 International Pharmaceuticals, Inc. v. NLRC and Dr.

Virginia Camacho
Quintia; GR 106331 (1998)

This is a petition for certiorari to set aside the decision of the National Labor Relations Commission which
affirmed in toto the decision of the Labor Arbiter, finding petitioner guilty of the illegal dismissal of private
respondent Virginia Camacho Quintia, as well as its resolution denying reconsideration.

Petitioner International Pharmaceuticals, Inc. (IPI) is a corporation engaged in the manufacture, production
and sale of pharmaceutical products. In March 1983, it employed private respondent Virginia Camacho Quintia
as Medical Director of its Research and Development department, replacing one Diana Villaraza. 1 The
government, in that year, launched a program encouraging the development of herbal medicine and offering
incentives to interested parties. Petitioner decided to venture into the development of herbal medicine,
although it is now alleged that this was merely experimental, to find out if it would be feasible to include herbal
medicine in its business. 2 One of the government requirements was the hiring of a pharmacologist. Petitioner
avers that it was only for this purpose that private respondent was hired, hence its contention that private
respondent was a project employee.

The contract of employment provided for a term of one year from the date of its execution on March 19, 1983,
subject to renewal by mutual consent of the parties at least thirty days before its expiration. It provided for a
monthly compensation of P4,000.00. It was agreed that Quintia could continue teaching at the Cebu Doctor's
Hospital, 3where she was, at that time, a full-time member of the faculty.

Quintia claimed that when her contract of employment was about to expire, she was invited by Xavier University
in Cagayan de Oro City to be the chairperson of its pharmacology department. However, Pio Castillo, the
president and general manager, prevailed upon her to stay, assuring her of security of tenure. Because of this
assurance, she declined the offer of Xavier University. 4 Indeed, after her contract expired on March 19, 1984,
she remained in the employ of petitioner where she not only performed the work of Medical Director of its
Research and Development department but also that of company physician. This continued until her
termination on July 12, 1986.

In her complaint, private respondent alleges that the reason for her termination "was her taking up the cudgels
for the rank and file employees when she felt they were given a raw deal by the officers of their own Savings
and Loan Association." She claimed that sometime in June 1986, while Pio Castillo was in China, the
Association declared dividends to its members. Due to complaints of the employees, meetings were held
during which private respondent pointed out the "inequality in the imposition of interest rate to the low-salaried
employees" and led them in the demand for a full disclosure of the association's financial status. Her
participation was resented by the association's officers, all of whom were appointed by management, so that
when Castillo arrived, private respondent was summoned to Castillo's office where she was berated for her
acts and humiliated in front of some laborers. When she sought permission to explain her side, she was
arrogantly turned down and told to leave. 5

On July 10, 1986, Quintia was replaced as head of the Research and Development department by Paz Wong.
Two days later, on July 12, 1986, she received an inter-office memorandum officially terminating her services
allegedly because of the expiration of her contract of employment.

On January 21, 1987, 6 private respondent filed a complaint, charging petitioner with illegal dismissal and
praying that petitioner be ordered to reinstate private respondent and to pay her full backwages and moral
damages. 7

In its position paper, petitioner claimed that private respondent had been hired on a "consultancy basis
coterminous with the duration of the project" involving the development of herbal medicine and that her
employment was terminated upon the abandonment of that project. It explained that Quintia's employment,

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which lasted for more than two years after the original contract expired, was by virtue of an oral agreement
with the same terms as the written contract or, at the very least, by virtue of implied extensions of the said
contract which lasted until the "company decided that nothing would come out from said project." 8

In a decision rendered on December 18, 1990, the Labor Arbiter found private respondent to have been illegally
dismissed. He held that private respondent was a regular employee and not a project employee and so could
not be dismissed without just and/or legal causes as provided in the Labor Code. Moreover, he found that
petitioner failed to observe due process in terminating Quintia's services. For this reason, the Labor Arbiter
ordered the petitioner to reinstate private respondent and to pay her backwages for three years, including 13th
month pay and Service Incentive Leave, moral damages and attorney's fees amounting to P177,099.94. He
further ruled that if reinstatement was no longer feasible, petitioner should pay private respondent P6,000 as
separation pay.

On appeal, the NLRC affirmed the ruling in a decision dated May 26, 1992. Petitioner moved for
reconsideration, but its motion was denied for lack of merit. The NLRC directed the Labor Arbiter to conduct a
hearing to determine whether reinstatement was feasible. Hence, this petition.

We find the petition to be without merit.

First. Art, 280 of the Labor Code provides:

Art. 280. Regular and casual employment. — The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be
regular where the employee has been engaged to perform activities which are usually necessary or desirable
in the usual business or trade of the employer except where the employment has been fixed for a specific
project or undertaking, the completion or termination of which has been determined at the time of the
engagement of the employee or where the work or service to be performed is seasonal in nature and the
employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That
any employee who has rendered at least one year of service, whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in which he is employed and his employment
shall continue while such activity exists.

In Brent School, Inc. v. Zamora, 9 it was held that although work done under a contract is necessary and
desirable in relation to the usual business of the employer, a contract for a fixed period may nonetheless be
made so long as it is entered into freely, voluntarily and knowingly by the parties. Applying this ruling to the
case at bar, the NLRC held that the written contract between petitioner and private respondent was valid, but,
after its expiration on March 18, 1984, as the petitioner had decided to continue her services, it must respect
the security of tenure of the employee in accordance with Art, 280. It said:

To our mind, when complainant was allowed to continue working without the benefit of a contract after the
expiration of the one year period provided in their written contract, that act completely changed the complexion
of the relationship between the parties.

The NLRC cited the following facts to justify its ruling: Quintia was continued as Medical Director and even
given the additional function of company physician after the expiration of the original contract; she undertook
various civic activities for and in behalf of petitioner, such as conducting free clinics and giving out IPI products;
she did work which was necessary and desirable in relation to the trade or business of petitioner; and her
employment lasted for more than (3) three years.

Petitioner contends:

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(1) that the NLRC's reliance on Art. 280 is "clearly contrary to this Court's decisions;"

(2) that private respondent's tasks are really not necessary and desirable to the usual business of petitioner;

(3) that there is "clearly no legal or factual basis to support respondent NLRC's reliance on the absence of a
new written contract as indicating that respondent Quintia became a regular employee." 10

Petitioner's first ground is that the ruling of the NLRC is contrary to the Brent School decision. He contends
that Art. 280 should not be so interpreted as to render employment contracts with a fixed term invalid. But the
NLRC precisely upheld the validity of the contract in accordance with the Brent School case. Indeed, the
validity of the written contract is not in issue in this case. What is in issue is whether private respondent did not
become a regular employee after the expiration of the written contraction March 18, 1984 on the basis of the
facts pointed out by the NLRC, simply because there was in the beginning a contract of employment with a
fixed term.

Petitioner also invokes the ruling in Singer Sewing Machine v. Drilon 11 in which it was stated:

The definition that regular employees are those who perform activities which are desirable and necessary for
the business of the employer is not determinative in this case. Any agreement may provide that one party shall
render services for and in behalf of another for a consideration (no matter how necessary for the latter's
business) even without being hired as an employee. This is precisely true in the case of an independent
contractorship as well as in an agency agreement. The Court agrees with the petitioner's argument that Article
280 is not the yardstick for determining the existence of an employment relationship because it merely
distinguishes between two kinds of employees, i.e., regular employees and casual employees, for purposes
of determining the right of an employee to certain benefits, to join or form a union, or to security of tenure.
Article 280 does not apply where the existence of an employment relationship is in dispute.

Petitioner argues:

Even assuming arguendo that respondent Quintia was performing tasks which were "necessary and desirable
to the main business" of petitioner, said standard cannot apply since said Article merely distinguishes between
regular and casual employment for the purpose of determining entitlement to benefits under the Labor Code.
In this case, respondent Quintia's alleged status as "regular" employee has precisely been disputed by
petitioner. And, as this Honorable Court noted in the foregoing case, an agreement may provide that one party
will render services, no matter how necessary for the other party's business, without being hired as a regular
employee, and this is precisely the nature of the contract entered into by the parties in this case. 12

Clearly, petitioner misapplies the ruling in Singer. Quintia's status as an employee is not disputed in this case.
Therefore, in determining whether she was a project employee or a regular employee, the question is whether
her work was "necessary and desirable to the main business of the employer." It is true that, as held in Singer,
parties can enter into an agreement for the rendering of services by one to the other and that however
necessary such services may be to the latter's business the contract will not necessarily give rise to an
employer-employee relationship if the elements of such relationship are not present. But that is not the question
in this case. Quintia was an employee. The question is whether, given the fact that she was an employee, she
was a regular or a project employee, considering that she had been continued in the service of petitioner for
more than two years following the expiration of her written contract.

Petitioner's second point is that private respondent's tasks were not really necessary and desirable in respect
of the usual business of petitioner, the work done by Quintia being on a temporary basis only. 13 According to
petitioner, Quintia's engagement was only for the duration of its herbal medicine development project. In
addition, petitioner points out that private respondent was not required to keep fixed office hours and this

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arrangement continued even after the expiration of the written contract, thus indicating the temporary nature
of her employment.

We are not prepared to throw overboard the findings of both the NLRC and the Labor Arbiter on the matter.
These are essentially factual matters which are within the competence of the labor agencies to determine.
Their findings are accorded by this Court respect and finality if, as in this case, they are supported by
substantial evidence. 18

Indeed, the terms of the written employment contract are clear:

. . . That the FIRST PARTY is a manufacturer of medicines and pharmaceutical preparations, while the
SECOND PARTY is a Doctor of Medicine and Pharmacologist of long standing;

That the FIRST PARTY desires to hire the SECOND PARTY as Medical Director of its Research and
Development department, which the latter accepts, under the following terms and conditions, to wit:

1. That the SECOND PARTY shall perform and/or cause the performance of the following:

a) Microbiological research and testing;

b) Clinical research and testing;

c) Prove and support First Party's claims in its brochures, literature and advertisements;

d) Register with and cause the approval by Food and Drug Administration of all pharmaceutical and medical
preparations developed and tested by the First Party's R&D department; and

e) To do and perform such other duties as may, from time to time, be assigned by the First Party consonant
to and in accord with the position herein conferred . . . .

There is no mention whatsoever of any project or of any consultancy in the contract. As aptly observed by the
Solicitor General, the duties of Quintia as provided for in the contract reject any notion of consultancy. Clearly,
she was hired as Medical Director of the Research and Development department of petitioner company and
not as consultant nor for any particular project. The work she performed was manifestly necessary and
desirable to the usual business of petitioner, considering that it is engaged in the manufacture and production
of medicinal preparations. Petitioner itself admits that research and development are part of its business. 19

We agree with the Labor Arbiter that the fact that she was not required to report at a fixed hour or to keep fixed
hours of work does not detract from her status as a regular employee. As petitioner itself admits, Quintia was
a managerial employee 20 and therefore not covered by the Labor Code provisions on hours of work. What
this Court said in once case 21 is apropos:

The primary standard, . . . of determining a regular employment is the reasonable connection between the
particular activity performed by the employee in relation to the usual business or trade of the employer. The
test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The
connection can be determined by considering the nature of the work performed and its relation to the scheme
of the particular business or trade in its entirety. Also, if the employee has been performing the job for at least
one year, even if the performance is not continuous or merely intermittent, the law deems the repeated and
continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity
to the business. Hence, the employment is also considered regular, but only with respect to such activity and
while such activity exists.

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Neither does the fact that private respondent was teaching full-time at the Cebu Doctors' College negate her
regular status since this fact does not affect the nature of Quintia's work. Whether one's employment is regular
is not determined by the number of hours one works, but by the nature of the work and by the length of time
one has been in that particular job.

Considering the foregoing, it is clear that Quintia became a regular employee of petitioner after her contract
expired on March 18, 1984 and her services were continued for more than two years in the usual trade or
business of the employer.

Petitioner goes on to state his third point that "there is clearly no legal or factual basis to support respondent
NLRC's reliance on the absence of a new written contract as indicating that respondent Quintia became a
regular employee." 22 In support, the petitioner again cites the Brent School case 23 where it was recognized
that term contracts can be made orally. 24 Hence, it is argued that "the mere fact that there was no subsequent
written contract does not mean that the original agreement was abandoned and/or that respondent became a
regular employee due to the absence thereof and/or that the parties had executed a new agreement, in the
absence of evidence showing intent to abandon and/or novate the same." It posits that, based on the acts of
the parties, an implied renewal was entered into, or, at the very least, petitioner claims, the absence of a written
contract only indicates that the parties impliedly agreed to extend their written contract.

There is absolutely no principle of law to support the proposition urged by petitioner. On the other hand the
written contract in this case provided that it was subject to renewal by mutual consent of the parties at least
thirty days before its expiration on March 18, 1984. There is no evidence to show that the parties mutually
agreed to renew their contract. On the other hand, to sustain petitioner's contention that there was an implied
extension after the expiration of the original contract would make it possible for employers like petitioner to
circumvent Art. 280 of the Labor Code and thus prevent an employee from becoming regular through the
simple expedient of making him sign a contract for a term and then extend to him a contract term, after term,
after term.

Moreover, assuming that petitioner is correct that there was at least an implied renewal of the written contract
containing the same terms and conditions, then Quintia's termination should have been effective in March of
1986 or March of 1987 rather than July of 1986. It should be noted that the fixed term stated in the written
contract allegedly renewed is one year. Considering that the said contract was executed on March 19, 1983,
then if there really were implied renewals with the same terms and conditions, private respondent's
employment should not have been terminated in July of 1986. As discussed earlier, the decision of the NLRC
is based not alone on inference drawn from the expiration of the contract but on facts which, in light of Art.
280, show that private respondent's work was in pursuance of the business of petitioner.

Second. Prescinding from the premise that private respondent was a project employee, petitioner claims that
because it had discontinued its herbal medicine project after it had been shown not to be viable, private
respondent's employment had to be terminated, too.

We have already shown why this claim has no basis and no merit. Petitioner was unable to prove that it had
actually undertaken a project. Private respondent's contract will be searched in vain for any mention of a
project. What it states is that Quintia's employment was one for a definite period, not for a project as petitioner
would have it. A project employment is one where the employment has been fixed for a specific
project/undertaking, the completion or termination of which has been determined at the time of the engagement
of the employee. 25 Quintia's engagement after the expiration of the written contract cannot be said to have
been pre-determined because, if petitioner's other claim is to be believed, it was essentially contingent upon
the feasibility of herbal medicine as part of petitioner's business and for as long as the herbal medicine
development was being pursued by it.

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It follows from the conclusion that private respondent Quintia was a regular employee that she could only be
dismissed for just or authorized cause. 26 The records are bereft of any evidence showing the existence of
any of the specified causes in the Labor Code. It may be that an employer is allowed wider discretion in
terminating employment in respect of managerial personnel compared to rank-and-file employees, and that
such managerial employees can be separated from the service for loss of confidence. 27 However, a mere
allegation of such ground is not sufficient. As this Court has held in Western Shipping Agency, Inc. v. NLRC: 28

Loss of confidence is a valid ground for the dismissal of managerial employees . . . But even managerial
employees enjoy security of tenure, . . . and, . . . can only be dismissed after cause is shown in an appropriate
proceeding. The loss of confidence must be substantiated by evidence. The burden of proof is on the employer
to show grounds justifying the loss of confidence.

Petitioner in this case failed to discharge this burden, as both the Labor Arbiter and the NLRC found.

Moreover, as the labor arbiter found, petitioner failed to accord due process to private respondent in
terminating her services. In the case of Aurora Land Projects Corp. v. NLRC it was stated: 29

The law requires that the employer must furnish the worker sought to be dismissed with two written
noticesbefore termination of employee can be legally effected: (1) notice which apprises the employee of the
particular acts or omissions for which his dismissal is sought; and (2) the subsequent notice which informs the
employee of the employer's decision to dismiss him (Section 13, BP 130; Sections 2-6, Rule XIV, Book V Rules
and Regulations Implementing the Labor Code as amended). Failure to comply with the requirements taints
the dismissal with illegality. This procedure is mandatory; in the absence of which, any judgment reached by
management is void and in existent. (Tingson, Jr. v. NLRC, 185 SCRA 498 [1990]; National Service
Corporation v. NLRC, 168 SCRA 122 [1988]; Ruffy v. NLRC, 182 SCRA 365 [1990]).

The memoranda dated July 12, 1986 and July 10, 1986, copies of which were furnished the complainant,
informing her of the termination of her contract and the appointment of a replacement, without apprising her of
the particular acts or omissions for which her dismissal was sought, do not suffice to satisfy, the requirements
of notice. Nor was petitioner given the opportunity to be heard. 30 Consequently, her dismissal from the service
was illegal.

Third. Petitioner contends that the reinstatement of private respondent is not feasible because the position
which she held was abolished on account of its decision to discontinue its herbal medicine development project
and that, in any event, because the position is a sensitive one which needs an employee in whom the petitioner
has full faith and confidence. It is also contended that reinstatement would be untenable considering the
antagonism engendered as a result of this case. 31

As regards the claim that the position has already been abolished and, therefore, reinstatement is impossible,
suffice it to state that the factual findings of the Labor Arbiter belie this. A replacement for private respondent
was appointed two (2) days prior to her termination. If the position had been abolished, there would have been
no necessity for a replacement.

But we agree that because of antagonism generated by this case and the private respondent's own preference
for separation pay, reinstatement would no longer be feasible. It would thus be in the best interest of the parties
to order the payment of separation pay in lieu of reinstatement. Such an amount should not be equivalent to
one-half month salary for every year of service only, as ordered by the Labor Arbiter and affirmed by the NLRC
but, in accordance with our decisions, 32 it must be equivalent to one month salary for every year of service.

Private respondent should be given separation pay and backwages in accordance with the Labor Code. The
backwages, however, are to be computed only for three years from July 12, 1986, the date of her dismissal,
without deduction or qualification, considering that the dismissal was made before the effectivity on March 21,

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1989, of R.A. No. 6715, which provides for the payment of full backwages to employees who are illegally
dismissed. 33

WHEREFORE, the petition is DISMISSED. The decision of the National Labor Relations Commission is
MODIFIED by ordering petitioner to pay private respondent separation pay equivalent to one month salary for
every year of service. In all other respects, the decision of the NLRC is AFFIRMED.

SO ORDERED.

Regalado, Melo, Puno and Martinez, JJ., concur.

Petitioner's allegations are contrary to the factual findings of both the NLRC and the Labor Arbiter, particularly
their findings that she was the head of petitioner's Research and Development department; that in addition,
she performed the function of company physician; and that she undertook various civic activities in behalf of
petitioner and that this engagement lasted for more than three years (1983 — 1986). 14 Certainly, as the
NLRC observed, these facts show complainant working "not as 'consultant' but as a regular employee albeit a
managerial one." 15 It should be added that Quintia was hired to replace one Diana Villaraza, 16 which
suggests that the position to which she was appointed by petitioner was an existing one, so much so that after
the termination of Quintia's employment, somebody else (Paz Wong) was appointed in her place. 17 If private
respondent's employment was for a particular project which had allegedly been terminated, why would there
be a need to replace her?

 Mercidar Fishing Corporation v. NLRC and Fermin Agao, Jr.; GR 112574

(1998)

FACTS: This case originated from a complaint filed by Agao against petitioner for illegal dismissal, violation of
P.D. No. 851, and non-payment of five days SIL. Private respondent had been employed as a “bodegero” or
ship’s quartermaster. He complained that he had been constructively dismissed by petitioner when the latter
refused him assignments aboard its boats. Private respondent alleged that he had been sick and thus allowed
to go on leave without pay for one month but that when he reported to work at the end of such period with a
health clearance, he was told to come back another time as he could not be reinstated immediately. Thereafter,
petitioner refused to give him work.

Petitioner, on the other hand, alleged that it was private respondent who actually abandoned his work. It
claimed that the latter failed to report for work after his leave had expired and was, in fact, absent without leave
for three months .

Labor Arbiter Amansec rendered a decision ordering respondents to reinstate complainant with
backwages, pay him his 13th month pay and incentive leave pay.

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Petitioner appealed to the NLRC which dismissed the appeal for lack of merit. The NLRC dismissed petitioner’s
claim that it cannot be held liable for SIL pay by fishermen in its employ as the latter supposedly are “field
personnel” and thus not entitled to such pay under the Labor Code.

ISSUE: is Agao a field employee, hence not entitled to SIL pay?

HELD: WHEREFORE, the petition is DISMISSED

NO; Agao is NOT a field employee, he is entitled to SIL pay

Art. 82 of the Labor Code provides:

Art. 82. Coverage. — The provisions of this Title [Working Conditions and Rest Periods] shall apply to
employees in all establishments and undertakings whether for profit or not, but not to government
employees, field personnel, members of the family of the employer who are dependent on him for support,
domestic helpers, persons in the personal service of another, and workers who are paid by results as
determined by the Secretary of Labor in appropriate regulations.

xxx xxx xxx

“Field personnel” shall refer to non-agricultural employees who regularly perform their duties away from the
principal place of business or branch office of the employer and whose actual hours of work in the field
cannot be determined with reasonable certainty.

Petitioner argues essentially that since the work of private respondent is performed away from its principal
place of business, it has no way of verifying his actual hours of work on the vessel. It contends that private
respondent and other fishermen in its employ should be classified as “field personnel” who have no statutory
right to SIL pay.

In the case of Union of Pilipro Employees (UFE) v. Vicar, this Court explained the meaning of the phrase
“whose actual hours of work in the field cannot be determined with reasonable certainty” in Art. 82 of the Labor
Code, as follows:

Moreover, the requirement that “actual hours of work in the field cannot be determined with reasonable
certainty” must be read in conjunction with Rule IV, Book III of the Implementing Rules which provides:

Rule IV Holidays with Pay

Sec. 1. Coverage — This rule shall apply to all employees except:

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xxx xxx xxx

(e) Field personnel and other employees whose time and performance is unsupervised by the employer . .
. (Emphasis supplied).

Petitioner in said case is contending that such rule added another element not found in the law. Contrary to
the contention of the petitioner, the Court finds that the aforementioned rule did not add another element to
the Labor Code definition of field personnel. The clause “whose time and performance is unsupervised
by the employer” did not amplify but merely interpreted and expounded the clause “whose actual
hours of work in the field cannot be determined with reasonable certainty.” The former clause is
still within the scope and purview of Article 82 which defines field personnel. Hence, in deciding whether or
not an employee’s actual working hours in the field can be determined with reasonable certainty, query
must be made as to whether or not such employee’s time and performance is constantly supervised
by the employer

In the case at bar, during the entire course of their fishing voyage, fishermen employed by petitioner have no
choice but to remain on board its vessel. Although they perform non-agricultural work away from petitioner’s
business offices, the fact remains that throughout the duration of their work they are under the effective
control and supervision of petitioner through the vessel’s patron or master as the NLRC correctly held

 Far East Agricultural Supply, Inc. v. Jimmy Lebatique and CA; GR

162813 (2007)

FACTS

Petitioner Far East hired on March 4, 1996 private respondent Jimmy Lebatique as truck driver with a daily
wage of P223.50. He delivered animal feeds to the company’s clients. On January 24, 2000, Lebatique
complained of nonpayment of overtime work particularly on January 22, 2000, when he was required to make
a second delivery in Novaliches, Quezon City. That same day, Manuel Uy, brother of Far East’s General
Manager and petitioner Alexander Uy, suspended Lebatique apparently for illegal use of company
vehicle. Even so, Lebatique reported for work the next day but he was prohibited from entering the company
premises.

On January 26, 2000, Lebatique sought the assistance of the Department of Labor and Employment (DOLE)
Public Assistance and Complaints Unit concerning the nonpayment of his overtime pay. According to
Lebatique, two days later, he received a telegram from petitioners requiring him to report for work. When he
did the next day, January 29, 2000, Alexander asked him why he was claiming overtime pay. Lebatique
explained that he had never been paid for overtime work since he started working for the company. He also
told Alexander that Manuel had fired him. After talking to Manuel, Alexander terminated Lebatique and told
him to look for another job. On March 20, 2000, Lebatique filed a complaint for illegal dismissal and
nonpayment of overtime pay.

Petitioners maintain that Lebatique, as a driver, is not entitled to overtime pay since he is a field personnel
whose time outside the company premises cannot be determined with reasonable certainty. According to
petitioners, the drivers do not observe regular working hours unlike the other office employees. The drivers
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may report early in the morning to make their deliveries or in the afternoon, depending on the production of
animal feeds and the traffic conditions. Petitioners also aver that Lebatique worked for less than eight hours
a day.

Respondent, on his part claims that he is not a field personnel, thus, he is entitled to overtime pay and service
incentive leave pay.

ISSUE

Whether or not petitioner id entitled to overtime pay and service incentive leave.

HELD

The SC held that Lebatique is not a field personnel for the following reasons:
(1) company drivers, including Lebatique, are directed to deliver the goods at a specified time and place;
(2) they are not given the discretion to solicit, select and contact prospective clients; and
(3) Far East issued a directive that company drivers should stay at the client’s premises during truck-ban hours
which is from 5:00 to 9:00 a.m. and 5:00 to 9:00 p.m.

Even petitioners admit that the drivers can report early in the morning, to make their deliveries, or in the
afternoon, depending on the production of animal feeds. Drivers, like Lebatique, are under the control and
supervision of management officers. Lebatique, therefore, is a regular employee whose tasks are usually
necessary and desirable to the usual trade and business of the company. Thus, he is entitled to the benefits
accorded to regular employees of Far East, including overtime pay and service incentive leave pay.

Note that all money claims arising from an employer-employee relationship shall be filed within three years
from the time the cause of action accrued; otherwise, they shall be forever barred. Further, if it is established
that the benefits being claimed have been withheld from the employee for a period longer than three years,
the amount pertaining to the period beyond the three-year prescriptive period is therefore barred by
prescription. The amount that can only be demanded by the aggrieved employee shall be limited to the amount
of the benefits withheld within three years before the filing of the complaint.

Lebatique timely filed his claim for service incentive leave pay, considering that in this situation, the prescriptive
period commences at the time he was terminated. On the other hand, his claim regarding nonpayment of
overtime pay since he was hired in March 1996 is a different matter. In the case of overtime pay, he can only
demand for the overtime pay withheld for the period within three years preceding the filing of the complaint on
March 20, 2000.

Petition is denied

 Labor Congress of the Philippines v. NLRC, Empire Food Products, et

al.; GR 123934 (1998)

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Facts: The 99 persons named as petitioners in this proceeding were rank-and-file employees of respondent
Empire Food Products, which hired them on various dates. Petitioners filed against private respondents a
complaint for payment of money claims and for violation of labor standards laws They also filed a petition for
direct certification of petitioner Labor Congress of the Philippines as their bargaining representative. In an
Order dated October 24, 1990, Mediator Arbiter approved the memorandum of agreement and certified LCP
"as the sole and exclusive bargaining agent among the rank-and-file employees of Empire Food Products for
purposes of collective bargaining with respect to wages, hours of work and other terms and conditions of
employment".

On November 1990, petitioners through LCP President Navarro submitted to private respondents a proposal
for collective bargaining. On January 1991, petitioners filed a complaint against private respondents for Unfair
Labor Practice by way of Illegal Lockout and/or Dismissal; Union busting thru Harassments [sic], threats, and
interfering with the rights of employees to self-organization; Violation of the Memorandum of Agreement dated
October 23, 1990; Underpayment of Wages in violation of R.A. No. 6640 and R.A. No. 6727, such as Wages
promulgated by the Regional Wage Board; Actual, Moral and Exemplary Damages."

Issue: Whether or not the petitioners are entitled to labor standard benefits considering they are paid by piece
rate worker.

Ruling: The petitioners are so entitled to these benefits namely, holiday pay, premium pay, 13th month pay
and service incentive leave. Three (3) factors lead us to conclude that petitioners, although piece-rate workers,
were regular employees of private respondents. First, as to the nature of petitioners' tasks were necessary or
desirable in the usual business of private respondents, who were engaged in the manufacture and selling of
such food products; second, petitioners worked for private respondents throughout the year, and third, the
length of time that petitioners worked for private respondents. Thus, while petitioners' mode of compensation
was on a "per piece basis," the status and nature of their employment was that of regular employees.

The Rules Implementing the Labor Code exclude certain employees from receiving benefits such as nighttime
pay, holiday pay, service incentive leave and 13th month pay, "field personnel and other employees whose
time and performance is unsupervised by the employer, including those who are engaged on task or contract
basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of the
time consumed in the performance thereof."

Plainly, petitioners as piece-rate workers do not fall within this group. As mentioned earlier, not only did
petitioners labor under the control of private respondents as their employer, likewise did petitioners toil
throughout the year with the fulfillment of their quota as supposed basis for compensation.

Further, in Section 8(b), Rule IV, Book III which we quote hereunder, piece workers are specifically mentioned
as being entitled to holiday pay.

SEC. 8. Holiday pay of certain employees. —

(b) Where a covered employee is paid by results or output, such as payment on piece work, his holiday pay
shall not be less than his average daily earnings for the last seven (7) actual working days preceding the
regular holiday: Provided, however, that in no case shall the holiday pay be less than the applicable statutory
minimum wage rate.

In addition, the Revised Guidelines on the Implementation of the 13th Month Pay Law, in view of the
modifications to P.D. No. 851 19 by Memorandum Order No. 28, clearly exclude the employer of piece rate
workers from those exempted from paying 13th month pay, to wit:

2. EXEMPTED EMPLOYERS

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The following employers are still not covered by P.D. No. 851:

d. Employers of those who are paid on purely commission, boundary or task basis, and those who are paid a
fixed amount for performing specific work, irrespective of the time consumed in the performance thereof,
except where the workers are paid on piece-rate basis in which case the employer shall grant the required
13th month pay to such workers.

The Revised Guidelines as well as the Rules and Regulations identify those workers who fall under the piece-
rate category as those who are paid a standard amount for every piece or unit of work produced that is more
or less regularly replicated, without regard to the time spent in producing the same.

As to overtime pay, the rules, however, are different. According to Sec 2(e), Rule I, Book III of the Implementing
Rules, workers who are paid by results including those who are paid on piece-work, takay, pakiao, or task
basis, if their output rates are in accordance with the standards prescribed under Sec. 8, Rule VII, Book III, of
these regulations, or where such rates have been fixed by the Secretary of Labor in accordance with the
aforesaid section, are not entitled to receive overtime pay. As such, petitioners are beyond the ambit of
exempted persons and are therefore entitled to overtime pay.

 Best Wear Garments v. Adelaida De Lemos and Cecille Ocubillo; GR

191281 (2012)
FACTS:

Respondents Adelaida De Lemos and Cecile Ocubillo were employees of Best Wear Garments (Best Wear)
owned by Warren Pardilla. In 2004, De Lemos and Ocubillo filed a case for illegal dismissal. Both alleged that
they were arbitrarily transferred to other areas of operation of Pardilla’s garments company, which they said
amounted to constructive dismissal as it resulted in less earnings for them. They also claimed that the reason
for their transfer is their refusal to render overtime work until 7:00 p.m.

Best wear countered that De Lemos and Ocubillo are piece-rate workers and hence they are not paid according
to the number of hours worked. Best Wear also averred that the two were not illegally terminated; rather, they
were the ones who resigned.

The Labor Arbiter ruled that De Lemos and Ocubillo were constructively dismissed from employment. On
appeal, the NLRC found no basis for the charge of constructive dismissal. Aggrieved, De Lemos and Ocubillo
appealed to the Court of Appeals. The CA reinstated the LA’s decision. Hence, this instant petition.

ISSUE: Whether or not the Court of Appeals erred in ruling that De Lemos and Ocubillo were constructively
dismissed?

HELD: De Lemos and Ocubillo were not constructively dismissed.

LABOR LAW: transfer; management prerogative; piece-rate workers

The right of employees to security of tenure does not give them vested rights to their positions to the extent of
depriving management of its prerogative to change their assignments or to transfer them. Thus, an employer
may transfer or assign employees from one office or area of operation to another, provided there is no demotion

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in rank or diminution of salary, benefits, and other privileges, and the action is not motivated by discrimination,
made in bad faith, or effected as a form of punishment or demotion without sufficient cause.

Being piece-rate workers assigned to individual sewing machines, their earnings depended on the quality and
quantity of finished products. That their work output might have been affected by the change in their specific
work assignments does not necessarily imply that any resulting reduction in pay is tantamount to constructive
dismissal. Workers under piece-rate employment have no fixed salaries and their compensation is computed
on the basis of accomplished tasks. The constitutional policy of providing full protection to labor is not intended
to oppress or destroy management. While the Constitution is committed to the policy of social justice and the
protection of the working class, it should not be supposed that every labor dispute will be automatically decided
in favor of labor. Management also has its rights which are entitled to respect and enforcement in the interest
of simple fair play. Thus, where management prerogative to transfer employees is validly exercised, as in this
case, courts will decline to interfere.

Petition is GRANTED.

 Legend Hotel (Manila) v. Hernani Realuyo aka Joey Roa; GR 153511

(2012)

Respondent averred that he had worked as a pianist at the Legend Hotel’s Tanglaw Restaurant from
September 1992 with an initial rate of P400.00/night that was given to him after each night’s performance; that
his rate had increased to P750.00/night; and that during his employment, he could not choose the time of
performance, which had been fixed from 7:00 pm to 10:00 pm for three to six times/week. He added that the
Legend Hotel’s restaurant manager had required him to conform with the venue’s motif; that he had been
subjected to the rules on employees’ representation checks and chits, a privilege granted to other employees;
that on July 9, 1999, the management had notified him that as a cost-cutting measure his services as a pianist
would no longer be required effective July 30, 1999; that he disputed the excuse, insisting that Legend Hotel
had been lucratively operating as of the filing of his complaint; and that the loss of his employment made him
bring his complaint.

Issues: 1. Whether or not petition for certiorari to the CA is proper.

2. Whether or not there is ER-EE relationship.
3. Whether or not retrenchment as a ground for respondent’s dismissal is valid.

Held: YES. There is no longer any doubt that a petition for certiorari brought to assail the decision of the NLRC
may raise factual issues, and the CA may then review the decision of the NLRC and pass upon such factual
issues in the process.8 The power of the CA to review factual issues in the exercise of its original jurisdiction
to issue writs of certiorari is based on Section 9 of Batas Pambansa Blg. 129, which pertinently provides that
the CA “shall have the power to try cases and conduct hearings, receive evidence and perform any and all
acts necessary to resolve factual issues raised in cases falling within its original and appellate jurisdiction,
including the power to grant and conduct new trials or further proceedings.”

YES. Petitioner actually wielded the power of selection at the time it entered into the service contract dated
September 1, 1992 with respondent. This is true, notwithstanding petitioner’s insistence that respondent had
only offered his services to provide live music at petitioner’s Tanglaw Restaurant, and despite petitioner’s
position that what had really transpired was a negotiation of his rate and time of availability. The power of

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selection was firmly evidenced by, among others, the express written recommendation dated January 12, 1998
by Christine Velazco, petitioner’s restaurant manager, for the increase of his remuneration.

Respondent’s remuneration, albeit denominated as talent fees, was still considered as included in the term
wage in the sense and context of the Labor Code, regardless of how petitioner chose to designate the
remuneration. Anent this, Article 97(f) of the Labor Code clearly states:

xxx wage paid to any employee shall mean the remuneration or earnings, however designated, capable of
being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis,
or other method of calculating the same, which is payable by an employer to an employee under a written or
unwritten contract of employment for work done or to be done, or for services rendered or to be rendered, and
includes the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other
facilities customarily furnished by the employer to the employee.

That respondent worked for less than eight hours/day was of no consequence and did not detract from the
CA’s finding on the existence of the employer-employee relationship. In providing that the “normal hours of
work of any employee shall not exceed eight (8) hours a day,” Article 83 of the Labor Code only set a maximum
of number of hours as “normal hours of work” but did not prohibit work of less than eight hours.

The power of the employer to control the work of the employee is considered the most significant determinant
of the existence of an employer-employee relationship. This is the so-called control test, and is premised on
whether the person for whom the services are performed reserves the right to control both the end achieved
and the manner and means used to achieve that end.

A review of the records shows, however, that respondent performed his work as a pianist under petitioner’s
supervision and control. Specifically, petitioner’s control of both the end achieved and the manner and means
used to achieve that end was demonstrated by the following, to wit: a. He could not choose the time of his
performance, which petitioners had fixed from 7:00 pm to 10:00 pm, three to six times a week; b. He could not
choose the place of his performance; c. The restaurant’s manager required him at certain times to perform
only Tagalog songs or music, or to wear barong Tagalog to conform to the Filipiniana motif; and d. He was
subjected to the rules on employees’ representation check and chits, a privilege granted to other employees.
Relevantly, it is worth remembering that the employer need not actually supervise the performance of duties
by the employee, for it sufficed that the employer has the right to wield that power.

NO. Retrenchment is one of the authorized causes for the dismissal of employees recognized by the Labor
Code. It is a management prerogative resorted to by employers to avoid or to minimize business losses. On
this matter, Article 283 of the Labor Code.

The Court has laid down the following standards that an employer should meet to justify retrenchment and to
foil abuse, namely: (a) The expected losses should be substantial and not merely de minimis in extent; (b) The
substantial losses apprehended must be reasonably imminent; (c) The retrenchment must be reasonably
necessary and likely to effectively prevent the expected losses; and (d) The alleged losses, if already incurred,

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and the expected imminent losses sought to be forestalled must be proved by sufficient and convincing
evidence.

Anent the last standard of sufficient and convincing evidence, it ought to be pointed out that a less exacting
standard of proof would render too easy the abuse of retrenchment as a ground for termination of services of
employees.

In termination cases, the burden of proving that the dismissal was for a valid or authorized cause rests upon
the employer. Here, petitioner did not submit evidence of the losses to its business operations and the
economic havoc it would thereby imminently sustain. It only claimed that respondent’s termination was due to
its “present business/financial condition.” This bare statement fell short of the norm to show a valid
retrenchment. Hence, we hold that there was no valid cause for the retrenchment of respondent.

PAL v. NLRC

Petitioner Philippine Airlines, Inc. assails the decision of the National Labor Relations Commission dismissing

its appeal from the decision of Labor Arbiter Romulus S. Protacio which declared the suspension of private

respondent Dr. Herminio A. Fabros illegal and ordered petitioner to pay private respondent the amount

equivalent to all the benefits he should have received during his period of suspension plus P500,000.00 moral

damages.

The facts are as follow:

Private respondent was employed as flight surgeon at petitioner company. He was assigned at the PAL

Medical Clinic at Nichols and was on duty from 4:00 in the afternoon until 12:00 midnight.

On February 17, 1994, at around 7:00 in the evening, private respondent left the clinic to have his dinner at

his residence, which was about five-minute drive away. A few minutes later, the clinic received an emergency

call from the PAL Cargo Services. One of its employees, Mr. Manuel Acosta, had suffered a heart attack. The

nurse on duty, Mr. Merlino Eusebio, called private respondent at home to inform him of the emergency. The

patient arrived at the clinic at 7:50 in the evening and Mr. Eusebio immediately rushed him to the hospital.

When private respondent reached the clinic at around 7:51 in the evening, Mr. Eusebio had already left with

the patient. Mr. Acosta died the following day.

Upon learning about the incident, PAL Medical Director Dr. Godofredo B. Banzon ordered the Chief Flight

Surgeon to conduct an investigation. The Chief Flight Surgeon, in turn, required private respondent to explain

why no disciplinary sanction should be taken against him.

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In his explanation, private respondent asserted that he was entitled to a thirty-minute meal break; that he

immediately left his residence upon being informed by Mr. Eusebio about the emergency and he arrived at the

clinic a few minutes later; that Mr. Eusebio panicked and brought the patient to the hospital without waiting for

him.

Finding private respondent's explanation unacceptable, the management charged private respondent with

abandonment of post while on duty. He was given ten days to submit a written answer to the administrative

charge.

In his answer, private respondent reiterated the assertions in his previous explanation. He further denied that

he abandoned his post on February 17, 1994. He said that he only left the clinic to have his dinner at home.

In fact, he returned to the clinic at 7:51 in the evening upon being informed of the emergency.

After evaluating the charge as well as the answer of private respondent, petitioner company decided to

suspend private respondent for three months effective December 16, 1994.

Private respondent filed a complaint for illegal suspension against petitioner.

On July 16, 1996, Labor Arbiter Romulus A. Protasio rendered a decision[1] declaring the suspension of private

respondent illegal. It also ordered petitioner to pay private respondent the amount equivalent to all the benefits

he should have received during his period of suspension plus P500,000.00 moral damages. The dispositive

portion of the decision reads:

WHEREFORE, in view of all the foregoing, judgment is hereby rendered declaring the suspension of

complainant as illegal, and ordering the respondents the restitution to the complainant of all employment

benefits equivalent to his period of suspension, and the payment to the complainant of P500,000.00 by way of

moral damages.[2]

Petitioner appealed to the NLRC. The NLRC, however, dismissed the appeal after finding that the decision of

the Labor Arbiter is supported by the facts on record and the law on the matter.[3] The NLRC likewise denied

petitioner's motion for reconsideration.[4]

Hence, this petition raising the following arguments:

1. The public respondents acted without or in excess of their jurisdiction and with grave abuse of

discretion in nullifying the 3-month suspension of private respondent despite the fact that the private

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 respondent has committed an offense that warranted the imposition of disciplinary action.

2. The public respondents acted without or in excess of their jurisdiction and with grave abuse of

discretion in holding the petitioner liable for moral damages:

(a)

Despite the fact that no formal hearing whatsoever was conducted for complainant to substantiate his claim;

(b)

Despite the absence of proof that the petitioner acted in bad faith in imposing the 3-month suspension; and

(c)

Despite the fact that the Labor Arbiter's award of moral damages is highly irregular, considering that it was

more than what the private respondent prayed for.[5]

We find that public respondents did not err in nullifying the three-month suspension of private respondent.

They, however, erred in awarding moral damages to private respondent.

First, as regards the legality of private respondent's suspension. The facts do not support petitioner's allegation

that private respondent abandoned his post on the evening of February 17, 1994. Private respondent left the

clinic that night only to have his dinner at his house, which was only a few minutes' drive away from the clinic.

His whereabouts were known to the nurse on duty so that he could be easily reached in case of emergency.

Upon being informed of Mr. Acosta's condition, private respondent immediately left his home and returned to

the clinic. These facts belie petitioner's claim of abandonment.

Petitioner argues that being a full-time employee, private respondent is obliged to stay in the company

premises for not less than eight (8) hours. Hence, he may not leave the company premises during such time,

even to take his meals.

We are not impressed.

Articles 83 and 85 of the Labor Code read:

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Art. 83. Normal hours of work.--The normal hours of work of any employee shall not exceed eight (8) hours

a day.

Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in hospitals

and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for eight (8) hours

a day, for five (5) days a week, exclusive of time for meals, except where the exigencies of the service

require that such personnel work for six (6) days or forty-eight (48) hours, in which case they shall be entitled

to an additional compensation of at least thirty per cent (30%) of their regular wage for work on the sixth day.

For purposes of this Article, "health personnel" shall include: resident physicians, nurses, nutritionists,

dieticians, pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists,

midwives, attendants and all other hospital or clinic personnel. (emphasis supplied)

Art. 85. Meal periods.--Subject to such regulations as the Secretary of Labor may prescribe, it shall be the

duty of every employer to give his employees not less than sixty (60) minutes time-off for their regular meals.

Section 7, Rule I, Book III of the Omnibus Rules Implementing the Labor Code further states:

Sec. 7. Meal and Rest Periods.--Every employer shall give his employees, regardless of sex, not less than

one (1) hour time-off for regular meals, except in the following cases when a meal period of not less than

twenty (20) minutes may be given by the employer provided that such shorter meal period is credited as

compensable hours worked of the employee;

(a)

Where the work is non-manual work in nature or does not involve strenuous physical exertion;

(b)

Where the establishment regularly operates not less than sixteen hours a day;

(c)

In cases of actual or impending emergencies or there is urgent work to be performed on machineries,

equipment or installations to avoid serious loss which the employer would otherwise suffer; and

(d)

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Where the work is necessary to prevent serious loss of perishable goods.

Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be considered as compensable

working time.

Thus, the eight-hour work period does not include the meal break. Nowhere in the law may it be inferred that

employees must take their meals within the company premises. Employees are not prohibited from going out

of the premises as long as they return to their posts on time. Private respondent's act, therefore, of going home

to take his dinner does not constitute abandonment.

We now go to the award of moral damages to private respondent.

Not every employee who is illegally dismissed or suspended is entitled to damages. As a rule, moral damages

are recoverable only where the dismissal or suspension of the employee was attended by bad faith or fraud,

or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public

policy.[6] Bad faith does not simply mean negligence or bad judgment. It involves a state of mind dominated

by ill will or motive. It implies a conscious and intentional design to do a wrongful act for a dishonest purpose

or some moral obliquity.[7] The person claiming moral damages must prove the existence of bad faith by clear

and convincing evidence for the law always presumes good faith.[8]

In the case at bar, there is no showing that the management of petitioner company was moved by some evil

motive in suspending private respondent. It suspended private respondent on an honest, albeit erroneous,

belief that private respondent's act of leaving the company premises to take his meal at home constituted

abandonment of post which warrants the penalty of suspension. Also, it is evident from the facts that petitioner

gave private respondent all the opportunity to refute the charge against him and to defend himself. These

negate the existence of bad faith on the part of petitioner. Under the circumstances, we hold that private

respondent is not entitled to moral damages.

IN VIEW WHEREOF, the petition is PARTIALLY GRANTED. The portion of the assailed decision awarding

moral damages to private respondent is DELETED. All other aspects of the decision are AFFIRMED.

SO ORDERED

Teofilo Arica v. NLRC

ACTS:
19 of 31
This case stemmed from a complaint filed against private
respondent Stanfilco for assembly time, moral damages and
attorney’s fees, with the Regional Arbitration- Davao City.
The Labor Arbiter rendered a decision in favor of private
respondent STANFILCO, holding that:

“We cannot but agree with respondent that the

pronouncement in that earlier case, i.e. the thirty-minute
assembly time long practiced cannot be considered waiting
time or work time and, therefore, not compensable, has
become the law of the case which can no longer be
disturbed without doing violence to the time-honored
principle of resjudicata.”

NLRC uphold the Labor Arbiters’ decision and declared

that:

“Surely, the customary functions referred to in the above-

quoted provision of the agreement includes the long-
standing practice and institutionalized non-
compensable assembly time. This, in effect, estopped
complainants from pursuing this case.

MR was denied hence this petition for review on certiorari.

Petitioners contend that the preliminary activities as
workers of respondents STANFILCO in the assembly area is
compensable as working time (from 5:30am to 6:00 am)
since these preliminary activities are necessarily and
primarily for private respondent’s benefit. These
preliminary activities of the workers are as follows-.

(a) First there is the roll call. Followed by getting their

individual work assignments from the foreman.
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(b) Then, they are individually required to accomplish the
Laborer’s Daily Accomplishment Report during which they
are often made to explain about their reported
accomplishment the following day.

(c) Then they go to the stockroom to get the working

materials, tools and equipment.

(d) Lastly, they travel to the field bringing with them their
tools, equipment and materials.

All these activities take 30 minutes to accomplish.

.Respondent avers that the instant complaint is not new

because it is the very same claim they brought against
respondent by the same group of rank and file employees in
the case of Arica vs. National Labor Relations Commission
which was filed before in a different case. The said case
involved a claim for “waiting time”, as the complainants
purportedly were required to assemble.

In the previous case, the 30-minute assembly time long

practiced and institutionalized by mutual consent of the
parties under their CBA cannot be considered as ‘waiting
time’ within the purview of Section 5, Rule 1, Book III of the
Rules and Regulations Implementing the Labor.

ISSUE:

WON the “assembly time” is compensable.

RULING:
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 1. The 30-minute assembly is a deeply-rooted, routinary
practice of the employees, and the proceedings
attendant thereto are not infected with complexities as
to deprive the workers the time to attend to other
personal pursuits. They are not new employees as to
require the company to deliver long briefings regarding
their respective work assignments. Their houses are
situated right on the area where the farms are located,
such that after the roll call, which does not necessarily
require the personal presence, they can go back to their
houses to attend to some chores. In short, they are not
subject to the absolute control of the company during
this period, otherwise, their failure to report in the
assembly time would justify the company to impose
disciplinary measures. The evidence of the case
demonstrates that the 30-minute assembly time was
not primarily intended for the interests of the employer,
but ultimately for the employees to indicate their
availability or non-availability for work during every
working day.
Herein petitioners are merely reiterating the very same
claim which they filed in Arica vs NLRC and which records
show had already long been considered terminated and
closed by this Court. Therefore, the NLRC can not be faulted
for ruling that petitioners’ claim is already barred by res
judicata.

Petition is DISMISSED for lack of merit and the decision of

the National Labor Relations Commission is AFFIRMED.

Hilario Rada v. NLRC

FACTS: "Petitioners initial employment with this Respondent was under a

Contract of Employment for a Definite Period dated July 7, 1977, copy of
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which is hereto attached and made an integral part hereof as Annex A
whereby Petitioner was hired as Driver for the construction supervision phase
of the Manila North Expressway Extension, Second Stage (hereinafter
referred to as MNEE Stage 2) for a term of about 24 months effective July 1,
1977.xxx"Highlighting the nature of Petitioners employment, Annex A
specifically provides as follows:chanrob1es virtual 1aw libraryIt is hereby
understood that the Employer does not have a continuing need for the
services of the Employee beyond the termination date of this contract and
that the Employees services shall automatically, and without notice, terminate
upon the completion of the above specified phase of the project; and that it is
further understood that the engagement of his/her services is coterminous
with the same and not with the whole project or other phases thereof wherein
other employees of similar position as he/she have been hired. (Par.
7,Emphasis supplied). "Petitioners first contract of employment expired on
June 30, 1979. Meanwhile, the main project, MNEE Stage 2, was not finished
on account of various constraints, not the least of which was inadequate
funding, and the same was extended and remained in progress beyond the
original period of 2.3 years. Fortunately for the Petitioner, at the time the first
contract of employment expired, Respondent was in need of Driver for the
extended project. Since Petitioner had the necessary experience and his
performance under the first contract of employment was found satisfactory,
the position of Driver was offered to Petitioner, which he accepted. Hence a
second Contract of Employment for a Definite Period of 10 months, that is,
from July 1, 1979 to April 30, 1980 was executed between Petitioner and
Respondent on July 7, 1979. . . "In March 1980 some of the areas or phases
of the project were completed, but the bulk of the project was yet to be
finished. By that time some of those project employees whose contracts of
employment expired or were about to expire because of the completion of
portions of the project were offered another employment in the remaining
portion of the project. Petitioner was among those whose contract was about
to expire, and since his service performance was satisfactory, respondent
renewed his contract of employment in April 1980, after Petitioner agreed to
the offer. Accordingly, a third contract of employment for a definite period was
executed by and between the Petitioner and the Respondent whereby the
Petitioner was again employed as Driver for 19 months, from May 1, 1980 to
November 30, 1981, . . ."This third contract of employment was subsequently
extended for a number of times, the last extension being for a period of 3
months, that is, from October 1, 1985 to December 31, 1985, . . . "The last
extension, from October 1, 1985 to December 31, 1985 (Annex E) covered by
an Amendment to the Contract of Employment with a Definite Period, was not
extended any further because Petitioner had no more work to do in the
project. This last extension was confirmed by a notice on November 28, 1985
duly acknowledged by the Petitioner the very next day, . . . "Sometime in the
2nd week of December 1985, Petitioner applied for Personnel Clearance with
Respondent dated December 9, 1985 and acknowledged having received the
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amount of P3,796.20 representing conversion to cash of unused leave credits
and financial assistance. Petitioner also released Respondent from all
obligations and or claims, etc. in a Release, Waiver and Quitclaim . . ." Culled
from the records, it appears that on May 20, 1987, petitioner filed before the
NLRC, National Capital Region, Department of Labor and Employment, a
Complaint for nonpayment of separation pay and overtime pay. Petitioner
filed an Amended Complaint alleging that he was illegally dismissed and that
he was not paid overtime pay although he was made to render three hours
overtime work from Monday to Saturday for a period of three years. Labor
Arbiter Dominador M. Cruz rendered a decision in favor of the petitioner.
Hence this petition. ISSUES: 1. WHETHER OR NOT PETITIONER IS
ILLEGALLY DISMISSED.2. WHETHER OR NOT PETITIONER IS ENTITLED
TO OVERTIME PAYHELD: 1. NO. From the foregoing, it is clear that
petitioner is a project employee considering that he does not belong to a
"work pool" from which the company would draw workers for assignment to
other projects at its discretion. It is likewise apparent from the facts obtaining
herein that petitioner was utilized only for one particular project, the MNEE
Stage 2 Project of respondent company. Hence, the termination of herein
petitioner is valid by reason of the completion of the project and the expiration
of his employment contract.2. YES. Anent the claim for overtime
compensation, we hold that petitioner is entitled to the same. The fact that he
picks up employees of Philnor at certain specified points along EDSA in going
to the project site and drops them off at the same points on his way back from
the field office going home to Marikina, Metro Manila is not merely incidental
to petitioners job as a driver. On the contrary, said transportation
arrangement had been adopted, not so much for the convenience of the
employees, but primarily for the benefit of the employer, herein
privateRespondent. Since the assigned task of fetching and delivering
employees is indispensable and consequently mandatory, then the time
required of and used by petitioner in going from his residence to the field
office and back, that is, from 5:30 A.M. to 7:00 A.M. and from 4:00 P.M. to
around 6:00 P.M., which the labor arbiter rounded off as averaging three
hours each working day, should be paid as overtime work. Quintessentially,
petitioner should be given overtime pay for the three excess hours of work
performed during working days from January, 1983 to December, 1985.8.

Pigcaulan v. Security and Credit Investigation

FACTS: It is not for an employee to prove non-payment of

benefits to which he is entitled by law. Rather, it is on the
employer that the burden of proving payment of these
claims rests.

24 of 31
Canoy and Pigcaulan were both employed by SCII as
security guards and were assigned to SCII’s different clients.
Subsequently, however, Canoy and Pigcaulan filed with the
Labor Arbiter separate complaints7 for underpayment of
salaries and non-payment of overtime, holiday, rest day,
service incentive leave and 13th month pays. These
complaints were later on consolidated as they involved the
same causes of action. Canoy and Pigcaulan, in support of
their claim, submitted their respective daily time
records reflecting the number of hours served and
their wages for the same. They likewise presented
itemized lists of their claims for the corresponding
periods served.

RESPONDENT MAINTAINS: that Canoy and Pigcaulan

were paid their just salaries and other benefits
under the law; that the salaries they received were above
the statutory minimum wage and the rates provided by the
Philippine Association of Detective and Protective Agency
Operators (PADPAO) for security guards; that their holiday
pay were already included in the computation of their
monthly salaries; that they were paid additional premium of
30% in addition to their basic salary whenever they were
required to work on Sundays and 200% of their salary for
work done on holidays; and, that Canoy and Pigcaulan were
paid the corresponding 13th month pay for the years 1998
and 1999. In support thereof, copies of payroll
listings8 and lists of employees who received their
13th month pay, for the said periods.
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LABOR ARBITER: (in favor of petitioner herein) held that
the payroll listings presented by the respondents did not
prove that Canoy and Pigcaulan were duly paid as same
were not signed by the latter or by any SCII officer. The 13th
month payroll was, however, acknowledged as sufficient
proof of payment, for it bears Canoy’s and Pigcaulan’s
signatures.

NLRC affirmed; CA however reversed in favor of

respondent.

Hence, the present Petition for Review on Certiorari [filed

by petitioner PIGCAULAN alone]

ISSUE: WON the Honorable Court of Appeals erred when it

dismissed the complaint allegedly due to absence of legal
and factual [bases] despite attendance of substantial
evidence in the records.

HELD: YES

There was no substantial evidence to support the grant of

overtime pay.

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The Labor Arbiter relied heavily on the itemized
computations they submitted which he considered as
representative daily time records to substantiate the award
of salary differentials. The NLRC then sustained the award
on the ground that there was substantial evidence of
underpayment of salaries and benefits.

We find that both the Labor Arbiter and the NLRC

erred in this regard. The handwritten itemized
computations are self-serving, unreliable and
unsubstantial evidence to sustain the grant of salary
differentials, particularly overtime pay. Unsigned
and unauthenticated as they are, there is no way of
verifying the truth of the handwritten entries stated
therein. Written only in pieces of paper and solely
prepared by Canoy and Pigcaulan, these
representative daily time records, as termed by the
Labor Arbiter, can hardly be considered as
competent evidence to be used as basis to prove that
the two were underpaid of their salaries.

Hence, in the absence of any concrete proof that additional

service beyond the normal working hours and days had
indeed been rendered, we cannot affirm the grant of
overtime pay to Pigcaulan.

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However, with respect to the award for holiday pay, service
incentive leave pay and 13th month pay, we affirm and rule
that Pigcaulan is entitled to these benefits [under the Labor
Code, Article 94-95].

SCII failed to show any other concrete proof by

means of records, pertinent files or similar
documents reflecting that the specific claims have
been paid. With respect to 13th month pay, SCII presented
proof that this benefit was paid but only for the years 1998
and 1999. To repeat, the burden of proving payment
of these monetary claims rests on SCII, being the
employer.

The CA erred in dismissing the claims instead of remanding

the case to the Labor Arbiter for a detailed computation of
the judgment award.

PETITION GRANTED. Pigcaulan is hereby declared

entitled to holiday pay and service incentive leave pay for
the years 1997-2000 and proportionate 13th month pay for
the year 2000. The case is REMANDED to the Labor
Arbiter for further proceedings to determine the exact
amount and to make a detailed computation of the monetary
benefits due

Mantrade Division Employees and Workers Union

v. Arbitrator Bacungan and Mantrade

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This is a petition for Certiorari and Mandamus filed by petitioner against arbitrator
Froilan M. Bacungan and Mantrade Development Corporation arising from the decision
of respondent arbitrator, the dispositive part of which reads as follows: jgc:chanrobles.com.ph

"CONSIDERING ALL THE ABOVE, We rule that Mantrade Development Corporation is

not under legal obligation to pay holiday pay (as provided for in Article 94 of the Labor
Code in the third official Department of Labor edition) to its monthly paid employees
who are uniformly paid by the month, irrespective of the number of working days
therein, with a salary of not less than the statutory or established minimum wage, and
this rule is applicable not only as of March 2, 1976 but as of November 1, 1974." cralaw virtua1aw library

Petitioner questions the validity of the pertinent section of the Rules and Regulations
Implementing the Labor Code as amended on which respondent arbitrator based his
decision.

On the other hand, respondent corporation has raised procedural and substantive
objections. It contends that petitioner is barred from pursuing the present action in
view of Article 263 of the Labor Code, which provides in part that "voluntary
arbitration awards or decisions shall be final, inappealable, and executory," as well as
the rules implementing the same; the pertinent provision of the Collective Bargaining
Agreement between petitioner and respondent corporation; and Article 2044 of the
Civil Code which provides that "any stipulation that the arbitrators’ award or decision
shall be final, is valid, without prejudice to Articles 2038, 2039, and 2040."
Respondent corporation further contends that the special civil action of certiorari does
not lie because respondent arbitrator is not an "officer exercising judicial functions"
within the contemplation of Rule 65, Section 1, of the Rules of Court; that the instant
petition raises an error of judgment on the part of respondent arbitrator and not an
error of jurisdiction; that it prays for the annulment of certain rules and regulations
issued by the Department of Labor, not for the annulment of the voluntary arbitration
proceedings; and that appeal by certiorariunder Section 29 of the Arbitration Law,
Republic Act No. 876, is not applicable to the case at bar because arbitration in labor
disputes is expressly excluded by Section 3 of said law. chanrobles law library : red

These contentions have been ruled against in the decision of this Court in the case of
Oceanic Bic Division (FFW) v. Romero, promulgated on July 16, 1984, wherein it
stated:jgc:chanrobles.com.ph

"We agree with the petitioner that the decisions of voluntary arbitrators must be given
the highest respect and as a general rule must be accorded a certain measure of
finality. This is especially true where the arbitrator chosen by the parties enjoys the
first rate credentials of Professor Flerida Ruth Pineda Romero, Director of the U.P. Law
Center and an academician of unquestioned expertise in the field of Labor Law. It is
not correct, however, that this respect precludes the exercise of judicial review over
their decisions. Article 262 of the Labor Code making voluntary arbitration awards
final, inappealable and executory, except where the money claims exceed
P100,000.00 or 40% of the paid-up capital of the employer or where there is abuse of
discretion or gross incompetence refers to appeals to the National Labor Relations
Commission and not to judicial review.

"In spite of statutory provisions making ‘final’ the decisions of certain administrative
agencies, we have taken cognizance of petitions questioning these decisions where
want of jurisdiction, grave abuse of discretion, violation of due process, denial of
substantial justice, or erroneous interpretation of the Law were brought to our
attention. . . .
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 x x x

"A voluntary arbitrator by the nature of her functions acts in a quasi-judicial capacity.
There is no reason why her decisions involving interpretation of law should be beyond
this Court’s review. Administrative officials are presumed to act in accordance with law
and yet we do not hesitate to pass upon their work where a question of law is
involved or where a showing of abuse of discretion in their official acts is properly
raised in petitions for certiorari." (130 SCRA 392, 399, 400-401)

In denying petitioner’s claim for holiday pay, respondent arbitrator stated that
although monthly salaried employees are not among those excluded from receiving
such additional pay under Article 94 of the Labor Code of the Philippines, to wit: chanrobles virtual lawlibrary

ART. 94. Right to holiday pay. — (a) Every worker shall be paid his regular daily wage
during regular holidays, except in retail and service establishments regularly
employing less than ten (10) workers;

(b) The employer may require an employee to work on any holiday but such employee
shall be paid compensation equivalent to twice his regular rate; and

(c) As used in this Article, "holiday" includes: New Year’s Day, Maundy Thursday,
Good Friday, the ninth of April, the first of May, the twelfth of June, the fourth of July,
the thirtieth of November, the twenty-fifth and the thirtieth of December, and the day
designated by law for holding a general election.

they appear to be excluded under Sec. 2, Rule IV, Book III of the Rules and
Regulations implementing said provision which reads thus: chanrob1es virtual 1aw library

SEC. 2. Status of employees paid by the month. — Employees who are uniformly paid
by the month, irrespective of the number of working days therein, with a salary of not
less than the statutory or established minimum wage shall be presumed to be paid for
all days in the month whether worked or not.

Respondent arbitrator further opined that respondent corporation does not have any
legal obligation to grant its monthly salaried employees holiday pay, unless it is
argued that the pertinent section of the Rules and Regulations implementing Section
94 of the Labor Code is not in conformity with the law, and thus, without force and
effect.

This issue was subsequently decided on October 24, 1984 by a division of this Court in
the case of Insular Bank of Asia and America Employees’ Union (IBAAEU) v. Inciong,
wherein it held as follows:jgc:chanrobles.com.ph

"WE agree with the petitioner’s contention that Section 2, Rule IV, Book III of the
implementing rules and Policy Instruction No. 9, issued by the then Secretary of Labor
are null and void since in the guise of clarifying the Labor Code’s provisions on holiday
pay, they in effect amended them by enlarging the scope of their exclusion (p. 11,
rec.)

"Article 94 of the Labor Code, as amended by P.D. 850, provides: chanrob1es virtual 1aw library

30 of 31
‘Art. 94. Right to holiday pay. — (a) Every worker shall be paid his regular daily wage
during regular holidays, except in retail and service establishments regularly
employing less than ten (10) workers . . .’

"The coverage and scope of exclusion of the Labor Code’s holiday pay provisions is
spelled out under Article 82 thereof which reads: chanrob1es virtual 1aw library

‘Art. 82. Coverage. — The provision of this Title shall apply to employees in all
establishments and undertakings, whether for profit or not, but not to government
employees, managerial employees, field personnel, members of the family of the
employer who are dependent on him for support, domestic helpers, persons, in the
personal service of another, and workers who are paid by results as determined by
the Secretary of Labor in appropriate regulations.’

x x x

"From the above-cited provisions, it is clear that monthly paid employees are not
excluded from the benefits of holiday pay. However, the implementing rules on
holiday pay promulgated by the then Secretary of Labor excludes monthly paid
employees from the said benefits by inserting under Rule IV, Book III of the
implementing rules, Section 2, which provides that: ‘employees who are uniformly
paid by the month, irrespective of the number of working days therein, with a salary
of not less than the statutory or established minimum wage shall be presumed to be
paid for all days in the month whether worked or not.’" (132 SCRA 663, 672-673).

This ruling was reiterated by the Court en banc on August 28, 1985 in the case of
Chartered Bank Employees Association v. Ople, wherein it added that: chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph

"The questioned Sec. 2, Rule IV, Book III of the Integrated Rules and the Secretary’s
Policy Instruction No. 9 add another excluded group, namely ‘employees who are
uniformly paid by the month.’ While the additional exclusion is only in the form of a
presumption that all monthly paid employees have already been paid holiday pay, it
constitutes a taking away or a deprivation which must be in the law if it is to be valid.
An administrative interpretation which diminishes the benefits of labor more than
what the statute delimits or withholds is obviously ultra vires." (138 SCRA 273, 282.
See also CBTC Employees Union v. , Clave, January 7, 1986, 141 SCRA 9.)

Lastly, respondent corporation contends that mandamus does not lie to compel the
performance of an act which the law does not clearly enjoin as a duty. True it is also
that mandamus is not proper to enforce a contractual obligation, the remedy being an
action for specific performance (Province of Pangasinan v. Reparations Commission,
November 29, 1977, 80 SCRA 376). In the case at bar, however, in view of the above
cited subsequent decisions of this Court clearly defining the legal duty to grant holiday
pay to monthly salaried employees, mandamus is an appropriate equitable remedy
(Dionisio v. Paterno, July 23, 1980, 98 SCRA 677; Gonzales v. Government Service
Insurance System, September 10, 1981, 107 SCRA 492).

WHEREFORE, the questioned decision of respondent arbitrator is SET ASIDE and

respondent corporation is ordered to GRANT holiday pay to its monthly salaried
employees. No costs.

SO ORDERED.

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