III. Labor Standards A. Hours of work 1. Coverage/Exclusions (Art. 82, Labor Code) 2.

Normal hours of work a) Compressed work week 3. Meal break 4. Waiting time 5. Overtime work, overtime pay 6. Night work (R.A. No. 10151), Night shift differential 7. Part-time work 8. Contract for piece work (see Civil Code) Article 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. "Field personnel" shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office e of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. Article 83. Normal hours of work. The normal hours of work of any employee shall not exceed eight (8) hours a day. Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for eight (8) hours a day, for five (5) days a week, exclusive of time for meals, except where the exigencies of the service require that such personnel work for six (6) days or forty-eight (48) hours, in which case, they shall be entitled to an additional compensation of at least thirty percent (30%) of their regular wage for work on the sixth day. For purposes of this Article, "health personnel" shall include resident physicians, nurses, nutritionists, dietitians, pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists, midwives, attendants and all other hospital or clinic personnel. Article 84. Hours worked. Hours worked shall include (a) all time during which an employee is required to be on duty or to be at a prescribed workplace; and (b) all time during which an employee is suffered or permitted to work. Rest periods of short duration during working hours shall be counted as hours worked. Article 85. Meal periods. Subject to such regulations as the Secretary of Labor may prescribe, it shall be the duty of every employer to give his employees not less than sixty (60) minutes time-off for their regular meals. Article 86. Night shift differential. Every employee shall be paid a night shift differential of not less than ten percent (10%) of his regular wage for each hour of work performed between ten oclock in the evening and six ocloc k in the morning. Article 87. Overtime work. Work may be performed beyond eight (8) hours a day provided that the employee is paid for the overtime work, an additional compensation equivalent to his regular wage plus at least twenty-five percent (25%) thereof. Work performed beyond eight hours on a holiday or rest day shall be paid an additional compensation equivalent to the rate of the first eight hours on a holiday or rest day plus at least thirty percent (30%) thereof.

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Article 88. Undertime not offset by overtime. Undertime work on any particular day shall not be offset by overtime work on any other day. Permission given to the employee to go on leave on some other day of the week shall not exempt the employer from paying the additional compensation required in this Chapter. Article 89. Emergency overtime work. Any employee may be required by the employer to perform overtime work in any of the following cases: When the country is at war or when any other national or local emergency has been declared by the National Assembly or the Chief Executive; When it is necessary to prevent loss of life or property or in case of imminent danger to public safety due to an actual or impending emergency in the locality caused by serious accidents, fire, flood, typhoon, earthquake, epidemic, or other disaster or calamity; When there is urgent work to be performed on machines, installations, or equipment, in order to avoid serious loss or damage to the employer or some other cause of similar nature; When the work is necessary to prevent loss or damage to perishable goods; and Where the completion or continuation of the work started before the eighth hour is necessary to prevent serious obstruction or prejudice to the business or operations of the employer. Any employee required to render overtime work under this Article shall be paid the additional compensation required in this Chapter. Article 90. Computation of additional compensation. For purposes of computing overtime and other additional remuneration as required by this Chapter, the "regular wage" of an employee shall include the cash wage only, without deduction on account of facilities provided by the employer

REPUBLIC ACT NO. 10151 AN ACT ALLOWING THE EMPLOYMENT OF NIGIIT WORKERS, THEREBY REPEALING ARTICLES 130 AND 131 OF PRESIDENTIAL DECREE NUMBER FOUR HUNDRED FORTY-TWO, AS AMENDED, OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled: Section 1. Article 130 of the Labor Code is hereby repealed. Section 2. Article 131 of the Labor Code is hereby repealed. Section 3. The subsequent articles in Book Three, Title III, Chapter I to Chapter IV of Presidential Decree No. 442 are hereby renumbered accordingly. Section 4. A new chapter is hereby inserted after Book Three, Title III of Presidential Decree No. 442, to read as follows: "Chapter V "Employment of Night Workers "Article 154. Coverage. - This chapter' shall apply to all persons, who shall be employed or permitted or suffered to work at night, except those employed in agriculture, stock raising, fishing, maritime transport and inland navigation, during a period of not less than seven (7) consecutive hours, including the interval from midnight to five o'clock in the morning, to

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be determined by the Secretary of Labor and Employment, after consulting the workers' representatives/labor organizations and employers. "'Night worker' means any employed person whose work requires performance of a substantial number of hours of night work which exceeds a specified limit. This limit shall be fixed by the Secretary of Labor after consulting the workers' representatives/labor organizations and employers." "Article 155. Health Assessment. - At their request, workers shall have the right to undergo a health assessment without charge and to receive advice on how to reduce or avoid health problems associated with their work: "(a) Before taking up an assignment as a night worker; "(b) At regular intervals during such an assignment; and "(c) If they experience health problems during such, an assignment which are not caused by factors other than the performance of night work. "With the exception of a finding of unfitness for night work, the findings of such assessments shall not be transmitted to others without the workers' consent and shall not be used to their detriment." "Article 156. Mandatory Facilities. - Suitable firstaid facilities shall be made available for workers performing night work, including arrangements where such workers, where necessary, can be taken immediately to a place for appropriate treatment. The employers are likewise required to provide safe and healthful working conditions and adequate or reasonable facilities such as sleeping or resting quarters in the establishment and transportation from the work premises to the nearest point of their residence subject to exceptions and guidelines to be provided by the DOLE." "Article 157. Transfer. - Night workers who are certified as unfit for night work, due to health reasons, shall be transferred, whenever practicable, to a similar job for which they are fit to work. "If such transfer to a similar job is not practicable, these workers shall be granted the same benefits as other workers who are unable to work, or to secure employment during such period. "A night worker certified as temporarily unfit for night work shall be given the same protection against dismissal or notice of dismissal as other workers who are prevented from working for reasons of health." "Article 158. Women Night Workers. - Measures shall be taken to ensure that an alternative to night work is available to women workers who would otherwise be called upon to perform such work: "(a) Before and after childbirth, for a period of at least sixteen (16) weeks, which shall be divided between the time before and after childbirth; "(b) For additional periods, in respect of winch a medical certificate IS produced stating that said additional periods are necessary for the health of the mother or child: "(1) During pregnancy; "(2) During a specified time beyond the period, after childbirth is fixed pursuant to subparagraph (a) above, the length of which shall be determined by the DOLE after consulting the labor organizations and employers. "During the periods referred to in this article: "(i) A woman worker shall not be dismissed or given notice of dismissal, except for just or authorized causes provided for in this Code that are not connected with pregnancy, childbirth and childcare responsibilities.

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"(ii) A woman worker shall not lose the benefits regarding her status, seniority, and access to promotion which may attach to her regular night work position. "Pregnant women and nursing mothers may be allowed to work .at night only if a competent physician, other than the company physician, shall certify their fitness to render night work, and specify, in the case of pregnant employees, the period of the pregnancy that they can safely work. "The measures referred to in this article may include transfer to day work where this is possible, the provision of social security benefits or an extension of maternity leave. "The provisions of this article shall not leave the effect of reducing the protection and benefits connected with maternity leave under existing laws." "Article 159. Compensation. The compensation for night workers in the form of working time, pay or similar benefits shall recognize the exceptional nature of night work." "Article 160. Social Services. - Appropriate social services shall be provided for night workers and, where necessary, for workers performing night work." "Article 161. Night Work Schedules. - Before introducing work schedules requiring the services of night workers, the employer shall consult the workers' representatives/labor organizations concerned on the details of such schedules and the forms of organization of night work that are best adapted to the establishment and its personnel, as well as on the occupational health measures and social services which are required. In establishments employing night workers, consultation shall take place regularly." Section 5. The subsequent articles starting from Book Four, Title I, Chapter I of Presidential Decree No. 442 are hereby renumbered accordingly. Section 6. Application. - The measures referred to in this chapter shall be applied not later than six (6) months from the effectivity of this Act. Section 7. Guidelines. - The DOLE shall promulgate appropriate regulations in addition to existing ones to ensure protection, safety and welfare of night workers. Section 8. Penalties. - Any violation of this Act, and the rules and regulations issued pursuant hereof shall be punished with a fine of not less than Thirty thousand pesos (P30,000.00) nor more than Fifty thousand pesos (P50,000.00) or imprisonment of not less than six (6) months, or both, at the discretion of the court. If the offense is committed by a corporation, trust, firm, partnership at association, or other entity, the penalty shall be imposed upon the guilty officer or officers of such corporation, trust, firm, partnership or association, or entity. Section 9. Separability Clause. - If any portion of this Act is declared unconstitutional, the same shall not affect the validity and effectivity of the other provisions not affected thereby. Section 10. Repealing Clause. - All laws, acts, decrees, executive orders, rules and regulations or other issuances or parts thereof, which are inconsistent with this Act, are hereby modified and repealed. Section 11. Effectivity Clause. - This Act shall take effect after fifteen (15) days following its publication in two (2) national newspapers of general circulation.

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1. Coverage/Exclusions (Art. 82, Labor Code) MANILA JOCKEY CLUB EMPLOYEES LABOR UNION-PTGWO - versus - MANILA JOCKEY CLUB, INC., G.R. No. 167760 March 7, 2007 Challenged in this petition for review under Rule 45 of the Rules of Court is the decision dated December 17, 2004 of the Court of Appeals (CA), as reiterated in its resolution of April 4, 2005, dismissing the petition for review of herein petitioner in CA-G.R. SP No. 69240, entitled Manila Jockey Club Employees Labor Union- PTGWO v. Manila Jockey Club, Inc. The facts: Petitioner Manila Jockey Club Employees Labor Union-PTGWO and respondent Manila Jockey Club, Inc., a corporation with a legislative franchise to conduct, operate and maintain horse races, entered into a Collective Bargaining Agreement (CBA) effective January 1, 1996 to December 31, 2000. The CBA governed the economic rights and obligations of respondents regular monthly paid rank-and-file employees. In the CBA, the parties agreed to a 7-hour work schedule from 9:00 a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m. on a work week of Monday to Saturday, as contained under Section 1, Article IV, of the same CBA, to wit: Section 1. Both parties to this Agreement agree to observe the seven-hour work schedule herewith scheduled to be from 9:00 a.m. to 12:00 noon and 1:00 p.m. to 5 p.m. on work week of Monday to Saturday. All work performed in excess of seven (7) hours work schedule and on days not included within the work week shall be considered overtime and paid as such. Except those monthly compensation which includes work performed during Saturday, Sunday, and Holiday when races are held at the Club. xxx xxx xxx

Accordingly, overtime on an ordinary working day shall be remunerated in an amount equivalent to the worker's regular basic wage plus twenty five percent (25%) thereof. Where the employee is permitted or suffered to work on legally mandated holidays or on his designated rest day which is not a legally mandated holiday, thirty percent (30%) shall be added to his basic wage for a seven hour work; while work rendered in excess of seven hours on legally mandated holidays and rest days not falling within the aforestated categories day shall be additionally compensated for the overtime work equivalent to his rate for the first seven hours on a legally mandated holiday or rest day plus thirty percent (30%) thereof. The CBA likewise reserved in respondent certain management prerogatives, including the determination of the work schedule, as provided under Section 2, Article XI: Section 2. The COMPANY shall have exclusive control in the management of the offices and direction of the employees. This shall include, but shall not be limited to, the right to plan, direct and control office operations, to hire, assign and transfer employees from one job to another or from one department to another; to promote, demote, discipline, suspend, discharge or terminate employees for proper cause and/or in accordance with law, to relieve employees from duty because of lack of work or for other legitimate reasons; or to introduce new or improved methods or facilities; or to change existing methods or facilities to change the schedules of work; and to make and enforce rules and regulations to carry out the functions of management, provided, however, that the COMPANY will not use these rights for the purpose of discrimination against any employee because of his membership in the UNION. Provided, further, that the prerogatives provided for under this Section shall be subject to, and in accordance with pertinent directives, proclamations and their implementing rules and regulations. On April 3, 1999, respondent issued an inter-office memorandum declaring that, effective April 20, 1999, the hours of work of regular monthly-paid employees shall be from 1:00 p.m. to 8:00 p.m. when horse races are held, that is, every Tuesday and Thursday. The memorandum, however, maintained the 9:00 a.m. to 5:00 p.m. schedule for non-race days. On October 12, 1999, petitioner and respondent entered into an Amended and Supplemental CBA retaining Section 1 of Article IV and Section 2 of Article XI, supra, and clarified that any conflict arising therefrom shall be referred to a voluntary arbitrator for resolution.

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Subsequently, before a panel of voluntary arbitrators of the National Conciliation and Mediation Board (NCMB), petitioner questioned the above office memorandum as violative of the prohibition against non-diminution of wages and benefits guaranteed under Section 1, Article IV, of the CBA which specified the work schedule of respondent's employees to be from 9:00 a.m. to 5:00 p.m. Petitioner claimed that as a result of the memorandum, the employees are precluded from rendering their usual overtime work from 5:00 p.m. to 9:00 p.m. The NCMBs panel of voluntary arbitrators, in a decision dated October 18, 2001, upheld respondent's prerogative to change the work schedule of regular monthly-paid employees under Section 2, Article XI, of the CBA. Petitioner moved for reconsideration but the panel denied the motion. Dissatisfied, petitioner then appealed the panels decision to the CA in CA-G.R. SP No. 69240. In the herein assailed decision of December 17, 2004, the CA upheld that of the panel and denied petitioners subsequent motion for reconsideration via its equally challenged resolution of April 4, 2005. Hence, petitioners present recourse, raising the following issues: I WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT RESPONDENT MJCI DID NOT RELINQUISH PART OF ITS MANAGEMENT PREROGATIVE WHEN IT STIPULATED A WORK SCHEDULE IN THE CBA. II WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT RESPONDENT MJCI DID NOT VIOLATE THE NON-DIMINUTION PROVISION CONTAINED IN ARTICLE 100 OF THE LABOR CODE. We DENY. Respondent, as employer, cites the change in the program of horse races as reason for the adjustment of the employees work schedule. It rationalizes that when the CBA was signed, the horse races started at 10:00 a.m. When the races were moved to 2:00 p.m., there was no other choice for management but to change the employees' work schedule as there was no work to be done in the morning. Evidently, the adjustment in the work schedule of the employees is justified. We are not unmindful that every business enterprise endeavors to increase profits. As it is, the Court will not interfere with the business judgment of an employer in the exercise of its prerogative to devise means to improve its operation, provided that it does not violate the law, CBAs, and the general principles of justice and fair play. We have thus held that management is free to regulate, according to its own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place and manner of work, processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, layoff of workers and discipline, dismissal, and recall of workers. While it is true that Section 1, Article IV of the CBA provides for a 7-hour work schedule from 9:00 a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m. from Mondays to Saturdays, Section 2, Article XI, however, expressly reserves on respondent the prerogative to change existing methods or facilities to change the schedules of work. As aptly ruled by the CA: x x x. Such exact language lends no other meaning but that while respondent may have allowed the initial determination of the work schedule to be done through collective bargaining, it expressly retained the prerogative to change it. Moreover, it cannot be said that in agreeing to Section 1 of Article IV, respondent already waived that customary prerogative of management to set the work schedule. Had that been the intention, Section 2 of Article XI would not have made any reference at all to the retention by respondent of that prerogative. The CBA would have instead expressly prohibited respondent from exercising it. x x x As it were, however, the CBA expressly recognized in respondent the prerogative to

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change the work schedule. This effectively rules out any notion of waiver on the part of respondent of its prerogative to change the work schedule.

The same provision of the CBA also grants respondent the prerogative to relieve employees from duty because of lack of work. Petitioners argument, therefore, that the change in work schedule violates Article 100 of the Labor Code because it resulted in the diminution of the benefit enjoyed by regular monthly-paid employees of rendering overtime work with pay, is untenable. Section 1, Article IV, of the CBA does not guarantee overtime work for all the employees but merely provides that "all work performed in excess of seven (7) hours work schedule and on days not included within the work week shall be considered overtime and paid as such." Respondent was not obliged to allow all its employees to render overtime work everyday for the whole year, but only those employees whose services were needed after their regular working hours and only upon the instructions of management. The overtime pay was not given to each employee consistently, deliberately and unconditionally, but as a compensation for additional services rendered. Thus, overtime pay does not fall within the definition of benefits under Article 100 of the Labor Code on prohibition against elimination or diminution of benefits. While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be presumed that every labor dispute will be automatically decided in favor of labor. The partiality for labor has not in any way diminished our belief that justice in every case is for the deserving, to be dispensed in the light of the established facts and the applicable law and doctrine. WHEREFORE, the instant petition is DENIED and the assailed decision and resolution of the CA are AFFIRMED. Costs against petitioner. SO ORDERED.

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[G.R. No. 126383. November 28, 1997] SAN JUAN DE DIOS HOSPITAL EMPLOYEES ASSOCIATION-AFW/MA. CONSUELO MAQUILING, LEONARDO MARTINEZ, DOMINGO ELA, JR., RODOLFO CALUCIN, JR., PERLA MENDOZA, REX RAPHAEL REYES, ROGELIO BELMONTE, AND 375 OTHER EMPLOYEE-UNION MEMBERS, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, AND SAN JUAN DE DIOS HOSPITAL, respondents. Petitioners, the rank-and-file employee-union officers and members of San Juan De Dios Hospital Employees Association, sent on July 08, 1991, a four (4) -page letter with attached support signatures x x x requesting and pleading for the expeditious implementation and payment by respondent Juan De Dios Hospital "of the 40 HOURS/5 -DAY WORKWEEK with compensable weekly two (2) days off provided for by Republic Ac t 5901 as clarified for enforcement by the Secretary of Labors Policy Instructions No. 54 dated April 12, 1988. i[1] Respondent hospital failed to give a favorable response; thus, petitioners filed a complaint regarding their claims for statutory benefit s under the above-cited law and policy issuanceii[2], docketed as NLRC NCR Case No. 00-08-04815-91. On February 26, 1992, the Labor Arbiteriii[3] dismissed the complaint. Petitioners appealed before public respondent National Labor Relations Commissioniv[4] (NLRC), docketed as NLRC NCR CA 003028-92, which affirmed the Labor Arbiters decision. Petitioners subsequent motion for reconsideration was denied; hence, this petition under Rule 65 of the Rules of Court ascribing grave abuse of discretion on the part of NLRC in concluding that Policy Instructions No. 54 proceeds from a wrong interpretation of RA 5901v[5] and Article 83 of the Labor Code. As the Court sees it, the core issue is whether Policy Instructions No. 54 issued by then Labor Secretary (now Senator) Franklin M. Drilon is valid or not. The policy instruction in question provides in full as follows: Policy Instruction No. 54 To: All Concerned Working Hours and Compensation of Hospital/Clinic Personnel

Subject:

This issuance clarifies the enforcement policy of this Department on the working hours and compensation of personnel employed by hospital/clinics with a bed capacity of 100 or more and those located in cities and municipalities with a population of one million or more. Republic Act 5901 took effect on 21 June 1969 prescribes a 40-hour/5 day work week for hospital/clinic personnel. At the same time, the Act prohibits the diminution of the compensation of these workers who would suffer a reduction in their weekly wage by reason of the shortened workweek prescribed by the Act. In effect, RA 5901 requires that the covered hospital workers who used to work seven (7) days a week should be paid for such number of days for working only 5 days or 40 hours a week. The evident intention of RA 5901 is to reduce the number of hospital personnel, considering the nature of their work, and at the same time guarantee the payment to them of a full weekly wage for seven (7) days. This is quite clear in the Exemplary Note of RA 5901 which states: As compared with the other employees and laborers, these hospital and health clinic personnel are over-worked despite the fact that their duties are more delicate in nature. If we offer them better working conditions, it is believed that the brain drain, that our country suffers nowadays as far as these personnel are concerned will be considerably lessened. The fact that these hospitals and health clinics personnel perform duties which are directly concerned with the health and lives of our people does not mean that they should work for a longer period than most employees and laborers. They are also entitled to as much rest as other workers. Making them work longer than is necessary may endanger, rather than protect the health of their patients. Besides, they are not receiving better pay than the other workers. Therefore, it is just and fair that they may be made to enjoy the privileges of equal working hours with other workers except those excepted by law. (Sixth Congress of the Republic of the Philippines, Third Session, House of Representatives, H. No. 16630)

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The Labor Code in its Article 83 adopts and incorporates the basic provisions of RA 5901 and retains its spirit and intent which is to shorten the workweek of covered hospital personnel and at the same time assure them of a full weekly wage.

Consistent with such spirit and intent, it is the position of the Department that personnel in subject hospital and clinics are entitled to a full weekly wage for seven (7) days it they have completed the 40-hours/5-day workweek in any given workweek. All enforcement and adjudicatory agencies of this Department shall be guided by this issuance in the disposition of cases involving the personnel of covered hospitals and clinics. Done in the City of Manila, this 12th day of April, 1988. (Sgd.) FRANKLIN M. DRILON Secretary (Emphasis Added) We note that Policy Instruction No. 54 relies and purports to implement Republic Act No. 5901, otherwise known as An Act Prescribing Forty Hours A Week Of Labor For Government and Private Hospitals Or Clinic Personnel, enacted on June 21, 1969. Reliance on Republic Act No. 5901, however, is misplaced for the said statute, as correctly ruled by respondent NLRC, has long been repealed with the passage of the Labor Code on May 1, 1974, Article 302 of which explicitly provides: All labor laws not adopted as part of this Code either directly or by reference are hereby repealed. All provisions of existing laws, orders, decrees, rules and regulations inconsistent herewi th are likewise repealed. Accordingly, only Article 83 of the Labor Code which appears to have substantially incorporated or reproduced the basic provisions of Republic Act No. 5901 may support Policy Instructions No. 54 on which the latters validity ma y be gauged. Article 83 of the Labor Code states: Art. 83. Normal Hours of Work. -- The normal hours of work of any employee shall not exceed eight (8) hours a day. Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for eight (8) hours a day, for five (5) days a week, exclusive of time for meals, except where the exigencies of the service require that such personnel work for six (6) days or forty-eight (48) hours, in which case they shall be entitled to an additional compensation of at least thirty per cent (30%) of their regular wage for work on the sixth day. For purposes of this Article, health personnel shall include: resident physicians, nurses, nutritionists, dietitians, pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists, midwives, attendants and all other hospital or clinic personnel. (Underscorin g supplied) A cursory reading of Article 83 of the Labor Code betrays petitioners position that hospital employees are entitled to a full weekly salary with paid two (2) days off if they have completed the 40 -hour/5-day workweek.vi[6] What Article 83 merely provides are: (1) the regular office hour of eight hours a day, five days per week for health personnel, and (2) where the exigencies of service require that health personnel work for six days or forty-eight hours then such health personnel shall be entitled to an additional compensation of at least thirty percent of their regular wage for work on the sixth day. There is nothing in the law that supports then Secretary of Labors assertion that personnel in subject hospital s and clinics are entitled to a full weekly wage for seven (7) days if they have completed the 40-hour/5-day workweek in any given workweek. Needless to say, the Secretary of Labor exceeded his authority by including a two days off with pay in contravention of the clear mandate of the statute. Such act the Court shall not countenance. Administrative interpretation of the law, we reiterate, is at best merely advisory,vii[7] and the Court will not hesitate to strike down an administrative interpretation that deviates from the provision of the statute. Indeed, even if we were to subscribe with petitioners erroneous assertion that Republic Act No. 5901 has neither been amended nor repealed by the Labor Code, we nevertheless find Policy Instructions No. 54 invalid. A perusal of Republic Act No. 5901viii[8] reveals nothing therein that gives two days off with pay for health personnel who complete a 40-hour work or 5-day workweek. In fact, the Explanatory Note of House Bill No. 16630 (later passed into law as Republic Act No. 5901) explicitly states that the bills sole purpose is to shorten the working hours of health personnel and not to dole out a two days off with pay.

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Hence:

The accompanying bill seeks to grant resident physicians, staff nurses, nutritionists, midwives, attendants an d other hospital and health clinic personnel of public and private hospitals and clinics, the privilege of enjoying the eight hours a week exclusive of time for lunch granted by law to all government employees and workers except those employed in schools and in courts. At present those hospitals and health clinic personnel including those employed in private hospitals and clinics, work six days a week, 8 hours a day or 48 hours a week. As compared with the other employees and laborers, these hospital and health clinic personnel are over-worked despite the fact that their duties are more delicate in nature. If we offer them better working conditions, it is believed that the brain drain, that our country suffers nowadays as far as these personnel are con cerned will be considerably lessened. The fact that these hospitals and health clinic personnel perform duties which are directly concerned with the health and lives of our people does not mean that they should work for a longer period than most employees and laborers. They are also entitled to as much rest as other workers. Making them work longer than is necessary may endanger, rather than protect, the health of their patients. Besides, they are not receiving better pay than the other workers. Therefore, it is just and fair that they be made to enjoy the privileges of equal working hours with other workers except those excepted by law. In the light of the foregoing, approval of this bill is strongly recommended. (SGD.) SERGIO H. LOYOLA Congressman, 3rd District Manila (Annex F of petition, underscoring supplied) Further, petitioners' position is also negated by the very rules and regulations promulgated by the Bureau of Labor Standards which implement Republic Act No. 5901. Pertinent portions of the implementing rules provide: RULES AND REGULATIONS IMPLEMENTING REPUBLIC ACT NO. 5901 By virtue of Section 79 of the Revised Administrative Code, as modified by section 18 of Implementation Report for Reorganization Plan No. 20-A on Labor, vesting in the Bureau of Labor Standards the authority to promulgate rules and regulations to implement wage and hour laws, the following rules and regulations are hereby issued for the implementation of Republic Act No. 5901. CHAPTER I Coverage Section 1. General Statement on Coverage. Republic Act No. 5901, hereinafter referred to as the Act, shall apply to: (a) All hospitals and clinics, including those with a bed capacity of less than one hundred, which are situated in cities o r municipalities with a population of one million or more; and to (b) All hospitals and clinics with a bed capacity of at least one hundred, irrespective of the size of population of the ci ty or municipality where they may be situated. xxx xxx xxx

Section 7. Regular Working Day. The regular working days of covered employees shall be not more than five days in a workweek. The workweek may begin at any hour and on any day, including Saturday or Sunday, designated by the employer. Employers are not precluded from changing the time at which the workday or workweek begins, provided that the change is not intended to evade the requirements of these regulations on the payment of additional compensation.

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Section 15. Additional Pay Under the Act and C.A. No. 444. (a) Employees of covered hospitals and clinics who are entitled to the benefits provided under the Eight-Hour Labor Law, as amended, shall be paid an additional compensation equivalent to their regular rate plus at least twenty-five percent thereof for work performed on Sunday and Holidays, not exceeding eight hours, such employees shall be entitled to an additional compensation of at least 25% of their regular rate. (b) For work performed in excess of forty hours a week, excluding those rendered in excess of eight hours a day during the week, employees covered by the Eight-Hour Labor Law shall be entitled to an additional straight-time pay which must be equivalent at least to their regular rate. If petitioners are entitled to two days off with pay, then there appears to be no sense at all why Section 15 of the implementing rules grants additional compensation equivalent to the regular rate plus at least twenty-five percent thereof for work performed on Sunday to health personnel, or an additional straight -time pay which must be equivalent at least to the regular rate [f]or work performed in excess of forty hours a week xxx. Policy Instructions No. 54 to our mind unduly extended the statute. The Secretary of Labor moreover erred in invoking the spirit and intent of Republic Act No. 5901 and Article 83 of the Labor Code for it is an elementary rule of statutory construction that when the language of the law is clear and unequivocal, the law must be taken to mean exactly what it says.ix[9] No additions or revisions may be permitted. Policy Instructions No. 54 being inconsistent with and repugnant to the provision of Article 83 of the Labor Code, as well as to Republic Act No. 5901, should be, as it is hereby, declared void. WHEREFORE, the decision appealed from is AFFIRMED. No costs. SO ORDERED.

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BISIG MANGGAGAWA SA TRYCO and/or FRANCISCO SIQUIG, as Union President, JOSELITO LARIO, VIVENCIO B. BARTE, SATURNINO EGERA and SIMPLICIO AYA-AY, Petitioners, - versus -

NATIONAL LABOR RELATIONS COMMISSION, TRYCO PHARMA CORPORATION, and/or WILFREDO C. RIVERA, G.R. No. 151309 October 15, 2008 This petition seeks a review of the Decision of the Court of Appeals (CA) dated July 24, 2001 and Resolution dated December 20, 2001, which affirmed the finding of the National Labor Relations Commission (NLRC) that the petitioners transfer to another workplace did not amount to a constructive dismissal and an unfair labor practice. The pertinent factual antecedents are as follows: Tryco Pharma Corporation (Tryco) is a manufacturer of veterinary medicines and its principal office is located in Caloocan City. Petitioners Joselito Lario, Vivencio Barte, Saturnino Egera and Simplicio Aya-ay are its regular employees, occupying the positions of helper, shipment helper and factory workers, respectively, assigned to the Production Department. They are members of Bisig Manggagawa sa Tryco (BMT), the exclusive bargaining representative of the rank-and-file employees. Tryco and the petitioners signed separate Memorand[a] of Agreement (MOA), providing for a compressed workweek schedule to be implemented in the company effective May 20, 1996. The MOA was entered into pursuant to Department of Labor and Employment Department Order (D.O.) No. 21, Series of 1990, Guidelines on the Implementation of Compressed Workweek. As provided in the MOA, 8:00 a.m. to 6:12 p.m., from Monday to Friday, shall be considered as the regular working hours, and no overtime pay shall be due and payable to the employee for work rendered during those hours. The MOA specifically stated that the employee waives the right to claim overtime pay for work rendered after 5:00 p.m. until 6:12 p.m. from Monday to Friday considering that the compressed workweek schedule is adopted in lieu of the regular workweek schedule which also consists of 46 hours. However, should an employee be permitted or required to work beyond 6:12 p.m., such employee shall be entitled to overtime pay. Tryco informed the Bureau of Working Conditions of the Department of Labor and Employment of the implementation of a compressed workweek in the company. In January 1997, BMT and Tryco negotiated for the renewal of their collective bargaining agreement (CBA) but failed to arrive at a new agreement. Meantime, Tryco received the Letter dated March 26, 1997 from the Bureau of Animal Industry of the Department of Agriculture reminding it that its production should be conducted in San Rafael, Bulacan, not in Caloocan City: MR. WILFREDO C. RIVERA President, Tryco Pharma Corporation San Rafael, Bulacan Subject: LTO as VDAP Manufacturer at San Rafael, Bulacan Dear Mr. Rivera: This is to remind you that your License to Operate as Veterinary Drug and Product Manufacturer is addressed at San Rafael, Bulacan, and so, therefore, your production should be done at the above mentioned address only. Further, production of a drug includes propagation, processing, compounding, finishing, filling, repacking, labeling, advertising, storage, distribution or sale of the veterinary drug product. In no instance, therefore, should any of the above be done at your business office at 117 M. Ponce St., EDSA, Caloocan City. Please be guided accordingly. Thank you.

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Very truly yours, (sgd.) EDNA ZENAIDA V. VILLACORTE, D.V.M.

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Chief, Animal Feeds Standard Division Accordingly, Tryco issued a Memorandum dated April 7, 1997 which directed petitioner Aya-ay to report to the companys plant site in Bulacan. When petitioner Aya -ay refused to obey, Tryco reiterated the order on April 18, 1997. Subsequently, through a Memorandum dated May 9, 1997, Tryco also directed petitioners Egera, Lario and Barte to report to the companys plant site in Bulacan. BMT opposed the transfer of its members to San Rafael, Bulacan, contending that it constitutes unfair labor practice. In protest, BMT declared a strike on May 26, 1997. In August 1997, petitioners filed their separate complaints for illegal dismissal, underpayment of wages, nonpayment of overtime pay and service incentive leave, and refusal to bargain against Tryco and its President, Wilfredo C. Rivera. In their Position Paper, petitioners alleged that the company acted in bad faith during the CBA negotiations because it sent representatives without authority to bind the company, and this was the reason why the negotiations failed. They added that the management transferred petitioners Lario, Barte, Egera and Aya-ay from Caloocan to San Rafael, Bulacan to paralyze the union. They prayed for the company to pay them their salaries from May 26 to 31, 1997, service incentive leave, and overtime pay, and to implement Wage Order No. 4. In their defense, respondents averred that the petitioners were not dismissed but they refused to comply with the managements directive for them to report to the companys plant in San Rafael, Bulacan. They denied the allegation that they negotiated in bad faith, stating that, in fact, they sent the Executive Vice-President and Legal Counsel as the companys representatives to the CBA negotiations. They claim that the failure to arrive at an agreement was due to the stubbornness of the union panel. Respondents further averred that, long before the start of the negotiations, the company had already been planning to decongest the Caloocan office to comply with the government policy to shift the concentration of manufacturing activities from the metropolis to the countryside. The decision to transfer th e companys production activities to San Rafael, Bulacan was precipitated by the letter-reminder of the Bureau of Animal Industry. On February 27, 1998, the Labor Arbiter dismissed the case for lack of merit. The Labor Arbiter held that the transfer of the petitioners would not paralyze or render the union ineffective for the following reasons: (1) complainants are not members of the negotiating panel; and (2) the transfer was made pursuant to the directive of the Department of Agriculture. The Labor Arbiter also denied the money claims, ratiocinating that the nonpayment of wages was justified because the petitioners did not render work from May 26 to 31, 1997; overtime pay is not due because of the compressed workweek agreement between the union and management; and service incentive leave pay cannot be claimed by the complainants because they are already enjoying vacation leave with pay for at least five days. As for the claim of noncompliance with Wage Order No. 4, the Labor Arbiter held that the issue should be left to the grievance machinery or voluntary arbitrator. On October 29, 1999, the NLRC affirmed the Labor Arbiters Decision, dismissing the case, thus: PREMISES CONSIDERED, the Decision of February 27, 1998 is hereby AFFIRMED and complainants appeal therefrom DISMISSED for lack of merit. Complainants Joselito Lario, Vivencio Barte, Saturnino Egera and Simplicio Aya-ay are directed to report to work at respondents San Rafael Plant, Bulacan but without backwages. Respondents are directed to accept the complainants back to work. SO ORDERED. On December 22, 1999, the NLRC denied the petitioners motion for reconsideration for lack of merit. Left with no recourse, petitioners filed a petition for certiorari with the CA. On July 24, 2001, the CA dismissed the petition for certiorari and ruled that the transfer order was a management prerogative not amounting to a constructive dismissal or an unfair labor practice. The CA further sustained the enforceability of the MOA, particularly the wai ver of overtime pay in light of this Courts rulings upholding a waiver of benefits in exchange of other valuable privileges. The dispositive portion of the said CA decision reads: WHEREFORE, the instant petition is DISMISSED. The Decision of the Labor Arbiter dated February 27, 1998 and the Decision and Resolution of the NLRC promulgated on October 29, 1999 and December 22, 1999, respectively, in NLRC-NCR Case Nos. 08-05715-97, 08-06115-97 and 08-0592097, are AFFIRMED.

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SO ORDERED. The CA denied the petitioners motion for reconsideration on December 20, 2001. Dissatisfied, petitioners filed this petition for review raising the following issues: A. THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE PATENTLY ERRONEOUS RULING OF THE LABOR ARBITER AND THE COMMISSION THAT THERE WAS NO DISMISSAL, MUCH LESS ILLEGAL DISMISSAL, OF THE INDIVIDUAL PETITIONERS. B. THE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING AND CONCLUDING THAT PRIVATE RESPONDENTS COMMITTED ACTS OF UNFAIR LABOR PRACTICE. C. THE COURT OF APPEALS ERRED IN NOT FINDING AND CONCLUDING THAT PETITIONERS ARE ENTITLED TO THEIR MONEY CLAIMS AND TO DAMAGES, AS WELL AS LITIGATION COSTS AND ATTORNEYS FEES. The petition has no merit. We have no reason to deviate from the well-entrenched rule that findings of fact of labor officials, who are deemed to have acquired expertise in matters within their respective jurisdiction, are generally accorded not only respect but even finality, and bind us when supported by substantial evidence. This is particularly true when the findings of the Labor Arbiter, the NLRC and the CA are in absolute agreement. In this case, the Labor Arbiter, the NLRC, and the CA uniformly agreed that the petitioners were not constructively dismissed and that the transfer orders did not amount to an unfair labor practice. But if only to disabuse the minds of the petitioners who have persistently pursued this case on the mistaken belief that the labor tribunals and the appellate court committed grievous errors, this Court will go over the issues raised in this petition. Petitioners mainly contend that the transfer orders amount to a constructive dismissal. They maintain that the letter of the Bureau of Animal Industry is not credible because it is not authenticated; it is only a ploy, solicited by respondents to give them an excuse to effect a massive transfer of employees. They point out that the Caloocan City office is still engaged in production activities until now and respondents even hired new employees to replace them. We do not agree. We refuse to accept the petitioners wild and reckless imputation that the Bureau of Animal Industry conspired with the respondents just to effect the transfer of the petitioners. There is not an iota of proof to support this outlandish claim. Absent any evidence, the allegation is not only highly irresponsible but is grossly unfair to the government agency concerned. Even as this Court has given litigants and counsel a relatively wide latitude to present arguments in support of their cause, we will not tolerate outright misrepresentation or baseless accusation. Let this be fair warning to counsel for the petitioners. Furthermore, Trycos decision to transfer its production activities to San Rafael, Bulacan, regardless of whether it was made pursuant to the letter of the Bureau of Animal Industry, was within the scope of its inherent right to control and manage its enterprise effectively. While the law is solicitous of the welfare of 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. This prerogative extends to the managements right to regulate, according to its own discretion and ju dgment, all aspects of employment, including the freedom to transfer and reassign employees according to the requirements of its business. Managements prerogative of transferring and reassigning employees from one area of operation to another in order to meet the requirements of the business is, therefore, generally not constitutive of constructive dismissal. Thus, the consequent transfer of Trycos personnel, assigned to the Production Department was well within the scope of its management prerogative. When the transfer is not unreasonable, or inconvenient, or prejudicial to the employee, and it does not involve a demotion in rank or diminution of salaries, benefits, and other privileges, the employee may not complain that it amounts to a constructive dismissal. However, the employer has the burden of proving that the transfer of an employee is for valid and legitimate grounds. The employer must show that the transfer is not unreasonable, inconvenient, or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits. Indisputably, in the instant case, the transfer orders do not entail a demotion in rank or diminution of salaries, benefits and other privileges of the petitioners. Petitioners, therefore, anchor their objection solely on the ground that it would cause them great inconvenience since they are all residents of Metro Manila and they would incur additional expenses to travel daily from Manila to Bulacan.

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The Court has previously declared that mere incidental inconvenience is not sufficient to warrant a claim of constructive dismissal. Objection to a transfer that is grounded solely upon the personal inconvenience or hardship that will be caused to the employee by reason of the transfer is not a valid reason to disobey an order of transfer. Incidentally, petitioners cite Escobin v. NLRC where the Court held that the transfer of the employees therein was unreasonable. However, the distance of the workplace to which the employees were being transferred can hardly compare to that of the present case. In that case, the employees were being transferred from Basilan to Manila; hence, the Court noted that the transfer would have entailed the separation of the employees from their families who were residing in Basilan and accrual of additional expenses for living accommodations in Manila. In contrast, the distance from Caloocan to San Rafael, Bulacan is not considerably great so as to compel petitioners to seek living accommodations in the area and prevent them from commuting to Metro Manila daily to be with their families. Petitioners, however, went further and argued that the transfer orders amounted to unfair labor practice because it would paralyze and render the union ineffective. To begin with, we cannot see how the mere transfer of its members can paralyze the union. The union was not deprived of the membership of the petitioners whose work assignments were only transferred to another location. More importantly, there was no showing or any indication that the transfer orders were motivated by an intention to interfere with the petitioners right to organize. Unfair labor practice refers to acts that violate the workers right to organize. With the exception of Article 248(f) of the Labor Code of the Philippines, the prohibited acts are related to the workers right to self-organization and to the observance of a CBA. Without that element, the acts, no matter how unfair, are not unfair labor practices. Finally, we do not agree with the petitioners assertion that the MOA is not enforceable as it is contrary to law. The MOA is enforceable and binding against the petitioners. Where it is shown that the person making the waiver did so voluntarily, with full understanding of what he was doing, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding undertaking. D.O. No. 21 sanctions the waiver of overtime pay in consideration of the benefits that the employees will derive from the adoption of a compressed workweek scheme, thus: The compressed workweek scheme was originally conceived for establishments wishing to save on energy costs, promote greater work efficiency and lower the rate of employee absenteeism, among others. Workers favor the scheme considering that it would mean savings on the increasing cost of transportation fares for at least one (1) day a week; savings on meal and snack expenses; longer weekends, or an additional 52 off-days a year, that can be devoted to rest, leisure, family responsibilities, studies and other personal matters, and that it will spare them for at least another day in a week from certain inconveniences that are the normal incidents of employment, such as commuting to and from the workplace, travel time spent, exposure to dust and motor vehicle fumes, dressing up for work, etc. Thus, under this scheme, the generally observed workweek of six (6) days is shortened to five (5) days but prolonging the working hours from Monday to Friday without the employer being obliged for pay overtime premium compensation for work performed in excess of eight (8) hours on weekdays, in exchange for the benefits abovecited that will accrue to the employees. Moreover, the adoption of a compressed workweek scheme in the company will help temper any inconvenience that will be caused the petitioners by their transfer to a farther workplace. Notably, the MOA complied with the following conditions set by the DOLE, under D.O. No. 21, to protect the interest of the employees in the implementation of a compressed workweek scheme: 1. The employees voluntarily agree to work more than eight (8) hours a day the total in a week of which shall not exceed their normal weekly hours of work prior to adoption of the compressed workweek arrangement; 2. There will not be any diminution whatsoever in the weekly or monthly take-home pay and fringe benefits of the employees; 3. If an employee is permitted or required to work in excess of his normal weekly hours of work prior to the adoption of the compressed workweek scheme, all such excess hours shall be considered overtime work and shall be compensated in accordance with the provisions of the Labor Code or applicable Collective Bargaining Agreement (CBA); 4. Appropriate waivers with respect to overtime premium pay for work performed in excess of eight (8) hours a day may be devised by the parties to the agreement. 5. The effectivity and implementation of the new working time arrangement shall be by agreement of the parties.

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PESALA v. NLRC, cited by the petitioners, is not applicable to the present case. In that case, an employment contract provided that the workday consists of 12 hours and the employee will be paid a fixed monthly salary rate that was above the legal minimum wage. However, unlike the present MOA which specifically states that the employee waives his right to claim overtime pay for work rendered beyond eight hours, the employment contract in that case was silent on whether overtime pay was included in the payment of the fixed monthly salary. This necessitated the interpretation by the Court as to whether the fixed monthly rate provided under the employment contract included overtime pay. The Court noted that if the employee is paid only the minimum wage but with overtime pay, the amount is still greater than the fixed monthly rate as provided in the employment contract. It, therefore, held that overtime pay was not included in the agreed fixed monthly rate. Considering that the MOA clearly states that the employee waives the payment of overtime pay in exchange of a five-day workweek, there is no room for interpretation and its terms should be implemented as they are written. WHEREFORE, the petition is DENIED. The Court of Appeals Decision dated July 24, 2001 and Resolution dated December 20, 2001 are AFFIRMED. SO ORDERED.

2. Normal hours of work a) Compressed work week 3. Meal break 4. Waiting time 5. Overtime work, overtime pay

SERGIO I. CARBONILLA, EMILIO Y. LEGASPI IV, and ADONAIS Y. REJUSO, Petitioners, - versus BOARD OF AIRLINES REPRESENTATIVES G.R. No. 193247 September 14, 2011 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x The Cases Before the Court are two petitions for review assailing the Decision promulgated on 9 July 2009 by the Court of Appeals in CA-G.R. SP No. 103250. In G.R. No. 193247, petitioners Sergio I. Carbonilla, Emilio Y. Legaspi IV, and Adonais Y. Rejuso (Carbonilla, et al.) assail the Resolution promulgated on 5 August 2010 by the Court of Appeals in CA-G.R. SP No. 103250. In G.R. No. 194276, petitioners Office of the President, represented by Paquito N. Ochoa in his capacity as Executive Secretary, Department of Finance, represented by Cesar V. Purisima in his capacity as Secretary of Finance, and the Bureau of Customs (BOC), represented by Angelito A. Alvarez in his capacity as Commissioner of Customs (Office of the President, et al.), assail the Resolution promulgated on 26 October 2010 by the Court of Appeals in CA-G.R. SP No. 103250. The Antecedent Facts The facts, as gathered from the assailed Decision of the Court of Appeals, are as follows: The Bureau of Customs issued Customs Administrative Order No. 1-2005 (CAO 1-2005) amending CAO 7-92. The Department of Finance approved CAO 1-2005 on 9 February 2006. CAO 7-92 and CAO 1-2005 were promulgated pursuant to Section 3506 in relation to Section 608 of the Tariff and Customs Code of the Philippines (TCCP). Petitioners Office of the President, et al. alleged that prior to the amendment of CAO 7-92, the BOC created on 23 April 2002 a committee to review the overtime pay of Customs personnel in Ninoy Aquino International Airport (NAIA) and to propose its adjustment from the exchange rate of P25 to US$1 to the then exchange rate of P55 to US$1. The Office of the President, et al. alleged that for a period of more than two years from the creation of the committee, several meetings were conducted with the agencies concerned, including respondent Board of Airlines Representatives (BAR), to discuss the proposed rate adjustment that would be embodied in an Amendatory Customs Administrative Order. On the other hand, BAR alleged that it learned of the proposed increase in the overtime rates only sometime in 2004 and only through unofficial reports.

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On 23 August 2004, BAR wrote a letter addressed to Edgardo L. De Leon, Chief, Bonded Warehouse Division, BOCNAIA, informing the latter of its objection to the proposed increase in the overtime rates. BAR further requested for a meeting to discuss the matter. BAR wrote the Secretary of Finance on 31 January 2005 and 21 February 2005 reiterating its concerns against the issuance of CAO 1-2005. In a letter dated 3 March 2005, the Acting District Collector of BOC informed BAR that the Secretary of Finance already approved CAO 1-2005 on 9 February 2005. As such, the increase in the overtime rates became effective on 16 March 2005. BAR still requested for an audience with the Secretary of Finance which was granted on 12 October 2005. The BOC then sent a letter to BARs member airlines demanding payment of overtime services to BOC personnel in compliance with CAO 1-2005. The BARs member airlines refused and mani fested their intention to file a petition with the Commissioner of Customs and/or the Secretary of Finance to suspend the implementation of CAO 1-2005. In a letter dated 31 August 2006, Undersecretary Gaudencio A. Mendoza, Jr. (Usec. Mendoza), Legal and Revenue Operations Group, Department of Finance informed BAR, through its Chairman Felix J. Cruz (Cruz), that they find no valid ground to disturb the validity of CAO 1-2005, much less to suspend its implementation or effectivity and that its implementation effective 16 March 2005 is legally proper. In separate letters both dated 4 December 2006 Cruz requested the Office of the President and the Office of the Executive Secretary to review the decision of Usec. Mendoza. Cruz manifested the objection of the International Airlines operating in the Philippines to CAO 1-2005. On 13 December 2006, Deputy Executive Secretary Manuel B. Gaite (Deputy Exec. Sec. Gaite) issued an Order requiring BAR to pay its appeal fee and submit an appeal memorandum within 15 days from notice. BAR paid the appeal fee and submitted its appeal memorandum on 19 January 2007. The Decision of the Office of the President In a Decision dated 12 March 2007, the Office of the President denied the appeal of BAR and affirmed the Decision of the Department of Finance. The Office of the President ruled that the BOC was merely exercising its rule-making or quasi-legislative power when it issued CAO 1-2005. The Office of the President ruled that since CAO 1-2005 was issued in the exercise of BOCs rulemaking or quasi-legislative power, its validity and constitutionality may only be assailed through a direct action before the regular courts. The Office of the President further ruled that, assuming that BARs recourse be fore the Office of the President was proper and in order, the appeal was filed out of time because BAR received the letter-decision of the Secretary of Finance on 4 September 2006 but it filed its appeal only on 4 December 2006, beyond the 30-day period provided under Administrative Order No. 18 dated 12 February 1987. The Office of the President also ruled that the grounds raised by BAR, namely, (1) the failure to comply with the publication requirement; (2) that the foreign exchange cannot be a basis for rate increase; and (3) that increase in rate was ill-timed, were already deliberated during the meetings held between the BOC and the stakeholders and were also considered by the Secretary of Finance. The Office of the President further adopted the position of the BOC that several public hearings and consultations were conducted by the BOC-NAIA Collection District, which were in substantial compliance with Section 9, Chapter I, Book VII of the Administrative Code of 1987. BAR did not oppose the exchange rate used in CAO 7-92 which was the exchange rate at that time and thus, the BOC-NAIA Collection District found it strange that BAR was questioning the fixing of the adjusted pay rates which were lower than the rate provided under Section 3506 of the TCCP. The Office of the President ruled that there is a legal presumption that the rates fixed by an administrative agency are reasonable, and that the fixing of the rates by the Government, through its authorized agents, involved the exercise of reasonable discretion. BAR filed a motion for reconsideration. In its Resolution dated 14 March 2008, the Office of the President denied BARs motion for reconsideration. BAR filed a petition for review under Rule 45 before the Court of Appeals.

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Petitioners Carbonilla, et al. filed an Omnibus Motion to Intervene before the Court of Appeals on the ground that as customs personnel, they would be directly affected by the outcome of the case. Petitioners Carbonilla, et al. also adopted the Comment filed by the Office of the Solicitor General (OSG).

The Decision of the Court of Appeals In its 26 February 2009 Resolution, the Court of Appeals denied the motion for intervention filed by Carbonilla, et al. The Court of Appeals ruled that the petition before it involved the resolution of whether the decision of the Office of the President was correctly rendered. The Court of Appeals held that the intervenors case was for collection of their unpaid overtime services and their interests could not be protected or addressed in the resolution of the case. The Court of Appeals ruled that Carbonilla, et al. should pursue their case in a separate proceeding against the proper respondents. Carbonilla, et al. filed a motion for reconsideration of the 26 February 2009 resolution. Without resolving Carbonilla, et al.s motion for reconsideration, the Court of Appeals promulgated the assailed 9 July 2009 Decision which set aside the 12 March 2007 Decision and 14 March 2008 Resolution of the Office of the President and declared Section 3506 of the TCCP, CAO 7-92 and CAO 1-2005 unenforceable against BAR. Ruling that it could take cognizance of BARs appeal, the Court of Appeals held that BAR could not be faulted for not filing a case before the Court of Tax Appeals (CTA) because the Office of the President admitted that it preempted any action before the CTA. Deputy Exec. Sec. Gaite treated the letters of BAR as an appeal and required it to pay appeal fee and to submit an appeal memorandum. The Court of Appeals further ruled that what the Office of the President treated as a decision of the Department of Finance was merely an advisory letter dated 31 August 2006 and to treat it as a decision from which an appeal could be taken and then rule that it was not perfected on time would deprive BAR of its right to due process. The Court of Appeals further ruled that it has the power to resolve the constitutional issue raised against CAO 7-92 and CAO 1-2005. The Court of Appeals ruled that Section 8, Article IX(B) of the Constitution prohibits an appointive public officer or employee from receiving additional, double or indirect compensation, unless specifically authorized by law. The Court of Appeals ruled that Section 3506 of the TCCP only authorized payment of additional compensation for overtime work, and thus, the payment of traveling and meal allowances under CAO 7-92 and CAO 1-2005 are unconstitutional and could not be enforced against BAR members. The Court of Appeals ruled that Section 3506 of the TCCP failed the completeness and sufficient standard tests to the extent that it attempted to cover BAR members through CAO 7-92 and CAO 1-2005. The Court of Appeals ruled that the phrase other persons served did not provide for descriptive terms and conditi ons that might be completely understood by the BOC. The Court of Appeals ruled that devoid of common distinguishable characteristic, aircraft owners and operators should not have been lumped together with importers and shippers. The Court of Appeals also ruled that Section 3506 of the TCCP failed the sufficient standard test because it does not contain adequate guidelines or limitations needed to map out the boundaries of the delegates authority. The dispositive portion of the Court of Appeals Decision reads: WHEREFORE, the petition is GRANTED. Declaring Section 3506 of the TCCP as well as CAO 7-92 and CAO 1-2005 to be unenforceable as against the petitioners, the appealed Decision dated March 12, 2007 and Resolution dated March 14, 2008 are hereby SET ASIDE. SO ORDERED. Petitioners Carbonilla, et al. filed their motion for reconsideration of the 9 July 2009 Decision. In its 5 August 2010 Resolution, the Court of Appeals, among others, denied Carbonilla, et al.s motion for reconsideration. Carbonilla, et al. came to this Court via a petition for review, docketed as G.R. No. 193247, on the following grounds: I. The Honorable Court of Appeals seriously erred in law in ruling that the Court of Tax Appeals did not have jurisdiction on the subject controversy. II. The Honorable Court of Appeals seriously erred in law in ruling that Section 3506 of the TCCP failed the completeness and sufficient standard tests. III. The Honorable Court of Appeals seriously erred in law in ruling that CAO 7-92 as amended by CAO 12005 as well as Section 3506 of the TCCP are not enforceable against BARs members. IV. The Honorable Court of Appeals seriously erred in law in not ruling that estoppel and/or laches should have prevented the BAR from questioning CAO 1-2005.

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V. The Honorable Court of Appeals seriously erred in law in issuing the decision dated July 9, 2009 in denying petitioners intervention and motion for reconsideration dated August 3, 2009. The Office of the President, et al. also filed a motion for reconsideration dated 28 July 2009 assailing the 9 July 2009 Decision of the Court of Appeals. Meanwhile, in a Resolution promulgated on 12 May 2010, the Court of Appeals directed BAR to continue complying with the 12 March 2007 Decision of the Office of the President. The Court of Appeals ruled that BAR unlawfully withheld the rightful overtime payment of BOC employees when it stopped paying its obligations under CAO 7-92, as amended by CAO 1-2005, since the Court of Appeals 9 July 2009 Decision had not attained finality pending the resolution of the motion for reconsideration filed by the Office of the President, et al. BAR filed a motion for reconsideration dated 26 May 2010 for the reversal of the 12 May 2010 Resolution of the Court of Appeals. In a Resolution promulgated on 26 October 2010, the Court of Appeals granted BARs 26 May 2010 motion for reconsideration and denied the 28 July 2009 motion for reconsideration of the Office of the President, et al. The Office of the President, et al. filed a petition for review before this Court, docketed as G.R. No. 194276, raising the following grounds: I. The Court of Appeals erred in giving due course to respondents BAR and its member airlines petition for review because it had no jurisdiction over the issues raised therein by respondents, to wit: 1. 2. CAO No. 1-2005 is invalid as the increased overtime pay rates and meal and transportation allowances fixed therein are unreasonable and confiscatory; and The act of the Bureau of Customs charging and/or collecting from BARs member airlines the cost of the overtime pay and meal and transportation allowances of Bureau of Customs (BOC) personnel in connection with the discharge of their government duties, functions and responsibilities is legally impermissible and, therefore, invalid.

These issues involve the validity and collection of money charges authorized by the Customs Law and thus the Court of Tax Appeals (CTA) has exclusive jurisdiction thereof. I. Granting arguendo that the Court of Appeals has jurisdiction over the said issues raised by the BAR and its member airlines, the Court of Appeals should have dismissed their petition for review filed under Rule 45 of the Rules of Court on the following grounds: 1. A petition for review under Ruled 43 of the Rules of Court cannot be filed to question the quasi-legislative or rule-making power of the Commissioner of Customs; 2. BARs appeal to the Office of the President questioning the 31 Au gust 2006 Decision of the Department of Finance (DOF), finding that CAO No. 1-2005 is valid, was filed out of time; 3. Some of respondents BAR member airlines country managers who executed the verification and certification of non-forum shopping of their petition for review did not have the necessary authorization of the said member airlines for them to execute the same; and 4. Administrative procedural due process was observed in the promulgation by the Commissioner of Customs of the questioned CAO No. 1-2005. II. Respondents BAR and its member airlines are guilty of laches and estoppel and thus are effectively barred from questioning the authority of the Commissioner of Customs to promulgate pursuant to Section 608 in relation to Section 3506 of the Tariff and Customs Code (TCCP), as amended, not only CAO No. 1-2005, but also CAO No. 7-92. III. The Court of Appeals erred in going beyond the issues raised by respondents BAR and its member airlines not only in the pleadings filed by them in the proceedings below but also in their petition for review. IV. Section 3506 of the TCCP, CAO No. 1-2005 and CAO No. 7-92 are valid. Said law and its implementing regulations neither constitute undue delegation of legislative power nor authorize overpayment of BOC personnel. The Issues

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For resolution in these cases are the following issues: 1. 2. Whether the Court of Appeals committed a reversible error in denying the intervention of Carbonilla, et al.; Whether the Court of Appeals has jurisdiction over BARs petition;

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3. 4. 5. 6.

Whether BARs appeal before the Office of the President was filed on time; Whether the officers of some of BARs member airlines who executed the verification and certification of non-forum shopping have the necessary authorization to execute them; Whether BAR was guilty of laches and/or estoppel; and Whether the Court of Appeals committed a reversible error in declaring Section 3506 of the TCCP, CAO 792, and CAO 1-2005 unenforceable against BAR. The Ruling of this Court

The petition in G.R. No. 193247 has no merit while the petition in G.R. No. 194276 is meritorious. Intervention in G.R. No. 193247 On the matter of the intervention of Carbonilla, et al., Section 1, Rule 19 of the 1997 Rules of Civil Procedure provides: Section 1. Who may intervene. - A person who has a legal interest in the matter in litigation, or in the success of either of the parties, or an interest against both, or is so situated as to be adversely affected by a distribution or other disposition of property in the custody of the court or of an officer thereof may, with leave of court, be allowed to intervene in the action. The court shall consider whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the original parti es, and whether or not the intervenors rights may be fully protected in a separate proceeding. Intervention is not a matter of right but it may be permitted by the courts when the applicant shows facts which satisfy the requirements authorizing intervention. In G.R. No. 193247, the Court of Appeals denied Carbonilla, et al.s motion for intervention in its 26 February 2009 Resolution on the ground that the case was for collection of unpaid overtime services and thus should be pursued in a separate proceeding against the proper respondents. A reading of the Carbonilla, et al.s Omnibus Motion supports the ground invoked by the Court of Appeals in denying the motion. The Omnibus Motion states: 1. 2. The said movants-intervenors all held offices or were stationed at the Ninoy Aquino International Airport [NAIA] and who have all been rendering overtime services thereat for so many years. Movant-Intervenor Carbonilla has retired from government service last September 2007 without his being paid the additional rates set by CAO No. 1-2005 which became effective on March 16, 2007. The effectivity and implementation of the said CAO No. 1-2005 is the main issue in this case. Thus, it is noteworthy to mention that all the movants-intervenors all rendered overtime services since March 16, 2005 or for all the time material to the issue in this case. Movants-Intervenors urgently need their respective [differential]/back payments representing overtime services rendered from 16 March 2005 to the present pursuant to the implementation of CAO No. 1-2005. Said differential/back payments pursuant to CAO No. 1-2005 would be of great help to the movantsintervenors considering that as of 24 January 2008, herein movants-intervenors were stripped of their respective overtime duties by the District Collector of Customs at NAIA for reasons only known to the latter. The full implementation of CAO No. 1-2005 would not only benefit the cause and financial needs of herein movants-intervenors but also that of the other 900 or so employees of the Bureau of Customs-NAIA who are rendering overtime services thereat up to the present.

3. 4. 5.

6.

Clearly, Carbonilla, et al. were really after the payment of their differential or back payments for services rendered. Hence, the Court of Appeals correctly denied the motion for intervention. It should be stressed that the allowance or disallowance of a motion for intervention is addressed to the sound discretion of the courts. The permissive tenor of the Rules of Court shows the intention to give the courts the full measure of discretion in allowing or disallowing the intervention. Once the courts have exercised this discretion, it could not be reviewed by certiorari or controlled by mandamus unless it could be shown that the discretion was exercised in an arbitrary or capricious manner. Carbonilla, et al. failed to show that the Court of Appeals rendered its resolution in an arbitrary or capricious manner.

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In addition, Carbonilla, et al. admitted in their petition that their motion for reconsideration of the 26 February 2009 Resolution of the Court of Appeals had been denied in open court during the oral arguments held by the Court of Appeals on 16 December 2009. Carbonilla, et al. did not act on the denial of this motion but only pursued their motion for

reconsideration of the 9 July 2009 Decision of the Court of Appeals. Hence, the denial of Carbonilla, et al.s motion for intervention had already attained finality. Having ruled against the right of Carbonilla, et al. to intervene, we see no reason to rule on the other issues they raise unless raised in G.R. No. 194276. We now discuss the issues raised in G.R. No. 194276. Jurisdiction of the Court of Appeals The Office of the President, et al. argue that the Court of Appeals should have denied BARs petition because it had no jurisdiction over the issues raised, involving the validity and collection of money charges authorized by Customs Law, which are under the jurisdiction of the CTA. We do not agree. The jurisdiction of the Court of Appeals over BARs petition stems from Section 1 in relation to Section 3, Rule 43 of the 1997 Rules of Civil Procedure which states that appeals from awards, judgments, final orders or resolutions of or authorized by any quasi-judicial agency in the exercise of its quasi judicial functions[,] which includes the Office of the President, may be taken to the Court of Appeals. BARs petition for review to the Court of Appeals from the 12 March 2007 Decision and 14 March 2008 Resolution of the Office of the President falls within the jurisdiction of the Court of Appeals. As noted by the Court of Appeals, the Office of the President took cognizance of Cruzs letter dated 4 December 2006 requesting for a review of the 31 August 2006 letter of Usec. Mendoza. Deputy Exec. Sec. Gaite required BAR to pay the appeal fee and submit its appeal memorandum. Thereafter, the Office of the President issued its 12 March 2007 Decision affirming the decision of the Department of Finance and then denied BARs motion for reconsideration in its 14 March 2008 Resolution. BARs only recourse is to file a petition for review before the Court of Appeals under Rule 43 of the 1997 Rules on Civil Procedure. The exercise by the Court of Appeals of its appellate jurisdiction over the decision of the Office of the President is entirely distinct from the issue of whether BAR committed a procedural error in elevating the case before the Office of the President instead of filing its appeal before the CTA. Timeliness of the Appeal before the Office of the President The Court of Appeals ruled that the question of whether BARs appeal before the Office of the President was filed on time was rendered academic when BAR paid the appeal fee and submitted its appeal memorandum on time. The Court of Appeals held that Deputy Exec. Sec. Gaite could not validly require BAR to perfect its appeal in his 13 December 2006 Order and then rule, after its perfection, that the appeal was not filed on time. The Court of Appeals ruled that the 13 December 2006 Order of Deputy Exec. Sec. Gaite stopped BAR from pursuing any recourse with the CTA. The Court of Appeals further ruled that the Office of the President did not explain how the 31 August 2006 letter of Usec. Mendoza became a decision of the Secretary of Finance when it was only an advisory letter. We do not agree with the Court of Appeals. The Office of the President is not precluded from issuing the assailed decision in the same way that this Court is not proscribed from accepting a petition before it, requiring the payment of docket fees, directing the respondent to comment on the petition, and after studying the case, from ruling that the petition was filed out of time or that it lacks merit. However, Cruzs 4 December 2006 letters to then President Gloria Macapa gal Arroyo and then Exec. Sec. Eduardo Ermita are not in the nature of an appeal provided for under Administrative Order No. 18, series of 1987 (AO 18).Section 1 of AO 18 provides that an appeal to the Office of the President shall be taken within 30 days from receipt by the aggrieved party of the decision, resolution or order complained of or appealed from. Section 2 of AO 18 cites caption, docket number of the case as presented in the office of origin, and addresses of the parties. Section 3 mentions pauper litigants. In sum, the appeal provided under AO 18 refers to adversarial cases. It does not refer to a review of administrative rules and regulations, as what BAR asked the Office of the President to do in this case. BAR, in writing the Office of the President, was exhausting its administrative remedies. BAR could still go to the regular courts after the Office of the President acted on its request for a review of Usec. Mendozas 31 August 2006 letter. The decision of the Office of the President did not foreclose BARs remedy to bring the matter to the regular courts. BAR is assailing the issuance and implementation of CAO 1-2005. CAO 1-2005 is an amendment to CAO 7-92. CAO 792 was issued [b]y authority of Section 608, in relation to Section 3506, of th e Tariff and Customs Code of the Philippines x x x. On this score, we do not agree with the Office of the President that BAR, instead of filing an appeal

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before its office, should have filed an appeal before the CTA in accordance with Section 7 of Republic Act No. 9282 (RA 9282) which reads: Section 7. Jurisdiction. - The CTA shall exercise: (a) Exclusive appellate jurisdiction, to review by appeal, as herein provided: xxxx 4. Decisions of the Commissioner of Customs in vases involving liability for customs duties, fees and other money charges, seizure, detention or release of property affected, fines forfeitures or other penalties in relation thereto, or other matters arising under the Customs Law or other laws administered by the Bureau of Customs. Under Section 11 of RA 9282, an appeal to the CTA should be taken within 30 days from receipt of the assailed decision or ruling. However, Section 2313, Book II of Republic Act No. 1937 (RA 1937) 29 provides: Section 2313. Review of Commissioner. - The person aggrieved by the decision or action of the Collector in any matter presented upon protest or by his action in any case of seizure may, within fifteen (15) days after notification on writing by the Collector of his action or decision, file a written notice to the Collector with a copy furnished to the Commissioner of his intention to appeal the action or decision of the Collector to the Commissioner. Thereupon the Collector shall forthwith transmit all the records of the proceedings to the Commissioner, who shall approve, modify or reverse the action or decision of the Collector and take such steps and make such orders as may be necessary to give effect to his decision. Provided, That when an appeal is filed beyond the period herein prescribed, the same shall be deemed dismissed. If in any seizure proceedings, the Collector renders a decision adverse to the Government, such decision shall automatically be reviewed by the Commissioner and the records of the case shall be elevated within five (5) days from the promulgation of the decision of the Collector. The Commissioner shall render a decision on the automatic appeal within thirty (30) days from receipts of the records of the case. If the Collectors decision is reversed by the Commissioner, the decision of the Commissioner shall be final and executory. However, if the Collectors decision is affirmed, or if within thirty (30) days from receipt of the record of the case by the Commissioner no decision is rendered of the decision involves imported articles whose published value is five million pesos (P5,000,000) or more, such decision shall be deemed automatically appealed to the Secretary of Finance and the records of the proceedings shall be elevated within five (5) days from the promulgation of the decision of the Commissioner or of the Collector under appeal, as the case may be. Provided, further, That if the decision of the Commissioner or of the Collector under appeal, as the case may be, is affirmed by the Secretary of Finance, or if within thirty (30) days from receipt of the records of the proceedings by the Secretary of Finance, no decision is rendered, the decision of the Secretary of Finance, or of the Commissioner, or of the Collector under appeal, as the case may be, shall become final and executory. xxxx Section 2402 of RA 1937 further provides: Section 2402. Review by Court of Appeals. - The party aggrieved by a ruling of the Commissioner in any matter brought before him upon protest or by his action or ruling in any case of seizure may appeal to the Court of Tax Appeals, in the manner and within the period prescribed by law and regulations. Clearly, what is appealable to the CTA are cases involving protest or seizure, which is not the subject of BARs appeal in these cases. BARs actions, including seeking an audience with the Secretary of Finance, 30 as well as writing to the Executive Secretary and the Office of the President, are part of the administrative process to question the validity of the issuance of an administrative regulation, that is, of CAO 1-2005, entitled Amendments to Customs Administrative Order No. 7-92 (Rules and Regulations Governing the Overtime Pay and Other Compensations Related Thereto Due to Customs Personnel at the NAIA).

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CAO 1-2005 was issued pursuant to Section 608 of the TCCP which provides:

Section 608. Commissioner to Make Rules and Regulations. - The Commissioner shall, subject to the approval of the Secretary of Finance, promulgate all rules and regulations necessary to enforce the provisions of this Code. x xx The jurisdiction over the validity and constitutionality of rules and regulations issued by the Commissioner under Section 608 of the TCCP lies before the regular courts. It is not within the jurisdiction of the Office of the President or the CTA. Hence, the Office of the President erred in holding that BARs appeal was filed late because BAR can still raise the issue before the regular courts. Verification and Certification of Non-Forum Shopping The Office of the President, et al. allege that the Court of Appeals should have dismissed the petition because of BARs failure to comply fully with the requirements of verification and certification of non-forum shopping. We agree with the Court of Appeals in its liberal interpretation of the Rules. Verification of a pleading is a formal, not jurisdictional, requirement. The requirement is simply a condition affecting the form of the pleading and non-compliance with the requirement does not render the pleading fatally defective.

As regards the certification of non-forum shopping, this Court may relax the rigid application of the rules to afford the parties the opportunity to fully ventilate their cases on the merits. This is in line with the principle that cases should be decided only after giving all parties the chance to argue their causes and defenses. Technicality and procedural imperfections should not serve as basis of decisions and should not be used to defeat the substantive rights of the other party. Estoppel and Laches The Office of the President, et al. allege that BAR is guilty of estoppel and laches because it did not question CAO 7-92 which had been in effect since 1992. The Office of the President, et al. argue that a direct attack of CAO 1-2005 is a collateral attack of CAO 7-92 since CAO 7-92 is the main administrative regulation enacted to implement Section 3506 of the TCCP. The argument has no merit. BAR is not questioning the validity of CAO 7-92 or Section 3506 of the TCCP. BAR is questioning the validity of CAO 1-2005 on the following grounds: (1) that it was approved in violation of BARs right to due process because its approval did not comply with the required publication notice under Section 9(2), Chapter I, Book VII, of the Administrative Code of the Philippines; (2) that CAO 1-2005 inappropriately based its justification on the declining value of the Philippine peso versus the U.S. dollar when services of the BOC are rendered without spending any foreign currency; and (3) that the increase in BOC rates aggravates the already high operating cost paid by the airlines which are still reeling from the impact of consecutive negative events such as SARS, Iraqi war, avian flu and the unprecedented increase in fuel prices. BARs objection to CAO 1-2005 could not be considered a direct attack on CAO 7-92 because BAR was merely objecting to the amendments to CAO 7-92. BAR did not question the validity of CAO 7-92 itself. Even during the pendency of these cases before the Court of Appeals, BAR members continued to pay the rates prescribed under CAO 792. It was only upon the promulgation of the Court of Appeals Decision declaring CAO 7 -92 and CAO 1-2005 unconstitutional that BAR recommended to its members to stop paying the charges imposed by the BOC. Hence, BAR is not estopped from questioning CAO 1-2005 on the ground alone that it did not question the validity of CAO 7-92. Constitutionality of CAO 7-92, CAO 1-2005 and Section 3506 of the TCCP The Office of the President, et al. allege that the Court of Appeals acted beyond its jurisdiction when it passed upon the validity of CAO 7-92 and Section 3506 of the TCCP. We do not agree with the Office of the President, et al. Section 8, Rule 51 of the 1997 Rules of Civil Procedure also states:

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Section 8. Questions that may be decided. - No error which does not affect the jurisdiction over the subject matter or the validity of the judgment appealed from or the proceedings therein, will be considered unless stated

in the assignment of errors, or closely related to or dependent on an assigned error and properly argued in the brief, save as the court may pass upon plain errors and clerical errors. The Court of Appeals deemed it necessary to rule on the issue for the proper determination of these cases. The Court has ruled that the Court of Appeals is imbued with sufficient authority and discretion to review matters, not otherwise assigned as errors on appeal, if it finds that their consideration is necessary in arriving at a complete and just resolution of the case or to serve the interests of justice or to avoid dispensing piecemeal justice. Further, while it is true that the issue of constitutionality must be raised at the first opportunity, this Court, in the exercise of sound discretion, can take cognizance of the constitutional issues raised by the parties in accordance with Section 5(2)(a), Article VII of the 1987 Constitution. The Court has further ruled: When an administrative regulation is attacked for being unconstitutional or invalid, a party may raise its unconstitutionality or invalidity on every occasion that the regulation is being enforced. For the Court to exercise its power of judicial review, the party assailing the regulation must show that the question of constitutionality has been raised at the earliest opportunity. This requisite should not be taken to mean that the question of constitutionality must be raised immediately after the execution of the state action complained of. That the question of constitutionality has not been raised before is not a valid reason for refusing to allow it to be raised later. A contrary rule would mean that a law, otherwise unconstitutional, would lapse into constitutionality by the mere failure of the proper party to promptly file a case to challenge the same. Section 3506 of the TCCP provides: Section 3506. Assignment of Customs Employees to Overtime Work. - Customs employees may be assigned by a Collector to do overtime work at rates fixed by the Commissioner of Customs when the service rendered is to be paid by the importers, shippers or other persons served. The rates to be fixed shall not be less than that prescribed by law to be paid to employees of private enterprise. We do not agree with the Court of Appeals in excluding airline companies, aircraft owners, and operators from the coverage of Section 3506 of the TCCP. The term other persons served refers to all other persons served by the BOC employees. Airline companies, aircraft owners, and operators are among other persons served by the BOC employees. As pointed out by the OSG, the processing of embarking and disembarking from aircrafts of passengers, as well as their baggages and cargoes, forms part of the BOC functions. BOC employees who serve beyond the regular office hours are entitled to overtime pay for the services they render. The Court of Appeals ruled that, applying the principle of ejusdem generis, airline companies, aircraft owners, and operators are not in the same category as importers and shippers because an importer brings goods to the country from a foreign country and pays custom duties while a shipper is one who ships goods to another; one who engages the services of a carrier of goods; one who tenders goods to a carrier for transportation. However, airline passengers pass through the BOC to declare whether they are bringing goods that need to be taxed. The passengers cannot leave the airport of entry without going through the BOC. Clearly, airline companies, aircraft owners, and operators are among the persons served by the BOC under Section 3506 of the TCCP. The overtime pay of BOC employees may be paid by any of the following: (1) all the taxpayers in the country; (2) the airline passengers; and (3) the airline companies which are expected to pass on the overtime pay to passengers. If the overtime pay is taken from all taxpayers, even those who do not travel abroad will shoulder the payment of the overtime pay. If the overtime pay is taken directly from the passengers or from the airline companies, only those who benefit from the overtime services will pay for the services rendered. Here, Congress deemed it proper that the payment of overtime services shall be shouldered by the other persons served by the BOC, that is, the airline companies. This is a policy decision on the part of Congress that is within its discretion to determine. Such determination by Congress is not subject to judicial review. We do not agree with the Court of Appeals that Section 3506 of the TCCP failed the completeness and sufficient standard tests. Under the first test, the law must be complete in all its terms and conditions when it leaves the legislature such that when it reaches the delegate, the only thing he will have to do is to enforce it. The second test requires adequate guidelines or limitations in the law to determine the boundaries of the delegates authority and prevent the delegati on from running riot. Contrary to the ruling of the Court of Appeals, Section 3506 of the TCCP complied with these requirements. The law is complete in itself that it leaves nothing more for the BOC to do: it gives authority to the Collector to assign

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customs employees to do overtime work; the Commissioner of Customs fixes the rates; and it provides that the payments shall be made by the importers, shippers or other persons served. Section 3506 also fixed the standard to be followed by the Commissioner of Customs when it provides that the rates shall not be less than that prescribed by law to be paid to employees of private enterprise. Contrary to the ruling of the Court of Appeals, BOC employees rendering overtime services are not receiving double compensation for the overtime pay, travel and meal allowances provided for under CAO 7-92 and CAO 1-2005. Section 3506 provides that the rates shall not be less than that prescribed by law to be paid to employees of private enterprise. The overtime pay, travel and meal allowances are payment for additional work rendered after regular office hours and do not constitute double compensation prohibited under Section 8, Article IX(B) of the 1987 Constitution as they are in fact authorized by law or Section 3506 of the TCCP. BAR raises the alleged failure of BOC to publish the required notice of public hearing and to conduct public hearings to give all parties the opportunity to be heard prior to the issuance of CAO 1-2005 as required under Section 9(2), Chapter I, Book VII of the Administrative Code of the Philippines. Section 9(2) provides: Sec. 9. Public Participation. - (1) If not otherwise required by law, an agency shall, as far as practicable, publish or circulate notices of proposed rules and afford interested parties the opportunity to submit their views prior to the adoption of any rule. (2) In the fixing of rates, no rule or final order shall be valid unless the proposed rates shall have been published in a newspaper of general circulation at least two (2) weeks before the first hearing thereon. (3) In cases of opposition, the rules on contested cases shall be observed. BARs argument has no merit. The BOC created a committee to re-evaluate the proposed increase in the rate of overtime pay and for two years, several meetings were conducted with the agencies concerned to discuss the proposal. BAR and the Airline Operators Council participated in these meetings and discussions. Hence, BAR cannot claim that it was denied due process in the imposition of the increase of the overtime rate. CAO 1-2005 was published in the Manila Standard, a newspaper of general circulation in the Philippines on 18 February 2005 and while it was supposed to take effect on 5 March 2005, or 15 days after its publication, the BOC-NAIA still deferred BARs compliance until 16 March 2005. WHEREFORE, we DENY the petition in G.R. No. 193247. We GRANT the petition in G.R. No. 194276 and SET ASIDE the 9 July 2009 Decision and 26 October 2010 Resolution of the Court of Appeals in CA-G.R. SP No. 103250. Petitioner Bureau of Customs is DIRECTED to implement CAO 1-2005 immediately. SO ORDERED.

CHARLITO PEARANDA vs. BAGANGA PLYWOOD CORPORATION and HUDSON CHUA No. 159577 May 3, 2006

G.R.

Managerial employees and members of the managerial staff are exempted from the provisions of the Labor Code on labor standards. Since petitioner belongs to this class of employees, he is not entitled to overtime pay and premium pay for working on rest days. The Case

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Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing the January 27, 2003 and July 4, 2003 Resolutions of the Court of Appeals (CA) in CA-GR SP No. 74358. The earlier Resolution disposed as follows: WHEREFORE, premises considered, the instant petition is hereby DISMISSED.

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The latter Resolution denied reconsideration. On the other hand, the Decision of the National Labor Relations Commission (NLRC) challenged in the CA disposed as follows: WHEREFORE, premises considered, the decision of the Labor Arbiter below awarding overtime pay and premium pay for rest day to complainant is hereby REVERSED and SET ASIDE, and the complaint in the above-entitled case dismissed for lack of merit. The Facts Sometime in June 1999, Petitioner Charlito Pearanda was hired as an employee of Baganga Plywood Corporation (BPC) to take charge of the operations and maintenance of its steam plant boiler. In May 2001, Pearanda filed a Complaint for illegal dismissal with money claims against BPC and its general manager, Hudson Chua, before the NLRC. After the parties failed to settle amicably, the labor arbiter directed the parties to file their position papers and submit supporting documents. Their respective allegations are summarized by the labor arbiter as follows: [Pearanda] through counsel in his position paper alleges that he was employed by respondent [Baganga] on March 15, 1999 with a monthly salary of P5,000.00 as Foreman/Boiler Head/Shift Engineer until he was illegally terminated on December 19, 2000. Further, [he] alleges that his services [were] terminated without the benefit of due process and valid grounds in accordance with law. Furthermore, he was not paid his overtime pay, premium pay for working during holidays/rest days, night shift differentials and finally claims for payment of damages and attorneys fees having been forced to litigate the present complaint. Upon the other hand, respondent [BPC] is a domestic corporation duly organized and existing under Philippine laws and is represented herein by its General Manager HUDSON CHUA, [the] individual respondent. Respondents thru counsel allege that complainants separation from service was done pursuant to Art. 283 of the Labor Code. The respondent [BPC] was on temporary closure due to repair and general maintenance and it applied for clearance with the Department of Labor and Employment, Regional Office No. XI to shut down and to dismiss employees (par. 2 position paper). And due to the insistence of herein complainant he was paid his separation benefits (Annexes C and D, ibid). Consequently, when respondent [BPC] partially reopened in January 2001, [Pearanda] failed to reapply. Hence, he was not terminated from employment much less illegally. He opted to severe employment when he insisted payment of his separation benefits. Furthermore, being a managerial employee he is not entitled to overtime pay and if ever he rendered services beyond the normal hours of work, [there] was no office order/or authorization for him to do so. Finally, respondents allege that the claim for damages has no legal and factual basis and that the instant complaint must necessarily fail for lack of merit. The labor arbiter ruled that there was no illegal dismissal and that petitioners Complaint was premature because he was still employed by BPC. The temporary closure of BPCs plan t did not terminate his employment, hence, he need not reapply when the plant reopened. According to the labor arbiter, petitioners money claims for illegal dismissal was also weakened by his quitclaim and admission during the clarificatory conference that he accepted separation benefits, sick and vacation leave conversions and thirteenth month pay. Nevertheless, the labor arbiter found petitioner entitled to overtime pay, premium pay for working on rest days, and attorneys fees in the total amount of P21,257.98. Ruling of the NLRC Respondents filed an appeal to the NLRC, which deleted the award of overtime pay and premium pay for working on rest days. According to the Commission, petitioner was not entitled to these awards because he was a managerial employee. Ruling of the Court of Appeals In its Resolution dated January 27, 2003, the CA dismissed Pearandas Petition for Certiorari. The appellate court held that he failed to: 1) attach copies of the pleadings submitted before the labor arbiter and NLRC; and 2) explain why the filing and service of the Petition was not done by personal service.

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In its later Resolution dated July 4, 2003, the CA denied reconsideration on the ground that petitioner still failed to submit the pleadings filed before the NLRC. Hence this Petition. The Issues Petitioner states the issues in this wise: The [NLRC] committed grave abuse of discretion amounting to excess or lack of jurisdiction when it entertained the APPEAL of the respondent[s] despite the lapse of the mandatory period of TEN DAYS. The [NLRC] committed grave abuse of discretion amounting to an excess or lack of jurisdiction when it rendered the assailed RESOLUTIONS dated May 8, 2002 and AUGUST 16, 2002 REVERSING AND SETTING ASIDE the FACTUAL AND LEGAL FINDINGS of the [labor arbiter] with respect to the following: I. The finding of the [labor arbiter] that [Pearanda] is a regular, common employee entitled to monetary benefits under Art. 82 [of the Labor Code]. II. The finding that [Pearanda] is entitled to the payment of OVERTIME PAY and OTHER MONETARY BENEFITS. The Courts Ruling The Petition is not meritorious. Preliminary Issue: Resolution on the Merits The CA dismissed Pearandas Petition on purely technical grounds, particularly with regard to the failure to submit supporting documents. In Atillo v. Bombay, the Court held that the crucial issue is whether the documents accompanying the petition before the CA sufficiently supported the allegations therein. Citing this case, Piglas-Kamao v. NLRC stayed the dismissal of an appeal in the exercise of its equity jurisdiction to order the adjudication on the merits. The Petition filed with the CA shows a prima facie case. Petitioner attached his evidence to challenge the finding that he was a managerial employee. In his Motion for Reconsideration, petitioner also submitted the pleadings before the labor arbiter in an attempt to comply with the CA rules. Evidently, the CA could have ruled on the Petition on the basis of these attachments. Petitioner should be deemed in substantial compliance with the procedural requirements. Under these extenuating circumstances, the Court does not hesitate to grant liberality in favor of petitioner and to tackle his substantive arguments in the present case. Rules of procedure must be adopted to help promote, not frustrate, substantial justice. The Court frowns upon the practice of dismissing cases purely on procedural grounds. Considering that there was substantial compliance, a liberal interpretation of procedural rules in this labor case is more in keeping with the constitutional mandate to secure social justice. First Issue: Timeliness of Appeal Under the Rules of Procedure of the NLRC, an appeal from the decision of the labor arbiter should be filed within 10 days from receipt thereof. Petitioners claim that respondents filed their appeal beyond the required period is not substantiated. In the pleadings before us, petitioner fails to indicate when respondents received the Decision of the labor arbiter. Neither did the petitioner attach a copy of the challenged appeal. Thus, this Court has no means to determine from the records when the 10-day period commenced and terminated. Since petitioner utterly failed to support his claim that respondents appeal was filed out of time, we need not belabor that point. The parties alleging have the burden of substantiating their allegations.

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Second Issue: Nature of Employment Petitioner claims that he was not a managerial employee, and therefore, entitled to the award granted by the labor arbiter.

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Article 82 of the Labor Code exempts managerial employees from the coverage of labor standards. Labor standards provide the working conditions of employees, including entitlement to overtime pay and premium pay for working on rest days. Under this provision, managerial employees are those whose primary duty consists of the management of the establishment in which they are employed or of a department or subdivision. The Implementing Rules of the Labor Code state that managerial employees are those who meet the following conditions: (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. The Court disagrees with the NLRCs finding that petitioner was a managerial employee. However, petitioner was a member of the managerial staff, which also takes him out of the coverage of labor standards. Like managerial employees, officers and members of the managerial staff are not entitled to the provisions of law on labor standards. The Implementing Rules of the Labor Code define members of a managerial staff as those with the following duties and responsibilities: (1) The primary duty consists of the performance of work directly related to management policies of the 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 than 20 percent of their hours worked in a workweek to activities which are not directly and closely related to the performance of the work described in paragraphs (1), (2), and (3) above. As shift engineer, petitioners duties and responsibilities were as follows: 1. To supply the required and continuous steam to all consuming units at minimum cost. 2. To supervise, check and monitor manpower workmanship as well as operation of boiler and accessories. 3. To evaluate performance of machinery and manpower. 4. To follow-up supply of waste and other materials for fuel. 5. To train new employees for effective and safety while working. 6. Recommend parts and supplies purchases. 7. To recommend personnel actions such as: promotion, or disciplinary action. 8. To check water from the boiler, feedwater and softener, regenerate softener if beyond hardness limit. 9. Implement Chemical Dosing. 10. Perform other task as required by the superior from time to time. The foregoing enumeration, particularly items 1, 2, 3, 5 and 7 illustrates that petitioner was a member of the managerial staff. His duties and responsibilities conform to the definition of a member of a managerial staff under the Implementing Rules. Petitioner supervised the engineering section of the steam plant boiler. His work involved overseeing the operation of the machines and the performance of the workers in the engineering section. This work necessarily required the use of discretion and independent judgment to ensure the proper functioning of the steam plant boiler. As supervisor, petitioner is deemed a member of the managerial staff. Noteworthy, even petitioner admitted that he was a supervisor. In his Position Paper, he stated that he was the foreman responsible for the operation of the boiler. The term foreman implies that he was the representative of management over the workers and the operation of the department. Petitioners evidence also showed that he was the supervisor of the steam plant. His classification as supervisor is further evident from the manner his salary was paid. He belonged to the 10% of respondents 354 employees who were paid on a monthly basis; the others were paid only on a daily basis. On the basis of the foregoing, the Court finds no justification to award overtime pay and premium pay for rest days to petitioner. WHEREFORE, the Petition is DENIED. Costs against petitioner. SO ORDERED.

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PLACEWELL INTERNATIONAL SERVICES CORPORATION - versus - IRENEO B. CAMOTE, G.R. No. 169973 June 26, 2006

This Petition for Review on Certiorari under Rule 45 of the Rules of Court assails the September 27, 2005 Decision of the Court of Appeals in CA-G.R. SP No. 77145, which set aside the November 20, 2002 Resolution of the National Labor Relations Commission (NLRC) and reinstated with modifications the May 31, 2002 Decision of Labor Arbiter Arturo L. Gamolo. The records show that on August 15, 1999, petitioner Placewell International Services Corporation (PISC) deployed respondent Ireneo B. Camote to work as building carpenter for SAAD Trading and Contracting Co. (SAAD) at the Kingdom of Saudi Arabia (KSA) for a contract duration of two years, with a corresponding salary of US$370.00 per month. At the job site, respondent was allegedly found incompetent by his foreign employer; thus the latter decided to terminate his services. However, respondent pleaded for his retention and consented to accept a lower salary of SR 800.00 per month. Thus, SAAD retained respondent until his return to the Philippines two years after. On November 27, 2001, respondent filed a sworn Complaintfor monetary claims against petitioner alleging that when he arrived at the job site, he and his fellow Filipino workers were required to sign another employment contract written in Arabic under the constraints of losing their jobs if they refused; that for the entire duration of the new contract, he received only SR 590.00 per month; that he was not given his overtime pay despite rendering nine hours of work everyday; that he and his co-workers sought assistance from the Philippine Embassy but they did not succeed in pursuing their cause of action because of difficulties in communication. On May 31, 2002, the labor arbiter rendered a decision holding that the modification of respondents employment contract is not allowed under Section 10 of Republic Act No. 8042 (R.A. No. 8042); thus, he should have received the original contracted salary of US$370.00 per month instead of the new rate given by SAAD. It was also noted that respondent did not refute petitioners allegation regarding the non-payment of placement and other processing fees prior to deployment. The labor arbiter also found that there is no differential as far as respondents overtime pay is concerned considering that he was given overtime pay based on the new rate of SR 800.00. Since respondent rendered one hour of overtime work per day for only 18 months, and not the entire 24 months as claimed, the total overtime pay he received is more or less equivalent to the amount he ought to have received if the original contracted rate of US$370.00 was used. Finally, the labor arbiter awarded respondent attorneys fees equivalent to 10% of the total judgment award for being compelled to hire a counsel to protect his rights and interests. The dispositive portion of the Decision reads: WHEREFORE, premises considered, judgment is hereby rendered ORDERING respondent PLACEWELL INTERNATIONAL SERVICES CORPORATION to pay complainant IRENEO B. CAMOTE the amount of PESOS: TWO HUNDRED FIFTEEN THOUSAND FOUR HUNDRED TWENTY FOUR ONLY (P215,424.00) representing underpayment of wages and attorneys fees. SO ORDERED. On appeal by the petitioner, the NLRC set aside the Decision of the Labor Arbiter, to wit: WHEREFORE, premises considered, the appealed decision is Vacated and Set Aside. In lieu thereof, a new judgment is rendered, dismissing the above-entitled case for lack of cause of action. SO ORDERED. Aggrieved, respondent filed a Petition for Certiorari under Rule 65 in the Court of Appeals which set aside the Resolution of the NLRC, and reinstated with modifications the Decision of the labor arbiter. The appellate court held that there was a diminution of respondents salary from a rate of US$370.00 to SR 800.00 per month in clear violation of Section 10 of R.A. No. 8042. As to the alleged incompetence of respondent, the appellate court noted that said allegation has not been substantiated hence should not be given any credence. Thus, for failure of petitioner to show just cause for the demotion of respondent, the appellate court granted the petition, set aside resolution dated November 24, 2000 of the NLRC, and reinstated the decision of the Labor Arbiter dated May 31, 2002, the dispositive portion of which follows:

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WHEREFORE, premises considered, the petition is GRANTED. The assailed Resolution dated 24 November 2000 of the NLRC, Fifth Division is SET ASIDE and the Decision of the Labor Arbiter dated 31 May 2002 is REINSTATED and AFFIRMED with modifications. The exchange rate shall be that prevailing at the time of actual payment. Private respondent, PLACEWELL INTERNATIONAL SERVICES CORPORATION is hereby ordered jointly and severally liable to pay petitioner, IRENEO B. CAMOTE the following: Per POEA approved contract or $370.00 x (rate of exchange at the time of actual payment) x 24 months = Total salary in the original contract Less: Salary as Modified or SR 800 x P12.00 x 24 months = Less: P230,400.00

Unauthorized Deductions or SR 4,885 x P12 = P171,780.00 P 58,620.00

Less: Unpaid placement fee Equals: Total unpaid salary Add: Attorneys fees or 5% of the total unpaid salary Equals: Total Money Claims. SO ORDERED. Hence, this petition. Petitioner avers that respondent failed to substantiate the allegation that he was forced to enter into the new employment contract with SAAD which proves that the new contract was actually voluntarily entered and agreed upon between said parties; that if respondent was indeed forced to sign the new contract, his claims are now barred by laches because respondent never informed petitioner of any problem at the job site until two years after his deployment; that the appellate courts award for unauthorized deductions in the amount of P171,780.00 should be deleted for lack of legal or factual basis; that respondent is not entitled to attorneys fees. R.A. No. 8042 explicitly prohibits the substitution or alteration to the prejudice of the worker, of employment contracts already approved and verified by the Department of Labor and Employment (DOLE) from the time of actual signing thereof by the parties up to and including the period of the expiration of the same without the approval of the DOLE. Thus, we held in Chavez v. Bonto-Perez that the subsequently executed side agreement of an overseas contract worker with her foreign employer which reduced her salary below the amount approved by the POEA is void because it is against our existing laws, morals and public policy. The said side agreement cannot supersede her standard employment contract approved by the POEA. Applying the same rule in the case at bar, the unauthorized alteration in the employment contract of respondent, particularly the diminution in his salary from US$370.00 to SR 800.00 per month, is void for violating the POEAapproved contract which set the minimum standards, terms, and conditions of his employment. Moreover, we find that there was no proper dismissal of respondent by SAAD; the termination of respondent was clearly a ploy to pressure him to agree to a lower wage rate for continued employment. Thus, the original POEAapproved employment contract of respondent subsists despite the so-called new agreement with SAAD. Consequently, the solidary liability of petitioner with SAAD for respondent s money claims continues in accordance with Section 10 of R.A. 8042. Petitioners contention that respondent is guilty of laches is without basis. Laches has been defined as the failure of or neglect for an unreasonable and unexplained length of time to do that which by exercising due diligence, could or should have been done earlier, or to assert a right within reasonable time, warranting a presumption that the party entitled thereto has either abandoned it or declined to assert it. Thus, the doctrine of laches presumes that the party guilty of negligence had the opportunity to do what should have been done, but failed to do so. Conversely, if the said party did not have the occasion to assert the right, then, he can not be adjudged guilty of laches . Laches is not concerned with the

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mere lapse of time, rather, the party must have been afforded an opportunity to pursue his claim in order that the delay may sufficiently constitute laches. The doctrine of laches is based upon grounds of public policy which requires, for the peace of society, the discouragement of stale claims, and is principally a question of the inequity or unfairness of permitting a right or claim to be enforced or asserted. There is no absolute rule as to what constitutes laches; each case is to be determined according to its particular circumstances. The question of laches is addressed to the sound discretion of the court, and since it is an equitable doctrine, its application is controlled by equitable considerations. It cannot be worked to defeat justice or to perpetrate fraud and injustice. In the instant case, respondent filed his claim within the three-year prescriptive period for the filing of money claims set forth in Article 291 of the Labor Code from the time the cause of action accrued. Thus, we find that the doctrine of laches finds no application in this case. The labor arbiter and the Court of Appeals did not err in awarding attorneys fees to respondent. It is settled that in actions for recovery of wages or where an employee was forced to litigate and incur expenses to protect his rights and interests, he is entitled to an award of attorneys fees. However, with regard to Unauthorized Deductions amounting to P171,780.00; we note that the appellate court did not state any basis for its award, thus, the same is deleted for lack of factual and legal basis. WHEREFORE, the instant petition is PARTLY GRANTED. The Decision of the Court of Appeals in CAG.R. SP No. 77145 dated September 27, 2005 is AFFIRMED with MODIFICATION that the amount of P171,780 representing Unauthorized Deductions is DELETED for lack of basis. SO ORDERED.

FAR EAST AGRICULTURAL SUPPLY, INC. and/or ALEXANDER UY, Petitioners, G.R. No. 162813 JIMMY LEBATIQUE and THE HONORABLE COURT OF APPEALS, Respondents.Promulgated: February 12, 2007 Before us is a petition for review on certiorari assailing the Decisiondated September 30, 2003 of the Court of Appeals in CA-G.R. SP No. 76196 and its Resolution dated March 15, 2004 denying the motion for reconsideration. The appellate court had reversed the Decision dated October 15, 2002 of the National Labor Relations Commission (NLRC) setting aside the Decision dated June 27, 2001 of the Labor Arbiter. Petitioner Far East Agricultural Supply, Inc. (Far East) hired on March 4, 1996 private respondent Jimmy Lebatique as truck driver with a daily wage of P223.50. He delivered animal feeds to the companys clients. On January 24, 2000, Lebatique complained of nonpayment of overtime work particularly on January 22, 2000, when he was required to make a second delivery in Novaliches, Quezon City. That same day, Manuel Uy, brother of Far Easts General Manager and petitioner Alexander Uy, suspended Lebatique apparently for illegal use of company vehicle. Even so, Lebatique reported for work the next day but he was prohibited from entering the company premises. On January 26, 2000, Lebatique sought the assistance of the Department of Labor and Employment (DOLE) Public Assistance and Complaints Unit concerning the nonpayment of his overtime pay. According to Lebatique, two days later, he received a telegram from petitioners requiring him to report for work. When he did the next day, January 29, 2000, Alexander asked him why he was claiming overtime pay. Lebatique explained that he had never been paid for overtime work since he started working for the company. He also told Alexander that Manuel had fired him. After talking to Manuel, Alexander terminated Lebatique and told him to look for another job. On March 20, 2000, Lebatique filed a complaint for illegal dismissal and nonpayment of overtime pay. The Labor Arbiter found that Lebatique was illegally dismissed, and ordered his reinstatement and the payment of his full back wages, 13th month pay, service incentive leave pay, and overtime pay. The dispositive portion of the decision is quoted herein in full, as follows:

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WHEREFORE, we find the termination of complainant illegal. He should thus be ordered reinstated with full backwages. He is likewise ordered paid his 13 th month pay, service incentive leave pay and overtime pay as computed by the Computation and Examination Unit as follows: a) Backwages: 01/25/00 - 10/31/00 = 9.23 mos. P 223.50 x 26 x 9.23 = P 53,635.53 11/01/00 06/26/01 = 7.86 mos. P 250.00 x 26 x 7.86 = 51,090.00 P 104,725.53 13th Month Pay: 1/12 of P 104,725.53 = 8,727.13 Service Incentive Leave Pay 01/25/00 10/31/00 = 9.23 mos. P 223.50 x 5/12 x 9.23 = P 859.54 11/01/00 06/26/01 = 7.86 mos. P 250.00 x 5/12 x 7.86 = [818.75] 1,678.29 115,130.95 b) Overtime Pay: (3 hours/day) 03/20/97 4/30/97 = 1.36 mos. P 180/8 x 1.25 x 3 x 26 x 1.36 = 05/01/97 02/05/98 = 9.16 mos. P 185/8 x 1.25 x 3 x 26 x 9.16 = 02/06/98 10/30/99 = 20.83 mos. P 198/8 x 1.25 x 3 x 26 x [20.83] 10/31/99 01/24/00 = 2.80 mos. P 223.50/8 x 1.25 x 3 x 26 x 2.80

P 2,983.50 20,652.94 = 50,265.39 81,528.77 P 196,659.72

= 7,626.94 TOTAL AWARD

SO ORDERED. On appeal, the NLRC reversed the Labor Arbiter and dismissed the complaint for lack of merit. The NLRC held that there was no dismissal to speak of since Lebatique was merely suspended. Further, it found that Lebatique was a field personnel, hence, not entitled to overtime pay and service incentive leave pay. Lebatique sought reconsideration but was denied. Aggrieved, Lebatique filed a petition for certiorari with the Court of Appeals. The Court of Appeals, in reversing the NLRC decision, reasoned that Lebatique was suspended on January 24, 2000 but was illegally dismissed on January 29, 2000 when Alexander told him to look for another job. It also found that Lebatique was not a field personnel and therefore entitled to payment of overtime pay, service incentive leave pay, and 13 th month pay. It reinstated the decision of the Labor Arbiter as follows: WHEREFORE, premises considered, the decision of the NLRC dated 27 December 2002 is hereby REVERSED and the Labor Arbiters decision dated 27 June 2001 REINSTATED. SO ORDERED. Petitioners moved for reconsideration but it was denied. Hence, the instant petition wherein petitioners assign the following errors: THE COURT OF APPEALS ERRED IN REVERSING THE DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION DATED 15 OCTOBER 2002 AND IN RULING THAT THE PRIVATE RESPONDENT WAS ILLEGALLY DISMISSED. THE COURT OF APPEALS ERRED IN REVERSING THE DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION DATED 15 OCTOBER 2002 AND IN RULING THAT PRIVATE RESPONDENT IS NOT A FIELD PERSONNEL AND THER[E]FORE ENTITLED TO OVERTIME PAY AND SERVICE INCENTIVE LEAVE PAY. THE COURT OF APPEALS ERRED IN NOT DISMISSING THE PETITION FOR CERTIORARI FOR FAILURE OF PRIVATE RESPONDENT TO ATTACH CERTIFIED TRUE COPIES OF THE QUESTIONED DECISION AND RESOLUTION OF THE PUBLIC RESPONDENT. Simply stated, the principal issues in this case are: (1) whether Lebatique was illegally dismissed; and (2) whether Lebatique was a field personnel, not entitled to overtime pay. Petitioners contend that, (1) Lebatique was not dismissed from service but merely suspended for a day due to violation of company rules; (2) Lebatique was not barred from entering the company premises since he never reported

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back to work; and (3) Lebatique is estopped from claiming that he was illegally dismissed since his complaint before the DOLE was only on the nonpayment of his overtime pay. Also, petitioners maintain that Lebatique, as a driver, is not entitled to overtime pay since he is a field personnel whose time outside the company premises cannot be determined with reasonable certainty. According to petitioners, the drivers do not observe regular working hours unlike the other office employees. The drivers may report early in the morning to make their deliveries or in the afternoon, depending on the production of animal feeds and the traffic conditions. Petitioners also aver that Lebatique worked for less than eight hours a day. Lebatique for his part insists that he was illegally dismissed and was not merely suspended. He argues that he neither refused to work nor abandoned his job. He further contends that abandonment of work is inconsistent with the filing of a complaint for illegal dismissal. He also claims that he is not a field personnel, thus, he is entitled to overtime pay and service incentive leave pay. After consideration of the submission of the parties, we find that the petition lacks merit. We are in agreement with the decision of the Court of Appeals sustaining that of the Labor Arbiter. It is well settled that in cases of illegal dismissal, the burden is on the employer to prove that the termination was for a valid cause. In this case, petitioners failed to discharge such burden. Petitioners aver that Lebatique was merely suspended for one day but he abandoned his work thereafter. To constitute abandonment as a just cause for dismissal, there must be: (a) absence without justifiable reason; and (b) a clear intention, as manifested by some overt act, to sever the employer-employee relationship. The records show that petitioners failed to prove that Lebatique abandoned his job. Nor was there a showing of a clear intention on the part of Lebatique to sever the employer-employee relationship. When Lebatique was verbally told by Alexander Uy, the companys General Manager, to look for another job, Lebatique was in effect dismissed. Even assuming earlier he was merely suspended for illegal use of company vehicle, the records do not show that he was afforded the opportunity to explain his side. It is clear also from the sequence of the events leading to Lebatiques dismissal that it was Lebatiques complaint for nonpayment of his overtime pay that provoked the management to dismiss him, on the erroneous premise that a truck driver is a field personnel not entitled to overtime pay. An employee who takes steps to protest his layoff cannot by any stretch of imagination be said to have abandoned his work and the filing of the complaint is proof enough of his desire to return to work, thus negating any suggestion of abandonment. A contrary notion would not only be illogical but also absurd. It is immaterial that Lebatique had filed a complaint for nonpayment of overtime pay the day he was suspended by managements unilateral act. What matters is that he filed the complaint for illegal dismissal on March 20, 2000, after he was told not to report for work, and his filing was well within the prescriptive period allowed under the law. On the second issue, Article 82 of the Labor Code is decisive on the question of who are referred to by the term field personnel. It provides, as follows: ART. 82. Coverage. - The provisions of this title [Working Conditions and Rest Periods] shall apply to employees in all establishments and undertakings whether for profit or not, but not to government employees, 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. xxxx Field personnel shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. In Auto Bus Transport Systems, Inc. v. Bautista, this Court emphasized that the definition of a field personnel is not merely concerned with the location where the employee regularly performs his duties but also with the fact that the employees performance is unsupervised by the employer. We held that field personnel are those who regularly perform their duties away from the principal place of business of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. Thus, in order to determine whether an employee is a field employee, it is also necessary to ascertain if actual hours of work in the field can be determined with reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or not the employees time and performance are constantly supervised by the employer. As correctly found by the Court of Appeals, Lebatique is not a field personnel as defined above for the following reasons: (1) company drivers, including Lebatique, are directed to deliver the goods at a specified time and place; (2) they are not given the discretion to solicit, select and contact prospective clients; and (3) Far East issued a directive that company drivers should stay at the clients premises during truck -ban hours which is from 5:00 to 9:00 a.m. and 5:00 to

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9:00 p.m. Even petitioners admit that the drivers can report early in the morning, to make their deliveries, or in the afternoon, depending on the production of animal feeds. Drivers, like Lebatique, are under the control and supervision of management officers. Lebatique, therefore, is a regular employee whose tasks are usually necessary and desirable to the usual trade and business of the company. Thus, he is entitled to the benefits accorded to regular employees of Far East, including overtime pay and service incentive leave pay. Note that all money claims arising from an employer-employee relationship shall be filed within three years from the time the cause of action accrued; otherwise, they shall be forever barred. Further, if it is established that the benefits being claimed have been withheld from the employee for a period longer than three years, the amount pertaining to the period beyond the three-year prescriptive period is therefore barred by prescription. The amount that can only be demanded by the aggrieved employee shall be limited to the amount of the benefits withheld within three years before the filing of the complaint. Lebatique timely filed his claim for service incentive leave pay, considering that in this situation, the prescriptive period commences at the time he was terminated. On the other hand, his claim regarding nonpayment of overtime pay since he was hired in March 1996 is a different matter. In the case of overtime pay, he can only demand for the overtime pay withheld for the period within three years preceding the filing of the complaint on March 20, 2000. However, we find insufficient the selected time records presented by petitioners to compute properly his overtime pay. The Labor Arbiter should have required petitioners to present the daily time records, payroll, or other documents in manage ments control to determine the correct overtime pay due Lebatique. WHEREFORE, the petition is DENIED for lack of merit. The Decision dated September 30, 2003 of the Court of Appeals in CA-G.R. SP No. 76196 and its Resolution dated March 15, 2004 are AFFIRMED with MODIFICATION to the effect that the case is hereby REMANDED to the Labor Arbiter for further proceedings to determine the exact amount of overtime pay and other monetary benefits due Jimmy Lebatique which herein petitioners should pay without further delay. Costs against petitioners. SO ORDERED.

EMIRATE SECURITY AND MAINTENANCE SYSTEMS, INC. and ROBERTO A. YAN , Petitioners, - versus GLENDA M. MENESE, G.R. No. 182848 October 5, 2011 x----------------------------------------------------------------------------------------x Before the Court is the petition for review on certiorari which assails the decision and the resolution of the Court of Appeals (CA) rendered on February 28, 2008 and May 14, 2008, respectively, in CA-G.R. SP. No. 100073. The Antecedents The facts of the case are summarized below. On June 5, 2001, respondent Glenda M. Menese (Menese) filed a complaint for constructive dismissal; illegal reduction of salaries and allowances; separation pay; refund of contribution to cash bond; overtime, holiday, rest day and premium pay; damages; and attorneys fees against the petitioners, Emirate Security and Maintenance Systems, Inc. (agency) and its General Manager, Robert A. Yan (Yan). Menese alleged in the compulsory arbitration proceedings that on April 1, 1999, the agency engaged her services as payroll and billing clerk. She was assigned to the agencys security detachment at the Philippine General Hospital (PGH). She was given a monthly salary of P9,200.00 and an allowance of P2,500.00, for a total of P11,700.00 in compensation. Effective May 2001, her allowance was allegedly reduced to P1,500.00 without notice, and P100.00 was deducted from her salary every month as her contribution to a cash bond which lasted throughout her employment. She was required to work seven (7) days a week, from 8:00 a.m. to 5:00 p.m. She was also required to report for work on holidays, except on New Years Day and Christmas. She claimed that she was never given overtime, holiday, rest day and premium pay. Menese further alleged that on May 4, 2001, she started getting pressures from the agency for her to resign from her position because it had been committed to a certain Amy Claro, a protge of Mrs. Violeta G. Dapula (Dapula) the new chief of the Security Division of the University of the Philippines (UP) Manila and PGH. Menese raised the matter with Yan who told her that the agency was in the process of establishing goodwill with Dapula, so it had to sacrifice her position to accommodate Dapulas request to hire Claro.

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Menese claimed that she was told not to worry because if she was still interested in working with the agency, she could still be retained as a lady guard with a salary equivalent to the minimum wage. She would then be detailed to another detachment because Dapula did not like to see her around anymore. If the offer was acceptable to her, she should report to the agencys personnel officer for the issuance of the necessary duty detail order. Menese thought about the offer and soon realized that she was actually being demoted in rank and salary. She eventually decided to decline the offer. She continued reporting to the PGH detachment and performed her usual functions as if nothing happened. Menese alleged that at this juncture, Claro reported at the agencys PGH detachment and performed the functions she was doing. She bewailed that thereafter she continuously received harassment calls and letters. She was also publicly humiliated and badly treated at the detachment. The agency, through Security Officer Alton Acab, prohibited her from using the office computer. On May 18, 2001, Jose Dante Chan, the agencys PGH detachment commander, arrogantly told her to leave PGH. Again on May 25, 2001, Chan shouted at her and told her to pack her things and to leave immediately, and not to return to the detachment anymore; otherwise, she would be physically driven out of the office. Still not satisfied with what they did, the petitioners allegedly withheld her salary for May 16-31, 2001. She claimed that the petitioners dismissed her from the service without just cause and due process. The petitioners, for their part, denied liability. They alleged that on May 8, 2001, Dapula informed the agency in writing, through Yan, that she had been receiving numerous complaints from security guards and other agency employees about Meneses unprofessional conduct. She told the petitioners that she was not tolerating Meneses neg ative work attitude despite the fact that she is the wife of Special Police Major Divino Menese who is a member of the UP Manila police force, and that as a matter of policy and out of delicadeza, she does not condone nepotism in her division. On the basis of Dapulas letter, Yan sent Menese a memorandum dated May 16, 2001, instructing her to report to the agencys head office and, there and then, discussed with her Dapulas letter. Yan informed Menese that upon Dapulas request, she would be transferred to another assignment which would not involve any demotion in rank or diminution in her salary and other benefits. Although Menese said that she would think about the matter, the petitioners were surprised to receive summons from the labor arbiter regarding the complaint. The Compulsory Arbitration Rulings In a decision dated March 14, 2002, Labor Arbiter Jovencio LL. Mayor, Jr. declared Menese to have been constructively dismissed. He found the petitioners wanting in good faith in transferring Menese to another detachment as she would be suffering a demotion in rank and a diminution in pay. Accordingly, he ordered the petitioners to immediately reinstate Menese and, solidarily, to pay her full backwages of P83,443.75 (latest computation); P66,924.00 in monetary benefits; P50,000.00 and P20,000.00 in moral and exemplary damages, respectively; and attorneys fees of P15,036.74. The petitioners appealed to the National Labor Relations Commission ( NLRC). On September 30, 2003, the NLRC Second Division issued a resolution granting the appeal and reversing the labor arbiters decision. It ruled that Menese was not constructively dismissed but was merely transferred to another detachment. It opined that the transfer was a valid exercise of the petitioners management prerogative. However, it ruled that despite Meneses refusal to accept the transfer, she cannot be made liable for abandonment as her refusal was based on her honest belief that she was being constructively dismissed. The NLRC ordered Menese, at her option, to immediately report to the agencys head office and the agency to accept her back to work. It absolved Yan from liability, and deleted the award of backwages, overtime pay and damages. On October 28, 2003, Menese filed a partial motion for reconsideration of the NLRC resolution and later (on June 17, 2005), a motion to recall the entry of judgment of October 31, 2003. On June 1, 2007, the NLRC rendered a resolution setting aside the entry of judgment and denying Meneses partial motion fo r reconsideration. The Petition for Certiorari Menese elevated her case to the CA through a petition for certiorari under Rule 65 of the Rules of Court. In the main, she argued that the agency was in bad faith when it issued the memoranda dated May 16, 2001, May 22, 2001 and May 28, 2001, ordering her transfer from the PGH detachment to the agencys head office. She po sited that it was a ploy to create a vacancy in the detachment to accommodate the entry of Claro, Dapulas protge. She regarded the transfer as a removal from her position at PGH a constructive dismissal.

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The agency, in rebuttal, posited that Menese was not illegally dismissed, but was merely transferred to its head office in response to the request of the new head of the UP-PGH security division for the transfer. The action, it maintained, was a valid exercise of its management prerogative. Thus, Menese was guilty of abandoning her employment when she refused to report for work at her new posting. The CA Decision The CA granted the petition in its decision of February 28, 2008. It set aside the assailed resolutions of the NLRC and reinstated the March 14, 2002 decision of the labor arbiter. As the labor arbiter did, the CA found Menese to have been constructively, and therefore illegally, dismissed. It noted that the memoranda on Meneses transfer were prompted by Daculas letter, dated May 8, 2001, to Yan, which contained allegations on Meneses supposed unprofessional conduct and involvement in nepotism. It further noted that when Yan asked Dapula in writingto provide the agency with documents/evidence that would support her allegations, she failed to do so. The CA thus concluded that the reasons for Meneses transfer did not exist or that no substantial evidence was presented in that regard. The CA brushed aside the petitioners argument that it was their prerogative to transfer Menese f rom the agencys PGH detachment to its head office at Ortigas Avenue, Mandaluyong City. Relying on applicable jurisprudence, the appellate court pointed out that while it is the managements prerogative to transfer an employee from one office to another within the business establishment, it is not without limitation. It must be exercised in such a way that there is no demotion in rank or diminution in pay, benefits and other privileges. Otherwise, the transfer amounts to a constructive dismissal, as correctly pointed out by the labor arbiter in his decision of March 14, 2002. In this light, the CA held that the petitioners failed to prove that Menese abandoned her employment. The CA sustained all the other findings of the labor arbiter. On the whole, it ruled that the NLRC misappreciated the evidence in the case. The petitioners moved for reconsideration, but the CA denied the motion in its resolution of May 14, 2008. The Petitioners Case Aside from the petition itself, the petitioners filed a reply to Meneses comment and a memorandum where they asked for a reversal of the assailed CA rulings on the ground that the CA gravely erred in: (1) (2) (3) Affirming the labor arbiters findings that Menese was constructively dismissed; Holding Yan solidarily liable with the agency for damages; and Sustaining the award of backwages, damages and attorneys fees, as well as overtime pay.

The petitioners insist that Menese was not illegally dismissed. They argue that it was Menese who deliberately and unjustifiably refused to work despite several notices to her after she was validly relieved from her current work assignment due to a clients request. They maintain that since Menese chose not to return to work, she must be considered either to have resigned from or to have abandoned her employment. They further maintain that nothing on record shows any positive or overt act of the agency in dismissing Menese. Moreover, the petitioners regard Meneses continued refusal to report to the agencys head office as an act of gross insubordination constituting a just cause for termination under Article 282(a) of the Labor Code. They argue that under this law, an employer may terminate an employment for serious misconduct or willful disobedience by the employee of the lawful orders of his employer or his representative in connection with his work. The petitioners posit that she is not entitled to reinstatement and backwages since she failed to comply with the reinstatement option stated in the NLRC resolution. Neither is she entitled to overtime pay because she did not work beyond the eight (8)-hour working period; her one (1) hour time off from twelve noon to 1:00 p.m. is not compensable. Neither is Menese entitled to moral and exemplary damages because the evidence on record does not show any malice or bad faith on their part to justify the award. The petitioners likewise take exception to the award of attorneys fees as the labor arbiters decision and the NLRCs resolution failed to state the justification for the award. They further contend that the CA gravely erred in upholding the labor arbiters ruling that Yan is solidarily liable with the agency, as Yan was merely acting in his capacity as the agencys general manager, and that there is no showing that Yan acted maliciously or in bad faith when he ordered

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Meneses transfer. They also point out that Menese did not challenge before the CA the NLRC ruling absolving Yan from any liability. The Case for Menese By way of her comment and memorandum, Menese asks that the appeal be denied for lack of merit. She claims that at the arbitration stage, the petitioners readily admitted the fact of her removal, manifesting in open session their lack of interest to settle the case amicably as they have a strong evidence to support their defense of her dismissal for cause. She observed during the hearing that the petitioners were very confident about their case, because according to them, they had Dapulas letter asking for her immediate removal. Menese further claims that the petitioners realized that they did not have the necessary evidence, so Yan wrote Dapula a letter asking her for proof of the complaints or grievances of the security guards against Menese. Dapula did not produce or present the evidence they asked for resulting in their failure to substantiate their defense of dismissal for cause. Menese contends that the petitioners then revised their theory of the case and made it appear that she was not actually dismissed but was merely transferred, purportedly in the exercise of their management prerogative. She posits that her transfer was motivated by ill will and bad faith, as it was done to facilitate the entry of a favored applicant to the PGH detachment. She intimates that the labor arbiter resolved the case correctly when he found her to have been constructively or illegally dismissed. She bewails the NLRCs surprising reversal of the labor arbiters decision, but feels vindicated when the CA set aside the NLRC ruling. Menese submits that the CA is correct in nullifying the NLRCs reversal of her illegal dismissal case because the labor tribunal closed its eyes to the fact that bad faith attended her transfer. She points out that the petitioners twin directives, vis--vis her transfer upon which the NLRC based its ruling, were both issued for a selfish and immoral purpose; the first, dated May 16, 2001, was issued for the purpose of creating a vacancy, and the second, dated May 22, 2001, was intended to cover up the wrongdoing that was earlier committed. In other words, the directives were tainted with malice and ill will. On the matter of Yans liability, Menese maintains that the NLRC committed a serious error in allowing him to get away with his wrongdoing considering the injustice done to her as a result of her unceremonious dismissal. In a different vein, Menese assails the NLRCs exclusion of the one -hour meal break as overtime work, for it erroneously assumed that her employer had been giving its employees a 60 minute time-off for regular meals and that she was not performing work during the period. She argues that this was not the actual practice in the workplace, contending that she continued working even during the one-hour meal break. Finally, Menese maintains that the CA correctly reinstated the labor arbiters award of attorneys fees and the imposition of solidary liability on Yan and the agency. She posits that in her quest for justice because of her unceremonious dismissal, she was constrained to engage the services of a counsel to handle her case. The Courts Ruling We deny the petition for lack of merit. The evidence of Meneses unwarranted, unjustified and, in her own language, unceremonious dismissal is so glaring that to ignore it is to commit, as the NLRC did, grave abuse of discretion. We note as a starting point that at the time material to the case, Menese ceased to be the agencys payroll and billing clerk at its PGH detachment. The position was taken away from her as she had been transferred to the agencys main office on Ortigas Avenue, Mandaluyong City, upon the request of Dapula, the new chief of the UP-PGH Security Division. The transfer was to be carried out through a memorandum dated May 16, 2001 issued by Yan; a second memorandum dated May 22, 2001 issued by Personnel Officer Edwin J. Yabes, reminding Menese of Yans instruction for her to report to the main office; and a third memorandum dated May 28, 2001, also issued by Yabes informing Menese that it was her second notice to assume her work detail at the main office. Yabes instructed her to report for work on May 30, 2001. Citing Mendoza v. Rural Bank of Lucban, the petitioners argue that the transfer was undertaken in the exercise of management prerogative in the pursuit of their legitimate interests. They submit that Menese refused to comply with the valid transfer orders they issued, making her liable for abandonment and insubordination. They argue that nothing on record shows that she was illegally dismissed as no dismissal had been imposed on her. On a superficial consideration, the petitioners position looks unassailable as indeed an employer can regulate, generally without restraint and according to its own discretion and judgment, every aspect of its business, including work assignments and transfer of employees, subject only to limitations imposed by law. This submission, however, glossed over or suppressed a crucial factor in the present lab or controversy. We refer to Dapulas letter to Yan in early May 2001,

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asking for Meneses transfer allegedly due to numerous complaints from security guards and co -workers regarding her unprofessionalism and because of nepotism; Menese is the wife of a member of the UP Manila police force. Had Yan inquired into Dapulas claim of Meneses alleged unprofessionalism, ideally through an administrative investigation, he could have been provided with a genuine reason assuming proof of Dapulas accusation existed for Meneses transfer or even for her dismissal, if warranted. That the agency did not get into the bottom of Dapulas letter before it implemented Meneses transfer is indicative of the sheer absence of an objective justification for the transfer. The most that the agency did was to write Dapula a letter, through Yan, asking her to provide documents/evidence in support of her request for Meneses transfer. Significantly, Yans request came after the labor arbiters summons to Yan regarding Meneses complaint. Dapula never responded to Yans letter and neither did she provide the evidence needed for the agencys defense in the complaint. As Menese noted, the petitioners did not submit as annex to the petition Yans letter to Dapula, and the reason appears to be obvious they were trying to avoid calling attention to the absence of proof of Meneses alleged unprofessionalism and her involvement in nepotism. Evidently, the basis for Dapulas request did not exist. We thus find credible Meneses contention that her transfer was a ploy to remove her from the PGH detachment to accommodate the entry of Dapulas protge. In short, the agency wanted to create a vacancy for Claro, the protge. Confronted with this clear intent of the petitioners, we cannot see how Meneses transfer could be considered a valid exercise of management prerogative. As Menese rightly put it, her transfer was arbitrarily done, motivated no less by ill will and bad faith. In Blue Dairy Corporation v. NLRC, the Court stressed as a matter of principle that the managerial prerogative to transfer personnel must be exercised without abuse of discretion, bearing in mind the basic elements of justice and fair play. Having the right should not be confused with the manner in which that right is exercised. Thus, it should not be used as a subterfuge by the employer to get rid of an undesirable worker. Measured against this basic precept, the petitioners undoubtedly abused their discretion or authority in transferr ing Menese to the agencys head office. She had become undesirable because she stood in the way of Claros entry into the PGH detachment. Menese had to go, thus the need for a pretext to get rid of her. The request of a client for the transfer became the overriding command that prevailed over the lack of basis for the transfer. We cannot blame Menese for refusing Yans offer to be transferred. Not only was the transfer arbitrary and done in bad faith, it would also result, as Menese feared, in a demotion in rank and a diminution in pay. Although Yan informed Menese that based on the request of the client, she will be transferred to another assignment which however will not involve any demotion in rank nor diminution in her salaries and other benefits, the offer was such as to invite reluctance and suspicion as it was couched in a very general manner. We find credible Meneses submission on this point, i.e., that under the offered transfer: (1) she would hold the position of lady guard and (2) she would be paid in accordance with the statutory minimum wage, or from P11,720.00 to P7,500.00. In these lights, Meneses transfer constituted a constructive dismissal as it had no justifiable basis and entailed a demotion in rank and a diminution in pay for her. For a transfer not to be considered a constructive dismissal, the employer must be able to show that the transfer is for a valid reason, entails no diminution in the terms and conditions of employment, and must be unreasonably inconvenient or prejudicial to the employee. If the employer fails to meet these standards, the employees transfer shall amount, at the very least, to constructive dismissal. The petitioners, unfortunately for them, failed to come up to these standards. In declaring Meneses transfer to be in the valid exercise of the petitioners management prerogative, the NLRC grossly misappreciated the evidence and, therefore, gravely abused its discretion in closing its eyes to the patent injustice committed on Menese. It completely disregarded the obvious presence of bad faith in Meneses transfer. Labor justice demands that Menese be awarded moral and exemplary damages and, for having been constrained to litigate in order to protect her rights, attorneys fees. Yans solidary liability Yan had been aware all the time of the utter lack of a valid reason for Meneses transfer. He had been aware all the time that Dapulas charges against Menese the ostensible reason for the transfer were nonexistent as Dapula failed to substantiate the charges. He was very much a part of the flagrant and duplicitous move to get rid of Menese to give way to Claro, Dapulas protge. Based on the facts, Yan is as guilty as the agency in causing the transfer that was undertaken in bad faith and in a wanton and oppressive manner. Thus, he should be solidarily liable with the agency for Meneses monetary awards. The overtime pay award While the labor arbiter declared that Meneses claim for overtime pay is unrebutted and, indeed, nowhere in the petitioners position paper did they controvert Meneses claim, we hold that the claim must still be substantiated. In Global Incorporated v. Commissioner Atienza, a claim for overtime pay will not be granted for want of factual and legal basis. In this respect, the records indicate that the labor arbiter granted Meneses claim for holiday pay, rest day and premium pay on the basis of payrolls. There is no such proof in support of Meneses claim for overtime pay other than

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her contention that she worked from 8:00 a.m. up to 5:00 p.m. She presented no evidence to show that she was working during the entire one hour meal break. We thus find the NLRCs deletion of the overtime pay award in order. Also, the NLRC noted that the award of P2,600.00 for the refund of the cash bond deposit is overstated and should be adjusted to P600.00 only, as indicated by the payrolls. We likewise find the adjustment in order. All told, except for the above clarifications on the overtime pay award and the refund of the cash bond deposit, we reiterate and so declare the petition to be devoid of merit. WHEREFORE, premises considered, except for the overtime pay award and the refund of deposit for the cash bond, the petition is DENIED for lack of merit. The assailed decision and resolution of the Court of Appeals are AFFIRMED, with the following modifications: 1) The deletion of the overtime pay award; and 2) Adjustment of the refund of the cash or surety bond deposit award from P2,500.00 to P600.00. Costs against the petitioners.

ABDULJUAHID R. PIGCAULAN,

G.R. No. 173648

January 16, 2012

- versus SECURITY and CREDIT INVESTIGATION, INC. and/or RENE AMBY REYES x-------------------------------------------------------------------x It is not for an employee to prove non-payment of benefits to which he is entitled by law. Rather, it is on the employer that the burden of proving payment of these claims rests. This Petition for Review on Certiorari assails the February 24, 2006 Decision of the Court of Appeals (CA) in CA-G.R. SP No. 85515, which granted the petition for certiorari filed therewith, set aside the March 23, 2004 and June 14, 2004 Resolutions of the National Labor Relations Commission (NLRC), and dismissed the complaint filed by Oliver R. Canoy (Canoy) and petitioner Abduljuahid R. Pigcaulan (Pigcaulan) against respondent Security and Credit Investigation, Inc. (SCII) and its General Manager, respondent Rene Amby Reyes. Likewise assailed is the June 28, 2006 Resolution denying Canoys and Pigcaulans Motion for Reconsideration. Factual Antecedents Canoy and Pigcaulan were both employed by SCII as security guards and were assigned to SCIIs different clients. Subsequently, however, Canoy and Pigcaulan filed with the Labor Arbiter separate complaints for underpayment of salaries and nonpayment of overtime, holiday, rest day, service incentive leave and 13th month pays. These complaints were later on consolidated as they involved the same causes of action. Canoy and Pigcaulan, in support of their claim, submitted their respective daily time records reflecting the number of hours served and their wages for the same. They likewise presented itemized lists of their claims for the corresponding periods served. Respondents, however, maintained that Canoy and Pigcaulan were paid their just salaries and other benefits under the law; that the salaries they received were above the statutory minimum wage and the rates provided by the Philippine Association of Detective and Protective Agency Operators (PADPAO) for security guards; that their holiday pay were already included in the computation of their monthly salaries; that they were paid additional premium of 30% in addition to their basic salary whenever they were required to work on Sundays and 200% of their salary for work done on holidays; and, that Canoy and Pigcaulan were paid the corresponding 13th month pay for the years 1998 and 1999. In support thereof, copies of payroll listings and lists of employees who received their 13th month pay for the periods December 1997 to November 1998 and December 1998 to November 1999 were presented. In addition, respondents contended that Canoys and Pigcaulans monetary claims should only be limited to the past three years of employment pursuant to the rule on prescription of claims. Ruling of the Labor Arbiter

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Originally captioned as Oliver Canoy and Abduljuahid Pigcaulan, petitioners vs. Security and Credit Investigation Inc. and/or Rene Amby Reyes, respondents. The Court, however, drops Oliver Canoy from the caption consistent with the Courts ruling herein.

Giving credence to the itemized computations and representative daily time records submitted by Canoy and Pigcaulan, Labor Arbiter Manuel P. Asuncion awarded them their monetary claims in his Decision dated June 6, 2002. The Labor Arbiter held that the payroll listings presented by the respondents did not prove that Canoy and Pigcaulan were duly paid as same were not signed by the latter or by any SCII officer. The 13th month payroll was, however, acknowledged as sufficient proof of payment, for it bears Canoys and Pigcaulans signatures. Thus, without indicating any detailed computation of the judgment award, the Labor Arbiter ordered the payment of overtime pay, holiday pay, service incentive leave pay and proportionate 13th month pay for the year 2000 in favor of Canoy and Pigcaulan, viz: WHEREFORE, the respondents are hereby ordered to pay the complainants: 1) their salary differentials in the amount of P166,849.60 for Oliver Canoy and P121,765.44 for Abduljuahid Pigcaulan; 2) the sum of P3,075.20 for Canoy and P2,449.71 for Pigcaulan for service incentive leave pay and; [3]) the sum of P1,481.85 for Canoy and P1,065.35 for Pigcaulan as proportionate 13th month pay for the year 2000. The rest of the claims are dismissed for lack of sufficient basis to make an award. SO ORDERED.

Ruling of the National Labor Relations Commission Respondents appealed to the NLRC. They alleged that there was no basis for the awards made because aside from the self-serving itemized computations, no representative daily time record was presented by Canoy and Pigcaulan. On the contrary, respondents asserted that the payroll listings they submitted should have been given more probative value. To strengthen their cause, they attached to their Memorandum on Appeal payrolls bearing the individual signatures of Canoy and Pigcaulan to show that the latter have received their salaries, as well as copies of transmittal letters to the bank to show that the salaries reflected in the payrolls were directly deposited to the ATM accounts of SCIIs employees. The NLRC, however, in a Resolution dated March 23, 2004, dismissed the appeal and held that the evidence show underpayment of salaries as well as non-payment of service incentive leave benefit. Accordingly, the Labor Arbiters Decision was sustained. The motion for reconsideration thereto was likewise dismissed by the NLRC in a Resolution dated June 14, 2004. Ruling of the Court of Appeals In respondents petition for certiorari with prayer for the issuance of a temporary restraining order and preliminary injunction before the CA, they attributed grave abuse of discretion on the part of the NLRC in finding that Canoy and Pigcaulan are entitled to salary differentials, service incentive leave pay and proportionate 13th month pay and in arriving at amounts without providing sufficient bases therefor. The CA, in its Decision dated February 24, 2006, set aside the rulings of both the Labor Arbiter and the NLRC after noting that there were no factual and legal bases mentioned in the questioned rulings to support the conclusions made. Consequently, it dismissed all the monetary claims of Canoy and Pigcaulan on the following rationale: First. The Labor Arbiter disregarded the NLRC rule that, in cases involving money awards and at all events, as far as practicable, the decision shall embody the detailed and full amount awarded. Second. The Labor Arbiter found that the payrolls submitted by SCII have no probative value for being unsigned by Canoy, when, in fact, said payrolls, particularly the payrolls from 1998 to 1999 indicate the individual signatures of Canoy. Third. The Labor Arbiter did not state in his decision the substance of the evidence adduced by Pigcaulan and Canoy as well as the laws or jurisprudence that would show that the two are indeed entitled to the salary differential and incentive leave pays. Fourth. The Labor Arbiter held Reyes liable together with SCII for the payment of the claimed salaries and benefits despite the absence of proof that Reyes deliberately or maliciously designed to evade SCIIs alleged financial obligation; hence the Labor Arbiter ignored that SCII has a corporate personality separate and distinct from Reyes. To justify solidary liability, there must be an allegation and showing that the officers of the corporation deliberately or maliciously designed to evade the financial obligation of the corporation.

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Canoy and Pigcaulan filed a Motion for Reconsideration, but same was denied by the CA in a Resolution dated June 28, 2006. Hence, the present Petition for Review on Certiorari. Issues

The petition ascribes upon the CA the following errors: I. The Honorable Court of Appeals erred when it dismissed the complaint on mere alleged failure of the Labor Arbiter and the NLRC to observe the prescribed form of decision, instead of remanding the case for reformation of the decision to include the desired detailed computation. II. The Honorable Court of Appeals erred when it [made] complainants suffer the consequences of the alleged nonobservance by the Labor Arbiter and NLRC of the prescribed forms of decisions considering that they have complied with all needful acts required to support their claims. III. The Honorable Court of Appeals erred when it dismissed the complaint allegedly due to absence of legal and factual [bases] despite attendance of substantial evidence in the records. It is well to note that while the caption of the petition reflects both the names of Canoy and Pigcaulan as petitioners, it appears from its body that it is being filed solely by Pigcaulan. In fact, the Verification and Certification of Non-Forum Shopping was executed by Pigcaulan alone. In his Petition, Pigcaulan submits that the Labor Arbiter and the NLRC are not strictly bound by the rules. And even so, the rules do not mandate that a detailed computation of how the amount awarded was arrived at should be embodied in the decision. Instead, a statement of the nature or a description of the amount awarded and the specific figure of the same will suffice. Besides, his and Canoys claims were supported by substantial evidence in the form of the handwritten detailed computations which the Labor Arbiter termed as representative daily time records, showing that they were not properly compensated for work rendered. Thus, the CA should have remanded the case instead of outrightly dismissing it. In their Comment, respondents point out that since it was only Pigcaulan who filed the petition, the CA Decision has already become final and binding upon Canoy. As to Pigcaulans arguments, respondents submit that they were able to present sufficient evidence to prove payment of just salaries and benefits, which bits of evidence were unfortunately ignored by the Labor Arbiter and the NLRC. Fittingly, the CA reconsidered these pieces of evidence and properly appreciated them. Hence, it was correct in dismissing the claims for failure of Canoy and Pigcaulan to discharge their burden to disprove payment. Pigcaulan, this time joined by Canoy, asserts in his Reply that his filing of the present petition redounds likewise to Canoys benefit since their complaints were consolidated below. As such, they maintain that any kind of disposition made in favor or against either of them would inevitably apply to the other. Hence, the institution of the petition solely by Pigcaulan does not render the assailed Decision final as to Canoy. Nonetheless, in said reply they appended Canoys affidavit where he verified under oath the contents and allegations of the petition filed by Pigcaulan and also attested to the authenticity of its annexes. Canoy, however, failed to certify that he had not filed any action or claim in another court or tribunal involving the same issues. He likewise explains in said affidavit that his absence during the preparation and filing of the petition was caused by severe financial distress and his failure to inform anyone of his whereabouts. Our Ruling The assailed CA Decision is considered final as to Canoy. We have examined the petition and find that same was filed by Pigcaulan solely on his own behalf. This is very clear from the petitions prefatory which is phrased as follows: COMES NOW Petitioner Abduljuahid R. Pigcaulan, by counsel, unto this Honorable Court x x x. (Emphasis supplied.) Also, under the heading Parties, only Pigcaulan is mentioned as petitioner and consistent with this, the body of the petition refers only to a petitioner and never in its plural form petitioners. Aside from the fact that the Verification and Certification of NonForum Shopping attached to the petition was executed by Pigcaulan alone, it was plainly and particularly indicated under the name of the lawyer who prepared the same, Atty. Josefel P. Grageda, that he is the Counsel for Petitioner Adbuljuahid Pigcaulan only. In view of these, there is therefore, no doubt, that the petition was brought only on behalf of Pigcaulan. Since no appeal from the CA Decision was brought by Canoy, same has already become final and executory as to him. Canoy cannot now simply incorporate in his affidavit a verification of the contents and allegations of the petition as he is not one of the petitioners therein. Suffice it to state that it would have been different had the said petition been filed in behalf of both Canoy and Pigcaulan. In such a case, subsequent submission of a verification may be allowed as non-compliance therewith or a defect therein does not necessarily render the pleading, or the petition as in this case, fatally defective. The court may order its submission or correction, or act on the pleading if the attending circumstances are such that strict compliance with the Rule may be dispensed with in order that the ends of justice may be served thereby. Further, a verification is deemed substantially complied with when one who has ample knowledge to swear to the truth of the allegations in the complaint or petition signs the verification, and when matters alleged in the petition have been made in good faith or are true and correct. However, even if it were so, we note that Canoy still failed to submit or at least incorporate in his affidavit a certificate of non-forum shopping. The filing of a certificate of non-forum shopping is mandatory so much so

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that non-compliance could only be tolerated by special circumstances and compelling reasons. This Court has held that when there are several petitioners, all of them must execute and sign the certification against forum shopping; otherwise, those who did not sign will be dropped as parties to the case. True, we held that in some cases, execution by only one of the petitioners on behalf of the other petitioners constitutes substantial compliance with the rule on the filing of a certificate of non-forum shopping on the ground of common interest or common cause of action or defense. We, however, find that common interest is not present in the instant petition. To recall, Canoys and Pigcaulans complaints were consolidated because they both sought the same reliefs against the same respondents. This does not, however, mean that they share a common interest or defense. The evidence required to substantiate their claims may not be the same. A particular evidence which could sustain Canoys action may not effectively serve as sufficient to support Pigcaulans claim. Besides, assuming that the petition is also filed on his behalf, Canoy failed to show any reasonable cause for his failure to join Pigcaulan to personally sign the Certification of Non-Forum Shopping. It is his duty, as a litigant, to be prudent in pursuing his claims against SCII, especially so, if he was indeed suffering from financial distress. However, Canoy failed to advance any justifiable reason why he did not inform anyone of his whereabouts when he knows that he has a pending case against his former employer. Sadly, his lack of prudence and diligence cannot merit the courts consideration or sympathy. It must be emphasized at this point that procedural rules should not be ignored simply because their non-observance may result in prejudice to a partys substantial rights. The Rules of Court should be followed except only for the most persuasive of reasons. Having declared the present petition as solely filed by Pigcaulan, this Court shall consider the subsequent pleadings, although apparently filed under his and Canoys name, as solely filed by the former. There was no substantial evidence to support the grant of overtime pay. The Labor Arbiter ordered reimbursement of overtime pay, holiday pay, service incentive leave pay and 13th month pay for the year 2000 in favor of Canoy and Pigcaulan. The Labor Arbiter relied heavily on the itemized computations they submitted which he considered as representative daily time records to substantiate the award of salary differentials. The NLRC then sustained the award on the ground that there was substantial evidence of underpayment of salaries and benefits. We find that both the Labor Arbiter and the NLRC erred in this regard. The handwritten itemized computations are selfserving, unreliable and unsubstantial evidence to sustain the grant of salary differentials, particularly overtime pay. Unsigned and unauthenticated as they are, there is no way of verifying the truth of the handwritten entries stated therein. Written only in pieces of paper and solely prepared by Canoy and Pigcaulan, these representative daily time records, as termed by the Labor Arbiter, can hardly be considered as competent evidence to be used as basis to prove that the two were underpaid of their salaries. We find nothing in the records which could substantially support Pigcaulans contention that he had rendered service beyond eight hours to entitle him to overtime pay and during Sundays to entitle him to restday pay. Hence, in the absence of any concrete proof that additional service beyond the normal working hours and days had indeed been rendered, we cannot affirm the grant of overtime pay to Pigcaulan. Pigcaulan is entitled to holiday pay, service incentive leave pay and proportionate 13th month pay for year 2000. However, with respect to the award for holiday pay, service incentive leave pay and 13th month pay, we affirm and rule that Pigcaulan is entitled to these benefits. Article 94 of the Labor Code provides that: ART. 94. RIGHT TO HOLIDAY PAY. (a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less than ten (10) workers; xxxx While Article 95 of the Labor Code provides: ART. 95. RIGHT TO SERVICE INCENTIVE LEAVE. (a) Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive of five days with pay. xxxx Under the Labor Code, Pigcaulan is entitled to his regular rate on holidays even if he does not work. Likewise, express provision of the law entitles him to service incentive leave benefit for he rendered service for more than a year already. Furthermore, under Presidential Decree No. 851, he should be paid his 13th month pay. As employer, SCII has the burden of proving that it has paid these benefits to its employees.

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SCII presented payroll listings and transmittal letters to the bank to show that Canoy and Pigcaulan received their salaries as well as benefits which it claimed are already integrated in the employees monthly salaries. However, the documents presented do not prove SCIIs allegation. SCII failed to show any other concrete proof by means of records, pertinent files or similar documents reflecting that the specific claims have been paid. With respect to 13th month pay, SCII presented proof that this benefit was paid but only for the years 1998 and 1999. To repeat, the burden of proving payment of these monetary claims rests on SCII, being the employer. It is a rule that one who pleads payment has the burden of proving it. Even when the plaintiff alleges non-payment, still the general rule is that the burden rests on the defendant to prove payment, rather than on the plaintiff to prove non-payment. Since SCII failed to provide convincing proof that it has already settled the claims, Pigcaulan should be paid his holiday pay, service incentive leave benefits and proportionate 13th month pay for the year 2000. The CA erred in dismissing the claims instead of remanding the case to the Labor Arbiter for a detailed computation of the judgment award. Indeed, the Labor Arbiter failed to provide sufficient basis for the monetary awards granted. Such failure, however, should not result in prejudice to the substantial rights of the party. While we disallow the grant of overtime pay and restday pay in favor of Pigcaulan, he is nevertheless entitled, as a matter of right, to his holiday pay, service incentive leave pay and 13th month pay for year 2000. Hence, the CA is not correct in dismissing Pigcaulans claims in its entirety. Consistent with the rule that all money claims arising from an employer-employee relationship shall be filed within three years from the time the cause of action accrued, Pigcaulan can only demand the amounts due him for the period within three years preceding the filing of the complaint in 2000. Furthermore, since the records are insufficient to use as bases to properly compute Pigcaulans claims, the case should be remanded to the Labor Arbiter for a detailed computation of the monetary benefits due to him. WHEREFORE, the petition is GRANTED. The Decision dated February 24, 2006 and Resolution dated June 28, 2006 of the Court of Appeals in CA-G.R. SP No. 85515 are REVERSED and SET ASIDE. Petitioner Abduljuahid R. Pigcaulan is hereby declared ENTITLED to holiday pay and service incentive leave pay for the years 1997-2000 and proportionate 13th month pay for the year 2000. The case is REMANDED to the Labor Arbiter for further proceedings to determine the exact amount and to make a detailed computation of the monetary benefits due Abduljuahid R. Pigcaulan which Security and Credit Investigation Inc. should pay without delay.

PART TIME WORK G.R. No. 143258. August 15, 2003 PHILIPPINE AIRLINES, INC., petitioner, vs. JOSELITO PASCUA, et al., respondents. For review is the decision dated January 26, 2000 of the Court of Appeals and its May 23, 2000 resolution in CA-G.R. SP No. 50351. The appellate court dismissed the petition for certiorari filed by petitioner to challenge the NLRC decision dated January 23, 1998, in NLRC NCR CA No. 010598-96, and likewise denied their motion for reconsideration. The antecedent facts, as summarized by the Court of Appeals and borne by the records, are as follows: In April, August, and September of 1992, PAL hired private respondents as station attendants on a four or six-hour workshift a day at five to six days a week. The primary duty of private respondents who were assigned to PALs Air services Department and ASD/CARGO was to load cargo to departing, and unload cargo from arriving PAL international flights as well as flights of Cathay Pacific, Northwest Airlines and Thai Airlines with which PAL had service contract[s].

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On certain occasions, PAL compelled private respondents to work overtime because of urgent necessity. The contracts with private respondents were extended twice, the last of which appears to have been for an indefinite period. On February 3, 1994, private respondent Joselito Pascua, in his and on behalf of other 79 part-time station attendants, filed with the Department of Labor and Employment a complaint for: (1) Regularization (2) Underpayment of wages (3) Overtime pay (4) Thirteenth month pay (5) Service incentive leave pay (6) Full time of eight hours employment (7) Recovery of benefits due to regular employees (8) Night differential pay (9) Moral damages and (10) Attorneys fees, which was docketed as NLRC NCR Case No. 00-02-00953-94. During the pendency of the case, PAL President Jose Antonio Garcia and PAL Chairman & Corporate Executive Officer Carlos G. Dominguez converted the employment status of private respondents from temporary part-time to regular parttime. On February 24, 1995, private respondents dropped their money claim then pending before the Office of Executive Labor Arbiter Guanio, thus leaving for consideration their complaint for regularization - conversion of their employment status from part-time to regular (working on an 8-hour shift). Finding private respondents remaining cause of action was rendered moot and academic by their supervening regularization and denying their prayer that their status as regular employees be given retroactive effect to six months after their stint as temporary contractual employees, the Executive Labor Arbiter dismissed private respondents complaint. On appeal, the NLRC, finding for private respondents, declared them as regular employees of PAL with an eight-hour work-shift. The pertinent portions of the NLRC decision reads: Respondent admits that complainants have been performing functions that are considered necessary or desirable in the usual business of PAL. There is no clear showing, however, that complainants employment had been fixed for a particular project or undertaking the completion or termination of which has been determined at the time of their engagement. Neither is there a clear showing that the work or services which they performed, was seasonal in nature and their employment for the duration of the season. Complainants were simply hired as part-time employees at the ASD and at the ASD/CARGO to do ramp services. Complainants can therefore be considered as casual employees for a definite period during the first year of their employment and, thereafter, as regular employees of respondents by operation of law. As such, they should be entitled to the compensation and other benefits provided in the Collective Bargaining Agreement for regular employees from or day after one year [of] service. Having been paid less than what they should receive, complainants are therefore, entitled to the differentials. Petitioner promptly filed a motion for reconsideration of the NLRC decision, which was denied in an order dated October 12, 1998. Consequently, petitioner filed with the Court of Appeals a special civil action for certiorari to annul the NLRC decision. On January 26, 2000, the Court of Appeals dismissed the said petition and by resolution issued on May 23, 2000, denied petitioners motion for reconsideration.

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Hence, this appeal by certiorari where petitioner assigns the following errors: I. THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THE NLRC DECISION WHICH RULED ON THE MERITS OF THE COMPLAINT, DESPITE THE FACT THAT THE CAUSE OF

II.

ACTION HAS ALREADY BECOME MOOT AND ACADEMIC WHEN THE PETITIONER ACCORDED REGULAR STATUS TO THE RESPONDENTS DURING THE ARBITRATION PROCEEDINGS. EVEN IF WE ASSUME FOR THE SAKE OF ARGUMENT THAT THE COMPLAINT HAS NOT BEEN RENDERED MOOT AND ACADEMIC, STILL THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THE DECISION OF THE NLRC WHICH COMPELLED THE PETITIONER TO CHANGE THE RESPONDENTS EMPLOYMENT STATUS FROM PART -TIME TO FULL-TIME.

Two principal issues need resolution: (1) Did petitioners act of converting respondents status from temporary to regular employees render the original complaint for regularization moot and academic? (2) Did the appellate court err when it upheld the decision of the NLRC to accord respondents regular full-time employment although petitioner, in the exercise of its management prerogative, requires only part-time services? Petitioner contends that the NLRC could not change respondents status from part-time to full-time employment because respondents merely prayed in their original complaint for regular status as opposed to temporary or casual employment. Respondents temporary part-time status was already converted by petitioner to regular part-time status at the arbitration level, to put an end to the controversy. That being the case, the labor arbiter ordered the dismissal of the complaint for having become moot and academic, because the relief sought was already granted even prior to the termination of the dispute. Clearly, says petitioner, respondents cause of action for regularization had been extinguished when petitioner accorded the respondents regular status. It was grave abuse as well as error for the NLRC to touch the merits of an issue in effect already mooted at the arbiters level, according to petitioner. On the second issue, petitioner argues that the NLRC could not lawfully impose the change of employment status of respondents from part-time to full-time employees. It has no authority or power to do so. According to petitioner, management of its business is a matter that falls within the exclusive domain of the employer. As such, only the employer, and no one else, should determine the number of employees to be hired, the type of employees to be engaged, and the qualifications of each and every employee. The employer could engage part-time employees if its operational needs require such part-time employees. The NLRC should not substitute its judgment for that of the employer in this regard, says petitioner. Respondents, in their comment, aver that the conversion of their employment status from part-time temporary to part-time regular did not render inutile their original complaint, as in fact they have consistently asked for full-time regularization. According to respondents, in their pleadings they repeatedly sought not only regularization but in fact they also asked entitlement to benefits of regular full-time employees. Further, respondents claim that since petitioner needs the services of private respondents for eight (8) hours or more a day, it is with evident bad faith that petitioner continues to categorize them as mere part-timers rather than full-timers so the company could avoid payment of corresponding benefits due to respondents. On the first issue that the original complaint was rendered moot and academic by the subsequent regularization of respondents while the action was pending before the labor arbiter, we find that the petitioners assertion is not entirely true nor accurate. Petitioner insists that all respondents sought was the conversion of their temporary employment status to regular employment, without asking for a change from part-time to full time status. This claim, however, is belied by the very complaint initially filed with the labor arbiter. As stated by the OSG in its comment to the petition filed with the Court of Appeals, which we now quote aptly: However, a thorough scrutiny of the appeal reveals that despite its lack of preciseness, private respondents were, in fact, ultimately assailing their part-time status, not just the retroactive date of their regularization as part-time employees. They contradicted the Labor Arbiters perception that hiring of part-time employees was justified by the peculiar nature of airport operations. Besides, even petitioner understood the heart of the appeal when it observed in their Answer to Appeal that [a]ll that they wanted is to be converted to full time status. The pleadings filed by private respondents consistently show that they wanted to become regular full-time employees, not only regular part-time employees. Although they repeatedly said regular employees, not specifying whether it should be regular part-time or regular full-time, their intention should be read from the entirety of all their pleadings. Private respondents have consistently alleged that despite their part-time status, they actually work more than 8 hours daily. Private respondent Joselito Pascua confirmed this when he testified on November 24, 1995 (TSN, November 24, 1995, pp. 35-36). Ultimately, they want to be entitled to the many collective bargaining agreement (CBA) benefits which would be possible only if they were regular full-time employees since regular part-time employees are covered by the Personnel

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Policies and Procedures Manual, the relevant portion of which was introduced only for the first time in this Court. While regular part-time employees have their own package of benefits, it is safe to infer that the benefits under the CBA are better, being a result of negotiation, than those provided under the Personnel Policies and Procedures Manual which are unilaterally handed down by petitioner. An issue becomes moot and academic when it ceases to present a justiciable controversy, so that a declaration on the issue would be of no practical use or value. In that situation, there is no actual substantial relief to which respondents would be entitled and which would be negated by the dismissal of their original complaint. Here, it is readily apparent that the dismissal of the original complaint by the labor arbiter would negate the substantial relief to which respondents would have been entitled. They seek regular full-time employment and this claim is fully set forth in the original complaint. They specifically prayed for entitlement to benefits due to a regular full-time employee with seniority rights. The mere regularization of respondents would still not entitle them to all benefits under the CBA, which regular full-time employees enjoy. In fact, regular part-time employees are covered by the benefits under Personnel Policies and Procedures Manual, not the CBA. The dismissal then of the complaint by the labor arbiter is reversible error, and the NLRC still acted within its power and authority as a quasi-judicial agency in finding that respondents deserve more than just being regular employees but must be regular full-time employees. We now come to the second issue, which touches on the valid exercise of management prerogative. According to petitioner, NLRC encroached upon this exclusive sphere of managerial decision, when it ruled that respondents should be made regular full-time employees instead of regular part-time employees, and the appellate court thereby erred in sustaining the NLRC. This contention does not quite ring true, much less persuade us. It must be borne in mind that the exercise of management prerogative is not absolute. While it may be conceded that management is in the best position to know its operational needs, the exercise of management prerogative cannot be utilized to circumvent the law and public policy on labor and social justice. That prerogative accorded management could not defeat the very purpose for which our labor laws exist: to balance the conflicting interests of labor and management, not to tilt the scale in favor of one over the other, but to guaranty that labor and management stand on equal footing when bargaining in good faith with each other. By its very nature, encompassing as it could be, management prerogative must be exercised always with the principles of fair play at heart and justice in mind. Records show that respondents were first hired to work for a period of one year. Notwithstanding the fact that respondents perform duties that are usually necessary or desirable in the usual trade or business of petitioner, respondents were considered temporary employees as their engagement was fixed for a specific period. However, equally borne by the records, is the fact that respondents employment was extended for more than two years. Evidently, there was a continued and repeated necessity for their services, which puts to naught the contention that respondents, beyond the oneyear period, still continued to be temporary part-time employees. Article 280 of the Labor Codeprovides 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 actually exists. The NLRC decision now assailed is one based on substantial evidence, which is that amount of relevant evidence that a reasonable mind might accept as adequate to justify a conclusion. It bears stressing that findings of fact of quasi-judicial agencies like the NLRC which have acquired expertise in the specific matters entrusted to their jurisdiction are accorded by this Court not only respect but even finality if they are supported by substantial evidence. Here we find no compelling reason to go against the factual findings of the NLRC. The parties had ample opportunity to present below the necessary evidence and arguments in furtherance of their causes, and it is presumed that the quasi-judicial body rendered its decision taking into consideration the evidence and arguments thus presented. Such being the case, it is likewise presumed that the official duty of the NLRC to render its decision was regularly performed. Petitioner has not shown any compelling justification to warrant reversal of the NLRC findings. Absent any showing of patent error, or that the NLRC failed to consider a fact of substance that if considered would warrant a different result, we yield to the factual conclusions of that quasi-judicial agency. More so, when as here, these NLRC conclusions are affirmed by the appellate court. It is basic to the point of being elementary that nomenclatures assigned to a contract shall be disregarded if it is apparent that the attendant circumstances do not support their use or designation. The same is true with greater force concerning contracts of employment, imbued as they are with public interest. Although respondents were initially hired as part-time employees for one year, thereafter the over-all circumstances with respect to duties assigned to them, number of hours they were permitted to work including over-time, and the extension of employment beyond two years can only lead to one conclusion: that they should be declared full-time employees. Thus, not without sufficient and substantial reasons, the

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claim of management prerogative by petitioner ought to be struck down for being contrary to law and policy, fair play and good faith. In sum, we are in agreement with the Court of Appeals that the NLRC did not commit grave abuse of discretion simply because it overturned the labor arbiters decision. Grave abuse of discretion is committed when the judgment is rendered in a capricious, whimsical, arbitrary or despotic manner. An abuse of discretion does not necessarily follow just because there is a reversal by the NLRC of the decision of the labor arbiter. Neither does variance in the evidentiary assessment by the NLRC and by the labor arbiter warrant as a matter of course another full review of the facts. The NLRCs decision, so long as it is not bereft of evidentiary support from the records, deserves respect from the Court. WHEREFORE, the petition is DENIED for lack of merit. The decision dated January 26, 2000 of the Court of Appeals and its resolution dated May 23, 2000, in CA-G.R. SP No. 50351 are AFFIRMED. Costs against petitioner. SO ORDERED.

ROQUE D.A. DATOR, - versus UNIVERSITY OF SANTO TOMAS, REV. FR. TAMERLANE LANA and REV. FR. RODEL ALIGAN, August 31, 2006 G.R. No. 169464 This petition for review on certiorari assails the April 27, 2005 Decision of the Court of Appeals in CA-G.R. SP No. 81378, which reversed the August 29, 2003 Decision and October 30, 2003 Resolution of the National Labor Relations Commission (NLRC) in NLRC CA No. 034433-03 and dismissed petitioners complaint for lack of merit; and its August 24, 2005 Resolution denying petitioners motion for reconsideration. Petitioner Roque D.A. Dator was hired by respondent University of Santo Tomas (UST) in June 1983 as Instructor I of the Institute of Religion with a maximum teaching load of 24 units. On December 15, 1995, petitioner was also hired as Graft Investigation Officer II with the Office of the Ombudsman but he failed to disclose such other employment to respondents, who discovered the same only during the first semester of School Year 2000-2001. Thus, on June 16, 2000, petitioner was informed that his teaching load would be reduced to 12 hours per week, pursuant to Section 5, Article III of the UST Faculty Code which states that faculty members who have a full time outside employment other than teaching may not be given a teaching load in excess of 12 hours per week. Petitioner asked for reconsideration of the reduction in his teaching load which was granted. He was given an additional load of three teaching hours. On June 15, 2001, petitioner again requested for an additional load of three units but his request was denied by respondent Rev. Fr. Aligan on the ground that [t]o grant the request when one was already made before for humanitarian and equitable reasons would reduce the subject policy to naught and the granting might become the general rather than the exception to the policy. Petitioner filed a Complaint-Affidavit to the Chairperson of the Grievance Committee, Dr. Gil Gamila, President of the University of Sto. Tomas Faculty Union, but the complaint was dismissed. Petitioner appealed to respondent Rev. Fr. Tamerlane Lana, Rector of respondent UST but the appeal was denied. Petitioner thus filed a complaint for Illegal Reduction of Teaching Load and Illegal Change of Employment Status, Damages, Unpaid Benefits and Attorneys Fees and illegal constructive dismissal befor e the Labor Arbiter on February 19, 2002. Petitioner claimed that his arbitrary demotion from full-time to part-time faculty member violated the provisions of the CBA, as well as his right to security of tenure. Likewise, he argued that the UST Faculty Code which respondents

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relied upon to reduce his teaching load has been superseded by the CBA. In support of his contentions, petitioner cited the following sections of Article IV of the CBA: Section 3. Normal Teaching Load. Every faculty member with a permanent appointment shall be entitled to no less than the same teaching load or assignment as he had in the previous semesters, excluding the overloads and substitute load except in justified deloading as herein provided. xxxx Section 5. Reduction of Teaching Load. The teaching load of a faculty member may be reduced for any of the following reasons: a) A reduction in the number of classes or sections in the faculty, college, school or department concerned, provided that, in such case a compensating load in other faculties, colleges, school or department shall, as far as possible, be made available to the faculty member concerned; Non-offering of his/her specialized subject along his/her expertise in any given semester or school year; By way of sanction for inefficiency duly proven after due process and in accordance with standards or criteria in force in the UNIVERSITY; Failing Health of the faculty member duly certified by a Board of three (3) physicians teaching in the Faculty of Medicine and Surgery of the University chosen as follows: one by the faculty member concerned, one by the UNIVERSITY and one by the FACULTY UNION.

b) c) d)

Section 6. Procedure for the Reduction of Load. In case of deloading that affects permanent faculty members, the following rules shall be observed, to wit: a) b) c) The available subject shall first be given to the faculty members who have been teaching the particular subject; Seniority as to the number of years of handling the particular subject shall be used as basis in the distribution of the available particular subject; In case the faculty member concerned shall have taught the particular subject for an equal length of time priority shall be given to the faculty member having a higher rank; In case the faculty member concerned shall have taught the particular subject for an equal length of time and holding the same rank, preference shall be given to the faculty member who has a higher efficiency rating; In case the matter cannot be settled by the use of the foregoing data, the particular available subjects shall be distributed to the faculty members concerned in proportion to the faculty members average teaching assignment in the immediately preceding school year.

d)

e)

In the case of non-tenured faculty members, priority in the distribution of available subjects among them in the event of a bona-fide deloading shall be in accordance with the following criteria that are to be applied in the order of mention to wit: a) length of service; number of semesters of handling the particular subject; and efficiency rating.

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b) c)

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Section 7. Notice of deloading. Faculty members who shall be affected by a process of deloading should be given a written notice thereof, at least two (2) weekes before the start of every semester; conversely, faculty members who, for one reason or another, are not available to teach for the succeeding semester, should inform the dean of such fact at least two (2) weeks before the start of the semester. On the other hand, respondents maintained that petitioners teaching load was reduced in accordance with Sections 5 and 6 of Article III of the Faculty Code which provide: SEC. 5 Faculty members who have a full time outside employment other than teaching may not be given a teaching load in excess of 12 hours per week. The maximum load of part time employees should be arranged in accordance with the following table: Hours of Weekly Work 40-48 30-39 20-29 10-19 Load 12 Units 15 Units 18 Units 21 Units

SEC. 6 All faculty members shall submit each semester in writing to their respective Deans a statement of the number of teaching hours per week to be rendered in other institutions and/or daily hours of work or employment, inside or outside the University. The Labor Arbiter ruled in favor of respondents holding that the situation contemplated in Section 5, Article III of the Faculty Code, when evaluated together with the provisions of the CBA, constitutes a ground for teaching load reduction. On appeal, the NLRC ordered the restoration of petitioners faculty member status to full -time. Respondents motion for reconsideration was denied. Petitioners partial motion for reconsideration with regard to the award for backwages and damages was likewise denied. Respondents filed a petition for certiorari before the Court of Appeals which reversed the NLRC decision and sustained the findings of the Labor Arbiter in its assailed Decision dated April 27, 2005, the dispositive portion of which states: WHEREFORE, premises considered, we hereby GRANT the petition. The decision dated August 29, 2003 and the order dated October 30, 2003 of the National Labor Relations Commission in the case Roque A. Dator vs. University of Sto. Tomas and/or Rev. Tamerlane Lana, NLRC CA No. 034433-03 is hereby declared NULL AND VOID and is accordingly SET ASIDE. The complaint is hereby DISMISSED for lack of merit. SO ORDERED. The Court of Appeals denied petitioners motion for reconsideration. Hence, this petition raising the following issue s: THE APPELLATE COURT GROSSLY DEPARTED FROM JURISPRUDENCE I. APPLICABLE LAW AND PREVAILING

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II. III.

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IN NOT FINDING [THAT] PETITIONERS DELOADING WAS WITHOUT JUST CAUSE, WITHOUT DUE PROCESS AND IN VIOLATION OF AN EXTANT CBA BETWEEN UST AND THE UST FACULTY UNION IN ITS FLAWED INTERPRETATION OF THE APPLICABLE PROVISIONS OF THE CBA AND THE UST FACULTY CODE IN FINDING [THAT] PETITIONER HAD COMMITTED MISREPRESENTATION

IV.

V.

VI.

IN FINDING THAT PETITIONER HAD THE BURDEN OF PROOF IN SHOWING THAT OTHER FACULTY MEMBERS SIMILARLY SITUATED WERE GIVEN FULL-TIME LOADS IN FAILING TO SEE THAT RESPONDENT UST HAD ALREADY ADMITTED IN ITS PLEADINGS THAT OTHER GOVERNMENT EMPLOYEES HAD BEEN GRANTED FULL-TIME TEACHING LOADS IN FAILING TO FIND [THAT] UST HAD ACTED IN BAD FAITH.

Petitioner contends that he is a tenured faculty member thus he is entitled to the same teaching load as he had in the previous semesters; that he was not accorded due process when respondents unilaterally reduced his teaching load; that Section 5, Article III of the Faculty Code has no application in this case; and that respondents acted in bad faith. Respondents maintain that petitioners teaching load was reduced in accordance with Section 5, Article III of the Faculty Code; that they did not violate petitioners right to due process and that he was given an opportunity to be heard; that petitioner falsified at least 13 written statements where he deliberately failed to mention his full time employment with the Office of the Ombudsman. The petition lacks merit. The issues for resolution are: 1) whether the reduction of petitioners teaching load was justified; and 2) whether petitioner was denied due process. We agree with the Court of Appeals ruling that while the CBA provides grounds for reduction of teaching loa d, the question of whether a faculty member is considered full-time or part-time is addressed by the Faculty Code which provides that where the full-time faculty member is at the same time working as a full-time employee elsewhere, the faculty member is considered part-time and a 12-hour teaching load limitation is imposed. There is no dispute that petitioner was holding a full-time position with the Office of the Ombudsman while working as a faculty member in UST. Accordingly, Section 5, Article III of the Faculty Code applies. We quote with approval the ruling of the Court of Appeals, to wit: We completely disagree with the NLRCs conclusions as it applied the wrong rules and misappreciated the evidence on record. The NLRC gravely abused its discretion on this point for its complete disregard of the Faculty Code. While the NLRC correctly viewed the CBA as the primary instrument that governs the relationship between UST and its unionized faculty members, it disregarded Article XX of this CBA which reconciles the CBA with the Faculty Code. Article XX states: ARTICLE XX FACULTY CODE The provisions of the Faculty Code of 1981, as amended, which are not otherwise incorporated in the CBA and which are not in conflict with any provisions of the latter shall remain in full force and effect. In the event of conflict between a faculty code provision and the CBA, the provision of the latter shall prevail. (Emphasis supplied) Thus, contrary to the NLRCs conclusion, the UST Faculty Code continues to exist and to apply to UST faculty members, but must give way if its terms are in conflict with what the CBA provides. The standard in determining the applicable rule and the one that the NLRC completely missed is whether a conflict exists between the provisions the parties cited.

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We see no conflict between the provisions the parties respectively cited as these provisions apply to different situations. Article IV of the CBA are the rules on the teaching loads that faculty members may normally expect to carry; it provides as well the grounds or reasons for giving a tenured faculty member less than his normal teaching load. These provisions do not address the question of

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when a faculty member is to be considered a full-time or a part-time faculty member. Whether a faculty member should only be on part-time basis is governed by Section 5 Article III of the UST Faculty Code we have quoted above. Thus, the provisions Dator cited regarding deloading and the authorized grounds therefore do not apply because what is involved is a change of status from full-time faculty member to a part-time one due to the faculty members full -time employment elsewhere. In contrast with the authorized causes for deloading under the CBA, the change of sta tus from full-time faculty member with a 24-unit load to a part-time one with a 12-unit load in effect involves a disqualification to be a full-time faculty member because of the very practical reason that he or she is already a full-time employee elsewhere. In the present case, this disqualification is compounded by Dators repeated misrepresentations about his employment status outside UST. The present case therefore is closer to being a disqualification situation coupled with a disciplinary cause, rather than one involving a purely authorized deloading under the CBA. Petitioner argues that he was under no obligation to disclose his employment with the Office of the Ombudsman. He claims that the only information required of him pertained to 1) other colleges where he is teaching, 2) teaching loads outside the university, and 3) a business firm he is employed with. He argues that the Office of the Ombudsman, being a government agency, does not fall under any of the foregoing categories. Petitioners argument is flimsy and deserves scant consideration. Section 6, Article III of the Faculty Code states that all faculty members must submit each semester a statement of the number of teaching hours per week to be rendered in other institutions and/or daily hours of work or employment, inside or outside the University. The rationale behind the rule is unmistakable. As pointed out by respondents, there is a need to maintain USTs quality of education as well as to ensure that government service is not jeopardized. Petitioner admitted in his letter-request dated July 15, 2001 that with the implementation of a CHED Circular, the teaching load assignment of government employees was limited to only 12 units per semester x x x so as not to prejudice the interests of both the government and the University and/or college concerned. It is clear therefore that petitioner was aware of the limitation. Moreover, we find that petitioner was not denied due process. It is settled that due process is simply an opportunity to be heard. In this case, respondents informed petitioner that his teaching load would be reduced as he was working full-time with the Office of the Ombudsman. Petitioner asked for reconsideration twice. His first request was granted and he was given an additional load of three units for School Year 2000-2001. For School Year 2001-2002, petitioner again requested an additional load of three units but was denied. Upon denial of his second request, petitioner availed of the grievance procedure provided in the CBA. Yet again, after his complaint was dismissed, petitioner appealed directly to respondent Fr. Lana. As observed by the Court of Appeals, petitioner exhausted the internal mechanism of seeking redress within USTs administrative machinery. Contrary to petitioners claims, he was accorded due process. We likewise reject petitioners claim that respondents acted in bad faith. A review of the record reveals that respondents merely implemented the Faculty Code which clearly sets a 12-hour load limitation to faculty members who are also full-time employees elsewhere. And while petitioner decries an alleged discrimination against him, he failed to prove his allegations with substantial evidence which is that amount of evidence a reasonable mind might accept as adequate to support a conclusion. All told, petitioners complaint cannot be sustained. An employees bare allegations of constructive dismissal, when uncorroborated by the evidence on record, cannot be given credence. As aptly held by the Court of Appeals: A constructive dismissal occurs when the law deems that there is effectively a termination of employment or a quitting because continued employment is rendered impossible, unreasonable or unlikely, such as in an offer involving a demotion in rank and a diminution in pay. Where, as in the present case, the employer was fully justified in giving a faculty member a lesser load because the latter is disqualified under applicable rules from handling a full load, and where the faculty member committed repeated misrepresentations in his bid to

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maintain his full load, we cannot see any legal or factual basis to conclude that the faculty member had been constructively dismissed. We conclude from all these that UST committed no illegality when it ordered the reduction of Dators load from twenty-four (24) units to twelve (12) units per semester. Substantively, there was factual basis for deloading. Procedurally, Dator had been given full opportunity to be heard. He was even accommodated for one school year with an extra three-unit load that he accepted. After this acceptance and the express recognition that indeed he could only handle a twelve-unit load, private respondent Dator can no longer claim that he should after all been given a full twenty-four unit load. Thus, the NLRCs conclusions - based on a skewed reading of the facts and the application of the wrong rules - cannot but be attended by grave abuse of discretion amounting to lack or excess of jurisdiction. WHEREFORE, the instant petition is DENIED. The Decision dated April 27, 2005 of the Court of Appeals in CA-G.R. SP No. 81378 ordering the dismissal of petitioners complaint for lack of merit; and its Resolution dated August 24, 2005 denying petitioners motion for reconsideration, are hereby AFFIRMED. SO ORDERED.

[G.R. No. 157788. March 08, 2005] SAINT MARYS UNIVERSITY, represented by its President REV. JESSIE M. HECHANOVA, CICM, petitioner, vs. COURT OF APPEALS (Former Special Twelfth Division), NATIONAL LABOR RELATIONS COMMISSION (Second Division) and MARCELO A. DONELO, respondents. For review on certiorari are the Decision dated May 21, 2002 and the Resolution dated February 12, 2003 of the Court of Appeals in CA-G.R. SP No. 63240 which dismissed the petition for certiorari of St. Marys University and its motion for reconsideration, respectively. Respondent Marcelo Donelo started teaching on a contractual basis at S t. Marys University in 1992. In 1995, he was issued an appointment as an Assistant Professor I. Later on, he was promoted to Assistant Professor III. He taught until the first semester of school year 1999-2000 when the school discontinued giving him teaching assignments. For this, respondent filed a complaint for illegal dismissal against the university. In its defense, petitioner St. Marys University showed that respondent was merely a part -time instructor and, except for three semesters, carried a load of less than eighteen units. Petitioner argued that respondent never attained permanent or regular status for he was not a full-time teacher. Further, petitioner showed that respondent was under investigation by the university for giving grades to students who did not attend classes. Petitioner alleged that respondent did not respond to inquiries relative to the investigation. Instead, respondent filed the instant case against the university. The Labor Arbiter ruled that respondent was lawfully dismissed because he had not attained permanent or regular status pursuant to the Manual of Regulations for Private Schools. The Labor Arbiter held that only full-time teachers with regular loads of at least 18 units, who have satisfactorily completed three consecutive years of service qualify as permanent or regular employees. On appeal by respondent, the National Labor Relations Commission (NLRC) reversed the Decision of the Labor Arbiter and ordered the reinstatement of respondent without loss of seniority rights and privileges with full backwages from the time his salaries were withheld until actual reinstatemen. It held that respondent was a full-time teacher as he did not appear to have other regular remunerative employment and was paid on a regular monthly basis regardless of the number of teaching hours. As a full-time teacher and having taught for more than 3 years, respondent qualified as a permanent or regular employee of the university.

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Petitioner sought for reconsideration and pointed out that respondent was also working for the Provincial Government of Nueva Vizcaya from 1993 to 1996. Nevertheless, the NLRC denied petitioners Motion for Reconsideration. Aggrieved, petitioner elevated the matter to the Court of Appeals, which affirmed the Decision of the NLRC.

Hence, this petition with a motion for temporary restraining order, alleging that the Court of Appeals erred in: FINDING THAT THE RESPONDENT DONELO ATTAINED A PERMANENT STATUS, THE SAID FINDING BEING CLEARLY CONTRARY TO THE EVIDENCE AT HAND AND DEVOID OF BASIS IN LAW. HOLDING THAT THE TWIN-NOTICE REQUIREMENT IMPOSED BY LAW BEFORE TERMINATION OF EMPLOYMENT CAN BE LEGALLY EFFECTED MUST BE COMPLIED WITH BY THE PETITIONER. AFFIRMING THE DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION IN OR DERING THE PETITIONER TO REINSTATE RESPONDENT DONELO TO HIS FORMER POSITION WITHOUT LOSS OF SENIORITY RIGHTS AND PRIVILEGES WITH FULL BACKWAGES FROM THE TIME OF HIS DISMISSAL UNTIL ACTUALLY REINSTATED. Plainly, the ultimate questions before us are: 1. 2. 3. Was respondent a full-time teacher? Had he attained permanent status? Was he illegally dismissed?

Petitioner contends that respondent did not attain permanent status since he did not carry a load of at least 18 units for three consecutive years; and that only full-time teachers can attain permanent status. Further, since respondent was not a permanent employee, the twin-notice requirement in the termination of the latters employment did not apply. Respondent argues that, as early as 1995, he had a permanent appointment as Assistant Professor, and he was a permanent employee regardless of the provisions of the Manual of Regulations for Private Schools. He asserts that he should not be faulted for not carrying a load of at least 18 units since the university unilaterally controls his load assignment in the same manner that the university has the prerogative to shorten his probationary period. He points out also that the present Manual allows full-time teachers to hold other remunerative positions as long as these do not conflict with the regular school day. Since he is a permanent employee, respondent insists that petitioners failure to give him the required notices constitutes illegal dismissal. Section 93 of the 1992 Manual of Regulations for Private Schools, provides that full-time teachers who have satisfactorily completed their probationary period shall be considered regular or permanent. Furthermore, the probationary period shall not be more than six consecutive regular semesters of satisfactory service for those in the tertiary level. Thus, the following requisites must concur before a private school teacher acquires permanent status: (1) the teacher is a full-time teacher; (2) the teacher must have rendered three consecutive years of service; and (3) such service must have been satisfactory. In the present case, petitioner claims that private respondent lacked the requisite years of service with the university and also the appropriate quality of his service, i.e., it is less than satisfactory. The basic question, however, is whether respondent is a full-time teacher. Section 45 of the 1992 Manual of Regulations for Private Schools provides that full-time academic personnel are those meeting all the following requirements: a. Who possess at least the minimum academic qualifications prescribed by the Department under this Manual for all academic personnel; b. Who are paid monthly or hourly, based on the regular teaching loads as provided for in the policies, rules and standards of the Department and the school;

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c. Whose total working day of not more than eight hours a day is devoted to the school;

d. Who have no other remunerative occupation elsewhere requiring regular hours of work that will conflict with the working hours in the school; and e. Who are not teaching full-time in any other educational institution. All teaching personnel who do not meet the foregoing qualifications are considered part-time. A perusal of the various orders of the then Department of Education, Culture and Sports prescribing teaching loads shows that the regular full-time load of a faculty member is in the range of 15 units to 24 units a semester or term, depending on the courses taught. Part-time instructors carry a load of not more than 12 units. The evidence on record reveals that, except for four non-consecutive terms, respondent generally carried a load of twelve units or less from 1992 to 1999. There is also no evidence that he performed other functions for the school when not teaching. These give the impression that he was merely a part-time teacher. Although this is not conclusive since there are full-time teachers who are allowed by the university to take fewer load, in this case, respondent did not show that he belonged to the latter group, even after the university presented his teaching record. With a teaching load of twelve units or less, he could not claim he worked for the number of hours daily as prescribed by Section 45 of the Manual. Furthermore, the records also indubitably show he was employed elsewhere from 1993 to 1996. Since there is no showing that respondent worked on a full-time basis for at least three years, he could not have acquired a permanent status. A part-time employee does not attain permanent status no matter how long he has served the school. And as a part-timer, his services could be terminated by the school without being held liable for illegal dismissal. Moreover, the requirement of twin-notice applicable only to regular or permanent employees could not be invoked by respondent. Yet, this is not to say that part-time teachers may not have security of tenure. The school could not lawfully terminate a part-timer before the end of the agreed period without just cause. But once the period, semester, or term ends, there is no obligation on the part of the school to renew the contract of employment for the next period, semester, or term. In this case, the contract of employment of the respondent was not presented. However, judicial notice may be taken that contracts of employment of part-time teachers are generally on a per semester or term basis. In the absence of a specific agreement on the period of the contract of employment, it is presumed to be for a term or semester. After the end of each term or semester, the school does not have any obligation to give teaching load to each and every part-time teacher. That petitioner did not give any teaching assignment to the respondent during a given term or semester, even if factually true, did not amount to an actionable violation of respondents rights. It did not amount to illegal dismissal of the part-time teacher. The law, while protecting the rights of the employees, authorizes neither the oppression nor destruction of the employer. And when the law tilts the scale of justice in favor of labor, the scale should never be so tilted if the result would be an injustice to the employer. WHEREFORE, the petition is GRANTED. The Decision dated May 21, 2002 and the Resolution dated February 12, 2003 of the Court of Appeals in CA-G.R. SP No. 63240, which sustained those of the NLRC, are NULLIFIED and SET ASIDE. The Decision of the Executive Labor Arbiter of the Regional Arbitration Branch II, Tuguegarao City, Cagayan, is hereby REINSTATED. SO ORDERED.

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LOLITA R. LACUESTA, Petitioner, G.R. No. 152777 - versus ATENEO DE MANILA UNIVERSITY, DR. LEOVINO MA. GARCIA and DR. MARIJO RUIZ, December 9, 2005

This petition for review on certiorari assails the Decision dated October 12, 2001 of the Court of Appeals in CAG.R. SP No. 61173 and its Resolution dated February 21, 2002, denying the motion for reconsideration. The appellate court affirmed the Decision dated February 24, 2000 of the National Labor Relations Commission (NLRC), which had reversed the Decision dated March 20, 1998 of the Labor Arbiter. The facts are undisputed. Respondent Ateneo de Manila University (Ateneo) hired, on a contractual basis, petitioner Lolita R. Lacuesta as a part-time lecturer in its English Department for the second semester of school year 1988-1989. She was re-hired, still on a contractual basis, for the first and second semesters of school year 1989-1990. On July 13, 1990, the petitioner was first appointed as full-time instructor on probation, in the same department effective June 1, 1990 until March 31, 1991. Thereafter, her contract as faculty on probation was renewed effective April 1, 1991 until March 31, 1992. She was again hired for a third year effective April 1, 1992 until March 31, 1993. During these three years she was on probation status. In a letter dated January 27, 1993, respondent D r. Leovino Ma. Garcia, Dean of Ateneos Graduate School and College of Arts and Sciences, notified petitioner that her contract would no longer be renewed because she did not integrate well with the English Department. Petitioner then appealed to the President of the Ateneo at the time, Fr. Joaquin Bernas, S.J. In a letter dated February 11, 1993, Fr. Bernas explained to petitioner that she was not being terminated, but her contract would simply expire. He also stated that the university president makes a permanent appointment only upon recommendation of the Dean and confirmation of the Committee on Faculty Rank and Permanent Appointment. He added that any appointment he might extend would be tantamount to a midnight appointment. In another letter dated March 11, 1993, Fr. Bernas offered petitioner the job as book editor in the University Press under terms comparable to that of a faculty member. On March 26, 1993, petitioner applied for clearance to collect her final salary as instructor. Petitioner also signed a Quitclaim, Discharge and Release on April 16, 1993. Petitioner worked as editor in the University Press from April 1, 1993 to March 31, 1994 including an extension of two months after her contract expired. Upon expiry of her contract, petitioner applied for clearance to collect her final salary as editor. Later, she agreed to extend her contract from June 16, 1994 to October 31, 1994. Petitioner decided not to have her contract renewed due to a severe back problem. She did not report back to work, but she submitted her clearance on February 20, 1995. On December 23, 1996, petitioner filed a complaint for illegal dismissal with prayer for reinstatement, back wages, and moral and exemplary damages. Dr. Leovino Ma. Garcia and Dr. Marijo Ruiz were sued in their official capacities as the previous and present deans of the College of Arts and Sciences, respectively. Labor Arbiter Manuel P. Asuncion held that petitioner may not be terminated by mere lapse of the probationary period but only for just cause or failure to meet the employers standards. Moreover, said the Labor Arbiter, the quitclaim, discharge and release executed by petitioner was not a bar to filing a complaint for illegal dismissal. Thus, he ordered reinstatement with payment of full back wages.

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The NLRC upon appeal of respondents reversed the Labor Arbiters decision and ruled that petitioner was not illegally dismissed, and that her quitclaim was valid. Petitioner sought reconsideration but it was denied. She then filed a

petition for certiorari before the Court of Appeals assailing the NLRC decision. The appellate court dismissed the petition saying there was no grave abuse of discretion and affirmed the NLRC decision. It ruled: WHEREFORE, the petition is hereby denied and accordingly DISMISSED.

Hence, this instant petition where petitioner assigns the following as errors: 1. The Court of Appeals erred in ruling that it is the Manual of Regulations For Private Schools, not the Labor Code, that determines the acquisition of regular or permanent status of faculty members in an educational institution; 2. The Court of Appeals erred in upholding the Quitclaim that was signed by the Petitioner and in taking that against her claims for illegal dismissal and for moral and exemplary damages against the respondents.

Simply put, the issue in this case is whether the petitioner was illegally dismissed.

Petitioner contends that Articles 280 and 281 of the Labor Code, not the Manual of Regulations for Private Schools, is the applicable law to determine whether or not an employee in an educational institution has acquired regular or permanent status. She argues that (1) under Article 281, probationary employment shall not exceed six (6) months from date of employment unless a longer period had been stipulated by an apprenticeship agreement; (2) under Article 280, if the apprenticeship agreement stipulates a period longer than one year and the employee rendered at least one year of service, whether continuous or broken, the employee shall be considered as regular employee with respect to the activity in which he is employed while such activity exists; and (3) it is with more reason that petitioner be made regular since she had rendered services as part-time and full-time English teacher for four and a half years, services which are necessary and desirable to the usual business of Ateneo. Furthermore, the petitioner contends that her clearance was granted and completed only after she signed the quitclaim on April 16, 1993. She contends also that the respondents failed to show that her quitclaim was voluntary. Respondents, for their part, contend that the Manual of Regulations for Private Schools is controlling. In the Manual, full-time teachers who have rendered three consecutive years of satisfactory service shall be considered permanent. Respondents also claim that the petitioner was not terminated but her employment contract expired at the end of the probationary period. Further, institutions of higher learning, such as respondent Ateneo, enjoy the freedom to choose who may teach according to its standards. Respondents also argue that the quitclaim, discharge and release by petitioner is binding and should bar her complaint for illegal dismissal. After considering the contentions of the parties in the light of the circumstances in this case, we find for respondents. The Manual of Regulations for Private Schools, and not the Labor Code, determines whether or not a faculty member in an educational institution has attained regular or permanent status. In University of Santo Tomas v. National Labor Relations Commission the Court en banc said that under Policy Instructions No. 11 issued by the Department of Labor and Employment, the probationary employment of professors, instructors and teachers shall be subject to the standards established by the Department of Education and Culture. Said standards are embodied in paragraph 75 (now Section 93) of the Manual of Regulations for Private Schools. Section 93 of the 1992 Manual of Regulations for Private Schools provides that full-time teachers who have satisfactorily completed their probationary period shall be considered regular or permanent. Moreover, for those teaching in the tertiary level, the probationary period shall not be more than six consecutive regular semesters of satisfactory service. The requisites to acquire permanent employment, or security of tenure, are (1) the teacher is a full-time teacher; (2) the teacher must have rendered three consecutive years of service; and (3) such service must have been satisfactory.

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As previously held, a part-time teacher cannot acquire permanent status. Only when one has served as a full-time teacher can he acquire permanent or regular status. The petitioner was a part-time lecturer before she was appointed as a full-time instructor on probation. As a part-time lecturer, her employment as such had ended when her contract expired. Thus, the three semesters she served as part-time lecturer could not be credited to her in computing the number of years she has served to qualify her for permanent status. Petitioner posits that after completing the three-year probation with an above-average performance, she already acquired permanent status. On this point, we are unable to agree with petitioner. Completing the probation period does not automatically qualify her to become a permanent employee of the university. Petitioner could only qualify to become a permanent employee upon fulfilling the reasonable standards for permanent employment as faculty member. Consistent with academic freedom and constitutional autonomy, an institution of higher learning has the prerogative to provide standards for its teachers and determine whether these standards have been met. At the end of the probation period, the decision to re-hire an employee on probation, belongs to the university as the employer alone. We reiterate, however, that probationary employees enjoy security of tenure, but only within the period of probation. Likewise, an employee on probation can only be dismissed for just cause or when he fails to qualify as a regular employee in accordance with the reasonable standards made known by the employer at the time of his hiring. Upon expiration of their contract of employment, academic personnel on probation cannot automatically claim security of tenure and compel their employers to renew their employment contracts. In the instant case, petitioner, did not attain permanent status and was not illegally dismissed. As found by the NLRC, her contract merely expired. Lastly, we find that petitioner had already signed a valid quitclaim, discharge and release which bars the present action. This Court has held that not all quitclaims are per se invalid or against public policy, except (1) where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or (2) where the terms of settlement are unconscionable on their face. In this case, there is no showing that petitioner was coerced into signing the quitclaim. In her sworn quitclaim, she freely declared that she received to her full satisfaction all that is due her by reason of her employment and that she was voluntarily releasing respondent Ateneo from all claims in relation to her employment. Nothing on the face of her quitclaim has been shown as unconscionable. WHEREFORE, the petition is DENIED for lack of merit. The Decision dated October 12, 2001 of the Court of Appeals in CA-G.R. SP No. 61173 and its Resolution dated February 21, 2002 are AFFIRMED. SO ORDERED.

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[G.R. No. 52267. January 24, 1996] ENGINEERING & MACHINERY CORPORATION, petitioner, vs. COURT OF APPEALS and PONCIANO L. ALMEDA, respondents. Is a contract for the fabrication and installation of a central air-conditioning system in a building, one of sale or for a piece of work? What is the prescriptive period for filing actions for breach of the terms of such contract? These are the legal questions brought before this Court in this Petition for review on certiorari under Rule 45 of the Rules of Court, to set aside the Decision of the Court of Appeals in CA-G.R. No. 58276-R promulgated on November 28, 1978 (affirming in toto the decision dated April 15, 1974 of the then Court of First Instance of Rizal, Branch II, in Civil Case No. 14712, which ordered petitioner to pay private respondent the amount needed to rectify the faults and deficiencies of the air-conditioning system installed by petitioner in private respondents building, plus damages, attorneys fees and costs). By a resolution of the First Division of this Court dated November 13, 1995, this case was transferred to the Third. After deliberating on the various submissions of the parties, including the petition, record on appeal, private respondents comment and briefs for the petitioner and the private respondent, the Court assigned the writing of this Decision to the undersigned, who took his oath as a member of the Court on October 10, 1995. The Facts Pursuant to the contract dated September 10, 1962 between petitioner and private respondent, the former undertook to fabricate, furnish and install the air-conditioning system in the latters building along Buendia Avenue, Makati in consideration of P210,000.00. Petitioner was to furnish the materials, labor, tools and all services required in order to so fabricate and install said system. The system was completed in 1963 and accepted by private respondent, who paid in full the contract price. On September 2, 1965, private respondent sold the building to the National Investment and Development Corporation (NIDC). The latter took possession of the building but on account of NIDCs noncompliance with the terms and conditions of the deed of sale, private respondent was able to secure judicial rescission thereof. The ownership of the building having been decreed back to private respondent, he re-acquired possession sometime in 1971. It was then that he learned from some NIDC employees of the defects of the air-conditioning system of the building. Acting on this information, private respondent commissioned Engineer David R. Sapico to render a technical evaluation of the system in relation to the contract with petitioner. In his report, Sapico enumerated the defects of the system and concluded that it was not capable of maintaining the desired room temperature of 76F - 2F (Exhibit C) On the basis of this report, private respondent filed on May 8, 1971 an action for damages against petitioner with the then Court of First Instance of Rizal (Civil Case No. 14712). The complaint alleged that the air-conditioning system installed by petitioner did not comply with the agreed plans and specifications. Hence, private respondent prayed for the amount of P2 10,000.00 representing the rectification cost, P100,000.00 as da mages and P15,000.00 as attorneys fees. Petitioner moved to dismiss the complaint, alleging that the prescriptive period of six months had set in pursuant to Articles 1566 and 1567, in relation to Article 1571 of the Civil Code, regarding the responsibility of a vendor for any hidden faults or defects in the thing sold. Private respondent countered that the contract dated September 10, 1962 was not a contract of sale but a contract for a piece of work under Article 1713 of the Civil Code. Thus, in accordance with Article 1144 (1) of the same Code, the complaint was timely brought within the ten-year prescriptive period. In its reply, petitioner argued that Article 1571 of the Civil Code providing for a six-month prescriptive period is applicable to a contract for a piece of work by virtue of Article 1714, which provides that such a contract shall be governed by the pertinent provisions on warranty of title and against hidden defects and the payment of price in a contract of sale.

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The trial court denied the motion to dismiss. In its answer to the complaint, petitioner reiterated its claim of prescription as an affirmative defense. It alleged that whatever defects might have been discovered in the air-conditioning system could have been caused by a variety of factors, including ordinary wear and tear and lack of proper and regular maintenance. It pointed out that during the one-year period that private respondent withheld final payment, the system was subjected to very rigid inspection and testing and corrections or modifications effected by petitioner. It interposed a compulsory counterclaim suggesting that the complaint was filed to offset the adverse effects of the judgment in Civil Case No. 71494, Court of First Instance of Manila, involving the same parties, wherein private respondent was adjudged to pay petitioner the balance of the unpaid contract price for the air-conditioning system installed in another building of private respondent, amounting to P138,482.25. Thereafter, private respondent filed an ex-parte motion for preliminary attachment on the strength of petitioners own statement to the effect that it had sold its business and was no longer doing business in Manila. The trial court granted the motion and, upon private respondent s posting of a bond of P50,000.00, ordered the issuance of a writ of attachment. In due course, the trial court rendered a decision finding that petitioner failed to install certain parts and accessories called for by the contract, and deviated from the plans of the system, thus reducing its operational effectiveness to the extent that 35 window-type units had to be installed in the building to achieve a fairly desirable room temperature. On the question of prescription, the trial court ruled that the complaint was filed within the ten-year prescriptive period although the contract was one for a piece of work, because it involved the installation of an air -conditioning system which the defendant itself manufactured, fabricated, designed and installed. Petitioner appealed to the Court of Appeals, which affirmed the decision of the trial court. Hence, it instituted the instant petition. The Submissions of the Parties In the instant Petition, petitioner raised three issues. First, it contended that private respondents acceptance of the work and his payment of the contract price extinguished any liability with respect to the defects in the air-conditioning system. Second, it claimed that the Court of Appeals erred when it held that the defects in the installation were not apparent at the time of delivery and acceptance of the work considering that private respondent was not an expert who could recognize such defects. Third, it insisted that, assuming arguendo that there were indeed hidden defects, private respondents complaint was barred by prescription under Article 1571 of the Civil Code, which provides for a six-month prescriptive period. Private respondent, on the other hand, averred that the issues raised by petitioner, like the question of whether there was an acceptance of the work by the owner and whether the hidden defects in the installation could have been discovered by simple inspection, involve questions of fact which have been passed upon by the appellate court. The Courts Ruling The Supreme Court reviews only errors of law in petitions for review on certiorari under Rule 45. It is not the function of this Court to re-examine the findings of fact of the appellate court unless said findings are not supported by the evidence on record or the judgment is based on a misapprehension of facts. The Court has consistently held that the factual findings of the trial court, as well as the Court of Appeals, are final and conclusive and may not be reviewed on appeal. Among the exceptional circumstances where a reassessment of facts found by the lower courts is allowed are when the conclusion is a finding grounded entirely on speculation, surmises or conjectures; when the inference made is manifestly absurd, mistaken or impossible; when there is grave abuse of discretion in the appreciation of facts; when the judgment is premised on a misapprehension of facts; when the findings went beyond the issues of the case and the same are contrary to the admissions of both appellant and appellee. After a careful study of the case at bench, we find none of the above grounds present to justify the re-evaluation of the findings of fact made by the courts below. We see no valid reason to discard the factual conclusions of the appellate court. x x x (I)t is not the fu nction of this Court to assess and evaluate all over again the evidence, testimonial and documentary, adduced by the parties, particularly where, such as here, the findings of both the trial court and the appellate court on the matter coincide. (Italics supplied)

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Hence, the first two issues will not be resolved as they raise questions of fact. Thus, the only question left to be resolved is that of prescription. In their submissions, the parties argued lengthily on the nature of the contract entered into by them, viz., whether it was one of sale or for a piece of work. Article 1713 of the Civil Code defines a contract for a piece of work thus: By the contract for a piece of work the contractor binds himself to execute a piece of work for the employer, in consideration of a certain price or compensation. The contractor may either employ only his labor or skill, or also furnish the material. A contract for a piece of work, labor and materials may be distinguished from a contract of sale by the inquiry as to whether the thing transferred is one not in existence and which would never have existed but for the order of the person desiring it. In such case, the contract is one for a piece of work, not a sale. On the other hand, if the thing subject of the contract would have existed and been the subject of a sale to some other person even if the order had not been given, then the contract is one of sale. Thus, Mr. Justice Vitug explains that A contract for the delivery at a certain price of an article which the vendor in the ordinary course of his business manufactures or procures for the general market, whether the same is on hand at the time or not is a contract of sale, but if the goods are to be manufactured specially for the customer and upon his special order, and not for the general market, it is a contract for a piece of work (Art. 1467, Civil Code). The mere fact alone that certain articles are made upon previous orders of customers will not argue against the imposition of the sales tax if such articles are ordinarily manufactured by the taxpayer for sale to the public (Celestino Co vs. Collector, 99 Phil. 841). To Tolentino, the distinction between the two contracts depends on the intention of the parties. Thus, if the parties intended that at some future date an object has to be delivered, without considering the work or labor of the party bound to deliver, the contract is one of sale. But if one of the parties accepts the undertaking on the basis of some plan, taking into account the work he will employ personally or through another, there is a contract for a piece of work. Clearly, the contract in question is one for a piece of work. It is not petitioners line of business to manufacture air conditioning systems to be sold off-the-shelf. Its business and particular field of expertise is the fabrication and installation of such systems as ordered by customers and in accordance with the particular plans and specifications provided by the customers. Naturally, the price or compensation for the system manufactured and installed will depend greatly on the particular plans and specifications agreed upon with the customers. The obligations of a contractor for a piece of work are set forth in Articles 1714 and 1715 of the Civil Code, which provide: Art. 1714. If the contractor agrees to produce the work from material furnished by him, he shall deliver the thing produced to the employer and transfer dominion over the thing. This contract shall be governed by the following articles as well as by the pertinent provisions on warranty of title and against hidden defects and the payment of price in a contract of sale. Art. 1715. The contractor shall execute the work in such a manner that it has the qualities agreed upon and has no defects which destroy or lessen its value or fitness for its ordinary or stipulated use. Should the work be not of such quality, the employer may require that the contractor remove the defect or execute another work. If the contractor fails or refuses to comply with this obligation, the employer may have the defect removed or another work executed, at the contractors cost. The provisions on warranty against hidden defects, referred to in Art. 1714 above-quoted, are found in Articles 1561 and 1566, which read as follows: Art. 1561. The vendor shall be responsible for warranty against the hidden defects which the thing sold may have, should they render it unfit for the use for which it is intended, or should they diminish its fitness for such use to such an extent

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that, had the vendee been aware thereof, he would not have acquired it or would have given a lower price for it; but said vendor shall not be answerable for patent defects or those which may be visible, or for those which are not visible if the vendee is an expert who, by reason of his trade or profession, should have known them. xxx xxx xxx

Art. 1566. The vendor is responsible to the vendee for any hidden faults or defects in the thing sold, even though he was not aware thereof. This provision shall not apply if the contrary has been stipulated, and the vendor was not aware of the hidden faults or defects in the thing sold. The remedy against violations of the warranty against hidden defects is either to withdraw from the contract (redhibitory action) or to demand a proportionate reduction of the price (accion quanti minoris), with damages in either case. In Villostas vs. Court of Appeals, we held that, while it is true that Article 1571 of the Civil Code provides for a prescriptive period of six months for a redhibitory action, a cursory reading of the ten preceding articles to which it refers will reveal that said rule may be applied only in case of implied warranties; and where there is an express warranty in the contract, as in the case at bench, the prescriptive period is the one specified in the express warranty, and in the absence of such period, the general rule on rescission of contract, which is four years (Article 1389, Civil Code) shall apply. Consistent with the above discussion, it would appear that this suit is barred by prescription because the complaint was filed more than four years after the execution of the contract and the completion of the air-conditioning system. However, a close scrutiny of the complaint filed in the trial court reveals that the original action is not really for enforcement of the warranties against hidden defects, but one for breach of the contract itself. It alleged that the petitioner, in the installation of the air -conditioning system did not comply with the specifications provided in the written agreement between the parties, and an evaluation of the air -conditioning system as installed by the defendant showed the following defects and violations of the specifications of the agreement, to wit: GROUND FLOOR: A. RIGHT WING: Equipped with Worthington Compressor, Model 2VC4 directly driven by an Hp Elm electric motor 1750 rmp, 3 phase, 60 cycles, 220 volts, complete with starter evaporative condenser, circulating water pump, air handling unit air ducts. I. 1. 2. 3. 4. 5. II. 1. 2. 3. 4. 5. Defects Noted: Deteriorated evaporative condenser panels, coils are full of scales and heavy corrosion is very evident. Defective gauges of compressors; No belt guard on motor; Main switch has no cover; Desired room temperature not attained; Aside from the above defects, the following were noted not installed although provided in the specifications. Face and by-pass damper of G.I. sheets No. 16. This damper regulates the flow of cooled air depending on room condition. No fresh air intake provision were provided which is very necessary for efficient comfort cooling. No motor to regulate the face and by-pass damper. Liquid level indicator for refrigerant not provided. Suitable heat exchanger is not installed. This is an important component to increase refrigeration efficiency. Modulating thermostat not provided. Water treatment device for evaporative condenser was not provided. Liquid receiver not provided by sight glass.

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6. 7. 8.

B. LEFT WING: Worthington Compressor Model 2VC4 is installed complete with 15 Hp electric motOr, 3 phase, 220 volts 60 cycles with starter. Defects Noted: Same as right wing. except No. 4. All other defects on right wing are common to the left wing. SECOND FLOOR: (Common up to EIGHT FLOORS) Compressors installed are MELCO with 7.5 Hp V-belt driven by 1800 RPM, 220 volts, 60 cycles, 3 phase, Thrige electric motor with starters. As stated in the specifications under Section No. IV, the MELCO compressors do not satisfy the conditions stated therein due to the following: 1. 2. 3. MELCO Compressors are not provided with automatic capacity unloader. Not provided with oil pressure safety control. Particular compressors do not have provision for renewal sleeves.

Out of the total 15 MELCO compressors installed to serve the 2nd floor up to 8th floors, only six (6) units are in operation and the rest were already replaced. Of the remaining six (6) units, several of them have been replaced with bigger cranks hafts. NINTH FLOOR: Two (2) Worthington 2VC4 driven by 15 Hp, 3 phase, 220 volts, 60 cycles, 1750 rpm, Higgs motors with starters. Defects Noted are similar to ground floor. GENERAL REMARKS: Under Section III, Design conditions of specification for air conditioning work, and taking into account A & B same, the present systems are not capable of maintaining the des ired room temperature of 76 = 2F (sic). The present tenant have installed 35 window type air conditioning units distributed among the different floor levels. Temperature measurements conducted on March 29, 1971, revealed that 78F room (sic) is only maintained due to the additional window type units. The trial court, after evaluating the evidence presented, held that, indeed, petitioner failed to install items and parts required in the contract and substituted some other items which were not in accordance with the specifications, thus: From all of the foregoing, the Court is persuaded to believe the plaintiff that not only had the defendant failed to install items and parts provided for in the specifications of the air-conditioning system be installed, like face and by-pass dampers and modulating thermostat and many others, but also that there are items, parts and accessories which were used and installed on the air-conditioning system which were not in full accord with contract specifications. These omissions to install the equipments, parts and accessories called for in the specifications of the contract, as well as the deviations made in putting into the air-conditioning system equipments, parts and accessories not in full accord with the contract specification naturally resulted to adversely affect the operational effectiveness of the air-conditioning system which necessitated the installation of thirty-five window type of air-conditioning units distributed among the different floor levels in order to be able to obtain a fairly desirable room temperature for the tenants and actual occupants of the building.

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The Court opines and so holds that the failure of the defendant to follow the contract specifications and said omissions and deviations having resulted in the operational ineffectiveness of the system installed makes the defendant liable to the plaintiff in the amount necessary to rectify to put the air conditioning system in its proper operational condition to make it serve the purpose for which the plaintiff entered into the contract with the defendant. The respondent Court affirmed the trial courts decision thereby making the latters findings also its own. Having concluded that the original complaint is one for damages arising from breach of a written contract - and not a suit to enforce warranties against hidden defects - we herewith declare that the governing law is Article 1715 (supra). However, inasmuch as this provision does not contain a specific prescriptive period, the general law on prescription, which is Article 1144 of the Civil Code, will apply. Said provision states, inter alia, that actions upon a written contract prescribe in ten (10) years. Since the governing contract was executed on September 10, 1962 and the complaint was filed on May 8, 1971, it is clear that the action has not prescribed. What about petitioners contention that acceptance of the work by the employer re lieves the contractor of liability for any defect in the work? This was answered by respondent Court as follows: As the breach of contract which gave rise to the instant case consisted in appellants omission to install the equipments (sic), parts and accessories not in accordance with the plan and specifications provided for in the contract and the deviations made in putting into the air conditioning system parts and accessories not in accordance with the contract specifications, it is evident that the defect in the installation was not apparent at the time of the delivery and acceptance of the work, considering further that plaintiff is not an expert to recognize the same. From the very nature of things, it is impossible to determine by the simple inspection of air conditioning system installed in an 8-floor building whether it has been furnished and installed as per agreed specifications. Verily, the mere fact that the private respondent accepted the work does not, ipso facto, relieve the petitioner from liability for deviations from and violations of the written contract, as the law gives him ten (10) years within which to file an action based on breach thereof. WHEREFORE, the petition is hereby DENIED and the assailed Decision is AFFIRMED. No costs. SO ORDERED.

B. Wages Title II WAGES Chapter I PRELIMINARY MATTERS Article 97. Definitions. As used in this Title: "Person" means an individual, partnership, association, corporation, business trust, legal representatives, or any organized group of persons. "Employer" includes any person acting directly or indirectly in the interest of an employer in relation to an employee and shall include the government and all its branches, subdivisions and instrumentalities, all government-owned or controlled corporations and institutions, as well as non-profit private institutions, or organizations.

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"Employee" includes any individual employed by an employer. "Agriculture" includes farming in all its branches and, among other things, includes cultivation and tillage of soil, dairying, the production, cultivation, growing and harvesting of any agricultural and horticultural commodities, the raising of livestock or poultry, and any practices performed by a farmer on a farm as an incident to or in conjunction with such farming operations, but does not include the manufacturing or processing of sugar, coconuts, abaca, tobacco, pineapples or other farm products. "Employ" includes to suffer or permit to work. "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 and Employment, of board, lodging, or other facilities customarily furnished by the employer to the employee. "Fair and reasonable value" shall not include any profit to the employer, or to any person affiliated with the employer. Article 98. Application of Title. This Title shall not apply to farm tenancy or leasehold, domestic service and persons working in their respective homes in needle work or in any cottage industry duly registered in accordance with law. Chapter II MINIMUM WAGE RATES Article 99. Regional minimum wages. The minimum wage rates for agricultural and non-agricultural employees and workers in each and every region of the country shall be those prescribed by the Regional Tripartite Wages and Productivity Boards. (As amended by Section 3, Republic Act No. 6727, June 9, 1989). Article 100. Prohibition against elimination or diminution of benefits. Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of promulgation of this Code. Article 101. Payment by results. The Secretary of Labor and Employment shall regulate the payment of wages by results, including pakyao, piecework, and other non-time work, in order to ensure the payment of fair and reasonable wage rates, preferably through time and motion studies or in consultation with representatives of workers and employers organizations. Chapter III PAYMENT OF WAGES Article 102. Forms of payment. No employer shall pay the wages of an employee by means of promissory notes, vouchers, coupons, tokens, tickets, chits, or any object other than legal tender, even when expressly requested by the employee. Payment of wages by check or money order shall be allowed when such manner of payment is customary on the date of effectivity of this Code, or is necessary because of special circumstances as specified in appropriate regulations to be issued by the Secretary of Labor and Employment or as stipulated in a collective bargaining agreement. Article 103. Time of payment. Wages shall be paid at least once every two (2) weeks or twice a month at intervals not exceeding sixteen (16) days. If on account of force majeure or circumstances beyond the employers control, payment of wages on or within the time herein provided cannot be made, the employer shall pay the wages immediately after such force majeure or circumstances have ceased. No employer shall make payment with less frequency than once a month. The payment of wages of employees engaged to perform a task which cannot be completed in two (2) weeks shall be subject to the following conditions, in the absence of a collective bargaining agreement or arbitration award:

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That payments are made at intervals not exceeding sixteen (16) days, in proportion to the amount of work completed; That final settlement is made upon completion of the work. Article 104. Place of payment. Payment of wages shall be made at or near the place of undertaking, except as otherwise provided by such regulations as the Secretary of Labor and Employment may prescribe under conditions to ensure greater protection of wages. Article 105. Direct payment of wages. Wages shall be paid directly to the workers to whom they are due, except: In cases of force majeure rendering such payment impossible or under other special circumstances to be determined by the Secretary of Labor and Employment in appropriate regulations, in which case, the worker may be paid through another person under written authority given by the worker for the purpose; or Where the worker has died, in which case, the employer may pay the wages of the deceased worker to the heirs of the latter without the necessity of intestate proceedings. The claimants, if they are all of age, shall execute an affidavit attesting to their relationship to the deceased and the fact that they are his heirs, to the exclusion of all other persons. If any of the heirs is a minor, the affidavit shall be executed on his behalf by his natural guardian or next-of-kin. The affidavit shall be presented to the employer who shall make payment through the Secretary of Labor and Employment or his representative. The representative of the Secretary of Labor and Employment shall act as referee in dividing the amount paid among the heirs. The payment of wages under this Article shall absolve the employer of any further liability with respect to the amount paid. Article 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person for the performance of the formers work, the employees of the contractor and of the latters 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. The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the contracting-out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code. 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 person 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. Article 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. 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 should the contractor or subcontractor, as the case may be, fail to pay the same. Article 109. Solidary liability. The provisions of existing laws to the contrary notwithstanding, every employer or indirect employer shall be held responsible with his 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.

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Article 110. Worker preference in case of bankruptcy. In the event of bankruptcy or liquidation of an employers business, his workers shall enjoy first preference as regards their wages and other monetary claims, any provisions of law to the contrary notwithstanding. Such unpaid wages and monetary claims shall be paid in full before claims of the government and other creditors may be paid. (As amended by Section 1, Republic Act No. 6715, March 21, 1989) Article 111. Attorneys fees. In cases of unlawful withholding of wages, the culpable party may be assessed attorneys fees equivalent to ten percent of the amount of wages recovered. It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for the recovery of wages, attorneys fees which exceed ten percent of the amount of wages recovered. Chapter IV PROHIBITIONS REGARDING WAGES Article 112. Non-interference in disposal of wages. No employer shall limit or otherwise interfere with the freedom of any employee to dispose of his wages. He shall not in any manner force, compel, or oblige his employees to purchase merchandise, commodities or other property from any other person, or otherwise make use of any store or services of such employer or any other person. Article 113. Wage deduction. No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees, except: In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium on the insurance; For union dues, in cases where the right of the worker or his union to check-off has been recognized by the employer or authorized in writing by the individual worker concerned; and In cases where the employer is authorized by law or regulations issued by the Secretary of Labor and Employment. Article 114. Deposits for loss or damage. No employer shall require his worker to make deposits from which deductions shall be made for the reimbursement of loss of or damage to tools, materials, or equipment supplied by the employer, except when the employer is engaged in such trades, occupations or business where the practice of making deductions or requiring deposits is a recognized one, or is necessary or desirable as determined by the Secretary of Labor and Employment in appropriate rules and regulations. Article 115. Limitations. No deduction from the deposits of an employee for the actual amount of the loss or damage shall be made unless the employee has been heard thereon, and his responsibility has been clearly shown. Article 116. Withholding of wages and kickbacks prohibited. It shall be unlawful for any person, directly or indirectly, to withhold any amount from the wages of a worker or induce him to give up any part of his wages by force, stealth, intimidation, threat or by any other means whatsoever without the workers consent. Article 117. Deduction to ensure employment. It shall be unlawful to make any deduction from the wages of any employee for the benefit of the employer or his representative or intermediary as consideration of a promise of employment or retention in employment. Article 118. Retaliatory measures. It shall be unlawful for an employer to refuse to pay or reduce the wages and benefits, discharge or in any manner discriminate against any employee who has filed any complaint or instituted any proceeding under this Title or has testified or is about to testify in such proceedings.

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Article 119. False reporting. It shall be unlawful for any person to make any statement, report, or record filed or kept pursuant to the provisions of this Code knowing such statement, report or record to be false in any material respect.

Chapter V WAGE STUDIES, WAGE AGREEMENTS AND WAGE DETERMINATION Article 120. Creation of National Wages and Productivity Commission. There is hereby created a National Wages and Productivity Commission, hereinafter referred to as the Commission, which shall be attached to the Department of Labor and Employment (DOLE) for policy and program coordination. (As amended by Republic Act No. 6727, June 9, 1989). Article 121. Powers and functions of the Commission. The Commission shall have the following powers and functions: To act as the national consultative and advisory body to the President of the Philippines and Congress on matters relating to wages, incomes and productivity; To formulate policies and guidelines on wages, incomes and productivity improvement at the enterprise, industry and national levels; To prescribe rules and guidelines for the determination of appropriate minimum wage and productivity measures at the regional, provincial, or industry levels; To review regional wage levels set by the Regional Tripartite Wages and Productivity Boards to determine if these are in accordance with prescribed guidelines and national development plans; To undertake studies, researches and surveys necessary for the attainment of its functions and objectives, and to collect and compile data and periodically disseminate information on wages and productivity and other related information, including, but not limited to, employment, cost-of-living, labor costs, investments and returns; To review plans and programs of the Regional Tripartite Wages and Productivity Boards to determine whether these are consistent with national development plans; To exercise technical and administrative supervision over the Regional Tripartite Wages and Productivity Boards; To call, from time to time, a national tripartite conference of representatives of government, workers and employers for the consideration of measures to promote wage rationalization and productivity; and To exercise such powers and functions as may be necessary to implement this Act. The Commission shall be composed of the Secretary of Labor and Employment as ex-officio chairman, the DirectorGeneral of the National Economic and Development Authority (NEDA) as ex-officio vice-chairman, and two (2) members each from workers and employers sectors who shall be appointed by the President of the Philippines upon recommendation of the Secretary of Labor and Employment to be made on the basis of the list of nominees submitted by the workers and employers sectors, respectively, and who shall serve for a term of five (5) year s. The Executive Director of the Commission shall also be a member of the Commission. The Commission shall be assisted by a Secretariat to be headed by an Executive Director and two (2) Deputy Directors, who shall be appointed by the President of the Philippines, upon the recommendation of the Secretary of Labor and Employment. The Executive Director shall have the same rank, salary, benefits and other emoluments as that of a Department Assistant Secretary, while the Deputy Directors shall have the same rank, salary, benefits and other emoluments as that of a Bureau Director. The members of the Commission representing labor and management shall have the same rank, emoluments, allowances and other benefits as those prescribed by law for labor and management r epresentatives in the Employees Compensation Commission. (As amended by Republic Act No. 6727, June 9, 1989)

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Article 122. Creation of Regional Tripartite Wages and Productivity Boards. There is hereby created Regional Tripartite Wages and Productivity Boards, hereinafter referred to as Regional Boards, in all regions, including autonomous regions as may be established by law. The Commission shall determine the offices/headquarters of the respective Regional Boards.

The Regional Boards shall have the following powers and functions in their respective territorial jurisdictions: To develop plans, programs and projects relative to wages, incomes and productivity improvement for their respective regions; To determine and fix minimum wage rates applicable in their regions, provinces or industries therein and to issue the corresponding wage orders, subject to guidelines issued by the Commission; To undertake studies, researches, and surveys necessary for the attainment of their functions, objectives and programs, and to collect and compile data on wages, incomes, productivity and other related information and periodically disseminate the same; To coordinate with the other Regional Boards as may be necessary to attain the policy and intention of this Code; To receive, process and act on applications for exemption from prescribed wage rates as may be provided by law or any Wage Order; and To exercise such other powers and functions as may be necessary to carry out their mandate under this Code. Implementation of the plans, programs, and projects of the Regional Boards referred to in the second paragraph, letter (a) of this Article, shall be through the respective regional offices of the Department of Labor and Employment within their territorial jurisdiction; Provided, however, That the Regional Boards shall have technical supervision over the regional office of the Department of Labor and Employment with respect to the implementation of said plans, programs and projects. Each Regional Board shall be composed of the Regional Director of the Department of Labor and Employment as chairman, the Regional Directors of the National Economic and Development Authority and the Department of Trade and Industry as vice-chairmen and two (2) members each from workers and employers s ectors who shall be appointed by the President of the Philippines, upon the recommendation of the Secretary of Labor and Employment, to be made on the basis of the list of nominees submitted by the workers and employers sectors, respectively, and who sha ll serve for a term of five (5) years. Each Regional Board to be headed by its chairman shall be assisted by a Secretariat. (As amended by Republic Act No. 6727, June 9, 1989) Article 123. Wage Order. Whenever conditions in the region so warrant, the Regional Board shall investigate and study all pertinent facts; and based on the standards and criteria herein prescribed, shall proceed to determine whether a Wage Order should be issued. Any such Wage Order shall take effect after fifteen (15) days from its complete publication in at least one (1) newspaper of general circulation in the region. In the performance of its wage-determining functions, the Regional Board shall conduct public hearings/consultations, giving notices to employees and employers groups, provincial, city and municipal officials and other interested parties. Any party aggrieved by the Wage Order issued by the Regional Board may appeal such order to the Commission within ten (10) calendar days from the publication of such order. It shall be mandatory for the Commission to decide such appeal within sixty (60) calendar days from the filing thereof. The filing of the appeal does not stay the order unless the person appealing such order shall file with the Commission, an undertaking with a surety or sureties satisfactory to the Commission for the payment to the employees affected by the order of the corresponding increase, in the event such order is affirmed. (As amended by Republic Act No. 6727, June 9, 1989) Article 124. Standards/Criteria for minimum wage fixing. The regional minimum wages to be established by the Regional Board shall be as nearly adequate as is economically feasible to maintain the minimum standards of living necessary for the health, efficiency and general well-being of the employees within the framework of the national economic and social

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development program. In the determination of such regional minimum wages, the Regional Board shall, among other relevant factors, consider the following: The demand for living wages; Wage adjustment vis--vis the consumer price index; The cost of living and changes or increases therein; The needs of workers and their families; The need to induce industries to invest in the countryside; Improvements in standards of living; The prevailing wage levels; Fair return of the capital invested and capacity to pay of employers; Effects on employment generation and family income; and The equitable distribution of income and wealth along the imperatives of economic and social development. The wages prescribed in accordance with the provisions of this Title shall be the standard prevailing minimum wages in every region. These wages shall include wages varying with industries, provinces or localities if in the judgment of the Regional Board, conditions make such local differentiation proper and necessary to effectuate the purpose of this Title. Any person, company, corporation, partnership or any other entity engaged in business shall file and register annually with the appropriate Regional Board, Commission and the National Statistics Office, an itemized listing of their labor component, specifying the names of their workers and employees below the managerial level, including learners, apprentices and disabled/handicapped workers who were hired under the terms prescribed in the employment contracts, and their corresponding salaries and wages. Where the application of any prescribed wage increase by virtue of a law or wage order issued by any Regional Board results in distortions of the wage structure within an establishment, the employer and the union shall negotiate to correct the distortions. Any dispute arising from wage distortions shall be resolved through the grievance procedure under their collective bargaining agreement and, if it remains unresolved, through voluntary arbitration. Unless otherwise agreed by the parties in writing, such dispute shall be decided by the voluntary arbitrators within ten (10) calendar days from the time said dispute was referred to voluntary arbitration. In cases where there are no collective agreements or recognized labor unions, the employers and workers shall endeavor to correct such distortions. Any dispute arising therefrom shall be settled through the National Conciliation and Mediation Board and, if it remains unresolved after ten (10) calendar days of conciliation, shall be referred to the appropriate branch of the National Labor Relations Commission (NLRC). It shall be mandatory for the NLRC to conduct continuous hearings and decide the dispute within twenty (20) calendar days from the time said dispute is submitted for compulsory arbitration. The pendency of a dispute arising from a wage distortion shall not in any way delay the applicability of any increase in prescribed wage rates pursuant to the provisions of law or wage order. As used herein, a wage distortion shall mean a situation where an increase in prescribed wage rates results in the elimination or severe contraction of intentional quantitative differences in wage or salary rates between and among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation.

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All workers paid by result, including those who are paid on piecework, takay, pakyaw or task basis, shall receive not less than the prescribed wage rates per eight (8) hours of work a day, or a proportion thereof for working less than eight (8) hours. All recognized learnership and apprenticeship agreements shall be considered automatically modified insofar as their wage clauses are concerned to reflect the prescribed wage rates. (As amended by Republic Act No. 6727, June 9, 1989) Article 125. Freedom to bargain. No wage order shall be construed to prevent workers in particular firms or enterprises or industries from bargaining for higher wages with their respective employers. (As amended by Republic Act No. 6727, June 9, 1989) Article 126. Prohibition against injunction. No preliminary or permanent injunction or temporary restraining order may be issued by any court, tribunal or other entity against any proceedings before the Commission or the Regional Boards. (As amended by Republic Act No. 6727, June 9, 1989) Article 127. Non-diminution of benefits. No wage order issued by any regional board shall provide for wage rates lower than the statutory minimum wage rates prescribed by Congress. (As amended by Republic Act No. 6727, June 9, 1989) Chapter VI ADMINISTRATION AND ENFORCEMENT Article 128. Visitorial and enforcement power. The Secretary of Labor and Employment or his duly authorized representatives, including labor regulation officers, shall have access to employers records and premises at any time of the day or night whenever work is being undertaken therein, and the right to copy therefrom, to question any employee and investigate any fact, condition or matter which may be necessary to determine violations or which may aid in the enforcement of this Code and of any labor law, wage order or rules and regulations issued pursuant thereto. Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection. (As amended by Republic Act No. 7730, June 2, 1994). An order issued by the duly authorized representative of the Secretary of Labor and Employment under this Article may be appealed to the latter. In case said order involves a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Secretary of Labor and Employment in the amount equivalent to the monetary award in the order appealed from. (As amended by Republic Act No. 7730, June 2, 1994) The Secretary of Labor and Employment may likewise order stoppage of work or suspension of operations of any unit or department of an establishment when non-compliance with the law or implementing rules and regulations poses grave and imminent danger to the health and safety of workers in the workplace. Within twenty-four hours, a hearing shall be conducted to determine whether an order for the stoppage of work or suspension of operations shall be lifted or not. In case the violation is attributable to the fault of the employer, he shall pay the employees concerned their salaries or wages during the period of such stoppage of work or suspension of operation. It shall be unlawful for any person or entity to obstruct, impede, delay or otherwise render ineffective the orders of the Secretary of Labor and Employment or his duly authorized representatives issued pursuant to the authority granted under this Article, and no inferior court or entity shall issue temporary or permanent injunction or restraining order or otherwise assume jurisdiction over any case involving the enforcement orders issued in accordance with this Article.

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Any government employee found guilty of violation of, or abuse of authority, under this Article shall, after appropriate administrative investigation, be subject to summary dismissal from the service. The Secretary of Labor and Employment may, by appropriate regulations, require employers to keep and maintain such employment records as may be necessary in aid of his visitorial and enforcement powers under this Code. Article 129. Recovery of wages, simple money claims and other benefits. Upon complaint of any interested party, the Regional Director of the Department of Labor and Employment or any of the duly authorized hearing officers of the Department is empowered, through summary proceeding and after due notice, to hear and decide any matter involving the recovery of wages and other monetary claims and benefits, including legal interest, owing to an employee or person employed in domestic or household service or househelper under this Code, arising from employer-employee relations: Provided, That such complaint does not include a claim for reinstatement: Provided further, That the aggregate money claims of each employee or househelper does not exceed Five thousand pesos (P5,000.00). The Regional Director or hearing officer shall decide or resolve the complaint within thirty (30) calendar days from the date of the filing of the same. Any sum thus recovered on behalf of any employee or househelper pursuant to this Article shall be held in a special deposit account by, and shall be paid on order of, the Secretary of Labor and Employment or the Regional Director directly to the employee or househelper concerned. Any such sum not paid to the employee or househelper because he cannot be located after diligent and reasonable effort to locate him within a period of three (3) years, shall be held as a special fund of the Department of Labor and Employment to be used exclusively for the amelioration and benefit of workers. Any decision or resolution of the Regional Director or hearing officer pursuant to this provision may be appealed on the same grounds provided in Article 223 of this Code, within five (5) calendar days from receipt of a copy of said decision or resolution, to the National Labor Relations Commission which shall resolve the appeal within ten (10) calendar days from the submission of the last pleading required or allowed under its rules. The Secretary of Labor and Employment or his duly authorized representative may supervise the payment of unpaid wages and other monetary claims and benefits, including legal interest, found owing to any employee or househelper under this Code. (As amended by Section 2, Republic Act No. 6715, March 21, 1989)

1. Wage vs. salary

[G.R. No. 108556. November 19, 1996] MANILA MANDARIN EMPLOYEES UNION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, Second Division, and the MANILA MANDARIN HOTEL, respondents. The petitioner in this special civil action of certiorari seeks nullification of the September 11, 1992 Decision of the Second Division of the National Labor Relations Commission reversing the judgment of the Labor Arbiter in NLRC NCR Case No. 10-4336-86 and dismissing the case for lack of merit, as well as of the Commissions November 24, 1992 Resolution denying reconsideration of said decision. On October 30, 1986, the Manila Mandarin Employees Union (hereafter UNION), as exclusive bargaining agent of the rank-and-file employees of the Manila Mandarin Hotel, Inc. (hereafter MANDARIN), filed with the NLRC Arbitration Branch a complaint in its members behalf to compel MANDARIN to pay the salary differentials of the individual employees concerned because of wage distortions in their salary structure allegedly created by the upward revisions of the minimum wage pursuant to various Presidential Decrees and Wage Orders, and the failure of MANDARIN to implement the corresponding increases in the basic salary rate of newly-hired employees. The relevant Presidential Decrees and Wage Orders were specified by the UNION as follows:

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a. PD 1389, amending PD 928, mandating an increase in the statutory minimum wage by P3.00 spread out over a period of three years, as follows: P1.00 starting July 1, 1978; P1.00 starting May 1, 1979; and P1.00 starting May 1, 1980.

b. PD 1614, providing that workers covered by PD 1389, whether agricultural or non-agricultural, should receive an increase of P2.00 in their statutory minimum wage effective April 1, 1979, the same representing an acceleration of the remaining increases under PD 1389; and that all non-agricultural workers in Metro Manila shall receive a minimum wage of P12.00; c. PD 1713, issued on august 18, 1980 providing an increase in the minimum daily wage rates and for additional allowance; increasing the minimum daily wage rates by P1.00 and providing that all private employers shall pay their employees with wages or salaries not exceeding P1,500.00 a month, an additional mandatory living allowance of P60.00 a month for non-agricultural workers, P45.00 for plantation workers and P30.00 a month for agricultural non-plantation workers; d. PD 1751, issued on December 14, 1980, increasing the statutory daily minimum wages by integrating the P4.00 mandatory allowance under PD 525 and PD 1123 into the basic pay of all covered workers; e. Wage Order No. 1, issued on March 26, 1981, increasing the mandatory emergency living allowance of all workers with salaries or wages of P1,500.00 a month by P2.00 a day for non-agricultural workers, P1.50 a day for agricultural plantation workers, P1.00 a day for agricultural non-plantation workers, effective March 22, 1981; f. Wage Order No. 2 issued on July 6, 1983 increasing the mandatory basic minimum wage and living allowance for non-agricultural and agricultural workers in the following manner: 1) For non-agricultural employees, receiving not more than P1,800.00 monthly, P1.00 a day as minimum wage and P1.50 a day as cost of living allowance; 2) For plantation agricultural employees, P1.00 a day as minimum wage and P0.50 a day as cost of living allowance subject to the same salary ceiling provided in the immediately preceding section; and 3) For non-plantation agricultural employees, P1.00 a day as minimum wage; and also, providing that effective October 1, 1983, the living allowances rates as adjusted in the preceding section shall be further increased subject to the same salary ceiling, for non-agricultural employees, by P1.00. g. Wage Order No. 3 issued November 7, 1983 increasing the statutory minimum wage rates for workers in the private sector by P1.00 per day effective November 1, 1983, and also increasing the statutory wage rates by P1.00 per day, effective December 1, 1983; h. Wage Order No. 4 issued on May 1, 1984 increasing the statutory daily minimum wages, after integrating the mandatory living allowance under PDs 1614, 1634, 1678 and 1713 into the basic pay of all covered employees, effective May 1, 1984; -- after the integration, the minimum daily wage rate was increased by P11.00 for non-agricultural workers. i. Wage Order No. 5 issued on June 11, 1984 increasing the statutory daily minimum wage rates and living allowances of workers in the private sector by P3.00 effective June 16, 1984 -- the minimum daily wage rates became P35.00 for Metro Manila and P34.00 for outside Metro Manila; and j. Wage Order No. 6, effective November 1, 1984, increasing the statutory minimum wage rate by P2.00 per day. On January 15, 1987, the UNION filed its Position Paper amplifying the allegations of its complaint and setting forth the legal bases of its demands against MANDARIN; and on March 25, 1987, it filed an Amended Complaint presenting an additional claim for payment of salary differentials to the union members affected, allegedly resulting from underpayment of wages. The Labor Arbiter eventually ruled in favor of the UNION, holding that there were in fact wage distortions entitling its members to salary adjustments totalling P26,173,601.25 -- for 541 employees -- as well as underpayments amounting to P1,978,296.18 -- 182 employees. The dispositive portion of his decision reads: WHEREFORE, judgment is hereby rendered ordering the respondent Hotel to pay the individual complainants who are members of the respondent Union whose names appear on the respective computations embodied in this Decision, the aggregate amount of P26,173,601.25 representing their salary adjustments by way of correcting the wage distortions in their respective salary structure, for the period from October 30, 1983 up to October 31, 1990, and continuously thereafter to pay the corresponding amounts due them as such salary

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adjustments until the same are properly and finally restored in their basic monthly rates; to pay the aggregate amount of P1,978,296.18 representing their salary differentials resulting from underpayment of wages in violation of the minimum wage laws, Presidential Decrees and Wage Orders for the period from March 25, 1984 up to October 31, 1990, and continuously thereafter to pay the corresponding amounts due them as such salary differentials until the same are properly and finally restored into their basic monthly rates. Likewise, the respondent Hotel is ordered to pay an amount equivalent to ten percent (10%) of the total awards granted to individual complainants, by way of and as attorneys fees. On appeal, the Second Division of respondent Commission (composed of Commissioner Domingo H. Zapanta, ponente, and Presiding Commissioner Edna Bonto-Perez) rendered the dispositions already referred to and now assailed -- setting aside the Labor Arbiters judgment and dismissing the UNIONs complainant, and later denying the UNIONs motion for reconsideration. The principal issues raised in this Court are: (1) Whether or not the NLRC had jurisdiction to take cognizance of MANDARINS appeal from the Labor Arbiters decision; and (2) if so, whether or not it gravely abused its discretion in setting aside the Labor Arbiters judgment and dismissing the UNIONS complaint. The issue of jurisdiction is grounded on the posited tardiness of private respondents appeal from the Labor Arbiters judgment to the NLRC, and fatal defect in their supersedeas bond. The UNION contends that the records indubitably show that MANDARIN received on January 22, 1991 its copy of the Labor Arbiters Decision (of January 15, 1991), but filed its appeal and paid the appeal fee only on February 4, 1991, three (3) days beyond the reglementary ten-day period for doing so. It also condemns as anomalous the certification of Deputy Executive Clerk Gaudencio P. Demaisip, Jr., NLRC, to the effect that MANDARINs lawyer had approached Hon. Domingo H. Zapanta, a member of the Second Division, NLRC, for assistance to have the appeal including the appeal fee in said case duly received and acknowledged on February 1, 1991, at 4:40 P.M; and claims that the anomally was aggravated when it was Commissioner Zapanta who wrote the Decision for the Second Division-- reversing the Labor Arbiters judgment, as aforesaid -- despite the UNIONS motion for his disqualification and/or inhibition. The UNION finally argues that MANDARINS appeal was not only tardy but also fatally flawed in that its supersedeas bond had been issued by a surety company -- Plaridel Surety & Insurance Company -- which had pending obligations and liabilities at the time, the Insurance Commissioner having in fact issued a Cease-and-Desist Order against said company for issuing bonds of no little magnitude without authority; and that moreover, the replacement bond of the Commonwealth Insurance Company -- subsequently filed by order of the NLRC -- was just as defective because the latter company had an authorized maximum net retention level in the amount of only P686,582.80, way below the monetary award subject of MANDARINS appeal to the Commission. The Court rules that respondent Commission acted correctly in accepting and acting on MANDARINs appeal. The circumstances attendant upon the filing of the appeal and supersedeas bond are clearly set forth in the Certification of Deputy Executive Clerk Demaisip, Jr. above mentioned, viz.: This is to certify that when Atty. Godofredo Labay filed the appeal in NLRC NCR Case No. 10 -4335-86 entitled Manila Mandarin Employees Union vs. Manila Mandarin on Friday, February 1, 1991, the Cashier and the Docket Section, NCR, were not around, that no one would receive the pleadings and the appeal fee. He therefore approached Commissioner Domingo H. Zapanta for assistance and to have the appeal including the appeal bond in said case duly received on February 1, 1991 at 4:50 p.m. with respect to the appeal fee, since no one was authorized to act as substitute for the Cashier of the NCR for purposes of receiving the appeal fee and issuing a temporary receipt and/or official receipt therefor, Commissioner Zapanta requested Atty. Gaudencio P. Demaisip, Jr. to receive said pleadings and allowed Atty. Labay to pay the appeal fee on Monday, February 4, 1991. This certification is issued upon request of Atty. Labay for whatever purpose it may serve him. (SGD.) GAUDENCIO P. DEMAISIP, JR. Deputy Executive Clerk Second Division

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MANDARIN cannot be faulted for paying the appeal fee only on February 4, 1991. The fact is that on February 1, 1991, its lawyer was in the NLRC premises, ready to pay said fee, but was unable to do so because the NLRC Cashier or any other employee authorized to receive payment in his stead, was no longer around. This is why Commissioner Zapanta allowed payment of the appeal fee to be made on the next business day, as in fact the appeal fee was paid on, February 4, 1991. This Court has ruled that the failure to pay the appeal docketing fee within the reglementary period confers a directory, not mandatory, power to dismiss an appeal, to be exercised with circumspection in light of all the relevant facts. In view of these considerations, and the meritoriousness of MANDARINs appeal -- as later pronounced by respondent NLRC -- the interest of justice was quite evidently served when MANDARINs appeal was given due course despite delayed payment of the docketing fee. The contention concerning MANDARINs ostensibly defective appeal bond, issued by Plaridel Surety and Insurance Company, deserves short shrift, too. The issuance of the bond antedated this Courts resolution of January 15, 1992 -- to which the attention of respondent NLRC had been invited by the UNION -- declaring said surety company to be of doubtful solvency. More important, the issue was mooted when MANDARIN posted a new surety bond, through Commonwealth Insurance Company, in compliance with the Order of the respondent Commission dated December 10, 1991. The UNIONs contention that this new bond was equally defective because the bonding company had an authorized maximum net retention level lower than the sum of P30,967,087.17 involved in this dispute, is inconsequential, the new bonding company being duly accredited by this Court and licensed by the Insurance Commission. At any rate, this Court has invariably ruled that Article 223 of the Labor Code, requiring a bond in appeals involving monetary awards, must be liberally construed, in line with the desired objective of resolving controversies on their merits. The circumstance under which the bond was filed in this case adequately justify such liberal application of the provision. As to the alleged partiality of Commissioner Domingo Zapanta, the Court finds that his intervention on February 1, 1991 in the matter of payment of the appeal docketing fee did not, in the circumstances already related, constitute impropriety or pre-judgment of the case and a ground for his disqualification as a member of the Second Division to which the case was thereafter raffled. Significantly, in its motion to inhibit, the UNION mentioned that the case was assigned particularly to the late Commissioner Rustico Diokno ** (but) that up on the latters demise, the case was reassigned to Commissioner Domingo Zapanta as the new ponente. As Commissioner Zapanta had always been a member of the Second Division, the UNIONs motion for his inhibition, filed more than a year after the occurrence of the incident on which it was based, becomes suspect as a mere afterthought. In any case, Commissioner Zapanta did inhibit himself from taking part in the resolution of the UNIONS motion for reconsideration of the assailed decision of September 11, 19 92, thus dispelling what doubts might linger about his impartiality. Coming now to the issue of wage distortion, prior to the effectivity on June 9, 1989 of Republic Act No. 6727 which, among others, amended Article 124 (Standards/Criteria for Minimum Wage Fixing) of the Labor Code, the concept to wage distortion was relatively obscure. So it was observed by this Court in National Federation of Labor vs. NLRC, a case involving the same subject Wage Orders: We note that neither the Wage Orders noted above, nor the Implementing Rules promulgated by the Department of Labor and Employment, set forth a clear and specific notion of wage distortion. What the Wage Orders and the Implementing Rules did was simply to recognize that implementation of the Wage Orders could result in a distortion of the wage structure of an employer, and to direct the employer and the union to negotiate with each other to correct the distortion. Thus, Section 6 of Wage Order No. 3, dated 7 November 1983, provided as follows: Section 6. Where the application of the minimum wage rate prescribed herein results in distortions of the wage structure of an establishment, the employer and the union shall negotiate to correct the distortions. Any dispute arising from wage distortions shall be resolved through the grievance procedure under their collective bargaining agreement of through conciliation. In case where there is no collective bargaining agreement or recognized labor organization, the employer shall endeavor to correct such distortions in consultation with their workers. Any dispute arising from wage distortions shall be resolved through conciliation by the appropriate Regional Office of the Ministry of Labor and Employment or through arbitration by the NLRC Arbitration Branch having jurisdiction over the work-place. (Underscoring supplied)

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It is therefore opportune to re-state the general principles enunciated in that case, summarized in Metro Transit Organization, Inc. vs. NLRC, et al. as follows: (a) The concept of wage distortion assumes an existing grouping or classification of employees which establishes distinctions among such employees on some relevant or legitimate basis. This classification is reflected in a differing wage rate for each of the existing classes of employees. (b) Wage distortions have often been the result of government-decreed increases in minimum wages. There are, however, other causes of wage distortions, like the merger of two (2) companies (with differing classification of employees and different wage rates) where the surviving company absorbs all the employees of the dissolved corporation. (In the present Metro case, as already noted, the wage distortion arose because the effectivity dates of wage increases given to each of the two (2) classes of employees (rank-in-file and supervisory) had not been synchronized in their respective CBAs.) (c) Should a wage distortion exist, there is no legal requirement that, in the rectification of that distortion by re-adjustment of the wage rates of the differing classes of employees, the gap which had previously or historically existed be restored in precisely the same amount. In other words, correction of a wage distortion may be done by re-establishing a substantial or significant gap (as distinguished from the historical gap) between the wage rates of the differing classes of employees. (d) The re-establishment of a significant difference in wage rates may be the result of resort to grievance procedures or collective bargaining negotiations. It was only on June 9, 1989, upon the enactment of R.A. No. 6727 ( Wage Rationalization Act, amending, among others, Article 124 of the Labor Code), that the term wage distortion came to be explicitly defined as: ** a situation where an increase in prescribed wage rates results in the elimination or severe contraction of intentional quantitative differences in wage or salary rates between and among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation. The same provision lays down the procedure to be followed where wage distortion arises from the implementation of a wage increase prescribed by law or ordered by a Regional Wage Board, viz.: Where the application of any prescribed wage increase by virtue of a law or Wage order issued by any Regional Board results in distortions of the wage structure within an establishment, the employer and the union shall negotiate to correct the distortions. Any dispute arising from the wage distortions shall be resolved through the grievance procedure under their collective bargaining agreement and, if it remains unresolved, through voluntary arbitration. Unless otherwise agreed by the parties in writing, such dispute shall be decided by the voluntary arbitrator or panel of voluntary arbitrators within ten (10) calendar days from the time said dispute was referred to voluntary arbitration. In cases where there are no collective agreements or recognized labor unions, the employers and workers shall endeavor to correct such distortions. Any dispute arising therefrom shall be settled through the National Conciliation and Mediation Board and, if it remains unresolved after ten (10) calendar days of conciliation, shall be referred to the appropriate branch of the National Labor Relations Commission (NLRC). It shall be mandatory for the NLRC to conduct continuous hearings and decide the dispute within twenty (20) calendar days from the time said dispute is submitted for compulsory arbitration. The pendency of a dispute arising from a wage distortion shall not in any way delay the applicability of any increase in prescribed wage rates pusurant to the provisions of law or Wage Order. The issue of whether or not a wage distortion exists as a consequence of the grant of a wage increase to certain employees, is a question of fact; and as a rule, factual findings in labor cases, where grounded on substantial evidence, are not reviewed. However, a disharmony such as exists here, between the factual findings of the Labor Arbiter and those of the NLRC, opens the door to a review thereof by this Court.

75
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The Labor Arbiter ruled that a wage distortion existed, and that the only and logical way to correct ** ( it) in the salary structure of the employees of respondent Hotel is to apply the corresponding increase made by way of revising upward the minimum wage or integration of the ECOLA into the basic wage as embodied in the various Presidential Decrees and

Wage Orders, across-the-board, so that employees whose salaries are above the minimum set by law who have already been long in the service will not be discriminated against. On the other hand, respondent Commission declared in its decision that there was no wage distortion arising from the implementation of said Presidential Decrees and Wage Orders such as warranted across-the-board increases to all employees: On the issue of wage distortion, we have examined the various presidential decrees and wage orders r eferred to by the complainant and in the Labor Arbiters decision and we found nothing therein that would justify the award of across-the-board increases to all employees. The apparent intention of the law is only to upgrade the salaries or wages of the employees receiving lower than the minimum daily wage set therein. For example, Section 1 of Wage Order No. 6 provides that effective November 1, 1984, the statutory minimum daily wage rates workers in the private sector shall be increased by P2.00. Also, Section 1 of Presidential Decree 1389 provides that Presidential Decree 928 is hereby amended by increasing all existing statutory minimum wages in the country by Three Pesos (P3.00) spread equally over a period of three years, as follows: 1)One Peso (P1.00) starting July 1, 1978; 2)One Peso(P1.00) starting May 1, 1979; and One Peso (P1.00) starting May 1, 1980. Thus, it is clear that the presidential decrees and wage orders merely provide for a floor wage to be observed by the employers in the private sector. It indeed appears that the clear mandate of those issuances was merely to increase the prevailing minimum wages of particular employee groups. There were no across-the-board increases to all employees; increases were required only as regards those specified therein. It was therefore incorrect for the UNION to claim that all its members became automatically entitled to across-the-board increases upon the effectivity of the Decrees and Wage Orders in question. And even if there were wage distortions, which is not the case here, the appropriate remedy thereunder prescribed is for the employer and the union to negotiate to correct them; or, if the dispute be not thereby resolved, to thresh out the controversy through the grievance procedure in the collective bargaining agreement, or through conciliation or arbitration. A review of the records convinces this Court that respondent NLRC committed no grave abuse of discretion in holding that no wage distortion was demonstrated by the UNION. It was, to be sure, incumbent on the UNION to prove by substantial evidence its assertion of the existence of a wage distortion. This it failed to do. It presented no such evidence to establish, as required by the law, what, if any, were the designed quantitative differences in wage or salary rates between employee groups, and if there were any severe contractions or elimination of these quantitative differences. The UNIONs effort to prove wage distortion consisted only of the presentation of an unverified list o f thirteen (13) employees denominated a Sample Comparison of Salary Rates Affected by Wage Distortion, viz.: SAMPLE COMPARISON OF SALARY RATES OF COMPLAINANTS AFFECTED BY WAGE DISTORTION F & B DEPT. Name 1. Pablo Trinidad 2. Eduardo Vito 3. Camilo Sanchez 4. Renato Solomon 5. Buenconsejo Monico HOUSEKEEPING DEPT. 1. Ruben A. Rillo 2. Hubert Malolot 3. Aurella Kilat -- Waiter -- Waiter -- Busboy -- Busboy -- Busboy -- Linen Uniform Att. --- Linen Uniform Att. --- Linen Uniform Att. --- Cloakroom Attn. -- Cloakroom Attn. -- Houseman Attn. -- Houseman Attn. Position -- 9/1/78 -- 10/16/80 -- 8/1/83 -- 7/19/84 -- 4/15/85 6/19/76 1/16/80 5/2/79 P 984 P1,238 P1,272 P 946 P1,194 P1,142 P1,194 Date Hired (12/30/85) P1,300 P1,375 P 954 P1,096 P 968 Basic Rate

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4. 5. 6. 7.

Rogelio Molaco David Pineda Nemesio Matro Domgo Sabando

-9/1/80 -- 9/14/81 -- 6/10/76 -3/8/82

Page

8. Renato Guina SUBMITTED:

-- Houseman Attn.

--

8/24/81

P1,194

(SGD.) ATTY. R. E. ESPINOSA 9/17/87. The UNIONs Internal Vice-President, Arnulfo Castro, deposed that the employees named in this list were the more or less (13) persons found to have suffered wage distortion, and the UNION pointed out that while these thirteen employees occupied similar positions, they were receiving different rates of salary. Respondent Commission however found that as explained by respondents, such disparity was due simply to the fact that the employees mentioned had been hired on different dates and were thus receiving different salaries; or that an employee was hired initially at a position level carrying a hiring rate than the others; or that an employee failed to meet the cut-off date in the grant of yearly CBA increase; or that the union did not get the correct data on salaries. The Commission accepted as more accurate the data presented by MANDARIN respecting the same employees, to wit: A N N E X 2 F & B Dept. NAME 1. 2. 3. 4. 5. Pablo Trinidad Eduardo Vito Camilo Sanchez Renato Solomon Busboy Buenconsejo Monico Position Date Hired per Hotel Records Waiter Waiter Busboy 09/01/78 10/16/80 08/01/83 Basic Rate as of 12/30/85

P1,302.00* 1,375.00* 1,194.00 07/19/84 1,096.00 Busboy 14/15/85 968.00

Housekeeping Dept. 1. Ruben A. Rillo Linen Uniform Att. 06/19/76 1,417.00 2. Hubert Malolot Linen Uniform Att. 01/16/80 1.238.00 3. Aurella Kilat Linen Uniform Att. 05/02/79 1,272.00 4. Rogelio Molaco Cloakroom Attn. 09/01/80 1,272.00 5. David Pineda Cloakroom Attn. 09/14/81 1,213.00 6. Nemesio Matro Houseman Attn. 06/10/77 1,342.00 7. Domingo Sabando Houseman Attn. 03/08/82 1,194.00 8. Renato Guina Houseman Attn. 08/24/81 1,194.00 * Vito was hired at a higher position with a higher hiring rate than that given to Trinidad, i.e. Vito was hired at P366/mo. While Trinidad at P301/mo. Prior to hiring, Vito already worked as a waiter at the Metropolitan Club. The Court agrees that the claimed wage distortion was actually a result of the UNIONS failure to appreciate various circumstances relating to the employment of the thirteen employees. For instance, while some of these employees mentioned by UNION Vice-President Arnulfo Castro occupied the same or similar positions, they were hired by the Hotel on different dates and at different salaries. As explained in part by MANDARIN: With respect to the case of Pablo Trinidad and Eduardo Vito, while they were both occupying the position of waiter in 1987, with monthly salaries of P2,044.00 and P2,217.00, respectively, a comparative study of the records of these employees shows one of them was initially hired at a higher position level which naturally carried a higher hiring rate. Trinidad was originally hired in 1978 as a mere Houseman at the Banquet Department with a basic starting rate of P301.00 a month. On the other hand, Vito was originally hired in 1980 already a Busboy at the Food and Beverage Department with a starting salary of P366.00 a month. Before he was hired at the Mandarin Hotel, Vito had already been working as Waiter at the Metropolitan Club. Rrecords also show that it was only after some time that Trinidad was promoted to Busboy but still with the smaller

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Banquet Department. The headway in rate was carried by Vito although at some point in their careers, these two employees achieved the same position as Waiter. Not long after, Vito was promoted to Captain Waiter while Trinidad remained Waiter. There is therefore no reason to compare the remuneration of these two employees as the circumstances attendant to their employment are different. Respondent Commission correctly concluded that these did not represent cases of wage distortion contemplated by the law (Article 124, Labor Code, as amended), i.e., a situation where an increase in prescribed wage rates results in the elimination or severe contraction of intentional quantitative differences in wage or salary rates between and among employees groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical basis of differentation. Moreover, even assuming arguendo that there was really a wage distortion, it was wrong for the Labor Arbiter, after first acknowledging that some of the money claims had prescribed under Article 291 of the Labor Code, to nevertheless order the computation of salary differentials retroactive to the effective dates of PDs 1389,1614,1713, 1751 and Wage Orders Nos. 2,3,4,5,and 6: in 1978, 1979, 1980, 1980, July 1983, November 1983, May 1984, June 1981 and November 1984, respectively. Clearly, five of these Decrees and Wage Orders took effect after the lapse of the three-year prescriptive period for litigating claims for wage distortion differentials, the original complaint for wage distortion having been filed on October 30, 1986 and the amended complaint for underpayment of wages, on March 25, 1987. Consequently, the applicable cut-off dates, for purposes of prescription, were October 30, 1983 and March 25, 1984, respectively. Finally, the records show that the matter of wage distortion, actual or imputed under the various issuances up to Wage Order No. 6, had been settled by the parties as early as July 30, 1985. On that day they executed a Compromise Agreement with the assistance of the then Regional Director of the National Capital Region, Severo M. Pucan in which they affirmed that with the implementation by MANDARIN of Wage Order Nos. 4 and 6 as well as P.D. 1634, the latter was deemed for all legal and purposes to have fully satisfied all its legal and contractual obligations to its employees under all presidential issuances on wages, The Compromise Agreement pertinently states: 1. That the respondent shall implement Wage Order No. 6 effective July 1, 1985, without prejudice to the outcome of the application for exemption as distressed employer filed by said respodent with the National Wage Council as regards benefits that might be due between November 1, 1985 and June 30, inclusive; 2. The the respondent shall also implement effective August 1, 1985 the integration of the P90.00 a month cost of living allowance under P.D. 1634 into the basic wages of its employees as called for under Wage Order No. 4 in accordance with the Guidelines contained in the Explanatory Bulletin issued by the Bureau of Working Conditions on August 8, 1985; 3. That as soon as the respondent shall have complied with the above terms of this Compromise Agreement, said respondent shall be deemed for all legal intents and puposes to have fully satisfied all the legal and contractual obligations to its employees under all presidential issuances on wages, including Wage Orders No. 4 and 6, and Article XI of the collective bargaining agreement, The Labor Code recognizes the conclusiveness of compromises as a means to settle and end labor disputes. Article 227 provides that (a)ny compromise settlement, including those involving labor standard laws, voluntary agreed upon by the parties with the assistance of the Bureau or the regional office of the Department of Labor, shall be final and binding upon the parties. The National Labor Relations Commission or any court shall not assume jurisdiction over issues involved therein except in case of non-compliance thereof or if there is prima facie evidence that the settlement was obtained through fraud, misrepresentation or coercion. In Olaybar vs. NLRC, this Court had occasion, in a labor dispute, to apply the rule that compromises and settlements have the effect and conclusiveness of res judicata upon the parties. Thus, and again assuming arguendo the existence of a wage distortion, this was corrected under the fully implemented Compromise Agreement; and such correction having been explicitly acknowledge by the UNION, it is now estopped from claiming that a distortion still subsists. In the same manner, when the UNION entered into a new collective agreement with MANDARIN, providing for wage increases in 1987, it is deemed to have thereby settled any remaining question of wage distortion, since the subject of wages and wage distortions were plainly and unavoidably an economic issue and the proper subject of collective bargaining.

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Neither did respondent Commission gravely abuse its discretion in ruling against the UNION on the issue of underpayment of wages. The UNIONs theory was that since the employees of MANDARIN are paid on a mont hly basis under the Group III category, the applicable increase in daily wage must be multiplied by 365 and then divided by 12 to determine the equivalent monthly rate. MANDARINs position, on the other hand, was that it had consistently been using the mu ltiplier 313, and not 365, for the purpose of deriving salary related benefits of its employees who are paid by the month, excluding from 365, the 52 unpaid rest days in a year. This appears to have been the consistent practice of MANDARIN, following the formula for daily paid employees under Group II category as prepared by the Bureau of Labor Standards: AR x 313 days ____________ 12 Where: 313 days = 303 actual working days a year plus the paid 10 unworked regular = EMR

holidays. Actual working days . 303 10 legal holidays 10 _____ Total No. of Days 313.

MANDARIN presented evidence of its practice regarding the use of the factor 313 in computing the monthly equivalent of the minimum daily wages and other related benefits of its employees; i.e., Annexes 3 and 4 of its Supplemental Appeal dated November 12, 1991. This was corroborated by t he UNIONs Internal Vice President, Arnulfo Castro, who admitted during cross-examination that in his research and study, he found that the divisor used in arriving at the daily rate of the hotel employees was 313 days, which meant that the days-off or rest days are not paid. The admission confirms that the hotel employees pertain to Group II category under the Bureau of Labor Standards Guidelines for computing the equivalent monthly minimum wage rates. Thus, instead of multiplying the applicable minimum daily wage by 365 and dividing the result by 12 to derive the applicable minimum monthly salary, the factor used is 313, composed of 303 actual working days and the 10 unworked but paid regular holidays in a year. In his explanatory Bulletin on the payment of Holiday Pay -- Ref. No. 85-08 dated 6 November 1985 -- then Secretary Augusto Sanchez of the Department of Labor and Employment, expatiating on the implications of the Chartered Bank case, stated: 6. Monthly Paid Employees Oftentime confusion arises from the different interpretations as to who is a monthly-paid employee. A monthly-paid employee is one whose monthly salary includes payments for everyday of the month although he does not regularly work on his rest days or Sundays and on regular and special holidays. Group III in the above illustration covers monthly paid employees. Employees falling under Group I, II and IV are in reality daily paid employees but whose daily rate is translated into its monthly equivalent. The fact, therefore, that an employee is regularly paid a fixed monthly rate does not necessarily mean that he is a monthly-paid employee as defined above. (Italics supplied) As applied to the UNION, the monthly equivalent of the minimum wage under the various Presidential Decrees and Wage Orders based on the above formula should be as follows: PD/WO NO. Effectivity Wage Rate 01 July 1978 1 March 1979 18 Aug. 1980 06 July 1983 Minimum Daily Monthly Rate Equivalent

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Page

PD 1389 PD 1614 PD 1813 WO # 2

P 11.00 13.00 14.00 19.00

P 286.96 339.00 365.17 495.58

WO # 3 WO # 4 WO # 5 WO # 6

01 Nov. 1983 01 May 1984 01 Nov. 1984 01 Nov. 1984

20.00 32.00 35.00 37.00

521.67 834.67 912.92 965.08

On the other hand, the monthly pay of the Hotel employees and their hiring rate may be illustrated as follows: PD/WO NO. PD 1389 PD 1614 PD 1813 WO # 2 WO # 3 WO # 4 WO # 5 WO # 6 Effectivity Monthly Rate 01 July 1978 01 March 1979 18 Aug. 1980 06 July 1983 01 Nov. 1983 01 May 1984 16 May 1984 01 Nov. 1984 Equivalent in the Hotel Lowest Salary

P 286.92 339.08 365.17 495.58 521.67 834.67 912.92 965.08

P 350.00 411.00 562.00 960.00 960.00 960.00 960.00 1,015.00.

A comparative analysis of the wages of the Hotels employees from 1978 to 1984 vis a vis the minimum wages fixed by law for the same period reveals that at no time during the said period was there any underpayment of wages by the respondent Hotel. On the contrary, the prevailing monthly salaries of the subject hotel employees appear to be and above the minimum amounts required under the applicable Presidential Decrees and Wage Orders. WHEREFORE, the assailed Decision of respondent Commission promulgated on September 11, 1992 -- reversing the judgment of the Labor Arbiter and dismissing the UNIONS complaint - - being based on substantial evidence and in accord with applicable laws and jurisprudence, as well as said Commissions Resolution dated November 24, 1992 -denying reconsideration -- are hereby AFFIRMED in toto. SO ORDERED.

2. Minimum wage defined, Minimum wage setting 3. Minimum wage of workers paid by results a) Workers paid by results b) Apprentices c) Learners d) Persons with disability 4. Commissions 5. Deductions from wages 6. Non-diminution of benefits 7. Facilities vs. supplements 8. Wage Distortion / Rectification 9. Divisor to determine daily rate C. Rest Periods 1.Weekly rest day 2. Emergency rest day work D.Holiday pay / Premium pay 1.Coverage, exclusions 2.Teachers, piece workers, takay, seasonal workers, seafarers

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E. Leaves 1.Service Incentive Leave 2.Maternity Leave

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3.Paternity Leave 4.Parental Leave (R.A. No. 8972) 5.Leave for Victims of Violence against Women and Children (R.A. No. 9262) 6.Special leave benefit for women F.Service Charge G. Thirteenth Month Pay H.Separation Pay I.Retirement Pay 1.Eligibility 2.Amount 3.Retirement benefits of workers paid by results 4.Retirement benefits of part-time workers 5.Taxability J.Women Workers 1.Provisions against discrimination 2.Stipulation against marriage 3.Prohibited acts 4.Anti-Sexual Harassment Act (R.A. No. 7877) K.Employment of Minors (Labor Code and R.A. No. 7678, R.A. No. 9231) L.Househelpers (Labor Codeas amended by R.A. No. 7655, an Act Increasing the Minimum Wage of Househelpers; see also Household Service under the Civil Code) M. Employment of Homeworkers N.Apprentices and Learners O.Persons with disability (R.A. No. 7277, as amended by R.A. No. 9442) 1.Definition 2.Rights of persons with disability 3.Prohibition on discrimination against persons with disability 4.Incentives for employers

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i[1] Petition, p. 4; Rollo, p. 9. ii[2] Id. iii[3] Labor Arbiter Edilberto Pangan. iv[4] Second Division: Calaycay, V.R. Comm., Ponente; Aquino, R.T., Pres. Comm.; and Rayala, R.I., Comm., Concurring. v[5] NLRC Decision, p. 18; Rollo, p. 70. vi[6] Petition, p. 14; Rollo, p. 19. vii[7] Philippine Apparel Workers Union v. NLRC, 106 SCRA 444, 464. viii[8] Pertinent provisions of Republic Act No. 5901 provides as follows: AN ACT PRESCRIBING FORTY HOURS A WEEK OF LABOR FOR GOVERNMENT AND PRIVATE HOSPITALS OR CLINIC PERSONNEL Be in enacted by the Senate and House of Representatives of the Philippines in Congress assembled Section 1. Government and private resident physicians, nurses, nutritionists, dietetians, (sic) pharmacists, social workers, laboratory technicians, psychologists, midwives, attendants and all other hospitals or clinic personnel shall hold regular office hours for eight hours a day, for five days a week, or a total of forty hours a week, exclusive of time for lunch: Provided, That any of such employees or laborers who shall suffer a reduction of his weekly or daily wage or compensation because of a reduction of the number of days or hours of labor in a week, as provided, herein, subject to the minimum daily or hourly wage or compensation already fixed by existing law, shall be given an automatic increase in his daily or hourly or per piece wage shall be equal to the diminution which his daily or hourly or per piece wage shall suffer on account of the reduction of days of labor to five days a week. And provided further, That the salaries of employees received on monthly basis shall not suffer any diminution on account of the reduction of the number of days of labor a week. Sec. 2. This Act shall apply only to cities and municipalities with a population of one million or more and to hospitals and clinics with a bed capacity of at least one hundred. (Emphasis added). ix[9] Insular Bank of Asia and America Employees Union v. Inciong, 132 SCRA 663, 673.

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