1.

THIRD DIVISION present, the rotation has changed and bottling operators are now
G.R. No. 198783 April 15, 2013 given a 30-minute break after one and one half (1 ½) hours of work.
ROYAL PLANT WORKERS UNION, Petitioner, In 1974, the bottling operators of then Bottling Line 2 were provided
vs. with chairs upon their request. In 1988, the bottling operators of then
COCA-COLA BOTTLERS PHILIPPINES, INC.-CEBU Bottling Line 1 followed suit and asked to be provided also with
PLANT, Respondent. chairs. Their request was likewise granted. Sometime in September
DECISION 2008, the chairs provided for the operators were removed pursuant
MENDOZA, J.: to a national directive of petitioner. This directive is in line with the "I
Assailed in this petition is the May 24, 2011 Decision1 and the Operate, I Maintain, I Clean" program of petitioner for bottling
September 2, 2011 Resolution2 of the Court of Appeals (CA) in CA- operators, wherein every bottling operator is given the responsibility
G.R. SP No. 05200, entitled Coca-Cola Bottlers Philippines, Inc.- to keep the machinery and equipment assigned to him clean and
Cebu Plant v. Royal Plant Workers Union, which nullified and set safe. The program reinforces the task of bottling operators to
aside the June 11, 2010 Decision3 of the Voluntary Arbitration Panel constantly move about in the performance of their duties and
(Arbitration Committee) in a case involving the removal of chairs in responsibilities.
the bottling plant of Coca-Cola Bottlers Philippines, Inc. (CCBPI). With this task of moving constantly to check on the machinery and
The Factual and Procedural equipment assigned to him, a bottling operator does not need a chair
Antecedents anymore, hence, petitioner’s directive to remove them. Furthermore,
The factual and procedural antecedents have been accurately CCBPI rationalized that the removal of the chairs is implemented so
recited in the May 24, 2011 CA decision as follows: that the bottling operators will avoid sleeping, thus, prevent injuries to
Petitioner Coca-Cola Bottlers Philippines, Inc. (CCBPI) is a domestic their persons. As bottling operators are working with machines which
corporation engaged in the manufacture, sale and distribution of consist of moving parts, it is imperative that they should not fall
softdrink products. It has several bottling plants all over the country, asleep as to do so would expose them to hazards and injuries. In
one of which is located in Cebu City. Under the employ of each addition, sleeping will hamper the efficient flow of operations as the
bottling plant are bottling operators. In the case of the plant in Cebu bottling operators would be unable to perform their duties
City, there are 20 bottling operators who work for its Bottling Line 1 competently.
while there are 12-14 bottling operators who man its Bottling Line 2. The bottling operators took issue with the removal of the chairs.
All of them are male and they are members of herein respondent Through the representation of herein respondent, they initiated the
Royal Plant Workers Union (ROPWU). grievance machinery of the Collective Bargaining Agreement (CBA)
The bottling operators work in two shifts. The first shift is from 8 a.m. in November 2008. Even after exhausting the remedies contained in
to 5 p.m. and the second shift is from 5 p.m. up to the time the grievance machinery, the parties were still at a deadlock with
production operations is finished. Thus, the second shift varies and petitioner still insisting on the removal of the chairs and respondent
may end beyond eight (8) hours. However, the bottling operators are still against such measure. As such, respondent sent a Notice to
compensated with overtime pay if the shift extends beyond eight (8) Arbitrate, dated 16 July 2009, to petitioner stating its position to
hours. For Bottling Line 1, 10 bottling operators work for each shift submit the issue on the removal of the chairs for arbitration.
while 6 to 7 bottling operators work for each shift for Bottling Line 2. Nevertheless, before submitting to arbitration the issue, both parties
Each shift has rotations of work time and break time. Prior to availed of the conciliation/mediation proceedings before the National
September 2008, the rotation is this: after two and a half (2 ½) hours Conciliation and Mediation Board (NCMB) Regional Branch No. VII.
of work, the bottling operators are given a 30-minute break and this They failed to arrive at an amicable settlement.
goes on until the shift ends. In September 2008 and up to the Thus, the process of arbitration continued and the parties appointed
the chairperson and members of the Arbitration Committee as
outlined in the CBA. Petitioner and respondent respectively minimum number of years before a benefit would constitute a
appointed as members to the Arbitration Committee Mr. Raul A. voluntary company practice which could not be unilaterally withdrawn
Kapuno, Jr. and Mr. Luis Ruiz while they both chose Atty. Alice by the employer.
Morada as chairperson thereof. They then executed a Submission The Arbitration Committee further stated that, although the removal
Agreement which was accepted by the Arbitration Committee on 01 of the chairs was done in good faith, CCBPI failed to present
October 2009. As contained in the Submission Agreement, the sole evidence regarding instances of sleeping while on duty. There were
issue for arbitration is whether the removal of chairs of the operators no specific details as to the number of incidents of sleeping on duty,
assigned at the production/manufacturing line while performing their who were involved, when these incidents happened, and what
duties and responsibilities is valid or not. actions were taken. There was no evidence either of any accident or
Both parties submitted their position papers and other subsequent injury in the many years that the bottling operators used chairs. To
pleadings in amplification of their respective stands. Petitioner the Arbitration Committee, it was puzzling why it took 34 and 20
argued that the removal of the chairs is valid as it is a legitimate years for CCBPI to be so solicitous of the bottling operators’ safety
exercise of management prerogative, it does not violate the Labor that it removed their chairs so that they would not fall asleep and
Code and it does not violate the CBA it contracted with respondent. injure themselves.
On the other hand, respondent espoused the contrary view. It Finally, the Arbitration Committee was of the view that, contrary to
contended that the bottling operators have been performing their CCBPI’s position, line efficiency was the result of many factors and it
assigned duties satisfactorily with the presence of the chairs; the could not be attributed solely to one such as the removal of the
removal of the chairs constitutes a violation of the Occupational chairs.
Health and Safety Standards, the policy of the State to assure the Not contented with the Arbitration Committee’s decision, CCBPI filed
right of workers to just and humane conditions of work as stated in a petition for review under Rule 43 before the CA.
Article 3 of the Labor Code and the Global Workplace Rights Policy. Ruling of the CA
Ruling of the Arbitration Committee On May 24, 2011, the CA rendered a contrasting decision which
On June 11, 2010, the Arbitration Committee rendered a decision in nullified and set aside the decision of the Arbitration Committee. The
favor of the Royal Plant Workers Union (the Union) and against dispositive portion of the CA decision reads:
CCBPI, the dispositive portion of which reads, as follows: WHEREFORE, premises considered, the petition is hereby
Wherefore, the undersigned rules in favor of ROPWU declaring that GRANTED and the Decision, dated 11 June 2010, of the Arbitration
the removal of the operators chairs is not valid. CCBPI is hereby Committee in AC389-VII-09-10-2009D is NULLIFIED and SET
ordered to restore the same for the use of the operators as before ASIDE. A new one is entered in its stead SUSTAINING the removal
their removal in 2008.4 of the chairs of the bottling operators from the
The Arbitration Committee ruled, among others, that the use of manufacturing/production line.5
chairs by the operators had been a company practice for 34 years in The CA held, among others, that the removal of the chairs from the
Bottling Line 2, from 1974 to 2008, and 20 years in Bottling Line 1, manufacturing/production lines by CCBPI is within the province of
from 1988 to 2008; that the use of the chairs by the operators management prerogatives; that it was part of its inherent right to
constituted a company practice favorable to the Union; that it ripened control and manage its enterprise effectively; and that since it was
into a benefit after it had been enjoyed by it; that any benefit being the employer’s discretion to constantly develop measures or means
enjoyed by the employees could not be reduced, diminished, to optimize the efficiency of its employees and to keep its
discontinued, or eliminated by the employer in accordance with machineries and equipment in the best of conditions, it was only
Article 100 of the Labor Code, which prohibited the diminution or appropriate that it should be given wide latitude in exercising it.
elimination by the employer of the employees’ benefit; and that The CA stated that CCBPI complied with the conditions of a valid
jurisprudence had not laid down any rule requiring a specific exercise of a management prerogative when it decided to remove
the chairs used by the bottling operators in the I. THAT WITH DUE RESPECT, THE COURT OF APPEALS
manufacturing/production lines. The removal of the chairs was solely COMMITTED REVERSIBLE ERROR IN HOLDING THAT A
motivated by the best intentions for both the Union and CCBPI, in PETITION FOR REVIEW UNDER RULE 43 OF THE RULES
line with the "I Operate, I Maintain, I Clean" program for bottling OF COURT IS THE PROPER REMEDY OF CHALLENGING
operators, wherein every bottling operator was given the BEFORE SAID COURT THE DECISION OF THE
responsibility to keep the machinery and equipment assigned to him VOLUNTARY ARBITRATOR OR PANEL OF VOLUNTARY
clean and safe. The program would reinforce the task of bottling ARBITRATORS UNDER THE LABOR CODE.
operators to constantly move about in the performance of their duties II. THAT WITH DUE RESPECT, THE COURT OF APPEALS
and responsibilities. Without the chairs, the bottling operators could GRAVELY ABUSED ITS DISCRETION IN NULLIFYING
efficiently supervise these machineries’ operations and maintenance. AND SETTING ASIDE THE DECISION OF THE PANEL OF
It would also be beneficial for them because the working time before VOLUNTARY ARBITRATORS WHICH DECLARED AS NOT
the break in each rotation for each shift was substantially reduced VALID THE REMOVAL OF THE CHAIRS OF THE
from two and a half hours (2 ½ ) to one and a half hours (1 ½) before OPERATORS IN THE MANUFACTURING AND/OR
the 30-minute break. This scheme was clearly advantageous to the PRODUCTION LINE.
bottling operators as the number of resting periods was increased. In advocacy of its positions, the Union argues that the proper remedy
CCBPI had the best intentions in removing the chairs because some in challenging the decision of the Arbitration Committee before the
bottling operators had the propensity to fall asleep while on the job CA is a petition for certiorari under Rule 65. The petition for review
and sleeping on the job ran the risk of injury exposure and removing under Rule 43 resorted to by CCBPI should have been dismissed for
them reduced the risk. being an improper remedy. The Union points out that the parties
The CA added that the decision of CCBPI to remove the chairs was agreed to submit the unresolved grievance involving the removal of
not done for the purpose of defeating or circumventing the rights of chairs to voluntary arbitration pursuant to the provisions of Article V
its employees under the special laws, the Collective Bargaining of the existing CBA. Hence, the assailed decision of the Arbitration
Agreement (CBA) or the general principles of justice and fair play. It Committee is a judgment or final order issued under the Labor Code
opined that the principles of justice and fair play were not violated of the Philippines. Section 2, Rule 43 of the 1997 Rules of Civil
because, when the chairs were removed, there was a commensurate Procedure, expressly states that the said rule does not cover cases
reduction of the working time for each rotation in each shift. The under the Labor Code of the Philippines. The judgments or final
provision of chairs for the bottling operators was never part of the orders of the Voluntary Arbitrator or Panel of Voluntary Arbitrators
CBAs contracted between the Union and CCBPI. The chairs were are governed by the provisions of Articles 260, 261, 262, 262-A, and
not provided as a benefit because such matter was dependent upon 262-B of the Labor Code of the Philippines.
the exigencies of the work of the bottling operators. As such, CCBPI On the substantive aspect, the Union argues that there is no
could withdraw this provision if it was not necessary in the exigencies connection between CCBPI’s "I Operate, I Maintain, I Clean"
of the work, if it was not contributing to the efficiency of the bottling program and the removal of the chairs because the implementation
operators or if it would expose them to some hazards. Lastly, the CA of the program was in 2006 and the removal of the chairs was done
explained that the provision of chairs to the bottling operators cannot in 2008. The 30-minute break is part of an operator’s working hours
be covered by Article 100 of the Labor Code on elimination or and does not make any difference. The frequency of the break
diminution of benefits because the employee’s benefits referred to period is not advantageous to the operators because it cannot
therein mainly involved monetary considerations or privileges compensate for the time they are made to stand throughout their
converted to their monetary equivalent. working time. The bottling operators get tired and exhausted after
Disgruntled with the adverse CA decision, the Union has come to their tour of duty even with chairs around. How much more if the
this Court praying for its reversal on the following GROUNDS chairs are removed?
The Union further claims that management prerogatives are not special laws, the CBA or the general principles of justice and fair
absolute but subject to certain limitations found in law, a collective play.
bargaining agreement, or general principles of fair play and justice. The Court’s Ruling
The operators have been performing their assigned duties and The decision in this case rests on the resolution of two basic
responsibilities satisfactorily for thirty (30) years using chairs. There questions. First, is an appeal to the CA via a petition for review under
is no record of poor performance because the operators are sitting Rule 43 of the 1997 Rules of Civil Procedure a proper remedy to
all the time. There is no single incident when the attention of an question the decision of the Arbitration Committee? Second, was the
operator was called for failure to carry out his assigned tasks. CCBPI removal of the bottling operators’ chairs from CCBPI’s
has not submitted any evidence to prove that the performance of the production/manufacturing lines a valid exercise of a management
operators was poor before the removal of the chairs and that it has prerogative?
improved after the chairs were removed. The presence of chairs for The Court sustains the ruling of the CA on both issues.
more than 30 years made the operators awake and alert as they Regarding the first issue, the Union insists that the CA erred in ruling
could relax from time to time. There are sanctions for those caught that the recourse taken by CCBPI in appealing the decision of the
sleeping while on duty. Before the removal of the chairs, the Arbitration Committee was proper. It argues that the proper remedy
efficiency of the operators was much better and there was no in challenging the decision of the Voluntary Arbitrator before the CA
recorded accident. After the removal of the chairs, the efficiency of is by filing a petition for certiorari under Rule 65 of the Rules of
the operators diminished considerably, resulting in the drastic decline Court, not a petition for review under Rule 43.
of line efficiency. CCBPI counters that the CA was correct in ruling that the recourse it
Finally, the Union asserts that the removal of the chairs constitutes took in appealing the decision of the Arbitration Committee to the CA
violation of the Occupational Health and Safety Standards, which via a petition for review under Rule 43 of the Rules of Court was
provide that every company shall keep and maintain its workplace proper and in conformity with the rules and prevailing jurisprudence.
free from hazards that are likely to cause physical harm to the A Petition for Review under Rule 43 is the proper remedy
workers or damage to property. The removal of the chairs constitutes CCBPI is correct. This procedural issue being debated upon is not
a violation of the State policy to assure the right of workers to a just novel. The Court has already ruled in a number of cases that a
and humane condition of work pursuant to Article 3 of the Labor decision or award of a voluntary arbitrator is appealable to the CA via
Code and of CCBPI’s Global Workplace Rights Policy. Hence, the a petition for review under Rule 43. The recent case of Samahan Ng
unilateral withdrawal, elimination or removal of the chairs, which Mga Manggagawa Sa Hyatt (SAMASAH-NUWHRAIN) v. Hon.
have been in existence for more than 30 years, constitutes a Voluntary Arbitrator Buenaventura C. Magsalin and Hotel Enterprises
violation of existing practice. of the Philippines6 reiterated the well-settled doctrine on this issue, to
The respondent’s position wit:
CCBPI reiterates the ruling of the CA that a petition for review under In the case of Samahan ng mga Manggagawa sa Hyatt-NUWHRAIN-
Rule 43 of the Rules of Court was the proper remedy to question the APL v. Bacungan,7 we repeated the well-settled rule that a decision
decision of the Arbitration Committee. It likewise echoes the ruling of or award of a voluntary arbitrator is appealable to the CA via petition
the CA that the removal of the chairs was a legitimate exercise of for review under Rule 43. We held that:
management prerogative; that it was done not to harm the bottling "The question on the proper recourse to assail a decision of a
operators but for the purpose of optimizing their efficiency and voluntary arbitrator has already been settled in Luzon Development
CCBPI’s machineries and equipment; and that the exercise of its Bank v. Association of Luzon Development Bank Employees, where
management prerogative was done in good faith and not for the the Court held that the decision or award of the voluntary arbitrator or
purpose of circumventing the rights of the employees under the panel of arbitrators should likewise be appealable to the Court of
Appeals, in line with the procedure outlined in Revised Administrative
Circular No. 1-95 (now embodied in Rule 43 of the 1997 Rules of SEC. 3. Where to appeal. - An appeal under this Rule may be taken
Civil Procedure), just like those of the quasi-judicial agencies, boards to the Court of Appeals within the period and in the manner therein
and commissions enumerated therein, and consistent with the provided, whether the appeal involves questions of fact, of law, or
original purpose to provide a uniform procedure for the appellate mixed questions of fact and law.
review of adjudications of all quasi-judicial entities. SEC. 4. Period of appeal. - The appeal shall be taken within fifteen
Subsequently, in Alcantara, Jr. v. Court of Appeals, and Nippon Paint (15) days from notice of the award, judgment, final order or
Employees Union-Olalia v. Court of Appeals, the Court reiterated the resolution, or from the date of its last publication, if publication is
aforequoted ruling. In Alcantara, the Court held that notwithstanding required by law for its effectivity, or of the denial of petitioner’s
Section 2 of Rule 43, the ruling in Luzon Development Bank still motion for new trial or reconsideration duly filed in accordance with
stands. The Court explained, thus: the governing law of the court or agency a quo. x x x. (Emphasis
‘The provisions may be new to the Rules of Court but it is far from supplied.)’
being a new law. Section 2, Rules 42 of the 1997 Rules of Civil Hence, upon receipt on May 26, 2003 of the Voluntary Arbitrator’s
Procedure, as presently worded, is nothing more but a reiteration of Resolution denying petitioner’s motion for reconsideration, petitioner
the exception to the exclusive appellate jurisdiction of the Court of should have filed with the CA, within the fifteen (15)-day
Appeals, as provided for in Section 9, Batas Pambansa Blg. 129, as reglementary period, a petition for review, not a petition for certiorari.
amended by Republic Act No. 7902: On the second issue, the Union basically claims that the CCBPI’s
(3) Exclusive appellate jurisdiction over all final judgments, decisions, decision to unilaterally remove the operators’ chairs from the
resolutions, orders or awards of Regional Trial Courts and quasi- production/manufacturing lines of its bottling plants is not valid
judicial agencies, instrumentalities, boards or commissions, including because it violates some fundamental labor policies. According to
the Securities and Exchange Commission, the Employees’ the Union, such removal constitutes a violation of the 1)
Compensation Commission and the Civil Service Commission, Occupational Health and Safety Standards which provide that every
except those falling within the appellate jurisdiction of the Supreme worker is entitled to be provided by the employer with appropriate
Court in accordance with the Constitution, the Labor Code of the seats, among others; 2) policy of the State to assure the right of
Philippines under Presidential Decree No. 442, as amended, the workers to a just and humane condition of work as provided for in
provisions of this Act and of subparagraph (1) of the third paragraph Article 3 of the Labor Code;8 3) Global Workplace Rights Policy of
and subparagraph (4) of the fourth paragraph of Section 17 of the CCBPI which provides for a safe and healthy workplace by
Judiciary Act of 1948.’ maintaining a productive workplace and by minimizing the risk of
The Court took into account this exception in Luzon Development accident, injury and exposure to health risks; and 4) diminution of
Bank but, nevertheless, held that the decisions of voluntary benefits provided in Article 100 of the Labor Code.9
arbitrators issued pursuant to the Labor Code do not come within its Opposing the Union’s argument, CCBPI mainly contends that the
ambit x x x." removal of the subject chairs is a valid exercise of management
Furthermore, Sections 1, 3 and 4, Rule 43 of the 1997 Rules of Civil prerogative. The management decision to remove the subject chairs
Procedure, as amended, provide: was made in good faith and did not intend to defeat or circumvent
"SECTION 1. Scope. - This Rule shall apply to appeals from the rights of the Union under the special laws, the CBA and the
judgments or final orders of the Court of Tax Appeals and from general principles of justice and fair play.
awards, judgments, final orders or resolutions of or authorized by Again, the Court agrees with CCBPI on the matter.
any quasi-judicial agency in the exercise of its quasi-judicial A Valid Exercise of
functions. Among these agencies are the x x x, and voluntary Management Prerogative
arbitrators authorized by law. The Court has held that management is free to regulate, according to
xxxx its own discretion and judgment, all aspects of employment,
including hiring, work assignments, working methods, time, place, There was no violation either of the Health, Safety and Social
and manner of work, processes to be followed, supervision of Welfare Benefit provisions under Book IV of the Labor Code of the
workers, working regulations, transfer of employees, work Philippines. As shown in the foregoing, the removal of the chairs was
supervision, lay-off of workers, and discipline, dismissal and recall of compensated by the reduction of the working hours and increase in
workers. The exercise of management prerogative, however, is not the rest period. The directive did not expose the bottling operators to
absolute as it must be exercised in good faith and with due regard to safety and health hazards.
the rights of labor.10 The Union should not complain too much about standing and moving
In the present controversy, it cannot be denied that CCBPI removed about for one and one-half (1 ½) hours because studies show that
the operators’ chairs pursuant to a national directive and in line with sitting in workplaces for a long time is hazardous to one’s health. The
its "I Operate, I Maintain, I Clean" program, launched to enable the report of VicHealth, Australia,12 disclosed that "prolonged workplace
Union to perform their duties and responsibilities more efficiently. sitting is an emerging public health and occupational health issue
The chairs were not removed indiscriminately. They were carefully with serious implications for the health of our working population.
studied with due regard to the welfare of the members of the Union. Importantly, prolonged sitting is a risk factor for poor health and early
The removal of the chairs was compensated by: a) a reduction of the death, even among those who meet, or exceed, national13 activity
operating hours of the bottling operators from a two-and-one-half (2 guidelines." In another report,14 it was written:
½)-hour rotation period to a one-and-a-half (1 ½) hour rotation Workers needing to spend long periods in a seated position on the
period; and b) an increase of the break period from 15 to 30 minutes job such as taxi drivers, call centre and office workers, are at risk for
between rotations. injury and a variety of adverse health effects.
Apparently, the decision to remove the chairs was done with good The most common injuries occur in the muscles, bones, tendons and
intentions as CCBPI wanted to avoid instances of operators sleeping ligaments, affecting the neck and lower back regions. Prolonged
on the job while in the performance of their duties and sitting:
responsibilities and because of the fact that the chairs were not ● reduces body movement making muscles more likely to pull,
necessary considering that the operators constantly move about cramp or strain when stretched suddenly, causes fatigue in the back
while working. In short, the removal of the chairs was designed to and neck muscles by slowing the blood supply and puts high tension
increase work efficiency. Hence, CCBPI’s exercise of its on the spine, especially in the low back or neck, and
management prerogative was made in good faith without doing any ● causes a steady compression on the spinal discs that hinders their
harm to the workers’ rights. nutrition and can contribute to their premature degeneration.
The fact that there is no proof of any operator sleeping on the job is Sedentary employees may also face a gradual deterioration in health
of no moment. There is no guarantee that such incident would never if they do not exercise or do not lead an otherwise physically active
happen as sitting on a chair is relaxing. Besides, the operators life. The most common health problems that these employees
constantly move about while doing their job. The ultimate purpose is experience are disorders in blood circulation and injuries affecting
to promote work efficiency. their ability to move. Deep Vein Thrombosis (DVT), where a clot
No Violation of Labor Laws forms in a large vein after prolonged sitting (eg after a long flight) has
The rights of the Union under any labor law were not violated. There also been shown to be a risk.
is no law that requires employers to provide chairs for bottling Workers who spend most of their working time seated may also
operators. The CA correctly ruled that the Labor Code, specifically experience other, less specific adverse health effects. Common
Article 13211 thereof, only requires employers to provide seats for effects include decreased fitness, reduced heart and lung efficiency,
women. No similar requirement is mandated for men or male and digestive problems. Recent research has identified too much
workers. It must be stressed that all concerned bottling operators in sitting as an important part of the physical activity and health
this case are men. equation, and suggests we should focus on the harm caused by daily
inactivity such as prolonged sitting. conditions of employment outside the CBA that have general
Associate professor David Dunstan leads a team at the Baker IDI in application to employees who are similarly situated in a Department
Melbourne which is specifically researching sitting and physical or in the Plant shall be implemented. [emphasis and underscoring
activity. He has found that people who spend long periods of time supplied]
seated (more than four hours per day) were at risk of: As can be gleaned from the aforecited provision, the CBA expressly
● higher blood levels of sugar and fats, provides that benefits and/or privileges, not expressly given therein
● larger waistlines, and but which are presently being granted by the company and enjoyed
● higher risk of metabolic syndrome by the employees, shall be considered as purely voluntary acts by
regardless of how much moderate to vigorous exercise they had. the management and that the continuance of such benefits and/or
In addition, people who interrupted their sitting time more often just privileges, no matter how long or how often, shall not be understood
by standing or with light activities such as housework, shopping, and as establishing an obligation on the company’s part. Since the matter
moving about the office had healthier blood sugar and fat levels, and of the chairs is not expressly stated in the CBA, it is understood that
smaller waistlines than those whose sitting time was not broken up. it was a purely voluntary act on the part of CCBPI and the long
Of course, in this case, if the chairs would be returned, no risks practice did not convert it into an obligation or a vested right in favor
would be involved because of the shorter period of working time. The of the Union.
study was cited just to show that there is a health risk in prolonged No Violation of the general principles of justice and fair play
sitting. The Court completely agrees with the CA ruling that the removal of
No Violation of the CBA the chairs did not violate the general principles of justice and fair play
The CBA15 between the Union and CCBPI contains no provision because the bottling operators’ working time was considerably
whatsoever requiring the management to provide chairs for the reduced from two and a half (2 ½) hours to just one and a half (1 ½)
operators in the production/manufacturing line while performing their hours and the break period, when they could sit down, was
duties and responsibilities. On the contrary, Section 2 of Article 1 of increased to 30 minutes between rotations. The bottling operators’
the CBA expressly provides as follows: new work schedule is certainly advantageous to them because it
Article I greatly increases their rest period and significantly decreases their
SCOPE working time. A break time of thirty (30) minutes after working for
SECTION 2. Scope of the Agreement. All the terms and conditions of only one and a half (1 ½) hours is a just and fair work schedule.
employment of employees and workers within the appropriate No Violation of Article 100 of the Labor Code
bargaining unit (as defined in Section 1 hereof) are embodied in this The operators’ chairs cannot be considered as one of the employee
Agreement and the same shall govern the relationship between the benefits covered in Article 10016 of the Labor Code. In the Court’s
COMPANY and such employees and/or workers. On the other hand, view, the term "benefits" mentioned in the non-diminution rule refers
all such benefits and/or privileges as are not expressly provided for to monetary benefits or privileges given to the employee with
in this Agreement but which are now being accorded, may in the monetary equivalents.
future be accorded, or might have previously been accorded, to the Such benefits or privileges form part of the employees’ wage, salary
employees and/or workers, shall be deemed as purely voluntary acts or compensation making them enforceable obligations.
on the part of the COMPANY in each case, and the continuance and This Court has already decided several cases regarding the non-
repetition thereof now or in the future, no matter how long or how diminution rule where the benefits or privileges involved in those
often, shall not be construed as establishing an obligation on the part cases mainly concern monetary considerations or privileges with
of the COMPANY. It is however understood that any benefits that are monetary equivalents. Some of these cases are: Eastern
agreed upon by and between the COMPANY and the UNION in the Telecommunication Phils. Inc. v. Eastern Telecoms Employees
Labor-Management Committee Meetings regarding the terms and Union,17 where the case involves the payment of 14th, 15th and 16th
month bonuses; Central Azucarera De Tarlac v. Central Azucarera 2. FIRST DIVISION
De Tarlac Labor Union-NLU,18 regarding the 13th month pay, [G.R. No. 154689. November 25, 2004]
legal/special holiday pay, night premium pay and vacation and sick UNICORN SAFETY GLASS, INC., LILY YULO and HILARIO
leaves; TSPIC Corp. v. TSPIC Employees Union, 19 regarding salary YULO, petitioners, vs. RODRIGO BASARTE, JAIMELITO
wage increases; and American Wire and Cable Daily Employees FLORES, TEODOLFO LOR, RONNIE DECIO, ELMER
Union vs. American Wire and Cable Company, Inc.,20 involving SULTORA and JOSELITO DECIO, respondents.
service awards with cash incentives, premium pay, Christmas party DECISION
with incidental benefits and promotional increase. YNARES-SANTIAGO, J.:
In this regard, the Court agrees with the CA when it resolved the This is a Petition for Review on Certiorari seeking to set aside the
matter and wrote: Decision[1] of the Court of Appeals dated October 18, 2001 and its
Let it be stressed that the aforequoted article speaks of non- subsequent Resolution dated August 7, 2002, which reversed the
diminution of supplements and other employee benefits. decisions of the Labor Arbiter and the National Labor Relations
Supplements arc privileges given to an employee which constitute as Commission (NLRC).
extra remuneration besides his or her basic ordinary earnings and Respondents were regular employees of petitioner Unicorn
wages. From this definition, We can only deduce that the other Safety Glass Incorporated, a company engaged in the business of
employee benefits spoken of by Article 100 pertain only to those glass manufacturing. Respondents normally worked six (6) times a
which are susceptible of monetary considerations. Indeed, this could week, from Monday to Saturday, and were paid on a weekly basis.
only be the most plausible conclusion because the cases tackling They were likewise officers of the organized union in petitioner
Article 100 involve mainly with monetary considerations or privileges company, owned and managed by the Spouses Lily and Hilario Yulo.
converted to their monetary equivalents. On March 2, 1998, Hilario Yulo, as general manager of Unicorn,
xxxx issued a Memorandum[2] informing respondents that effective April 13,
Without a doubt, equating the provision of chairs to the bottling 1998, their workdays shall be reduced due to economic
operators Ds something within the ambit of "benefits'' in the context considerations. Yulo cited several factors such as decrease in sales,
of Article 100 of the Labor Code is unduly stretching the coverage of increase in the cost of production, devaluation of the peso and
the law. The interpretations of Article 100 of the Labor Code do not increase in minimum wage, which contributed to the current economic
show even with the slightest hint that such provision of chairs for the state of the company. In a letter dated March 12, 1998, respondents
bottling operators may be sheltered under its mantle. 21 registered their protest to the proposed reduction of working days and
Jurisprudence recognizes the exercise of management prerogatives. expressed doubts on the reasons offered by the
Labor Jaws also discourage interference with an employer's company.[3]Respondents also surmised that the management was
judgment in the conduct of its business. For this reason, the Court merely getting back at them for forming a union especially since only
often declines to interfere in legitimate business decisions of the union officers were affected by the work reduction.
employers. The law must protect not only the welfare of the On April 6, 1998, Hilario Yulo issued another
employees, but also the right of the employers.22 Memorandum[4] announcing the implementation of a work rotation
WHEREFORE, the petition is DENIED. schedule to take effect from April 13, 1998 to April 30, 1998, which will
SO ORDERED. effectively reduce respondents workdays to merely three days a week.
JOSE CATRAL MENDOZA A copy of the planned rotation scheme was sent to the Department of
Associate Justice Labor and Employment. Respondents wrote another letter of protest
dated April 7, 1998[5] expressing their frustrations at the apparent lack
of willingness on the part of petitioner companys management to
address their concerns and objections. On the same day, respondents
met with the Spouses Yulo and inquired as to the reasons for the the report rotation adopted by respondents. From this
imposition of the reduced workweek. They were told that it was admission and statement of complainant, we feel that the
managements prerogative to do so.[6] charge of illegal dismissal they filed against respondents is
On April 13, 1998, instead of reporting for work, respondents filed misplaced. If complainants strongly opposed the rotation
a complaint against petitioner company with the National Labor adopted by respondents, they could have initiated an illegal
Relations Commission, docketed as NLRC Case No. NCR-00-04- rotation and not illegal dismissal case against respondents. As
03277-98, for constructive dismissal and unfair labor practice, i.e., good soldiers complainants could initiate this case while they
union busting, non-payment of five days service incentive leave pay are reporting for work based on the adopted work rotation and
and payment of moral and exemplary damages as well as attorneys let the Court decides whether or not this rotation is valid and
fees. Respondents prayed for reinstatement and payment of full legal. Certainly refusal to report for work is not a proper
backwages. remedy.[8]
Meanwhile, since respondents failed to report for work, The Labor Arbiter likewise dismissed the charge of unfair
petitioners sent each of them a telegram directing them to do so. On labor practice for lack of legal and factual basis. Nonetheless, the
April 18, 1998, respondents sent Yulo a letter informing him that, in Labor Arbiter ordered petitioner company to pay the respondents
view of the managements apparent indifference to their plight and claim for unpaid service incentive leave pay. The Labor Arbiter
blatant violation of their rights, a complaint was lodged against disposed of the case, thus:
petitioner company for constructive dismissal. Moreover, given the WHEREFORE, the instant case is hereby dismissed for lack
working environment they were subjected to, they decided not to of merit. Respondents however, are ordered to pay
report for work at all.[7] Petitioner company replied by asking them to complainants the total amount of P5,110.00 for unpaid
explain why they have not been reporting for work. However, service incentive leave pay as alluded in the above
respondents neither reported for work nor replied to petitioner computation.
companys telegrams. On the grounds of amicable settlement and subsequent
On January 26, 1999, Labor Arbiter Felipe Pati rendered withdrawals of their complaints, the cases of PAQUITO
judgment finding that respondents were not constructively terminated MANONGSONG and ELMER SULTORA are hereby
by petitioner company. Thus: dismissed with prejudice.
Complainants claim that they were constructively terminated. SO ORDERED.[9]
However, evidence extant do not support this contention. What The case was appealed to the NLRC. During the pendency of
we see on records are the telegrams, letters and memoranda the appeal, however, petitioner company filed a Motion to Dismiss
sent by respondents to complainants ordering the latter to alleging that respondents Basarte, Flores, Decio and Lor entered
report for work. Despite due receipt by the complainants of into amicable settlements and executed a Waiver, Release &
these communications, they simply ignored respondents plea. Quitclaim.[10] Respondents representative filed an Opposition
Complainants deliberate refusal to report for work is very much thereto alleging that the Waiver, Release & Quitclaim executed by
evident from the number of letters they received from respondents were entered into without his knowledge and not in
respondents which were all ignored. the presence of the Labor Arbiter; and that the amounts received
It is true that complainants have sent to respondent a joint by respondents were unconscionably inadequate.
letter-reply dated April 18, 1998 (Annexes 35, Respondents In a decision dated October 31, 2000, the NLRC sustained the
Position Paper). However, said joint letter reinforces the fact findings of the Labor Arbiter. On the issue of the amicable
that complainants were not terminated by respondents. In fact settlements, the NLRC stated:
complainants admitted in this joint letter-reply that they have
decided not to report for work because they did not agree with
 We are not convinced that the amicable settlement entered Basarte, Jaimelito Flores and Ronnie Decio, without loss of
into by complainants were involuntary and that the seniority rights and privileges, and to pay these three their
consideration thereof are unconscionable. full backwages from April 13, 1998 until their reinstatement.
It is to be stressed that the complainants were the ones who Or, to award them separation pay, in case reinstatement is
went to the office of respondent for settlement. They no longer feasible or possible. Private respondents are
acknowledged having signed the Waiver, Release and further sentenced to pay the aforenamed petitioners ten per
Quitclaim and brought the same before a Notary Public. cent (10%) of the total awards by way of attorneys fees.
Given these factual circumstances, it is hard to believe that Costs shall also be taxed against private respondents.
there was involuntariness on the part of the complainant SO ORDERED.[13]
when they settled their claims with respondent. In fact, Its Motion for Reconsideration having been denied, petitioners
almost a year have already lapsed since then. It is only now are before us on Petition for Review on Certiorari, raising the
that complainants are claiming that their settlement was following assignment of errors:
involuntary. I.
Anent complainants claim that the consideration of THE HONORABLE COURT OF APPEALS ERRED IN REVERSING
settlement is unconscionable suffice it to state that the THE RULING OF THE LABOR ARBITER A QUO WHICH WAS
amount granted by way of settlement to complainants AFFIRMED BY THE NLRC HOLDING THAT PRIVATE
Rodrigo Basarte, Jaimelito Flores, Joselito Decio including RESPONDENTS WERE NOT ILLEGALLY DISMISSED FROM
that of complainant Teodolfo Lor (Records, p. 179) are more THEIR EMPLOYMENT.
than the judgment award.[11] II.
The dispositive portion of the NLRCs decision states: THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT
PREMISES CONSIDERED, the appeal from the Decision THE RELEASE, WAIVER AND QUITCLAIMS EXECUTED BY
dated January 26, 1999 is hereby DISMISSED for lack of PRIVATE RESPONDENTS RODRIGO BASARTE AND JAIMELITO
merit and the Decision is AFFIRMED. FLORES NULL AND VOID.[14]
Further, the motions to dismiss filed by respondents with The petition lacks merit.
respect to complainants Rodrigo Basarte, Jaimelito Flores, Constructive dismissal or a constructive discharge has been
Joselito Decio and Teodolfo Lor are hereby GRANTED. defined as quitting because continued employment is rendered
Thus, insofar as said complainants are concerned their impossible, unreasonable or unlikely, as an offer involving a demotion
cases are dismissed with prejudice, as prayed for by in rank and a diminution in pay.[15]Constructive dismissal, however,
respondents. does not always take the form of a diminution. In several cases, we
SO ORDERED.[12] have ruled that an act of clear discrimination, insensibility, or disdain
Unrelenting, the respondents filed a petition for certiorari with by an employer may become so unbearable on the part of the
the Court of Appeals, which found respondents case partly employee so as to foreclose any choice on his part except to resign
meritorious. from such employment. This constitutes constructive dismissal. [16]
However, it declined to make a contrary finding on the charge In the case at bar, we agree with the Court of Appeals that
of unfair labor practice for lack of clear-cut and convincing petitioners bare assertions on the alleged reason for the rotation plan
evidence. The dispositive portion of the Court of Appeals decision as well as its failure to refute respondents contention that they were
is as follows: targeted due to their union activities, merit the reversal of the Labor
UPON THE VIEW WE TAKE OF THIS CASE, THUS, the Arbiters decision. It was incumbent upon petitioners to prove that the
petition is substantially GRANTED. Private respondents are rotation scheme was a genuine business necessity and not meant to
hereby ordered to reinstate to their former positions Rodrigo subdue the organized union. The reasons enumerated by petitioners
in their Memoranda dated March 2, 1998 were factors too general to favor of one over the other, but to guaranty that labor and
actually substantiate the need for the scheme. Petitioners cite the management stand on equal footing when bargaining in good faith
reduction in their electric consumption as proof of an economic slump. with each other.[19]
This may be true to an extent. But it does not, by itself, prove that the In the case at bar, the manner by which petitioners exercised their
rotation scheme was the most reasonable alternative to remedy the management prerogative appears to be an underhanded
companys problems. circumvention of the law. Petitioners were keen on summarily
The petitioners unbending stance on the implementation of the implementing the rotation plan, obviously singling out respondents
rotation scheme was an indication that the rotation plan was being who were all union officers. The managements apparent lack of
implemented for reasons other than business necessity. It appears interest to hear what the respondents had to say, created an uncertain
that respondents attempted on more than one occasion to have a situation where reporting for work was tantamount to an acquiescence
dialogue with petitioner Hilario Yulo to discuss the work reduction. in an unjust situation.
Good faith should have prompted Yulo to hear the side of the Petitioners argued that they exerted diligent and massive efforts
respondents, to come up with a scheme amenable to both parties or to make respondents return to work, highlighting the telegrams and
attempt to convince the employees concerned that there was no other memoranda sent to respondents.[20] It is well established that to
viable option. However, petitioners ignored the letters sent by constitute abandonment, two elements must concur: (1) the failure to
respondents, which compelled the latter to seek redress with the report for work or absence without valid or justifiable reason, and (2)
Labor Arbiter. a clear intention to sever the employer-employee relationship, with the
We are mindful that every business strives to keep afloat during second element as the more determinative factor and being
these times when prevailing economic situations turns such endeavor manifested by some overt acts. Abandoning ones job means the
into a near struggle. With as much latitude as our laws would allow, deliberate, unjustified refusal of the employee to resume his
the Court has always respected a companys exercise of its employment and the burden of proof is on the employer to show a
prerogative to devise means to improve its operations. Thus, we have clear and deliberate intent on the part of the employee to discontinue
held that management is free to regulate, according to its own employment.[21]
discretion and judgment, all aspects of employment, including hiring, However, petitioners charge of abandonment of work by
work assignments, working methods, time, place and manner of work, respondents does not hold water when taken in light of the complaint
processes to be followed, supervision of workers, working regulations, for constructive dismissal. We have held that a charge of
transfer of employees, work supervision, lay off of workers and abandonment is totally inconsistent with the filing of a complaint for
discipline, dismissal and recall of workers.[17] Further, management constructive dismissal and with reason.[22] Respondents cannot be
retains the prerogative, whenever exigencies of the service so require, said to have abandoned their jobs when precisely, the root cause of
to change the working hours of its employees.[18] their protest is their demand to maintain their regular work hours. What
However, the exercise of management prerogative is not is more, respondents even prayed for reinstatement and backwages.
absolute. By its very nature, encompassing as it could be, Clearly, these are incompatible with the proposition that respondents
management prerogative must be exercised in good faith and with due sought to abandon their work.
regard to the rights of laborverily, with the principles of fair play at heart Anent the issue of the validity of the waivers and quitclaims
and justice in mind. While we concede that management would best executed by some of the respondents, petitioners argue that while
know its operational needs, the exercise of management prerogative admittedly, the amounts indicated therein were not substantial, it does
cannot be utilized as an implement to circumvent our laws and not necessarily follow that these were executed under duress.
oppress employees. The prerogative accorded management cannot Moreover, the waivers and quitclaims were executed when the
defeat the very purpose for which our labor laws exist: to balance the complaint for illegal dismissal was already dismissed by the Labor
conflicting interests of labor and management, not to tilt the scale in
Arbiter. Thus, the waivers and quitclaims were executed under valid inclusive of allowances, and to the other benefits or their monetary
circumstances. equivalent computed from the time of his actual reinstatement.
We do not agree. To be sure, the law looks with disfavor upon However, if reinstatement is no longer possible, the employer has the
quitclaims and releases by employees who are inveigled or pressured alternative of paying the employee his separation pay in lieu of
into signing them by unscrupulous employers seeking to evade their reinstatement.
legal responsibilities. We have clarified the standards for determining WHEREFORE, the instant petition is DENIED, and the decision
the validity of quitclaim or waiver in the case of Periquet v. National of the Court of Appeals of October 18, 2001 in CA-G.R. SP No. 63577
Labor Relations Commission,[23] to wit: is AFFIRMED in toto. Costs against petitioners.
If the agreement was voluntarily entered into and represents a SO ORDERED.
reasonable settlement, it is binding on the parties and may not later
be disowned simply because of a change of mind. It is only where
there is clear proof that the waiver was wangled from an
unsuspecting or gullible person, or the terms of settlement are
unconscionable on its face, that the law will step in to annul the
questionable transaction. But 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.
In the instant case, while it is true that the complaint for illegal
dismissal filed by respondents with the Labor Arbiter has been
dismissed, their appeal before the NLRC was still pending. In fact,
petitioners even filed a Motion to Dismiss with the NLRC on the very
ground that the respondents, or at least most of them, have executed
said Waivers, Releases and Quitclaims. Petitioners cannot therefore
deny that it was in their interest to have respondents execute the
quitclaims.
Furthermore, the considerations received by respondents
Basarte and Flores were grossly inadequate considering the length of
time that they were employed in petitioner company. As correctly
pointed out by the Court of Appeals, Basarte worked for petitioner
company for 21 years, that is, from 1976 to 1998, while Flores worked
from 1991 to 1998. Basarte and Flores only received P10,000.00 and
P3,000.00, respectively. In contrast, Manongsong and Soltura, two
workers who opted to settle their respective cases earlier on, both
started in 1993 only, but were able to take home P16,434.00 each
after executing their waivers.
Article 279 of the Labor Code provides that an employee who is
unjustly dismissed from work is entitled to reinstatement without loss
of seniority rights and other privileges, and to his full backwages,
 3. SECOND DIVISION 2. The AUTHORITY [LRTA] shall pay METRO the
MANAGEMENT FEE as follows x x x [par. 5.01];
LIGHT RAIL TRANSIT AUTHORITY, G.R. No. 163782
Petitioner,vs PERFECTO H. VENUS 3. In rendering these services, METRO shall apply its best
DECISION skills and judgment, in attaining the objectives of the [Light
Rail Transit] System in accordance with accepted
PUNO, J.: professional standards. It shall exercise the required care,
Before us are the consolidated petitions of Light Rail Transit diligence and efficiency in the discharge of its duties and
Authority (LRTA) and Metro Transit Organization, Inc. (METRO), responsibilities and shall work for the best interest of the
seeking the reversal of the Decision of the Court of Appeals directing [Light Rail Transit] System and the AUTHORITY [LRTA]
them to reinstate private respondent workers to their former positions [par. 2.03];
without loss of seniority and other rights and privileges, and ordering
them to jointly and severally pay the latter their full back wages, 4. METRO shall be free to employ such employees and
benefits, and moral damages. The LRTA and METRO were also officers as it shall deem necessary in order to carry out the
ordered to jointly and severally pay attorneys fees equivalent to ten requirements of [the] Agreement. Such employees and
percent (10%) of the total money judgment. officers shall be the employees of METRO and not of the
AUTHORITY [LRTA]. METRO shall prepare a
Petitioner LRTA is a government-owned and controlled corporation compensation schedule and the corresponding salaries and
created by Executive Order No. 603, Series of 1980, as amended, to fringe benefits of [its] personnel in consultation with the
construct and maintain a light rail transit system and provide the AUTHORITY [LRTA] [par. 3.05];
commuting public with an efficient, economical, dependable and safe
transportation. Petitioner METRO, formerly Meralco Transit 5. METRO shall likewise hold the AUTHORITY [LRTA] free
Organization, Inc., was a qualified transportation corporation duly and harmless from any and all fines, penalties, losses and
organized in accordance with the provisions of the Corporation Code, liabilities and litigation expenses incurred or suffered on
registered with the Securities and Exchange Commission, and account of and by reason of death, injury, loss or damage
existing under Philippine laws. to passengers and third persons, including the employees
and representatives of the AUTHORITY [LRTA], except
It appears that petitioner LRTA constructed a light rail transit system where such death, injury, loss or damage is attributable to
from Monumento in Kalookan City to Baclaranin Paraaque, Metro a defect or deficiency in the design of the system or its
Manila. To provide the commuting public with an efficient and equipment [par. 3.06].
dependable light rail transit system, petitioner LRTA, after a bidding
process, entered into a ten (10)-year Agreement for the Management
and Operation of the Metro Manila Light Rail Transit System from June Pursuant to the above Agreement, petitioner METRO hired its own
8, 1984 until June 8, 1994 with petitioner METRO.[1] The Agreement employees, including herein private respondents. Petitioner METRO
provided, among others, that thereafter entered into a collective bargaining agreement with Pinag-
1. Effective on the COMMENCEMENT DATE, METRO isang Lakas ngManggagawa sa METRO, Inc. National Federation of
shall accept and take over from the AUTHORITY [LRTA] Labor, otherwise known as PIGLAS-METRO, INC. NFL KMU (Union),
the management, maintenance and operation of the the certified exclusive collective bargaining representative of the rank-
commissioned and tested portion of the [Light Rail Transit] and-file employees of petitioner METRO.
System x x x[par. 2.02];
Meanwhile, on June 9, 1989, petitioners LRTA and METRO executed Reynaldo B. Gener, and Bienvenido G. Arpilleda, were considered
a Deed of Sale where petitioner LRTA purchased the shares of stocks dismissed from employment.
in petitioner METRO.[2] However, petitioners LRTA and METRO
continued with their distinct and separate juridical In the meantime, on July 31, 2000, the Agreement for the
personalities. Hence, when the above ten (10)-year Agreement Management and Operation of the Metro Manila Light Rail Transit
expired on June 8, 1994, they renewed the same, initially on a yearly System between petitioners LRTA and METRO expired. The Board of
basis, and subsequently on a monthly basis. Directors of petitioner LRTA decided not to renew the contract with
petitioner METRO and directed the LRTA management instead to
On July 25, 2000, the Union filed a Notice of Strike with the National immediately take over the management and operation of the light rail
Conciliation and Mediation Board National Capital Region against transit system to avert the mass transportation crisis.
petitioner METRO on account of a deadlock in the collective
bargaining negotiation. On the same day, the Union struck. The On October 10, 2000, private respondents Venus, Jr., Santos, Jr., and
power supply switches in the different light rail transit substations were Roy filed a complaint for illegal dismissal before the National Labor
turned off. The members of the Union picketed the various Relations Commission (NLRC) and impleaded both petitioners LRTA
substations. They completely paralyzed the operations of the entire and METRO. Private respondents
light rail transit system. As the strike adversely affected the mobility of Ramos, Alfon, Santos, Ferrer, Alinas, Lofranco, Policarpio, Gener,
the commuting public, then Secretary of and Arpilleda follwed suit on December 1, 2000.
Labor Bienvenido E. Laguesma issued on that same day an
assumption of jurisdiction order[3] directing all the striking employees On October 1, 2001, Labor Arbiter Luis D. Flores rendered a
to return to work immediately upon receipt of this Order and for the consolidated judgment in favor of the private respondent workers
Company to accept them back under the same terms and conditions WHEREFORE, judgment is hereby rendered in favor of
of employment prevailing prior to the strike.[4] the complainants and against the respondents, as
follows:
In their memorandum,[5] Department of Labor and Employment
Sheriffs Feliciano R. Orihuela, Jr., and Romeo P. Lemi reported to 1. Declaring that the complainants were illegally
Sec. Laguesma that they tried to personally serve the Order of dismissed from employment and ordering their
assumption of jurisdiction to the Union through its officials and reinstatement to their former positions without loss of
members on July 26, 2000, but the latter refused to receive the seniority and other rights and privileges.
same. The sheriffs thus posted the Order in the different
stations/terminals of the light rail transit system. Further, the Order of 2. Ordering respondents Metro Transit Organization, Inc.
assumption of jurisdiction was published on the July 27, 2000 issues and Light Rail Transit Authority to jointly and severally pay
of the Philippine Daily Inquirer[6] and the Philippine Star.[7] the complainants their other benefits and full backwages,
which as of June 30, 2001 are as follows:
Despite the issuance, posting, and publication of the 1. Perfecto H. Venus, Jr. P247,724.36
assumption of jurisdiction and return to work order, the Union officers 2. Bienvenido P. Santos, Jr. 247,724.36
and members, including herein private respondent workers, failed to 3. Rafael C. Roy 247,724.36
return to work. Thus, effective July 27, 2000, private respondents, 4. Nancy [C.] Ramos 254,282.62
Perfecto Venus, Jr., Bienvenido P. Santos, Jr., Rafael C. Roy, Nancy 5. Salvador A. Alfon 257,764.62
C. Ramos, Salvador A. Alfon, Noel R. Santos, Manuel A. Ferrer, 6. Noel R. Santos 221,897.58
Salvador G. Alinas, Ramon D. Lofranco, Amador H. Policarpio, 7. Manuel A. Ferrer 250,534.78
8. Salvador G. [Alinas] 253,454.88 On a petition for certiorari however, the Court of Appeals reversed the
9. Ramon D. Lofranco 253,642.18 NLRC and reinstated the Decision rendered by the Labor
10. Amador H. Policarpio 256,609.22 Arbiter. Public respondent appellate court declared the workers
11. Reynaldo B. Gener 255,094.56 dismissal as illegal, pierced the veil of separate corporate personality
TOTAL P2,746,453.52 and held the LRTA and METRO as jointly liable for back wages.

3. Ordering respondents Metro Transit Organization, Inc. Hence, these twin petitions for review on certiorari of the decision of
and Light Rail Transit Authority to jointly and severally pay public respondent appellate court filed by LRTA and METRO which
each of the complainants the amount of P50,000.00 as this Court eventually consolidated.
moral damages.
In the main, petitioner LRTA argues that it has no employer-employee
4. Ordering respondents Metro Transit Organization, Inc. relationship with private respondent workers as they were hired by
and Light Rail Transit Authority to jointly and severally pay petitioner METRO alone pursuant to its ten (10)-year Agreement for
the complainants attorneys fees equivalent to ten percent the Management and Operation of the Metro Manila Light Rail Transit
(10%) of the total money judgment. System with petitioner METRO. Private respondent workers
recognized that their employer was not petitioner LRTA when their
SO ORDERED. certified exclusive collective bargaining representative, the Pinag-
isang Lakas ng Manggagawa sa METRO, Inc. National Federation of
Labor, otherwise known as PIGLAS-METRO, INC. NFL KMU, entered
The complaint filed by Bienvenido G. Arpilleda, although initially into a collective bargaining agreement with petitioner
consolidated with the main case, was eventually dropped for his failure METRO. Piercing the corporate veil of METRO was unwarranted, as
to appear and submit any document and position paper.[9] there was no competent and convincing evidence of any wrongful,
fraudulent or unlawful act on the part of METRO, and, more so, on the
On May 29, 2002, on appeal, the NLRC found that the striking workers part of LRTA.
failed to heed the return to work order and reversed and set aside the
decision of the labor arbiter. The suit against LRTA was dismissed Petitioner LRTA further contends that it is a government-owned and
since LRTA is a government-owned and controlled corporation controlled corporation with an original charter, Executive Order No.
created by virtue of Executive Order No. 603 with an original 603, Series of 1980, as amended, and thus under the exclusive
charter[10] and it ha[d] no participation whatsoever with the termination jurisdiction only of the Civil Service Commission, not the NLRC.
of complainants employment.[11] In fine, the cases against the LRTA
and METRO were dismissed, respectively, for lack of jurisdiction and Private respondent workers, however, submit that petitioner METRO
for lack of merit. was not only fully-owned by petitioner LRTA, but all aspects of its
operations and administration were also strictly controlled, conducted
On December 3, 2002, the NLRC denied the workers Motion for and directed by petitioner LRTA. And since petitioner METRO is a
Reconsideration [t]here being no showing that the Commission mere adjunct, business conduit, and alter ego of petitioner LRTA, their
committed, (and that) the Motion for Reconsideration was based on, respective corporate veils must be pierced to satisfy the money claims
palpable or patent errors, and the fact that (the) said motion is not of the illegally dismissed private respondent employees.
under oath.
We agree with petitioner LRTA. Section 2 (1), Article IX B, 1987
Constitution, expressly provides that [t]he civil service embraces all
branches, subdivisions, instrumentalities, and agencies of the respondent workers cannot have the best of two worlds, e.g., be
Government, including government-owned or controlled corporations considered government employees of petitioner LRTA, yet allowed to
with original charters. Corporations with original charters are those strike as private employees under our labor laws. Department of
which have been created by special law and not through the general Justice Opinion No. 108, Series of 1999, issued by then Secretary of
corporation law. Thus, in Philippine National Oil Company Energy Justice Serafin R. Cuevas on whether or not employees of petitioner
Development Corporation v. Hon. Leogrado, we held that under METRO could go on strike is persuasive
the present state of the law, the test in determining whether a We believe that METRO employees are not covered by
government-owned or controlled corporation is subject to the Civil the prohibition against strikes applicable to employees
Service Law is the manner of its creation such that government embraced in the Civil Service. It is not disputed, but in fact
corporations created by special charter are subject to its provisions conceded, that METRO employees are not covered by
while those incorporated under the general Corporation Law are the Civil Service. This being so, METRO employees are
not within its coverage.[12] There should be no dispute then that not covered by the Civil Service law, rules and regulations
employment in petitioner LRTA should be governed only by civil but are covered by the Labor Code and, therefore, the
service rules, and not the Labor Code and beyond the reach of the rights and prerogatives granted to private
Department of Labor and Employment, since petitioner LRTA is a employees thereunder, including the right to strike, are
government-owned and controlled corporation with an original charter, available to them.
Executive Order No. 603, Series of 1980, as amended.
Moreover, as noted by Secretary Benjamin E. Diokno, of
In contrast, petitioner METRO is covered by the Labor Code despite the Department of Budget and Management, in his letter
its later acquisition by petitioner LRTA. In Lumanta v. National Labor dated February 22, 1999, the employees of METRO are
Relations Commission,[13] this Court ruled that labor law claims not entitled to the government amelioration assistance
against government-owned and controlled corporations without authorized by the President pursuant to Administrative
original charter fall within the jurisdiction of the Department of Labor Order No. 37 for government employees, because the
and Employment and not the Civil Service Commission. Petitioner employees of METRO are not government employees
METRO was originally organized under the Corporation Code, and since Metro, Inc. could not be considered as GOCC as
only became a government-owned and controlled corporation after it defined under Section 3 (b) of E.O. 518 x x x x[14]
was acquired by petitioner LRTA. Even then, petitioner METRO has
no original charter, hence, it is the Department of Labor and Indeed, there was never an intention to consider the
Employment, and not the Civil Service Commission, which has employees of petitioner METRO as government employees of
jurisdiction over disputes arising from the employment of its petitioner LRTA as well neither from the beginning, nor until the
workers. Consequently, the terms and conditions of such employment end. Otherwise, they could have been easily converted from being
are governed by the Labor Code and not by the Civil Service Rules employees in the private sector and absorbed as government
and Regulations. employees covered by the civil service when petitioner LRTA acquired
petitioner METRO in 1989. The stubborn fact is that they remained
We therefore hold that the employees of petitioner METRO cannot be private employees with rights and prerogatives granted to them under
considered as employees of petitioner LRTA. The employees hired by the Labor Code, including the right to strike, which they exercised and
METRO are covered by the Labor Code and are under the jurisdiction from which the instant dispute arose.
of the Department of Labor and Employment, whereas the employees
of petitioner LRTA, a government-owned and controlled corporation We likewise hold that it is inappropriate to pierce the corporate veil of
with original charter, are covered by civil service rules. Herein private petitioner METRO. In Del Rosario v. National Labor Relations
Commission, we ruled that [u]nder the law a corporation is bestowed On this point, the Department of Justice Opinion No. 108,
juridical personality, separate and distinct from its stockholders. But Series of 1999, issued by then Secretary of Justice Serafin R. Cuevas
when the juridical personality of the corporation is used to defeat is once again apropos:
public convenience, justify wrong, protect fraud or defend crime, the Anent the issue of piercing the corporate veil, it was
corporation shall be considered as a mere association of persons, and held in Concept Builders, Inc. v. NLRC (G.R. No. 108734,
its responsible officers and/or stockholders shall be held individually May 29, 1996, 257 SCRA 149, 159) that the test in
liable. For the same reasons, a corporation shall be liable for the determining the applicability of the doctrine of piercing the veil
obligations of a stockholder, or a corporation and its successor-in- of corporate fiction is as follows:
interest shall be considered as one and the liability of the former shall
attach to the latter. But for the separate juridical personality of a 1. Control, not mere majority or complete stock
corporation to be disregarded, the wrongdoing must be clearly and control, but complete domination, not only of finances
convincingly established. It cannot be presumed.[15] In Del Rosario, but of policy and business practice in respect to the
we also held that the substantial identity of the incorporators of the two transaction attacked so that the corporate entity as to
corporations does not necessarily imply fraud.[16] this transaction had at the time no separate mind, will
or existence of its own;
In the instant case, petitioner METRO, 2. Such control must have been used by the
formerly Meralco Transit Organization, Inc., was originally owned by defendant to commit fraud or wrong, to perpetuate the
the Manila Electric Company and registered with the Securities and violation of a statutory or other positive legal duty, or
Exchange Commission more than a decade before the labor dishonest and unjust act in contravention of plaintiffs
dispute. It then entered into a ten-year agreement with petitioner legal rights; and
LRTA in 1984. And, even if petitioner LRTA eventually purchased 3. The aforesaid control and breach of duty must
METRO in 1989, both parties maintained their separate and distinct proximately cause the injury or unjust loss
juridical personality and allowed the agreement to proceed. In 1990, complained of.
this Court, in Light Rail Transit Authority v. Commission on Audit,
even upheld the validity of the said agreement.[17] Consequently, the The absence of any one of these elements prevents
agreement was extended beyond its ten-year period. In piercing the corporate veil. In applying the
1995, METROs separate juridical identity was again recognized when instrumentality or alter ego doctrine, the courts are
it entered into a collective bargaining agreement with the workers concerned with reality and not form, with how the
union. All these years, METROs distinct corporate personality corporation operated and the individual defendants
continued quiescently, separate and apart from the juridical relationship to that operation.
personality of petitioner LRTA. Here, the records do not show that control was used to
commit a fraud or wrong. In fact, it appears that piercing the
The labor dispute only arose in 2000, after a deadlock corporate veil for the purpose of delivery of public service,
occurred during the collective bargaining between petitioner METRO would lead to a confusing situation since the outcome would
and the workers union. This alone is not a justification to pierce the be that Metro will be treated as a mere alter ego of LRTA, not
corporate veil of petitioner METRO and make petitioner LRTA liable having a separate corporate personality from LRTA, when
to private respondent workers. There are no badges of fraud or any dealing with the issue of strike, and a separate juridical entity
wrongdoing to pierce the corporate veil of petitioner METRO. not covered by the Civil Service when it comes to other
matters. Under the Constitution, a government corporation is
either one with original charter or one without original charter, served and posted by the sheriffs of the Department of Labor and
but never both.[18] Employment the following day, on July 26, 2000. Further, the said
order of assumption of jurisdiction was duly published on July 27,
In sum, petitioner LRTA cannot be held liable to the employees of 2000, in the Philippine Daily Inquirer and the Philippine Star. On
petitioner METRO. the same day also, on July 27, 2000, private respondent workers were
dismissed. Neither could they be considered as having abandoned
With regard the issue of illegal dismissal, petitioner METRO their work. If petitioner METRO did not dismiss the strikers right away,
maintains that private respondent workers were not illegally dismissed and instead accepted them back to work, the management agreement
but should be deemed to have abandoned their jobs after defying the between petitioners LRTA and METRO could still have been extended
assumption of jurisdiction and return-to-work order issued by the and the workers would still have had work to return to.
Labor Secretary. Private respondent workers, on the other hand,
submit that they could not immediately return to work as the light rail IN VIEW WHEREOF, the Decision of public respondent Court of
transit system had ceased its operations. Appeals is AFFIRMED insofar as it holds Metro Transit Organization,
Inc. liable for the illegal dismissal of private respondents and orders it
We find for the private respondent to pay them their benefits and full back wages and moral
workers. In Batangas Laguna Tayabas Bus Co. v. National Labor damages. Further, Metro Transit Organization, Inc. is ordered to pay
Relations Commission,[19] we said that the five-day period for the attorneys fees equivalent to ten percent (10%) of the total money
strikers to obey the Order of the Secretary of Justice and return to judgment. The petition of the Light Rail Transit Authority is GRANTED,
work was not sufficient as some of them may have left Metro Manila and the complaint filed against it for illegal dismissal is DISMISSED
and did not have enough time to return during the period given by for lack of merit.
petitioner, which was only five
days.[20] In Batangas Laguna TayabasBus Co.,[21] we further held SO ORDERED.
The contention of the petitioner that the private respondents
abandoned their position is also not acceptable. An employee 4. SECOND DIVISION G.R. No. 186070 April 11, 2011
who forthwith takes steps to protest his lay-off cannot by any
logic be said to have abandoned his work. CLIENTLOGIC PHILPPINES, INC. (now known as
SITEL), JOSEPH VELASQUEZ, IRENE ROA, and
For abandonment to constitute a valid cause for termination RODNEY SPIRES,
of employment, there must be a deliberate, unjustified refusal Petitioners, versus BENEDICT CASTRO,
of the employee to resume his employment. This refusal must Respondent.
be clearly established. As we stressed in a recent case, mere
absence is not sufficient; it must be accompanied by overt DECISION
acts unerringly pointing to the fact that the employee simply
does not want to work anymore. NACHURA, J.:
In the instant case, private respondent workers could not have
defied the return-to-work order of the Secretary of Labor simply This is a Petition for Review on Certiorari under Rule 45 of the Rules
because they were dismissed immediately, even before they could of Court, assailing the September 1, 2008 Decision[1] and the January
obey the said order. The records show that the assumption of 7, 2009 Resolution[2] of the Court of Appeals (CA), affirming with
jurisdiction and return-to-work order was issued by Secretary of modification the November 29, 2007 resolution[3] of the National Labor
Labor Bienvenido E. Laguesma on July 25, 2000. The said order was Relations Commission (NLRC), which held that respondent Benedict
Castro was not illegally dismissed. The CA, however, awarded denied on the ground that medical records of employees are highly
respondents money claims, viz.: confidential and can only be disclosed in cases involving health
issues, and not to be used to build any disciplinary case against them.
WHEREFORE, premises considered, the instant Petition
is PARTLY GRANTED. The Resolutions dated 29 November On October 11, 2006, respondent received a notice requiring
2007 and 23 January 2008 of the National Labor Relations him to explain why he should not be penalized for: (1) violating Green
Commission (Third Division) in NLRC CN. RAB-CAR-02- Dot Companys Policy and Procedure for Direct Deposit Bank Info
0091-07 LAC NO. 08-002207- Request when he accessed a customers online account and then
07 are AFFIRMED with MODIFICATION in that the monetary gave the latters routing and reference numbers for direct deposit; and
awards of Executive Labor Arbiter Vito C. Bose in his Decision (2) gravely abusing his discretion when he requested for the medical
dated 29 June 2007, as computed in Annex A records of his team members. Respondent did not deny the infractions
thereof, ONLY for holiday premiums of Php 16,913.35; imputed against him. He, however, justified his actuations by
service incentive leave pay Php8,456.65; overtime pay of Php explaining that the customer begged him to access the account
578,753.10; and rest day pay of Php 26,384.80 which because she did not have a computer or an internet access and that
(petitioners) shall jointly and solidarily pay to petitioner, are he merely requested for a patient tracker, not medical records.
hereby REINSTATED. No pronouncement as to costs.
In November 2006, a poster showing SITELs organizational chart was
SO ORDERED.[4] posted on the companys bulletin board, but respondents name and
picture were conspicuously missing, and the name and photo of
The second assailed issuance of the CA denied petitioners another employee appeared in the position which respondent was
motion for reconsideration. supposedly occupying.

The facts: On January 22, 2007, SITEL posted a notice of vacancy for
respondents position, and on February 12, 2007, he received a Notice
Respondent was employed by petitioner ClientLogic Philippines, Inc. of Termination. These events prompted him to file a complaint for
(now known and shall hereafter be referred to as SITEL) on February illegal dismissal; non-payment of overtime pay, rest day pay, holiday
14, 2005 as a call center agent for its Bell South Account. After six (6) pay, service incentive leave pay; full backwages; damages; and
months, he was promoted to the Mentor position, and thereafter to the attorneys fees before the Labor Arbiter (LA) against herein petitioners
Coach position. A Coach is a team supervisor who is in charge of SITEL and its officers, Joseph Velasquez (Velasquez), Irene Roa
dealing with customer complaints which cannot be resolved by call (Roa), and Rodney Spires (Spires).[5]
center agents. In June 2006, he was transferred to the Dot Green
Account. In their position paper,[6] petitioners averred that respondent
was dismissed on account of valid and justifiable causes. He
During respondents stint at the Dot Green Account, respondent committed serious misconduct which breached the trust and
noticed that some of the call center agents under him would often confidence reposed in him by the company. He was duly furnished the
make excuses to leave their work stations. Their most common twin notices required by the Labor Code. Further, he is not entitled to
excuse was that they would visit the companys medical clinic. To verify overtime pay, rest day pay, night shift differential, holiday pay, and
that they were not using the clinic as an alibi to cut their work hours, service incentive leave pay because he was a supervisor, hence, a
respondent sent an e-mail to the clinics personnel requesting for the member of the managerial staff.
details of the agents alleged medical consultation. His request was
In a decision dated June 29, 2007,[7] the LA ruled in favor of dated January 7, 2009.[11] From the said denial, only petitioners sought
respondent by declaring him illegally dismissed and ordering recourse with this Court through the petition at bar. Respondents
petitioners to pay his full backwages and, in lieu of reinstatement, his failure to partially appeal the CAs Decision finding him not illegally
separation pay. The LA further awarded respondents money claims dismissed has now rendered the same final and executory; hence, the
upon finding that he was not occupying a managerial position. The instant petition shall traverse only the issue on money claims.
decretal portion of the decision reads:
Petitioners argue in the main[12] that, as a team supervisor, respondent
WHEREFORE, all premises duly considered, the (petitioners) was a member of the managerial staff; hence, he is not entitled to
are hereby found guilty of illegally dismissing (respondent). As overtime pay, rest day pay, holiday pay, and service incentive leave
such, (petitioners) shall be jointly and solidarily liable to pay pay.
(respondent) his full backwages from the date of his dismissal
to the finality of this decision, computed as of today at One We deny the petition.
Hundred Thirty Eight Thousand Seven Hundred Fifty Nine
Pesos and 80/100 (P138,759.80) plus, Seven Hundred The petition hinges on the question of whether the duties and
Sixty Three Thousand Two Hundred Forty Eight Pesos responsibilities performed by respondent qualify him as a member of
and 67/100 (P763,248.67) representing his separation pay at petitioners managerial staff. This is clearly a question of fact, the
one month pay for every year of service, holiday pay and determination of which entails an evaluation of the evidence on record.
service incentive leave pay for the three years prior to the filing
of this case, overtime pay for six (6) hours daily, rest day and The alleged errors of the CA lengthily enumerated in the petition[13] are
ten percent (10%) as attorneys fees. essentially factual in nature and, therefore, outside the ambit of a
petition for review on certiorari under Rule 45 of the Rules of Civil
All other claims are hereby dismissed for lack of evidence. Procedure. The Court does not try facts since such statutory duty is
devolved upon the labor tribunals. It is not for this Court to weigh and
The computation of the foregoing monetary claims is hereto calibrate pieces of evidence otherwise adequately passed upon by the
attached and made an integral part hereof as Annex A. labor tribunals especially when affirmed by the appellate court.[14]

SO ORDERED Petitioners claim exception to the foregoing rule and assert that the
factual findings of the LA and the NLRC were conflicting. This is not
Aggrieved, petitioners appealed to the NLRC, which, in its November correct. The labor tribunals decisions were at odds only with respect
29, 2007 resolution,[9] reversed and set aside the decision of the LA to the issue of illegal dismissal. Anent the money claims issue, it
by dismissing the complaint for lack of merit on the ground that cannot be said that their rulings were contradictory because the
respondents employment was terminated for a just cause. The NLRC NLRC, disappointingly, did not make any finding thereon and it
failed to discuss the money claims. erroneously construed that the resolution of the money claims was
intertwined with the determination of the legality of respondents
On September 1, 2008, the CA affirmed the NLRCs finding that there dismissal. Nonetheless, the CA has already rectified such lapse when
was no illegal dismissal. Anent the money claims, however, the CA it made a definitive review of the LAs factual findings on respondents
concurred with the LAs ruling.[10] money claims. Agreeing with the LA, the CA held:

Petitioners and respondent respectively moved for partial Article 82 of the Labor Code states that the provisions of the
reconsideration, but their motions were denied in the CA Resolution Labor Code on working conditions and rest periods shall not
apply to managerial employees. Generally, managerial change of status of other employees are given particular
employees are not entitled to overtime pay for services weight.
rendered in excess of eight hours a day.
They are considered as officers or members of a managerial
Article 212 (m) of the Labor Code defines a managerial staff if they perform the following duties and responsibilities:
employee as one who is vested with powers or prerogatives
to lay down and execute management policies and/or to hire, 1) The primary duty consists of the performance of work
transfer, suspend, lay-off, recall, discharge, assign or directly related to management of policies of their employer;
discipline employees, or to effectively recommend such
managerial actions. 2) Customarily and regularly exercise discretion and
independent judgment;
In his Position Paper, (respondent) states that he worked from
8:00 p.m. to 10:00 a.m. or 4 p.m. to 12:00 p.m. of the following 3) (i) Regularly and directly assist a proprietor or a managerial
day; he was also required to work during his restdays and employee whose primary duty consists of management of the
during holidays but he was not paid; he was also not paid establishment in which he is employed or subdivision thereof;
overtime pay; night shift differentials, and service incentive or (ii) execute under general supervision work along
leave. He was employed as call center agent on 14 February specialized or technical lines requiring special training,
2005, then promoted as Mentor in August 2005, and again experience, or knowledge; or (iii) execute, under general
promoted to Coach position in September 2005, which was supervision, special assignment and tasks xxx.
the position he had when he was terminated. A coach is a
team supervisor who is in charge of dealing with customer (Respondents) duties do not fall under any of the categories
complaints which could not be dealt with by call center agents, enumerated above. His work is not directly related to
and if a call center agent could not meet the needs of a management policies. Even the circumstances shown by the
customer, he passes the customers call to the coach. Clearly, instant case reveal that (respondent) does not regularly
(respondent) is not a managerial employee as defined by law. exercise discretion and independent judgment. (Petitioners)
Thus, he is entitled to his money claims. submitted a list of the responsibilities of HR
As correctly found by Executive Labor Arbiter Bose: Manager/Supervisor and Division Manager/Department
Manager/Supervisors but these do not pertain to (respondent)
Employees are considered occupying managerial positions if who does not have any of the said positions. He was just a
they meet all of the following conditions, namely: team Supervisor and not (an) HR or Department
Supervisor.[15]
1) Their primary duty consists of management of the
establishment in which they are employed or of a department We find no reversible error in the above ruling. The test of
or subdivision thereof; supervisory or managerial status depends on whether a
2) They customarily and regularly direct the work of two or person possesses authority to act in the interest of his
more employees therein; employer and whether such authority is not merely routinary
3) They have the authority to hire or fire other employees of or clerical in nature, but requires the use of independent
lower rank; or their suggestions and recommendations as to judgment.[16] The position held by respondent and its
the hiring and firing and as to the promotion or any other concomitant duties failed to hurdle this test.
As a coach or team supervisor, respondents main duty was to deal As correctly observed by the CA and the LA, these duties
with customer complaints which could not be handled or solved by call clearly pertained to Division Managers/Department
center agents. If the members of his team could not meet the needs Managers/ Supervisors, which respondent was not, as he was
of a customer, they passed the customers call to respondent. merely a team supervisor. Petitioners themselves described
respondent as the superior of a call center agent; he heads
This job description does not indicate that respondent can exercise and guides a specific number of agents, who form a team.[18]
the powers and prerogatives equivalent to managerial actions which From the foregoing, respondent is thus entitled to his claims
require the customary use of independent judgment. There is no for holiday pay, service incentive leave pay, overtime pay and rest
showing that he was actually conferred or was actually exercising the day pay, pursuant to Book Three of the Labor Code, specifically Article
following duties attributable to a member of the managerial staff, viz.: 82,[19] in relation to Articles 87,[20] 93,[21] and 95[22] thereof.

1) The primary duty consists of the performance of work WHEREFORE, premises considered, the Petition is
directly related to management of policies of their employer; hereby DENIED. The September 1, 2008 Decision and the January 7,
2) Customarily and regularly exercise discretion and 2009 Resolution of the Court of Appeals are AFFIRMED.
independent judgment;
3) (i) Regularly and directly assist a proprietor or a managerial SO ORDERED.
employee whose primary duty consists of management of the
establishment in which he is employed or subdivision thereof;
or (ii) execute under general supervision work along
specialized or technical lines requiring special training,
experience, or knowledge; or (iii) execute, under general
supervision, special assignment and tasks; and
4) Who do not devote more than 20 percent of their hours
worked in a workweek to activities which are not directly and
closely related to the performance of the work described in
paragraphs (1), (2), and (3) above.[17]

According to petitioners, respondent also performed the following

duties, as shown in the companys Statement of Policy on Discipline:

a. Know and understand in full the Policy on Discipline

including their underlying reasons.
b. Implement strictly and consistently the Policy on Discipline.
c. Ensure that the said Policy on Discipline is communicated
to and understood by all employees.
d. Monitor compliance by employees with the said Policy.
e. Advise HR Manager on the state of discipline in their
respective departments; problems, if any, and recommend
solution(s) and corrective action(s).
 5. FIRST DIVISION (Wiltschek). The appointment of Wiltschek as the Acting General
M+W ZANDER PHILIPPINES, INC. and ROLF WILTSCHEK, Manager was announced in a meeting held on January 31, 2002. On
Petitioners, versus -TRINIDAD M. ENRIQUEZ, Respondent. the same day, a Letter of Appeal[2] was signed by 29 employees of
M+W Zander, opposing the appointment of Wiltschek.
DECISION The letter states:
TO: MR. KLAUS GAERTNER Managing Director
PUNO, C.J.: CC: MR. HELMUT KURZBOECK
CC: MISS KITY LEE
At bar is a petition for review on certiorari under Rule 45 of the Rules DATE: January 31, 2002
of Court, seeking the reversal of the decision,[1] dated May 31, 2005, LETTER OF APPEAL
of the Court of Appeals in CA G.R. SP No. 87597, entitled Trinidad M. We are writing you this Letter of Appeal in the hope of
Enriquez v. National Labor Relations Commission, M+W Zander expressing our concern and sentiments on the appointment
Philippines, Inc. and Rolf Wiltschek. The decision of the Court of of Rolf Wiltschek as the new General Manager.
Appeals set aside the decision of the National Labor Relations
Commission (NLRC) and ruled the dismissal of respondent Trinidad We are appealing for your kind attention and consideration on
M. Enriquez (Enriquez) as illegal. The Court of Appeals also ordered this matter as part of the m+w Zander family worldwide. We
petitioners M+W Zander Philippines, Inc. and Rolf Wiltschek to know that above anything else, the well-being of the company
reinstate respondent to her former position without loss of seniority is the first priority of every employee from whom he derives
rights and privileges and awarded her moral damages and attorneys his livelihood and that of his family. However, we believe that
fees. Rolf Wiltschek as the General Manager here in
the Philippines will not in any way contribute to our goal of
The facts are as follows. making m+w Zander better equipped to fight all the financial
deficiencies that the company is facing today.
On June 4, 2001, respondent Enriquez was hired on probationary
basis as the Administration Manager and Executive Assistant to the For how can we have a person represent the company when
General Manager of petitioner M+W Zander Philippines, Inc. (M+W we cannot even respect him as a person. His human behavior
Zander), a multi-national corporation engaged in construction and and relationship, his manners and etiquette appear less than
facilities management. She was confirmed as a permanent employee the accepted norms in a civilized society. His sarcasm and
on December 4, 2001. As Administration Manager, respondents arrogance and seeming feeling of superiority as expressed by
responsibilities include taking charge of the management of his verbal abuses on his contemporaries and subordinates is
administrative personnel assigned to the head office, as well as the unacceptable even in a poor country like the Philippines. Most
security of the company staff and premises and the implementation of of us in m+w Zander have worked with all sorts of people with
company rules. As Executive Assistant to the General Manager, different nationalities, people with even higher positions in life
respondent was in charge of scheduling, monitoring and tracking all but we have never seen such an obnoxious and demeaning
the General Managers appointments and personal finances and attitude towards the Filipino workers. It has perhaps escaped
serving as the liaison among the General Manager, the Division Rolf Wiltschek, that we Filipinos take pride in our professions
Heads, the Administrative Staff and external contacts. and in our Country humble as it is.

In January 2002, M+W Zander relieved its General Manager, Mr. Eric We wish to relay to you our extreme disappointment on the
Van Stiegeren, and in his place appointed Mr. Rolf Wiltschek replacement of Mr. Eric Van Stijgeren with the sudden
appointment of Rolf Wiltschek as the new General Manager. 20. RANDY TECSON (sgd.)
We wish to convey to you our apprehension on the fate that 21. JOY P. ESGUERRA (sgd.)
awaits m+w Zander here in the Philippines with Rolf Wiltschek
as the General Manager. Lastly, we assure you of our 22. LARRY N. MARASIGAN (sgd.)
commitment to give our best performance in any task given 23. ELMER M. ARANA (sgd.)
us for the welfare of our Company. 24. ALDRIN EVANGELISTA (sgd.)
25. EDWARD A. BORJA (sgd.)
Please help us save m+w Zander (Phils.) Inc.
26. ERNESTO M. ANTIQUIA (sgd.)
Respectfully yours, 27. JESS DELA CRUZ (sgd.)
28. P.R. SIMPLICIANO (sgd.)
M+W Zander- Manila Head Office STAFF
29. R.L. CRUZ (sgd.)

All of the Undersigned: The same appeal from the employees at the site to
follow.[3]
1. ABEC TAYAG (sgd.)
A day after the Letter of Appeal was released, a number of employees
2. CARLITO GARCIA (sgd.)
did not report to work.
3. MARK JOSEPH AMADOR (sgd.)
4. CHRISTINE SAN AGUSTIN (sgd.) Petitioners allege that after the announcement of Wiltschek as the new
5. EMMANUEL PIELAGO, JR. (sgd.) General Manager, respondent actively solicited signatures for a letter
opposing the appointment of Wiltschek (Letter of Appeal). The
6. STANLEY MOSENDE (sgd.)
petitioners claim that Enriquez used her influence and moral
7. JOANNE A. MEDIARITO (sgd.) ascendancy to coerce several employees into signing the letter of
8. MICHAEL M. ILAGAN (sgd.) appeal.[4] They referred to Affidavits of Mark Joseph M. Amador
9. DIANE F. COMINTAN (sgd.) (Amador),[5] Randy R. Tecson (Tecson)[6] and Patrocinio R.
Simpliciano,[7] M+W Zanders Accounting Assistant, Network
10. ERIC V. NAPOLITAN (sgd.) Administrator and Contract Administrator, respectively, which state
11. RAYMOND C. JOSE (sgd.) that respondent sought their signature for the Letter of Appeal.
12. CHE BONBON (sgd.) Amador stated in his affidavit[8] that on February 1, 2002 one Abelardo
Tayag asked him not to go to work and Enriquez only called him to
13. POCHOLO G. RATON (sgd.)
confirm that he did not report for work. In Tecsons affidavit, [9] it was
14. JON-JON IBARRA (sgd.) stated that on February 1, 2002, he received a call from Enriquez in
15. MICHELLE DE MESA (sgd.) his mobile phone telling him not to report to work since other
16. TRINIDAD M. ENRIQUEZ (sgd.) employees will not report to work and that he should just file for a sick
leave since they were doing the same. Tecson said he was already on
17. VIRGILIO G. NATIVIDAD (sgd.) his way to the office and refused to follow Enriquez.
18. CELSA L. BAG-AO (sgd.)
19. ALLAN RIVERA (sgd.)
Upon discovering respondent Enriquezs participation in drafting and 14 FEBRUARY 2002
in circulating the Letter of Appeal, as well as in the alleged work
stoppage that occurred a day after the release of the Letter, M+W TO WHOM IT MAY CONCERN:
Zander sent a Notice[10] to respondent Enriquez, requiring her to
explain within 48 hours from receipt of the notice why no disciplinary IN RELATION TO THE ALLEGATIONS MADE AGAINST MS.
action should be taken against her for willful breach of trust and using TRINIDAD ENRIQUEZ, I ALLAN O. RIVERA REQUEST TO
her authority and/or influence as Administration Manager of M+W BE ACKNOWLEDGED & RECOGNIZED THROUGH MY
Zander over her subordinates to stage a no work day on February 1, OWN INITIATIVE & NOT FORCED TO PRESENT THIS
2002. It was indicated that willful breach of trust has a corresponding WRITTEN STATEMENT TO CLARIFY WHAT REALLY
penalty of dismissal. Meanwhile, respondent Enriquez was placed TRANSPIRED ON JANUARY 31, 2002.
under preventive suspension for 15 working days.
IT WAS ME [sic] WHO GAVE INSTRUCTION TO THOSE
Respondent Enriquez signed a statement,[11] dated February 5, 2002, PRESENT THAT EVENING OF JANUARY 31, 2002 NOT TO
denying that she used her authority and/or influence as Administration REPORT FOR WORK THE FOLLOWING DAY[,] FEBRUARY
Manager and Executive Assistant to the General Manager to compel 01, 2002 (FRIDAY).
her co-employees to stage the illegal work stoppage. She also denied
that she performed any act to disrupt the vital operations of the IT WAS ALSO I, WHO INVITED MS. TRINIDAD ENRIQUEZ
company. She said that when she arrived at work on February 2, 2002, TO JOIN US, WHO WAS THEN LATER ACCUSED OF
she was given a notice of suspension for 15 days and was instructed INSTIGATING THE SAID NO WORK DAY SHOW,
to leave the premises without being given an explanation. Her WHEREAS, IT WAS I WHO INSTIGATED THE INCIDENT.
personal belongings were inspected and she was escorted out of the
premises like a criminal. Respondent stated in her affidavit that her FURTHER MS. TRINIDAD ENRIQUEZ, ASIDE FROM
colleagues were given an order that if she is seen in the premises of COMING LATE EVENING, SHE ONLY STAYED FOR LESS
the company, the administration should be informed immediately and THAN AN HOUR, THAT THE ACCUSATION BY SOME OF
that in no case should respondent be allowed to enter the premises of THE INDIVIDUALS IS NOT TRUE, SINCE SOME HAD
the company except if she is with an authorized escort of the petitioner ALREADY LEFT & MOST OF THE PARTICIPANTS DID NOT
company.[12] ARRIVED [sic] YET.
On February 14, 2002, an administrative investigation and an
administrative hearing were conducted by the petitioner. During the THIS IS TO ATTEST TO THE TRUTH OF THE ABOVE.
administrative hearing, the respondent submitted several signed (Sgd.)
statements from her subordinates, such as Cecilia Benito, [13] the ALLAN ORDINARIO RIVERA
receptionist; Michelle De Mesa,[14] the Engineering Administrative SALES ENGINEER[17]
Assistant; Joy Esguerra,[15] an Administrative Assistant, and Christine
Roma San Agustin;[16] all saying that they were never advised or Out of the eight subordinates who gave their statements during the
prevailed upon by the respondent not to report to work. administrative investigation, it was only Stanley Mosende (Mosende)
who stated that he was influenced by respondent Enriquez not to
Sales Engineer Allan Ordinario Rivera (Rivera) admitted before the report for work.[18] It appears, however, that Mosende was not absent
investigating panel that he was the one who instigated the no work from work based on the signed attendance sheet, which showed that
day on February 1, 2002, but he was not charged by the petitioners. he reported to the office at 5:00 p.m. and signed out at 7:00
We quote Riveras statement: p.m.[19] The accounts of Mosende are incongruous with the statement
of Tecson, the Network Administrator. Tecson submitted a written The Court of Appeals reversed and set aside the decision of
statement declaring that around 8:00 a.m. of February 1, 2002, he the NLRC and reinstated the decision of the Labor Arbiter, declaring
received a text message from Mosende and from Wally Borja asking that the dismissal
him not to go to the office.[20] He did not mention the respondent. Later of respondent was illegal.[25] The petitioners were ordered to reinstate
on, he contradicted his earlier statement when he submitted another respondent to her former position without loss of seniority rights and
affidavit that was attached to the Petition for Review of petitioner M+W privileges. The Court of Appeals deleted the award of exemplary
Zander, this time stating that it was respondent Enriquez who called damages and reduced the award of moral damages to P25,000.00.
him up in his mobile phone to tell him not to report to work. The award of attorneys fees was also affirmed.

On March 1, 2002, a Notice of Termination[21] was received by At issue in this petition[26] is whether respondent was illegally
respondent informing her that her services as Administration Manager dismissed by petitioners. Consequently, it must also be determined
and Executive Assistant to the General Manager of M+W Zander are whether moral damages and attorneys fees should be awarded, if
terminated effective the same day. The respondent was found liable respondent was illegally dismissed, and whether Wiltschek should be
for willful breach of trust and confidence in using [her] authority and/or personally liable together with M+W Zander.
influence as Administrative Manager of M+W Zander Philippines over After a thorough review of the records, we affirm the decision of the
[her] subordinate to stage a no work day last February 1, 2002, which Court of Appeals and find that respondent was illegally dismissed by
in turn disrupted vital operations in the Company.[22] petitioner M+W Zander.
The sole ground for respondents termination by petitioners is
On the same day of her receipt of the Notice of Termination, willful breach of trust and confidence in using [her] authority and/or
respondent filed a Complaint for illegal dismissal with the Arbitration influence as Administrative Manager of ZANDER over [her]
Office of the NLRC. Respondent Enriquez alleges that petitioners subordinate to stage a no work day last February 1, 2002.[27]
based her termination on mere speculation since there were a number
of employees who reported to work despite signing the letter of appeal, Article 282 (c) of the Labor Code allows an employer to terminate the
and despite the absence of some of the employees, the company still services of an employee for loss of trust and confidence. [28] Certain
continued its operations that day. guidelines must be observed for the employer to terminate an
employee for loss of trust and confidence. We held in General Bank
Labor Arbiter Edgar B. Bisana held that respondent Enriquez was and Trust Company v. Court of Appeals,[29] viz.:
illegally dismissed.[23] Both petitioners, M+W Zander and Wiltschek, [L]oss of confidence should not be simulated. It should not be
were ordered to reinstate respondent without loss of seniority rights used as a subterfuge for causes which are improper, illegal,
and privileges, and to pay respondent full backwages and benefits or unjustified. Loss of confidence may not be arbitrarily
from the time compensation was withheld from her up to her actual asserted in the face of overwhelming evidence to the contrary.
reinstatement. The petitioners were further ordered to It must be genuine, not a mere afterthought to justify earlier
pay P100,000.00 as moral damages, P100,000.00 as exemplary action taken in bad faith.[30]
damages, as well as attorneys fees.
The first requisite for dismissal on the ground of loss of trust and
The NLRC reversed the decision of the Labor Arbiter and found that confidence is that the employee concerned must be one holding a
respondent was not illegally dismissed because she committed position of trust and confidence.
serious misconduct which destroyed the trust and confidence of the
management in her.[24] There are two classes of positions of trust: managerial employees and
fiduciary rank-and-file employees.
 -To take charge of the maintenance, upkeep and
Managerial employees are defined as those vested with the powers inventory of all company property within the head
or prerogatives to lay down management policies and to hire, transfer, office;
suspend, lay-off, recall, discharge, assign or discipline employees or -To take charge of the timely provision of supplies and
effectively recommend such managerial actions.[31] They refer to equipment covered by the proper requisition documents
those whose primary duty consists of the management of the within the head office;
establishment in which they are employed or of a department or a -To take charge of traffic, tracking, and distribution of all
subdivision thereof, and to other officers or members of the incoming and outgoing correspondence, packages and
managerial staff.[32] Officers and members of the managerial staff facsimile messages;
perform work directly related to management policies of their employer -To take care of all official travel arrangements and
and customarily and regularly exercise discretion and independent documentation by company personnel;
judgment.[33] - To ensure the proper allocation of company cars assigned
to the Head Office; and
The second class or fiduciary rank-and-file employees consist of -To coordinate schedule and documentation of regular staff
cashiers, auditors, property custodians, etc., or those who, in the meetings and one-on-one meetings as required by EVS
normal exercise of their functions, regularly handle significant and the Division Heads.[35] (Emphasis supplied.)
amounts of money or property.[34] These employees, though rank-and-
file, are routinely charged with the care and custody of the employers The duties of the Executive Assistant to the General Manager are as
money or property, and are thus classified as occupying positions of follows:
trust and confidence. -To take care of the scheduling, monitoring, and tracking of all
the GMs appointments;
In the case at bar, respondent was employed as the Administration -To serve as liaison between the GM, the Division Heads, the
Manager and the Executive Assistant to the General Manager. The Administrative Staff and external contacts;
responsibilities of the Administration Manager include: -To take care of immigration concerns and corresponding
- To take charge of the management of Administrative documents for the GM and the company expatriates;
personnel assigned to the head office in so far as administrative -To effectively handle, monitor, and document calls for the
functions are concerned (Administrative Assistants assigned to the GM;
Division heads and other managerial positions except HRD); -To handle personal financials (Banking/Bills) for the GM and
- To take charge of the over-all security for the company -To perform any other tasks relative to the above functions
staff, premises, and sensitive areas; to guard against which may be assigned from time to time by the GM.[36]
unauthorized entry in sensitive areas (as determined
by the management committee); Though respondents position is designated as the Administration
- To take charge of the implementation of company rules Manager of M+W Zander, it does not automatically mean that she
on housekeeping, cleanliness and security for all occupies a position of trust and confidence. It is not the job title but the
occupants of the Head Office in coordination with the actual work that the employee performs that determines whether he
company Division Heads and HRD; or she occupies a position of trust and confidence.[37]Respondents
-To monitor attendance of all administrative personnel and duties as the Administration Manager include management of the
enforce applicable company rules pertaining thereto; administrative assistants who are assigned to the division heads, in so
far as their administrative functions are concerned. She also takes
charge of the implementation of company rules on housekeeping and
cleanliness, oversees the security of the premises and the sensitive Petitioners anchored the termination of respondent on the statement
areas of the company, monitors the inventory of company property, made by a single subordinate, Mosende, which was made during the
and ensures the timely provision of supplies and equipment. The administrative investigation conducted by petitioners. Mosende stated
position of an Administration Manager may thus be properly that respondent, as his superior, told him not to report to work on
considered as a managerial position, being a head of administrative February 1, 2002.[41] It was only Mosende who said that respondent
assistants of other divisions, and because of the performance of work forced him not to report to work on February 1, 2002. During the
directly related to management policies and company rules. administrative investigation, the rest of respondents subordinates did
not identify respondent as the one who influenced them not to go to
The second requisite of terminating an employee for loss of trust and work on February 1, 2002.
confidence is that there must be an act that would justify the loss of
trust and confidence.[38] To be a valid cause for dismissal, the loss of The act of influencing a single subordinate not to report to work is
confidence must be based on a willful breach of trust and founded on insufficient to merit the harsh and grave penalty of dismissal. The
clearly established facts.[39] records are bereft of any evidence to prove that respondent in fact
We find that it was not established that respondent used her authority coerced a considerable number of employees to stage the no work
to influence her subordinates to stage a no work day; and assuming day. Petitioners may not arbitrarily assert loss of trust and confidence
that she performed this act as alleged by petitioners, it does not satisfy in respondent based on the lone affidavit of Mosende, in the face of
the jurisprudential requirements for valid termination due to loss of overwhelming evidence to the contrary, including affidavits from
trust and confidence. several subordinates of respondent and the categorical statement of
Rivera that he was the one who influenced other employees to stage
Loss of trust and confidence stems from a breach of trust founded on the no work day.
a dishonest, deceitful or fraudulent act. In the case at bar, respondent
did not commit any act which was dishonest or deceitful. She did not We note that while 29 other employees signed the Letter of Appeal,
use her authority as the Administration Manager to misappropriate and several employees joined the alleged work stoppage, it was only
company property nor did she abuse the trust reposed in her by respondent who was singled out and dismissed. These protest
petitioners with respect to her responsibility to implement company activities bear out the general sentiment of discontent within the
rules. The most that can be attributed to respondent is that she company and petitioners cannot pin the blame on respondent
influenced a single subordinate, without exerting any force or making alone. Petitioners may not terminate respondents employment on
any threats, not to report to work. This does not constitute dishonest mere speculation and base her dismissal on unclear and nebulous
or deceitful conduct which would justify the conclusion of loss of trust reasons, especially where a less punitive penalty would suffice. The
and confidence. penalty must be commensurate with the act, conduct or omission
imputed to the employee and must be imposed in connection with the
We are convinced that respondent's dismissal cannot justifiably be disciplinary authority of the employer.[42]
sustained since the findings in this case and whatever investigations
may have been made by petitioners miserably fail to establish We thus find the dismissal to be illegal. Consequently, respondent is
culpability on respondents part. While dishonesty or disloyalty of an entitled to reinstatement without loss of seniority rights and other
employee is not to be condoned, neither should a condemnation on privileges, and to full backwages, inclusive of allowances, and other
that ground be tolerated on the basis of suspicions spawned by benefits or their monetary equivalent, computed from the time of the
speculative inferences.[40] withholding of the employee's compensation up to the time of actual
reinstatement. If reinstatement is not possible due to the strained
relations between the employer and the employee, separation pay
should instead be paid the employee equivalent to one month salary suspicion of her involvement in drafting and in circulating the letter of
for every year of service, computed from the time of engagement up appeal and the alleged staging of the no work day is contrary to good
to the finality of this decision. morals because it caused unnecessary humiliation to respondent.
When respondent reported to work a day after the alleged no work
Petitioners also raised as an issue the propriety of the award of moral day, she was given a notice of preventive suspension, her personal
damages and attorneys fees, arguing that there is no factual or legal belongings were inspected, and she was escorted outside of the
basis to award such. Petitioners also pointed out that there was also premises, without any explanation. Furthermore, an order was given
no discussion in the body of the decision of the Court of Appeals which by the administration to her subordinates that in no case shall she be
states the reasons for the award of damages. allowed inside the company premises without an authorized escort.
Such measures were unwarranted because the charges against
We find that based on the facts of the case, there is sufficient basis to respondent have no connection to the breach of trust involving loss of
award moral damages and attorneys fees to respondent. We have money or company property, which could have called for securing
consistently ruled that in illegal dismissal cases, moral damages are company property from respondent. The crux is precisely that the
recoverable only where the dismissal of the employee was attended charges against respondent are divorced from the essence of loss of
by bad faith or fraud, or constituted an act oppressive to labor, or was trust and confidencewhich is the commission of an act that
done in a manner contrary to morals, good customs or public is dishonest, deceitful or fraudulent. And despite this, based merely on
policy.[43] Such an award cannot be justified solely upon the premise mere suspicion, respondent was treated unfairly when she was not
that the employer fired his employee without just cause or due given an explanation why her personal belongings were inspected,
process. Additional facts must be pleaded and proven to warrant the why she was asked to leave the company building, why she had to be
grant of moral damages under the Civil Code, i.e., that the act of escorted by guards, why she was banned from the premises, and,
dismissal was attended by bad faith or fraud, or constituted an act most importantly, why it was necessary at all to issue an order to her
oppressive to labor, or was done in a manner contrary to morals, good subordinates that she is not allowed in the company premises unless
customs or public policy; and, of course, that social humiliation, she is escorted by authorized personnel. These measures are
wounded feelings, grave anxiety, and similar injury resulted uncalled for, unfair and oppressive.
therefrom.[44]
On the matter of attorney's fees, we have ruled that attorney's fees
In previous cases where moral damages and attorneys fees were may be awarded only when the employee is illegally dismissed in bad
awarded, the manner of termination was done in a humiliating and faith and is compelled to litigate or incur expenses to protect his rights
insulting manner, such as in the case of Balayan Colleges v. by reason of the unjustified acts of his employer.[47] In the case at bar,
National Labor Relations Commission[45] where the employer respondents unjustified and unwarranted dismissal prompted her to
posted copies of its letters of termination to the teachers inside the engage the professional services of a counsel and she is thus entitled
school campus and it also furnished copies to the town mayor and to an award of attorneys fees.
Parish Priest of their community for the purpose of maligning the
teachers reputation. So also in the case of Chiang Kai Shek School Lastly, we come to the issue of whether Wiltschek, as the
v. Court of Appeals,[46] this Court awarded moral damages to a General Manager, should be personally liable together with M+W
teacher who was flatly, and without warning or a formal notice, told Zander. We agree with petitioners that he should not be made
that she was dismissed. personally liable. The general manager of a corporation should not be
made personally answerable for the payment of an illegally dismissed
In the case at bar, we see it fit to award moral damages to respondent employee's monetary claims arising from the dismissal unless he had
because the manner in which respondent was treated upon petitioners acted maliciously or in bad faith in terminating the services of the
employee.[48] The employer corporation has a separate and distinct
personality from its officers who merely act as its agents. 6. FIRST DIVISION
G.R. No. 159577 May 3, 2006
It is well settled that: CHARLITO PEÑARANDA, Petitioner,
[A] corporation is invested by law with a personality separate vs.
and distinct from those of the persons composing it as well as BAGANGA PLYWOOD CORPORATION and HUDSON
from that of any other entity to which it may be related. Mere CHUA, Respondents.
ownership by a single stockholder or by another corporation DECISION
of all or nearly all of the capital stock of a corporation is not of PANGANIBAN, CJ:
itself sufficient ground for disregarding the separate corporate Managerial employees and members of the managerial staff are
personality. [49] exempted from the provisions of the Labor Code on labor standards.
Since petitioner belongs to this class of employees, he is not entitled
The exception noted is where the official "had acted maliciously or in to overtime pay and premium pay for working on rest days.
bad faith," in which event he may be made personally liable for his The Case
own act. That exception is not applicable in the case at bar, because Before us is a Petition for Review1 under Rule 45 of the Rules of
it has not been proven that Wiltschek was impleaded in his capacity Court, assailing the January 27, 20032 and July 4, 20033 Resolutions
as General Manager of petitioner corporation and there appears to be of the Court of Appeals (CA) in CA-GR SP No. 74358. The earlier
no evidence on record that he acted maliciously or in bad faith in Resolution disposed as follows:
terminating the services of respondent. His act, therefore, was within "WHEREFORE, premises considered, the instant petition is
the scope of his authority and was a corporate act for which he should hereby DISMISSED."4
not be held personally liable for. The latter Resolution denied reconsideration.
On the other hand, the Decision of the National Labor Relations
IN VIEW WHEREOF, the petition is PARTIALLY GRANTED. Commission (NLRC) challenged in the CA disposed as follows:
The portion of the assailed decision ordering Rolf Wiltschek liable with "WHEREFORE, premises considered, the decision of the Labor
M+W Zander is DELETED. All other aspects of the decision of the Arbiter below awarding overtime pay and premium pay for rest day to
Court of Appeals are AFFIRMED. complainant is hereby REVERSED and SET ASIDE, and the
complaint in the above-entitled case dismissed for lack of merit.5
SO ORDERED. The Facts
Sometime in June 1999, Petitioner Charlito Peñaranda was hired as
an employee of Baganga Plywood Corporation (BPC) to take charge
of the operations and maintenance of its steam plant boiler.6 In May
2001, Peñaranda filed a Complaint for illegal dismissal with money
claims against BPC and its general manager, Hudson Chua, before
the NLRC.7
After the parties failed to settle amicably, the labor arbiter8 directed
the parties to file their position papers and submit supporting
documents.9 Their respective allegations are summarized by the
labor arbiter as follows:
"[Peñaranda] through counsel in his position paper alleges that he
was employed by respondent [Baganga] on March 15, 1999 with a
monthly salary of P5,000.00 as Foreman/Boiler Head/Shift Engineer Ruling of the NLRC
until he was illegally terminated on December 19, 2000. Further, [he] Respondents filed an appeal to the NLRC, which deleted the award
alleges that his services [were] terminated without the benefit of due of overtime pay and premium pay for working on rest days.
process and valid grounds in accordance with law. Furthermore, he According to the Commission, petitioner was not entitled to these
was not paid his overtime pay, premium pay for working during awards because he was a managerial employee.14
holidays/rest days, night shift differentials and finally claims for Ruling of the Court of Appeals
payment of damages and attorney’s fees having been forced to In its Resolution dated January 27, 2003, the CA dismissed
litigate the present complaint. Peñaranda’s Petition for Certiorari. The appellate court held that he
"Upon the other hand, respondent [BPC] is a domestic corporation failed to: 1) attach copies of the pleadings submitted before the labor
duly organized and existing under Philippine laws and is represented arbiter and NLRC; and 2) explain why the filing and service of the
herein by its General Manager HUDSON CHUA, [the] individual Petition was not done by personal service.15
respondent. Respondents thru counsel allege that complainant’s In its later Resolution dated July 4, 2003, the CA denied
separation from service was done pursuant to Art. 283 of the Labor reconsideration on the ground that petitioner still failed to submit the
Code. The respondent [BPC] was on temporary closure due to repair pleadings filed before the NLRC.16
and general maintenance and it applied for clearance with the Hence this Petition.17
Department of Labor and Employment, Regional Office No. XI to The Issues
shut down and to dismiss employees (par. 2 position paper). And Petitioner states the issues in this wise:
due to the insistence of herein complainant he was paid his "The [NLRC] committed grave abuse of discretion amounting to
separation benefits (Annexes C and D, ibid). Consequently, when excess or lack of jurisdiction when it entertained the APPEAL of the
respondent [BPC] partially reopened in January 2001, [Peñaranda] respondent[s] despite the lapse of the mandatory period of TEN
failed to reapply. Hence, he was not terminated from employment DAYS.1avvphil.net
much less illegally. He opted to severe employment when he insisted "The [NLRC] committed grave abuse of discretion amounting to an
payment of his separation benefits. Furthermore, being a managerial excess or lack of jurisdiction when it rendered the assailed
employee he is not entitled to overtime pay and if ever he rendered RESOLUTIONS dated May 8, 2002 and AUGUST 16, 2002
services beyond the normal hours of work, [there] was no office REVERSING AND SETTING ASIDE the FACTUAL AND LEGAL
order/or authorization for him to do so. Finally, respondents allege FINDINGS of the [labor arbiter] with respect to the following:
that the claim for damages has no legal and factual basis and that "I. The finding of the [labor arbiter] that [Peñaranda] is a
the instant complaint must necessarily fail for lack of merit."10 regular, common employee entitled to monetary benefits
The labor arbiter ruled that there was no illegal dismissal and that under Art. 82 [of the Labor Code].
petitioner’s Complaint was premature because he was still employed "II. The finding that [Peñaranda] is entitled to the payment of
by BPC.11 The temporary closure of BPC’s plant did not terminate his OVERTIME PAY and OTHER MONETARY BENEFITS."18
employment, hence, he need not reapply when the plant reopened. The Court’s Ruling
According to the labor arbiter, petitioner’s money claims for illegal The Petition is not meritorious.
dismissal was also weakened by his quitclaim and admission during Preliminary Issue:
the clarificatory conference that he accepted separation benefits, Resolution on the Merits
sick and vacation leave conversions and thirteenth month pay.12 The CA dismissed Peñaranda’s Petition on purely technical grounds,
Nevertheless, the labor arbiter found petitioner entitled to overtime particularly with regard to the failure to submit supporting documents.
pay, premium pay for working on rest days, and attorney’s fees in the In Atillo v. Bombay,19 the Court held that the crucial issue is whether
total amount of P21,257.98.13 the documents accompanying the petition before the CA sufficiently
supported the allegations therein. Citing this case, Piglas-Kamao v.
NLRC20 stayed the dismissal of an appeal in the exercise of its equity consists of the management of the establishment in which they are
jurisdiction to order the adjudication on the merits. employed or of a department or subdivision."30
The Petition filed with the CA shows a prima facie case. Petitioner The Implementing Rules of the Labor Code state that managerial
attached his evidence to challenge the finding that he was a employees are those who meet the following conditions:
managerial employee.21 In his Motion for Reconsideration, petitioner "(1) Their primary duty consists of the management of the
also submitted the pleadings before the labor arbiter in an attempt to establishment in which they are employed or of a
comply with the CA rules.22 Evidently, the CA could have ruled on department or subdivision thereof;
the Petition on the basis of these attachments. Petitioner should be "(2) They customarily and regularly direct the work of two or
deemed in substantial compliance with the procedural requirements. more employees therein;
Under these extenuating circumstances, the Court does not hesitate "(3) They have the authority to hire or fire other employees of
to grant liberality in favor of petitioner and to tackle his substantive lower rank; or their suggestions and recommendations as to
arguments in the present case. Rules of procedure must be adopted the hiring and firing and as to the promotion or any other
to help promote, not frustrate, substantial justice.23 The Court frowns change of status of other employees are given particular
upon the practice of dismissing cases purely on procedural weight."31
grounds.24 Considering that there was substantial compliance,25 a The Court disagrees with the NLRC’s finding that petitioner was a
liberal interpretation of procedural rules in this labor case is more in managerial employee. However, petitioner was a member of the
keeping with the constitutional mandate to secure social justice. 26 managerial staff, which also takes him out of the coverage of labor
First Issue: standards. Like managerial employees, officers and members of the
Timeliness of Appeal managerial staff are not entitled to the provisions of law on labor
Under the Rules of Procedure of the NLRC, an appeal from the standards.32 The Implementing Rules of the Labor Code define
decision of the labor arbiter should be filed within 10 days from members of a managerial staff as those with the following duties and
receipt thereof.27 responsibilities:
Petitioner’s claim that respondents filed their appeal beyond the "(1) The primary duty consists of the performance of work directly
required period is not substantiated. In the pleadings before us, related to management policies of the employer;
petitioner fails to indicate when respondents received the Decision of "(2) Customarily and regularly exercise discretion and independent
the labor arbiter. Neither did the petitioner attach a copy of the judgment;
challenged appeal. Thus, this Court has no means to determine from "(3) (i) Regularly and directly assist a proprietor or a managerial
the records when the 10-day period commenced and terminated. employee whose primary duty consists of the management of the
Since petitioner utterly failed to support his claim that respondents’ establishment in which he is employed or subdivision thereof; or (ii)
appeal was filed out of time, we need not belabor that point. The execute under general supervision work along specialized or
parties alleging have the burden of substantiating their allegations. 28 technical lines requiring special training, experience, or knowledge;
Second Issue: or (iii) execute under general supervision special assignments and
Nature of Employment tasks; and
Petitioner claims that he was not a managerial employee, and "(4) who do not devote more than 20 percent of their hours worked in
therefore, entitled to the award granted by the labor arbiter. a workweek to activities which are not directly and closely related to
Article 82 of the Labor Code exempts managerial employees from the performance of the work described in paragraphs (1), (2), and (3)
the coverage of labor standards. Labor standards provide the above."33
working conditions of employees, including entitlement to overtime As shift engineer, petitioner’s duties and responsibilities were as
pay and premium pay for working on rest days.29 Under this follows:
provision, managerial employees are "those whose primary duty
"1. To supply the required and continuous steam to all consuming
units at minimum cost.
"2. To supervise, check and monitor manpower workmanship as well
as operation of boiler and accessories.
"3. To evaluate performance of machinery and manpower.
"4. To follow-up supply of waste and other materials for fuel.
"5. To train new employees for effective and safety while working.
"6. Recommend parts and supplies purchases.
"7. To recommend personnel actions such as: promotion, or
disciplinary action.
"8. To check water from the boiler, feedwater and softener,
regenerate softener if beyond hardness limit.
"9. Implement Chemical Dosing.
"10. Perform other task as required by the superior from time to
time."34
The foregoing enumeration, particularly items 1, 2, 3, 5 and 7
illustrates that petitioner was a member of the managerial staff. His
duties and responsibilities conform to the definition of a member of a
managerial staff under the Implementing Rules.
Petitioner supervised the engineering section of the steam plant
boiler. His work involved overseeing the operation of the machines
and the performance of the workers in the engineering section. This
work necessarily required the use of discretion and independent
judgment to ensure the proper functioning of the steam plant boiler.
As supervisor, petitioner is deemed a member of the managerial
staff.35
Noteworthy, even petitioner admitted that he was a supervisor. In his
Position Paper, he stated that he was the foreman responsible for
the operation of the boiler.36 The term foreman implies that he was
the representative of management over the workers and the
operation of the department.37 Petitioner’s evidence also showed that
he was the supervisor of the steam plant. 38 His classification as
supervisor is further evident from the manner his salary was paid. He
belonged to the 10% of respondent’s 354 employees who were paid
on a monthly basis; the others were paid only on a daily basis.39
On the basis of the foregoing, the Court finds no justification to
award overtime pay and premium pay for rest days to petitioner.
WHEREFORE, the Petition is DENIED. Costs against petitioner.
SO ORDERED.
 7. FIRST DIVISION illegally dismissed from the service, hence entitled to separation pay,
[G.R. No. 121288. November 20, 1998] but rejected the charge of unfair labor practice and dismissed, for lack
ROLANDO DELA CRUZ, petitioner, vs. NATIONAL of merit, petitioners other monetary claims. The dispositive portion of
LABOR RELATIONS COMMISSION and EMMANUEL the decision read as follows:
LO, respondents. WHEREFORE, premises considered judgment is rendered as
DECISION follows:
DAVIDE, JR., J.:* Respondent Emmanuel Lo is hereby ordered to pay complainant the
In this special civil action for certiorari under Rule 65 of the Rules amount [of] P4,628.00 representing his separation pay.
of Court, petitioner seeks to set aside, on ground of grave abuse of All other claims are hereby dismissed.
discretion, the Decision[1] of 17 March 1995 of the National Labor SO ORDERED.
Relations Commission (NLRC) in NLRC Case No. V-0254-92 (RAB- Labor Arbiter Lagoc summarized the factual contentions of the
06-09-50298-91) and its Resolution[2] of 19 May 1995 denying the parties, thus:
motion for reconsideration. The former affirmed the 15 February 1994 Complainant [petitioner herein] alleged in his position paper that he
Decision[3] of Labor Arbiter Rodolfo G. Lagoc ordering private started working with respondent Emmanuel Lo in June 1988 as
respondent Emmanuel Lo to pay petitioner separation pay but ordinary crew and received wages in cash from the share of the
dismissing all other claims of petitioner. catch of the fishing boat of said respondent; that on January 1989,
In a complaint[4] filed on 5 September 1991 before Sub-Regional the complainant was promoted to light boat operator and the wages
Arbitration Branch No. 6 of the NLRC, situated in Iloilo City, petitioner was [sic] increased from one (1) share as a crew [member] to five (5)
charged private respondent Emmanuel Lo with unfair labor practice, shares; that in March 1989 the complainant was again promoted to
illegal dismissal, underpayment of salary, non-payment of overtime secondo patron with fixed salary of P200.00 in addition to five (5)
pay, legal holiday pay, premium pay for holiday and rest day, and non- shares of the catch and P1.00/fish box commission; that in
payment of wages or commission and separation pay. The case was November 1989, complainant became a full-pledged patron (Captain
docketed as SRAB Case No. 06-09-50298-91. of respondents fishing boat known as M/DCA Sheenly Joy 1); that as
Private respondent filed his Answer[5] on 9 October 1991. captain, the complainant received a monthly salary of P450.00 and
Petitioner and private respondent then filed their position papers[6] on ten (10) shares of the fish catch plus P2.00/fish box commission; that
4 November 1991 and 21 November 1991, respectively. on December 2, 1990, the undersigned complainant was dismissed
On 7 August 1992, after appropriate proceedings, Labor Arbiter by the respondent Emmanuel Lo illegally and unlawfully without
Dennis D. Juanon rendered a decision[7] dismissing the complaint for notice and separation pay; that on December 13, 1990, the
lack of merit due to the absence of an employer-employee relationship complainant came to the office of the undersigned counsel and the
between petitioner and private respondent. latter wrote respondent a letter of demand; that in 1988, when the
Petitioner seasonably appealed to the NLRC on 9 September complainant was employed by the respondent, the latter owned one
1992. The appeal was docketed as NLRC Case No. V-0254-92 (RAB- fishing boat and when the complainant was dismissed in 1990, the
06-09-50298-91). respondent had increased his fishing boat to three (3) boats out of
In its Resolution[8] of 22 October 1992, the NLRC granted his profit from his first; that each of the respondents fishing boat[s]
petitioners appeal and remanded the case to Labor Arbiter Juanon for went fishing for 22-23 days every month and all the fish catched [sic]
appropriate proceedings. Upon petitioners motion, Labor Arbiter on these days were sold everyday and the cash proceeds were kept
Juanon inhibited himself from the case.[9] As such, the case was by the respondent;that at the end of every 22-23 days of fishing, the
ultimately reassigned to Labor Arbiter Rodolfo G. Lagoc. fishing boat was cleaned by the crew, engine, net and light boat were
In his decision[10] of 15 February 1994, Labor Arbiter Lagoc found repaired by the crew, helped and managed by the officers including
that petitioner was an employee of private respondent and was the complainant; that these cleaning and repair [sic] were charged to
the gross income of the month; that the monthly income of the crew [go] ashore. In other words he had complete control of his fishing
would not be given unless these cleaning and repair [sic] were all boat, the officers and crew.
done; that the system of sharing of the monthly income of the fishing Respondent on the other hand, in [his] Answer and Position Paper,
boat was done by the respondent in the following manner: states that he is the owner and operator of three (3) fishing boats
1. From the monthly gross income, the respondent [would] deduct operating in the province of Antique; that complainant used to work
25% for maintenance; as patron of one of the fishing vessels owned by the respondent; that
2. After deducting the 25%, the respondent and the officers/crew got the agreement between the complainant and respondent was for the
10% each (total 20%) from the remaining 75% of the gross, former to share with the members of the crew [sic] and the
known as sideline; the officers/crew (about 24 men) share[d] the respondent the catch of the fishing vessels with the respondent
sideline (10%) as follows: providing for fuel and oil, equipments [sic] and other [sic] which the
a. Captain 10 shares complainant and the crew needs [sic] for a particular voyage; that the
b. Engineer 8 shares fishing vessels go out fishing at the initiative of the complainant and
c. Secondo Captain 8 shares the crew members; that the respondent has no participation
d. Encargado 8 shares whatsoever in so far as the decision when to go out is
e. Light Boat Chief 6 shares concerned; that the respondents only obligation is to provide for fuel
f. Secondo Chief 5 shares and oil and the equipments [sic] needed by the crew; that the
g. Chief Lambatero 6 shares complainant was not paid any salary and his compensation consist
h. Secondo Lambatero 4 shares [sic] only of his share in the catch of the fishing vessel everytime it
I. Lambatero 3 shares goes out fishing; that the fishing vessel does not go out everyday nor
j. Chief Swimmer 6 shares the whole year round; that it is not true that the complainant receives
k. Winch Operator 4 shares [a] monthly salary of P450.00 per month because his only
l. Other crew 2 shares compensation is his share in the catch of the fishing vessel; that
3. Out of the remaining 55% of the remaining of the gross monthly there is no employer-employee relationship which exist [sic] between
earning, the expenses for the repairs of boat, net, engine, and the complainant and the respondent because as alleged patron of
light boat, oil and fuel, and food and ropes were charged [to the] the respondents fishing boat, the complainant is not under the orders
remaining amount which expenses usually exceeded 55% of the of the respondent as regards his alleged employment; that the
monthly gross income and left nothing to the officers and crew complainant and the crew go out to sea not upon the direction of the
like the complainant. boat owner but upon their own volition as to when and how long and
4. The Officers and crew, including the complainant received monthly where to go fishing; that the latter perform no services for the boat
income on 10% sideline aforementioned and owner but for their benefit; that the undertaking therefore is a joint
commission P8.00/fish box sold every day which they shared, venture with the respondent as boat owner, supplying the boat and
while the respondent who kept the record of the income and its equipment and the patron (the complainant) and the crew
expenses got 35% of the gross monthly income, and free members contributing necessary labor and the parties getting
maintenance and repair of his fishing boat and equipment. He specific shares for their respective contributions.[11]
also control [sic] the selling price of the daily fish catch and [sic] In determining the existence of an employer-employee
unknown to the officers and crew. relationship, Labor Arbiter Lagoc meticulously discussed the elements
The respondent was the one who hired the complainant. He made all thereof, especially that of private respondents power of control over
the job promotions, paid the salaries and dismissed the petitioner with respect to the means and methods by which the work
complainant.The respondent directed personally the fishing was to be accomplished, thus:
operation, where to send the light boat, where to fish and when to
Complainants evidence that control and supervision is exercised by find the testimonies of the corroborating witnesses as wanting in
respondent, and certain amounts are given to him aside from his fish probative value since there are ties between the witnesses and
share in the catch is his testimony on cross-examination: respondent which under the natural course of things will cause them
Q. As patron you also decide when to set on [sic] to go out fishing (witnesses) to take the side of respondent.
and usually this happen [sic] when the right start [sic]? There is more probative value in complainants testimony that
A. Yes, it depends upon the order of the owner, we just obey. (p. respondent gave orders to set sail and that the patron and crew
3, TSN 6 August 1993) [would] merely obey.
xxxxx Respondent ha[s] been in the fishing business for years. He first had
and in the re-direct examination, viz: only one boat. He infused hundreds of thousands, if not millions, as
Q. What about when you were patron of the fishing boat of Mr. Lo capital in the business and caused the acquisition of two (2) more
what you [would] get aside from your share of fish catch boats.
monthly or any other compensations [sic]? This simply means that he is knowledgeable about the deep sea
Labor Arbiter: fishing business. Indeed, it is foolhardy for a businessman to invest
Your question is already stated in your Position Paper, this kind of money in a fishing boat and let somebody operate it
paragraph 4 without him exercising at the least the right to control the manner its
Atty. Pefianco: [sic] going to be used in the work to be done although not actually
Yes, Okey [sic] but I want to reiterate it now. exercising such right.
A. P200.00 every month and two pesos per box and there are 15 Complainants testimony although uncorroborated is more [within] the
of us. realm of the actual facts surrounding the circumstances of this
Q. That is in your position paper, you stated here P250.00 so which case. Moreover, the positive allegations of complainant prevails over
is correct Mr. Witness 250.00 or 500.00 a month? the denials of respondent.
Atty. Operiano: As to the issue concerning illegal dismissal, unfair labor practice
I object that is not proper for re-direct. and other money claims, Labor Arbiter Lagoc held:
A. P450.00 On the issue of illegal dismissal we find for the complainant. The
(p. 19, TSN 6 August 1993) charges of illegal dismissal was by invoking no employer-employee
Respondents evidence on the same issue is his testimony, relationship, not refuted by respondent. Thus we find that the
corroborated by Nismal and Tonding that it is complainant who severance of [the] employer-employee relationship was caused by
decides when to sail out to the [sic] sea, where to fish, how long they respondent. The dismissal not having been justified, perforce the
will stay fishing [at] sea and when to go bank [sic] to the port. same is not one for just cause or authorized under the law. Since
Nismal is the fish dealer of Sheenly Joy 1 owned by respondent complainant seeks separation pay as relief, then the same must be
while Tonding work[s] as [a] crew member of respondents boat granted.
Sheenly Joy 3. Complainant served from 1988 to 1990 or two (2) years. He is thus
No material inconsistencies were shown in all the witnesses [sic entitled to two (2) months separation pay, this being a case of illegal
testmonies during cross-examination. We are placed in a quandary dismissal. Since complainant failed to state his monthly income, the
since both parties may be assumed to be aware of the Supreme separation pay is therefore computed at the minimum basis daily rate
Courts ruling in [the] Pajarillo and Ruga cases and adopted their provided for my [sic] law at the time of dismissal multiplied by the
respective positions to conform with the facts of those two (2) cases. number of working days in a month, which according to complainant
But be that as it may, although respondents declaration that he does is 26 working days per month, and the result multiplied by 2
not have supervision and control over the work of complainant is months. (P89.00/day x 26 working days x 2 months separation pay
corroborated by witnesses Nismal and Tonding, We nevertheless = P4,628.00)
With respect to complainants charge of unfair labor practice the so- therefore, not covered by Book III of the Labor Code; hence, petitioner
called unfair labor practice act was not specified thus the same must was not entitled to back wages and the other monetary claims he
perforce fail. sought.
Regarding the issues of money claims, complainant as Patron of the The sole issue before us is whether the NLRC acted with grave
boat is a managerial employee thus he is excepted from the abuse of discretion amounting to lack or excess of jurisdiction when it
provision[s] of Book III, of the Labor Code. dismissed petitioners claim for separation pay, back wages,
Moreover, it is not disputed that complainant as Patron of the boat allowances and damages.
shares in the income of the sale fish catch, and this sharing of The petition is meritorious as to the issue of back wages.
income in the fish catch is even true when he was still a crew Grave abuse of discretion attended the refusal of the labor arbiter
member of the fishing boat owned by respondent. Persons who are and the NLRC to award back wages to petitioner, simply because
given shares in the fish caught are not covered by the Labor petitioner did not ask for such relief in his complaint. In so doing, the
Standards Law which [complainant] charged herein [respondent] for NLRC relied solely on Section 3 of Rule V of the Rules of Procedure
violations [sic]. Thus, the herein complainants money claims are of the NRLC.
likewise dismissed for lack of merit. This is a patently erroneous conclusion.
Both petitioner and private respondent appealed to the NLRC. First, in his complaint, petitioner charged private respondent
In its decision[12] of 17 March 1995, the NLRC dismissed both with, inter alia, illegal dismissal. He similarly prayed for back wages in
appeals for lack of merit. The NLRC rejected petitioners claim for his position paper and claimed back wages once more in his appeal
reinstatement and back wages because it appears in the complaint before the NLRC.
filed on September 5, 1991 he only sought for the payment of his We have also observed that the complaint was a pro-
separation pay, among others, and under Section 3, Rule V of the forma mimeographed form and petitioner merely put an X mark on the
Rules of the Commission, parties are not allowed to allege facts or nature or description of the charge enumerated after the paragraph
present evidence to prove facts not referred to and any cause or reading:
causes of action not included in the complaint or position papers, Complainant hereby charges respondent of:
affidavits and other documents. Among those marked with an X were illegal dismissal and separation
Petitioner and private respondents separately moved for pay and/or retirement/resignation benefit. It must be noted that back
reconsideration of the decision,[13] which the NLRC denied in wages was not among those enumerated. It is thus reasonable to
itsresolution[14] of 19 May 1995. suppose that petitioner was guided solely by what appeared in
Before this Court, petitioner contends that the NLRC committed the pro-forma form when he did not specifically pray for back
grave abuse of discretion in refusing to award his monetary claims, wages. Therefore, it was entirely inaccurate for the NLRC to have held
including back wages and other monetary benefits, in light of his that petitioner only sought separation pay.
having been dismissed without just cause. Second, and more importantly, both the labor arbiter and the
The Office of the Solicitor General (OSG) filed a Manifestation In NLRC concluded that petitioner was illegally dismissed. Conformably
Lieu of Comment wherein it recommends that back wages be awarded then with Article 279 of the Labor Code, he is entitled to an award of
to petitioner, pursuant to Article 279 of the Labor Code and the back wages since the Article expressly mandates that an employee
decisions in Torillo v. Leogardo,[15] Santos v. NLRC[16] and General who is unjustly dismissed from work shall be entitled to reinstatement
Baptist Bible College v. NLRC.[17] without loss of seniority rights and other privileges and to full back
In its Comment which we required to be filed, the NLRC failed to wages, inclusive of allowances, and to other benefits or their monetary
address the issues raised in this petition. equivalent computed from the time compensation was withheld up to
In his comment, private respondent supported the stand of the the time of actual reinstatement. The provision gives meaning to the
labor arbiter in that petitioner was a managerial employee and, laborers constitutional guaranty of security of tenure and finds solid
basis on the universal principles of justice and equity. The grant of personal service of another, and workers who are paid by results as
back wages allows the unjustly and illegally dismissed employee to determined by the Secretary of Labor in appropriate regulations.
recover from the employer that which the former lost by way of wages As used herein, managerial employees refer to those whose primary
as a result of his dismissal from employment. duty consists of the management of the establishment in which they
It is evident that the award of back wages resulting from the illegal are employed or of a department or subdivision thereof, and to other
dismissal of an employee is a substantive right. Thus, the failure to officers or members of the managerial staff.
claim back wages in a complaint for illegal dismissal has been held to xxx
be a mere procedural lapse which cannot defeat a right granted under A managerial employee is therefore excluded from the coverage
substantive law.[18] of the law as regards conditions of employment which include hours
The present state of jurisprudence allows full recovery of back of work, weekly rest periods, holidays, service incentive leaves and
wages pursuant to the express provisions of Article 279 of the Labor service charges.[21]
Code, i.e., without any deduction of income the employee may have The labor arbiter classified petitioner as a managerial
derived from employment elsewhere from the date of his dismissal up employee. We have not been provided with any compelling reason to
to his reinstatement.[19] overturn this factual finding. As chief patron of the M/DCA Sheenly Joy
Petitioner would have, likewise, been entitled to reinstatement as 1, albeit an unlicensed one,[22] petitioner was tasked to take complete
a consequence of his illegal dismissal from employment. However, by charge and command of the vessel and perform the responsibilities
expressly asking for separation pay, he is deemed to have opted for and duties of a ship captain.[23] Petitioner, an employee who falls
separation pay in lieu of reinstatement. This is the tenor of the holding squarely within the category of officers or members of a managerial
in Reformist Union v. NLRC[20] to the effect that separation pay is staff, is thus exempted from payment of overtime pay, premium pay
awarded as an alternative to reinstatement. for holidays and rest days and service incentive leave
Corollary then to the foregoing is the matter of computing both pay.[24] Therefore, the labor arbiter was correct in holding that
the back wages and the separation pay due petitioner. To be reckoned petitioner was not entitled to overtime pay, legal holiday pay, premium
for the former is the period of putative service. This pertains to that pay for holidays and rest days.
period from the date petitioner was dismissed from employment on 2 WHEREFORE, the instant petition is hereby GRANTED in
December 1990 until he could have been reinstated which, taking into part. The Decision of the National Labor Relations Commission of 17
account the appeals separately interposed by petitioner and private March 1995 and the Decision of the Labor Arbiter of 15 February
respondent from the decision of the labor arbiter, and the filing of this 1994 in NLRC Case No. V-0254-92 (RAB-06-09-50298-91) are
case, could have been done only after the finality of this decision hereby MODIFIED. As modified, private respondent EMMANUEL LO
affirming the finding of the labor arbiter and the NLRC that petitioner is hereby ORDERED to pay back wages to petitioner ROLANDO DE
was illegally dismissed from his employment by private LA CRUZ, for the period from the date the latter was illegally dismissed
respondent. As regards separation pay, the same must be computed from service until finality of this decision, with interest at 6% per annum
from the time petitioner was first employed by private respondent until until this decision becomes final and executory, after which time, the
the finality of this decision. interest rate shall be 12% per annum until the amounts due are
As to petitioners other monetary claims, significant to the actually paid or satisfied; and separation pay at the rate of one (1)
resolution of said issue is Article 82 of the Labor Code, which provides: months pay for every year of service computed from the date he was
Article 82. Coverage. -- The provisions of this Title shall apply to first employed until the finality of this decision, with interest at 12% per
employees in all establishments and undertakings whether for profit annum from the date of promulgation of this decision until actually
or not, but not to government employees, managerial employees, paid.
field personnel, members of the family of the employer who are No pronouncement as to costs.
dependent on him for support, domestic helpers, persons in the SO ORDERED.
 Bellosillo, Vitug, Panganiban, and Quisumbing JJ., concur mechanics and other details of the election. The payroll of the
company three (3) months prior to the filing of the petition shall be
8. THIRD DIVISION used as the basis in determining the list of eligible voters.
The choices are: a) Association of Marine Officers and Seamen of
G.R. No. 107761 December 27, 1994 Reyes and Lim Co., Inc. (Managers for Cargo Marine Corp.); and
ASSOCIATION OF MARINE OFFICERS AND SEAMEN OF REYES b) No Union.SO ORDERED.2
AND LIM CO. (MANAGERS FOR CARGO MARINE
CORP.), petitioner, Private respondent Reyes and Lim Co. Inc. appealed this Order to
vs. the Secretary of Labor and Employment on the issues of employees'
HON. BIENVENIDO E. LAGUESMA, REYES AND LIM CO. INC. status as well as the composition of the bargaining unit. In a
(MANAGERS FOR CARGO MARINE CORP.), respondent. resolution dated October 8, 1992, Undersecretary Bienvenido E.
Ruscius G. Zaragoza for petitioner. Laguesma modified the order and held that:
Jonathan M. Polines for private respondent. PREMISES CONSIDERED, the Resolution of the Med-Arbiter dated
01 June 1992 is hereby modified so as to exclude Major Patron,
ROMERO, J.: Minor Patron, and Chief (Mate) and Chief Marine Engineer from the
The question before us in this petition for certiorari is whether or not bargaining unit. SO RESOLVED.3
the major patron, minor patron, chief mate and chief engineer of a
vessel are managerial employees. Their motion for reconsideration having been denied for lack of merit
Public respondent Undersecretary of Labor has ruled that they are, on November 5, 1992,4 petitioner comes to us seeking to have the
contrary to petitioner labor organization's contention that they are Resolution of public respondent set aside and to have us rule that
rank and file employees who may form part of the union. the major patron, minor patron, chief mate and chief engineer are not
The facts antecedent to this petition are as follows: managerial employees but rank and file. As members of the rank and
The Association of Marine Officers and Seamen of Reyes and Lim file, these employees would be eligible to form part of the union and
Co., a legitimate labor organization, filed a petition for certification take part in the certification election. To buttress their position that
election on March 11, 1992. On June 1, 1992 the Med-Arbiter issued the aforementioned employees are not managerial but rank and file
an Order for the conduct of a certification election in the bargaining employees, petitioner advances the following arguments.
unit covering the entire complement of four vessels.
He ruled that even as private respondent company alleges certain Firstly, it is petitioner's belief that aside from having the power to
employees to be managerial, supervisory and confidential execute management policies and to hire and fire, transfer, suspend,
employees (master, chief mate, second mate, third mate, radio lay-off, recall, discharge, assign or discipline employees, a
officer, chief engineer and second engineer), the records is bereft of managerial employee should also have the power and prerogative to
any showing that the marine officers are performing managerial, lay down management policies. Petitioner claims that the major
supervisory, and confidential functions.1 patron, minor patron, and chief mate and chief engineer do not have
The dispositive portion of the Med-Arbiter's Order reads: the power to lay down management policies because they merely
navigate the bay and rivers of Pasig and Bataan hauling liquefied
WHEREFORE, on the foregoing consideration, let a certification petroleum (gasul). Moreover, private respondent's operations
election be conducted among the regular marine officers and department has "high-tech maritime gadgets and equipment" in order
seamen of Reyes and Lim Co., Inc. (Managers for Cargo Marine to monitor and direct the operations of the boats while en route to its
Corp.) within twenty (20) days from receipt hereof, subject to the destination.5
usual pre-election conference of the parties to thresh out the
Secondly, petitioner asserts that the job descriptions submitted by Filipino Seafarers" submitted by private respondent, they offer no
private respondent Reyes and Lim Co., Inc.6 and relied upon by other superior proof by way of reliability and substance.
public respondent Undersecretary of Labor do not apply to the
situation of the aforementioned employees. Furthermore, the job Such an attack on these job descriptions cannot be considered
descriptions were not acknowledged and even outrightly denied by adequate. Apart from general claims made in a joint affidavit
the workers themselves.7 The employees of Reyes and Lim Co., Inc. executed by 18 employees, including the masters, chief mates and
possess no seamen's book, for they do not traverse the high seas chief engineers of three vessels,11 there appears no other proof on
but merely the bay and rivers from Pasig to Bataan. They therefore, record of the functions they actually perform on board the vessels
are not covered by the job descriptions applicable to Filipino and of the functions performed by other marine officers of the same
seafarers, but are ordinary workers.8 position.

Finally, public respondent's determination of who are managerial To buttress their position, private respondents assert that these "Job
employees constitutes a deprivation of the worker's right to self- Descriptions" have been adopted as reference by the POEA and
organization and free collective bargaining since such resolution is considered as matters of public knowledge in consonance with the
made during pre-election conference on "inclusion-exclusion" provisions of the Code of Commerce, Philippine Merchant Marine
proceedings.9 Rules and Regulations and customary maritime practice with respect
to the inherent and customary duties of captains, chief mates, and
Petitioner's arguments fail to persuade. chief marine engineers on board the vessels.12 This declaration
The only question for resolution is whether or not the major patron, remaining unrebutted, we are led to the conclusion that the job
minor patron, chief mate and chief engineer of the vessels, M/T descriptions submitted constitute industry practice, at the very least.
Banak, M/T Butane, M/T Biya, and M/T Alkane are managerial More importantly, the credence accorded by public respondent to
employees, and as such, not qualified, therefore, to join a union. these job descriptions is worthy of due respect. The factual findings
Public respondent opined in the following manner: of quasi-judicial agencies, such as the Department of Labor and
An evaluation of the afore-mentioned job descriptions submitted by Employment which are supported by substantial evidence, are
respondent-appellant vis-a-visArticle 212 (m) of the Labor Code, as binding on us and entitled to great respect considering their expertise
amended, showed that the following are managerial positions, in their respective fields.13
namely: Major Patron, Minor Patron, Chief Mate and Chief Marine
Engineer. This must be so, because among the Major Patron's duties Petitioner's failure to overcome the submissions of private
and functions are to take complete charge and command of the ship respondent as regards these descriptions and to rebut the same
and to perform the duties and responsibilities of a ship captain; a leaves us no alternative but to accept public respondent's evaluation
Minor Patron commands a vessel, plying within limits of inland of facts.
waterways, ports and estuaries, while a Chief Mate acts as the
executive officer next in command to the captain on board a ship; Furthermore, petitioner's arguments that the employees who work on
and a Chief Marine Engineer plans, coordinates the engine-room board the vessels are not seamen bound by the job descriptions, is
department including supervision of subordinates. In the untenable. The fact that they transport liquefied petroleum gas (LPG)
performance of said functions, it is clear that they are vested with and the vessels operate for only five hours are immaterial for these
powers or prerogatives to lay down and execute management do not remove them from the coverage of maritime law. While they
policies.10 haul LPG, they continue to do so on board a vessel which traverses
While petitioners assail public respondent for the use of the "Job waters. Neither the length of operating time nor the area traveled
Descriptions of Main Category of Particular Ranks and Ratings of would alter the fact that the vessels are used as means of
transportation by water and within the sphere of maritime law to Petitioner claims that the marine officers in question must possess
which the job descriptions are applicable. The workers on board are the power to lay down and formulate management policies aside
not, as petitioners would have us believe, in the category of gasoline from just executing such policies.
delivery helpers or ordinary employees.14 Public respondent committed no error in concluding that the
We next consider the law concerning managerial employees. positions of major patron, minor patron, chief mate, and chief
The second paragraph of Article 82 referring to managerial engineer are managerial because the job descriptions on record
employees in the Labor Code reads, thus: disclose that the major patron's duties include taking complete
. . . "managerial employees" refers to those whose primary duty charge and command of the ship and performing the responsibilities
consists of the management of the establishment in which they are and duties of a ship captain; the minor patron also commands the
employed or of a department or subdivision thereof, and to other vessel, plying the limits of inland waterways, ports and estuaries; the
officers or members of the managerial staff. . . . chief mate performs the functions of an executive officer next in
Article 212 (m) of the Code further defines managerial employees as: command to the captain; and the chief marine engineer takes over-
(m) "Managerial employee" is one who is vested with powers or all charge of the operation of the ship's mechanical and electrical
prerogatives to lay down and execute management policies and/or to equipment. Public respondent's assessment of these managerial
hire, transfer, suspend, lay-off, recall, discharge, assign or discipline functions of the subject officers has adequate basis and should not
employees. . . .. be disturbed.
The implementing rules and regulations of the Labor Code further The functions which these officers discharge pertain to the
provide a more detailed definition of managerial employees. Rule I, navigation of the vessel. Even if there are advanced communications
Book III, Section 2 states: equipment on board, the importance of the position of the officers in
Sec. 2. Exemption. — The provisions of this Rule shall not apply to assessing risks and evaluating the vessel's situation remains
the following persons if they qualify for exemption under the indisputable. The exercise of discretion and judgment in directing a
conditions set forth herein: ship's course is as much managerial in nature as decisions arrived at
(a) . . . . in the confines of the more conventional board room or executive
(b) Managerial employees, if they meet all of the following conditions, office.
namely: We find that there has been no grave abuse of discretion on the part
(1) Their primary duty consists of the management of the of the respondent Undersecretary of Labor when it ruled that the
establishment in which they are employed or of a department or major patron, minor patron, chief mate and chief engineer are
subdivision thereof; managerial employees who are not allowed under Article 245 of the
(2) They customarily and regularly direct the work of two or more Labor Code to join, assist or form any labor organization.
employees therein; With regard to the next issue, petitioners content that the
(3) They have the authority to hire or fire other employees of lower determination of whether or not said employees are managerial
rank; or their suggestions and recommendations as to the hiring and should be done during the
firing and as to the promotion or any other change of status of other pre-election conference on "inclusion-exclusion proceeding," and not
employees are given particular weight. during the processing of their petition for certification election. We
(c) . . . . find this issue not a proper one for consideration since it is raised in
It is very significant to note that we are not dealing here with this petition for the first time. The well-settled principle that issues not
employees of an ordinary business establishment. The business of a raised in the court a quo cannot be raised for the first time on appeal
marine or shipping corporation is, by its very nature, different from for being offensive to basic rules of fair play, justice, and due process
other corporate concerns. applies even in labor cases.15
IN VIEW WHEREOF, the instant petition is DISMISSED. The
challenged resolution of the Undersecretary of Labor is AFFIRMED.
SO ORDERED.

9. SECOND DIVISION
G.R. No. 101761. March 24, 1993.
 NATIONAL SUGAR REFINERIES CORPORATION, petitioner, vs. granted salary adjustments and increases in benefits commensurate
NATIONAL LABOR RELATIONS COMMISSION and NBSR to their actual duties and functions.
SUPERVISORY UNION, (PACIWU) TUCP, respondents. We glean from the records that for about ten years prior to the JE
Jose Mario C. Bunag for petitioner. Program, the members of respondent union were treated in the
The Solicitor General and the Chief Legal Officer, NLRC, for public same manner as rank-and file employees. As such, they used to be
respondent. Zoilo V. de la Cruz for private respondent. paid overtime, rest day and holiday pay pursuant to the provisions of
DECISION Articles 87, 93 and 94 of the Labor Code as amended. With the
REGALADO, J: implementation of the JE Program, the following adjustments were
The main issue presented for resolution in this original petition for made: (1) the members of respondent union were re-classified under
certiorari is whether supervisory employees, as defined in Article 212 levels S-5 to S-8 which are considered managerial staff for purposes
(m), Book V of the Labor Code, should be considered as officers or of compensation and benefits; (2) there was an increase in basic pay
members of the managerial staff under Article 82, Book III of the of the average of 50% of their basic pay prior to the JE Program, with
same Code, and hence are not entitled to overtime rest day and the union members now enjoying a wide gap (P1,269.00 per month)
holiday pay. in basic pay compared to the highest paid rank-and-file employee;
Petitioner National Sugar Refineries Corporation (NASUREFCO), a (3) longevity pay was increased on top of alignment adjustments; (4)
corporation which is fully owned and controlled by the Government, they were entitled to increased company COLA of P225.00 per
operates three (3) sugar refineries located at Bukidnon, Iloilo and month; (5) there was a grant of P100.00 allowance for rest
Batangas. The Batangas refinery was privatized on April 11, 1992 day/holiday work.
pursuant to Proclamation No. 50. 1 Private respondent union On May 11, 1990, petitioner NASUREFCO recognized herein
represents the former supervisors of the NASUREFCO Batangas respondent union, which was organized pursuant to Republic Act
Sugar Refinery, namely, the Technical Assistant to the Refinery NO. 6715 allowing supervisory employees to form their own unions,
Operations Manager, Shift Sugar Warehouse Supervisor, Senior as the bargaining representative of all the supervisory employees at
Financial/Budget Analyst, General Accountant, Cost Accountant, the NASUREFCO Batangas Sugar Refinery.
Sugar Accountant, Junior Financial/Budget Analyst, Shift Boiler Two years after the implementation of the JE Program, specifically
Supervisor,, Shift Operations Chemist, Shift Electrical Supervisor, on June 20, 1990, the members of herein respondent union filed a
General Services Supervisor, Instrumentation Supervisor, complainant with the executive labor arbiter for non-payment of
Community Development Officer, Employment and Training overtime, rest day and holiday pay allegedly in violation of Article 100
Supervisor, Assistant Safety and Security Officer, Head and of the Labor Code.
Personnel Services, Head Nurse, Property Warehouse Supervisor, On January 7, 1991, Executive Labor Arbiter Antonio C. Pido
Head of Inventory Control Section, Shift Process Supervisor, Day rendered a decision 2 disposing as follows:
Maintenance Supervisor and Motorpool Supervisor. "WHEREFORE, premises considered, respondent National Sugar
On June 1, 1988, petitioner implemented a Job Evaluation (JE) refineries Corporation is hereby directed to —
Program affecting all employees, from rank-and-file to department 1. pay the individual members of complainant union the usual
heads. The JE Program was designed to rationalized the duties and overtime pay, rest day pay and holiday pay enjoyed by them instead
functions of all positions, reestablish levels of responsibility, and of the P100.00 special allowance which was implemented on June
recognize both wage and operational structures. Jobs were ranked 11, 1988; and
according to effort, responsibility, training and working conditions and 2. pay the individual members of complainant union the difference in
relative worth of the job. As a result, all positions were re-evaluated, money value between the P100.00 special allowance and the
and all employees including the members of respondent union were overtime pay, rest day pay and holiday pay that they ought to have
received from June 1, 1988.
All other claims are hereby dismissed for lack of merit. due to rank-and-file employees together with those due to
SO ORDERED." supervisors under the JE Program.
In finding for the members therein respondent union, the labor ruled We find creditable merit in the petition and that the extraordinary writ
that the along span of time during which the benefits were being paid of certiorari shall accordingly issue.
to the supervisors has accused the payment thereof to ripen into The primordial issue to be resolved herein is whether the members
contractual obligation; at the complainants cannot be estopped from of respondent union are entitled to overtime, rest day and holiday
questioning the validity of the new compensation package despite pay. Before this can be resolved, however it must of necessity be
the fact that they have been receiving the benefits therefrom, ascertained first whether or not the union members, as supervisory
considering that respondent union was formed only a year after the employees, are to be considered as officers or members of the
implementation of the Job Evaluation Program, hence there was no managerial staff who are exempt from the coverage of Article 82 of
way for the individual supervisors to express their collective the Labor Code.
response thereto prior to the formation of the union; and the It is not disputed that the members of respondent union are
comparative computations presented by the private respondent supervisory employees, as defined employees, as defined under
union showed that the P100.00 special allowance given Article 212(m), Book V of the Labor Code on Labor Relations, which
NASUREFCO fell short of what the supervisors ought to receive had reads:
the overtime pay rest day pay and holiday pay not been "(m) 'Managerial employee' is one who is vested with powers or
discontinued, which arrangement, therefore, amounted to a prerogatives to lay down and execute management policies and/or to
diminution of benefits. hire, transfer, suspend, lay-off, recall, discharged, assign or
On appeal, in a decision promulgated on July 19, 1991 by its Third discipline employees. Supervisory employees are those who, in the
Division, respondent National Labor Relations Commission (NLRC) interest of the employer effectively recommend such managerial
affirmed the decision of the labor arbiter on the ground that the actions if the exercise of such authority is not merely routinary or
members of respondent union are not managerial employees, as clerical in nature but requires the use of independent judgment. All
defined under Article 212 (m) of the Labor Code and, therefore, they employees not falling within any of those above definitions are
are entitled to overtime, rest day and holiday pay. Respondent NLRC considered rank-and-file employees of this Book."
declared that these supervisory employees are merely exercising Respondent NLRC, in holding that the union members are entitled to
recommendatory powers subject to the evaluation, review and final overtime, rest day and holiday pay, and in ruling that the latter are
action by their department heads; their responsibilities do not require not managerial employees, adopted the definition stated in the
the exercise of discretion and independent judgment; they do not aforequoted statutory provision.
participate in the formulation of management policies nor in the hiring Petitioner, however, avers that for purposes of determining whether
or firing of employees; and their main function is to carry out the or not the members of respondent union are entitled to overtime, rest
ready policies and plans of the corporation. 3 Reconsideration of day and holiday pay, said employees should be considered as
said decision was denied in a resolution of public respondent dated "officers or members of the managerial staff" as defined under Article
August 30, 1991. 4 82, Book III of the Labor Code on "Working Conditions and Rest
Hence this petition for certiorari, with petitioner NASUREFCO Periods" and amplified in Section 2, Rule I, Book III of the Rules to
asseverating that public respondent commission committed a grave Implement the Labor Code, to wit:
abuse of discretion in refusing to recognized the fact that the "Art. 82 Coverage. — The provisions of this title shall apply to
members of respondent union are members of the managerial staff employees in all establishments and undertakings whether for profit
who are not entitled to overtime, rest day and holiday pay; and in or not, but not to government employees, managerial employees,
making petitioner assume the "double burden" of giving the benefits 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 It is the submission of petitioner that while the members of
determined by the Secretary of Labor in Appropriate regulations. respondent union, as supervisors, may not be occupying managerial
"As used herein, 'managerial employees' refer to those whose positions, they are clearly officers or members of the managerial staff
primary duty consists of the management of the establishment in because they meet all the conditions prescribed by law and, hence,
which they are employed or of a department or subdivision thereof, they are not entitled to overtime, rest day and supervisory employees
and to other officers or members of the managerial staff." (Emphasis under Article 212 (m) should be made to apply only to the provisions
supplied.) on Labor Relations, while the right of said employees to the
xxx xxx xxx questioned benefits should be considered in the light of the meaning
'Sec. 2. Exemption. — The provisions of this rule shall not apply to of a managerial employee and of the officers or members of the
the following persons if they qualify for exemption under the managerial staff, as contemplated under Article 82 of the Code and
condition set forth herein: Section 2, Rule I Book III of the implementing rules. In other words,
xxx xxx xxx for purposes of forming and joining unions, certification elections,
(b) Managerial employees, if they meet all of the following conditions, collective bargaining, and so forth, the union members are
namely: supervisory employees. In terms of working conditions and rest
(1) Their primary duty consists of the management of the periods and entitlement to the questioned benefits, however, they
establishment in which they are employed or of a department or are officers or members of the managerial staff, hence they are not
subdivision thereof: entitled thereto.
(2) They customarily and regularly direct the work of two or more While the Constitution is committed to the policy of social justice and
employees therein: the protection of the working class, it should not be supposed that
(3) They have the authority to hire or fire other employees of lower every labor dispute will be automatically decided in favor of labor.
rank; or their suggestions and recommendations as to the hiring and Management also has its own rights which, as such, are entitled to
firing and as to the promotion or any other change of status of other respect and enforcement in the interest of simple fair play. Out of its
employees are given particular weight. concern for those with less privileges in life, this Court has inclined
(c) Officers or members of a managerial staff if they perform the more often than not toward the worker and upheld his cause in his
following duties and responsibilities: conflicts with the employer. Such favoritism, however, has not
(1) The primary duty consists of the performance of work directly blinded us to the rule that justice is in every case for the deserving,
related to management policies of their employer; to be dispensed in the light of the established facts and the
(2) Customarily and regularly exercise discretion and independent applicable law and doctrine. 5
judgment; This is one such case where we are inclined to tip the scales of
(3) (i) Regularly and directly assist a proprietor or a managerial justice in favor of the employer.
employee whose primary duty consists of the management of the The question whether a given employee is exempt from the benefits
establishment in which he is employed or subdivision thereof; or (ii) of the law is a factual one dependent on the circumstances of the
execute under general supervision work along specialized or particular case, In determining whether an employee is within the
technical lines requiring special training, experience, or knowledge; terms of the statutes, the criterion is the character of the work
or (iii) execute under general supervision special assignments and performed, rather than the title of the employee's position. 6
tasks; and Consequently, while generally this Court is not supposed to review
(4) Who do not devote more 20 percent of their hours worked in a the factual findings of respondent commission, substantial justice
work-week to activities which are not directly and closely related to and the peculiar circumstances obtaining herein mandate a deviation
the performance of the work described in paragraphs (1), (2), and from the rule.
above."
A cursory perusal of the Job Value Contribution Statements 7 of the necessary, and initiates and prepares reports for any observed
union members will readily show that these supervisory employees abnormality within the refinery;
are under the direct supervision of their respective department 10) supervises the activities of all personnel under him and goes to it
superintendents and that generally they assist the latter in planning, that instructions to subordinates are properly implemented; and
organizing, staffing, directing, controlling communicating and in 11) performs other related tasks as may be assigned by his
making decisions in attaining the company's set goals and immediate superior.
objectives. These supervisory employees are likewise responsible From the foregoing, it is apparent that the members of respondent
for the effective and efficient operation of their respective union discharge duties and responsibilities which ineluctably qualify
departments. More specifically, their duties and functions include, them as officers or members of the managerial staff, as defined in
among others, the following operations whereby the employee: Section 2, Rule I Book III of the aforestated Rules to Implement the
1) assists the department superintendent in the following: Labor Code, viz.: (1) their primary duty consists of the performance
a) planning of systems and procedures relative to department of work directly related to management policies of their employer; (2)
activities; they customarily and regularly exercise discretion and independent
b) organizing and scheduling of work activities of the department, judgment; (3) they regularly and directly assist the managerial
which includes employee shifting scheduled and manning employee whose primary duty consist of the management of a
complement; department of the establishment in which they are employed (4) they
c) decision making by providing relevant information data and other execute, under general supervision, work along specialized or
inputs; technical lines requiring special training, experience, or knowledge;
d) attaining the company's set goals and objectives by giving his full (5) they execute, under general supervision, special assignments
support; and tasks; and (6) they do not devote more than 20% of their hours
e) selecting the appropriate man to handle the job in the department; worked in a work-week to activities which are not directly and clearly
and related to the performance of their work hereinbefore described.
f) preparing annual departmental budget; Under the facts obtaining in this case, we are constrained to agree
2) observes, follows and implements company policies at all times with petitioner that the union members should be considered as
and recommends disciplinary action on erring subordinates; officers and members of the managerial staff and are, therefore,
3) trains and guides subordinates on how to assume responsibilities exempt from the coverage of Article 82. Perforce, they are not
and become more productive; entitled to overtime, rest day and holiday.
4) conducts semi-annual performance evaluation of his subordinates The distinction made by respondent NLRC on the basis of whether
and recommends necessary action for their or not the union members are managerial employees, to determine
development/advancement; the latter's entitlement to the questioned benefits, is misplaced and
5) represents the superintendent or the department when appointed inappropriate. It is admitted that these union members are
and authorized by the former; supervisory employees and this is one instance where the
6) coordinates and communicates with other inter and intra nomenclatures or titles of their jobs conform with the nature of their
department supervisors when necessary; functions. Hence, to distinguish them from a managerial employee,
7) recommends disciplinary actions/promotions; as defined either under Articles 82 or 212 (m) of the Labor Code, is
8) recommends measures to improve work methods, equipment puerile and in efficacious. The controversy actually involved here
performance, quality of service and working conditions; seeks a determination of whether or not these supervisory
9) sees to it that safety rules and regulations and procedure and are employees ought to be considered as officers or members of the
implemented and followed by all NASUREFCO employees, managerial staff. The distinction, therefore, should have been made
recommends revisions or modifications to said rules when deemed along that line and its corresponding conceptual criteria.
II. We likewise no not subscribe to the finding of the labor arbiter that benefits knowingly fully well that said employees are not covered by
the payment of the questioned benefits to the union members has the law requiring payment thereof. 11 In the case at bar, respondent
ripened into a contractual obligation. union failed to sufficiently establish that petitioner has been
A. Prior to the JE Program, the union members, while being motivated or is wont to give these benefits out of pure generosity.
supervisors, received benefits similar to the rank-and-file employees B. It remains undisputed that the implementation of the JE Program,
such as overtime, rest day and holiday pay, simply because they the members of private respondent union were re-classified under
were treated in the same manner as rank-and-file employees, and levels S-5 S-8 which were considered under the program as
their basic pay was nearly on the same level as those of the latter, managerial staff purposes of compensation and benefits, that they
aside from the fact that their specific functions and duties then as occupied re-evaluated positions, and that their basic pay was
supervisors had not been properly defined and delineated from those increased by an average of 50% of their basic salary prior to the JE
of the rank-and-file. Such fact is apparent from the clarification made Program. In other words, after the JE Program there was an ascent
by petitioner in its motion for reconsideration 8 filed with respondent in position, rank and salary. This in essence is a promotion which is
commission in NLRC Case No. CA No. I-000058, dated August 16, defined as the advancement from one position to another with an
1991, wherein, it lucidly explained: increase in duties and responsibilities as authorized by law, and
"But, complainants no longer occupy the same positions they held usually accompanied by an increase in salary. 12
before the JE Program. Those positions formerly classified as Quintessentially, with the promotion of the union members, they are
'supervisory' and found after the JE Program to be rank-and-file were no longer entitled to the benefits which attach and pertain exclusively
classified correctly and continue to receive overtime, holiday and to their positions. Entitlement to the benefits provided for by law
restday pay. As to them, the practice subsists. requires prior compliance with the conditions set forth therein. With
"However, those whose duties confirmed them to be supervisory, the promotion of the members of respondent union, they occupied
were re-evaluated, their duties re-defined and in most cases their positions which no longer met the requirements imposed by law.
organizational positions re-designated to confirm their superior rank Their assumption of these positions removed them from the
and duties. Thus, after the JE program, complainants cannot be said coverage of the law, ergo, their exemption therefrom.
to occupy the same positions." 9 As correctly pointed out by petitioner, if the union members really
It bears mention that this positional submission was never refuted wanted to continue receiving the benefits which attach to their former
nor controverted by respondent union in any of its pleadings filed positions, there was nothing to prevent them from refusing to accept
before herein public respondent or with this Court. Hence, it can be their promotions and their corresponding benefits. As the sating goes
safely concluded therefrom that the members of respondent union by, they cannot have their cake and eat it too or, as petitioner
were paid the questioned benefits for the reason that, at that time, suggests, they could not, as a simple matter of law and fairness, get
they were rightfully entitled thereto. Prior to the JE Program, they the best of both worlds at the expense of NASUREFCO.
could not be categorically classified as members or officers of the Promotion of its employees is one of the jurisprudentially-recognized
managerial staff considering that they were then treated merely on exclusive prerogatives of management, provided it is done in good
the same level as rank-and-file. Consequently, the payment thereof faith. In the case at bar, private respondent union has miserably
could not be construed as constitutive of voluntary employer failed to convince this Court that the petitioner acted implementing
practice, which cannot be now be unilaterally withdrawn by the JE Program. There is no showing that the JE Program was
petitioner. To be considered as such, it should have been practiced intended to circumvent the law and deprive the members of
over a long period of time, and must be shown to have been respondent union of the benefits they used to receive.
consistent and deliberate. 10 Not so long ago, on this particular score, we had the occasion to hold
The test or rationale of this rule on long practice requires an that:
indubitable showing that the employer agreed to continue giving the
". . . it is the prerogative of the management to regulate, according to APEX MINING COMPANY, INC., petitioner, vs.
its discretion and judgment, all aspects of employment. This flows NATIONAL LABOR RELATIONS COMMISSION and SINCLITICA
from the established rule that labor law does not authorize the CANDIDO, respondents.
substitution of the judgment of the employer in the conduct of its
business. Such management prerogative may be availed of without Bernabe B. Alabastro for petitioner.
fear of any liability so long as it is exercised in good faith for the Angel Fernandez for private respondent.
advancement of the employer's interest and not for the purpose of GANCAYCO, J.:
defeating on circumventing the rights of employees under special Is the househelper in the staff houses of an industrial company a
laws or valid agreement and are not exercised in a malicious, harsh, domestic helper or a regular employee of the said firm? This is the
oppressive, vindictive or wanton manner or out of malice or spite." 13 novel issue raised in this petition.
WHEREFORE, the impugned decision and resolution of respondent Private respondent Sinclita Candida was employed by petitioner
National Labor Relations Commission promulgated on July 19, 1991 Apex Mining Company, Inc. on May 18, 1973 to perform laundry
and August 30, 1991, respectively, are hereby ANNULLED and SET services at its staff house located at Masara, Maco, Davao del Norte.
ASIDE for having been rendered and adopted with grave abuse of In the beginning, she was paid on a piece rate basis. However, on
discretion, and the basic complaint of private respondent union is January 17, 1982, she was paid on a monthly basis at P250.00 a
DISMISSED. month which was ultimately increased to P575.00 a month.
Narvasa, C . J ., Padilla, Nocon and Campos, Jr., JJ., concur. On December 18, 1987, while she was attending to her assigned
task and she was hanging her laundry, she accidentally slipped and
hit her back on a stone. She reported the accident to her immediate
supervisor Mila de la Rosa and to the personnel officer, Florendo D.
Asirit. As a result of the accident she was not able to continue with
her work. She was permitted to go on leave for medication. De la
Rosa offered her the amount of P 2,000.00 which was eventually
increased to P5,000.00 to persuade her to quit her job, but she
refused the offer and preferred to return to work. Petitioner did not
allow her to return to work and dismissed her on February 4, 1988.
On March 11, 1988, private respondent filed a request for assistance
with the Department of Labor and Employment. After the parties
submitted their position papers as required by the labor arbiter
assigned to the case on August 24, 1988 the latter rendered a
decision, the dispositive part of which reads as follows:

WHEREFORE, Conformably With The Foregoing, judgment is

hereby rendered ordering the respondent, Apex Mining Company,
Inc., Masara, Davao del Norte, to pay the complainant, to wit:
1 Salary
10. FIRST DIVISION Differential –– P16,289.20
G.R. No. 94951 April 22, 1991 2. Emergency Living
Allowance –– 12,430.00
3. 13th Month Pay
Differential –– 1,322.32 to extend to then driver, houseboy, or gardener exclusively working
4. Separation Pay in the company, the staffhouses and its premises. They may not be
(One-month for considered as within the meaning of a "househelper" or "domestic
every year of servant" as above-defined by law.
service [1973-19881) –– 25,119.30 The criteria is the personal comfort and enjoyment of the family of
or in the total of FIFTY FIVE THOUSAND ONE HUNDRED SIXTY the employer in the home of said employer. While it may be true that
ONE PESOS AND 42/100 (P55,161.42). the nature of the work of a househelper, domestic servant or
SO ORDERED.1 laundrywoman in a home or in a company staffhouse may be similar
in nature, the difference in their circumstances is that in the former
Not satisfied therewith, petitioner appealed to the public respondent instance they are actually serving the family while in the latter case,
National Labor Relations Commission (NLRC), wherein in due whether it is a corporation or a single proprietorship engaged in
course a decision was rendered by the Fifth Division thereof on July business or industry or any other agricultural or similar pursuit,
20, 1989 dismissing the appeal for lack of merit and affirming the service is being rendered in the staffhouses or within the premises of
appealed decision. A motion for reconsideration thereof was denied the business of the employer. In such instance, they are employees
in a resolution of the NLRC dated June 29, 1990. of the company or employer in the business concerned entitled to the
Hence, the herein petition for review by certiorari, which appopriately privileges of a regular employee.
should be a special civil action for certiorari, and which in the interest Petitioner contends that it is only when the househelper or domestic
of justice, is hereby treated as such.2 The main thrust of the petition servant is assigned to certain aspects of the business of the
is that private respondent should be treated as a mere househelper employer that such househelper or domestic servant may be
or domestic servant and not as a regular employee of petitioner. considered as such as employee. The Court finds no merit in making
The petition is devoid of merit. any such distinction. The mere fact that the househelper or domestic
Under Rule XIII, Section l(b), Book 3 of the Labor Code, as servant is working within the premises of the business of the
amended, the terms "househelper" or "domestic servant" are defined employer and in relation to or in connection with its business, as in
as follows: its staffhouses for its guest or even for its officers and employees,
The term "househelper" as used herein is synonymous to the term warrants the conclusion that such househelper or domestic servant
"domestic servant" and shall refer to any person, whether male or is and should be considered as a regular employee of the employer
female, who renders services in and about the employer's home and and not as a mere family househelper or domestic servant as
which services are usually necessary or desirable for the contemplated in Rule XIII, Section l(b), Book 3 of the Labor Code, as
maintenance and enjoyment thereof, and ministers exclusively to the amended.
personal comfort and enjoyment of the employer's family.3 Petitioner denies having illegally dismissed private respondent and
The foregoing definition clearly contemplates such househelper or maintains that respondent abandoned her work.1âwphi1This
domestic servant who is employed in the employer's home to argument notwithstanding, there is enough evidence to show that
minister exclusively to the personal comfort and enjoyment of the because of an accident which took place while private respondent
employer's family. Such definition covers family drivers, domestic was performing her laundry services, she was not able to work and
servants, laundry women, yayas, gardeners, houseboys and other was ultimately separated from the service. She is, therefore, entitled
similar househelps. to appropriate relief as a regular employee of petitioner. Inasmuch as
The definition cannot be interpreted to include househelp or private respondent appears not to be interested in returning to her
laundrywomen working in staffhouses of a company, like petitioner work for valid reasons, the payment of separation pay to her is in
who attends to the needs of the company's guest and other persons order.
availing of said facilities. By the same token, it cannot be considered
WHEREFORE, the petition is DISMISSED and the appealed
decision and resolution of public respondent NLRC are hereby
AFFIRMED. No pronouncement as to costs.
SO ORDERED.
Narvasa, Cruz, Griño-Aquino and Medialdea, JJ., concur.

11. FIRST DIVISION

[G. R. No. 123938. May 21, 1998]
 LABOR CONGRESS OF THE PHILIPPINES (LCP) for and in 2. That with regards [sic] to NLRC CASE NO. RAB-III-10-1817-90
behalf of its members petitioners, vs. NATIONAL pending with the NLRC parties jointly and mutually agreed that the
LABOR RELATIONS COMMISSION, EMPIRE FOOD issues thereof, shall be discussed by the parties and resolve[d]
PRODUCTS, its Proprietor/President & Manager, MR. during the negotiation of the Collective Bargaining Agreement;
GONZALO KEHYENG and MRS. EVELYN 3. That Management of the Empire Food Products shall make the
KEHYENG, respondents. proper adjustment of the Employees Wages within fifteen (15) days
DECISION from the signing of this Agreement and further agreed to register all
DAVIDE, JR., J.: the employees with the SSS;
In this special civil action for certiorari under Rule 65, petitioners 4. That Employer, Empire Food Products thru its Management
seek to reverse the 29 March 1995 resolution[1] of the National Labor agreed to deduct thru payroll deduction UNION DUES and other
Relations Commission (NLRC) in NLRC RAB III Case No. 01-1964-91 Assessment[s] upon submission by the LCP Labor Congress
which affirmed the Decision[2] of Labor Arbiter Ariel C. Santos individual Check-Off Authorization[s] signed by the Union Members
dismissing their complaint for utter lack of merit. indicating the amount to be deducted and further agreed all
The antecedents of this case as summarized by the Office of the deduction[s] made representing Union Dues and Assessment[s] shall
Solicitor General in its Manifestation and Motion in Lieu of be remitted immediately to the LCP Labor Congress Treasurer or
Comment,[3] are as follows: authorized representative within three (3) or five (5) days upon
The 99 persons named as petitioners in this proceeding were rank- deductions [sic], Union dues not deducted during the period due,
and-file employees of respondent Empire Food Products, which shall be refunded or reimbursed by the
hired them on various dates (Paragraph 1, Annex A of Petition, Employer/Management. Employer/Management further agreed to
Annex B; Page 2, Annex F of Petition). deduct Union dues from non-union members the same amount
Petitioners filed against private respondents a complaint for payment deducted from union members without need of individual Check-Off
of money claim[s] and for violation of labor standard[s] laws (NLRC Authorizations [for] Agency Fee;
Case No. RAB-111-10-1817-90). They also filed a petition for direct 5. That in consideration [of] the foregoing covenant, parties jointly
certification of petitioner Labor Congress of the Philippines as their and mutually agreed that NLRC CASE NO. RAB-III-10-1817-90 shall
bargaining representative (Case No. R0300-9010-RU-005). be considered provisionally withdrawn from the Calendar of the
On October 23, 1990, petitioners represented by LCP President National Labor Relations Commission(NLRC), while the Petition for
Benigno B. Navarro, Sr. and private respondents Gonzalo Kehyeng direct certification of the LCP Labor Congress parties jointly move for
and Evelyn Kehyeng in behalf of Empire Food Products, Inc. entered the direct certification of the LCP Labor Congress;
into a Memorandum of Agreement which provided, among others, 6. That parties jointly and mutually agreed that upon signing of this
the following: Agreement, no Harassments [sic], Threats, Interferences [sic] of their
1. That in connection with the pending Petition for Direct Certification respective rights under the law, no Vengeance or Revenge by each
filed by the Labor Congress with the DOLE, Management of the partner nor any act of ULP which might disrupt the operations of the
Empire Food Products has no objection [to] the direct certification of business;
the LCP Labor Congress and is now recognizing the Labor Congress 7. Parties jointly and mutually agreed that pending negotiations or
of the Philippines (LCP) and its Local Chapter as the SOLE and formalization of the propose[d] CBA, this Memorandum of
EXCLUSIVE Bargaining Agent and Representative for all rank and Agreement shall govern the parties in the exercise of their respective
file employees of the Empire Food Products regarding WAGES, rights involving the Management of the business and the terms and
HOURS OF WORK, AND OTHER TERMS AND CONDITIONS OF condition[s] of employment, and whatever problems and grievances
EMPLOYMENT; may arise by and between the parties shall be resolved by them, thru
the most cordial and good harmonious relationship by
communicating the other party in writing indicating said grievances resigned and executed quitclaim[s] and releases prior to the filing of
before taking any action to another forum or government agencies; this complaint should be reinstated to their former position[s] with the
8. That parties [to] this Memorandum of Agreement jointly and admonition to respondents that any harassment, intimidation,
mutually agreed to respect, abide and comply with all the terms and coercion or any form of threat as a result of this immediately
conditions hereof. Further agreed that violation by the parties of any executory reinstatement shall be dealt with accordingly.
provision herein shall constitute an act of ULP. (Annex A of Petition). SO ORDERED. (Annex G of Petition)
In an Order dated October 24, 1990, Mediator Arbiter Antonio Cortez On appeal, the National Labor Relations Commission vacated the
approved the memorandum of agreement and certified LCP as the Decision dated April 14, 1972 [sic] and remanded the case to the
sole and exclusive bargaining agent among the rank-and-file Labor Arbiter for further proceedings for the following reasons:
employees of Empire Food Products for purposes of collective The Labor Arbiter, through his decision, noted that xxx complainant
bargaining with respect to wages, hours of work and other terms and did not present any single witness while respondent presented four
conditions of employment (Annex B of Petition). (4) witnesses in the persons of Gonzalo Kehyeng, Orlando Cairo,
On November 9, 1990, petitioners through LCP President Navarro Evelyn Kehyeng and Elvira Bulagan xxx (p. 183, Records), that xxx
submitted to private respondents a proposal for collective bargaining complainant before the National Labor Relations Commission must
(Annex C of Petition). prove with definiteness and clarity the offense charged. xxx (Record,
On January 23, 1991, petitioners filed a complaint docketed as p. 183); that xxx complainant failed to specify under what provision of
NLRC Case No. RAB-III-01-1964-91 against private respondents for: the Labor Code particularly Art. 248 did respondents violate so as to
a. Unfair Labor Practice by way of Illegal Lockout and/or Dismissal; constitute unfair labor practice xxx (Record, p. 183); that
b. Union busting thru Harassments [sic], threats, and interfering with complainants failed to present any witness who may describe in what
the rights of employees to self-organization; manner respondents have committed unfair labor practice xxx
c. Violation of the Memorandum of Agreement dated October 23, (Record, p. 185); that xxx complainant LCP failed to present anyone
1990; of the so-called 99 complainants in order to testify who committed
d. Underpayment of Wages in violation of R.A. No. 6640 and R.A. the threats and intimidation xxx (Record, p. 185).
No. 6727, such as Wages promulgated by the Regional Wage Upon review of the minutes of the proceedings on record, however, it
Board; appears that complainant presented witnesses, namely, BENIGNO
e. Actual, Moral and Exemplary Damages. (Annex D of Petition) NAVARRO, JR. (28 February 1991, RECORD, p. 91; 8 March 1991,
After the submission by the parties of their respective position papers RECORD, p. 92, who adopted its POSITION PAPER AND
and presentation of testimonial evidence, Labor Arbiter Ariel C. CONSOLIDATED AFFIDAVIT, as Exhibit A and the annexes thereto
Santos absolved private respondents of the charges of unfair labor as Exhibit B, B-1 to B-9, inclusive. Minutes of the proceedings on
practice, union busting, violation of the memorandum of agreement, record show that complainant further presented other witnesses,
underpayment of wages and denied petitioners prayer for actual, namely: ERLINDA BASILIO (13 March 1991, RECORD, p. 93;
moral and exemplary damages. Labor Arbiter Santos, however, LOURDES PANTILLO, MARIFE PINLAC, LENIE GARCIA (16 April
directed the reinstatement of the individual complainants: 1991, Record, p. 96, see back portion thereof; 2 May 1991, Record,
The undersigned Labor Arbiter is not oblivious to the fact that p. 102; 16 May 1991, Record, p. 103; 11 June 1991, Record, p.
respondents have violated a cardinal rule in every establishment that 105). Formal offer of Documentary and Testimonial Evidence was
a payroll and other papers evidencing hours of work, payments, etc. made by complainant on June 24, 1991 (Record, p. 106-109)
shall always be maintained and subjected to inspection and visitation The Labor Arbiter must have overlooked the testimonies of some of
by personnel of the Department of Labor and Employment. As such the individual complainants which are now on record.Other individual
penalty, respondents should not escape liability for this technicality, complainants should have been summoned with the end in view of
hence, it is proper that all individual complainants except those who receiving their testimonies. The complainants should be afforded the
time and opportunity to fully substantiate their claims against the 2 - That with regards [sic] to the NLRC Case No. RAB III-10-1817-90
respondents.Judgment should be rendered only based on the pending with the NLRC, parties jointly and mutually agreed that the
conflicting positions of the parties. The Labor Arbiter is called upon to issues thereof shall be discussed by the parties and resolve[d] during
consider and pass upon the issues of fact and law raised by the the negotiation of the CBA.
parties. The aforequoted provision does not speak of [an] obligation on the
Toward this end, therefore, it is Our considered view [that] the case part of respondents but on a resolutory condition that may occur or
should be remanded to the Labor Arbiter of origin for further may not happen. This cannot be made the basis of an imposition of
proceedings.(Annex H of Petition) an obligation over which the National Labor Relations Commission
In a Decision dated July 27, 1994, Labor Arbiter Santos made the has exclusive jurisdiction thereof.
following determination: Anent the charge that there was underpayment of wages, the
Complainants failed to present with definiteness and clarity the evidence points to the contrary. The enumeration of complainants
particular act or acts constitutive of unfair labor practice. wages in their consolidated Affidavits of merit and position paper
It is to be borne in mind that a declaration of unfair labor practice which implies underpayment has no leg to stand on in the light of the
connotes a finding of prima facie evidence of probability that a fact that complainants admission that they are piece workers or paid
criminal offense may have been committed so as to warrant the filing on a pakiao [basis] i.e. a certain amount for every thousand pieces of
of a criminal information before the regular court.Hence, evidence cheese curls or other products repacked. The only limitation for piece
which is more than a scintilla is required in order to declare workers or pakiao workers is that they should receive compensation
respondents/employers guilty of unfair labor practice. Failing in this no less than the minimum wage for an eight (8) hour work [sic].And
regard is fatal to the cause of complainants. Besides, even the compliance therewith was satisfactorily explained by respondent
charge of illegal lockout has no leg to stand on because of the Gonzalo Kehyeng in his testimony (TSN, p. 12-30) during the July
testimony of respondents through their guard Orlando Cairo (TSN, 31, 1991 hearing. On cross-examination, complainants failed to rebut
July 31, 1991 hearing; p. 5-35) that on January 21, 1991, or deny Gonzalo Kehyengs testimony that complainants have been
complainants refused and failed to report for work, hence guilty of even receiving more than the minimum wage for an average workers
abandoning their post without permission from respondents. As a [sic]. Certainly, a lazy worker earns less than the minimum wage but
result of complainants[] failure to report for work, the cheese curls the same cannot be attributable to respondents but to the lazy
ready for repacking were all spoiled to the prejudice of workers.
respondents. Under cross-examination, complainants failed to rebut Finally, the claim for moral and exemplary damages has no leg to
the authenticity of respondents witness testimony. stand on when no malice, bad faith or fraud was ever proven to have
As regards the issue of harassments [sic], threats and interference been perpetuated by respondents.
with the rights of employees to self-organization which is actually an WHEREFORE, premises considered, the complaint is hereby
ingredient of unfair labor practice, complainants failed to specify what DISMISSED for utter lack of merit. (Annex I of Petition).[4]
type of threats or intimidation was committed and who committed the On appeal, the NLRC, in its Resolution dated 29 March
same. What are the acts or utterances constitutive of harassments 1995,[5] affirmed in toto the decision of Labor Arbiter Santos. In so
[sic] being complained of? These are the specifics which should doing, the NLRC sustained the Labor Arbiters findings that: (a) there
have been proven with definiteness and clarity by complainants who was a dearth of evidence to prove the existence of unfair labor practice
chose to rely heavily on its position paper through generalizations to and union busting on the part of private respondents; (b) the
prove their case. agreement of 23 October 1990 could not be made the basis of an
Insofar as violation of [the] Memorandum of Agreement dated obligation within the ambit of the NLRCs jurisdiction, as the provisions
October 23, 1990 is concerned, both parties agreed that: thereof, particularly Section 2, spoke of a resolutory condition which
could or could not happen; (c) the claims for underpayment of wages
were without basis as complainants were admittedly pakiao workers which reglementary period to apply. Instead of using the reasonable
and paid on the basis of their output subject to the lone limitation that time criterion for certiorari under Rule 65, he used the 15-day period
the payment conformed to the minimum wage rate for an eight-hour for petitions for review on certiorari under Rule 45. They hastened to
workday; and (d) petitioners were not underpaid. add that such was a mere technicality which should not bar their
Their motion for reconsideration having been denied by the petition from being decided on the merits in furtherance of substantial
NLRC in its Resolution of 31 October 1995,[6] petitioners filed the justice, especially considering that respondents neither denied nor
instant special civil action for certiorari raising the following issues: contradicted the facts and issues raised in the petition.
I WHETHER OR NOT THE PUBLIC RESPONDENT NATIONAL In its Manifestation and Motion in Lieu of Comment, the Office of
LABOR RELATIONS COMMISSION GRAVELY ABUSED ITS the Solicitor General (OSG) sided with petitioners. It pointed out that
DISCRETION WHEN IT DISREGARDED OR IGNORED NOT ONLY the Labor Arbiter, in finding that petitioners abandoned their jobs,
THE EVIDENCE FAVORABLE TO HEREIN PETITIONERS, relied solely on the testimony of Security Guard Rolando Cairo that
APPLICABLE JURISPRUDENCE BUT ALSO ITS OWN DECISIONS petitioners refused to work on 21 January 1991, resulting in the
AND THAT OF THIS HONORABLE HIGHEST TRIBUNAL WHICH spoilage of cheese curls ready for repacking. However, the OSG
[WAS] TANTAMOUNT NOT ONLY TO THE DEPRIVATION OF argued, this refusal to report for work for a single day did not constitute
PETITIONERS RIGHT TO DUE PROCESS BUT WOULD RESULT abandonment, which pertains to a clear, deliberate and unjustified
[IN] MANIFEST INJUSTICE. refusal to resume employment, and not mere absence. In fact, the
II WHETHER OR NOT THE PUBLIC RESPONDENT GRAVELY OSG stressed, two days after allegedly abandoning their work,
ABUSED ITS DISCRETION WHEN IT DEPRIVED THE petitioners filed a complaint for, inter alia, illegal lockout or illegal
PETITIONERS OF THEIR CONSTITUTIONAL RIGHT TO SELF- dismissal. Finally, the OSG questioned the lack of explanation on the
ORGANIZATION, SECURITY OF TENURE, PROTECTION TO part of Labor Arbiter Santos as to why he abandoned his original
LABOR, JUST AND HUMANE CONDITIONS OF WORK AND DUE decision to reinstate petitioners.
PROCESS. In view of the stand of the OSG, we resolved to require the NLRC
III WHETHER OR NOT THE PETITIONERS WERE ILLEGALLY to file its own Comment.
EASED OUT [OF] OR CONSTRUCTIVELY DISMISSED FROM In its Comment, the NLRC invokes the general rule that factual
THEIR ONLY MEANS OF LIVELIHOOD. findings of an administrative agency bind a reviewing court and
IV WHETHER OR NOT PETITIONERS SHOULD BE REINSTATED asserts that this case does not fall under the exceptions. The NLRC
FROM THE DATE OF THEIR DISMISSAL UP TO THE TIME OF further argues that grave abuse of discretion may not be imputed to it,
THEIR REINSTATEMENT, WITH BACKWAGES, STATUTORY as it affirmed the factual findings and legal conclusions of the Labor
BENEFITS, DAMAGES AND ATTORNEYS FEES.[7] Arbiter only after carefully reviewing, weighing and evaluating the
evidence in support thereof, as well as the pertinent provisions of law
We required respondents to file their respective Comments. and jurisprudence.
In their Manifestation and Comment, private respondents In their Reply, petitioners claim that the decisions of the NLRC
asserted that the petition was filed out of time. As petitioners admitted and the Labor Arbiter were not supported by substantial evidence; that
in their Notice to File petition for Review on Certiorari that they abandonment was not proved; and that much credit was given to self-
received a copy of the resolution (denying their motion for serving statements of Gonzalo Kehyeng, owner of Empire Foods, as
reconsideration) on 13 December 1995, they had only until 29 to payment of just wages.
December 1995 to file the petition. Having failed to do so, the NLRC On 7 July 1997, we gave due course to the petition and required
thus already entered judgment in private respondents favor. the parties to file their respective memoranda.However, only
In their Reply, petitioners averred that Mr. Navarro, a non-lawyer petitioners and private respondents filed their memoranda, with the
who filed the notice to file a petition for review on their behalf, mistook NLRC merely adopting its Comment as its Memorandum.
 We find for petitioners. provision of the Labor Code particularly Art. 248 did respondents
Invocation of the general rule that factual findings of the NLRC violate so as to constitute unfair labor practice x x x (Record, p. 183);
bind this Court is unavailing under the circumstances.Initially, we are that complainants failed to present any witness who may describe in
unable to discern any compelling reason justifying the Labor what manner respondents have committed unfair laborpractice x x x
Arbiters volte face from his 14 April 1992 decision reinstating (Record, p. 185); that x x x complainant a [sic] LCP failed to present
petitioners to his diametrically opposed 27 July 1994 decision, when anyone of the so called 99 complainants in order to testify who
in both instances, he had before him substantially the same committed the threats and intimidation x x x (Record, p. 185).
evidence. Neither do we find the 29 March 1995 NLRC resolution to Upon review of the minutes of the proceedings on record, however, it
have sufficiently discussed the facts so as to comply with the standard appears that complainant presented witnesses, namely BENIGNO
of substantial evidence. For one thing, the NLRC confessed its NAVARRO, JR. (28 February 1991, RECORD, p. 91; 8 March 1991,
reluctance to inquire into the veracity of the Labor Arbiters factual RECORD, p. 92), who adopted its POSITION PAPER AND
findings, staunchly declaring that it was not about to substitute [its] CONSOLIDATED AFFIDAVIT, as Exhibit A and the annexes thereto
judgment on matters that are within the province of the trier of as Exhibit B, B-1 to B-9, inclusive. Minutes of the proceedings on
facts. Yet, in the 21 July 1992 NLRC resolution,[8] it chastised the record show that complainant further presented other witnesses,
Labor Arbiter for his errors both in judgment and procedure, for which namely: ERLINDA BASILIO (13 March 1991, RECORD, p. 93;
reason it remanded the records of the case to the Labor Arbiter for LOURDES PANTILLO, MARIFE PINLAC, LENI GARCIA (16 April
compliance with the pronouncements therein. 1991, Record, p. 96, see back portion thereof; 2 May 1991, Record,
What cannot escape from our attention is that the Labor Arbiter p. 102; 16 May 1991, Record, p. 103; 11 June 1991, Record, p. 105).
did not heed the observations and pronouncements of the NLRC in its Formal offer of Documentary and Testimonial Evidence was made
resolution of 21 July 1992, neither did he understand the purpose of by the complainant on June 24, 1991 (Record, p. 106-109).
the remand of the records to him. In said resolution, the NLRC The Labor Arbiter must have overlooked the testimonies of some of
summarized the grounds for the appeal to be: the individual complainants which are now on record.Other individual
1. that there is a prima facie evidence of abuse of discretion and acts complainants should have been summoned with the end in view of
of gross incompetence committed by the Labor Arbiter in rendering receiving their testimonies. The complainants should [have been]
the decision. afforded the time and opportunity to fully substantiate their claims
2. that the Labor Arbiter in rendering the decision committed serious against the respondents.Judgment should [have been] rendered only
errors in the findings of facts. based on the conflicting positions of the parties. The Labor Arbiter is
After which, the NLRC observed and found: called upon to consider and pass upon the issues of fact and law
Complainant alleged that the Labor Arbiter disregarded the raised by the parties.
testimonies of the 99 complainants who submitted their Consolidated Toward this end, therefore, it is Our considered view the case should
Affidavit of Merit and Position Paper which was adopted as direct be remanded to the Labor Arbiter of origin for further proceedings.
testimonies during the hearing and cross-examined by respondents Further, We take note that the decision does not contain a
counsel. dispositive portion or fallo. Such being the case, it may be well said
The Labor Arbiter, through his decision, noted that x x x complainant that the decision does not resolve the issues at hand. On another
did not present any single witness while respondent presented four plane, there is no portion of the decision which could be carried out
(4) witnesses in the persons of Gonzalo Kehyeng, Orlando Cairo, by way of execution.
Evelyn Kehyeng and Elvira Bulagan x x x (Records, p. 183), that x x It may be argued that the last paragraph of the decision may be
x complainant before the National Labor Relations Commission must categorized as the dispositive portion thereof:
prove with definiteness and clarity the offense charged. x x xxxxx
x (Record, p. 183; that x x x complainant failed to specify under what
The undersigned Labor Arbiter is not oblivious [to] the fact that and shortly thereafter vigorously pursue his complaint for illegal
respondents have violated a cardinal rule in every establishment that dismissal (De Ysasi III v. NLRC, 231 SCRA 173; Ranara v. NLRC,
a payroll and other papers evidencing hour[s] of work, payment, etc. 212 SCRA 631; Dagupan Bus Co. v. NLRC, 191 SCRA 328; Atlas
shall always be maintained and subjected to inspection and visitation Consolidated Mining and Development Corp. v. NLRC, 190 SCRA
by personnel of the Department of Labor and Employment. As such 505; Hua Bee Shirt Factory v. NLRC, 186 SCRA 586; Mabaylan v.
penalty,respondents should not escape liability for this technicality, NLRC, 203 SCRA 570 and Flexo Manufacturing v. NLRC, 135 SCRA
hence, it is proper that all the individual complainants except those 145). In Atlas Consolidated, supra, this Honorable Court explicitly
who resigned and executed quitclaim[s] and release[s] prior to the stated:
filing of this complaint should be reinstated to their former position It would be illogical for Caballo, to abandon his work and then
with the admonition to respondents that any harassment, immediately file an action seeking for his reinstatement. We can not
intimidation, coercion or any form of threat as a result of this believe that Caballo, who had worked for Atlas for two years and ten
immediately executory reinstatement shall be dealt with accordingly. months, would simply walk away from his job unmindful of the
SO ORDERED. consequence of his act, i.e. the forfeiture of his accrued employment
It is Our considered view that even assuming arguendo that the benefits. In opting to finally to [sic] contest the legality of his
respondents failed to maintain their payroll and other papers dismissal instead of just claiming his separation pay and other
evidencing hours of work, payment etc., such circumstance, standing benefits, which he actually did but which proved to be futile after all,
alone, does not warrant the directive to reinstate complainants to ably supports his sincere intention to return to work, thus negating
their former positions. It is [a] well settled rule that there must be a Atlas stand that he had abandoned his job.
finding of illegal dismissal before reinstatement be mandated. In De Ysasi III v. NLRC (supra), this Honorable Court stressed that it
In this regard, the LABOR ARBITER is hereby directed to include in is the clear, deliberate and unjustified refusal to resume employment
his clarificatory decision, after receiving evidence, considering and and not mere absence that constitutes abandonment. The absence
resolving the same, the requisite dispositive portion.[9] of petitioner employees for one day on January 21, 1991 as testified
Apparently, the Labor Arbiter perceived that if not for petitioners, [to] by Security Guard Orlando Cairo did not constitute
he would not have fallen victim to this stinging rebuke at the hands of abandonment.
the NLRC. Thus does it appear to us that the Labor Arbiter, in In his first decision, Labor Arbiter Santos expressly directed the
concluding in his 27 July 1994 Decision that petitioners abandoned reinstatement of the petitioner employees and admonished the
their work, was moved by, at worst, spite, or at best, lackadaisically private respondents that any harassment, intimidation, coercion or
glossed over petitioners evidence.On this score, we find the following any form of threat as a result of this immediately executory
observations of the OSG most persuasive: reinstatement shall be dealt with accordingly.
In finding that petitioner employees abandoned their work, the Labor In his second decision, Labor Arbiter Santos did not state why he
Arbiter and the NLRC relied on the testimony of Security Guard was abandoning his previous decision directing the reinstatement of
Rolando Cairo that on January 21, 1991, petitioners refused to petitioner employees.
work. As a result of their failure to work, the cheese curls ready for By directing in his first decision the reinstatement of petitioner
repacking on said date were spoiled. employees, the Labor Arbiter impliedly held that they did not
The failure to work for one day, which resulted in the spoilage of abandon their work but were not allowed to work without just cause.
cheese curls does not amount to abandonment of work. In fact two That petitioner employees are pakyao or piece workers does not
(2) days after the reported abandonment of work or on January 23, imply that they are not regular employees entitled to
1991, petitioners filed a complaint for, among others, unfair labor reinstatement. Private respondent Empire Food Products, Inc. is a
practice, illegal lockout and/or illegal dismissal. In several cases, this food and fruit processing company. In Tabas v. California
Honorable Court held that one could not possibly abandon his work Manufacturing Co., Inc. (169 SCRA 497), this Honorable Court held
that the work of merchandisers of processed food, who coordinate failed to rule on but which petitioners prayed for in their
with grocery stores and other outlets for the sale of the processed complaint,[15] we hold that petitioners are so entitled to these
food is necessary in the day-to-day operation[s] of the benefits. Three (3) factors lead us to conclude that petitioners,
company. With more reason, the work of processed food repackers although piece-rate workers, were regular employees of private
is necessary in the day-to-day operation[s] of respondent Empire respondents. First, as to the nature of petitioners tasks, their job of
Food Products.[10] repacking snack food was necessary or desirable in the usual
It may likewise be stressed that the burden of proving the business of private respondents, who were engaged in the
existence of just cause for dismissing an employee, such as manufacture and selling of such food products; second, petitioners
abandonment, rests on the employer, [11] a burden private worked for private respondents throughout the year, their employment
respondents failed to discharge. not having been dependent on a specific project or season; and third,
Private respondents, moreover, in considering petitioners the length of time[16] that petitioners worked for private
employment to have been terminated by abandonment, violated their respondents. Thus, while petitioners mode of compensation was on a
rights to security of tenure and constitutional right to due process in per piece basis, the status and nature of their employment was that of
not even serving them with a written notice of such regular employees.
termination.[12] Section 2, Rule XIV, Book V of the Omnibus Rules The Rules Implementing the Labor Code exclude certain
Implementing the Labor Code provides: employees from receiving benefits such as nighttime pay, holiday pay,
SEC. 2. Notice of Dismissal. - Any employer who seeks to dismiss a service incentive leave[17] and 13th month pay,[18] inter alia, field
worker shall furnish him a written notice stating the particular acts or personnel and other employees whose time and performance is
omission constituting the grounds for his dismissal. In cases of unsupervised by the employer, including those who are engaged on
abandonment of work, the notice shall be served at the workers last task or contract basis, purely commission basis, or those who are paid
known address. a fixed amount for performing work irrespective of the time consumed
Petitioners are therefore entitled to reinstatement with full back in the performance thereof. Plainly, petitioners as piece-rate workers
wages pursuant to Article 279 of the Labor Code, as amended by R.A. do not fall within this group. As mentioned earlier, not only did
No. 6715. Nevertheless, the records disclose that taking into account petitioners labor under the control of private respondents as their
the number of employees involved, the length of time that has lapsed employer, likewise did petitioners toil throughout the year with the
since their dismissal, and the perceptible resentment and enmity fulfillment of their quota as supposed basis for compensation. Further,
between petitioners and private respondents which necessarily in Section 8 (b), Rule IV, Book III which we quote hereunder, piece
strained their relationship, reinstatement would be impractical and workers are specifically mentioned as being entitled to holiday pay.
hardly promotive of the best interests of the parties. In lieu of SEC. 8. Holiday pay of certain employees.-
reinstatement then, separation pay at the rate of one month for every (b) Where a covered employee is paid by results or output, such
year of service, with a fraction of at least six (6) months of service as payment on piece work, his holiday pay shall not be
considered as one (1) year, is in order.[13] less than his average daily earnings for the last seven (7)
That being said, the amount of back wages to which each actual working days preceding the regular
petitioner is entitled, however, cannot be fully settled at this holiday: Provided, however, that in no case shall the
time. Petitioners, as piece-rate workers having been paid by the holiday pay be less than the applicable statutory minimum
piece,[14] there is need to determine the varying degrees of production wage rate.
and days worked by each worker. Clearly, this issue is best left to the In addition, the Revised Guidelines on the Implementation of the
National Labor Relations Commission. 13th Month Pay Law, in view of the modifications to P.D. No. 851[19] by
As to the other benefits, namely, holiday pay, premium pay, Memorandum Order No. 28, clearly exclude the employer of piece rate
13th month pay and service incentive leave which the labor arbiter workers from those exempted from paying 13th month pay, to wit:
2. EXEMPTED EMPLOYERS certification[25] merely proved that petitioners sought and acquired the
The following employers are still not covered by P.D. No. 851: status of bargaining agent for all rank-and-file employees. Finally, the
d. Employers of those who are paid on purely commission, boundary existence of the memorandum of agreement[26] offered to substantiate
or task basis, and those who are paid a fixed amount for private respondents non-compliance therewith, did not prove either
performing specific work, irrespective of the time consumed in compliance or non-compliance, absent evidence of concrete, overt
the performance thereof, except where the workers are paid acts in contravention of the provisions of the memorandum.
on piece-rate basis in which case the employer shall grant the IN VIEW WHEREOF, the instant petition is hereby
required 13th month pay to such workers. (italics supplied) GRANTED. The Resolution of the National Labor Relations
The Revised Guidelines as well as the Rules and Regulations identify Commission of 29 March 1995 and the Decision of the Labor Arbiter
those workers who fall under the piece-rate category as those who are of 27 July 1994 in NLRC Case No. RAB-III-01-1964-91 are hereby
paid a standard amount for every piece or unit of work produced that SET ASIDE, and another is hereby rendered:
is more or less regularly replicated, without regard to the time spent in 1. DECLARING petitioners to have been illegally dismissed by
producing the same.[20] private respondents, thus entitled to full back wages and other
As to overtime pay, the rules, however, are different. According privileges, and separation pay in lieu of reinstatement at the
to Sec. 2(e), Rule I, Book III of the Implementing Rules, workers who rate of one months salary for every year of service with a
are paid by results including those who are paid on piece- fraction of six months of service considered as one year;
work, takay, pakiao, or task basis, if their output rates are in 2. REMANDING the records of this case to the National Labor
accordance with the standards prescribed under Sec. 8, Rule VII, Relations Commission for its determination of the back wages
Book III, of these regulations, or where such rates have been fixed by and other benefits and separation pay, taking into account the
the Secretary of Labor in accordance with the aforesaid section, are foregoing observations; and
not entitled to receive overtime pay.Here, private respondents did not 3. DIRECTING the National Labor Relations Commission to
allege adherence to the standards set forth in Sec. 8 nor with the rates resolve the referred issues within sixty (60) days from its
prescribed by the Secretary of Labor. As such, petitioners are beyond receipt of a copy of this decision and of the records of the case
the ambit of exempted persons and are therefore entitled to overtime and to submit to this Court a report of its compliance hereof
pay. Once more, the National Labor Relations Commission would be within ten (10) days from the rendition of its resolution.
in a better position to determine the exact amounts owed petitioners, Costs against private respondents.
if any. SO ORDERED.
As to the claim that private respondents violated petitioners right Bellosillo, Vitug, Panganiban, and Quisumbing, JJ., concur.
to self-organization, the evidence on record does not support this
claim. Petitioners relied almost entirely on documentary evidence 12. SECOND DIVISION
which, per se, did not prove any wrongdoing on private respondents [G.R. No. 111042. October 26, 1999]
part. For example, petitioners presented their complaint[21] to prove AVELINO LAMBO and VICENTE BELOCURA, petitioners,
the violation of labor laws committed by private respondents. The vs. NATIONAL LABOR RELATIONS COMMISSION and
complaint, however, is merely the pleading alleging the plaintiffs J.C. TAILOR SHOP and/or JOHNNY CO, respondents.
cause or causes of action.[22] Its contents are merely allegations, the DECISION
verity of which shall have to be proved during the trial. They likewise MENDOZA, J.:
offered their Consolidated Affidavit of Merit and Position This is a petition for certiorari to set aside the decision[1] of the
Paper[23] which, like the offer of their Complaint, was a tautological National Labor Relations Commission (NLRC) which reversed the
exercise, and did not help nor prove their cause. In like manner, the awards made by the Labor Arbiter in favor of petitioners, except one
petition for certification election[24] and the subsequent order of for P4,992.00 to each, representing 13th month pay.
 The facts are as follows. out of a meeting with private respondents and other
Petitioners Avelino Lambo and Vicente Belocura were employed employees.According to the NLRC, during that meeting, the
as tailors by private respondents J.C. Tailor Shop and/or Johnny Co employees voted to maintain the company policy of paying them
on September 10, 1985 and March 3, 1985, respectively. They worked according to the volume of work finished at the rate of P18.00 per
from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays.As dozen of tailored clothing materials. Only petitioners allegedly insisted
in the case of the other 100 employees of private respondents, that they be paid the minimum wage and other benefits. The NLRC
petitioners were paid on a piece-work basis, according to the style of held petitioners guilty of abandonment of work and accordingly
suits they made. Regardless of the number of pieces they finished in dismissed their claims except that for 13th month pay. The dispositive
a day, they were each given a daily pay of at least P64.00. portion of its decision reads:
On January 17, 1989, petitioners filed a complaint against private WHEREFORE, in view of the foregoing, the appealed decision is
respondents for illegal dismissal and sought recovery of overtime pay, hereby vacated and a new one entered ordering respondents to pay
holiday pay, premium pay on holiday and rest day, service incentive each of the complainants their 13th month pay in the amount
leave pay, separation pay, 13th month pay, and attorneys fees. of P4,992.00. All other monetary awards are hereby deleted.
After hearing, Labor Arbiter Jose G. Gutierrez found private SO ORDERED.[3]
respondents guilty of illegal dismissal and accordingly ordered them Petitioners allege that they were dismissed by private
to pay petitioners claims. The dispositive portion of the Labor Arbiters respondents as they were about to file a petition with the Department
decision reads: of Labor and Employment (DOLE) for the payment of benefits such as
WHEREFORE, in the light of the foregoing, judgment is hereby Social Security System (SSS) coverage, sick leave and vacation
rendered declaring the complainants to have been illegally dismissed leave.They deny that they abandoned their work.
and ordering the respondents to pay the complainants the following The petition is meritorious.
monetary awards: First. There is no dispute that petitioners were employees of
AVELINO LAMBO VICENTE BELOCURA private respondents although they were paid not on the basis of time
I. BACKWAGES P64,896.00 P64,896.00 spent on the job but according to the quantity and the quality of work
II. OVERTIME PAY 13,447.90 13,447.90 produced by them. There are two categories of employees paid by
III. HOLIDAY PAY 1,399.30 1,399.30 results: (1) those whose time and performance are supervised by the
IV. 13TH MONTH PAY 4,992.00 4,992.00 employer. (Here, there is an element of control and supervision over
V. SEPARATION PAY 9,984.00 11,648.00 the manner as to how the work is to be performed. A piece-rate worker
TOTAL P94,719.20 P96,383.20 = P191,102.40 belongs to this category especially if he performs his work in the
Add: 10% Attorneys Fees 19,110.24 company premises.); and (2) those whose time and performance
GRAND TOTAL P210,212.64 are unsupervised. (Here, the employers control is over the result of
====== the work. Workers on pakyao and takay basis belong to this
or a total aggregate amount of TWO HUNDRED TEN THOUSAND group.) Both classes of workers are paid per unit
TWO HUNDRED TWELVE AND 64/100 (P210,212.64). accomplished. Piece-rate payment is generally practiced in garment
All other claims are dismissed for lack of merit. factories where work is done in the company premises, while payment
SO ORDERED.[2] on pakyao and takaybasis is commonly observed in the agricultural
On appeal by private respondents, the NLRC reversed the industry, such as in sugar plantations where the work is performed in
decision of the Labor Arbiter. It found that petitioners had not been bulk or in volumes difficult to quantify.[4] Petitioners belong to the first
dismissed from employment but merely threatened with a closure of category, i.e., supervised employees.
the business if they insisted on their demand for a straight payment of In determining the existence of an employer-employee
their minimum wage, after petitioners, on January 17, 1989, walked relationship, the following elements must be considered: (1) the
selection and engagement of the employee; (2) the payment of wages; walk out of their jobs and instead file a complaint for illegal dismissal
(3) the power of dismissal; and (4) the power to control the employees against private respondents on January 17, 1989, even before all
conduct.[5] Of these elements, the most important criterion is whether employees could sign the petition and management could act upon
the employer controls or has reserved the right to control the employee the same.
not only as to the result of the work but also as to the means and To justify a finding of abandonment of work, there must be proof
methods by which the result is to be accomplished.[6] of a deliberate and unjustified refusal on the part of an employee to
In this case, private respondents exercised control over the work resume his employment. The burden of proof is on the employer to
of petitioners. As tailors, petitioners worked in the companys premises show an unequivocal intent on the part of the employee to discontinue
from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. The employment.[10] Mere absence is not sufficient. It must be
mere fact that they were paid on a piece-rate basis does not negate accompanied by manifest acts unerringly pointing to the fact that the
their status as regular employees of private respondents. The term employee simply does not want to work anymore.[11]
wage is broadly defined in Art. 97 of the Labor Code as remuneration Private respondents failed to discharge this burden. Other than
or earnings, capable of being expressed in terms of money whether the self-serving declarations in the affidavits of their two employees,
fixed or ascertained on a time, task, piece or commission private respondents did not adduce proof of overt acts of petitioners
basis. Payment by the piece is just a method of compensation and showing their intention to abandon their work. On the contrary, the
does not define the essence of the relations.[7] Nor does the fact that evidence shows that petitioners lost no time in filing the case for illegal
petitioners are not covered by the SSS affect the employer-employee dismissal against private respondent. This fact negates any intention
relationship. on their part to sever their employment relationship.[12] Abandonment
Indeed, the following factors show that petitioners, although is a matter of intention; it cannot be inferred or presumed from
piece-rate workers, were regular employees of private equivocal acts.[13]
respondents: (1) within the contemplation of Art. 280 of the Labor Third. Private respondents invoke the compromise
Code, their work as tailors was necessary or desirable in the usual agreement,[14] dated March 2, 1993, between them and petitioner
business of private respondents, which is engaged in the tailoring Avelino Lambo, whereby in consideration of the sum of P10,000.00,
business; (2) petitioners worked for private respondents throughout petitioner absolved private respondents from liability for money claims
the year, their employment not being dependent on a specific project or any other obligations.
or season; and, (3) petitioners worked for private respondents for more To be sure, not all quitclaims are per se invalid or against public
than one year.[8] policy. But those (1) where there is clear proof that the waiver was
Second. Private respondents contend, however, that petitioners wangled from an unsuspecting or gullible person or (2) where the
refused to report for work after learning that the J.C. Tailoring and terms of settlement are unconscionable on their face are invalid. In
Dress Shop Employees Union had demanded their (petitioners) these cases, the law will step in to annul the questionable
dismissal for conduct unbecoming of employees. In support of their transaction.[15] However, considering that the Labor Arbiter had given
claim, private respondents presented the affidavits [9] of Emmanuel Y. petitioner Lambo a total award of P94,719.20, the amount
Caballero, president of the union, and Amado Cabaero, member, that of P10,000.00 to cover any and all monetary claims is clearly
petitioners had not been dismissed by private respondents but that unconscionable. As we have held in another case,[16] the subordinate
practically all employees of the company, including the members of position of the individual employee vis-a-vis management renders him
the union had asked management to terminate the services of especially vulnerable to its blandishments, importunings, and even
petitioners. The employees allegedly said they were against intimidations, and results in his improvidently waiving benefits to which
petitioners request for change of the mode of payment of their wages, he is clearly entitled. Thus, quitclaims, waivers or releases are looked
and that when a meeting was called to discuss this issue, a petition upon with disfavor for being contrary to public policy and are
for the dismissal of petitioners was presented, prompting the latter to ineffective to bar claims for the full measure of the workers legal
rights.[17] An employee who is merely constrained to accept the wages 5.00/hr. x 804 hrs. = P 4,020.00
paid to him is not precluded from recovering the difference between May 1/87-Sept. 30/87 = 4 mos. & 26 days =
the amount he actually received and that amount which he should (4 mos. x 26 days + 26 days) = 130 days
have received. 130 days x 2 hrs./day = 260 hrs.
Fourth. The Labor Arbiter awarded backwages, overtime pay, P 41.00/day 8 hrs. =
holiday pay, 13th month pay, separation pay and attorneys fees, 5.12/hr. x 25% =
corresponding to 10% of the total monetary awards, in favor of 1.28/hr. + P5.12/hr. =
petitioners. 6.40/hr. x 260 hrs. = P 1,664.00
As petitioners were illegally dismissed, they are entitled to Oct. 1/87-Dec. 13/87 = 2 mos. & 11 days =
reinstatement with backwages. Considering that petitioners were (2 mos. x 26 days + 11 days) = 63 days
dismissed from the service on January 17, 1989, i.e., prior to March 63 days x 2 hrs./day = 126 hrs.
21, 1989,[18] the Labor Arbiter correctly applied the rule in the Mercury P 49.00/day 8 hrs. =
Drug case,[19] according to which the recovery of backwages should 6.12/hr. x 25% =
be limited to three years without qualifications or deductions. Any 1.53/hr. + P6.12/hr. =
award in excess of three years is null and void as to the excess.[20] 7.65/hr. x 126 hrs. = P963.90
The Labor Arbiter correctly ordered private respondents to give Dec. 14/87 - Jan. 17/89 = 13 mos. & 2 days =
separation pay. Considerable time has lapsed since petitioners (13 mos. x 26 days + 2 days) = 340 days
dismissal, so that reinstatement would now be impractical and hardly 340 days x 2 hrs./day = 680 hrs.
in the best interest of the parties. In lieu of reinstatement, separation P 64.00/day 8 hrs. =
pay should be awarded to petitioners at the rate of one month salary 8.00/hr. x 25% =
for every year of service, with a fraction of at least six (6) months of 2.00/hr. + P8.00/hr. =
service being considered as one (1) year.[21] 10.00/hr. x 680 hrs. = P6,800.00 P13,447.90
The awards for overtime pay, holiday pay and 13th month pay III. HOLIDAY PAY: Jan. 17/86 - Jan. 17/89
are in accordance with our finding that petitioners are regular Jan. 17/86 - April 30/87 = 12 RHs; 8 SHs
employees, although paid on a piece-rate basis.[22] These awards are P 32.00/day x 200% =
based on the following computation of the Labor Arbiter: 64.00/day x 12 days = P768.00
AVELINO LAMBO 32.00/day x 12 days = (384.00) P384.00
I. BACKWAGES: Jan. 17/89 - Jan. 17/92 = 36 mos. 32.00/day x 30% =
P 64.00/day x 26 days = 9.60/day x 8 days = 76.80 460.80
1,664.00/mo. x 36 mos. = P 59,904.00 May 1/87 - Sept. 30/87 = 3 RHs; 3 SHs
13th Mo. Pay: P 41.00/day x 200% =
P 1,664.00/yr. x 3 yrs. = 4, 992.00 P64,896.00 82.00/day x 3 days = P246.00
II. OVERTIME PAY: Jan. 17/86 - Jan. 17/89 41.00/day x 3 days = (123.00) P123.00
Jan. 17/86 - April 30/87 = 15 mos. & 12 days = 41.00/day x 30% =
(15 mos. x 26 days + 12 days) = 402 days 12.30/day x 3 days = 36.90 159.90
*2 hours = 25% Oct. 1/87 - Dec. 13/87 = 1 RH
402 days x 2 hrs./day = 804 hrs. P 49.00/day x 200% =
P 32.00/day 8 hrs. = 98.00/day x 1 day = P98.00
4.00/hr. x 25% = 49.00/day x 1 day = (49.00) 49.00
1.00/hr. + P4.00/hr. = Dec. 14/87 - Jan. 17/89 = 9 RHs; 8 SHs
P 64.00/day x 200% = represented by the Public Attorneys Office. With regard to petitioner
128.00/day x 9 days = P1,152.00 Avelino Lambo, the amount of P10,000.00 paid to him under the
64.00/day x 9 days = (576.00) P 576.00 compromise agreement should be deducted from the total award
64.00/day x 30% = of P94,719.20.Consequently, the award to each petitioner should be
19.20/day x 8 days = 153.60 729.60 1,399.30 as follows:
IV. 13TH MO. PAY: Jan. 17/86 - Jan. 17/89 = 3 yrs. AVELINO LAMBO VICENTE BELOCURA
P 64.00/day x 26 days = I. BACKWAGES P64,896.00 P 64,896.00
1,664.00/yr. x 3 yrs. = 4,992.00 II. OVERTIME PAY 13,447.90 13,447.90
V. SEPARATION PAY: Sept. 10/85 - Jan. 17/92 = 6 yrs. III. HOLIDAY PAY 1,399.30 1,399.30
1,664.00/mo. x 6 yrs. = 9,984.00 IV. 13TH MONTH PAY 4,992.00 4,992.00
TOTAL AWARD OF AVELINO LAMBO P94,719.20 V. SEPARATION PAY 9,984.00 11,648.00
====== P 94,719.20
VICENTE BELOCURA Less 10,000.00
I. BACKWAGES: Jan. 17/89 - Jan. 17/92 = 36 mos. TOTAL P84,719.20 P96,383.20
Same computation as A. Lambo P64,896.00 GRAND TOTAL P181,102.40
II. OVERTIME PAY: Jan. 17/86 - Jan. 17/89 ======
Same computation as A. Lambo 13,447.90 vvvvvvvvvv

III. HOLIDAY PAY: Jan. 17/86 - Jan. 17/89 WHEREFORE, the decision of the National Labor Relations
Same computation as A. Lambo 1,399.30 Commission is SET ASIDE and another one is RENDERED ordering
IV. 13TH MO. PAY: Jan. 17/86 - Jan. 17/89 private respondents to pay petitioners the total amount of One
Same computation as A. Lambo 4,992.00 Hundred Eighty-One Thousand One Hundred Two Pesos and 40/100
V. SEPARATION PAY: March 3/85 - Jan. 17/92 = 7 yrs. (P181,102.40), as computed above.
P1,664.00/mo. x 7 yrs. = 11,648.00 SO ORDERED.
TOTAL AWARD OF VICENTE BELOCURA P96,383.20
=====
SUMMARY
AVELINO LAMBO VICENTE BELOCURA
I. BACKWAGES P64,896.00 P64,896.00
II. OVERTIME PAY 13,447.90 13,447.90
III. HOLIDAY PAY 1,399.30 1,399.30
IV. 13TH MO. PAY 4,992.00 4,992.00
V. SEPARATION PAY 9,984.00 11,648.00
TOTAL P94,719.20 P96,383.20
= P191,102.40
ADD: 10% Attorneys Fees 19,110.24
GRAND TOTAL P 210,212.64
=======
Except for the award of attorneys fees in the amount 13. SECOND DIVISION
of P19,110.24, the above computation is affirmed. The award of [G.R. No. 156367. May 16, 2005]
attorneys fees should be disallowed, it appearing that petitioners were
AUTO BUS TRANSPORT SYSTEMS, INC., petitioner, Furthermore, petitioner avers that in the exercise of its
vs. ANTONIO BAUTISTA, respondent. management prerogative, respondents employment was terminated
DECISION only after the latter was provided with an opportunity to explain his
CHICO-NAZARIO, J.: side regarding the accident on 03 January 2000.
Before Us is a Petition for Review on Certiorari assailing the On 29 September 2000, based on the pleadings and supporting
Decision[1] and Resolution[2] of the Court of Appeals affirming the evidence presented by the parties, Labor Arbiter Monroe C. Tabingan
Decision[3] of the National Labor Relations Commission (NLRC). The promulgated a Decision,[4] the dispositive portion of which reads:
NLRC ruling modified the Decision of the Labor Arbiter (finding WHEREFORE, all premises considered, it is hereby found that the
respondent entitled to the award of 13th month pay and service complaint for Illegal Dismissal has no leg to stand on. It is hereby
incentive leave pay) by deleting the award of 13th month pay to ordered DISMISSED, as it is hereby DISMISSED.
respondent. However, still based on the above-discussed premises, the
THE FACTS respondent must pay to the complainant the following:
Since 24 May 1995, respondent Antonio Bautista has been a. his 13th month pay from the date of his hiring to the date of his
employed by petitioner Auto Bus Transport Systems, Inc. (Autobus), dismissal, presently computed at P78,117.87;
as driver-conductor with travel routes Manila-Tuguegarao via Baguio, b. his service incentive leave pay for all the years he had been in
Baguio- Tuguegarao via Manila and Manila-Tabuk via Baguio. service with the respondent, presently computed at P13,788.05.
Respondent was paid on commission basis, seven percent (7%) of the All other claims of both complainant and respondent are hereby
total gross income per travel, on a twice a month basis. dismissed for lack of merit.[5]
On 03 January 2000, while respondent was driving Autobus No. Not satisfied with the decision of the Labor Arbiter, petitioner
114 along Sta. Fe, Nueva Vizcaya, the bus he was driving accidentally appealed the decision to the NLRC which rendered its decision on 28
bumped the rear portion of Autobus No. 124, as the latter vehicle September 2001, the decretal portion of which reads:
suddenly stopped at a sharp curve without giving any warning. [T]he Rules and Regulations Implementing Presidential Decree No.
Respondent averred that the accident happened because he was 851, particularly Sec. 3 provides:
compelled by the management to go back to Roxas, Isabela, although Section 3. Employers covered. The Decree shall apply to all
he had not slept for almost twenty-four (24) hours, as he had just employers except to:
arrived in Manila from Roxas, Isabela. Respondent further alleged that xxx xxx xxx
he was not allowed to work until he fully paid the amount of e) employers of those who are paid on purely commission, boundary,
P75,551.50, representing thirty percent (30%) of the cost of repair of or task basis, performing a specific work, irrespective of the time
the damaged buses and that despite respondents pleas for consumed in the performance thereof. xxx.
reconsideration, the same was ignored by management. After a Records show that complainant, in his position paper, admitted that
month, management sent him a letter of termination. he was paid on a commission basis.
Thus, on 02 February 2000, respondent instituted a Complaint In view of the foregoing, we deem it just and equitable to modify the
for Illegal Dismissal with Money Claims for nonpayment of 13th month assailed Decision by deleting the award of 13th month pay to the
pay and service incentive leave pay against Autobus. complainant.
Petitioner, on the other hand, maintained that respondents WHEREFORE, the Decision dated 29 September 2000 is MODIFIED
employment was replete with offenses involving reckless imprudence, by deleting the award of 13th month pay. The other findings are
gross negligence, and dishonesty. To support its claim, petitioner AFFIRMED.[6]
presented copies of letters, memos, irregularity reports, and warrants In other words, the award of service incentive leave pay was
of arrest pertaining to several incidents wherein respondent was maintained. Petitioner thus sought a reconsideration of this aspect,
involved.
which was subsequently denied in a Resolution by the NLRC dated which service incentive leave shall not be granted. Rather, it serves
31 October 2001. as an amplification of the interpretation of the definition of field
Displeased with only the partial grant of its appeal to the NLRC, personnel under the Labor Code as those whose actual hours of work
petitioner sought the review of said decision with the Court of Appeals in the field cannot be determined with reasonable certainty.[8]
which was subsequently denied by the appellate court in a Decision The same is true with respect to the phrase those who are
dated 06 May 2002, the dispositive portion of which reads: engaged on task or contract basis, purely commission basis.Said
WHEREFORE, premises considered, the Petition is DISMISSED for phrase should be related with field personnel, applying the rule
lack of merit; and the assailed Decision of respondent Commission in on ejusdem generis that general and unlimited terms are restrained
NLRC NCR CA No. 026584-2000 is hereby AFFIRMED in toto. No and limited by the particular terms that they follow.[9] Hence,
costs.[7] employees engaged on task or contract basis or paid on purely
Hence, the instant petition. commission basis are not automatically exempted from the grant of
ISSUES service incentive leave, unless, they fall under the classification of field
1. Whether or not respondent is entitled to service incentive leave; personnel.
2. Whether or not the three (3)-year prescriptive period provided under Therefore, petitioners contention that respondent is not entitled
Article 291 of the Labor Code, as amended, is applicable to to the grant of service incentive leave just because he was paid on
respondents claim of service incentive leave pay. purely commission basis is misplaced. What must be ascertained in
RULING OF THE COURT order to resolve the issue of propriety of the grant of service incentive
The disposition of the first issue revolves around the proper leave to respondent is whether or not he is a field personnel.
interpretation of Article 95 of the Labor Code vis--vis Section 1(D), According to Article 82 of the Labor Code, field personnel shall
Rule V, Book III of the Implementing Rules and Regulations of the refer to non-agricultural employees who regularly perform their duties
Labor Code which provides: away from the principal place of business or branch office of the
Art. 95. RIGHT TO SERVICE INCENTIVE LEAVE employer and whose actual hours of work in the field cannot be
(a) Every employee who has rendered at least one year of service determined with reasonable certainty. This definition is further
shall be entitled to a yearly service incentive leave of five days elaborated in the Bureau of Working Conditions (BWC), Advisory
with pay. Opinion to Philippine Technical-Clerical Commercial Employees
Book III, Rule V: SERVICE INCENTIVE LEAVE Association[10] which states that:
SECTION 1. Coverage. This rule shall apply to all employees except: As a general rule, [field personnel] are those whose performance of
(d) Field personnel and other employees whose performance is their job/service is not supervised by the employer or his
unsupervised by the employer including those who are engaged representative, the workplace being away from the principal office
on task or contract basis, purely commission basis, or those who and whose hours and days of work cannot be determined with
are paid in a fixed amount for performing work irrespective of the reasonable certainty; hence, they are paid specific amount for
time consumed in the performance thereof; . . . rendering specific service or performing specific work. If required to
A careful perusal of said provisions of law will result in the be at specific places at specific times, employees including drivers
conclusion that the grant of service incentive leave has been delimited cannot be said to be field personnel despite the fact that they are
by the Implementing Rules and Regulations of the Labor Code to performing work away from the principal office of the
apply only to those employees not explicitly excluded by Section 1 of employee. [Emphasis ours]
Rule V. According to the Implementing Rules, Service Incentive Leave To this discussion by the BWC, the petitioner differs and
shall not apply to employees classified as field personnel. The phrase postulates that under said advisory opinion, no employee would ever
other employees whose performance is unsupervised by the employer be considered a field personnel because every employer, in one way
must not be understood as a separate classification of employees to or another, exercises control over his employees. Petitioner further
argues that the only criterion that should be considered is the nature The question now that must be addressed is up to what amount
of work of the employee in that, if the employees job requires that he of service incentive leave pay respondent is entitled to.
works away from the principal office like that of a messenger or a bus The response to this query inevitably leads us to the correlative
driver, then he is inevitably a field personnel. issue of whether or not the three (3)-year prescriptive period under
We are not persuaded. At this point, it is necessary to stress that Article 291 of the Labor Code is applicable to respondents claim of
the definition of a field personnel is not merely concerned with the service incentive leave pay.
location where the employee regularly performs his duties but also Article 291 of the Labor Code states that all money claims arising
with the fact that the employees performance is unsupervised by the from employer-employee relationship shall be filed within three (3)
employer. As discussed above, field personnel are those who years from the time the cause of action accrued; otherwise, they shall
regularly perform their duties away from the principal place of business be forever barred.
of the employer and whose actual hours of work in the field cannot be In the application of this section of the Labor Code, the pivotal
determined with reasonable certainty. Thus, in order to conclude question to be answered is when does the cause of action for money
whether an employee is a field employee, it is also necessary to claims accrue in order to determine the reckoning date of the three-
ascertain if actual hours of work in the field can be determined with year prescriptive period.
reasonable certainty by the employer. In so doing, an inquiry must be It is settled jurisprudence that a cause of action has three
made as to whether or not the employees time and performance are elements, to wit, (1) a right in favor of the plaintiff by whatever means
constantly supervised by the employer. and under whatever law it arises or is created; (2) an obligation on the
As observed by the Labor Arbiter and concurred in by the Court part of the named defendant to respect or not to violate such right; and
of Appeals: (3) an act or omission on the part of such defendant violative of the
It is of judicial notice that along the routes that are plied by these bus right of the plaintiff or constituting a breach of the obligation of the
companies, there are its inspectors assigned at strategic places who defendant to the plaintiff.[12]
board the bus and inspect the passengers, the punched tickets, and To properly construe Article 291 of the Labor Code, it is essential
the conductors reports. There is also the mandatory once-a-week car to ascertain the time when the third element of a cause of action
barn or shop day, where the bus is regularly checked as to its transpired. Stated differently, in the computation of the three-year
mechanical, electrical, and hydraulic aspects, whether or not there prescriptive period, a determination must be made as to the period
are problems thereon as reported by the driver and/or conductor. when the act constituting a violation of the workers right to the benefits
They too, must be at specific place as [sic] specified time, as they being claimed was committed. For if the cause of action accrued more
generally observe prompt departure and arrival from their point of than three (3) years before the filing of the money claim, said cause of
origin to their point of destination. In each and every depot, there is action has already prescribed in accordance with Article 291.[13]
always the Dispatcher whose function is precisely to see to it that the Consequently, in cases of nonpayment of allowances and other
bus and its crew leave the premises at specific times and arrive at monetary benefits, if it is established that the benefits being claimed
the estimated proper time. These, are present in the case at bar. The have been withheld from the employee for a period longer than three
driver, the complainant herein, was therefore under constant (3) years, the amount pertaining to the period beyond the three-year
supervision while in the performance of this work. He cannot be prescriptive period is therefore barred by prescription. The amount
considered a field personnel.[11] that can only be demanded by the aggrieved employee shall be limited
We agree in the above disquisition. Therefore, as correctly to the amount of the benefits withheld within three (3) years before the
concluded by the appellate court, respondent is not a field personnel filing of the complaint.[14]
but a regular employee who performs tasks usually necessary and It is essential at this point, however, to recognize that the service
desirable to the usual trade of petitioners business. Accordingly, incentive leave is a curious animal in relation to other benefits granted
respondent is entitled to the grant of service incentive leave. by the law to every employee. In the case of service incentive leave,
the employee may choose to either use his leave credits or commute incentive leave, but from the time when the employer refuses to pay
it to its monetary equivalent if not exhausted at the end of the its monetary equivalent after demand of commutation or upon
year.[15] Furthermore, if the employee entitled to service incentive termination of the employees services, as the case may be.
leave does not use or commute the same, he is entitled upon his The above construal of Art. 291, vis--vis the rules on service
resignation or separation from work to the commutation of his accrued incentive leave, is in keeping with the rudimentary principle that in the
service incentive leave. As enunciated by the Court in Fernandez v. implementation and interpretation of the provisions of the Labor Code
NLRC:[16] and its implementing regulations, the workingmans welfare should be
The clear policy of the Labor Code is to grant service incentive leave the primordial and paramount consideration.[18] The policy is to extend
pay to workers in all establishments, subject to a few exceptions. the applicability of the decree to a greater number of employees who
Section 2, Rule V, Book III of the Implementing Rules and can avail of the benefits under the law, which is in consonance with
Regulations provides that [e]very employee who has rendered at the avowed policy of the State to give maximum aid and protection to
least one year of service shall be entitled to a yearly service labor.[19]
incentive leave of five days with pay. Service incentive leave is a In the case at bar, respondent had not made use of his service
right which accrues to every employee who has served within 12 incentive leave nor demanded for its commutation until his
months, whether continuous or broken reckoned from the date the employment was terminated by petitioner. Neither did petitioner
employee started working, including authorized absences and paid compensate his accumulated service incentive leave pay at the time
regular holidays unless the working days in the establishment as a of his dismissal. It was only upon his filing of a complaint for illegal
matter of practice or policy, or that provided in the employment dismissal, one month from the time of his dismissal, that respondent
contracts, is less than 12 months, in which case said period shall be demanded from his former employer commutation of his accumulated
considered as one year. It is also commutable to its money leave credits. His cause of action to claim the payment of his
equivalent if not used or exhausted at the end of the year. In other accumulated service incentive leave thus accrued from the time when
words, an employee who has served for one year is entitled to it. He his employer dismissed him and failed to pay his accumulated leave
may use it as leave days or he may collect its monetary value. To credits.
limit the award to three years, as the solicitor general recommends, Therefore, the prescriptive period with respect to his claim for
is to unduly restrict such right.[17] [Italics supplied] service incentive leave pay only commenced from the time the
Correspondingly, it can be conscientiously deduced that the employer failed to compensate his accumulated service incentive
cause of action of an entitled employee to claim his service incentive leave pay at the time of his dismissal. Since respondent had filed his
leave pay accrues from the moment the employer refuses to money claim after only one month from the time of his dismissal,
remunerate its monetary equivalent if the employee did not make use necessarily, his money claim was filed within the prescriptive period
of said leave credits but instead chose to avail of its commutation. provided for by Article 291 of the Labor Code.
Accordingly, if the employee wishes to accumulate his leave credits WHEREFORE, premises considered, the instant petition is
and opts for its commutation upon his resignation or separation from hereby DENIED. The assailed Decision of the Court of Appeals in CA-
employment, his cause of action to claim the whole amount of his G.R. SP. No. 68395 is hereby AFFIRMED. No Costs.
accumulated service incentive leave shall arise when the employer SO ORDERED.
fails to pay such amount at the time of his resignation or separation
from employment.
Applying Article 291 of the Labor Code in light of this peculiarity 14. EN BANC
of the service incentive leave, we can conclude that the three (3)-year G.R. No. L-18353 July 31, 1963
prescriptive period commences, not at the end of the year when the SAN MIGUEL BREWERY, INC., petitioner, vs.
employee becomes entitled to the commutation of his service DEMOCRATIC LABOR ORGANIZATION, ET AL., respondents.
 Paredes, Poblador, Cruz and Nazareno for petitioner. The demands for the application of the Minimum Wage Law to
Delfin N. Mercader for respondents. workers paid on "pakiao" basis, payment of accumulated vacation
BAUTISTA ANGELO, J.: and sick leave and attorney's fees, as well as the award of additional
On January 27, 1955, the Democratic Labor Association filed separation pay, were either dismissed, denied, or set aside.
complaint against the San Miguel Brewery, Inc. embodying 12 Its motion for reconsideration having been denied by the industrial
demands for the betterment of the conditions of employment of its court en banc, which affirmed the decision of the court a quo with
members. The company filed its answer to the complaint specifically few exceptions, the San Miguel Brewery, Inc. interposed the present
denying its material averments and answering the demands point by petition for review.
point. The company asked for the dismissal of the complaint. Anent the finding of the court a quo, as affirmed by the Court of
At the hearing held sometime in September, 1955, the union Industrial Relations, to the effect that outside or field sales personnel
manifested its desire to confine its claim to its demands for overtime, are entitled to the benefits of the Eight-Hour Labor Law, the pertinent
night-shift differential pay, and attorney's fees, although it was facts are as follows:
allowed to present evidence on service rendered during Sundays After the morning roll call, the employees leave the plant of the
and holidays, or on its claim for additional separation pay and sick company to go on their respective sales routes either at 7:00 a.m. for
and vacation leave compensation.1äwphï1.ñët soft drinks trucks, or 8:00 a.m. for beer trucks. They do not have a
After the case had been submitted for decision, Presiding Judge daily time record. The company never require them to start their work
Jose S. Bautista, who was commissioned to receive the evidence, as outside sales personnel earlier than the above schedule.
rendered decision expressing his disposition with regard to the points The sales routes are so planned that they can be completed within 8
embodied in the complaint on which evidence was presented. hours at most, or that the employees could make their sales on their
Specifically, the disposition insofar as those points covered by this routes within such number of hours variable in the sense that
petition for review are concerned, is as follows: sometimes they can be completed in less than 8 hours, sometimes 6
1. With regard to overtime compensation, Judge Bautista held that to 7 hours, or more. The moment these outside or field employees
the provisions of the Eight-Hour Labor Law apply to the employees leave the plant and while in their sales routes they are on their own,
concerned for those working in the field or engaged in the sale of the and often times when the sales are completed, or when making short
company's products outside its premises and consequently they trip deliveries only, they go back to the plant, load again, and make
should be paid the extra compensation accorded them by said law in another round of sales. These employees receive monthly salaries
addition to the monthly salary and commission earned by them, and sales commissions in variable amounts. The amount of
regardless of the meal allowance given to employees who work up to compensation they receive is uncertain depending upon their
late at night. individual efforts or industry. Besides the monthly salary, they are
2. As to employees who work at night, Judge Bautista decreed that paid sales commission that range from P30, P40, sometimes P60,
they be paid their corresponding salary differentials for work done at P70, to sometimes P90, P100 and P109 a month, at the rate of
night prior to January 1, 1949 with the present qualification: 25% on P0.01 to P0.01-½ per case.
the basis of their salary to those who work from 6:00 to 12:00 p.m., It is contended that since the employees concerned are paid a
and 75% to those who work from 12:01 to 6:00 in the morning. commission on the sales they make outside of the required 8 hours
3. With regard to work done during Sundays and holidays, Judge besides the fixed salary that is paid to them, the Court of Industrial
Bautista also decreed that the employees concerned be paid an Relations erred in ordering that they be paid an overtime
additional compensation of 25% as provided for in Commonwealth compensation as required by the Eight-Hour Labor Law for the
Act No. 444 even if they had been paid a compensation on monthly reason that the commission they are paid already takes the place of
salary basis. such overtime compensation. Indeed, it is claimed, overtime
compensation is an additional pay for work or services rendered in
excess of 8 hours a day by an employee, and if the employee is is the extra work they perform, they can be considered as employees
already given extra compensation for labor performed in excess of 8 paid on piece work, "pakiao", or commission basis. The Department
hours a day, he is not covered by the law. His situation, the company of Labor, called upon to implement, the Eight-Hour Labor Law, is of
contends, can be likened to an employee who is paid on piece-work, this opinion when on December 9, 1957 it made the ruling on a query
"pakiao", or commission basis, which is expressly excluded from the submitted to it, thru the Director of the Bureau of Labor Standards, to
operation of the Eight-Hour Labor Law.1 the effect that field sales personnel receiving regular monthly
We are in accord with this view, for in our opinion the Eight-Hour salaries, plus commission, are not subject to the Eight-Hour Labor
Labor Law only has application where an employee or laborer is paid Law. Thus, on this point, said official stated:
on a monthly or daily basis, or is paid a monthly or daily . . . Moreover, when a fieldman receives a regular monthly salary
compensation, in which case, if he is made to work beyond the plus commission on percentage basis of his sales, it is also the
requisite period of 8 hours, he should be paid the additional established policy of the Office to consider his commission as
compensation prescribed by law. This law has no application when payment for the extra time he renders in excess of eight hours,
the employee or laborer is paid on a piece-work, "pakiao", or thereby classifying him as if he were on piecework basis, and
commission basis, regardless of the time employed. The philosophy therefore, technically speaking, he is not subject to the Eight-Hour
behind this exemption is that his earnings in the form of commission Labor Law.
based on the gross receipts of the day. His participation depends We are, therefore, of the opinion that the industrial court erred in
upon his industry so that the more hours he employs in the work the holding that the Eight-Hour Labor Law applies to the employees
greater are his gross returns and the higher his commission. This composing the outside service force and in ordering that they be paid
philosophy is better explained in Jewel Tea Co. v. Williams, C.C.A. the corresponding additional compensation.
Okla., 118 F. 2d 202, as follows: With regard to the claim for night salary differentials, the industrial
The reasons for excluding an outside salesman are fairly apparent. court found that claimants Magno Johnson and Jose Sanchez
Such salesman, to a greater extent, works individually. There are no worked with the respondent company during the period specified by
restrictions respecting the time he shall work and he can earn as them in their testimony and that watchmen Zoilo Illiga, Inocentes
much or as little, within the range of his ability, as his ambition Prescillas and Daniel Cayuca rendered night duties once every three
dictates. In lieu of overtime he ordinarily receives commissions as weeks continuously during the period of the employment and that
extra compensation. He works away from his employer's place of they were never given any additional compensation aside from their
business, is not subject to the personal supervision of his employer, monthly regular salaries. The court found that the company started
and his employer has no way of knowing the number of hours he paying night differentials only in January, 1949 but never before that
works per day. time. And so it ordered that the employees concerned be paid 25%
True it is that the employees concerned are paid a fixed salary for additional compensation for those who worked from 6:00 to 12:00
their month of service, such as Benjamin Sevilla, a salesman, P215; p.m. and 75% additional compensation for those who worked from
Mariano Ruedas, a truck driver, P155; Alberto Alpaza and Alejandro 12:01 to 6: 00 in the morning. It is now contended that this ruling is
Empleo, truck helpers, P125 each, and sometimes they work in erroneous because an award for night shift differentials cannot be
excess of the required 8-hour period of work, but for their extra work given retroactive effect but can only be entertained from the date of
they are paid a commission which is in lieu of the extra demand which was on January 27, 1953, citing in support thereof our
compensation to which they are entitled. The record shows that ruling in Earnshaws Docks & Honolulu Iron Works v. The Court of
these employees during the period of their employment were paid Industrial Relations, et al., L-8896, January 25, 1957.
sales commission ranging from P30, P40, sometimes P60, P70, to This ruling, however, has no application here for it appears that
sometimes P90, P100 and P109 a month depending on the volume before the filing of the petition concerning this claim a similar one
of their sales and their rate of commission per case. And so, insofar had already been filed long ago which had been the subject of
negotiations between the union and the company which culminated
in a strike in 1952. Unfortunately, however, the strike fizzled out and
the strikers were ordered to return to work with the understanding
that the claim for night salary differentials should be settled in court.
It is perhaps for this reason that the court a quo granted this claim in
spite of the objection of the company to the contrary.
The remaining point to be determined refers to the claim for pay for
Sundays and holidays for service performed by some claimants who
were watchmen or security guards. It is contended that these
employees are not entitled to extra pay for work done during these
days because they are paid on a monthly basis and are given one
day off which may take the place of the work they may perform either
on Sunday or any holiday.
We disagree with this claim because it runs counter to law. Section 4
of Commonwealth Act No. 444 expressly provides that no person,
firm or corporation may compel an employee or laborer to work
during Sundays and legal holidays unless he is paid an additional
sum of 25% of his regular compensation. This proviso is mandatory,
regardless of the nature of compensation. The only exception is with
regard to public utilities who perform some public service.
WHEREFORE, the decision of the industrial court is hereby modified
as follows: the award with regard to extra work performed by those
employed in the outside or field sales force is set aside. The rest of
the decision insofar as work performed on Sundays and holidays
covering watchmen and security guards, as well as the award for
night salary differentials, is affirmed. No costs.
Bengzon, C.J., Labrador, Concepcion, Reyes, J.B.L., Barrera,
Paredes, Dizon, Regala and Makalintal, JJ., concur.
Padilla, J., took no part.

15. EN BANC
G.R. No. 79255 January 20, 1992
 UNION OF FILIPRO EMPLOYEES (UFE), petitioner, vs. November 1, 1974, the date of effectivity of the Labor Code. He
BENIGNO VIVAR, JR., NATIONAL LABOR RELATIONS adjudged, however, that the company's sales personnel are field
COMMISSION and NESTLÉ PHILIPPINES, INC. (formerly personnel and, as such, are not entitled to holiday pay. He likewise
FILIPRO, INC.), respondents. ruled that with the grant of 10 days' holiday pay, the divisor should be
Jose C. Espinas for petitioner. changed from 251 to 261 and ordered the reimbursement of
Siguion Reyna, Montecillo & Ongsiako for private respondent. overpayment for overtime, night differential, vacation and sick leave
pay due to the use of 251 days as divisor.
GUTIERREZ, JR., J.: Both Nestle and UFE filed their respective motions for partial
This labor dispute stems from the exclusion of sales personnel from reconsideration. Respondent Arbitrator treated the two motions as
the holiday pay award and the change of the divisor in the appeals and forwarded the case to the NLRC which issued a
computation of benefits from 251 to 261 days. resolution dated May 25, 1987 remanding the case to the respondent
On November 8, 1985, respondent Filipro, Inc. (now Nestle arbitrator on the ground that it has no jurisdiction to review decisions
Philippines, Inc.) filed with the National Labor Relations Commission in voluntary arbitration cases pursuant to Article 263 of the Labor
(NLRC) a petition for declaratory relief seeking a ruling on its rights Code as amended by Section 10, Batas Pambansa Blg. 130 and as
and obligations respecting claims of its monthly paid employees for implemented by Section 5 of the rules implementing B.P. Blg. 130.
holiday pay in the light of the Court's decision in Chartered Bank However, in a letter dated July 6, 1987, the respondent arbitrator
Employees Association v. Ople (138 SCRA 273 [1985]). refused to take cognizance of the case reasoning that he had no
Both Filipro and the Union of Filipino Employees (UFE) agreed to more jurisdiction to continue as arbitrator because he had resigned
submit the case for voluntary arbitration and appointed respondent from service effective May 1, 1986.
Benigno Vivar, Jr. as voluntary arbitrator. Hence, this petition.
On January 2, 1980, Arbitrator Vivar rendered a decision directing The petitioner union raises the following issues:
Filipro to: 1) Whether or not Nestle's sales personnel are entitled to holiday
pay its monthly paid employees holiday pay pursuant to Article 94 of pay; and
the Code, subject only to the exclusions and limitations specified in 2) Whether or not, concomitant with the award of holiday pay, the
Article 82 and such other legal restrictions as are provided for in the divisor should be changed from 251 to 261 days and whether or not
Code. (Rollo, p. 31) the previous use of 251 as divisor resulted in overpayment for
Filipro filed a motion for clarification seeking (1) the limitation of the overtime, night differential, vacation and sick leave pay.
award to three years, (2) the exclusion of salesmen, sales The petitioner insists that respondent's sales personnel are not field
representatives, truck drivers, merchandisers and medical personnel under Article 82 of the Labor Code. The respondent
representatives (hereinafter referred to as sales personnel) from the company controverts this assertion.
award of the holiday pay, and (3) deduction from the holiday pay Under Article 82, field personnel are not entitled to holiday pay. Said
award of overpayment for overtime, night differential, vacation and article defines field personnel as "non-agritultural employees who
sick leave benefits due to the use of 251 divisor. (Rollo, pp. 138-145) regularly perform their duties away from the principal place of
Petitioner UFE answered that the award should be made effective business or branch office of the employer and whose actual hours of
from the date of effectivity of the Labor Code, that their sales work in the field cannot be determined with reasonable certainty."
personnel are not field personnel and are therefore entitled to holiday The controversy centers on the interpretation of the clause "whose
pay, and that the use of 251 as divisor is an established employee actual hours of work in the field cannot be determined with
benefit which cannot be diminished. reasonable certainty."
On January 14, 1986, the respondent arbitrator issued an order
declaring that the effectivity of the holiday pay award shall retroact to
It is undisputed that these sales personnel start their field work at Rule IV Holidays with Pay
8:00 a.m. after having reported to the office and come back to the Sec. 1. Coverage — This rule shall apply to all employees except:
office at 4:00 p.m. or 4:30 p.m. if they are Makati-based. xxx xxx xxx
The petitioner maintains that the period between 8:00 a.m. to 4:00 or (e) Field personnel and other employees whose time and
4:30 p.m. comprises the sales personnel's working hours which can performance is unsupervised by the employer . . . (Emphasis
be determined with reasonable certainty. supplied)
The Court does not agree. The law requires that the actual hours of While contending that such rule added another element not found in
work in the field be reasonably ascertained. The company has no the law (Rollo, p. 13), the petitioner nevertheless attempted to show
way of determining whether or not these sales personnel, even if that its affected members are not covered by the abovementioned
they report to the office before 8:00 a.m. prior to field work and come rule. The petitioner asserts that the company's sales personnel are
back at 4:30 p.m, really spend the hours in between in actual field strictly supervised as shown by the SOD (Supervisor of the Day)
work. schedule and the company circular dated March 15, 1984 (Annexes
We concur with the following disquisition by the respondent 2 and 3, Rollo, pp. 53-55).
arbitrator: Contrary to the contention of the petitioner, the Court finds that the
The requirement for the salesmen and other similarly situated aforementioned rule did not add another element to the Labor Code
employees to report for work at the office at 8:00 a.m. and return at definition of field personnel. The clause "whose time and
4:00 or 4:30 p.m. is not within the realm of work in the field as performance is unsupervised by the employer" did not amplify but
defined in the Code but an exercise of purely management merely interpreted and expounded the clause "whose actual hours of
prerogative of providing administrative control over such personnel. work in the field cannot be determined with reasonable certainty."
This does not in any manner provide a reasonable level of The former clause is still within the scope and purview of Article 82
determination on the actual field work of the employees which can be which defines field personnel. Hence, in deciding whether or not an
reasonably ascertained. The theoretical analysis that salesmen and employee's actual working hours in the field can be determined with
other similarly-situated workers regularly report for work at 8:00 a.m. reasonable certainty, query must be made as to whether or not such
and return to their home station at 4:00 or 4:30 p.m., creating the employee's time and performance is constantly supervised by the
assumption that their field work is supervised, is surface projection. employer.
Actual field work begins after 8:00 a.m., when the sales personnel The SOD schedule adverted to by the petitioner does not in the least
follow their field itinerary, and ends immediately before 4:00 or 4:30 signify that these sales personnel's time and performance are
p.m. when they report back to their office. The period between 8:00 supervised. The purpose of this schedule is merely to ensure that the
a.m. and 4:00 or 4:30 p.m. comprises their hours of work in the field, sales personnel are out of the office not later than 8:00 a.m. and are
the extent or scope and result of which are subject to their individual back in the office not earlier than 4:00 p.m.
capacity and industry and which "cannot be determined with Likewise, the Court fails to see how the company can monitor the
reasonable certainty." This is the reason why effective supervision number of actual hours spent in field work by an employee through
over field work of salesmen and medical representatives, truck the imposition of sanctions on absenteeism contained in the
drivers and merchandisers is practically a physical impossibility. company circular of March 15, 1984.
Consequently, they are excluded from the ten holidays with pay The petitioner claims that the fact that these sales personnel are
award. (Rollo, pp. 36-37) given incentive bonus every quarter based on their performance is
Moreover, the requirement that "actual hours of work in the field proof that their actual hours of work in the field can be determined
cannot be determined with reasonable certainty" must be read in with reasonable certainty.
conjunction with Rule IV, Book III of the Implementing Rules which The Court thinks otherwise.
provides:
The criteria for granting incentive bonus are: (1) attaining or When the claim of the Union for payment of ten holidays was
exceeding sales volume based on sales target; (2) good collection granted, there was a consequent need to abandon that 251 divisor.
performance; (3) proper compliance with good market hygiene; (4) To maintain it would create an impossible situation where the
good merchandising work; (5) minimal market returns; and (6) proper employees would benefit with additional ten days with pay but would
truck maintenance. (Rollo, p. 190). simultaneously enjoy higher benefits by discarding the same ten
The above criteria indicate that these sales personnel are given days for purposes of computing overtime and night time services and
incentive bonuses precisely because of the difficulty in measuring considering sick and vacation leave credits. Therefore,
their actual hours of field work. These employees are evaluated by reimbursement of such overpayment with the use of 251 as divisor
the result of their work and not by the actual hours of field work arises concomitant with the award of ten holidays with pay. (Rollo, p.
which are hardly susceptible to determination. 34)
In San Miguel Brewery, Inc. v. Democratic Labor Organization (8 The divisor assumes an important role in determining whether or not
SCRA 613 [1963]), the Court had occasion to discuss the nature of holiday pay is already included in the monthly paid employee's salary
the job of a salesman. Citing the case of Jewel Tea and in the computation of his daily rate. This is the thrust of our
Co. v. Williams, C.C.A. Okla., 118 F. 2d 202, the Court stated: pronouncement in Chartered Bank Employees Association
The reasons for excluding an outside salesman are fairly apparent. v. Ople (supra). In that case, We held:
Such a salesman, to a greater extent, works individually. There are It is argued that even without the presumption found in the rules and
no restrictions respecting the time he shall work and he can earn as in the policy instruction, the company practice indicates that the
much or as little, within the range of his ability, as his ambition monthly salaries of the employees are so computed as to include the
dictates. In lieu of overtime he ordinarily receives commissions as holiday pay provided by law. The petitioner contends otherwise.
extra compensation. He works away from his employer's place of One strong argument in favor of the petitioner's stand is the fact that
business, is not subject to the personal supervision of his employer, the Chartered Bank, in computing overtime compensation for its
and his employer has no way of knowing the number of hours he employees, employs a "divisor" of 251 days. The 251 working days
works per day. divisor is the result of subtracting all Saturdays, Sundays and the ten
While in that case the issue was whether or not salesmen were (10) legal holidays from the total number of calendar days in a year.
entitled to overtime pay, the same rationale for their exclusion as If the employees are already paid for all non-working days, the
field personnel from holiday pay benefits also applies. divisor should be 365 and not 251.
The petitioner union also assails the respondent arbitrator's ruling In the petitioner's case, its computation of daily ratio since
that, concomitant with the award of holiday pay, the divisor should be September 1, 1980, is as follows:
changed from 251 to 261 days to include the additional 10 holidays monthly rate x 12 months
and the employees should reimburse the amounts overpaid by ———————————
Filipro due to the use of 251 days' divisor. 251 days
Arbitrator Vivar's rationale for his decision is as follows: Following the criterion laid down in the Chartered Bank case, the use
. . . The new doctrinal policy established which ordered payment of of 251 days' divisor by respondent Filipro indicates that holiday pay
ten holidays certainly adds to or accelerates the basis of conversion is not yet included in the employee's salary, otherwise the divisor
and computation by ten days. With the inclusion of ten holidays as should have been 261.
paid days, the divisor is no longer 251 but 261 or 262 if election day It must be stressed that the daily rate, assuming there are no
is counted. This is indeed an extremely difficult legal question of intervening salary increases, is a constant figure for the purpose of
interpretation which accounts for what is claimed as falling within the computing overtime and night differential pay and commutation of
concept of "solutio indebti." 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 of the Court's decision in this case may not be needlessly delayed by
261 days would result in a lower daily rate which is violative of the another petition, the Court resolved to take up the matter of
prohibition on non-diminution of benefits found in Article 100 of the effectivity of the holiday pay award raised by Nestle.
Labor Code. To maintain the same daily rate if the divisor is adjusted Nestle insists that the reckoning period for the application of the
to 261 days, then the dividend, which represents the employee's holiday pay award is 1985 when the Chartered Bank decision,
annual salary, should correspondingly be increased to incorporate promulgated on August 28, 1985, became final and executory, and
the holiday pay. To illustrate, if prior to the grant of holiday pay, the not from the date of effectivity of the Labor Code. Although the Court
employee's annual salary is P25,100, then dividing such figure by does not entirely agree with Nestle, we find its claim meritorious.
251 days, his daily rate is P100.00 After the payment of 10 days' In Insular Bank of Asia and America Employees' Union (IBAAEU)
holiday pay, his annual salary already includes holiday pay and totals v. Inciong, 132 SCRA 663 [1984], hereinafter referred to as the IBAA
P26,100 (P25,100 + 1,000). Dividing this by 261 days, the daily rate case, the Court declared that Section 2, Rule IV, Book III of the
is still P100.00. There is thus no merit in respondent Nestle's claim of implementing rules and Policy Instruction No. 9, issued by the then
overpayment of overtime and night differential pay and sick and Secretary of Labor on February 16, 1976 and April 23, 1976,
vacation leave benefits, the computation of which are all based on respectively, and which excluded monthly paid employees from
the daily rate, since the daily rate is still the same before and after holiday pay benefits, are null and void. The Court therein reasoned
the grant of holiday pay. that, in the guise of clarifying the Labor Code's provisions on holiday
Respondent Nestle's invocation of solutio indebiti, or payment by pay, the aforementioned implementing rule and policy instruction
mistake, due to its use of 251 days as divisor must fail in light of the amended them by enlarging the scope of their exclusion.
Labor Code mandate that "all doubts in the implementation and The Chartered Bank case reiterated the above ruling and added the
interpretation of this Code, including its implementing rules and "divisor" test.
regulations, shall be resolved in favor of labor." (Article 4). Moreover, However, prior to their being declared null and void, the
prior to September 1, 1980, when the company was on a 6-day implementing rule and policy instruction enjoyed the presumption of
working schedule, the divisor used by the company was 303, validity and hence, Nestle's non-payment of the holiday benefit up to
indicating that the 10 holidays were likewise not paid. When Filipro the promulgation of the IBAA case on October 23, 1984 was in
shifted to a 5-day working schebule on September 1, 1980, it had the compliance with these presumably valid rule and policy instruction.
chance to rectify its error, if ever there was one but did not do so. It is In the case of De Agbayani v. Philippine National Bank, 38 SCRA
now too late to allege payment by mistake. 429 [1971], the Court discussed the effect to be given to a legislative
Nestle also questions the voluntary arbitrator's ruling that holiday pay or executive act subsequently declared invalid:
should be computed from November 1, 1974. This ruling was not xxx xxx xxx
questioned by the petitioner union as obviously said decision was . . . It does not admit of doubt that prior to the declaration of nullity
favorable to it. Technically, therefore, respondent Nestle should have such challenged legislative or executive act must have been in force
filed a separate petition raising the issue of effectivity of the holiday and had to be complied with. This is so as until after the judiciary, in
pay award. This Court has ruled that an appellee who is not an an appropriate case, declares its invalidity, it is entitled to obedience
appellant may assign errors in his brief where his purpose is to and respect. Parties may have acted under it and may have changed
maintain the judgment on other grounds, but he cannot seek their positions. What could be more fitting than that in a subsequent
modification or reversal of the judgment or affirmative relief unless he litigation regard be had to what has been done while such legislative
has also appealed. (Franco v. Intermediate Appellate Court, 178 or executive act was in operation and presumed to be valid in all
SCRA 331 [1989], citing La Campana Food Products, Inc. v. respects. It is now accepted as a doctrine that prior to its being
Philippine Commercial and Industrial Bank, 142 SCRA 394 [1986]). nullified, its existence as a fact must be reckoned with. This is merely
Nevertheless, in order to fully settle the issues so that the execution to reflect awareness that precisely because the judiciary is the
government organ which has the final say on whether or not a from the date of effectivity of the Labor Code, but from October 23,
legislative or executive measure is valid, a period of time may have 1984, the date of promulgation of the IBAA case.
elapsed before it can exercise the power of judicial review that may WHEREFORE, the order of the voluntary arbitrator in hereby
lead to a declaration of nullity. It would be to deprive the law of its MODIFIED. The divisor to be used in computing holiday pay shall be
quality of fairness and justice then, if there be no recognition of what 251 days. The holiday pay as above directed shall be computed from
had transpired prior to such adjudication. October 23, 1984. In all other respects, the order of the respondent
In the language of an American Supreme Court decision: "The actual arbitrator is hereby AFFIRMED.
existence of a statute, prior to such a determination of SO ORDERED.
[unconstitutionality], is an operative fact and may have
consequences which cannot justly be ignored. The past cannot 16. EN BANC
always be erased by a new judicial declaration. The effect of the G.R. No. L-4148 July 16, 1952
subsequent ruling as to invalidity may have to be considered in MANILA TERMINAL COMPANY, INC., petitioner, vs.
various aspects, — with respect to particular relations, individual and THE COURT OF INDUSTRIAL RELATIONS and MANILA
corporate, and particular conduct, private and official." (Chicot TERMINAL RELIEF AND MUTUAL AID
County Drainage Dist. v. Baxter States Bank, 308 US 371, 374 ASSOCIATION, respondents.
[1940]). This language has been quoted with approval in a resolution Perkins, Ponce Enrile and Contreras for petitioner.
in Araneta v. Hill (93 Phil. 1002 [1952]) and the decision in Manila Antonio V. Raquiza, Honesto Ricobal and Perfecto E. Llacarfor
Motor Co., Inc. v. Flores (99 Phil. 738 [1956]). An even more recent respondent Association.
instance is the opinion of Justice Zaldivar speaking for the Court Mariano R. Padilla for respondent Court of Industrial Relations.
in Fernandez v. Cuerva and Co. (21 SCRA 1095 [1967]. (At pp. 434- PARAS, C. J.:
435) On September 1, 1945, the Manila Terminal Company, Inc.
The "operative fact" doctrine realizes that in declaring a law or rule hereinafter to be referred as to the petitioner, undertook the arrastre
null and void, undue harshness and resulting unfairness must be service in some of the piers in Manila's Port Area at the request and
avoided. It is now almost the end of 1991. To require various under the control of the United States Army. The petitioner hired
companies to reach back to 1975 now and nullify acts done in good some thirty men as watchmen on twelve-hour shifts at a
faith is unduly harsh. 1984 is a fairer reckoning period under the compensation of P3 per day for the day shift and P6 per day for the
facts of this case. night shift. On February 1, 1946, the petitioner began the postwar
Applying the aforementioned doctrine to the case at bar, it is not far- operation of the arrastre service at the present at the request and
fetched that Nestle, relying on the implicit validity of the implementing under the control of the Bureau of Customs, by virtue of a contract
rule and policy instruction before this Court nullified them, and entered into with the Philippine Government. The watchmen of the
thinking that it was not obliged to give holiday pay benefits to its petitioner continued in the service with a number of substitutions and
monthly paid employees, may have been moved to grant other additions, their salaries having been raised during the month of
concessions to its employees, especially in the collective bargaining February to P4 per day for the day shift and P6.25 per day for the
agreement. This possibility is bolstered by the fact that respondent nightshift. On March 28, 1947, Dominador Jimenez, a member of the
Nestle's employees are among the highest paid in the industry. With Manila Terminal Relief and Mutual Aid Association, sent a letter to
this consideration, it would be unfair to impose additional burdens on the Department of Labor, requesting that the matter of overtime pay
Nestle when the non-payment of the holiday benefits up to 1984 was be investigated, but nothing was done by the Department. On April
not in any way attributed to Nestle's fault. 29, 1947, Victorino Magno Cruz and five other employees, also
The Court thereby resolves that the grant of holiday pay be effective, member of the Manila Transit Mutual Aid Association, filed a 5-point
not from the date of promulgation of the Chartered Bank case nor demand with the Department of Labor, including overtime pay, but
the Department again filed to do anything about the matter. On May independent personality and which cannot be sued without the
27, 1947, the petitioner instituted the system of strict eight-hour consent of the State. (Metran vs. Paredes, 45. Off. Gaz., 2835.)
shifts. On June 19, 1947, the Manila Port Terminal Police The petitioner find a motion for reconsideration. The Association also
Association, not registered in accordance with the provisions of filed a motion for reconsideration in so far its other demands were
Commonwealth Act No. 213, filed a petition with the Court of dismissed. Judge Yanson, concurred in by Judge Jose S. Bautista,
Industrial Relations. On July 16, 1947, the Manila Terminal Relief promulgated on July 13, 1950, a resolution denying both motions for
and Mutual Aid Association was organized for the first time, having reconsideration. Presiding Judge Arsenio C. Roldan, in a separate
been granted certificate No. 375 by the Department of Labor. On opinion concurred in by Judge Modesto Castillo, agreed with the
July 28, 1947, Manila Terminal Relief and Mutual Aid Association decision of Judge Yanson of April 1, 1950, as to the dismissal of
filed an amended petition with the Court of Industrial Relations other demands of the Association, but dissented therefrom as to the
praying, among others, that the petitioner be ordered to pay its granting of overtime pay. In a separate decisive opinion, Judge Juan
watchmen or police force overtime pay from the commencement of S. Lanting concurred in the dismissal of other demands of the
their employment. On May 9, 1949, by virtue of Customs Association. With respect to overtime compensation, Judge Lanting
Administrative Order No. 81 and Executive Order No. 228 of the ruled:
President of the Philippines, the entire police force of the petitioner 1. The decision under review should be affirmed in so far it grants
was consolidated with the Manila Harvor Police of the Customs compensation for overtime on regular days (not Sunday and legal
Patrol Service, a Government agency under the exclusive control of holidays)during the period from the date of entrance to duty to May
the Commissioner of Customs and the Secretary of Finance The 24, 1947, such compensation to consists of the amount
Manila Terminal Relief and Mutual Aid Association will hereafter be corresponding to the four hours' overtime at the regular rate and an
referred to as the Association. additional amount of 25 per cent thereof.
Judge V. Jimenez Yanson of the Court of Industrial Relations in his 2. As to the compensation for work on Sundays and legal holidays,
decision of April 1, 1950, as amended on April 18, 1950, while the petitioner should pay to its watchmen the compensation that
dismissing other demands of the Association for lack of jurisdiction, corresponds to the overtime (in excess of 8 hours) at the regular rate
ordered the petitioner to pay to its police force — only, that is, without any additional amount, thus modifying the
(a) Regular or base pay corresponding to four hours' overtime plus decision under review accordingly.
25 per cent thereof as additional overtime compensation for the 3. The watchmen are not entitled to night differential pay for past
period from September 1, 1945 to May 24, 1947; services, and therefore the decision should be reversed with the
(b) Additional compensation of 25 per cent to those who worked from respect thereto.
6:00 p.m. to 6:00 a.m. during the same period: The petitioner has filed a present petition for certiorari. Its various
(c) Additional compensation of 50 per cent for work performed on contentions may be briefly summed up in the following propositions:
Sundays and legal holidays during the same period; (1) The Court of Industrial Relations has no jurisdiction to render a
(d) Additional compensation of 50 per cent for work performed on money judgment involving obligation in arrears. (2) The agreement
Sundays and legal holidays from May 24, 1947 to May 9, 1949; and under which its police force were paid certain specific wages for
(e) Additional compensation of 25 per cent for work performed at twelve-hour shifts, included overtime compensation. (3) The
night from May 29, 1947 to May 9, 1949. Association is barred from recovery by estoppel and laches. (4) the
With reference to the pay for overtime service after the watchmen nullity or invalidity of the employment contract precludes any
had been integrated into the Manila Harbor Police, Judge Yanson recovery by the Association. (5) Commonwealth Act No. 4444 does
ruled that the court has no jurisdiction because it affects the Bureau not authorize recovery of back overtime pay.
of Customs, an instrumentality of the Government having no The contention that the Court of Industrial Relations has no
jurisdiction to award a money judgment was already overruled by this
Court in G.R. No. L-4337, Detective & protective Bureau, Inc. vs. number of hours, sufficient to cover both the statutory minimum
Court of Industrial Relations and United Employees Welfare wage and overtime compensation, if computed on the basis of the
Association, 90 Phil., 665, in this wise: "It is also argued that the statutory minimum wage, and which makes no provision for a fixed
respondent court has no jurisdiction to award overtime pay, which is hourly rate or that the weekly wage includes overtime compensation,
money judgment. We believe that under Commonwealth Act No. 103 does not meet the requirements of the Act."
the Court is empowered to make the order for the purpose of settling Moreover, we note that after the petition had instituted the strict
disputes between the employer and employee1. As a matter of fact eight-hour shifts, no reduction was made in the salaries which its
this Court has confirmed an order of the Court of Industrial Relations watchmen received under the twelve hour arrangement. Indeed, as
requiring the Elks Club to pay to its employees certain sum of money admitted by the petitioner, "when the members or the respondent
as overtime back wages from June 3, 1939 to March 13, 1941. This, union were placed on strict eight-hour shifts, the lowest salary of all
in spite the allegation of lack or excess of jurisdiction on the part of the members of the respondent union was P165 a month, or P5.50
said court. (45 Off. Gaz., 3829; 80 Phil. 272)" daily, for both day and night shifts." Although it may be argued that
The important point stressed by the petitioner is that the contract the salary for the night shift was somewhat lessened, the fact that
between it and the Association upon the commencement of the the rate for the day shift was increased in a sense tends to militate
employment of its watchman was to the certain rates of pay, against the contention that the salaries given during the twelve-hour
including overtime compensation namely, P3 per day for the day shift shifts included overtime compensation.
and P6 per day for night shift beginning September 1, 1945, and P4 Petitioner's allegation that the association had acquiesced in the
per day shift and P6.25 per day for the night shift since February, twelve-hour shifts for more than 18 months, is not accurate, because
1946. The record does not bear out these allegations. The petitioner the watchmen involved in this case did not enter the service of the
has relied merely on the facts that its watchmen had worked on petitioner, at one time, on September 1, 1945. As Judge Lanting
twelve-hour shifts at specific wages per day and that no complaint found, "only one of them entered the service of the company on said
was made about the matter until, first on March 28, 1947 and, date, very few during the rest of said month, some during the rest of
secondly, on April 29, 1947. that year (1945) and in 1946, and very many in 1947, 1948 and
In times of acute unemployment, the people, urged by the instinct of 1949."
self-preservation, go from place to place and from office to office in The case at bar is quite on all fours with the case of Detective &
search for any employment, regardless of its terms and conditions, Protective Bureau, Inc. vs. Court of Industrial Relations and United
their main concern in the first place being admission to some work. Employees Welfare Association, supra, in which the facts were as
Specially for positions requiring no special qualifications, applicants follows: "The record discloses that upon petition properly submitted,
would be good as rejected if they ever try to be inquisitive about the said court made an investigation and found that the members of the
hours of work or the amount of salary, ever attempt to dictate their United Employees Welfare Association (hereafter called the
terms. The petitioner's watchmen must have railroaded themselves Association) were in the employ of the petitioner Detective and
into their employment, so to speak, happy in the thought that they Protective Bureau, Inc. (herein called the Bureau) which is engaged
would then have an income on which to subsist. But, at the same in the business of furnishing security guards to commercial and
time, they found themselves required to work for twelve hours a day. industrial establishments, paying to said members monthly salaries
True, there was agreement to work, but can it fairly be supposed that out of what it received from the establishments benefited by guard
they had the freedom to bargain in any way, much less to insist in service. The employment called for daily tours of duty for more than
the observance of the Eight Hour Labor Law? eight hours, in addition to work on Sundays and holidays.
As was aptly said in Floyd vs. Du Bois Soap Co., 1942, 317 U. S. Nonetheless the members performed their labors without receiving
596, 63 Sup. Ct. 159; 6 CCH Labor Cases, Par. 51, 147, "A contract extra compensation." The only difference is that, while in said case
of employment, which provides for a weekly wage for a specified the employees concerned were paid monthly salaries, in the case
now before us the wages were computed daily. In the case cited, we While counsel for the petitioner has cited authorities in support of the
held the following: doctrine invoked, there are also authorities pointed out in the opinion
It appears that the Bureau had been granting the members of Judge Lanting to the contrary. Suffice it to say, in this connection,
of the Association, every month, "two days off" days in which that we are inclined to rule adversely against petitioner for the
they rendered no service, although they received salary for reasons already stated.
the whole month. Said Bureau contended below that the pay The argument that the nullity or invalidity of the employment contract
corresponding to said 2 day vacation corresponded to the precludes recovery by the Association of any overtime pay is also
wages for extra work. The court rejected the contention, untenable. The argument, based on the supposition that the parties
quite properly we believe, because in the contract there was are in pari delicto, was in effect turned down in Gotamo Lumber Co.
no agreement to that effect; and such agreement, if any, vs. Court of Industrial Relations,* 47 Off. Gaz., 3421, wherein we
would probably be contrary to the provisions of the Eight- ruled: "The petitioner maintains that as the overtime work had been
Hour Law (Act No. 444, sec. 6) and would be null and performed without a permit from the Department of Labor, no extra
void ab initio. compensation should be authorized. Several decisions of this court
It is argued here, in opposition to the payment, that until the are involved. But those decisions were based on the reasoning that
commencement of this litigation the members of the as both the laborer and employer were duty bound to secure the
Association never claimed for overtime pay. That may be permit from the Department of Labor, both were in pari delicto.
true. Nevertheless the law gives them the right to extra However the present law in effect imposed that duty upon the
compensation. And they could not be held to employer (C.A. No. 444). Such employer may not therefore be heard
have impliedly waived such extra compensation, for the to plead his own neglect as exemption or defense.
obvious reason that could not have expressly waived it. The employee in rendering extra service at the request of his
The foregoing pronouncements are in point. The Association cannot employer has a right to assume that the latter has complied
be said to have impliedly waived the right to overtime compensation, with the requirement of the law, and therefore has obtained
for the obvious reason that they could not have expressly waived it." the required permission from the Department of Labor.
The principle of estoppel and the laches cannot well be invoked Moreover, the Eight-Hour Law, in providing that "any agreement or
against the Association. In the first place, it would be contrary to the contract between the employer and the laborer or employee contrary
spirit of the Eight Hour Labor Law, under which as already seen, the to the provisions of this Act shall be null avoid ab initio,"
laborers cannot waive their right to extra compensation. In the (Commonwealth Act No. 444, sec. 6), obviously intended said
second place, the law principally obligates the employer to observe provision for the benefit of the laborers or employees. The employer
it, so much so that it punishes the employer for its violation and cannot, therefore, invoke any violation of the act to exempt him from
leaves the employee or laborer free and blameless. In the third liability for extra compensation. This conclusion is further supported
place, the employee or laborer is in such a disadvantageous position by the fact that the law makes only the employer criminally liable for
as to be naturally reluctant or even apprehensive in asserting any any violation. It cannot be pretended that, for the employer to commit
claim which may cause the employer to devise a way for exercising any violation of the Eight-Hour Labor Law, the participation or
his right to terminate the employment. acquiescence of the employee or laborer is indispensable, because
If the principle of estoppel and laches is to be applied, it may bring the latter in view of his need and desire to live, cannot be considered
about a situation, whereby the employee or laborer, who cannot as being on the same level with the employer when it comes to the
expressly renounce their right to extra compensation under the question of applying for and accepting an employment.
Eight-Hour Labor Law, may be compelled to accomplish the same Petitioner also contends that Commonwealth Act No. 444 does not
thing by mere silence or lapse of time, thereby frustrating the provide for recovery of back overtime pay, and to support this
purpose of law by indirection. contention it makes referrence to the Fair Labor Standards Act of the
United States which provides that "any employer who violates the
provisions of section 206 and section 207 of this title shall be liable to
the employee or employees affected in the amount of their unpaid
minimum wages or their unpaid overtime compensation as the case
may be," — a provision not incorporated in Commonwealth Act No.
444, our Eight-Hour Labor Law. We cannot agree to the proposition,
because sections 3 and 5 of Commonwealth Act 444 expressly
provides for the payment of extra compensation in cases where
overtime services are required, with the result that the employees or
laborers are entitled to collect such extra compensation for past
overtime work. To hold otherwise would be to allow an employer to
violate the law by simply, as in this case, failing to provide for and
pay overtime compensation.
The point is stressed that the payment of the claim of the Association
for overtime pay covering a period of almost two years may lead to
the financial ruin of the petitioner, to the detriment of its employees
themselves. It is significant, however, that not all the petitioner's
watchmen would receive back overtime pay for the whole period
specified in the appealed decision, since the record shows that the
great majority of the watchmen were admitted in 1946 and 1947, and
even 1948 and 1949. At any rate, we are constrained to sustain the
claim of the Association as a matter of simple justice, consistent with
the spirit and purpose of the Eight-Hour Labor Law. The petitioner, in
the first place, was required to comply with the law and should
therefore be made liable for the consequences of its violation.
It is high time that all employers were warned that the public is
interested in the strict enforcement of the Eight-Hour Labor Law. This
was designed not only to safeguard the health and welfare of the
laborer or employee, but in a way to minimize unemployment by
forcing employers, in cases where more than 8-hour operation is
necessary, to utilize different shifts of laborers or employees working
only for eight hours each.
Wherefore, the appealed decision, in the form voted by Judge
Lanting, is affirmed, it being understood that the petitioner's
watchmen will be entitled to extra compensation only from the dates
they respectively entered the service of the petitioner, hereafter to be
duly determined by the Court of Industrial Relations. So ordered,
without costs.
Feria, Pablo, Bengzon, Padilla, Tuason, Bautista Angelo, and
Labrador, JJ., concur.
 17. FIRST DIVISION lunch break, it filed on behalf of its members a complaint with the
[G.R. No. 119205. April 15, 1998] Labor Arbiter for unfair labor practice, discrimination and evasion of
SIME DARBY PILIPINAS, INC., petitioner, vs. NATIONAL LABOR liability pursuant to the resolution of this Court in Sime Darby
RELATIONS COMMISSION (2ND DIVISION) and SIME International Tire Co., Inc. v. NLRC.[2] However, the Labor Arbiter
DARBY SALARIED EMPLOYEES ASSOCIATION (ALU- dismissed the complaint on the ground that the change in the work
TUCP), respondents. schedule and the elimination of the 30-minute paid lunch break of the
DECISION factory workers constituted a valid exercise of management
BELLOSILLO, J.: prerogative and that the new work schedule, break time and one-hour
Is the act of management in revising the work schedule of its lunch break did not have the effect of diminishing the benefits granted
employees and discarding their paid lunch break constitutive of unfair to factory workers as the working time did not exceed eight (8) hours.
labor practice? The Labor Arbiter further held that the factory workers would be
Sime Darby Pilipinas, Inc., petitioner, is engaged in the justly enriched if they continued to be paid during their lunch break
manufacture of automotive tires, tubes and other rubber even if they were no longer on call or required to work during the
products. Sime Darby Salaried Employees Association (ALU-TUCP), break. He also ruled that the decision in the earlier Sime
private respondent, is an association of monthly salaried employees Darby case[3] was not applicable to the instant case because the
of petitioner at its Marikina factory. Prior to the present controversy, all former involved discrimination of certain employees who were not paid
company factory workers in Marikina including members of private for their 30-minute lunch break while the rest of the factory workers
respondent union worked from 7:45 a.m. to 3:45 p.m. with a 30 minute were paid; hence, this Court ordered that the discriminated employees
paid on call lunch break. be similarly paid the additional compensation for their lunch break.
On 14 August 1992 petitioner issued a memorandum to all Private respondent appealed to respondent National Labor
factory-based employees advising all its monthly salaried employees Relations Commission (NLRC) which sustained the Labor Arbiter and
in its Marikina Tire Plant, except those in the Warehouse and Quality dismissed the appeal.[4] However, upon motion for reconsideration by
Assurance Department working on shifts, a change in work schedule private respondent, the NLRC, this time with two (2) new
effective 14 September 1992 thus commissioners replacing those who earlier retired, reversed its arlier
TO: ALL FACTORY-BASED EMPLOYEES decision of 20 April 1994 as well as the decision of the Labor
RE: NEW WORK SCHEDULE Arbiter.[5] The NLRC considered the decision of this Court in the Sime
Effective Monday, September 14, 1992, the new work Darby case of 1990 as the law of the case wherein petitioner was
schedule factory office will be as follows: ordered to pay the money value of these covered employees deprived
7:45 A.M. 4:45 P.M. (Monday to Friday) of lunch and/or working time breaks. The public respondent declared
7:45 A.M. 11:45 P.M. (Saturday). that the new work schedule deprived the employees of the benefits of
Coffee break time will be ten minutes only anytime between: time-honored company practice of providing its employees a 30-
9:30 A.M. 10:30 A.M. and minute paid lunch break resulting in an unjust diminution of company
2:30 P.M. 3:30 P.M. privileges prohibited by Art. 100 of the Labor Code, as
Lunch break will be between: amended. Hence, this petition alleging that public respondent
12:00 NN 1:00 P.M. (Monday to Friday). committed grave abuse of discretion amounting to lack or excess of
Excluded from the above schedule are the Warehouse and jurisdiction: (a) in ruling that petitioner committed unfair labor practice
QA employees who are on shifting. Their work and break in the implementation of the change in the work schedule of its
time schedules will be maintained as it is now.[1] employees from 7:45 a.m. 3:45 p.m. to 7:45 a.m. 4:45 p.m. with one-
Since private respondent felt affected adversely by the change in hour lunch break from 12:00 nn to 1:00 p.m.; (b) in holding that there
the work schedule and discontinuance of the 30-minute paid on call 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 such act of management was discriminatory and constituted unfair
affirming the decision of the NLRC, petitioner was authorized to labor practice.
discontinue the practice of having a 30-minute paid lunch break should The case before us does not pertain to any controversy involving
it decide to do so; and (d) in ignoring petitioners inherent management discrimination of employees but only the issue of whether the change
prerogative of determining and fixing the work schedule of its of work schedule, which management deems necessary to increase
employees which is expressly recognized in the collective bargaining production, constitutes unfair labor practice. As shown by the records,
agreement between petitioner and private respondent. the change effected by management with regard to working time is
The Office of the Solicitor General filed in lieu of comment a made to apply to all factory employees engaged in the same line of
manifestation and motion recommending that the petition be granted, work whether or not they are members of private respondent
alleging that the 14 August 1992 memorandum which contained the union. Hence, it cannot be said that the new scheme adopted by
new work schedule was not discriminatory of the union members nor management prejudices the right of private respondent to self-
did it constitute unfair labor practice on the part of petitioner. organization.
We agree, hence, we sustain petitioner. The right to fix the work Every business enterprise endeavors to increase its profits. In the
schedules of the employees rests principally on their employer. In the process, it may devise means to attain that goal. Even as the law is
instant case petitioner, as the employer, cites as reason for the solicitous of the welfare of the employees, it must also protect the right
adjustment the efficient conduct of its business operations and its of an employer to exercise what are clearly management
improved production.[6] It rationalizes that while the old work schedule prerogatives.[10] Thus, management is free to regulate, according to its
included a 30-minute paid lunch break, the employees could be called own discretion and judgment, all aspects of employment, including
upon to do jobs during that period as they were on call. Even if hiring, work assignments, working methods, time, place and manner
denominated as lunch break, this period could very well be considered of work, processes to be followed, supervision of workers, working
as working time because the factory employees were required to work regulations, transfer of employees, work supervision, lay off of workers
if necessary and were paid accordingly for working. With the new work and discipline, dismissal and recall of workers.[11] Further,
schedule, the employees are now given a one-hour lunch break management retains the prerogative, whenever exigencies of the
without any interruption from their employer. For a full one-hour service so require, to change the working hours of its employees. So
undisturbed lunch break, the employees can freely and effectively use long as such prerogative is exercised in good faith for the
this hour not only for eating but also for their rest and comfort which advancement of the employers interest and not for the purpose of
are conducive to more efficiency and better performance in their defeating or circumventing the rights of the employees under special
work. Since the employees are no longer required to work during this laws or under valid agreements, this Court will uphold such
one-hour lunch break, there is no more need for them to be exercise.[12]
compensated for this period. We agree with the Labor Arbiter that the While the Constitution is committed to the policy of social justice
new work schedule fully complies with the daily work period of eight and the protection of the working class, it should not be supposed that
(8) hours without violating the Labor Code.[7] Besides, the new every dispute will be automatically decided in favor of
schedule applies to all employees in the factory similarly situated labor. Management also has right which, as such, are entitled to
whether they are union members or not.[8] respect and enforcement in the interest of simple fair play. Although
Consequently, it was grave abuse of discretion for public this Court has inclined more often than not toward the worker and has
respondent to equate the earlier Sime Darby case[9] with the facts upheld his cause in his conflicts with the employer, such as favoritism
obtaining in this case. That ruling in the former case is not applicable has not blinded the Court to the rule that justice is in every case for
here. The issue in that case involved the matter of granting lunch the deserving, to be dispensed in the light of the established facts and
breaks to certain employees while depriving the other employees of the applicable law and doctrine.[13]
such breaks. This Court affirmed in that case the NLRCs finding that
 WHEREFORE, the Petition is GRANTED. The Resolution of the On June 19,1986, the NLRC affirmed the arbiter's decision with
National Labor Relations Commission dated 29 November 1994 is modification as follows:
SET ASIDE and the decision of the Labor Arbiter dated 26 November Be that as it may, since as intimated at the outset, the vacation leave
1993 dismissing the complaint against petitioner for unfair labor forced upon the complainants was visited with arbitrariness not
practice is AFFIRMED. amounting to unfair labor practice, a refund of the amount equivalent
SO ORDERED. to the earned leave of each of the complainants treated as their pay
Davide, Jr., (Chairman), Vitug, Panganiban, and Quisumbing, during their vacation is believed in order.
JJ., concur. WHEREFORE, modified as above indicated, the decision appealed
from is hereby AFFIRMED. (PARTIAL APPEAL TO THE NATIONAL
18. THIRD DIVISION LABOR RELATIONS COMMISSION, p. 1) (p. 60, Rollo)
G.R. No. 80737 September 29, 1988
PHILIPPINE GRAPHIC ARTS INC., IGMIDIO R. SILVERIO AND The petitioners raise two issues in their petition, namely:
CARLOS CABAL, petitioners, A. PUBLIC RESPONDENT COMMITTED A GRAVE ABUSE OF
vs. DISCRETION IN RENDERING A RESOLUTION ON AN ISSUE
NATIONAL LABOR RELATIONS COMMISSION, ROSALINA M. INVOLVING A MONEY CLAIM, WHICH WAS NOT A SUBJECT OF
PULPULAAN AND EMELITA SALONGA, respondents. AN APPEAL NOR ASSIGNED AS AN ERROR.
George L. Howard for petitioners. B. PUBLIC RESPONDENT COMMITTED A GRAVE ABUSE OF
The Office of the Solicitor General for public respondent. DISCRETION IN RENDERING A RESOLUTION IN FAVOR OF THE
Raul E. Espinosa for private respondents. UNION AND/OR 23 OTHER EMPLOYEES WHO ARE NOT REAL
PARTIES IN THE CASE, NOR IN THE PARTIAL APPEAL. (pp. 17 &
GUTIERREZ, JR., J.: 22, Rollo)
In October, 1984, the petitioner corporation was forced by economic After considering the petition and treating the comments of the
circumstances to require its workers to go on mandatory vacation private respondents and the Solicitor General as Answers, the Court
leave in batches of seven or nine for periods ranging from 15, 30, to resolved to give due course to the petition and decide it on the basic
45 days. The workers were paid while on leave but the pay was merits.
charged against their respective earned leaves. The principal issue now before the Court is the forced vacation leave
As a result, the private respondents filed complaints for unfair labor without pay whether or not it is unfair labor practice and if not an
practice and discrimination. unfair labor practice, whether or not it was tainted with arbitrariness.
On April 9, 1986, the Labor Arbiter rendered a decision the The Court is convinced from the records now before it, that there
dispositive portion of which reads: was no unfair labor practice. As found by the NLRC, the private
Wherefore, for lack of merit, the complaint for unfair labor practice on respondents themselves never questioned the existence of an
grounds of discrimination, forced leave and reduction of working economic crisis but, in fact, admitted its existence. There is basis for
days is hereby, DISMISSED. Respondent is hereby ordered to the petitioner's contentions that the reduction of work schedule was
restore and grant to all its employees the company policy regarding temporary, that it was taken only after notice and consultations with
groceries previously enjoyed by them. (p. 27, Rollo) the workers and supervisors, that a consensus was reached on how
to deal with deteriorating economic conditions and reduced sales
The private respondents filed a "partial appeal" with the National and that the temporary reduction of working days was a more
Labor Relations Commission (NLRC) questioning the Labor Arbiter's humane solution instead of a retrenchment and reduction of
dismissal of their complaint for unfair labor practice and the resultant personnel. The petitioner further points out that this is in consonance
forced vacation leaves which were actually without pay. with the collective bargaining agreement between the employer and
its employees. The Court, therefore, agrees with the Solicitor equitable that whoever is aggrieved should initiate settlement of the
General in his submission that: grievance through the grievance machinery. To impose the
compulsory procedure on employers alone would be oppressive of
There is also no showing that the imposition of forced leave was capital, notwithstanding the fact that in most cases the grievance is
exercised for the purpose of defeating or circumventing the rights of of the employees.
employees under special laws or under valid agreements. As the In the case at bar, when petitioners sent notice to complainants, no
records show, petitioners instituted the forced leave due to economic grievance between petitioners and private respondents that need be
crisis, which private respondents do not even question. (Position threshed out before the grievance machinery has yet materialized.
Paper [Private Respondents'], dated July 1985, p. 2) But then, private respondents, who received such notice and being
Likewise the forced leave was enforced neither in a malicious, harsh, aggrieved thereof, instituted a case before the Labor Arbiter for
oppressive, vindictive nor wanton manner, or out of malice or spite. unfair labor practices and discrimination, prior to any referral to the
Apart from private respondents concurrence that the forced leave grievance machinery, which they are equally mandated to go through
was implemented due to economic crisis, what only "hurts" (ibid.) and under the circumstances they were better situated to initiate;
them "is that said management's plan was not even discussed in the likewise, petitioners even prayed before the Labor Arbiter that the
grievance procedure so that the Union members thereof may well be complaint be dismissed and/or referred to the grievance machinery.
apprised of the reason therefor." (Ibid.) (Position Paper (Petitioners'), dated 24 July 1985, p. 7) Thus,
However, to rule that petitioners' failure to bring the question of petitioner should not be faulted if the grievance machinery was in
necessity in the imposition of forced leave and the distribution of any way by-passed. (Rollo, pp. 64-66)
work availability before the grievance machinery, as a prior requisite WHEREFORE, the petition is hereby GRANTED. The June 19, 1987
for the implementation of the forced leave scheme, constitutes resolution of the National Labor Relations Commission is set aside
arbitrariness is erroneous. (Rollo, pp. 63-64) and the April 9, 1986 decision of the Labor Arbiter is REINSTATED.
The decision to resort to forced leaves was, under the SO ORDERED.
circumstances, a management prerogative. The workers' claim of
non-resort. to the grievance machinery is negated by their failure to
initiate steps for its employment.
As stressed by the Solicitor General:
The statutory law on grievance procedure provides that:
ART. 261. Grievance machinery. Whenever a grievance arises from
the interpretation or implementation of a collective agreement,
including disciplinary actions imposed on members of the bargaining
unit, the employer and the bargaining representative shall meet to
adjust the grievance. Where the grievance procedure as provided
herein does not apply, grievances shall be subject to negotiation,
conciliation or arbitration as provided elsewhere in this Code (Labor
Code (Emphasis supplied)
As the law stands, both employers and bargaining representative of
the employees are required to go through the grievance machinery in
case a grievance arises. And though the law does not provide who,
as between labor and capital, should initiate that said grievance be
brought first to the, grievance machinery, it is only logical, just and 19. SECOND DIVISION
 LINTON COMMERCIAL CO., INC. G.R. No. 163147 the implementation of the new policy without waiting for its approval
and DESIREE ONG, Petitioners,-versus- ALEX A. HELLERA, by DOLE.
FRANCISCO RACASA, DANTE ESCARLAN,Respondents.
Aggrieved, sixty-eight (68) workers (workers) filed a
DECISION Complaint for illegal reduction of workdays with the Arbitration Branch
of the NLRC on 17 July 1998.
TINGA, J.:
On the other hand, the workers pointed out that Linton
This is a petition for review under Rule 45 of the Rules of Civil implemented the reduction of work hours without observing Article 283
Procedure seeking the reversal of the Decision[1] of the Court of of the Labor Code, which required submission of notice thereof to
Appeals promulgated on 12 December 2003 as well as its DOLE one month prior to the implementation of reduction of
Resolution[2] promulgated on 2 April 2004 denying petitioners motion personnel, since Linton filed only the establishment termination report
for reconsideration. enacting the compressed workweek on the very date of its
implementation.[10]
This case originated from a labor complaint filed before the
National Labor Relations Commission (NLRC) in which herein Petitioners, on the other hand, contended that the devaluation
respondents contended that petitioner Linton Commercial Company, of the peso created a negative impact in international trade and
Inc. (Linton) had committed illegal reduction of work when it imposed affected their business because a majority of their raw materials were
a reduction of work hours thereby affecting its employees. imported. They claimed that their business suffered a net loss
of P3,569,706.57 primarily due to currency devaluation and the slump
Linton is a domestic corporation engaged in the business of in the market. Consequently, Linton decided to reduce the working
importation, wholesale, retail and fabrication of steel and its by- days of its employees to three (3) days on a rotation basis as a cost-
products.[3] Petitioner Desiree Ong is Lintons vice president.[4] On 17 cutting measure. Further, petitioners alleged that the compressed
December 1997, Linton issued a memorandum [5] addressed to its workweek was actually implemented on 12 January 1998 and not on 7
employees informing them of the companys decision to suspend its January 1998, and that Article 283 was not applicable to the instant
operations from 18 December 1997 to 5 January 1998 due to the case.[11]
currency crisis that affected its business operations. Linton submitted
an establishment termination report[6] to the Department of Labor and Pending decision of the Labor Arbiter, twenty-one (21) of the
Employment (DOLE) regarding the temporary closure of the workers signed individual release and quitclaim documents stating
establishment covering the said period. The companys operation was that they had voluntarily tendered their resignation as employees of
to resume on 6 January 1998. Linton and that they had been fully paid of all monetary compensation
due them.[12]
On 7 January 1997,[7] Linton issued another
[8]
memorandum informing them that effective 12 January 1998, it On 28 January 2000, the Labor Arbiter rendered a
would implement a new compressed workweek of three (3) days on a Decision[13] finding petitioners guilty of illegal reduction of work hours
rotation basis. In other words, each worker would be working on a and directing them to pay each of the workers their three (3)
rotation basis for three working days only instead for six days a week. days/weeks worth of work compensation from 12 January 1998 to 13
On the same day, Linton submitted an establishment termination July 1998.
report[9] concerning the rotation of its workers. Linton proceeded with
 Petitioners appealed to the National Labor Relations petition did not include the NLRC as party respondent, which made for
Commission (NLRC). In a Resolution[14] promulgated on 29 June another jurisdictional defect. The rest of its arguments were merely a
2001, the NLRC reversed the decision of the Labor Arbiter. The NLRC reiteration of its arguments before the NLRC.
held that an employer has the prerogative to control all aspects of
employment in its business organization, including the supervision of In reversing the NLRC, the Court of Appeals, in its
workers, work regulation, lay-off of workers, dismissal and recall of Decision[22] dated 12 December 2003 ruled that the failure to indicate
workers. The NLRC took judicial notice of the Asian currency crisis in all the names of petitioners in the caption of the petition was not
1997 and 1998 thus finding Lintons decision to implement a violative of the Rules of Court because the records of the case showed
compressed workweek as a valid exercise of management that there were sixty-eight (68) original complainants who filed the
prerogative. Moreover, the NLRC ruled that Article 283 of the Labor complaint before the Arbitration Branch of the NLRC. The appellate
Code, which requires an employer to submit a written notice to DOLE court likewise considered the quitclaims and release documents as
one (1) month prior to the closure or reduction of personnel, is not ready documents which did not change the fact that the 21 workers
applicable to the instant case because no closure was undertaken and were impelled to sign the same. The appellate court gave no credence
no reduction of employees was implemented by Linton. Lastly, the to the said quitclaims, considering the economic disadvantage that
NLRC took note that there were twenty-one (21) complainants- would be suffered by the employees. The appellate court also noted
workers[15] who had already resigned and executed individual waivers that the records did not show that the 21 workers desisted from
and quitclaims. Consequently, the NRLC considered them as dropped pursuing the petition and that the waivers and quitclaims would not bar
from the list of complainants. The workers motion for reconsideration the 21 complainants from continuing the action.[23]
was denied in a Resolution[16] dated 24 September 2001.
On the failure to include the NLRC as party respondent, the
The workers then filed before the Court of Appeals[17] a appellate court treated the NLRC as a nominal party which ought to
petition for certiorari under Rule 65 of the Rules of Civil Procedure be joined as party to the petition simply because the technical rules
assailing the decision[18] of the NLRC and its resolution[19] that denied require its presence on record. The inclusion of the NLRC in the body
their Motion for Reconsideration. In the petition, the workers claimed of the petition was deemed by the appellate court as substantial
that the NLRC erred in finding that the one (1) month notice compliance with the rules.
requirement under Article 283 of the Labor Code did not apply to the
instant case; that Linton did not exceed the limits of its business On the main issues, the Court of Appeals ruled that the
prerogatives; and that Linton was able to establish a factual basis on employees were constructively dismissed because the short period of
record to justify the reduction of work days. time between the submission of the establishment termination report
informing DOLE of its intention to observe a compressed workweek
In its Comment,[20] Linton highlighted the fact that the caption, and the actual implementation thereat was a manifestation of Lintons
the body as well as the verification of the petition submitted by intention to eventually retrench the employees. It found that Linton had
complainants-workers indicated solely Alex Hellera, et al. as failed to observe the substantive and procedural requirements of a
petitioners. Linton argued that the petition was defective and did not valid dismissal or retrenchment to avoid or minimize business losses
necessarily include the other workers in the proceedings before the since it had failed to present adequate, credible and persuasive
NLRC. Linton also mentioned that 21 out of the 68 complainants- evidence that it was indeed suffering, or would imminently suffer, from
workers executed individual resignation letters and individual waivers drastic business losses. Lintons financial statements for 1997-1998
and quitclaims.[21] With these waivers and quitclaims, Linton raised in showed no indication of financial losses, and the alleged loss
issue whether the petition still included the signatories of said of P3,645,422.00 in 1997 was considered insubstantial considering its
documents. Moreover, Linton pointed out that the caption of the
total asset of P1,065,948,601.00.Hence, the appellate court shall be indicated in the title of the original complaint or
considered Lintons losses as de minimis.[24] petition. However, the rules itself endorses its liberal construction if it
promotes the objective of securing a just, speedy and inexpensive
Lastly, the appellate court found Linton to have failed to adopt disposition of the action or proceeding.[29] Pleadings shall be
a more sensible means of cutting the costs of its operations in less construed liberally so as to render substantial justice to the parties and
drastic measures not grossly unfavorable to labor. Hence, Linton to determine speedily and inexpensively the actual merits of the
failed to establish enough factual basis to justify the necessity of a controversy with the least regard to technicalities.[30]
reduced workweek.[25]
In Vlason Enterprises Corporation v. Court of Appeals [31] the
Petitioners filed a motion for reconsideration[26]
which the Court pronounced that, while the general rule requires the inclusion of
appellate court denied through a Resolution[27]dated 2 April 2004. the names of all the parties in the title of a complaint, the non-inclusion
of one or some of them is not fatal to the cause of action of a plaintiff,
In filing the instant petition for review, petitioners allege that provided there is a statement in the body of the petition indicating that
the Court of Appeals erred when it considered the petition as having a defendant was made a party to such action. If in Vlason the Court
been filed by all sixty (68) workers, in disregard of the fact that only found that the absence of defendants name in the caption would not
Alex Hellera, et al. was indicated as petitioner in the caption, body and cause the dismissal of the action, more so in this case where only the
verification of the petition and twenty-one (21) of the workers executed names of some of petitioners were not reflected. This is consistent
waivers and quitclaims. Petitioners further argue that the Court of with the general rule that mere failure to include the name of a party
Appeals erred in annulling the release and quitclaim documents in the title of a complaint is not fatal by itself.[32]
signed by 21 employees because no such relief was prayed for in the
petition. The validity of the release and quitclaim was also not raised Petitioners likewise challenge the absence of the names of
as an issue before the labor arbiter nor the NLRC. Neither was it raised the other workers in the body and verification of the petition. The
in the very petition filed before the Court of Appeals. Petitioners workers petition shows that the petition stipulated as parties-
conclude that the Court of Appeals, therefore, had invalidated the petitioners Alex A. Hellera, et al. as employees of Linton, meaning that
waivers and quitclaims motu proprio. there were more than one petitioner who were all workers of Linton.
The petition also attached the resolution[33] of the NLRC where the
Petitioners also allege that the Court of Appeals erred when it names of the workers clearly appear. As documents attached to a
held that the reduction of workdays is equivalent to constructive complaint form part thereof,[34] the petition, therefore has sufficiently
dismissal. They posit that there was no reduction of salary but instead indicated that the rest of the workers were parties to the petition.
only a reduction of working days from six to three days per week.
Petitioners add that the reduction of workdays, while not expressly With respect to the absence of the workers signatures in the
covered by any of the provisions of the Labor Code, is analogous to verification, the verification requirement is deemed substantially
the situation contemplated in Article 286[28] of the Labor Code because complied with when some of the parties who undoubtedly have
the company implemented the reduction of workdays to address its sufficient knowledge and belief to swear to the truth of the allegations
financial losses. Lastly, they note that since there was no in the petition had signed the same. Such verification is deemed a
retrenchment, the one-month notice requirement under Article 283 of sufficient assurance that the matters alleged in the petition have been
the Labor Code is not applicable. made in good faith or are true and correct, and not merely
speculative.[35] The verification in the instant petition states that
First, we resolve the procedural issues of the case. Rule 7, Hellera, the affiant, is the president of the union of which complainants
Section 1 of the Rules of Court states that the names of the parties are all members and officers.[36] As the matter at hand is a labor
dispute between Linton and its employees, the union president In Philippine Graphic Arts, Inc. v. NLRC,[40] the Court upheld
undoubtedly has sufficient knowledge to swear to the truth of the for the validity of the reduction of working hours, taking into
allegations in the petition. Helleras verification sufficiently meets the consideration the following: the arrangement was temporary, it was a
purpose of the requirements set by the rules. more humane solution instead of a retrenchment of personnel, there
was notice and consultations with the workers and supervisors, a
Moreover, the Court has ruled that the absence of a consensus were reached on how to deal with deteriorating economic
verification is not jurisdictional, but only a formal defect.[37] Indeed, the conditions and it was sufficiently proven that the company was
Court has ruled in the past that a pleading required by the Rules of suffering from losses.
Court to be verified may be given due course even without a
verification if the circumstances warrant the suspension of the rules in The Bureau of Working Conditions of the DOLE, moreover,
the interest of justice.[38] released a bulletin[41] providing for in determining when an employer
can validly reduce the regular number of working days. The said
We turn to the propriety of the Court of Appeals ruling on the bulletin states that a reduction of the number of regular working days
invalidity of the waivers and quitclaims executed by the 21 workers. It is valid where the arrangement is resorted to by the employer to
must be remembered that the petition filed before the Court of Appeals prevent serious losses due to causes beyond his control, such as
was a petition for certiorari under Rule 65 in which, as a rule, only when there is a substantial slump in the demand for his goods or
jurisdictional questions may be raised, including matters of grave services or when there is lack of raw materials.
abuse of discretion which are equivalent to lack of jurisdiction. [39] The
issue on the validity or invalidity of the waivers and quitclaims was not Although the bulletin stands more as a set of directory
raised as an issue in the petition. Neither was it raised in the NLRC. guidelines than a binding set of implementing rules, it has one main
There is no point of reference from which one can determine whether consideration, consistent with the ruling in Philippine Graphic Arts Inc.,
or not the NLRC committed grave abuse of discretion in its finding on in determining the validity of reduction of working hoursthat the
the validity and binding effect of the waivers and quitclaims since this company was suffering from losses.
matter was never raised in issue in the first place.
Petitioners attempt to justify their action by alleging that the
In addition, petitioners never had the opportunity to support or company was suffering from financial losses owing to the Asian
reinforce the validity of the waivers and quitclaims because the currency crisis. Was petitioners claim of financial losses supported by
authenticity and binding effect thereof were never challenged. In the evidence?
interest of fair play, justice and due process, the documents should
not have been unilaterally evaluated by the Court of Appeals. Thus, The lower courts did not give credence to the income
the corresponding modification of its Decision should be ordained. statement submitted by Linton because the same was not audited by
an independent auditor.[42] The NLRC, on the other hand, took judicial
After resolving the technical aspects of this case, we now notice of the Asian currency crisis which resulted in the devaluation of
proceed to the merits thereof. The main issue in this labor dispute is the peso and a slump in market demand.[43] The Court of Appeals for
whether or not there was an illegal reduction of work when Linton its part held that Linton failed to present adequate, credible and
implemented a compressed workweek by reducing from six to three persuasive evidence to show that it was in dire straits and indeed
the number of working days with the employees working on a rotation suffering, or would imminently suffer, from drastic business losses. It
basis. did not find the reduction of work hours justifiable, considering that the
alleged loss of P3,645,422.00 in 1997 is insubstantial compared to
Lintons total asset of P1,065,948,601.76.[44]
 A close examination of petitioners financial reports for 1997- sufficient and convincing evidence.[50] Linton failed to comply with
1998 shows that, while the company suffered a loss of P3,645,422.00 these standards.
in 1997, it retained a considerable amount of earnings [45] and
operating income.[46] Clearly then, while Linton suffered from losses All taken into account, the compressed workweek
for that year, there remained enough earnings to sufficiently sustain arrangement was unjustified and illegal. Thus, petitioners committed
its operations. In business, sustained operations in the black is the illegal reduction of work hours.
ideal but being in the red is a cruel reality. However, a year of financial
losses would not warrant the immolation of the welfare of the In assessing the monetary award in favor of respondents, the
employees, which in this case was done through a reduced workweek Court has taken the following factors into account:
that resulted in an unsettling diminution of the periodic pay for a
protracted period. Permitting reduction of work and pay at the slightest (1) The compressed workweek arrangement was lifted after six (6)
indication of losses would be contrary to the States policy to afford months, or on 13 July 1998.[51] Thus, Linton resumed its regular
protection to labor and provide full employment.[47] operations and discontinued the emergency measure;
(2) The claims of the workers, as reflected in their pleadings, were
Certainly, management has the prerogative to come up with narrowed to petitioners illegal reduction of their work hours and the
measures to ensure profitability or loss minimization. However, such non-payment of their compensation for three (3) days a week from 12
privilege is not absolute. Management prerogative must be exercised January 1998 to 13 July 1998. They did not assert any other claims;
in good faith and with due regard to the rights of labor.[48]
(3) As found by the NLRC, 21 of the workers are no longer entitled to
As previously stated, financial losses must be shown before any monetary award since they had already executed their respective
a company can validly opt to reduce the work hours of its waivers and quitclaims. We give weight to the finding and exclude the
employees. However, to date, no definite guidelines have yet been set 21 workers as recipients of the award to be granted in this case.
to determine whether the alleged losses are sufficient to justify the Consequently, only the following workers are entitled to the award,
reduction of work hours. If the standards set in determining the with the amounts respectively due them stated opposite their names:
justifiability of financial losses under Article 283 (i.e., retrenchment) or
Article 286 (i.e., suspension of work) of the Labor Code were to be 1. Alex A. Hellera - P16,368.30
considered, petitioners would end up failing to meet the standards. On 2. Francisco Racasa - 16,458.00
the one hand, Article 286 applies only when there is a bona fide 3. Dante Escarlan - 15,912.00
suspension of the employers operation of a business or undertaking 4. Donato Sasa - 15,580.50
for a period not exceeding six (6) months.[49] Records show that Linton 5. Rodolfo Olinar - 15,912.00
continued its business operations during the effectivity of the 6. Daniel Custodio - 15,912.00
compressed workweek, which spanned more than the maximum 7. Arturo Pollo - 16,660.80
period. On the other hand, for retrenchment to be justified, any claim 8. B. Pilapil - 16,075.80
of actual or potential business losses must satisfy the following 9. Donato Bonete - 15,600.00
standards: (1) the losses incurred are substantial and not de minimis; 10. Isagani Yap - 15,678.00
(2) the losses are actual or reasonably imminent; (3) the retrenchment 11. Cesar Ragonon - 16,068.00
is reasonably necessary and is likely to be effective in preventing the 12. Benedicto Bagan - 15,775.50
expected losses; and (4) the alleged losses, if already incurred, or the 13. Rexte Solanoy - 15,678.00
expected imminent losses sought to be forestalled, are proven by 14. Felipe Cagoco, Jr. - 15,990.00
15. Jose Narce - 16,348.80
 16. Quirino C. Ada - 15,990.00 legal interest on the award should commence only from the date of
17. Salfaram Elmer - 16,302.00 promulgation of the Court of Appeals Decision on 12 December 2003.
18. Romeo Balais - 16,302.00
19. Claudio S. Morales - 15,947.10 WHEREFORE, the Petition is GRANTED IN PART. The decision of
20. Elpidio E. Vergabinia - 15,561.00 the Court of Appeals reinstating the decision of the Labor Arbiter is
21. Conrado Cagoco - 15,990.00 AFFIRMED with MODIFICATION to the effect that the 21 workers who
22. Roy Boragoy - 15,892.50 executed waivers and quitclaims are no longer entitled to back
23. Reynaldo Santos - 16,200.60 payments. Petitioners are ORDERED TO PAY respondents, except
24. Lino Valencia - 15,678.00 the aforementioned 21 workers, the monetary award as
25. Roy Durano - 15,678.00 computed,[54] pursuant to the decision of the Labor Arbiter[55]with
26. Leo Valencia - 15,678.00 interest at the rate of 6% per annum from 12 December 2003, the date
27. Jayoma A. - 15,561.00 of promulgation of the Court of Appeals decision, until the finality of
28. Ramon Olinar III - 15,678.00 this decision, and thereafter at the rate of 12% per annum until full
29. Saturnino C. Ebaya - 15,919.80 payment.
30. Nicanor L. de Castro - 16,614.00
31. Eduardo Gonzales - 15,678.00 SO ORDERED.
32. Isagani Gonzales - 16,469.70
33. Thomas Andrab, Jr. - 15,912.00
34. Minieto Durano - 16,660.80 20. THIRD DIVISION G.R. No. 151309
35. Ernesto Vallente - 15,997.80 BISIG MANGGAGAWA SA TRYCO and/or
36. Nestor M. Bonete - 15,705.30 FRANCISCO SIQUIG, as Union President, JOSELITO
37. Jose Salonoy - 16,458.00 LARIO, VIVENCIO B. BARTE, SATURNINO EGERA
38. Alberto Lagman - 16,660.80 and SIMPLICIO AYA-AY, Petitioners, - versus
39. Rolando Torres - 15,678.00 NATIONAL LABOR RELATIONS COMMISSION,
40. Rolindo Cualquiera - 16,068.00 TRYCO PHARMA CORPORATION, and/or WILFREDO
41. Armando Lima - 16,426.80 C. RIVERA, Respondents.
42. Alfredo Selapio - 16,060.20
43. Martin V. Villacampa - 15,939.30 DECISION
44. Carlito Pable - 16,263.00
45. Dante Escarlan - 15,912.00 NACHURA, J.:
46. M. Durano - 16,614.00 This petition seeks a review of the Decision[1] of the Court of
47. Ramon Roso - 16,302.00[52] Appeals (CA) dated July 24, 2001 and Resolution dated December
20, 2001, which affirmed the finding of the National Labor Relations
(4) The Labor Arbiters decision in favor of respondents was reversed Commission (NLRC) that the petitioners transfer to another workplace
by the NLRC. Considering that there is no provision for appeal from did not amount to a constructive dismissal and an unfair labor practice.
the decision of the NLRC,[53] petitioners should not be deemed at fault
in not paying the award as ordered by the Labor Arbiter. Petitioners The pertinent factual antecedents are as follows:
liability only gained a measure of certainty only when the Court of
Appeals reversed the NLRC decision. In the interest of justice, the 6% Tryco Pharma Corporation (Tryco) is a manufacturer of
veterinary medicines and its principal office is located
in Caloocan City. Petitioners Joselito Lario, Vivencio Barte, Saturnino
Egera and Simplicio Aya-ay are its regular employees, occupying the Subject: LTO as VDAP Manufacturer at San Rafael, Bulacan
positions of helper, shipment helper and factory workers, respectively,
assigned to the Production Department. They are members of Bisig Dear Mr. Rivera:
Manggagawa sa Tryco (BMT), the exclusive bargaining representative
of the rank-and-file employees. This is to remind you that your License to Operate as
Veterinary Drug and Product Manufacturer is addressed
Tryco and the petitioners signed separate Memorand[a] of at San Rafael, Bulacan, and so, therefore, your production
Agreement[2] (MOA), providing for a compressed workweek schedule should be done at the above mentioned address only. Further,
to be implemented in the company effective May 20, 1996. The MOA production of a drug includes propagation, processing,
was entered into pursuant to Department of Labor and Employment compounding, finishing, filling, repacking, labeling,
Department Order (D.O.) No. 21, Series of 1990, Guidelines on the advertising, storage, distribution or sale of the veterinary drug
Implementation of Compressed Workweek. As provided in the product. In no instance, therefore, should any of the above be
MOA, 8:00 a.m. to 6:12 p.m., from Monday to Friday, shall be done at your business office at 117 M. Ponce St.,
considered as the regular working hours, and no overtime pay shall EDSA, Caloocan City.
be due and payable to the employee for work rendered during those
hours. The MOA specifically stated that the employee waives the right Please be guided accordingly.
to claim overtime pay for work rendered after 5:00 p.m. until 6:12 Thank you.
p.m. from Monday to Friday considering that the compressed Very truly yours,
workweek schedule is adopted in lieu of the regular workweek (sgd.)
schedule which also consists of 46 hours. However, should an EDNA ZENAIDA V. VILLACORTE, D.V.M.
employee be permitted or required to work beyond 6:12 p.m., such Chief, Animal Feeds Standard Division[4]
employee shall be entitled to overtime pay.
Accordingly, Tryco issued a Memorandum [5] dated April 7,
Tryco informed the Bureau of Working Conditions of the 1997 which directed petitioner Aya-ay to report to the companys plant
Department of Labor and Employment of the implementation of a site in Bulacan. When petitioner Aya-ay refused to obey, Tryco
compressed workweek in the company.[3] reiterated the order on April 18, 1997.[6] Subsequently, through a
Memorandum[7] dated May 9, 1997, Tryco also directed petitioners
In January 1997, BMT and Tryco negotiated for the renewal Egera, Lario and Barte to report to the companys plant site in Bulacan.
of their collective bargaining agreement (CBA) but failed to arrive at a
new agreement. BMT opposed the transfer of its members to San Rafael,
Bulacan, contending that it constitutes unfair labor practice. In protest,
Meantime, Tryco received the Letter dated March 26, BMT declared a strike on May 26, 1997.
1997 from the Bureau of Animal Industry of the Department of
Agriculture reminding it that its production should be conducted in San In August 1997, petitioners filed their separate
Rafael, Bulacan, not in Caloocan City: complaints[8] for illegal dismissal, underpayment of wages,
nonpayment of overtime pay and service incentive leave, and refusal
MR. WILFREDO C. RIVERA to bargain against Tryco and its President, Wilfredo C. Rivera. In their
President, Tryco Pharma Corporation Position Paper,[9] petitioners alleged that the company acted in bad
San Rafael, Bulacan faith during the CBA negotiations because it sent representatives
without authority to bind the company, and this was the reason why On October 29, 1999, the NLRC affirmed the Labor Arbiters
the negotiations failed. They added that the management transferred Decision, dismissing the case, thus:
petitioners Lario, Barte, Egera and Aya-ay from Caloocan to San
Rafael, Bulacan to paralyze the union. They prayed for the company PREMISES CONSIDERED, the Decision of February 27,
to pay them their salaries from May 26 to 31, 1997, service incentive 1998 is hereby AFFIRMED and complainants appeal
leave, and overtime pay, and to implement Wage Order No. 4. therefrom DISMISSED for lack of merit. Complainants
Joselito Lario, Vivencio Barte, Saturnino Egera and Simplicio
In their defense, respondents averred that the petitioners Aya-ay are directed to report to work at respondents San
were not dismissed but they refused to comply with the Rafael Plant, Bulacan but without backwages. Respondents
managements directive for them to report to the companys plant are directed to accept the complainants back to work.
in San Rafael, Bulacan. They denied the allegation that they
negotiated in bad faith, stating that, in fact, they sent the Executive SO ORDERED.[11]
Vice-President and Legal Counsel as the companys representatives
to the CBA negotiations. They claim that the failure to arrive at an On December 22, 1999, the NLRC denied the petitioners motion for
agreement was due to the stubbornness of the union panel. reconsideration for lack of merit.[12]

Respondents further averred that, long before the start of the Left with no recourse, petitioners filed a petition
negotiations, the company had already been planning to decongest for certiorari with the CA.
the Caloocan office to comply with the government policy to shift the
concentration of manufacturing activities from the metropolis to the On July 24, 2001, the CA dismissed the petition
countryside. The decision to transfer the companys production for certiorari and ruled that the transfer order was a management
activities to San Rafael, Bulacan was precipitated by the letter- prerogative not amounting to a constructive dismissal or an unfair
reminder of the Bureau of Animal Industry. labor practice. The CA further sustained the enforceability of the MOA,
particularly the waiver of overtime pay in light of this Courts rulings
On February 27, 1998, the Labor Arbiter dismissed the case upholding a waiver of benefits in exchange of other valuable
for lack of merit.[10] The Labor Arbiter held that the transfer of the privileges. The dispositive portion of the said CA decision reads:
petitioners would not paralyze or render the union ineffective for the
following reasons: (1) complainants are not members of the WHEREFORE, the instant petition is DISMISSED. The
negotiating panel; and (2) the transfer was made pursuant to the Decision of the Labor Arbiter dated February 27, 1998and the
directive of the Department of Agriculture. Decision and Resolution of the NLRC promulgated
on October 29, 1999 and December 22, 1999, respectively, in
The Labor Arbiter also denied the money claims, ratiocinating NLRC-NCR Case Nos. 08-05715-97, 08-06115-97 and 08-
that the nonpayment of wages was justified because the petitioners 05920-97, are AFFIRMED.
did not render work from May 26 to 31, 1997; overtime pay is not due
because of the compressed workweek agreement between the union SO ORDERED.[13]
and management; and service incentive leave pay cannot be claimed
by the complainants because they are already enjoying vacation leave The CA denied the petitioners motion for reconsideration
with pay for at least five days. As for the claim of noncompliance with on December 20, 2001.[14]
Wage Order No. 4, the Labor Arbiter held that the issue should be left
to the grievance machinery or voluntary arbitrator.
Dissatisfied, petitioners filed this petition for review raising the massive transfer of employees. They point out that
following issues: the Caloocan Cityoffice is still engaged in production activities until
-A- now and respondents even hired new employees to replace them.
THE HONORABLE COURT OF APPEALS ERRED IN
AFFIRMING THE PATENTLY ERRONEOUS RULING OF We do not agree.
THE LABOR ARBITER AND THE COMMISSION THAT
THERE WAS NO DISMISSAL, MUCH LESS ILLEGAL We refuse to accept the petitioners wild and reckless
DISMISSAL, OF THE INDIVIDUAL PETITIONERS. imputation that the Bureau of Animal Industry conspired with the
respondents just to effect the transfer of the petitioners. There is not
-B- an iota of proof to support this outlandish claim. Absent any evidence,
THE COURT OF APPEALS GRAVELY ERRED IN NOT the allegation is not only highly irresponsible but is grossly unfair to
FINDING AND CONCLUDING THAT PRIVATE the government agency concerned. Even as this Court has given
RESPONDENTS COMMITTED ACTS OF UNFAIR LABOR litigants and counsel a relatively wide latitude to present arguments in
PRACTICE. support of their cause, we will not tolerate outright misrepresentation
or baseless accusation. Let this be fair warning to counsel for the
-C- petitioners.
THE COURT OF APPEALS ERRED IN NOT FINDING AND
CONCLUDING THAT PETITIONERS ARE ENTITLED TO Furthermore, Trycos decision to transfer its production
THEIR MONEY CLAIMS AND TO DAMAGES, AS WELL AS activities to San Rafael, Bulacan, regardless of whether it was made
LITIGATION COSTS AND ATTORNEYS FEES.[15] pursuant to the letter of the Bureau of Animal Industry, was within the
The petition has no merit. scope of its inherent right to control and manage its enterprise
effectively. While the law is solicitous of the welfare of employees, it
We have no reason to deviate from the well-entrenched rule must also protect the right of an employer to exercise what are clearly
that findings of fact of labor officials, who are deemed to have acquired management prerogatives. The free will of management to conduct its
expertise in matters within their respective jurisdiction, are generally own business affairs to achieve its purpose cannot be denied. [18]
accorded not only respect but even finality, and bind us when
supported by substantial evidence.[16] This is particularly true when This prerogative extends to the managements right to
the findings of the Labor Arbiter, the NLRC and the CA are in absolute regulate, according to its own discretion and judgment, all aspects of
agreement.[17] In this case, the Labor Arbiter, the NLRC, and the CA employment, including the freedom to transfer and reassign
uniformly agreed that the petitioners were not constructively dismissed employees according to the requirements of its
and that the transfer orders did not amount to an unfair labor practice. business.[19] Managements prerogative of transferring and
But if only to disabuse the minds of the petitioners who have reassigning employees from one area of operation to another in order
persistently pursued this case on the mistaken belief that the labor to meet the requirements of the business is, therefore, generally not
tribunals and the appellate court committed grievous errors, this Court constitutive of constructive dismissal.[20] Thus, the consequent
will go over the issues raised in this petition. transfer of Trycos personnel, assigned to the Production Department
was well within the scope of its management prerogative.
Petitioners mainly contend that the transfer orders amount to
a constructive dismissal. They maintain that the letter of the Bureau of When the transfer is not unreasonable, or inconvenient, or
Animal Industry is not credible because it is not authenticated; it is only prejudicial to the employee, and it does not involve a demotion in rank
a ploy, solicited by respondents to give them an excuse to effect a or diminution of salaries, benefits, and other privileges, the employee
may not complain that it amounts to a constructive To begin with, we cannot see how the mere transfer of its
dismissal.[21] However, the employer has the burden of proving that members can paralyze the union. The union was not deprived of the
the transfer of an employee is for valid and legitimate grounds. The membership of the petitioners whose work assignments were only
employer must show that the transfer is not unreasonable, transferred to another location.
inconvenient, or prejudicial to the employee; nor does it involve a
demotion in rank or a diminution of his salaries, privileges and other More importantly, there was no showing or any indication that
benefits.[22] the transfer orders were motivated by an intention to interfere with the
petitioners right to organize. Unfair labor practice refers to acts that
Indisputably, in the instant case, the transfer orders do not violate the workers right to organize. With the exception of Article
entail a demotion in rank or diminution of salaries, benefits and other 248(f) of the Labor Code of the Philippines, the prohibited acts are
privileges of the petitioners. Petitioners, therefore, anchor their related to the workers right to self-organization and to the observance
objection solely on the ground that it would cause them great of a CBA. Without that element, the acts, no matter how unfair, are not
inconvenience since they are all residents of Metro Manila and they unfair labor practices.[26]
would incur additional expenses to travel daily from Manila to Bulacan.
Finally, we do not agree with the petitioners assertion that the
The Court has previously declared that mere incidental MOA is not enforceable as it is contrary to law. The MOA is
inconvenience is not sufficient to warrant a claim of constructive enforceable and binding against the petitioners. Where it is shown that
dismissal.[23] Objection to a transfer that is grounded solely upon the the person making the waiver did so voluntarily, with full
personal inconvenience or hardship that will be caused to the understanding of what he was doing, and the consideration for the
employee by reason of the transfer is not a valid reason to disobey an quitclaim is credible and reasonable, the transaction must be
order of transfer.[24] recognized as a valid and binding undertaking.[27]

Incidentally, petitioners cite Escobin v. NLRC[25] where the Court held D.O. No. 21 sanctions the waiver of overtime pay in
that the transfer of the employees therein was unreasonable. consideration of the benefits that the employees will derive from the
However, the distance of the workplace to which the employees were adoption of a compressed workweek scheme, thus:
being transferred can hardly compare to that of the present case. In
that case, the employees were being transferred from Basilan The compressed workweek scheme was
to Manila; hence, the Court noted that the transfer would have entailed originally conceived for establishments wishing to
the separation of the employees from their families who were residing save on energy costs, promote greater work
in Basilan and accrual of additional expenses for living efficiency and lower the rate of employee
accommodations in Manila. In contrast, the distance absenteeism, among others. Workers favor the
from Caloocan to San Rafael, Bulacan is not considerably great so as scheme considering that it would mean savings on
to compel petitioners to seek living accommodations in the area and the increasing cost of transportation fares for at least
prevent them from commuting to Metro Manila daily to be with their one (1) day a week; savings on meal and snack
families. expenses; longer weekends, or an additional 52 off-
days a year, that can be devoted to rest, leisure,
Petitioners, however, went further and argued that the transfer family responsibilities, studies and other personal
orders amounted to unfair labor practice because it would paralyze matters, and that it will spare them for at least another
and render the union ineffective. 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, 4. Appropriate waivers with respect to
dressing up for work, etc. Thus, under this scheme, overtime premium pay for work performed in
the generally observed workweek of six (6) days is excess of eight (8) hours a day may be
shortened to five (5) days but prolonging the working devised by the parties to the agreement.
hours from Monday to Friday without the employer
being obliged for pay overtime premium 5. The effectivity and implementation of
compensation for work performed in excess of eight the new working time arrangement shall be
(8) hours on weekdays, in exchange for the benefits by agreement of the parties.
abovecited that will accrue to the employees.

PESALA v. NLRC,[28] cited by the petitioners, is not applicable

Moreover, the adoption of a compressed workweek scheme to the present case. In that case, an employment contract provided
in the company will help temper any inconvenience that will be caused that the workday consists of 12 hours and the employee will be paid a
the petitioners by their transfer to a farther workplace. fixed monthly salary rate that was above the legal minimum wage.
However, unlike the present MOA which specifically states that the
Notably, the MOA complied with the following conditions set employee waives his right to claim overtime pay for work rendered
by the DOLE, under D.O. No. 21, to protect the interest of the beyond eight hours, the employment contract in that case was silent
employees in the implementation of a compressed workweek scheme: on whether overtime pay was included in the payment of the fixed
monthly salary. This necessitated the interpretation by the Court as to
1. The employees voluntarily agree to whether the fixed monthly rate provided under the employment
work more than eight (8) hours a day the total contract included overtime pay. The Court noted that if the employee
in a week of which shall not exceed their is paid only the minimum wage but with overtime pay, the amount is
normal weekly hours of work prior to adoption still greater than the fixed monthly rate as provided in the employment
of the compressed workweek arrangement; contract. It, therefore, held that overtime pay was not included in the
agreed fixed monthly rate.
2. There will not be any diminution
whatsoever in the weekly or monthly take- Considering that the MOA clearly states that the employee
home pay and fringe benefits of the waives the payment of overtime pay in exchange of a five-day
employees; workweek, there is no room for interpretation and its terms should be
implemented as they are written.
3. If an employee is permitted or required
to work in excess of his normal weekly hours WHEREFORE, the petition is DENIED. The Court of Appeals
of work prior to the adoption of the Decision dated July 24, 2001 and Resolution dated December 20,
compressed workweek scheme, all such 2001 are AFFIRMED.
excess hours shall be considered overtime
work and shall be compensated in SO ORDERED.
accordance with the provisions of the Labor
Code or applicable Collective Bargaining
Agreement (CBA);
 21. EN BANC That all officers, engineers and crew members of motor
G.R. No. L-9265 April 29, 1957 tugboats who have not received their pay corresponding to
LUZON STEVEDORING CO., INC., petitioner, the second half of December, 1941, be paid accordingly.
vs. c. Point No. 11.
LUZON MARINE DEPARTMENT UNION and THE HON. That Ciriaco Sarmiento, Chief Mate, M/V Marlin, Rafael
MODESTO CASTILLO, THE HON. JOSE S. BAUTISTA, THE HON. Santos, Port Engineer, and Lorenzo de la Cruz, Chief
V. JIMENEZ YANSON and THE HON. JUAN L. LANTING, Judges Engineer, M/V Shark who have been suspended without
of the Court of Industrial Relations, respondents. justifiable cause and for union activities, be reinstated with
Perkins, Ponce Enrile and Associates for petitioner. pay from time of suspension.
Mariano B. Tuason for respondent Judge of the Court of Industrial d. Point No. 12.
Relations. That all officers, engineers and crew members of the motor
Sioson, Roldan and Vidanes for respondent union. tugboats "Shark", "Hearing", "Pike" and "Ray", who have
FELIX, J.: been discharged without justifiable cause and for union
This case involves a petition for certiorari filed by the Luzon activities, be reinstate with pay from time of discharge. (p.
Stevedoring Co., Inc., to review a resolution dated June 5, 1955, 65-66, Record).
issued by the Court of Industrial Relations. On September 5, 1955, On the basis of these demands, the case was set for hearing and the
with leave of court, a supplemental petition was filed by said parties submitted their respective evidence, both oral and
petitioner, and both petitions were given due course by resolution of documentary, from June 8,1951, to January 7, 1954. In one of the
this Court of September 15, 1955. The facts of the case may be hearings of the case, the original intervenor in Union de Obreros
summarized as follows: Estibadores de Filipinas (UOEF), through counsel, moved for the
On June 21, 1948, herein respondent Luzon Marine Department withdraw al of said Union from the case, which motion was granted
Union filed a petition with the Court of Industrial Relations containing by the Court.
several demands against herein petitioner Luzon Stevedoring Co., After the parties had submitted exhaustive memoranda, the trial
Inc., among which were the petition for full recognition of the right of Judge rendered a decision on February 10, 1955, finding that the
COLLECTIVE bargaining, close shop and check off. However, on company gave said employees 3 free meals every day and about 20
July 18, 1948, while the case was still pending with the CIR, said minutes rest after each mealtime; that they worked from 6:00 am. to
labor union declared a strike which was ruled down as illegal by this 6:00 p.m. every day including Sundays and holidays, and for work
Court in G.R. No. L-2660 promulgated on May 30, 1950. In view of performed in excess of 8 hours, the officers, patrons and radio
said ruling, the Union filed a "Constancia" with the Court of Industrial operators were given overtime pay in the amount of P4 each and P2
Relations praying that the remaining unresolved demands of the each for the rest of the crew up to March, 1947, and after said date,
Union presented in their original petition, be granted. Said these payments were increased to P5 and P2.50, respectively, until
unresolved demands are the following: the time of their separation or the strike of July 19, 1948; that when
a. Point No. 2. the tugboats underwent repairs, their personnel worked only 8 hours
That the work performed in excess of eight (8) hours he paid a day excluding Sundays and holidays; that although there was an
an overtime pay of 50 per cent the regular rate of pay, and effort on the part of claimants to show that some had worked beyond
that work performed on Sundays and legal holidays be paid 6:00 p.m., the evidence was uncertain and indefinite and that
double the regular rate of pay. demand was, therefore, denied; that respondent Company, by the
b. Point No. 7. nature of its business and as defined by law (Section 18-b of
Commonwealth Act as amended) is considered a public service
operator by the Public Service Commission in its decision in case
No. 3035-C entitled "Philippine Shipowners. Association vs. Luzon and for such other relief as may be just and equitable in the
Stevedoring Co., Inc., et al."(Exh. 23), and, therefore, exempt from premises.
paying additional remuneration or compensation for work performed Luzon Stevedoring Co., Inc. also sought for the reconsideration of
on Sundays and legal holidays, pursuant to the provisions of section the decision only in so far as it interpreted that the period during
4 of Commonwealth Act No. 444 (Manila Electric Co. vs. Public which a seaman is aboard a tugboat shall be considered as "working
Utilities Employees Association, 79 Phil., 408. 44 Off. Gaz., 1760); time" for the purpose of the Eight-Hour-Labor Law.
and ruled that: In pursuance of Section 1 of Commonwealth Act No. 103, as
For the above reasons, the aforementioned employees are amended by Commonwealth Act No. 254 and further amended by
only entitled to receive overtime pay for work rendered in Commonwealth Act No. 559, the motions for reconsideration were
excess of 8 hours on ordinary days including Sundays and passed upon by the Court en banc, and on June 6, 1955, a
legal holidays. resolution modifying the decision of February 10, 1955, was issued,
However, the respondent company has proved to the in the sense that the 4 hours of overtime work included in the regular
satisfaction of the Court that it has paid its employees for daily schedule of work from 6:00 a.m. to 6:00 p.m. should be paid
such overtime work as shown above Exhs. 1 to 20-B). independently of the so-called "coffee-money", after making a finding
It is, therefore, only a matter of computation whether such that said extra amounts were given to crew members of some
over time pay by the respondent for overtime services tugboats for work performed beyond 6:00 p.m. over a period of some
rendered covers the actual overtime work performed by the 16 weeks. The Company's motion for reconsideration was denied.
employees concerned equivalent to 25 per cent which is the From this resolution, the Luzon Stevedoring Co., Inc. filed the
minimum rate fixed by law in the absence of other proof to present petition for certiorari and when the Court of Industrial
justify the granting of more beyond said minimum rate. Relations, acting upon said Company's motion for clarification, ruled
Demands Nos. 11 and 12 regarding the reinstatement to the service that the 20 minutes' rest given the claimants after mealtime should
of the employees named therein were denied and respondent not be deducted from the 4 hours of overtime worked performed by
Company was only or to pay the separation pay and overtime work said claimants, petitioner filed a supplemental petition for certiorari
rendered by Ciriaco Sarmiento, Rafael Santos and Lorenzo de la dated September 5, 1955, and both petitions were given due course
Cruz, after making the pronouncement that their separation or by this Court.
dismissal was not due to union activities but for valid and legal Respondent Luzon Marine Labor Union filed within the reglementary
grounds. period a motion to dismiss, which this Court considered as an
The Luzon Marine Department Union, through counsel, therefore, answer by resolution of October 14, 1955, alleging that the decision,
filed a motion for reconsideration praying that the decision of resolution and order of the Court of Industrial Relations sought to be
February 10, 1955, be modified so as to declare and rule that the reviewed by petitioner do not present any question of law, the issues
members of the Union who had rendered services from 6:00 a.m. to in said CIR case No. 147-V being purely factual. The respondent
6:00 p.m. were entitled to 4 hours' overtime pay; that allotted to the Judges of the Court of Industrial Relations, represented by counsel,
taking of their meals should not be deducted from the 4 hours of timely filed an answer likewise asserting that there could have been
overtime rendered by said employees, that the amounts of P3 and no question of law involved or error of law committed by the said
P2 set aside for the daily meals of the employees be considered as Judges in the resolutions appealed from, same having been based
part of their actual compensation in determining the amount due to on purely findings of fact.
said employees separated from the service without just cause be In this instance, petitioner does not seek to alter the lower court's
paid their unearned wages and salaries from the date of their finding that the regular daily schedule of work of the members of the
separation up to the time the decision in case L-2660 became final; herein respondent Union was from 6:00 a.m. to 6:00 p.m. Petitioner,
however, submits several "issues" which We will proceed to discuss For the purposes of this case, We do not need to set for seamen a
one after the other. They are the following: criterion different from that applied to laborers on land, for under the
I. Is the definition for "hours of work" as presently applied to dryland provisions of the above quoted section, the only thing to be done is
laborers equally applicable to seamen? Or should a different criterion to determine the meaning and scope of the term "working place"
be applied by virtue of the fact that the seamen's employment is used therein. As We understand this term, a laborer need not leave
completely different in nature as well as in condition of work from that thepremises of the factory, shop or boat in order that his period of
of a dryland laborer? rest shall not be counted, it being enough that he "cease to work",
Petitioner questions the applicability to seamen of the interpretation may rest completely and leave or may leave at his will
given to the phrase "hours of work" for the purpose of the Eight-Hour the spot where he actually stays while working, to go somewhere
Labor Law, insinuating that although the seamen concerned stayed else, whether within or outside the premises of said factory, shop or
in petitioner's tugboats, or merely within its compound, for 12 hours, boat. If these requisites are complied with, the period of such rest
yet their work was not continuous but interrupted or broken. It has shall not be counted.
been the consistent stand of petitioner that while it is true that the In the case at bar We do not need to look into the nature of the work
workers herein were required to report for work at 6:00 a.m. and of claimant mariners to ascertain the truth of petitioners allegation
were made to stay up to 6:00 p.m., their work was not continuous that this kind of seamen have had enough "free time", a task of
and they could have left the premises of their working place were it which We are relieved, for although after an ocular inspection of the
not for the inherent physical impossibility peculiar to the nature of working premises of the seamen affected in this case the trial Judge
their duty which prevented them from leaving the tugboats. It is the declared in his decision that the Company gave the complaining
Company's defense that a literal interpretation of what constitutes laborers 3 free meals a day with a recess of 20 minutes after each
non-working hours would result in absurdity if made to apply to meal, this decision was specifically amended by the Court en banc in
seamen aboard vessels in bays and rivers, and We are called upon its Resolution of June 6, 1955, wherein it held that the claimants
to make an interpretation of the law on "non-working hours" that may herein rendered services to the Company from 6:00 a.m. to 6:00
comprehend within its embrace not only the non-working hours of p.m. including Sundays and holidays, which implies either that said
laborers employed in land jobs, but also of that particular group of laborers were not given any recess at all, or that they were not
seamen, i.e., those employed in vessels plying in rivers and bays, allowed to leave the spot of their working place, or that they could
since admittedly there is no need for such ruling with respect to not rest completely. And such resolution being on a question
officers and crew of interisland vessels which have aboard 2 shifts of essentially of fact, this Court is now precluded to review the same
said men and strictly follow the 8-hour working period. (Com. Act No. 103, Sec. 15, as amended by Sec. 2 of Com. Act No.
Section 1 of Commonwealth Act No. 444, known as the Eight-Hour 559; Rule 44 of the Rules of Court; Kaisahan Ng Mga Manggagawa
Labor Law, provides: sa Kahoy sa Filipinas vs. Gotamco Sawmill, 80 Phil., 521; Operators,
SEC. 1. The legal working day for any person employed by Inc. vs. Pelagio, 99 Phil, 893, and others).
another shall be of not more than eight hours daily. When II. Should a person be penalized for following an opinion issued by
the work is not continuous, the time during which the laborer the Secretary of Justice in the absence of any judicial
is not working AND CAN LEAVE HIS WORKING pronouncement whatsoever?
PLACE and can rest completely, shall not be counted. Petitioner cites Opinion No. 247, Series of 1941 of the Secretary of
The requisites contained in this section are further implemented by Justice to a query made by the Secretary of Labor in connection with
contemporary regulations issued by administrative authorities a similar subject matter as the one involved, in this issue, but that
(Sections 4 and 5 of Chapter III, Article 1, Code of Rules and opinion has no bearing on the case at bar because it refers to
Regulations to Implement the Minimum Wage Law). officers and crew on board interisland boats whose situation is
different from that of mariners or sailors working in small tugboats
that ply along bays and rivers and have no cabins or places for asserting a claim which may cause the employer to devise a
persons that man the same. Moreover, We can not pass upon this way for exercising his right to terminate the employment.
second issue because, aside from the fact that there appears Moreover, if the principle of estoppel and laches is to be
nothing on record that would support petitioner's assertion that in its applied, it would bring about a situation whereby the
dealing with its employees, it was guided by an opinion of the employee or laborer, can not expressly renounce the right to
Secretary of Justice, the issue involves a mere theoretical question. extra compensation under the Eight-Hour Labor Law, may
III. When employees with full knowledge of the law, voluntarily be compelled to accomplish the same thing by mere silence
agreed to work for so many hours in consideration of a certain or lapse of time, thereby frustrating the purpose of the law by
definite wage, and continue working without any protest for a period indirection.
of almost two years, is said compensation as agreed upon legally This is the law on the matter and We certainly adhere, to it in the
deemed and retroactively presumed to constitute full payment for all present case. We deem it, however, convenient to say a few words
services rendered, including whatever overtime wages might be of explanation so that the principle enunciated herein may not lead to
due? Especially so if such wages, though received years before the any misconstruction of the law in future cases. There is no question
enactment of the Minimum Wage Law, were already set mostly that the right of the laborers to overtime pay cannot be waived. But
above said minimum wage? there may be cases in which the silence of the employee or laborer
IV. The members set of respondent Union having expressly who lets the time go by for quite a long period without claiming or
manifested acquiescence over a period of almost two years with asserting his right to overtime compensation may favor the inference
reference to the sufficiency of their wages and having made no that he has not worked any such overtime or that his extra work has
protest whatsoever with reference to said compensation does the been duly compensated. But this is not so in the case at bar. The
legal and equitable principle of estoppel operate to bar them from complaining laborers have declared that long before the filing of this
making a claim for, or making any recovery of, back overtime case, they had informed Mr. Martinez, a sort of overseer of the
compensation? petitioner, that they had been working overtime and claiming the
We are going to discuss these two issues jointly. Section 6 of corresponding compensation therefor, and there is nothing on record
Commonwealth Act No. 444 provides: to show that the claimants, at least the majority of them, had
Sec. 6. Any agreement or contract between the employer and the received wages in excess of the minimum wage later provided by
laborer or employee contrary to the provisions of this Act shall be null Republic Act No. 602, approved April 6, 1951. On the contrary, in the
and void ab initio. decision of the trial Judge, it appears that 34 out of the 58 claimants
In the case of the Manila Terminal Co. vs. Court of Industrial received salaries less than the minimum wage authorized by said
Relations et al., 91 Phil., 625, 48 Off. Gaz., 2725, this Court held: Minimum Wage Law, to wit:
The principles of estoppel and laches cannot be, invoked Per
against employees or laborers in an action for the recovery month
of compensation for past overtime work. In the first place, it 1. Ambrosio Tañada …………….. oiler P82.50
would be contrary to the spirit of the Eight-Hour Labor Law, but after passing the
under which. as already seen, the laborers cannot waive examinations his wages were
their right to extra compensation. In the second place, the increased to P225 per month;
law principally obligates the employer to observe it, so much
so that it punishes the employer for its violation and leaves 2. Patricio Santiago …………….. quartermaster 82.50
the employee free and blameless. In the third place, the but after passing the
employee or laborer is in such a disadvantageous position examinations his wages were
as to be naturally reluctant or even apprehensive in increased to P225 per month;
3. Fidelino Villanueva …………… oiler 82.50 31. Roberto Francisco oiler 82.50
4. Pedro Filamor ………………… quartermaster 82.50 32. Elias Matrocinio seaman 82.50
then his wage was reduced to 33. Baltazar Vega seaman 67.50
P67.50 per month as cook;
34. Jose Sanchez oiler 82.50
5. Emiliano Irabon ………………. seaman 82.50 Consequently, for lack of the necessary supporting evidence for the
then his wage was reduced to petitioner, the inference referred to above cannot be drawn in this
P60 and he stayed for 1 month only; case.
it was increased again to P67.50; V. Granting, without conceding, that any overtime pay in arrears is
6. Juanito de Luna oiler 82.50 due, what is the extent and rule of retro-activity with reference to
7. Benigno Curambao oiler 82.50 overtime pay in arrears as set forth and established by the
8. Salvador Mercadillo oiler 82.50 precedents and policies of the Court of Industrial Relations in past
decisions duly affirmed by the Honorable Supreme Court?
9. Nicasio Sta. Lucia cook 82.50 VI. Is the grant of a sizeable amount as back overtime wages by the
10. Damaso Arciaga seaman 82.50 Court of Industrial Relations in consonance with the dictates of public
11. Leonardo Patnugot oiler 82.50 policy and the avowed national and government policy on economic
recovery and financial stability?
12. Bienvenido Crisostomo oiler 82.50
In connection with issue No. 5, petitioner advances the theory that
13. Isidro Malabanan cook 82.50 the computation of the overtime payment in arrears should be based
14. Saturnino Tumbokon seaman 67.50 from the filing of the petition. In support of this contention, petitioner
15. Bonifacio Cortez quartermaster 82.50 cites the case of Gotamco Lumber Co. vs- Court of Industrial
Relations, 85 Phil., 242; 47 Off. Gaz., 3421. This case is not in point;
16. Victorio Carillo cook 67.50
it merely declares that Commonwealth Act No. 444 imposes upon
17. Francisco Atilano cook 67.50 the employer the duty to secure the permit for overtime work, and the
18. Gualberto Legaspi seaman 67.50 latter may not therefore be heard to plead his own negligence as
19. Numeriano Juanillo quartermaster 82.50 exemption or defense. The employee in rendering extra services at
the request of his employer has a right to assume that the latter has
20. Moises Nicodemus quartermaster 82.50
complied with the requirements of the law and therefore has
21. Arsenio Indiano seaman 82.50 obtained the required permission from the Department of Labor (47
22. Ricardo Autencio oiler 82.50 Off, Gaz., 3421). The other decisions of the Court of Industrial
23. Mateo Arciaga seaman 67.50 Relations cited by petitioner, to wit: Cases 6-V, 7-V and 8-V,
Gotamco & Co., Dy Pac & Co., Inc. and D. C. Chuan; Case 110-
24. Romulo Magallanes quartermaster 82.50 V, National Labor Union vs. Standard Vacuum Oil Co.; Case No. 76-
25. Antonio Belbes seaman 67.50 v, Dee Cho Workers, CLO vs. Dee Cho Lumber Co., and Case No.
26. Benjamin Aguirre quartermaster 82.50 70-V, National Labor Union vs. Benguet Consolidated Mining Co., do
27. Emilio Anastasio quartermaster 82.50 not seem to have reached this Court and to have been affirmed by
Us.
28. Baltazar Labrada oiler 82.50 It is of common occurrence that a workingman has already rendered
29. Emeterio Magallanes seaman 67.50 services in excess of the statutory period of 8 hours for some time
30. Agripino Laurente quartermaster 82.50 before he can be led or he can muster enough courage to confront
his employer with a demand for payment thereof. Fear of possible (Metropolitan Transportation Service vs. Paredes,* G.R. No. L-1232,
unemployment sometimes is a very strong factor that gags the man prom. January 12, 1948), although in another case. We said that it is
from asserting his right under the law and it may take him months or "more an administrative board than a part of the integrated judicial
years before he could be made to present a claim against his system of the nation" (Ang Tibay vs. Court of Industrial Relations, 69
employer. To allow the workingman to be compensated only from the Phil., 635). But for procedural purposes, the Court of Industrial
date of the filing of the petition with the court would be to penalize Relations is a court with well-defined powers vested by the law
him for his acquiescence or silence which We have declared in the creating it and with such other powers as generally pertain to a court
case of the Manila Terminal Co. vs. CIR, supra, to be beyond the of justice (Sec. 20, Com. Act No. 103). As such, the general rule that
intent of the law. It is not just and humane that he should be deprived before a judgment becomes final, the Court that rendered the same
of what is lawfully his under the law, for the true intendent of may alter or modify it so as to conform with the law and the
Commonwealth Act No. 444 is to compensate the worker for evidence, is applicable to the Court of Industrial Relations (Connel
services rendered beyond the statutory period and this should be Bros. Co.(Phil.) vs. National Labor Union, G.R. No. L-3631, prom.
made to retroact to the date when such services were actually January 30, 1956). The law also provides that after a judge of the
performed. Court of Industrial Relations, duly designated by the Presiding Judge
Anent issue No. VI, petitioner questions the reasonableness of the therein to hear a particular case, had rendered a decision, any
law providing for the grant of overtime wages. It is sufficient for Us to agrieved party may request for reconsideration thereof and the
state here that courts cannot go outside of the field of interpretation judges of said Court shall sit together, the concurrence of the 3 of
so as to inquire into the motive or motives of Congress in enacting a them being necessary for the pronouncement of a decision, order or
particular piece of legislation. This question, certainly, is not within award (See. 1, Com. Act No. 103). It was in virtue of these rules and
Our province to entertain. upon motions for reconsideration presented by both parties that
It may be alleged, however, that the delay in asserting the right to resolution subject of the present petition was issued, the Court en
back overtime compensation may cause an unreasonable or banc finding it necessary to modify a part of the decision of February
irreparable injury to the employer, because the accumulation of such 10, 1955, which is clearly within its power to do.
back overtime wages may become so great that their payment might On the other hand, the issue under consideration is predicated on a
cause the bankruptcy or the closing of the business of the employer situation which is not obtaining in the case at bar, for, it presupposes
who might not be in a position to defray the same. Perhaps this that the resolutions en banc of the respondent Court "are clearly
situation may occur, but We shall not delve on it this time because unsupported in fact and in law, patently arbitrary and capricious and
petitioner does not claim that the payment of the back overtime absolutely devoid of any sustaining reason", which does not seem to
wages it is ordered to pay to its claimant laborers will cause the be the case as a matter of fact.
injury it foresees or force it to close its business, a situation which it Wherefore, and on the strength of the foregoing consideration, the
speaks of theoretically and in general. resolutions of the Court of Industrial Relations appealed from are
VII. Should not a Court of Industrial Relations' resolution, en banc, hereby affirmed, with costs against petitioner. It is so ordered.
which is clearly unsupported in fact and in law, patently arbitrary and Bengzon, Padilla, Reyes, A., Bautista Angelo, Labrador.
capricious and absolutely devoid of sustaining reason, be declared Concepcion, Reyes, J.B.L. and Endencia, JJ., concur.
illegal? Especially so, if the trial court's decision which the
resolution en banc reversed, is most detailed, exhaustive and
comprehensive in its findings as well as most reasonable and legal in
its conclusions? This issue was raised by petitioner in its
supplemental petition and We have this much to say. The Court of
Industrial Relations has been considered "a court of justice"
 22. EN BANC As to the demand for the payment of the wages that the
G.R. No. L-5121 January 30, 1953 strikers lost on the occasion of their strike on November 22,
J.P. HEILBRONN CO., petitioner, 1948, the Court understands that a strike is a voluntary and
vs. deliberate cessation of work on the part of the workers. Upon
NATIONAL LABOR UNION, respondent. this consideration and based on the equitable tenet of a fair
Ross, Selph, Carrascoso and Janda for petitioner. day's wage for a fair day's labor, this demand falls of its own
Eulogio R. Lerum for respondent. weight and must be, as it is hereby, denied.
MONTEMAYOR, J.: Again, in the case of Federation Obrera de Filipinas (FOF) vs.
On July 12, 1948, the Secretary of Labor certified to the Court of Philippine Rubber Projects Co., Inc., case No. 346-V, ruling upon a
Industrial Relations (CIR) a dispute between the National Labor similar demand the CIR said:
Union, a labor organization organized under the provisions of The strike was, therefore, justified under the circumstances,
Commonwealth Act 213 and the J.P. Heilbronn Co., hereinafter to be but for reasons that wages and salaries represent the
called the Company, a domestic corporation domiciled in the City of compensation of the labor performed by the laborers or
Manila. The case was docketed as "National Labor Union, petitioner, employees and, not having performed any work during the
vs. J.P. Heilbronn Co., respondent, case No. 160-V." In connection strike, they should not be paid any wage or salary therefore.
with the hearing of that case, particularly incidental motions and For this reason this demand is hereby denied.
petitions concerning questions that arose between the management When the case of strikes, and according to the CIR even if the strike
and its employees who were members of J.P. Heilbronn Employees is legal, strikers may not collect their wages during the days they did
Association affiliated with the National Labor Union, Armando not go to work, for the same reasons if not more, laborers who
Ocampo and Protacio Ty, President and Secretary, respectively, of voluntarily absent themselves from work to attend the hearing of a
the local union attended the conferences and hearing before the case in which they seek to prove and establish their demands
CIR, in some cases assisting the lawyer who represented them. against the company, the legality and propriety of which demands is
Subsequently, a motion was filed in the case by the Labor Union in not yet known, should lose their pay during the period of such
behalf of Armando Ocampo and Protacio Ty praying the court to absence from work. The age-old rule governing the relation between
order the Company to pay to these men the amounts of P88 and labor and capital or management and employee is that a "fair day's
P64.65 respectively, corresponding to the deductions in their salaries wage for a fair day's labor." If there is no work performed by the
made by the Company on the days or hours of their absence from employee there can be no wage or pay, unless of course, the laborer
their work while attending the conferences and hearing already was able, willing and ready to work but was illegally locked out,
mentioned. Despite opposition of the company to the said motion, dismissed or suspended. It is hardly fair or just for an employee or
the same was granted by the CIR through Associate Judge V. laborer to fight or litigate against his employer on the employer's
Jimenez Yanson. After petition for reconsideration of said order was time.
denied by the Court of Industrial Relations in banc, the company has In a case where a laborer absents himself from work because of a
brought the case to us seeking to reverse the said order. strike or to attend a conference or hearing in a case or incident
The action taken by the CIR is hardly consistent with its previous between him and his employer, he might seek reimbursement of his
rulings regarding payment of wages or salaries to laborers or wages from his union which had declared the strike or filed the case
employees who had voluntarily absented themselves from work. In in the industrial court. Or, in the present case, he might have his
the case of San Miguel Brewery, Inc. vs. National Union, et al., case absence from his work charged against his vacation leave. Three of
No. 271-V, in passing upon a demand of laborers for their wages the Justices who sign the present decision believe that the
corresponding to the days that they were on strike, said CIR held: deductions made from the wages of Armando Ocampo and Protacio
Ty might possibly be charged as damages in the case in the event
that the said case in the CIR prosecuted in behalf of their union is Pedro C. Ramos rendered a decision dated October 9, 1985 (Annex
finally decided in their favor and against the company. 'E', Rollo, pp. 51-58) in favor of private respondent STANFILCO,
In view of the foregoing, the order appealed from ordering the holding that:
reimbursement of the salaries or wages of Armando Ocampo and Given these facts and circumstances, we cannot but
Protacio Ty corresponding to the days or portion of days they were agree with respondent that the pronouncement in
absent from work his hereby set aside, with costs. that earlier case, i.e. the thirty-minute assembly time
Paras, C.J., Feria, Pablo, Bengzon, Padilla, Tuason, Reyes, Jugo, long practiced cannot be considered waiting time or
Bautista Angelo and Labrador, JJ., concur. work time and, therefore, not compensable, has
23. SECOND DIVISION become the law of the case which can no longer be
G.R. No. 78210 February 28, 1989 disturbed without doing violence to the time-
TEOFILO ARICA, DANILO BERNABE, MELQUIADES DOHINO, honored principle of res-judicata.
ABONDIO OMERTA, GIL TANGIHAN, SAMUEL LABAJO, WHEREFORE, in view of the foregoing
NESTOR NORBE, RODOLFO CONCEPCION, RICARDO RICHA, considerations, the instant complaint should
RODOLFO NENO, ALBERTO BALATRO, BENJAMIN JUMAMOY, therefore be, as it is hereby, DISMISSED.
FERMIN DAAROL, JOVENAL ENRIQUEZ, OSCAR BASAL, SO ORDERED. (Rollo, p. 58)
RAMON ACENA, JAIME BUGTAY, and 561 OTHERS, HEREIN On December 12, 1986, after considering the appeal memorandum
REPRESENTED BY KORONADO B. APUZEN, petitioners of complainant and the opposition of respondents, the First Division
vs. of public respondent NLRC composed of Acting Presiding
NATIONAL LABOR RELATIONS COMMISSION, HONORABLE Commissioner Franklin Drilon, Commissioner Conrado Maglaya,
FRANKLIN DRILON, HONORABLE CONRADO B. MAGLAYA, Commissioner Rosario D. Encarnacion as Members, promulgated its
HONORABLE ROSARIO B. ENCARNACION, and STANDARD Resolution, upholding the Labor Arbiters' decision. The Resolution's
(PHILIPPINES) FRUIT CORPORATION, respondents. dispositive portion reads:
Koronado B. Apuzen and Jose C. Espinas for petitioners. 'Surely, the customary functions referred to in the
The Solicitor General for public respondent. above- quoted provision of the agreement includes
Dominguez & Paderna Law Offices Co. for private respondent. the long-standing practice and institutionalized non-
compensable assembly time. This, in effect,
PARAS, J.: estopped complainants from pursuing this case.
This is a petition for review on certiorari of the decision of the The Commission cannot ignore these hard facts,
National Labor Relations Commission dated December 12, 1986 in and we are constrained to uphold the dismissal and
NLRC Case No. 2327 MC-XI-84 entitled Teofilo Arica et al. vs. closure of the case.
Standard (Phil.) Fruits Corporation (STANFILCO) which affirmed the WHEREFORE, let the appeal be, as it is hereby
decision of Labor Arbiter Pedro C. Ramos, NLRC, Special Task dismissed, for lack of merit.
Force, Regional Arbitration Branch No. XI, Davao City dismissing the SO ORDERED. (Annex "H", Rollo, pp. 86-89).
claim of petitioners. On January 15, 1987, petitioners filed a Motion for Reconsideration
This case stemmed from a complaint filed on April 9, 1984 against which was opposed by private respondent (Annex "I", Rollo, pp. 90-
private respondent Stanfilco for assembly time, moral damages and 91; Annex J Rollo, pp. 92-96).
attorney's fees, with the aforementioned Regional Arbitration Branch Public respondent NLRC, on January 30, 1987, issued a resolution
No. XI, Davao City. denying for lack of merit petitioners' motion for reconsideration
After the submission by the parties of their respective position papers (Annex "K", Rollo, p. 97).
(Annex "C", pp. 30-40; Annex "D", Rollo, pp. 41-50), Labor Arbiter 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 employees in the case of Associated Labor Union and Standard Fruit
petition. Corporation, NLRC Case No. 26-LS-XI-76 which was filed way back
Petitioners assign the following issues: April 27, 1976 when ALU was the bargaining agent of respondent's
1) Whether or not the 30-minute activity of the rank and file workers. The said case involved a claim for "waiting
petitioners before the scheduled working time is time", as the complainants purportedly were required to assemble at
compensable under the Labor Code. a designated area at least 30 minutes prior to the start of their
2) Whether or not res judicata applies when the facts scheduled working hours "to ascertain the work force available for
obtaining in the prior case and in the case at bar are the day by means of a roll call, for the purpose of assignment or
significantly different from each other in that there is reassignment of employees to such areas in the plantation where
merit in the case at bar. they are most needed." (Rollo, pp. 64- 65)
3) Whether or not there is finality in the decision of Noteworthy is the decision of the Minister of Labor, on May 12, 1978
Secretary Ople in view of the compromise in the aforecited case (Associated Labor Union vs. Standard (Phil.)
agreement novating it and the withdrawal of the Fruit Corporation, NLRC Case No. 26-LS-XI-76 where significant
appeal. findings of facts and conclusions had already been made on the
4) Whether or not estoppel and laches lie in matter.
decisions for the enforcement of labor standards The Minister of Labor held:
(Rollo, p. 10). The thirty (30)-minute assembly time long practiced
Petitioners contend that the preliminary activities as workers of and institutionalized by mutual consent of the parties
respondents STANFILCO in the assembly area is compensable as under Article IV, Section 3, of the Collective
working time (from 5:30 to 6:00 o'clock in the morning) since these Bargaining Agreement cannot be considered as
preliminary activities are necessarily and primarily for private waiting time within the purview of Section 5, Rule I,
respondent's benefit. Book III of the Rules and Regulations Implementing
These preliminary activities of the workers are as follows: the Labor Code. ...
(a) First there is the roll call. This is followed by Furthermore, the thirty (30)-minute assembly is a
getting their individual work assignments from the deeply- rooted, routinary practice of the employees,
foreman. and the proceedings attendant thereto are not
(b) Thereafter, they are individually required to infected with complexities as to deprive the workers
accomplish the Laborer's Daily Accomplishment the time to attend to other personal pursuits. They
Report during which they are often made to explain are not new employees as to require the company to
about their reported accomplishment the following deliver long briefings regarding their respective work
day. assignments. Their houses are situated right on the
(c) Then they go to the stockroom to get the working area where the farm are located, such that after the
materials, tools and equipment. roll call, which does not necessarily require the
(d) Lastly, they travel to the field bringing with them personal presence, they can go back to their houses
their tools, equipment and materials. to attend to some chores. In short, they are not
All these activities take 30 minutes to accomplish (Rollo, Petition, p. subject to the absolute control of the company
11). during this period, otherwise, their failure to report in
Contrary to this contention, respondent avers that the instant the assembly time would justify the company to
complaint is not new, the very same claim having been brought impose disciplinary measures. The CBA does not
against herein respondent by the same group of rank and file contain any provision to this effect; the record is also
 bare of any proof on this point. This, therefore, said subsequent suit of any other issue which could
demonstrates the indubitable fact that the thirty (30)- have been raised in the first but was not. The law
minute assembly time was not primarily intended for provides that 'the judgment or order is, with respect
the interests of the employer, but ultimately for the to the matter directly adjudged or as to any other
employees to indicate their availability or non- matter that could have been raised in relation
availability for work during every working day. thereto, conclusive between the parties and their
(Annex "E", Rollo, p. 57). successors in interest by title subsequent to the
Accordingly, the issues are reduced to the sole question as to commencement of the action .. litigating for the
whether public respondent National Labor Relations Commission same thing and in the same capacity.' So, even if
committed a grave abuse of discretion in its resolution of December new causes of action are asserted in the second
17, 1986. action (e.g. fraud, deceit, undue machinations in
The facts on which this decision was predicated continue to be the connection with their execution of the convenio de
facts of the case in this questioned resolution of the National Labor transaccion), this would not preclude the operation
Relations Commission. of the doctrine of res judicata. Those issues are also
It is clear that herein petitioners are merely reiterating the very same barred, even if not passed upon in the first. They
claim which they filed through the ALU and which records show had could have been, but were not, there raised. (Vda.
already long been considered terminated and closed by this Court in de Buncio v. Estate of the late Anita de Leon, 156
G.R. No. L-48510. Therefore, the NLRC can not be faulted for ruling SCRA 352 [1987]).
that petitioners' claim is already barred by res-judicata. Moreover, as a rule, the findings of facts of quasi-judicial agencies
Be that as it may, petitioners' claim that there was a change in the which have acquired expertise because their jurisdiction is confined
factual scenario which are "substantial changes in the facts" makes to specific matters are accorded not only respect but at times even
respondent firm now liable for the same claim they earlier filed finality if such findings are supported by substantial evidence
against respondent which was dismissed. It is thus axiomatic that the (Special Events & Central Shipping Office Workers Union v. San
non-compensability of the claim having been earlier established, Miguel Corporation, 122 SCRA 557 [1983]; Dangan v. NLRC, 127
constitute the controlling legal rule or decision between the parties SCRA 706 [1984]; Phil. Labor Alliance Council v. Bureau of Labor
and remains to be the law of the case making this petition without Relations, 75 SCRA 162 [1977]; Mamerto v. Inciong, 118 SCRA 265
merit. (1982]; National Federation of Labor Union (NAFLU) v. Ople, 143
As aptly observed by the Solicitor General that this petition is "clearly SCRA 124 [1986]; Edi-Staff Builders International, Inc. v. Leogardo,
violative of the familiar principle of res judicata.There will be no end Jr., 152 SCRA 453 [1987]; Asiaworld Publishing House, Inc. v. Ople,
to this controversy if the light of the Minister of Labor's decision dated 152 SCRA 219 [1987]).
May 12, 1979 that had long acquired the character of finality and The records show that the Labor Arbiters' decision dated October 9,
which already resolved that petitioners' thirty (30)-minute assembly 1985 (Annex "E", Petition) pointed out in detail the basis of his
time is not compensable, the same issue can be re-litigated again." findings and conclusions, and no cogent reason can be found to
(Rollo, p. 183) disturb these findings nor of those of the National Labor Relations
This Court has held: Commission which affirmed the same.
In this connection account should be taken of the PREMISES CONSIDERED, the petition is DISMISSED for lack of
cognate principle that res judicata operates to bar merit and the decision of the National Labor Relations Commission is
not only the relitigation in a subsequent action of the AFFIRMED.
issues squarely raised, passed upon and SO ORDERED.
adjudicated in the first suit, but also the ventilation in Melencio-Herrera (Chairperson), Padilla and Regalado, JJ., concur.
Separate Opinions availability or non-availability for work during every
working day. (Decision, 6.)
SARMIENTO, J., Dissenting: Precisely, it is the petitioners' contention that the assembly time in
It is my opinion that res judicata is not a bar. question had since undergone dramatic changes, thus:
The decision penned by then Minister Blas Ople in ALU v. (a) First there is the roll call. This is followed by
STANFILCO (NLRC Case No. 26-LS-XI-76) relied upon by the getting their individual work assignments from the
respondents as basis for claims of res judicata, is not, to my mind, a foreman.
controlling precedent. In that case, it was held that the thirty-minute (b) Thereafter,they are individually required to
"waiting time" complained of was a mere "assembly time" and not a accomplish the Laborer's Daily Accomplishment
waiting time as the term is known in law, and hence, a compensable Report during which they are often made to explain
hour of work. Thus: about their reported accomplishment the following
The thirty (30)-minute assembly time long practiced day.
and institutionalized by mutual consent of the parties (c) Then they go to the stockroom to get the working
under Article IV, Section 3, of the Collective materials, tools and equipment.
Bargaining Agreement cannot be considered as (d) Lastly, they travel to the field bringing with them
'waiting time' within the purview of Section 5, Rule 1, their tools, equipment and materials. (Supra, 4-5.)
Book III of the Rules and Regulations Implementing The petitioners have vehemently maintained that in view thereof, the
the Labor Code. ... instant case should be distinguished from the first case. And I do not
Furthermore, the thirty (30)-minute assembly is a believe that the respondents have successfully rebutted these
deeply- rooted, routinary practice of the employees, allegations. The Solicitor General relies solely on the decision of then
and the proceedings attendant thereto are not Minister Ople, the decision the petitioners precisely reject in view of
infected with complexities as to deprive the workers the changes in the conditions of the parties. The private respondent
the time to attend to other personal pursuits. They on the other hand insists that these practices were the same
are not new employees as to require the company to practices taken into account in ALU v. STANFILCO. If this were so,
deliver long briefings regarding their respective work the Ople decision was silent thereon.
assignments. Their houses are situated right on the It is evident that the Ople decision was predicated on the absence of
area where the farms are located, such that after the any insinuation of obligatoriness in the course or after the assembly
roll call, which does not necessarily require the activities on the part of the employees.(" . . [T]hey are not subject to
personal presence, they can go back to their houses the absolute control of the company during this period, otherwise,
to attend to some chores. their failure to report in the assembly time would justify the company
In short, they are not subject to the absolute control to impose disciplinary measures;" supra, 6.) As indicated, however,
of the company during this period, otherwise, their by the petitioners, things had since changed, and remarkably so, and
failure to report in the assembly time would justify the latter had since been placed under a number of restrictions. My
the company to impose disciplinary measures. The considered opinion is that the thirty-minute assembly time had
CBA does not contain any provision to this effect; become, in truth and fact, a "waiting time" as contemplated by the
the record is also bare of any proof on this point. Labor Code.
This, therefore, demonstrates the indubitable fact I vote, then, to grant the petition.
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