G.R. No.
159577 May 3, 2006 for payment of damages and attorney’s fees having been forced to litigate the present
CHARLITO PEÑARANDA, Petitioner, vs. BAGANGA PLYWOOD CORPORATION and
HUDSON CHUA, Respondents.
DECISION
PANGANIBAN, CJ:
Managerial employees and members of the managerial staff are exempted from the
provisions of the Labor Code on labor standards. Since petitioner belongs to this class of
employees, he is not entitled to overtime pay and premium pay for working on rest days.
The Case
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, assailing the January
27, 20032 and July 4, 20033 Resolutions of the Court of Appeals (CA) in CA-GR SP No.
74358. The earlier Resolution disposed as follows:
"WHEREFORE, premises considered, the instant petition is hereby DISMISSED."4
The latter Resolution denied reconsideration.
On the other hand, the Decision of the National Labor Relations Commission (NLRC)
challenged in the CA disposed as follows:
"WHEREFORE, premises considered, the decision of the Labor Arbiter below awarding
overtime pay and premium pay for rest day to complainant is hereby REVERSED and SET
ASIDE, and the complaint in the above-entitled case dismissed for lack of merit.5
The Facts
Sometime in June 1999, Petitioner Charlito Peñaranda was hired as an employee of
Baganga Plywood Corporation (BPC) to take charge of the operations and maintenance of its
steam plant boiler.6 In May 2001, Peñaranda filed a Complaint for illegal dismissal with
money claims against BPC and its general manager, Hudson Chua, before the NLRC.7
After the parties failed to settle amicably, the labor arbiter8 directed the parties to file their
position papers and submit supporting documents.9 Their respective allegations are
summarized by the labor arbiter as follows:
"[Peñaranda] through counsel in his position paper alleges that he was employed by
respondent [Baganga] on March 15, 1999 with a monthly salary of P5,000.00 as
Foreman/Boiler Head/Shift Engineer until he was illegally terminated on December 19, 2000.
Further, [he] alleges that his services [were] terminated without the benefit of due process
and valid grounds in accordance with law. Furthermore, he was not paid his overtime pay,
premium pay for working during holidays/rest days, night shift differentials and finally claims
complaint.
"Upon the other hand, respondent [BPC] is a domestic corporation duly organized and
existing under Philippine laws and is represented herein by its General Manager HUDSON
CHUA, [the] individual respondent. Respondents thru counsel allege that complainant’s
separation from service was done pursuant to Art. 283 of the Labor Code. The respondent
[BPC] was on temporary closure due to repair and general maintenance and it applied for
clearance with the Department of Labor and Employment, Regional Office No. XI to shut
down and to dismiss employees (par. 2 position paper). And due to the insistence of herein
complainant he was paid his separation benefits (Annexes C and D, ibid). Consequently,
when respondent [BPC] partially reopened in January 2001, [Peñaranda] failed to reapply.
Hence, he was not terminated from employment much less illegally. He opted to severe
employment when he insisted payment of his separation benefits. Furthermore, being a
managerial employee he is not entitled to overtime pay and if ever he rendered services
beyond the normal hours of work, [there] was no office order/or authorization for him to do so.
Finally, respondents allege that the claim for damages has no legal and factual basis and that
the instant complaint must necessarily fail for lack of merit."10
The labor arbiter ruled that there was no illegal dismissal and that petitioner’s Complaint was
premature because he was still employed by BPC.11 The temporary closure of BPC’s plant
did not terminate his employment, hence, he need not reapply when the plant reopened.
According to the labor arbiter, petitioner’s money claims for illegal dismissal was also
weakened by his quitclaim and admission during the clarificatory conference that he accepted
separation benefits, sick and vacation leave conversions and thirteenth month pay.12
Nevertheless, the labor arbiter found petitioner entitled to overtime pay, premium pay for
working on rest days, and attorney’s fees in the total amount of P21,257.98.13
Ruling of the NLRC
Respondents filed an appeal to the NLRC, which deleted the award of overtime pay and
premium pay for working on rest days. According to the Commission, petitioner was not
entitled to these awards because he was a managerial employee.14
Ruling of the Court of Appeals
In its Resolution dated January 27, 2003, the CA dismissed Peñaranda’s Petition for
Certiorari. The appellate court held that he failed to: 1) attach copies of the pleadings
submitted before the labor arbiter and NLRC; and 2) explain why the filing and service of the
Petition was not done by personal service.15
In its later Resolution dated July 4, 2003, the CA denied reconsideration on the ground that
petitioner still failed to submit the pleadings filed before the NLRC.16
1
Hence this Petition.
The Issues
Petitioner states the issues in this wise:
"The [NLRC] committed grave abuse of discretion amounting to excess or lack of jurisdiction
when it entertained the APPEAL of the respondent[s] despite the lapse of the mandatory
period of TEN DAYS.1avvphil.net
"The [NLRC] committed grave abuse of discretion amounting to an excess or lack of
jurisdiction when it rendered the assailed RESOLUTIONS dated May 8, 2002 and AUGUST
16, 2002 REVERSING AND SETTING ASIDE the FACTUAL AND LEGAL FINDINGS of the
[labor arbiter] with respect to the following:
"I. The finding of the [labor arbiter] that [Peñaranda] is a regular, common employee entitled
to monetary benefits under Art. 82 [of the Labor Code].
"II. The finding that [Peñaranda] is entitled to the payment of OVERTIME PAY and OTHER
MONETARY BENEFITS."18
The Court’s Ruling
The Petition is not meritorious.
Preliminary Issue:
Resolution on the Merits
The CA dismissed Peñaranda’s Petition on purely technical grounds, particularly with regard
to the failure to submit supporting documents.
In Atillo v. Bombay, the Court held that the crucial issue is whether the documents
accompanying the petition before the CA sufficiently supported the allegations therein. Citing
this case, Piglas-Kamao v. NLRC stayed the dismissal of an appeal in the exercise of its
equity jurisdiction to order the adjudication on the merits.
The Petition filed with the CA shows a prima facie case. Petitioner attached his evidence to
challenge the finding that he was a managerial employee. In his Motion for Reconsideration,
petitioner also submitted the pleadings before the labor arbiter in an attempt to comply with
the CA rules. Evidently, the CA could have ruled on the Petition on the basis of these
attachments. Petitioner should be deemed in substantial compliance with the procedural
requirements.
Under these extenuating circumstances, the Court does not hesitate to grant liberality in favor
of petitioner and to tackle his substantive arguments in the present case. Rules of procedure
must be adopted to help promote, not frustrate, substantial justice.23 The Court frowns upon
the practice of dismissing cases purely on procedural grounds. Considering that there was
substantial compliance, a liberal interpretation of procedural rules in this labor case is more in
keeping with the constitutional mandate to secure social justice.
First Issue:
Timeliness of Appeal
Under the Rules of Procedure of the NLRC, an appeal from the decision of the labor arbiter
should be filed within 10 days from receipt thereof.
Petitioner’s claim that respondents filed their appeal beyond the required period is not
substantiated. In the pleadings before us, petitioner fails to indicate when respondents
received the Decision of the labor arbiter. Neither did the petitioner attach a copy of the
challenged appeal. Thus, this Court has no means to determine from the records when the
10-day period commenced and terminated. Since petitioner utterly failed to support his claim
that respondents’ appeal was filed out of time, we need not belabor that point. The parties
alleging have the burden of substantiating their allegations.
Second Issue:
Nature of Employment
Petitioner claims that he was not a managerial employee, and therefore, entitled to the award
granted by the labor arbiter.
Article 82 of the Labor Code exempts managerial employees from the coverage of labor
standards. Labor standards provide the working conditions of employees, including
entitlement to overtime pay and premium pay for working on rest days. Under this provision,
managerial employees are "those whose primary duty consists of the management of the
establishment in which they are employed or of a department or subdivision."
The Implementing Rules of the Labor Code state that managerial employees are those who
meet the following conditions:
"(1) Their primary duty consists of the management of the establishment in which they are
employed or of a department or subdivision thereof;
"(2) They customarily and regularly direct the work of two or more employees therein;
"(3) They have the authority to hire or fire other employees of lower rank; or their suggestions
and recommendations as to the hiring and firing and as to the promotion or any other change
of status of other employees are given particular weight."
The Court disagrees with the NLRC’s finding that petitioner was a managerial employee.
However, petitioner was a member of the managerial staff, which also takes him out of the
coverage of labor standards. Like managerial employees, officers and members of the
managerial staff are not entitled to the provisions of law on labor standards.32 The
2
Implementing Rules of the Labor Code define members of a managerial staff as those with
the following duties and responsibilities:
"(1) The primary duty consists of the performance of work directly related to management
policies of the employer;
"(2) Customarily and regularly exercise discretion and independent judgment;
the department. Petitioner’s evidence also showed that he was the supervisor of the steam
plant. His classification as supervisor is further evident from the manner his salary was paid.
He belonged to the 10% of respondent’s 354 employees who were paid on a monthly basis;
the others were paid only on a daily basis.
On the basis of the foregoing, the Court finds no justification to award overtime pay and
premium pay for rest days to petitioner.

"(3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary WHEREFORE, the Petition is DENIED. Costs against petitioner.
duty consists of the management of the establishment in which he is employed or subdivision
thereof; or (ii) execute under general supervision work along specialized or technical lines SO ORDERED.
requiring special training, experience, or knowledge; or (iii) execute under general
supervision special assignments and tasks; and

"(4) who do not devote more than 20 percent of their hours worked in a workweek to activities
which are not directly and closely related to the performance of the work described in
paragraphs (1), (2), and (3) above."33

As shift engineer, petitioner’s duties and responsibilities were as follows:

"1. To supply the required and continuous steam to all consuming units at minimum cost.
"2. To supervise, check and monitor manpower workmanship as well as operation of boiler
and accessories.
"3. To evaluate performance of machinery and manpower.
"4. To follow-up supply of waste and other materials for fuel.
"5. To train new employees for effective and safety while working.
"6. Recommend parts and supplies purchases.
"7. To recommend personnel actions such as: promotion, or disciplinary action.
"8. To check water from the boiler, feedwater and softener, regenerate softener if beyond
hardness limit.
"9. Implement Chemical Dosing.
"10. Perform other task as required by the superior from time to time."

The foregoing enumeration, particularly items 1, 2, 3, 5 and 7 illustrates that petitioner was a
member of the managerial staff. His duties and responsibilities conform to the definition of a
member of a managerial staff under the Implementing Rules.
Petitioner supervised the engineering section of the steam plant boiler. His work involved
overseeing the operation of the machines and the performance of the workers in the
engineering section. This work necessarily required the use of discretion and independent
judgment to ensure the proper functioning of the steam plant boiler. As supervisor, petitioner
is deemed a member of the managerial staff.

Noteworthy, even petitioner admitted that he was a supervisor. In his Position Paper, he
stated that he was the foreman responsible for the operation of the boiler. The term foreman
implies that he was the representative of management over the workers and the operation of

3
G.R. No. 101761. March 24, 1993.
NATIONAL SUGAR REFINERIES CORPORATION, petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION and NBSR SUPERVISORY UNION, (PACIWU) TUCP,
respondents.
DECISION
REGALADO, J p:
The main issue presented for resolution in this original petition for certiorari is whether
supervisory employees, as defined in Article 212 (m), Book V of the Labor Code, should be
considered as officers or members of the managerial staff under Article 82, Book III of the
same Code, and hence are not entitled to overtime rest day and holiday pay.
Petitioner National Sugar Refineries Corporation (NASUREFCO), a corporation which is fully
owned and controlled by the Government, operates three (3) sugar refineries located at
Bukidnon, Iloilo and Batangas. The Batangas refinery was privatized on April 11, 1992
pursuant to Proclamation No. 50. 1 Private respondent union represents the former
supervisors of the NASUREFCO Batangas Sugar Refinery, namely, the Technical Assistant
to the Refinery Operations Manager, Shift Sugar Warehouse Supervisor, Senior
Financial/Budget Analyst, General Accountant, Cost Accountant, Sugar Accountant, Junior
Financial/Budget Analyst, Shift Boiler Supervisor,, Shift Operations Chemist, Shift Electrical
Supervisor, General Services Supervisor, Instrumentation Supervisor, Community
Development Officer, Employment and Training Supervisor, Assistant Safety and Security
Officer, Head and Personnel Services, Head Nurse, Property Warehouse Supervisor, Head
of Inventory Control Section, Shift Process Supervisor, Day Maintenance Supervisor and
Motorpool Supervisor.
On June 1, 1988, petitioner implemented a Job Evaluation (JE) Program affecting all
employees, from rank-and-file to department heads. The JE Program was designed to
rationalized the duties and functions of all positions, reestablish levels of responsibility, and
recognize both wage and operational structures. Jobs were ranked according to effort,
responsibility, training and working conditions and relative worth of the job. As a result, all
positions were re-evaluated, and all employees including the members of respondent union
were granted salary adjustments and increases in benefits commensurate to their actual
duties and functions.
We glean from the records that for about ten years prior to the JE Program, the members of
respondent union were treated in the same manner as rank-and file employees. As such,
they used to be paid overtime, rest day and holiday pay pursuant to the provisions of Articles
87, 93 and 94 of the Labor Code as amended. With the implementation of the JE Program,
the following adjustments were made: (1) the members of respondent union were re-
classified under levels S-5 to S-8 which are considered managerial staff for purposes of
compensation and benefits; (2) there was an increase in basic pay of the average of 50% of
their basic pay prior to the JE Program, with the union members now enjoying a wide gap
(P1,269.00 per month) in basic pay compared to the highest paid rank-and-file employee; (3)
longevity pay was increased on top of alignment adjustments; (4) they were entitled to
increased company COLA of P225.00 per month; (5) there was a grant of P100.00 allowance
for rest day/holiday work.
On May 11, 1990, petitioner NASUREFCO recognized herein respondent union, which was
organized pursuant to Republic Act NO. 6715 allowing supervisory employees to form their
own unions, as the bargaining representative of all the supervisory employees at the
NASUREFCO Batangas Sugar Refinery.
Two years after the implementation of the JE Program, specifically on June 20, 1990, the
members of herein respondent union filed a complainant with the executive labor arbiter for
non-payment of overtime, rest day and holiday pay allegedly in violation of Article 100 of the
Labor Code.
On January 7, 1991, Executive Labor Arbiter Antonio C. Pido rendered a decision 2 disposing
as follows:
"WHEREFORE, premises considered, respondent National Sugar refineries Corporation is
hereby directed to —
1. pay the individual members of complainant union the usual overtime pay, rest day pay and
holiday pay enjoyed by them instead of the P100.00 special allowance which was
implemented on June 11, 1988; and
2. pay the individual members of complainant union the difference in money value between
the P100.00 special allowance and the overtime pay, rest day pay and holiday pay that they
ought to have received from June 1, 1988.
All other claims are hereby dismissed for lack of merit.
SO ORDERED."
In finding for the members therein respondent union, the labor ruled that the along span of
time during which the benefits were being paid to the supervisors has accused the payment
thereof to ripen into contractual obligation; at the complainants cannot be estopped from
questioning the validity of the new compensation package despite the fact that they have
been receiving the benefits therefrom, considering that respondent union was formed only a
year after the implementation of the Job Evaluation Program, hence there was no way for the
individual supervisors to express their collective response thereto prior to the formation of the
union; and the comparative computations presented by the private respondent union showed
that the P100.00 special allowance given NASUREFCO fell short of what the supervisors
ought to receive had the overtime pay rest day pay and holiday pay not been discontinued,
which arrangement, therefore, amounted to a diminution of benefits.
4
On appeal, in a decision promulgated on July 19, 1991 by its Third Division, respondent
National Labor Relations Commission (NLRC) affirmed the decision of the labor arbiter on the
ground that the members of respondent union are not managerial employees, as defined
under Article 212 (m) of the Labor Code and, therefore, they are entitled to overtime, rest day
and holiday pay. Respondent NLRC declared that these supervisory employees are merely
exercising recommendatory powers subject to the evaluation, review and final action by their
department heads; their responsibilities do not require the exercise of discretion and
independent judgment; they do not participate in the formulation of management policies nor
in the hiring or firing of employees; and their main function is to carry out the ready policies
and plans of the corporation. 3 Reconsideration of said decision was denied in a resolution of
public respondent dated August 30, 1991. 4
Hence this petition for certiorari, with petitioner NASUREFCO asseverating that public
respondent commission committed a grave abuse of discretion in refusing to recognized the
fact that the members of respondent union are members of the managerial staff who are not
entitled to overtime, rest day and holiday pay; and in making petitioner assume the "double
burden" of giving the benefits due to rank-and-file employees together with those due to
supervisors under the JE Program.
We find creditable merit in the petition and that the extraordinary writ of certiorari shall
accordingly issue.
The primordial issue to be resolved herein is whether the members of respondent union are
entitled to overtime, rest day and holiday pay. Before this can be resolved, however it must of
necessity be ascertained first whether or not the union members, as supervisory employees,
are to be considered as officers or members of the managerial staff who are exempt from the
coverage of Article 82 of the Labor Code.
It is not disputed that the members of respondent union are supervisory employees, as
defined employees, as defined under Article 212(m), Book V of the Labor Code on Labor
Relations, which reads:
"(m) 'Managerial employee' is one who is vested with powers or prerogatives to lay down and
execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharged,
assign or discipline employees. Supervisory employees are those who, in the interest of the
employer effectively recommend such managerial actions if the exercise of such authority is
not merely routinary or clerical in nature but requires the use of independent judgment. All
employees not falling within any of those above definitions are considered rank-and-file
employees of this Book."
Respondent NLRC, in holding that the union members are entitled to overtime, rest day and
holiday pay, and in ruling that the latter are not managerial employees, adopted the definition
stated in the aforequoted statutory provision.
Petitioner, however, avers that for purposes of determining whether or not the members of
respondent union are entitled to overtime, rest day and holiday pay, said employees should
be considered as "officers or members of the managerial staff" as defined under Article 82,
Book III of the Labor Code on "Working Conditions and Rest Periods" and amplified in
Section 2, Rule I, Book III of the Rules to Implement the Labor Code, to wit:
"Art. 82 Coverage. — The provisions of this title shall apply to employees in all
establishments and undertakings whether for profit or not, but not to government employees,
managerial employees, field personnel, members of the family of the employer who are
dependent on him for support, domestic helpers, persons in the personal service of another,
and workers who are paid by results as determined by the Secretary of Labor in Appropriate
regulations.
"As used herein, 'managerial employees' refer to those whose primary duty consists of the
management of the establishment in which they are employed or of a department or
subdivision thereof, and to other officers or members of the managerial staff." (Emphasis
supplied.)
xxx xxx xxx
'Sec. 2. Exemption. — The provisions of this rule shall not apply to the following persons if
they qualify for exemption under the condition set forth herein:
xxx xxx xxx
(b) Managerial employees, if they meet all of the following conditions, namely:
(1) Their primary duty consists of the management of the establishment in which they are
employed or of a department or subdivision thereof:
(2) They customarily and regularly direct the work of two or more employees therein:
(3) They have the authority to hire or fire other employees of lower rank; or their suggestions
and recommendations as to the hiring and firing and as to the promotion or any other change
of status of other employees are given particular weight.
(c) Officers or members of a managerial staff if they perform the following duties and
responsibilities:
(1) The primary duty consists of the performance of work directly related to management
policies of their employer;
(2) Customarily and regularly exercise discretion and independent judgment;
(3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty
consists of the management of the establishment in which he is employed or subdivision
thereof; or (ii) execute under general supervision work along specialized or technical lines
requiring special training, experience, or knowledge; or (iii) execute under general
supervision special assignments and tasks; and
5
(4) Who do not devote more 20 percent of their hours worked in a work-week to activities
which are not directly and closely related to the performance of the work described in
paragraphs (1), (2), and above."
It is the submission of petitioner that while the members of respondent union, as supervisors,
may not be occupying managerial positions, they are clearly officers or members of the
managerial staff because they meet all the conditions prescribed by law and, hence, they are
not entitled to overtime, rest day and supervisory employees under Article 212 (m) should be
made to apply only to the provisions on Labor Relations, while the right of said employees to
the questioned benefits should be considered in the light of the meaning of a managerial
employee and of the officers or members of the managerial staff, as contemplated under
Article 82 of the Code and Section 2, Rule I Book III of the implementing rules. In other
words, for purposes of forming and joining unions, certification elections, collective
bargaining, and so forth, the union members are supervisory employees. In terms of working
conditions and rest periods and entitlement to the questioned benefits, however, they are
officers or members of the managerial staff, hence they are not entitled thereto.
While the Constitution is committed to the policy of social justice and the protection of the
working class, it should not be supposed that every labor dispute will be automatically
decided in favor of labor. Management also has its own rights which, as such, are entitled to
respect and enforcement in the interest of simple fair play. Out of its concern for those with
less privileges in life, this Court has inclined more often than not toward the worker and
upheld his cause in his conflicts with the employer. Such favoritism, however, has not blinded
us to the rule that justice is in every case for the deserving, to be dispensed in the light of the
established facts and the applicable law and doctrine. 5
This is one such case where we are inclined to tip the scales of justice in favor of the
employer.
The question whether a given employee is exempt from the benefits of the law is a factual
one dependent on the circumstances of the particular case, In determining whether an
employee is within the terms of the statutes, the criterion is the character of the work
performed, rather than the title of the employee's position. 6
Consequently, while generally this Court is not supposed to review the factual findings of
respondent commission, substantial justice and the peculiar circumstances obtaining herein
mandate a deviation from the rule.
A cursory perusal of the Job Value Contribution Statements 7 of the union members will
readily show that these supervisory employees are under the direct supervision of their
respective department superintendents and that generally they assist the latter in planning,
organizing, staffing, directing, controlling communicating and in making decisions in attaining
the company's set goals and objectives. These supervisory employees are likewise
responsible for the effective and efficient operation of their respective departments. More
specifically, their duties and functions include, among others, the following operations
whereby the employee:
1) assists the department superintendent in the following:
a) planning of systems and procedures relative to department activities;
b) organizing and scheduling of work activities of the department, which includes employee
shifting scheduled and manning complement;
c) decision making by providing relevant information data and other inputs;
d) attaining the company's set goals and objectives by giving his full support;
e) selecting the appropriate man to handle the job in the department; and
f) preparing annual departmental budget;
2) observes, follows and implements company policies at all times and recommends
disciplinary action on erring subordinates;
3) trains and guides subordinates on how to assume responsibilities and become more
productive;
4) conducts semi-annual performance evaluation of his subordinates and recommends
necessary action for their development/advancement;
5) represents the superintendent or the department when appointed and authorized by the
former;
6) coordinates and communicates with other inter and intra department supervisors when
necessary;
7) recommends disciplinary actions/promotions;
8) recommends measures to improve work methods, equipment performance, quality of
service and working conditions;
9) sees to it that safety rules and regulations and procedure and are implemented and
followed by all NASUREFCO employees, recommends revisions or modifications to said
rules when deemed necessary, and initiates and prepares reports for any observed
abnormality within the refinery;
10) supervises the activities of all personnel under him and goes to it that instructions to
subordinates are properly implemented; and
11) performs other related tasks as may be assigned by his immediate superior.
From the foregoing, it is apparent that the members of respondent union discharge duties and
responsibilities which ineluctably qualify them as officers or members of the managerial staff,
as defined in Section 2, Rule I Book III of the aforestated Rules to Implement the Labor Code,
viz.: (1) their primary duty consists of the performance of work directly related to management
policies of their employer; (2) they customarily and regularly exercise discretion and
independent judgment; (3) they regularly and directly assist the managerial employee whose
primary duty consist of the management of a department of the establishment in which they
are employed (4) they execute, under general supervision, work along specialized or
technical lines requiring special training, experience, or knowledge; (5) they execute, under
general supervision, special assignments and tasks; and (6) they do not devote more than
6
20% of their hours worked in a work-week to activities which are not directly and clearly
related to the performance of their work hereinbefore described.
Under the facts obtaining in this case, we are constrained to agree with petitioner that the
union members should be considered as officers and members of the managerial staff and
are, therefore, exempt from the coverage of Article 82. Perforce, they are not entitled to
overtime, rest day and holiday.
The distinction made by respondent NLRC on the basis of whether or not the union members
are managerial employees, to determine the latter's entitlement to the questioned benefits, is
misplaced and inappropriate. It is admitted that these union members are supervisory
employees and this is one instance where the nomenclatures or titles of their jobs conform
with the nature of their functions. Hence, to distinguish them from a managerial employee, as
defined either under Articles 82 or 212 (m) of the Labor Code, is puerile and in efficacious.
The controversy actually involved here seeks a determination of whether or not these
supervisory employees ought to be considered as officers or members of the managerial
staff. The distinction, therefore, should have been made along that line and its corresponding
conceptual criteria.
II. We likewise no not subscribe to the finding of the labor arbiter that the payment of the
questioned benefits to the union members has ripened into a contractual obligation.
A. Prior to the JE Program, the union members, while being supervisors, received benefits
similar to the rank-and-file employees such as overtime, rest day and holiday pay, simply
because they were treated in the same manner as rank-and-file employees, and their basic
pay was nearly on the same level as those of the latter, aside from the fact that their specific
functions and duties then as supervisors had not been properly defined and delineated from
those of the rank-and-file. Such fact is apparent from the clarification made by petitioner in its
motion for reconsideration 8 filed with respondent commission in NLRC Case No. CA No. I-
000058, dated August 16, 1991, wherein, it lucidly explained:
"But, complainants no longer occupy the same positions they held before the JE Program.
Those positions formerly classified as 'supervisory' and found after the JE Program to be
rank-and-file were classified correctly and continue to receive overtime, holiday and restday
pay. As to them, the practice subsists.
"However, those whose duties confirmed them to be supervisory, were re-evaluated, their
duties re-defined and in most cases their organizational positions re-designated to confirm
their superior rank and duties. Thus, after the JE program, complainants cannot be said to
occupy the same positions." 9
It bears mention that this positional submission was never refuted nor controverted by
respondent union in any of its pleadings filed before herein public respondent or with this
Court. Hence, it can be safely concluded therefrom that the members of respondent union
were paid the questioned benefits for the reason that, at that time, they were rightfully entitled
thereto. Prior to the JE Program, they could not be categorically classified as members or
officers of the managerial staff considering that they were then treated merely on the same
level as rank-and-file. Consequently, the payment thereof could not be construed as
constitutive of voluntary employer practice, which cannot be now be unilaterally withdrawn by
petitioner. To be considered as such, it should have been practiced over a long period of
time, and must be shown to have been consistent and deliberate. 10
The test or rationale of this rule on long practice requires an indubitable showing that the
employer agreed to continue giving the benefits knowingly fully well that said employees are
not covered by the law requiring payment thereof. 11 In the case at bar, respondent union
failed to sufficiently establish that petitioner has been motivated or is wont to give these
benefits out of pure generosity.
B. It remains undisputed that the implementation of the JE Program, the members of private
respondent union were re-classified under levels S-5 S-8 which were considered under the
program as managerial staff purposes of compensation and benefits, that they occupied re-
evaluated positions, and that their basic pay was increased by an average of 50% of their
basic salary prior to the JE Program. In other words, after the JE Program there was an
ascent in position, rank and salary. This in essence is a promotion which is defined as the
advancement from one position to another with an increase in duties and responsibilities as
authorized by law, and usually accompanied by an increase in salary. 12
Quintessentially, with the promotion of the union members, they are no longer entitled to the
benefits which attach and pertain exclusively to their positions. Entitlement to the benefits
provided for by law requires prior compliance with the conditions set forth therein. With the
promotion of the members of respondent union, they occupied positions which no longer met
the requirements imposed by law. Their assumption of these positions removed them from
the coverage of the law, ergo, their exemption therefrom.
As correctly pointed out by petitioner, if the union members really wanted to continue
receiving the benefits which attach to their former positions, there was nothing to prevent
them from refusing to accept their promotions and their corresponding benefits. As the sating
goes by, they cannot have their cake and eat it too or, as petitioner suggests, they could not,
as a simple matter of law and fairness, get the best of both worlds at the expense of
NASUREFCO.
Promotion of its employees is one of the jurisprudentially-recognized exclusive prerogatives
of management, provided it is done in good faith. In the case at bar, private respondent union
has miserably failed to convince this Court that the petitioner acted implementing the JE
Program. There is no showing that the JE Program was intended to circumvent the law and
deprive the members of respondent union of the benefits they used to receive.
Not so long ago, on this particular score, we had the occasion to hold that:
7
". . . it is the prerogative of the management to regulate, according to its discretion and
judgment, all aspects of employment. This flows from the established rule that labor law does
not authorize the substitution of the judgment of the employer in the conduct of its business.
Such management prerogative may be availed of without fear of any liability so long as it is
exercised in good faith for the advancement of the employer's interest and not for the
purpose of defeating on circumventing the rights of employees under special laws or valid
agreement and are not exercised in a malicious, harsh, oppressive, vindictive or wanton
manner or out of malice or spite." 13

WHEREFORE, the impugned decision and resolution of respondent National Labor Relations
Commission promulgated on July 19, 1991 and August 30, 1991, respectively, are hereby
ANNULLED and SET ASIDE for having been rendered and adopted with grave abuse of
discretion, and the basic complaint of private respondent union is DISMISSED.

8
 G.R. No. 94951 April 22, 1991
APEX MINING COMPANY, INC., petitioner,
vs. NATIONAL LABOR RELATIONS COMMISSION and SINCLITICA CANDIDO,
respondents.
GANCAYCO, J.:
Is the househelper in the staff houses of an industrial company a domestic helper or a regular
employee of the said firm? This is the novel issue raised in this petition.
Private respondent Sinclita Candida was employed by petitioner Apex Mining Company, Inc.
on May 18, 1973 to perform laundry services at its staff house located at Masara, Maco,
Davao del Norte. In the beginning, she was paid on a piece rate basis. However, on January
17, 1982, she was paid on a monthly basis at P250.00 a month which was ultimately
increased to P575.00 a month.
On December 18, 1987, while she was attending to her assigned task and she was hanging
her laundry, she accidentally slipped and hit her back on a stone. She reported the accident
to her immediate supervisor Mila de la Rosa and to the personnel officer, Florendo D. Asirit.
As a result of the accident she was not able to continue with her work. She was permitted to
go on leave for medication. De la Rosa offered her the amount of P 2,000.00 which was
eventually increased to P5,000.00 to persuade her to quit her job, but she refused the offer
and preferred to return to work. Petitioner did not allow her to return to work and dismissed
her on February 4, 1988.
On March 11, 1988, private respondent filed a request for assistance with the Department of
Labor and Employment. After the parties submitted their position papers as required by the
labor arbiter assigned to the case on August 24, 1988 the latter rendered a decision, the
dispositive part of which reads as follows:
WHEREFORE, Conformably With The Foregoing, judgment is hereby rendered ordering the
respondent, Apex Mining Company, Inc., Masara, Davao del Norte, to pay the complainant,
to wit:
1 Salary
Differential –– P16,289.20
2. Emergency Living
Allowance –– 12,430.00
3. 13th Month Pay
Differential –– 1,322.32
4. Separation Pay
(One-month for every year of service [1973-19881) –– 25,119.30 or in the total of FIFTY FIVE
THOUSAND ONE HUNDRED SIXTY ONE PESOS AND 42/100 (P55,161.42).
SO ORDERED.
Not satisfied therewith, petitioner appealed to the public respondent National Labor Relations
Commission (NLRC), wherein in due course a decision was rendered by the Fifth Division
thereof on July 20, 1989 dismissing the appeal for lack of merit and affirming the appealed
decision. A motion for reconsideration thereof was denied in a resolution of the NLRC dated
June 29, 1990.
Hence, the herein petition for review by certiorari, which appopriately should be a special civil
action for certiorari, and which in the interest of justice, is hereby treated as such.2 The main
thrust of the petition is that private respondent should be treated as a mere househelper or
domestic servant and not as a regular employee of petitioner.
The petition is devoid of merit.
Under Rule XIII, Section l(b), Book 3 of the Labor Code, as amended, the terms
"househelper" or "domestic servant" are defined as follows:
The term "househelper" as used herein is synonymous to the term "domestic servant" and
shall refer to any person, whether male or female, who renders services in and about the
employer's home and which services are usually necessary or desirable for the maintenance
and enjoyment thereof, and ministers exclusively to the personal comfort and enjoyment of
the employer's family.3
The foregoing definition clearly contemplates such househelper or domestic servant who is
employed in the employer's home to minister exclusively to the personal comfort and
enjoyment of the employer's family. Such definition covers family drivers, domestic servants,
laundry women, yayas, gardeners, houseboys and other similar househelps.
The definition cannot be interpreted to include househelp or laundrywomen working in
staffhouses of a company, like petitioner who attends to the needs of the company's guest
and other persons availing of said facilities. By the same token, it cannot be considered to
extend to then driver, houseboy, or gardener exclusively working in the company, the
staffhouses and its premises. They may not be considered as within the meaning of a
"househelper" or "domestic servant" as above-defined by law.
The criteria is the personal comfort and enjoyment of the family of the employer in the home
of said employer. While it may be true that the nature of the work of a househelper, domestic
servant or laundrywoman in a home or in a company staffhouse may be similar in nature, the
difference in their circumstances is that in the former instance they are actually serving the
family while in the latter case, whether it is a corporation or a single proprietorship engaged in
business or industry or any other agricultural or similar pursuit, service is being rendered in
9
the staffhouses or within the premises of the business of the employer. In such instance, they
are employees of the company or employer in the business concerned entitled to the
privileges of a regular employee.

Petitioner contends that it is only when the househelper or domestic servant is assigned to
certain aspects of the business of the employer that such househelper or domestic servant
may be considered as such as employee. The Court finds no merit in making any such
distinction. The mere fact that the househelper or domestic servant is working within the
premises of the business of the employer and in relation to or in connection with its business,
as in its staffhouses for its guest or even for its officers and employees, warrants the
conclusion that such househelper or domestic servant is and should be considered as a
regular employee of the employer and not as a mere family househelper or domestic servant
as contemplated in Rule XIII, Section l(b), Book 3 of the Labor Code, as amended.

Petitioner denies having illegally dismissed private respondent and maintains that respondent
abandoned her work.1âwphi1 This argument notwithstanding, there is enough evidence to
show that because of an accident which took place while private respondent was performing
her laundry services, she was not able to work and was ultimately separated from the service.
She is, therefore, entitled to appropriate relief as a regular employee of petitioner. Inasmuch
as private respondent appears not to be interested in returning to her work for valid reasons,
the payment of separation pay to her is in order.

WHEREFORE, the petition is DISMISSED and the appealed decision and resolution of public
respondent NLRC are hereby AFFIRMED. No pronouncement as to costs.

SO ORDERED.

10
 G.R. No. 156367 May 16, 2005
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.
Thus, on 02 February 2000, respondent instituted a Complaint for Illegal Dismissal 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."
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.
WHEREFORE, the Decision dated 29 September 2000 is MODIFIED by deleting the award
of 13th month pay. The other findings are AFFIRMED.6
11
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 pay.
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
12
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
13
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.

14
G.R. No. 123938 May 21, 1998
LABOR CONGRESS OF THE PHILIPPINES (LCP) for and in behalf of its members, ANA
MARIE OCAMPO, MARY INTAL, ANNABEL CARESO, MARLENE MELQIADES, IRENE
JACINTO, NANCY GARCIA, IMELDA SARMIENTO, LENITA VIRAY, GINA JACINTO,
ROSEMARIE DEL ROSARIO, CATHERINE ASPURNA, WINNIE PENA, VIVIAN BAA,
EMILY LAGMAN, LILIAN MARFIL, NANCY DERACO, JANET DERACO, MELODY
JACINTO, CAROLYN DIZON, IMELDA MANALOTO, NORY VIRAY, ELIZA SALAZAR,
GIGI MANALOTO, JOSEFINA BASILIO, MARY ANN MAYATI, ZENAIDA GARCIA, MERLY
CANLAS, ERLINDA MANALANG, ANGELINA QUIAMBAO, LANIE GARCIA, ELVIRA
PIEDRA, LOURDES PANLILIO, LUISA PANLILIO, LERIZA PANLILIO, ALMA CASTRO,
ALDA DAVID, MYRA T. OLALIA, MARIFE PINLAC, NENITA DE GUZMAN, JULIE
GACAD, EVELYN MANALO, NORA PATIO, JANETH CARREON, ROWENA MENDOZA,
ROWENA MANALO, LENY GARCIA, FELISISIMA PATIO, SUSANA SALOMON, JOYDEE
LANSANGAN, REMEDIOS AGUAS, JEANIE LANSANGAN, ELIZABETH MERCADO,
JOSELYN MANALESE, BERNADETH RALAR, LOLITA ESPIRITU, AGNES SALAS,
VIRGINIA MENDIOLA, GLENDA SALITA, JANETH RALAR, ERLINDA BASILIO, CORA
PATIO, ANTONIA CALMA, AGNES CARESO, GEMMA BONUS, MARITESS OCAMPO,
LIBERTY GELISANGA, JANETH MANARANG, AMALIA DELA CRUZ, EVA CUEVAS,
TERESA MANIAGO, ARCELY PEREZ, LOIDA BIE, ROSITA CANLAS, ANALIZA
ESGUERRA, LAILA MANIAGO, JOSIE MANABAT, ROSARIO DIMATULAC, NYMPA
TUAZON, DAIZY TUASON, ERLINDA NAVARRO, EMILY MANARANG, EMELITA
CAYANAN, MERCY CAYANAN, LUZVIMINDA CAYANAN, ANABEL MANALO, SONIA
DIZON, ERNA CANLAS, MARIAN BENEDICTA, DOLORES DOLETIN, JULIE DAVID,
GRACE VILLANUEVA, VIRGINIA MAGBAG, CORAZON RILLION, PRECY MANALILI,
ELENA RONOZ, IMELDA MENDOZA, EDNA CANLAS and ANGELA CANLAS,
petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, EMPIRE FOOD PRODUCTS, its
Proprietor/President & Manager, MR. GONZALO KEHYENG and MRS. EVELYN
KEHYENG, respondents.
DAVIDE, JR., J.:
In this special civil action for certiorari under Rule 65, petitioners seek to reverse the 29
March 1995 resolution 1 of the National Labor Relations Commission (NLRC) in NLRC RAB
III Case No. 01-1964-91 which affirmed the Decision 2 of Labor Arbiter Ariel C. Santos
dismissing their complaint for utter lack of merit.
The antecedents of this case, as summarized by the Office of the Solicitor General in its
Manifestation and Motion in Lieu of Comment, 3 are as follows:
The 99 persons named as petitioners in this proceeding were rank-and-file employees of
respondent Empire Food Products, which hired them on various dates (Paragraph 1, Annex
"A" of Petition, Annex "B;" Page 2, Annex "F" of Petition).
Petitioners filed against private respondents a complaint for payment of money claim[s] and
for violation of labor standard[s] laws (NLRC Case No. RAB-111-10-1817-90). They also filed
a petition for direct certification of petitioner Labor Congress of the Philippines as their
bargaining representative (Case No. R0300-9010-RU-005).
On October 23, 1990, petitioners represented by LCP President Benigno B. Navarro, Sr. and
private respondents Gonzalo Kehyeng and Evelyn Kehyeng in behalf of Empire Food
Products, Inc. entered into a Memorandum of Agreement which provided, among others, the
following:
1. That in connection with the pending Petition for Direct Certification filed by the Labor
Congress with the DOLE, Management of the Empire Food Products has no objection [to] the
direct certification of the LCP Labor Congress and is now recognizing the Labor Congress of
the Philippines (LCP) and its Local Chapter as the SOLE and EXCLUSIVE Bargaining Agent
and Representative for all rank and file employees of the Empire Food Products regarding
"WAGES, HOURS Of WORK, AND OTHER TERMS AND CONDITIONS OF
EMPLOYMENT;"
2. That with regards [sic] to NLRC CASE NO. RAB-III-10-1817-90 pending with the NLRC
parties jointly and mutually agreed that the issues thereof, shall be discussed by the parties
and resolve[d] during the negotiation of the Collective Bargaining Agreement;
3. That Management of the Empire Food Products shall make the proper adjustment of the
Employees Wages within fifteen (15) days from the signing of this Agreement and further
agreed to register all the employees with the SSS;
4. That Employer, Empire Food Products thru its Management agreed to deduct thru payroll
deduction UNION DUES and other Assessment[s] upon submission by the LCP Labor
Congress individual Check-Off Authorization[s] signed by the Union Members indicating the
amount to be deducted and further agreed all deduction[s] made representing Union Dues
and Assessment[s] shall be remitted immediately to the LCP Labor Congress Treasurer or
authorized representative within three (3) or five (5) days upon deductions [sic], Union dues
not deducted during the period due, shall be refunded or reimbursed by the
Employer/Management. Employer/Management further agreed to deduct Union dues from
non-union members the same amount deducted from union members without need of
individual Check-Off Authorizations [for] Agency Fee;
5. That in consideration [of] the foregoing covenant, parties jointly and mutually agreed that
NLRC CASE NO. RAB-III-10-1817-90 shall be considered provisionally withdrawn from the
Calendar of the National Labor Relations Commission (NLRC), while the Petition for direct
certification of the LCP Labor Congress parties jointly move for the direct certification of the
LCP Labor Congress;
6. That parties jointly and mutually agreed that upon signing of this Agreement, no
Harassments [sic], Threats, Interferences [sic] of their respective rights under the law, no
15
Vengeance or Revenge by each partner nor any act of ULP which might disrupt the
operations of the business;
7. Parties jointly and mutually agreed that pending negotiations or formalization of the
propose[d] CBA, this Memorandum of Agreement shall govern the parties in the exercise of
their respective rights involving the Management of the business and the terms and
condition[s] of employment, and whatever problems and grievances may arise by and
between the parties shall be resolved by them, thru the most cordial and good harmonious
relationship by communicating the other party in writing indicating said grievances before
taking any action to another forum or government agencies;
8. That parties [to] this Memorandum of Agreement jointly and mutually agreed to respect,
abide and comply with all the terms and conditions hereof. Further agreed that violation by
the parties of any provision herein shall constitute an act of ULP. (Annex "A" of Petition).
In an Order dated October 24, 1990, Mediator Arbiter Antonio Cortez approved the
memorandum of agreement and certified LCP "as the sole and exclusive bargaining agent
among the rank-and-file employee of Empire Food Products for purposes of collective
bargaining with respect to wages, hours of work and other terms and conditions of
employment" (Annex "B" of Petition).
On November 9, 1990, petitioners through LCP President Navarro submitted to private
respondents a proposal for collective bargaining (Annex "C" of Petition).
On January 23, 1991, petitioners filed a complaint docketed as NLRC Case No. RAB-III-01-
1964-91 against private respondents for:
a. Unfair Labor Practice by way of Illegal Lockout and/or Dismissal;
b. Union busting thru Harassments [sic], threats, and interfering with the rights of employees
to self-organization;
c. Violation of the Memorandum of Agreement dated October 23, 1990;
d. Underpayment of Wages in violation of R.A. No. 6640 and R.A. No. 6727, such as Wages
promulgated by the Regional Wage Board;
e. Actual, Moral and Exemplary Damages. (Annex "D" of Petition)
After the submission by the parties of their respective position papers and presentation of
testimonial evidence, Labor Arbiter Ariel C. Santos absolved private respondents of the
charges of unfair labor practice, union busting, violation of the memorandum of agreement,
underpayment of wages and denied petitioners' prayer for actual, moral and exemplary
damages. Labor Arbiter Santos, however, directed the reinstatement of the individual
complainants:
The undersigned Labor Arbiter is not oblivious to the fact that respondents have violated a
cardinal rule in every establishment that a payroll and other papers evidencing hours of work,
payments, etc. shall always be maintained and subjected to inspection and visitation by
personnel of the Department of Labor and Employment. As such penalty, respondents should
not escape liability for this technicality, hence, it is proper that all individual complainants
except those who resigned and executed quitclaim[s] and releases prior to the filing of this
complaint should be reinstated to their former position[s] with the admonition to respondents
that any harassment, intimidation, coercion or any form of threat as a result of this
immediately executory reinstatement shall be dealt with accordingly.
SO ORDERED. (Annex "G" of petition)
On appeal, the National Labor Relations Commission vacated the Decision dated April 14,
1972 [sic] and remanded the case to the Labor Arbiter for further proceedings for the
following reasons:
The Labor Arbiter, through his decision, noted that ". . . complainant did not present any
single witness while respondent presented four (4) witnesses in the persons of Gonzalo
Kehyeng, Orlando Cairo, Evelyn Kehyeng and Elvira Bulagan . . ." (p. 183, Records), that
". . . complainant before the National Labor Relations Commission must prove with
definiteness and clarity the offense charged. . . ." (Record, p. 183); that ". . . complainant
failed to specify under what provision of the Labor Code particularly Art. 248 did respondents
violate so as to constitute unfair labor practice . . ." (Record, p. 183); that "complainants failed
to present any witness who may describe in what manner respondents have committed unfair
labor practice . . ." (Record, p. 185); that ". . . complainant LCP failed to present anyone of the
so-called 99 complainants in order to testify who committed the threats and intimidation . . ."
(Record, p. 185).
Upon review of the minutes of the proceedings on record, however, it appears that
complainant presented witnesses, namely, BENIGNO NAVARRO, JR. (28 February 1991,
RECORD, p. 91; 8 March 1991, RECORD, p. 92, who adopted its POSITION PAPER AND
CONSOLIDATED AFFIDAVIT, as Exhibit "A" and the annexes thereto as Exhibit "B", "B-1" to
"B-9", inclusive. Minutes of the proceedings on record show that complainant further
presented other witnesses, namely: ERLINDA BASILIO (13 March 1991, RECORD, p. 93;
LOURDES PANTILLO, MARIFE PINLAC, LENIE GARCIA (16 April 1991, Record, p. 96, see
back portion thereof ; 2 May 1991, Record, p. 102; 16 May 1991, Record, p. 103, 11 June
1991, Record, p. 105). Formal offer of Documentary and Testimonial Evidence was made by
complainant on June 24, 1991 (Record, p. 106-109)
The Labor Arbiter must have overlooked the testimonies of some of the individual
complainants which are now on record. Other individual complainants should have been
summoned with the end in view of receiving their testimonies. The complainants should be
afforded the time and opportunity to fully substantiate their claims against the respondents.
Judgment should be rendered only based on the conflicting positions of the parties. The
Labor Arbiter is called upon to consider and pass upon the issues of fact and law raised by
the parties.
16
Toward this end, therefore, it is Our considered view [that] the case should be remanded to
the Labor Arbiter of origin for further proceedings. (Annex "H" of Petition)
In a Decision dated July 27, 1994, Labor Arbiter Santos made the following determination:
Complainants failed to present with definiteness and clarity the particular act or acts
constitutive of unfair labor practice.
It is to be borne in mind that a declaration of unfair labor practice connotes a finding of prima
facie evidence of probability that a criminal offense may have been committed so as to
warrant the filing of a criminal information before the regular court. Hence, evidence which is
more than a scintilla is required in order to declare respondents/employers guilty of unfair
labor practice. Failing in this regard is fatal to the cause of complainants. Besides, even the
charge of illegal lockout has no leg to stand on because of the testimony of respondents
through their guard Orlando Cairo (TSN, July 31, 1991 hearing; p. 5-35) that on January 21,
1991, complainants refused and failed to report for work, hence guilty of abandoning their
post without permission from respondents. As a result of complainants['] failure to report for
work, the cheese curls ready for repacking were all spoiled to the prejudice of respondents.
Under cross-examination, complainants failed to rebut the authenticity of respondents'
witness testimony.
As regards the issue of harassments [sic], threats and interference with the rights of
employees to self-organization which is actually an ingredient of unfair labor practice,
complainants failed to specify what type of threats or intimidation was committed and who
committed the same. What are the acts or utterances constitutive of harassments [sic] being
complained of? These are the specifics which should have been proven with definiteness and
clarity by complainants who chose to rely heavily on its position paper through
generalizations to prove their case.
Insofar as violation of [the] Memorandum of Agreement dated October 23, 1990 is concerned,
both parties agreed that:
2 — That with regards [sic] to the NLRC Case No. RAB III-10-1817-90 pending with the
NLRC, parties jointly and mutually agreed that the issues thereof shall be discussed by the
parties and resolve[d] during the negotiation of the CBA.
The aforequoted provision does not speak of [an] obligation on the part of respondents but on
a resolutory condition that may occur or may not happen. This cannot be made the basis of
an imposition of an obligation over which the National Labor Relations Commission has
exclusive jurisdiction thereof.
Anent the charge that there was underpayment of wages, the evidence points to the contrary.
The enumeration of complainants' wages in their consolidated Affidavits of merit and position
paper which implies underpayment has no leg to stand on in the light of the fact that
complainants' admission that they are piece workers or paid on a pakiao [basis] i.e. a certain
amount for every thousand pieces of cheese curls or other products repacked. The only
limitation for piece workers or pakiao workers is that they should receive compensation no
less than the minimum wage for an eight (8) hour work [sic]. And compliance therewith was
satisfactorily explained by respondent Gonzalo Kehyeng in his testimony (TSN, p. 12-30)
during the July 31, 1991 hearing. On cross-examination, complainants failed to rebut or deny
Gonzalo Kehyeng's testimony that complainants have been even receiving more than the
minimum wage for an average workers [sic]. Certainly, a lazy worker earns less than the
minimum wage but the same cannot be attributable to respondents but to the lazy workers.
Finally, the claim for moral and exemplary damages has no leg to stand on when no malice,
bad faith or fraud was ever proven to have been perpetuated by respondents.
WHEREFORE, premises considered, the complaint is hereby DISMISSED for utter lack of
merit. (Annex "I" of Petition). 4
On appeal, the NLRC, in its Resolution dated 29 March 1995, 5 affirmed in toto the decision
of Labor Arbiter Santos. In so doing, the NLRC sustained the Labor Arbiter's findings that: (a)
there was a dearth of evidence to prove the existence of unfair labor practice and union
busting on the part of private respondents; (b) the agreement of 23 October 1990 could not
be made the basis of an obligation within the ambit of the NLRC's jurisdiction, as the
provisions thereof, particularly Section 2, spoke of a resolutory condition which could or could
not happen; (c) the claims for underpayment of wages were without basis as complainants
were admittedly "pakiao" workers and paid on the basis of their output subject to the lone
limitation that the payment conformed to the minimum wage rate for an eight-hour workday;
and (d) petitioners were not underpaid.
Their motion for reconsideration having been denied by the NLRC in its Resolution of 31
October 1995, 6 petitioners filed the instant special civil action for certiorari raising the
following issues:
I
WHETHER OR NOT THE PUBLIC RESPONDENT NATIONAL LABOR RELATIONS
COMMISSION GRAVELY ABUSED ITS DISCRETION WHEN IT DISREGARDED OR
IGNORED NOT ONLY THE EVIDENCE FAVORABLE TO HEREIN PETITIONERS,
APPLICABLE JURISPRUDENCE BUT ALSO ITS OWN DECISIONS AND THAT OF THIS
HONORABLE HIGHEST TRIBUNAL WHICH [WAS] TANTAMOUNT NOT ONLY TO THE
DEPRIVATION OF PETITIONERS' RIGHT TO DUE PROCESS BUT WOULD RESULT [IN]
MANIFEST INJUSTICE.
II
WHETHER OR NOT THE PUBLIC RESPONDENT GRAVELY ABUSED ITS DISCRETION
WHEN IT DEPRIVED THE PETITIONERS OF THEIR CONSTITUTIONAL RIGHT TO SELF-
ORGANIZATION, SECURITY OF TENURE, PROTECTION TO LABOR, JUST AND
HUMANE CONDITIONS OF WORK AND DUE PROCESS.
17
III
WHETHER OR NOT THE PETITIONERS WERE ILLEGALLY EASED OUT [OF] OR
CONSTRUCTIVELY DISMISSED FROM THEIR ONLY MEANS OF LIVELIHOOD.
IV
WHETHER OR NOT PETITIONERS SHOULD BE REINSTATED FROM THE DATE OF
THEIR DISMISSAL UP TO THE TIME OF THEIR REINSTATEMENT, WITH BACKWAGES,
STATUTORY BENEFITS, DAMAGES AND ATTORNEY'S FEES. 7
We required respondents to file their respective Comments.
In their Manifestation and Comment, private respondents asserted that the petition was filed
out of time. As petitioners admitted in their Notice to File Petition for Review on Certiorari that
they received a copy of the resolution (denying their motion for reconsideration) on 13
December 1995, they had only until 29 December 1995 to file the petition. Having failed to do
so, the NLRC thus already entered judgment in private respondents' favor.
In their Reply, petitioners averred that Mr. Navarro, a non-lawyer who filed the notice to file a
petition for review on their behalf, mistook which reglementary period to apply. Instead of
using the "reasonable time" criterion for certiorari under Rule 65, he used the 15-day period
for petitions for review on certiorari under Rule 45. They hastened to add that such was a
mere technicality which should not bar their petition from being decided on the merits in
furtherance of substantial justice, especially considering that respondents neither denied nor
contradicted the facts and issues raised in the petition.
In its Manifestation and Motion in Lieu of Comment, the Office of the Solicitor General (OSG)
sided with petitioners. It pointed out that the Labor Arbiter, in finding that petitioners
abandoned their jobs, relied solely on the testimony of Security Guard Rolando Cairo that
petitioners refused to work on 21 January 1991, resulting in the spoilage of cheese curls
ready for repacking. However, the OSG argued, this refusal to report for work for a single day
did not constitute abandonment, which pertains to a clear, deliberate and unjustified refusal to
resume employment, and not mere absence. In fact, the OSG stressed, two days after
allegedly abandoning their work, petitioners filed a complaint for, inter alia, illegal lockout or
illegal dismissal. Finally, the OSG questioned the lack of explanation on the part of Labor
Arbiter Santos as to why he abandoned his original decision to reinstate petitioners.
In view of the stand of the OSG, we resolved to require the NLRC to file its own Comment.
In its Comment, the NLRC invokes the general rule that factual findings of an administrative
agency bind a reviewing court and asserts that this case does not fall under the exceptions.
The NLRC further argues that grave abuse of discretion may not be imputed to it, as it
affirmed the factual findings and legal conclusions of the Labor Arbiter only after carefully
reviewing, weighing and evaluating the evidence in support thereof, as well as the pertinent
provisions of law and jurisprudence.
In their Reply, petitioners claim that the decisions of the NLRC and the Labor Arbiter were not
supported by substantial evidence; that abandonment was not proved; and that much credit
was given to self-serving statements of Gonzalo Kehyeng, owner of Empire Foods, as to
payment of just wages.
On 7 July 1997, we gave due course to the petition and required the parties to file their
respective memoranda. However, only petitioners and private respondents filed their
memoranda, with the NLRC merely adopting its Comment as its Memorandum.
We find for petitioners.
Invocation of the general rule that factual findings of the NLRC bind this Court is unavailing
under the circumstances. Initially, we are unable to discern any compelling reason justifying
the Labor Arbiter's volte face from his 14 April 1992 decision reinstating petitioners to his
diametrically opposed 27 July 1994 decision, when in both instances, he had before him
substantially the same evidence. Neither do we find the 29 March 1995 NLRC resolution to
have sufficiently discussed the facts so as to comply with the standard of substantial
evidence. For one thing, the NLRC confessed its reluctance to inquire into the veracity of the
Labor Arbiter's factual findings, staunchly declaring that it was "not about to substitute [its]
judgment on matters that are within the province of the trier of facts." Yet, in the 21 July 1992
NLRC resolution, 8 it chastised the Labor Arbiter for his errors both in judgment and
procedure; for which reason it remanded the records of the case to the Labor Arbiter for
compliance with the pronouncements therein.
What cannot escape from our attention is that the Labor Arbiter did not heed the observations
and pronouncements of the NLRC in its resolution of 21 July 1992, neither did he understand
the purpose of the remand of the records to him. In said resolution, the NLRC summarized
the grounds for the appeal to be:
1. that there is a prima facie evidence of abuse of discretion and acts of gross incompetence
committed by the Labor Arbiter in rendering the decision.
2. that the Labor Arbiter in rendering the decision committed serious errors in the findings of
facts.
After which, the NLRC observed and found:
Complainant alleged that the Labor Arbiter disregarded the testimonies of the 99
complainants who submitted their Consolidated Affidavit of Merit and Position Paper which
was adopted as direct testimonies during the hearing and cross-examined by respondents'
counsel.
The Labor Arbiter, through his decision, noted that ". . . complainant did not present any
single witness while respondent presented four (4) witnesses in the persons of Gonzalo
Kehyeng, Orlando Cairo, Evelyn Kehyeng and Elvira Bulagan . . ." (Records, p. 183), that
". . . complainant before the National Labor Relations Commission must prove with
18
definiteness and clarity the offense charged. . . ." (Record, p. 183; that ". . . complainant failed
to specify under what provision of the Labor Code particularly Art. 248 did respondents
violate so as to constitute unfair labor practice . . ." (Record, p. 183); that "complainants failed
to present any witness who may describe in what manner respondents have committed unfair
labor practice . . ." (Record, p. 185); that ". . . complainant a [sic] LCP failed to present
anyone of the so called 99 complainants in order to testify who committed the threats and
intimidation . . ." (Record, p.185).
Upon review of the minutes of the proceedings on record, however, it appears that
complainant presented witnesses, namely BENIGNO NAVARRO, JR. (28 February 1991,
RECORD, p. 91; 8 March 1991, RECORD, p. 92), who adopted its POSITION PAPER AND
CONSOLIDATED AFFIDAVIT as Exhibit A and the annexes thereto as Exhibit B, B-1 to B-9,
inclusive. Minutes of the proceedings on record show that complainant further presented
other witnesses, namely: ERLINDA BASILIO (13 March 1991, RECORD, p. 93; LOURDES
PANTILLO, MARIFE PINLAC, LENI GARCIA (16 April 1991, Record, p. 96, see back portion
thereof; 2 May 1991, Record, p. 102; 16 May 1991, Record, p. 103; 11 June 1991, Record, p.
105). Formal offer of Documentary and Testimonial Evidence was made by the complainant
on June 24, 1991 (Record, p.106-109).
The Labor Arbiter must have overlooked the testimonies of some of the individual
complainants which are now on record. Other individual complainants should have been
summoned with the end in view of receiving their testimonies. The complainants should [have
been] afforded the time and opportunity to fully substantiate their claims against the
respondents. Judgment should [have been] rendered only based on the conflicting positions
of the parties. The Labor Arbiter is called upon to consider and pass upon the issues of fact
and law raised by the parties.
Toward this end, therefore, it is Our considered view the case should be remanded to the
Labor Arbiter of origin for further proceedings.
Further, We take note that the decision does not contain a dispositive portion or fallo. Such
being the case, it may be well said that the decision does not resolve the issues at hand. On
another plane, there is no portion of the decision which could be carried out by way of
execution.
It may be argued that the last paragraph of the decision may be categorized as the
dispositive portion thereof:
xxx xxx xxx
The undersigned Labor Arbiter is not oblivious [to] the fact that respondents have violated a
cardinal rule in every establishment that a payroll and other papers evidencing hour[s] of
work, payment, etc. shall always be maintained and subjected to inspection and visitation by
personnel of the Department of Labor and Employment. As such penalty, respondents should
not escape liability for this technicality, hence, it is proper that all the individual complainants
except those who resigned and executed quitclaim[s] and release[s] prior to the filing of this
complaint should be reinstated to their former position with the admonition to respondents
that any harassment, intimidation, coercion or any form of threat as a result of this
immediately executory reinstatement shall be dealt with accordingly.
SO ORDERED.
It is Our considered view that even assuming arguendo that the respondents failed to
maintain their payroll and other papers evidencing hours of work, payment etc., such
circumstance, standing alone, does not warrant the directive to reinstate complainants to their
former positions. It is [a] well settled rule that there must be a finding of illegal dismissal
before reinstatement be mandated.
In this regard, the LABOR ARBITER is hereby directed to include in his clarificatory decision,
after receiving evidence, considering and resolving the same, the requisite dispositive
portion.9
Apparently, the Labor Arbiter perceived that if not for petitioners, he would not have fallen
victim to this stinging rebuke at the hands of the NLRC. Thus does it appear to us that the
Labor Arbiter, in concluding in his 27 July 1994 Decision that petitioners abandoned their
work, was moved by, at worst, spite, or at best, lackadaisically glossed over petitioner's
evidence. On this score, we find the following observations of the OSG most persuasive:
In finding that petitioner employees abandoned their work, the Labor Arbiter and the NLRC
relied on the testimony of Security Guard Rolando Cairo that on January 21, 1991, petitioners
refused to work. As a result of their failure to work, the cheese curls ready for repacking on
said date were spoiled.
The failure to work for one day, which resulted in the spoilage of cheese curls does not
amount to abandonment of work. In fact two (2) days after the reported abandonment of work
or on January 23, 1991, petitioners filed a complaint for, among others, unfair labor practice,
illegal lockout and/or illegal dismissal. In several cases, this Honorable Court held that "one
could not possibly abandon his work and shortly thereafter vigorously pursue his complaint
for illegal dismissal (De Ysasi III v. NLRC, 231 SCRA 173; Ranara v. NLRC, 212 SCRA 631;
Dagupan Bus Co. v. NLRC, 191 SCRA 328; Atlas Consolidated Mining and Development
Corp. v. NLRC, 190 SCRA 505; Hua Bee Shirt Factory v. NLRC, 186 SCRA 586; Mabaylan v.
NLRC, 203 SCRA 570 and Flexo Manufacturing v. NLRC, 135 SCRA 145). In Atlas
Consolidated, supra, this Honorable Court explicitly stated:
It would be illogical for Caballo, to abandon his work and then immediately file an action
seeking for his reinstatement. We can not believe that Caballo, who had worked for Atlas for
two years and ten months, would simply walk away from his job unmindful of the
consequence of his act. i.e. the forfeiture of his accrued employment benefits. In opting to
finally to [sic] contest the legality of his dismissal instead of just claiming his separation pay
and other benefits, which he actually did but which proved to be futile after all, ably supports
19
his sincere intention to return to work, thus negating Atlas' stand that he had abandoned his
job.
In De Ysasi III v. NLRC (supra), this Honorable Court stressed that it is the clear, deliberate
and unjustified refusal to resume employment and not mere absence that constitutes
abandonment. The absence of petitioner employees for one day on January 21, 1991 as
testified [to] by Security Guard Orlando Cairo did not constitute abandonment.
In his first decision, Labor Arbiter Santos expressly directed the reinstatement of the
petitioner employees and admonished the private respondents that "any harassment,
intimidation, coercion or any form of threat as a result of this immediately executory
reinstatement shall be dealt with accordingly.
In his second decision, Labor Arbiter Santos did not state why he was abandoning his
previous decision directing the reinstatement of petitioner employees.
By directing in his first decision the reinstatement of petitioner employees, the Labor Arbiter
impliedly held that they did not abandon their work but were not allowed to work without just
cause.
That petitioner employees are "pakyao" or piece workers does not imply that they are not
regular employees entitled to reinstatement. Private respondent Empire Food Products, Inc.
is a food and fruit processing company. In Tabas v. California Manufacturing Co., Inc. (169
SCRA 497), this Honorable Court held that the work of merchandisers of processed food,
who coordinate with grocery stores and other outlets for the sale of the processed food is
necessary in the day-to-day operation[s] of the company. With more reason, the work of
processed food repackers is necessary in the day-to-day operation[s] of respondent Empire
Food Products. 10
It may likewise be stressed that the burden of proving the existence of just cause for
dismissing an employee, such as abandonment, rests on the employer, 11 a burden private
respondents failed to discharge.
Private respondents, moreover, in considering petitioners' employment to have been
terminated by abandonment, violated their rights to security of tenure and constitutional right
to due process in not even serving them with a written notice of such termination. 12 Section
2, Rule XIV, Book V of the Omnibus Rules Implementing the Labor Code provides:
Sec. 2. Notice of Dismissal — Any employer who seeks to dismiss a worker shall furnish him
a written notice stating the particular acts or omission constituting the grounds for his
dismissal. In cases of abandonment of work, the notice shall be served at the worker's last
known address.
Petitioners are therefore entitled to reinstatement with full back wages pursuant to Article 279
of the Labor Code, as amended by R.A. No. 6715. Nevertheless, the records disclose that
taking into account the number of employees involved, the length of time that has lapsed
since their dismissal, and the perceptible resentment and enmity between petitioners and
private respondents which necessarily strained their relationship, reinstatement would be
impractical and hardly promotive of the best interests of the parties. In lieu of reinstatement
then, separation pay at the rate of one month for every year of service, with
a fraction of at least six (6) months of service considered as one (1) year, is in order. 13
That being said, the amount of back wages to which each petitioner is entitled, however,
cannot be fully settled at this time. Petitioners, as piece-rate workers having been paid by the
piece, 14 there is need to determine the varying degrees of production and days worked by
each worker. Clearly, this issue is best left to the National Labor Relations Commission.
As to the other benefits, namely, holiday pay, premium pay, 13th month pay and service
incentive leave which the labor arbiter failed to rule on but which petitioners prayed for in their
complaint, 15 we hold that petitioners are so entitled to these benefits. Three (3) factors lead
us to conclude that petitioners, although piece-rate workers, were regular employees of
private respondents. First, as to the nature of petitioners' tasks, their job of repacking snack
food was necessary or desirable in the usual business of private respondents, who were
engaged in the manufacture and selling of such food products; second, petitioners worked for
private respondents throughout the year, their employment not having been dependent on a
specific project or season; and third, the length of time 16 that petitioners worked for private
respondents. Thus, while petitioners' mode of compensation was on a "per piece basis," the
status and nature of their employment was that of regular employees.
The Rules Implementing the Labor Code exclude certain employees from receiving benefits
such as nighttime pay, holiday pay, service incentive leave 17 and 13th month pay, 18 inter
alia, "field personnel and other employees whose time and performance is unsupervised by
the employer, including those who are engaged on task or contract basis, purely commission
basis, or those who are paid a fixed amount for performing work irrespective of the time
consumed in the performance thereof." Plainly, petitioners as piece-rate workers do not fall
within this group. As mentioned earlier, not only did petitioners labor under the control of
private respondents as their employer, likewise did petitioners toil throughout the year with
the fulfillment of their quota as supposed basis for compensation. Further, in Section 8 (b),
Rule IV, Book III which we quote hereunder, piece workers are specifically mentioned as
being entitled to holiday pay.
Sec. 8. Holiday pay of certain employees. —
(b) Where a covered employee is paid by results or output, such as payment on piece work,
his holiday pay shall not be less than his average daily earnings for the last seven (7) actual
working days preceding the regular holiday: Provided, however, that in no case shall the
holiday pay be less than the applicable statutory minimum wage rate.
20
In addition, the Revised Guidelines on the Implementation of the 13th Month Pay Law, in view
of the modifications to P.D. No. 851 19 by Memorandum Order No. 28, clearly exclude the
employer of piece rate workers from those exempted from paying 13th month pay, to wit:
2. EXEMPTED EMPLOYERS
The following employers are still not covered by P.D. No. 851:
d. Employers of those who are paid on purely commission, boundary or task basis, and those
who are paid a fixed amount for performing specific work, irrespective of the time consumed
in the performance thereof, except where the workers are paid on piece-rate basis in which
case the employer shall grant the required 13th month pay to such workers. (emphasis
supplied)
IN VIEW WHEREOF, the instant petition is hereby GRANTED. The Resolution of the National
Labor Relations Commission of 29 March 1995 and the Decision of the Labor Arbiter of 27
July 1994 in NLRC Case No. RAB-III-01-1964-91 are hereby SET ASIDE, and another is
hereby rendered:
1. DECLARING petitioners to have been illegally dismissed by private respondents, thus
entitled to full back wages and other privileges, and separation pay in lieu of reinstatement at
the rate of one month's salary for every year of service with a fraction of six months of service
considered as one year;
2. REMANDING the records of this case to the National Labor Relations Commission for its
determination of the back wages and other benefits and separation pay, taking into account
the foregoing observations; and

The Revised Guidelines as well as the Rules and Regulations identify those workers who fall 3. DIRECTING the National Labor Relations Commission to resolve the referred issues within
under the piece-rate category as those who are paid a standard amount for every piece or sixty (60) days from its receipt of a copy of this decision and of the records of the case and to
unit of work produced that is more or less regularly replicated, without regard to the time submit to this Court a report of its compliance hereof within ten (10) days from the rendition of
spent in producing the same. 20 its resolution.

As to overtime pay, the rules, however, are different. According to Sec. 2(e), Rule I, Book III Costs against private respondents.
of the Implementing Rules, workers who are paid by results including those who are paid on
piece-work, takay, pakiao, or task basis, if their output rates are in accordance with the SO ORDERED.
standards prescribed under Sec. 8, Rule VII, Book III, of these regulations, or where such
rates have been fixed by the Secretary of Labor in accordance with the aforesaid section, are
not entitled to receive overtime pay. Here, private respondents did not allege adherence to
the standards set forth in Sec. 8 nor with the rates prescribed by the Secretary of Labor. As
such, petitioners are beyond the ambit of exempted persons and are therefore entitled to
overtime pay. Once more, the National Labor Relations Commission would be in a better
position to determine the exact amounts owed petitioners, if any.

As to the claim that private respondents violated petitioners' right to self-organization, the
evidence on record does not support this claim. Petitioners relied almost entirely on
documentary evidence which, per se, did not prove any wrongdoing on private respondents'
part. For example, petitioners presented their complaint 21 to prove the violation of labor laws
committed by private respondents. The complaint, however, is merely "the pleading alleging
the plaintiff's cause or causes of action." 22 Its contents are merely allegations, the verity of
which shall have to be proved during the trial. They likewise offered their Consolidated
Affidavit of Merit and Position Paper 23 which, like the offer of their Complaint, was a
tautological exercise, and did not help nor prove their cause. In like manner, the petition for
certification election 24 and the subsequent order of certification 25 merely proved that
petitioners sought and acquired the status of bargaining agent for all rank-and-file employees.
Finally, the existence of the memorandum of agreement 26 offered to substantiate private
respondents' non-compliance therewith, did not prove either compliance or non-compliance,
absent evidence of concrete, overt acts in contravention of the provisions of the
memorandum.

21
 G.R. No. 111042 October 26, 1999
AVELINO LAMBO and VICENTE BELOCURA, petitioners, vs. NATIONAL LABOR
RELATIONS COMMISSION and J.C. TAILOR SHOP and/or JOHNNY CO, respondents.
MENDOZA, J.:
This is a petition for certiorari to set aside the decision 1 of the National Labor Relations
Commission (NLRC) which reversed the awards made by the Labor Arbiter in favor of
petitioners, except one for P4,992.00 to each, representing 13th month pay.
The facts are as follows.
Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private
respondents J.C. Tailor Shop and/or Johnny Co on September 10, 1985 and March 3, 1985,
respectively. They worked from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays.
As in the case of the other 100 employees of private respondents, petitioners were paid on a
piece-work basis, according to the style of suits they made. Regardless of the number of
pieces they finished in a day, they were each given a daily pay of at least P64.00.
On January 17, 1989, petitioners filed a complaint against private respondents for illegal
dismissal and sought recovery of overtime pay, holiday pay, premium pay on holiday and rest
day, service incentive leave pay, separation pay, 13th month pay, and attorney’s
fees.1âwphi1.nêt
After hearing, Labor Arbiter Jose G. Gutierrez found private respondents guilty of illegal
dismissal and accordingly ordered them to pay petitioners’ claims. The dispositive portion of
the Labor Arbiter’s decision reads:
WHEREFORE, in the light of the foregoing, judgment is hereby rendered declaring the
complainants to have been illegally dismissed and ordering the respondents to pay the
complainants the following monetary awards:
AVELINO LAMBO VICENTE BELOCURA
I. BACKWAGES P64,896.00 P64,896.00
II. OVERTIME PAY 13,447.90 13,447.90
III. HOLIDAY PAY 1,399.30 1,399.30
IV. 13TH MONTH PAY 4,992.00 4,992.00
V. SEPARATION PAY 9,984.00 11,648.00
—————— ——————
TOTAL P94,719.20 P96,383.20 = P191,102.40
Add: 10% Attorney's Fees 19,110.24
——————
GRAND TOTAL P210,212.64
=========
or a total aggregate amount of TWO HUNDRED TEN THOUSAND TWO HUNDRED
TWELVE AND 64/100 (P210,212.64).
All other claims are dismissed for lack of merit.
SO ORDERED.
On appeal by private respondents, the NLRC reversed the decision of the Labor Arbiter. It
found that petitioners had not been dismissed from employment but merely threatened with a
closure of the business if they insisted on their demand for a "straight payment of their
minimum wage," after petitioners, on January 17, 1989, walked out of a meeting with private
respondents and other employees. According to the NLRC, during that meeting, the
employees voted to maintain the company policy of paying them according to the volume of
work finished at the rate of P18.00 per dozen of tailored clothing materials. Only petitioners
allegedly insisted that they be paid the minimum wage and other benefits. The NLRC held
petitioners guilty of abandonment of work and accordingly dismissed their claims except that
for 13th month pay. The dispositive portion of its decision reads:
WHEREFORE, in view of the foregoing, the appealed decision is hereby vacated and a new
one entered ordering respondents to pay each of the complainants their 13th month pay in
the amount of P4,992.00. All other monetary awards are hereby deleted.
SO ORDERED.
Petitioners allege that they were dismissed by private respondents as they were about to file
a petition with the Department of Labor and Employment (DOLE) for the payment of benefits
such as Social Security System (SSS) coverage, sick leave and vacation leave. They deny
that they abandoned their work.
The petition is meritorious.
First. There is no dispute that petitioners were employees of private respondents although
they were paid not on the basis of time spent on the job but according to the quantity and the
quality of work produced by them. There are two categories of employees paid by results: (1)
those whose time and performance are supervised by the employer. (Here, there is an
element of control and supervision over the manner as to how the work is to be performed. A
piece-rate worker belongs to this category especially if he performs his work in the company
premises.); and (2) those whose time and performance are unsupervised. (Here, the
employer’s control is over the result of the work. Workers on pakyao and takay basis belong
to this group.) Both classes of workers are paid per unit accomplished. Piece-rate payment is
generally practiced in garment factories where work is done in the company premises, while
payment on pakyao and takay basis is commonly observed in the agricultural industry, such
22
as in sugar plantations where the work is performed in bulk or in volumes difficult to quantify.4
Petitioners belong to the first category, i.e., supervised employees.
In determining the existence of an employer-employee relationship, the following elements
must be considered: (1) the selection and engagement of the employee; (2) the payment of
wages; (3) the power of dismissal; and (4) the power to control the employee’s conduct. 5 Of
these elements, the most important criterion is whether the employer controls or has reserved
the right to control the employee not only as to the result of the work but also as to the means
and methods by which the result is to be accomplished. 6
In this case, private respondents exercised control over the work of petitioners. As tailors,
petitioners worked in the company’s premises from 8:00 a.m. to 7:00 p.m. daily, including
Sundays and holidays. The mere fact that they were paid on a piece-rate basis does not
negate their status as regular employees of private respondents. The term "wage" is broadly
defined in Art. 97 of the Labor Code as remuneration or earnings, capable of being expressed
in terms of money whether fixed or ascertained on a time, task, piece or commission basis.
Payment by the piece is just a method of compensation and does not define the essence of
the relations. 7 Nor does the fact that petitioners are not covered by the SSS affect the
employer-employee relationship.
Indeed, the following factors show that petitioners, although piece-rate workers, were regular
employees of private respondents: (1) within the contemplation of Art. 280 of the Labor Code,
their work as tailors was necessary or desirable in the usual business of private respondents,
which is engaged in the tailoring business; (2) petitioners worked for private respondents
throughout the year, their employment not being dependent on a specific project or season;
and, (3) petitioners worked for private respondents for more than one year. 8
Second. Private respondents contend, however, that petitioners refused to report for work
after learning that the J.C. Tailoring and Dress Shop Employees Union had demanded their
(petitioners’) dismissal for conduct unbecoming of employees. In support of their claim,
private respondents presented the affidavits 9 of Emmanuel Y. Caballero, president of the
union, and Amado Cabañero, member, that petitioners had not been dismissed by private
respondents but that practically all employees of the company, including the members of the
union had asked management to terminate the services of petitioners. The employees
allegedly said they were against petitioners’ request for change of the mode of payment of
their wages, and that when a meeting was called to discuss this issue, a petition for the
dismissal of petitioners was presented, prompting the latter to walk out of their jobs and
instead file a complaint for illegal dismissal against private respondents on January 17, 1989,
even before all employees could sign the petition and management could act upon the same.
To justify a finding of abandonment of work, there must be proof of a deliberate and
unjustified refusal on the part of an employee to resume his employment. The burden of proof
is on the employer to show an unequivocal intent on the part of the employee to discontinue
employment. Mere absence is not sufficient. It must be accompanied by manifest acts
unerringly pointing to the fact that the employee simply does not want to work anymore.
Private respondents failed to discharge this burden. Other than the self-serving declarations
in the affidavits of their two employees, private respondents did not adduce proof of overt acts
of petitioners showing their intention to abandon their work. On the contrary, the evidence
shows that petitioners lost no time in filing the case for illegal dismissal against private
respondent. This fact negates any intention on their part to sever their employment
relationship. Abandonment is a matter of intention; it cannot be inferred or presumed from
equivocal acts.
Third. Private respondents invoke the compromise agreement, 14 dated March 2, 1993,
between them and petitioner Avelino Lambo, whereby in consideration of the sum of
P10,000.00, petitioner absolved private respondents from liability for money claims or any
other obligations.
To be sure, not all quitclaims are per se invalid or against public policy. But those (1) where
there is clear proof that the waiver was wangled from an unsuspecting or gullible person or
(2) where the terms of settlement are unconscionable on their face are invalid. In these
cases, the law will step in to annul the questionable transaction. 15 However, considering that
the Labor Arbiter had given petitioner Lambo a total award of P94,719.20, the amount of
P10,000.00 to cover any and all monetary claims is clearly unconscionable. As we have held
in another case, 16 the subordinate position of the individual employee vis-a-vis management
renders him especially vulnerable to its blandishments, importunings, and even intimidations,
and results in his improvidently waiving benefits to which he is clearly entitled. Thus,
quitclaims, waivers or releases are looked upon with disfavor for being contrary to public
policy and are ineffective to bar claims for the full measure of the workers’ legal rights. 17 An
employee who is merely constrained to accept the wages paid to him is not precluded from
recovering the difference between the amount he actually received and that amount which he
should have received.
Fourth. The Labor Arbiter awarded backwages, overtime pay, holiday pay, 13th month pay,
separation pay and attorney’s fees, corresponding to 10% of the total monetary awards, in
favor of petitioners.
As petitioners were illegally dismissed, they are entitled to reinstatement with backwages.
Considering that petitioners were dismissed from the service on January 17, 1989, i.e., prior
to March 21, 1989, 18 the Labor Arbiter correctly applied the rule in the Mercury Drug case,
19 according to which the recovery of backwages should be limited to three years without
qualifications or deductions. Any award in excess of three years is null and void as to the
excess.
The Labor Arbiter correctly ordered private respondents to give separation pay. Considerable
time has lapsed since petitioners’ dismissal, so that reinstatement would now be impractical
and hardly in the best interest of the parties. In lieu of reinstatement, separation pay should
be awarded to petitioners at the rate of one month salary for every year of service, with a
fraction of at least six (6) months of service being considered as one (1) year.
23
The awards for overtime pay, holiday pay and 13th month pay are in accordance with our III. HOLIDAY PAY: Jan. 17/86 - Jan. 17/89
finding that petitioners are regular employees, although paid on a piece-rate basis. These Jan. 17/86 - April 30/87 = 12 RHs; 8 SHs
awards are based on the following computation of the Labor Arbiter: P 32.00/day x 200% =
64.00/day x 12 days = 768.00
AVELINO LAMBO 32.00/day x 12 days = (384.00) P384.00
I. BACKWAGES: Jan. 17/89 - Jan. 17/92 = 36 mos. 32.00/day x 30% = ————
P 64.00/day x 26 days = 9.60/day x 8 days = 76.80 460.80
1,664.00/mo. x 36 mos. = P59,904.00 ———
13th Mo. Pay: May 1/87 - Sept. 30/87 = 3 RHs; 3 SHs
P1,664.00/yr. x 3 yrs. = 4,992.00 P64,896.00 P 41.00/day x 200% =
———— 82.00/day 3 days = 246.00
II. OVERTIME PAY: Jan. 17/86 - Jan. 17/89 41.00/day x 3 days = (123.00) P123.00
Jan. 17/86 - April 30/87 = 15 mos. & 12 day = 41.00/day x 30% = ————
(15 mos. x 26 days + 12 days) = 402 days 12.30/day x 3 days = 36.90 159.90
*2 hours = 25% ————
402 days x 2 hrs./days = 804 hrs. Oct. 1/87 - Dec. 13/87 = 1 RH
P 32.00/day ÷ 8 hrs. = P 49.00/day x 200% =
4.00/hr. x 25% = 98.00/day x 1 day = P98.00
1.00/hr. + P4.00/hr. = 49.00/day x 1 day = (49.00) 49.00
5.00/hr. x 804 hrs. = 4,020.00 ————
Dec. 14/87 - Jan. 17/89 = 9 RHs; 8 SHs
May 1/87 - Sept. 30/87 = 4 mos. & 26 days = P 64.00/day x 200% =
(4 mos. x 26 days + 26 days) = 130 days 128.00/day x 9 days = P1,152.00
130 days x 2 hrs./day = 260 hrs. 64.00/day x 9 days = (576.00) P576.00
P 41.00/day ÷ 8 hrs. = 64.00/day x 30% = ————
5.12/hr. x 25% = 19.20/day x 8 days = 153.60 729.60 1,399.30
1.28/hr. + P5.12/hr. = ——— ———
6.40/hr. x 260 hrs. = P1,664.00 IV. 13TH MO. PAY: Jan. 17/86 - Jan. 17/89 = 3 yrs.
P 64.00/day x 26 days =
Oct. 1/87 - Dec. 13/87 = 2 mos. & 11 days = 1,664.00/yr. x 3 yrs. = 4,992.00
(2 mos. x 26 days + 11 days) = 63 days
63 days x 2 hrs./day = 126 hrs. V. SEPARATION PAY: Sept. 10/85 - Jan. 17/92 = 6 yrs.
P 49.00/day ÷ 8 hrs. = P1,664.00/mo. x 6 yrs. = 9,984.00
6.12/hr. x 25% = ————
1.53/hr. + P6.12/hr. = TOTAL AWARD OF AVELINO LAMBO P94,719.20
7.65/hr. x 126 hrs. = P963.90 ========

Dec. 14/87 - Jan. 17/89 = 13 mos. & 2 days = VICENTE BELOCURA

(13 mos. x 26 days + 2 days) = 340 days I. BACKWAGES: Jan. 17/89 - Jan. 17/92 = 36 mos.
340 days x 2 hrs./day = 680 hrs. Same computation as A. Lambo P64,896.00
P 64.00/day ÷ 8 hrs. =
8.00/hr. x 25% = II. OVERTIME PAY: Jan. 17/86 - Jan. 17/89
2.00/hr. + P8.00/hr = Same computation as A. Lambo 13,447.90
10.00/hr. x 680 hrs. = P6,800.00 P13,447.90
III. HOLIDAY PAY: Jan. 17/86 - Jan. 17/89

24
Same computation as A. Lambo 1,399.30 TOTAL P84,719.20 P96,383.20
GRAND TOTAL P181,102.40
IV. 13TH MO. PAY: Jan. 17/86 - Jan. 17/89 =========
Same computation as A. Lambo 4,992.00
WHEREFORE, the decision of the National Labor Relations Commission is SET ASIDE and
V. SEPARATION PAY: March 3/85 - Jan. 17/92 = 7 yrs. another one is RENDERED ordering private respondents to pay petitioners the total amount
P1,664.00/mo. x 7 yrs. = 11,648.00 of One Hundred Eighty-One Thousand One Hundred Two Pesos and 40/100 (P181,102.40),
————— as computed above.
TOTAL AWARD OF VICENTE BELOCURA P96,383.20
========= SO ORDERED.

SUMMARY

AVELINO LAMBO VICENTE BELOCURA

———————— —————————
I. BACKWAGES P64,896.00 P64,896.00
II. OVERTIME PAY 13,447.90 13,447.90
III. HOLIDAY PAY 1,399.30 1,399.30
IV. 13TH MO. PAY 4,992.00 4,992.00
V. SEPARATION PAY 9,984.00 11,648.00
————— —————
TOTAL P94,719.20 P96,383.20
= P191,102.40
ADD: 10% Attorney's Fees 19,110.24
—————
GRAND TOTAL P210,212.64
=========
Except for the award of attorney’s fees in the amount of P19,110.24, the above computation
is affirmed. The award of attorney’s fees should be disallowed, it appearing that petitioners
were represented by the Public Attorney’s Office. With regard to petitioner Avelino Lambo,
the amount of P10,000.00 paid to him under the compromise agreement should be deducted
from the total award of P94,719.20. Consequently, the award to each petitioner should be as
follows:

AVELINO LAMBO VICENTE BELOCURA

———————— —————————
I. BACKWAGES P64,896.00 P64,896.00
II. OVERTIME PAY 13,447.90 13,447.90
III. HOLIDAY PAY 1,399.30 1,399.30
IV. 13TH MONTH PAY 4,992.00 4,992.00
V. SEPARATION PAY 9,984.00 11,648.00
————— —————
P 94,719.20
Less 10,000.00
—————

25
 G.R. No. L-18353 July 31, 1963
SAN MIGUEL BREWERY, INC., petitioner, vs. DEMOCRATIC LABOR ORGANIZATION,
ET AL., respondents.
BAUTISTA ANGELO, J.:
On January 27, 1955, the Democratic Labor Association filed complaint against the San
Miguel Brewery, Inc. embodying 12 demands for the betterment of the conditions of
employment of its members. The company filed its answer to the complaint specifically
denying its material averments and answering the demands point by point. The company
asked for the dismissal of the complaint.
At the hearing held sometime in September, 1955, the union manifested its desire to confine
its claim to its demands for overtime, night-shift differential pay, and attorney's fees, although
it was allowed to present evidence on service rendered during Sundays and holidays, or on
its claim for additional separation pay and sick and vacation leave compensation.1äwphï1.ñët
After the case had been submitted for decision, Presiding Judge Jose S. Bautista, who was
commissioned to receive the evidence, rendered decision expressing his disposition with
regard to the points embodied in the complaint on which evidence was presented.
Specifically, the disposition insofar as those points covered by this petition for review are
concerned, is as follows:
1. With regard to overtime compensation, Judge Bautista held that the provisions of the Eight-
Hour Labor Law apply to the employees concerned for those working in the field or engaged
in the sale of the company's products outside its premises and consequently they should be
paid the extra compensation accorded them by said law in addition to the monthly salary and
commission earned by them, regardless of the meal allowance given to employees who work
up to late at night.
2. As to employees who work at night, Judge Bautista decreed that they be paid their
corresponding salary differentials for work done at night prior to January 1, 1949 with the
present qualification: 25% on the basis of their salary to those who work from 6:00 to 12:00
p.m., and 75% to those who work from 12:01 to 6:00 in the morning.
3. With regard to work done during Sundays and holidays, Judge Bautista also decreed that
the employees concerned be paid an additional compensation of 25% as provided for in
Commonwealth Act No. 444 even if they had been paid a compensation on monthly salary
basis.
The demands for the application of the Minimum Wage Law to workers paid on "pakiao"
basis, payment of accumulated vacation and sick leave and attorney's fees, as well as the
award of additional separation pay, were either dismissed, denied, or set aside.
Its motion for reconsideration having been denied by the industrial court en banc, which
affirmed the decision of the court a quo with few exceptions, the San Miguel Brewery, Inc.
interposed the present petition for review.
Anent the finding of the court a quo, as affirmed by the Court of Industrial Relations, to the
effect that outside or field sales personnel are entitled to the benefits of the Eight-Hour Labor
Law, the pertinent facts are as follows:
After the morning roll call, the employees leave the plant of the company to go on their
respective sales routes either at 7:00 a.m. for soft drinks trucks, or 8:00 a.m. for beer trucks.
They do not have a daily time record. The company never require them to start their work as
outside sales personnel earlier than the above schedule.
The sales routes are so planned that they can be completed within 8 hours at most, or that
the employees could make their sales on their routes within such number of hours variable in
the sense that sometimes they can be completed in less than 8 hours, sometimes 6 to 7
hours, or more. The moment these outside or field employees leave the plant and while in
their sales routes they are on their own, and often times when the sales are completed, or
when making short trip deliveries only, they go back to the plant, load again, and make
another round of sales. These employees receive monthly salaries and sales commissions in
variable amounts. The amount of compensation they receive is uncertain depending upon
their individual efforts or industry. Besides the monthly salary, they are paid sales commission
that range from P30, P40, sometimes P60, P70, to sometimes P90, P100 and P109 a month,
at the rate of P0.01 to P0.01-½ per case.
It is contended that since the employees concerned are paid a commission on the sales they
make outside of the required 8 hours besides the fixed salary that is paid to them, the Court
of Industrial Relations erred in ordering that they be paid an overtime compensation as
required by the Eight-Hour Labor Law for the reason that the commission they are paid
already takes the place of such overtime compensation. Indeed, it is claimed, overtime
compensation is an additional pay for work or services rendered in excess of 8 hours a day
by an employee, and if the employee is already given extra compensation for labor performed
in excess of 8 hours a day, he is not covered by the law. His situation, the company
contends, can be likened to an employee who is paid on piece-work, "pakiao", or commission
basis, which is expressly excluded from the operation of the Eight-Hour Labor Law.1
We are in accord with this view, for in our opinion the Eight-Hour Labor Law only has
application where an employee or laborer is paid on a monthly or daily basis, or is paid a
monthly or daily compensation, in which case, if he is made to work beyond the requisite
period of 8 hours, he should be paid the additional compensation prescribed by law. This law
has no application when the employee or laborer is paid on a piece-work, "pakiao", or
commission basis, regardless of the time employed. The philosophy behind this exemption is
that his earnings in the form of commission based on the gross receipts of the day. His
participation depends upon his industry so that the more hours he employs in the work the
26
greater are his gross returns and the higher his commission. This philosophy is better
explained in Jewel Tea Co. v. Williams, C.C.A. Okla., 118 F. 2d 202, as follows:
The reasons for excluding an outside salesman are fairly apparent. Such salesman, to a
greater extent, works individually. There are no restrictions respecting the time he shall work
and he can earn as much or as little, within the range of his ability, as his ambition dictates. In
lieu of overtime he ordinarily receives commissions as extra compensation. He works away
from his employer's place of business, is not subject to the personal supervision of his
employer, and his employer has no way of knowing the number of hours he works per day.
True it is that the employees concerned are paid a fixed salary for their month of service,
such as Benjamin Sevilla, a salesman, P215; Mariano Ruedas, a truck driver, P155; Alberto
Alpaza and Alejandro Empleo, truck helpers, P125 each, and sometimes they work in excess
of the required 8-hour period of work, but for their extra work they are paid a commission
which is in lieu of the extra compensation to which they are entitled. The record shows that
these employees during the period of their employment were paid sales commission ranging
from P30, P40, sometimes P60, P70, to sometimes P90, P100 and P109 a month depending
on the volume of their sales and their rate of commission per case. And so, insofar is the
extra work they perform, they can be considered as employees paid on piece work, "pakiao",
or commission basis. The Department of Labor, called upon to implement, the Eight-Hour
Labor Law, is of this opinion when on December 9, 1957 it made the ruling on a query
submitted to it, thru the Director of the Bureau of Labor Standards, to the effect that field
sales personnel receiving regular monthly salaries, plus commission, are not subject to the
Eight-Hour Labor Law. Thus, on this point, said official stated:
. . . Moreover, when a fieldman receives a regular monthly salary plus commission on
percentage basis of his sales, it is also the established policy of the Office to consider his
commission as payment for the extra time he renders in excess of eight hours, thereby
classifying him as if he were on piecework basis, and therefore, technically speaking, he is
not subject to the Eight-Hour Labor Law.
We are, therefore, of the opinion that the industrial court erred in holding that the Eight-Hour
Labor Law applies to the employees composing the outside service force and in ordering that
they be paid the corresponding additional compensation.
With regard to the claim for night salary differentials, the industrial court found that claimants
Magno Johnson and Jose Sanchez worked with the respondent company during the period
specified by them in their testimony and that watchmen Zoilo Illiga, Inocentes Prescillas and
Daniel Cayuca rendered night duties once every three weeks continuously during the period
of the employment and that they were never given any additional compensation aside from
their monthly regular salaries. The court found that the company started paying night
differentials only in January, 1949 but never before that time. And so it ordered that the
employees concerned be paid 25% additional compensation for those who worked from 6:00
to 12:00 p.m. and 75% additional compensation for those who worked from 12:01 to 6: 00 in
the morning. It is now contended that this ruling is erroneous because an award for night shift
differentials cannot be given retroactive effect but can only be entertained from the date of
demand which was on January 27, 1953, citing in support thereof our ruling in Earnshaws
Docks & Honolulu Iron Works v. The Court of Industrial Relations, et al., L-8896, January 25,
1957.
This ruling, however, has no application here for it appears that before the filing of the petition
concerning this claim a similar one had already been filed long ago which had been the
subject of negotiations between the union and the company which culminated in a strike in
1952. Unfortunately, however, the strike fizzled out and the strikers were ordered to return to
work with the understanding that the claim for night salary differentials should be settled in
court. It is perhaps for this reason that the court a quo granted this claim in spite of the
objection of the company to the contrary.
The remaining point to be determined refers to the claim for pay for Sundays and holidays for
service performed by some claimants who were watchmen or security guards. It is contended
that these employees are not entitled to extra pay for work done during these days because
they are paid on a monthly basis and are given one day off which may take the place of the
work they may perform either on Sunday or any holiday.
We disagree with this claim because it runs counter to law. Section 4 of Commonwealth Act
No. 444 expressly provides that no person, firm or corporation may compel an employee or
laborer to work during Sundays and legal holidays unless he is paid an additional sum of 25%
of his regular compensation. This proviso is mandatory, regardless of the nature of
compensation. The only exception is with regard to public utilities who perform some public
service.
WHEREFORE, the decision of the industrial court is hereby modified as follows: the award
with regard to extra work performed by those employed in the outside or field sales force is
set aside. The rest of the decision insofar as work performed on Sundays and holidays
covering watchmen and security guards, as well as the award for night salary differentials, is
affirmed. No costs.
27
G.R. No. 119205 April 15, 1998
SIME DARBY PILIPINAS, INC. petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION (2ND DIVISION) and SIME DARBY SALARIED EMPLOYEES
ASSOCIATION (ALU-TUCP), respondents.
BELLOSILLO, J.:
Is the act of management in revising the work schedule of its employees and discarding their
paid lunch break constitutive of unfair labor practice?
Sime Darby Pilipinas, Inc., petitioner, is engaged in the manufacture of automotive tires,
tubes and other rubber products. Sime Darby Salaried Employees Association (ALU-TUCP),
private respondent, is an association of monthly salaried employees of petitioner at its
Marikina factory. Prior to the present controversy, all company factory workers in Marikina
including members of private respondent union worked from 7:45 a.m. to 3:45 p.m. with a 30-
minute paid "on call" lunch break.
On 14 August 1992 petitioner issued a memorandum to all factory-based employees advising
all its monthly salaried employees in its Marikina Tire Plant, except those in the Warehouse
and Quality Assurance Department working on shifts, a change in work schedule effective 14
September 1992 thus —
TO: ALL FACTORY-BASED EMPLOYEES
RE: NEW WORK SCHEDULE
Effective Monday, September 14, 1992, the new work schedule of the factory office will be as
follows:
7:45 A.M. — 4:45 P.M. (Monday to Friday)
7:45 A.M. — 11:45 A.M. (Saturday).
Coffee break time will be ten minutes only anytime between:
9:30 A.M. — 10:30 A.M. and
2:30 P.M. — 3:30 P.M.
Lunch break will be between:
12:00 NN — 1:00 P.M. (Monday to Friday).
Excluded from the above schedule are the Warehouse and QA employees who are on
shifting. Their work and break time schedules will be maintained as it is now.1
Since private respondent felt affected adversely by the change in the work schedule and
discontinuance of the 30-minute paid "on call" lunch break, it filed on behalf of its members a
complaint with the Labor Arbiter for unfair labor practice, discrimination and evasion of liability
pursuant to the resolution of this Court in Sime Darby International Tire Co., Inc. v. NLRC.2
However, the Labor Arbiter dismissed the complaint on the ground that the change in the
work schedule and the elimination of the 30-minute paid lunch break of the factory workers
constituted a valid exercise of management prerogative and that the new work schedule,
break time and one-hour lunch break did not have the effect of diminishing the benefits
granted to factory workers as the working time did not exceed eight (8) hours.
The Labor Arbiter further held that the factory workers would be unjustly enriched if they
continued to be paid during their lunch break even if they were no longer "on call" or required
to work during the break. He also ruled that the decision in the earlier Sime Darby case3 was
not applicable to the instant case because the former involved discrimination of certain
employees who were not paid for their 30-minute lunch break while the rest of the factory
workers were paid; hence, this Court ordered that the discriminated employees be similarly
paid the additional compensation for their lunch break.
Private respondent appealed to respondent National Labor Relations Commission (NLRC)
which sustained the Labor Arbiter and dismissed the appeal.4 However, upon motion for
reconsideration by private respondent, the NLRC, this time with two (2) new commissioners
replacing those who earlier retired, reversed its earlier decision of 20 April 1994 as well as the
decision of the Labor Arbiter.5 The NLRC considered the decision of this Court in the Sime
Darby case of 1990 as the law of the case wherein petitioner was ordered to pay "the money
value of these covered employees deprived of lunch and/or working time breaks." The public
respondent declared that the new work schedule deprived the employees of the benefits of a
time-honored company practice of providing its employees a 30-minute paid lunch break
resulting in an unjust diminution of company privileges prohibited by Art. 100 of the Labor
Code, as amended. Hence, this petition alleging that public respondent committed grave
abuse of discretion amounting to lack or excess of jurisdiction: (a) in ruling that petitioner
committed unfair labor practice in the implementation of the change in the work schedule of
its employees from 7:45 a.m. — 3:45 p.m. to 7:45 a.m. — 4:45 p.m. with one-hour lunch
break from 12:00 nn to 1:00 p.m.; (b) in holding that there was diminution of benefits when
the 30-minute paid lunch break was eliminated; (c) in failing to consider that in the earlier
Sime Darby case affirming the decision of the NLRC, petitioner was authorized to discontinue
the practice of having a 30-minute paid lunch break should it decide to do so; and, (d) in
ignoring petitioner's inherent management prerogative of determining and fixing the work
schedule of its employees which is expressly recognized in the collective bargaining
agreement between petitioner and private respondent.
The Office of the Solicitor General filed in a lieu of comment a manifestation and motion
recommending that the petitioner be granted, alleging that the 14 August 1992 memorandum
which contained the new work schedule was not discriminatory of the union members nor did
it constitute unfair labor practice on the part of petitioner.
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We agree, hence, we sustain petitioner. The right to fix the work schedules of the employees
rests principally on their employer. In the instant case petitioner, as the employer, cites as
reason for the adjustment the efficient conduct of its business operations and its improved
production.6 It rationalizes that while the old work schedule included a 30-minute paid lunch
break, the employees could be called upon to do jobs during that period as they were "on
call." Even if denominated as lunch break, this period could very well be considered as
working time because the factory employees were required to work if necessary and were
paid accordingly for working. With the new work schedule, the employees are now given a
one-hour lunch break without any interruption from their employer. For a full one-hour
undisturbed lunch break, the employees can freely and effectively use this hour not only for
eating but also for their rest and comfort which are conducive to more efficiency and better
performance in their work. Since the employees are no longer required to work during this
one-hour lunch break, there is no more need for them to be compensated for this period. We
agree with the Labor Arbiter that the new work schedule fully complies with the daily work
period of eight (8) hours without violating the Labor Code.7 Besides, the new schedule
applies to all employees in the factory similarly situated whether they are union members or
not.8
While the Constitution is committed to the policy of social justice and the protection of the
working class, it should not be supposed that every dispute will be automatically decided in
favor of labor. Management also has rights which, as such, are entitled to respect and
enforcement in the interest of simple fair play. Although this Court has inclined more often
than not toward the worker and has upheld his cause in his conflicts with the employer, such
favoritism has not blinded the Court to the rule that justice is in every case for the deserving,
to be dispensed in the light of the established facts and the applicable law and doctrine.13
WHEREFORE, the Petition is GRANTED. The Resolution of the National Labor Relations
Commission dated 29 November 1994 is SET ASIDE and the decision of the Labor Arbiter
dated 26 November 1993 dismissing the complaint against petitioner for unfair labor practice
is AFFIRMED.
SO ORDERED.

Consequently, it was grave abuse of discretion for public respondent to equate the earlier
Sime Darby case9 with the facts obtaining in this case. That ruling in the former case is not
applicable here. The issue in that case involved the matter of granting lunch breaks to certain
employees while depriving the other employees of such breaks. This Court affirmed in that
case the NLRC's finding that such act of management was discriminatory and constituted
unfair labor practice.

The case before us does not pertain to any controversy involving discrimination of employees
but only the issue of whether the change of work schedule, which management deems
necessary to increase production, constitutes unfair labor practice. As shown by the records,
the change effected by management with regard to working time is made to apply to all
factory employees engaged in the same line of work whether or not they are members of
private respondent union. Hence, it cannot be said that the new scheme adopted by
management prejudices the right of private respondent to self-organization.

Every business enterprise endeavors to increase its profits. In the process, it may devise
means to attain that goal. Even as the law is solicitous of the welfare of the employees, it
must also protect the right of an employer to exercise what are clearly management
prerogatives.10 Thus, management is free to regulate, according to its own discretion and
judgment, all aspects of employment, including hiring, work assignments, working methods,
time, place and manner of work, processes to be followed, supervision of workers, working
regulations, transfer of employees, work supervision, lay off of workers and discipline,
dismissal and recall of workers.11 Further, management retains the prerogative, whenever
exigencies of the service so require, to change the working hours of its employees. So long
as such prerogative is exercised in good faith for the advancement of the employer's interest
and not for the purpose of defeating or circumventing the rights of the employees under
special laws or under valid agreements, this Court will uphold such exercise.12

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