G.R. No.

122917 July 12, 1999

MARITES BERNARDO, ELVIRA GO DIAMANTE, REBECCA E. DAVID, DAVID P. PASCUAL, RAQUEL

ESTILLER, ALBERT HALLARE, EDMUND M. CORTEZ, JOSELITO O. AGDON GEORGE P. LIGUTAN
JR., CELSO M. YAZAR, ALEX G. CORPUZ, RONALD M. DELFIN, ROWENA M. TABAQUERO,
CORAZON C. DELOS REYES, ROBERT G. NOORA, MILAGROS O. LEQUIGAN, ADRIANA F.
TATLONGHARI, IKE CABANDUCOS, COCOY NOBELLO, DORENDA CANTIMBUHAN, ROBERT
MARCELO, LILIBETH Q. MARMOLEJO, JOSE E. SALES, ISABEL MAMAUAG, VIOLETA G.
MONTES, ALBINO TECSON, MELODY V. GRUELA, BERNADETH D. AGERO, CYNTHIA DE VERA,
LANI R. CORTEZ, MA. ISABEL B. CONCEPCION, DINDO VALERIO, ZENAIDA MATA, ARIEL DEL
PILAR, MARGARET CECILIA CANOZA, THELMA SEBASTIAN, MA. JEANETTE CERVANTES,
JEANNIE RAMIL, ROZAIDA PASCUAL, PINKY BALOLOA, ELIZABETH VENTURA, GRACE S.
PARDO and TIMOSA, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and FAR EAST BANK AND TRUST
COMPANY, respondents.

FACTS:

The 43 petitioners are deaf-mutes who were hired on various periods from 1988 to 1993 by
respondent Far East Bank and Trust Co. as Money Sorters and Counters through a uniformly worded
agreement called "Employment Contract for Handicapped Workers". The said agreement provides for the
manner of how they are hired and be rehired, the amount of their wages (P118.00 per day), period of
employment (5 days a week, 8 hours a day, training for 1 month, 6 months period) and the manner and
methods of how their works are to be done (Sort out bills according to color; Count each denomination
per hundred, either manually or with the aid of a counting machine; Wrap and label bills per hundred; Put
the wrapped bills into bundles; and Submit bundled bills to the bank teller for verification.) Many of their
employments were renewed every six months. Claiming that they should be considered as regular
employees they filed a complaint for illegal dismissal and recovery of various benefits.

Labor arbiters decision: complaint is dismissed for lack of merit (the terms of the contract shall be the law
between the parties.). Affirmed by the NLRC (Art. 280 is not controlling herein but Art. 80) (the Magna
Carta for Disabled Persons was not applicable, "considering the prevailing circumstances of the case.")
and denied motion for reconsideration.

ISSUES: Does petitioners considered as regular employees?

LAW: Art.78 & 80 of the Labor Code and the Magna Carta for Disabled Persons.

RULING:

Yes. The petition is meritorious. However, only the employees, who worked for more than six
months and whose contracts were renewed are deemed regular. Hence, their dismissal from employment
was illegal.

The stipulations in the employment contracts indubitably conform with Article 80, however, the application
of Article 280 of the Labor Code is justified because of the advent of RA No. 7277 (the Magna Carta for
Disabled Persons) which mandates that a qualified disabled employee should be given the same terms
and conditions of employment as a qualified able-bodied person (compensation, privileges, benefits,
fringe benefits, incentives or allowances) 27 of the petitioners are considered regular employees by
provision of law regardless of any agreement between the parties as embodied in article 280 in relation to
article 281 of the Labor Code.

The test is whether the former is usually necessary or desirable in the usual business or trade of the
employer. Hence, the employment is considered regular, but only with respect to such activity, and while
such activity exist. Without a doubt, the task of counting and sorting bills is necessary and desirable to the
business of respondent bank.

When the bank renewed the contract after the lapse of the six-month probationary period, the employees
thereby became regular employees. No employer is allowed to determine indefinitely the fitness of its
employees. Those who have worked for only 6 months and employments were not renewed are not
considered regular employees.

OPINION:

The Court correctly finds that 27 of the handicapped workers are regular employees. The test is
whether the activity is usually necessary or desirable in the usual business or trade of the employer. The
employment is considered regular, but only with respect to such activity, and while such activity exist.
Without a doubt, the task of counting and sorting bills is necessary and desirable to the business of
respondent bank. As regular employees, the twenty-seven petitioners are entitled to security of tenure;
that is, their services may be terminated only for a just or authorized cause.

G.R. No. 79182 September 11, 1991

PNOC-ENERGY DEVELOPMENT CORPORATION, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION (Third Division) and DANILO
MERCADO, respondents.

PARAS, J.:

This is a petition for certiorari to set aside the Resolution * dated July 3, 1987 of respondent National
Labor Relations Commission (NLRC for brevity) which affirmed the decision dated April 30, 1986 of Labor
Arbiter Vito J. Minoria of the NLRC, Regional Arbitration Branch No. VII at Cebu City in Case No. RAB-
VII-0556-85 entitled "Danilo Mercado, Complainant, vs. Philippine National Oil Company-Energy
Development Corporation, Respondent", ordering the reinstatement of complainant Danilo Mercado and
the award of various monetary claims.

The factual background of this case is as follows:

Private respondent Danilo Mercado was first employed by herein petitioner Philippine National Oil
Company-Energy Development Corporation (PNOC-EDC for brevity) on August 13, 1979. He held various
positions ranging from clerk, general clerk to shipping clerk during his employment at its Cebu office until
his transfer to its establishment at Palimpinon, Dumaguete, Oriental Negros on September 5, 1984. On
June 30, 1985, private respondent Mercado was dismissed. His last salary was P1,585.00 a month basic
pay plus P800.00 living allowance (Labor Arbiter's Decision, Annex "E" of Petition, Rollo, p. 52).

The grounds for the dismissal of Mercado are allegedly serious acts of dishonesty committed as follows:

1. On ApriI 12, 1985, Danilo Mercado was ordered to purchase 1,400 pieces of nipa shingles from
Mrs. Leonardo Nodado of Banilad, Dumaguete City, for the total purchase price of Pl,680.00.
Against company policy, regulations and specific orders, Danilo Mercado withdrew the nipa
shingles from the supplier but paid the amount of P1,000.00 only. Danilo Mercado appropriated
the balance of P680.00 for his personal use;
 2. In the same transaction stated above, the supplier agreed to give the company a discount of
P70.00 which Danilo Mercado did not report to the company;

3. On March 28, 1985, Danilo Mercado was instructed to contract the services of Fred R. Melon
of Dumaguete City, for the fabrication of rubber stamps, for the total amount of P28.66. Danilo
Mercado paid the amount of P20.00 to Fred R. Melon and appropriated for his personal use the
balance of P8.66.

In addition, private respondent, Danilo Mercado violated company rules and regulations in the
following instances:

1. On June 5, 1985, Danilo Mercado was absent from work without leave, without proper turn-
over of his work, causing disruption and delay of company work activities;

2. On June 15, 1985, Danilo Mercado went on vacation leave without prior leave, against
company policy, rules and regulations. (Petitioner's Memorandum, Rollo, p. 195).

On September 23, 1985, private respondent Mercado filed a complaint for illegal dismissal, retirement
benefits, separation pay, unpaid wages, etc. against petitioner PNOC-EDC before the NLRC Regional
Arbitration Branch No. VII docketed as Case No. RAB-VII-0556-85.

After private respondent Mercado filed his position paper on December 16, 1985 (Annex "B" of the
Petition, Rollo, pp. 28-40), petitioner PNOC-EDC filed its Position Paper/Motion to Dismiss on January 15,
1986, praying for the dismissal of the case on the ground that the Labor Arbiter and/or the NLRC had no
jurisdiction over the case (Annex "C" of the Petition, Rollo, pp. 41-45), which was assailed by private
respondent Mercado in his Opposition to the Position Paper/Motion to Dismiss dated March 12, 1986
(Annex "D" of the Petition, Rollo, pp. 46-50).

The Labor Arbiter ruled in favor of private respondent Mercado. The dispositive onion of said decision
reads as follows:

WHEREFORE, in view of the foregoing, respondents are hereby ordered:

1) To reinstate complainant to his former position with full back wages from the date of his
dismissal up to the time of his actual reinstatement without loss of seniority rights and other
privileges;

2) To pay complainant the amount of P10,000.00 representing his personal share of his savings
account with the respondents;

3) To pay complainants the amount of P30,000.00 moral damages; P20,000.00 exemplary

damages and P5,000.00 attorney's fees;

4) To pay complainant the amount of P792.50 as his proportionate 13th month pay for 1985.

Respondents are hereby further ordered to deposit the aforementioned amounts with this Office
within ten days from receipt of a copy of this decision for further disposition.

SO ORDERED.
(Labor Arbiter's Decision, Rollo, p. 56)

The appeal to the NLRC was dismissed for lack of merit on July 3, 1987 and the assailed decision was
affirmed.
Hence, this petition.

The issues raised by petitioner in this instant petition are:

1. Whether or not matters of employment affecting the PNOC-EDC, a government-owned and

controlled corporation, are within the jurisdiction of the Labor Arbiter and the NLRC.

2. Assuming the affirmative, whether or not the Labor Arbiter and the NLRC are justified in
ordering the reinstatement of private respondent, payment of his savings, and proportionate 13th
month pay and payment of damages as well as attorney's fee.

Petitioner PNOC-EDC alleges that it is a corporation wholly owned and controlled by the government; that
the Energy Development Corporation is a subsidiary of the Philippine National Oil Company which is a
government entity created under Presidential Decree No. 334, as amended; that being a government-
owned and controlled corporation, it is governed by the Civil Service Law as provided for in Section 1,
Article XII-B of the 1973 Constitution, Section 56 of Presidential Decree No. 807 (Civil Service Decree)
and Article 277 of Presidential Decree No. 442, as amended (Labor Code).

The 1973 Constitution provides:

The Civil Service embraces every branch, agency, subdivision and instrumentality of the
government including government-owned or controlled corporations.

Petitioner PNOC-EDC argued that since Labor Arbiter Minoria rendered the decision at the time when the
1973 Constitution was in force, said decision is null and void because under the 1973 Constitution,
government-owned and controlled corporations were governed by the Civil Service Law. Even assuming
that PNOC-EDC has no original or special charter and Section 2(i), Article IX-B of the 1987 Constitution
provides that:

The Civil Service embraces all branches, subdivision, instrumentalities and agencies of the
Government, including government-owned or controlled corporations with original charters.

such circumstances cannot give validity to the decision of the Labor Arbiter (Ibid., pp. 192-193).

This issue has already been laid to rest in the case of PNOC-EDC vs. Leogardo, 175 SCRA 26 (July 5,
1989), involving the same petitioner and the same issue, where this Court ruled that the doctrine that
employees of government-owned and/or con controlled corporations, whether created by special law or
formed as subsidiaries under the General Corporation law are governed by the Civil Service Law and not
by the Labor Code, has been supplanted by the present Constitution. "Thus, under the present state of
the law, the test in determining whether a government-owned or controlled corporation is subject to the
Civil Service Law are the manner of its creation, such that government corporations created by special
charter are subject to its provisions while those incorporated under the General Corporation Law are not
within its coverage."

Specifically, the PNOC-EDC having been incorporated under the General Corporation Law was held to be
a government owned or controlled corporation whose employees are subject to the provisions of the
Labor Code (Ibid.).

The fact that the case arose at the time when the 1973 Constitution was still in effect, does not deprive
the NLRC of jurisdiction on the premise that it is the 1987 Constitution that governs because it is the
Constitution in place at the time of the decision (NASECO v. NLRC, G.R. No. 69870, 168 SCRA 122
[1988]).
In the case at bar, the decision of the NLRC was promulgated on July 3, 1987. Accordingly, this case falls
squarely under the rulings of the aforementioned cases.

As regards the second issue, the record shows that PNOC-EDC's accusations of dishonesty and
violations of company rules are not supported by evidence. Nonetheless, while acknowledging the rule
that administrative bodies are not governed by the strict rules of evidence, petitioner PNOC-EDC alleges
that the labor arbiter's propensity to decide the case through the position papers submitted by the parties
is violative of due process thereby rendering the decision null and void (Ibid., p. 196).

On the other hand, private respondent contends that as can be seen from petitioner's Motion for
Reconsideration and/or Appeal dated July 28, 1986 (Annex "F" of the Petition, Rollo, pp. 57- 64), the latter
never questioned the findings of facts of the Labor Arbiter but simply limited its objection to the lack of
legal basis in view of its stand that the NLRC had no jurisdiction over the case (Private Respondent's
Memorandum, Rollo, p. 104).

Petitioner PNOC-EDC filed its Position Paper/Motion to Dismiss dated January 15, 1986 (Annex "C" of
the Petition Rollo, pp. 41-45) before the Regional Arbitration Branch No. VII of Cebu City and its Motion
for Reconsideration and/or Appeal dated July 28, 1986 (Annex "F" of the Petition, Rollo, pp. 57-64) before
the NLRC of Cebu City. Indisputably, the requirements of due process are satisfied when the parties are
given an opportunity to submit position papers. What the fundamental law abhors is not the absence of
previous notice but rather the absolute lack of opportunity to ventilate a party's side. There is no denial of
due process where the party submitted its position paper and flied its motion for reconsideration (Odin
Security Agency vs. De la Serna, 182 SCRA 472 [February 21, 1990]). Petitioner's subsequent Motion for
Reconsideration and/or Appeal has the effect of curing whatever irregularity might have been committed
in the proceedings below (T.H. Valderama and Sons, Inc. vs. Drilon, 181 SCRA 308 [January 22, 1990]).

Furthermore, it has been consistently held that findings of administrative agencies which have acquired
expertise because their jurisdiction is confined to specific matters are accorded not only respect but even
finality (Asian Construction and Development Corporation vs. NLRC, 187 SCRA 784 [July 27, 1990];
Lopez Sugar Corporation vs. Federation of Free Workers, 189 SCRA 179 [August 30, 1990]). Judicial
review by this Court does not go so far as to evaluate the sufficiency of the evidence but is limited to
issues of jurisdiction or grave abuse of discretion (Filipinas Manufacturers Bank vs. NLRC, 182 SCRA 848
[February 28, 1990]). A careful study of the records shows no substantive reason to depart from these
established principles.

While it is true that loss of trust or breach of confidence is a valid ground for dismissing an employee,
such loss or breach of trust must have some basis (Gubac v. NLRC, 187 SCRA 412 [July 13, 1990]). As
found by the Labor Arbiter, the accusations of petitioner PNOC-EDC against private respondent Mercado
have no basis. Mrs. Leonardo Nodado, from whom the nipa shingles were purchased, sufficiently
explained in her affidavit (Rollo, p. 36) that the total purchase price of P1,680.00 was paid by respondent
Mercado as agreed upon. The alleged discount given by Mrs. Nodado is not supported by evidence as
well as the alleged appropriation of P8.66 from the cost of fabrication of rubber stamps. The Labor Arbiter,
likewise, found no evidence to support the alleged violation of company rules. On the contrary, he found
respondent Mercado's explanation in his affidavit (Rollo, pp. 38-40) as to the alleged violations to be
satisfactory. Moreover, these findings were never contradicted by petitioner petitioner PNOC-EDC.

PREMISES CONSIDERED, the petition is DENIED and the resolution of respondent NLRC dated July 3,
1987 is AFFIRMED with the modification that the moral damages are reduced to Ten Thousand
(P10,000.00) Pesos, and the exemplary damages reduced to Five Thousand (P5,000.00) Pesos.

SO ORDERED.

G.R. No. L-18353 July 31, 1963

 SAN MIGUEL BREWERY, INC., petitioner,
vs.
DEMOCRATIC LABOR ORGANIZATION, ET AL., respondents.

BAUTISTA ANGELO, J.:

On January 27, 1955, the Democratic Labor Association filed complaint against the San Miguel Brewery,
Inc. embodying 12 demands for the betterment of the conditions of employment of its members. The
company filed its answer to the complaint specifically denying its material averments and answering the
demands point by point. The company asked for the dismissal of the complaint.

At the hearing held sometime in September, 1955, the union manifested its desire to confine its claim to
its demands for overtime, night-shift differential pay, and attorney's fees, although it was allowed to
present evidence on service rendered during Sundays and holidays, or on its claim for additional
separation pay and sick and vacation leave compensation.1wph1.t

After the case had been submitted for decision, Presiding Judge Jose S. Bautista, who was
commissioned to receive the evidence, rendered decision expressing his disposition with regard to the
points embodied in the complaint on which evidence was presented. Specifically, the disposition insofar
as those points covered by this petition for review are concerned, is as follows:

1. With regard to overtime compensation, Judge Bautista held that the provisions of the Eight-
Hour Labor Law apply to the employees concerned for those working in the field or engaged in
the sale of the company's products outside its premises and consequently they should be paid
the extra compensation accorded them by said law in addition to the monthly salary and
commission earned by them, regardless of the meal allowance given to employees who work up
to late at night.

2. As to employees who work at night, Judge Bautista decreed that they be paid their
corresponding salary differentials for work done at night prior to January 1, 1949 with the present
qualification: 25% on the basis of their salary to those who work from 6:00 to 12:00 p.m., and
75% to those who work from 12:01 to 6:00 in the morning.

3. With regard to work done during Sundays and holidays, Judge Bautista also decreed that the
employees concerned be paid an additional compensation of 25% as provided for in
Commonwealth Act No. 444 even if they had been paid a compensation on monthly salary basis.

The demands for the application of the Minimum Wage Law to workers paid on "pakiao" basis, payment
of accumulated vacation and sick leave and attorney's fees, as well as the award of additional separation
pay, were either dismissed, denied, or set aside.

Its motion for reconsideration having been denied by the industrial court en banc, which affirmed the
decision of the court a quo with few exceptions, the San Miguel Brewery, Inc. interposed the present
petition for review.

Anent the finding of the court a quo, as affirmed by the Court of Industrial Relations, to the effect that
outside or field sales personnel are entitled to the benefits of the Eight-Hour Labor Law, the pertinent facts
are as follows:

After the morning roll call, the employees leave the plant of the company to go on their respective sales
routes either at 7:00 a.m. for soft drinks trucks, or 8:00 a.m. for beer trucks. They do not have a daily time
record. The company never require them to start their work as outside sales personnel earlier than the
above schedule.
The sales routes are so planned that they can be completed within 8 hours at most, or that the employees
could make their sales on their routes within such number of hours variable in the sense that sometimes
they can be completed in less than 8 hours, sometimes 6 to 7 hours, or more. The moment these outside
or field employees leave the plant and while in their sales routes they are on their own, and often times
when the sales are completed, or when making short trip deliveries only, they go back to the plant, load
again, and make another round of sales. These employees receive monthly salaries and sales
commissions in variable amounts. The amount of compensation they receive is uncertain depending upon
their individual efforts or industry. Besides the monthly salary, they are paid sales commission that range
from P30, P40, sometimes P60, P70, to sometimes P90, P100 and P109 a month, at the rate of P0.01 to
P0.01- per case.

It is contended that since the employees concerned are paid a commission on the sales they make
outside of the required 8 hours besides the fixed salary that is paid to them, the Court of Industrial
Relations erred in ordering that they be paid an overtime compensation as required by the Eight-Hour
Labor Law for the reason that the commission they are paid already takes the place of such overtime
compensation. Indeed, it is claimed, overtime compensation is an additional pay for work or services
rendered in excess of 8 hours a day by an employee, and if the employee is already given extra
compensation for labor performed in excess of 8 hours a day, he is not covered by the law. His situation,
the company contends, can be likened to an employee who is paid on piece-work, "pakiao", or
commission basis, which is expressly excluded from the operation of the Eight-Hour Labor Law. 1

We are in accord with this view, for in our opinion the Eight-Hour Labor Law only has application where an
employee or laborer is paid on a monthly or daily basis, or is paid a monthly or daily compensation, in
which case, if he is made to work beyond the requisite period of 8 hours, he should be paid the additional
compensation prescribed by law. This law has no application when the employee or laborer is paid on a
piece-work, "pakiao", or commission basis, regardless of the time employed. The philosophy behind this
exemption is that his earnings in the form of commission based on the gross receipts of the day. His
participation depends upon his industry so that the more hours he employs in the work the greater are his
gross returns and the higher his commission. This philosophy is better explained in Jewel Tea Co. v.
Williams, C.C.A. Okla., 118 F. 2d 202, as follows:

The reasons for excluding an outside salesman are fairly apparent. Such salesman, to a greater
extent, works individually. There are no restrictions respecting the time he shall work and he can
earn as much or as little, within the range of his ability, as his ambition dictates. In lieu of overtime
he ordinarily receives commissions as extra compensation. He works away from his employer's
place of business, is not subject to the personal supervision of his employer, and his employer
has no way of knowing the number of hours he works per day.

True it is that the employees concerned are paid a fixed salary for their month of service, such as
Benjamin Sevilla, a salesman, P215; Mariano Ruedas, a truck driver, P155; Alberto Alpaza and Alejandro
Empleo, truck helpers, P125 each, and sometimes they work in excess of the required 8-hour period of
work, but for their extra work they are paid a commission which is in lieu of the extra compensation to
which they are entitled. The record shows that these employees during the period of their employment
were paid sales commission ranging from P30, P40, sometimes P60, P70, to sometimes P90, P100 and
P109 a month depending on the volume of their sales and their rate of commission per case. And so,
insofar is the extra work they perform, they can be considered as employees paid on piece work,
"pakiao", or commission basis. The Department of Labor, called upon to implement, the Eight-Hour Labor
Law, is of this opinion when on December 9, 1957 it made the ruling on a query submitted to it, thru the
Director of the Bureau of Labor Standards, to the effect that field sales personnel receiving regular
monthly salaries, plus commission, are not subject to the Eight-Hour Labor Law. Thus, on this point, said
official stated:

. . . Moreover, when a fieldman receives a regular monthly salary plus commission on percentage
basis of his sales, it is also the established policy of the Office to consider his commission as
payment for the extra time he renders in excess of eight hours, thereby classifying him as if he
 were on piecework basis, and therefore, technically speaking, he is not subject to the Eight-Hour
Labor Law.

We are, therefore, of the opinion that the industrial court erred in holding that the Eight-Hour Labor Law
applies to the employees composing the outside service force and in ordering that they be paid the
corresponding additional compensation.

With regard to the claim for night salary differentials, the industrial court found that claimants Magno
Johnson and Jose Sanchez worked with the respondent company during the period specified by them in
their testimony and that watchmen Zoilo Illiga, Inocentes Prescillas and Daniel Cayuca rendered night
duties once every three weeks continuously during the period of the employment and that they were
never given any additional compensation aside from their monthly regular salaries. The court found that
the company started paying night differentials only in January, 1949 but never before that time. And so it
ordered that the employees concerned be paid 25% additional compensation for those who worked from
6:00 to 12:00 p.m. and 75% additional compensation for those who worked from 12:01 to 6: 00 in the
morning. It is now contended that this ruling is erroneous because an award for night shift differentials
cannot be given retroactive effect but can only be entertained from the date of demand which was on
January 27, 1953, citing in support thereof our ruling in Earnshaws Docks & Honolulu Iron Works v. The
Court of Industrial Relations, et al., L-8896, January 25, 1957.

This ruling, however, has no application here for it appears that before the filing of the petition concerning
this claim a similar one had already been filed long ago which had been the subject of negotiations
between the union and the company which culminated in a strike in 1952. Unfortunately, however, the
strike fizzled out and the strikers were ordered to return to work with the understanding that the claim for
night salary differentials should be settled in court. It is perhaps for this reason that the court a
quo granted this claim in spite of the objection of the company to the contrary.

The remaining point to be determined refers to the claim for pay for Sundays and holidays for service
performed by some claimants who were watchmen or security guards. It is contended that these
employees are not entitled to extra pay for work done during these days because they are paid on a
monthly basis and are given one day off which may take the place of the work they may perform either on
Sunday or any holiday.

We disagree with this claim because it runs counter to law. Section 4 of Commonwealth Act No. 444
expressly provides that no person, firm or corporation may compel an employee or laborer to work during
Sundays and legal holidays unless he is paid an additional sum of 25% of his regular compensation.
This proviso is mandatory, regardless of the nature of compensation. The only exception is with regard to
public utilities who perform some public service.

WHEREFORE, the decision of the industrial court is hereby modified as follows: the award with regard to
extra work performed by those employed in the outside or field sales force is set aside. The rest of the
decision insofar as work performed on Sundays and holidays covering watchmen and security guards, as
well as the award for night salary differentials, is affirmed. No costs.

G.R. No. 79255 January 20, 1992

UNION OF FILIPRO EMPLOYEES (UFE), petitioner,
vs.
 BENIGNO VIVAR, JR., NATIONAL LABOR RELATIONS COMMISSION and NESTL PHILIPPINES,
INC. (formerly FILIPRO, INC.), respondents.

GUTIERREZ, JR., J.:

This labor dispute stems from the exclusion of sales personnel from the holiday pay award and the
change of the divisor in the computation of benefits from 251 to 261 days.

On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the National Labor
Relations Commission (NLRC) a petition for declaratory relief seeking a ruling on its rights and obligations
respecting claims of its monthly paid employees for holiday pay in the light of the Court's decision
in Chartered Bank Employees Association v. Ople (138 SCRA 273 [1985]).

Both Filipro and the Union of Filipino Employees (UFE) agreed to submit the case for voluntary arbitration
and appointed respondent Benigno Vivar, Jr. as voluntary arbitrator.

On January 2, 1980, Arbitrator Vivar rendered a decision directing Filipro to:

pay its monthly paid employees holiday pay pursuant to Article 94 of the Code, subject
only to the exclusions and limitations specified in Article 82 and such other legal
restrictions as are provided for in the Code. (Rollo,
p. 31)

Filipro filed a motion for clarification seeking (1) the limitation of the award to three years, (2)
the exclusion of salesmen, sales representatives, truck drivers, merchandisers and medical
representatives (hereinafter referred to as sales personnel) from the award of the holiday pay, and (3)
deduction from the holiday pay award of overpayment for overtime, night differential, vacation and sick
leave benefits due to the use of 251 divisor. (Rollo, pp. 138-145)

Petitioner UFE answered that the award should be made effective from the date of effectivity of the Labor
Code, that their sales personnel are not field personnel and are therefore entitled to holiday pay, and that
the use of 251 as divisor is an established employee benefit which cannot be diminished.

On January 14, 1986, the respondent arbitrator issued an order declaring that the effectivity of the holiday
pay award shall retroact to November 1, 1974, the date of effectivity of the Labor Code. He adjudged,
however, that the company's sales personnel are field personnel and, as such, are not entitled to holiday
pay. He likewise ruled that with the grant of 10 days' holiday pay, the divisor should be changed from 251
to 261 and ordered the reimbursement of overpayment for overtime, night differential, vacation and sick
leave pay due to the use of 251 days as divisor.

Both Nestle and UFE filed their respective motions for partial reconsideration. Respondent Arbitrator
treated the two motions as appeals and forwarded the case to the NLRC which issued a resolution dated
May 25, 1987 remanding the case to the respondent arbitrator on the ground that it has no jurisdiction to
review decisions in voluntary arbitration cases pursuant to Article 263 of the Labor Code as amended by
Section 10, Batas Pambansa Blg. 130 and as implemented by Section 5 of the rules implementing B.P.
Blg. 130.

However, in a letter dated July 6, 1987, the respondent arbitrator refused to take cognizance of the case
reasoning that he had no more jurisdiction to continue as arbitrator because he had resigned from service
effective May 1, 1986.

Hence, this petition.

The petitioner union raises the following issues:

1) Whether or not Nestle's sales personnel are entitled to holiday pay; and

2) Whether or not, concomitant with the award of holiday pay, the divisor should be changed from 251 to
261 days and whether or not the previous use of 251 as divisor resulted in overpayment for overtime,
night differential, vacation and sick leave pay.

The petitioner insists that respondent's sales personnel are not field personnel under Article 82 of the
Labor Code. The respondent company controverts this assertion.

Under Article 82, field personnel are not entitled to holiday pay. Said article defines field personnel as
"non-agritultural employees who regularly perform their duties away from the principal place of business
or branch office of the employer and whose actual hours of work in the field cannot be determined with
reasonable certainty."

The controversy centers on the interpretation of the clause "whose actual hours of work in the field cannot
be determined with reasonable certainty."

It is undisputed that these sales personnel start their field work at 8:00 a.m. after having reported to the
office and come back to the office at 4:00 p.m. or 4:30 p.m. if they are Makati-based.

The petitioner maintains that the period between 8:00 a.m. to 4:00 or 4:30 p.m. comprises the sales
personnel's working hours which can be determined with reasonable certainty.

The Court does not agree. The law requires that the actual hours of work in the field be reasonably
ascertained. The company has no way of determining whether or not these sales personnel, even if they
report to the office before 8:00 a.m. prior to field work and come back at 4:30 p.m, really spend the hours
in between in actual field work.

We concur with the following disquisition by the respondent arbitrator:

The requirement for the salesmen and other similarly situated employees to report for
work at the office at 8:00 a.m. and return at 4:00 or 4:30 p.m. is not within the realm of
work in the field as defined in the Code but an exercise of purely management
prerogative of providing administrative control over such personnel. This does not in any
manner provide a reasonable level of determination on the actual field work of the
employees which can be reasonably ascertained. The theoretical analysis that salesmen
and other similarly-situated workers regularly report for work at 8:00 a.m. and return to
their home station at 4:00 or 4:30 p.m., creating the assumption that their field work is
supervised, is surface projection. Actual field work begins after 8:00 a.m., when the sales
personnel follow their field itinerary, and ends immediately before 4:00 or 4:30 p.m. when
they report back to their office. The period between 8:00 a.m. and 4:00 or 4:30 p.m.
comprises their hours of work in the field, the extent or scope and result of which are
subject to their individual capacity and industry and which "cannot be determined with
reasonable certainty." This is the reason why effective supervision over field work of
salesmen and medical representatives, truck drivers and merchandisers is practically a
physical impossibility. Consequently, they are excluded from the ten holidays with pay
award. (Rollo, pp. 36-37)

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

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

xxx xxx xxx

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

While contending that such rule added another element not found in the law ( Rollo, p. 13), the petitioner
nevertheless attempted to show that its affected members are not covered by the abovementioned rule.
The petitioner asserts that the company's sales personnel are strictly supervised as shown by the SOD
(Supervisor of the Day) schedule and the company circular dated March 15, 1984 (Annexes 2 and
3, Rollo, pp. 53-55).

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

The SOD schedule adverted to by the petitioner does not in the least signify that these sales personnel's
time and performance are supervised. The purpose of this schedule is merely to ensure that the sales
personnel are out of the office not later than 8:00 a.m. and are back in the office not earlier than 4:00 p.m.

Likewise, the Court fails to see how the company can monitor the number of actual hours spent in field
work by an employee through the imposition of sanctions on absenteeism contained in the company
circular of March 15, 1984.

The petitioner claims that the fact that these sales personnel are given incentive bonus every quarter
based on their performance is proof that their actual hours of work in the field can be determined with
reasonable certainty.

The Court thinks otherwise.

The criteria for granting incentive bonus are: (1) attaining or exceeding sales volume based on sales
target; (2) good collection performance; (3) proper compliance with good market hygiene; (4) good
merchandising work; (5) minimal market returns; and (6) proper truck maintenance. (Rollo, p. 190).

The above criteria indicate that these sales personnel are given incentive bonuses precisely because of
the difficulty in measuring their actual hours of field work. These employees are evaluated by the result of
their work and not by the actual hours of field work which are hardly susceptible to determination.

In San Miguel Brewery, Inc. v. Democratic Labor Organization (8 SCRA 613 [1963]), the Court had
occasion to discuss the nature of the job of a salesman. Citing the case of Jewel Tea
Co. v. Williams, C.C.A. Okla., 118 F. 2d 202, the Court stated:

The reasons for excluding an outside salesman are fairly apparent. Such a salesman, to
a greater extent, works individually. There are no restrictions respecting the time he shall
work and he can earn as much or as little, within the range of his ability, as his ambition
 dictates. In lieu of overtime he ordinarily receives commissions as extra compensation.
He works away from his employer's place of business, is not subject to the personal
supervision of his employer, and his employer has no way of knowing the number of
hours he works per day.

While in that case the issue was whether or not salesmen were entitled to overtime pay, the same
rationale for their exclusion as field personnel from holiday pay benefits also applies.

The petitioner union also assails the respondent arbitrator's ruling that, concomitant with the award of
holiday pay, the divisor should be changed from 251 to 261 days to include the additional 10 holidays and
the employees should reimburse the amounts overpaid by Filipro due to the use of 251 days' divisor.

Arbitrator Vivar's rationale for his decision is as follows:

. . . The new doctrinal policy established which ordered payment of ten holidays certainly
adds to or accelerates the basis of conversion and computation by ten days. With the
inclusion of ten holidays as paid days, the divisor is no longer 251 but 261 or 262 if
election day is counted. This is indeed an extremely difficult legal question of
interpretation which accounts for what is claimed as falling within the concept of "solutio
indebti."

When the claim of the Union for payment of ten holidays was granted, there was a
consequent need to abandon that 251 divisor. To maintain it would create an impossible
situation where the employees would benefit with additional ten days with pay but would
simultaneously enjoy higher benefits by discarding the same ten days for purposes of
computing overtime and night time services and considering sick and vacation leave
credits. Therefore, reimbursement of such overpayment with the use of 251 as divisor
arises concomitant with the award of ten holidays with pay. (Rollo, p. 34)

The divisor assumes an important role in determining whether or not holiday pay is already included in the
monthly paid employee's salary and in the computation of his daily rate. This is the thrust of our
pronouncement in Chartered Bank Employees Association v. Ople (supra). In that case, We held:

It is argued that even without the presumption found in the rules and in the policy
instruction, the company practice indicates that the monthly salaries of the employees are
so computed as to include the holiday pay provided by law. The petitioner contends
otherwise.

One strong argument in favor of the petitioner's stand is the fact that the Chartered Bank,
in computing overtime compensation for its employees, employs a "divisor" of 251 days.
The 251 working days divisor is the result of subtracting all Saturdays, Sundays and the
ten (10) legal holidays from the total number of calendar days in a year. If the employees
are already paid for all non-working days, the divisor should be 365 and not 251.

In the petitioner's case, its computation of daily ratio since September 1, 1980, is as follows:

monthly rate x 12 months

251 days
Following the criterion laid down in the Chartered Bank case, the use of 251 days' divisor by respondent
Filipro indicates that holiday pay is not yet included in the employee's salary, otherwise the divisor should
have been 261.

It must be stressed that the daily rate, assuming there are no intervening salary increases, is a constant
figure for the purpose of computing overtime and night differential pay and commutation of sick and
vacation leave credits. Necessarily, the daily rate should also be the same basis for computing the 10
unpaid holidays.

The respondent arbitrator's order to change the divisor from 251 to 261 days would result in a lower daily
rate which is violative of the prohibition on non-diminution of benefits found in Article 100 of the Labor
Code. To maintain the same daily rate if the divisor is adjusted to 261 days, then the dividend,
which represents the employee's annual salary, should correspondingly be increased to incorporate the
holiday pay. To illustrate, if prior to the grant of holiday pay, the employee's annual salary is P25,100, then
dividing such figure by 251 days, his daily rate is P100.00 After the payment of 10 days' holiday pay, his
annual salary already includes holiday pay and totals P26,100 (P25,100 + 1,000). Dividing this by 261
days, the daily rate is still P100.00. There is thus no merit in respondent Nestle's claim of overpayment of
overtime and night differential pay and sick and vacation leave benefits, the computation of which are all
based on the daily rate, since the daily rate is still the same before and after the grant of holiday pay.

Respondent Nestle's invocation of solutio indebiti, or payment by mistake, due to its use of 251 days as
divisor must fail in light of the Labor Code mandate that "all doubts in the implementation and
interpretation of this Code, including its implementing rules and regulations, shall be resolved in favor of
labor." (Article 4). Moreover, prior to September 1, 1980, when the company was on a 6-day working
schedule, the divisor used by the company was 303, indicating that the 10 holidays were likewise not
paid. When Filipro shifted to a 5-day working schebule on September 1, 1980, it had the chance to rectify
its error, if ever there was one but did not do so. It is now too late to allege payment by mistake.

Nestle also questions the voluntary arbitrator's ruling that holiday pay should be computed from
November 1, 1974. This ruling was not questioned by the petitioner union as obviously said decision was
favorable to it. Technically, therefore, respondent Nestle should have filed a separate petition raising the
issue of effectivity of the holiday pay award. This Court has ruled that an appellee who is not an appellant
may assign errors in his brief where his purpose is to maintain the judgment on other grounds, but he
cannot seek modification or reversal of the judgment or affirmative relief unless he has also appealed.
(Franco v. Intermediate Appellate Court, 178 SCRA 331 [1989], citing La Campana Food Products, Inc. v.
Philippine Commercial and Industrial Bank, 142 SCRA 394 [1986]). Nevertheless, in order to fully settle
the issues so that the execution of the Court's decision in this case may not be needlessly delayed by
another petition, the Court resolved to take up the matter of effectivity of the holiday pay award raised by
Nestle.

Nestle insists that the reckoning period for the application of the holiday pay award is 1985 when
the Chartered Bank decision, promulgated on August 28, 1985, became final and executory, and not from
the date of effectivity of the Labor Code. Although the Court does not entirely agree with Nestle, we find
its claim meritorious.

In Insular Bank of Asia and America Employees' Union (IBAAEU) v. Inciong, 132 SCRA 663 [1984],
hereinafter referred to as the IBAA case, the Court declared that Section 2, Rule IV, Book III of the
implementing rules and Policy Instruction No. 9, issued by the then Secretary of Labor on February 16,
1976 and April 23, 1976, respectively, and which excluded monthly paid employees from holiday pay
benefits, are null and void. The Court therein reasoned that, in the guise of clarifying the Labor Code's
provisions on holiday pay, the aforementioned implementing rule and policy instruction amended them by
enlarging the scope of their exclusion. The Chartered Bank case reiterated the above ruling and added
the "divisor" test.
However, prior to their being declared null and void, the implementing rule and policy instruction enjoyed
the presumption of validity and hence, Nestle's non-payment of the holiday benefit up to the promulgation
of the IBAA case on October 23, 1984 was in compliance with these presumably valid rule and policy
instruction.

In the case of De Agbayani v. Philippine National Bank, 38 SCRA 429 [1971], the Court discussed the
effect to be given to a legislative or executive act subsequently declared invalid:

xxx xxx xxx

. . . It does not admit of doubt that prior to the declaration of nullity such challenged
legislative or executive act must have been in force and had to be complied with. This is
so as until after the judiciary, in an appropriate case, declares its invalidity, it is entitled to
obedience and respect. Parties may have acted under it and may have changed their
positions. What could be more fitting than that in a subsequent litigation regard be had to
what has been done while such legislative or executive act was in operation and
presumed to be valid in all respects. It is now accepted as a doctrine that prior to its being
nullified, its existence as a fact must be reckoned with. This is merely to reflect
awareness that precisely because the judiciary is the government organ which has the
final say on whether or not a legislative or executive measure is valid, a period of time
may have elapsed before it can exercise the power of judicial review that may lead to a
declaration of nullity. It would be to deprive the law of its quality of fairness and justice
then, if there be no recognition of what had transpired prior to such adjudication.

In the language of an American Supreme Court decision: "The actual existence of a

statute, prior to such a determination of [unconstitutionality], is an operative fact and may
have consequences which cannot justly be ignored. The past cannot always be erased
by a new judicial declaration. The effect of the subsequent ruling as to invalidity may have
to be considered in various aspects, with respect to particular relations, individual and
corporate, and particular conduct, private and official." (Chicot County Drainage Dist. v.
Baxter States Bank, 308 US 371, 374 [1940]). This language has been quoted with
approval in a resolution in Araneta v. Hill (93 Phil. 1002 [1952]) and the decision
in Manila Motor Co., Inc. v. Flores (99 Phil. 738 [1956]). An even more recent instance is
the opinion of Justice Zaldivar speaking for the Court in Fernandez v. Cuerva and Co. (21
SCRA 1095 [1967]. (At pp. 434-435)

The "operative fact" doctrine realizes that in declaring a law or rule null and void, undue harshness and
resulting unfairness must be avoided. It is now almost the end of 1991. To require various companies to
reach back to 1975 now and nullify acts done in good faith is unduly harsh. 1984 is a fairer reckoning
period under the facts of this case.

Applying the aforementioned doctrine to the case at bar, it is not far-fetched that Nestle, relying on the
implicit validity of the implementing rule and policy instruction before this Court nullified them, and thinking
that it was not obliged to give holiday pay benefits to its monthly paid employees, may have been moved
to grant other concessions to its employees, especially in the collective bargaining agreement. This
possibility is bolstered by the fact that respondent Nestle's employees are among the highest paid in the
industry. With this consideration, it would be unfair to impose additional burdens on Nestle when the non-
payment of the holiday benefits up to 1984 was not in any way attributed to Nestle's fault.

The Court thereby resolves that the grant of holiday pay be effective, not from the date of promulgation of
the Chartered Bank case nor from the date of effectivity of the Labor Code, but from October 23, 1984,
the date of promulgation of the IBAA case.
WHEREFORE, the order of the voluntary arbitrator in hereby MODIFIED. The divisor to be used in
computing holiday pay shall be 251 days. The holiday pay as above directed shall be computed from
October 23, 1984. In all other respects, the order of the respondent arbitrator is hereby AFFIRMED.

SO ORDERED.

G.R. No. L-21348 June 30, 1966

RED V COCONUT PRODUCTS, LTD., petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS, TANGLAW NG PAGGAWA, ALBERTO DELA CRUZ, ET
AL.,respondents.

BENGZON, J.P., J.:

Red V Coconut Products, Ltd. is a corporation with principal office and place of business at Lucena City. It
has in that city a desiccated coconut factory. In said factory, it has several hundred workers. About 800 of
said workers are members of Tanglaw ng Paggawa labor union.

Tanglaw ng Paggawa and Red V Coconut Products, Ltd. entered into a collective bargaining agreement
on July 15, 1958. Subsequently, however, on October 5, 1961, the aforementioned company and union
entered into another collective bargaining agreement, to expire on October 31, 1965.

The 1958 collective bargaining agreement provided among other things for payment of differentials
to night shift workers in the desiccated coconut factory.1wph1.t

The 1961 collective bargaining agreement retained the same arrangement. It stated:

The present shift differential will remain in effect, namely, 35 for the second shift and 55 for the
third Shift.

In the factory, there are two groups of workers, the three-shift group let us call it Group A and the
two shift group which we shall call Group B. As observed by the parties thereto, differentials were
paid to workers, under the 1958 and 1961 contracts, thus:

Hours of Work Differentials

Group A 1st shift 4 A.M. 12 Noon (8 Hrs.) None
2nd shift 12 Noon 8 P.M. (8 Hrs.) .35
3rd shift 8 P.M. 4 A.M. (8 Hrs.) .55
Group B 1st shift 4 A.M. 4 P.M. (12 Hrs.) None
2nd shift 4 P.M. 4 A.M. (12 Hrs.) .55

On January 17, 1962, Tanglaw ng Paggawa and some 300 workers in the above-stated factory, members
of the said union, who belong to Group B, filed a petition in the Court of Industrial Relations. Petitioners
therein alleged that the petitioners-workers are shellers, parers, counters and haulers in the two shifts
(Group B) consisting of 12 hours each shift, the first shift from 4: 00 A.M. to 4: 00 P.M. and the second
shift from 4 P.M. to 4 A.M.; that said workers change shift assignments every week; that, accordingly, all
of them work from 4 A.M. to 4 P.M. (first shift) for two alternate weeks per month and from 4 P.M. to 4 A.M.
(second shift) likewise for two alternate weeks in a month; that although said workers perform work from 4
P.M. to 4 A.M., they receive only P.55 differential pay for the corresponding hours of night work; that their
nightwork is equivalent to the nightwork of the 2nd and 3rd shifts of Group A combined, so that they
should receive what the 2nd and 3rd shifts of Group A, combined, receive as differential pay, namely, P.90
(P.75 plus P.35); that, therefore, they are entitled to payment of P.35 more as differential pay, since up to
the time of the petition, they received only P.55 per night as differential pay.

Said additional P.35 was asked by the petitioners-workers of Group B f or work done by them from 4 P.M.
to 4 A.M. Their claim referred to the time from July 15, 1958 to the date of the petition, allegedly at
P186.90 per sheller, parer, counter and hauler, or a total sum of P65,228.10 more or less.

Respondent company therein filed on January 28, 1962 a motion to dismiss, stating that the Court of
Industrial Relations has no jurisdiction over the case for the reason that the claim asserted in the petition
is a simple money claim and that an interpretation of a contract (the collective bargaining agreement is
involved, which pertains to the regular courts.

The Court of Industrial Relations denied said motion by resolution of February 17, 1962 ruling that the
claim is for unpaid overtime pay of laborers still employed by the company. Said court likewise denied a
motion for reconsideration of the resolution. Red V Coconut Products, Ltd. filed its answer on May 2,
1962.

In the meanwhile, on April 25, 1962, Tanglaw ng Paggawa filed with the Court of Industrial Relations a
new and independent petition alleging unfair labor practice against Red V Coconut Products, Ltd. (CIR
Case No. 3150 ULP). It was asserted therein that the company refused to grant 15 days leave with pay to
the members of the union in violation of the 1961 collective bargaining agreement.

The Court of Industrial Relations, on January 19, 1963 after trial, rendered its decision on the petition for
differential pay (CIR Case No. 1642-V). It found therein that the petitioners-workers are engaged
on pakiao or piece-work basis, and, therefore, are not entitled to overtime pay under the Eight-Hour Labor
Law (Sec. 2, CA 444); that their petition for night shift differentials based on the collective bargaining
agreements is meritorious because the company having paid night differentials indiscriminately to the
night shift workers of Group A and Group B alike, the payments should be uniform and equal for the night
shifts of both groups, that is, P.90. It therefore ordered payment of the deficiency in said differentials to the
workers of Group B.

Red V Coconut Products, Ltd. moved for reconsideration of said decision on January 29, 1963. The Court
of Industrial Relations en banc denied said motion by resolution of February 25, 1963. And, hence, Red V
Coconut Products, Ltd. filed this petition for review herein.

Petitioner herein contends that the present case involves a mere money claim over which the Court of
Industrial Relations has no jurisdiction.1

It is exiomatic that to determine the issue of jurisdiction resort is to be made to the allegations in the
petition or complaint.2 The petition for shift differential in the present case, it is true, did not expressly
mention the Eight-Hour Labor Law. Nonetheless, it clearly asserted that (1) petitioners-laborers "are
working in the Red V Coconut Products, Ltd." and (2) they "work in two (2) shifts (Blue and Red shifts)
consisting of approximately 12 hours each shift." Accordingly, from the said allegations, it is proper to
regard the petition, as the Court of Industrial Relations did, as one for overtime pay by workers still
employed by the company. As such it falls within the jurisdiction of the Court of Industrial Relations. For
the same is in effect an assertion not of a simple money claim but, as respondent court rightly held, of a
claim for overtime pay by workers who are employees of the company. 3

During the trial, as stated, evidence was adduced to the effect that the aforesaid petitioners-workers were
engaged on a piece-work basis. The same, however, does not appear from the petition or complaint filed
with the respondent court. It therefore cannot affect its jurisdiction over the case, which was already
acquired. For jurisdiction, once acquired, continues until final adjudication of the litigation. 4
Furthermore, although the Eight-Hour Labor Law provides that it does not cover those workers who prefer
to be paid on piece-work basis (Sec. 2, CA 444), nothing in said law precludes an agreement for the
payment of overtime compensation to piece-workers. And in agreeing to the provision for payment of shift
differentials to the petitioners-workers aforementioned, in the bargaining agreement, as well as in actually
paying to them said differentials, though not in full, the company in effect freely adhered to an application
and implementation of the Eight-Hour Labor Law, or its objectives, to said workers. It should be observed
that while the provision in the bargaining agreements speaks of shift differentials for the "second shift"
and the "third shift" and Group B has no third shift, said Group B has a second shift, which performs work
equivalent to that of the corresponding shifts of Group A. It follows that respondent court did not err in
ordering the company to pay the full and equivalent amount of said differentials (P.90) corresponding,
under the bargaining agreements, to the workers who performed 12 hours of work, from 4 P.M. to 4 A.M.

And, finally, the laborers in question are not strictly under the full concept of piece-workers as
contemplated by law for the reason that their hours of work that is, 12 hours per shift are fixed by
the employer. As ruled by this Court in Lara v. Del Rosario, 94 Phil. 780, 781-782, the philosophy
underlying the exclusion of piece workers from the Eight-Hour Labor Law is that said workers are paid
depending upon the work they do "irrespective of the amount of time employed" in doing said work. Such
freedom as to hours of work does not obtain in the case of the laborers herein involved, since they are
assigned by the employer to work in two shifts for 12 hours each shift. Thus it cannot be said that for all
purposes these workers fall outside the law requiring payment of compensation for work done in excess
of eight hours. At least for the purpose of recovering the full differential pay stipulated in the bargaining
agreement as due to laborers who perform 12 hours of work under the night shift, said laborers should be
deemedpro tanto or to that extent within the scope of the afore-stated law.

Wherefore, the decision and resolution of the Court of Industrial Relations under review are affirmed. So
ordered.

G.R. No. L-17068 December 30, 1961

NATIONAL SHIPYARDS AND STEEL CORPORATION, petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS and DOMINADOR MALONDRAS, respondents.

REYES, J.B.L., J.:

Petition filed by the National Shipyards and Steel Corporation (otherwise known as the NASSCO) to
review certain orders of the respondent Court of Industrial Relations requiring it to pay its bargeman
Dominador Malondras overtime service of 16 hours a day for a period from January 1, 1954 to December
31, 1956, and from January 1, 1957 to April 30, 1957, inclusive.

The petitioner NASSCO, a government-owned and controlled corporation, is the owner of several barges
and tugboats used in the transportation of cargoes and personnel in connection with its business of
shipbuilding and repair. In order that its bargeman could immediately be called to duty whenever their
services are needed, they are required to stay in their respective barges, for which reason they are given
living quarters therein as well as subsistence allowance of P1.50 per day during the time they are on
board. However, upon prior authority of their superior officers, they may leave their barges when said
barges are idle.

On April 15, 1957, 39 crew members of petitioner's tugboat service, including therein respondent
Dominador Malondras, filed with the Industrial Court a complaint for the payment of overtime
compensation (Case No. 1059-V). In the course of the proceeding, the parties entered into a stipulation of
facts wherein the NASSCO recognized and admitted

4. That to meet the exigencies of the service in the performance of the above work, petitioners
have to work when so required in excess of eight (8) hours a day and/or during Sundays and
 legal holidays (actual overtime service is subject to determination on the basis of the logbook of
the vessels, time sheets and other pertinent records of the respondent).

xxx xxx xxx

6. The petitioners are paid by the respondent their regular salaries and subsistence allowance,
without additional compensation for overtime work;

Pursuant to the above stipulation, the Industrial Court, on November 22, 1957, issued an order directing
the court examiner to compute the overtime compensation due the claimants.

On February 14, 1958, the court examiner submitted his report covering the period from January 1 to
December 31, 1957. In said report, the examiner found that the petitioners in Case No. 1058-V, including
herein respondent Dominador Malondras, rendered an average overtime service of five (5) hours each
day for the period aforementioned, and upon approval of the report by the Court, all the claimants,
including Malondras, were paid their overtime compensation by the NASSCO.

Subsequently, on April 30, 1958, the court examiner submitted his second partial report covering the
period from January 1, 1954 to December 31, 1956, again giving each crewman an average of five (5)
overtime hours each day. Respondent Malondras was not, however, included in this report as his daily
time sheets were not then available. Again upon approval by the Court, the crewmen concerned were
paid their overtime compensation.

Because of his exclusion from the second report of the examiner, and his time sheets having been
located in the meantime, Dominador Malondras, on September 18, 1959, filed petitions in the same case
asking for the compensation and payment of his overtime compensation for the period from January 1,
1954 to December 31, 1956, and from January to April 30, 1957 which, he alleged, was not included in
the first report of the examiner because his time sheets for these months could not be found at the time.
Malondras' petition was opposed by the NASSCO upon the argument, among others, that its records do
not indicate the actual number of working hours rendered by Malondras during the periods in question.
Acting on the petition and opposition, the Industrial Court ordered the examiner to examine the log books,
daily time sheets, and other pertinent records of the corporation for the purpose of determining and
computing whatever overtime service Malondras had rendered from January 1, 1954 to December 31,
1956.

On January 15, 1960, the chief examiner submitted a report crediting Malondras with a total of 4,349
overtime hours from January 1, 1954 to December 31, 1956, at an average of five (5) overtime hours a
day, and after deducting the aggregate amount of subsistence allowance received by Malondras during
this period, recommended the payment to him of overtime compensation in the total sum of P2,790.90.

On February 20, 1960, the Court ordered the examiner to make a re-examination of the records with a
view to determining Malondras' overtime service from January 1, 1954 to December 31, 1956, and from
January 1, 1957 to April 30, 1957, but without deducting from the compensation to be paid to him his
subsistence allowance. Pursuant to this last order, the examiner, on April 23, 1960, submitted an
amended report giving Malondras an average of sixteen (16) overtime hours a day, on the basis of his
time sheets, and recommending the payment to him of the total amount of P15,242.15 as overtime
compensation during the periods covered by the report. This report was, over the NASSCO's vigorous
objections, approved by the Court below on May 6, 1960. The NASSCO moved for reconsideration, which
was denied by the Court en banc, with one judge dissenting. Whereupon, the NASSCO appealed to this
Court.

There appears to be no question that respondent Malondras actually rendered overtime services during
the periods covered by the examiner's report. This is admitted in the stipulation of facts of the parties in
Case No. 1058-V; and it was on the basis of this admission that the Court below, in its order of November
22, 1957, ordered the payment of overtime compensation to all the petitioners in Case No. 1058-V,
including respondent Dominador Malondras, after the overtime service rendered by them had been
determined and computed on the basis of the log books, time sheets and other pertinent records of the
petitioner corporation.

The only matter to be determined here is, therefore, the number of hours of overtime for which Malondras
should be paid for the periods January 1, 1954 to December 31, 1956, and from January to April 30,
1957. Respondents urge that this is a question of fact and not subject to review by this Court, there being
sufficient evidence to support the Industrial Court's ruling on this point. It appears, however, that in
crediting Malondras with 16 hours of overtime service daily for the periods in question, the court examiner
relied only on his daily time sheets which, although approved by petitioner's officers in charge and its
auditors, do not show the actual number of hours of work rendered by him each day but only indicate,
according to the examiner himself, that:

almost everyday Dominador Malondras was on "Detail" or "Detailed on Board". According to the
officer in charge of Dominador Malondras, when he (Dominador Malondras) was on "Detail" or
"Detailed on Board", he was in the boat for twenty-four (24) hours.

In other words, the court examiner interpreted the words "Detail" or "Detailed on Board" to mean that as
long as respondent Malondras was in his barge for twenty-four hours, he should be paid overtime for
sixteen hours a day or the time in excess of the legal eight working hours that he could not leave his
barge. Petitioner NASSCO, upon the other hand, argues that the mere fact that Malondras was required
to be on board his barge all day so that he could immediately be called to duty when his services were
needed does not imply that he should be paid overtime for sixteen hours a day, but that he should receive
compensation only for the actual service in excess of eight hours that he can prove. This question is
clearly a legal one that may be reviewed and passed upon by this Court.lawphil.net

We can not agree with the Court below that respondent Malondras should be paid overtime compensation
for every hour in excess of the regular working hours that he was on board his vessel or barge each day,
irrespective of whether or not he actually put in work during those hours. Seamen are required to stay on
board their vessels by the very nature of their duties, and it is for this reason that, in addition to their
regular compensation, they are given free living quarters and subsistence allowances when required to be
on board. It could not have been the purpose of our law to require their employers to pay them overtime
even when they are not actually working; otherwise, every sailor on board a vessel would be entitled to
overtime for sixteen hours each day, even if he had spent all those hours resting or sleeping in his bunk,
after his regular tour of duty. The correct criterion in determining whether or not sailors are entitled to
overtime pay is not, therefore, whether they were on board and can not leave ship beyond the regular
eight working hours a day, but whether they actually rendered service in excess of said number of hours.
We have ruled to that effect in Luzon Stevedoring Co., Inc. vs. Luzon Marine Department Union, et al., L-
9265, April 29, 1957:

I. Is the definition for "hours of work" as presently applied to dryland laborers equally applicable to
seamen? Or should a different criterion be applied by virtue of the fact that the seaman's
employment is completely different in nature as well as in condition of work from that of a dryland
laborer?

xxx xxx xxx

Section 1 of Commonwealth Act No. 444, known as the Eight-Hour Labor Law, provides:

"SEC. 1. The legal working day for any person employed by another shall be of not more
than eight hours daily. When the work is not continuous, the time during which the laborer
is not working AND CAN LEAVE HIS WORKING PLACE and can rest completely, shall
not be counted."
 The requisites contained in this section are further implemented by contemporary regulations
issued by administrative authorities (Sections 4 and 5 of Chapter III, Article 1, Code of Rules and
Regulations to implement the Minimum Wage Law).

For the purposes of this case, we do not need to set for seamen a criterion different from that
applied to laborers on land, for under the provisions of the above quoted section, the only thing to
be done is to determine the meaning and scope of the term "working place" used therein. As we
understand this term, a laborer need not leave the premises of the factory shop or boat in order
that his period of rest shall not be counted, it being enough that he "cease to work", may rest
completely and leave or may leave at his will the spot where he actually stays while working, to
go somewhere else, whether within or outside the premises of said factory, shop or boat . If these
requisites are complied with, the period of such rest shall not be counted. (Emphasis supplied)

While Malondras' daily time sheets do not show his actual working hours, nevertheless, petitioner has
already admitted in the Stipulation of Facts in this case that Malondras and his co-claimants did render
service beyond eight (8) hours a day when so required by the exigencies of the service; and in fact,
Malondras was credited and already paid for five (5) hours daily overtime work during the period from
May 1 to December 31, 1957, under the examiner's first report. Since Malondras has been at the same
job since 1954, it can be reasonably inferred that the overtime service he put in whenever he was
required to be aboard his barge all day from 1954 to 1957 would be more or less consistent. In truth, the
other claimants who served with Malondras under the same conditions and period have been finally paid
for an overtime of 5 hours a day, and no substantial difference exists between their case and the present
one, which was not covered by the same award only because Malondras' time records not found until
later.

The next question is whether or not the subsistence allowance received by Malondras for the periods
covered by the report in question should be deducted from his overtime compensation. We do not think
so, for the Stipulation of the Facts of the parties show that this allowance is independent of and has
nothing to do with whatever additional compensation for overtime work was due the petitioner NASSCO's
bargemen. According to the petitioner itself, the reason why their bargemen are given living quarters in
their barges and subsistence allowance at the rate of P1.50 per day was because they were required to
stay in their respective barges in order that they could be immediately called to duty when their services
were needed (Petition, par. 5, p. 2). Petitioner having already paid Malondras and his companions
overtime for 1957 without deduction of the subsistence allowances received by them during this period,
and Malondras' companions having been paid overtime for the other years also without deducting their
subsistence allowances, there is no valid reason why Malondras should be singled out now and his
subsistence allowance deducted from the overtime compensation still due him.

The last question involves petitioner's claim that it was error for the examiner to base Malondras' overtime
compensation for the whole year 1954 at P6.16 a day, when he was appointed in the tubgoat service only
on October 1, 1954, and before that was a derrick man with a daily salary of P6.00. In answer, respondent
Malondras asserts that the report of the examiner, based on his time sheets from January 1, 1954, show
that he had already been rendering overtime service from that date. This answer does not, however, deny
that Malondras started to get P6.16 a day only in October, 1954, and was before that time receiving only
P6.00 daily, as claimed by petitioner. We think, therefore, that the records should be reexamined to find
out Malondras' exact daily wage from January 1, 1954 to September, 1954, and his overtime
compensation for these months computed on the basis thereof.

WHEREFORE, the order appealed from is modified in the sense that respondent Malondras should be
credited five (5) overtime hours instead of sixteen (16) hours a day for the periods covered by the
examiner's report. The court below is ordered to determine from the records the exact daily wage
received by respondent Malondras from January 1, 1954 to September, 1954, and to compute
accordingly his overtime compensation for that period. In all other respects, the judgment appealed from
is affirmed. No costs in this instance. So ordered.
 G.R. No. 78210 February 28, 1989

TEOFILO ARICA, DANILO BERNABE, MELQUIADES DOHINO, ABONDIO OMERTA, GIL TANGIHAN,
SAMUEL LABAJO, NESTOR NORBE, RODOLFO CONCEPCION, RICARDO RICHA, RODOLFO
NENO, ALBERTO BALATRO, BENJAMIN JUMAMOY, FERMIN DAAROL, JOVENAL ENRIQUEZ,
OSCAR BASAL, RAMON ACENA, JAIME BUGTAY, and 561 OTHERS, HEREIN REPRESENTED BY
KORONADO B. APUZEN, petitioners
vs.
NATIONAL LABOR RELATIONS COMMISSION, HONORABLE FRANKLIN DRILON, HONORABLE
CONRADO B. MAGLAYA, HONORABLE ROSARIO B. ENCARNACION, and STANDARD
(PHILIPPINES) FRUIT CORPORATION, respondents.

Teofilo Arica et al and 561 others sued Standard Fruits Corporation (STANFILCO) Philippines for
allegedly not paying the workers for their assembly time which takes place every work day from 5:30am to
6am. The assembly time consists of the roll call of the workers; their getting of assignments from the
foreman; their filling out of the Laborers Daily Accomplishment Report; their getting of tools and
equipment from the stockroom; and their going to the field to work. The workers alleged that this is
necessarily and primarily for STANFILCOs benefit.
ISSUE: Whether or not the workers assembly time should be paid.
HELD: No. The thirty minute assembly time long practiced and institutionalized by mutual consent of the
parties under Article IV, Section 3, of the Collective Bargaining Agreement cannot be considered as
waiting time within the purview of Section 5, Rule I, Book III of the Rules and Regulations Implementing
the Labor Code . . .
Furthermore, the thirty (30)-minute assembly is a deeply-rooted, routinary practice of the employees, and
the proceedings attendant thereto are not infected with complexities as to deprive the workers the time to
attend to other personal pursuits. In short, they are not subject to the absolute control of the company
during this period, otherwise, their failure to report in the assembly time would justify the company to
impose disciplinary measures.
G.R. No. 96078 January 9, 1992
HILARIO RADA, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (Second Division) and PHILNOR CONSULTANTS
AND PLANNERS, INC., respondents.
In 1977, Hilario Rada was contracted by Philnor Consultants and Planners, Inc as a driver. He was
assigned to a specific project in Manila. The contract he signed was for 2.3 years. His task was to drive
employees to the project from 7am to 4pm. He was allowed to bring home the company vehicle in order
to provide a timely transportation service to the other project workers. The project he was assigned to was
not completed as scheduled hence, since he has a satisfactory record, he was re-contracted for an
additional 10 months. After 10 months the project was not yet completed. Several contracts thereafter
were made until the project was finished in 1985.
At the completion of the project, Rada was terminated as his employment was co-terminous with the
project. He later sued Philnor for non payment of separation pay and overtime pay. He said he is entitled
to be paid OT pay because he uses extra time to get to the project site from his home and from the
project site to his home everyday in total, he spends an average of 3 hours OT every day.
ISSUE: Whether or not Rada is entitled to separation pay and OT pay.
HELD: Separation pay NO. Overtime pay Yes.
Separation Pay
The SC ruled that Rada was a project employee whose work was coterminous with the project for which
he was hired. Project employees, as distinguished from regular or non-project employees, are mentioned
in Section 281 of the Labor Code as those where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of the engagement of
the employee.
Project employees are not entitled to termination pay if they are terminated as a result of the completion
of the project or any phase thereof in which they are employed, regardless of the number of projects in
which they have been employed by a particular construction company. Moreover, the company is not
required to obtain clearance from the Secretary of Labor in connection with such termination.
OT Pay
Rada is entitled to OT pay. The fact that he picks up employees of Philnor at certain specified points along
EDSA in going to the project site and drops them off at the same points on his way back from the field
office going home to Marikina, Metro Manila is not merely incidental to Radas job as a driver. On the
contrary, said transportation arrangement had been adopted, not so much for the convenience of the
employees, but primarily for the benefit of Philnor. As embodied in Philnors memorandum, they allowed
their drivers to bring home their transport vehicles in order for them to provide a timely transport service
and to avoid delay not really so that the drivers could enjoy the benefits of the company vehicles nor for
them to save on fair.

G.R. NO. 41314 November 13, 1992

UNION CARBIDE LABOR UNION (NLU), petitioner,

vs.
UNION CARBIDE PHILIPPINES, INC. AND THE HON. SECRETARY OF LABOR, respondents.

MELO, J.:

This refers to a petition for review of the decision of the then Secretary of Labor Blas Ople handed down
on February 7, 1975 which set aside the decision of the Arbitrator ordering reinstatement with backwages,
and instead adjudged the payment of separation pay; and the resolution dated July 24, 1975 denying
petitioner's motion for reconsideration for lack of merit.

The undisputed facts as found by the Secretary of Labor are as follows:

. . . Complainants Agapito Duro, Alfredo Torio, and Rustico Javillonar, were dismissed
from their employment after an application for clearance to terminate them was approved
by the Secretary of Labor on December 19, 1972. Respondent's application for clearance
was premised on "willful violation of Company regulations, gross insubordination and
refusal to submit to a Company investigation . . . ."

Prior events leading to the dismissal of complainants are recited in the Arbitrator's
decision, which we quote:

It appears that the Company is operating on three (3) shifts namely:

morning, afternoon and night shifts. The workers in the third shift
normally work from Monday to Saturday, the last working day being
Friday or forty (40) hours a week or from Monday to Friday.

Sometime in July 1972, there seems to be a change in the working

schedule from Monday to Friday as contained in the collective bargaining
agreement aforecited to Sunday thru Thursday. The change became
effective July 5, 1972. The third shift employees were required to start
the new work schedule from Sunday thru Thursday.
 On November 6, 1972, the night shift employees filed a demand to
maintain the old working schedule from Monday thru Friday. (Letter of
November 6, 1972 addressed to the Committee on Labor Relation,
UCLU). The demand was referred to the Labor Management Relation
Committee and discussed from November 15, up to November 24, 1972.
In the discussions had, it was arrived at that all night shift operating
personnel were allowed to start their work Monday and on Saturday. This
excepted the employees in the maintenance and preparation crews
whose work schedule is presumed to be maintained from Sunday to
Thursday. The work schedule between management representatives and
the alleged officers of the Union (Varias group) was approved and
disseminated to take effect November 26, 1972. (Exh. "2" Respondent).

In manifestation of their dissention to the new work schedule, the three

respondents Duro, Torio, and Javillonar did not report for work on
November 26, 1972 which was a Sunday since it was not a working day
according to the provisions of the Collecrtive Bargaining Agreement.
(Exh. "A" Complainant). Their absence caused their suspension for
fourteen (14) days. (pp. 29-30, Rollo).

On May 4, 1973, the Arbitrator rendered a decision ordering the reinstatement with backwages of the
complainants. On June 8, 1973, the National Labor Relations Commission dismissed respondent
company's appeal for having been filed out of time. A motion for reconsideration which was treated as an
appeal was then filed by respondent company before the Secretary of Labor, resulting in the modification
of the Arbitrator's decision by awarding complainants separation pay. A motion for reconsideration
subsequently filed by the petitioner was denied for lack of merit.

Hence, this petition.

The main issue in this case is whether or not the complainants could be validly dismissed from their
employment on the ground of insubordination for refusing to comply with the new work schedule.

Petitioner alleges that the change in the company's working schedule violated the existing Collective
Bargaining Agreement of the parties. Hence, complainants cannot be dismissed since their refusal to
comply with the re-scheduled working hours was based on a provision of the Collective Bargaining
Agreement. Petitioner further contends that the dismissal of the complainants violated Section 9, Article II
of the 1973 Constitution which provides "the right of workers to self-organization, collective bargaining,
security of tenure, and just and humane conditions of work."

The petition has no merit.

Although Article XIX of the CBA provides for the duration of the agreement, which We quote:

This agreement shall become effective on September 1, 1971 and shall remain in full
force and effect without change until August 31, 1974. Unless the parties hereto agree
otherwise, negotiation for renewal, or renewal and modification, or a new agreement may
not be initiated before July 1, 1974.

this does not necessarily mean that the company can no longer change its working schedule, for
Section 2, Article II of the same CBA expressly provides that:

Sec. 2. In the exercise of its functions of management, the COMPANY shall have the sole
and exclusive right and power, among other things, to direct the operations and the
working force of its business in all respects; to be the sole judge in determining the
 capacity or fitness of an employee for the position or job to which he has been assigned;
to schedule the hours of work, shifts and work schedules; to require work to be done in
excess of eight hours or Sundays or holidays as the exigencies of the service may
require; to plan, schedule, direct, curtail and control factory operations and schedules of
production; to introduce and install new or improved methods or facilities; to designate
the work and the employees to perform it; to select and hire new employees; to train new
employees and improve the skill and ability of employees from one job to another or form
one shift to another; to classify or reclassify employees; and to make such changes in the
duties of its employees as the COMPANY may see fit or convenient for the proper
conduct of its business.

Verily and wisely, management retained the prerogative, whenever exigencies of the service so require, to
change the working hours of its employees. And as long as such prerogative is exercised in good faith for
the advancement of the employer's interest and not for the purpose of defeating or circumventing the
rights of the employees under special laws or under valid agreements, this Court will uphold such
exercise (San Miguel Brewery Sales Force Union (PTGWO) vs. Ople, 170 SCRA 25 [1989]).

Thus, in the case of Abbott Laboratories (Phil.), Inc. vs. NLRC (154 SCRA 713 [1987]), We ruled:

. . . Even as the law is solicitous of the welfare of employees, it must also protect the right
of an employer to exercise what are clearly management prerogatives. The free will of
management to conduct its own business affairs to achieve its purpose cannot be denied.
(p.717)

Further, the incident complained of took place sometime in 1972, so there is no violation of the 1973
Constitution to speak of because the guarantee of security of tenure embodied under Section 9, Article II
may not be given a retroactive effect. It is the basic norm that provisions of the fundamental law should be
given prospective application only, unless legislative intent for its retroactive application is so provided.

As pointed out by Justice Isagani Cruz, to wit:

Finally, it should be observed that the provisions of the Constitution should be given only
a prospective application unless the contrary is clearly intended. Were the rule otherwise,
rights already acquired or vested might be unduly disturbed or withdrawn even in the
absence of an unmistakable intention to place them within the scope of the Constitution.

(p.10, Constitutional Law, Isagani Cruz, 1991 Edition)

We agree with the findings arrived at by both Arbitrator and the Secretary of Labor that there is no unfair
labor practice in this case. Neither was there gross and habitual neglect of complainants' duties. Nor did
the act of complainants in refusing to follow the new working hours amount to serious misconduct or
willful disobedience to the orders of respondent company.
Although no serious objections may be offered to the Arbitrator's conclusion to order reinstatement with
backwages of the complainants, We now refrain from doing so considering that reinstatement is no longer
feasible due to the fact that the controversy started more than 20 years ago aside from the obviously
strained relations between the parties.
WHEREFORE, the decision appealed from is hereby AFFIRMED.
SO ORDERED.