G.R. No.
L-65482 December 1, 1987
JOSE RIZAL COLLEGE, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION AND NATIONAL ALLIANCE OF
TEACHERS/OFFICE WORKERS, respondents.
PARAS, J.:
This is a petition for certiorari with prayer for the issuance of a writ of preliminary injunction,
seeking the annulment of the decision of the National Labor Relations Commission * in NLRC
Case No. RB-IV 23037-78 (Case No. R4-1-1081-71) entitled "National Alliance of Teachers
and Office Workers and Juan E. Estacio, Jaime Medina, et al. vs. Jose Rizal College"
modifying the decision of the Labor Arbiter as follows:
WHEREFORE, in view of the foregoing considerations, the decision
appealed from is MODIFIED, in the sense that teaching personnel paid by
the hour are hereby declared to be entitled to holiday pay.
SO ORDERED.
The factual background of this case which is undisputed is as follows:
Petitioner is a non-stock, non-profit educational institution duly organized and existing under
the laws of the Philippines. It has three groups of employees categorized as follows: (a)
personnel on monthly basis, who receive their monthly salary uniformly throughout the year,
irrespective of the actual number of working days in a month without deduction for holidays;
(b) personnel on daily basis who are paid on actual days worked and they receive unworked
holiday pay and (c) collegiate faculty who are paid on the basis of student contract hour.
Before the start of the semester they sign contracts with the college undertaking to meet their
classes as per schedule.
Unable to receive their corresponding holiday pay, as claimed, from 1975 to 1977, private
respondent National Alliance of Teachers and Office Workers (NATOW) in behalf of the
faculty and personnel of Jose Rizal College filed with the Ministry of Labor a complaint
against the college for said alleged non-payment of holiday pay, docketed as Case No. R04-
10-81-72. Due to the failure of the parties to settle their differences on conciliation, the case
was certified for compulsory arbitration where it was docketed as RB-IV-23037-78 (Rollo, pp.
155-156).
After the parties had submitted their respective position papers, the Labor Arbiter ** rendered
a decision on February 5, 1979, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered as follows:
1. The faculty and personnel of the respondent Jose Rizal College who are
paid their salary by the month uniformly in a school year, irrespective of the
number of working days in a month, without deduction for holidays, are
presumed to be already paid the 10 paid legal holidays and are no longer
entitled to separate payment for the said regular holidays;
2. The personnel of the respondent Jose Rizal College who are paid their
wages daily are entitled to be paid the 10 unworked regular holidays
according to the pertinent provisions of the Rules and Regulations
Implementing the Labor Code;
3. Collegiate faculty of the respondent Jose Rizal College who by contract
are paid compensation per student contract hour are not entitled to unworked
regular holiday pay considering that these regular holidays have been
excluded in the programming of the student contact hours. (Rollo. pp. 26-27)
On appeal, respondent National Labor Relations Commission in a decision promulgated on
June 2, 1982, modified the decision appealed from, in the sense that teaching personnel paid
by the hour are declared to be entitled to holiday pay (Rollo. p. 33).
Hence, this petition.
The sole issue in this case is whether or not the school faculty who according to their
contracts are paid per lecture hour are entitled to unworked holiday pay.
Labor Arbiter Julio Andres, Jr. found that faculty and personnel employed by petitioner who
are paid their salaries monthly, are uniformly paid throughout the school year regardless of
working days, hence their holiday pay are included therein while the daily paid employees are
renumerated for work performed during holidays per affidavit of petitioner's treasurer (Rollo,
pp. 72-73).
There appears to be no problem therefore as to the first two classes or categories of
petitioner's workers.
The problem, however, lies with its faculty members, who are paid on an hourly basis, for
while the Labor Arbiter sustains the view that said instructors and professors are not entitled
to holiday pay, his decision was modified by the National Labor Relations Commission
holding the contrary. Otherwise stated, on appeal the NLRC ruled that teaching personnel
paid by the hour are declared to be entitled to holiday pay.
Petitioner maintains the position among others, that it is not covered by Book V of the Labor
Code on Labor Relations considering that it is a non- profit institution and that its hourly paid
faculty members are paid on a "contract" basis because they are required to hold classes for
a particular number of hours. In the programming of these student contract hours, legal
holidays are excluded and labelled in the schedule as "no class day. " On the other hand, if a
regular week day is declared a holiday, the school calendar is extended to compensate for
that day. Thus petitioner argues that the advent of any of the legal holidays within the
semester will not affect the faculty's salary because this day is not included in their schedule
while the calendar is extended to compensate for special holidays. Thus the programmed
number of lecture hours is not diminished (Rollo, pp. 157- 158).
The Solicitor General on the other hand, argues that under Article 94 of the Labor Code (P.D.
No. 442 as amended), holiday pay applies to all employees except those in retail and service
establishments. To deprive therefore employees paid at an hourly rate of unworked holiday
pay is contrary to the policy considerations underlying such presidential enactment, and its
precursor, the Blue Sunday Law (Republic Act No. 946) apart from the constitutional mandate
to grant greater rights to labor (Constitution, Article II, Section 9). (Reno, pp. 76-77).
In addition, respondent National Labor Relations Commission in its decision promulgated on
June 2, 1982, ruled that the purpose of a holiday pay is obvious; that is to prevent diminution
of the monthly income of the workers on account of work interruptions. In other words,
although the worker is forced to take a rest, he earns what he should earn. That is his holiday
pay. It is no excuse therefore that the school calendar is extended whenever holidays occur,
because such happens only in cases of special holidays (Rollo, p. 32).
Subject holiday pay is provided for in the Labor Code (Presidential Decree No. 442, as
amended), which reads:
Art. 94. Right to holiday pay — (a) Every worker shall be paid his regular
daily wage during regular holidays, except in retail and service
establishments regularly employing less than ten (10) workers;
(b) The employer may require an employee to work on any holiday but such
employee shall be paid a compensation equivalent to twice his regular
rate; ... "
and in the Implementing Rules and Regulations, Rule IV, Book III, which reads:
SEC. 8. Holiday pay of certain employees. — (a) Private school teachers,
including faculty members of colleges and universities, may not be paid for
the regular holidays during semestral vacations. They shall, however, be paid
for the regular holidays during Christmas vacations. ...
Under the foregoing provisions, apparently, the petitioner, although a non-profit institution is
under obligation to give pay even on unworked regular holidays to hourly paid faculty
members subject to the terms and conditions provided for therein.
We believe that the aforementioned implementing rule is not justified by the provisions of the
law which after all is silent with respect to faculty members paid by the hour who because of
their teaching contracts are obliged to work and consent to be paid only for work actually
done (except when an emergency or a fortuitous event or a national need calls for the
declaration of special holidays). Regular holidays specified as such by law are known to both
school and faculty members as no class days;" certainly the latter do not expect payment for
said unworked days, and this was clearly in their minds when they entered into the teaching
contracts.
On the other hand, both the law and the Implementing Rules governing holiday pay are silent
as to payment on Special Public Holidays.
It is readily apparent that the declared purpose of the holiday pay which is the prevention of
diminution of the monthly income of the employees on account of work interruptions is
defeated when a regular class day is cancelled on account of a special public holiday and
class hours are held on another working day to make up for time lost in the school calendar.
Otherwise stated, the faculty member, although forced to take a rest, does not earn what he
should earn on that day. Be it noted that when a special public holiday is declared, the faculty
member paid by the hour is deprived of expected income, and it does not matter that the
school calendar is extended in view of the days or hours lost, for their income that could be
earned from other sources is lost during the extended days. Similarly, when classes are
called off or shortened on account of typhoons, floods, rallies, and the like, these faculty
members must likewise be paid, whether or not extensions are ordered.
Petitioner alleges that it was deprived of due process as it was not notified of the appeal
made to the NLRC against the decision of the labor arbiter.
The Court has already set forth what is now known as the "cardinal primary" requirements of
due process in administrative proceedings, to wit: "(1) the right to a hearing which includes
the right to present one's case and submit evidence in support thereof; (2) the tribunal must
consider the evidence presented; (3) the decision must have something to support itself; (4)
the evidence must be substantial, and substantial evidence means such evidence as a
reasonable mind might accept as adequate to support a conclusion; (5) the decision must be
based on the evidence presented at the hearing, or at least contained in the record and
disclosed to the parties affected; (6) the tribunal or body of any of its judges must act on its or
his own independent consideration of the law and facts of the controversy, and not simply
accept the views of a subordinate; (7) the board or body should in all controversial questions,
render its decisions in such manner that the parties to the proceeding can know the various
issues involved, and the reason for the decision rendered. " (Doruelo vs. Commission on
Elections, 133 SCRA 382 [1984]).
The records show petitioner JRC was amply heard and represented in the instant
proceedings. It submitted its position paper before the Labor Arbiter and the NLRC and even
filed a motion for reconsideration of the decision of the latter, as well as an "Urgent Motion for
Hearing En Banc" (Rollo, p. 175). Thus, petitioner's claim of lack of due process is
unfounded.
PREMISES CONSIDERED, the decision of respondent National Labor Relations Commission
is hereby set aside, and a new one is hereby RENDERED:
(a) exempting  petitioner from paying hourly paid faculty members their pay for regular
holidays, whether the same be during the regular semesters of the school year or during
semestral, Christmas, or Holy Week vacations;
(b) but ordering petitioner to pay said faculty members their regular hourly rate on days
declared as special holidays or for some reason classes are called off or shortened for the
hours they are supposed to have taught, whether extensions of class days be ordered or not;
in case of extensions said faculty members shall likewise be paid their hourly rates should
they teach during said extensions.
SO ORDERED.
G.R. No. L-52415 October 23, 1984
INSULAR BANK OF ASIA AND AMERICA EMPLOYEES' UNION (IBAAEU), petitioner,
vs.
HON. AMADO G. INCIONG, Deputy Minister, Ministry of Labor and INSULAR BANK OF
ASIA AND AMERICA, respondents.
Sisenando R. Villaluz, Jr. for petitioner.
Abdulmaid Kiram Muin colloborating counsel for petitioner.
The Solicitor General Caparas, Tabios, Ilagan Alcantara & Gatmaytan Law Office and Sycip,
Salazar, Feliciano & Hernandez Law Office for respondents.
MAKASIAR, J.:ñé+.£ªwph!1
This is a petition for certiorari to set aside the order dated November 10, 1979, of respondent
Deputy Minister of Labor, Amado G. Inciong, in NLRC case No. RB-IV-1561-76
entitled "Insular Bank of Asia and America Employees' Union (complainant-appellee), vs.
Insular Bank of Asia and America" (respondent-appellant), the dispositive portion of which
reads as follows: têñ.£îhqwâ£
xxx xxx xxx
ALL THE FOREGOING CONSIDERED, let the appealed Resolution en
banc of the National Labor Relations Commission dated 20 June 1978 be, as
it is hereby, set aside and a new judgment. promulgated dismissing the
instant case for lack of merit (p. 109 rec.).
The antecedent facts culled from the records are as follows:
On June 20, 1975, petitioner filed a complaint against the respondent bank for the payment of
holiday pay before the then Department of Labor, National Labor Relations Commission,
Regional Office No. IV in Manila. Conciliation having failed, and upon the request of both
parties, the case was certified for arbitration on July 7, 1975 (p. 18, NLRC rec.
On August 25, 1975, Labor Arbiter Ricarte T. Soriano rendered a decision in the above-
entitled case, granting petitioner's complaint for payment of holiday pay. Pertinent portions of
the decision read: têñ.£îhqwâ£
xxx xxx xxx
The records disclosed that employees of respondent bank were not paid their
wages on unworked regular holidays as mandated by the Code, particularly
Article 208, to wit: têñ.£îhqwâ£
Art. 208. Right to holiday pay.
(a) Every worker shall be paid his regular daily wage during
regular holidays, except in retail and service establishments
regularly employing less than 10 workers.
(b) The term "holiday" as used in this chapter, shall include:
New Year's Day, Maundy Thursday, Good Friday, the ninth
of April the first of May, the twelfth of June, the fourth of July,
the thirtieth of November, the twenty-fifth and the thirtieth of
December and the day designated by law for holding a
general election.
xxx xxx xxx
This conclusion is deduced from the fact that the daily rate of pay of the bank
employees was computed in the past with the unworked regular holidays as
excluded for purposes of determining the deductible amount for absences
incurred Thus, if the employer uses the factor 303 days as a divisor in
determining the daily rate of monthly paid employee, this gives rise to a
presumption that the monthly rate does not include payments for unworked
regular holidays. The use of the factor 303 indicates the number of ordinary
 working days in a year (which normally has 365 calendar days), excluding
the 52 Sundays and the 10 regular holidays. The use of 251 as a factor (365
calendar days less 52 Saturdays, 52 Sundays, and 10 regular holidays) gives
rise likewise to the same presumption that the unworked Saturdays, Sundays
and regular holidays are unpaid. This being the case, it is not amiss to state
with certainty that the instant claim for wages on regular unworked holidays is
found to be tenable and meritorious.
WHEREFORE, judgment is hereby rendered:
(a) xxx xxxx xxx
(b) Ordering respondent to pay wages to all its employees for all regular
h(olidays since November 1, 1974 (pp. 97-99, rec., underscoring supplied).
Respondent bank did not appeal from the said decision. Instead, it complied with the order of
Arbiter Ricarte T. Soriano by paying their holiday pay up to and including January, 1976.
On December 16, 1975, Presidential Decree No. 850 was promulgated amending, among
others, the provisions of the Labor Code on the right to holiday pay to read as follows: têñ.
£îhqwâ£
Art. 94. Right to holiday pay. — (a) Every worker shall be paid his regular
daily wages during regular holidays, except in retail and service
establishments regularly employing less than ten (10) workers;
(b) The employer may require an employee to work on any holiday but such
employee shall be paid a compensation equivalent to twice his regular rate
and
(c) As used in this Article, "holiday" includes New Year's Day, Maundy
Thursday, Good Friday, the ninth of April, the first of May, the twelfth of June,
the fourth of July, the thirtieth of November, the twenty-fifth and the thirtieth of
December, and the day designated by law for holding a general election.
Accordingly, on February 16, 1976, by authority of Article 5 of the same Code, the
Department of Labor (now Ministry of Labor) promulgated the rules and regulations for the
implementation of holidays with pay. The controversial section thereof reads: têñ.£îhqwâ£
Sec. 2. Status of employees paid by the month. — Employees who are
uniformly paid by the month, irrespective of the number of working days
therein, with a salary of not less than the statutory or established minimum
wage shall be presumed to be paid for all days in the month whether worked
or not.
For this purpose, the monthly minimum wage shall not be less than the
statutory minimum wage multiplied by 365 days divided by twelve" (italics
supplied).
On April 23, 1976, Policy Instruction No. 9 was issued by the then Secretary of Labor (now
Minister) interpreting the above-quoted rule, pertinent portions of which read: têñ.£îhqwâ£
xxx xxx xxx
The ten (10) paid legal holidays law, to start with, is intended to benefit
principally daily employees. In the case of monthly, only those whose
monthly salary did not yet include payment for the ten (10) paid legal holidays
are entitled to the benefit.
Under the rules implementing P.D. 850, this policy has been fully clarified to
eliminate controversies on the entitlement of monthly paid employees, The
new determining rule is this: If the monthly paid employee is receiving not
less than P240, the maximum monthly minimum wage, and his monthly pay
is uniform from January to December, he is presumed to be already paid the
ten (10) paid legal holidays. However, if deductions are made from his
monthly salary on account of holidays in months where they occur, then he is
still entitled to the ten (10) paid legal holidays. ..." (emphasis supplied).
Respondent bank, by reason of the ruling laid down by the aforecited rule implementing
Article 94 of the Labor Code and by Policy Instruction No. 9, stopped the payment of holiday
pay to an its employees.
On August 30, 1976, petitioner filed a motion for a writ of execution to enforce the arbiter's
decision of August 25, 1975, whereby the respondent bank was ordered to pay its employees
their daily wage for the unworked regular holidays.
On September 10, 1975, respondent bank filed an opposition to the motion for a writ of
execution alleging, among others, that: (a) its refusal to pay the corresponding unworked
holiday pay in accordance with the award of Labor Arbiter Ricarte T. Soriano dated August
25, 1975, is based on and justified by Policy Instruction No. 9 which interpreted the rules
implementing P. D. 850; and (b) that the said award is already repealed by P.D. 850 which
took effect on December 16, 1975, and by said Policy Instruction No. 9 of the Department of
Labor, considering that its monthly paid employees are not receiving less than P240.00 and
their monthly pay is uniform from January to December, and that no deductions are made
from the monthly salaries of its employees on account of holidays in months where they occur
(pp. 64-65, NLRC rec.).
On October 18, 1976, Labor Arbiter Ricarte T. Soriano, instead of issuing a writ of execution,
issued an order enjoining the respondent bank to continue paying its employees their regular
holiday pay on the following grounds: (a) that the judgment is already final and the findings
which is found in the body of the decision as well as the dispositive portion thereof is res
judicata or is the law of the case between the parties; and (b) that since the decision had
been partially implemented by the respondent bank, appeal from the said decision is no
longer available (pp. 100-103, rec.).
On November 17, 1976, respondent bank appealed from the above-cited order of Labor
Arbiter Soriano to the National Labor Relations Commission, reiterating therein its
contentions averred in its opposition to the motion for writ of execution. Respondent bank
further alleged for the first time that the questioned order is not supported by evidence insofar
as it finds that respondent bank discontinued payment of holiday pay beginning January,
1976 (p. 84, NLRC rec.).
On June 20, 1978, the National Labor Relations Commission promulgated its resolution en
banc  dismissing respondent bank's appeal, the dispositive portion of which reads as
follows: têñ.£îhqwâ£
In view of the foregoing, we hereby resolve to dismiss, as we hereby dismiss,
respondent's appeal; to set aside Labor Arbiter Ricarte T. Soriano's order of
18 October 1976 and, as prayed for by complainant, to order the issuance of
the proper writ of execution (p. 244, NLRC rec.).
Copies of the above resolution were served on the petitioner only on February 9, 1979 or
almost eight. (8) months after it was promulgated, while copies were served on the
respondent bank on February 13, 1979.
On February 21, 1979, respondent bank filed with the Office of the Minister of Labor a motion
for reconsideration/appeal with urgent prayer to stay execution, alleging therein the following:
(a) that there is prima facie evidence of grave abuse of discretion, amounting to lack of
jurisdiction on the part of the National Labor Relations Commission, in dismissing the
respondent's appeal on pure technicalities without passing upon the merits of the appeal and
(b) that the resolution appealed from is contrary to the law and jurisprudence (pp. 260-274,
NLRC rec.).
On March 19, 1979, petitioner filed its opposition to the respondent bank's appeal and alleged
the following grounds: (a) that the office of the Minister of Labor has no jurisdiction to
entertain the instant appeal pursuant to the provisions of P. D. 1391; (b) that the labor
arbiter's decision being final, executory and unappealable, execution is a matter of right for
the petitioner; and (c) that the decision of the labor arbiter dated August 25, 1975 is
supported by the law and the evidence in the case (p. 364, NLRC rec.).
On July 30, 1979, petitioner filed a second motion for execution pending appeal, praying that
a writ of execution be issued by the National Labor Relations Commission pending appeal of
the case with the Office of the Minister of Labor. Respondent bank filed its opposition thereto
on August 8, 1979.
On August 13, 1979, the National Labor Relations Commission issued an order which
states: têñ.£îhqwâ£
The Chief, Research and Information Division of this Commission is hereby
directed to designate a Socio-Economic Analyst to compute the holiday pay
of the employees of the Insular Bank of Asia and America from April 1976 to
the present, in accordance with the Decision of the Labor Arbiter dated
August 25, 1975" (p. 80, rec.).
On November 10, 1979, the Office of the Minister of Labor, through Deputy Minister Amado
G. Inciong, issued an order, the dispositive portion of which states: têñ.£îhqwâ£
ALL THE FOREGOING CONSIDERED, let the appealed Resolution en
banc  of the National Labor Relations Commission dated 20 June 1978 be, as
it is hereby, set aside and a new judgment promulgated dismissing the
instant case for lack of merit (p. 436, NLRC rec.).
Hence, this petition for certiorari charging public respondent Amado G. Inciong with abuse of
discretion amounting to lack or excess of jurisdiction.
The issue in this case is: whether or not the decision of a Labor Arbiter awarding payment of
regular holiday pay can still be set aside on appeal by the Deputy Minister of Labor even
though it has already become final and had been partially executed, the finality of which was
affirmed by the National Labor Relations Commission sitting en banc, on the basis of an
Implementing Rule and Policy Instruction promulgated by the Ministry of Labor long after the
said decision had become final and executory.
WE find for the petitioner.
I
WE agree with the petitioner's contention that Section 2, Rule IV, Book III of the implementing
rules and Policy Instruction No. 9 issued by the then Secretary of Labor are null and void
since in the guise of clarifying the Labor Code's provisions on holiday pay, they in effect
amended them by enlarging the scope of their exclusion (p. 1 1, rec.).
Article 94 of the Labor Code, as amended by P.D. 850, provides: têñ.£îhqwâ£
Art. 94. Right to holiday pay. — (a) Every worker shall be paid his regular
daily wage during regular holidays, except in retail and service
establishments regularly employing less than ten (10) workers. ...
The coverage and scope of exclusion of the Labor Code's holiday pay provisions is spelled
out under Article 82 thereof which reads: têñ.£îhqwâ£
 Art. 82. Coverage. — The provision of this Title shall apply to employees in
all establishments and undertakings, whether for profit or not, but not to
government employees, managerial employees, field personnel members of
the family of the employer who are dependent on him for support domestic
helpers, persons in the personal service of another, and workers who are
paid by results as determined by the Secretary of Labor in appropriate
regulations.
... (emphasis supplied).
From the above-cited provisions, it is clear that monthly paid employees are not excluded
from the benefits of holiday pay. However, the implementing rules on holiday pay
promulgated by the then Secretary of Labor excludes monthly paid employees from the said
benefits by inserting, under Rule IV, Book Ill of the implementing rules, Section 2, which
provides that: "employees who are uniformly paid by the month, irrespective of the number of
working days therein, with a salary of not less than the statutory or established minimum
wage shall be presumed to be paid for all days in the month whether worked or not. "
Public respondent maintains that "(T)he rules implementing P. D. 850 and Policy Instruction
No. 9 were issued to clarify the policy in the implementation of the ten (10) paid legal
holidays. As interpreted, 'unworked' legal holidays are deemed paid insofar as monthly paid
employees are concerned if (a) they are receiving not less than the statutory minimum wage,
(b) their monthly pay is uniform from January to December, and (c) no deduction is made
from their monthly salary on account of holidays in months where they occur. As explained in
Policy Instruction No, 9, 'The ten (10) paid legal holidays law, to start with, is intended to
benefit principally daily paid employees. In case of monthly, only those whose monthly salary
did not yet include payment for the ten (10) paid legal holidays are entitled to the benefit' "
(pp. 340-341, rec.). This contention is untenable.
It is elementary in the rules of statutory construction that when the language of the law is
clear and unequivocal the law must be taken to mean exactly what it says. In the case at bar,
the provisions of the Labor Code on the entitlement to the benefits of holiday pay are clear
and explicit - it provides for both the coverage of and exclusion from the benefits. In Policy
Instruction No. 9, the then Secretary of Labor went as far as to categorically state that the
benefit is principally intended for daily paid employees, when the law clearly states that every
worker shall be paid their regular holiday pay. This is a flagrant violation of the mandatory
directive of Article 4 of the Labor Code, which states that "All doubts in the implementation
and interpretation of the provisions of this Code, including its implementing rules and
regulations, shall be resolved in favor of labor." Moreover, it shall always be presumed that
the legislature intended to enact a valid and permanent statute which would have the most
beneficial effect that its language permits (Orlosky vs. Haskell, 155 A. 112.)
Obviously, the Secretary (Minister) of Labor had exceeded his statutory authority granted by
Article 5 of the Labor Code authorizing him to promulgate the necessary implementing rules
and regulations.
Public respondent vehemently argues that the intent and spirit of the holiday pay law, as
expressed by the Secretary of Labor in the case of Chartered Bank Employees Association v.
The Chartered Bank (NLRC Case No. RB-1789-75, March 24, 1976), is to correct the
disadvantages inherent in the daily compensation system of employment — holiday pay is
primarily intended to benefit the daily paid workers whose employment and income are
circumscribed by the principle of "no work, no pay." This argument may sound meritorious;
but, until the provisions of the Labor Code on holiday pay is amended by another law,
monthly paid employees are definitely included in the benefits of regular holiday pay. As
earlier stated, the presumption is always in favor of law, negatively put, the Labor Code is
always strictly construed against management.
While it is true that the contemporaneous construction placed upon a statute by executive
officers whose duty is to enforce it should be given great weight by the courts, still if such
construction is so erroneous, as in the instant case, the same must be declared as null and
void. It is the role of the Judiciary to refine and, when necessary, correct constitutional (and/or
statutory) interpretation, in the context of the interactions of the three branches of the
government, almost always in situations where some agency of the State has engaged in
action that stems ultimately from some legitimate area of governmental power (The Supreme
Court in Modern Role, C. B. Swisher 1958, p. 36).
Thus. in the case of Philippine Apparel Workers Union vs. National Labor Relations
Commission (106 SCRA 444, July 31, 1981) where the Secretary of Labor enlarged the
scope of exemption from the coverage of a Presidential Decree granting increase in
emergency allowance, this Court ruled that: têñ.£îhqwâ£
... the Secretary of Labor has exceeded his authority when he included
paragraph (k) in Section 1 of the Rules implementing P. D. 1 1 23.
xxx xxx xxx
Clearly, the inclusion of paragraph k contravenes the statutory authority
granted to the Secretary of Labor, and the same is therefore void, as ruled by
this Court in a long line of cases . . . .. têñ.£îhqwâ£
The recognition of the power of administrative officials to
promulgate rules in the administration of the statute,
necessarily limited to what is provided for in the legislative
enactment, may be found in the early case of United States
vs. Barrios decided in 1908. Then came in a 1914 decision,
United States vs. Tupasi Molina (29 Phil. 119) delineation of
the scope of such competence. Thus: "Of course the
regulations adopted under legislative authority by a particular
department must be in harmony with the provisions of the
law, and for the sole purpose of carrying into effect its
general provisions. By such regulations, of course, the law
itself cannot be extended. So long, however, as the
regulations relate solely to carrying into effect the provisions
of the law, they are valid." In 1936, in People vs. Santos, this
Court expressed its disapproval of an administrative order
that would amount to an excess of the regulatory power
vested in an administrative official We reaffirmed such a
doctrine in a 1951 decision, where we again made clear that
where an administrative order betrays inconsistency or
repugnancy to the provisions of the Act, 'the mandate of the
Act must prevail and must be followed. Justice Barrera,
speaking for the Court in Victorias Milling inc. vs. Social
Security Commission, citing Parker as well as Davis did
tersely sum up the matter thus: "A rule is binding on the
Courts so long as the procedure fixed for its promulgation is
followed and its scope is within the statutory authority
granted by the legislature, even if the courts are not in
agreement with the policy stated therein or its innate
wisdom. ... On the other hand, administrative interpretation
of the law is at best merely advisory, for it is the courts that
finally determine chat the law means."
"It cannot be otherwise as the Constitution limits the authority
of the President, in whom all executive power resides, to
take care that the laws be faithfully executed. No lesser
administrative executive office or agency then can, contrary
to the express language of the Constitution assert for itself a
more extensive prerogative. Necessarily, it is bound to
observe the constitutional mandate. There must be strict
compliance with the legislative enactment. Its terms must be
followed the statute requires adherence to, not departure
from its provisions. No deviation is allowable. In the terse
language of the present Chief Justice, an administrative
agency "cannot amend an act of Congress." Respondents
can be sustained, therefore, only if it could be shown that the
rules and regulations promulgated by them were in
accordance with what the Veterans Bill of Rights provides"
(Phil. Apparel Workers Union vs. National Labor Relations
Commission, supra, 463, 464, citing Teozon vs. Members of
the Board of Administrators, PVA 33 SCRA 585; see also
Santos vs. Hon. Estenzo, et al, 109 Phil. 419; Hilado vs.
Collector of Internal Revenue, 100 Phil. 295; Sy Man vs.
Jacinto & Fabros, 93 Phil. 1093; Olsen & Co., Inc. vs.
Aldanese and Trinidad, 43 Phil. 259).
This ruling of the Court was recently reiterated in the case of American Wire & Cable
Workers Union (TUPAS) vs. The National Labor Relations Commission and American Wire &
Cable Co., Inc., G.R. No. 53337, promulgated on June 29, 1984.
In view of the foregoing, Section 2, Rule IV, Book III of the Rules to implement the Labor
Code and Policy instruction No. 9 issued by the then Secretary of Labor must be declared
null and void. Accordingly, public respondent Deputy Minister of Labor Amado G. Inciong had
no basis at all to deny the members of petitioner union their regular holiday pay as directed
by the Labor Code.
II
It is not disputed that the decision of Labor Arbiter Ricarte T. Soriano dated August 25, 1975,
had already become final, and was, in fact, partially executed by the respondent bank.
However, public respondent maintains that on the authority of De Luna vs. Kayanan, 61
SCRA 49, November 13, 1974, he can annul the final decision of Labor Arbiter Soriano since
the ensuing promulgation of the integrated implementing rules of the Labor Code pursuant to
P.D. 850 on February 16, 1976, and the issuance of Policy Instruction No. 9 on April 23, 1976
by the then Secretary of Labor are facts and circumstances that transpired subsequent to the
promulgation of the decision of the labor arbiter, which renders the execution of the said
decision impossible and unjust on the part of herein respondent bank (pp. 342-343, rec.).
This contention is untenable.
To start with, unlike the instant case, the case of De Luna relied upon by the public
respondent is not a labor case wherein the express mandate of the Constitution on the
protection to labor is applied. Thus Article 4 of the Labor Code provides that, "All doubts in
the implementation and interpretation of the provisions of this Code, including its
implementing rules and regulations, shall be resolved in favor of labor and Article 1702 of the
Civil Code provides that, " In case of doubt, all labor legislation and all labor contracts shall be
construed in favor of the safety and decent living for the laborer.
Consequently, contrary to public respondent's allegations, it is patently unjust to deprive the
members of petitioner union of their vested right acquired by virtue of a final judgment on the
basis of a labor statute promulgated following the acquisition of the "right".
On the question of whether or not a law or statute can annul or modify a judicial order issued
prior to its promulgation, this Court, through Associate Justice Claro M. Recto, said: têñ.
£îhqwâ£
xxx xxx xxx
 We are decidedly of the opinion that they did not. Said order, being
unappealable, became final on the date of its issuance and the parties who
acquired rights thereunder cannot be deprived thereof by a constitutional
provision enacted or promulgated subsequent thereto. Neither the
Constitution nor the statutes, except penal laws favorable to the accused,
have retroactive effect in the sense of annulling or modifying vested rights, or
altering contractual obligations" (China Ins. & Surety Co. vs. Judge of First
Instance of Manila, 63 Phil. 324, emphasis supplied).
In the case of In re: Cunanan, et al., 19 Phil. 585, March 18, 1954, this Court said: "... when a
court renders a decision or promulgates a resolution or order on the basis of and in
accordance with a certain law or rule then in force, the subsequent amendment or even
repeal of said law or rule may not affect the final decision, order, or resolution already
promulgated, in the sense of revoking or rendering it void and of no effect." Thus, the
amendatory rule (Rule IV, Book III of the Rules to Implement the Labor Code) cannot be
given retroactive effect as to modify final judgments. Not even a law can validly annul final
decisions (In re: Cunanan, et al., Ibid).
Furthermore, the facts of the case relied upon by the public respondent are not analogous to
that of the case at bar. The case of De Luna speaks of final and executory judgment, while iii
the instant case, the final judgment is partially executed. just as the court is ousted of its
jurisdiction to annul or modify a judgment the moment it becomes final, the court also loses its
jurisdiction to annul or modify a writ of execution upon its service or execution; for, otherwise,
we will have a situation wherein a final and executed judgment can still be annulled or
modified by the court upon mere motion of a panty This would certainly result in endless
litigations thereby rendering inutile the rule of law.
Respondent bank counters with the argument that its partial compliance was involuntary
because it did so under pain of levy and execution of its assets (p. 138, rec.). WE find no
merit in this argument. Respondent bank clearly manifested its voluntariness in complying
with the decision of the labor arbiter by not appealing to the National Labor Relations
Commission as provided for under the Labor Code under Article 223. A party who waives his
right to appeal is deemed to have accepted the judgment, adverse or not, as correct,
especially if such party readily acquiesced in the judgment by starting to execute said
judgment even before a writ of execution was issued, as in this case. Under these
circumstances, to permit a party to appeal from the said partially executed final judgment
would make a mockery of the doctrine of finality of judgments long enshrined in this
jurisdiction.
Section I of Rule 39 of the Revised Rules of Court provides that "... execution shall issue as a
matter of right upon the expiration of the period to appeal ... or if no appeal has been duly
perfected." This rule applies to decisions or orders of labor arbiters who are exercising quasi-
judicial functions since "... the rule of execution of judgments under the rules should govern
all kinds of execution of judgment, unless it is otherwise provided in other laws" Sagucio vs.
Bulos 5 SCRA 803) and Article 223 of the Labor Code provides that "... decisions, awards, or
orders of the Labor Arbiter or compulsory arbitrators are final and executory unless appealed
to the Commission by any or both of the parties within ten (10) days from receipt of such
awards, orders, or decisions. ..."
Thus, under the aforecited rule, the lapse of the appeal period deprives the courts of
jurisdiction to alter the final judgment and the judgment becomes final ipso jure  (Vega vs.
WCC, 89 SCRA 143, citing Cruz vs. WCC, 2 PHILAJUR 436, 440, January 31, 1978; see
also Soliven vs. WCC, 77 SCRA 621; Carrero vs. WCC and Regala vs. WCC, decided jointly,
77 SCRA 297; Vitug vs. Republic, 75 SCRA 436; Ramos vs. Republic, 69 SCRA 576).
In Galvez vs. Philippine Long Distance Telephone Co., 3 SCRA 422, 423, October 31, 1961,
where the lower court modified a final order, this Court ruled thus: têñ.£îhqwâ£
xxx xxx xxx
The lower court was thus aware of the fact that it was thereby altering or
modifying its order of January 8, 1959. Regardless of the excellence of the
motive for acting as it did, we are constrained to hold however, that the lower
court had no authorities to make said alteration or modification. ...
xxx xxx xxx
The equitable considerations that led the lower court to take the action
complained of cannot offset the dem ands of public policy and public interest
— which are also responsive to the tenets of equity — requiring that an
issues passed upon in decisions or final orders that have become executory,
be deemed conclusively disposed of and definitely closed for, otherwise,
there would be no end to litigations, thus setting at naught the main role of
courts of justice, which is to assist in the enforcement of the rule of law and
the maintenance of peace and order, by settling justiciable controversies with
finality.
xxx xxx xxx
In the recent case of Gabaya vs. Mendoza, 113 SCRA 405, 406, March 30, 1982, this Court
said: têñ.£îhqwâ£
xxx xxx xxx
In Marasigan vs. Ronquillo (94 Phil. 237), it was categorically stated that the
rule is absolute that after a judgment becomes final by the expiration of the
period provided by the rules within which it so becomes, no further
amendment or correction can be made by the court except for clerical errors
or mistakes. And such final judgment is conclusive not only as to every
matter which was offered and received to sustain or defeat the claim or
 demand but as to any other admissible matter which must have been offered
for that purpose (L-7044, 96 Phil. 526). In the earlier case of Contreras and
Ginco vs. Felix and China Banking Corp., Inc. (44 O.G. 4306), it was stated
that the rule must be adhered to regardless of any possible injustice in a
particular case for (W)e have to subordinate the equity of a particular
situation to the over-mastering need of certainty and immutability of judicial
pronouncements
xxx xxx xxx
III
The despotic manner by which public respondent Amado G. Inciong divested the members of
the petitioner union of their rights acquired by virtue of a final judgment is tantamount to a
deprivation of property without due process of law Public respondent completely ignored the
rights of the petitioner union's members in dismissing their complaint since he knew for a fact
that the judgment of the labor arbiter had long become final and was even partially executed
by the respondent bank.
A final judgment vests in the prevailing party a right recognized and protected by law under
the due process clause of the Constitution (China Ins. & Surety Co. vs. Judge of First
Instance of Manila, 63 Phil. 324). A final judgment is "a vested interest which it is right and
equitable that the government should recognize and protect, and of which the individual could
no. be deprived arbitrarily without injustice" (Rookledge v. Garwood, 65 N.W. 2d 785, 791).
lt is by this guiding principle that the due process clause is interpreted. Thus, in the pithy
language of then Justice, later Chief Justice, Concepcion "... acts of Congress, as well as
those of the Executive, can deny due process only under pain of nullity, and judicial
proceedings suffering from the same flaw are subject to the same sanction, any statutory
provision to the contrary notwithstanding (Vda. de Cuaycong vs. Vda. de Sengbengco 110
Phil. 118, emphasis supplied), And "(I)t has been likewise established that a violation of a
constitutional right divested the court of jurisdiction; and as a consequence its judgment is
null and void and confers no rights" (Phil. Blooming Mills Employees Organization vs. Phil.
Blooming Mills Co., Inc., 51 SCRA 211, June 5, 1973).
Tested by and pitted against this broad concept of the constitutional guarantee of due
process, the action of public respondent Amado G. Inciong is a clear example of deprivation
of property without due process of law and constituted grave abuse of discretion, amounting
to lack or excess of jurisdiction in issuing the order dated November 10, 1979.
WHEREFORE, THE PETITION IS HEREBY GRANTED, THE ORDER OF PUBLIC
RESPONDENT IS SET ASIDE, AND THE DECISION OF LABOR ARBITER RICARTE T.
SORIANO DATED AUGUST 25, 1975, IS HEREBY REINSTATED.
COSTS AGAINST PRIVATE RESPONDENT INSULAR BANK OF ASIA AND AMERICA
SO ORDERED.1äwphï1.ñët
G.R. No. 147420             June 10, 2004
CEZAR ODANGO in his behalf and in behalf of 32 complainants, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and ANTIQUE ELECTRIC
COOPERATIVE, INC., respondents.
DECISION
CARPIO, J.:
The Case
Before the Court is a petition for review1 assailing the Court of Appeals’ Resolutions of 27
September 20002 and 7 February 2001 in CA-G.R. SP No. 51519. The Court of Appeals
upheld the Decision3 dated 27 November 1997 and the Resolution dated 30 April 1998 of the
National Labor Relations Commission ("NLRC") in NLRC Case No. V-0048-97. The NLRC
reversed the Labor Arbiter’s Decision of 29 November 1996, which found respondent Antique
Electric Cooperative ("ANTECO") liable for petitioners’ wage differentials amounting to
₱1,017,507.73 plus attorney’s fees of 10%.
Antecedent Facts
Petitioners are monthly-paid employees of ANTECO whose workdays are from Monday to
Friday and half of Saturday. After a routine inspection, the Regional Branch of the
Department of Labor and Employment ("DOLE") found ANTECO liable for underpayment of
the monthly salaries of its employees. On 10 September 1989, the DOLE directed ANTECO
to pay its employees wage differentials amounting to ₱1,427,412.75. ANTECO failed to pay.
Thus, on various dates in 1995, thirty-three (33) monthly-paid employees filed complaints with
the NLRC Sub-Regional Branch VI, Iloilo City, praying for payment of wage differentials,
damages and attorney’s fees. Labor Arbiter Rodolfo G. Lagoc ("Labor Arbiter") heard the
consolidated complaints.
On 29 November 1996, the Labor Arbiter rendered a Decision in favor of petitioners granting
them wage differentials amounting to ₱1,017,507.73 and attorney’s fees of 10%. Florentino
Tongson, whose case the Labor Arbiter dismissed, was the sole exception.
ANTECO appealed the Decision to the NLRC on 24 December 1996. On 27 November 1997,
the NLRC reversed the Labor Arbiter’s Decision. The NLRC denied petitioners’ motion for
reconsideration in its Resolution dated 30 April 1998. Petitioners then elevated the case to
this Court through a petition for certiorari, which the Court dismissed for petitioners’ failure to
comply with Section 11, Rule 13 of the Rules of Court. On petitioners’ motion for
reconsideration, the Court on 13 January 1999 set aside the dismissal. Following the doctrine
in St. Martin Funeral Home v. NLRC,4 the Court referred the case to the Court of Appeals.
On 27 September 2000, the Court of Appeals issued a Resolution dismissing the petition for
failure to comply with Section 3, Rule 46 of the Rules of Court. The Court of Appeals
explained that petitioners failed to allege the specific instances where the NLRC abused its
discretion. The appellate court denied petitioners’ motion for reconsideration on 7 February
2001.
Hence, this petition.
The Labor Arbiter’s Ruling
The Labor Arbiter reasoned that ANTECO failed to refute petitioners’ argument that monthly-
paid employees are considered paid for all the days in a month under Section 2, Rule IV of
Book 3 of the Implementing Rules of the Labor Code ("Section 2"). 5 Petitioners claim that this
includes not only the 10 legal holidays, but also their un-worked half of Saturdays and all of
Sundays.
The Labor Arbiter gave credence to petitioners’ arguments on the computation of their wages
based on the 304 divisor used by ANTECO in converting the leave credits of its employees.
The Labor Arbiter agreed with petitioners that ANTECO’s use of 304 as divisor is an
admission that it is paying its employees for only 304 days a year instead of the 365 days as
specified in Section 2. The Labor Arbiter concluded that ANTECO owed its employees the
wages for 61 days, the difference between 365 and 304, for every year.
The NLRC’s Ruling
On appeal, the NLRC reversed the Labor Arbiter’s ruling that ANTECO underpaid its
employees. The NLRC pointed out that the Labor Arbiter’s own computation showed that the
daily wage rates of ANTECO’s employees were above the minimum daily wage of ₱124. The
lowest paid employee of ANTECO was then receiving a monthly wage of ₱3,788. The NLRC
applied the formula in Section 2 [(Daily Wage Rate = (Wage x 12)/365)] to the monthly wage
of ₱3,788 to arrive at a daily wage rate of ₱124.54, an amount clearly above the minimum
wage.
The NLRC noted that while the reasoning in the body of the Labor Arbiter’s decision
supported the view that ANTECO did not underpay, the conclusion arrived at was the
opposite. Finally, the NLRC ruled that the use of 304 as a divisor in converting leave credits is
more favorable to the employees since a lower divisor yields a higher rate of pay.
The Ruling of the Court of Appeals
The Court of Appeals held that the petition was insufficient in form and substance since it
"does not allege the essential requirements of the extra-ordinary special action of certiorari."
The Court of Appeals faulted petitioners for failing to recite "where and in what specific
instance public respondent abused its discretion." The appellate court characterized the
allegations in the petition as "sweeping" and clearly falling short of the requirement of Section
3, Rule 46 of the Rules of Court.
The Issues
Petitioners raise the following issues:
I
WHETHER THE COURT OF APPEALS IS CORRECT IN DISMISSING THE CASE.
II WHETHER PETITIONERS ARE ENTITLED TO THEIR MONEY CLAIM. 6
The Ruling of the Court
The petition has no merit.
On the sufficiency of the petition
Petitioners argue that the Court of Appeals erred in dismissing their petition because this
Court had already ruled that their petition is sufficient in form and substance. They argue that
this precludes any judgment to the contrary by the Court of Appeals. Petitioners cite this
Court’s Resolution dated 13 January 1999 as their basis. This Resolution granted petitioners’
motion for reconsideration and set aside the dismissal of their petition for review.
Petitioners’ reliance on our 16 September 1998 Resolution is misplaced. In our Resolution,
we dismissed petitioners’ case for failure to comply with Section 11, Rule 13 of the Rules of
Court.7 The petition lacked a written explanation on why service was made through registered
mail and not personally.
The error petitioners committed before the Court of Appeals is different. The appellate court
dismissed their petition for failure to comply with the first paragraph of Section 3 of Rule 46 8 in
relation to Rule 65 of the Rules of Court, outlining the necessary contents of a petition for
certiorari. This is an entirely different ground. The previous dismissal was due to petitioners’
failure to explain why they resorted to service by registered mail. This time the content of the
petition itself is deficient. Petitioners failed to allege in their petition the specific instances
where the actions of the NLRC amounted to grave abuse of discretion.
There is nothing in this Court’s Resolution dated 13 January 1999 that remotely supports
petitioners’ argument. What we resolved then was to reconsider the dismissal of the petition
due to a procedural defect and to refer the case to the Court of Appeals for its proper
disposition. We did not in any way rule that the petition is sufficient in form and substance.
Petitioners also argue that their petition is clear and specific in its allegation of grave abuse of
discretion. They maintain that they have sufficiently complied with the requirement in Section
3, Rule 46 of the Rules of Court.
Again, petitioners are mistaken.
We quote the relevant part of their petition:
REASONS RELIED UPON FOR ALLOWANCE OF PETITION
12. This Honorable court can readily see from the facts and circumstances of this
case, the petitioners were denied of their rights to be paid of 4 hours of each
Saturday, 51 rest days and 10 legal holidays of every year since they started working
with respondent ANTECO.
13. The respondent NLRC while with open eyes knew that the petitioners are entitled
to salary differentials consisting of 4 hours pay on Saturdays, 51 rest days and 10
legal holidays plus 10% attorney’s fees as awarded by the Labor Arbiter in the above-
mentioned decision, still contrary to law, contrary to existing jurisprudence issued
arbitrary, without jurisdiction and in excess of jurisdiction the decision vacating and
setting aside the said decision of the Labor Arbiter, to the irreparable damage and
prejudice of the petitioners.
14. That the respondent NLRC in grave abuse of discretion in the exercise of its
function, by way of evasion of positive duty in accordance with existing labor laws,
illegally refused to reconsider its decision dismissing the petitioners’ complaints.
15. That there is no appeal, nor plain, speedy and adequate remedy in law from the
above-mentioned decision and resolution of respondent NLRC except this petition for
certiorari.9
These four paragraphs comprise the petitioners’ entire argument. In these four paragraphs
petitioners ask that a writ of certiorari be issued in their favor. We find that the Court of
Appeals did not err in dismissing the petition outright. Section 3, Rule 46 of the Rules of Court
requires that a petition for certiorari must state the grounds relied on for the relief sought. A
simple perusal of the petition readily shows that petitioners failed to meet this requirement.
The appellate court’s jurisdiction to review a decision of the NLRC in a petition for certiorari is
confined to issues of jurisdiction or grave abuse of discretion. 10 An extraordinary remedy, a
petition for certiorari is available only and restrictively in truly exceptional cases. The sole
office of the writ of certiorari is the correction of errors of jurisdiction including the commission
of grave abuse of discretion amounting to lack or excess of jurisdiction. 11 It does not include
correction of the NLRC’s evaluation of the evidence or of its factual findings. Such findings
are generally accorded not only respect but also finality. 12 A party assailing such findings
bears the burden of showing that the tribunal acted capriciously and whimsically or in total
disregard of evidence material to the controversy, in order that the extraordinary writ of
certiorari will lie.13
We agree with the Court of Appeals that nowhere in the petition is there any acceptable
demonstration that the NLRC acted either with grave abuse of discretion or without or in
excess of its jurisdiction. Petitioners merely stated generalizations and conclusions of law.
Rather than discussing how the NLRC acted capriciously, petitioners resorted to a litany of
generalizations.
Petitions that fail to comply with procedural requisites, or are unintelligible or clearly without
legal basis, deserve scant consideration. Section 6, Rule 65 of the Rules of Court requires
that every petition be sufficient in form and substance before a court may take further action.
Lacking such sufficiency, the court may dismiss the petition outright.
The insufficiency in substance of this petition provides enough reason to end our discussion
here. However, we shall discuss the issues raised not so much to address the merit of the
petition, for there is none, but to illustrate the extent by which petitioners have haphazardly
pursued their claim.
On the right of the petitioners to wage differentials
Petitioners claim that the Court of Appeals gravely erred in denying their claim for wage
differentials. Petitioners base their claim on Section 2, Rule IV of Book III of the Omnibus
Rules Implementing the Labor Code. Petitioners argue that under this provision monthly-paid
employees are considered paid for all days of the month including un-worked days.
Petitioners assert that they should be paid for all the 365 days in a year. They argue that
since in the computation of leave credits, ANTECO uses a divisor of 304, ANTECO is not
paying them 61 days every year.
Petitioners’ claim is without basis
We have long ago declared void Section 2, Rule IV of Book III of the Omnibus Rules
Implementing the Labor Code. In Insular Bank of Asia v. Inciong,14 we ruled as follows:
Section 2, Rule IV, Book III of the Implementing Rules and Policy Instructions No. 9
issued by the Secretary (then Minister) of Labor are null and void since in the guise of
clarifying the Labor Code’s provisions on holiday pay, they in effect amended them
by enlarging the scope of their exclusion.
The Labor Code is clear that monthly-paid employees are not excluded from the
benefits of holiday pay. However, the implementing rules on holiday pay promulgated
 by the then Secretary of Labor excludes monthly-paid employees from the said
benefits by inserting, under Rule IV, Book III of the implementing rules, Section 2
which provides that monthly-paid employees are presumed to be paid for all days in
the month whether worked or not.
Thus, Section 2 cannot serve as basis of any right or claim. Absent any other legal basis,
petitioners’ claim for wage differentials must fail.
Even assuming that Section 2, Rule IV of Book III is valid, petitioners’ claim will still fail. The
basic rule in this jurisdiction is "no work, no pay." The right to be paid for un-worked days is
generally limited to the ten legal holidays in a year. 15 Petitioners’ claim is based on a mistaken
notion that Section 2, Rule IV of Book III gave rise to a right to be paid for un-worked days
beyond the ten legal holidays. In effect, petitioners demand that ANTECO should pay them
on Sundays, the un-worked half of Saturdays and other days that they do not work at all.
Petitioners’ line of reasoning is not only a violation of the "no work, no pay" principle, it also
gives rise to an invidious classification, a violation of the equal protection clause. Sustaining
petitioners’ argument will make monthly-paid employees a privileged class who are paid even
if they do not work.
The use of a divisor less than 365 days cannot make ANTECO automatically liable for
underpayment. The facts show that petitioners are required to work only from Monday to
Friday and half of Saturday. Thus, the minimum allowable divisor is 287, which is the result of
365 days, less 52 Sundays and less 26 Saturdays (or 52 half Saturdays). Any divisor below
287 days means that ANTECO’s workers are deprived of their holiday pay for some or all of
the ten legal holidays. The 304 days divisor used by ANTECO is clearly above the minimum
of 287 days.
Finally, petitioners cite Chartered Bank Employees Association v. Ople 16 as an analogous
situation. Petitioners have misread this case.
In Chartered Bank, the workers sought payment for un-worked legal holidays as a right
guaranteed by a valid law. In this case, petitioners seek payment of wages for un-worked
non-legal holidays citing as basis a void implementing rule. The circumstances are also
markedly different. In Chartered Bank,  there was a collective bargaining agreement that
prescribed the divisor. No CBA exists in this case. In Chartered Bank, the employer was
liable for underpayment because the divisor it used was 251 days, a figure that clearly fails to
account for the ten legal holidays the law requires to be paid. Here, the divisor ANTECO uses
is 304 days. This figure does not deprive petitioners of their right to be paid on legal holidays.
A final note. ANTECO’s defense is likewise based on Section 2, Rule IV of Book III of the
Omnibus Rules Implementing the Labor Code although ANTECO’s interpretation of this
provision is opposite that of petitioners. It is deplorable that both parties premised their
arguments on an implementing rule that the Court had declared void twenty years ago
in Insular Bank. This case is cited prominently in basic commentaries. 17 And yet, counsel for
both parties failed to consider this. This does not speak well of the quality of representation
they rendered to their clients. This controversy should have ended long ago had either
counsel first checked the validity of the implementing rule on which they based their
contentions.
WHEREFORE, the petition is DENIED. The Resoution of the Court of
Appeals DISMISSING CA-G.R. SP No. 51519 is AFFIRMED.
SO ORDERED.
G.R. No. 114698 July 3, 1995
WELLINGTON INVESTMENT AND MANUFACTURING CORPORATION, petitioner,
vs.
CRESENCIANO B. TRAJANO, Under-Secretary of Labor and Employment, ELMER
ABADILLA, and 34 others, respondents.
NARVASA, C.J.:
The basic issue raised by petitioner in this case is, as its counsel puts it, "whether or not a
monthly-paid employee, receiving a fixed monthly compensation, is entitled to an additional
pay aside from his usual holiday pay, whenever a regular holiday falls on a Sunday."
The case arose from a routine inspection conducted by a Labor Enforcement Officer on
August 6, 1991 of the Wellington Flour Mills, an establishment owned and operated by
petitioner Wellington Investment and Manufacturing Corporation (hereafter, simply
Wellington). The officer thereafter drew up a report, a copy of which was "explained to and
received by" Wellington's personnel manager, in which he set forth his finding of "(n)on-
payment of regular holidays falling on a Sunday for monthly-paid employees." 1
Wellington sought reconsideration of the Labor Inspector's report, by letter dated August 10,
1991. It argued that "the monthly salary of the company's monthly-salaried employees
already includes holiday pay for all regular holidays . . . (and hence) there is no legal basis for
the finding of alleged non-payment of regular holidays falling on a Sunday." 2 It expounded on
this thesis in a position paper subsequently submitted to the Regional Director, asserting that
it pays its monthly-paid employees a fixed monthly compensation "using the 314 factor which
undeniably covers and already includes payment for all the working days in a month as well
as all the 10 unworked regular holidays within a year."3
Wellington's arguments failed to persuade the Regional Director who, in an Order issued on
July 28, 1992, ruled that "when a regular holiday falls on a Sunday, an extra or additional
working day is created and the employer has the obligation to pay the employees for the
extra day except the last Sunday of August since the payment for the said holiday is already
included in the 314 factor," and accordingly directed Wellington to pay its employees
compensation corresponding to four (4) extra working days. 4
Wellington timely filed a motion for reconsideration of this Order of August 10, 1992, pointing
out that it was in effect being compelled to "shell out an additional pay for an alleged extra
working day" despite its complete payment of all compensation lawfully due its workers, using
the 314 factor.5 Its motion was treated as an appeal and was acted on by respondent
Undersecretary. By Order dated September 22, the latter affirmed the challenged order of the
Regional Director, holding that "the divisor being used by the respondent (Wellington) does
not reliably reflect the actual working days in a year, " and consequently commanded
Wellington to pay its employees the "six additional working days resulting from regular
holidays falling on Sundays in 1988, 1989 and 1990." 6 Again, Wellington moved for
reconsideration,7 and again was rebuffed.8
Wellington then instituted the special civil action of certiorari at bar in an attempt to nullify the
orders above mentioned. By Resolution dated July 4, 1994, this Court authorized the
issuance of a temporary restraining order enjoining the respondents from enforcing the
questioned orders.9
Every worker should, according to the Labor Code, 10 "be paid his regular daily wage during
regular holidays, except in retail and service establishments regularly employing less than ten
(10) workers;" this, of course, even if the worker does no work on these holidays. The regular
holidays include: "New Year's Day, Maundy Thursday, Good Friday, the ninth of April, the first
of May, the twelfth of June, the fourth of July, the thirtieth of November, the twenty-fifth of
December, and the day designated by law for holding a general election (or national
referendum or plebiscite).11
Particularly as regards employees "who are uniformly paid by the month, "the monthly
minimum wage shall not be less than the statutory minimum wage multiplied by 365 days
divided by twelve."12 This monthly salary shall serve as compensation "for all days in the
month whether worked or not," and "irrespective of the number of working days therein." 13 In
other words, whether the month is of thirty (30) or thirty-one (31) days' duration, or twenty-
eight (28) or twenty-nine (29) (as in February), the employee is entitled to receive the entire
monthly salary. So, too, in the event of the declaration of any special holiday, or any fortuitous
cause precluding work on any particular day or days (such as transportation strikes, riots, or
typhoons or other natural calamities), the employee is entitled to the salary for the entire
month and the employer has no right to deduct the proportionate amount corresponding to
the days when no work was done. The monthly compensation is evidently intended precisely
to avoid computations and adjustments resulting from the contingencies just mentioned which
are routinely made in the case of workers paid on daily basis.
In Wellington's case, there seems to be no question that at the time of the inspection
conducted by the Labor Enforcement Officer on August 6, 1991, it was and had been paying
its employees "a salary of not less than the statutory or established minimum wage," and that
the monthly salary thus paid was "not . . . less than the statutory minimum wage multiplied by
365 days divided by twelve," supra. There is, in other words, no issue that to this extent,
Wellington complied with the minimum norm laid down by law.
Apparently the monthly salary was fixed by Wellington to provide for compensation for every
working day of the year including the holidays specified by law — and excluding only
Sundays. In fixing the salary, Wellington used what it calls the "314 factor;" that is to say, it
simply deducted 51 Sundays from the 365 days normally comprising a year and used the
difference, 314, as basis for determining the monthly salary. The monthly salary thus fixed
actually covers payment for 314 days of the year, including regular and special holidays, as
well as days when no work is done by reason of fortuitous cause, as above specified, or
causes not attributable to the employees.
The Labor Officer who conducted the routine inspection of Wellington discovered that in
certain years, two or three regular holidays had fallen on Sundays. He reasoned that this had
precluded the enjoyment by the employees of a non-working day, and the employees had
consequently had to work an additional day for that month. This ratiocination received the
approval of his Regional Director who opined 14 that "when a regular holiday falls on a
Sunday, an extra or additional working day is created and the employer has the obligation to
pay its employees for the extra day except the last Sunday of August since the payment for
the said holiday is already included in the 314 factor." 15
This ingenuous theory was adopted and further explained by respondent Labor
Undersecretary, to whom the matter was appealed, as follows: 16
. . . By using said (314) factor, the respondent (Wellington) assumes that all
the regular holidays fell on ordinary days and never on a Sunday. Thus, the
respondent failed to consider the circumstance that whenever a regular
holiday coincides with a Sunday, an additional working day is created and left
unpaid. In other words, while the said divisor may be utilized as proof
evidencing payment of 302 working days, 2 special days and the ten regular
holidays in a calendar year, the same does not cover or include payment of
additional working days created as a result of some regular holidays falling
on Sundays.
He pointed out that in 1988 there was "an increase of three (3) working days resulting from
regular holidays falling on Sundays;" hence Wellington "should pay for 317 days, instead of
314 days." By the same process of ratiocination, respondent Undersecretary theorized that
there should be additional payment by Wellington to its monthly-paid employees for "an
increment of three (3) working days" for 1989 and again, for 1990. What he is saying is that in
those years, Wellington should have used the "317 factor," not the "314 factor."
The theory loses sight of the fact that the monthly salary in Wellington — which is based on
the so-called "314 factor" — accounts for all 365 days of a year; i.e., Wellington's "314 factor"
leaves no day unaccounted for; it is paying for all the days of a year with the exception only of
51 Sundays.
The respondents' theory would make each of the years in question (1988, 1989, 1990), a
year of 368 days. Pursuant to this theory, no employer opting to pay his employees by the
month would have any definite basis to determine the number of days in a year for which
compensation should be given to his work force. He would have to ascertain the number of
times legal holidays would fall on Sundays in all the years of the expected or extrapolated
lifetime of his business. Alternatively, he would be compelled to make adjustments in his
employees' monthly salaries every year, depending on the number of times that a legal
holiday fell on a Sunday.
There is no provision of law requiring any employer to make such adjustments in the monthly
salary rate set by him to take account of legal holidays falling on Sundays in a given year, or,
contrary to the legal provisions bearing on the point, otherwise to reckon a year at more than
365 days. As earlier mentioned, what the law requires of employers opting to pay by the
month is to assure that "the monthly minimum wage shall not be less than the statutory
minimum wage multiplied by 365 days divided by twelve," 17 and to pay that salary "for all
days in the month whether worked or not," and "irrespective of the number of working days
therein."18 That salary is due and payable regardless of the declaration of any special holiday
in the entire country or a particular place therein, or any fortuitous cause precluding work on
any particular day or days (such as transportation strikes, riots, or typhoons or other natural
calamities), or cause not imputable to the worker. And as also earlier pointed out, the legal
provisions governing monthly compensation are evidently intended precisely to avoid re-
computations and alterations in salary on account of the contingencies just mentioned, which,
by the way, are routinely made between employer and employees when the wages are paid
on daily basis.
The public respondents argue that their challenged conclusions and dispositions may be
justified by Section 2, Rule X, Book III of the Implementing Rules, giving the Regional Director
power — 19
. . . to order and administer (in cases where employer-employee relations still
exist), after due notice and hearing, compliance with the labor standards
provisions of the Code and the other labor legislations based on the findings
of their Regulations Officers or Industrial Safety Engineers (Labor Standard
and Welfare Officers) and made in the course of inspection, and to issue
writs of execution to the appropriate authority for the enforcement of his
order, in line with the provisions of Article 128 in relation to Articles 289 and
290 of the Labor Code, as amended. . . .
The respondents beg the question. Their argument assumes that there are some "labor
standards provisions of the Code and the other labor legislations" imposing on employers the
obligation to give additional compensation to their monthly-paid employees in the event that a
legal holiday should fall on a Sunday in a particular month — with which compliance may be
commanded by the Regional Director — when the existence of said provisions is precisely
the matter to be established.
In promulgating the orders complained of the public respondents have attempted to legislate,
or interpret legal provisions in such a manner as to create obligations where none are
intended. They have acted without authority, or at the very least, with grave abuse of their
discretion. Their acts must be nullified and set aside.
WHEREFORE, the orders complained of, namely: that of the respondent Undersecretary
dated September 22, 1993, and that of the Regional Director dated July 30, 1992, are
NULLIFIED AND SET ASIDE, and the proceeding against petitioner DISMISSED.
SO ORDERED
G.R. No. 102132. March 19, 1993.
DAVAO INTEGRATED PORT STEVEDORING SERVICES, petitioner, vs. RUBEN V.
ABARQUEZ, in his capacity as an accredited Voluntary Arbitrator and THE ASSOCIATION
OF TRADE UNIONS (ATU-TUCP), respondents.
Libron, Gaspar & Associates for petitioner.
Bansalan B. Metilla for Association of Trade Unions (ATUTUCP).
SYLLABUS
1. LABOR LAWS AND SOCIAL LEGISLATION; LABOR RELATIONS; COLLECTIVE
BARGAINING AGREEMENT; DEFINED; NATURE THEREOF; CONSTRUCTION TO BE
PLACED THEREON. — A collective bargaining agreement (CBA), as used in Article 252 of
the Labor Code, refers to a contract executed upon request of either the employer or the
exclusive bargaining representative incorporating the agreement reached after negotiations
with respect to wages, hours of work and all other terms and conditions of employment,
including proposals for adjusting any grievances or questions arising under such agreement.
While the terms and conditions of a CBA constitute the law between the parties, it is not,
however, an ordinary contract to which is applied the principles of law governing ordinary
contracts. A CBA, as a labor contract within the contemplation of Article 1700 of the Civil
Code of the Philippines which governs the relations between labor and capital, is not merely
contractual in nature but impressed with public interest, thus, it must yield to the common
good. As such, it must be construed liberally rather than narrowly and technically, and the
courts must place a practical and realistic construction upon it, giving due consideration to the
context in which it is negotiated and purpose which it is intended to serve.
2. ID.; ID.; ID.; ID.; ID.; ID.; CASE AT BAR. — It is thus erroneous for petitioner to isolate
Section 1, Article VIII of the 1989 CBA from the other related section on sick leave with pay
benefits, specifically Section 3 thereof, in its attempt to justify the discontinuance or
withdrawal of the privilege of commutation or conversion to cash of the unenjoyed portion of
the sick leave benefit to regular intermittent workers. The manner they were deprived of the
privilege previously recognized and extended to them by petitioner-company during the
lifetime of the CBA of October 16, 1985 until three (3) months from its renewal on April 15,
1989, or a period of three (3) years and nine (9) months, is not only tainted with arbitrariness
but likewise discriminatory in nature. It must be noted that the 1989 CBA has two (2) sections
on sick leave with pay benefits which apply to two (2) distinct classes of workers in
petitioner's company, namely: (1) the regular non-intermittent workers or those workers who
render a daily eight-hour service to the company and are governed by Section 1, Article VIII
of the 1989 CBA; and (2) intermittent field workers who are members of the regular labor pool
and the present regular extra labor pool as of the signing of the agreement on April 15, 1989
or those workers who have irregular working days and are governed by Section 3, Article VIII
of the 1989 CBA. It is not disputed that both classes of workers are entitled to sick leave with
pay benefits provided they comply with the conditions set forth under Section 1 in relation to
the last paragraph of Section 3, to wit: (1) the employee-applicant must be regular or must
have rendered at least one year of service with the company; and (2) the application must be
accompanied by a certification from a company-designated physician. the phrase "herein sick
leave privilege," as used in the last sentence of Section 1, refers to the privilege of having a
fixed 15-day sick leave with pay which, as mandated by Section 1, only the non-intermittent
workers are entitled to. This fixed 15-day sick leave with pay benefit should be distinguished
from the variable number of days of sick leave, not to exceed 15 days, extended to
intermittent workers under Section 3 depending on the number of hours of service rendered
to the company, including overtime pursuant to the schedule provided therein. It is only fair
and reasonable for petitioner-company not to stipulate a fixed 15-day sick leave with pay for
its regular intermittent workers since, as the term "intermittent" implies, there is irregularity in
their work-days. Reasonable and practical interpretation must be placed on contractual
provisions. Interpetatio fienda est ut res magis valeat quam pereat. Such interpretation is to
be adopted, that the thing may continue to have efficacy rather than fail.
3. ID.; ID.; ID.; SICK LEAVE BENEFITS; NATURE AND PURPOSE. — Sick leave benefits,
like other economic benefits stipulated in the CBA such as maternity leave and vacation leave
benefits, among others, are by their nature, intended to be replacements for regular income
which otherwise would not be earned because an employee is not working during the period
of said leaves. They are non-contributory in nature, in the sense that the employees
contribute nothing to the operation of the benefits. By their nature, upon agreement of the
parties, they are intended to alleviate the economic condition of the workers.
4. ID.; ID.; JURISDICTION OF VOLUNTARY ARBITRATOR; CASE AT BAR. — Petitioner-
company's objection to the authority of the Voluntary Arbitrator to direct the commutation of
the unenjoyed portion of the sick leave with pay benefits of intermittent workers in his
decision is misplaced. Article 261 of the Labor Code is clear. The questioned directive of the
herein public respondent is the necessary consequence of the exercise of his arbitral power
as Voluntary Arbitrator under Article 261 of the Labor Code "to hear and decide all unresolved
grievances arising from the interpretation or implementation of the Collective Bargaining
Agreement." We, therefore, find that no grave abuse of discretion was committed by public
respondent in issuing the award (decision). Moreover, his interpretation of Sections 1 and 3,
Article VIII of the 1989 CBA cannot be faulted with and is absolutely correct.
5. ID.; CONDITIONS OF EMPLOYMENT; PROHIBITION AGAINST ELIMINATION OR
DIMINUTION OF BENEFITS; BENEFITS GRANTED PURSUANT TO COMPANY
PRACTICE OR POLICY CANNOT BE PEREMPTORILY WITHDRAWN. — Whatever doubt
there may have been early on was clearly obliterated when petitioner-company recognized
the said privilege and paid its intermittent workers the cash equivalent of the unenjoyed
portion of their sick leave with pay benefits during the lifetime of the CBA of October 16, 1985
until three (3) months from its renewal on April 15, 1989. Well-settled is it that the said
privilege of commutation or conversion to cash, being an existing benefit, the petitioner-
company may not unilaterally withdraw, or diminish such benefits. It is a fact that petitioner-
company had, on several instances in the past, granted and paid the cash equivalent of the
unenjoyed portion of the sick leave benefits of some intermittent workers. Under the
circumstances, these may be deemed to have ripened into company practice or policy which
cannot be peremptorily withdrawn.
DECISION
ROMERO, J p:
In this petition for certiorari, petitioner Davao Integrated Port Services Corporation seeks to
reverse the Award 1 issued on September 10, 1991 by respondent Ruben V. Abarquez, in his
capacity as Voluntary Arbitrator of the National Conciliation and Mediation Board, Regional
Arbitration Branch XI in Davao City in Case No. AC-211-BX1-10-003-91 which directed
petitioner to grant and extend the privilege of commutation of the unenjoyed portion of the
sick leave with pay benefits to its intermittent field workers who are members of the regular
labor pool and the present regular extra pool in accordance with the Collective Bargaining
Agreement (CBA) executed between petitioner and private respondent Association of Trade
Unions (ATU-TUCP), from the time it was discontinued and henceforth.
The facts are as follows:
Petitioner Davao Integrated Port Stevedoring Services (petitioner-company) and private
respondent ATU-TUCP (Union), the exclusive collective bargaining agent of the rank and file
workers of petitioner-company, entered into a collective bargaining agreement (CBA) on
October 16, 1985 which, under Sections 1 and 3, Article VIII thereof, provide for sick leave
with pay benefits each year to its employees who have rendered at least one (1) year of
service with the company, thus:
"ARTICLE VIII
Section 1. Sick Leaves — The Company agrees to grant 15 days sick leave with pay each
year to every regular non-intermittent worker who already rendered at least one year of
service with the company. However, such sick leave can only be enjoyed upon certification by
a company designated physician, and if the same is not enjoyed within one year period of the
current year, any unenjoyed portion thereof, shall be converted to cash and shall be paid at
the end of the said one year period. And provided however, that only those regular workers of "Section 3. — All intermittent field workers of the company who are members of the Regular
the company whose work are not intermittent, are entitled to the herein sick leave privilege. Labor Pool and present Regular Extra Labor Pool as of the signing of this agreement shall be
entitled to vacation and sick leaves per year of service with pay under the following schedule
xxx xxx xxx based on the number of hours rendered including overtime, to wit:

Section 3. — All intermittent field workers of the company who are members of the Regular Hours of Service Per Vacation Sick Leave
Labor Pool shall be entitled to vacation and sick leaves per year of service with pay under the
following schedule based on the number of hours rendered including overtime, to wit: Calendar Year Leave

Hours of Service Per Vacation Sick Leave Less than 750 NII NII

Calendar Year Leave 751 — 825 6 days 6 days

Less than 750 NII NII 826 — 900 7 7

751 — 825 6 days 6 days 901 — 925 8 8

826 — 900 7 7 926 — 1,050 9 9

901 — 925 8 8 1,051 — 1,125 10 10

926 — 1,050 9 9 1,126 — 1,200 11 11

1,051 — 1,125 10 10 1,201 — 1,275 12 12

1,126 — 1,200 11 11 1,276 — 1,350 13 13

1,201 — 1,275 12 12 1,351 — 1,425 14 14

1,276 — 1,350 13 13 1,426 — 1,500 15 15

1,351 — 1,425 14 14
1,426 — 1,500 15 15
The conditions for the availment of the herein vacation and sick leaves shall be in accordance
with the above provided Sections 1 and 2 hereof, respectively."
Upon its renewal on April 15, 1989, the provisions for sick leave with pay benefits were
reproduced under Sections 1 and 3, Article VIII of the new CBA, but the coverage of the said
benefits was expanded to include the "present Regular Extra Labor Pool as of the signing of
this Agreement." Section 3, Article VIII, as revised, provides, thus:
The conditions for the availment of the herein vacation and sick leaves shall be in accordance
with the above provided Sections 1 and 2 hereof, respectively."
During the effectivity of the CBA of October 16, 1985 until three (3) months after its renewal
on April 15, 1989, or until July 1989 (a total of three (3) years and nine (9) months), all the
field workers of petitioner who are members of the regular labor pool and the present regular
extra labor pool who had rendered at least 750 hours up to 1,500 hours were extended sick
leave with pay benefits. Any unenjoyed portion thereof at the end of the current year was
converted to cash and paid at the end of the said one-year period pursuant to Sections 1 and
3, Article VIII of the CBA. The number of days of their sick leave per year depends on the
number of hours of service per calendar year in accordance with the schedule provided in
Section 3, Article VIII of the CBA.
The commutation of the unenjoyed portion of the sick leave with pay benefits of the
intermittent workers or its conversion to cash was, however, discontinued or withdrawn when
petitioner-company under a new assistant manager, Mr. Benjamin Marzo (who replaced Mr.
Cecilio Beltran, Jr. upon the latter's resignation in June 1989), stopped the payment of its
cash equivalent on the ground that they are not entitled to the said benefits under Sections 1
and 3 of the 1989 CBA.
The Union objected to the said discontinuance of commutation or conversion to cash of the
unenjoyed sick leave with pay benefits of petitioner's intermittent workers contending that it is
a deviation from the true intent of the parties that negotiated the CBA; that it would violate the
principle in labor laws that benefits already extended shall not be taken away and that it
would result in discrimination between the non-intermittent and the intermittent workers of the
petitioner-company.
Upon failure of the parties to amicably settle the issue on the interpretation of Sections 1 and
3, Article VIII of the 1989 CBA, the Union brought the matter for voluntary arbitration before
the National Conciliation and Mediation Board, Regional Arbitration Branch XI at Davao City
by way of complaint for enforcement of the CBA. The parties mutually designated public
respondent Ruben Abarquez, Jr. to act as voluntary arbitrator.
After the parties had filed their respective position papers, 2 public respondent Ruben
Abarquez, Jr. issued on September 10, 1991 an Award in favor of the Union ruling that the
regular intermittent workers are entitled to commutation of their unenjoyed sick leave with pay
benefits under Sections 1 and 3 of the 1989 CBA, the dispositive portion of which reads:
"WHEREFORE, premises considered, the management of the respondent Davao Integrated
Port Stevedoring Services Corporation is hereby directed to grant and extend the sick leave
privilege of the commutation of the unenjoyed portion of the sick leave of all the intermittent
field workers who are members of the regular labor pool and the present extra pool in
accordance with the CBA from the time it was discontinued and henceforth.
SO ORDERED."
Petitioner-company disagreed with the aforementioned ruling of public respondent, hence,
the instant petition.
Petitioner-company argued that it is clear from the language and intent of the last sentence of
Section 1, Article VIII of the 1989 CBA that only the regular workers whose work are not
intermittent are entitled to the benefit of conversion to cash of the unenjoyed portion of sick
leave, thus: ". . . And provided, however, that only those regular workers of the Company
whose work are not intermittent are entitled to the herein sick leave privilege."
Petitioner-company further argued that while the intermittent workers were paid the cash
equivalent of their unenjoyed sick leave with pay benefits during the previous management of
Mr. Beltran who misinterpreted Sections 1 and 3 of Article VIII of the 1985 CBA, it was well
within petitioner-company's rights to rectify the error it had committed and stop the payment
of the said sick leave with pay benefits. An error in payment, according to petitioner-company,
can never ripen into a practice.
We find the arguments unmeritorious.
A collective bargaining agreement (CBA), as used in Article 252 of the Labor Code, refers to
a contract executed upon request of either the employer or the exclusive bargaining
representative incorporating the agreement reached after negotiations with respect to wages,
hours of work and all other terms and conditions of employment, including proposals for
adjusting any grievances or questions arising under such agreement.
While the terms and conditions of a CBA constitute the law between the parties, 3 it is not,
however, an ordinary contract to which is applied the principles of law governing ordinary
contracts. 4 A CBA, as a labor contract within the contemplation of Article 1700 of the Civil
Code of the Philippines which governs the relations between labor and capital, is not merely
contractual in nature but impressed with public interest, thus, it must yield to the common
good. As such, it must be construed liberally rather than narrowly and technically, and the
courts must place a practical and realistic construction upon it, giving due consideration to the
context in which it is negotiated and purpose which it is intended to serve. 5
It is thus erroneous for petitioner to isolate Section 1, Article VIII of the 1989 CBA from the
other related section on sick leave with pay benefits, specifically Section 3 thereof, in its
attempt to justify the discontinuance or withdrawal of the privilege of commutation or
conversion to cash of the unenjoyed portion of the sick leave benefit to regular intermittent
workers. The manner they were deprived of the privilege previously recognized and extended
to them by petitioner-company during the lifetime of the CBA of October 16, 1985 until three
(3) months from its renewal on April 15, 1989, or a period of three (3) years and nine (9)
months, is not only tainted with arbitrariness but likewise discriminatory in nature. Petitioner-
company is of the mistaken notion that since the privilege of commutation or conversion to
cash of the unenjoyed portion of the sick leave with pay benefits is found in Section 1, Article
VIII, only the regular non-intermittent workers and no other can avail of the said privilege
because of the proviso found in the last sentence thereof.
It must be noted that the 1989 CBA has two (2) sections on sick leave with pay benefits which
apply to two (2) distinct classes of workers in petitioner's company, namely: (1) the regular
non-intermittent workers or those workers who render a daily eight-hour service to the
company and are governed by Section 1, Article VIII of the 1989 CBA; and (2) intermittent
field workers who are members of the regular labor pool and the present regular extra labor
pool as of the signing of the agreement on April 15, 1989 or those workers who have irregular
working days and are governed by Section 3, Article VIII of the 1989 CBA.
It is not disputed that both classes of workers are entitled to sick leave with pay benefits
provided they comply with the conditions set forth under Section 1 in relation to the last
paragraph of Section 3, to wit: (1) the employee-applicant must be regular or must have
rendered at least one year of service with the company; and (2) the application must be
accompanied by a certification from a company-designated physician.
Sick leave benefits, like other economic benefits stipulated in the CBA such as maternity
leave and vacation leave benefits, among others, are by their nature, intended to be
replacements for regular income which otherwise would not be earned because an employee
is not working during the period of said leaves. 6 They are non-contributory in nature, in the
sense that the employees contribute nothing to the operation of the benefits. 7 By their
nature, upon agreement of the parties, they are intended to alleviate the economic condition
of the workers.
After a careful examination of Section 1 in relation to Section 3, Article VIII of the 1989 CBA in
light of the facts and circumstances attendant in the instant case, we find and so hold that the
last sentence of Section 1, Article VIII of the 1989 CBA, invoked by petitioner-company does
not bar the regular intermittent workers from the privilege of commutation or conversion to
cash of the unenjoyed portion of their sick leave with pay benefits, if qualified. For the phrase
"herein sick leave privilege," as used in the last sentence of Section 1, refers to the privilege
of having a fixed 15-day sick leave with pay which, as mandated by Section 1, only the non-
intermittent workers are entitled to. This fixed 15-day sick leave with pay benefit should be
distinguished from the variable number of days of sick leave, not to exceed 15 days,
extended to intermittent workers under Section 3 depending on the number of hours of
service rendered to the company, including overtime pursuant to the schedule provided
therein. It is only fair and reasonable for petitioner-company not to stipulate a fixed 15-day
sick leave with pay for its regular intermittent workers since, as the term "intermittent" implies,
there is irregularity in their work-days. Reasonable and practical interpretation must be placed
on contractual provisions. Interpetatio fienda est ut res magis valeat quam pereat. Such
interpretation is to be adopted, that the thing may continue to have efficacy rather than fail. 8
We find the same to be a reasonable and practical distinction readily discernible in Section 1,
in relation to Section 3, Article VIII of the 1989 CBA between the two classes of workers in the
company insofar as sick leave with pay benefits are concerned. Any other distinction would
cause discrimination on the part of intermittent workers contrary to the intention of the parties
that mutually agreed in incorporating the questioned provisions in the 1989 CBA.
Public respondent correctly observed that the parties to the CBA clearly intended the same
sick leave privilege to be accorded the intermittent workers in the same way that they are
both given the same treatment with respect to vacation leaves - non-commutable and non-
cumulative. If they are treated equally with respect to vacation leave privilege, with more
reason should they be on par with each other with respect to sick leave privileges. 9 Besides,
if the intention were otherwise, during its renegotiation, why did not the parties expressly
stipulate in the 1989 CBA that regular intermittent workers are not entitled to commutation of
the unenjoyed portion of their sick leave with pay benefits?
Whatever doubt there may have been early on was clearly obliterated when petitioner-
company recognized the said privilege and paid its intermittent workers the cash equivalent of
the unenjoyed portion of their sick leave with pay benefits during the lifetime of the CBA of
October 16, 1985 until three (3) months from its renewal on April 15, 1989. Well-settled is it
that the said privilege of commutation or conversion to cash, being an existing benefit, the
petitioner-company may not unilaterally withdraw, or diminish such benefits. 10 It is a fact that
petitioner-company had, on several instances in the past, granted and paid the cash
equivalent of the unenjoyed portion of the sick leave benefits of some intermittent workers. 11
Under the circumstances, these may be deemed to have ripened into company practice or
policy which cannot be peremptorily withdrawn. 12
Moreover, petitioner-company's objection to the authority of the Voluntary Arbitrator to direct
the commutation of the unenjoyed portion of the sick leave with pay benefits of intermittent
workers in his decision is misplaced. Article 261 of the Labor Code is clear. The questioned
directive of the herein public respondent is the necessary consequence of the exercise of his
arbitral power as Voluntary Arbitrator under Article 261 of the Labor Code "to hear and decide
all unresolved grievances arising from the interpretation or implementation of the Collective
Bargaining Agreement." We, therefore, find that no grave abuse of discretion was committed
by public respondent in issuing the award (decision). Moreover, his interpretation of Sections
1 and 3, Article VIII of the 1989 CBA cannot be faulted with and is absolutely correct.
WHEREFORE, in view of the foregoing, the petition is DISMISSED. The award (decision) of
public respondent dated September 10, 1991 is hereby AFFIRMED. No costs.
SO ORDERED.
G.R. No. 149252. April 28, 2005
DONALD KWOK, Petitioners,
vs.
PHILIPPINE CARPET MANUFACTURING CORPORATION, Respondents.
DECISION
CALLEJO, SR., J.:
This is a petition for review of the Decision 1 of the Court of Appeals (CA) in CA-G.R. SP No.
60232 dismissing Donald Kwok’s petition for review on certiorari and affirming the majority
Decision of the National Labor Relations Commission (NLRC), as well as its resolution in
NLRC NCR Case No. 00-12-07454-96 dismissing the motion for reconsideration of the said
decision.
The Antecedents
In 1965, petitioner Donald Kwok and his father-in-law Patricio L. Lim, along with some other
stockholders, established a corporation, the respondent Philippine Carpet Manufacturing
Corporation (PCMC). The petitioner became its general manager, executive vice-president In a Decision8 dated November 27, 1998, the Labor Arbiter ruled in favor of the petitioner.
and chief operations officer. Lim, on the other hand, was its president and chairman of the The fallo of the decision reads:
board of directors. When the petitioner retired 36 years later or on October 31, 1996, he was
receiving a monthly salary of ₱160,000.00. 2 He demanded the cash equivalent of what he WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered
believed to be his accumulated vacation and sick leave credits during the entire length of his ordering the respondent company to pay complainant the sum of ₱7,080,546.00, plus ten
service with the respondent corporation, i.e., from November 16, 1965 to October 31, 1996, in percent (10%) thereof as and for attorney’s fees.
the total amount of ₱7,080,546.00 plus interest. 3 However, the respondent corporation
refused to accede to the petitioner’s demands, claiming that the latter was not entitled SO ORDERED.9
thereto.4
Undaunted, the respondent corporation appealed the decision to the NLRC, alleging that:
The petitioner filed a complaint against the respondent corporation for the payment of his
accumulated vacation and sick leave credits before the NLRC. He claimed that Lim made a
verbal promise to give him unlimited sick leave and vacation leave benefits and its cash I. THE LABOR ARBITER ERRED IN CONCLUDING THAT KWOK WAS COVERED BY THE
conversion upon his retirement or resignation without the need for any application therefor. In NOVEMBER 6, 1981 MEMORANDUM ON VACATION AND SICK LEAVE CREDITS. 10
addition, Lim also promised to grant him other benefits, such as golf and country club
membership; the privilege to charge the respondent corporation’s account; 6% profit-sharing II. THE LABOR ARBITER ERRED IN CONCLUDING THAT IT WAS DISCRIMINATORY NOT
in the net income of the respondent corporation (while Lim got 4%); and other corporate TO GRANT KWOK THESE BENEFITS.11
perquisites. According to the petitioner, all of these promises were complied with, except for
the grant of the cash equivalent of his accumulated vacation and sick leave credits upon his III. KWOK’S CLAIMS ARE BASELESS.12
retirement.5
IV. KWOK’S CLAIMS FOR BENEFITS ACCRUING FROM 1966 ARE BARRED BY
The respondent corporation denied all these, claiming that upon the petitioner’s retirement, PRESCRIPTION.13
he received the amount of ₱6,902,387.19 representing all the benefits due him. Despite this,
the petitioner again demanded ₱7,080,546.00, which demand was without factual and legal V. THERE IS NO BASIS FOR THE AWARD OF ₱7,080,546.00. 14
basis. The respondent corporation asserted that the chairman of its board of directors and its
president/vice-president had unlimited discretion in the use of their time, and had never been
The respondent corporation averred that based on the petitioner’s memorandum, his
required to file applications for vacation and sick leaves; as such, the said officers were not
admissions and the contract of employment, the petitioner was not entitled to the cash
entitled to vacation and sick leave benefits. The respondent corporation, likewise, pointed out
conversion of his sick and vacation leave credits. While the respondent corporation conceded
that even if the petitioner was entitled to the said additional benefits, his claim had already
that the petitioner may have been entitled to unlimited sick and vacation leave benefits during
prescribed. It further averred that it had no policy to grant vacation and sick leave credits to
his employment, it maintained that no such promise was made by Lim to convert the same;
the petitioner.6
even assuming that such verbal promise was made, the respondent corporation was not
bound thereby since the petitioner failed to adduce the written conformity of its board of
In his Affidavit7 dated May 19, 1998, Lim denied making any such verbal promise to his son- directors. The respondent corporation insisted that the claims of the petitioner were barred
in-law on the grant of unlimited vacation and sick leave credits and the cash conversion under Article 291 of the Labor Code.
thereof. Lim averred that the petitioner had received vacation and sick leave benefits from
1994 to 1996. Moreover, assuming that he did make such promise to the petitioner, the same
For his part, the petitioner made the following averments in his memorandum:
had not been confirmed or approved via resolution of the respondent corporation’s board of
directors.
The non-performance by PCMC of this particular promise to convert in cash all of his unused
cash (sic) and sick leave credits was precipitated by the falling out of the marriage between
It was further pointed out that as per the Memorandum dated November 6, 1981, only regular
Mr. Kwok and his wife, the daughter of Mr. Lim. In fact, even while Mr. Kwok was still the
employees and managerial and confidential employees falling under Category I were entitled
Executive Vice-President and General Manager of PCMC, when the falling out of the said
to vacation and sick leave credits. The petitioner, whose position did not fall under Category I,
marriage became apparent, the other benefits or perquisites which Mr. Kwok used to enjoy
was, thus, not entitled to the benefits under the said memorandum. The respondent
were immediately curtailed by Mr. Lim to the prejudice of Mr. Kwok. 15
corporation alleged that this was admitted by the petitioner himself and affirmed by Raoul
Rodrigo, its incumbent executive vice-president and general manager.
On November 29, 1999, the NLRC, by majority vote, rendered judgment granting the appeal,
reversing and setting aside the decision of the Labor Arbiter. 16 The NLRC ordered the
dismissal of the complaint. Commissioner Angelita A. Gacutan filed a dissenting opinion. 17
Aggrieved, the petitioner filed a petition for review with the CA, on the following grounds:
I
THE COMMISSION ACTED WITHOUT OR IN EXCESS OF ITS JURISDICTION OR WITH
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION
WHEN IT DECLARED THAT THE VERBAL PROMISE OF MR. LIM TO PETITIONER WAS
UNENFORCEABLE.
II
THE COMMISSION ACTED WITHOUT OR IN EXCESS OF ITS JURISDICTION OR WITH
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION
WHEN IT RULED THAT THE VERBAL PROMISE BY MR. LIM TO PETITIONER WAS NOT
BINDING AS IT WAS NOT APPROVED BY THE BOARD OF DIRECTORS.
III
THE COMMISSION ACTED WITHOUT OR IN EXCESS OF ITS JURISDICTION OR WITH
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION
WHEN IT IGNORED STRONG EVIDENCE THAT PCMC CLOTHED MR. LIM WITH
AWESOME POWERS TO GRANT BENEFITS TO ITS EMPLOYEES INCLUDING
PETITIONER AND RATIFIED THE SAME BY ITS SILENCE AND WHEN IT IGNORED TOO
EXISTING JURISPRUDENCE ON THE MATTER.
IV
THE COMMISSION ACTED WITHOUT OR IN EXCESS OF ITS JURISDICTION OR WITH
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION
WHEN IT IGNORED STRONG AND CLEAR EVIDENCE THAT IN PCMC THE GIVING OF
BENEFITS TO PETITIONER, THOUGH NOT IN WRITING, WAS A PREVALENT
PRACTICE.
V The petitioner further argues that his complaint was not time-barred since he filed it on
THE COMMISSION ACTED WITHOUT OR IN EXCESS OF ITS JURISDICTION OR WITH
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION
WHEN IT RULED THAT THE MEMORANDUM DATED APRIL 26, 1997 APPLICABLE TO
MR. RAOUL RODRIGO WAS ALSO APPLICABLE TO PETITIONER. 18
On February 28, 2001, the CA rendered judgment affirming the decision of the NLRC and
dismissing the petition.19 The petitioner’s motion for reconsideration thereof was denied by the
appellate court, per its Resolution20 dated July 17, 2001.
The petitioner, thus, filed the instant petition for review on certiorari with this Court, assailing
the decision and resolution of the CA on the following claims:
I
The Hon. Court of Appeals, contrary to law, gravely erred and disregarded established
jurisprudence in ruling that petitioner has not adduced sufficient evidence to support his claim
that he was, indeed, promised the cash conversion of his unused vacation and sick leave
credits upon retirement.21
II
The Hon. Court of Appeals gravely erred in ruling that even if private respondent’s (sic) Mr.
Lim did make him such promise, the same cannot be enforced. 22
III
The Hon. Court of Appeals gravely erred and disregarded clear jurisprudence on the matter
when it ruled that there is no showing that private respondent, thru its board of directors either
recognized, approved or ratified the promise made by Mr. Lim to petitioner. 23
As gleaned from his Memorandum, the petitioner posits that he had adduced substantial
evidence to prove that Lim, as president and chairman of the respondent corporation’s board
of directors, made a verbal promise to give him the cash conversion of his accumulated
vacation and sick leave credits upon his retirement (that is, benefits at par with the number of
days to which the officer next in rank to him was entitled). According to the petitioner, his
claim is fortified by the fact that his successor, Raoul Rodrigo, has unlimited vacation and sick
leave credits. The petitioner further asserts that he would not have accepted the positions in
the respondent corporation without such benefit, especially since his subordinates were also
enjoying the same. He posits that he was entitled to the said privilege because of his rank.
He, likewise, claims that, in contrast to the evidence he has presented, the respondent
corporation failed to adduce proof of its affirmative allegations.
December 5, 1996. Even if this were so, he is, nevertheless, entitled to the cash value of his
vacation and sick leave credits for three years before his retirement. Moreover, the evidence
on record shows that officers belonging to Category I had been granted the cash conversion
of their earned leave credits after the lapse of three years.
The respondent corporation, for its part, asserts that the petitioner failed to adduce
substantial evidence to the claims in his complaint. Even if Lim had made such verbal
promise to the petitioner, the same is not binding on the respondent corporation absent its
conformity through board resolution. Moreover, the petitioner is not covered by the
Memorandum dated November 6, 1981 because he had unlimited leave credits; hence, it
cannot be gainsaid that he still had unused leave credits to be converted. According to the
respondent corporation, the petitioner himself admitted that he was not included in the
Memorandum dated November 6, 1981; and even assuming that he was covered by the said
memorandum, the fact that his complaint was filed only in 1996 precludes him from claiming
the cash conversion of such leave credits for the years 1966 to 1993.
The Court’s Ruling
The petition has no merit.
The threshold issue in this case is factual – whether or not the petitioner is entitled, based on
the documentary and testimonial evidence on record, to the cash value of his vacation and
sick leave credits in the total amount of ₱7,080,546.00. The resolution of the issue is riveted
to our resolution of whether the petitioner’s mainly testimonial evidence of an alleged verbal
promise made by a corporate officer to grant him the privilege of converting accumulated
vacation and sick leave credits after retirement or separation from employment is entitled to
probative weight.
Under Rule 45 of the Rules of Court, only questions of law may be raised under a petition for
review on certiorari. The Court, not being a trier of facts, is not wont to reexamine and
reevaluate the evidence of the parties, whether testimonial or documentary. Moreover, the
findings of facts of the CA on appeal from the NLRC are, more often than not, given
conclusive effect by the Court. The Court may delve into and resolve factual issues only in
exceptional circumstances, such as when the findings of facts of the Labor Arbiter, on one
hand, and those of the NLRC and the CA, on the other, are capricious and arbitrary; or when
the CA has reached an erroneous conclusion based on arbitrary findings of fact; and when
substantial justice so requires. In this case, however, the petitioner failed to convince the
Court that the factual findings of the CA which affirmed the findings of the NLRC on appeal,
as well as its conclusions based on the said findings, are capricious and arbitrary.
While the petitioner was unequivocal in claiming that the respondent corporation, through its
president and chairman of the board of directors, obliged itself, as a matter of policy, to grant
him the cash value of his vacation and sick leave credits upon his retirement, he was
burdened to prove his claim by substantial evidence. 24 The petitioner failed to discharge this
burden.
We agree with the petitioner’s contention that for a contract to be binding on the parties
thereto, it need not be in writing unless the law requires that such contract be in some form in
order that it may be valid or enforceable or that it be executed in a certain way, in which case
that requirement is absolute and independent. 25 Indeed, corporate policies need not be in
writing. Contracts entered into by a corporate officer or obligations or prestations assumed by
such officer for and in behalf of such corporation are binding on the said corporation only if
such officer acted within the scope of his authority or if such officer exceeded the limits of his
authority, the corporation has ratified such contracts or obligations.
In the present case, the petitioner relied principally on his testimony to prove that Lim made a
verbal promise to give him vacation and sick leave credits, as well as the privilege of
converting the same into cash upon retirement. The Court agrees that those who belong to
the upper corporate echelons would have more privileges. However, the Court cannot
presume the existence of such privileges or benefits. The petitioner was burdened to prove
not only the existence of such benefits but also that he is entitled to the same, especially
considering that such privileges are not inherent to the positions occupied by the petitioner in
the respondent corporation, son-in-law of its president or not.
In dismissing the petition before it, the CA disbelieved the petitioner’s testimony and gave
credence and probative weight to the collective testimonies of the respondent corporation’s
witnesses, who were its employees and officers, including Lim, whom the petitioner
presented as a hostile witness. We agree with the appellate court’s encompassing synthesis
and analysis of the evidence on record:
Except for his bare assertions, petitioner has not adduced sufficient evidence to support his
claim that he was, indeed, promised the cash conversion of his unused vacation and sick
leaves upon retirement. Petitioner harps on what he calls the prevalent practice in PCMC of
giving him benefits, such as the use of golf and country club facilities, salary increases, the
use of the company vehicle and driver, and sharing in PCMC’s annual net income, without
either a written contract or a Board resolution to back it up. Respondent PCMC denies all
these, however. According to respondent, petitioner’s share in the income of the company is
actually part of the consultancy fee which PCMC pays DK Management Services, Inc., a firm
owned by petitioner’s company. PCMC adds that the yearly salary increases of corporate
officers were always with the prior approval of the Board.
Nevertheless, assuming that petitioner was, indeed, given the benefits which he so claimed, it
does not necessarily follow that among those is the cash conversion of his accumulated
leaves. It is a basic rule in evidence that each party must prove his affirmative allegation.
Since the burden of proof lies with the party who asserts an affirmative allegation, the plaintiff
or complainant has to prove his affirmative allegations in the complaint and the defendant or
respondent has to prove the affirmative allegations in his affirmative defenses and
counterclaim. Petitioner, in the case at bar, has failed to discharge this burden. 26
The CA made short shift of the claim of the petitioner that per Memorandum dated November
6, 1981, he was not entitled to the benefits of the company policy of commutation of leave
credits. Indeed, the company policy of conversion into equivalent cash of unused vacation
and sick leave credits applied only to its regular employees. The petitioner failed to offer
evidence to rebut the testimony of Nel Gopez, Chief Accountant of the respondent, that the
petitioner was not among the regular employees covered by the policy for the simple reason
that he had unlimited vacation leave benefits. As stated by the CA, the petitioner no less WITNESS
corroborated the testimony of Gopez, thus:
Because he has, as far as I can remember, he has unlimited vacation leave."
ATTY. PIMENTEL
This was corroborated by petitioner himself when he testified in this wise:
And, so you mention[ed] earlier that … the policy on vacation leave benefits apply for
category one employee(s) and rank-and-file employee(s)? ATTY. PIMENTEL

WITNESS (Mr. Nel Gopez) Mr. Witness, you occupied the position of Executive Vice-President and General Manager.
You agree with me that this position or this office of Executive Vice-President and General
Yes. Manager are not covered by this policy.

ATTY. PIMENTEL WITNESS (Donald Kwok)

And who are considered category one employee(s)? Yes, it is not covered by this policy.

WITNESS …

Category One employees are from the rank and of Senior Vice-President and Assistant
General Manager and below, up to the level of department managers.
ATTY. PIMENTEL
How about the complainant, Mr. Kwok, does he falling (sic) to the category one?
WITNESS
As far as I can remember, he is (sic) not belong to category one employee.
ATTY. PIMENTEL
Therefore, he is not entitled to the lump sum benefit?
WITNESS
Yes, Ma’am.
ATTY. PIMENTEL
And would you know, Mr. Witness, why he is (sic) not given the conversion of the vacation
leave benefits at the time category one employees sectors (sic) are given?
ATTY. PIMENTEL
So this policy applies to persons below you and your father-in-law?
WITNESS
Yes, right.
ATTY. PIMENTEL
And this policy does not apply to you?
WITNESS
As far as I’m concerned, it does not apply for (sic) me.
In all respects, therefore, petitioner, by virtue of his position as Executive Vice-President, is
not covered by the November 6, 1981 Memorandum granting PCMC employees the
conversion of their unused vacation and sick leaves into cash. 27
We have reviewed the records and found no evidence to controvert the following findings of
the CA and its ratiocinations on its resolution of the petitioner’s submissions:
Second, even assuming that petitioner is included among the "regular employees" of PCMC
referred to in said memorandum, there is no evidence that he complied with the cut-off dates
for the filing of the cash conversion of vacation and sick leaves. This being so, we find merit
in respondent’s argument that petitioner’s money claims have already been barred by the
three-year prescriptive period under Article 291 of the Labor Code, as amended.
Third, and this is of primordial importance, there is no proof that petitioner has filed vacation
and sick leaves with PCMC’s personnel department. Without a record of petitioner’s
absences, there is no way to determine the actual number of leave credits he is entitled to.
The ₱7,080,546.00 figure arrived at by petitioner supposedly representing the cash
equivalent of his earned sick and vacation leaves is thus totally baseless.
And, fourth, even assuming that PCMC President Patricio Lim did promise petitioner the cash
conversion of his leaves, we agree with respondent that this cannot bind the company in the
absence of any Board resolution to that effect. We must stress that the personal act of the
company president cannot bind the corporation. As explicitly stated by the Supreme Court
in People’s Aircargo and Warehousing Co., Inc. v. Court of Appeals:
"The general rule is that, in the absence of authority from the board of directors, no person,
not even its officers, can validly bind a corporation. A corporation is a juridical person,
separate and distinct from its stockholders and members, ‘having xxx powers, attributes and
properties expressly authorized by law or incident to its existence.’
…
"… the power and the responsibility to decide whether the corporation should enter into a
contract that will bind the corporation is lodged in the board, subject to the articles of
incorporation, by-laws, or relevant provisions of law."
Anent the third assigned error, petitioner maintains that the PCMC Board of Directors has
granted its President, Patricio Lim, awesome powers to grant benefits to its employees,
adding that the Board has always given its consent to the way Lim ran the affairs of the
company especially on matters relating to the benefits that its corporate officers enjoyed.
True, jurisprudence holds that the president of a corporation possesses the power to enter
into a contract for the corporation when "the conduct on the part of both the president and
corporation [shows] that he had been in the habit of acting in similar matters on behalf of the
company and that the company had authorized him so to act and had recognized, approved
and ratified his former and similar actions."
In the case at bar, however, there is no showing that PCMC had either recognized, approved
or ratified the cash conversion of petitioner’s leave credits as purportedly promised to him by
Lim. On the contrary, PCMC has steadfastly maintained that "the Company, through the
Board, has long adopted the policy of granting its earlier mentioned corporate officers
unlimited leave benefits denying them the privilege of converting their unused vacation or sick
leave benefits into their cash equivalent."
As to the last assigned error, petitioner faults the NLRC for holding as applicable to petitioner,
the April 26, 1997 Memorandum issued by PCMC to Raoul Rodrigo, Donald Kwok’s
successor as company executive vice-president. The said memo granted Rodrigo unlimited
sick and vacation leave credits but disallowed the cash conversion thereof. Before he
became executive vice-president, Rodrigo was senior vice-president and enjoyed the
commutation of his unused vacation and sick leaves.
We note that the April 26, 1997 memo was issued to Rodrigo when petitioner was already
retired from PCMC. While said memorandum was particularly directed to Rodrigo, however,
this does not necessarily mean that petitioner, as former executive vice-president, was then
not prohibited from converting his earned vacation and sick leaves into cash since he was not
issued a similar memo. On the contrary, the memo simply affirms the long-standing company
practice of excluding PCMC’s top two positions, that of president and executive vice-
president, from the commutation of leaves. As heretofore discussed, among the perks of
those occupying these posts is the privilege of having unlimited leaves, which is totally
incompatible with the concept of converting unused leave credits into their cash equivalents. 28
We are not convinced by the petitioner’s claim that Lim capriciously deprived him of his
entitlement to the cash conversion of his accumulated vacation and sick leave credits simply
because of his estrangement from his wife, who happens to be Lim’s daughter. The petitioner
did not adduce any evidence to show that he appealed to the respondent corporation’s board
of directors for the implementation of the said privilege which was allegedly granted to him.
Even if Lim was the president and chairman of the respondent corporation’s board of
directors, the rest of the membership of the board could have overruled him and granted to
the petitioner his claim if, indeed, the latter was entitled thereto. Indeed, even the petitioner
admitted that, after his retirement, the board of directors granted to him salary increase for
two years prior to his retirement. If the claim of the petitioner had been approved by the board
of directors, for sure, it would have approved the same despite his falling out with the
daughter of Lim.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. Costs against
the petitioner.
SO ORDERED.