Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 159577 May 3, 2006
CHARLITO PEÑARANDA, Petitioner,
vs.
AGANGA PL!"OOD CORPORATION a#$ HUDSON CHUA, Respondents.
D ! I S I O N
PANGANIAN, CJ:
Mana"erial e#plo$ees and #e#bers of the #ana"erial staff are e%e#pted fro# the
provisions of the &abor !ode on labor standards. Since petitioner belon"s to this class
of e#plo$ees, he is not entitled to overti#e pa$ and pre#iu# pa$ for 'or(in" on rest
da$s.
The !ase
)efore us is a Petition for Revie'
*
under Rule +, of the Rules of !ourt, assailin" the
-anuar$ ./, .001
.
and -ul$ +, .001
1
Resolutions of the !ourt of 2ppeals 3!24 in !25
6R SP No. /+1,7. The earlier Resolution disposed as follo's8
9:;RFOR, pre#ises considered, the instant petition is hereb$ DISMISSED.9
+
The latter Resolution denied reconsideration.
On the other hand, the Decision of the National &abor Relations !o##ission 3N&R!4
challen"ed in the !2 disposed as follo's8
9:;RFOR, pre#ises considered, the decision of the &abor 2rbiter belo' a'ardin"
overti#e pa$ and pre#iu# pa$ for rest da$ to co#plainant is hereb$ RVRSD and
ST 2SID, and the co#plaint in the above5entitled case dis#issed for lac( of #erit.
,
The Facts
So#eti#e in -une *<<<, Petitioner !harlito Pe=aranda 'as hired as an e#plo$ee of
)a"an"a Pl$'ood !orporation 3)P!4 to ta(e char"e of the operations and
#aintenance of its stea# plant boiler.
>
In Ma$ .00*, Pe=aranda filed a !o#plaint for
ille"al dis#issal 'ith #one$ clai#s a"ainst )P! and its "eneral #ana"er, ;udson
!hua, before the N&R!.
/
2fter the parties failed to settle a#icabl$, the labor arbiter
7
directed the parties to file
their position papers and sub#it supportin" docu#ents.
<
Their respective alle"ations
are su##ari?ed b$ the labor arbiter as follo's8
9@Pe=arandaA throu"h counsel in his position paper alle"es that he 'as e#plo$ed b$
respondent @)a"an"aA on March *,, *<<< 'ith a #onthl$ salar$ of P,,000.00 as
Fore#anB)oiler ;eadBShift n"ineer until he 'as ille"all$ ter#inated on Dece#ber *<,
.000. Further, @heA alle"es that his services @'ereA ter#inated 'ithout the benefit of due
process and valid "rounds in accordance 'ith la'. Further#ore, he 'as not paid his
overti#e pa$, pre#iu# pa$ for 'or(in" durin" holida$sBrest da$s, ni"ht shift differentials
and finall$ clai#s for pa$#ent of da#a"es and attorne$Cs fees havin" been forced to
liti"ate the present co#plaint.
9Dpon the other hand, respondent @)P!A is a do#estic corporation dul$ or"ani?ed and
e%istin" under Philippine la's and is represented herein b$ its 6eneral Mana"er
;DDSON !;D2, @theA individual respondent. Respondents thru counsel alle"e that
co#plainantCs separation fro# service 'as done pursuant to 2rt. .71 of the &abor
!ode. The respondent @)P!A 'as on te#porar$ closure due to repair and "eneral
#aintenance and it applied for clearance 'ith the Depart#ent of &abor and
#plo$#ent, Re"ional Office No. EI to shut do'n and to dis#iss e#plo$ees 3par. .
position paper4. 2nd due to the insistence of herein co#plainant he 'as paid his
separation benefits 32nne%es ! and D, ibid4. !onseFuentl$, 'hen respondent @)P!A
partiall$ reopened in -anuar$ .00*, @Pe=arandaA failed to reappl$. ;ence, he 'as not
ter#inated fro# e#plo$#ent #uch less ille"all$. ;e opted to severe e#plo$#ent 'hen
he insisted pa$#ent of his separation benefits. Further#ore, bein" a #ana"erial
e#plo$ee he is not entitled to overti#e pa$ and if ever he rendered services be$ond
the nor#al hours of 'or(, @thereA 'as no office orderBor authori?ation for hi# to do so.
Finall$, respondents alle"e that the clai# for da#a"es has no le"al and factual basis
and that the instant co#plaint #ust necessaril$ fail for lac( of #erit.9
*0
The labor arbiter ruled that there 'as no ille"al dis#issal and that petitionerCs
!o#plaint 'as pre#ature because he 'as still e#plo$ed b$ )P!.
**
The te#porar$
closure of )P!Cs plant did not ter#inate his e#plo$#ent, hence, he need not reappl$
'hen the plant reopened.
2ccordin" to the labor arbiter, petitionerCs #one$ clai#s for ille"al dis#issal 'as also
'ea(ened b$ his Fuitclai# and ad#ission durin" the clarificator$ conference that he
1
accepted separation benefits, sic( and vacation leave conversions and thirteenth
#onth pa$.
*.
Nevertheless, the labor arbiter found petitioner entitled to overti#e pa$, pre#iu# pa$
for 'or(in" on rest da$s, and attorne$Cs fees in the total a#ount of P.*,.,/.<7.
*1
Rulin" of the N&R!
Respondents filed an appeal to the N&R!, 'hich deleted the a'ard of overti#e pa$
and pre#iu# pa$ for 'or(in" on rest da$s. 2ccordin" to the !o##ission, petitioner
'as not entitled to these a'ards because he 'as a #ana"erial e#plo$ee.
*+
Rulin" of the !ourt of 2ppeals
In its Resolution dated -anuar$ ./, .001, the !2 dis#issed Pe=arandaCs Petition for
!ertiorari. The appellate court held that he failed to8 *4 attach copies of the pleadin"s
sub#itted before the labor arbiter and N&R!G and .4 e%plain 'h$ the filin" and service
of the Petition 'as not done b$ personal service.
*,
In its later Resolution dated -ul$ +, .001, the !2 denied reconsideration on the "round
that petitioner still failed to sub#it the pleadin"s filed before the N&R!.
*>

;ence this Petition.
*/
T%& I''(&'
Petitioner states the issues in this 'ise8
9The @N&R!A co##itted "rave abuse of discretion a#ountin" to e%cess or lac( of
Hurisdiction 'hen it entertained the 2PP2& of the respondent@sA despite the lapse of
the #andator$ period of TN D2IS.1avvphil.net
9The @N&R!A co##itted "rave abuse of discretion a#ountin" to an e%cess or lac( of
Hurisdiction 'hen it rendered the assailed RSO&DTIONS dated Ma$ 7, .00. and
2D6DST *>, .00. RVRSIN6 2ND STTIN6 2SID the F2!TD2& 2ND &62&
FINDIN6S of the @labor arbiterA 'ith respect to the follo'in"8
9I. The findin" of the @labor arbiterA that @Pe=arandaA is a re"ular, co##on e#plo$ee
entitled to #onetar$ benefits under 2rt. 7. @of the &abor !odeA.
9II. The findin" that @Pe=arandaA is entitled to the pa$#ent of OVRTIM P2I and
OT;R MONT2RI )NFITS.9
*7
The !ourtCs Rulin"
The Petition is not #eritorious.
Preli#inar$ Issue8
Resolution on the Merits
The !2 dis#issed Pe=arandaCs Petition on purel$ technical "rounds, particularl$ 'ith
re"ard to the failure to sub#it supportin" docu#ents.
In 2tillo v. )o#ba$,
*<
the !ourt held that the crucial issue is 'hether the docu#ents
acco#pan$in" the petition before the !2 sufficientl$ supported the alle"ations therein.
!itin" this case, Pi"las5Ja#ao v. N&R!
.0
sta$ed the dis#issal of an appeal in the
e%ercise of its eFuit$ Hurisdiction to order the adHudication on the #erits.
The Petition filed 'ith the !2 sho's a pri#a facie case. Petitioner attached his
evidence to challen"e the findin" that he 'as a #ana"erial e#plo$ee.
.*
In his Motion
for Reconsideration, petitioner also sub#itted the pleadin"s before the labor arbiter in
an atte#pt to co#pl$ 'ith the !2 rules.
..
videntl$, the !2 could have ruled on the
Petition on the basis of these attach#ents. Petitioner should be dee#ed in substantial
co#pliance 'ith the procedural reFuire#ents.
Dnder these e%tenuatin" circu#stances, the !ourt does not hesitate to "rant liberalit$
in favor of petitioner and to tac(le his substantive ar"u#ents in the present case. Rules
of procedure #ust be adopted to help pro#ote, not frustrate, substantial Hustice.
.1
The
!ourt fro'ns upon the practice of dis#issin" cases purel$ on procedural "rounds.
.+
!onsiderin" that there 'as substantial co#pliance,
.,
a liberal interpretation of
procedural rules in this labor case is #ore in (eepin" 'ith the constitutional #andate to
secure social Hustice.
.>

First Issue8
Ti#eliness of 2ppeal
Dnder the Rules of Procedure of the N&R!, an appeal fro# the decision of the labor
arbiter should be filed 'ithin *0 da$s fro# receipt thereof.
./
2
PetitionerCs clai# that respondents filed their appeal be$ond the reFuired period is not
substantiated. In the pleadin"s before us, petitioner fails to indicate 'hen respondents
received the Decision of the labor arbiter. Neither did the petitioner attach a cop$ of the
challen"ed appeal. Thus, this !ourt has no #eans to deter#ine fro# the records 'hen
the *05da$ period co##enced and ter#inated. Since petitioner utterl$ failed to support
his clai# that respondentsC appeal 'as filed out of ti#e, 'e need not belabor that point.
The parties alle"in" have the burden of substantiatin" their alle"ations.
.7
Second Issue8
Nature of #plo$#ent
Petitioner clai#s that he 'as not a #ana"erial e#plo$ee, and therefore, entitled to the
a'ard "ranted b$ the labor arbiter.
2rticle 7. of the &abor !ode e%e#pts #ana"erial e#plo$ees fro# the covera"e of
labor standards. &abor standards provide the 'or(in" conditions of e#plo$ees,
includin" entitle#ent to overti#e pa$ and pre#iu# pa$ for 'or(in" on rest da$s.
.<
Dnder this provision, #ana"erial e#plo$ees are 9those 'hose pri#ar$ dut$ consists of
the #ana"e#ent of the establish#ent in 'hich the$ are e#plo$ed or of a depart#ent
or subdivision.9
10
The I#ple#entin" Rules of the &abor !ode state that #ana"erial e#plo$ees are those
'ho #eet the follo'in" conditions8
93*4 Their pri#ar$ dut$ consists of the #ana"e#ent of the establish#ent in 'hich the$
are e#plo$ed or of a depart#ent or subdivision thereofG
93.4 The$ custo#aril$ and re"ularl$ direct the 'or( of t'o or #ore e#plo$ees thereinG
9314 The$ have the authorit$ to hire or fire other e#plo$ees of lo'er ran(G or their
su""estions and reco##endations as to the hirin" and firin" and as to the pro#otion or
an$ other chan"e of status of other e#plo$ees are "iven particular 'ei"ht.9
1*
The !ourt disa"rees 'ith the N&R!Cs findin" that petitioner 'as a #ana"erial
e#plo$ee. ;o'ever, petitioner 'as a #e#ber of the #ana"erial staff, 'hich also ta(es
hi# out of the covera"e of labor standards. &i(e #ana"erial e#plo$ees, officers and
#e#bers of the #ana"erial staff are not entitled to the provisions of la' on labor
standards.
1.
The I#ple#entin" Rules of the &abor !ode define #e#bers of a
#ana"erial staff as those 'ith the follo'in" duties and responsibilities8
93*4 The pri#ar$ dut$ consists of the perfor#ance of 'or( directl$ related to
#ana"e#ent policies of the e#plo$erG
93.4 !usto#aril$ and re"ularl$ e%ercise discretion and independent Hud"#entG
9314 3i4 Re"ularl$ and directl$ assist a proprietor or a #ana"erial e#plo$ee 'hose
pri#ar$ dut$ consists of the #ana"e#ent of the establish#ent in 'hich he is e#plo$ed
or subdivision thereofG or 3ii4 e%ecute under "eneral supervision 'or( alon" speciali?ed
or technical lines reFuirin" special trainin", e%perience, or (no'led"eG or 3iii4 e%ecute
under "eneral supervision special assi"n#ents and tas(sG and
93+4 'ho do not devote #ore than .0 percent of their hours 'or(ed in a 'or('ee( to
activities 'hich are not directl$ and closel$ related to the perfor#ance of the 'or(
described in para"raphs 3*4, 3.4, and 314 above.9
11
2s shift en"ineer, petitionerCs duties and responsibilities 'ere as follo's8
9*. To suppl$ the reFuired and continuous stea# to all consu#in" units at #ini#u#
cost.
9.. To supervise, chec( and #onitor #anpo'er 'or(#anship as 'ell as operation of
boiler and accessories.
91. To evaluate perfor#ance of #achiner$ and #anpo'er.
9+. To follo'5up suppl$ of 'aste and other #aterials for fuel.
9,. To train ne' e#plo$ees for effective and safet$ 'hile 'or(in".
9>. Reco##end parts and supplies purchases.
9/. To reco##end personnel actions such as8 pro#otion, or disciplinar$ action.
97. To chec( 'ater fro# the boiler, feed'ater and softener, re"enerate softener if
be$ond hardness li#it.
9<. I#ple#ent !he#ical Dosin".
9*0. Perfor# other tas( as reFuired b$ the superior fro# ti#e to ti#e.9
1+
3
The fore"oin" enu#eration, particularl$ ite#s *, ., 1, , and / illustrates that petitioner
'as a #e#ber of the #ana"erial staff. ;is duties and responsibilities confor# to the
definition of a #e#ber of a #ana"erial staff under the I#ple#entin" Rules.
Petitioner supervised the en"ineerin" section of the stea# plant boiler. ;is 'or(
involved overseein" the operation of the #achines and the perfor#ance of the 'or(ers
in the en"ineerin" section. This 'or( necessaril$ reFuired the use of discretion and
independent Hud"#ent to ensure the proper functionin" of the stea# plant boiler. 2s
supervisor, petitioner is dee#ed a #e#ber of the #ana"erial staff.
1,
Note'orth$, even petitioner ad#itted that he 'as a supervisor. In his Position Paper, he
stated that he 'as the fore#an responsible for the operation of the boiler.
1>
The ter#
fore#an i#plies that he 'as the representative of #ana"e#ent over the 'or(ers and
the operation of the depart#ent.
1/
PetitionerCs evidence also sho'ed that he 'as the
supervisor of the stea# plant.
17
;is classification as supervisor is further evident fro#
the #anner his salar$ 'as paid. ;e belon"ed to the *0K of respondentCs 1,+
e#plo$ees 'ho 'ere paid on a #onthl$ basisG the others 'ere paid onl$ on a dail$
basis.
1<
On the basis of the fore"oin", the !ourt finds no Hustification to a'ard overti#e pa$ and
pre#iu# pa$ for rest da$s to petitioner.
:;RFOR, the Petition is DNID. !osts a"ainst petitioner.
SO ORDRD.
4
Republic of the Philippines
SUPREME COURT
Manila
T;IRD DIVISION
G.R. No.151370 D&)&*+&, -, 2002
ASIA PACI.IC CHARTERING /PHILS.0 INC., petitioner,
vs.
MARIA LINDA R. .AROLAN, respondent.
D ! I S I O N
CARPIO MORALES, J.:
)efore this !ourt is a Petition for Revie' under Rule +, of the *<</ Rules of !ivil
Procedure assailin" the !ourt of 2ppeals *4 -une .7, .00* Decision
*
'hich set aside
the decision of the National &abor Relations !o##ission 3N&R!4 reversin" that of the
&abor 2rbiter, and .4 -anuar$ <, .00.
.
Resolution den$in" a reconsideration of its
decision.
Petitioner 2sia Pacific !harterin" 3Phils4 Inc. 'as, until *<<>, the "eneral sales a"ent
36S24 of the Scandinavian 2irline S$ste# 3S2S4, an off5line international airline
co#pan$ 'ith license to do business in the Philippines. 2s 6S2, petitioner sold
passen"er and car"o spaces for airlines operated b$ S2S.
Respondent Maria &inda R. Farolan 'as on Dece#ber *>, *<<. hired as Sales
Mana"er of petitioner for its passen"er and car"o 6S2 operations for S2S, follo'in"
her confor#it$ to a Dece#ber *0, *<<. letter5offer of e#plo$#ent
1
fro# petitioner
throu"h its Vice PresidentB!o#ptroller !atalino )ondoc. The pertinent portion of the
letter5offer reads8
9Dear Ms. Farolan8
!onfir#in" our previous discussions, 2SI25P2!IFI! !;2RTRIN6 P;I&., IN!. is
pleased to offer $ou the position of Sales Mana"er of its Passen"er and !ar"o
Operations for S!2NDIN2VI2N 2IR&INS SISTM in the Philippines, co##encin" on
Dece#ber *>, *<<. on the follo'in" ter#s8
Monthl$
)asic Pa$ P .., 000.00
;ousin" 2llo'ance +,000.00
Transportation 2llo'ance
3.00 liters of "as4
!ash Fuivalent
Meal 2llo'ance /,0.00
Please affi% $our si"nature belo' if $ou find the fore"oin" acceptable and return to us a
si"ned duplicate. Mean'hile, 'e certainl$ loo( for'ard to $our Hoinin" us and rest
assured of our fullest support.
%%%
3S"d4 Maria &inda R. Farolan
!onfor#e89 3#phasis supplied4.
It is "athered that &eslie Murra$, the then Sales Mana"er of petitioner, tal(ed to
respondent into acceptin" the position after verball$ briefin" her on the nature of the
position.
Soon after respondent assu#ed her post, she participated in a nu#ber of
#eetin"sBse#inars
+
includin" a !usto#er Service Se#inar in )an"(o(, Thailand, a
Re"ional Sales Meetin" on the technical aspects of airline co##ercial operations in
Februar$ *<<1, and a course on the hi"hl$ technical airline co#puter reservations
s$ste# called 92#adeus9, all "eared to'ards i#provin" her #ar(etin" and sales s(ills.
In Septe#ber of *<<1, respondent, upon instruction of )ondoc, sub#itted a report
,

9R8 ODR !OMMNTS 2ND 2!TIONS )IN6 T2JN !ON!RNIN6 S2SC POOR P
L & PRFORM2N! FOR -2ND2RI 5 -D&I *<<19 the pertinent portions of 'hich
read8
11 2a#(a,y 3o 2(4y 1993 Sa4&' 5 5 5
*<<1 *<<. !;2N6
Sea#an .11 +.1 3*<04
5
%patsBTourists ,01 /*> 3.*14
PT2s 1+> *<> *,0
Refu"eesBIOM ,1 7>+ 7**4
% % %
E564a#a37o#'.
*. International Or"ani?ation for Mi"ration 3IOM45both Vietna# and Scandinavian
6overn#ents have 3&,*7#a3&$ 6,o8&)3' 9o, ,&9(:&&'; hence the tre#endous
decrease 3<+K4 % % %.
.. Sea#anCs Fares5Rates not co#petitive enou"h.
1. %patsBTourists5In a #ar(et 'here o#<47#& carriers 'ere $,o667#: ,a3&' $,a'37)a44y ,
'e 'ere losin" passen"ers to said carriers.
1 T%& 6,&'&#3 Ma,=&3>
*. 2s S2S is o99<47#& , 'e have no control over space and to an e%tent our rates are
hi"her because of proration 'ith deliverin" carriers.
.. On5lines do not prorate 'ith other carriers therefore can dive fares % % %.
I have convinced Mr. -espersen to brin" do'n the fares to be #ore co#petitive. The
reason he did not do so earlier 'as because lo'5$ield fares are lo' in priorit$ for
confir#in" seats. )ut no' that S2S is considerin" increasin" their freFuencies e%5
;on"(on" before $ear5end, this 'ill be advanta"eous to boostin" our sales.
A. M&a'(,&' 3o 3a=& ,&*a7#$&, o9 1993 a#$ 9o, 199->
*. :e have ne"otiated a lo'er fare for sea#en 3effective Septe#ber4 'hich is
co#petitive. :e are alread$ "ettin" positive response fro# a"ents. Since this3sic4 lo'5
$ield sales, ;on"(on" did not adHust fare accordin"l$ first half of *<<1 because of
space constraints.
.. 2s S2S still prefers hi"h5$ield sales, 'e have offered incentives to 2#eco as 2sian
Develop#ent )an( 32D)4 3effective *st -une for one $ear4 'ith Mr. -espersenCs
approval % % %.
In addition, 2D) itself is 'illin" to consider proposals 'e sub#it to the# in the case of
cost5savin"s. In e%chan"e, the$ can endorse to S2S a relevant share of their urope
travel % % %.
1. :e have also ne"otiated a lo'er net fare for cono#$ !lass. This rate is also
co#petitive and is in force.
+. Incentive Pro"ra# for 2"ents5Dsin" the points s$ste# si#ilar to P2&Cs pro#o 3P2&s
S#iles4, to sti#ulate sales. :e are at present fine5tunin" #echanics for ;on"(on"Cs
approval 'hich 'e intend to launch before !hrist#as. This pro#o is self5sustainin" 3no
si"nificant e%penses to be incurred4
,. :e are currentl$ pushin" sales for )altic areaBRussia as 'e have the best rates. :e
have identified the a"ents 'ho have passen"ers to these destinations and 'e are
focusin" on the# % % %.9 3#phasis and underscorin" supplied4.
2s reflected in respondentCs report, there 'as a drop in S2SC sales revenues 'hich to
her 'as attributable to #ar(et forces be$ond her control.
Notin" the #ar(ed decline in S2SC sales revenues, petitioner directed its hi"h ran(in"
officer Roberto Mo?obrado in -anuar$ *<<+ to conduct an investi"ation on the #atter
and identif$ the proble#Bs and i#ple#ent possible solutions.
Mo?obrado thus infor#all$ too( over so#e of respondentCs #ar(etin" and sales
responsibilities, albeit respondent retained her title as Sales Mana"er and continued to
receive her salar$ as such.
)$ petitionerCs clai#, Mo?obrado found out that respondent did not adopt an$ sales
strate"$ nor conduct an$ sales #eetin" or develop other sources of revenue for S2S,
she havin" si#pl$ let her sales staff perfor# their functions all b$ the#selvesG in *<<+,
Soren -espersen, 6eneral Mana"er of S2S in ;on"(on", Southern !hina, Taipei and
the Philippines, ca#e to the Philippines to assess the statistics on S2SC sales revenues
and S2S 'as convinced that respondent 'as not fit for the Hob of Sales Mana"erG and
in vie' of the chan"es introduced b$ Mo?obrado, S2S56S2 sales operations dre'
positive results.
On Ma$ .*, *<<+, respondent received a #essa"e
>
fro# -espersen readin"8
6
9Dear &inda and )ob @Mo?obradoA,
First of all con"ratulation to $our sale result in 2pril. Iou reached and e%ceeded the
tar"et b$ ,0K In !Bclass 3FantasticNNN4 and *K In MBclass. This is the second #onth in a
ro' 3and the last . first in #ore than a $ear4 and hopefull$ the be"innin" of a ne' and
positive trend.
% % %
2s $ou can see Ma$ loo(s ver$ "ood.
:ith the a"reed focus on sellin" the MBclass and all the activities initiated, IC# sure that
the rest of the period 'ill pic( ver$ soon.
% % %9 3Dnderscorin" suppliedG Ouoted verbati#4.
On -ul$ *7, *<<+,
/
respondent received another #essa"e fro# -espersen readin"8
9Dear &inda,
The sales report for -une *<<+ did unfortunatel$ not reach tar"et in !Bclass but in
MBclass $ou #ana"ed ver$ 'ell. Totall$ <K belo' tar"et.
The pre boo(in"s eff. *+ -ul$ loo(s ver$ "ood and encoura"in" and 'ith . 'ee(s to "o
-ul$ should not be a proble#. 3enclosed4
Please send #$ re"ards to all the "irls and tell the# to (eep up the "ood 'or(.
-ust for reason of clarification. nclosed to $our action list is a production report for
-an5Ma$ *<<+. The fi"ures I send to $ou is onl$ $our lon"5haul sales and do not include
uropean sectors. The correct fi"ure for the period 'ill be +1>,000 DSD in tar"et for
lon"5haul 3actual 1>. TDSD4 and >+. TDSD total 'ith ,*+ TDSD achieved.
Please be so (ind and infor# )ob accordin"l$.
% % %
On even date, ho'ever, petitioner sent respondent a letter of ter#ination
7
on the
"round of 9loss of confidence.9 The letter reads8
9This confir#s our 3P)obC Mo?obrado and #$self4 -ul$ +, *<<+ verbal advice to $ou
re"ardin" Mana"e#entCs decision to ter#inate $our Services as our 6S2 Mana"er for
S!2NDIN2VI2N 2IR&INS SISTMCs Offline Operations in the Philippines, thirt$ 3104
da$s upon receipt of this Notice, due to our 4o'' o9 )o#97$&#)& in $our Mana"erial and
Mar(etin" capabilities. 2s e%plained to $ou b$ Mr. Mo?obrado and #$self, records 'ill
sho' that under $our Mana"e#ent 3or lac( of it4, our S2S56S2 perfor#ance is, as
follo's8
2. *<<1 vs. *<<.
6ross Revenue 5 .< K shortfall
Operatin" %penses 5 .K over
Net !ash Flo' 5 /<K shortfall
). -2N52PR C<+ vs. -2N52PR P<.
Revenues 5 1+K shortfall
Operatin" %penses 5 >K over
Net !ash Flo' 5 <+K shortfall
Several ti#es in the past, 'e have #ade $ou a'are in the need to i#prove $our sales
perfor#ance and "ain the respect of $our staff 'hich have openl$ e%pressed their
concern on their lac( of direction under $our #ana"e#ent. ven our principal 3S2S4
had ne"ative co##ents about the 'a$ $ou handle ur"ent reFuire#ents of the Re"ional
Office. S2S 'as also alar#ed b$ the afore#entioned dis#al overall Perfor#ance of
2P!BS2S. 2ll these pro#pted us to decide to replace $ou as our S2S 6S2 Mana"er to
save the situation and our representation of the S2S56S2 in the Philippines.
% % %9 3Ouoted verbati#G #phasis supplies4.
Thus spa'ned the filin" b$ respondent of a co#plaint for ille"al dis#issal a"ainst
petitioner, )ondoc, Mo?obrado and one Donald Marshall 3the record indicates that he
had ceased to be connected 'ith petitioner 'hen the case 'as pendin" before the
&abor 2rbiter4, 'ith pra$er for da#a"es and attorne$Cs fees. In her co#plaint petitioner
alle"ed that )ondoc and Mo?obrado had as(ed her to tender her resi"nation as she
'as not the person 'ho# S2S 'as loo(in" for to handle the position of Sales
7
Mana"er
<
but that she refused, hence, she 'as ter#inated b$ the letter of -ul$ *7, *<<+
letter.
*0
The &abor 2rbiter, after a detailed anal$sis of the evidence for both parties, found for
respondent upon the follo'in" issues8
*. :hether or not co#plainant 'as validl$ ter#inated for causeG
.. :hether or not due process 'as observed 'hen co#plainant 'as
ter#inatedG and
1. :hether or not an$ of the parties are entitled to da#a"es,
and disposed in his decision
**
as follo's8
9:;RFOR, findin" the dis#issal of the co#plainant Ms &inda Farolan to be
'ithout Hust cause, effected 'ith #alice, ill 'ill and bad faith, respondent 2sian Pacific
!harterin" Philippine, Inc. is hereb$ ordered to pa$ her separation pa$ of Fort$ Four
Thousand Pesos 3P++,000.004, and all the benefit that 'ould have been due her under
the pre#ises. 2sian Pacific !harterin" is li(e'ise ordered to pa$ co#plainant #oral
da#a"es in the a#ount of One Million Five ;undred Thousand Pesos 3P*,,00,000.004
and e%e#plar$ da#a"es in the a#ount of Seven ;undred Fift$ Thousand Pesos
3P/,0,000.004, no#inal da#a"es of Five Thousand Pesos 3P,,000.004 and the
eFuivalent of .,K of the total a'ard as attorne$Cs fees.9
On appeal, the N&R!, b$ Decision of March .., *<<<,
*.
reversed the &abor 2rbiterCs
decision, it reco"ni?in" the ri"ht of petitioner as e#plo$er to ter#inate or dis#iss
e#plo$ees based on loss of trust and confidence, the ri"ht bein" a #ana"e#ent
prero"ative.
RespondentCs Motion for Reconsideration of the N&R! Decision havin" been denied,
she brou"ht her case to the !ourt of 2ppeals via !ertiorari.
*1

)$ Decision of -une .7, .00*,
*+
the !ourt of 2ppeals, as stated earl$ on, reversed the
N&R! decision and disposed as follo's8
9:;RFOR, pre#ises considered, the challen"ed decision dated March .., *<<<
and the Resolution dated -ul$ *>, *<<< of public respondent National &abor Relations
!o##ission 3Second Division4 are hereb$ set aside for havin" been issued 'ith "rave
abuse of discretion a#ountin" to lac( or in e%cess of Hurisdiction. The decision dated
Septe#ber */, *<<7 of &abor 2rbiter Ro#ulus S. Protacio is hereb$ upheld 'ith
#odifications that the a'ard of attorne$Cs fees shall onl$ be eFuivalent to ten percent
3*0K4 of the total #onetar$ a'ard. In addition, the a'ard for no#inal da#a"es is
deleted for lac( of basis.9 3Dnderscorin" supplied4.
Petitioner filed a #otion for reconsideration
*,
of the !ourt of 2ppeals decision but it 'as
denied, hence, the present Petition for Revie' on !ertiorari
*>
anchored on the follo'in"
"rounds8
9I
T; !2 DFID T; :&&5ST2)&IS;D RD& T;2T 2P!, 2S MP&OIR, ;2S
T; M2N26MNT PRRO62TIV TO RP&2! 2 S2&S M2N26R :;OM IT
;2S R2SON2)& 6RODNDS TO )&IV !2NNOT FF!TIV&I DIS!;2R6
T; DDTIS DM2NDD )I SD!; POSITION.
II
T; !2 D!ISION :2S PRMISD ON &2!J OF VIDN! TO DISPROV
RSPONDNTCS T;ORI T;2T T; POOR S2&S PRFORM2N! OF S2S :2S
DD TO M2RJT FOR!S )IOND ;R !ONTRO&. IT, T; VIDN! ON
R!ORD S;O:D T; !ONTR2RI. NO &SS T;2N S2S !ONFIRMD T;2T
RSPONDNT :2S NOT FIT FOR T; POSITION OF M2N26R 2ND, T;2T NO
SP!I2& !IR!DMST2N!S SDFFI!INT TO TRI66R T; S;2RP D!&IN IN
S2&S SDPRVND IN T; P;I&IPPIN M2RJT.
III
IN 2:2RDIN6 MOR2& 2ND EMP&2RI D2M26S, T; !2 2!TD :IT; 6R2V
2)DS OF DIS!RTION. VN 2SSDMIN6, T;2T RSPONDNTCS TRMIN2TION
:2S P:IT;ODT -DST !2DSC, 2P! IS NOT &I2)& TO P2I D2M26S @MI&&2RS
vs. N&R!, 1.7 S!R2 /< 3.00*4A !ORO&&2RI&I, 2P! IS PRSDMD TO ;2V
2!TD IN 6OOD F2IT; @6ONM2&S vs. N&R!, 6.R. NO. *1*>,15.> March .00*A.
T; !2, ;O:VR, RVRSD T; PRSDMPTION. IT PRSDMD5:IT;ODT
2NI VIDN! :;2TSOVR5T;2T 2P! 2!TD IN )2D F2IT; IN TRMIN2TIN6
RSPONDNT P:IT;ODT DD R62RD TO T; ;2RS; !ONSODN!SC OF
T; TRMIN2TION
The issue in the #ain is 'hether or not respondentCs dis#issal 'as le"al.
2 state#ent of the reFuisites for a valid dis#issal of an e#plo$ee is thus in order, to 'it8
3a4 the e#plo$ee #ust be afforded due process, i.e., he #ust be "iven opportunit$ to
be heard and to defend hi#selfG and 3b4 dis#issal #ust be for a valid cause as
8
provided in 2rticle .7. of the &abor !ode or an$ of the authori?ed causes under 2rticle
.71 and .7+ of the sa#e !ode.
*/
2s re"ards the first reFuisite, the follo'in" substantiated findin"s of the &abor 2rbiter,
'hich 'ere adopted b$ the !ourt of 2ppeals, reflect respondentCs deprivation of due
process8
9% % %
@:Ae find that the #anner b$ 'hich co#plainant 'as dis#issed violated the basic
precepts of fairness and due process. First, 'ithout an$ se#blance of, or 'ritten
authorit$ 'hatsoever 3TSN dated -anuar$ 10, *<<>, pp. +> 5 +74, respondent
Mo?obrado too( over the functions of co#plainant. !o#plainant clai#s that she has
been told it 'as upon the 'ill of respondent Marshall that she be replaced. 2lthou"h
respondent Mo?obrado #a$ have been #erel$ "ivin" pointers and su""estions to the
staff of co#plainant, the appearance of authorit$ 'as unpleasantl$ conspicuous. &ater,
respondent )ondoc su##oned co#plainant and told her to tender her resi"nation or
face ter#ination. !o#plainant, not havin" been "iven a Hustifiable "round, refused to
resi"n. Thereafter, she 'as finall$ ter#inated, 'ithout bein" afforded the opportunit$ to
be heard and to present evidence in her defense. She 'as never "iven a 'ritten notice
statin" the particular acts or o#ission constitutin" the "rounds for her dis#issal as
reFuired b$ la'. % % %9
*7

2s re"ards the second reFuisite, the rule is settled that in ter#ination cases, the
e#plo$er bears the onus of provin" that the dis#issal is for Hust cause failin" 'hich the
dis#issal is not Hustified and the e#plo$ee is entitled to reinstate#ent.
*<

Petitioner clai#s that respondent failed to live up to #ana"e#entCs e%pectation in li"ht
of her failure to adopt sales and #ar(etin" strate"ies to increase sales revenues of
S2S, 'hich failure is reflective of her inco#petence and inefficienc$, thus resultin" to
loss of revenues in *<<1 and *<<+.
Petitioner adds that had it not been throu"h Mo?obradoCs efforts, S2S sales revenues
could not have recovered.
Petitioner further clai#s that -espersen 'as the one 'ho initiated the ter#ination of
respondent because of her 9dis#al perfor#ance9 in handlin" its operations.
2nd petitioner reiterates the principle that the ri"ht to dis#iss a #ana"erial e#plo$ee is
a #easure of self5preservation, it citin" the cases of 6rand Motor Parts !orp. v.
Minister of &abor et al.,
.0
and )uiser et al. v. &e"ardo.
.*
)efore passin" on petitionerCs position, this !ourt dee#s it i#perative to discuss the
nature of respondentCs Hob as sales #ana"er of petitioner. It is not disputed that her Hob
description, and the ter#s and conditions of her e#plo$#ent, 'ith the e%ception of her
salar$ and allo'ances, 'ere never reduced to 'ritin".
Recent decisions of this !ourt distin"uish the treat#ent of #ana"erial e#plo$ees fro#
that of ran( and file personnel insofar as the application of the doctrine of loss of trust
and confidence is concerned.
..

9Thus 'ith respect to ran( and file personnel, loss of trust and confidence as "round for
valid dis#issal reFuires proof of involve#ent in the alle"ed events in Fuestion and that
#ere uncorroborated assertions and accusations b$ the e#plo$er 'ill not be sufficient.
)ut as re"ards a #ana"erial e#plo$ee, #ere e%istence of a basis for believin" that
such e#plo$ee has breached the trust of his e#plo$er 'ould suffice for his dis#issal.9
3Dnderscorin" supplied4
A' &#(#)7a3&$ 7# Sa*'o# ?. NLRC, 330 SCRA -60,
9)efore one #a$ be properl$ considered a #ana"erial e#plo$ee, all the follo'in"
conditions #ust be #et8
3*4 Their pri#ar$ dut$ consists of the #ana"e#ent of the establish#ent in 'hich the$
are e#plo$ed or of a depart#ent or subdivision thereofG
3.4 The$ custo#aril$ and re"ularl$ direct the 'or( of t'o or #ore e#plo$ees thereinG
314 The$ have the authorit$ to hire or fire other e#plo$ees of lo'er ran(G or their
su""estions and reco##endations as to the hirin" and firin" and as to the pro#otion or
an$ other chan"e of status of other e#plo$ees are "iven particular 'ei"ht. 3Section
.3b4, Rule I, )oo( III of the O#nibus Rules I#ple#entin" the &abor !ode, e#phasis
supplied4.
)$ respondentCs clai#, her function, as verball$ e%plained to her b$ Murra$, dealt
#ainl$ 'ith servicin" of e%istin" clientele.
.1
)ondoc, ho'ever, described respondentCs
functions and duties as critical.
.+

The follo'in" rulin" of this !ourt in Paper Industries !orp. of the Philippines v.
&a"ues#a
.,
is instructive8
9Mana"erial e#plo$ees are ran(ed as Top Mana"ers, Middle Mana"ers and First &ine
Mana"ers. The #ere fact that an e#plo$ee is desi"nated 9#ana"er9 does not ipso
9
facto #a(e hi# one5desi"nation should be reconciled 'ith the actual Hob description of
the e#plo$ee for it is the Hob description that deter#ines the nature of e#plo$#ent.9
.+

3Dnderscorin" supplied4.
The absence of a 'ritten Hob description or prescribed 'or( standards, ho'ever, leaves
this !ourt in the dar(.
ven assu#in", ho'ever, that respondent 'as a #ana"erial e#plo$ee, the stated
"round 3in the letter of ter#ination4 for her dis#issal, 9loss of confidence,9 should have
a basis and deter#ination thereof cannot be left entirel$ to the e#plo$er.
&oss of trust and confidence to be a valid "round for an e#plo$eeCs dis#issal #ust be
based on a 'illful breach and founded on clearl$ established facts.
.>
2 breach is 'illful if
it is done intentionall$, (no'in"l$ and purposel$, 'ithout Hustifiable e%cuse, as
distin"uished fro# an act done carelessl$, thou"htlessl$, heedlessl$ or inadvertentl$.
./

RespondentCs detailed RPORT dated Septe#ber 7, *<<1, Fuoted above, relative to
S2S profit and loss for *<<1, 'hich 'as closel$ e%a#ined and anal$?ed b$ the &abor
2rbiter, contains an e%planation of 'hat brou"ht about the decline in sales revenues.
2nd it contains too a nu#ber of reco##ended #easures on i#prove#ent of sales for
the re#ainder of *<<1 and for *<<+.
2s did the &abor 2rbiter and the !ourt of 2ppeals, this !ourt finds respondentCs
e%planation in her Report behind the decline in sales revenues as due to #ar(et forces
be$ond respondentCs control plausible. In an$ event, there is no sho'in" that the
decline is reflective of an$ 'illfull breach of duties b$ respondent.
The t'o letters sent b$ S2S to respondent in *<<+ in fact ne"ate 'illful breach of her
duties b$ respondent. The first 3received on Ma$ .*, *<<+4 con"ratulated her and
Mo?obrado for e%ceedin" 9sale 3sic4 result in 2pril9 *<<+. PetitionerCs ar"u#ent that
respondent could not invo(e these letters in her favor as the$ 'ere intended for
Mo?obrado fails. The letters 'ere addressed to respondent and Mo?obrado. The second
letter 3received on -ul$ *7, *<<+4 'hich 'as addressed to respondent, 'hile notin" that
the sales for -une *<<+ did not reach the tar"et in 9!Bclass9, noted that in 9MBclass9 she
9#ana"ed ver$ 'ell9. 2nd it 'ent on to state that 9@tAhe pre5boo(in"s eff. *+ -ul$ loo(s
3sic4 ver$ "ood and encoura"in" and 'ith . 'ee(s to "o -ul$ should not be a proble#.9
In fact it reFuested respondent to 9send . . . re"ards to all the "irls and tell the# to (eep
up the "ood 'or(.9
:hile petitioner attributes the i#prove#ent of sales in *<<+ to Mo?obrado, the fact
re#ains that respondent 'as still the Sales Mana"er up to -ul$ *<<+, in char"e of
those 9sales #eetin"s9 durin" 'hich pertinent #ar(et strate"ies 'ere developed and
utili?ed to increase sales.
In another vein, petitioner attributes loss of confidence to respondentCs alle"ed 9"ross
inefficienc$ and inco#petence,9 it citin", as earlier stated, the cases of 6rand Motor
Parts !orp. 3supra4 and )uiser et al. 3supra4.
The 6rand Motors case, ho'ever, involved a probationar$ e#plo$ee5#ana"er 'ho
failed to, a#on" other thin"s, sub#it reFuired #onthl$ reports and violated co#pan$
polic$, clearl$ #irrorin" his insubordination and disrespect to e%press instructions of
#ana"e#ent.
:hile this !ourt, in the )uiser case 3supra4, held that 9@fAailure to observe prescribed
standards of 'or(, or to fulfill reasonable 'or( assi"n#ents due to inefficienc$9 #a$ be
Hust cause for dis#issal, petitioner has neither sho'n 'hat standards of 'or( or
reasonable 'or( assi"n#ents 'ere prescribed 'hich respondent failed to observe nor
that if she did fail to observe an$ such, it 'as due to inefficienc$.
Finall$ and at all events, "iven respondentCs previous 'or( e%perience as herein belo'
indicated, to 'it8
1P&,7o$ Co*6a#y Po'737o#
*<>05*<>/ %press Tours,
Inc.
!ler(5Reservations L Tic(etin"
*<>75*</0 ;ouse of Travel,
Inc.
Sales Mana"er
*</*5*</1 Super Travel Mana"er, 2d#inistration
*</15*</7 2#erican
%press, Inc.
Mana"er, :orld ;ealth Or"ani?ation
2ccount
*</75*<71 F.2.R. Travel
Masters, Inc.
President L 6eneral Mana"er
*<715*<7+ !ebu Pla?a Director, !onvention
*<7,5*<7< 2#erican
%press, Inc.
Mana"er5:orld ;ealth Or"ani?ation In5
Plant Office Senior Mana"er52sian
Develop#ent )an( In5Plant Office
*<<.5*<<+ 2sia Pacific Sales Mana"er, Passen"er L !ar"o 6S2
10
!harterin" Phil.
Inc.
Operations, Scandinavian 2irlines
S$ste#.9
3%hibit 929, p. /., !ourt of 2ppeals Rollo4,
this !ourt is not prepared to find for petitioner. It bears notin" that there is no sho'in"
that respondent represented herself as possessed of the hi"hest de"ree of s(ill and
care (no'n in the trade. 2nd it is not disputed that respondent 'as approached b$
petitionerCs then Sales Mana"er Murra$, and offered the position of Sales Mana"er.
She thus could not Hust be uncere#oniousl$ dischar"ed for 9loss of confidence9 arisin"
fro# alle"ed inco#petenc$
.7
.
9:hile an e#plo$ee #a$ be dis#issed because of inefficienc$, ne"lect or
carelessness, the la' i#plies a situation or underta(in" b$ an e#plo$ee in enterin" into
a contract of e#plo$#ent that he is co#petent to perfor# the 'or( underta(en and is
possessed of the reFuisite s(ill and (no'led"e to enable hi# to do so, and that he 'ill
do the 'or( of the e#plo$er in a careful #anner. If he is not Fualified to do the 'or(
'hich he underta(es, if he is inco#petent, uns(illful or inefficient, or if he e%ecutes his
'or( in a ne"li"ent #anner or is other'ise "uilt$ of ne"lect of dut$, he #a$ la'full$ be
dischar"ed before the e%piration of his ter# of e#plo$#ent.9
.<

In fine, this !ourt finds that respondent had been ille"all$ dis#issed and is accordin"l$
entitled to reinstate#ent to her for#er position 'ithout loss of seniorit$ ri"hts and
pa$#ent of bac('a"es.
10
)ut as the #atter of reinstate#ent is no lon"er feasible as the
6S2 contract bet'een S2S and petitioner had been ter#inated in Ma$ of *<<>,
respondent is, as correctl$ held b$ the !ourt of 2ppeals, entitled to separation pa$ in an
a#ount eFuivalent to one 3*4 #onth salar$ for ever$ $ear of service, a fraction of si% 3>4
#onths to be considered a $ear.
;avin" been hired on Dece#ber *>, *<<. and ter#inated on -ul$ *7, *<<+, respondent
is considered to have 'or(ed for t'o 3.4 $ears for purposes of co#putin" her
separation pa$.
Respondent is also entitled to the a'ard of bac('a"es co#puted fro# -ul$ *7, *<<+
up to Ma$ of *<<>.
2s re"ards the a'ard to respondent of #oral and e%e#plar$ da#a"es, petitioner
assails it in this 'ise8 9The a'ard of da#a"es in so far as the sa#e 'as based solel$
on respondentCs affidavit containin" "eneral and uncorroborated state#ent that she
suffered da#a"es as a result of her ter#ination is null and void @it bein"A insufficient to
overco#e the presu#ption o "ood faith.9
The follo'in" pertinent portions of petitionerCs 2ffidavit 'hich 2ffidavit 'as sub#itted as
part of her testi#on$ are self5e%planator$, ho'ever.
9% % %
7. On -ul$ +, *<<+, Messrs. )ondoc and Mo?obrado su##oned #e and 'ithout an$
clear e%planation, ordered #e to sub#it a letter of resi"nationG the$ infor#ed #e that I
'as not the person 'ho# S2S 'as loo(in" for to handle the position of Sales
Mana"erG even as I 'as deepl$ hurt, shoc(ed, and hu#iliated, I declined to resi"n fro#
#$ position as I stron"l$ believed that the instruction for #e to resi"n 'as unHust and
violative of #$ ri"htsG durin" the conference, I 'as never "iven the chance to (no'
precisel$ 'h$ I 'as bein" as(ed to resi"n or to e%plain #$ positionG further#ore, I 'as
infor#ed then that Mr. Donald Marshall 'as the one 'ho decided and insisted on #$
ter#ination.
<. On -ul$ *7, *<<+, a"ain 'ithout re"ard to the basic reFuire#ents of due process, I
'as "iven a notice of ter#ination si"ned b$ Mr. )ondocG the supposed "round for #$
ter#ination 'as 2P!Cs alle"ed Ploss of confidence in #$ #ana"erial and #ar(etin"
capabilities due to the co#pan$Cs alle"ed dis#al perfor#ance durin" #$ ter# of office
as 6S2 Sales Mana"erCG once #ore, I 'as never called to ans'er this char"eG a cop$
of the notice of ter#ination is hereto attached as 2nne% PCG
*0. The ne's of #$ ter#ination circulated at once in the travel industr$ and as a result,
I 'as and still a# freFuentl$ as(ed b$ #$ friends and acFuaintances in the industr$
about #$ ter#ination fro# 2P! to #$ endless hu#iliation and e#barrass#entG this up
to no' causes #e endless e#otional pain that I even avoid #$ friends and
acFuaintances for fear that the$ #i"ht loo( at #e differentl$ after #$ ter#ination fro#
2P!G #$ reputation as a professional has been totall$ shattered b$ the unHust act of
2P!G
**. )ecause of the e%tre#e social hu#iliation, and serious an%iet$ over #$ no'
bes#irched reputation in the travel industr$, I decided to see( le"al adviseG on -ul$ .*,
*<<+, #$ counsel 'rote 2P! de#andin" for #$ i##ediate reinstate#ent 'ithout loss
of seniorit$ ri"hts and for da#a"esG a cop$ of the letter5de#and is hereto attached as
2nne% PFCG
% % %9.
The$ need no a#plification andBor corroboration. Indeed, petitioner 'as deprived of
due process and denied 9basic precepts of fairness9 'hen she 'as ter#inated. ;er
resultant sufferin"s thus entitle her to an a'ard of #oral da#a"es.
11
To 'arrant a'ard of #oral da#a"es, it #ust be sho'n that the dis#issal of the
e#plo$ee 'as attended to b$ bad faith, or constituted an act opposite to labor, or 'as
done in a #anner contrar$ to #orals, "ood custo#s or public polic$.
1*
2'ard of #oral and e%e#plar$ da#a"es for an ille"all$ dis#issed e#plo$ee is proper
'here the e#plo$ee had been harassed and arbitraril$ ter#inated b$ the e#plo$er.
1.
In deter#inin" the a#ount of #oral da#a"es recoverable, ho'ever, the business,
social and financial position of the offended part$ and the business or financial position
of the offender are ta(en into account.
11
6iven petitionerCs business position or standin"
before and at the ti#e of ter#ination and petitionerCs business and financial position,
this !ourt reduces the a#ount of #oral da#a"es a'arded to P,00,000.00 'hich it
finds reasonable. The a#ount of e%e#plar$ da#a"es a'arded is accordin"l$ reduced
too to P.,0,000.00.
:;RFOR, the decision of the !ourt of 2ppeals is hereb$ 2FFIRMD 'ith the
MODIFI!2TION that the a#ount of #oral da#a"es and e%e#plar$ da#a"es a'arded
to respondent, Ma. &inda R. Farolan, is hereb$ reduced to Five ;undred Thousand
3P,00,000.004 Pesos and T'o ;undred Fift$ Thousand 3P.,0,000.004 Pesos,
respectivel$.
!osts a"ainst petitioner.
SO ORDRD.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
12
G.R. No. 121035 A6,74 12, 2000
RU.INO NORERTO .. SAMSON, petitioner,
vs.
NATIONAL LAOR RELATIONS COMMISSION, SCHERING<PLOUGH
CORPORATION, LEO RICONALLA a#$ 2OSE L. ESTINGOR, respondents.

@APUNAN, J.:
Throu"h this petition for certiorari, Rufino Norberto F. Sa#son 39petitioner94 assails the
Decision, dated */ March *<<,, of the National &abor Relations !o##ission in the
consolidated cases of N&R! N!R50050*500>,.5<+ and N&R! N!R50050.50077/5<+.
Petitioner li(e'ise assails the Resolution, dated *0 Ma$ *<<,, of the N&R! den$in" his
#otion for reconsideration.
The assailed decision of the N&R! reversed and set aside the Decision, dated .,
2u"ust *<<+, of &abor 2rbiter Ricardo !. Nora findin" respondent Scherin"5Plou"h
!orporation 39respondent co#pan$94 "uilt$ of ille"al dis#issal and orderin" it to
reinstate petitioner to his for#er position as District Sales Mana"er and to pa$ hi#
bac('a"es.
2s culled fro# the decisions of the labor arbiter and the N&R!, the facts of the case are
as follo's8
This pertains to the case 3N!R50050*500>,.5<+4 filed b$ the co#plainant Rufino
Norberto F. Sa#son a"ainst the respondents Scherin" Q Plou"h. !orp. 39SP!9 for
brevit$4 and Mr. &eo !. Riconalla, National Sales Mana"er, for #one$ eFuivalent of rice
subsid$ for the period 2pril *<<0 to Dece#ber *<<. and holida$ pa$, no' dee#ed
sub#itted for resolution based on records available.
On Februar$ *, *<<+, said co#plainant filed another case 3N!R50050.50077/5<+4 for
ille"al preventive suspension raffled to the ;onorable &abor 2rbiter Donato 6. Ouinto,
-r. and consolidated to the above case nu#ber.
&i(e'ise, on Februar$ +, *<<+, co#plainant filed a Motion to 2#end !o#plaint and
averred pertinentl$ that 9. . . co#plainant 'as placed under an indefinite preventive
suspension on ., -anuar$ *<<+9G and 9. . . 'as arbitraril$ and su##aril$ ter#inated
fro# e#plo$#ent on 01 Februar$ *<<+ on "round of loss of confidence.9
2s culled fro# the records of the instant case, 'hat reall$ precipitated co#plainantRs
preventive suspension cul#inatin" to his dis#issal is 3sic4 the incident that too( place
on Dece#ber */, *<<1 as "leaned fro# the e%chan"e of lettersB#e#oranda fro# both
parties.
In a letter dated ., -anuar$ *<<+ 32nne% 9294 addressed to the co#plainant Mr.
Sa#son si"ned b$ one -.&. stin"or, the latter called the attention of 3sic4 the
co#plainantRs conduct 9. . . in a #anner ini#ical to the interests of SP!9 and
enu#erated the follo'in" acts co##itted b$ the co#plainantG to 'it8
% % % % % % % % %
*. On or about 17 December 1993, during the Sales and Marketing Christmas
gathering, you made utterances o obscene, insulting, and oensive !ords, reerring to
or direct against S"C#s Management Committee, in the presence o several co$
employees.
.. On that sa#e occasion, and a"ain in the presence of several co5e#plo$ees, you
uttered obscene, insulting and oensive !ords, and made malicious and le!d gesture,
all of 'hich referred to or 'ere directed a"ainst Mr. pitacio D. Titon", -r. President and
6eneral Mana"er of SP!.
1. 2lso on that sa#e occasion, $ou repeated $our #alicious utterances and threatened
to disrupt or other'ise create violence durin" SP!Rs forthco#in" National Sales
!onference, and enHoined $our co5e#plo$ees not to prepare for the said conference.
+. SubseFuentl$, on or about 3 %anuary 199&, you repeated your threats to some co$
employees, advising them to !atch out or some disruptive actions to happen during
the 'ational Sales Conerence. 3#phasis ours4
!o#plainant 'as "iven t'o 3.4 da$s fro# receipt of the fore"oin" letter and to5e%plain
9. . . 'h$ no disciplinar$ action, includin" ter#ination9, should be ta(en a"ainst the
co#plainant and in the #eanti#e 'as placed on preventive suspension effective
i##ediatel$, until further notice.
!o#plainant on the ver$ sa#e date ., -anuar$ *<<+ and in repl$ to the above5
#entioned letterB#e#o 32nne% 9)94 'rote an e%planation statin"8
% % % % % % % % %
Relative to the said #e#o I 'ould li(e to cate"oricall$ state the follo'in" facts8
13
*. That the act3s4 alluded in the #e#o, specificall$ para"raph@sA * and ., 'hich
alle"ed that I uttered obscene, insultin" and offensive 'ords is not true. ( ever (
happened to utter such !ords it !as made in reerence to the decision taken by the
management committee on the Cua )im case and not to an$ particular or specific
person3s4 as stated in the #e#o.
.. I be" to disa"ree 'ith the state#ent #ade in Para"raphs 1 and + of the sa#e
#e#o as I den$ to have uttered #uch less threaten to create violence and disrupt the
holdin" of the National Sales !onference8
Finall$, I a# lod"in" a for#al protest for bein" placed under preventive suspension it
bein" contrar$ to the #e#o 'hich "ave #e t'o 3.4 da$s 'ithin 'hich to e%plain #$
position before an$ disciplinar$ action could be initiated. I believe that the pre5e#pted
i#position of the preventive suspension is not onl$ arbitrar$ but is violative of #$
constitutional 9ri"ht to due process9.
Sub#itted for $our infor#ation. 3#phasis ours4
2"ain, on -anuar$ ./, *<<+, co#plainant 'rote a letter 32nne% 9!94 addressed to Mr.
-.&. stin"or, ;RD Mana"er, 'hich in part reads8
% % % % % % % % %
)ein" a staff 3DSM4 assi"ned in the field I seldo# sta$ in the office e%cept on e%tre#e
necessit$ or 'hen #$ presence is reFuired. Dnder such situation #$ continued
e#plo$#ent 'ill not in an$ 'a$ poses @sicA serious or i##inent threat to the life and
propert$ of the co#pan$ as 'ell as #$ co5e#plo$ees. The preventive suspension
#eted out a"ainst #e is not onl$ abusive, arbitrar$ but indiscri#inatel$ applied under
the "uise of #ana"erial prero"ative but violative of #$ ri"ht under the la'.
I trust that #$ i##ediate reinstate#ent 'ill be acted upon 'ithout an$ further dela$.
In a letter dated Februar$ 1, *<<+, respondent SP! thru Mr. -.&. stin"or, 'rote a letter
32nne% 9D94 to the co#plainant Mr. Sa#son, the dispositive part of 'hich reads as
follo's8
% % % % % % % % %
In vie' of the fore"oin", notice is hereb$ "iven that $our e#plo$#ent fro# Scherin"
Plou"h !orporation is ter#inated effective at the close of business hours of 1 Februar$
*<<+.
:e reiterate our previous directive for $ou to turn over the service vehicle, all #one$,
docu#ents, records and other propert$ in $our possession or custod$ to the National
Sales Mana"er. Please co#pl$ 'ith this directive i##ediatel$.
*
On the basis of the pleadin"s filed b$ the parties and evidence on record, the labor
arbiter rendered his Decision, dated ., 2u"ust *<<+, declarin" the dis#issal of
petitioner ille"al. The labor arbiter ruled that petitionerRs conduct is not so serious as to
'arrant his dis#issal because8 *4 the alle"ed offensive 'ords 'ere uttered durin" an
infor#al and unofficial "et5to"ether of e#plo$ees 'here there 'as social drin(in" and
petitioner 'as alread$ tips$G .4 the 'ords 'ere uttered to sho' disapproval over
#ana"e#entRs decision on the 9!ua &i#9 caseG 14 the penalt$ for the offense is onl$
9verbal re#inder9 under respondent co#pan$Rs rules and re"ulationsG and +4 petitioner
'as alread$ ad#onished durin" a #eetin" on + -anuar$ *<<+. 2ccordin"l$, respondent
co#pan$ 'as ordered to reinstate petitioner as District Sales Mana"er and to pa$ hi#
bac('a"es.
.
)oth parties appealed said decision to the N&R!. Petitioner filed a partial appeal of the
denial of his clai# for holida$ pa$ and the cash eFuivalent of the rice subsid$. For its
part, respondent co#pan$ sou"ht the reversal of the decision of the labor arbiter
alle"in" that the latter erred in rulin" that petitionerRs e#plo$#ent 'as ter#inated
'ithout valid cause and in orderin" his reinstate#ent.
In reversin" the labor arbiterRs decision, the N&R! found that there 'as Hust cause, i.e.,
"ross #isconduct, for petitionerRs dis#issal. The N&R! #ade the follo'in" disFuisition,
thus8
It is 'ell established in the records that co#plainant #ade insultin" and obscene
utterances directed at the respondent co#pan$Rs #ana"e#ent co##ittee in the
presence of several e#plo$ees. 2"ain, he directed his verbal abuse a"ainst 6eneral
Mana"er and President pitacio D. Titon", -r. b$ utterin" 9Si DT, bullshit $an9,
9sabihin #o (a$ DT $an9G and 9sabihin #o (a$ DT, bullshit $an9 'hile "esturin" and
#a(in" the 9dirt$ fin"er9 si"n. 3pa"e /, Decision4 These utterances 'ere #ade b$ the
co#plainant in @aA loud #anner. 32ffidavit of &eo !. Riconalla, 2nne% 9*9, of
respondentsR position paper4 ;e 'as further accused of threatenin" to disrupt
respondentsR national sales conference b$ tellin" Ms. 2nita Valde?co that the
conference 'ill be a 9ver$ blood$ one.9 3RespondentsR position paper4
:e consider the fore"oin" actuations of the co#plainant as constitutin" "ross
#isconduct, sufficient to Hustif$ respondents in ter#inatin" his services. The actuation
of the co#plainant is destructive of the #orals of his co5e#plo$ees and, therefore, his
continuance in the position of District Sales Mana"er 'ould be patentl$ ini#ical to the
respondent co#pan$Rs interest.1*!phi1.n+t
14
!o#plainant is a #ana"erial e#plo$ee as he is a District Sales Mana"er. 2s such, his
position carries the hi"hest de"ree of responsibilit$ in i#provin" and upholdin" the
interests of the e#plo$er and in e%e#plif$in" the ut#ost standard of discipline and
"ood conduct a#on" his5co5e#plo$ees. 3Top For# Mf". Inc., vs. N&R!, .*7 S!R2
1*14 In ter#inatin" the e#plo$#ent of #ana"erial e#plo$ees, the e#plo$er is allo'ed
a 'ider latitude of discretion than in the case of ordinar$ ran(5and5file e#plo$ee.
32urelio vs. N&R!, et al., 6.R. <<01+, 2pril *., *<<14
1
Preli#inaril$, 'e find it necessar$ to resolve the procedural issues raised b$ respondent
co#pan$ in its !o##ent 3'ith Motion for !larification4, dated > Septe#ber *<<,.
Respondent co#pan$ harped on the fact that the caption of the petition did not include
the doc(et nu#bers of the cases before the N&R! in violation of Supre#e !ourt
!ircular .75<*. :e do not find this o#ission fatal as the pertinent doc(et nu#bers had
been set out in the first and second pa"es of the petition. The sa#e constitutes
substantial co#pliance 'ith the reFuire#ent of the la'.
Respondent co#pan$ further opined that the petition should be su##aril$ dis#issed
as the decision had beco#e final and e%ecutor$ citin" Section **+, Rule VII and
Section . 3b4, Rule VIII of the Rules of Procedure of the N&R!. This contention is
li(e'ise untenable. 2s an ori"inal action for certiorari, the petition 'as #erel$ reFuired
to be filed 'ithin a reasonable ti#e fro# receipt of a cop$ of the Fuestioned decision or
resolution.
+
Dnder the rules then in effect at the ti#e of the filin" of the instant petition, a
period of three 314 #onths 'as considered to be 9reasonable ti#e9.
,
In this case,
petitioner received a cop$ of the assailed N&R! decision on ., 2pril *<<,. ;e filed a
#otion for reconsideration on ./ 2pril *<<, but it 'as denied b$ the N&R! in its
assailed resolution, a cop$ of 'hich 'as received b$ petitioner on * -ul$ *<<,. The
instant petition 'as filed t'ent$5seven 3./4 da$s after said receipt or on .7 -ul$ *<<,.
!learl$, the instant petition 'as filed 'ell 'ithin the re"le#entar$ period provided b$
la'.
;avin" settled that, 'e no' address the substantive issue involved in this case, i.e.,
'hether the N&R! acted 'ith "rave abuse of discretion a#ountin" to lac( or e%cess of
Hurisdiction in reversin" the decision of the labor arbiter and rulin" that petitioner 'as
validl$ dis#issed.
:e rule in favor of petitioner.
The issue of 'hether petitioner 'as validl$ dis#issed is a factual one and "enerall$,
factual findin"s of the N&R! are accorded respect. In this case, ho'ever, there is
co#pellin" reason to deviate fro# this salutar$ principle because the findin"s of facts of
the N&R! are in conflict 'ith that of the labor arbiter. 2ccordin"l$, this !ourt #ust of
necessit$ revie' the records to deter#ine 'hich findin"s should be preferred as #ore
confor#able to the evidentiar$ facts.
>
To constitute valid dis#issal, t'o 3.4 reFuisites #ust be #et8 3*4 the dis#issal #ust be
for an$ of the causes e%pressed in 2rticle .7. of the &abor !odeG and 3.4 the e#plo$ee
#ust be "iven an opportunit$ to be heard and defend hi#self.
/
2rticle .7. of the &abor
!ode provides8
2rt. .7.. ,ermination by employer. Q 2n e#plo$er #a$ ter#inate an e#plo$#ent for
an$ of the follo'in" causes8
a. Serious #isconduct or 'illful disobedience b$ the e#plo$ee of the la'ful orders of
his e#plo$er or representative in connection 'ith his 'or(G
b. 6ross and habitual ne"lect b$ the e#plo$ee of his dutiesG
c. Fraud or 'illful breach b$ the e#plo$ee of the trust reposed in hi# b$ his e#plo$er
or dul$ authori?ed representativeG
d. !o##ission of a cri#e or offense b$ the e#plo$ee a"ainst the person of his
e#plo$er or an$ i##ediate #e#ber of his fa#il$ or his dul$ authori?ed representativeG
and
e. Other causes analo"ous to the fore"oin".
2s borne b$ the records, petitionerRs dis#issal 'as brou"ht about b$ the utterances he
#ade durin" an infor#al !hrist#as "atherin" of respondent co#pan$Rs Sales and
Mar(etin" Division on */ Dece#ber *<<1. Petitioner 'as heard to have uttered, 9Si
DT 3referrin" to pitacio D. Tiaon", 6eneral Mana"er and President of respondent
co#pan$4, bullshit $an,9 9sabihin #o (a$ DT $an9 and 9sabihin #o (a$ DT, bullshit
$an,9 'hile #a(in" the 9dirt$ fin"er9 "esture. Petitioner li(e'ise told his co5e#plo$ees
that the forthco#in" national sales conference of respondent co#pan$ 'ould be a
9ver$ blood$ one.9
The N&R! ruled that the fore"oin" actuation of petitioner constituted "ross #isconduct
'arrantin" his dis#issal. !itin" Hurisprudence, the N&R! held that 9in ter#inatin" the
e#plo$#ent of #ana"erial e#plo$ees, the e#plo$er is allo'ed a 'ider latitude of
discretion than in the case of ordinar$ ran(5and5file.9
7
:e do not a"ree 'ith the findin"s of the N&R!.
Misconduct is i#proper or 'ron" conduct. It is the trans"ression of so#e established
and definite rule of action, a forbidden act, a dereliction of dut$, 'illful in character, and
i#plies 'ron"ful intent and not #ere error in Hud"#ent. The #isconduct to be serious
15
#ust be of such "ave and a""ravated character and not #erel$ trivial and uni#portant.
Such #isconduct, ho'ever serious, #ust, nevertheless, be in connection 'ith the
e#plo$eeRs 'or( to constitute Hust cause for his separation.
<
In this case, the alle"ed #isconduct of petitioner, 'hen vie'ed in its conte%t, is not of
such serious and "rave character as to 'arrant his dis#issal. First, petitioner #ade the
alle"ed offensive utterances and obscene "esture durin" an infor#al !hrist#as
"atherin" of respondent co#pan$Rs district sales #ana"ers and #ar(etin" staff. The
"atherin" 'as Hust a casual "et5to"ether of e#plo$ees. It is to be e%pected durin" this
(ind of "atherin"s, 'ho# ton"ues are #ore often than not loosened b$ liFuor or other
alcoholic bevera"es, that e#plo$ees freel$ e%press their "rievances and "ripes a"ainst
their e#plo$ers. #plo$ees should be allo'ed 'ider latitude to freel$ e%press their
senti#ents durin" these (inds of occasions 'hich are be$ond the disciplinar$ authorit$
of the e#plo$er. Si"nificantl$, it does not appear in the records that petitioner
possessed an$ ascendanc$ over the e#plo$ees 'ho heard his utterances as to cause
de#orali?ation in the ran(s.
Second, petitionerRs outburst 'as in reaction to the decision of the #ana"e#ent in the
9!ua &i#9 case. 2d#ittedl$, usin" the 'ords 9bullshit9 and 9putan" ina9 and #a(in"
le'd "esture to e%press his dissatisfaction over said #ana"e#ent decision 'ere clearl$
in bad taste but these acts 'ere not intended to #ali"n or cast aspersion on the person
of respondent co#pan$Rs president and "eneral #ana"er.
The instant case should be distin"uished fro# the previous cases 'here 'e held that
the use of insultin" and offensive lan"ua"e constituted "ross #isconduct Hustif$in" an
e#plo$eeRs dis#issal. In De la Cru- vs. ').C,
*0
the dis#issed e#plo$ee shouted
9sa$an" an" pa"(a5professional #oN9 and 9putan" ina #o9 at the co#pan$ ph$sician
'hen the latter refused to "ive hi# a referral slip. In /utobus 0orkers# 1nion 2/013 vs.
').C,
**
the dis#issed e#plo$ee called his supervisor 9"a"o (a9 and taunted the latter
b$ sa$in" 9ba(it anon" "usto #o, tan" ina #o.9 In these cases, the dis#issed
e#plo$ees personall$ subHected their respective superiors to the fore"oin" verbal
abuses. The utter lac( of respect for their superiors 'as patent. In contrast, 'hen
petitioner 'as heard to have uttered the alle"ed offensive 'ords a"ainst respondent
co#pan$Rs president and "eneral #ana"er, the latter 'as not around.
In /sian Design and Manuacturing Corporation vs. Deputy Minister o )abor,
*.
the
dis#issed e#plo$ee #ade false and #alicious state#ents a"ainst the fore#an 3his
superior4 b$ tellin" his co5e#plo$ees8 9If $ou donRt "ive a "oat to the fore#an $ou 'ill
be ter#inated. If $ou 'ant to re#ain in this co#pan$, $ou have to "ive a "oat.9 The
dis#issed e#plo$ee therein li(e'ise posted a notice in the co#fort roo# of the
co#pan$ pre#ises 'hich read8 9Notice to all Sander 5 Those 'ho 'ant to re#ain in this
co#pan$, $ou #ust "ive an$thin" to $our fore#an. Failure to do so 'ill be ter#inated
Q 2lice 70.9 In .eynolds "hilippine Corporation vs. 4slava,
*1
the dis#issed e#plo$ee
circulated several letters to the #e#bers of the co#pan$Rs board of directors callin" the
e%ecutive vice5president and "eneral #ana"er a 9bi" fool,9 9anti5Filipino9 and accusin"
hi# of 9#is#ana"e#ent, inefficienc$, lac( of plannin" and foresi"ht, pett$ favoritis#,
dictatorial policies, one5#an rule, conte#ptuous attitude to labor, anti5Filipino
utterances and activities.9 In this case, the records do not sho' that petitioner #ade
an$ such false and #alicious state#ents a"ainst an$ of his superiors.
Third, respondent co#pan$ itself did not see# to consider the offense of petitioner
serious and "rave enou"h to 'arrant an i##ediate investi"ation on the #atter. It #ust
be recalled that petitioner uttered the alle"ed offensive lan"ua"e at an infor#al
"atherin" on */ Dece#ber *<<1. ;e then alle"edl$ #ade threatenin" re#ar(s about
the forthco#in" sales conference on 1 -anuar$ *<<+. Durin" a #eetin" on + -anuar$
*<<+, Mr. Titon", -r., the president and "eneral #ana"er of respondent co#pan$ and
alle"edl$ to 'ho# the offensive 'ords 'ere directed, #erel$ ad#onished petitioner
statin" that, 9'hen there is a disa"ree#ent, act in a professional and civili?ed #anner.9
Respondent co#pan$ allo'ed several 'ee(s to pass before it dee#ed it necessar$ to
reFuire petitioner to e%plain 'h$ no disciplinar$ action should be ta(en a"ainst hi# for
his behavior. This see#in" lac( of ur"enc$ on the part of respondent co#pan$ in ta(in"
an$ disciplinar$ action a"ainst petitioner ne"ates its char"e that the latterRs #isbehavior
constituted serious #isconduct.
Further, respondent co#pan$Rs rules and re"ulations
*+
provide as follo's8
N2TDR OF T; OFFNS
*. . . .
.. &oafin" or loiterin", en"a"in" in fistcuffs or loud#outhed Fuarrelin" or provo(in" or
en"a"in" others to such behaviour, inflictin" bodil$ har# to another, an$ violent act or
lan"ua"e 'hich affects adversel$ #orals, production or the #aintenance of discipline,
indecent or i##oral conduct durin" 'or(in" hoursG unauthori?ed participation in
activities durin" official hours 'hich are outside of re"ularl$ assi"ned duties8
#alin"erin"G unauthori?ed absence such as underti#eG "oin" on sic( leave althou"h
not actuall$ sic(G freFuentl$ receivin" visitors durin" official hours for personal #atter.
1. :illful and intentional refusal 'ithout valid reason to accept 'or( or follo' specific
instructionsG disrespectG insolenceG and li(e behavior to'ards a superior authorit$ of a
hi"h ran(in" officer of the co#pan$.
P N 2 & T I S
First Offense8 Verbal re#inder
16
Second Offense8 :ritten repri#and
Third offense8 Pa$roll deduction for ti#e not 'or(ed due offenses. Revie' 'ith Dept.
;ead 'ith 'ritten follo' up.
Fourth Offense8 .nd 'ritten repri#and 'ith 'arnin" of suspension.
Fifth Offense8 Suspension and final rapi#and 'ith 'arnin" of dis#issal if reoccurs.
Si%th Offense8 Dis#issal
PetitionerRs conduct on */ Dece#ber *<<1 #a$ be properl$ considered as fallin" under
either para"raph nu#ber ., i.e., use of violent lan"ua"e, or para"raph nu#ber 1, i.e.,
insolence or disrespect to'ards a superior authorit$. )ein" a first offense, the
appropriate penalt$ i#posable on petitioner is onl$ a 9verbal re#inder9 and not
dis#issal.
Indeed, the penalt$ of dis#issal is undul$ harsh considerin" that petitioner had been in
the e#plo$ of respondent co#pan$ for eleven 3**4 $ears and it does not appear that he
had a previous dero"ator$ record. It is settled that not'ithstandin" the e%istence of a
valid cause for dis#issal, such as breach of trust b$ an e#plo$ee, nevertheless,
dis#issal should not be i#posed, as it is too severe a penalt$ if the latter had been
e#plo$ed for a considerable len"th of ti#e in the service of his e#plo$er, and such
e#plo$#ent is untainted b$ an$ (ind of dishonest$ and irre"ularit$.
*,
This concern of the !ourt for the ter#ination of e#plo$#ent even on the assu#ption
that conduct far fro# e%e#plar$ 'as indul"ed in 'as #ade evident in the case of
/lmira vs. 5.6. 7oodrich "hilippines, (nc.,
*>
'here this !ourt held8
It 'ould i#pl$ at the ver$ least that 'here a penalt$ less punitive 'ould suffice,
'hatever #issteps #a$ be co##itted b$ labor ou"ht not to be visited 'ith a
conseFuence so severe. It is not onl$ because of the la'Rs concern for the 'or(in"#an.
There is, in addition, his fa#il$ to consider. Dne#plo$#ent brin"s untold hardships and
sorro's on those dependent on the 'a"e5earner. The #iser$ and pain attendant on the
loss of Hobs then could be avoided if there be acceptance of the vie' that under all
circu#stances of this case, petitioners should not be deprived of their #eans of
livelihood. Nor is this to condone 'hat had been done b$ the#. For all this 'hile, since
private respondent considered the# separated fro# the service, the$ had not been
paid. Fro# the strictl$ Huridical standpoint, it cannot be too stron"l$ stressed, to follo'
Davis in his #asterl$ 'or(, Discretionar$ -ustice, that 'here a decision #a$ be #ade
to rest on infor#ed Hud"#ent rather than ri"id rules, all the eFuities of the case #ust be
accorded their due 'ei"ht.
*/
6iven the environ#ental circu#stances of this case, the acts of petitioner clearl$ do not
constitute serious #isconduct as to Hustif$ his dis#issal. Neither is his dis#issal
Hustified on "round of loss of confidence. 2s a "round for dis#issal, the ter# 9trust and
confidence9 is restricted to #ana"erial e#plo$ees.
*7
:e share the vie' of the Solicitor
6eneral that petitioner is not a #ana"erial e#plo$ee. )efore one #a$ be properl$
considered a #ana"erial e#plo$ee, all the follo'in" conditions #ust be #et8
3*4 Their pri#ar$ dut$ consists of the #ana"e#ent of the establish#ent in 'hich the$
are e#plo$ed or of a depart#ent or sub5division thereofG
3.4 The$ custo#aril$ and re"ularl$ direct the 'or( of t'o or #ore e#plo$ees thereinG
314 The$ have the authorit$ to hire or fire other e#plo$ees of lo'er ran(G or their
su""estions and reco##endations as to the hirin" and firin" and as to the pro#otion or
an$ other chan"e of status of other e#plo$ees 'e "iven particular 'ei"ht.
*<
Further, it is the nature of the e#plo$eeRs functions, and not the no#enclature or title
"iven to his Hob, 'hich deter#ines 'hether he has ran(5and5file, supervisor$ or
#ana"erial status.
.0
Petitioner describes his functions as District Sales Mana"er as
follo's8
The office of a District Sales Mana"erRs pri#ar$ responsibilit$ is to achieve or surpass
the sales and profit tar"ets for each territor$ in the assi"ned district throu"h8 3a4 efficient
plannin"G 3b4 #ana"e#ent functionG and 3c4 auditin" and control. 9Mana"e#ent action,9
on the other hand, #eans to direct the activities of the Professional Medical
Representatives @b$A8 3*4 @#a(in"A decisions that are co#patible 'ith district, national
and corporate obHectivesG 3.4 @directin"A the activities of representative throu"h Q 3a4
freFuent field visits 3#ust spend at least 70K of 'or(in" da$s in a Fuarter, allocatin"
ei"ht 374 'or(in" da$s per PMRBFuarter e%cludin" travel ti#e4G 3b4 'ritten
co##unicationsG 3c4 sales #eetin"s Q 314 @trainin"A PMRs in #edicalBproduct
(no'led"eG 3+4 @#otivatin"A and @developin"A PMRs to'ard "reater productivit$G 3,4
@actin"A as a channel bet'een field and ho#e officeG 3>4 @#aintainin"A records as basis
for Fuic( anal$sis of the district perfor#anceG 3/4 @overseein"A special proHects assurin"
the cost benefit value of such benefitG 374 . . . su""estin" to sales #ana"e#ent ne'
ideas, #ethods, devices to increase productivit$ of sales district or individual
propertiesG and @insurin"A safe custod$ and proper #aintenance of all co#pan$
properties 3e.g. co#pan$ cars, audio5visuals4.
.*
The above Hob description does not #ention that petitioner possesses the po'er 9to la$
do'n policies nor to hire, transfer, suspend, la$ off recall, dischar"e, assi"n or
discipline e#plo$ees.9 2bsent this crucial ele#ent, petitioner cannot be considered a
#ana"erial e#plo$ee despite his desi"nation as District Sales Mana"er.
17
6rantin" arguendo that petitioner 'ere to be considered a #ana"erial e#plo$ee, the
"round for 9loss of confidence9 is still 'ithout basis. &oss of trust and confidence to be a
valid "round for an e#plo$eeRs dis#issal #ust be clearl$ established.
..
2 breach is
'illful if it is done intentionall$, (no'in"l$ and purposel$, 'ithout Hustifiable e%cuse, as
distin"uished fro# an act done carelessl$, thou"htlessl$, heedlessl$ or inadvertentl$. It
#ust rest on substantial "rounds and not on the e#plo$erRs arbitrariness, 'hi#s,
caprices or suspicion, other'ise, the e#plo$ee 'ould re#ain at the #erc$ of the
e#plo$er.
.1
:hen petitioner #ade the offensive utterances, it can be said that he
#erel$ acted 9carelessl$, thou"htlessl$ or heedlessl$9 and not 9intentionall$, (no'in"l$,
purposel$, or 'ithout Hustifiable e%cuse.9
In fine, there bein" no Hust cause for petitionerRs dis#issal, the sa#e is conseFuentl$
unla'ful.1*!phi1 Petitioner is thus entitled to reinstate#ent to his position as District
Sales Mana"er, unless such position no lon"er e%ists, in 'hich case he shall be "iven a
substantiall$ eFuivalent position 'ithout loss of seniorit$ ri"hts. ;e is li(e'ise entitled to
the pa$#ent of his full bac('a"es.
:ith respect to petitionerRs other #onetar$ clai#s, ho'ever, 'e a"ree 'ith the findin"s
of the labor arbiter that he failed to establish his entitle#ent thereto. :e Fuote 'ith
approval the labor arbiterRs pertinent findin"s as follo's8
2nent the #onetar$ clai#s of co#plainant for pa$#ent of the holida$ pa$ and the cash
eFuivalent of the rice subsid$ for the period 2pril *<<0 to Dece#ber *<<. vis$a$vis the
docu#entar$ evidence available on records 32nne%es 9;9 and 9I94 this Office is inclined
to den$ said clai#s for failure of the co#plainant to substantiall$ and convincin"l$
prove the sa#e.
:hen co#plainant 'as appointed District Sales Mana"er effective 2pril *, *<<0, his
salar$ 'as increased b$ PSOS8 T'o Thousand Five ;undred Onl$ 3P.,,00.004
32nne% 9;94 in accordance 'ith respondentRs 9Salar$ 2d#inistrative Polic$9.
2"ain, effective -anuar$ *, *<<1, co#plainantRs salar$ 'as increased b$ PSOS8 One
Thousand One ;undred Four, so #uch so that in the span of t'o 3.4 $ears,
co#plainantRs salar$ reached the a#ount of T'ent$ Thousand Five ;undred Thirt$ Si%
3P.0,,1>.004 Pesos 'hich lends credence to the position of the respondent SP! that
said clai#s for holida$ pa$ and rice subsid$ is alread$ inte"rated in co#plainantRs
salar$.
.+
:;RFOR, the instant petition is 6R2NTD. The Decision, dated */ March *<<,,
and Resolution, dated *0 Ma$ *<<,, of the N&R! in the consolidated cases of N&R!
N!R50050*500>,.5<+ and N&R! N!R50050.50077/5<+ are RVRSD and ST
2SID. The Decision, dated ., 2u"ust *<<+, of the labor arbiter is RINST2TD.
SO ORDRD.1*!phi1.n+t
Davide, %r., C.%., "uno, "ardo and 8nares$Santiago, %%., concur.
P
Republic of the Philippines
SUPREME COURT
Manila
18
N )2N!

G.R. No. 79255 2a#(a,y 20, 1992
UNION O. .ILIPRO EMPLO!EES /U.E0, petitioner,
vs.
ENIGNO AIAAR, 2R., NATIONAL LAOR RELATIONS COMMISSION a#$ NESTLB
PHILIPPINES, INC. /9o,*&,4y .ILIPRO, INC.0, respondents.
%ose C. 4spinas or petitioner.
Siguion .eyna, Montecillo 9 :ngsiako or private respondent.

GUTIERREC, 2R., J.:
This labor dispute ste#s fro# the e%clusion of sales personnel fro# the holida$ pa$
a'ard and the chan"e of the divisor in the co#putation of benefits fro# .,* to .>*
da$s.
On Nove#ber 7, *<7,, respondent Filipro, Inc. 3no' Nestle Philippines, Inc.4 filed 'ith
the National &abor Relations !o##ission 3N&R!4 a petition for declarator$ relief
see(in" a rulin" on its ri"hts and obli"ations respectin" clai#s of its #onthl$ paid
e#plo$ees for holida$ pa$ in the li"ht of the !ourtRs decision in Chartered 5ank
4mployees /ssociation v. :ple 3*17 S!R2 ./1 @*<7,A4.
)oth Filipro and the Dnion of Filipino #plo$ees 3DF4 a"reed to sub#it the case for
voluntar$ arbitration and appointed respondent )eni"no Vivar, -r. as voluntar$
arbitrator.
On -anuar$ ., *<70, 2rbitrator Vivar rendered a decision directin" Filipro to8
pa$ its #onthl$ paid e#plo$ees holida$ pa$ pursuant to 2rticle <+ of the !ode, subHect
onl$ to the e%clusions and li#itations specified in 2rticle 7. and such other le"al
restrictions as are provided for in the !ode. 3.ollo,
p. 1*4
Filipro filed a #otion for clarification see(in" 3*4 the li#itation of the a'ard to three
$ears, 3.4 the e%clusion of sales#en, sales representatives, truc( drivers,
#erchandisers and #edical representatives 3hereinafter referred to as sales personnel4
fro# the a'ard of the holida$ pa$, and 314 deduction fro# the holida$ pa$ a'ard of
overpa$#ent for overti#e, ni"ht differential, vacation and sic( leave benefits due to the
use of .,* divisor. 3.ollo, pp. *175*+,4
Petitioner DF ans'ered that the a'ard should be #ade effective fro# the date of
effectivit$ of the &abor !ode, that their sales personnel are not field personnel and are
therefore entitled to holida$ pa$, and that the use of .,* as divisor is an established
e#plo$ee benefit 'hich cannot be di#inished.
On -anuar$ *+, *<7>, the respondent arbitrator issued an order declarin" that the
effectivit$ of the holida$ pa$ a'ard shall retroact to Nove#ber *, *</+, the date of
effectivit$ of the &abor !ode. ;e adHud"ed, ho'ever, that the co#pan$Rs sales
personnel are field personnel and, as such, are not entitled to holida$ pa$. ;e li(e'ise
ruled that 'ith the "rant of *0 da$sR holida$ pa$, the divisor should be chan"ed fro#
.,* to .>* and ordered the rei#burse#ent of overpa$#ent for overti#e, ni"ht
differential, vacation and sic( leave pa$ due to the use of .,* da$s as divisor.
)oth Nestle and DF filed their respective #otions for partial reconsideration.
Respondent 2rbitrator treated the t'o #otions as appeals and for'arded the case to
the N&R! 'hich issued a resolution dated Ma$ .,, *<7/ re#andin" the case to the
respondent arbitrator on the "round that it has no Hurisdiction to revie' decisions in
voluntar$ arbitration cases pursuant to 2rticle .>1 of the &abor !ode as a#ended b$
Section *0, )atas Pa#bansa )l". *10 and as i#ple#ented b$ Section , of the rules
i#ple#entin" ).P. )l". *10.
;o'ever, in a letter dated -ul$ >, *<7/, the respondent arbitrator refused to ta(e
co"ni?ance of the case reasonin" that he had no #ore Hurisdiction to continue as
arbitrator because he had resi"ned fro# service effective Ma$ *, *<7>.
;ence, this petition.
The petitioner union raises the follo'in" issues8
*4 :hether or not NestleRs sales personnel are entitled to holida$ pa$G and
.4 :hether or not, conco#itant 'ith the a'ard of holida$ pa$, the divisor should be
chan"ed fro# .,* to .>* da$s and 'hether or not the previous use of .,* as divisor
resulted in overpa$#ent for overti#e, ni"ht differential, vacation and sic( leave pa$.
19
The petitioner insists that respondentRs sales personnel are not field personnel under
2rticle 7. of the &abor !ode. The respondent co#pan$ controverts this assertion.
Dnder 2rticle 7., field personnel are not entitled to holida$ pa$. Said article defines field
personnel as 9non5a"ritultural e#plo$ees 'ho re"ularl$ perfor# their duties a'a$ fro#
the principal place of business or branch office of the e#plo$er and 'hose actual hours
of 'or( in the field cannot be deter#ined 'ith reasonable certaint$.9
The controvers$ centers on the interpretation of the clause 9'hose actual hours of 'or(
in the field cannot be deter#ined 'ith reasonable certaint$.9
It is undisputed that these sales personnel start their field 'or( at 7800 a.#. after havin"
reported to the office and co#e bac( to the office at +800 p.#. or +810 p.#. if the$ are
Ma(ati5based.
The petitioner #aintains that the period bet'een 7800 a.#. to +800 or +810 p.#.
co#prises the sales personnelRs 'or(in" hours 'hich can be deter#ined 'ith
reasonable certaint$.
The !ourt does not a"ree. The la' reFuires that the actual hours of 'or( in the field be
reasonabl$ ascertained. The co#pan$ has no 'a$ of deter#inin" 'hether or not these
sales personnel, even if the$ report to the office before 7800 a.#. prior to field 'or( and
co#e bac( at +810 p.#, reall$ spend the hours in bet'een in actual field 'or(.
:e concur 'ith the follo'in" disFuisition b$ the respondent arbitrator8
The reFuire#ent for the sales#en and other si#ilarl$ situated e#plo$ees to report for
'or( at the office at 7800 a.#. and return at +800 or +810 p.#. is not 'ithin the real# of
'or( in the field as defined in the !ode but an e%ercise of purel$ #ana"e#ent
prero"ative of providin" ad#inistrative control over such personnel. This does not in
an$ #anner provide a reasonable level of deter#ination on the actual field 'or( of the
e#plo$ees 'hich can be reasonabl$ ascertained. The theoretical anal$sis that
sales#en and other si#ilarl$5situated 'or(ers re"ularl$ report for 'or( at 7800 a.#. and
return to their ho#e station at +800 or +810 p.#., creatin" the assu#ption that their field
'or( is supervised, is surface proHection. 2ctual field 'or( be"ins after 7800 a.#., 'hen
the sales personnel follo' their field itinerar$, and ends i##ediatel$ before +800 or +810
p.#. 'hen the$ report bac( to their office. The period bet'een 7800 a.#. and +800 or
+810 p.#. co#prises their hours of 'or( in the field, the e%tent or scope and result of
'hich are subHect to their individual capacit$ and industr$ and 'hich 9cannot be
deter#ined 'ith reasonable certaint$.9 This is the reason 'h$ effective supervision over
field 'or( of sales#en and #edical representatives, truc( drivers and #erchandisers is
practicall$ a ph$sical i#possibilit$. !onseFuentl$, the$ are e%cluded fro# the ten
holida$s 'ith pa$ a'ard. 3.ollo, pp. 1>51/4
Moreover, the reFuire#ent that 9actual hours of 'or( in the field cannot be deter#ined
'ith reasonable certaint$9 #ust be read in conHunction 'ith Rule IV, )oo( III of the
I#ple#entin" Rules 'hich provides8
Rule IV ;olida$s 'ith Pa$
Sec. *. !overa"e Q This rule shall appl$ to all e#plo$ees e%cept8
%%% %%% %%%
3e4 Field personnel and other e#plo$ees !hose time and perormance is unsupervised
by the employer . . . 3#phasis supplied4
:hile contendin" that such rule added another ele#ent not found in the la' 3.ollo, p.
*14, the petitioner nevertheless atte#pted to sho' that its affected #e#bers are not
covered b$ the above#entioned rule. The petitioner asserts that the co#pan$Rs sales
personnel are strictl$ supervised as sho'n b$ the SOD 3Supervisor of the Da$4
schedule and the co#pan$ circular dated March *,, *<7+ 32nne%es . and 1, .ollo, pp.
,15,,4.
!ontrar$ to the contention of the petitioner, the !ourt finds that the afore#entioned rule
did not add another ele#ent to the &abor !ode definition of field personnel. The clause
9'hose ti#e and perfor#ance is unsupervised b$ the e#plo$er9 did not a#plif$ but
#erel$ interpreted and e%pounded the clause 9'hose actual hours of 'or( in the field
cannot be deter#ined 'ith reasonable certaint$.9 The for#er clause is still 'ithin the
scope and purvie' of 2rticle 7. 'hich defines field personnel. ;ence, in decidin"
'hether or not an e#plo$eeRs actual 'or(in" hours in the field can be deter#ined 'ith
reasonable certaint$, Fuer$ #ust be #ade as to 'hether or not such e#plo$eeRs ti#e
and perfor#ance is constantl$ supervised b$ the e#plo$er.
The SOD schedule adverted to b$ the petitioner does not in the least si"nif$ that these
sales personnelRs ti#e and perfor#ance are supervised. The purpose of this schedule
is #erel$ to ensure that the sales personnel are out of the office not later than 7800 a.#.
and are bac( in the office not earlier than +800 p.#.
&i(e'ise, the !ourt fails to see ho' the co#pan$ can #onitor the nu#ber of actual
hours spent in field 'or( b$ an e#plo$ee throu"h the i#position of sanctions on
absenteeis# contained in the co#pan$ circular of March *,, *<7+.
20
The petitioner clai#s that the fact that these sales personnel are "iven incentive bonus
ever$ Fuarter based on their perfor#ance is proof that their actual hours of 'or( in the
field can be deter#ined 'ith reasonable certaint$.
The !ourt thin(s other'ise.
The criteria for "rantin" incentive bonus are8 3*4 attainin" or e%ceedin" sales volu#e
based on sales tar"etG 3.4 "ood collection perfor#anceG 314 proper co#pliance 'ith
"ood #ar(et h$"ieneG 3+4 "ood #erchandisin" 'or(G 3,4 #ini#al #ar(et returnsG and
3>4 proper truc( #aintenance. 3.ollo, p. *<04.
The above criteria indicate that these sales personnel are "iven incentive bonuses
precisel$ because of the difficult$ in #easurin" their actual hours of field 'or(. These
e#plo$ees are evaluated b$ the result of their 'or( and not b$ the actual hours of field
'or( 'hich are hardl$ susceptible to deter#ination.
In San Miguel 5re!ery, (nc. v. Democratic )abor :rgani-ation 37 S!R2 >*1 @*<>1A4,
the !ourt had occasion to discuss the nature of the Hob of a sales#an. !itin" the case
of %e!el ,ea Co. v. 0illiams, !.!.2. O(la., **7 F. .d .0., the !ourt stated8
The reasons for e%cludin" an outside sales#an are fairl$ apparent. Such a sales#an,
to a "reater e%tent, 'or(s individuall$. There are no restrictions respectin" the ti#e he
shall 'or( and he can earn as #uch or as little, 'ithin the ran"e of his abilit$, as his
a#bition dictates. In lieu of overti#e he ordinaril$ receives co##issions as e%tra
co#pensation. ;e 'or(s a'a$ fro# his e#plo$erRs place of business, is not subHect to
the personal supervision of his e#plo$er, and his e#plo$er has no 'a$ of (no'in" the
nu#ber of hours he 'or(s per da$.
:hile in that case the issue 'as 'hether or not sales#en 'ere entitled to overti#e pa$,
the sa#e rationale for their e%clusion as field personnel fro# holida$ pa$ benefits also
applies.
The petitioner union also assails the respondent arbitratorRs rulin" that, conco#itant
'ith the a'ard of holida$ pa$, the divisor should be chan"ed fro# .,* to .>* da$s to
include the additional *0 holida$s and the e#plo$ees should rei#burse the a#ounts
overpaid b$ Filipro due to the use of .,* da$sR divisor.
2rbitrator VivarRs rationale for his decision is as follo's8
. . . The ne' doctrinal polic$ established 'hich ordered pa$#ent of ten holida$s
certainl$ adds to or accelerates the basis of conversion and co#putation b$ ten da$s.
:ith the inclusion of ten holida$s as paid da$s, the divisor is no lon"er .,* but .>* or
.>. if election da$ is counted. This is indeed an e%tre#el$ difficult le"al Fuestion of
interpretation 'hich accounts for 'hat is clai#ed as fallin" 'ithin the concept of
9solutio indebti.9
:hen the clai# of the Dnion for pa$#ent of ten holida$s 'as "ranted, there 'as a
conseFuent need to abandon that .,* divisor. To #aintain it 'ould create an i#possible
situation 'here the e#plo$ees 'ould benefit 'ith additional ten da$s 'ith pa$ but
'ould si#ultaneousl$ enHo$ hi"her benefits b$ discardin" the sa#e ten da$s for
purposes of co#putin" overti#e and ni"ht ti#e services and considerin" sic( and
vacation leave credits. Therefore, rei#burse#ent of such overpa$#ent 'ith the use of
.,* as divisor arises conco#itant 'ith the a'ard of ten holida$s 'ith pa$. 3.ollo, p. 1+4
The divisor assu#es an i#portant role in deter#inin" 'hether or not holida$ pa$ is
alread$ included in the #onthl$ paid e#plo$eeRs salar$ and in the co#putation of his
dail$ rate. This is the thrust of our pronounce#ent in Chartered 5ank 4mployees
/ssociation v. :ple 3supra4. In that case, :e held8
It is ar"ued that even 'ithout the presu#ption found in the rules and in the polic$
instruction, the co#pan$ practice indicates that the #onthl$ salaries of the e#plo$ees
are so co#puted as to include the holida$ pa$ provided b$ la'. The petitioner contends
other'ise.
One stron" ar"u#ent in favor of the petitionerRs stand is the fact that the !hartered
)an(, in co#putin" overti#e co#pensation for its e#plo$ees, e#plo$s a 9divisor9 of
.,* da$s. The .,* 'or(in" da$s divisor is the result of subtractin" all Saturda$s,
Sunda$s and the ten 3*04 le"al holida$s fro# the total nu#ber of calendar da$s in a
$ear. If the e#plo$ees are alread$ paid for all non5'or(in" da$s, the divisor should be
1>, and not .,*.
In the petitionerRs case, its co#putation of dail$ ratio since Septe#ber *, *<70, is as
follo's8
#onthl$ rate % *. #onths
QQQQQQQQQQQ
.,* da$s
Follo'in" the criterion laid do'n in the Chartered 5ank case, the use of .,* da$sR
divisor b$ respondent Filipro indicates that holida$ pa$ is not $et included in the
e#plo$eeRs salar$, other'ise the divisor should have been .>*.
21
It #ust be stressed that the dail$ rate, assu#in" there are no intervenin" salar$
increases, is a constant fi"ure for the purpose of co#putin" overti#e and ni"ht
differential pa$ and co##utation of sic( and vacation leave credits. Necessaril$, the
dail$ rate should also be the sa#e basis for co#putin" the *0 unpaid holida$s.
The respondent arbitratorRs order to chan"e the divisor fro# .,* to .>* da$s 'ould
result in a lo'er dail$ rate 'hich is violative of the prohibition on non5di#inution of
benefits found in 2rticle *00 of the &abor !ode. To #aintain the sa#e dail$ rate if the
divisor is adHusted to .>* da$s, then the dividend, 'hich represents the e#plo$eeRs
annual salar$, should correspondin"l$ be increased to incorporate the holida$ pa$. To
illustrate, if prior to the "rant of holida$ pa$, the e#plo$eeRs annual salar$ is P.,,*00,
then dividin" such fi"ure b$ .,* da$s, his dail$ rate is P*00.00 2fter the pa$#ent of *0
da$sR holida$ pa$, his annual salar$ alread$ includes holida$ pa$ and totals P.>,*00
3P.,,*00 S *,0004. Dividin" this b$ .>* da$s, the dail$ rate is still P*00.00. There is
thus no #erit in respondent NestleRs clai# of overpa$#ent of overti#e and ni"ht
differential pa$ and sic( and vacation leave benefits, the co#putation of 'hich are all
based on the dail$ rate, since the dail$ rate is still the sa#e before and after the "rant
of holida$ pa$.
Respondent NestleRs invocation of solutio indebiti, or pa$#ent b$ #ista(e, due to its
use of .,* da$s as divisor #ust fail in li"ht of the &abor !ode #andate that 9all doubts
in the i#ple#entation and interpretation of this !ode, includin" its i#ple#entin" rules
and re"ulations, shall be resolved in favor of labor.9 32rticle +4. Moreover, prior to
Septe#ber *, *<70, 'hen the co#pan$ 'as on a >5da$ 'or(in" schedule, the divisor
used b$ the co#pan$ 'as 101, indicatin" that the *0 holida$s 'ere li(e'ise not paid.
:hen Filipro shifted to a ,5da$ 'or(in" schebule on Septe#ber *, *<70, it had the
chance to rectif$ its error, if ever there 'as one but did not do so. It is no' too late to
alle"e pa$#ent b$ #ista(e.
Nestle also Fuestions the voluntar$ arbitratorRs rulin" that holida$ pa$ should be
co#puted fro# Nove#ber *, *</+. This rulin" 'as not Fuestioned b$ the petitioner
union as obviousl$ said decision 'as favorable to it. Technicall$, therefore, respondent
Nestle should have filed a separate petition raisin" the issue of effectivit$ of the holida$
pa$ a'ard. This !ourt has ruled that an appellee 'ho is not an appellant #a$ assi"n
errors in his brief 'here his purpose is to #aintain the Hud"#ent on other "rounds, but
he cannot see( #odification or reversal of the Hud"#ent or affir#ative relief unless he
has also appealed. 3Franco v. Inter#ediate 2ppellate !ourt, */7 S!R2 11* @*<7<A,
citin" &a !a#pana Food Products, Inc. v. Philippine !o##ercial and Industrial )an(,
*+. S!R2 1<+ @*<7>A4. Nevertheless, in order to full$ settle the issues so that the
e%ecution of the !ourtRs decision in this case #a$ not be needlessl$ dela$ed b$ another
petition, the !ourt resolved to ta(e up the #atter of effectivit$ of the holida$ pa$ a'ard
raised b$ Nestle.
Nestle insists that the rec(onin" period for the application of the holida$ pa$ a'ard is
*<7, 'hen the Chartered 5ank decision, pro#ul"ated on 2u"ust .7, *<7,, beca#e
final and e%ecutor$, and not fro# the date of effectivit$ of the &abor !ode. 2lthou"h the
!ourt does not entirel$ a"ree 'ith Nestle, 'e find its clai# #eritorious.
In (nsular 5ank o /sia and /merica 4mployees# 1nion 2(5//413 v. (nciong, *1. S!R2
>>1 @*<7+A, hereinafter referred to as the I)22 case, the !ourt declared that Section .,
Rule IV, )oo( III of the i#ple#entin" rules and Polic$ Instruction No. <, issued b$ the
then Secretar$ of &abor on Februar$ *>, *</> and 2pril .1, *</>, respectivel$, and
'hich e%cluded #onthl$ paid e#plo$ees fro# holida$ pa$ benefits, are null and void.
The !ourt therein reasoned that, in the "uise of clarif$in" the &abor !odeRs provisions
on holida$ pa$, the afore#entioned i#ple#entin" rule and polic$ instruction a#ended
the# b$ enlar"in" the scope of their e%clusion. The Chartered 5ank case reiterated the
above rulin" and added the 9divisor9 test.
;o'ever, prior to their bein" declared null and void, the i#ple#entin" rule and polic$
instruction enHo$ed the presu#ption of validit$ and hence, NestleRs non5pa$#ent of the
holida$ benefit up to the pro#ul"ation of the I)22 case on October .1, *<7+ 'as in
co#pliance 'ith these presu#abl$ valid rule and polic$ instruction.
In the case of De /gbayani v. "hilippine 'ational 5ank, 17 S!R2 +.< @*</*A, the !ourt
discussed the effect to be "iven to a le"islative or e%ecutive act subseFuentl$ declared
invalid8
%%% %%% %%%
. . . It does not ad#it of doubt that prior to the declaration of nullit$ such challen"ed
le"islative or e%ecutive act #ust have been in force and had to be co#plied 'ith. This
is so as until after the Hudiciar$, in an appropriate case, declares its invalidit$, it is
entitled to obedience and respect. Parties #a$ have acted under it and #a$ have
chan"ed their positions. :hat could be #ore fittin" than that in a subseFuent liti"ation
re"ard be had to 'hat has been done 'hile such le"islative or e%ecutive act 'as in
operation and presu#ed to be valid in all respects. It is no' accepted as a doctrine that
prior to its bein" nullified, its e%istence as a fact #ust be rec(oned 'ith. This is #erel$
to reflect a'areness that precisel$ because the Hudiciar$ is the "overn#ent or"an 'hich
has the final sa$ on 'hether or not a le"islative or e%ecutive #easure is valid, a period
of ti#e #a$ have elapsed before it can e%ercise the po'er of Hudicial revie' that #a$
lead to a declaration of nullit$. It 'ould be to deprive the la' of its Fualit$ of fairness
and Hustice then, if there be no reco"nition of 'hat had transpired prior to such
adHudication.
In the lan"ua"e of an 2#erican Supre#e !ourt decision8 9The actual e%istence of a
statute, prior to such a deter#ination of @unconstitutionalit$A, is an operative fact and
22
#a$ have conseFuences 'hich cannot Hustl$ be i"nored. The past cannot al'a$s be
erased b$ a ne' Hudicial declaration. The effect of the subseFuent rulin" as to invalidit$
#a$ have to be considered in various aspects, Q 'ith respect to particular relations,
individual and corporate, and particular conduct, private and official.9 3!hicot !ount$
Draina"e Dist. v. )a%ter States )an(, 107 DS 1/*, 1/+ @*<+0A4. This lan"ua"e has
been Fuoted 'ith approval in a resolution in /raneta v. ;ill 3<1 Phil. *00. @*<,.A4 and
the decision in Manila Motor Co., (nc. v. 6lores 3<< Phil. /17 @*<,>A4. 2n even #ore
recent instance is the opinion of -ustice Maldivar spea(in" for the !ourt in 6ernande- v.
Cuerva and Co. 3.* S!R2 *0<, @*<>/A. 32t pp. +1+5+1,4
The 9operative fact9 doctrine reali?es that in declarin" a la' or rule null and void, undue
harshness and resultin" unfairness #ust be avoided. It is no' al#ost the end of *<<*.
To reFuire various co#panies to reach bac( to *</, no! and nullif$ acts done in "ood
faith is undul$ harsh. *<7+ is a fairer rec(onin" period under the facts of this case.
2ppl$in" the afore#entioned doctrine to the case at bar, it is not far5fetched that Nestle,
rel$in" on the i#plicit validit$ of the i#ple#entin" rule and polic$ instruction before this
!ourt nullified the#, and thin(in" that it 'as not obli"ed to "ive holida$ pa$ benefits to
its #onthl$ paid e#plo$ees, #a$ have been #oved to "rant other concessions to its
e#plo$ees, especiall$ in the collective bar"ainin" a"ree#ent. This possibilit$ is
bolstered b$ the fact that respondent NestleRs e#plo$ees are a#on" the hi"hest paid in
the industr$. :ith this consideration, it 'ould be unfair to i#pose additional burdens on
Nestle 'hen the non5pa$#ent of the holida$ benefits up to *<7+ 'as not in an$ 'a$
attributed to NestleRs fault.
The !ourt thereb$ resolves that the "rant of holida$ pa$ be effective, not fro# the date
of pro#ul"ation of the !hartered )an( case nor fro# the date of effectivit$ of the &abor
!ode, but fro# October .1, *<7+, the date of pro#ul"ation of the I)22 case.
:;RFOR, the order of the voluntar$ arbitrator in hereb$ MODIFID. The divisor to
be used in co#putin" holida$ pa$ shall be .,* da$s. The holida$ pa$ as above directed
shall be co#puted fro# October .1, *<7+. In all other respects, the order of the
respondent arbitrator is hereb$ 2FFIRMD.
SO ORDRD.
'arvasa, C.%., Melencio$;errera, "aras, 6eliciano, "adilla, 5idin, Medialdea, 7ri<o$
/=uino, .egalado, Davide, %r. and .omero, %%., concur.
Cru- and 'ocon, %%., took no part.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION

23
G.R. No. 109210 A6,74 17, 1996
ENGINEER LEONCIO A. SALACAR, petitioner,
vs.
NATIONAL LAOR RELATIONS COMMISSION /2#$ D7?7'7o#0 a#$ H.L. CARLOS
CONSTRUCTION, CO. INC., respondents.

@APUNAN, J.:p
This is a petition for certiorari D to annul the decision of the National &abor Relations
!o##ission in N&R! !ase No. 00.7,,5<. dated ./ .Nove#ber *<<. 'hich affir#ed
in toto the decision of the &abor 2rbiter in N&R! N!R50050<50,11,5<* dated .<
-anuar$ *<<. dis#issin" the co#plaint filed b$ petitioner for lac( of #erit. The N&R!Rs
resolution dated .. Februar$ *<<1 is si#ilarl$ i#pu"ned for den$in" petitionerRs #otion
for reconsideration.
The antecedent facts are as follo's8
On */ 2pril *<<0, private respondent, at a #onthl$ salar$ of P+,,00.00, e#plo$ed
petitioner as constructionBproHect en"ineer for the construction of the Monte de Piedad
buildin" in !ubao, Oue?on !it$. 2lle"edl$, b$ virtue of an oral contract, petitioner 'ould
also receive a share in the profits after co#pletion of the proHect and that petitionerRs
services in e%cess of ei"ht 374 hours on re"ular da$s and services rendered on
'ee(ends and le"al holida$s shall be co#pensable overti#e at the rate of P./.7, per
hour.
On *> 2pril *<<*, petitioner received a #e#orandu# issued b$ private respondentRs
proHect #ana"er, n"r. Nestor 2. Delantar infor#in" hi# of the ter#ination of his
services effective on 10 2pril *<<*. Reproduced hereunder is the above#entioned
#e#orandu#8
2pril *>, *<<*
MMOR2NDDM TO8
&ON!IO V. S2&2M2R
ProHect n"ineer
MONT D PID2D )&D6. PRO-!T
Oue?on !it$
Due to the i#pendin" co#pletion of the afore#entioned proHect and the lac( of up5
co#in" contracted 'or(s for our co#pan$ in the i##ediate future, volu#e of 'or( for
our en"ineerin" and technical personnel has "reatl$ been di#inished.
In vie' of this, $ou are hereb$ advised to 'ind up all technical reports includin"
acco#plish#ents, chan"e orders, etc.
Further, $ou are advised that $our services are bein" ter#inated effective at the close
of office hours on 2pril 10, *<<*.
This, ho'ever, has no preHudice to $our re5e#plo$#ent in this co#pan$ in its local and
overseas proHects should the need for $our services arises.
Than( $ou for $our invaluable services rendered to this co#pan$.
Noted )$8
3S"d.4 Mario ). !ornista
Vice President
1
On *1 Septe#ber *<<*, petitioner filed a co#plaint a"ainst private respondent for
ille"al dis#issal, unfair labor practice, ille"al deduction,
non5pa$#ent of 'a"es, overti#e rendered, service incentive leave pa$, co##ission,
allo'ances, profit5sharin" and separation pa$ 'ith the N&R!5N!R 2rbitration )ranch,
Manila.
2
On .< -anuar$ *<<., &abor 2rbiter Raul T. 2Fuino rendered a decision, the dispositive
portion of 'hich reads, thus8
:;RFOR, responsive to the fore"oin", the instant case is
hereb$ DISMISSD for lac( of #erits.
SO ORDRD.
3
The &abor 2rbiter ruled that petitioner 'as a #ana"erial e#plo$ee and therefore
e%e#pt fro# pa$#ent of benefits such as overti#e pa$, service incentive leave pa$ and
pre#iu# pa$ for holida$s and rest da$s. Petitioner, &abor 2rbiter 2Fuino further
declared, 'as also not entitled to separation pa$. ;e 'as hired as a proHect e#plo$ee
and his services 'ere ter#inated due to the co#pletion of the proHect.
-
24
The &abor 2rbiter, li(e'ise, denied petitionerRs clai# for a share in the proHectRs profits,
rei#burse#ent of le"al e%penses and unpaid 'a"es for lac( of basis.
5
On *+ 2pril *<<., petitioner appealed to the National &abor Relations !o##ission
3N&R!4.
On ./ Nove#ber *<<., the N&R! rendered the assailed decision, the dispositive
portion of 'hich reads as follo's8
:;RFOR, pre#ises considered, the appeal is hereb$ Dis#issed and the assailed
decision is 2ffir#ed en toto.
SO ORDRD.
6
On .< -anuar$ *<<1, petitioner filed a #otion for reconsideration 'hich the N&R!
denied for lac( of #erit on .. Februar$ *<<1.
7
;ence, the instant petition 'herein the follo'in" issues 'ere raised8
I. 6rantin" for the sa(e of ar"u#ent 'ithout concedin", that co#plainant5petitioner
herein 'as a #ana"erial e#plo$ee, 'as his verbal contract to be paid his overti#e
services as stated in para"raph .3b4 of this Petition invalidT and the pa$#ents of such
overti#e services as evidenced b$ %hibits 9)9 to 9)5.+9 3the "enuineness and
authenticit$ of 'hich are not disputed4 are the$ not evidentiar$ and of corroborative
value to the true un'ritten a"ree#ent bet'een the parties in this caseT
II. Is there an$ portion of the &abor !ode that prohibits contracts bet'een e#plo$er and
e#plo$ee "ivin" the latter the benefit of bein" paid overti#e services, as in this
particular caseT
III. :here an e#plo$ee 'as induced to accept a lo' or distorted salar$ or 'a"e level,
because of an incentive pro#ise to receive a bi""er co#pensation than that 'hich
'ould be his true and correct 'a"e level as sho'n b$ docu#ents for the pa$#ent of
his distorted 'a"es and overti#e services, is it not le"all$ proper, in the alternative to
clai# pa$#ent of the differential of his undistorted salar$ or 'a"e level 'hen the
pro#ised incentive co#pensation is denied b$ his e#plo$er after the co#pletion of the
Hob for 'hich he has e#plo$edT
IV. Is the !ertificate of e#plo$#ent issued to an e#plo$ee b$ his e#plo$er, assailable
b$ #ere affidavits of denials to the effect that said !ertificate 'as issued because of
the insistence of the e#plo$ee that it be #ade to include a period he did not 'or(, but
'hich such fact of insistence or reFuest is also denied b$ the e#plo$ee, because he
reall$ 'or(ed durin" the period included in said !ertificateT
V. Is the e#plo$er liable for the pa$#ent of the attorne$Rs pa$ incurred b$ his e#plo$ee
in a 'or( connected cri#inal prosecution a"ainst hi# for an act done b$ another
e#plo$ee assi"ned b$ sa#e e#plo$er to do the act 'hich 'as the subHect of the
cri#inal prosecutionT
E
Petitioner pra$s that Hud"#ent be rendered, thus8
*. That the decision of the N&R! and its resolution den$in" the Motion for
Reconsideration be set aside on "rounds of "rave abuse of discretion andG
.. That private respondent be ordered to pa$ petitioner the follo'in"8
a. the pre#iu# pa$s for his overti#e services of 1>7 hours on ordinar$ da$s at .,KG
./. hours on Saturda$s at 10KG ./. hours on Sunda$s plus .+ hours on le"al holida$s
at .00K co#puted at the rate of P./.7, per hour of undistorted 'a"e levelG
b. in the alternative, to pa$ at least one 3*4 percent of +., #illion pesos profit share, or
the su# total of the differential of his salaries, in the a#ount of P.,*7+.00 per #onth,
since 2pril */, *<<0 to 2pril 10, *<<*, his undistorted salar$ bein" P>,>7+.00 per
#onthG and to pa$ his unpaid salar$ for *, da$s 5 Ma$ * to *,, *<<*, 'ith his
undistorted salar$ rateG
c. the a#ount of P1,000.00 rei#burse#ent for 'hat he paid his defense counsel in that
cri#inal action 'hich should have instead been a"ainst respondentRs "eneral #ana"erG
d. Separation pa$ of at least one #onth salar$, he havin" been ter#inated
unreasonabl$ 'ithout cause, and three da$s service incentive leave pa$G and to pa$ the
costsG
9
)efore proceedin" to the #erits of the petition, 'e shall first resolve the procedural
obHection raised. Private respondent pra$s for the outri"ht dis#issal of the instant
petition on "rounds of 'ron" #ode of appeal, it bein" in the for# of a petition for revie'
on certiorari 3Rule +, of the Revised Rules of !ourt4 and not a special civil action for
certiorari 3Rule >, thereof4 'hich is the correct #ode of appeal fro# decisions of the
N&R!.
2lthou"h 'e a"ree 'ith private respondent that appeals to the Supre#e !ourt fro#
decisions of the N&R! should be in the for# of a special civil action for certiorari under
25
Rule >, of the Revised Rules of !ourt, this rule is not infle%ible. In a nu#ber of cases,
10
this !ourt has resolved to treat as special civil actions for certiorari petitions
erroneousl$ captioned as petitions for revie' on certiorari 9in the interest of Hustice.9 In
"eople#s Security, (nc. v. ').C,
11
'e elaborated, thus8
Indeed, this !ourt has ti#e and a"ain declared that the onl$ 'a$ b$ 'hich a labor
case #a$ reach the Supre#e !ourt is throu"h a petition for certiorari under Rule >, of
the Rules of !ourt alle"in" lac( or e%cess of Hurisdiction or "rave abuse of discretion
3Pearl S. )uc( Foundation v. N&R!, *7. S!R2 ++> @*<<0A4.
This petition should not be dis#issed on a #ere technicalit$ ho'ever. 9Dis#issal of
appeal purel$ on technical "rounds is fro'ned upon 'here the polic$ of the courts is
to encoura"e hearin"s of appeal on their #erits. ,he rules o procedure ought not to
be applied in a very rigid technical sense, rules o procedure are used only to help
secure, not override substantial >ustice. ( a technical and rigid enorcement o the
rules is made, their aim !ould be deeated9 3Ta#a$o v. !ourt of 2ppeals, .0< S!R2
,*7, ,.. @*<<.A citing 6re"orio v. !ourt of 2ppeals, /. S!R2 *.0 @*</>A4.
Conse=uently, in the interest o >ustice, the instant petition or revie! shall be treated
as a special civil action on certiorari. 3#phasis ours.4
Movin" on to the #erits, stated differentl$, the issues for our resolution are the
follo'in"8
*4 :hether or not petitioner is entitled to overti#e pa$, pre#iu# pa$ for services
rendered on rest da$s and holida$s and service incentive leave pa$, pursuant to
2rticles 7/, <1, <+ and <, of the &abor !odeG
.4 :hether or not petitioner is entitled to a share in the profits of the construction
proHectG.
14 :hether or not petitioner rendered services fro# * Ma$ to *, Ma$ *<<* and is,
therefore, entitled to unpaid 'a"esG
+4 :hether or not private respondent is liable to rei#burse petitionerRs le"al e%penses
andG
,4 :hether or not petitioner is entitled to separation pa$.
On the first issue, the N&R! concurred 'ith the &abor 2rbiterRs rulin" that petitioner 'as
a #ana"erial e#plo$ee and, therefore, e%e#pt fro# pa$#ent of overti#e pa$, pre#iu#
pa$ for holida$s and rest da$s and service incentive leave pa$ under the la'. The
N&R! declared that8
)oo( III on conditions of e#plo$#ent e%e#pts #ana"erial e#plo$ees fro# its
covera"e on the "rant of certain econo#ic benefits, 'hich are the ones the
co#plainant5appellant 'as de#andin" fro# respondent. It is an undisputed fact that
appellant 'as a #ana"erial e#plo$ee and such, he 'as not entitled to the econo#ic
benefits he sou"ht to recover.
12
Petitioner clai#s that since he perfor#s his duties in the proHect site or a'a$ fro# the
principal place of business of his e#plo$er 3herein private respondent4, he falls under
the cate"or$ of 9field personnel.9 ;o'ever, petitioner accentuates that his case
constitutes the e%ception to the e%ception because his actual 'or(in" hours can be
deter#ined as evidenced b$ the disburse#ent vouchers containin" pa$#ents of
petitionerRs salaries and overti#e services.
13
Stran"el$, petitioner is of the vie' that
field personnel #a$ include #ana"erial e#plo$ees.
:e are constrained to disa"ree 'ith petitioner.
In his ori"inal co#plaint, petitioner stated that the nature of his 'or( is 9supervisor$5
en"ineerin".9
1-
Si#ilarl$, in his o'n petition and in other pleadin"s sub#itted to this
!ourt, petitioner confir#ed that his Hob 'as to supervise the laborers in the construction
proHect
15
;ence, althou"h petitioner cannot strictl$ be classified as a #ana"erial
e#plo$ee under 2rt. 7. of the &abor !ode,
16
and sec. .3b4, Rule I, )oo( III of the
O#nibus Rules I#ple#entin" the &abor !ode,
1
7 nonetheless he is still not entitled to
pa$#ent of the aforestated benefits because he falls sFuarel$ under another e%e#pt
cate"or$ Q 9officers or #e#bers of a #ana"erial staff9 as defined under sec. .3c4 of
the above#entioned i#ple#entin" rules8
Sec. .. 4?emption. Q The provisions of this Rule shall not appl$ to the follo'in"
persons if the$ Fualif$ for e%e#ption under the condition set forth herein8
%%% %%% %%%
3c4 Officers or #e#bers of a #ana"erial staff if the$ perfor# the follo'in" duties and
responsibilities8
3*4 The pri#ar$ dut$ consists of the perfor#ance of 'or( directl$ related to
#ana"e#ent policies of their e#plo$erG
3.4 !usto#aril$ and re"ularl$ e%ercise discretion and independent Hud"#entG
314 @iA Re"ularl$ and directl$ assist a proprietor or a #ana"erial e#plo$ee 'hose
pri#ar$ dut$ consists of the #ana"e#ent of the establish#ent in 'hich he is e#plo$ed
or subdivision thereofG or @iiA e%ecute under "eneral supervision 'or( alon" speciali?ed
26
or technical lines reFuirin" special trainin", e%perience, or (no'led"eG or @iiiA e%ecute
under "eneral supervision special assi"n#ents and tas(sG and
3+4 'ho do not devote #ore than .0 percent of their hours 'or(ed in a 'or(5'ee( to
activities 'hich are not directl$ and closel$ related to the perfor#ance of the 'or(
described in para"raphs 3*4, 3.4, and 314 above.
2 case in point is 'ational Sugar .eineries Corporation v. ').C.
1E
On the issue of
9'hether supervisor$ e#plo$ees, as defined in 2rticle .*. 3#4, )oo( V of the &abor
!ode, should be considered as officers or #e#bers of the #ana"erial staff under
2rticle 7., )oo( III of the sa#e !ode and hence not entitled to overti#e, rest da$ and
holida$ pa$,9
19
this !ourt ruled8
2 cursor$ perusal of the -ob Value !ontribution State#ents of the union #e#bers 'ill
readil$ sho' that these supervisor$ e#plo$ees are under the direct supervision of their
respective depart#ent superintendents and that "enerall$ the$ assist the latter in
plannin", or"ani?in", staffin", directin", controllin", co##unicatin" and in #a(in"
decisions in attainin" the co#pan$Rs set "oals and obHectives. These supervisor$
e#plo$ees are li(e'ise responsible for the effective and efficient operation of their
respective depart#ents. . . .
%%% %%% %%%
Fro# the fore"oin", it is apparent that the #e#bers of respondent union dischar"e
duties and responsibilities 'hich ineluctabl$ Fualif$ the# as officers or #e#bers of the
#ana"erial staff, as defined in Section ., Rule I, )oo( III of the aforestated Rules to
I#ple#ent the &abor !ode, vi?.8 3*4 their pri#ar$ dut$ consists of the perfor#ance of
'or( directl$ related to #ana"e#ent policies of their e#plo$erG 3.4 the$ custo#aril$ and
re"ularl$ e%ercise discretion and independent Hud"#entG 314 the$ re"ularl$ and directl$
assist the #ana"erial e#plo$ee 'hose pri#ar$ dut$ consists of the #ana"e#ent of a
depart#ent of the establish#ent in 'hich the$ are e#plo$edG 3+4 the$ e%ecute, under
"eneral supervision, 'or( alon" speciali?ed or technical lines reFuirin" special trainin",
e%perience, or (no'led"eG 3,4 the$ e%ecute, under "eneral supervision, special
assi"n#ents and tas(sG and 3>4 the$ do not devote #ore than .0K of their hours
'or(ed in a 'or(5'ee( to activities 'hich are not directl$ and clearl$ related to the
perfor#ance of their 'or( hereinbefore described.
Dnder the facts obtainin" in this case, 'e are constrained to a"ree 'ith petitioner that
the union #e#bers should be considered as officers or #e#bers of the #ana"erial
staff and are, therefore, e%e#pt fro# the covera"e of 2rticle 7.. Perforce, the$ are not
entitled to overti#e, rest da$ and holida$ pa$.
20
The aforeFuoted rationale eFuall$ applies to petitioner herein considerin" in the #ain
his supervisor$ duties as private respondentRs proHect en"ineer, duties 'hich, it is
si"nificant to note, petitioner does not dispute.
Petitioner, li(e'ise, clai#s that the N&R! failed to "ive due 'ei"ht and consideration to
the fact that private respondent co#pensated hi# for his overti#e services as indicated
in the various disburse#ent vouchers he sub#itted as evidence.
PetitionerRs contention is un#eritorious. That petitioner 'as paid overti#e benefits does
not auto#aticall$ and necessaril$ denote that petitioner is entitled to such benefits. 2rt.
7. of the &abor !ode specificall$ delineates 'ho are entitled to the overti#e pre#iu#s
and service incentive leave pa$ provided under 2rt. 7/, <1, <+ and <, of the &abor
!ode and the e%e#ptions thereto. 2s previousl$ deter#ined, petitioner falls under the
e%e#ptions and therefore has no le"al clai# to the said benefits. It is 'ell and "ood
that petitioner 'as co#pensated for his overti#e services. ;o'ever, this does not
translate into a ri"ht on the part of petitioner to de#and additional pa$#ent 'hen,
under the la', petitioner is clearl$ e%e#pted therefro#.
6oin" to the second issue, petitioner insists that private respondent pro#ised hi# a
share in the profits after co#pletion of the construction proHect. It is because of this oral
a"ree#ent, petitioner elucidates, that he a"reed to a #onthl$ salar$ of P+,,00.00, an
a#ount 'hich he clai#s is too lo' for a professional civil en"ineer li(e hi# 'ith the
ran( of proHect en"ineer.
2r"uin" further, petitioner states that pa$#ent of his overti#e services, as sho'n b$
the afore#entioned disburse#ent vouchers, proves the e%istence of this verbal
a"ree#ent since pa$#ent of his overti#e services constitutes part of this so5called
understandin".
:e cannot accede to petitionerRs de#and. No'here in the disburse#ent vouchers can
'e find even the re#otest hint of a profit5sharin" a"ree#ent bet'een petitioner and
private respondent. PetitionerRs rationali?ation stretches the i#a"ination 'a$ too far.
Thus, 'e concur 'ith the rulin" of the &abor 2rbiter8
2s to the issue of profit sharin", 'e si#pl$ cannot "rant the sa#e on the #ere basis of
co#plainantRs alle"ation that respondent verball$ pro#ised hi# that he is entitled to a
share in the profits derive3d4 fro# the proHects. )enefits or privile"es of this nature 3are4
usuall$ in 'ritin", besides co#plainant failed to 3establish4 that said benefits or
privile"es 3have4 been "iven to an$ of respondent3Rs4 e#plo$ees as a #atter of practice
or polic$.
21
3:ords in parenthesis supplied.4
27
2nent the third issue, petitioner alle"es that on 10 2pril *<<*, before closin" hours,
private respondentRs proHect #ana"er, n"ineer Nestor Delantar advised hi# to
continue supervisin" the 9finishin" touches on #an$ parts of the buildin" 'hich too(
hi# and the assistin" laborers until *, Ma$ *<<*.9
22
2s proof of his e%tended service, petitioner presented the certificate of service issued
b$ n"r. Delantar attestin" to petitionerRs e#plo$#ent as proHect en"ineer fro# 2pril
*<<0 to Ma$ *<<*.
23
In contrast, private respondent ar"ues that the above#entioned certificate 'as issued
solel$ to acco##odate petitioner 'ho needed the sa#e for his 'or( application
abroad. It further stressed that petitioner failed to prove he actuall$ 'or(ed durin" the
aforestated period.
On this score, 'e rule for the petitioner. The purpose for 'hich the said certificate 'as
issued beco#es irrelevant. The fact re#ains that private respondent (no'in"l$ and
voluntaril$ issued the certificate. Mere denials and self5servin" state#ents to the effect
that petitioner alle"edl$ pro#ised not to use the certificate a"ainst private respondent
are not sufficient to overturn the sa#e. ;ence, private respondent is estopped fro#
assailin" the contents of its o'n certificate of service.
Durin" the construction of the Monte de Piedad buildin", a cri#inal co#plaint for unHust
ve%ation 'as filed b$ one Salvador Flores a"ainst the officers of the Monte de Piedad L
Savin"s )an(, the o'ner thereof, for constructin" a bun(house in front of his 3Flores4
apart#ent and #a(in" it difficult for hi# to enter the sa#e.
Petitioner avers that he 'as i#plicated in the co#plaint for the sole reason that he 'as
the construction en"ineer of the proHect. ;ence, private respondent, bein" the
e#plo$er, is obli"ated to pa$ petitionerRs le"al e%penses, particularl$, rei#burse#ent of
the fees petitioner paid his counsel a#ountin" to P1,000.00. Petitioner ar"ues that
private respondentRs act of "ivin" allo'ances to enable petitioner to attend the
hearin"s, as sho'n in the disburse#ent voucher sub#itted as evidence,
2-
constitutes
an ad#ission of the aforestated obli"ation.
:e a"ree 'ith petitioner. 2lthou"h not directl$ i#plicated in the cri#inal co#plaint,
private respondent is nonetheless obli"ated to defra$ petitionerRs le"al e%penses.
Petitioner 'as included in the co#plaint not in his personal capacit$ but in his capacit$
as proHect en"ineer of private respondent and the case arose in connection 'ith his
'or( as such. 2t the construction site, petitioner is the representative of private
respondent bein" its e#plo$ee and he acts for and in behalf of private respondent.
;ence, the inclusion of petitioner in the co#plaint for unHust ve%ation, 'hich 'as 'or(5
related, is eFuivalent to inclusion of private respondent itself.
On the last issue, 'e rule that petitioner is a proHect e#plo$ee and, therefore, not
entitled to separation pa$.
The applicable provision is 2rticle .70 of the &abor !ode 'hich defines the ter#
9proHect e#plo$ee,9 thus8
2rt. .70. Re"ular and !asual #plo$#ent. Q The provisions of 'ritten a"ree#ent to
the contrar$ not'ithstandin" and re"ardless of the oral a"ree#ent of the parties, an
e#plo$#ent shall be dee#ed to be re"ular 'here the e#plo$ee has been en"a"ed to
perfor# activities 'hich are usuall$ necessar$ or desirable in the usual business or
trade of the e#plo$er, e?cept !here the employment has been i?ed or a speciic
period or undertaking the completion or termination o !hich has been determined at
the time o the engagement o the employee or 'here the 'or( or services to be
perfor#ed is seasonal in nature and the e#plo$#ent is for the duration of the season.
3#phasis ours.4
25
In the case at bench, it 'as dul$ established that private respondent hired petitioner as
proHect or construction en"ineer specificall$ for its Monte de Piedad buildin" proHect. In
his o'n 'ords, petitioner declared8
%%% %%% %%%
.. That co#plainant5petitioner herein, b$ virtue of an oral a"ree#ent entered into 'ith
private respondent herein throu"h its proprietor, president and "eneral #ana"er, n"r.
;onorio &. !arlos, on /pril 17, 199@, began to !ork as a licensed Civil 4ngineer as
construction or engineer o its contracted pro>ect, the Monte de "iedad 5ank 5uilding,
at Cubao, Aue-on City, on the follo'in" ter#s and conditions, to 'it8
2ccordin"l$, as proHect e#plo$ee, petitionerRs services are dee#ed coter#inous 'ith
the proHect, that is, petitionerRs services #a$ be ter#inated as soon as the proHect for
'hich he 'as hired is co#pleted.
2
7
There can be no dispute that petitionerRs dis#issal 'as due to the co#pletion of the
construction of the Monte de Piedad buildin". Petitioner hi#self stated that it too( hi#
and his assistin" laborers until *, Ma$ *<<* to co#plete the 9finishin" touches9 on the
said buildin".
2E
Petitioner, thus, has no le"al ri"ht to de#and separation pa$.
29
Polic$ Instruction No.
.0 entitled 9Stabili?in" #plo$er5#plo$ee Relations in the !onstruction Industr$9
e%plicitl$ #andates that8
%%% %%% %%%
28
ProHect e#plo$ees are not entitled to ter#ination pa$ if the$ are ter#inated as a result
of the co#pletion of the proHect or an$ phase thereof in 'hich the$ are e#plo$ed,
re"ardless of the nu#ber of proHects in 'hich the$ have been e#plo$ed b$ a particular
construction co#pan$. Moreover, the co#pan$ is not reFuired to obtain a clearance
fro# the Secretar$ of &abor in connection 'ith such ter#ination. :hat is reFuired of the
co#pan$ is a report to the nearest Public #plo$#ent Office for statistical purposes.
%%% %%% %%%
Depart#ent Order No. *< of the Depart#ent of &abor and #plo$#ent 3DO&4 entitled
96uidelines 6overnin" the #plo$#ent of :or(ers in the !onstruction Industr$9
pro#ul"ated on * 2pril *<<1, reiterates the sa#e rule.
30
:;RFOR, pre#ises considered, the assailed decision is hereb$ MODIFID as
follo's8
*4 Private respondent is ordered to pa$ petitioner for services rendered fro# * Ma$ to
*, Ma$ *<<*G and,
.4 Private respondent is ordered to rei#burse petitionerRs le"al e%penses in the a#ount
of P1,000.00.
In all other respects, the i#pu"ned decision is hereb$ 2FFIRMD.
SO ORDRD.
"adilla, 5ellosillo, Bitug and ;ermosisima, %r., %%., concur.
Republic of the Philippines
SUPREME COURT
Manila
S!OND DIVISION

G.R. No. 11257- O)3o+&, E, 199E
MERCIDAR .ISHING CORPORATION ,&6,&'&#3&$ +y 73' P,&'7$&#3 DOMINGO .
NAAAL, petitioner,
vs.
29
NATIONAL LAOR RELATIONS COMMISSION a#$ .ERMIN AGAO, 2R.,
respondents.

MENDOCA, J.:
This is a petition for certiorari to set aside the decision, dated 2u"ust 10, *<<1, of the
National &abor Relations !o##ission dis#issin" the appeal of petitioner Mercidar
Fishin" !orporation fro# the decision of the &abor 2rbiter in N&R! N!R !ase No. 0<5
0,07+5<0, as 'ell as the resolution dated October .,, *<<1, of the N&R! den$in"
reconsideration.
This case ori"inated fro# a co#plaint filed on Septe#ber .0, *<<0 b$ private
respondent Fer#in 2"ao, -r. a"ainst petitioner for ille"al dis#issal, violation of P.D. No.
7,*, and non5pa$#ent of five da$s service incentive leave for *<<0. Private respondent
had been e#plo$ed as a 9bode"ero9 or shipRs Fuarter#aster on Februar$ *., *<77. ;e
co#plained that he had been constructivel$ dis#issed b$ petitioner 'hen the latter
refused hi# assi"n#ents aboard its boats after he had reported to 'or( on Ma$ .7,
*<<0.
1
Private respondent alle"ed that he had been sic( and thus allo'ed to "o on leave
'ithout pa$ for one #onth fro# 2pril .7, *<<0 but that 'hen he reported to 'or( at the
end of such period 'ith a health clearance, he 'as told to co#e bac( another ti#e as
he could not be reinstated i##ediatel$. Thereafter, petitioner refused to "ive hi# 'or(.
For this reason, private respondent as(ed for a certificate of e#plo$#ent fro#
petitioner on Septe#ber >, *<<0. ;o'ever, 'hen he ca#e bac( for the certificate on
Septe#ber *0, petitioner refused to issue the certificate unless he sub#itted his
resi"nation. Since private respondent refused to sub#it such letter unless he 'as "iven
separation pa$, petitioner prevented hi# fro# enterin" the pre#ises.
2
Petitioner, on the other hand, alle"ed that it 'as private respondent 'ho actuall$
abandoned his 'or(. It clai#ed that the latter failed to report for 'or( after his leave
had e%pired and 'as, in fact, absent 'ithout leave for three #onths until 2u"ust .7,
*<<7. Petitioner further clai#s that, nonetheless, it assi"ned private respondent to
another vessel, but the latter 'as left behind on Septe#ber *, *<<0. Thereafter, private
respondent as(ed for a certificate of e#plo$#ent on Septe#ber > on the prete%t that
he 'as appl$in" to another fishin" co#pan$. On Septe#ber *0, *<<0, he refused to "et
the certificate and resi"n unless he 'as "iven separation pa$.
3
On Februar$ *7, *<<., &abor 2rbiter 2rthur &. 2#ansec rendered a decision disposin"
of the case as follo's8
2!!ORDIN6&I, respondents are ordered to reinstate co#plainant 'ith bac('a"es,
pa$ hi# his *1th #onth pa$ and incentive leave pa$ for *<<0.
2ll other clai#s are dis#issed.
SO ORDRD.
Petitioner appealed to the N&R! 'hich, on 2u"ust 10, *<<1, dis#issed the appeal for
lac( of #erit. The N&R! dis#issed petitionerRs clai# that it cannot be held liable for
service incentive leave pa$ b$ fisher#en in its e#plo$ as the latter supposedl$ are
9field personnel9 and thus not entitled to such pa$ under the &abor !ode.
-
The N&R! li(e'ise denied petitionerRs #otion for reconsideration of its decision in its
order dated October .,, *<<1.
;ence, this petition. Petitioner contends8
I
T; RSPONDNT !OMMISSION P2&P2)&I RRD IN RD&IN6 2ND
SDST2ININ6 T; VI: T;2T FIS;IN6 !R: MM)RS. &IJ FRMIN 262O,
-R., !2NNOT ) !&2SSIFID 2S FI&D PRSONN& DNDR 2RTI!& 7. OF T;
&2)OR !OD.
II
T; RSPONDNT !OMMISSION 2!TD :IT; 6R2V 2)DS OF DIS!RTION
2MODNTIN6 TO &2!J OF -DRISDI!TION :;N IT DP;&D T; FINDIN6S OF
T; &2)OR 2R)ITR T;2T ;RIN PTITIONR ;2D !ONSTRD!TIV&I
DISMISSD FRMIN 262O, -R., FROM MP&OIMNT.
The petition has no #erit.
2rt. 7. of the &abor !ode provides8
2rt. 7.. Coverage. Q The provisions of this Title @:or(in" !onditions and Rest PeriodsA
shall appl$ to e#plo$ees in all establish#ents and underta(in"s 'hether for profit or
not, but not to "overn#ent e#plo$ees, field personnel, #e#bers of the fa#il$ of the
e#plo$er 'ho are dependent on hi# for support, do#estic helpers, persons in the
30
personal service of another, and 'or(ers 'ho are paid b$ results as deter#ined b$ the
Secretar$ of &abor in appropriate re"ulations.
%%% %%% %%%
9Field personnel9 shall refer to non5a"ricultural e#plo$ees 'ho re"ularl$ perfor# their
duties a'a$ fro# the principal place of business or branch office of the e#plo$er and
'hose actual hours of 'or( in the field cannot be deter#ined 'ith reasonable certaint$.
Petitioner ar"ues essentiall$ that since the 'or( of private respondent is perfor#ed
a'a$ fro# its principal place of business, it has no 'a$ of verif$in" his actual hours of
'or( on the vessel. It contends that private respondent and other fisher#en in its
e#plo$ should be classified as 9field personnel9 'ho have no statutor$ ri"ht to service
incentive leave pa$.
In the case of 1nion o "ilipro 4mployees 21643 v. Bicar,
5
this !ourt e%plained the
#eanin" of the phrase 9'hose actual hours of 'or( in the field cannot be deter#ined
'ith reasonable certaint$9 in 2rt. 7. of the &abor !ode, as follo's8
Moreover, the reFuire#ent that 9actual hours of 'or( in the field cannot be deter#ined
'ith reasonable certaint$9 #ust be read in conHunction 'ith Rule IV, )oo( III of the
I#ple#entin" Rules 'hich provides8
Rule IV ;olida$s 'ith Pa$
Sec. *. !overa"e Q This rule shall appl$ to all e#plo$ees e%cept8
%%% %%% %%%
3e4 Field personnel and other e#plo$ees 'hose ti#e and perfor#ance is unsupervised
b$ the e#plo$er . . . 3#phasis supplied4.
:hile contendin" that such rule added another ele#ent not found in the la' 3.ollo, p.
*14, the petitioner nevertheless atte#pted to sho' that its affected #e#bers are not
covered b$ the above#entioned rule. The petitioner asserts that the co#pan$Rs sales
personnel are strictl$ supervised as sho'n b$ the SOD 3Supervisor of the Da$4
schedule and the co#pan$ circular dated March *,, *<7+ 32nne%es . and 1, .ollo, pp.
,15,,4.
!ontrar$ to the contention of the petitioner, the !ourt finds that the afore#entioned rule
did not add another ele#ent to the &abor !ode definition of field personnel. The clause
9'hose ti#e and perfor#ance is unsupervised b$ the e#plo$er9 did not a#plif$ but
#erel$ interpreted and e%pounded the clause 9'hose actual hours of 'or( in the field
cannot be deter#ined 'ith reasonable certaint$.9 The for#er clause is still 'ithin the
scope and purvie' of 2rticle 7. 'hich defines field personnel. ;ence, in decidin"
'hether or not an e#plo$eeRs actual 'or(in" hours in the field can be deter#ined 'ith
reasonable certaint$, Fuer$ #ust be #ade as to 'hether or not such e#plo$eeRs ti#e
and perfor#ance is constantl$ supervised b$ the e#plo$er.
6
2ccordin"l$, it 'as held in the afore#entioned case that sales#en of Nestle
Philippines, Inc. 'ere field personnel8
It is undisputed that these sales personnel start their field 'or( at 7800 a.#. after havin"
reported to the office and co#e bac( to the office at +800 p.#. or +810 p.#. if the$ are
Ma(ati5based.
The petitioner #aintains that the period bet'een 7800 a.#. to +800 or +810 p.#.
co#prises the sales personnelRs 'or(in" hours 'hich can be deter#ined 'ith
reasonable certaint$.
The !ourt does not a"ree. The la' reFuires that the actual hours of 'or( in the field be
reasonabl$ ascertained. The co#pan$ has no 'a$ of deter#inin" 'hether or not these
sales personnel, even if the$ report to the office before 7800 a.#. prior to field 'or( and
co#e bac( at +810 p.#., reall$ spend the hours in bet'een in actual field 'or(.
7
In contrast, in the case at bar, durin" the entire course of their fishin" vo$a"e,
fisher#en e#plo$ed b$ petitioner have no choice but to re#ain on board its vessel.
2lthou"h the$ perfor# non5a"ricultural 'or( a'a$ fro# petitionerRs business offices, the
fact re#ains that throu"hout the duration of their 'or( the$ are under the effective
control and supervision of petitioner throu"h the vesselRs patron or #aster as the N&R!
correctl$ held.
E
Neither did petitioner "ravel$ abuse its discretion in rulin" that private respondent had
constructivel$ been dis#issed b$ petitioner. Such factual findin" of both the N&R! and
the &abor 2rbiter is based not onl$ on the pleadin"s of the parties but also on a #edical
certificate of fitness 'hich, contrar$ to petitionerRs clai# private respondent presented
'hen he reported to 'or( on Ma$ .7, *<<0.
9
2s the N&R! held8
2nent "rounds 3a4 and 3b4 of the appeal, the respondent, in a nutshell, 'ould li(e us to
believe that the 2rbiter abused his discretion 3or seriousl$ erred in his findin"s of facts4
in "ivin" credence to the factual version of the co#plainant. )ut it is settled that
93:4hen confronted 'ith conflictin" versions of factual #atters,9 the &abor 2rbiter has
the 9discretion to deter#ine 'hich part$ deserves credence on the basis of evidence
31
received.9 @6el#art Industries 3Phils.4, Inc. vs. &eo"ardo, *,, S!R2 +01, 10<, &5/0,++,
Nove#ber ,, *<7/A. 2nd besides, it is settled in this Hurisdiction that 9to constitute
abandon#ent of position, there #ust be concurrence of the intention to abandon and
so#e overt acts fro# 'hich it #a$ be inferred that the e#plo$ee concerned has no
#ore interest in 'or(in"9 3Da"upan )us !o., Inc. vs. N&R!, *<* S!R2 1.74, and that
the filin" of the co#plaint 'hich as(ed for reinstate#ent plus bac('a"es 3Record, p.
.04 is inconsistent 'ith respondentsR defense of abandon#ent 3;ua )ee Shirt Factor$
vs. N&R!, *77 S!R2 ,7>4.
10
It is trite to sa$ that the factual findin"s of Fuasi5Hudicial bodies are "enerall$ bindin" as
lon" as the$ are supported substantiall$ b$ evidence in the record of the case.
11
This is
especiall$ so 'here, as here, the a"enc$ and its subordinate 'ho heard the case in the
first instance are in full a"ree#ent as to the facts.
12
2s re"ards the labor arbiterRs a'ard 'hich 'as affir#ed b$ respondent N&R!, there is
no reason to appl$ the rule that reinstate#ent #a$ not be ordered if, as a result of the
case bet'een the parties, their relation is
strained.
13
ven at this late sta"e of this dispute, petitioner continues to reiterate its
offer to reinstate private respondent.
1-
:;RFOR, the petition is DISMISSD.
SO ORDRD.
.egalado, Melo, "uno and Martine-, %%., concur.
Republic of the Philippines
SUPREME COURT
Manila
S!OND DIVISION
G.R. No. 156367 May 16, 2005
AUTO US TRANSPORT S!STEMS, INC., petitioner,
vs.
ANTONIO AUTISTA, respondent.
D ! I S I O N
CHICO<NACARIO, J.>
32
)efore Ds is a Petition for Revie' on Certiorari assailin" the Decision
*
and Resolution
.

of the !ourt of 2ppeals affir#in" the Decision
1
of the National &abor Relations
!o##ission 3N&R!4. The N&R! rulin" #odified the Decision of the &abor 2rbiter
3findin" respondent entitled to the a'ard of *1
th
#onth pa$ and service incentive leave
pa$4 b$ deletin" the a'ard of *1
th
#onth pa$ to respondent.
THE .ACTS
Since .+ Ma$ *<<,, respondent 2ntonio )autista has been e#plo$ed b$ petitioner 2uto
)us Transport S$ste#s, Inc. 32utobus4, as driver5conductor 'ith travel routes Manila5
Tu"ue"arao via )a"uio, )a"uio5 Tu"ue"arao via Manila and Manila5Tabu( via )a"uio.
Respondent 'as paid on co##ission basis, seven percent 3/K4 of the total "ross
inco#e per travel, on a t'ice a #onth basis.
On 01 -anuar$ .000, 'hile respondent 'as drivin" 2utobus No. **+ alon" Sta. Fe,
Nueva Vi?ca$a, the bus he 'as drivin" accidentall$ bu#ped the rear portion of 2utobus
No. *.+, as the latter vehicle suddenl$ stopped at a sharp curve 'ithout "ivin" an$
'arnin".
Respondent averred that the accident happened because he 'as co#pelled b$ the
#ana"e#ent to "o bac( to Ro%as, Isabela, althou"h he had not slept for al#ost t'ent$5
four 3.+4 hours, as he had Hust arrived in Manila fro# Ro%as, Isabela. Respondent
further alle"ed that he 'as not allo'ed to 'or( until he full$ paid the a#ount of
P/,,,,*.,0, representin" thirt$ percent 310K4 of the cost of repair of the da#a"ed
buses and that despite respondentCs pleas for reconsideration, the sa#e 'as i"nored
b$ #ana"e#ent. 2fter a #onth, #ana"e#ent sent hi# a letter of ter#ination.
Thus, on 0. Februar$ .000, respondent instituted a !o#plaint for Ille"al Dis#issal 'ith
Mone$ !lai#s for nonpa$#ent of *1
th
#onth pa$ and service incentive leave pa$
a"ainst 2utobus.
Petitioner, on the other hand, #aintained that respondentCs e#plo$#ent 'as replete
'ith offenses involvin" rec(less i#prudence, "ross ne"li"ence, and dishonest$. To
support its clai#, petitioner presented copies of letters, #e#os, irre"ularit$ reports, and
'arrants of arrest pertainin" to several incidents 'herein respondent 'as involved.
Further#ore, petitioner avers that in the e%ercise of its #ana"e#ent prero"ative,
respondentCs e#plo$#ent 'as ter#inated onl$ after the latter 'as provided 'ith an
opportunit$ to e%plain his side re"ardin" the accident on 01 -anuar$ .000.
On .< Septe#ber .000, based on the pleadin"s and supportin" evidence presented b$
the parties, &abor 2rbiter Monroe !. Tabin"an pro#ul"ated a Decision,
+
the dispositive
portion of 'hich reads8
:;RFOR, all pre#ises considered, it is hereb$ found that the co#plaint for Ille"al
Dis#issal has no le" to stand on. It is hereb$ ordered DISMISSD, as it is hereb$
DISMISSD.
;o'ever, still based on the above5discussed pre#ises, the respondent #ust pa$ to the
co#plainant the follo'in"8
a. his *1
th
#onth pa$ fro# the date of his hirin" to the date of his dis#issal, presentl$
co#puted at P/7,**/.7/G
b. his service incentive leave pa$ for all the $ears he had been in service 'ith the
respondent, presentl$ co#puted at P*1,/77.0,.
2ll other clai#s of both co#plainant and respondent are hereb$ dis#issed for lac( of
#erit.
,
Not satisfied 'ith the decision of the &abor 2rbiter, petitioner appealed the decision to
the N&R! 'hich rendered its decision on .7 Septe#ber .00*, the decretal portion of
'hich reads8
@TAhe Rules and Re"ulations I#ple#entin" Presidential Decree No. 7,*, particularl$
Sec. 1 provides8
9Section 1. #plo$ers covered. U The Decree shall appl$ to all e#plo$ers e%cept to8
%%% %%% %%%
e4 e#plo$ers of those 'ho are paid on purel$ co##ission, boundar$, or tas( basis,
perfor#in" a specific 'or(, irrespective of the ti#e consu#ed in the perfor#ance
thereof. %%%.9
Records sho' that co#plainant, in his position paper, ad#itted that he 'as paid on a
co##ission basis.
In vie' of the fore"oin", 'e dee# it Hust and eFuitable to #odif$ the assailed Decision
b$ deletin" the a'ard of *1
th
#onth pa$ to the co#plainant.
33
V
:;RFOR, the Decision dated .< Septe#ber .000 is MODIFID b$ deletin" the
a'ard of *1
th
#onth pa$. The other findin"s are 2FFIRMD.
>
In other 'ords, the a'ard of service incentive leave pa$ 'as #aintained. Petitioner
thus sou"ht a reconsideration of this aspect, 'hich 'as subseFuentl$ denied in a
Resolution b$ the N&R! dated 1* October .00*.
Displeased 'ith onl$ the partial "rant of its appeal to the N&R!, petitioner sou"ht the
revie' of said decision 'ith the !ourt of 2ppeals 'hich 'as subseFuentl$ denied b$
the appellate court in a Decision dated 0> Ma$ .00., the dispositive portion of 'hich
reads8
:;RFOR, pre#ises considered, the "etition is DISMISSD for lac( of #eritG and
the assailed Decision of respondent !o##ission in N&R! N!R !2 No. 0.>,7+5.000
is hereb$ 2FFIRMD in toto. No costs.
/
;ence, the instant petition.
ISSUES
*. :hether or not respondent is entitled to service incentive leaveG
.. :hether or not the three 3145$ear prescriptive period provided under 2rticle .<* of
the &abor !ode, as a#ended, is applicable to respondentCs clai# of service incentive
leave pa$.
RULING O. THE COURT
The disposition of the first issue revolves around the proper interpretation of 2rticle <,
of the &abor !ode vis$C$vis Section *3D4, Rule V, )oo( III of the I#ple#entin" Rules
and Re"ulations of the &abor !ode 'hich provides8
Art. 95. RI6;T TO SRVI! IN!NTIV &2V
3a4 ver$ e#plo$ee 'ho has rendered at least one $ear of service shall be entitled to a
$earl$ service incentive leave of five da$s 'ith pa$.
Book III, Rule V: SERVICE INCENTIVE LEAVE
SECTION 1. !overa"e. U This rule shall appl$ to all e#plo$ees e%cept8
V
3d4 Field personnel and other e#plo$ees 'hose perfor#ance is unsupervised b$ the
e#plo$er includin" those 'ho are en"a"ed on tas( or contract basis, purel$
co##ission basis, or those 'ho are paid in a fi%ed a#ount for perfor#in" 'or(
irrespective of the ti#e consu#ed in the perfor#ance thereofG . . .
2 careful perusal of said provisions of la' 'ill result in the conclusion that the "rant of
service incentive leave has been deli#ited b$ the I#ple#entin" Rules and Re"ulations
of the &abor !ode to appl$ onl$ to those e#plo$ees not e%plicitl$ e%cluded b$ Section *
of Rule V. 2ccordin" to the I#ple#entin" Rules, Service Incentive &eave shall not appl$
to e#plo$ees classified as 9field personnel.9 The phrase 9other e#plo$ees 'hose
perfor#ance is unsupervised b$ the e#plo$er9 #ust not be understood as a separate
classification of e#plo$ees to 'hich service incentive leave shall not be "ranted.
Rather, it serves as an a#plification of the interpretation of the definition of field
personnel under the &abor !ode as those 9'hose actual hours of 'or( in the field
cannot be deter#ined 'ith reasonable certaint$.9
7
The sa#e is true 'ith respect to the phrase 9those !ho are engaged on task or
contract basis, purely commission basis.D Said phrase should be related 'ith 9field
personnel,9 appl$in" the rule on e>usdem generis that "eneral and unli#ited ter#s are
restrained and li#ited b$ the particular ter#s that the$ follo'.
<
;ence, e#plo$ees
en"a"ed on tas( or contract basis or paid on purel$ co##ission basis are not
auto#aticall$ e%e#pted fro# the "rant of service incentive leave, unless, the$ fall
under the classification of field personnel.
Therefore, petitionerCs contention that respondent is not entitled to the "rant of service
incentive leave Hust because he 'as paid on purel$ co##ission basis is #isplaced.
:hat #ust be ascertained in order to resolve the issue of propriet$ of the "rant of
service incentive leave to respondent is 'hether or not he is a field personnel.
2ccordin" to 2rticle 7. of the &abor !ode, 9field personnel9 shall refer to non5
a"ricultural e#plo$ees 'ho re"ularl$ perfor# their duties a'a$ fro# the principal place
of business or branch office of the e#plo$er and 'hose actual hours of 'or( in the field
cannot be deter#ined 'ith reasonable certaint$. This definition is further elaborated in
the 5ureau o 0orking Conditions 250C3, /dvisory :pinion to "hilippine ,echnical$
Clerical Commercial 4mployees /ssociation
*0
'hich states that8
2s a "eneral rule, @field personnelA are those 'hose perfor#ance of their HobBservice is
not supervised b$ the e#plo$er or his representative, the 'or(place bein" a'a$ fro#
34
the principal office and 'hose hours and da$s of 'or( cannot be deter#ined 'ith
reasonable certaint$G hence, the$ are paid specific a#ount for renderin" specific
service or perfor#in" specific 'or(. ( re=uired to be at speciic places at speciic times,
employees including drivers cannot be said to be ield personnel despite the act that
they are perorming !ork a!ay rom the principal oice o the employee. @#phasis
oursA
To this discussion b$ the ):!, the petitioner differs and postulates that under said
advisor$ opinion, no e#plo$ee 'ould ever be considered a field personnel because
ever$ e#plo$er, in one 'a$ or another, e%ercises control over his e#plo$ees. Petitioner
further ar"ues that the onl$ criterion that should be considered is the nature of 'or( of
the e#plo$ee in that, if the e#plo$eeCs Hob reFuires that he 'or(s a'a$ fro# the
principal office li(e that of a #essen"er or a bus driver, then he is inevitabl$ a field
personnel.
:e are not persuaded. 2t this point, it is necessar$ to stress that the definition of a
9field personnel9 is not #erel$ concerned 'ith the location 'here the e#plo$ee
re"ularl$ perfor#s his duties but also 'ith the fact that the e#plo$eeCs perfor#ance is
unsupervised b$ the e#plo$er. 2s discussed above, field personnel are those 'ho
re"ularl$ perfor# their duties a'a$ fro# the principal place of business of the e#plo$er
and !hose actual hours o !ork in the ield cannot be determined !ith reasonable
certainty. Thus, in order to conclude 'hether an e#plo$ee is a field e#plo$ee, it is also
necessar$ to ascertain if actual hours of 'or( in the field can be deter#ined 'ith
reasonable certaint$ b$ the e#plo$er. In so doin", an inFuir$ #ust be #ade as to
'hether or not the e#plo$eeCs ti#e and perfor#ance are constantl$ supervised b$ the
e#plo$er.
2s observed b$ the &abor 2rbiter and concurred in b$ the !ourt of 2ppeals8
It is of Hudicial notice that alon" the routes that are plied b$ these bus co#panies, there
are its inspectors assi"ned at strate"ic places 'ho board the bus and inspect the
passen"ers, the punched tic(ets, and the conductorCs reports. There is also the
#andator$ once5a5'ee( car barn or shop da$, 'here the bus is re"ularl$ chec(ed as to
its #echanical, electrical, and h$draulic aspects, 'hether or not there are proble#s
thereon as reported b$ the driver andBor conductor. The$ too, #ust be at specific place
as @sicA specified ti#e, as the$ "enerall$ observe pro#pt departure and arrival fro#
their point of ori"in to their point of destination. In each and ever$ depot, there is al'a$s
the Dispatcher 'hose function is precisel$ to see to it that the bus and its cre' leave
the pre#ises at specific ti#es and arrive at the esti#ated proper ti#e. These, are
present in the case at bar. The driver, the co#plainant herein, 'as therefore under
constant supervision 'hile in the perfor#ance of this 'or(. ;e cannot be considered a
field personnel.
**
:e a"ree in the above disFuisition. Therefore, as correctl$ concluded b$ the appellate
court, respondent is not a field personnel but a re"ular e#plo$ee 'ho perfor#s tas(s
usuall$ necessar$ and desirable to the usual trade of petitionerCs business. 2ccordin"l$,
respondent is entitled to the "rant of service incentive leave.
The Fuestion no' that #ust be addressed is up to 'hat a#ount of service incentive
leave pa$ respondent is entitled to.
The response to this Fuer$ inevitabl$ leads us to the correlative issue of 'hether or not
the three 3145$ear prescriptive period under 2rticle .<* of the &abor !ode is applicable
to respondentCs clai# of service incentive leave pa$.
2rticle .<* of the &abor !ode states that all #one$ clai#s arisin" fro# e#plo$er5
e#plo$ee relationship shall be filed 'ithin three 314 $ears fro# the ti#e the cause of
action accruedG other'ise, the$ shall be forever barred.
In the application of this section of the &abor !ode, the pivotal Fuestion to be ans'ered
is 'hen does the cause of action for #one$ clai#s accrue in order to deter#ine the
rec(onin" date of the three5$ear prescriptive period.
It is settled Hurisprudence that a cause of action has three ele#ents, to 'it, 3*4 a ri"ht in
favor of the plaintiff b$ 'hatever #eans and under 'hatever la' it arises or is createdG
3.4 an obli"ation on the part of the na#ed defendant to respect or not to violate such
ri"htG and 314 an act or o#ission on the part of such defendant violative of the ri"ht of
the plaintiff or constitutin" a breach of the obli"ation of the defendant to the plaintiff.
*.
To properl$ construe 2rticle .<* of the &abor !ode, it is essential to ascertain the ti#e
'hen the third ele#ent of a cause of action transpired. Stated differentl$, in the
co#putation of the three5$ear prescriptive period, a deter#ination #ust be #ade as to
the period 'hen the act constitutin" a violation of the 'or(ersC ri"ht to the benefits
bein" clai#ed 'as co##itted. For if the cause of action accrued #ore than three 314
$ears before the filin" of the #one$ clai#, said cause of action has alread$ prescribed
in accordance 'ith 2rticle .<*.
*1
!onseFuentl$, in cases of nonpa$#ent of allo'ances and other #onetar$ benefits, if it
is established that the benefits bein" clai#ed have been 'ithheld fro# the e#plo$ee
for a period lon"er than three 314 $ears, the a#ount pertainin" to the period be$ond the
three5$ear prescriptive period is therefore barred b$ prescription. The a#ount that can
onl$ be de#anded b$ the a""rieved e#plo$ee shall be li#ited to the a#ount of the
benefits 'ithheld 'ithin three 314 $ears before the filin" of the co#plaint.
*+
35
It is essential at this point, ho'ever, to reco"ni?e that the service incentive leave is a
curious ani#al in relation to other benefits "ranted b$ the la' to ever$ e#plo$ee. In the
case of service incentive leave, the e#plo$ee #a$ choose to either use his leave
credits or co##ute it to its #onetar$ eFuivalent if not e%hausted at the end of the
$ear.
*,
Further#ore, if the e#plo$ee entitled to service incentive leave does not use or
co##ute the sa#e, he is entitled upon his resi"nation or separation fro# 'or( to the
co##utation of his accrued service incentive leave. 2s enunciated b$ the !ourt in
6ernande- v. ').C8
*>
The clear polic$ of the &abor !ode is to "rant service incentive leave pa$ to 'or(ers in
all establish#ents, subHect to a fe' e%ceptions. Section ., Rule V, )oo( III of the
I#ple#entin" Rules and Re"ulations provides that 9@eAver$ e#plo$ee 'ho has
rendered at least one $ear of service shall be entitled to a $earl$ service incentive leave
of five da$s 'ith pa$.9 Service incentive leave is a ri"ht 'hich accrues to ever$
e#plo$ee 'ho has served 9'ithin *. #onths, 'hether continuous or bro(en rec(oned
fro# the date the e#plo$ee started 'or(in", includin" authori?ed absences and paid
re"ular holida$s unless the 'or(in" da$s in the establish#ent as a #atter of practice or
polic$, or that provided in the e#plo$#ent contracts, is less than *. #onths, in 'hich
case said period shall be considered as one $ear.9 It is also Dcommutable to its money
e=uivalent i not used or e?hausted at the end o the year.D (n other !ords, an
employee !ho has served or one year is entitled to it. ;e may use it as leave days or
he may collect its monetary value. To li#it the a'ard to three $ears, as the solicitor
"eneral reco##ends, is to undul$ restrict such ri"ht.
*/
@Italics suppliedA
!orrespondin"l$, it can be conscientiousl$ deduced that the cause of action of an
entitled e#plo$ee to clai# his service incentive leave pa$ accrues fro# the #o#ent the
e#plo$er refuses to re#unerate its #onetar$ eFuivalent if the e#plo$ee did not #a(e
use of said leave credits but instead chose to avail of its co##utation. 2ccordin"l$, if
the e#plo$ee 'ishes to accu#ulate his leave credits and opts for its co##utation upon
his resi"nation or separation fro# e#plo$#ent, his cause of action to clai# the 'hole
a#ount of his accu#ulated service incentive leave shall arise 'hen the e#plo$er fails
to pa$ such a#ount at the ti#e of his resi"nation or separation fro# e#plo$#ent.
2ppl$in" 2rticle .<* of the &abor !ode in li"ht of this peculiarit$ of the service incentive
leave, 'e can conclude that the three 3145$ear prescriptive period co##ences, not at
the end of the $ear 'hen the e#plo$ee beco#es entitled to the co##utation of his
service incentive leave, but fro# the ti#e 'hen the e#plo$er refuses to pa$ its
#onetar$ eFuivalent after de#and of co##utation or upon ter#ination of the
e#plo$eeCs services, as the case #a$ be.
The above construal of 2rt. .<*, vis$C$vis the rules on service incentive leave, is in
(eepin" 'ith the rudi#entar$ principle that in the i#ple#entation and interpretation of
the provisions of the &abor !ode and its i#ple#entin" re"ulations, the 'or(in"#anCs
'elfare should be the pri#ordial and para#ount consideration.
*7
The polic$ is to e%tend
the applicabilit$ of the decree to a "reater nu#ber of e#plo$ees 'ho can avail of the
benefits under the la', 'hich is in consonance 'ith the avo'ed polic$ of the State to
"ive #a%i#u# aid and protection to labor.
*<
In the case at bar, respondent had not #ade use of his service incentive leave nor
de#anded for its co##utation until his e#plo$#ent 'as ter#inated b$ petitioner.
Neither did petitioner co#pensate his accu#ulated service incentive leave pa$ at the
ti#e of his dis#issal. It 'as onl$ upon his filin" of a co#plaint for ille"al dis#issal, one
#onth fro# the ti#e of his dis#issal, that respondent de#anded fro# his for#er
e#plo$er co##utation of his accu#ulated leave credits. ;is cause of action to clai#
the pa$#ent of his accu#ulated service incentive leave thus accrued fro# the ti#e
'hen his e#plo$er dis#issed hi# and failed to pa$ his accu#ulated leave credits.
Therefore, the prescriptive period 'ith respect to his clai# for service incentive leave
pa$ onl$ co##enced fro# the ti#e the e#plo$er failed to co#pensate his accu#ulated
service incentive leave pa$ at the ti#e of his dis#issal. Since respondent had filed his
#one$ clai# after onl$ one #onth fro# the ti#e of his dis#issal, necessaril$, his
#one$ clai# 'as filed 'ithin the prescriptive period provided for b$ 2rticle .<* of the
&abor !ode.
"HERE.ORE, pre#ises considered, the instant petition is hereb$ DNID. The
assailed Decision of the !ourt of 2ppeals in !256.R. SP. No. >71<, is hereb$
2FFIRMD. No !osts. SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
N )2N!
G.R. No. L<213-E 2(#& 30, 1966
RED A COCONUT PRODUCTS, LTD., petitioner,
vs.
COURT O. INDUSTRIAL RELATIONS, TANGLA" NG PAGGA"A, ALERTO DELA
CRUC, ET AL., respondents.
.omeo /. .eal or petitioner.
/. B. Billacorta or respondents.
ENGCON, 2.P., J.:
36
Red V !oconut Products, &td. is a corporation 'ith principal office and place of
business at &ucena !it$. It has in that cit$ a desiccated coconut factor$. In said factor$,
it has several hundred 'or(ers. 2bout 700 of said 'or(ers are #e#bers of ,angla! ng
"agga!a labor union.
,angla! ng "agga!a and Red V !oconut Products, &td. entered into a collective
bar"ainin" a"ree#ent on -ul$ *,, *<,7. SubseFuentl$, ho'ever, on October ,, *<>*,
the afore#entioned co#pan$ and union entered into another collective bar"ainin"
a"ree#ent, to e%pire on October 1*, *<>,.
The *<,7 collective bar"ainin" a"ree#ent provided a#on" other thin"s for pa$#ent of
differentials to night shit !orkers in the desiccated coconut factor$.1E!phF1.<Gt
The *<>* collective bar"ainin" a"ree#ent retained the sa#e arran"e#ent. It stated8
The present shift differential 'ill re#ain in effect, na#el$, 1,W for the second shift and
,,W for the third Shift.
In the factory, there are two groups of workers, the three-shift
group !et us ca!! it "roup # an$ the two shift group
which we sha!! ca!! "roup %& #s o'ser(e$ 'y the parties
thereto, $i)erentia!s were pai$ to workers, un$er the 1958 an$
1961 contracts, thus*
Ho(,' o9 "o,= D799&,&#37a4'
6roup 2 Q *st shift + 2.M. Q *. Noon 37 ;rs.4 None
.nd shift *. Noon Q 7 P.M. 37 ;rs.4 .1,
1rd shift 7 P.M. Q + 2.M. 37 ;rs.4 .,,
6roup ) Q *st shift + 2.M. Q + P.M. 3*. ;rs.4 None
.nd shift + P.M. Q + 2.M. 3*. ;rs.4 .,,
On -anuar$ */, *<>., ,angla! ng "agga!a and so#e 100 'or(ers in the above5stated
factor$, #e#bers of the said union, 'ho belon" to 6roup ), filed a petition in the !ourt
of Industrial Relations. Petitioners therein alle"ed that the petitioners5'or(ers are
shellers, parers, counters and haulers in the t'o shifts 36roup )4 consistin" of *. hours
each shift, the first shift fro# +8 00 2.M. to +8 00 P.M. and the second shift fro# + P.M.
to + 2.M.G that said 'or(ers chan"e shift assi"n#ents ever$ 'ee(G that, accordin"l$, all
o them 'or( fro# + 2.M. to + P.M. 3first shift4 for t'o alternate 'ee(s per #onth and
fro# + P.M. to + 2.M. 3second shift4 li(e'ise for t'o alternate 'ee(s in a #onthG that
althou"h said 'or(ers perfor# 'or( fro# + P.M. to + 2.M., the$ receive onl$ P.,,
differential pa$ for the correspondin" hours of ni"ht 'or(G that their ni"ht'or( is
eFuivalent to the ni"ht'or( of the .nd and 1rd shifts of 6roup 2 co#bined, so that the$
should receive 'hat the .nd and 1rd shifts of 6roup 2, co#bined, receive as differential
pa$, na#el$, P.<0 3P./, plus P.1,4G that, therefore, the$ are entitled to pa$#ent of P.1,
#ore as differential pa$, since up to the ti#e of the petition, the$ received onl$ P.,, per
ni"ht as differential pa$.
Said additional P.1, 'as as(ed b$ the petitioners5'or(ers of 6roup ) f or 'or( done b$
the# fro# + P.M. to + 2.M. Their clai# referred to the ti#e fro# -ul$ *,, *<,7 to the
date of the petition, alle"edl$ at P*7>.<0 per sheller, parer, counter and hauler, or a
total su# of P>,,..7.*0 #ore or less.
Respondent co#pan$ therein filed on -anuar$ .7, *<>. a #otion to dis#iss, statin"
that the !ourt of Industrial Relations has no Hurisdiction over the case for the reason
that the clai# asserted in the petition is a si#ple #one$ clai# and that an interpretation
of a contract 3the collective bar"ainin" a"ree#ent is involved, 'hich pertains to the
re"ular courts.
The !ourt of Industrial Relations denied said #otion b$ resolution of Februar$ */, *<>.
rulin" that the clai# is for unpaid overti#e pa$ of laborers still employed b$ the
co#pan$. Said court li(e'ise denied a #otion for reconsideration of the resolution. Red
V !oconut Products, &td. filed its ans'er on Ma$ ., *<>..
In the #ean'hile, on 2pril .,, *<>., ,angla! ng "agga!a filed 'ith the !ourt of
Industrial Relations a ne! and independent petition alleging unair labor practice
against .ed B Coconut "roducts, )td. 3!IR !ase No. 1*,0 D&P4. It 'as asserted
therein that the co#pan$ refused to "rant *, da$s leave 'ith pa$ to the #e#bers of the
union in violation of the *<>* collective bar"ainin" a"ree#ent.
The !ourt of Industrial Relations, on -anuar$ *<, *<>1 after trial, rendered its decision
on the petition for differential pa$ 3!IR !ase No. *>+.5V4. It found therein that the
petitioners5'or(ers are en"a"ed on pakiao or piece5'or( basis, and, therefore, are not
entitled to overti#e pa$ under the i"ht5;our &abor &a' 3Sec. ., !2 +++4G that their
petition for ni"ht shift differentials based on the collective bar"ainin" a"ree#ents is
#eritorious because the co#pan$ havin" paid ni"ht differentials indiscri#inatel$ to the
ni"ht shift 'or(ers of 6roup 2 and 6roup ) ali(e, the pa$#ents should be unifor# and
eFual for the ni"ht shifts of both "roups, that is, P.<0. It therefore ordered pa$#ent of
the deficienc$ in said differentials to the 'or(ers of 6roup ).
37
Red V !oconut Products, &td. #oved for reconsideration of said decision on -anuar$
.<, *<>1. The !ourt of Industrial Relations en banc denied said #otion b$ resolution of
Februar$ .,, *<>1. 2nd, hence, Red V !oconut Products, &td. filed this petition for
revie' herein.
Petitioner herein contends that the present case involves a #ere #one$ clai# over
'hich the !ourt of Industrial Relations has no Hurisdiction.
*
It is e%io#atic that to deter#ine the issue of Hurisdiction resort is to be #ade to the
alle"ations in the petition or co#plaint.
.
The petition for shift differential in the present
case, it is true, did not e%pressl$ #ention the i"ht5;our &abor &a'. Nonetheless, it
clearl$ asserted that 3*4 petitioners5laborers 9are !orking in the Red V !oconut
Products, &td.9 and 3.4 the$ 9'or( in t'o 3.4 shifts 3)lue and Red shifts4 consistin" of
appro%i#atel$ 1H hours each shit.9 2ccordin"l$, fro# the said alle"ations, it is proper to
re"ard the petition, as the !ourt of Industrial Relations did, as one for overti#e pa$ b$
'or(ers still e#plo$ed b$ the co#pan$. 2s such it falls 'ithin the Hurisdiction of the
!ourt of Industrial Relations. For the sa#e is in effect an assertion not of a si#ple
#one$ clai# but, as respondent court ri"htl$ held, of a clai# for overti#e pa$ b$
'or(ers 'ho are e#plo$ees of the co#pan$.
1
Durin" the trial, as stated, evidence 'as adduced to the effect that the aforesaid
petitioners5'or(ers 'ere en"a"ed on a piece5'or( basis. The sa#e, ho'ever, does not
appear fro# the petition or co#plaint filed 'ith the respondent court. It therefore cannot
affect its Hurisdiction over the case, 'hich 'as alread$ acFuired. For Hurisdiction, once
acFuired, continues until final adHudication of the liti"ation.
+
Further#ore, althou"h the i"ht5;our &abor &a' provides that it does not cover those
'or(ers 'ho prefer to be paid on piece5'or( basis 3Sec. ., !2 +++4, nothin" in said la'
precludes an a"ree#ent for the pa$#ent of overti#e co#pensation to piece5'or(ers.
2nd in a"reein" to the provision for pa$#ent of shift differentials to the petitioners5
'or(ers afore#entioned, in the bar"ainin" a"ree#ent, as 'ell as in actually paying to
the# said differentials, thou"h not in full, the co#pan$ in effect reely adhered to an
application and i#ple#entation of the i"ht5;our &abor &a', or its obHectives, to said
'or(ers. It should be observed that 'hile the provision in the bar"ainin" a"ree#ents
spea(s of shift differentials for the 9second shift9 and the 9third shift9 and 6roup ) has
no third shift, said 6roup ) has a second shift, 'hich perfor#s 'or( eFuivalent to that
of the correspondin" shifts of 6roup 2. It follo's that respondent court did not err in
orderin" the co#pan$ to pa$ the full and eFuivalent a#ount of said differentials 3P.<04
correspondin", under the bar"ainin" a"ree#ents, to the 'or(ers 'ho perfor#ed *.
hours of 'or(, fro# + P.M. to + 2.M.
2nd, finall$, the laborers in Fuestion are not strictl$ under the full concept of piece5
'or(ers as conte#plated b$ la' for the reason that their hours of 'or( Q that is, *.
hours per shift Q are fi%ed b$ the e#plo$er. 2s ruled b$ this !ourt in )ara v. Del
.osario, <+ Phil. /70, /7*5/7., the philosoph$ underl$in" the e%clusion of piece
'or(ers fro# the i"ht5;our &abor &a' is that said 'or(ers are paid dependin" upon
the 'or( the$ do 9irrespective o the amount o time employed9 in doin" said 'or(.
Such freedo# as to hours of 'or( does not obtain in the case of the laborers herein
involved, since the$ are assi"ned b$ the e#plo$er to 'or( in t'o shifts for *. hours
each shift. Thus it cannot be said that or all purposes these 'or(ers fall outside the la'
reFuirin" pa$#ent of co#pensation for 'or( done in e%cess of ei"ht hours. 2t least for
the purpose of recoverin" the full differential pa$ stipulated in the bar"ainin" a"ree#ent
as due to laborers 'ho perfor# 1H hours o !ork under the ni"ht shift, said laborers
should be dee#ed pro tanto or to that e%tent 'ithin the scope of the afore5stated la'.
:herefore, the decision and resolution of the !ourt of Industrial Relations under revie'
are affir#ed. So ordered.
Concepcion, C.%., .eyes, %.5.)., 5arrera, Di-on, .egala, Makalintal, Ialdivar and
Sanche-, %%., concur.
Republic of the Philippines
SUPREME COURT
Manila
N )2N!
G.R. No. L<15-22 No?&*+&, 30, 1962
NATIONAL DEAELOPMENT COMPAN!, petitioner,
vs.
38
COURT O. INDUSTRIAL RELATIONS a#$ NATIONAL TEFTILE "OR@ERS UNION,
respondents.
7overnment Corporate Counsel Simeon M. 7opengco and )oren-o .. Mos=ueda or
petitioner.
4ulogio .. )erum or respondent 'ational ,e?tile 0orkers 1nion.
Mariano 5. ,uason or respondent Court o (ndustrial .elations.
REGALA, J.:
This is a case for revie' fro# the !ourt of Industrial Relations. The pertinent facts are
the follo'in"8
2t the National Develop#ent !o., a "overn#ent5o'ned and controlled corporation,
there 'ere four shifts of 'or(. One shift 'as fro# 7 a.#. to + p.#., 'hile the three other
shifts 'ere fro# > a.#. to . p.#G then fro# . p.#. to *0 p.#. and, finall$, fro# *0 p.#.
to > a.#. In each shift, there 'as a one5hour #ealti#e period, to 'it8 Fro# 3*4 ** a.#.
to *. noon for those 'or(in" bet'een > a.#. and . p.#. and fro# 3.4 / p.#. to 7 p.#.
for those 'or(in" bet'een . p.#. and *0 p.#.
The records disclose that althou"h there 'as a one5hour #ealti#e, petitioner
nevertheless credited the 'or(ers 'ith ei"ht hours of 'or( for each shift and paid the#
for the sa#e nu#ber of hours. ;o'ever, since *<,1, 'henever 'or(ers in one shift
'ere reFuired to continue 'or(in" until the ne%t shift, petitioner instead of creditin"
the# 'ith ei"ht hours of overti#e 'or(, has been pa$in" the# for si% hours onl$,
petitioner that the t'o hours correspondin" to the #ealti#e periods should not be
included in co#putin" co#pensation. On the other hand, respondent National Te%tile
:or(ers Dnion 'hose #e#bers are e#plo$ed at the ND!, #aintained the opposite
vie' and as(ed the !ourt of Industrial Relations to order the pa$#ent of additional
overti#e pa$ correspondin" to the #ealti#e periods.
2fter hearin", -ud"e 2rsenio I. Martine? of the !IR issued an order dated March *<,
*<,<, holdin" that #ealti#e should be counted in the deter#ination of overti#e 'or(
and accordin"l$ ordered petitioner to pa$ P*0*,+0/.<> b$ 'a$ of overti#e
co#pensation. Petitioner filed a #otion for reconsideration but the sa#e 'as dis#issed
b$ the !IR en banc on the "round that petitioner failed to furnish the union a cop$ of its
#otion.
Thereafter, petitioner appealed to this !ourt, contendin", first, that the !IR has no
Hurisdiction over clai#s for overti#e co#pensation and, secondar$ that the !IR did not
#a(e 9a correct appraisal of the facts, in the li"ht of the evidence9 in holdin" that
#ealti#e periods should be included in overti#e 'or( because 'or(ers could not leave
their places of 'or( and rest co#pletel$ durin" those hours.
In support of its contention that the !IR lost its Hurisdiction over clai#s for overti#e pa$
upon the enact#ent of the Industrial Peace 2ct 3Republic 2ct No. 7/,4, petitioner cites
a nu#ber of decisions of this !ourt. On Ma$ .1, *<>0, ho'ever, :e ruled in "rice
Stabili-ation Corp. v. Court o (ndustrial .elations, et al., 6.R. No. &5*1.0>, that
2nal$?in" these cases, the underl$in" principle, it 'ill be noted in all of the#, thou"h
not stated in e%press ter#s, is that 'here the e#plo$er5e#plo$ee relationship is still
e%istin" or is sou"ht to be reestablished because of its 'ron"ful severance, 3as 'here
the e#plo$ee see(s reinstate#ent4 the !ourt of Industrial Relations has Hurisdiction
over all clai#s arisin" out of, or in connection 'ith the e#plo$#ent, such as those
related to the Mini#u# :a"e &a' and the i"ht5;our &abor &a'. 2fter the ter#ination
of their relationship and no reinstate#ent is sou"ht, such clai#s beco#e #ere #one$
clai#s, and co#e 'ithin the Hurisdiction of the re"ular courts,
:e are a'are that in . cases, so#e state#ents i#pl$in" a different vie' have been
#ade, but 'e no' hold and declare the principle set forth in the ne%t precedin"
para"raph as the one "overnin" all cases of this nature.
This has been the constant doctrine of this !ourt since Ma$ .1, *<>0.
*
2 #ore recent definition of the Hurisdiction of the !IR is found in Campos, et al. v.
Manila .ailroad Co., et al., 6.R. No. &5*/<0,, Ma$ .,, *<>., in 'hich :e held that, for
such Hurisdiction to co#e into pla$, the follo'in" reFuisites #ust be co#plied 'ith8 3a4
there #ust e%ist bet'een the parties an e#plo$er5e#plo$ee relationship or the
clai#ant #ust see( his reinstate#entG and 3b4 the controvers$ #ust relate to a case
certified b$ the President to the !IR as one involvin" national interest, or #ust arise
either under the i"ht5;our &abor &a', or under the Mini#u# :a"e &a'. In default of
an$ of these circu#stances, the clai# beco#es a #ere #one$ clai# that co#es under
the Hurisdiction of the re"ular courts. ;ere, petitioner does not den$ the e%istence of an
e#plo$er5e#plo$ee relationship bet'een it and the #e#bers of the union. Neither is
there an$ Fuestion that the clai# is based on the i"ht5;our &abor &a' 3!o#. 2ct No.
+++, as a#ended4. :e therefore rule in favor of the Hurisdiction of the !IR over the
present clai#.
The other issue raised in the appeal is 'hether or not, on the basis of the evidence, the
#ealti#e brea(s should be considered 'or(in" ti#e under the follo'in" provision of
the la'G
39
The le"al 'or(in" da$ for an$ person e#plo$ed b$ another shall be of not #ore than
ei"ht hours dail$. 0hen the !ork is not continuous, the time during !hich the laborer is
not !orking and can leave his !orking place and can rest completely shall not be
counted. 3Sec. *, !o#. 2ct No. +++, as a#ended. #phasis ours.4
It 'ill be noted that, under the la', the idle ti#e that an e#plo$ee #a$ spend for restin"
and durin" 'hich he #a$ leave the spot or place of 'or( thou"h not the pre#ises
.
of
his e#plo$er, is not counted as 'or(in" ti#e onl$ 'here the 'or( is bro(en or is not
continuous.
The deter#ination as to 'hether 'or( is continuous or not is #ainl$ one of fact 'hich
:e shall not revie' as lon" as the sa#e is supported b$ evidence. 3Sec. *,, !o#. 2ct
No. *01, as a#ended, Philippine Ne'spaper 6uild v. venin" Ne's, Inc., 7> Phil. 1014.
That is 'h$ :e brushed aside petitionerRs contention in one case that 'or(ers 'ho
'or(ed under a > a.#. to > p.#. schedule had enou"h 9free ti#e9 and therefore should
not be credited 'ith four hours of overti#e and held that the findin" of the !IR 9that
clai#ants herein rendered services to the !o#pan$ fro# >800 a.#. to >800 p.#.
includin" Sunda$s and holida$s, . . . i#plies either that the$ 'ere not allo'ed to leave
the spot of their 'or(in" place, or that the$ could not rest co#pletel$9 3&u?on
Stevedorin" !o., Inc. v. &u?on Marine Depart#ent Dnion, et al., 6.R. No. &5<.>,, 2pril
.<, *<,/4.
Indeed, it has been said that no "eneral rule can be laid do'n is to 'hat constitutes
co#pensable 'or(, rather the Fuestion is one of fact dependin" upon particular
circu#stances, to be deter#ined b$ the controverted in cases. 31* 2#. -urisdiction
Sec. >.> pp. 7/7.4
In this case, the !IRRs findin" that 'or( in the petitioner co#pan$ 'as continuous and
did not per#it e#plo$ees and laborers to rest co#pletel$ is not 'ithout basis in
evidence and follo'in" our earlier rulin"s, shall not disturb the sa#e. Thus, the !IR
found8
:hile it #a$ be correct to sa$ that it is 'ell5hi"h i#possible for an e#plo$ee to 'or(
'hile he is eatin", $et under Section * of !o#. 2ct No. +++ such a ti#e for eatin" can
be se"re"ated or deducted fro# his 'or(, if the sa#e is continuous and the e#plo$ee
can leave his 'or(in" place rest co#pletel$. The ti#e cards sho' that the 'or( 'as
continuous and 'ithout interruption. There is also the evidence adduced b$ the
petitioner that the pertinent e#plo$ees can freel$ leave their 'or(in" place nor rest
co#pletel$. There is further#ore the aspect that durin" the period covered the
co#putation the 'or( 'as on a .+5hour basis and previousl$ stated divided into shifts.
Fro# these facts, the !IR correctl$ concluded that 'or( in petitioner co#pan$ 'as
continuous and therefore the #ealti#e brea(s should be counted as 'or(in" ti#e for
purposes of overti#e co#pensation.
Petitioner "ives an ei"ht5hour credit to its e#plo$ees 'ho 'or( a sin"le shift sa$ fro# >
a.#. to . p.#. :h$ cannot it credit the# si%teen hours should the$ 'or( in t'o shiftsT
There is another reason 'h$ this appeal should dis#issed and that is that there is no
decision b$ the !IR en banc fro# 'hich petitioner can appeal to this !ourt. 2s alread$
indicated above, the records sho' that petitionerRs #otion for reconsideration of the
order of March *<, *<,< 'as dis#issed b$ the !IR en banc because of petitionerRs
failure to serve a cop$ of the sa#e on the union.
Section *, of the rules of the !IR, in relation to Section * of !o##on'ealth 2ct No.
*01, states8
The #ovant shall file the #otion 3for reconsideration4, in si% copies 'ithin five 3,4 da$s
fro# the date on 'hich he receives notice of the order or decision, obHect of the #otion
for reconsideration, the sa#e to be verified under oath 'ith respect to the correctness
of the alle"ations of fact, and serving a copy thereo personally or by registered mail,
on the adverse party. The latter #a$ file an ans'er, in si% 3>4 copies, dul$ verified under
oath. 3#phasis ours.4
In one case 3)ien, et al. v. !astillo, etc., et al., 6.R. No. &5/+.7, Ma$ .+, *<,,4, :e
sustained the dis#issal of a #otion for reconsideration filed outside of the period
provided in the rules of the !IR. 2 #otion for reconsideration, a cop$ of 'hich has not
been served on the adverse part$ as reFuired b$ the rules, stands on the sa#e footin".
For 9in the ver$ nature of thin"s, a #otion for reconsideration a"ainst a rulin" or
decision b$ one -ud"e is in effect an appeal to the !ourt of Industrial Relations, en
banc,9 the purpose bein" 9to substitute the decision or order of a colle"iate court for the
rulin" or decision of an$ Hud"e.9 The provision in !o##on'ealth 2ct No. *01
authori?in" the presentation of a #otion for reconsideration of a decision or order of the
Hud"e to the !IR, en banc and not direct appeal therefore to this !ourt, is also in accord
'ith the principal of e%haustion of ad#inistrative re#edies before resort can be #ade
to this !ourt. 3)roce, et al., v. The !ourt of Industrial Relations, et al., 6.R. No. &5
*.1>/, October .<, *<,<4.
PetitionerRs #otion for reconsideration havin" been dis#issed for its failure to serve a
cop$ of the sa#e on the union, there is no decision of the !IR en banc that petitioner
can brin" to this !ourt for revie'.
40
:;RFOR, the order of March *<, *<,< and the resolution of 2pril ./, *<,< are
hereb$ affir#ed and the appeal is dis#issed, 'ithout pronounce#ent as to costs.
"adilla, 5autista /ngelo, )abrador, Concepcion, .eyes, %.5.)., 5arrera, "aredes,
Di-on and Makalintal concur.
5eng-on, C.%., too( no part.
Republic of the Philippines
SUPREME COURT
Manila
N )2N!
G.R. No. L<12--- .&+,(a,y 2E, 1963
STATES MARINE CORPORATION a#$ RO!AL LINE, INC., petitioners,
vs.
CEU SEAMENGS ASSOCIATION, INC., respondent.
"edro 5. 1y Calderon or petitioners.
7audioso C. Billagon-alo or respondent.
41
PAREDES, J.:
Petitioners States Marine !orporation and Ro$al &ine, Inc. 'ere en"a"ed in the
business of #arine coast'ise transportation, e#plo$in" therein several stea#ships of
Philippine re"istr$. The$ had a collective bar"ainin" contract 'ith the respondent !ebu
Sea#enRs 2ssociation, Inc. On Septe#ber *., *<,., the respondent union filed 'ith the
!ourt of Industrial Relations 3!IR4, a petition 3!ase No. /+05V4 a"ainst the States
Marine !orporation, later a#ended on Ma$ +, *<,1, b$ includin" as part$ respondent,
the petitioner Ro$al &ine, Inc. The Dnion alle"ed that the officers and #en 'or(in" on
board the petitionersR vessels have not been paid their sic( leave, vacation leave and
overti#e pa$G that the petitioners threatened or coerced the# to accept a reduction of
salaries, observed b$ other shipo'nersG that after the Mini#u# :a"e &a' had ta(en
effect, the petitioners reFuired their e#plo$ees on board their vessels, to pa$ the su#
of P.+0 for ever$ #eal, 'hile the #asters and officers 'ere not reFuired to pa$ their
#eals and that because !aptain !arlos 2sensi had refused to $ield to the "eneral
reduction of salaries, the petitioners dis#issed said captain 'ho no' clai#s for
reinstate#ent and the pa$#ent of bac( 'a"es fro# Dece#ber .,, *<,., at the rate of
P,+0.00, #onthl$.
The petitionersR shippin" co#panies, ans'erin", averred that ver$ #uch belo' 10 of
the #en and officers in their e#plo$ 'ere #e#bers of the respondent unionG that the
'or( on board a vessel is one of co#parative easeG that petitioners have suffered
financial losses in the operation of their vessels and that there is no la' 'hich provides
for the pa$#ent of sic( leave or vacation leave to e#plo$ees or 'or(ers of private
fir#sG that as re"ards the clai# for overti#e pa$, the petitioners have al'a$s observed
the provisions of !o##. 2ct No. +++, 3i"ht5;our &abor &a'4, not'ithstandin" the fact
that it does not appl$ to those 'ho provide #eans of transportationG that the
shipo'ners and operators in !ebu 'ere pa$in" the salaries of their officers and #en,
dependin" upon the #ar"in of profits the$ could reali?e and other factors or
circu#stances of the businessG that in enactin" Rep. 2ct No. >0. 3Mini#u# :a"e
&a'4, the !on"ress had in #ind that the a#ount of P.+0 per #eal, furnished the
e#plo$ees should be deducted fro# the dail$ 'a"esG that !aptain 2sensi 'as not
dis#issed for alle"ed union activities, but 'ith the e%piration of the ter#s of the contract
bet'een said officer and the petitioners, his services 'ere ter#inated.
2 decision 'as rendered on Februar$ .*, *<,/ in favor of the respondent union. The
#otion for reconsideration thereof, havin" been denied, the co#panies filed the present
'rit of certiorari, to resolve le"al Fuestion involved. 2l'a$s bearin" in #ind the deep5
rooted principle that the factual findin"s of the !ourt of Industrial Relations should not
be disturbed, if supported b$ substantial evidence, the different issues are ta(en up, in
the order the$ are raised in the brief for the petitioners.
*. 6irst assignment o error. Q The respondent court erred in holdin" that it had
Hurisdiction over case No. /+05V, not'ithstandin" the fact that those 'ho had dispute
'ith the petitioners, 'ere less than thirt$ 3104 in nu#ber.
The !IR #ade a findin" that at the ti#e of the filin" of the petition in case No. /+05V,
respondent Dnion had #ore than thirt$ #e#bers actuall$ 'or(in" 'ith the co#panies,
and the court declared itself 'ith Hurisdiction to ta(e co"ni?ance of the case. 2"ainst
this order, the herein petitioners did not file a #otion for reconsideration or a petition for
certiorari. The findin" of fact #ade b$ the !IR beca#e final and conclusive, 'hich :e
are not no' authori?ed to alter or #odif$. It is a%io#atic that once the !IR had acFuired
Hurisdiction over a case, it continues to have that Hurisdiction, until the case is
ter#inated 3Manila ;otel #p. 2ssociation v. Manila ;otel !o#pan$, et al., +0 O.6.
No. >, p. 10./4. It 'as abundantl$ sho'n that there 'ere ,> #e#bers 'ho si"ned
%hibits 2, 25I to 257, and that *01 #e#bers of the Dnion are listed in %hibits ), )5* to
)51,, F, F5* and J5. to J51. So that at the ti#e of the filin" of the petition, the
respondent union had a total #e#bership of *,<, 'or(in" 'ith the herein petitioners,
'ho 'ere presu#ed interested in or 'ould be benefited b$ the outco#e of the case
3N2M2R!O v. !IR, &5*/70+, -an. *<>14. 2nne% D, 3Order of the !IR, dated March 7,
*<,+4, li(e'ise belies the contention of herein petitioner in this re"ard. The fact that
onl$ / clai#ed for overti#e pa$ and onl$ / 'itnesses testified, does not 'arrant the
conclusion that the e#plo$ees 'ho had so#e dispute 'ith the present petitioners 'ere
less than 10. The rulin" of the !IR, 'ith respect to the Fuestion of Hurisdiction is,
therefore, correct.
.. Second assignment o error. Q The !IR erred in holdin", that inas#uch as in the
shippin" articles, the herein petitioners have bound the#selves to suppl$ the cre' 'ith
provisions and 'ith such 9dail$ subsistence as shall be #utuall$ a"reed upon9 bet'een
the #aster and the cre', no deductions for #eals could be #ade b$ the aforesaid
petitioners fro# their 'a"es or salaries.
1. ,hird assignment o error. Q The !IR erred in holdin" that inas#uch as 'ith re"ard
to #eals furnished to cre' #e#bers of a vessel, section 13f4 of 2ct No. >0. is the
"eneral rule, 'hich section *< thereof is the e%ception, the cost of said #eals #a$ not
be le"all$ deducted fro# the 'a"es or salaries of the aforesaid cre' #e#bers b$ the
herein petitioners.
+. 6ourth assignment o error. Q The !IR erred in declarin" that the deduction for costs
of #eals fro# the 'a"es or salaries after 2u"ust +, *<,*, is ille"al and sa#e should be
rei#bursed to the e#plo$ee concerned, in spite of said section 1, par. 3f4 of 2ct No.
>0..
It 'as sho'n b$ substantial evidence, that since the be"innin" of the operation of the
petitionerRs business, all the cre' of their vessels have been si"nin" 9shippin" articles9
42
in 'hich are stated opposite their na#es, the salaries or 'a"es the$ 'ould receive. 2ll
sea#en, 'hether #e#bers of the cre' or dec( officers or en"ineers, have been
furnished free #eals b$ the ship o'ners or operators. 2ll the shippin" articles si"ned b$
the #aster and the cre' #e#bers, contained, a#on" others, a stipulation, that 9in
consideration of 'hich services to be dul$ perfor#ed, the said #aster hereb$ a"rees to
pa$ to the said cre', as 'a"es, the su#s a"ainst their na#es respectivel$ e%pressed
in the contractG and to supply them !ith provisions as provided herein ...9 3Sec. 7, par.
@bA, shippin" articles4, and durin" the duration of the contract 9the #aster of the vessel
'ill provide each #e#ber of the cre' such daily subsistence as shall be #utuall$
a"reed dail$ upon bet'een said #aster and cre'G or, in lieu of such subsistence the
cre' #a$ reserve the ri"ht to de#and at the ti#e of e%ecution of these articles that
adeFuate daily rations be furnished each #e#ber of the cre'.9 3Sec. 7, par. @eA,
shippin" articles4. It is, therefore, apparent that, aside fro# the pa$#ent of the
respective salaries or 'a"es, set opposite the na#es of the cre' #e#bers, the
petitioners bound the#selves to suppl$ the cre' 'ith shipRs provisions, dail$
subsistence or dail$ rations, 'hich include food.
This 'as the situation before 2u"ust +, *<,*, 'hen the Mini#u# :a"e &a' beca#e
effective. 2fter this date, ho'ever, the co#panies be"an deductin" the cost of #eals
fro# the 'a"es or salaries of cre' #e#bersG but no such deductions 'ere #ade fro#
the salaries of the dec( officers and en"ineers in all the boats of the petitioners. Dnder
the e%istin" la's, therefore, the Fuer$ conver"es on the le"alit$ of such deductions.
:hile the petitioners herein contend that the deductions are le"al and should not be
rei#bursed to the respondent union, the latter, ho'ever, clai#s that sa#e are ille"al
and rei#burse#ent should be #ade.
:herefore, the parties respectfull$ pra$ that the fore"oin" stipulation of facts be
ad#itted and approved b$ this ;onorable !ourt, 'ithout preHudice to the parties
adducin" other evidence to prove their case not covered b$ this stipulation of facts.
1E!phF1.<Gt
:e hold that such deductions are not authori?ed. In the coast'ise business of
transportation of passen"ers and frei"ht, the #en 'ho co#pose the co#ple#ent of a
vessel are provided 'ith free #eals b$ the shipo'ners, operators or a"ents, because
the$ hold on to their 'or( and duties, re"ardless of 9the stress and strain conco#itant
of a bad 'eather, un#indful of the dan"ers that lur( ahead in the #idst of the hi"h
seas.9
Section 1, par. f, of the Mini#u# :a"e &a', 3R.2. No. >0.4, provides as follo's Q
3f4 Dntil and unless investi"ations b$ the Secretar$ of &abor on his initiative or on
petition of an$ interested part$ result in a different deter#ination of the fair and
reasonable value, the urnishing o meals shall be valued at not #ore than thirt$
centavos per #eal for a"ricultural e#plo$ees and not more than orty centavos for an$
other e#plo$ees covered b$ this 2ct, and the furnishin" of housin" shall be valued at
not #ore than t'ent$ centavos dail$ for a"ricultural 'or(ers and not #ore than fort$
centavos dail$ for other e#plo$ees covered b$ this 2ct.
Petitioners #aintain, in vie' of the above provisions, that in fi%in" the #ini#u# 'a"e of
e#plo$ees, !on"ress too( into account the #eals furnished b$ e#plo$ers and that in
fi%in" the rate of fort$ centavos per #eal, the la'#a(ers had in #ind that the latter
a#ount should be deducted fro# the dail$ 'a"e, other'ise, no rate for #eals should
have been provided.
;o'ever, section *<, sa#e la', states Q
S!. *<. .elations to other labor la!s and practices.Q Nothin" in this 2ct shall deprive
an e#plo$ee of the ri"ht to see( fair 'a"es, shorter 'or(in" hours and better 'or(in"
conditions nor >ustiy an employer in violatin" an$ other labor la' applicable to his
employees, in reducing the !age no! paid to any o his employees in e?cess o the
minimum !age established under this /ct, or in reducing supplements urnished on the
date o enactment.
2t first blush, it 'ould appear that there e%ists a contradiction bet'een the provisions of
section 13f4 and section *< of Rep. 2ct No. >0.G but fro# a careful e%a#ination of the
sa#e, it is evident that Section 13f4 constitutes the "eneral rule, 'hile section *< is the
e%ception. In other 'ords, if there are no supple#ents "iven, 'ithin the #eanin" and
conte#plation of section *<, but #erel$ facilities, section 13f4 "overns. There is no
conflictG the t'o provisions could, as the$ should be har#oni?ed. 2nd even if there is
such a conflict, the respondent !IR should resolve the sa#e in favor of the safet$ and
decent livin" laborers 32rt. */0., ne' !ivil !ode4..
It is ar"ued that the food or #eals "iven to the dec( officers, #arine en"ineers and
unlicensed cre' #e#bers in Fuestion, 'ere #ere 9facilities9 'hich should be deducted
fro# 'a"es, and not 9supple#ents9 'hich, accordin" to said section *<, should not be
deducted fro# such 'a"es, because it is provided therein8 9Nothin" in this 2ct shall
deprive an e#plo$ee of the ri"ht to such fair 'a"e ... or in reducin" supple#ents
furnished on the date of enact#ent.9 In the case of 2to(5)i" :ed"e 2ssn. v. 2to(5)i"
:ed"e !o., &5/1+<, -ul$ *<, *<,,G ,* O.6. 1+1., the t'o ter#s are defined as follo's
Q
9Supple#ents9, therefore, constitute e%tra re#uneration or special privile"es or benefits
"iven to or received b$ the laborers over and above their ordinary earnings or !ages.
9Facilities9, on the other hand, are ite#s of e%pense necessar$ for the laborerRs and his
fa#il$Rs e%istence and subsistence so that b$ e%press provision of la' 3Sec. .@"A4, the$
for# part of the 'a"e and 'hen furnished b$ the e#plo$er are deductible therefro#,
43
since if the$ are not so furnished, the laborer 'ould spend and pa$ for the# Hust the
sa#e.
In short, the benefit or privile"e "iven to the e#plo$ee 'hich constitutes an e%tra
re#uneration above and over his basic or ordinar$ earnin" or 'a"e, is supple#entG and
'hen said benefit or privile"e is part of the laborersR basic 'a"es, it is a facilit$. The
criterion is not so #uch 'ith the (ind of the benefit or ite# 3food, lod"in", bonus or sic(
leave4 "iven, but its purpose. !onsiderin", therefore, as definitel$ found b$ the
respondent court that the #eals 'ere freel$ "iven to cre' #e#bers prior to 2u"ust +,
*<,*, 'hile the$ 'ere on the hi"h seas 9not as part of their 'a"es but as a necessar$
#atter in the #aintenance of the health and efficienc$ of the cre' personnel durin" the
vo$a"e9, the deductions therein #ade for the #eals "iven after 2u"ust +, *<,*, should
be returned to the#, and the operator of the coast'ise vessels affected should
continue "ivin" the sa#e benefit..
In the case of Cebu /utobus Company v. 1nited Cebu /utobus 4mployees /ssn., )$
97&H, :ct. H7, 19JJ, the co#pan$ used to pa$ to its drivers and conductors, 'ho 'ere
assi"ned outside of the !it$ li#its, aside fro# their re"ular salar$, a certain percenta"e
of their dail$ 'a"e, as allo'ance for food. Dpon the effectivit$ of the Mini#u# :a"e
&a', ho'ever, that privile"e 'as stopped b$ the co#pan$. The order !IR to the
co#pan$ to continue "rantin" this privile"e, 'as upheld b$ this !ourt.
The shippin" co#panies ar"ue that the furnishin" of #eals to the cre' before the
effectivit$ of Rep. 2ct No. >0., is of no #o#ent, because such circu#stance 'as
alread$ ta(en into consideration b$ !on"ress, 'hen it stated that 9'a"e9 includes the
fair and reasonable value of boards custo#aril$ furnished b$ the e#plo$er to the
e#plo$ees. If :e are to follo' the theor$ of the herein petitioners, then a cre' #e#ber,
'ho used to receive a #onthl$ 'a"e of P*00.00, before 2u"ust +, *<,*, 'ith no
deduction for #eals, after said date, 'ould receive onl$ P7>.00 #onthl$ 3after
deductin" the cost of his #eals at P.+0 per #eal4, 'hich 'ould be ver$ #uch less than
the P*...00 #onthl$ #ini#u# 'a"e, fi%ed in accordance 'ith the Mini#u# :a"e &a'.
Instead of benefitin" hi#, the la' 'ill adversel$ affect said cre' #e#ber. Such
interpretation does not confor# 'ith the avo'ed intention of !on"ress in enactin" the
said la'.
One should not overloo( a fact full$ established, that onl$ unlicensed cre' #e#bers
'ere #ade to pa$ for their #eals or food, 'hile the dec( officers and #arine en"ineers
receivin" hi"her pa$ and provided 'ith better victuals, 'ere not. This pictures in no
uncertain ter#s, a "reat and unHust discri#ination obtainin" in the present case
3Pa#buHan Sur Dnited Mine :or(ers v. !IR, et al., &5/*//, Ma$ 1*, *<,,4.
6ith, Si?th and Seventh assignments o error.Q The !IR erred in holdin" that Severino
Pepito, a boats#an, had rendered overti#e 'or(, not'ithstandin" the provisions of
section *, of !.2. No. +++G in basin" its findin" ofthe alle"ed overti#e, on the
uncorroborated testi#on$ of said Severino PepitoG and in orderin" the herein
petitioners to pa$ hi#. Severino Pepito 'as found b$ the !IR to have 'or(ed overti#e
and had not been paid for such services. Severino Pepito cate"oricall$ stated that he
'or(ed durin" the late hours of the evenin" and durin" the earl$ hours of the da$ 'hen
the boat doc(s and unloads. 2side fro# the above, he did other Hobs such as re#ovin"
rusts and cleanin" the vessel, 'hich overti#e 'or( totalled to > hours a da$, and of
'hich he has not been paid as $et. This state#ent 'as not rebutted b$ the petitioners.
Nobod$ 'or(in" 'ith hi# on the sa#e boat 9MBV 2driana9 contra'ise. The testi#onies
of boats'ains of other vessels3MBV Iruna and MBV Princesa4, are inco#petent and
unreliable. 2nd considerin" the established fact that the 'or( of Severino Pepito 'as
continuous, and durin" the ti#e he 'as not 'or(in", he could not leave and could not
co#pletel$ rest, because of the place and nature of his 'or(, the provisions of sec. *,
of !o##. 2ct No. +++, 'hich states 9:hen the 'or( is not continuous, the ti#e durin"
'hich the laborer is not 'or(in" and can leave his 'or(in" place and can rest
co#pletel$ shall not be counted9, find no application in his case.
7. 4ighth assignment o error.Q The !IR erred in orderin" petitioners to reinstate !apt.
!arlos 2sensi to his for#er position, considerin" the fact that said officer had been
e#plo$ed since -anuar$ <, *<,1, as captain of a vessel belon"in" to another shippin"
fir# in the !it$ of !ebu.
The !IR held Q
Findin" that the clai#s of !aptain !arlos 2sensi for bac( salaries fro# the ti#e of his
alle"ed la$5off on March .0, *<,., is not supported b$ the evidence on record, the
sa#e is hereb$ dis#issed. !onsiderin", ho'ever, that !aptain 2sensi had been laid5off
for a lon" ti#e and that his failure to report for 'or( is not sufficient cause for his
absolute dis#issal, respondents are hereb$ ordered to reinstate hi# to his for#er Hob
'ithout bac( salar$ but under the sa#e ter#s and conditions of e#plo$#ent e%istin"
prior to his la$5off, 'ithout loss of seniorit$ and other benefits alread$ acFuired b$ hi#
prior to March .0, *<,.. This !ourt is e#po'ered to reduce the punish#ent #eted out
to an errin" e#plo$ee 3Standard Vacuu# Oil !o., Inc. v. Jatipunan &abor Dnion, 6.R.
No. &5<>>>, -an. 10, *<,/4. This step ta(en is in consonance 'ith section *. of !o##.
2ct *01, as a#ended.9 3p. *>, Decision, 2nne% R6R4.
The rulin" is in confor#it$ 'ith the evidence, la' and eFuit$.
'inth and ,enth assignments o error. Q The !IR erred in den$in" a dul$ verified
#otion for ne' trial, and in overrulin" petitionerRs #otion for reconsideration.
The #otion for ne' trial, supported b$ an affidavit, states that the #ovants have a "ood
and valid defense and the sa#e is based on three orders of the :2S 3:a"e
44
2d#inistration Service4, dated Nove#ber >, *<,>. It is alle"ed that the$ 'ould
inevitabl$ affect the defense of the petitioners. The #otion for ne' trial is 'ithout #erit.
;avin" the said 'a"e Orders in their possession, 'hile the case 'as pendin" decision,
it 'as not e%plained 'h$ the proper #ove 'as not ta(en to introduce the# before the
decision 'as pro#ul"ated. The said 'a"e orders, dealin" as the$ do, 'ith the
evaluation o meals and acilities, are irrelevant to the present issue, it havin" been
found and held that the #eals or food in Fuestion are not facilities but supple#ents.
The ori"inal petition in the !IR havin" been filed on Sept. *., *<,., the :2S could
have intervened in the #anner provided b$ la' to e%press its vie's on the #atter. 2t
an$ rate, the ad#ission of the three 'a"e orders have not altered the decision reached
in this case.
IN VI: ;ROF, the petition is dis#issed, 'ith costs a"ainst the petitioners.
5eng-on, C.%., "adilla, 5autista /ngelo, )abrador, Concepcion, .eyes, %.5.)., 5arrera,
Di-on, .egala and Makalintal, %%., concur.
Republic of the Philippines
SUPREME COURT
Manila
S!OND DIVISION

G.R. No. 9607E 2a#(a,y 9, 1992
HILARIO RADA, petitioner,
vs.
NATIONAL LAOR RELATIONS COMMISSION /S&)o#$ D7?7'7o#0 a#$ PHILNOR
CONSULTANTS AND PLANNERS, INC., respondents.
Cabellero, Calub, /umentado 9 /ssociates )a! :ices or petitioner.
45

REGALADO, J.:
In this special civil action for certiorari, petitioner Rada see(s to annul the decision of
respondent National &abor Relations !o##ission 3N&R!4, dated Nove#ber *<, *<<0,
reversin" the decision of the labor arbiter 'hich ordered the reinstate#ent of petitioner
'ith bac('a"es and a'arded hi# overti#e pa$.
1
The facts, as stated in the !o##ent of private respondent Philnor !onsultants and
Planners, Inc. 3Philnor4, are as follo's8
PetitionerRs initial e#plo$#ent 'ith this Respondent 'as under a 9!ontract of
#plo$#ent for a Definite Period9 dated -ul$ /, *<//, cop$ of 'hich is hereto attached
and #ade an inte"ral part hereof as /nne? / 'hereb$ Petitioner 'as hired as 9Driver9
for the construction supervision phase of the Manila North %press'a$ %tension,
Second Sta"e 3hereinafter referred to as MN Sta"e .4 for a ter# of 9about .+
#onths effective -ul$ *, *<//.
%%% %%% %%%
;i"hli"htin" the nature of PetitionerRs e#plo$#ent, /nne? / specificall$ provides as
follo's8
It is hereb$ understood that the #plo$er does not have a continuin" need for the
services of the #plo$ee be$ond the ter#ination date of this contract and that the
#plo$eeRs services shall auto#aticall$, and 'ithout notice, ter#inate upon the
co#pletion of the above specified phase of the proHectG and that it is further understood
that the en"a"e#ent of hisBher services is coter#inus 'ith the sa#e and not 'ith the
'hole proHect or other phases thereof 'herein other e#plo$ees of si#ilar position as
heBshe have been hired. 3Par. /, e#phasis supplied4
PetitionerRs first contract of e#plo$#ent e%pired on -une 10, *</<. Mean'hile, the
#ain proHect, MN Sta"e ., 'as not finished on account of various constraints, not
the least of 'hich 'as inadeFuate fundin", and the sa#e 'as e%tended and re#ained
in pro"ress be$ond the ori"inal period of ..1 $ears. Fortunatel$ for the Petitioner, at the
ti#e the first contract of e#plo$#ent e%pired, Respondent 'as in need of Driver for the
e%tended proHect. Since Petitioner had the necessar$ e%perience and his perfor#ance
under the first contract of e#plo$#ent 'as found satisfactor$, the position of Driver 'as
offered to Petitioner, 'hich he accepted. ;ence a second !ontract of #plo$#ent for a
Definite Period of *0 #onths, that is, fro# -ul$ *, *</< to 2pril 10, *<70 'as e%ecuted
bet'een Petitioner and Respondent on -ul$ /, *</<. . . .
In March *<70 so#e of the areas or phases of the proHect 'ere co#pleted, but the bul(
of the proHect 'as $et to be finished. )$ that ti#e so#e of those proHect e#plo$ees
'hose contracts of e#plo$#ent e%pired or 'ere about to e%pire because of the
co#pletion of portions of the proHect 'ere offered another e#plo$#ent in the re#ainin"
portion of the proHect. Petitioner 'as a#on" those 'hose contract 'as about to e%pire,
and since his service perfor#ance 'as satisfactor$, respondent rene'ed his contract of
e#plo$#ent in 2pril *<70, after Petitioner a"reed to the offer. 2ccordin"l$, a third
contract of e#plo$#ent for a definite period 'as e%ecuted b$ and bet'een the
Petitioner and the Respondent 'hereb$ the Petitioner 'as a"ain e#plo$ed as Driver
for *< #onths, fro# Ma$ *, *<70 to Nove#ber 10, *<7*, . . .
This third contract of e#plo$#ent 'as subseFuentl$ e%tended for a nu#ber of ti#es,
the last e%tension bein" for a period of 1 #onths, that is, fro# October *, *<7, to
Dece#ber 1*, *<7,, . . .
The last e%tension, fro# October *, *<7, to Dece#ber 1*, *<7, 32nne% 4 covered b$
an 92#end#ent to the !ontract of #plo$#ent 'ith a Definite Period,9 'as not
e%tended an$ further because Petitioner had no #ore 'or( to do in the proHect. This
last e%tension 'as confir#ed b$ a notice on Nove#ber .7, *<7, dul$ ac(no'led"ed b$
the Petitioner the ver$ ne%t da$, . . .
So#eti#e in the .nd 'ee( of Dece#ber *<7,, Petitioner applied for 9Personnel
!learance9 'ith Respondent dated Dece#ber <, *<7, and ac(no'led"ed havin"
received the a#ount of P1,/<>..0 representin" conversion to cash of unused leave
credits and financial assistance. Petitioner also released Respondent fro# all
obli"ations andBor clai#s, etc. in a 9Release, :aiver and Ouitclai#9 . . .
2
!ulled fro# the records, it appears that on Ma$ .0, *<7/, petitioner filed before the
N&R!, National !apital Re"ion, Depart#ent of &abor and #plo$#ent, a !o#plaint for
non5pa$#ent of separation pa$ and overti#e pa$. On -une 1, *<7/, Philnor filed its
Position Paper alle"in", inter alia, that petitioner 'as not ille"all$ ter#inated since the
proHect for 'hich he 'as hired 'as co#pletedG that he 'as hired under three distinct
contracts of e#plo$#ent, each of 'hich 'as for a definite period, all 'ithin the
esti#ated period of MN Sta"e . ProHect, coverin" different phases or areas of the
said proHectG that his 'or( 'as strictl$ confined to the MN Sta"e . ProHect and that
he 'as never assi"ned to an$ other proHect of PhilnorG that he did not render overti#e
services and that there 'as no de#and or clai# for hi# for such overti#e pa$G that he
si"ned a 9Release, :aiver and Ouitclai#9 releasin" Philnor fro# all obli"ations and
clai#sG and that PhilnorRs business is to provide en"ineerin" consultanc$ services,
includin" supervision of construction services, such that it hires e#plo$ees accordin" to
the reFuire#ents of the proHect #annin" schedule of a particular contract.
3
46
On -ul$ ., *<7/, petitioner filed an 2#ended !o#plaint alle"in" that he 'as ille"all$
dis#issed and that he 'as not paid overti#e pa$ althou"h he 'as #ade to render
three hours overti#e 'or( for# Monda$ to Saturda$ for a period of three $ears.
On -ul$ /, *<7/, petitioner filed his Position Paper clai#in" that he 'as ille"all$
dis#issed since he 'as a re"ular e#plo$ee entitled to securit$ of tenureG that he 'as
not a proHect e#plo$ee since Philnor is not en"a"ed in the construction business as to
be covered b$ Polic$ Instructions No. .0G that the contract of e#plo$#ent for a definite
period e%ecuted bet'een hi# and Philnor is a"ainst public polic$ and a clear
circu#vention of the la' desi"ned #erel$ to evade an$ benefits or liabilities under the
statuteG that his position as driver 'as essential, necessar$ and desirable to the
conduct of the business of PhilnorG that he rendered overti#e 'or( until >800 p.#. dail$
e%cept Sunda$s and holida$s and, therefore, he 'as entitled to overti#e pa$.
-
In his Repl$ to RespondentRs Position Paper, petitioner clai#ed that he 'as a re"ular
e#plo$ee pursuant to 2rticle ./73c4 of the &abor !ode and, thus, he cannot be
ter#inated e%cept for a Hust cause under 2rticle .70 of the !odeG and that the public
respondentRs rulin" in Aui!a vs. "hilnor Consultants and "lanners, (nc.
5
is not
applicable to his case since he 'as an ad#inistrative e#plo$ee 'or(in" as a co#pan$
driver, 'hich position still e%ists and is essential to the conduct of the business of
Philnor even after the co#pletion of his contract of e#plo$#ent.
6
Petitioner li(e'ise
avers that the contract of e#plo$#ent for a definite period entered into bet'een hi#
and Philnor 'as a plo$ to defeat the intent of 2rticle .70 of the &abor !ode.
On -ul$ .7, *<7/, Philnor filed its RespondentRs Supple#ental Position Paper, alle"in"
therein that petitioner 'as not a co#pan$ driver since his Hob 'as to drive the
e#plo$ees hired to 'or( at the MN Sta"e . ProHect to and fro# the filed office at
Sto. Do#in"o Interchan"e, Pa#pan"aG that the office hours observed in the proHect
'ere fro# /800 a.#. to +800 p.#. Monda$s throu"h Saturda$sG that Philnor adopted the
polic$ of allo'in" certain e#plo$ees, not necessaril$ the proHect driver, to brin" ho#e
proHect vehicles to afford fast and free transportation to and fro# the proHect field office
considerin" the distance bet'een the proHect site and the e#plo$eesR residence, to
avoid proHect dela$s and inefficienc$ due to e#plo$ee tardiness caused b$
transportation proble#G that petitioner 'as allo'ed to use a proHect vehicle 'hich he
used to pic( up and drop off so#e ten e#plo$ees alon" pifanio de los Santos 2venue
3DS24, on his 'a$ ho#e to Mari(ina, Metro ManilaG that 'hen he 'as absent or on
leave, another e#plo$ee livin" in Metro Manila used the sa#e vehicle in transportin"
the sa#e e#plo$eesG that the ti#e used b$ petitioner to and fro# his residence to the
proHect site fro# ,810 a.#. to /800 a.#. and fro# +800 p.#. to >800 p.#., or about three
hours dail$, 'as not overti#e 'or( as he 'as #erel$ enHo$in" the benefit and
convenience of free transportation provided b$ Philnor, other'ise 'ithout such vehicle
he 'ould have used at least four hours b$ usin" public transportation and spent P*..00
dail$ fareG that in the case of Aui!a vs. "hilnor Consultants and "lanners, (nc., supra,
the N&R! upheld PhilnorRs position that Oui'a 'as a proHect e#plo$ee and he 'as not
entitled to ter#ination pa$ under Polic$ Instructions No. .0 since his e#plo$#ent 'as
coter#inous 'ith the co#pletion of the proHect.
On 2u"ust .,, *<7/, Philnor filed its RespondentRs Repl$B!o##ents to !o#plainantRs
ReHoinder and Repl$, sub#ittin" there'ith t'o letters dated -anuar$ ,, *<7, and
Februar$ >, *<7,, si"ned b$ MN Sta"e . ProHect e#plo$ees, includin" herein
petitioner, 'here the$ as(ed 'hat ter#ination benefits could be "iven to the# as the
MN Sta"e . ProHect 'as nearin" co#pletion, and PhilnorRs letter5repl$ dated
Februar$ .., *<7, infor#in" the# that the$ are not entitled to ter#ination benefits as
the$ are contractualBproHect e#plo$ees.
On 2u"ust 1*, *<7<, &abor 2rbiter Do#inador M. !ru? rendered a decision
7
'ith the
follo'in" dispositive portion8
:;RFOR, in vie' of all the fore"oin" considerations, Hud"#ent is hereb$
rendered8
3*4 Orderin" the respondent co#pan$ to reinstate the co#plainant to his for#er
position 'ithout loss of seniorit$ ri"hts and other privile"es 'ith full bac('a"es fro# the
ti#e of his dis#issal to his actual reinstate#entG
3.4 Directin" the respondent co#pan$ to pa$ the co#plainant overti#e pa$ for the
three e%cess hours of 'or( perfor#ed durin" 'or(in" da$s fro# -anuar$ *<71 to
Dece#ber *<7,G and
314 Dis#issin" all other clai#s for lac( of #erit.
SO ORDRD.
2ctin" on PhilnorRs appeal, the N&R! rendered its assailed decision dated Nove#ber
*<, *<<0, settin" aside the labor arbiterRs aforeFuoted decision and dis#issin"
petitionerRs co#plaint.
;ence this petition 'herein petitioner char"es respondent N&R! 'ith "rave abuse of
discretion a#ountin" to lac( of Hurisdiction for the follo'in" reasons8
*. The decision of the labor arbiter, dated 2u"ust 1*, *<7<, has alread$ beco#e final
and e%ecutor$G
.. The case of Aui!a vs. "hilnor Consultants and "lanners, (nc. is not bindin" nor is it
applicable to this caseG
47
1. The petitioner is a re"ular e#plo$ee 'ith ei"ht $ears and five #onths of continuous
services for his e#plo$er, private respondent PhilnorG
+. The clai#s for overti#e services, reinstate#ent and full bac('a"es are valid and
#eritorious and should have been sustainedG and
,. The decision of the labor arbiter should be reinstated as it is #ore in accord 'ith the
facts, the la' and evidence.
The petition is devoid of #erit.
*. Petitioner Fuestions the Hurisdiction of respondent N&R! in ta(in" co"ni?ance of the
appeal filed b$ Philnor in spite of the latterRs failure to file a supersedeas bond 'ithin
ten da$s fro# receipt of the labor arbiterRs decision, b$ reason of 'hich the appeal
should be dee#ed to have been filed out of ti#e. It 'ill be noted, ho'ever, that Philnor
'as able to file a bond althou"h it 'as #ade be$ond the *05da$ re"le#entar$ period.
:hile it is true that the pa$#ent of the supersedeas bond is an essential reFuire#ent in
the perfection of an appeal, ho'ever, 'here the fee had been paid althou"h pa$#ent
'as dela$ed, the broader interests of Hustice and the desired obHective of resolvin"
controversies on the #erits de#ands that the appeal be "iven due course. )esides, it
'as 'ithin the inherent po'er of the N&R! to have allo'ed late pa$#ent of the bond,
considerin" that the aforesaid decision of the labor arbiter 'as received b$ private
respondent on October 1, *<7< and its appeal 'as dul$ filed on October *1, *<7<.
;o'ever, said decision did not state the a#ount a'arded as bac('a"es and overti#e
pa$, hence the a#ount of the supersedeas bond could not be deter#ined. It 'as onl$ in
the order of the N&R! of Februar$ *>, *<<0 that the a#ount of the supersedeas bond
'as specified and 'hich bond, after an e%tension "ranted b$ the N&R!, 'as ti#el$
filed b$ private respondent.
Moreover, as provided b$ 2rticle ..* of the &abor !ode, 9in an$ proceedin" before the
!o##ission or an$ of the &abor 2rbiters, the rules of evidence prevailin" in !ourts of
la' or eFuit$ shall not be controllin" and it is the spirit and intention of this !ode that
the !o##ission and its #e#bers and the &abor 2rbiters shall use ever$ and all
reasonable #eans to ascertain the facts in each case speedil$ and obHectivel$ 'ithout
re"ard to technicalities of la' or procedure, all in the interest of due process. E Finall$,
the issue of ti#eliness of the appeal bein" an entirel$ ne' and unpleaded #atter in the
proceedin"s belo' it #a$ not no' be raised for the first ti#e before this !ourt.
9
.. Petitioner postulates that as a re"ular e#plo$ee, he is entitled to securit$ of tenure,
hence he cannot be ter#inated 'ithout cause. Private respondent Philnor believes
other'ise and asserts that petitioner is #erel$ a proHect e#plo$ee 'ho 'as ter#inated
upon the co#pletion of the proHect for 'hich he 'as e#plo$ed.
In holdin" that petitioner is a re"ular e#plo$ee, the labor arbiter found that8
. . . There is no Fuestion that the co#plainant 'as e#plo$ed as driver in the
respondent co#pan$ continuousl$ fro# -ul$ *, *<// to Dece#ber 1*, *<7, under
various contracts of e#plo$#ent. Si#ilarl$, there is no dispute that respondent Philnor
!onsultant L Planner, Inc., as its business na#e connotes, has been en"a"ed in
providin" to its client3e4le en"ineerin" consultanc$ services. The record sho's that
'hile the different labor contracts e%ecuted b$ the parties stipulated definite periods of
en"a"in" the services of the co#plainant, $et the latter 'as suffered to continue
perfor#in" his Hob upon the e%piration of one contract and the rene'al of another.
Dnder these circu#stances, the co#plaint has obtained the status of re"ular e#plo$ee,
it appearin" that he has 'or(ed 'ithout fail for al#ost ei"ht $ears, a fraction of si%
#onths considered as one 'hole $ear, and that his assi"ned tas( as driver 'as
necessar$ and desirable in the usual tradeBbusiness of the respondent e#plo$er.
2ssu#in" to be true, as spelled out in the e#plo$#ent contract, that the #plo$er has
no 9continuin" need for the services of the #plo$e3e4 be$ond the ter#ination date of
this contract and that the #plo$eeRs services shall auto#aticall$, and 'ithout notice,
ter#inate upon co#pletion of the above specified phase of the proHect,9 still 'e cannot
see our 'a$ clear 'h$ the co#plainant 'as hired and his services en"a"ed contract
after contract strai"ht fro# *<// to *<7, 'hich, to our considered vie', lends credence
to the contention that he 'or(ed as re"ular driver ferr$in" earl$ in the #ornin" office
personnel to the co#pan$ #ain office in Pa#pan"a and brin"in" bac( late in the
afternoon to Manila, and drivin" co#pan$ e%ecutives for inspection of construction
'or(ers to the Hobsites. 2ll told, 'e believe that the co#plainant, under the
environ#ental facts obtainin" in the case at bar, is a re"ular e#plo$ee, the provisions
of 'ritten a"ree#ent to the
contrar$ not'ithstandin" and re"ardless of the oral understandin" of the parties . . .
10
On the other hand, respondent N&R! declared that, as bet'een the uncorroborated
and unsupported assertions of petitioners and those of private respondent 'hich are
supported b$ docu#ents, "reater credence should be "iven the latter. It further held
that8
!o#plainant 'as hired in a specific proHect or underta(in" as driver. :hile such proHect
'as still on5"oin" he 'as hired several ti#es 'ith his e#plo$#ent period fi%ed ever$
ti#e his contract 'as rene'ed. 2t the co#pletion of the specific proHect or underta(in"
his e#plo$#ent contract 'as not rene'ed.
:e reiterate our rulin" in the case of 2Aui!a3 vs. "hilnor Consultants and "lanners,
(nc., N&R! R2) III ,5*/1757+, it is bein" applicable in this case, vi-.8
48
. . . :hile it is true that the activities perfor#ed b$ hi# 'ere necessar$ or desirable in
the usual business or trade of the respondent as consultants, planners, contractor and
'hile it is also true that the duration of his e#plo$#ent 'as for a period of about seven
$ears, these circu#stances did not #a(e hi# a
re"ular e#plo$ee in conte#plation of 2rticle .7* of 3the4 &abor !ode. . . .
11
Our rulin" in Sandoval Shipyards, (nc. vs. 'ational )abor .elations Commission, et al.
12
is applicable to the case at bar. Thus8
:e hold that private respondents 'ere proHect e#plo$ees 'hose 'or( 'as
coter#inous 'ith the proHect or 'hich the$ 'ere hired. ProHect e#plo$ees, as
distin"uished fro# re"ular or non5proHect e#plo$ees, are #entioned in section .7* of
the &abor !ode as those 9'here the e#plo$#ent has been fi%ed for a specific proHect
or underta(in" the co#pletion or ter#ination of 'hich has been deter#ined at the ti#e
of the en"a"e#ent of the e#plo$ee.9
Polic$ Instructions No. .0 of the Secretar$ of &abor, 'hich 'as issued to stabili?e
e#plo$er5e#plo$ee relations in the construction industr$, provides8
ProHect e#plo$ees are those e#plo$ed in connection 'ith a particular construction
proHect. Non5proHect 3re"ular4 e#plo$ees are those e#plo$ed b$ a construction
co#pan$ 'ithout reference to an$ particular proHect.
ProHect e#plo$ees are not entitled to ter#ination pa$ if the$ are ter#inated as a result
of the co#pletion of the proHect or an$ phase thereof in 'hich the$ are e#plo$ed,
re"ardless of the nu#ber of proHects in 'hich the$ have been e#plo$ed b$ a particular
construction co#pan$. Moreover, the co#pan$ is not reFuired to obtain clearance fro#
the Secretar$ of &abor in connection 'ith such ter#ination.
The petitioner cited three of its o'n cases 'herein the National &abor Relations
!o##ission, Deput$ Minister of &abor and #plo$#ent Incion" and the Director of the
National !apital Re"ion held that the la$off of its proHect e#plo$ees 'as la'ful. Deput$
Minister Incion" in TFD !ase No. *,10, In Re Sandoval Ship$ards, Inc. 2pplication for
!learance to Ter#inate #plo$ees, rendered the follo'in" rulin" on Februar$ .>,
*</<G
:e feel that there is #erit in the contention of the applicant corporation. To our #ind,
the e#plo$#ent of the e#plo$ees concerned 'ere fi%ed for a specific proHect or
underta(in". 6or the nature o the business the corporation is engaged into is one
!hich !ill not allo! it to employ !orkers or an indeinite period.
It is si"nificant to note that the corporation does not construct vessels for sale or
other'ise 'hich 'ill de#and continuous productions of ships and 'ill need per#anent
or re"ular 'or(ers. It #erel$ accepts contracts for shipbuildin" or for repair of vessels
for# third parties and, onl$, on occasion 'hen it has 'or( contract of this nature that it
hires 'or(ers to do the Hob 'hich, needless to sa$, lasts onl$ for less than a $ear or
lon"er.
The co#pletion of their 'or( or proHect auto#aticall$ ter#inates their e#plo$#ent, in
'hich case, the e#plo$er is, under the la', onl$ obli"ed to render a report on the
ter#ination of the e#plo$#ent. 3*1<5*+0, .ollo of 6.R. No. >,>7<4 3#phasis
supplied4
In Cartagenas, et al. vs. .omago 4lectric Company, (nc., et al.,
13
'e li(e'ise held that8
2s an electrical contractor, the private respondent depends for its business on the
contracts it is able to obtain fro# real estate developers and builders of buildin"s. Since
its 'or( depends on the availabilit$ of such contracts or 9proHects,9 necessaril$ the
duration of the e#plo$#entRs of this 'or( force is not per#anent but co5ter#inus 'ith
the proHects to 'hich the$ are assi"ned and fro# 'hose pa$rolls the$ are paid. (t !ould
be e?tremely burdensome or their employer !ho, like them, depends on the
availability o pro>ects, i it !ould have to carry them as permanent employees and pay
them !ages even i there are no pro>ects or them to !ork on. 3#phasis supplied.4
It #ust be stressed herein that althou"h petitioner 'or(ed 'ith Philnor as a driver for
ei"ht $ears, the fact that his services 'ere rendered onl$ for a particular proHect 'hich
too( that sa#e period of ti#e to co#plete cate"ori?es hi# as a proHect e#plo$ee.
Petitioner 'as e#plo$ed for one specific proHect.
2 non5proHect e#plo$ee is different in that the e#plo$ee is hired for #ore than one
proHect. 2 non5proHect e#plo$ee, vis$a$vis a proHect e#plo$ee, is best e%e#plified in the
case of 6egurin, et al. vs. 'ational )abor .elations Commission, et al.
1-
'herein four of
the petitioners had been 'or(in" 'ith the co#pan$ for nine $ears, one for ei"ht $ears,
another for si% $ears, the shortest ter# bein" three $ears. In holdin" that petitioners are
re"ular e#plo$ees, this !ourt therein e%plained8
!onsiderin" the nature of the 'or( of petitioners, that of carpenter, laborer or #ason,
their respective Hobs 'ould actuall$ be continuous and on5"oin". :hen a proHect to
'hich the$ are individuall$ assi"ned is co#pleted, the$ 'ould be assi"ned to the ne%t
proHect or a phase thereof. In other 'ords, the$ belon"ed to a 9'or( pool9 fro# 'hich
the co#pan$ 'ould dra' 'or(ers for assi"n#ent to other proHects at its discretion.
The$ are, therefore, actuall$ 9non5proHect e#plo$ees.9
49
Fro# the fore"oin", it is clear that petitioner is a proHect e#plo$ee considerin" that he
does not belon" to a 9'or( pool9 fro# 'hich the co#pan$ 'ould dra' 'or(ers for
assi"n#ent to other proHects at its discretion. It is li(e'ise apparent fro# the facts
obtainin" herein that petitioner 'as utili?ed onl$ for one particular proHect, the MN
Sta"e . ProHect of respondent co#pan$. ;ence, the ter#ination of herein petitioner is
valid b$ reason of the co#pletion of the proHect and the e%piration of his e#plo$#ent
contract.
1. 2nent the clai# for overti#e co#pensation, 'e hold that petitioner is entitled to the
sa#e. The fact that he pic(s up e#plo$ees of Philnor at certain specified points alon"
DS2 in "oin" to the proHect site and drops the# off at the sa#e points on his 'a$
bac( fro# the field office "oin" ho#e to Mari(ina, Metro Manila is not #erel$ incidental
to petitionerRs Hob as a driver. On the contrar$, said transportation arran"e#ent had
been adopted, not so #uch for the convenience of the e#plo$ees, but pri#aril$ for the
benefit of the e#plo$er, herein private respondent. This fact is inevitabl$ deducible fro#
the Me#orandu# of respondent co#pan$8
The herein Respondent resorted to the above transport arran"e#ent because fro# its
previous proHect construction supervision e%periences, Respondent found out that
proHect dela$s and inefficiencies resulted fro# e#plo$eesR tardinessG and that the
proble# of tardiness, in turn, 'as a""ravated b$ transportation proble#s, 'hich varied
in de"rees in proportion to the distance bet'een the proHect site and the e#plo$eesR
residence. In vie' of this lesson fro# e%perience, and as a practical, if e%pensive,
solution to e#plo$eesR tardiness and its conco#itant proble#s, Respondent adopted
the polic$ of allo'in" certain e#plo$ees Q not necessaril$ proHect drivers Q to brin"
ho#e proHect vehicles, so that e#plo$ees could be afforded fast, convenient and free
transportation to and fro# the proHect field office. . . .
15
Private respondent does not hesitate to ad#it that it is usuall$ the proHect driver 'ho is
tas(ed 'ith pic(in" up or droppin" off his fello' e#plo$ees. Proof thereof is the
undisputed fact that 'hen petitioner is absent, another driver is supposed to replace
hi# and drive the vehicle and li(e'ise pic( up andBor drop off the other e#plo$ees at
the desi"nated points on DS2. If drivin" these e#plo$ees to and fro# the proHect site
is not reall$ part of petitionerRs Hob, then there 'ould have been no need to find a
replace#ent driver to fetch these e#plo$ees. )ut since the assi"ned tas( of fetchin"
and deliverin" e#plo$ees is indispensable and conseFuentl$ #andator$, then the ti#e
reFuired of and used b$ petitioner in "oin" fro# his residence to the field office and
bac(, that is, fro# ,810 a.#. to /800 a.#. and fro# +800 p.#. to around >800 p.#., 'hich
the labor arbiter rounded off as avera"in" three hours each 'or(in" da$, should be paid
as overti#e 'or(. Ouintessentiall$, petitioner should be "iven overti#e pa$ for the three
e%cess hours of 'or( perfor#ed durin" 'or(in" da$s fro# -anuar$, *<71 to Dece#ber,
*<7,.
:;RFOR, subHect to the #odification re"ardin" the a'ard of overti#e pa$ to
herein petitioner, the decision appealed fro# is 2FFIRMD in all other respects.
SO ORDRD.
Melencio$;errera, "aras and "adilla, %%., concur.
'ocon, %., took no part.
Republic of the Philippines
SUPREME COURT
)a"uio !it$
T;IRD DIVISION

G.R. No. 126529 A6,74 15, 199E
EDUARDO . PRANGAN, petitioner,
vs.
NATIONAL LAOR RELATIONS COMMISSION /NLRC0, MASAGANA SECURIT!
SERAICES CORPORATION, a#$Ho, AICTOR C. PADILLA, respondents.

ROMERO, J.:
50
Private respondent, a corporation en"a"ed in providin" securit$ services to its client,
hired petitioner on Nove#ber +, *<70 as one of its securit$ "uards. Thereafter, he 'as
assi"ned to the !at ;ouse )ar and Restaurant 'ith a #onthl$ salar$ of P.,000.00 until
its closure on 2u"ust 1*, *<<1.
On Ma$ +, *<<+, petitioner filed a co#plaint
1
a"ainst private respondent for
underpa$#ent of 'a"es, non5pa$#ent of salar$ fro# 2u"ust *>51*, *<<1, overti#e
pa$, pre#iu# pa$ for holida$, rest da$, ni"ht shift differential, unifor# allo'ance,
service incentive leave pa$ and *1th #onth pa$ fro# the $ear *<<0 to *<<1.
Private respondent, in its position paper,
2
reHected petitionerRs clai# alle"in" it #erel$
acted as an a"ent of the latter in securin" his e#plo$#ent at the !at ;ouse )ar and
Restaurant. Thus, the liabilit$ for the clai#s of the petitioner should be char"ed to !at
;ouse )ar and its o'ner, bein" his direct e#plo$er.
In resolvin" the dispute in a decision dated Ma$ 1*, *<<,,
3
the &abor 2rbiter brushed
aside the private respondentRs contention that it 'as #erel$ an a"ent of the petitioner
and concluded8
:;RFOR, PRMISS !ONSIDRD, respondents M2S262N2 S!DRITI
SRVI! !ORPOR2TION andBor VI!TOR !. P2DI&&2 are hereb$ ORDRD to pa$
'ithin ten 3*04 da$s fro# receipt hereof herein co#plainant DD2RDO ). PR2N62N,
the total su# of Nine Thousand Nine ;undred Thirt$ T'o Pesos L Si%teen !entavos
3P<,<1..*>4 pre#iu# pa$ for holida$ and rest da$s, ni"ht shift differential, service
incentive leave pa$, *1th #onth pa$, unifor# allo'ance, and unpaid salar$.
!o#plainantRs other clai#s as 'ell as respondentsR counter clai# are hereb$
DISMISSD either for the reason of prescription andBor lac( of #erit.
SO ORDRD.
2pparentl$ not satisfied 'ith the above5#entioned #onetar$ a'ard, petitioner appealed
to the National &abor Relations !o##ission 3N&R!4 contendin" that the &abor 2rbiter
erred in concludin" that he onl$ 'or(ed for four hours and not t'elve hours a da$.
videntl$, the shorter 'or( hours resulted in a lo'er #onetar$ a'ard b$ the &abor
2rbiter. ;o'ever, the N&R! dis#issed his appeal for failure to file the sa#e 'ithin ten5
da$ re"le#entar$ period.
-
Dndaunted, petitioner failed a #otion for reconsideration 'hich, in the 9interest of
Hustice,9 'as favorabl$ "ranted b$ the N&R! resultin" in the reinstate#ent of his
appeal. Nonetheless, petitionerRs victor$ 'as short5lived as the N&R! eventuall$
dis#issed his appeal for lac( of #erit,
5
the dispositive portion of the decision reads8
:;RFOR, the appeal is hereb$ dis#issed for lac( of #erit and decision is affir#ed
in toto.
SO ORDRD.
Petitioner is no' before us i#putin" "rave abuse of discretion on the part of
respondent N&R! 3a4 declarin" that he rendered onl$ four hours and not t'elve hours
of 'or(, and 3b4 affir#in" the #onetar$ a'ard.
The public respondent, throu"h the Solicitor 6eneral, and the private respondent filed
their respective co##ents on the petition refutin" the alle"ation of the petitioner.
Specificall$, the$ asserted that the decision 'as supported b$ a#ple evidence sho'in"
that petitioner indeed 'or(ed for onl$ four hours and not t'elve hours a da$.
2 revie' of the alle"ed error raised b$ the instant petition leads us to conclude that the
sa#e is factual in nature 'hich, as a rule, 'e do not pass upon. 2s a "eneral rule, it is
not for us to correct the N&R!Rs evaluation of the evidence, as our tas( is confined to
issues of Hurisdiction or "rave abuse of discretion.
6
Obviousl$, ho'ever, the sa#e 'ill
not appl$ 'here the evidence reFuires a reversal or #odification.
7
2s proof of petitionerRs actual hours of 'or(, private respondent sub#itted the dail$
ti#e records alle"edl$ si"ned b$ the petitioner hi#self sho'in" that he onl$ 'or(ed four
hours dail$.
In contrast, petitioner ar"ues that these dail$ ti#e records 'ere falsified for the si#ple
reason that he 'as not reFuired to sub#it one. ;e further stressed that, assu#in" such
docu#ents e%ist, its authenticit$ and due e%ecution are Fuestionable and of doubtful
source.
:e find #erit in the petition.
To be sure, findin"s of fact of =uasi$>udicial bodies li(e the N&R!, particularl$ 'hen
the$ coincide 'ith those of the &abor 2rbiter, are accorded 'ith respect even finalit$ if
supported b$ substantial evidence.
E
In this re"ard, 'e have defined substantial
evidence as such a#ount of relevant evidence 'hich a reasonable #ind #i"ht accept
as adeFuate to Hustif$ a conclusion.
9
2bsent such Fuantu# of evidence, the !ourt is not
precluded fro# #a(in" its o'n independent evaluation of facts.
10
In the instant case, there is no dispute that #atters concernin" an e#plo$eeRs actual
hours of 'or( are 'ithin the a#bit of #ana"e#ent prero"ative. ;o'ever, 'hen an
e#plo$er alle"es that his e#plo$ee 'or( less than the nor#al hours of e#plo$#ent as
51
provided for in the la',
11
he bears the burden of provin" his alle"ation 'ith clear and
satisfactor$ evidence.
In the instant petition, the N&R!, in declarin" that petitioner onl$ 'or(ed for four hours,
relied solel$ on the supposed dail$ ti#e records of the petitioner sub#itted b$ the
private respondent.
12
:e, ho'ever, are of the opinion that these docu#ents cannot be
considered substantial evidence as to conclude that petitioner onl$ 'or(ed for four
hours. It is 'orth #entionin" that petitioner, in his Sur5ReHoinder to RespondentsR
ReHoinder,
13
uneFuivocall$ stated that8
!o#plainant 3petitioner herein4 never #ade nor sub#itted an$ dail$ ti#e record 'ith
respondent co#pan$ considerin" the fact that he 'as assi"ned to a sin"le post and
that the dail$ ti#e records he alle"edl$ sub#itted 'ith respondent co#pan$ are all
falsified and his si"nature appearin" therein for"ed.
Private respondent hardl$ bothered to controvert petitionerRs assertion, #uch less
bolster its o'n contention. 2s petitionerRs e#plo$er, private respondent has unli#ited
access to all relevant docu#ents and records on the hours of 'or( of the petitioner.
Iet, even as it insists that petitioner onl$ 'or(ed for four hours and not t'elve, no
e#plo$#ent contract, pa$roll, notice of assi"n#ent or postin", cash voucher or an$
other convincin" evidence 'hich #a$ attest to the actual hours of 'or( of the petitioner
'as even presented. Instead, 'hat the private respondent offered as evidence 'as
onl$ petitionerRs dail$ ti#e record, 'hich the latter cate"oricall$ denied ever
acco#plishin", #uch less si"nin".
In said alle"ed dail$ ti#e record, it sho'ed that petitioner started 'or( at *0800 p.#.
and 'ould invariabl$ leave his post at e%actl$ .800 a.#. Obviousl$, such unvar$in"
recordin" of a dail$ ti#e record is i#probable and contrar$ to hu#an e%perience. It is
i#possible for an e#plo$ee to arrive at the 'or(place and leave at e%actl$ the sa#e
ti#e, da$ in da$ out. The ver$ unifor#it$ and re"ularit$ of the entries are 9bad"es of
untruthfulness and as such indices of dubiet$.
1-
2nother consideration 'hich #ilitates a"ainst private respondentRs clai# is the fact that
in the personnel data sheet of the petitioner,
15
dul$ si"ned b$ the for#erRs operation
#ana"er, it sho's on its face that the latterRs hours of 'or( are fro# /800 p.#. to /800
a.#. or t'elve hours a da$. ;ence, private respondent is estopped fro# assailin" the
contents of its o'n docu#ents.
Further, the attendance sheets of !at ;ouse )ar and Restaurant
16
sho'ed that
petitioner 'or(ed fro# /800 p.#. to /800 a.#. dail$, docu#ents 'hich 'ere never
repudiated b$ the private respondent.
2ll told, private respondent has not adeFuatel$ proved that petitionerRs actual hours of
'or( is onl$ four hours. Its une%plained silence contravenin" the personnel data sheet
and the attendance sheets of !at ;ouse )ar and Restaurant presented b$ the
petitioner sho'in" he 'or(ed for t'elve hours, has assu#ed the character of an
ad#ission. No reason 'as proffered for this silence despite private respondent, bein"
the e#plo$er, could have easil$ done so.
2s is 'ell5settled, if doubts e%ist bet'een the evidence presented b$ the e#plo$er and
the e#plo$ee, the scales of Hustice #ust be tilted in favor of the e#plo$ee. Since it is a
ti#e5honored rule that in controversies bet'een a laborer and his #aster, doubts
reasonabl$ arisin" fro# the evidence, or in the interpretation of a"ree#ents and
'ritin"s should he resolved in the for#erRs
favor.
17
:;RFOR, in vie' of the fore"oin", the instant petition is hereb$ 6R2NTD.
2ccordin"l$, the decision of the N&R! dated -ul$ 1*, *<<> is hereb$ V2!2TD.
:hatever #one$ clai#s due to the petitioner shall be co#puted on the basis of a
t'elve5hour dail$ 'or( schedule. For this purpose, the case is hereb$ RM2NDD to
the &abor 2rbiter for i##ediate reco#putation of said clai#s in accordance 'ith the
fore"oin" findin"s. No costs.
SO ORDRD.
'arvasa, C.%., Kapunan and "urisima, %%., concur.
52
Republic of the Philippines
SUPREME COURT
Manila
T;IRD DIVISION
G.R. No. 121-39 2a#(a,y 25, 2000
A@LAN ELECTRIC COOPERATIAE INCORPORATED /A@ELCO0, petitioner,
vs.
NATIONAL LAOR RELATIONS COMMISSION /.o(,3% D7?7'7o#0, RODOL.O M.
RETISO a#$ 165 OTHERS,
*
respondents.
GONCAGA<RE!ES, J.:
In his petition for certiorari and prohibition 'ith pra$er for 'rit of preli#inar$ inHunction
andBor te#porar$ restrainin" order, petitioner assails 3a4 the decision dated 2pril .0,
*<<,, of public respondent National &abor Relations !o##ission 3N&R!4, Fourth 3+th4
Division, !ebu !it$, in N&R! !ase No. V50*+15<+ reversin" the Februar$ .,, *<<+
decision of &abor 2rbiter Dennis D. -uanon and orderin" petitioner to pa$ 'a"es in the
a""re"ate a#ount of P>,+7,,/>/.<0 to private respondents, and 3b4 the resolution
dated -ul$ .7, *<<, den$in" petitionerRs #otion for reconsideration, for havin" been
issued 'ith "rave abuse of discretion.
53
2 te#porar$ restrainin" order 'as issued b$ this !ourt on October <, *<<, enHoinin"
public respondent fro# e%ecutin" the Fuestioned decision upon a suret$ bond posted
b$ petitioner in the a#ount of P>,+00,000.00.
.
The facts as found b$ the &abor 2rbiter are as follo's8
1
These are consolidated casesBclai#s for non5pa$#ent of salaries and 'a"es, *1th
#onth pa$, !O&2 and other frin"e benefits as rice, #edical and clothin" allo'ances,
sub#itted b$ co#plainant Rodolfo M. Retiso and *>1 others, &$n . )anilla and :ilson
). Sallador a"ainst respondents 2(lan lectric !ooperative, Inc. 32J&!O4, 2tt$.
&eovi"ildo Mation" in his capacit$ as 6eneral Mana"erG Manuel !ali?o, in his capacit$
as 2ctin" )oard President, )oard of Directors, 2J&!O.
!o#plainants alle"ed that prior to the te#porar$ transfer of the office of 2J&!O fro#
&e?o 2(lan to 2#on Theater, Jalibo, 2(lan, co#plainants 'ere continuousl$ perfor#in"
their tas( and 'ere dul$ paid of their salaries at their #ain office located at &e?o, 2(lan.
That on -anuar$ .., *<<., b$ 'a$ of resolution of the )oard of Directors of 2J&!O
allo'ed the te#porar$ transfer holdin" of office at 2#on Theater, Jalibo, 2(lan per
infor#ation b$ their ProHect Supervisor, 2tt$. &eovi"ildo Mation", that their head office is
closed and that it is dan"erous to hold office thereatG
Nevertheless, #aHorit$ of the e#plo$ees includin" herein co#plainants continued to
report for 'or( at &e?o 2(lan and 'ere paid of their salaries.
That on Februar$ >, *<<., the ad#inistrator of N2, Rodri"o !abrera, 'rote a letter
addressed to the )oard of 2J&!O, that he is not interposin" an$ obHections to the
action ta(en b$ respondent Mation". . .
That on Februar$ **, *<<., unnu#bered resolution 'as passed b$ the )oard of
2J&!O 'ithdra'in" the te#porar$ desi"nation of office at Jalibo, 2(lan, and that the
dail$ operations #ust be held a"ain at the #ain office of &e?o, 2(lanG
+
That co#plainants 'ho 'ere then reportin" at the &e?o office fro# -anuar$ *<<. up to
Ma$ *<<. 'ere dul$ paid of their salaries, 'hile in the #eanti#e so#e of the
e#plo$ees throu"h the insti"ation of respondent Mation" continued to re#ain and 'or(
at Jalibo, 2(lanG
That fro# -une *<<. up to March *7, *<<1, co#plainants 'ho continuousl$ reported
for 'or( at &e?o, 2(lan in co#pliance 'ith the afore#entioned resolution 'ere not paid
their salariesG
That on March *<, *<<1 up to the present, co#plainants 'ere a"ain allo'ed to dra'
their salariesG 'ith the e%ception of a fe' co#plainants 'ho 'ere not paid their salaries
for the #onths of 2pril and Ma$ *<<1G
Per alle"ations of the respondents, the follo'in" are the facts8
*. That these co#plainants voluntaril$ abandoned their respective 'or(BHob
assi"n#ents, 'ithout an$ Hustifiable reason and 'ithout notif$in" the #ana"e#ent of
the 2(lan lectric !ooperative, Inc. 32J&!O4, hence the cooperative suffered
da#a"es and s$ste#s lossG
.. That the co#plainants herein defied the la'ful orders and other issuances b$ the
6eneral Mana"er and the )oard of Directors of the 2J&!O. These co#plainants 'ere
reFuested to report to 'or( at the Jalibo office . . . but despite these la'ful orders of the
6eneral Mana"er, the co#plainants did not follo' and 'ilfull$ and #aliciousl$ defied
said orders and issuance of the 6eneral Mana"erG that the )oard of Directors passed a
Resolution resistin" and den$in" the clai#s of these co#plainants, . . . under the
principle of 9no 'or( no pa$9 'hich is le"all$ HustifiedG That these co#plainants have
9#ass leave9 fro# their custo#ar$ 'or( on -une *<<. up to March *7, *<<1 and had a
9sit5do'n9 stance for these periods of ti#e in their alle"ed protest of the appoint#ent of
respondent 2tt$. &eovi"ildo Mation" as the ne' 6eneral Mana"er of the 2(lan lectric
!ooperative, Inc. 32J&!O4 b$ the )oard of Directors and confir#ed b$ the
2d#inistrator of the National lectrification 2d#inistration 3N24, Oue?on !it$G That
the$ en"a"ed in 9. . . slo'do'n #ass leaves, sit do'ns, atte#pts to da#a"e, destro$
or sabota"e plant eFuip#ent and facilities of the 2(lan lectric !ooperative, Inc.
32J&!O4.
On Februar$ .,, *<<+, a decision 'as rendered b$ &abor 2rbiter Dennis D. -uanon
dis#issin" the co#plaints.
,
Dissatisfied 'ith the decision, private respondents appealed to the respondent
!o##ission.
On appeal, the N&R!Rs Fourth Division, !ebu !it$,
>
reversed and set aside the &abor
2rbiterRs decision and held that private respondents are entitled to unpaid 'a"es fro#
-une *>, *<<. to March *7, *<<1, thus8
/
The evidence on records, #ore specificall$ the evidence sub#itted b$ the
co#plainants, 'hich are8 the letter dated 2pril /, *<<1 of Pedrito &. &e$son, Office
Mana"er of 2J&!O 32nne% 9!9G co#plainantsR position paperG .ollo, p. *0.4
addressed to respondent 2tt$. &eovi"ildo T. Mation"G respondent 2J&!O 6eneral
Mana"erG the #e#orandu# of said 2tt$. Mation" dated *+ 2pril *<<1, in ans'er to the
54
letter of Pedrito &e$son 32nne% 9D9 co#plainantsR position paper4G as 'ell as the
co#putation of the unpaid 'a"es due to co#plainants 32nne%es 99 to 9519G
co#plainantsR position paper, .ollo, pa"es *0.+ to *0./4 clearl$ sho' that
co#plainants had rendered services durin" the period5-une *>, *<<. to March *7,
*<<1. The record is bereft of an$ sho'in" that the respondents had sub#itted an$
evidence, docu#entar$ or other'ise, to controvert this asseveration of the
co#plainants that services 'ere rendered durin" this period. 9SubHectin" these
evidences sub#itted b$ the co#plainants to the crucible of scrutin$, :e find that
respondent 2tt$. Mation" responded to the reFuest of the Office Mana"er, Mr. &e$son,
'hich :e Fuote, to 'it8
Rest assured that :e shall reco##end $our aforesaid reFuest to our )oard of
Directors for their consideration and appropriate action. This pa$#ent, ho'ever, shall
be subHect, a#on" others, to the availabilit$ of funds.
This assurance is an ad#ission that co#plainants are entitled to pa$#ent for services
rendered fro# -une *>, *<<. to March *7, *<<1, speciall$ so that the reco##endation
and reFuest co#es fro# the office #ana"er hi#self 'ho has direct (no'led"e
re"ardin" the services and perfor#ance of e#plo$ees under hi#. For ho' could one
office #ana"er reco##end pa$#ent of 'a"es, if no services 'ere rendered b$
e#plo$ees under hi#. 2n office #ana"er is the #ost Fualified person to (no' the
perfor#ance of personnel under hi#. 2nd therefore, an$ reFuest co#in" fro# hi# for
pa$#ent of 'a"es addressed to his superior as in the instant case shall be "iven
'ei"ht.
Further#ore, the record is clear that co#plainants 'ere paid of their 'a"es and other
frin"e benefits fro# -anuar$, *<<. to Ma$, *<<. and fro# March *<, *<<1 up to the
ti#e co#plainants filed the instant cases. In the intere"nu#, fro# -une *>, *<<. to
March *7, *<<1, co#plainants 'ere not paid of their salaries, hence these clai#s. :e
could see no rh$#e nor reason in respondentsR refusal to pa$ co#plainants salaries
durin" this period 'hen co#plainants had 'or(ed and actuall$ rendered service to
2J&!O.
:hile the respondents #aintain that co#plainants 'ere not paid durin" this interim
period under the principle of 9no 'or(, no pa$9, ho'ever, no proof 'as sub#itted b$ the
respondents to substantiate this alle"ation. The labor arbiter, therefore, erred in
dis#issin" the clai#s of the co#plainants, 'hen he adopted the 9no 'or(, no pa$9
principle advanced b$ the respondents.1*!phi1.n+t
:;RFOR, in vie' of the fore"oin", the appealed decision dated Februar$ .,,
*<<+ is hereb$ Reversed and Set 2side and a ne' one entered orderin" respondent
2J&!O to pa$ co#plainants their clai#s a#ountin" to P>,+7,,/>/.<0 as sho'n in the
co#putation 32nne%es 99 to 95194.
2 #otion for reconsideration 'as filed b$ petitioner but the sa#e 'as denied b$ public
respondent in a resolution dated -ul$ .7, *<<,.
7
Petitioner brou"ht the case to this !ourt alle"in" that respondent N&R! co##itted
"rave abuse of discretion citin" the follo'in" "rounds8
<
*. PD)&I! RSPONDNT !OMMITTD 6R2V DIS!RTION IN RVRSIN6 T;
F2!TD2& FINDIN6S 2ND !ON!&DSIONS OF T; &2)OR 2R)ITR, 2ND
DISR62RDIN6 T; EPRSS 2DMISSION OF PRIV2T RSPONDNTS T;2T
T;I DFID PTITIONRRS ORDR TR2NSFRRIN6 T; PTITIONRRS
OFFI!I2& )DSINSS OFFI! FROM &MO TO J2&I)O 2ND FOR T;M TO
RPORT T;R2T.
.. PD)&I! RSPONDNT !OMMITTD 6R2V 2)DS OF DIS!RTION IN
!ON!&DDIN6 T;2T PRIV2T RSPONDNTS :R R2&&I :ORJIN6 OR
RNDRIN6 SRVI! ON T; )2SIS OF T; !OMPDT2TION OF :26S 2ND
T; )I2SD R!OMMND2TION SD)MITTD )I &ISON :;O IS ON OF T;
PRIV2T RSPONDNTS :;O DFID T; &2:FD& ORDRS OF PTITIONR.
1. PD)&I! RSPONDNT !OMMITTD 6R2V 2)DS OF DIS!RTION IN
!ONSIDRIN6 T; 2SSDR2N! )I PTITIONRRS 6NR2& M2N26R
M2TION6 TO R!OMMND T; P2IMNT OF T; !&2IMS OF PRIV2T
RSPONDNTS 2S 2N 2DMISSION OF &I2)I&ITI OR 2 R!O6NITION T;2T
!OMPNS2)& SRVI!S :R 2!TD2&&I RNDRD.
+. 6R2NTIN6 T;2T PRIV2T RSPONDNTS !ONTINDD TO RPORT 2T T;
&MO OFFI!, IT IS STI&& 6R2V 2)DS OF DIS!RTION FOR PD)&I!
RSPONDNT TO !ONSIDR T;2T PTITIONR IS &62&&I O)&I62TD TO
R!O6NIM S2ID !IR!DMST2N! 2S !OMPNS2)& SRVI! 2ND P2I
:26S TO PRIV2T RSPONDNTS FOR DFIIN6 T; ORDR FOR T;M TO
RPORT FOR :ORJ 2T T; J2&I)O OFFI! :;R T; OFFI!I2& )DSINSS
2ND OPR2TIONS :R !ONDD!TD.
,. PD)&I! RSPONDNT !OMMITTD 6R2V 2)DS OF DIS!RTION 2ND
SRIODS, P2TNT 2ND P2&P2)& RROR IN RD&IN6 T;2T T; 9NO :ORJ, NO
P2I9 PRIN!IP& DOS NOT 2PP&I FOR &2!J OF VIDNTI2RI SDPPORT
:;N PRIV2T RSPONDNTS 2&R2DI 2DMITTD T;2T T;I DID NOT
RPORT FOR :ORJ 2T T; J2&I)O OFFI!.
>. PD)&I! RSPONDNT !OMMITTD 6R2V 2)DS OF DIS!RTION IN
2!!ORDIN6 :I6;T 2ND !RDI)I&ITI TO T; S&F5SRVIN6 2ND )I2SD
2&&62TIONS OF PRIV2T RSPONDNTS, 2ND 2!!PTIN6 T;M 2S PROOF,
55
DSPIT T; ST2)&IS;D F2!T 2ND 2DMISSION T;2T PRIV2T
RSPONDNTS DID NOT RPORT FOR :ORJ 2T T; J2&I)O OFFI!, OR T;2T
T;I :R NVR P2ID FOR 2NI :26S FROM T; TIM T;I DFID
PTITIONRRS ORDRS.
Petitioner contends that public respondent co##itted "rave abuse of discretion in
findin" that private respondents are entitled to their 'a"es fro# -une *>, *<<. to
March *7, *<<1, thus disre"ardin" the principle of 9no 'or(, no pa$9. It alle"es that
private respondents stated in their pleadin"s that the$ not onl$ obHected to the transfer
of petitionerRs business office to Jalibo but the$ also defied the directive to report
thereat because the$ considered the transfer ille"al. It further clai#s that private
respondents refused to reco"ni?e the authorit$ of petitionerRs la'ful officers and a"ents
resultin" in the disruption of petitionerRs business operations in its official business
office in &e?o, 2(lan, forcin" petitioner to transfer its office fro# &e?o to Jalibo
transferrin" all its eFuip#ents, records and facilitiesG that private respondents cannot
choose 'here to 'or(, thus, 'hen the$ defied the la'ful orders of petitioner to report at
Jalibo, private respondents 'ere considered dis#issed as far as petitioner 'as
concerned. Petitioner also disputes private respondentsR alle"ation that the$ 'ere paid
their salaries fro# -anuar$ to Ma$ *<<. and a"ain fro# March *<, *<<1 up to the
present but not for the period fro# -une *<<. to March *7, *<<1 sa$in" that private
respondents ille"all$ collected fees and char"es due petitioner and appropriated the
collections a#on" the#selves for 'hich reason the$ are clai#in" salaries onl$ for the
period fro# -une *<<. to March *<<1 and that private respondents 'ere paid their
salaries startin" onl$ in 2pril *<<1 'hen petitionerRs )oard a"reed to accept private
respondents bac( to 'or( at Jalibo office out of co#passion and not for the reason that
the$ rendered service at the &e?o office. Petitioner also adds that co#pensable service
is best sho'n b$ ti#ecards, pa$slips and other si#ilar docu#ents and it 'as an error
for public respondent to consider the co#putation of the clai#s for 'a"es and benefits
sub#itted #erel$ b$ private respondents as substantial evidence.
The Solicitor 6eneral filed its Manifestation in lieu of !o##ent pra$in" that the
decision of respondent N&R! be set aside and pa$#ent of 'a"es clai#ed b$ private
respondents be denied for lac( of #erit alle"in" that private respondents could not
have 'or(ed for petitionerRs office in &e?o durin" the stated period since petitioner
transferred its business operation in Jalibo 'here all its records and eFuip#ents 'ere
brou"htG that co#putations of the clai#s for 'a"es and benefits sub#itted b$ private
respondents to petitioner is not proof of rendition of 'or(. Filin" its o'n !o##ent,
public respondent N&R! clai#s that the ori"inal and e%clusive Hurisdiction of this !ourt
to revie' decisions or resolutions of respondent N&R! does not include a correction of
its evaluation of evidence as factual issues are not fit subHect for certiorari.
Private respondents, in their !o##ent, alle"e that revie' of a decision of N&R! in a
petition for certiorari under Rule >, does not include the correctness of its evaluation of
the evidence but is confined to issues of Hurisdiction or "rave abuse of discretion and
that factual findin"s of ad#inistrative bodies are entitled "reat 'ei"ht, and accorded not
onl$ respect but even finalit$ 'hen supported b$ substantial evidence. The$ clai# that
petitionerRs )oard of Directors passed an unnu#bered resolution on Februar$ **, *<<.
returnin" bac( the office to &e?o fro# Jalibo 2(lan 'ith a directive for all e#plo$ees to
i##ediatel$ report at &e?oG that the letter5repl$ of 2tt$. Mation" to the letter of office
#ana"er &e$son that he 'ill reco##end the pa$#ent of the private respondentsR
salar$ fro# -une *>, *<<. to March *7, *<<1 to the )oard of Directors 'as an
ad#ission that private respondent are entitled to such pa$#ent for services rendered.
Private respondents state that in appreciatin" the evidence in their favor, public
respondent N&R! at #ost #a$ be liable for errors of Hud"#ent 'hich, as differentiated
fro# errors of Hurisdiction, are not 'ithin the province of the special civil action of
certiorari.
Petitioner filed its Repl$ alle"in" that revie' of the decision of public respondent is
proper if there is a conflict in the factual findin"s of the labor arbiter and the N&R! and
'hen the evidence is insufficient and insubstantial to support N&R!Rs factual findin"sG
that public respondentRs findin"s that private respondent rendered co#pensable
services 'ere #erel$ based on private respondentsR co#putation of clai#s 'hich is
self5servin"G that the alle"ed unnu#bered board resolution dated Februar$ **, *<<.,
directin" all e#plo$ees to report to &e?o Officer 'as never i#ple#ented because it 'as
not a valid action of 2J&!ORs le"iti#ate board.
The sole issue for deter#ination is 'hether or not public respondent N&R! co##itted
"rave abuse of discretion a#ountin" to e%cess or 'ant of Hurisdiction 'hen it reversed
the findin" of the &abor 2rbiter that private respondent refused to 'or( under the la'ful
orders of the petitioner 2J&!O #ana"e#entG hence the$ are covered b$ the 9no
'or(, no pa$9 principle and are thus not entitled to the clai# for unpaid 'a"es fro#
-une *>, *<<. to March *7, *<<1.
:e find #erit in the petition.
2t the outset, 'e reiterate the rule that in certiorari proceedin"s under Rule >,, this
!ourt does not assess and 'ei"h the sufficienc$ of evidence upon 'hich the labor
arbiter and public respondent N&R! based their resolutions. Our Fuer$ is li#ited to the
deter#ination of 'hether or not public respondent N&R! acted 'ithout or in e%cess of
its Hurisdiction or 'ith "rave abuse of discretion in renderin" the assailed resolutions.
*0

:hile ad#inistrative findin"s of fact are accorded "reat respect, and even finalit$ 'hen
supported b$ substantial evidence, nevertheless, 'hen it can be sho'n that
ad#inistrative bodies "rossl$ #isappreciated evidence of such nature as to co#pel a
contrar$ conclusion, this court had not hesitated to reverse their factual findin"s.
**

Factual findin"s of ad#inistrative a"encies are not infallible and 'ill be set aside 'hen
the$ fail the test of arbitrariness.
*.
Moreover, 'here the findin"s of N&R! contradict
56
those of the labor arbiter, this !ourt, in the e%ercise of its eFuit$ Hurisdiction, #a$ loo(
into the records of the case and ree%a#ine the Fuestioned findin"s.
*1
:e find co"ent reason, as sho'n b$ the petitioner and the Solicitor 6eneral, not to
affir# the factual findin"s of public respondent N&R!.
:e do not a"ree 'ith the findin" that private respondents had rendered services fro#
-une *>, *<<. to March *7, *<<1 so as to entitle the# to pa$#ent of 'a"es. Public
respondent based its conclusion on the follo'in"8 3a4 the letter dated 2pril /, *<<1 of
Pedrito &. &e$son, Office Mana"er of 2J&!O addressed to 2J&!ORs 6eneral
Mana"er, 2tt$. &eovi"ildo T. Mation", reFuestin" for the pa$#ent of private
respondentsR unpaid 'a"es fro# -une *>, *<<. to March *7, *<<1G 3b4 the
#e#orandu# of said 2tt$. Mation" dated *+ 2pril *<<1, in ans'er to the letter reFuest
of Pedrito &e$son 'here 2tt$. Mation" #ade an assurance that he 'ill reco##end
such reFuestG 3c4 the private respondentsR o'n co#putation of their unpaid 'a"es. :e
find that the fore"oin" does not constitute substantial evidence to support the
conclusion that private respondents are entitled to the pa$#ent of 'a"es fro# -une *>,
*<<. to March *7, *<<1. Substantial evidence is that a#ount of relevant evidence
'hich a reasonable #ind #i"ht accept as adeFuate to Hustif$ a conclusion.
*+
These
evidences relied upon b$ public respondent did not establish the fact that private
respondents actuall$ rendered services in the Jalibo office durin" the stated period.
The letter of Pedrito &e$son to 2tt$. Mation" 'as considered b$ public respondent as
evidence that services 'ere rendered b$ private respondents durin" the stated period,
as the reco##endation and reFuest ca#e fro# the office #ana"er 'ho has direct
(no'led"e re"ardin" the services and perfor#ance of e#plo$ees under hi#. :e are
not convinced. Pedrito &e$son is one of the herein private respondents 'ho are
clai#in" for unpaid 'a"es and 'e find his actuation of reFuestin" in behalf of the other
private respondents for the pa$#ent of their bac('a"es to be biased and self5servin",
thus not credible.
On the other hand, petitioner 'as able to sho' that private respondents did not render
services durin" the stated period. PetitionerRs evidences sho' that on -anuar$ ..,
*<<., petitionerRs )oard of Directors passed a resolution te#poraril$ transferrin" the
Office fro# &e?o, 2(lan to 2#on Theater, Jalibo, 2(lan upon the reco##endation of
2tt$. &eovi"ildo Mation", then proHect supervisor, on the "round that the office at &e?o
'as dan"erous and unsafe. Such transfer 'as approved b$ then N2 2d#inistrator,
Rodri"o . !abrera, in a letter dated Februar$ >, *<<. addressed to petitionerRs )oard
of Directors.
*,
Thus, the N2 2d#inistrator, in the e%ercise of supervision and control
over all electric cooperatives, includin" petitioner, 'rote a letter dated Februar$ >, *<<.
addressed to the Provincial Director P!BINP Jalibo 2(lan reFuestin" for #ilitar$
assistance for the petitionerRs tea# in retrievin" the electric cooperativeRs eFuip#ents
and other re#ovable facilities andBor fi%tures conseFuential to the transfer of its
principal business address fro# &e?o to Jalibo and in #aintainin" peace and order in
the cooperativeRs covera"e area.
*>
The fore"oin" establishes the fact that the
continuous operation of the petitionerRs business office in &e?o 2(lan 'ould pose a
serious and i##inent threat to petitionerRs officials and other e#plo$ees, hence the
necessit$ of te#poraril$ transferrin" the operation of its business office fro# &e?o to
Jalibo. Such transfer 'as done in the e%ercise of a #ana"e#ent prero"ative and in the
absence of contrar$ evidence is not unHustified. :ith the transfer of petitionerRs
business office fro# its for#er office, &e?o, to Jalibo, 2(lan, its eFuip#ents, records
and facilities 'ere also re#oved fro# &e?o and brou"ht to the Jalibo office 'here
petitionerRs official business 'as bein" conductedG thus private respondentsR alle"ations
that the$ continued to report for 'or( at &e?o to support their clai# for 'a"es has no
basis.
Moreover, private respondents in their position paper ad#itted that the$ did not report
at the Jalibo office, as &e?o re#ained to be their office 'here the$ continuousl$
reported, to 'it8
*/
On -anuar$ .., *<<* b$ 'a$ of a resolution of the )oard of Directors of 2J&!O it
allo'ed the te#porar$ holdin" of office at 2#on Theater, Jalibo, 2(lan, per infor#ation
b$ their proHect supervisor, 2tt$. &eovi"ildo Mation" that their head office is closed and
that it is dan"erous to hold office thereat.
Nevertheless, #aHorit$ of the e#plo$ees includin" the herein co#plainants, continued
to report for 'or( at &e?o, 2(lan and 'ere paid of their salaries.
% % % % % % % % %
The transfer of office fro# &e?o, 2(lan to Jalibo, 2(lan bein" ille"al for failure to co#pl$
'ith the le"al reFuire#ents under P.D. .><, the co#plainants re#ained and continued
to 'or( at the &e?o Office until the$ 'ere ille"all$ loc(ed out therefro# b$ the
respondents. Despite the ille"al loc( out ho'ever, co#plainants continued to report
dail$ to the location of the &e?o Office, prepared to continue in the perfor#ance of their
re"ular duties.
!o#plainants thus could not be considered to have abandoned their 'or( as &e?o
re#ained to be their office and not Jalibo despite the te#porar$ transfer thereto.
Further the fact that the$ 'ere allo'ed to dra' their salaries up to Ma$, *<<. is an
ac(no'led"#ent b$ the #ana"e#ent that the$ are 'or(in" durin" the period.
% % % % % % % % %
57
It #ust be pointed out that co#plainants 'or(ed and continuousl$ reported at &e?o
office despite the #ana"e#ent holdin" office at Jalibo. In fact, the$ 'ere paid their
'a"es before it 'as 'ithheld and then 'ere allo'ed to dra' their salaries a"ain on
March *<<1 'hile reportin" at &e?o up to the present.
RespondentsR acts and pa$#ent of co#plainantsR salaries and a"ain fro# March *<<1
is an uneFuivocal reco"nition on the part of respondents that the 'or( of co#plainants
is continuin" and uninterrupted and the$ are therefore entitled to their unpaid 'a"es for
the period fro# -une *<<. to March *<<1.
The ad#ission is detri#ental to private respondentsR cause. Their e%cuse is that the
transfer to Jalibo 'as ille"al but 'e a"ree 'ith the &abor 2rbiter that it 'as not for
private respondents to declare the #ana"e#entRs act of te#poraril$ transferrin" the
2J&!O office to Jalibo as an ille"al act. There is no alle"ation nor proof that the
transfer 'as #ade in bad faith or 'ith #alice. The &abor 2rbiter correctl$ rationali?ed in
its decision as follo's8
*7
:e do not subscribe to co#plainants theor$ and assertions. The$, b$ their o'n
alle"ations, have unilaterall$ co##itted acts in violation of #ana"e#entRsBrespondentsR
directives purel$ classified as #ana"e#ent prero"ative. The$ have ta(en a#on"st
the#selves declarin" #ana"e#entRs acts of temporarily transferrin" the holdin" of the
2J&!O office fro# &e?o to Jalibo, 2(lan as ille"al. It is never incu#bent upon
the#selves to declare the sa#e as such. It is lod"ed in another foru# or bod$ le"all$
#antled to do the sa#e. :hat the$ should have done 'as first to follo' #ana"e#entRs
orders temporarily transferrin" office for it has the first presu#ption of le"alit$. Further,
the transfer 'as onl$ temporary. For8
The e#plo$er as o'ner of the business, also has inherent ri"hts, a#on" 'hich are the
ri"ht to select the persons to be hired and dischar"e the# for Hust and valid causeG to
pro#ul"ate and enforce reasonable e#plo$#ent rules and re"ulations and to #odif$,
a#end or revo(e the sa#eG to desi"nate the 'or( as 'ell as the e#plo$ee or
e#plo$ees to perfor# itG to transfer or pro#ote e#plo$eesG to schedule, direct, curtail
or control co#pan$ operationsG to introduce or install ne' or i#proved labor or #one$
savin"s #ethods, facilities or devicesG to create, #er"e, divide, reclassif$ and abolish
depart#ents or positions in the co#pan$ and to sell or close the business.
% % % % % % % % %
ven as the la' is solicitous of the 'elfare of the e#plo$ees it #ust also protect the
ri"ht of an e#plo$er to e%ercise 'hat are clearl$ #ana"e#ent prero"atives. The free
'ill of #ana"e#ent to conduct its o'n business affairs to achieve its purpose can not
be denied. The transfer of assi"n#ent of a #edical representative fro# Manila to the
province has therefore been held la'ful 'here this 'as de#anded b$ the reFuire#ents
of the dru" co#pan$Rs #ar(etin" operations and the for#er had at the ti#e of his
e#plo$#ent underta(en to accept assi"n#ent an$'here in the Philippines. 32bbot
&aboratories 3Phils.4, Inc., et al. vs. N&R!, et al., 6.R. No. &5/><,<, Oct. *., *<7/4.
It is the e#plo$erRs prero"ative to abolish a position 'hich it dee#s no lon"er
necessar$, and the courts, absent an$ findin"s of #alice on the part of the
#ana"e#ent, cannot erase that initiative si#pl$ to protect the person holdin" office
36reat Pacific &ife 2ssurance !orporation vs. N&R!, et al., 6.R. No. 770**, -ul$ 10,
*<<04.
Private respondents clai# that petitionerRs )oard of Directors passed an unnu#bered
resolution dated Februar$ **, *<<. returnin" bac( the office fro# its te#porar$ office in
Jalibo to &e?o. Thus, the$ did not def$ an$ la'ful order of petitioner and 'ere Hustified
in continuin" to re#ain at &e?o office. This alle"ation 'as controverted b$ petitioner in
its Repl$ sa$in" that such unnu#bered resolution 'as never i#ple#ented as it 'as not
a valid act of petitionerRs )oard. :e are convinced b$ petitionerRs ar"u#ent that such
unnu#bered resolution 'as not a valid act of petitioners le"iti#ate )oard considerin"
the subseFuent actions ta(en b$ the petitionerRs )oard of Directors decr$in" private
respondents ini#ical act and defiance, to 'it 3*4 Resolution No. +**, s. of *<<. on
Septe#ber <, *<<., dis#issin" all 2J&!O e#plo$ees 'ho 'ere on ille"al stri(e and
'ho refused to return to 'or( effective -anuar$ 1*, *<<. despite the directive of the
N2 proHect supervisor and petitionerRs actin" "eneral #ana"erG
*<
3.4 Resolution No.
+//, s. of *<<1 dated March *0, *<<1 acceptin" bac( private respondents 'ho sta"ed
ille"al stri(e, defied le"al orders and issuances, out of co#passion, reconciliation,
!hristian values and hu#anitarian reason subHect to the condition of 9no 'or(, no
pa$9
.0
314 Resolution No. +<>, s. of *<<1 dated -une +, *<<1, reHectin" the de#ands of
private respondents for bac('a"es fro# -une *>, *<<. to March *<<1 adoptin" the
polic$ of 9no 'or(, no pa$9 as such de#and has no basis, and directin" the !OOP
&e"al !ounsel to file cri#inal cases a"ainst e#plo$ees 'ho #isappropriated
collections and officers 'ho authori?ed disburse#ents of funds 'ithout le"al authorit$
fro# the N2 and the 2J&!O )oard.
.*
If indeed there 'as a valid board resolution
transferrin" bac( petitionerRs office to &e?o fro# its te#porar$ office in Jalibo, there 'as
no need for the )oard to pass the above5cited resolutions.
:e are also unable to a"ree 'ith public respondent N&R! 'hen it held that the
assurance #ade b$ 2tt$. Mation" to the letter5reFuest of office #ana"er &e$son for the
pa$#ent of private respondentsR 'a"es fro# -une *<<. to March *<<1 'as an
ad#ission on the part of "eneral #ana"er Mation" that private respondents are indeed
entitled to the sa#e. The letter repl$ of 2tt$. Mation" to &e$son #erel$ stated that he
'ill reco##end the reFuest for pa$#ent of bac('a"es to the )oard of Directors for
their consideration and appropriate action and nothin" else, thus, the ulti#ate approval
'ill co#e fro# the )oard of Directors. :e find 'ell5ta(en the ar"u#ent advanced b$
the Solicitor 6eneral as follo's8
..
58
The alle"ation of private respondents that petitioner had alread$ approved pa$#ent of
their 'a"es is 'ithout basis. Mation"Rs offer to reco##end the pa$#ent of private
respondentsR 'a"es is hardl$ approval of their clai# for 'a"es. It is Hust an underta(in"
to reco##end pa$#ent. Moreover, the offer is conditional. It is subHect to the condition
that petitionerRs )oard of Directors 'ill "ive its approval and that funds 'ere available.
Mation"Rs repl$ to &e$sonRs letter for pa$#ent of 'a"es did not constitute approval or
assurance of pa$#ent. The fact is that, the )oard of Directors of petitioner reHected
private respondents de#and for pa$#ent 3)oard Resolution No. +<>, s. *<<14.
:e are accordin"l$ constrained to overturn public respondentRs findin"s that petitioner
is not Hustified in its refusal to pa$ private respondentsR 'a"es and other frin"e benefits
fro# -une *>, *<<. to March *7, *<<1G public respondents stated that private
respondents 'ere paid their salaries fro# -anuar$ to Ma$ *<<. and a"ain fro# March
*<, *<<1 up to the present. 2s cited earlier, petitionerRs )oard in a Resolution No. +**
dated Septe#ber <, *<<. dis#issed private respondents 'ho 'ere on ille"al stri(e and
'ho refused to report for 'or( at Jalibo office effective -anuar$ 1*, *<<.G since no
services 'ere rendered b$ private respondents the$ 'ere not paid their salaries.
Private respondents never Fuestioned nor controverted the Resolution dis#issin" the#
and no'here in their !o##ent is it stated that the$ Fuestioned such dis#issal. Private
respondents also have not rebutted petitionerRs clai# that private respondents ille"all$
collected fees and char"es due petitioner and appropriated the collections a#on"
the#selves to satisf$ their salaries fro# -anuar$ to Ma$ *<<., for 'hich reason, private
respondents are #erel$ clai#in" salaries onl$ for the period fro# -une *>, *<<. to
March *<<1.
Private respondents 'ere dis#issed b$ petitioner effective -anuar$ 1*, *<<. and 'ere
accepted bac( b$ petitioner, as an act of co#passion, subHect to the condition of 9no
'or(, no pa$9 effective March *<<1 'hich e%plains 'h$ private respondents 'ere
allo'ed to dra' their salaries a"ain. Notabl$, the letter5reFuest of Mr. &e$son for the
pa$#ent of bac('a"es and other frin"e benefits in behalf of private respondents 'as
#ade onl$ in 2pril *<<1, after a )oard Resolution acceptin" the# bac( to 'or( out of
co#passion and hu#anitarian reason. It too( private respondents about ten #onths
before the$ reFuested for the pa$#ent of their bac('a"es, and the lon" inaction of
private respondents to file their clai# for unpaid 'a"es cast doubts as to the veracit$ of
their clai#.
The a"e5old rule "overnin" the relation bet'een labor and capital, or #ana"e#ent and
e#plo$ee of a 9fair da$Rs 'a"e for a fair da$Rs labor9 re#ains as the basic factor in
deter#inin" e#plo$eesR 'a"es. If there is no 'or( perfor#ed b$ the e#plo$ee there
can be no 'a"e or pa$ unless, of course, the laborer 'as able, 'illin" and read$ to
'or( but 'as ille"all$ loc(ed out, suspended or dis#issed,
.1
or other'ise ille"all$
prevented fro# 'or(in",
.+
a situation 'hich 'e find is not present in the instant case. It
'ould neither be fair nor Hust to allo' private respondents to recover so#ethin" the$
have not earned and could not have earned because the$ did not render services at
the Jalibo office durin" the stated period.
Finall$, 'e hold that public respondent erred in #erel$ rel$in" on the co#putations of
co#pensable services sub#itted b$ private respondents. There #ust be co#petent
proof such as ti#e cards or office records to sho' that the$ actuall$ rendered
co#pensable service durin" the stated period to entitle the# to 'a"es. It has been
established that the petitionerRs business office 'as .transferred to Jalibo and all its
eFuip#ents, records and facilities 'ere transferred thereat and that it conducted its
official business in Jalibo durin" the period in Fuestion. It 'as incu#bent upon private
respondents to prove that the$ indeed rendered services for petitioner, 'hich the$
failed to do. It is a basic rule in evidence that each part$ #ust prove his affir#ative
alle"ation. Since the burden of evidence lies 'ith the part$ 'ho asserts the affir#ative
alle"ation, the plaintiff or co#plainant has to prove his affir#ative alle"ations in the
co#plaint and the defendant or the respondent has to prove the affir#ative alle"ation in
his affir#ative defenses and counterclai#.
.,
:;RFOR, in vie' of the fore"oin", the petition for C4.,(:./.( is 6R2NTD.
!onseFuentl$ the decision of public respondent N&R! dated 2pril .0, *<<, and the
Resolution dated -ul$ .7, *<<, in N&R! !ase No. V50*+15<+ are hereb$ RVRSD
and ST 2SID for havin" been rendered 'ith "rave abuse of discretion a#ountin" to
lac( or e%cess of Hurisdiction. Private respondents co#plaint for pa$#ent of unpaid
'a"es before the &abor 2rbiter is DISMISSD.1*!phi1.n+t
SO ORDRD.
Melo, Bitug, "anganiban and "urisima, %%., concur.
59
Republic of the Philippines
SUPREME COURT
Manila
N )2N!
G.R. No. L<16275 .&+,(a,y 23, 1961
PAN AMERICAN "ORLD AIR"A!S S!STEM /PHILIPPINES0, petitioner,
vs.
PAN AMERICAN EMPLO!EES ASSOCIATION, respondent.
.oss, Selph and Carrascoso or petitioner.
%ose 4spinas or respondent.
RE!ES, 2..L., J.>
2ppeal b$ certiorari fro# the decision of the !ourt of Industrial Relations in !ase No.
*0,,5V dated October *0, *<,<, and its resolution en banc den$in" the #otion for
reconsideration filed b$ the petitioner herein.
The dispositive portion of the appealed decision reads8 .
:;RFOR, the !ourt orders the !hief of the %a#inin" Division or his
representative to co#pute the overti#e co#pensation due the aforesaid fourteen 3*+4
aircraft #echanic and the t'o e#plo$ees fro# the !o##unication Depart#ent based
on the ti#e sheet of said e#plo$ees fro# Februar$ .1 *<,. up to and includin" -ul$
*,, *<,7 and to sub#it his report 'ithin 10 da$s for further disposition b$ the !ourtG
60
and the co#pan$ shall sho' to the !ourt %a#iner such ti#e sheets an other
docu#ents that #a$ be necessar$ in the aforesaid co#putationG and t'o 3.4
representatives for the co#pan$ and t'o 3.4 representatives for the union shall be
chosen to help the !ourt %a#iner in said co#putation.
The co#pan$ is also ordered to per#anentl$ adopt the strai"ht 75hour shift inclusive of
#eal period 'hich is #utuall$ beneficial to the parties.
SO ORDRD.
In this appeal, petitioner advances five proposition 'hich, briefl$, are as follo's8 3*4 the
Industrial !ourt has no Hurisdiction to order the pa$#ent of overti#e co#pensation, it
bein" a #ere #onetar$ clai# co"ni?able b$ re"ular courtsG 3.4 the findin" that the one5
hour #eal period should be considered overti#e 'or( 3deductin" *, #inutes as ti#e
allotted for eatin"4 is not supported b$ substantial evidenceG 314 the court belo' had no
authorit$ to dele"ate its Hudicial functions b$ orderin" the !hief of the %a#inin"
Division or his representative to co#pute the overti#e pa$G 3+4 the findin" that there
'as no a"ree#ent to 'ithdra' !ase No. *0,,5V in consideration of the 'a"e
increases in the !ollective )ar"ainin" !ontract 3%h. 9294 is not supported b$
substantial evidenceG and 3,4 the court belo' had no authorit$ to order the co#pan$ to
adopt a strai"ht 75hour shift inclusive of #eal period.
On the issue of Hurisdiction over clai#s for overti#e pa$, 'e have since definitel$ ruled
in a recent decisions that the Industrial !ourt #a$ properl$ ta(e co"ni?ance of such
cases if, at the ti#e of the petition, the co#plainants 'ere still in the service of the
e#plo$er, or, havin" been separated fro# such service, should as( for reinstate#entG
other'ise, such clai#s should be brou"ht before the re"ular courts 3N2SS!O v. !IR, et
al., &5*1777, 2pril .<, *<>0G FRIS!O v. !IR, et al., &5*170>, Ma$ .1, *<>0G )oard of
&iFuidators, et al. vs. !IR, et al., &5*,+7,, Ma$ .1, *<>0G Sta. !ecilia, Sa'#ills !o. vs.
!IR, &5*+.,+ L &5*+.,,, Ma$ ./, *<>0G 2Ha% International !orp. v. Se"uritan, &5*>017,
October .,, *<>0G Sa#pa"uita Pictures, Inc., et al. vs. !IR, &5*>+0+, October .,,
*<>04. Since, in the instant case there is no Fuestion that the e#plo$ees clai#in"
overti#e co#pensation 'ere still in the service of the co#pan$ 'hen the case 'as
filed, the Hurisdiction of the !ourt of Industrial Relations cannot be assailed. In fact,
since it is not pretended that, thereafter, the co#plainants 'ere dischar"ed or
other'ise ter#inated their relationship 'ith the co#pan$ for an$ reason, all of said
co#plainants could still be 'ith the co#pan$ up to the present.
Petitioner herein clai#s that the one5hour #eal period should not be considered as
overti#e 'or( 3after deductin" *, #inutes4, because the evidence sho'ed that
co#plainants could rest co#pletel$, and 'ere not in an$ #anner under the control of
the co#pan$ durin" that period. The court belo' found, on the contrar$, that durin" the
so called #eal period, the #echanics 'ere reFuired to stand b$ for e#er"enc$ 'or(G
that if the$ happened not to be available 'hen called, the$ 'ere repri#anded b$ the
lead#anG that as in fact it happened on #an$ occasions, the #echanics had been
called fro# their #eals or told to hurr$ #plo$ees 2ssociation up eatin" to perfor#
'or( durin" this period. Far fro# bein" unsupported b$ substantial evidence, the record
clearl$ confir#s the above factual findin"s of the Industrial !ourt.
Si#ilarl$, this !ourt is satisfied 'ith the findin" that there 'as no a"ree#ent to
'ithdra' !ase No. *0,,5V in consideration of the 'a"e increases obtained b$ the,
union and set forth in the !ollective )ar"ainin" 2"ree#ent %hibit 929. 2s reasoned out
b$ the court belo', such alle"ed a"ree#ent 'ould have been incorporated in the
contract if it e%isted. The fact that the union filed a #otion to dis#iss 'ithout preHudice,
after the !ollective )ar"ainin" !ontract had been si"ned, did not necessaril$ #ean that
it had a"reed to 'ithdra' the case in consideration of the 'a"e increases. The #otion
itself 32nne% 9)9, Petition for Certiorari4 'as e%pressl$ based on an understandin" that
the co#pan$ 'ould 9for#ulate a schedule of 'or( 'hich shall be in consonance 'ith !.
2. +++9. 2ll in all, there is substantial evidence in the record to support the findin" of the
court belo' that no such a"ree#ent 'as #ade.
It is ne%t contended that in orderin" the !hief of the %a#inin" Division or his
representative to co#pute the co#pensation due, the Industrial !ourt undul$ dele"ated
its Hudicial functions and thereb$ rendered an inco#plete decision. :e do not believe
so. !o#putation of the overti#e pa$ involves a #echanical function, at #ost. 2nd the
report 'ould still have to be sub#itted to the Industrial !ourt for its approval, b$ the
ver$ ter#s of the order itself. That there 'as no specification of the a#ount of overti#e
pa$ in the decision did not #a(e it inco#plete, since this #atter 'ould necessaril$ be
#ade clear enou"h in the i#ple#entation of the decision 3see Malate Ta%icab L
6ara"e, Inc. vs. !IR, et al., &57/*7, Ma$ **, *<,>4.
The Industrial !ourtRs order for per#anent adoption of a strai"ht 75hour shift includin"
the #eal period 'as but a conseFuence of its findin" that the #eal hour 'as not one of
co#plete rest, but 'as actuall$ a 'or( hour, since for its duration, the laborers had to
be on read$ call. Of course, if the !o#pan$ practices in this re"ard should be #odified
to afford the #echanics a real rest durin" that hour 3f. e%., b$ installin" an entirel$
different e#er"enc$ cre', or an$ si#ilar arran"e#ent4, then the #odification of this part
of the decision #a$ be sou"ht fro# the !ourt belo'. 2s thin"s no' stand, 'e see no
'arrant for alterin" the decision.
The Hud"#ent appealed fro# is affir#ed. !osts a"ainst appellant.
5eng-on, "adilla, 5autista /ngelo, )abrador, Concepcion , 5arrera, "aredes and
Di-on, %%., concur.
61
Republic of the Philippines
SUPREME COURT
Manila
S!OND DIVISION

G.R. No. 132E05 .&+,(a,y 2, 1999
PHILIPPINE AIRLINES, INC., petitioner,
vs.
NATIONAL LAOR RELATIONS COMMISSION, LAOR ARITER ROMULUS
PROTACIO a#$ DR. HERMINIO A. .AROS, respondents.

PUNO, J.:
Petitioner Philippine 2irlines, Inc. assails the decision of the National &abor Relations
!o##ission dis#issin" its appeal fro# the decision of &abor 2rbiter Ro#ulus S.
Protacio 'hich declared the suspension of private respondent Dr. ;er#inio 2. Fabros
ille"al and ordered petitioner to pa$ private respondent the a#ount eFuivalent to all the
benefits he should have received durin" his period of suspension plus P,00,000.00
#oral da#a"es.
The facts are as follo'8
62
Private respondent 'as e#plo$ed as fli"ht sur"eon at petitioner co#pan$. ;e 'as
assi"ned at the P2& Medical !linic at Nichols and 'as on dut$ fro# +800 in the
afternoon until *.800 #idni"ht.
On Februar$ */, *<<+, at around /800 in the evenin", private respondent left the clinic
to have his dinner at his residence, 'hich 'as about five5#inute drive a'a$. 2 fe'
#inutes later, the clinic received an e#er"enc$ call fro# the P2& !ar"o Services. One
of its e#plo$ees, Mr. Manuel 2costa, had suffered a heart attac(. The nurse on dut$,
Mr. Merlino usebio, called private respondent at ho#e to infor# hi# of the e#er"enc$.
The patient arrived at the clinic at /8,0 in the evenin" and Mr. usebio i##ediatel$
rushed hi# to the hospital. :hen private respondent reached the clinic at around /8,*
in the evenin", Mr. usebio had alread$ left 'ith the patient. Mr. 2costa died the
follo'in" da$.
Dpon learnin" about the incident, P2& Medical Director Dr. 6odofredo ). )an?on
ordered the !hief Fli"ht Sur"eon to conduct an investi"ation. The !hief Fli"ht Sur"eon,
in turn, reFuired private respondent to e%plain 'h$ no disciplinar$ sanction should be
ta(en a"ainst hi#.
In his e%planation, private respondent asserted that he 'as entitled to a thirt$5#inute
#eal brea(G that he i##ediatel$ left his residence upon bein" infor#ed b$ Mr. usebio
about the e#er"enc$ and he arrived at the clinic a fe' #inutes laterG that Mr. usebio
panic(ed and brou"ht the patient to the hospital 'ithout 'aitin" for hi#.
Findin" private respondentRs e%planation unacceptable, the #ana"e#ent char"ed
private respondent 'ith abandon#ent of post 'hile on dut$. ;e 'as "iven ten da$s to
sub#it a 'ritten ans'er to the ad#inistrative char"e.
In his ans'er, private respondent reiterated the assertions in his previous e%planation.
;e further denied that he abandoned his post on Februar$ */, *<<+. ;e said that he
onl$ left the clinic to have his dinner at ho#e. In fact, he returned to the clinic at /8,* in
the evenin" upon bein" infor#ed of the e#er"enc$.
2fter evaluatin" the char"e as 'ell as the ans'er of private respondent, petitioner
co#pan$ decided to suspend private respondent for three #onths effective Dece#ber
*>, *<<+.
Private respondent filed a co#plaint for ille"al suspension a"ainst petitioner.
On -ul$ *>, *<<>, &abor 2rbiter Ro#ulus 2. Protasio rendered a decision
1
declarin" the
suspension of private respondent ille"al. It also ordered petitioner to pa$ private
respondent the a#ount eFuivalent to all the benefits he should have received durin" his
period of suspension plus P,00,000.00 #oral da#a"es. The dispositive portion of the
decision reads8
:;RFOR, in vie' of all the fore"oin", Hud"#ent is hereb$ rendered declarin" the
suspension of co#plainant as ille"al, and orderin" the respondents the restitution to the
co#plainant of all e#plo$#ent benefits eFuivalent to his period of suspension, and the
pa$#ent to the co#plainant of P,00,000.00 b$ 'a$ of #oral da#a"es.
2
Petitioner appealed to the N&R!. The N&R!, ho'ever, dis#issed the appeal after
findin" that the decision of the &abor 2rbiter is supported b$ the facts on record and the
la' on the #atter.
3
The N&R! li(e'ise denied petitionerRs #otion for reconsideration.
-
;ence, this petition raisin" the follo'in" ar"u#ents8
*. The public respondents acted 'ithout or in e%cess of their Hurisdiction and 'ith "rave
abuse of discretion in nullif$in" the 15#onth suspension of private respondent despite
the fact that the private respondent has co##itted an offense that 'arranted the
i#position of disciplinar$ action.
.. The public respondents acted 'ithout or in e%cess of their Hurisdiction and 'ith "rave
abuse of discretion in holdin" the petitioner liable for #oral da#a"es8
3a4 Despite the fact that no for#al hearin" 'hatsoever 'as conducted for co#plainant
to substantiate his clai#G
3b4 Despite the absence of proof that the petitioner acted in bad faith in i#posin" the 15
#onth suspensionG and
3c4 Despite the fact that the &abor 2rbiterRs a'ard of #oral da#a"es is hi"hl$ irre"ular,
considerin" that it 'as #ore than 'hat the private respondent pra$ed for.
5
:e find that public respondents did not err in nullif$in" the three5#onth suspension of
private respondent. The$, ho'ever, erred in a'ardin" #oral da#a"es to private
respondent.
First, as re"ards the le"alit$ of private respondentRs suspension. The facts do not
support petitionerRs alle"ation that private respondent abandoned his post on the
evenin" of Februar$ */, *<<+. Private respondent left the clinic that ni"ht onl$ to have
his dinner at his house, 'hich 'as onl$ a fe' #inutesR drive a'a$ fro# the clinic. ;is
'hereabouts 'ere (no'n to the nurse on dut$ so that he could be easil$ reached in
case of e#er"enc$. Dpon bein" infor#ed of Mr. 2costaRs condition, private respondent
63
i##ediatel$ left his ho#e and returned to the clinic. These facts belie petitionerRs clai#
of abandon#ent.
Petitioner ar"ues that bein" a full5ti#e e#plo$ee, private respondent is obli"ed to sta$
in the co#pan$ pre#ises for not less than ei"ht 374 hours. ;ence, he #a$ not leave the
co#pan$ pre#ises durin" such ti#e, even to ta(e his #eals.
:e are not i#pressed.
2rt. 71 and 7, of the &abor !ode read8
2rt. 71. Nor#al hours of 'or(. Q The nor#al hours of 'or( of an$ e#plo$ee shall not
e%ceed ei"ht 374 hours a da$.
;ealth personnel in cities and #unicipalities 'ith a population of at least one #illion
3*,000,0004 or in hospitals and clinics 'ith a bed capacit$ of at least one hundred 3*004
shall hold re"ular office hours for ei"ht 374 hours a da$, for five 3,4 da$s a 'ee(,
e%clusive of ti#e for #eals, e%cept 'here the e%i"encies of the service reFuire that
such personnel 'or( for si% 3>4 da$s or fort$5ei"ht 3+74 hours, in 'hich case the$ shall
be entitled to an additional co#pensation of at least thirt$ per cent 310K4 of their
re"ular 'a"e for 'or( on the si%th da$. For purposes of this 2rticle, 9health personnel9
shall include8 resident ph$sicians, nurses, nutritionists, dieticians, phar#acists, social
'or(ers, laborator$ technicians, para#edical technicians, ps$cholo"ists, #id'ives,
attendants and all other hospital or clinic personnel. 3e#phasis supplied4
2rt. 7,. Meal periods. Q SubHect to such re"ulations as the Secretar$ of &abor #a$
prescribe, it shall be the dut$ of ever$ e#plo$er to "ive his e#plo$ees not less than
si%t$ 3>04 #inutes ti#e5off for their re"ular #eals.
Sec. /, Rule I, )oo( III of the O#nibus Rules I#ple#entin" the &abor !ode further
states8
Sec. /. Meal and Rest Periods. Q ver$ e#plo$er shall "ive his e#plo$ees, re"ardless
of se%, not less than one 3*4 hour ti#e5off for re"ular #eals, e%cept in the follo'in"
cases 'hen a #eal period of not less than t'ent$ 3.04 #inutes #a$ be "iven b$ the
e#plo$er provided that such shorter #eal period is credited as co#pensable hours
'or(ed of the e#plo$eeG
3a4 :here the 'or( is non5#anual 'or( in nature or does not involve strenuous
ph$sical e%ertionG
3b4 :here the establish#ent re"ularl$ operates not less than si%teen hours a da$G
3c4 In cases of actual or i#pendin" e#er"encies or there is ur"ent 'or( to be
perfor#ed on #achineries, eFuip#ent or installations to avoid serious loss 'hich the
e#plo$er 'ould other'ise sufferG and
3d4 :here the 'or( is necessar$ to prevent serious loss of perishable "oods.
Rest periods or coffee brea(s runnin" fro# five 3,4 to t'ent$ 3.04 #inutes shall be
considered as co#pensable 'or(in" ti#e.
Thus, the ei"ht5hour 'or( period does not include the #eal brea(. No'here in the la'
#a$ it be inferred that e#plo$ees #ust ta(e their #eals 'ithin the co#pan$ pre#ises.
#plo$ees are not prohibited fro# "oin" out of the pre#ises as lon" as the$ return to
their posts on ti#e. Private respondentRs act, therefore, of "oin" ho#e to ta(e his
dinner does not constitute abandon#ent.
:e no' "o to the a'ard of #oral da#a"es to private respondent.
Not ever$ e#plo$ee 'ho is ille"all$ dis#issed or suspended is entitled to da#a"es. 2s
a rule, #oral da#a"es are recoverable onl$ 'here the dis#issal or suspension of the
e#plo$ee 'as attended b$ bad faith or fraud, or constituted an act oppressive to labor,
or 'as done in a #anner contrar$ to #orals, "ood custo#s or public polic$.
6
)ad faith
does not si#pl$ #ean ne"li"ence or bad Hud"#ent. It involves a state of #ind
do#inated b$ ill 'ill or #otive. It i#plies a conscious and intentional desi"n to do a
'ron"ful act for a dishonest purpose or so#e #oral obliFuit$.
7
The person clai#in"
#oral da#a"es #ust prove the e%istence of bad faith b$ clear and convincin" evidence
for the la' al'a$s presu#es "ood faith.
E
In the case at bar, there is no sho'in" that the #ana"e#ent of petitioner co#pan$ 'as
#oved b$ so#e evil #otive in suspendin" private respondent. It suspended private
respondent on an honest, albeit erroneous, belief that private respondentRs act of
leavin" the co#pan$ pre#ises to ta(e his #eal at ho#e constituted abandon#ent of
post 'hich 'arrants the penalt$ of suspension. 2lso, it is evident fro# the facts that
petitioner "ave private respondent all the opportunit$ to refute the char"e a"ainst hi#
and to defend hi#self. These ne"ate the e%istence of bad faith on the part of petitioner.
Dnder the circu#stances, 'e hold that private respondent is not entitled to #oral
da#a"es.
IN VI: :;ROF, the petition is P2RTI2&&I 6R2NTD. The portion of the assailed
decision a'ardin" #oral da#a"es to private respondent is D&TD. 2ll other aspects
of the decision are 2FFIRMD.
64
SO ORDRD.
Republic of the Philippines
SUPREME COURT
Manila
N )2N!
G.R. No. L<30279 2(4y 30, 19E2
PHILIPPINE NATIONAL AN@, petitioner,
vs.
PHILIPPINE NATIONAL AN@ EMPLO!EES ASSOCIATION /PEMA0 a#$ COURT
O. INDUSTRIAL RELATIONS, respondents.
Conrado 4. Medina, 4dgardo M. Magtalas and 'estor Kala! or petitioner.
)eon :. ,y, 7esmundo 6ernande- 9 Iulueta, :liver 5. 7esmundo and (srael 5ocobo
or respondents.

ARREDO, J.:
2ppeal b$ the Philippine National )an( fro# the decision of the trial court of the !ourt
of Industrial Relations in !ase No. IP25,1 dated 2u"ust ,, *<>/ and affir#ed en banc
b$ said court on -anuar$ *,, *<>7.
This case started on -anuar$ .7, *<>, in conseFuence of the certification of the
President of the Philippines of an industrial dispute bet'een the Philippine National
)an( #plo$ees 2ssociation 3PM2, for short4, on the one hand, and the Philippine
National )an( 3PN), for short4, on the other, 'hich arose fro# no #ore than the
65
alle"ed failure of the PN) to co#pl$ 'ith its co##it#ent of or"ani?in" a !o##ittee on
Personnel 2ffairs to ta(e char"e of screenin" and deliberatin" on the pro#otion of
e#plo$ees covered b$ the collective bar"ainin" a"ree#ent then in force bet'een the
said parties. On -anuar$ .7, *<>,, the Industrial !ourt issued an order ai#ed at
settlin" the dispute te#poraril$ bet'een the parties, 'hich 'as certified b$ the
President. Pertinent portions of the order read thus8
%%% %%% %%%
*. That in order to settle the stri(e and for the e#plo$ees to return to 'or( i##ediatel$
startin" -anuar$ .<, *<>,, the !o##ittee on Personnel 2ffairs is hereb$ created to
start functionin" on Februar$ *, *<>,G
%%% %%% %%%
f. That in return for this concession, an inHunction a"ainst future stri(es or loc(outs shall
be issued b$ the !ourt to last for a period of si% #onths but 'hich shall ter#inate even
before that period should all disputes of the parties be alread$ resolvedG 3Pa"e 7+,
Record.4
2ccordin" to the ver$ decision no' on appeal, 9on Ma$ .., *<>,, petitioner 3private
respondent herein4 filed another pleadin" sub#ittin" to this !ourt for deter#ination
certain #atters 'hich it clai#s cannot be resolved b$ the parties, 'hich are as follo's8
6irst Cause o /ction
a. In a Resolution No. **>. dated Septe#ber *>, *<,/, the RespondentRs )oard of
Directors approved a revision of the co#putation of overti#e pa$ retroactive as of -ul$
*, *<,+, and authori?ed a reco#putation of the re"ular one5 hour and e%tra overti#e
alread$ rendered b$ all officers and e#plo$ees of the Respondent )an(.
The details of the benefits involved in said Resolution are contained in a Me#orandu#
of the Respondent )an( dated Septe#ber *7, *<,/.
b. Since the "rant of the benefits in Fuestion, the e#plo$ees of the Respondent,
represented b$ the petitioner, have al'a$s considered the# to be a part of their
salaries andBor frin"e benefitsG nevertheless, the Respondent, in *<>1, 'ithout Hust
cause, 'ithdre' said benefits and in spite of repeated de#ands refused, and still
refuses to reinstate the sa#e up to the present.
Second Cause o /ction
c. 2fter the pro#ul"ation of the Decision in National :ater'or(s and Se'era"e
2uthorit$ vs. N2:2S2 !onsolidated Dnions, et al. 6.R. No. &5*7<17, 2u". 1*, *<>+,
the Petitioner has repeatedl$ reFuested Respondent that the cost of livin" allo'ance
and lon"evit$ pa$ be ta(en into account in the co#putation of overti#e pa$, effective as
of the "rant of said benefits on -anuar$ *, *<,7, in accordance 'ith the rulin" in said
Decision of the Supre#e !ourt.
d. Dntil no' Respondent has not ta(en an$ concrete steps to'ard the pa$#ent of the
differential overti#e and ni"htti#e pa$s arisin" fro# the cost of livin" allo'ance and
lon"evit$ pa$.
%%% %%% %%%
Respondent in its ans'er of -une /, *<>, too( e%ception to this #entioned petition on
several "rounds, na#el$, 3*4 the said alle"ed causes of action 'ere not disputes
e%istin" bet'een the parties, 3.4 the sa#e are #ere #one$ clai#s and therefore not
'ithin this !ourtRs Hurisdiction, and 314 that the parties have not so stipulated under the
collective bar"ainin" a"ree#ent bet'een the#, or the sa#e is pre#ature as the
pertinent collective bar"ainin" a"ree#ent has not $et e%pired.9 3Pp. 7+57>, Record.4
1

Resolvin" the issues of Hurisdiction and pre#aturit$ thus raised b$ PN), the court held8
2s to the first "round, it is 'ell to note that this !ourt in its Order of -anuar$ .7, *<>,
has enHoined the parties not to stri(e or loc(out for a period of si% 3>4 #onths startin"
fro# said date. In a ver$ definite sense the labor disputes bet'een the parties have
been "iven a specific period for the settle#ent of their differences. The fact that
thereafter the Fuestion of the #anner of pa$#ent of overti#e pa$ is bein" put in issue,
appears to indicate that this 'as a part of the labor dispute. If 'e are to consider that
this Fuestion, particularl$ the second cause of action, has in fact e%isted as earl$ as
*<,7, sho's the necessit$ of resolvin" the sa#e no'. 2nd the sa#e 'ould indeed be
an e%istin" issue considerin" that the present certification ca#e onl$ in *<>,.
It is further to be noted that the presidential certification has not li#ited specific areas of
the labor dispute e#braced 'ithin the said certification. It spea(s of the e%istence of a
labor dispute bet'een the parties and of a stri(e declared b$ the PM2, for 'hich the
!ourt has been reFuested to ta(e i##ediate steps in the e%ercise of its po'ers under
the la'.
ven on the assu#ption that the present issue is not one e#braced b$ the presidential
certification or it is an issue presented b$ one part$ on a cause arisin" subseFuent to
the certification, the sa#e 'ould still be subHect to the Hurisdiction of this !ourt. In 92po
!e#ent :or(ers Dnion versus !ebu Portland !e#ent9, !ase No. ** IP2 36.R. No. &5
66
*.+,*, -ul$ *0, *<,/4, the !ourt en banc 3'here this Sala has ta(en an opposite vie'4
upheld its Hurisdiction under the circu#stances Hust enu#erated. It 'ould see# that this
Fuestion has been further settled b$ our Supre#e !ourt in 9National :ater'or(s L
Se'era"e 2uthorit$ vs. N2:2S2 !onsolidated Dnions, et al.9 3supra4, 'hich 'e Fuote
in part8
%%% %%% %%%
+. PetitionerRs clai# that the issue of overti#e co#pensation not havin" been raised in
the ori"inal case but #erel$ dra""ed into it b$ intervenors, respondent !ourt cannot
ta(e co"ni?ance thereof under Section *, Rule *1 of the Rules of !ourt.
%%% %%% %%%
... The fact that the Fuestion of overti#e pa$#ent is not included in the principal case in
the sense that it is not one of the ite#s of dispute certified to b$ the President is of no
#o#ent, for it co#es 'ithin the sound discretion of the !ourt of Industrial Relations.
Moreover, in labor disputes technicalities of procedure should as #uch as possible be
avoided not onl$ in the interest of labor but to avoid #ultiplicit$ of action. This clai# has
no #erit.
%%% %%% %%%
2s to the obHection posed that the issues are #ere #one$ clai#s, there appears to be
no "round for the sa#e. In the first place, althou"h the sa#e involves a clai# for
additional co#pensation it is also a part of the labor dispute e%istin" bet'een the
parties and subHect to the co#pulsor$ arbitration po'ers of the !ourt, pursuant to
Section *0 of Rep. 2ct No. 7/,. In the second place, on the basis of the so5called
PRIS!O doctrine 36.R. No. &5 *170>, Ma$ .1,.*<>04, there is an e%istin" and current
e#plo$er5e#plo$ee relationship bet'een the respondent and the #e#bers of
petitioner union, for 'ho# the additional overti#e co#pensation is clai#ed.
:ith respect to "round three of the ans'er on 'hich obHection is based, on !.2. +++,
as a#ended, Section > thereof, provides as follo's8
R2n$ a"ree#ent or contract bet'een the e#plo$er and the laborer or e#plo$ee
contrar$ to the provisions of this 2ct shall be null and void ab initioR.
The instant action is partiall$ subHect to the provisions of !o##on'ealth 2ct +++, as
a#ended. ven if, the parties have stipulated to the e%tent that overti#e 'ill not be
paid, the sa#e 'ill not be bindin". More so under the present circu#stances, 'here the
onl$ Fuestion is the correctness of the co#putation of the overti#e pa$#ents.
:hile the !ourt notes that the first cause of action has beco#e #oot and acade#ic in
vie' of the co#pliance b$ respondent, hence there is no further need to resolve the
sa#e 3t.s.n., pp. ,5/, 2u"ust *>, *<>,4, the settle#ent of said first cause of action
further stren"thens the vie' that the second cause of action is indeed an e%istin"
dispute bet'een the parties. )oth causes of fiction involve overti#e Fuestions. )oth
ste# fro# dates 'ell be$ond and before the presidential certification of the present
proceedin"s. If respondent has been fit to ta(e steps to e%pedite and resolve, 'ithout
court intervention, the first cause of action, it cannot den$ the e%istence of the second
cause of action as the first and second appear to be interrelated #atters. 3Pp. 7>57<,
Record4
2nd :e a"ree that the fore"oin" holdin" is 'ell ta(en. It 'ould be #ore 'orth'hile to
proceed to the basic issues i##ediatel$ than to add an$thin" #ore of Our o'n
discourse to the sufficientl$ based disposition of the court a Fuo of the above5
#entioned preli#inar$ Fuestions.
2fter discussin" the pros and cons on the issue involved in the second cause of action
as to 'hether or not the cost5of5livin" allo'ance other'ise deno#inated as eFuit$ pa$
and lon"evit$ pa$ "ranted b$ the ban(, the first be"innin" -anuar$ *, *<,7 and the
latter effective -ul$ *, *<>*, should be included in the co#putation of overti#e5pa$, the
court "ranted the de#ands of P M2, e%cept the additional rate of 'or( for ni"ht pa$,
and rendered the follo'in" Hud"#ent8
:;RFOR, in vie' of the fore"oin", this !ourt hereb$ pro#ul"ates the follo'in"8
*. The respondent Philippine National )an( is hereb$ reFuired to pa$ overti#e and
ni"htti#e rates to its e#plo$ees fro# -anuar$ .7, *<>.G and such overti#e
co#pensation shall be based on the su# total of the e#plo$eeRs basic salar$ or 'a"e
plus cost of livin" allo'ance and lon"evit$ pa$ under the follo'in" schedule8
Ra. Overti#e services rendered shall be paid at the rate of ti#e and one5third, but
overti#e 'or( perfor#ed bet'een >800 P.M. and >5 .00 2.M. shall be paid at the rate of
*,0K or ,0K be$ond the re"ular rateG
Rb. The rate for 'or( perfor#ed in the ni"ht shift, or durin" the period fro# >800 P.M. to
>800 2.M. shall be co#pensated at the rate of *,0K or ,0K be$ond the re"ular rate,
provided the 'or( perfor#ed involved a definite ni"ht shift and not #erel$ a
continuation b$ 'a$ of overti#e of the re"ular and established hours of the respondent
)an(.
.. The !hief of the %a#inin" Division of the !ourt or an$ of his dul$ desi"nated
representatives is hereb$ ordered to co#pute the overti#e rates due each e#plo$ee of
67
the respondent )an( fro# -anuar$ .7, *<>., in accordance 'ith the above
deter#inationG and to co#plete the sa#e 'ithin a period of si%t$ 3>04 da$s fro# receipt
of this Order. ;o'ever, considerin" that the Philippine National )an( is a "overn#ent
depositor$, and renders and perfor#s functions distinct and uniFueG and, 'hile it #a$
be a ban(in" institution, its relationship 'ith other "overn#ent a"encies and the public
is such that it has no basis for co#parison 'ith other ban(in" institutions or"ani?ed
under the corporation la' or special charter. To reFuire it to pa$ i##ediatel$ the liabilit$
after the e%act a#ount shall have been deter#ined b$ the !ourt %a#iner and dul$
approved b$ the !ourt, as in other cases, 'ould 'or( undue hardship to the 'hole
"overn#ent #achiner$, not to #ention the outstandin" forei"n liabilities and outside
co##it#ents, if an$. Moreover, the records sho' that this case 'as initiated lon"
before the ta(in" over of the incu#bent ban( officials.
2ccordin"l$, the !ourt feels that the pa$#ent shall be subHect to the ne"otiations b$ the
parties as to ti#e, a#ount, and duration.
The !ourt #a$ intervene in said ne"otiations for the purpose of settlin" once and for all
this case to #aintain industrial peace pursuant to Section *1 of !o##on'ealth 2ct
*01, as a#ended, if desired, ho'ever b$ the parties.
2fter all this is not an unfair labor practice case.
SO ORDRD. 3Pp. <75*00, Record.4
In connection 'ith the above decision, t'o interestin" points appear at once to be of
deter#inative relevance8
The first is that in upholdin" its Hurisdiction to ta(e co"ni?ance of the de#and in
Fuestion about cost5of5livin" allo'ance and lon"evit$ pa$, the Industrial !ourt carefull$
noted that it 'as not resolvin" a petition for declarator$ relief in the li"ht of the decision
of this !ourt in N2:2S2 vs. N2:2S2 !onsolidated Dnions, 6.R. No. &5 *7<17,
2u"ust 1*, *<>+, ** S!R2 />>. Thus the decision under revie' states8
Incidentall$, the present action is not one for declarator$ relief as to the applicabilit$ of a
Hudicial decision to the herein parties. 2 careful perusal of the pleadin"s indicates that
'hat is bein" sou"ht is the pa$#ent of differential overti#e and ni"htti#e pa$ based on
e%istin" la' and Hurisprudence. The cause of action is not anchored on an$ decision of
an$ court but on provisions of the la' 'hich have been in effect at the ti#e of the
occurrence of the cause of the action in relation to a labor dispute. ;ence, this is not a
petition for declarator$ relief. 3Pp. <+5<,, Record.4
The second refers to a subseFuent decision of the sa#e (ndustrial Court in Shell :il
0orkers 1nion vs. Shell Co., et al., !ase No. .+*05V and Shell 9 /iliates Supervisors
1nion vs. Shell Company o the "hilippines, et al., !ase No. .+**5 V, in 'hich the court
#ade an e%planator$ discourse of its understandin" of the N2:2S2 rulin", supra, and
on that basis reHected the clai# of the 'or(ers. In brief, it held that 3*4 N2:2S2 does
not appl$ 'here the collective bar"ainin" a"ree#ent does not provide for the #ethod of
co#putation of overti#e pa$ herein insisted upon b$ private respondent PM2 and 3.4
the fact5situation in the Shell cases differed fro# that of N2:2S2, since the sole and
definite ratio decidendi in N2:2S2 'as #erel$ that inas#uch as Republic 2ct *770
#erel$ fi%ed a +05hour ,5da$ 'or( for all 'or(ers, laborers and e#plo$ees includin"
"overn#ent5o'ned corporations li(e N2:2S2, the 'ee(l$ pa$ of N2:2S2 'or(ers
'or(in" #ore than five da$s a 'ee( should re#ain intactG 'ith overti#e pa$ in e%cess
of ei"ht hours 'or( and ., K additional co#pensation on Sunda$s. There 'as no
pronounce#ent at all therein re"ardin" the basis of the co#putation of overti#e pa$ in
re"ard to bonuses and other frin"e benefits.
For bein" co##endabl$ lucid and co#prehensive, :e dee# it Hustified to Fuote fro#
that Shell decision8
,he main issueL
The Dnions appear to have read the N2:2S2 case ver$ broadl$. The$ 'ould 'ant it
held that in vie' of the said rulin" of the Supre#e !ourt, e#plo$ers and e#plo$ees
#ust, even in the face of e%istin" bar"ainin" contracts providin" other'ise, deter#ine
the dail$ and hourl$ rates of e#plo$ees in this #anner8 2dd to basic pa$ all the #one$
value of all frin"e benefits a"reed upon or alread$ received b$ the 'or(ers individuall$
and overti#e pa$ shall be co#puted thus Q
)asic $earl$ Rate plus Value of all Frin"e )enefits divided b$ nu#ber of da$s 'or(ed
durin" the $ear eFuals dail$ 'a"eG Dail$ 'a"e divided b$ 7 eFuals hourl$ rate. ;ourl$
rate plus pre#iu# rate eFuals hourl$ overti#e rate.
The N2:2S2 case #ust be vie'ed to deter#ine 'hether it is that broad. N2:2S2
case #ust be understood in its settin". The 'ords used b$ the Supre#e !ourt in its
reasonin" should not be disen"a"ed fro# the fact5situation 'ith 'hich it 'as
confronted and the specific Fuestion 'hich it 'as there reFuired to decide. 2bove all
care should be ta(en not to lose si"ht of the truth that the facts obtainin", the issue
settled, and the la' applied in the said case, and these, thou"h e%tractable fro# the
records thereof as #aterial in the resolution herein, 'ere, as the$ are, pri#aril$
declarative of the ri"hts and liabilities of the parties involved therein.
Recourse to the records of the N2:2S2 case sho's that the fact5 situation, as far as
can be #ateriall$ connected 'ith the instant case, is as follo's8
68
In vie' of the enact#ent of Rep. 2ct *770, providin" that the le"al hours of 'or( for
"overn#ent e#plo$ees, 3includin" those in "overn#ent5o'ned or controlled
corporations4 shall be ei"ht 374 hours a da$ for five 3,4 da$s a 'ee( or fort$ 3+04 hours a
'ee(, its i#ple#entation b$ N2:2S2 'as disputed b$ the Dnion. The 'or(ers affected
'ere those 'ho, for a period of three 314 #onths prior to or i##ediatel$ precedin" the
i#ple#entation of Rep. 2ct *770, 'ere 'or(in" seven 3/4 da$s a 'ee( and 'ere
continuousl$ receivin" .,K Sunda$ differential pa$. The #anner of co#putin" or
deter#inin" the dail$ rate of #onthl$ salaried e#plo$ees.
2nd the Supre#e !ourt, specificall$ laid out the issue to be decided, as it did decide, in
the N2:2S2, as follo's8
/. and 7. ;o' is a dail$ 'a"e of a 'ee(l$ e#plo$ee co#puted in the li"ht of Republic
2ct *770TR36.R. &5*7<174
Resolvin" the above issue, it 'as heldG
2ccordin" to petitioner, the dail$ 'a"e should be co#puted e%clusivel$ on the basic
'a"e 'ithout includin" the auto#atic increase of .,K correspondin" to the Sunda$
differential. To include said Sunda$ differential 'ould be to increase the basic pa$
'hich is not conte#plated b$ said 2ct. Respondent court disa"rees 'ith this #anner of
co#putation. lt holds that Republic 2ct *770 reFuires that the basic 'ee(l$ 'a"e and
the basic #onthl$ salar$ should not be di#inished not'ithstandin" the reduction in the
nu#ber of 'or(in" da$s a 'ee(. If the auto#atic increase correspondin" to the salar$
differential should not be included there 'ould be a di#inution of the 'ee(l$ 'a"e of
the laborer concerned. Of course, this should onl$ benefit those 'ho have been
'or(in" seven da$s a 'ee( and had been re"ularl$ receivin" .,K additional
co#pensation for Sunda$ 'or( before the effectivit$ of the 2ct.
It is thus necessar$ to anal$?e the !ourtRs rationale in the said N2:2S2 case, Rin the
li"ht of Rep. 2ct *770R, and the Rspecific corollariesR discussed preparator$ to arrivin" at
a final conclusion on the #ain issue. :hat 'as reFuired to be done, b$ 'a$ of
i#ple#entin" R. 2. *770T The statute directs that 'or(in" hours and da$s of
"overn#ent e#plo$ees 3includin" those of "overn#ent o'ned and controlled
proprietar$ corporations4 shall be reduced to five da$s5fort$ hours a 'ee(. )ut, the
sa#e la' carried the specific proviso, desi"ned to "uard a"ainst di#inution of salaries
or earnin"s of affected e#plo$ees. The Supre#e !ourt itself clearl$ spelled this out in
the follo'in" lan"ua"e8 RIt is evident that Republic 2ct *770 does not intend to raise the
'a"es of the e#plo$ees over 'hat the$ are actuall$ receivin". Rather, its purpose is to
li#it the 'or(in" da$s in a 'ee( to five da$s, or to +0 hours 'ithout ho'ever per#ittin"
an$ reduction in the 'ee(l$ or dail$ 'a"e of the co#pensation 'hich 'as previousl$
received. ...
If the obHect of the la' 'as to (eep intact, 3not either to increase it or decrease it4 it is
but natural that the !ourt should concern itself, as it did, 'ith the corollar$, 'hat is the
'ee(l$ 'a"e of 'or(er 'ho, prior to R.2. *770, had been 'or(in" seven 3/4 da$s a
'ee( and re"ularl$ receivin" differential pa$#ents for 'or( on Sunda$s or at ni"htT It
see#s clear that the !ourt 'as onl$ concerned in i#ple#entin" correctl$ R.2. *770 b$
ensurin" that in di#inishin" the 'or(in" da$s and hours of 'or(ers in one 'ee(, no
di#inution should result in the 'or(erRs 'ee(l$ or dail$ 'a"e. 2nd, the conclusion
reached b$ the Supre#e !ourt 'as to affir# or reco"ni?e the correctness of the action
ta(en b$ the industrial court includin" such differential pa$ in co#putin" the 'ee(l$
'a"es of these e#plo$ees and laborers 'ho 'or(ed seven da$s a 'ee( and 'ere
continuousl$ receivin" .,K Sunda$ differential for a period of three #onths
i##ediatel$ precedin" the i#ple#entation of R.2. *770.R Nothin" 'as said about
addin" the #one$ value of so#e other bonuses or allo'ances or #one$ value of other
frin"e benefits, received outside the 'ee( or at so#e other periods. That 'as not 'ithin
the scope of the issue before the !ourt. in fact, the li#ited application of the decision is
e%pressed in the decision itself. The resolution of this particular issue 'as for the
benefit of onl$ a se"#ent of the N2:2S2 e#plo$ees. Said the !ourt ROf course, this
should onl$ benefit those 'ho have been 'or(in" seven da$s a 'ee( and had been
re"ularl$ receivin" .,K additional co#pensation for Sunda$ 'or( before the effectivit$
of the 2ct.R
Dnions #a(e capital of the follo'in" pronounce#ent of the Supre#e !ourt in the
N2:2S2 case8
It has been held that for purposes of co#putin" overti#e co#pensation a re"ular 'a"e
includes all pa$#ents 'hich the parties have a"reed shall be received durin" the 'or(
'ee(, includin" piece5'or( 'a"es, differential pa$#ents for 'or(in" at undesirable
ti#es, such as at ni"ht or on Sunda$s and holida$s, and the cost of board and lod"in"
custo#aril$ furnished the e#plo$ee 3:allin" v. Ian"er#an5Re$nolds ;ard'oo( !o.,
1., D.S. +*<G :allin" v. ;arischfe"er !orp. 1., D.S. +./4. The RRe"ular rate of pa$
also ordinaril$ includes incentive bonus or profit5 sharin" pa$#ents #ade in addition to
the nor#al basic pa$ 3,> !.-.S., pp. /0+5/0,4, and it 'as also held that the hi"her rate
for ni"ht, Sunda$ and holida$ 'or( is Hust as #uch as re"ular rate as the lo'er rate for
da$ti#e 'or(. The hi"her rate is #erel$ an induce#ent to accept e#plo$#ent at ti#es
'hich are not at desirable for# a 'or(#anRs standpoint 3International &. 2ssRn. :ise ,0
F. Supp. .>, affir#ed !.!.2. !arbunao v. National Ter#inals !orp. *1< F. 7,14.
)ut this para"raph in the decision appears to have been used and cited b$ the !ourt to
sustain the action of the court a Fuo8 that it 'as correct to include the .,K Sunda$
pre#iu# for the purpose of settin" the 'ee(l$ 'a"e of specified 'or(ers 'hose 'ee(l$
earnin"s before the passa"e of R.2. *770 'ould be di#inished, if said pre#iu# pa$
re"ularl$ received for three #onths 'ere not included. It is si"nificant that the citations
therein used b$ the Supre#e !ourt are e%cerpts fro# 2#erican decisions 'hose
le"islation on overti#e is at variance 'ith the la' in this Hurisdiction in this respect8 the
69
D.S. le"islation considers 'or( in e%cess of fort$ hours a 'ee( as overti#eG 'hereas,
'hat is "enerall$ considered overti#e in the Philippines is 'or( in e%cess Rof the
re"ular 75hours a da$. It is understandabl$ #aterial to refer to precedents in the D.S. for
purposes of co#putin" 'ee(l$ 'a"es under a +05 hour a 'ee( rule, since the particular
issue involved in N2:2S2 is the conversion of prior 'ee(l$ re"ular earnin"s into dail$
rates 'ithout allo'in" di#inution or addition.
No rule of universal application to other cases #a$, therefore, be Hustifiabl$ e%tracted
fro# the N2:2S2 case. &et it be enou"h that in arrivin" at Hust solution and correct
application of R.2. *770, an inference 'as dra'n fro# other decisions that a re"ular
'a"e includes pa$#ents Ra"reed b$ the parties to be received durin" the 'ee(.R )ut to
use this analo"$ in another fact5 situation 'ould un#iti"atin"l$ stretch its value as basis
for le"al reasonin", for analo"ies are not perfect and can brin" a collapse if stretched
far be$ond their lo"ical and reasoned efficac$. Neither 'ould it be far to ascribe to the
Supre#e !ourtRs citation of forei"n Hurisprudence, 'hich 'as used for purposes of
analo"$, the force of statute la', for this 'ould be the conseFuence if it 'ere allo'ed to
be used as authorit$ for all fact5situations, even if different fro# the N2:2S2 case.
This, because courts do not le"islate. 2ll the$ do is appl$ the la'.
The above discussions i#pel the obHective anal$st to reHect the proposition that the
N2:2S2 decision is an e#bracin" and can be used 'ith the authorit$ of a statuteRs
effects on e%istin" contracts.
It appears that the ans'er to dispute lies, not in the te%t of the N2:2S2 case but in the
ter#s and conditions and practice in the i#ple#entation of, the a"ree#ent, an area
'hich #a(es resolution of the issue dependent on the relation of the ter#s and
conditions of the contract to the phraseolo"$ and purpose of the i"ht5;our &abor &a'
32ct +++4.
The #ore 'e read the N2:2S2 case, the #ore 'e are convinced that the overti#e
co#putation set therein cannot appl$ to the cases at bar. For to do so 'ould lead to
unHust results, ineFuities bet'een and a#on" the e#plo$ees the#selves and absurd
situations. To appl$ the N2:2S2 co#putation 'ould reFuire a different for#ula for
each and ever$ e#plo$ee, 'ould reFuire reference to and continued use of individual
earnin"s in the past, thus #ultipl$in" the ad#inistrative difficulties of the !o#pan$. It
'ould be cu#berso#e and tedious a process to co#pute overti#e pa$ and this #a$
a"ain cause dela$s in pa$#ents, 'hich in turn could lead to serious disputes. To appl$
this #ode of co#putation 'ould retard and stifle the "ro'th of unions the#selves as
!o#panies 'ould be irresistibl$ dra'n into den$in", ne' and additional frin"e benefits,
if not those alread$ e%istin", for fear of bloatin" their overhead e%penses throu"h
overti#e 'hich, b$ reason of bein" unfi%ed, beco#es instead a veritable source of
irritant in labor relations.
One other reason 'h$ application of the N2:2S2 case should be reHected is that this
!ourt is not prepared to accept that it can la$ do'n a less cu#berso#e for#ula for a
co#pan$5'ide overti#e pa$ other than that 'hich is alread$ provided in the collective
bar"ainin" a"ree#ent. !ourts cannot #a(e contracts for the parties the#selves.
!o##on'ealth 2ct +++ prescribes that overti#e 'or( shall be paid Rat the sa#e rate
as their re"ular 'a"es or salar$, plus at least t'ent$5five per centu# additionalR 3Secs.
+ L ,4. The la' did not define 'hat is a Rre"ular 'a"e or salar$R. :hat the la'
e#phasi?ed b$ 'a$ of repeated e%pression is that in addition to Rre"ular 'a"eR, there
#ust be paid an additional .,K of that Rre"ular 'a"eR to constitute overti#e rate of pa$.
The parties 'ere thus allo'ed to a"ree on 'hat sha" be #utuall$ considered re"ular
pa$ fro# or upon 'hich a .,K pre#iu# shall be based and added to #a(e up
overti#e co#pensation. This the parties did b$ a"reein" and acceptin" for a ver$ lon"
period to a basic hourl$ rate to 'hich a pre#iu# shall be added for purposes of
overti#e.
2lso si"nificant is the fact that !o##on'ealth 2ct +++ #erel$ sets a #ini#u#, a least
pre#iu# rate for purposes of overti#e. In this case, the parties a"reed to pre#iu#
rates four 3+4 or even si% 3>4 ti#es than that fi%ed b$ the 2ct. Far fro# bein" a"ainst the
la', therefore, the a"ree#ent provided for rates Rco##ensurate 'ith the !o#pan$Rs
reputation of bein" a#on" the leadin" e#plo$ers in the PhilippinesR 32rt. *, Sec. ., !oll.
)ar". 2"ree#ent4 at the sa#e ti#e that the !o#pan$ is #aintained in a co#petitive
position in the #ar(et !oll. )ar". 2"ree#ent, lbid4.
Since the a"reed rates are 'a$ above prevailin" statutor$ 'a"es and pre#iu#s, fi%ed
b$ the#selves bona fide throu"h ne"otiations favored b$ la', there appears no
co#pellin" reason nor basis for declarin" the sa#e ille"al. 2 basic principle for#in" an
i#portant foundation of R.2. 7/, is the encoura"e#ent "iven to parties to resort to
peaceful settle#ent of industrial proble#s throu"h collective bar"ainin". It behooves
this !ourt, therefore, to help develop respect for those a"ree#ents 'hich do not e%hibit
features of ille"alit$ This is the onl$ 'a$ to build confidence in the de#ocratic process
of collective bar"ainin". Parties cannot be per#itted to avoid the i#plications and
ra#ifications of the a"ree#ent.
2lthou"h this !ourt has "one ver$ far in resolvin" an doubts and in "ivin" "reat 'ei"ht
to evidence and presu#ptions in favor of labor, it #a$ not "o as far as reconstruct the
la' to fit particular cases.9 3Pp. */+5*7*, Record4
Proof of the correctness of the aforeFuoted considerations, the appeal of the 'or(ers
fro# the Industrial !ourtRs decision did not prosper. 2ffir#in" the appealed decision, :e
held8
70
The theor$, therefore, of the petitioners is to the effect that, not'ithstandin" the ter#s
and conditions of their e%istin" collective bar"ainin" a"ree#ent 'ith respondent Shell
!o#pan$, particularl$ %hibit R25lR for the Petitioners and %hibit Rl52R for the
Respondent 3'hich is 2ppendi% R)R of the !ollective )ar"ainin" 2"ree#ent of the
parties4, considerin" the rulin" in the N2:2S2 case, a reco#putation should be #ade
of their basic 'a"e b$ addin" the #one$ value of the frin"e benefits enHo$ed b$ the#
fro# 'hence the pre#iu# rates a"reed upon shall be co#puted in order to arrive at
the correct co#putation of their overti#e co#pensation fro# the !o#pan$. On the
other hand, respondent Shell !o#pan$ #aintains that the N2:2S2 case should not
be utili?ed as the basis for the alteration of their #ode of co#putin" overti#e rate of
pa$ as set forth in their collective )ar"ainin" 2"ree#ent. It insists that their collective
bar"ainin" a"ree#ent should be the la' bet'een the#.
2fter a careful and thorou"h re5e%a#ination of the N2:2S2 case, supra, and a
#inute e%a#ination of the facts and the evidence of the case no' before Ds, :e rule
that the N2:2S2 case is not in point and, therefore, is inapplicable to the case at bar.
The rulin" of this !ourt in the N2:2S2 case conte#plates the re"ularit$ and
continuit$ of the benefits enHo$ed b$ the e#plo$ees or 'or(ers 3for at least three 314
#onths4 as the condition precedent before such additional pa$#ents or benefits are
ta(en into account. This is evident in the aforeFuoted rulin" of this !ourt in the
N2:2S2 case as 'ell as in the hereinbelo' cited authorities, to 'it8
The Rre"ular rateR of pa$ on the basis of 'hich overti#e #ust be co#puted #ust reflect
an pa$#ents 'hich parties have a"reed shall be received re"ularl$ durin" the 'or(
'ee(, e%clusive of overti#e pa$#ents.R :allin" v. 6arloc( Pac(in" !o. !.!.2.N.I., *,<
F. .d ++, +,. 3Pa"e .7<, :ORDS 2nd P;R2SS, Per#anent dition, Vol. 1>2G Italics
supplied4G and
2s a "eneral rule the 'ords Rre"ular rateR #ean the hourl$ rate actuall$ paid for the
nor#al, non5overti#e 'or( 'ee(, and an e#plo$eeRs re"ular co#pensation is the
co#pensation 'hich re"ularl$ and actuall$ reaches hi#, ... .R 3,> !.-.S. /0+G #phasis
supplied4.
ven in the definition of 'a"e under the Mini#u# :a"e &a', the 'ords Rcusto#aril$
furnishedR are used in referrin" to the additional pa$#ents or benefits, thus, 5
R:a"eR paid to an$ e#plo$ee sha" #ean the re#uneration or earnin"s, ho'ever
desi"nated, capable of bein" e%pressed in ter#s of #one$, 'hether fi%ed or
ascertained on a ti#e, tas(, piece, co##ission basis, or other #ethod of calculatin"
the sa#e, 'hich is pa$able b$ an e#plo$er to an e#plo$ee under a 'ritten or un'ritten
contract of e#plo$#ent for 'or( done or to be done or for services rendered or to be
rendered, and includes the fair and reasonable value, as deter#ined b$ the Secretar$
of &abor, of board, lod"in" or other facilities custo#aril$ furnished b$ the e#plo$er to
the e#plo$ee.R 3Sec. . 3"4, R.2. No. >0.4.
;avin" been stipulated b$ the parties that ... the Tin Factor$ Incentive Pa$ has ceased
in vie' of the closure of the factor$ in Ma$ *<>> the frin"e benefits as described sho'
that the$ are occasionall$ not re"ularl$ enHo$ed and that not all e#plo$ees are entitled
to the#R, herein petitioners failed to #eet the test laid do'n b$ this !ourt in the
N2:2S2 case. Further, the collective bar"ainin" a"ree#ent resorted to b$ the parties
bein" in accordance 'ith R.2. 7/,, 'ith its provision on overti#e pa$ far 'a$ be$ond
the pre#iu# rate provided for in Sections + and , of !o##on'ealth 2ct +++, the sa#e
should "overn their relationship. Since this is their contract entered into b$ the#
pursuant to bar"ainin" ne"otiations under e%istin" la's, the$ are bound to respect it. It
is the dut$ of this !ourt to see to it that contracts bet'een parties, not tainted 'ith
infir#it$ or irre"ularit$ or ille"alit$, be strictl$ co#plied 'ith b$ the parties the#selves.
This is the onl$ 'a$ b$ 'hich unit$ and order can be properl$ attained in our societ$.
It should be noted in passin" that !o##on'ealth 2ct +++ prescribes onl$ a #ini#u#
of at least .,K in addition to the re"ular 'a"e or salar$ of an e#plo$ee to constitute
his overti#e rate of pa$, 'hereas, under 2ppendi% R)R, 3%hs. R25lR, Petitioners and Rl52R,
Respondent4 of the !ollective )ar"ainin" 2"ree#ent of the parties, the pre#iu# rate of
overti#e pa$ is as hi"h as l,0K on re"ular 'or(in" da$s up to .,0 K on Sunda$s and
reco"ni?ed national holida$s. 3Shell Oil :or(ers Dnion vs. Shell !o#pan$ of the
Philippines, 6.R. No. &510>,75,<, March 1*, *</>, /0 S!R2 .+.5.+1.4
In the instant case, on Ma$ .., *<>, PM2 alle"ed in the court belo' the follo'in"
cause of action as a#ended on -une /, *<>,8
Since the start of the "ivin" of cost of livin" allo'ance and lon"evit$ pa$ and reiterated,
after the pro#ul"ation of the Decision in National :ater'or(s and Se'era"e 2uthorit$
vs. N2:2S2 !onsolidated Dnions et al., 6.R. No. &5*7<17, 2u"ust 1*, *<>+, the
petitioner has repeatedl$ reFuested respondent that the cost of livin" allo'ance and
lon"evit$ pa$ be ta(en into account in the co#putation of overti#e pa$, effective as of
the "rant of said benefits on -anuar$ *, *<,7, in accordance 'ith the rulin" in said
Decision of the Supre#e !ourt. 3Pa"e *+, PN)Rs )rief.4
To be sure, there could be so#e plausibilit$ in PN)Rs pose re"ardin" the Hurisdiction of
the Industrial !ourt over the above cause of action. )ut, as :e have alread$ stated,
:e a"ree 'ith the broader vie' adopted b$ the court a Fuo on said point, and :e find
that it is in the best interests of an concerned that this al#ost .,5$ear dispute be settled
once and for all 'ithout the need of "oin" throu"h other foru#s onl$ for the #atter to
ulti#atel$ co#e bac( to this !ourt probabl$ $ears later, ta(in" particular note as :e do,
in this re"ard, of the cases cited on pa"es <5*0 of PM2Rs ori"inal #e#o, as follo's8
71
Reali?in" its error before in not considerin" the present case a certified labor dispute,
the )an( no' concedes that the case at bar Rbelon"s to co#pulsor$ arbitrationR.
;ence, the la'ful po'ers of the !IR over the sa#e. ;o'ever, the )an( sa$s Roverti#e
differential is but a #one$ clai#, 3and4 respondent court does not have Hurisdiction to
ta(e co"ni?ance of the sa#eR.
)ut this is not a pure #one$ clai# 3pp. *05**, Opposition4 because other factors are
involved 5 certification b$ the President, the #atter #a$ li(el$ cause a stri(e, the
dispute concerns national interest and co#es 'ithin the !IRRs inHunction a"ainst
stri(in", and the e#plo$er5e#plo$ee relationship bet'een the )an( and the
e#plo$ees has not been severed. )esides, R#one$ clai#R is e#braced 'ithin the ter#
Rco#pensationR and therefore falls sFuarel$ under the Hurisdiction of the !IR in the
e%ercise of its arbitration po'er 3Sec. +, !2 *01G Please see also Republic vs. !IR, &5
.*101, Sept. .1B>7G Ma(alintal -., N:S2 !ase, &5.>7<+5<>, Feb. .7B><G Fernando,
-.4.
:hat confers Hurisdiction on the Industrial !ourt, sa$s -ustice -.).&. Re$es, is not the
for# or #anner of certification b$ the President, but the referral to said court of the
industrial dispute bet'een the e#plo$er and the e#plo$ees. 3&iberation Stea#ship vs.
!IR, etc., &5.,17< L .,1<0, -une ./B>74.
In "hil. "ostal Savings 5ank, et al. vs. C(., et al., &5.+,/., Dec. .0B>/, this ;onorable
!ourt, spea(in" throu"h !hief -ustice !oncepcion, held that the certification of the
issue Ras a dispute affectin" an industr$ indispensable to the national interestR leaves
Rno roo# for doubt on the Hurisdiction of the !IR to settle such dispute.R
Relatedl$, ho'ever, it is to be noted that it is clear fro# the holdin" of the Industrial
!ourtRs decision :e have earlier Fuoted, 9the cause of action 3here4 is not on an$
decision of an$ court but on the provisions of the la' 'hich have been in effect at the
ti#e of the occurrence of the cause of action in relation to a labor dispute9. Vie'ed fro#
such perspective laid b$ the lo'er court itself, it can hardl$ be said that it indeed
e%ercised purel$ its po'er of arbitration, 'hich #eans la$in" do'n the ter#s and
conditions that should "overn the relationship bet'een the e#plo$er and e#plo$ees of
an enterprise follo'in" its o'n appreciation of the relevant circu#stances rather
e#piricall$. More accuratel$ understood, the court in fact indul"ed in an interpretation of
the applicable la', na#el$, !2 +++, in the li"ht of its o'n i#pression of the opinion of
this !ourt in N2:2S2 and based its decision thereon.
2ccordin"l$, upon the fact5situation of this case hereunder to be set forth, the
funda#ental Fuestion for Ds to decide is 'hether or not the decision under appeal is in
accordance 'ith that la' and the cited Hurisprudence. In brief, as PM2 posits, is
N2:2S2 four5sFuare 'ith this caseT 2nd even assu#in", for a 'hile, that in a sense
'hat is before Ds is an arbitration decision, private respondent itself ad#its in its
above5#entioned #e#orandu# that this !ourt is not 'ithout po'er and authorit$ to
deter#ine 'hether or not such arbitration decision is a"ainst the la' or Hurisprudence
or constitutes a "rave abuse of discretion. Thus, in PM2Rs #e#orandu#, it #a(es the
observation that 93F4urther#ore, in the Shell cases, the unions are usin" the N2:2S2
decision as a source of ri"ht for reco#putation, 'hile in the PN), the Dnion #erel$
cites the N2:2S2 doctrine, not as a source of ri"ht, but as a le"al authorit$ or
reference b$ both parties so the Dnion de#and #a$ be "ranted. 9 3Motion to Dis#iss,
p. 1.4
Obviousl$, therefore, the polestar to 'hich Our #ental vision #ust be focused in order
that :e #a$ arrive at a correct le"al and eFuitable deter#ination of this controvers$
and, in the process #a(e N2:2S2 better understood as :e believe it should be, is
none other than Sections 1 and + of !o#. 2ct No. +++, the i"ht ;our &abor &a',
'hich pertinentl$ provide thus8
S!. 1. :or( #a$ be perfor#ed be$ond ei"ht hours a da$ in case of actual or
i#pendin" e#er"encies caused b$ serious accidents, fire, flood, t$phoon, earthFua(e,
epide#ic, or other disaster or cala#it$ in order to prevent loss to life and propert$ or
i##inent dan"er to public safet$G or in case of ur"ent 'or( to be perfor#ed on the
#achines, eFuip#ent, or installations in order to avoid a serious loss 'hich the
e#plo$er 'ould other'ise suffer, or so#e other Hust cause of a si#ilar natureG but in all
such cases the laborers and e#plo$ees shall be entitled to receive co#pensation for
the overti#e 'or( perfor#ed at the sa#e rate as their re"ular 'a"es or salar$, plus at
least t'ent$5five per centu# additional.
In case of national e#er"enc$ the 6overn#ent is e#po'ered to establish rules and
re"ulations for the operation of the plants and factories and to deter#ine the 'a"es to
be paid the laborers.
%%% %%% %%%
S!. +. No person, fir#, or corporation, business establish#ent or place or center of
labor shall co#pel an e#plo$ee or laborer to 'or( durin" Sunda$s and le"al holida$s,
unless he is paid an additional su# of at least t'ent$5five per centu# of his re"ular
re#uneration8 Provided, ho'ever, that this prohibition shall not appl$ to public utilities
perfor#in" so#e public service such as suppl$in" "as, electricit$, po'er, 'ater, or
providin" #eans of transportation or co##unication.
The vital Fuestion is, 'hat does 9re"ular 'a"e or salar$9 #ean or connote in the li"ht of
the de#and of PM2T
72
In Our considered opinion, the ans'er to such Fuestion lies in the basic rationale of
overti#e pa$. :h$ is a laborer or e#plo$ee 'ho 'or(s be$ond the re"ular hours of
'or( entitled to e%tra co#pensation called in this enli"htened ti#e, overti#e pa$T
Veril$, there can be no other reason than that he is #ade to 'or( lon"er than 'hat is
co##ensurate 'ith his a"reed co#pensation for the statutoril$ fi%ed or voluntaril$
a"reed hours of labor he is supposed to do. :hen he thus spends additional ti#e to his
'or(, the effect upon hi# is #ulti5faceted8 he puts in #ore effort, ph$sical andBor
#entalG he is dela$ed in "oin" ho#e to his fa#il$ to enHo$ the co#forts thereofG he
#i"ht have no ti#e for rela%ation, a#use#ent or sportsG he #i"ht #iss i#portant pre5
arran"ed en"a"e#entsG etc., etc. It is thus the additional 'or(, labor or service
e#plo$ed and the adverse effects Hust #entioned of his lon"er sta$ in his place of 'or(
that Hustif$ and is the real reason for the e%tra co#pensation that he called overti#e
pa$.
Overti#e 'or( is actuall$ the len"thenin" of hours developed to the interests of the
e#plo$er and the reFuire#ents of his enterprise. It follo's that the 'a"e or salar$ to be
received #ust li(e'ise be increased, and #ore than that, a special additional a#ount
#ust be added to serve either as encoura"e#ent or induce#ent or to #a(e up fop the
thin"s he loses 'hich :e have alread$ referred to. 2nd on this score, it #ust al'a$s be
borne in #ind that 'a"e is indisputabl$ intended as pa$#ent for 'or( done or services
rendered. Thus, in the definition of 'a"e for purposes of the Mini#u# :a"e &a',
Republic 2ct No. >0., it is stated8
R:a"eR paid to an$ e#plo$ee shall #ean the re#uneration or earnin"s, ho'ever
desi"nated, capable of bein" e%pressed in ter#s of #one$, 'hether fi%ed or
ascertained on a ti#e tas(, piece, co##ission basis or other #ethod of calculatin" the
sa#e, 'hich is pa$able b$ an e#plo$er to an e#plo$ee under a 'ritten or un'ritten
contract of e#plo$#ent or !ork done or to be done or or services rendered or to be
rendered and includes the fair and reasonable value as deter#ined b$ the Secretar$ of
&abor, of board, lod"in" or other facilities custo#aril$ furnished b$ the e#plo$er to the
e#plo$ee. RFair and reasonable valueR shall not include a profit to the e#plo$er 'hich
reduces the 'a"e received b$ the e#plo$ee belo' the #ini#u# 'a"e applicable to the
e#plo$ee under this 2ct, nor shall an$ transaction bet'een an e#plo$er or an$ person
affiliated 'ith the e#plo$er and the e#plo$ee of the e#plo$er include an$ profit to the
e#plo$er or affiliated person 'hich reduces the e#plo$eeRs 'a"e belo' the 'a"e
applicable to the e#plo$ee under this 2ct.R
2
3#phasis supplied4.
2s can be seen, 'a"e under said la', in 'hatever #eans or for# it is "iven to the
'or(er, is 9for 'or( done or to be done or for services rendered or to be rendered9 and
lo"icall$ 9includes 3onl$4 the fair and reasonable value as deter#ined b$ the Secretar$
of &abor, of board, lod"in" or other facilities custo#aril$ furnished b$ the e#plo$er to
the e#plo$ee9.
Indeed, for the purpose of avoidin" an$ #isunderstandin" or #isinterpretation of the
'ord 9'a"e9 used in the la' and to differentiate it fro# 9supple#ent9, the :a"e
2d#inistration Service to i#ple#ent the Mini#u# :a"e &a', defined the latter as8
e%tra re#uneration or benefits received b$ 'a"e earners fro# their e#plo$ers and
include but are not restricted to pa$ for vacation and holida$s not 'or(edG paid sic(
leave or #aternit$ leaveG overti#e rate in e%cess of 'hat is reFuired b$ la'G pension,
retire#ent, and death benefitsG profit5sharin", fa#il$ allo'ancesG !hrist#as, 'ar ris(
and cost$o$living bonusesM or other bonuses other than those paid as a re!ard or
e?tra output or time spent on the >ob. 3#phasis ours4.
In these ti#es 'hen hu#ane and di"nified treat#ent of labor is steadil$ beco#in"
universall$ an obsession of societ$, 'e, in our countr$, have reached a point in
e#plo$er5 e#plo$ee relationship 'herein e#plo$ers the#selves reali?e the
indispensabilit$ of at least #a(in" the co#pensation of 'or(ers eFual to the 'orth of
their efforts as #uch as this case can be statisticall$ deter#ined. Thus, in order to #eet
the effects of uncertain econo#ic conditions affectin" adversel$ the livin" conditions of
'a"e earners, e#plo$ers, 'henever the financial conditions of the enterprise per#it,
"rant the# 'hat has been called as cost5of5livin" allo'ance. In other 'ords, instead of
leavin" the 'or(ers to assu#e the ris(s of or drift b$ the#selves a#idst the cross
5currents of countr$5'ide econo#ic dislocation, e#plo$ers tr$ their best to help the#
tide over the hardships and difficulties of the situation. So#eti#es, such allo'ances are
voluntaril$ a"reed upon in collective bar"ainin" a"ree#ents. 2t other ti#es, it is
i#posed b$ the "overn#ent as in the instances of Presidential Decrees Nos. ,.,, <.7,
**.1, *17<, *>*+, *>/7, */,* and */<0G &etters of Instructions No. *0,> and :a"e
Order No. *. Notabl$, Presidential Decree No. */,* increased the statutor$ 'a"e at all
levels b$ P+00 in addition to inte"ratin" the #andator$ e#er"enc$ livin" allo'ances
under Presidential Decree No. ,., and Presidential Decree No. **.1 into the basic pa$
of all covered 'or(ers.
6oin" over these la's, one readil$ notices t'o distinctive features8 First, it is evidentl$
"ratif$in" that the "overn#ent, in (eepin" 'ith the hu#anitarian trend of the ti#es,
al'a$s #a(es ever$ effort to (eep 'a"es abreast 'ith increased cost of livin"
conditions, doin" it as soon as the necessit$ for it arises. ;o'ever, obviousl$, in order
not to overdo thin"s, e%cept 'hen other'ise provided, it spares fro# such obli"ation
e#plo$ers 'ho b$ #utual a"ree#ent 'ith their 'or(ers are alread$ pa$in" 'hat the
correspondin" la' provides 3See Sec. + of P.D. No. ,.,G Section . of P.D. No. 7,* until
P.D. *>7+ abolished all e%e#ptions under P.D. No. ,.,, P.D. No. **.1, P.D. No. 7,*
and P.D. No. <.7 a#on" distressed e#plo$ers 'ho even thou"h "iven sufficient lapse
of ti#e to #a(e the necessar$ adHust#ent have not done so.41
In the case at bar, as alread$ related earlier, the cost5of5livin" allo'ance be"an to be
"ranted in *<,7 and the lon"evit$ pa$ in *<7*. In other 'ords, the$ 'ere "ranted b$
73
PN) upon reali?in" the difficult pli"ht of its labor force in the face of the unusual
inflationar$ situation in the econo#$ of the countr$, 'hich, ho'ever acute, 'as
nevertheless e%pected to i#prove. There 'as thus evident an inherentl$ contin"ent
character in said allo'ances. The$ 'ere not intended to be re"ular, #uch less
per#anent additional part of the co#pensation of the e#plo$ees and 'or(ers. To such
effect 'ere the testi#onies of the 'itnesses at the trial. For instance, Mr. &adislao
Iu?on declared8
2TTORNI 6SMDNDO
Ouestionin" ....
O. !allin" $our attention to para"raph No. *, entitled #onthl$ livin" allo'ance, 'hich
has been #ar(ed as %hibit R25lR, 'ill $ou (indl$ tell us the histor$ of this benefit5
#onthl$ livin" allo'ance, 'h$ the sa#e has been "rantedT
2. :ell, in vie' of the increasin" standard of livin", 'e decided to de#and fro#
#ana"e#ent in our set of de#ands ... included in our set of de#ands in *<,/5*<,7 a
#onthl$ livin" allo'ance in addition to our basic salar$. This benefit 'as a"reed upon
and "ranted to ta(e effect as of -anuar$ *, *<,7. That 'as the first ti#e it 'as enHo$ed
b$ the e#plo$ees of the Philippine National )an(. It started on a lesser a#ount but
$ear after $ear 'e have been de#andin" for increases on this livin" allo'ance until 'e
have attained the present a#ount of P * ,0.00 a #onth, startin" 'ith P+0.00 'hen it
'as first "ranted. The sa#e is still bein" enHo$ed b$ the e#plo$ees on a #uch hi"her
a#ount. There 'ere a fe' variations to that. 3t. t.s.n., pp. *75*<, ;earin" of 2u"ust *>,
*<>,4
'hich testi#on$ 'as affir#ed b$ Mr. Panfilo Do#in"o, on cross5 e%a#ination b$
counsel for the respondent, readin" as follo's8
2TTORNI 6SMDNDO8
O. Do $ou recall Mr. Do#in"o, that in den$in" the cost of livin" allo'ance and lon"evit$
pa$ for incorporation 'ith the basic salar$, the reason "iven b$ the #ana"e#ent 'as
that as accordin" to $ou, it 'ill #ean an added cost and R further#ore it 'ill increase the
contribution of the Philippine National )an( to the 6SIS, is that correctT
2. This is one of the reasons, of the obHections for the inclusion of the livin" allo'ance
and lon"evit$ pa$ to for# part of the basic pa$, I #ean a#on" others, because the
basic reason !hy management !ould ob>ect is the cost o living allo!ance is temporary
in nature, the philosophy behind the grant o this beneit, 'onetheless, it !as the
understanding i ( recall right that in the event that cost o living should go do!n then
there should be a corresponding decrease in the cost o living allo!ance being granted
( have to mention this because this is the undamental philosophy in the grant o cost o
living allo!ance. 3Pp. *<5.0, Record.4
Much less 'ere the$ dependent on e%tra or special 'or( done or service rendered b$
the correspondin" recipient. Rather, the$ 'ere based on the needs of their fa#ilies as
the conditions of the econo#$ 'arranted. Such is the ine%orable i#port of the pertinent
provisions of the collective bar"ainin" a"ree#ent8
MONT;&I &IVIN6 2&&O:2N!
2ll e#plo$ees of the )an( shall be "ranted a #onthl$ livin" allo'ance of P*+0, plus
P*0 for each #inor dependent child belo' .* $ears of a"e, but in no case shall the
total allo'ance e%ceed P.00 or .,K of the #onthl$ salar$, 'hichever is hi"her, subHect
to the follo'in" conditions8
a4 That this ne' basic allo'ance shall be applicable to all e#plo$ees, irrespective of
their civil statusG
b4 That a 'ido' or 'ido'er shall also enHo$ the basic allo'ance of P*+0 a #onth, plus
the additional benefit of P*0 for each #inor dependent child but not to e%ceed P.00 or
.,K of basic salar$ 'hichever is hi"her.
c4 That in case the husband and 'ife are both e#plo$ees in the )an( both shall enHo$
this ne' basic #onthl$ livin" allo'ance of P*+0 but onl$ one of spouses shall be
entitled to clai# the additional benefit of P*0 for each #inor le"iti#ate or ac(no'led"ed
child. 3Pp. 1051*, PN)Rs #e#o.4
So also 'ith the lon"evit$ pa$G #anifestl$, this 'as not based on the dail$ or #onthl$
a#ount of 'or( done or service rendered it 'as #ore of a "ratuit$ for their lo$alt$, or
their havin" been in the ban(Rs e#plo$#ent for consideration periods of ti#e. Indeed,
'ith particular reference to the lon"evit$ pa$, the then e%istin" collective bar"ainin"
contract e%pressl$ provided8 9... That this benefit shall not for# part of the basic salaries
of the officers so affected.9
PM2 #a$ contend that the e%press e%clusion of the lon"evit$ pa$, #eans that the
cost5of5livin" allo'ance 'as not intended to be e%cluded. !onsiderin", ho'ever, the
contin"ent nature of the allo'ances and their lac( of relation to 'or( done or service
rendered, 'hich in a sense #a$ be other'ise in respect to lon"evit$ pa$ PM2Rs
contention is untenable. The rule of e?clusio unius, e?clusio alterius 'ould not appl$
here, if onl$ because in the ver$ nature of the t'o benefits in Fuestion, considerations
and conclusions as to one of the# could be non$se=uitur as to the other.
74
:ithal, there is the indisputable si"nificant fact that after *<,7, ever$ti#e a collective
bar"ainin" a"ree#ent 'as bein" entered into, the union al'a$s de#anded the
inte"ration of the cost5of5livin" allo'ances and lon"evit$ pa$, and as #an$ ti#es, upon
opposition of the ban(, no stipulation to such effect has ever been included in an$ of
said a"ree#ents. 2nd the e%press e%clusion of lon"evit$ pa$ 'as continued to be
#aintained.
On this point, the respondent court held that under its broad Hurisdiction, it 'as 'ithin
the a#bit of its authorit$ to provide for 'hat the parties could not a"ree upon. :e are
not persuaded to vie' the #atter that 'a$. :e are not convinced that the "overn#ent,
thru the Industrial !ourt, then, could i#pose upon the parties in an e#plo$er5e#plo$ee
conflict, ter#s and conditions 'hich are inconsistent 'ith the e%istin" la' and
Hurisprudence, particularl$ 'here the re#ed$ is sou"ht b$ the actors #ore on such le"al
basis and not purel$ on the courtRs arbitration po'ers.
2s pointed out earlier in this opinion, Our tas( here is t'o5fold8 First, revie'in" the
decision under scrutin$ as based on la' and Hurisprudence, the Fuestion is 'hether or
not the rulin"s therein are correct. 2nd second, readin" such Hud"#ent as an arbitration
decision, did the court a Fuo "ravel$ abuse its discretion in holdin", as it did, that cost5
of5livin" allo'ance and lon"evit$ pa$ should be included in the co#putation of overti#e
pa$T
In re"ard to the first Fuestion, :e have alread$ pointed out to start 'ith, that as far as
lon"evit$ pa$ is concerned, it is be$ond Fuestion that the sa#e cannot be included in
the co#putation of overti#e pa$ for the ver$ si#ple reason that the contrar$ is
e%pressl$ stipulated in the collective bar"ainin" a"ree#ent and, as should be the case,
it is settled that the ter#s and conditions of a collective bar"ainin" a"ree#ent
constitute the la' bet'een the parties. 3Mactan :or(ers Dnion vs. 2boiti?, +, S!R2
,//. See also Shell Oil :or(ers Dnion et al. vs. Shell !o#pan$ of the Philippines,
supra4 The contention of PM2 that the e%press provision in the collective bar"ainin"
a"ree#ent that 9this benefit 3lon"evit$ pa$4 shall not for# part of the basic salaries of
the officers so affected9 cannot i#pl$ the sa#e Idea insofar as the co#putation of the
overti#e pa$ is concerned defies the rules of lo"ic and #athe#atics. If the basic pa$
cannot be dee#ed increased, ho' could the overti#e pa$ be based on an$ increased
a#ount at allT
;o'ever, the #atter of the cost5of5livin" allo'ance has to be e%a#ined fro# another
perspective, na#el$, that 'hile PM2 had been al'a$s de#andin" for its inte"ration
into the basic pa$, it never succeeded in "ettin" the confor#it$ of PN) thereto, and so,
all collective bar"ainin" a"ree#ents entered 5+ into periodicall$ b$ the said parties did
not provide therefor. 2nd it 'ould appear that PM2 too( the non5a"ree#ent of the
ban( in "ood "race, for the record does not sho' that an$ re#edial #easure 'as ever
ta(en b$ it in connection there'ith. In other 'ords, the parties see#ed to be #utuall$
satisfied that the #atter could be better left for settle#ent on the bar"ainin" table
sooner or later, pursuant to the spirit of free bar"ainin" underl$in" Republic 2ct 7/,, the
Industrial Peace 2ct then in force. Or, as observed b$ PM2 in its #e#orandu#, 3pa"e
.14, the parties 9a"reed to let the Fuestion re#ain open5pendin" decision of authorities
that 'ould Hustif$ the de#and of the Dnion.9 Indeed, on pa"es .15.+ of said
#e#orandu#, the follo'in" position of PM2 is stated thus8
Thus the follo'in" proceedin" too( place at the !ourt a Fuo8
2TTI. 6SMDNDO8
That is our position, Iour ;onor, because apparentl$ there 'as an understandin"
reached bet'een the parties as to their havin" to 'ait for authorities and considerin"
that the issue or one of the issues then involved in the N2:2S2 case pendin" in the
!IR supports the stand of the union, that the principle enunciated in connection 'ith
that issue is applicable to this case.
%%% %%% %%%
O. Do 'e understand fro# $ou, Mister Iuson, that it 'as because of the #ana"e#ent
as(in" $ou for authorities in allo'in" the inte"ration of the cost of livin" allo'ance 'ith
$our basic salar$ and $our failure to produce at the ti#e such authorities that the union
then did not brin" an$ case to the !ourtT
2. :ell, in the first place, it is not reall$ #$ Idea to be brin"in" #atters to the !ourt
durin" #$ ti#e but I 'ould #uch prefer that 'e a"ree on the issue. :ell, insofar as $ou
said that the #ana"e#ent 'as as(in" #e, 'elt I 'ould sa$ that the$ 'ere invo(in" 3on4
authorities that 'e can sho' in order to beco#e as a basis for "rantin" or for a"reein"
'ith us althou"h 'e 'ere a'are of the e%istence of a pendin" case 'hich is ver$
closel$ si#ilar to our de#and, $et 'e decided to 'ait until this case should be decided
b$ the !ourt so that 'e can avail of the decision to present to #ana"e#ent as 'hat
the$ are as(in" for. 3t.s.n., pp. 1*51., 1,51>, 2u". .7,*<>,.4
No', to co#plete proper understandin" of the character of the controvers$ before Ds,
and lest it be felt b$ those concerned that :e have overloo(ed a point precisel$ related
to the #atter touched in the above i##ediatel$ precedin" para"raph, it should be
relevant to Fuote a portion of the 9Stipulation of Facts9 of the parties hereto8
*. This particular de#and 'as a#on" those sub#itted b$ Petitioner5Dnion in the
current collective bar"ainin" ne"otiations to the Respondent )an(. ;o'ever, since this
case 'as alread$ filed in court on Ma$ .., *<>,, the parties a"reed not to include this
75
particular de#and in the discussion, leavin" the #atter to the discretion and final
Hudicial deter#ination of the courts of Hustice.9 3Pa"e 7*, Rec.4
In fine, 'hat the parties co##onl$ desire is for this !ourt to construe !2 +++ in the
li"ht of N2:2S2, considerin" the fact5 situation of the instant case.
In this respect, it is Our considered opinion, after #ature deliberation, that
not'ithstandin" the portions of the N2:2S2Rs opinion relied upon b$ PM2, there is
nothin" in !2 +++ that could Hustif$ its posture that cost5of5livin" allo'ance should be
added to the re"ular 'a"e in co#putin" overti#e pa$.
2fter all, 'hat 'as said in N2:2S2 that could be controllin" hereT True, it is there
stated that 9for purposes of co#putin" overti#e co#pensation, re"ular 'a"e includes
all pa$#ents 'hich the parties have a"reed shall be received durin" the 'or( 'ee(,
includin" 5 differential pa$#ents for 'or(in" at undesirable ti#es, such as at ni"ht and
the board and lod"in" custo#aril$ furnished the e#plo$ee. ... The Rre"ular rateR of pa$
also ordinaril$ includes incentive bonus or profit5sharin" pa$#ents #ade in addition to
the nor#al basic pa$ 3,> !.-.S., pp. /0+5/0,4, and it 'as also held that the hi"her rate
for ni"ht, Sunda$ and holida$ 'or( is Hust as #uch a re"ular rate as the lo'er rate for
da$ti#e 'or(. The hi"her rate is #erel$ an induce#ent to accept e#plo$#ent at ti#es
'hich are not as desirable fro# a 'or(#enRs standpoint 3International &. 2ssRn vs.
National Ter#inals !orp. !.!. :ise, ,0 F. Supp. .>, affir#ed !.!.2. !arbunoa v.
National Ter#inals !orp. *1< F. .d 7,14.9 3** S!R2, p. /714
)ut no'here did N2:2S2 refer to e%tra, te#porar$ and contin"ent co#pensation
unrelated to 'or( done or service rendered, 'hich as e%plained earlier is the ver$
nature of cost5of5 livin" allo'ance. :ithal, in strict sense, 'hat :e have Hust Fuoted
fro# N2:2S2 'as obiter dictum, since the onl$ issue before the !ourt there 'as
'hether or not 9in co#putin" the dail$ 'a"e, 3'hether4 the addition co#pensation for
Sunda$ should be included. 9 3See No. / of Record4
In an$ event, as stressed b$ Ds in the Shell cases, the basis of co#putation of overti#e
pa$ be$ond that reFuired b$ !2 +++ #ust be the collective bar"ainin" a"ree#ent,
-
for,
to reiterate Our postulation therein and in )isi" n" Man""a"a'a, supra, it is not for the
court to i#pose upon the parties an$thin" be$ond 'hat the$ have a"reed upon 'hich is
not tainted 'ith ille"alit$. On the other hand, 'here the parties fail to co#e to an
a"ree#ent, on a #atter not le"all$ reFuired, the court abuses its discretion 'hen it
obli"es an$ >f the# to do #ore than 'hat is le"all$ obli"ed.
Doctrinall$, :e hold that, in the absence of an$ specific provision on the #atter in a
collective bar"ainin" a"ree#ent, 'hat are decisive in deter#inin" the basis for the
co#putation of overti#e pa$ are t'o ver$ "er#ane considerations, na#el$, 3*4 'hether
or not the additional pa$ is for e%tra 'or( done or service rendered and 3.4 'hether or
not the sa#e is intended to be per#anent and re"ular, not contin"ent nor te#porar$
and "iven onl$ to re#ed$ a situation 'hich can chan"e an$ ti#e. :e reiterate, overti#e
pa$ is for e%tra effort be$ond that conte#plated in the e#plo$#ent contract, hence
'hen additional pa$ is "iven for an$ other purpose, it is illo"ical to include the sa#e in
the basis for the co#putation of overti#e pa$. This holdin" supersedes N2:2S2.
;avin" arrived at the fore"oin" conclusions, :e dee# it unnecessar$ to discuss an$ of
the other issues raised b$ the parties.
:;RFOR, Hud"#ent is hereb$ rendered reversin" the decision appealed fro#,
'ithout costs.
Republic of the Philippines
SUPREME COURT
Manila
T;IRD DIVISION

G.R. No. 111359 A(:('3 15, 1995
CALTEF REGULAR EMPLO!EES AT MANILA O..ICE, LEGACPI UL@ DEPOT
AND MARINDUIUE UL@ DEPOT</MACLU0, petitioners,
vs.
CALTEF /PHILIPPINES0, INC. a#$ NATIONAL LAOR RELATIONS COMMISSION
/.IRST DIAISION0, respondents.

.ELICIANO, J.:
In this petition for certiorari, petitioner !alte% Re"ular #plo$ees 2ssociation at the
Manila Office, &e"a?pi )ul( Depot and the MarinduFue )ul( Depot 3hereinafter
referred to as 9Dnion94, see(s to annul and set aside the decision of the National
&abor Relations !o##ission 39N&R!94, pro#ul"ated on , March *<<1, 'hich
reversed the decision of &abor 2rbiter Valentin 6uanio.
On *. Dece#ber *<7,, petitioner Dnion and private respondent !alte% 3Philippines4,
Inc. 39!alte%94 entered into a !ollective )ar"ainin" 2"ree#ent 39*<7, !)294 'hich
76
'as to be in effect until #idni"ht of 1* Dece#ber *<77. The !)2 included, a#on"
others, the follo'in" provision8
2RTI!& III
;ODRS OF :ORJ
In confor#it$ 'ith Presidential Decree ++., other'ise (no'n as the &abor !ode of the
Philippines, as a#ended, the re"ular 'or( 'ee( shall consist of ei"ht 374 hours per da$,
seven 3/4 da$s, Monda$ throu"h Sunda$, durin" 'hich re"ular rates of pa$ shall be
paid in accordance 'ith 2nne% ) and !ork on the employee#s one 9Day o .est,9 shall
be considered a special !ork day, during !hich 9Day o .est9 rates o pay shall be paid
as provided in /nne? 5. Dail$ 'or(in" schedules shall be established b$ #ana"e#ent
in accordance 'ith the reFuire#ents of efficient operations on the basis o eight 2N3
hours per day or any ive 2J3 days. "rovided, ho'ever e#plo$ees reFuired to 'or( in
e?cess o orty 2&@3 hours in any !eek shall be co#pensated in accordance 'ith 2nne%
) of this
2"ree#ent.
1
3#phasis supplied4.
Pertinent portions of 2nne% 9)9 of the *<7, !)2 are also Fuoted here as follo's8
2nne% 9)9
!o#putation of8
Re"ular Da$ Pa$
Overti#e Pa$
Ni"ht Shift Differential Pa$
Da$ Off Pa$
%cess of +0 hours 'ithin a calendar 'ee(
Sunda$ Pre#iu# Pa$
;olida$ Pre#iu# Pa$
#plo$eeRs )asic ;ourl$ :a"e Rate8
Monthl$ )ase Pa$
QQQQQQQ
E X 3.*.>>/4 374
2. .egular "ay
*4 ;ourl$ rate
X E
.4 OT ;ourl$ Rate *. MN
X 3E S ,0K E4
14 NSD > PM 5 *. MN
X 3E S .,K E4
+4 OT ;ourl$ Rate NSD > PM 5 *. MN
X 3E S .,K E4 S ,0K 3E S .,K E4
,4 NSD *. MN 5 > 2M
X 3E S ,0K E4
>4 OT ;ourl$ Rate NSD *. MN 5 > 2M
X 3E S ,0K E4 S ,0K 3E S ,0K E4
). .egular 6irst Day :
*. ;ourl$ Rate
X 3E S ,0K E4
.. OT ;ourl$ Rate
X 3E S ,0K E4 S ,0K 3% S ,0K E4
1. NSD > PM 5 *. MN
X @ 3E S ,0K E4 S .,K 3E S ,0K E4 A
+. OT ;ourl$ Rate NSD > PM 5 *. MN
X @ 3E S ,0K E4 S .,K 3E S ,0K E4 A S
,0K @ 3E S ,0K E4 S .,K 3E S ,0K4 A
,. NSD *. MN 5 > 2M
X @ 3E S ,0K E4 S ,0K 3E S ,0K E4 A
>. OT ;ourl$ Rate NSD *. MN 5 > 2M
X @ 3E S ,0K E4 S ,0K 3E S ,0K E4 A S
,0K @ 3E S ,0K E4 S ,0K 3E S ,0K E4 A
77
!. .egular Second Day :
*. ;ourl$ Rate
X 3E S *00K E4
.. OT ;ourl$ Rate
X 3E S *00K E4 S ,0K 3E S *00K E4
1. NSD > PM 5 *.MN
X @ 3E S *00K E4 S .,K 3E S *00K4 A
+. OT ;ourl$ Rate NSD > PM 5 *. MN
X @ 3E S *00K E4 S .,K 3E S *00K E4 A S
,0K @ 3E S *00K E4 S .,K 3E S *00K E4 A
,. NSD *. MN 5 > 2M
X @ 3E S *00K E4 S ,0K 3E S *00K E4 A
>. OT ;ourl$ Rate NSD *. MN 5 > 2M
X @ 3E S *00K E4 S ,0K 3E S *00K E4 A S
,0K @ 3E S *00K E4 S ,0K 3E S *00K E4 A
D. 4?cess o &@ ;ours !ithin a Calendar 0eek
*. ;ourl$ Rate
X 3E S ,0K E4
.. OT ;ourl$ Rate
X 3E S ,0K E4 S ,0K 3E S ,0K E4
1. NSD > PM 5 *.MN
X @ 3E S ,0K E4 S .,K 3E S ,0K E4 A
+. OT ;ourl$ Rate NSD > PM 5 *. MN
X @ 3E S ,0K E4 S .,K 3E S ,0K E4 A S
,0K @ 3E S ,0K E4 S .,K 3E S ,0K E4 A
,. NSD *. MN 5 > 2M
X @ 3E S ,0K E4 S ,0K 3E S ,0K E4 A
>. OT ;ourl$ Rate NSD *. MN 5 > 2M
X @ 3E S ,0K E4 S ,0K 3E S ,0K E4 A S
,0K @ 3E S ,0K E4 S ,0K 3E S ,0K E4 A
. Sunday as a 'ormal 0ork Day
*. ;ourl$ Rate
X 3E S *00K E4
.. OT ;ourl$ Rate
X 3E S *00K E4 S ,0K 3E S *00K E4
1. NSD > PM 5 *. MN
X @ 3E S *00K E4 S .,K 3E S *00K E4 A
+. OT ;ourl$ Rate NSD > PM 5 *. MN
X @ 3E S *00K E4 S .,K 3E S *00K E4 A S
,0K @ 3E S *00K E4 S .,K 3E S *00K E4 A
,. NSD *. MN 5 > 2M
X @ 3E S *00K E4 S ,0K 3E S *00K E4 A
>. OT ;ourl$ Rate NSD *. MN 5 > 2M
X @ 3E S *00K E4 S ,0K 3E S *00K E4 A S
,0K @ 3E S *00K E4 S ,0K 3E S *00K E4 A
F. Sunday as day o
*. ;ourl$ Rate
X 3E S *00K E4
.. OT ;ourl$ Rate
X 3E S *00K E4 S ,0K 3E S *00K E4
1. NSD > PM 5 *. MN
X @ 3E S *00K E4 S .,K 3ES *00K E4 A
+. OT ;ourl$ Rate NSD > PM 5 *. MN
X @ 3E S *00K E4 S .,K 3E S *00K E4 A S
,0K @ 3ES *00K E4 S .,K 3E S *00K E4 A
78
,. NSD *. MN 5 > 2M
X @ 3E S *00K E4 S ,0K 3E S *00K E4 A
>. OT ;ourl$ Rate NSD *. MN 5 > 2M
X @ 3E S *00K E4 S ,0K 3E S *00K E4 A S
,0K @ 3E S *00K E4 S ,0K 3E S *00K E4 A
6. ;oliday as 'ormal 0ork Day
*. ;ourl$ Rate
X 3E S *,0K E4
.. OT ;ourl$ Rate
X 3E S *,0K E4 S ,0K 3E S *,0K E4
1. NSD > PM 5 *. MN
X @ 3E S *,0K E4 S .,K 3E S *,0K E4 A
+. OT ;ourl$ Rate NSD > PM 5 *. MN
X @ 3E S *,0K E4 S .,K 3E S *,0K E4 A S
,0K @ 3E S *,0K E4 S .,K 3E S *,0K E4 A
,. NSD *. MN 5 > 2M
X @ 3E S *,0K E4 S ,0K 3E S *,0K E4 A
>. OT ;ourl$ Rate NSD *. MN 5 > 2M
X @ 3E S *,0K E4 S ,0K 3E S *,0K E4 A S
,0K @ 3E S *,0K E4 S ,0K 3E S *,0K E4 A
;. ;oliday as Day :
*. ;ourl$ Rate
X 3E S *,0K E4
.. OT ;ourl$ Rate
X 3E S *,0K E4 S ,0K 3E S *,0K E4
1. NSD > PM 5 *. MN
X @ 3E S *,0K E4 S .,K 3E S *,0K E4 A
+. OT ;ourl$ Rate NSD > PM 5 *. MN
X @ 3E S *,0K E4 S .,K 3E S *,0K E4 A S ,0K
@ 3E S *,0K E4 S .,K 3E S *,0K E4 A
,. NS! *. MN 5 > 2M
X @ 3E S *,0K E4 S ,0K 3E S *,0K E4 A
>. OT ;ourl$ Rate
X @ 3E S *,0K E4 S ,0K 3E S *,0K E4 A S ,0K
@ 3E S *,0K E4 S ,0K 3E S *,0K E4 A
/. D ;ourl$ Rate for less than 7 hours
X 3*,0K E4
D For 'or( of less than 7 hours, the e#plo$ee 'ill receive his basic dail$ rate Q
3Monthl$ )ase Pa$4
QQQQQQQ
.*.>>/
plus the hourl$ rate #ultiplied b$ the nu#ber of hours 'or(ed.
2
So#eti#e in 2u"ust *<7>, the Dnion called !alte%Rs attention to alle"ed violations b$
!alte% of 2nne% 9)9 of the *<7, !)2, e.g. non5pa$#ent of ni"ht5shift differential, non5
pa$#ent of overti#e pa$ and non5pa$#ent at 9first da$5off rates9 for 'or( perfor#ed on
a Saturda$.
!alte%Rs Industrial Relations #ana"er i##ediatel$ evaluated petitionerRs clai#s and
accordin"l$ infor#ed petitioner Dnion that differential pa$#ents 'ould be ti#el$
i#ple#ented. In the i#ple#entation of the re5co#puted clai#s, ho'ever, no differential
pa$#ent 'as #ade 'ith respect to 'or( perfor#ed on the first . *B. hours on a
Saturda$.
On / -ul$ *<7/, the Dnion instituted a co#plaint for unfair labor practice a"ainst !alte%
alle"in" violation of the provisions of the *<7, !)2. Petitioner Dnion char"ed !alte%
'ith shortchan"in" its e#plo$ees 'hen !alte% co#pensated 'or( perfor#ed on the
first . *B. hours of Saturda$, an e#plo$eesR da$ of rest, at re"ular rates, 'hen it should
be pa$in" at 9da$ of rest9 or 9da$ off9 rates.
79
!alte% denied the accusations of the Dnion. It averred that Saturda$ 'as never
desi"nated as a da$ of rest, #uch less a 9da$5off9. It #aintained that the *<7, !)2
provided onl$ * da$ of rest for e#plo$ees at the Manila Office, as 'ell as e#plo$ees
si#ilarl$ situated at the &e"a?pi and MarinduFue )ul( Depots. This da$ of rest,
accordin" to !alte%, 'as Sunda$.
In due ti#e, the &abor 2rbiter ruled in favor of petitioner Dnion, 'hile findin" at the
sa#e ti#e that private respondent !alte% 'as not "uilt$ of an$ unfair labor practice.
&abor 2rbiter Valentin !. 6uanio, interpretin" 2rticle III and 2nne% 9)9 of the *<7, !)2,
concluded that !alte%Rs e#plo$ees had been "iven t'o 3.4 da$s 3instead of one @*A
da$4 of rest, 'ith the result that 'or( perfor#ed on the e#plo$eeRs first da$ of rest, vi-.
Saturda$, should be co#pensated at 9First da$5off9 rates.
On appeal b$ !alte%, public respondent N&R! set aside the decision of &abor 2rbiter
6uanio. The N&R! found that the conclusions of the &abor 2rbiter 'ere not supported
b$ the evidence on record. The N&R!, interpretin" the provisions of the *<7, !)2,
concluded that that !)2 "ranted onl$ one 3*4 da$ of rest, e.g., Sunda$. The DnionRs
#otion for reconsideration 'as denied on < -une *<<1.
The controvers$ 'e #ust address in this Petition for Certiorari relates to the
appropriate interpretation of 2rticle III in relation to 2nne% 9)9 of the partiesR *<7, !)2.
2fter carefull$ e%a#inin" the lan"ua"e of 2rticle III, in relation to 2nne% 9)9 of the *<7,
!)2, Fuoted in limine, as 'ell as relevant portions of earlier !)2s bet'een the parties,
'e a"ree 'ith the N&R! that the intention of the parties to the *<7, !)2 'as to
provide the e#plo$ees 'ith onl$ one 3*4 da$ of rest. The plain and ordinar$ #eanin" of
the lan"ua"e of 2rticle III is that !alte% and the Dnion had a"reed to pa$ 9da$ of rest9
rates for 'or( perfor#ed on 9an e#plo$eeRs one da$ of rest9. To the !ourtRs #ind, the
use of the 'ord 9one9 describin" the phrase 9da$ of rest @of an e#plo$eeA9 e#phasi?es
the fact that the parties had a"reed that onl$ a sin"le da$ of rest shall be scheduled
and shall be provided to the e#plo$ee.
It is useful to note that the contract clauses "overnin" hours of 'or( in previous !)2s
e%ecuted bet'een private respondent !alte% and petitioner Dnion in *</1, *</>, *</<
and *<7. contained provisions parallel if not identical to those set out in 2rticle III of the
*<7, !)2 here before us.
2rticle III of the *</1 !ollective )ar"ainin" 2"ree#ent
3
provided as follo's8
2rticle III
;ours o 0ork
Sec. *. In confor#it$ 'ith Presidential Decree No. *+1, the re"ular 'or( 'ee( shall
consist of ei"ht 374 hours per da$, seven 3/4 da$s, Monda$ throu"h Sunda$, durin"
'hich re"ular rates of pa$ shall be paid in accordance 'ith 2rticle IV, Section * and
!ork on the employee#s one 9Day o .est9 shall be paid as provided in /rticle (B,
Section N. Dail$ 'or(in" schedules shall be established b$ #ana"e#ent in accordance
'ith the reFuire#ents of efficient operations on the basis o eight 2N3 hours per day or
any ive 2J3 daysG provided, ho'ever, e#plo$ees reFuired to 'or( in e?cess o orty
2&@3 hours in any !eek shall be co#pensated in accordance 'ith 2rticle IV, Section / of
this 2"ree#ent. 3#phasis supplied4
2rticle III of the *</> !ollective )ar"ainin" 2"ree#ent
-
read8
2rticle III
;ours o 0ork
Sec. *. In confor#it$ 'ith Presidential Decree No. *+1, the re"ular 'or( 'ee( shall
consist of ei"ht 374 hours per da$, seven 3/4 da$s, Monda$ throu"h Sunda$, durin"
'hich re"ular rates of pa$ shall be paid in accordance 'ith 2rticle IV, Section * and
!ork on the employee#s one 9Day o .est9 shall be paid as provided in /rticle (B,
Section N. Dail$ 'or(in" schedules shall be established b$ #ana"e#ent in
accordance 'ith the reFuire#ents of efficient operations on the basis o eight 2N3
hours per day or any ive 2J3 daysG provided, ho'ever, e#plo$ees reFuired to 'or( in
e?cess o orty 2&@3 hours in any !eek shall be co#pensated in accordance 'ith
2rticle IV, Section / of this 2"ree#ent. 3#phasis supplied4
2rticle III of the *</< !ollective )ar"ainin" 2"ree#ent
5
said8
2rticle III
;ours o 0ork
Sec. *. In confor#it$ 'ith Presidential Decree ++., other'ise (no'n as the &abor !ode
of the Philippines, as #ended, the re"ular 'or( 'ee( shall consist of ei"ht 374 hours
per da$, seven 3/4 da$s, Monda$ thru Sunda$ durin" 'hich re"ular rates of pa$ shall be
paid in accordance 'ith 2rticle IV, Section * and !ork on the employee#s one DDay o
.estD shall be paid as provided in /rticle (B, Section 7. Dail$ 'or(in" schedules shall be
established b$ #ana"e#ent in accordance 'ith the reFuire#ents of efficient operations
on the basis of ei"ht hours per da$ for an$ five 3,4 da$sG provided, ho'ever, e#plo$ees
reFuired to 'or( in e%cess of fort$ 3+04 hours in an$ 'ee( shall be co#pensated in
accordance 'ith 2rticle IV, Section > of this 2"ree#ent. 3#phasis supplied4.
80
2rticle III of the *<7. !ollective )ar"ainin" 2"ree#ent
6
also provided as follo's8
2rticle III
;ours o 0ork
Sec. *. In confor#it$ 'ith Presidential Decree ++., other'ise (no'n as the &abor !ode
of the Philippines, as a#ended, the re"ular 'or( 'ee( shall consist of ei"ht 374 hours
per da$, seven 3/4 da$s, Monda$ thru Sunda$, durin" 'hich re"ular rates of pa$ shall
be paid in accordance 'ith 2rticle IV, Section * and !ork on the employee#s one 9Day
o .est9 shall be paid as provided in /rticle (B, Section 7. Dail$ 'or(in" schedules shall
be established b$ #ana"e#ent in accordance 'ith the reFuire#ents of efficient
operations on the basis o eight hours per day or any ive 2J3 daysG provided, ho'ever
e#plo$ees reFuired to 'or( in e?cess o orty 2&@3 hours in any !eek shall be
co#pensated in accordance 'ith 2rticle IV, Section > of this 2"ree#ent. 3#phasis
supplied4
In all these !)2s 3*</1, *</>, *</<, *<7.4, 2rticle III provide that onl$ 9'or( on an
e#plo$eeRs one da$ of rest 9shall be paid on the basis of 9da$ of rest rates9. The
relevant point here is that petitioner Dnion had never su""ested that #ore than * da$ of
rest had been a"reed upon, and certainl$ !alte% had never treated 2rticle III or an$
other portion of the !)2s as providin" t!o 2H3 days o rest. It is 'ell settled that the
conte#poraneous and subseFuent conduct of the parties #a$ be ta(en into account b$
a court called upon to interpret and appl$ a contract entered into b$ the#.
7
:e note that &abor 2rbiter 6uanio surmised that the intention he i#plied fro# the
contents of 2nne% 9)9 'as in conflict 'ith the intention e%pressed in 2rticle III 3'hich,
the &abor 2rbiter ad#itted, stipulated only one da$ of rest4. 2ccordin" to the &abor
2rbiter, 'hen 2nne% 9)9 referred to 9First Da$5off Rates9 and 9Second Da$5off Rates9,
these 'ere #eant to e%press an a"ree#ent that the parties intended to provide
e#plo$ees t!o 2H3 days o rest. ;e then declared that 2nne% 9)9 should prevail over
2rticle III because the for#er 'as a #ore specific provision than the latter.
2n anne% e%presses the idea of Hoinin" a s#aller or subordinate thin" 'ith another,
lar"er or of hi"her i#portance.
E
2n anne% has a subordinate role, 'ithout an$
independent si"nificance separate fro# that to 'hich it is tac(ed on. 2nne% 9),9 in the
case at bar, is one such docu#ent. It is not a #e#orandu# of a#end#ents or a codicil
containin" additional or ne' ter#s or stipulations. 2nne% 9)9 cannot be construed as
#odif$in" or alterin" the ter#s e%pressed in the bod$ of the a"ree#ent contained in the
*<7, !)2. It did not confer an$ ri"hts upon e#plo$ees represented b$ petitioner
DnionG neither did it i#pose an$ obli"ations upon private respondent !alte%. In fact, the
contents of 2nne% 9)9 have no intelli"ible si"nificance in and of the#selves 'hen
considered separatel$ fro# the *<7, !)2.
Moreover, 'e are persuaded b$ private respondentRs ar"u#ent that 2nne% 9)9 'as
intended to serve as a company !ide guide in co#putin" co#pensation for 'or(
perfor#ed b$ all its e#plo$ees, includin" but not li#ited to the Manila Office e#plo$ees
represented b$ petitioner Dnion. Private respondent also points out that the
#athe#atical for#ulae contained in 2nne% 9)9 are not all applicable to all classes of
e#plo$ees, there bein" so#e for#ulae applicable onl$ to particular "roups or classes
of e#plo$ees. Thus, 9First Da$5off rates9 and 9Second Da$5off rates9 are applicable
only to e#plo$ees stationed at the refiner$ and associated facilities li(e depots and
ter#inals 'hich #ust be in constant t'ent$5four 3.+4 hours a da$, seven 3/4 da$s a
'ee(, operation, hence necessitatin" the continuous presence of operations personnel.
The 'or( of such operations personnel reFuired the# to be on dut$ for si% 3>4
consecutive da$s. Dpon the other hand, 9First Da$5off rates9 and 9Second Da$5off
rates9 are not applicable to personnel of the Manila Office 'hich consisted of other
"roups or cate"ories of e#plo$ees 3e.g., office cler(s, librarians, co#puter operators,
secretaries, collectors, etc.4,
9
since the nature o their !ork did not re=uire them to be
on duty or si? 2O3 consecutive days.
:e find, under the fore"oin" circu#stances, that the purported intention inferred fro#
2nne% 9)9 b$ the &abor 2rbiter 'as based #erel$ on conHecture and speculation.
:e also note that the &abor 2rbiter #erel$ suspected that the parties a"reed to provide
t'o 3.4 da$s of rest on the "round that the$ had so stipulated in their 197@ C5/.
10
2
principal difficult$ 'ith this vie' is that it disre"ards the fact that 2rticle III of the *<7,
!)2 no lon"er contained a particular proviso found in the *</0 !)2. In fact, all the
!)2s subseFuent to *</0 3*</1, *</>, *</<, *<7.4 had si#ilarl$ deleted the proviso
in the *</0 !)2 providin" for t'o 3.4 da$s5off. To the !ourtRs #ind, such deletion
#eans onl$ one thin" Q that is Q the parties had a"reed to re#ove such stipulation.
2ccordin"l$, the proviso found in 2rticle III of the *</0 !)2 ceased to be a de#andable
obli"ation. Petitioner Dnion cannot no' unilaterall$ re5insert such a stipulation b$
strained inference fro# 2nne% 9).9 Dpon the fore"oin" circu#stances, 'e #ust hold
that the &abor 2rbiterRs suspicion is 'ithout basis in the facts of record.
Petitioner Dnion also contended that private respondent !alte% in the instant petition
'as violatin" the statutor$ prohibition a"ainst off5settin" underti#e for overti#e 'or( on
another da$.
11
Dnion counsel atte#pted to establish this char"e b$ assertin" that the
e#plo$ees had been reFuired to render 9overti#e 'or(9 on a Saturda$ but
co#pensated onl$ at re"ular rates of pa$, because the$ had not co#pleted the ei"ht
3745hour 'or( period dail$ fro# Monda$ thru Frida$.
The !ourt finds petitionerRs contention bereft of #erit. Overti#e 'or( consists of hours
'or(ed on a "iven da$ in e%cess of the applicable 'or( period, 'hich here is ei"ht 374
hours.
12
It is not enou"h that the hours 'or(ed fall on disa"reeable or inconvenient
hours. In order that 'or( #a$ be considered as overti#e 'or(, the hours 'or(ed #ust
81
be in e%cess of and in addition to the ei"ht 374 hours 'or(ed durin" the prescribed dail$
'or( period, or the fort$ 3+04 hours 'or(ed durin" the re"ular 'or( 'ee( Monda$ thru
Frida$.
In the present case, under the *<7, !)2, hours 'or(ed on a Saturda$ do not, by that
act alone, necessaril$ constitute overti#e 'or( co#pensable at pre#iu# rates of pa$,
contrar$ to petitionerRs assertion. These are nor#al or re"ular 'or( hours,
co#pensable at re"ular rates of pa$, as provided in the *<7, !)2G under that !)2,
Saturda$ is not a rest da$ or a 9da$ off9. It is onl$ 'hen an e#plo$ee has been reFuired
on a Saturda$ to render 'or( in e%cess of the fort$ 3+04 hours 'hich constitute the
re"ular 'or( 'ee( that such e#plo$ee #a$ be considered as perfor#in" overti#e 'or(
on that Saturda$. :e consider that the statutor$ prohibition a"ainst offsettin" underti#e
one da$ 'ith overti#e another da$ has no application in the case at bar.
13
PetitionerRs counsel, in his final atte#pt to la$ a basis for co#pellin" private respondent
to pa$ pre#iu# rates of pa$ for all hours 'or(ed on a Saturda$, re"ardless of the
nu#ber of hours actuall$ 'or(ed earlier durin" the 'ee(, i.e., on Monda$ to Frida$,
insists that private respondent cannot reFuire its e#plo$ees to co#plete the +05hour
re"ular 'or( 'ee( on a Saturda$, after it has allo'ed its e#plo$ees to render onl$ 1/5
*B. hours of 'or(.
The co#pan$ practice of allo'in" e#plo$ees to leave thirt$ 3104 #inutes earlier than
the scheduled off5ti#e had been established pri#aril$ for the convenience of the
e#plo$ees #ost of 'ho# have had to co##ute fro# 'or( place to ho#e and in order
that the$ #a$ avoid the heav$ rush hour vehicular traffic. There is no alle"ation here b$
petitioner Dnion that such practice 'as resorted to b$ !alte% in order to escape its
contractual obli"ations. This practice, 'hile it effectivel$ reduced to 1/5*B. the nu#ber
of hours actuall$ 'or(ed b$ e#plo$ees 'ho had opted to leave ahead of off5ti#e, is not
be construed as #odif$in" the other ter#s of the *<7, !)2. 2s correctl$ pointed out b$
private respondent, the shortened 'or( period did not result in li(e'ise shortenin" the
'or( reFuired for purposes of deter#inin" overti#e pa$, as 'ell as for purposes of
deter#inin" pre#iu# pa$ for 'or( be$ond fort$ 3+04 hours 'ithin the calendar 'ee(. It
follo's that an e#plo$ee is entitled to be paid pre#iu# rates, 'hether for 'or( in
e%cess of ei"ht 374 hours on an$ "iven da$, or for 'or( be$ond the fort$ 3+045hour
reFuire#ent for the calendar 'ee(, onl$ 'hen the e#plo$ee had, in act alread$
rendered the reFuisite nu#ber of hours Q 7 or +0 Q prescribed in the *<7, !)2.
In recapitulation, the partiesR *<7, !)2 stipulated that e#plo$ees at the Manila Office,
as 'ell as those si#ilarl$ situated at the &e"a?pi and MarinduFue )ul( Depots, shall be
provided onl$ one 3*4 da$ of restG Sunda$, and not Saturda$, 'as desi"nated as this
da$ of rest. :or( perfor#ed on a Saturda$ is accordin"l$ to be paid at re"ular rates of
pa$, as a rule, unless the e#plo$ee shall have been reFuired to render 'or( in e%cess
of fort$ 3+04 hours in a calendar 'ee(. The e#plo$ee #ust, ho'ever, have in act
rendered !ork in e%cess of fort$ 3+04 hours before hours subse=uently 'or(ed beco#e
pa$able at pre#iu# rates. :e conclude that the N&R! correctl$ set aside the palpable
error co##itted b$ &abor 2rbiter 6uanio, 'hen the latter i#posed upon one of the
parties to the *<7, !)2, an obli"ation 'hich it had never assu#ed.
:;RFOR, petitioner Dnion havin" failed to sho' "rave abuse of discretion
a#ountin" to lac( or e%cess of Hurisdiction on the part of public respondent National
&abor Relations !o##ission in renderin" its decision dated , March *<<1, the !ourt
Resolved to DISMISS the Petition for lac( of #erit.SO ORDRD.
Republic of the Philippines
SUPREME COURT
Manila
N )2N!
G.R. No. L<-1-E 2(4y 16, 1952
MANILA TERMINAL COMPAN!, INC., petitioner,
vs.
THE COURT O. INDUSTRIAL RELATIONS a#$ MANILA TERMINAL RELIE. AND
MUTUAL AID ASSOCIATION, respondents.
"erkins, "once 4nrile and Contreras or petitioner.
/ntonio B. .a=ui-a, ;onesto .icobal and "erecto 4. )lacaror respondent /ssociation.
Mariano .. "adilla or respondent Court o (ndustrial .elations.
PARAS, C. J.>
On Septe#ber *, *<+,, the Manila Ter#inal !o#pan$, Inc. hereinafter to be referred as
to the petitioner, undertoo( the arrastre service in so#e of the piers in ManilaRs Port
2rea at the reFuest and under the control of the Dnited States 2r#$. The petitioner
hired so#e thirt$ #en as 'atch#en on t'elve5hour shifts at a co#pensation of P1 per
da$ for the da$ shift and P> per da$ for the ni"ht shift. On Februar$ *, *<+>, the
petitioner be"an the post'ar operation of the arrastre service at the present at the
reFuest and under the control of the )ureau of !usto#s, b$ virtue of a contract entered
into 'ith the Philippine 6overn#ent. The 'atch#en of the petitioner continued in the
service 'ith a nu#ber of substitutions and additions, their salaries havin" been raised
durin" the #onth of Februar$ to P+ per da$ for the da$ shift and P>.., per da$ for the
ni"htshift. On March .7, *<+/, Do#inador -i#ene?, a #e#ber of the Manila Ter#inal
Relief and Mutual 2id 2ssociation, sent a letter to the Depart#ent of &abor, reFuestin"
that the #atter of overti#e pa$ be investi"ated, but nothin" 'as done b$ the
82
Depart#ent. On 2pril .<, *<+/, Victorino Ma"no !ru? and five other e#plo$ees, also
#e#ber of the Manila Transit Mutual 2id 2ssociation, filed a ,5point de#and 'ith the
Depart#ent of &abor, includin" overti#e pa$, but the Depart#ent a"ain filed to do
an$thin" about the #atter. On Ma$ ./, *<+/, the petitioner instituted the s$ste# of
strict ei"ht5hour shifts. On -une *<, *<+/, the Manila Port Ter#inal Police 2ssociation,
not re"istered in accordance 'ith the provisions of !o##on'ealth 2ct No. .*1, filed a
petition 'ith the !ourt of Industrial Relations. On -ul$ *>, *<+/, the Manila Ter#inal
Relief and Mutual 2id 2ssociation 'as or"ani?ed for the first ti#e, havin" been "ranted
certificate No. 1/, b$ the Depart#ent of &abor. On -ul$ .7, *<+/, Manila Ter#inal
Relief and Mutual 2id 2ssociation filed an a#ended petition 'ith the !ourt of Industrial
Relations pra$in", a#on" others, that the petitioner be ordered to pa$ its 'atch#en or
police force overti#e pa$ fro# the co##ence#ent of their e#plo$#ent. On Ma$ <,
*<+<, b$ virtue of !usto#s 2d#inistrative Order No. 7* and %ecutive Order No. ..7
of the President of the Philippines, the entire police force of the petitioner 'as
consolidated 'ith the Manila ;arvor Police of the !usto#s Patrol Service, a
6overn#ent a"enc$ under the e%clusive control of the !o##issioner of !usto#s and
the Secretar$ of Finance The Manila Ter#inal Relief and Mutual 2id 2ssociation 'ill
hereafter be referred to as the 2ssociation.
-ud"e V. -i#ene? Ianson of the !ourt of Industrial Relations in his decision of 2pril *,
*<,0, as a#ended on 2pril *7, *<,0, 'hile dis#issin" other de#ands of the
2ssociation for lac( of Hurisdiction, ordered the petitioner to pa$ to its police force Q
3a4 Re"ular or base pa$ correspondin" to four hoursR overti#e plus ., per cent thereof
as additional overti#e co#pensation for the period fro# Septe#ber *, *<+, to Ma$ .+,
*<+/G
3b4 2dditional co#pensation of ., per cent to those 'ho 'or(ed fro# >800 p.#. to >800
a.#. durin" the sa#e period8
3c4 2dditional co#pensation of ,0 per cent for 'or( perfor#ed on Sunda$s and le"al
holida$s durin" the sa#e periodG
3d4 2dditional co#pensation of ,0 per cent for 'or( perfor#ed on Sunda$s and le"al
holida$s fro# Ma$ .+, *<+/ to Ma$ <, *<+<G and
3e4 2dditional co#pensation of ., per cent for 'or( perfor#ed at ni"ht fro# Ma$ .<,
*<+/ to Ma$ <, *<+<.
:ith reference to the pa$ for overti#e service after the 'atch#en had been inte"rated
into the Manila ;arbor Police, -ud"e Ianson ruled that the court has no Hurisdiction
because it affects the )ureau of !usto#s, an instru#entalit$ of the 6overn#ent havin"
no independent personalit$ and 'hich cannot be sued 'ithout the consent of the State.
3Metran vs. Paredes, +,. Off. 6a?., .71,.4
The petitioner find a #otion for reconsideration. The 2ssociation also filed a #otion for
reconsideration in so far its other de#ands 'ere dis#issed. -ud"e Ianson, concurred
in b$ -ud"e -ose S. )autista, pro#ul"ated on -ul$ *1, *<,0, a resolution den$in" both
#otions for reconsideration. Presidin" -ud"e 2rsenio !. Roldan, in a separate opinion
concurred in b$ -ud"e Modesto !astillo, a"reed 'ith the decision of -ud"e Ianson of
2pril *, *<,0, as to the dis#issal of other de#ands of the 2ssociation, but dissented
therefro# as to the "rantin" of overti#e pa$. In a separate decisive opinion, -ud"e
-uan S. &antin" concurred in the dis#issal of other de#ands of the 2ssociation. :ith
respect to overti#e co#pensation, -ud"e &antin" ruled8
*. The decision under revie' should be affir#ed in so far it "rants co#pensation for
overti#e on re"ular da$s 3not Sunda$ and le"al holida$s4durin" the period fro# the
date of entrance to dut$ to Ma$ .+, *<+/, such co#pensation to consists of the a#ount
correspondin" to the four hoursR overti#e at the re"ular rate and an additional a#ount
of ., per cent thereof.
.. 2s to the co#pensation for 'or( on Sunda$s and le"al holida$s, the petitioner
should pa$ to its 'atch#en the co#pensation that corresponds to the overti#e 3in
e%cess of 7 hours4 at the re"ular rate onl$, that is, 'ithout an$ additional a#ount, thus
#odif$in" the decision under revie' accordin"l$.
1. The 'atch#en are not entitled to ni"ht differential pa$ for past services, and
therefore the decision should be reversed 'ith the respect thereto.
The petitioner has filed a present petition for certiorari. Its various contentions #a$ be
briefl$ su##ed up in the follo'in" propositions8 3*4 The !ourt of Industrial Relations
has no Hurisdiction to render a #one$ Hud"#ent involvin" obli"ation in arrears. 3.4 The
a"ree#ent under 'hich its police force 'ere paid certain specific 'a"es for t'elve5hour
shifts, included overti#e co#pensation. 314 The 2ssociation is barred fro# recover$ b$
estoppel and laches. 3+4 the nullit$ or invalidit$ of the e#plo$#ent contract precludes
an$ recover$ b$ the 2ssociation. 3,4 !o##on'ealth 2ct No. ++++ does not authori?e
recover$ of bac( overti#e pa$.
The contention that the !ourt of Industrial Relations has no Hurisdiction to a'ard a
#one$ Hud"#ent 'as alread$ overruled b$ this !ourt in 6.R. No. &5+11/, Detective L
protective 5ureau, (nc. vs. Court o (ndustrial .elations and 1nited 4mployees 0elare
/ssociation, <0 Phil., >>,, in this 'ise8 9It is also ar"ued that the respondent court has
no Hurisdiction to a'ard overti#e pa$, 'hich is #one$ Hud"#ent. :e believe that under
!o##on'ealth 2ct No. *01 the !ourt is e#po'ered to #a(e the order for the purpose
of settlin" disputes bet'een the e#plo$er and e#plo$ee
*
. 2s a #atter of fact this !ourt
83
has confir#ed an order of the !ourt of Industrial Relations reFuirin" the l(s !lub to
pa$ to its e#plo$ees certain su# of #one$ as overti#e bac( 'a"es fro# -une 1, *<1<
to March *1, *<+*. This, in spite the alle"ation of lac( or e%cess of Hurisdiction on the
part of said court. 3+, Off. 6a?., 17.<G 70 Phil. ./.49
The i#portant point stressed b$ the petitioner is that the contract bet'een it and the
2ssociation upon the co##ence#ent of the e#plo$#ent of its 'atch#an 'as to the
certain rates of pa$, includin" overti#e co#pensation na#el$, P1 per da$ for the da$
shift and P> per da$ for ni"ht shift be"innin" Septe#ber *, *<+,, and P+ per da$ shift
and P>.., per da$ for the ni"ht shift since Februar$, *<+>. The record does not bear
out these alle"ations. The petitioner has relied #erel$ on the facts that its 'atch#en
had 'or(ed on t'elve5hour shifts at specific 'a"es per da$ and that no co#plaint 'as
#ade about the #atter until, first on March .7, *<+/ and, secondl$, on 2pril .<, *<+/.
In ti#es of acute une#plo$#ent, the people, ur"ed b$ the instinct of self5preservation,
"o fro# place to place and fro# office to office in search for an$ e#plo$#ent,
re"ardless of its ter#s and conditions, their #ain concern in the first place bein"
ad#ission to so#e 'or(. Speciall$ for positions reFuirin" no special Fualifications,
applicants 'ould be "ood as reHected if the$ ever tr$ to be inFuisitive about the hours of
'or( or the a#ount of salar$, ever atte#pt to dictate their ter#s. The petitionerRs
'atch#en #ust have railroaded the#selves into their e#plo$#ent, so to spea(, happ$
in the thou"ht that the$ 'ould then have an inco#e on 'hich to subsist. )ut, at the
sa#e ti#e, the$ found the#selves reFuired to 'or( for t'elve hours a da$. True, there
'as a"ree#ent to 'or(, but can it fairl$ be supposed that the$ had the freedo# to
bar"ain in an$ 'a$, #uch less to insist in the observance of the i"ht ;our &abor &a'T
2s 'as aptl$ said in 6loyd vs. Du 5ois Soap Co., *<+., 1*/ D. S. ,<>, >1 Sup. !t. *,<G
> !!; &abor !ases, Par. ,*, *+/, 92 contract of e#plo$#ent, 'hich provides for a
'ee(l$ 'a"e for a specified nu#ber of hours, sufficient to cover both the statutor$
#ini#u# 'a"e and overti#e co#pensation, if co#puted on the basis of the statutor$
#ini#u# 'a"e, and 'hich #a(es no provision for a fi%ed hourl$ rate or that the 'ee(l$
'a"e includes overti#e co#pensation, does not #eet the reFuire#ents of the 2ct.9
Moreover, 'e note that after the petition had instituted the strict ei"ht5hour shifts, no
reduction 'as #ade in the salaries 'hich its 'atch#en received under the t'elve hour
arran"e#ent. Indeed, as ad#itted b$ the petitioner, 9'hen the #e#bers or the
respondent union 'ere placed on strict ei"ht5hour shifts, the lo'est salar$ of all the
#e#bers of the respondent union 'as P*>, a #onth, or P,.,0 dail$, for both da$ and
ni"ht shifts.9 2lthou"h it #a$ be ar"ued that the salar$ for the ni"ht shift 'as so#e'hat
lessened, the fact that the rate for the da$ shift 'as increased in a sense tends to
#ilitate a"ainst the contention that the salaries "iven durin" the t'elve5hour shifts
included overti#e co#pensation.
PetitionerRs alle"ation that the association had acFuiesced in the t'elve5hour shifts for
#ore than *7 #onths, is not accurate, because the 'atch#en involved in this case did
not enter the service of the petitioner, at one ti#e, on Septe#ber *, *<+,. 2s -ud"e
&antin" found, 9onl$ one of the# entered the service of the co#pan$ on said date, ver$
fe' durin" the rest of said #onth, so#e durin" the rest of that $ear 3*<+,4 and in *<+>,
and ver$ #an$ in *<+/, *<+7 and *<+<.9
The case at bar is Fuite on all fours 'ith the case of Detective 9 "rotective 5ureau, (nc.
vs. Court o (ndustrial .elations and 1nited 4mployees 0elare /ssociation, supra, in
'hich the facts 'ere as follo's8 9The record discloses that upon petition properl$
sub#itted, said court #ade an investi"ation and found that the #e#bers of the Dnited
#plo$ees :elfare 2ssociation 3hereafter called the 2ssociation4 'ere in the e#plo$ of
the petitioner Detective and Protective )ureau, Inc. 3herein called the )ureau4 'hich is
en"a"ed in the business of furnishin" securit$ "uards to co##ercial and industrial
establish#ents, pa$in" to said #e#bers #onthl$ salaries out of 'hat it received fro#
the establish#ents benefited b$ "uard service. The e#plo$#ent called for dail$ tours of
dut$ for #ore than ei"ht hours, in addition to 'or( on Sunda$s and holida$s.
Nonetheless the #e#bers perfor#ed their labors 'ithout receivin" e%tra
co#pensation.9 The onl$ difference is that, 'hile in said case the e#plo$ees concerned
'ere paid #onthl$ salaries, in the case no' before us the 'a"es 'ere co#puted dail$.
In the case cited, 'e held the follo'in"8
It appears that the )ureau had been "rantin" the #e#bers of the 2ssociation, ever$
#onth, 9t'o da$s off9 da$s in 'hich the$ rendered no service, althou"h the$ received
salar$ for the 'hole #onth. Said )ureau contended belo' that the pa$ correspondin"
to said . da$ vacation corresponded to the 'a"es for e%tra 'or(. The court reHected the
contention, Fuite properl$ 'e believe, because in the contract there 'as no a"ree#ent
to that effectG and such a"ree#ent, if an$, 'ould probabl$ be contrar$ to the provisions
of the i"ht5;our &a' 32ct No. +++, sec. >4 and 'ould be null and void ab initio.
It is ar"ued here, in opposition to the pa$#ent, that until the co##ence#ent of this
liti"ation the #e#bers of the 2ssociation never clai#ed for overti#e pa$. That #a$ be
true. Nevertheless the la' "ives the# the ri"ht to e%tra co#pensation. 2nd the$ could
not be held to have impliedly 'aived such e%tra co#pensation, for the obvious reason
that could not have e?pressly 'aived it.
The fore"oin" pronounce#ents are in point. The 2ssociation cannot be said to have
i#pliedl$ 'aived the ri"ht to overti#e co#pensation, for the obvious reason that the$
could not have e%pressl$ 'aived it.9
The principle of estoppel and the laches cannot 'ell be invo(ed a"ainst the
2ssociation. In the first place, it 'ould be contrar$ to the spirit of the i"ht ;our &abor
&a', under 'hich as alread$ seen, the laborers cannot 'aive their ri"ht to e%tra
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co#pensation. In the second place, the la' principall$ obli"ates the e#plo$er to
observe it, so #uch so that it punishes the e#plo$er for its violation and leaves the
e#plo$ee or laborer free and bla#eless. In the third place, the e#plo$ee or laborer is
in such a disadvanta"eous position as to be naturall$ reluctant or even apprehensive in
assertin" an$ clai# 'hich #a$ cause the e#plo$er to devise a 'a$ for e%ercisin" his
ri"ht to ter#inate the e#plo$#ent.
If the principle of estoppel and laches is to be applied, it #a$ brin" about a situation,
'hereb$ the e#plo$ee or laborer, 'ho cannot e%pressl$ renounce their ri"ht to e%tra
co#pensation under the i"ht5;our &abor &a', #a$ be co#pelled to acco#plish the
sa#e thin" b$ #ere silence or lapse of ti#e, thereb$ frustratin" the purpose of la' b$
indirection.
:hile counsel for the petitioner has cited authorities in support of the doctrine invo(ed,
there are also authorities pointed out in the opinion of -ud"e &antin" to the contrar$.
Suffice it to sa$, in this connection, that 'e are inclined to rule adversel$ a"ainst
petitioner for the reasons alread$ stated.
The ar"u#ent that the nullit$ or invalidit$ of the e#plo$#ent contract precludes
recover$ b$ the 2ssociation of an$ overti#e pa$ is also untenable. The ar"u#ent,
based on the supposition that the parties are in pari delicto, 'as in effect turned do'n
in 7otamo )umber Co. vs. Court o (ndustrial .elations,
Y
+/ Off. 6a?., 1+.*, 'herein
'e ruled8 9The petitioner #aintains that as the overti#e 'or( had been perfor#ed
'ithout a per#it fro# the Depart#ent of &abor, no e%tra co#pensation should be
authori?ed. Several decisions of this court are involved. )ut those decisions 'ere
based on the reasonin" that as both the laborer and e#plo$er 'ere dut$ bound to
secure the per#it fro# the Depart#ent of &abor, both 'ere in pari delicto. ;o'ever the
present la' in effect i#posed that dut$ upon the e#plo$er 3!.2. No. +++4. Such
e#plo$er #a$ not therefore be heard to plead his o'n ne"lect as e%e#ption or
defense.
The e#plo$ee in renderin" e%tra service at the reFuest of his e#plo$er has a ri"ht to
assu#e that the latter has co#plied 'ith the reFuire#ent of the la', and therefore has
obtained the reFuired per#ission fro# the Depart#ent of &abor.
Moreover, the i"ht5;our &a', in providin" that 9an$ a"ree#ent or contract bet'een
the e#plo$er and the laborer or e#plo$ee contrar$ to the provisions of this 2ct shall be
null avoid ab initio,9 3!o##on'ealth 2ct No. +++, sec. >4, obviousl$ intended said
provision for the benefit of the laborers or e#plo$ees. The e#plo$er cannot, therefore,
invo(e an$ violation of the act to e%e#pt hi# fro# liabilit$ for e%tra co#pensation. This
conclusion is further supported b$ the fact that the la' #a(es onl$ the e#plo$er
cri#inall$ liable for an$ violation. It cannot be pretended that, for the e#plo$er to
co##it an$ violation of the i"ht5;our &abor &a', the participation or acFuiescence of
the e#plo$ee or laborer is indispensable, because the latter in vie' of his need and
desire to live, cannot be considered as bein" on the sa#e level 'ith the e#plo$er 'hen
it co#es to the Fuestion of appl$in" for and acceptin" an e#plo$#ent.
Petitioner also contends that !o##on'ealth 2ct No. +++ does not provide for recover$
of bac( overti#e pa$, and to support this contention it #a(es referrence to the Fair
&abor Standards 2ct of the Dnited States 'hich provides that 9an$ e#plo$er 'ho
violates the provisions of section .0> and section .0/ of this title shall be liable to the
e#plo$ee or e#plo$ees affected in the a#ount of their unpaid #ini#u# 'a"es or their
unpaid overti#e co#pensation as the case #a$ be,9 Q a provision not incorporated in
!o##on'ealth 2ct No. +++, our i"ht5;our &abor &a'. :e cannot a"ree to the
proposition, because sections 1 and , of !o##on'ealth 2ct +++ e%pressl$ provides
for the pa$#ent of e%tra co#pensation in cases 'here overti#e services are reFuired,
'ith the result that the e#plo$ees or laborers are entitled to collect such e%tra
co#pensation for past overti#e 'or(. To hold other'ise 'ould be to allo' an e#plo$er
to violate the la' b$ si#pl$, as in this case, failin" to provide for and pa$ overti#e
co#pensation.
The point is stressed that the pa$#ent of the clai# of the 2ssociation for overti#e pa$
coverin" a period of al#ost t'o $ears #a$ lead to the financial ruin of the petitioner, to
the detri#ent of its e#plo$ees the#selves. It is si"nificant, ho'ever, that not all the
petitionerRs 'atch#en 'ould receive bac( overti#e pa$ for the 'hole period specified
in the appealed decision, since the record sho's that the "reat #aHorit$ of the
'atch#en 'ere ad#itted in *<+> and *<+/, and even *<+7 and *<+<. 2t an$ rate, 'e
are constrained to sustain the clai# of the 2ssociation as a #atter of si#ple Hustice,
consistent 'ith the spirit and purpose of the i"ht5;our &abor &a'. The petitioner, in
the first place, 'as reFuired to co#pl$ 'ith the la' and should therefore be #ade liable
for the conseFuences of its violation.
It is hi"h ti#e that all e#plo$ers 'ere 'arned that the public is interested in the strict
enforce#ent of the i"ht5;our &abor &a'. This 'as desi"ned not onl$ to safe"uard the
health and 'elfare of the laborer or e#plo$ee, but in a 'a$ to #ini#i?e une#plo$#ent
b$ forcin" e#plo$ers, in cases 'here #ore than 75hour operation is necessar$, to
utili?e different shifts of laborers or e#plo$ees 'or(in" onl$ for ei"ht hours each.
:herefore, the appealed decision, in the for# voted b$ -ud"e &antin", is affir#ed, it
bein" understood that the petitionerRs 'atch#en 'ill be entitled to e%tra co#pensation
onl$ fro# the dates the$ respectivel$ entered the service of the petitioner, hereafter to
be dul$ deter#ined b$ the !ourt of Industrial Relations. So ordered, 'ithout costs.
6eria, "ablo, 5eng-on, "adilla, ,uason, 5autista /ngelo, and )abrador, %%., concur.
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