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Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No.

80774 May 31, 1988 SAN MIGUEL CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and RUSTICO VEGA, respondents. FELICIANO, J.: In line with an Innovation Program sponsored by petitioner San Miguel Corporation ("Corporation;" "SMC") and under which management undertook to grant cash awards to "all SMC employees ... except [ED-HO staff, Division Managers and higher-ranked personnel" who submit to the Corporation Ideas and suggestions found to be beneficial to the Corporation, private respondent Rustico Vega submitted on 23 September 1980 an innovation proposal. Mr. Vega's proposal was entitled "Modified Grande Pasteurization Process," and was supposed to eliminate certain alleged defects in the quality and taste of the product "San Miguel Beer Grande:" Title of Proposal Modified Grande Pasteurization Process Present Condition or Procedure At the early stage of beer grande production, several cases of beer grande full goods were received by MB as returned beer fulls (RBF). The RBF's were found to have sediments and their contents were hazy. These effects are usually caused by underpasteurization time and the pasteurzation units for beer grande were almost similar to those of the steinie. Proposed lnnovation (Attach necessary information) In order to minimize if not elienate underpasteurization of beer grande, reduce the speed of the beer grande pasteurizer thereby, increasing the pasteurization time and the pasteurization acts for grande beer. In this way, the self-life (sic) of beer grande will also be increased. 1 Mr. Vega at that time had been in the employ of petitioner Corporation for thirteen (1 3) years and was then holding the position of "mechanic in the Bottling Department of the SMC Plant Brewery situated in Tipolo, Mandaue City. Petitioner Corporation, however, did not find the aforequoted proposal acceptable and consequently refused Mr. Vega's subsequent demands for a cash award under the Innovation Program. On 22 February 1983., a Complaint 2 (docketed as Case No. RAB-VII-0170-83) was filed against petitioner Corporation with Regional Arbitration Branch No. VII (Cebu City) of the then.", Ministry of Labor and Employment. Frivate respondent Vega alleged there that his proposal "[had] been accepted by the methods analyst and implemented by the Corporation [in] October 1980," and that the same "ultimately and finally solved the problem of the Corporation in the production of Beer Grande." Private respondent thus claimed entitlement to a cash prize of P60,000.00 (the maximum award per proposal offered under the Innovation Program) and attorney's fees. In an Answer With Counterclaim and Position Paper, 3 petitioner Corporation alleged that private respondent had no cause of action. It denied ever having approved or adopted Mr. Vega's proposal as part of the Corporation's brewing procedure in the production of San Miguel Beer Grande. Among other things, petitioner stated that Mr. Vega's proposal was tumed down by the company "for lack of originality" and that the same, "even if implemented [could not] achieve the desired result." Petitioner further alleged that the Labor Arbiter had no jurisdiction, Mr. Vega having improperly bypassed the grievance machinery procedure prescribed under a then existing collective bargaining agreement between management and employees, and available

administrative remedies provided under the rules of the Innovation Program. A counterclaim for moral and exemplary damages, attorney's fees, and litigation expenses closed out petitioner's pleading. In an Order 4 dated 30 April 1986, the Labor Arbiter, noting that the money claim of complainant Vega in this case is "not a necessary incident of his employment" and that said claim is not among those mentioned in Article 217 of the Labor Code, dismissed the complaint for lack of jurisdiction. However, in a gesture of "compassion and to show the government's concern for the workingman," the Labor Arbiter also directed petitioner to pay Mr. Vega the sum of P2,000.00 as "financial assistance." The Labor Arbiter's order was subsequently appealed by both parties, private respondent Vega assailing the dismissal of his complaint for lack of jurisdiction and petitioner Corporation questioning the propriety of the award of "financial assistance" to Mr. Vega. Acting on the appeals, the public respondent National Labor Relations Commission, on 4 September 1987, rendered a Decision, 5 the dispositive portion of which reads: WHEREFORE, the appealed Order is hereby set aside and another udgment entered, order the respondent to pay the complainant the amount of P60,000.00 as explained above. SO ORDERED. In the present Petition for certiorari filed on 4 December 1987, petitioner Corporation, invoking Article 217 of the Labor Code, seeks to annul the Decision of public respondent Commission in Case No. RAB-VII-01 70-83 upon the ground that the Labor Arbiter and the Commission have no jurisdiction over the subject matter of the case. The jurisdiction of Labor Arbiters and the National Labor Relations Commission is outlined in Article 217 of the Labor Code, as last amended by Batas Pambansa Blg. 227 which took effect on 1 June 1982: ART. 217. Jurisdiction of Labor Arbiters and the commission. (a) The Labor Arbiters shall have theoriginal and exclusive jurisdiction to hear and decide within thirty (30) working days after submission of the case by the parties for decision, the following cases involving are workers, whether agricultural or non-agricultural: 1. Unfair labor practice cases; 2. Those that workers may file involving wages, hours of work and other terms and conditions of employment; 3. All money claims of workers, including those based on nonpayment or underpayment of wages, overtime compensation, separation pay and other benefits provided by law or appropriate agreement, except claims for employees' compensation, social security, medicare and maternity benefits; 4. Cases involving household services; and 5. Cases arising from any violation of Article 265 of this; Code, including questions involving the legality of strikes and lockouts. (b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters. (Emphasis supplied) While paragraph 3 above refers to "all money claims of workers," it is not necessary to suppose that the entire universe of money claims that might be asserted by workers against their employers has been absorbed into the original and exclusive jurisdiction of Labor Arbiters. In the first place, paragraph 3 should be read not in isolation from but rather within the context formed by paragraph 1 related to unfair labor practices), paragraph 2 (relating to claims concerning terms and conditions of employment), paragraph 4 (claims relating to household services, a particular species of employer-employee relations), and paragraph 5 (relating to certain activities prohibited to employees or to employers).<re||an1w> It is evident that there is a unifying element which runs through paragraphs 1 to 5 and that is, that they all refer to cases or disputes arising out of or in connection with an employer-employee relationship. This is, in other words, a situation where the rule of noscitur a sociis may be

usefully invoked in clarifying the scope of paragraph 3, and any other paragraph of Article 217 of the Labor Code, as amended. We reach the above conclusion from an examination of the terms themselves of Article 217, as last amended by B.P. Blg. 227, and even though earlier versions of Article 217 of the Labor Code expressly brought within the jurisdiction of the Labor Arbiters and the NLRC "cases arising from employer employee relations," 6 which clause was not expressly carried over, in printer's ink, in Article 217 as it exists today. For it cannot be presumed that money claims of workers which do not arise out of or in connection with their employer-employee relationship, and which would therefore fall within the general jurisdiction of the regular courts of justice, were intended by the legislative authority to be taken away from the jurisdiction of the courts and lodged with Labor Arbiters on an exclusive basis. The Court, therefore, believes and so holds that the money claims of workers" referred to in paragraph 3 of Article 217 embraces money claims which arise out of or in connection with the employer-employee relationship, or some aspect or incident of such relationship. Put a little differently, that money claims of workers which now fall within the original and exclusive jurisdiction of Labor Arbiters are those money claims which have some reasonable causal connection with the employeremployee relationship. Applying the foregoing reading to the present case, we note that petitioner's Innovation Program is an employee incentive scheme offered and open only to employees of petitioner Corporation, more specifically to employees below the rank of manager. Without the existing employer-employee relationship between the parties here, there would have been no occasion to consider the petitioner's Innovation Program or the submission by Mr. Vega of his proposal concerning beer grande; without that relationship, private respondent Vega's suit against petitioner Corporation would never have arisen. The money claim of private respondent Vega in this case, therefore, arose out of or in connection with his employment relationship with petitioner. The next issue that must logically be confronted is whether the fact that the money claim of private respondent Vega arose out of or in connection with his employment relation" with petitioner Corporation, is enough to bring such money claim within the original and exclusive jurisdiction of Labor Arbiters. In Molave Motor Sales, Inc. v. Laron, 7 the petitioner was a corporation engaged in the sale and repair of motor vehicles, while private respondent was the sales Manager of petitioner. Petitioner had sued private respondent for non-payment of accounts which had arisen from private respondent's own purchases of vehicles and parts, repair jobs on cars personally owned by him, and cash advances from the corporation. At the pre-trial in the lower court, private respondent raised the question of lack of jurisdiction of the court, stating that because petitioner's complaint arose out of the employer-employee relationship, it fell outside the jurisdiction of the court and consequently should be dismissed. Respondent Judge did dismiss the case, holding that the sum of money and damages sued for by the employer arose from the employer-employee relationship and, hence, fell within the jurisdiction of the Labor Arbiter and the NLRC. In reversing the order of dismissal and requiring respondent Judge to take cognizance of the case below, this Court, speaking through Mme. Justice Melencio-Herrera, said: Before the enactment of BP Blg. 227 on June 1, 1982, Labor Arbiters, under paragraph 5 of Article 217 of the Labor Code had jurisdiction over" all other cases arising from employer-employee relation, unless, expressly excluded by this Code." Even then, the principle followed by this Court was that, although a controversy is between an employer and an employee, the Labor Arbiters have no jurisdiction if the Labor Code is not involved. In Medina vs. Castro-Bartolome, 11 SCRA 597, 604, in negating jurisdiction of the Labor Arbiter, although the parties were an employer and two employees, Mr. Justice Abad Santos stated: The pivotal question to Our mind is whether or not the Labor Code has any relevance to the reliefs sought by the plaintiffs. For if the Labor Code has no relevance, any discussion concerning the statutes amending it and whether or not they have retroactive effect is unnecessary. It is obvious from the complaint that the plaintiffs have not alleged any unfair labor practice. Theirs is a simple action for damages for tortious acts allegedly committed by the defendants. Such being the case, the governing statute is the Civil Code and not the Labor

Code. It results that the orders under review are based on a wrong premise. And in Singapore Airlines Limited v. Pao, 122 SCRA 671, 677, the following was said: Stated differently, petitioner seeks protection under the civil laws and claims no benefits under the Labor Code. The primary relief sought is for liquidated damages for breach of a contractual obligation. The other items demanded are not labor benefits demanded by workers generally taken cognizance of in labor disputes, such as payment of wages, overtime compensation or separation pay. The items claimed are the natural consequences flowing from breach of an obligation, intrinsically a civil dispute. In the case below, PLAINTIFF had sued for monies loaned to DEFENDANT, the cost of repair jobs made on his personal cars, and for the purchase price of vehicles and parts sold to him. Those accounts have no relevance to the Labor Code. The cause of action was one under the civil laws, and it does not breach any provision of the Labor Code or the contract of employment of DEFENDANT. Hence the civil courts, not the Labor Arbiters and the NLRC should have jurisdiction. 8 It seems worth noting that Medina v. Castro-Bartolome, referred to in the above excerpt, involved a claim for damages by two (2) employees against the employer company and the General Manager thereof, arising from the use of slanderous language on the occasion when the General Manager fired the two (2) employees (the Plant General Manager and the Plant Comptroller). The Court treated the claim for damages as "a simple action for damages for tortious acts" allegedly committed by private respondents, clearly if impliedly suggesting that the claim for damages did not necessarily arise out of or in connection with the employer-employee relationship.Singapore Airlines Limited v. Pao, also cited in Molave, involved a claim for liquidated damages not by a worker but by the employer company, unlike Medina. The important principle that runs through these three (3) cases is that where the claim to the principal relief sought 9 is to be resolved not by reference to the Labor Code or other labor relations statute or a collective bargaining agreement but by the general civil law, the jurisdiction over the dispute belongs to the regular courts of justice and not to the Labor Arbiter and the NLRC. In such situations, resolution of the dispute requires expertise, not in labor management relations nor in wage structures and other terms and conditions of employment, but rather in the application of the general civil law. Clearly, such claims fall outside the area of competence or expertise ordinarily ascribed to Labor Arbiters and the NLRC and the rationale for granting jurisdiction over such claims to these agencies disappears. Applying the foregoing to the instant case, the Court notes that the SMC Innovation Program was essentially an invitation from petitioner Corporation to its employees to submit innovation proposals, and that petitioner Corporation undertook to grant cash awards to employees who accept such invitation and whose innovation suggestions, in the judgment of the Corporation's officials, satisfied the standards and requirements of the Innovation Program 10 and which, therefore, could be translated into some substantial benefit to the Corporation. Such undertaking, though unilateral in origin, could nonetheless ripen into an enforceable contractual (facio ut des) 11 obligation on the part of petitioner Corporation under certain circumstances. Thus, whether or not an enforceable contract, albeit implied arid innominate, had arisen between petitioner Corporation and private respondent Vega in the circumstances of this case, and if so, whether or not it had been breached, are preeminently legal questions, questions not to be resolved by referring to labor legislation and having nothing to do with wages or other terms and conditions of employment, but rather having recourse to our law on contracts. WEREFORE, the Petition for certiorari is GRANTED. The decision dated 4 September 1987 of public respondent National Labor Relations Commission is SET ASIDE and the complaint in Case No. RAB-VII-017083 is hereby DISMISSED, without prejudice to the right of private respondent Vega to file a suit before the proper court, if he so desires. No pronouncement as to costs. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 89621 September 24, 1991 PEPSI COLA DISTRIBUTORS OF THE PHILIPPINES, INC., represented by its Plant General Manager ANTHONY B. SIAN, ELEAZAR LIMBAB, IRENEO BALTAZAR & JORGE HERAYA, petitioners, vs. HON. LOLITA O. GAL-LANG, SALVADOR NOVILLA, ALEJANDRO OLIVA, WILFREDO CABAAS & FULGENCIO LEGO, respondents. Aurelio D. Menzon for petitioners. Mario P. Nicolasora co-counsel for petitioners. Papiano L. Santo for private respondents. CRUZ, J.:p The question now before us has been categorically resolved in earlier decisions of the Court that a little more diligent research would have disclosed to the petitioners. On the basis of those cases and the facts now before us, the petition must be denied. The private respondents were employees of the petitioner who were suspected of complicity in the irregular disposition of empty Pepsi Cola bottles. On July 16, 1987, the petitioners filed a criminal complaint for theft against them but this was later withdrawn and substituted with a criminal complaint for falsification of private documents. On November 26, 1987, after a preliminary investigation conducted by the Municipal Trial Court of Tanauan, Leyte, the complaint was dismissed. The dismissal was affirmed on April 8, 1988, by the Office of the Provincial Prosecutor. Meantime, allegedly after an administrative investigation, the private respondents were dismissed by the petitioner company on November 23, 1987. As a result, they lodged a complaint for illegal dismissal with the Regional Arbitration Branch of the NLRC in Tacloban City on December 1, 1987, and decisions manded reinstatement with damages. In addition, they instituted in the Regional Trial Court of Leyte, on April 4, 1988, a separate civil complaint against the petitioners for damages arising from what they claimed to be their malicious prosecution. The petitioners moved to dismiss the civil complaint on the ground that the trial court had no jurisdiction over the case because it involved employee-employer relations that were exclusively cognizable by the labor arbiter. The motion was granted on February 6, 1989. On July 6, 1989, however, the respondent judge, acting on the motion for reconsideration, reinstated the complaint, saying it was "distinct from the labor case for damages now pending before the labor courts." The petitioners then came to this Court for relief. The petitioners invoke Article 217 of the Labor Code and a number of decisions of this Court to support their position that the private respondents civil complaint for damages falls under the jurisdiction of the labor arbiter. They particularly cite the case of Getz Corporation v. Court of Appeals, 1 where it was held that a court of first instance had no jurisdiction over the complaint filed by a dismissed employee "for unpaid salary and other employment benefits, termination pay and moral and exemplary damages." We hold at the outset that the case is not in point because what was involved there was a claim arising from the alleged illegal dismissal of an employee, who chose to complain to the regular court and not to the labor arbiter. Obviously, the claim arose from employee-employer relations and so came under Article 217 of the Labor Code which then provided as follows: ART. 217. Jurisdiction of Labor Arbiters and the Commission. (a) The Labor Arbiters shall have the original and exclusive jurisdiction to hear and decide within thirty (30)

working days after submission of the case by the parties for decision, the following cases involving all workers, whether agricultural or non-agricultural: 1. Unfair labor practice cases; 2. Those that workers may file involving wages, hours of work and other terms and conditions of employment; 3. All money claims of workers, including those based on non-payment or underpayment of wages, overtime compensation, separation pay and other benefits provided by law or appropriate agreement, except claims for employees' compensation, social security, medicare and maternity benefits; 4. Cases involving household services; and 5. Cases arising from any violation of Article 265 of this Code, including questions involving the legality of strikes and lockouts. (b) The Commission shall have exclusive appellate jurisdiction over all cases decided by labor Arbiters. 2 It must be stressed that not every controversy involving workers and their employers can be resolved only by the labor arbiters. This will be so only if there is a "reasonable causal connection" between the claim asserted and employee-employer relations to put the case under the provisions of Article 217. Absent such a link, the complaint will be cognizable by the regular courts of justice in the exercise of their civil and criminal jurisdiction. In Medina v. Castro-Bartolome, 3 two employees filed in the Court of First Instance of Rizal a civil complaint for damages against their employer for slanderous remarks made against them by the company president. On the order dismissing the case because it came under the jurisdiction of the labor arbiters, Justice Vicente Abad Santos said for the Court: It is obvious from the complaint that the plaintiffs have not alleged any unfair labor practice. Theirs is a simple action for damages for tortious acts allegedly committed by the defendants. Such being the case, the governing statute is the Civil Code and not the Labor Code. It results that the orders under review are based on a wrong premise. In Singapore Airlines Ltd. v. Pao, 4 where the plaintiff was suing for damages for alleged violation by the defendant of an "Agreement for a Course of Conversion Training at the Expense of Singapore Airlines Limited," the jurisdiction of the Court of First Instance of Rizal over the case was questioned. The Court, citing the earlier case of Quisaba v. Sta. Ines Melale Veneer and Plywood, Inc., 5 declared through Justice Herrera: Stated differently, petitioner seeks protection under the civil laws and claims no benefits under the Labor Code. The primary relief sought is for liquidated damages for breach of a contractual obligation. The other items demanded are not labor benefits demanded by workers generally taken cognizance of in labor disputes, such as payment of wages, overtime compensation or separation pay. The items claimed are the natural consequences flowing from breach of an obligation, intrinsically a civil dispute. In Molave Sales, Inc. v. Laron, 6 the same Justice held for the Court that the claim of the plaintiff against its sales manager for payment of certain accounts pertaining to his purchase of vehicles and automotive parts, repairs of such vehicles, and cash advances from the corporation was properly cognizable by the Regional Trial Court of Dagupan City and not the labor arbiter, because "although a controversy is between an employer and an employee, the Labor Arbiters have nojurisdiction if the Labor Code is not involved." The latest ruling on this issue is found in San Miguel Corporation v. NLRC, 7 where the above cases are cited and the changes in Article 217 are recounted. That case involved a claim of an employee for a P60,000.00 prize for a proposal made by him which he alleged had been accepted and implemented by the defendant corporation in the processing of one of its beer products. The claim was filed with the labor arbiter, who dismissed it for lack of jurisdiction but was reversed by the NLRC on appeal. In setting aside the appealed decision and dismissing the complaint, the Court observed through Justice Feliciano:

It is the character of the principal relief sought that appears essential, in this connection. Where such principal relief is to be granted under labor legislation or a collective bargaining agreement, the case should fall within the jurisdiction of the Labor Arbiter and the NLRC, even though a claim for damages might be asserted as an incident to such claim. xxx xxx xxx Where the claim to the principal relief sought is to be resolved not by reference to the Labor Code or other labor relations statute or a collective bargaining agreement but by the general civil law, the jurisdiction over the dispute belongs to the regular courts of justice and not to the Labor Arbiter and the NLRC. In such situations, resolution of the dispute requires expertise, not in labor management relations nor in wage structures and other terms and conditions of employment, but rather in the application of the general civil law. Clearly, such claims fall outside the area of competence or expertise ordinarily ascribed to Labor Arbiters and the NLRC and the rationale for granting jurisdiction over such claims to these agencies disappears. xxx xxx xxx While paragraph 3 above refers to "all money claims of workers," it is not necessary to suppose that the entire universe of money claims that might be asserted by workers against their employers has been absorbed into the original and exclusive jurisdiction of Labor Arbiters. xxx xxx xxx For it cannot be presumed that money claims of workers which do not arise out of or in connection with their employer-employee relationship, and which would therefore fall within the general jurisdiction of the regular courts of justice, were intended by the legislative authority to be taken away from the jurisdiction of the courts and lodged with Labor Arbiters on an exclusive basis. The Court, therefore, believes and so holds that the 'money claims of workers" referred to in paragraph 3 of Article 217 embraces money claims which arise out of or in connection with the employer- employee relationship, or some aspect or incident of such relationship. Put a little differently, that money claims of workers which now fall within the original and exclusive jurisdiction of Labor Arbiters are those money claims which have some reasonable causal connection with the employeremployee relationship (Ibid.). The case now before the Court involves a complaint for damages for malicious prosecution which was filed with the Regional Trial Court of Leyte by the employees of the defendant company. It does not appear that there is a "reasonable causal connection" between the complaint and the relations of the parties as employer and employees. The complaint did not arise from such relations and in fact could have arisen independently of an employment relationship between the parties. No such relationship or any unfair labor practice is asserted. What the employees are alleging is that the petitioners acted with bad faith when they filed the criminal complaint which the Municipal Trial Court said was intended "to harass the poor employees" and the dismissal of which was affirmed by the Provincial Prosecutor "for lack of evidence to establish even a slightest probability that all the respondents herein have committed the crime imputed against them." This is a matter which the labor arbiter has no competence to resolve as the applicable law is not the Labor Code but the Revised Penal Code. "Talents differ, all is well and wisely put," so observed the philosopher-poet. 8 So it must be in the case we here decide. WHEREFORE, the order dated July 6, 1989, is AFFIRMED and the petition DENIED, with costs against the petitioner. SO ORDERED. G.R. No. L-59825 September 11, 1982

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION ERNESTO MEDINA and JOSE G. ONG, petitioners, vs. HON. FLORELIANA CASTRO-BARTOLOME in her capacity as Presiding Judge of the Court of First Instance Cf Rizal, Branch XV, Makati, Metro Manila, COSME DE ABOITIZ and PEPSI-COLA BOTTLING COMPANY OF THE PHILIPPINES, INC., respondents. ABAD SANTOS, J.: Civil Case No. 33150 of the Court of First Instance of Rizal Branch XV, was filed in May, 1979, by Ernesto Medina and Jose G. Ong against Cosme de Aboitiz and Pepsi-Cola Bottling Co. of the Philippines, Inc. Medina was the former Plant General Manager and Ong was the former Plant Comptroller of the company. Among the averments in the complaint are the following: 3. That on or about 1:00 o'clock in the afternoon of December 20, 1977, defendant Cosme de Aboitiz, acting in his capacity as President and Chief Executive Officer of the defendant Pepsi-Cola Bottling Company of the Philippines, Inc., went to the Pepsi-Cola Plant in Muntinlupa, Metro Manila, and without any provocation, shouted and maliciously humiliated the plaintiffs with the use of the following slanderous language and other words of similar import uttered in the presence of the plaintiffs' subordinate employees, thusGOD DAMN IT. YOU FUCKED ME UP ... YOU SHUT UP! FUCK YOU! YOU ARE BOTH SHIT TO ME! YOU ARE FIRED (referring to Ernesto Medina). YOU TOO ARE FIRED! '(referring to Jose Ong ) 4. That on January 9, 1978, the herein plaintiffs filed a joint criminal complaint for oral defamation against the defendant Cosme de Aboitiz duly supported with respective affidavits and corroborated by the affidavits of two (2) witnesses: Isagani Hernandez and Jose Ganseco II, but after conducting a preliminary investigation, Hon. Jose B. Castillo, dismissed the complaint allegedly because the expression "Fuck you and "You are both shit to me" were uttered not to slander but to express anger and displeasure; 5. That on February 8, 1978, plaintiffs filed a Petition for Review with the office of the Secretary of Justice (now Ministry of Justice) and on June 13, 1978, the Deputy Minister of Justice, Catalino Macaraig, Jr., issued a resolution sustaining the plaintiff's complaint, reversing the resolution of the Provincial Fiscal and directing him to file against defendant Cosme de Aboitiz an information for Grave Slander. ... ; 6. That the employment records of plaintiffs show their track performance and impeccable qualifications, not to mention their long years of service to the Company which undoubtedly caused their promotion to the two highest positions in Muntinlupa Plant having about 700 employees under them with Ernesto Medina as the Plant General Manager receiving a monthly salary of P6,600.00 excluding other perquisites accorded only to top executives and having under his direct supervision other professionals like himself, including the plaintiff Jose G. Ong, who was the Plant Comptroller with a basic monthly salary of P4,855.00; 7. That far from taking these matters into consideration, the defendant corporation, acting through its President, Cosme de Aboitiz, dismissed and slandered the plaintiffs in the presence of their subordinate employees although this could have been done in private; 8. That the defendants have evidently enjoyed the act of dismissing the plaintiffs and such dismissal was planned to make it as humiliating as possible because instead of allowing a lesser official like the Regional Vice President to take whatever action was necessary

under the circumstances, Cosme de Aboitiz himself went to the Muntinlupa Plant in order to publicly upbraid and dismiss the plaintiffs; 9. That the defendants dismissed the plaintiffs because of an alleged delay in the use of promotional crowns when such delay was true with respect to the other Plants, which is therefore demonstrative of the fact that Cosme de Aboitiz did not really have a strong reason for publicly humiliating the plaintiffs by dismissing them on the spot; 10. That the defendants were moved by evil motives and an anti-social attitude in dismissing the plaintiffs because the dismissal was effected on the very day that plaintiffs were awarded rings of loyalty to the Company, five days before Christmas and on the day when the employees' Christmas party was held in the Muntinlupa Plant, so that when plaintiffs went home that day and found their wives and children already dressed up for the party, they didn't know what to do and so they cried unashamedly; xxx xxx xxx 20. That because of the anti-social manner by which the plaintiffs were dismissed from their employment and the embarrassment and degradation they experience in the hands of the defendants, the plaintiffs have suffered and will continue to suffer wounded feelings, sleepless nights, mental torture, besmirched reputation and other similar injuries, for which the sum of P150,000.00 for each plaintiff, or the total amount. of P300,000.00 should be awarded as moral damages; 21. That the defendants have demonstrated their lack of concern for the rights and dignity of the Filipino worker and their callous disregard of Philippine labor and social legislation, and to prevent other persons from following the footsteps of defendants, the amount of P50,000.00 for each plaintiff, or the total sum of P100,000.00, should be awarded as exemplary damages; 22. That plaintiffs likewise expect to spend no less than P5,000.00 as litigation expenses and were constrained to secure the services of counsel for the protection and enforcement of their rights for which they agreed to pay the sum of P10,000.00 and P200.00 per appearance as and for attorney's fees. The complaint contains the following: PRAYER WHEREFORE, in view of all the foregoing. it is most respectfully that after proper notice and hearing, judgment be rendered for the plaintiffs and against the defendants ordering them, jointly and solidarily, to pay the plaintiffs the sums of: 1. Unrealized income in such sum as will be established during the trial; 2. P300,000.00 as moral damages; 3. P100,000.00 by way of exemplary damages: 4. P5,000.00 as litigation expenses; 5. P10,000.00 and P200.00 per appearance as and for attorney's fees; and 6. Costs of this suit. Plaintiffs also pray for such further reliefs and remedies as may be in keeping with justice and equity. On June 4, 1979, a motion to dismiss the complaint on the ground of lack of jurisdiction was filed by the defendants. The trial court denied the motion on September 6, 1979, in an order which reads as follows:

Up for resolution by the Court is the defendants' Motion to Dismiss dated June 4, 1979, which is basically anchored on whether or not this Court has jurisdiction over the instant petition. The complaint alleges that the plaintiffs' dismissal was without any provocation and that defendant Aboitiz shouted and maliciously humiliated plaintiffs and used the words quoted in paragraph 3 thereof. The plaintiffs further allege that they were receiving salaries of P6,600.00 and P4,855.00 a month. So the complaint for civil damages is clearly not based on an employer-employee relationship but on the manner of plaintiffs' dismissal and the effects flowing therefrom. (Jovito N. Quisaba vs, Sta. Ines-Melale Veneer & Plywood Co., Inc., et al., No. L-38088, Aug. 30,1974.) This case was filed on May 10, 1979. The amendatory decree, P.D. 1367, which took effect on May 1, 1978 and which provides that Regional Directors shall not indorse and Labor Arbiters shall not entertain claims for moral or other forms of damages, now expressly confers jurisdiction on the courts in these cases, specifically under the plaintiff's causes of action. Because of the letter dated January 4, 1978 and the statement of plaintiff Medina that his receipt of the amount from defendant company was done "under strong protest," it cannot be said that the demands set forth in the complaint have been paid, waived or other extinguished. In fact, in defendants' Motion to Dismiss, it is stated that 'in the absence of a showing that there was fraud, duress or violence attending said transactions, such Release and Quitclaim Deeds are valid and binding contracts between them, which in effect admits that plaintiffs can prove fraud, violence, duress or violence. Hence a cause of action for plaintiffs exist. It is noticed that the defamatory remarks standing alone per se had been made the sole cause under the first cause of action, but it is alleged in connection with the manner in which the plaintiffs had been dismissed, and whether the statute of limitations would apply or not would be a matter of evidence. IT has been alreadly settled by jurisprudence that mere asking for reinstatement does not remove from the CFI jurisdiction over the damages. The case must involve unfair labor practices to bring it within the jurisdiction of the CIR (now NLRC). WHEREFORE, the defendants' Motion to Dismiss dated June 4, 1979 is hereby denied. The defendants are hereby directed to interpose their answer within ten (10) days from receipt hereof. While the trial was underway, the defendants filed a second motion to dismiss the complaint dated January 23, 1981, because of amendments to the Labor Code immediately prior thereto. Acting on the motion, the trial court issued on May 23, 1981, the following order: Up for resolution by the Court is the defendants' Motion to Dismiss dated January 23, 1981, on grounds not existing when the first Motion to Dismiss dated June 4, 1979 was interposed. The ground relied upon is the promulgation of P.D. No. 1691 amending Art. 217 of the Labor Code of the Philippines and Batasan Pambansa Bldg. 70 which took effect on May 1, 1980, amending Art. 248 of the Labor Code. The Court agrees with defendants that the complaint alleges unfair labor practices which under Art. 217 of the Labor Code, as amended by P.D. 1691, has vested original and exclusive jurisdiction to Labor Arbiters, and Art. 248, thereof ... "which may include claims for damages and other affirmative reliefs." Under the amendment, therefore, jurisdiction over employee-employer relations and claims of workers have been removed from the Courts of First Instance. If it is argued that this case did not arise from employer-employee relation, but it cannot be denied that this case would not have arisen if the plaintiffs had not been employees of defendant Pepsi-Cola. Even the alleged defamatory remarks

made by defendant Cosme de Aboitiz were said to plaintiffs in the course of their employment, and the latter were dismissed from such employment. Hence, the case arose from such employer-employee relationship which under the new Presidential Decree 1691 are under the exclusive, original jurisdiction of the labor arbiters. The ruling of this Court with respect to the defendants' first motion to dismiss, therefore, no longer holds as the positive law has been subsequently issued and being a curative law, can be applied retroactively (Garcia v. Martinez, et al., L-47629, May 28, 1979; 90 SCRA 331333). It will also logically follow that plaintiffs can reinterpose the same complaint with the Ministry of Labor. WHEREFORE, let this case be, as it is hereby ordered, dismissed, without pronouncement as to costs. A motion to reconsider the above order was filed on July 7, 1981, but it was only on February 8, 1982, or after a lapse of around seven (7) months when the motion was denied. Plaintiffs have filed the instant petition pursuant to R. A. No. 5440 alleging that the respondent court committed the following errors: IN DIVESTING ITSELF OF ITS JURISDICTION TO HEAR AND DECIDE CIVIL CASE NO. 33150 DESPITE THE FACT THAT JURISDICTION HAD ALREADY ATTACHED WHICH WAS NOT OUSTED BY THE SUBSEQUENT ENACTMENT OF PRESIDENTIAL DECREE 1691; IN HOLDING THAT PRESIDENTIAL DECREE 1691 SHOULD BE GIVEN A RETROSPECTIVE EFFECT WHEN PRESIDENTIAL DECREE 1367 WHICH WAS IN FORCE WHEN CIVIL CASE NO. 33150 WAS FILED AND TRIAL THEREOF HAD COMMENCED, WAS NEVER EXPRESSLY REPEALED BY PRESIDENTIAL DECREE 1691, AND IF EVER THERE WAS AN IMPLIED REPEAL, THE SAME IS NOT FAVORED UNDER PREVAILED JURISPRUDENCE; IN HOLDING THAT WITH THE REMOVAL BY PRESIDENTIAL DECREE 1691 OF THE PROVISO INSERTED IN ARTICLE 217 OF THE LABOR CODE BY PRESIDENTIAL DECREE 1367, THE LABOR ARBITERS HAVE ACQUIRED JURISDICTION OVER CLAIMS FOR DAMAGES ARISING FROM EMPLOYER-EMPLOYEE RELATIONS TO THE EXCLUSION OF THE REGULAR COURTS, WHEN A READING OF ARTICLE 217 WITHOUT THE PROVISO IN QUESTION READILY REVEALS THAT JURISDICTION OVER DAMAGE CLAIMS IS STILL VESTED WITH THE REGULAR COURTS; IN DISMISSING FOR LACK OF JURISDICTION CIVIL CASE NO. 33150 THEREBY VIOLATING THE CONSTITUTIONAL RIGHTS OF THE PETITIONERS NOTABLY THEIR RIGHT TO DUE PROCESS. The pivotal question to Our mind is whether or not the Labor Code has any relevance to the reliefs sought by the plaintiffs. For if the Labor Code has no relevance, any discussion concerning the statutes amending it and whether or not they have retroactive effect is unnecessary. It is obvious from the complaint that the plaintiffs have not alleged any unfair labor practice. Theirs is a simple action for damages for tortious acts allegedly committed by the defendants. Such being the case, the governing statute is the Civil Code and not the Labor Code. It results that the orders under review are based on a wrong premise. WHEREFORE, the petition is granted; the respondent judge is hereby ordered to reinstate Civil Case No. 33150 and render a decision on the merits. Costs against the private respondents. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 79004-08 October 4, 1991 FRANKLIN BAGUIO AND 15 OTHERS, BONIFACIO IGOT AND 6 OTHERS, ROY MAGALLANES AND 4 OTHERS, CLAUDIO BONGO, EDUARDO ANDALES and 4 OTHERS, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION (3rd DIVISION), GENERAL MILLING CORPORATION and/or FELICIANO LUPO, respondents. MELENCIO-HERRERA, J.: The liability of an employer in job contracting, vis-a-vis his contractor's employees, is the sole issue brought to the fore in this labor dispute. This Petition for certiorari seeks to set aside the Resolution, dated 27 February 1987, of public respondent National Labor Relations Commission (NLRC), Third Division, which reversed the Resolution of its First Division, dated 27 December 1985, and absolved private respondent General Milling Corporation (GMC) from any and all liability to petitioners. Sometime in 1983, private respondent Feliciano LUPO, a building contractor, entered into a contract with GMC, a domestic corporation engaged in flour and feeds manufacturing, for the construction of an annex building inside the latter's plant in Cebu City. In connection with the aforesaid contract, LUPO hired herein petitioners either as carpenters, masons or laborers. Subsequently, LUPO terminated petitioners' services, on different dates. As a result, petitioners filed Complaints against LUPO and GMC before the NLRC Regional Arbitration Branch No. VII, Cebu City, for unpaid wages, COLA differentials, bonus and overtime pay. In a Decision, dated 21 November 1984, the Executive Labor Arbiter, Branch VII, found LUPO and GMC jointly and severally liable to petitioners, premised on Article 109 of the Labor Code, infra, and ordered them to pay the aggregate amount of P95,382.92. Elevated on appeal on 14 December 1984, the NLRC (First Division) denied the same for lack of merit in a Resolution, dated 27 December 1985. Upon Motion for Reconsideration, filed on 27 February 1986, the case was reassigned to the Third Division. In a Resolution of 27 February 1987, that Division absolved GMC from any liability. It opined that petitioners were only hired by LUPO as workers in his construction contract with GMC and were never meant to be employed by the latter. Petitioners now assail that judgment in this Petition for Certiorari. Petitioners contend that GMC is jointly and severally liable with LUPO for the latter's obligations to them. They seek recovery from GMC based on Article 106 of the Labor Code, infra, which holds the employer jointly and severally liable with his contractor for unpaid wages of employees of the latter. In his "Manifestation in lieu of Comment," the Solicitor General recognizes the solidary liability of GMC and LUPO but bases recovery on Article 108 of the Labor Code, infra, contending that inasmuch as GMC failed to require them LUPO a bond to answer for the latter's obligations to his employees, as required by said provision, GMC should, correspondingly, be deemed solidarily liable. In their respective Comments, both GMC and the NLRC maintain that Article 106 finds no application in the instant case because it is limited to situations where the work being performed by the contractor's employees are directly related to the principal business of the employer. The NLRC further opines that Article 109 on "Solidary Liability" finds no application either because GMC was neither petitioners' employer nor indirect employer. Upon the facts and circumstances, we uphold the solidary liability of GMC and LUPO for the latter's liabilities in favor of employees whom he had earlier employed and dismissed.

Recovery, however, should not be based on Article 106 of the Labor Code. This provision treats specifically of "labor-only" contracting, which is not the set-up between GMC and LUPO. Article 106 provides: Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person for the performance of the former's work, the employees of the contractor and of the latter's subcontractor, if any, shall be paid in accordance with the provisions of this Code. In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. xxx xxx xxx There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such persons are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him (Emphasis supplied). In other words, a person is deemed to be engaged in "labor only" contracting where (1) the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others; and (2) the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer (See Section 9, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code; emphasis supplied). Since the construction of an annex building inside the company plant has no relation whatsoever with the employer's business of flour and feeds manufacturing, "labor-only" contracting does not exist. Article 106 is thus inapplicable. Instead, it is "job contracting," covered by Article 107, which is involved, reading: Art. 107. Indirect Employer. The provisions of the immediately preceding Article shall likewise apply to any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project. (Emphasis supplied). Specifically, there is "job contracting" where (1) the contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and (2) the contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of his business. It may be that LUPO subsequently ran out of capital and was unable to satisfy the award to petitioners. That was an after-the-fact development, however, and does not detract from his status as an independent contractor. Based on the foregoing, GMC qualifies as an "indirect employer." It entered into a contract with an independent contractor, LUPO, for the construction of an annex building, a work, task, job or project not directly related to GMC's business of flour and feeds manufacturing. Being an "indirect employer," GMC is solidarily liable with LUPO for any violation of the Labor Code pursuant to Article 109 thereof, reading: Art. 109. Solidary Liability. The provisions of existing laws to the contrary notwithstanding, every employer or indirect employer shall be held responsible with a

contractor or subcontractor for any violation of any provision of this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be considered as direct employers. The provision of existing law referred to is Article 1728 of the Civil Code, which states, among others, that "the contractor is liable for all the claims of laborers and others employed by him ..." The foregoing interpretation finds a precedent in the case o Deferia v. NLRC (G.R. No. 78713, 27 February 1991) per Sarmiento, J., where Articles 107 and 109 were applied as the statutory basis for the joint and several liability of the employer with his contractor, in addition to Article 106, since the situation in that case was clearly one of "labor-only" contracting. The NLRC submission that Article 107 is not applicable in the instant case for the reason that the coverage thereof is limited to one "not an employer" whereas GMC is such an employer as defined in Article 97 (b) of the Labor Code, 1 is not well-taken. Under the peculiar set-up herein, GMC is, in fact, "not an employer" (in the sense of not being a direct employer) as understood in Article 106 of the Labor Code, but qualifies as an "indirect employer" under Article 107 of said Code. The distinction between Articles 106 and 107 was in the fact that Article 106 deals with "labor-only" contracting. Here, by operation of law, the contractor is merely considered as an agent of the employer, who is deemed "responsible to the workers to the same extent as if the latter were directly employed by him." On the other hand, Article 107 deals with "job contracting." In the latter situation, while the contractor himself is the direct employer of the employees, the employer is deemed, by operation of law, as an indirect employer. In other words, the phrase "not an employer" found in Article 107 must be read in conjunction with Article 106. A contrary interpretation would render the provisions of Article 107 meaningless considering that everytime an employer engages a contractor, the latter is always acting in the interest of the former, whether directly or indirectly, in relation to his employees. It should be recalled that a finding that a contractor is a "labor-only" contractor is equivalent to declaring that there is an employer-employee relationship between the owner of the project and the employees of the "laboronly" contractor (Associated Anglo-American Tobacco Corp. v. Clave, G.R. No. 50915, 30 August 1990, 189 SCRA 127; Industrial Timber Corp. v. NLRC, G.R. No. 83616, 20 January 1989, 169 SCRA 341). This is evidently because, as heretofore stated, the "labor-only" contractor is considered as a mere agent of an employer. In contrast, in "job contracting," no employer-employee relationship exists between the owner and the employees of his contractor. The owner of the project is not the direct employer but merely an indirect employer, by operation of law, of his contractor's employees. As an indirect employer, and for purposes of determining the extent of its civil liability, GMC is deemed a "direct employee" of his contractor's employees pursuant to the last sentence of Article 109 of the Labor Code. As a consequence, GMC can not escape its joint and solidary liability to petitioners. Further, Article 108 of the Labor Code requires the posting of a bond to answer for wages that a contractor fails to pay, thus: Article 108. Posting of Bond. An employer or indirect employer may require the contractor or subcontractor to furnish a bond equal to the cost of labor under contract, on condition that the bond will answer for the wages due the employees showed the contractor or subcontractor, as the case may be, fails to pay the same. Having failed to require LUPO to post such a bond, GMC must answer for whatever liabilities LUPO may have incurred to his employees. This is without prejudice to its seeking reimbursement from LUPO for whatever amount it will have to pay petitioners. WHEREFORE, the Petition for certiorari is GRANTED. The Resolution of respondent NLRC, Third Division, dated 27 February 1987, is hereby SET ASIDE, and the Decision of the Labor Arbiter, dated 21 November 1984, is hereby REINSTATED. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. Nos. 100376-77 June 17, 1994 DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, GODOFREDO MORILLO, JR., SUNDAY BACEA, ALFREDO COS and ROGELIO VILLANUEVA, respondents. Vicente T. Cuison for petitioner. Tamondong, Wong, Cos, & Associates for private respondent. PADILLA, J.: This petition for review on certiorari (here treated as a petition for certiorari under Rule 65, Rules of Court) seeks to reverse and set aside the Resolution dated 11 June 1991 of respondent National Labor Relations Commission ("NLRC") in NLRC NCR Case Nos. 00-09-03383-87 and 00-10-03562-87, denying petitioners motion for reconsideration, the dispositive part of which reads: Accordingly, the Banks motion for reconsideration is hereby denied. The responsible officers of the Bank and its counsel are hereby warned, under pain of contempt, that we shall not tolerate their further delaying the execution of the subject award. 1 Private respondents Godofredo Morillo, Sunday Bacea, Alfredo Cos and Rogelio Villanueva were hired as security guards by Confidential Investigation and Security Corporation ("CISCOR") on 19 May 1981, 21 August 1984, 22 January 1985, and 27 November 1985, respectively. In the course of their employment, private respondents were assigned to secure the premises of CISCORs clients, among them, the herein petitioner, Development Bank of the Philippines ("DBP") which, in turn, assigned private respondents to secure one of its properties or assets, the Riverside Mills Corporation. On 11 August 1987, private respondent Villanueva resigned from CISCOR. On 15 August 1987, private respondents Morillo, Bacea and Cos followed suit in resigning from CISCOR. Thereafter, private respondents claimed from CISCOR the return of their cash bond and payment of their 13th month pay and service incentive leave pay. For failure of CISCOR to grant their claims, private respondents Villanueva and Cos filed against CISCOR and its President/Manager Ernesto Medina NLRC NCR Case No. 00-10-3562-87 on 13 October 1987, while private respondents Morillo and Bacea filed NLRC NCR Case No. 00-09-3383-87 on 29 September 1987. In said two (2) cases, private respondents sought recovery of their cash bond, payment of 13th month pay, and their five-day service incentive leave pay. The two (2) cases were consolidated and assigned to Labor Arbiter Crescencio Iniego. In their position paper filed on 23 November 1987, private respondents (as complainants) alleged that they tendered their resignations in August 1987 upon the assurance of CISCOR that they would be paid the cash benefits due them. For failure of CISCOR to comply, private respondents claimed violations committed by CISCOR and Medina, specifically, the non-payment of their 13th month pay, five (5) day service incentive leave pay from the date of employment to the time of their separation, non-refund of their cash bond, non-payment of legal holiday pay and rest day pay. On the other hand, CISCOR and Medina in their position paper filed on 3 March 1988 admitted that private respondents were former security guards of CISCOR. They added, however, that sometime in 1987, petitioner allegedly formed its own security agency and pirated private respondents who tendered their voluntary resignations from CISCOR. Thereafter, when private respondents sought from CISCOR the return of their cash bond deposit, payment of 13th month pay and service incentive leave pay, CISCOR explained to private respondents that in view of the claim of petitioner that it incurred losses when private

respondents and their other co-security guards secured the premises of Riverside Mills Corporation, private respondents, prior to the payment of their claims, were asked to first secure an individual/agency clearance from petitioner to show that no losses were incurred while they were guarding Riverside Mills Corporation. Instead of getting such clearance from the petitioner, private respondents secured their clearance from CISCORs detachment commander. Hence, for failure to secure the required clearance, private respondents cash bond deposit, their proportionate 13th month pay and service incentive leave pay were withheld to answer for liabilities incurred while private respondents were guarding Riverside Mills Corporation. On 10 March 1988, CISCOR filed a motion with leave to implead petitioner bank and averred therein that in view of its contract with the petitioner whereby, for a certain service fee, CISCO R undertook to guard petitioners premises, both CISCOR and petitioner, under the Labor Code, are jointly and severally liable to pay the salaries and other statutory benefits due the private respondents, petitioner being an indispensable party to the case. On 11 March 1988, Labor Arbiter Iniego issued an order granting the aforesaid motion and including petitioner as one of the respondents therein. To this, private respondents filed their opposition and alleged, among others, that petitioner, not being an employer of the private respondents, was not a proper, necessary or indispensable party to the case. In answer, petitioner filed its position paper alleging therein that it was not made a respondent by the herein private respondents in their complaint, and that none of the original parties to the case (private respondents and CISCOR/Medina) interposed any claim against the petitioner. It further stated that it cannot be held liable to the claim of private respondents because there was no failure on the part of CISCOR and Medina to pay said claims. If CISCOR had apparently failed to pay private respondents claims, it was only due to the failure of private respondents to secure their individual clearance of accountability or agency clearance that there were no losses incurred while they were guarding Riverside Mills Corporation. On 12 July 1988, the Labor Arbiter rendered a decision, the dispositive part of which reads: WHEREFORE, judgment is hereby rendered ordering the respondents Confidential Investigation and Security Corporation, Mr. Ernesto Medina and Development Bank of the Philippines to pay the complainants the corresponding salary differential due them to be computed for the last three (3) years from the time they stopped working with the respondents sometime in August 1987. Confidential Investigation and Security Corporation is further ordered to return to the complainants their respective cash bond cited in this decision within a period of ten (10) days from receipt hereof. 2 From the above decision, CISCOR and Medina appealed to the NLRC. Petitioner likewise filed its Motion for Reconsideration/Appeal and prayed for the Labor Arbiter to modify his decision and make CISCOR and Medinasolely liable for the claims of private respondents, and to declare the award for salary differentials as null and void. In its Resolution of 24 January 1991, the NLRC held the petitioner DBP, CISCOR and Medina, as jointly and severally liable, the pertinent part of which reads: WHEREFORE, the decision appealed from is hereby modified. All the respondents (Confidential Investigation and Security Corporation, Ernesto Medina and the Development Bank of the Philippines) are hereby adjudged jointly and severally liable to the admitted claims for 13th month pay, 5 days incentive leave, and refund of cash bond, and accordingly, immediate execution is hereby directed against any of the aforesaid respondents without prejudice to their having lawful recourse against each other. Anent the award of wage differential and the claim for rest day and legal holiday pay, the same are hereby remanded to the Arbitration Branch of origin for further hearing with the directive that it be completed in 20 days from the Arbitration Branchs receipt of this Order. 3 Hence, this petition for review on certiorari, with petitioner DBP raising the following issues: 1. Whether or not the DBP is really liable for any of the claims of private respondents;

2. Whether or not the NLRC (or the Labor Arbiter) correctly applied Article 106 of the Labor Code; and 3. Whether or not the wage differential, rest day and legal holiday pay could and should be adjudicated in this case. The threshold and, in the ultimate analysis, the decisive issue raised by the present petition is whether petitioner was correctly held jointly and severally liable, alongside CISCOR and Medina, for the payment of the private respondents salary differentials, 13th month pay, service incentive leave pay, rest day pay, legal holiday pay, and the refund of their cash deposit. Petitioner posits that it is not the employer of private respondents and should thus not be held liable for the latters claims. In addition, it avers that it was not properly impleaded as it was CISCOR and Medina who filed the motion to implead petitioner, and not the private respondents, as complainants therein. Petitioner even goes further by countering that, assuming arguendo, it was the indirect employer of private respondents, Article 106 of the Labor Code 4 cannot be applied to the present case as there was no failure on the part of CISCOR and Medina, as direct employer, to pay the claims of private respondents, but only a failure on the part of the latter to present the proper clearance to pave the way for the payment of the claims. It emphasizes that the term "fails" in Article 106 of the Labor Code implies insolvency or unwillingness of the direct employer to pay, which cannot be said of CISCOR and Medina as they have manifested their willingness to pay private respondents claims after they have presented proper clearance from accountability. We are not persuaded by petitioners arguments. Petitioners interpretation of Article 106 of the Labor Code is quite misplaced. Nothing in said Article 106 indicates that insolvency or unwillingness to pay by the contractor or direct employer is a prerequisite for the joint and several liability of the principal or indirect employer. In fact, the rule is that in job contracting, the principal is jointly and severally liable with the contractor. The statutory basis for this joint and several liability is set forth in Articles 107 5 and 109 6 in relation to Article 106 of the Labor Code. 7 There is no doubt that private respondents are entitled to the cash benefits due them. The petitioner is also, no doubt, liable to pay such benefits because the law mandates the joint and several liability of the principal and the contractor for the protection of labor. In Eagle Security Agency, Inc. vs. NLRC, this Court, explaining the aforesaid liability, held: This joint and several liability of the contractor and the principal is mandated by the Labor Code to assure compliance of the provisions therein including the statutory minimum wage [Article 99, Labor Code]. The contractor is made liable by virtue of his status as direct employer. The principal, on the other hand, is made the indirect employer of the contractors employees for purposes of paying the employees their wages should the contractor be unable to pay them. This joint and several liability facilitates, if not guarantees, payment of the workers performance of any work, task, job or project, thus giving the workers ample protection as mandated by the 1987 Constitution [See Article II Sec. 18 and Article XIII Sec. 3]. 8 Neither may petitioner argue that it was not properly impleaded and hence, should not be made liable to the claims of private respondents. On this matter, petitioner cannot be absolved from responsibility. We sustain respondent Commissions holding that: Anent the Banks first issue, what we actually have here is a "Third-Party Complaint", defined by Section 12, Rule 6 of the Rules of Court as "a claim that a defending party may, with leave of court, file against a person not a party to the action, called the thirdparty defendant, for contribution, indemnity, subrogation or any other relief, in respect of his opponents claim" (emphasis ours). Since Rule I, Section 3 of our 1986 Revised NLRC Rules adopts suppletorily the Rules of Court "in the interest of expeditious labor justice and whenever practicable and convenient" with the Security Agencys impleading the Bank for indemnity and subrogation considering that the complainants worked with the Bank "to safeguard their premises, properties and their person" (Record, p. 76), such a third-party complaint would therefore be proper. That the bank has not disputed liability on

the admitted claims, but professes merely subsidiary, instead of solidary liability, we find its position here all the more, untenable. 9 Finally, petitioner submits that wage differential, rest day and legal holiday pay should not be adjudicated in this case. The respondent Commission, however, observed: Regarding the question of wage differential, we note that the complaint (Record, p. 1), as well as the complainants Position Paper (Record, pp. 5-10) do not mention about any wage differential claim. We do not therefore see any basis with which we may, on sight, affirm the said award. We note though that complainants position paper save technical arguments (that after all are not binding to us in this jurisdiction), sufficiently claims rest day and legal holiday pay, claims that were not strongly refuted by respondents. Impressed, although not convincingly, that the award on wage differential could have referred to the complainants claim for rest day and legal holiday pay, we therefore see the need to have the said claims subjected to further hearing but for a limited period of 20 days. 10 We note that in the present case, there is no claim for wage differentials either in the complaints or in the position paper filed by private respondents before the labor arbiter. Accordingly, no relief may be granted on such matter. We, however, agree with the respondent Commission in its stand that private respondents are entitled to rest day and holiday pay (aside from the refund of their cash bond and the payment of their 13th month pay and service incentive leave pay for 1989). Private respondents position paper submitted before the labor arbiter properly raised the two (2) issues (rest and holiday pay) and included the same in their prayer for relief. The computation of the amount due each individual security guard can be made during the additional hearings ordered by the Commission. WHEREFORE, premises considered, the questioned resolution of the respondent NLRC is hereby AFFIRMED with the modification that the additional hearing ordered by the NLRC shall not include wage differentials but shall be confined to legal holiday and rest day pay. Execution shall forthwith proceed as to the NLRC awards of 13th month pay, service incentive leave pay and return of private respondents cash bond. Petitioner and CISCOR/Medina are ORDERED to pay jointly and severally the claims of private respondents, as finally awarded by the NLRC, without prejudice to the right of reimbursement which petitioner or CISCOR/Medina may have against each other. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. Nos. 97008-09 July 23, 1993 VIRGINIA G. NERI and JOSE CABELIN, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION FAR EAST BANK & TRUST COMPANY (FEBTC) and BUILDING CARE CORPORATION, respondents. R.L. Salcedo & Improso Law Office for petitioners. Bengzon, Zarnaga, Narciso, Cudala, Pecson, Bengzon & Jimenez for Bldg. Care Corp. Bautista, Picaso, Buyco, Tan & Fider for respondent FEBTC. BELLOSILLO, J.: Respondents are sued by two employees of Building Care Corporation, which provides janitorial and other specific services to various firms, to compel Far Bast Bank and Trust Company to recognize them as its regular employees and be paid the same wages which its employees receive. Building Care Corporation (BCC, for brevity), in the proceedings below, established that it had substantial capitalization of P1 Million or a stockholders equity of P1.5 Million. Thus the Labor Arbiter ruled that BCC was only job contracting and that consequently its employees were not employees of Far East Bank and Trust Company (FEBTC, for brevity). on appeal, this factual finding was affirmed by respondent National Labor Relations Commission (NLRC, for brevity). Nevertheless, petitioners insist before us that BCC is engaged in "labor-only" contracting hence, they conclude, they are employees of respondent FEBTC. Petitioners Virginia G. Neri and Jose Cabelin applied for positions with, and were hired by, respondent BCC, a corporation engaged in providing technical, maintenance, engineering, housekeeping, security and other specific services to its clientele. They were assigned to work in the Cagayan de Oro City Branch of respondent FEBTC on 1 May 1979 and 1 August 1980, respectively, Neri an radio/telex operator and Cabelin as janitor, before being promoted to messenger on 1 April 1989. On 28 June 1989, petitioners instituted complaints against FEBTC and BCC before Regional Arbitration Branch No. 10 of the Department of Labor and Employment to compel the bank to accept them as regular employees and for it to pay the differential between the wages being paid them by BCC and those received by FEBTC employees with similar length of service. On 16 November 1989, the Labor Arbiter dismissed the complaint for lack of merit. 1 Respondent BCC was considered an independent contractor because it proved it had substantial capital. Thus, petitioners were held to be regular employees of BCC, not FEBTC. The dismissal was appealed to NLRC which on 28 September 1990 affirmed the decision on appeal. 2 On 22 October 1990, NLRC denied reconsideration of its affirmance, 3prompting petitioners to seek redress from this Court. Petitioners vehemently contend that BCC in engaged in "labor-only" contracting because it failed to adduce evidence purporting to show that it invested in the form of tools, equipment, machineries, work premises and other materials which are necessary in the conduct of its business. Moreover, petitioners argue that they perform duties which are directly related to the principal business or operation of FEBTC. If the definition of "labor-only" contracting 4 is to be read in conjunction with job contracting, 5 then the only logical conclusion is that BCC is a "labor only" contractor. Consequently, they must be deemed employees of respondent bank by operation of law since BCC is merely an agent of FEBTC following the doctrine laid down in Philippine Bank of Communications v. National Labor Relations Commission 6 where we ruled that where "labor-only" contracting

exists, the Labor Code itself establishes an employer-employee relationship between the employer and the employees of the "labor-only" contractor; hence, FEBTC should be considered the employer of petitioners who are deemed its employees through its agent, "labor-only" contractor BCC. We cannot sustain the petition. Respondent BCC need not prove that it made investments in the form of tools, equipment, machineries, work premises, among others, because it has established that it has sufficient capitalization. The Labor Arbiter and the NLRC both determined that BCC had a capital stock of P1 million fully subscribed and paid for. 7 BCC is therefore a highly capitalized venture and cannot be deemed engaged in "labor-only" contracting. It is well-settled that there is "labor-only" contracting where: (a) the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others; and, (b) the workers recruited and placed by such person are performing activities which are directly related to the principal business of the employer. 8 Article 106 of the Labor Code defines "labor-only" contracting thus Art. 106. Contractor or subcontractor. . . . . There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited by such persons are performing activities which are directly related to the principal business of such employer . . . . (emphasis supplied). Based on the foregoing, BCC cannot be considered a "labor-only" contractor because it has substantial capital. While there may be no evidence that it has investment in the form of tools, equipment, machineries, work premises, among others, it is enough that it has substantial capital, as was established before the Labor Arbiter as well as the NLRC. In other words, the law does not require both substantial capital and investment in the form of tools, equipment, machineries, etc. This is clear from the use of the conjunction "or". If the intention was to require the contractor to prove that he has both capital and the requisite investment, then the conjunction "and" should have been used. But, having established that it has substantial capital, it was no longer necessary for BCC to further adduce evidence to prove that it does not fall within the purview of "labor-only" contracting. There is even no need for it to refute petitioners' contention that the activities they perform are directly related to the principal business of respondent bank. Be that as it may, the Court has already taken judicial notice of the general practice adopted in several government and private institutions and industries of hiring independent contractors to perform special services. 9These services range from janitorial, 10 security 11 and even technical or other specific services such as those performed by petitioners Neri and Cabelin. While these services may be considered directly related to the principal business of the employer, 12 nevertheless, they are not necessary in the conduct of the principal business of the employer. In fact, the status of BCC as an independent contractor was previously confirmed by this Court in Associated Labor Unions-TUCP v. National Labor Relations Commission, 13 where we held thus The public respondent ruled that the complainants are not employees of the bank but of the company contracted to serve the bank. Building Care Corporation is a big firm which services, among others, a university, an international bank, a big local bank, a hospital center, government agencies, etc. It is a qualified independent contractor. The public respondent correctly ruled against petitioner's contentions . . . . (Emphasis supplied). Even assuming ex argumenti that petitioners were performing activities directly related to the principal business of the bank, under the "right of control" test they must still be considered employees of BCC. In the case of petitioner Neri, it is admitted that FEBTC issued a job description which detailed her functions as a radio/telex operator. However, a cursory reading of the job description shows that what was sought to be controlled by FEBTC was actually the end-result of the task, e.g., that the daily incoming and outgoing telegraphic transfer of funds received and relayed by her, respectively, tallies with that of the register. The guidelines were laid down merely to ensure that the desired end-result was achieved. It did not, however, tell Neri how the radio/telex machine should be operated. In the Shipside case, 14 we ruled

. . . . If in the course of private respondents' work (referring to the workers), SHIPSIDE occasionally issued instructions to them, that alone does not in the least detract from the fact that only STEVEDORES is the employer of the private respondents, for in legal contemplation, such instructions carry no more weight than mere requests, the privity of contract being between SHIPSIDE and STEVEDORES . . . . Besides, petitioners do not deny that they were selected and hired by BCC before being assigned to work in the Cagayan de Oro Branch of FFBTC. BCC likewise acknowledges that petitioners are its employees. The record is replete with evidence disclosing that BCC maintained supervision and control over petitioners through its Housekeeping and Special Services Division: petitioners reported for work wearing the prescribed uniform of BCC; leaves of absence were filed directly with BCC; and, salaries were drawn only from BCC. 15 As a matter of fact, Neri even secured a certification from BCC on 16 May 1986 that she was employed by the latter. On the other hand, on 24 May 1988, Cabelin filed a complaint for underpayment of wages, non-integration of salary adjustments mandated by Wage Orders Nos. 5 & 6 and R.A. 6640 as well as for illegal deduction 16against BCC alone which was provisionally dismissed on 19 August 1988 upon Cabelin's manifestation that his money claim was negligible. 17 More importantly, under the terms and conditions of the contract, it was BCC alone which had the power to reassign petitioners. Their deployment to FEBTC was not subject to the bank's acceptance. Cabelin was promoted to messenger because the FEBTC branch manager promised BCC that two (2) additional janitors would be hired from the company if the promotion was to be effected. 18 Furthermore, BCC was to be paid in lump sum unlike in the situation in Philippine Bank of Communications 19 where the contractor, CESI, was to be paid at a daily rate on a per person basis. And, the contract therein stipulated that the CESI was merely to provide manpower that would render temporary services. In the case at bar, Neri and Cabelin were to perform specific special services. Consequently, petitioners cannot be held to be employees of FEBTC as BCC "carries an independent business" and undertaken the performance of its contract with various clients according to its "own manner and method, free from the control and supervision" of its principals in all matters "except as to the results thereof." 20 Indeed, the facts in Philippine Bank of Communications do not square with those of the instant case. Therein, the Court ruled that CESI was a "labor-only" contractor because upholding the contract between the contractor and the bank would in effect permit employers to avoid the necessity of hiring regular or permanent employees and would enable them to keep their employees indefinitely on a temporary or casual basis, thus denying them security of tenure in their jobs. This of course violates the Labor Code. BCC has not committed any violation. Also, the former case was for illegal dismissal; this case, on the other hand, is for conversion of employment status so that petitioners can receive the same salary being given to regular employees of FEBTC. But, as herein determined, petitioners are not regular employees of FEBTC but of BCC. At any rate, the finding that BCC in a qualified independent contractor precludes us from applying the Philippine Bank of Communicationsdoctrine to the instant petition. The determination of employer-employee relationship involves factual findings. 21 Absent any grave abuse of discretion, and we find none in the case before us, we are bound by the findings of the Labor Arbiter as affirmed by respondent NLRC. IN VIEW OF THE FOREGOING, the Petition for Certiorari is DISMISSED. SO ORDERED. G.R. No. 87700 June 13, 1990

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, DANIEL S.L. BORBON II, HERMINIA REYES, MARCELA PURIFICACION, ET AL., petitioners, vs. HON. JESUS G. BERSAMIRA, IN HIS CAPACITY AS PRESIDING JUDGE OF BRANCH 166, RTC, PASIG, and SAN MIGUEL CORPORATION, respondents. Romeo C. Lagman for petitioners. Jardeleza, Sobrevinas, Diaz, Mayudini & Bodegon for respondents. MELENCIO-HERRERA, J.: Respondent Judge of the Regional Trial Court of Pasig, Branch 166, is taken to task by petitioners in this special civil action for certiorari and Prohibition for having issued the challenged Writ of Preliminary Injunction on 29 March 1989 in Civil Case No. 57055 of his Court entitled "San Miguel Corporation vs. SMCEU-PTGWO, et als." Petitioners' plea is that said Writ was issued without or in excess of jurisdiction and with grave abuse of discretion, a labor dispute being involved. Private respondent San Miguel Corporation (SanMig. for short), for its part, defends the Writ on the ground of absence of any employer-employee relationship between it and the contractual workers employed by the companies Lipercon Services, Inc. (Lipercon) and D'Rite Service Enterprises (D'Rite), besides the fact that the Union is bereft of personality to represent said workers for purposes of collective bargaining. The Solicitor General agrees with the position of SanMig. The antecedents of the controversy reveal that: Sometime in 1983 and 1984, SanMig entered into contracts for merchandising services with Lipercon and D'Rite (Annexes K and I, SanMig's Comment, respectively). These companies are independent contractors duly licensed by the Department of Labor and Employment (DOLE). SanMig entered into those contracts to maintain its competitive position and in keeping with the imperatives of efficiency, business expansion and diversity of its operation. In said contracts, it was expressly understood and agreed that the workers employed by the contractors were to be paid by the latter and that none of them were to be deemed employees or agents of SanMig. There was to be no employer-employee relation between the contractors and/or its workers, on the one hand, and SanMig on the other. Petitioner San Miguel Corporation Employees Union-PTWGO (the Union, for brevity) is the duly authorized representative of the monthly paid rank-and-file employees of SanMig with whom the latter executed a Collective Bargaining Agreement (CBA) effective 1 July 1986 to 30 June 1989 (Annex A, SanMig's Comment). Section 1 of their CBA specifically provides that "temporary, probationary, or contract employees and workers are excluded from the bargaining unit and, therefore, outside the scope of this Agreement." In a letter, dated 20 November 1988 (Annex C, Petition), the Union advised SanMig that some Lipercon and D'Rite workers had signed up for union membership and sought the regularization of their employment with SMC. The Union alleged that this group of employees, while appearing to be contractual workers supposedly independent contractors, have been continuously working for SanMig for a period ranging from six (6) months to fifteen (15) years and that their work is neither casual nor seasonal as they are performing work or activities necessary or desirable in the usual business or trade of SanMig. Thus, it was contended that there exists a "labor-only" contracting situation. It was then demanded that the employment status of these workers be regularized.

On 12 January 1989 on the ground that it had failed to receive any favorable response from SanMig, the Union filed a notice of strike for unfair labor practice, CBA violations, and union busting (Annex D, Petition). On 30 January 1989, the Union again filed a second notice of strike for unfair labor practice (Annex F, Petition). As in the first notice of strike. Conciliatory meetings were held on the second notice. Subsequently, the two (2) notices of strike were consolidated and several conciliation conferences were held to settle the dispute before the National Conciliation and Mediation Board (NCMB) of DOLE (Annex G, Petition). Beginning 14 February 1989 until 2 March 1989, series of pickets were staged by Lipercon and D'Rite workers in various SMC plants and offices. On 6 March 1989, SMC filed a verified Complaint for Injunction and Damages before respondent Court to enjoin the Union from: a. representing and/or acting for and in behalf of the employees of LIPERCON and/or D'RITE for the purposes of collective bargaining; b. calling for and holding a strike vote, to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE; c. inciting, instigating and/or inducing the employees or workers of LIPERCON and D'RITE to demonstrate and/or picket at the plants and offices of plaintiff within the bargaining unit referred to in the CBA,...; d. staging a strike to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE; e. using the employees or workers of LIPERCON AND D'RITE to man the strike area and/or picket lines and/or barricades which the defendants may set up at the plants and offices of plaintiff within the bargaining unit referred to in the CBA ...; f. intimidating, threatening with bodily harm and/or molesting the other employees and/or contract workers of plaintiff, as well as those persons lawfully transacting business with plaintiff at the work places within the bargaining unit referred to in the CBA, ..., to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE; g. blocking, preventing, prohibiting, obstructing and/or impeding the free ingress to, and egress from, the work places within the bargaining unit referred to in the CBA .., to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE; h. preventing and/or disrupting the peaceful and normal operation of plaintiff at the work places within the bargaining unit referred to in the CBA, Annex 'C' hereof, to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE. (Annex H, Petition) Respondent Court found the Complaint sufficient in form and substance and issued a Temporary Restraining Order for the purpose of maintaining the status quo, and set the application for Injunction for hearing. In the meantime, on 13 March 1989, the Union filed a Motion to Dismiss SanMig's Complaint on the ground of lack of jurisdiction over the case/nature of the action, which motion was opposed by SanMig. That Motion was denied by respondent Judge in an Order dated 11 April 1989. After several hearings on SanMig's application for injunctive relief, where the parties presented both testimonial and documentary evidence on 25 March 1989, respondent Court issued the questioned Order (Annex A, Petition) granting the application and enjoining the Union from Committing the acts complained of, supra. Accordingly, on 29 March 1989, respondent Court issued the corresponding Writ of Preliminary Injunction after SanMig had posted the required bond of P100,000.00 to answer for whatever damages petitioners may sustain by reason thereof. In issuing the Injunction, respondent Court rationalized:

The absence of employer-employee relationship negates the existence of labor dispute. Verily, this court has jurisdiction to take cognizance of plaintiff's grievance. The evidence so far presented indicates that plaintiff has contracts for services with Lipercon and D'Rite. The application and contract for employment of the defendants' witnesses are either with Lipercon or D'Rite. What could be discerned is that there is no employer-employee relationship between plaintiff and the contractual workers employed by Lipercon and D'Rite. This, however, does not mean that a final determination regarding the question of the existence of employer-employee relationship has already been made. To finally resolve this dispute, the court must extensively consider and delve into the manner of selection and engagement of the putative employee; the mode of payment of wages; the presence or absence of a power of dismissal; and the Presence or absence of a power to control the putative employee's conduct. This necessitates a full-blown trial. If the acts complained of are not restrained, plaintiff would, undoubtedly, suffer irreparable damages. Upon the other hand, a writ of injunction does not necessarily expose defendants to irreparable damages. Evidently, plaintiff has established its right to the relief demanded. (p. 21, Rollo) Anchored on grave abuse of discretion, petitioners are now before us seeking nullification of the challenged Writ. On 24 April 1989, we issued a Temporary Restraining Order enjoining the implementation of the Injunction issued by respondent Court. The Union construed this to mean that "we can now strike," which it superimposed on the Order and widely circulated to entice the Union membership to go on strike. Upon being apprised thereof, in a Resolution of 24 May 1989, we required the parties to "RESTORE the status quo ante declaration of strike" (p. 2,62 Rollo). In the meantime, however, or on 2 May 1989, the Union went on strike. Apparently, some of the contractual workers of Lipercon and D'Rite had been laid off. The strike adversely affected thirteen (13) of the latter's plants and offices. On 3 May 1989, the National Conciliation and Mediation Board (NCMB) called the parties to conciliation. The Union stated that it would lift the strike if the thirty (30) Lipercon and D'Rite employees were recalled, and discussion on their other demands, such as wage distortion and appointment of coordinators, were made. Effected eventually was a Memorandum of Agreement between SanMig and the Union that "without prejudice to the outcome of G.R. No. 87700 (this case) and Civil Case No. 57055 (the case below), the laid-off individuals ... shall be recalled effective 8 May 1989 to their former jobs or equivalent positions under the same terms and conditions prior to "lay-off" (Annex 15, SanMig Comment). In turn, the Union would immediately lift the pickets and return to work. After an exchange of pleadings, this Court, on 12 October 1989, gave due course to the Petition and required the parties to submit their memoranda simultaneously, the last of which was filed on 9 January 1990. The focal issue for determination is whether or not respondent Court correctly assumed jurisdiction over the present controversy and properly issued the Writ of Preliminary Injunction to the resolution of that question, is the matter of whether, or not the case at bar involves, or is in connection with, or relates to a labor dispute. An affirmative answer would bring the case within the original and exclusive jurisdiction of labor tribunals to the exclusion of the regular Courts. Petitioners take the position that 'it is beyond dispute that the controversy in the court a quo involves or arose out of a labor dispute and is directly connected or interwoven with the cases pending with the NCMB-DOLE, and is thus beyond the ambit of the public respondent's jurisdiction. That the acts complained of (i.e., the mass concerted action of picketing and the reliefs prayed for by the private respondent) are within the competence of labor tribunals, is beyond question" (pp. 6-7, Petitioners' Memo). On the other hand, SanMig denies the existence of any employer-employee relationship and consequently of any labor dispute between itself and the Union. SanMig submits, in particular, that "respondent Court is vested with jurisdiction and judicial competence to enjoin the specific type of strike staged by petitioner union and its officers herein complained of," for the reasons that:

A. The exclusive bargaining representative of an employer unit cannot strike to compel the employer to hire and thereby create an employment relationship with contractual workers, especially were the contractual workers were recognized by the union, under the governing collective bargaining agreement, as excluded from, and therefore strangers to, the bargaining unit. B. A strike is a coercive economic weapon granted the bargaining representative only in the event of a deadlock in a labor dispute over 'wages, hours of work and all other and of the employment' of the employees in the unit. The union leaders cannot instigate a strike to compel the employer, especially on the eve of certification elections, to hire strangers or workers outside the unit, in the hope the latter will help re-elect them. C. Civil courts have the jurisdiction to enjoin the above because this specie of strike does not arise out of a labor dispute, is an abuse of right, and violates the employer's constitutional liberty to hire or not to hire. (SanMig's Memorandum, pp. 475-476, Rollo). We find the Petition of a meritorious character. A "labor dispute" as defined in Article 212 (1) of the Labor Code includes "any controversy or matter concerning terms and conditions of employment or the association or representation of persons in negotiating, fixing, maintaining, changing, or arranging the terms and conditions of employment, regardless of whether the disputants stand in the proximate relation of employer and employee." While it is SanMig's submission that no employer-employee relationship exists between itself, on the one hand, and the contractual workers of Lipercon and D'Rite on the other, a labor dispute can nevertheless exist "regardless of whether the disputants stand in the proximate relationship of employer and employee" (Article 212 [1], Labor Code, supra) provided the controversy concerns, among others, the terms and conditions of employment or a "change" or "arrangement" thereof (ibid). Put differently, and as defined by law, the existence of a labor dispute is not negative by the fact that the plaintiffs and defendants do not stand in the proximate relation of employer and employee. That a labor dispute, as defined by the law, does exist herein is evident. At bottom, what the Union seeks is to regularize the status of the employees contracted by Lipercon and D'Rite in effect, that they be absorbed into the working unit of SanMig. This matter definitely dwells on the working relationship between said employees vis-a-vis SanMig. Terms, tenure and conditions of their employment and the arrangement of those terms are thus involved bringing the matter within the purview of a labor dispute. Further, the Union also seeks to represent those workers, who have signed up for Union membership, for the purpose of collective bargaining. SanMig, for its part, resists that Union demand on the ground that there is no employer-employee relationship between it and those workers and because the demand violates the terms of their CBA. Obvious then is that representation and association, for the purpose of negotiating the conditions of employment are also involved. In fact, the injunction sought by SanMig was precisely also to prevent such representation. Again, the matter of representation falls within the scope of a labor dispute. Neither can it be denied that the controversy below is directly connected with the labor dispute already taken cognizance of by the NCMB-DOLE (NCMB-NCR- NS-01021-89; NCMB NCR NS-01-093-83). Whether or not the Union demands are valid; whether or not SanMig's contracts with Lipercon and D'Rite constitute "labor-only" contracting and, therefore, a regular employer-employee relationship may, in fact, be said to exist; whether or not the Union can lawfully represent the workers of Lipercon and D'Rite in their demands against SanMig in the light of the existing CBA; whether or not the notice of strike was valid and the strike itself legal when it was allegedly instigated to compel the employer to hire strangers outside the working unit; those are issues the resolution of which call for the application of labor laws, and SanMig's cause's of action in the Court below are inextricably linked with those issues. The precedent in Layno vs. de la Cruz (G.R. No. L-29636, 30 April 1965, 13 SCRA 738) relied upon by SanMig is not controlling as in that case there was no controversy over terms, tenure or conditions, of employment or the representation of employees that called for the application of labor laws. In that case, what the petitioning union demanded was not a change in working terms and conditions, or the representation of the employees, but that its members be hired as stevedores in the place of the members of a rival union, which petitioners wanted

discharged notwithstanding the existing contract of the arrastre company with the latter union. Hence, the ruling therein, on the basis of those facts unique to that case, that such a demand could hardly be considered a labor dispute. As the case is indisputably linked with a labor dispute, jurisdiction belongs to the labor tribunals. As explicitly provided for in Article 217 of the Labor Code, prior to its amendment by R.A. No. 6715 on 21 March 1989, since the suit below was instituted on 6 March 1989, Labor Arbiters have original and exclusive jurisdiction to hear and decide the following cases involving all workers including "1. unfair labor practice cases; 2. those that workers may file involving wages, hours of work and other terms and conditions of employment; ... and 5. cases arising from any violation of Article 265 of this Code, including questions involving the legality of striker and lockouts. ..." Article 217 lays down the plain command of the law. The claim of SanMig that the action below is for damages under Articles 19, 20 and 21 of the Civil Code would not suffice to keep the case within the jurisdictional boundaries of regular Courts. That claim for damages is interwoven with a labor dispute existing between the parties and would have to be ventilated before the administrative machinery established for the expeditious settlement of those disputes. To allow the action filed below to prosper would bring about "split jurisdiction" which is obnoxious to the orderly administration of justice (Philippine Communications, Electronics and Electricity Workers Federation vs. Hon. Nolasco, L-24984, 29 July 1968, 24 SCRA 321). We recognize the proprietary right of SanMig to exercise an inherent management prerogative and its best business judgment to determine whether it should contract out the performance of some of its work to independent contractors. However, the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law (Section 3, Article XIII, 1987 Constitution) equally call for recognition and protection. Those contending interests must be placed in proper perspective and equilibrium. WHEREFORE, the Writ of certiorari is GRANTED and the Orders of respondent Judge of 25 March 1989 and 29 March 1989 are SET ASIDE. The Writ of Prohibition is GRANTED and respondent Judge is enjoined from taking any further action in Civil Case No. 57055 except for the purpose of dismissing it. The status quo ante declaration of strike ordered by the Court on 24 May 1989 shall be observed pending the proceedings in the National Conciliation Mediation Board-Department of Labor and Employment, docketed as NCMB-NCR-NS-0102189 and NCMB-NCR-NS-01-093-83. No costs. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 114337 September 29, 1995 NITTO ENTERPRISES, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and ROBERTO CAPILI, respondents. KAPUNAN, J.: This petition for certiorari under Rule 65 of the Rules of Court seeking to annul the decision 1 rendered by public respondent National Labor Relations Commission, which reversed the decision of the Labor Arbiter. Briefly, the facts of the case are as follows: Petitioner Nitto Enterprises, a company engaged in the sale of glass and aluminum products, hired Roberto Capili sometime in May 1990 as an apprentice machinist, molder and core maker as evidenced by an apprenticeship agreement 2 for a period of six (6) months from May 28, 1990 to November 28, 1990 with a daily wage rate of P66.75 which was 75% of the applicable minimum wage. At around 1:00 p.m. of August 2, 1990, Roberto Capili who was handling a piece of glass which he was working on, accidentally hit and injured the leg of an office secretary who was treated at a nearby hospital. Later that same day, after office hours, private respondent entered a workshop within the office premises which was not his work station. There, he operated one of the power press machines without authority and in the process injured his left thumb. Petitioner spent the amount of P1,023.04 to cover the medication of private respondent. The following day, Roberto Capili was asked to resign in a letter 3 which reads: Wala siyang tanggap ng utos mula sa superbisor at wala siyang experiensa kung papaano gamitin and "TOOL" sa pagbuhat ng salamin, sarili niyang desisyon ang paggamit ng tool at may disgrasya at nadamay pa ang isang sekretarya ng kompanya. Sa araw ding ito limang (5) minute ang nakakalipas mula alas-singko ng hapon siya ay pumasok sa shop na hindi naman sakop ng kanyang trabaho. Pinakialaman at kinalikot ang makina at nadisgrasya niya ang kanyang sariling kamay. Nakagastos ang kompanya ng mga sumusunod: Emergency and doctor fee P715.00 Medecines (sic) and others 317.04 Bibigyan siya ng kompanya ng Siyam na araw na libreng sahod hanggang matanggal ang tahi ng kanyang kamay. Tatanggapin niya ang sahod niyang anim na araw, mula ika-30 ng Hulyo at ika-4 ng Agosto, 1990. Ang kompanya ang magbabayad ng lahat ng gastos pagtanggal ng tahi ng kanyang kamay, pagkatapos ng siyam na araw mula ika-2 ng Agosto. Sa lahat ng nakasulat sa itaas, hinihingi ng kompanya ang kanyang resignasyon, kasama ng kanyang comfirmasyon at pag-ayon na ang lahat sa itaas ay totoo.

Naiintindihan ko ang lahat ng nakasulat sa itaas, at ang lahat ng ito ay aking pagkakasala sa hindi pagsunod sa alintuntunin ng kompanya. On August 3, 1990 private respondent executed a Quitclaim and Release in favor of petitioner for and in consideration of the sum of P1,912.79. 4 Three days after, or on August 6, 1990, private respondent formally filed before the NLRC Arbitration Branch, National Capital Region a complaint for illegal dismissal and payment of other monetary benefits. On October 9, 1991, the Labor Arbiter rendered his decision finding the termination of private respondent as valid and dismissing the money claim for lack of merit. The dispositive portion of the ruling reads: WHEREFORE, premises considered, the termination is valid and for cause, and the money claims dismissed for lack of merit. The respondent however is ordered to pay the complainant the amount of P500.00 as financial assistance. SO ORDERED. 5 Labor Arbiter Patricio P. Libo-on gave two reasons for ruling that the dismissal of Roberto Capilian was valid. First, private respondent who was hired as an apprentice violated the terms of their agreement when he acted with gross negligence resulting in the injury not only to himself but also to his fellow worker. Second, private respondent had shown that "he does not have the proper attitude in employment particularly the handling of machines without authority and proper training. 6 On July 26, 1993, the National Labor Relations Commission issued an order reversing the decision of the Labor Arbiter, the dispositive portion of which reads: WHEREFORE, the appealed decision is hereby set aside. The respondent is hereby directed to reinstate complainant to his work last performed with backwages computed from the time his wages were withheld up to the time he is actually reinstated. The Arbiter of origin is hereby directed to further hear complainant's money claims and to dispose them on the basis of law and evidence obtaining. SO ORDERED. 7 The NLRC declared that private respondent was a regular employee of petitioner by ruling thus: As correctly pointed out by the complainant, we cannot understand how an apprenticeship agreement filed with the Department of Labor only on June 7, 1990 could be validly used by the Labor Arbiter as basis to conclude that the complainant was hired by respondent as a plain "apprentice" on May 28, 1990. Clearly, therefore, the complainant was respondent's regular employee under Article 280 of the Labor Code, as early as May 28,1990, who thus enjoyed the security of tenure guaranteed in Section 3, Article XIII of our 1987 Constitution. The complainant being for illegal dismissal (among others) it then behooves upon respondent, pursuant to Art. 227(b) and as ruled in Edwin Gesulgon vs. NLRC, et al. (G.R. No. 90349, March 5, 1993, 3rd Div., Feliciano, J.) to prove that the dismissal of complainant was for a valid cause. Absent such proof, we cannot but rule that the complainant was illegally dismissed. 8 On January 28, 1994, Labor Arbiter Libo-on called for a conference at which only private respondent's representative was present. On April 22, 1994, a Writ of Execution was issued, which reads:

NOW, THEREFORE, finding merit in [private respondent's] Motion for Issuance of the Writ, you are hereby commanded to proceed to the premises of [petitioner] Nitto Enterprises and Jovy Foster located at No. l 74 Araneta Avenue, Portero, Malabon, Metro Manila or at any other places where their properties are located and effect the reinstatement of herein [private respondent] to his work last performed or at the option of the respondent by payroll reinstatement. You are also to collect the amount of P122,690.85 representing his backwages as called for in the dispositive portion, and turn over such amount to this Office for proper disposition. Petitioner filed a motion for reconsideration but the same was denied. Hence, the instant petition for certiorari. The issues raised before us are the following: I WHETHER OR NOT PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION IN HOLDING THAT PRIVATE RESPONDENT WAS NOT AN APPRENTICE. II WHETHER OR NOT PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION IN HOLDING THAT PETITIONER HAD NOT ADEQUATELY PROVEN THE EXISTENCE OF A VALID CAUSE IN TERMINATING THE SERVICE OF PRIVATE RESPONDENT. We find no merit in the petition. Petitioner assails the NLRC's finding that private respondent Roberto Capili cannot plainly be considered an apprentice since no apprenticeship program had yet been filed and approved at the time the agreement was executed. Petitioner further insists that the mere signing of the apprenticeship agreement already established an employer-apprentice relationship. Petitioner's argument is erroneous. The law is clear on this matter. Article 61 of the Labor Code provides: Contents of apprenticeship agreement. Apprenticeship agreements, including the main rates of apprentices, shall conform to the rules issued by the Minister of Labor and Employment. The period of apprenticeship shall not exceed six months. Apprenticeship agreements providing for wage rates below the legal minimum wage, which in no case shall start below 75% per cent of the applicable minimum wage, may be entered into only in accordance with apprenticeship program duly approved by the Minister of Labor and Employment. The Ministry shall develop standard model programs of apprenticeship. (emphasis supplied) In the case at bench, the apprenticeship agreement between petitioner and private respondent was executed on May 28, 1990 allegedly employing the latter as an apprentice in the trade of "care maker/molder." On the same date, an apprenticeship program was prepared by petitioner and submitted to the Department of Labor and Employment. However, the apprenticeship Agreement was filed only on June 7, 1990. Notwithstanding the absence of approval by the Department of Labor and Employment, the apprenticeship agreement was enforced the day it was signed.

Based on the evidence before us, petitioner did not comply with the requirements of the law. It is mandated that apprenticeship agreements entered into by the employer and apprentice shall be entered only in accordance with the apprenticeship program duly approved by the Minister of Labor and Employment. Prior approval by the Department of Labor and Employment of the proposed apprenticeship program is, therefore, a condition sine quo non before an apprenticeship agreement can be validly entered into. The act of filing the proposed apprenticeship program with the Department of Labor and Employment is a preliminary step towards its final approval and does not instantaneously give rise to an employer-apprentice relationship. Article 57 of the Labor Code provides that the State aims to "establish a national apprenticeship program through the participation of employers, workers and government and non-government agencies" and "to establish apprenticeship standards for the protection of apprentices." To translate such objectives into existence, prior approval of the DOLE to any apprenticeship program has to be secured as a condition sine qua non before any such apprenticeship agreement can be fully enforced. The role of the DOLE in apprenticeship programs and agreements cannot be debased. Hence, since the apprenticeship agreement between petitioner and private respondent has no force and effect in the absence of a valid apprenticeship program duly approved by the DOLE, private respondent's assertion that he was hired not as an apprentice but as a delivery boy ("kargador" or "pahinante") deserves credence. He should rightly be considered as a regular employee of petitioner as defined by Article 280 of the Labor Code: 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 services 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. (Emphasis supplied) and pursuant to the constitutional mandate to "protect the rights of workers and promote their welfare." 9 Petitioner further argues that, there is a valid cause for the dismissal of private respondent. There is an abundance of cases wherein the Court ruled that the twin requirements of due process, substantive and procedural, must be complied with, before valid dismissal exists. 10 Without which, the dismissal becomes void. The twin requirements of notice and hearing constitute the essential elements of due process. This simply means that the employer shall afford the worker ample opportunity to be heard and to defend himself with the assistance of his representative, if he so desires. Ample opportunity connotes every kind of assistance that management must accord the employee to enable him to prepare adequately for his defense including legal representation. 11 As held in the case of Pepsi-Cola Bottling Co., Inc. v. NLRC: 12 The law requires that the employer must furnish the worker sought to be dismissed with two (2) written notices before 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 (Sec. 13, BP 130; Sec. 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. vs. NLRC, 185 SCRA 498 [1990]; National Service Corp. vs. NLRC, 168 SCRA 122; Ruffy vs. NLRC. 182 SCRA 365 [1990]). The fact is private respondent filed a case of illegal dismissal with the Labor Arbiter only three days after he was made to sign a Quitclaim, a clear indication that such resignation was not voluntary and deliberate. Private respondent averred that he was actually employed by petitioner as a delivery boy ("kargador" or "pahinante"). He further asserted that petitioner "strong-armed" him into signing the aforementioned resignation letter and quitclaim without explaining to him the contents thereof. Petitioner made it clear to him that anyway, he did not have a choice. 13 Petitioner cannot disguise the summary dismissal of private respondent by orchestrating the latter's alleged resignation and subsequent execution of a Quitclaim and Release. A judicious examination of both events belies any spontaneity on private respondent's part. WHEREFORE, finding no abuse of discretion committed by public respondent National Labor Relations Commission, the appealed decision is hereby AFFIRMED. SO ORDERED.

SECOND DIVISION [G.R. No. 118978. May 23, 1997] PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY,* petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and GRACE DE GUZMAN,respondents. DECISION REGALADO, J.: Seeking relief through the extraordinary writ of certiorari, petitioner Philippine Telegraph and Telephone Company (hereafter, PT&T) invokes the alleged concealment of civil status and defalcation of company funds as grounds to terminate the services of an employee. That employee, herein private respondent Grace de Guzman, contrarily argues that what really motivated PT&T to terminate her services was her having contracted marriage during her employment, which is prohibited by petitioner in its company policies. She thus claims that she was discriminated against in gross violation of law, such a proscription by an employer being outlawed by Article 136 of the Labor Code. Grace de Guzman was initially hired by petitioner as a reliever, specifically as a Supernumerary Project Worker, for a fixed period from November 21, 1990 until April 20, 1991 vice one C.F. Tenorio who went on maternity leave.[1] Under the Reliever Agreement which she signed with petitioner company, her employment was to be immediately terminated upon expiration of the agreed period. Thereafter, from June 10, 1991 to July 1, 1991, and from July 19, 1991 to August 8, 1991, private respondents services as reliever were again engaged by petitioner, this time in replacement of one Erlinda F. Dizon who went on leave during both periods.[2] After August 8, 1991, and pursuant to their Reliever Agreement, her services were terminated. On September 2, 1991, private respondent was once more asked to join petitioner company as a probationary employee, the probationary period to cover 150 days. In the job application form that was furnished her to be filled up for the purpose, she indicated in the portion for civil status therein that she was single although she had contracted marriage a few months earlier, that is, on May 26, 1991.[3] It now appears that private respondent had made the same representation in the two successive reliever agreements which she signed on June 10, 1991 and July 8, 1991. When petitioner supposedly learned about the same later, its branch supervisor in Baguio City, Delia M. Oficial, sent to private respondent a memorandum dated January 15, 1992 requiring her to explain the discrepancy. In that memorandum, she was reminded about the companys policy of not accepting married women for employment.[4] In her reply letter dated January 17, 1992, private respondent stated that she was not aware of PT&Ts policy regarding married women at the time, and that all along she had not deliberately hidden her true civil status.[5] Petitioner nonetheless remained unconvinced by her explanations. Private respondent was dismissed from the company effective January 29, 1992,[6] which she readily contested by initiating a complaint for illegal dismissal, coupled with a claim for non-payment of cost of living allowances (COLA), before the Regional Arbitration Branch of the National Labor Relations Commission in Baguio City. At the preliminary conference conducted in connection therewith, private respondent volunteered the information, and this was incorporated in the stipulation of facts between the parties, that she had failed to remit the amount of P2,380.75 of her collections. She then executed a promissory note for that amount in favor of petitioner.[7] All of these took place in a formal proceeding and with the agreement of the parties and/or their counsel. On November 23, 1993, Labor Arbiter Irenarco R. Rimando handed down a decision declaring that private respondent, who had already gained the status of a regular employee, was illegally dismissed by petitioner. Her reinstatement, plus payment of the corresponding back wages and COLA, was correspondingly ordered, the labor arbiter being of the firmly expressed view that the ground relied upon by petitioner in dismissing private respondent was clearly insufficient, and that it was apparent that she had been discriminated against on account of her having contracted marriage in violation of company rules.

On appeal to the National Labor Relations Commission (NLRC), said public respondent upheld the labor arbiter and, in its decision dated April 29, 1994, it ruled that private respondent had indeed been the subject of an unjust and unlawful discrimination by her employer, PT&T. However, the decision of the labor arbiter was modified with the qualification that Grace de Guzman deserved to be suspended for three months in view of the dishonest nature of her acts which should not be condoned. In all other respects, the NLRC affirmed the decision of the labor arbiter, including the order for the reinstatement of private respondent in her employment with PT&T. The subsequent motion for reconsideration filed by petitioner was rebuffed by respondent NLRC in its resolution of November 9, 1994, hence this special civil action assailing the aforestated decisions of the labor arbiter and respondent NLRC, as well as the denial resolution of the latter. 1. Decreed in the Bible itself is the universal norm that women should be regarded with love and respect but, through the ages, men have responded to that injunction with indifference, on the hubristic conceit that women constitute the inferior sex. Nowhere has that prejudice against womankind been so pervasive as in the field of labor, especially on the matter of equal employment opportunities and standards. In the Philippine setting, women have traditionally been considered as falling within the vulnerable groups or types of workers who must be safeguarded with preventive and remedial social legislation against discriminatory and exploitative practices in hiring, training, benefits, promotion and retention. The Constitution, cognizant of the disparity in rights between men and women in almost all phases of social and political life, provides a gamut of protective provisions. To cite a few of the primordial ones, Section 14, Article II[8] on the Declaration of Principles and State Policies, expressly recognizes the role of women in nation-building and commands the State to ensure, at all times, the fundamental equality before the law of women and men. Corollary thereto, Section 3 of Article XIII[9] (the progenitor whereof dates back to both the 1935 and 1973 Constitution) pointedly requires the State to afford full protection to labor and to promote full employment and equality of employment opportunities for all, including an assurance of entitlement to tenurial security of all workers. Similarly, Section 14 of Article XIII[10] mandates that the State shall protect working women through provisions for opportunities that would enable them to reach their full potential. 2. Corrective labor and social laws on gender inequality have emerged with more frequency in the years since the Labor Code was enacted on May 1, 1974 as Presidential Decree No. 442, largely due to our countrys commitment as a signatory to the United Nations Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW).[11] Principal among these laws are Republic Act No. 6727[12] which explicitly prohibits discrimination against women with respect to terms and conditions of employment, promotion, and training opportunities; Republic Act No. 6955[13] which bans the mail-order-bride practice for a fee and the export of female labor to countries that cannot guarantee protection to the rights of women workers; Republic Act No. 7192,[14] also known as the Women in Development and Nation Building Act, which affords women equal opportunities with men to act and to enter into contracts, and for appointment, admission, training, graduation, and commissioning in all military or similar schools of the Armed Forces of the Philippines and the Philippine National Police; Republic Act No. 7322[15] increasing the maternity benefits granted to women in the private sector; Republic Act No. 7877[16] which outlaws and punishes sexual harassment in the workplace and in the education and training environment; and Republic Act No. 8042,[17] or the Migrant Workers and Overseas Filipinos Act of 1995, which prescribes as a matter of policy, inter alia, the deployment of migrant workers, with emphasis on women, only in countries where their rights are secure. Likewise, it would not be amiss to point out that in the Family Code,[18] womens rights in the field of civil law have been greatly enhanced and expanded. In the Labor Code, provisions governing the rights of women workers are found in Articles 130 to 138 thereof. Article 130 involves the right against particular kinds of night work while Article 132 ensures the right of women to be provided with facilities and standards which the Secretary of Labor may establish to ensure their health and safety. For purposes of labor and social legislation, a woman working in a nightclub, cocktail lounge, massage clinic, bar or other similar establishments shall be considered as an employee under Article 138. Article 135, on the other hand, recognizes a womans right against discrimination with respect to terms and conditions of employment on account simply of sex. Finally, and this brings us to the issue at hand, Article 136 explicitly prohibits discrimination merely by reason of the marriage of a female employee.

3. Acknowledged as paramount in the due process scheme is the constitutional guarantee of protection to labor and security of tenure. Thus, an employer is required, as a condition sine qua non prior to severance of the employment ties of an individual under his employ, to convincingly establish, through substantial evidence, the existence of a valid and just cause in dispensing with the services of such employee, ones labor being regarded as constitutionally protected property. On the other hand, it is recognized that regulation of manpower by the company falls within the so-called management prerogatives, which prescriptions encompass the matter of hiring, supervision of workers, work assignments, working methods and assignments, as well as regulations on the transfer of employees, lay-off of workers, and the discipline, dismissal, and recall of employees.[19] As put in a case, an employer is free to regulate, according to his discretion and best business judgment, all aspects of employment, from hiring to firing, except in cases of unlawful discrimination or those which may be provided by law.[20] In the case at bar, petitioners policy of not accepting or considering as disqualified from work any woman worker who contracts marriage runs afoul of the test of, and the right against, discrimination, afforded all women workers by our labor laws and by no less than the Constitution. Contrary to petitioners assertion that it dismissed private respondent from employment on account of her dishonesty, the record discloses clearly that her ties with the company were dissolved principally because of the companys policy that married women are not qualified for employment in PT&T, and not merely because of her supposed acts of dishonesty. That it was so can easily be seen from the memorandum sent to private respondent by Delia M. Oficial, the branch supervisor of the company, with the reminder, in the words of the latter, that youre fully aware that the company is not accepting married women employee (sic), as it was verbally instructed to you.[21] Again, in the termination notice sent to her by the same branch supervisor, private respondent was made to understand that her severance from the service was not only by reason of her concealment of her married status but, over and on top of that, was her violation of the companys policy against marriage (and even told you that married women employees are not applicable [sic] or accepted in our company.) [22] Parenthetically, this seems to be the curious reason why it was made to appear in the initiatory pleadings that petitioner was represented in this case only by its said supervisor and not by its highest ranking officers who would otherwise be solidarily liable with the corporation.[23] Verily, private respondents act of concealing the true nature of her status from PT&T could not be properly characterized as willful or in bad faith as she was moved to act the way she did mainly because she wanted to retain a permanent job in a stable company. In other words, she was practically forced by that very same illegal company policy into misrepresenting her civil status for fear of being disqualified from work. While loss of confidence is a just cause for termination of employment, it should not be simulated. [24] It must rest on an actual breach of duty committed by the employee and not on the employers caprices.[25] Furthermore, it should never be used as a subterfuge for causes which are improper, illegal, or unjustified.[26] In the present controversy, petitioners expostulations that it dismissed private respondent, not because the latter got married but because she concealed that fact, does have a hollow ring. Her concealment, so it is claimed, bespeaks dishonesty hence the consequent loss of confidence in her which justified her dismissal. Petitioner would asseverate, therefore, that while it has nothing against marriage, it nonetheless takes umbrage over the concealment of that fact. This improbable reasoning, with interstitial distinctions, perturbs the Court since private respondent may well be minded to claim that the imputation of dishonesty should be the other way around. Petitioner would have the Court believe that although private respondent defied its policy against its female employees contracting marriage, what could be an act of insubordination was inconsequential. What it submits as unforgivable is her concealment of that marriage yet, at the same time, declaring that marriage as a trivial matter to which it supposedly has no objection. In other words, PT&T says it gives its blessings to its female employees contracting marriage, despite the maternity leaves and other benefits it would consequently respond for and which obviously it would have wanted to avoid. If that employee confesses such fact of marriage, there will be no sanction; but if such employee conceals the same instead of proceeding to the confessional, she will be dismissed. This line of reasoning does not impress us as reflecting its true management policy or that we are being regaled with responsible advocacy.

This Court should be spared the ennui of strained reasoning and the tedium of propositions which confuse through less than candid arguments. Indeed, petitioner glosses over the fact that it was its unlawful policy against married women, both on the aspects of qualification and retention, which compelled private respondent to conceal her supervenient marriage. It was, however, that very policy alone which was the cause of private respondents secretive conduct now complained of. It is then apropos to recall the familiar saying that he who is the cause of the cause is the cause of the evil caused. Finally, petitioners collateral insistence on the admission of private respondent that she supposedly misappropriated company funds, as an additional ground to dismiss her from employment, is somewhat insincere and self-serving. Concededly, private respondent admitted in the course of the proceedings that she failed to remit some of her collections, but that is an altogether different story. The fact is that she was dismissed solely because of her concealment of her marital status, and not on the basis of that supposed defalcation of company funds. That the labor arbiter would thus consider petitioners submissions on this supposed dishonesty as a mere afterthought, just to bolster its case for dismissal, is a perceptive conclusion born of experience in labor cases. For, there was no showing that private respondent deliberately misappropriated the amount or whether her failure to remit the same was through negligence and, if so, whether the negligence was in nature simple or grave. In fact, it was merely agreed that private respondent execute a promissory note to refund the same, which she did, and the matter was deemed settled as a peripheral issue in the labor case. Private respondent, it must be observed, had gained regular status at the time of her dismissal. When she was served her walking papers on January 29, 1992, she was about to complete the probationary period of 150 days as she was contracted as a probationary employee on September 2, 1991. That her dismissal would be effected just when her probationary period was winding down clearly raises the plausible conclusion that it was done in order to prevent her from earning security of tenure.[27] On the other hand, her earlier stints with the company as reliever were undoubtedly those of a regular employee, even if the same were for fixed periods, as she performed activities which were essential or necessary in the usual trade and business of PT&T. [28]The primary standard of determining regular employment is the reasonable connection between the activity performed by the employee in relation to the business or trade of the employer.[29] As an employee who had therefore gained regular status, and as she had been dismissed without just cause, she is entitled to reinstatement without loss of seniority rights and other privileges and to full back wages, inclusive of allowances and other benefits or their monetary equivalent.[30] However, as she had undeniably committed an act of dishonesty in concealing her status, albeit under the compulsion of an unlawful imposition of petitioner, the three-month suspension imposed by respondent NLRC must be upheld to obviate the impression or inference that such act should be condoned. It would be unfair to the employer if she were to return to its fold without any sanction whatsoever for her act which was not totally justified. Thus, her entitlement to back wages, which shall be computed from the time her compensation was withheld up to the time of her actual reinstatement, shall be reduced by deducting therefrom the amount corresponding to her three months suspension. 4. The government, to repeat, abhors any stipulation or policy in the nature of that adopted by petitioner PT&T. The Labor Code states, in no uncertain terms, as follows: ART. 136. Stipulation against marriage. - It shall be unlawful for an employer to require as a condition of employment or continuation of employment that a woman shall not get married, or to stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of marriage. This provision had a studied history for its origin can be traced to Section 8 of Presidential Decree No. 148,[31] better known as the Women and Child Labor Law, which amended paragraph (c), Section 12 of Republic Act No. 679,[32] entitled An Act to Regulate the Employment of Women and Children, to Provide Penalties for Violations Thereof, and for Other Purposes. The forerunner to Republic Act No. 679, on the other hand, was Act No. 3071 which became law on March 16, 1923 and which regulated the employment of women and children in shops, factories, industrial, agricultural, and mercantile establishments and other places of labor in the then Philippine Islands.

It would be worthwhile to reflect upon and adopt here the rationalization in Zialcita, et al. vs. Philippine Air Lines,[33] a decision that emanated from the Office of the President. There, a policy of Philippine Air Lines requiring that prospective flight attendants must be single and that they will be automatically separated from the service once they marry was declared void, it being violative of the clear mandate in Article 136 of the Labor Code with regard to discrimination against married women. Thus: Of first impression is the incompatibility of the respondents policy or regulation with the codal provision of law. Respondent is resolute in its contention that Article 136 of the Labor Code applies only to women employed in ordinary occupations and that the prohibition against marriage of women engaged in extraordinary occupations, like flight attendants, is fair and reasonable, considering the pecularities of their chosen profession. We cannot subscribe to the line of reasoning pursued by respondent. All along, it knew that the controverted policy has already met its doom as early as March 13, 1973 when Presidential Decree No. 148, otherwise known as the Women and Child Labor Law, was promulgated. But for the timidity of those affected or their labor unions in challenging the validity of the policy, the same was able to obtain a momentary reprieve. A close look at Section 8 of said decree, which amended paragraph (c) of Section 12 of Republic Act No. 679, reveals that it is exactly the same provision reproduced verbatim in Article 136 of the Labor Code, which was promulgated on May 1, 1974 to take effect six (6) months later, or on November 1, 1974. It cannot be gainsaid that, with the reiteration of the same provision in the new Labor Code, all policies and acts against it are deemed illegal and therefore abrogated. True, Article 132 enjoins the Secretary of Labor to establish standards that will ensure the safety and health of women employees and in appropriate cases shall by regulation require employers to determine appropriate minimum standards for termination in special occupations, such as those of flight attendants, but that is precisely the factor that militates against the policy of respondent. The standards have not yet been established as set forth in the first paragraph, nor has the Secretary of Labor issued any regulation affecting flight attendants. It is logical to presume that, in the absence of said standards or regulations which are as yet to be established, the policy of respondent against marriage is patently illegal. This finds support in Section 9 of the New Constitution, which provides: Sec. 9. The State shall afford protection to labor, promote full employment and equality in employment, ensure equal work opportunities regardless of sex, race, or creed, and regulate the relations between workers and employees. The State shall assure the rights of workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work x x x. Moreover, we cannot agree to the respondents proposition that termination from employment of flight attendants on account of marriage is a fair and reasonable standard designed for their own health, safety, protection and welfare, as no basis has been laid therefor. Actually, respondent claims that its concern is not so much against the continued employment of the flight attendant merely by reason of marriage as observed by the Secretary of Labor, but rather on the consequence of marriage-pregnancy. Respondent discussed at length in the instant appeal the supposed ill effects of pregnancy on flight attendants in the course of their employment. We feel that this needs no further discussion as it had been adequately explained by the Secretary of Labor in his decision of May 2, 1976. In a vain attempt to give meaning to its position, respondent went as far as invoking the provisions of Articles 52 and 216 of the New Civil Code on the preservation of marriage as an inviolable social institution and the family as a basic social institution, respectively, as bases for its policy of non-marriage. In both instances, respondent predicates absence of a flight attendant from her home for long periods of time as contributory to an unhappy married life. This is pure conjecture not based on actual conditions, considering that, in this modern world, sophisticated technology has narrowed the distance from one place to another. Moreover, respondent overlooked the fact that married flight attendants can program their lives to adapt to prevailing circumstances and events. Article 136 is not intended to apply only to women employed in ordinary occupations, or it should have categorically expressed so. The sweeping intendment of the law, be it on special or ordinary occupations, is reflected in the whole text and supported by Article 135 that speaks of non-discrimination on the employment of women.

The judgment of the Court of Appeals in Gualberto, et al. vs. Marinduque Mining & Industrial Corporation[34] considered as void a policy of the same nature. In said case, respondent, in dismissing from the service the complainant, invoked a policy of the firm to consider female employees in the project it was undertaking as separated the moment they get married due to lack of facilities for married women. Respondent further claimed that complainant was employed in the project with an oral understanding that her services would be terminated when she gets married. Branding the policy of the employer as an example of discriminatory chauvinism tantamount to denying equal employment opportunities to women simply on account of their sex, the appellate court struck down said employer policy as unlawful in view of its repugnance to the Civil Code, Presidential Decree No. 148 and the Constitution. Under American jurisprudence, job requirements which establish employer preference or conditions relating to the marital status of an employee are categorized as a sex-plus discrimination where it is imposed on one sex and not on the other. Further, the same should be evenly applied and must not inflict adverse effects on a racial or sexual group which is protected by federal job discrimination laws. Employment rules that forbid or restrict the employment of married women, but do not apply to married men, have been held to violate Title VII of the United States Civil Rights Act of 1964, the main federal statute prohibiting job discrimination against employees and applicants on the basis of, among other things, sex.[35] Further, it is not relevant that the rule is not directed against all women but just against married women. And, where the employer discriminates against married women, but not against married men, the variable is sex and the discrimination is unlawful.[36] Upon the other hand, a requirement that a woman employee must remain unmarried could be justified as a bona fide occupational qualification, or BFOQ, where the particular requirements of the job would justify the same, but not on the ground of a general principle, such as the desirability of spreading work in the workplace. A requirement of that nature would be valid provided it reflects an inherent quality reasonably necessary for satisfactory job performance. Thus, in one case, a nomarriage rule applicable to both male and female flight attendants, was regarded as unlawful since the restriction was not related to the job performance of the flight attendants.[37] 5. Petitioners policy is not only in derogation of the provisions of Article 136 of the Labor Code on the right of a woman to be free from any kind of stipulation against marriage in connection with her employment, but it likewise assaults good morals and public policy, tending as it does to deprive a woman of the freedom to choose her status, a privilege that by all accounts inheres in the individual as an intangible and inalienable right.[38] Hence, while it is true that the parties to a contract may establish any agreements, terms, and conditions that they may deem convenient, the same should not be contrary to law, morals, good customs, public order, or public policy.[39] Carried to its logical consequences, it may even be said that petitioners policy against legitimate marital bonds would encourage illicit or common-law relations and subvert the sacrament of marriage. Parenthetically, the Civil Code provisions on the contract of labor state that the relations between the parties, that is, of capital and labor, are not merely contractual, impressed as they are with so much public interest that the same should yield to the common good.[40] It goes on to intone that neither capital nor labor should visit acts of oppression against the other, nor impair the interest or convenience of the public. [41] In the final reckoning, the danger of just such a policy against marriage followed by petitioner PT&T is that it strikes at the very essence, ideals and purpose of marriage as an inviolable social institution and, ultimately, of the family as the foundation of the nation.[42] That it must be effectively interdicted here in all its indirect, disguised or dissembled forms as discriminatory conduct derogatory of the laws of the land is not only in order but imperatively required. ON THE FOREGOING PREMISES, the petition of Philippine Telegraph and Telephone Company is hereby DISMISSED for lack of merit, with double costs against petitioner. SO ORDERED.

THIRD DIVISION [G.R. No. 124841. July 31, 1998] PEFTOK INTEGRATED SERVICES, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and EDUARDO ABUGHO, ET. AL., respondents. DECISION PURISIMA, J.: Pacta privata juri publico derogare non possunt. Private agreements (between parties) cannot derogate from public right. Filed on May 22, 1996, this petition for certiorari under Rule 65 of the Revised Rules of Court seeks to set aside the decision of the National Labor Relations Commission (NLRC)dismissing the appeal of petitioner. The case stemmed from the decision handed down by Labor Arbiter Noel Augusto S. Magbanua, disposing, as follows: WHEREFORE, in view of the foregoing premises, respondents-PEFTOK Security Agency and Timber Industries of the Philippines, Inc. (TIPI) and Union Plywood Corporation are hereby ordered to pay, jointly and solidarily the claims of complainants as previously computed as follows: 1. Eduardo Abugho 2. Clenio Macanoquit 3. Claro Mendez 4. Leovemin Lumban 5. Crispin Balingkit 6. Ulysses Labis 7. Fidel Sabellina 8. Leonardo Daluperi 9. Valentine Adame 10. Gonzalo Ernero 11. Celso Niluag 12. Reynaldo Maasin P49,397.83 31,596.12 49,308.83 16,666.45 44,772.34 43,812.64 23,666.90 27,026.59 17,084.92 18,018.56 18,670.00 19,499.28[1] GRAND TOTAL - 342,598.52 Other claims are hereby dismissed for failure to substantiate and for lack of merit. SO ORDERED. Pertinent sheriffs return shows that the aforesaid decision was partly executed up to fifty percent (50%), Timber Industries of the Philippines (TIPI) having paid half of their solidary obligation to the security guardsemployees, who quitclaimed and waived fifty percent (50%) of the benefits adjudged in their favor. On October 13, 1989,[2] Eduardo Abugho, Claro Mendez and Leonardo Daluperi executed a waiver[3] of all their claims against Peftok Integrated Services, Inc. (PEFTOK, for brevity) for the period ending on June 30, 1989. Said waiver[4] appeared to bar all claims they may have had against PEFTOK before June 30, 1989. Urged by their entitlement to full benefits as provided in the labor arbiters decision, the private respondents sought the issuance of an alias writ of execution. On May 29, 1992, Eduardo Abugho, Fidel Sabellina, Leonardo Daluperi, Claro Mendez and Reynaldo Maasin executed another waiver and quitclaim[5] purportedly renouncing whatever claims they may have against

PEFTOK for the period ending March 15, 1998. Such waiver or quitclaim was worded to preclude whatever claim they may have against PEFTOK on or before March 16, 1998. However, Eduardo Abugho, Fidel Sabellina, Leonardo Daluperi, Reynaldo Maasin and Claro Mendez subsequently executed affidavits [6] stating that the aforementioned quitclaims were prepared and readied for their signature by PEFTOK and they were forced to sign the same for fear that they would not be given their salary on pay day, and worse, their services would be terminated if they did not sign the said quitclaims under controversy. Private respondents asserted that the waivers of claims signed by them are contrary to public policy; the same being written in the English language which they do not understand and the contents thereof were not explained to them. On June 19, 1995, the prayer for alias writ of execution was granted by Labor Arbiter Henry F. Te. In support of its prayer, petitioner PEFTOK theorizes that the quitclaims executed by the security guards suffer no legal infirmity. Like any other right, the claims in dispute can be waived and waiver thereof is not prohibited by law. No surety bond is required to perfect an appeal, in the same manner that no bond is necessary for the issuance of an alias writ of execution; petitioner maintains. The comment sent in by the Solicitor General prays that the petition be dismissed outright for being premature and for non-compliance with the requisite motion for reconsideration of the NLRC decision before elevating the same to this court. It stressed that quitclaims by employees are basically against public policy. There is no quibble over the fact that subject decision of the labor arbiter appealed from was received by petitioner on June 30, 1995. The appeal therefrom should have been interposed within 10 days or not later than July 10, 1995. But unfortunately for petitioner, its appeal was only filed on July 17, 1995. Indeed, it is decisively clear that petitioners appeal is flawed by late filing. The prescribed period f or appeal is both mandatory and jurisdictional. Then, too, the petition under consideration is likewise dismissable on the ground of prematurity. In consonance with the principle of exhaustion of administrative remedies, it was necessary for a motion for reconsideration of the decision of the National Labor Relations Commission to be filed in order to give NLRC a chance to correct its mistakes, if there be any. So also, under Rule 65 of the Revised Rules of Court, petitioner must establish that it has no plain, speedy and adequate remedy in the ordinary course of law for its perceived grievance.[7] It is decisively clear that they (guards) affixed their signatures to subject waivers and/or quitclaims for fear that they would not be paid their salaries on pay day or worse, still, their services would be terminated if they did not sign those papers. In short, there was no voluntariness in the execution of the quitclaim or waivers in question. it should be borne in mind that in this jurisdiction, quitclaims, waivers or releases are looked upon with disfavor.[8] Necessitous men are not free men.[9] They are commonly frowned upon as contrary to public policy and ineffective to bar claims for the full measure of the workers legal rights.[10] With respect to the posting of cash or surety bond, the requirement therefor is mandatory. The bond is sine qua non to the perfection of appeal from the labor arbiters monetary award. [11] The posting of cash or surety bond is unconditional[12] and cannot therefore be trifled with. It is the intendment of the law that employees be assured that if they finally prevail in the case, they will receive the monetary award granted them. The bond also serves to discourage employers from using the appeal as a ploy to delay or evade payment of monetary obligations to their employees. WHEREFORE, the petition is hereby DISMISSED for lack of merit; the decision of the NLRC dated February 26, 1995 is AFFIRMED and the questioned alias writ of execution UPHELD. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. L-53515 February 8, 1989 SAN MIGUEL BREWERY SALES FORCE UNION (PTGWO), petitioner, vs. HON. BLAS F. OPLE, as Minister of Labor and SAN MIGUEL CORPORATION, respondents. Lorenzo F. Miravite for petitioner. Isidro D. Amoroso for New San Miguel Corp. Sales Force Union. Siguion Reyna, Montecillo & Ongsiako for private respondent. GRIO-AQUINO, J.: This is a petition for review of the Order dated February 28, 1980 of the Minister of Labor in Labor Case No. AJML-069-79, approving the private respondent's marketing scheme, known as the "Complementary Distribution System" (CDS) and dismissing the petitioner labor union's complaint for unfair labor practice. On April 17, 1978, a collective bargaining agreement (effective on May 1, 1978 until January 31, 1981) was entered into by petitioner San Miguel Corporation Sales Force Union (PTGWO), and the private respondent, San Miguel Corporation, Section 1, of Article IV of which provided as follows: Art. IV, Section 1. Employees within the appropriate bargaining unit shall be entitled to a basic monthly compensation plus commission based on their respective sales. (p. 6, Annex A; p. 113, Rollo.) In September 1979, the company introduced a marketing scheme known as the "Complementary Distribution System" (CDS) whereby its beer products were offered for sale directly to wholesalers through San Miguel's sales offices. The labor union (herein petitioner) filed a complaint for unfair labor practice in the Ministry of Labor, with a notice of strike on the ground that the CDS was contrary to the existing marketing scheme whereby the Route Salesmen were assigned specific territories within which to sell their stocks of beer, and wholesalers had to buy beer products from them, not from the company. It was alleged that the new marketing scheme violates Section 1, Article IV of the collective bargaining agreement because the introduction of the CDS would reduce the takehome pay of the salesmen and their truck helpers for the company would be unfairly competing with them. The complaint filed by the petitioner against the respondent company raised two issues: (1) whether the CDS violates the collective bargaining agreement, and (2) whether it is an indirect way of busting the union. In its order of February 28, 1980, the Minister of Labor found: ... We see nothing in the record as to suggest that the unilateral action of the employer in inaugurating the new sales scheme was designed to discourage union organization or diminish its influence, but rather it is undisputable that the establishment of such scheme was part of its overall plan to improve efficiency and economy and at the same time gain profit to the highest. While it may be admitted that the introduction of new sales plan somewhat disturbed the present set-up, the change however was too insignificant as to convince this Office to interpret that the innovation interferred with the worker's right to self-organization. Petitioner's conjecture that the new plan will sow dissatisfaction from its ranks is already a prejudgment of the plan's viability and effectiveness. It is like saying that the plan will not work out to the workers' [benefit] and therefore management must adopt a new system of

marketing. But what the petitioner failed to consider is the fact that corollary to the adoption of the assailed marketing technique is the effort of the company to compensate whatever loss the workers may suffer because of the new plan over and above than what has been provided in the collective bargaining agreement. To us, this is one indication that the action of the management is devoid of any anti-union hues. (pp. 24-25, Rollo.) The dispositive part of the Minister's Order reads: WHEREFORE, premises considered, the notice of strike filed by the petitioner, San Miguel Brewery Sales Force Union-PTGWO is hereby dismissed. Management however is hereby ordered to pay an additional three (3) months back adjustment commissions over and above the adjusted commission under the complementary distribution system. (p. 26, Rollo.) The petition has no merit. Public respondent was correct in holding that the CDS is a valid exercise of management prerogatives: Except as limited by special laws, an employer is free to regulate, according to his own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place and manner of work, tools to be used, processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, lay-off of workers and the discipline, dismissal and recall of work. ... (NLU vs. Insular La Yebana Co., 2 SCRA 924; Republic Savings Bank vs. CIR 21 SCRA 226, 235.) (Perfecto V. Hernandez, Labor Relations Law, 1985 Ed., p. 44.) (Emphasis ours.) Every business enterprise endeavors to increase its profits. In the process, it may adopt or devise means designed towards that goal. In Abbott Laboratories vs. NLRC, 154 SCRA 713, We ruled: ... Even as the law is solicitous of the welfare of the employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. The free will of management to conduct its own business affairs to achieve its purpose cannot be denied. So long as a company's management prerogatives are exercised in good faith for the advancement of the employer's interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements, this Court will uphold them (LVN Pictures Workers vs. LVN, 35 SCRA 147; Phil. American Embroideries vs. Embroidery and Garment Workers, 26 SCRA 634; Phil. Refining Co. vs. Garcia, 18 SCRA 110). San Miguel Corporation's offer to compensate the members of its sales force who will be adversely affected by the implementation of the CDS by paying them a so-called "back adjustment commission" to make up for the commissions they might lose as a result of the CDS proves the company's good faith and lack of intention to bust their union. WHEREFORE, the petition for certiorari is dismissed for lack of merit. SO ORDERED. G.R. No. 101761. March 24, 1993.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION NATIONAL SUGAR REFINERIES CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and NBSR SUPERVISORY UNION, (PACIWU) TUCP, respondents. Jose Mario C. Bunag for petitioner. The Solicitor General and the Chief Legal Officer, NLRC, for public respondent. Zoilo V. de la Cruz for private respondent. DECISION REGALADO, J p: The main issue presented for resolution in this original petition for certiorari is whether supervisory employees, as defined in Article 212 (m), Book V of the Labor Code, should be considered as officers or members of the managerial staff under Article 82, Book III of the same Code, and hence are not entitled to overtime rest day and holiday pay. Petitioner National Sugar Refineries Corporation (NASUREFCO), a corporation which is fully owned and controlled by the Government, operates three (3) sugar refineries located at Bukidnon, Iloilo and Batangas. The Batangas refinery was privatized on April 11, 1992 pursuant to Proclamation No. 50. 1 Private respondent union represents the former supervisors of the NASUREFCO Batangas Sugar Refinery, namely, the Technical Assistant to the Refinery Operations Manager, Shift Sugar Warehouse Supervisor, Senior Financial/Budget Analyst, General Accountant, Cost Accountant, Sugar Accountant, Junior Financial/Budget Analyst, Shift Boiler Supervisor,, Shift Operations Chemist, Shift Electrical Supervisor, General Services Supervisor, Instrumentation Supervisor, Community Development Officer, Employment and Training Supervisor, Assistant Safety and Security Officer, Head and Personnel Services, Head Nurse, Property Warehouse Supervisor, Head of Inventory Control Section, Shift Process Supervisor, Day Maintenance Supervisor and Motorpool Supervisor. On June 1, 1988, petitioner implemented a Job Evaluation (JE) Program affecting all employees, from rank-andfile to department heads. The JE Program was designed to rationalized the duties and functions of all positions, reestablish levels of responsibility, and recognize both wage and operational structures. Jobs were ranked according to effort, responsibility, training and working conditions and relative worth of the job. As a result, all positions were re-evaluated, and all employees including the members of respondent union were granted salary adjustments and increases in benefits commensurate to their actual duties and functions. We glean from the records that for about ten years prior to the JE Program, the members of respondent union were treated in the same manner as rank-and file employees. As such, they used to be paid overtime, rest day and holiday pay pursuant to the provisions of Articles 87, 93 and 94 of the Labor Code as amended. With the implementation of the JE Program, the following adjustments were made: (1) the members of respondent union were re-classified under levels S-5 to S-8 which are considered managerial staff for purposes of compensation and benefits; (2) there was an increase in basic pay of the average of 50% of their basic pay prior to the JE Program, with the union members now enjoying a wide gap (P1,269.00 per month) in basic pay compared to the highest paid rank-and-file employee; (3) longevity pay was increased on top of alignment adjustments; (4) they were entitled to increased company COLA of P225.00 per month; (5) there was a grant of P100.00 allowance for rest day/holiday work. On May 11, 1990, petitioner NASUREFCO recognized herein respondent union, which was organized pursuant to Republic Act NO. 6715 allowing supervisory employees to form their own unions, as the bargaining representative of all the supervisory employees at the NASUREFCO Batangas Sugar Refinery.

Two years after the implementation of the JE Program, specifically on June 20, 1990, the members of herein respondent union filed a complainant with the executive labor arbiter for non-payment of overtime, rest day and holiday pay allegedly in violation of Article 100 of the Labor Code. On January 7, 1991, Executive Labor Arbiter Antonio C. Pido rendered a decision 2 disposing as follows: "WHEREFORE, premises considered, respondent National Sugar refineries Corporation is hereby directed to 1. pay the individual members of complainant union the usual overtime pay, rest day pay and holiday pay enjoyed by them instead of the P100.00 special allowance which was implemented on June 11, 1988; and 2. pay the individual members of complainant union the difference in money value between the P100.00 special allowance and the overtime pay, rest day pay and holiday pay that they ought to have received from June 1, 1988. All other claims are hereby dismissed for lack of merit. SO ORDERED." In finding for the members therein respondent union, the labor ruled that the along span of time during which the benefits were being paid to the supervisors has accused the payment thereof to ripen into contractual obligation; at the complainants cannot be estopped from questioning the validity of the new compensation package despite the fact that they have been receiving the benefits therefrom, considering that respondent union was formed only a year after the implementation of the Job Evaluation Program, hence there was no way for the individual supervisors to express their collective response thereto prior to the formation of the union; and the comparative computations presented by the private respondent union showed that the P100.00 special allowance given NASUREFCO fell short of what the supervisors ought to receive had the overtime pay rest day pay and holiday pay not been discontinued, which arrangement, therefore, amounted to a diminution of benefits. On appeal, in a decision promulgated on July 19, 1991 by its Third Division, respondent National Labor Relations Commission (NLRC) affirmed the decision of the labor arbiter on the ground that the members of respondent union are not managerial employees, as defined under Article 212 (m) of the Labor Code and, therefore, they are entitled to overtime, rest day and holiday pay. Respondent NLRC declared that these supervisory employees are merely exercising recommendatory powers subject to the evaluation, review and final action by their department heads; their responsibilities do not require the exercise of discretion and independent judgment; they do not participate in the formulation of management policies nor in the hiring or firing of employees; and their main function is to carry out the ready policies and plans of the corporation. 3 Reconsideration of said decision was denied in a resolution of public respondent dated August 30, 1991. 4 Hence this petition for certiorari, with petitioner NASUREFCO asseverating that public respondent commission committed a grave abuse of discretion in refusing to recognized the fact that the members of respondent union are members of the managerial staff who are not entitled to overtime, rest day and holiday pay; and in making petitioner assume the "double burden" of giving the benefits due to rank-and-file employees together with those due to supervisors under the JE Program. We find creditable merit in the petition and that the extraordinary writ of certiorari shall accordingly issue. The primordial issue to be resolved herein is whether the members of respondent union are entitled to overtime, rest day and holiday pay. Before this can be resolved, however it must of necessity be ascertained first whether or not the union members, as supervisory employees, are to be considered as officers or members of the managerial staff who are exempt from the coverage of Article 82 of the Labor Code. It is not disputed that the members of respondent union are supervisory employees, as defined employees, as defined under Article 212(m), Book V of the Labor Code on Labor Relations, which reads: "(m) 'Managerial employee' is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharged, assign or discipline employees. Supervisory employees are those who, in the interest of the employer effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the

use of independent judgment. All employees not falling within any of those above definitions are considered rank-and-file employees of this Book." Respondent NLRC, in holding that the union members are entitled to overtime, rest day and holiday pay, and in ruling that the latter are not managerial employees, adopted the definition stated in the aforequoted statutory provision. Petitioner, however, avers that for purposes of determining whether or not the members of respondent union are entitled to overtime, rest day and holiday pay, said employees should be considered as "officers or members of the managerial staff" as defined under Article 82, Book III of the Labor Code on "Working Conditions and Rest Periods" and amplified in Section 2, Rule I, Book III of the Rules to Implement the Labor Code, to wit: "Art. 82 Coverage. The provisions 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. "As used herein, 'managerial employees' refer to those whose primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof, and to other officers or members of the managerial staff." (Emphasis supplied.) xxx xxx xxx 'Sec. 2. Exemption. The provisions of this rule shall not apply to the following persons if they qualify for exemption under the condition set forth herein: xxx xxx xxx (b) Managerial employees, if they meet all of the following conditions, namely: (1) Their primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof: (2) They customarily and regularly direct the work of two or more employees therein: (3) They have the authority to hire or fire other employees of lower rank; or their suggestions and recommendations as to the hiring and firing and as to the promotion or any other change of status of other employees are given particular weight. (c) Officers or members of a managerial staff if they perform the following duties and responsibilities: (1) The primary duty consists of the performance of work directly related to management policies of their employer; (2) Customarily and regularly exercise discretion and independent judgment; (3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the management of the establishment in which he is employed or subdivision thereof; or (ii) execute under general supervision work along specialized or technical lines requiring special training, experience, or knowledge; or (iii) execute under general supervision special assignments and tasks; and (4) Who do not devote more 20 percent of their hours worked in a work-week to activities which are not directly and closely related to the performance of the work described in paragraphs (1), (2), and above." It is the submission of petitioner that while the members of respondent union, as supervisors, may not be occupying managerial positions, they are clearly officers or members of the managerial staff because they meet all the conditions prescribed by law and, hence, they are not entitled to overtime, rest day and supervisory employees under Article 212 (m) should be made to apply only to the provisions on Labor Relations, while the right of said employees to the questioned benefits should be considered in the light of the meaning of a managerial employee and of the officers or members of the managerial staff, as contemplated under Article 82 of the Code and Section 2, Rule I Book III of the implementing rules. In other words, for purposes of forming and

joining unions, certification elections, collective bargaining, and so forth, the union members are supervisory employees. In terms of working conditions and rest periods and entitlement to the questioned benefits, however, they are officers or members of the managerial staff, hence they are not entitled thereto. 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 own rights which, as such, are entitled to respect and enforcement in the interest of simple fair play. Out of its concern for those with less privileges in life, this Court has inclined more often than not toward the worker and upheld his cause in his conflicts with the employer. Such favoritism, however, has not blinded us to the rule that justice is in every case for the deserving, to be dispensed in the light of the established facts and the applicable law and doctrine. 5 This is one such case where we are inclined to tip the scales of justice in favor of the employer. The question whether a given employee is exempt from the benefits of the law is a factual one dependent on the circumstances of the particular case, In determining whether an employee is within the terms of the statutes, the criterion is the character of the work performed, rather than the title of the employee's position. 6 Consequently, while generally this Court is not supposed to review the factual findings of respondent commission, substantial justice and the peculiar circumstances obtaining herein mandate a deviation from the rule. A cursory perusal of the Job Value Contribution Statements 7 of the union members will readily show that these supervisory employees are under the direct supervision of their respective department superintendents and that generally they assist the latter in planning, organizing, staffing, directing, controlling communicating and in making decisions in attaining the company's set goals and objectives. These supervisory employees are likewise responsible for the effective and efficient operation of their respective departments. More specifically, their duties and functions include, among others, the following operations whereby the employee: 1) assists the department superintendent in the following: a) planning of systems and procedures relative to department activities; b) organizing and scheduling of work activities of the department, which includes employee shifting scheduled and manning complement; c) decision making by providing relevant information data and other inputs; d) attaining the company's set goals and objectives by giving his full support; e) selecting the appropriate man to handle the job in the department; and f) preparing annual departmental budget; 2) observes, follows and implements company policies at all times and recommends disciplinary action on erring subordinates; 3) trains and guides subordinates on how to assume responsibilities and become more productive; 4) conducts semi-annual performance evaluation of his subordinates and recommends necessary action for their development/advancement; 5) represents the superintendent or the department when appointed and authorized by the former; 6) coordinates and communicates with other inter and intra department supervisors when necessary; 7) recommends disciplinary actions/promotions; 8) recommends measures to improve work methods, equipment performance, quality of service and working conditions;

9) sees to it that safety rules and regulations and procedure and are implemented and followed by all NASUREFCO employees, recommends revisions or modifications to said rules when deemed necessary, and initiates and prepares reports for any observed abnormality within the refinery; 10) supervises the activities of all personnel under him and goes to it that instructions to subordinates are properly implemented; and 11) performs other related tasks as may be assigned by his immediate superior. From the foregoing, it is apparent that the members of respondent union discharge duties and responsibilities which ineluctably qualify them as officers or members of the managerial staff, as defined in Section 2, Rule I Book III of the aforestated Rules to Implement the Labor Code, viz.: (1) their primary duty consists of the performance of work directly related to management policies of their employer; (2) they customarily and regularly exercise discretion and independent judgment; (3) they regularly and directly assist the managerial employee whose primary duty consist of the management of a department of the establishment in which they are employed (4) they execute, under general supervision, work along specialized or technical lines requiring special training, experience, or knowledge; (5) they execute, under general supervision, special assignments and tasks; and (6) they do not devote more than 20% of their hours worked in a work-week to activities which are not directly and clearly related to the performance of their work hereinbefore described. Under the facts obtaining in this case, we are constrained to agree with petitioner that the union members should be considered as officers and members of the managerial staff and are, therefore, exempt from the coverage of Article 82. Perforce, they are not entitled to overtime, rest day and holiday. The distinction made by respondent NLRC on the basis of whether or not the union members are managerial employees, to determine the latter's entitlement to the questioned benefits, is misplaced and inappropriate. It is admitted that these union members are supervisory employees and this is one instance where the nomenclatures or titles of their jobs conform with the nature of their functions. Hence, to distinguish them from a managerial employee, as defined either under Articles 82 or 212 (m) of the Labor Code, is puerile and in efficacious. The controversy actually involved here seeks a determination of whether or not these supervisory employees ought to be considered as officers or members of the managerial staff. The distinction, therefore, should have been made along that line and its corresponding conceptual criteria. II. We likewise no not subscribe to the finding of the labor arbiter that the payment of the questioned benefits to the union members has ripened into a contractual obligation. A. Prior to the JE Program, the union members, while being supervisors, received benefits similar to the rankand-file employees such as overtime, rest day and holiday pay, simply because they were treated in the same manner as rank-and-file employees, and their basic pay was nearly on the same level as those of the latter, aside from the fact that their specific functions and duties then as supervisors had not been properly defined and delineated from those of the rank-and-file. Such fact is apparent from the clarification made by petitioner in its motion for reconsideration 8 filed with respondent commission in NLRC Case No. CA No. I-000058, dated August 16, 1991, wherein, it lucidly explained: "But, complainants no longer occupy the same positions they held before the JE Program. Those positions formerly classified as 'supervisory' and found after the JE Program to be rank-and-file were classified correctly and continue to receive overtime, holiday and restday pay. As to them, the practice subsists. "However, those whose duties confirmed them to be supervisory, were re-evaluated, their duties re-defined and in most cases their organizational positions re-designated to confirm their superior rank and duties. Thus, after the JE program, complainants cannot be said to occupy the same positions." 9 It bears mention that this positional submission was never refuted nor controverted by respondent union in any of its pleadings filed before herein public respondent or with this Court. Hence, it can be safely concluded therefrom that the members of respondent union were paid the questioned benefits for the reason that, at that time, they were rightfully entitled thereto. Prior to the JE Program, they could not be categorically classified as members or officers of the managerial staff considering that they were then treated merely on the same level as rank-and-file. Consequently, the payment thereof could not be construed as constitutive of voluntary employer

practice, which cannot be now be unilaterally withdrawn by petitioner. To be considered as such, it should have been practiced over a long period of time, and must be shown to have been consistent and deliberate. 10 The test or rationale of this rule on long practice requires an indubitable showing that the employer agreed to continue giving the benefits knowingly fully well that said employees are not covered by the law requiring payment thereof. 11 In the case at bar, respondent union failed to sufficiently establish that petitioner has been motivated or is wont to give these benefits out of pure generosity. B. It remains undisputed that the implementation of the JE Program, the members of private respondent union were re-classified under levels S-5 S-8 which were considered under the program as managerial staff purposes of compensation and benefits, that they occupied re-evaluated positions, and that their basic pay was increased by an average of 50% of their basic salary prior to the JE Program. In other words, after the JE Program there was an ascent in position, rank and salary. This in essence is a promotion which is defined as the advancement from one position to another with an increase in duties and responsibilities as authorized by law, and usually accompanied by an increase in salary. 12 Quintessentially, with the promotion of the union members, they are no longer entitled to the benefits which attach and pertain exclusively to their positions. Entitlement to the benefits provided for by law requires prior compliance with the conditions set forth therein. With the promotion of the members of respondent union, they occupied positions which no longer met the requirements imposed by law. Their assumption of these positions removed them from the coverage of the law, ergo, their exemption therefrom. As correctly pointed out by petitioner, if the union members really wanted to continue receiving the benefits which attach to their former positions, there was nothing to prevent them from refusing to accept their promotions and their corresponding benefits. As the sating goes by, they cannot have their cake and eat it too or, as petitioner suggests, they could not, as a simple matter of law and fairness, get the best of both worlds at the expense of NASUREFCO. Promotion of its employees is one of the jurisprudentially-recognized exclusive prerogatives of management, provided it is done in good faith. In the case at bar, private respondent union has miserably failed to convince this Court that the petitioner acted implementing the JE Program. There is no showing that the JE Program was intended to circumvent the law and deprive the members of respondent union of the benefits they used to receive. Not so long ago, on this particular score, we had the occasion to hold that: ". . . it is the prerogative of the management to regulate, according to its discretion and judgment, all aspects of employment. This flows from the established rule that labor law does not authorize the substitution of the judgment of the employer in the conduct of its business. Such management prerogative may be availed of without fear of any liability so long as it is exercised in good faith for the advancement of the employer's interest and not for the purpose of defeating on circumventing the rights of employees under special laws or valid agreement and are not exercised in a malicious, harsh, oppressive, vindictive or wanton manner or out of malice or spite." 13 WHEREFORE, the impugned decision and resolution of respondent National Labor Relations Commission promulgated on July 19, 1991 and August 30, 1991, respectively, are hereby ANNULLED and SET ASIDE for having been rendered and adopted with grave abuse of discretion, and the basic complaint of private respondent union is DISMISSED. G.R. No. 94951 April 22, 1991

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION

APEX MINING COMPANY, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and SINCLITICA CANDIDO, respondents. Bernabe B. Alabastro for petitioner. Angel Fernandez for private respondent. GANCAYCO, J.:p Is the househelper in the staff houses of an industrial company a domestic helper or a regular employee of the said firm? This is the novel issue raised in this petition. Private respondent Sinclita Candida was employed by petitioner Apex Mining Company, Inc. on May 18, 1973 to perform laundry services at its staff house located at Masara, Maco, Davao del Norte. In the beginning, she was paid on a piece rate basis. However, on January 17, 1982, she was paid on a monthly basis at P250.00 a month which was ultimately increased to P575.00 a month. On December 18, 1987, while she was attending to her assigned task and she was hanging her laundry, she accidentally slipped and hit her back on a stone. She reported the accident to her immediate supervisor Mila de la Rosa and to the personnel officer, Florendo D. Asirit. As a result of the accident she was not able to continue with her work. She was permitted to go on leave for medication. De la Rosa offered her the amount of P 2,000.00 which was eventually increased to P5,000.00 to persuade her to quit her job, but she refused the offer and preferred to return to work. Petitioner did not allow her to return to work and dismissed her on February 4, 1988. On March 11, 1988, private respondent filed a request for assistance with the Department of Labor and Employment. After the parties submitted their position papers as required by the labor arbiter assigned to the case on August 24, 1988 the latter rendered a decision, the dispositive part of which reads as follows: WHEREFORE, Conformably With The Foregoing, judgment is hereby rendered ordering the respondent, Apex Mining Company, Inc., Masara, Davao del Norte, to pay the complainant, to wit: 1 Salary Differential P16,289.20 2. Emergency Living Allowance 12,430.00 3. 13th Month Pay Differential 1,322.32 4. Separation Pay (One-month for every year of

service [1973-19881) 25,119.30 or in the total of FIFTY FIVE THOUSAND ONE HUNDRED SIXTY ONE PESOS AND 42/100 (P55,161.42). SO ORDERED. 1 Not satisfied therewith, petitioner appealed to the public respondent National Labor Relations Commission (NLRC), wherein in due course a decision was rendered by the Fifth Division thereof on July 20, 1989 dismissing the appeal for lack of merit and affirming the appealed decision. A motion for reconsideration thereof was denied in a resolution of the NLRC dated June 29, 1990. Hence, the herein petition for review by certiorari, which appopriately should be a special civil action for certiorari, and which in the interest of justice, is hereby treated as such. 2 The main thrust of the petition is that private respondent should be treated as a mere househelper or domestic servant and not as a regular employee of petitioner. The petition is devoid of merit. Under Rule XIII, Section l(b), Book 3 of the Labor Code, as amended, the terms "househelper" or "domestic servant" are defined as follows: The term "househelper" as used herein is synonymous to the term "domestic servant" and shall refer to any person, whether male or female, who renders services in and about the employer's home and which services are usually necessary or desirable for the maintenance and enjoyment thereof, and ministers exclusively to the personal comfort and enjoyment of the employer's family. 3 The foregoing definition clearly contemplates such househelper or domestic servant who is employed in the employer's home to minister exclusively to the personal comfort and enjoyment of the employer's family. Such definition covers family drivers, domestic servants, laundry women, yayas, gardeners, houseboys and other similar househelps. The definition cannot be interpreted to include househelp or laundrywomen working in staffhouses of a company, like petitioner who attends to the needs of the company's guest and other persons availing of said facilities. By the same token, it cannot be considered to extend to then driver, houseboy, or gardener exclusively working in the company, the staffhouses and its premises. They may not be considered as within the meaning of a "househelper" or "domestic servant" as above-defined by law. The criteria is the personal comfort and enjoyment of the family of the employer in the home of said employer. While it may be true that the nature of the work of a househelper, domestic servant or laundrywoman in a home or in a company staffhouse may be similar in nature, the difference in their circumstances is that in the former instance they are actually serving the family while in the latter case, whether it is a corporation or a single proprietorship engaged in business or industry or any other agricultural or similar pursuit, service is being rendered in the staffhouses or within the premises of the business of the employer. In such instance, they are employees of the company or employer in the business concerned entitled to the privileges of a regular employee. Petitioner contends that it is only when the househelper or domestic servant is assigned to certain aspects of the business of the employer that such househelper or domestic servant may be considered as such as employee. The Court finds no merit in making any such distinction. The mere fact that the househelper or domestic servant is working within the premises of the business of the employer and in relation to or in connection with its business, as in its staffhouses for its guest or even for its officers and employees, warrants the conclusion that such househelper or domestic servant is and should be considered as a regular employee of the employer and not as a mere family househelper or domestic servant as contemplated in Rule XIII, Section l(b), Book 3 of the Labor Code, as amended. Petitioner denies having illegally dismissed private respondent and maintains that respondent abandoned her work. This argument notwithstanding, there is enough evidence to show that because of an accident which took

place while private respondent was performing her laundry services, she was not able to work and was ultimately separated from the service. She is, therefore, entitled to appropriate relief as a regular employee of petitioner. Inasmuch as private respondent appears not to be interested in returning to her work for valid reasons, the payment of separation pay to her is in order. WHEREFORE, the petition is DISMISSED and the appealed decision and resolution of public respondent NLRC are hereby AFFIRMED. No pronouncement as to costs. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-18353 July 31, 1963 SAN MIGUEL BREWERY, INC., petitioner, vs. DEMOCRATIC LABOR ORGANIZATION, ET AL., respondents. Paredes, Poblador, Cruz and Nazareno for petitioner. Delfin N. Mercader for respondents. BAUTISTA ANGELO, J.: On January 27, 1955, the Democratic Labor Association filed complaint against the San Miguel Brewery, Inc. embodying 12 demands for the betterment of the conditions of employment of its members. The company filed its answer to the complaint specifically denying its material averments and answering the demands point by point. The company asked for the dismissal of the complaint. At the hearing held sometime in September, 1955, the union manifested its desire to confine its claim to its demands for overtime, night-shift differential pay, and attorney's fees, although it was allowed to present evidence on service rendered during Sundays and holidays, or on its claim for additional separation pay and sick and vacation leave compensation.1wph1.t After the case had been submitted for decision, Presiding Judge Jose S. Bautista, who was commissioned to receive the evidence, rendered decision expressing his disposition with regard to the points embodied in the complaint on which evidence was presented. Specifically, the disposition insofar as those points covered by this petition for review are concerned, is as follows: 1. With regard to overtime compensation, Judge Bautista held that the provisions of the Eight-Hour Labor Law apply to the employees concerned for those working in the field or engaged in the sale of the company's products outside its premises and consequently they should be paid the extra compensation accorded them by said law in addition to the monthly salary and commission earned by them, regardless of the meal allowance given to employees who work up to late at night. 2. As to employees who work at night, Judge Bautista decreed that they be paid their corresponding salary differentials for work done at night prior to January 1, 1949 with the present qualification: 25% on the basis of their salary to those who work from 6:00 to 12:00 p.m., and 75% to those who work from 12:01 to 6:00 in the morning. 3. With regard to work done during Sundays and holidays, Judge Bautista also decreed that the employees concerned be paid an additional compensation of 25% as provided for in Commonwealth Act No. 444 even if they had been paid a compensation on monthly salary basis. The demands for the application of the Minimum Wage Law to workers paid on "pakiao" basis, payment of accumulated vacation and sick leave and attorney's fees, as well as the award of additional separation pay, were either dismissed, denied, or set aside. Its motion for reconsideration having been denied by the industrial court en banc, which affirmed the decision of the court a quo with few exceptions, the San Miguel Brewery, Inc. interposed the present petition for review. Anent the finding of the court a quo, as affirmed by the Court of Industrial Relations, to the effect that outside or field sales personnel are entitled to the benefits of the Eight-Hour Labor Law, the pertinent facts are as follows: After the morning roll call, the employees leave the plant of the company to go on their respective sales routes either at 7:00 a.m. for soft drinks trucks, or 8:00 a.m. for beer trucks. They do not have a daily time record. The company never require them to start their work as outside sales personnel earlier than the above schedule.

The sales routes are so planned that they can be completed within 8 hours at most, or that the employees could make their sales on their routes within such number of hours variable in the sense that sometimes they can be completed in less than 8 hours, sometimes 6 to 7 hours, or more. The moment these outside or field employees leave the plant and while in their sales routes they are on their own, and often times when the sales are completed, or when making short trip deliveries only, they go back to the plant, load again, and make another round of sales. These employees receive monthly salaries and sales commissions in variable amounts. The amount of compensation they receive is uncertain depending upon their individual efforts or industry. Besides the monthly salary, they are paid sales commission that range from P30, P40, sometimes P60, P70, to sometimes P90, P100 and P109 a month, at the rate of P0.01 to P0.01- per case. It is contended that since the employees concerned are paid a commission on the sales they make outside of the required 8 hours besides the fixed salary that is paid to them, the Court of Industrial Relations erred in ordering that they be paid an overtime compensation as required by the Eight-Hour Labor Law for the reason that the commission they are paid already takes the place of such overtime compensation. Indeed, it is claimed, overtime compensation is an additional pay for work or services rendered in excess of 8 hours a day by an employee, and if the employee is already given extra compensation for labor performed in excess of 8 hours a day, he is not covered by the law. His situation, the company contends, can be likened to an employee who is paid on piece-work, "pakiao", or commission basis, which is expressly excluded from the operation of the EightHour Labor Law.1 We are in accord with this view, for in our opinion the Eight-Hour Labor Law only has application where an employee or laborer is paid on a monthly or daily basis, or is paid a monthly or daily compensation, in which case, if he is made to work beyond the requisite period of 8 hours, he should be paid the additional compensation prescribed by law. This law has no application when the employee or laborer is paid on a piecework, "pakiao", or commission basis, regardless of the time employed. The philosophy behind this exemption is that his earnings in the form of commission based on the gross receipts of the day. His participation depends upon his industry so that the more hours he employs in the work the greater are his gross returns and the higher his commission. This philosophy is better explained in Jewel Tea Co. v. Williams, C.C.A. Okla., 118 F. 2d 202, as follows: The reasons for excluding an outside salesman are fairly apparent. Such salesman, to a greater extent, works individually. There are no restrictions respecting the time he shall work and he can earn as much or as little, within the range of his ability, as his ambition dictates. In lieu of overtime he ordinarily receives commissions as extra compensation. He works away from his employer's place of business, is not subject to the personal supervision of his employer, and his employer has no way of knowing the number of hours he works per day. True it is that the employees concerned are paid a fixed salary for their month of service, such as Benjamin Sevilla, a salesman, P215; Mariano Ruedas, a truck driver, P155; Alberto Alpaza and Alejandro Empleo, truck helpers, P125 each, and sometimes they work in excess of the required 8-hour period of work, but for their extra work they are paid a commission which is in lieu of the extra compensation to which they are entitled. The record shows that these employees during the period of their employment were paid sales commission ranging from P30, P40, sometimes P60, P70, to sometimes P90, P100 and P109 a month depending on the volume of their sales and their rate of commission per case. And so, insofar is the extra work they perform, they can be considered as employees paid on piece work, "pakiao", or commission basis. The Department of Labor, called upon to implement, the Eight-Hour Labor Law, is of this opinion when on December 9, 1957 it made the ruling on a query submitted to it, thru the Director of the Bureau of Labor Standards, to the effect that field sales personnel receiving regular monthly salaries, plus commission, are not subject to the Eight-Hour Labor Law. Thus, on this point, said official stated: . . . Moreover, when a fieldman receives a regular monthly salary plus commission on percentage basis of his sales, it is also the established policy of the Office to consider his commission as payment for the extra time he renders in excess of eight hours, thereby classifying him as if he were on piecework basis, and therefore, technically speaking, he is not subject to the Eight-Hour Labor Law.

We are, therefore, of the opinion that the industrial court erred in holding that the Eight-Hour Labor Law applies to the employees composing the outside service force and in ordering that they be paid the corresponding additional compensation. With regard to the claim for night salary differentials, the industrial court found that claimants Magno Johnson and Jose Sanchez worked with the respondent company during the period specified by them in their testimony and that watchmen Zoilo Illiga, Inocentes Prescillas and Daniel Cayuca rendered night duties once every three weeks continuously during the period of the employment and that they were never given any additional compensation aside from their monthly regular salaries. The court found that the company started paying night differentials only in January, 1949 but never before that time. And so it ordered that the employees concerned be paid 25% additional compensation for those who worked from 6:00 to 12:00 p.m. and 75% additional compensation for those who worked from 12:01 to 6: 00 in the morning. It is now contended that this ruling is erroneous because an award for night shift differentials cannot be given retroactive effect but can only be entertained from the date of demand which was on January 27, 1953, citing in support thereof our ruling in Earnshaws Docks & Honolulu Iron Works v. The Court of Industrial Relations, et al., L-8896, January 25, 1957. This ruling, however, has no application here for it appears that before the filing of the petition concerning this claim a similar one had already been filed long ago which had been the subject of negotiations between the union and the company which culminated in a strike in 1952. Unfortunately, however, the strike fizzled out and the strikers were ordered to return to work with the understanding that the claim for night salary differentials should be settled in court. It is perhaps for this reason that the court a quo granted this claim in spite of the objection of the company to the contrary. The remaining point to be determined refers to the claim for pay for Sundays and holidays for service performed by some claimants who were watchmen or security guards. It is contended that these employees are not entitled to extra pay for work done during these days because they are paid on a monthly basis and are given one day off which may take the place of the work they may perform either on Sunday or any holiday. We disagree with this claim because it runs counter to law. Section 4 of Commonwealth Act No. 444 expressly provides that no person, firm or corporation may compel an employee or laborer to work during Sundays and legal holidays unless he is paid an additional sum of 25% of his regular compensation. This proviso is mandatory, regardless of the nature of compensation. The only exception is with regard to public utilities who perform some public service. WHEREFORE, the decision of the industrial court is hereby modified as follows: the award with regard to extra work performed by those employed in the outside or field sales force is set aside. The rest of the decision insofar as work performed on Sundays and holidays covering watchmen and security guards, as well as the award for night salary differentials, is affirmed. No costs.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 96078 January 9, 1992 HILARIO RADA, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION (Second Division) and PHILNOR CONSULTANTS AND PLANNERS, INC., respondents. Cabellero, Calub, Aumentado & Associates Law Offices for petitioner. REGALADO, J.: In this special civil action for certiorari, petitioner Rada seeks to annul the decision of respondent National Labor Relations Commission (NLRC), dated November 19, 1990, reversing the decision of the labor arbiter which ordered the reinstatement of petitioner with backwages and awarded him overtime pay. 1 The facts, as stated in the Comment of private respondent Philnor Consultants and Planners, Inc. (Philnor), are as follows: Petitioner's initial employment with this Respondent was under a "Contract of Employment for a Definite Period" dated July 7, 1977, copy of 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 xxx xxx Highlighting the nature of Petitioner's employment, Annex A specifically provides as follows: It 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 Employee's 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 coterminus 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) Petitioner's 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 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" . . . 2 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 non-payment of separation pay and overtime pay. On June 3, 1987, Philnor filed its Position Paper alleging, inter alia, that petitioner was not illegally terminated since the project for which he was hired was completed; that he was hired under three distinct contracts of employment, each of which was for a definite period, all within the estimated period of MNEE Stage 2 Project, covering different phases or areas of the said project; that his work was strictly confined to the MNEE Stage 2 Project and that he was never assigned to any other project of Philnor; that he did not render overtime services and that there was no demand or claim for him for such overtime pay; that he signed a "Release, Waiver and Quitclaim" releasing Philnor from all obligations and claims; and that Philnor's business is to provide engineering consultancy services, including supervision of construction services, such that it hires employees according to the requirements of the project manning schedule of a particular contract. 3 On July 2, 1987, 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 form Monday to Saturday for a period of three years. On July 7, 1987, petitioner filed his Position Paper claiming that he was illegally dismissed since he was a regular employee entitled to security of tenure; that he was not a project employee since Philnor is not engaged in the construction business as to be covered by Policy Instructions No. 20; that the contract of employment for a definite period executed between him and Philnor is against public policy and a clear circumvention of the law designed merely to evade any benefits or liabilities under the statute; that his position as driver was essential, necessary and desirable to the conduct of the business of Philnor; that he rendered overtime work until 6:00 p.m. daily except Sundays and holidays and, therefore, he was entitled to overtime pay. 4 In his Reply to Respondent's Position Paper, petitioner claimed that he was a regular employee pursuant to Article 278(c) of the Labor Code and, thus, he cannot be terminated except for a just cause under Article 280 of the Code; and that the public respondent's ruling in Quiwa vs. Philnor Consultants and Planners, Inc. 5 is not applicable to his case since he was an administrative employee working as a company driver, which position still exists and is essential to the conduct of the business of Philnor even after the completion of his contract of

employment. 6 Petitioner likewise avers that the contract of employment for a definite period entered into between him and Philnor was a ploy to defeat the intent of Article 280 of the Labor Code. On July 28, 1987, Philnor filed its Respondent's Supplemental Position Paper, alleging therein that petitioner was not a company driver since his job was to drive the employees hired to work at the MNEE Stage 2 Project to and from the filed office at Sto. Domingo Interchange, Pampanga; that the office hours observed in the project were from 7:00 a.m. to 4:00 p.m. Mondays through Saturdays; that Philnor adopted the policy of allowing certain employees, not necessarily the project driver, to bring home project vehicles to afford fast and free transportation to and from the project field office considering the distance between the project site and the employees' residence, to avoid project delays and inefficiency due to employee tardiness caused by transportation problem; that petitioner was allowed to use a project vehicle which he used to pick up and drop off some ten employees along Epifanio de los Santos Avenue (EDSA), on his way home to Marikina, Metro Manila; that when he was absent or on leave, another employee living in Metro Manila used the same vehicle in transporting the same employees; that the time used by petitioner to and from his residence to the project site from 5:30 a.m. to 7:00 a.m. and from 4:00 p.m. to 6:00 p.m., or about three hours daily, was not overtime work as he was merely enjoying the benefit and convenience of free transportation provided by Philnor, otherwise without such vehicle he would have used at least four hours by using public transportation and spent P12.00 daily fare; that in the case of Quiwa vs. Philnor Consultants and Planners, Inc., supra, the NLRC upheld Philnor's position that Quiwa was a project employee and he was not entitled to termination pay under Policy Instructions No. 20 since his employment was coterminous with the completion of the project. On August 25, 1987, Philnor filed its Respondent's Reply/Comments to Complainant's Rejoinder and Reply, submitting therewith two letters dated January 5, 1985 and February 6, 1985, signed by MNEE Stage 2 Project employees, including herein petitioner, where they asked what termination benefits could be given to them as the MNEE Stage 2 Project was nearing completion, and Philnor's letter-reply dated February 22, 1985 informing them that they are not entitled to termination benefits as they are contractual/project employees. On August 31, 1989, Labor Arbiter Dominador M. Cruz rendered a decision 7 with the following dispositive portion: WHEREFORE, in view of all the foregoing considerations, judgment is hereby rendered: (1) Ordering the respondent company to reinstate the complainant to his former position without loss of seniority rights and other privileges with full backwages from the time of his dismissal to his actual reinstatement; (2) Directing the respondent company to pay the complainant overtime pay for the three excess hours of work performed during working days from January 1983 to December 1985; and (3) Dismissing all other claims for lack of merit. SO ORDERED. Acting on Philnor's appeal, the NLRC rendered its assailed decision dated November 19, 1990, setting aside the labor arbiter's aforequoted decision and dismissing petitioner's complaint. Hence this petition wherein petitioner charges respondent NLRC with grave abuse of discretion amounting to lack of jurisdiction for the following reasons: 1. The decision of the labor arbiter, dated August 31, 1989, has already become final and executory; 2. The case of Quiwa vs. Philnor Consultants and Planners, Inc. is not binding nor is it applicable to this case; 3. The petitioner is a regular employee with eight years and five months of continuous services for his employer, private respondent Philnor; 4. The claims for overtime services, reinstatement and full backwages are valid and meritorious and should have been sustained; and

5. The decision of the labor arbiter should be reinstated as it is more in accord with the facts, the law and evidence. The petition is devoid of merit. 1. Petitioner questions the jurisdiction of respondent NLRC in taking cognizance of the appeal filed by Philnor in spite of the latter's failure to file a supersedeas bond within ten days from receipt of the labor arbiter's decision, by reason of which the appeal should be deemed to have been filed out of time. It will be noted, however, that Philnor was able to file a bond although it was made beyond the 10-day reglementary period. While it is true that the payment of the supersedeas bond is an essential requirement in the perfection of an appeal, however, where the fee had been paid although payment was delayed, the broader interests of justice and the desired objective of resolving controversies on the merits demands that the appeal be given due course. Besides, it was within the inherent power of the NLRC to have allowed late payment of the bond, considering that the aforesaid decision of the labor arbiter was received by private respondent on October 3, 1989 and its appeal was duly filed on October 13, 1989. However, said decision did not state the amount awarded as backwages and overtime pay, hence the amount of the supersedeas bond could not be determined. It was only in the order of the NLRC of February 16, 1990 that the amount of the supersedeas bond was specified and which bond, after an extension granted by the NLRC, was timely filed by private respondent. Moreover, as provided by Article 221 of the Labor Code, "in any proceeding before the Commission or any of the Labor Arbiters, the rules of evidence prevailing in Courts of law or equity shall not be controlling and it is the spirit and intention of this Code that the Commission and its members and the Labor Arbiters shall use every and all reasonable means to ascertain the facts in each case speedily and objectively without regard to technicalities of law or procedure, all in the interest of due process. 8 Finally, the issue of timeliness of the appeal being an entirely new and unpleaded matter in the proceedings below it may not now be raised for the first time before this Court. 9 2. Petitioner postulates that as a regular employee, he is entitled to security of tenure, hence he cannot be terminated without cause. Private respondent Philnor believes otherwise and asserts that petitioner is merely a project employee who was terminated upon the completion of the project for which he was employed. In holding that petitioner is a regular employee, the labor arbiter found that: . . . There is no question that the complainant was employed as driver in the respondent company continuously from July 1, 1977 to December 31, 1985 under various contracts of employment. Similarly, there is no dispute that respondent Philnor Consultant & Planner, Inc., as its business name connotes, has been engaged in providing to its client(e)le engineering consultancy services. The record shows that while the different labor contracts executed by the parties stipulated definite periods of engaging the services of the complainant, yet the latter was suffered to continue performing his job upon the expiration of one contract and the renewal of another. Under these circumstances, the complaint has obtained the status of regular employee, it appearing that he has worked without fail for almost eight years, a fraction of six months considered as one whole year, and that his assigned task as driver was necessary and desirable in the usual trade/business of the respondent employer. Assuming to be true, as spelled out in the employment contract, that the Employer has no "continuing need for the services of the Employe(e) beyond the termination date of this contract and that the Employee's services shall automatically, and without notice, terminate upon completion of the above specified phase of the project," still we cannot see our way clear why the complainant was hired and his services engaged contract after contract straight from 1977 to 1985 which, to our considered view, lends credence to the contention that he worked as regular driver ferrying early in the morning office personnel to the company main office in Pampanga and bringing back late in the afternoon to Manila, and driving company executives for inspection of construction workers to the jobsites. All told, we believe that the complainant, under the environmental facts obtaining in the case at bar, is a regular employee, the

provisions of written agreement to the contrary notwithstanding and regardless of the oral understanding of the parties . . . 10 On the other hand, respondent NLRC declared that, as between the uncorroborated and unsupported assertions of petitioners and those of private respondent which are supported by documents, greater credence should be given the latter. It further held that: Complainant was hired in a specific project or undertaking as driver. While such project was still on-going he was hired several times with his employment period fixed every time his contract was renewed. At the completion of the specific project or undertaking his employment contract was not renewed. We reiterate our ruling in the case of (Quiwa) vs. Philnor Consultants and Planners, Inc., NLRC RAB III 5-1738-84, it is being applicable in this case, viz.: . . . While it is true that the activities performed by him were necessary or desirable in the usual business or trade of the respondent as consultants, planners, contractor and while it is also true that the duration of his employment was for a period of about seven years, these circumstances did not make him a regular employee in contemplation of Article 281 of (the) Labor Code. . . . 11 Our ruling in Sandoval Shipyards, Inc. vs. National Labor Relations Commission, et al. 12 is applicable to the case at bar. Thus: We hold that private respondents were project employees whose work was coterminous with the project or which they were hired. Project employees, as distinguished from regular or non-project employees, are mentioned in section 281 of the Labor Code as those "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." Policy Instructions No. 20 of the Secretary of Labor, which was issued to stabilize employer-employee relations in the construction industry, provides: Project employees are those employed in connection with a particular construction project. Non-project (regular) employees are those employed by a construction company without reference to any particular project. Project employees are not entitled to termination pay if they are terminated as a result of the completion of the project or any phase thereof in which they are employed, regardless of the number of projects in which they have been employed by a particular construction company. Moreover, the company is not required to obtain clearance from the Secretary of Labor in connection with such termination. The petitioner cited three of its own cases wherein the National Labor Relations Commission, Deputy Minister of Labor and Employment Inciong and the Director of the National Capital Region held that the layoff of its project employees was lawful. Deputy Minister Inciong in TFU Case No. 1530, In Re Sandoval Shipyards, Inc. Application for Clearance to Terminate Employees, rendered the following ruling on February 26, 1979; We feel that there is merit in the contention of the applicant corporation. To our mind, the employment of the employees concerned were fixed for a specific project or undertaking. For the

nature of the business the corporation is engaged into is one which will not allow it to employ workers for an indefinite period. It is significant to note that the corporation does not construct vessels for sale or otherwise which will demand continuous productions of ships and will need permanent or regular workers. It merely accepts contracts for shipbuilding or for repair of vessels form third parties and, only, on occasion when it has work contract of this nature that it hires workers to do the job which, needless to say, lasts only for less than a year or longer. The completion of their work or project automatically terminates their employment, in which case, the employer is, under the law, only obliged to render a report on the termination of the employment. (139-140, Rollo of G.R. No. 65689) (Emphasis supplied) In Cartagenas, et al. vs. Romago Electric Company, Inc., et al., 13 we likewise held that: As an electrical contractor, the private respondent depends for its business on the contracts it is able to obtain from real estate developers and builders of buildings. Since its work depends on the availability of such contracts or "projects," necessarily the duration of the employment's of this work force is not permanent but co-terminus with the projects to which they are assigned and from whose payrolls they are paid. It would be extremely burdensome for their employer who, like them, depends on the availability of projects, if it would have to carry them as permanent employees and pay them wages even if there are no projects for them to work on. (Emphasis supplied.) It must be stressed herein that although petitioner worked with Philnor as a driver for eight years, the fact that his services were rendered only for a particular project which took that same period of time to complete categorizes him as a project employee. Petitioner was employed for one specific project. A non-project employee is different in that the employee is hired for more than one project. A non-project employee, vis-a-vis a project employee, is best exemplified in the case of Fegurin, et al. vs. National Labor Relations Commission, et al. 14 wherein four of the petitioners had been working with the company for nine years, one for eight years, another for six years, the shortest term being three years. In holding that petitioners are regular employees, this Court therein explained: Considering the nature of the work of petitioners, that of carpenter, laborer or mason, their respective jobs would actually be continuous and on-going. When a project to which they are individually assigned is completed, they would be assigned to the next project or a phase thereof. In other words, they belonged to a "work pool" from which the company would draw workers for assignment to other projects at its discretion. They are, therefore, actually "non-project employees." 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. 3. 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 petitioner's 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 private respondent. This fact is inevitably deducible from the Memorandum of respondent company:

The herein Respondent resorted to the above transport arrangement because from its previous project construction supervision experiences, Respondent found out that project delays and inefficiencies resulted from employees' tardiness; and that the problem of tardiness, in turn, was aggravated by transportation problems, which varied in degrees in proportion to the distance between the project site and the employees' residence. In view of this lesson from experience, and as a practical, if expensive, solution to employees' tardiness and its concomitant problems, Respondent adopted the policy of allowing certain employees not necessarily project drivers to bring home project vehicles, so that employees could be afforded fast, convenient and free transportation to and from the project field office. . . . 15 Private respondent does not hesitate to admit that it is usually the project driver who is tasked with picking up or dropping off his fellow employees. Proof thereof is the undisputed fact that when petitioner is absent, another driver is supposed to replace him and drive the vehicle and likewise pick up and/or drop off the other employees at the designated points on EDSA. If driving these employees to and from the project site is not really part of petitioner's job, then there would have been no need to find a replacement driver to fetch these employees. But 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. WHEREFORE, subject to the modification regarding the award of overtime pay to herein petitioner, the decision appealed from is AFFIRMED in all other respects. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-17068 December 30, 1961 NATIONAL SHIPYARDS AND STEEL CORPORATION, petitioner, vs. COURT OF INDUSTRIAL RELATIONS and DOMINADOR MALONDRAS, respondents. N. C. Virata for petitioner. Mariano B. Tuason for respondent Court. Manuel P. Calanog for respondent Dominador Malondras. REYES, J.B.L., J.: Petition filed by the National Shipyards and Steel Corporation (otherwise known as the NASSCO) to review certain orders of the respondent Court of Industrial Relations requiring it to pay its bargeman Dominador Malondras overtime service of 16 hours a day for a period from January 1, 1954 to December 31, 1956, and from January 1, 1957 to April 30, 1957, inclusive. The petitioner NASSCO, a government-owned and controlled corporation, is the owner of several barges and tugboats used in the transportation of cargoes and personnel in connection with its business of shipbuilding and repair. In order that its bargeman could immediately be called to duty whenever their services are needed, they are required to stay in their respective barges, for which reason they are given living quarters therein as well as subsistence allowance of P1.50 per day during the time they are on board. However, upon prior authority of their superior officers, they may leave their barges when said barges are idle. On April 15, 1957, 39 crew members of petitioner's tugboat service, including therein respondent Dominador Malondras, filed with the Industrial Court a complaint for the payment of overtime compensation (Case No. 1059-V). In the course of the proceeding, the parties entered into a stipulation of facts wherein the NASSCO recognized and admitted 4. That to meet the exigencies of the service in the performance of the above work, petitioners have to work when so required in excess of eight (8) hours a day and/or during Sundays and legal holidays (actual overtime service is subject to determination on the basis of the logbook of the vessels, time sheets and other pertinent records of the respondent). 6. The petitioners are paid by the respondent their regular salaries and subsistence allowance, without additional compensation for overtime work; Pursuant to the above stipulation, the Industrial Court, on November 22, 1957, issued an order directing the court examiner to compute the overtime compensation due the claimants. On February 14, 1958, the court examiner submitted his report covering the period from January 1 to December 31, 1957. In said report, the examiner found that the petitioners in Case No. 1058-V, including herein respondent Dominador Malondras, rendered an average overtime service of five (5) hours each day for the period aforementioned, and upon approval of the report by the Court, all the claimants, including Malondras, were paid their overtime compensation by the NASSCO. Subsequently, on April 30, 1958, the court examiner submitted his second partial report covering the period from January 1, 1954 to December 31, 1956, again giving each crewman an average of five (5) overtime hours each day. Respondent Malondras was not, however, included in this report as his daily time sheets were not then available. Again upon approval by the Court, the crewmen concerned were paid their overtime compensation.

Because of his exclusion from the second report of the examiner, and his time sheets having been located in the meantime, Dominador Malondras, on September 18, 1959, filed petitions in the same case asking for the compensation and payment of his overtime compensation for the period from January 1, 1954 to December 31, 1956, and from January to April 30, 1957 which, he alleged, was not included in the first report of the examiner because his time sheets for these months could not be found at the time. Malondras' petition was opposed by the NASSCO upon the argument, among others, that its records do not indicate the actual number of working hours rendered by Malondras during the periods in question. Acting on the petition and opposition, the Industrial Court ordered the examiner to examine the log books, daily time sheets, and other pertinent records of the corporation for the purpose of determining and computing whatever overtime service Malondras had rendered from January 1, 1954 to December 31, 1956. On January 15, 1960, the chief examiner submitted a report crediting Malondras with a total of 4,349 overtime hours from January 1, 1954 to December 31, 1956, at an average of five (5) overtime hours a day, and after deducting the aggregate amount of subsistence allowance received by Malondras during this period, recommended the payment to him of overtime compensation in the total sum of P2,790.90. On February 20, 1960, the Court ordered the examiner to make a re-examination of the records with a view to determining Malondras' overtime service from January 1, 1954 to December 31, 1956, and from January 1, 1957 to April 30, 1957, but without deducting from the compensation to be paid to him his subsistence allowance. Pursuant to this last order, the examiner, on April 23, 1960, submitted an amended report giving Malondras an average of sixteen (16) overtime hours a day, on the basis of his time sheets, and recommending the payment to him of the total amount of P15,242.15 as overtime compensation during the periods covered by the report. This report was, over the NASSCO's vigorous objections, approved by the Court below on May 6, 1960. The NASSCO moved for reconsideration, which was denied by the Court en banc, with one judge dissenting. Whereupon, the NASSCO appealed to this Court. There appears to be no question that respondent Malondras actually rendered overtime services during the periods covered by the examiner's report. This is admitted in the stipulation of facts of the parties in Case No. 1058-V; and it was on the basis of this admission that the Court below, in its order of November 22, 1957, ordered the payment of overtime compensation to all the petitioners in Case No. 1058-V, including respondent Dominador Malondras, after the overtime service rendered by them had been determined and computed on the basis of the log books, time sheets and other pertinent records of the petitioner corporation. The only matter to be determined here is, therefore, the number of hours of overtime for which Malondras should be paid for the periods January 1, 1954 to December 31, 1956, and from January to April 30, 1957. Respondents urge that this is a question of fact and not subject to review by this Court, there being sufficient evidence to support the Industrial Court's ruling on this point. It appears, however, that in crediting Malondras with 16 hours of overtime service daily for the periods in question, the court examiner relied only on his daily time sheets which, although approved by petitioner's officers in charge and its auditors, do not show the actual number of hours of work rendered by him each day but only indicate, according to the examiner himself, that: almost everyday Dominador Malondras was on "Detail" or "Detailed on Board". According to the officer in charge of Dominador Malondras, when he (Dominador Malondras) was on "Detail" or "Detailed on Board", he was in the boat for twenty-four (24) hours. In other words, the court examiner interpreted the words "Detail" or "Detailed on Board" to mean that as long as respondent Malondras was in his barge for twenty-four hours, he should be paid overtime for sixteen hours a day or the time in excess of the legal eight working hours that he could not leave his barge. Petitioner NASSCO, upon the other hand, argues that the mere fact that Malondras was required to be on board his barge all day so that he could immediately be called to duty when his services were needed does not imply that he should be paid overtime for sixteen hours a day, but that he should receive compensation only for the actual service in excess of eight hours that he can prove. This question is clearly a legal one that may be reviewed and passed upon by this Court.lawphil.net We can not agree with the Court below that respondent Malondras should be paid overtime compensation for every hour in excess of the regular working hours that he was on board his vessel or barge each day, irrespective of whether or not he actually put in work during those hours. Seamen are required to stay on board

their vessels by the very nature of their duties, and it is for this reason that, in addition to their regular compensation, they are given free living quarters and subsistence allowances when required to be on board. It could not have been the purpose of our law to require their employers to pay them overtime even when they are not actually working; otherwise, every sailor on board a vessel would be entitled to overtime for sixteen hours each day, even if he had spent all those hours resting or sleeping in his bunk, after his regular tour of duty. The correct criterion in determining whether or not sailors are entitled to overtime pay is not, therefore, whether they were on board and can not leave ship beyond the regular eight working hours a day, but whether they actually rendered service in excess of said number of hours. We have ruled to that effect in Luzon Stevedoring Co., Inc. vs. Luzon Marine Department Union, et al., L-9265, April 29, 1957: I. Is the definition for "hours of work" as presently applied to dryland laborers equally applicable to seamen? Or should a different criterion be applied by virtue of the fact that the seaman's employment is completely different in nature as well as in condition of work from that of a dryland laborer? Section 1 of Commonwealth Act No. 444, known as the Eight-Hour Labor Law, provides: "SEC. 1. The legal working day for any person employed by another shall be of not more than eight hours daily. When the work is not continuous, the time during which the laborer is not working AND CAN LEAVE HIS WORKING PLACE and can rest completely, shall not be counted." The requisites contained in this section are further implemented by contemporary regulations issued by administrative authorities (Sections 4 and 5 of Chapter III, Article 1, Code of Rules and Regulations to implement the Minimum Wage Law). For the purposes of this case, we do not need to set for seamen a criterion different from that applied to laborers on land, for under the provisions of the above quoted section, the only thing to be done is to determine the meaning and scope of the term "working place" used therein. As we understand this term, alaborer need not leave the premises of the factory shop or boat in order that his period of rest shall not be counted, it being enough that he "cease to work", may rest completely and leave or may leave at his will the spot where he actually stays while working, to go somewhere else, whether within or outside the premises of said factory, shop or boat. If these requisites are complied with, the period of such rest shall not be counted. (Emphasis supplied) While Malondras' daily time sheets do not show his actual working hours, nevertheless, petitioner has already admitted in the Stipulation of Facts in this case that Malondras and his co-claimants did render service beyond eight (8) hours a day when so required by the exigencies of the service; and in fact, Malondras was credited and already paid for five (5) hours daily overtime work during the period from May 1 to December 31, 1957, under the examiner's first report. Since Malondras has been at the same job since 1954, it can be reasonably inferred that the overtime service he put in whenever he was required to be aboard his barge all day from 1954 to 1957 would be more or less consistent. In truth, the other claimants who served with Malondras under the same conditions and period have been finally paid for an overtime of 5 hours a day, and no substantial difference exists between their case and the present one, which was not covered by the same award only because Malondras' time records not found until later. The next question is whether or not the subsistence allowance received by Malondras for the periods covered by the report in question should be deducted from his overtime compensation. We do not think so, for the Stipulation of the Facts of the parties show that this allowance is independent of and has nothing to do with whatever additional compensation for overtime work was due the petitioner NASSCO's bargemen. According to the petitioner itself, the reason why their bargemen are given living quarters in their barges and subsistence allowance at the rate of P1.50 per day was because they were required to stay in their respective barges in order that they could be immediately called to duty when their services were needed (Petition, par. 5, p. 2). Petitioner having already paid Malondras and his companions overtime for 1957 without deduction of the subsistence allowances received by them during this period, and Malondras' companions having been paid overtime for the other years also without deducting their subsistence allowances, there is no valid reason why

Malondras should be singled out now and his subsistence allowance deducted from the overtime compensation still due him. The last question involves petitioner's claim that it was error for the examiner to base Malondras' overtime compensation for the whole year 1954 at P6.16 a day, when he was appointed in the tubgoat service only on October 1, 1954, and before that was a derrick man with a daily salary of P6.00. In answer, respondent Malondras asserts that the report of the examiner, based on his time sheets from January 1, 1954, show that he had already been rendering overtime service from that date. This answer does not, however, deny that Malondras started to get P6.16 a day only in October, 1954, and was before that time receiving only P6.00 daily, as claimed by petitioner. We think, therefore, that the records should be reexamined to find out Malondras' exact daily wage from January 1, 1954 to September, 1954, and his overtime compensation for these months computed on the basis thereof. WHEREFORE, the order appealed from is modified in the sense that respondent Malondras should be credited five (5) overtime hours instead of sixteen (16) hours a day for the periods covered by the examiner's report. The court below is ordered to determine from the records the exact daily wage received by respondent Malondras from January 1, 1954 to September, 1954, and to compute accordingly his overtime compensation for that period. In all other respects, the judgment appealed from is affirmed. No costs in this instance. So ordered. Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Barrera, Paredes, Dizon and De Leon, JJ., concur.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 111359 August 15, 1995 CALTEX REGULAR EMPLOYEES AT MANILA OFFICE, LEGAZPI BULK DEPOT AND MARINDUQUE BULK DEPOT-(MACLU), petitioners, vs. CALTEX (PHILIPPINES), INC. and NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION),respondents. FELICIANO, J.: In this petition for certiorari, petitioner Caltex Regular Employees Association at the Manila Office, Legazpi Bulk Depot and the Marinduque Bulk Depot (hereinafter referred to as "Union"), seeks to annul and set aside the decision of the National Labor Relations Commission ("NLRC"), promulgated on 5 March 1993, which reversed the decision of Labor Arbiter Valentin Guanio. On 12 December 1985, petitioner Union and private respondent Caltex (Philippines), Inc. ("Caltex") entered into a Collective Bargaining Agreement ("1985 CBA") which was to be in effect until midnight of 31 December 1988. The CBA included, among others, the following provision: ARTICLE III HOURS OF WORK In conformity with Presidential Decree 442, otherwise known as the Labor Code of the Philippines, as amended, the regular work week shall consist of eight (8) hours per day, seven (7) days, Monday through Sunday, during which regular rates of pay shall be paid in accordance with Annex B and work on the employee's one "Day of Rest," shall be considered a special work day, during which "Day of Rest" rates of pay shall be paid as provided in Annex B. Daily working schedules shall be established by management in accordance with the requirements of efficient operations on the basis of eight (8) hours per day for any five (5) days. Provided, however employees required to work in excess of forty (40) hours in any weekshall be compensated in accordance with Annex B of this Agreement. 1 (Emphasis supplied). Pertinent portions of Annex "B" of the 1985 CBA are also quoted here as follows: Annex "B" Computation of: Regular Day Pay Overtime Pay Night Shift Differential Pay Day Off Pay Excess of 40 hours within a calendar week Sunday Premium Pay Holiday Premium Pay Employee's Basic Hourly Wage Rate: Monthly Base Pay

X = (21.667) (8) A. Regular Pay 1) Hourly rate =X 2) OT Hourly Rate 12 MN = (X + 50% X) 3) NSD 6 PM - 12 MN = (X + 25% X) 4) OT Hourly Rate NSD 6 PM - 12 MN = (X + 25% X) + 50% (X + 25% X) 5) NSD 12 MN - 6 AM = (X + 50% X) 6) OT Hourly Rate NSD 12 MN - 6 AM = (X + 50% X) + 50% (X + 50% X) B. Regular First Day Off 1. Hourly Rate = (X + 50% X) 2. OT Hourly Rate = (X + 50% X) + 50% (x + 50% X) 3. NSD 6 PM - 12 MN = [ (X + 50% X) + 25% (X + 50% X) ] 4. OT Hourly Rate NSD 6 PM - 12 MN = [ (X + 50% X) + 25% (X + 50% X) ] + 50% [ (X + 50% X) + 25% (X + 50%) ] 5. NSD 12 MN - 6 AM = [ (X + 50% X) + 50% (X + 50% X) ] 6. OT Hourly Rate NSD 12 MN - 6 AM = [ (X + 50% X) + 50% (X + 50% X) ] + 50% [ (X + 50% X) + 50% (X + 50% X) ] C. Regular Second Day Off 1. Hourly Rate = (X + 100% X) 2. OT Hourly Rate = (X + 100% X) + 50% (X + 100% X) 3. NSD 6 PM - 12MN = [ (X + 100% X) + 25% (X + 100%) ] 4. OT Hourly Rate NSD 6 PM - 12 MN = [ (X + 100% X) + 25% (X + 100% X) ] + 50% [ (X + 100% X) + 25% (X + 100% X) ] 5. NSD 12 MN - 6 AM = [ (X + 100% X) + 50% (X + 100% X) ]

6. OT Hourly Rate NSD 12 MN - 6 AM = [ (X + 100% X) + 50% (X + 100% X) ] + 50% [ (X + 100% X) + 50% (X + 100% X) ] D. Excess of 40 Hours within a Calendar Week 1. Hourly Rate = (X + 50% X) 2. OT Hourly Rate = (X + 50% X) + 50% (X + 50% X) 3. NSD 6 PM - 12MN = [ (X + 50% X) + 25% (X + 50% X) ] 4. OT Hourly Rate NSD 6 PM - 12 MN = [ (X + 50% X) + 25% (X + 50% X) ] + 50% [ (X + 50% X) + 25% (X + 50% X) ] 5. NSD 12 MN - 6 AM = [ (X + 50% X) + 50% (X + 50% X) ] 6. OT Hourly Rate NSD 12 MN - 6 AM = [ (X + 50% X) + 50% (X + 50% X) ] + 50% [ (X + 50% X) + 50% (X + 50% X) ] E. Sunday as a Normal Work Day 1. Hourly Rate = (X + 100% X) 2. OT Hourly Rate = (X + 100% X) + 50% (X + 100% X) 3. NSD 6 PM - 12 MN = [ (X + 100% X) + 25% (X + 100% X) ] 4. OT Hourly Rate NSD 6 PM - 12 MN = [ (X + 100% X) + 25% (X + 100% X) ] + 50% [ (X + 100% X) + 25% (X + 100% X) ] 5. NSD 12 MN - 6 AM = [ (X + 100% X) + 50% (X + 100% X) ] 6. OT Hourly Rate NSD 12 MN - 6 AM = [ (X + 100% X) + 50% (X + 100% X) ] + 50% [ (X + 100% X) + 50% (X + 100% X) ] F. Sunday as day off 1. Hourly Rate = (X + 100% X) 2. OT Hourly Rate = (X + 100% X) + 50% (X + 100% X) 3. NSD 6 PM - 12 MN = [ (X + 100% X) + 25% (X+ 100% X) ] 4. OT Hourly Rate NSD 6 PM - 12 MN = [ (X + 100% X) + 25% (X + 100% X) ] + 50% [ (X+ 100% X) + 25% (X + 100% X) ] H. Holiday as Day Off

5. NSD 12 MN - 6 AM = [ (X + 100% X) + 50% (X + 100% X) ] 6. OT Hourly Rate NSD 12 MN - 6 AM = [ (X + 100% X) + 50% (X + 100% X) ] + 50% [ (X + 100% X) + 50% (X + 100% X) ] G. Holiday as Normal Work Day 1. Hourly Rate = (X + 150% X) 2. OT Hourly Rate = (X + 150% X) + 50% (X + 150% X) 3. NSD 6 PM - 12 MN = [ (X + 150% X) + 25% (X + 150% X) ] 4. OT Hourly Rate NSD 6 PM - 12 MN = [ (X + 150% X) + 25% (X + 150% X) ] + 50% [ (X + 150% X) + 25% (X + 150% X) ] 5. NSD 12 MN - 6 AM = [ (X + 150% X) + 50% (X + 150% X) ] 6. OT Hourly Rate NSD 12 MN - 6 AM = [ (X + 150% X) + 50% (X + 150% X) ] + 50% [ (X + 150% X) + 50% (X + 150% X) ] 1. Hourly Rate = (X + 150% X) 2. OT Hourly Rate = (X + 150% X) + 50% (X + 150% X) 3. NSD 6 PM - 12 MN = [ (X + 150% X) + 25% (X + 150% X) ] 4. OT Hourly Rate NSD 6 PM - 12 MN = [ (X + 150% X) + 25% (X + 150% X) ] + 50% [ (X + 150% X) + 25% (X + 150% X) ] 5. NSC 12 MN - 6 AM = [ (X + 150% X) + 50% (X + 150% X) ] 6. OT Hourly Rate = [ (X + 150% X) + 50% (X + 150% X) ] + 50% [ (X + 150% X) + 50% (X + 150% X) ] 7. * Hourly Rate for less than 8 hours = (150% X) * For work of less than 8 hours, the employee will receive his basic daily rate (Monthly Base Pay) 21.667

plus the hourly rate multiplied by the number of hours worked. 2 Sometime in August 1986, the Union called Caltex's attention to alleged violations by Caltex of Annex "B" of the 1985 CBA, e.g. non-payment of night-shift differential, non-payment of overtime pay and non-payment at "first day-off rates" for work performed on a Saturday. Caltex's Industrial Relations manager immediately evaluated petitioner's claims and accordingly informed petitioner Union that differential payments would be timely implemented. In the implementation of the re-computed claims, however, no differential payment was made with respect to work performed on the first 2 1/2 hours on a Saturday. On 7 July 1987, the Union instituted a complaint for unfair labor practice against Caltex alleging violation of the provisions of the 1985 CBA. Petitioner Union charged Caltex with shortchanging its employees when Caltex compensated work performed on the first 2 1/2 hours of Saturday, an employees' day of rest, at regular rates, when it should be paying at "day of rest" or "day off" rates. Caltex denied the accusations of the Union. It averred that Saturday was never designated as a day of rest, much less a "day-off". It maintained that the 1985 CBA provided only 1 day of rest for employees at the Manila Office, as well as employees similarly situated at the Legazpi and Marinduque Bulk Depots. This day of rest, according to Caltex, was Sunday. In due time, the Labor Arbiter ruled in favor of petitioner Union, while finding at the same time that private respondent Caltex was not guilty of any unfair labor practice. Labor Arbiter Valentin C. Guanio, interpreting Article III and Annex "B" of the 1985 CBA, concluded that Caltex's employees had been given two (2) days (instead of one [1] day) of rest, with the result that work performed on the employee's first day of rest, viz. Saturday, should be compensated at "First day-off" rates. On appeal by Caltex, public respondent NLRC set aside the decision of Labor Arbiter Guanio. The NLRC found that the conclusions of the Labor Arbiter were not supported by the evidence on record. The NLRC, interpreting the provisions of the 1985 CBA, concluded that that CBA granted only one (1) day of rest,e.g., Sunday. The Union's motion for reconsideration was denied on 9 June 1993. The controversy we must address in this Petition for Certiorari relates to the appropriate interpretation of Article III in relation to Annex "B" of the parties' 1985 CBA. After carefully examining the language of Article III, in relation to Annex "B" of the 1985 CBA, quoted in limine, as well as relevant portions of earlier CBAs between the parties, we agree with the NLRC that the intention of the parties to the 1985 CBA was to provide the employees with only one (1) day of rest. The plain and ordinary meaning of the language of Article III is that Caltex and the Union had agreed to pay "day of rest" rates for work performed on "an employee's one day of rest". To the Court's mind, the use of the word "one" describing the phrase "day of rest [of an employee]" emphasizes the fact that the parties had agreed that only a single day of rest shall be scheduled and shall be provided to the employee. It is useful to note that the contract clauses governing hours of work in previous CBAs executed between private respondent Caltex and petitioner Union in 1973, 1976, 1979 and 1982 contained provisions parallel if not identical to those set out in Article III of the 1985 CBA here before us. Article III of the 1973 Collective Bargaining Agreement 3 provided as follows: Article III Hours of Work Sec. 1. In conformity with Presidential Decree No. 143, the regular work week shall consist of eight (8) hours per day, seven (7) days, Monday through Sunday, during which regular rates of pay shall be paid in accordance with Article IV, Section 1 and work on the employee's one "Day of Rest" shall be paid as provided in Article IV, Section 8. Daily working schedules shall be established by management in accordance with the requirements of efficient operations on the basis of eight (8) hours per day for any five (5)

days; provided, however, employees required to work in excess of forty (40) hours in any week shall be compensated in accordance with Article IV, Section 7 of this Agreement. (Emphasis supplied) Article III of the 1976 Collective Bargaining Agreement 4 read: Article III Hours of Work Sec. 1. In conformity with Presidential Decree No. 143, the regular work week shall consist of eight (8) hours per day, seven (7) days, Monday through Sunday, during which regular rates of pay shall be paid in accordance with Article IV, Section 1 and work on the employee's one "Day of Rest" shall be paid as provided in Article IV, Section 8. Daily working schedules shall be established by management in accordance with the requirements of efficient operations on the basis of eight (8) hours per day for any five (5) days; provided, however, employees required to work in excess of forty (40) hours in any week shall be compensated in accordance with Article IV, Section 7 of this Agreement. (Emphasis supplied) Article III of the 1979 Collective Bargaining Agreement 5 said: Article III Hours of Work Sec. 1. In conformity with Presidential Decree 442, otherwise known as the Labor Code of the Philippines, as mended, the regular work week shall consist of eight (8) hours per day, seven (7) days, Monday thru Sunday during which regular rates of pay shall be paid in accordance with Article IV, Section 1 and work on the employee's one "Day of Rest" shall be paid as provided in Article IV, Section 7. Daily working schedules shall be established by management in accordance with the requirements of efficient operations on the basis of eight hours per day for any five (5) days; provided, however, employees required to work in excess of forty (40) hours in any week shall be compensated in accordance with Article IV, Section 6 of this Agreement. (Emphasis supplied). Article III of the 1982 Collective Bargaining Agreement 6 also provided as follows: Article III Hours of Work Sec. 1. In conformity with Presidential Decree 442, otherwise known as the Labor Code of the Philippines, as amended, the regular work week shall consist of eight (8) hours per day, seven (7) days, Monday thru Sunday, during which regular rates of pay shall be paid in accordance with Article IV, Section 1 and work on the employee's one "Day of Rest" shall be paid as provided in Article IV, Section 7. Daily working schedules shall be established by management in accordance with the requirements of efficient operations on the basis of eight hours per day for any five (5) days;provided, however employees required to work in excess of forty (40) hours in any week shall be compensated in accordance with Article IV, Section 6 of this Agreement. (Emphasis supplied) In all these CBAs (1973, 1976, 1979, 1982), Article III provide that only "work on an employee's one day of rest "shall be paid on the basis of "day of rest rates". The relevant point here is that petitioner Union had never suggested that more than 1 day of rest had been agreed upon, and certainly Caltex had never treated Article III or any other portion of the CBAs as providing two (2) days of rest. It is well settled that the contemporaneous and subsequent conduct of the parties may be taken into account by a court called upon to interpret and apply a contract entered into by them. 7

We note that Labor Arbiter Guanio surmised that the intention he implied from the contents of Annex "B" was in conflict with the intention expressed in Article III (which, the Labor Arbiter admitted, stipulated only one day of rest). According to the Labor Arbiter, when Annex "B" referred to "First Day-off Rates" and "Second Day-off Rates", these were meant to express an agreement that the parties intended to provide employees two (2) days of rest. He then declared that Annex "B" should prevail over Article III because the former was a more specific provision than the latter. An annex expresses the idea of joining a smaller or subordinate thing with another, larger or of higher importance. 8 An annex has a subordinate role, without any independent significance separate from that to which it is tacked on. Annex "B," in the case at bar, is one such document. It is not a memorandum of amendments or a codicil containing additional or new terms or stipulations. Annex "B" cannot be construed as modifying or altering the terms expressed in the body of the agreement contained in the 1985 CBA. It did not confer any rights upon employees represented by petitioner Union; neither did it impose any obligations upon private respondent Caltex. In fact, the contents of Annex "B" have no intelligible significance in and of themselves when considered separately from the 1985 CBA. Moreover, we are persuaded by private respondent's argument that Annex "B" was intended to serve as acompany wide guide in computing compensation for work performed by all its employees, including but not limited to the Manila Office employees represented by petitioner Union. Private respondent also points out that the mathematical formulae contained in Annex "B" are not all applicable to all classes of employees, there being some formulae applicable only to particular groups or classes of employees. Thus, "First Day-off rates" and "Second Day-off rates" are applicable only to employees stationed at the refinery and associated facilities like depots and terminals which must be in constant twenty-four (24) hours a day, seven (7) days a week, operation, hence necessitating the continuous presence of operations personnel. The work of such operations personnel required them to be on duty for six (6) consecutive days. Upon the other hand, "First Dayoff rates" and "Second Day-off rates" are not applicable to personnel of the Manila Office which consisted of other groups or categories of employees (e.g., office clerks, librarians, computer operators, secretaries, collectors, etc.), 9 since the nature of their work did not require them to be on duty for six (6) consecutive days. We find, under the foregoing circumstances, that the purported intention inferred from Annex "B" by the Labor Arbiter was based merely on conjecture and speculation. We also note that the Labor Arbiter merely suspected that the parties agreed to provide two (2) days of rest on the ground that they had so stipulated in their 1970 CBA. 10 A principal difficulty with this view is that it disregards the fact that Article III of the 1985 CBA no longer contained a particular proviso found in the 1970 CBA. In fact, all the CBAs subsequent to 1970 (1973, 1976, 1979, 1982) had similarly deleted the proviso in the 1970 CBA providing for two (2) days-off. To the Court's mind, such deletion means only one thing that is the parties had agreed to remove such stipulation. Accordingly, the proviso found in Article III of the 1970 CBA ceased to be a demandable obligation. Petitioner Union cannot now unilaterally re-insert such a stipulation by strained inference from Annex "B." Upon the foregoing circumstances, we must hold that the Labor Arbiter's suspicion is without basis in the facts of record. Petitioner Union also contended that private respondent Caltex in the instant petition was violating the statutory prohibition against off-setting undertime for overtime work on another day. 11 Union counsel attempted to establish this charge by asserting that the employees had been required to render "overtime work" on a Saturday but compensated only at regular rates of pay, because they had not completed the eight (8)-hour work period daily from Monday thru Friday. The Court finds petitioner's contention bereft of merit. Overtime work consists of hours worked on a given day in excess of the applicable work period, which here is eight (8) hours. 12 It is not enough that the hours worked fall on disagreeable or inconvenient hours. In order that work may be considered as overtime work, the hours worked must be in excess of and in addition to the eight (8)

hours worked during the prescribed daily work period, or the forty (40) hours worked during the regular work week Monday thru Friday. In the present case, under the 1985 CBA, hours worked on a Saturday do not, by that fact alone, necessarily constitute overtime work compensable at premium rates of pay, contrary to petitioner's assertion. These are normal or regular work hours, compensable at regular rates of pay, as provided in the 1985 CBA; under that CBA, Saturday is not a rest day or a "day off". It is only when an employee has been required on a Saturday to render work in excess of the forty (40) hours which constitute the regular work week that such employee may be considered as performing overtime work on that Saturday. We consider that the statutory prohibition against offsetting undertime one day with overtime another day has no application in the case at bar. 13 Petitioner's counsel, in his final attempt to lay a basis for compelling private respondent to pay premium rates of pay for all hours worked on a Saturday, regardless of the number of hours actually worked earlier during the week, i.e., on Monday to Friday, insists that private respondent cannot require its employees to complete the 40-hour regular work week on a Saturday, after it has allowed its employees to render only 37-1/2 hours of work. The company practice of allowing employees to leave thirty (30) minutes earlier than the scheduled off-time had been established primarily for the convenience of the employees most of whom have had to commute from work place to home and in order that they may avoid the heavy rush hour vehicular traffic. There is no allegation here by petitioner Union that such practice was resorted to by Caltex in order to escape its contractual obligations. This practice, while it effectively reduced to 371/2 the number of hours actually worked by employees who had opted to leave ahead of off-time, is not be construed as modifying the other terms of the 1985 CBA. As correctly pointed out by private respondent, the shortened work period did not result in likewise shortening the work required for purposes of determining overtime pay, as well as for purposes of determining premium pay for work beyond forty (40) hours within the calendar week. It follows that an employee is entitled to be paid premium rates, whether for work in excess of eight (8) hours on any given day, or for work beyond the forty (40)-hour requirement for the calendar week, only when the employee had, in fact already rendered the requisite number of hours 8 or 40 prescribed in the 1985 CBA. In recapitulation, the parties' 1985 CBA stipulated that employees at the Manila Office, as well as those similarly situated at the Legazpi and Marinduque Bulk Depots, shall be provided only one (1) day of rest; Sunday, and not Saturday, was designated as this day of rest. Work performed on a Saturday is accordingly to be paid at regular rates of pay, as a rule, unless the employee shall have been required to render work in excess of forty (40) hours in a calendar week. The employee must, however, have in fact rendered work in excess of forty (40) hours before hours subsequently worked become payable at premium rates. We conclude that the NLRC correctly set aside the palpable error committed by Labor Arbiter Guanio, when the latter imposed upon one of the parties to the 1985 CBA, an obligation which it had never assumed. WHEREFORE, petitioner Union having failed to show grave abuse of discretion amounting to lack or excess of jurisdiction on the part of public respondent National Labor Relations Commission in rendering its decision dated 5 March 1993, the Court Resolved to DISMISS the Petition for lack of merit. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. Nos. 85122-24 March 22, 1991 JULIO N. CAGAMPAN, SILVINO C. VICERA, JORGE C. DE CASTRO, JUANITO R. DE JESUS, ARNOLD J. MIRANDA, , MAXIMO O. ROSELLO & ANICETO L. BETANA, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, & ACE MARITIME AGENCIES, INC., respondents. Benjamin S. David for petitioners. De Luna, Sumnoad and Gaerlan for private respondent. PARAS, J.:p Presented before Us for review is the decision of public respondent National Labor Relations Commission handed down on March 16, 1988 reversing the decision of the Philippine Oversees Employment Administration and correspondingly dismissing the cases for lack of merit. The POEA decision granted overtime pay to petitioners equivalent to 30% of their basic pay. We do not dispute the facts as found by the Solicitor General. Thus: On April 17 and 18,1985, petitioners, all seamen, entered into separate contracts of employment with the Golden Light Ocean Transport, Ltd., through its local agency, private respondent ACE MARITIME AGENCIES, INC. Petitioners, with their respective ratings and monthly salary rates, are as follows: Petitioners Rating Salary per month Julio Cagampan 2nd Engineer US$500.00 Silvino Vicera 2nd Engineer US$800.00 Juanito de Jesus Ordinary Seaman US$120.00 Jorge C. de Castro Ordinary Seaman US$160.00 Arnold Miranda 3rd Officer US$310.00 Maximo Rosello Cook US$230.00 Aniceto Betana 3rd Engineer US$400.00 Petitioners were deployed on May 7, 1985, and discharged on July 12, 1986. Thereafter, petitioners collectively and/or individually filed complaints for non-payment of overtime pay, vacation pay and terminal pay against private respondent. In addition, they claimed that they were made to sign their contracts in blank. Likewise, petitioners averred that although they agreed to render services on board the vessel Rio Colorado managed by Golden Light Ocean Transport, Ltd., the vessel they actually boarded was MV "SOIC I" managed by Columbus Navigation. Two (2) petitioners, Jorge de Castro and Juanito de Jesus, charged that although they were employed as ordinary seamen (OS), they actually performed the work and duties of Able Seamen (AB). Private respondent was furnished with copies of petitioners' complaints and summons, but it failed to file its answer within the reglementary period. Thus, on January 12, 1987, an

Order was issued declaring that private respondent has waived its right to present evidence in its behalf and that the cases are submitted for decision (Page 68, Records). On August 5, 1987, the Philippine Overseas Employment Administration (POEA) rendered a Decision dismissing petitioners' claim for terminal pay but granted their prayer for leave pay and overtime pay. The dispositive portion of the Decision reads: IN VIEW OF THE FOREGOING, judgment is hereby rendered ordering respondent (private respondent) Ace Maritime Agencies, Inc. to pay the following complainants (petitioners) in the amounts opposite their names: 1. Julio CagampanUS$583.33 plus US$2,125.00 representing the 30% guaranteed overtime pay; 2. Silvino ViceraUS$933.33 plus US$3,400.00 representing the 30% guaranteed overtime pay; 3. Jorge de CastroUS$233.33 plus US$850.00 representing the 30% guaranteed overtime pay; 4. Juanito de JesusUS$233.33 plus US$850.00 representing the 30% guaranteed overtime pay; 5. Lauro DiongzonUS$233.33 plus US$850.00 representing the 30% guaranteed overtime pay; 6. Arnold MirandaUS$455.00 plus US$1,659.50 representing the 30% guaranteed overtime pay; 7. Maximo RoselloUS$303.33 plus US$1,105.00 representing the 30% guaranteed overtime pay; and 8. Aniceto BetanaUS$583.33 plus US$2,125.00 representing the 30% guaranteed overtime pay. The payments represent their leave pay equivalent to their respective salary (sic) of 35 days and should be paid in Philippine currency at the current rate of exchange at the time of actual payment. (pp. 81-82, Records) Private respondent appealed from the POEA's Decision to the NLRC on August 24, 1987. On March 16, 1988, the NLRC promulgated a Decision, the dispositive portion of which reads: WHEREFORE, premises considered, the appealed decision is hereby REVERSED and SET ASIDE and another one entered dismissing these cases for lack of merit. (p. 144, Records) On May 8, 1988, petitioners filed an Urgent Motion for Reconsideration of the NLRC's Decision (p. 210, Records), but the same was denied by the NLRC for lack of merit in its Resolution dated September 12, 1988 (p. 212, Records). Hence, this appeal from the decision and resolution of the respondent NLRC. Petitioners allege that respondent Commission gravely abused its discretion or erred in deciding in favor of private respondent company by reason of the following: 1. Respondent NLRC overlooked the fact that private respondent company had repeatedly failed and refused to file its answer to petitioners' complaints with their supporting documents.

2. Respondent Commission erred in reversing and setting aside the POEA decision and correspondingly dismissing the appeal of petitioners, allegedly in contravention of law and jurisprudence. Private respondent maritime company disclaims the aforesaid allegations of petitioners through these arguments: 1. As borne out by the records, its former counsel attended all the hearings before the POEA wherein he raised the basis objection that the complaint of petitioners was so generally couched that a more detailed pleading with supporting documents was repeatedly requested for the latter to submit. 2. The NLRC never abused its discretion in arriving at assailed decision considering that the same was based on the Memorandum on Appeal dated August 14, 1987 filed by private respondent. 3. In the hearings conducted by respondent Commission, all the arguments of both parties were properly ventilated and considered by said Commission in rendering its decision. 4. The Labor Code basically provides that the rules of evidence prevailing in courts of law or equity shall not be controlling and it is the spirit and intention of the Code that the Commission and its members and Labor Arbiters should use every and an reasonable means to ascertain the facts in each case speedily and objectively and without regard to technicalities of law and procedure, all in the interest of due process. 5. Petitioners' motion for reconsideration of the NLRC decision did not invoke the merits of the case but merely raised purely technical and procedural matters. Even assuming that private respondent, technically speaking, waived the presentation of evidence, its appeal to the NLRC was valid since it involved merely a correct interpretation and clarification of certain provisions of the contract the validity of which has never been questioned. The Solicitor General, arguing for public respondent NLRC, contends: 1. Petitioners' assumption that a party who is declared to have waived his right to present evidence also loses his right to appeal from an adverse judgment made against him is a falsity for, although the technical rules of evidence prevailing in the courts of law or equity do not bind labor tribunals, even the Rules of Court allows a party declared in default to appeal from said judgment by attaching the propriety of the relief awarded therein. 2. The NLRC did not abuse its discretion in the rendition of subject decision because the evidence presented by petitioners in support of their complaint is by itself sufficient to back up the decision. The issue of the disallowance of overtime pay stems from an interpretation of particular provisions of the employment contract. We cannot sustain petitioners' position. The failure of respondent to submit its responsive pleading was not fatal as to invalidate its case before the Phil. Overseas Employment Authority. Evidently, such formal or technical defect was rectified by the fact that the POEA proceeded with the hearings on the case where both parties were given sufficient leeway to ventilate their cases. Petitioners' manifest pursuit of their claims before the POEA in the absence of the answer produced the effect of condoning the failure of private respondent to submit the said answer. Their submission to the POEA's authority without questioning its jurisdiction to continue the hearings further strengthens the fact that the alleged technical defect had already been cured. After all, what is there to complain of when the POEA handed down a decision favorable to petitioners with the allowance of the latter's leave pay and overtime pay. Notably, it was only when private respondent appealed the NLRC decision to this Court that petitioners suddenly unearth the issue of private respondent's default in the POEA case. Had the decision favoring them not been reversed by the NLRC, petitioners could have just clammed up. They resorted to bringing up a technical, not a substantial, defect in their desperate attempt to sway the Court's decision in their favor. Private respondent has pointedly argued that the NLRC anchored its decision primarily upon the Memorandum on Appeal. In the case of Manila Doctors Hospital v. NLRC (153 SCRA 262) this Court ruled that the National Labor Relations Commission and the Labor Arbiter have authority under the Labor Code to decide a case based on the position papers and documents submitted without resorting to the technical rules of evidence.

On the issue of whether or not petitioners should be entitled to terminal pay, We sustain the finding of respondent NLRC that petitioners were actually paid more than the amounts fixed in their employment contracts. The pertinent portion of the NLRC decision reads as follows. On this award for leave pay to the complainants (petitioners), the (private) respondent maintains that the actually they were paid much more than what they were legally entitled to under their contract.This fact has not been disputed by the complainants (petitioners.) Thus, as mentioned in (private) respondent's Memorandum on Appeal dated 14 August 1987, their overpayment is more than enough and sufficient to offset whatever claims for leave pay they filed in this case and for which the POEA favorably considered in their favor. For complainant (petitioner) Aniceto Betana, it appears that under the crew contract his monthly salary was US$400 while he was overpaid by US$100 as he actually received US$500. In fine, Betana had received at least US1,400 excess salary for a period of fourteen (14) months which was the period of his employment. In the case of complainant (petitioner) Jorge C. de Castro his stipulated monthly pay was US$160 but he actually received a monthly pay of US$200 or an overpayment of US$560 for the same period of service. For complainant (petitioner) Juanito R. de Jesus, his overpayment is US$1120. Complainant (petitioner)Arnold J. Miranda has also the same amount of excess payment as de Jesus. Indeed, We cannot simply ignore this material fact. It is our duty to prevent a miscarriage of justice for if We sustain the award for leave pay in the face of undisputed facts that the complainants (petitioners) were even paid much more than what they should receive by way of leave pay, then they would be enriching themselves at the expense of others. Accordingly, justice and equity compel Us to deny this award. Even as the denial of petitioners' terminal pay by the NLRC has been justified, such denial should not have been applied to petitioners Julio Cagampan and Silvino Vicera. For, a deeper scrutiny of the records by the Solicitor General has revealed that the fact of overpayment does not cover the aforenamed petitioners since the amounts awarded them were equal only to the amounts stipulated in the crew contracts. Since petitioners Cagampan and Vicera were not overpaid by the company, they should be paid the amounts of US$583.33 and US$933.33, respectively. Further examination by the Solicitor General shows that petitioner Maximo Rosello was also overpaid in the amount of US$420.00. Hence, with respect to petitioners Cagampan and Vicera, the NLRC decision must be modified correspondingly. As regards the question of overtime pay, the NLRC cannot be faulted for disallowing the payment of said pay because it merely straightened out the distorted interpretation asserted by petitioners and defined the correct interpretation of the provision on overtime pay embodied in the contract conformably with settled doctrines on the matter. Notably, the NLRC ruling on the disallowance of overtime pay is ably supported by the fact that petitioners never produced any proof of actual performance of overtime work. Petitioners have conveniently adopted the view that the "guaranteed or fixed overtime pay of 30% of the basic salary per month" embodied in their employment contract should be awarded to them as part of a "package benefit." They have theorized that even without sufficient evidence of actual rendition of overtime work, they would automatically be entitled to overtime pay. Their theory is erroneous for being illogical and unrealistic. Their thinking even runs counter to the intention behind the provision. The contract provision means that the fixed overtime pay of 30% would be the basis for computing the overtime pay if and when overtime work would be rendered. Simply, stated, the rendition of overtime work and the submission of sufficient proof that said work was actually performed are conditions to be satisfied before a seaman could be entitled to overtime pay which should be computed on the basis of 30% of the basic monthly salary. In short, the contract provision guarantees the right to overtime pay but the entitlement to such benefit must first be established. Realistically speaking, a seaman, by the very nature of his job, stays on board a ship or vessel beyond the regular eight-hour work schedule. For the employer to give him overtime pay for the extra hours when he might be sleeping or attending to his personal chores or even just lulling away his time would be extremely unfair and unreasonable. We already resolved the question of overtime pay of a worker aboard a vessel in the case of National Shipyards and Steel Corporation v. CIR (3 SCRA 890). We ruled:

We can not agree with the Court below that respondent Malondras should be paid overtime compensation for every hour in excess of the regular working hours that he was on board his vessel or barge each day, irrespective of whether or not he actually put in work during those hours. Seamen are required to stay on board their vessels by the very nature of their duties, and it is for this reason that, in addition to their regular compensation, they are given free living quarters and subsistence allowances when required to be on board. It could not have been the purpose of our law to require their employers to pay them overtime even when they are not actually working; otherwise, every sailor on board a vessel would be entitled to overtime for sixteen hours each day, even if he spent all those hours resting or sleeping in his bunk, after his regular tour of duty. The correct criterion in determining whether or not sailors are entitled to overtime pay is not, therefore, whether they were on board and can not leave ship beyond the regular eight working hours a day, but whether they actually rendered service in excess of said number of hours. (Emphasis supplied) The aforequoted ruling is a reiteration of Our resolution in Luzon Stevedoring Co., Inc. vs. Luzon Marine Department Union, et al. (G.R. No. 9265, April 29, 1957). WHEREFORE, the decision of the NLRC is hereby AFFIRMED with the modification that petitioners Cagampan and Vicera are awarded their leave pay according to the terms of the contract. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. L-44169 December 3, 1985 ROSARIO A. GAA, petitioner, vs. THE HONORABLE COURT OF APPEALS, EUROPHIL INDUSTRIES CORPORATION, and CESAR R. ROXAS, Deputy Sheriff of Manila, respondents. Federico C. Alikpala and Federico Y. Alikpala, Jr. for petitioner. Borbe and Palma for private respondent. PATAJO, J.: This is a petition for review on certiorari of the decision of the Court of Appeals promulgated on March 30, 1976, affirming the decision of the Court of First Instance of Manila. It appears that respondent Europhil Industries Corporation was formerly one of the tenants in Trinity Building at T.M. Kalaw Street, Manila, while petitioner Rosario A. Gaa was then the building administrator. On December 12, 1973, Europhil Industries commenced an action (Civil Case No. 92744) in the Court of First Instance of Manila for damages against petitioner "for having perpetrated certain acts that Europhil Industries considered a trespass upon its rights, namely, cutting of its electricity, and removing its name from the building directory and gate passes of its officials and employees" (p. 87 Rollo). On June 28, 1974, said court rendered judgment in favor of respondent Europhil Industries, ordering petitioner to pay the former the sum of P10,000.00 as actual damages, P5,000.00 as moral damages, P5,000.00 as exemplary damages and to pay the costs. The said decision having become final and executory, a writ of garnishment was issued pursuant to which Deputy Sheriff Cesar A. Roxas on August 1, 1975 served a Notice of Garnishment upon El Grande Hotel, where petitioner was then employed, garnishing her "salary, commission and/or remuneration." Petitioner then filed with the Court of First Instance of Manila a motion to lift said garnishment on the ground that her "salaries, commission and, or remuneration are exempted from execution under Article 1708 of the New Civil Code. Said motion was denied by the lower Court in an order dated November 7, 1975. A motion for reconsideration of said order was likewise denied, and on January 26, 1976 petitioner filed with the Court of Appeals a petition for certiorari against filed with the Court of Appeals a petition for certiorari against said order of November 7, 1975. On March 30, 1976, the Court of Appeals dismissed the petition for certiorari. In dismissing the petition, the Court of Appeals held that petitioner is not a mere laborer as contemplated under Article 1708 as the term laborer does not apply to one who holds a managerial or supervisory position like that of petitioner, but only to those "laborers occupying the lower strata." It also held that the term "wages" means the pay given" as hire or reward to artisans, mechanics, domestics or menial servants, and laborers employed in manufactories, agriculture, mines, and other manual occupation and usually employed to distinguish the sums paid to persons hired to perform manual labor, skilled or unskilled, paid at stated times, and measured by the day, week, month, or season," citing 67 C.J. 285, which is the ordinary acceptation of the said term, and that "wages" in Spanish is "jornal" and one who receives a wage is a "jornalero." In the present petition for review on certiorari of the aforesaid decision of the Court of Appeals, petitioner questions the correctness of the interpretation of the then Court of Appeals of Article 1708 of the New Civil Code which reads as follows: ART. 1708. The laborer's wage shall not be subject to execution or attachment, except for debts incurred for food, shelter, clothing and medical attendance.

It is beyond dispute that petitioner is not an ordinary or rank and file laborer but "a responsibly place employee," of El Grande Hotel, "responsible for planning, directing, controlling, and coordinating the activities of all housekeeping personnel" (p. 95, Rollo) so as to ensure the cleanliness, maintenance and orderliness of all guest rooms, function rooms, public areas, and the surroundings of the hotel. Considering the importance of petitioner's function in El Grande Hotel, it is undeniable that petitioner is occupying a position equivalent to that of a managerial or supervisory position. In its broadest sense, the word "laborer" includes everyone who performs any kind of mental or physical labor, but as commonly and customarily used and understood, it only applies to one engaged in some form of manual or physical labor. That is the sense in which the courts generally apply the term as applied in exemption acts, since persons of that class usually look to the reward of a day's labor for immediate or present support and so are more in need of the exemption than are other. (22 Am. Jur. 22 citing Briscoe vs. Montgomery, 93 Ga 602, 20 SE 40; Miller vs. Dugas, 77 Ga 4 Am St Rep 192; State ex rel I.X.L. Grocery vs. Land, 108 La 512, 32 So 433;Wildner vs. Ferguson, 42 Minn 112, 43 NW 793; 6 LRA 338; Anno 102 Am St Rep. 84. In Oliver vs. Macon Hardware Co., 98 Ga 249 SE 403, it was held that in determining whether a particular laborer or employee is really a "laborer," the character of the word he does must be taken into consideration. He must be classified not according to the arbitrary designation given to his calling, but with reference to the character of the service required of him by his employer. In Wildner vs. Ferguson, 42 Minn 112, 43 NW 793, the Court also held that all men who earn compensation by labor or work of any kind, whether of the head or hands, including judges, laywers, bankers, merchants, officers of corporations, and the like, are in some sense "laboring men." But they are not "laboring men" in the popular sense of the term, when used to refer to a must presume, the legislature used the term. The Court further held in said case: There are many cases holding that contractors, consulting or assistant engineers, agents, superintendents, secretaries of corporations and livery stable keepers, do not come within the meaning of the term. (Powell v. Eldred, 39 Mich, 554, Atkin v. Wasson, 25 N.Y. 482; Short v. Medberry, 29 Hun. 39; Dean v. De Wolf, 16 Hun. 186; Krausen v. Buckel, 17 Hun. 463; Ericson v. Brown, 39 Barb. 390; Coffin v. Reynolds, 37 N.Y. 640; Brusie v. Griffith, 34 Cal. 306; Dave v. Nunan, 62 Cal. 400). Thus, in Jones vs. Avery, 50 Mich, 326, 15 N.W. Rep. 494, it was held that a traveling salesman, selling by sample, did not come within the meaning of a constitutional provision making stockholders of a corporation liable for "labor debts" of the corporation. In Kline vs. Russell 113 Ga. 1085, 39 SE 477, citing Oliver vs. Macon Hardware Co., supra, it was held that a laborer, within the statute exempting from garnishment the wages of a "laborer," is one whose work depends on mere physical power to perform ordinary manual labor, and not one engaged in services consisting mainly of work requiring mental skill or business capacity, and involving the exercise of intellectual faculties. So, also in Wakefield vs. Fargo, 90 N.Y. 213, the Court, in construing an act making stockholders in a corporation liable for debts due "laborers, servants and apprentices" for services performed for the corporation, held that a "laborer" is one who performs menial or manual services and usually looks to the reward of a day's labor or services for immediate or present support. And in Weymouth vs. Sanborn, 43 N.H. 173, 80 Am. Dec. 144, it was held that "laborer" is a term ordinarily employed to denote one who subsists by physical toil in contradistinction to those who subsists by professional skill. And in Consolidated Tank Line Co. vs. Hunt, 83 Iowa, 6, 32 Am. St. Rep. 285, 43 N.W. 1057, 12 L.R.A. 476, it was stated that "laborers" are those persons who earn a livelihood by their own manual labor. Article 1708 used the word "wages" and not "salary" in relation to "laborer" when it declared what are to be exempted from attachment and execution. The term "wages" as distinguished from "salary", applies to the compensation for manual labor, skilled or unskilled, paid at stated times, and measured by the day, week, month, or season, while "salary" denotes a higher degree of employment, or a superior grade of services, and implies a position of office: by contrast, the term wages " indicates considerable pay for a lower and less responsible character of employment, while "salary" is suggestive of a larger and more important service (35 Am. Jur. 496).

The distinction between wages and salary was adverted to in Bell vs. Indian Livestock Co. (Tex. Sup.), 11 S.W. 344, wherein it was said: "'Wages' are the compensation given to a hired person for service, and the same is true of 'salary'. The words seem to be synonymous, convertible terms, though we believe that use and general acceptation have given to the word 'salary' a significance somewhat different from the word 'wages' in this: that the former is understood to relate to position of office, to be the compensation given for official or other service, as distinguished from 'wages', the compensation for labor." Annotation 102 Am. St. Rep. 81, 95. We do not think that the legislature intended the exemption in Article 1708 of the New Civil Code to operate in favor of any but those who are laboring men or women in the sense that their work is manual. Persons belonging to this class usually look to the reward of a day's labor for immediate or present support, and such persons are more in need of the exemption than any others. Petitioner Rosario A. Gaa is definitely not within that class. We find, therefore, and so hold that the Trial Court did not err in denying in its order of November 7, 1975 the motion of petitioner to lift the notice of garnishment against her salaries, commission and other remuneration from El Grande Hotel since said salaries, Commission and other remuneration due her from the El Grande Hotel do not constitute wages due a laborer which, under Article 1708 of the Civil Code, are not subject to execution or attachment. IN VIEW OF THE FOREGOING, We find the present petition to be without merit and hereby AFFIRM the decision of the Court of Appeals, with costs against petitioner. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. L-50999 March 23, 1990 JOSE SONGCO, ROMEO CIPRES, and AMANCIO MANUEL, petitioners, vs NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION), LABOR ARBITER FLAVIO AGUAS, and F.E. ZUELLIG (M), INC., respondents. MEDIALDEA, J.: This is a petition for certiorari seeking to modify the decision of the National Labor Relations Commission in NLRC Case No. RB-IV-20840-78-T entitled, "Jose Songco and Romeo Cipres, Complainants-Appellants, v. F.E. Zuellig (M), Inc., Respondent-Appellee" and NLRC Case No. RN- IV-20855-78-T entitled, "Amancio Manuel, Complainant-Appellant, v. F.E. Zuellig (M), Inc., Respondent-Appellee," which dismissed the appeal of petitioners herein and in effect affirmed the decision of the Labor Arbiter ordering private respondent to pay petitioners separation pay equivalent to their one month salary (exclusive of commissions, allowances, etc.) for every year of service. The antecedent facts are as follows: Private respondent F.E. Zuellig (M), Inc., (hereinafter referred to as Zuellig) filed with the Department of Labor (Regional Office No. 4) an application seeking clearance to terminate the services of petitioners Jose Songco, Romeo Cipres, and Amancio Manuel (hereinafter referred to as petitioners) allegedly on the ground of retrenchment due to financial losses. This application was seasonably opposed by petitioners alleging that the company is not suffering from any losses. They alleged further that they are being dismissed because of their membership in the union. At the last hearing of the case, however, petitioners manifested that they are no longer contesting their dismissal. The parties then agreed that the sole issue to be resolved is the basis of the separation pay due to petitioners. Petitioners, who were in the sales force of Zuellig received monthly salaries of at least P40,000. In addition, they received commissions for every sale they made. The collective Bargaining Agreement entered into between Zuellig and F.E. Zuellig Employees Association, of which petitioners are members, contains the following provision (p. 71, Rollo): ARTICLE XIV Retirement Gratuity Section l(a)-Any employee, who is separated from employment due to old age, sickness, death or permanent lay-off not due to the fault of said employee shall receive from the company a retirement gratuity in an amount equivalent to one (1) month's salary per year of service. One month of salaryas used in this paragraph shall be deemed equivalent to the salary at date of retirement; years of service shall be deemed equivalent to total service credits, a fraction of at least six months being considered one year, including probationary employment. (Emphasis supplied) On the other hand, Article 284 of the Labor Code then prevailing provides: Art. 284. Reduction of personnel. The termination of employment of any employee due to the installation of labor saving-devices, redundancy, retrenchment to prevent losses, and other similar causes, shall entitle the employee affected thereby to separation pay. In case of termination due to the installation of labor-saving devices or redundancy, the separation pay shall be equivalent to one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and other similar causes, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year. (Emphasis supplied) In addition, Sections 9(b) and 10, Rule 1, Book VI of the Rules Implementing the Labor Code provide: xxx

Sec. 9(b). Where the termination of employment is due to retrechment initiated by the employer to prevent losses or other similar causes, or where the employee suffers from a disease and his continued employment is prohibited by law or is prejudicial to his health or to the health of his co-employees, the employee shall be entitled to termination pay equivalent at least to his one month salary, or to one-half month pay for every year of service, whichever is higher, a fraction of at least six (6) months being considered as one whole year. xxx Sec. 10. Basis of termination pay. The computation of the termination pay of an employee as provided herein shall be based on his latest salary rate, unless the same was reduced by the employer to defeat the intention of the Code, in which case the basis of computation shall be the rate before its deduction. (Emphasis supplied) On June 26,1978, the Labor Arbiter rendered a decision, the dispositive portion of which reads (p. 78, Rollo): RESPONSIVE TO THE FOREGOING, respondent should be as it is hereby, ordered to pay the complainants separation pay equivalent to their one month salary (exclusive of commissions, allowances, etc.) for every year of service that they have worked with the company. SO ORDERED. The appeal by petitioners to the National Labor Relations Commission was dismissed for lack of merit. Hence, the present petition. On June 2, 1980, the Court, acting on the verified "Notice of Voluntary Abandonment and Withdrawal of Petition dated April 7, 1980 filed by petitioner Romeo Cipres, based on the ground that he wants "to abide by the decision appealed from" since he had "received, to his full and complete satisfaction, his separation pay," resolved to dismiss the petition as to him. The issue is whether or not earned sales commissions and allowances should be included in the monthly salary of petitioners for the purpose of computation of their separation pay. The petition is impressed with merit. Petitioners' position was that in arriving at the correct and legal amount of separation pay due them, whether under the Labor Code or the CBA, their basic salary, earned sales commissions and allowances should be added together. They cited Article 97(f) of the Labor Code which includes commission as part on one's salary, to wit; (f) '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. 'Fair reasonable value' shall not include any profit to the employer or to any person affiliated with the employer. Zuellig argues that if it were really the intention of the Labor Code as well as its implementing rules to include commission in the computation of separation pay, it could have explicitly said so in clear and unequivocal terms. Furthermore, in the definition of the term "wage", "commission" is used only as one of the features or designations attached to the word remuneration or earnings. Insofar as the issue of whether or not allowances should be included in the monthly salary of petitioners for the purpose of computation of their separation pay is concerned, this has been settled in the case of Santos v.

NLRC, et al., G.R. No. 76721, September 21, 1987, 154 SCRA 166, where We ruled that "in the computation of backwages and separation pay, account must be taken not only of the basic salary of petitioner but also of her transportation and emergency living allowances." This ruling was reiterated in Soriano v. NLRC, et al., G.R. No. 75510, October 27, 1987, 155 SCRA 124 and recently, in Planters Products, Inc. v. NLRC, et al., G.R. No. 78524, January 20, 1989. We shall concern ourselves now with the issue of whether or not earned sales commission should be included in the monthly salary of petitioner for the purpose of computation of their separation pay. Article 97(f) by itself is explicit that commission is included in the definition of the term "wage". It has been repeatedly declared by the courts that where the law speaks in clear and categorical language, there is no room for interpretation or construction; there is only room for application (Cebu Portland Cement Co. v. Municipality of Naga, G.R. Nos. 24116-17, August 22, 1968, 24 SCRA 708; Gonzaga v. Court of Appeals, G.R.No. L-2 7455, June 28,1973, 51 SCRA 381). A plain and unambiguous statute speaks for itself, and any attempt to make it clearer is vain labor and tends only to obscurity. How ever, it may be argued that if We correlate Article 97(f) with Article XIV of the Collective Bargaining Agreement, Article 284 of the Labor Code and Sections 9(b) and 10 of the Implementing Rules, there appears to be an ambiguity. In this regard, the Labor Arbiter rationalized his decision in this manner (pp. 74-76, Rollo): The definition of 'wage' provided in Article 96 (sic) of the Code can be correctly be (sic) stated as a general definition. It is 'wage ' in its generic sense. A careful perusal of the same does not show any indication that commission is part of salary. We can say that commission by itself may be considered a wage. This is not something novel for it cannot be gainsaid that certain types of employees like agents, field personnel and salesmen do not earn any regular daily, weekly or monthly salaries, but rely mainly on commission earned. Upon the other hand, the provisions of Section 10, Rule 1, Book VI of the implementing rules in conjunction with Articles 273 and 274 (sic) of the Code specifically states that the basis of the termination pay due to one who is sought to be legally separated from the service is 'his latest salary rates. x x x. Even Articles 273 and 274 (sic) invariably use 'monthly pay or monthly salary'. The above terms found in those Articles and the particular Rules were intentionally used to express the intent of the framers of the law that for purposes of separation pay they mean to be specifically referring to salary only. .... Each particular benefit provided in the Code and other Decrees on Labor has its own pecularities and nuances and should be interpreted in that light. Thus, for a specific provision, a specific meaning is attached to simplify matters that may arise there from. The general guidelines in (sic) the formation of specific rules for particular purpose. Thus, that what should be controlling in matters concerning termination pay should be the specific provisions of both Book VI of the Code and the Rules. At any rate, settled is the rule that in matters of conflict between the general provision of law and that of a particular- or specific provision, the latter should prevail. On its part, the NLRC ruled (p. 110, Rollo): From the aforequoted provisions of the law and the implementing rules, it could be deduced that wage is used in its generic sense and obviously refers to the basic wage rate to be ascertained on a time, task, piece or commission basis or other method of calculating the same. It does not, however, mean that commission, allowances or analogous income necessarily forms part of the employee's salary because to do so would lead to anomalies (sic), if not absurd, construction of the word "salary." For what will prevent the employee from insisting that emergency living allowance, 13th month pay, overtime, and premium pay, and other fringe benefits should be added to the computation of their separation pay. This situation, to our mind, is not the real intent of the Code and its rules. We rule otherwise. The ambiguity between Article 97(f), which defines the term 'wage' and Article XIV of the Collective Bargaining Agreement, Article 284 of the Labor Code and Sections 9(b) and 10 of the Implementing Rules, which mention the terms "pay" and "salary", is more apparent than real. Broadly, the word "salary" means

a recompense or consideration made to a person for his pains or industry in another man's business. Whether it be derived from "salarium," or more fancifully from "sal," the pay of the Roman soldier, it carries with it the fundamental idea of compensation for services rendered. Indeed, there is eminent authority for holding that the words "wages" and "salary" are in essence synonymous (Words and Phrases, Vol. 38 Permanent Edition, p. 44 citing Hopkins vs. Cromwell, 85 N.Y.S. 839,841,89 App. Div. 481; 38 Am. Jur. 496). "Salary," the etymology of which is the Latin word "salarium," is often used interchangeably with "wage", the etymology of which is the Middle English word "wagen". Both words generally refer to one and the same meaning, that is, a reward or recompense for services performed. Likewise, "pay" is the synonym of "wages" and "salary" (Black's Law Dictionary, 5th Ed.). Inasmuch as the words "wages", "pay" and "salary" have the same meaning, and commission is included in the definition of "wage", the logical conclusion, therefore, is, in the computation of the separation pay of petitioners, their salary base should include also their earned sales commissions. The aforequoted provisions are not the only consideration for deciding the petition in favor of the petitioners. We agree with the Solicitor General that granting, in gratia argumenti, that the commissions were in the form of incentives or encouragement, so that the petitioners would be inspired to put a little more industry on the jobs particularly assigned to them, still these commissions are direct remuneration services rendered which contributed to the increase of income of Zuellig . Commission is the recompense, compensation or reward of an agent, salesman, executor, trustees, receiver, factor, broker or bailee, when the same is calculated as a percentage on the amount of his transactions or on the profit to the principal (Black's Law Dictionary, 5th Ed., citing Weiner v. Swales, 217 Md. 123, 141 A.2d 749, 750). The nature of the work of a salesman and the reason for such type of remuneration for services rendered demonstrate clearly that commission are part of petitioners' wage or salary. We take judicial notice of the fact that some salesmen do not receive any basic salary but depend on commissions and allowances or commissions alone, are part of petitioners' wage or salary. We take judicial notice of the fact that some salesman do not received any basic salary but depend on commissions and allowances or commissions alone, although an employer-employee relationship exists. Bearing in mind the preceeding dicussions, if we adopt the opposite view that commissions, do not form part of wage or salary, then, in effect, We will be saying that this kind of salesmen do not receive any salary and therefore, not entitled to separation pay in the event of discharge from employment. Will this not be absurd? This narrow interpretation is not in accord with the liberal spirit of our labor laws and considering the purpose of separation pay which is, to alleviate the difficulties which confront a dismissed employee thrown the the streets to face the harsh necessities of life. Additionally, in Soriano v. NLRC, et al., supra, in resolving the issue of the salary base that should be used in computing the separation pay, We held that: The commissions also claimed by petitioner ('override commission' plus 'net deposit incentive') are not properly includible in such base figure since such commissions must be earned by actual market transactions attributable to petitioner. Applying this by analogy, since the commissions in the present case were earned by actual market transactions attributable to petitioners, these should be included in their separation pay. In the computation thereof, what should be taken into account is the average commissions earned during their last year of employment. The final consideration is, in carrying out and interpreting the Labor Code's provisions and its implementing regulations, the workingman's welfare should be the primordial and paramount consideration. This kind of interpretation gives meaning and substance to the liberal and compassionate spirit of the law as provided for in Article 4 of the Labor Code which states that "all doubts in the implementation and interpretation of the provisions of the Labor Code including its implementing rules and regulations shall be resolved in favor of labor" (Abella v. NLRC, G.R. No. 71812, July 30,1987,152 SCRA 140; Manila Electric Company v. NLRC, et al., G.R. No. 78763, July 12,1989), and Article 1702 of the Civil Code which provides that "in case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer. ACCORDINGLY, the petition is hereby GRANTED. The decision of the respondent National Labor Relations Commission is MODIFIED by including allowances and commissions in the separation pay of petitioners Jose Songco and Amancio Manuel. The case is remanded to the Labor Arbiter for the proper computation of said separation pay. SO ORDERED.