THIRD DIVISION
demand to maintain the old working schedule from
G.R. NO. 41314 November 13, 1992
UNION CARBIDE LABOR UNION (NLU), petitioner,
vs.
UNION CARBIDE PHILIPPINES, INC. AND THE HON. SECRETARY OF
LABOR, respondents.
MELO, J.:
This refers to a petition for review of the decision of the then Secretary of Labor Blas
Ople handed down on February 7, 1975 which set aside the decision of the Arbitrator
ordering reinstatement with backwages, and instead adjudged the payment of
separation pay; and the resolution dated July 24, 1975 denying petitioner's motion for
reconsideration for lack of merit.
The undisputed facts as found by the Secretary of Labor are as follows:
. . . Complainants Agapito Duro, Alfredo Torio, and Rustico
Javillonar, were dismissed from their employment after an
application for clearance to terminate them was approved by the
Secretary of Labor on December 19, 1972. Respondent's
application for clearance was premised on "willful violation of
Company regulations, gross insubordination and refusal to submit
to a Company investigation . . . ."
Prior events leading to the dismissal of complainants are recited in
the Arbitrator's decision, which we quote:
It appears that the Company is operating on three (3)
shifts namely: morning, afternoon and night shifts. The
workers in the third shift normally work from Monday to
Saturday, the last working day being Friday or forty (40)
hours a week or from Monday to Friday.
Sometime in July 1972, there seems to be a change in the
working schedule from Monday to Friday as contained in
the collective bargaining agreement aforecited to Sunday
thru Thursday. The change became effective July 5, 1972.
The third shift employees were required to start the new
work schedule from Sunday thru Thursday.
On November 6, 1972, the night shift employees filed a
Monday thru Friday. (Letter of November 6, 1972
addressed to the Committee on Labor Relation, UCLU).
The demand was referred to the Labor Management
Relation Committee and discussed from November 15, up
to November 24, 1972. In the discussions had, it was
arrived at that all night shift operating personnel were
allowed to start their work Monday and on Saturday. This
excepted the employees in the maintenance and
preparation crews whose work schedule is presumed to be
maintained from Sunday to Thursday. The work schedule
between management representatives and the alleged
officers of the Union (Varias group) was approved and
disseminated to take effect November 26, 1972. (Exh. "2"
Respondent).
In manifestation of their dissention to the new work
schedule, the three respondents Duro, Torio, and
Javillonar did not report for work on November 26, 1972
which was a Sunday since it was not a working day
according to the provisions of the Collecrtive Bargaining
Agreement. (Exh. "A" Complainant). Their absence
caused their suspension for fourteen (14) days. (pp. 29-
30, Rollo).
On May 4, 1973, the Arbitrator rendered a decision ordering the reinstatement with
backwages of the complainants. On June 8, 1973, the National Labor Relations
Commission dismissed respondent company's appeal for having been filed out of
time. A motion for reconsideration which was treated as an appeal was then filed by
respondent company before the Secretary of Labor, resulting in the modification of
the Arbitrator's decision by awarding complainants’ separation pay. A motion for
reconsideration subsequently filed by the petitioner was denied for lack of merit.
Hence, this petition.
The main issue in this case is whether or not the complainants could be validly
dismissed from their employment on the ground of insubordination for refusing to
comply with the new work schedule.
Petitioner alleges that the change in the company's working schedule violated the
existing Collective Bargaining Agreement of the parties. Hence, complainants cannot
be dismissed since their refusal to comply with the re-scheduled working hours was
based on a provision of the Collective Bargaining Agreement. Petitioner further
contends that the dismissal of the complainants violated Section 9, Article II of the
1
1973 Constitution which provides "the right of workers to self-organization,
collective bargaining, security of tenure, and just and humane conditions of work."
The petition has no merit.
Although Article XIX of the CBA provides for the duration of the agreement, which
We quote:
This agreement shall become effective on September 1, 1971 and
shall remain in full force and effect without change until August
31, 1974. Unless the parties hereto agree otherwise, negotiation for
renewal, or renewal and modification, or a new agreement may not
be initiated before July 1, 1974.
this does not necessarily mean that the company can no longer change its
working schedule, for Section 2, Article II of the same CBA expressly
provides that:
Sec. 2. In the exercise of its functions of management, the
COMPANY shall have the sole and exclusive right and power,
among other things, to direct the operations and the working force
of its business in all respects; to be the sole judge in determining
the capacity or fitness of an employee for the position or job to
which he has been assigned; to schedule the hours of work, shifts
and work schedules; to require work to be done in excess of eight
hours or Sundays or holidays as the exigencies of the service may
require; to plan, schedule, direct, curtail and control factory
operations and schedules of production; to introduce and install
new or improved methods or facilities; to designate the work and
the employees to perform it; to select and hire new employees; to
train new employees and improve the skill and ability of
employees from one job to another or form one shift to another; to
classify or reclassify employees; and to make such changes in the
duties of its employees as the COMPANY may see fit or
convenient for the proper conduct of its business.
Verily and wisely, management retained the prerogative, whenever exigencies of the
service so require, to change the working hours of its employees. And as long as
such prerogative is exercised in good faith for the advancement of the employer's
interest and not for the purpose of defeating or circumventing the rights of the
employees under special laws or under valid agreements, this Court will uphold such
exercise (San Miguel Brewery Sales Force Union (PTGWO) vs. Ople, 170 SCRA 25
[1989]).
2
Thus, in the case of Abbott Laboratories (Phil.), Inc. vs. NLRC (154 SCRA 713
[1987]), We ruled:
. . . Even as the law is solicitous of the welfare of employees, it
must also protect the right of an employer to exercise what are
clearly management prerogatives. The free will of management to
conduct its own business affairs to achieve its purpose cannot be
denied. (p.717)
Further, the incident complained of took place sometime in 1972, so there is no
violation of the 1973 Constitution to speak of because the guarantee of security of
tenure embodied under Section 9, Article II may not be given a retroactive effect. It
is the basic norm that provisions of the fundamental law should be given prospective
application only, unless legislative intent for its retroactive application is so
provided.
As pointed out by Justice Isagani Cruz, to wit:
Finally, it should be observed that the provisions of the
Constitution should be given only a prospective application unless
the contrary is clearly intended. Were the rule otherwise, rights
already acquired or vested might be unduly disturbed or withdrawn
even in the absence of an unmistakable intention to place them
within the scope of the Constitution.
(p.10, Constitutional Law, Isagani Cruz, 1991 Edition)
We agree with the findings arrived at by both Arbitrator and the Secretary of Labor
that there is no unfair labor practice in this case. Neither was there gross and habitual
neglect of complainants' duties. Nor did the act of complainants in refusing to follow
the new working hours amount to serious misconduct or willful disobedience to the
orders of respondent company.
Although no serious objections may be offered to the Arbitrator's conclusion to order
reinstatement with backwages of the complainants, We now refrain from doing so
considering that reinstatement is no longer feasible due to the fact that the
controversy started more than 20 years ago aside from the obviously strained
relations between the parties.
WHEREFORE, the decision appealed from is hereby AFFIRMED.
SO ORDERED.
 FIRST DIVISION
G.R. No. L-31832 October 23, 1982
SOCIAL SECURITY SYSTEM, petitioner,
vs.
SSS SUPERVISORS' UNION-CUGCO and COURT OF INDUSTRIAL
RELATIONS, respondents.
Benjamin C. Pineda for respondent Union.
Filemon Q. Almazan for petitioners.
MELENCIO-HERRERA, J.:
This Petition seeks to review on certiorari the Orders of respondent Court of
Industrial Relations (CIR) on the issue of whether or not petitioner Social Security
System (SSS) may be held liable for the payment of wages of members of
respondent Union who admittedly did not work during the 17-day strike declared in
1968 by the rank and file Union (the Philippine Association of Free Labor Unions
[PAFLU]).
For a brief factual background, it should be stated that the instant case is an offshoot
of Case No. 46-IPA (49) certified to the CIR by the President of the Philippines for
compulsory arbitration of labor dispute between the SSS and the PAFLU concerning
the interpretation of certain provisions of their Collective Bargaining Agreement.
The PAFLU had staged a strike in defiance of the CIR Order of August 29, 1968
"enjoining the parties, for the sake of industrial peace . . . to maintain the  status quo-
the Union not to declare any strike and the Management not to dismiss nor suspend
any of its employees nor to declare any lockout." On 3 September 1968, in that same
case, the SSS filed an Urgent Petition to declare the strike illegal.
On 26 September 1968, respondent Union (the SSS Supervisors' Union) filed a
Motion for Intervention in the said case averring, inter alia, that it had not
participated in the strike: that its members wanted to report for work but were
prevented by the picketers from entering the work premises; that under the
circumstances, they were entitled to their salaries corresponding to the duration of
the strike, which could be deducted from the accrued leave credits of their members.
The SSS had no objection to the intervention sought but opposed the demand for the
payment of salaries pertaining to the entire period of the strike.
3
In its Order of 12 March 1969, intervention was allowed by respondent Court, and
pending resolution of the claim for salaries, the SSS was directed to pay the same,
chargeable in the meantime to the accrued leave credits of the members 1 pending the
determination of the question of the illegality of the strike. Reconsideration of that
Order sought by the SSS was denied on 6 November 1969.
On 24 November 1969, respondent Court issued an Order 2 directing the CIR
Examining Division to compute immediately the money equivalent of the salaries of
the members of respondent Union as well as the salaries of those employees who
were not members of the striking Union (PAFLU) and to deposit the amount
computed, for further disposition.
The SSS challenged on certiorari the said Orders before this Court (G.R. No. L-
31234), particularly the order to deposit, grounded on the overlapping membership in
the two Unions and the impossibility of compliance. We denied the Petition on 2
December 1969 and the proceedings below were resumed.
Upon a joint Motion for clarification of its Order of 24 November 1969, respondent
Court, through Judge Joaquin M. Salvador, issued the Order of 3 March 1970,
ordering the payment of salaries of the members of respondent Union during the
strike period, but not to be chargeable to accrued leave credits. The reasons given
were that this Court had already declared the strike premature, and that the members
of respondent Union had not participated in the strike and had actually manifested
their desire to work but could not cross the heavy picket lines during the height of the
strike.
The SSS moved to reconsider the Order of 3 March 1970 arguing that since
respondent Union members actually rendered no service at all during the strike, they
were not entitled to the payment of salaries. Respondent Court, en banc, denied
reconsideration on 25 March 1970 for lack of sufficient justification.
Contending that the Industrial Court had no authority to issue the Order dated 3
March 1970 and its Resolution en banc dated 25 March 1970, petitioner asks this
Tribunal to have them annulled.
We find for the petitioner based on the equitable tenet of a "fair day's wage for a fair
day's labor."
The age-old rule governing the relation between labor and capital
or management and employee is that of a 'fair day's wage for a fair
day's labor.' If there is no work performed by the employee there
can be no wage or pay, unless of course the laborer was able,
willing and ready to work but was illegally locked out, dismissed
 or suspended. It is hardly fair or just for an employee or laborer to
fight or litigate against his employer on the employer's time.

In this case, the failure to work on the part of the members of respondent Union was
due to circumstances not attributable to themselves. But neither should the burden of
the economic loss suffered by them be shifted to their employer, the SSS, which was
equally faultless, considering that the situation was not a direct consequence of the
employer's lockout or unfair labor practice. Under the circumstances, it is but fair
that each party must bear his own loss.

Considering, therefore, that the parties had no hand or participation

in the situation they were in, and that the stoppage of the work was
not the direct consequence of the company's lockout or unfair labor
practice, 'the economic loss should not be shifted to the employer.'
Justice and equity demand that each must have to bear its own loss,
thus placing the parties in equal footing where none should profit
from the other there being no fault of either. 4

WHEREFORE, we hereby set aside respondent Court's Order dated 3 March 1970 as
affirmed by its Resolution en banc dated 25 March 1970, without pronouncement as
to costs.

SO ORDERED.

4
 THIRD DIVISION
G.R. No. 151309             October 15, 2008
BISIG MANGGAGAWA SA TRYCO and/or FRANCISCO SIQUIG, as Union
President, JOSELITO LARIÑO, VIVENCIO B. BARTE, SATURNINO
EGERA and SIMPLICIO AYA-AY, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, TRYCO PHARMA
CORPORATION, and/or WILFREDO C. RIVERA, respondents.
DECISION
NACHURA, J.:
This petition seeks a review of the Decision  of the Court of Appeals (CA) dated July
1
Tryco informed the Bureau of Working Conditions of the Department of Labor and
Employment of the implementation of a compressed workweek in the company. 3
In January 1997, BMT and Tryco negotiated for the renewal of their collective
bargaining agreement (CBA) but failed to arrive at a new agreement.
Meantime, Tryco received the Letter dated March 26, 1997 from the Bureau of
Animal Industry of the Department of Agriculture reminding it that its production
should be conducted in San Rafael, Bulacan, not in Caloocan City:
MR. WILFREDO C. RIVERA
President, Tryco Pharma Corporation
San Rafael, Bulacan
Subject: LTO as VDAP Manufacturer at San Rafael, Bulacan

24, 2001 and Resolution dated December 20, 2001, which affirmed the finding of the Dear Mr. Rivera:
National Labor Relations Commission (NLRC) that the petitioners' transfer to
another workplace did not amount to a constructive dismissal and an unfair labor This is to remind you that your License to Operate as Veterinary Drug and
practice. Product Manufacturer is addressed at San Rafael, Bulacan, and so,
therefore, your production should be done at the above mentioned address
The pertinent factual antecedents are as follows: only. Further, production of a drug includes propagation, processing,
compounding, finishing, filling, repacking, labeling, advertising, storage,
Tryco Pharma Corporation (Tryco) is a manufacturer of veterinary medicines and its distribution or sale of the veterinary drug product. In no instance, therefore,
principal office is located in Caloocan City. Petitioners Joselito Lariño, Vivencio should any of the above be done at your business office at 117 M. Ponce St.,
Barte, Saturnino Egera and Simplicio Aya-ay are its regular employees, occupying EDSA, Caloocan City.
the positions of helper, shipment helper and factory workers, respectively, assigned
to the Production Department. They are members of Bisig Manggagawa sa Tryco Please be guided accordingly.
(BMT), the exclusive bargaining representative of the rank-and-file employees.
Thank you.
Tryco and the petitioners signed separate Memorand[a] of Agreement 2 (MOA),
providing for a compressed workweek schedule to be implemented in the company Very truly yours,
effective May 20, 1996. The MOA was entered into pursuant to Department of Labor
and Employment Department Order (D.O.) No. 21, Series of 1990, Guidelines on the (sgd.)
Implementation of Compressed Workweek. As provided in the MOA, 8:00 a.m. to
6:12 p.m., from Monday to Friday, shall be considered as the regular working hours,
and no overtime pay shall be due and payable to the employee for work rendered EDNA ZENAIDA V. VILLACORTE, D.V.M.
during those hours. The MOA specifically stated that the employee waives the right Chief, Animal Feeds Standard Division4
to claim overtime pay for work rendered after 5:00 p.m. until 6:12 p.m. from
Monday to Friday considering that the compressed workweek schedule is adopted in
lieu of the regular workweek schedule which also consists of 46 hours. However,
should an employee be permitted or required to work beyond 6:12 p.m., such
employee shall be entitled to overtime pay.

5
Accordingly, Tryco issued a Memorandum5 dated April 7, 1997 which directed
petitioner Aya-ay to report to the company's plant site in Bulacan. When petitioner
Aya-ay refused to obey, Tryco reiterated the order on April 18, 1997.6 Subsequently,
through a Memorandum7 dated May 9, 1997, Tryco also directed petitioners Egera,
Lariño and Barte to report to the company's plant site in Bulacan.
BMT opposed the transfer of its members to San Rafael, Bulacan, contending that it
constitutes unfair labor practice. In protest, BMT declared a strike on May 26, 1997.
In August 1997, petitioners filed their separate complaints 8 for illegal dismissal,
underpayment of wages, nonpayment of overtime pay and service incentive leave,
and refusal to bargain against Tryco and its President, Wilfredo C. Rivera. In their
Position Paper,9 petitioners alleged that the company acted in bad faith during the
CBA negotiations because it sent representatives without authority to bind the
company, and this was the reason why the negotiations failed. They added that the
management transferred petitioners Lariño, Barte, Egera and Aya-ay from Caloocan
to San Rafael, Bulacan to paralyze the union. They prayed for the company to pay
them their salaries from May 26 to 31, 1997, service incentive leave, and overtime
pay, and to implement Wage Order No. 4.
In their defense, respondents averred that the petitioners were not dismissed but they
refused to comply with the management's directive for them to report to the
company's plant in San Rafael, Bulacan. They denied the allegation that they
negotiated in bad faith, stating that, in fact, they sent the Executive Vice-President
and Legal Counsel as the company's representatives to the CBA negotiations. They
claim that the failure to arrive at an agreement was due to the stubbornness of the
union panel.
Respondents further averred that, long before the start of the negotiations, the
company had already been planning to decongest the Caloocan office to comply with
the government policy to shift the concentration of manufacturing activities from the
metropolis to the countryside. The decision to transfer the company's production
activities to San Rafael, Bulacan was precipitated by the letter-reminder of the
Bureau of Animal Industry.
On February 27, 1998, the Labor Arbiter dismissed the case for lack of merit. 10 The
Labor Arbiter held that the transfer of the petitioners would not paralyze or render
the union ineffective for the following reasons: (1) complainants are not members of
the negotiating panel; and (2) the transfer was made pursuant to the directive of the
Department of Agriculture.
The Labor Arbiter also denied the money claims, ratiocinating that the nonpayment
of wages was justified because the petitioners did not render work from May 26 to
31, 1997; overtime pay is not due because of the compressed workweek agreement
between the union and management; and service incentive leave pay cannot be
6
claimed by the complainants because they are already enjoying vacation leave with
pay for at least five days. As for the claim of noncompliance with Wage Order No. 4,
the Labor Arbiter held that the issue should be left to the grievance machinery or
voluntary arbitrator.
On October 29, 1999, the NLRC affirmed the Labor Arbiter's Decision, dismissing
the case, thus:
PREMISES CONSIDERED, the Decision of February 27, 1998 is hereby
AFFIRMED and complainants' appeal therefrom DISMISSED for lack of
merit. Complainants Joselito Lariño, Vivencio Barte, Saturnino Egera and
Simplicio Aya-ay are directed to report to work at respondents' San Rafael
Plant, Bulacan but without backwages. Respondents are directed to accept
the complainants back to work.
SO ORDERED.11
On December 22, 1999, the NLRC denied the petitioners' motion for reconsideration
for lack of merit.12
Left with no recourse, petitioners filed a petition for certiorari with the CA.
On July 24, 2001, the CA dismissed the petition for certiorari and ruled that the
transfer order was a management prerogative not amounting to a constructive
dismissal or an unfair labor practice. The CA further sustained the enforceability of
the MOA, particularly the waiver of overtime pay in light of this Court's rulings
upholding a waiver of benefits in exchange of other valuable privileges. The
dispositive portion of the said CA decision reads:
WHEREFORE, the instant petition is DISMISSED. The Decision of the
Labor Arbiter dated February 27, 1998 and the Decision and Resolution of
the NLRC promulgated on October 29, 1999 and December 22, 1999,
respectively, in NLRC-NCR Case Nos. 08-05715-97, 08-06115-97 and 08-
05920-97, are AFFIRMED.
SO ORDERED.13
The CA denied the petitioners' motion for reconsideration on December 20, 2001.14
Dissatisfied, petitioners filed this petition for review raising the following issues:
-A-
 THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING
THE PATENTLY ERRONEOUS RULING OF THE LABOR ARBITER
AND THE COMMISSION THAT THERE WAS NO DISMISSAL, MUCH
LESS ILLEGAL DISMISSAL, OF THE INDIVIDUAL PETITIONERS.
-B-
THE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING
AND CONCLUDING THAT PRIVATE RESPONDENTS COMMITTED
ACTS OF UNFAIR LABOR PRACTICE.
-C-
THE COURT OF APPEALS ERRED IN NOT FINDING AND
CONCLUDING THAT PETITIONERS ARE ENTITLED TO THEIR
MONEY CLAIMS AND TO DAMAGES, AS WELL AS LITIGATION
COSTS AND ATTORNEY'S FEES.15
The petition has no merit.
We have no reason to deviate from the well-entrenched rule that findings of fact of
labor officials, who are deemed to have acquired expertise in matters within their
respective jurisdiction, are generally accorded not only respect but even finality, and
bind us when supported by substantial evidence. 16 This is particularly true when the
findings of the Labor Arbiter, the NLRC and the CA are in absolute agreement. 17 In
this case, the Labor Arbiter, the NLRC, and the CA uniformly agreed that the
petitioners were not constructively dismissed and that the transfer orders did not
amount to an unfair labor practice. But if only to disabuse the minds of the
petitioners who have persistently pursued this case on the mistaken belief that the
labor tribunals and the appellate court committed grievous errors, this Court will go
over the issues raised in this petition.
Petitioners mainly contend that the transfer orders amount to a constructive
dismissal. They maintain that the letter of the Bureau of Animal Industry is not
credible because it is not authenticated; it is only a ploy, solicited by respondents to
give them an excuse to effect a massive transfer of employees. They point out that
the Caloocan City office is still engaged in production activities until now and
respondents even hired new employees to replace them.
We do not agree.
We refuse to accept the petitioners' wild and reckless imputation that the Bureau of
Animal Industry conspired with the respondents just to effect the transfer of the
petitioners. There is not an iota of proof to support this outlandish claim. Absent any
7
evidence, the allegation is not only highly irresponsible but is grossly unfair to the
government agency concerned. Even as this Court has given litigants and counsel a
relatively wide latitude to present arguments in support of their cause, we will not
tolerate outright misrepresentation or baseless accusation. Let this be fair warning to
counsel for the petitioners.
Furthermore, Tryco's decision to transfer its production activities to San Rafael,
Bulacan, regardless of whether it was made pursuant to the letter of the Bureau of
Animal Industry, was within the scope of its inherent right to control and manage its
enterprise effectively. While the law is solicitous of the welfare of employees, it
must also protect the right of an employer to exercise what are clearly management
prerogatives. The free will of management to conduct its own business affairs to
achieve its purpose cannot be denied.18
This prerogative extends to the management's right to regulate, according to its own
discretion and judgment, all aspects of employment, including the freedom to
transfer and reassign employees according to the requirements of its
business.19 Management's prerogative of transferring and reassigning employees
from one area of operation to another in order to meet the requirements of the
business is, therefore, generally not constitutive of constructive dismissal. 20 Thus, the
consequent transfer of Tryco's personnel, assigned to the Production Department was
well within the scope of its management prerogative.
When the transfer is not unreasonable, or inconvenient, or prejudicial to the
employee, and it does not involve a demotion in rank or diminution of salaries,
benefits, and other privileges, the employee may not complain that it amounts to a
constructive dismissal.21 However, the employer has the burden of proving that the
transfer of an employee is for valid and legitimate grounds. The employer must show
that the transfer is not unreasonable, inconvenient, or prejudicial to the employee;
nor does it involve a demotion in rank or a diminution of his salaries, privileges and
other benefits.22
Indisputably, in the instant case, the transfer orders do not entail a demotion in rank
or diminution of salaries, benefits and other privileges of the petitioners. Petitioners,
therefore, anchor their objection solely on the ground that it would cause them great
inconvenience since they are all residents of Metro Manila and they would incur
additional expenses to travel daily from Manila to Bulacan.
The Court has previously declared that mere incidental inconvenience is not
sufficient to warrant a claim of constructive dismissal. 23 Objection to a transfer that is
grounded solely upon the personal inconvenience or hardship that will be caused to
the employee by reason of the transfer is not a valid reason to disobey an order of
transfer.24
Incidentally, petitioners cite Escobin v. NLRC25 where the Court held that the transfer
of the employees therein was unreasonable. However, the distance of the workplace
to which the employees were being transferred can hardly compare to that of the
present case. In that case, the employees were being transferred from Basilan to
Manila; hence, the Court noted that the transfer would have entailed the separation of
the employees from their families who were residing in Basilan and accrual of
additional expenses for living accommodations in Manila. In contrast, the distance
from Caloocan to San Rafael, Bulacan is not considerably great so as to compel
petitioners to seek living accommodations in the area and prevent them from
commuting to Metro Manila daily to be with their families.
Petitioners, however, went further and argued that the transfer orders amounted to
unfair labor practice because it would paralyze and render the union ineffective.
To begin with, we cannot see how the mere transfer of its members can paralyze the
union. The union was not deprived of the membership of the petitioners whose work
assignments were only transferred to another location.
More importantly, there was no showing or any indication that the transfer orders
were motivated by an intention to interfere with the petitioners' right to organize.
Unfair labor practice refers to acts that violate the workers' right to organize. With
the exception of Article 248(f) of the Labor Code of the Philippines, the prohibited
acts are related to the workers' right to self-organization and to the observance of a
CBA. Without that element, the acts, no matter how unfair, are not unfair labor
practices.26
Finally, we do not agree with the petitioners' assertion that the MOA is not
enforceable as it is contrary to law. The MOA is enforceable and binding against the
petitioners. Where it is shown that the person making the waiver did so voluntarily,
with full understanding of what he was doing, and the consideration for the quitclaim
is credible and reasonable, the transaction must be recognized as a valid and binding
undertaking.27
D.O. No. 21 sanctions the waiver of overtime pay in consideration of the benefits
that the employees will derive from the adoption of a compressed workweek scheme,
thus:
The compressed workweek scheme was originally conceived for
establishments wishing to save on energy costs, promote greater work
efficiency and lower the rate of employee absenteeism, among others.
Workers favor the scheme considering that it would mean savings on the
increasing cost of transportation fares for at least one (1) day a week;
savings on meal and snack expenses; longer weekends, or an additional 52
off-days a year, that can be devoted to rest, leisure, family responsibilities,
studies and other personal matters, and that it will spare them for at least
8
another day in a week from certain inconveniences that are the normal
incidents of employment, such as commuting to and from the workplace,
travel time spent, exposure to dust and motor vehicle fumes, dressing up for
work, etc. Thus, under this scheme, the generally observed workweek of six
(6) days is shortened to five (5) days but prolonging the working hours from
Monday to Friday without the employer being obliged for pay overtime
premium compensation for work performed in excess of eight (8) hours on
weekdays, in exchange for the benefits abovecited that will accrue to the
employees.
Moreover, the adoption of a compressed workweek scheme in the company will help
temper any inconvenience that will be caused the petitioners by their transfer to a
farther workplace.
Notably, the MOA complied with the following conditions set by the DOLE, under
D.O. No. 21, to protect the interest of the employees in the implementation of a
compressed workweek scheme:
1. The employees voluntarily agree to work more than eight (8) hours a day
the total in a week of which shall not exceed their normal weekly hours of
work prior to adoption of the compressed workweek arrangement;
2. There will not be any diminution whatsoever in the weekly or monthly
take-home pay and fringe benefits of the employees;
3. If an employee is permitted or required to work in excess of his normal
weekly hours of work prior to the adoption of the compressed workweek
scheme, all such excess hours shall be considered overtime work and shall
be compensated in accordance with the provisions of the Labor Code or
applicable Collective Bargaining Agreement (CBA);
4. Appropriate waivers with respect to overtime premium pay for work
performed in excess of eight (8) hours a day may be devised by the parties
to the agreement.
5. The effectivity and implementation of the new working time arrangement
shall be by agreement of the parties.
PESALA v. NLRC,28 cited by the petitioners, is not applicable to the present case. In
that case, an employment contract provided that the workday consists of 12 hours
and the employee will be paid a fixed monthly salary rate that was above the legal
minimum wage. However, unlike the present MOA which specifically states that the
employee waives his right to claim overtime pay for work rendered beyond eight
hours, the employment contract in that case was silent on whether overtime pay was
included in the payment of the fixed monthly salary. This necessitated the
interpretation by the Court as to whether the fixed monthly rate provided under the
employment contract included overtime pay. The Court noted that if the employee is
paid only the minimum wage but with overtime pay, the amount is still greater than
the fixed monthly rate as provided in the employment contract. It, therefore, held that
overtime pay was not included in the agreed fixed monthly rate.

Considering that the MOA clearly states that the employee waives the payment of
overtime pay in exchange of a five-day workweek, there is no room for interpretation
and its terms should be implemented as they are written.

WHEREFORE, the petition is DENIED. The Court of Appeals Decision dated July
24, 2001 and Resolution dated December 20, 2001 are AFFIRMED.

SO ORDERED.

9
 THIRD DIVISION
G.R. No. 76746               July 27, 1987
DURABUILT RECAPPING PLANT & COMPANY and EDUARDO LAO,
GENERAL MANAGER, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, HON. COMM.
RICARDO C. CASTRO, HON. ARBITER AMELIA M. GULOY,
KAPISANAN NG MGA MANGGAGAWA SA DURABUILT and REYNALDO
BODEGAS, respondents.
GUTIERREZ, JR., J.:
This is a petition to review the May 16, 1986 resolution of respondent National
Labor Relations Commission (NLRC) affirming the Labor Arbiter's order in NLRC
Case No. NCR-73162083. The sole issue raised is the proper basis for the
computation of backwages in favor of an illegally dismissed employee.
The facts of the case are simple and uncontroverted.
On July 11, 1983, a complaint for illegal dismissal was filed by respondent Reynaldo
Bodegas, against petitioner Durabuilt, a tire recapping company.
In a decision rendered by the Labor Arbiter on February 13, 1984, the private
respondent was ordered reinstated to his former position with full backwages, from
the time he was terminated up to the time he is actually reinstated, without loss of
seniority rights and benefits accruing to him.
The petitioners failed to file a seasonable appeal and entry of final judgment was
made on July 8, 1985.
On August 8, 1985, the Acting Chief of Research and Information and the
Corporation Auditing Examiner of the then Ministry of Labor and Employment
submitted a computation of backwages, ECOLA, 13th month pay, sick and vacation
leave benefits in favor of Reynaldo Bodegas in the total amount of P24,316.38.
The petitioner filed its opposition to the computation on the ground that it
contemplated a straight computation of twenty six (26) working days in one month
when the period covered by the computation was intermittently interrupted due to
frequent brownouts and machine trouble and that respondent Bodegas had only a
total of 250.75 days of attendance in 1982 due to absences. According to the
petitioner, Bodegas is entitled only to the amount of P3,834.05 broken down as
10
follows: salaries — P1,993.00; ECOLA — P1,433.50, and 13th month pay —
P407.55.
On October 23, 1985, the Labor Arbiter denied the opposition to the computation.
The petitioner appealed to the NLRC which, in an order dated May 16, 1986,
affirmed the order of the Labor Arbiter and dismissed the appeal.
Claiming grave abuse of discretion on the part of the public respondents, Durabuilt
filed the instant petition.
Backwages, in general, are granted on grounds of equity for earnings which a worker
or employee has lost due to his dismissal from work (New Manila Candy Workers
Union (NACONWA-PAFLU v. CIR, 86 SCRA 37).
The general principle is that an employee is entitled to receive as backwages all the
amounts he may have lost starting from the date of his dismissal up to the time of his
reinstatement (Capital Garment Corporation v. Ople, 117 SCRA 473; New Manila
Candy Workers' Union (NACONWA-PAFLU) v. CIR, supra).
In a line of cases, this Court has established a policy fixing the amount of backwages
to a just and reasonable level without qualification or deduction (Insular Life
Assurance Co., Ltd. Employees' Association-NATU v. Insular Life Assurance Co.,
Ltd., 76 SCRA 501; Feati University Club v. Feati University, 58 SCRA 395;
Mercury Drug Co., Inc. v. CIR, 56 SCRA 694). The respondents center their
attention on the above underlined portion of this policy. Hence, their contention that
the deductions cited by the petitioners cannot be made.
In their bid to recover a greater amount of backwages, the rationale of the policy has
escaped the respondents' consideration. In Insular Life Assurance Employees
Association-NATU v. Insular Life Assurance Co., Ltd. (76 SCRA 50) we held that to
fix the amount of backwages without qualification or deduction simply means that
the workers are to be paid their backwages fixed as of the time of their dismissal or
strike without deduction for their earnings elsewhere during their law-off and
without qualification of their backwages as thus fixed; i.e. unqualified by any wage
increases or other benefits that may have been received by their co-workers who
were not dismissed or did not go on strike. The principle is justified "as a realistic,
reasonable and mutually beneficial solution for it relieves the employees from
proving their earnings during their law-offs and the employer from submitting
counter proofs. It was meant to obviate the twin evils of Idleness on the part of the
employees and attrition and undue delay in satisfying the award on the part of the
employer" (New Manila Candy Workers Union NACONWA-PAFLU v. CIR supra).
The same was not to establish an inflexible rule of computation of any Backwages
due an employee.
The age-old rule governing the relation between labor and capital, or management
and employee of a "fair day's wage for a fair day's labor" remains as the basic factor
in determining employees' wages, and for that matter backwages. If there is no work
performed by the employee there can be no wage or pay unless, of course, the
laborer was able, willing and ready to work but was illegally locked out, or
suspended (SSS v. SSS Supervisors Union-CUGCO, 117 SCRA 746).
The illegal dismissal of the private respondent is conceded by the petitioner. It is
willing to pay backwages. However, the petitioner argues that for days where no
work was required and could be done by its employees, no wages could have been
earned and, thereafter, lost by said employees to justify an award of backwages. We
quote with approval the Solicitor General's comment,* to wit:
From the indubitable facts on record, it appears that petitioners have valid
reasons to claim that certain days should not be considered days worked for
purposes of computing private respondent's backwages since their business
was not in actual operation due to brownouts or power interruption and the
retrenchment of workers they had during the period of private respondent's
dismissal.
It cannot be denied that during the past years particularly in 1983, there was
chronic electrical power interruption resulting to disruption of business
operations. To alleviate the situation, the government thru the Ministry of
Trade and Industry called on the industrial sector to resort to the so-called
Voluntary Loan Curtailment Plan (or VLCP), whereby brownouts or
electrical power interruption was scheduled by area. The program while it
may have been called 1. voluntary" was not so as electrical power
consumers had no choice then due to the prevailing energy crisis.
Petitioners heeding the government's call, participated in the VLCP as
indicated in their statement of conformity dated November 23, 1982. Thus,
beginning March 21, 1983 and every Wednesday thereafter, petitioner's
business (which indicentally is recapping rubber tires) was not in actual
operation. No less than the former Minister of Trade and Industry expressed
his gratitude to petitioners for participating in the VLCP. Petitioners
substantiated claim therefore, that the days during which they were not in
operation due to the VLCP should be excluded in the number of days
worked for purposes of computing private respondents backwages stands
reasonable and should have been considered by the corporation auditing
examiner.1avvphi1
Moreover, as early as May 1978, the Ministry of Labor and Employment,
thru Policy Instruction No. 36, has said that —
11
2. Brownouts running for more than twenty minutes may not be treated as
hours worked provided that any of the following conditions are present;
a) The employees can leave their work place or go elsewhere
whether within or without the work premises; or
b) The employees can use the time effectively for their own
interest.
It is of record that during electrical power interruptions, petitioners business
was not in operation. This was never disputed by private respondent.
Petitioners' claim that the period (December 1983) during which they
effected retrenchment of workers owing to economic crisis then prevailing
likewise appears plausible. There is substantial evidence consisting of
reports to MOLE and Social Security System showing that petitioners had
laid off workers due to lack of raw materials. The petitioners payrolls
submitted to support their objection to computation indicate that the number
of working days was reduced from the normal weekly six working days to
four working days for a great number of petitioners' workers. Obviously,
private respondent could not have been among those laid off, as at that time
he was already dismissed by petitioner. (Rollo, pp. 31-34).
Thus, we have held that where the failure of workers to work was not due to the
employer's fault, the burden of economic loss suffered by the employees should not
be shifted to the employer. Each party must bear his own loss (SSS v. SSS
Supervisors' Union-CUGCO, supra; Pan-American World Airways, Inc. v. CIR, 17
SCRA 813). As pointed out by the Solicitor General —
... to allow payment of backwages of P24,316.68 as ordered by public
respondents instead of P3,834.16 as petitioners claim and which appears to
be just and reasonable under the circumstances of this case would not only
be unconscionable but would be grossly unfair to other employees who
were not paid when petitioners' business was not in operation. (Rollo, p.
35).
Indeed, it would neither be fair nor just to allow respondent to recover something he
has not earned and could not have earned and to further penalize the petitioner
company over and above the losses it had suffered due to lack of raw materials and
the energy-saving programs of the government. The private respondent cannot be
allowed to enrich himself at the expense of the petitioner company. The computation
of backwages should be based on daily rather than on monthly pay schedules where,
as in the case at bar, such basis is more realistic and accurate. (Compania Maritima v.
United Seamen's Union of the Philippines, 65 SCRA 393).
In conclusion, we again quote the Solicitor General's comment:

Finally, what strengthens petitioners claim for mitigated liability is their

evident good faith as manifested by their reinstatement of private
respondent while the case for illegal dismissal was still pending and their
willingness to pay backwages. While it is true that as a general rule order of
reinstatement carries with it an award of backwages (Art. 280, Labor Code)
this Honorable Court did not only mitigate but absolved employers from
liability of backwages where good faith is evident (Findlay Millar Timber
Co. v. PLASLU, 6 SCRA 26: Cromwell Com. Employees & Laborers
Union v. CIR, 13 SCRA 259, Norton and Harrison Labor Union v. Harrison
Co. Inc. 15 SCRA 310; PAL v. PALEA, 57 SCRA 489; Cruz v. MOLE, 120
SCRA 15). There is no indication, to paraphrase this Honorable Court's
ruling in Pantranco North Express Inc. v. NLRC (126 SCRA 526) that
private respondent was a "victim of arbitrary and high handed action. Rollo,
pp. 34-35).

WHEREFORE, in view of the foregoing, the petition is hereby GRANTED. The

order of the Labor Arbiter, Amelia M. Guloy in NLRC Case No. NCR-7-3162083,
dated October 23, 1985, as affirmed by the NLRC is SET ASIDE. The petitioner is
ordered to pay private respondent his backwages from the time he was terminated up
to the time he was actually reinstated computed on the basis of the number of days
when petitioner's business was in actual operation. The number of days where no
work was required and could be done by petitioner's employees on account of
shutdowns due to electrical power interruptions, machine repair, and lack of raw
materials are not considered hours worked for purposes of computing the petitioner's
obligation to respondent employee. In no case shall the award exceed three year's
backpay as above computed.

SO ORDERED.

12
 FIRST DIVISION
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
13
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.
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
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
14
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
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.
 SECOND DIVISION
G.R. No. 78210 February 28, 1989
TEOFILO ARICA, DANILO BERNABE, MELQUIADES DOHINO,
ABONDIO OMERTA, GIL TANGIHAN, SAMUEL LABAJO, NESTOR
NORBE, RODOLFO CONCEPCION, RICARDO RICHA, RODOLFO NENO,
ALBERTO BALATRO, BENJAMIN JUMAMOY, FERMIN DAAROL,
JOVENAL ENRIQUEZ, OSCAR BASAL, RAMON ACENA, JAIME
BUGTAY, and 561 OTHERS, HEREIN REPRESENTED BY KORONADO B.
APUZEN, petitioners
vs.
NATIONAL LABOR RELATIONS COMMISSION, HONORABLE
FRANKLIN DRILON, HONORABLE CONRADO B. MAGLAYA,
HONORABLE ROSARIO B. ENCARNACION, and STANDARD
(PHILIPPINES) FRUIT CORPORATION, respondents.
Koronado B. Apuzen and Jose C. Espinas for petitioners.
The Solicitor General for public respondent.
Dominguez & Paderna Law Offices Co. for private respondent.
PARAS, J.:
This is a petition for review on certiorari of the decision of the National Labor
Relations Commission dated December 12, 1986 in NLRC Case No. 2327 MC-XI-
84 entitled Teofilo Arica et al. vs. Standard (Phil.) Fruits Corporation (STANFILCO)
which affirmed the decision of Labor Arbiter Pedro C. Ramos, NLRC, Special Task
Force, Regional Arbitration Branch No. XI, Davao City dismissing the claim of
petitioners.
This case stemmed from a complaint filed on April 9, 1984 against private
respondent Stanfilco for assembly time, moral damages and attorney's fees, with the
aforementioned Regional Arbitration Branch No. XI, Davao City.
After the submission by the parties of their respective position papers (Annex "C",
pp. 30-40; Annex "D", Rollo, pp. 41-50), Labor Arbiter Pedro C. Ramos rendered a
decision dated October 9, 1985 (Annex 'E', Rollo, pp. 51-58) in favor of private
respondent STANFILCO, holding that:
Given these facts and circumstances, we cannot but agree with
respondent that the pronouncement in that earlier case, i.e. the
15
thirty-minute assembly time long practiced cannot be considered
waiting time or work time and, therefore, not compensable, has
become the law of the case which can no longer be disturbed
without doing violence to the time- honored principle of res-
judicata.
WHEREFORE, in view of the foregoing considerations, the instant
complaint should therefore be, as it is hereby, DISMISSED.
SO ORDERED. (Rollo, p. 58)
On December 12, 1986, after considering the appeal memorandum of complainant
and the opposition of respondents, the First Division of public respondent NLRC
composed of Acting Presiding Commissioner Franklin Drilon, Commissioner
Conrado Maglaya, Commissioner Rosario D. Encarnacion as Members, promulgated
its Resolution, upholding the Labor Arbiters' decision. The Resolution's dispositive
portion reads:
'Surely, the customary functions referred to in the above- quoted
provision of the agreement includes the long-standing practice and
institutionalized non-compensable assembly time. This, in effect,
estopped complainants from pursuing this case.
The Commission cannot ignore these hard facts, and we are
constrained to uphold the dismissal and closure of the case.
WHEREFORE, let the appeal be, as it is hereby dismissed, for lack
of merit.
SO ORDERED. (Annex "H", Rollo, pp. 86-89).
On January 15, 1987, petitioners filed a Motion for Reconsideration which was
opposed by private respondent (Annex "I", Rollo, pp. 90-91; Annex J Rollo, pp. 92-
96).
Public respondent NLRC, on January 30, 1987, issued a resolution denying for lack
of merit petitioners' motion for reconsideration (Annex "K", Rollo, p. 97).
Hence this petition for review on certiorari filed on May 7, 1987.
The Court in the resolution of May 4, 1988 gave due course to this petition.
Petitioners assign the following issues:
1) Whether or not the 30-minute activity of the petitioners before
the scheduled working time is compensable under the Labor Code.
2) Whether or not res judicata applies when the facts obtaining in
the prior case and in the case at bar are significantly different from
each other in that there is merit in the case at bar.
3) Whether or not there is finality in the decision of Secretary Ople
in view of the compromise agreement novating it and the
withdrawal of the appeal.
4) Whether or not estoppel and laches lie in decisions for the
enforcement of labor standards (Rollo, p. 10).
Petitioners contend that the preliminary activities as workers of respondents
STANFILCO in the assembly area is compensable as working time (from 5:30 to
6:00 o'clock in the morning) since these preliminary activities are necessarily and
primarily for private respondent's benefit.
These preliminary activities of the workers are as follows:
(a) First there is the roll call. This is followed by getting their
individual work assignments from the foreman.
(b) Thereafter, they are individually required to accomplish the
Laborer's Daily Accomplishment Report during which they are
often made to explain about their reported accomplishment the
following day.
(c) Then they go to the stockroom to get the working materials,
tools and equipment.
(d) Lastly, they travel to the field bringing with them their tools,
equipment and materials.
All these activities take 30 minutes to accomplish (Rollo, Petition, p. 11).
Contrary to this contention, respondent avers that the instant complaint is not new,
the very same claim having been brought against herein respondent by the same
group of rank and file employees in the case of Associated Labor Union and
Standard Fruit Corporation, NLRC Case No. 26-LS-XI-76 which was filed way back
April 27, 1976 when ALU was the bargaining agent of respondent's rank and file
16
workers. The said case involved a claim for "waiting time", as the complainants
purportedly were required to assemble at a designated area at least 30 minutes prior
to the start of their scheduled working hours "to ascertain the work force available
for the day by means of a roll call, for the purpose of assignment or reassignment of
employees to such areas in the plantation where they are most needed." (Rollo, pp.
64- 65)
Noteworthy is the decision of the Minister of Labor, on May 12, 1978 in the
aforecited case (Associated Labor Union vs. Standard (Phil.) Fruit Corporation,
NLRC Case No. 26-LS-XI-76 where significant findings of facts and conclusions
had already been made on the matter.
The Minister of Labor held:
The thirty (30)-minute assembly time long practiced and
institutionalized by mutual consent of the parties under Article IV,
Section 3, of the Collective Bargaining Agreement cannot be
considered as waiting time within the purview of Section 5, Rule I,
Book III of the Rules and Regulations Implementing the Labor
Code. ...
Furthermore, the thirty (30)-minute assembly is a deeply- rooted,
routinary practice of the employees, and the proceedings attendant
thereto are not infected with complexities as to deprive the workers
the time to attend to other personal pursuits. They are not new
employees as to require the company to deliver long briefings
regarding their respective work assignments. Their houses are
situated right on the area where the farm are located, such that after
the roll call, which does not necessarily require the personal
presence, they can go back to their houses to attend to some
chores. In short, they are not subject to the absolute control of the
company during this period, otherwise, their failure to report in the
assembly time would justify the company to impose disciplinary
measures. The CBA does not contain any provision to this effect;
the record is also bare of any proof on this point. This, therefore,
demonstrates the indubitable fact that the thirty (30)-minute
assembly time was not primarily intended for the interests of the
employer, but ultimately for the employees to indicate their
availability or non-availability for work during every working day.
(Annex "E", Rollo, p. 57).
Accordingly, the issues are reduced to the sole question as to whether public
respondent National Labor Relations Commission committed a grave abuse of
discretion in its resolution of December 17, 1986.
The facts on which this decision was predicated continue to be the facts of the case in
this questioned resolution of the National Labor Relations Commission.
It is clear that herein petitioners are merely reiterating the very same claim which
they filed through the ALU and which records show had already long been
considered terminated and closed by this Court in G.R. No. L-48510. Therefore, the
NLRC can not be faulted for ruling that petitioners' claim is already barred by res-
judicata.
Be that as it may, petitioners' claim that there was a change in the factual scenario
which are "substantial changes in the facts" makes respondent firm now liable for the
same claim they earlier filed against respondent which was dismissed. It is thus
axiomatic that the non-compensability of the claim having been earlier established,
constitute the controlling legal rule or decision between the parties and remains to be
the law of the case making this petition without merit.
Moreover, as a rule, the findings of facts of quasi-judicial agencies which have
acquired expertise because their jurisdiction is confined to specific matters are
accorded not only respect but at times even finality if such findings are supported by
substantial evidence (Special Events & Central Shipping Office Workers Union v.
San Miguel Corporation, 122 SCRA 557 [1983]; Dangan v. NLRC, 127 SCRA 706
[1984]; Phil. Labor Alliance Council v. Bureau of Labor Relations, 75 SCRA 162
[1977]; Mamerto v. Inciong, 118 SCRA 265 (1982]; National Federation of Labor
Union (NAFLU) v. Ople, 143 SCRA 124 [1986]; Edi-Staff Builders International,
Inc. v. Leogardo, Jr., 152 SCRA 453 [1987]; Asiaworld Publishing House, Inc. v.
Ople, 152 SCRA 219 [1987]).
The records show that the Labor Arbiters' decision dated October 9, 1985 (Annex
"E", Petition) pointed out in detail the basis of his findings and conclusions, and no
cogent reason can be found to disturb these findings nor of those of the National
Labor Relations Commission which affirmed the same.

As aptly observed by the Solicitor General that this petition is "clearly violative of PREMISES CONSIDERED, the petition is DISMISSED for lack of merit and the
the familiar principle of res judicata. There will be no end to this controversy if the decision of the National Labor Relations Commission is AFFIRMED.
light of the Minister of Labor's decision dated May 12, 1979 that had long acquired
the character of finality and which already resolved that petitioners' thirty (30)- SO ORDERED.
minute assembly time is not compensable, the same issue can be re-litigated again."
(Rollo, p. 183)

This Court has held:

In this connection account should be taken of the cognate principle

that res judicata operates to bar not only the relitigation in a
subsequent action of the issues squarely raised, passed upon and
adjudicated in the first suit, but also the ventilation in said
subsequent suit of any other issue which could have been raised in
the first but was not. The law provides that 'the judgment or order
is, with respect to the matter directly adjudged or as to any other
matter that could have been raised in relation thereto, conclusive
between the parties and their successors in interest by title
subsequent to the commencement of the action .. litigating for the
same thing and in the same capacity.' So, even if new causes of
action are asserted in the second action (e.g. fraud, deceit, undue
machinations in connection with their execution of the convenio de
transaccion), this would not preclude the operation of the doctrine
of res judicata. Those issues are also barred, even if not passed
upon in the first. They could have been, but were not, there raised.
(Vda. de Buncio v. Estate of the late Anita de Leon, 156 SCRA
352 [1987]).

17
 SECOND DIVISION
G.R. Nos. 85122-24             March 22, 1991
JULIO N. CAGAMPAN, SILVINO C. VICERA, JORGE C. DE CASTRO,
JUANITO R. DE JESUS, ARNOLD J. MIRANDA, , MAXIMO O. ROSELLO
& ANICETO L. BETANA, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, & ACE MARITIME
AGENCIES, INC., respondents.
Benjamin S. David for petitioners.
De Luna, Sumnoad and Gaerlan for private respondent.
PARAS, J.:
Presented before Us for review is the decision of public respondent National Labor
Relations Commission handed down on March 16, 1988 reversing the decision of the
Philippine Oversees Employment Administration and correspondingly dismissing the
cases for lack of merit. The POEA decision granted overtime pay to petitioners
equivalent to 30% of their basic pay.
We do not dispute the facts as found by the Solicitor General. Thus:
On April 17 and 18,1985, petitioners, all seamen, entered into separate
contracts of employment with the Golden Light Ocean Transport, Ltd.,
through its local agency, private respondent ACE MARITIME AGENCIES,
INC. Petitioners, with their respective ratings and monthly salary rates, are
as follows:
Petitioners were deployed on May 7, 1985, and discharged on July 12,
1986.
Thereafter, petitioners collectively and/or individually filed complaints for non-
payment of overtime pay, vacation pay and terminal pay against private respondent.
In addition, they claimed that they were made to sign their contracts in blank.
Likewise, petitioners averred that although they agreed to render services on board
the vessel Rio Colorado managed by Golden Light Ocean Transport, Ltd., the vessel
they actually boarded was MV "SOIC I" managed by Columbus Navigation. Two (2)
petitioners, Jorge de Castro and Juanito de Jesus, charged that although they were
employed as ordinary seamen (OS), they actually performed the work and duties of
Able Seamen (AB).
Private respondent was furnished with copies of petitioners' complaints and
summons, but it failed to file its answer within the reglementary period. Thus, on
January 12, 1987, an Order was issued declaring that private respondent has waived
its right to present evidence in its behalf and that the cases are submitted for decision
(Page 68, Records).
On August 5, 1987, the Philippine Overseas Employment Administration (POEA)
rendered a Decision dismissing petitioners' claim for terminal pay but granted their
prayer for leave pay and overtime pay. The dispositive portion of the Decision reads:
IN VIEW OF THE FOREGOING, judgment is hereby rendered ordering
respondent (private respondent) Ace Maritime Agencies, Inc. to pay the
following complainants (petitioners) in the amounts opposite their names:
1. Julio Cagampan—US$583.33 plus US$2,125.00 representing the 30%
guaranteed overtime pay;

2. Silvino Vicera—US$933.33 plus US$3,400.00 representing the 30%

Petitioners Rating Salary per month guaranteed overtime pay;
Julio Cagampan 2nd Engineer US$500.00
Silvino Vicera 2nd Engineer US$800.00 3. Jorge de Castro—US$233.33 plus US$850.00 representing the 30%
guaranteed overtime pay;
Juanito de Jesus Ordinary Seaman US$120.00
Jorge C. de Castro Ordinary Seaman US$160.00 4. Juanito de Jesus—US$233.33 plus US$850.00 representing the 30%
Arnold Miranda 3rd Officer US$310.00 guaranteed overtime pay;

Maximo Rosello Cook US$230.00 5. Lauro Diongzon—US$233.33 plus US$850.00 representing the 30%
Aniceto Betana 3rd Engineer US$400.00 guaranteed overtime pay;

18
 6. Arnold Miranda—US$455.00 plus US$1,659.50 representing the 30%
guaranteed overtime pay;
7. Maximo Rosello—US$303.33 plus US$1,105.00 representing the 30%
guaranteed overtime pay; and
8. Aniceto Betana—US$583.33 plus US$2,125.00 representing the 30%
guaranteed overtime pay.
The payments represent their leave pay equivalent to their respective salary
(sic) of 35 days and should be paid in Philippine currency at the current rate
of exchange at the time of actual payment. (pp. 81-82, Records)
Private respondent appealed from the POEA's Decision to the NLRC on August 24,
1987. On March 16, 1988, the NLRC promulgated a Decision, the dispositive portion
of which reads:
WHEREFORE, premises considered, the appealed decision is hereby
REVERSED and SET ASIDE and another one entered dismissing these
cases for lack of merit. (p. 144, Records)
On May 8, 1988, petitioners filed an Urgent Motion for Reconsideration of the
NLRC's Decision (p. 210, Records), but the same was denied by the NLRC for lack
of merit in its Resolution dated September 12, 1988 (p. 212, Records).
Hence, this appeal from the decision and resolution of the respondent NLRC.
Petitioners allege that respondent Commission gravely abused its discretion or erred
in deciding in favor of private respondent company by reason of the following:
1. Respondent NLRC overlooked the fact that private respondent company
had repeatedly failed and refused to file its answer to petitioners' complaints
with their supporting documents.
2. Respondent Commission erred in reversing and setting aside the POEA
decision and correspondingly dismissing the appeal of petitioners, allegedly
in contravention of law and jurisprudence.
Private respondent maritime company disclaims the aforesaid allegations of
petitioners through these arguments:
1. As borne out by the records, its former counsel attended all the hearings
before the POEA wherein he raised the basis objection that the complaint of
19
petitioners was so generally couched that a more detailed pleading with
supporting documents was repeatedly requested for the latter to submit.
2. The NLRC never abused its discretion in arriving at assailed decision
considering that the same was based on the Memorandum on Appeal dated
August 14, 1987 filed by private respondent.
3. In the hearings conducted by respondent Commission, all the arguments
of both parties were properly ventilated and considered by said Commission
in rendering its decision.
4. The Labor Code basically provides that the rules of evidence prevailing
in courts of law or equity shall not be controlling and it is the spirit and
intention of the Code that the Commission and its members and Labor
Arbiters should use every and an reasonable means to ascertain the facts in
each case speedily and objectively and without regard to technicalities of
law and procedure, all in the interest of due process.
5. Petitioners' motion for reconsideration of the NLRC decision did not
invoke the merits of the case but merely raised purely technical and
procedural matters. Even assuming that private respondent, technically
speaking, waived the presentation of evidence, its appeal to the NLRC was
valid since it involved merely a correct interpretation and clarification of
certain provisions of the contract the validity of which has never been
questioned.
The Solicitor General, arguing for public respondent NLRC, contends:
1. Petitioners' assumption that a party who is declared to have waived his
right to present evidence also loses his right to appeal from an adverse
judgment made against him is a falsity for, although the technical rules of
evidence prevailing in the courts of law or equity do not bind labor
tribunals, even the Rules of Court allows a party declared in default to
appeal from said judgment by attaching the propriety of the relief awarded
therein.
2. The NLRC did not abuse its discretion in the rendition of subject decision
because the evidence presented by petitioners in support of their complaint
is by itself sufficient to back up the decision. The issue of the disallowance
of overtime pay stems from an interpretation of particular provisions of the
employment contract.
We cannot sustain petitioners' position.
The failure of respondent to submit its responsive pleading was not fatal as to
invalidate its case before the Phil. Overseas Employment Authority. Evidently, such
formal or technical defect was rectified by the fact that the POEA proceeded with the
hearings on the case where both parties were given sufficient leeway to ventilate
their cases.
Petitioners' manifest pursuit of their claims before the POEA in the absence of the
answer produced the effect of condoning the failure of private respondent to submit
the said answer. Their submission to the POEA's authority without questioning its
jurisdiction to continue the hearings further strengthens the fact that the alleged
technical defect had already been cured. After all, what is there to complain of when
the POEA handed down a decision favorable to petitioners with the allowance of the
latter's leave pay and overtime pay.
Notably, it was only when private respondent appealed the NLRC decision to this
Court that petitioners suddenly unearth the issue of private respondent's default in the
POEA case. Had the decision favoring them not been reversed by the NLRC,
petitioners could have just clammed up. They resorted to bringing up a technical, not
a substantial, defect in their desperate attempt to sway the Court's decision in their
favor.
Private respondent has pointedly argued that the NLRC anchored its decision
primarily upon the Memorandum on Appeal.1âwphi1 In the case of Manila Doctors
Hospital v. NLRC (153 SCRA 262) this Court ruled that the National Labor
Relations Commission and the Labor Arbiter have authority under the Labor Code to
decide a case based on the position papers and documents submitted without
resorting to the technical rules of evidence.
On the issue of whether or not petitioners should be entitled to terminal
pay, We sustain the finding of respondent NLRC that petitioners were actually paid
more than the amounts fixed in their employment contracts. The pertinent portion of
the NLRC decision reads as follows.
On this award for leave pay to the complainants (petitioners), the (private)
respondent maintains that the actually they were paid much more than what
they were legally entitled to under their contract. This fact has not been
disputed by the complainants (petitioners.) Thus, as mentioned in (private)
respondent's Memorandum on Appeal dated 14 August 1987, their
overpayment is more than enough and sufficient to offset whatever claims
for leave pay they filed in this case and for which the POEA favorably
considered in their favor. For complainant (petitioner) Aniceto Betana, it
appears that under the crew contract his monthly salary was US$400 while
he was overpaid by US$100 as he actually received US$500. In fine, Betana
had received at least US1,400 excess salary for a period of fourteen (14)
months which was the period of his employment. In the case of complainant
20
(petitioner) Jorge C. de Castro his stipulated monthly pay was US$160 but
he actually received a monthly pay of US$200 or an overpayment of
US$560 for the same period of service. For complainant (petitioner) Juanito
R. de Jesus, his overpayment is US$1120. Complainant (petitioner) Arnold
J. Miranda has also the same amount of excess payment as de Jesus.
Indeed, We cannot simply ignore this material fact. It is our duty to prevent
a miscarriage of justice for if We sustain the award for leave pay in the face
of undisputed facts that the complainants (petitioners) were even paid much
more than what they should receive by way of leave pay, then they would
be enriching themselves at the expense of others. Accordingly, justice and
equity compel Us to deny this award.
Even as the denial of petitioners' terminal pay by the NLRC has been justified, such
denial should not have been applied to petitioners Julio Cagampan and Silvino
Vicera. For, a deeper scrutiny of the records by the Solicitor General has revealed
that the fact of overpayment does not cover the aforenamed petitioners since the
amounts awarded them were equal only to the amounts stipulated in the crew
contracts. Since petitioners Cagampan and Vicera were not overpaid by the
company, they should be paid the amounts of US$583.33 and US$933.33,
respectively. Further examination by the Solicitor General shows that petitioner
Maximo Rosello was also overpaid in the amount of US$420.00.
Hence, with respect to petitioners Cagampan and Vicera, the NLRC decision must be
modified correspondingly.
As regards the question of overtime pay, the NLRC cannot be faulted for disallowing
the payment of said pay because it merely straightened out the distorted
interpretation asserted by petitioners and defined the correct interpretation of the
provision on overtime pay embodied in the contract conformably with settled
doctrines on the matter. Notably, the NLRC ruling on the disallowance of overtime
pay is ably supported by the fact that petitioners never produced any proof of actual
performance of overtime work.
Petitioners have conveniently adopted the view that the "guaranteed or fixed
overtime pay of 30% of the basic salary per month" embodied in their employment
contract should be awarded to them as part of a "package benefit." They have
theorized that even without sufficient evidence of actual rendition of overtime work,
they would automatically be entitled to overtime pay. Their theory is erroneous for
being illogical and unrealistic. Their thinking even runs counter to the intention
behind the provision. The contract provision means that the fixed overtime pay of
30% would be the basis for computing the overtime pay if and when overtime work
would be rendered. Simply, stated, the rendition of overtime work and the
submission of sufficient proof that said work was actually performed are conditions
to be satisfied before a seaman could be entitled to overtime pay which should be
computed on the basis of 30% of the basic monthly salary. In short, the contract
provision guarantees the right to overtime pay but the entitlement to such benefit
must first be established. Realistically speaking, a seaman, by the very nature of his
job, stays on board a ship or vessel beyond the regular eight-hour work schedule. For
the employer to give him overtime pay for the extra hours when he might be sleeping
or attending to his personal chores or even just lulling away his time would be
extremely unfair and unreasonable.

We already resolved the question of overtime pay of a worker aboard a vessel in the
case of National Shipyards and Steel Corporation v. CIR (3 SCRA 890). We ruled:

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

The aforequoted ruling is a reiteration of Our resolution in Luzon Stevedoring

Co., Inc. vs. Luzon Marine Department Union, et al. (G.R. No. 9265, April 29,
1957).

WHEREFORE, the decision of the NLRC is hereby AFFIRMED with the

modification that petitioners Cagampan and Vicera are awarded their leave pay
according to the terms of the contract.

SO ORDERED.

21
 THIRD DIVISION
G.R. No. 105963 August 22, 1996
PAL EMPLOYEES SAVING AND LOAN ASSOCIATION, INC.
(PESALA), petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION AND ANGEL V.
ESQUEJO, respondents.
PANGANIBAN, J.:p
Is an employee entitled to overtime pay for work rendered in excess of eight
hours a day, given the fact that his employment contract specifies a twelve-
hour workday at a fixed monthly salary rate that is above the legal
minimum wage? This is the principal question answered by this Court in
resolving this petition which challenges the validity and legality of the
Decision1 of public respondent National Labor Relations
Commission2 promulgated on April 23, 1992 in NLRC NCR CA No.
002522-91 entitled "Angel V. Esquejo vs. PAL Employees Savings and
Loan Association" which Decision modified (slightly as to amount) the
earlier decision3 dated November 11, 1991 of the labor arbiter granting
private respondent's claim of overtime pay.
The Facts and the Case Below
On October 10, 1990, private respondent filed with public respondent a
complaint docketed as NLRC NCR Case No. 10-05457-90 for non-payment
of overtime pay and non-payment of the P25.00 statutory minimum wage
increase mandated by Republic Act No. 6727.
Subsequently, private respondent filed a supplemental complaint for illegal
suspension with payer for reinstatement and payment of backwages.
However, before the case was submitted for resolution, private respondent
filed a "Motion to Withdraw Supplemental Complaint" on the ground that a
separate action for illegal suspension, illegal dismissal, etc. had been filed
and was pending before another labor arbiter. Hence, the issue decide by
public respondent and which is under review by this Court in this petition
involves only his claim for overtime pay.
On December 13, 1990, petitioner
paper 5 alleging among other things:
On November 26, 1990, private respondent filed his position paper 4 with the
labor arbiter alleging the following facts constituting his cause of action:
22
Complaint (herein private respondent) started working with
respondent (PESALA) sometime last March 1, 1986 as a company
guard and was receiving a monthly basic salary of P1,990.00 plus
an emergency allowance in the amount of P510.00. He was
required to work a (sic) twelve (12) hours a day, a (sic) xerox
copies of his appointment are hereto attached and marked as
Annexes "C" and "D" of this position paper;
That on December 10, 1986, respondent Board of Directors in its
board meeting held on November 21, 1986 approved a salary
adjustment for the complainant increasing his monthly basic salary
to P2,310.00 and an emergency allowance of P510.00, a xerox
copy of the salary adjustment is hereto attached and marked as
Annex "E" hereof;
That on August 25, 1987, because of his impressive performance
on his assigned job, another adjustment was approved by the
President of the association increasing his monthly basic salary to
P2,880.00, a xerox copy of the salary adjustment is hereto attached
and marked as Annex "F" hereof;
That from January 4, 1988 up to June 1990, several salary
adjustments were made by the respondent on the monthly basic
salary of the complainant including a letter of appreciation for
being as (sic) one of the outstanding performers during the first
half of 1988, the latest salary prior to the filing of the complaint
was P3,720.00, a (sic) xerox copies of all documents relative to the
salary adjustments are hereto attached and marked as annexes "G",
"H", and "K" of this position paper;
That during his entire period of employment with respondent, the
former was required to perform overtime work without any
additional compensation from the latter. It was also at this point
wherein the respondent refused to give the 25.00 increase on the
minimum wage rates as provided for by law. On October 12, 1990,
complainant was suspended for the period of thirty seven (37) days
for an offense allegedly committed by the respondent sometime
last August 1989.
PESALA filed its position
On 01 March, 1986, complainant was appointed in a permanent
status as the company guard of respondent. In the Appointment
Memorandum dated February 24, 1986 which has the conformity
of complaint, it is expressly stipulated therein that complainant is
to receive a monthly salary of P1,900.00 plus P510.00 emergency
allowance for a twelve (12) hours work per day with one (1) day
off. A copy of said appointment memorandum is hereto attached as
Annex "A" and made an integral part hereof.
On 01 December, 1986, the monthly salary of complainant was
increased to P2,310,00 plus P510.00 emergency allowance. Latter,
or on 01 January, 1988, the monthly salary of complainant was
again increased to P3,420.00. And still later, or on 01 February,
1989, complainant's monthly salary was increased are hereto
attached as Annexes "B", "B-1" and "B-2" and are made integral
parts hereof.
On 29, November, 1989, the manager of respondent in the person
of Sulpicio Jornales wrote to complainant informing the latter that
the position of a guard will be abolished effective November 30,
1989, and that complainant will be re-assigned to the position of a
ledger custodian effective December 1, 1989.
Pursuant to the above-mentioned letter-agreement of Mr. Jornales,
complaint was formally appointed by respondent as its ledger
custodian on December 1, 1989. The monthly salary of
complainant as ledger custodian starting on December 1, 1989 was
P3,720,00 for forty (40) working hours a week or eight (8) working
hours a day. a copy of said Appointment memorandum is hereto
attached as Annex "C" and made an integral part hereof.
On 29 August, 1990, complainant was administratively charged
with a serious misconduct or disobedience of the lawful orders of
respondent or its officers, and gross and habitual neglect of his
duties, committed as follows:
1. Sometime in August, 1989, you (referring to
complainant Esquejo) forwarded the checks
corresponding to the withdrawals of Mr. Jose
Jimenez and Mr. Anselmo dela Banda of Davao
and Iloilo Station, respectively, without the
signature of the Treasurer and the President of
PESALA, in violation of your duty and function
that you should see to it that the said checks
should be properly signed by the two PESALA
officials before you send out said checks to their
addresses. As a result of which, there was a
23
substantial delay in the transmission of the
checks to its owners resulting to an
embarrassment on the part of the PESALA
officers and damage and injury to the recipients
(sic) of the checks since they needed the money
badly.
2. Sometime in August, 1989, before you
(complainant) went on your vacation, you failed
to leave or surrender the keys of the office,
especially the keys of the keys to the main and
back doors which resulted to damage, injury and
embarrassment to PESALA. This is a gross
violation of your assigned duties and you
disobeyed the instruction of your Superior.
xxx xxx xxx
Herein complainant was informed of the aforequoted charges
against him and was given the opportunity to be heard and present
evidence in his behalf as shown by the Notice of Hearing (Annex
"D" hereof) sent to him. Complainant did in fact appeared (sic) at
the hearing, assisted by his counsel, Atty. Mahinardo G. Mailig,
and presented his evidence in the form of a Counter-Affidavit. A
copy of said Counter-Affidavit is hereto attached as Annex "E" and
made an integral part hereof.
On 12 October, 1990, after due deliberation on the merits of the
administrative charges filed against herein complainant, the
Investigating Officer in the person of Capt. Rogelio Enverga
resolved the same imposing a penalty of suspension of herein
complainant, thus:
"PENALTY: 1. For the first offense,
you (referring to complaint Esquejo) are
suspended for a period of thirty (30)
working days without pay effective
October 15, 1990.
2. For the second offense, your (sic) are
suspended for a period of seven (7)
working days whiteout pay effective
from the date first suspension will
expire".
On March 7, 1991, private respondent filed a detailed and itemized
computation of his money claims totaling P107,495.90, to which petitioner
filed its comment on April 28, 1991. The computation filed on March 7,
1991 was later reduced to P65,302.80. To such revised computation, the
petitioner submitted its comment on April 28, 1991.
WHEREFORE, judgment is hereby rendered:
1. Granting the claim for overtime pay
covering the period October 10, 1987 to
November 30, 1989 in the amount of
P28,344.55.
2. The claim for non-payment of P25.00
salary increase pursuant to Republic Act
No. 6727 is dismissed for lack of merit.
Aggrieved by the aforesaid decision, petitioner appealed to public
respondent NLRC only to be rejected on April 23, 1992 via the herein
assailed Decision, the dispositive portion of which reads as follows:
WHEREFORE, premises considered, the award is reduced to an
amount of TWENTY EIGHT THOUSAND SIXTY-SIX PESOS
AND 45/100 (P28,066.45). In all other respects, the Decision
under review is hereby AFFIRMED and the appeal DISMISSED
for lack of merit.
No motion for reconsideration of the Decision was filed by the
petitioner.6
What transpired afterwards is narrated by the Solicitor General in his
memorandum,7 which we presume to be correct since petitioner did not
contradict the same in its memorandum:
. . . Petitioner did not appeal the Decision of respondent NLRC.
When it became final, the parties were called to a conference on
June 29, 1992 to determine the possibility of the parties' voluntary
compliance with the Decision (Order of Labor Arbiter Linsangan.
dated July 23, 1992).
. . . In their second conference, held on July 15, 1992, petitioner
proposed to private respondent a package compromise agreement
in settlement of all pending claims. Private respondent for his part
demanded (P150,000.00 as settlement of his complaint which was
24
turned down by petitioner as too excessive. Unfortunately, no
positive results were achieved.
As a result, pleading was filed by petitioner captioned: Motion to
Defer Execution and Motion to Re-Compute alleged overtime pay.
Petitioner states that "quite recently, the Employee Payroll Sheets
pertaining to the salaries, overtime pay, vacation and sick leave of
Angel Esquejo were located".
. . . Petitioner's Motion to Defer Execution and Motion to Re-
Compute respondent's overtime pay was denied in an Order dated
July 23, 1992.
. . . Petitioner moved to reconsider the Denial Order on July 27,
1992. Private respondent opposed.
In the meantime, petitioner filed the instant special civil action
for certiorari before this Court on July 10, 1992. Later, on July 17, 1992,
citing as reason that ". . . quite recently, the Employee Payroll Sheets which
contained the salaries and overtime pay received by respondent Esquejo
were located in the bodega of the petitioner and based on said Payroll
Sheets, it appears that substantial overtime pay have been paid to
respondent Esquejo in the amount of P24,238.22 for the period starting
January 1987 up to November 1989". petitioner asked this Court for the
issuance of a temporary restraining order or writ of preliminary injunction.
On the same date of July 17, 1992, a "Supplemental Petition Based On
Newly Discovered Evidence" was filed by petitioner to which was attached
photocopies of payroll sheets of the aforestated period.
On July 29, 1992, this court issued a temporary restraining order enjoining
the respondents from enforcing the Decision dated April 23, 1992 issued in
NLRC NCR No. 002522-91, the case below subject of the instant petition.
The Issues
Four issues have been raised by the petitioner in its effort to obtain a
reversal of the assailed Decision, to wit:
I
THE RESPONDENT NLRC COMMITTED A GRAVE ABUSE
OF DISCRETION WHEN IT RULED THAT PRIVATE
RESPONDENT IS ENTITLED TO OVERTIME PAY WHEN
THE SAME IS A GROSS CONTRAVENTION OF THE
 CONTRACT OF EMPLOYMENT BETWEEN PETITIONER
AND RESPONDENT ESQUEJO AND A PATENT VIOLATION
OF ARTICLES 1305, 1306 AND 1159 OF THE CIVIL CODE.
II
THE RESPONDENT NLRC COMMITTED A GRAVE ABUSE
OF DISCRETION IF AWARDING OVERTIME PAY OF
P28,066.45 TO PRIVATE RESPONDENT WHEN THE SAME IS
A CLEAR VIOLATION OF ARTICLE 22 OF THE CIVIL CODE
ON UNJUST ENRICHMENT.
III
THE RESPONDENT NLRC COMMITTED A GRAVE ABUSED
OF DISCRETION WHEN IT RULED THAT PRIVATE
RESPONDENT WAS NOT PAID THE OVERTIME PAY
BASED ON THE COMPUTATION OF LABOR ARBITER
CORNELIO LINSANGAN WHICH WAS AFFIRMED BY SAID
RESPONDENT NLRC WHEN THE SAME IS NOT
SUPPORTED BY SUBSTANTIAL EVIDENCE AND IT,
THEREFORE, VIOLATED THE CARDINAL PRIMARY
RIGHTS OF PETITIONER AS PRESCRIBED IN "AND TIBAY
VS. CIR." 69 PHIL. 635.
IV
WHETHER OR NOT THE PETITIONER'S SUPPLEMENTAL
PETITION BASED ON NEWLY DISCOVERED EVIDENCE
MAY BE ADMITTED AS PART OF ITS EVIDENCE IT BEING
VERY VITAL TO THE JUDICIOUS DETERMINATION OF
THE CASE. (Rollo, p. 367)
In essence the above issued boil down to this query: Is an employee entitled to
overtime pay for work rendered in excess of the regular eight hour day given the fact
that he entered into a contract of labor specifying a work-day of twelve hours at a
fixed monthly rate above the legislated minimum wage?
The Court's Ruling
At the outset, we would like to rectify the statement made by the Solicitor General
that the "petitioner did not appeal from the Decision of (public) respondent NLRC".
The elevation of the said case by appeal is not possible. The only remedy available
from an order or decision of the NLRC is a petition for certiorari under Rule 65 of
25
the Rules of Court alleging lack or excess of jurisdiction or grave abuse of
discretion.8 The general rule now is that the special civil action of certiorari should
be instituted within a period of three months. 9 Hence, when the petition was filed on
July 10, 1992, three months had not yet elapsed from petitioner's receipt of the
assailed Decision (should really be from receipt of the order denying the motion for
reconsideration).
However, aside from failing to show clearly grave abuse of discretion on the part of
respondent NLRC, which we shall discuss shortly, the petitioner also failed to
comply with the mandatory requirement of filing a motion for reconsideration from
the Decision of the public respondent before resorting to the remedy of certiorari.
We have previously held that:
. . . The implementing rules of respondent NLRC are unequivocal
in requiring that a motion for reconsideration of the order,
resolution, or decision of respondent commission should be
seasonably filed as a precondition for pursuing any further or
subsequent remedy, otherwise the said order, resolution, or
decision shall become final and executory after ten calendar days
from receipts thereof. Obviously, the rationale therefor is that the
law intends to afford the NLRC an opportunity to rectify such
errors or mistakes it may have lapsed into before resort to the
courts of justice can be had. This merely adopts the rule that the
function of a motion for reconsideration is to point out to the court
the error that it may have committed and to give it a chance to
correct itself.10
Additionally, the allegations in the petition clearly show that
petitioner failed to file a motion for reconsideration of the assailed
Resolution before filing the instant petition. As correctly argued by
private respondent Rolando Tan, such failure constitutes a fatal
infirmity. . . . The unquestioned rule in this jurisdiction is
that certiorari will only if there is no appeal or any other plain,
speedy an adequate remedy in the ordinary course of law against
the acts of public respondent. In the instant case, the plain and
adequate remedy expressly provided by law was a motion for
reconsideration of the assailed decision, based on a palpable or
patent errors, to be made under oath and filed within ten (10)
calendar days from receipt of the questioned decision. And for
failure to avail of the correct remedy expressly provided by law,
petitioner has permitted the subject Resolution to become final and
executory after the lapse of the ten day period within which to file
such motion for reconsideration.11
In brief, the filing of the instant petition was premature and did not toll the running any equivocation" that the overtime pay for work rendered for four (4) hours in
of the 3 month period. Thus, the assailed Decision became final and executory. On excess of the eight (8) hour regular working period is already included in the
this ground alone, this petition must therefore be dismissed. P1,990.00 basic salary. "This is very clear from the fact that the appointment states
12 hours a day work."13 By its computations,14 petitioner tried to illustrate the private
However, in view of the importance of the substantial query raised in the petition, we respondent was paid more than the legally required minimum salary then prevailing.
have resolved to decide the case on the merits also.
To prove its contention, petitioner argues that:
The First Issue: Was Overtime Pay Included?
The legal minimum wage prescribed by our statutes, the legally
The main disagreement between the parties centers on how the contract of computed overtime pay and monthly salaries being paid by
employment of the private respondent should be interpreted. The terms and petitioner to respondent Esquejo would show that indeed, the
conditions thereof reads as follows: overtime pay has always been absorbed and included in the said
agreed monthly salaries.
Date: February 24, 1986
NAME : ESQUEJO, ANGEL In 1986, the legal minimum salary of Esquejo is computed as
NATURE OF ACTION : APPOINTMENT follows (per Appointment Memoranda dated February 4, 1986 and
FROM : June 6, 1986 [Annex "C" and "D" of Annex "B" of this Petition]):
POSITION TITLE : COMPANY GUARD
TO : 54 x 314 days
STATUS : PERMANENT -------------
EFFECTIVE DATE : MARCH 1, 1986 12 months = P1,413.00 monthly salary
FROM : P1,990.00 per month
plus P510.00 emergency The hourly overtime pay is computed as follows:
allowance
54/8 hours = P6.75 x 4 hrs. = P27.00
SALARY : P27.00 x 1.25 = P33.75 x 20 (should be 26)days
TO : = P887.50
(should be P877.50)
REMARKS : To confirm permanent
appointment as company P1,413.00 — legal minimum wage
guard who will render 12 + 887.50(877.50) — legal overtime pay
hours a day with one (1) ---------------
day off P2,290.50 — amount due to respondent
Esquejo under the law
RECOMMENDED BY: APPROVED BY:
P2,500.00 — gross salary of Esquejo per
(Signed) (Signed) contract
SULPICIO B. JORNALES CATALINO F. -2,290.50
BANEZ ----------

(Signed) P209.50 — Difference (Rolllo, p. 371).

ANGEL V. ESQUEJO12

Petitioner faults the public respondent when it said that there was "no meeting of
minds between the parties," since the employment contract "explicitly states without
26
On the other hand, private respondent in his position paper claims that overtime pay
is not so incorporated and should be considered apart from the P1,990.00 basic
salary. 15
We find for the private respondent and uphold the respondent NLRC's ruling that he
is entitled to overtime pay.
Based on petitioner's own computation, it appears that the basic salary plus
emergency allowance given to private respondent did not actually include the
overtime pay claimed by private respondent. Following the computations it would
appear that by adding the legal minimum monthly salary which at the time was
P1,413.00 and the legal overtime minimum monthly salary which at the time was
P1,413.00 and the legal overtime pay of P877.50, the total amount due the private
respondent as basic salary should have been P2,290.50. By adding the emergency
cost of living allowance (ECOLA) of P510.00 as provided by the employment
contract, the total basic salary plus emergency allowance should have amounted to
P2,800.50. However, petitioner admitted that it actually paid private respondent
P1,990.00 as basic salary plus P510.00 emergency allowance or a total of only
P2,500.00. Undoubtedly, private respondent was shortchanged in the amount of
P300.50. Petitioner's own computations thus clearly establish that private
respondent's claim for overtime pay is valid.
Side Issue: Meeting of the Minds?
The petitioner contends that the employment contract between itself and the private
respondent "perfectly satisfies" the requirements of Article 1305 of the Civil Code as
to the "meeting of the minds" such that there was a "legal and valid contract" entered
into by the parties. Thus, private respondent "cannot be allowed to question the said
salary arrangements for the extra 4 hours overtime pay after the lapse of 4 years and
claim only now that the same is not included in the terms of the employment
contracts."16
We disagree. Public respondent correctly found no such agreement as to overtime
pay. In fact. the contract was definite only as to the number of hours of work to be
rendered but vague as to what is covered by the salary stipulated. Such ambiguity
was resolved by the public respondent, thus:
In resolving the issue of whether or not complainant's overtime pay
for the four (4) hours of work rendered in excess of the normal
eight hour work period is incorporated in the computation of his
monthly salary, respondent invokes its contract of employment
with the complainant. Said contract appears to be in the nature of a
document identifiable as an appointment memorandum which took
effect on March 1, 1986 (Records, p. 56) by virtue of which
complaint expressed conformity to his appointment as company
27
guard with a work period of twelve (12) hours a day with one (1)
day off. Attached to this post is a basic salary of P1,900.00 plus
P510.00 emergency allowance. It is (a) cardinal rule in the
interpretation of a contract that if the terms thereof are clear and
leave no doubt upon the intention of the contracting parties, then
the literal meaning of its stipulations shall control. (Art. 1370, Civil
Code of the Philippines). To this, respondent seeks refuge.
Circumstances, however, do not allow us to consider this rule in
the light of complainant's claim for overtime pay which is an
evident indication that as to this matter, it cannot be said that there
was a meeting of the minds between the parties, it appearing that
respondent considered the four (4) hours work in excess of the
eight hours as overtime work and compensated by way of
complainant's monthly salary while on the latter's part, said work
rendered is likewise claimed as overtime work but yet unpaid in
view of complainant's being given only his basic salary.
Complainant claims that the basic salary could not possibly include
therein the overtime pay for his work rendered in excess of eight
hours. Hence, respondent's Appointment Memorandum cannot be
taken and accorded credit as it is so worded in view of this
ambiguity. We therefore proceeded to determine the issue in the
light of existing law related thereto. while it is true that the
complainant received a salary rate which is higher that the
minimum provided by law, it does not however follow that any
additional compensation due the complainant can be offset by his
salary in excess of the minimum, especially in the absence of an
express agreement to that effect. To consider otherwise would be
in disregard of the rule of non-diminution of benefits which are
above the minimum being extended to the employees.
Furthermore, such arrangement is likewise in disregard of the
manner required by the law on how overtime compensation must
be determined. There is further the possibility that in view of
subsequent increases in the minimum wage, the existing salary for
twelve (12) hours could no longer account for the increased wage
level together with the overtime rate for work rendered in excess of
eight hours. This fertile ground for a violation of a labor standards
provision can be effectively thwarted if there is a clear and definite
delineation between an employee's regular and overtime
compensation. It is, further noted that a reading of respondent's
Appointment Memoranda issued to the complainant on different
dates (Records, pp. 56-60) shows that the salary being referred to
by the respondent which allegedly included complainant's overtime
pay, partakes of the nature of a basic salary and as such, does not
contemplate any other compensation above thereof including
complaint's overtime pay. We therefore affirm complainant's
entitlement to the latter benefit.17
Petitioner also insists that private respondent's delay in asserting his right/claim
demonstrates his agreement to the inclusion of overtime pay in his monthly salary
rate. This argument is specious. First of all, delay cannot be attributed to the private
respondent. He was hired on March 1, 1986. His twelve-hour work periods continued
until November 30, 1989. On October 10, 1990 (just before he was suspended) he
filed his money claims with the labor arbiter. Thus, the public respondent in
upholding the decision of the arbiter computed the money claims for the three years
period from the date claims were filed, with the computation starting as of October
10, 1987 onwards.
In connection with the foregoing, we should add that even if there had been a
meeting of the minds in the instant case, the employment contract could not have
effectively shielded petitioner from the just and valid claims of private respondent.
Generally speaking, contracts are respected as the law between the contracting,
parties, and they may establish such stipulation, clause, terms and conditions as they
may see fit; and for as long as such agreements are not contrary to law, morals, good
customs, public policy or public order, they shall have the fore of law between
them.18 However, ". . ., while it is the inherent and inalienable right of every man to
have the most liberty of contracting, and agreements voluntarily and fairly made will
be held valid and enforced in the courts, the general right to contract is subject to the
limitation that the agreement must not be in violation of the Constitution, the statute
of some rule of law (12 Am. Jur. pp. 641-642)." 19 And under the Civil Code,
contracts of labor are explicitly subject to the police power of the State because they
are not ordinary contracts but are impressed with public interest. 20 Inasmuch as in
this particular instance the contract is question would have been deemed in violation
of pertinent labor laws, the provisions of said laws would prevail over the terms of
the contract, and private respondent would still be entitled to overtime pay.
Moreover, we cannot agree with petitioner's assertion that by judging the intention of
the parties from their contemporaneous acts it would appear that the "failure of
respondent Esquejo to claim such alleged overtime pay since 1986 clearly
demonstrate(s) that the agreement on his gross salary as contained in his appointment
paper is conclusive on the matter of the inclusion of overtime pay." (Rollo, pp. 13-
15; also, Rollo, pp. 378-380). This is simply not the case here. The interpretation of
the provision in question having been put in issue, the Court is constrained to
determine which interpretation is more in accord with the intent of the parties. 21 To
ascertain the intent of the parties, the Court is bound to look at their
contemporaneous and subsequent acts.22 Private respondent's silence and failure to
claim his overtime pay since 1986 cannot be considered as proving the understanding
on his part that the rate provided in his employment contract covers overtime pay.
Precisely, that is the very question raised by private respondent with the arbiter,
because contrary to the claim of petitioner, private respondent believed that he was
not paid his overtime pay and that such pay is not covered by the rate agreed upon
and stated in his Appointment Memorandum. The subsequent act of private
respondent in filing money claims negates the theory that there was clear agreements
as to the inclusion of his overtime pay in the contracted salary rate. When an
28
employee fails to assert his right immediately upon violation thereof, such failure
cannot ipso facto be deemed as a waiver of the oppression. We must recognize that
the worker and his employer are not equally situated. When a worker keeps silent
inspite of flagrant violations of his rights, it may be because he is seriously fearful of
losing his job. And the dire consequences thereof on his family and his dependents
prevent him from complaining. In short, his thoughts of sheer survival weight
heavily against launching an attack upon his more powerful employer.
The petitioner contends that the agreed salary rate in the employment contract should
be deemed to cover overtime pay, otherwise serious distortions in wages would
result "since a mere company guard will be receiving a salary much more that the
salaries of other employees who are much higher in rank and position than him in the
company." (Rollo, p. 16) We find this argument flimsy and undeserving of
consideration. How can paying an employee the overtime pay due him cause serious
distortions in salary rates or scales? And how can "other employees" be aggrieved
when they did not render any overtime service?
Petitioner's allegation that private respondent is guilty of laches is likewise devoid of
merit. Laches is defined as failure or neglect for an unreasonable and unexplained
length of time to do that which, by exercising due diligence, could or should have
been done earlier. It is negligence or omission to assert a right within an
unreasonable time, warranting the presumption that the party entitled to assert it has
either abandoned or declined to assert it 23 The question of laches is addressed to the
sound discretion of the court, and since it is an equitable doctrine, its application is
controlled by equitable considerations. It cannot work to defeat justice or to
perpetrate fraud and injustice.24 Laches cannot be charged against any worker when
he has not incurred undue delay in the assertion of his rights. Private respondent filed
his complaint within the three-year reglementary period. He did not sleep on his
rights for an unreasonable length of time.25
Second Issue: Unjust Enrichment?
Petitioner contends that the award of overtime pay is "plain and simple unjust and
illegal enrichment." Such award "in effect sanctioned and approved the grant of
payment to respondent Esquejo which will result in double payment for the overtime
work rendered by paid employee."26 Also, per petitioner, "(n)othing in the Labor
Code nor in the Rules and Regulations issued in the implementation thereof prohibits
the manner of paying the overtime pay (by) including the same in the salary."27
This is begging the issue. To reiterate, the main question raised before the labor
tribunals is whether the provision on wages in the contract of employment already
included the overtime pay for four (4) working hours rendered six days a week in
excess of the regular eight-hour work. And we hold that the tribunals below were
correct in ruling that the stipulated pay did not include overtime. Hence, there can be
no undue enrichment in claiming what legally belongs to private respondent.
 Third Issue: Basic of NLRC's Decision?
Petitioner assails respondent NLRC for adopting that portion of the decision of the
labor arbiter, which reads as follows:
. . . Our conclusion is quite clear considering the fact that at the
time of his employment in March 1986, during which the
minimum wage was P37.00 a day for 8 hours work, complaint's
total take-home-pay working 12 hours a day including ECOLA,
was only P2,500.00 a month. And immediately prior to his
appointment as Ledger Custodian effective December 1, 1989,
with the working hours reduced to 8 hours a week, complainant's
monthly salary was P3,420.00 (instead of P5,161.01 minimum
monthly with 4 hours overtime work everyday, or a difference of
P1,741.01 a month).
Accordingly, the claim for overtime pay reckoned from October
10, 1987 up to November 30, 1989 should be, as it is hereby,
granted.28 (Rollo, p. 201).
Petitioner believes that by adopting the above-quoted portion of the arbiter's
decision, respondent NLRC violated the cardinal rule that its decisions must be
supported by substantial evidence. In doing so, petitioner claims that the NLRC
violated is primary rights as enunciated in the case of Ang Tibay vs. CIR 29. In other
words, petitioner holds the view that the arbiter's decision failed to explain how the
amount of P5,161.01 was arrived at.30
Petitioner is in error. The public respondent did not adopt in toto the aforequoted
portion of the arbiter's decision. It made its own computations and arrived at a
slightly different amount, with a difference of P278.10 from the award granted by the
labor arbiter. To refute petitioner's claim, public respondent attached (as Annexes
"1", "1-A" "1-B" and "1-C") to its Comment, the computations made by the labor
arbiter in arriving at the sum of P5,161,00. On the other hand, public respondent
made its own computation in its assailed Decision and arrived at a slightly different
figure from the computed by the labor arbiter:
Respondent claims that the award of P28,344.55 is bereft of any
factual basis. Records show that as per computation of the office of
the Fiscal Examiner, (Records, p. 116) the said amount was arrived
at. The computation was however based on the assumption that the
complainant regularly reported for work. Records however show
that the complainant absented himself from work for one day in
August 1989. (Records, p. 63) For this unworked day, no overtime
pay must be due. As to the rest of his period of employment
subject to the three year limitation rule which dates from October
29
10, 1987 up to his appointment as Ledger Custodian on December
1, 1989 after which his regular work period was already reduced to
eight hours, there being no showing that the complainant absented
himself from work, and he being then required to work for period
of twelve hours daily, We therefore rule on complainant's
entitlement to overtime compensation for the duration of the
aforesaid period in excess of one working day. Consequently,
complainant's overtime pay shall be computed as follow:
OVERTIME PAY: (4 HRS/DAY)
October 10, 1987 — December 13, 1987 = 2.10
mos.
P54/8hrs. = P6.75 x 4 hrs. = P27.00
P27 x 1.25 = P33.75 x 26 x 2.10 mos. =
P1,842.75
————
December 14, 1987 — June 30, 1989 = 18.53
mos.
P64/8 hrs. = P8 x 4 hrs. = P32.00
P32 x 1.25 = P40 x 26 x 18.53 = P19,271.20
—————
July 1, 1989 — November 30, 1989 = 5 mos.
P89/8 hrs. = P11.12 x 4 hrs. = P44.50
P44.50 x 1.25 = P55.62 x 25 x 5 mos. =
P6,952.50 (P6,953.125)
————
TOTAL OVERTIME PAY
P28,066.45 (P28,067.075)" (Rollo, pp. 210-212)
Prescinding therefrom, it is evident that petitioner had no basis to argue that
respondent NLRC committed any grave abuse of discretion in quoting the questioned
portion of the labor arbiter's holding.
Fourth Issue: Newly Discovered Evidence?
In its Supplemental Petition filed on July 17, 1996, petitioner alleges in part:
2. That only recently, the petitioner was able to locate the
Employees Payroll Sheets which contained the salaries, overtime
pay, vacation and sick leaves of respondent Esquejo which pertains
 to the period starting from January 1, 1987 up to November 1989. computation is based on the evidence thus submitted by the parties.
Therefore, said total amount of overtime pay paid to and received All appointment by the respondent carries (sic) with it (sic) that the
by respondent Esquejo should be deducted from the computed basic salary of the complainant is equivalent to 12 hours work
amount of P28,066.45 based on the questioned decision; (Rollo, p. everyday for six (6) days a week, hence, the four (4) hours
220). overtime daily was not considered and therefore not paid by the
respondent. (Rollo, p. 327).
Contrary to petitioner's claim however, said documents consisting of payroll
sheets, cannot be considered as "newly-discovered evidence" since said It has been consistently held that factual issued are not proper subjects of a petition
papers were in its custody and possession all along, petitioner being the for certiorari, as the power of the Supreme Court to review labor cases is limited to
employer of private respondent questions of jurisdiction and grave abuse of discretion. 32 The introduction in this
petition of so-called newly discovered evidence is unwarranted. This Court is not a
Furthermore, petitioner offers no satisfactory explanation why these trier of facts and it is not its function to examine and evaluate the evidence presented
documents were unavailable at the time the case was being heard by the (or which ought to have been presented) in the tribunals below.33
labor arbiter. In its Memorandum, petitioner excused itself for its failure to
present such evidence before the labor arbiter and respondent NLRC by WHEREFORE, in view of the foregoing considerations, the Petition is DISMISSED,
saying that "petitioner('s office) appeared to be in disorder or in a state of the temporary restraining order issued on July 30, 1992 LIFTED, and the assailed
confusion since the then officers (of petitioner) were disqualified by the decision of the public respondent AFFIRMED. Cost against petitioner.
Monetary Board on grounds of misappropriation of funds of the association
and other serious irregularities. There was no formal turn-over of the
documents from the disqualified set of officer to the new officers of
petitioner."31 We find such excuse weak and unacceptable, the same not
being substantiated by any evidence on record. Moreover, payroll records
are normally not in the direct custody and possession of corporate officers
but of their subordinates, i.e., payroll clerks and the like. In the normal
course of business, such payroll sheets are not the subject of formal
turnovers by outgoing officers to their successors of office. And if indeed it
is true that the petitioner had been looking for such records or documents
during the pendency of the case with the labor arbiter and with public
respondent, petitioner never alleged such search before the said labor
tribunals a quo. Hence, such bare allegations of facts cannot be fairly
appreciated in this petition for certiorari, which is concerned only with
grave abuse of discretion of lack (or excess) of jurisdiction.

The Solicitor General quotes with approval a portion of private respondent's

Opposition to petitioner's motion for reconsideration thus:

It is clear from the payroll, although the substantial pages thereof

do not show that the net amount indicated therein have been
received or duly acknowledged to have been received by the
complainant, THAT OVERTIME PAYMENTS THAT WERE
MADE REFER TO WORK RENDERED DURING
COMPLAINANT'S OFF DAYS. What has been rightfully,
claimed by the complainant and awarded by this Honorable Office
is the overtime works (sic) rendered by the complainant daily for
six (6) days a week computed at four (4) hours per day. This

30
 SECOND DIVISION
G.R. No. L-52415 October 23, 1984
INSULAR BANK OF ASIA AND AMERICA EMPLOYEES' UNION
(IBAAEU), petitioner,
vs.
HON. AMADO G. INCIONG, Deputy Minister, Ministry of Labor and
INSULAR BANK OF ASIA AND AMERICA, respondents.
Sisenando R. Villaluz, Jr. for petitioner.
Abdulmaid Kiram Muin colloborating counsel for petitioner.
The Solicitor General Caparas, Tabios, Ilagan Alcantara & Gatmaytan Law Office
and Sycip, Salazar, Feliciano & Hernandez Law Office for respondents.
MAKASIAR, J.:
This is a petition for certiorari to set aside the order dated November 10, 1979, of
respondent Deputy Minister of Labor, Amado G. Inciong, in NLRC case No. RB-IV-
1561-76 entitled "Insular Bank of Asia and America Employees' Union
(complainant-appellee), vs. Insular Bank of Asia and America" (respondent-
appellant), the dispositive portion of which reads as follows: têñ.£îhqwâ£
xxx xxx xxx
ALL THE FOREGOING CONSIDERED, let the appealed
Resolution en banc of the National Labor Relations Commission
dated 20 June 1978 be, as it is hereby, set aside and a new
judgment. promulgated dismissing the instant case for lack of merit
(p. 109 rec.).
The antecedent facts culled from the records are as follows:
On June 20, 1975, petitioner filed a complaint against the respondent bank for the
payment of holiday pay before the then Department of Labor, National Labor
Relations Commission, Regional Office No. IV in Manila. Conciliation having
failed, and upon the request of both parties, the case was certified for arbitration on
July 7, 1975 (p. 18, NLRC rec.
31
On August 25, 1975, Labor Arbiter Ricarte T. Soriano rendered a decision in the
above-entitled case, granting petitioner's complaint for payment of holiday pay.
Pertinent portions of the decision read: têñ.£îhqwâ£
xxx xxx xxx
The records disclosed that employees of respondent bank were not
paid their wages on unworked regular holidays as mandated by the
Code, particularly Article 208, to wit: têñ.£îhqwâ£
Art. 208. Right to holiday pay.
(a) Every worker shall be paid his regular daily
wage during regular holidays, except in retail and
service establishments regularly employing less
than 10 workers.
(b) The term "holiday" as used in this chapter,
shall include: New Year's Day, Maundy
Thursday, Good Friday, the ninth of April the
first of May, the twelfth of June, the fourth of
July, the thirtieth of November, the twenty-fifth
and the thirtieth of December and the day
designated by law for holding a general election.
xxx xxx xxx
This conclusion is deduced from the fact that the daily rate of pay
of the bank employees was computed in the past with the unworked
regular holidays as excluded for purposes of determining the
deductible amount for absences incurred Thus, if the employer
uses the factor 303 days as a divisor in determining the daily rate
of monthly paid employee, this gives rise to a presumption that the
monthly rate does not include payments for unworked regular
holidays. The use of the factor 303 indicates the number of
ordinary working days in a year (which normally has 365 calendar
days), excluding the 52 Sundays and the 10 regular holidays. The
use of 251 as a factor (365 calendar days less 52 Saturdays, 52
Sundays, and 10 regular holidays) gives rise likewise to the same
presumption that the unworked Saturdays, Sundays and regular
holidays are unpaid. This being the case, it is not amiss to state
with certainty that the instant claim for wages on regular unworked
holidays is found to be tenable and meritorious.
 WHEREFORE, judgment is hereby rendered:
(a) xxx xxxx xxx
(b) Ordering respondent to pay wages to all its employees for all
regular h(olidays since November 1, 1974 (pp. 97-99, rec.,
underscoring supplied).
Respondent bank did not appeal from the said decision. Instead, it complied with the
order of Arbiter Ricarte T. Soriano by paying their holiday pay up to and including
January, 1976.
On December 16, 1975, Presidential Decree No. 850 was promulgated amending,
among others, the provisions of the Labor Code on the right to holiday pay to read as
follows: têñ.£îhqwâ£
Art. 94. Right to holiday pay. — (a) Every worker shall be paid his
regular daily wages during regular holidays, except in retail and
service establishments regularly employing less than ten (10)
workers;
(b) The employer may require an employee to work on any holiday
but such employee shall be paid a compensation equivalent to
twice his regular rate and
(c) As used in this Article, "holiday" includes New Year's Day,
Maundy Thursday, Good Friday, the ninth of April, the first of
May, the twelfth of June, the fourth of July, the thirtieth of
November, the twenty-fifth and the thirtieth of December, and the
day designated by law for holding a general election.
Accordingly, on February 16, 1976, by authority of Article 5 of the same Code, the
Department of Labor (now Ministry of Labor) promulgated the rules and regulations
for the implementation of holidays with pay. The controversial section thereof
reads: têñ.£îhqwâ£
Sec. 2. Status of employees paid by the month. — Employees who
are uniformly paid by the month, irrespective of the number of
working days therein, with a salary of not less than the statutory or
established minimum wage shall be presumed to be paid for all
days in the month whether worked or not.
32
For this purpose, the monthly minimum wage shall not be less than
the statutory minimum wage multiplied by 365 days divided by
twelve" (italics supplied).
On April 23, 1976, Policy Instruction No. 9 was issued by the then Secretary of
Labor (now Minister) interpreting the above-quoted rule, pertinent portions of which
read: têñ.£îhqwâ£
xxx xxx xxx
The ten (10) paid legal holidays law, to start with, is intended to
benefit principally daily employees. In the case of monthly, only
those whose monthly salary did not yet include payment for the ten
(10) paid legal holidays are entitled to the benefit.
Under the rules implementing P.D. 850, this policy has been fully
clarified to eliminate controversies on the entitlement of monthly
paid employees, The new determining rule is this: If the monthly
paid employee is receiving not less than P240, the maximum
monthly minimum wage, and his monthly pay is uniform from
January to December, he is presumed to be already paid the ten
(10) paid legal holidays. However, if deductions are made from his
monthly salary on account of holidays in months where they occur,
then he is still entitled to the ten (10) paid legal holidays. ..."
(emphasis supplied).
Respondent bank, by reason of the ruling laid down by the aforecited rule
implementing Article 94 of the Labor Code and by Policy Instruction No. 9, stopped
the payment of holiday pay to an its employees.
On August 30, 1976, petitioner filed a motion for a writ of execution to enforce the
arbiter's decision of August 25, 1975, whereby the respondent bank was ordered to
pay its employees their daily wage for the unworked regular holidays.
On September 10, 1975, respondent bank filed an opposition to the motion for a writ
of execution alleging, among others, that: (a) its refusal to pay the corresponding
unworked holiday pay in accordance with the award of Labor Arbiter Ricarte T.
Soriano dated August 25, 1975, is based on and justified by Policy Instruction No. 9
which interpreted the rules implementing P. D. 850; and (b) that the said award is
already repealed by P.D. 850 which took effect on December 16, 1975, and by said
Policy Instruction No. 9 of the Department of Labor, considering that its monthly
paid employees are not receiving less than P240.00 and their monthly pay is uniform
from January to December, and that no deductions are made from the monthly
salaries of its employees on account of holidays in months where they occur (pp. 64-
65, NLRC rec.).
On October 18, 1976, Labor Arbiter Ricarte T. Soriano, instead of issuing a writ of
execution, issued an order enjoining the respondent bank to continue paying its
employees their regular holiday pay on the following grounds: (a) that the judgment
is already final and the findings which is found in the body of the decision as well as
the dispositive portion thereof is res judicata or is the law of the case between the
parties; and (b) that since the decision had been partially implemented by the
respondent bank, appeal from the said decision is no longer available (pp. 100-103,
rec.).
On November 17, 1976, respondent bank appealed from the above-cited order of
Labor Arbiter Soriano to the National Labor Relations Commission, reiterating
therein its contentions averred in its opposition to the motion for writ of execution.
Respondent bank further alleged for the first time that the questioned order is not
supported by evidence insofar as it finds that respondent bank discontinued payment
of holiday pay beginning January, 1976 (p. 84, NLRC rec.).
On June 20, 1978, the National Labor Relations Commission promulgated its
resolution en banc dismissing respondent bank's appeal, the dispositive portion of
which reads as follows: têñ.£îhqwâ£
In view of the foregoing, we hereby resolve to dismiss, as we
hereby dismiss, respondent's appeal; to set aside Labor Arbiter
Ricarte T. Soriano's order of 18 October 1976 and, as prayed for by
complainant, to order the issuance of the proper writ of execution
(p. 244, NLRC rec.).
Copies of the above resolution were served on the petitioner only on February 9,
1979 or almost eight. (8) months after it was promulgated, while copies were served
on the respondent bank on February 13, 1979.
On February 21, 1979, respondent bank filed with the Office of the Minister of Labor
a motion for reconsideration/appeal with urgent prayer to stay execution, alleging
therein the following: (a) that there is prima facie evidence of grave abuse of
discretion, amounting to lack of jurisdiction on the part of the National Labor
Relations Commission, in dismissing the respondent's appeal on pure technicalities
without passing upon the merits of the appeal and (b) that the resolution appealed
from is contrary to the law and jurisprudence (pp. 260-274, NLRC rec.).
On March 19, 1979, petitioner filed its opposition to the respondent bank's appeal
and alleged the following grounds: (a) that the office of the Minister of Labor has no
jurisdiction to entertain the instant appeal pursuant to the provisions of P. D. 1391;
(b) that the labor arbiter's decision being final, executory and unappealable,
execution is a matter of right for the petitioner; and (c) that the decision of the labor
arbiter dated August 25, 1975 is supported by the law and the evidence in the case (p.
364, NLRC rec.).
33
On July 30, 1979, petitioner filed a second motion for execution pending appeal,
praying that a writ of execution be issued by the National Labor Relations
Commission pending appeal of the case with the Office of the Minister of Labor.
Respondent bank filed its opposition thereto on August 8, 1979.
On August 13, 1979, the National Labor Relations Commission issued an order
which states: têñ.£îhqwâ£
The Chief, Research and Information Division of this Commission
is hereby directed to designate a Socio-Economic Analyst to
compute the holiday pay of the employees of the Insular Bank of
Asia and America from April 1976 to the present, in accordance
with the Decision of the Labor Arbiter dated August 25, 1975" (p.
80, rec.).
On November 10, 1979, the Office of the Minister of Labor, through Deputy
Minister Amado G. Inciong, issued an order, the dispositive portion of which
states: têñ.£îhqwâ£
ALL THE FOREGOING CONSIDERED, let the appealed
Resolution en banc of the National Labor Relations Commission
dated 20 June 1978 be, as it is hereby, set aside and a new
judgment promulgated dismissing the instant case for lack of merit
(p. 436, NLRC rec.).
Hence, this petition for certiorari charging public respondent Amado G. Inciong with
abuse of discretion amounting to lack or excess of jurisdiction.
The issue in this case is: whether or not the decision of a Labor Arbiter awarding
payment of regular holiday pay can still be set aside on appeal by the Deputy
Minister of Labor even though it has already become final and had been partially
executed, the finality of which was affirmed by the National Labor Relations
Commission sitting en banc, on the basis of an Implementing Rule and Policy
Instruction promulgated by the Ministry of Labor long after the said decision had
become final and executory.
WE find for the petitioner.
I
WE agree with the petitioner's contention that Section 2, Rule IV, Book III of the
implementing rules and Policy Instruction No. 9 issued by the then Secretary of
Labor are null and void since in the guise of clarifying the Labor Code's provisions
on holiday pay, they in effect amended them by enlarging the scope of their
exclusion (p. 1 1, rec.).
Article 94 of the Labor Code, as amended by P.D. 850, provides: têñ.£îhqwâ£
Art. 94. Right to holiday pay. — (a) Every worker shall be paid his
regular daily wage during regular holidays, except in retail and
service establishments regularly employing less than ten (10)
workers. ...
The coverage and scope of exclusion of the Labor Code's holiday pay provisions is
spelled out under Article 82 thereof which reads: têñ.£îhqwâ£
Art. 82. Coverage. — The provision of this Title shall apply to
employees in all establishments and undertakings, whether for
profit or not, but not to government employees, managerial
employees, field personnel members of the family of the employer
who are dependent on him for support domestic helpers, persons
in the personal service of another, and workers who are paid by
results as determined by the Secretary of Labor in appropriate
regulations.
... (emphasis supplied).
From the above-cited provisions, it is clear that monthly paid employees are not
excluded from the benefits of holiday pay. However, the implementing rules on
holiday pay promulgated by the then Secretary of Labor excludes monthly paid
employees from the said benefits by inserting, under Rule IV, Book Ill of the
implementing rules, Section 2, which provides that: "employees who are uniformly
paid by the month, irrespective of the number of working days therein, with a salary
of not less than the statutory or established minimum wage shall be presumed to be
paid for all days in the month whether worked or not. "
Public respondent maintains that "(T)he rules implementing P. D. 850 and Policy
Instruction No. 9 were issued to clarify the policy in the implementation of the ten
(10) paid legal holidays. As interpreted, 'unworked' legal holidays are deemed paid
insofar as monthly paid employees are concerned if (a) they are receiving not less
than the statutory minimum wage, (b) their monthly pay is uniform from January to
December, and (c) no deduction is made from their monthly salary on account of
holidays in months where they occur. As explained in Policy Instruction No, 9, 'The
ten (10) paid legal holidays law, to start with, is intended to benefit principally daily
paid employees. In case of monthly, only those whose monthly salary did not yet
include payment for the ten (10) paid legal holidays are entitled to the benefit' " (pp.
340-341, rec.). This contention is untenable.
34
It is elementary in the rules of statutory construction that when the language of the
law is clear and unequivocal the law must be taken to mean exactly what it says. In
the case at bar, the provisions of the Labor Code on the entitlement to the benefits of
holiday pay are clear and explicit - it provides for both the coverage of and exclusion
from the benefits. In Policy Instruction No. 9, the then Secretary of Labor went as far
as to categorically state that the benefit is principally intended for daily paid
employees, when the law clearly states that every worker shall be paid their regular
holiday pay. This is a flagrant violation of the mandatory directive of Article 4 of the
Labor Code, which states that "All doubts in the implementation and interpretation of
the provisions of this Code, including its implementing rules and regulations, shall
be resolved in favor of labor." Moreover, it shall always be presumed that the
legislature intended to enact a valid and permanent statute which would have the
most beneficial effect that its language permits (Orlosky vs. Haskell, 155 A. 112.)
Obviously, the Secretary (Minister) of Labor had exceeded his statutory authority
granted by Article 5 of the Labor Code authorizing him to promulgate the necessary
implementing rules and regulations.
Public respondent vehemently argues that the intent and spirit of the holiday pay law,
as expressed by the Secretary of Labor in the case of Chartered Bank Employees
Association v. The Chartered Bank (NLRC Case No. RB-1789-75, March 24, 1976),
is to correct the disadvantages inherent in the daily compensation system of
employment — holiday pay is primarily intended to benefit the daily paid workers
whose employment and income are circumscribed by the principle of "no work, no
pay." This argument may sound meritorious; but, until the provisions of the Labor
Code on holiday pay is amended by another law, monthly paid employees are
definitely included in the benefits of regular holiday pay. As earlier stated, the
presumption is always in favor of law, negatively put, the Labor Code is always
strictly construed against management.
While it is true that the contemporaneous construction placed upon a statute by
executive officers whose duty is to enforce it should be given great weight by the
courts, still if such construction is so erroneous, as in the instant case, the same must
be declared as null and void. It is the role of the Judiciary to refine and, when
necessary, correct constitutional (and/or statutory) interpretation, in the context of the
interactions of the three branches of the government, almost always in situations
where some agency of the State has engaged in action that stems ultimately from
some legitimate area of governmental power (The Supreme Court in Modern Role,
C. B. Swisher 1958, p. 36).
Thus. in the case of Philippine Apparel Workers Union vs. National Labor Relations
Commission (106 SCRA 444, July 31, 1981) where the Secretary of Labor enlarged
the scope of exemption from the coverage of a Presidential Decree granting increase
in emergency allowance, this Court ruled that: têñ.£îhqwâ£
... the Secretary of Labor has exceeded his authority when he
included paragraph (k) in Section 1 of the Rules implementing P.
D. 1 1 23.
xxx xxx xxx
Clearly, the inclusion of paragraph k contravenes the statutory
authority granted to the Secretary of Labor, and the same is
therefore void, as ruled by this Court in a long line of cases.
The recognition of the power of administrative officials to
promulgate rules in the administration of the statute,
necessarily limited to what is provided for in the
legislative enactment, may be found in the early case of
United States vs. Barrios decided in 1908. Then came in a
1914 decision, United States vs. Tupasi Molina (29 Phil.
119) delineation of the scope of such competence. Thus:
"Of course the regulations adopted under legislative
authority by a particular department must be in harmony
with the provisions of the law, and for the sole purpose of
carrying into effect its general provisions. By such
regulations, of course, the law itself cannot be extended.
So long, however, as the regulations relate solely to
carrying into effect the provisions of the law, they are
valid." In 1936, in People vs. Santos, this Court expressed
its disapproval of an administrative order that would
amount to an excess of the regulatory power vested in an
administrative official We reaffirmed such a doctrine in a
1951 decision, where we again made clear that where an
administrative order betrays inconsistency or repugnancy
to the provisions of the Act, 'the mandate of the Act must
prevail and must be followed. Justice Barrera, speaking
for the Court in Victorias Milling inc. vs. Social Security
Commission, citing Parker as well as Davis did tersely
sum up the matter thus: "A rule is binding on the Courts
so long as the procedure fixed for its promulgation is
followed and its scope is within the statutory authority
granted by the legislature, even if the courts are not in
agreement with the policy stated therein or its innate
wisdom. ... On the other hand, administrative
interpretation of the law is at best merely advisory, for it
is the courts that finally determine chat the law means."
"It cannot be otherwise as the Constitution limits the
authority of the President, in whom all executive power
35
resides, to take care that the laws be faithfully executed.
No lesser administrative executive office or agency then
can, contrary to the express language of the Constitution
assert for itself a more extensive prerogative. Necessarily,
it is bound to observe the constitutional mandate. There
must be strict compliance with the legislative enactment.
Its terms must be followed the statute requires adherence
to, not departure from its provisions. No deviation is
allowable. In the terse language of the present Chief
Justice, an administrative agency "cannot amend an act of
Congress." Respondents can be sustained, therefore, only
if it could be shown that the rules and regulations
promulgated by them were in accordance with what the
Veterans Bill of Rights provides" (Phil. Apparel Workers
Union vs. National Labor Relations
Commission, supra, 463, 464, citing Teozon vs. Members
of the Board of Administrators, PVA 33 SCRA 585; see
also Santos vs. Hon. Estenzo, et al, 109 Phil. 419; Hilado
vs. Collector of Internal Revenue, 100 Phil. 295; Sy Man
vs. Jacinto & Fabros, 93 Phil. 1093; Olsen & Co., Inc. vs.
Aldanese and Trinidad, 43 Phil. 259).
This ruling of the Court was recently reiterated in the case of American Wire &
Cable Workers Union (TUPAS) vs. The National Labor Relations Commission and
American Wire & Cable Co., Inc., G.R. No. 53337, promulgated on June 29, 1984.
In view of the foregoing, Section 2, Rule IV, Book III of the Rules to implement the
Labor Code and Policy instruction No. 9 issued by the then Secretary of Labor must
be declared null and void. Accordingly, public respondent Deputy Minister of Labor
Amado G. Inciong had no basis at all to deny the members of petitioner union their
regular holiday pay as directed by the Labor Code.
II
It is not disputed that the decision of Labor Arbiter Ricarte T. Soriano dated August
25, 1975, had already become final, and was, in fact, partially executed by the
respondent bank.
However, public respondent maintains that on the authority of De Luna vs. Kayanan,
61 SCRA 49, November 13, 1974, he can annul the final decision of Labor Arbiter
Soriano since the ensuing promulgation of the integrated implementing rules of the
Labor Code pursuant to P.D. 850 on February 16, 1976, and the issuance of Policy
Instruction No. 9 on April 23, 1976 by the then Secretary of Labor are facts and
circumstances that transpired subsequent to the promulgation of the decision of the
labor arbiter, which renders the execution of the said decision impossible and unjust
on the part of herein respondent bank (pp. 342-343, rec.).
This contention is untenable.
To start with, unlike the instant case, the case of De Luna relied upon by the public
respondent is not a labor case wherein the express mandate of the Constitution on the
protection to labor is applied. Thus Article 4 of the Labor Code provides that, "All
doubts in the implementation and interpretation of the provisions of this Code,
including its implementing rules and regulations, shall be resolved in favor of labor
and Article 1702 of the Civil Code provides that, " In case of doubt, all labor
legislation and all labor contracts shall be construed in favor of the safety and decent
living for the laborer.
Consequently, contrary to public respondent's allegations, it is patently unjust to
deprive the members of petitioner union of their vested right acquired by virtue of a
final judgment on the basis of a labor statute promulgated following the acquisition
of the "right".
On the question of whether or not a law or statute can annul or modify a judicial
order issued prior to its promulgation, this Court, through Associate Justice Claro M.
Recto, said:
xxx xxx xxx
We are decidedly of the opinion that they did not. Said order, being
unappealable, became final on the date of its issuance and the
parties who acquired rights thereunder cannot be deprived thereof
by a constitutional provision enacted or promulgated subsequent
thereto. Neither the Constitution nor the statutes, except penal
laws favorable to the accused, have retroactive effect in the sense
of annulling or modifying vested rights, or altering contractual
obligations" (China Ins. & Surety Co. vs. Judge of First Instance of
Manila, 63 Phil. 324, emphasis supplied).
In the case of In re: Cunanan, et al., 19 Phil. 585, March 18, 1954, this Court said:
"... when a court renders a decision or promulgates a resolution or order on the basis
of and in accordance with a certain law or rule then in force, the subsequent
amendment or even repeal of said law or rule may not affect the final decision, order,
or resolution already promulgated, in the sense of revoking or rendering it void and
of no effect." Thus, the amendatory rule (Rule IV, Book III of the Rules to
Implement the Labor Code) cannot be given retroactive effect as to modify final
judgments. Not even a law can validly annul final decisions (In re: Cunanan, et al.,
Ibid).
36
Furthermore, the facts of the case relied upon by the public respondent are not
analogous to that of the case at bar. The case of De Luna speaks of final and
executory judgment, while iii the instant case, the final judgment is partially
executed. just as the court is ousted of its jurisdiction to annul or modify a judgment
the moment it becomes final, the court also loses its jurisdiction to annul or modify a
writ of execution upon its service or execution; for, otherwise, we will have a
situation wherein a final and executed judgment can still be annulled or modified by
the court upon mere motion of a panty This would certainly result in endless
litigations thereby rendering inutile the rule of law.
Respondent bank counters with the argument that its partial compliance was
involuntary because it did so under pain of levy and execution of its assets (p. 138,
rec.). WE find no merit in this argument. Respondent bank clearly manifested its
voluntariness in complying with the decision of the labor arbiter by not appealing to
the National Labor Relations Commission as provided for under the Labor Code
under Article 223. A party who waives his right to appeal is deemed to have accepted
the judgment, adverse or not, as correct, especially if such party readily acquiesced in
the judgment by starting to execute said judgment even before a writ of execution
was issued, as in this case. Under these circumstances, to permit a party to appeal
from the said partially executed final judgment would make a mockery of the
doctrine of finality of judgments long enshrined in this jurisdiction.
Section I of Rule 39 of the Revised Rules of Court provides that "... execution shall
issue as a matter of right upon the expiration of the period to appeal ... or if no appeal
has been duly perfected." This rule applies to decisions or orders of labor arbiters
who are exercising quasi-judicial functions since "... the rule of execution of
judgments under the rules should govern all kinds of execution of judgment, unless it
is otherwise provided in other laws" Sagucio vs. Bulos 5 SCRA 803) and Article 223
of the Labor Code provides that "... decisions, awards, or orders of the Labor Arbiter
or compulsory arbitrators are final and executory unless appealed to the Commission
by any or both of the parties within ten (10) days from receipt of such awards, orders,
or decisions. ..."
Thus, under the aforecited rule, the lapse of the appeal period deprives the courts of
jurisdiction to alter the final judgment and the judgment becomes final ipso
jure (Vega vs. WCC, 89 SCRA 143, citing Cruz vs. WCC, 2 PHILAJUR 436, 440,
January 31, 1978; see also Soliven vs. WCC, 77 SCRA 621; Carrero vs. WCC and
Regala vs. WCC, decided jointly, 77 SCRA 297; Vitug vs. Republic, 75 SCRA 436;
Ramos vs. Republic, 69 SCRA 576).
In Galvez vs. Philippine Long Distance Telephone Co., 3 SCRA 422, 423, October
31, 1961, where the lower court modified a final order, this Court ruled thus: têñ.
£îhqwâ£
xxx xxx xxx
 The lower court was thus aware of the fact that it was thereby
altering or modifying its order of January 8, 1959. Regardless of
the excellence of the motive for acting as it did, we are constrained
to hold however, that the lower court had no authorities to make
said alteration or modification. ...
xxx xxx xxx
The equitable considerations that led the lower court to take the
action complained of cannot offset the dem ands of public policy
and public interest — which are also responsive to the tenets of
equity — requiring that an issues passed upon in decisions or final
orders that have become executory, be deemed conclusively
disposed of and definitely closed for, otherwise, there would be no
end to litigations, thus setting at naught the main role of courts of
justice, which is to assist in the enforcement of the rule of law and
the maintenance of peace and order, by settling justiciable
controversies with finality.
xxx xxx xxx
In the recent case of Gabaya vs. Mendoza, 113 SCRA 405, 406, March 30, 1982, this
Court said:
xxx xxx xxx
In Marasigan vs. Ronquillo (94 Phil. 237), it was categorically
stated that the rule is absolute that after a judgment becomes final
by the expiration of the period provided by the rules within which
it so becomes, no further amendment or correction can be made by
the court except for clerical errors or mistakes. And such final
judgment is conclusive not only as to every matter which was
offered and received to sustain or defeat the claim or demand but
as to any other admissible matter which must have been offered for
that purpose (L-7044, 96 Phil. 526). In the earlier case of Contreras
and Ginco vs. Felix and China Banking Corp., Inc. (44 O.G. 4306),
it was stated that the rule must be adhered to regardless of any
possible injustice in a particular case for (W)e have to subordinate
the equity of a particular situation to the over-mastering need of
certainty and immutability of judicial pronouncements
xxx xxx xxx
III
37
The despotic manner by which public respondent Amado G. Inciong divested the
members of the petitioner union of their rights acquired by virtue of a final judgment
is tantamount to a deprivation of property without due process of law Public
respondent completely ignored the rights of the petitioner union's members in
dismissing their complaint since he knew for a fact that the judgment of the labor
arbiter had long become final and was even partially executed by the respondent
bank.
A final judgment vests in the prevailing party a right recognized and protected by
law under the due process clause of the Constitution (China Ins. & Surety Co. vs.
Judge of First Instance of Manila, 63 Phil. 324). A final judgment is "a vested
interest which it is right and equitable that the government should recognize and
protect, and of which the individual could no. be deprived arbitrarily without
injustice" (Rookledge v. Garwood, 65 N.W. 2d 785, 791).
lt is by this guiding principle that the due process clause is interpreted. Thus, in the
pithy language of then Justice, later Chief Justice, Concepcion "... acts of Congress,
as well as those of the Executive, can deny due process only under pain of nullity,
and judicial proceedings suffering from the same flaw are subject to the same
sanction, any statutory provision to the contrary notwithstanding (Vda. de Cuaycong
vs. Vda. de Sengbengco 110 Phil. 118, emphasis supplied), And "(I)t has been
likewise established that a violation of a constitutional right divested the court of
jurisdiction; and as a consequence its judgment is null and void and confers no
rights" (Phil. Blooming Mills Employees Organization vs. Phil. Blooming Mills Co.,
Inc., 51 SCRA 211, June 5, 1973).
Tested by and pitted against this broad concept of the constitutional guarantee of due
process, the action of public respondent Amado G. Inciong is a clear example of
deprivation of property without due process of law and constituted grave abuse of
discretion, amounting to lack or excess of jurisdiction in issuing the order dated
November 10, 1979.
WHEREFORE, THE PETITION IS HEREBY GRANTED, THE ORDER OF
PUBLIC RESPONDENT IS SET ASIDE, AND THE DECISION OF LABOR
ARBITER RICARTE T. SORIANO DATED AUGUST 25, 1975, IS HEREBY
REINSTATED.
COSTS AGAINST PRIVATE RESPONDENT INSULAR BANK OF ASIA AND
AMERICA
SO ORDERED.
 THIRD DIVISION
G.R. No. 144664             March 15, 2004
ASIAN TRANSMISSION CORPORATION, petitioner,
vs.
The Hon. COURT OF APPEALS, Thirteenth Division, HON. FROILAN M.
BACUNGAN as Voluntary Arbitrator, KISHIN A. LALWANI, Union, Union
representative to the Panel Arbitrators; BISIG NG ASIAN TRANSMISSION
LABOR UNION (BATLU); HON. BIENVENIDO T. LAGUESMA in his
capacity as Secretary of Labor and Employment; and DIRECTOR CHITA G.
CILINDRO in her capacity as Director of Bureau of Working
Conditions, respondents.
DECISION
CARPIO-MORALES, J.:
Petitioner, Asian Transmission Corporation, seeks via petition for certiorari under
Rule 65 of the 1995 Rules of Civil Procedure the nullification of the March 28, 2000
Decision1 of the Court of Appeals denying its petition to annul 1) the March 11, 1993
"Explanatory Bulletin"2 of the Department of Labor and Employment (DOLE)
entitled "Workers’ Entitlement to Holiday Pay on April 9, 1993, Araw ng Kagitingan
and Good Friday", which bulletin the DOLE reproduced on January 23, 1998, 2) the
July 31, 1998 Decision3 of the Panel of Voluntary Arbitrators ruling that the said
explanatory bulletin applied as well to April 9, 1998, and 3) the September 18,
19984 Resolution of the Panel of Voluntary Arbitration denying its Motion for
Reconsideration.
The following facts, as found by the Court of Appeals, are undisputed:
The Department of Labor and Employment (DOLE), through Undersecretary
Cresenciano B. Trajano, issued an Explanatory Bulletin dated March 11, 1993
wherein it clarified, inter alia, that employees are entitled to 200% of their basic
wage on April 9, 1993, whether unworked, which[,] apart from being Good Friday
[and, therefore, a legal holiday], is also Araw ng Kagitingan [which is also a legal
holiday]. The bulletin reads:
"On the correct payment of holiday compensation on April 9, 1993 which apart from
being Good Friday is also Araw ng Kagitingan, i.e., two regular holidays falling on
the same day, this Department is of the view that the covered employees are entitled
to at least two hundred percent (200%) of their basic wage even if said holiday is
unworked. The first 100% represents the payment of holiday pay on April 9, 1993 as
38
Good Friday and the second 100% is the payment of holiday pay for the same date as
Araw ng Kagitingan.
Said bulletin was reproduced on January 23, 1998, when April 9, 1998 was both
Maundy Thursday and Araw ng Kagitingan x x x x
Despite the explanatory bulletin, petitioner [Asian Transmission Corporation] opted
to pay its daily paid employees only 100% of their basic pay on April 9, 1998.
Respondent Bisig ng Asian Transmission Labor Union (BATLU) protested.
In accordance with Step 6 of the grievance procedure of the Collective Bargaining
Agreement (CBA) existing between petitioner and BATLU, the controversy was
submitted for voluntary arbitration. x x x x On July 31, 1998, the Office of the
Voluntary Arbitrator rendered a decision directing petitioner to pay its covered
employees "200% and not just 100% of their regular daily wages for the unworked
April 9, 1998 which covers two regular holidays, namely, Araw ng Kagitignan and
Maundy Thursday." (Emphasis and underscoring supplied)
Subject of interpretation in the case at bar is Article 94 of the Labor Code which
reads:
ART. 94. Right to holiday pay. - (a) Every worker shall be paid his regular daily
wage during regular holidays, except in retail and service establishments regularly
employing less than ten (10) workers;
(b) The employer may require an employee to work on any holiday but such
employee shall be paid a compensation equivalent to twice his regular rate;
and
(c) As used in this Article, "holiday" includes: New Year’s Day, Maundy
Thursday, Good Friday, the ninth of April, the first of May, the twelfth of
June, the fourth of July, the thirtieth of November, the twenty-fifth and
thirtieth of December and the day designated by law for holding a general
election,
which was amended by Executive Order No. 203 issued on June 30, 1987, such that
the regular holidays are now:
1. New Year’s Day January 1
2. Maundy Thursday Movable Date
3. Good Friday Movable Date
 4. Araw ng Kagitingan April 9 (Bataan and Corregidor Day)
5. Labor Day May 1
6. Independence Day June 12
7. National Heroes Day Last Sunday of August
8. Bonifacio Day November 30
9. Christmas Day December 25
10. Rizal Day December 30
In deciding in favor of the Bisig ng Asian Transmission Labor Union (BATLU), the
Voluntary Arbitrator held that Article 94 of the Labor Code provides for holiday pay
for every regular holiday, the computation of which is determined by a legal formula
which is not changed by the fact that there are two holidays falling on one day, like
on April 9, 1998 when it was Araw ng Kagitingan and at the same time was Maundy
Thursday; and that that the law, as amended, enumerates ten regular holidays for
every year should not be interpreted as authorizing a reduction to nine the number of
paid regular holidays "just because April 9 (Araw ng Kagitingan) in certain years,
like 1993 and 1998, is also Holy Friday or Maundy Thursday."
In the assailed decision, the Court of Appeals upheld the findings of the Voluntary
Arbitrator, holding that the Collective Bargaining Agreement (CBA) between
petitioner and BATLU, the law governing the relations between them, clearly
recognizes their intent to consider Araw ng Kagitingan and Maundy Thursday, on
whatever date they may fall in any calendar year, as paid legal holidays during the
effectivity of the CBA and that "[t]here is no condition, qualification or exception for
any variance from the clear intent that all holidays shall be compensated." 5
The Court of Appeals further held that "in the absence of an explicit provision in law
which provides for [a] reduction of holiday pay if two holidays happen to fall on the
same day, any doubt in the interpretation and implementation of the Labor Code
provisions on holiday pay must be resolved in favor of labor."
By the present petition, petitioners raise the following issues:
I VI
WHETHER OR NOT THE RESPONDENT COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION IN ERRONEOUSLY INTERPRETING THE
TERMS OF THE COLLECTIVE BARGAINING AGREEMENT BETWEEN THE
39
PARTIES AND SUBSTITUTING ITS OWN JUDGMENT IN PLACE OF THE
AGREEMENTS MADE BY THE PARTIES THEMSELVES
II
WHETHER OR NOT THE RESPONDENT COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION IN HOLDING THAT ANY DOUBTS ABOUT
THE VALIDITY OF THE POLICIES ENUNCIATED IN THE EXPLANATORY
BULLETIN WAS LAID TO REST BY THE REISSUANCE OF THE SAID
EXPLANATORY BULLETIN
III
WHETHER OR NOT THE RESPONDENT COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION IN UPHOLDING THE VALIDITY OF THE
EXPLANATORY BULLETIN EVEN WHILE ADMITTING THAT THE SAID
BULLEITN WAS NOT AN EXAMPLE OF A JUDICIAL, QUASI-JUDICIAL, OR
ONE OF THE RULES AND REGULATIONS THAT [Department of Labor and
Employment] DOLE MAY PROMULGATE
IV
WHETHER OR NOT THE SECRETARY OF THE DEPARTMENT OF LABOR
AND EMPLOYMENT (DOLE) BY ISSUING EXPLANATORY BULLETIN
DATED MARCH 11, 1993, IN THE GUISE OF PROVIDING GUIDELINES ON
ART. 94 OF THE LABOR CODE, COMMITTED GRAVE ABUSE OF
DISCRETION, AS IT LEGISLATED AND INTERPRETED LEGAL
PROVISIONS IN SUCH A MANNER AS TO CREATE OBLIGATIONS WHERE
NONE ARE INTENDED BY THE LAW
V
WHETHER OR NOT THE RESPONDENT COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION IN SUSTAINING THE SECRETARY OF
THE DEPARTMENT OF LABOR IN REITERATING ITS EXPLANATORY
BULLETIN DATED MARCH 11, 1993 AND IN ORDERING THAT THE SAME
POLICY OBTAINED FOR APRIL 9, 1998 DESPITE THE RULINGS OF THE
SUPREME COURT TO THE CONTRARY
WHETHER OR NOT RESPONDENTS’ ACTS WILL DEPRIVE PETITIONER OF
PROPERTY WITHOUT DUE PROCESS BY THE "EXPLANATORY
BULLETIN" AS WELL AS EQUAL PROTECTION OF LAWS
The petition is devoid of merit.
At the outset, it bears noting that instead of assailing the Court of Appeals Decision
by petition for review on certiorari under Rule 45 of the 1997 Rules of Civil
Procedure, petitioner lodged the present petition for certiorari under Rule 65.
[S]ince the Court of Appeals had jurisdiction over the petition under Rule 65, any
alleged errors committed by it in the exercise of its jurisdiction would be errors of
judgment which are reviewable by timely appeal and not by a special civil action
of certiorari. If the aggrieved party fails to do so within the reglementary period, and
the decision accordingly becomes final and executory, he cannot avail himself of the
writ of certiorari, his predicament being the effect of his deliberate inaction.
The appeal from a final disposition of the Court of Appeals is a petition for review
under Rule 45 and not a special civil action under Rule 65 of the Rules of Court, now
Rule 45 and Rule 65, respectively, of the 1997 Rules of Civil Procedure. Rule 45 is
clear that the decisions, final orders or resolutions of the Court of Appeals in any
case, i.e., regardless of the nature of the action or proceeding involved, may be
appealed to this Court by filing a petition for review, which would be but a
continuation of the appellate process over the original case. Under Rule 45 the
reglementary period to appeal is fifteen (15) days from notice of judgment or denial
of motion for reconsideration.
xxx
For the writ of certiorari under Rule 65 of the Rules of Court to issue, a petitioner
must show that he has no plain, speedy and adequate remedy in the ordinary course
of law against its perceived grievance. A remedy is considered "plain, speedy and
adequate" if it will promptly relieve the petitioner from the injurious effects of the
judgment and the acts of the lower court or agency. In this case, appeal was not only
available but also a speedy and adequate remedy.6
The records of the case show that following petitioner’s receipt on August 18, 2000
of a copy of the August 10, 2000 Resolution of the Court of Appeals denying its
Motion for Reconsideration, it filed the present petition for certiorari on September
15, 2000, at which time the Court of Appeals decision had become final and
executory, the 15-day period to appeal it under Rule 45 having expired.
Technicality aside, this Court finds no ground to disturb the assailed decision.
Holiday pay is a legislated benefit enacted as part of the Constitutional imperative
that the State shall afford protection to labor. 7 Its purpose is not merely "to prevent
diminution of the monthly income of the workers on account of work interruptions.
In other words, although the worker is forced to take a rest, he earns what he should
earn, that is, his holiday pay."8 It is also intended to enable the worker to participate
40
in the national celebrations held during the days identified as with great historical
and cultural significance.
Independence Day (June 12), Araw ng Kagitingan (April 9), National Heroes Day
(last Sunday of August), Bonifacio Day (November 30) and Rizal Day (December
30) were declared national holidays to afford Filipinos with a recurring opportunity
to commemorate the heroism of the Filipino people, promote national identity, and
deepen the spirit of patriotism. Labor Day (May 1) is a day traditionally reserved to
celebrate the contributions of the working class to the development of the nation,
while the religious holidays designated in Executive Order No. 203 allow the worker
to celebrate his faith with his family.
As reflected above, Art. 94 of the Labor Code, as amended, affords a worker the
enjoyment of ten paid regular holidays.9 The provision is mandatory,10 regardless of
whether an employee is paid on a monthly or daily basis. 11 Unlike a bonus, which is
a management prerogative,12 holiday pay is a statutory benefit demandable under the
law. Since a worker is entitled to the enjoyment of ten paid regular holidays, the fact
that two holidays fall on the same date should not operate to reduce to nine the ten
holiday pay benefits a worker is entitled to receive.
It is elementary, under the rules of statutory construction, that when the language of
the law is clear and unequivocal, the law must be taken to mean exactly what it
says.13 In the case at bar, there is nothing in the law which provides or indicates that
the entitlement to ten days of holiday pay shall be reduced to nine when two holidays
fall on the same day.
Petitioner’s assertion that Wellington v. Trajano14 has "overruled" the DOLE March
11, 1993 Explanatory Bulletin does not lie. In Wellington, the issue was
whether monthly-paid employees are entitled to an additional day’s pay if a holiday
falls on a Sunday. This Court, in answering the issue in the negative, observed that in
fixing the monthly salary of its employees, Wellington took into account "every
working day of the year including the holidays specified by law and excluding only
Sunday." In the instant case, the issue is whether daily-paid employees are entitled to
be paid for two regular holidays which fall on the same day.15
In any event, Art. 4 of the Labor Code provides that all doubts in the implementation
and interpretation of its provisions, including its implementing rules and regulations,
shall be resolved in favor of labor. For the working man’s welfare should be the
primordial and paramount consideration.16
Moreover, Sec. 11, Rule IV, Book III of the Omnibus Rules to Implement the Labor
Code provides that "Nothing in the law or the rules shall justify an employer in
withdrawing or reducing any benefits, supplements or payments for unworked
regular holidays as provided in existing individual or collective agreement or
employer practice or policy."17
From the pertinent provisions of the CBA entered into by the parties, petitioner had WHEREFORE, the petition is hereby DISMISSED.
obligated itself to pay for the legal holidays as required by law. Thus, the 1997-1998
CBA incorporates the following provision: SO ORDERED.

ARTICLE XIV
PAID LEGAL HOLIDAYS

The following legal holidays shall be paid by the COMPANY as required by law:

1. New Year’s Day (January 1st)

2. Holy Thursday (moveable)

3. Good Friday (moveable)

4. Araw ng Kagitingan (April 9th)

5. Labor Day (May 1st)

6. Independence Day (June 12th)

7. Bonifacio Day [November 30]

8. Christmas Day (December 25th)

9. Rizal Day (December 30th)

10. General Election designated by law, if declared public non-working

holiday

11. National Heroes Day (Last Sunday of August)

Only an employee who works on the day immediately preceding or after a regular
holiday shall be entitled to the holiday pay.

A paid legal holiday occurring during the scheduled vacation leave will result in
holiday payment in addition to normal vacation pay but will not entitle the employee
to another vacation leave.

Under similar circumstances, the COMPANY will give a day’s wage for November
1st and December 31st whenever declared a holiday. When required to work on said
days, the employee will be paid according to Art. VI, Sec. 3B hereof.18

41

EN BANC
G.R. No. 79255 January 20, 1992
UNION OF FILIPRO EMPLOYEES (UFE), petitioner,
vs.
BENIGNO VIVAR, JR., NATIONAL LABOR RELATIONS COMMISSION
and NESTLÉ PHILIPPINES, INC. (formerly FILIPRO, INC.), respondents.
Jose C. Espinas for petitioner.
Siguion Reyna, Montecillo & Ongsiako for private respondent.
GUTIERREZ, JR., J.:
This labor dispute stems from the exclusion of sales personnel from the holiday pay
award and the change of the divisor in the computation of benefits from 251 to 261
days.
On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed
with the National Labor Relations Commission (NLRC) a petition for declaratory
relief seeking a ruling on its rights and obligations respecting claims of its monthly
paid employees for holiday pay in the light of the Court's decision in Chartered Bank
Employees Association v. Ople (138 SCRA 273 [1985]).
Both Filipro and the Union of Filipino Employees (UFE) agreed to submit the case
for voluntary arbitration and appointed respondent Benigno Vivar, Jr. as voluntary
arbitrator.
On January 2, 1980, Arbitrator Vivar rendered a decision directing Filipro to:
pay its monthly paid employees holiday pay pursuant to Article 94
of the Code, subject only to the exclusions and limitations
specified in Article 82 and such other legal restrictions as are
provided for in the Code. (Rollo,
p. 31)
Filipro filed a motion for clarification seeking (1) the limitation of the award to three
years, (2) the exclusion of salesmen, sales representatives, truck drivers,
merchandisers and medical representatives (hereinafter referred to as sales
42
personnel) from the award of the holiday pay, and (3) deduction from the holiday
pay award of overpayment for overtime, night differential, vacation and sick leave
benefits due to the use of 251 divisor. (Rollo, pp. 138-145)
Petitioner UFE answered that the award should be made effective from the date of
effectivity of the Labor Code, that their sales personnel are not field personnel and
are therefore entitled to holiday pay, and that the use of 251 as divisor is an
established employee benefit which cannot be diminished.
On January 14, 1986, the respondent arbitrator issued an order declaring that the
effectivity of the holiday pay award shall retroact to November 1, 1974, the date of
effectivity of the Labor Code. He adjudged, however, that the company's sales
personnel are field personnel and, as such, are not entitled to holiday pay. He
likewise ruled that with the grant of 10 days' holiday pay, the divisor should be
changed from 251 to 261 and ordered the reimbursement of overpayment for
overtime, night differential, vacation and sick leave pay due to the use of 251 days as
divisor.
Both Nestle and UFE filed their respective motions for partial reconsideration.
Respondent Arbitrator treated the two motions as appeals and forwarded the case to
the NLRC which issued a resolution dated May 25, 1987 remanding the case to the
respondent arbitrator on the ground that it has no jurisdiction to review decisions in
voluntary arbitration cases pursuant to Article 263 of the Labor Code as amended by
Section 10, Batas Pambansa Blg. 130 and as implemented by Section 5 of the rules
implementing B.P. Blg. 130.
However, in a letter dated July 6, 1987, the respondent arbitrator refused to take
cognizance of the case reasoning that he had no more jurisdiction to continue as
arbitrator because he had resigned from service effective May 1, 1986.
Hence, this petition.
The petitioner union raises the following issues:
1) Whether or not Nestle's sales personnel are entitled to holiday pay; and
2) Whether or not, concomitant with the award of holiday pay, the divisor should be
changed from 251 to 261 days and whether or not the previous use of 251 as divisor
resulted in overpayment for overtime, night differential, vacation and sick leave pay.
The petitioner insists that respondent's sales personnel are not field personnel under
Article 82 of the Labor Code. The respondent company controverts this assertion.
Under Article 82, field personnel are not entitled to holiday pay. Said article defines
field personnel as "non-agritultural employees who regularly perform their duties
away from the principal place of business or branch office of the employer and
whose actual hours of work in the field cannot be determined with reasonable
certainty."
The controversy centers on the interpretation of the clause "whose actual hours of
work in the field cannot be determined with reasonable certainty."
It is undisputed that these sales personnel start their field work at 8:00 a.m. after
having reported to the office and come back to the office at 4:00 p.m. or 4:30 p.m. if
they are Makati-based.
The petitioner maintains that the period between 8:00 a.m. to 4:00 or 4:30 p.m.
comprises the sales personnel's working hours which can be determined with
reasonable certainty.
The Court does not agree. The law requires that the actual hours of work in the field
be reasonably ascertained. The company has no way of determining whether or not
these sales personnel, even if they report to the office before 8:00 a.m. prior to field
work and come back at 4:30 p.m, really spend the hours in between in actual field
work.
We concur with the following disquisition by the respondent arbitrator:
The requirement for the salesmen and other similarly situated
employees to report for work at the office at 8:00 a.m. and return at
4:00 or 4:30 p.m. is not within the realm of work in the field as
defined in the Code but an exercise of purely management
prerogative of providing administrative control over such
personnel. This does not in any manner provide a reasonable level
of determination on the actual field work of the employees which
can be reasonably ascertained. The theoretical analysis that
salesmen and other similarly-situated workers regularly report for
work at 8:00 a.m. and return to their home station at 4:00 or 4:30
p.m., creating the assumption that their field work is supervised, is
surface projection. Actual field work begins after 8:00 a.m., when
the sales personnel follow their field itinerary, and ends
immediately before 4:00 or 4:30 p.m. when they report back to
their office. The period between 8:00 a.m. and 4:00 or 4:30 p.m.
comprises their hours of work in the field, the extent or scope and
result of which are subject to their individual capacity and industry
and which "cannot be determined with reasonable certainty." This
is the reason why effective supervision over field work of salesmen
and medical representatives, truck drivers and merchandisers is
43
practically a physical impossibility. Consequently, they are
excluded from the ten holidays with pay award. (Rollo, pp. 36-37)
Moreover, the requirement that "actual hours of work in the field cannot be
determined with reasonable certainty" must be read in conjunction with Rule IV,
Book III of the Implementing Rules which provides:
Rule IV Holidays with Pay
Sec. 1. Coverage — This rule shall apply to all employees except:
xxx xxx xxx
(e) Field personnel and other employees whose time and
performance is unsupervised by the employer . . . (Emphasis
supplied)
While contending that such rule added another element not found in the law (Rollo,
p. 13), the petitioner nevertheless attempted to show that its affected members are
not covered by the abovementioned rule. The petitioner asserts that the company's
sales personnel are strictly supervised as shown by the SOD (Supervisor of the Day)
schedule and the company circular dated March 15, 1984 (Annexes 2 and 3, Rollo,
pp. 53-55).
Contrary to the contention of the petitioner, the Court finds that the aforementioned
rule did not add another element to the Labor Code definition of field personnel. The
clause "whose time and performance is unsupervised by the employer" did not
amplify but merely interpreted and expounded the clause "whose actual hours of
work in the field cannot be determined with reasonable certainty." The former clause
is still within the scope and purview of Article 82 which defines field personnel.
Hence, in deciding whether or not an employee's actual working hours in the field
can be determined with reasonable certainty, query must be made as to whether or
not such employee's time and performance is constantly supervised by the employer.
The SOD schedule adverted to by the petitioner does not in the least signify that
these sales personnel's time and performance are supervised. The purpose of this
schedule is merely to ensure that the sales personnel are out of the office not later
than 8:00 a.m. and are back in the office not earlier than 4:00 p.m.
Likewise, the Court fails to see how the company can monitor the number of actual
hours spent in field work by an employee through the imposition of sanctions on
absenteeism contained in the company circular of March 15, 1984.
The petitioner claims that the fact that these sales personnel are given incentive
bonus every quarter based on their performance is proof that their actual hours of
work in the field can be determined with reasonable certainty.
The Court thinks otherwise.
The criteria for granting incentive bonus are: (1) attaining or exceeding sales volume
based on sales target; (2) good collection performance; (3) proper compliance with
good market hygiene; (4) good merchandising work; (5) minimal market returns; and
(6) proper truck maintenance. (Rollo, p. 190).
The above criteria indicate that these sales personnel are given incentive bonuses
precisely because of the difficulty in measuring their actual hours of field work.
These employees are evaluated by the result of their work and not by the actual hours
of field work which are hardly susceptible to determination.
In San Miguel Brewery, Inc. v. Democratic Labor Organization (8 SCRA 613
[1963]), the Court had occasion to discuss the nature of the job of a salesman. Citing
the case of Jewel Tea Co. v. Williams, C.C.A. Okla., 118 F. 2d 202, the Court
stated:
The reasons for excluding an outside salesman are fairly apparent.
Such a salesman, to a greater extent, works individually. There are
no restrictions respecting the time he shall work and he can earn as
much or as little, within the range of his ability, as his ambition
dictates. In lieu of overtime he ordinarily receives commissions as
extra compensation. He works away from his employer's place of
business, is not subject to the personal supervision of his employer,
and his employer has no way of knowing the number of hours he
works per day.
While in that case the issue was whether or not salesmen were entitled to overtime
pay, the same rationale for their exclusion as field personnel from holiday pay
benefits also applies.
The petitioner union also assails the respondent arbitrator's ruling that, concomitant
with the award of holiday pay, the divisor should be changed from 251 to 261 days
to include the additional 10 holidays and the employees should reimburse the
amounts overpaid by Filipro due to the use of 251 days' divisor.
Arbitrator Vivar's rationale for his decision is as follows:
. . . The new doctrinal policy established which ordered payment of
ten holidays certainly adds to or accelerates the basis of conversion
44
and computation by ten days. With the inclusion of ten holidays as
paid days, the divisor is no longer 251 but 261 or 262 if election
day is counted. This is indeed an extremely difficult legal question
of interpretation which accounts for what is claimed as falling
within the concept of "solutio indebti."
When the claim of the Union for payment of ten holidays was
granted, there was a consequent need to abandon that 251 divisor.
To maintain it would create an impossible situation where the
employees would benefit with additional ten days with pay but
would simultaneously enjoy higher benefits by discarding the same
ten days for purposes of computing overtime and night time
services and considering sick and vacation leave credits. Therefore,
reimbursement of such overpayment with the use of 251 as divisor
arises concomitant with the award of ten holidays with pay. (Rollo,
p. 34)
The divisor assumes an important role in determining whether or not holiday pay is
already included in the monthly paid employee's salary and in the computation of his
daily rate. This is the thrust of our pronouncement in Chartered Bank Employees
Association v. Ople (supra). In that case, We held:
It is argued that even without the presumption found in the rules
and in the policy instruction, the company practice indicates that
the monthly salaries of the employees are so computed as to
include the holiday pay provided by law. The petitioner contends
otherwise.
One strong argument in favor of the petitioner's stand is the fact
that the Chartered Bank, in computing overtime compensation for
its employees, employs a "divisor" of 251 days. The 251 working
days divisor is the result of subtracting all Saturdays, Sundays and
the ten (10) legal holidays from the total number of calendar days
in a year. If the employees are already paid for all non-working
days, the divisor should be 365 and not 251.
In the petitioner's case, its computation of daily ratio since September 1, 1980, is as
follows:
monthly rate x 12 months
———————————
251 days
Following the criterion laid down in the Chartered Bank case, the use of 251 days'
divisor by respondent Filipro indicates that holiday pay is not yet included in the
employee's salary, otherwise the divisor should have been 261.
It must be stressed that the daily rate, assuming there are no intervening salary
increases, is a constant figure for the purpose of computing overtime and night
differential pay and commutation of sick and vacation leave credits. Necessarily, the
daily rate should also be the same basis for computing the 10 unpaid holidays.
The respondent arbitrator's order to change the divisor from 251 to 261 days would
result in a lower daily rate which is violative of the prohibition on non-diminution of
benefits found in Article 100 of the Labor Code. To maintain the same daily rate if
the divisor is adjusted to 261 days, then the dividend, which represents the
employee's annual salary, should correspondingly be increased to incorporate the
holiday pay. To illustrate, if prior to the grant of holiday pay, the employee's annual
salary is P25,100, then dividing such figure by 251 days, his daily rate is P100.00
After the payment of 10 days' holiday pay, his annual salary already includes holiday
pay and totals P26,100 (P25,100 + 1,000). Dividing this by 261 days, the daily rate is
still P100.00. There is thus no merit in respondent Nestle's claim of overpayment of
overtime and night differential pay and sick and vacation leave benefits, the
computation of which are all based on the daily rate, since the daily rate is still the
same before and after the grant of holiday pay.
Respondent Nestle's invocation of solutio indebiti, or payment by mistake, due to its
use of 251 days as divisor must fail in light of the Labor Code mandate that "all
doubts in the implementation and interpretation of this Code, including its
implementing rules and regulations, shall be resolved in favor of labor." (Article 4).
Moreover, prior to September 1, 1980, when the company was on a 6-day working
schedule, the divisor used by the company was 303, indicating that the 10 holidays
were likewise not paid. When Filipro shifted to a 5-day working schebule on
September 1, 1980, it had the chance to rectify its error, if ever there was one but did
not do so. It is now too late to allege payment by mistake.
Nestle also questions the voluntary arbitrator's ruling that holiday pay should be
computed from November 1, 1974. This ruling was not questioned by the petitioner
union as obviously said decision was favorable to it. Technically, therefore,
respondent Nestle should have filed a separate petition raising the issue of effectivity
of the holiday pay award. This Court has ruled that an appellee who is not an
appellant may assign errors in his brief where his purpose is to maintain the
judgment on other grounds, but he cannot seek modification or reversal of the
judgment or affirmative relief unless he has also appealed. (Franco v. Intermediate
Appellate Court, 178 SCRA 331 [1989], citing La Campana Food Products, Inc. v.
Philippine Commercial and Industrial Bank, 142 SCRA 394 [1986]). Nevertheless,
in order to fully settle the issues so that the execution of the Court's decision in this
45
case may not be needlessly delayed by another petition, the Court resolved to take up
the matter of effectivity of the holiday pay award raised by Nestle.
Nestle insists that the reckoning period for the application of the holiday pay award
is 1985 when the Chartered Bank decision, promulgated on August 28, 1985,
became final and executory, and not from the date of effectivity of the Labor Code.
Although the Court does not entirely agree with Nestle, we find its claim
meritorious.
In Insular Bank of Asia and America Employees' Union (IBAAEU) v. Inciong, 132
SCRA 663 [1984], hereinafter referred to as the IBAA case, the Court declared that
Section 2, Rule IV, Book III of the implementing rules and Policy Instruction No. 9,
issued by the then Secretary of Labor on February 16, 1976 and April 23, 1976,
respectively, and which excluded monthly paid employees from holiday pay benefits,
are null and void. The Court therein reasoned that, in the guise of clarifying the
Labor Code's provisions on holiday pay, the aforementioned implementing rule and
policy instruction amended them by enlarging the scope of their exclusion.
The Chartered Bank case reiterated the above ruling and added the "divisor" test.
However, prior to their being declared null and void, the implementing rule and
policy instruction enjoyed the presumption of validity and hence, Nestle's non-
payment of the holiday benefit up to the promulgation of the IBAA case on October
23, 1984 was in compliance with these presumably valid rule and policy instruction.
In the case of De Agbayani v. Philippine National Bank, 38 SCRA 429 [1971], the
Court discussed the effect to be given to a legislative or executive act subsequently
declared invalid:
xxx xxx xxx
. . . It does not admit of doubt that prior to the declaration of nullity
such challenged legislative or executive act must have been in
force and had to be complied with. This is so as until after the
judiciary, in an appropriate case, declares its invalidity, it is
entitled to obedience and respect. Parties may have acted under it
and may have changed their positions. What could be more fitting
than that in a subsequent litigation regard be had to what has been
done while such legislative or executive act was in operation and
presumed to be valid in all respects. It is now accepted as a
doctrine that prior to its being nullified, its existence as a fact must
be reckoned with. This is merely to reflect awareness that precisely
because the judiciary is the government organ which has the final
say on whether or not a legislative or executive measure is valid, a
period of time may have elapsed before it can exercise the power
of judicial review that may lead to a declaration of nullity. It would
 be to deprive the law of its quality of fairness and justice then, if SO ORDERED.
there be no recognition of what had transpired prior to such
adjudication.

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

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

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

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

The Court thereby resolves that the grant of holiday pay be effective, not from the
date of promulgation of the Chartered Bank case nor from the date of effectivity of
the Labor Code, but from October 23, 1984, the date of promulgation of the IBAA
case.

WHEREFORE, the order of the voluntary arbitrator in hereby MODIFIED. The

divisor to be used in computing holiday pay shall be 251 days. The holiday pay as
above directed shall be computed from October 23, 1984. In all other respects, the
order of the respondent arbitrator is hereby AFFIRMED.

46