G.R. No. L-4148             July 16, 1952 Judge V.
Judge V. Jimenez Yanson of the Court of Industrial Relations in his decision of April 1, 1950,
MANILA TERMINAL COMPANY, INC., petitioner,
vs.
THE COURT OF INDUSTRIAL RELATIONS and MANILA TERMINAL RELIEF AND
MUTUAL AID ASSOCIATION, respondents.
Perkins, Ponce Enrile and Contreras for petitioner.
Antonio V. Raquiza, Honesto Ricobal and Perfecto E. Llacarfor respondent Association.
Mariano R. Padilla for respondent Court of Industrial Relations.
PARAS, C. J.:
On September 1, 1945, the Manila Terminal Company, Inc. hereinafter to be referred as to
the petitioner, undertook the arrastre service in some of the piers in Manila's Port Area at the
request and under the control of the United States Army. The petitioner hired some thirty men
as watchmen on twelve-hour shifts at a compensation of P3 per day for the day shift and P6
per day for the night shift. On February 1, 1946, the petitioner began the postwar operation of
the arrastre service at the present at the request and under the control of the Bureau of
Customs, by virtue of a contract entered into with the Philippine Government. The watchmen
of the petitioner continued in the service with a number of substitutions and additions, their
salaries having been raised during the month of February to P4 per day for the day shift and
P6.25 per day for the nightshift. On March 28, 1947, Dominador Jimenez, a member of the
Manila Terminal Relief and Mutual Aid Association, sent a letter to the Department of Labor,
requesting that the matter of overtime pay be investigated, but nothing was done by the
Department. On April 29, 1947, Victorino Magno Cruz and five other employees, also
member of the Manila Transit Mutual Aid Association, filed a 5-point demand with the
Department of Labor, including overtime pay, but the Department again filed to do anything
about the matter. On May 27, 1947, the petitioner instituted the system of strict eight-hour
shifts. On June 19, 1947, the Manila Port Terminal Police Association, not registered in
accordance with the provisions of Commonwealth Act No. 213, filed a petition with the Court
of Industrial Relations. On July 16, 1947, the Manila Terminal Relief and Mutual Aid
Association was organized for the first time, having been granted certificate No. 375 by the
Department of Labor. On July 28, 1947, Manila Terminal Relief and Mutual Aid Association
filed an amended petition with the Court of Industrial Relations praying, among others, that
the petitioner be ordered to pay its watchmen or police force overtime pay from the
commencement of their employment. On May 9, 1949, by virtue of Customs Administrative
Order No. 81 and Executive Order No. 228 of the President of the Philippines, the entire
police force of the petitioner was consolidated with the Manila Harvor Police of the Customs
Patrol Service, a Government agency under the exclusive control of the Commissioner of
Customs and the Secretary of Finance The Manila Terminal Relief and Mutual Aid
Association will hereafter be referred to as the Association.
as amended on April 18, 1950, while dismissing other demands of the Association for lack of
jurisdiction, ordered the petitioner to pay to its police force —
(a) Regular or base pay corresponding to four hours' overtime plus 25 per cent thereof as
additional overtime compensation for the period from September 1, 1945 to May 24, 1947;
(b) Additional compensation of 25 per cent to those who worked from 6:00 p.m. to 6:00 a.m.
during the same period:
(c) Additional compensation of 50 per cent for work performed on Sundays and legal holidays
during the same period;
(d) Additional compensation of 50 per cent for work performed on Sundays and legal holidays
from May 24, 1947 to May 9, 1949; and
(e) Additional compensation of 25 per cent for work performed at night from May 29, 1947 to
May 9, 1949.
With reference to the pay for overtime service after the watchmen had been integrated into
the Manila Harbor Police, Judge Yanson ruled that the court has no jurisdiction because it
affects the Bureau of Customs, an instrumentality of the Government having no independent
personality and which cannot be sued without the consent of the State. (Metran vs. Paredes,
45. Off. Gaz., 2835.)
The petitioner find a motion for reconsideration. The Association also filed a motion for
reconsideration in so far its other demands were dismissed. Judge Yanson, concurred in by
Judge Jose S. Bautista, promulgated on July 13, 1950, a resolution denying both motions for
reconsideration. Presiding Judge Arsenio C. Roldan, in a separate opinion concurred in by
Judge Modesto Castillo, agreed with the decision of Judge Yanson of April 1, 1950, as to the
dismissal of other demands of the Association, but dissented therefrom as to the granting of
overtime pay. In a separate decisive opinion, Judge Juan S. Lanting concurred in the
dismissal of other demands of the Association. With respect to overtime compensation,
Judge Lanting ruled:
1. The decision under review should be affirmed in so far it grants compensation for overtime
on regular days (not Sunday and legal holidays)during the period from the date of entrance to
duty to May 24, 1947, such compensation to consists of the amount corresponding to the four
hours' overtime at the regular rate and an additional amount of 25 per cent thereof.
2. As to the compensation for work on Sundays and legal holidays, the petitioner should pay
to its watchmen the compensation that corresponds to the overtime (in excess of 8 hours) at
the regular rate only, that is, without any additional amount, thus modifying the decision under
review accordingly.
3. The watchmen are not entitled to night differential pay for past services, and therefore the
decision should be reversed with the respect thereto.
The petitioner has filed a present petition for certiorari. Its various contentions may be briefly
summed up in the following propositions: (1) The Court of Industrial Relations has no
jurisdiction to render a money judgment involving obligation in arrears. (2) The agreement
under which its police force were paid certain specific wages for twelve-hour shifts, included
overtime compensation. (3) The Association is barred from recovery by estoppel and laches.
(4) the nullity or invalidity of the employment contract precludes any recovery by the
Association. (5) Commonwealth Act No. 4444 does not authorize recovery of back overtime
pay.
The contention that the Court of Industrial Relations has no jurisdiction to award a money
judgment was already overruled by this Court in G.R. No. L-4337, Detective &
protective Bureau, Inc. vs. Court of Industrial Relations and United Employees Welfare
Association, 90 Phil., 665, in this wise: "It is also argued that the respondent court has no
jurisdiction to award overtime pay, which is money judgment. We believe that under
Commonwealth Act No. 103 the Court is empowered to make the order for the purpose of
settling disputes between the employer and employee 1. As a matter of fact this Court has
confirmed an order of the Court of Industrial Relations requiring the Elks Club to pay to its
employees certain sum of money as overtime back wages from June 3, 1939 to March 13,
1941. This, in spite the allegation of lack or excess of jurisdiction on the part of said court. (45
Off. Gaz., 3829; 80 Phil. 272)"
The important point stressed by the petitioner is that the contract between it and the
Association upon the commencement of the employment of its watchman was to the certain
rates of pay, including overtime compensation namely, P3 per day for the day shift and P6
per day for night shift beginning September 1, 1945, and P4 per day shift and P6.25 per day
for the night shift since February, 1946. The record does not bear out these allegations. The
petitioner has relied merely on the facts that its watchmen had worked on twelve-hour shifts
at specific wages per day and that no complaint was made about the matter until, first on
March 28, 1947 and, secondly, on April 29, 1947.
In times of acute unemployment, the people, urged by the instinct of self-preservation, go
from place to place and from office to office in search for any employment, regardless of its
terms and conditions, their main concern in the first place being admission to some work.
Specially for positions requiring no special qualifications, applicants would be good as
rejected if they ever try to be inquisitive about the hours of work or the amount of salary, ever
attempt to dictate their terms. The petitioner's watchmen must have railroaded themselves
into their employment, so to speak, happy in the thought that they would then have an income
on which to subsist. But, at the same time, they found themselves required to work for twelve
hours a day. True, there was agreement to work, but can it fairly be supposed that they had
the freedom to bargain in any way, much less to insist in the observance of the Eight Hour
Labor Law?
As was aptly said in Floyd vs. Du Bois Soap Co., 1942, 317 U. S. 596, 63 Sup. Ct. 159; 6
CCH Labor Cases, Par. 51, 147, "A contract of employment, which provides for a weekly
wage for a specified number of hours, sufficient to cover both the statutory minimum wage
and overtime compensation, if computed on the basis of the statutory minimum wage, and
which makes no provision for a fixed hourly rate or that the weekly wage includes overtime
compensation, does not meet the requirements of the Act."
Moreover, we note that after the petition had instituted the strict eight-hour shifts, no reduction
was made in the salaries which its watchmen received under the twelve hour arrangement.
Indeed, as admitted by the petitioner, "when the members or the respondent union were
placed on strict eight-hour shifts, the lowest salary of all the members of the respondent union
was P165 a month, or P5.50 daily, for both day and night shifts." Although it may be argued
that the salary for the night shift was somewhat lessened, the fact that the rate for the day
shift was increased in a sense tends to militate against the contention that the salaries given
during the twelve-hour shifts included overtime compensation.
Petitioner's allegation that the association had acquiesced in the twelve-hour shifts for more
than 18 months, is not accurate, because the watchmen involved in this case did not enter
the service of the petitioner, at one time, on September 1, 1945. As Judge Lanting found,
"only one of them entered the service of the company on said date, very few during the rest of
said month, some during the rest of that year (1945) and in 1946, and very many in 1947,
1948 and 1949."
The case at bar is quite on all fours with the case of Detective & Protective Bureau, Inc. vs.
Court of Industrial Relations and United Employees Welfare Association, supra, in which the
facts were as follows: "The record discloses that upon petition properly submitted, said court
made an investigation and found that the members of the United Employees Welfare
Association (hereafter called the Association) were in the employ of the petitioner Detective
and Protective Bureau, Inc. (herein called the Bureau) which is engaged in the business of
furnishing security guards to commercial and industrial establishments, paying to said
members monthly salaries out of what it received from the establishments benefited by guard
service. The employment called for daily tours of duty for more than eight hours, in addition to
work on Sundays and holidays. Nonetheless the members performed their labors without
receiving extra compensation." The only difference is that, while in said case the employees
concerned were paid monthly salaries, in the case now before us the wages were computed
daily. In the case cited, we held the following:
It appears that the Bureau had been granting the members of the Association, every
month, "two days off" days in which they rendered no service, although they received
salary for the whole month. Said Bureau contended below that the pay corresponding
to said 2 day vacation corresponded to the wages for extra work. The court rejected
the contention, quite properly we believe, because in the contract there was no
agreement to that effect; and such agreement, if any, would probably be contrary to
the provisions of the Eight-Hour Law (Act No. 444, sec. 6) and would be null and
void ab initio.
 It is argued here, in opposition to the payment, that until the commencement of this
litigation the members of the Association never claimed for overtime pay. That may
be true. Nevertheless the law gives them the right to extra compensation. And they
could not be held to have impliedly waived such extra compensation, for the obvious
reason that could not have expressly waived it.
The foregoing pronouncements are in point. The Association cannot be said to have impliedly
waived the right to overtime compensation, for the obvious reason that they could not have
expressly waived it."
The principle of estoppel and the laches cannot well be invoked against the Association. In
the first place, it would be contrary to the spirit of the Eight Hour Labor Law, under which as
already seen, the laborers cannot waive their right to extra compensation. In the second
place, the law principally obligates the employer to observe it, so much so that it punishes the
employer for its violation and leaves the employee or laborer free and blameless. In the third
place, the employee or laborer is in such a disadvantageous position as to be naturally
reluctant or even apprehensive in asserting any claim which may cause the employer to
devise a way for exercising his right to terminate the employment.
If the principle of estoppel and laches is to be applied, it may bring about a situation, whereby
the employee or laborer, who cannot expressly renounce their right to extra compensation
under the Eight-Hour Labor Law, may be compelled to accomplish the same thing by mere
silence or lapse of time, thereby frustrating the purpose of law by indirection.
While counsel for the petitioner has cited authorities in support of the doctrine invoked, there
are also authorities pointed out in the opinion of Judge Lanting to the contrary. Suffice it to
say, in this connection, that we are inclined to rule adversely against petitioner for the
reasons already stated.
The argument that the nullity or invalidity of the employment contract precludes recovery by
the Association of any overtime pay is also untenable. The argument, based on the
supposition that the parties are in  pari delicto, was in effect turned down in Gotamo Lumber
Co. vs. Court of Industrial Relations,* 47 Off. Gaz., 3421, wherein we ruled: "The petitioner
maintains that as the overtime work had been performed without a permit from the
Department of Labor, no extra compensation should be authorized. Several decisions of this
court are involved. But those decisions were based on the reasoning that as both the laborer
and employer were duty bound to secure the permit from the Department of Labor, both were
in pari delicto. However the present law in effect imposed that duty upon the employer (C.A.
No. 444). Such employer may not therefore be heard to plead his own neglect as exemption
or defense.
The employee in rendering extra service at the request of his employer has a right to
assume that the latter has complied with the requirement of the law, and therefore
has obtained the required permission from the Department of Labor.
Moreover, the Eight-Hour Law, in providing that "any agreement or contract between the
employer and the laborer or employee contrary to the provisions of this Act shall be null
avoid ab initio," (Commonwealth Act No. 444, sec. 6), obviously intended said provision for
the benefit of the laborers or employees. The employer cannot, therefore, invoke any violation
of the act to exempt him from liability for extra compensation. This conclusion is further
supported by the fact that the law makes only the employer criminally liable for any violation.
It cannot be pretended that, for the employer to commit any violation of the Eight-Hour Labor
Law, the participation or acquiescence of the employee or laborer is indispensable, because
the latter in view of his need and desire to live, cannot be considered as being on the same
level with the employer when it comes to the question of applying for and accepting an
employment.
Petitioner also contends that Commonwealth Act No. 444 does not provide for recovery of
back overtime pay, and to support this contention it makes referrence to the Fair Labor
Standards Act of the United States which provides that "any employer who violates the
provisions of section 206 and section 207 of this title shall be liable to the employee or
employees affected in the amount of their unpaid minimum wages or their unpaid overtime
compensation as the case may be," — a provision not incorporated in Commonwealth Act
No. 444, our Eight-Hour Labor Law. We cannot agree to the proposition, because sections 3
and 5 of Commonwealth Act 444 expressly provides for the payment of extra compensation
in cases where overtime services are required, with the result that the employees or laborers
are entitled to collect such extra compensation for past overtime work. To hold otherwise
would be to allow an employer to violate the law by simply, as in this case, failing to provide
for and pay overtime compensation.
The point is stressed that the payment of the claim of the Association for overtime pay
covering a period of almost two years may lead to the financial ruin of the petitioner, to the
detriment of its employees themselves. It is significant, however, that not all the petitioner's
watchmen would receive back overtime pay for the whole period specified in the appealed
decision, since the record shows that the great majority of the watchmen were admitted in
1946 and 1947, and even 1948 and 1949. At any rate, we are constrained to sustain the
claim of the Association as a matter of simple justice, consistent with the spirit and purpose of
the Eight-Hour Labor Law. The petitioner, in the first place, was required to comply with the
law and should therefore be made liable for the consequences of its violation.
It is high time that all employers were warned that the public is interested in the strict
enforcement of the Eight-Hour Labor Law. This was designed not only to safeguard the
health and welfare of the laborer or employee, but in a way to minimize unemployment by
forcing employers, in cases where more than 8-hour operation is necessary, to utilize
different shifts of laborers or employees working only for eight hours each.
Wherefore, the appealed decision, in the form voted by Judge Lanting, is affirmed, it being
understood that the petitioner's watchmen will be entitled to extra compensation only from the
dates they respectively entered the service of the petitioner, hereafter to be duly determined
by the Court of Industrial Relations. So ordered, without costs.
Feria, Pablo, Bengzon, Padilla, Tuason, Bautista Angelo, and Labrador, JJ., concur.
G.R. No. 142824            December 19, 2001
INTERPHIL LABORATORIES EMPLOYEES UNION-FFW, ENRICO GONZALES and MA.
THERESA MONTEJO, petitioners,
vs.
INTERPHIL LABORATORIES, INC., AND HONORABLE LEONARDO A. QUISUMBING,
SECRETARY OF LABOR AND EMPLOYMENT, respondents.
KAPUNAN, J.:
Assailed in this petition for review on certiorari are the decision, promulgated on 29
December 1999, and the resolution, promulgated on 05 April 2000, of the Court of Appeals in
CA-G.R. SP No. 50978.
Culled from the questioned decision, the facts of the case are as follows:
Interphil Laboratories Employees Union-FFW is the sole and exclusive bargaining agent of
the rank-and-file employees of Interphil Laboratories, Inc., a company engaged in the
business of manufacturing and packaging pharmaceutical products. They had a Collective
Bargaining Agreement (CBA) effective from 01 August 1990 to 31 July 1993.
Prior to the expiration of the CBA or sometime in February 1993, Allesandro G.
Salazar,1 Vice-President-Human Resources Department of respondent company, was
approached by Nestor Ocampo, the union president, and Hernando Clemente, a union
director. The two union officers inquired about the stand of the company regarding the
duration of the CBA which was set to expire in a few months. Salazar told the union officers
that the matter could be best discussed during the formal negotiations which would start
soon.
In March 1993, Ocampo and Clemente again approached Salazar. They inquired once more
about the CBA status and received the same reply from Salazar. In April 1993, Ocampo
requested for a meeting to discuss the duration and effectivity of the CBA. Salazar acceded
and a meeting was held on 15 April 1993 where the union officers asked whether Salazar
would be amenable to make the new CBA effective for two (2) years, starting 01 August
1993. Salazar, however, declared that it would still be premature to discuss the matter and
that the company could not make a decision at the moment. The very next day, or on 16 April
1993, all the rank-and-file employees of the company refused to follow their regular two-shift
work schedule of from 6:00 a.m. to 6:00 p.m., and from 6:00 p.m. to 6:00 a.m. At 2:00 p.m.
and 2:00 a.m., respectively, the employees stopped working and left their workplace without
sealing the containers and securing the raw materials they were working on. When Salazar
inquired about the reason for their refusal to follow their normal work schedule, the
employees told him to "ask the union officers." To minimize the damage the overtime boycott
was causing the company, Salazar immediately asked for a meeting with the union officers.
In the meeting, Enrico Gonzales, a union director, told Salazar that the employees would only
return to their normal work schedule if the company would agree to their demands as to the
effectivity and duration of the new CBA. Salazar again told the union officers that the matter
could be better discussed during the formal renegotiations of the CBA. Since the union was
apparently unsatisfied with the answer of the company, the overtime boycott continued. In
addition, the employees started to engage in a work slowdown campaign during the time they
were working, thus substantially delaying the production of the company.2
On 14 May 1993, petitioner union submitted with respondent company its CBA proposal, and
the latter filed its counter-proposal.
On 03 September 1993, respondent company filed with the National Labor Relations
Commission (NLRC) a petition to declare illegal petitioner union's "overtime boycott" and
"work slowdown" which, according to respondent company, amounted to illegal strike. The
case, docketed NLRC-NCR Case No. 00-09-05529-93, was assigned to Labor Arbiter Manuel
R. Caday.
On 22 October 1993, respondent company filed with the National Conciliation and Mediation
Board (NCMB) an urgent request for preventive mediation aimed to help the parties in their
CBA negotiations.3 The parties, however, failed to arrive at an agreement and on 15
November 1993, respondent company filed with the Office of the Secretary of Labor and
Employment a petition for assumption of jurisdiction.
On 24 January 1994, petitioner union filed with the NCMB a Notice of Strike citing unfair labor
practice allegedly committed by respondent company. On 12 February 1994, the union
staged a strike.
On 14 February 1994, Secretary of Labor Nieves Confesor issued an assumption order4 over
the labor dispute. On 02 March 1994, Secretary Confesor issued an order directing
respondent company to "immediately accept all striking workers, including the fifty-three (53)
terminated union officers, shop stewards and union members back to work under the same
terms and conditions prevailing prior to the strike, and to pay all the unpaid accrued year end
benefits of its employees in 1993."5 On the other hand, petitioner union was directed to
"strictly and immediately comply with the return-to-work orders issued by (the) Office x x
x6 The same order pronounced that "(a)ll pending cases which are direct offshoots of the
instant labor dispute are hereby subsumed herewith."7
In the i, the case before Labor Arbiter Caday continued. On 16 March 1994, petitioner union
filed an "Urgent Manifestation and Motion to Consolidate the Instant Case and to Suspend
Proceedings" seeking the consolidation of the case with the labor dispute pending before the
Secretary of Labor. Despite objection by respondent company, Labor Arbiter Caday held in
abeyance the proceedings before him. However, on 06 June 1994, Acting Labor Secretary
Jose S. Brillantes, after finding that the issues raised would require a formal hearing and the
presentation of evidentiary matters, directed Labor Arbiters Caday and M. Sol del Rosario to
proceed with the hearing of the cases before them and to thereafter submit their report and
recommendation to his office.
On 05 September 1995, Labor Arbiter Caday submitted his recommendation to the then
Secretary of Labor Leonardo A. Quisumbing.8 Then Secretary Quisumbing approved and
adopted the report in his Order, dated 13 August 1997, hence:
WHEREFORE, finding the said Report of Labor Arbiter Manuel R. Caday to be
supported by substantial evidence, this Office hereby RESOLVES to APPROVE and
ADOPT the same as the decision in this case, and judgment is hereby rendered:
(1) Declaring the 'overtime boycott' and 'work slowdown' as illegal strike;
(2) Declaring the respondent union officers namely:
Nestor Ocampo President
Carmelo Santos Vice-President
Marites Montejo Treasurer/Board Member
Rico Gonzales Auditor
Rod Abuan Director
Segundino Flores Director
Hernando Clemente Director
who spearheaded and led the overtime boycott and work slowdown, to have lost their
employment status; and
(3) Finding the respondents guilty of unfair labor practice for violating the then
existing CBA which prohibits the union or any employee during the existence of the
CBA from staging a strike or engaging in slowdown or interruption of work and
ordering them to cease and desist from further committing the aforesaid illegal acts.
Petitioner union moved for the reconsideration of the order but its motion was denied. The
union went to the Court of Appeals via a petition for certiorari. In the now questioned decision
promulgated on 29 December 1999, the appellate court dismissed the petition. The union's
motion for reconsideration was likewise denied.
Hence, the present recourse where petitioner alleged:
THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS, LIKE THE
HONORABLE PUBLIC RESPONDENT IN THE PROCEEDINGS BELOW,
COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK AND/OR
EXCESS OF JURISDICTION WHEN IT COMPLETELY DISREGARDED "PAROL
EVIDENCE RULE" IN THE EVALUATION AND APPRECIATION OF EVIDENCE
PROFERRED BY THE PARTIES.
THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF
JURISDICTION, WHEN IT DID NOT DECLARE PRIVATE RESPONDENT'S ACT OF
EXTENDING SUBSTANTIAL SEPARATION PACKAGE TO ALMOST ALL
INVOLVED OFFICERS OF PETITIONER UNION, DURING THE PENDENCY OF
THE CASE, AS TANTAMOUNT TO CONDONATION, IF INDEED, THERE WAS
ANY MISDEED COMMITTED.
THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF
JURISDICTION WHEN IT HELD THAT THE SECRETARY OF LABOR AND
EMPLOYMENT HAS JURISDICTION OVER A CASE (A PETITION TO DECLARE
STRIKE ILLEGAL) WHICH HAD LONG BEEN FILED AND PENDING BEFORE THE
LABOR ARBITER.9
We sustain the questioned decision.
On the matter of the authority and jurisdiction of the Secretary of Labor and Employment to
rule on the illegal strike committed by petitioner union, it is undisputed that the petition to
declare the strike illegal before Labor Arbiter Caday was filed long before the Secretary of
Labor and Employment issued the assumption order on 14 February 1994. However, it
cannot be denied that the issues of "overtime boycott" and "work slowdown" amounting to
illegal strike before Labor Arbiter Caday are intertwined with the labor dispute before the
Labor Secretary. In fact, on 16 March 1994, petitioner union even asked Labor Arbiter Caday
to suspend the proceedings before him and consolidate the same with the case before the
Secretary of Labor. When Acting Labor Secretary Brillantes ordered Labor Arbiter Caday to
continue with the hearing of the illegal strike case, the parties acceded and participated in the
proceedings, knowing fully well that there was also a directive for Labor Arbiter Caday to
thereafter submit his report and recommendation to the Secretary. As the appellate court
pointed out, the subsequent participation of petitioner union in the continuation of the hearing
was in effect an affirmation of the jurisdiction of the Secretary of Labor.
The appellate court also correctly held that the question of the Secretary of Labor and
Employment's jurisdiction over labor and labor-related disputes was already settled
in International Pharmaceutical, Inc. vs. Hon. Secretary of Labor and Associated Labor
Union (ALU)10 where the Court declared:
In the present case, the Secretary was explicitly granted by Article 263(g) of the
Labor Code the authority to assume jurisdiction over a labor dispute causing or likely
to cause a strike or lockout in an industry indispensable to the national interest, and
decide the same accordingly. Necessarily, this authority to assume jurisdiction over
the said labor dispute must include and extend to all questions and controversies
 arising therefrom, including cases over which the labor arbiter has exclusive
jurisdiction.
Moreover, Article 217 of the Labor Code is not without, but contemplates, exceptions
thereto. This is evident from the opening proviso therein reading '(e)xcept as
otherwise provided under this Code . . .' Plainly, Article 263(g) of the Labor Code was
meant to make both the Secretary (or the various regional directors) and the labor
arbiters share jurisdiction, subject to certain conditions. Otherwise, the Secretary
would not be able to effectively and efficiently dispose of the primary dispute. To hold
the contrary may even lead to the absurd and undesirable result wherein the
Secretary and the labor arbiter concerned may have diametrically opposed rulings.
As we have said, '(i)t is fundamental that a statute is to be read in a manner that
would breathe life into it, rather than defeat it.
In fine, the issuance of the assailed orders is within the province of the Secretary as
authorized by Article 263(g) of the Labor Code and Article 217(a) and (5) of the same
Code, taken conjointly and rationally construed to subserve the objective of the
jurisdiction vested in the Secretary.11
Anent the alleged misappreciation of the evidence proffered by the parties, it is axiomatic that
the factual findings of the Labor Arbiter, when sufficiently supported by the evidence on
record, must be accorded due respect by the Supreme Court.12 Here, the report and
recommendation of Labor Arbiter Caday was not only adopted by then Secretary of Labor
Quisumbing but was likewise affirmed by the Court of Appeals. We see no reason to depart
from their findings.
Petitioner union maintained that the Labor Arbiter and the appellate court disregarded the
"parol evidence rule"13 when they upheld the allegation of respondent company that the work
schedule of its employees was from 6:00 a.m. to 6:00 p.m. and from 6:00 p.m. to 6:00 am.
According to petitioner union, the provisions of their CBA on working hours clearly stated that
the normal working hours were "from 7:30 a.m. to 4:30 p.m." 14 Petitioner union underscored
that the regular work hours for the company was only eight (8) hours. It further contended that
the Labor Arbiter as well as the Court of Appeals should not have admitted any other
evidence contrary to what was stated in the CBA.
The reliance on the parol evidence rule is misplaced. In labor cases pending before the
Commission or the Labor Arbiter, the rules of evidence prevailing in courts of law or equity
are not controlling.15 Rules of procedure and evidence are not applied in a very rigid and
technical sense in labor cases.16 Hence, the Labor Arbiter is not precluded from accepting
and evaluating evidence other than, and even contrary to, what is stated in the CBA.
In any event, the parties stipulated:
Section 1. Regular Working Hours — A normal workday shall consist of not more
than eight (8) hours. The regular working hours for the Company shall be from 7:30
A.M. to 4:30 P.M. The schedule of shift work shall be maintained; however the
company may change the prevailing work time at its discretion, should such change
be necessary in the operations of the Company. All employees shall observe such
rules as have been laid down by the company for the purpose of effecting control
over working hours.17
It is evident from the foregoing provision that the working hours may be changed, at the
discretion of the company, should such change be necessary for its operations, and that the
employees shall observe such rules as have been laid down by the company. In the case
before us, Labor Arbiter Caday found that respondent company had to adopt a continuous
24-hour work daily schedule by reason of the nature of its business and the demands of its
clients. It was established that the employees adhered to the said work schedule since 1988.
The employees are deemed to have waived the eight-hour schedule since they followed,
without any question or complaint, the two-shift schedule while their CBA was still in force
and even prior thereto. The two-shift schedule effectively changed the working hours
stipulated in the CBA. As the employees assented by practice to this arrangement, they
cannot now be heard to claim that the overtime boycott is justified because they were not
obliged to work beyond eight hours.
As Labor Arbiter Caday elucidated in his report:
Respondents' attempt to deny the existence of such regular overtime schedule is
belied by their own awareness of the existence of the regular overtime schedule of
6:00 A.M. to 6:00 P.M. and 6:00 P.M. to 6:00 A.M. of the following day that has been
going on since 1988. Proof of this is the case undisputedly filed by the union for and
in behalf of its members, wherein it is claimed that the company has not been
computing correctly the night premium and overtime pay for work rendered between
2:00 A.M. and 6:00 A.M. of the 6:00 P.M. to 6:00 A.M. shift. (tsn pp. 9-10, testimony
of Alessandro G. Salazar during hearing on August 9, 1994). In fact, the union Vice-
President Carmelo C. Santos, demanded that the company make a recomputation of
the overtime records of the employees from 1987 (Exh. "P"). Even their own witness,
union Director Enrico C. Gonzales, testified that when in 1992 he was still a Quality
Control Inspector at the Sucat Plant of the company, his schedule was sometime at
6:00 A.M. to 6:00 P.M., sometime at 6:00 A.M. to 2:00 P.M., at 2:00 P.M. to 10:00
P.M. and sometime at 6:00 P.M. to 6:00 A.M., and when on the 6 to 6 shifts, he
received the commensurate pay (t.s.n. pp. 7-9, hearing of January 10, 1994).
Likewise, while in the overtime permits, dated March 1, 6, 8, 9 to 12, 1993, which
were passed around daily for the employees to sign, his name appeared but without
his signatures, he however had rendered overtime during those dates and was paid
because unlike in other departments, it has become a habit to them to sign the
overtime schedule weekly (t.s.n. pp. 26-31, hearing of January 10, 1994). The
awareness of the respondent union, its officers and members about the existence of
the regular overtime schedule of 6:00 A.M. to 6:00 P.M. and 6:00 P.M. to 6:00 A.M. of
the following day will be further shown in the discussion of the second issue.18
As to the second issue of whether or not the respondents have engaged in "overtime
boycott" and "work slowdown" from April 16, 1993 up to March 7, 1994, both
amounting to illegal strike, the evidence presented is equally crystal clear that the
"overtime boycott" and "work slowdown" committed by the respondents amounted to
illegal strike.
As undisputably testified to by Mr. Alessandro G. Salazar, the company's Vice-
President-Human Resources Department, sometime in February, 1993, he was
approached by the union President Nestor Ocampo and Union Director Hernando
Clemente who asked him as to what was the stand of the company regarding the
duration of the CBA between the company and which was set to expire on July 31,
1993. He answered that the matter could be best discussed during the formal
renegotiations which anyway was to start soon. This query was followed up
sometime in March, 1993, and his answer was the same. In early April, 1993, the
union president requested for a meeting to discuss the duration and effectivity of the
CBA. Acceding to the request, a meeting was held on April 15, 1993 wherein the
union officers asked him if he would agree to make the new CBA effective on August
1, 1993 and the term thereof to be valid for only two (2) years. When he answered
that it was still premature to discuss the matter, the very next day, April 16, 1993, all
the rank and file employees of the company refused to follow their regular two-shift
work schedule of 6:00 A.M. to 6:00 P.M. and 6:00 P.M. to 6:00 A.M., when after the
8-hours work, they abruptly stopped working at 2:00 P.M. and 2:00 A.M.,
respectively, leaving their place of work without sealing the containers and securing
the raw materials they were working on. When he saw the workers leaving before the
end of their shift, he asked them why and their reply was "asked (sic) the union
officers." Alarmed by the overtime boycott and the damage it was causing the
company, he requested for a meeting with the union officers. In the meeting, he
asked them why the regular work schedule was not being followed by the employees,
and union Director Enrico Gonzales, with the support of the other union officers, told
him that if management would agree to a two-year duration for the new CBA and an
effectivity date of August 1, 1993, all employees will return to the normal work
schedule of two 12-hour shifts. When answered that the management could not
decide on the matter at the moment and to have it discussed and agreed upon during
the formal renegotiations, the overtime boycott continued and the employees at the
same time employed a work slowdown campaign during working hours, causing
considerable delay in the production and complaints from the clients/customers (Exh.
"O", Affidavit of Alessandro G. Salazar which formed part of his direct testimony).
This testimonial narrations of Salazar was, as earlier said, undisputed because the
respondents' counsel waived his cross examination (t.s.n. p. 15, hearing on August 9,
1994).
Aside from the foregoing undisputed testimonies of Salazar, the testimonies of other
Department Managers pointing to the union officers as the instigators of the overtime
boycott and work slowdown, the testimony of Epifanio Salumbides (Exh. "Y") a union
member at the time the concerted activities of the respondents took place, is quoted
hereunder:
"2. Noon Pebrero 1993, ipinatawag ng Presidente ng Unyon na si Nestor
Ocampo ang lahat ng taga-maintenance ng bawat departamento upang
dumalo sa isang miting. Sa miting na iyon, sinabi ni Rod Abuan, na isang
Direktor ng Unyon, na mayroon ilalabas na memo ang Unyon na nag-uutos
sa mga empleyado ng Kompanya na mag-imbento ng sari-saring dahilan
para lang hindi sila makapagtrabaho ng "overtime". Sinabihan rin ako ni
Tessie Montejo na siya namang Treasurer ng Unyon na 'Manny, huwag ka
na lang pumasok sa Biyernes para hindi ka masabihan ng magtrabaho ng
Sabado at Linggo' na siya namang araw ng "overtime" ko x x x
"3. Nakalipas ang dalawang buwan at noong unang bahagi ng Abril 1993,
miniting kami ng Shop Stewards namin na sina Ariel Abenoja, Dany
Tansiongco at Vicky Baron. Sinabihan kami na huwag ng mag-overtime pag
nagbigay ng senyas ang Unyon ng "showtime."
"4. Noong umaga ng ika-15 ng Abril 1993, nagsabi na si Danny Tansiongco
ng "showtime". Dahil dito wala ng empleyadong nag-overtime at sabay-sabay
silang umalis, maliban sa akin. Ako ay pumasok rin noong Abril 17 at 18,
1993 na Sabado at Linggo.
"5. Noong ika-19 ng Abril 1993, ako ay ipinatawag ni Ariel Abenoja Shop
Steward, sa opisina ng Unyon. Nadatnan ko doon ang halos lahat ng
opisyales ng Unyon na sina:
Nestor Ocampo Presidente
Carmelo Santos Bise-Presidente
Nanding Clemente Director
TessMontejo Chief Steward
Segundo Flores Director
Enrico Gonzales Auditor
Boy Alcantara Shop Steward
Rod Abuan Director
at marami pang iba na hindi ko na maala-ala. Pagpasok ko, ako'y pinaligiran
ng mga opisyales ng Unyon. Tinanong ako ni Rod Aguan kung bakit ako
"nag-overtime" gayong "Binigyan ka na namin ng instruction na huwag
pumasok, pinilit mo pa ring pumasok." "Management ka ba o Unyonista."
Sinagot ko na ako ay Unyonista. Tinanong niya muli kung bakit ako
pumasok. Sinabi ko na wala akong maibigay na dahilan para lang hindi
pumasok at "mag-overtime." Pagkatapos nito, ako ay pinagmumura ng mga
opisyales ng Unyon kaya't ako ay madaliang umalis.
 xxx           xxx           xxx
Likewise, the respondents' denial of having a hand in the work slowdown since there
was no change in the performance and work efficiency for the year 1993 as
compared to the previous year was even rebuffed by their witness Ma. Theresa
Montejo, a Quality Control Analyst. For on cross-examination, she (Montejo) admitted
that she could not answer how she was able to prepare the productivity reports from
May 1993 to February 1994 because from April 1993 up to April 1994, she was on
union leave. As such, the productivity reports she had earlier shown was not
prepared by her since she had no personal knowledge of the reports (t.s.n. pp. 32-35,
hearing of February 27, 1995). Aside from this admission, the comparison made by
the respondents was of no moment, because the higher production for the years
previous to 1993 was reached when the employees regularly rendered overtime
work. But undeniably, overtime boycott and work slowdown from April 16, 1993 up to
March 7, 1994 had resulted not only in financial losses to the company but also
damaged its business reputation.
Evidently, from all the foregoing, respondents' unjustified unilateral alteration of the
24-hour work schedule thru their concerted activities of "overtime boycott" and "work
slowdown" from April 16, 1993 up to March 7, 1994, to force the petitioner company
to accede to their unreasonable demands, can be classified as a strike on an
installment basis, as correctly called by petitioner company x x x19
It is thus undisputed that members of the union by their own volition decided not to render
overtime services in April 1993.20 Petitioner union even admitted this in its Memorandum,
dated 12 April 1999, filed with the Court of Appeals, as well as in the petition before this
Court, which both stated that "(s)ometime in April 1993, members of herein petitioner, on their
own volition and in keeping with the regular working hours in the Company x x x decided not
to render overtime".21 Such admission confirmed the allegation of respondent company that
petitioner engaged in "overtime boycott" and "work slowdown" which, to use the words of
Labor Arbiter Caday, was taken as a means to coerce respondent company to yield to its
unreasonable demands.
More importantly, the "overtime boycott" or "work slowdown" by the employees constituted a
violation of their CBA, which prohibits the union or employee, during the existence of the
CBA, to stage a strike or engage in slowdown or interruption of work.22 In Ilaw at Buklod ng
Manggagawa vs. NLRC ,23 this Court ruled:
x x x (T)he concerted activity in question would still be illicit because contrary to the
workers' explicit contractual commitment "that there shall be no strikes, walkouts,
stoppage or slowdown of work, boycotts, secondary boycotts, refusal to handle any
merchandise, picketing, sit-down strikes of any kind, sympathetic or general strikes,
or any other interference with any of the operations of the COMPANY during the term
of x x x (their collective bargaining) agreement."
What has just been said makes unnecessary resolution of SMC's argument that the
workers' concerted refusal to adhere to the work schedule in force for the last several
years, is a slowdown, an inherently illegal activity essentially illegal even in the
absence of a no-strike clause in a collective bargaining contract, or statute or rule.
The Court is in substantial agreement with the petitioner's concept of a slowdown as
a "strike on the installment plan;" as a willful reduction in the rate of work by
concerted action of workers for the purpose of restricting the output of the employer,
in relation to a labor dispute; as an activity by which workers, without a complete
stoppage of work, retard production or their performance of duties and functions to
compel management to grant their demands. The Court also agrees that such a
slowdown is generally condemned as inherently illicit and unjustifiable, because while
the employees "continue to work and remain at their positions and accept the wages
paid to them," they at the same time "select what part of their allotted tasks they care
to perform of their own volition or refuse openly or secretly, to the employer's
damage, to do other work;" in other words, they "work on their own terms." x x x24
Finally, the Court cannot agree with the proposition that respondent company, in extending
substantial separation package to some officers of petitioner union during the pendency of
this case, in effect, condoned the illegal acts they committed.
Respondent company correctly postured that at the time these union officers obtained their
separation benefits, they were still considered employees of the company. Hence, the
company was merely complying with its legal obligations. 25 Respondent company could have
withheld these benefits pending the final resolution of this case. Yet, considering perhaps the
financial hardships experienced by its employees and the economic situation prevailing,
respondent company chose to let its employees avail of their separation benefits. The Court
views the gesture of respondent company as an act of generosity for which it should not be
punished.
WHEREFORE, the petition is DENIED DUE COURSE and the 29 December 1999 decision of
the Court of Appeals is AFFIRMED.
SO ORDERED.
G.R. No. L-16275             February 23, 1961
PAN AMERICAN WORLD AIRWAYS SYSTEM (PHILIPPINES), petitioner,
vs.
PAN AMERICAN EMPLOYEES ASSOCIATION, respondent.
Ross, Selph and Carrascoso for petitioner.
Jose Espinas for respondent.
REYES, J.B.L., J.:
Appeal by certiorari from the decision of the Court of Industrial Relations in Case No. 1055-V
dated October 10, 1959, and its resolution en banc denying the motion for reconsideration
filed by the petitioner herein.
The dispositive portion of the appealed decision reads: .
WHEREFORE, the Court orders the Chief of the Examining Division or his
representative to compute the overtime compensation due the aforesaid fourteen
(14) aircraft mechanic and the two employees from the Communication Department
based on the time sheet of said employees from February 23 1952 up to and
including July 15, 1958 and to submit his report within 30 days for further disposition
by the Court; and the company shall show to the Court Examiner such time sheets an
other documents that may be necessary in the aforesaid computation; and two (2)
representatives for the company and two (2) representatives for the union shall be
chosen to help the Court Examiner in said computation.
The company is also ordered to permanently adopt the straight 8-hour shift inclusive
of meal period which is mutually beneficial to the parties.
SO ORDERED.
In this appeal, petitioner advances five proposition which, briefly, are as follows: (1) the
Industrial Court has no jurisdiction to order the payment of overtime compensation, it being a
mere monetary claim cognizable by regular courts; (2) the finding that the one-hour meal
period should be considered overtime work (deducting 15 minutes as time allotted for eating)
is not supported by substantial evidence; (3) the court below had no authority to delegate its
judicial functions by ordering the Chief of the Examining Division or his representative to
compute the overtime pay; (4) the finding that there was no agreement to withdraw Case No.
1055-V in consideration of the wage increases in the Collective Bargaining Contract (Exh.
"A") is not supported by substantial evidence; and (5) the court below had no authority to
order the company to adopt a straight 8-hour shift inclusive of meal period.
On the issue of jurisdiction over claims for overtime pay, we have since definitely ruled in a
recent decisions that the Industrial Court may properly take cognizance of such cases if, at
the time of the petition, the complainants were still in the service of the employer, or, having
been separated from such service, should ask for reinstatement; otherwise, such claims
should be brought before the regular courts (NASSCO v. CIR, et al., L-13888, April 29, 1960;
FRISCO v. CIR, et al., L-13806, May 23, 1960; Board of Liquidators, et al. vs. CIR, et al., L-
15485, May 23, 1960; Sta. Cecilia, Sawmills Co. vs. CIR, L-14254 & L-14255, May 27, 1960;
Ajax International Corp. v. Seguritan, L-16038, October 25, 1960; Sampaguita Pictures, Inc.,
et al. vs. CIR, L-16404, October 25, 1960). Since, in the instant case there is no question that
the employees claiming overtime compensation were still in the service of the company when
the case was filed, the jurisdiction of the Court of Industrial Relations cannot be assailed. In
fact, since it is not pretended that, thereafter, the complainants were discharged or otherwise
terminated their relationship with the company for any reason, all of said complainants could
still be with the company up to the present.
Petitioner herein claims that the one-hour meal period should not be considered as overtime
work (after deducting 15 minutes), because the evidence showed that complainants could
rest completely, and were not in any manner under the control of the company during that
period. The court below found, on the contrary, that during the so called meal period, the
mechanics were required to stand by for emergency work; that if they happened not to be
available when called, they were reprimanded by the leadman; that as in fact it happened on
many occasions, the mechanics had been called from their meals or told to hurry Employees
Association up eating to perform work during this period. Far from being unsupported by
substantial evidence, the record clearly confirms the above factual findings of the Industrial
Court.
Similarly, this Court is satisfied with the finding that there was no agreement to withdraw
Case No. 1055-V in consideration of the wage increases obtained by the, union and set forth
in the Collective Bargaining Agreement Exhibit "A". As reasoned out by the court below, such
alleged agreement would have been incorporated in the contract if it existed. The fact that the
union filed a motion to dismiss without prejudice, after the Collective Bargaining Contract had
been signed, did not necessarily mean that it had agreed to withdraw the case in
consideration of the wage increases. The motion itself (Annex "B", Petition for Certiorari) was
expressly based on an understanding that the company would "formulate a schedule of work
which shall be in consonance with C. A. 444". All in all, there is substantial evidence in the
record to support the finding of the court below that no such agreement was made.
It is next contended that in ordering the Chief of the Examining Division or his representative
to compute the compensation due, the Industrial Court unduly delegated its judicial functions
and thereby rendered an incomplete decision. We do not believe so. Computation of the
overtime pay involves a mechanical function, at most. And the report would still have to be
submitted to the Industrial Court for its approval, by the very terms of the order itself. That
there was no specification of the amount of overtime pay in the decision did not make it
incomplete, since this matter would necessarily be made clear enough in the implementation
of the decision (see Malate Taxicab & Garage, Inc. vs. CIR, et al., L-8718, May 11, 1956).
The Industrial Court's order for permanent adoption of a straight 8-hour shift including the
meal period was but a consequence of its finding that the meal hour was not one of complete
rest, but was actually a work hour, since for its duration, the laborers had to be on ready call.
Of course, if the Company practices in this regard should be modified to afford the mechanics
a real rest during that hour (f. ex., by installing an entirely different emergency crew, or any
similar arrangement), then the modification of this part of the decision may be sought from the
Court below. As things now stand, we see no warrant for altering the decision.
The judgment appealed from is affirmed. Costs against appellant.
[G.R. No. L-63122. February 20, 1984.]
UNIVERSITY OF PANGASINAN FACULTY UNION, Petitioner, v. UNIVERSITY OF
PANGASINAN And NATIONAL LABOR RELATIONS COMMISSION, Respondents.
Tanopo, Serafico, Juanitez & Callanta Law Office and Hermogenes S. Decano
for Petitioner.
The Solicitor General for Respondents.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATIONS; LABOR LAWS; PRESIDENTIAL DECREES ON
EMERGENCY COST OF LIVING ALLOWANCE; REQUISITES FOR ENTITLEMENT TO
ALLOWANCES PROVIDED THEREUNDER. — The various Presidential Decrees on
ECOLAs to wit: PD’s 1614, 1634, 1678 and 1713, provide on "Allowances of Fulltime
Employees . . ." that "Employees shall be paid in full the required monthly allowance
regardless of the number of their regular working days if they incur no absences during the
month. If they incur absences without pay, the amounts corresponding to the absences may
be deducted from the monthly allowance . . ." ; and on "Leave of Absence Without Pay", that
"All covered employees shall be entitled to the allowance provided herein when they are on
leave of absence with pay."cralaw virtua1aw library
2. ID.; ID.; ID.; "NO WORK, NO PAY" PRINCIPLE NOT APPLICABLE’ CASE AT BAR. — It is
beyond dispute that the petitioner’s members are full-time employees receiving their monthly
salaries irrespective of the number of working days or teaching hours in a month. However,
they find themselves in a most peculiar situation whereby they are forced to go on leave
during semestral breaks. These semestral breaks are in the nature of work interruptions
beyond the employees’ control. The duration of the semestral break varies from year to year
dependent on a variety of circumstances affecting at times only the private respondent but at
other times all educational institutions in the country. As such, these breaks cannot be
considered as absences within the meaning of the law for which deductions may be made
from monthly allowances. The "No work, no pay" principle does not apply in the instant case.
The petitioner’s members received their regular salaries during this period. It is clear from the
aforequoted provision of law that it contemplates a "no work" situation where the employees
voluntarily absent themselves. Petitioners, in the case at bar, certainly do not, ad voluntatem,
absent themselves during semestral breaks. Rather, they are constrained to take mandatory
leave from work. For this they cannot be faulted nor can they be begrudged that which is due
them under the law.
3. ID.; ID.; ID.; EMPLOYEES WHETHER PAID ON MONTHLY OR DAILY BASIS ENTITLED
TO DAILY LIVING ALLOWANCE WHEN PAID THEIR BASIC WAGE. — Respondent’s
contention that the "factor receiving a salary alone should not be the basis of receiving
ECOLA", is likewise, without merit. Particular attention is brought to the Implementing Rules
and Regulations of Wage Order No. 1 to wit: "Sec. 5. Allowance for Unworked Days. — a) All
covered employees whether paid on a monthly or daily basis shall be entitled to their daily
living allowance when they are paid their basic.." . .
4. ID.; ID.; ID.; PURPOSE OF THE LAW. — The legal principles of "No work, no pay; No pay,
no ECOLA" must necessarily give way to the purpose of the law to augment the income of
employees to enable them to cope with the harsh living conditions brought about by inflation;
and to protect employees and their wages against the ravages brought by these conditions.
Significantly, it is the commitment of the State to protect labor and to provide means by which
the difficulties faced by the working force may best be alleviated.
5. ID.; ID.; ID.; PRESIDENTIAL DECREE 451; CONSTRUED. — Respondent overlooks the
elemental principle of statutory construction that the general statements in the whereas
clauses cannot prevail over the specific or particular statements in the law itself which define
or limit the purposes of the legislation or proscribe certain acts. True, the whereas clauses of
PD 451 provide for salary and or wage increase and other benefits, however, the same do
not delineate the source of such funds and it is only in Section 3 which provides for the
limitations wherein the intention of the framers of the law is clearly outlined. The law is clear.
The sixty (60%) percent incremental proceeds from the tuition increase are to be devoted
entirely to wage or salary increases which means increases in basic salary. The law cannot
be construed to include allowances which are benefits over and above the basic salaries of
the employees.
6. REMEDIAL LAW; APPEALS; FINDINGS OF FACT OF NATIONAL LABOR RELATIONS
COMMISSION ARE BINDING WHEN FULLY SUBSTANTIATED BY EVIDENCE. — As
evidenced by the payrolls submitted by them during the period September 16 to September
30, 1981, the faculty members have been paid for the extra loads. We agree with the
respondents that this issue involves a question of fact properly within the competence of the
respondent NLRC to pass upon. The findings of fact of the respondent Commission are
binding on this Court there being no indication of their being unsubstantiated by evidence.
DECISION
GUTIERREZ, JR., J.:
This is a petition for review on certiorari pursuant to Rule 65 of the Rules of Court to annul
and to set aside the decision of respondent National Labor Relations Commission (NLRC)
dated October 25, 1982, dismissing the appeal of petitioner in NLRC Case No. RBI-47-82,
entitled "University of Pangasinan Faculty Union, complainant, versus University of
Pangasinan, Respondent." chanrobles law library : red
Petitioner is a labor union composed of faculty members of the respondent University of
Pangasinan, an educational institution duly organized and existing by virtue of the laws of the
Philippines.
On December 18, 1981, the petitioner, through its President, Miss Consuelo Abad, filed a
complaint against the private respondent with the Arbitration Branch of the NLRC, Dagupan
District Office, Dagupan City. The complaint seeks: (a) the payment of Emergency Cost of
Living Allowances (ECOLA) for November 7 to December 5, 1981, a semestral break; (b)
salary increases from the sixty (60%) percent of the incremental proceeds of increased tuition
fees; and (c) payment of salaries for suspended extra loads.
The petitioner’s members are full-time professors, instructors, and teachers of respondent
University. The teachers in the college level teach for a normal duration of ten (10) months a
school year, divided into two (2) semesters of five (5) months each, excluding the two (2)
months summer vacation. These teachers are paid their salaries on a regular monthly basis.
In November and December, 1981, the petitioner’s members were fully paid their regular
monthly salaries. However, from November 7 to December 5, during the semestral break,
they were not paid their ECOLA. The private respondent claims that the teachers are not
entitled thereto because the semestral break is not an integral part of the school year and
there being no actual services rendered by the teachers during said period, the principle of
"No work, no pay" applies.
During the same school year (1981-1982), the private respondent was authorized by the
Ministry of Education and Culture to collect, as it did collect, from its students a fifteen (15%)
percent increase of tuition fees. Petitioner’s members demanded a salary increase effective
the first semester of said schoolyear to be taken from the sixty (60%) percent incremental
proceeds of the increased tuition fees. Private respondent refused, compelling the petitioner
to include said demand in the complaint filed in the case at bar. While the complaint was
pending in the arbitration branch, the private respondent granted an across-the-board salary
increase of 5.86%. Nonetheless, the petitioner is still pursuing full distribution of the 60% of
the incremental proceeds as mandated by the Presidential Decree No. 451.
Aside from their regular loads, some of petitioner’s members were given extra loads to handle
during the same 1981-1982 schoolyear. Some of them had extra loads to teach on
September 21, 1981, but they were unable to teach as classes in all levels throughout the
country were suspended, although said days was proclaimed by the President of the
Philippines as a working holiday. Those with extra loads to teach on said day claimed they
were not paid their salaries for those loads, but the private respondent claims otherwise.
The issue to be resolved in the case at bar are the following:chanrob1es virtual 1aw library
I employers to withhold employee benefits by the simple expedient of unilaterally imposing "no
"WHETHER OR NOT PETITIONER’S MEMBERS ARE ENTITLED TO ECOLA DURING THE
SEMESTRAL BREAK FROM NOVEMBER 7 TO DECEMBER 5, 1981 OF THE 1981-82
SCHOOL YEAR.
II
"WHETHER OR NOT 60% OF THE INCREMENTAL PROCEEDS OF INCREASED TUITION
FEES SHALL BE DEVOTED EXCLUSIVELY TO SALARY INCREASE,
III
"WHETHER OR NOT ALLEGED PAYMENT OF SALARIES FOR EXTRA LOADS ON
SEPTEMBER 21, 1981 WAS PROVEN BY SUBSTANTIAL EVIDENCE."cralaw virtua1aw
library
Anent the first issue, the various Presidential Decrees on ECOLAs to wit: PD’s 1614, 1634,
1678 and 1713, provide on "Allowances of Fulltime Employees . . ." that "Employees shall be
paid in full the required monthly allowance regardless of the number of their regular working
days if they incur no absences during the month. If they incur absences without pay, the
amounts corresponding to the absences may be deducted from the monthly allowance . . ." ;
and on "Leave of Absence Without Pay", that "All covered employees shall be entitled to the
allowance provided herein when they are on leave of absence with pay."cralaw virtua1aw
library
It is beyond dispute that the petitioner’s members are full-time employees receiving their
monthly salaries irrespective of the number of working days or teaching hours in a month.
However, they find themselves in a most peculiar situation whereby they are forced to go on
leave during semestral breaks. These semestral breaks are in the nature of work interruptions
beyond the employees’ control. The duration of the semestral break varies from year to year
dependent on a variety of circumstances affecting at times only the private respondent but at
other times all educational institutions in the country. As such, these breaks cannot be
considered as absences within the meaning of the law for which deductions may be made
from monthly allowances. The "No work, no pay" principle does not apply in the instant case.
The petitioner’s members received their regular salaries during this period. It is clear from the
aforequoted provision of law that it contemplates a "no work" situation where the employees
voluntarily absent themselves. Petitioners, in the case at bar, certainly do not, ad voluntatem,
absent themselves during semestral breaks. Rather, they are constrained to take mandatory
leave from work. For this they cannot be faulted nor can they be begrudged that which is due
them under the law. To a certain extent, the private respondent can specify dates when no
classes would be held. Surely, it was not the intention of the framers of the law to allow
work" days and consequently avoiding compliance with the mandate of the law for those
days.chanrobles.com.ph : virtual law library
Respondent’s contention that "the fact of receiving a salary alone should not be the basis of
receiving ECOLA", is, likewise, without merit. Particular attention is brought to the
Implementing Rules and Regulations of Wage Order No. 1 to wit.
SECTION 5. Allowance for Unworked Days. —
"a) All covered employees whether paid on a monthly or daily basis shall be entitled to their
daily living allowance when they are paid their basic wage."cralaw virtua1aw library
x           x          x
This provision, at once refutes the above contention. It is evident that the intention of the law
is to grant ECOLA upon the payment of basic wages. Hence, we have the principle of "No
pay, no ECOLA" the converse of which finds application in the case at bar. Petitioners cannot
be considered to be on leave without pay so as not to be entitled to ECOLA, for, as earlier
stated, the petitioners were paid their wages in full for the months of November and
December of 1981, notwithstanding the intervening semestral break. This, in itself, is a tacit
recognition of the rather unusual state of affairs in which teachers find themselves. Although
said to be on forced leave, professors and teachers are, nevertheless, burdened with the task
of working during a period of time supposedly available for rest and private matters. There
are papers to correct, students to evaluate, deadlines to meet, and periods within which to
submit grading reports. Although they may be considered by the respondent to be on leave,
the semestral break could not be used effectively for the teacher’s own purposes for the
nature of a teacher’s job imposes upon him further duties which must be done during the said
period of time. Learning is a never ending process. Teachers and professors must keep
abreast of developments all the time. Teachers cannot also wait for the opening of the next
semester to begin their work. Arduous preparation is necessary for the delicate task of
educating our children. Teaching involves not only an application of skill and an imparting of
knowledge, but a responsibility which entails self dedication and sacrifice. The task of
teaching ends not with the perceptible efforts of the petitioner’s members but goes beyond
the classroom: a continuum where only the visible labor is relieved by academic
intermissions. It would be most unfair for the private respondent to consider these teachers
as employees on leave without pay to suit its purposes and, yet, in the meantime, continue
availing of their services as they prepare for the next semester or complete all of the last
semester’s requirements. Furthermore, we may also by analogy apply the principle
enunciated in the Omnibus Rules Implementing the Labor Code to wit:chanrob1es virtual 1aw
library
Sec. 4. Principles in Determining Hours Worked. — The following general principles shall
govern in determining whether the time spent by an employee is considered hours worked for
purposes of this Rule:chanrob1es virtual 1aw library
x           x          x
"(d) The time during which an employee is inactive by reason of interruptions in his work
beyond his control shall be considered time either if the imminence of the resumption of work
requires the employee’s presence at the place of work or if the interval is too brief to be
utilized effectively and gainfully in the employee’s own interest." (Emphasis supplied).
The petitioner’s members in the case at bar, are exactly in such a situation. The semestral
break scheduled is an interruption beyond petitioner’s control and it cannot be used
"effectively nor gainfully in the employee’s interest’. Thus, the semestral break may also be
considered as "hours worked." For this, the teachers are paid regular salaries and, for this,
they should be entitled to ECOLA. Not only do the teachers continue to work during this short
recess but much less do they cease to live for which the cost of living allowance is intended.
The legal principles of "No work, no pay; No pay, no ECOLA" must necessarily give way to
the purpose of the law to augment the income of employees to enable them to cope with the
harsh living conditions brought about by inflation; and to protect employees and their wages
against the ravages brought by these conditions. Significantly, it is the commitment of the
State to protect labor and to provide means by which the difficulties faced by the working
force may best be alleviated. To submit to the respondents’ interpretation of the no work, no
pay policy is to defeat this noble purpose. The Constitution and the law mandate
otherwise.chanrobles.com:cralaw:red
With regard to the second issue, we are called upon to interpret and apply Section 3 of
Presidential Decree 451 to wit:chanrob1es virtual 1aw library
SEC. 3. Limitations. — The increase in tuition or other school fees or other charges as well as
the new fees or charges authorized under the next preceding section shall be subject to the
following conditions:jgc:chanrobles.com.ph
"(a) That no increase in tuition or other school fees or charges shall be approved unless sixty
(60%) per centum of the proceeds is allocated for increase in salaries or wages of the
members of the faculty and all other employees of the school concerned, and the balance for
institutional development, student assistance and extension services, and return to
investments: Provided, That in no case shall the return to investments exceed twelve (12%)
per centum of the incremental proceeds; . . ."cralaw virtua1aw library
x           x          x
This Court had the occasion to rule squarely on this point in the very recent case entitled,
University of the East v. University of the East Faculty Association, 117 SCRA 554. We held
that:jgc:chanrobles.com.ph
"In effect, the problem posed before Us is whether or not the reference in Section 3(a) to
‘increase in salaries or wages of the faculty and all other employees of the schools
concerned’ as the first purpose to which the incremental proceeds from authorized increases
to tuition fees may be devoted, may be construed to include allowances and benefits. In the
negative, which is the position of respondents, it would follow that such allowances must be
taken in resources of the school not derived from tuition fees.

"Without delving into the factual issue of whether or not there could be any such other
resources, We note that among the items of second purpose stated in provision in question is
return in investment. And the law provides only for a maximum, not a minimum. In other
words, the schools may get a return to investment of not more than 12%, but if circumstances
warrant, there is no minimum fixed by law which they should get.
"On this predicate, We are of the considered view that, if the school happen to have no other
resources to grant allowances and benefits, either mandated by law or secured by collective
bargaining, such allowances and benefits should be charged against the return to
investments referred to in the second purpose stated in Section 3(a) of P.D. 451."cralaw
virtua1aw library
Private respondent argues that the above interpretation "disregarded the intention and spirit
of the law" which intention is clear from the "whereas" clauses as
follows:jgc:chanrobles.com.ph
"It is imperative that private educational institutions upgrade classroom instruction . . . provide
salary and or wage increases and other benefits . . ."cralaw virtua1aw library
Respondent further contends that PD 451 was issued to alleviate the sad plight of private
schools, their personnel and all those directly or indirectly on school income as the decree
was aimed — find no compelling reason, therefore, to deviate from our previous ruling in the University of
". . . to upgrade classroom instruction by improving their facilities and bring competent
teachers in all levels of education, provide salary and or wage increases and other benefits to
their teaching, administrative, and other personnel to keep up with the increasing cost of
living." (Emphasis supplied)
Respondent overlooks the elemental principle of statutory construction that the general
statements in the whereas clauses cannot prevail over the specific or particular statements in
the law itself which define or limit the purposes of the legislation or proscribe certain acts.
True, the whereas clauses of PD 451 provide for salary and or wage increase and other
benefits, however, the same do not delineate the source of such funds and it is only in
Section 3 which provides for the limitations wherein the intention of the framers of the law is
clearly outlined. The law is clear. The sixty (60%) percent incremental proceeds from the
tuition increase are to be devoted entirely to wage or salary increases which means increases
in basic salary. The law cannot be construed to include allowances which are benefits over
and above the basic salaries of the employees. To charge such benefits to the 60%
incremental proceeds would be to reduce the increase in basic salary provided by law, an
increase intended also to help the teachers and other workers tide themselves and their
families over these difficult economic times.chanrobles virtual lawlibrary
This Court is not guilty of usurpation of legislative functions as claimed by the respondents.
We expressed the opinion in the University of the East case that benefits mandated by law
and collective bargaining may be charged to the 12% return on investments within the 40%
incremental proceeds of tuition increase. As admitted by respondent, we merely made this
statement as a suggestion in answer to the respondent’s query as to where then, under the
law, can such benefits be charged. We were merely interpreting the meaning of the law within
the confines of its provisions. The law provides that 60% should go to wage increases and
40% to institutional developments, student assistance, extension services, and return on
investments (ROI). Under the law, the last item ROI has flexibility sufficient to accommodate
other purposes of the law and the needs of the university. ROI is not set aside for any one
purpose of the university such as profits or returns on investments. The amount may be used
to comply with other duties and obligations imposed by law which the university exercising
managerial prerogatives finds cannot under present circumstances, be funded by other
revenue sources. It may be applied to any other collateral purpose of the university or
invested elsewhere. Hence, the framers of the law intended this portion of the increases in
tuition fees to be a general fund to cover up for the university’s miscellaneous expenses and,
precisely, for this reason, it was not so delimited. Besides, ROI is a return or profit over and
above the operating expenditures of the university, and still, over and above the profits it may
have had prior to the tuition increase. The earning capacities of private educational
institutions are not dependent on the increases in tuition fees allowed by P.D. 451.
Accommodation of the allowances required by law require wise and prudent management of
all the university resources together with the incremental proceeds of tuition increases.
Cognizance should be taken of the fact that the private respondent had, before PD 451,
managed to grant all allowances required by law. It cannot now claim that it could not afford
the same, considering that additional funds are even granted them by the law in question. We
the East case even as we take the second hard look at the decision requested by the
private Respondent. This case was decided in 1982 when PDs 1614, 1634, 1678, and 1713
which are also the various Presidential Decrees on ECOLA were already in force. PD 451
was interpreted in the light of these subsequent legislations which bear upon but do not
modify nor amend, the same. We need not go beyond the ruling in the University of the East
case.
Coming now to the third issue, the respondents are of the considered view that as evidenced
by the payrolls submitted by them during the period September 16 to September 30, 1981,
the faculty members have been paid for the extra loads. We agree with the respondents that
this issue involves a question of fact properly within the competence of the respondent NLRC
to pass upon. The findings of fact of the respondent Commission are binding on this Court
there being no indication of their being unsubstantiated by evidence. We find no grave abuse
in the findings of respondent NLRC on this matter to warrant reversal. Assuming arguendo,
however, that the petitioners have not been paid for these extra loads, they are not entitled to
payment following the principles of "No work, no pay." This time, the rule applies. Involved
herein is a matter different from the payment of ECOLA under the first issue. We are now
concerned with extra, not regular loads for which the petitioners are paid regular salaries
every month regardless of the number of working days or hours in such a month. Extra loads
should be paid for only when actually performed by the employee. Compensation is based,
therefore, on actual work done and on the number of hours and days spent over and beyond
their regular hours of duty. Since there was no work on September 21, 1981, it would now be
unfair to grant petitioner’s demand for extra wages on that day.chanrobles law library : red

Finally, disposing of the respondent’s charge of petitioner’s lack of legal capacity to sue,
suffice it to say that this question can no longer be raised initially on appeal or certiorari. It is
quite belated for the private respondent to question the personality of the petitioner after it
had dealt with it as a party in the proceedings below. Furthermore, it was not disputed that
the petitioner is a duly registered labor organization and as such has the legal capacity to sue
and be sued. Registration grants it the rights of a legitimate labor organization and
recognition by the respondent University is not necessary for it to institute this action in behalf
of its members to protect their interests and obtain relief from grievances. The issues raised
by the petitioner do not involve pure money claims but are more intricately intertwined with
conditions of employment.
WHEREFORE the petition for certiorari is hereby GRANTED. The private respondent is
ordered to pay its regular fulltime teachers/employees emergency cost of living allowances
for the semestral break from November 7 to December 5, 1981 and the undistributed balance
of the sixty (60%) percent incremental proceeds from tuition increases for the same
schoolyear as outlined above. The respondent Commission is sustained insofar as it DENIED
the payment of salaries for the suspended extra loads on September 21, 1981.
SO ORDERED.
G.R. No. 126529 April 15, 1998
EDUARDO B. PRANGAN, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC), MASAGANA SECURITY
SERVICES CORPORATION, and/or VICTOR C. PADILLA, respondents.
ROMERO, J.:
Private respondent, a corporation engaged in providing security services to its client, hired
petitioner on November 4, 1980 as one of its security guards. Thereafter, he was assigned to
the Cat House Bar and Restaurant with a monthly salary of P2,000.00 until its closure on
August 31, 1993.
1 NLRC (a) declaring that he rendered only four hours and not twelve hours of work, and (b)
On May 4, 1994, petitioner filed a complaint  against private respondent for underpayment of
wages, non-payment of salary from August 16-31, 1993, overtime pay, premium pay for
holiday, rest day, night shift differential, uniform allowance, service incentive leave pay and
13th month pay from the year 1990 to 1993.
Private respondent, in its position paper,2 rejected petitioner's claim alleging it merely acted
as an agent of the latter in securing his employment at the Cat House Bar and Restaurant.
Thus, the liability for the claims of the petitioner should be charged to Cat House Bar and its
owner, being his direct employer.
In resolving the dispute in a decision dated May 31, 1995, 3 the Labor Arbiter brushed aside
the private respondent's contention that it was merely an agent of the petitioner and
concluded:
WHEREFORE, PREMISES CONSIDERED, respondents MASAGANA SECURITY
SERVICE CORPORATION and/or VICTOR C. PADILLA are hereby ORDERED to
pay within ten (10) days from receipt hereof herein complainant EDUARDO B.
PRANGAN, the total sum of Nine Thousand Nine Hundred Thirty Two Pesos &
Sixteen Centavos (P9,932.16) premium pay for holiday and rest days, night shift
differential, service incentive leave pay, 13th month pay, uniform allowance, and
unpaid salary.
Complainant's other claims as well as respondents' counter claim are hereby
DISMISSED either for the reason of prescription and/or lack of merit.
SO ORDERED.
Apparently not satisfied with the above-mentioned monetary award, petitioner appealed to the
National Labor Relations Commission (NLRC) contending that the Labor Arbiter erred in
concluding that he only worked for four hours and not twelve hours a day. Evidently, the
shorter work hours resulted in a lower monetary award by the Labor Arbiter. However, the
NLRC dismissed his appeal for failure to file the same within ten-day reglementary period.4
Undaunted, petitioner failed a motion for reconsideration which, in the "interest of justice,"
was favorably granted by the NLRC resulting in the reinstatement of his appeal. Nonetheless,
petitioner's victory was short-lived as the NLRC eventually dismissed his appeal for lack of
merit,5 the dispositive portion of the decision reads:
WHEREFORE, the appeal is hereby dismissed for lack of merit and decision is
affirmed in toto.
SO ORDERED.
Petitioner is now before us imputing grave abuse of discretion on the part of respondent
affirming the monetary award.
The public respondent, through the Solicitor General, and the private respondent filed their
respective comments on the petition refuting the allegation of the petitioner. Specifically, they
asserted that the decision was supported by ample evidence showing that petitioner indeed
worked for only four hours and not twelve hours a day.
A review of the alleged error raised by the instant petition leads us to conclude that the same
is factual in nature which, as a rule, we do not pass upon. As a general rule, it is not for us to
correct the NLRC's evaluation of the evidence, as our task is confined to issues of jurisdiction
or grave abuse of discretion.6 Obviously, however, the same will not apply where the
evidence requires a reversal or modification.7
As proof of petitioner's actual hours of work, private respondent submitted the daily time
records allegedly signed by the petitioner himself showing that he only worked four hours
daily.
In contrast, petitioner argues that these daily time records were falsified for the simple reason
that he was not required to submit one. He further stressed that, assuming such documents
exist, its authenticity and due execution are questionable and of doubtful source.
We find merit in the petition.
To be sure, findings of fact of quasi-judicial bodies like the NLRC, particularly when they
coincide with those of the Labor Arbiter, are accorded with respect even finality if supported
by substantial evidence.8 In this regard, we have defined substantial evidence as such
amount of relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion.9 Absent such quantum of evidence, the Court is not precluded from making its
own independent evaluation of facts.10
In the instant case, there is no dispute that matters concerning an employee's actual hours of
work are within the ambit of management prerogative. However, when an employer alleges
that his employee work less than the normal hours of employment as provided for in the
law,11 he bears the burden of proving his allegation with clear and satisfactory evidence.
In the instant petition, the NLRC, in declaring that petitioner only worked for four hours, relied
solely on the supposed daily time records of the petitioner submitted by the private
respondent.12 We, however, are of the opinion that these documents cannot be considered
substantial evidence as to conclude that petitioner only worked for four hours. It is worth
mentioning that petitioner, in his Sur-Rejoinder to Respondents' Rejoinder,13 unequivocally
stated that:
Complainant (petitioner herein) never made nor submitted any daily time record with
respondent company considering the fact that he was assigned to a single post and
that the daily time records he allegedly submitted with respondent company are all
falsified and his signature appearing therein forged.
Private respondent hardly bothered to controvert petitioner's assertion, much less bolster its
own contention. As petitioner's employer, private respondent has unlimited access to all
relevant documents and records on the hours of work of the petitioner. Yet, even as it insists
that petitioner only worked for four hours and not twelve, no employment contract, payroll,
notice of assignment or posting, cash voucher or any other convincing evidence which may
attest to the actual hours of work of the petitioner was even presented. Instead, what the
private respondent offered as evidence was only petitioner's daily time record, which the latter
categorically denied ever accomplishing, much less signing.
In said alleged daily time record, it showed that petitioner started work at 10:00 p.m. and
would invariably leave his post at exactly 2:00 a.m. Obviously, such unvarying recording of a
daily time record is improbable and contrary to human experience. It is impossible for an
employee to arrive at the workplace and leave at exactly the same time, day in day out. The
very uniformity and regularity of the entries are "badges of untruthfulness and as such indices
of dubiety.14
Another consideration which militates against private respondent's claim is the fact that in the
personnel data sheet of the petitioner,15 duly signed by the former's operation manager, it
shows on its face that the latter's hours of work are from 7:00 p.m. to 7:00 a.m. or twelve
hours a day. Hence, private respondent is estopped from assailing the contents of its own
documents.
Further, the attendance sheets of Cat House Bar and Restaurant16 showed that petitioner
worked from 7:00 p.m. to 7:00 a.m. daily, documents which were never repudiated by the
private respondent.
All told, private respondent has not adequately proved that petitioner's actual hours of work is
only four hours. Its unexplained silence contravening the personnel data sheet and the
attendance sheets of Cat House Bar and Restaurant presented by the petitioner showing he
worked for twelve hours, has assumed the character of an admission. No reason was
proffered for this silence despite private respondent, being the employer, could have easily
done so.
As is well-settled, if doubts exist between the evidence presented by the employer and the
employee, the scales of justice must be tilted in favor of the employee. Since it is a time-
honored rule that in controversies between a laborer and his master, doubts reasonably
arising from the evidence, or in the interpretation of agreements and writings should he
resolved in the former's
favor.17
WHEREFORE, in view of the foregoing, the instant petition is hereby GRANTED.
Accordingly, the decision of the NLRC dated July 31, 1996 is hereby VACATED. Whatever
money claims due to the petitioner shall be computed on the basis of a twelve-hour daily work
schedule. For this purpose, the case is hereby REMANDED to the Labor Arbiter for
immediate recomputation of said claims in accordance with the foregoing findings. No costs.
SO ORDERED.
G.R. No. L-15422           November 30, 1962
NATIONAL DEVELOPMENT COMPANY, petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS and NATIONAL TEXTILE WORKERS
UNION, respondents.
Government Corporate Counsel Simeon M. Gopengco and Lorenzo R. Mosqueda for
petitioner.
Eulogio R. Lerum for respondent National Textile Workers Union.
Mariano B. Tuason for respondent Court of Industrial Relations.
REGALA, J.:
This is a case for review from the Court of Industrial Relations. The pertinent facts are the
following:
At the National Development Co., a government-owned and controlled corporation, there
were four shifts of work. One shift was from 8 a.m. to 4 p.m., while the three other shifts were
from 6 a.m. to 2 p.m; then from 2 p.m. to 10 p.m. and, finally, from 10 p.m. to 6 a.m. In each
shift, there was a one-hour mealtime period, to wit: From (1) 11 a.m. to 12 noon for those
working between 6 a.m. and 2 p.m. and from (2) 7 p.m. to 8 p.m. for those working between 2
p.m. and 10 p.m.
The records disclose that although there was a one-hour mealtime, petitioner nevertheless
credited the workers with eight hours of work for each shift and paid them for the same
number of hours. However, since 1953, whenever workers in one shift were required to
continue working until the next shift, petitioner instead of crediting them with eight hours of
overtime work, has been paying them for six hours only, petitioner that the two hours
corresponding to the mealtime periods should not be included in computing compensation.
On the other hand, respondent National Textile Workers Union whose members are
employed at the NDC, maintained the opposite view and asked the Court of Industrial
Relations to order the payment of additional overtime pay corresponding to the mealtime
periods.
After hearing, Judge Arsenio I. Martinez of the CIR issued an order dated March 19, 1959,
holding that mealtime should be counted in the determination of overtime work and
accordingly ordered petitioner to pay P101,407.96 by way of overtime compensation.
Petitioner filed a motion for reconsideration but the same was dismissed by the CIR en
banc on the ground that petitioner failed to furnish the union a copy of its motion.
Thereafter, petitioner appealed to this Court, contending, first, that the CIR has no jurisdiction
over claims for overtime compensation and, secondary that the CIR did not make "a correct
appraisal of the facts, in the light of the evidence" in holding that mealtime periods should be
included in overtime work because workers could not leave their places of work and rest
completely during those hours.
In support of its contention that the CIR lost its jurisdiction over claims for overtime pay upon
the enactment of the Industrial Peace Act (Republic Act No. 875), petitioner cites a number of
decisions of this Court. On May 23, 1960, however, We ruled in Price Stabilization Corp. v.
Court of Industrial Relations, et al., G.R. No. L-13206, that
Analyzing these cases, the underlying principle, it will be noted in all of them, though
not stated in express terms, is that where the employer-employee relationship is still
existing or is sought to be reestablished because of its wrongful severance, (as
where the employee seeks reinstatement) the Court of Industrial Relations has
jurisdiction over all claims arising out of, or in connection with the employment, such
as those related to the Minimum Wage Law and the Eight-Hour Labor Law. After the
termination of their relationship and no reinstatement is sought, such claims become
mere money claims, and come within the jurisdiction of the regular courts,
We are aware that in 2 cases, some statements implying a different view have been
made, but we now hold and declare the principle set forth in the next preceding
paragraph as the one governing all cases of this nature.
This has been the constant doctrine of this Court since May 23, 1960.1
A more recent definition of the jurisdiction of the CIR is found in Campos, et al. v. Manila
Railroad Co., et al., G.R. No. L-17905, May 25, 1962, in which We held that, for such
jurisdiction to come into play, the following requisites must be complied with: (a) there must
exist between the parties an employer-employee relationship or the claimant must seek his
reinstatement; and (b) the controversy must relate to a case certified by the President to the
CIR as one involving national interest, or must arise either under the Eight-Hour Labor Law,
or under the Minimum Wage Law. In default of any of these circumstances, the claim
becomes a mere money claim that comes under the jurisdiction of the regular courts. Here,
petitioner does not deny the existence of an employer-employee relationship between it and
the members of the union. Neither is there any question that the claim is based on the Eight-
Hour Labor Law (Com. Act No. 444, as amended). We therefore rule in favor of the
jurisdiction of the CIR over the present claim.
The other issue raised in the appeal is whether or not, on the basis of the evidence, the
mealtime breaks should be considered working time under the following provision of the law;
The legal working day for any person employed by another shall be of not more than
eight hours daily. When the work is not continuous, the time during which the laborer
is not working and can leave his working place and can rest completely shall not be
counted. (Sec. 1, Com. Act No. 444, as amended. Emphasis ours.)
It will be noted that, under the law, the idle time that an employee may spend for resting and
during which he may leave the spot or place of work though not the premises2 of his
employer, is not counted as working time only where the work is broken or is not continuous.
The determination as to whether work is continuous or not is mainly one of fact which We
shall not review as long as the same is supported by evidence. (Sec. 15, Com. Act No. 103,
as amended, Philippine Newspaper Guild v. Evening News, Inc., 86 Phil. 303).
That is why We brushed aside petitioner's contention in one case that workers who worked
under a 6 a.m. to 6 p.m. schedule had enough "free time" and therefore should not be
credited with four hours of overtime and held that the finding of the CIR "that claimants herein
rendered services to the Company from 6:00 a.m. to 6:00 p.m. including Sundays and
holidays, . . . implies either that they were not allowed to leave the spot of their working place,
or that they could not rest completely" (Luzon Stevedoring Co., Inc. v. Luzon Marine
Department Union, et al., G.R. No. L-9265, April 29, 1957).
Indeed, it has been said that no general rule can be laid down is to what constitutes
compensable work, rather the question is one of fact depending upon particular
circumstances, to be determined by the controverted in cases. (31 Am. Jurisdiction Sec. 626
pp. 878.)
In this case, the CIR's finding that work in the petitioner company was continuous and did not
permit employees and laborers to rest completely is not without basis in evidence and
following our earlier rulings, shall not disturb the same. Thus, the CIR found:
While it may be correct to say that it is well-high impossible for an employee to work
while he is eating, yet under Section 1 of Com. Act No. 444 such a time for eating
can be segregated or deducted from his work, if the same is continuous and the
employee can leave his working place rest completely. The time cards show that the
work was continuous and without interruption. There is also the evidence adduced by
the petitioner that the pertinent employees can freely leave their working place nor
rest completely. There is furthermore the aspect that during the period covered the
computation the work was on a 24-hour basis and previously stated divided into
shifts.
From these facts, the CIR correctly concluded that work in petitioner company was
continuous and therefore the mealtime breaks should be counted as working time for
purposes of overtime compensation.
Petitioner gives an eight-hour credit to its employees who work a single shift say from 6 a.m.
to 2 p.m. Why cannot it credit them sixteen hours should they work in two shifts?
There is another reason why this appeal should dismissed and that is that there is no
decision by the CIR en banc from which petitioner can appeal to this Court. As already
indicated above, the records show that petitioner's motion for reconsideration of the order of
March 19, 1959 was dismissed by the CIR en banc because of petitioner's failure to serve a
copy of the same on the union.
Section 15 of the rules of the CIR, in relation to Section 1 of Commonwealth Act No. 103,
states:
The movant shall file the motion (for reconsideration), in six copies within five (5)
days from the date on which he receives notice of the order or decision, object of the
motion for reconsideration, the same to be verified under oath with respect to the
correctness of the allegations of fact, and serving a copy thereof personally or by
registered mail, on the adverse party. The latter may file an answer, in six (6) copies,
duly verified under oath. (Emphasis ours.)
In one case (Bien, et al. v. Castillo, etc., et al., G.R. No. L-7428, May 24, 1955), We sustained
the dismissal of a motion for reconsideration filed outside of the period provided in the rules of
the CIR. A motion for reconsideration, a copy of which has not been served on the adverse
party as required by the rules, stands on the same footing. For "in the very nature of things, a
motion for reconsideration against a ruling or decision by one Judge is in effect an appeal to
the Court of Industrial Relations, en banc," the purpose being "to substitute the decision or
order of a collegiate court for the ruling or decision of any judge." The provision in
Commonwealth Act No. 103 authorizing the presentation of a motion for reconsideration of a
decision or order of the judge to the CIR, en banc and not direct appeal therefore to this
Court, is also in accord with the principal of exhaustion of administrative remedies before
resort can be made to this Court. (Broce, et al., v. The Court of Industrial Relations, et al.,
G.R. No. L-12367, October 29, 1959).
Petitioner's motion for reconsideration having been dismissed for its failure to serve a copy of
the same on the union, there is no decision of the CIR en banc that petitioner can bring to this
Court for review.
WHEREFORE, the order of March 19, 1959 and the resolution of April 27, 1959 are hereby
affirmed and the appeal is dismissed, without pronouncement as to costs.
Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon and
Makalintal concur.
Bengzon, C.J., took no part.
G.R. No. L-1309             July 26, 1948
THE SHELL COMPANY OF PHILIPPINE ISLANDS, LIMITED, recurrente,
vs.
NATIONAL LABOR UNION, recurrida.
Sres. Ross, Selph, Carrascoso y Janda en representacion de la recurrente.
Sres. Paguia y Villanueva en representacion de la recurrida.
BRIONES, J.:
Actuando sobre una peticion de la entidad obrera llamada "National Labor Union," la Corte
de Relaciones Industriales ha dictado una decision en la que, entre otras cosas, se obliga a
la firma petrolera "The Shell Company of Philippine Islands, Limited" a pagar a sus obreros
que trabajan de noche (desde que se pone el sol hasta que se levanta al dia siguiente) una
compensacion adicional de 50% sobre sus salarios regulares si trabajasen de dia. Parece
que la comania tiene necesidad del servicio nocturno de un determinado numero de obreros,
pues los aviones procedentes del extranjero suelen aterrizar y despegarse de noche, siendo
por esto necesario el que se hagan faenas de noche para el suministro de gasolina y
lubricantes, y para otros menesteres. La compania petrolera se ha excepcionado contra
dicha decision de ahi el presente recurso de certiorari para que la revoquemos.
La compania recurrente alega y arguye que no solo no existe ninguna disposicion legal que
faculte a la Corte de Relaciones Industriales para ordenar el pago de compensacion
adicional a obreros que trabajan de noche, sino que, por el contrario, la ley del
Commonwealth No. 444 exime al patrono de semejante obligacion toda vez que en dicha ley
se proveen los casos en que es compulsorio el pago de "overtime" (compensacion adicional),
y entre tales casos no figura el trabajo de noche.
Por su parte, la union obrera recurrida sostiene que la facultad que se discute forma parte de
los poderes amplios y efectivos que la ley del Commonwealth No. 103 — la carta organica
del Tribunal de Relaciones Industriales — otorga a dicho tribunal; y que la ley No. 444 del
Commonwealth que se invoca no tiene ninguna aplication al presente caso, pues la misma
es de alcance forzosamente limitado, refiriendose particular y exclusivamente a la jornada
maxima de trabajo contidiano permitida en los establecimientos industriales — la jornada de
8 horas.
Nuestra conclusion es que la union obrera recurrida tiene la razon de su parte. Para una
clara y cabal elucidacion de los puntos discutidos, estmamos conveniente, aun a riesgo de
alargar esta ponencia, transcribir lasdisposiciones legales pertinentes que son los articulos 1,
4 y 13 de la ley del Commonwealth No. 103. Helas aqui:
SECTION 1. The Judge: his appointment, qualifications, compensation, tenure. —
There is hereby created a Court of Industrial Relations, which shall have jurisdiction
over the entire Philippines, to consider, investigate, decide, and settle any question,
matter, controversy or dispute arising between, and/or affecting, employers and
employees or laborers, and landlords and tenants or farm-laborers, and regulate the
relation between them, subject to, and in accordance with, the provisions of this Act.
The Court shall keep a record of all its proceedings and shall be presided over by a
Judge to be appointed by the President of the Philippines with the consent of the
Commission on Appointments of the National Assembly. The Judge of the Court shall
hold office during good behavior until he reaches the age of seventy years, or
becomes incapacitated to discharge the duties of his office. His qualifications shall be
the same as those provided in the Constitution for members of the Supreme Court
and he shall receive an annual compensation of ten thousand pesos and shall be
entitled to traveling expenses and per diems when performing official duties outside
of the City of Manila. The Department of Justice shall have executive supervision
over the Court.
SEC. 4. Strikes and lockouts. — The Court shall take cognizance for purpose of
prevention, arbitration, decision and settlement, of any industrial or agricultural
dispute causing or likely to cause a strike or lockout, arising form differences as
regards wages, shares or compensation, hours of labor or conditions of tenancy or
employment, between employers and employees or laborers and between landlords
and tenants or farm-laborers, provided that the number of employees, laborers or
tenants or farm-laborers involved exceeds thirty, and such industrial or agricultural
dispute is submitted to the Court by the Secretary of Labor, or by any or both of the
parties to the controversy and certified by the Secretary of Labor as existing and
proper to be dealt with by the Court for the sake of public interest. In all such cases,
the Secretary of Labor or the party or parties submitting the disputes, shall clearly
and specifically state in writing the questions to be decided. Upon the submission of
such a controversy or question by the Secretary of Labor, his intervention therein as
authorized by law, shall cease.
The Court shall, before hearing the dispute and in the course of such hearing,
endeavor to reconcile the parties and induce them to settle the dispute by amicable
agreement. If any agreement as to the whole or any part of the dispute is arrived at
by the parties, a memorandum of its terms shall be made in writing, signed and
acknowledged by the parties thereto before the Judge of the Court or any official
acting in his behalf and authorized to administer oaths or acknowledgments, or,
before a notary public. The memorandum shall be filed in the office of the Clerk of the
Court, and, unless otherwise ordered by the Court, shall, as between the parties to
the agreement, have the same effect as, and be deemed to be, a decision or award.
SEC. 13. Character of the award. — In making an award, order or decision, under the
provisions of section four of this Act, the Court shall not be restricted to the specific
relief claimed or demands made by the parties to the industrial or agricultural dispute,
but may include in the award, order or decision any matter or determination which my
be deemed necessary or expedient for the purpose of setting the dispute or of
preventing further industrial or agricultural disputes.
Resulta evidente de las disposiciones transcritas lo siguiente: (a) que cuando surge una
disputa entre el principal y el empleado u obrero, vgr. sobre cuestion de salarios, la Corte de
Relaciones Industriales tiene jurisdiccion en todo el territorio de Filipinas para considerar,
investigar y resolver dicha disputa, fijando los salarios que estime justos y razonables; (b)
que para los efectos de prevencion, arbitraje, decision y arreglo, el mismo Tribunal de
Relaciones Industriales tien igualmente jurisdiccion para conocer de cualquier disputa —
industrial o agricola — resultante de cualesquier diferencias respecto de los salarios,
participaciones o compensaciones, horas de trabajo, condiciones del empleo o de la
aparceria entre los patronos y los empleados u obreros y entre los propietarios y los
terratenientes u obreros agricolas previo el cumplimiento de ciertos requisitos y condiciones,
cuando se viere que dicha disputa ocasiona o puede ocasionar una huelga; (c) que en el
ejercicio de sus facultades arriba especificadas, el Tribunal de Relaciones Industriales no
queda limitado, al decidir la disputa, a conceder el remedio o remedios solicitados por las
partes en la controversia, sino que puede incluir en la orden or decision cualquier materia o
determinacion para el proposito de arreglar la disputa o de prevenir ulteriores controversias
industriales o agricolas.
En el caso nos ocupa existe indudablemente una dispunta industrial. Mientras la empresa, la
compania Shell, no esta dispuesta a pagar a sus obreros de noche mayores salarios que los
obreros de ida, la "NationalLabor Union", a la cual estan afiliados los trabajadoresde la Shell,
reclama otro tipo de salarios para el servicio nocturno — un 50% mas. En esto consiste la
disputa, el litigio industrial. Ahora bien: ¿que ha hecho la Corte de Relaciones Industriales,
despues de sometido el conflicto a su jurisdiccion? Pues precisamente lo que manda la
citada ley No. 103 del Commonwealth, carta organica de su creacion y funcionamiento, a
saber: considerar, investigar y enjuiciar la disputa, resolviedola despues en el sentido en que
la ha resuelto, es decir, remunerando el trabajo de noche con un 50% mas de los salarios de
dia. Y esto es perfectamente legal tanto dentro del alcance del articulo 1 de la referida ley
No. 103 que faculta a la Corte de Relaciones Industriales para decidir cualquier disputa sobre
salarios y compensaciones en la forma que estime razonable y conveniente, como dentro del
marco del articulo 4 de la misma ley que autoriza a dicho tribunal para enjuiciar y decidir
cualquier pleito o controversia industrial o agricola determine el estallido de una huelga o
tienda a causarla. Mas todavia: lo hecho por el Trbunal de Relaciones Industriales en el
presente caso es asimismo legal dentro del marco del articulo 13 de la misma ley No. 103,
articulo que, como queda visto, no solo faculta a dicho tribunal a conceder el remedio que
recabanlas partes, sino inclusive a ir mas alla, esto es, a otorgar remedios no expresamente
solicitados, siempre que los mismos se encamienen a resolver de una vez la disputa o a
prevenir el estallido de ulteriores disputas o huelgas.
Es evidente que con estos amplios poderes el Estadose ha propuesto equipar al Tribunal de
Relaciones Industriales hasta el maximum posible de utilidad y eficacia, haciendo del mismo
no una simple agencia academica, sino verdaderamente activa, dinamica y eficiente — en
una palabra, la maquinaria oficial por excelencia en la formidable y espinosa tarea de
resolver los conflictos industriales, yagricolas de cierta clase, previniendo y evitando de esta
manera esos paros y huelgas que tanto afligen y danan no solo a las empresas y a los
obreros, sino, en general, a toda la comunidad. En su opinion concurrente dictada en el caso
autoritativo de Ang Tibay contra Tribunal de Relaciones Industriales1 (R.G. No. 46496), el
Magistado Laurel ha expresado muy acertadamente la idea fundamental que subraya la
creacion de dicho tribunal, con el siguiente pronunciamiento:
In Commonwealth Act No. 103, and by it, our government no longer performs the role
of mere mediator or intervenor but that of supreme arbiter. (Las cursivas son
nuestras.).
La recurrente arguye, sin embargo, que si bien es verdad que en caso de disputa el Tribunal
de relaciiones Industriales tiene, en virtud de su ley organica, el poder de fijar los salarios, tal
poder no es absoluto, sino que esta sujeto a ciertas restricciones y cortapizas, provistas en la
ley comunmente conocida por ley sobre la jornada de ocho horas, la ley del Commonwealth
No. 444, cuyos articulos pertinentes se transacriben integramente a continuacion:
SECTION 1. The legal working day for any person employed by another shall be of
not more than eight hours daily. When the work is not continuous, the time during
which the laborer is not working and can leave his working place and can rest
completely shall not be counted.
SEC. 3. Work may be performed beyond eight hours a day in case of actual or
impending emergencies caused by serious accidents, fire, flood, typhoon,
earthquake, epidemic, or other disaster or calamity in order to prevent loss to life and
property or imminent danger to public safety; or in case urgent work to be performed
on the machines, equipment, or installations in order to avoid a serious loss which
the employer would otherwise suffer, or some other just cause of a similar nature; but
in all such cases the laborers and employees shall be entitled to receive
compensation for the overtime work performed at the same rate as their regular
wages or salary, plus at least twenty-five per centum additional.
In case of national emergency the government is empowered to establish rules and
regulations for the operation of the plants and factories and to determine the wages
to be paid the laborers.
SEC. 4. No person, firm, or corporation, business establishment or place or center of
labor shall compel an employee or laborer to work during Sundays and legal
holidays, unless he is paid an additional sum of at least twenty-five per centum of his
regular remuneration: Provided however, That this prohibition shall not apply to public
utilities performing some public service such as supplying gas, electricity, power,
water, or providing means of transportation or communication.
Como quiera — argumentanlos abogados de la recurrente — que en estos articulos se
especifican los casos en que se autoriza el pago de compensacion extra o adicional y son
solo, a saber: (a) en caso de "overtime" o trabajo en exceso de las horas regulares por
razones imperiosasde urgencia con motivo de algun desastre o accidente, o para evitar
perdidas o repararlas; (b) en caso de trabajo por los domingos y fiestas; (c) en caso de
emergencia, y nada hay que se refiera al trabajo de noche; luego la orden de que se trata es
ilegal, pues no esta autorizada por la ley. "In the absence — recalcan los abogados de la
recurrente — legislation authorizing the payment of extra compensation for work done at
night, the Court of Industrial Relations ha no power or authority to order the petitioner
company to pay extra compensation for work done by its laborers at night. Expressio unius
est exclusio alterius. Where, as inthe case at bar, statute expressly specifies the cases where
payment of extra compensation may be demanded, extra compensation may be allowed in
those cases only, and in no others. The provisions of the Commonwealth Act No. 444 cannot
be enlarged by implication or otherwise. Expressum facit cessare tacitum.
La argumentacion es erronea. La Ley No. 444 no es aplicable al presente caso, siendo
evidente que la misma tiene un objeto especifico, a saber: (a) fijar en 8 horas la jornada
maxima de trabajo; (b) senalar ciertos casos excepcionales en que se puede autorizar el
trabajo fuera de dicha jornada; (c) proveer un sobresueldo, que no debe ser menor de 25%
del salario regular, para el "overtime" o trabajo en exceso de las 8 horas.
En el caso de Manila Electric, solicitante-apelante, contra The Public Utities Employees'
Association,2 apelada, L-1206 (45 Off. Gaz., 1760), esta Corte ha declarado que la facultad
conferida por el articulo 1 de la ley del Commonwealth No. 103 al Tribunal de relaciones
Industriales para enjuciar y decidir pleitos y controversias industriales entre el capital y el
trabajo, que incluye la de fijar salarios y compnsaciones de empleados y obreros, ha
quedado restringida por el articulo 4 de la ley Commonwealth No. 444, que al mismo tiempo
que limita a un 25% del salario o compensacion regular del obrero el minimum de la
compensacion adicional que el tribunal puede conceder por trabajos en los Domingos y
fiestas oficiales, exime del pago de dicha compensacion adicional a las entidades de utilidad
publica que prestan algun servicio publico, como las que suministran gas, electricidad, fuerza
mortriz, agua, o proveen medios de transporte o communicacion. Tal restriccion viene a ser
una excepcion de la facultad general del tribunal para fijar, en casos de disputa, los salarios y
compensaciones que deben pagar los patronos a los empleados y obreros; y como quiera
que dicho articulo 4 se refiere solamente a salario o compensacion por trabajos durante los
dias de Domingo y fiestas oficiales, es obvio que no puede referirse a salario o
compensacion adicional por trabajos fuera de lajornada de ocho horas que generalmente se
realizan desde primeras horas de la manana a ultimas horas de la tarde, pues una cosa es
trabajar en dias de Domingo y fiestas oficiales, y otra cosa bien distinta es trabajar de noche
of fuera de la jornada de ocho horas en dias laborables. Aplicando la maxima legal
"expressio unius est exclusio alterius," se puede sostener, sin temor de equivocarse, que una
ley que provee una excepcion especifica a sus disposiciones generales, como la
compensacion adicional por trabajos en dias de Domingo y fiestas oficiales, excluye
cualquiera otra, como la compensacion adicional por trabajos de noche en dias
laborables."Another case in which this maxim may almost invariably by followed is that of
statute which makes certain specific exceptions to its general provisions. Here wemay safely
assume that all other exceptions were intended to be excluded." (Wabash R. Co.vs. United
States, 178 Fed., 5, 101 C. C. A. 133; Cella Commision Co. vs. Bohlinger, 147 Fed., 419; 78
C. C. A. 467; Kunkalman vs. Gibson, 171 Ind., 503; 84 N.E. 985; Hering vs. Clement, 133
App. Div., 293; 117 N.Y., Supp. 747.).
El trabajo denoche que la compania Shell exige de sus obreros no es talmente un "overtime",
en el sentido en que se emplea esta palabra en la Le No. 444, sino que es una
jornada completa de trabajo, tambien de 8 horas: solo que, en vez de realizarse de dia, se
hace de noche. Dicho en otras palabras, el trabajo de noche de que aqui se trata no es
solamente unexceso, prolongacion u "overtime" del trabajo regular de dia, sino que es otro
tipo de trabajo, absolutamente independiente de la jornada diurna. Por eso hay dos turnos: el
turno de obreros que trabajan de dia; y el turno de los que trabajan de noche. Asi que no es
extrano que el legislador no haya incluido este tipo de trabajo entre los casos de "overtime"
senalados en la referida ley No. 444.
La cuestion que, a nuestro juicio, se debe determinar es si entre las facultades generales de
la Corte de Relaciones Industriales que estan admitidas sin dipusta, esta la de considerar la
jornada de noche como una jornada completa de trabajo; la de estimarla como mas
gravosa que la jornada de dia; y consiguientemente, la de proveer y ordenar que se
remunere con un 50% mas de los salarios regulares diurnos. Nuestra contestacion es
afirmativa: todo esto se halla comprendido entre los poderes generales de la Corte de
Relaciones Industriales. Si este tribunal tiene, en casos de disputa, el poder de fijar los
salarios que estime justos y razonables para el trabajo de dia, no hay razon por que no ha de
tener el mismo poder con respecto a los salarios de noche; es tan trabajo lo uno como lo
otro. Y con respecto ala apreciacion de que el trabajo de noche es mas pesado y oneroso
que el de dia y, por tanto, merece mayor remuneracion, tampoco hay motivospara revocarla
o alterarla. No hay argumento posible contra el hecho universal de que el trabajo regular,
normal y ordinario es el de dia, y que el trabajo de noche es muy exceptional y justificado
solo por ciertos motivos imperativamente inevitables. Por algo la humanidad ha
trabajadosiempre de dia.
Razones de higiene, de medicina, de moral, de cultura, de sociologia, establecen de consuno
que el trabajo de nocho tiene muchos inconvenientes, y cuando no hay mas remedio que
hacerlo es solo justo que se remunero mejor que de ordinario para resarcir hasa cierto punto
al obrero de tales inconvenientes. Es indudable que el trabajo de noche no solo a la larga
afecta a la salud del trabajador, sino que le priva a este de ciertas cosas que hacen
relativamente agradable la vida, como, vgr., un reposo completo e ininterrumpido y ciertos
ratos de solaz, ocio o expansion espiritual y cultural que podria tener al terminar el trabajo
por la tarde y durante las primeras horas de la noche. Se dice que el obrero puede
descansar de dia despues de haber trabajado toda la noche; pero puede acaso el reposo de
dia dar al cuerpo aquel tonico y aquel efecto reparador completo que solo puede
proporcionar el reposo natural de noche? Se dice tambien que algunos prefieren trabajar de
noche bajo nuestro clima abrasador, evitando asi el calor del dia. Mucho tememos, sin
embargo, que esto sea mejor hablado que praticado. Creemos que desde tiempo inmemorial
la regla universal es que el hombre trabja de noche mas por necesidad irremediable que por
placentera conveniencia.
A la opinion vulgar, universal, hay que sumar la opinionpericial, el criterio especialista. La
opinion de los tratadistas y expertos milita decididamente en favor de la tesis de que el
trabajo de noche es mas duro y oneroso que el trabajo de dia, considerandose por esto con
marcada repugnancia y compeliendo consiguientemente a las gerencias capitalisticas a
establecer una escala mas alta de salarios como incentivo a los obreros para aceptarlo. Se
podrian citar virias autoridades, pero para no extender demasiado esta ponencia optamos
por transcriber solamente algunas, a saber:
. . . Then, it must be remembered that it is distinctly unphysiological to turn the night
into day and deprive the body of the beneficial effects of sunshine. The human
organism revolts against this procedure. Added to artificial lighting are reversed and
unnatural times of eating, resting, and sleeping. Much of the inferiority of nightwork
can doubtless be traced to the failure of the workers to secure proper rest and sleep,
by day. Because of inability or the lack of opportunity to sleep, nightworkers often
spend their days in performing domestic duties, joining the family in the midday meal,
'tinkering about the place', watching the baseball game, attending the theater or
taking a ride in the car. It is not strange that nightworkers tend to be less efficient
than dayworkers and lose more time. . . (The Management of Labor Relations, by
Watkins & Dodd, page 524.).
Nightwork. — Nightwork has gained a measure of prominence in the modern
industrial system in connection with continuous industries, that is, industries in which
the nature of the processes makes it necessary to keep machinery and equipment in
constant operation. Even in continuous industries the tendency is definitely in the
direction of FOUR shifts of 6 hours each, with provision for an automatic change of
shift for all workers at stated intervals. Some discussion has taken place with regard
to the lengths of the period any workers should be allowed to remain on the night
shift. A weekly change of shifts is common, specially where three or four shifts are in
operation; in other cases the change is made fortnightly or monthly; in still other
instances, no alternation is provided for, the workers remaining on day — or
nightwork permanently, except where temporary changes are made for individual
convenience.
There is sharp difference of opinion concerning the relative merits of these systems.
Advocates of the weekly change of shifts contend that the strain of nightwork and the
difficulty of getting adequate sleep during the day make it unwise for workers to
remain on the"graveyard" shift for more than a week at a time. Opponents urge that
repeated changes make it more difficult to settle down to either kind of shift and that
after the first week nightwork becomes less trying while the ability to sleep by day
increases. Workers themselves react in various ways to the different systems. This
much, however, is certain: Few persons react favorably to nightwork, whether the
shift be continuous or alternating. Outside of continuous industries, nightwork can
scarcely be justified, and, even in these, it presents serious disadvantages which
must be recognized in planing for industrial efficiency, stabilization of the working
force, the promotion of industrial good-will, and the conservation of the health and
vitality of the workers.
Nightwork cannot be regarded as desirable, either from the point of view of the
employer or of the wage earner. It is uneconomical unless overhead costs are
unusually heavy. Frequently the scale of wages is higher as an inducement to
employees to accept employment on the night shift, and the rate of production is
generally lower. (Management of Labor Relations, by Watkins & Dodd, pp. 522-524;
emphasis ours.)
. . . The lack of sunlight tends to produce anemia and tuberculosis and to predispose
to other ills. Nightwork brings increased liability to eyestrain and accident. Serious
moral dangers also are likely to result from the necessity of traveling the streets alone
at night, and from the interference with normal home life. From an economic point of
view, moreover, the investigations showed that nightwork was unprofitable, being
inferior to day work both in quality and in quantity. Wherever it had been abolished, in
the long run the efficiency both of the management and of the workers was raised.
Furthermore, it was found that nightwork laws are a valuable aid in enforcing acts
fixing the maximum period of employment. (Principles of Labor Legislation, by
Commons and Andrews, 4th Revised Edition, p. 142.)
Special regulation of nightwork for adult men is a comparatively recent development.
Some European countries have adopted laws placing special limitations on hours of
nightwork for men, and others prohibit such work except in continuous processes.
(Principles of Labor legislation, 4th Revised Edition by Common & Andrews, p. 147.)
Nightwork has almost invariably been looked upon with disfavor by students of the
problem because of the excessive strain involved, especially for women and young
persons, the large amount of lost time consequent upon exhaustion of the workers,
the additional strain and responsibility upon the executive staff, the tendency of
excessively fatigued workers to "keep going" on artificial stimulants, the general
curtailment of time for rest, leisure, and cultural improvement, and the fact that night
workers, although precluded to an extent from the activities of day life, do attempt to
enter into these activities, with resultant impairment of physical well-being. It is not
contended, of course, that nightwork could be abolished in the continuous-process
industries, but it is possible to put such industries upon a three- or four-shifts basis,
and to prohibit nightwork for women and children. (Labor's Progress and Problems,
Vol. I, p. 464, by Professors Millis and Montgomery.)
Nightwork. — Civilized peoples are beginning to recognize the fact that except in
cases of necessity or in periods of great emergency, nightwork is socially
undesirable. Under our modern industrial system, however, nightwork has greatly
aided the production of commodities, and has offered a significant method of cutting
down the ever-increasing overhead costs of industry. This result has led employers to
believe that such work is necessary and profitable. Here again one meets a conflict of
economic and social interests. Under these circumstances it is necessary to discover
whether nightwork has deleterious effects upon the health of laborers and tends to
reduce the ultimate supply of efficient labor. If it can proved that nightwork affects
adversely both the quality and quantity of productive labor, its discontinuance will
undoubtedly be sanctioned by employers. From a social point of view, even a
relatively high degree of efficiency in night operations must be forfeited if it is
purchased with rapid exhaustion of the health and energy of the workers. From an
economic point of view, nightwork may be necessary if the employer is to meet the
demand for his product, or if he is to maintain his market in the face of increasing
competition or mounting variable production costs.
Industrial experience has shown that the possession of extra-ordinary physical
strength and self-control facilitates the reversal of the ordinary routine of day work
and night rest, with the little or no unfavorable effect on health and efficiency.
Unusual vitality and self-control, however, are not common possessions. It has been
found that the most serious obstacle to a reversal of the routine is the lack of self-
discipline. Many night workers enter into the numerous activities of day life that
preclude sleep, and continue to attempt to do their work at night. Evidence gathered En meritos de lo expuesto, se deniega el recurso de certiorari interpuesto y se confirma la
by the British Health of Munition Workers' Committee places permanent night sentencia del Tribunal De Reclaciones Industriales, con costas a cargo de a recurrente. Asi
workers, whether judged on the basis of output or loss of time, in a very unfavorable se ordena.
positions as compared with day workers.
Paras, Pres. Interino, Feria, Pablo, Perfecto, Bengzon, Padilla and Tuason, MM., estan
Systems of nightwork differ. There is the continuous system, in which employees conformes.
labor by night and do not attend the establishment at all by day, and the
discontinuous system, in which the workers change to the day turn at regular G.R. No. L-30452 September 30, 1982
intervals, usually every other week. There are, of course, minor variations in these
systems, depending upon the nature of the industry and the wishes of management. MERCURY DRUG CO., INC., petitioner,
Such bodies as the British Health Munition Workers' Committee have given us vs.
valuable conclusions concerning the effect of nightwork. Continuous nightwork is NARDO DAYAO, ET AL., respondents,
definitely less productive than the discontinuous system. The output of the
continuous day shift does not make up for this loss in production.
Caparas & Ilagan for petitioner.
There is, moreover, a marked difference between the rates of output of night and day
shifts on the discontinuous plan. In each case investigated the inferiority of night Gerardo P. Cabo Chan and Elias Banzali for respondents.
labor was definitely established. This inferiority is evidently the result of the night
worker's failure to secure proper amounts of sleep and rest during the day. The
system of continuous shifts, especially for women, is regarded by all investigators as
undesirable. Women on continuous nightwork are likely to perform domestic duties, GUTIERREZ, JR., J.:
and this added strain undoubtedly accounts for the poorer results of their industrial
activities. The tendency to devote to amusement and other things the time that This is a petition for review on certiorari of the decision of the Court of Industrial Relations
should be spent in rest and sleep is certainly as common among men as among dated March 30, 1968 in Case No. 1926-V and the Resolution of the Court en banc dated
women workers and accounts largely for the loss of efficiency and time on the part of July 6, 1968 denying two separate motions for reconsideration filed by petitioners and
both sexes in nightwork. respondents.

The case against nightwork, then, may be said to rest upon several grounds. In the The factual background of Case No. 1926-V is summarized by the respondent Court of
first place, there are the remotely injurious effects of permanent nightwork manifested Industrial Relations as follows:
in the later years of the worker's life. Of more immediate importance to the average
worker is the disarrangement of his social life, including the recreational activities of
This is a verified petition dated March 17, 1964 which was subsequently
his leisure hours and the ordinary associations of normal family relations. From an
amended on July 31, 1964 filed by Nardo Dayao and 70 others against
economic point of view, nightwork is to be discouraged because of its adverse effect
Mercury Drug Co., Inc., and/or Mariano Que, President & General Manager,
upon efficiency and output. A moral argument against nightwork in the case of
and Mercury Drug Co., Inc., Employees Association praying, with respect to
women is that the night shift forces the workers to go to and from the factory in
respondent corporation and its president and general manager: 1) payment
darkness. Recent experiences of industrial nations have added much to the evidence
of their unpaid back wages for work done on Sundays and legal holidays plus
against the continuation of nightwork, except in extraordinary circumstances and
25c/c additional compensation from date of their employment up to June 30,
unavoidable emergencies. The immediate prohibition of nightwork for all laborers is
1962; 2) payment of extra compensation on work done at night; 3)
hardly practicable; its discontinuance in the case of women employees is
reinstatement of Januario Referente and Oscar Echalar to their former
unquestionably desirable. 'The night was made for rest and sleep and not for work' is
positions with back salaries; and, as against the respondent union, for its
a common saying among wage-earning people, and many of them dream of an
disestablishment and the refund of all monies it had collected from
industrial order in which there will be no night shift. (Labor Problems, 3rd Edition, pp.
petitioners.
325-328, by Watkins & Dodd.).

In separate motions, respondent management and respondent union move to

dismiss, the first on the ground that:
 I. The petition states no cause of action.
II. This Court has no jurisdiction over the subject of the claims of petitioners
Januario Referente and Oscar Echalar.
III. There is another action pending between the same parties, namely,
Mercury Drug Co., Inc., and/or Mariano Que and Nardo Dayao.
while on the other hand, the second alleges that this Court has no jurisdiction over the acts
complained of against the respondent union.
For reasons stated in the Order dated March 24, 1965, two Court resolved
the motions to dismiss, as follows:
1. Ground No. 1 of management's motion to dismiss was denied for lack of
merit.
2. Its second ground was found meritorious and, accordingly Januario
Referente and Oscar Echalar were dropped as party petitioners in this case.
3. The third ground was denied, holding that there still exists the employer-
employee relationship between Nardo Dayao and the management.
4. With respect to the fourth ground, the Court held that on the basis of
section 7-A of C.A. No. 444, as amended by R.A. No. 1993, 'it can be safely
said that,
counting backward the three (3) year prescriptive period from the date of the
filing of the instant petition - March 20, 1964 - all-of petitioners' claims have
not yet prescribed.'
5. In so far as respondent union's motion is concerned, the Court held that
'petitioners' cause of action against the respondent Association should be
dismissed without prejudice to the refiling of the same as an unfair labor
practice case.'
Only the respondent management moved to reconsider the Order of March
24, 1965 but the same was denied by the Court en banc in a resolution dated
August 26, 1965. Respondent submitted an answer to the amended petition
which was subsequently amended on January 6, 1966, containing some
admissions and some denials of the material averments of the amended
petition. By way of affirmative and special defenses,, respondents alleged
that petitioners have no cause of action against Mariano Que because their
employer respondent Mercury Drug Company, Inc., an existing corporation
which has a separate and distinct personality from its incorporators
stockholders and/or officer, that the company being a service enterprise is
excluded from the coverage of the Eight Hour Labor Law, as amended; that
no court has the power to set wages, rates of pay, hours of employment, or
other conditions of employment to the extent of disregarding an agreement
thereon between the respondent company and the petitioners, and of fixing
night differential wages; that the petitioners were fully paid for services
rendered under the terms and conditions of the individual contracts of
employment; that the petition having been verified by only three of the
petitioners without showing that the others authorized the inclusion of their
names as petitioners does not confer jurisdiction to this Court; that there is no
employer-employee relationship between management and petitioner Nardo
Dayao and that his claim has been released and/or barred by another action
and that petitioners' claims accuring before March 20, 1961 have prescribed."
(Annex "P", pp. 110-112, rollo).
After hearing on the merits, the respondent court rendered its decision. The dispositive
portion of the March 30, 1968 decision reads:
IN VIEW OF THE FOREGOING, the Court hereby resolves that:
1. The claim of the petitioners for payment of back wages correspoding to the
first four hours work rendered on every other Sunday and first four hours on
legal holidays should be denied for lack of merit.
2. Respondent Mercury Drug Company, Inc.. is hereby ordered to pay the
sixty- nine (69) petitioners:
(a) An additional sum equivalent to 25% of their respective
basic or regular salaries for services rendered on Sundays
and legal holidays during the period from March 20. 1961 up
to June 30, 1962; and
(b) Another additional sum or premium equivalent to 25% of
their respective basic or regular salaries for nighttime
services rendered from March 20, 1961 up to June 30, 1962.
3. Petitioners' petition to convert them to monthly employees should be, as it
is hereby, denied for lack of merit.
4. Respondent Mariano Que, being an officer and acted only as an agent in
behalf of the respondent corporation, should be absolved from the money
claims of herein petitioners whose employer, according to the pleadings and
evidence, is the Mercury Drug Company,, Inc.
 To expedite the computation of the money award, the Chief Court Examiner
or his authorized representative is hereby directed to proceed to the office of
the respondent corporation at Bambang Street, Sta. Cruz, Manila, the latter
to make available to said employee its records, like time records, payrolls
and other pertinent papers, and compute the money claims awarded in this
decision and, upon the completion thereof, to submit his report as soon as
possible for further disposition of the Court.
Not satisfied with the decision, the respondents filed a motion for its reconsideration. The
motion for reconsideration, was however, denied by the Court  en banc in its Resolution dated
July 6, 1968.
Petitioner Mercury Drug Company, Inc., assigned the following errors in this petition:
I
RESPONDENT CIR ERRED IN DECLARING THE CONTRACTS OF
EMPLOYMENT, EXHIBITS "A" AND "B", NULL AND VOID AS BEING
CONTRARY TO PUBLIC POLICY AND IN SUSTAINING, ACCORDINGLY,
PRIVATE RESPONDENTS' CLAIMS FOR 25% SUNDAY AND LEGAL
HOLIDAY PREMIUMS BECAUSE SUCH DECLARATION AND AWARD
ARE NOT SUPPORTED BY SUBSTANTIAL EVIDENCE, THUS
INFRINGING UPON THE CARDINAL RIGHTS OF THE PETITIONER; AND
ALSO BECAUSE THE VALIDITY OF SAID t CONTRACTS OF
EMPLOYMENT HAS NOT BEEN RAISED.
II
RESPONDENT CIR ERRED IN SUSTAINING PRIVATE RESPONDENTS'
CLAIMS FOR NIGHTTIME WORK PREMIUMS NOT ONLY BECAUSE OF
THE DECLARED POLICY ON COLLECTIVE BARGAINING FREEDOM EX.
PRESSED IN REPUBLIC ACT 875 AND THE EXPRESS PROHIBITION IN
SECTION 7 OF SAID STATUTE, BUT ALSO BECAUSE OF THE WAIVER
OF SAID CLAIMS AND THE TOTAL ABSENCE OF EVIDENCE THEREON.
III
RESPONDENT CIR ERRED IN MAKING AWARDS IN FAVOR OF THE
PRIVATE RESPONDENTS WHO NEITHER GAVE EVIDENCE NOR EVEN
APPEARED TO SHOW THEIR INTEREST.
Three issues are discussed by the petitioner in its first assignment of error. The first issue
refers to its allegation that the respondent Court erred in declaring the contracts of
employment null and void and contrary to law. This allegation is premised upon the following
finding of the respondent court:
But the Court finds merit in the claim for the payment of additional
compensation for work done on Sundays and holidays. While an employer
may compel his employees to perform service on such days, the law
nevertheless imposes upon him the obligation to pay his employees at least
25% additional of their basic or regular salaries.
No person, firm or corporation, business establishment or
place of center of labor shall compel an employee or laborer
to work during Sundays and legal holidays unless he is paid
an additional sum of at least twenty-five per centum of his
regular remuneration: PROVIDED, HOWEVER, That this
prohibition shall not apply to public utilities performing some
public service such as supplying gas, electricity, power,
water, or providing means of transportation or
communication. (Section 4, C. A. No. 444) (Emphasis
supplied)
Although a service enterprise, respondent company's employees are within
the coverage of C. A. No. 444, as amended known as the Eight Hour Labor
Law, for they do not fall within the category or class of employees or laborers
excluded from its provisions. (Section 2, Ibid.)
The Court is not impressed by the argument that under the contracts of
employment the petitioners are not entitled to such claim for the reason that
the same are contrary to law. Payment of extra or additional pay for services
rendered during Sundays and legal holidays is mandated by law. Even
assuming that the petitioners had agreed to work on Sundays and legal
holidays without any further consideration than their monthly salaries, they
are not barred nevertheless from claiming what is due them, because such
agreement is contrary to public policy and is declared nun and void by law.
Any agreement or contract between employer and the laborer or employee
contrary to the provisions of this Act shall be null and void ab initio.
Under the cited statutory provision, the petitioners are justified to receive
additional amount equivalent to 25% of their respective basic or regular
salaries for work done on Sundays and legal holidays for the period from
March 20, 1961 to June 30, 1962. (Decision, pp. 119-120, rollo)
From a perusal of the foregoing statements of the respondent court, it can be seen readily
that the petitioner-company based its arguments in its first assignment of error on the wrong
premise. The contracts of employment signed by the private respondents are on a standard
form, an example of which is that of private respondent Nardo Dayao quoted hereunder:
 Mercury Drug Co., Inc. 1580 Bambang, Manila These contracts were not declared by the respondent court null and void in their entirety. The
October 30, 1959 respondent court, on the basis of the conflicting evidence presented by the parties, in effect:
1) rejected the theory of the petitioner company that the 25% additional compensation
Mr. Nardo Dayao claimed by the private respondents for the four-hour work they rendered during Sundays and
1015 Sta. Catalina legal holidays provided in their contracts of employment were covered by the private
Rizal Ave., Exten. respondents' respective monthly salaries; 2) gave credence to private respondents', (Nardo
Dayao, Ernesto Talampas and Josias Federico) testimonies that the 25% additional
compensation was not included in the private respondents' respective monthly salaries and 3)
Dear Mr. Dayao:
ruled that any agreement in a contract of employment which would exclude the 25%
additional compensation for work done during Sundays and holidays is null and void as
You are hereby appointed as Checker, in the Checking Department of mandated by law.
MERCURY DRUG CO., INC., effective July 1, 1959 and you shall receive an
annual compensation the amount of Two Thousand four hundred pesos only
On the second issue, the petitioner-company reiterated its stand that under the,- respective
(P2,400.00), that includes the additional compensation for work on Sundays
contracts of employment of the private respondents, the subject 25 % additional
and legal holidays.
compensation had already been included in the latter's respective monthly salaries. This
contention is based on the testimony of its lone witness, Mr. Jacinto Concepcion and
Your firm being a Service Enterprise, you will be required to perform work pertinent exhibits. Thus:
every day in a year as follows:
Exhibit A shows that for the period of October 30, 1960, the annual
8 Hours work on regular days and-all special Holidays that may be declared compensation of private respondent Nardo Dayao, including the additional
but with the 25% additional compensation; compensation for the work he renders during the first four (4) hours on every
other Sunday and on the eight (8) Legal Holidays at the time was P2,400.00
4 Hours work on every other Sundays of the month; or P200.00 per month. These amounts did not represent basic salary only,
but they represented the basic daily wage of Nardo Dayao considered to be
For any work performed in excess of the hours as above mentioned, you shall be paid 25 % in the amount of P7.36 x 305 ordinary working days at the time or in the total
additional compensation per hour. amount of P2,144.80. So plus the amount of P156.40 which is the equivalent
of the Sunday and Legal Holiday rate at P9.20 basic rate of P7.36 plus 25%
This appointment may be terminated without notice for cause and without cause upon thirty thereof or P1.84) x 17, the latter figure representing 13 Sundays and 4 Legal
days written notice. Holidays of 8 hours each. ...

This supersedes your appointment of July 1, 1959. xxx xxx xxx

Very truly yours, That the required minimum 25% Sunday and Legal Holiday additional
compensation was paid to and received by the employees for the work they
rendered on every other Sunday and on the eight Legal Holidays for the
MERCURY DRUG CO., INC.
period October, 1959 to June 30, 1962 is further corroborated by Exhibits 5,
6, 8, 9 and 9-A and the testimony of Mr. Jacinto Concepcion thereon. (Brief
(Sgd.) MARIANO QUE General Manager for the Petitioner, pp. 24, 27).

ACCEPTED WITH FULL CONFORMITY: The aforesaid computations were not given credence by the respondent court. In fact the
same computations were not even mentioned in the court's decision which shows that the
(Sgd.) NARDO DAYAO court found such computations incredible. The computations, supposedly patterned after the
(EXH. "A" and "l ") WAS Interpretative Bulletin No. 2 of the Department Labor demonstrated in Exhibits "6", "7",
(Decision, pp. 114-115, rollo) "8", "9", and "9-A", miserably failed to show the exact and correct annual salary as stated in
the respective contracts of employment of the respondent employees. The figures arrived at
in each case did not tally with the annual salaries on to the employees' contracts of
employment, the difference varying from P1.20 to as much as P14.40 always against the
interest of the employees. The petitioner's defense consists of mathematical computations
made after the filing of the case in order to explain a clear attempt to make its employees
work without the extra compensation provided by law on Sundays and legal holidays.
In not giving weight to the evidence of the petitioner company, the respondent court sustained
the private respondents' evidence to the effect that their 25% additional compensation for
work done on Sundays and Legal Holidays were not included in their respective monthly
salaries. The private respondents presented evidence through the testimonies of Nardo
Dayao, Ernesto Talampas, and Josias Federico who are themselves among the employees
who filed the case for unfair labor practice in the respondent court and are private
respondents herein. The petitioner- company's contention that the respondent court's
conclusion on the issue of the 25% additional compensation for work done on Sundays and
legal holidays during the first four hours that the private respondents had to work under their
respective contracts of employment was not supported by substantial evidence is, therefore,
unfounded. Much less do We find any grave abuse of discretion on the part of the respondent
court in its interpretation of the employment contract's provision on salaries. In view of the
controlling doctrine that a grave abuse of discretion must be shown in order to warrant our
disturbing the findings of the respondent court, the reversal of the court's endings on this
matter is unwarranted. (Sanchez vs. Court of Industrial Relations, 27 SCRA 490).
The last issue raised in the first assignment of error refers to a procedural matter. The
petitioner-company contends that ,-the question as to whether or not the contracts of
employment were null and void was not put in issue, hence, the respondent court pursuant to
the Rules of Court should have refrained from ruling that such contracts of employment were
null and void. In this connection We restate our finding that the respondent court did not
declare the contracts of employment null and void in their entirety. Only the objectionable
features violative of law were nullified. But even granting that the Court of Industrial Relations
declared the contracts of employment wholly void, it could do so notwithstanding the
procedural objection. In Sanchez u. Court of Industrial Relations, supra, this Court speaking
through then Justice, now Chief Justice Enrique M. Fernando, stated:
xxx xxx xxx
Moreover, petitioners appear to be oblivious of the statutory mandate that
respondent Court in the hearing, investigation and determination of any
question or controversy and in the exercise of any of its duties or power is to
act 'according to justice and equity and substantial merits of the case, without
regard to technicalities or legal forms and shall not be bound by any technical
rules of legal evidence' informing its mind 'in such manner as it may deem
just and equitable.' Again, this Court has invariably accorded the most
hospitable scope to the breadth and amplitude with which such provision is
couched. So it has been from the earliest case decided in 1939 to a 1967
decision.
Two issues are raised in the second assignment of error by the petitioner-
company. The first hinges on the jurisdiction of the respondent court to award
additional compensation for nighttime work. Petitioner wants Us to re-
examine Our rulings on the question of nighttime work. It contends that the
respondent court has no jurisdiction to award additional compensation for
nighttime work because of the declared policy on freedom of collective
bargaining expressed in Republic Act 875 and the express prohibition in
Section 7 of the said statute. A re- examination of the decisions on nighttime
pay differential was the focus of attention in Rheem of the Philippines, Inc. et
al., v. Ferrer, et al (19 SCRA 130). The earliest cases cited by the petitioner-
company, Naric v. Naric Workers Union L-12075, - May 29, 1959 and
Philippine Engineers' Syndicate u. Bautista, L-16440, February 29, 196.4,
were discussed lengthily. Thus -
xxx xxx xxx
2. On the claim for night differentials, no extended discussion is necessary.
To be read as controlling here is Philippine Engineers' Syndicate, Inc. vs.
Hon. Jose S. Bautista, et al., L-16440, February 29, 1964, where this Court,
speaking thru Mr. Chief Justice Cesar Bengzon, declared —
Only one issue is raised: whether or not upon the enactment
of Republic Act 875, the CIR lost its jurisdiction over claims
for additional compensation for regular night work. Petitioner
says that this Act reduced the jurisdiction of respondent court
and limited it to specific cases which this Court has defined
as: ... (1) when the labor dispute affects an industry which is
indispensable to the national interest and is so certified by
the President to the industrial court (Sec. 10, Republic Act
875); (2) when the controversy refers to minimum wage
under the Minimum Wage Law (Republic Act 602); (3) when
it involves hours of employment under the Eight-Hour Labor
Law (Commonwealth Act 444) and (4) when it involves an
unfair labor practice [Sec. 5(a), Republic Act 8751', [Paflu, et
al. vs. Tan, et al., 52 Off. Gaz, No. 13, 5836].
Petitioner insists that respondents' case falls in none of these
categories because as held in two previous cases, night
work is not overtime but regular work; and that respondent
court's authority to try the case cannot be implied from its
general jurisdiction and broad powers' under Commonwealth
Act 103 because Republic Act 875 precisely curbed such
powers limiting them to certain specific litigations, beyond
which it is not permitted to act.
 We believe petitioner to be in error. Its position collides with our ruling in the
Naric case [National Rice & Corn Corp. (NARIC) vs. NARIC Workers' Union,
et al., G.R. No. L-12075, May 29, 1959] where we held;
While it is true that this Court made the above comment in
the aforementioned case, it does not intend to convey the
Idea that work done at night cannot also be an overtime
work. The comment only served to emphasize that the
demand which the Shell Company made upon its laborers is
not merely overtime work but night work and so there was
need to differentiate night work from daytime work. In fact,
the company contended that there was no law that required
the payment of additional compensation for night work unlike
an overtime work which is covered by Commonwealth Act
No. 444 (Eight Hour Labor Law). And this Court in that case
said that while there was no law actually requiring payment
of additional compensation for night work, the industrial court
has the power to determine the wages that night workers
should receive under Commonwealth Act No. 103, and so it
justified the additional compensation in the Shell case for
'hygienic, medical, moral, cultural and sociological reasons.
xxx xxx xxx
True, in Paflu, et al. vs. Tan, et al., supra, and in a series of cases thereafter, We held that
the broad powers conferred by Commonwealth Act 103 on the CIR may have been curtailed
by Republic Act 875 which limited them to the four categories therein expressed in line with
the public policy of allowing settlement of industrial disputes via the collective bargaining
process; but We find no cogent reason for concluding that a suit of this nature for extra
compensation for night work falls outside the domain of the industrial court. Withal, the record
does not show that the employer-employee relation between the 64 respondents and the
petitioner had ceased.
After the passage of Republic Act 875, this Court has not only upheld the industrial court's
assumption of jurisdiction over cases for salary differentials and overtime pay [Chua Workers
Union (NLU) vs. City Automotive Co., et al., G.R. No. L- 11655, April 29, 1959; Prisco vs.
CIR, et al., G.R. No. L-13806, May 23, 1960] or for payment of additional compensation for
work rendered on Sundays and holidays and for night work [Nassco vs. Almin, et al., G.R.
No. L9055, November 28, 1958; Detective & Protective Bureau, Inc. vs. Felipe Guevara, et
al., G.R. No. L-8738, May 31, 1957] but has also supported such court's ruling that work
performed at night should be paid more than work done at daytime, and that if that work is
done beyond the worker's regular hours of duty, he should also be paid additional
compensation for overtime work. [Naric vs. Naric Workers' Union. et al., G. R No. L-12075,
May 29, 1959, citing Shell Co. vs. National Labor Union, 81 Phil. 315]. Besides, to hold that
this case for extra compensation now falls beyond the powers of the industrial court to
decide, would amount to a further curtailment of the jurisdiction of said court to an extent
which may defeat the purpose of the Magna Carta to the prejudice of labor.' [Luis Recato Dy,
et al v-9. CIR, G.R. No. L-17788, May 25,1962]"
The petitioner-company's arguments on the respondent court's alleged lack of jurisdiction
over additional compensation for work done at night by the respondents is without merit.
The other issue raised in the second assignment of error is premised on the petitioner-
company's contention that the respondent court's ruling on the additional compensation for
nighttime work is not supported by substantial evidence.
This contention is untenable. Pertinent portions of the respondent court's decision read:
xxx xxx xxx
There is no serious disagreement between the petitioners and respondent
management on the facts recited above. The variance in the evidence is only
with respect to the money claims. Witnesses for petitioners declared they
worked on regular days and on every other Sunday and also during all
holidays; that for services rendered on Sundays and holidays they were not
paid for the first four (4) hours and what they only received was the overtime
compensation corresponding to the number of hours after or in excess of the
first four hours; and that such payment is being indicated in the overtime pay
for work done in excess of eight hours on regular working days. It is also
claimed that their nighttime services could well be seen on their respective
daily time records. .. (Emphasis supplied) (p.116, rollo)
The respondent court's ruling on additional compensation for work done at night is, therefore,
not without evidence. Moreover, the petitioner-company did not deny that the private
respondents rendered nighttime work. In fact, no additional evidence was necessary to prove
that the private respondents were entitled to additional compensation for whether or not they
were entitled to the same is a question of law which the respondent court answered correctly.
The "waiver rule" is not applicable in the case at bar. Additional compensation for nighttime
work is founded on public policy, hence the same cannot be waived. (Article 6, Civil Code).
On this matter, We believe that the respondent court acted according to justice and equity
and the substantial merits of the case, without regard to technicalities or legal forms and
should be sustained.
The third assignment of error is likewise without merit. The fact that only three of the private
respondents testified in court does not adversely affect the interests of the other respondents
in the case. The ruling in Dimayuga V. Court of Industrial Relations (G.R. No. L-0213, May
27, 1957) has been abandoned in later rulings of this Court. In Philippine Land Air-Sea Labor
Union (PLASLU) vs. Sy Indong Company Rice And Corn Mill (11 SCRA 277) We had
occasion to re-examine the ruling in  Dimayuga We stated:
 The latter reversed the decision of the trial Judge as regards the
reinstatement with backwages of ... upon the theory that this is not a class
suit; that, consequently, it is necessary and imperative that they should
personally testify and prove the charges in the complaint', and that, having
failed to do so, the decision of the trial Judge in their favor is untenable under
the rule laid down in Dimayuga vs. Court of Industrial Relations, G.R. No. L-
0213 (May 27,1957).
We do not share the view taken in the resolution appealed from. As the trial
Judge correctly said, in Ms dissent from said resolution,:
xxx xxx xxx
In the case of Sanchez v. Court of Industrial Relations, supra, this Court stated:
To the reproach against the challenged order in the brief of petitioners in view
of only two of the seven claimants testifying, a statement by this Court in
Ormoc Sugar Co., Inc. vs. OSCO Workers Fraternity Labor Union would
suffice by way of refutation. Thus: "This Court fully agrees with the
respondent that quality and not quantity of witnesses should be the primordial
consideration in the appraisal of evidence.' Barely eight days later, in another
decision, the above statement was given concrete expression. Thus: 'The
bases of the awards were not only the respective affidavits of the claimants
but the testimonies of 24 witnesses (because 6 were not given credence by
the court below) who Identified the said 239 claimants. The contention of
petitions on this point is therefore unfounded Moveover in Philippine Land-
Air-Sea Labor Union (PLASLU) v. Sy Indong company Rice & Corn Mill, this
Court, through the present Chief Justice rejected as untenable the theory of
the Court of Industrial Relations concerning the imperative needs of all the
claimants to testify personality and prove their charges in the complaint. As
tersely put: 'We do not share the view taken in the resolution appealed from.
The petitioner's contention that its employees fully understood what they signed when they
entered into the contracts of employment and that they should be bound by their voluntary
commitments is anachronistic in this time and age.
The Mercury Drug Co., Inc., maintains a chain of drugstores that are open every day of the
week and, for some stores, up to very late at night because of the nature of the
pharmaceutical retail business. The respondents knew that they had to work Sundays and
holidays and at night, not as exceptions to the rule but as part of the regular course of
employment. Presented with contracts setting their compensation on an annual basis with an
express waiver of extra compensation for work on Sundays and holidays, the workers did not
have much choice. The private respondents were at a disadvantage insofar as the
contractual relationship was concerned. Workers in our country do not have the luxury or
freedom of declining job openings or filing resignations even when some terms and
conditions of employment are not only onerous and inequitous but illegal. It is precisely
because of this situation that the framers of the Constitution embodied the provisions on
social justice (Section 6, Article 11) and protection to labor (Section 9, Article I I) in the
Declaration of Principles And State Policies.
It is pursuant to these constitutional mandates that the courts are ever vigilant to protect the
rights of workers who are placed in contractually disadvantageous positions and who sign
waivers or provisions contrary to law and public policy.
WHEREFORE, the petition is hereby dismissed. The decision and resolution appealed from
are affirmed with costs against the petitioner.
SO ORDERED.
G.R. No. 123520 June 26, 1998
NATIONAL SEMICONDUCTOR (HK) DISTRIBUTION, LTD., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (4TH DIVISION) and EDGAR PHILIP C.
SANTOS, respondents.
BELLOSILLO, J.:
The main issues to be resolved in his petition for certiorari are: First, who has the burden of
providing a claim for night shift differential pay, the worker who claims not to have been paid
night shift differentials, or the employer in custody of pertinent documents which would prove
the fact of payment of the same? Second, were the requirements of due process substantially
complied with in dismissing the worker?
Petitioner National Semiconductor (HK) Distribution, Ltd. (NSC for brevity), a foreign
corporation licensed to do business in the Philippines, manufactures and assembles
electronic parts for export with principal office at the Mactan Export Processing Zone, Mactan,
Lapu-Lapu City. Private respondent Edgar Philip C. Santos was employed by NSC as a
technician in its Special Products Group with a monthly salary of P5,501.00 assigned to the
graveyard shift starting at ten o' clock in the evening until six o' clock in the morning.
On 8 January 1993 Santos did not report for work on his shift. He resumed his duties as night
shift Technician Support only on 9 January 1993. However, at the end of his shift the
following morning, he made two (2) entries in his daily time record (DTR) to make it appear
that he worked on both the 8th and 9th of January 1993.
His immediate supervisor, Mr. Joel Limsiaco, unknown to private respondent Santos,
received the report that there was no technician in the graveyard shift of 8 January 1993.
Thus, Limsiaco checked the DTRs and found out that Santos indeed did not report for work
on 8 January. But when he checked Santos' DTR again in the morning of 9 January 1993 he
found the entry made by Santos for the day before.
Informal investigations were conducted by management. Santos was required in a
memorandum to explain in writing within 48 hours from notice why no disciplinary action
should be taken against him for dishonesty, falsifying daily time record (DTR) and violation of
company rules and regulations. 1 On 11 January 1993 Santos submitted his written
explanation alleging that he was ill on the day he was absent. As regards the entry on 8
January, he alleged that it was merely due to oversight or carelessness on his part. 2
Finding Santos' explanation unsatisfactory, NSC dismissed him on 14 January 1993 on the
ground of falsification of his DTR, which act was inimical to the company and constituted
dishonesty and serious misconduct. 3
Thus, on 20 January 1993, Santos filed a complaint for illegal dismissal and non-payment of
back wages, premium pay for holidays and rest days, night shift differential pay, allowances,
separation pay, moral damages and attorney's fees.
Labor Arbiter Dominador A. Almirante found that Santos was dismissed on legal grounds
although he was not afforded due process, hence, NSC was ordered to indemnify him
P1,000.00. The Labor Arbiter likewise ordered the payment of P19,801.47 representing
Santos' unpaid night shift differentials. 4
NSC appealed to the National Labor Relations Commission (NLRC). In its Decision of 29
September 1995 the NLRC affirmed the Labor Arbiter holding that his conclusions were
sufficiently supported by the evidence and therefore must be respected by the appellate
tribunal because the hearing officer was in a unique position to observe the demeanor of
witnesses and to judge their credibility. 5
NSC imputes grave abuse of discretion to the NLRC in affirming the Labor Arbiter's award of
night shift differentials and P1,000.00 indemnity for alleged violation of due process. It
contends that the question of non-payment of night shift differentials was never raised as an
issue nor pursued and proved by Santos in the proceeding before the Labor Arbiter; that
Santos was already paid his night shift differentials, and any further payment to him would
amount to unjust enrichment; and, that the P1,000.00 indemnity is totally unjustified as he
was afforded ample opportunity to be heard.
We now resolve. A perusal of Santos' position paper filed before the Labor Arbiter reveals
that the question of non-payment of night shift differentials was specifically raised as an issue
in the proceedings below which was never abandoned by Santos as erroneously claimed by
NSC thus —
ISSUES
1. Did respondent National Semiconductor (HK) Distribution Ltd. illegally
dismiss complainant Edgar Philip Santos?
2. Is complainant Edgar Philip Santos entitled to recover unpaid salary,
holiday pay, night shift differential, allowances, separation pay, retirement
benefits and moral damages? 6
And, in his prayer, Santos sought to be afforded the reliefs prayed for in his complaint. 7
The fact that Santos neglected to substantiate his claim for night shift differentials is not
prejudicial to his cause. After all, the burden of proving payment rests on petitioner NSC.
Santos' allegation of non-payment of this benefit, to which he is by law entitled, is a negative
allegation which need not be supported by evidence unless it is an essential part of his cause
of action. It must be noted that his main cause of action is his illegal dismissal, and the claim
for night shift differential is but an incident of the protest against such dismissal. Thus, the
burden of proving that payment of such benefit has been made rests upon the party who will
suffer if no evidence at all is presented by either party. 8 Moreover, in Jimerez v.  National
Labor Relations Commission, 9 we declared —
As a general rule, one who pleads payment has the burden of proving it.
Even where the plaintiff must allege non-payment, the general rule is that the
burden rests on the defendant to prove payment, rather than on the plaintiff
to prove non-payment. The debtor has the burden of showing with legal
certainty that the obligation has been discharged by payment.
For sure, private respondent cannot adequately prove the fact of non-payment of night shift
differentials since the pertinent employee files, payrolls, records, remittances and other
similar documents — which will show that private respondent rendered night shift work; the
time he rendered services; and, the amounts owed as night shift differentials — are not in his
possession but in the custody and absolute control of petitioner.
Private respondent has been in petitioner's employ for five (5) years — starting 13 January
1988 when he was hired to 14 January 1993 when his services were terminated — and
petitioner never denied that private respondent rendered night shift work. In fact, it even
presented some documents purporting to prove that private respondent was assigned to work
on the night shift.
By choosing not to fully and completely disclose information to prove that it had paid all the
night shift differentials due to private respondent, petitioner failed to discharge the burden of
proof. Consequently, no grave abuse of discretion can be ascribed to the NLRC for sustaining
the Labor Arbiter when it ruled thus —
 It is not disputed that complainant was regularly assigned to a night shift
(10:00 P.M. to 7:00 A.M.). Under Section 2, Rule II, Book Three of the
Implementing Rules of the Labor Code, complainant is entitled to an
additional benefit of not less ten percent (10%) of his regular wage for each
hour of work performed. The record is bereft of evidence that respondent has
paid complainant this benefit. The best evidence for respondent corporation
would have been the payrolls, vouchers, daily time records and the like which
under Sections 6, 7, 8, 11 and 12, Rule X, Book III of the Implementing Rules
it is obliged to keep. Its failure gives rise to the presumption that either it does
not have them or if it does, their presentation is prejudicial to its cause.
We rule therefore that complainant should be awarded a night shift
differential but limited to there (3) years considering the prescriptive period of
money claims. 10
On the issue of due process, we agree with petitioner that Santos was accorded full
opportunity to be heard before he was dismissed.
The essence of due process is simply an opportunity to be heard, or as applied to
administrative proceedings, an opportunity to explain one's side. 11 In the instant case,
petitioner furnished private respondent notice as to the particular acts which constituted the
ground for his dismissal. By requiring him to submit a written explanation within 48 hours from
receipt of the notice, the company gave him the opportunity to be heard in his defense.
Private respondent availed of this chance by submitting a written explanation. Furthermore,
investigations on the incident were actually conducted on 9 January 1993 and 11 January
1993. Mr. Reynaldo Gandionco, petitioner's witness, testified:
Q: I reform my question. Was there an investigation
conducted on the complainant regarding the alleged
falsification of DTR?
A: Yes, ma'am, there was.
Q: Who was present during the alleged investigation? I am
referring to the first investigation?
A: The first investigation we were many. We were Daryll Go,
Joel Limsiaco, Edgar Philip Santos and me.
Q: When was the first investigation conducted?
A: On the night of January 9, 1993.
x x x           x x x          x x x
Q: During the second investigation, who were present?
A: We were: Daryll Go, Edgar Philip Santos and me.
Q: And when was the second investigation conducted?
A: It was on January 11, 1993 in the afternoon. 12
Finally, private respondent was notified on 14 January 1993 of the management's decision to
terminate his services.
Thus, it is clear the minimum requirements of due process have been fulfilled by petitioner.
That the investigations conducted by petitioner may not be considered formal or recorded
hearings or investigations is immaterial. A formal or trial type hearing is not all times and in all
instances essential to due process, the requirements of which are satisfied where the parties
are afforded fair and reasonable opportunity to explain their side of the controversy. 13 It is
deemed sufficient for the employer to follow the natural sequence of notice, hearing and
judgment. 14
WHEREFORE, petition is DISMISSED. The NLRC Decision of 29 September 1995 is
AFFIRMED subject to the modification that the award of P1,000.00 as indemnity is DELETED
in accordance with the foregoing discussion.
SO ORDERED.
G.R. No. L-30279 July 30, 1982
PHILIPPINE NATIONAL BANK, petitioner,
vs.
PHILIPPINE NATIONAL BANK EMPLOYEES ASSOCIATION (PEMA) and COURT OF
INDUSTRIAL RELATIONS, respondents.
Conrado E. Medina, Edgardo M. Magtalas and Nestor Kalaw for petitioner.
Leon O. Ty, Gesmundo Fernandez & Zulueta, Oliver B. Gesmundo and Israel Bocobo for
respondents.
BARREDO, J.:
Appeal by the Philippine National Bank from the decision of the trial court of the Court of
Industrial Relations in Case No. IPA-53 dated August 5, 1967 and affirmed en banc by said
court on January 15, 1968.
This case started on January 28, 1965 in consequence of the certification of the President of
the Philippines of an industrial dispute between the Philippine National Bank Employees
Association (PEMA, for short), on the one hand, and the Philippine National Bank (PNB, for
short), on the other, which arose from no more than the alleged failure of the PNB to comply
with its commitment of organizing a Committee on Personnel Affairs to take charge of
screening and deliberating on the promotion of employees covered by the collective
bargaining agreement then in force between the said parties. On January 28, 1965, the
Industrial Court issued an order aimed at settling the dispute temporarily between the parties,
which was certified by the President. Pertinent portions of the order read thus:
xxx xxx xxx
1. That in order to settle the strike and for the employees to return to work
immediately starting January 29, 1965, the Committee on Personnel Affairs is
hereby created to start functioning on February 1, 1965;
xxx xxx xxx
f. That in return for this concession, an injunction against
future strikes or lockouts shall be issued by the Court to last
for a period of six months but which shall terminate even
before that period should all disputes of the parties be
already resolved; (Page 84, Record.)
According to the very decision now on appeal, "on May 22, 1965, petitioner (private
respondent herein) filed another pleading submitting to this Court for determination certain
matters which it claims cannot be resolved by the parties, which are as follows:
First Cause of Action
a. In a Resolution No. 1162 dated September 16, 1957, the Respondent's
Board of Directors approved a revision of the computation of overtime pay
retroactive as of July 1, 1954, and authorized a recomputation of the regular
one- hour and extra overtime already rendered by all officers and employees
of the Respondent Bank.
The details of the benefits involved in said Resolution are contained in a
Memorandum of the Respondent Bank dated September 18, 1957.
b. Since the grant of the benefits in question, the employees of the
Respondent, represented by the petitioner, have always considered them to
be a part of their salaries and/or fringe benefits; nevertheless, the
Respondent, in 1963, without just cause, withdrew said benefits and in spite
of repeated demands refused, and still refuses to reinstate the same up to
the present.
Second Cause of Action
c. After the promulgation of the Decision in National Waterworks and
Sewerage Authority vs. NAWASA Consolidated Unions, et al. G.R. No. L-
18938, Aug. 31, 1964, the Petitioner has repeatedly requested Respondent
that the cost of living allowance and longevity pay be taken into account in
the computation of overtime pay, effective as of the grant of said benefits on
January 1, 1958, in accordance with the ruling in said Decision of the
Supreme Court.
d. Until now Respondent has not taken any concrete steps toward the
payment of the differential overtime and nighttime pays arising from the cost
of living allowance and longevity pay.
xxx xxx xxx
Respondent in its answer of June 7, 1965 took exception to this mentioned petition on several
grounds, namely, (1) the said alleged causes of action were not disputes existing between
the parties, (2) the same are mere money claims and therefore not within this Court's
jurisdiction, and (3) that the parties have not so stipulated under the collective bargaining
agreement between them, or the same is premature as the pertinent collective bargaining
agreement has not yet expired." (Pp. 84-86, Record.) 1
Resolving the issues of jurisdiction and prematurity thus raised by PNB, the court held:
As to the first ground, it is well to note that this Court in its Order of January
28, 1965 has enjoined the parties not to strike or lockout for a period of six
(6) months starting from said date. In a very definite sense the labor disputes
between the parties have been given a specific period for the settlement of
their differences. The fact that thereafter the question of the manner of
payment of overtime pay is being put in issue, appears to indicate that this
was a part of the labor dispute. If we are to consider that this question,
particularly the second cause of action, has in fact existed as early as 1958,
shows the necessity of resolving the same now. And the same would indeed
be an existing issue considering that the present certification came only in
1965.
It is further to be noted that the presidential certification has not limited
specific areas of the labor dispute embraced within the said certification. It
speaks of the existence of a labor dispute between the parties and of a strike
declared by the PEMA, for which the Court has been requested to take
immediate steps in the exercise of its powers under the law.
Even on the assumption that the present issue is not one embraced by the
presidential certification or it is an issue presented by one party on a cause
arising subsequent to the certification, the same would still be subject to the
jurisdiction of this Court. In "Apo Cement Workers Union versus Cebu
Portland Cement", Case No. 11 IPA (G.R. No. L-12451, July 10, 1957), the
Court en banc (where this Sala has taken an opposite view) upheld its
jurisdiction under the circumstances just enumerated. It would seem that this
question has been further settled by our Supreme Court in "National
Waterworks & Sewerage Authority vs. NAWASA Consolidated Unions, et al."
(supra), which we quote in part:
xxx xxx xxx
4. Petitioner's claim that the issue of overtime compensation not having been
raised in the original case but merely dragged into it by intervenors,
respondent Court cannot take cognizance thereof under Section 1, Rule 13
of the Rules of Court.
xxx xxx xxx
... The fact that the question of overtime payment is not included in the
principal case in the sense that it is not one of the items of dispute certified to
by the President is of no moment, for it comes within the sound discretion of
the Court of Industrial Relations. Moreover, in labor disputes technicalities of
procedure should as much as possible be avoided not only in the interest of
labor but to avoid multiplicity of action. This claim has no merit.
xxx xxx xxx
As to the objection posed that the issues are mere money claims, there
appears to be no ground for the same. In the first place, although the same
involves a claim for additional compensation it is also a part of the labor
dispute existing between the parties and subject to the compulsory arbitration
powers of the Court, pursuant to Section 10 of Rep. Act No. 875. In the
second place, on the basis of the so-called PRISCO doctrine (G.R. No. L-
13806, May 23,.1960), there is an existing and current employer-employee
relationship between the respondent and the members of petitioner union, for
whom the additional overtime compensation is claimed.
With respect to ground three of the answer on which objection is based, on
C.A. 444, as amended, Section 6 thereof, provides as follows:
'Any agreement or contract between the employer and the
laborer or employee contrary to the provisions of this Act
shall be null and void ab initio'.
The instant action is partially subject to the provisions of Commonwealth Act
444, as amended. Even if, the parties have stipulated to the extent that
overtime will not be paid, the same will not be binding. More so under the
present circumstances, where the only question is the correctness of the
computation of the overtime payments.
While the Court notes that the first cause of action has become moot and
academic in view of the compliance by respondent, hence there is no further
need to resolve the same (t.s.n., pp. 5-7, August 16, 1965), the settlement of
said first cause of action further strengthens the view that the second cause
of action is indeed an existing dispute between the parties. Both causes of
fiction involve overtime questions. Both stem from dates well beyond and
before the presidential certification of the present proceedings. If respondent
has been fit to take steps to expedite and resolve, without court intervention,
the first cause of action, it cannot deny the existence of the second cause of
action as the first and second appear to be interrelated matters. (Pp. 86-89,
Record)
And We agree that the foregoing holding is well taken. It would be more worthwhile to
proceed to the basic issues immediately than to add anything more of Our own discourse to
the sufficiently based disposition of the court a quo of the above- mentioned preliminary
questions.
After discussing the pros and cons on the issue involved in the second cause of action as to
whether or not the cost-of-living allowance otherwise denominated as equity pay and
longevity pay granted by the bank, the first beginning January 1, 1958 and the latter effective
July 1, 1961, should be included in the computation of overtime-pay, the court granted the
demands of PE MA, except the additional rate of work for night pay, and rendered the
following judgment:
WHEREFORE, in view of the foregoing, this Court hereby promulgates the
following:
1. The respondent Philippine National Bank is hereby required to pay
overtime and nighttime rates to its employees from January 28, 1962; and
such overtime compensation shall be based on the sum total of the
employee's basic salary or wage plus cost of living allowance and longevity
pay under the following schedule:
 'a. Overtime services rendered shall be paid at the rate of
time and one-third, but overtime work performed between
6:00 P.M. and 6- .00 A.M. shall be paid at the rate of 150%
or 50% beyond the regular rate;
'b. The rate for work performed in the night shift, or during
the period from 6:00 P.M. to 6:00 A.M. shall be compensated
at the rate of 150% or 50% beyond the regular rate, provided
the work performed involved a definite night shift and not
merely a continuation by way of overtime of the regular and
established hours of the respondent Bank.
2. The Chief of the Examining Division of the Court or any of his duly
designated representatives is hereby ordered to compute the overtime rates
due each employee of the respondent Bank from January 28, 1962, in
accordance with the above determination; and to complete the same within a
period of sixty (60) days from receipt of this Order. However, considering that
the Philippine National Bank is a government depository, and renders and
performs functions distinct and unique; and, while it may be a banking
institution, its relationship with other government agencies and the public is
such that it has no basis for comparison with other banking institutions
organized under the corporation law or special charter. To require it to pay
immediately the liability after the exact amount shall have been determined
by the Court Examiner and duly approved by the Court, as in other cases,
would work undue hardship to the whole government machinery, not to
mention the outstanding foreign liabilities and outside commitments, if any.
Moreover, the records show that this case was initiated long before the taking
over of the incumbent bank officials.
Accordingly, the Court feels that the payment shall be subject to the
negotiations by the parties as to time, amount, and duration.
The Court may intervene in said negotiations for the purpose of settling once
and for all this case to maintain industrial peace pursuant to Section 13 of
Commonwealth Act 103, as amended, if desired, however by the parties.
After all this is not an unfair labor practice case.
SO ORDERED. (Pp. 98-100, Record.)
In connection with the above decision, two interesting points appear at once to be of
determinative relevance:
The first is that in upholding its jurisdiction to take cognizance of the demand in question
about cost-of-living allowance and longevity pay, the Industrial Court carefully noted that it
was not resolving a petition for declaratory relief in the light of the decision of this Court in
NAWASA vs. NAWASA Consolidated Unions, G.R. No. L- 18938, August 31, 1964, 11 SCRA
766. Thus the decision under review states:
Incidentally, the present action is not one for declaratory relief as to the
applicability of a judicial decision to the herein parties. A careful perusal of
the pleadings indicates that what is being sought is the payment of
differential overtime and nighttime pay based on existing law and
jurisprudence. The cause of action is not anchored on any decision of any
court but on provisions of the law which have been in effect at the time of the
occurrence of the cause of the action in relation to a labor dispute. Hence,
this is not a petition for declaratory relief. (Pp. 94-95, Record.)
The second refers to a subsequent decision of the same Industrial Court in Shell Oil Workers
Union vs. Shell Co., et al., Case No. 2410-V and Shell & Affiliates Supervisors Union vs.
Shell Company of the Philippines, et al., Case No. 2411- V, in which the court made an
explanatory discourse of its understanding of the NAWASA ruling, supra, and on that basis
rejected the claim of the workers. In brief, it held that (1) NAWASA does not apply where the
collective bargaining agreement does not provide for the method of computation of overtime
pay herein insisted upon by private respondent PEMA and (2) the fact-situation in the Shell
cases differed from that of NAWASA, since the sole and definite ratio decidendi in NAWASA
was merely that inasmuch as Republic Act 1880 merely fixed a 40-hour 5-day work for all
workers, laborers and employees including government-owned corporations like NAWASA,
the weekly pay of NAWASA workers working more than five days a week should remain
intact; with overtime pay in excess of eight hours work and 25 % additional compensation on
Sundays. There was no pronouncement at all therein regarding the basis of the computation
of overtime pay in regard to bonuses and other fringe benefits.
For being commendably lucid and comprehensive, We deem it justified to quote from that
Shell decision:
The main issue:
The Unions appear to have read the NAWASA case very broadly. They
would want it held that in view of the said ruling of the Supreme Court,
employers and employees must, even in the face of existing bargaining
contracts providing otherwise, determine the daily and hourly rates of
employees in this manner: Add to basic pay all the money value of all fringe
benefits agreed upon or already received by the workers individually and
overtime pay shall be computed thus —
Basic yearly Rate plus Value of all Fringe Benefits divided by number of days
worked during the year equals daily wage; Daily wage divided by 8 equals
hourly rate. Hourly rate plus premium rate equals hourly overtime rate.
The NAWASA case must be viewed to determine whether it is that broad.
NAWASA case must be understood in its setting. The words used by the
Supreme Court in its reasoning should not be disengaged from the fact-
situation with which it was confronted and the specific question which it was
there required to decide. Above all care should be taken not to lose sight of
the truth that the facts obtaining, the issue settled, and the law applied in the
said case, and these, though extractable from the records thereof as material
in the resolution herein, were, as they are, primarily declarative of the rights
and liabilities of the parties involved therein.
Recourse to the records of the NAWASA case shows that the fact- situation,
as far as can be materially connected with the instant case, is as follows:
In view of the enactment of Rep. Act 1880, providing that the
legal hours of work for government employees, (including
those in government-owned or controlled corporations) shall
be eight (8) hours a day for five (5) days a week or forty (40)
hours a week, its implementation by NAWASA was disputed
by the Union. The workers affected were those who, for a
period of three (3) months prior to or immediately preceding
the implementation of Rep. Act 1880, were working seven
(7) days a week and were continuously receiving 25%
Sunday differential pay. The manner of computing or
determining the daily rate of monthly salaried employees.
And the Supreme Court, specifically laid out the issue to be decided, as it did
decide, in the NAWASA, as follows:
7. and 8. How is a daily wage of a weekly employee computed in the light of
Republic Act 1880?'(G.R. L-18938)
Resolving the above issue, it was held;
According to petitioner, the daily wage should be computed
exclusively on the basic wage without including the
automatic increase of 25% corresponding to the Sunday
differential. To include said Sunday differential would be to
increase the basic pay which is not contemplated by said
Act. Respondent court disagrees with this manner of
computation. lt holds that Republic Act 1880 requires that the
basic weekly wage and the basic monthly salary should not
be diminished notwithstanding the reduction in the number of
working days a week. If the automatic increase
corresponding to the salary differential should not be
included there would be a diminution of the weekly wage of
the laborer concerned. Of course, this should only benefit
those who have been working seven days a week and had
been regularly receiving 25% additional compensation for
Sunday work before the effectivity of the Act.
It is thus necessary to analyze the Court's rationale in the said NAWASA
case, 'in the light of Rep. Act 1880', and the 'specific corollaries' discussed
preparatory to arriving at a final conclusion on the main issue. What was
required to be done, by way of implementing R. A. 1880? The statute directs
that working hours and days of government employees (including those of
government owned and controlled proprietary corporations) shall be reduced
to five days-forty hours a week. But, the same law carried the specific
proviso, designed to guard against diminution of salaries or earnings of
affected employees. The Supreme Court itself clearly spelled this out in the
following language: 'It is evident that Republic Act 1880 does not intend to
raise the wages of the employees over what they are actually receiving.
Rather, its purpose is to limit the working days in a week to five days, or to 40
hours without however permitting any reduction in the weekly or daily wage
of the compensation which was previously received. ...
If the object of the law was to keep intact, (not either to increase it or
decrease it) it is but natural that the Court should concern itself, as it did, with
the corollary, what is the weekly wage of worker who, prior to R.A. 1880, had
been working seven (7) days a week and regularly receiving differential
payments for work on Sundays or at night? It seems clear that the Court was
only concerned in implementing correctly R.A. 1880 by ensuring that in
diminishing the working days and hours of workers in one week, no
diminution should result in the worker's weekly or daily wage. And, the
conclusion reached by the Supreme Court was to affirm or recognize the
correctness of the action taken by the industrial court including such
differential pay in computing the weekly wages of these employees and
laborers who worked seven days a week and were continuously receiving
25% Sunday differential for a period of three months immediately preceding
the implementation of R.A. 1880.' Nothing was said about adding the money
value of some other bonuses or allowances or money value of other fringe
benefits, received outside the week or at some other periods. That was not
within the scope of the issue before the Court. in fact, the limited application
of the decision is expressed in the decision itself. The resolution of this
particular issue was for the benefit of only a segment of the NAWASA
employees. Said the Court 'Of course, this should only benefit those who
have been working seven days a week and had been regularly receiving
25% additional compensation for Sunday work before the effectivity of the
Act.'
Unions make capital of the following pronouncement of the Supreme Court in
the NAWASA case:
 It has been held that for purposes of computing overtime
compensation a regular wage includes all payments which
the parties have agreed shall be received during the work
week, including piece-work wages, differential payments for
working at undesirable times, such as at night or on Sundays
and holidays, and the cost of board and lodging customarily
furnished the employee (Walling v. Yangerman-Reynolds
Hardwook Co., 325 U.S. 419; Walling v. Harischfeger Corp.
325 U.S. 427). The 'Regular rate of pay also ordinarily
includes incentive bonus or profit- sharing payments made in
addition to the normal basic pay (56 C.J.S., pp. 704-705),
and it was also held that the higher rate for night, Sunday
and holiday work is just as much as regular rate as the lower
rate for daytime work. The higher rate is merely an
inducement to accept employment at times which are not at
desirable form a workman's standpoint (International L.
Ass'n. Wise 50 F. Supp. 26, affirmed C.C.A. Carbunao v.
National Terminals Corp. 139 F. 853).
But this paragraph in the decision appears to have been used and cited by
the Court to sustain the action of the court a quo: that it was correct to
include the 25% Sunday premium for the purpose of setting the weekly wage
of specified workers whose weekly earnings before the passage of R.A. 1880
would be diminished, if said premium pay regularly received for three months
were not included. It is significant that the citations therein used by the
Supreme Court are excerpts from American decisions whose legislation on
overtime is at variance with the law in this jurisdiction in this respect: the U.S.
legislation considers work in excess of forty hours a week as overtime;
whereas, what is generally considered overtime in the Philippines is work in
excess 'of the regular 8-hours a day. It is understandably material to refer to
precedents in the U.S. for purposes of computing weekly wages under a 40-
hour a week rule, since the particular issue involved in NAWASA is the
conversion of prior weekly regular earnings into daily rates without allowing
diminution or addition.
No rule of universal application to other cases may, therefore, be justifiably
extracted from the NAWASA case. Let it be enough that in arriving at just
solution and correct application of R.A. 1880, an inference was drawn from
other decisions that a regular wage includes payments 'agreed by the parties
to be received during the week.' But to use this analogy in another fact-
situation would unmitigatingly stretch its value as basis for legal reasoning,
for analogies are not perfect and can bring a collapse if stretched far beyond
their logical and reasoned efficacy. Neither would it be far to ascribe to the
Supreme Court's citation of foreign jurisprudence, which was used for
purposes of analogy, the force of statute law, for this would be the
consequence if it were allowed to be used as authority for all fact-situations,
even if different from the NAWASA case. This, because courts do not
legislate. All they do is apply the law.
The above discussions impel the objective analyst to reject the proposition
that the NAWASA decision is an embracing and can be used with the
authority of a statute's effects on existing contracts.
It appears that the answer to dispute lies, not in the text of the NAWASA
case but in the terms and conditions and practice in the implementation of,
the agreement, an area which makes resolution of the issue dependent on
the relation of the terms and conditions of the contract to the phraseology
and purpose of the Eight-Hour Labor Law (Act 444).
The more we read the NAWASA case, the more we are convinced that the
overtime computation set therein cannot apply to the cases at bar. For to do
so would lead to unjust results, inequities between and among the
employees themselves and absurd situations. To apply the NAWASA
computation would require a different formula for each and every employee,
would require reference to and continued use of individual earnings in the
past, thus multiplying the administrative difficulties of the Company. It would
be cumbersome and tedious a process to compute overtime pay and this
may again cause delays in payments, which in turn could lead to serious
disputes. To apply this mode of computation would retard and stifle the
growth of unions themselves as Companies would be irresistibly drawn into
denying, new and additional fringe benefits, if not those already existing, for
fear of bloating their overhead expenses through overtime which, by reason
of being unfixed, becomes instead a veritable source of irritant in labor
relations.
One other reason why application of the NAWASA case should be rejected is
that this Court is not prepared to accept that it can lay down a less
cumbersome formula for a company-wide overtime pay other than that which
is already provided in the collective bargaining agreement. Courts cannot
make contracts for the parties themselves.
Commonwealth Act 444 prescribes that overtime work shall be paid 'at the
same rate as their regular wages or salary, plus at least twenty-five per
centum additional' (Secs. 4 & 5). The law did not define what is a 'regular
wage or salary'. What the law emphasized by way of repeated expression is
that in addition to 'regular wage', there must be paid an additional 25% of that
'regular wage' to constitute overtime rate of pay. The parties were thus
allowed to agree on what shag be mutually considered regular pay from or
upon which a 25% premium shall be based and added to make up overtime
compensation. This the parties did by agreeing and accepting for a very long
 period to a basic hourly rate to which a premium shall be added for purposes
of overtime.
Also significant is the fact that Commonwealth Act 444 merely sets a
minimum, a least premium rate for purposes of overtime. In this case, the
parties agreed to premium rates four (4) or even six (6) times than that fixed
by the Act. Far from being against the law, therefore, the agreement provided
for rates 'commensurate with the Company's reputation of being among the
leading employers in the Philippines' (Art. 1, Sec. 2, Coll. Barg. Agreement)
at the same time that the Company is maintained in a competitive position in
the market Coll. Barg. Agreement, lbid).
Since the agreed rates are way above prevailing statutory wages and
premiums, fixed by themselves bona fide through negotiations favored by
law, there appears no compelling reason nor basis for declaring the same
illegal. A basic principle forming an important foundation of R.A. 875 is the
encouragement given to parties to resort to peaceful settlement of industrial
problems through collective bargaining. It behooves this Court, therefore, to
help develop respect for those agreements which do not exhibit features of
illegality This is the only way to build confidence in the democratic process of
collective bargaining. Parties cannot be permitted to avoid the implications
and ramifications of the agreement.
Although this Court has gone very far in resolving an doubts and in giving
great weight to evidence and presumptions in favor of labor, it may not go as
far as reconstruct the law to fit particular cases." (Pp. 174-181, Record)
Proof of the correctness of the aforequoted considerations, the appeal of the workers from
the Industrial Court's decision did not prosper. Affirming the appealed decision, We held:
The theory, therefore, of the petitioners is to the effect that, notwithstanding
the terms and conditions of their existing collective bargaining agreement
with respondent Shell Company, particularly Exhibit 'A-l' for the Petitioners
and Exhibit 'l-A' for the Respondent (which is Appendix 'B' of the Collective
Bargaining Agreement of the parties), considering the ruling in the NAWASA
case, a recomputation should be made of their basic wage by adding the
money value of the fringe benefits enjoyed by them from whence the
premium rates agreed upon shall be computed in order to arrive at the
correct computation of their overtime compensation from the Company. On
the other hand, respondent Shell Company maintains that the NAWASA case
should not be utilized as the basis for the alteration of their mode of
computing overtime rate of pay as set forth in their collective Bargaining
Agreement. It insists that their collective bargaining agreement should be the
law between them.
After a careful and thorough re-examination of the NAWASA case, supra,
and a minute examination of the facts and the evidence of the case now
before Us, We rule that the NAWASA case is not in point and, therefore, is
inapplicable to the case at bar.
The ruling of this Court in the NAWASA case contemplates the regularity and
continuity of the benefits enjoyed by the employees or workers (for at least
three (3) months) as the condition precedent before such additional
payments or benefits are taken into account. This is evident in the
aforequoted ruling of this Court in the NAWASA case as well as in the
hereinbelow cited authorities, to wit:
The 'regular rate' of pay on the basis of which overtime must
be computed must reflect an payments which parties have
agreed shall be received regularly during the work week,
exclusive of overtime payments.' Walling v. Garlock Packing
Co. C.C.A.N.Y., 159 F. 2d 44, 45. (Page 289, WORDS And
PHRASES, Permanent Edition, Vol. 36A; Italics supplied);
and
As a general rule the words 'regular rate' mean the hourly
rate actually paid for the normal, non-overtime work week,
and an employee's regular compensation is the
compensation which regularly and actually reaches him, ... .'
(56 C.J.S. 704; Emphasis supplied).
Even in the definition of wage under the Minimum Wage Law, the words
'customarily furnished' are used in referring to the additional payments or
benefits, thus, -
'Wage' paid to any employee shag mean the remuneration or earnings,
however designated, capable of being expressed in terms of money, whether
fixed or ascertained on a time, task, piece, commission basis, or other
method of calculating the same, which is payable by an employer to an
employee under a written or unwritten contract of employment for work done
or to be done or for services rendered or to be rendered, and includes the fair
and reasonable value, as determined by the Secretary of Labor, of board,
lodging or other facilities customarily furnished by the employer to the
employee.' (Sec. 2 (g), R.A. No. 602).
Having been stipulated by the parties that ... the Tin Factory Incentive Pay
has ceased in view of the closure of the factory in May 1966 the fringe
benefits as described show that they are occasionally not regularly enjoyed
and that not all employees are entitled to them', herein petitioners failed to
meet the test laid down by this Court in the NAWASA case. Further, the
 collective bargaining agreement resorted to by the parties being in
accordance with R.A. 875, with its provision on overtime pay far way beyond
the premium rate provided for in Sections 4 and 5 of Commonwealth Act 444,
the same should govern their relationship. Since this is their contract entered
into by them pursuant to bargaining negotiations under existing laws, they
are bound to respect it. It is the duty of this Court to see to it that contracts
between parties, not tainted with infirmity or irregularity or illegality, be strictly
complied with by the parties themselves. This is the only way by which unity
and order can be properly attained in our society.
It should be noted in passing that Commonwealth Act 444 prescribes only a
minimum of at least 25% in addition to the regular wage or salary of an
employee to constitute his overtime rate of pay, whereas, under Appendix 'B',
(Exhs. 'A-l', Petitioners and 'l-A', Respondent) of the Collective Bargaining
Agreement of the parties, the premium rate of overtime pay is as high as
l50% on regular working days up to 250 % on Sundays and recognized
national holidays. (Shell Oil Workers Union vs. Shell Company of the
Philippines, G.R. No. L-30658-59, March 31, 1976, 70 SCRA 242-243.)
In the instant case, on May 22, 1965 PEMA alleged in the court below the following cause of
action as amended on June 7, 1965:
Since the start of the giving of cost of living allowance and longevity pay and
reiterated, after the promulgation of the Decision in National Waterworks and
Sewerage Authority vs. NAWASA Consolidated Unions et al., G.R. No. L-
18938, August 31, 1964, the petitioner has repeatedly requested respondent
that the cost of living allowance and longevity pay be taken into account in
the computation of overtime pay, effective as of the grant of said benefits on
January 1, 1958, in accordance with the ruling in said Decision of the
Supreme Court. (Page 14, PNB's Brief.)
To be sure, there could be some plausibility in PNB's pose regarding the jurisdiction of the
Industrial Court over the above cause of action. But, as We have already stated, We agree
with the broader view adopted by the court a quo on said point, and We find that it is in the
best interests of an concerned that this almost 25-year dispute be settled once and for all
without the need of going through other forums only for the matter to ultimately come back to
this Court probably years later, taking particular note as We do, in this regard, of the cases
cited on pages 9-10 of PEMA's original memo, as follows:
Realizing its error before in not considering the present case a certified labor
dispute, the Bank now concedes that the case at bar 'belongs to compulsory
arbitration'. Hence, the lawful powers of the CIR over the same. However, the
Bank says 'overtime differential is but a money claim, (and) respondent court
does not have jurisdiction to take cognizance of the same'.
But this is not a pure money claim (pp. 10-11, Opposition) because other
factors are involved - certification by the President, the matter may likely
cause a strike, the dispute concerns national interest and comes within the
CIR's injunction against striking, and the employer-employee relationship
between the Bank and the employees has not been severed. Besides,
'money claim' is embraced within the term 'compensation' and therefore falls
squarely under the jurisdiction of the CIR in the exercise of its arbitration
power (Sec. 4, CA 103; Please see also Republic vs. CIR, L- 21303, Sept.
23/68; Makalintal J., NWSA Case, L-26894-96, Feb. 28/69; Fernando, J.).
What confers jurisdiction on the Industrial Court, says Justice J.B.L. Reyes, is
not the form or manner of certification by the President, but the referral to
said court of the industrial dispute between the employer and the employees.
(Liberation Steamship vs. CIR, etc., L-25389 & 25390, June 27/68).
In Phil. Postal Savings Bank, et al. vs. CIR, et al., L-24572, Dec. 20/67, this
Honorable Court, speaking through Chief Justice Concepcion, held that the
certification of the issue 'as a dispute affecting an industry indispensable to
the national interest' leaves 'no room for doubt on the jurisdiction of the CIR
to settle such dispute.'
Relatedly, however, it is to be noted that it is clear from the holding of the Industrial Court's
decision We have earlier quoted, "the cause of action (here) is not on any decision of any
court but on the provisions of the law which have been in effect at the time of the occurrence
of the cause of action in relation to a labor dispute". Viewed from such perspective laid by the
lower court itself, it can hardly be said that it indeed exercised purely its power of arbitration,
which means laying down the terms and conditions that should govern the relationship
between the employer and employees of an enterprise following its own appreciation of the
relevant circumstances rather empirically. More accurately understood, the court in fact
indulged in an interpretation of the applicable law, namely, CA 444, in the light of its own
impression of the opinion of this Court in NAWASA and based its decision thereon.
Accordingly, upon the fact-situation of this case hereunder to be set forth, the fundamental
question for Us to decide is whether or not the decision under appeal is in accordance with
that law and the cited jurisprudence. In brief, as PEMA posits, is NAWASA four-square with
this case? And even assuming, for a while, that in a sense what is before Us is an arbitration
decision, private respondent itself admits in its above-mentioned memorandum that this Court
is not without power and authority to determine whether or not such arbitration decision is
against the law or jurisprudence or constitutes a grave abuse of discretion. Thus, in PEMA's
memorandum, it makes the observation that "(F)urthermore, in the Shell cases, the unions
are using the NAWASA decision as a source of right for recomputation, while in the PNB, the
Union merely cites the NAWASA doctrine, not as a source of right, but as a legal authority or
reference by both parties so the Union demand may be granted. " (Motion to Dismiss, p. 3.)
Obviously, therefore, the polestar to which Our mental vision must be focused in order that
We may arrive at a correct legal and equitable determination of this controversy and, in the
process make NAWASA better understood as We believe it should be, is none other than
Sections 3 and 4 of Com. Act No. 444, the Eight Hour Labor Law, which pertinently provide
thus:
SEC. 3. Work may be performed beyond eight hours a day in case of actual
or impending emergencies caused by serious accidents, fire, flood, typhoon,
earthquake, epidemic, or other disaster or calamity in order to prevent loss to
life and property or imminent danger to public safety; or in case of urgent
work to be performed on the machines, equipment, or installations in order to
avoid a serious loss which the employer would otherwise suffer, or some
other just cause of a similar nature; but in all such cases the laborers and
employees shall be entitled to receive compensation for the overtime work
performed at the same rate as their regular wages or salary, plus at least
twenty-five per centum additional.
In case of national emergency the Government is empowered to establish
rules and regulations for the operation of the plants and factories and to
determine the wages to be paid the laborers.
xxx xxx xxx
SEC. 4. No person, firm, or corporation, business establishment or place or
center of labor shall compel an employee or laborer to work during Sundays
and legal holidays, unless he is paid an additional sum of at least twenty-five
per centum of his regular remuneration: Provided, however, that this
prohibition shall not apply to public utilities performing some public service
such as supplying gas, electricity, power, water, or providing means of
transportation or communication.
The vital question is, what does "regular wage or salary" mean or connote in the light of the
demand of PEMA?
In Our considered opinion, the answer to such question lies in the basic rationale of overtime
pay. Why is a laborer or employee who works beyond the regular hours of work entitled to
extra compensation called in this enlightened time, overtime pay? Verily, there can be no
other reason than that he is made to work longer than what is commensurate with his agreed
compensation for the statutorily fixed or voluntarily agreed hours of labor he is supposed to
do. When he thus spends additional time to his work, the effect upon him is multi-faceted: he
puts in more effort, physical and/or mental; he is delayed in going home to his family to enjoy
the comforts thereof; he might have no time for relaxation, amusement or sports; he might
miss important pre-arranged engagements; etc., etc. It is thus the additional work, labor or
service employed and the adverse effects just mentioned of his longer stay in his place of
work that justify and is the real reason for the extra compensation that he called overtime pay.
Overtime work is actually the lengthening of hours developed to the interests of the employer
and the requirements of his enterprise. It follows that the wage or salary to be received must
likewise be increased, and more than that, a special additional amount must be added to
serve either as encouragement or inducement or to make up fop the things he loses which
We have already referred to. And on this score, it must always be borne in mind that wage is
indisputably intended as payment for work done or services rendered. Thus, in the definition
of wage for purposes of the Minimum Wage Law, Republic Act No. 602, it is stated:
'Wage' paid to any employee shall mean the remuneration or earnings,
however designated, capable of being expressed in terms of money, whether
fixed or ascertained on a time task, piece, commission basis or other method
of calculating the same, which is payable by an employer to an employee
under a written or unwritten contract of employment for work done or to be
done or for services rendered or to be rendered and includes the fair and
reasonable value as determined by the Secretary of Labor, of board, lodging
or other facilities customarily furnished by the employer to the employee.
'Fair and reasonable value' shall not include a profit to the employer which
reduces the wage received by the employee below the minimum wage
applicable to the employee under this Act, nor shall any transaction between
an employer or any person affiliated with the employer and the employee of
the employer include any profit to the employer or affiliated person which
reduces the employee's wage below the wage applicable to the employee
under this Act.' 2 (Emphasis supplied).
As can be seen, wage under said law, in whatever means or form it is given to the worker, is
"for work done or to be done or for services rendered or to be rendered" and logically
"includes (only) the fair and reasonable value as determined by the Secretary of Labor, of
board, lodging or other facilities customarily furnished by the employer to the employee".
Indeed, for the purpose of avoiding any misunderstanding or misinterpretation of the word
"wage" used in the law and to differentiate it from "supplement", the Wage Administration
Service to implement the Minimum Wage Law, defined the latter as:
extra remuneration or benefits received by wage earners from their
employers and include but are not restricted to pay for vacation and holidays
not worked; paid sick leave or maternity leave; overtime rate in excess of
what is required by law; pension, retirement, and death benefits; profit-
sharing, family allowances; Christmas, war risk and cost-of-living bonuses;
or other bonuses other than those paid as a reward for extra output or time
spent on the job. (Emphasis ours).
In these times when humane and dignified treatment of labor is steadily becoming universally
an obsession of society, we, in our country, have reached a point in employer- employee
relationship wherein employers themselves realize the indispensability of at least making the
compensation of workers equal to the worth of their efforts as much as this case can be
statistically determined. Thus, in order to meet the effects of uncertain economic conditions
affecting adversely the living conditions of wage earners, employers, whenever the financial
conditions of the enterprise permit, grant them what has been called as cost-of-living
allowance. In other words, instead of leaving the workers to assume the risks of or drift by
themselves amidst the cross -currents of country-wide economic dislocation, employers try
their best to help them tide over the hardships and difficulties of the situation. Sometimes,
such allowances are voluntarily agreed upon in collective bargaining agreements. At other
times, it is imposed by the government as in the instances of Presidential Decrees Nos. 525,
928, 1123, 1389, 1614, 1678, 1751 and 1790; Letters of Instructions No. 1056 and Wage
Order No. 1. Notably, Presidential Decree No. 1751 increased the statutory wage at all levels
by P400 in addition to integrating the mandatory emergency living allowances under
Presidential Decree No. 525 and Presidential Decree No. 1123 into the basic pay of all
covered workers.
Going over these laws, one readily notices two distinctive features: First, it is evidently
gratifying that the government, in keeping with the humanitarian trend of the times, always
makes every effort to keep wages abreast with increased cost of living conditions, doing it as
soon as the necessity for it arises. However, obviously, in order not to overdo things, except
when otherwise provided, it spares from such obligation employers who by mutual agreement
with their workers are already paying what the corresponding law provides (See Sec. 4 of
P.D. No. 525; Section 2 of P.D. No. 851 until P.D. 1684 abolished all exemptions under P.D.
No. 525, P.D. No. 1123, P.D. No. 851 and P.D. No. 928 among distressed employers who
even though given sufficient lapse of time to make the necessary adjustment have not done
so.)3
In the case at bar, as already related earlier, the cost-of-living allowance began to be granted
in 1958 and the longevity pay in 1981. In other words, they were granted by PNB upon
realizing the difficult plight of its labor force in the face of the unusual inflationary situation in
the economy of the country, which, however acute, was nevertheless expected to improve.
There was thus evident an inherently contingent character in said allowances. They were not
intended to be regular, much less permanent additional part of the compensation of the
employees and workers. To such effect were the testimonies of the witnesses at the trial. For
instance, Mr. Ladislao Yuzon declared:
ATTORNEY GESMUNDO
Questioning ....
Q. Calling your attention to paragraph No. 1, entitled monthly
living allowance, which has been marked as Exhibit 'A-l', will
you kindly tell us the history of this benefit- monthly living
allowance, why the same has been granted?
A. Well, in view of the increasing standard of living, we
decided to demand from management in our set of demands
... included in our set of demands in 1957-1958 a monthly
living allowance in addition to our basic salary. This benefit
was agreed upon and granted to take effect as of January 1,
1958. That was the first time it was enjoyed by the
employees of the Philippine National Bank. It started on a
lesser amount but year after year we have been demanding
for increases on this living allowance until we have attained
the present amount of P 1 50.00 a month, starting with
P40.00 when it was first granted. The same is still being
enjoyed by the employees on a much higher amount. There
were a few variations to that. (t. t.s.n., pp. 18-19, Hearing of
August 16, 1965)
which testimony was affirmed by Mr. Panfilo Domingo, on cross- examination by counsel for
the respondent, reading as follows:
ATTORNEY GESMUNDO:
Q. Do you recall Mr. Domingo, that in denying the cost of
living allowance and longevity pay for incorporation with the
basic salary, the reason given by the management was that
as according to you, it will mean an added cost and '
furthermore it will increase the contribution of the Philippine
National Bank to the GSIS, is that correct?
A. This is one of the reasons, of the objections for the
inclusion of the living allowance and longevity pay to form
part of the basic pay, I mean among others, because the
basic reason why management would object is the cost of
living allowance is temporary in nature, the philosophy
behind the grant of this benefit, Nonetheless, it was the
understanding if I recall right that in the event that cost of
living should go down then there should be a corresponding
decrease in the cost of living allowance being granted I have
to mention this because this is the fundamental philosophy
in the grant of cost of living allowance. (Pp. 19-20, Record.)
Much less were they dependent on extra or special work done or service rendered by the
corresponding recipient. Rather, they were based on the needs of their families as the
conditions of the economy warranted. Such is the inexorable import of the pertinent
provisions of the collective bargaining agreement:
MONTHLY LIVING ALLOWANCE
 All employees of the Bank shall be granted a monthly living allowance of
P140, plus P10 for each minor dependent child below 21 years of age, but in
no case shall the total allowance exceed P200 or 25% of the monthly salary,
whichever is higher, subject to the following conditions:
a) That this new basic allowance shall be applicable to all
employees, irrespective of their civil status;
b) That a widow or widower shall also enjoy the basic
allowance of P140 a month, plus the additional benefit of
P10 for each minor dependent child but not to exceed P200
or 25% of basic salary whichever is higher.
c) That in case the husband and wife are both employees in
the Bank both shall enjoy this new basic monthly living
allowance of P140 but only one of spouses shall be entitled
to claim the additional benefit of P10 for each minor
legitimate or acknowledged child. (Pp. 30-31, PNB's memo.)
So also with the longevity pay; manifestly, this was not based on the daily or monthly amount
of work done or service rendered it was more of a gratuity for their loyalty, or their having
been in the bank's employment for consideration periods of time. Indeed, with particular
reference to the longevity pay, the then existing collective bargaining contract expressly
provided: "... That this benefit shall not form part of the basic salaries of the officers so
affected."
PEMA may contend that the express exclusion of the longevity pay, means that the cost-of-
living allowance was not intended to be excluded. Considering, however, the contingent
nature of the allowances and their lack of relation to work done or service rendered, which in
a sense may be otherwise in respect to longevity pay PEMA's contention is untenable. The
rule of exclusio unius, exclusio alterius would not apply here, if only because in the very
nature of the two benefits in question, considerations and conclusions as to one of them
could be non-sequitur as to the other.
Withal, there is the indisputable significant fact that after 1958, everytime a collective
bargaining agreement was being entered into, the union always demanded the integration of
the cost-of-living allowances and longevity pay, and as many times, upon opposition of the
bank, no stipulation to such effect has ever been included in any of said agreements. And the
express exclusion of longevity pay was continued to be maintained.
On this point, the respondent court held that under its broad jurisdiction, it was within the
ambit of its authority to provide for what the parties could not agree upon. We are not
persuaded to view the matter that way. We are not convinced that the government, thru the
Industrial Court, then, could impose upon the parties in an employer-employee conflict, terms
and conditions which are inconsistent with the existing law and jurisprudence, particularly
where the remedy is sought by the actors more on such legal basis and not purely on the
court's arbitration powers.
As pointed out earlier in this opinion, Our task here is two-fold: First, reviewing the decision
under scrutiny as based on law and jurisprudence, the question is whether or not the rulings
therein are correct. And second, reading such judgment as an arbitration decision, did the
court a quo gravely abuse its discretion in holding, as it did, that cost-of-living allowance and
longevity pay should be included in the computation of overtime pay?
In regard to the first question, We have already pointed out to start with, that as far as
longevity pay is concerned, it is beyond question that the same cannot be included in the
computation of overtime pay for the very simple reason that the contrary is expressly
stipulated in the collective bargaining agreement and, as should be the case, it is settled that
the terms and conditions of a collective bargaining agreement constitute the law between the
parties. (Mactan Workers Union vs. Aboitiz, 45 SCRA 577. See also Shell Oil Workers Union
et al. vs. Shell Company of the Philippines, supra) The contention of PEMA that the express
provision in the collective bargaining agreement that "this benefit (longevity pay) shall not
form part of the basic salaries of the officers so affected" cannot imply the same Idea insofar
as the computation of the overtime pay is concerned defies the rules of logic and
mathematics. If the basic pay cannot be deemed increased, how could the overtime pay be
based on any increased amount at all?
However, the matter of the cost-of-living allowance has to be examined from another
perspective, namely, that while PEMA had been always demanding for its integration into the
basic pay, it never succeeded in getting the conformity of PNB thereto, and so, all collective
bargaining agreements entered -4 into periodically by the said parties did not provide
therefor. And it would appear that PEMA took the non-agreement of the bank in good grace,
for the record does not show that any remedial measure was ever taken by it in connection
therewith. In other words, the parties seemed to be mutually satisfied that the matter could be
better left for settlement on the bargaining table sooner or later, pursuant to the spirit of free
bargaining underlying Republic Act 875, the Industrial Peace Act then in force. Or, as
observed by PEMA in its memorandum, (page 23), the parties "agreed to let the question
remain open-pending decision of authorities that would justify the demand of the Union."
Indeed, on pages 23-24 of said memorandum, the following position of PEMA is stated thus:
Thus the following proceeding took place at the Court a quo:
ATTY. GESMUNDO:
That is our position, Your Honor, because apparently there was an
understanding reached between the parties as to their having to wait for
authorities and considering that the issue or one of the issues then involved
in the NAWASA case pending in the CIR supports the stand of the union, that
the principle enunciated in connection with that issue is applicable to this
case.
 xxx xxx xxx
Q. Do we understand from you, Mister Yuson, that it was
because of the management asking you for authorities in
allowing the integration of the cost of living allowance with
your basic salary and your failure to produce at the time such
authorities that the union then did not bring any case to the
Court?
A. Well, in the first place, it is not really my Idea to be
bringing matters to the Court during my time but I would
much prefer that we agree on the issue. Well, insofar as you
said that the management was asking me, welt I would say
that they were invoking (on) authorities that we can show in
order to become as a basis for granting or for agreeing with
us although we were aware of the existence of a pending
case which is very closely similar to our demand, yet we
decided to wait until this case should be decided by the
Court so that we can avail of the decision to present to
management as what they are asking for. (t.s.n., pp. 31-32,
35-36, Aug. 28,1965.)
Now, to complete proper understanding of the character of the controversy before Us, and
lest it be felt by those concerned that We have overlooked a point precisely related to the
matter touched in the above immediately preceding paragraph, it should be relevant to quote
a portion of the "Stipulation of Facts" of the parties hereto:
1. This particular demand was among those submitted by Petitioner-Union in
the current collective bargaining negotiations to the Respondent Bank.
However, since this case was already filed in court on May 22, 1965, the
parties agreed not to include this particular demand in the discussion, leaving
the matter to the discretion and final judicial determination of the courts of
justice." (Page 81, Rec.)
In fine, what the parties commonly desire is for this Court to construe CA 444 in the light of
NAWASA, considering the fact- situation of the instant case.
In this respect, it is Our considered opinion, after mature deliberation, that notwithstanding the
portions of the NAWASA's opinion relied upon by PEMA, there is nothing in CA 444 that
could justify its posture that cost-of-living allowance should be added to the regular wage in
computing overtime pay.
After all, what was said in NAWASA that could be controlling here? True, it is there stated
that "for purposes of computing overtime compensation, regular wage includes all payments
which the parties have agreed shall be received during the work week, including - differential
payments for working at undesirable times, such as at night and the board and lodging
customarily furnished the employee. ... The 'regular rate' of pay also ordinarily includes
incentive bonus or profit-sharing payments made in addition to the normal basic pay (56
C.J.S., pp. 704-705), and it was also held that the higher rate for night, Sunday and holiday
work is just as much a regular rate as the lower rate for daytime work. The higher rate is
merely an inducement to accept employment at times which are not as desirable from a
workmen's standpoint (International L. Ass'n vs. National Terminals Corp. C.C. Wise, 50 F.
Supp. 26, affirmed C.C.A. Carbunoa v. National Terminals Corp. 139 F. 2d 853)." (11 SCRA,
p. 783)
But nowhere did NAWASA refer to extra, temporary and contingent compensation unrelated
to work done or service rendered, which as explained earlier is the very nature of cost-of-
living allowance. Withal, in strict sense, what We have just quoted from NAWASA was  obiter
dictum, since the only issue before the Court there was whether or not "in computing the daily
wage, (whether) the addition compensation for Sunday should be included. " (See No. 7 of
Record)
In any event, as stressed by Us in the Shell cases, the basis of computation of overtime pay
beyond that required by CA 444 must be the collective bargaining agreement, 4 for, to
reiterate Our postulation therein and in Bisig ng Manggagawa, supra, it is not for the court to
impose upon the parties anything beyond what they have agreed upon which is not tainted
with illegality. On the other hand, where the parties fail to come to an agreement, on a matter
not legally required, the court abuses its discretion when it obliges any 6f them to do more
than what is legally obliged.
Doctrinally, We hold that, in the absence of any specific provision on the matter in a collective
bargaining agreement, what are decisive in determining the basis for the computation of
overtime pay are two very germane considerations, namely, (1) whether or not the additional
pay is for extra work done or service rendered and (2) whether or not the same is intended to
be permanent and regular, not contingent nor temporary and given only to remedy a situation
which can change any time. We reiterate, overtime pay is for extra effort beyond that
contemplated in the employment contract, hence when additional pay is given for any other
purpose, it is illogical to include the same in the basis for the computation of overtime pay.
This holding supersedes NAWASA.
Having arrived at the foregoing conclusions, We deem it unnecessary to discuss any of the
other issues raised by the parties.
WHEREFORE, judgment is hereby rendered reversing the decision appealed from, without
costs.
Guerrero, De Castro, Plana, Escolin, Vasquez, Relova and Gutierrez, Jr., JJ., concur.
Fernando, C.J., Concepcion and Abad Santos, JJ., took no part.
Melencio-Herrera J., concur in the result. cent additional compensation as overtime work and another 25 per cent additional
compensation as night work.
G.R. No. L-12075             May 29, 1959
Notwithstanding the opposition of the corporation to the report of the chief examiner as
NATIONAL RICE AND CORN CORPORATION (NARIC), petitioner, explained by him, the industrial court issued an order on December 28, 1956 approving the
vs. same and ordering the corporation to deposit with said court the amount of P5,221.84 within
NARIC WORKERS UNION, ET AL., respondents. five days from receipt of the order. On January 3, 1957, the corporation filed a motion for
reconsideration praying that a recomputation of the additional compensation due the
employees be ordered, but the Court of Industrial Relations en banc issued a resolution on
Zosimo Q. Pizarro for for petitioner.
February 13, 1957 stating that it finds no sufficient justification for altering or modifying its
Vicente T. Ocampo for respondent NARIC Worker's Union.
previous order, Hence the present petition for review.
Edilberto J. Pangan fo respondent CIR.

BAUTISTA ANGELO, J.:
In Case No. 746-V of the Court of Industrial Relations, entitled NARIC Workers Union vs.
National Rice and Corn Corporation, the industrial court promulgated a decision dated
February 15, 1956 directing that the corporation pay to its workers 25 per cent additional
compensation for night work rendered by them.
On May 21, 1956, upon motion of the union, the industrial court issued an order directing its
chief examiner, or any of his assistants, to compute the additional compensation for night
work granted in the decision covering the period from October 3, 1952 to February 16, 1953.
The chief examiner acted as directed and submitted his report to the court on August 7, 1956.
The report shows that there are 163 workers and employees of the corporation who have
rendered night work from October 3, 1952, to February 16, 1953 and the 25 per cent
additional compensation of said workers and employees computed on the basis of their
respective monthly salaries amounted to P5,221.84.
On September 24, 1956, the union filed with the court a petition for execution of the decision
praying that the corporation be ordered to deposit with the court the said sum of P5,221.84.
On September 27, 1956, the corporation filed its opposition contending that said motion is
premature because the report of the examiner has not yet been passed upon and approved
by the court and therefore is not yet final.
The motion, as well as the opposition, were set for hearing, during which the chief examiner
was called upon to explain his report. He stated that in making his report he considered any
all work performed between 6:00 o'clock in the afternoon and 6:00 o'clock in the morning as
"night work" and accordingly has awarded each employee or worker an additional
compensation of 25 per cent for "night work". He further stated that if a particular employee
worked from 8:00 o'clock in the morning to 5:00 o'clock in the afternoon and then rendered
overtime service from 5:00 o'clock in the afternoon of the same day to 7:00 o'clock in the
evening of the same day, he considered the work from 5:00 to 6:00 p.m. as overtime work
and entitled to 25 per cent additional compensation as overtime work, and the same work
from 6:00 to 7:00 p.m. as both overtime work and night work and therefore entitled to 25 per
The main issue raised by the corporation is: "Should the employee performing his regular
eight hours work during the daytime from 8:00 o'clock in the morning to 12:00 o'clock at noon
and from 1:00 o'clock to 5:00 o'clock in the afternoon . . . be paid for his services from 5:00
o'clock to 9:00 in the afternoon as "overtime work" and at the same time be paid from 6:00
o'clock to 9:00 o'clock in the evening as night work?"
The respondent court, in issuing its order of December 28, 1956, as well as its resolution en
banc dated February 13, 1957, has in effect held that "night work" is any and all work
rendered between 6:00 o'clock in the afternoon and 6:00 o'clock in the morning, and
consequently, if a certain employee performs his regular eight hours up to 5:00 o'clock in the
afternoon and renders overtime from 5:00 p.m. to 9:00 p.m. of the same day, the said
employee is entitled to an additional compensation for overtime services from 5:00 p.m. to
9:00 p.m. and at the same time to additional compensation for "night work" from 6:00 p.m. to
9:00 p.m. for the very same work. In other words, respondent court upheld the manner of
computation made by its chief examiner in implementing its decision rendered on February
15, 1956. This interpretation of the term "night work" is, according to the corporation,
erroneous for it runs counter to the definition given to said term by this Court in Shell
Company of the Philippines vs. National Labor Union, 81 Phil., 315; 46 Off. Gaz., 97.
Thus, in said case, the following comment was made: "The night work which the Shell
Company demands of its laborers is not merely an overtime work in the sense in which this
word is issued in Act No. 444, but it is in reality a complete working day also of eight hours,
only that, instead of its being done at daytime, it is performed at night. In other words, the
night work referred to here is not an excess, extension or overtime of the regular work during
the day time, but it is rather another kind of work absolutely independent of the work being
done during the day. For this reason, there are two shifts: the shift of laborers who work
during the day and the shift of those who work at night." (Translated into English)
While it is true that this Court made the above comment in the aforementioned case, it does
not intend to convey the idea that work done at night cannot also be an overtime work. The
comment only served to emphasize that the demand which the Shell company made upon its
laborers is not merely an overtime work but night work and so there was need to differentiate
night work from daytime work. In fact, the company contended that there was no law that
required the payment of additional compensation for night work unlike an overtime work
which is covered by Commonwealth Act No. 444 (Eight Hour Labor Law). And this Court in
that case said that while there was no law actually requiring payment of additional
compensation for night work, the industrial court has the power to determine the wages that
night workers should receive under Commonwealth Act No. 103, and so it justified the
additional compensation given to night workers by the industrial court in the Shell case for
"hygienic, medical, moral, cultural and sociological reasons." That case therefore cannot be
invoked as an authority for concluding that one who does night work cannot be paid
additional compensation for the same work as overtime. One is paid for his work done during
the night and the other is paid because it is excess of the regular eight-hour work may be
legally required to do. One is done for reasons of health and the other because of an express
mandate of the law (Commonwealth Act No. 444). We find therefore correct the computation
made by the chief examiner as affirmed by the industrial court.
The logic of this conclusion may be better seen by an example. Let us suppose that the
workers of an industrial company work in three shifts: one from 8:00 o'clock a.m. to 4:00
o'clock p.m.; another from 4:00 o'clock p.m. to 12:00 o'clock p.m.; and still another from 12:00
o'clock p.m. to 8:00 o'clock a.m. Supposing that night work begins from 6:00 o'clock p.m. and
ends at 6:00 o'clock a.m. (Article 13, New Civil Code.) Under the law and jurisprudence, the
first shift workers will have to be paid a compensation as day workers; the second shift
workers will have to be partly as day workers and partly as night workers; and the third
workers will have to be partly paid as night workers and partly as day workers.
Supposing again that the second shift workers, for some justifiable reasons, are required to
extend their work from 12:00 o'clock p.m. to 2:00 o'clock a.m. Under the law, they are entitled
to additional compensation for overtime work on the basis of their wages as night workers. If
the first shift workers were required to extend their work up to 8:00 o'clock p.m., is it not fair
and logical that for the two hours they work at night (6:00 to 8:00) they also be paid an
overtime compensation on the basis of wages paid for night workers? This is the only logical
conclusion based on our ruling in the Shell case which requires payment of additional
compensation for night work. In other words, work done at night should be paid more than
work done by the chief examiner. Respondent court is there-workers regular hour of duty, he
should also be paid additional compensation for overtime work. This is what was done by the
chief examiner. Respondent court is therefore justified in affirming his report.
Wherefore, the order and resolution appealed from are affirmed, with costs against petitioner.
G.R. No. L-27761 December 6, 1927
PHILIPPINE SUGAR CENTRALS AGENCY, plaintiff-appellee,
vs.
THE INSULAR COLLECTOR OF CUSTOMS, defendant-appellant.
Attorney-General Jaranilla for appellant.
Dionisio de Leon for appellee.
STATEMENT
This case had its origin in the Court of First Instance of Manila where it was tried and
submitted upon the following stipulation of facts:
Come now the parties, plaintiff and defendant, in the above-entitled cause, by their
undersigned attorneys, and respectfully submit to this Honorable Court the following
statement of facts, which the court may find as true and enter judgment thereon:
I. That the plaintiff at all times and in all transactions herein mentioned have always
acted as representative and attorney-in-fact of the Ma-ao Sugar Central Co.
II. That in May, 1926, the plaintiff herein shipped at Pulupandan, Occidental Negros,
on the steamship Hannover 5,124,416 gross kilos of centrifugal sugar consigned to
the United States.
III. That said sugar was laden through a wharf built, owned and maintained solely by
the Ma-ao Sugar Central Company, a domestic corporation, on a foreshore public
land at Pulupandan, Occidental Negros, leased to it by the Government of Philippine
Islands.
IV. That the defendant herein through the collector of customs of the collection district
of Iloilo, assessed and collected wharfage dues on sugar mentioned in paragraph II
hereof at P2 per thousand gross kilos or a total amount of P10,248.84.
V. That the plaintiff paid, under protest, the said amount of P10,248.84 but its protest
was overruled by the defendant.
VI. It is further agreed by the parties herein that Pulupandan through which the sugar
in question was exported, was at the time of the shipment, and is now, a port of entry
of the Philippine Islands, having been declared as such by Act No. 3106.
In which judgment was rendered for the plaintiff for P10,248.84, the amount of plaintiff's
claim, without costs.
On appeal the defendant assigns the following errors:
I. The lower court erred in declaring that the plaintiff was not bound to pay duty as a
charge for wharfage on the goods exported through Pulupandan, a port of entry of
the Philippine Islands, since the wharf used by the plaintiff for shipping said goods did
not belong to the Government.
 II. The lower court erred in ordering the defendant to return to the plaintiff the sum of
P10,248.84 in question instead of dismissing the complaint with costs against the
plaintiff.
III. The lower court erred in not granting a new trial.
 
JOHNS, J.:
As tersely stated by the trial judge, the question at issue is whether or not the Government of
the Philippine Islands can legally collect the duty of $1 per gross ton of 1,000 kilos as a
charge for wharfage on goods, wares and merchandise exported through a port of entry of
the Philippine Islands or shipped therefrom to the United States, where it appears that the
Government does not own the wharf and that the sugar in question was loaded from a wharf
which was the sole property of a private person.
Section 16 of the original Customs Tariff of November 15, 1901, is as follows:
There shall be levied and collected upon goods of all kinds exported through the
ports of entry of the Philippine Islands a duty of seventy-five cents ($0.75) per gross
ton of 1,000 kilos as a charge for wharfage and for harbor dues whatever be the port
of destination or nationality of the exporting vessel.
That law was enacted by the United States Philippine Commission by the authority of
the President of the United States, and with the approval of the Secretary of War. It
was reenacted in section 16 of an Act of Congress of the United States of March 3,
1905, entitled "An Act to revise and amend the Tariff laws of the Philippine Islands
and for other purposes," as amended by the Act of Congress of February 26, 1906,
entitled "An Act to amend an Act entitled "An Act to revise and amend the Tariff laws
of the Philippine Islands, and for other purposes," approved March third, nineteen
hundred and five.
August 5, 1909, the Congress of the United States passed what is known as the "Philippine
Tariff Act of 1909," entitled "An Act to raise revenue for the Philippine Islands, and for other
purposes," section 14 of which, under the head of "Wharfage," is as follows:
That there shall be levied and collected upon all articles, goods, wares, or
merchandise, except coal, timber and cement, the product of the Philippine Islands,
exported through ports of entry of the Philippine Islands, or shipped therefrom to the
United States or any of its possessions, a duty of one dollar per gross ton of one
thousand kilos, as a charge for wharfage, whatever be the port of destination or
nationality of the exporting vessel: Provided, that articles, goods, wares, or
merchandise imported, exported, or shipped in transit for the use of the Government
of the United States, or of that of that of the Philippine Islands, shall be exempted
from the charges prescribed in this section.
By a comparison, it will be seen that the law of 1909 changes the duty of seventy-five cents
($0.75) per gross ton of 1,000 kilos to $1 per gross ton, and that the words "as a charge for
wharfage and for harbor dues" now read "as a charge for wharfage." That is to say, that the
words "and for harbor dues," found in the Customs Tariff of 1901 and 1905, were omitted
from the Tariff Act of 1909.
The question now before the court is the meaning of the words "as a charge for wharfage," as
those words are used in section 14 of the Tariff Act of 1909.
The law in question is an Act of Congress, and it is a revenue law for the Philippine Islands.
In Words and Phrases, volume 8, page 7435, it is said:
Wharfage is a charge or rent for the temporary use of a wharf.
Wharfage is the fee paid for tying vessels to a wharf, or for loading goods on a wharf
of shipping them therefrom.
Wharfage is money due or money actually paid for the privilege of landing goods
upon or loading a vessel, while moored, from a wharf.
Wharfage or keyage is a toll or duty for the pitching or lodging of goods upon a wharf,
or pay for taking goods into a boat and from thence.
By the same author and in the same volume, on page 6997, the word
"Tonnage" is defined to be the cubical contents or burden of a ship in tons, or the
amount of weight which one or several ships will carry.
And on page 6998, it is said:
A "duty on tonnage" is a duty or tax or burden imposed under the authority of the
state, which is, by the law imposing it, to be measured by the capacity of the vessel,
and is in its essence contribution claimed for the privilege of arriving and departing
from a port of the United States.
And on page 6999, it is said:
A "duty on tonnage" is a duty on a vessel for the privilege of entering a port, and does
not prohibit wharfage.
 A "duty of tonnage," within the constitutional provision that no state shall, without the
consent of Congress, lay any "duty of tonnage," is a charge, tax or duty on a vessel
for the privilege of entering a port; and though usually levied according to tonnage,
and so acquiring its name, it is not confined to that method of rating the charge. It
does not include a charge for wharfage.
In the syllabus to the case of Cincinnati, Portsmouth, Big Sandy and Pomeroy Packet
Company vs. Board of Trustee of the Town of Catlettsburg, Kentucky (26 Law, ed., 1169), the
Supreme Court of the United States laid down this rule:
3. A city or town, situated on navigable waters, may build and own a wharf suitable
for vessels to land at, and exact a reasonable compensation for the facilities thus
afforded to vessels by the use of such wharves, and this is no infringement of the
constitutional provisions concerning tonnage taxes and the regulation of commerce.
4. Appropriate regulations prescribing places for the landing of vessels and placing
the matter under the control of a wharfmaster or other officer, whose duty is to look
after it, are valid and constitutional, and the States may prescribe them until
Congress assumes to do so.
And on page 1170 of the opinion, it is said:
The effort of the pleader, undoubtedly, is to bring the case with the constitutional
prohibition of a tax upon tonnage.
If, however, the Trustees of the Town had a right to compensation for the use of the
improved landing or wharf which they had made, it is no objection to the ordinance
fixing the amount of this compensation that it was measured by the size of the vessel,
and that this size was, ascertained by the tonnage of each vessel. It is idle, after the
decisions we have made, to call this a tax upon tonnage (Cannon vs. New Orleans,
20 Wall., 577 [87 U. S., XXII 417]; Packet Co. vs. St. Louis, 100 U. S., 428 [XXV,
690]; Packet Co. vs. Keokuk, 95 U. S., 80 [XXIV, 377]; Guy vs. Baltimore, 100 U. S.,
442 [XXV, 746].)
Still less ground exists for holding that the penalties imposed for a refusal to obey the
rules for places of landing and the orders of the wharfmaster on that subject, are
taxes on tonnage.
Nor is there any room to question the right of a city or town situated on navigable
waters to build and own a wharf suitable for vessels to land at, and exact a
reasonable compensation for the facilities thus afforded to vessels by the use of such
wharves, and that this is no infringement of the constitutional provisions concerning
tonnage taxes and the regulation of commerce, see cases above cited.
An on page 1171, it is said:
We are not aware that in any instance Congress has attempted to exercise it. If it be
a regulation of Commerce under the power conferred on Congress by the
Constitution, that body has signally failed to provide any such regulation. It belongs,
also, manifestly, to that class of rules which, like pilotage and some others, can be
most wisely exercised by local authorities, and in regard to which no general rules,
applicable alike to all parts and landing places, can be properly made. If a regulation
of commerce at all, it comes within that class in which the States may prescribe rules
until Congress assumes to do so. (Cooley vs. Board of Wardens, 12 How., 299;
Gilman vs. Philadelphia, 3 Wall., 727 [70 U. S., XVIII, 100]; Crandall vs. Nevada, 6
Wall., 42 [73 U.S., XVIII, 746]; Pound vs. Turck, 95 U. S., XXIV, 526].)
There is, probably, not a city or large town in the United States, situated on a
navigable water, where ordinances, rules and regulations like those of the Town of
Catlettsburg are not made and imposed by authority derived from state legislation,
and the long acquiescence in this exercise of the power, and its absolute necessity,
are arguments almost conclusive in favor of its rightful existence.
In the syllabus to the case of Parkersburg an Ohio River Transportation Company vs. City of
Parkersburg (27 Law, ed., 584), the Supreme Court of the United States laid down this rule:
2. The ordinance in this case imposed certain rates of wharfage on vessels "That
may discharge or receive freight, or land on or anchor at or in front of any public
landing or wharf belonging to the city, for the purpose of discharging or receiving
freight;" held that the ordinance only intended to charge for the use of a wharf, and
not for entering the port, or lying at anchor in the river.
3. Wharfage is a charge for the use of wharf, made by the owner therefor by way of
rent, or compensation; a duty of tonnage is a tax or duty charged for the privilege of
entering, or loading or lying in, a port or harbor, and can only be imposed by the
government.
5. That, although wharves are related to commerce and navigation as aids and
conveniences, yet being local in their nature, and requiring special regulations for
particular places, in the absence of Congressional legislation on the subject, the
regulation thereof properly belongs to the States in which they are situated.
And on page 586 of the opinion, it is said:
But whether a charge imposed is a charge of wharfage or a duty of tonnage must be
determined by the terms of the ordinance or regulation which imposes it. They are
not the same thing; a duty of tonnage is a charge for the privilege of entering or
trading or lying in a port or harbo; wharfage is a charge for the use of a wharf.
Exorbitant wharfage may have a similar effect as a burden on commerce as a duty of
tonnage has; but it is exorbitant wharfage and not a duty of tonnage; and the remedy
for the one is different from the remedy for the other. The question whether it is the
 one or the other is not one of intent, but one of fact and law; of fact, as whether the
charge is made for the use of a wharf, or for entering the port; of law, as whether,
according as the fact is shown to exist, it is wharfage or a duty of tonnage.
And on page 587, it is said:
When the Constitution declares that "No State shall, without the consent of Congress,
lay and duty of tonnage;" and when Congress, in section 4220 of the Revised
Statutes, declares that "No vessel belonging to any citizen of the United States,
trading from one port within the United States to another port within the Unites
States, or employed in the bank, whale or other fisheries, shall be subject to tonnage,
tax or duty, if such vessel be licensed, registered or enrolled;" they mean by the
phrases, "duty of tonnage," and "tonnage tax or duty," a charge, tax or duty on a
vessel for the privilege of entering a port; and although usually levied according to
tonnage, and so acquiring its name, it is not confined to that method of rating the
charge. It has nothing to do with wharfage, which is a charge against a vessel for
using or lying at a wharf or landing.
And on page 588, it is said:
Now wharves, levees and landing places are essential to commerce by water, no
less than a navigable channel and a clear river. But they are attached to the land;
they are private property, real estate; and they are primarily, at least, subject to the
local states loss. Congress has never yet interposed to supervise their administration;
it has hitherto left this exclusively to the States. There is little doubt, however, that
Congress, if it saw fit, in case of prevailing abuses in the management of wharf
property, abuses materially interfering with the prosecution of commerce, might
interpose and make regulations to prevent such abuses. When it shall have done so,
it will be time enough for the courts to carry its regulations into effect by judicial
proceedings properly instituted. But until Congress has acted, the courts of the
United States cannot assume control over the subject as a matter of federal
cognizance. It is the Congress, and not the judicial department, to which the
Constitution has given the power to regulate commerce with foreign Nations, and
among the several States. The courts can never take the initiative on this subject.
That is to say, it is the law of the land that even a municipality has the legal right to pass and
enforce an ordinance requiring a vessel to pay wharfage tax for the use of a wharf on a
navigable stream within the city limits, and such reasonable charge is not a duty or charge on
Untied States commerce. But in the instant case, we have an Act of Congress which
specifically authorizes the levying of the duty in question "as a charge for wharfage." In
construing the meaning of those words as used in that law, we must take into consideration
the relative situation and the conditions existing at the time the law was enacted. That is to
say, it is the law of the land that even a municipality on a navigable river in a State of the
United States has the legal right to pass and enforce an ordinance to require a vessel to pay
wharfage tax for the use of a wharf within the city limits, and that a tax even by a city for such
a purpose does not interfere with, and is not a charge on, United States commerce.
It is also the law of the land that the United States Congress in its discretion has the power to
levy and collect a tonnage tax ever though it would interfere with the United States
commerce. But in the instant case, we have an Act of Congress which specifically authorizes
the Government of the Philippine Islands to levy and collect the duty in question "as a charge
for wharfage."
It is vigorously contended that by reason of the fact that the sugar in question was loaded
from a private wharf and not from a Government wharf, that the Government has no legal
right to levy and collect the duty "as a charge for wharfage." In construing the law now in
question, we should take into consideration its history, relative situation and the conditions
existing at the time it was enacted.
As stated, the original Customs Tariff of 1901 was enacted by the Philippine Commission
under the authority from the President of the United States. At the time of its enactment, it is a
matter of common knowledge that the Government of the Philippine Islands did not have,
own or operate a pier or wharf anywhere or at any place, a fact which must have been known
to the Commission which enacted the law.
It is stated in the brief for the Attorney-General and not denied in the brief for the appellee,
that the two oldest piers of the Insular Government, Nos. 3 and 5, were first opened in the
year 1910. That prior to that time, and because there was no wharves or piers, export
cargoes by means of lights were brought to the sides of vessels that were anchored in Manila
Bay.
Notwithstanding that the fact the wharfage tax in question has been continuously levied and
collected from 1901 up to the present time. That is to say, in 1901 the Philippine Commission,
which enacted the law, knew or must have known that there was not a single pier or wharf in
the Philippine Islands, and yet without such wharves or piers, the Government has at all times
levied and collected the tax in question, and it if fair to assume that from and out of the money
derived from such sources, it has since erected and constructed piers and wharves in all of
the large cities of its principal ports of entries at a cost of millions of pesos, and it is a matter
of common knowledge that pier 7 recently constructed in the City of Manila cost about
P12,979,824.99, and that it is reputed to b e the most modern, best and fines dock in the
Orient.
It further appears from out own records and reports that during all of this time the tax in
question has been paid without any protest or objection, and that the first time that the law
now in question was ever presented to this court was in the case of Compañia General de
Tabacos vs. Collector of Customs  (46 Phil., 8), in which an attack was made on the
constitutionality of the law, and its validity was sustained by this court. The question now
presented was not then decided because it did not appear from the agreed statement of facts
that the articles upon which the defendant collected the duty had or had not passed through a
Government wharf. That case was decided on April 7, 1924.
The instant case is the first and only case in which the question now under consideration was
ever presented. Hence, we have a law which since 1901 has been construed by its officials to
mean that the Government of the Philippine Islands is entitled to levy and collect a duty of $1
per gross ton "as a charge for wharfage" upon all articles, goods, wares and merchandise
exported through the ports of entry of the Philippine Islands, and that construction has been
acquiesced in and accepted, and the money paid without any protest or objection for twenty-
six years, for many years of which the Government never even owned or operated a wharf.
It also appears that Pulupandan, the place from which the sugar was shipped, was made a
port of entry of the Philippine Islands on March 17, 1923, and that on January 19, 1925, the
Legislature appropriated P750,000 for improvements made and to be made in that port,
which were to consist not only of the building of a wharf, but the construction of breakwaters,
sea walls and the dredging of the harbor.
When we consider that the tax in question has at all times for twenty-six years been levied
and collected by the Government both before it owned or operated any wharf, and that is has
spent millions of pesos in the construction of wharves in its principal ports of entries, and that
from the recent port of Pulupandan and for sugar that was shipped from that port on the
steamship Hannover  in the year 1926 only the tax in question amount to P10,284.84, the
importance of the instant case and its far reaching effect upon the finances of the
Government of the Philippine Islands stands out in bold relief and becomes very apparent,
and this court is now called upon to overthrow that long continued constructions, and in legal
effect to hold that, because the sugar was shipped through a private owned wharf, the
government is not entitled to collect the money in question "as a charge for wharfage." The
long acquiescence in its construction and the far reaching effect of such a decision makes it
imperative for this court to sustain the law, if there are any reasonable grounds upon which it
can be done.
This rule is well stated in Sutherland on Statutory Construction, volume 2, page 889, where it
is said:
"The practical construction given to a doubtful statute by the department or officers whose
duty it is to carry it into execution is entitled to great weight and will not be disregarded or
overturned except for cogent reasons, and unless it is clear that such construction is
erroneous." Citing numerous decisions.
In the case of Kelly vs. Multnomah County (18 Ore., 356, 359; 22 Pac., 1110), the Supreme
Court of Oregon said:
In all cases where those persons whose duty it is to executed a law have uniformly
given it a particularly construction, and that construction has been acquiesced in and
acted upon for a long time, it is a contemporary exposition of the statute, which
always commands the attention of the courts, and will be followed unless it clearly
and manifestly appears to be wrong.
Following which, on page 890, Sutherland says:
The legislature is presumed to be cognizant of such construction, and after long
continuance, without any legislation evincing its dissent, court will consider
themselves warranted in adopting that construction.
The same author, on page 883, says:
Surrounding facts and conditions. — Mischief to be remedied. — In order to ascertain
the purpose or intentions, if it is not clearly expressed in a statute, or that such
purpose or intention may be carried into effect, the court will take notice of the history
of its terms when it was enacted. It is needful in the construction of all instruments to
read them in view of the surrounding facts. To understand their purport and intended
application, one should, as far as possible, be placed in a situation to see the subject
from the maker's standpoints and study his language with that outlook. Statutes are
no exception. The court may look to the surrounding circumstances.
And on pages 885 and 886, he says:
The mischief intended to be removed or suppressed or the cause of necessity of any
kind which induced the enactment of a law are important factors to be considered in
its construction. "The purpose for which the law was enacted is a matter of prime
importance in arriving at a correct interpretation of its terms."
In the case of Cameron vs. Chicago, Milwaukee & St. Paul Ry. Co. (63 Minnesota, 384), on
page 387 of the opinion that court said:
This statute has been in force for nearly 20 years, and attorney's fees have been
repeatedly allowed to the plaintiff in actions brought under it. Two such cases have
been heard on appeal in this court (see Coleman vs. St. Paul, M. & M. R. Co., 38
Minn., 260; 36 N. W., 638; Scott vs. Minneapolis, St. P. & Ste. M. R. Co., 42 Minn.,
179; 43 N. W., 966); and, so far as we are advised, this is the first time any question
as to the constitutionality of the provisions of this statute allowing reasonable
attorney's fees has ever been suggested. This acquiescence, without question, of
bench and bar, in the validity of the statute, is significant; and it is entitled to
controlling weight if the question as to the validity of the statute is doubtful.
The same principle is laid down in Molina vs. Rafferty (38 Phil., 167), on page 169 in which
this court makes the following quotation from Cooley on Taxation, volume 1, 3d ed., p. 450:
 The underlying principle of all construction is that the intent of the legislature should
be sought in the words employed to express it, and that when found it should be
made to govern, . . . if the words of the law seem to be doubtful import, it may then
perhaps become necessary to look beyond them in order to ascertain what was in
the legislative mind at the time the law was enacted; what the circumstances were,
under which the action was taken; what evil, if any, was meant to be redressed; . . .
And where the law has contemporaneously been put into operation, and in doing so a
construction has necessarily been put upon it, this construction, especially if followed
for some considerable period, is entitled to great respect, as being very probably a
true expression of the legislative purpose, and is not lightly to be overruled, although
it is not conclusive.
And on page 173 of the opinion, it is said:
During the many years that the statute before us has been in existence, since it first
appeared, substantially in its present form, in section 142 of Act No. 1189, passed in
1904, no attempt has been made, until this case arose, to construe it as not applying
to fish grown in ponds, and much weight should be given to this long continued
administrative interpretation.
See also In re  Allen (2 Phil., 630), where it is held that:
Courts will give weight to the contemporaneous construction placed upon a statute by
the executive officers whose duty it is so enforce it, and, unless such interpretation is
clearly erroneous, will ordinarily be controlled thereby.
The purpose of the law was to authorize the Government of the Philippine Islands to levy a
duty of $1 per gross ton "as a charge for wharfage." Being an Act of Congress, the law would
be valid if it did not specify the purpose for which the duty was to be levied and collected.
Without such a provision it would then be construed as a duty on tonnage, and Congress
would have a right to enact that kind of a law. The omission from the Act of 1909 of the words
"and for harbor dues" in the previous law is very significant and would clearly indicate that it
was not the intent of Congress under the Act of 1909 that duty should be levied on tonnage.
In view of the fact that in 1901 there were no wharves or piers in the Philippine Islands, and of
the conditions then existing and the enactment of the law in 1901 under the same conditions,
and its reenactment by Congress in 1905 under similar conditions, and of the present law of
1909 and of the continuous construction of the law placed upon it by the Government
officials, and the further fact that the duty in question has been paid without any protest or
objection for twenty-six-years, during which time the Government has expanded millions of
pesos in the construction of wharves, and that it now owns and operates large an extensive
wharves in all of its principal ports of entry and that Congress has never seen fit to repeal the
law of 1909, we are forced to the conclusion that it was the purpose and intent of the act in
question to give the Government of the Philippine Islands authority to levy and collect such a
duty of $1 per gross ton, and that the money derived from such sources should be used,
deemed and treated as a trust fund, for the purpose of acquiring and constructing wharves by
the Government of the Philippine Islands. In truth and in fact, that is what has been done in all
of its principal ports of entry.
Pulupandan was made a port of entry of March 17, 1923. It further appears that in line with its
policy, the Legislature on January 19, 1925, made an appropriation of P750,000 for
improvements made and to be made in that port, which were to consist not only of the
building of a wharf, but the construction of breakwaters, sea walls and the dredging of the
harbor.
Based on the conditions existing in 1901 and as they exist now, we have a legal right to
assume that the money derived from such sources has been appropriated and used by the
Government for the erection and construction of wharves and the improvement of its harbors.
The construction for which plaintiff contends would overthrow and destroy the whole system
of the Government, in and by which millions of pesos have been levied and collected an
expanded in the construction of Government wharves, and it would have defeated the
construction of the Government wharf at Pulupandan. The law in question could have been
repealed or changed at any time by an Act of Congress. In view of the long continuous
construction which has been placed upon it by the government officials, and for which they
now contend, the very fact that Congress has not seen fit to repeal or change the law is a
very potent argument in favor of sustaining that construction. The language of the Act could
have been made more specific and certain, but in view of its history, its long continuous
construction, and what has been done and accomplished by and under it, we are clearly of
the opinion that the Government is entitled to have and receive the money in question, even
though the sugar was shipped from a private wharf.
The judgment of the lower court is reversed, with costs. So ordered.
Avanceña, C.J., Street, Malcolm, Villamor, Ostrand and Villa-Real, JJ., concur.
 
 
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 REASONS RELIED UPON FOR ALLOWANCE OF PETITION
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:
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.
.R. No. 146073            January 13, 2003
JERRY E. ACEDERA, ANTONIO PARILLA, AND OTHERS LISTED IN ANNEX
"A,"1, petitioners-appellants,
vs.
INTERNATIONAL CONTAINER TERMINAL SERVICES, INC. (ICTSI), NATIONAL LABOR
RELATIONS COMMISSION and HON. COURT OF APPEALS, respondents-appellees.
CARPIO-MORALES, J.:
For consideration is the petition for review on certiorari assailing the decision of the Court of
Appeals affirming that of the National Labor Relations Commission (NLRC) which affirmed
the decision of the Labor Arbiter denying herein petitioners-appellants’ Complaint-in-
Intervention with Motion for Intervention.
The antecedent facts are as follows:
Petitioners-appellants Jerry Acedera, et al. are employees of herein private respondent
International Container Terminal Services, Inc. (ICTSI) and are officers/members of
Associated Port Checkers & Workers Union-International Container Terminal Services, Inc.
Local Chapter (APCWU-ICTSI), a labor organization duly registered as a local affiliate of the
Associated Port Checkers & Workers Union (APCWU).
When ICTSI started its operations in 1988, it determined the rate of pay of its employees by
using 304 days, the number of days of work of the employees in a year, as divisor.2
On September 28, 1990, ICTSI entered into its first Collective Bargaining Agreement (CBA)
with APCWU with a term of five years effective until September 28, 1995.3 The CBA was
renegotiated and thereafter renewed through a second CBA that took effect on September
29, 1995, effective for another five years. 4 Both CBAs contained an identically-worded
provision on hours and days of work reading:
Article IX
Regular Hours of Work and Days of Labor
Section 1. The regular working days in a week shall be five (5) days on any day from
Monday to Sunday, as may be scheduled by the COMPANY, upon seven (7) days
prior notice unless any of this day is declared a special holiday.5 (Italics omitted)
In accordance with the above-quoted provision of the CBA, the employees’ work week was
reduced to five days or a total of 250 days a year. ICTSI, however, continued using the 304-
day divisor in computing the wages of the employees.6
On November 10, 1990, the Regional Tripartite Wage and Productivity Board (RTWPB) in the
National Capital Region decreed a P17.00 daily wage increase for all workers and employees
receiving P125.00 per day or lower in the National Capital Region.7 The then president of
APCWU, together with some union members, thus requested the ICTSI’s Human Resource
Department/Personnel Manager to compute the actual monthly increase in the employees’
wages by multiplying the RTWPB mandated increase by 365 days and dividing the product
by 12 months.8
Heeding the proposal and following the implementation of the new wage order, ICTSI
stopped using 304 days as divisor and started using 365 days in determining the daily wage
of its employees and other consequential compensation, even if the employees’ work week
consisted of only five days as agreed upon in the CBA.9
In early 1997, ICTSI went on a retrenchment program and laid off its on-call
employees.10 This prompted the APCWU-ICTSI to file a notice of strike which included as
cause of action not only the retrenchment of the employees but also ICTSI’s use of 365 days
as divisor in the computation of wages.11 The dispute respecting the retrenchment was
resolved by a compromise settlement12 while that respecting the computation of wages was
referred to the Labor Arbiter.13
On February 26, 1997, APCWU, on behalf of its members and other employees similarly
situated, filed with the Labor Arbiter a complaint against ICTSI which was dismissed for
APCWU’s failure to file its position paper.14 Upon the demand of herein petitioners-appellants,
APCWU filed a motion to revive the case which was granted. APCWU thereupon filed its
position paper on August 22, 1997.15
On December 8, 1997, petitioners-appellants filed with the Labor Arbiter a Complaint-in-
Intervention with Motion to Intervene.16 In the petition at bar, they justified their move to
intervene in this wise:
[S]hould the union succeed in prosecuting the case and in getting a favorable reward
it is actually they that would benefit from the decision. On the other hand, should the
union fail to prove its case, or to prosecute the case diligently, the individual workers
or members of the union would suffer great and immeasurable loss. … [t]hey wanted
to insure by their intervention that the case would thereafter be prosecuted with all
due diligence and would not again be dismissed for lack of interest to prosecute on
the part of the union.17
The Labor Arbiter rendered a decision, the dispositive portion of which reads:
WHEREFORE, decision is hereby rendered declaring that the correct divisor in
computing the daily wage and other labor standard benefits of the employees of
respondent ICTSI who are members of complainant Union as well as the other
employees similarly situated is two hundred fifty (250) days such that said
respondent is hereby ordered to pay the employees concerned the differentials
representing the underpayment of said salaries and other benefits reckoned three (3)
years back from February 26, 1997, the date of filing of this complaint or computed
from February 27 1994 until paid, but for purposes of appeal, the salary differentials
 are temporarily computed for one year in the amount of Four Hundred Sixty Eight
Thousand Forty Pesos (P468,040.00).18
In the same decision, the Labor Arbiter denied petitioners-appellants’ Complaint-in-
Intervention with Motion for Intervention upon a finding that they are already well represented
by APCWU.19
On appeal, the NLRC reversed the decision of the Labor Arbiter and dismissed APCWU’s
complaint for lack of merit.20 The denial of petitioners-appellants’ intervention was, however,
affirmed.21
Unsatisfied with the decision of the NLRC, APCWU filed a petition for certiorari with the Court
of Appeals while petitioners-appellants filed theirs with this Court which referred the
petition22 to the Court of Appeals.
The Court of Appeals dismissed APCWU’s petition on the following grounds: failure to allege
when its motion for reconsideration of the NLRC decision was filed, failure to attach the
necessary appendices to the petition, and failure to file its motion for extension to file its
petition within the reglementary period.23
As for petitioners-appellants’ petition for certiorari, it was dismissed by the Court of Appeals in
this wise:
It is clear from the records that herein petitioners, claiming to be employees of
respondent ICTSI, are already well represented by its employees union, APCWU, in
the petition before this Court (CA-G.R. SP. No. 53266) although the same has been
dismissed. The present petition is, therefore a superfluity that deserves to be
dismissed. Furthermore, only Acedera signed the Certificate of non-forum shopping.
On this score alone, this petition should likewise be dismissed. We find that the same
has no merit considering that herein petitioners have not presented any meritorious
argument that would justify the reversal of the Decision of the NLRC.
Article IX of the CBA provides:
Regular Hours of Work and Days of Labor
"Section 1. The regular working days in a week shall be five (5) days on any
day from Monday to Sunday, as may be scheduled by the COMPANY, upon
seven (7) days prior notice unless any of this day is declared a special
holiday."
This provision categorically states the required number of working days an employee
is expected to work for a week. It does not, however, indicate the manner in which an
employee’s salary is to be computed. In fact, nothing in the CBA makes any referral
to any divisor which should be the basis for determining the salary. The NLRC,
therefore, correctly ruled that" xxx the absence of any express or specific provision in
the CBA that 250 days should be used as divisor altogether makes the position of the
Union untenable."
xxx
Considering that herein petitioners themselves requested that 365 days be used as
the divisor in computing their wage increase and later did not raise or object to the
same during the negotiations of the new CBA, they are clearly estopped to now
complain of such computation only because they no longer benefit from it. Indeed,
the 365 divisor for the past seven (7) years has already become practice and law
between the company and its employees.24 (Emphasis supplied)
xxx
Hence, the present petition of petitioners-appellants who fault the Court of Appeals as
follows:
I
. . . in rejecting the CBA of the parties as the source of the divisor to determine the
workers’ daily rate totally disregarded the applicable landmark decisions of the
Honorable Supreme Court on the matter.
II
. . . [IN] disregard[ING] applicable decisions of this Honorable Court when it ruled that
the petitioners-appellants are already in estoppel.
III
. . . in ruling that the petitioners-appellants have no legal right to intervene in and
pursue this case and that their intervention is a superfluity.
IV
. . . in holding, although merely as an obiter dictum, that only petitioner Jerry Acedera
signed the certificate of non-forum shopping.25
The third assigned error respecting petitioners-appellants’ right to intervene shall first be
passed upon, it being determinative of their right to raise the other assigned errors.
Petitioners-appellants anchor their right to intervene on Rule 19 of the 1997 Rules of Civil must be clear and convincing evidence of fraud or collusion or lack of good faith
Procedure, Section 1 of which reads: independently of the dismissal. This, petitioners-appellants failed to proffer.

Section 1. Who may intervene.- A person who has legal interest in the matter in
litigation, or in the success of either of the parties, or an interest against both, or is so
situated to be adversely affected by a distribution or other disposition of property in
the custody of the court or of an officer thereof may, with leave of court, be allowed to
intervene in the action. The court shall consider whether or not the intervention will
unduly delay or prejudice the adjudication of the rights of the original parties, and
whether or not the intervenor’s right may be fully protected in a separate proceeding.
Petitioners-appellants likewise express their fear that APCWU would not prosecute the case
diligently because of its "sweetheart relationship" with ICTSI.31 There is nothing on record,
however, to support this alleged relationship which allegation surfaces as a mere afterthought
because it was never raised early on. It was raised only in petitioners-appellants’ reply to
ICTSI’s comment in the petition at bar, the last pleading submitted to this Court, which was
filed on June 20, 2001 or more than 42 months after petitioners-appellants filed their
Complaint-in-Intervention with Motion to Intervene with the Labor Arbiter.

They stress that they have complied with the requisites for intervention because (1) they are
the ones who stand to gain or lose by the direct legal operation and effect of any judgment
that may be rendered in this case, (2) no undue delay or prejudice would result from their
intervention since their Complaint-in-Intervention with Motion for Intervention was filed while
the Labor Arbiter was still hearing the case and before any decision thereon was rendered,
and (3) it was not possible for them to file a separate case as they would be guilty of forum
shopping because the only forum available for them was the Labor Arbiter.26
Petitioners-appellants, however, failed to consider, in addition to the rule on intervention, the
rule on representation, thusly:
To reiterate, for a member of a class to be permitted to intervene in a representative action,
fraud or collusion or lack of good faith on the part of the representative must be proven. It
must be based on facts borne on record. Mere assertions, as what petitioners-appellants
proffer, do not suffice.
The foregoing discussion leaves it unnecessary to discuss the other assigned errors.
WHEREFORE, the present petition is hereby denied.
SO ORDERED.

Sec. 3. Representatives as parties.- Where the action is allowed to be prosecuted or G.R. No. L-15422           November 30, 1962
defended by a representative or someone acting in a fiduciary capacity, the
beneficiary shall be included in the title of the case and shall be deemed to be the
real party in interest. A representative may be a trustee of an express trust, a NATIONAL DEVELOPMENT COMPANY, petitioner,
guardian, an executor or administrator, or a party authorized by law or these vs.
Rules. . . 27 (Emphasis supplied) COURT OF INDUSTRIAL RELATIONS and NATIONAL TEXTILE WORKERS
UNION, respondents.
A labor union is one such party authorized to represent its members under Article 242(a) of
the Labor Code which provides that a union may act as the representative of its members for Government Corporate Counsel Simeon M. Gopengco and Lorenzo R. Mosqueda for
the purpose of collective bargaining. This authority includes the power to represent its petitioner.
members for the purpose of enforcing the provisions of the CBA. That APCWU acted in a Eulogio R. Lerum for respondent National Textile Workers Union.
representative capacity "for and in behalf of its Union members and other employees similarly Mariano B. Tuason for respondent Court of Industrial Relations.
situated," the title of the case filed by it at the Labor Arbiter’s Office so expressly states.
REGALA, J.:
While a party acting in a representative capacity, such as a union, may be permitted to
intervene in a case, ordinarily, a person whose interests are already represented will not be This is a case for review from the Court of Industrial Relations. The pertinent facts are the
permitted to do the same28 except when there is a suggestion of fraud or collusion or that the following:
representative will not act in good faith for the protection of all interests represented by him.29
At the National Development Co., a government-owned and controlled corporation, there
Petitioners-appellants cite the dismissal of the case filed by ICTSI, first by the Labor Arbiter, were four shifts of work. One shift was from 8 a.m. to 4 p.m., while the three other shifts were
and later by the Court of Appeals.30 The dismissal of the case does not, however, by itself from 6 a.m. to 2 p.m; then from 2 p.m. to 10 p.m. and, finally, from 10 p.m. to 6 a.m. In each
show the existence of fraud or collusion or a lack of good faith on the part of APCWU. There shift, there was a one-hour mealtime period, to wit: From (1) 11 a.m. to 12 noon for those
working between 6 a.m. and 2 p.m. and from (2) 7 p.m. to 8 p.m. for those working between 2
p.m. and 10 p.m.
The records disclose that although there was a one-hour mealtime, petitioner nevertheless
credited the workers with eight hours of work for each shift and paid them for the same
number of hours. However, since 1953, whenever workers in one shift were required to
continue working until the next shift, petitioner instead of crediting them with eight hours of
overtime work, has been paying them for six hours only, petitioner that the two hours
corresponding to the mealtime periods should not be included in computing compensation.
On the other hand, respondent National Textile Workers Union whose members are
employed at the NDC, maintained the opposite view and asked the Court of Industrial
Relations to order the payment of additional overtime pay corresponding to the mealtime
periods.
After hearing, Judge Arsenio I. Martinez of the CIR issued an order dated March 19, 1959,
holding that mealtime should be counted in the determination of overtime work and
accordingly ordered petitioner to pay P101,407.96 by way of overtime compensation.
Petitioner filed a motion for reconsideration but the same was dismissed by the CIR en
banc on the ground that petitioner failed to furnish the union a copy of its motion.
Thereafter, petitioner appealed to this Court, contending, first, that the CIR has no jurisdiction
over claims for overtime compensation and, secondary that the CIR did not make "a correct
appraisal of the facts, in the light of the evidence" in holding that mealtime periods should be
included in overtime work because workers could not leave their places of work and rest
completely during those hours.
In support of its contention that the CIR lost its jurisdiction over claims for overtime pay upon
the enactment of the Industrial Peace Act (Republic Act No. 875), petitioner cites a number of
decisions of this Court. On May 23, 1960, however, We ruled in Price Stabilization Corp. v.
Court of Industrial Relations, et al., G.R. No. L-13206, that
Analyzing these cases, the underlying principle, it will be noted in all of them, though
not stated in express terms, is that where the employer-employee relationship is still
existing or is sought to be reestablished because of its wrongful severance, (as
where the employee seeks reinstatement) the Court of Industrial Relations has
jurisdiction over all claims arising out of, or in connection with the employment, such
as those related to the Minimum Wage Law and the Eight-Hour Labor Law. After the
termination of their relationship and no reinstatement is sought, such claims become
mere money claims, and come within the jurisdiction of the regular courts,
We are aware that in 2 cases, some statements implying a different view have been
made, but we now hold and declare the principle set forth in the next preceding
paragraph as the one governing all cases of this nature.
This has been the constant doctrine of this Court since May 23, 1960.1
A more recent definition of the jurisdiction of the CIR is found in Campos, et al. v. Manila
Railroad Co., et al., G.R. No. L-17905, May 25, 1962, in which We held that, for such
jurisdiction to come into play, the following requisites must be complied with: (a) there must
exist between the parties an employer-employee relationship or the claimant must seek his
reinstatement; and (b) the controversy must relate to a case certified by the President to the
CIR as one involving national interest, or must arise either under the Eight-Hour Labor Law,
or under the Minimum Wage Law. In default of any of these circumstances, the claim
becomes a mere money claim that comes under the jurisdiction of the regular courts. Here,
petitioner does not deny the existence of an employer-employee relationship between it and
the members of the union. Neither is there any question that the claim is based on the Eight-
Hour Labor Law (Com. Act No. 444, as amended). We therefore rule in favor of the
jurisdiction of the CIR over the present claim.
The other issue raised in the appeal is whether or not, on the basis of the evidence, the
mealtime breaks should be considered working time under the following provision of the law;
The legal working day for any person employed by another shall be of not more than
eight hours daily. When the work is not continuous, the time during which the laborer
is not working and can leave his working place and can rest completely shall not be
counted. (Sec. 1, Com. Act No. 444, as amended. Emphasis ours.)
It will be noted that, under the law, the idle time that an employee may spend for resting and
during which he may leave the spot or place of work though not the premises2 of his
employer, is not counted as working time only where the work is broken or is not continuous.
The determination as to whether work is continuous or not is mainly one of fact which We
shall not review as long as the same is supported by evidence. (Sec. 15, Com. Act No. 103,
as amended, Philippine Newspaper Guild v. Evening News, Inc., 86 Phil. 303).
That is why We brushed aside petitioner's contention in one case that workers who worked
under a 6 a.m. to 6 p.m. schedule had enough "free time" and therefore should not be
credited with four hours of overtime and held that the finding of the CIR "that claimants herein
rendered services to the Company from 6:00 a.m. to 6:00 p.m. including Sundays and
holidays, . . . implies either that they were not allowed to leave the spot of their working place,
or that they could not rest completely" (Luzon Stevedoring Co., Inc. v. Luzon Marine
Department Union, et al., G.R. No. L-9265, April 29, 1957).
Indeed, it has been said that no general rule can be laid down is to what constitutes
compensable work, rather the question is one of fact depending upon particular
circumstances, to be determined by the controverted in cases. (31 Am. Jurisdiction Sec. 626
pp. 878.)
In this case, the CIR's finding that work in the petitioner company was continuous and did not
permit employees and laborers to rest completely is not without basis in evidence and
following our earlier rulings, shall not disturb the same. Thus, the CIR found:
 While it may be correct to say that it is well-high impossible for an employee to work
while he is eating, yet under Section 1 of Com. Act No. 444 such a time for eating
can be segregated or deducted from his work, if the same is continuous and the
employee can leave his working place rest completely. The time cards show that the
work was continuous and without interruption. There is also the evidence adduced by
the petitioner that the pertinent employees can freely leave their working place nor
rest completely. There is furthermore the aspect that during the period covered the
computation the work was on a 24-hour basis and previously stated divided into
shifts.
From these facts, the CIR correctly concluded that work in petitioner company was
continuous and therefore the mealtime breaks should be counted as working time for
purposes of overtime compensation.
Petitioner gives an eight-hour credit to its employees who work a single shift say from 6 a.m.
to 2 p.m. Why cannot it credit them sixteen hours should they work in two shifts?
There is another reason why this appeal should dismissed and that is that there is no
decision by the CIR en banc from which petitioner can appeal to this Court. As already
indicated above, the records show that petitioner's motion for reconsideration of the order of
March 19, 1959 was dismissed by the CIR en banc because of petitioner's failure to serve a
copy of the same on the union.
Section 15 of the rules of the CIR, in relation to Section 1 of Commonwealth Act No. 103,
states:
The movant shall file the motion (for reconsideration), in six copies within five (5)
days from the date on which he receives notice of the order or decision, object of the
motion for reconsideration, the same to be verified under oath with respect to the
correctness of the allegations of fact, and serving a copy thereof personally or by
registered mail, on the adverse party. The latter may file an answer, in six (6) copies,
duly verified under oath. (Emphasis ours.)
In one case (Bien, et al. v. Castillo, etc., et al., G.R. No. L-7428, May 24, 1955), We sustained
the dismissal of a motion for reconsideration filed outside of the period provided in the rules of
the CIR. A motion for reconsideration, a copy of which has not been served on the adverse
party as required by the rules, stands on the same footing. For "in the very nature of things, a
motion for reconsideration against a ruling or decision by one Judge is in effect an appeal to
the Court of Industrial Relations, en banc," the purpose being "to substitute the decision or
order of a collegiate court for the ruling or decision of any judge." The provision in
Commonwealth Act No. 103 authorizing the presentation of a motion for reconsideration of a
decision or order of the judge to the CIR, en banc and not direct appeal therefore to this
Court, is also in accord with the principal of exhaustion of administrative remedies before
resort can be made to this Court. (Broce, et al., v. The Court of Industrial Relations, et al.,
G.R. No. L-12367, October 29, 1959).
Petitioner's motion for reconsideration having been dismissed for its failure to serve a copy of
the same on the union, there is no decision of the CIR en banc that petitioner can bring to this
Court for review.
WHEREFORE, the order of March 19, 1959 and the resolution of April 27, 1959 are hereby
affirmed and the appeal is dismissed, without pronouncement as to costs.
Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon and
Makalintal concur.
Bengzon, C.J., took no part.
G.R. No. L-4614           October 24, 1952
JUAN DELIVA, petitioner,
vs.
HON. JOSE T. SURTIDA, Judge of the Court of First Instance of Camarines Sur, and
LEODEGARIO RONQUILLO, respondents.
Tible, Tena and Borja for petitioner.
Felipe, Kariñgal and Felipe for respondents.
PADILLA, J.:
This is a petition to compel the respondent court to direct the execution of a judgment
rendered in favor of the petitioner and against the respondent in civil case No. 99-R of the
Court of First Instance of Camarines Sur entitled Juan Deliva vs. Leodegario Ronquillo, et al.
The facts alleged in the petition are as follows: On 19 July 1944 the respondent court
rendered judgment ordering Leodegario Ronquillo, one of the respondents, to deliver the
petitioner one-half of three parcels of land described under Group A of the complaint, the
subject of partition proceedings, and to pay him the sum of P1,425 by way of damages. The
record of the case was destroyed during the battle for liberation, so the petitioner began
reconstitution proceedings and the respondent court declared it reconstituted on 13 February
1947. The respondent Leodegario Ronquillo moved for reconsideration of the order declaring
it reconstituted. The parties presented their respective evidence in support of their
contentions as to whether the judgment had been rendered therein and a copy of the
judgment had been served upon the respondent Leodegario Ronquillo. The respondent court
denied the motion for reconsideration. From the orders declaring the record reconstituted and
denying the motion for reconsideration Leodegario Ronquillo appealed to the Court of
Appeals. One of the issues joined and one of the questions raised, argued and submitted by
the parties to the Court of Appeals was whether in 1944 after judgment had been rendered in
the case, Leodegario Ronquillo or his attorney was served with a copy thereof. On 8 April
1949 the Court of Appeals rendered judgment declaring that Leodegario Ronquillo's attorney
had been served with a copy of the judgment. On 2 February and 1 December 1950 motions
for execution of the judgment and for the appointment of commissioners to partition the three
parcels of land were presented but the respondent court, upon objection of the respondent,
denied the motion in its orders of 20 February and 20 December 1950, respectively, and
refuse to issue a writ of execution on the ground that the judgment was not yet final. It is
claimed that such refusal constitute an unlawful neglect to perform an act specifically
enjoined by law and that there is no other plain, speedy and adequate remedy in the ordinary
course of law to have said orders denying the execution prayed for annulled and set aside.
These facts are uncontroverted.
In their answer Leodegario Ronquillo and the respondent court allege that whether a copy of
the judgment had been received by him or his attorney was raised incidentally in the motion
for reconsideration to support the main claim that Leodegario Ronquillo or his counsel had
not been notified of the date of the trial of civil case No. 7110 of the respondent court and that
the parcels of land litigated therein could not be located and identified for lack of description
of the same.
In the two orders of 20 February and 20 December 1950 denying the motions for execution,
the respondent court states that the respondent had not been notified of the judgment. In the
memorandum for the respondents they invoke the rule laid down in the cases of San Jose vs.
de Venecia1 (45 Off. Gaz. 2073, 2074) and Velasquez vs. Ysip,2 (45 Off. Gaz. 2079, 2080),
wherein the court among other things said:
Here, the last and only proceeding reconstituted is the rendition of the judgement. The next
step would have been notice thereof upon the parties, but notice upon petitioner has not been
reconstituted. Such notice therefore should be served anew, and from the date of the new
service the period of appeal should be computed." The rule invoked by the respondents as
laid down in two cases cited is correct and sound. However, in the case of San Jose vs. de
Venecia, et al., supra, we said: "the last and only proceeding reconstituted is the rendition of
the judgment" (p. 2074); and in the case of Velasquez vs. Ysip, et al, supra, we said: "No
notice of the decisions upon the petitioner prior to the destruction appeared to have been
reconstituted." (p. 2080) The next step in those cases was to serve notice upon the parties or
their attorneys of such reconstituted judgment. As it was not done the judgment could not
become final. Here, however, the situation is different. Not only the judgement was
reconstituted but also the fact that notice thereof had been served upon the attorney of the
adverse party, the respondent Leodegario Ronquillo, was found by the respondent court and
the court of Appeals on appeal. Does a reconstitution mean a physical
or verbatim reproduction of the pleadings, evidence, decision or judgment rendered and
subsequent judicial acts or orders and motions of the parties prompting them? Section 4, Act
No. 3110, gives the answer by providing that "In case it is impossible to find a copy of a
motion, decree, order document, or other proceeding of vital importance for the reconstitution
of the record, the same may be replaced by an agreement on the facts entered into between
the counsels or the interested parties, which shall be reduced to writing and attached to the
proper record." If it is not a physical or verbatim reproduction of the documents which made
up the record to be reconstituted and there is a finding of fact by the trial court affirmed by a
reviewing court on appeal that a notice of the judgment rendered in the case had been served
upon the attorney for the defeated party and the judgment of both courts where such findings
appears are attached to the reconstituted record, would not that be a sufficient compliance
with the law?
The fact that the finding of both courts as to the service of judgment upon the attorney for the
respondent was not on the main issue, for it is contended that it was just raised to strengthen
the main claim and issue that no notice of the date of trial had been served upon the
respondent or his counsel, such finding of fact does not lose its value and effectiveness,
taking into consideration that lack of notice of judgment might influence and lead the trial
court to believe and conclude that there was also no notice of hearing as claimed by the
respondent. Be it the main or just an incidental issue, the fact remains that the question of
service of judgment was raised, the issue joined, evidence in support of both claims
presented, and the respondent court and the court of Appeals passed upon it finding that a
notice of judgment had been served upon the attorney for the respondent. And, as already
stated, both judgments are part of the reconstituted record. To copy or type the dispositive
part of the decision in order to have copies thereof served upon the parties or their attorneys
and to make the date of receipt of such notice of judgment the beginning of the period within
which appeal may be taken would have the effect of reversing the final finding already made
by two courts that a notice of the judgment rendered in the case had already been served
upon the attorney for the respondent.
The claim that the parcels of land cannot be identified for lack of description, granting it to be
true, is no legal reason for refusing to issue the writ of execution upon a final and executory
judgment. Let the sheriff make the return thereon. If he cannot carry out the execution of the
part of the judgment for the reason pointed out, further proceedings may be had looking
toward the execution of the judgment. But the judgment not only holds that the petitioner is
entitled to one-half of the three parcels of land which his brother Anastacio had sold to the
respondent but also awards him damages in the sum of P1,425. The execution of this part of
the judgment does not need the description of the three parcels of land involved in the case.
Petition for the writ of mandamus is granted, with costs against the respondent Leodegario
Ronquillo.
Paras, C.J., Pablo, Bengzon, Tuason, Montemayor, Bautista Angelo and Labrador,
JJ., concur.
G.R. Nos. L-51612-13 July 22, 1986
GLOBAL INCORPORATED, petitioner,
vs.
HON. COMMISSIONERS DIEGO D. ATIENZA, GERONIMO Q. QUADRA and CLETO T.
VILLATUYA, and CLARITA ROSAL, respondents.
Federico V. Ganaden for private respondent.
PARAS, J.:
The instant petition for "Certiorari, mandamus with Preliminary Injunction and/or Restraining
Order", seeks a review of the Decision dated June 28, 1979 of the National labor Relations
Commission, which modified on appeal the decision of the Labor Arbiter Miguel P. Soriano,
Jr. in NLRC Case Nos. RB-IV-9962-77 and RB-IV-11544-77 entitled  "Clarita Rosal vs. Global
Incorporated"
From the records, what appear undisputed are the following:
Clarita Rosal, herein private respondent, commenced her employment with petitioner Global
Incorporated in February, 1970, as a "Sales Clerk" with a salary of P450.00 a month.
On November 11, 1976 Global Inc. filed with the Department of Labor, Regional Office No. 4,
an application for clearance to terminate the services of Clarita Rosal, for having violated
company rules and regulations by incurring repeated absences and tardiness. (Case No. T-
IV-11-7480-76) The subject employee was placed under preventive suspension on November
16, 1976 pending resolution of the application for clearance.
On December 3, 1976, Clarita Rosal filed her opposition to the clearance application as well
as a counter-complaint against Global Inc., for illegal dismissal, overtime pay and premium
pay. (Case No. RB-IV-9962-77)
On February 3, 1977, the officer-in-charge of Regional Office No. 4, Ministry of labor, Vicente
Leogardo, Jr. lifted the preventive suspension of Clarita Rosal, finding her suspension not
warranted, and reinstated her to her former position without loss of rights and with full
backwages from the time of preventive suspension up to the date of her actual reinstatement.
On the said issue of preventive suspension, the officer-in-charge opined.
. . . , it appears that the continued presence of the subject employee does not
pose a serious and imminent threat to the life or property of the employer or
co-employees. Her tardiness does not in any way pose serious threat to the
property of the employer. As sales clerk, she was required to prepare reports
and submit them before closing of office hours in the afternoon. Herein
complainant managed to comply with such requirement without prejudice to
company's interest.
Consequently, the hearings on the issue of termination and the counter-complaint for illegal
dismissal were consolidated and jointly held before Labor Arbiter Miguel P. Soriano, Jr.,
docketed respectively as NLRC Case Nos. RB-IV-9962-77 and RB-IV-1154-77.
On May 31, 1978, the Labor Arbiter rendered his decision, the dispositive portion of which
reads—
WHEREFORE, all things considered, this complaint for illegal dismissal,
overtime compensation and premium pay is hereby ordered DISMISSED for
lack of merit. Accordingly, the clearance for complainant's termination is
hereby GRANTED.
SO ORDERED.
Clarita Rosal appealed the aforesaid decision to the National Labor Relations Commission.
On June 28, 1979, respondents, Commissioners Diego Atienza and Geronimo Quadra
modified the appealed decision as follows:
WHEREFORE, responsive to the foregoing, the following dispositions are
made:
(a) respondent is ordered to pay complainant overtime pay at the rate of one
hour everyday starting Nov. 1, 1974 to Nov. 16, 1976 when she was
suspended;
(b) respondent is likewise ordered to pay complainant backwages from Dec.
2, 1976 to May 31, 1978;
(c) the decision of the Labor Arbiter granting clearance to terminate the
services of the complainant is affirmed.
Compliance with the above orders is strictly enjoined and the respondent-
appellee is further ordered to submit to the Commission proof of compliance
with this Decision after ten (10) days from receipt of the same.
SO ORDERED.
Respondent Commissioner Cleto T. Villatuya voted to affirm the Labor Arbiter's decision.
Hence, the instant petition praying that after hearing, judgment be rendered reversing or
declaring the assailed decision null and void and affirming in toto the decision of the Labor
Arbiter Miguel P. Soriano, Jr.; to order the private respondent Clarita Rosal to pay the
petitioner the sum of Two Thousand Pesos (P2,000), as and for attorney's fees and to pay
costs of suit; and that pending the adjudication of the case on the merits, a writ of preliminary
injunction or restraining order be issued against the respondents or their representatives
restraining them from executing or enforcing the assailed decision.
In the Resolution of this Court dated Oct. 17, 1979 respondents were required to file their
comment within ten (10) days from notice. In the same resolution, a temporary restraining
order was issued enjoining the respondents from enforcing and/or carrying out the assailed
decision.
In the subsequent Resolution dated March 21, 1980 this Court, acting on the Petition as well
as the respondents' Comments and petitioner's Reply to the said Comments resolved to give
due course to the petition and required the parties to file their respective memoranda, after
which the case was deemed submitted for decision.
Petitioner takes issue with the ruling of the National Labor Relations Commission granting
backwages and overtime pay in favor of private respondent Clarita Rosal. Thus, it argues ,
that if both the Labor Arbiter who tried the case and the National Labor Relations Commission
which reviewed the same, found the grounds of absenteeism and tardiness as valid and just
causes to terminate the employment of Clarita Rosal, the inevitable conclusion is that the
preventive suspension on the same grounds is likewise just and valid. If the suspension is
just and valid, she is not entitled to backwages. (Be it noted that under the Rules of the
Ministry, an employee placed unjustly under preventive suspension is entitled to be paid her
wages, even if she does not work during said period). On the issue of overtime pay, it is the
contention of petitioner that the grant of overtime pay in favor of Clarita Rosal at the rate of
one hour everyday starting Nov. 1, 1974 to Nov. 16, 1976 is not justified as there is nothing in
the record except her bare allegations which would show that she truly and actually rendered
said overtime work. Besides it is highly improbable, if not impossible for Clarita Rosal to have
rendered continuous overtime services from Nov. 1, 1974 to Nov. 16, 1976, or a period of two
(2) years including Sundays and holidays.
After a careful review of the evidence on record as well as the arguments of both parties, We
rule—
1. On the issue of overtime pay, We agree with the conclusion of the labor Arbiter that the
same should be denied for want of sufficient factual and legal basis. The evidence on record
shows that the office hours of the petitioner are from 8:00 in the morning to 5:00 in the
afternoon, with noon break from 12:00 noon to 1:00 p.m. from Monday thru Saturday. No
employee is authorized to work after office hours, during Sundays and Holidays unless
required by a written memorandum from the General Manager. During the period from Nov.
1, 1974 to Nov. 16, 1976, no employee of the company was never required to work after 5:00
in the afternoon. Neither did the company require any employee to work during Sundays or
Holidays except on Nov. 1, 1976, on which date respondent Clarita Rosal was requested to
work through a written memorandum signed by the General Manager. Respondent Rosal
admitted this, and that she was properly compensated for her work on said date (Exh. "10").
The claim of Clarita Rosal that she rendered overtime work from Nov. 1, 1974 to Nov. 16,
1976 has not been substantiated by adequate evidence. Her time records for said period
show that she had no time-in and time-out during Sundays and Holidays. Except for some
time records where there were no time-outs in the afternoon, Rosal's time records show that
she regularly left the office at or a few minutes after 5:00 o'clock in the afternoon. The records
where there were no time-outs in the afternoon were sufficiently explained by petitioner's
witness as due to a mechanical defect in the office bundy clock. The same omission of time-
outs was found in the records of the other employees, but only respondent complained.
2. On the issue of backwages, the National Labor Relation Commission ordered petitioner to
pay Clarita Rosal "backwages from Dec. 2, 1976 to May 31, 1978", the date when Asst.
Secretary Vicente Leogardo, Jr., rendered his decision lifting the preventive suspension of
Clarita Rosal and ordering petitioner to reinstate her to her former position without loss of
rights and with full backwages from the time of preventive suspension up to the date of her
actual reinstatement.
We agree. We note that this decision of the Labor Arbiter ordering reinstatement had not
been complied with. Neither was it appealed by petitioner, therefore, the decision had
become final and executory. To exempt petitioner from the payment of backwages would be
to give premium to the blant disregard of orders of the Ministry of Labor. Moreover, it would
be in consonance with compassionate justice that Clarita Rosal be paid backwages during
the period that she was supposed to be reinstated.
Note that the only ground for the imposition of preventive suspension is provided for under
Sec. 4, Rule XIV of the Implementing Regulations of the Ministry of Labor which reads-
SEC. 4. Preventive suspension. The employer may place the employee
concerned under preventive suspension only if the continued employment of
the employee poses a serious and imminent threat to the life or property of
the employer or of the co-employees. Any preventive suspension before the
filing of the application shall be considered worked days, and shall be duly
paid as such if the continued presence of the employee concerned does not
pose a serious threat to the life and property of the employer or of the co-
employees.
As aptly held by Asst. Secretary Leogardo Jr. (Officer-in-charge of Regional Office No. IV of
the Ministry of Labor), the continued presence of Clarita Rosal never posed a serious and
imminent threat to the life or property of the employer or co-employees as would warrant her
preventive suspension.
Accordingly, the assailed decision of the National Labor Relations Commissions is
MODIFIED as follows:
(a) the decision granting clearance to terminate the services of private respondent Clarita
Rosal is affirmed;
(b) petitioner is ordered to pay private respondent backwages from Dec. 2, 1976 to May 31,
1978;
(c) petitioner is ordered to pay costs of suit.
SO ORDERED.
G.R. No. 173648               January 16, 2012
ABDULJUAHID R. PIGCAULAN,* Petitioner,
vs.
SECURITY and CREDIT NVESTIGATION, INC. and/or RENE AMBY
REYES, Respondents.
DECISION
DEL CASTILLO, J.:
It is not for an employee to prove non-payment of benefits to which he is entitled by law.
Rather, it is on the employer that the burden of proving payment of these claims rests.
This Petition for Review on Certiorari1 assails the February 24, 2006 Decision2 of the Court of
Appeals (CA) in CA-G.R. SP No. 85515, which granted the petition for certiorari filed
therewith, set aside the March 23, 20043 and June 14, 20044 Resolutions of the National
Labor Relations Commission (NLRC), and dismissed the complaint filed by Oliver R. Canoy
(Canoy) and petitioner Abduljuahid R. Pigcaulan (Pigcaulan) against respondent Security and
Credit Investigation, Inc. (SCII) and its General Manager, respondent Rene Amby Reyes.
Likewise assailed is the June 28, 2006 Resolution5 denying Canoy’s and Pigcaulan’s Motion
for Reconsideration.6
Factual Antecedents
Canoy and Pigcaulan were both employed by SCII as security guards and were assigned to
SCII’s different clients. Subsequently, however, Canoy and Pigcaulan filed with the Labor
Arbiter separate complaints7 for underpayment of salaries and non-payment of overtime,
holiday, rest day, service incentive leave and 13th month pays. These complaints were later
on consolidated as they involved the same causes of action.
Canoy and Pigcaulan, in support of their claim, submitted their respective daily time records
reflecting the number of hours served and their wages for the same. They likewise presented
itemized lists of their claims for the corresponding periods served.
Respondents, however, maintained that Canoy and Pigcaulan were paid their just salaries
and other benefits under the law; that the salaries they received were above the statutory
minimum wage and the rates provided by the Philippine Association of Detective and
Protective Agency Operators (PADPAO) for security guards; that their holiday pay were
already included in the computation of their monthly salaries; that they were paid additional
premium of 30% in addition to their basic salary whenever they were required to work on
Sundays and 200% of their salary for work done on holidays; and, that Canoy and Pigcaulan
were paid the corresponding 13th month pay for the years 1998 and 1999. In support thereof,
copies of payroll listings8 and lists of employees who received their 13th month pay for the
periods December 1997 to November 1998 and December 1998 to November 19999 were
presented. In addition, respondents contended that Canoy’s and Pigcaulan’s monetary claims
should only be limited to the past three years of employment pursuant to the rule on
prescription of claims.
Ruling of the Labor Arbiter
Giving credence to the itemized computations and representative daily time records
submitted by Canoy and Pigcaulan, Labor Arbiter Manuel P. Asuncion awarded them their
monetary claims in his Decision10 dated June 6, 2002. The Labor Arbiter held that the payroll
listings presented by the respondents did not prove that Canoy and Pigcaulan were duly paid
as same were not signed by the latter or by any SCII officer. The 13th month payroll was,
however, acknowledged as sufficient proof of payment, for it bears Canoy’s and Pigcaulan’s
signatures. Thus, without indicating any detailed computation of the judgment award, the
Labor Arbiter ordered the payment of overtime pay, holiday pay, service incentive leave pay
and proportionate 13th month pay for the year 2000 in favor of Canoy and Pigcaulan, viz:
WHEREFORE, the respondents are hereby ordered to pay the complainants: 1) their salary
differentials in the amount of ₱166,849.60 for Oliver Canoy and ₱121,765.44 for Abduljuahid
Pigcaulan; 2) the sum of ₱3,075.20 for Canoy and ₱2,449.71 for Pigcaulan for service
incentive leave pay and; [3]) the sum of ₱1,481.85 for Canoy and ₱1,065.35 for Pigcaulan as
proportionate 13th month pay for the year 2000. The rest of the claims are dismissed for lack
of sufficient basis to make an award.
SO ORDERED.11
Ruling of the National Labor Relations Commission
Respondents appealed to the NLRC. They alleged that there was no basis
for the awards made because aside from the self-serving itemized computations, no
representative daily time record was presented by Canoy and Pigcaulan. On the contrary,
respondents asserted that the payroll listings they submitted should have been given more
probative value. To strengthen their cause, they attached to their Memorandum on Appeal
payrolls12 bearing the individual signatures of Canoy and Pigcaulan to show that the latter
have received their salaries, as well as copies of transmittal letters 13 to the bank to show that
the salaries reflected in the payrolls were directly deposited to the ATM accounts of SCII’s
employees.
The NLRC, however, in a Resolution14 dated March 23, 2004, dismissed the appeal and held
that the evidence show underpayment of salaries as well as non-payment of service incentive
leave benefit. Accordingly, the Labor Arbiter’s Decision was sustained. The motion for
reconsideration thereto was likewise dismissed by the NLRC in a Resolution 15 dated June 14,
2004.
Ruling of the Court of Appeals
In respondents’ petition for certiorari with prayer for the issuance of a temporary restraining
order and preliminary injunction16 before the CA, they attributed grave abuse of discretion on
the part of the NLRC in finding that Canoy and Pigcaulan are entitled to salary differentials,
service incentive leave pay and proportionate 13th month pay and in arriving at amounts
without providing sufficient bases therefor.
The CA, in its Decision17 dated February 24, 2006, set aside the rulings of
both the Labor Arbiter and the NLRC after noting that there were no factual and legal bases
mentioned in the questioned rulings to support the conclusions made. Consequently, it
dismissed all the monetary claims of Canoy and Pigcaulan on the following rationale:
First. The Labor Arbiter disregarded the NLRC rule that, in cases involving money awards
and at all events, as far as practicable, the decision shall embody the detailed and full amount
awarded.
Second.  The Labor Arbiter found that the payrolls submitted by SCII have no probative value
for being unsigned by Canoy, when, in fact, said payrolls, particularly the payrolls from 1998
to 1999 indicate the individual signatures of Canoy.
Third. The Labor Arbiter did not state in his decision the substance of the evidence adduced
by Pigcaulan and Canoy as well as the laws or jurisprudence that would show that the two
are indeed entitled to the salary differential and incentive leave pays.
Fourth. The Labor Arbiter held Reyes liable together with SCII for the payment of the claimed
salaries and benefits despite the absence of proof that Reyes deliberately or maliciously
designed to evade SCII’s alleged financial obligation; hence the Labor Arbiter ignored that
SCII has a corporate personality separate and distinct from Reyes. To justify solidary liability,
there must be an allegation and showing that the officers of the corporation deliberately or
maliciously designed to evade the financial obligation of the corporation.18
Canoy and Pigcaulan filed a Motion for Reconsideration, but same was denied by the CA in a
Resolution19 dated June 28, 2006.
Hence, the present Petition for Review on Certiorari.
Issues
The petition ascribes upon the CA the following errors:
I. The Honorable Court of Appeals erred when it dismissed the complaint on mere
alleged failure of the Labor Arbiter and the NLRC to observe the prescribed form of
decision, instead of remanding the case for reformation of the decision to include the
desired detailed computation.
II. The Honorable Court of Appeals erred when it [made] complainants suffer the
consequences of the alleged non-observance by the Labor Arbiter and NLRC of the
prescribed forms of decisions considering that they have complied with all needful
acts required to support their claims.
III. The Honorable Court of Appeals erred when it dismissed the complaint allegedly
due to absence of legal and factual [bases] despite attendance of substantial
evidence in the records.20
It is well to note that while the caption of the petition reflects both the names of Canoy and
Pigcaulan as petitioners, it appears from its body that it is being filed solely by Pigcaulan. In
fact, the Verification and Certification of Non-Forum Shopping was executed by Pigcaulan
alone.
In his Petition, Pigcaulan submits that the Labor Arbiter and the NLRC are not strictly bound
by the rules. And even so, the rules do not mandate that a detailed computation of how the
amount awarded was arrived at should be embodied in the decision. Instead, a statement of
the nature or a description of the amount awarded and the specific figure of the same will
suffice. Besides, his and Canoy’s claims were supported by substantial evidence in the form
of the handwritten detailed computations which the Labor Arbiter termed as "representative
daily time records," showing that they were not properly compensated for work rendered.
Thus, the CA should have remanded the case instead of outrightly dismissing it.
In their Comment,21 respondents point out that since it was only Pigcaulan who filed the
petition, the CA Decision has already become final and binding upon Canoy. As to
Pigcaulan’s arguments, respondents submit that they were able to present sufficient evidence
to prove payment of just salaries and benefits, which bits of evidence were unfortunately
ignored by the Labor Arbiter and the NLRC. Fittingly, the CA reconsidered these pieces of
evidence and properly appreciated them. Hence, it was correct in dismissing the claims for
failure of Canoy and Pigcaulan to discharge their burden to disprove payment.
Pigcaulan, this time joined by Canoy, asserts in his Reply 22 that his filing of the present
petition redounds likewise to Canoy’s benefit since their complaints were consolidated below.
As such, they maintain that any kind of disposition made in favor or against either of them
would inevitably apply to the other. Hence, the institution of the petition solely by Pigcaulan
does not render the assailed Decision final as to Canoy. Nonetheless, in said reply they
appended Canoy’s affidavit23 where he verified under oath the contents and allegations of the
petition filed by Pigcaulan and also attested to the authenticity of its annexes. Canoy,
however, failed to certify that he had not filed any action or claim in another court or tribunal
involving the same issues. He likewise explains in said affidavit that his absence during the
preparation and filing of the petition was caused by severe financial distress and his failure to
inform anyone of his whereabouts.
Our Ruling
The assailed CA Decision is considered final as to Canoy.
We have examined the petition and find that same was filed by Pigcaulan solely on his own
behalf. This is very clear from the petition’s prefatory which is phrased as follows:
COMES NOW Petitioner Abduljuahid R. Pigcaulan, by counsel, unto this Honorable Court
x x x. (Emphasis supplied.)
Also, under the heading "Parties", only Pigcaulan is mentioned as petitioner and consistent
with this, the body of the petition refers only to a "petitioner" and never in its plural form
"petitioners". Aside from the fact that the Verification and Certification of Non-Forum
Shopping attached to the petition was executed by Pigcaulan alone, it was plainly and
particularly indicated under the name of the lawyer who prepared the same, Atty. Josefel P.
Grageda, that he is the "Counsel for Petitioner Adbuljuahid Pigcaulan" only. In view of these,
there is therefore, no doubt, that the petition was brought only on behalf of Pigcaulan. Since
no appeal from the CA Decision was brought by Canoy, same has already become final and
executory as to him.
Canoy cannot now simply incorporate in his affidavit a verification of the contents and
allegations of the petition as he is not one of the petitioners therein. Suffice it to state that it
would have been different had the said petition been filed in behalf of both Canoy and
Pigcaulan. In such a case, subsequent submission of a verification may be allowed as non-
compliance therewith or a defect therein does not necessarily render the pleading, or the
petition as in this case, fatally defective.24 "The court may order its submission or correction,
or act on the pleading if the attending circumstances are such that strict compliance with the
Rule may be dispensed with in order that the ends of justice may be served thereby. Further,
a verification is deemed substantially complied with when one who has ample knowledge to
swear to the truth of the allegations in the complaint or petition signs the verification, and
when matters alleged in the petition have been made in good faith or are true and
correct."25 However, even if it were so, we note that Canoy still failed to submit or at least
incorporate in his affidavit a certificate of non-forum shopping.
The filing of a certificate of non-forum shopping is mandatory so much so that non-
compliance could only be tolerated by special circumstances and compelling reasons. 26 This
Court has held that when there are several petitioners, all of them must execute and sign the
certification against forum shopping; otherwise, those who did not sign will be dropped as
parties to the case.27 True, we held that in some cases, execution by only one of the
petitioners on behalf of the other petitioners constitutes substantial compliance with the rule
on the filing of a certificate of non-forum shopping on the ground of common interest or
common cause of action or defense.28 We, however, find that common interest is not present
in the instant petition. To recall, Canoy’s and Pigcaulan’s complaints were consolidated
because they both sought the same reliefs against the same respondents. This does not,
however, mean that they share a common interest or defense. The evidence required to
substantiate their claims may not be the same. A particular evidence which could sustain
Canoy’s action may not effectively serve as sufficient to support Pigcaulan’s claim.
Besides, assuming that the petition is also filed on his behalf, Canoy failed to show any
reasonable cause for his failure to join Pigcaulan to personally sign the Certification of Non-
Forum Shopping. It is his duty, as a litigant, to be prudent in pursuing his claims against SCII,
especially so, if he was indeed suffering from financial distress. However, Canoy failed to
advance any justifiable reason why he did not inform anyone of his whereabouts when he
knows that he has a pending case against his former employer. Sadly, his lack of prudence
and diligence cannot merit the court’s consideration or sympathy. It must be emphasized at
this point that procedural rules should not be ignored simply because their non-observance
may result in prejudice to a party’s substantial rights. The Rules of Court should be followed
except only for the most persuasive of reasons.29
Having declared the present petition as solely filed by Pigcaulan, this Court shall consider the
subsequent pleadings, although apparently filed under his and Canoy’s name, as solely filed
by the former.
There was no substantial evidence to support the grant of overtime pay.
The Labor Arbiter ordered reimbursement of overtime pay, holiday pay, service incentive
leave pay and 13th month pay for the year 2000 in favor of Canoy and Pigcaulan. The Labor
Arbiter relied heavily on the itemized computations they submitted which he considered as
representative daily time records to substantiate the award of salary differentials. The NLRC
then sustained the award on the ground that there was substantial evidence of underpayment
of salaries and benefits.
We find that both the Labor Arbiter and the NLRC erred in this regard. The handwritten
itemized computations are self-serving, unreliable and unsubstantial evidence to sustain the
grant of salary differentials, particularly overtime pay. Unsigned and unauthenticated as they
are, there is no way of verifying the truth of the handwritten entries stated therein. Written
only in pieces of paper and solely prepared by Canoy and Pigcaulan, these representative
daily time records, as termed by the Labor Arbiter, can hardly be considered as competent
evidence to be used as basis to prove that the two were underpaid of their salaries. We find
nothing in the records which could substantially support Pigcaulan’s contention that he had
rendered service beyond eight hours to entitle him to overtime pay and during Sundays to
entitle him to restday pay. Hence, in the absence of any concrete proof that additional service
beyond the normal working hours and days had indeed been rendered, we cannot affirm the
grant of overtime pay to Pigcaulan.
Pigcaulan is entitled to holiday pay, service incentive leave pay and proportionate 13th month
pay for year 2000.
However, with respect to the award for holiday pay, service incentive leave
pay and 13th month pay, we affirm and rule that Pigcaulan is entitled to these benefits.
Article 94 of the Labor Code provides that:
ART. 94. RIGHT TO HOLIDAY PAY. – (a) Every worker shall be paid his regular daily wage
during regular holidays, except in retail and service establishments regularly employing less
than ten (10) workers;
xxxx
While Article 95 of the Labor Code provides:
ART. 95. RIGHT TO SERVICE INCENTIVE LEAVE.  –  (a) Every employee who has rendered
at least one year of service shall be entitled to a yearly service incentive of five days with pay.
only demand the amounts due him for the period within three years preceding the filing of the
complaint in 2000. Furthermore, since the records are insufficient to use as bases to properly
compute Pigcaulan’s claims, the case should be remanded to the Labor Arbiter for a detailed
computation of the monetary benefits due to him.
WHEREFORE, the petition is GRANTED. The Decision dated February 24, 2006 and
Resolution dated June 28, 2006 of the Court of Appeals in CA-G.R. SP No. 85515
are REVERSED and SET ASIDE. Petitioner Abduljuahid R. Pigcaulan is hereby declared
entitled to holiday pay and service incentive leave pay for the years 1997-2000 and
proportionate 13th month pay for the year 2000.

The case is REMANDED to the Labor Arbiter for further proceedings to determine the exact
xxxx
amount and to make a detailed computation of the monetary benefits due Abduljuahid R.
Pigcaulan which Security and Credit Investigation Inc. should pay without delay.
Under the Labor Code, Pigcaulan is entitled to his regular rate on holidays even if he does
not work.30 Likewise, express provision of the law entitles him to service incentive leave
SO ORDERED.
benefit for he rendered service for more than a year already. Furthermore, under Presidential
Decree No. 851,31 he should be paid his 13th month pay. As employer, SCII has the burden of
proving that it has paid these benefits to its employees.32 G.R. No. 167614               March 24, 2009

SCII presented payroll listings and transmittal letters to the bank to show that Canoy and ANTONIO M. SERRANO, Petitioner,
Pigcaulan received their salaries as well as benefits which it claimed are already integrated in vs.
the employees’ monthly salaries. However, the documents presented do not prove SCII’s Gallant MARITIME SERVICES, INC. and MARLOW NAVIGATION CO., INC., Respondents.
allegation. SCII failed to show any other concrete proof by means of records, pertinent files or
similar documents reflecting that the specific claims have been paid. With respect to 13th DECISION
month pay, SCII presented proof that this benefit was paid but only for the years 1998 and
1999. To repeat, the burden of proving payment of these monetary claims rests on SCII, AUSTRIA-MARTINEZ, J.:
being the employer. It is a rule that one who pleads payment has the burden of proving it.
"Even when the plaintiff alleges non-payment, still the general rule is that the burden rests on For decades, the toil of solitary migrants has helped lift entire families and communities out of
the defendant to prove payment, rather than on the plaintiff to prove non-payment." 33 Since poverty. Their earnings have built houses, provided health care, equipped schools and
SCII failed to provide convincing proof that it has already settled the claims, Pigcaulan should planted the seeds of businesses. They have woven together the world by transmitting ideas
be paid his holiday pay, service incentive leave benefits and proportionate 13th month pay for and knowledge from country to country. They have provided the dynamic human link between
the year 2000. cultures, societies and economies. Yet, only recently have we begun to understand not only
how much international migration impacts development, but how smart public policies can
The CA erred in dismissing the claims instead of remanding the case to the Labor Arbiter for magnify this effect.
a detailed computation of the judgment award.
United Nations Secretary-General Ban Ki-Moon
Indeed, the Labor Arbiter failed to provide sufficient basis for the monetary awards Global Forum on Migration and Development
granted.lawphi1 Such failure, however, should not result in prejudice to the substantial rights Brussels, July 10, 20071
of the party.1avvphi1 While we disallow the grant of overtime pay and restday pay in favor of
Pigcaulan, he is nevertheless entitled, as a matter of right, to his holiday pay, service For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5th paragraph of
incentive leave pay and 13th month pay for year 2000. Hence, the CA is not correct in Section 10, Republic Act (R.A.) No. 8042,2 to wit:
dismissing Pigcaulan’s claims in its entirety.
Sec. 10. Money Claims. - x x x In case of termination of overseas employment without just,
Consistent with the rule that all money claims arising from an employer-employee relationship valid or authorized cause as defined by law or contract, the workers shall be entitled to the full
shall be filed within three years from the time the cause of action accrued, 34 Pigcaulan can
reimbursement of his placement fee with interest of twelve percent (12%) per annum, plus his (2) months and seven (7) days of his contract, leaving an unexpired portion of nine (9)
salaries for the unexpired portion of his employment contract or for three (3) months for months and twenty-three (23) days.
every year of the unexpired term, whichever is less.
Petitioner filed with the Labor Arbiter (LA) a Complaint 9 against respondents for constructive
x x x x (Emphasis and underscoring supplied) dismissal and for payment of his money claims in the total amount of US$26,442.73, broken
down as follows:
does not magnify the contributions of overseas Filipino workers (OFWs) to national
development, but exacerbates the hardships borne by them by unduly limiting their May 27/31, 1998 (5 days) incl. Leave pay US$ 413.90
entitlement in case of illegal dismissal to their lump-sum salary either for the unexpired
portion of their employment contract "or for three months for every year of the unexpired term, June 01/30, 1998 2,590.00
whichever is less" (subject clause). Petitioner claims that the last clause violates the OFWs'
constitutional rights in that it impairs the terms of their contract, deprives them of equal July 01/31, 1998 2,590.00
protection and denies them due process. August 01/31, 1998 2,590.00

By way of Petition for Review under Rule 45 of the Rules of Court, petitioner assails the Sept. 01/30, 1998 2,590.00
December 8, 2004 Decision3 and April 1, 2005 Resolution4 of the Court of Appeals (CA), Oct. 01/31, 1998 2,590.00
which applied the subject clause, entreating this Court to declare the subject clause
unconstitutional. Nov. 01/30, 1998 2,590.00
Dec. 01/31, 1998 2,590.00
Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd.
(respondents) under a Philippine Overseas Employment Administration (POEA)-approved Jan. 01/31, 1999 2,590.00
Contract of Employment with the following terms and conditions:
Feb. 01/28, 1999 2,590.00

Duration of contract 12 months Mar. 1/19, 1999 (19 days) incl. leave pay 1,640.00

Position Chief Officer   ----------------------------

----------------------------
Basic monthly salary US$1,400.00 ------------------------
Hours of work 48.0 hours per week   25,382.23
Overtime US$700.00 per month Amount adjusted to chief mate's salary  
5
Vacation leave with pay 7.00 days per month (March 19/31, 1998 to April 1/30, 1998) + 1,060.5010
  ----------------------------
On March 19, 1998, the date of his departure, petitioner was constrained to accept a ----------------------------
downgraded employment contract for the position of Second Officer with a monthly salary of ----------------------------
US$1,000.00, upon the assurance and representation of respondents that he would be made ----------
Chief Officer by the end of April 1998.6
TOTAL CLAIM US$ 26,442.7311
7
Respondents did not deliver on their promise to make petitioner Chief Officer.  Hence,
petitioner refused to stay on as Second Officer and was repatriated to the Philippines on May as well as moral and exemplary damages and attorney's fees.
26, 1998.8
The LA rendered a Decision dated July 15, 1999, declaring the dismissal of petitioner
Petitioner's employment contract was for a period of 12 months or from March 19, 1998 up to illegal and awarding him monetary benefits, to wit:
March 19, 1999, but at the time of his repatriation on May 26, 1998, he had served only two
WHEREFORE, premises considered, judgment is hereby rendered declaring that the
dismissal of the complainant (petitioner) by the respondents in the above-entitled
case was illegal and the respondents are hereby ordered to pay the complainant
[petitioner], jointly and severally, in Philippine Currency, based on the rate of
exchange prevailing at the time of payment, the amount of EIGHT THOUSAND
SEVEN HUNDRED SEVENTY U.S. DOLLARS (US $8,770.00), representing the
complainant’s salary for three (3) months of the unexpired portion of the
aforesaid contract of employment.1avvphi1
The respondents are likewise ordered to pay the complainant [petitioner], jointly and
severally, in Philippine Currency, based on the rate of exchange prevailing at the time
of payment, the amount of FORTY FIVE U.S. DOLLARS (US$ 45.00),12 representing
the complainant’s claim for a salary differential. In addition, the respondents are
hereby ordered to pay the complainant, jointly and severally, in Philippine Currency,
at the exchange rate prevailing at the time of payment, the complainant’s
(petitioner's) claim for attorney’s fees equivalent to ten percent (10%) of the total
amount awarded to the aforesaid employee under this Decision.
The claims of the complainant for moral and exemplary damages are hereby
DISMISSED for lack of merit.
All other claims are hereby DISMISSED.
SO ORDERED.13 (Emphasis supplied)
In awarding petitioner a lump-sum salary of US$8,770.00, the LA based his
computation on the salary period of three months only -- rather than the entire
unexpired portion of nine months and 23 days of petitioner's employment contract -
applying the subject clause. However, the LA applied the salary rate of US$2,590.00,
consisting of petitioner's "[b]asic salary, US$1,400.00/month + US$700.00/month,
fixed overtime pay, + US$490.00/month, vacation leave pay = 2003 which granted the petition for certiorari, docketed as G.R. No. 151833, filed by
US$2,590.00/compensation per month."14
Respondents appealed15 to the National Labor Relations Commission (NLRC) to
question the finding of the LA that petitioner was illegally dismissed.
Petitioner also appealed16 to the NLRC on the sole issue that the LA erred in not
applying the ruling of the Court in  Triple Integrated Services, Inc. v. National Labor
Relations Commission17 that in case of illegal dismissal, OFWs are entitled to their
salaries for the unexpired portion of their contracts.18
In a Decision dated June 15, 2000, the NLRC modified the LA Decision, to wit:
WHEREFORE, the Decision dated 15 July 1999 is MODIFIED. Respondents are
hereby ordered to pay complainant, jointly and severally, in Philippine currency, at
the prevailing rate of exchange at the time of payment the following:
1. Three (3) months salary
$1,400 x 3 US$4,200.00
2. Salary differential 45.00
US$4,245.00
3. 10% Attorney’s fees 424.50
TOTAL US$4,669.50
The other findings are affirmed.
SO ORDERED.19
The NLRC corrected the LA's computation of the lump-sum salary awarded to petitioner by
reducing the applicable salary rate from US$2,590.00 to US$1,400.00 because R.A. No.
8042 "does not provide for the award of overtime pay, which should be proven to have been
actually performed, and for vacation leave pay."20
Petitioner filed a Motion for Partial Reconsideration, but this time he questioned the
constitutionality of the subject clause.21 The NLRC denied the motion.22
Petitioner filed a Petition for Certiorari23 with the CA, reiterating the constitutional challenge
against the subject clause.24 After initially dismissing the petition on a technicality, the CA
eventually gave due course to it, as directed by this Court in its Resolution dated August 7,
petitioner.
In a Decision dated December 8, 2004, the CA affirmed the NLRC ruling on the reduction of
the applicable salary rate; however, the CA skirted the constitutional issue raised by
petitioner.25
His Motion for Reconsideration26 having been denied by the CA,27 petitioner brings his cause
to this Court on the following grounds:
I
The Court of Appeals and the labor tribunals have decided the case in a way not in accord
with applicable decision of the Supreme Court involving similar issue of granting unto the
migrant worker back wages equal to the unexpired portion of his contract of employment
instead of limiting it to three (3) months
II
In the alternative that the Court of Appeals and the Labor Tribunals were merely applying
their interpretation of Section 10 of Republic Act No. 8042, it is submitted that the Court of
Appeals gravely erred in law when it failed to discharge its judicial duty to decide questions of
substance not theretofore determined by the Honorable Supreme Court, particularly, the
constitutional issues raised by the petitioner on the constitutionality of said law, which
unreasonably, unfairly and arbitrarily limits payment of the award for back wages of overseas
workers to three (3) months.
III
Even without considering the constitutional limitations [of] Sec. 10 of Republic Act No. 8042,
the Court of Appeals gravely erred in law in excluding from petitioner’s award the overtime
pay and vacation pay provided in his contract since under the contract they form part of his
salary.28
On February 26, 2008, petitioner wrote the Court to withdraw his petition as he is already old
and sickly, and he intends to make use of the monetary award for his medical treatment and
medication.29 Required to comment, counsel for petitioner filed a motion, urging the court to
allow partial execution of the undisputed monetary award and, at the same time, praying that
the constitutional question be resolved.30
Considering that the parties have filed their respective memoranda, the Court now takes up
the full merit of the petition mindful of the extreme importance of the constitutional question
raised therein.
On the first and second issues
The unanimous finding of the LA, NLRC and CA that the dismissal of petitioner was illegal is
not disputed. Likewise not disputed is the salary differential of US$45.00 awarded to
petitioner in all three fora. What remains disputed is only the computation of the lump-sum
salary to be awarded to petitioner by reason of his illegal dismissal.
Applying the subject clause, the NLRC and the CA computed the lump-sum salary of
petitioner at the monthly rate of US$1,400.00 covering the period of three months out of the
unexpired portion of nine months and 23 days of his employment contract or a total of
US$4,200.00.
Impugning the constitutionality of the subject clause, petitioner contends that, in addition to
the US$4,200.00 awarded by the NLRC and the CA, he is entitled to US$21,182.23 more or a
total of US$25,382.23, equivalent to his salaries for the entire nine months and 23 days left of
his employment contract, computed at the monthly rate of US$2,590.00.31
The Arguments of Petitioner
Petitioner contends that the subject clause is unconstitutional because it unduly impairs the
freedom of OFWs to negotiate for and stipulate in their overseas employment contracts a
determinate employment period and a fixed salary package.32 It also impinges on the equal
protection clause, for it treats OFWs differently from local Filipino workers (local workers) by
putting a cap on the amount of lump-sum salary to which OFWs are entitled in case of illegal
dismissal, while setting no limit to the same monetary award for local workers when their
dismissal is declared illegal; that the disparate treatment is not reasonable as there is no
substantial distinction between the two groups;33 and that it defeats Section 18,34 Article II of
the Constitution which guarantees the protection of the rights and welfare of all Filipino
workers, whether deployed locally or overseas.35
Moreover, petitioner argues that the decisions of the CA and the labor tribunals are not in line
with existing jurisprudence on the issue of money claims of illegally dismissed OFWs. Though
there are conflicting rulings on this, petitioner urges the Court to sort them out for the
guidance of affected OFWs.36
Petitioner further underscores that the insertion of the subject clause into R.A. No. 8042
serves no other purpose but to benefit local placement agencies. He marks the statement
made by the Solicitor General in his Memorandum, viz.:
Often, placement agencies, their liability being solidary, shoulder the payment of money
claims in the event that jurisdiction over the foreign employer is not acquired by the court or if
the foreign employer reneges on its obligation. Hence, placement agencies that are in good
faith and which fulfill their obligations are unnecessarily penalized for the acts of the foreign
employer. To protect them and to promote their continued helpful contribution in deploying
Filipino migrant workers, liability for money claims was reduced under Section 10 of R.A. No.
8042. 37 (Emphasis supplied)
Petitioner argues that in mitigating the solidary liability of placement agencies, the subject
clause sacrifices the well-being of OFWs. Not only that, the provision makes foreign
employers better off than local employers because in cases involving the illegal dismissal of
employees, foreign employers are liable for salaries covering a maximum of only three
months of the unexpired employment contract while local employers are liable for the full
lump-sum salaries of their employees. As petitioner puts it:
In terms of practical application, the local employers are not limited to the amount of
backwages they have to give their employees they have illegally dismissed, following well-
entrenched and unequivocal jurisprudence on the matter. On the other hand, foreign
employers will only be limited to giving the illegally dismissed migrant workers the maximum
of three (3) months unpaid salaries notwithstanding the unexpired term of the contract that
can be more than three (3) months.38
Lastly, petitioner claims that the subject clause violates the due process clause, for it deprives
him of the salaries and other emoluments he is entitled to under his fixed-period employment
contract.39
The Arguments of Respondents
In their Comment and Memorandum, respondents contend that the constitutional issue
should not be entertained, for this was belatedly interposed by petitioner in his appeal before
the CA, and not at the earliest opportunity, which was when he filed an appeal before the
NLRC.40
The Arguments of the Solicitor General
The Solicitor General (OSG)41 points out that as R.A. No. 8042 took effect on July 15, 1995,
its provisions could not have impaired petitioner's 1998 employment contract. Rather, R.A.
No. 8042 having preceded petitioner's contract, the provisions thereof are deemed part of the
minimum terms of petitioner's employment, especially on the matter of money claims, as this
was not stipulated upon by the parties.42
Moreover, the OSG emphasizes that OFWs and local workers differ in terms of the nature of
their employment, such that their rights to monetary benefits must necessarily be treated
differently. The OSG enumerates the essential elements that distinguish OFWs from local
workers: first, while local workers perform their jobs within Philippine territory, OFWs perform
their jobs for foreign employers, over whom it is difficult for our courts to acquire jurisdiction,
or against whom it is almost impossible to enforce judgment; and second, as held in Coyoca
v. National Labor Relations Commission43 and Millares v. National Labor Relations
Commission,44 OFWs are contractual employees who can never acquire regular employment
status, unlike local workers who are or can become regular employees. Hence, the OSG
posits that there are rights and privileges exclusive to local workers, but not available to
OFWs; that these peculiarities make for a reasonable and valid basis for the differentiated
treatment under the subject clause of the money claims of OFWs who are illegally dismissed.
Thus, the provision does not violate the equal protection clause nor Section 18, Article II of
the Constitution.45
Lastly, the OSG defends the rationale behind the subject clause as a police power measure
adopted to mitigate the solidary liability of placement agencies for this "redounds to the
benefit of the migrant workers whose welfare the government seeks to promote. The survival
of legitimate placement agencies helps [assure] the government that migrant workers are
properly deployed and are employed under decent and humane conditions."46
The Court's Ruling
The Court sustains petitioner on the first and second issues.
When the Court is called upon to exercise its power of judicial review of the acts of its co-
equals, such as the Congress, it does so only when these conditions obtain: (1) that there is
an actual case or controversy involving a conflict of rights susceptible of judicial
determination;47 (2) that the constitutional question is raised by a proper party 48 and at the
earliest opportunity;49 and (3) that the constitutional question is the very lis mota of the
case,50 otherwise the Court will dismiss the case or decide the same on some other ground.51
Without a doubt, there exists in this case an actual controversy directly involving petitioner
who is personally aggrieved that the labor tribunals and the CA computed his monetary
award based on the salary period of three months only as provided under the subject clause.
The constitutional challenge is also timely. It should be borne in mind that the requirement
that a constitutional issue be raised at the earliest opportunity entails the interposition of the
issue in the pleadings before a competent court, such that, if the issue is not raised in the
pleadings before that competent court, it cannot be considered at the trial and, if not
considered in the trial, it cannot be considered on appeal.52 Records disclose that the issue
on the constitutionality of the subject clause was first raised, not in petitioner's appeal with the
NLRC, but in his Motion for Partial Reconsideration with said labor tribunal, 53 and reiterated in
his Petition for Certiorari before the CA.54 Nonetheless, the issue is deemed seasonably
raised because it is not the NLRC but the CA which has the competence to resolve the
constitutional issue. The NLRC is a labor tribunal that merely performs a quasi-judicial
function – its function in the present case is limited to determining questions of fact to which
the legislative policy of R.A. No. 8042 is to be applied and to resolving such questions in
accordance with the standards laid down by the law itself;55 thus, its foremost function is to
administer and enforce R.A. No. 8042, and not to inquire into the validity of its provisions. The
CA, on the other hand, is vested with the power of judicial review or the power to declare
unconstitutional a law or a provision thereof, such as the subject clause.56 Petitioner's
interposition of the constitutional issue before the CA was undoubtedly seasonable. The CA
was therefore remiss in failing to take up the issue in its decision.
The third condition that the constitutional issue be critical to the resolution of the case likewise
obtains because the monetary claim of petitioner to his lump-sum salary for the entire
unexpired portion of his 12-month employment contract, and not just for a period of three
months, strikes at the very core of the subject clause.
Thus, the stage is all set for the determination of the constitutionality of the subject clause.
Does the subject clause violate Section 10,
Article III of the Constitution on non-impairment
of contracts?
The answer is in the negative.
Petitioner's claim that the subject clause unduly interferes with the stipulations in his contract Section 18,63 Article II and Section 3,64 Article XIII accord all members of the labor sector,
on the term of his employment and the fixed salary package he will receive57 is not tenable. without distinction as to place of deployment, full protection of their rights and welfare.

Section 10, Article III of the Constitution provides: To Filipino workers, the rights guaranteed under the foregoing constitutional provisions
translate to economic security and parity: all monetary benefits should be equally enjoyed by
No law impairing the obligation of contracts shall be passed. workers of similar category, while all monetary obligations should be borne by them in equal
degree; none should be denied the protection of the laws which is enjoyed by, or spared the
burden imposed on, others in like circumstances.65
The prohibition is aligned with the general principle that laws newly enacted have only a
prospective operation,58 and cannot affect acts or contracts already perfected; 59 however, as
to laws already in existence, their provisions are read into contracts and deemed a part Such rights are not absolute but subject to the inherent power of Congress to incorporate,
thereof.60 Thus, the non-impairment clause under Section 10, Article II is limited in application when it sees fit, a system of classification into its legislation; however, to be valid, the
to laws about to be enacted that would in any way derogate from existing acts or contracts by classification must comply with these requirements: 1) it is based on substantial distinctions;
enlarging, abridging or in any manner changing the intention of the parties thereto. 2) it is germane to the purposes of the law; 3) it is not limited to existing conditions only; and
4) it applies equally to all members of the class.66
As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded the
execution of the employment contract between petitioner and respondents in 1998. Hence, it There are three levels of scrutiny at which the Court reviews the constitutionality of a
cannot be argued that R.A. No. 8042, particularly the subject clause, impaired the classification embodied in a law: a) the deferential or rational basis scrutiny in which the
employment contract of the parties. Rather, when the parties executed their 1998 challenged classification needs only be shown to be rationally related to serving a legitimate
employment contract, they were deemed to have incorporated into it all the provisions of R.A. state interest;67 b) the middle-tier or intermediate scrutiny in which the government must show
No. 8042. that the challenged classification serves an important state interest and that the classification
is at least substantially related to serving that interest;68 and c) strict judicial scrutiny69 in which
a legislative classification which impermissibly interferes with the exercise of a fundamental
But even if the Court were to disregard the timeline, the subject clause may not be declared
right70 or operates to the peculiar disadvantage of a suspect class 71 is presumed
unconstitutional on the ground that it impinges on the impairment clause, for the law was
unconstitutional, and the burden is upon the government to prove that the classification is
enacted in the exercise of the police power of the State to regulate a business, profession or
necessary to achieve a compelling state interest and that it is the least restrictive
calling, particularly the recruitment and deployment of OFWs, with the noble end in view of
means to protect such interest.72
ensuring respect for the dignity and well-being of OFWs wherever they may be
employed.61 Police power legislations adopted by the State to promote the health, morals,
peace, education, good order, safety, and general welfare of the people are generally Under American jurisprudence, strict judicial scrutiny is triggered by suspect
applicable not only to future contracts but even to those already in existence, for all private classifications73 based on race74 or gender75 but not when the classification is drawn along
contracts must yield to the superior and legitimate measures taken by the State to promote income categories.76
public welfare.62
It is different in the Philippine setting. In Central Bank (now Bangko Sentral ng Pilipinas)
Does the subject clause violate Section 1, Employee Association, Inc. v. Bangko Sentral ng Pilipinas,77 the constitutionality of a
Article III of the Constitution, and Section 18, provision in the charter of the Bangko Sentral ng Pilipinas (BSP), a government financial
Article II and Section 3, Article XIII on labor institution (GFI), was challenged for maintaining its rank-and-file employees under the Salary
as a protected sector? Standardization Law (SSL), even when the rank-and-file employees of other GFIs had been
exempted from the SSL by their respective charters. Finding that the disputed provision
contained a suspect classification based on salary grade, the Court deliberately employed the
The answer is in the affirmative.
standard of strict judicial scrutiny in its review of the constitutionality of said provision. More
significantly, it was in this case that the Court revealed the broad outlines of its judicial
Section 1, Article III of the Constitution guarantees: philosophy, to wit:

No person shall be deprived of life, liberty, or property without due process of law nor shall Congress retains its wide discretion in providing for a valid classification, and its policies
any person be denied the equal protection of the law. should be accorded recognition and respect by the courts of justice except when they run
afoul of the Constitution. The deference stops where the classification violates a fundamental
right, or prejudices persons accorded special protection by the Constitution. When
these violations arise, this Court must discharge its primary role as the vanguard of
constitutional guaranties, and require a stricter and more exacting adherence to constitutional
limitations. Rational basis should not suffice.
Admittedly, the view that prejudice to persons accorded special protection by the Constitution
requires a stricter judicial scrutiny finds no support in American or English jurisprudence.
Nevertheless, these foreign decisions and authorities are not per se controlling in this
jurisdiction. At best, they are persuasive and have been used to support many of our
decisions. We should not place undue and fawning reliance upon them and regard them as
indispensable mental crutches without which we cannot come to our own decisions through
the employment of our own endowments. We live in a different ambience and must decide
our own problems in the light of our own interests and needs, and of our qualities and even
idiosyncrasies as a people, and always with our own concept of law and justice. Our laws
must be construed in accordance with the intention of our own lawmakers and such intent
may be deduced from the language of each law and the context of other local legislation
related thereto. More importantly, they must be construed to serve our own public interest
which is the be-all and the end-all of all our laws. And it need not be stressed that our public
interest is distinct and different from others.
xxxx
Further, the quest for a better and more "equal" world calls for the use of equal protection as
a tool of effective judicial intervention.
Equality is one ideal which cries out for bold attention and action in the Constitution. The
Preamble proclaims "equality" as an ideal precisely in protest against crushing inequities in
Philippine society. The command to promote social justice in Article II, Section 10, in "all
phases of national development," further explicitated in Article XIII, are clear commands to
the State to take affirmative action in the direction of greater equality. x x x [T]here is thus in
the Philippine Constitution no lack of doctrinal support for a more vigorous state effort
towards achieving a reasonable measure of equality.
Our present Constitution has gone further in guaranteeing vital social and economic rights to
marginalized groups of society, including labor. Under the policy of social justice, the law
bends over backward to accommodate the interests of the working class on the humane
justification that those with less privilege in life should have more in law. And the obligation to
afford protection to labor is incumbent not only on the legislative and executive branches but
also on the judiciary to translate this pledge into a living reality. Social justice calls for the
humanization of laws and the equalization of social and economic forces by the State so that
justice in its rational and objectively secular conception may at least be approximated.
xxxx
Under most circumstances, the Court will exercise judicial restraint in deciding questions of
constitutionality, recognizing the broad discretion given to Congress in exercising its
legislative power. Judicial scrutiny would be based on the "rational basis" test, and the
legislative discretion would be given deferential treatment.
But if the challenge to the statute is premised on the denial of a fundamental right, or the
perpetuation of prejudice against persons favored by the Constitution with special
protection, judicial scrutiny ought to be more strict. A weak and watered down view
would call for the abdication of this Court’s solemn duty to strike down any law repugnant to
the Constitution and the rights it enshrines. This is true whether the actor committing the
unconstitutional act is a private person or the government itself or one of its instrumentalities.
Oppressive acts will be struck down regardless of the character or nature of the actor.
xxxx
In the case at bar, the challenged proviso operates on the basis of the salary grade or officer-
employee status. It is akin to a distinction based on economic class and status, with the
higher grades as recipients of a benefit specifically withheld from the lower grades. Officers of
the BSP now receive higher compensation packages that are competitive with the industry,
while the poorer, low-salaried employees are limited to the rates prescribed by the SSL. The
implications are quite disturbing: BSP rank-and-file employees are paid the strictly
regimented rates of the SSL while employees higher in rank - possessing higher and better
education and opportunities for career advancement - are given higher compensation
packages to entice them to stay. Considering that majority, if not all, the rank-and-file
employees consist of people whose status and rank in life are less and limited, especially in
terms of job marketability, it is they - and not the officers - who have the real economic and
financial need for the adjustment . This is in accord with the policy of the Constitution "to free
the people from poverty, provide adequate social services, extend to them a decent standard
of living, and improve the quality of life for all." Any act of Congress that runs counter to this
constitutional desideratum deserves strict scrutiny by this Court before it can pass muster.
(Emphasis supplied)
Imbued with the same sense of "obligation to afford protection to labor," the Court in the
present case also employs the standard of strict judicial scrutiny, for it perceives in the
subject clause a suspect classification prejudicial to OFWs.
Upon cursory reading, the subject clause appears facially neutral, for it applies to all OFWs.
However, a closer examination reveals that the subject clause has a discriminatory intent
against, and an invidious impact on, OFWs at two levels:
First, OFWs with employment contracts of less than one year vis-à-vis OFWs with
employment contracts of one year or more;
Second, among OFWs with employment contracts of more than one year; and
 Third, OFWs vis-à-vis local workers with fixed-period employment;
OFWs with employment contracts of less than one year vis-à-vis OFWs with
employment contracts of one year or more
As pointed out by petitioner,78 it was in Marsaman Manning Agency, Inc. v. National Labor
Relations Commission79 (Second Division, 1999) that the Court laid down the following rules
on the application of the periods prescribed under Section 10(5) of R.A. No. 804, to wit:
Another was Triple-Eight Integrated Services, Inc. v. National Labor Relations
Commission  (Third Division, December 1998),83 which involved an OFW (therein respondent
Erlinda Osdana) who was originally granted a 12-month contract, which was
deemed renewed for another 12 months. After serving for one year and seven-and-a-half
months, respondent Osdana was illegally dismissed, and the Court awarded her salaries for
the entire unexpired portion of four and one-half months of her contract.
The Marsaman  interpretation of Section 10(5) has since been adopted in the following cases:

A plain reading of Sec. 10 clearly reveals that the choice of which amount to award an Case Title Contract Period of Unexpired Period Period Applied in
illegally dismissed overseas contract worker, i.e., whether his salaries for the Period Service the Computation of
unexpired portion of his employment contract or three (3) months’ salary for every the Monetary
year of the unexpired term, whichever is less, comes into play only when the Award
employment contract concerned has a term of at least one (1) year or more. This is
evident from the words "for every year of the unexpired term" which follows the words Skippers v. 6 months 2 months 4 months 4 months
"salaries x x x for three months." To follow petitioners’ thinking that private respondent is Maguad84
entitled to three (3) months salary only simply because it is the lesser amount is to completely
disregard and overlook some words used in the statute while giving effect to some. This is Bahia Shipping 9 months 8 months 4 months 4 months
contrary to the well-established rule in legal hermeneutics that in interpreting a statute, care v. Reynaldo
should be taken that every part or word thereof be given effect since the law-making body is Chua 85
presumed to know the meaning of the words employed in the statue and to have used them
advisedly. Ut res magis valeat quam pereat.80 (Emphasis supplied) Centennial 9 months 4 months 5 months 5 months
Transmarine v.
dela Cruz l86
In Marsaman, the OFW involved was illegally dismissed two months into his 10-month
contract, but was awarded his salaries for the remaining 8 months and 6 days of his contract. Talidano v. 12 months 3 months 9 months 3 months
Falcon87
Prior to Marsaman, however, there were two cases in which the Court made conflicting
rulings on Section 10(5). One was Asian Center for Career and Employment System and Univan v. CA 88 12 months 3 months 9 months 3 months
Services v. National Labor Relations Commission (Second Division, October 1998),81 which
Oriental v. CA 89 12 months more than 2 10 months 3 months
involved an OFW who was awarded a two-year employment contract, but was dismissed
months
after working for one year and two months. The LA declared his dismissal illegal and awarded
him SR13,600.00 as lump-sum salary covering eight months, the unexpired portion of his PCL v. NLRC90 12 months more than 2 more or less 9 3 months
contract. On appeal, the Court reduced the award to SR3,600.00 equivalent to his three months months
months’ salary, this being the lesser value, to wit:
Olarte v. 12 months 21 days 11 months and 9 3 months
Under Section 10 of R.A. No. 8042, a worker dismissed from overseas employment without Nayona91 days
just, valid or authorized cause is entitled to his salary for the unexpired portion of his
employment contract or for three (3) months for every year of the unexpired term, whichever JSS v.Ferrer92 12 months 16 days 11 months and 24 3 months
is less. days

Pentagon v. 12 months 9 months and 2 months and 23 2 months and 23

In the case at bar, the unexpired portion of private respondent’s employment contract is eight Adelantar93 7 days days days
(8) months. Private respondent should therefore be paid his basic salary corresponding to
three (3) months or a total of SR3,600.82 Phil. Employ v. 12 months 10 months 2 months Unexpired portion
Paramio, et al.94
 Flourish 2 years 26 days 23 months and 4 6 months or 3 al.98
Maritime v. days months for each
Almanzor 95 year of contract Phil. Integrated 2 years 7 days 23 months and 23 months and 23 days
v. NLRC99 23 days
Athenna 1 year, 10 1 month 1 year, 9 months 6 months or 3
Manpower v. months and and 28 days months for each JGB v. NLC100 2 years 9 months 15 months 15 months
Villanos 96 28 days year of contract
Agoy v. NLRC101 2 years 2 months 22 months 22 months

As the foregoing matrix readily shows, the subject clause classifies OFWs into two EDI v. NLRC, et 2 years 5 months 19 months 19 months
categories. The first category includes OFWs with fixed-period employment contracts of less al.102
than one year; in case of illegal dismissal, they are entitled to their salaries for the entire
Barros v. NLRC, 12 months 4 months 8 months 8 months
unexpired portion of their contract. The second category consists of OFWs with fixed-period
et al.103
employment contracts of one year or more; in case of illegal dismissal, they are entitled to
monetary award equivalent to only 3 months of the unexpired portion of their contracts. Philippine 12 months 6 months and 5 months and 5 months and 18 days
Transmarine v. 22 days 18 days
The disparity in the treatment of these two groups cannot be discounted. In Skippers, the Carilla104
respondent OFW worked for only 2 months out of his 6-month contract, but was awarded his
salaries for the remaining 4 months. In contrast, the respondent OFWs
in Oriental and PCL who had also worked for about 2 months out of their 12-month contracts It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods or the
were awarded their salaries for only 3 months of the unexpired portion of their contracts. unexpired portions thereof, were treated alike in terms of the computation of their monetary
Even the OFWs involved in Talidano  and Univan  who had  worked for a longer period of 3 benefits in case of illegal dismissal. Their claims were subjected to a uniform rule of
months out of their 12-month contracts before being illegally dismissed were awarded their computation: their basic salaries multiplied by the entire unexpired portion of their
salaries for only 3 months. employment contracts.

To illustrate the disparity even more vividly, the Court assumes a hypothetical OFW-A with an
employment contract of 10 months at a monthly salary rate of US$1,000.00 and a
hypothetical OFW-B with an employment contract of 15 months with the same monthly salary
rate of US$1,000.00. Both commenced work on the same day and under the same employer,
and were illegally dismissed after one month of work. Under the subject clause, OFW-A will
be entitled to US$9,000.00, equivalent to his salaries for the remaining 9 months of his
contract, whereas OFW-B will be entitled to only US$3,000.00, equivalent to his salaries for 3
months of the unexpired portion of his contract, instead of US$14,000.00 for the unexpired
portion of 14 months of his contract, as the US$3,000.00 is the lesser amount.
The enactment of the subject clause in R.A. No. 8042 introduced a differentiated rule of
computation of the money claims of illegally dismissed OFWs based on their employment
periods, in the process singling out one category whose contracts have an unexpired portion
of one year or more and subjecting them to the peculiar disadvantage of having their
monetary awards limited to their salaries for 3 months or for the unexpired portion thereof,
whichever is less, but all the while sparing the other category from such prejudice, simply
because the latter's unexpired contracts fall short of one year.
Among OFWs With Employment Contracts of More Than One Year

The disparity becomes more aggravating when the Court takes into account jurisprudence Upon closer examination of the terminology employed in the subject clause, the Court now
that, prior to the effectivity of R.A. No. 8042 on July 14, 1995, 97 illegally dismissed OFWs, has misgivings on the accuracy of the Marsaman interpretation.
no matter how long the period of their employment contracts, were entitled to their salaries for
the entire unexpired portions of their contracts. The matrix below speaks for itself: The Court notes that the subject clause "or for three (3) months for every year of the
unexpired term, whichever is less" contains the qualifying phrases "every year" and
"unexpired term." By its ordinary meaning, the word "term" means a limited or definite extent
Case Title Contract Period of Unexpired Period Applied in the
of time.105 Corollarily, that "every year" is but part of an "unexpired term" is significant in many
Period Service Period Computation of the
ways: first, the unexpired term must be at least one year, for if it were any shorter, there
Monetary Award
would be no occasion for such unexpired term to be measured by every year; and second,
ATCI v. CA, et 2 years 2 months 22 months 22 months the original term must be more than one year, for otherwise, whatever would be the
unexpired term thereof will not reach even a year. Consequently, the more decisive factor in
the determination of when the subject clause "for three (3) months for every year of the
unexpired term, whichever is less" shall apply is not the length of the original contract period
as held in Marsaman,106 but the length of the unexpired portion of the contract period -- the
subject clause applies in cases when the unexpired portion of the contract period is at least
one year, which arithmetically requires that the original contract period be more than one
year.
Viewed in that light, the subject clause creates a sub-layer of discrimination among OFWs
whose contract periods are for more than one year: those who are illegally dismissed with
less than one year left in their contracts shall be entitled to their salaries for the entire
unexpired portion thereof, while those who are illegally dismissed with one year or more
remaining in their contracts shall be covered by the subject clause, and their monetary
benefits limited to their salaries for three months only.
To concretely illustrate the application of the foregoing interpretation of the subject clause, the
Court assumes hypothetical OFW-C and OFW-D, who each have a 24-month contract at a
salary rate of US$1,000.00 per month. OFW-C is illegally dismissed on the 12th month, and
OFW-D, on the 13th month. Considering that there is at least 12 months remaining in the
contract period of OFW-C, the subject clause applies to the computation of the latter's
monetary benefits. Thus, OFW-C will be entitled, not to US$12,000,00 or the latter's total
salaries for the 12 months unexpired portion of the contract, but to the lesser amount of
US$3,000.00 or the latter's salaries for 3 months out of the 12-month unexpired term of the
contract. On the other hand, OFW-D is spared from the effects of the subject clause, for there
are only 11 months left in the latter's contract period. Thus, OFW-D will be entitled to
US$11,000.00, which is equivalent to his/her total salaries for the entire 11-month unexpired
portion.
OFWs vis-à-vis Local Workers
With Fixed-Period Employment
As discussed earlier, prior to R.A. No. 8042, a uniform system of computation of the monetary
awards of illegally dismissed OFWs was in place. This uniform system was applicable even to
local workers with fixed-term employment.107
The earliest rule prescribing a uniform system of computation was actually Article 299 of the
Code of Commerce (1888),108 to wit:
Article 299. If the contracts between the merchants and their shop clerks and employees
should have been made of a fixed period, none of the contracting parties, without the consent
of the other, may withdraw from the fulfillment of said contract until the termination of the
period agreed upon.
Persons violating this clause shall be subject to indemnify the loss and damage suffered, with
the exception of the provisions contained in the following articles.
In Reyes v. The Compañia Maritima,109 the Court applied the foregoing provision to determine
the liability of a shipping company for the illegal discharge of its managers prior to the
expiration of their fixed-term employment. The Court therein held the shipping company liable
for the salaries of its managers for the remainder of their fixed-term employment.
There is a more specific rule as far as seafarers are concerned: Article 605 of the Code of
Commerce which provides:
Article 605. If the contracts of the captain and members of the crew with the agent should be
for a definite period or voyage, they cannot be discharged until the fulfillment of their
contracts, except for reasons of insubordination in serious matters, robbery, theft, habitual
drunkenness, and damage caused to the vessel or to its cargo by malice or manifest or
proven negligence.
Article 605 was applied to Madrigal Shipping Company, Inc. v. Ogilvie,110 in
which the Court held the shipping company liable for the salaries and subsistence allowance
of its illegally dismissed employees for the entire unexpired portion of their employment
contracts.
While Article 605 has remained good law up to the present,111 Article 299 of the Code of
Commerce was replaced by Art. 1586 of the Civil Code of 1889, to wit:
Article 1586. Field hands, mechanics, artisans, and other laborers hired for a certain time and
for a certain work cannot leave or be dismissed without sufficient cause, before the fulfillment
of the contract. (Emphasis supplied.)
Citing Manresa, the Court in Lemoine v. Alkan112 read the disjunctive "or" in Article 1586 as a
conjunctive "and" so as to apply the provision to local workers who are employed for a time
certain although for no particular skill. This interpretation of Article 1586 was reiterated in
Garcia Palomar v. Hotel de France Company.113 And in both Lemoine and Palomar, the Court
adopted the general principle that in actions for wrongful discharge founded on Article 1586,
local workers are entitled to recover damages to the extent of the amount stipulated to be
paid to them by the terms of their contract. On the computation of the amount of such
damages, the Court in Aldaz v. Gay114 held:
The doctrine is well-established in American jurisprudence, and nothing has been brought to
our attention to the contrary under Spanish jurisprudence, that when an employee is
wrongfully discharged it is his duty to seek other employment of the same kind in the same
community, for the purpose of reducing the damages resulting from such wrongful discharge.
However, while this is the general rule, the burden of showing that he failed to make an effort
to secure other employment of a like nature, and that other employment of a like nature was
obtainable, is upon the defendant. When an employee is wrongfully discharged under a
contract of employment his prima facie damage is the amount which he would be entitled to
had he continued in such employment until the termination of the period. (Howard vs. Daly,
61 N. Y., 362; Allen vs. Whitlark, 99 Mich., 492; Farrell vs. School District No. 2, 98 Mich.,
43.)115 (Emphasis supplied)
On August 30, 1950, the New Civil Code took effect with new provisions on fixed-term
employment: Section 2 (Obligations with a Period), Chapter 3, Title I, and Sections 2
(Contract of Labor) and 3 (Contract for a Piece of Work), Chapter 3, Title VIII, Book
IV.116 Much like Article 1586 of the Civil Code of 1889, the new provisions of the Civil Code do
not expressly provide for the remedies available to a fixed-term worker who is illegally
discharged. However, it is noted that in Mackay Radio & Telegraph Co., Inc. v. Rich,117 the
Court carried over the principles on the payment of damages underlying Article 1586 of the
Civil Code of 1889 and applied the same to a case involving the illegal discharge of a local
worker whose fixed-period employment contract was entered into in 1952, when the new Civil
Code was already in effect.118
More significantly, the same principles were applied to cases involving overseas Filipino
workers whose fixed-term employment contracts were illegally terminated, such as in First
Asian Trans & Shipping Agency, Inc. v. Ople, 119 involving seafarers who were illegally
discharged. In Teknika Skills and Trade Services, Inc. v. National Labor Relations
Commission,120 an OFW who was illegally dismissed prior to the expiration of her fixed-period
employment contract as a baby sitter, was awarded salaries corresponding to the unexpired
portion of her contract. The Court arrived at the same ruling in Anderson v. National Labor
Relations Commission,121 which involved a foreman hired in 1988 in Saudi Arabia for a fixed
term of two years, but who was illegally dismissed after only nine months on the job -- the
Court awarded him salaries corresponding to 15 months, the unexpired portion of his
contract. In Asia World Recruitment, Inc. v. National Labor Relations Commission,122 a
Filipino working as a security officer in 1989 in Angola was awarded his salaries for the
remaining period of his 12-month contract after he was wrongfully discharged. Finally,
in Vinta Maritime Co., Inc. v. National Labor Relations Commission, 123 an OFW whose 12-
month contract was illegally cut short in the second month was declared entitled to his
salaries for the remaining 10 months of his contract.
In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment who
were illegally discharged were treated alike in terms of the computation of their money
claims: they were uniformly entitled to their salaries for the entire unexpired portions of their
contracts. But with the enactment of R.A. No. 8042, specifically the adoption of the subject
clause, illegally dismissed OFWs with an unexpired portion of one year or more in their
employment contract have since been differently treated in that their money claims are
subject to a 3-month cap, whereas no such limitation is imposed on local workers with fixed-
term employment.
The Court concludes that the subject clause contains a suspect classification in that,
in the computation of the monetary benefits of fixed-term employees who are illegally
discharged, it imposes a 3-month cap on the claim of OFWs with an unexpired portion
of one year or more in their contracts, but none on the claims of other OFWs or local
workers with fixed-term employment. The subject clause singles out one classification
of OFWs and burdens it with a peculiar disadvantage.
There being a suspect classification involving a vulnerable sector protected by the
Constitution, the Court now subjects the classification to a strict judicial scrutiny, and
determines whether it serves a compelling state interest through the least restrictive means.
What constitutes compelling state interest is measured by the scale of rights and powers
arrayed in the Constitution and calibrated by history.124 It is akin to the paramount interest of
the state125 for which some individual liberties must give way, such as the public interest in
safeguarding health or maintaining medical standards,126 or in maintaining access to
information on matters of public concern.127
In the present case, the Court dug deep into the records but found no compelling state
interest that the subject clause may possibly serve.
The OSG defends the subject clause as a police power measure "designed to protect the
employment of Filipino seafarers overseas x x x. By limiting the liability to three months [sic],
Filipino seafarers have better chance of getting hired by foreign employers." The limitation
also protects the interest of local placement agencies, which otherwise may be made to
shoulder millions of pesos in "termination pay."128
The OSG explained further:
Often, placement agencies, their liability being solidary, shoulder the payment of money
claims in the event that jurisdiction over the foreign employer is not acquired by the court or if
the foreign employer reneges on its obligation. Hence, placement agencies that are in good
faith and which fulfill their obligations are unnecessarily penalized for the acts of the foreign
employer. To protect them and to promote their continued helpful contribution in deploying
Filipino migrant workers, liability for money are reduced under Section 10 of RA 8042.
This measure redounds to the benefit of the migrant workers whose welfare the government
seeks to promote. The survival of legitimate placement agencies helps [assure] the
government that migrant workers are properly deployed and are employed under decent and
humane conditions.129 (Emphasis supplied)
However, nowhere in the Comment or Memorandum does the OSG cite the source of its
perception of the state interest sought to be served by the subject clause.
The OSG locates the purpose of R.A. No. 8042 in the speech of Rep. Bonifacio Gallego in
sponsorship of House Bill No. 14314 (HB 14314), from which the law originated; 130 but the
speech makes no reference to the underlying reason for the adoption of the subject clause.
That is only natural for none of the 29 provisions in HB 14314 resembles the subject clause.
On the other hand, Senate Bill No. 2077 (SB 2077) contains a provision on money claims, to
wit:
Sec. 10. Money Claims. - Notwithstanding any provision of law to the contrary, the Labor
Arbiters of the National Labor Relations Commission (NLRC) shall have the original and
exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the
complaint, the claims arising out of an employer-employee relationship or by virtue of the
complaint, the claim arising out of an employer-employee relationship or by virtue of any law
or contract involving Filipino workers for overseas employment including claims for actual,
moral, exemplary and other forms of damages.
The liability of the principal and the recruitment/placement agency or any and all claims under
this Section shall be joint and several.
Any compromise/amicable settlement or voluntary agreement on any money claims exclusive
of damages under this Section shall not be less than fifty percent (50%) of such money
claims: Provided, That any installment payments, if applicable, to satisfy any such
compromise or voluntary settlement shall not be more than two (2) months. Any
compromise/voluntary agreement in violation of this paragraph shall be null and void.
Non-compliance with the mandatory period for resolutions of cases provided under this
Section shall subject the responsible officials to any or all of the following penalties:
(1) The salary of any such official who fails to render his decision or resolution within
the prescribed period shall be, or caused to be, withheld until the said official
complies therewith;
(2) Suspension for not more than ninety (90) days; or
(3) Dismissal from the service with disqualification to hold any appointive public office
for five (5) years.
Provided, however, That the penalties herein provided shall be without prejudice to any
liability which any such official may have incurred under other existing laws or rules and
regulations as a consequence of violating the provisions of this paragraph.
But significantly, Section 10 of SB 2077 does not provide for any rule on the computation of
money claims.
A rule on the computation of money claims containing the subject clause was inserted and
eventually adopted as the 5th paragraph of Section 10 of R.A. No. 8042. The Court examined
the rationale of the subject clause in the transcripts of the "Bicameral Conference Committee
(Conference Committee) Meetings on the Magna Carta on OCWs (Disagreeing Provisions of
Senate Bill No. 2077 and House Bill No. 14314)." However, the Court finds no discernible
state interest, let alone a compelling one, that is sought to be protected or advanced by the
adoption of the subject clause.
In fine, the Government has failed to discharge its burden of proving the existence of a
compelling state interest that would justify the perpetuation of the discrimination against
OFWs under the subject clause.
Assuming that, as advanced by the OSG, the purpose of the subject clause is to protect the
employment of OFWs by mitigating the solidary liability of placement agencies, such callous
and cavalier rationale will have to be rejected. There can never be a justification for any form
of government action that alleviates the burden of one sector, but imposes the same burden
on another sector, especially when the favored sector is composed of private businesses
such as placement agencies, while the disadvantaged sector is composed of OFWs whose
protection no less than the Constitution commands. The idea that private business interest
can be elevated to the level of a compelling state interest is odious.
Moreover, even if the purpose of the subject clause is to lessen the solidary liability of
placement agencies vis-a-vis their foreign principals, there are mechanisms already in place
that can be employed to achieve that purpose without infringing on the constitutional rights of
OFWs.
The POEA Rules and Regulations Governing the Recruitment and Employment of Land-
Based Overseas Workers, dated February 4, 2002, imposes administrative disciplinary
measures on erring foreign employers who default on their contractual obligations to migrant
workers and/or their Philippine agents. These disciplinary measures range from temporary
disqualification to preventive suspension. The POEA Rules and Regulations Governing the
Recruitment and Employment of Seafarers, dated May 23, 2003, contains similar
administrative disciplinary measures against erring foreign employers.
Resort to these administrative measures is undoubtedly the less restrictive means of aiding
local placement agencies in enforcing the solidary liability of their foreign principals.
Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is violative of
the right of petitioner and other OFWs to equal protection.1avvphi1
Further, there would be certain misgivings if one is to approach the declaration of the
unconstitutionality of the subject clause from the lone perspective that the clause directly
violates state policy on labor under Section 3,131 Article XIII of the Constitution.
While all the provisions of the 1987 Constitution are presumed self-executing, 132 there are
some which this Court has declared not judicially enforceable, Article XIII being
one,133 particularly Section 3 thereof, the nature of which, this Court, in Agabon v. National
Labor Relations Commission,134 has described to be not self-actuating:
Thus, the constitutional mandates of protection to labor and security of tenure may be
deemed as self-executing in the sense that these are automatically acknowledged and
observed without need for any enabling legislation. However, to declare that the constitutional
provisions are enough to guarantee the full exercise of the rights embodied therein, and the
realization of ideals therein expressed, would be impractical, if not unrealistic. The espousal
of such view presents the dangerous tendency of being overbroad and exaggerated. The
guarantees of "full protection to labor" and "security of tenure", when examined in isolation,
are facially unqualified, and the broadest interpretation possible suggests a blanket shield in
favor of labor against any form of removal regardless of circumstance. This interpretation
implies an unimpeachable right to continued employment-a utopian notion, doubtless-but still
hardly within the contemplation of the framers. Subsequent legislation is still needed to define
the parameters of these guaranteed rights to ensure the protection and promotion, not only
the rights of the labor sector, but of the employers' as well. Without specific and pertinent
legislation, judicial bodies will be at a loss, formulating their own conclusion to approximate at
least the aims of the Constitution.
Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be a source of a
positive enforceable right  to stave off the dismissal of an employee for just cause owing to
the failure to serve proper notice or hearing. As manifested by several framers of the 1987
Constitution, the provisions on social justice require legislative enactments for their
enforceability.135 (Emphasis added)
Thus, Section 3, Article XIII cannot be treated as a principal source of direct enforceable
rights, for the violation of which the questioned clause may be declared unconstitutional. It
may unwittingly risk opening the floodgates of litigation to every worker or union over every
conceivable violation of so broad a concept as social justice for labor.
It must be stressed that Section 3, Article XIII does not directly bestow on the working class
any actual enforceable right, but merely clothes it with the status of a sector for whom the
Constitution urges protection through executive or legislative action and judicial recognition.
Its utility is best limited to being an impetus not just for the executive and legislative
departments, but for the judiciary as well, to protect the welfare of the working class.  And it
was in fact consistent with that constitutional agenda that the Court in Central Bank (now
Bangko Sentral ng Pilipinas) Employee Association, Inc. v. Bangko Sentral ng
Pilipinas,  penned by then Associate Justice now Chief Justice Reynato S. Puno, formulated
the judicial precept that when the challenge to a statute is premised on the perpetuation of
prejudice against persons favored by the Constitution with special protection -- such as the
working class or a section thereof -- the Court may recognize the existence of a suspect
classification and subject the same to strict judicial scrutiny.
The view that the concepts of suspect classification and strict judicial scrutiny formulated
in Central Bank Employee Association exaggerate the significance of Section 3, Article XIII is
a groundless apprehension. Central Bank applied Article XIII in conjunction with the equal
protection clause. Article XIII, by itself, without the application of the equal protection clause,
has no life or force of its own as elucidated in Agabon.
Along the same line of reasoning, the Court further holds that the subject clause violates
petitioner's right to substantive due process, for it deprives him of property, consisting of
monetary benefits, without any existing valid governmental purpose.136
The argument of the Solicitor General, that the actual purpose of the subject clause of limiting
the entitlement of OFWs to their three-month salary in case of illegal dismissal, is to give
them a better chance of getting hired by foreign employers. This is plain speculation. As
earlier discussed, there is nothing in the text of the law or the records of the deliberations
leading to its enactment or the pleadings of respondent that would indicate that there is an
existing governmental purpose for the subject clause, or even just a pretext of one.
The subject clause does not state or imply any definitive governmental purpose; and it is for
that precise reason that the clause violates not just petitioner's right to equal protection, but
also her right to substantive due process under Section 1,137 Article III of the Constitution.
The subject clause being unconstitutional, petitioner is entitled to his salaries for the entire
unexpired period of nine months and 23 days of his employment contract, pursuant to law
and jurisprudence prior to the enactment of R.A. No. 8042.
On the Third Issue
Petitioner contends that his overtime and leave pay should form part of the salary basis in the
computation of his monetary award, because these are fixed benefits that have been
stipulated into his contract.
Petitioner is mistaken.
The word salaries in Section 10(5) does not include overtime and leave pay. For seafarers
like petitioner, DOLE Department Order No. 33, series 1996, provides a Standard
Employment Contract of Seafarers, in which salary is understood as the basic wage,
exclusive of overtime, leave pay and other bonuses; whereas overtime pay is compensation
for all work "performed" in excess of the regular eight hours, and holiday pay is compensation
for any work "performed" on designated rest days and holidays.
By the foregoing definition alone, there is no basis for the automatic inclusion of overtime and
holiday pay in the computation of petitioner's monetary award, unless there is evidence that
he performed work during those periods. As the Court held in Centennial Transmarine, Inc. v.
Dela Cruz,138
However, the payment of overtime pay and leave pay should be disallowed in light of our
ruling in Cagampan v. National Labor Relations Commission, to wit:
The rendition of overtime work and the submission of sufficient proof that said was actually
performed are conditions to be satisfied before a seaman could be entitled to overtime pay
which should be computed on the basis of 30% of the basic monthly salary. In short, the
contract provision guarantees the right to overtime pay but the entitlement to such benefit
must first be established.
In the same vein, the claim for the day's leave pay for the unexpired portion of the contract is
unwarranted since the same is given during the actual service of the seamen.
WHEREFORE, the Court GRANTS the Petition. The subject clause "or for three months for
every year of the unexpired term, whichever is less" in the 5th paragraph of Section 10 of
Republic Act No. 8042 is DECLARED UNCONSTITUTIONAL; and the December 8, 2004
Decision and April 1, 2005 Resolution of the Court of Appeals are MODIFIED to the effect
that petitioner is AWARDED his salaries for the entire unexpired portion of his employment
contract consisting of nine months and 23 days computed at the rate of US$1,400.00 per
month.
No costs.
SO ORDERED.
G.R. No. 207286               July 29, 2015
DELA ROSA LINER, INC. AND/OR ROSAURO DELA ROSA, SR. AND NORA DELA
ROSA, Petitioners,
vs.
CALIXTO B. BORELA AND ESTELO A. AMARILLE, Respondents.
DECISION
BRION, J.:
Before us is Dela Rosa Liner, et al. 's petition for review on certiorari 1 which seeks to annul
the March 8, 2013 decision2 and May 21, 2013 resolution3 of the Court of Appeals in CA-G.R.
SP No. 128188.
The Antecedents
The facts as set out in the CA decision are summarized below.
On September 23, 2011, respondents Calixto Borela, bus driver, and Estelo Amarille,
conductor, filed separate complaints4 (later consolidated) against petitioners Dela Rosa Liner,
Inc., a public transport company, Rosauro Dela Rosa, Sr., and Nora Dela Rosa, for
underpayment/non-payment of salaries, holiday pay, overtime pay, service incentive leave
pay,
13th month pay, sick leave and vacation leave, night shift differential, illegal deductions, and
violation of Wage Order Nos. 13, 14, 15 and 16.
In a motion dated October 26, 2011, the petitioners asked the labor arbiter to dismiss the
case for forum shopping. They alleged that on September 28, 2011, the CA 13th Division
disposed of a similar case between the parties (CA-G.R. SP No. 118038) after they entered
into a compromise agreement5 which covered all claims and causes of action they had
against each other in relation to the respondents' employment.
The respondents opposed the motion, contending that the causes of action in the present
case are different from the causes of action settled in the case the petitioners cited.
The Rulings on Compulsory Arbitration
Labor Arbiter (LA) Danna A. Castillon, in an order6 dated November 24, 2011, upheld the
petitioners' position and dismissed the complaint on grounds of forum shopping. Respondents
appealed the LA's ruling. On July 31, 2012, the National Labor Relations Commission (NLRC)
1st Division granted the appeal,7 reversed LA Castillon's dismissal order, and reinstated the
complaint.
The NLRC held that the respondents could not have committed forum shopping as there was
no identity of causes of action between the two cases. The first complaint, the NLRC pointed
out, charged the petitioners with illegal dismissal and unfair labor practice; while the second
complaint was based on the petitioners' alleged nonpayment/underpayment of their salaries
and monetary benefits, and violation of several wage orders.
The petitioners moved for reconsideration, but the NLRC denied their motion, prompting them
to file with the CA a petition for certiorari, for alleged grave abuse of discretion by the NLRC
in: ( 1) holding that the respondents did not commit forum shopping when they filed the
second complaint; and (2) disregarding respondents' quitclaim in relation to the compromise
agreement in the first complaint.
The CA Decision
In its decision under review, the CA 15th Division denied the petition; it found no grave abuse
of discretion in the NLRC ruling that the respondents did not commit forum shopping when
they filed their second complaint. The NLRC likewise held that neither was the case barred by
res judicata arising from the CA judgment in the first case.
The appeals court explained that the first case involved the issues of whether respondents
had been illegally dismissed and whether petitioners should be liable for unfair labor practice.
The labor arbiter8 dismissed the first complaint for lack of merit in his decision of November 6,
2008.
On the respondents' appeal against the LA ruling in this first case, the NLRC 6th Division
rendered a decision on March 25, 2010, reversing the dismissal of the complaint. It awarded
respondents back wages (₱442,550.00 for Borela and ?215,775.00 for Amarille), damages
(₱10,000.00 each in moral and exemplary damages for Borela ), and moral and exemplary
damages (₱25,000.00 each for Amarille), plus 10% attorney's fees for each of them.9
On the petitioners' motion for reconsideration of the NLRC ruling in the first complaint,
however, the NLRC vacated its decision, and in its resolution of September 30, 2010, issued
a new ruling that followed the LA' s ruling, with modification. It awarded the respondents
financial assistance of ₱10,000.00 each, in consideration of their long years of service to the
company. The respondents sought relief from the CA through a petition for certiorari (CA-
G.R. SP No. 118038). Thereafter, the parties settled the case (involving the first complaint)
amicably through the compromise agreement10 adverted to earlier. Under the terms of this
agreement, "(t)he parties has (sic) agreed to terminate the case now pending before the
Court of Appeals and that both parties further agree that no further action based on the same
grounds be brought against each other, and this Agreement applies to all claims and
damages or losses either party may have against each other whether those damages or
losses are known or unknown, foreseen or unforeseen."
Based on this agreement, Borela and Amarille received from respondents ₱350,000.00 and
₱150,000.00, respectively, and executed a quitclaim. Consequently, the CA 13th Division
rendered judgment in accordance with the compromise agreement and ordered an entry of
judgment which was issued on September 28, 2011. In this manner, the parties resolved the
first case.
To go back to the present case CA-G.R. SP No. 128188, which arose from the second
complaint the respondents subsequently filed), the CA 15th Division upheld the NLRC's (1st
Division) decision and ruled out the presence of forum shopping and res judicata as bars to
the respondents' subsequent money claims against the petitioners. The petitioners moved for
reconsideration, but the CA denied the motion in its resolution of May 21, 2013.
The Petition
The petitioners now ask the Court to nullify the CA judgment in CAG.R. SP No. 128188
(arising from the second complaint), contending that the appellate court erred in upholding
the NLRC ruling that there was no forum shopping nor res judicata that would bar the second
complaint. They submit that "private respondents should be penalized and be dealt with more
severely, knowing fully well that the same action had been settled and they both received a
considerable amount for the settlement.11
The Respondents' Position
In their Comment12 filed on September 4, 2013, the respondents pray for the denial of the
petition for having been filed out of time and for lack of merit.
They argue that the petition should not prosper as it was belatedly filed. They claim that
according to the petitioners' counsel herself, her law firm received a copy of the CA resolution
of May 21, 2013, denying their motion for reconsideration on May 28, 2013, and giving them
until June 12, 2013, to file the petition. The petition, they point out, was notarized only on
June 13, 2013, which means that it was filed only on that day, or beyond the 15-day filing
period.
On the substantive aspect of the case, respondents contend that their second complaint
involved two causes of action: (1) their claim for sick leave, vacation leave, and 13th-month
pay under the collective bargaining agreement of the company; and (2) the petitioners'
noncompliance with wage orders since the year 2000 until the present.
They quote the NLRC's (1st Division) decision of July 31, 2012,13 almost in its entirety, to
support their position that they did not commit forum shopping in the filing of the second
complaint and that they should be heard on their money claims against the petitioners.
The Court's Ruling
The procedural issue
We find the petition for review on certiorari timely filed pursuant to Rule 45, Section 2 of the
Rules of Court.14
The last day for filing of the petition, as respondents claim, fell on June 12, 2013,
Independence Day, a legal holiday. In Reiner Pacific International Shipping, et al., v. Captain
Francisco B. Guevarra, et al.,15 the Court explained that under Section 1, Rule 22 of the Rules
of Court, as clarified by A.M. 00-2-14 SC (in relation to the filing of pleadings in courts), when
the last day on which a pleading is due falls on a Saturday, Sunday, or a legal holiday, the
filing of the pleading on the next working day is deemed on time. The filing of the petition
therefore on June 13, 2013, a working day, fully complied with the rules.
The merits of the case
The CA 15th Division committed no reversible error when it affirmed the NLRC ruling that the
second complaint is not barred by the rule on forum shopping nor by the principle of res
judicata. In other words, no grave abuse of discretion could be attributed to the NLRC when it
reinstated the second complaint.
Contrary to the petitioners' submission, respondents' second complaint (CA-G.R. SP
No.128188), a money claim, is not a "similar case" to the first complaint (CA-G.R. SP No.
118038). Thus, the filing of the second complaint did not constitute forum shopping and the
judgment in the first case is not a res judicata ruling that bars the second complaint.
As the CA aptly cited, the elements of forum shopping are: (1) identity of parties; (2) identity
of rights asserted and relief prayed for, the relief being founded on the same facts; and (3)
identity of the two preceding particulars such that any judgment rendered in the other action
will, regardless of which party is successful, amount to res judicata in the action under
consideration.16
We concur with the CA that forum shopping and res judicata are not applicable in the present
case. There is no identity of rights asserted and reliefs prayed for, and the judgment rendered
in the previous action will not amount to res judicata in the action now under consideration.
There is also no identity of causes of action in the first complaint and in the second complaint.
In Yap v. Chua,17 we held that the test to determine whether causes of action are identical is
to ascertain whether the same evidence would support both actions, or whether there is an
identity in the facts essential to the maintenance of the two actions. If the same facts or
evidence would support both actions, then they are considered the same; a judgment in the
first case would be a bar to the subsequent action.
Under the circumstances of the case before us, sufficient basis exists for the NLRC's and
CA's conclusions that there is no identity of causes of action between the respondents' two
complaints against the petitioners.1âwphi1 The first complaint involved illegal
dismissal/suspension, unfair labor practice with prayer for damages and attorney's fees; while
the second complaint (the subject of the present appeal) involves claims for labor standards
benefits -the petitioners' alleged violation of Wage Orders Nos. 13, 14, 15 and 16;
nonpayment of respondents' sick and vacation leave pays, 13thmonth pay, service incentive
leave benefit, overtime pay, and night shift differential.
As the CA correctly held, the same facts or evidence would not support both actions. To put it
simply, the facts or the evidence that would determine whether respondents were illegally
dismissed, illegally suspended, or had been the subject of an unfair labor practice act by the
petitioners are not the same facts or evidence that would support the charge of
noncompliance with labor standards benefits and several wage orders. We thus cannot find a
basis for petitioners' claim that "the same action had been settled x x x."18
Neither are we persuaded by petitioners' argument that "The Compromise Agreement
covered all claims and causes of action that the parties may have against each other in
relation to the private respondents' employment."19 The compromise agreement had been
concluded to terminate the illegal dismissal and unfair labor case then pending before the CA.
While the parties agreed that no further action shall be brought by the parties against each
other, they pointedly stated that they referred to actions on the same grounds.
The phrase same grounds can only refer to the grounds raised in the first complaint and not
to any other grounds. We likewise cannot accept the compromise agreement's application "to
all claims and damages or losses either party may have against each other whether those
damages or losses are known or unknown, foreseen or unforeseen."20
This coverage is too sweeping and effectively excludes any claims by the respondents
against the petitioners, including those that by law and jurisprudence cannot be waived
without appropriate consideration such as nonpayment or underpayment of overtime pay and
wages.
In Pampanga Sugar Development, Co., Inc., v. Court of Industrial Relations, et al., 21 the Court
reminded the parties that while rights may be waived, the waiver must not be contrary to law,
public policy, morals, or good customs; or prejudicial to a third person with a right recognized
by law.22 In labor law, respondents' claim for 13th-month pay, overtime pay, and statutory
wages (under Wages Orders 13, 14, 15 and 16), among others, cannot simply be generally
waived as they are granted for workers' protection and welfare; it takes more than a general
waiver to give up workers' rights to these legal entitlements.
Lastly, the petitioners' insinuation, that the respondents are not and should not be .entitled to
anything more, because they had already "received a considerable amount for the
settlement"23 (₱350,000.00 for Borela and ₱150, 000.00 for Amarille), should be placed and
understood in its proper context.
We note that in the illegal dismissal case where the compromise agreement took place, the
NLRC 6th Division (acting on the appeal from the LA's ruling) awarded Borela ₱442,550.00 in
backwages; ₱20,000.00 in moral and exemplary damages, plus 10% attorney's fees; and to
Amarille ₱215,775.00 in back wages and ₱50,000.00 in moral and exemplary damages, plus
10% attorney's fees.24
Although the NLRC reconsidered these awards and eventually granted financial assistance of
₱10,000.00 each to Borela and Amarille,25 it is reasonable to regard the amounts they
received as a fair compromise in the settlement of the first complaint in relation with the initial
NLRC award, indicated above, before its reconsideration. To be sure, the parties, especially
the respondents, could not have considered the ₱10,000.00 financial assistance or their labor
standards claims, particularly the alleged violation of the wage orders, as a factor in their
effort to settle the case amicably. The compromise agreement, it should be emphasized, was
executed on September 8, 2011,26 while the labor standards complaint was filed only on
September 23, 2011.27
For the reasons discussed above, we find the petition without merit.
WHEREFORE, premises considered, the petition for review on certiorari is DISMISSED for
lack of merit. The assailed decision and resolution of the Court of Appeals are AFFIRMED.
SO ORDERED.
G.R. No. 105963 August 22, 1996
PAL EMPLOYEES SAVING AND LOAN ASSOCIATION, INC. (PESALA), petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION AND ANGEL V. ESQUEJO, respondents.
 
PANGANIBAN, J.:p
Is an employee entitled to overtime pay for work rendered in excess of eight hours a
day, given the fact that his employment contract specifies a twelve-hour workday at a
fixed monthly salary rate that is above the legal minimum wage? This is the principal
question answered by this Court in resolving this petition which challenges the
validity and legality of the
Decision1 of public respondent National Labor Relations Commission2 promulgated
on April 23, 1992 in NLRC NCR CA No. 002522-91 entitled "Angel V. Esquejo vs.
PAL Employees Savings and Loan Association" which Decision modified (slightly as
to amount) the earlier decision3 dated November 11, 1991 of the labor arbiter
granting private respondent's claim of overtime pay.
The Facts and the Case Below
On October 10, 1990, private respondent filed with public respondent a complaint
docketed as NLRC NCR Case No. 10-05457-90 for non-payment of overtime pay
and non-payment of the P25.00 statutory minimum wage increase mandated by
Republic Act No. 6727.
On December 13, 1990, petitioner PESALA filed its position paper 5 alleging among
other things:
Subsequently, private respondent filed a supplemental complaint for illegal
suspension with payer for reinstatement and payment of backwages. However,
before the case was submitted for resolution, private respondent filed a "Motion to
Withdraw Supplemental Complaint" on the ground that a separate action for illegal
suspension, illegal dismissal, etc. had been filed and was pending before another
labor arbiter. Hence, the issue decide by public respondent and which is under
review by this Court in this petition involves only his claim for overtime pay.
On November 26, 1990, private respondent filed his position paper4 with the labor
arbiter alleging the following facts constituting his cause of action:
Complaint (herein private respondent) started working with respondent
(PESALA) sometime last March 1, 1986 as a company guard and was
receiving a monthly basic salary of P1,990.00 plus an emergency allowance
in the amount of P510.00. He was required to work a (sic) twelve (12) hours
a day, a (sic) xerox copies of his appointment are hereto attached and
marked as Annexes "C" and "D" of this position paper;
That on December 10, 1986, respondent Board of Directors in its board
meeting held on November 21, 1986 approved a salary adjustment for the
complainant increasing his monthly basic salary to P2,310.00 and an
emergency allowance of P510.00, a xerox copy of the salary adjustment is
hereto attached and marked as Annex "E" hereof;
That on August 25, 1987, because of his impressive performance on his
assigned job, another adjustment was approved by the President of the
association increasing his monthly basic salary to P2,880.00, a xerox copy of
the salary adjustment is hereto attached and marked as Annex "F" hereof;
That from January 4, 1988 up to June 1990, several salary adjustments were
made by the respondent on the monthly basic salary of the complainant
including a letter of appreciation for being as (sic) one of the outstanding
performers during the first half of 1988, the latest salary prior to the filing of
the complaint was P3,720.00, a (sic) xerox copies of all documents relative to
the salary adjustments are hereto attached and marked as annexes "G", "H",
and "K" of this position paper;
That during his entire period of employment with respondent, the former was
required to perform overtime work without any additional compensation from
the latter. It was also at this point wherein the respondent refused to give the
25.00 increase on the minimum wage rates as provided for by law. On
October 12, 1990, complainant was suspended for the period of thirty seven
(37) days for an offense allegedly committed by the respondent sometime
last August 1989.
On 01 March, 1986, complainant was appointed in a permanent status as the
company guard of respondent. In the Appointment Memorandum dated
February 24, 1986 which has the conformity of complaint, it is expressly
stipulated therein that complainant is to receive a monthly salary of
P1,900.00 plus P510.00 emergency allowance for a twelve (12) hours work
per day with one (1) day off. A copy of said appointment memorandum is
hereto attached as Annex "A" and made an integral part hereof.
On 01 December, 1986, the monthly salary of complainant was increased to
P2,310,00 plus P510.00 emergency allowance. Latter, or on 01 January,
1988, the monthly salary of complainant was again increased to P3,420.00.
And still later, or on 01 February, 1989, complainant's monthly salary was
increased are hereto attached as Annexes "B", "B-1" and "B-2" and are made
integral parts hereof.
On 29, November, 1989, the manager of respondent in the person of Sulpicio
Jornales wrote to complainant informing the latter that the position of a guard
will be abolished effective November 30, 1989, and that complainant will be
re-assigned to the position of a ledger custodian effective December 1, 1989.
Pursuant to the above-mentioned letter-agreement of Mr. Jornales, complaint
was formally appointed by respondent as its ledger custodian on December
1, 1989. The monthly salary of complainant as ledger custodian starting on
December 1, 1989 was P3,720,00 for forty (40) working hours a week or
eight (8) working hours a day. a copy of said Appointment memorandum is
hereto attached as Annex "C" and made an integral part hereof.
On 29 August, 1990, complainant was administratively charged with a
serious misconduct or disobedience of the lawful orders of respondent or its
officers, and gross and habitual neglect of his duties, committed as follows:
1. Sometime in August, 1989, you (referring
to complainant Esquejo) forwarded the
checks corresponding to the withdrawals of
Mr. Jose Jimenez and Mr. Anselmo dela
Banda of Davao and Iloilo Station,
respectively, without the signature of the
Treasurer and the President of PESALA, in
violation of your duty and function that you
should see to it that the said checks should
be properly signed by the two PESALA
officials before you send out said checks to
their addresses. As a result of which, there
was a substantial delay in the transmission
of the checks to its owners resulting to an
embarrassment on the part of the PESALA
officers and damage and injury to the
recipients (sic) of the checks since they
needed the money badly.
2. Sometime in August, 1989, before you
(complainant) went on your vacation, you
failed to leave or surrender the keys of the
office, especially the keys of the keys to the
main and back doors which resulted to
damage, injury and embarrassment to
PESALA. This is a gross violation of your
assigned duties and you disobeyed the
instruction of your Superior.
xxx xxx xxx
Herein complainant was informed of the aforequoted charges against him
and was given the opportunity to be heard and present evidence in his behalf
as shown by the Notice of Hearing (Annex "D" hereof) sent to him.
Complainant did in fact appeared (sic) at the hearing, assisted by his
counsel, Atty. Mahinardo G. Mailig, and presented his evidence in the form of
a Counter-Affidavit. A copy of said Counter-Affidavit is hereto attached as
Annex "E" and made an integral part hereof.
On 12 October, 1990, after due deliberation on the merits of the
administrative charges filed against herein complainant, the Investigating
Officer in the person of Capt. Rogelio Enverga resolved the same imposing a
penalty of suspension of herein complainant, thus:
"PENALTY: 1. For the first
offense, you (referring to
complaint Esquejo) are
suspended for a period of
thirty (30) working days
without pay effective
October 15, 1990.
2. For the second offense,
your (sic) are suspended for
a period of seven (7)
working days whiteout pay
effective from the date first
suspension will expire".
On March 7, 1991, private respondent filed a detailed and itemized computation of
his money claims totaling P107,495.90, to which petitioner filed its comment on April
28, 1991. The computation filed on March 7, 1991 was later reduced to P65,302.80.
To such revised computation, the petitioner submitted its comment on April 28, 1991.
WHEREFORE, judgment is hereby rendered:
1. Granting the claim for overtime pay
covering the period October 10, 1987 to
November 30, 1989 in the amount of
P28,344.55.
2. The claim for non-payment of P25.00
salary increase pursuant to Republic Act No.
6727 is dismissed for lack of merit.
Aggrieved by the aforesaid decision, petitioner appealed to public respondent NLRC
only to be rejected on April 23, 1992 via the herein assailed Decision, the dispositive
portion of which reads as follows:
 WHEREFORE, premises considered, the award is reduced to an amount of
TWENTY EIGHT THOUSAND SIXTY-SIX PESOS AND 45/100
(P28,066.45). In all other respects, the Decision under review is hereby
AFFIRMED and the appeal DISMISSED for lack of merit.
No motion for reconsideration of the Decision was filed by the petitioner.6
What transpired afterwards is narrated by the Solicitor General in his
memorandum,7 which we presume to be correct since petitioner did not contradict the
same in its memorandum:
On July 29, 1992, this court issued a temporary restraining order enjoining the
respondents from enforcing the Decision dated April 23, 1992 issued in NLRC NCR
No. 002522-91, the case below subject of the instant petition.
The Issues
Four issues have been raised by the petitioner in its effort to obtain a reversal of the
assailed Decision, to wit:
I

. . . Petitioner did not appeal the Decision of respondent NLRC. When it THE RESPONDENT NLRC COMMITTED A GRAVE ABUSE
became final, the parties were called to a conference on June 29, 1992 to OF DISCRETION WHEN IT RULED THAT PRIVATE
determine the possibility of the parties' voluntary compliance with the RESPONDENT IS ENTITLED TO OVERTIME PAY WHEN
Decision (Order of Labor Arbiter Linsangan. dated July 23, 1992). THE SAME IS A GROSS CONTRAVENTION OF THE
CONTRACT OF EMPLOYMENT BETWEEN PETITIONER
. . . In their second conference, held on July 15, 1992, petitioner proposed to AND RESPONDENT ESQUEJO AND A PATENT
private respondent a package compromise agreement in settlement of all VIOLATION OF ARTICLES 1305, 1306 AND 1159 OF THE
pending claims. Private respondent for his part demanded (P150,000.00 as CIVIL CODE.
settlement of his complaint which was turned down by petitioner as too
excessive. Unfortunately, no positive results were achieved. II

As a result, pleading was filed by petitioner captioned: Motion to Defer THE RESPONDENT NLRC COMMITTED A GRAVE ABUSE
Execution and Motion to Re-Compute alleged overtime pay. Petitioner states OF DISCRETION IF AWARDING OVERTIME PAY OF
that "quite recently, the Employee Payroll Sheets pertaining to the salaries, P28,066.45 TO PRIVATE RESPONDENT WHEN THE
overtime pay, vacation and sick leave of Angel Esquejo were located". SAME IS A CLEAR VIOLATION OF ARTICLE 22 OF THE
CIVIL CODE ON UNJUST ENRICHMENT.
. . . Petitioner's Motion to Defer Execution and Motion to Re-Compute
respondent's overtime pay was denied in an Order dated July 23, 1992. III

. . . Petitioner moved to reconsider the Denial Order on July 27, 1992. Private THE RESPONDENT NLRC COMMITTED A GRAVE
respondent opposed. ABUSED OF DISCRETION WHEN IT RULED THAT
PRIVATE RESPONDENT WAS NOT PAID THE OVERTIME
In the meantime, petitioner filed the instant special civil action for certiorari before this PAY BASED ON THE COMPUTATION OF LABOR
Court on July 10, 1992. Later, on July 17, 1992, citing as reason that ". . . quite ARBITER CORNELIO LINSANGAN WHICH WAS
recently, the Employee Payroll Sheets which contained the salaries and overtime pay AFFIRMED BY SAID RESPONDENT NLRC WHEN THE
received by respondent Esquejo were located in the bodega of the petitioner and SAME IS NOT SUPPORTED BY SUBSTANTIAL
based on said Payroll Sheets, it appears that substantial overtime pay have been EVIDENCE AND IT, THEREFORE, VIOLATED THE
paid to respondent Esquejo in the amount of P24,238.22 for the period starting CARDINAL PRIMARY RIGHTS OF PETITIONER AS
January 1987 up to November 1989". petitioner asked this Court for the issuance of a PRESCRIBED IN "AND TIBAY VS. CIR." 69 PHIL. 635.
temporary restraining order or writ of preliminary injunction. On the same date of July
17, 1992, a "Supplemental Petition Based On Newly Discovered Evidence" was filed IV
by petitioner to which was attached photocopies of payroll sheets of the aforestated
period.
 WHETHER OR NOT THE PETITIONER'S SUPPLEMENTAL speedy an adequate remedy in the ordinary course of law against the acts of
PETITION BASED ON NEWLY DISCOVERED EVIDENCE public respondent. In the instant case, the plain and adequate remedy
MAY BE ADMITTED AS PART OF ITS EVIDENCE IT expressly provided by law was a motion for reconsideration of the assailed
BEING VERY VITAL TO THE JUDICIOUS decision, based on a palpable or patent errors, to be made under oath and
DETERMINATION OF THE CASE. (Rollo, p. 367) filed within ten (10) calendar days from receipt of the questioned decision.
And for failure to avail of the correct remedy expressly provided by law,
In essence the above issued boil down to this query: Is an employee entitled to overtime pay petitioner has permitted the subject Resolution to become final and executory
for work rendered in excess of the regular eight hour day given the fact that he entered into a after the lapse of the ten day period within which to file such motion for
contract of labor specifying a work-day of twelve hours at a fixed monthly rate above the reconsideration.11
legislated minimum wage?
In brief, the filing of the instant petition was premature and did not toll the running of the 3
The Court's Ruling month period. Thus, the assailed Decision became final and executory. On this ground alone,
this petition must therefore be dismissed.
At the outset, we would like to rectify the statement made by the Solicitor General that the
"petitioner did not appeal from the Decision of (public) respondent NLRC". The elevation of However, in view of the importance of the substantial query raised in the petition, we have
the said case by appeal is not possible. The only remedy available from an order or decision resolved to decide the case on the merits also.
of the NLRC is a petition for certiorari under Rule 65 of the Rules of Court alleging lack or
excess of jurisdiction or grave abuse of discretion.8 The general rule now is that the special The First Issue: Was Overtime Pay Included?
civil action of certiorari should be instituted within a period of three months.9 Hence, when the
petition was filed on July 10, 1992, three months had not yet elapsed from petitioner's receipt The main disagreement between the parties centers on how the contract of employment of
of the assailed Decision (should really be from receipt of the order denying the motion for the private respondent should be interpreted. The terms and conditions thereof reads as
reconsideration). follows:

However, aside from failing to show clearly grave abuse of discretion on the part of Date: February 24, 1986
respondent NLRC, which we shall discuss shortly, the petitioner also failed to comply with the NAME : ESQUEJO, ANGEL
mandatory requirement of filing a motion for reconsideration from the Decision of the public NATURE OF ACTION : APPOINTMENT
respondent before resorting to the remedy of certiorari. We have previously held that: FROM :
POSITION TITLE : COMPANY GUARD
. . . The implementing rules of respondent NLRC are unequivocal in requiring TO :
that a motion for reconsideration of the order, resolution, or decision of STATUS : PERMANENT
respondent commission should be seasonably filed as a precondition for EFFECTIVE DATE : MARCH 1, 1986
pursuing any further or subsequent remedy, otherwise the said order, FROM : P1,990.00 per month
resolution, or decision shall become final and executory after ten calendar plus P510.00 emergency
days from receipts thereof. Obviously, the rationale therefor is that the law allowance
intends to afford the NLRC an opportunity to rectify such errors or mistakes it
may have lapsed into before resort to the courts of justice can be had. This SALARY :
merely adopts the rule that the function of a motion for reconsideration is to TO :
point out to the court the error that it may have committed and to give it a
chance to correct itself.10 REMARKS : To confirm permanent
appointment as company
Additionally, the allegations in the petition clearly show that petitioner failed to guard who will render 12
file a motion for reconsideration of the assailed Resolution before filing the hours a day with one (1)
instant petition. As correctly argued by private respondent Rolando Tan, such day off
failure constitutes a fatal infirmity. . . . The unquestioned rule in this
jurisdiction is that certiorari will only if there is no appeal or any other plain, RECOMMENDED BY: APPROVED BY:
 (Signed) (Signed)
SULPICIO B. JORNALES CATALINO F. BANEZ
(Signed)
ANGEL V. ESQUEJO12
Petitioner faults the public respondent when it said that there was "no meeting of minds
between the parties," since the employment contract "explicitly states without any
equivocation" that the overtime pay for work rendered for four (4) hours in excess of the eight
(8) hour regular working period is already included in the P1,990.00 basic salary. "This is very
clear from the fact that the appointment states 12 hours a day work."13 By its
computations,14 petitioner tried to illustrate the private respondent was paid more than the
legally required minimum salary then prevailing.
To prove its contention, petitioner argues that:
The legal minimum wage prescribed by our statutes, the legally computed
overtime pay and monthly salaries being paid by petitioner to respondent
Esquejo would show that indeed, the overtime pay has always been
absorbed and included in the said agreed monthly salaries.
P209.50 — Difference (Rolllo, p. 371).
On the other hand, private respondent in his position paper claims that overtime pay is not so
incorporated and should be considered apart from the P1,990.00 basic salary. 15
We find for the private respondent and uphold the respondent NLRC's ruling that he is
entitled to overtime pay.
Based on petitioner's own computation, it appears that the basic salary plus emergency
allowance given to private respondent did not actually include the overtime pay claimed by
private respondent. Following the computations it would appear that by adding the legal
minimum monthly salary which at the time was P1,413.00 and the legal overtime minimum
monthly salary which at the time was P1,413.00 and the legal overtime pay of P877.50, the
total amount due the private respondent as basic salary should have been P2,290.50. By
adding the emergency cost of living allowance (ECOLA) of P510.00 as provided by the
employment contract, the total basic salary plus emergency allowance should have amounted
to P2,800.50. However, petitioner admitted that it actually paid private respondent P1,990.00
as basic salary plus P510.00 emergency allowance or a total of only P2,500.00. Undoubtedly,
private respondent was shortchanged in the amount of P300.50. Petitioner's own
computations thus clearly establish that private respondent's claim for overtime pay is valid.

In 1986, the legal minimum salary of Esquejo is computed as follows (per Side Issue: Meeting of the Minds?
Appointment Memoranda dated February 4, 1986 and June 6, 1986 [Annex
"C" and "D" of Annex "B" of this Petition]): The petitioner contends that the employment contract between itself and the private
respondent "perfectly satisfies" the requirements of Article 1305 of the Civil Code as to the
54 x 314 days "meeting of the minds" such that there was a "legal and valid contract" entered into by the
------------- parties. Thus, private respondent "cannot be allowed to question the said salary
12 months = P1,413.00 monthly salary arrangements for the extra 4 hours overtime pay after the lapse of 4 years and claim only
now that the same is not included in the terms of the employment contracts."16
The hourly overtime pay is computed as follows:
We disagree. Public respondent correctly found no such agreement as to overtime pay. In
fact. the contract was definite only as to the number of hours of work to be rendered but
54/8 hours = P6.75 x 4 hrs. = P27.00
vague as to what is covered by the salary stipulated. Such ambiguity was resolved by the
P27.00 x 1.25 = P33.75 x 20 (should be 26)days = P887.50
public respondent, thus:
(should be P877.50)

In resolving the issue of whether or not complainant's overtime pay for the
P1,413.00 — legal minimum wage
four (4) hours of work rendered in excess of the normal eight hour work
+ 887.50(877.50) — legal overtime pay
period is incorporated in the computation of his monthly salary, respondent
---------------
invokes its contract of employment with the complainant. Said contract
P2,290.50 — amount due to respondent
appears to be in the nature of a document identifiable as an appointment
Esquejo under the law
memorandum which took effect on March 1, 1986 (Records, p. 56) by virtue
of which complaint expressed conformity to his appointment as company
P2,500.00 — gross salary of Esquejo per contract guard with a work period of twelve (12) hours a day with one (1) day off.
-2,290.50 Attached to this post is a basic salary of P1,900.00 plus P510.00 emergency
---------- allowance. It is (a) cardinal rule in the interpretation of a contract that if the
 terms thereof are clear and leave no doubt upon the intention of the
contracting parties, then the literal meaning of its stipulations shall control.
(Art. 1370, Civil Code of the Philippines). To this, respondent seeks refuge.
Circumstances, however, do not allow us to consider this rule in the light of
complainant's claim for overtime pay which is an evident indication that as to
this matter, it cannot be said that there was a meeting of the minds between
the parties, it appearing that respondent considered the four (4) hours work in
excess of the eight hours as overtime work and compensated by way of
complainant's monthly salary while on the latter's part, said work rendered is
likewise claimed as overtime work but yet unpaid in view of complainant's
being given only his basic salary. Complainant claims that the basic salary
could not possibly include therein the overtime pay for his work rendered in
excess of eight hours. Hence, respondent's Appointment Memorandum
cannot be taken and accorded credit as it is so worded in view of this
ambiguity. We therefore proceeded to determine the issue in the light of
existing law related thereto. while it is true that the complainant received a
salary rate which is higher that the minimum provided by law, it does not
however follow that any additional compensation due the complainant can be
offset by his salary in excess of the minimum, especially in the absence of an
express agreement to that effect. To consider otherwise would be in
disregard of the rule of non-diminution of benefits which are above the
minimum being extended to the employees. Furthermore, such arrangement
is likewise in disregard of the manner required by the law on how overtime
compensation must be determined. There is further the possibility that in view
of subsequent increases in the minimum wage, the existing salary for twelve
(12) hours could no longer account for the increased wage level together with
the overtime rate for work rendered in excess of eight hours. This fertile
ground for a violation of a labor standards provision can be effectively
thwarted if there is a clear and definite delineation between an employee's
regular and overtime compensation. It is, further noted that a reading of
respondent's Appointment Memoranda issued to the complainant on different
dates (Records, pp. 56-60) shows that the salary being referred to by the
respondent which allegedly included complainant's overtime pay, partakes of
the nature of a basic salary and as such, does not contemplate any other
compensation above thereof including complaint's overtime pay. We
therefore affirm complainant's entitlement to the latter benefit.17
Petitioner also insists that private respondent's delay in asserting his right/claim demonstrates
his agreement to the inclusion of overtime pay in his monthly salary rate. This argument is
specious. First of all, delay cannot be attributed to the private respondent. He was hired on
March 1, 1986. His twelve-hour work periods continued until November 30, 1989. On October
10, 1990 (just before he was suspended) he filed his money claims with the labor arbiter.
Thus, the public respondent in upholding the decision of the arbiter computed the money
claims for the three years period from the date claims were filed, with the computation starting
as of October 10, 1987 onwards.
In connection with the foregoing, we should add that even if there had been a meeting of the
minds in the instant case, the employment contract could not have effectively shielded
petitioner from the just and valid claims of private respondent. Generally speaking, contracts
are respected as the law between the contracting, parties, and they may establish such
stipulation, clause, terms and conditions as they may see fit; and for as long as such
agreements are not contrary to law, morals, good customs, public policy or public order, they
shall have the fore of law between them.18 However, ". . ., while it is the inherent and
inalienable right of every man to have the most liberty of contracting, and agreements
voluntarily and fairly made will be held valid and enforced in the courts, the general right to
contract is subject to the limitation that the agreement must not be in violation of the
Constitution, the statute of some rule of law (12 Am. Jur. pp. 641-642)." 19 And under the Civil
Code, contracts of labor are explicitly subject to the police power of the State because they
are not ordinary contracts but are impressed with public interest.20 Inasmuch as in this
particular instance the contract is question would have been deemed in violation of pertinent
labor laws, the provisions of said laws would prevail over the terms of the contract, and
private respondent would still be entitled to overtime pay.
Moreover, we cannot agree with petitioner's assertion that by judging the intention of the
parties from their contemporaneous acts it would appear that the "failure of respondent
Esquejo to claim such alleged overtime pay since 1986 clearly demonstrate(s) that the
agreement on his gross salary as contained in his appointment paper is conclusive on the
matter of the inclusion of overtime pay." (Rollo, pp. 13-15; also, Rollo, pp. 378-380). This is
simply not the case here. The interpretation of the provision in question having been put in
issue, the Court is constrained to determine which interpretation is more in accord with the
intent of the parties.21 To ascertain the intent of the parties, the Court is bound to look at their
contemporaneous and subsequent acts.22 Private respondent's silence and failure to claim his
overtime pay since 1986 cannot be considered as proving the understanding on his part that
the rate provided in his employment contract covers overtime pay. Precisely, that is the very
question raised by private respondent with the arbiter, because contrary to the claim of
petitioner, private respondent believed that he was not paid his overtime pay and that such
pay is not covered by the rate agreed upon and stated in his Appointment Memorandum. The
subsequent act of private respondent in filing money claims negates the theory that there was
clear agreements as to the inclusion of his overtime pay in the contracted salary rate. When
an employee fails to assert his right immediately upon violation thereof, such failure
cannot ipso facto be deemed as a waiver of the oppression. We must recognize that the
worker and his employer are not equally situated. When a worker keeps silent inspite of
flagrant violations of his rights, it may be because he is seriously fearful of losing his job. And
the dire consequences thereof on his family and his dependents prevent him from
complaining. In short, his thoughts of sheer survival weight heavily against launching an
attack upon his more powerful employer.
The petitioner contends that the agreed salary rate in the employment contract should be
deemed to cover overtime pay, otherwise serious distortions in wages would result "since a
mere company guard will be receiving a salary much more that the salaries of other
employees who are much higher in rank and position than him in the company." (Rollo, p. 16)
We find this argument flimsy and undeserving of consideration. How can paying an employee
the overtime pay due him cause serious distortions in salary rates or scales? And how can
"other employees" be aggrieved when they did not render any overtime service?
Petitioner's allegation that private respondent is guilty of laches is likewise devoid of merit.
Laches is defined as failure or neglect for an unreasonable and unexplained length of time to
do that which, by exercising due diligence, could or should have been done earlier. It is
negligence or omission to assert a right within an unreasonable time, warranting the
presumption that the party entitled to assert it has either abandoned or declined to assert
it23 The question of laches is addressed to the sound discretion of the court, and since it is an
equitable doctrine, its application is controlled by equitable considerations. It cannot work to
defeat justice or to perpetrate fraud and injustice.24 Laches cannot be charged against any
worker when he has not incurred undue delay in the assertion of his rights. Private
respondent filed his complaint within the three-year reglementary period. He did not sleep on
his rights for an unreasonable length of time.25
Second Issue: Unjust Enrichment?
Petitioner contends that the award of overtime pay is "plain and simple unjust and illegal
enrichment." Such award "in effect sanctioned and approved the grant of payment to
respondent Esquejo which will result in double payment for the overtime work rendered by
paid employee."26 Also, per petitioner, "(n)othing in the Labor Code nor in the Rules and
Regulations issued in the implementation thereof prohibits the manner of paying the overtime
pay (by) including the same in the salary."27
This is begging the issue. To reiterate, the main question raised before the labor tribunals is
whether the provision on wages in the contract of employment already included the overtime
pay for four (4) working hours rendered six days a week in excess of the regular eight-hour
work. And we hold that the tribunals below were correct in ruling that the stipulated pay did
not include overtime. Hence, there can be no undue enrichment in claiming what legally
belongs to private respondent.
Third Issue: Basic of NLRC's Decision?
Petitioner assails respondent NLRC for adopting that portion of the decision of the labor
arbiter, which reads as follows:
. . . Our conclusion is quite clear considering the fact that at the time of his
employment in March 1986, during which the minimum wage was P37.00 a
day for 8 hours work, complaint's total take-home-pay working 12 hours a
day including ECOLA, was only P2,500.00 a month. And immediately prior to
his appointment as Ledger Custodian effective December 1, 1989, with the
working hours reduced to 8 hours a week, complainant's monthly salary was
P3,420.00 (instead of P5,161.01 minimum monthly with 4 hours overtime
work everyday, or a difference of P1,741.01 a month).
Accordingly, the claim for overtime pay reckoned from October 10, 1987 up
to November 30, 1989 should be, as it is hereby, granted.28 (Rollo, p. 201).
Petitioner believes that by adopting the above-quoted portion of the arbiter's decision,
respondent NLRC violated the cardinal rule that its decisions must be supported by
substantial evidence. In doing so, petitioner claims that the NLRC violated is primary rights as
enunciated in the case of Ang Tibay vs. CIR 29. In other words, petitioner holds the view that
the arbiter's decision failed to explain how the amount of P5,161.01 was arrived at.30
Petitioner is in error. The public respondent did not adopt in toto the aforequoted portion of
the arbiter's decision. It made its own computations and arrived at a slightly different amount,
with a difference of P278.10 from the award granted by the labor arbiter. To refute petitioner's
claim, public respondent attached (as Annexes "1", "1-A" "1-B" and "1-C") to its Comment,
the computations made by the labor arbiter in arriving at the sum of P5,161,00. On the other
hand, public respondent made its own computation in its assailed Decision and arrived at a
slightly different figure from the computed by the labor arbiter:
Respondent claims that the award of P28,344.55 is bereft of any factual
basis. Records show that as per computation of the office of the Fiscal
Examiner, (Records, p. 116) the said amount was arrived at. The
computation was however based on the assumption that the complainant
regularly reported for work. Records however show that the complainant
absented himself from work for one day in August 1989. (Records, p. 63) For
this unworked day, no overtime pay must be due. As to the rest of his period
of employment subject to the three year limitation rule which dates from
October 10, 1987 up to his appointment as Ledger Custodian on December
1, 1989 after which his regular work period was already reduced to eight
hours, there being no showing that the complainant absented himself from
work, and he being then required to work for period of twelve hours daily, We
therefore rule on complainant's entitlement to overtime compensation for the
duration of the aforesaid period in excess of one working day. Consequently,
complainant's overtime pay shall be computed as follow:
OVERTIME PAY: (4 HRS/DAY)
October 10, 1987 — December 13, 1987 = 2.10 mos.
P54/8hrs. = P6.75 x 4 hrs. = P27.00
P27 x 1.25 = P33.75 x 26 x 2.10 mos. = P1,842.75
————
December 14, 1987 — June 30, 1989 = 18.53 mos.
P64/8 hrs. = P8 x 4 hrs. = P32.00
P32 x 1.25 = P40 x 26 x 18.53 = P19,271.20
—————
 July 1, 1989 — November 30, 1989 = 5 mos.
P89/8 hrs. = P11.12 x 4 hrs. = P44.50
P44.50 x 1.25 = P55.62 x 25 x 5 mos. = P6,952.50
(P6,953.125)
————
TOTAL OVERTIME PAY
P28,066.45 (P28,067.075)" (Rollo, pp. 210-212)
Prescinding therefrom, it is evident that petitioner had no basis to argue that respondent
NLRC committed any grave abuse of discretion in quoting the questioned portion of the labor
arbiter's holding.
Fourth Issue: Newly Discovered Evidence?
In its Supplemental Petition filed on July 17, 1996, petitioner alleges in part:
2. That only recently, the petitioner was able to locate the Employees Payroll
Sheets which contained the salaries, overtime pay, vacation and sick leaves
of respondent Esquejo which pertains to the period starting from January 1,
1987 up to November 1989. Therefore, said total amount of overtime pay
paid to and received by respondent Esquejo should be deducted from the
computed amount of P28,066.45 based on the questioned decision; (Rollo, p.
220).
Contrary to petitioner's claim however, said documents consisting of payroll sheets,
cannot be considered as "newly-discovered evidence" since said papers were in its
custody and possession all along, petitioner being the employer of private respondent
Furthermore, petitioner offers no satisfactory explanation why these documents were
unavailable at the time the case was being heard by the labor arbiter. In its
Memorandum, petitioner excused itself for its failure to present such evidence before
the labor arbiter and respondent NLRC by saying that "petitioner('s office) appeared
to be in disorder or in a state of confusion since the then officers (of petitioner) were
disqualified by the Monetary Board on grounds of misappropriation of funds of the
association and other serious irregularities. There was no formal turn-over of the
documents from the disqualified set of officer to the new officers of petitioner." 31 We
find such excuse weak and unacceptable, the same not being substantiated by any
evidence on record. Moreover, payroll records are normally not in the direct custody
and possession of corporate officers but of their subordinates, i.e., payroll clerks and
the like. In the normal course of business, such payroll sheets are not the subject of
formal turnovers by outgoing officers to their successors of office. And if indeed it is
true that the petitioner had been looking for such records or documents during the
pendency of the case with the labor arbiter and with public respondent, petitioner
never alleged such search before the said labor tribunals a quo. Hence, such bare
allegations of facts cannot be fairly appreciated in this petition for certiorari, which is
concerned only with grave abuse of discretion of lack (or excess) of jurisdiction.
The Solicitor General quotes with approval a portion of private respondent's
Opposition to petitioner's motion for reconsideration thus:
It is clear from the payroll, although the substantial pages thereof do not
show that the net amount indicated therein have been received or duly
acknowledged to have been received by the complainant, THAT OVERTIME
PAYMENTS THAT WERE MADE REFER TO WORK RENDERED DURING
COMPLAINANT'S OFF DAYS. What has been rightfully, claimed by the
complainant and awarded by this Honorable Office is the overtime works
(sic) rendered by the complainant daily for six (6) days a week computed at
four (4) hours per day. This computation is based on the evidence thus
submitted by the parties. All appointment by the respondent carries (sic) with
it (sic) that the basic salary of the complainant is equivalent to 12 hours work
everyday for six (6) days a week, hence, the four (4) hours overtime daily
was not considered and therefore not paid by the respondent. (Rollo, p. 327).
It has been consistently held that factual issued are not proper subjects of a petition
for certiorari, as the power of the Supreme Court to review labor cases is limited to questions
of jurisdiction and grave abuse of discretion.32 The introduction in this petition of so-called
newly discovered evidence is unwarranted. This Court is not a trier of facts and it is not its
function to examine and evaluate the evidence presented (or which ought to have been
presented) in the tribunals below.33
WHEREFORE, in view of the foregoing considerations, the Petition is DISMISSED, the
temporary restraining order issued on July 30, 1992 LIFTED, and the assailed decision of the
public respondent AFFIRMED. Cost against petitioner.
Narvasa, C.J., Davide, Jr., Melo and Francisco, JJ., concur.
G.R. No. L-30452 September 30, 1982
MERCURY DRUG CO., INC., petitioner,
vs.
NARDO DAYAO, ET AL., respondents,
Caparas & Ilagan for petitioner.
Gerardo P. Cabo Chan and Elias Banzali for respondents.
GUTIERREZ, JR., J.:
This is a petition for review on certiorari of the decision of the Court of Industrial Relations
dated March 30, 1968 in Case No. 1926-V and the Resolution of the Court en banc dated
July 6, 1968 denying two separate motions for reconsideration filed by petitioners and
respondents.
The factual background of Case No. 1926-V is summarized by the respondent Court of
Industrial Relations as follows:
This is a verified petition dated March 17, 1964 which was subsequently
amended on July 31, 1964 filed by Nardo Dayao and 70 others against
Mercury Drug Co., Inc., and/or Mariano Que, President & General Manager,
and Mercury Drug Co., Inc., Employees Association praying, with respect to
respondent corporation and its president and general manager: 1) payment
of their unpaid back wages for work done on Sundays and legal holidays plus
25c/c additional compensation from date of their employment up to June 30,
1962; 2) payment of extra compensation on work done at night; 3)
reinstatement of Januario Referente and Oscar Echalar to their former
positions with back salaries; and, as against the respondent union, for its
disestablishment and the refund of all monies it had collected from
petitioners.
In separate motions, respondent management and respondent union move to
dismiss, the first on the ground that:
I. The petition states no cause of action.
II. This Court has no jurisdiction over the subject of the claims of petitioners
Januario Referente and Oscar Echalar.
III. There is another action pending between the same parties, namely,
Mercury Drug Co., Inc., and/or Mariano Que and Nardo Dayao.
while on the other hand, the second alleges that this Court has no jurisdiction over the acts
complained of against the respondent union.
For reasons stated in the Order dated March 24, 1965, two Court resolved
the motions to dismiss, as follows:
1. Ground No. 1 of management's motion to dismiss was denied for lack of
merit.
After hearing on the merits, the respondent court rendered its decision. The dispositive
portion of the March 30, 1968 decision reads:
2. Its second ground was found meritorious and, accordingly Januario
Referente and Oscar Echalar were dropped as party petitioners in this case.
3. The third ground was denied, holding that there still exists the employer-
employee relationship between Nardo Dayao and the management.
4. With respect to the fourth ground, the Court held that on the basis of
section 7-A of C.A. No. 444, as amended by R.A. No. 1993, 'it can be safely
said that,
counting backward the three (3) year prescriptive period from the date of the
filing of the instant petition - March 20, 1964 - all-of petitioners' claims have
not yet prescribed.'
5. In so far as respondent union's motion is concerned, the Court held that
'petitioners' cause of action against the respondent Association should be
dismissed without prejudice to the refiling of the same as an unfair labor
practice case.'
Only the respondent management moved to reconsider the Order of March
24, 1965 but the same was denied by the Court en banc in a resolution dated
August 26, 1965. Respondent submitted an answer to the amended petition
which was subsequently amended on January 6, 1966, containing some
admissions and some denials of the material averments of the amended
petition. By way of affirmative and special defenses,, respondents alleged
that petitioners have no cause of action against Mariano Que because their
employer respondent Mercury Drug Company, Inc., an existing corporation
which has a separate and distinct personality from its incorporators
stockholders and/or officer, that the company being a service enterprise is
excluded from the coverage of the Eight Hour Labor Law, as amended; that
no court has the power to set wages, rates of pay, hours of employment, or
other conditions of employment to the extent of disregarding an agreement
thereon between the respondent company and the petitioners, and of fixing
night differential wages; that the petitioners were fully paid for services
rendered under the terms and conditions of the individual contracts of
employment; that the petition having been verified by only three of the
petitioners without showing that the others authorized the inclusion of their
names as petitioners does not confer jurisdiction to this Court; that there is no
employer-employee relationship between management and petitioner Nardo
Dayao and that his claim has been released and/or barred by another action
and that petitioners' claims accuring before March 20, 1961 have prescribed."
(Annex "P", pp. 110-112, rollo).
 IN VIEW OF THE FOREGOING, the Court hereby resolves that:
1. The claim of the petitioners for payment of back wages correspoding to the
first four hours work rendered on every other Sunday and first four hours on
legal holidays should be denied for lack of merit.
2. Respondent Mercury Drug Company, Inc.. is hereby ordered to pay the
sixty- nine (69) petitioners:
(a) An additional sum equivalent to 25% of their respective
basic or regular salaries for services rendered on Sundays
and legal holidays during the period from March 20. 1961 up
to June 30, 1962; and
(b) Another additional sum or premium equivalent to 25% of
their respective basic or regular salaries for nighttime
services rendered from March 20, 1961 up to June 30, 1962.
3. Petitioners' petition to convert them to monthly employees should be, as it
is hereby, denied for lack of merit.
4. Respondent Mariano Que, being an officer and acted only as an agent in
behalf of the respondent corporation, should be absolved from the money
claims of herein petitioners whose employer, according to the pleadings and
evidence, is the Mercury Drug Company,, Inc.
To expedite the computation of the money award, the Chief Court Examiner
or his authorized representative is hereby directed to proceed to the office of
the respondent corporation at Bambang Street, Sta. Cruz, Manila, the latter
to make available to said employee its records, like time records, payrolls
and other pertinent papers, and compute the money claims awarded in this
decision and, upon the completion thereof, to submit his report as soon as
possible for further disposition of the Court.
Not satisfied with the decision, the respondents filed a motion for its reconsideration. The
motion for reconsideration, was however, denied by the Court  en banc in its Resolution dated
July 6, 1968.
Petitioner Mercury Drug Company, Inc., assigned the following errors in this petition:
I water, or providing means of transportation or
RESPONDENT CIR ERRED IN DECLARING THE CONTRACTS OF
EMPLOYMENT, EXHIBITS "A" AND "B", NULL AND VOID AS BEING
CONTRARY TO PUBLIC POLICY AND IN SUSTAINING, ACCORDINGLY,
PRIVATE RESPONDENTS' CLAIMS FOR 25% SUNDAY AND LEGAL
HOLIDAY PREMIUMS BECAUSE SUCH DECLARATION AND AWARD
ARE NOT SUPPORTED BY SUBSTANTIAL EVIDENCE, THUS
INFRINGING UPON THE CARDINAL RIGHTS OF THE PETITIONER; AND
ALSO BECAUSE THE VALIDITY OF SAID t CONTRACTS OF
EMPLOYMENT HAS NOT BEEN RAISED.
II
RESPONDENT CIR ERRED IN SUSTAINING PRIVATE RESPONDENTS'
CLAIMS FOR NIGHTTIME WORK PREMIUMS NOT ONLY BECAUSE OF
THE DECLARED POLICY ON COLLECTIVE BARGAINING FREEDOM EX.
PRESSED IN REPUBLIC ACT 875 AND THE EXPRESS PROHIBITION IN
SECTION 7 OF SAID STATUTE, BUT ALSO BECAUSE OF THE WAIVER
OF SAID CLAIMS AND THE TOTAL ABSENCE OF EVIDENCE THEREON.
III
RESPONDENT CIR ERRED IN MAKING AWARDS IN FAVOR OF THE
PRIVATE RESPONDENTS WHO NEITHER GAVE EVIDENCE NOR EVEN
APPEARED TO SHOW THEIR INTEREST.
Three issues are discussed by the petitioner in its first assignment of error. The first issue
refers to its allegation that the respondent Court erred in declaring the contracts of
employment null and void and contrary to law. This allegation is premised upon the following
finding of the respondent court:
But the Court finds merit in the claim for the payment of additional
compensation for work done on Sundays and holidays. While an employer
may compel his employees to perform service on such days, the law
nevertheless imposes upon him the obligation to pay his employees at least
25% additional of their basic or regular salaries.
No person, firm or corporation, business establishment or
place of center of labor shall compel an employee or laborer
to work during Sundays and legal holidays unless he is paid
an additional sum of at least twenty-five per centum of his
regular remuneration: PROVIDED, HOWEVER, That this
prohibition shall not apply to public utilities performing some
public service such as supplying gas, electricity, power,
communication. (Section 4, C. A. No. 444) (Emphasis
supplied)
 Although a service enterprise, respondent company's employees are within
the coverage of C. A. No. 444, as amended known as the Eight Hour Labor
Law, for they do not fall within the category or class of employees or laborers
excluded from its provisions. (Section 2, Ibid.)
The Court is not impressed by the argument that under the contracts of
employment the petitioners are not entitled to such claim for the reason that
the same are contrary to law. Payment of extra or additional pay for services
rendered during Sundays and legal holidays is mandated by law. Even
assuming that the petitioners had agreed to work on Sundays and legal
holidays without any further consideration than their monthly salaries, they
are not barred nevertheless from claiming what is due them, because such
agreement is contrary to public policy and is declared nun and void by law.
Any agreement or contract between employer and the laborer or employee
contrary to the provisions of this Act shall be null and void ab initio.
Under the cited statutory provision, the petitioners are justified to receive
additional amount equivalent to 25% of their respective basic or regular
salaries for work done on Sundays and legal holidays for the period from
March 20, 1961 to June 30, 1962. (Decision, pp. 119-120, rollo)
From a perusal of the foregoing statements of the respondent court, it can be seen readily
that the petitioner-company based its arguments in its first assignment of error on the wrong
premise. The contracts of employment signed by the private respondents are on a standard
form, an example of which is that of private respondent Nardo Dayao quoted hereunder:
Mercury Drug Co., Inc. 1580 Bambang, Manila
October 30, 1959
Mr. Nardo Dayao
1015 Sta. Catalina
Rizal Ave., Exten.
Dear Mr. Dayao:
You are hereby appointed as Checker, in the Checking Department of
MERCURY DRUG CO., INC., effective July 1, 1959 and you shall receive an
annual compensation the amount of Two Thousand four hundred pesos only
(P2,400.00), that includes the additional compensation for work on Sundays
and legal holidays.
Your firm being a Service Enterprise, you will be required to perform work
every day in a year as follows:
8 Hours work on regular days and-all special Holidays that may be declared
but with the 25% additional compensation;
4 Hours work on every other Sundays of the month;
For any work performed in excess of the hours as above mentioned, you shall be paid 25 %
additional compensation per hour.
This appointment may be terminated without notice for cause and without cause upon thirty
days written notice.
This supersedes your appointment of July 1, 1959.
Very truly yours,
MERCURY DRUG CO., INC.
(Sgd.) MARIANO QUE General Manager
ACCEPTED WITH FULL CONFORMITY:
(Sgd.) NARDO DAYAO
(EXH. "A" and "l ")
(Decision, pp. 114-115, rollo)
These contracts were not declared by the respondent court null and void in their entirety. The
respondent court, on the basis of the conflicting evidence presented by the parties, in effect:
1) rejected the theory of the petitioner company that the 25% additional compensation
claimed by the private respondents for the four-hour work they rendered during Sundays and
legal holidays provided in their contracts of employment were covered by the private
respondents' respective monthly salaries; 2) gave credence to private respondents', (Nardo
Dayao, Ernesto Talampas and Josias Federico) testimonies that the 25% additional
compensation was not included in the private respondents' respective monthly salaries and 3)
ruled that any agreement in a contract of employment which would exclude the 25%
additional compensation for work done during Sundays and holidays is null and void as
mandated by law.
On the second issue, the petitioner-company reiterated its stand that under the,- respective
contracts of employment of the private respondents, the subject 25 % additional
compensation had already been included in the latter's respective monthly salaries. This
contention is based on the testimony of its lone witness, Mr. Jacinto Concepcion and
pertinent exhibits. Thus:
 Exhibit A shows that for the period of October 30, 1960, the annual
compensation of private respondent Nardo Dayao, including the additional
compensation for the work he renders during the first four (4) hours on every
other Sunday and on the eight (8) Legal Holidays at the time was P2,400.00
or P200.00 per month. These amounts did not represent basic salary only,
but they represented the basic daily wage of Nardo Dayao considered to be
in the amount of P7.36 x 305 ordinary working days at the time or in the total
amount of P2,144.80. So plus the amount of P156.40 which is the equivalent
of the Sunday and Legal Holiday rate at P9.20 basic rate of P7.36 plus 25%
thereof or P1.84) x 17, the latter figure representing 13 Sundays and 4 Legal
Holidays of 8 hours each. ...
xxx xxx xxx
That the required minimum 25% Sunday and Legal Holiday additional
compensation was paid to and received by the employees for the work they
rendered on every other Sunday and on the eight Legal Holidays for the
period October, 1959 to June 30, 1962 is further corroborated by Exhibits 5,
6, 8, 9 and 9-A and the testimony of Mr. Jacinto Concepcion thereon. (Brief
for the Petitioner, pp. 24, 27).
The aforesaid computations were not given credence by the respondent court. In fact the
same computations were not even mentioned in the court's decision which shows that the
court found such computations incredible. The computations, supposedly patterned after the
WAS Interpretative Bulletin No. 2 of the Department Labor demonstrated in Exhibits "6", "7",
"8", "9", and "9-A", miserably failed to show the exact and correct annual salary as stated in
the respective contracts of employment of the respondent employees. The figures arrived at
in each case did not tally with the annual salaries on to the employees' contracts of
employment, the difference varying from P1.20 to as much as P14.40 always against the
interest of the employees. The petitioner's defense consists of mathematical computations
made after the filing of the case in order to explain a clear attempt to make its employees
work without the extra compensation provided by law on Sundays and legal holidays.
In not giving weight to the evidence of the petitioner company, the respondent court sustained
the private respondents' evidence to the effect that their 25% additional compensation for
work done on Sundays and Legal Holidays were not included in their respective monthly
salaries. The private respondents presented evidence through the testimonies of Nardo
Dayao, Ernesto Talampas, and Josias Federico who are themselves among the employees
who filed the case for unfair labor practice in the respondent court and are private
respondents herein. The petitioner- company's contention that the respondent court's
conclusion on the issue of the 25% additional compensation for work done on Sundays and
legal holidays during the first four hours that the private respondents had to work under their
respective contracts of employment was not supported by substantial evidence is, therefore,
unfounded. Much less do We find any grave abuse of discretion on the part of the respondent
court in its interpretation of the employment contract's provision on salaries. In view of the
controlling doctrine that a grave abuse of discretion must be shown in order to warrant our
disturbing the findings of the respondent court, the reversal of the court's endings on this
matter is unwarranted. (Sanchez vs. Court of Industrial Relations, 27 SCRA 490).
The last issue raised in the first assignment of error refers to a procedural matter. The
petitioner-company contends that ,-the question as to whether or not the contracts of
employment were null and void was not put in issue, hence, the respondent court pursuant to
the Rules of Court should have refrained from ruling that such contracts of employment were
null and void. In this connection We restate our finding that the respondent court did not
declare the contracts of employment null and void in their entirety. Only the objectionable
features violative of law were nullified. But even granting that the Court of Industrial Relations
declared the contracts of employment wholly void, it could do so notwithstanding the
procedural objection. In Sanchez u. Court of Industrial Relations, supra, this Court speaking
through then Justice, now Chief Justice Enrique M. Fernando, stated:
xxx xxx xxx
Moreover, petitioners appear to be oblivious of the statutory mandate that
respondent Court in the hearing, investigation and determination of any
question or controversy and in the exercise of any of its duties or power is to
act 'according to justice and equity and substantial merits of the case, without
regard to technicalities or legal forms and shall not be bound by any technical
rules of legal evidence' informing its mind 'in such manner as it may deem
just and equitable.' Again, this Court has invariably accorded the most
hospitable scope to the breadth and amplitude with which such provision is
couched. So it has been from the earliest case decided in 1939 to a 1967
decision.
Two issues are raised in the second assignment of error by the petitioner-
company. The first hinges on the jurisdiction of the respondent court to award
additional compensation for nighttime work. Petitioner wants Us to re-
examine Our rulings on the question of nighttime work. It contends that the
respondent court has no jurisdiction to award additional compensation for
nighttime work because of the declared policy on freedom of collective
bargaining expressed in Republic Act 875 and the express prohibition in
Section 7 of the said statute. A re- examination of the decisions on nighttime
pay differential was the focus of attention in Rheem of the Philippines, Inc. et
al., v. Ferrer, et al (19 SCRA 130). The earliest cases cited by the petitioner-
company, Naric v. Naric Workers Union L-12075, - May 29, 1959 and
Philippine Engineers' Syndicate u. Bautista, L-16440, February 29, 196.4,
were discussed lengthily. Thus -
xxx xxx xxx
2. On the claim for night differentials, no extended discussion is necessary.
To be read as controlling here is Philippine Engineers' Syndicate, Inc. vs.
Hon. Jose S. Bautista, et al., L-16440, February 29, 1964, where this Court,
speaking thru Mr. Chief Justice Cesar Bengzon, declared —
Only one issue is raised: whether or not upon the enactment
of Republic Act 875, the CIR lost its jurisdiction over claims
for additional compensation for regular night work. Petitioner
says that this Act reduced the jurisdiction of respondent court
and limited it to specific cases which this Court has defined
as: ... (1) when the labor dispute affects an industry which is
indispensable to the national interest and is so certified by
the President to the industrial court (Sec. 10, Republic Act
875); (2) when the controversy refers to minimum wage
under the Minimum Wage Law (Republic Act 602); (3) when
it involves hours of employment under the Eight-Hour Labor
Law (Commonwealth Act 444) and (4) when it involves an
unfair labor practice [Sec. 5(a), Republic Act 8751', [Paflu, et
al. vs. Tan, et al., 52 Off. Gaz, No. 13, 5836].
Petitioner insists that respondents' case falls in none of these
categories because as held in two previous cases, night
work is not overtime but regular work; and that respondent
court's authority to try the case cannot be implied from its
general jurisdiction and broad powers' under Commonwealth
Act 103 because Republic Act 875 precisely curbed such
powers limiting them to certain specific litigations, beyond
which it is not permitted to act.
We believe petitioner to be in error. Its position collides with our ruling in the
Naric case [National Rice & Corn Corp. (NARIC) vs. NARIC Workers' Union,
et al., G.R. No. L-12075, May 29, 1959] where we held;
While it is true that this Court made the above comment in
the aforementioned case, it does not intend to convey the
Idea that work done at night cannot also be an overtime
work. The comment only served to emphasize that the
demand which the Shell Company made upon its laborers is
not merely overtime work but night work and so there was
need to differentiate night work from daytime work. In fact,
the company contended that there was no law that required
the payment of additional compensation for night work unlike
an overtime work which is covered by Commonwealth Act
No. 444 (Eight Hour Labor Law). And this Court in that case
said that while there was no law actually requiring payment
of additional compensation for night work, the industrial court
has the power to determine the wages that night workers
should receive under Commonwealth Act No. 103, and so it
justified the additional compensation in the Shell case for
'hygienic, medical, moral, cultural and sociological reasons.
xxx xxx xxx
True, in Paflu, et al. vs. Tan, et al., supra, and in a series of cases thereafter, We held that
the broad powers conferred by Commonwealth Act 103 on the CIR may have been curtailed
by Republic Act 875 which limited them to the four categories therein expressed in line with
the public policy of allowing settlement of industrial disputes via the collective bargaining
process; but We find no cogent reason for concluding that a suit of this nature for extra
compensation for night work falls outside the domain of the industrial court. Withal, the record
does not show that the employer-employee relation between the 64 respondents and the
petitioner had ceased.
After the passage of Republic Act 875, this Court has not only upheld the industrial court's
assumption of jurisdiction over cases for salary differentials and overtime pay [Chua Workers
Union (NLU) vs. City Automotive Co., et al., G.R. No. L- 11655, April 29, 1959; Prisco vs.
CIR, et al., G.R. No. L-13806, May 23, 1960] or for payment of additional compensation for
work rendered on Sundays and holidays and for night work [Nassco vs. Almin, et al., G.R.
No. L9055, November 28, 1958; Detective & Protective Bureau, Inc. vs. Felipe Guevara, et
al., G.R. No. L-8738, May 31, 1957] but has also supported such court's ruling that work
performed at night should be paid more than work done at daytime, and that if that work is
done beyond the worker's regular hours of duty, he should also be paid additional
compensation for overtime work. [Naric vs. Naric Workers' Union. et al., G. R No. L-12075,
May 29, 1959, citing Shell Co. vs. National Labor Union, 81 Phil. 315]. Besides, to hold that
this case for extra compensation now falls beyond the powers of the industrial court to
decide, would amount to a further curtailment of the jurisdiction of said court to an extent
which may defeat the purpose of the Magna Carta to the prejudice of labor.' [Luis Recato Dy,
et al v-9. CIR, G.R. No. L-17788, May 25,1962]"
The petitioner-company's arguments on the respondent court's alleged lack of jurisdiction
over additional compensation for work done at night by the respondents is without merit.
The other issue raised in the second assignment of error is premised on the petitioner-
company's contention that the respondent court's ruling on the additional compensation for
nighttime work is not supported by substantial evidence.
This contention is untenable. Pertinent portions of the respondent court's decision read:
xxx xxx xxx
There is no serious disagreement between the petitioners and respondent
management on the facts recited above. The variance in the evidence is only
with respect to the money claims. Witnesses for petitioners declared they
worked on regular days and on every other Sunday and also during all
 holidays; that for services rendered on Sundays and holidays they were not
paid for the first four (4) hours and what they only received was the overtime
compensation corresponding to the number of hours after or in excess of the
first four hours; and that such payment is being indicated in the overtime pay
for work done in excess of eight hours on regular working days. It is also
claimed that their nighttime services could well be seen on their respective
daily time records. .. (Emphasis supplied) (p.116, rollo)
The respondent court's ruling on additional compensation for work done at night is, therefore,
not without evidence. Moreover, the petitioner-company did not deny that the private
respondents rendered nighttime work. In fact, no additional evidence was necessary to prove
that the private respondents were entitled to additional compensation for whether or not they
were entitled to the same is a question of law which the respondent court answered correctly.
The "waiver rule" is not applicable in the case at bar. Additional compensation for nighttime
work is founded on public policy, hence the same cannot be waived. (Article 6, Civil Code).
On this matter, We believe that the respondent court acted according to justice and equity
and the substantial merits of the case, without regard to technicalities or legal forms and
should be sustained.
The third assignment of error is likewise without merit. The fact that only three of the private
respondents testified in court does not adversely affect the interests of the other respondents
in the case. The ruling in Dimayuga V. Court of Industrial Relations (G.R. No. L-0213, May
27, 1957) has been abandoned in later rulings of this Court. In Philippine Land Air-Sea Labor
Union (PLASLU) vs. Sy Indong Company Rice And Corn Mill (11 SCRA 277) We had
occasion to re-examine the ruling in  Dimayuga We stated:
The latter reversed the decision of the trial Judge as regards the
reinstatement with backwages of ... upon the theory that this is not a class
suit; that, consequently, it is necessary and imperative that they should
personally testify and prove the charges in the complaint', and that, having
failed to do so, the decision of the trial Judge in their favor is untenable under
the rule laid down in Dimayuga vs. Court of Industrial Relations, G.R. No. L-
0213 (May 27,1957).
We do not share the view taken in the resolution appealed from. As the trial
Judge correctly said, in Ms dissent from said resolution,:
xxx xxx xxx
In the case of Sanchez v. Court of Industrial Relations, supra, this Court stated:
To the reproach against the challenged order in the brief of petitioners in view
of only two of the seven claimants testifying, a statement by this Court in
Ormoc Sugar Co., Inc. vs. OSCO Workers Fraternity Labor Union would
suffice by way of refutation. Thus: "This Court fully agrees with the
respondent that quality and not quantity of witnesses should be the primordial
consideration in the appraisal of evidence.' Barely eight days later, in another
decision, the above statement was given concrete expression. Thus: 'The
bases of the awards were not only the respective affidavits of the claimants
but the testimonies of 24 witnesses (because 6 were not given credence by
the court below) who Identified the said 239 claimants. The contention of
petitions on this point is therefore unfounded Moveover in Philippine Land-
Air-Sea Labor Union (PLASLU) v. Sy Indong company Rice & Corn Mill, this
Court, through the present Chief Justice rejected as untenable the theory of
the Court of Industrial Relations concerning the imperative needs of all the
claimants to testify personality and prove their charges in the complaint. As
tersely put: 'We do not share the view taken in the resolution appealed from.
The petitioner's contention that its employees fully understood what they signed when they
entered into the contracts of employment and that they should be bound by their voluntary
commitments is anachronistic in this time and age.
The Mercury Drug Co., Inc., maintains a chain of drugstores that are open every day of the
week and, for some stores, up to very late at night because of the nature of the
pharmaceutical retail business. The respondents knew that they had to work Sundays and
holidays and at night, not as exceptions to the rule but as part of the regular course of
employment. Presented with contracts setting their compensation on an annual basis with an
express waiver of extra compensation for work on Sundays and holidays, the workers did not
have much choice. The private respondents were at a disadvantage insofar as the
contractual relationship was concerned. Workers in our country do not have the luxury or
freedom of declining job openings or filing resignations even when some terms and
conditions of employment are not only onerous and inequitous but illegal. It is precisely
because of this situation that the framers of the Constitution embodied the provisions on
social justice (Section 6, Article 11) and protection to labor (Section 9, Article I I) in the
Declaration of Principles And State Policies.
It is pursuant to these constitutional mandates that the courts are ever vigilant to protect the
rights of workers who are placed in contractually disadvantageous positions and who sign
waivers or provisions contrary to law and public policy.
WHEREFORE, the petition is hereby dismissed. The decision and resolution appealed from
are affirmed with costs against the petitioner.
SO ORDERED.
G.R. No. 111876             January 31, 1996
JOHANNA SOMBONG, petitioner,
vs.
COURT OF APPEALS and MARIETTA NERI ALVIAR, LILIBETH NERI and all persons
holding the subject child ARABELA SOMBONG in their custody, respondents.
DECISION
HERMOSISIMA, JR., J.:
Every so often two women claim to be the legitimate parent of the same child. One or the
other, whether for financial gain or for sheer cupidity, should be an impostor. The court is
consequently called upon to decide as to which of them should have the child's lawful
custody. This is the very nature of this case. The child herein had considerably grown through
the years that this controversy had unbearably lagged. The wisdom of the ages should be of
some help, delicate as the case considerably is. The earliest recorded decision on the matter
is extant in the Bible, I Kings 3. As it appears, King Solomon in all his glory resolved the
controversy posed by two women claiming the same child:
And the King said, Bring me a sword. And they brought a sword before the King.
And the King said, Divide the living child in two, and give half to the one, and half to
the other.
Then spoke the woman whose the living child was unto the King, for her bowels
yearned upon her son, and she said, O my Lord, give her the living child, and in no
wise slay it. But the other said, Let it be neither mine nor thine, but divide it.
Then the King answered and said, Give her the living child, and in no wise slay it: she
is the mother thereof. (1 Kings, Chapter 3, Verses 25-27)
King Solomon's wisdom, was inspired by God:
And all Israel heard of the judgment which the King had judged; and they feared the
King: for they saw that the wisdom of God was in him, to do judgment. (Ibid, Verse
28)
We do resolve the herein controversy inspired by God's own beloved King.
The Petition for Review on Certiorari before us seeks the reversal of the decision1 of
respondent Court of Appeals2 which had reversed the decision3 of the Regional Trial
Court4 which granted the Petition for Habeas Corpus filed by petitioner.
The following facts were developed by the evidence presented by the opposing parties:
Petitioner is the mother of Arabella O. Sombong who was born on April 23, 1987 in Signal
Village, Taguig, Metro Manila.5 Some time in November, 1987, Arabella, then only six months
old, was brought to the Sir John Clinic, located at 121 First Avenue, Kaloocan City, for relief
of coughing fits and for treatment of colds. Petitioner did not have enough money to pay the
hospital bill in the amount of P300.00. Arabella could not be discharged, then, because of the
petitioner's failure to pay the bill. Petitioner surprisingly gave testimony to the effect that she
allegedly paid the private respondents by installments in the total amount of P1,700.00,
knowing for a fact that the sum payable was only P300.00. Despite such alleged payments,
the owners of the clinic, Dra. Carmen Ty and her husband, Mr. Vicente Ty, allegedly refused
to turn over Arabella to her. Petitioner claims that the reason for such a refusal was that she
refused to go out on a date with Mr. Ty, who had been courting her. This allegedly gave Dra.
Ty a reason to be jealous of her, making it difficult for everyone all around.
On the other hand and in contrast to her foregoing allegations, petitioner testified that she
visited Arabella at the clinic only after two years, i.e., in 1989. This time, she did not go
beyond berating the spouses Ty for their refusal to give Arabella to her. Three years
thereafter, i.e., in 1992, petitioner again resurfaced to lay claim to her child. Her pleas
allegedly fell on deaf ears.
Consequently, on May 21, 1992, petitioner filed a petition with the Regional Trial Court of
Quezon City for the issuance of a Writ of Habeas Corpus against the spouses Ty. She
alleged therein that Arabella was being unlawfully detained and imprisoned at No. 121, First
Avenue, Grace Park, Kalookan City. The petition was denied due course and summarily
dismissed,6 without prejudice, on the ground of lack of jurisdiction, the alleged detention
having been perpetrated in Kalookan City.
Petitioner, thereafter, filed a criminal complaint7 with the Office of the City Prosecutor of
Kalookan City against the spouses Ty. Dr. Ty, in her counter-affidavit, admitted that
petitioner's child, Arabella, had for some time been in her custody. Arabella was discharged
from the clinic in April, 1989, and was, in the presence of her clinic staff, turned over to
someone who was properly identified to be the child's guardian.
In the face of the refusal of the spouses Ty to turn over Arabella to her, she had sought the
help of Barangay Captains Alfonso and Bautista of Kalookan City, Mayor Asistio of the same
city, and even Congresswoman Hortensia L. Starke of Negros Occidental. Their efforts to
help availed her nothing.
On September 4, 1992, the Office of the City Prosecutor of Kalookan City, on the basis of
petitioner's complaint, filed an information8 against the spouses Ty for Kidnapping and Illegal
Detention of a Minor before the Regional Trial Court of Kalookan City. 9 On September 16,
1992, an order for the arrest of the spouses Ty was issued in the criminal case. Facing arrest,
Dra. Ty disclosed the possibility that the child, Arabella, may be found at No. 23 Jesus Street,
San Francisco del Monte, Quezon City. The agents of the National Bureau of Investigation
went to said address and there found a female child who answered to the name of Cristina
Grace Neri. Quite significantly, the evidence disclosed that the child, Cristina, had been living
with respondent Marietta Neri Alviar since 1988. When she was just a baby, Cristina was
abandoned by her parents at the Sir John Clinic. On April 18, 1988, Dr. Fe Mallonga, a
dentist at the Sir John Clinic and niece of both Dra. Ty and respondent Alviar, called the latter
up to discuss the possibility of turning over to her care one of the several abandoned babies
at the said clinic. Respondent Alviar was told that this baby whose name was unknown had
long been abandoned by her parents and appeared to be very small, very thin, and full of
scabies. Taking pity on the baby, respondent Alviar and her mother, Maura Salacup Neri,
decided to take care of her. This baby was baptized at the Good Samaritan Church on April
30, 1988. Her Certificate of Baptism10 indicates her name to be Cristina Grace S. Neri; her
birthday to be April 30, 1987; her birthplace to be Quezon City; and her foster father and
foster mother to be Cicero Neri and Maura Salacup, respectively. Respondent Alviar was
invited by the National Bureau of Investigation for questioning on September 22, 1992 in the
presence of Dra. Ty and petitioner. Cristina was also brought along by said respondent. At
that confrontation, Dra. Ty could not be sure that Cristina was indeed petitioner's child,
Arabella. Neither could petitioner with all certainty say that Cristina was her long lost
daughter.
On October 13, 1992, petitioner filed a petition for the issuance of a Writ of Habeas
Corpus with the Regional Trial Court11 of Quezon City. The trial court conducted a total of
eight (8) hearings, for the period, from October 28, 1992 to December 11, 1992. On January
15, 1993, it rendered a decision granting the Petition for Habeas Corpus and ordering
respondent Alviar to immediately deliver the person of Cristina Grace Neri to the petitioner,
the court having found Cristina to be the petitioner's long lost child, Arabella.
The trial court, in justification of its conclusions, discussed that:
On the issue of whether or not the minor child, in question, is the daughter of the
petitioner, there seems to be no question, to the mind of this Court, that the
petitioner, is, indeed, the mother of the child, registered by the name of Arabella O.
Sombong, per her Certificate of Birth . . . and later caused to be baptized as Cristina
Grace S. Nery (sic) . . . For, this child is the same child which was delivered by the
Sir John Clinic at Kalookan City, owned by Dra. Carmen Ty, to Dra. Fe Mallonga and
later given to the custody of the respondents. In fact, Dra. Carmen Ty, in her
testimony admitted that the petitioner is the mother of Arabella . . .
On the question of whether or not the petitioner has the rightful custody of the minor
child, in question, which is being withheld by the respondents from her, as will
authorize the granting of the petition for habeas corpus . . . there is no question that
the minor . . . is only about five (5) years old . . . it follows that the child must not be
separated from the mother, who is the petitioner, unless, of course, this Court finds
compelling reasons to order otherwise.
Heretofore, under the New Civil Code of the Philippines, the compelling reasons
which may deprive the parents of their authority or suspend exercise thereof are
stated. It was then provided in Article 332, supra, that:
The courts may deprive the parents of their authority . . . if they should treat
their children with excessive harshness . . . or abandon them. . . . (Emphasis
supplied by the RTC)
Unfortunately, the foregoing article, which was under Title XI, parental authority, was
expressly repealed by Article 254 of the Family Code of the Philippines . . .
xxx       xxx       xxx
It can be seen, therefore, that the words "or abandoned them" mentioned in Article
332 of the New Civil Code . . . is (sic) no longer mentioned in the amending (of) Art.
231 of the Family Code of the Philippines.
It is clear . . . that under the law presently controlling, abandonment is no longer
considered a compelling reason upon the basis of which the Court may separate the
child below seven (7) years old from the mother.
Conceivably, however, in paragraph 6 of Article 231, supra, the effects of culpable
negligence on the part of the parent may be considered by this Court in suspending
petitioner's parental authority over her daughter, in question . . .
The question, therefore, is whether there is culpable negligence on the part of the
petitioner so that her parental authority over her child, in question, may at least be
suspended by this Court.
This Court is not persuaded that the petitioner is guilty of culpable negligence vis-a-
vis her daughter, in question, upon the bases of the facts adduced. For, there is no
question that from April, 1988 she kept on demanding from Dra. Carmen Ty . . . the
return of her child to her but the latter refused even to see her or to talk to her.
Neither did Vicente Ty, the husband of Dra. Carmen Ty, respond to her entreaties to
return her daughter.
xxx       xxx       xxx
Besides, in the interim, while petitioner was looking for her daughter, she made
representations for her recovery with Barangay Captains Alfonso and Bautista, and
Mayor Asistio, all of Kalookan City, as well as with Congresswoman Hortensia L.
Starke to intervene in her behalf.
It cannot be said, therefore, no matter how remotely, that the petitioner was
negligent, nay culpably, in her efforts for the recovery of her daughter.
xxx       xxx       xxx
 Certainly, the respondents have no right to the parental authority of the child, superior
to that of the petitioner as they are not her parents. They have, therefore, no right to
the custody of petitioner's daughter. The Sir John Clinic, or Dra. Carmen Ty, have
(sic) no right to deliver the child, in question, to Dra. Fe Mallonga. Neither had the
latter the right and the authority to gave (sic) the child to the respondents, whose
custody of petitioner's daughter is, consequently, illegal.12
Herein private respondents filed an appeal from the decision of the Regional Trial Court to the
Court of Appeals. The Appellate Court took cognizance of the following issues: (1) The
propriety of the habeas corpus proceeding vis-a-vis the problem respecting the identity of the
child subject of said proceeding; (2) If indeed petitioner be the mother of the child in question,
what the effect would proof of abandonment be under the circumstances of the case; and (3)
Will the question of the child's welfare be the paramount consideration in this case which
involves child custody.
The Court of Appeals reversed and set aside the decision of the trial court, ruling as it did
that:
. . . the lower court erred in sweepingly concluding that petitioner's child Arabella
Sombong and respondents' foster child Cristina Neri are one and the same person to
warrant the issuance of the writ. . . .
As clearly stated in the facts of this case, not even petitioner herself could recognize
her own child when respondents' foster child Cristina Neri was presented to her
before the NBI and respondent court. Dr. Carmen Ty at the NBI investigation could
not also ascertain whether or not Cristina Neri and petitioner's missing child are one
and the same person.
Before the lower court, petitioner-appellee presented two physicians from the Sir
John Clinic, namely, Dr. Carmen Ty and Dr. Angelina Trono to identify the child in
question. But both witnesses could not positively declare that Cristina Neri is the
same missing child Arabella Sombong of petitioner. Dr. Trono even declared in court
that there were other babies left in the clinic and that she could not be certain which
baby was given to respondents (pp. 48-49, tsn, Nov. 10, 1992). . . . Petitioner,
herself, could not identify her own child, prompting the respondent court to call for
child Cristina Neri to come forward near the bench for comparison of her physical
features with that of her alleged mother, the petitioner (p. 32, tsn, Nov. 5, 1992). After
a comparison of petitioner and Cristina Neri's physical features, the lower court found
no similarity and to which petitioner agreed claiming that said child looked like her
sister-in-law (p. 33, id.). When the lower court instructed petitioner to bring said
sister-in-law in the next hearing, petitioner stated they were not on good terms (p.
34, id.) No one, therefore, up to this time has come forward to testify as a witness in
order to positively identify respondents' child Cristina Neri to be one and the same as
petitioner's missing child, Arabella Sombong.
xxx       xxx       xxx
The issuance of a writ of habeas corpus  does not lie in this case considering that
petitioner is not entitled to the custody of Cristina Neri because she is not the mother
of the said child, and does not have the right to have custody over said child.
xxx       xxx       xxx
We do not agree with the lower court that the ground of abandonment of a child has
been repealed by Art. 231 of the Family Code for abandonment can also be included
under the phrase "cases which have resulted from culpable negligence of the parent"
(par. 2, Art. 231 of the Family Code). What can be the worst culpable negligence of a
parent than abandoning her own child. This court does not believe petitioner-
appellee's explanation that she had been negotiating for the discharge of her child for
the past five years. That was too long a time for negotiation when she could have
filed immediately a complaint with the authorities or the courts . . .
As to the issue of the welfare of the child, petitioner-appellee's capability to give her
child the basic needs and guidance in life appear (sic) to be bleak. Before the lower
court petitioner-appellee filed a motion to litigate as pauper as she had no fixed
income. She also admitted that she had no stable job, and she had been separated
from a man previously married to another woman. She also confessed that she
planned to go abroad and leave her other child Johannes to the care of the nuns. The
child Arabella Sombong wherever she is certainly does not face a bright prospect
with petitioner-appellee.13
This prompted the petitioner to file this petition.
We do not find the petition to be meritorious.
While we sympathize with the plight of petitioner who has been separated from her daughter
for more than eight years, we cannot grant her the relief she is seeking, because the
evidence in this case does not support a finding that the child, Cristina, is in truth and in fact
her child, Arabella; neither is there sufficient evidence to support the finding that private
respondents' custody of Cristina is so illegal as to warrant the grant of a Writ of Habeas
Corpus. In general, the purpose of the writ of habeas corpus is to determine whether or not a
particular person is legally held. A prime specification of an application for a writ of habeas
corpus, in fact, is an actual and effective, and not merely nominal or moral, illegal restraint of
liberty. "The writ of habeas corpus was devised and exists as a speedy and effectual remedy
to relieve persons from unlawful restraint, and as the best and only sufficient defense of
personal freedom. A prime specification of an application for a writ of habeas corpus  is
restraint of liberty. The essential object and purpose of the writ of habeas corpus  is to inquire
into all manner of involuntary restraint as distinguished from voluntary, and to relieve a
person therefrom if such restraint is illegal. Any restraint which will preclude freedom of action
is sufficient."14
Fundamentally, in order to justify the grant of the writ of habeas corpus, the restraint of liberty
must be in the nature of an illegal and involuntary deprivation of freedom of action. This is the
basic requisite under the first part of Section 1, Rule 102, of the Revised Rules of Court,
which provides that "except as otherwise expressly provided by law, the writ of habeas
corpus shall extend to all cases of illegal confinement or detention by which any person is
deprived of his liberty."
In the second part of the same provision, however, Habeas Corpus may be resorted to in
cases where "the rightful custody of any person is withheld from the person entitled thereto."
Thus, although the writ of Habeas Corpus ought not to be issued if the restraint is voluntary,
we have held time and again that the said writ is the proper legal remedy to enable parents to
regain the custody of a minor child even if the latter be in the custody of a third person of her
own free will.15
It may even be said that in custody cases involving minors, the question of illegal and
involuntary restraint of liberty is not the underlying rationale for the availability of the writ as a
remedy; rather, the writ of habeas corpus is prosecuted for the purpose of determining the
right of custody over a child.
The controversy does not involve the question of personal freedom, because an infant is
presumed to be in the custody of someone until he attains majority age. In passing on the writ
in a child custody case, the court deals with a matter of an equitable nature. Not bound by
any mere legal right of parent or guardian, the court gives his or her claim to the custody of
the child due weight as a claim founded on human nature and considered generally equitable
and just. Therefore, these cases are decided, not on the legal right of the petitioner to be
relieved from unlawful imprisonment or detention, as in the case of adults, but on the court's
view of the best interests of those whose welfare requires that they be in custody of one
person or another. Hence, the court is not bound to deliver a child into the custody of any
claimant or of any person, but should, in the consideration of the facts, leave it in such
custody as its welfare at the time appears to require. In short, the child's welfare is the
supreme consideration.
Considering that the child's welfare is an all-important factor in custody cases, the Child and
Youth Welfare Code16 unequivocally provides that in all questions regarding the care and
custody, among others, of the child, his welfare shall be the paramount consideration.17 In the
same vein, the Family Code authorizes the courts to, if the welfare of the child so demands,
deprive the parents concerned of parental authority over the child or adopt such measures as
may be proper under the circumstances.18
The foregoing principles considered, the grant of the writ in the instant case will all depend on
the concurrence of the following requisites: (1) that the petitioner has the right of custody over
the minor; (2) that the rightful custody of the minor is being withheld from the petitioner by the
respondent; and (3) that it is to the best interest of the minor concerned to be in the custody
of petitioner and not that of the respondent.
Not all of these requisites exist in this case. The dismissal of this petition is thus warranted.
I
As to the question
of identity.
Petitioner does not have the right of custody over the minor Cristina because, by the
evidence disclosed before the court a quo, Cristina has not been shown to be petitioner's
daughter, Arabella. The evidence adduced before the trial court does not warrant the
conclusion that Arabella is the same person as Cristina. It will be remembered that, in habeas
corpus proceedings, the question of identity is relevant and material, subject to the usual
presumptions including those as to identity of person.19 These presumptions may yield,
however, to the evidence proffered by the parties.
Identity may be thought of as a quality of a person or thing, — the quality of
sameness with another person or thing. The essential assumption is that two persons
or things are first thought of as existing, and that then the one is alleged, because of
common features, to be the same as the other.20
Evidence must necessarily be adduced to prove that two persons, initially thought of to be
distinct and separate from each other, are indeed one and the same. The process is both
logical and analytical.
. . . it operates by comparing common marks found to exist in the two supposed
separate objects of thought, with reference to the possibility of their being the same.
It follows that its force depends on the necessariness of the association between the
mark and a single object. Where a certain circumstance, feature, or mark, may
commonly be found associated with a large number of objects, the presence of that
feature or mark in two supposed objects is little indication of their identity,
because . . . the other conceivable hypotheses are so numerous, i.e., the objects that
possess that mark are numerous and therefore any two of them possessing it may
well be different. But where the objects possessing the mark are only one or a few,
and the mark is found in two supposed instances, the chances of two being different
are "nil" or are comparatively small.
Hence, in the process of identification of two supposed objects, by a common mark,
the force of the inference depends on the degree of necessariness of association of
that mark with a single object.
For simplicity's sake, the evidential circumstance may thus be spoken of as "a mark."
But in practice it rarely occurs that the evidential mark is a single circumstance. The
evidencing feature is usually a group of circumstances, which as a whole constitute a
feature capable of being associated with a single object. Rarely can one
circumstance alone be so inherently peculiar to a single object. It is by adding
 circumstance to circumstance that we obtain a composite feature or mark which as a
whole cannot be supposed to be associated with more than a single object.
The process of constructing an inference of identity thus consists usually in adding
together a number of circumstances, each of which by itself might be a feature of
many objects, but all of which together make it more probable that they co-exist in a
single object only. Each additional circumstance reduces the chances of there being
more than one object so associated.21
In the instant case, the testimonial and circumstantial proof establishes the individual and
separate existence of petitioner's child, Arabella, from that of private respondents' foster child,
Cristina.
We note, among others, that Dr. Trono, who is petitioner's own witness, testified in court that,
together with Arabella, there were several babies left in the clinic and so she could not be
certain whether it was Arabella or some other baby that was given to private respondents.
Petitioner's own evidence shows that, after the confinement of Arabella in the clinic in 1987,
she saw her daughter again only in 1989 when she visited the clinic. This corroborates the
testimony of petitioner's own witness, Dra. Ty, that Arabella was physically confined in the
clinic from November, 1987 to April, 1989. This testimony tallies with her assertion in her
counter-affidavit to the effect that Arabella was in the custody of the hospital until April, 1989.
All this, when juxtaposed with the unwavering declaration of private respondents that they
obtained custody of Cristina in April, 1988 and had her baptized at the Good Samaritan
Church on April 30, 1988, leads to the conclusion that Cristina is not Arabella.
Significantly, Justice Lourdes K. Tayao-Jaguros, herself a mother and the ponente of the
herein assailed decision, set the case for hearing on August 30, 1993 primarily for the
purpose of observing petitioner's demeanor towards the minor Cristina. She made the
following personal but relevant manifestation:
The undersigned  ponente as a mother herself of four children, wanted to see how
petitioner as an alleged mother of a missing child supposedly in the person of
Cristina Neri would react on seeing again her long lost child. The petitioner appeared
in the scheduled hearing of this case late, and she walked inside the courtroom
looking for a seat without even stopping at her alleged daughter's seat; without even
casting a glance on said child, and without even that tearful embrace which
characterizes the reunion of a loving mother with her missing dear child. Throughout
the proceedings, the undersigned  ponente noticed no signs of endearment and
affection expected of a mother who had been deprived of the embrace of her little
child for many years. The conclusion or finding of undersigned ponente as a mother,
herself, that petitioner-appellee is not the mother of Cristina Neri has been given
support by aforestated observation . . .22
The process of constructing an inference of identity having earlier been explained to consist
of adding one circumstance to another in order to obtain a composite feature or mark which
as a whole cannot be supposed to be associated with more than a single object, the reverse
is also true, i.e., when one circumstance is added to another, and the result is a fortification of
the corporeality of each of the two objects the identity of which is being sought to be
established, the nexus of circumstances correspondingly multiply the chances of there being
more than one object so associated. This is the situation that confronts us in this case, and so
the inevitable but sad conclusion that we must make is that petitioner has no right of custody
over the minor Cristina, because Cristina is not identical with her missing daughter Arabella.
II
Private respondents
not unlawfully
withholding custody.
Since we hold that petitioner has not been established by evidence to be entitled to the
custody of the minor Cristina on account of mistaken identity, it cannot be said that private
respondents are unlawfully withholding from petitioner the rightful custody over Cristina. At
this juncture, we need not inquire into the validity of the mode by which private respondents
acquired custodial rights over the minor, Cristina. This matter is not ripe for adjudication in
this instant petition for habeas corpus.
III
Private respondents
have the interest of
the child Cristina at
heart.
We find that private respondents are financially, physically and spiritually in a better position
to take case of the child, Cristina. They have the best interest of Cristina at heart. On the
other hand, it is not to the best interest of the minor, Cristina, to be placed in the custody of
petitioner, had the petitioner's custody rights over Cristina been established. The Court of
Appeals gave the reason:
As to the issue of the welfare of the child, petitioner-appellee's capability to give her
child the basic needs and guidance in life appear (sic) to be bleak. Before the lower
court petitioner-appellee filed a motion to litigate as pauper as she had no fixed
income. She also admitted that she had no stable job, and she had been separated
from a man previously married to another woman. She also confessed that she
planned to go abroad and leave her other child Johannes to the care of the nuns. The
child Arabella Sombong wherever she is certainly does not face a bright prospect
with petitioner-appellee.23
In the light of the aforegoing premises, we are constrained to rule that Habeas Corpus does
not lie to afford petitioner the relief she seeks.
WHEREFORE, the appealed decision of the Court of Appeals in CA-G.R. SP No. 30574 is respondents including the cutting, sales and delivery of glass as well as balancing,
AFFIRMED IN TOTO. Costs against petitioner. accounting and checking of capital and profits every end of the month; that she was made to
work from 8:30 in the morning up to 9:30 in the evening continuously from Monday to Sunday
SO ORDERED. without having been paid overtime pay, rest day pay and holiday pay; that during the period
of her employment, she was not paid any 13th month pay as well as five (5) days service
incentive leave pay; that on August 28, 1992 at around 7:00 o’clock in the evening, while she
G.R. No. 115755               December 4, 2000
was working, respondent Bonifacio Sia called her up and told her to finish all her works that
night, but she told respondent that she would not be able to finish them all because it was
IMELDA B. DAMASCO, petitioner, already late; that she then left respondent’s room but respondent called her again and asked
vs. her why she could not finish what she was told to do, to which complainant [Damasco]
NATIONAL LABOR RELATIONS COMMISSION, MANILA GLASS SUPPLY and answered that it was already late and there were still a lot of things to do; that respondent
BONIFACIO K. SIA, respondents. asked her what she was doing since he (respondent) left for Manila, to which complainant
told him that she was attending to the sales, to the field and to other things relative to the
x-----------------------x business of respondent, to which respondent got mad at her; that respondent asked
complainant why she was not teaching her two (2) other co-workers on what to do, and she
G.R. No. 116101               December 4, 2000 answered she would not do it anymore because if the other co-workers should commit
mistakes in accounting, she was the first one to be lambasted by respondent and even
BONIFACIO K. SIA and MANILA GLASS SUPPLY, petitioners, required to share in paying the shortages; that when respondent heard this, he picked up and
vs. swiped an ashtray in front of complainant and it broke, after which, he threw some notebooks
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER DOMINADOR B. at complainant who began to tremble in fear and her whole body shook; respondent ordered
SALUDARES, DEPUTY SHERIFF ANTONIO T. DATU and IMELDA B. her to go out of the room, lambasted her again and told her that he (respondent)does not
DAMASCO, respondents. want to see her face anymore ("ayaw ko nang makita ang pagmumukha mo rito"); that after
respondent had left, complainant again trembled and she could not prevent herself from
crying, her co-workers applied alcohol on her because her body was cold, given water to
DECISION
drink and after about an hour, complainant decided not to finish her work anymore because
she felt weak; that one of his co-workers, Alma, brought her home and since then, she did not
QUISUMBING, J.: report for work anymore because she developed a phobia of respondent…

These two petitions for certiorari seek to annul the decision promulgated by public respondent
National Labor Relations Commission (NLRC) on March 21, 1994 in NLRC CA No. L-001159,
and its resolution dated May 11, 1994, which denied petitioners’ respective motions for
reconsideration.
Ms. Imelda Damasco is the petitioner in G.R. No. 115755 and private respondent in G.R. No.
116101. She was a regular sales clerk in Manila Glass Supply in Olongapo City.
Manila Glass Supply is private respondent in G.R. No. 115755 and petitioner in G.R. No.
116101. It is a sole proprietorship engaged in the sale of glass with main store in Olongapo
City and branch in Metro Manila. Bonifacio K. Sia is private respondent in G.R. No. 115755
and petitioner in G.R. No. 116101. He is the owner of Manila Glass Supply.
The factual background of this case as summarized by the labor arbiter is as follows:
"That she [Damasco] was employed by respondents [Manila Glass Supply and Bonifacio K.
Sia] as Sales Clerk on January 30, 1992, receiving lately a daily wage of P140.00; that as
sales clerk, she was ordered to do almost all the works related to the glass business of
Disputing the claim of complainant, respondents maintain as follows: That sometime in the
late part of August 1992, complainant was instructed by respondent to report for work in their
store in Metro Manila as there is a necessity for her detail thereat for reasons that the
employees there are new and do not have the experience and know-how in running the store
specifically with regards (sic) to the sale of glass; that complainant manifested her objection
to such detail for reasons that her husband is working in Olongapo City and she does not
want to work in Manila; that thereafter, complainant did not report for work in the respondent’s
store in Olongapo City, so respondent sent some of his employees to the house of
complainant but were told that she is sick and cannot report for work; that sometime in the
first week of January 1993, respondent received a copy of the instant complaint filed by
complainant; that immediately, respondent thru counsel sent a letter to complainant directing
her to report for work on January 13, 1993 at its store in Olongapo City; that complainant
ignored the letter despite receipt thereof, hence, on January 15, 1993, respondent again sent
complainant another letter directing her to report for work on January 22, 1993 but just the
same, complainant failed and refused to report for work; that it is not true as claimed by
complainant that respondent shouted at her and swiped an ashtray from the table and threw
at her some notebooks…. "1
On December 7, 1992, Damasco filed before the NLRC Regional Arbitration Branch in San
Fernando, Pampanga, a complaint against Bonifacio Sia and Manila Glass Supply (jointly
referred hereafter as "Sia" for easy reference). In the one-page complaint form of the NLRC,
Damasco indicated that she is suing her employer for illegal dismissal and non-payment of
overtime pay.2 However, in her complaint affidavit and position paper filed later before the
labor arbiter, Damasco additionally charged her employer with non-payment of 13th month
pay, service incentive leave pay, holiday pay and night shift differential.3
On September 2, 1993, the labor arbiter rendered judgment in favor of Ms. Damasco. The
labor official declared that Sia has not shown any just or authorized cause in terminating the
services of Damasco, except for wild, generalized and self-serving statements that Damasco
committed serious misconduct or willful disobedience of the lawful orders in connection with
her work. The labor arbiter also ruled that Damasco is entitled to 13th month pay, service
incentive leave pay, holiday pay, overtime pay, and disposed of the case, thus:
"WHEREFORE, premises considered, judgment is hereby entered in favor of the complainant
and against respondents, ordering the latter, as follows:
1.To pay the total sum of P112,570.32 representing unpaid 13th month pay, holiday
pay, overtime and premiums pay, five (5) days service incentive leave pay,
backwages and separation pay of complainant;
2.To pay attorney’s fees in the sum of P11,257.00 which is ten (10%) percent of the
award; and
3.All other claims or issues, for want of substantial evidence, are hereby
DISMISSED.
SO DECIDED."4
On appeal, the NLRC upheld the labor arbiter’s finding that Damasco was illegally dismissed
but modified the labor official’s judgment, thus:
"PREMISES CONSIDERED, the Decision of September 2, 1993, is hereby MODIFIED.
Respondents are directed to pay complainant the following:
I. Backwages …………..……… P43,680.00
II. Separation Pay ……………… 36,400.00
III. 13th month pay ……………. 10,920.00
IV. Service Incentive Leave Pay… 2,100.00
V. Holiday Pay ……………….. 4,200.00
VI. Attorney’s fees …………….. 1,722.00
--------------
T O T A L ----- P99,022.00
SO ORDERED."5
Both parties filed motions for reconsideration which were denied.
On July 4, 1994, the NLRC issued an entry of judgment stating that the aforesaid judgment of
the labor tribunal has become final and executory.
On July 7, 1994, the labor arbiter, upon motion of Damasco, issued a writ of execution. In
compliance therewith, public respondent deputy sheriff issued the next day a notice of
garnishment addressed to Far East Bank and Trust Company, Olongapo City, against all
credits and deposits of Bonifacio Sia and/or Manila Glass Supply maintained in said bank,
sufficient to cover the monetary award in favor of Damasco.6
In her petition, Damasco alleged that the NLRC committed grave abuse of discretion:
"…IN DELETING THE AWARD FOR OVERTIME PAY AND REDUCING THE ATTORNEY’S
FEES IN FAVOR OF PETITIONER."7
In his memorandum, Sia raised the following issues for resolution, thus:
A
WHETHER OR NOT PUBLIC RESPONDENT LABOR ARBITER SALUDARES
DEPRIVED PETITIONERS OF THEIR RIGHT TO DUE PROCESS AND THUS
COMMITTED GRAVE ABUSE OF DISRCRETION, AMOUNTING TO LACK OR
EXCESS OF JURISDICTION
B
WHETHER OR NOT PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE
OF DISCRETION, AMOUNTING TO LACK OR EXCESS OF JURISDICTION, IN
AFFIRMING, ALBEIT WITH MODIFICATIONS, THE LABOR ARBITER’S PATENTLY
NULL AND VOID DECISION."8
In our view, the crucial issue for resolution is whether or not the NLRC committed grave
abuse of discretion in affirming the decision of the labor arbiter which held that Damasco was
illegally dismissed from her job.
On August 1, 1994, we decided to consolidate the two petitions inasmuch as they involve the
same parties and intertwined issues. Likewise, we issued a temporary restraining order,
effective immediately and continuing until further orders from this Court, enjoining the parties
concerned from implementing the subject writ of execution and notice of garnishment dated
July 7 and 8, 1994, which were respectively issued by the labor arbiter and deputy sheriff of
NLRC Regional Arbitration Branch III, San Fernando, Pampanga.9
We note that both petitioners did not comply with the rule on certification against forum
shopping. The certifications in their respective petitions were executed by their lawyers, which
is not correct.10 The certification of non-forum shopping must be by the petitioner or a principal
party and not the attorney. This procedural lapse on the part of petitioners could have
warranted the outright dismissal of their actions.11
But, the Court recognizes the need to resolve these two petitions on their merits as a matter
of social justice involving labor and capital. After all, technicality should not be allowed to
stand in the way of equitably and completely resolving herein the rights and obligations of
these parties.12 Moreover, we must stress that technical rules of procedure in labor cases are
not to be strictly applied if the result would be detrimental to the working woman.13
Sia contends that he was deprived of his right to due process as the labor arbiter failed to
conduct a hearing for the reception of evidence. He also claims that the labor arbiter’s finding
that Damasco was illegally dismissed is not supported by substantial evidence. On the
contrary, Sia insists, Damasco abandoned her work as she refused to be detailed at her
employer’s store in Metro Manila.
Sia’s contentions are bereft of merit. His words cannot hide the oppressive acts obviously
directed to deprive Ms. Damasco of her employment and erode her dignity as a worker.
It is now axiomatic that the essence of due process in administrative proceedings is simply an
opportunity to explain one’s side or an opportunity to seek reconsideration of the action or
ruling complained of.14 A formal or trial-type hearing is not at all times and in all instances
essential to due process, the requirements of which is satisfied where parties are afforded fair
and reasonable opportunity to explain their side of the controversy at hand.15
As noted by the Solicitor General and petitioner Damasco, the labor arbiter set the case
several times for preliminary conference but the parties failed to reached an amicable
settlement.16 The labor arbiter then ordered the parties to submit their position papers. In
compliance therewith, the parties submitted position papers where they set out and argued
the factual as well as the legal bases of their position. Damasco filed her position paper,
computation of money claims and affidavit. For his part, Sia filed his position paper and
affidavit. Damasco, in turn, filed her affidavit in reply to the affidavit of Sia. After both parties
had filed their replies, the case was deemed submitted for resolution as the labor arbiter did
not find it necessary to conduct a trial-type hearing. Note that the filing of position papers and
supporting documents fulfills the requirements of due process.17 Further, it is within the
discretion of the labor arbiter to determine if there is a need for a hearing. 18 Thus, we cannot
subscribe to Sia’s posturing that the labor arbiter gravely abused its discretion when he
dispensed with the hearing to receive further evidence.19
Moreover, Sia was given additional opportunity to argue his case on appeal before the NLRC
in a memorandum and motion for reconsideration which pleadings were likewise considered
by that labor agency in the course of resolving the case. Sia cannot thereafter interpose lack
of due process since he was given sufficient time and ample chances to be heard in the
present case. Consequently, the alleged defect in the proceedings in the labor arbiter, if there
be any, should be deemed cured.20 All told, Sia’s due process argument must fail.
On Sia’s assertion that the labor arbiter’s finding is not supported by ample evidence, suffice
it to state that judicial review of labor cases does not go as far as to evaluate the sufficiency
of evidence upon which the labor arbiter and NLRC based their determinations.21 Moreover,
this Court does not review supposed errors in the decision of the NLRC which raise factual
issues because findings of agencies exercising quasi-judicial functions are accorded not only
respect but even finality aside from the consideration that this Court is not a trier of facts. 22 In
any case, in our view, the labor arbiter used every reasonable means to ascertain the facts by
giving the parties ample opportunity to present evidence. It is worth stressing that in
controversies between a worker and her employer doubts reasonably arising from evidence
or in the interpretation of agreements should be resolved in the former’s favor.23 Thus, the
labor arbiter had reasonable ground to sustain the version of Ms. Damasco on how she was
unceremoniously dismissed from her job. Furthermore, Sia did not quite succeed to convince
the NLRC to rule otherwise. Finally, the mere fact that the worker seeks reinstatement and
backpay directly rebuts the employer’s bare claim of abandonment by the worker of his
employment.
Thus, going now to the specific issue of abandonment, we find no merit in Sia’s allegation
that Ms. Damasco abandoned her job. To constitute abandonment, two elements must
concur: (1) the failure to report for work or absence without valid or justifiable reason, and (2)
a clear intention to sever the employer-employee relationship, with the second element as the
more determinative factor when manifested by some overt acts.24 Abandoning one’s job
means the deliberate, unjustified refusal of the employee to resume his employment and the
burden of proof is on the employer to show a clear and deliberate intent on the part of the
employee to discontinue employment.
In this case, there are no overt acts established by Sia from which we can infer the clear
intention of Damasco to desist from employment. Sia’s letters dated January 7 and 15, 1993,
for Damasco to report for work deserve scant consideration. Note that those orders were
made four months after Damasco was told not to show herself again in the store, and after
Sia had received a copy of Damasco’s complaint for illegal dismissal. It is indeed highly
incredible for an employer to require his employee without an approved leave to report to
work only after four months of absence. If at all, the charge of abandonment is disingenuous
to say the least. Moreover, as noted by the NLRC, it was unlikely that Damasco had
abandoned her job for no reason at all considering the hardship of the times. In addition, if
Damasco had truly forsaken her job, she would not have bothered to file a complaint for
illegal dismissal against her employer and prayed for reinstatement. An employee who
forthwith took steps to protect her layoff could not by any logic be said to have abandoned her
work.25
As to Sia’s allegation that Ms. Damasco committed serious misconduct or willful disobedience
of lawful order in connection with her work, we find no tenable support. Even if Sia directed
her to be assigned at his store in Metro Manila, her act of refusing to be detailed in Metro
Manila could hardly be characterized a willful or intentional disobedience of her employer’s
order. It was Sia’s order that appears to us whimsical if not vindictive. Reassignment to Metro
Manila is prejudicial to Ms. Damasco, as she and her family are residing in Olongapo City.
This would entail separation from her family and additional expenses on her part for
transportation and food. Damasco’s reassignment order was unreasonable, considering the
attendant circumstances.26
In sum, we conclude there is no valid and just cause to terminate the employment of Ms.
Damasco.1âwphi1 The NLRC did not gravely abuse its discretion in upholding the finding of
the labor arbiter that Ms. Damasco’s dismissal was not for cause.
An employee who is unjustly dismissed from work is entitled to reinstatement without loss of
seniority rights and other privileges as well as to his full backwages, inclusive of allowances,
and to other benefits or their monetary equivalent computed from the time his compensation
was withheld from him up to the time of his actual reinstatement.27
However, in our view, the circumstances obtaining in this case do not warrant the
reinstatement of Ms. Damasco. Antagonism caused a severe strain in the relationship
between her and her employer. A more equitable disposition would be an award of separation
pay equivalent to one (1) month’s pay for every year of service with the employer.28
Now, as regards Ms. Damasco’s contention that public respondent gravely abused its
discretion in deleting the award for overtime pay for lack of factual basis, we find the same
impressed with merit. We note that Sia has admitted in his pleadings that Damasco’s work
starts at 8:30 in the morning and ends up at 6:30 in the evening daily, except holidays and
Sundays. However, Sia claims that Damasco’s basic salary of P140.00 a day is more than
enough to cover the "one hour excess work" which is the compensation they allegedly agreed
upon.29
Judicial admissions made by parties in the pleadings, or in the course of the trial or other
proceedings in the same case are conclusive, no further evidence being required to prove the
same, and cannot be contradicted unless previously shown to have been made through
palpable mistake or that no such admission was made.30 In view of Sia’s formal admission
that Ms. Damasco worked beyond eight hours daily, the latter is entitled to overtime
compensation. No further proof is required. Sia already admitted she worked an extra hour
daily. Thus, public respondent gravely erred in deleting the award of overtime pay to Ms.
Damasco on the pretext that the claim has no factual basis.
Still, even assuming that Damasco received a wage which is higher than the minimum
provided by law, it does not follow that any additional compensation due her can be offset by
her pay in excess of the minimum, in the absence of an express agreement to that effect.
Moreover, such arrangement, if there be any, must appear in the manner required by law on
how overtime compensation must be determined. For it is necessary to have a clear and
definite delineation between an employee’s regular and overtime compensation to thwart
violation of the labor standards provision of the Labor Code.31
With regard to the award of attorney’s fees the ten percent (10%) attorney’s fees is provided
for in Article 111 of the Labor Code. Considering the circumstances of this case, said award
is in order.
WHEREFORE, in G.R. No. 115755, the petition is GRANTED. The judgment of the Labor
Arbiter in favor of petitioner Imelda B. Damasco dated September 2, 1993 is REINSTATED in
full. In G.R. No. 116101, the petition of Bonifacio K. Sia and Manila Glass Supply is
DISSMISSED for lack of merit. Costs against petitioners Bonifacio K. Sia and Manila Glass
Supply.
SO ORDERED.
G.R. No. 151309             October 15, 2008
BISIG MANGGAGAWA SA TRYCO and/or FRANCISCO SIQUIG, as Union President,
JOSELITO LARIÑO, VIVENCIO B. BARTE, SATURNINO EGERA and SIMPLICIO AYA-
AY, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, TRYCO PHARMA CORPORATION,
and/or WILFREDO C. RIVERA, respondents.
DECISION
NACHURA, J.:
This petition seeks a review of the Decision1 of the Court of Appeals (CA) dated July 24, 2001
and Resolution dated December 20, 2001, which affirmed the finding of the National Labor
Relations Commission (NLRC) that the petitioners' transfer to another workplace did not
amount to a constructive dismissal and an unfair labor practice.
The pertinent factual antecedents are as follows:
Tryco Pharma Corporation (Tryco) is a manufacturer of veterinary medicines and its principal
office is located in Caloocan City. Petitioners Joselito Lariño, Vivencio Barte, Saturnino Egera
and Simplicio Aya-ay are its regular employees, occupying the positions of helper, shipment
helper and factory workers, respectively, assigned to the Production Department. They are
members of Bisig Manggagawa sa Tryco (BMT), the exclusive bargaining representative of
the rank-and-file employees.
Tryco and the petitioners signed separate Memorand[a] of Agreement 2 (MOA), providing for a
compressed workweek schedule to be implemented in the company effective May 20, 1996.
The MOA was entered into pursuant to Department of Labor and Employment Department
Order (D.O.) No. 21, Series of 1990, Guidelines on the Implementation of Compressed
Workweek. As provided in the MOA, 8:00 a.m. to 6:12 p.m., from Monday to Friday, shall be
considered as the regular working hours, and no overtime pay shall be due and payable to
the employee for work rendered during those hours. The MOA specifically stated that the
employee waives the right to claim overtime pay for work rendered after 5:00 p.m. until 6:12
p.m. from Monday to Friday considering that the compressed workweek schedule is adopted
in lieu of the regular workweek schedule which also consists of 46 hours. However, should an
employee be permitted or required to work beyond 6:12 p.m., such employee shall be entitled
to overtime pay.
Tryco informed the Bureau of Working Conditions of the Department of Labor and
Employment of the implementation of a compressed workweek in the company.3
In January 1997, BMT and Tryco negotiated for the renewal of their collective bargaining
agreement (CBA) but failed to arrive at a new agreement.
Meantime, Tryco received the Letter dated March 26, 1997 from the Bureau of Animal
Industry of the Department of Agriculture reminding it that its production should be conducted
in San Rafael, Bulacan, not in Caloocan City:
MR. WILFREDO C. RIVERA
President, Tryco Pharma Corporation
San Rafael, Bulacan
Subject: LTO as VDAP Manufacturer at San Rafael, Bulacan
Dear Mr. Rivera:
This is to remind you that your License to Operate as Veterinary Drug and Product
Manufacturer is addressed at San Rafael, Bulacan, and so, therefore, your
production should be done at the above mentioned address only. Further, production
of a drug includes propagation, processing, compounding, finishing, filling, repacking,
labeling, advertising, storage, distribution or sale of the veterinary drug product. In no
instance, therefore, should any of the above be done at your business office at 117
M. Ponce St., EDSA, Caloocan City.
Please be guided accordingly.
Thank you.
Very truly yours,
(sgd.)
EDNA ZENAIDA V. VILLACORTE, D.V.M.
Chief, Animal Feeds Standard Division4
Accordingly, Tryco issued a Memorandum5 dated April 7, 1997 which directed petitioner Aya-
ay to report to the company's plant site in Bulacan. When petitioner Aya-ay refused to obey,
Tryco reiterated the order on April 18, 1997.6 Subsequently, through a Memorandum7 dated
May 9, 1997, Tryco also directed petitioners Egera, Lariño and Barte to report to the
company's plant site in Bulacan.
BMT opposed the transfer of its members to San Rafael, Bulacan, contending that it
constitutes unfair labor practice. In protest, BMT declared a strike on May 26, 1997.
In August 1997, petitioners filed their separate complaints 8 for illegal dismissal, underpayment
of wages, nonpayment of overtime pay and service incentive leave, and refusal to bargain
against Tryco and its President, Wilfredo C. Rivera. In their Position Paper,9 petitioners
alleged that the company acted in bad faith during the CBA negotiations because it sent
representatives without authority to bind the company, and this was the reason why the
negotiations failed. They added that the management transferred petitioners Lariño, Barte,
Egera and Aya-ay from Caloocan to San Rafael, Bulacan to paralyze the union. They prayed
for the company to pay them their salaries from May 26 to 31, 1997, service incentive leave,
and overtime pay, and to implement Wage Order No. 4.
In their defense, respondents averred that the petitioners were not dismissed but they refused
to comply with the management's directive for them to report to the company's plant in San
Rafael, Bulacan. They denied the allegation that they negotiated in bad faith, stating that, in
fact, they sent the Executive Vice-President and Legal Counsel as the company's
representatives to the CBA negotiations. They claim that the failure to arrive at an agreement
was due to the stubbornness of the union panel.
Respondents further averred that, long before the start of the negotiations, the company had
already been planning to decongest the Caloocan office to comply with the government policy
to shift the concentration of manufacturing activities from the metropolis to the countryside.
The decision to transfer the company's production activities to San Rafael, Bulacan was
precipitated by the letter-reminder of the Bureau of Animal Industry.
On February 27, 1998, the Labor Arbiter dismissed the case for lack of merit. 10 The Labor
Arbiter held that the transfer of the petitioners would not paralyze or render the union
ineffective for the following reasons: (1) complainants are not members of the negotiating
panel; and (2) the transfer was made pursuant to the directive of the Department of
Agriculture.
The Labor Arbiter also denied the money claims, ratiocinating that the nonpayment of wages
was justified because the petitioners did not render work from May 26 to 31, 1997; overtime
pay is not due because of the compressed workweek agreement between the union and
management; and service incentive leave pay cannot be claimed by the complainants
because they are already enjoying vacation leave with pay for at least five days. As for the
claim of noncompliance with Wage Order No. 4, the Labor Arbiter held that the issue should
be left to the grievance machinery or voluntary arbitrator.
On October 29, 1999, the NLRC affirmed the Labor Arbiter's Decision, dismissing the case,
thus:
PREMISES CONSIDERED, the Decision of February 27, 1998 is hereby AFFIRMED
and complainants' appeal therefrom DISMISSED for lack of merit. Complainants
Joselito Lariño, Vivencio Barte, Saturnino Egera and Simplicio Aya-ay are directed to
report to work at respondents' San Rafael Plant, Bulacan but without backwages.
Respondents are directed to accept the complainants back to work.
SO ORDERED.11
On December 22, 1999, the NLRC denied the petitioners' motion for reconsideration for lack
of merit.12
Left with no recourse, petitioners filed a petition for certiorari with the CA.
On July 24, 2001, the CA dismissed the petition for certiorari and ruled that the transfer order
was a management prerogative not amounting to a constructive dismissal or an unfair labor
practice. The CA further sustained the enforceability of the MOA, particularly the waiver of
overtime pay in light of this Court's rulings upholding a waiver of benefits in exchange of other
valuable privileges. The dispositive portion of the said CA decision reads:
WHEREFORE, the instant petition is DISMISSED. The Decision of the Labor Arbiter
dated February 27, 1998 and the Decision and Resolution of the NLRC promulgated
on October 29, 1999 and December 22, 1999, respectively, in NLRC-NCR Case Nos.
08-05715-97, 08-06115-97 and 08-05920-97, are AFFIRMED.
SO ORDERED.13
The CA denied the petitioners' motion for reconsideration on December 20, 2001.14
Dissatisfied, petitioners filed this petition for review raising the following issues:
-A-
THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE PATENTLY
ERRONEOUS RULING OF THE LABOR ARBITER AND THE COMMISSION THAT
THERE WAS NO DISMISSAL, MUCH LESS ILLEGAL DISMISSAL, OF THE
INDIVIDUAL PETITIONERS.
-B-
THE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING AND
CONCLUDING THAT PRIVATE RESPONDENTS COMMITTED ACTS OF UNFAIR
LABOR PRACTICE.
-C-
THE COURT OF APPEALS ERRED IN NOT FINDING AND CONCLUDING THAT
PETITIONERS ARE ENTITLED TO THEIR MONEY CLAIMS AND TO DAMAGES,
AS WELL AS LITIGATION COSTS AND ATTORNEY'S FEES.15
The petition has no merit.
We have no reason to deviate from the well-entrenched rule that findings of fact of labor
officials, who are deemed to have acquired expertise in matters within their respective
jurisdiction, are generally accorded not only respect but even finality, and bind us when
supported by substantial evidence.16 This is particularly true when the findings of the Labor
Arbiter, the NLRC and the CA are in absolute agreement.17 In this case, the Labor Arbiter, the
NLRC, and the CA uniformly agreed that the petitioners were not constructively dismissed
and that the transfer orders did not amount to an unfair labor practice. But if only to disabuse
the minds of the petitioners who have persistently pursued this case on the mistaken belief
that the labor tribunals and the appellate court committed grievous errors, this Court will go
over the issues raised in this petition.
Petitioners mainly contend that the transfer orders amount to a constructive dismissal. They
maintain that the letter of the Bureau of Animal Industry is not credible because it is not
authenticated; it is only a ploy, solicited by respondents to give them an excuse to effect a
massive transfer of employees. They point out that the Caloocan City office is still engaged in
production activities until now and respondents even hired new employees to replace them.
We do not agree.
We refuse to accept the petitioners' wild and reckless imputation that the Bureau of Animal
Industry conspired with the respondents just to effect the transfer of the petitioners. There is
not an iota of proof to support this outlandish claim. Absent any evidence, the allegation is not
only highly irresponsible but is grossly unfair to the government agency concerned. Even as
this Court has given litigants and counsel a relatively wide latitude to present arguments in
support of their cause, we will not tolerate outright misrepresentation or baseless accusation.
Let this be fair warning to counsel for the petitioners.
Furthermore, Tryco's decision to transfer its production activities to San Rafael, Bulacan,
regardless of whether it was made pursuant to the letter of the Bureau of Animal Industry,
was within the scope of its inherent right to control and manage its enterprise effectively.
While the law is solicitous of the welfare of employees, it must also protect the right of an
employer to exercise what are clearly management prerogatives. The free will of
management to conduct its own business affairs to achieve its purpose cannot be denied.18
This prerogative extends to the management's right to regulate, according to its own
discretion and judgment, all aspects of employment, including the freedom to transfer and
reassign employees according to the requirements of its business.19 Management's
prerogative of transferring and reassigning employees from one area of operation to another
in order to meet the requirements of the business is, therefore, generally not constitutive of
constructive dismissal.20 Thus, the consequent transfer of Tryco's personnel, assigned to the
Production Department was well within the scope of its management prerogative.
When the transfer is not unreasonable, or inconvenient, or prejudicial to the employee, and it
does not involve a demotion in rank or diminution of salaries, benefits, and other privileges,
the employee may not complain that it amounts to a constructive dismissal.21 However, the
employer has the burden of proving that the transfer of an employee is for valid and legitimate
grounds. The employer must show that the transfer is not unreasonable, inconvenient, or
prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his
salaries, privileges and other benefits.22
Indisputably, in the instant case, the transfer orders do not entail a demotion in rank or
diminution of salaries, benefits and other privileges of the petitioners. Petitioners, therefore,
anchor their objection solely on the ground that it would cause them great inconvenience
since they are all residents of Metro Manila and they would incur additional expenses to travel
daily from Manila to Bulacan.
The Court has previously declared that mere incidental inconvenience is not sufficient to
warrant a claim of constructive dismissal.23 Objection to a transfer that is grounded solely
upon the personal inconvenience or hardship that will be caused to the employee by reason
of the transfer is not a valid reason to disobey an order of transfer.24
Incidentally, petitioners cite Escobin v. NLRC25 where the Court held that the transfer of the
employees therein was unreasonable. However, the distance of the workplace to which the
employees were being transferred can hardly compare to that of the present case. In that
case, the employees were being transferred from Basilan to Manila; hence, the Court noted
that the transfer would have entailed the separation of the employees from their families who
were residing in Basilan and accrual of additional expenses for living accommodations in
Manila. In contrast, the distance from Caloocan to San Rafael, Bulacan is not considerably
great so as to compel petitioners to seek living accommodations in the area and prevent them
from commuting to Metro Manila daily to be with their families.
Petitioners, however, went further and argued that the transfer orders amounted to unfair
labor practice because it would paralyze and render the union ineffective.
To begin with, we cannot see how the mere transfer of its members can paralyze the union.
The union was not deprived of the membership of the petitioners whose work assignments
were only transferred to another location.
More importantly, there was no showing or any indication that the transfer orders were
motivated by an intention to interfere with the petitioners' right to organize. Unfair labor
practice refers to acts that violate the workers' right to organize. With the exception of Article
248(f) of the Labor Code of the Philippines, the prohibited acts are related to the workers'
right to self-organization and to the observance of a CBA. Without that element, the acts, no
matter how unfair, are not unfair labor practices.26
Finally, we do not agree with the petitioners' assertion that the MOA is not enforceable as it is
contrary to law. The MOA is enforceable and binding against the petitioners. Where it is
shown that the person making the waiver did so voluntarily, with full understanding of what he
was doing, and the consideration for the quitclaim is credible and reasonable, the transaction
must be recognized as a valid and binding undertaking.27
D.O. No. 21 sanctions the waiver of overtime pay in consideration of the benefits that the
employees will derive from the adoption of a compressed workweek scheme, thus:
The compressed workweek scheme was originally conceived for establishments
wishing to save on energy costs, promote greater work efficiency and lower the rate
of employee absenteeism, among others. Workers favor the scheme considering that
it would mean savings on the increasing cost of transportation fares for at least one
(1) day a week; savings on meal and snack expenses; longer weekends, or an
additional 52 off-days a year, that can be devoted to rest, leisure, family
responsibilities, studies and other personal matters, and that it will spare them for at
least another day in a week from certain inconveniences that are the normal incidents
of employment, such as commuting to and from the workplace, travel time spent,
exposure to dust and motor vehicle fumes, dressing up for work, etc. Thus, under this
scheme, the generally observed workweek of six (6) days is shortened to five (5)
days but prolonging the working hours from Monday to Friday without the employer
being obliged for pay overtime premium compensation for work performed in excess
of eight (8) hours on weekdays, in exchange for the benefits abovecited that will
accrue to the employees.
Moreover, the adoption of a compressed workweek scheme in the company will help temper
any inconvenience that will be caused the petitioners by their transfer to a farther workplace.
Notably, the MOA complied with the following conditions set by the DOLE, under D.O. No. 21,
to protect the interest of the employees in the implementation of a compressed workweek
scheme:
1. The employees voluntarily agree to work more than eight (8) hours a day the total
in a week of which shall not exceed their normal weekly hours of work prior to
adoption of the compressed workweek arrangement;
2. There will not be any diminution whatsoever in the weekly or monthly take-home
pay and fringe benefits of the employees;
3. If an employee is permitted or required to work in excess of his normal weekly
hours of work prior to the adoption of the compressed workweek scheme, all such
excess hours shall be considered overtime work and shall be compensated in
accordance with the provisions of the Labor Code or applicable Collective Bargaining
Agreement (CBA);
4. Appropriate waivers with respect to overtime premium pay for work performed in
excess of eight (8) hours a day may be devised by the parties to the agreement.
5. The effectivity and implementation of the new working time arrangement shall be
by agreement of the parties.
PESALA v. NLRC,28 cited by the petitioners, is not applicable to the present case. In that
case, an employment contract provided that the workday consists of 12 hours and the
employee will be paid a fixed monthly salary rate that was above the legal minimum wage.
However, unlike the present MOA which specifically states that the employee waives his right
to claim overtime pay for work rendered beyond eight hours, the employment contract in that
case was silent on whether overtime pay was included in the payment of the fixed monthly
salary. This necessitated the interpretation by the Court as to whether the fixed monthly rate
provided under the employment contract included overtime pay. The Court noted that if the
employee is paid only the minimum wage but with overtime pay, the amount is still greater
than the fixed monthly rate as provided in the employment contract. It, therefore, held that
overtime pay was not included in the agreed fixed monthly rate.
Considering that the MOA clearly states that the employee waives the payment of overtime
pay in exchange of a five-day workweek, there is no room for interpretation and its terms
should be implemented as they are written.
WHEREFORE, the petition is DENIED. The Court of Appeals Decision dated July 24, 2001
and Resolution dated December 20, 2001 are AFFIRMED.
SO ORDERED.
.R. No. L-18939             August 31, 1964
NATIONAL WATERWORKS and SEWERAGE AUTHORITY, petitioner,
vs.
NWSA CONSOLIDATED UNIONS, ET AL., respondents.
Govt. Corp. Counsel Simeon M. Gopengco and Asst. Govt. Corp. Counsel Arturo B. Santos
for petitioner.
Cipriano Cid and Associates and Israel Bocobo for respondents.
Alfredo M. Montesa for intervenor-respondent.
BAUTISTA ANGELO, J.:
Petitioner National Waterworks & Sewerage Authority is a government-owned and controlled
corporation created under Republic Act No. 1383, while respondent NWSA Consolidated
Unions are various labor organizations composed of laborers and employees of the
NAWASA. The other respondents are intervenors Jesus Centeno, et al., hereinafter referred
to as intervenors.
Acting on a certification of the President of the Philippines, the Court of Industrial Relations
conducted a hearing on December 5, 1957 on the controversy then existing between
petitioner and respondent unions which the latter embodied in a "Manifesto" dated December
51, 1957, namely: implementation of the 40-Hour Week Law (Republic Act No. 1880); alleged
violations of the collective bargaining agreement dated December 28, 1956 concerning
"distress pay"; minimum wage of P5.25; promotional appointments and filling of vacancies of
newly created positions; additional compensation for night work; wage increases to some
laborers and employees; and strike duration pay. In addition, respondent unions raised the
issue of whether the 25% additional compensation for Sunday work should be included in
computing the daily wage and whether, in determining the daily wage of a monthly-salaried
employee, the salary should be divided by 30 days.
On December 13, 1957, petitioner and respondent unions, conformably to a suggestion of the
Court of Industrial Relations, submitted a joint stipulation of facts on the issues concerning
the 40-Hour Week Law, "distress pay," minimum wage of P5.25, filling of vacancies, night
compensation, and salary adjustments, reserving the right to present evidence on matters not
covered therein. On December 4, 1957, respondent intervenors filed a petition in intervention
on the issue for additional compensation for night work. Later, however, they amended their
petition by including a new demand for overtime pay in favor of Jesus Centeno, Cesar
Cabrera, Feliciano Duiguan, Cecilio Remotigue, and other employees receiving P4,200.00
per annum or more.
Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted and
approved by this Honorable Court, without prejudice to the parties adducing other evidence to
prove their case not covered by this stipulation of facts. 1äwphï1.ñët
On February 5, 1958, petitioner filed a motion to dismiss the claim for overtime pay alleging
that respondent Court of Industrial Relations was without jurisdiction to pass upon the same
because, as mere intervenors, the latter cannot raise new issues not litigated in the principal
case, the same not being the lis mota  therein involved. To this motion the intervenors filed an
opposition. Thereafter, respondent court issued an order allowing the issue to be litigated.
Petitioner's motion to reconsider having been denied, it filed its answer to the petition for
intervention. Finally, on January 16, 1961, respondent court rendered its decision stating
substantially as follows:
The NAWASA is an agency not performing governmental functions and, therefore, is liable to
pay additional compensation for work on Sundays and legal holidays conformably to
Commonwealth Act No. 444, known as the Eight-Hour Labor Law, even if said days should
be within the staggered five work days authorized by the President; the intervenors do not fall
within the category of "managerial employees" as contemplated in Republic Act 2377 and so
are not exempt from the coverage of the Eight-Hour Labor Law; even those intervenors
attached to the General Auditing Office and the Bureau of Public Works come within the
purview of Commonwealth Act No. 444; the computation followed by NAWASA in computing
overtime compensation is contrary to Commonwealth Act 444; the undertime of a worker
should not be set-off against the worker in determining whether the latter has rendered
service in excess of eight hours for that day; in computing the daily wage of those employed
on daily basis, the additional 25% compensation for Sunday work should be included; the
computation used by the NAWASA for monthly salaried employees to wit, dividing the
monthly basic pay by 30 is erroneous; the minimum wage awarded by respondent court way
back on November 25, 1950 in Case No. 359-V entitled MWD Workers Union v. Metropolitan
Water District, applies even to those who were employed long after the promulgation of the
award and even if their workers are hired only as temporary, emergency and casual workers
for a definite period and for a particular project; the authority granted to NAWASA by the
President to stagger the working days of its workers should be limited exclusively to those
specified in the authorization and should not be extended to others who are not therein
specified; and under the collective bargaining agreement entered into between the NAWASA
and respondent unions on December 28, 1956, as well as under Resolution No. 29, series of
1957 of the Grievance Committee, even those who work outside the sewerage chambers
should be paid 25% additional compensation as "distress pay."
Its motion for reconsideration having been denied, NAWASA filed the present petition for
review raising merely questions of law. Succinctly, these questions are:
1. Whether NAWASA is performing governmental functions and, therefore,
essentially a service agency of the government;
2. Whether NAWASA is a public utility and, therefore, exempted from paying
additional compensation for work on Sundays and legal holidays;
3. Whether the intervenors are "managerial employees" within the meaning of
Republic Act 2377 and, therefore, not entitled to the benefits of Commonwealth Act
No. 444, as amended;
4. Whether respondent Court of Industrial Relations has jurisdiction to adjudicate
overtime pay considering that this issue was not among the demands of respondent
union in the principal case but was merely dragged into the case by the intervenors;
5. Whether those attached to the General Auditing Office and the Bureau of Public
Works come within the purview of Commonwealth Act No. 444, as amended;
6. In determining whether one has worked in excess of eight hours, whether the
undertime for that day should be set off;
7. In computing the daily wage, whether the additional compensation for Sunday
work should be included;
8. What is the correct method to determine the equivalent daily wage of a monthly
salaried employee, especially in a firm which is a public utility?;
9. Considering that the payment of night compensation is not by virtue of any
statutory provision but emanates only from an award of respondent Court of Industrial
Relations, whether the same can be made retroactive and cover a period prior to the
promulgation of the award;
10. Whether the minimum wage fixed and awarded by respondent Court of Industrial
Relations in another case (MWD Workers Union v. MWD CIR Case No. 359-V)
applies to those employed long after the promulgation thereof, whether hired as
temporary, emergency and casual workers for a definite period and for a specific
project;
11. How should the collection bargaining agreement of December 28, 1956 and
Resolution No. 29, series of 1957 of the Grievance Committee be interpreted and
construed insofar as the stipulations therein contained relative to "distress pay" is
concerned?; and
12. Whether, under the first indorsement of the President of the Philippines dated
August 12, 1957, which authorizes herein petitioner to stagger the working days of its
employees and laborers, those whose services are indispensably continuous
throughout the year may be staggered in the same manner as the pump, valve, filter
 and chlorine operators, guards, watchmen, medical services, and those attached to
the recreational facilities.
DISCUSSION OF THE ISSUES
1. Is NAWASA an agency that performs governmental functions and, therefore, essentially a
service agency of the government? Petitioner sustains the affirmative because, under
Republic Act No. 1383, it is a public corporation, and such it exist a an agency independent of
the Department of Public Works of our government. It also contends that under the same Act
the Public Service Commission does not have control, supervision or jurisdiction over it in the
fixing of rates concerning of the operation of the service. It can also incur indebtedness or
issue bonds that are exempt from taxation which circumstance implies that it is essentially a
government- function corporation because it enjoys that attribute of sovereignty. Petitioner
likewise invokes the opinion of the Secretary of Justice which holds that the NAWASA being
essentially a service agency of the government can be classified as a corporation performing
governmental function.
With this contention, we disagree. While under republic Act No. 1383 the NAWASA is
considered as a public corporation it does not show that it was so created for the government
of a portion of the State. It should be borne in mind that there are two kinds of public
corporation, namely, municipal and non-municipal. A municipal corporation in its strict is the
body politic constituted by the inhabitants of a city or town for the purpose of local
government thereof. It is the body politic established by law particularly as an agency of the
State to assist in the civil government of the country chiefly to regulate the local and internal
affairs of the city or town that is incorporated (62 C.J.S., p. 61). Non- municipal corporations,
on the other hand, are public corporations created as agencies of the State for limited
purposes to take charge merely of some public or state work other than community
government (Elliot, Municipal Corporations, 3rd ed., p. 7; McQuillin, Mun. Corp., 3rd ed., Vol.
1, p. 476).
The National Waterworks and Sewerage Authority was not created for purposes of local
government. It was created for the "purpose of consolidating and centralizing all waterworks,
sewerage and drainage system in the Philippines under one control and direction and general
supervision." The NAWASA therefore, though a public corporation, is not a municipal
corporation, because it is not an agency of the State to regulate or administer the local affairs
of the town, city, or district which is incorporated.
Moreover, the NAWASA, by its charter, has personality and power separate and distinct from
the government. It is an independent agency of the government although it ids placed, for
administrative purposes, under the Department of Public Works and Communications. It has
continuous succession under its corporate name and sue and be sued in court. It has
corporate power to exercised by its board of directors; it has its own assets and liabilities; and
it may charge rates for its services.
In Bacani vs. National Coconut Corporation, 53 O.G., 2798, we stated: "To recapitulate, we
may mention that the term 'Government of the Republic of the Philippines'... refers only to
that government entity through which the functions of the government are exercised as an
attribute of sovereignty, and in this are included those arms through which political authority is
made effective whether they be provincial, municipal or other form of local government.
These are what we call municipal corporations. They do not include government entities
which are given a corporate personality separate and distinct from the government and which
are governed by the Corporation Law. Their powers, duties and liabilities have to be
determined in the light of that law and of their corporate charter."
The same conclusion may be reached by considering the powers, functions and activities of
the NAWASA which are enumerated in Section 2, Republic Act No. 1383, among others, as
follows:
(e) To construct, maintain and operate mains pipes, water reservoirs, machinery, and
other waterworks for the purpose of supplying water to the inhabitants of its zone,
both domestic and other purposes; to purify the source of supply, regulate the control
and use, and prevent the waste of water; and to fix water rates and provide for the
collection of rents therefor;
(f) To construct, maintain and operate such system of sanitary sewers as may be
necessary for the proper sanitation of the cities and towns comprising the Authority
and to charge and collect such sums for construction and rates for this service as
may be determined by the Board to be equitable and just;
(g) To acquire, purchase, hold, transfer, sell, lease, rent, mortgage, encumber, and
otherwise dispose of real and personal property, including rights and franchises,
within the Philippines, as authorized by the purpose for which the Authority was
created and reasonably and necessarily required of the transaction of the lawful
business of the same, unless otherwise provided in this Act;
The business of providing water supply and sewerage service, as this Court held, "may for all
practical purposes be likened to an industry engaged in by coal companies, gas companies,
power plants, ice plants, and the like" (Metropolitan Water District v. Court of Industrial
Relations, et al., L-4488, August 27, 1952). These are but mere ministrant functions of
government which are aimed at advancing the general interest of society. As such they are
optional (Bacani v. National Coconut Corporation, supra). And it has been held that "although
the state may regulate the service and rates of water plants owned and operated by
municipalities, such property is not employed for governmental purposes and in the
ownership operation thereof the municipality acts in its proprietary capacity, free from
legislative interference" (1 McQuillin, p. 683). In Mendoza v. De Leon, 33 Phil., 508, 509, this
Court also held:
Municipalities of the Philippine Islands organized under the Municipal Code have
both governmental and corporate or business functions. Of the first class are the
 adoption of regulations against fire and disease, preservation of the public peace,
maintenance of municipal prisons, establishment of primary schools and post-offices,
etc. Of the latter class are the establishment of municipal waterworks for the use of
the inhabitants, the construction and maintenance of municipal slaughterhouses,
markets, stables, bathing establishments, wharves, ferries, and fisheries. ...
On the strength of the foregoing considerations, our conclusions is that the NAWASA is not
an agency performing governmental functions. Rather, it performs proprietary functions, and
as such comes within the coverage of Commonwealth Act No. 444.
2. We agree with petitioner that the NAWASA is a public utility because its primary function is
to construct, maintain and operate water reservoirs and waterworks for the purpose of
supplying water to the inhabitants, as well as consolidate and centralize all water supplies
and drainage systems in the Philippines. We likewise agree with petitioner that a public utility
is exempt from paying additional compensation for work on Sundays and legal holidays
conformably to Section 4 of Commonwealth Act No. 444 which provides that the prohibition,
regarding employment of Sundays and holidays unless an additional sum of 25% of the
employee's regular remuneration is paid shall not apply to public utilities such as those
supplying gas, electricity, power, water or providing means of transportation or
communication. In other words, the employees and laborers of NAWASA can be made to
work on Sundays and legal holidays without being required to pay them an additional
compensation of 25%.
It is to be noted, however, that in the case at bar it has been stipulated that prior to the
enactment of Republic Act No. 1880, providing for the implementation of the 40-Hour Week
Law, the Metropolitan Water District had been paying 25% additional compensation for work
on Sundays and legal holidays to its employees and laborers by virtue of Resolution No. 47,
series of 1948, of its board of Directors, which practice was continued by the NAWASA when
the latter took over the service. And in the collective bargaining agreement entered into
between the NAWASA and respondent unions it was agreed that all existing benefits enjoyed
by the employees and laborers prior to its effectivity shall remain in force and shall form part
of the agreement, among which certainly is the 25% additional compensation for work on
Sundays and legal holidays therefore enjoyed by said laborers and employees. It may,
therefore, be said that while under Commonwealth Act No. 444 a public utility is not required
to pay additional compensation to its employees and workers for work done on Sundays and
legal holidays, there is, however, no prohibition for it to pay such additional compensation if it
voluntarily agrees to do so. The NAWASA committed itself to pay this additional
compensation. It must pay not because of compulsion of law but because of contractual
obligation.
3. This issue raises the question whether the intervenors are "managerial employees" within
the meaning of Republic Act 2377 and as such are not entitled to the benefits of
Commonwealth Act No. 444, as amended. Section 2 of Republic Act 2377 provides:
Sec. 2. This Act shall apply to all persons employed in any industry or occupation,
whether public or private with the exception of farm laborers, laborers who prefer to
be paid on piece work basis, managerial employees, outside sales personnel,
domestic servants, persons in the personal service of another and members of the
family of the employer working for him.
The term "managerial employee" in this Act shall mean either (a) any person whose
primary duty consists of the management of the establishment in which he is
employed or of a customarily recognized department or subdivision thereof, or (b) ally
officer or member of the managerial staff.
One of the distinguishing characteristics managerial employee may be known as expressed
in the explanatory note of Republic Act No. 2377 is that he is not subject to the rigid
observance of regular office hours. The true worth of his service does not depend so much on
the time he spends in office but more on the results he accomplishes. In fact, he is free to go
out of office anytime.
On the other hand, in the Fair Labor Standards Act of the United States, which was taken into
account by the sponsors of the present Act in defining the degree of work of a managerial
employee, we find interesting the following dissertation of the nature of work o a managerial
employee:
Decisions have consumed and applied a regulation in substance providing that the
term "professional" employee shall mean any employee ... who is engaged in work
predominantly intellectual and varied in character, and requires the consistent
exercise of discretion and judgment in its performance and is of such a character that
the output produced or the result accomplished cannot be standardized in relation to
a given period of time, and whose hours of work of the same nature as that
performed by non-exempt employees do not exceed twenty percent of the hours
worked in the work week by the non-exempt employees, except where such work is
necessarily incident to work of a professional nature; and which requires, first,
knowledge of an advanced type in a field of science or learning customarily acquired
by a prolonged course or specialized intellectual instruction and study, or, second,
predominantly original and creative in character in a recognized field of artistic
endeavor. Stranger v. Vocafilm Corp., C.C.A. N.Y., 151 F. 2d 894, 162 A.L.R.
216; Hofer v. Federal Cartridge Corp., D.C. Minn. 71 F. Supp. 243; Aulen v. Triumph
Explosive, D.C. Md., 58 P. Supp. 4." (56 C.J.S., p. 666).
Under the provisions of the Fair Labor Standards Act 29 U.S.C.A., Section 23 (a) (1),
executive employees are exempted from the statutory requirements as to minimum
wages and overtime pay. ...
Thus the exemption attaches only where it appears that the employee's primary duty
consists of the management of the establishment or of a customarily recognized
department or subdivision thereof, that he customarily and regularly directs the work
 of other employees therein, that he has the authority to hire or discharge other
employees or that his suggestions and recommendations as to the hiring or
discharging and as to the advancement and promotion or any other change of status
of other employees are given particular weight, that he customarily and, regularly
exercises discretionary powers, ... . (56 C.J.S., pp. 666-668.)
The term "administrative employee" ordinarily applies only to an employee who is
compensated for his services at a salary or fee of not less than a prescribed sum per
month, and who regularly and directly assists an employee employed in a bona fide
executive or administrative capacity, where such assistance is nonmanual in nature
and requires the exercise of discretion and independent judgment; or who performs
under only general supervision, responsible non-manual office or field work, directly
related to management policies or general business operations, along specialized or
technical lines' requiring special training experience, or knowledge, and the exercise
of discretion and independent judgment; ... . (56 C.J.S., p. 671.)
The reason underlying each exemption is in reality apparent. Executive,
administrative and professional workers are not usually employed at hourly wages
nor is it feasible in the case of such employees to provide a fixed hourly rate of pay
nor maximum hours of labor, Helena Glendale Perry Co. v. Walling, C.C.A. Ark. 132
F. 2d 616, 619. (56 C.J.S., p. 664.)
The philosophy behind the exemption of managerial employees from the 8-Hour Labor Law is
that such workers are not usually employed for every hour of work but their compensation is
determined considering their special training, experience or knowledge which requires the
exercise of discretion and independent judgment, or perform work related to management
policies or general business operations along specialized or technical lines. For these
workers it is not feasible to provide a fixed hourly rate of pay or maximum hours of labor.
The intervenors herein are holding position of responsibility. One of them is the Secretary of
the Board of Directors. Another is the private secretary of the general manager. Another is a
public relations officer, and many other chiefs of divisions or sections and others are
supervisors and overseers. Respondent court, however, after examining carefully their
respective functions, duties and responsibilities found that their primary duties do not bear
any direct relation with the management of the NAWASA, nor do they participate in the
formulation of its policies nor in the hiring and firing of its employees. The chiefs of divisions
and sections are given ready policies to execute and standard practices to observe for their
execution. Hence, it concludes, they have little freedom of action, as their main function is
merely to carry out the company's orders, plans and policies.
To the foregoing comment, we agree. As a matter of fact, they are required to observe
working hours and record their time work and are not free to come and go to their offices, nor
move about at their own discretion. They do not, therefore, come within the category of
"managerial employees" within the meaning of the law.
4. Petitioner's claim is that the issue of overtime compensation not having been raised in the
original case but merely dragged into it by intervenors, respondent court cannot take
cognizance thereof under Section 1, Rule 13, of the Rules of Court.
Intervenors filed a petition for intervention alleging that being employees of petitioner who
have worked at night since 1954 without having been fully compensated they desire to
intervene insofar as the payment of their night work is concerned. Petitioner opposed the
petition on the ground that this matter was not in the original case since it was not included in
the dispute certified by the President of the Philippines to the Court of Industrial Relations.
The opposition was overruled. This is now assigned as error.
There is no dispute that the intervenors were in the employ of petitioner when they intervened
and that their claim refers to the 8-Hour Labor Law and since this Court has held time and
again that disputes that call for the application of the 8-Hour Labor Law are within the
jurisdiction of the Court of Industrial Relations if they arise while the employer-employee
relationship still exists, it is clear that the matter subject of intervention comes within the
jurisdiction of respondent court.1 The fact that the question of overtime payment is not
included in the principal casein the sense that it is not one of the items of dispute certified to
by the President is of no moment, for it comes within the sound discretion of the Court of
Industrial Relations. Moreover, in labor disputes technicalities of procedure should as much
as possible be avoided not only in the interest of labor but to avoid multiplicity of action. This
claim has no merit.
5. It is claimed that some intervenors are occupying positions in the General Auditing Office
and in the Bureau of Public Works for they are appointed either by the Auditor General or by
the Secretary of Public Works and, consequently, they are not officers of the NAWASA but of
the insular government, and as such are not covered by the Eight-Hour Labor Law.
The status of the GAO employees assigned to, and working in, government-controlled
corporations has already been decided by this Court in National Marketing Corporation, et al.
v. Court of Industrial Relations, et al., L-17804, January 31, 1963. In said case, this Court
said:
We agree with appellants that members of the auditing force can not be regarded as
employees of the PRISCO in matters relating to their compensation. They are
appointed and supervised by the Auditor General, have an independent tenure, and
work subject to his orders and instructions, and not to those of the management of
appellants. Above all, the nature of their functions and duties, for the purpose of fiscal
control of appellants' operations, imperatively demands, as a matter of policy, that
their positions be completely independent from interference or inducement on the
part of the supervised management, in order to assure a maximum of impartiality in
the auditing functions. Both independence and impartiality require that the employees
in question be utterly free from apprehension as to their tenure and from expectancy
of benefits resulting from any action of the management, since in either case there
would be an influence at work that could possibly lead, if not to positive malfeasance,
 to, laxity and indifference that would gradually erode and endanger the critical
supervision entrusted to these auditing employees.
The inclusion of their items in the PRISCO budget should be viewed as no more than
a designation by the national government of the fund or source from which their
emoluments are to be drawn, and does not signify that they are thereby made
PRISCO employees.
The GAO employees assigned to the NAWASA are exactly in the same position regarding
their status, compensation and right to overtime pay as the rest of the GAO employees
assigned to the defunct PRISCO, and following our ruling in the PRISCO case, we hold that
the GAO employees herein are not covered by the 8-Hour Labor Law, but by other pertinent
laws on the matter.
The same thing may be said with regard to the employer of the Bureau of Public Works
assigned to, and working in, the NAWASA. Their position is the same as that of the GAO
employees. Therefore, they are not also covered by the 8-Hour Labor Law.
The respondent court, therefore, erred in considering them as employees of the NAWASA for
the mere reason that they are paid out of its fund and are subject to its administration and
supervision.
6. A worker is entitled to overtime pay only for work in actual service beyond eight hours. If a
worker should incur in undertime during his regular daily work, should said undertime be
deducted in computing his overtime work? Petitioner sustains the affirmative while
respondent unions the negative, and respondent court decided the dispute in favor of the
latter. Hence this error.
There is merit in the decision of respondent court that the method used by petitioner in
offsetting the overtime with the undertime and at the same time charging said undertime to
the accrued leave of the employee is unfair, for under such method the employee is made to
pay twice for his undertime because his leave is reduced to that extent while he was made to
pay for it with work beyond the regular working hours. The proper method should be to
deduct the undertime from the accrued leave but pay the employee the overtime to which he
is entitled. This method also obviates the irregular schedule that would result if the overtime
should be set off against the undertime for that would place the schedule for working hours
dependent on the employee.
7. and 8. How is a daily wage of a weekly employee computed in the light of Republic Act
1880?
According to petitioner, the daily wage should be computed exclusively on the basic wage,
without including the automatic increase of 25% corresponding to the Sunday differential. To
include said Sunday differential would be to increase the basic pay which is not contemplated
by said Act. Respondent court disagrees with this manner of computation. It holds that
Republic Act 1880 requires that the basic weekly wage and the basic monthly salary should
not be diminished notwithstanding the reduction in the number of working days a week. If the
automatic increase corresponding to the salary differential should not be included there would
be a diminution of the weekly wage of the laborer concerned. Of course, this should only
benefit those who have been working seven days a week and had been regularly receiving
25% additional compensation for Sunday work before the effectivity of the Act.
It is evident that Republic Act 1880 does not intend to raise the wages of the employees over
what they are actually receiving. Rather, its purpose is to limit the working days in a week to
five days, or to 40 hours without however permitting any reduction in the weekly or daily wage
of the compensation which was previously received. The question then to be determined is:
what is meant by weekly or daily wage? Does the regular wage include differential payments
for work on Sundays or at nights, or is it the total amount received by the laborer for whatever
nature or concept?
It has been held that for purposes of computing overtime compensation a regular wage
includes all payments which the parties have agreed shall be received during the work week,
including piece work wages, differential payments for working at undesirable times, such as
at night or on Sundays and holidays, and the cost of board and lodging customarily furnished
the employee (Walling v. Yangermah-Reynolds Hardwook Co., 325 U.S. 419; Walling v.
Harischfeger Corp., 325 U.S. 427.) The "regular rate" of pay also ordinarily includes incentive
bonus or profit-sharing payments made in addition to the normal basic pay (56 C.J.S., pp.
704-705), and it was also held that the higher rate for night, Sunday and holiday work is just
as much a regular rate as the lower rate for daytime work. The higher rate is merely an
inducement to accept employment at times which are not as desirable from a workman's
standpoint (International L. Ass'n v. National Terminals Corp. C.C. Wise, 50 F. Supp. 26,
affirmed C.C.A. Carbunao v. National Terminals Corp. 139 F. 2d 853).
Respondent court, therefore, correctly included such differential pay in computing the weekly
wages of those employees and laborers who worked seven days a week and were
continuously receiving 25% Sunday differential for a period of three months immediately
preceding the implementation of Republic Act 1880.
The next issue refers to the method of computing the daily rate of a monthly-salaried
employee. Petitioner in computing this daily rate divides the monthly basic pay of the
employee by 30 in accordance with Section 254 of the Revised Administrative Code which in
part provides that "In making payment for part of a month, the amount to be paid for each day
shall be determined by dividing the monthly pay into as many parts as there are days in the
particular month." The respondent court disagrees with this method and holds that the way to
determine the daily rate of a monthly employee is to divide the monthly salary by the actual
number of working hours in the month. Thus, according to respondent court, Section 8 (g) of
Republic Act No. 1161, as amended by Republic Act 1792, provides that the daily rate of
compensation is the total regular compensation for the customary number of hours worked
each day. In other words, according to respondent court, the correct computation shall be (a)
the monthly salary divided by the actual of working hours in a month or (b) the regular
monthly compensation divided by the number of working days in a month.
This finding of respondent court should be modified insofar as the employees of the General
Auditing Office and of the Bureau of Public Works assigned to work in the NAWASA are
concerned for, as already stated, they are government employees and should be governed
by Section 254 of the Revised Administrative Code. This section provides that in making
payments for part of a month, the amount to be paid for each day shall be determined by
dividing the monthly pay. Into as many parts as there are days in the particular month. With
this modification we find correct the finding of the respondent court on this issue.
9. The Court of Industrial Relations awarded an additional 25% night compensation to some,
workers with retroactive effect, that is, effective even before the presentation of the claim,
provided that they had been given authorization by the general manager to perform night
work. It is petitioner's theory that since there is no statute requiring payment of additional
compensation for night work but it can only be granted either by the voluntary act of the
employer or by an award of the industrial court under its compulsory arbitration power, such
grant should only be prospective in operation, and not retroactive, as authorized by the court.
It is of common occurrence that a working man who has already rendered night time service
takes him a long time before he can muster enough courage to confront his employer with the
demand for payment for it for fear of possible reprisal. It happens that many months or years
are allowed to pass by before he could be made to present such claim against his employer,
and so it is neither fair nor just that he be deprived of what is due him simply because of his
silence for fear of losing the means of his livelihood. Hence, it is not erroneous for the Court
of Industrial Relations to make the payment of such night compensation retroactive to the
date when the work was actually performed.
The power of the Court of Industrial Relations to order the payment of compensation for
overtime service prior to the date of the filing of the claim has been recognized by this Court
(Luzon Stevedoring Co., Inc. v. Luzon Marine Department Union, et al., L-9265, April 29,
1957). The same reasons given therein for the retroactivity of overtime compensation may
also be given for the retroactivity of payment of night compensation, as such reasoning runs
along the line already above-stated.
10. The Court of Industrial Relations in its resolution dated November 25, 1950 issued in
Case No. 359-V entitled MWD Workers Union, et al. v. Metropolitan Water District, fixed the
following rates of minimum daily wage: P5.25 for those working in Manila and suburbs; P4.50
for those working in Quezon City; and P4.00 for those working in Ipo. Montalban and Balara.
It appears that in spite of the notice to terminate said award filed with the court on December
29, 1953, the Metropolitan Water District continued paying the above wages and the
NAWASA which succeeded it adopted the same rates for sometime. In September, 1955, the
NAWASA hired the claimants as temporary workers and it is now contended that said rates
cannot apply to these workers.
The Court of Industrial Relations, however, held that the discontinuance of this minimum
wage rate was improper and ordered the payment of the difference to said workers from the
date the payment of said rates was discontinued, advancing, among others, the following
reasons: that the resolution of November 25, 1950 is applicable not only to those laborers
already in the service but also to those who may be employed thereafter; the notice of
determination of said award given on December 29, 1953 is not legally effective because the
same was given without hearing and the employer continued paying the minimum wages
even after the notice of termination; and there is no showing that the minimum wages violate
Civil Service Law or the principles underlying the WAPCO.
We find no valid reason to disagree with the foregoing finding of the Court of Industrial
Relations considering that the award continued to be valid and effective in spite of the notice
of termination given by the employer. No good reason is seen why such award should not
apply to those who may be employed after its approval by the court there being nothing
therein that may prevent its extension to them. Moreover, the industrial court can at any time
during the effectiveness of an award or reopen any question involved therein under Section
17 of Commonwealth Act No. 103, and such is what said court has done when it made the
award extensive to the new employees, more so when they are similarly situated. To do
otherwise would be to foster discrimination.
11. This issue has to do with the meaning of "distress pay." Paragraph 3, Article VIII, of the
collective bargaining agreement entered into between the employer and respondent unions,
provides:
Because of the peculiar nature of the function of those employees and laborers of the
Sewerage Division who actually work in the sewerage chambers, causing "unusual
distress" to them, they shall receive extra compensation equivalent to twenty-five
(25%) of their basic wage.
Pursuant to said agreement, a grievance committee was created composed of
representatives of management and labor which adopted the following resolution:
Resolution No. 9
Series of 1957
BE IT RESOLVED, That the employees and laborers of the Sewerage Division who
actually work in the sewerage chambers causing unusual distress to them, be paid
extra compensation equivalent to 25% of their basic wage, as embodied in Article
VIII, Paragraph 3 of the Collective Bargaining Agreement; PROVIDED, however, that
any employee who may be required to work actually in the sewerage chambers shall
also be paid 25% extra compensation and, PROVIDED FURTHER, that the term
"sewerage chambers" shall include pits, trenches, and other excavations that are
necessary to tap the sewer line, and PROVIDED FINALLY that this will not prejudice
any laborer or employee who may be included in one way or another in the term
"unusual distress" within the purview of Paragraph 3 of Article VIII, of the Collective
Bargaining Agreement.
And in a conference held between management and labor on November 25, 1957, the
following was agreed upon: "Distress Management agreed to pay effective October 1, 1956
25% additional compensation for those who actually work in and outside sewerage chambers
in accordance with Resolution No. 9 of the Grievance Committee."
The question that arose in connection with this distress pay is with regard to the meaning of
the phrase "who actually work in and outside sewerage chambers." Petitioner contends that
the distress pay should be given only to those who actually work inside the sewerage
chambers while the union maintains that such pay should be given to all those whose work
have to do with the sewerage chambers, whether inside or outside. The Court of Industrial
Relations sustained the latter view holding that the distress pay should be given to those who
actually work in and outside the sewerage chambers effective October 1, 1956. This view is
now disputed by petitioner.
The solution of the present issue hinges upon the interpretation of paragraph 3, Article VIII of
the collective bargaining agreement, copied above, as explained by Resolution No. 9, and the
agreement of November 25, 1957, also copied above, which stipulation has to be interpreted
as a whole pursuant to Article 1374 of the Civil Code. As thus interpreted, we find that those
who are entitled to the distress pay are those employees and laborers who work in the
sewerage chambers whether they belong to the sewerage division or not, and by sewerage
chambers should be understood to mean as the surroundings where the work is actually
done, not necessarily "inside the sewerage chambers." This is clearly inferred from the
conference held in the Department of Labor on November 25, 1957 where it was agreed that
the compensation should be paid to those who work "in and outside" the sewerage chambers
in accordance with the terms of Resolution No. 9 of the Grievance Committee. It should be
noted that according to said resolution, sewerage chambers include "pits, trenches, and other
excavations that are necessary to tap the sewer lines." And the reason given for this extra
compensation is the "unusual distress" that is caused to the laborers by working in the
sewerage chambers in the form and extent above-mentioned.
It is clear then that all the laborers whether of the sewerage division or not assigned to work
in and outside the sewerage chambers and suffer in unusual distress because of the nature
of their work are entitled to the extra compensatory. And this conclusion is further bolstered
by the findings of the industrial court regarding the main activities of the sewerage division.
Thus, the Court of Industrial Relations found that the sewerage division has three main
activities, to wit: (a) cooperation of the sewerage pumping stations; (b) cleaning and
maintenance of sewer mains; and (c) installation and repairs of house sewer connections.
The pump operators and the sewer attendants in the seven pumping stations in Manila,
according to the industrial court, suffer unusual distress. The pump operators have to go to
the wet pit to see how the cleaning of the screen protecting the pump is being performed, and
go also to the dry pit abutting the wet pit to make repairs in the breakdown of the pumps.
Although the operators used to stay near the motor which is but a few meters from the pump,
they unavoidably smell the foul odor emitting from the pit. Thesewerage attendants go down
and work in the wet pit containing sewerage materials in order to clean the screen.
A group assigned to the cleaning and maintenance of the sewer mains which are located in
the middle of the streets of Manila is usually composed of a capataz  and four sewerage
attendants. These attendants are rotated in going inside the manholes, operation of the
window glass, bailing out from the main to the manhole and in supplying the water service as
necessity demand. These attendants come into contact with dirt, stink, and smell, darkness
and heat inside and near the sewage pipes. The capataz goes from one manhole to another
seeing to it that the work is properly performed and as such also suffers unusual distress
although to a lesser degree.
The group resigned to the third kind of activity is also usually composed of a capataz and four
attendants. Their work is to connect sewer pipes from houses to the sewer mains and to do
this they excavate the trench across the street from the proper line to the sewer main and
then they install the pipe after tapping the sewer main. In the tapping, the sewer pipe is
opened and so the sewerage gets out and fills up the trench and the men have to wade in
and work with the sewerage water. The capataz  has to go near the filthy excavations or
trenches full of filthy sewerage, matter to aid the attendants in making pipe connections,
especially when these are complicated.
It cannot therefore be gainsaid that all there laborers suffer unusual distress. The wet pits,
trenches, manholes, which are full of sewage matters, are filthy sources of germs and
different diseases. They emit foul and filthy odor dangerous to health. Those working in such
places and exposed directly to the distress of contamination.
Premises considered, the decision of the Court of Industrial Relations in this respect should
be modified in the sense that all employees and laborers, whether or not they belong to the
sewerage division, who actually work in and outside the sewerage chambers, should be paid
the distress pay or the extra compensation equivalent to 25% of their basic wage effective
October 1, 1956.
12. On August 6, 1957, the NAWASA requested the President of the Philippines for
exemption from Executive Order No. 251 which prescribes the office hours to be observed in
government and government-owned or controlled corporations in order that it could stagger
the working hours of its employees and laborers. The request is based on the fact that there
are essential and indispensable phases in the operation of the NAWASA that are required to
be attended to continuously for twenty-four hours for the entire seven days of the week
without interruption some of which being the work performed by pump operators, valve
operators, filter operators, chlorine operators, watchmen and guards, and medical personnel.
This request was granted and, accordingly, the NAWASA staggered the work schedule of the
employees and laborers performing the activities above-mentioned. Respondent unions
protested against this staggering schedule of work and this protest having been unheeded,
they brought the matter to the Court of Industrial Relations.
In resolving this issue, the industrial court justified the staggering of the work days of those
holding positions as pump operators, valve operators, filter operators, chlorine operators,
watchmen and guards, and those in the medical service for the reason that the same was
made pursuant to the authority granted by the President who in the valid exercise of the
powers conferred upon him by Republic Act No. 1880 could prescribe the working days of
employees and laborers in government-owned and controlled corporations depending upon
the exigencies of the service. The court, however, stated that the staggering should not apply
to the personnel in the construction, sewerage, maintenance, machineries and shops
because they work below 365 days a year and their services are not continuous to require
staggering. From this portion of the decision, the petitioner appeals.
Considering that respondent court found that the workers in question work less than 365 days
a year and their services are not continuous to require staggering, we see no reason to
disturb this finding. This is contrary to the very essence of the request that the staggering
should be made only with regard to those phases of the operation of the NAWASA that have
to be attended to continuously for twenty-four hours without interruption which certainly
cannot apply to the workers mentioned in the last part of the decision of the respondent court
on the matter.
RECAPITULATION
In resume, this Court holds:
(1) The NAWASA, though a public corporation, does not perform governmental
functions. It performs proprietary functions, and hence, it is covered by
Commonwealth Act No. 444;
(2) The NAWASA is a public utility. Although pursuant to Section 4 of Commonwealth
Act 444 it is not obliged to pay an additional sum of 25% to its laborers for work done
on Sundays and legal holidays, yet it must pay said additional compensation by virtue
of the contractual obligation it assumed under the collective bargaining agreement;
(3) The intervenors are not "managerial employees" as defined in Republic Act No.
2377, hence they are covered by Commonwealth Act No. 444, as amended;
(4) The Court of Industrial Relations has jurisdiction to adjudicate overtime pay in the
case at bar there being an employer-employee relationship existing between
intervenors and petitioner;
(5) The GAO employees assigned to work in the NAWASA cannot be regarded as
employees of the NAWASA on matters relating to compensation. They are
employees of the national government and are not covered by the Eight-Hour Labor
Law. The same may be said of the employees of the Bureau of Public Works
assigned to work in the NAWASA;
(6) The method used by the NAWASA in off-setting the overtime with the undertime
and at the same time charging said undertime to the accrued leave is unfair;
(7) The differential pay for Sundays is a part of the legal wage. Hence, it was
correctly included in computing the weekly wages of those employees and laborers
who worked seven days a week and were regularly receiving the 25% salary
differential for a period of three months prior to the implementation of Republic Act
1880. This is so even if petitioner is a public utility in view of the contractual obligation
it has assumed on the matter;
(8) In the computation of the daily wages of employees paid by the month distinction
should be made between government employees like the GAO employees and those
who are not. The computation for government employees is governed by Section 254
of the Revised Administrative Code while for others the correct computation is the
monthly salary divided by the actual number of working hours in the month or the
regular monthly compensation divided by the number of working days in the month;
(9) The Court of Industrial Relations did not err in ordering the payment of night
compensation from the time such services were rendered. The laborer must be
compensated for nighttime work as of the date the same was rendered;
(10) The rates of minimum pay fixed in CIR Case No. 359-V are applicable not only
to those who were already in the service as of the date of the decision but also to
those who were employed subsequent to said date;
(11) All the laborers, whether assigned to the sewerage division or not who are
actually working inside or outside the sewerage chambers are entitled to distress
pay; and
(12) There is no valid reason to disturb the finding of the Court of Industrial Relations
that the work of the personnel in the construction, sewerage, maintenance,
machineries and shops of petitioner is not continous as to require staggering.
CONCLUSION
With the modification indicated in the above resume as elaborated in this decision, we hereby
affirm the decision of respondent court in all other respects, without pronouncement as to
costs.