G.R. No.
156367             May 16, 2005 Thus, on 02 February 2000, respondent instituted a Complaint for Illegal Dismissal
AUTO BUS TRANSPORT SYSTEMS, INC., petitioner,
vs.
ANTONIO BAUTISTA, respondent.
DECISION
CHICO-NAZARIO, J.:
Before Us is a Petition for Review on Certiorari assailing the Decision1 and
Resolution2 of the Court of Appeals affirming the Decision3 of the National Labor
Relations Commission (NLRC). The NLRC ruling modified the Decision of the Labor
Arbiter (finding respondent entitled to the award of 13th month pay and service
incentive leave pay) by deleting the award of 13th month pay to respondent.
THE FACTS
Since 24 May 1995, respondent Antonio Bautista has been employed by petitioner
Auto Bus Transport Systems, Inc. (Autobus), as driver-conductor with travel routes
Manila-Tuguegarao via Baguio, Baguio- Tuguegarao via Manila and Manila-Tabuk
via Baguio. Respondent was paid on commission basis, seven percent (7%) of the
total gross income per travel, on a twice a month basis.
On 03 January 2000, while respondent was driving Autobus No. 114 along Sta. Fe,
Nueva Vizcaya, the bus he was driving accidentally bumped the rear portion of
Autobus No. 124, as the latter vehicle suddenly stopped at a sharp curve without
giving any warning.
Respondent averred that the accident happened because he was compelled by the
management to go back to Roxas, Isabela, although he had not slept for almost
twenty-four (24) hours, as he had just arrived in Manila from Roxas, Isabela.
Respondent further alleged that he was not allowed to work until he fully paid the
amount of P75,551.50, representing thirty percent (30%) of the cost of repair of the
damaged buses and that despite respondent’s pleas for reconsideration, the same
was ignored by management. After a month, management sent him a letter of
termination.
with Money Claims for nonpayment of 13th month pay and service incentive leave
pay against Autobus.
Petitioner, on the other hand, maintained that respondent’s employment was replete
with offenses involving reckless imprudence, gross negligence, and dishonesty. To
support its claim, petitioner presented copies of letters, memos, irregularity reports,
and warrants of arrest pertaining to several incidents wherein respondent was
involved.
Furthermore, petitioner avers that in the exercise of its management prerogative,
respondent’s employment was terminated only after the latter was provided with an
opportunity to explain his side regarding the accident on 03 January 2000.
On 29 September 2000, based on the pleadings and supporting evidence presented
by the parties, Labor Arbiter Monroe C. Tabingan promulgated a Decision,4 the
dispositive portion of which reads:
WHEREFORE, all premises considered, it is hereby found that the complaint
for Illegal Dismissal has no leg to stand on. It is hereby ordered DISMISSED,
as it is hereby DISMISSED.
However, still based on the above-discussed premises, the respondent must
pay to the complainant the following:
a. his 13th month pay from the date of his hiring to the date of his
dismissal, presently computed at P78,117.87;
b. his service incentive leave pay for all the years he had been in
service with the respondent, presently computed at P13,788.05.
All other claims of both complainant and respondent are hereby dismissed for
lack of merit.5
Not satisfied with the decision of the Labor Arbiter, petitioner appealed the decision
to the NLRC which rendered its decision on 28 September 2001, the decretal portion
of which reads:
 [T]he Rules and Regulations Implementing Presidential Decree No. 851,
particularly Sec. 3 provides:
"Section 3. Employers covered. – The Decree shall apply to all
employers except to:
xxx       xxx       xxx
e) employers of those who are paid on purely commission, boundary,
or task basis, performing a specific work, irrespective of the time
consumed in the performance thereof. xxx."
Records show that complainant, in his position paper, admitted that he was
paid on a commission basis.
In view of the foregoing, we deem it just and equitable to modify the assailed
Decision by deleting the award of 13th month pay to the complainant.
… pay.
WHEREFORE, the Decision dated 29 September 2000 is MODIFIED by
deleting the award of 13th month pay. The other findings are AFFIRMED.6
In other words, the award of service incentive leave pay was maintained. Petitioner
thus sought a reconsideration of this aspect, which was subsequently denied in a
Resolution by the NLRC dated 31 October 2001.
Displeased with only the partial grant of its appeal to the NLRC, petitioner sought the
review of said decision with the Court of Appeals which was subsequently denied by
the appellate court in a Decision dated 06 May 2002, the dispositive portion of which
reads:
WHEREFORE, premises considered, the Petition is DISMISSED for lack of
merit; and the assailed Decision of respondent Commission in NLRC NCR
CA No. 026584-2000 is hereby AFFIRMED in toto. No costs.7
Hence, the instant petition.
ISSUES
1. Whether or not respondent is entitled to service incentive leave;
2. Whether or not the three (3)-year prescriptive period provided under Article 291 of
the Labor Code, as amended, is applicable to respondent’s claim of service
incentive leave pay.
RULING OF THE COURT
The disposition of the first issue revolves around the proper interpretation of Article
95 of the Labor Code vis-à-vis Section 1(D), Rule V, Book III of the Implementing
Rules and Regulations of the Labor Code which 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 leave of five days with
Book III, Rule V: SERVICE INCENTIVE LEAVE
SECTION 1. Coverage. – This rule shall apply to all employees except:
…
(d) Field personnel and other employees whose performance is
unsupervised by the employer including those who are engaged on
task or contract basis, purely commission basis, or those who are paid
in a fixed amount for performing work irrespective of the time
consumed in the performance thereof; . . .
A careful perusal of said provisions of law will result in the conclusion that the grant
of service incentive leave has been delimited by the Implementing Rules and
Regulations of the Labor Code to apply only to those employees not explicitly
excluded by Section 1 of Rule V. According to the Implementing Rules, Service
Incentive Leave shall not apply to employees classified as "field personnel." The
phrase "other employees whose performance is unsupervised by the employer"
must not be understood as a separate classification of employees to which service
incentive leave shall not be granted. Rather, it serves as an amplification of the
interpretation of the definition of field personnel under the Labor Code as those
"whose actual hours of work in the field cannot be determined with reasonable
certainty."8
The same is true with respect to the phrase "those who are engaged on task or
contract basis, purely commission basis." Said phrase should be related with "field
personnel," applying the rule on ejusdem generis that general and unlimited terms
are restrained and limited by the particular terms that they follow.9 Hence,
employees engaged on task or contract basis or paid on purely commission basis
are not automatically exempted from the grant of service incentive leave, unless,
they fall under the classification of field personnel.
Therefore, petitioner’s contention that respondent is not entitled to the grant of
service incentive leave just because he was paid on purely commission basis is
misplaced. What must be ascertained in order to resolve the issue of propriety of the
grant of service incentive leave to respondent is whether or not he is a field
personnel.
According to Article 82 of the Labor Code, "field personnel" shall refer to non-
agricultural employees who regularly perform their duties away from the principal
place of business or branch office of the employer and whose actual hours of work in
the field cannot be determined with reasonable certainty. This definition is further
elaborated in the Bureau of Working Conditions (BWC), Advisory Opinion to
Philippine Technical-Clerical Commercial Employees Association10 which states that:
As a general rule, [field personnel] are those whose performance of their
job/service is not supervised by the employer or his representative, the
workplace being away from the principal office and whose hours and days of
work cannot be determined with reasonable certainty; hence, they are paid
specific amount for rendering specific service or performing specific work. If
required to be at specific places at specific times, employees including drivers
cannot be said to be field personnel despite the fact that they are performing
work away from the principal office of the employee. [Emphasis ours]
To this discussion by the BWC, the petitioner differs and postulates that under said
advisory opinion, no employee would ever be considered a field personnel because
every employer, in one way or another, exercises control over his employees.
Petitioner further argues that the only criterion that should be considered is the
nature of work of the employee in that, if the employee’s job requires that he works
away from the principal office like that of a messenger or a bus driver, then he is
inevitably a field personnel.
We are not persuaded. At this point, it is necessary to stress that the definition of a
"field personnel" is not merely concerned with the location where the employee
regularly performs his duties but also with the fact that the employee’s performance
is unsupervised by the employer. As discussed above, field personnel are those who
regularly perform their duties away from the principal place of business of the
employer and whose actual hours of work in the field cannot be determined with
reasonable certainty. Thus, in order to conclude whether an employee is a field
employee, it is also necessary to ascertain if actual hours of work in the field can be
determined with reasonable certainty by the employer. In so doing, an inquiry must
be made as to whether or not the employee’s time and performance are constantly
supervised by the employer.
As observed by the Labor Arbiter and concurred in by the Court of Appeals:
It is of judicial notice that along the routes that are plied by these bus
companies, there are its inspectors assigned at strategic places who board
the bus and inspect the passengers, the punched tickets, and the conductor’s
reports. There is also the mandatory once-a-week car barn or shop day,
where the bus is regularly checked as to its mechanical, electrical, and
hydraulic aspects, whether or not there are problems thereon as reported by
the driver and/or conductor. They too, must be at specific place as [sic]
specified time, as they generally observe prompt departure and arrival from
their point of origin to their point of destination. In each and every depot, there
is always the Dispatcher whose function is precisely to see to it that the bus
and its crew leave the premises at specific times and arrive at the estimated
proper time. These, are present in the case at bar. The driver, the
complainant herein, was therefore under constant supervision while in the
performance of this work. He cannot be considered a field personnel.11
We agree in the above disquisition. Therefore, as correctly concluded by the
appellate court, respondent is not a field personnel but a regular employee who
performs tasks usually necessary and desirable to the usual trade of petitioner’s
business. Accordingly, respondent is entitled to the grant of service incentive leave.
The question now that must be addressed is up to what amount of service incentive
leave pay respondent is entitled to.
The response to this query inevitably leads us to the correlative issue of whether or
not the three (3)-year prescriptive period under Article 291 of the Labor Code is
applicable to respondent’s claim of service incentive leave pay.
Article 291 of the Labor Code states that all money claims arising from employer-
employee relationship shall be filed within three (3) years from the time the cause of
action accrued; otherwise, they shall be forever barred.
In the application of this section of the Labor Code, the pivotal question to be
answered is when does the cause of action for money claims accrue in order to
determine the reckoning date of the three-year prescriptive period.
It is settled jurisprudence that a cause of action has three elements, to wit, (1) a right
in favor of the plaintiff by whatever means and under whatever law it arises or is
created; (2) an obligation on the part of the named defendant to respect or not to
violate such right; and (3) an act or omission on the part of such defendant violative
of the right of the plaintiff or constituting a breach of the obligation of the defendant
to the plaintiff.12
To properly construe Article 291 of the Labor Code, it is essential to ascertain the
time when the third element of a cause of action transpired. Stated differently, in the
computation of the three-year prescriptive period, a determination must be made as
to the period when the act constituting a violation of the workers’ right to the benefits
being claimed was committed. For if the cause of action accrued more than three (3)
years before the filing of the money claim, said cause of action has already
prescribed in accordance with Article 291.13
Consequently, in cases of nonpayment of allowances and other monetary benefits, if
it is established that the benefits being claimed have been withheld from the
employee for a period longer than three (3) years, the amount pertaining to the
period beyond the three-year prescriptive period is therefore barred by prescription.
The amount that can only be demanded by the aggrieved employee shall be limited
to the amount of the benefits withheld within three (3) years before the filing of the
complaint.14
It is essential at this point, however, to recognize that the service incentive leave is a
curious animal in relation to other benefits granted by the law to every employee. In
the case of service incentive leave, the employee may choose to either use his leave
credits or commute it to its monetary equivalent if not exhausted at the end of the
year.15 Furthermore, if the employee entitled to service incentive leave does not use
or commute the same, he is entitled upon his resignation or separation from work to
the commutation of his accrued service incentive leave. As enunciated by the Court
in Fernandez v. NLRC:16
The clear policy of the Labor Code is to grant service incentive leave pay to
workers in all establishments, subject to a few exceptions. Section 2, Rule V,
Book III of the Implementing Rules and Regulations provides that "[e]very
employee who has rendered at least one year of service shall be entitled to a
yearly service incentive leave of five days with pay." Service incentive leave is
a right which accrues to every employee who has served "within 12 months,
whether continuous or broken reckoned from the date the employee started
working, including authorized absences and paid regular holidays unless the
working days in the establishment as a matter of practice or policy, or that
provided in the employment contracts, is less than 12 months, in which case
said period shall be considered as one year." It is also "commutable to its
money equivalent if not used or exhausted at the end of the year." In other
words, an employee who has served for one year is entitled to it. He may use
it as leave days or he may collect its monetary value. To limit the award to
three years, as the solicitor general recommends, is to unduly restrict such
right.17 [Italics supplied]
Correspondingly, it can be conscientiously deduced that the cause of action of an
entitled employee to claim his service incentive leave pay accrues from the moment
the employer refuses to remunerate its monetary equivalent if the employee did not
make use of said leave credits but instead chose to avail of its commutation.
Accordingly, if the employee wishes to accumulate his leave credits and opts for its
commutation upon his resignation or separation from employment, his cause of
action to claim the whole amount of his accumulated service incentive leave shall
arise when the employer fails to pay such amount at the time of his resignation or
separation from employment.
Applying Article 291 of the Labor Code in light of this peculiarity of the service
incentive leave, we can conclude that the three (3)-year prescriptive period
commences, not at the end of the year when the employee becomes entitled to the
commutation of his service incentive leave, but from the time when the employer
refuses to pay its monetary equivalent after demand of commutation or upon
termination of the employee’s services, as the case may be.
The above construal of Art. 291, vis-à-vis the rules on service incentive leave, is in
keeping with the rudimentary principle that in the implementation and interpretation
of the provisions of the Labor Code and its implementing regulations, the
workingman’s welfare should be the primordial and paramount consideration.18 The
policy is to extend the applicability of the decree to a greater number of employees
who can avail of the benefits under the law, which is in consonance with the avowed
policy of the State to give maximum aid and protection to labor.19
In the case at bar, respondent had not made use of his service incentive leave nor
demanded for its commutation until his employment was terminated by petitioner.
Neither did petitioner compensate his accumulated service incentive leave pay at the
time of his dismissal. It was only upon his filing of a complaint for illegal dismissal,
one month from the time of his dismissal, that respondent demanded from his former
employer commutation of his accumulated leave credits. His cause of action to claim
the payment of his accumulated service incentive leave thus accrued from the time
when his employer dismissed him and failed to pay his accumulated leave credits.
Therefore, the prescriptive period with respect to his claim for service incentive leave
pay only commenced from the time the employer failed to compensate his
accumulated service incentive leave pay at the time of his dismissal. Since
respondent had filed his money claim after only one month from the time of his
dismissal, necessarily, his money claim was filed within the prescriptive period
provided for by Article 291 of the Labor Code.
WHEREFORE, premises considered, the instant petition is hereby DENIED. The
assailed Decision of the Court of Appeals in CA-G.R. SP. No. 68395 is hereby
AFFIRMED. No Costs.
SO ORDERED.
G.R. No. 126383. November 28, 1997]
SAN JUAN DE DIOS HOSPITAL EMPLOYEES ASSOCIATION-AFW/MA.
CONSUELO MAQUILING, LEONARDO MARTINEZ, DOMINGO ELA, JR.,
RODOLFO CALUCIN, JR., PERLA MENDOZA, REX RAPHAEL REYES,
ROGELIO BELMONTE, AND 375 OTHER EMPLOYEE-UNION
MEMBERS, Petitioners, v. NATIONAL LABOR RELATIONS COMMISSION, AND
SAN JUAN DE DIOS HOSPITAL, Respondents.
DECISION
FRANCISCO, J.:
Petitioners, the rank-and-file employee-union officers and members of San Juan De
Dios Hospital Employees Association, sent on July 08, 1991, a four (4)-page letter
with attached support signatures x x x requesting and pleading for the expeditious
implementation and payment by respondent Juan De Dios Hospital "of the 40
HOURS/5-DAY WORKWEEK with compensable weekly two (2) days off provided for
by Republic Act 5901 as clarified for enforcement by the Secretary of Labors Policy
Instructions No. 54 dated April 12, 1988.1 Respondent hospital failed to give a
favorable response; thus, petitioners filed a complaint regarding their claims for
statutory benefits under the above-cited law and policy issuance2, docketed as
NLRC NCR Case No. 00-08-04815-91. On February 26, 1992, the Labor
Arbiter3 dismissed the complaint. Petitioners appealed before public respondent
National Labor Relations Commission4 (NLRC), docketed as NLRC NCR CA
003028-92, which affirmed the Labor Arbiters decision. Petitioners subsequent
motion for reconsideration was denied; hence, this petition under Rule 65 of the
Rules of Court ascribing grave abuse of discretion on the part of NLRC in concluding
that Policy Instructions No. 54 proceeds from a wrong interpretation of RA 59015 and
Article 83 of the Labor Code.
As the Court sees it, the core issue is whether Policy Instructions No. 54 issued by
then Labor Secretary (now Senator) Franklin M. Drilon is valid or not.
The policy instruction in question provides in full as follows:
Policy Instruction No. 54
To: All Concerned
Subject: Working Hours and Compensation of Hospital/Clinic Personnel
This issuance clarifies the enforcement policy of this Department on the working
hours and compensation of personnel employed by hospital/clinics with a bed
capacity of 100 or more and those located in cities and municipalities with a
population of one million or more.
Republic Act 5901 took effect on 21 June 1969 prescribes a 40-hour/5 day work
week for hospital/clinic personnel. At the same time, the Act prohibits the diminution
of the compensation of these workers who would suffer a reduction in their weekly
wage by reason of the shortened workweek prescribed by the Act. In effect, RA
5901 requires that the covered hospital workers who used to work seven (7) days a
week should be paid for such number of days for working only 5 days or 40 hours a
week.
The evident intention of RA 5901 is to reduce the number of hospital personnel,
considering the nature of their work, and at the same time guarantee the payment to
them of a full weekly wage for seven (7) days. This is quite clear in the Exemplary
Note of RA 5901 which states:
As compared with the other employees and laborers, these hospital and health clinic
personnel are over-worked despite the fact that their duties are more delicate in
nature. If we offer them better working conditions, it is believed that the brain drain,
that our country suffers nowadays as far as these personnel are concerned will be
considerably lessened. The fact that these hospitals and health clinics personnel
perform duties which are directly concerned with the health and lives of our people
does not mean that they should work for a longer period than most employees and
laborers. They are also entitled to as much rest as other workers. Making them work
longer than is necessary may endanger, rather than protect the health of their
patients. Besides, they are not receiving better pay than the other workers.
Therefore, it is just and fair that they may be made to enjoy the privileges of equal
working hours with other workers except those excepted by law. (Sixth Congress of
the Republic of the Philippines, Third Session, House of Representatives, H. No.
16630)
The Labor Code in its Article 83 adopts and incorporates the basic provisions of RA
5901 and retains its spirit and intent which is to shorten the workweek of covered
hospital personnel and at the same time assure them of a full weekly wage.
Consistent with such spirit and intent, it is the position of the Department that
personnel in subject hospital and clinics are entitled to a full weekly wage for seven
(7) days it they have completed the 40-hours/5-day workweek in any given
workweek.
All enforcement and adjudicatory agencies of this Department shall be guided by this
issuance in the disposition of cases involving the personnel of covered hospitals and
clinics.
Done in the City of Manila, this 12th day of April, 1988.
(Sgd.) FRANKLIN M. DRILON
Secretary
(Emphasis Added)
We note that Policy Instruction No. 54 relies and purports to implement Republic Act
No. 5901, otherwise known as An Act Prescribing Forty Hours A Week Of Labor For
Government and Private Hospitals Or Clinic Personnel, enacted on June 21, 1969.
Reliance on Republic Act No. 5901, however, is misplaced for the said statute, as
correctly ruled by respondent NLRC, has long been repealed with the passage of the
Labor Code on May 1, 1974, Article 302 of which explicitly provides: All labor laws
not adopted as part of this Code either directly or by reference are hereby repealed.
All provisions of existing laws, orders, decrees, rules and regulations inconsistent
herewith are likewise repealed. Accordingly, only Article 83 of the Labor Code which
appears to have substantially incorporated or reproduced the basic provisions of
Republic Act No. 5901 may support Policy Instructions No. 54 on which the latters
validity may be gauged. Article 83 of the Labor Code states:
Art. 83. Normal Hours of Work. -- The normal hours of work of any employee shall
not exceed eight (8) hours a day.
Health personnel in cities and municipalities with a population of at least one million
(1,000,000) or in hospitals and clinics with a bed capacity of at least one hundred
(100) shall hold regular office hours for eight (8) hours a day, for five (5) days a
week, exclusive of time for meals, except where the exigencies of the service require
that such personnel work for six (6) days or forty-eight (48) hours, in which case they
shall be entitled to an additional compensation of at least thirty per cent (30%) of
their regular wage for work on the sixth day. For purposes of this Article, health
personnel shall include: resident physicians, nurses, nutritionists, dietitians,
pharmacists, social workers, laboratory technicians, paramedical technicians,
psychologists, midwives, attendants and all other hospital or clinic personnel.
(Underscoring supplied)
A cursory reading of Article 83 of the Labor Code betrays petitioners position that
hospital employees are entitled to a full weekly salary with paid two (2) days off if
they have completed the 40-hour/5-day workweek.6 What Article 83 merely provides
are: (1) the regular office hour of eight hours a day, five days per week for health
personnel, and (2) where the exigencies of service require that health personnel
work for six days or forty-eight hours then such health personnel shall be entitled to
an additional compensation of at least thirty percent of their regular wage for work on
the sixth day. There is nothing in the law that supports then Secretary of Labors
assertion that personnel in subject hospitals and clinics are entitled to a full weekly
wage for seven (7) days if they have completed the 40-hour/5-day workweek in any
given workweek. Needless to say, the Secretary of Labor exceeded his authority by
including a two days off with pay in contravention of the clear mandate of the statute.
Such act the Court shall not countenance. Administrative interpretation of the law,
we reiterate, is at best merely advisory,7 and the Court will not hesitate to strike
down an administrative interpretation that deviates from the provision of the statute.
Indeed, even if we were to subscribe with petitioners erroneous assertion that
Republic Act No. 5901 has neither been amended nor repealed by the Labor Code,
we nevertheless find Policy Instructions No. 54 invalid. A perusal of Republic Act No.
59018 reveals nothing therein that gives two days off with pay for health personnel
who complete a 40-hour work or 5-day workweek. In fact, the Explanatory Note of
House Bill No. 16630 (later passed into law as Republic Act No. 5901) explicitly
states that the bills sole purpose is to shorten the working hours of health personnel
and not to dole out a two days off with pay.
Hence:
The accompanying bill seeks to grant resident physicians, staff nurses, nutritionists,
midwives, attendants and other hospital and health clinic personnel of public and
private hospitals and clinics, the privilege of enjoying the eight hours a week
exclusive of time for lunch granted by law to all government employees and workers
except those employed in schools and in courts. At present those hospitals and
health clinic personnel including those employed in private hospitals and
clinics, work six days a week, 8 hours a day or 48 hours a week.
As compared with the other employees and laborers, these hospital and health clinic
personnel are over-worked despite the fact that their duties are more delicate in
nature. If we offer them better working conditions, it is believed that the brain drain,
that our country suffers nowadays as far as these personnel are concerned will be
considerably lessened. The fact that these hospitals and health clinic personnel
perform duties which are directly concerned with the health and lives of our people
does not mean that they should work for a longer period than most employees and
laborers. They are also entitled to as much rest as other workers. Making them work
longer than is necessary may endanger, rather than protect, the health of their
patients. Besides, they are not receiving better pay than the other workers.
Therefore, it is just and fair that they be made to enjoy the privileges of equal
working hours with other workers except those excepted by law.
In the light of the foregoing, approval of this bill is strongly recommended.
(SGD.) SERGIO H. LOYOLA
Congressman, 3rd District Manila
(Annex F of petition,
underscoring supplied)
Further, petitioners' position is also negated by the very rules and regulations
promulgated by the Bureau of Labor Standards which implement Republic Act No.
5901. Pertinent portions of the implementing rules provide:
RULES AND REGULATIONS IMPLEMENTING REPUBLIC ACT NO. 5901
By virtue of Section 79 of the Revised Administrative Code, as modified by section
18 of Implementation Report for Reorganization Plan No. 20-A on Labor, vesting in
the Bureau of Labor Standards the authority to promulgate rules and regulations to
implement wage and hour laws, the following rules and regulations are hereby
issued for the implementation of Republic Act No. 5901.
CHAPTER I Coverage
Section 1. General Statement on Coverage. Republic Act No. 5901, hereinafter
referred to as the Act, shall apply to:
(a) All hospitals and clinics, including those with a bed capacity of less than one
hundred, which are situated in cities or municipalities with a population of one million
or more; and to
(b) All hospitals and clinics with a bed capacity of at least one hundred, irrespective
of the size of population of the city or municipality where they may be situated.
xxx xxx xxx
Section 7. Regular Working Day. The regular working days of covered employees
shall be not more than five days in a workweek. The workweek may begin at any
hour and on any day, including Saturday or Sunday, designated by the employer.
Employers are not precluded from changing the time at which the workday or
workweek begins, provided that the change is not intended to evade the
requirements of these regulations on the payment of additional compensation.
xxx xxx xxx
Section 15. Additional Pay Under the Act and C.A. No. 444. (a) Employees of
covered hospitals and clinics who are entitled to the benefits provided under the
Eight-Hour Labor Law, as amended, shall be paid an additional compensation
equivalent to their regular rate plus at least twenty-five percent thereof for work
performed on Sunday and Holidays, not exceeding eight hours, such employees
shall be entitled to an additional compensation of at least 25% of their regular rate.
(b) For work performed in excess of forty hours a week, excluding those rendered in
excess of eight hours a day during the week, employees covered by the Eight-Hour
Labor Law shall be entitled to an additional straight-time pay which must be
equivalent at least to their regular rate.
If petitioners are entitled to two days off with pay, then there appears to be no sense
at all why Section 15 of the implementing rules grants additional compensation
equivalent to the regular rate plus at least twenty-five percent thereof for work
performed on Sunday to health personnel, or an additional straight-time pay which
must be equivalent at least to the regular rate [f]or work performed in excess of forty
hours a week xxx. Policy Instructions No. 54 to our mind unduly extended the
statute. The Secretary of Labor moreover erred in invoking the spirit and intent of
Republic Act No. 5901 and Article 83 of the Labor Code for it is an elementary rule
of statutory construction that when the language of the law is clear and unequivocal,
the law must be taken to mean exactly what it says.9 No additions or revisions may
be permitted. Policy Instructions No. 54 being inconsistent with and repugnant to the
provision of Article 83 of the Labor Code, as well as to Republic Act No. 5901,
should be, as it is hereby, declared void.
WHEREFORE, the decision appealed from is AFFIRMED. No costs.
SO ORDERED.
G.R. No. 112574. October 8, 1998
MERCIDAR FISHING CORPORATION represented by its President DOMINGO
B. NAVAL, Petitioner, v. NATIONAL LABOR RELATIONS COMMISSION and
FERMIN AGAO, JR., Respondents.
DECISION
MENDOZA, J.:
This is a petition for certiorari to set aside the decision, dated August 30, 1993, of
the National Labor Relations Commission dismissing the appeal of petitioner
Mercidar Fishing Corporation from the decision of the Labor Arbiter in NLRC NCR
Case No. 09-05084-90, as well as the resolution dated October 25, 1993, of the
NLRC denying reconsideration.
This case originated from a complaint filed on September 20, 1990 by private
respondent Fermin Agao, Jr. against petitioner for illegal dismissal, violation of P.D.
No. 851, and non-payment of five days service incentive leave for 1990. Private
respondent had been employed as a bodegero or ships quartermaster on February
12, 1988. He complained that he had been constructively dismissed by petitioner
when the latter refused him assignments aboard its boats after he had reported to
work on May 28, 1990.1cräläwvirtualibräry
Private respondent alleged that he had been sick and thus allowed to go on leave
without pay for one month from April 28, 1990 but that when he reported to work at
the end of such period with a health clearance, he was told to come back another
time as he could not be reinstated immediately. Thereafter, petitioner refused to give
him work. For this reason, private respondent asked for a certificate of employment
from petitioner on September 6, 1990. However, when he came back for the
certificate on September 10, petitioner refused to issue the certificate unless he
submitted his resignation. Since private respondent refused to submit such letter
unless he was given separation pay, petitioner prevented him from entering the
premises.2cräläwvirtualibräry
Petitioner, on the other hand, alleged that it was private respondent who actually
abandoned his work. It claimed that the latter failed to report for work after his leave
had expired and was, in fact, absent without leave for three months until August 28,
1998. Petitioner further claims that, nonetheless, it assigned private respondent to
another vessel, but the latter was left behind on September 1, 1990. Thereafter,
private respondent asked for a certificate of employment on September 6 on the
pretext that he was applying to another fishing company. On September 10, 1990,
he refused to get the certificate and resign unless he was given separation
pay.3cräläwvirtualibräry
On February 18, 1992, Labor Arbiter Arthur L. Amansec rendered a decision
disposing of the case as follows:
ACCORDINGLY, respondents are ordered to reinstate complainant with
backwages, pay him his 13th month pay and incentive leave pay for 1990.
All other claims are dismissed.
SO ORDERED.
Petitioner appealed to the NLRC which, on August 30, 1993, dismissed the appeal
for lack of merit. The NLRC dismissed petitioners claim that it cannot be held liable
for service incentive leave pay by fishermen in its employ as the latter supposedly
are field personnel and thus not entitled to such pay under the Labor
Code.4cräläwvirtualibräry
The NLRC likewise denied petitioners motion for reconsideration of its decision in its
order dated October 25, 1993.
Hence, this petition. Petitioner contends:
I
THE RESPONDENT COMMISSION PALPABLY ERRED IN RULING AND
SUSTAINING THE VIEW THAT FISHING CREW MEMBERS, LIKE FERMIN AGAO,
JR., CANNOT BE CLASSIFIED AS FIELD PERSONNEL UNDER ARTICLE 82 OF
THE LABOR CODE.
II
THE RESPONDENT COMMISSION ACTED WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT UPHELD THE
FINDINGS OF THE LABOR ARBITER THAT HEREIN PETITIONER HAD
CONSTRUCTIVELY DISMISSED FERMIN AGAO, JR., FROM EMPLOYMENT.
The petition has no merit.
Art. 82 of the Labor Code provides:
ART. 82. Coverage. - The provisions of this Title [Working Conditions and
Rest Periods] shall apply to employees in all establishments and
undertakings whether for profit or not, but not to government employees,
field personnel, members of the family of the employer who are dependent
on him for support, domestic helpers, persons in the personal service of
another, and workers who are paid by results as determined by the
Secretary of Labor in appropriate regulations.
..........
Field personnel shall refer to non-agricultural employees who regularly
perform their duties away from the principal place of business or branch
office of the employer and whose actual hours of work in the field cannot be
determined with reasonable certainty.
Petitioner argues essentially that since the work of private respondent is performed
away from its principal place of business, it has no way of verifying his actual hours
of work on the vessel. It contends that private respondent and other fishermen in its
employ should be classified as field personnel who have no statutory right to service
incentive leave pay.
In the case of Union of Filipro Employees (UFE) v. Vicar,5 this Court explained the
meaning of the phrase whose actual hours of work in the field cannot be determined
with reasonable certainty in Art. 82 of the Labor Code, as follows:
 Moreover, the requirement that actual hours of work in the field cannot be
determined with reasonable certainty must be read in conjunction with Rule
IV, Book III of the Implementing Rules which provides:
Rule IV Holidays with Pay
Section 1. Coverage - This rule shall apply to all employees except:
..........
(e) Field personnel and other employees whose
time and performance is unsupervised by the employer xxx (Italics
supplied)
While contending that such rule added another element not found in the law
(Rollo, p. 13), the petitioner nevertheless attempted to show that its affected
members are not covered by the abovementioned rule. The petitioner
asserts that the companys sales personnel are strictly supervised as shown
by the SOD (Supervisor of the Day) schedule and the company circular
dated March 15, 1984 (Annexes 2 and 3, Rollo, pp. 53-55).
Contrary to the contention of the petitioner, the Court finds that the
aforementioned rule did not add another element to the Labor Code
definition of field personnel. The clause whose time and performance is
unsupervised by the employer did not amplify but merely interpreted and
expounded the clause whose actual hours of work in the field cannot be
determined with reasonable certainty. The former clause is still within the
scope and purview of Article 82 which defines field personnel. Hence, in
deciding whether or not an employees actual working hours in the field can
be determined with reasonable certainty, query must be made as to
whether or not such employees time and performance is constantly
supervised by the employer.6cräläwvirtualibräry
Accordingly, it was held in the aforementioned case that salesmen of Nestle
Philippines, Inc. were field personnel:
It is undisputed that these sales personnel start their field work at 8:00 a.m.
after having reported to the office and come back to the office at 4:00 p.m.
or 4:30 p.m. if they are Makati-based.
The petitioner maintains that the period between 8:00 a.m. to 4:00 or 4:30
p.m. comprises the sales personnels working hours which can be
determined with reasonable certainty.
The Court does not agree. The law requires that the actual hours of work in
the field be reasonably ascertained. The company has no way of
determining whether or not these sales personnel, even if they report to the
office before 8:00 a.m. prior to field work and come back at 4:30 p.m., really
spend the hours in between in actual field work.7cräläwvirtualibräry
In contrast, in the case at bar, during the entire course of their fishing voyage,
fishermen employed by petitioner have no choice but to remain on board its vessel.
Although they perform non-agricultural work away from petitioners business offices,
the fact remains that throughout the duration of their work they are under the
effective control and supervision of petitioner through the vessels patron or master
as the NLRC correctly held.8cräläwvirtualibräry
Neither did petitioner gravely abuse its discretion in ruling that private respondent
had constructively been dismissed by petitioner. Such factual finding of both the
NLRC and the Labor Arbiter is based not only on the pleadings of the parties but
also on a medical certificate of fitness which, contrary to petitioners claim, private
respondent presented when he reported to work on May 28, 1990.9 As the NLRC
held:
Anent grounds (a) and (b) of the appeal, the respondent, in a nutshell,
would like us to believe that the Arbiter abused his discretion (or seriously
erred in his findings of facts) in giving credence to the factual version of the
complainant. But it is settled that (W)hen confronted with conflicting
versions of factual matters, the Labor Arbiter has the discretion to determine
which party deserves credence on the basis of evidence received. [Gelmart
Industries (Phils.), Inc. v. Leogardo, 155 SCRA 403, 409, L-70544,
November 5, 1987]. And besides, it is settled in this jurisdiction that to
constitute abandonment of position, there must be concurrence of the
intention to abandon and some overt acts from which it may be inferred that
the employee concerned has no more interest in working (Dagupan Bus
Co., Inc. v. NLRC, 191 SCRA 328), and that the filing of the complaint
which asked for reinstatement plus backwages (Record, p. 20) is
inconsistent with respondents defense of abandonment (Hua Bee Shirt
Factory v. NLRC, 188 SCRA 586).10cräläwvirtualibräry
It is trite to say that the factual findings of quasi-judicial bodies are generally binding
as long as they are supported substantially by evidence in the record of the
case.11 This is especially so where, as here, the agency and its subordinate who
heard the case in the first instance are in full agreement as to the
facts.12cräläwvirtualibräry
As regards the labor arbiters award which was affirmed by respondent NLRC, there
is no reason to apply the rule that reinstatement may not be ordered if, as a result of
the case between the parties, their relation is strained.13 Even at this late stage of
this dispute, petitioner continues to reiterate its offer to reinstate private
respondent.14cräläwvirtualibräry
WHEREFORE, the petition is DISMISSED.
SO ORDERED.
FIRST DIVISION
[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 petitioner’s members received their regular salaries during this period. It is clear from
"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
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 employers to withhold
employee benefits by the simple expedient of unilaterally imposing "no 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 —
". . . 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 find no
compelling reason, therefore, to deviate from our previous ruling in the University of
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. 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.

Bengzon, C.J., Concepcion, Reyes, J.B.L., Paredes, Regala and Makalintal, JJ.,
concur.