Labor 4

a.) G.R. No.
212054
ST. LUKE'S MEDICAL CENTER, INC., Petitioner,

vs.
MARIA THERESA V. SANCHEZ, Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari are the Decision dated November 21, 2013 and the
1 2
Resolution dated April 4, 2014 of the Court of Appeals (CA) in CA-G.R. SP No. 129108 which affirmed the
3
Decision dated November 19, 2012 and the Resolution dated January 14, 2013 of the National Labor Relations
4 5
Commission (NLRC) in NLRC LAC No. 06-001858-12, declaring the dismissal of respondent Maria Theresa V.
Sanchez (Sanchez) illegal.
The Facts
On June 29, 2009, Sanchez was hired by petitioner St. Luke's Medical Center, Inc. (SLMC) as a Staff Nurse, and
was eventually assigned at SLMC, Quezon City's Pediatric Unit until her termination on July 6, 2011 for her
purported violation of SLMC's Code of Discipline, particularly Section 1, Rule 1 on Acts of Dishonesty, i.e., Robbery,
Theft, Pilferage, and Misappropriation of Funds. 6
Records reveal that at the end of her shift on May 29, 2011, Sanchez passed through the SLMC Centralization
Entrance/Exit where she was subjected to the standard inspection procedure by the security personnel. In the
course thereof, the Security Guard on-duty, Jaime Manzanade (SG Manzanade), noticed a pouch in her bag and
asked her to open the same. When opened, said pouch contained the following assortment of medical stocks which
7
were subsequently confiscated: (a) Syringe 10cl [4 pieces]; (b) Syringe 5cl [3 pieces]; (c) Syringe 3cl [3 pieces]; (d)
Micropore [1 piece]; (e) Cotton Balls [1 pack]; (f) Neoflon g26 [1 piece]; (g) Venofix 25 [2 pieces]; and (h) Gloves [4
pieces] (questioned items). Sanchez asked SG Manzanade if she could just return the pouch inside the treatment
8
room; however, she was not allowed to do so. Instead, she was brought to the SLMC In-House Security
9
Department (IHSD) where she was directed to write an Incident Report explaining why she had the questioned
items in her possession. She complied with the directive and also submitted an undated handwritten letter of
10 11
apology (handwritten letter) which reads as follows:

12
To In-House Security,
I am very sorry for bringing things from [SLMC] inside my bag.
Pasensya na po. Taos-puso po akong humihingi ng tawad sa aking pagkakasala, Alam ko po na ako ay nagkamali.
Hindi ko po dapat dinala yung mga gamit sa hospital. Hindi ko po alam kung [paano] ako magsisimulang humingi ng
patawad. Kahit alam kong bawal ay nagawa kong makapag uwi ng gamit. Marami pang gamit dahil sa naipon po.
Paisa-isa nagagawa kong makakuha pag nakakalimutan kong isoli. Hindi ko na po naiwan sa nurse station dahil
naisip kong magagamit ko rin po pag minsang nagkakaubusan ng stocks at talagang may kailangan.
Humihingi po ako ng tawad sa aking ginawa. Isinakripisyo ko ang hindi pagiging "toxic" sa pagkuha ng gamit para
sa bagay na alam kong mali. Inaamin ko na ako'y naging madamot, pasuway at makasalanan. Inuna ko ang comfort
ko keysa gumawa ng tama. Manikluhod po akong humihingi ng tawad.
Sorry po. Sorry po. Sorry po talaga. 13
In a memorandum of even date, the IHSD, Customer Affairs Division, through Duty Officer Hernani R. Janayon,
14
apprised SLMC of the incident, highlighting that Sanchez expressly admitted that she intentionally brought out the
questioned items. 1awp++i1
Special Civil Actions

An initial investigation was also conducted by the SLMC Division of Nursing which thereafter served Sanchez a
15
notice to explain. 16
On May 31, 2011, Sanchez submitted an Incident Report Addendum (May 31, 2011 letter), explaining that the
17
questioned items came from the medication drawers of patients who had already been discharged, and, as similarly
practiced by the other staff members, she started saving these items as excess stocks in her pouch, along with
other basic items that she uses during her shift. She then put the pouch inside the lowest drawer of the bedside
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table in the treatment room for use in immediate procedures in case replenishment of stocks gets delayed.
However, on the day of the incident, she failed to return the pouch inside the medication drawer upon getting her tri-
colored pen and calculator and, instead, placed it inside her bag. Eventually, she forgot about the same as she got
caught up in work, until it was noticed by the guard on duty on her way out of SMLC's premises.
Consequently, Sanchez was placed under preventive suspension effective June 3, 2011 until the conclusion of the
investigation by SLMC's Employee and Labor Relations Department (ELRD) which, thereafter, required her to
19
explain why she should not be terminated from service for "acts of dishonesty" due to her possession of the
questioned items in violation of Section 1, Rule I of the SLMC Code of Discipline. In response, she submitted a
20
letter dated June 13, 2011, which merely reiterated her claims in her previous May 31, 2011 letter. She likewise
21
requested for a case conference, which SLMC granted. After hearing her side, SLMC, on July 4, 2011, informed
22 23
Sanchez of its decision to terminate her employment effective closing hours of July 6, 2011. This prompted her to
24
file a complaint for illegal dismissal before the NLRC, docketed as NLRC NCR Case No. 07-11042-11.
In her position paper, Sanchez maintained her innocence, claiming that she had no intention of bringing outside the
25
SLMC's premises the questioned items since she merely inadvertently left the pouch containing them in her bag as
she got caught up in work that day. She further asserted that she could not be found guilty of pilferage since the
questioned items found in her possession were neither SLMC's nor its employees' property. She also stressed the
fact that SLMC did not file any criminal charges against her. Anent her supposed admission in her handwritten letter,
she claimed that she was unassisted by counsel when she executed the same and, thus, was inadmissible for being
unconstitutional. 26
For its part, SLMC contended that Sanchez was validly dismissed for just cause as she had committed theft in
27
violation of Section 1, Rule I of the SLMC Code of Discipline, which punishes acts of dishonesty, i.e., robbery,
28 29
theft, pilferage, and misappropriation of funds, with termination from service.
The LA Ruling
In a Decision dated May 27, 2012, the Labor Arbiter (LA) ruled that Sanchez was validly dismissed for intentionally
30 31
taking the property of SLMC's clients for her own personal benefit, which constitutes an act of dishonesty as
32
provided under SLMC's Code of Discipline.
According to the LA, Sanchez's act of theft was evinced by her attempt to bring the questioned items that did not
belong to her out of SLMC's premises; this was found to be analogous to serious misconduct which is a just cause
to dismiss her. The fact that the items she took were neither SLMC's nor her co-employees' property was not found
33
by the LA to be material since the SLMC Code of Discipline clearly provides that acts of dishonesty committed to
SLMC, its doctors, its employees, as well as its customers, are punishable by a penalty of termination from
service. To this, the LA opined that "[i]t is rather illogical to distinguish the persons with whom the [said] acts may
34
be committed as SLMC is also answerable to the properties of its patients." Moreover, the LA observed that
35
Sanchez was aware of SLMC's strict policy regarding the taking of hospital/medical items as evidenced by her
handwritten letter, but nonetheless committed the said misconduct. Finally, the LA pointed out that SLMC's non-
36
filing of a criminal case against Sanchez did not preclude a determination of her serious misconduct, considering
that the filing of a criminal case is entirely separate and distinct from the determination of just cause for termination
of employment. 37
Aggrieved, Sanchez appealed to the NLRC. 38
The NLRC Ruling

In a Decision dated November 19, 2012, the NLRC reversed and set aside the LA ruling, and held that Sanchez
39
was illegally dismissed.
The NLRC declared that the alleged violation of Sanchez was a unique case, considering that keeping excess
hospital stocks or "hoarding" was an admitted practice amongst nurses in the Pediatric Unit which had been
tolerated by SLMC management for a long time. The NLRC held that while Sanchez expressed remorse for her
40
misconduct in her handwritten letter, she manifested that she only "hoarded" the questioned items for future use in
case their medical supplies are depleted, and not for her personal benefit. It further held that SLMC failed to
41
establish that Sanchez was motivated by ill-will when she brought out the questioned items, noting: (a) the testimony
of SG Manzanade during the conference before the ELRD of Sanchez's demeanor when she was apprehended,
i.e., "[d]i naman siya masyado nataranta," and her consequent offer to return the pouch; and (b) that the said
42 43
pouch was not hidden underneath the bag. Finally, the NLRC concluded that the punishment of dismissal was too
44
harsh and the one
(1) month preventive suspension already imposed on and served by Sanchez was the appropriate
penalty. Accordingly, the NLRC ordered her reinstatement, and the payment of backwages, other benefits,
45
and attorney's fees. 46
Unconvinced, SLMC moved for reconsideration which was, however, denied in a Resolution dated January 14,
47 48
2013. Thus, it filed a petition for certiorari before the CA.

49
The CA Ruling
In a Decision dated November 21, 2013, the CA upheld the NLRC, ruling that the latter did not gravely abuse its
50
discretion in finding that Sanchez was illegally dismissed.
It ruled that Sanchez's offense did not qualify as serious misconduct, given that: (a) the questioned items found in
her possession were not SLMC property since said items were paid for by discharged patients, thus discounting any
material or economic damage on SLMC's part; (b) the retention of excess medical supplies was an admitted
practice amongst nurses in the Pediatric Unit which was tolerated by SLMC; (c) it was illogical for Sanchez to leave
the pouch in her bag since she would be subjected to a routine inspection; (d) Sanchez's lack of intention to bring
out the pouch was manifested by her composed demeanor upon apprehension and offer to return the pouch to the
treatment room; and (e) had SLMC honestly believed that Sanchez committed theft or pilferage, it should have filed
the appropriate criminal case, but failed to do so. Moreover, while the CA recognized that SLMC had the
51
management prerogative to discipline its erring employees, it, however, declared that such right must be exercised
humanely. As such, SLMC should only impose penalties commensurate with the degree of infraction. Considering
that there was no indication that Sanchez's actions were perpetrated for self-interest or for an unlawful objective, the
penalty of dismissal imposed on her was grossly oppressive and disproportionate to her offense. 52
Dissatisfied, SLMC sought for reconsideration, but was denied in a Resolution54 dated April 4, 2014, hence, this
53
petition.
The Issue Before the Court
The core issue to be resolved is whether or not Sanchez was illegally dismissed by SLMC.
The Court's Ruling
The petition is meritorious.
The right of an employer to regulate all aspects of employment, aptly called "management prerogative,"
gives employers the freedom to regulate, according to their discretion and best judgment, all aspects of
employment, including work assignment, working methods, processes to be followed, working regulations,
transfer of employees, work supervision, lay-off of workers and the discipline, dismissal and recall of
workers. In this light, courts often decline to interfere in legitimate business decisions of employers. In fact,
55
labor laws discourage interference in employers' judgment concerning the conduct of their business. 56

Among the employer's management prerogatives is the right to prescribe reasonable rules and regulations
necessary or proper for the conduct of its business or concern, to provide certain disciplinary measures to
implement said rules and to assure that the same would be complied with. At the same time, the employee
has the corollary duty to obey all reasonable rules, orders, and instructions of the employer; and willful or
intentional disobedience thereto, as a general rule, justifies termination of the contract of service and the
dismissal of the employee. Article 296 (formerly Article 282) of the Labor Code provides:
57 58
Article 296. Termination by Employer. - An employer may terminate an employment for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or his
representative in connection with his work;
xxxx
Note that for an employee to be validly dismissed on this ground, the employer's orders, regulations, or instructions
must be: (1) reasonable and lawful, (2) sufficiently known to the employee, and (3) in connection with the duties
which the employee has been engaged to discharge." 59
Tested against the foregoing, the Court finds that Sanchez was validly dismissed by SLMC for her willful disregard
and disobedience of Section 1, Rule I of the SLMC Code of Discipline, which reasonably punishes acts of
dishonesty, i.e., "theft, pilferage of hospital or co-employee property, x x x or its attempt in any form or manner from
the hospital, co-employees, doctors, visitors, [and] customers (external and internal)" with termination from
employment. Such act is obviously connected with Sanchez's work, who, as a staff nurse, is tasked with the proper
60
stewardship of medical supplies. Significantly, records show that Sanchez made a categorical admission in her61
handwritten letter - i.e., "[k]ahit alam kong bawal ay nagawa kong [makapag-uwi] ng gamit" - that despite her
62 63
knowledge of its express prohibition under the SLMC Code of Discipline, she still knowingly brought out the subject
medical items with her. It is apt to clarify that SLMC cannot be faulted in construing the taking of the questioned
items as an act of dishonesty (particularly, as theft, pilferage, or its attempt in any form or manner) considering that
the intent to gain may be reasonably presumed from the furtive taking of useful property appertaining to
another. Note that Section 1, Rule 1 of the SLMC Code of Discipline is further supplemented by the company policy
64
requiring the turn-over of excess medical supplies/items for proper handling and providing a restriction on taking
65
and bringing such items out of the SLMC premises without the proper authorization or "pass" from the official
concerned, which Sanchez was equally aware thereof. Nevertheless, Sanchez failed to turn-over the questioned
66 67
items and, instead, "hoarded" them, as purportedly practiced by the other staff members in the Pediatric Unit. As it is
clear that the company policies subject of this case are reasonable and lawful, sufficiently known to the employee,
and evidently connected with the latter's work, the Court concludes that SLMC dismissed Sanchez for a just cause.
On a related point, the Court observes that there lies no competent basis to support the common observation of the
NLRC and the CA that the retention of excess medical supplies was a tolerated practice among the nurses at the
Pediatric Unit. While there were previous incidents of "hoarding," it appears that such acts were - in similar fashion -
furtively made and the items secretly kept, as any excess items found in the concerned nurse's possession would
have to be confiscated. Hence, the fact that no one was caught and/or sanctioned for transgressing the prohibition
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therefor does not mean that the so-called "hoarding" practice was tolerated by SLMC. Besides, whatever maybe the
justification behind the violation of the company rules regarding excess medical supplies is immaterial since it has
been established that an infraction was deliberately committed. Doubtless, the deliberate disregard or disobedience
69
of rules by the employee cannot be countenanced as it may encourage him or her to do even worse and will render
a mockery of the rules of discipline that employees are required to observe. 70
Finally, the Court finds it inconsequential that SLMC has not suffered any actual damage. While damage aggravates
the charge, its absence does not mitigate nor negate the employee's liability. Neither is SLMC's non- filing of the
71
appropriate criminal charges relevant to this analysis. An employee's guilt or innocence in a criminal case is not
determinative of the existence of a just or authorized cause for his or her dismissal. It is well- settled that conviction
72
in a criminal case is not necessary to find just cause for termination of employment, as in this case. Criminal and
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labor cases involving an employee arising from the same infraction are separate and distinct proceedings which
should not arrest any judgment from one to the other.

As it stands, the Court thus holds that the dismissal of Sanchez was for a just cause, supported by substantial
evidence, and is therefore in order. By declaring otherwise, bereft of any substantial bases, the NLRC issued a
patently and grossly erroneous ruling tantamount to grave abuse of discretion, which, in turn, means that the CA
erred when it affirmed the same. In consequence, the grant of the present petition is warranted.
WHEREFORE, the petition is GRANTED. The Decision dated November 21, 2013 and the Resolution dated April 4,
2014 of the Court of Appeals in CA-G.R. SP No. 129108 are REVERSED and SET ASIDE. The Labor Arbiter's
Decision dated May 27, 2012 in NLRC Case No. NCR 07-11042-11 finding respondent Maria Theresa V. Sanchez
to have been validly dismissed by petitioner St. Luke's Medical Center, Inc. is hereby REINSTATED.

b.) G.R. No. 149433 June 22, 2011
THE COCA-COLA EXPORT CORPORATION, Petitioner,

vs.
CLARITA P. GACAYAN, Respondent.
RESOLUTION
LEONARDO-DE CASTRO, J.:
For resolution is the Motion for Reconsideration filed by petitioner The Coca-Cola Export Corporation (petitioner
company) of our Decision promulgated on December 15, 2010, denying its petition for review on certiorari of the
Decision dated May 30, 2001, and subsequent Resolution dated August 9, 2001 of the Court of Appeals in CA-G.R.
SP No. 49192.
In our Decision dated December 15, 2010, we affirmed with modification the decision of the Court of Appeals which
ruled that respondent Clarita P. Gacayan (respondent Gacayan) was illegally dismissed from her employment with
petitioner company. We upheld the appellate court’s order that respondent Gacayan be reinstated to her former
position, if possible, otherwise to a substantially equivalent position without loss of seniority rights and full
backwages. We, however, modified the award of backwages, ruling that they should be computed from the time the
compensation was not paid up to the time of respondent Gacayan’s reinstatement.
In support of its motion, petitioner company advanced the following arguments:
I.
"LOSS OF TRUST AND CONFIDENCE," AS A JUST CAUSE FOR TERMINATION, IS NOT RESTRICTED TO
MANAGERIAL EMPLOYEES BUT LIKEWISE APPLIES TO "SUPERVISORS OR OTHER PERSONNEL
OCCUPYING POSITIONS OF RESPONSIBILITY."
II.
RESPONDENT’S BREACH OF PETITIONER’S TRUST IS CLEARLY SUPPORTED AND BORNE BY THE

RECORDS.
III.
RESPONDENT’S WRONGFUL, MALICIOUS, AND FRAUDULENT INTENT IS EVIDENT FROM THE RECORDS.
IV.
RESPONDENT’S DISMISSAL IS NOT "HARSH" BUT IS COMPLETELY COMMENSURATE TO THE SEVERITY

OF HER ACTS. THE COURT’S ORDER FOR RESPONDENT’S REINSTATEMENT WITH BACKWAGES
REWARDS GROSS DISHONESTY AND ENNOBLES BREACH OF TRUST.1
To resolve the instant motion, it is necessary to restate briefly the factual background of the case.
One of the benefits enjoyed by the employees of petitioner company was the reimbursement of meal and
transportation expenses incurred while rendering overtime work. This was allowed only when the employee
worked overtime for at least four hours on a Saturday, Sunday, or holiday, and for at least two hours on weekdays.
The maximum amount allowed to be reimbursed was one hundred fifty (₱150.00) pesos. It was in connection with
this company policy that respondent Gacayan, then a Senior Financial Accountant, was made to explain the
alleged alterations in three (3) receipts which she submitted to support her claim for reimbursement of meal
expenses, to wit: 1) McDonald’s Receipt No. 875493 dated October 1, 1994 for ₱111.00; 2) Shakey’s Pizza Parlor

Receipt No. 122658 dated November 20, 1994 for ₱174.06; and 3) Shakey’s Pizza Parlor Receipt No. 41274 dated
July 19, 1994 for ₱130.50.
Petitioner company sent respondent Gacayan several memoranda requiring her to explain why her claims for
reimbursement should not be considered fraudulent since there were alterations, i.e., the dates of issuance of
the receipts and the food items purchased as enumerated thereon, in the receipts she submitted.
Consequently, respondent Gacayan submitted her explanation denying any personal knowledge in the commission
of the alterations on the subject receipts.
Petitioner company then conducted a hearing and formal investigation on the matter to give respondent Gacayan an
opportunity to explain the issues against her and to present her side. After attending the first scheduled hearing and
participating thereat, respondent Gacayan did not attend the succeeding hearings, citing her doctor’s advice to rest,
and likewise complaining of the alleged partiality of the investigating committee against her.
In a letter dated April 4, 1995, petitioner company dismissed respondent Gacayan for fraudulently submitting
tampered and/or altered receipts in support of her petty cash reimbursements in gross violation of the company’s
rules and regulations.
On June 6, 1995, respondent Gacayan filed a complaint with the National Labor Relations Commission (NLRC).
In a Decision dated June 17, 1996, the Labor Arbiter dismissed respondent Gacayan’s complaint for lack of merit.
This was affirmed by the NLRC in its Resolution dated April 14, 1998.
On appeal, the Court of Appeals reversed the NLRC and ruled that the penalty imposed on respondent Gacayan
was too harsh. The Court of Appeals ordered the immediate reinstatement of respondent Gacayan to her former
position or to a substantially equivalent position without loss of seniority rights and with full backwages. Hence,
petitioner company filed with this Court a petition for review on certiorari which was denied in our Decision dated
December 15, 2010.
In our Decision dated December 15, 2010, we declared that respondent Gacayan’s dismissal from employment was
not grounded on any of the just causes enumerated under Article 2822 of the Labor Code since petitioner company,
in its termination letter dated April 4, 1998, neither mentioned its alleged loss of trust and confidence in respondent
Gacayan, nor discussed the alleged sensitive and delicate position of respondent Gacayan requiring the utmost
trust of petitioner company.
Petitioner company now begs us to reconsider this pronouncement, arguing that respondent Gacayan’s position as
a "Senior Financial Accountant with the Job Description of a Financial Project Analyst" has duties which clearly
qualify her as one occupying a position of trust and responsibility, thus:
8.1. Provides support in the form of financial analyses and evaluation of alternative strategies or action plans
to assist management in strategic and operational decision-making.
8.2. Scope of work is mainly financial analysis but may include assessment of tax, legal, regulatory, socio-
political, marketing, operating, and other considerations.
8.3. Liaises with the Bottler to comply with Corporate Bottler financial reporting requirements and to ensure
Bottler’s plans are aligned with TCCEC’s [Respondent’s]. Includes:
Business Plan.
Monthly Rolling Estimate.
Monthly variance analysis (vs Budget and prior year, Pesos and Dlrs)

Dividend Declared Report and monitoring of dividend remittances.
Quarterly reports.
Analysis of financial issues/questions raised by Corporate.
Presentation charts.
8.4. Assists management on various initiatives on ad hoc basis (scope of work depends on objectives).
Ad hoc requests from Corporation for Information.
Accounting for REFPET project costs.
Foundation 3-year plan.
Finance representative in MRP II project.
CCFEL ROSS conversion project.
BLI and BII recapitalization.3
According to petitioner company, respondent Gacayan had access to and was responsible for confidential, delicate,
and sensitive matters, particularly relating to its operations and finances. Moreover, petitioner company maintains
that respondent Gacayan was in-charge of the proper handling of funds as "among her tasks was the preparation of
the Business Plan, Monthly Rolling Estimate, Monthly variance analysis (vs Budget and prior year, Pesos and Dlrs),
Dividend Declared Report and monitoring of dividend remittances, and Quarterly reports."4 Petitioner company
further calls on the Court to affirm our ruling in Divine Word College of San Jose v. Aurelio5 and Panday v. National
Labor Relations Commission6 that a Senior Bookkeeper (in the former case) or a Branch Accountant (in the latter
case) held a position of trust and confidence.
Likewise, petitioner company maintains that respondent Gacayan’s "act of falsifying or altering receipts in order to
secure unwarranted reimbursements, not only once, but on three (3) separate occasions, were clearly established
by the evidence on record and unambiguously displays [r]espondent [Gacayan]’s wrongful intent."7
After due consideration of the motion for reconsideration, we find the same impressed with merit.
It is well-settled in our jurisdiction that loss of trust and confidence constitutes a just and valid cause for an
employee’s termination. In Etcuban, Jr. v. Sulpicio Lines, Inc.,8 this Court held:
Law and jurisprudence have long recognized the right of employers to dismiss employees by reason of loss of trust
and confidence. More so, in the case of supervisors or personnel occupying positions of responsibility, loss
of trust justifies termination. Loss of confidence as a just cause for termination of employment is premised from
the fact that an employee concerned holds a position of trust and confidence. This situation holds where a person is
entrusted with confidence on delicate matters, such as the custody, handling, or care and protection of the
employer’s property. But, in order to constitute a just cause for dismissal, the act complained of must be "work-
related" such as would show the employee concerned to be unfit to continue working for the employer.9
In the instant case, respondent Gacayan was the Senior Financial Accountant of petitioner company. While
respondent Gacayan denies that she is handling or has custody of petitioner’s funds, a re-examination of
the records of this case reveals that she indeed handled delicate and confidential matters in the financial
analyses and evaluations of the action plans and strategies of petitioner company. Respondent Gacayan
was also privy to the strategic and operational decision-making of petitioner company, a sensitive and
delicate position requiring the latter’s utmost trust and confidence. As such, she should be considered as
holding a position of responsibility or of trust and confidence.

We revert to the findings of the Labor Arbiter, as affirmed by the NLRC, that respondent Gacayan betrayed the trust
and confidence reposed on her when she, ironically a Senior Financial Accountant tasked with ensuring financial
reportorial/regulatory compliance from others, repeatedly submitted tampered or altered receipts to support her
claim for meal reimbursements, in gross violation of the rules and regulations of petitioner company. Upon review,
even the Court of Appeals did not absolve respondent Gacayan of wrongdoing but rather merely held that dismissal
was too harsh a penalty for her infraction.
It has oft been held that loss of confidence should not be used as a subterfuge for causes which are illegal,
improper and unjustified. It must be genuine, not a mere afterthought to justify an earlier action taken in bad faith. It
bears stressing that what is at stake here are the sole means of livelihood, the name and the reputation of the
employee.10
Verily, in Tiu and/or Conti Pawnshop v. National Labor Relations Commission,11 we held that the language of Article
282(c) of the Labor Code states that the loss of trust and confidence must be based on willful breach of the trust
reposed in the employee by the employer. Ordinary breach will not suffice; it must be willful. Such breach is willful if
it is done intentionally, knowingly, and purposely, without justifiable excuse as distinguished from an act done
carelessly, thoughtlessly, heedlessly or inadvertently.12 And in the case of supervisors or personnel occupying
positions of responsibility, like respondent Gacayan, the loss of trust and confidence must spring from the voluntary
or willful act of the employee, or by reason of some blameworthy act or omission on the part of the employee.13
Thus, petitioner company must sufficiently and convincingly show that the loss of trust and confidence in respondent
Gacayan was founded on clearly established facts, incidents and substantial evidence.
In its motion for reconsideration, petitioner company emphasized the clear and convincing evidence on record that
respondent Gacayan breached the trust and confidence reposed in her when she repeatedly submitted tampered or
altered receipts to support her claim for meal reimbursement. Petitioner company maintained that respondent
Gacayan cannot mistakenly file a claim for overtime meal allowance reimbursement for a day she knew she was not
entitled to, as she did not actually render overtime work. Petitioner company reiterated its evidence showing that
respondent Gacayan acted with wrongful, malicious and fraudulent intent when she repeatedly submitted tampered
or altered receipts.
With regard to the first receipt in question, McDonald’s Receipt No. 875493 dated October 1, 1994 for ₱111.00,
petitioner company was able to secure a certification14 from the issuing branch of McDonald’s that said receipt was
not issued on October 1, 1994 but on October 2, 1994. The second receipt, Shakey’s Pizza Parlor Receipt No.
122658 dated November 20, 1994 for ₱174.06, was actually for three orders of Bunch of Lunch and not a single
order of Buddy Pack with Extra Mojos as claimed by respondent Gacayan. Petitioner company presented the sworn
affidavit15 of the delivery personnel of Shakey’s Pasong Tamo to attest to this fact. Lastly, the third receipt, Shakey’s
Pizza Parlor Receipt No. 41274 dated July 19, 1994 for ₱130.50, was found to be actually issued on July 17, 1994.
Moreover, another employee who supposedly shared the food with respondent Gacayan denied in a sworn
affidavit16 that she partook of the said meal. In sum, petitioner company highlighted in its motion that the gravity of
respondent Gacayan’s offense lies in the inherent dishonesty of her alteration of the said receipts even though the
amounts she received were minimal sums.
Respondent Gacayan intentionally, knowingly, purposely, and without justifiable excuse, submitted tampered or
altered receipts to support her claim for meal reimbursement. Respondent Gacayan failed to sufficiently refute the
charges against her for the submission of said fraudulent items of expense. All she did was to deny any personal
knowledge in the commission of the alterations in the subject receipts and to point fingers at other people who may
have done the alterations.17
First, respondent Gacayan blamed the McDonald’s staff for the mistake in the date on the first receipt. She also
blamed her sister’s driver for allegedly giving her a wrong receipt. Second, respondent Gacayan blamed the delivery
staff of Shakey’s for bringing yet another wrong receipt. She allegedly requested the delivery personnel to merely
write the correct items which she ordered and to sign the said receipt to authenticate the alterations made in order
to avoid the hassle of having to wait for a replacement receipt. This, however, was contradicted by the delivery
personnel who narrated that what was ordered and what he delivered were three orders of Bunch of Lunch and not
a Buddy Pack. The delivery personnel further recounted that the call for delivery on that particular day was made by
a certain Leah Gatayan (Gacayan) who turned out to be respondent Gacayan’s daughter who was with her in the
office as evidenced by the logbook entry of the security guard in respondent Gacayan’s office. Third, respondent
Gacayan claimed to have shared a meal with a certain CAV (Corazon A. Varona), who executed an affidavit
denying such an instance of meal-sharing with her.
Although the amounts involved in the subject receipts were relatively small, or only the dates and/or items ordered
were altered or tampered with, respondent Gacayan’s act of submitting fraudulent items of expense adversely
reflected on her integrity and honesty, which is ample basis for petitioner company to lose its trust and confidence in
her.
On the issue of due process, petitioner company complied with all the aforementioned requirements for the valid
dismissal of respondent Gacayan. We quote with approval the Labor Arbiter in his disquisition, to wit:
As far as the notice requirement is concerned, the law requires the employer to give two (2) kinds of notices to the
employee sought to be terminated:
‘It is evident from the said provisions that the employer is required to furnish an employee who is to be dismissed
two (2) written notices before such termination. The first is the notice to apprise the employee of the particular act or
omissions for which his dismissal is sought. This may loosely be considered as the proper charge. The second is
the notice informing the employee of the employer’s decision to dismiss him. This decision, however, must come
only after the employee is given a reasonable period from receipt of the first notice within which to answer the
charge, and ample opportunity to be heard and defend himself with the assistance of his representative, if he so
desires. This is in consonance with the express provisions of law on the protection of labor and the broader dictates
of procedural due process. Non compliance therewith is fatal because these requirements are conditions sine qua
non before dismissal may be validly effected. (Tiu vs. National Labor Relations Commission, 215 SCRA 540, 551-
552, emphasis added).’
Tested against the foregoing yardstick, the termination of complainant [herein respondent] is clearly valid.
Respondents [herein petitioner] complied with the notice requirement strictly to the letter. Complainant [respondent]
was given the first notice which the Supreme Court amply termed in the foregoing jurisprudence as the ‘proper
charge.’ This Office further notes that more than one notice was given to the complainant [respondent]. In fact,
complainant [respondent] was repeatedly directed to answer the charges against her. As she in fact did.
Complainant [Respondent] was given repeated opportunities to ventilate her side through the numerous hearings
scheduled by the respondents [petitioner]. But after attending only the first hearing, complainant [respondent]
suddenly refused in fact she failed to attend the two (2) other hearings. [Even] when she came to know that the
Shakey’s delivery man was going to be invited.
It was only after the evidence against complainant [respondent] was received and her fraudulent participation
morally ascertained that respondents [petitioner] finally decided to terminate his (sic) services. And after arriving at a
conclusion, complainant [respondent] was consequently informed of her termination which was the sanction
imposed on her.
Again, following the yardstick laid down by the Tiu doctrine cited above, the procedure in terminating complainant
[respondent] was definitely followed. Her termination is therefore valied (sic) and must be upheld for all intents and
purposes.
Certainly, complainant cannot now belatedly claim that she was denied due process. For it was her who repeatedly
refused to subsequently appear before the formal administrative investigation conducted by respondent company
[petitioner].
‘Due process is not violated where a person is not heard because he has chosen, for whatever reason, not to be
heard. It is obvious that if he opts to be silent where he has the right to be (sic) speak, he cannot later be heard to
complain that he was unduly silenced.’ (Pepsi Cola Distributors of the Philippines, Inc. vs. National Labor Relations
Commission, G.R. No. 100686, August 15, 1995)18

Evidence shows that respondent Gacayan was properly notified of the charges against her. She received several
1âwphi1
memoranda19 from petitioner company requiring her to explain in writing why her claims for reimbursement for meal
expenses should not be considered fraudulent since there were alterations in the receipts she submitted. Petitioner
company also sent respondent Gacayan a letter20 dated January 3, 1995 directing her to explain why she should not
be subjected to disciplinary sanctions for her violations of the company’s rules and regulations which punishes with
dismissal the submission of any fraudulent item of expense. Petitioner company even advised respondent Gacayan
to bring along a counsel of her choice at the hearings conducted to investigate the matter.
Respondent Gacayan submitted her explanation and denied any knowledge of the commission of alterations on the
receipts which she submitted. She even appeared and participated at the proceedings of the investigation. Clearly,
respondent Gacayan was given ample opportunity to present her side and rebut the evidence against her.
Despite all the chances given by petitioner company for respondent Gacayan to present her case, respondent
Gacayan failed to attend the succeeding hearings and merely filed applications for leave.21 Petitioner company,
however, continued to send notices22 to respondent Gacayan informing her of the re-setting of the continuation of
the investigation on January 23, 1995 and March 15, 1995. With respondent Gacayan’s continued absence at the
scheduled hearings and after the evidence was evaluated, petitioner company finally dismissed respondent
Gacayan for fraudulently submitting tampered or altered receipts in support of her petty cash reimbursements.
Given the foregoing, it is evident that the required procedural due process for respondent Gacayan’s termination
was fully complied with. The letter dated January 3, 1995 served on respondent Gacayan was the written notice
specifying the charges against her, while the subsequent letter23 dated April 4, 1995 served as the written notice of
termination.
In fine, petitioner company had sufficiently discharged its burden of proving that the dismissal of respondent
Gacayan was for just cause, that it was made within the parameters of the law, and that respondent was afforded
due process pursuant to the basic tenets of equity, justice and fair play. We agree with petitioner company that to
allow respondent Gacayan to be reinstated to her former position with payment of backwages would tend rather to
reward dishonesty and ennoble breach of trust by employees to the prejudice of the employer.
This Court has always reminded that:
While the Constitution is committed to the policy of social justice and the protection of the working class, it should
not be expected that every labor dispute will be automatically decided in favor of labor. Management also has its
own rights which, as such, are entitled to respect and enforcement in the interest of simple fair play. 24
WHEREFORE, in view of the foregoing, we GRANT the Motion for Reconsideration filed by petitioner The Coca-
Cola Export Corporation and RECONSIDER our Decision dated December 15, 2010. The assailed Decision dated
May 30, 2001 and Resolution dated August 9, 2001 of the Court of Appeals in CA-G.R. SP No. 49192 are
REVERSED and SET ASIDE. The Resolutions dated April 14, 1998 and June 19, 1998 of the National Labor
Relations Commission are hereby AFFIRMED.

c.) G. R. No. 143258 - August 15, 2003
PHILIPPINE AIRLINES, INC., Petitioner, v. JOSELITO PASCUA, ROBERT ABION, IRENEO ACOSTA, GARY
NEPOMUCENO, JASON PALAD, CEFERINO de la CRUZ, JOEL SALGADO, WILFREDO RIVERA, ALEXANDER
ANORE, FERNANDO BACCAY, EDILBERTO FAUNE, REYMAR KALAW, GARY G. MARASIGAN, RODOLFO ODO,
JONATHAN RENGO, ARTHUR APOSTOL, EDUARDO BALICASAN, MATHIAS GLEAN, ALINORMAN
HARANGOTE, CRISANTO CASTILLO, REX MARION CUERPO, EDGARDO del PRADO, RICARDO HERNANDEZ,
PEDRO MERCADO JR., CESAR PAYOYO, RONALDO QUEROL, MAURELIO SIERRA, MANUEL VILLELA,
LOUISEN FELIPE, LOBENEDICTO TIMBREZA, ANTONIO CABUG, ELISEO ESPIRITU, ARNEL BAUTISTA,
ANTHONY ROBLES, DENNIS ARANDIA, CHARLIE BALUBAL, RHODERIC BITAS, ORLANDO CANDA, CHARLIE
de la CRUZ, RIQUESENDO de la FUENTE, RENO DUQUE, JONATHAN FEBRE, ALVIN RIBERTA, NATHANIEL
MALABAS, JUANITO SERUMA, FREDERICH de ASIS, ROMMEL ESTRADA, SYDFREY EVARISTO, ERICSON
INTAL, FERDINAND GALANG, RUBEN PEROLINA, ROBERT McBURNEY, ENRIQUE SORIANO, ALVIN
MANALAYSAY, NEMESIO MAALA, RAUL NEPOMUCENO, SAMUEL REYES, ERWIN MINA, MANUEL REYES,
REYNALDO ORAPA, TEODORICO PADELIO, RANDY PIMENTEL, WILLIAM PATRIMONIO, JOEL RAMOS,
OLEGARIO REYES, RAUL OCULTO, ROGELIO OLQUINDO, and LARRY VILLAFLOR. respondents.
QUISUMBING, J.:
For review is the decision dated January 26, 20001 of the Court of Appeals and its May 23, 20002 resolution in CA-G.R.
SP No. 50351. The appellate court dismissed the petition for certiorari filed by petitioner to challenge the NLRC
decision dated January 23, 1998,3 in NLRC NCR CA No. 010598-96, and likewise denied their motion for
reconsideration.
The antecedent facts, as summarized by the Court of Appeals and borne by the records, are as follows:
In April, August, and September of 1992, PAL hired private respondents as station attendants on a four or six-
hour work-shift a day at five to six days a week.
The primary duty of private respondents who were assigned to PALs Air services Department and ASD/CARGO was to
load cargo to departing, and unload cargo from arriving PAL international flights as well as flights of Cathay Pacific,
Northwest Airlines and Thai Airlines with which PAL had service contract[s].
On certain occasions, PAL compelled private respondents to work overtime because of urgent necessity. The contracts
with private respondents were extended twice, the last of which appears to have been for an indefinite period.
On February 3, 1994, private respondent Joselito Pascua, in his and on behalf of other 79 part-time station
attendants, filed with the Department of Labor and Employment a complaint for:
(1) Regularization
(2) Underpayment of wages
(3) Overtime pay
(4) Thirteenth month pay
(5) Service incentive leave pay
(6) Full time of eight hours employment
(7) Recovery of benefits due to regular employees
(8) Night differential pay
(9) Moral damages and
(10) Attorneys fees,

which was docketed as NLRC NCR Case No. 00-02-00953-94.
During the pendency of the case, PAL President Jose Antonio Garcia and PAL Chairman & Corporate Executive Officer
Carlos G. Dominguez converted the employment status of private respondents from temporary part-time to regular
part-time.
On February 24, 1995, private respondents dropped their money claim then pending before the Office of Executive
Labor Arbiter Guanio, thus leaving for consideration their complaint for "regularization" - conversion of their
employment status from part-time to regular (working on an 8-hour shift).
Finding private respondents remaining cause of action was rendered "moot and academic" by their supervening
regularization and denying their prayer that their status as regular employees be given retroactive effect to "six
months after their stint as temporary contractual employees," the Executive Labor Arbiter dismissed private
respondents complaint.
On appeal, the NLRC, finding for private respondents, declared them as regular employees of PAL with an eight-hour
work-shift. The pertinent portions of the NLRC decision reads:
Respondent admits that complainants have been performing functions that are considered necessary or desirable in
the usual business of PAL. There is no clear showing, however, that complainants employment had been fixed for a
particular project or undertaking the completion or termination of which has been determined at the time of their
engagement. Neither is there a clear showing that the work or services which they performed, was seasonal in nature
and their employment for the duration of the season. Complainants were simply hired as part-time employees at the
ASD and at the ASD/CARGO to do ramp services.
Complainants can therefore be considered as casual employees for a definite period during the first year of their
employment and, thereafter, as regular employees of respondents by operation of law. As such, they should be
entitled to the compensation and other benefits provided in the Collective Bargaining Agreement for regular
employees from or day after one year [of] service. Having been paid less than what they should receive, complainants
are therefore, entitled to the differentials.4
Petitioner promptly filed a motion for reconsideration of the NLRC decision, which was denied in an order dated
October 12, 1998. Consequently, petitioner filed with the Court of Appeals a special civil action for certiorari to annul
the NLRC decision. On January 26, 2000, the Court of Appeals dismissed the said petition and by resolution issued on
May 23, 2000, denied petitioners motion for reconsideration.
Hence, this appeal by certiorari where petitioner assigns the following errors:
-I-
THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THE NLRC DECISION WHICH RULED ON THE MERITS OF
THE COMPLAINT, DESPITE THE FACT THAT THE CAUSE OF ACTION HAS ALREADY BECOME MOOT AND ACADEMIC
WHEN THE PETITIONER ACCORDED REGULAR STATUS TO THE RESPONDENTS DURING THE ARBITRATION
PROCEEDINGS.
- II -
EVEN IF WE ASSUME FOR THE SAKE OF ARGUMENT THAT THE COMPLAINT HAS NOT BEEN RENDERED MOOT AND
ACADEMIC, STILL THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THE DECISION OF THE NLRC WHICH
COMPELLED THE PETITIONER TO CHANGE THE RESPONDENTS EMPLOYMENT STATUS FROM PART-TIME TO FULL-
TIME.5
Two principal issues need resolution: (1) Did petitioners act of converting respondents status from
temporary to regular employees render the original complaint for "regularization" moot and academic?
(2) Did the appellate court err when it upheld the decision of the NLRC to accord respondents regular full-
time employment although petitioner, in the exercise of its management prerogative, requires only part-
time services?
Petitioner contends that the NLRC could not change respondents status from part-time to full-time
employment because respondents merely prayed in their original complaint for regular status as opposed

to temporary or casual employment. Respondents temporary part-time status was already converted by petitioner
to regular part-time status at the arbitration level, to put an end to the controversy. That being the case, the labor
arbiter ordered the dismissal of the complaint for having become moot and academic, because the relief sought was
already granted even prior to the termination of the dispute. Clearly, says petitioner, respondents cause of action for
regularization had been extinguished when petitioner accorded the respondents regular status.6 It was grave abuse as
well as error for the NLRC to touch the merits of an issue in effect already mooted at the arbiters level, according to
petitioner.
On the second issue, petitioner argues that the NLRC could not lawfully impose the change of employment
status of respondents from part-time to full-time employees. 7 It has no authority or power to do so.
According to petitioner, management of its business is a matter that falls within the exclusive domain of
the employer. As such, only the employer, and no one else, should determine the number of employees to
be hired, the type of employees to be engaged, and the qualifications of each and every employee. The
employer could engage part-time employees if its operational needs require such part-time employees.
The NLRC should not substitute its judgment for that of the employer in this regard, says petitioner.8
Respondents, in their comment, aver that the conversion of their employment status from part-time temporary to
part-time regular did not render inutile their original complaint, as in fact they have consistently asked for full-
time regularization. According to respondents, in their pleadings they repeatedly sought not only regularization but in
fact they also asked entitlement to benefits of regular full-time employees. Further, respondents claim that since
petitioner needs the services of private respondents for eight (8) hours or more a day, it is with evident bad faith that
petitioner continues to categorize them as mere "part-timers" rather than full-timers so the company could avoid
payment of corresponding benefits due to respondents.9
On the first issue that the original complaint was rendered moot and academic by the subsequent regularization of
respondents while the action was pending before the labor arbiter, we find that the petitioners assertion is not entirely
true nor accurate. Petitioner insists that all respondents sought was the conversion of their temporary employment
status to regular employment, without asking for a change from part-time to full time status. This claim, however, is
belied by the very complaint initially filed with the labor arbiter. As stated by the OSG in its comment to the petition
filed with the Court of Appeals, which we now quote aptly:
However, a thorough scrutiny of the appeal reveals that despite its lack of preciseness, private
respondents were, in fact, ultimately assailing their part-time status, not just the retroactive date of their
regularization as part-time employees. They contradicted the Labor Arbiters perception that hiring of part-time
employees was justified by the peculiar nature of airport operations. Besides, even petitioner understood the heart of
the appeal when it observed in their Answer to Appeal that "[a]ll that they wanted is to be converted to full time
status."
The pleadings filed by private respondents consistently show that they wanted to become regular full-time employees,
not only regular part-time employees. Although they repeatedly said "regular employees," not specifying whether it
should be regular part-time or regular full-time, their intention should be read from the entirety of all their pleadings.
Private respondents have consistently alleged that despite their part-time status, they actually work more than 8
hours daily. Private respondent Joselito Pascua confirmed this when he testified on November 24, 1995 (TSN,
November 24, 1995, pp. 35-36). Ultimately, they want to be entitled to the many collective bargaining agreement
(CBA) benefits which would be possible only if they were regular full-time employees since regular part-time
employees are covered by the Personnel Policies and Procedures Manual, the relevant portion of which was introduced
only for the first time in this Court. While regular part-time employees have their own package of benefits, it is safe to
infer that the benefits under the CBA are better, being a result of negotiation, than those provided under the
Personnel Policies and Procedures Manual which are unilaterally handed down by petitioner.10
An issue becomes moot and academic when it ceases to present a justiciable controversy, so that a declaration on the
issue would be of no practical use or value. In that situation, there is no actual substantial relief to which respondents
would be entitled and which would be negated by the dismissal of their original complaint.11 Here, it is readily
apparent that the dismissal of the original complaint by the labor arbiter would negate the substantial relief to which
respondents would have been entitled. They seek regular full-time employment and this claim is fully set forth in the
original complaint. They specifically prayed for entitlement to benefits due to a regular full-time employee with
seniority rights.12 The mere regularization of respondents would still not entitle them to all benefits under the CBA,
which regular full-time employees enjoy. In fact, regular part-time employees are covered by the benefits under
Personnel Policies and Procedures Manual, not the CBA. The dismissal then of the complaint by the labor arbiter is
reversible error, and the NLRC still acted within its power and authority as a quasi-judicial agency in finding that
respondents deserve more than just being regular employees but must be regular full-time employees.

We now come to the second issue, which touches on the valid exercise of management prerogative. According to
petitioner, NLRC encroached upon this exclusive sphere of managerial decision, when it ruled that respondents should
be made regular full-time employees instead of regular part-time employees, and the appellate court thereby erred in
sustaining the NLRC. This contention does not quite ring true, much less persuade us. It must be borne in
mind that the exercise of management prerogative is not absolute. While it may be conceded that
management is in the best position to know its operational needs, the exercise of management
prerogative cannot be utilized to circumvent the law and public policy on labor and social justice. That
prerogative accorded management could not defeat the very purpose for which our labor laws exist: to
balance the conflicting interests of labor and management, not to tilt the scale in favor of one over the
other, but to guaranty that labor and management stand on equal footing when bargaining in good faith
with each other. By its very nature, encompassing as it could be, management prerogative must be
exercised always with the principles of fair play at heart and justice in mind.
Records show that respondents were first hired to work for a period of one year. Notwithstanding the fact that
respondents perform duties that are usually necessary or desirable in the usual trade or business of petitioner,
respondents were considered temporary employees as their engagement was fixed for a specific period. However,
equally borne by the records, is the fact that respondents employment was extended for more than two years.
Evidently, there was a continued and repeated necessity for their services, which puts to naught the contention that
respondents, beyond the one-year period, still continued to be temporary part-time employees. Article 280 of the
Labor Code13 provides that any employee who has rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed, and
his employment shall continue while such activity actually exists.
The NLRC decision now assailed is one based on substantial evidence, which is that amount of relevant evidence that
a reasonable mind might accept as adequate to justify a conclusion.14 It bears stressing that findings of fact of quasi-
judicial agencies like the NLRC which have acquired expertise in the specific matters entrusted to their jurisdiction are
accorded by this Court not only respect but even finality if they are supported by substantial evidence.15 Here we find
no compelling reason to go against the factual findings of the NLRC. The parties had ample opportunity to present
below the necessary evidence and arguments in furtherance of their causes, and it is presumed that the quasi-judicial
body rendered its decision taking into consideration the evidence and arguments thus presented. Such being the case,
it is likewise presumed that the official duty of the NLRC to render its decision was regularly performed.16 Petitioner
has not shown any compelling justification to warrant reversal of the NLRC findings. Absent any showing of patent
error, or that the NLRC failed to consider a fact of substance that if considered would warrant a different result, we
yield to the factual conclusions of that quasi-judicial agency. More so, when as here, these NLRC conclusions are
affirmed by the appellate court.
It is basic to the point of being elementary that nomenclatures assigned to a contract shall be disregarded if it is
apparent that the attendant circumstances do not support their use or designation. The same is true with greater
force concerning contracts of employment, imbued as they are with public interest. Although respondents were
initially hired as part-time employees for one year, thereafter the over-all circumstances with respect to duties
assigned to them, number of hours they were permitted to work including over-time, and the extension of
employment beyond two years can only lead to one conclusion: that they should be declared full-time employees.
Thus, not without sufficient and substantial reasons, the claim of management prerogative by petitioner ought to be
struck down for being contrary to law and policy, fair play and good faith.
In sum, we are in agreement with the Court of Appeals that the NLRC did not commit grave abuse of discretion simply
because it overturned the labor arbiters decision. Grave abuse of discretion is committed when the judgment is
rendered in a capricious, whimsical, arbitrary or despotic manner. An abuse of discretion does not necessarily follow
just because there is a reversal by the NLRC of the decision of the labor arbiter. Neither does variance in the
evidentiary assessment by the NLRC and by the labor arbiter warrant as a matter of course another full review of the
facts. The NLRCs decision, so long as it is not bereft of evidentiary support from the records, deserves respect from
the Court.17
WHEREFORE, the petition is DENIED for lack of merit. The decision dated January 26, 2000 of the Court of Appeals
and its resolution dated May 23, 2000, in CA-G.R. SP No. 50351 are AFFIRMED. Costs against petitioner.

d.) G.R. No. 163431, August 28, 2013
NATHANIEL N. DONGON, Petitioner, v. RAPID MOVERS AND FORWARDERS CO., INC.,

AND/OR NICANOR E. JAO, JR., Respondents.
DECISION
BERSAMIN, J.:
The prerogative of the employer to dismiss an employee on the ground of willful

disobedience to company policies must be exercised in good faith and with due regard to
the rights of labor.
The Case
By petition for review on certiorari, petitioner appeals the adverse decision promulgated on October
24, 2003,1 whereby the Court of Appeals (CA) set aside the decision dated June 17, 2002 of the
National Labor Relations Commission (NLRC) in his favor.2 The NLRC had thereby reversed the ruling
dated September 10, 2001 of the Labor Arbiter dismissing his complaint for illegal dismissal.3 cralaw virtualaw library
Antecedents
The following background facts of this case are stated in the CA’s assailed decision, viz:
From the records, it appears that petitioner Rapid is engaged in the hauling and trucking
business while private respondent Nathaniel T. Dongon is a former truck helper leadman.
Private respondent’s area of assignment is the Tanduay Otis Warehouse where he has a
job of facilitating the loading and unloading [of the] petitioner’s trucks. On 23 April 2001,
private respondent and his driver, Vicente Villaruz, were in the vicinity of Tanduay as they tried to
get some goods to be distributed to their clients.
Tanduay’s security guard called the attention of private respondent as to the fact that Mr. Villaruz’[s]
was not wearing an Identification Card (I.D. Card). Private respondent, then, assured the guard that
he will secure a special permission from the management to warrant the orderly release of goods.
Instead of complying with his compromise, private respondent lent his I.D. Card to Villaruz; and
by reason of such misrepresentation , private respondent and Mr. Villaruz got a clearance from
Tanduay for the release of the goods. However, the security guard, who saw the misrepresentation
committed by private respondent and Mr. Villaruz, accosted them and reported the matter to the
management of Tanduay.
On 23 May 2001, after conducting an administrative investigation, private respondent was dismissed
from the petitioning Company.
On 01 June 2001, private respondent filed a Complaint for Illegal Dismissal. x x x4 cralaw virtualaw library
In his decision, the Labor Arbiter dismissed the complaint, and ruled that respondent Rapid Movers
and Forwarders Co., Inc. (Rapid Movers) rightly exercised its prerogative to dismiss petitioner,
considering that: (1) he had admitted lending his company ID to driver Vicente Villaruz; (2) his act
had constituted mental dishonesty and deceit amounting to breach of trust; (3) Rapid Movers’
relationship with Tanduay had been jeopardized by his act; and (4) he had been banned from all the
warehouses of Tanduay as a result, leaving Rapid Movers with no available job for him.5 cralaw virtualaw library

On appeal, however, the NLRC reversed the Labor Arbiter, and held that Rapid Movers had not
discharged its burden to prove the validity of petitioner’s dismissal from his employment. It opined
that Rapid Movers did not suffer any pecuniary damage from his act; and that his dismissal was a
penalty disproportionate to the act of petitioner complained of. It awarded him backwages and
separation pay in lieu of reinstatement, to wit:
WHEREFORE, the decision appealed from is REVERSED and SET ASIDE and a new one ENTERED
ordering the payment of his backwages from April 25, 2001 up to the finality of this decision and in
lieu of reinstatement, he should be paid his separation pay from date of hire on May 2, 1994 up to
the finality hereof.
SO ORDERED.6 cralaw virtualaw library
Rapid Movers brought a petition for certiorari in the CA, averring grave abuse of discretion on the
part of the NLRC, to wit:
I.
x x x IN STRIKING DOWN THE DISMISSAL OF THE PRIVATE RESPONDENT [AS] ILLEGAL ALLEGEDLY
FOR BEING GROSSLY DISPROPORTIONATE TO THE OFFENSE COMMITTED IN THAT NEITHER THE
PETITIONERS NOR ITS CLIENT TANDUAY SUFFERED ANY PECUNIARY DAMAGE THEREFROM THEREBY
IMPLYING THAT FOR A DISHONEST ACT/MISCONDUCT TO BE A GROUND FOR DISMISSAL OF AN
EMPLOYEE, THE SAME MUST AT LEAST HAVE RESULTED IN PECUNIARY DAMAGE TO THE
EMPLOYER; chanr0blesvirtualawlibrary
II.
x x x IN EXPRESSING RESERVATION ON THE GUILT OF THE PRIVATE RESPONDENT IN THE LIGHT OF

ITS PERCEIVED CONFLICTING DATES OF THE LETTER OF TANDUAY TO RAPID MOVERS (JANUARY 25,
2001) AND THE OCCURRENCE OF THE INCIDENT ON APRIL 25, 2001 WHEN SAID CONFLICT OF
DATES CONSIDERING THE EVIDENCE ON RECORD, WAS MORE APPARENT THAN REAL.7 cralaw virtualaw library
Ruling of the CA
On October 24, 2003, the CA promulgated its assailed decision reinstating the decision of the Labor
Arbiter, and upholding the right of Rapid Movers to discipline its workers, holding thusly:
There is no dispute that the private respondent lent his I.D. Card to another employee who used the
same in entering the compound of the petitioner customer, Tanduay. Considering that this amounts
to dishonesty and is provided for in the petitioning Company’s Manual of Discipline, its imposition is
but proper and appropriate.
It is basic in any enterprise that an employee has the obligation of following the rules and regulations
of its employer. More basic further is the elementary obligation of an employee to be honest and
truthful in his work. It should be noted that honesty is one of the foremost criteria of an employer
when hiring a prospective employee. Thus, we see employers requiring an NBI clearance or police
clearance before formally accepting an applicant as their employee. Such rules and regulations are
necessary for the efficient operation of the business.
Employees who violate such rules and regulations are liable for the penalties and sanctions so
provided, e.g., the Company’s Manual of Discipline (as in this case) and the Labor Code.
The argument of the respondent commission that no pecuniary damage was sustained is off-tangent
with the facts of the case. The act of lending an ID is an act of dishonesty to which no pecuniary
estimate can be ascribed for the simple reason that no monetary equation is involved. What is
involved is plain and simple adherence to truth and violation of the rules. The act of uttering or the
making of a falsehood does not need any pecuniary estimate for the act to gestate to one punishable
under the labor laws. In this case, the illegal use of the I.D. Card while it may appear to be initially
trivial is of crucial relevance to the petitioner’s customer, Tanduay, which deals with drivers and
leadmen withdrawing goods and merchandise from its warehouse. For those with criminal intentions
can use another’s ID to asport goods and merchandise.
Hence, while it can be conceded that there is no pecuniary damage involved, the fact remains that
the offense does not only constitute dishonesty but also willful disobedience to the lawful order of the
Company, e.g., to observe at all time the terms and conditions of the Manual of Discipline. Article
282 of the Labor Code provides:
“Termination by Employer – An employer may terminate an employment for any of the following
causes: cralawlibrary
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer
or representative in connection with his work; chanr0blesvirtualawlibrary
x x x.” (Emphasis, supplied)

The constitutional protection afforded to labor does not condone wrongdoings by the employee; and
an employer’s power to discipline its workers is inherent to it. As honesty is always the best policy,
the Court is convinced that the ruling of the Labor Arbiter is more in accord with the spirit of
the Labor Code. “The Constitutional policy of providing full protection to labor is not intended to
oppress or destroy management (Capili vs. NLRC, 270 SCRA 488[1997].” Also, in Atlas Fertilizer
Corporation vs. NLRC, 273 SCRA 549 [1997], the Highest Magistrate declared that “The law, in
protecting the rights of the laborers, authorizes neither oppression nor self-destruction of the
employer.”
WHEREFORE, premises considered, the Petition is GRANTED. The assailed 17 June

2002 Decision of respondent Commission in NLRC CA-029937-01 is hereby SET ASIDE and the 10
September 2001 Decision of Labor Arbiter Vicente R. Layawen is ordered REINSTATED. No costs.
SO ORDERED.8 cralaw virtualaw library
Petitioner moved for a reconsideration, but the CA denied his motion on March 22, 2004.9 cralaw virtualaw library
Undaunted, the petitioner is now on appeal.
Issue
Petitioner still asserts the illegality of his dismissal, and denies being guilty of willful disobedience. He
contends that:
THE HONORABLE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN SUSTAINING THE
DECISION DATED 10 SEPTEMBER 2001 OF LABOR ARBITER VICENTE R. LAYAWEN WHERE THE
LATTER RULED THAT BY LENDING HIS ID TO VILLARUZ, PETITIONER (COMPLAINANT) COMMITTED
MISREPRESENTATION AND DECEIT CONSTITUTING MENTAL DISHONESTY WHICH CANNOT BE
DISCARDED AS INSIGNIFICANT OR TRIVIAL.10 cralaw virtualaw library
Petitioner argues that his dismissal was discriminatory because Villaruz was retained in
his employment as driver; and that the CA gravely abused its discretion in disregarding his
showing that he did not violate Rapid Movers’ rules and regulations but simply performed his work in
line with the duties entrusted to him, and in not appreciating his good faith and lack of any intention
to willfully disobey the company’s rules.
In its comment,11 Rapid Movers prays that the petition for certiorari be dismissed for being an
improper remedy and apparently resorted to as a substitute for a lost appeal; and insists that the CA
did not commit grave abuse of discretion.
In his reply,12 petitioner submits that his dismissal was a penalty too harsh and disproportionate to
his supposed violation; and that his dismissal was inappropriate due to the violation being his first
infraction that was even committed in good faith and without malice.

Based on the parties’ foregoing submissions, the issues to be resolved are, firstly: Was the petition
improper and dismissible?; and, secondly: If the petition could prosper, was the dismissal of
petitioner on the ground of willful disobedience to the company regulation lawful?
Ruling
The petition has merit.
1.
Petition should not be dismissed
In St. Martin Funeral Home v. National Labor Relations Commission,13 the Court has clarified that
parties seeking the review of decisions of the NLRC should file a petition for certiorari in the CA on
the ground of grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the
NLRC. Thereafter, the remedy of the aggrieved party from the CA decision is an appeal via petition
for review on certiorari.14 cralaw virtualaw library
The petition filed here is self-styled as a petition for review on certiorari, but Rapid Movers points out
that the petition was really one for certiorari under Rule 65 of the Rules of Court due to its basis
being the commission by the CA of a grave abuse of its discretion and because the petition was filed
beyond the reglementary period of appeal under Rule 45. Hence, Rapid Movers insists that the Court
should dismiss the petition because certiorari under Rule 65 could not be a substitute of a lost appeal
under Rule 45.
Ordinarily, an original action for certiorari will not prosper if the remedy of appeal is available, for an
appeal by petition for review on certiorari under Rule 45 of the Rules of Court and an original action
for certiorari under Rule 65 of the Rules of Court are mutually exclusive, not alternative nor
successive, remedies.15 On several occasions, however, the Court has treated a petition
for certiorari as a petition for review on certiorari when: (a) the petition has been filed within the 15-
day reglementary period;16 (b) public welfare and the advancement of public policy dictate such
treatment; (c) the broader interests of justice require such treatment; (d) the writs issued were null
and void; or (e) the questioned decision or order amounts to an oppressive exercise of judicial
authority.17cralaw virtualaw library
The Court deems it proper to allow due course to the petition as one for certiorari under Rule 65 in
the broader interest of substantial justice, particularly because the NLRC’s appellate adjudication was
set aside by the CA, and in order to put at rest the doubt that the CA, in so doing, exercised its
judicial authority oppressively. Whether the petition was proper or not should be of less importance
than whether the CA gravely erred in undoing and setting aside the determination of the NLRC as a
reviewing forum vis-à-vis the Labor Arbiter. We note in this regard that the NLRC had declared the
dismissal of petitioner to be harsh and not commensurate to the infraction committed. Given the
spirit and intention underlying our labor laws of resolving a doubtful situation in favor of the working
man, we will have to review the judgment of the CA to ascertain whether the NLRC had really
committed grave abuse of its discretion. This will settle the doubts on the propriety of terminating
petitioner, and at the same time ensure that justice is served to the parties.18 cralaw virtualaw library
2.
Petitioner was not guilty of willful disobedience; hence, his dismissal was illegal
Petitioner maintains that willful disobedience could not be a ground for his dismissal because he had
acted in good faith and with the sole intention of facilitating deliveries for Rapid Movers when he
allowed Villaruz to use his company ID.

Willful disobedience to the lawful orders of an employer is one of the valid grounds to terminate an
employee under Article 296 (formerly Article 282) of the Labor Code.19 For willful disobedience to be
a ground, it is required that: (a) the conduct of the employee must be willful or intentional; and (b)
the order the employee violated must have been reasonable, lawful, made known to the employee,
and must pertain to the duties that he had been engaged to discharge.20 Willfulness must be
attended by a wrongful and perverse mental attitude rendering the employee’s act inconsistent with
proper subordination.21 In any case, the conduct of the employee that is a valid ground for dismissal
under the Labor Code constitutes harmful behavior against the business interest or person of his
employer.22 It is implied that in every act of willful disobedience, the erring employee obtains undue
advantage detrimental to the business interest of the employer.
Under the foregoing standards, the disobedience attributed to petitioner could not be justly
characterized as willful within the contemplation of Article 296 of the Labor Code. He neither
benefitted from it, nor thereby prejudiced the business interest of Rapid Movers. His explanation that
his deed had been intended to benefit Rapid Movers was credible. There could be no wrong or
perversity on his part that warranted the termination of his employment based on willful
disobedience.
Rapid Movers argues, however, that the strict implementation of company rules and
regulations should be accorded respect as a valid exercise of its management prerogative.
It posits that it had the prerogative to terminate petitioner for violating its following
company rules and regulations, to wit:
(a) “Pagpayag sa paggamit ng iba o paggamit ng maling rekord ng kumpanya kaugnay sa operations,
maintenance or materyales o trabaho” (Additional Rules and Regulations No. 2); and
(b) “Pagkutsaba sa pagplano o pagpulong sa ibang tao upang labagin ang anumang alituntunin ng
kumpanya” (Article 5.28).23
We cannot sustain the argument of Rapid Movers.
It is true that an employer is given a wide latitude of discretion in managing its own affairs. The
broad discretion includes the implementation of company rules and regulations and the imposition of
disciplinary measures on its employees. But the exercise of a management prerogative like this is not
limitless, but hemmed in by good faith and a due consideration of the rights of the worker.24 In this
light, the management prerogative will be upheld for as long as it is not wielded as an implement to
circumvent the laws and oppress labor.25 cralaw virtualaw library
To us, dismissal should only be a last resort, a penalty to be meted only after all the relevant
circumstances have been appreciated and evaluated with the goal of ensuring that the ground for
dismissal was not only serious but true. The cause of termination, to be lawful, must be a serious and
grave malfeasance to justify the deprivation of a means of livelihood. This requirement is in keeping
with the spirit of our Constitution and laws to lean over backwards in favor of the working class, and
with the mandate that every doubt must be resolved in their favor.26 cralaw virtualaw library
Although we recognize the inherent right of the employer to discipline its employees, we
should still ensure that the employer exercises the prerogative to discipline humanely and
considerately, and that the sanction imposed is commensurate to the offense involved and
to the degree of the infraction. The discipline exacted by the employer should further
consider the employee’s length of service and the number of infractions during his
employment.27 The employer should never forget that always at stake in disciplining its
employee are not only his position but also his livelihood, 28 and that he may also have a
family entirely dependent on his earnings.29 cralaw virtualaw library
Considering that petitioner’s motive in lending his company ID to Villaruz was to benefit Rapid
Movers as their employer by facilitating the loading of goods at the Tanduay Otis Warehouse for
distribution to Rapid Movers’ clients, and considering also that petitioner had rendered seven long
unblemished years of service to Rapid Movers, his dismissal was plainly unwarranted. The NLRC’s
reversal of the decision of the Labor Arbiter by holding that penalty too harsh and disproportionate to
the wrong attributed to him was legally and factually justified, not arbitrary or whimsical.
Consequently, for the CA to pronounce that the NLRC had thereby gravely abused its discretion was
not only erroneous but was itself a grave abuse of discretion amounting to lack of jurisdiction for not
being in conformity with the pertinent laws and jurisprudence. We have held that a conclusion or
finding derived from erroneous considerations is not a mere error of judgment but one tainted with
grave abuse of discretion.30
cralaw virtualaw library
WHEREFORE, the Court GRANTS the petition; REVERSES and SETS ASIDE the decision

promulgated by the Court of Appeals on October 24, 2003; REINSTATES the decision of the
National Labor Relations Commission rendered on June 17, 2002; and ORDERS respondents to pay
the costs of suit.

e.) [G.R. NO. 168654 : March 25, 2009]
ZAYBER JOHN B. PROTACIO, Petitioner, v. LAYA MANANGHAYA & CO. and/or MARIO T.

MANANGHAYA, Respondents.
DECISION
TINGA, J.:
Before the Court is a Petition for Review on Certiorari 1 under Rule 45 of the 1997 Rules of Civil
Procedure, assailing the decision2 and resolution3 of the Court of Appeals in CA-G.R. SP No. 85038.
The Court of Appeals' decision reduced the monetary award granted to petitioner by the National
Labor Relations Commission (NLRC) while the resolution denied petitioner's motion for
reconsideration for lack of merit.
The following factual antecedents are matters of record.
Respondent KPMG Laya Mananghaya & Co. (respondent firm) is a general professional partnership
duly organized under the laws of the Philippines. Respondent firm hired petitioner Zayber John
B. Protacio as Tax Manager on 01 April 1996. He was subsequently promoted to the position of
Senior Tax Manager. On 01 October 1997, petitioner was again promoted to the position of Tax
Principal.4
However, on 30 August 1999, petitioner tendered his resignation effective 30 September 1999. Then,
on 01 December 1999, petitioner sent a letter to respondent firm demanding the immediate payment
of his 13th month pay, the cash commutation of his leave credits and the issuance of his 1999
Certificate of Income Tax Withheld on Compensation. Petitioner sent to respondent firm two more
demand letters for the payment of his reimbursement claims under pain of the legal action.5
Respondent firm failed to act upon the demand letters. Thus, on 15 December 1999, petitioner filed
before the NLRC a complaint for the non-issuance of petitioner's W-2 tax form for 1999 and the non-
payment of the following benefits: (1) cash equivalent of petitioner's leave credits in the amount
of P55,467.60; (2) proportionate 13th month pay for the year 1999; (3) reimbursement claims in the
amount of P19,012.00; and (4) lump sum pay for the fiscal year 1999 in the amount
of P674,756.70. Petitioner also sought moral and exemplary damages and attorney's fees.
Respondent Mario T. Managhaya was also impleaded in his official capacity as respondent firm's
managing partner.6
In his complaint,7 petitioner averred, inter alia, that when he was promoted to the position of Tax
Principal in October 1997, his compensation package had consisted of a monthly gross compensation
of P60,000.00, a 13th month pay and a lump sum payment for the year 1997 in the amount
of P240,000.00 that was paid to him on 08 February 1998.
According to petitioner, beginning 01 October 1998, his compensation package was revised as
follows: (a) monthly gross compensation of P95,000.00, inclusive of nontaxable allowance; (b) 13th
month pay; and (c) a lump sum amount in addition to the aggregate monthly gross compensation.
On 12 April 1999, petitioner received the lump sum amount of P573,000.00 for the fiscal year ending
1998.8
Respondent firm denied it had intentionally delayed the processing of petitioner's claims but alleged
that the abrupt departure of petitioner and three other members of the firm's Tax Division had
created problems in the determination of petitioner's various accountabilities, which could be finished
only by going over voluminous documents. Respondents further averred that they had been taken
aback upon learning about the labor case filed by petitioner when all along they had done their best
to facilitate the processing of his claims.9
During the pendency of the case before the Labor Arbiter, respondent firm on three occasions sent
check payments to petitioner in the following amounts: (1) P71,250.00, representing petitioner's
13th month pay; (2) P54,824.18, as payments for the cash equivalent of petitioner's leave credits
and reimbursement claims; and (3) P10,762.57, for the refund of petitioner's taxes withheld on his
vacation leave credits. Petitioner's copies of his withholding tax certificates were sent to him along
with the check payments.10 Petitioner acknowledged the receipt of the 13th month pay but disputed
the computation of the cash value of his vacation leave credits and reimbursement claims.11
On 07 June 2002, Labor Arbiter Eduardo J. Carpio rendered a decision,12 the dispositive portion of
which reads:
WHEREFORE, judgment is hereby rendered ordering respondents to jointly and solidarily pay
complainant the following:
P12,681.00 - representing the reimbursement claims of complainant;
P28,407.08 - representing the underpayment of the cash equivalent of the unused leave credits of
complainant;
P573,000.00 - representing complainant's 1999 year-end lump sum payment; and cralawlibrary
10% of the total judgment awards way of attorney's fees.
SO ORDERED.13
The Labor Arbiter awarded petitioner's reimbursement claims on the ground that respondent firm's
refusal to grant the same was not so much because the claim was baseless but because petitioner
had failed to file the requisite reimbursement forms. He held that the formal defect was cured when
petitioner filed several demand letters as well as the case before him.14
The Labor Arbiter held that petitioner was not fully paid of the cash equivalent of the leave credits
due him because respondent firm had erroneously based the computation on a basic pay
of P61,000.00. He held that the evidence showed that petitioner's monthly basic salary
was P95,000.00 inclusive of the other benefits that were deemed included and integrated in the basic
salary and that respondent firm had computed petitioner's 13th month pay based on a monthly basic
pay of P95,000.00; thus, the cash commutation of the leave credits should also be based on this
figure.15
The Labor Arbiter also ruled that petitioner was entitled to a year-end payment
of P573,000.00 on the basis of the company policy of granting yearly lump sum payments
to petitioner during all the years of service and that respondent firm had failed to give
petitioner the same benefit for the year 1999 without any explanation.16
Aggrieved, respondent firm appealed to the NLRC. On 21 August 2003, the NLRC rendered a modified
judgment,17 the dispositive portion of which states:
WHEREFORE, the Decision dated June 7, 2002 is hereby Affirmed with the modification that the
complainant is only entitled to receive P2,301.00 as reimbursement claims. The award of P12,681.00
representing the reimbursement claims of complainant is set aside for lack of basis.
SO ORDERED.18
From the amount of P12,681.00 awarded by the Labor Arbiter as payment for the reimbursement
claims, the NLRC lowered the same to P2,301.00 representing the amount which remained
unpaid.19 As regards the issues on the lump sum payments and cash equivalent of the leave credits,
the NLRC affirmed the findings of the Labor Arbiter.
Respondents filed a motion for reconsideration20 but the NLRC denied the motion for lack of
merit.21 Hence, respondents elevated the matter to the Court of Appeals via a petition
for certiorari .22
In the assailed Decision dated 19 April 2005, the Court of Appeals further reduced the total money
award to petitioner, to wit:
WHEREFORE, in the light of the foregoing, the assailed resolution of public respondent NLRC dated
August 21, 2003 in NLRC NCR Case No. 30-12-00927-99 (CA No. 032304-02) is hereby MODIFIED,
ordering petitioner firm to pay private respondent the following:
(1) P2,301.00 representing private respondent's reimbursement claims;
(2) P9,802.83 representing the underpayment of the cash equivalent of private respondent's unused
leave credits;
(3) P10,000.00 attorney's fees.
SO ORDERED.23
Petitioner sought reconsideration. In the assailed Resolution dated 27 June 2005, the Court of
Appeals denied petitioner's motion for reconsideration for lack of merit.
Hence, the instant petition, raising the following issues:
I.
WHETHER PUBLIC RESPONDENT COURT OF APPEALS' SUMMARY DENIAL OF PETITIONER'S MOTION

FOR RECONSIDERATION VIOLATES THE CONSTITUTIONAL REQUIREMENT THAT COURT DECISIONS
MUST STATE THE LEGAL AND FACTUAL BASIS [THEREOF].
II
WHETHER PUBLIC RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION

AND ACTED IN WANTON EXCESS OF JURISDICTION IN TAKING COGNIZANCE OF [RESPONDENTS]
PETITION FOR CERTIORARI WHEN THE RESOLUTION THEREOF HINGES ON MERE EVALUATION OF
EVIDENCE.
III.
WHETHER PUBLIC RESPONDENT COURT OF APPEALS WANTONLY ABUSED ITS DISCRETION IN

EMPLOYING A LARGER DIVISOR TO COMPUTE PETITIONER'S DAILY SALARY RATE THEREBY
DIMINISHING HIS BENEFITS, IN [VIOLATION] OF THE LABOR CODE.
IV.
WHETHER PUBLIC RESPONDENT COURT OF APPEALS CAPRICIOUSLY ABUSED ITS

DISCRETION IN REVERSING THE [CONCURRING] FINDINGS OF BOTH LABOR ARBITER AND

NLRC ON THE COMPENSABLE NATURE OF PETITIONER'S YEAR END [LUMP] SUM PLAY [sic]
CLAIM.24
Before delving into the merits of the petition, the issues raised by petitioner adverting to the
Constitution must be addressed. Petitioner contends that the Court of Appeals' resolution which
denied his motion for reconsideration violated Article VIII, Section 14 of the Constitution, which
states:
Section 14. No decision shall be rendered by any court without expressing therein clearly and
distinctly the facts and the law on which it is based.
No Petition for Review or motion for reconsideration of a decision of the court shall be refused due
course or denied without stating the legal basis therefor.
Obviously, the assailed resolution is not a "decision" within the meaning of the Constitutional
requirement. This mandate is applicable only in cases "submitted for decision," i.e., given due course
and after filing of briefs or memoranda and/or other pleadings, as the case may be.25 The
requirement is not applicable to a resolution denying a motion for reconsideration of the decision.
What is applicable is the second paragraph of the above-quoted Constitutional provision referring to
"motion for reconsideration of a decision of the court." The assailed resolution complied with the
requirement therein that a resolution denying a motion for reconsideration should state the legal
basis of the denial. It sufficiently explained that after reading the pleadings filed by the parties, the
appellate court did not find any cogent reason to reverse itself.
Next, petitioner argues that the Court of Appeals erred in giving due course to the petition
for certiorari when the resolution thereof hinged on mere evaluation of evidence. Petitioner opines
that respondents failed to make its case in showing that the Labor Arbiter and the NLRC had
exercised their discretion in an arbitrary and despotic manner.
As a general rule, in certiorari proceedings under Rule 65 of the Rules of Court, the appellate court
does not assess and weigh the sufficiency of evidence upon which the Labor Arbiter and the NLRC
based their conclusion. The query in this proceeding is limited to the determination of whether or not
the NLRC acted without or in excess of its jurisdiction or with grave abuse of discretion in rendering
its decision. However, as an exception, the appellate court may examine and measure the factual
findings of the NLRC if the same are not supported by substantial evidence.26 The Court has not
hesitated to affirm the appellate court's reversals of the decisions of labor tribunals if they are not
supported by substantial evidence.27
The Court is not unaware that the appellate court had reexamined and weighed the evidence on
record in modifying the monetary award of the NLRC. The Court of Appeals held that the amount of
the year-end lump sum compensation was not fully justified and supported by the evidence on
record. The Court fully agrees that the lump sum award of P573,000.00 to petitioner seemed to have
been plucked out of thin air. Noteworthy is the fact that in his position paper, petitioner claimed that
he was entitled to the amount of P674,756.70.28 The variance between the claim and the amount
awarded, with the record bereft of any proof to support either amount only shows that the appellate
court was correct in holding that the award was a mere speculation devoid of any factual basis. In
the exceptional circumstance as in the instant case, the Court finds no error in the appellate court's
review of the evidence on record.
After an assessment of the evidence on record, the Court of Appeals reversed the findings of the
NLRC and the Labor Arbiter with respect to the award of the year-end lump sum pay and the cash
value of petitioner's leave credits. The appellate court held that while the lump sum payment was in
the nature of a proportionate share in the firm's annual income to which petitioner was entitled, the
payment thereof was contingent upon the financial position of the firm. According to the Court of

Appeals, since no evidence was adduced showing the net income of the firm for fiscal year ending
1999 as well as petitioner's corresponding share therein, the amount awarded by the labor tribunals
was a baseless speculation and as such must be deleted.29
On the other hand, the NLRC affirmed the Labor Arbiter's award of the lump sum payment in the
amount of P573,000.00 on the basis that the payment thereof had become a company policy which
could not be withdrawn arbitrarily. Furthermore, the NLRC held that respondent firm had failed to
controvert petitioner's claim that he was responsible for generating some P7,365,044.47 in cash
revenue during the fiscal year ending 1999.
The evidence on record establishes that aside from the basic monthly
compensation,30 petitioner received a yearly lump sum amount during the first two
years31 of his employment, with the payments made to him after the annual net incomes of
the firm had been determined. Thus, the amounts thereof varied and were dependent on
the firm's cash position and financial performance. 32 In one of the letters of respondent
Mananghaya to petitioner, the amount was referred to as petitioner's "share in the
incentive compensation program."33
While the amount was drawn from the annual net income of the firm, the distribution
thereof to non-partners or employees of the firm was not, strictly speaking, a profit-
sharing arrangement between petitioner and respondent firm contrary to the Court of
Appeals' finding. The payment thereof to non-partners of the firm like herein petitioner
was discretionary on the part of the chairman and managing partner coming from their
authority to fix the compensation of any employee based on a share in the partnership's
net income.34 The distribution being merely discretionary, the year-end lump sum payment
may properly be considered as a year-end bonus or incentive. Contrary to petitioner's
claim, the granting of the year-end lump sum amount was precisely dependent on the
firm's net income; hence, the same was payable only after the firm's annual net income
and cash position were determined.
By definition, a "bonus" is a gratuity or act of liberality of the giver. It is something given

in addition to what is ordinarily received by or strictly due the recipient. 35 A bonus is
granted and paid to an employee for his industry and loyalty which contributed to the
success of the employer's business and made possible the realization of
profits.36 Generally, a bonus is not a demandable and enforceable obligation. It is so only
when it is made part of the wage or salary or compensation. When considered as part of
the compensation and therefore demandable and enforceable, the amount is usually fixed.
If the amount would be a contingent one dependent upon the realization of the profits, the
bonus is also not demandable and enforceable.37
In the instant case, petitioner's claim that the year-end lump sum represented the balance of his
total compensation package is incorrect. The fact remains that the amounts paid to petitioner on the
two occasions varied and were always dependent upon the firm's financial position.
Moreover, in Philippine Duplicators, Inc. v. NLRC,38 the Court held that if the bonus is paid only if
profits are realized or a certain amount of productivity achieved, it cannot be considered
part of wages. If the desired goal of production is not obtained, of the amount of actual work
accomplished, the bonus does not accrue.39 Only when the employer promises and agrees to
give without any conditions imposed for its payment, such as success of business or
greater production or output, does the bonus become part of the wage.40
Petitioner's assertion that he was responsible for generating revenues amounting to more than P7
million remains a mere allegation in his pleadings. The records are absolutely bereft of any
supporting evidence to substantiate the allegation.

The granting of a bonus is basically a management prerogative which cannot be forced
upon the employer who may not be obliged to assume the onerous burden of granting
bonuses or other benefits aside from the employees' basic salaries or wages.41 Respondents
had consistently maintained from the start that petitioner was not entitled to the bonus as a matter
of right. The payment of the year-end lump sum bonus based upon the firm's productivity or the
individual performance of its employees was well within respondent firm's prerogative. Thus,
respondent firm was also justified in declining to give the bonus to petitioner on account of the
latter's unsatisfactory performance.
Petitioner failed to present evidence refuting respondents' allegation and proof that they received a
number of complaints from clients about petitioner's "poor services." For purposes of determining
whether or not petitioner was entitled to the year-end lump sum bonus, respondents were not legally
obliged to raise the issue of substandard performance with petitioner, unlike what the Labor Arbiter
had suggested. Of course, if what was in question was petitioner's continued employment vis - Ã -vis
the allegations of unsatisfactory performance, then respondent firm was required under the law to
give petitioner due process to explain his side before instituting any disciplinary measure. However,
in the instant case, the granting of the year-end lump sum bonus was discretionary and conditional,
thus, petitioner may not question the basis for the granting of a mere privilege.Ï‚Î·Î±Ã±rÎ¿blÎµÅ¡ Î½Î¹râ€ Ï…Î±l lÎ±Ï‰ lÎ¹brÎ±rÃ¿
With regard to the computation of the cash equivalent of petitioner's leave credits, the Court of
Appeals used a base figure of P71,250.00 representing petitioner's monthly salary as opposed
to P95,000.00 used by the Labor Arbiter and NLRC. Meanwhile, respondents insist on a base figure of
only P61,000.00, which excludes the advance incentive pay of P15,000.00, transportation allowance
of P15,000.00 and representation allowance of P4,000.00, which petitioner regularly received every
month. Because of a lower base figure (representing the monthly salary) used by the appellate court,
the cash equivalent of petitioner's leave credits was lowered from P28,407.08 to P9,802.83. Ï‚Î·Î±Ã±rÎ¿blÎµÅ¡ Î½Î¹râ€ Ï…Î±l lÎ±Ï‰ lÎ¹brÎ±rÃ¿
The monthly compensation of P71,250.00 used as base figure by the Court of Appeals is totally
without basis. As correctly held by the Labor Arbiter and the NLRC, the evidence on record reveals
that petitioner was receiving a monthly compensation of P95,000.00 consisting of a basic salary
of P61,000.00, advance incentive pay of P15,000.00, transportation allowance of P15,000.00 and
representation allowance of P4,000.00. These amounts totaling P95,000.00 are all deemed part of
petitioner's monthly compensation package and, therefore, should be the basis in the cash
commutation of the petitioner's leave credits. These allowances were customarily furnished by
respondent firm and regularly received by petitioner on top of the basic monthly pay of P61,000.00.
Moreover, the Labor Arbiter noted that respondent firm's act of paying petitioner a 13th month-pay
at the rate of P95,000.00 was an admission on its part that petitioner's basic monthly salary
was P95,000.00
The Court of Appeals, Labor Arbiter and NLRC used a 30-working day divisor instead of 26 days
which petitioner insists. The Court of Appeals relied on Section 2, Rule IV, Book III42 of the
implementing rules of the Labor Code in using the 30-working day divisor. The provision essentially
states that monthly-paid employees are presumed to be paid for all days in the month whether
worked or not.
The provision has long been nullified in Insular Bank of Asia and American Employees' Union
(IBAAEU) v. Hon. Inciong, etc., et al.,43 where the Court ruled that the provision amended the Labor
Code's provisions on holiday pay by enlarging the scope of their exclusion.44 In any case, the
provision is inapplicable to the instant case because it referred to the computation of holiday pay for
monthly-paid employees.
Petitioner's claim that respondent firm used a 26-working day divisor is supported by the evidence on
record. In a letter addressed to

Petitioner, 45 respondents' counsel expressly admitted that respondent used a 26-working day divisor.
The Court is perplexed why the tribunals below used a 30-day divisor when there was an express
admission on respondents' part that they used a 26-day divisor in the cash commutation of leave
credits. Thus, with a monthly compensation of P95,000.00 and using a 26-working day divisor,
petitioner's daily rate is P3,653.85.46 Based on this rate, petitioner's cash equivalent of his leave
credits of 23.5 is P85,865.48.47 Since petitioner has already received the amount P46,009.67, a
balance of P39,855.80 remains payable to petitioner.
WHEREFORE, the instant Petition for Review on Certiorari is PARTLY GRANTED. The Decision of
the Court of Appeals in CA-G.R. SP No. 85038 is AFFIRMED with the MODIFICATION that
respondents are liable for the underpayment of the cash equivalent of petitioner's leave credits in the
amount of P39,855.80.

f.) G.R. No. 168081 October 17, 2008
ARMANDO G. YRASUEGUI, petitioners,
vs.
PHILIPPINE AIRLINES, INC., respondents.
DECISION
REYES, R.T., J.:
THIS case portrays the peculiar story of an international flight steward who was dismissed because of his failure to
adhere to the weight standards of the airline company.
He is now before this Court via a petition for review on certiorari claiming that he was illegally dismissed. To buttress
his stance, he argues that (1) his dismissal does not fall under 282(e) of the Labor Code; (2) continuing adherence
to the weight standards of the company is not a bona fide occupational qualification; and (3) he was discriminated
against because other overweight employees were promoted instead of being disciplined.
After a meticulous consideration of all arguments pro and con, We uphold the legality of dismissal. Separation pay,
however, should be awarded in favor of the employee as an act of social justice or based on equity. This is so
because his dismissal is not for serious misconduct. Neither is it reflective of his moral character.
The Facts
Petitioner Armando G. Yrasuegui was a former international flight steward of Philippine Airlines, Inc. (PAL).
He stands five feet and eight inches (5’8") with a large body frame. The proper weight for a man of his height
and body structure is from 147 to 166 pounds, the ideal weight being 166 pounds, as mandated by the
Cabin and Crew Administration Manual1 of PAL.
The weight problem of petitioner dates back to 1984. Back then, PAL advised him to go on an extended vacation
leave from December 29, 1984 to March 4, 1985 to address his weight concerns. Apparently, petitioner failed to
meet the company’s weight standards, prompting another leave without pay from March 5, 1985 to November 1985.
After meeting the required weight, petitioner was allowed to return to work. But petitioner’s weight problem recurred.
He again went on leave without pay from October 17, 1988 to February 1989.
On April 26, 1989, petitioner weighed 209 pounds, 43 pounds over his ideal weight. In line with company policy, he
was removed from flight duty effective May 6, 1989 to July 3, 1989. He was formally requested to trim down to his
ideal weight and report for weight checks on several dates. He was also told that he may avail of the services of the
company physician should he wish to do so. He was advised that his case will be evaluated on July 3, 1989.2
On February 25, 1989, petitioner underwent weight check. It was discovered that he gained, instead of losing,
weight. He was overweight at 215 pounds, which is 49 pounds beyond the limit. Consequently, his off-duty status
was retained.
On October 17, 1989, PAL Line Administrator Gloria Dizon personally visited petitioner at his residence to check on
the progress of his effort to lose weight. Petitioner weighed 217 pounds, gaining 2 pounds from his previous weight.
After the visit, petitioner made a commitment3 to reduce weight in a letter addressed to Cabin Crew Group Manager
Augusto Barrios. The letter, in full, reads:
Dear Sir:
I would like to guaranty my commitment towards a weight loss from 217 pounds to 200 pounds from today until 31
Dec. 1989.

From thereon, I promise to continue reducing at a reasonable percentage until such time that my ideal weight is
achieved.
Likewise, I promise to personally report to your office at the designated time schedule you will set for my weight
check.
Respectfully Yours,
F/S Armando Yrasuegui4
Despite the lapse of a ninety-day period given him to reach his ideal weight, petitioner remained overweight. On
January 3, 1990, he was informed of the PAL decision for him to remain grounded until such time that he
satisfactorily complies with the weight standards. Again, he was directed to report every two weeks for weight
checks.
Petitioner failed to report for weight checks. Despite that, he was given one more month to comply with the weight
requirement. As usual, he was asked to report for weight check on different dates. He was reminded that his
grounding would continue pending satisfactory compliance with the weight standards.5
Again, petitioner failed to report for weight checks, although he was seen submitting his passport for processing at
the PAL Staff Service Division.
On April 17, 1990, petitioner was formally warned that a repeated refusal to report for weight check would be dealt
with accordingly. He was given another set of weight check dates.6 Again, petitioner ignored the directive and did not
report for weight checks. On June 26, 1990, petitioner was required to explain his refusal to undergo weight checks.7
When petitioner tipped the scale on July 30, 1990, he weighed at 212 pounds. Clearly, he was still way over his
ideal weight of 166 pounds.
From then on, nothing was heard from petitioner until he followed up his case requesting for leniency on the latter
part of 1992. He weighed at 219 pounds on August 20, 1992 and 205 pounds on November 5, 1992.
On November 13, 1992, PAL finally served petitioner a Notice of Administrative Charge for violation of company
standards on weight requirements. He was given ten (10) days from receipt of the charge within which to file his
answer and submit controverting evidence.8
On December 7, 1992, petitioner submitted his Answer.9 Notably, he did not deny being overweight. What he
claimed, instead, is that his violation, if any, had already been condoned by PAL since "no action has been taken by
the company" regarding his case "since 1988." He also claimed that PAL discriminated against him because "the
company has not been fair in treating the cabin crew members who are similarly situated."
On December 8, 1992, a clarificatory hearing was held where petitioner manifested that he was undergoing a weight
reduction program to lose at least two (2) pounds per week so as to attain his ideal weight.10
On June 15, 1993, petitioner was formally informed by PAL that due to his inability to attain his ideal weight,
"and considering the utmost leniency" extended to him "which spanned a period covering a total of almost
five (5) years," his services were considered terminated "effective immediately."11
His motion for reconsideration having been denied,12 petitioner filed a complaint for illegal dismissal against PAL.
Labor Arbiter, NLRC and CA Dispositions
On November 18, 1998, Labor Arbiter Valentin C. Reyes ruled13 that petitioner was illegally dismissed. The
dispositive part of the Arbiter ruling runs as follows:

WHEREFORE, in view of the foregoing, judgment is hereby rendered, declaring the complainant’s dismissal illegal,
and ordering the respondent to reinstate him to his former position or substantially equivalent one, and to pay him:
a. Backwages of Php10,500.00 per month from his dismissal on June 15, 1993 until reinstated, which for purposes
of appeal is hereby set from June 15, 1993 up to August 15, 1998 at ₱651,000.00;
b. Attorney’s fees of five percent (5%) of the total award.
SO ORDERED.14
The Labor Arbiter held that the weight standards of PAL are reasonable in view of the nature of the job of
petitioner.15 However, the weight standards need not be complied with under pain of dismissal since his weight did
not hamper the performance of his duties.16 Assuming that it did, petitioner could be transferred to other positions
where his weight would not be a negative factor.17 Notably, other overweight employees, i.e., Mr. Palacios, Mr. Cui,
and Mr. Barrios, were promoted instead of being disciplined.18
Both parties appealed to the National Labor Relations Commission (NLRC).19
On October 8, 1999, the Labor Arbiter issued a writ of execution directing the reinstatement of petitioner without loss
of seniority rights and other benefits.20
On February 1, 2000, the Labor Arbiter denied21 the Motion to Quash Writ of Execution22 of PAL.
On March 6, 2000, PAL appealed the denial of its motion to quash to the NLRC.23
On June 23, 2000, the NLRC rendered judgment24 in the following tenor:
WHEREFORE, premises considered[,] the Decision of the Arbiter dated 18 November 1998 as modified by our
findings herein, is hereby AFFIRMED and that part of the dispositive portion of said decision concerning
complainant’s entitlement to backwages shall be deemed to refer to complainant’s entitlement to his full
backwages, inclusive of allowances and to his other benefits or their monetary equivalent instead of simply
backwages, from date of dismissal until his actual reinstatement or finality hereof. Respondent is enjoined to
manifests (sic) its choice of the form of the reinstatement of complainant, whether physical or through payroll within
ten (10) days from notice failing which, the same shall be deemed as complainant’s reinstatement through payroll
and execution in case of non-payment shall accordingly be issued by the Arbiter. Both appeals of respondent thus,
are DISMISSED for utter lack of merit.25
According to the NLRC, "obesity, or the tendency to gain weight uncontrollably regardless of the amount of
food intake, is a disease in itself."26 As a consequence, there can be no intentional defiance or serious misconduct
by petitioner to the lawful order of PAL for him to lose weight.27
Like the Labor Arbiter, the NLRC found the weight standards of PAL to be reasonable. However, it found as
unnecessary the Labor Arbiter holding that petitioner was not remiss in the performance of his duties as flight
steward despite being overweight. According to the NLRC, the Labor Arbiter should have limited himself to the issue
of whether the failure of petitioner to attain his ideal weight constituted willful defiance of the weight standards of
PAL.28
PAL moved for reconsideration to no avail.29 Thus, PAL elevated the matter to the Court of Appeals (CA) via a
petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure.30
By Decision dated August 31, 2004, the CA reversed31 the NLRC:
WHEREFORE, premises considered, we hereby GRANT the petition. The assailed NLRC decision is declared
NULL and VOID and is hereby SET ASIDE. The private respondent’s complaint is hereby DISMISSED. No costs.

SO ORDERED.32
The CA opined that there was grave abuse of discretion on the part of the NLRC because it "looked at wrong and
irrelevant considerations"33 in evaluating the evidence of the parties. Contrary to the NLRC ruling, the weight
standards of PAL are meant to be a continuing qualification for an employee’s position.34 The failure to adhere to the
weight standards is an analogous cause for the dismissal of an employee under Article 282(e) of the Labor Code in
relation to Article 282(a). It is not willful disobedience as the NLRC seemed to suggest.35 Said the CA, "the element
of willfulness that the NLRC decision cites is an irrelevant consideration in arriving at a conclusion on whether the
dismissal is legally proper."36 In other words, "the relevant question to ask is not one of willfulness but one of
reasonableness of the standard and whether or not the employee qualifies or continues to qualify under this
standard."37
Just like the Labor Arbiter and the NLRC, the CA held that the weight standards of PAL are reasonable.38 Thus,
petitioner was legally dismissed because he repeatedly failed to meet the prescribed weight standards.39 It is
obvious that the issue of discrimination was only invoked by petitioner for purposes of escaping the result of his
dismissal for being overweight.40
On May 10, 2005, the CA denied petitioner’s motion for reconsideration.41 Elaborating on its earlier ruling, the CA
held that the weight standards of PAL are a bona fide occupational qualification which, in case of violation, "justifies
an employee’s separation from the service."42
Issues
In this Rule 45 petition for review, the following issues are posed for resolution:
I.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT PETITIONER’S OBESITY

CAN BE A GROUND FOR DISMISSAL UNDER PARAGRAPH (e) OF ARTICLE 282 OF THE LABOR CODE OF
THE PHILIPPINES;
II.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT PETITIONER’S

DISMISSAL FOR OBESITY CAN BE PREDICATED ON THE "BONA FIDE OCCUPATIONAL QUALIFICATION
(BFOQ) DEFENSE";
III.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT PETITIONER WAS NOT
UNDULY DISCRIMINATED AGAINST WHEN HE WAS DISMISSED WHILE OTHER OVERWEIGHT CABIN
ATTENDANTS WERE EITHER GIVEN FLYING DUTIES OR PROMOTED;
IV.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED WHEN IT BRUSHED ASIDE PETITIONER’S
CLAIMS FOR REINSTATEMENT [AND] WAGES ALLEGEDLY FOR BEING MOOT AND
ACADEMIC.43 (Underscoring supplied)
Our Ruling
I. The obesity of petitioner is a ground for dismissal under Article 282(e) 44 of the Labor Code.
A reading of the weight standards of PAL would lead to no other conclusion than that they constitute a continuing
qualification of an employee in order to keep the job. Tersely put, an employee may be dismissed the moment he is

unable to comply with his ideal weight as prescribed by the weight standards. The dismissal of the employee would
thus fall under Article 282(e) of the Labor Code. As explained by the CA:
x x x [T]he standards violated in this case were not mere "orders" of the employer; they were the "prescribed
weights" that a cabin crew must maintain in order to qualify for and keep his or her position in the company. In
other words, they were standards that establish continuing qualifications for an employee’s position. In this sense,
the failure to maintain these standards does not fall under Article 282(a) whose express terms require the element
of willfulness in order to be a ground for dismissal. The failure to meet the employer’s qualifying standards is in
fact a ground that does not squarely fall under grounds (a) to (d) and is therefore one that falls under Article 282(e)
– the "other causes analogous to the foregoing."
By its nature, these "qualifying standards" are norms that apply prior to and after an employee is hired. They
apply prior to employment because these are the standards a job applicant must initially meet in order to be hired.
They apply after hiring because an employee must continue to meet these standards while on the job in order to
keep his job. Under this perspective, a violation is not one of the faults for which an employee can be dismissed
pursuant to pars. (a) to (d) of Article 282; the employee can be dismissed simply because he no longer "qualifies" for
his job irrespective of whether or not the failure to qualify was willful or intentional. x x x45
Petitioner, though, advances a very interesting argument. He claims that obesity is a "physical abnormality and/or
illness."46 Relying on Nadura v. Benguet Consolidated, Inc.,47 he says his dismissal is illegal:
Conscious of the fact that Nadura’s case cannot be made to fall squarely within the specific causes enumerated in
subparagraphs 1(a) to (e), Benguet invokes the provisions of subparagraph 1(f) and says that Nadura’s illness –
occasional attacks of asthma – is a cause analogous to them.
Even a cursory reading of the legal provision under consideration is sufficient to convince anyone that, as the trial
court said, "illness cannot be included as an analogous cause by any stretch of imagination."
It is clear that, except the just cause mentioned in sub-paragraph 1(a), all the others expressly enumerated in the
law are due to the voluntary and/or willful act of the employee. How Nadura’s illness could be considered as
"analogous" to any of them is beyond our understanding, there being no claim or pretense that the same was
contracted through his own voluntary act.48
The reliance on Nadura is off-tangent. The factual milieu in Nadura is substantially different from the case at
bar. First, Nadura was not decided under the Labor Code. The law applied in that case was Republic Act (RA) No.
1787. Second, the issue of flight safety is absent in Nadura, thus, the rationale there cannot apply here. Third,
in Nadura, the employee who was a miner, was laid off from work because of illness, i.e., asthma. Here, petitioner
was dismissed for his failure to meet the weight standards of PAL. He was not dismissed due to illness. Fourth, the
issue in Nadura is whether or not the dismissed employee is entitled to separation pay and damages. Here, the
issue centers on the propriety of the dismissal of petitioner for his failure to meet the weight standards of PAL. Fifth,
in Nadura, the employee was not accorded due process. Here, petitioner was accorded utmost leniency. He was
given more than four (4) years to comply with the weight standards of PAL.
In the case at bar, the evidence on record militates against petitioner’s claims that obesity is a disease. That he was
able to reduce his weight from 1984 to 1992 clearly shows that it is possible for him to lose weight given the proper
attitude, determination, and self-discipline. Indeed, during the clarificatory hearing on December 8, 1992, petitioner
himself claimed that "[t]he issue is could I bring my weight down to ideal weight which is 172, then the answer is
yes. I can do it now."49
True, petitioner claims that reducing weight is costing him "a lot of expenses."50 However, petitioner has only himself
to blame. He could have easily availed the assistance of the company physician, per the advice of PAL.51 He chose
to ignore the suggestion. In fact, he repeatedly failed to report when required to undergo weight checks, without
offering a valid explanation. Thus, his fluctuating weight indicates absence of willpower rather than an illness.
Petitioner cites Bonnie Cook v. State of Rhode Island, Department of Mental Health, Retardation and
Hospitals,52 decided by the United States Court of Appeals (First Circuit). In that case, Cook worked from 1978 to

1980 and from 1981 to 1986 as an institutional attendant for the mentally retarded at the Ladd Center that was
being operated by respondent. She twice resigned voluntarily with an unblemished record. Even respondent
admitted that her performance met the Center’s legitimate expectations. In 1988, Cook re-applied for a similar
position. At that time, "she stood 5’2" tall and weighed over 320 pounds." Respondent claimed that the morbid
obesity of plaintiff compromised her ability to evacuate patients in case of emergency and it also put her at greater
risk of serious diseases.
Cook contended that the action of respondent amounted to discrimination on the basis of a handicap. This was in
direct violation of Section 504(a) of the Rehabilitation Act of 1973,53 which incorporates the remedies contained in
Title VI of the Civil Rights Act of 1964. Respondent claimed, however, that morbid obesity could never constitute a
handicap within the purview of the Rehabilitation Act. Among others, obesity is a mutable condition, thus plaintiff
could simply lose weight and rid herself of concomitant disability.
The appellate Court disagreed and held that morbid obesity is a disability under the Rehabilitation Act and that
respondent discriminated against Cook based on "perceived" disability. The evidence included expert testimony that
morbid obesity is a physiological disorder. It involves a dysfunction of both the metabolic system and the
neurological appetite – suppressing signal system, which is capable of causing adverse effects within the
musculoskeletal, respiratory, and cardiovascular systems. Notably, the Court stated that "mutability is relevant only
in determining the substantiality of the limitation flowing from a given impairment," thus "mutability only precludes
those conditions that an individual can easily and quickly reverse by behavioral alteration."
Unlike Cook, however, petitioner is not morbidly obese. In the words of the District Court for the District of Rhode
Island, Cook was sometime before 1978 "at least one hundred pounds more than what is considered appropriate of
her height." According to the Circuit Judge, Cook weighed "over 320 pounds" in 1988. Clearly, that is not the case
here. At his heaviest, petitioner was only less than 50 pounds over his ideal weight.
In fine, We hold that the obesity of petitioner, when placed in the context of his work as flight attendant, becomes an
analogous cause under Article 282(e) of the Labor Code that justifies his dismissal from the service. His obesity may
not be unintended, but is nonetheless voluntary. As the CA correctly puts it, "[v]oluntariness basically means that the
just cause is solely attributable to the employee without any external force influencing or controlling his actions. This
element runs through all just causes under Article 282, whether they be in the nature of a wrongful action or
omission. Gross and habitual neglect, a recognized just cause, is considered voluntary although it lacks the element
of intent found in Article 282(a), (c), and (d)."54
II. The dismissal of petitioner can be predicated on the bona fide occupational qualification defense.
Employment in particular jobs may not be limited to persons of a particular sex, religion, or national origin
unless the employer can show that sex, religion, or national origin is an actual qualification for performing
the job. The qualification is called a bona fide occupational qualification (BFOQ).55 In the United States, there
are a few federal and many state job discrimination laws that contain an exception allowing an employer to engage
in an otherwise unlawful form of prohibited discrimination when the action is based on a BFOQ necessary to the
normal operation of a business or enterprise.56
Petitioner contends that BFOQ is a statutory defense. It does not exist if there is no statute providing for it.57 Further,
there is no existing BFOQ statute that could justify his dismissal.58
Both arguments must fail.
First, the Constitution,59 the Labor Code,60 and RA No. 727761 or the Magna Carta for Disabled Persons62 contain
provisions similar to BFOQ.
Second, in British Columbia Public Service Employee Commission (BSPSERC) v. The British Columbia
Government and Service Employee’s Union (BCGSEU),63 the Supreme Court of Canada adopted the so-called
"Meiorin Test" in determining whether an employment policy is justified. Under this test, (1) the employer
must show that it adopted the standard for a purpose rationally connected to the performance of the
job;64 (2) the employer must establish that the standard is reasonably necessary65 to the accomplishment of

that work-related purpose; and (3) the employer must establish that the standard is reasonably necessary in
order to accomplish the legitimate work-related purpose. Similarly, in Star Paper Corporation v. Simbol,66 this
Court held that in order to justify a BFOQ, the employer must prove that (1) the employment qualification is
reasonably related to the essential operation of the job involved; and (2) that there is factual basis for believing that
all or substantially all persons meeting the qualification would be unable to properly perform the duties of the job.67
In short, the test of reasonableness of the company policy is used because it is parallel to BFOQ.68 BFOQ is
valid "provided it reflects an inherent quality reasonably necessary for satisfactory job performance."69
In Duncan Association of Detailman-PTGWTO v. Glaxo Wellcome Philippines, Inc., 70 the Court did not hesitate to
pass upon the validity of a company policy which prohibits its employees from marrying employees of a rival
company. It was held that the company policy is reasonable considering that its purpose is the protection of the
interests of the company against possible competitor infiltration on its trade secrets and procedures.
Verily, there is no merit to the argument that BFOQ cannot be applied if it has no supporting statute. Too, the Labor
Arbiter,71 NLRC,72 and CA73 are one in holding that the weight standards of PAL are reasonable. A common carrier,
from the nature of its business and for reasons of public policy, is bound to observe extraordinary diligence for the
safety of the passengers it transports.74 It is bound to carry its passengers safely as far as human care and foresight
can provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances.75
The law leaves no room for mistake or oversight on the part of a common carrier. Thus, it is only logical to hold that
the weight standards of PAL show its effort to comply with the exacting obligations imposed upon it by law by virtue
of being a common carrier.
The business of PAL is air transportation. As such, it has committed itself to safely transport its passengers. In order
to achieve this, it must necessarily rely on its employees, most particularly the cabin flight deck crew who are on
board the aircraft. The weight standards of PAL should be viewed as imposing strict norms of discipline upon its
employees.
In other words, the primary objective of PAL in the imposition of the weight standards for cabin crew is flight
safety. It cannot be gainsaid that cabin attendants must maintain agility at all times in order to inspire passenger
confidence on their ability to care for the passengers when something goes wrong. It is not farfetched to say that
airline companies, just like all common carriers, thrive due to public confidence on their safety records. People,
especially the riding public, expect no less than that airline companies transport their passengers to their respective
destinations safely and soundly. A lesser performance is unacceptable.
The task of a cabin crew or flight attendant is not limited to serving meals or attending to the whims and caprices of
the passengers. The most important activity of the cabin crew is to care for the safety of passengers and the
evacuation of the aircraft when an emergency occurs. Passenger safety goes to the core of the job of a cabin
attendant. Truly, airlines need cabin attendants who have the necessary strength to open emergency doors, the
agility to attend to passengers in cramped working conditions, and the stamina to withstand grueling flight
schedules.
On board an aircraft, the body weight and size of a cabin attendant are important factors to consider in case of
emergency. Aircrafts have constricted cabin space, and narrow aisles and exit doors. Thus, the arguments of
respondent that "[w]hether the airline’s flight attendants are overweight or not has no direct relation to its mission of
transporting passengers to their destination"; and that the weight standards "has nothing to do with airworthiness of
respondent’s airlines," must fail.
The rationale in Western Air Lines v. Criswell76 relied upon by petitioner cannot apply to his case. What was involved
there were two (2) airline pilots who were denied reassignment as flight engineers upon reaching the age of 60, and
a flight engineer who was forced to retire at age 60. They sued the airline company, alleging that the age-60
retirement for flight engineers violated the Age Discrimination in Employment Act of 1967. Age-based BFOQ and
being overweight are not the same. The case of overweight cabin attendants is another matter. Given the cramped
cabin space and narrow aisles and emergency exit doors of the airplane, any overweight cabin attendant would
certainly have difficulty navigating the cramped cabin area.

In short, there is no need to individually evaluate their ability to perform their task. That an obese cabin attendant
occupies more space than a slim one is an unquestionable fact which courts can judicially recognize without
introduction of evidence.77 It would also be absurd to require airline companies to reconfigure the aircraft in order to
widen the aisles and exit doors just to accommodate overweight cabin attendants like petitioner.
The biggest problem with an overweight cabin attendant is the possibility of impeding passengers from evacuating
the aircraft, should the occasion call for it. The job of a cabin attendant during emergencies is to speedily get the
passengers out of the aircraft safely. Being overweight necessarily impedes mobility. Indeed, in an emergency
situation, seconds are what cabin attendants are dealing with, not minutes. Three lost seconds can translate into
three lost lives. Evacuation might slow down just because a wide-bodied cabin attendant is blocking the narrow
aisles. These possibilities are not remote.
Petitioner is also in estoppel. He does not dispute that the weight standards of PAL were made known to him prior to
his employment. He is presumed to know the weight limit that he must maintain at all times.78 In fact, never did he
question the authority of PAL when he was repeatedly asked to trim down his weight. Bona fides exigit ut quod
convenit fiat. Good faith demands that what is agreed upon shall be done. Kung ang tao ay tapat kanyang
tutuparin ang napagkasunduan.
Too, the weight standards of PAL provide for separate weight limitations based on height and body frame for both
male and female cabin attendants. A progressive discipline is imposed to allow non-compliant cabin attendants
sufficient opportunity to meet the weight standards. Thus, the clear-cut rules obviate any possibility for the
commission of abuse or arbitrary action on the part of PAL.
III. Petitioner failed to substantiate his claim that he was discriminated against by PAL.
Petitioner next claims that PAL is using passenger safety as a convenient excuse to discriminate against him.79 We
are constrained, however, to hold otherwise. We agree with the CA that "[t]he element of discrimination came into
play in this case as a secondary position for the private respondent in order to escape the consequence of dismissal
that being overweight entailed. It is a confession-and-avoidance position that impliedly admitted the cause of
dismissal, including the reasonableness of the applicable standard and the private respondent’s failure to
comply."80 It is a basic rule in evidence that each party must prove his affirmative allegation.81
Since the burden of evidence lies with the party who asserts an affirmative allegation, petitioner has to prove his
allegation with particularity. There is nothing on the records which could support the finding of discriminatory
treatment. Petitioner cannot establish discrimination by simply naming the supposed cabin attendants who are
allegedly similarly situated with him. Substantial proof must be shown as to how and why they are similarly situated
and the differential treatment petitioner got from PAL despite the similarity of his situation with other employees.
Indeed, except for pointing out the names of the supposed overweight cabin attendants, petitioner miserably failed
to indicate their respective ideal weights; weights over their ideal weights; the periods they were allowed to fly
despite their being overweight; the particular flights assigned to them; the discriminating treatment they got from
PAL; and other relevant data that could have adequately established a case of discriminatory treatment by PAL. In
the words of the CA, "PAL really had no substantial case of discrimination to meet."82
We are not unmindful that findings of facts of administrative agencies, like the Labor Arbiter and the NLRC, are
accorded respect, even finality.83 The reason is simple: administrative agencies are experts in matters within their
specific and specialized jurisdiction.84 But the principle is not a hard and fast rule. It only applies if the findings of
facts are duly supported by substantial evidence. If it can be shown that administrative bodies grossly
misappreciated evidence of such nature so as to compel a conclusion to the contrary, their findings of facts must
necessarily be reversed. Factual findings of administrative agencies do not have infallibility and must be set aside
when they fail the test of arbitrariness.85
Here, the Labor Arbiter and the NLRC inexplicably misappreciated evidence. We thus annul their findings.
To make his claim more believable, petitioner invokes the equal protection clause guaranty86 of the Constitution.
However, in the absence of governmental interference, the liberties guaranteed by the Constitution cannot be

invoked.87 Put differently, the Bill of Rights is not meant to be invoked against acts of private individuals.88 Indeed,
the United States Supreme Court, in interpreting the Fourteenth Amendment,89 which is the source of our equal
protection guarantee, is consistent in saying that the equal protection erects no shield against private conduct,
however discriminatory or wrongful.90 Private actions, no matter how egregious, cannot violate the equal protection
guarantee.91
IV. The claims of petitioner for reinstatement and wages are moot.
As his last contention, petitioner avers that his claims for reinstatement and wages have not been mooted. He is
entitled to reinstatement and his full backwages, "from the time he was illegally dismissed" up to the time that the
NLRC was reversed by the CA.92
At this point, Article 223 of the Labor Code finds relevance:
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the
reinstatement aspect is concerned, shall immediately be executory, even pending appeal. The employee shall either
be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or, at
the option of the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay the
execution for reinstatement provided herein.
The law is very clear. Although an award or order of reinstatement is self-executory and does not require a writ of
execution,93 the option to exercise actual reinstatement or payroll reinstatement belongs to the employer. It does not
belong to the employee, to the labor tribunals, or even to the courts.
Contrary to the allegation of petitioner that PAL "did everything under the sun" to frustrate his "immediate return to
his previous position,"94 there is evidence that PAL opted to physically reinstate him to a substantially equivalent
position in accordance with the order of the Labor Arbiter.95 In fact, petitioner duly received the return to work notice
on February 23, 2001, as shown by his signature.96
Petitioner cannot take refuge in the pronouncements of the Court in a case97 that "[t]he unjustified refusal of the
employer to reinstate the dismissed employee entitles him to payment of his salaries effective from the time the
employer failed to reinstate him despite the issuance of a writ of execution"98 and ""even if the order of reinstatement
of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages
of the employee during the period of appeal until reversal by the higher court."99 He failed to prove that he complied
with the return to work order of PAL. Neither does it appear on record that he actually rendered services for PAL
from the moment he was dismissed, in order to insist on the payment of his full backwages.
In insisting that he be reinstated to his actual position despite being overweight, petitioner in effect wants to render
the issues in the present case moot. He asks PAL to comply with the impossible. Time and again, the Court ruled
that the law does not exact compliance with the impossible.100
V. Petitioner is entitled to separation pay.
Be that as it may, all is not lost for petitioner.
Normally, a legally dismissed employee is not entitled to separation pay. This may be deduced from the language of
Article 279 of the Labor Code that "[a]n employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances,
and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from
him up to the time of his actual reinstatement." Luckily for petitioner, this is not an ironclad rule.
Exceptionally, separation pay is granted to a legally dismissed employee as an act "social justice,"101 or based on
"equity."102 In both instances, it is required that the dismissal (1) was not for serious misconduct; and (2) does not
reflect on the moral character of the employee.103

Here, We grant petitioner separation pay equivalent to one-half (1/2) month’s pay for every year of service.104 It
should include regular allowances which he might have been receiving.105 We are not blind to the fact that he was
not dismissed for any serious misconduct or to any act which would reflect on his moral character. We also
recognize that his employment with PAL lasted for more or less a decade.
WHEREFORE, the appealed Decision of the Court of Appeals is AFFIRMED but MODIFIED in that petitioner
Armando G. Yrasuegui is entitled to separation pay in an amount equivalent to one-half (1/2) month’s pay for every
year of service, which should include his regular allowances.

g.) G.R. No. 163512 February 28, 2007
DAISY B. TIU, Petitioner
vs.
PLATINUM PLANS PHIL., INC., Respondent.
DECISION
QUISUMBING, J.:
For review on certiorari are the Decision1 dated January 20, 2004 of the Court of Appeals in CA-G.R. CV No. 74972,
and its Resolution2 dated May 4, 2004 denying reconsideration. The Court of Appeals had affirmed the
decision3 dated February 28, 2002 of the Regional Trial Court (RTC) of Pasig City, Branch 261, in an action for
damages, ordering petitioner to pay respondent ₱100,000 as liquidated damages.
The relevant facts are as follows:
Respondent Platinum Plans Philippines, Inc. is a domestic corporation engaged in the pre-need industry. From 1987
to 1989, petitioner Daisy B. Tiu was its Division Marketing Director.
On January 1, 1993, respondent re-hired petitioner as Senior Assistant Vice-President and Territorial
Operations Head in charge of its Hongkong and Asean operations. The parties executed a contract of
employment valid for five years.4
On September 16, 1995, petitioner stopped reporting for work. In November 1995, she became the Vice-
President for Sales of Professional Pension Plans, Inc., a corporation engaged also in the pre-need
industry.
Consequently, respondent sued petitioner for damages before the RTC of Pasig City, Branch 261. Respondent
alleged, among others, that petitioner’s employment with Professional Pension Plans, Inc. violated the non-
involvement clause in her contract of employment, to wit:
8. NON INVOLVEMENT PROVISION – The EMPLOYEE further undertakes that during his/her engagement with
EMPLOYER and in case of separation from the Company, whether voluntary or for cause, he/she shall not, for the
next TWO (2) years thereafter, engage in or be involved with any corporation, association or entity, whether directly
or indirectly, engaged in the same business or belonging to the same pre-need industry as the EMPLOYER. Any
breach of the foregoing provision shall render the EMPLOYEE liable to the EMPLOYER in the amount of One
Hundred Thousand Pesos (P100,000.00) for and as liquidated damages.5
Respondent thus prayed for ₱100,000 as compensatory damages; ₱200,000 as moral damages; ₱100,000 as
exemplary damages; and 25% of the total amount due plus ₱1,000 per counsel’s court appearance, as attorney’s
fees.
Petitioner countered that the non-involvement clause was unenforceable for being against public order or public
policy: First, the restraint imposed was much greater than what was necessary to afford respondent a fair and
reasonable protection. Petitioner contended that the transfer to a rival company was an accepted practice in the pre-
need industry. Since the products sold by the companies were more or less the same, there was nothing peculiar or
unique to protect. Second, respondent did not invest in petitioner’s training or improvement. At the time petitioner
was recruited, she already possessed the knowledge and expertise required in the pre-need industry and
respondent benefited tremendously from it. Third, a strict application of the non-involvement clause would amount to
a deprivation of petitioner’s right to engage in the only work she knew.
In upholding the validity of the non-involvement clause, the trial court ruled that a contract in restraint of trade is valid
provided that there is a limitation upon either time or place. In the case of the pre-need industry, the trial court found
the two-year restriction to be valid and reasonable. The dispositive portion of the decision reads:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendant, ordering the latter to
pay the following:
1. the amount of One Hundred Thousand Pesos (P100,000.00) for and as damages, for the breach of the
non-involvement provision (Item No. 8) of the contract of employment;
2. costs of suit.
There being no sufficient evidence presented to sustain the grant of attorney’s fees, the Court deems it proper not to
award any.
SO ORDERED.6
On appeal, the Court of Appeals affirmed the trial court’s ruling. It reasoned that petitioner entered into the contract
on her own will and volition. Thus, she bound herself to fulfill not only what was expressly stipulated in the contract,
but also all its consequences that were not against good faith, usage, and law. The appellate court also ruled that
the stipulation prohibiting non-employment for two years was valid and enforceable considering the nature of
respondent’s business.
Petitioner moved for reconsideration but was denied. Hence, this appeal by certiorari where petitioner alleges that
the Court of Appeals erred when:
A.
… [IT SUSTAINED] THE VALIDITY OF THE NON-INVOLVEMENT CLAUSE IN PETITIONER’S CONTRACT

CONSIDERING THAT THE PERIOD FIXED THEREIN IS VOID FOR BEING OFFENSIVE TO PUBLIC POLICY
B.
… [IT SUSTAINED] THE AWARD OF LIQUIDATED DAMAGES CONSIDERING THAT IT BEING IN THE NATURE
OF A PENALTY THE SAME IS EXCESSIVE, INIQUITOUS OR UNCONSCIONABLE7
Plainly stated, the core issue is whether the non-involvement clause is valid.
Petitioner avers that the non-involvement clause is offensive to public policy since the restraint imposed is much
greater than what is necessary to afford respondent a fair and reasonable protection. She adds that since the
products sold in the pre-need industry are more or less the same, the transfer to a rival company is acceptable.
Petitioner also points out that respondent did not invest in her training or improvement. At the time she joined
respondent, she already had the knowledge and expertise required in the pre-need industry. Finally, petitioner
argues that a strict application of the non-involvement clause would deprive her of the right to engage in the only
work she knows.
Respondent counters that the validity of a non-involvement clause has been sustained by the Supreme Court in a
long line of cases. It contends that the inclusion of the two-year non-involvement clause in petitioner’s contract of
employment was reasonable and needed since her job gave her access to the company’s confidential marketing
strategies. Respondent adds that the non-involvement clause merely enjoined her from engaging in pre-need
business akin to respondent’s within two years from petitioner’s separation from respondent. She had not been
prohibited from marketing other service plans.
As early as 1916, we already had the occasion to discuss the validity of a non-involvement clause. In Ferrazzini v.
Gsell,8 we said that such clause was unreasonable restraint of trade and therefore against public policy.
In Ferrazzini, the employee was prohibited from engaging in any business or occupation in the Philippines for a
period of five years after the termination of his employment contract and must first get the written permission of his
employer if he were to do so. The Court ruled that while the stipulation was indeed limited as to time and space, it
was not limited as to trade. Such prohibition, in effect, forces an employee to leave the Philippines to work should
his employer refuse to give a written permission.
In G. Martini, Ltd. v. Glaiserman,9 we also declared a similar stipulation as void for being an unreasonable restraint
of trade. There, the employee was prohibited from engaging in any business similar to that of his employer for a
period of one year. Since the employee was employed only in connection with the purchase and export of abaca,
among the many businesses of the employer, the Court considered the restraint too broad since it effectively
prevented the employee from working in any other business similar to his employer even if his employment was
limited only to one of its multifarious business activities.
However, in Del Castillo v. Richmond,10 we upheld a similar stipulation as legal, reasonable, and not contrary to
public policy. In the said case, the employee was restricted from opening, owning or having any connection with any
other drugstore within a radius of four miles from the employer’s place of business during the time the employer was
operating his drugstore. We said that a contract in restraint of trade is valid provided there is a limitation upon either
time or place and the restraint upon one party is not greater than the protection the other party requires.
Finally, in Consulta v. Court of Appeals,11 we considered a non-involvement clause in accordance with Article
130612 of the Civil Code. While the complainant in that case was an independent agent and not an employee, she
was prohibited for one year from engaging directly or indirectly in activities of other companies that compete with the
business of her principal. We noted therein that the restriction did not prohibit the agent from engaging in any other
business, or from being connected with any other company, for as long as the business or company did not
compete with the principal’s business. Further, the prohibition applied only for one year after the termination of the
agent’s contract and was therefore a reasonable restriction designed to prevent acts prejudicial to the employer.
Conformably then with the aforementioned pronouncements, a non-involvement clause is not necessarily
void for being in restraint of trade as long as there are reasonable limitations as to time, trade, and place.
In this case, the non-involvement clause has a time limit: two years from the time petitioner’s employment
with respondent ends. It is also limited as to trade, since it only prohibits petitioner from engaging in any
pre-need business akin to respondent’s. 1awphi1.net
More significantly, since petitioner was the Senior Assistant Vice-President and Territorial Operations Head
in charge of respondent’s Hongkong and Asean operations, she had been privy to confidential and highly
sensitive marketing strategies of respondent’s business. To allow her to engage in a rival business soon
after she leaves would make respondent’s trade secrets vulnerable especially in a highly competitive
marketing environment. In sum, we find the non-involvement clause not contrary to public welfare and not
greater than is necessary to afford a fair and reasonable protection to respondent. 13
In any event, Article 1306 of the Civil Code provides that parties to a contract may establish such stipulations,
clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good
customs, public order, or public policy.
Article 115914 of the same Code also provides that obligations arising from contracts have the force of law between
the contracting parties and should be complied with in good faith. Courts cannot stipulate for the parties nor amend
their agreement where the same does not contravene law, morals, good customs, public order or public policy, for to
do so would be to alter the real intent of the parties, and would run contrary to the function of the courts to give force
and effect thereto.15 Not being contrary to public policy, the non-involvement clause, which petitioner and respondent
freely agreed upon, has the force of law between them, and thus, should be complied with in good faith.16
Thus, as held by the trial court and the Court of Appeals, petitioner is bound to pay respondent ₱100,000 as
liquidated damages. While we have equitably reduced liquidated damages in certain cases,17 we cannot do so in this
case, since it appears that even from the start, petitioner had not shown the least intention to fulfill the non-
involvement clause in good faith.
WHEREFORE, the petition is DENIED for lack of merit. The Decision dated January 20, 2004, and the Resolution
dated May 4, 2004, of the Court of Appeals in CA-G.R. CV No. 74972, are AFFIRMED. Costs against petitioner.

1.) G.R. No. 106331 March 9, 1998
INTERNATIONAL PHARMACEUTICALS, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC), FOURTH DIVISION, and DR. VIRGINIA CAMACHO
QUINTIA, respondents.
MENDOZA, J.:
This is a petition for certiorari to set aside the decision of the National Labor Relations Commission which
affirmed in toto the decision of the Labor Arbiter, finding petitioner guilty of the illegal dismissal of private respondent
Virginia Camacho Quintia, as well as its resolution denying reconsideration.
Petitioner International Pharmaceuticals, Inc. (IPI) is a corporation engaged in the manufacture, production and sale
of pharmaceutical products. In March 1983, it employed private respondent Virginia Camacho Quintia as
Medical Director of its Research and Development department, replacing one Diana Villaraza. 1 The
government, in that year, launched a program encouraging the development of herbal medicine and offering
incentives to interested parties. Petitioner decided to venture into the development of herbal medicine, although it is
now alleged that this was merely experimental, to find out if it would be feasible to include herbal medicine in its
business. 2 One of the government requirements was the hiring of a pharmacologist. Petitioner avers that it was
only for this purpose that private respondent was hired, hence its contention that private respondent was a project
employee.
The contract of employment provided for a term of one year from the date of its execution on March 19,
1983, subject to renewal by mutual consent of the parties at least thirty days before its expiration. It provided for
a monthly compensation of P4,000.00. It was agreed that Quintia could continue teaching at the Cebu Doctor's
Hospital, 3 where she was, at that time, a full-time member of the faculty.
Quintia claimed that when her contract of employment was about to expire, she was invited by Xavier University in
Cagayan de Oro City to be the chairperson of its pharmacology department. However, Pio Castillo, the president
and general manager, prevailed upon her to stay, assuring her of security of tenure. Because of this assurance, she
declined the offer of Xavier University. 4 Indeed, after her contract expired on March 19, 1984, she remained in
the employ of petitioner where she not only performed the work of Medical Director of its Research and
Development department but also that of company physician. This continued until her termination on July 12,
1986.
In her complaint, private respondent alleges that the reason for her termination "was her taking up the cudgels for
the rank and file employees when she felt they were given a raw deal by the officers of their own Savings and Loan
Association." She claimed that sometime in June 1986, while Pio Castillo was in China, the Association declared
dividends to its members. Due to complaints of the employees, meetings were held during which private respondent
pointed out the "inequality in the imposition of interest rate to the low-salaried employees" and led them in the
demand for a full disclosure of the association's financial status. Her participation was resented by the association's
officers, all of whom were appointed by management, so that when Castillo arrived, private respondent was
summoned to Castillo's office where she was berated for her acts and humiliated in front of some laborers. When
she sought permission to explain her side, she was arrogantly turned down and told to leave. 5
On July 10, 1986, Quintia was replaced as head of the Research and Development department by Paz Wong. Two
days later, on July 12, 1986, she received an inter-office memorandum officially terminating her services allegedly
because of the expiration of her contract of employment.
On January 21, 1987, 6 private respondent filed a complaint, charging petitioner with illegal dismissal and praying
that petitioner be ordered to reinstate private respondent and to pay her full backwages and moral damages. 7

In its position paper, petitioner claimed that private respondent had been hired on a "consultancy basis
coterminous with the duration of the project" involving the development of herbal medicine and that her
employment was terminated upon the abandonment of that project. It explained that Quintia's employment, which
lasted for more than two years after the original contract expired, was by virtue of an oral agreement with the same
terms as the written contract or, at the very least, by virtue of implied extensions of the said contract which lasted
until the "company decided that nothing would come out from said project." 8
In a decision rendered on December 18, 1990, the Labor Arbiter found private respondent to have been illegally
dismissed. He held that private respondent was a regular employee and not a project employee and so could not be
dismissed without just and/or legal causes as provided in the Labor Code. Moreover, he found that petitioner failed
to observe due process in terminating Quintia's services. For this reason, the Labor Arbiter ordered the petitioner to
reinstate private respondent and to pay her backwages for three years, including 13th month pay and Service
Incentive Leave, moral damages and attorney's fees amounting to P177,099.94. He further ruled that if
reinstatement was no longer feasible, petitioner should pay private respondent P6,000 as separation pay.
On appeal, the NLRC affirmed the ruling in a decision dated May 26, 1992. Petitioner moved for reconsideration, but
its motion was denied for lack of merit. The NLRC directed the Labor Arbiter to conduct a hearing to determine
whether reinstatement was feasible. Hence, this petition.
We find the petition to be without merit.
First. Art, 280 of the Labor Code provides:
Art. 280. Regular and casual employment. — The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be
regular where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer except where the employment has been fixed for a
specific project or undertaking, the completion or termination of which has been determined at the time of
the engagement of the employee or where the work or service to be performed is seasonal in nature and the
employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That
any employee who has rendered at least one year of service, whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in which he is employed and his
employment shall continue while such activity exists.
In Brent School, Inc. v. Zamora, 9 it was held that although work done under a contract is necessary and desirable
in relation to the usual business of the employer, a contract for a fixed period may nonetheless be made so long as
it is entered into freely, voluntarily and knowingly by the parties. Applying this ruling to the case at bar, the NLRC
held that the written contract between petitioner and private respondent was valid, but, after its expiration on March
18, 1984, as the petitioner had decided to continue her services, it must respect the security of tenure of the
employee in accordance with Art, 280. It said:
To our mind, when complainant was allowed to continue working without the benefit of a contract after the
expiration of the one year period provided in their written contract, that act completely changed the
complexion of the relationship between the parties.
The NLRC cited the following facts to justify its ruling: Quintia was continued as Medical Director and even given the
additional function of company physician after the expiration of the original contract; she undertook various civic
activities for and in behalf of petitioner, such as conducting free clinics and giving out IPI products; she did work
which was necessary and desirable in relation to the trade or business of petitioner; and her employment lasted for
more than (3) three years.
Petitioner contends:
(1) that the NLRC's reliance on Art. 280 is "clearly contrary to this Court's decisions;"

(2) that private respondent's tasks are really not necessary and desirable to the usual business of petitioner;
(3) that there is "clearly no legal or factual basis to support respondent NLRC's reliance on the absence of a new
written contract as indicating that respondent Quintia became a regular employee." 10
Petitioner's first ground is that the ruling of the NLRC is contrary to the Brent School decision. He contends that Art.
280 should not be so interpreted as to render employment contracts with a fixed term invalid. But the NLRC
precisely upheld the validity of the contract in accordance with the Brent School case. Indeed, the validity of the
written contract is not in issue in this case. What is in issue is whether private respondent did not become a regular
employee after the expiration of the written contraction March 18, 1984 on the basis of the facts pointed out by the
NLRC, simply because there was in the beginning a contract of employment with a fixed term.
Petitioner also invokes the ruling in Singer Sewing Machine v. Drilon 11 in which it was stated:
The definition that regular employees are those who perform activities which are desirable and necessary for
the business of the employer is not determinative in this case. Any agreement may provide that one party
shall render services for and in behalf of another for a consideration (no matter how necessary for the
latter's business) even without being hired as an employee. This is precisely true in the case of an
independent contractorship as well as in an agency agreement. The Court agrees with the petitioner's
argument that Article 280 is not the yardstick for determining the existence of an employment relationship
because it merely distinguishes between two kinds of employees, i.e., regular employees and casual
employees, for purposes of determining the right of an employee to certain benefits, to join or form a union,
or to security of tenure. Article 280 does not apply where the existence of an employment relationship is in
dispute.
Petitioner argues:
Even assuming arguendo that respondent Quintia was performing tasks which were "necessary and
desirable to the main business" of petitioner, said standard cannot apply since said Article merely
distinguishes between regular and casual employment for the purpose of determining entitlement to benefits
under the Labor Code. In this case, respondent Quintia's alleged status as "regular" employee has precisely
been disputed by petitioner. And, as this Honorable Court noted in the foregoing case, an agreement may
provide that one party will render services, no matter how necessary for the other party's business, without
being hired as a regular employee, and this is precisely the nature of the contract entered into by the parties
in this case. 12
Clearly, petitioner misapplies the ruling in Singer. Quintia's status as an employee is not disputed in this case.
Therefore, in determining whether she was a project employee or a regular employee, the question is whether her
work was "necessary and desirable to the main business of the employer." It is true that, as held in Singer, parties
can enter into an agreement for the rendering of services by one to the other and that however necessary such
services may be to the latter's business the contract will not necessarily give rise to an employer-employee
relationship if the elements of such relationship are not present. But that is not the question in this case. Quintia was
an employee. The question is whether, given the fact that she was an employee, she was a regular or a project
employee, considering that she had been continued in the service of petitioner for more than two years following the
expiration of her written contract.
Petitioner's second point is that private respondent's tasks were not really necessary and desirable in respect of the
usual business of petitioner, the work done by Quintia being on a temporary basis only. 13 According to petitioner,
Quintia's engagement was only for the duration of its herbal medicine development project. In addition, petitioner
points out that private respondent was not required to keep fixed office hours and this arrangement continued even
after the expiration of the written contract, thus indicating the temporary nature of her employment.
Petitioner's allegations are contrary to the factual findings of both the NLRC and the Labor Arbiter, particularly their
findings that she was the head of petitioner's Research and Development department; that in addition, she
performed the function of company physician; and that she undertook various civic activities in behalf of petitioner
and that this engagement lasted for more than three years (1983 — 1986). 14 Certainly, as the NLRC observed,
these facts show complainant working "not as 'consultant' but as a regular employee albeit a managerial one." 15 It
should be added that Quintia was hired to replace one Diana Villaraza, 16 which suggests that the position to which
she was appointed by petitioner was an existing one, so much so that after the termination of Quintia's employment,
somebody else (Paz Wong) was appointed in her place. 17 If private respondent's employment was for a particular
project which had allegedly been terminated, why would there be a need to replace her?
We are not prepared to throw overboard the findings of both the NLRC and the Labor Arbiter on the matter. These
are essentially factual matters which are within the competence of the labor agencies to determine. Their findings
are accorded by this Court respect and finality if, as in this case, they are supported by substantial evidence. 18
Indeed, the terms of the written employment contract are clear:
. . . That the FIRST PARTY is a manufacturer of medicines and pharmaceutical preparations, while the
SECOND PARTY is a Doctor of Medicine and Pharmacologist of long standing;
That the FIRST PARTY desires to hire the SECOND PARTY as Medical Director of its Research and
Development department, which the latter accepts, under the following terms and conditions, to wit:
1. That the SECOND PARTY shall perform and/or cause the performance of the following:
a) Microbiological research and testing;
b) Clinical research and testing;
c) Prove and support First Party's claims in its brochures, literature and advertisements;
d) Register with and cause the approval by Food and Drug Administration of all pharmaceutical and medical
preparations developed and tested by the First Party's R&D department; and
e) To do and perform such other duties as may, from time to time, be assigned by the First Party consonant
to and in accord with the position herein conferred . . . .
There is no mention whatsoever of any project or of any consultancy in the contract. As aptly observed by the
Solicitor General, the duties of Quintia as provided for in the contract reject any notion of consultancy. Clearly, she
was hired as Medical Director of the Research and Development department of petitioner company and not as
consultant nor for any particular project. The work she performed was manifestly necessary and desirable to the
usual business of petitioner, considering that it is engaged in the manufacture and production of medicinal
preparations. Petitioner itself admits that research and development are part of its business. 19
We agree with the Labor Arbiter that the fact that she was not required to report at a fixed hour or to keep
fixed hours of work does not detract from her status as a regular employee. As petitioner itself admits, Quintia
was a managerial employee 20 and therefore not covered by the Labor Code provisions on hours of work.
What this Court said in once case 21 is apropos:
The primary standard, . . . of determining a regular employment is the reasonable connection between the
particular activity performed by the employee in relation to the usual business or trade of the employer. The
test is whether the former is usually necessary or desirable in the usual business or trade of the employer.
The connection can be determined by considering the nature of the work performed and its relation to the
scheme of the particular business or trade in its entirety. Also, if the employee has been performing the job
for at least one year, even if the performance is not continuous or merely intermittent, the law deems the
repeated and continuing need for its performance as sufficient evidence of the necessity if not
indispensability of that activity to the business. Hence, the employment is also considered regular, but only
with respect to such activity and while such activity exists.
Neither does the fact that private respondent was teaching full-time at the Cebu Doctors' College negate her regular
status since this fact does not affect the nature of Quintia's work. Whether one's employment is regular is not

determined by the number of hours one works, but by the nature of the work and by the length of time one has been
in that particular job.
Considering the foregoing, it is clear that Quintia became a regular employee of petitioner after her contract expired
on March 18, 1984 and her services were continued for more than two years in the usual trade or business of the
employer.
Petitioner goes on to state his third point that "there is clearly no legal or factual basis to support respondent NLRC's
reliance on the absence of a new written contract as indicating that respondent Quintia became a regular
employee." 22 In support, the petitioner again cites the Brent School case 23 where it was recognized that term
contracts can be made orally. 24 Hence, it is argued that "the mere fact that there was no subsequent written
contract does not mean that the original agreement was abandoned and/or that respondent became a regular
employee due to the absence thereof and/or that the parties had executed a new agreement, in the absence of
evidence showing intent to abandon and/or novate the same." It posits that, based on the acts of the parties, an
implied renewal was entered into, or, at the very least, petitioner claims, the absence of a written contract only
indicates that the parties impliedly agreed to extend their written contract.
There is absolutely no principle of law to support the proposition urged by petitioner. On the other hand the written
contract in this case provided that it was subject to renewal by mutual consent of the parties at least thirty days
before its expiration on March 18, 1984. There is no evidence to show that the parties mutually agreed to renew
their contract. On the other hand, to sustain petitioner's contention that there was an implied extension after the
expiration of the original contract would make it possible for employers like petitioner to circumvent Art. 280 of the
Labor Code and thus prevent an employee from becoming regular through the simple expedient of making him sign
a contract for a term and then extend to him a contract term, after term, after term.
Moreover, assuming that petitioner is correct that there was at least an implied renewal of the written contract
containing the same terms and conditions, then Quintia's termination should have been effective in March of 1986 or
March of 1987 rather than July of 1986. It should be noted that the fixed term stated in the written contract allegedly
renewed is one year. Considering that the said contract was executed on March 19, 1983, then if there really were
implied renewals with the same terms and conditions, private respondent's employment should not have been
terminated in July of 1986. As discussed earlier, the decision of the NLRC is based not alone on inference drawn
from the expiration of the contract but on facts which, in light of Art. 280, show that private respondent's work was in
pursuance of the business of petitioner.
Second. Prescinding from the premise that private respondent was a project employee, petitioner claims that
because it had discontinued its herbal medicine project after it had been shown not to be viable, private
respondent's employment had to be terminated, too.
We have already shown why this claim has no basis and no merit. Petitioner was unable to prove that it had actually
undertaken a project. Private respondent's contract will be searched in vain for any mention of a project. What it
states is that Quintia's employment was one for a definite period, not for a project as petitioner would have it. A
project employment is one where the employment has been fixed for a specific project/undertaking, the completion
or termination of which has been determined at the time of the engagement of the employee. 25 Quintia's
engagement after the expiration of the written contract cannot be said to have been pre-determined because, if
petitioner's other claim is to be believed, it was essentially contingent upon the feasibility of herbal medicine as part
of petitioner's business and for as long as the herbal medicine development was being pursued by it.
It follows from the conclusion that private respondent Quintia was a regular employee that she could only be
dismissed for just or authorized cause. 26 The records are bereft of any evidence showing the existence of any of
the specified causes in the Labor Code. It may be that an employer is allowed wider discretion in terminating
employment in respect of managerial personnel compared to rank-and-file employees, and that such managerial
employees can be separated from the service for loss of confidence. 27 However, a mere allegation of such ground
is not sufficient. As this Court has held in Western Shipping Agency, Inc. v. NLRC: 28
Loss of confidence is a valid ground for the dismissal of managerial employees . . . But even managerial
employees enjoy security of tenure, . . . and, . . . can only be dismissed after cause is shown in an

appropriate proceeding. The loss of confidence must be substantiated by evidence. The burden of proof is
on the employer to show grounds justifying the loss of confidence.
Petitioner in this case failed to discharge this burden, as both the Labor Arbiter and the NLRC found.
Moreover, as the labor arbiter found, petitioner failed to accord due process to private respondent in terminating her
services. In the case of Aurora Land Projects Corp. v. NLRC it was stated: 29
The law requires that the employer must furnish the worker sought to be dismissed with two written
notices before termination of employee can be legally effected: (1) notice which apprises the employee of
the particular acts or omissions for which his dismissal is sought; and (2) the subsequent notice which
informs the employee of the employer's decision to dismiss him (Section 13, BP 130; Sections 2-6, Rule
XIV, Book V Rules and Regulations Implementing the Labor Code as amended). Failure to comply with the
requirements taints the dismissal with illegality. This procedure is mandatory; in the absence of which, any
judgment reached by management is void and in existent. (Tingson, Jr. v. NLRC, 185 SCRA 498 [1990];
National Service Corporation v. NLRC, 168 SCRA 122 [1988]; Ruffy v. NLRC, 182 SCRA 365 [1990]).
The memoranda dated July 12, 1986 and July 10, 1986, copies of which were furnished the complainant, informing
her of the termination of her contract and the appointment of a replacement, without apprising her of the particular
acts or omissions for which her dismissal was sought, do not suffice to satisfy, the requirements of notice. Nor was
petitioner given the opportunity to be heard. 30 Consequently, her dismissal from the service was illegal.
Third. Petitioner contends that the reinstatement of private respondent is not feasible because the position which
she held was abolished on account of its decision to discontinue its herbal medicine development project and that,
in any event, because the position is a sensitive one which needs an employee in whom the petitioner has full faith
and confidence. It is also contended that reinstatement would be untenable considering the antagonism engendered
as a result of this case. 31
As regards the claim that the position has already been abolished and, therefore, reinstatement is impossible,
suffice it to state that the factual findings of the Labor Arbiter belie this. A replacement for private respondent was
appointed two (2) days prior to her termination. If the position had been abolished, there would have been no
necessity for a replacement.
But we agree that because of antagonism generated by this case and the private respondent's own preference for
separation pay, reinstatement would no longer be feasible. It would thus be in the best interest of the parties to
order the payment of separation pay in lieu of reinstatement. Such an amount should not be equivalent to one-half
month salary for every year of service only, as ordered by the Labor Arbiter and affirmed by the NLRC but, in
accordance with our decisions, 32 it must be equivalent to one month salary for every year of service.
Private respondent should be given separation pay and backwages in accordance with the Labor Code. The
backwages, however, are to be computed only for three years from July 12, 1986, the date of her dismissal, without
deduction or qualification, considering that the dismissal was made before the effectivity on March 21, 1989, of R.A.
No. 6715, which provides for the payment of full backwages to employees who are illegally dismissed. 33
WHEREFORE, the petition is DISMISSED. The decision of the National Labor Relations Commission is MODIFIED
by ordering petitioner to pay private respondent separation pay equivalent to one month salary for every year of
service. In all other respects, the decision of the NLRC is AFFIRMED.

2.) G.R. No. 112574 October 8, 1998
MERCIDAR FISHING CORPORATION represented by its President DOMINGO B. NAVAL, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and FERMIN AGAO, JR., respondents.
MENDOZA, J.:
This is a petition for certiorari to set aside the decision, dated August 30, 1993, of the National Labor Relations
Commission dismissing the appeal of petitioner Mercidar Fishing Corporation from the decision of the Labor Arbiter
in NLRC NCR Case No. 09-05084-90, as well as the resolution dated October 25, 1993, of the NLRC denying
reconsideration.
This case originated from a complaint filed on September 20, 1990 by private respondent Fermin Agao, Jr. against
petitioner for illegal dismissal, violation of P.D. No. 851, and non-payment of five days service incentive leave for
1990. Private respondent had been employed as a "bodegero" or ship's quartermaster on February 12, 1988.
He complained that he had been constructively dismissed by petitioner when the latter refused him assignments
aboard its boats after he had reported to work on May 28, 1990. 1
Private respondent alleged that he had been sick and thus allowed to go on leave without pay for one month from
April 28, 1990 but that when he reported to work at the end of such period with a health clearance, he was told to
come back another time as he could not be reinstated immediately. Thereafter, petitioner refused to give him work.
For this reason, private respondent asked for a certificate of employment from petitioner on September 6, 1990.
However, when he came back for the certificate on September 10, petitioner refused to issue the certificate
unless he submitted his resignation. Since private respondent refused to submit such letter unless he was given
separation pay, petitioner prevented him from entering the premises. 2
Petitioner, on the other hand, alleged that it was private respondent who actually abandoned his work. It claimed
that the latter failed to report for work after his leave had expired and was, in fact, absent without leave for three
months until August 28, 1998. Petitioner further claims that, nonetheless, it assigned private respondent to another
vessel, but the latter was left behind on September 1, 1990. Thereafter, private respondent asked for a certificate of
employment on September 6 on the pretext that he was applying to another fishing company. On September 10,
1990, he refused to get the certificate and resign unless he was given separation pay. 3
On February 18, 1992, Labor Arbiter Arthur L. Amansec rendered a decision disposing of the case as follows:
ACCORDINGLY, respondents are ordered to reinstate complainant with backwages, pay him his
13th month pay and incentive leave pay for 1990.
All other claims are dismissed.
SO ORDERED.
Petitioner appealed to the NLRC which, on August 30, 1993, dismissed the appeal for lack of merit. The NLRC
dismissed petitioner's claim that it cannot be held liable for service incentive leave pay by fishermen in its employ as
the latter supposedly are "field personnel" and thus not entitled to such pay under the Labor Code. 4
The NLRC likewise denied petitioner's motion for reconsideration of its decision in its order dated October 25, 1993.
Hence, this petition. Petitioner contends:

THE RESPONDENT COMMISSION PALPABLY ERRED IN RULING AND SUSTAINING THE VIEW
THAT FISHING CREW MEMBERS. LIKE FERMIN AGAO, JR., CANNOT BE CLASSIFIED AS
FIELD PERSONNEL UNDER ARTICLE 82 OF THE LABOR CODE.
II
THE RESPONDENT COMMISSION ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING

TO LACK OF JURISDICTION WHEN IT UPHELD THE FINDINGS OF THE LABOR ARBITER THAT
HEREIN PETITIONER HAD CONSTRUCTIVELY DISMISSED FERMIN AGAO, JR., FROM
EMPLOYMENT.
The petition has no merit.
Art. 82 of the Labor Code provides:
Art. 82. Coverage. — The provisions of this Title [Working Conditions and Rest Periods] shall apply
to employees in all establishments and undertakings whether for profit or not, but not to government
employees, field personnel, members of the family of the employer who are dependent on him for
support, domestic helpers, persons in the personal service of another, and workers who are paid by
results as determined by the Secretary of Labor in appropriate regulations.
x x x x x x x x x
"Field personnel" shall refer to non-agricultural employees who regularly perform their duties away
from the principal place of business or branch office of the employer and whose actual hours of work
in the field cannot be determined with reasonable certainty.
Petitioner argues essentially that since the work of private respondent is performed away from its principal
place of business, it has no way of verifying his actual hours of work on the vessel. It contends that private
respondent and other fishermen in its employ should be classified as "field personnel" who have no statutory right to
service incentive leave pay.
In the case of Union of Pilipro Employees (UFE) v. Vicar, this Court explained the meaning of the phrase
5
"whose actual hours of work in the field cannot be determined with reasonable certainty" in Art. 82 of the
Labor Code, as follows:
Moreover, the requirement that "actual hours of work in the field cannot be determined with
reasonable certainty" must be read in conjunction with Rule IV, Book III of the Implementing
Rules which provides:
Rule IV Holidays with Pay
Sec. 1. Coverage — This rule shall apply to all employees except:
x x x x x x x x x
(e) Field personnel and other employees whose time and performance is
unsupervised by the employer . . . (Emphasis supplied).
While contending that such rule added another element not found in the law (Rollo, p. 13), the
petitioner nevertheless attempted to show that its affected members are not covered by the
abovementioned rule. The petitioner asserts that the company's sales personnel are strictly
supervised as shown by the SOD (Supervisor of the Day) schedule and the company circular
dated March 15, 1984 (Annexes 2 and 3, Rollo, pp. 53-55).

Contrary to the contention of the petitioner, the Court finds that the aforementioned rule did
not add another element to the Labor Code definition of field personnel. The clause "whose
time and performance is unsupervised by the employer" did not amplify but merely
interpreted and expounded the clause "whose actual hours of work in the field cannot be
determined with reasonable certainty." The former clause is still within the scope and
purview of Article 82 which defines field personnel. Hence, in deciding whether or not an
employee's actual working hours in the field can be determined with reasonable certainty,
query must be made as to whether or not such employee's time and performance is
constantly supervised by the employer. 6
Accordingly, it was held in the aforementioned case that salesmen of Nestle Philippines, Inc. were field
personnel:
It is undisputed that these sales personnel start their field work at 8:00 a.m. after having
reported to the office and come back to the office at 4:00 p.m. or 4:30 p.m. if they are Makati-
based.
The petitioner maintains that the period between 8:00 a.m. to 4:00 or 4:30 p.m. comprises the
sales personnel's working hours which can be determined with reasonable certainty.
The Court does not agree. The law requires that the actual hours of work in the field be
reasonably ascertained. The company has no way of determining whether or not these sales
personnel, even if they report to the office before 8:00 a.m. prior to field work and come back
at 4:30 p.m., really spend the hours in between in actual field work. 7
In contrast, in the case at bar, during the entire course of their fishing voyage, fishermen employed by
petitioner have no choice but to remain on board its vessel. Although they perform non-agricultural work
away from petitioner's business offices, the fact remains that throughout the duration of their work they are
under the effective control and supervision of petitioner through the vessel's patron or master as the NLRC
correctly held.
8
Neither did petitioner gravely abuse its discretion in ruling that private respondent had constructively been
dismissed by petitioner. Such factual finding of both the NLRC and the Labor Arbiter is based not only on
the pleadings of the parties but also on a medical certificate of fitness which, contrary to petitioner's claim
private respondent presented when he reported to work on May 28, 1990. As the NLRC held:
9
Anent grounds (a) and (b) of the appeal, the respondent, in a nutshell, would like us to
believe that the Arbiter abused his discretion (or seriously erred in his findings of facts) in
giving credence to the factual version of the complainant. But it is settled that "(W)hen
confronted with conflicting versions of factual matters," the Labor Arbiter has the "discretion
to determine which party deserves credence on the basis of evidence received." [Gelmart
Industries (Phils.), Inc. vs. Leogardo, 155 SCRA 403, 309, L-70544, November 5, 1987]. And
besides, it is settled in this jurisdiction that "to constitute abandonment of position, there
must be concurrence of the intention to abandon and some overt acts from which it may be
inferred that the employee concerned has no more interest in working" (Dagupan Bus Co.,
Inc. vs. NLRC, 191 SCRA 328), and that the filing of the complaint which asked for
reinstatement plus backwages (Record, p. 20) is inconsistent with respondents' defense of
abandonment (Hua Bee Shirt Factory vs. NLRC, 188 SCRA 586). 10
It is trite to say that the factual findings of quasi-judicial bodies are generally binding as long as they are
supported substantially by evidence in the record of the case. This is especially so where, as here, the
11
agency and its subordinate who heard the case in the first instance are in full agreement as to the facts. 12
As regards the labor arbiter's award which was affirmed by respondent NLRC, there is no reason to apply
the rule that reinstatement may not be ordered if, as a result of the case between the parties, their relation is
strained. Even at this late stage of this dispute, petitioner continues to reiterate its offer to reinstate
13
private respondent. 14

WHEREFORE, the petition is DISMISSED.

3.) [G.R. NO. 162813 : February 12, 2007]
FAR EAST AGRICULTURAL SUPPLY, INC. and/or ALEXANDER

UY, Petitioners, v. JIMMY LEBATIQUE and THE HONORABLE COURT OF
APPEALS, Respondents.
DECISION
QUISUMBING, J.:
Before us is a Petition for Review on Certiorari assailing the Decision1 dated

September 30, 2003 of the Court of Appeals in CA-G.R. SP No. 76196 and its
Resolution2 dated March 15, 2004 denying the motion for reconsideration. The
appellate court had reversed the Decision3 dated October 15, 2002 of the
National Labor Relations Commission (NLRC) setting aside the Decision4 dated
June 27, 2001 of the Labor Arbiter.
Petitioner Far East Agricultural Supply, Inc. (Far East) hired on March
4, 1996 private respondent Jimmy Lebatique as truck driver with a daily
wage of P223.50. He delivered animal feeds to the company's clients.
On January 24, 2000, Lebatique complained of nonpayment of overtime work

particularly on January 22, 2000, when he was required to make a second
delivery in Novaliches, Quezon City. That same day, Manuel Uy, brother of Far
East's General Manager and petitioner Alexander Uy, suspended Lebatique
apparently for illegal use of company vehicle. Even so, Lebatique reported for
work the next day but he was prohibited from entering the company premises.
On January 26, 2000, Lebatique sought the assistance of the Department of

Labor and Employment (DOLE) Public Assistance and Complaints Unit
concerning the nonpayment of his overtime pay. According to Lebatique, two
days later, he received a telegram from petitioners requiring him to report for
work. When he did the next day, January 29, 2000, Alexander asked him why
he was claiming overtime pay. Lebatique explained that he had never been
paid for overtime work since he started working for the company. He also told
Alexander that Manuel had fired him. After talking to Manuel, Alexander
terminated Lebatique and told him to look for another job.
On March 20, 2000, Lebatique filed a complaint for illegal dismissal and
nonpayment of overtime pay. The Labor Arbiter found that Lebatique was
illegally dismissed, and ordered his reinstatement and the payment of his full
back wages, 13th month pay, service incentive leave pay, and overtime pay.
The dispositive portion of the decision is quoted herein in full, as follows:
WHEREFORE, we find the termination of complainant illegal. He should thus be
ordered reinstated with full backwages. He is likewise ordered paid his 13th
month pay, service incentive leave pay and overtime pay as computed by the
Computation and Examination Unit as follows:
a) Backwages:
01/25/00 - 10/31/00 = 9.23 mos.
P 223.50 x 26 x 9.23 = P 53,635.53
11/01/00 - 06/26/01 = 7.86 mos.
P 250.00 x 26 x 7.86 = 51,090.00 P 104,725.53
13th Month Pay: 1/12 of P 104,725.53 = 8,727.13
Service Incentive Leave Pay
01/25/00 - 10/31/00 = 9.23 mos.
P 223.50 x 5/12 x 9.23 = P 859.54
11/01/00 - 06/26/01 = 7.86 mos.
P 250.00 x 5/12 x 7.86 = [818.75] 1,678.29 115,130.95
b) Overtime Pay: (3 hours/day)
03/20/97 - 4/30/97 = 1.36 mos.
P 180/8 x 1.25 x 3 x 26 x 1.36 = P 2,983.50
05/01/97 - 02/05/98 = 9.16 mos.
P 185/8 x 1.25 x 3 x 26 x 9.16 = 20,652.94
02/06/98 - 10/30/99 = 20.83 mos.
P 198/8 x 1.25 x 3 x 26 x [20.83] = 50,265.39
10/31/99 - 01/24/00 = 2.80 mos.
P 223.50/8 x 1.25 x 3 x 26 x 2.80 = 7,626.94 81,528.77
TOTAL AWARD P 196,659.72
SO ORDERED.5
On appeal, the NLRC reversed the Labor Arbiter and dismissed the complaint
for lack of merit. The NLRC held that there was no dismissal to speak of since
Lebatique was merely suspended. Further, it found that Lebatique was a field
personnel, hence, not entitled to overtime pay and service incentive leave pay.
Lebatique sought reconsideration but was denied.
Aggrieved, Lebatique filed a petition for certiorari with the Court of Appeals. ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
The Court of Appeals, in reversing the NLRC decision, reasoned that Lebatique
was suspended on January 24, 2000 but was illegally dismissed on January
29, 2000 when Alexander told him to look for another job. It also found that
Lebatique was not a field personnel and therefore entitled to payment of
overtime pay, service incentive leave pay, and 13th month pay.
It reinstated the decision of the Labor Arbiter as follows:
WHEREFORE, premises considered, the decision of the NLRC dated 27

December 2002 is hereby REVERSED and the Labor Arbiter's decision dated
27 June 2001 REINSTATED.
SO ORDERED.6
Petitioners moved for reconsideration but it was denied.
Hence, the instant petition wherein petitioners assign the following errors:
THE COURT OF APPEALS - ERRED IN REVERSING THE DECISION OF THE

NATIONAL LABOR RELATIONS COMMISSION DATED 15 OCTOBER 2002 AND
IN RULING THAT THE PRIVATE RESPONDENT WAS ILLEGALLY DISMISSED.
THE COURT OF APPEALS - ERRED IN REVERSING THE DECISION OF THE

NATIONAL LABOR RELATIONS COMMISSION DATED 15 OCTOBER 2002 AND
IN RULING THAT PRIVATE RESPONDENT IS NOT A FIELD PERSONNEL AND
THER[E]FORE ENTITLED TO OVERTIME PAY AND SERVICE INCENTIVE LEAVE
PAY.
THE COURT OF APPEALS - ERRED IN NOT DISMISSING THE PETITION FOR

CERTIORARI FOR FAILURE OF PRIVATE RESPONDENT TO ATTACH CERTIFIED
TRUE COPIES OF THE QUESTIONED DECISION AND RESOLUTION OF THE
PUBLIC RESPONDENT.7

Simply stated, the principal issues in this case are: (1) whether Lebatique was
illegally dismissed; and (2) whether Lebatique was a field personnel, not
entitled to overtime pay.
Petitioners contend that, (1) Lebatique was not dismissed from service but
merely suspended for a day due to violation of company rules; (2) Lebatique
was not barred from entering the company premises since he never reported
back to work; and (3) Lebatique is estopped from claiming that he was illegally
dismissed since his complaint before the DOLE was only on the nonpayment of
his overtime pay.
Also, petitioners maintain that Lebatique, as a driver, is not entitled to

overtime pay since he is a field personnel whose time outside the company
premises cannot be determined with reasonable certainty. According to
petitioners, the drivers do not observe regular working hours unlike the other
office employees. The drivers may report early in the morning to make their
deliveries or in the afternoon, depending on the production of animal feeds
and the traffic conditions. Petitioners also aver that Lebatique worked for less
than eight hours a day.8
Lebatique for his part insists that he was illegally dismissed and was not
merely suspended. He argues that he neither refused to work nor abandoned
his job. He further contends that abandonment of work is inconsistent with the
filing of a complaint for illegal dismissal. He also claims that he is not a field
personnel, thus, he is entitled to overtime pay and service incentive leave pay.
After consideration of the submission of the parties, we find that the petition
lacks merit. We are in agreement with the decision of the Court of Appeals
sustaining that of the Labor Arbiter.
It is well settled that in cases of illegal dismissal, the burden is on the

employer to prove that the termination was for a valid cause.9 In this case,
petitioners failed to discharge such burden. Petitioners aver that Lebatique was
merely suspended for one day but he abandoned his work thereafter. To
constitute abandonment as a just cause for dismissal, there must be: (a)
absence without justifiable reason; and (b) a clear intention, as manifested by
some overt act, to sever the employer-employee relationship.10
The records show that petitioners failed to prove that Lebatique abandoned his
job. Nor was there a showing of a clear intention on the part of Lebatique to
sever the employer-employee relationship. When Lebatique was verbally told
by Alexander Uy, the company's General Manager, to look for another job,
Lebatique was in effect dismissed. Even assuming earlier he was merely

suspended for illegal use of company vehicle, the records do not show that he
was afforded the opportunity to explain his side. It is clear also from the
sequence of the events leading to Lebatique's dismissal that it was Lebatique's
complaint for nonpayment of his overtime pay that provoked the management
to dismiss him, on the erroneous premise that a truck driver is a field
personnel not entitled to overtime pay.
An employee who takes steps to protest his layoff cannot by any stretch of
imagination be said to have abandoned his work and the filing of the complaint
is proof enough of his desire to return to work, thus negating any suggestion
of abandonment.11 A contrary notion would not only be illogical but also
absurd.
It is immaterial that Lebatique had filed a complaint for nonpayment of

overtime pay the day he was suspended by management's unilateral act. What
matters is that he filed the complaint for illegal dismissal on March 20, 2000,
after he was told not to report for work, and his filing was well within the
prescriptive period allowed under the law.
On the second issue, Article 82 of the Labor Code is decisive on the question of
who are referred to by the term "field personnel." It provides, as follows:
ART. 82. Coverage. - The provisions of this title [Working Conditions and

Rest Periods] shall apply to employees in all establishments and undertakings
whether for profit or not, but not to government employees, managerial
employees, field personnel, members of the family of the employer who are
dependent on him for support, domestic helpers, persons in the personal
service of another, and workers who are paid by results as determined by the
Secretary of Labor in appropriate regulations.
x x x
"Field personnel" shall refer to non-agricultural employees who regularly

perform their duties away from the principal place of business or branch office
of the employer and whose actual hours of work in the field cannot be
determined with reasonable certainty.
In Auto Bus Transport Systems, Inc. v. Bautista,12 this Court emphasized that

the definition of a "field personnel" is not merely concerned with the
location where the employee regularly performs his duties but also
with the fact that the employee's performance is unsupervised by the
employer. We held that field personnel are those who regularly
perform their duties away from the principal place of business of the
employer and whose actual hours of work in the field cannot be
determined with reasonable certainty. Thus, in order to determine
whether an employee is a field employee, it is also necessary to
ascertain if actual hours of work in the field can be determined with
reasonable certainty by the employer. In so doing, an inquiry must be
made as to whether or not the employee's time and performance are
constantly supervised by the employer.13
As correctly found by the Court of Appeals, Lebatique is not a field

personnel as defined above for the following reasons: (1) company
drivers, including Lebatique, are directed to deliver the goods at a
specified time and place; (2) they are not given the discretion to solicit,
select and contact prospective clients; and (3) Far East issued a directive
that company drivers should stay at the client's premises during truck-
ban hours which is from 5:00 to 9:00 a.m. and 5:00 to 9:00 p.m.14 Even
petitioners admit that the drivers can report early in the morning, to
make their deliveries, or in the afternoon, depending on the
production of animal feeds.15 Drivers, like Lebatique, are under the
control and supervision of management officers. Lebatique, therefore,
is a regular employee whose tasks are usually necessary and desirable
to the usual trade and business of the company. Thus, he is entitled to
the benefits accorded to regular employees of Far East, including
overtime pay and service incentive leave pay.
Note that all money claims arising from an employer-employee relationship

shall be filed within three years from the time the cause of action accrued;
otherwise, they shall be forever barred.16 Further, if it is established that the
benefits being claimed have been withheld from the employee for a period
longer than three years, the amount pertaining to the period beyond the
three-year prescriptive period is therefore barred by prescription. The amount
that can only be demanded by the aggrieved employee shall be limited to the
amount of the benefits withheld within three years before the filing of the
complaint.17
Lebatique timely filed his claim for service incentive leave pay, considering
that in this situation, the prescriptive period commences at the time he was
terminated.18 On the other hand, his claim regarding nonpayment of overtime
pay since he was hired in March 1996 is a different matter. In the case of
overtime pay, he can only demand for the overtime pay withheld for the
period within three years preceding the filing of the complaint on March 20,
2000. However, we find insufficient the selected time records presented by
petitioners to compute properly his overtime pay. The Labor Arbiter should
have required petitioners to present the daily time records, payroll, or other

documents in management's control to determine the correct overtime pay
due Lebatique.
WHEREFORE, the petition is DENIED for lack of merit. The Decision dated

September 30, 2003 of the Court of Appeals in CA-G.R. SP No. 76196 and
itsResolutiondated March 15, 2004 are AFFIRMED with MODIFICATION to
the effect that the case is hereby REMANDED to the Labor Arbiter for further
proceedings to determine the exact amount of overtime pay and other
monetary benefits due Jimmy Lebatique which herein petitioners should pay
without further delay.

4.) G.R. No. 123938 May 21, 1998
LABOR CONGRESS OF THE PHILIPPINES (LCP) for and in behalf of its members, ANA MARIE OCAMPO,
MARY INTAL, ANNABEL CARESO, MARLENE MELQIADES, IRENE JACINTO, NANCY GARCIA, IMELDA
SARMIENTO, LENITA VIRAY, GINA JACINTO, ROSEMARIE DEL ROSARIO, CATHERINE ASPURNA, WINNIE
PENA, VIVIAN BAA, EMILY LAGMAN, LILIAN MARFIL, NANCY DERACO, JANET DERACO, MELODY JACINTO,
CAROLYN DIZON, IMELDA MANALOTO, NORY VIRAY, ELIZA SALAZAR, GIGI MANALOTO, JOSEFINA
BASILIO, MARY ANN MAYATI, ZENAIDA GARCIA, MERLY CANLAS, ERLINDA MANALANG, ANGELINA
QUIAMBAO, LANIE GARCIA, ELVIRA PIEDRA, LOURDES PANLILIO, LUISA PANLILIO, LERIZA PANLILIO,
ALMA CASTRO, ALDA DAVID, MYRA T. OLALIA, MARIFE PINLAC, NENITA DE GUZMAN, JULIE GACAD,
EVELYN MANALO, NORA PATIO, JANETH CARREON, ROWENA MENDOZA, ROWENA MANALO, LENY GARCIA,
FELISISIMA PATIO, SUSANA SALOMON, JOYDEE LANSANGAN, REMEDIOS AGUAS, JEANIE LANSANGAN,
ELIZABETH MERCADO, JOSELYN MANALESE, BERNADETH RALAR, LOLITA ESPIRITU, AGNES SALAS,
VIRGINIA MENDIOLA, GLENDA SALITA, JANETH RALAR, ERLINDA BASILIO, CORA PATIO, ANTONIA
CALMA, AGNES CARESO, GEMMA BONUS, MARITESS OCAMPO, LIBERTY GELISANGA, JANETH MANARANG,
AMALIA DELA CRUZ, EVA CUEVAS, TERESA MANIAGO, ARCELY PEREZ, LOIDA BIE, ROSITA CANLAS,
ANALIZA ESGUERRA, LAILA MANIAGO, JOSIE MANABAT, ROSARIO DIMATULAC, NYMPA TUAZON, DAIZY
TUASON, ERLINDA NAVARRO, EMILY MANARANG, EMELITA CAYANAN, MERCY CAYANAN, LUZVIMINDA
CAYANAN, ANABEL MANALO, SONIA DIZON, ERNA CANLAS, MARIAN BENEDICTA, DOLORES DOLETIN,
JULIE DAVID, GRACE VILLANUEVA, VIRGINIA MAGBAG, CORAZON RILLION, PRECY MANALILI, ELENA
RONOZ, IMELDA MENDOZA, EDNA CANLAS and ANGELA CANLAS, Petitioners, vs. NATIONAL LABOR
RELATIONS COMMISSION, EMPIRE FOOD PRODUCTS, its Proprietor/President & Manager, MR. GONZALO
KEHYENG and MRS. EVELYN KEHYENG, Respondents.
DAVIDE, JR., J.:
In this special civil action for certiorari under Rule 65, petitioners seek to reverse the 29 March 1995 resolution 1 of
the National Labor Relations Commission (NLRC) in NLRC RAB III Case No. 01-1964-91 which affirmed the
Decision 2 of Labor Arbiter Ariel C. Santos dismissing their complaint for utter lack of merit.
The antecedents of this case, as summarized by the Office of the Solicitor General in its Manifestation and Motion in
Lieu of Comment, 3 are as follows:
The 99 persons named as petitioners in this proceeding were rank-and-file employees of respondent Empire Food
Products, which hired them on various dates (Paragraph 1, Annex "A" of Petition, Annex "B;" Page 2, Annex "F" of
Petition).
Petitioners filed against private respondents a complaint for payment of money claim[s] and for violation of labor
standard[s] laws (NLRC Case No. RAB-111-10-1817-90). They also filed a petition for direct certification of petitioner
Labor Congress of the Philippines as their bargaining representative (Case No. R0300-9010-RU-005).
On October 23, 1990, petitioners represented by LCP President Benigno B. Navarro, Sr. and private respondents
Gonzalo Kehyeng and Evelyn Kehyeng in behalf of Empire Food Products, Inc. entered into a Memorandum of
Agreement which provided, among others, the following:
1. That in connection with the pending Petition for Direct Certification filed by the Labor Congress with the DOLE,
Management of the Empire Food Products has no objection [to] the direct certification of the LCP Labor Congress and
is now recognizing the Labor Congress of the Philippines (LCP) and its Local Chapter as the SOLE and EXCLUSIVE
Bargaining Agent and Representative for all rank and file employees of the Empire Food Products regarding "WAGES,
HOURS Of WORK, AND OTHER TERMS AND CONDITIONS OF EMPLOYMENT;"
2. That with regards [sic] to NLRC CASE NO. RAB-III-10-1817-90 pending with the NLRC parties jointly and mutually
agreed that the issues thereof, shall be discussed by the parties and resolve[d] during the negotiation of the Collective
Bargaining Agreement;
3. That Management of the Empire Food Products shall make the proper adjustment of the Employees Wages within
fifteen (15) days from the signing of this Agreement and further agreed to register all the employees with the SSS;

4. That Employer, Empire Food Products thru its Management agreed to deduct thru payroll deduction UNION DUES
and other Assessment[s] upon submission by the LCP Labor Congress individual Check-Off Authorization[s] signed by
the Union Members indicating the amount to be deducted and further agreed all deduction[s] made representing
Union Dues and Assessment[s] shall be remitted immediately to the LCP Labor Congress Treasurer or authorized
representative within three (3) or five (5) days upon deductions [sic], Union dues not deducted during the period due,
shall be refunded or reimbursed by the Employer/Management. Employer/Management further agreed to deduct
Union dues from non-union members the same amount deducted from union members without need of individual
Check-Off Authorizations [for] Agency Fee;
5. That in consideration [of] the foregoing covenant, parties jointly and mutually agreed that NLRC CASE NO. RAB-III-
10-1817-90 shall be considered provisionally withdrawn from the Calendar of the National Labor Relations
Commission (NLRC), while the Petition for direct certification of the LCP Labor Congress parties jointly move for the
direct certification of the LCP Labor Congress;
6. That parties jointly and mutually agreed that upon signing of this Agreement, no Harassments [sic], Threats,
Interferences [sic] of their respective rights under the law, no Vengeance or Revenge by each partner nor any act of
ULP which might disrupt the operations of the business;
7. Parties jointly and mutually agreed that pending negotiations or formalization of the propose[d] CBA, this
Memorandum of Agreement shall govern the parties in the exercise of their respective rights involving the
Management of the business and the terms and condition[s] of employment, and whatever problems and grievances
may arise by and between the parties shall be resolved by them, thru the most cordial and good harmonious
relationship by communicating the other party in writing indicating said grievances before taking any action to another
forum or government agencies;
8. That parties [to] this Memorandum of Agreement jointly and mutually agreed to respect, abide and comply with all
the terms and conditions hereof. Further agreed that violation by the parties of any provision herein shall constitute
an act of ULP. (Annex "A" of Petition).
In an Order dated October 24, 1990, Mediator Arbiter Antonio Cortez approved the memorandum of agreement and
certified LCP "as the sole and exclusive bargaining agent among the rank-and-file employee of Empire Food Products
for purposes of collective bargaining with respect to wages, hours of work and other terms and conditions of
employment" (Annex "B" of Petition).
On November 9, 1990, petitioners through LCP President Navarro submitted to private respondents a proposal for
collective bargaining (Annex "C" of Petition).
On January 23, 1991, petitioners filed a complaint docketed as NLRC Case No. RAB-III-01-1964-91 against private
respondents for:
a. Unfair Labor Practice by way of Illegal Lockout and/or Dismissal;
b. Union busting thru Harassments [sic], threats, and interfering with the rights of employees to self-organization;
c. Violation of the Memorandum of Agreement dated October 23, 1990;
d. Underpayment of Wages in violation of R.A. No. 6640 and R.A. No. 6727, such as Wages promulgated by the
Regional Wage Board;
e. Actual, Moral and Exemplary Damages. (Annex "D" of Petition)
After the submission by the parties of their respective position papers and presentation of testimonial evidence, Labor
Arbiter Ariel C. Santos absolved private respondents of the charges of unfair labor practice, union busting, violation of
the memorandum of agreement, underpayment of wages and denied petitioners' prayer for actual, moral and
exemplary damages. Labor Arbiter Santos, however, directed the reinstatement of the individual complainants:
The undersigned Labor Arbiter is not oblivious to the fact that respondents have violated a cardinal rule in every
establishment that a payroll and other papers evidencing hours of work, payments, etc. shall always be maintained
and subjected to inspection and visitation by personnel of the Department of Labor and Employment. As such penalty,
respondents should not escape liability for this technicality, hence, it is proper that all individual complainants except

those who resigned and executed quitclaim[s] and releases prior to the filing of this complaint should be reinstated to
their former position[s] with the admonition to respondents that any harassment, intimidation, coercion or any form
of threat as a result of this immediately executory reinstatement shall be dealt with accordingly.
SO ORDERED. (Annex "G" of petition)
On appeal, the National Labor Relations Commission vacated the Decision dated April 14, 1972 [sic] and remanded
the case to the Labor Arbiter for further proceedings for the following reasons:
The Labor Arbiter, through his decision, noted that ". . . complainant did not present any single witness while
respondent presented four (4) witnesses in the persons of Gonzalo Kehyeng, Orlando Cairo, Evelyn Kehyeng and
Elvira Bulagan . . ." (p. 183, Records), that ". . . complainant before the National Labor Relations Commission must
prove with definiteness and clarity the offense charged. . . ." (Record, p. 183); that ". . . complainant failed to specify
under what provision of the Labor Code particularly Art. 248 did respondents violate so as to constitute unfair labor
practice . . ." (Record, p. 183); that "complainants failed to present any witness who may describe in what manner
respondents have committed unfair labor practice . . ." (Record, p. 185); that ". . . complainant LCP failed to present
anyone of the so-called 99 complainants in order to testify who committed the threats and intimidation . . ." (Record,
p. 185).
Upon review of the minutes of the proceedings on record, however, it appears that complainant presented witnesses,
namely, BENIGNO NAVARRO, JR. (28 February 1991, RECORD, p. 91; 8 March 1991, RECORD, p. 92, who adopted
its POSITION PAPER AND CONSOLIDATED AFFIDAVIT, as Exhibit "A" and the annexes thereto as Exhibit "B", "B-1" to
"B-9", inclusive. Minutes of the proceedings on record show that complainant further presented other witnesses,
namely: ERLINDA BASILIO (13 March 1991, RECORD, p. 93; LOURDES PANTILLO, MARIFE PINLAC, LENIE GARCIA
(16 April 1991, Record, p. 96, see back portion thereof ; 2 May 1991, Record, p. 102; 16 May 1991, Record, p. 103,
11 June 1991, Record, p. 105). Formal offer of Documentary and Testimonial Evidence was made by complainant on
June 24, 1991 (Record, p. 106-109)
The Labor Arbiter must have overlooked the testimonies of some of the individual complainants which are now on
record. Other individual complainants should have been summoned with the end in view of receiving their testimonies.
The complainants should be afforded the time and opportunity to fully substantiate their claims against the
respondents. Judgment should be rendered only based on the conflicting positions of the parties. The Labor Arbiter is
called upon to consider and pass upon the issues of fact and law raised by the parties.
Toward this end, therefore, it is Our considered view [that] the case should be remanded to the Labor Arbiter of origin
for further proceedings. (Annex "H" of Petition)
In a Decision dated July 27, 1994, Labor Arbiter Santos made the following determination:
Complainants failed to present with definiteness and clarity the particular act or acts constitutive of unfair labor
practice.
It is to be borne in mind that a declaration of unfair labor practice connotes a finding of prima facie evidence of
probability that a criminal offense may have been committed so as to warrant the filing of a criminal information
before the regular court. Hence, evidence which is more than a scintilla is required in order to declare
respondents/employers guilty of unfair labor practice. Failing in this regard is fatal to the cause of complainants.
Besides, even the charge of illegal lockout has no leg to stand on because of the testimony of respondents through
their guard Orlando Cairo (TSN, July 31, 1991 hearing; p. 5-35) that on January 21, 1991, complainants refused and
failed to report for work, hence guilty of abandoning their post without permission from respondents. As a result of
complainants['] failure to report for work, the cheese curls ready for repacking were all spoiled to the prejudice of
respondents. Under cross-examination, complainants failed to rebut the authenticity of respondents' witness
testimony.
As regards the issue of harassments [sic], threats and interference with the rights of employees to self-organization
which is actually an ingredient of unfair labor practice, complainants failed to specify what type of threats or
intimidation was committed and who committed the same. What are the acts or utterances constitutive of
harassments [sic] being complained of? These are the specifics which should have been proven with definiteness and
clarity by complainants who chose to rely heavily on its position paper through generalizations to prove their case.
Insofar as violation of [the] Memorandum of Agreement dated October 23, 1990 is concerned, both parties agreed
that:

2 - That with regards [sic] to the NLRC Case No. RAB III-10-1817-90 pending with the NLRC, parties jointly and
mutually agreed that the issues thereof shall be discussed by the parties and resolve[d] during the negotiation of the
CBA.
The aforequoted provision does not speak of [an] obligation on the part of respondents but on a resolutory condition
that may occur or may not happen. This cannot be made the basis of an imposition of an obligation over which the
National Labor Relations Commission has exclusive jurisdiction thereof.
Anent the charge that there was underpayment of wages, the evidence points to the contrary. The
enumeration of complainants' wages in their consolidated Affidavits of merit and position paper which
implies underpayment has no leg to stand on in the light of the fact that complainants' admission that
they are piece workers or paid on a pakiao [basis] i.e. a certain amount for every thousand pieces of
cheese curls or other products repacked. The only limitation for piece workers or pakiao workers is that they
should receive compensation no less than the minimum wage for an eight (8) hour work [sic]. And compliance
therewith was satisfactorily explained by respondent Gonzalo Kehyeng in his testimony (TSN, p. 12-30) during the
July 31, 1991 hearing. On cross-examination, complainants failed to rebut or deny Gonzalo Kehyeng's testimony that
complainants have been even receiving more than the minimum wage for an average workers [sic]. Certainly, a lazy
worker earns less than the minimum wage but the same cannot be attributable to respondents but to the lazy
workers.
Finally, the claim for moral and exemplary damages has no leg to stand on when no malice, bad faith or fraud was
ever proven to have been perpetuated by respondents.
WHEREFORE, premises considered, the complaint is hereby DISMISSED for utter lack of merit. (Annex "I" of
Petition). 4
On appeal, the NLRC, in its Resolution dated 29 March 1995, 5 affirmed in toto the decision of Labor Arbiter Santos. In
so doing, the NLRC sustained the Labor Arbiter's findings that: (a) there was a dearth of evidence to prove the
existence of unfair labor practice and union busting on the part of private respondents; (b) the agreement of 23
October 1990 could not be made the basis of an obligation within the ambit of the NLRC's jurisdiction, as the
provisions thereof, particularly Section 2, spoke of a resolutory condition which could or could not happen; (c) the
claims for underpayment of wages were without basis as complainants were admittedly "pakiao" workers and paid on
the basis of their output subject to the lone limitation that the payment conformed to the minimum wage rate for an
eight-hour workday; and (d) petitioners were not underpaid.
Their motion for reconsideration having been denied by the NLRC in its Resolution of 31 October 1995, 6 petitioners
filed the instant special civil action for certiorari raising the following issues:
WHETHER OR NOT THE PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION GRAVELY ABUSED ITS
DISCRETION WHEN IT DISREGARDED OR IGNORED NOT ONLY THE EVIDENCE FAVORABLE TO HEREIN PETITIONERS,
APPLICABLE JURISPRUDENCE BUT ALSO ITS OWN DECISIONS AND THAT OF THIS HONORABLE HIGHEST TRIBUNAL
WHICH [WAS] TANTAMOUNT NOT ONLY TO THE DEPRIVATION OF PETITIONERS' RIGHT TO DUE PROCESS BUT
WOULD RESULT [IN] MANIFEST INJUSTICE.
II
WHETHER OR NOT THE PUBLIC RESPONDENT GRAVELY ABUSED ITS DISCRETION WHEN IT DEPRIVED THE
PETITIONERS OF THEIR CONSTITUTIONAL RIGHT TO SELF-ORGANIZATION, SECURITY OF TENURE, PROTECTION TO
LABOR, JUST AND HUMANE CONDITIONS OF WORK AND DUE PROCESS.
III
WHETHER OR NOT THE PETITIONERS WERE ILLEGALLY EASED OUT [OF] OR CONSTRUCTIVELY DISMISSED FROM
THEIR ONLY MEANS OF LIVELIHOOD.
IV

WHETHER OR NOT PETITIONERS SHOULD BE REINSTATED FROM THE DATE OF THEIR DISMISSAL UP TO THE TIME
OF THEIR REINSTATEMENT, WITH BACKWAGES, STATUTORY BENEFITS, DAMAGES AND ATTORNEY'S FEES. 7
We required respondents to file their respective Comments.
In their Manifestation and Comment, private respondents asserted that the petition was filed out of time. As
petitioners admitted in their Notice to File Petition for Review on Certiorari that they received a copy of the resolution
(denying their motion for reconsideration) on 13 December 1995, they had only until 29 December 1995 to file the
petition. Having failed to do so, the NLRC thus already entered judgment in private respondents' favor.
In their Reply, petitioners averred that Mr. Navarro, a non-lawyer who filed the notice to file a petition for review on
their behalf, mistook which reglementary period to apply. Instead of using the "reasonable time" criterion
for certiorari under Rule 65, he used the 15-day period for petitions for review on certiorari under Rule 45. They
hastened to add that such was a mere technicality which should not bar their petition from being decided on the
merits in furtherance of substantial justice, especially considering that respondents neither denied nor contradicted
the facts and issues raised in the petition.
In its Manifestation and Motion in Lieu of Comment, the Office of the Solicitor General (OSG) sided with petitioners. It
pointed out that the Labor Arbiter, in finding that petitioners abandoned their jobs, relied solely on the testimony of
Security Guard Rolando Cairo that petitioners refused to work on 21 January 1991, resulting in the spoilage of cheese
curls ready for repacking. However, the OSG argued, this refusal to report for work for a single day did not constitute
abandonment, which pertains to a clear, deliberate and unjustified refusal to resume employment, and not mere
absence. In fact, the OSG stressed, two days after allegedly abandoning their work, petitioners filed a complaint
for, inter alia, illegal lockout or illegal dismissal. Finally, the OSG questioned the lack of explanation on the part of
Labor Arbiter Santos as to why he abandoned his original decision to reinstate petitioners.
In view of the stand of the OSG, we resolved to require the NLRC to file its own Comment.
In its Comment, the NLRC invokes the general rule that factual findings of an administrative agency bind a reviewing
court and asserts that this case does not fall under the exceptions. The NLRC further argues that grave abuse of
discretion may not be imputed to it, as it affirmed the factual findings and legal conclusions of the Labor Arbiter only
after carefully reviewing, weighing and evaluating the evidence in support thereof, as well as the pertinent provisions
of law and jurisprudence.
In their Reply, petitioners claim that the decisions of the NLRC and the Labor Arbiter were not supported by
substantial evidence; that abandonment was not proved; and that much credit was given to self-serving statements of
Gonzalo Kehyeng, owner of Empire Foods, as to payment of just wages.
On 7 July 1997, we gave due course to the petition and required the parties to file their respective memoranda.
However, only petitioners and private respondents filed their memoranda, with the NLRC merely adopting its
Comment as its Memorandum.
We find for petitioners.
Invocation of the general rule that factual findings of the NLRC bind this Court is unavailing under the circumstances.
Initially, we are unable to discern any compelling reason justifying the Labor Arbiter's volte face from his 14 April
1992 decision reinstating petitioners to his diametrically opposed 27 July 1994 decision, when in both instances, he
had before him substantially the same evidence. Neither do we find the 29 March 1995 NLRC resolution to have
sufficiently discussed the facts so as to comply with the standard of substantial evidence. For one thing, the NLRC
confessed its reluctance to inquire into the veracity of the Labor Arbiter's factual findings, staunchly declaring that it
was "not about to substitute [its] judgment on matters that are within the province of the trier of facts." Yet, in the 21
July 1992 NLRC resolution, 8 it chastised the Labor Arbiter for his errors both in judgment and procedure; for which
reason it remanded the records of the case to the Labor Arbiter for compliance with the pronouncements therein.
What cannot escape from our attention is that the Labor Arbiter did not heed the observations and pronouncements of
the NLRC in its resolution of 21 July 1992, neither did he understand the purpose of the remand of the records to him.
In said resolution, the NLRC summarized the grounds for the appeal to be:
1. that there is a prima facie evidence of abuse of discretion and acts of gross incompetence committed by the Labor
Arbiter in rendering the decision.

2. that the Labor Arbiter in rendering the decision committed serious errors in the findings of facts.
After which, the NLRC observed and found:
Complainant alleged that the Labor Arbiter disregarded the testimonies of the 99 complainants who submitted their
Consolidated Affidavit of Merit and Position Paper which was adopted as direct testimonies during the hearing and
cross-examined by respondents' counsel.
The Labor Arbiter, through his decision, noted that ". . . complainant did not present any single witness while
respondent presented four (4) witnesses in the persons of Gonzalo Kehyeng, Orlando Cairo, Evelyn Kehyeng and
Elvira Bulagan . . ." (Records, p. 183), that ". . . complainant before the National Labor Relations Commission must
prove with definiteness and clarity the offense charged. . . ." (Record, p. 183; that ". . . complainant failed to specify
under what provision of the Labor Code particularly Art. 248 did respondents violate so as to constitute unfair labor
practice . . ." (Record, p. 183); that "complainants failed to present any witness who may describe in what manner
respondents have committed unfair labor practice . . ." (Record, p. 185); that ". . . complainant a [sic] LCP failed to
present anyone of the so called 99 complainants in order to testify who committed the threats and intimidation . . ."
(Record, p.185).
Upon review of the minutes of the proceedings on record, however, it appears that complainant presented witnesses,
namely BENIGNO NAVARRO, JR. (28 February 1991, RECORD, p. 91; 8 March 1991, RECORD, p. 92), who adopted its
POSITION PAPER AND CONSOLIDATED AFFIDAVIT as Exhibit A and the annexes thereto as Exhibit B, B-1 to B-9,
inclusive. Minutes of the proceedings on record show that complainant further presented other witnesses, namely:
ERLINDA BASILIO (13 March 1991, RECORD, p. 93; LOURDES PANTILLO, MARIFE PINLAC, LENI GARCIA (16 April
1991, Record, p. 96, see back portion thereof; 2 May 1991, Record, p. 102; 16 May 1991, Record, p. 103; 11 June
1991, Record, p. 105). Formal offer of Documentary and Testimonial Evidence was made by the complainant on June
24, 1991 (Record, p.106-109).
The Labor Arbiter must have overlooked the testimonies of some of the individual complainants which are now on
record. Other individual complainants should have been summoned with the end in view of receiving their testimonies.
The complainants should [have been] afforded the time and opportunity to fully substantiate their claims against the
respondents. Judgment should [have been] rendered only based on the conflicting positions of the parties. The Labor
Arbiter is called upon to consider and pass upon the issues of fact and law raised by the parties.
Toward this end, therefore, it is Our considered view the case should be remanded to the Labor Arbiter of origin for
further proceedings.
Further, We take note that the decision does not contain a dispositive portion or fallo. Such being the case, it may be
well said that the decision does not resolve the issues at hand. On another plane, there is no portion of the decision
which could be carried out by way of execution.
It may be argued that the last paragraph of the decision may be categorized as the dispositive portion thereof:
xxx xxx xxx
The undersigned Labor Arbiter is not oblivious [to] the fact that respondents have violated a cardinal rule in every
establishment that a payroll and other papers evidencing hour[s] of work, payment, etc. shall always be maintained
and subjected to inspection and visitation by personnel of the Department of Labor and Employment. As such penalty,
respondents should not escape liability for this technicality, hence, it is proper that all the individual complainants
except those who resigned and executed quitclaim[s] and release[s] prior to the filing of this complaint should be
reinstated to their former position with the admonition to respondents that any harassment, intimidation, coercion or
any form of threat as a result of this immediately executory reinstatement shall be dealt with accordingly.
SO ORDERED.
It is Our considered view that even assuming arguendo that the respondents failed to maintain their payroll and other
papers evidencing hours of work, payment etc., such circumstance, standing alone, does not warrant the directive to
reinstate complainants to their former positions. It is [a] well settled rule that there must be a finding of illegal
dismissal before reinstatement be mandated.

In this regard, the LABOR ARBITER is hereby directed to include in his clarificatory decision, after receiving evidence,
considering and resolving the same, the requisite dispositive portion. 9
Apparently, the Labor Arbiter perceived that if not for petitioners, he would not have fallen victim to this stinging
rebuke at the hands of the NLRC. Thus does it appear to us that the Labor Arbiter, in concluding in his 27 July 1994
Decision that petitioners abandoned their work, was moved by, at worst, spite, or at best, lackadaisically glossed over
petitioner's evidence. On this score, we find the following observations of the OSG most persuasive:
In finding that petitioner employees abandoned their work, the Labor Arbiter and the NLRC relied on the testimony of
Security Guard Rolando Cairo that on January 21, 1991, petitioners refused to work. As a result of their failure to
work, the cheese curls ready for repacking on said date were spoiled.
The failure to work for one day, which resulted in the spoilage of cheese curls does not amount to abandonment of
work. In fact two (2) days after the reported abandonment of work or on January 23, 1991, petitioners filed a
complaint for, among others, unfair labor practice, illegal lockout and/or illegal dismissal. In several cases, this
Honorable Court held that "one could not possibly abandon his work and shortly thereafter vigorously pursue his
complaint for illegal dismissal (De Ysasi III v. NLRC, 231 SCRA 173; Ranara v. NLRC, 212 SCRA 631; Dagupan Bus
Co. v. NLRC, 191 SCRA 328; Atlas Consolidated Mining and Development Corp. v. NLRC, 190 SCRA 505; Hua Bee
Shirt Factory v. NLRC, 186 SCRA 586; Mabaylan v. NLRC, 203 SCRA 570 and Flexo Manufacturing v. NLRC, 135 SCRA
145). In Atlas Consolidated, supra, this Honorable Court explicitly stated:
It would be illogical for Caballo, to abandon his work and then immediately file an action seeking for his
reinstatement. We can not believe that Caballo, who had worked for Atlas for two years and ten months, would simply
walk away from his job unmindful of the consequence of his act. i.e. the forfeiture of his accrued employment
benefits. In opting to finally to [sic] contest the legality of his dismissal instead of just claiming his separation pay and
other benefits, which he actually did but which proved to be futile after all, ably supports his sincere intention to
return to work, thus negating Atlas' stand that he had abandoned his job.
In De Ysasi III v. NLRC (supra), this Honorable Court stressed that it is the clear, deliberate and unjustified refusal to
resume employment and not mere absence that constitutes abandonment. The absence of petitioner employees for
one day on January 21, 1991 as testified [to] by Security Guard Orlando Cairo did not constitute abandonment.
In his first decision, Labor Arbiter Santos expressly directed the reinstatement of the petitioner employees and
admonished the private respondents that "any harassment, intimidation, coercion or any form of threat as a result of
this immediately executory reinstatement shall be dealt with accordingly.
In his second decision, Labor Arbiter Santos did not state why he was abandoning his previous decision directing the
reinstatement of petitioner employees.
By directing in his first decision the reinstatement of petitioner employees, the Labor Arbiter impliedly held that they
did not abandon their work but were not allowed to work without just cause.
That petitioner employees are "pakyao" or piece workers does not imply that they are not regular
employees entitled to reinstatement. Private respondent Empire Food Products, Inc. is a food and fruit
processing company. In Tabas v. California Manufacturing Co., Inc. (169 SCRA 497), this Honorable Court
held that the work of merchandisers of processed food, who coordinate with grocery stores and other
outlets for the sale of the processed food is necessary in the day-to-day operation[s] of the company.
With more reason, the work of processed food repackers is necessary in the day-to-day operation[s] of
respondent Empire Food Products. 10
It may likewise be stressed that the burden of proving the existence of just cause for dismissing an employee, such as
abandonment, rests on the employer, 11 a burden private respondents failed to discharge.
Private respondents, moreover, in considering petitioners' employment to have been terminated by abandonment,
violated their rights to security of tenure and constitutional right to due process in not even serving them with a
written notice of such termination. 12 Section 2, Rule XIV, Book V of the Omnibus Rules Implementing the Labor Code
provides:
Sec. 2. Notice of Dismissal - Any employer who seeks to dismiss a worker shall furnish him a written notice stating the
particular acts or omission constituting the grounds for his dismissal. In cases of abandonment of work, the notice
shall be served at the worker's last known address.
Petitioners are therefore entitled to reinstatement with full back wages pursuant to Article 279 of the Labor Code, as
amended by R.A. No. 6715. Nevertheless, the records disclose that taking into account the number of employees
involved, the length of time that has lapsed since their dismissal, and the perceptible resentment and enmity between
petitioners and private respondents which necessarily strained their relationship, reinstatement would be impractical
and hardly promotive of the best interests of the parties. In lieu of reinstatement then, separation pay at the rate of
one month for every year of service, with
a fraction of at least six (6) months of service considered as one (1) year, is in order. 13
That being said, the amount of back wages to which each petitioner is entitled, however, cannot be fully settled at this
time. Petitioners, as piece-rate workers having been paid by the piece, 14 there is need to determine the varying
degrees of production and days worked by each worker. Clearly, this issue is best left to the National Labor Relations
Commission.
As to the other benefits, namely, holiday pay, premium pay, 13th month pay and service incentive leave
which the labor arbiter failed to rule on but which petitioners prayed for in their complaint, 15 we hold that
petitioners are so entitled to these benefits. Three (3) factors lead us to conclude that petitioners, although
piece-rate workers, were regular employees of private respondents. First, as to the nature of petitioners'
tasks, their job of repacking snack food was necessary or desirable in the usual business of private
respondents, who were engaged in the manufacture and selling of such food products; second, petitioners
worked for private respondents throughout the year, their employment not having been dependent on a
specific project or season; and third, the length of time 16 that petitioners worked for private respondents.
Thus, while petitioners' mode of compensation was on a "per piece basis," the status and nature of their
employment was that of regular employees.
The Rules Implementing the Labor Code exclude certain employees from receiving benefits such as nighttime pay,
holiday pay, service incentive leave 17 and 13th month pay, 18 inter alia, "field personnel and other employees whose
time and performance is unsupervised by the employer, including those who are engaged on task or contract basis,
purely commission basis, or those who are paid a fixed amount for performing work irrespective of the time consumed
in the performance thereof." Plainly, petitioners as piece-rate workers do not fall within this group. As
mentioned earlier, not only did petitioners labor under the control of private respondents as their
employer, likewise did petitioners toil throughout the year with the fulfillment of their quota as supposed
basis for compensation. Further, in Section 8 (b), Rule IV, Book III which we quote hereunder, piece workers are
specifically mentioned as being entitled to holiday pay.
Sec. 8. Holiday pay of certain employees. -
(b) Where a covered employee is paid by results or output, such as payment on piece work, his holiday
pay shall not be less than his average daily earnings for the last seven (7) actual working days preceding
the regular holiday: Provided, however, that in no case shall the holiday pay be less than the applicable
statutory minimum wage rate.
In addition, the Revised Guidelines on the Implementation of the 13th Month Pay Law, in view of the modifications to
P.D. No. 851 19 by Memorandum Order No. 28, clearly exclude the employer of piece rate workers from those
exempted from paying 13th month pay, to wit:
2. EXEMPTED EMPLOYERS
The following employers are still not covered by P.D. No. 851:
d. Employers of those who are paid on purely commission, boundary or task basis, and those who are paid a fixed
amount for performing specific work, irrespective of the time consumed in the performance thereof, except where the
workers are paid on piece-rate basis in which case the employer shall grant the required 13th month pay to such
workers. (emphasis supplied)
The Revised Guidelines as well as the Rules and Regulations identify those workers who fall under the
piece-rate category as those who are paid a standard amount for every piece or unit of work produced
that is more or less regularly replicated, without regard to the time spent in producing the same. 20
As to overtime pay, the rules, however, are different. According to Sec. 2(e), Rule I, Book III of the
Implementing Rules, workers who are paid by results including those who are paid on piece-
work, takay, pakiao, or task basis, if their output rates are in accordance with the standards prescribed

under Sec. 8, Rule VII, Book III, of these regulations, or where such rates have been fixed by the
Secretary of Labor in accordance with the aforesaid section, are not entitled to receive overtime pay.
Here, private respondents did not allege adherence to the standards set forth in Sec. 8 nor with the rates
prescribed by the Secretary of Labor. As such, petitioners are beyond the ambit of exempted persons and
are therefore entitled to overtime pay. Once more, the National Labor Relations Commission would be in a better
position to determine the exact amounts owed petitioners, if any.
As to the claim that private respondents violated petitioners' right to self-organization, the evidence on record does
not support this claim. Petitioners relied almost entirely on documentary evidence which, per se, did not prove any
wrongdoing on private respondents' part. For example, petitioners presented their complaint 21 to prove the violation
of labor laws committed by private respondents. The complaint, however, is merely "the pleading alleging the
plaintiff's cause or causes of action." 22 Its contents are merely allegations, the verity of which shall have to be proved
during the trial. They likewise offered their Consolidated Affidavit of Merit and Position Paper 23 which, like the offer of
their Complaint, was a tautological exercise, and did not help nor prove their cause. In like manner, the petition for
certification election 24 and the subsequent order of certification 25 merely proved that petitioners sought and acquired
the status of bargaining agent for all rank-and-file employees. Finally, the existence of the memorandum of
agreement 26 offered to substantiate private respondents' non-compliance therewith, did not prove either compliance
or non-compliance, absent evidence of concrete, overt acts in contravention of the provisions of the memorandum.
IN VIEW WHEREOF, the instant petition is hereby GRANTED. The Resolution of the National Labor Relations
Commission of 29 March 1995 and the Decision of the Labor Arbiter of 27 July 1994 in NLRC Case No. RAB-III-01-
1964-91 are hereby SET ASIDE, and another is hereby rendered:
1. DECLARING petitioners to have been illegally dismissed by private respondents, thus entitled to full back wages and
other privileges, and separation pay in lieu of reinstatement at the rate of one month's salary for every year of service
with a fraction of six months of service considered as one year;
2. REMANDING the records of this case to the National Labor Relations Commission for its determination of the back
wages and other benefits and separation pay, taking into account the foregoing observations; and
3. DIRECTING the National Labor Relations Commission to resolve the referred issues within sixty (60) days from its
receipt of a copy of this decision and of the records of the case and to submit to this Court a report of its compliance
hereof within ten (10) days from the rendition of its resolution.

5.) G.R. No. 191281 December 5, 2012
BEST WEAR GARMENTS and/or WARREN PARDILLA, Petitioners,

vs.
ADELAIDA B. DE LEMOS and CECILE M. OCUBILLO, Respondents.
DECISION
VILLARAMA, J.:
This is a petition for review on certiorari under Rule 45 assailing the Decision dated February 24, 2009 and
1
Resolution dated February 10, 2010 of the Court of Appeals (CA) in CA-G.R. SP No. 102002. TheCA reversed the
2
Decision dated August 28, 2007 of the National Labor Relations Commission (NLRC) and reinstated the September
3
5, 2005 Decision of the Labor Arbiter.

4
Petitioner Best Wear Garments is a sole proprietorship represented by its General Manager Alex Sitosta.
Respondents Cecile M. Ocubillo and Adelaida B. De Lemos were hired as sewers on piece-rate basis by
petitioners on October 27, 1993 andJuly 12, 1994, respectively.
On May 20, 2004, De Lemos filed a complaint for illegal dismissal with prayer for backwages and other accrued
5
benefits, separation pay, service incentive leave pay and attorney’s fees. A similar complaint was filed by Ocubillo
6
on June 10, 2004. Both alleged in their position paper that in August 2003, Sitosta arbitrarily transferred
them to other areas of operation of petitioner’s garments company, which they said amounted to
constructive dismissal as it resulted in less earnings for them.
De Lemos claimed that after two months in her new assignment, she was able to adjust but Sitosta again
transferred her to a "different operation where she could not earn [as] much as before because by-products require
long period of time to finish." She averred that the reason for her transfer was her refusal "to render [overtime work]
up to 7:00 p.m." Her request to be returned to her previous assignment was rejected and she was "constrained not
to report for work as Sitosta had become indifferent to her since said transfer of operation." She further alleged that
her last salary was withheld by petitioner company. 7
On her part, Ocubillo alleged that her transfer was precipitated by her having "incurred excessive absences since
2001." Her absences were due to the fact that her father became very sick since 2001 until his untimely demise on
November 9, 2003; aside from this, she herself became very sickly. She claimed that from September to October
2003, Sitosta assigned her to different machines "whichever is available" and that "there were times, she could not
earn for a day because there was no available machine to work for [sic]." Sitosta also allegedly required her to
render overtime work up to 7:00 p.m. which she refused "because she was only paid up to 6:25 p.m." 8
Petitioners denied having terminated the employment of respondents who supposedly committed numerous
absences without leave (AWOL). They claimed that sometime in February 2004, De Lemos informed Sitosta that
due to personal problem, she intends to resign from the company. She then demanded the payment of separation
pay. In March 2004, Ocubillo likewise intimated her intention to resign and demanded separation pay. Sitosta
explained to both De Lemos and Ocubillo that the company had no existing policy on granting separation pay, and
hence he could not act on their request. De Lemos never reported back to work since March 2004, while Ocubillo
failed to report for work from October 2004 to the present.
As to the allegation of respondents that the reason for their transfer was their refusal to render overtime work until
7:00 p.m., petitioners asserted that respondents are piece-rate workers and hence they are not paid according to
the number of hours worked.
On September 5, 2005, Labor Arbiter Arden S. Anni rendered a Decision granting respondents’ claims, as follows:
WHEREFORE, ALL THE FOREGOING CONSIDERED, judgment is rendered, as follows:

1. Declaring that complainants were constructively, nay, illegally dismissed from employment;
2. Ordering respondents to pay each of the complainants SEPARATION PAY equivalent to one-month
salary for every year of service, a fraction of at least six (6) months being considered as one (1) whole year;
3. Ordering respondents to pay each of the complainants BACKWAGES computed from the time of their
dismissal up to the finality of this decision.
For this purpose, both parties are directed to submit their respective computations of the total amount awarded for
approval by this office.
All other claims are dismissed for lack of merit.
SO ORDERED. 9
Labor Arbiter Anni ruled that since respondents neither resigned nor abandoned their jobs, the ambiguities in the
circumstances surrounding their dismissal are resolved in favor of the workers. It was emphasized that respondents
could no longer be deemed terminated for reason of AWOL because this prerogative should have been exercised
before the dismissals have been effected. Moreover, it would have been illogical for respondents to resign and then
file a complaint for illegal dismissal.
Petitioners appealed to the NLRC which reversed the Labor Arbiter’s decision and dismissed respondents’
complaints. The NLRC found no basis for the charge of constructive dismissal, thus:
Complainants’ alleged demotion is vague. They simply allege that by reason of their transfer in August 2003, they
did not earn as much as they earned in their previous assignments. They failed to state how much they earned
before and after their transfer, if only to determine whether or not there was indeed a diminution in their earnings.
Further, it is to be stressed that complainants were paid on a piece rate basis, which simply means that the more
output, they produced the more earnings they will have. In other words, the earning is dependent upon
complainants.
We find more credible respondents’ assertion that complainants’ transfer was a valid exercise of management
prerogative. Respondent company points out that it is engaged in the business of garments manufacturing as a
sub-contractor. That, the kind of work it performs is dependent into with its client which specifies the work it
has to perform. And, that corollary thereto, the work to be performed by its employees will depend on the
work specifications in the contract. Thus, if complainants have been assigned to different operations, it was
pursuant to the requirements of its contracts. x x x.
In furtherance of their defense that complainants were not dismissed, either actual or constructive in August 2003,
respondents allege that complainants continued to report for work until February 2004 for complainant De Lemos
and August 2004 for complainant Ocubillo. We lend credence to this allegation of respondents because it remains
unrebutted by complainants.
It is to be noted that it was only [on] May 20, 2004 and June 10, 2004 that the instant consolidated cases were
filed by complainant De Lemos and Ocubillo, respectively. It may not be amiss to state that the date of filing jibe
with respondents’ allegation that sometime in February and March 2004, complainants intimated their intention to
resign and demanded for payment of separation pay but was not favorably acted upon by management.
Be that as it may, considering that complainants were not dismissed by respondents, they should be ordered to
report back to work without backwages and for the respondents to accept them.
WHEREFORE, premises considered, the Decision dated September 5, 2005 is hereby SET ASIDE and a new one
entered dismissing complainants’ charge of illegal dismissal for lack of merit. However, there being no dismissal,
complainants Adelaida B. De Lemos and Cecile M. Ocubillo are hereby directed to report back to work without
backwages within ten (10) days from receipt of this Resolution and for the respondent Company to accept them
under the same terms and conditions at the time of their employment.
SO ORDERED. (Italics in the original; emphasis supplied)
10
Respondents filed a motion for reconsideration which the NLRC denied. Thus, they elevated the case to the CA
alleging grave abuse of discretion on the part of the NLRC.
By Decision dated February 24, 2009, the CA granted the petition for certiorari, reversed the ruling of the NLRC and
reinstated the Labor Arbiter’s decision with modification that the service incentive leave pay shall be excluded in the
computation of the monetary award. The CA found no valid and legitimate business reason for the transfer order
which entailed the reduction of respondents’ earnings. Because respondents’ plea to be returned to their former
posts was not heeded by petitioners, no other conclusion "is discernible from the attendant circumstances except
the fact that [respondents’] transfer was unreasonable, inconvenient and prejudicial to them which [is] tantamount to
a constructive dismissal." Moreover, the unauthorized absences of respondents did not warrant a finding of
11
abandonment in view of the length of their service with petitioner company and the difficulty in finding similar
employment. The CA further invoked the rule that an employee who forthwith takes steps to protest his layoff cannot
by any logic be said to have abandoned his work.
Petitioners filed a motion for partial reconsideration which was denied by the CA.
Hence, this petition alleging that the CA has glaringly overlooked and clearly erred in its findings of fact and in
applying the law on constructive dismissal.
At the outset, it must bestated that the main issue in this case involves a question of fact. It is an established rule
that the jurisdiction of the Supreme Court in cases brought before it from the CA via Rule 45 of the 1997 Rules of
Civil Procedure is generally limited to reviewing errors of law. This Court is not a trier of facts. In the exercise of its
power of review, the findings of fact of the CA are conclusive and binding and consequently, it is not our function to
analyze or weigh evidence all over again. 12
There are, however, recognized exceptions to this rule such as when there is a divergence between the findings of
13
facts of the NLRC and that of the CA. In this case, the CA’s findings are contrary to those of the NLRC. There is,
14
therefore, a need to review the records to determine which of them should be preferred as more conformable to
evidentiary facts. 15
The right of employees to security of tenure does not give them vested rights to their positions to the extent of
depriving management of its prerogative to change their assignments or to transfer them. Thus, an employer may
transfer or assign employees from one office or area of operation to another, provided there is no demotion in rank
or diminution of salary, benefits, and other privileges, and the action is not motivated by discrimination, made in bad
faith, or effected as a form of punishment or demotion without sufficient cause. 16
In Blue Dairy Corporation v. NLRC, we held that:

17
x x x. The managerial prerogative to transfer personnel must be exercised without grave abuse of discretion,
bearing in mind the basic elements of justice and fair play. Having the right should not be confused with the manner
in which that right is exercised. Thus, it cannot be used as a subterfuge by the employer to rid himself of an
undesirable worker. In particular, the employer must be able to show that the transfer is not unreasonable,
inconvenient or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries,
privileges and other benefits. Should the employer fail to overcome this burden of proof, the employee’s transfer
shall be tantamount to constructive dismissal, which has been defined as a quitting because continued employment
is rendered impossible, unreasonable or unlikely; as an offer involving a demotion in rank and diminution in pay.
Likewise, constructive dismissal exists when an act of clear discrimination, insensibility or disdain by an employer
has become so unbearable to the employee leaving him with no option but to forego with his continued
employment. 18
With the foregoing as guidepost, we hold that the CA erred in reversing the NLRC’s ruling that respondents were not
constructively dismissed.

Being piece-rate workers assigned to individual sewing machines, respondents’ earnings depended on the
quality and quantity of finished products. That their work output might have been affected by the change in
their specific work assignments does not necessarily imply that any resulting reduction in pay is
tantamount to constructive dismissal. Workers under piece-rate employment have no fixed salaries and
their compensation is computed on the basis of accomplished tasks. As admitted by respondent De Lemos,
some garments or by-products took a longer time to finish so they could not earn as much as before. Also,
the type of sewing jobs available would depend on the specifications made by the clients of petitioner
company. Under these circumstances, it cannot be said that the transfer was unreasonable, inconvenient or
prejudicial to the respondents. Such deployment of sewers to work on different types of garments as
dictated by present business necessity is within the ambit of management prerogative which, in the
absence of bad faith, ill motive or discrimination, should not be interfered with by the courts.
The records are bereft of any showing of clear discrimination, insensibility or disdain on the part of petitioners in
transferring respondents to perform a different type of sewing job.It is unfair to charge petitioners with constructive
dismissal simply because the respondents insist that their transfer to a new work assignment was against their will.
We have long stated that "the objection to the transfer being grounded on solely upon the personal inconvenience or
hardship that will be caused to the employee by reason of the transfer is not a valid reason to disobey an order of
transfer." That respondents eventually discontinued reporting for work after their plea to be returned to their former
19
work assignment was their personal decision, for which the petitioners should not be held liable particularly as the
latter did not, in fact, dismiss them.
Indeed, there was no evidence that respondents were dismissed from employment. In fact, petitioners expressed
1âwphi1
willingness to accept them back to work. There being no termination of employment by the employer, the award of
backwages cannot be sustained. It is well settled that backwages may be granted only when there is a finding of
illegal dismissal. In cases where there is no evidence of dismissal, the remedy is reinstatement but without
20
backwages. 21
The constitutional policy of providing full protection to labor is not intended to oppress or destroy
management. While the Constitution is committed to the policy of social justice and the protection of the working
22
class, it should not be supposed that every labor dispute will be automatically decided in favor of labor.
Management also has its rights which are entitled to respect and enforcement in the interest of simple fair
play. Thus, where management prerogative to transfer employees is validly exercised, as in this case, courts will
23
decline to interfere.
WHEREFORE, the petition for review on certiorari is GRANTED. The Decision dated February 24, 2009 and
Resolution dated February 10, 2010 of the Court of Appeals in CA-G.R. SP No. 102002 are SET ASIDE. The
Decision dated August 28, 2007 of the National Labor Relations Commission is hereby REINSTATED and
UPHELD.

6.) [G.R. NO. 153511 - July 18, 2012]
LEGEND HOTEL (MANILA), owned by TITANIUM CORPORATION, and/or, NELSON NAPUD,

in his capacity as the President of Petitioner Corporation, Petitioner, v. HERNANI S.
REALUYO, also known as JOEY ROA, Respondent.
DECISION
BERSAMIN, J.:
This labor case for illegal dismissal involves a pianist employed to perform in the restaurant of a
hotel. On August 9, 1999, respondent, whose stage name was Joey R. Roa, filed a complaint for
alleged unfair labor practice, constructive illegal dismissal, and the underpayment/nonpayment of his
premium pay for holidays, separation pay, service incentive leave pay, and 13111 month pay. He
prayed for attorney's fees, moral damages off P100,000.00 and exemplary damages for
P100,000.00.1 Ï‚rÎ½ll
Respondent averred that he had worked as a pianist at the Legend Hotel s Tanglaw
Restaurant from September 1992 with an initial rate of P400.00/night that was given to him after
each night s performance; that his rate had increased to P750.00/night; and that during his
employment, he could not choose the time of performance, which had been fixed from
7:00 pm to 10:00 pm for three to six times/week. He added that the Legend Hotel s restaurant
manager had required him to conform with the venue s motif; that he had been subjected to the
rules on employees representation checks and chits, a privilege granted to other employees; that on
July 9, 1999, the management had notified him that as a cost-cutting measure his services
as a pianist would no longer be required effective July 30, 1999; that he disputed the excuse,
insisting that Legend Hotel had been lucratively operating as of the filing of his complaint; and that
the loss of his employment made him bring his complaint.2 Ï‚rÎ½ll
In its defense, petitioner denied the existence of an employer-employee relationship with

respondent, insisting that he had been only a talent engaged to provide live music at
Legend Hotel s Madison Coffee Shop for three hours/day on two days each week; and
stated that the economic crisis that had hit the country constrained management to
dispense with his services.
On December 29, 1999, the Labor Arbiter (LA) dismissed the complaint for lack of merit upon finding
that the parties had no employer-employee relationship.3 The LA explained thusly: Ï‚rÎ±lÎ±Ï‰
xxx
On the pivotal issue of whether or not there existed an employer-employee relationship between the
parties, our finding is in the negative. The finding finds support in the service contract dated
September 1, 1992 xxx. crvll
xxx
Even if we grant the initial non-existence of the service contract, as complainant suggests in his reply
(third paragraph, page 4), the picture would not change because of the admission by complainant in
his letter dated October 8, 1996 (Annex "C") that what he was receiving was talent fee and not
salary.
This is reinforced by the undisputed fact that complainant received his talent fee nightly, unlike the
regular employees of the hotel who are paid by monthly xxx. crvll
xxx
And thus, absent the power to control with respect to the means and methods by which his work was
to be accomplished, there is no employer-employee relationship between the parties xxx.
xxx
WHEREFORE, this case must be, as it is hereby, DISMISSED for lack of merit.
SO ORDERED.4 Ï‚rÎ½ll
Respondent appealed, but the National Labor Relations Commission (NLRC) affirmed the LA on May
31, 2001.5 Ï‚rÎ½ll
Respondent assailed the decision of the NLRC in the Court of Appeals (CA) on certiorari .
On February 11, 2002, the CA set aside the decision of the NLRC,6 holding:
xxx
Applying the above-enumerated elements of the employee-employer relationship in this case, the
question to be asked is, are those elements present in this case? chanroblesvirtualawlibrary
The answer to this question is in the affirmative.
xxx
Well settled is the rule that of the four (4) elements of employer-employee relationship, it is the
power of control that is more decisive.
In this regard, public respondent failed to take into consideration that in petitioner s line of work, he
was supervised and controlled by respondent s restaurant manager who at certain times would
require him to perform only tagalog songs or music, or wear barong tagalog to conform with
Filipiniana motif of the place and the time of his performance is fixed by the respondents from 7:00
pm to 10:00 pm, three to six times a week. Petitioner could not choose the time of his performance.
xxx. crvll
As to the status of petitioner, he is considered a regular employee of private respondents since the
job of the petitioner was in furtherance of the restaurant business of respondent hotel. Granting that
petitioner was initially a contractual employee, by the sheer length of service he had rendered for
private respondents, he had been converted into a regular employee xxx. crvll
xxx
xxx In other words, the dismissal was due to retrenchment in order to avoid or minimize business
losses, which is recognized by law under Article 283 of the Labor Code, xxx. crvll
xxx
WHEREFORE, foregoing premises considered, this petition is GRANTED. xxx.7 Ï‚rÎ½ll
Issues

In this appeal, petitioner contends that the CA erred: Ï‚Î·Î±Ã±rÎ¿blÎµÅ¡ Î½Î¹râ€ Ï…Î±l lÎ±Ï‰ lÎ¹brÎ±rÃ¿
I. XXX WHEN IT RULED THAT THERE IS THE EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP

BETWEEN THE PETITIONER HOTEL AND RESPONDENT ROA.
II. XXX IN FINDING THAT ROA IS A REGULAR EMPLOYEE AND THAT THE TERMINATION OF HIS
SERVICES WAS ILLEGAL. THE CA LIKEWISE ERRED WHEN IT DECLARED THE REINSTATEMENT OF
ROA TO HIS FORMER POSITION OR BE GIVEN A SEPARATION PAY EQUIVALENT TO ONE MONTH FOR
EVERY YEAR OF SERVICE FROM SEPTEMBER 1999 UNTIL JULY 30, 1999 CONSIDERING THE
ABSENCE OF AN EMPLOYMENT RELATIONSHIP BETWEEN THE PARTIES.
III. XXX WHEN IT DECLARED THAT ROA IS ENTITLED TO BACKWAGES, SERVICE INCENTIVE LEAVE
AND OTHER BENEFITS CONSIDERING THAT THERE IS NO EMPLOYER EMPLOYEE RELATIONSHIP
BETWEEN THE PARTIES.
IV. XXX WHEN IT NULLIFIED THE DECISION DATED MAY 31, 2001 IN NLRC NCR CA NO. 023404-
2000 OF THE NLRC AS WELL AS ITS RESOLUTION DATED JUNE 29, 2001 IN FAVOR OF HEREIN
PETITIONER HOTEL WHEN HEREIN RESPONDENT ROA FAILED TO SHOW PROOF THAT THE NLRC
AND THE LABOR ARBITER HAVE COMMITTED GRAVE ABUSE OF DISCRETION OR LACK OF
JURISDICTION IN THEIR RESPECTIVE DECISIONS.
V. XXX WHEN IT OVERLOOKED THE FACT THAT THE PETITION WHICH ROA FILED IS IMPROPER
SINCE IT RAISED QUESTIONS OF FACT.
VI. XXX WHEN IT GAVE DUE COURSE TO THE PETITION FILED BY ROA WHEN IT IS CLEARLY
IMPROPER AND SHOULD HAVE BEEN DISMISSED OUTRIGHT CONSIDERING THAT A PETITION FOR
CERTIORARI UNDER RULE 65 IS LIMITED ONLY TO QUESTIONS OR ISSUES OF GRAVE ABUSE OF
DISCRETION OR LACK OF JURISDICTION COMMITTED BY THE NLRC OR THE LABOR ARBITER,
WHICH ISSUES ARE NOT PRESENT IN THE CASE AT BAR.
chanrobles virtual law library
The assigned errors are divided into the procedural issue of whether or not the petition
for certiorari filed in the CA was the proper recourse; and into two substantive issues, namely: (a)
whether or not respondent was an employee of petitioner; and (b) if respondent was petitioner s
employee, whether he was validly terminated.
Ruling
The appeal fails.
Procedural Issue:
Certiorari was a proper recourse
Petitioner contends that respondent s petition for certiorari was improper as a remedy against the
NLRC due to its raising mainly questions of fact and because it did not demonstrate that the NLRC
was guilty of grave abuse of discretion.
The contention is unwarranted. There is no longer any doubt that a petition for certiorari brought to
assail the decision of the NLRC may raise factual issues, and the CA may then review the decision of
the NLRC and pass upon such factual issues in the process.8 The power of the CA to review factual
issues in the exercise of its original jurisdiction to issue writs of certiorari is based on Section 9 of
Batas Pambansa Blg. 129, which pertinently provides that the CA "shall have the power to try cases

and conduct hearings, receive evidence and perform any and all acts necessary to resolve factual
issues raised in cases falling within its original and appellate jurisdiction, including the power to grant
and conduct new trials or further proceedings."
Substantive Issue No. 1:
Employer-employee relationship existed between the parties
We next ascertain if the CA correctly found that an employer-employee relationship existed between
the parties.
The issue of whether or not an employer-employee relationship existed between petitioner and
respondent is essentially a question of fact.9 The factors that determine the issue include who has the
power to select the employee, who pays the employee s wages, who has the power to dismiss the
employee, and who exercises control of the methods and results by which the work of the employee
is accomplished.10 Although no particular form of evidence is required to prove the existence of the
relationship, and any competent and relevant evidence to prove the relationship may be
admitted,11 a finding that the relationship exists must nonetheless rest on substantial evidence, which
is that amount of relevant evidence that a reasonable mind might accept as adequate to justify a
conclusion.12Ï‚rÎ½ll
Generally, the Court does not review factual questions, primarily because the Court is not a trier of
facts. However, where, like here, there is a conflict between the factual findings of the Labor Arbiter
and the NLRC, on the one hand, and those of the CA, on the other hand, it becomes proper for the
Court, in the exercise of its equity jurisdiction, to review and re-evaluate the factual issues and to
look into the records of the case and re-examine the questioned findings.13 Ï‚rÎ½ll
A review of the circumstances reveals that respondent was, indeed, petitioner s employee. He was
undeniably employed as a pianist in petitioner s Madison Coffee Shop/Tanglaw Restaurant from
September 1992 until his services were terminated on July 9, 1999.
First of all, petitioner actually wielded the power of selection at the time it entered into the service
contract dated September 1, 1992 with respondent. This is true, notwithstanding petitioner s
insistence that respondent had only offered his services to provide live music at petitioner s Tanglaw
Restaurant, and despite petitioner s position that what had really transpired was a negotiation of his
rate and time of availability. The power of selection was firmly evidenced by, among others, the
express written recommendation dated January 12, 1998 by Christine Velazco, petitioner s
restaurant manager, for the increase of his remuneration.14 Ï‚rÎ½ll
Petitioner could not seek refuge behind the service contract entered into with respondent. It is the
law that defines and governs an employment relationship, whose terms are not restricted to those
fixed in the written contract, for other factors, like the nature of the work the employee has been
called upon to perform, are also considered. The law affords protection to an employee, and does not
countenance any attempt to subvert its spirit and intent. Any stipulation in writing can be ignored
when the employer utilizes the stipulation to deprive the employee of his security of tenure. The
inequality that characterizes employer-employee relations generally tips the scales in favor of the
employer, such that the employee is often scarcely provided real and better options.15 Ï‚rÎ½ll
Secondly, petitioner argues that whatever remuneration was given to respondent were only his talent
fees that were not included in the definition of wage under the Labor Code; and that such talent fees
were but the consideration for the service contract entered into between them.
The argument is baseless.

Respondent was paid P400.00 per three hours of performance from 7:00 pm to 10:00 pm, three to
six nights a week. Such rate of remuneration was later increased to P750.00 upon restaurant
manager Velazco s recommendation. There is no denying that the remuneration denominated as
talent fees was fixed on the basis of his talent and skill and the quality of the music he played during
the hours of performance each night, taking into account the prevailing rate for similar talents in the
entertainment industry.16Ï‚rÎ½ll
Respondent s remuneration, albeit denominated as talent fees, was still considered as included in the
term wage in the sense and context of the Labor Code, regardless of how petitioner chose to
designate the remuneration. Anent this, Article 97(f) of the Labor Code clearly states: Ï‚rÎ±lÎ±Ï‰
xxx wage paid to any employee shall mean the remuneration or earnings, however designated,
capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece,
or commission basis, or other method of calculating the same, which is payable by an employer to an
employee under a written or unwritten contract of employment for work done or to be done, or for
services rendered or to be rendered, and includes the fair and reasonable value, as determined by
the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to
the employee.
Clearly, respondent received compensation for the services he rendered as a pianist in petitioner s
hotel. Petitioner cannot use the service contract to rid itself of the consequences of its employment of
respondent. There is no denying that whatever amounts he received for his performance, howsoever
designated by petitioner, were his wages.
It is notable that under the Rules Implementing the Labor Code and as held in Tan v.
Lagrama,17 every employer is required to pay his employees by means of a payroll, which should
show in each case, among others, the employee s rate of pay, deductions made from such pay, and
the amounts actually paid to the employee. Yet, petitioner did not present the payroll of its
employees to bolster its insistence of respondent not being its employee.
That respondent worked for less than eight hours/day was of no consequence and did not
detract from the CA s finding on the existence of the employer-employee relationship. In
providing that the " normal hours of work of any employee shall not exceed eight (8)
hours a day," Article 83 of the Labor Code only set a maximum of number of hours as
"normal hours of work" but did not prohibit work of less than eight hours.
Thirdly, the power of the employer to control the work of the employee is considered the most
significant determinant of the existence of an employer-employee relationship.18 This is the so-called
control test, and is premised on whether the person for whom the services are performed reserves
the right to control both the end achieved and the manner and means used to achieve that end.19 Ï‚rÎ½ll
Petitioner submits that it did not exercise the power of control over respondent and cites the
following to buttress its submission, namely: (a) respondent could beg off from his nightly
performances in the restaurant for other engagements; (b) he had the sole prerogative to play and
perform any musical arrangements that he wished; (c) although petitioner, through its manager,
required him to play at certain times a particular music or song, the music, songs, or arrangements,
including the beat or tempo, were under his discretion, control and direction; (d) the requirement for
him to wear barong Tagalog to conform with the Filipiniana motif of the venue whenever he
performed was by no means evidence of control; (e) petitioner could not require him to do any other
work in the restaurant or to play the piano in any other places, areas, or establishments, whether or
not owned or operated by petitioner, during the three hour period from 7:00 pm to 10:00 pm, three
to six times a week; and (f) respondent could not be required to sing, dance or play another musical
instrument.

A review of the records shows, however, that respondent performed his work as a pianist under
petitioner s supervision and control. Specifically, petitioner s control of both the end achieved and the
manner and means used to achieve that end was demonstrated by the following, to wit: Ï‚Î·Î±Ã±rÎ¿blÎµÅ¡ Î½Î¹râ€ Ï…Î±l lÎ±Ï‰ lÎ¹brÎ±rÃ¿
A. He could not choose the time of his performance, which petitioners had fixed from 7:00 pm to
10:00 pm, three to six times a week;
b. He could not choose the place of his performance;
c. The restaurant s manager required him at certain times to perform only Tagalog songs or music,
or to wear barong Tagalog to conform to the Filipiniana motif; and cralawlibrary
d. He was subjected to the rules on employees representation check and chits, a privilege granted to
other employees.
Relevantly, it is worth remembering that the employer need not actually supervise the performance
of duties by the employee, for it sufficed that the employer has the right to wield that power.
Lastly, petitioner claims that it had no power to dismiss respondent due to his not being even subject
to its Code of Discipline, and that the power to terminate the working relationship was mutually
vested in the parties, in that either party might terminate at will, with or without cause.
The claim is contrary to the records. Indeed, the memorandum informing respondent of the
discontinuance of his service because of the present business or financial condition of
petitioner20 showed that the latter had the power to dismiss him from employment.21 Ï‚rÎ½ll
Substantive Issue No. 2:
Validity of the Termination
Having established that respondent was an employee whom petitioner terminated to prevent losses,
the conclusion that his termination was by reason of retrenchment due to an authorized cause under
the Labor Code is inevitable.
Retrenchment is one of the authorized causes for the dismissal of employees recognized by the Labor
Code. It is a management prerogative resorted to by employers to avoid or to minimize business
losses. On this matter, Article 283 of the Labor Code states: Ï‚rÎ±lÎ±Ï‰
Article 283. Closure of establishment and reduction of personnel. The employer may also terminate
the employment of any employee due to the installation of labor-saving devices, redundancy,
retrenchment to prevent losses or the closing or cessation of operation of the establishment or
undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by
serving a written notice on the workers and the Ministry of Labor and Employment at least one (1)
month before the intended date thereof. xxx. In case of retrenchment to prevent losses and in cases
of closures or cessation of operations of establishment or undertaking not due to serious business
losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least
one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6)
months shall be considered one (1) whole year.
The Court has laid down the following standards that an employer should meet to justify
retrenchment and to foil abuse, namely: Ï‚Î·Î±Ã±rÎ¿blÎµÅ¡ Î½Î¹râ€ Ï…Î±l lÎ±Ï‰ lÎ¹brÎ±rÃ ¿

(a) The expected losses should be substantial and not merely de minimis in extent;
(b) The substantial losses apprehended must be reasonably imminent;
(c) The retrenchment must be reasonably necessary and likely to effectively prevent the expected
losses; and cralawlibrary
(d) The alleged losses, if already incurred, and the expected imminent losses sought to be forestalled
must be proved by sufficient and convincing evidence.22 Ï‚rÎ½ll
Anent the last standard of sufficient and convincing evidence, it ought to be pointed out that a less
exacting standard of proof would render too easy the abuse of retrenchment as a ground for
termination of services of employees.23 Ï‚rÎ½ll
Was the retrenchment of respondent valid? chanroblesvirtualawlibrary
In termination cases, the burden of proving that the dismissal was for a valid or authorized cause
rests upon the employer. Here, petitioner did not submit evidence of the losses to its business
operations and the economic havoc it would thereby imminently sustain. It only claimed that
respondent s termination was due to its "present business/financial condition." This bare statement
fell short of the norm to show a valid retrenchment. Hence, we hold that there was no valid cause for
the retrenchment of respondent.
Indeed, not every loss incurred or expected to be incurred by an employer can justify retrenchment.
The employer must prove, among others, that the losses are substantial and that the retrenchment is
reasonably necessary to avert such losses. Thus, by its failure to present sufficient and convincing
evidence to prove that retrenchment was necessary, respondent s termination due to retrenchment
is not allowed.
The Court realizes that the lapse of time since the retrenchment might have rendered respondent's
reinstatement to his former job no longer feasible. If that should be true, then petitioner should
instead pay to him separation pay at the rate of one. month pay for every year of service computed
from September 1992 (when he commenced to work for the petitioners) until the finality of this
decision, and full backwages from the time his compensation was withheld until the finality of this
decision.
WHEREFORE, we DENY the Petition for Review on Certiorari, and AFFIRM the decision of the Court of
Appeals promulgated on February 11, 2002, subject to the modification that should reinstatement be
no longer feasible, petitioner shall pay to respondent separation pay of one month for every year of
service computed from September 1992 until the finality of this decision, and full backwages from
the time his compensation was withheld until the finality of this decision.
Costs of suit to be paid by the petitioners.

7.) G.R. No. 132805 February 2, 1999
PHILIPPINE AIRLINES, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER ROMULUS PROTACIO and DR. HERMINIO
A. FABROS, respondents.
PUNO, J.:
Petitioner Philippine Airlines, Inc. assails the decision of the National Labor Relations Commission dismissing its
appeal from the decision of Labor Arbiter Romulus S. Protacio which declared the suspension of private respondent
Dr. Herminio A. Fabros illegal and ordered petitioner to pay private respondent the amount equivalent to all the
benefits he should have received during his period of suspension plus P500,000.00 moral damages.
The facts are as follow:
Private respondent was employed as flight surgeon at petitioner company. He was assigned at the PAL
Medical Clinic at Nichols and was on duty from 4:00 in the afternoon until 12:00 midnight.
On February 17, 1994, at around 7:00 in the evening, private respondent left the clinic to have his dinner at
his residence, which was about five-minute drive away. A few minutes later, the clinic received an emergency
call from the PAL Cargo Services. One of its employees, Mr. Manuel Acosta, had suffered a heart attack. The
nurse on duty, Mr. Merlino Eusebio, called private respondent at home to inform him of the emergency. The patient
arrived at the clinic at 7:50 in the evening and Mr. Eusebio immediately rushed him to the hospital. When private
respondent reached the clinic at around 7:51 in the evening, Mr. Eusebio had already left with the patient.
Mr. Acosta died the following day.
Upon learning about the incident, PAL Medical Director Dr. Godofredo B. Banzon ordered the Chief Flight Surgeon
to conduct an investigation. The Chief Flight Surgeon, in turn, required private respondent to explain why no
disciplinary sanction should be taken against him.
In his explanation, private respondent asserted that he was entitled to a thirty-minute meal break; that he
immediately left his residence upon being informed by Mr. Eusebio about the emergency and he arrived at the clinic
a few minutes later; that Mr. Eusebio panicked and brought the patient to the hospital without waiting for him.
Finding private respondent's explanation unacceptable, the management charged private respondent with
abandonment of post while on duty. He was given ten days to submit a written answer to the administrative charge.
In his answer, private respondent reiterated the assertions in his previous explanation. He further denied that he
abandoned his post on February 17, 1994. He said that he only left the clinic to have his dinner at home. In fact, he
returned to the clinic at 7:51 in the evening upon being informed of the emergency.
After evaluating the charge as well as the answer of private respondent, petitioner company decided to
suspend private respondent for three months effective December 16, 1994.
Private respondent filed a complaint for illegal suspension against petitioner.
On July 16, 1996, Labor Arbiter Romulus A. Protasio rendered a decision declaring the suspension of private
1
respondent illegal. It also ordered petitioner to pay private respondent the amount equivalent to all the benefits he
should have received during his period of suspension plus P500,000.00 moral damages. The dispositive portion of
the decision reads:

WHEREFORE, in view of all the foregoing, judgment is hereby rendered declaring the suspension of
complainant as illegal, and ordering the respondents the restitution to the complainant of all
employment benefits equivalent to his period of suspension, and the payment to the complainant of
P500,000.00 by way of moral damages. 2
Petitioner appealed to the NLRC. The NLRC, however, dismissed the appeal after finding that the decision of the
Labor Arbiter is supported by the facts on record and the law on the matter. The NLRC likewise denied petitioner's
3
motion for reconsideration.4
Hence, this petition raising the following arguments:
1. The public respondents acted without or in excess of their

jurisdiction and with grave abuse of discretion in nullifying the 3-
month suspension of private respondent despite the fact that the
private respondent has committed an offense that warranted the
imposition of disciplinary action.
2. The public respondents acted without or in excess of their

jurisdiction and with grave abuse of discretion in holding the petitioner
liable for moral damages:
(a) Despite the fact that no formal hearing whatsoever

was conducted for complainant to substantiate his
claim;
(b) Despite the absence of proof that the petitioner

acted in bad faith in imposing the 3-month
suspension; and
(c) Despite the fact that the Labor Arbiter's award of

moral damages is highly irregular, considering that it
was more than what the private respondent prayed
for.
5
We find that public respondents did not err in nullifying the three-month suspension of private respondent. They,
however, erred in awarding moral damages to private respondent.
First, as regards the legality of private respondent's suspension. The facts do not support petitioner's allegation that
private respondent abandoned his post on the evening of February 17, 1994. Private respondent left the clinic that
night only to have his dinner at his house, which was only a few minutes' drive away from the clinic. His
whereabouts were known to the nurse on duty so that he could be easily reached in case of emergency. Upon being
informed of Mr. Acosta's condition, private respondent immediately left his home and returned to the clinic. These
facts belie petitioner's claim of abandonment.
Petitioner argues that being a full-time employee, private respondent is obliged to stay in the company premises for
not less than eight (8) hours. Hence, he may not leave the company premises during such time, even to take his
meals.
We are not impressed.
Art. 83 and 85 of the Labor Code read:
Art. 83. Normal hours of work. — The normal hours of work of any employee shall not exceed eight
(8) hours a day.

Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in
hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours
for eight (8) hours a day, for five (5) days a week, exclusive of time for meals, except where the
exigencies of the service require that such personnel work for six (6) days or forty-eight (48) hours,
in which case they shall be entitled to an additional compensation of at least thirty per cent (30%) of
their regular wage for work on the sixth day. For purposes of this Article, "health personnel" shall
include: resident physicians, nurses, nutritionists, dieticians, pharmacists, social workers, laboratory
technicians, paramedical technicians, psychologists, midwives, attendants and all other hospital or
clinic personnel. (emphasis supplied)
Art. 85. Meal periods. — Subject to such regulations as the Secretary of Labor may prescribe,
it shall be the duty of every employer to give his employees not less than sixty (60) minutes
time-off for their regular meals.
Sec. 7, Rule I, Book III of the Omnibus Rules Implementing the Labor Code further states:
Sec. 7. Meal and Rest Periods. — Every employer shall give his employees, regardless of sex, not
less than one (1) hour time-off for regular meals, except in the following cases when a meal period of
not less than twenty (20) minutes may be given by the employer provided that such shorter meal
period is credited as compensable hours worked of the employee;
(a) Where the work is non-manual work in nature or does not involve strenuous physical exertion;
(b) Where the establishment regularly operates not less than sixteen hours a day;
(c) In cases of actual or impending emergencies or there is urgent work to be performed on

machineries, equipment or installations to avoid serious loss which the employer would otherwise
suffer; and
(d) Where the work is necessary to prevent serious loss of perishable goods.
Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be considered as
compensable working time.
Thus, the eight-hour work period does not include the meal break. Nowhere in the law may it be inferred that
employees must take their meals within the company premises. Employees are not prohibited from going
out of the premises as long as they return to their posts on time. Private respondent's act, therefore, of going
home to take his dinner does not constitute abandonment.
We now go to the award of moral damages to private respondent.
Not every employee who is illegally dismissed or suspended is entitled to damages. As a rule, moral damages are
recoverable only where the dismissal or suspension of the employee was attended by bad faith or fraud, or
constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public
policy. Bad faith does not simply mean negligence or bad judgment. It involves a state of mind dominated by ill will
6
or motive. It implies a conscious and intentional design to do a wrongful act for a dishonest purpose or some moral
obliquity. The person claiming moral damages must prove the existence of bad faith by clear and convincing
7
evidence for the law always presumes good faith. 8
In the case at bar, there is no showing that the management of petitioner company was moved by some evil motive
in suspending private respondent. It suspended private respondent on an honest, albeit erroneous, belief that
private respondent's act of leaving the company premises to take his meal at home constituted abandonment of
post which warrants the penalty of suspension. Also, it is evident from the facts that petitioner gave private
respondent all the opportunity to refute the charge against him and to defend himself. These negate the existence of
bad faith on the part of petitioner. Under the circumstances, we hold that private respondent is not entitled to moral
damages.
IN VIEW WHEREOF, the petition is PARTIALLY GRANTED. The portion of the assailed decision awarding moral
damages to private respondent is DELETED. All other aspects of the decision are AFFIRMED.

8.) [G.R. No. 78210. February 28, 1989.]
TEOFILO ARICA, DANILO BERNABE, MELQUIADES DOHINO, ABONDIO OMERTA, GIL

TANGIHAN, SAMUEL LABAJO, NESTOR NORBE, RODOLFO CONCEPCION, RICARDO RICHA,
RODOLFO NENO, ALBERTO BALATRO, BENJAMIN JUMAMOY, FERMIN DAAROL, JOVENAL
ENRIQUEZ, OSCAR BASAL, RAMON ACENA, JAIME BUGTAY, and 561 OTHERS, HEREIN
REPRESENTED BY KORONADO B. APUZEN, Petitioners, v. NATIONAL LABOR RELATIONS
COMMISSION, HONORABLE FRANKLIN DRILON, HONORABLE CONRADO B. MAGLAYA,
HONORABLE ROSARIO B. ENCARNACION, and STANDARD (PHILIPPINES) FRUIT
CORPORATION, Respondents.
Koronado B. Apuzen and Jose C . Espinas, for Petitioners.
The Solicitor General for public Respondent.
Dominguez & Paderna Law Offices Co. for Private Respondent.
SYLLABUS
1. LABOR LAW; NATIONAL LABOR RELATIONS COMMISSION; NON-COMPENSABILITY OF CLAIM

ALREADY ESTABLISHED IN AN EARLIER DECISION REMAINS TO BE THE "LAW OF THE CASE" ; ISSUE
RAISED BARRED BY THE RES JUDICATA. — It is clear that herein petitioners are merely reiterating
the very same claim which they fled through the ALU and which records show had already long been
considered terminated and closed by this Court in G.R. No. L-48510. Therefore, the NLRC can not be
faulted for ruling that petitioners’ claim is already barred by res judicata. Be that as it may,
petitioners’ claim that there was a change in the factual scenario which are "substantial changes in
the facts" makes respondent firm now liable for the same claim they earlier filed against respondent
which was dismissed. It is thus axiomatic that the non-compensability of the claim having been
earlier established, constitute the controlling legal rule or decision between the parties and remains
to be the law of the case making this petition without merit. As aptly observed by the Solicitor
General that this petition is "clearly violative of the familiar principle of res judicata. There will be no
end to this controversy if the light of the Minister of Labor’s decision dated May 12, 1979 that had
long acquired the character of finality — and which already resolved that petitioners’ thirty (30)-
minute assembly time is not compensable, the same issue can be re-litigated again." cralaw virtua1aw library
2. REMEDIAL LAW; EVIDENCE; FINDINGS OF FACT OF QUASI-JUDICIAL AGENCIES GENERALLY NOT

DISTURBED ON APPEAL. — As a rule, the findings of facts of quasi-judicial agencies which have
acquired expertise because their jurisdiction is confined to specific matters are accorded not only
respect but at times even finality if such findings are supported by substantial evidence. The records
show that the Labor Arbiters’ decision dated October 9, 1985 (Annex "E", Petition) pointed out in
detail the basis of his findings and conclusions, and no cogent reason can be found to disturb these
findings nor of those of the National Labor Relations Commission which affirmed the same.
DECISION
PARAS, J.:
This is a petition for review on certiorari of the decision of the National Labor Relations Commission
dated December 12, 1986 in NLRC Case No. 2327 MC-XI-84 entitled Teofilo Arica Et. Al. v. Standard
(Phil.) Fruits Corporation (STANFILCO) which affirmed the decision of Labor Arbiter Pedro C. Ramos,
NLRC, Special Task Force, Regional Arbitration Branch No. XI, Davao City dismissing the claim of
petitioners.
This case stemmed from a complaint filed on April 9, 1984 against private respondent Stanfilco for
assembly time, moral damages and attorney’s fees, with the aforementioned Regional Arbitration
Branch No. XI, Davao City.
After the submission by the parties of their respective position papers (Annex "C", pp. 30-40; Annex
"D", Rollo, pp. 41-50), Labor Arbiter Pedro C. Ramos rendered a decision dated October 9, 1985
(Annex "E", Rollo, pp. 51-58) in favor of private respondent STANFILCO, holding that: jgc:chanrobles.com.ph
"Given these facts and circumstances, we cannot but agree with respondent that the pronouncement
in that earlier case, i.e. the thirty-minute assembly time long practiced cannot be considered waiting
time or work time and, therefore, not compensable, has become the law of the case which can no
longer be disturbed without doing violence to the time-honored principle of res-judicata.
"WHEREFORE, in view of the foregoing considerations, the instant complaint should therefore be, as
it is hereby, DISMISSED.
SO ORDERED." (Rollo, p. 58)
On December 12, 1986, after considering the appeal memorandum of complainant and the
opposition of respondents, the First Division of public respondent NLRC composed of Acting Presiding
Commissioner Franklin Drilon, Commissioner Conrado Maglaya, Commissioner Rosario D.
Encarnacion as Members, promulgated its Resolution, upholding the Labor Arbiters’ decision. The
Resolution’s dispositive portion reads:jgc:chanrobles.com.ph
"Surely, the customary functions referred to in the above-quoted provision of the agreement includes
the long-standing practice and institutionalized non-compensable assembly time. This, in effect,
estopped complainants from pursuing this case.
"The Commission cannot ignore these hard facts, and we are constrained to uphold the dismissal and
closure of the case.
"WHEREFORE, let the appeal be, as it is hereby dismissed, for lack of merit.
"SO ORDERED." (Annex "H", Rollo, pp. 86-89).
On January 15, 1987, petitioners filed a Motion for Reconsideration which was opposed by private
respondent (Annex "I" Rollo, pp. 90-91; Annex "J," Rollo, pp. 92-96).
Public respondent NLRC, on January 30, 1987, issued resolution denying for lack of merit petitioners’
motion for reconsideration (Annex "K", Rollo, p. 97).
Hence this petition for review on certiorari filed on May 7, 1987.
The Court in the resolution of May 4, 1988 gave due course to this petition. chanrobles.com.ph : virtual law library
Petitioners assign the following issues: chanrob1es virtual 1aw library
1) Whether or not the 30-minute activity of the petitioners before the scheduled working
time is compensable under the Labor Code.
2) Whether or not res judicata applies when the facts obtaining in the prior case and in the case at
bar are significantly different from each other in that there is merit in the case at bar.
3) Whether or not there is finality in the decision of Secretary Ople in view of the compromise
agreement novating it and the withdrawal of the appeal.
4) Whether or not estoppel and laches lie in decisions for the enforcement of labor standards (Rollo,
p. 10).
Petitioners contend that the preliminary activities as workers of respondents STANFILCO

in the assembly area is compensable as working time (from 5:30 to 6:00 o’clock in the
morning) since these preliminary activities are necessarily and primarily for private
respondent’s benefit.
These preliminary activities of the workers are as follows: chanrob1es virtual 1aw library
(a) First there is the roll call. This is followed by getting their individual work assignments from the
foreman.
(b) Thereafter, they are individually required to accomplish the Laborer’s Daily Accomplishment
Report during which they are often made to explain about their reported accomplishment the
following day.
(c) Then they go to the stockroom to get the working materials, tools and equipment.
(d) Lastly, they travel to the field bringing with them their tools, equipment and materials.
All these activities take 30 minutes to accomplish (Rollo, Petition, p. 11).
Contrary to this contention, respondent avers that the instant complaint is not new, the very same
claim having been brought against herein respondent by the same group of rank and file employees
in the case of Associated Labor Union and Standard Fruit Corporation, NLRC Case No. 26-LS-XI-76
which was filed way back April 27, 1976 when ALU was the bargaining agent of respondent’s rank
and file workers. The said case involved a claim for "waiting time", as the complainants purportedly
were required to assemble at a designated area at least 30 minutes prior to the start of their
scheduled working hours "to ascertain the work force available for the day by means of a roll call, for
the purpose of assignment or reassignment of employees to such areas in the plantation where they
are most needed." (Rollo, pp. 64-65).
Noteworthy is the decision of the Minister of Labor, on May 12, 1978 in the aforecited case
(Associated Labor Union v. Standard (Phil.) Fruit Corporation, NLRC Case No. 26-LS-XI-76) where
significant findings of facts and conclusions had already been made on the matter.
The Minister of Labor held: jgc:chanrobles.com.ph
"The thirty (30)-minute assembly time long practiced and institutionalized by mutual consent of the
parties under Article IV, Section 3, of the Collective Bargaining Agreement cannot be considered as
‘waiting time’ within the purview of Section 5, Rule I, Book III of the Rules and Regulations
Implementing the Labor Code . . .
"Furthermore, the thirty (30)-minute assembly is a deeply-rooted, routinary practice of the

employees, and the proceedings attendant thereto are not infected with complexities as to
deprive the workers the time to attend to other personal pursuits. They are not new
employees as to require the company to deliver long briefings regarding their respective work
assignments. Their houses are situated right on the area where the farms are located, such
that after the roll call, which does not necessarily require the personal presence, they can
go back to their houses to attend to some chores. In short, they are not subject to the
absolute control of the company during this period, otherwise, their failure to report in the
assembly time would justify the company to impose disciplinary measures. The CBA does not contain
any provision to this effect; the record is also bare of any proof on this point. This, therefore,
demonstrates the indubitable fact that the thirty (30)-minute assembly time was not
primarily intended for the interests of the employer, but ultimately for the employees to
indicate their availability or non-availability for work during every working day." (Annex
"E", Rollo, p. 57).
Accordingly, the issues are reduced to the sole question as to whether public respondent National
Labor Relations Commission committed a grave abuse of discretion in its resolution of December 17,
1986. chanrobles law library
The facts on which this decision was predicated continue to be the facts of the case in this questioned
resolution of the National Labor Relations Commission.
It is clear that herein petitioners are merely reiterating the very same claim which they fled through
the ALU and which records show had already long been considered terminated and closed by this
Court in G.R. No. L-48510. Therefore, the NLRC can not be faulted for ruling that petitioners’ claim is
already barred by res judicata.
Be that as it may, petitioners’ claim that there was a change in the factual scenario which are
"substantial changes in the facts" makes respondent firm now liable for the same claim they earlier
filed against respondent which was dismissed. It is thus axiomatic that the non-compensability of the
claim having been earlier established, constitute the controlling legal rule or decision between the
parties and remains to be the law of the case making this petition without merit.
As aptly observed by the Solicitor General that this petition is "clearly violative of the familiar
principle of res judicata. There will be no end to this controversy if the light of the Minister of Labor’s
decision dated May 12, 1979 that had long acquired the character of finality — and which already
resolved that petitioners’ thirty (30)-minute assembly time is not compensable, the same issue can
be re-litigated again." (Rollo, p. 183).
This Court has held: jgc:chanrobles.com.ph
"In this connection account should be taken of the cognate principle that res judicata operates to bar
not only the relitigation in a subsequent action of the issues squarely raised, passed upon and
adjudicated in the first suit, but also the ventilation in said subsequent suit of any other issue which
could have been raised in the first but was not The law provides that ‘the judgment or order is, with
respect to the matter directly adjudged or as to any other matter that could have been raised in
relation thereto, conclusive between the parties and their successors in interest by title subsequent
to the commencement of the action . . . litigating for the same thing and in the same capacity.’ So,
even if new causes of action are asserted in the second action (e.g. fraud, deceit, undue
machinations in connection with their execution of the convenio de transaccion), this would not
preclude the operation of the doctrine of res judicata. Those issues are also barred, even if not
passed upon in the first. They could have been, but were not, there raised." (Vda. de Buncio v.
Estate of the late Anita de Leon, 156 SCRA 352 [1987]).
Moreover, as a rule, the findings of facts of quasi-judicial agencies which have acquired expertise
because their jurisdiction is confined to specific matters are accorded not only respect but at times
even finality if such findings are supported by substantial evidence (Special Events & Central
Shipping Office Workers Union v. San Miguel Corporation, 122 SCRA 557 [1983]; Dangan v. NLRC,
127 SCRA 706 [1984]; Phil. Labor Alliance Council v. Bureau of Labor Relations, 75 SCRA 162
[1977]; Mamerto v. Inciong, 118 SCRA 265 [1982]; National Federation of Labor Union (NAFLU) v.
Ople, 143 SCRA 124 [1986]; Edi-Staff Builders International, Inc. v. Leogardo, Jr., 152 SCRA 453
[1987]; Asiaworld Publishing House, Inc. v. Ople, 152 SCRA 219 [1987]).
The records show that the Labor Arbiters’ decision dated October 9, 1985 (Annex "E", Petition)
pointed out in detail the basis of his findings and conclusions, and no cogent reason can be found to
disturb these findings nor of those of the National Labor Relations Commission which affirmed the
same. chanrobles.com.ph : virtual law library
PREMISES CONSIDERED, the petition is DISMISSED for lack of merit and the decision of the National
Labor Relations Commission is AFFIRMED.

9.) G.R. No. 96078 January 9, 1992
HILARIO RADA, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (Second Division) and PHILNOR CONSULTANTS AND
PLANNERS, INC., respondents.
Cabellero, Calub, Aumentado & Associates Law Offices for petitioner.
REGALADO, J.:
In this special civil action for certiorari, petitioner Rada seeks to annul the decision of respondent National Labor
Relations Commission (NLRC), dated November 19, 1990, reversing the decision of the labor arbiter which ordered
the reinstatement of petitioner with backwages and awarded him overtime pay. 1
The facts, as stated in the Comment of private respondent Philnor Consultants and Planners, Inc. (Philnor), are as
follows:
Petitioner's initial employment with this Respondent was under a "Contract of Employment for a
Definite Period" dated July 7, 1977, copy of which is hereto attached and made an integral part
hereof as Annex A whereby Petitioner was hired as "Driver" for the construction supervision
phase of the Manila North Expressway Extension, Second Stage (hereinafter referred to as
MNEE Stage 2) for a term of "about 24 months effective July 1, 1977.
xxx xxx xxx
Highlighting the nature of Petitioner's employment, Annex A specifically provides as follows:
It is hereby understood that the Employer does not have a continuing need for the
services of the Employee beyond the termination date of this contract and that the
Employee's services shall automatically, and without notice, terminate upon the
completion of the above specified phase of the project; and that it is further
understood that the engagement of his/her services is coterminus with the same and
not with the whole project or other phases thereof wherein other employees of similar
position as he/she have been hired. (Par. 7, emphasis supplied)
Petitioner's first contract of employment expired on June 30, 1979. Meanwhile, the main project,
MNEE Stage 2, was not finished on account of various constraints, not the least of which was
inadequate funding, and the same was extended and remained in progress beyond the original
period of 2.3 years. Fortunately for the Petitioner, at the time the first contract of employment
expired, Respondent was in need of Driver for the extended project. Since Petitioner had the
necessary experience and his performance under the first contract of employment was found
satisfactory, the position of Driver was offered to Petitioner, which he accepted. Hence a second
Contract of Employment for a Definite Period of 10 months, that is, from July 1, 1979 to April 30,
1980 was executed between Petitioner and Respondent on July 7, 1979. . . .
In March 1980 some of the areas or phases of the project were completed, but the bulk of the project
was yet to be finished. By that time some of those project employees whose contracts of
employment expired or were about to expire because of the completion of portions of the project
were offered another employment in the remaining portion of the project. Petitioner was among
those whose contract was about to expire, and since his service performance was satisfactory,
respondent renewed his contract of employment in April 1980, after Petitioner agreed to the offer.
Accordingly, a third contract of employment for a definite period was executed by and between the
Petitioner and the Respondent whereby the Petitioner was again employed as Driver for 19 months,
from May 1, 1980 to November 30, 1981, . . .
This third contract of employment was subsequently extended for a number of times, the last
extension being for a period of 3 months, that is, from October 1, 1985 to December 31, 1985, . . .
The last extension, from October 1, 1985 to December 31, 1985 (Annex E) covered by an
"Amendment to the Contract of Employment with a Definite Period," was not extended any further
because Petitioner had no more work to do in the project. This last extension was confirmed by a
notice on November 28, 1985 duly acknowledged by the Petitioner the very next day, . . .
Sometime in the 2nd week of December 1985, Petitioner applied for "Personnel Clearance" with
Respondent dated December 9, 1985 and acknowledged having received the amount of P3,796.20
representing conversion to cash of unused leave credits and financial assistance. Petitioner also
released Respondent from all obligations and/or claims, etc. in a "Release, Waiver and
Quitclaim" . . .
2
Culled from the records, it appears that on May 20, 1987, petitioner filed before the NLRC, National Capital Region,
Department of Labor and Employment, a Complaint for non-payment of separation pay and overtime pay. On June
3, 1987, Philnor filed its Position Paper alleging, inter alia, that petitioner was not illegally terminated since the
project for which he was hired was completed; that he was hired under three distinct contracts of employment, each
of which was for a definite period, all within the estimated period of MNEE Stage 2 Project, covering different phases
or areas of the said project; that his work was strictly confined to the MNEE Stage 2 Project and that he was never
assigned to any other project of Philnor; that he did not render overtime services and that there was no demand or
claim for him for such overtime pay; that he signed a "Release, Waiver and Quitclaim" releasing Philnor from all
obligations and claims; and that Philnor's business is to provide engineering consultancy services, including
supervision of construction services, such that it hires employees according to the requirements of the project
manning schedule of a particular contract. 3
On July 2, 1987, petitioner filed an Amended Complaint alleging that he was illegally dismissed and that he was not
paid overtime pay although he was made to render three hours overtime work form Monday to Saturday for a period
of three years.
On July 7, 1987, petitioner filed his Position Paper claiming that he was illegally dismissed since he was a regular
employee entitled to security of tenure; that he was not a project employee since Philnor is not engaged in the
construction business as to be covered by Policy Instructions No. 20; that the contract of employment for a definite
period executed between him and Philnor is against public policy and a clear circumvention of the law designed
merely to evade any benefits or liabilities under the statute; that his position as driver was essential, necessary and
desirable to the conduct of the business of Philnor; that he rendered overtime work until 6:00 p.m. daily except
Sundays and holidays and, therefore, he was entitled to overtime pay. 4
In his Reply to Respondent's Position Paper, petitioner claimed that he was a regular employee pursuant to Article
278(c) of the Labor Code and, thus, he cannot be terminated except for a just cause under Article 280 of the Code;
and that the public respondent's ruling in Quiwa vs. Philnor Consultants and Planners, Inc. is not applicable to his
5
case since he was an administrative employee working as a company driver, which position still exists and is
essential to the conduct of the business of Philnor even after the completion of his contract of
employment. Petitioner likewise avers that the contract of employment for a definite period entered into between
6
him and Philnor was a ploy to defeat the intent of Article 280 of the Labor Code.
On July 28, 1987, Philnor filed its Respondent's Supplemental Position Paper, alleging therein that petitioner was
not a company driver since his job was to drive the employees hired to work at the MNEE Stage 2 Project to and
from the filed office at Sto. Domingo Interchange, Pampanga; that the office hours observed in the project were from
7:00 a.m. to 4:00 p.m. Mondays through Saturdays; that Philnor adopted the policy of allowing certain employees,
not necessarily the project driver, to bring home project vehicles to afford fast and free transportation to and from the
project field office considering the distance between the project site and the employees' residence, to avoid project
delays and inefficiency due to employee tardiness caused by transportation problem; that petitioner was allowed to
use a project vehicle which he used to pick up and drop off some ten employees along Epifanio de los Santos
Avenue (EDSA), on his way home to Marikina, Metro Manila; that when he was absent or on leave, another
employee living in Metro Manila used the same vehicle in transporting the same employees; that the time used by
petitioner to and from his residence to the project site from 5:30 a.m. to 7:00 a.m. and from 4:00 p.m. to 6:00 p.m.,
or about three hours daily, was not overtime work as he was merely enjoying the benefit and convenience of free
transportation provided by Philnor, otherwise without such vehicle he would have used at least four hours by using
public transportation and spent P12.00 daily fare; that in the case of Quiwa vs. Philnor Consultants and Planners,
Inc., supra, the NLRC upheld Philnor's position that Quiwa was a project employee and he was not entitled to
termination pay under Policy Instructions No. 20 since his employment was coterminous with the completion of the
project.
On August 25, 1987, Philnor filed its Respondent's Reply/Comments to Complainant's Rejoinder and Reply,
submitting therewith two letters dated January 5, 1985 and February 6, 1985, signed by MNEE Stage 2 Project
employees, including herein petitioner, where they asked what termination benefits could be given to them as the
MNEE Stage 2 Project was nearing completion, and Philnor's letter-reply dated February 22, 1985 informing them
that they are not entitled to termination benefits as they are contractual/project employees.
On August 31, 1989, Labor Arbiter Dominador M. Cruz rendered a decision with the following dispositive portion:
7
WHEREFORE, in view of all the foregoing considerations, judgment is hereby rendered:
(1) Ordering the respondent company to reinstate the complainant to his former position without loss
of seniority rights and other privileges with full backwages from the time of his dismissal to his actual
reinstatement;
(2) Directing the respondent company to pay the complainant overtime pay for the three excess
hours of work performed during working days from January 1983 to December 1985; and
(3) Dismissing all other claims for lack of merit.
SO ORDERED.
Acting on Philnor's appeal, the NLRC rendered its assailed decision dated November 19, 1990, setting aside the
labor arbiter's aforequoted decision and dismissing petitioner's complaint.
Hence this petition wherein petitioner charges respondent NLRC with grave abuse of discretion amounting to lack of
jurisdiction for the following reasons:
1. The decision of the labor arbiter, dated August 31, 1989, has already become final and executory;
2. The case of Quiwa vs. Philnor Consultants and Planners, Inc. is not binding nor is it applicable to this case;
3. The petitioner is a regular employee with eight years and five months of continuous services for his employer,
private respondent Philnor;
4. The claims for overtime services, reinstatement and full backwages are valid and meritorious and should have
been sustained; and
5. The decision of the labor arbiter should be reinstated as it is more in accord with the facts, the law and evidence.
The petition is devoid of merit.
1. Petitioner questions the jurisdiction of respondent NLRC in taking cognizance of the appeal filed by Philnor in
spite of the latter's failure to file a supersedeas bond within ten days from receipt of the labor arbiter's decision, by
reason of which the appeal should be deemed to have been filed out of time. It will be noted, however, that Philnor
was able to file a bond although it was made beyond the 10-day reglementary period.

While it is true that the payment of the supersedeas bond is an essential requirement in the perfection of an appeal,
however, where the fee had been paid although payment was delayed, the broader interests of justice and the
desired objective of resolving controversies on the merits demands that the appeal be given due course. Besides, it
was within the inherent power of the NLRC to have allowed late payment of the bond, considering that the aforesaid
decision of the labor arbiter was received by private respondent on October 3, 1989 and its appeal was duly filed on
October 13, 1989. However, said decision did not state the amount awarded as backwages and overtime pay,
hence the amount of the supersedeas bond could not be determined. It was only in the order of the NLRC of
February 16, 1990 that the amount of the supersedeas bond was specified and which bond, after an extension
granted by the NLRC, was timely filed by private respondent.
Moreover, as provided by Article 221 of the Labor Code, "in any proceeding before the Commission or any of the
Labor Arbiters, the rules of evidence prevailing in Courts of law or equity shall not be controlling and it is the spirit
and intention of this Code that the Commission and its members and the Labor Arbiters shall use every and all
reasonable means to ascertain the facts in each case speedily and objectively without regard to technicalities of law
or procedure, all in the interest of due process. 8 Finally, the issue of timeliness of the appeal being an entirely new and unpleaded matter in the
proceedings below it may not now be raised for the first time before this Court. 9
2. Petitioner postulates that as a regular employee, he is entitled to security of tenure, hence he cannot be
terminated without cause. Private respondent Philnor believes otherwise and asserts that petitioner is merely a
project employee who was terminated upon the completion of the project for which he was employed.
In holding that petitioner is a regular employee, the labor arbiter found that:
. . . There is no question that the complainant was employed as driver in the respondent company
continuously from July 1, 1977 to December 31, 1985 under various contracts of employment.
Similarly, there is no dispute that respondent Philnor Consultant & Planner, Inc., as its business
name connotes, has been engaged in providing to its client(e)le engineering consultancy services.
The record shows that while the different labor contracts executed by the parties stipulated definite
periods of engaging the services of the complainant, yet the latter was suffered to continue
performing his job upon the expiration of one contract and the renewal of another. Under these
circumstances, the complaint has obtained the status of regular employee, it appearing that he has
worked without fail for almost eight years, a fraction of six months considered as one whole year,
and that his assigned task as driver was necessary and desirable in the usual trade/business of the
respondent employer. Assuming to be true, as spelled out in the employment contract, that the
Employer has no "continuing need for the services of the Employe(e) beyond the termination date of
this contract and that the Employee's services shall automatically, and without notice, terminate
upon completion of the above specified phase of the project," still we cannot see our way clear why
the complainant was hired and his services engaged contract after contract straight from 1977 to
1985 which, to our considered view, lends credence to the contention that he worked as regular
driver ferrying early in the morning office personnel to the company main office in Pampanga and
bringing back late in the afternoon to Manila, and driving company executives for inspection of
construction workers to the jobsites. All told, we believe that the complainant, under the
environmental facts obtaining in the case at bar, is a regular employee, the provisions of written
agreement to the
contrary notwithstanding and regardless of the oral understanding of the parties . . . 10
On the other hand, respondent NLRC declared that, as between the uncorroborated and unsupported assertions of
petitioners and those of private respondent which are supported by documents, greater credence should be given
the latter. It further held that:
Complainant was hired in a specific project or undertaking as driver. While such project was still on-
going he was hired several times with his employment period fixed every time his contract was
renewed. At the completion of the specific project or undertaking his employment contract was not
renewed.
We reiterate our ruling in the case of (Quiwa) vs. Philnor Consultants and Planners, Inc., NLRC RAB
III 5-1738-84, it is being applicable in this case, viz.:
. . . While it is true that the activities performed by him were necessary or desirable in
the usual business or trade of the respondent as consultants, planners, contractor
and while it is also true that the duration of his employment was for a period of about
seven years, these circumstances did not make him a
regular employee in contemplation of Article 281 of (the) Labor Code. . . . 11
Our ruling in Sandoval Shipyards, Inc. vs. National Labor Relations Commission, et al. is applicable to the case at
12
bar. Thus:
We hold that private respondents were project employees whose work was coterminous with the
project or which they were hired. Project employees, as distinguished from regular or non-project
employees, are mentioned in section 281 of the Labor Code as those "where the employment has
been fixed for a specific project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee."
Policy Instructions No. 20 of the Secretary of Labor, which was issued to stabilize employer-
employee relations in the construction industry, provides:
Project employees are those employed in connection with a particular construction

project. Non-project (regular) employees are those employed by a construction
company without reference to any particular project.
Project employees are not entitled to termination pay if they are terminated as a
result of the completion of the project or any phase thereof in which they are
employed, regardless of the number of projects in which they have been employed
by a particular construction company. Moreover, the company is not required to
obtain clearance from the Secretary of Labor in connection with such termination.
The petitioner cited three of its own cases wherein the National Labor Relations Commission,
Deputy Minister of Labor and Employment Inciong and the Director of the National Capital Region
held that the layoff of its project employees was lawful. Deputy Minister Inciong in TFU Case No.
1530, In Re Sandoval Shipyards, Inc. Application for Clearance to Terminate Employees, rendered
the following ruling on February 26, 1979;
We feel that there is merit in the contention of the applicant corporation. To our mind,
the employment of the employees concerned were fixed for a specific project or
undertaking. For the nature of the business the corporation is engaged into is one
which will not allow it to employ workers for an indefinite period.
It is significant to note that the corporation does not construct vessels for sale or
otherwise which will demand continuous productions of ships and will need
permanent or regular workers. It merely accepts contracts for shipbuilding or for
repair of vessels form third parties and, only, on occasion when it has work contract
of this nature that it hires workers to do the job which, needless to say, lasts only for
less than a year or longer.
The completion of their work or project automatically terminates their employment, in

which case, the employer is, under the law, only obliged to render a report on the
termination of the employment. (139-140, Rollo of G.R. No. 65689) (Emphasis
supplied)
In Cartagenas, et al. vs. Romago Electric Company, Inc., et al., we likewise held that:
13
As an electrical contractor, the private respondent depends for its business on the contracts it is able
to obtain from real estate developers and builders of buildings. Since its work depends on the
availability of such contracts or "projects," necessarily the duration of the employment's of this work

force is not permanent but co-terminus with the projects to which they are assigned and from whose
payrolls they are paid. It would be extremely burdensome for their employer who, like them,
depends on the availability of projects, if it would have to carry them as permanent employees and
pay them wages even if there are no projects for them to work on. (Emphasis supplied.)
It must be stressed herein that although petitioner worked with Philnor as a driver for eight years, the fact that his
services were rendered only for a particular project which took that same period of time to complete categorizes him
as a project employee. Petitioner was employed for one specific project.
A non-project employee is different in that the employee is hired for more than one project. A non-project
employee, vis-a-vis a project employee, is best exemplified in the case of Fegurin, et al. vs. National Labor
Relations Commission, et al. wherein four of the petitioners had been working with the company for nine years,
14
one for eight years, another for six years, the shortest term being three years. In holding that petitioners are regular
employees, this Court therein explained:
Considering the nature of the work of petitioners, that of carpenter, laborer or mason, their
respective jobs would actually be continuous and on-going. When a project to which they are
individually assigned is completed, they would be assigned to the next project or a phase thereof. In
other words, they belonged to a "work pool" from which the company would draw workers for
assignment to other projects at its discretion. They are, therefore, actually "non-project employees."
From the foregoing, it is clear that petitioner is a project employee considering that he does not belong to a "work
pool" from which the company would draw workers for assignment to other projects at its discretion. It is likewise
apparent from the facts obtaining herein that petitioner was utilized only for one particular project, the MNEE Stage
2 Project of respondent company. Hence, the termination of herein petitioner is valid by reason of the completion of
the project and the expiration of his employment contract.
3. Anent the claim for overtime compensation, we hold that petitioner is entitled to the same. The fact that
he picks up employees of Philnor at certain specified points along EDSA in going to the project site and
drops them off at the same points on his way back from the field office going home to Marikina, Metro
Manila is not merely incidental to petitioner's job as a driver. On the contrary, said transportation
arrangement had been adopted, not so much for the convenience of the employees, but primarily for the
benefit of the employer, herein private respondent. This fact is inevitably deducible from the Memorandum of
respondent company:
The herein Respondent resorted to the above transport arrangement because from its
previous project construction supervision experiences, Respondent found out that project
delays and inefficiencies resulted from employees' tardiness; and that the problem of
tardiness, in turn, was aggravated by transportation problems, which varied in degrees in
proportion to the distance between the project site and the employees' residence. In view of this
lesson from experience, and as a practical, if expensive, solution to employees' tardiness and its
concomitant problems, Respondent adopted the policy of allowing certain employees — not
necessarily project drivers — to bring home project vehicles, so that employees could be afforded
fast, convenient and free transportation to and from the project field office. . . .
15
Private respondent does not hesitate to admit that it is usually the project driver who is tasked with picking up or
dropping off his fellow employees. Proof thereof is the undisputed fact that when petitioner is absent, another driver
is supposed to replace him and drive the vehicle and likewise pick up and/or drop off the other employees at the
designated points on EDSA. If driving these employees to and from the project site is not really part of petitioner's
job, then there would have been no need to find a replacement driver to fetch these employees. But since the
assigned task of fetching and delivering employees is indispensable and consequently mandatory, then the
time required of and used by petitioner in going from his residence to the field office and back, that is, from
5:30 a.m. to 7:00 a.m. and from 4:00 p.m. to around 6:00 p.m., which the labor arbiter rounded off as
averaging three hours each working day, should be paid as overtime work. Quintessentially, petitioner should
be given overtime pay for the three excess hours of work performed during working days from January, 1983 to
December, 1985.

WHEREFORE, subject to the modification regarding the award of overtime pay to herein petitioner, the
decision appealed from is AFFIRMED in all other respects.

9b.) [G.R. No. L-63122. February 20, 1984.]
UNIVERSITY OF PANGASINAN FACULTY UNION, Petitioner, v. UNIVERSITY OF

PANGASINAN And NATIONAL LABOR RELATIONS COMMISSION, Respondents.
Tanopo, Serafico, Juanitez & Callanta Law Office and Hermogenes S. Decano for Petitioner.
The Solicitor General for Respondents.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATIONS; LABOR LAWS; PRESIDENTIAL DECREES ON EMERGENCY

COST OF LIVING ALLOWANCE; REQUISITES FOR ENTITLEMENT TO ALLOWANCES PROVIDED
THEREUNDER. — The various Presidential Decrees on ECOLAs to wit: PD’s 1614, 1634, 1678 and
1713, provide on "Allowances of Fulltime Employees . . ." that "Employees shall be paid in full the
required monthly allowance regardless of the number of their regular working days if they incur no
absences during the month. If they incur absences without pay, the amounts corresponding to the
absences may be deducted from the monthly allowance . . ." ; and on "Leave of Absence Without
Pay", that "All covered employees shall be entitled to the allowance provided herein when they are
on leave of absence with pay." cralaw virtua1aw library
2. ID.; ID.; ID.; "NO WORK, NO PAY" PRINCIPLE NOT APPLICABLE’ CASE AT BAR. — It is beyond
dispute that the petitioner’s members are full-time employees receiving their monthly salaries
irrespective of the number of working days or teaching hours in a month. However, they find
themselves in a most peculiar situation whereby they are forced to go on leave during semestral
breaks. These semestral breaks are in the nature of work interruptions beyond the employees’
control. The duration of the semestral break varies from year to year dependent on a variety of
circumstances affecting at times only the private respondent but at other times all educational
institutions in the country. As such, these breaks cannot be considered as absences within the
meaning of the law for which deductions may be made from monthly allowances. The "No work, no
pay" principle does not apply in the instant case. The petitioner’s members received their regular
salaries during this period. It is clear from the aforequoted provision of law that it contemplates a "no
work" situation where the employees voluntarily absent themselves. Petitioners, in the case at bar,
certainly do not, ad voluntatem, absent themselves during semestral breaks. Rather, they are
constrained to take mandatory leave from work. For this they cannot be faulted nor can they be
begrudged that which is due them under the law.
3. ID.; ID.; ID.; EMPLOYEES WHETHER PAID ON MONTHLY OR DAILY BASIS ENTITLED TO DAILY
LIVING ALLOWANCE WHEN PAID THEIR BASIC WAGE. — Respondent’s contention that the "factor
receiving a salary alone should not be the basis of receiving ECOLA", is likewise, without merit.
Particular attention is brought to the Implementing Rules and Regulations of Wage Order No. 1 to
wit: "Sec. 5. Allowance for Unworked Days. — a) All covered employees whether paid on a monthly
or daily basis shall be entitled to their daily living allowance when they are paid their basic.." . .
4. ID.; ID.; ID.; PURPOSE OF THE LAW. — The legal principles of "No work, no pay; No pay, no
ECOLA" must necessarily give way to the purpose of the law to augment the income of employees to
enable them to cope with the harsh living conditions brought about by inflation; and to protect
employees and their wages against the ravages brought by these conditions. Significantly, it is the
commitment of the State to protect labor and to provide means by which the difficulties faced by the
working force may best be alleviated.
5. ID.; ID.; ID.; PRESIDENTIAL DECREE 451; CONSTRUED. — Respondent overlooks the elemental
principle of statutory construction that the general statements in the whereas clauses cannot prevail
over the specific or particular statements in the law itself which define or limit the purposes of the
legislation or proscribe certain acts. True, the whereas clauses of PD 451 provide for salary and or
wage increase and other benefits, however, the same do not delineate the source of such funds and
it is only in Section 3 which provides for the limitations wherein the intention of the framers of the
law is clearly outlined. The law is clear. The sixty (60%) percent incremental proceeds from the
tuition increase are to be devoted entirely to wage or salary increases which means increases in basic
salary. The law cannot be construed to include allowances which are benefits over and above the
basic salaries of the employees.
6. REMEDIAL LAW; APPEALS; FINDINGS OF FACT OF NATIONAL LABOR RELATIONS COMMISSION

ARE BINDING WHEN FULLY SUBSTANTIATED BY EVIDENCE. — As evidenced by the payrolls
submitted by them during the period September 16 to September 30, 1981, the faculty members
have been paid for the extra loads. We agree with the respondents that this issue involves a question
of fact properly within the competence of the respondent NLRC to pass upon. The findings of fact of
the respondent Commission are binding on this Court there being no indication of their being
unsubstantiated by evidence.
DECISION
GUTIERREZ, JR., J.:
This is a petition for review on certiorari pursuant to Rule 65 of the Rules of Court to annul and to set
aside the decision of respondent National Labor Relations Commission (NLRC) dated October 25,
1982, dismissing the appeal of petitioner in NLRC Case No. RBI-47-82, entitled "University of
Pangasinan Faculty Union, complainant, versus University of Pangasinan, Respondent." chanrobles law library : red
Petitioner is a labor union composed of faculty members of the respondent University of Pangasinan,
an educational institution duly organized and existing by virtue of the laws of the Philippines.
On December 18, 1981, the petitioner, through its President, Miss Consuelo Abad, filed a complaint
against the private respondent with the Arbitration Branch of the NLRC, Dagupan District Office,
Dagupan City. The complaint seeks: (a) the payment of Emergency Cost of Living Allowances
(ECOLA) for November 7 to December 5, 1981, a semestral break; (b) salary increases from the
sixty (60%) percent of the incremental proceeds of increased tuition fees; and (c) payment of
salaries for suspended extra loads.
The petitioner’s members are full-time professors, instructors, and teachers of respondent University.
The teachers in the college level teach for a normal duration of ten (10) months a school year,
divided into two (2) semesters of five (5) months each, excluding the two (2) months summer
vacation. These teachers are paid their salaries on a regular monthly basis.
In November and December, 1981, the petitioner’s members were fully paid their regular
monthly salaries. However, from November 7 to December 5, during the semestral break,
they were not paid their ECOLA. The private respondent claims that the teachers are not
entitled thereto because the semestral break is not an integral part of the school year and
there being no actual services rendered by the teachers during said period, the principle of
"No work, no pay" applies.
During the same school year (1981-1982), the private respondent was authorized by the Ministry of
Education and Culture to collect, as it did collect, from its students a fifteen (15%) percent increase
of tuition fees. Petitioner’s members demanded a salary increase effective the first semester of said
schoolyear to be taken from the sixty (60%) percent incremental proceeds of the increased tuition
fees. Private respondent refused, compelling the petitioner to include said demand in the complaint
filed in the case at bar. While the complaint was pending in the arbitration branch, the private
respondent granted an across-the-board salary increase of 5.86%. Nonetheless, the petitioner is still
pursuing full distribution of the 60% of the incremental proceeds as mandated by the Presidential
Decree No. 451.
Aside from their regular loads, some of petitioner’s members were given extra loads to handle during
the same 1981-1982 schoolyear. Some of them had extra loads to teach on September 21, 1981, but
they were unable to teach as classes in all levels throughout the country were suspended, although
said days was proclaimed by the President of the Philippines as a working holiday. Those with extra
loads to teach on said day claimed they were not paid their salaries for those loads, but the private
respondent claims otherwise.
The issue to be resolved in the case at bar are the following: chanrob1es virtual 1aw library
"WHETHER OR NOT PETITIONER’S MEMBERS ARE ENTITLED TO ECOLA DURING THE

SEMESTRAL BREAK FROM NOVEMBER 7 TO DECEMBER 5, 1981 OF THE 1981-82 SCHOOL
YEAR.
II
"WHETHER OR NOT 60% OF THE INCREMENTAL PROCEEDS OF INCREASED TUITION FEES SHALL BE
DEVOTED EXCLUSIVELY TO SALARY INCREASE,
III
"WHETHER OR NOT ALLEGED PAYMENT OF SALARIES FOR EXTRA LOADS ON SEPTEMBER 21, 1981
WAS PROVEN BY SUBSTANTIAL EVIDENCE." cralaw virtua1aw library
Anent the first issue, the various Presidential Decrees on ECOLAs to wit: PD’s 1614, 1634, 1678 and
1713, provide on "Allowances of Fulltime Employees . . ." that "Employees shall be paid in full the
required monthly allowance regardless of the number of their regular working days if they incur no
absences during the month. If they incur absences without pay, the amounts corresponding to the
absences may be deducted from the monthly allowance . . ." ; and on "Leave of Absence Without
Pay", that "All covered employees shall be entitled to the allowance provided herein when they are
on leave of absence with pay." cralaw virtua1aw library
It is beyond dispute that the petitioner’s members are full-time employees receiving their monthly
salaries irrespective of the number of working days or teaching hours in a month. However, they
find themselves in a most peculiar situation whereby they are forced to go on leave during
semestral breaks. These semestral breaks are in the nature of work interruptions beyond
the employees’ control. The duration of the semestral break varies from year to year dependent
on a variety of circumstances affecting at times only the private respondent but at other times all
educational institutions in the country. As such, these breaks cannot be considered as
absences within the meaning of the law for which deductions may be made from monthly
allowances. The "No work, no pay" principle does not apply in the instant case. The
petitioner’s members received their regular salaries during this period. It is clear from the
aforequoted provision of law that it contemplates a "no work" situation where the
employees voluntarily absent themselves. Petitioners, in the case at bar, certainly do not,
ad voluntatem, absent themselves during semestral breaks. Rather, they are constrained

to take mandatory leave from work. For this they cannot be faulted nor can they be
begrudged that which is due them under the law. To a certain extent, the private respondent
can specify dates when no classes would be held. Surely, it was not the intention of the framers of
the law to allow employers to withhold employee benefits by the simple expedient of unilaterally
imposing "no work" days and consequently avoiding compliance with the mandate of the law for
those days. chanrobles.com.ph : virtual law library
Respondent’s contention that "the fact of receiving a salary alone should not be the basis of receiving
ECOLA", is, likewise, without merit. Particular attention is brought to the Implementing Rules and
Regulations of Wage Order No. 1 to wit.
SECTION 5. Allowance for Unworked Days. —
"a) All covered employees whether paid on a monthly or daily basis shall be entitled to their daily
living allowance when they are paid their basic wage." cralaw virtua1aw library
x x x
This provision, at once refutes the above contention. It is evident that the intention of the law is to
grant ECOLA upon the payment of basic wages. Hence, we have the principle of "No pay, no ECOLA"
the converse of which finds application in the case at bar. Petitioners cannot be considered to be on
leave without pay so as not to be entitled to ECOLA, for, as earlier stated, the petitioners were paid
their wages in full for the months of November and December of 1981, notwithstanding the
intervening semestral break. This, in itself, is a tacit recognition of the rather unusual state of affairs
in which teachers find themselves. Although said to be on forced leave, professors and teachers are,
nevertheless, burdened with the task of working during a period of time supposedly available for rest
and private matters. There are papers to correct, students to evaluate, deadlines to meet, and
periods within which to submit grading reports. Although they may be considered by the respondent
to be on leave, the semestral break could not be used effectively for the teacher’s own purposes for
the nature of a teacher’s job imposes upon him further duties which must be done during the said
period of time. Learning is a never ending process. Teachers and professors must keep abreast of
developments all the time. Teachers cannot also wait for the opening of the next semester to begin
their work. Arduous preparation is necessary for the delicate task of educating our children. Teaching
involves not only an application of skill and an imparting of knowledge, but a responsibility which
entails self dedication and sacrifice. The task of teaching ends not with the perceptible efforts of the
petitioner’s members but goes beyond the classroom: a continuum where only the visible labor is
relieved by academic intermissions. It would be most unfair for the private respondent to consider
these teachers as employees on leave without pay to suit its purposes and, yet, in the meantime,
continue availing of their services as they prepare for the next semester or complete all of the last
semester’s requirements. Furthermore, we may also by analogy apply the principle enunciated in the
Omnibus Rules Implementing the Labor Code to wit: chanrob1es virtual 1aw library
Sec. 4. Principles in Determining Hours Worked. — The following general principles shall
govern in determining whether the time spent by an employee is considered hours worked
for purposes of this Rule: chanrob1es virtual 1aw library
x x x
"(d) The time during which an employee is inactive by reason of interruptions in his work
beyond his control shall be considered time either if the imminence of the resumption of
work requires the employee’s presence at the place of work or if the interval is too brief to
be utilized effectively and gainfully in the employee’s own interest." (Emphasis supplied).

The petitioner’s members in the case at bar, are exactly in such a situation. The semestral break
scheduled is an interruption beyond petitioner’s control and it cannot be used "effectively nor
gainfully in the employee’s interest’. Thus, the semestral break may also be considered as "hours
worked." For this, the teachers are paid regular salaries and, for this, they should be entitled to
ECOLA. Not only do the teachers continue to work during this short recess but much less do they
cease to live for which the cost of living allowance is intended. The legal principles of "No work, no
pay; No pay, no ECOLA" must necessarily give way to the purpose of the law to augment the income
of employees to enable them to cope with the harsh living conditions brought about by inflation; and
to protect employees and their wages against the ravages brought by these conditions. Significantly,
it is the commitment of the State to protect labor and to provide means by which the difficulties
faced by the working force may best be alleviated. To submit to the respondents’ interpretation of
the no work, no pay policy is to defeat this noble purpose. The Constitution and the law mandate
otherwise. chanrobles.com:cralaw:red
With regard to the second issue, we are called upon to interpret and apply Section 3 of Presidential
Decree 451 to wit: chanrob1es virtual 1aw library
SEC. 3. Limitations. — The increase in tuition or other school fees or other charges as well as the
new fees or charges authorized under the next preceding section shall be subject to the following
conditions: jgc:chanrobles.com.ph
"(a) That no increase in tuition or other school fees or charges shall be approved unless sixty (60%)
per centum of the proceeds is allocated for increase in salaries or wages of the members of the
faculty and all other employees of the school concerned, and the balance for institutional
development, student assistance and extension services, and return to investments: Provided, That
in no case shall the return to investments exceed twelve (12%) per centum of the incremental
proceeds; . . ." cralaw virtua1aw library
x x x
This Court had the occasion to rule squarely on this point in the very recent case entitled, University
of the East v. University of the East Faculty Association, 117 SCRA 554. We held that: jgc:chanrobles.com.ph
"In effect, the problem posed before Us is whether or not the reference in Section 3(a) to ‘increase in
salaries or wages of the faculty and all other employees of the schools concerned’ as the first purpose
to which the incremental proceeds from authorized increases to tuition fees may be devoted, may be
construed to include allowances and benefits. In the negative, which is the position of respondents, it
would follow that such allowances must be taken in resources of the school not derived from tuition
fees.
"Without delving into the factual issue of whether or not there could be any such other resources, We
note that among the items of second purpose stated in provision in question is return in investment.
And the law provides only for a maximum, not a minimum. In other words, the schools may get a
return to investment of not more than 12%, but if circumstances warrant, there is no minimum fixed
by law which they should get.
"On this predicate, We are of the considered view that, if the school happen to have no other
resources to grant allowances and benefits, either mandated by law or secured by collective
bargaining, such allowances and benefits should be charged against the return to investments
referred to in the second purpose stated in Section 3(a) of P.D. 451." cralaw virtua1aw library
Private respondent argues that the above interpretation "disregarded the intention and spirit of the
law" which intention is clear from the "whereas" clauses as follows: jgc:chanrobles.com.ph

"It is imperative that private educational institutions upgrade classroom instruction . . . provide
salary and or wage increases and other benefits . . ." cralaw virtua1aw library
Respondent further contends that PD 451 was issued to alleviate the sad plight of private schools,
their personnel and all those directly or indirectly on school income as the decree was aimed —
". . . to upgrade classroom instruction by improving their facilities and bring competent teachers in all
levels of education, provide salary and or wage increases and other benefits to their teaching,
administrative, and other personnel to keep up with the increasing cost of living." (Emphasis
supplied)
Respondent overlooks the elemental principle of statutory construction that the general statements in
the whereas clauses cannot prevail over the specific or particular statements in the law itself which
define or limit the purposes of the legislation or proscribe certain acts. True, the whereas clauses of
PD 451 provide for salary and or wage increase and other benefits, however, the same do not
delineate the source of such funds and it is only in Section 3 which provides for the limitations
wherein the intention of the framers of the law is clearly outlined. The law is clear. The sixty (60%)
percent incremental proceeds from the tuition increase are to be devoted entirely to wage or salary
increases which means increases in basic salary. The law cannot be construed to include allowances
which are benefits over and above the basic salaries of the employees. To charge such benefits to the
60% incremental proceeds would be to reduce the increase in basic salary provided by law, an
increase intended also to help the teachers and other workers tide themselves and their families over
these difficult economic times.chanrobles virtual lawlibrary
This Court is not guilty of usurpation of legislative functions as claimed by the respondents. We
expressed the opinion in the University of the East case that benefits mandated by law and collective
bargaining may be charged to the 12% return on investments within the 40% incremental proceeds
of tuition increase. As admitted by respondent, we merely made this statement as a suggestion in
answer to the respondent’s query as to where then, under the law, can such benefits be charged. We
were merely interpreting the meaning of the law within the confines of its provisions. The law
provides that 60% should go to wage increases and 40% to institutional developments, student
assistance, extension services, and return on investments (ROI). Under the law, the last item ROI
has flexibility sufficient to accommodate other purposes of the law and the needs of the university.
ROI is not set aside for any one purpose of the university such as profits or returns on investments.
The amount may be used to comply with other duties and obligations imposed by law which the
university exercising managerial prerogatives finds cannot under present circumstances, be funded
by other revenue sources. It may be applied to any other collateral purpose of the university or
invested elsewhere. Hence, the framers of the law intended this portion of the increases in tuition
fees to be a general fund to cover up for the university’s miscellaneous expenses and, precisely, for
this reason, it was not so delimited. Besides, ROI is a return or profit over and above the operating
expenditures of the university, and still, over and above the profits it may have had prior to the
tuition increase. The earning capacities of private educational institutions are not dependent on the
increases in tuition fees allowed by P.D. 451. Accommodation of the allowances required by law
require wise and prudent management of all the university resources together with the incremental
proceeds of tuition increases. Cognizance should be taken of the fact that the private respondent
had, before PD 451, managed to grant all allowances required by law. It cannot now claim that it
could not afford the same, considering that additional funds are even granted them by the law in
question. We find no compelling reason, therefore, to deviate from our previous ruling in the
University of the East case even as we take the second hard look at the decision requested by the
private Respondent. This case was decided in 1982 when PDs 1614, 1634, 1678, and 1713 which are
also the various Presidential Decrees on ECOLA were already in force. PD 451 was interpreted in the
light of these subsequent legislations which bear upon but do not modify nor amend, the same. We
need not go beyond the ruling in the University of the East case.
Coming now to the third issue, the respondents are of the considered view that as evidenced by the
payrolls submitted by them during the period September 16 to September 30, 1981, the faculty
members have been paid for the extra loads. We agree with the respondents that this issue involves
a question of fact properly within the competence of the respondent NLRC to pass upon. The findings
of fact of the respondent Commission are binding on this Court there being no indication of their
being unsubstantiated by evidence. We find no grave abuse in the findings of respondent NLRC on
this matter to warrant reversal. Assuming arguendo, however, that the petitioners have not been
paid for these extra loads, they are not entitled to payment following the principles of "No work, no
pay." This time, the rule applies. Involved herein is a matter different from the payment of ECOLA
under the first issue. We are now concerned with extra, not regular loads for which the petitioners
are paid regular salaries every month regardless of the number of working days or hours in such a
month. Extra loads should be paid for only when actually performed by the employee. Compensation
is based, therefore, on actual work done and on the number of hours and days spent over and
beyond their regular hours of duty. Since there was no work on September 21, 1981, it would now
be unfair to grant petitioner’s demand for extra wages on that day. chanrobles law library : red
Finally, disposing of the respondent’s charge of petitioner’s lack of legal capacity to sue, suffice it to
say that this question can no longer be raised initially on appeal or certiorari. It is quite belated for
the private respondent to question the personality of the petitioner after it had dealt with it as a
party in the proceedings below. Furthermore, it was not disputed that the petitioner is a duly
registered labor organization and as such has the legal capacity to sue and be sued. Registration
grants it the rights of a legitimate labor organization and recognition by the respondent University is
not necessary for it to institute this action in behalf of its members to protect their interests and
obtain relief from grievances. The issues raised by the petitioner do not involve pure money claims
but are more intricately intertwined with conditions of employment.
WHEREFORE the petition for certiorari is hereby GRANTED. The private respondent is ordered to pay
its regular fulltime teachers/employees emergency cost of living allowances for the semestral break
from November 7 to December 5, 1981 and the undistributed balance of the sixty (60%) percent
incremental proceeds from tuition increases for the same schoolyear as outlined above. The
respondent Commission is sustained insofar as it DENIED the payment of salaries for the suspended
extra loads on September 21, 1981.

10.) [G.R. No. 173648 : January 16, 2012]
ABDULJUAHID R. PIGCAULAN,* PETITIONER, VS. SECURITY AND CREDIT INVESTIGATION,

INC. AND/OR RENE AMBY REYES , RESPONDENTS.
DECISION
DEL CASTILLO, J.:
It is not for an employee to prove non-payment of benefits to which he is entitled by law. Rather, it is
on the employer that the burden of proving payment of these claims rests. cralaw
This Petition for Review on Certiorari[1] assails the February 24, 2006 Decision[2] of the Court of
Appeals (CA) in CA-G.R. SP No. 85515, which granted the petition for certiorari filed therewith, set
aside the March 23, 2004[3] and June 14, 2004[4] Resolutions of the National Labor Relations
Commission (NLRC), and dismissed the complaint filed by Oliver R. Canoy (Canoy) and petitioner
Abduljuahid R. Pigcaulan (Pigcaulan) against respondent Security and Credit Investigation, Inc.
(SCII) and its General Manager, respondent Rene Amby Reyes. Likewise assailed is the June 28,
2006 Resolution[5] denying Canoy’s and Pigcaulan’s Motion for Reconsideration.[6]
Factual Antecedents
Canoy and Pigcaulan were both employed by SCII as security guards and were assigned to
SCII’s different clients. Subsequently, however, Canoy and Pigcaulan filed with the Labor Arbiter
separate complaints[7] for underpayment of salaries and non-payment of overtime, holiday, rest day,
service incentive leave and 13th month pays. These complaints were later on consolidated as they
involved the same causes of action.
Canoy and Pigcaulan, in support of their claim, submitted their respective daily time
records reflecting the number of hours served and their wages for the same. They
likewise presented itemized lists of their claims for the corresponding periods served.
Respondents, however, maintained that Canoy and Pigcaulan were paid their just salaries and other
benefits under the law; that the salaries they received were above the statutory minimum wage and
the rates provided by the Philippine Association of Detective and Protective Agency Operators
(PADPAO) for security guards; that their holiday pay were already included in the computation of
their monthly salaries; that they were paid additional premium of 30% in addition to their basic
salary whenever they were required to work on Sundays and 200% of their salary for work done on
holidays; and, that Canoy and Pigcaulan were paid the corresponding 13th month pay for the years
1998 and 1999. In support thereof, copies of payroll listings[8] and lists of employees who received
their 13th month pay for the periods December 1997 to November 1998 and December 1998 to
November 1999[9] were presented. In addition, respondents contended that Canoy’s and Pigcaulan’s
monetary claims should only be limited to the past three years of employment pursuant to the rule
on prescription of claims.
Ruling of the Labor Arbiter
Giving credence to the itemized computations and representative daily time records submitted by
Canoy and Pigcaulan, Labor Arbiter Manuel P. Asuncion awarded them their monetary claims in his
Decision[10] dated June 6, 2002. The Labor Arbiter held that the payroll listings presented by the
respondents did not prove that Canoy and Pigcaulan were duly paid as same were not signed by the
latter or by any SCII officer. The 13th month payroll was, however, acknowledged as sufficient proof
of payment, for it bears Canoy’s and Pigcaulan’s signatures. Thus, without indicating any detailed
computation of the judgment award, the Labor Arbiter ordered the payment of overtime pay, holiday

pay, service incentive leave pay and proportionate 13th month pay for the year 2000 in favor of
Canoy and Pigcaulan, viz:
WHEREFORE, the respondents are hereby ordered to pay the complainants: 1) their salary
differentials in the amount of P166,849.60 for Oliver Canoy and P121,765.44 for Abduljuahid
Pigcaulan; 2) the sum of P3,075.20 for Canoy and P2,449.71 for Pigcaulan for service incentive leave
pay and; [3]) the sum of P1,481.85 for Canoy and P1,065.35 for Pigcaulan as proportionate
13th month pay for the year 2000. The rest of the claims are dismissed for lack of sufficient basis to
make an award.
SO ORDERED.[11]
Ruling of the National Labor Relations Commission
Respondents appealed to the NLRC. They alleged that there was no basis
for the awards made because aside from the self-serving itemized computations, no representative
daily time record was presented by Canoy and Pigcaulan. On the contrary, respondents asserted
that the payroll listings they submitted should have been given more probative value. To strengthen
their cause, they attached to their Memorandum on Appeal payrolls[12] bearing the individual
signatures of Canoy and Pigcaulan to show that the latter have received their salaries, as well as
copies of transmittal letters[13] to the bank to show that the salaries reflected in the payrolls were
directly deposited to the ATM accounts of SCII’s employees.
The NLRC, however, in a Resolution[14] dated March 23, 2004, dismissed the appeal and held that the
evidence show underpayment of salaries as well as non-payment of service incentive leave benefit.
Accordingly, the Labor Arbiter’s Decision was sustained. The motion for reconsideration thereto was
likewise dismissed by the NLRC in a Resolution[15] dated June 14, 2004.
Ruling of the Court of Appeals
In respondents’ petition for certiorari with prayer for the issuance of a temporary restraining order
and preliminary injunction[16] before the CA, they attributed grave abuse of discretion on the part of
the NLRC in finding that Canoy and Pigcaulan are entitled to salary differentials, service incentive
leave pay and proportionate 13th month pay and in arriving at amounts without providing sufficient
bases therefor.
The CA, in its Decision[17] dated February 24, 2006, set aside the rulings of both the Labor Arbiter
and the NLRC after noting that there were no factual and legal bases mentioned in the questioned
rulings to support the conclusions made. Consequently, it dismissed all the monetary claims of
Canoy and Pigcaulan on the following rationale:
First. The Labor Arbiter disregarded the NLRC rule that, in cases involving money awards and at all
events, as far as practicable, the decision shall embody the detailed and full amount awarded.
Second. The Labor Arbiter found that the payrolls submitted by SCII have no probative value for
being unsigned by Canoy, when, in fact, said payrolls, particularly the payrolls from 1998 to 1999
indicate the individual signatures of Canoy.
Third. The Labor Arbiter did not state in his decision the substance of the evidence adduced by
Pigcaulan and Canoy as well as the laws or jurisprudence that would show that the two are indeed
entitled to the salary differential and incentive leave pays.
Fourth. The Labor Arbiter held Reyes liable together with SCII for the payment of the claimed
salaries and benefits despite the absence of proof that Reyes deliberately or maliciously designed to
evade SCII’s alleged financial obligation; hence the Labor Arbiter ignored that SCII has a corporate
personality separate and distinct from Reyes. To justify solidary liability, there must be an allegation
and showing that the officers of the corporation deliberately or maliciously designed to evade the
financial obligation of the corporation.[18]
Canoy and Pigcaulan filed a Motion for Reconsideration, but same was denied by the CA in a
Resolution[19] dated June 28, 2006.
Hence, the present Petition for Review on Certiorari.
Issues
The petition ascribes upon the CA the following errors:
I. The Honorable Court of Appeals erred when it dismissed the complaint on mere alleged failure of
the Labor Arbiter and the NLRC to observe the prescribed form of decision, instead of remanding the
case for reformation of the decision to include the desired detailed computation.
II. The Honorable Court of Appeals erred when it [made] complainants suffer the consequences of
the alleged non-observance by the Labor Arbiter and NLRC of the prescribed forms of decisions
considering that they have complied with all needful acts required to support their claims.
III. The Honorable Court of Appeals erred when it dismissed the complaint allegedly due to absence
of legal and factual [bases] despite attendance of substantial evidence in the records.[20]
It is well to note that while the caption of the petition reflects both the names of Canoy and Pigcaulan
as petitioners, it appears from its body that it is being filed solely by Pigcaulan. In fact, the
Verification and Certification of Non-Forum Shopping was executed by Pigcaulan alone.
In his Petition, Pigcaulan submits that the Labor Arbiter and the NLRC are not strictly bound by the
rules. And even so, the rules do not mandate that a detailed computation of how the amount
awarded was arrived at should be embodied in the decision. Instead, a statement of the nature or a
description of the amount awarded and the specific figure of the same will suffice. Besides, his and
Canoy’s claims were supported by substantial evidence in the form of the handwritten detailed
computations which the Labor Arbiter termed as “representative daily time records,” showing that
they were not properly compensated for work rendered. Thus, the CA should have remanded the
case instead of outrightly dismissing it.
In their Comment,[21] respondents point out that since it was only Pigcaulan who filed the petition,
the CA Decision has already become final and binding upon Canoy. As to Pigcaulan’s arguments,
respondents submit that they were able to present sufficient evidence to prove payment of just
salaries and benefits, which bits of evidence were unfortunately ignored by the Labor Arbiter and the
NLRC. Fittingly, the CA reconsidered these pieces of evidence and properly appreciated them.
Hence, it was correct in dismissing the claims for failure of Canoy and Pigcaulan to discharge their
burden to disprove payment.
Pigcaulan, this time joined by Canoy, asserts in his Reply[22] that his filing of the present petition
redounds likewise to Canoy’s benefit since their complaints were consolidated below. As such, they
maintain that any kind of disposition made in favor or against either of them would inevitably apply
to the other. Hence, the institution of the petition solely by Pigcaulan does not render the assailed
Decision final as to Canoy. Nonetheless, in said reply they appended Canoy’s affidavit[23] where he
verified under oath the contents and allegations of the petition filed by Pigcaulan and also attested to
the authenticity of its annexes. Canoy, however, failed to certify that he had not filed any action or
claim in another court or tribunal involving the same issues. He likewise explains in said affidavit

that his absence during the preparation and filing of the petition was caused by severe financial
distress and his failure to inform anyone of his whereabouts.
Our Ruling
The assailed CA Decision is considered final as to Canoy.
We have examined the petition and find that same was filed by Pigcaulan solely on his own behalf.
This is very clear from the petition’s prefatory which is phrased as follows:
COMES NOW Petitioner Abduljuahid R. Pigcaulan, by counsel, unto this Honorable Court x x x.

(Emphasis supplied.)
Also, under the heading “Parties”, only Pigcaulan is mentioned as petitioner and consistent with this,
the body of the petition refers only to a “petitioner” and never in its plural form “petitioners”. Aside
from the fact that the Verification and Certification of Non-Forum Shopping attached to the petition
was executed by Pigcaulan alone, it was plainly and particularly indicated under the name of the
lawyer who prepared the same, Atty. Josefel P. Grageda, that he is the “Counsel for Petitioner
Adbuljuahid Pigcaulan” only. In view of these, there is therefore, no doubt, that the petition was
brought only on behalf of Pigcaulan. Since no appeal from the CA Decision was brought by Canoy,
same has already become final and executory as to him.
Canoy cannot now simply incorporate in his affidavit a verification of the contents and allegations of
the petition as he is not one of the petitioners therein. Suffice it to state that it would have been
different had the said petition been filed in behalf of both Canoy and Pigcaulan. In such a case,
subsequent submission of a verification may be allowed as non-compliance therewith or a defect
therein does not necessarily render the pleading, or the petition as in this case, fatally defective.[24]
“The court may order its submission or correction, or act on the pleading if the attending
circumstances are such that strict compliance with the Rule may be dispensed with in order that the
ends of justice may be served thereby. Further, a verification is deemed substantially complied with
when one who has ample knowledge to swear to the truth of the allegations in the complaint or
petition signs the verification, and when matters alleged in the petition have been made in good faith
or are true and correct.”[25] However, even if it were so, we note that Canoy still failed to submit or
at least incorporate in his affidavit a certificate of non-forum shopping.
The filing of a certificate of non-forum shopping is mandatory so much so that non-compliance
could only be tolerated by special circumstances and compelling reasons.[26] This Court has held that
when there are several petitioners, all of them must execute and sign the certification against forum
shopping; otherwise, those who did not sign will be dropped as parties to the case.[27] True, we held
that in some cases, execution by only one of the petitioners on behalf of the other petitioners
constitutes substantial compliance with the rule on the filing of a certificate of non-forum shopping on
the ground of common interest or common cause of action or defense.[28] We, however, find that
common interest is not present in the instant petition. To recall, Canoy’s and Pigcaulan’s complaints
were consolidated because they both sought the same reliefs against the same respondents. This
does not, however, mean that they share a common interest or defense. The evidence required to
substantiate their claims may not be the same. A particular evidence which could sustain Canoy’s
action may not effectively serve as sufficient to support Pigcaulan’s claim.
Besides, assuming that the petition is also filed on his behalf, Canoy failed to show any reasonable
cause for his failure to join Pigcaulan to personally sign the Certification of Non-Forum Shopping. It
is his duty, as a litigant, to be prudent in pursuing his claims against SCII, especially so, if he was
indeed suffering from financial distress. However, Canoy failed to advance any justifiable reason why
he did not inform anyone of his whereabouts when he knows that he has a pending case against his
former employer. Sadly, his lack of prudence and diligence cannot merit the court’s consideration or
sympathy. It must be emphasized at this point that procedural rules should not be ignored simply
because their non-observance may result in prejudice to a party’s substantial rights. The Rules of
Court should be followed except only for the most persuasive of reasons.[29]
Having declared the present petition as solely filed by Pigcaulan, this Court shall consider the
subsequent pleadings, although apparently filed under his and Canoy’s name, as solely filed by the
former.
There was no substantial evidence

to support the grant of overtime pay.
The Labor Arbiter ordered reimbursement of overtime pay, holiday pay, service incentive leave pay
and 13th month pay for the year 2000 in favor of Canoy and Pigcaulan. The Labor Arbiter relied
heavily on the itemized computations they submitted which he considered as representative daily
time records to substantiate the award of salary differentials. The NLRC then sustained the award on
the ground that there was substantial evidence of underpayment of salaries and benefits.
We find that both the Labor Arbiter and the NLRC erred in this regard. The handwritten itemized
computations are self-serving, unreliable and unsubstantial evidence to sustain the grant
of salary differentials, particularly overtime pay. Unsigned and unauthenticated as they are,
there is no way of verifying the truth of the handwritten entries stated therein. Written only in pieces
of paper and solely prepared by Canoy and Pigcaulan, these representative daily time records, as
termed by the Labor Arbiter, can hardly be considered as competent evidence to be used as basis to
prove that the two were underpaid of their salaries. We find nothing in the records which could
substantially support Pigcaulan’s contention that he had rendered service beyond eight
hours to entitle him to overtime pay and during Sundays to entitle him to restday pay.
Hence, in the absence of any concrete proof that additional service beyond the normal working hours
and days had indeed been rendered, we cannot affirm the grant of overtime pay to Pigcaulan.
Pigcaulan is entitled to holiday pay,

service incentive leave pay and
proportionate 13th month pay for year 2000.
However, with respect to the award for holiday pay, service incentive leave pay and 13th month pay,
we affirm and rule that Pigcaulan is entitled to these benefits.
Article 94 of the Labor Code provides that:
ART. 94. RIGHT TO HOLIDAY PAY. – (a) Every worker shall be paid his regular daily wage during
regular holidays, except in retail and service establishments regularly employing less than ten (10)
workers;
xxxx
While Article 95 of the Labor Code provides:
ART. 95. RIGHT TO SERVICE INCENTIVE LEAVE. – (a) Every employee who has rendered at least
one year of service shall be entitled to a yearly service incentive of five days with pay.
xxxx
Under the Labor Code, Pigcaulan is entitled to his regular rate on holidays even if he does not work.
[30]
Likewise, express provision of the law entitles him to service incentive leave benefit for he
rendered service for more than a year already. Furthermore, under Presidential Decree No. 851,
[31]
he should be paid his 13th month pay. As employer, SCII has the burden of proving that it has
paid these benefits to its employees.[32]
SCII presented payroll listings and transmittal letters to the bank to show that Canoy and Pigcaulan
received their salaries as well as benefits which it claimed are already integrated in the employees’
monthly salaries. However, the documents presented do not prove SCII’s allegation. SCII
failed to show any other concrete proof by means of records, pertinent files or similar
documents reflecting that the specific claims have been paid. With respect to 13th month
pay, SCII presented proof that this benefit was paid but only for the years 1998 and 1999.
To repeat, the burden of proving payment of these monetary claims rests on SCII, being
the employer. It is a rule that one who pleads payment has the burden of proving it.
“Even when the plaintiff alleges non-payment, still the general rule is that the burden
rests on the defendant to prove payment, rather than on the plaintiff to prove non-
payment.”[33] Since SCII failed to provide convincing proof that it has already settled the claims,
Pigcaulan should be paid his holiday pay, service incentive leave benefits and proportionate
13th month pay for the year 2000.
The CA erred in dismissing the claims

instead of remanding the case to the Labor
Arbiter for a detailed computation of the judgment award.
Indeed, the Labor Arbiter failed to provide sufficient basis for the monetary awards granted. Such
failure, however, should not result in prejudice to the substantial rights of the party. While we
disallow the grant of overtime pay and restday pay in favor of Pigcaulan, he is nevertheless entitled,
as a matter of right, to his holiday pay, service incentive leave pay and 13th month pay for year
2000. Hence, the CA is not correct in dismissing Pigcaulan’s claims in its entirety.
Consistent with the rule that all money claims arising from an employer-employee relationship shall
be filed within three years from the time the cause of action accrued,[34] Pigcaulan can only demand
the amounts due him for the period within three years preceding the filing of the complaint in 2000.
Furthermore, since the records are insufficient to use as bases to properly compute Pigcaulan’s
claims, the case should be remanded to the Labor Arbiter for a detailed computation of the monetary
benefits due to him. cralaw
WHEREFORE, the petition is GRANTED. The Decision dated
February 24, 2006 and Resolution dated June 28, 2006 of the Court of Appeals in CA-G.R. SP No.
85515 are REVERSED and SET ASIDE. Petitioner Abduljuahid R. Pigcaulan is hereby
declared ENTITLED to holiday pay and service incentive leave pay for the years 1997-2000 and
proportionate 13th month pay for the year 2000.
The case is REMANDED to the Labor Arbiter for further proceedings to determine the exact amount
and to make a detailed computation of the monetary benefits due Abduljuahid R. Pigcaulan which
Security and Credit Investigation Inc. should pay without delay.

11.) [G.R. No. L-48437. September 30, 1986.]
MANTRADE/FMMC DIVISION EMPLOYEES AND WORKERS UNION (represented by

PHILIPPINE SOCIAL SECURITY LABOR UNION — PSSLU Fed. — TUCP), Petitioner, v.
ARBITRATOR FROILAN M. BACUNGAN and MANTRADE DEVELOPMENT
CORPORATION, Respondents.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; VOLUNTARY ARBITRATORS; DECISIONS

SUBJECT TO JUDICIAL REVIEW. — The contentions of respondent corporation have been ruled
against in the decision of this court in the case of Oceanic Bic Division (FFW) v. Romero, promulgated
on July 16, 1984, wherein it stated: . . . "A voluntary arbitrator by the nature of her functions acts in
a quasijudicial capacity. There is no reason why her decisions involving interpretation of law should
be beyond this court’s review. Administrative officials are presumed to act in accordance with law and
yet we do not hesitate to pass upon their work where a question of law is involved or where a
showing of abuse of discretion in their officials acts is properly raised in petitions for certiorari." (130
SCRA 392, 399, 400-401)
2. ID.; ID.; GRANT FOR HOLIDAY PAY MONTHLY PAID EMPLOYEES; ISSUE SETTLED IN THE CASES
OF INSULAR BANK OF ASIA AND AMERICA EMPLOYEES’ UNION VS. INCIONG, [132 SCRA 633], AND
CHARTERED BANK EMPLOYEES UNION VS. OPLE [141 SCRA 9]. — Respondent arbitrator opined that
respondent corporation does not have any legal obligation to grant its monthly salaried employees
holiday pay, unless it is argued that the pertinent section of the Rule and Regulations implementing
Section 94 of the Labor Code is not in conformity with the law, and thus, without force and effect.
This issue was subsequently decided on October 24, 1984 by a division of this court in the case of
Insular Bank of Asia and American Employees’ Union (IBAAEU) v. Inciong, wherein it held as follows:
"We agree with petitioner’s contention that Section 2, Rule IV, Book III of the implementing rules
and Policy Instruction No. 9 issued by the then Secretary of Labor are null and void since in the guise
of clarifying the Labor Code’s provisions on holiday pay, they in effect amended them enlarging the
scope of their exclusion (p. 11, rec.). . . . "From the above-cited provisions, it is clear that monthly
paid employees are not excluded from the benefits of holiday pay. However, the implementing rules
on holiday pay promulgated by the then Secretary of Labor excludes monthly paid employees from
the said benefits by inserting under Rule IV, Book III of the implementing rules, section 2, which
provides that: ‘employees who are uniformly paid by the month, irrespective of the number of
working days therein , with the salary of not less than the statutory or established minimum wage
shall be presumed to be paid for all days in the month whether worked or not." (132 SCRA 663, 672-
673) This ruling was reiterated by the court en banc on August 28, 1985 in the case of Chartered
Bank Employees Association v. Ople, wherein it added that: "The questioned Sec. 2, Rule IV, Book III
of the Integrated Rules and the Secretary’s Policy Instruction No. 9 add another excluded group,
namely ‘employees who are uniformly paid by the month’. While additional exclusion is only in the
form of a presumption that all monthly paid employees have already been paid holiday paid, it
constitutes a taking away or a deprivation which must be in the law if it is to be valid. An
administrative interpretation which diminishes the benefits of labor more than what the statute
delimits or withholds is obviously ultra vires." (138 SCRA 273, 282. See also CBTC Employees Union
v. Clave, January 7, 1986, 141 SCRA 9.)
3. REMEDIAL LAW; SPECIAL CIVIL ACTION; MANDAMUS; APPROPRIATE EQUITABLE REMEDY IN

CASE AT BAR. — Respondent corporation contends that mandamus does not lie to compel the
performance of an act which the law does not clearly enjoin as a duty. True it is also that mandamus
is not proper to enforce a contractual obligation, the remedy being an action for specific performance
(Province of Pangasinan v. Reparations Commission, November 29, 1977, 80 SCRA 376). In the case
at bar, however, in view of the above-cited subsequent decisions of this Court clearly defining the
legal duty to grant holiday pay to monthly salaried employees, mandamus is an appropriate equitable
remedy (Dionisio v. Paterno, July 23, 1980, 98 SCRA 677; Gonzales v. Government Service
Insurance System, September 10, 1981, 107 SCRA 492).
DECISION
FERIA, J.:
This is a petition for Certiorari and Mandamus filed by petitioner against arbitrator Froilan M.

Bacungan and Mantrade Development Corporation arising from the decision of respondent arbitrator,
the dispositive part of which reads as follows: jgc:chanrobles.com.ph
"CONSIDERING ALL THE ABOVE, We rule that Mantrade Development Corporation is not under legal
obligation to pay holiday pay (as provided for in Article 94 of the Labor Code in the third official
Department of Labor edition) to its monthly paid employees who are uniformly paid by the month,
irrespective of the number of working days therein, with a salary of not less than the statutory or
established minimum wage, and this rule is applicable not only as of March 2, 1976 but as of
November 1, 1974." cralaw virtua1aw library
Petitioner questions the validity of the pertinent section of the Rules and Regulations Implementing
the Labor Code as amended on which respondent arbitrator based his decision.
On the other hand, respondent corporation has raised procedural and substantive objections. It
contends that petitioner is barred from pursuing the present action in view of Article 263 of the Labor
Code, which provides in part that "voluntary arbitration awards or decisions shall be final,
inappealable, and executory," as well as the rules implementing the same; the pertinent provision of
the Collective Bargaining Agreement between petitioner and respondent corporation; and Article
2044 of the Civil Code which provides that "any stipulation that the arbitrators’ award or decision
shall be final, is valid, without prejudice to Articles 2038, 2039, and 2040." Respondent corporation
further contends that the special civil action of certiorari does not lie because respondent arbitrator is
not an "officer exercising judicial functions" within the contemplation of Rule 65, Section 1, of the
Rules of Court; that the instant petition raises an error of judgment on the part of respondent
arbitrator and not an error of jurisdiction; that it prays for the annulment of certain rules and
regulations issued by the Department of Labor, not for the annulment of the voluntary arbitration
proceedings; and that appeal by certiorari under Section 29 of the Arbitration Law, Republic Act No.
876, is not applicable to the case at bar because arbitration in labor disputes is expressly excluded by
Section 3 of said law. chanrobles law library : red
These contentions have been ruled against in the decision of this Court in the case of Oceanic Bic
Division (FFW) v. Romero, promulgated on July 16, 1984, wherein it stated: jgc:chanrobles.com.ph
"We agree with the petitioner that the decisions of voluntary arbitrators must be given the highest
respect and as a general rule must be accorded a certain measure of finality. This is especially true
where the arbitrator chosen by the parties enjoys the first rate credentials of Professor Flerida Ruth
Pineda Romero, Director of the U.P. Law Center and an academician of unquestioned expertise in the
field of Labor Law. It is not correct, however, that this respect precludes the exercise of judicial
review over their decisions. Article 262 of the Labor Code making voluntary arbitration awards final,
inappealable and executory, except where the money claims exceed P100,000.00 or 40% of the
paid-up capital of the employer or where there is abuse of discretion or gross incompetence refers to
appeals to the National Labor Relations Commission and not to judicial review.
"In spite of statutory provisions making ‘final’ the decisions of certain administrative agencies, we
have taken cognizance of petitions questioning these decisions where want of jurisdiction, grave
abuse of discretion, violation of due process, denial of substantial justice, or erroneous interpretation
of the Law were brought to our attention. . . .
x x x
"A voluntary arbitrator by the nature of her functions acts in a quasi-judicial capacity. There is no
reason why her decisions involving interpretation of law should be beyond this Court’s review.
Administrative officials are presumed to act in accordance with law and yet we do not hesitate to
pass upon their work where a question of law is involved or where a showing of abuse of discretion in
their official acts is properly raised in petitions for certiorari." (130 SCRA 392, 399, 400-401)
In denying petitioner’s claim for holiday pay, respondent arbitrator stated that although monthly
salaried employees are not among those excluded from receiving such additional pay under Article 94
of the Labor Code of the Philippines, to wit:chanrobles virtual lawlibrary
ART. 94. Right to holiday pay. — (a) Every worker shall be paid his regular daily wage during regular
holidays, except in retail and service establishments regularly employing less than ten (10) workers;
(b) The employer may require an employee to work on any holiday but such employee shall be paid
compensation equivalent to twice his regular rate; and
(c) As used in this Article, "holiday" includes: New Year’s Day, Maundy Thursday, Good Friday, the
ninth of April, the first of May, the twelfth of June, the fourth of July, the thirtieth of November, the
twenty-fifth and the thirtieth of December, and the day designated by law for holding a general
election.
they appear to be excluded under Sec. 2, Rule IV, Book III of the Rules and Regulations
implementing said provision which reads thus: chanrob1es virtual 1aw library
SEC. 2. Status of employees paid by the month. — Employees who are uniformly paid by the month,
irrespective of the number of working days therein, with a salary of not less than the statutory or
established minimum wage shall be presumed to be paid for all days in the month whether worked or
not.
Respondent arbitrator further opined that respondent corporation does not have any legal obligation
to grant its monthly salaried employees holiday pay, unless it is argued that the pertinent section of
the Rules and Regulations implementing Section 94 of the Labor Code is not in conformity with the
law, and thus, without force and effect.
This issue was subsequently decided on October 24, 1984 by a division of this Court in the case of
Insular Bank of Asia and America Employees’ Union (IBAAEU) v. Inciong, wherein it held as
follows:jgc:chanrobles.com.ph
"WE agree with the petitioner’s contention that Section 2, Rule IV, Book III of the implementing
rules and Policy Instruction No. 9, issued by the then Secretary of Labor are null and void
since in the guise of clarifying the Labor Code’s provisions on holiday pay, they in effect amended
them by enlarging the scope of their exclusion (p. 11, rec.)
"Article 94 of the Labor Code, as amended by P.D. 850, provides: chanrob1es virtual 1aw library
‘Art. 94. Right to holiday pay. — (a) Every worker shall be paid his regular daily wage
during regular holidays, except in retail and service establishments regularly employing
less than ten (10) workers . . .’
"The coverage and scope of exclusion of the Labor Code’s holiday pay provisions is spelled out under
Article 82 thereof which reads:chanrob1es virtual 1aw library
‘Art. 82. Coverage. — The provision of this Title shall apply to employees in all establishments and
undertakings, whether for profit or not, but not to government employees, managerial employees,
field personnel, members of the family of the employer who are dependent on him for support,
domestic helpers, persons, in the personal service of another, and workers who are paid by results as
determined by the Secretary of Labor in appropriate regulations.’
x x x
"From the above-cited provisions, it is clear that monthly paid employees are not excluded from the
benefits of holiday pay. However, the implementing rules on holiday pay promulgated by the then
Secretary of Labor excludes monthly paid employees from the said benefits by inserting under Rule
IV, Book III of the implementing rules, Section 2, which provides that: ‘employees who are uniformly
paid by the month, irrespective of the number of working days therein, with a salary of not less than
the statutory or established minimum wage shall be presumed to be paid for all days in the month
whether worked or not.’" (132 SCRA 663, 672-673).
This ruling was reiterated by the Court en banc on August 28, 1985 in the case of Chartered Bank
Employees Association v. Ople, wherein it added that: chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph
"The questioned Sec. 2, Rule IV, Book III of the Integrated Rules and the Secretary’s Policy
Instruction No. 9 add another excluded group, namely ‘employees who are uniformly paid by the
month.’ While the additional exclusion is only in the form of a presumption that all monthly paid
employees have already been paid holiday pay, it constitutes a taking away or a deprivation which
must be in the law if it is to be valid. An administrative interpretation which diminishes the benefits
of labor more than what the statute delimits or withholds is obviously ultra vires." (138 SCRA 273,
282. See also CBTC Employees Union v. , Clave, January 7, 1986, 141 SCRA 9.)
Lastly, respondent corporation contends that mandamus does not lie to compel the performance of
an act which the law does not clearly enjoin as a duty. True it is also that mandamus is not proper to
enforce a contractual obligation, the remedy being an action for specific performance (Province of
Pangasinan v. Reparations Commission, November 29, 1977, 80 SCRA 376). In the case at bar,
however, in view of the above cited subsequent decisions of this Court clearly defining the legal duty
to grant holiday pay to monthly salaried employees, mandamus is an appropriate equitable remedy
(Dionisio v. Paterno, July 23, 1980, 98 SCRA 677; Gonzales v. Government Service Insurance
System, September 10, 1981, 107 SCRA 492).
WHEREFORE, the questioned decision of respondent arbitrator is SET ASIDE and respondent
corporation is ordered to GRANT holiday pay to its monthly salaried employees. No costs.

12.) G.R. No. L-65482 December 1, 1987
JOSE RIZAL COLLEGE, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION AND NATIONAL ALLIANCE OF TEACHERS/OFFICE
WORKERS, respondents.
PARAS, J.:
This is a petition for certiorari with prayer for the issuance of a writ of preliminary injunction, seeking the annulment
of the decision of the National Labor Relations Commission * in NLRC Case No. RB-IV 23037-78 (Case No. R4-1-1081-71) entitled
"National Alliance of Teachers and Office Workers and Juan E. Estacio, Jaime Medina, et al. vs. Jose Rizal College" modifying the decision of the Labor Arbiter as
follows:
WHEREFORE, in view of the foregoing considerations, the decision appealed from is MODIFIED, in
the sense that teaching personnel paid by the hour are hereby declared to be entitled to holiday pay.
SO ORDERED.
The factual background of this case which is undisputed is as follows:
Petitioner is a non-stock, non-profit educational institution duly organized and existing under the laws of the
Philippines. It has three groups of employees categorized as follows: (a) personnel on monthly basis, who
receive their monthly salary uniformly throughout the year, irrespective of the actual number of working
days in a month without deduction for holidays; (b) personnel on daily basis who are paid on actual days
worked and they receive unworked holiday pay and (c) collegiate faculty who are paid on the basis of
student contract hour. Before the start of the semester they sign contracts with the college undertaking to meet
their classes as per schedule.
Unable to receive their corresponding holiday pay, as claimed, from 1975 to 1977, private respondent
National Alliance of Teachers and Office Workers (NATOW) in behalf of the faculty and personnel of Jose
Rizal College filed with the Ministry of Labor a complaint against the college for said alleged non-payment
of holiday pay, docketed as Case No. R04-10-81-72. Due to the failure of the parties to settle their differences on
conciliation, the case was certified for compulsory arbitration where it was docketed as RB-IV-23037-78 (Rollo, pp.
155-156).
After the parties had submitted their respective position papers, the Labor Arbiter ** rendered a decision on February 5, 1979, the
dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered as follows:
1. The faculty and personnel of the respondent Jose Rizal College who are paid their salary by the
month uniformly in a school year, irrespective of the number of working days in a month, without
deduction for holidays, are presumed to be already paid the 10 paid legal holidays and are no longer
entitled to separate payment for the said regular holidays;
2. The personnel of the respondent Jose Rizal College who are paid their wages daily are entitled to
be paid the 10 unworked regular holidays according to the pertinent provisions of the Rules and
Regulations Implementing the Labor Code;
3. Collegiate faculty of the respondent Jose Rizal College who by contract are paid compensation
per student contract hour are not entitled to unworked regular holiday pay considering that these

regular holidays have been excluded in the programming of the student contact hours. (Rollo. pp.
26-27)
On appeal, respondent National Labor Relations Commission in a decision promulgated on June 2, 1982, modified
the decision appealed from, in the sense that teaching personnel paid by the hour are declared to be entitled to
holiday pay (Rollo. p. 33).
Hence, this petition.
The sole issue in this case is whether or not the school faculty who according to their contracts are paid
per lecture hour are entitled to unworked holiday pay.
Labor Arbiter Julio Andres, Jr. found that faculty and personnel employed by petitioner who are paid their salaries
monthly, are uniformly paid throughout the school year regardless of working days, hence their holiday pay are
included therein while the daily paid employees are renumerated for work performed during holidays per affidavit of
petitioner's treasurer (Rollo, pp. 72-73).
There appears to be no problem therefore as to the first two classes or categories of petitioner's workers.
The problem, however, lies with its faculty members, who are paid on an hourly basis, for while the Labor
Arbiter sustains the view that said instructors and professors are not entitled to holiday pay, his decision was
modified by the National Labor Relations Commission holding the contrary. Otherwise stated, on appeal the NLRC
ruled that teaching personnel paid by the hour are declared to be entitled to holiday pay.
Petitioner maintains the position among others, that it is not covered by Book V of the Labor Code on Labor
Relations considering that it is a non- profit institution and that its hourly paid faculty members are paid on a
"contract" basis because they are required to hold classes for a particular number of hours. In the programming of
these student contract hours, legal holidays are excluded and labelled in the schedule as "no class day. " On the
other hand, if a regular week day is declared a holiday, the school calendar is extended to compensate for that day.
Thus petitioner argues that the advent of any of the legal holidays within the semester will not affect the faculty's
salary because this day is not included in their schedule while the calendar is extended to compensate for special
holidays. Thus the programmed number of lecture hours is not diminished (Rollo, pp. 157- 158).
The Solicitor General on the other hand, argues that under Article 94 of the Labor Code (P.D. No. 442 as amended),
holiday pay applies to all employees except those in retail and service establishments. To deprive therefore
employees paid at an hourly rate of unworked holiday pay is contrary to the policy considerations underlying such
presidential enactment, and its precursor, the Blue Sunday Law (Republic Act No. 946) apart from the constitutional
mandate to grant greater rights to labor (Constitution, Article II, Section 9). (Reno, pp. 76-77).
In addition, respondent National Labor Relations Commission in its decision promulgated on June 2, 1982, ruled
that the purpose of a holiday pay is obvious; that is to prevent diminution of the monthly income of the workers on
account of work interruptions. In other words, although the worker is forced to take a rest, he earns what he should
earn. That is his holiday pay. It is no excuse therefore that the school calendar is extended whenever holidays
occur, because such happens only in cases of special holidays (Rollo, p. 32).
Subject holiday pay is provided for in the Labor Code (Presidential Decree No. 442, as amended), which reads:
Art. 94. Right to holiday pay — (a) Every worker shall be paid his regular daily wage during regular
holidays, except in retail and service establishments regularly employing less than ten (10) workers;
(b) The employer may require an employee to work on any holiday but such employee shall be paid
a compensation equivalent to twice his regular rate; ... "
and in the Implementing Rules and Regulations, Rule IV, Book III, which reads:

SEC. 8. Holiday pay of certain employees. — (a) Private school teachers, including faculty members
of colleges and universities, may not be paid for the regular holidays during semestral vacations.
They shall, however, be paid for the regular holidays during Christmas vacations. ...
Under the foregoing provisions, apparently, the petitioner, although a non-profit institution is under obligation to give
pay even on unworked regular holidays to hourly paid faculty members subject to the terms and conditions provided
for therein.
We believe that the aforementioned implementing rule is not justified by the provisions of the law which after all is
silent with respect to faculty members paid by the hour who because of their teaching contracts are obliged to work
and consent to be paid only for work actually done (except when an emergency or a fortuitous event or a national
need calls for the declaration of special holidays). Regular holidays specified as such by law are known to both
school and faculty members as no class days;" certainly the latter do not expect payment for said
unworked days, and this was clearly in their minds when they entered into the teaching contracts.
On the other hand, both the law and the Implementing Rules governing holiday pay are silent as to payment on
Special Public Holidays.
It is readily apparent that the declared purpose of the holiday pay which is the prevention of diminution of the
monthly income of the employees on account of work interruptions is defeated when a regular class day is cancelled
on account of a special public holiday and class hours are held on another working day to make up for time lost in
the school calendar. Otherwise stated, the faculty member, although forced to take a rest, does not earn what
he should earn on that day. Be it noted that when a special public holiday is declared, the faculty member
paid by the hour is deprived of expected income, and it does not matter that the school calendar is
extended in view of the days or hours lost, for their income that could be earned from other sources is lost
during the extended days. Similarly, when classes are called off or shortened on account of typhoons, floods,
rallies, and the like, these faculty members must likewise be paid, whether or not extensions are ordered.
Petitioner alleges that it was deprived of due process as it was not notified of the appeal made to the NLRC against
the decision of the labor arbiter.
The Court has already set forth what is now known as the "cardinal primary" requirements of due process in
administrative proceedings, to wit: "(1) the right to a hearing which includes the right to present one's case and
submit evidence in support thereof; (2) the tribunal must consider the evidence presented; (3) the decision must
have something to support itself; (4) the evidence must be substantial, and substantial evidence means such
evidence as a reasonable mind might accept as adequate to support a conclusion; (5) the decision must be based
on the evidence presented at the hearing, or at least contained in the record and disclosed to the parties affected;
(6) the tribunal or body of any of its judges must act on its or his own independent consideration of the law and facts
of the controversy, and not simply accept the views of a subordinate; (7) the board or body should in all
controversial questions, render its decisions in such manner that the parties to the proceeding can know the various
issues involved, and the reason for the decision rendered. " (Doruelo vs. Commission on Elections, 133 SCRA 382
[1984]).
The records show petitioner JRC was amply heard and represented in the instant proceedings. It submitted its
position paper before the Labor Arbiter and the NLRC and even filed a motion for reconsideration of the decision of
the latter, as well as an "Urgent Motion for Hearing En Banc" (Rollo, p. 175). Thus, petitioner's claim of lack of due
process is unfounded.
PREMISES CONSIDERED, the decision of respondent National Labor Relations Commission is hereby set aside,
and a new one is hereby RENDERED:
(a) exempting petitioner from paying hourly paid faculty members their pay for regular holidays, whether the same
be during the regular semesters of the school year or during semestral, Christmas, or Holy Week vacations;
(b) but ordering petitioner to pay said faculty members their regular hourly rate on days declared as special holidays
or for some reason classes are called off or shortened for the hours they are supposed to have taught, whether

extensions of class days be ordered or not; in case of extensions said faculty members shall likewise be paid their
hourly rates should they teach during said extensions.

13.) G.R. No. 118289 December 13, 1999
TRANS-ASIA PHILS. EMPLOYEES ASSOCIATION (TAPEA) and ARNEL GALVEZ, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION, TRANS-ASIA (PHILS.) and ERNESTO S. DE
CASTRO, respondents.
KAPUNAN, J.:
This petition for certiorari under Rule 65 of the Rules of Court seeks to reverse and set aside the Resolutions, dated
23 November 1993 and 13 September 1994 of the National Labor Relations Commission ("NLRC") which dismissed
petitioners' appeal from the adverse decision of the labor arbiter and denied petitioners' motion for reconsideration,
respectively.
The antecedents of this case are as follows:
On 7 July 1988, Trans-Asia Philippines Employees Association (TAPEA), the duly-recognized collective bargaining
agent of the monthly-paid rank-and-file employees of Trans-Asia (Phils.), entered into a Collective Bargaining
Agreement ("CBA") with their employer. The CBA, which was to be effective from 1 April 1988 up to 31 March 1991,
provided for, among others, the payment of holiday pay with a stipulation that if an employee is permitted to work
on a legal holiday, the said employee will receive a salary equivalent to 200% of the regular daily wage plus
a 60% premium pay.
Despite the conclusion of the CBA, however, an issue was still left unresolved with regard to the claim of TAPEA for
payment of holiday pay covering the period from January of 1985 up to December of 1987. Thus, the parties
underwent preventive mediation meetings with a representative from the National Mediation and Conciliation Board
in order to settle their disagreement on this particular issue. Since the parties were not able to arrive at an amicable
settlement despite the conciliation meetings, TAPEA, led by its President, petitioner Arnie Galvez, filed a complaint
before the labor arbiter, on 18 August 1988, for the payment of their holiday pay in arrears. On 18 September 1988,
petitioners amended their complaint to include the payment of holiday pay for the duration of the recently concluded
CBA (from 1988 to 1991), unfair labor practice, damages and attorney's fees.
In their Position Paper, petitioners contended that their claim for holiday pay in arrears is based on the non-inclusion
of the same in their monthly pay. In this regard, petitioners cited certain circumstances which, according to them,
would support their claim for past due holiday pay. First, petitioners presented Trans-Asia's Employees' Manual
which requires, as a pre-condition for the payment of holiday pay, that the employee should have worked or
was on authorized leave with pay on the day immediately preceding the legal holiday. Petitioners argued that
"if the intention [of Trans-Asia] was not to pay holiday pay in addition to the employee's monthly pay, then there
would be no need to impose or specify the pre-condition for the payment." Second, petitioners proffered as
1
evidence their appointment papers which do not contain any stipulation on the inclusion of holiday pay in their
monthly salary. According to petitioners, the absence of such stipulation is an indication that the mandated holiday
pay is not incorporated in the monthly salary. Third, petitioners noted the inclusion of a provision in the CBA for the
payment of an amount equivalent to 200% of the regular daily wage plus 60% premium pay to employees who are
permitted to work on a regular holiday. Petitioners claimed that this very generous provision was the remedy availed
of by Trans-Asia to allow its employees to recoup the holiday pay in arrears and, as such, is a tacit admission of the
non-payment of the same during the period prior to the current CBA.
Finally, petitioners cited the current CBA provision which obligates Trans-Asia to give holiday pay. Petitioners
asserted that this provision is an acknowledgment by Trans-Asia of its failure to pay the same in the past since, if it
was already giving holiday pay prior to the CBA, there was no need to stipulate on the said obligation in the current
CBA.

With regard to the claim for the payment of holiday pay for the duration of the CBA, the accusation of unfair labor
practice and the claim for damages and attorney's fees, petitioners asserted that Trans-Asia is guilty of bad faith in
negotiating and executing the current CBA since, after it recognized the right of the employees to receive holiday
pay, Trans-Asia allegedly refused to honor the CBA provision on the same.
In response to petitioner's contentions, Trans-Asia refuted the same in seriatim. With regard to the pre-condition for
the payment of holiday pay stated in the Employees' Manual and the absence of a stipulation on holiday pay in the
employees' appointment papers, Trans-Asia asserted that the above circumstances are not indicative of its non-
payment of holiday pay since it has always honored the labor law provisions on holiday pay by incorporating the
same in the payment of the monthly salaries of its employees. In support of this claim, Trans-Asia pointed out that it
has long been the standing practice of the company to use the divisor of "286" days in computing for its employees'
overtime pay and daily rate deductions for absences. Trans-Asia explained that this divisor is arrived at through the
following formula:
52 x 44
———— = 286 days
Where: 52 = number of weeks in a year
44 = number of work hours per week
8 = number of work hours per day
Trans-Asia further clarified that the "286" days divisor already takes into account the ten (10) regular
holidays in a year since it only subtracts from the 365 calendar days the unworked and unpaid 52 Sundays
and 26 Saturdays (employees are required to work half-day during Saturdays). Trans-Asia claimed that if the
ten (10) regular holidays were not included in the computation of their employees' monthly salary, the divisor
which they would have used would only be 277 days which is arrived at by subtracting 52 Sundays, 26
Saturdays and the 10 legal holidays from 365 calendar days. Furthermore, Trans-Asia explained that the
"286" days divisor is based on Republic Act No. 6640, wherein the divisor of 262 days (composed of the
2
252 working days and the 10 legal holidays) is used in computing for the monthly rate of workers who do not
work and are not considered paid on Saturdays and Sundays or rest days. According to Trans-Asia, if the
additional 26 working Saturdays in a year is factored-in to the divisor provided by Republic Act No. 6640, the
resulting divisor would be "286" days.
On petitioners' contention with regard to the CBA provision on the allegedly generous holiday pay rate of 260%,
Trans-Asia explained that this holiday pay rate was included in the CBA in order to comply with Section 4, Rule IV,
Book III of the Omnibus Rules Implementing the Labor Code. The aforesaid provision reads:
Sec. 4. Compensation for holiday work. — Any employee who is permitted or suffered to work on
any regular holiday, not exceeding eight (8) hours, shall be paid at least two hundred percent (200%)
of his regular daily wage. If the holiday falls on the scheduled rest day of the employee, he shall be
entitled to an additional premium pay of at least 30% of his regular holiday rate of 200% based on
his regular wage rate.
On the contention that Trans-Asia's acquiescence to the inclusion of a holiday pay provision in the CBA is an
admission of non-payment of the same in the past, Trans-Asia reiterated that it is simply a recognition of the
mandate of the Labor Code that employees are entitled to holiday pay. It clarified that the company's firm belief in
the payment of holiday pay to employees led it to agree to the inclusion of the holiday pay provision in the CBA.
With regard to the accusation of unfair labor practice because of Trans-Asia's act of allegedly bargaining in bad faith
and refusal to give holiday pay in accordance with the CBA, Trans-Asia explained that what petitioners would like

the company to do is to give double holiday pay since, as previously stated, the company has already included the
same in its employees monthly salary and, yet, petitioners want it to pay a second set of holiday pay.
On 13 February 1989, the labor arbiter rendered a decision dismissing the complaint, to wit:
After considering closely the arguments of the parties in support of their respective claims and
defenses, this Branch upholds a different view from that espoused by the complainants.
Just like in the Chartered Bank Case (L-44717), August 28, 1985, 138 SCRA 273, which is cited by
the complainants in their Position Paper, there appears to be no clear agreement between the
parties in the instant case, whether verbal or in writing, that the monthly salary of the employees
included the mandated holiday pay. In the absence of such agreement, the Supreme Court in said
Chartered Bank Case took into consideration existing practices in the bank in resolving the issue,
such as employment by the bank of a divisor of 251 days which is the result of subtracting all
Saturdays, Sundays and the ten (10) legal holidays from the total number of calendar days in a year.
Further, the Court took note of the fact that the bank used conflicting or different divisors in
computing salary-related benefits as well as the employees' absence from work. In the case at bar,
not only did the CBA between the complainants and respondents herein provides (sic) that the ten
(10) legal holidays are recognized by the Company as full holiday with pay. What is more, there can
be no doubt that since 1977 up to the execution of the CBA, the Trans-Asia, unlike that obtaining in
the Chartered Bank Case, never used conflicting or different divisors but consistently employed the
divisor of 286 days, which as earlier pointed out, was arrived at by subtracting only the unworked 52
Sundays and the 26 half-day-worked Saturdays from the total number of days in a year. The
consistency in the established practice of the Trans-Asia, which incidentally is not disputed by
complainants, did not give rise to any doubt which could have been resolved in favor of
complainants.
Besides, the respondents unlike the respondent bank in the Chartered Bank Employees Association
vs. Hon. Blas F. Ople, et al. (supra) citing also the case of IBAAEU vs. Hon. Amado Inciong (132
SCRA 663) which case have (sic) invalidated Section 2, Rule IV, Book III of the Implementing Rules
of the Labor Code and Policy Instruction No. 9, have never relied on the said invalidated rule and
Policy Instruction.
The complainants' arguments and juxtapositions in claiming that they were denied payment of their
holiday pay paled in the face of the prevailing company practices and circumstances abovestated.
Also, for the reasons adverted to above, the complainants charge of unfair labor practice claiming
that respondents in bad faith refused to comply with their contractual obligation under the CBA by
not paying the complainants' holiday pay, must fail. Since respondents have nothing more to pay by
way of legal holiday pay as it has already been included in their monthly salaries, the provision in the
CBA relative to holiday pay is just but a recognition of the complainants right to payment of legal
holiday pay as mandated by the Labor Code.
WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered
dismissing the complaint for lack of merit.
SO ORDERED. 3
Petitioners appealed to the National Labor Relations Commission. In its Resolution, dated 23 November 1993, the
NLRC dismissed the appeal and affirmed the decision of the labor arbiter, to wit:
We find no cogent reason to change or disturb the decision appealed from, the same being
substantially supported by the facts and evidence on record. "It is a well-settled rule that findings of
facts of administrative bodies, if based on substantial evidence are controlling on the reviewing
authority." (Planters Products, Inc. vs. NLRC, G.R. No. 78524 & 78739, January 20, 1989; 169
SCRA 328).

We find no abuse of discretion and/or error in the assailed decision.
WHEREFORE, the appeal are (sic) hereby DISMISSED for lack of merit and the decision appealed
from is AFFIRMED.
SO ORDERED. 4
Petitioners' motion for reconsideration was, likewise, denied by the NLRC in its Resolution, dated 13 September
1994.
Petitioners are now before us faulting the NLRC with the following assignment of errors:
PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION IN UPHOLDING THE

LABOR ARBITER'S DECISION DESPITE THE LACK OF SUBSTANTIAL EVIDENCE TO
SUPPORT IT
II
IN UPHOLDING THE LABOR ARBITER'S DECISION DESPITE THE LACK OF SUBSTANTIAL

EVIDENCE TO SUPPORT IT, PUBLIC RESPONDENT NLRC VIOLATED THE CONSTITUTIONAL
AND LEGAL MANDATE TO RESOLVE ALL DOUBTS IN SOCIAL LEGISLATION IN FAVOR OF
LABOR. 5
Petitioners, in furtherance of their first assignment of error, assert that the NLRC "blatantly and unashamedly
disregarded" the numerous evidence in support of their claim and relied merely on the sole evidence presented by
Trans-Asia, the "286" days divisor, in dismissing their appeal and, in so doing, is guilty of grave abuse of discretion.
6
We do not agree.
Trans-Asia's inclusion of holiday pay in petitioners' monthly salary is clearly established by its consistent
use of the divisor of "286" days in the computation of its employees' benefits and deductions. The use by
Trans-Asia of the "286" days divisor was never disputed by petitioners. A simple application of mathematics
would reveal that the ten (10) legal holidays in a year are already accounted for with the use of the said
divisor. As explained by Trans-Asia, if one is to deduct the unworked 52 Sundays and 26 Saturdays (derived by
dividing 52 Saturdays in half since petitioners are required to work half-day on Saturdays) from the 365 calendar
days in a year, the resulting divisor would be 286 days (should actually be 287 days). Since the ten (10) legal
holidays were never included in subtracting the unworked and unpaid days in a calendar year, the only
logical conclusion would be that the payment for holiday pay is already incorporated into the said divisor.
Thus, when viewed against this very convincing piece of evidence, the arguments put forward by petitioners to
support their claim of non-payment of holiday pay, i.e., the pre-condition stated in the Employees' Manual for
entitlement to holiday pay, the absence of a stipulation in the employees' appointment papers for the inclusion of
holiday pay in their monthly salary, the stipulation in the CBA recognizing the entitlement of the petitioners to holiday
pay with a concomitant provision for the granting of an "allegedly" very generous holiday pay rate, would appear to
be merely inferences and suppositions which, in the apropos words of the labor arbiter, "paled in the face of the
prevailing company practices and circumstances abovestated."
Hence, it is on account of the convincing and legally sound arguments and evidence of Trans-Asia that the labor
arbiter rendered a decision adverse to petitioners. Acknowledging that the decision of the labor arbiter was based
on substantial evidence, the NLRC affirmed the former's disposition. It is also with this acknowledgment that the
Court affirms the questioned resolutions of the NLRC. As aptly put by the Solicitor General, citing Sunset View
Condominium Corporation vs. NLRC, "findings of fact of administrative bodies should not be disturbed in the
7
absence of grave abuse of discretion or unless the findings are not supported by substantial evidence." In this
8
regard, the Solicitor General observed: "As said above, public respondent acted on the basis of substantial
evidence, hence, grave abuse of discretion is ruled out." 9

However, petitioners insist that the agreement of Trans-Asia in the CBA to give a generous 260% holiday pay rate to
employees who work on a holiday is conclusive proof that the monthly pay of petitioners does not include holiday
pay. Petitioners cite as basis the case of Chartered Bank Employees Association vs. Ople, which reads:
10 11
Any remaining doubts which may arise from the conflicting or different divisors used in the
computation of overtime pay and employees' absences are resolved by the manner in which work
actually rendered on holidays is paid. Thus, whenever monthly paid employees work on a holiday,
they are given an additional 100% base pay on top of a premium pay of 50%. If the employees'
monthly pay already includes their salaries for holidays, they should be paid only premium pay but
not both base pay and premium pay. 12
We are not convinced. The cited case cannot be relied upon by petitioners since the facts obtaining in the Chartered
Bank case are very different from those in the present case. In the Chartered Bank case, the bank used different
divisors in computing for its employees benefits and deductions. For computing overtime compensation, the bank
used 251 days as its divisor. On the other hand, for computing deductions due to absences, the bank used 365
days as divisor. Due to this confusing situation, the Court declared that there existed a doubt as to whether holiday
pay is already incorporated in the employees' monthly salary. Since doubts should be resolved in favor of labor, the
Court in the Chartered Bank case ruled in favor of the employees and further stated that its conclusion is fortified by
the manner in which the employees are remunerated for work rendered on holidays. In the present case, however,
there is no confusion with regard to the divisor used by Trans-Asia in computing for petitioners' benefits and
deductions. Trans-Asia consistently used a "286" days divisor for all its computations.
Nevertheless, petitioners' cause is not entirely lost. The Court notes that there is a need to adjust the divisor used by
Trans-Asia to 287 days, instead of only 286 days, in order to properly account for the entirety of regular holidays
and special days in a year as prescribed by Executive Order No. 203 in relation to Section 6 of the Rules
13
Implementing Republic Act 6727. 14
Sec. 1 of Executive Order No. 203 provides:
Sec. 1. Unless otherwise modified by law, order or proclamation, the following regular holidays and
special days shall be observed in the country:
A. Regular Holidays
New Year's Day — January 1
Maundy Thursday — Movable Date
Good Friday — Movable Date
Araw ng Kagitingan — April 9
(Bataan and Corregidor Day)
Labor Day — May 1
Independence Day — June 12
National Heroes Day — Last Sunday of August
Bonifacio Day — November 30
Christmas Day — December 25
Rizal Day — December 30

B. Nationwide Special Days
All Saints Day — November 1
Last Day of the Year — December 31
On the other hand, Section 6 of the Implementing Rules and Regulations of Republic Act No. 6727 provides:
Sec. 6. Suggested Formula in Determining the Equivalent Monthly Statutory Minimum Wage Rates.
— Without prejudice from existing company practices, agreements or policies, the following formulas
may be used as guides in determining the equivalent monthly statutory minimum wage rates:
x x x x x x x x x
d) For those who do not work and are not considered paid on Saturdays and Sundays or rest days:
Equivalent Monthly = Average Daily Wage Rate x 262 days
Rate (EMR) 12
Where 262 days =
250 days — Ordinary working days
10 days — Regular holidays
2 days — Special days (If considered paid; if actually
worked, this is equivalent to 2.6 days)
————
262 days — Total equivalent number of days
Based on the above, the proper divisor that should be used for a situation wherein the employees do not work and
are not considered paid on Saturdays and Sundays or rest days is 262 days. In the present case, since the
employees of Trans-Asia are required to work half-day on Saturdays, 26 days should be added to the divisor of 262
days, thus, resulting to 288 days. However, due to the fact that the rest days of petitioners fall on a Sunday, the
number of unworked but paid legal holidays should be reduced to nine (9), instead of ten (10), since one legal
holiday under E.O. No. 203 always falls on the last Sunday of August, National Heroes Day. Thus, the divisor that
should be used in the present case should be 287 days.
However, the Court notes that if the divisor is increased to 287 days, the resulting daily rate for purposes of overtime
pay, holiday pay and conversions of accumulated leaves would be diminished. To illustrate, if an employee receives
P8,000.00 as his monthly salary, his daily rate would be P334.49, computed as follows:
P8,000.00 x 12 months
—————————— = P334.49/day
287 days
Whereas if the divisor used is only 286 days, the employee's daily rate would be P335.66, computed as
follows:

P8,000.00 x 12 months
—————————— = P335.66/day
286 days
Clearly, this muddled situation would be violative of the proscription on the non-diminution of benefits under
Section 100 of the Labor Code. On the other hand, the use of the divisor of 287 days would be to the
advantage of petitioners if it is used for purposes of computing for deductions due to the employee's
absences. In view of this situation, the Court rules that the adjusted divisor of 287 days should only be used
by Trans-Asia for computations which would be advantageous to petitioners, i.e., deductions for absences,
and not for computations which would diminish the existing benefits of the employees, i.e., overtime pay,
holiday pay and leave conversions.
For their second assignment of error, petitioners argue that, since they provided the NLRC with "overwhelming
proof" of their claim against Trans-Asia, the least that the NLRC could have done was to declare that there existed
an ambiguity with regard to Trans-Asia's payment of holiday pay. Petitioners then posits that if the NLRC had only
done so, this ambiguity would have been resolved in their favor because of the constitutional mandate to resolve
doubts in favor of labor.
We are not persuaded. As previously stated, the decision of the labor arbiter and the resolutions of the NLRC were
based on substantial evidence and, as such, no ambiguity or doubt exists which could be resolved in petitioners'
favor.
WHEREFORE, premises considered, the Resolutions of the NLRC, dated 23 November 1993 and 13 September
1994, are hereby AFFIRMED with the MODIFICATION that Trans-Asia is hereby ordered to adjust its divisor to 287
days and pay the resulting holiday pay in arrears brought about by this adjustment starting from 30 June 1987, the
date of effectivity of E.O. No. 203.

14.) [G.R. No. 114698. July 3, 1995.]
WELLINGTON INVESTMENT AND MANUFACTURING CORPORATION, Petitioner, v.

CRESENCIANO B. TRAJANO, Under-Secretary of Labor and Employment, ELMER ABADILLA,
and 34 others, Respondents.
Felipe P. Fuentes, Jr. for Petitioner.
The Solicitor General for Respondents.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; WAGES; RIGHT TO HOLIDAY PAY. — Every
worker should, according to the Labor Code, "be paid his regular daily wage during regular holidays,
except in retail and service establishments regularly employing less than ten (10) workers" ; this, of
course, even if the worker does no work on these holidays. The regular holidays include: "New Year’s
Day, Maundy Thursday, Good Friday, the ninth of April, the first of May, the twelfth of June, the
fourth of July, the thirtieth of November, the twenty-fifth of December, and the day designated by
law for holding a general election (or national referendum or plebiscite).
2. ID.; ID.; ID.; COMPUTATION OF MONTHLY MINIMUM WAGE. — Employees who are uniformly paid
by the month, "the monthly minimum wage shall not be less than the statutory minimum wage
multiplied by 365 days divided by twelve." This monthly salary shall serve as compensatorily; "for all
days in the month whether worked or not," and "irrespective of the number of working days therein."
In other words, whether the month is of thirty (30) or thirty-one (31) days’ duration, or twenty-eight
(28) or twenty-nine (29) (as in February), the employee is entitled to receive the entire monthly
salary. So, too, in the event of the declaration of any special holiday, or any fortuitous cause
precluding work on any particular day or days (such as transportation strikes, riots, or typhoons or
other natural calamities), the employee is entitled to the salary for the entire month and the
employer has no right to deduct the proportionate amount corresponding to the days when no work
was done. The monthly compensation is evidently intended precisely to avoid computations and
adjustments resulting from the contingencies just mentioned which are routinely made in the case of
workers paid on daily basis.
3. ID.; ID.; ID.; ID.; WHEN REGULAR HOLIDAY FALLS ON A SUNDAY. — The basic issue raised in this
case is "whether or not a monthly-paid employee receiving a fixed monthly compensation, is entitled
to an additional pay aside from his usual holiday pay, whenever a regular holiday falls on a Sunday.
The monthly salary in Wellington-which is based on the so-called "314 factor" accounts for all 365
days of a year; with the exception only of 51 Sundays. The respondents’ theory that there was "an
increase of three (3) working days resulting from regular holidays falling on Sundays" ; hence
Wellington "should pay for 317 days, instead of 315 days" would make each of the year in question
(1988, 1989, 1990), a year of 368 days. Pursuant to this theory, no employer opting to pay his
employees by the month would have any definite basis to determine the number of days in a year for
which compensation should be given to his work force. There is no provision of law requiring any
employer to make such adjustments in the monthly salary rate set by him to take account of legal
holidays falling on Sundays in a given year, or, contrary to the legal provisions bearing on the point,
otherwise to reckon a year at more than 365 days.
4. REMEDIAL LAW; SPECIAL CIVIL ACTIONS; CERTIORARI; GRAVE ABUSE OF DISCRETION

COMMITTED BY IMPOSING AN OBLIGATION WHERE NONE INTENDED. — Respondent’s argument
assumes that there are some "labor standards provisions of the Code and the other labor
legislations" imposing on employers the obligation to give additional compensation to their monthly-
paid employees in the event that a legal holiday should fall on a Sunday in a particular month — with
which compliance may be commanded by the Regional Director — when the existence of said
provisions is precisely the matter to be established. In promulgating the orders complained of the
public respondents have attempted to legislate, or interpret legal provisions in such a manner as to
create obligations where none are intended. They have acted without authority, or at the very least,
with grave abuse of their discretion. Their acts must be nullified and set aside.
DECISION
NARVASA, C.J.:
The basic issue raised by petitioner in this case is, as its counsel puts it, "whether or not a monthly-
paid employee, receiving a fixed monthly compensation, is entitled to an additional pay aside from
his usual holiday pay, whenever a regular holiday falls on a Sunday." cralaw virtua1aw library
The case arose from a routine inspection conducted by a labor Enforcement Officer on August 6,
1991 of the Wellington Flour Mills, an establishment owned and operated by petitioner Wellington
Investment and Manufacturing Corporation (hereafter, simply Wellington). The officer thereafter
drew up a report, a copy of which was "explained to and received by" Wellington’s personnel
manager, in which he set forth his finding of" (n)on-payment of regular holidays falling on a Sunday
for monthly-paid employees." 1
Wellington sought reconsideration of the Labor Inspector’s report, by letter dated August 10, 1991. It
argued that "the monthly salary of the company’s monthly-salaried employees already includes
holiday pay for all regular holidays . . . (and hence) there is no legal basis for the finding of alleged
non-payment of regular holidays falling on a Sunday." 2 It expounded on this thesis in a position
paper subsequently submitted to the Regional Director, asserting that it pays its monthly-paid
employees a fixed monthly compensation "using the 314 factor which undeniably covers and already
includes payment for all the working days in a month as well as all the 10 unworked regular holidays
within a year." 3
Wellington’s arguments failed to persuade the Regional Director who, in an Order issued on July 28,
1992, ruled that "when a regular holiday falls on a Sunday, an extra or additional working day is
created and the employer has the obligation to pay the employees for the extra day except last
Sunday of August since the payment for the said holiday is already included in the 314 factor," and
accordingly directed Wellington to pay its employees compensation corresponding to four (4) extra
working days. 4
Wellington timely filed a motion for reconsideration of this Order of August 10, 1992, pointing out
that it was in effect being compelled to "shell out an additional pay for an alleged extra working day"
despite its complete payment of all compensation lawfully due its workers, using the 314 factor. 5 Its
motion was treated as an appeal and was acted on by respondent Undersecretary. By Order dated
September 22, the latter affirmed the challenged order of the Regional Director, holding that "the
divisor being used by the respondent (Wellington) does not reliably reflect the actual working days in
a year," and consequently commanded Wellington to pay its employees the "six additional working
days resulting from regular holidays falling on Sundays in 1988, 1989 and 1990." 6 Again, Wellington
moved for reconsideration, 7 and again was rebuffed. 8
Wellington then instituted the special civil action of certiorari at bar in an attempt to nullify the orders
above mentioned. By Resolution dated July 4, 1994, this Court authorized the issuance of a
temporary restraining order enjoining the respondents from enforcing the questioned orders. 9
Every worker should, according to the Labor Code, 10 "be paid his regular daily wage
during regular holidays, except in retail and service establishments regularly employing
less than ten (10) workers;" this, of course, even if the worker does no work on these
holidays. The regular holidays include: "New Year’s Day, Maundy Thursday, Good Friday, the ninth
of April, the first of May, the twelfth of June, the fourth of July, the thirtieth of November, the
twenty-fifth of December, and the day designed by law for holding a general election (or national
referendum or plebiscite). 11
Particularly as regards employees "who are uniformly paid by the month, "the monthly minimum
wage shall not be less than the statutory minimum wage multiplied by 365 days divided by twelve."
12 This monthly salary shall serve as compensation "for all days in the month whether worked or
not," and "irrespective of the number of working days therein." 13 In other words, whether the
month is of thirty (30) or thirty-one (31) days’ duration, or twenty-eight (28) or twenty-nine (29) (as
in February), the employee is entitled to receive the entire monthly salary. So, too, in the event of
the declaration of any special holiday, or any fortuitous cause precluding work on any particular day
or days (such as transportation strikes, riots, or typhoons or other natural calamities), the employee
is entitled to the salary for the entire month and the employer has no right to deduct the
proportionate amount corresponding to the days when no work was done. The monthly compensation
is evidently intended precisely to avoid computations and adjustments resulting from the
contingencies just mentioned which are routinely made in the case of workers paid on daily basis. chanrobles virtual lawlibrary
In Wellington’s case, there seems to be no question that at the time of the inspection conducted by
the Labor Enforcement Officer on August 6, 1991, it was and had been paying its employees "a
salary of not less than the statutory or established minimum wage," and that the monthly salary thus
paid was "not . . . less than the statutory minimum wage multiplied by 365 days divided by twelve,"
supra. There is, in other words, no issue that to this extent, Wellington complied with the minimum
norm laid down by law.
Apparently the monthly salary was fixed by Wellington to provide for compensation for
every working day of the year including the holidays specified by law — and excluding only
Sundays. In fixing the salary, Wellington used what it calls the "314 factor;" that is to say,
it simply deducted 51 Sundays from the 365 days normally comprising a year and used the
difference, 314, as basis for determining the monthly salary. The monthly salary thus fixed
actually covers payment for 314 days of the year, including regular and special holidays,
as well as days when no work is done by reason of fortuitous cause, as above specified, or
causes not attributable to the employees.
The Labor Officer was conducted the routine inspection of Wellington discovered that in certain years,
two or three regular holidays had fallen on Sundays. He reasoned that this had precluded the
enjoyment by the employees of a non-working day, and the employees had consequently had to
work an additional day for that month. This ratiocination received the approval of his Regional
Director who opined 14 that "when a regular holiday falls on a Sunday, an extra or additional working
day is created and the employer has the obligation to pay its employees for the extra day except the
last Sunday of August since the payment for the said holiday is already included in the 314 factor."
15
This ingenuous theory was adopted and further explained by respondent Labor Undersecretary, to
whom the matter was appealed, as follows: 16
". . . By using said (314) factor, the respondent (Wellington) assumes that all the regular holidays fell
on ordinary days and never on a Sunday. Thus, the respondent failed to consider the circumstance
that whenever a regular holiday coincides with a Sunday, an additional working day is created and
left unpaid. In other words, while the said divisor may be utilized as proof evidencing payment of 302
working days, 2 special days and the ten regular holidays in a calendar year, the same does not
cover or include payment of additional working days created as a result of some regular holidays
falling on Sundays." cralaw virtua1aw library

He pointed out that in 1988 there was "an increase of three (3) working days resulting from regular
holidays falling on Sundays;" hence Wellington "should pay for 317 days, instead of 314 days." By
the same process of ratiocination, respondent Undersecretary theorized that there should be
additional payment by Wellington to its monthly-paid employees for "an increment of three (3)
working days" for 1989 and again, for 1990. What he is saying is that in those years, Wellington
should have used the "317 factor," not the "314 factor." cralaw virtua1aw library
The theory loses sight of the fact that the monthly salary in Wellington — which is based on the so-
called "314 factor" — accounts for all 365 days of a year; i.e., Wellington’s "314 factor" leaves no day
unaccounted for; it is paying for all the days of a year with the exception only of 51 Sundays.
The respondents’ theory would make each of the years in question (1988, 1989, 1990), a year of 368
days. Pursuant to this theory, no employer opting to pay his employees by the month would have
any definite basis to determine the number of days in a year for which compensation should be given
to his work force. He would have to ascertain the number of times legal holidays would fall on
Sundays in all the years of the expected or extrapolated lifetime of his business. Alternatively, he
would be compelled to make adjustments in his employees’ monthly salaries every year, depending
on the number of times that a legal holiday fell on a Sunday.
There is no provision of law requiring any employer to make such adjustments in the
monthly salary rate set by him to take account of legal holidays falling on Sundays in a
given year, or, contrary to the legal provisions bearing on the point, otherwise to reckon a
year at more than 365 days. As earlier mentioned, what the law requires of employers
opting to pay by the month is to assure that "the monthly minimum wage shall not be less
than the statutory minimum wage multiplied by 365 days divided by twelve," 17 and to
pay that salary "for all days in the month whether worked or not," and "irrespective of the
number of working days therein." 18 That salary is due and payable regardless of the
declaration of any special holiday in the entire country or a particular place therein, or any
fortuitous cause precluding work on any particular day or days (such as transportation
strikes, riots or typhoons or other natural calamities), or cause not imputable to the
worker. And as also earlier pointed out, the legal provisions governing monthly compensation are
evidently intended precisely to avoid re-computations and alterations in salary on account of the
contingencies just mentioned, which, by the way, are routinely made between employer and
employees when the wages are paid on daily basis.
The public respondents argue that their challenged conclusions and dispositions may be justified by
Section 2, Rule X, Book III of the Implementing Rules, giving the Regional Director power — 19
". . . to order and administer (in cases where employer-employee relations still exist), after due
notice and hearing, compliance with the labor standards provisions of the Code and the other labor
legislations based on the findings of their Regulations Officers or Industrial Safety Engineers (Labor
Standard and Welfare Officers) and made in the course of inspection, and to issue writs of execution
to the appropriate authority for the enforcement of his order, in line with the provisions of Article 128
in relation to Articles 289 and 290 of the Labor Code, as amended. . . ." cralaw virtua1aw library
The respondents beg the question. Their argument assumes that there are some "labor standards
provisions of the Code and the other labor legislations" imposing on employers the obligation to give
additional compensation to their monthly-paid employees in the event that a legal holiday should fall
on a Sunday in a particular month — with which compliance may be commanded by the Regional
Director — when the existence of said provisions is precisely the matter to be established.
In promulgating the orders complained of the public respondents have attempted to legislate, or
interpret legal provisions in such a manner as to create obligations where none are intended. They
have acted without authority, or at the very least, with grave abuse of their discretion. Their acts
must be nullified and set aside. chanrobles.com.ph : virtual law library
WHEREFORE, the orders complained of, namely: that of the respondent Undersecretary dated
September 22, 1993, and that of the Regional Director dated July 30, 1992, are NULLIFIED AND SET
ASIDE, and the proceeding against petitioner DISMISSED.

15.) G.R. No. 146775 : January 30, 2002
SAN MIGUEL CORPORATION, Petitioner, v. THE HONORABLE COURT OF

APPEALS-FORMER THIRTEENTH DIVISION, HON. UNDERSECRETARY JOSE M.
ESPAOL, JR., Hon. CRESENCIANO B. TRAJANO, and HON. REGIONAL
DIRECTOR ALLAN M. MACARAYA, Respondents.
DECISION
KAPUNAN, J.:
Assailed in the petition before us are the decision, promulgated on 08 May
2000, and the resolution, promulgated on 18 October 2000, of the Court of
Appeals in CA G.R. SP-53269.
The facts of the case are as follows:
On 17 October 1992, the Department of Labor and Employment (DOLE), Iligan
District Office, conducted a routine inspection in the premises of San Miguel
Corporation (SMC) in Sta. Filomena, Iligan City. In the course of the
inspection, it was discovered that there was underpayment by SMC of
regular Muslim holiday pay to its employees. DOLE sent a copy of the
inspection result to SMC and it was received by and explained to its personnel
officer Elena dela Puerta.1 SMC contested the findings and DOLE conducted
summary hearings on 19 November 1992, 28 May 1993 and 4 and 5 October
1993. Still, SMC failed to submit proof that it was paying regular Muslim
holiday pay to its employees. Hence, Alan M. Macaraya, Director IV of
DOLE Iligan District Office issued a compliance order, dated 17 December
1993, directing SMC to consider Muslim holidays as regular holidays and to
pay both its Muslim and non-Muslim employees holiday pay within thirty (30)
days from the receipt of the order.
SMC appealed to the DOLE main office in Manila but its appeal was dismissed
for having been filed late. The dismissal of the appeal for late filing was later
on reconsidered in the order of 17 July 1998 after it was found that the appeal
was filed within the reglementary period. However, the appeal was still
dismissed for lack of merit and the order of Director Macaraya was affirmed.
SMC went to this Court for relief via a petition for certiorari, which this Court
referred to the Court of Appeals pursuant to St. Martin Funeral Homes vs.
NLRC.2 cräläwvirtualibräry

The appellate court, in the now questioned decision, promulgated on 08 May
2000, ruled, as follows:
WHEREFORE, the Order dated December 17, 1993 of Director Macaraya and

Order dated July 17, 1998 of Undersecretary Espaol, Jr. is hereby MODIFIED
with regards the payment of Muslim holiday pay from 200% to 150% of the
employee's basic salary. Let this case be remanded to the Regional Director
for the proper computation of the said holiday pay.
SO ORDERED.[3 cräläwvirtualibräry
Its motion for reconsideration having been denied for lack of merit, SMC filed a
petition for certiorari before this Court, alleging that:
PUBLIC RESPONDENTS SERIOUSLY ERRED AND COMMITTED GRAVE

ABUSE OF DISCRETION WHEN THEY GRANTED MUSLIM HOLIDAY PAY
TO NON-MUSLIM EMPLOYEES OF SMC-ILICOCO AND ORDERING SMC TO
PAY THE SAME RETROACTIVE FOR ONE (1) YEAR FROM THE DATE OF THE
PROMULGATION OF THE COMPLIANCE ORDER ISSUED ON DECEMBER 17,
1993, IT BEING CONTRARY TO THE PROVISIONS, INTENT AND PURPOSE OF
P.D. 1083 AND PREVAILING JURISPRUDENCE.
THE ISSUANCE OF THE COMPLIANCE ORDER WAS TAINTED WITH GRAVE

ABUSE OF DISCRETION IN THAT SAN MIGUEL CORPORATION WAS NOT
ACCORDED DUE PROCESS OF LAW; HENCE, THE ASSAILED COMPLIANCE
ORDER AND ALL SUBSEQUENT ORDERS, DECISION AND RESOLUTION OF
PUBLIC RESPONDENTS WERE ALL ISSUED WITH GRAVE ABUSE OF
DISCRETION AND ARE VOID AB INITIO.
THE HON. COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION

WHEN IT DECLARED THAT REGIONAL DIRECTOR MACARAYA,
UNDERSECRETARY TRAJANO AND UNDERSECRETARY ESPAOL, JR., WHO ALL
LIKEWISE ACTED WITH GRAVE ABUSE OF DISCRETION AND WITHOUT OR IN
EXCESS OF THEIR JURISDICTION, HAVE JURISDICTION IN ISSUING THE
ASSAILED COMPLIANCE ORDER AND SUBSEQUENT ORDERS, WHEN IN FACT
THEY HAVE NO JURISDICTION OR HAS LOST JURISDICTION OVER THE
HEREIN LABOR STANDARD CASE.[4 cräläwvirtualibräry
At the outset, petitioner came to this Court via a petition for certiorari under

Rule 65 instead of an appeal under Rule 45 of the 1997 Rules of Civil
Procedure. In National Irrigation Administration vs. Court of Appeals,5 the
Court declared:

x x x (S)ince the Court of Appeals had jurisdiction over the petition under Rule
65, any alleged errors committed by it in the exercise of its jurisdiction would
be errors of judgment which are reviewable by timely appeal and not by a
special civil action of certiorari. If the aggrieved party fails to do so within the
reglementary period, and the decision accordingly becomes final and
executory, he cannot avail himself of the writ of certiorari, his predicament
being the effect of his deliberate inaction.
The appeal from a final disposition of the Court of Appeals is a petition for
review under Rule 45 and not a special civil action under Rule 65 of the Rules
of Court, now Rule 45 and Rule 65, respectively, of the 1997 Rules of Civil
Procedure. Rule 45 is clear that decisions, final orders or resolutions of the
Court of Appeals in any case, i.e., regardless of the nature of the action or
proceeding involved, may be appealed to this Court by filing a petition for
review, which would be but a continuation of the appellate process over the
original case. Under Rule 45 the reglementary period to appeal is fifteen (15)
days from notice of judgment or denial of motion for reconsideration.
xxx
For the writ of certiorari under Rule 65 of the Rules of Court to issue, a

petitioner must show that he has no plain, speedy and adequate remedy in the
ordinary course of law against its perceived grievance. A remedy is considered
"plain, speedy and adequate" if it will promptly relieve the petitioner from the
injurious effects of the judgment and the acts of the lower court or agency. In
this case, appeal was not only available but also a speedy and adequate
remedy.[6 cräläwvirtualibräry
Well-settled is the rule that certiorari cannot be availed of as a substitute for a

lost appeal.7 For failure of petitioner to file a timely appeal, the questioned
decision of the Court of Appeals had already become final and executory.
In any event, the Court finds no reason to reverse the decision of the
Court of Appeals.
Muslim holidays are provided under Articles 169 and 170, Title I, Book V, of
Presidential Decree No. 1083,8 otherwise known as the Code of Muslim
Personal Laws, which states:
Art. 169. Official Muslim holidays. - The following are hereby recognized as

legal Muslim holidays:
(a) Amun Jadīd (New Year), which falls on the first day of the first lunar month
of Muharram;
(b) Maulid-un-Nabī (Birthday of the Prophet Muhammad), which falls on the
twelfth day of the third lunar month of Rabi-ul-Awwal;
(c) Lailatul Isrā Wal Mirāj (Nocturnal Journey and Ascension of the Prophet
Muhammad), which falls on the twenty-seventh day of the seventh lunar
month of Rajab;
(d) Īd-ul-Fitr (Hari Raya Puasa), which falls on the first day of the tenth lunar
month of Shawwal, commemorating the end of the fasting season; and
(e) Īd-ūl-Adhā (Hari Raya Haji),which falls on the tenth day of the twelfth

lunar month of Dhūl-Hijja.
Art. 170. Provinces and cities where officially observed. - (1) Muslim holidays
shall be officially observed in the Provinces of Basilan, Lanao del Norte, Lanao
del Sur, Maguindanao, North Cotabato, Iligan, Marawi, Pagadian, and
Zamboanga and in such other Muslim provinces and cities as may hereafter be
created;
(2) Upon proclamation by the President of the Philippines, Muslim holidays

may also be officially observed in other provinces and cities.
The foregoing provisions should be read in conjunction with Article 94 of the

Labor Code, which provides:
Art. 94. Right to holiday pay. -
(a) Every worker shall be paid his regular daily wage during regular
holidays, except in retail and service establishments regularly
employing less than ten (10) workers;
(b) The employer may require an employee to work on any holiday

but such employee shall be paid a compensation equivalent to
twice his regular rate; x x x.
Petitioner asserts that Article 3(3) of Presidential Decree No. 1083

provides that (t)he provisions of this Code shall be applicable only to
Muslims x x x. However, there should be no distinction between
Muslims and non-Muslims as regards payment of benefits for Muslim
holidays. The Court of Appeals did not err in sustaining Undersecretary Espaol
who stated:
Assuming arguendo that the respondents position is correct, then by the same
token, Muslims throughout the Philippines are also not entitled to holiday pays
on Christian holidays declared by law as regular holidays. We must remind the
respondent-appellant that wages and other emoluments granted by law to the
working man are determined on the basis of the criteria laid down by laws and
certainly not on the basis of the workers faith or religion.
At any rate, Article 3(3) of Presidential Decree No. 1083 also declares that x x
x nothing herein shall be construed to operate to the prejudice of a non-
Muslim.
In addition, the 1999 Handbook on Workers Statutory Benefits, approved by

then DOLE Secretary Bienvenido E. Laguesma on 14 December 1999
categorically stated:
Considering that all private corporations, offices, agencies, and entities or

establishments operating within the designated Muslim provinces and cities are
required to observe Muslim holidays, both Muslim and Christians working
within the Muslim areas may not report for work on the days
designated by law as Muslim holidays.[9 cräläwvirtualibräry
On the question regarding the jurisdiction of the Regional Director Allan M.

Macaraya, Article 128, Section B of the Labor Code, as amended by Republic
Act No. 7730, provides:
Article 128. Visitorial and enforcement power. -
xxx
(b) Notwithstanding the provisions of Article 129 and 217 of this Code to the
contrary, and in cases where the relationship of employer-employee still
exists, the Secretary of Labor and Employment or his duly authorized
representatives shall have the power to issue compliance orders to give effect
to the labor standards provisions of this Code and other labor legislation based
on the findings of labor employment and enforcement officers or industrial
safety engineers made in the course of the inspection. The Secretary or his
duly authorized representative shall issue writs of execution to the appropriate
authority for the enforcement of their orders, except in cases where the
employer contests the findings of the labor employment and enforcement
officer and raises issues supported by documentary proofs which were not
considered in the course of inspection.
xxx
In the case before us, Regional Director Macaraya acted as the duly authorized
representative of the Secretary of Labor and Employment and it was within his
power to issue the compliance order to SMC. In addition, the Court agrees
with the Solicitor General that the petitioner did not deny that it was not
paying Muslim holiday pay to its non-Muslim employees. Indeed, petitioner
merely contends that its non-Muslim employees are not entitled to Muslim
holiday pay. Hence, the issue could be resolved even without documentary
proofs. In any case, there was no indication that Regional Director Macaraya
failed to consider any documentary proof presented by SMC in the course of
the inspection.
Anent the allegation that petitioner was not accorded due process, we sustain
the Court of Appeals in finding that SMC was furnished a copy of the inspection
order and it was received by and explained to its Personnel Officer. Further, a
series of summary hearings were conducted by DOLE on 19 November
1992, 28 May 1993 and 4 and 5 October 1993. Thus, SMC could not claim that
it was not given an opportunity to defend itself.
Finally, as regards the allegation that the issue on Muslim holiday pay was
already resolved in NLRC CA No. M-000915-92 (Napoleon E. Fernan vs. San
Miguel Corporation Beer Division and Leopoldo Zaldarriaga),10 the Court notes
that the case was primarily for illegal dismissal and the claim for benefits was
only incidental to the main case. In that case, the NLRC Cagayan de Oro City
declared, in passing:
We also deny the claims for Muslim holiday pay for lack of factual and legal
basis. Muslim holidays are legally observed within the area of jurisdiction of
the present Autonomous Region for Muslim Mindanao (ARMM), particularly in
the provinces of Maguindanao, Lanao del Sur, Sulu and Tawi-Tawi. It is only
upon Presidential Proclamation that Muslim holidays may be officially observed
outside the Autonomous Region and generally extends to Muslims to enable
them the observe said holidays.[11 cräläwvirtualibräry
The decision has no consequence to issues before us, and as aptly declared by
Undersecretary Espaol, it can never be a benchmark nor a guideline to the
present case x x x.12 cräläwvirtualibräry
WHEREFORE, in view of the foregoing, the petition is DISMISSED.

16.) G.R. Nos. 83380-81 November 15, 1989
MAKATI HABERDASHERY, INC., JORGE LEDESMA and CECILIO G. INOCENCIO, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION, CEFERINA J. DIOSANA (Labor Arbiter, Department of Labor
and Employment, National Capital Region), SANDIGAN NG MANGGAGAWANG PILIPINO (SANDIGAN)-TUCP
and its members, JACINTO GARCIANO, ALFREDO C. BASCO, VICTORIO Y. LAURETO, ESTER NARVAEZ,
EUGENIO L. ROBLES, BELEN N. VISTA, ALEJANDRO A. ESTRABO, VEVENCIO TIRO, CASIMIRO ZAPATA,
GLORIA ESTRABO, LEONORA MENDOZA, MACARIA G. DIMPAS, MERILYN A. VIRAY, LILY OPINA, JANET
SANGDANG, JOSEFINA ALCOCEBA and MARIA ANGELES, respondents.
Ledesma, Saludo & Associates for petitioners.
Pablo S. Bernardo for private respondents.
FERNAN, C.J.:
This petition for certiorari involving two separate cases filed by private respondents against herein petitioners assails
the decision of respondent National Labor Relations Commission in NLRC CASE No. 7-2603-84 entitled "Sandigan
Ng Manggagawang Pilipino (SANDIGAN)-TUCP etc., et al. v. Makati Haberdashery and/or Toppers Makati, et al."
and NLRC CASE No. 2-428-85 entitled "Sandigan Ng Manggagawang Pilipino (SANDIGAN)-TUCP etc., et al. v.
Toppers Makati, et al.", affirming the decision of the Labor Arbiter who jointly heard and decided aforesaid cases,
finding: (a) petitioners guilty of illegal dismissal and ordering them to reinstate the dismissed workers and (b) the
existence of employer-employee relationship and granting respondent workers by reason thereof their various
monetary claims.
The undisputed facts are as follows:
Individual complainants, private respondents herein, have been working for petitioner Makati Haberdashery,
Inc. as tailors, seamstress, sewers, basters (manlililip) and "plantsadoras". They are paid on a piece-rate
basis except Maria Angeles and Leonila Serafina who are paid on a monthly basis. In addition to their piece-rate,
they are given a daily allowance of three (P 3.00) pesos provided they report for work before 9:30 a.m. everyday.
Private respondents are required to work from or before 9:30 a.m. up to 6:00 or 7:00 p.m. from Monday to Saturday
and during peak periods even on Sundays and holidays.
On July 20, 1984, the Sandigan ng Manggagawang Pilipino, a labor organization of the respondent workers, filed a
complaint docketed as NLRC NCR Case No. 7-2603-84 for (a) underpayment of the basic wage; (b) underpayment
of living allowance; (c) non-payment of overtime work; (d) non-payment of holiday pay; (e) non-payment of service
incentive pay; (f) 13th month pay; and (g) benefits provided for under Wage Orders Nos. 1, 2, 3, 4 and 5. 1
During the pendency of NLRC NCR Case No. 7-2603-84, private respondent Dioscoro Pelobello left with Salvador
Rivera, a salesman of petitioner Haberdashery, an open package which was discovered to contain a "jusi" barong
tagalog. When confronted, Pelobello replied that the same was ordered by respondent Casimiro Zapata for his
customer. Zapata allegedly admitted that he copied the design of petitioner Haberdashery. But in the afternoon,
when again questioned about said barong, Pelobello and Zapata denied ownership of the same. Consequently a
memorandum was issued to each of them to explain on or before February 4, 1985 why no action should be taken
against them for accepting a job order which is prejudicial and in direct competition with the business of the
company. Both respondents allegedly did not submit their explanation and did not report for work. Hence, they
2 3
were dismissed by petitioners on February 4, 1985. They countered by filing a complaint for illegal dismissal
docketed as NLRC NCR Case No. 2-428-85 on February 5, 1985. 4
On June 10, 1986, Labor Arbiter Ceferina J. Diosana rendered judgment, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in NLRC NCR Case No. 2-428-85 finding respondents
guilty of illegal dismissal and ordering them to reinstate Dioscoro Pelobello and Casimiro Zapata to
their respective or similar positions without loss of seniority rights, with full backwages from July 4,
1985 up to actual reinstatement. The charge of unfair labor practice is dismissed for lack of merit.
In NLRC NCR Case No. 7-26030-84, the complainants' claims for underpayment re violation of the
minimum wage law is hereby ordered dismissed for lack of merit.
Respondents are hereby found to have violated the decrees on the cost of living allowance, service
incentive leave pay and the 13th Month Pay. In view thereof, the economic analyst of the
Commission is directed to compute the monetary awards due each complainant based on the
available records of the respondents retroactive as of three years prior to the filing of the instant
case.
SO ORDERED. 5
From the foregoing decision, petitioners appealed to the NLRC. The latter on March 30, 1988 affirmed said decision
but limited the backwages awarded the Dioscoro Pelobello and Casimiro Zapata to only one (1) year. 6
After their motion for reconsideration was denied, petitioners filed the instant petition raising the following issues:
THE SUBJECT DECISIONS ERRONEOUSLY CONCLUDED THAT AN EMPLOYER-EMPLOYEE RELATIONSHIP

EXISTS BETWEEN PETITIONER HABERDASHERY AND RESPONDENTS WORKERS.
II
THE SUBJECT DECISIONS ERRONEOUSLY CONCLUDED THAT RESPONDENTS WORKERS ARE ENTITLED
TO MONETARY CLAIMS DESPITE THE FINDING THAT THEY ARE NOT ENTITLED TO MINIMUM WAGE.
III
THE SUBJECT DECISIONS ERRONEOUSLY CONCLUDED THAT RESPONDENTS PELOBELLO AND ZAPATA
WERE ILLEGALLY DISMISSED. 7
The first issue which is the pivotal issue in this case is resolved in favor of private respondents. We have repeatedly
held in countless decisions that the test of employer-employee relationship is four-fold: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the
employee's conduct. It is the so called "control test" that is the most important element. This simply means the
8
determination of whether the employer controls or has reserved the right to control the employee not only as to the
result of the work but also as to the means and method by which the same is to be accomplished. 9
The facts at bar indubitably reveal that the most important requisite of control is present. As gleaned from the
operations of petitioner, when a customer enters into a contract with the haberdashery or its proprietor, the latter
directs an employee who may be a tailor, pattern maker, sewer or "plantsadora" to take the customer's
measurements, and to sew the pants, coat or shirt as specified by the customer. Supervision is actively manifested
in all these aspects — the manner and quality of cutting, sewing and ironing.
Furthermore, the presence of control is immediately evident in this memorandum issued by Assistant Manager
Cecilio B. Inocencio, Jr. dated May 30, 1981 addressed to Topper's Makati Tailors which reads in part:
4. Effective immediately, new procedures shall be followed:

A. To follow instruction and orders from the undersigned Roger Valderama, Ruben Delos Reyes and
Ofel Bautista. Other than this person (sic) must ask permission to the above mentioned before giving
orders or instructions to the tailors.
B. Before accepting the job orders tailors must check the materials, job orders, due dates and other
things to maximize the efficiency of our production. The materials should be checked (sic) if it is
matched (sic) with the sample, together with the number of the job order.
C. Effective immediately all job orders must be finished one day before the due date. This can be
done by proper scheduling of job order and if you will cooperate with your supervisors. If you have
many due dates for certain day, advise Ruben or Ofel at once so that they can make necessary
adjustment on due dates.
D. Alteration-Before accepting alteration person attending on customs (sic) must ask first or must
advise the tailors regarding the due dates so that we can eliminate what we call 'Bitin'.
E. If there is any problem regarding supervisors or co-tailor inside our shop, consult with me at once
settle the problem. Fighting inside the shop is strictly prohibited. Any tailor violating this
memorandum will be subject to disciplinary action.
For strict compliance.

10
From this memorandum alone, it is evident that petitioner has reserved the right to control its employees not only as
to the result but also the means and methods by which the same are to be accomplished. That private respondents
are regular employees is further proven by the fact that they have to report for work regularly from 9:30 a.m. to 6:00
or 7:00 p.m. and are paid an additional allowance of P 3.00 daily if they report for work before 9:30 a.m. and which
is forfeited when they arrive at or after 9:30 a.m. 11
Since private respondents are regular employees, necessarily the argument that they are independent contractors
must fail. As established in the preceding paragraphs, private respondents did not exercise independence in their
own methods, but on the contrary were subject to the control of petitioners from the beginning of their tasks to their
completion. Unlike independent contractors who generally rely on their own resources, the equipment, tools,
accessories, and paraphernalia used by private respondents are supplied and owned by petitioners. Private
respondents are totally dependent on petitioners in all these aspects.
Coming now to the second issue, there is no dispute that private respondents are entitled to the Minimum Wage as
mandated by Section 2(g) of Letter of Instruction No. 829, Rules Implementing Presidential Decree No. 1614 and
reiterated in Section 3(f), Rules Implementing Presidential Decree 1713 which explicitly states that, "All employees
paid by the result shall receive not less than the applicable new minimum wage rates for eight (8) hours work a day,
except where a payment by result rate has been established by the Secretary of Labor. ..." No such rate has been
12
established in this case.
But all these notwithstanding, the question as to whether or not there is in fact an underpayment of minimum wages
to private respondents has already been resolved in the decision of the Labor Arbiter where he stated: "Hence, for
lack of sufficient evidence to support the claims of the complainants for alleged violation of the minimum wage, their
claims for underpayment re violation of the Minimum Wage Law under Wage Orders Nos. 1, 2, 3, 4, and 5 must
perforce fall."
13
The records show that private respondents did not appeal the above ruling of the Labor Arbiter to the NLRC; neither
did they file any petition raising that issue in the Supreme Court. Accordingly, insofar as this case is concerned, that
issue has been laid to rest. As to private respondents, the judgment may be said to have attained finality. For it is a
well-settled rule in this jurisdiction that "an appellee who has not himself appealed cannot obtain from the appellate
court-, any affirmative relief other than the ones granted in the decision of the court below. " 14
As a consequence of their status as regular employees of the petitioners, they can claim cost of living allowance.
This is apparent from the provision defining the employees entitled to said allowance, thus: "... All workers in the

private sector, regardless of their position, designation or status, and irrespective of the method by which their
wages are paid. " 15
Private respondents are also entitled to claim their 13th Month Pay under Section 3(e) of the Rules and
Regulations Implementing P.D. No. 851 which provides:
Section 3. Employers covered. — The Decree shall apply to all employers except to:
xxx xxx xxx
(e) Employers of those who are paid on purely commission, boundary, or task basis, and
those who are paid a fixed amount for performing a specific work, irrespective of the time
consumed in the performance thereof, except where the workers are paid on piece-rate basis
in which case the employer shall be covered by this issuance insofar as such workers are
concerned. (Emphasis supplied.)
On the other hand, while private respondents are entitled to Minimum Wage, COLA and 13th Month Pay, they are
not entitled to service incentive leave pay because as piece-rate workers being paid at a fixed amount for
performing work irrespective of time consumed in the performance thereof, they fall under one of the
exceptions stated in Section 1(d), Rule V, Implementing Regulations, Book III, Labor Code. For the same
reason private respondents cannot also claim holiday pay (Section 1(e), Rule IV, Implementing Regulations,
Book III, Labor Code).
With respect to the last issue, it is apparent that public respondents have misread the evidence, for it does show that
a violation of the employer's rules has been committed and the evidence of such transgression, the copied barong
tagalog, was in the possession of Pelobello who pointed to Zapata as the owner. When required by their employer
to explain in a memorandum issued to each of them, they not only failed to do so but instead went on AWOL
(absence without official leave), waited for the period to explain to expire and for petitioner to dismiss them. They
thereafter filed an action for illegal dismissal on the far-fetched ground that they were dismissed because of union
activities. Assuming that such acts do not constitute abandonment of their jobs as insisted by private respondents,
their blatant disregard of their employer's memorandum is undoubtedly an open defiance to the lawful orders of the
latter, a justifiable ground for termination of employment by the employer expressly provided for in Article 283(a) of
the Labor Code as well as a clear indication of guilt for the commission of acts inimical to the interests of the
employer, another justifiable ground for dismissal under the same Article of the Labor Code, paragraph (c). Well
established in our jurisprudence is the right of an employer to dismiss an employee whose continuance in the
service is inimical to the employer's interest.
16
In fact the Labor Arbiter himself to whom the explanation of private respondents was submitted gave no credence to
their version and found their excuses that said barong tagalog was the one they got from the embroiderer for the
Assistant Manager who was investigating them, unbelievable.
Under the circumstances, it is evident that there is no illegal dismissal of said employees. Thus, We have ruled that:
No employer may rationally be expected to continue in employment a person whose lack of morals,
respect and loyalty to his employer, regard for his employer's rules, and appreciation of the dignity
and responsibility of his office, has so plainly and completely been bared.
That there should be concern, sympathy, and solicitude for the rights and welfare of the working
class, is meet and proper. That in controversies between a laborer and his master, doubts
reasonably arising from the evidence, or in the interpretation of agreements and writings should be
resolved in the former's favor, is not an unreasonable or unfair rule. But that disregard of the
employer's own rights and interests can be justified by that concern and solicitude is unjust and
unacceptable. (Stanford Microsystems, Inc. v. NLRC, 157 SCRA 414-415 [1988] ).

The law is protecting the rights of the laborer authorizes neither oppression nor self-destruction of the
employer. More importantly, while the Constitution is committed to the policy of social justice and the protection of
17
the working class, it should not be supposed that every labor dispute will automatically be decided in favor of labor. 18
Finally, it has been established that the right to dismiss or otherwise impose discriplinary sanctions upon an
employee for just and valid cause, pertains in the first place to the employer, as well as the authority to determine
the existence of said cause in accordance with the norms of due process. 19
There is no evidence that the employer violated said norms. On the contrary, private respondents who vigorously
insist on the existence of employer-employee relationship, because of the supervision and control of their employer
over them, were the very ones who exhibited their lack of respect and regard for their employer's rules.
Under the foregoing facts, it is evident that petitioner Haberdashery had valid grounds to terminate the services of
private respondents.
WHEREFORE, the decision of the National Labor Relations Commission dated March 30, 1988 and that of the
Labor Arbiter dated June 10, 1986 are hereby modified. The complaint filed by Pelobello and Zapata for illegal
dismissal docketed as NLRC NCR Case No. 2-428-85 is dismissed for lack of factual and legal bases. Award of
service incentive leave pay to private respondents is deleted.

17.) [G.R. No. 171231 : February 17, 2010]
PNCC SKYWAY TRAFFIC MANAGEMENT AND SECURITY DIVISION WORKERS

ORGANIZATION (PSTMSDWO), REPRESENTED BY ITS PRESIDENT, RENE SORIANO,
PETITIONER, VS. PNCC SKYWAY CORPORATION, RESPONDENT.
DECISION
PERALTA, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking to
set aside the Decision[1] and the Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP. No. 87069,
which annulled and set aside the Decision and Order of the Voluntary Arbitrator dated July 12, 2004
and August 11, 2004, respectively.
The factual antecedents are as follows:
Petitioner PNCC Skyway Corporation Traffic Management and Security Division Workers' Organization
(PSTMSDWO) is a labor union duly registered with the Department of Labor and Employment (DOLE).
Respondent PNCC Skyway Corporation is a corporation duly organized and operating under and by
virtue of the laws of the Philippines.
On November 15, 2002, petitioner and respondent entered into a Collective Bargaining
Agreement (CBA) incorporating the terms and conditions of their agreement which
included vacation leave and expenses for security license provisions.
The pertinent provisions of the CBA relative to vacation leave and sick leave are as follows:
ARTICLE VIII
VACATION LEAVE AND SICK LEAVE
Section 1. Vacation Leave.
[a] Regular Employees covered by the bargaining unit who have completed at least one [1] year of
continuous service shall be entitled to vacation leave with pay depending on the length of service as
follows:
1-9 years of service- 15 working days

26 and above years of service - 19 working days.
[b] The company shall schedule the vacation leave of employees during the year taking
into consideration the request of preference of theemployees.(emphasis supplied)
[c] Any unused vacation leave shall be converted to cash and shall be paidto the employees on the
first week of December each year."
ARTICLE XXI
Section 6. Security License - All covered employees must possess a valid License [Security Guard
License] issued by the Chief, Philippine National Police or his duly authorized representative, to
perform his duties as security guard. All expenses of security guard in securing/renewing their
licenses shall be for their personal account. Guards, securing/renewing their license must apply for a
leave of absence and/or a change of schedule. Any guard who fails to renew his security guard
license should be placed on forced leave until such time that he can present a renewed security
license.
In a Memorandum dated December 29, 2003,[3] respondent's Head of the Traffic Management and
Security Department (TMSD) published the scheduled vacation leave of its TMSD personnel for the
year 2004. Thereafter, the Head of the TMSD issued a Memorandum[4] dated January 9, 2004 to all
TMSD personnel. In the said memorandum, it was provided that:
SCHEDULED VACATION LEAVE WITH PAY.
The 17 days (15 days SVL plus 2-day-off) scheduled vacation leave (SVL) with pay for the
year 2004 had been published for everyone to take a vacation with pay which will be our
opportunity to enjoy quality time with our families and perform our other activities requiring our
personal attention and supervision. Swapping of SVL schedule is allowed on a one-on-one basis by
submitting a written request at least 30 days before the actual schedule of SVL duly signed by the
concerned parties. However, the undersigned may consider the re-scheduling of the SVL upon the
written request of concerned TMSD personnel at least 30 days before the scheduled SVL. Re-
scheduling will be evaluated taking into consideration the TMSDs operational requirement.
Petitioner objected to the implementation of the said memorandum. It insisted that the
individual members of the union have the right to schedule their vacation leave. It opined
that the unilateral scheduling of the employees' vacation leave was done to avoid the
monetization of their vacation leave in December 2004. This was allegedly apparent in the
memorandum issued by the Head HRD,[5] addressed to all department heads, which provides:
FOR : All Dept. Heads

FROM: Head, HRD
SUBJECT : Leave Balances as of January 01, 2004
DATE: January 9, 2004
We are furnishing all the departments the leave balances of their respective staff as of January 01,
2004, so as to have them monitor and program the schedule of such leave.
Please consider the leave credit they earned each month [1-2-0], one day and two hours in
anticipation of the later schedule. As we are targeting the zero conversion comes December 2004, it
is suggested that the leave balances as of to date be given preferential scheduling.
x x x.
Petitioner also demanded that the expenses for the required in-service training of its member
security guards, as a requirement for the renewal of their license, be shouldered by the respondent.
However, the respondent did not accede to petitioner's demands and stood firm on its decision to
schedule all the vacation leave of petitioner's members.
Due to the disagreement between the parties, petitioner elevated the matter to the DOLE-NCMB for
preventive mediation. For failure to settle the issue amicably, the parties agreed to submit the issue
before the voluntary arbitrator.
The voluntary arbitrator issued a Decision dated July 12, 2004, the dispositive portion of which
reads:
WHEREFORE, premises all considered, declaring that:

a) The scheduling of all vacation leaves under Article VIII, Section 6, thereof, shall be under the
discretion of the union members entitled thereto, and the management to convert them into cash all
the leaves which the management compelled them to use.
b) To pay the expenses for the in-service-training of the company security guards, as a requirement
for renewal of licenses, shall not be their personal account but that of the company.
All other claims are dismissed for lack of merit.
SO ORDERED.[6]
Respondent filed a motion for reconsideration, which the voluntary arbitrator denied in the
Order[7] dated August 11, 2004.
Aggrieved, on October 22, 2004, respondent filed a Petition for Certiorari with Prayer for Temporary
Restraining Order and/or Writ of Preliminary Injunction with the CA, and the CA rendered a Decision
dated October 4, 2005,[8] annulling and setting aside the decision and order of the voluntary
arbitrator. The CA ruled that since the provisions of the CBA were clear, the voluntary arbitrator has
no authority to interpret the same beyond what was expressly written.
Petitioner filed a motion for reconsideration, which the CA denied through a Resolution dated January
23, 2006.[9] Hence, the instant petition assigning the following errors:
WITH ALL DUE RESPECT, THE HONORABLE PUBLIC RESPONDENT COURT OF APPEALS [THIRTEENTH
DIVISION] ERRED IN HOLDING THAT:
A) THE MANAGEMENT HAS THE SOLE DISCRETION TO SCHEDULE THE VACATION LEAVE OF HEREIN
PETITIONER.
B) THE MANAGEMENT IS NOT LIABLE FOR THE IN-SERVICE-TRAINING OF THE SECURITY GUARDS.
II
THE HONORABLE PUBLIC RESPONDENT ERRED IN OVERSEEING THE CONVERSION ASPECT OF THE
UNUSED LEAVE.
Before considering the merits of the petition, We shall first address the objection based on
technicality raised by respondent.
Respondent alleged that the petition was fatally defective due to the lack of authority of its union
president, Rene Soriano, to sign the certification and verification against forum shopping on
petitioner's behalf. It alleged that the authority of Rene Soriano to represent the union was only
conferred on June 30, 2006 by virtue of a board resolution,[10] while the Petition for Review had long
been filed on February 27, 2006. Thus, Rene Soriano did not possess the required authority at the
time the petition was filed on February 27, 2006.
The petitioner countered that the Board Resolution[11] dated June 30, 2006 merely reiterated the
authority given to the union president to represent the union, which was conferred as early as
October 2005. The resolution provides in part that:
WHEREAS, in a meeting duly called for October 2005, the Union decided to file a Motion for
Reconsideration and if the said motion be denied, to file a petition before the Supreme Court.
(Emphasis supplied)

Thus, the union president, representing the union, was clothed with authority to file the petition on
February 27, 2006.
The purpose of requiring verification is to secure an assurance that the allegations in the petition
have been made in good faith; or are true and correct, not merely speculative. This requirement is
simply a condition affecting the form of pleadings, and non-compliance therewith does not
necessarily render it fatally defective. Truly, verification is only a formal, not a jurisdictional,
requirement.
With respect to the certification of non-forum shopping, it has been held that the certification
requirement is rooted in the principle that a party-litigant shall not be allowed to pursue
simultaneous remedies in different fora, as this practice is detrimental to an orderly judicial
procedure. However, this Court has relaxed, under justifiable circumstances, the rule requiring the
submission of such certification considering that, although it is obligatory, it is not jurisdictional. Not
being jurisdictional, it can be relaxed under the rule of substantial compliance.[12]
In Cagayan Valley Drug Corporation v. Commissioner of Internal Revenue,[13] We said that:
In a slew of cases, however, we have recognized the authority of some corporate officers to sign the
verification and certification against forum shopping. In Mactan-Cebu International Airport Authority
v. CA, we recognized the authority of a general manager or acting general manager to sign the
verification and certificate against forum shopping; in Pfizer v. Galan, we upheld the validity of a
verification signed by an "employment specialist" who had not even presented any proof of her
authority to represent the company; in Novelty Philippines, Inc., v. CA, we ruled that a personnel
officer who signed the petition but did not attach the authority from the company is authorized to
sign the verification and non-forum shopping certificate; and in Lepanto Consolidated Mining
Company v. WMC Resources International Pty. Ltd. (Lepanto), we ruled that the Chairperson of the
Board and President of the Company can sign the verification and certificate against non-forum
shopping even without the submission of the board's authorization.
In sum, we have held that the following officials or employees of the company can sign the
verification and certification without need of a board resolution: (1) the Chairperson of the Board of
Directors, (2) the President of a corporation, (3) the General Manager or Acting General Manager, (4)
Personnel Officer, and (5) an Employment Specialist in a labor case.
While the above cases do not provide a complete listing of authorized signatories to the verification
and certification required by the rules, the determination of the sufficiency of the authority was done
on a case to case basis. The rationale applied in the foregoing cases is to justify the authority of
corporate officers or representatives of the corporation to sign the verification or certificate against
forum shopping, being "in a position to verify the truthfulness and correctness of the allegations in
the petition."
In the case at bar, We rule that Rene Soriano has sufficient authority to sign the verification and
certification against forum shopping for the following reasons: First, the resolution dated June 30,
2006 was merely a reiteration of the authority given to the Union President to file a case before this
Court assailing the CBA violations committed by the management, which was previously conferred
during a meeting held on October 5, 2005. Thus, it can be inferred that even prior to the filing of the
petition before Us on February 27, 2006, the president of the union was duly authorized to represent
the union and to file a case on its behalf. Second, being the president of the union, Rene Soriano is in
a position to verify the truthfulness and correctness of the allegations in the petition. Third, assuming
that Mr. Soriano has no authority to file the petition on February 27, 2006, the passing on June 30,
2006 of a Board Resolution authorizing him to represent the union is deemed a ratification of his
prior execution, on February 27, 2006, of the verification and certificate of non-forum shopping, thus
curing any defects thereof. Ratification in agency is the adoption or confirmation by one person of an
act performed on his behalf by another without authority.[14]
We now go to the merits of the case.
Petitioner insisted that their union members have the preference in scheduling their
vacation leave. On the other hand, respondent argued that Article VIII, Section 1 (b) gives
the management the final say regarding the vacation leave schedule of its employees.
Respondent may take into consideration the employees' preferred schedule, but the same
is not controlling.
Petitioner also requested the respondent to provide and/or shoulder the expenses for the in-service
training of their members as a requirement for the renewal of the security guards' license.
Respondent did not accede to the union's request invoking the CBA provision which states that all
expenses of security guards in securing /renewing their license shall be for their personal account.
The petitioner further argued that any doubts or ambiguity in the interpretation of the CBA should be
resolved in favor of the laborer.
As to the issue on vacation leaves, the same has no merit.
The rule is that where the language of a contract is plain and unambiguous, its meaning should be
determined without reference to extrinsic facts or aids. The intention of the parties must be gathered
from that language, and from that language alone. Stated differently, where the language of a
written contract is clear and unambiguous, the contract must be taken to mean that which, on its
face, it purports to mean, unless some good reason can be assigned to show that the words used
should be understood in a different sense.[15]
In the case at bar, the contested provision of the CBA is clear and unequivocal. Article
VIII, Section 1 (b) of the CBA categorically provides that the scheduling of vacation
leave shall be under the option of the employer. The preference requested by the
employees is not controlling because respondent retains its power and prerogative to
consider or to ignore said request.
Thus, if the terms of a CBA are clear and leave no doubt upon the intention of the contracting
parties, the literal meaning of its stipulation shall prevail.[16] In fine, the CBA must be strictly adhered
to and respected if its ends have to be achieved, being the law between the parties. In Faculty
Association of Mapua Institute of Technology (FAMIT) v. Court of Appeals, [17] this Court held that the
CBA during its lifetime binds all the parties. The provisions of the CBA must be respected since its
terms and conditions constitute the law between the parties. The parties cannot be allowed to change
the terms they agreed upon on the ground that the same are not favorable to them.
As correctly found by the CA:
The words of the CBA were unequivocal when it provided that "The company shall schedule the
vacation leave of employees during the year taking into consideration the request of preference of
the employees." The word shall in this instance connotes an imperative command, there being
nothing to show a different intention. The only concession given under the subject clause was that
the company should take into consideration the preferences of the employees in scheduling the
vacations; but certainly, the concession never diminished the positive right of management to
schedule the vacation leaves in accordance with what had been agreed and stipulated upon in the
CBA.
There is, thus, no basis for the Voluntary Arbitrator to interpret the subject provision relating to the
schedule of vacation leaves as being subject to the discretion of the union members. There is simply
nothing in the CBA which grants the union members this right.

It must be noted the grant to management of the right to schedule vacation leaves is not without
good reason. Indeed, if union members were given the unilateral discretion to schedule their vacation
leaves, the same may result in significantly crippling the number of key employees of the petitioner
manning the toll ways on holidays and other peak seasons, where union members may wittingly or
unwittingly choose to have a vacation. Put another way, the grant to management of the right to
schedule vacation leaves ensures that there would always be enough people manning and servicing
the toll ways, which in turn assures the public plying the same orderly and efficient toll way service.
Indeed, the multitude or scarcity of personnel manning the tollways should not rest upon the option
of the employees, as the public using the skyway system should be assured of its safety, security and
convenience.
Although the preferred vacation leave schedule of petitioner's members should be given
priority, they cannot demand, as a matter of right, that their request be automatically
granted by the respondent. If the petitioners were given the exclusive right to schedule
their vacation leave then said right should have been incorporated in the CBA. In the
absence of such right and in view of the mandatory provision in the CBA giving respondent
the right to schedule the vacation leave of its employees, compliance therewith is
mandated by law.
In the grant of vacation leave privileges to an employee, the employer is given the leeway
to impose conditions on the entitlement to and commutation of the same, as the grant of
vacation leave is not a standard of law, but a prerogative of management. [18] It is a mere
concession or act of grace of the employer and not a matter of right on the part of the
employee.[19] Thus, it is well within the power and authority of an employer to impose
certain conditions, as it deems fit, on the grant of vacation leaves, such as having the
option to schedule the same.
Along that line, since the grant of vacation leave is a prerogative of the employer, the latter can
compel its employees to exhaust all their vacation leave credits. Of course, any vacation leave credits
left unscheduled by the employer, or any scheduled vacation leave that was not enjoyed by the
employee upon the employer's directive, due to exigencies of the service, must be converted to cash,
as provided in the CBA. However, it is incorrect to award payment of the cash equivalent of vacation
leaves that were already used and enjoyed by the employees. By directing the conversion to cash of
all utilized and paid vacation leaves, the voluntary arbitrator has licensed unjust enrichment in favor
of the petitioner and caused undue financial burden on the respondent. Evidently, the Court cannot
tolerate this.
It would seem that petitioner's goal in relentlessly arguing that its members preferred vacation leave
schedule should be given preference is not allowed to them to avail themselves of their respective
vacation leave credits at all but, instead, to convert these into cash.
In Cuajo v. Chua Lo Tan,[20] We said that the purpose of a vacation leave is to afford a laborer a
chance to get a much-needed rest to replenish his worn-out energy and acquire a new vitality to
enable him to efficiently perform his duties, and not merely to give him additional salary and bounty.
This purpose is manifest in the Memorandum dated January 9, 2004[21] addressed to all TMSD
Personnel which provides that:
SCHEDULED VACATION LEAVE WITH PAY
The 17 days (15 days SVL plus 2-Day-Off) scheduled vacation leave (SVL) with pay for the year 2004
had been published for everyone to take a vacation with pay which will be our opportunity to
enjoy quality time with our families and perform our other activities requiring our personal
attention and supervision.(Emphasis ours.)
Accordingly, the vacation leave privilege was not intended to serve as additional salary,
but as a non-monetary benefit. To give the employees the option not to consume it with
the aim of converting it to cash at the end of the year would defeat the very purpose of
vacation leave.
Petitioner's contention that labor contracts should be construed in favor of the laborer is without
basis and, therefore, inapplicable to the present case. This rule of construction does not benefit
petitioners because, as stated, there is here no room for interpretation. Since the CBA is clear and
unambiguous, its terms should be implemented as they are written.
This brings Us to the issue of who is accountable for the in-service training of the security guards. On
this point, We find the petition meritorious.
Although it is a rule that a contract freely entered into between the parties should be respected, since
a contract is the law between the parties, there are, however, certain exceptions to the rule,
specifically Article 1306 of the Civil Code, which provides:
The contracting parties may establish such stipulations, clauses, terms and conditions as they may
deem convenient, provided they are not contrary to law, morals, good customs, public order, or
public policy.
Moreover, the relations between capital and labor are not merely contractual. "They are so impressed
with public interest that labor contracts must yield to the common good x x x."[22] The supremacy of
the law over contracts is explained by the fact that labor contracts are not ordinary contracts; they
are imbued with public interest and therefore are subject to the police power of the state.
[23]
However, it should not be taken to mean that provisions agreed upon in the CBA are absolutely
beyond the ambit of judicial review and nullification. If the provisions in the CBA run contrary to law,
public morals, or public policy, such provisions may very well be voided.
In the present case, Article XXI, Section 6 of the CBA provides that "All expenses of security guards
in securing /renewing their licenses shall be for their personal account." A reading of the provision
would reveal that it encompasses all possible expenses a security guard would pay or incur in order
to secure or renew his license. In-service training is a requirement for the renewal of a security
guard's license.[24] Hence, following the aforementioned CBA provision, the expenses for the same
must be on the personal account of the employee. However, the 1994 Revised Rules and Regulations
Implementing Republic Act No. 5487 provides the following:
Section 17. Responsibility for Training and Progressive Development. It is the primary responsibility
of all operators private security agency and company security forces to maintain and upgrade the
standards of efficiency, discipline, performance and competence of their personnel. To attain this
end, each duly licensed private security agency and company security force shall establish a staff
position for training and appoint a training officer whose primary functions are to determine the
training needs of the agency/guards in relation to the needs of the client/ market/ industry, and to
supervise and conduct appropriate training requirements. All private security personnel shall be re-
trained at least once very two years.
Section 12. In service training. - a. To maintain and/or upgrade the standard of efficiency, discipline
and competence of security guards and detectives, company security force and private security
agencies upon prior authority shall conduct-in-service training at least two (2) weeks duration for
their organic members by increments of at least two percent (2%) of their total strength. Where the
quality of training is better served by centralization, the CSFD Directors may activate a
training staff from local talents to assist. The cost of training shall be pro-rated among the
participating agencies/private companies. All security officer must undergo in-service training at
least once every two (2) years preferably two months before his or her birth month.
Since it is the primary responsibility of operators of company security forces to maintain and upgrade
the standards of efficiency, discipline, performance and competence of their personnel, it follows that
the expenses to be incurred therein shall be for the personal account of the company. Further, the
intent of the law to impose upon the employer the obligation to pay for the cost of its employees'
training is manifested in the aforementioned law's provision that Where the quality of training is
better served by centralization, the CFSD Directors may activate a training staff from local talents to
assist. The cost of training shall be pro-rated among the participating agencies/private companies. It
can be gleaned from the said provision that cost of training shall be pro-rated among participating
agencies and companies if the training is best served by centralization. The law mandates pro-rating
of expenses because it would be impracticable and unfair to impose the burden of expenses suffered
by all participants on only one participating agency or company. Thus, it follows that if there is no
centralization, there can be no pro-rating, and the company that has its own security forces shall
shoulder the entire cost for such training. If the intent of the law were to impose upon individual
employees the cost of training, the provision on the pro-rating of expenses would not have found
print in the law.
Further, petitioner alleged that prior to the inking of the CBA, it was the respondent company
providing for the in-service training of the guards.[25] Respondent never controverted the said
allegation and is thus deemed to have admitted the same.[26] Implicit from respondent's actuations
was its acknowledgment of its legally mandated responsibility to shoulder the expenses for in-service
training.
WHEREFORE, the petition is PARTIALLY GRANTED. The Decision and Resolution of the Court of
Appeals, dated October 4, 2005 and January 23, 2006, respectively, in CA-G.R. SP. No. 87069
is MODIFIED. The cost of in-service training of the respondent company's security guards shall be at
the expense of the respondent company. This case is remanded to the voluntary arbitrator for the
computation of the expenses incurred by the security guards for their in-service training, and
respondent company is directed to reimburse its security guards for the expenses incurred.

18.) G.R. No. L-50999 March 23, 1990
JOSE SONGCO, ROMEO CIPRES, and AMANCIO MANUEL, petitioners,

vs
NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION), LABOR ARBITER FLAVIO AGUAS, and
F.E. ZUELLIG (M), INC., respondents.
Raul E. Espinosa for petitioners.
Lucas Emmanuel B. Canilao for petitioner A. Manuel.
Atienza, Tabora, Del Rosario & Castillo for private respondent.
MEDIALDEA, J.:
This is a petition for certiorari seeking to modify the decision of the National Labor Relations Commission in NLRC
Case No. RB-IV-20840-78-T entitled, "Jose Songco and Romeo Cipres, Complainants-Appellants, v. F.E. Zuellig
(M), Inc., Respondent-Appellee" and NLRC Case No. RN- IV-20855-78-T entitled, "Amancio Manuel, Complainant-
Appellant, v. F.E. Zuellig (M), Inc., Respondent-Appellee," which dismissed the appeal of petitioners herein and in
effect affirmed the decision of the Labor Arbiter ordering private respondent to pay petitioners separation pay
equivalent to their one month salary (exclusive of commissions, allowances, etc.) for every year of service.
The antecedent facts are as follows:
Private respondent F.E. Zuellig (M), Inc., (hereinafter referred to as Zuellig) filed with the Department of Labor
(Regional Office No. 4) an application seeking clearance to terminate the services of petitioners Jose Songco,
Romeo Cipres, and Amancio Manuel (hereinafter referred to as petitioners) allegedly on the ground of
retrenchment due to financial losses. This application was seasonably opposed by petitioners alleging that the
company is not suffering from any losses. They alleged further that they are being dismissed because of their
membership in the union. At the last hearing of the case, however, petitioners manifested that they are no longer
contesting their dismissal. The parties then agreed that the sole issue to be resolved is the basis of the separation
pay due to petitioners. Petitioners, who were in the sales force of Zuellig received monthly salaries of at least
P40,000. In addition, they received commissions for every sale they made.
The collective Bargaining Agreement entered into between Zuellig and F.E. Zuellig Employees Association, of which
petitioners are members, contains the following provision (p. 71, Rollo):
ARTICLE XIV — Retirement Gratuity
Section l(a)-Any employee, who is separated from employment due to old age, sickness, death or
permanent lay-off not due to the fault of said employee shall receive from the company a retirement
gratuity in an amount equivalent to one (1) month's salary per year of service. One month
of salary as used in this paragraph shall be deemed equivalent to the salary at date of retirement;
years of service shall be deemed equivalent to total service credits, a fraction of at least six months
being considered one year, including probationary employment. (Emphasis supplied)
On the other hand, Article 284 of the Labor Code then prevailing provides:
Art. 284. Reduction of personnel. — The termination of employment of any employee due to the
installation of labor saving-devices, redundancy, retrenchment to prevent losses, and other similar
causes, shall entitle the employee affected thereby to separation pay. In case of termination due to
the installation of labor-saving devices or redundancy, the separation pay shall be equivalent to one

(1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case
of retrenchment to prevent losses and other similar causes, the separation pay shall be equivalent to
one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher.
A fraction of at least six (6) months shall be considered one (1) whole year. (Emphasis supplied)
In addition, Sections 9(b) and 10, Rule 1, Book VI of the Rules Implementing the Labor Code provide:
xxx
Sec. 9(b). Where the termination of employment is due to retrechment initiated by the employer to
prevent losses or other similar causes, or where the employee suffers from a disease and his
continued employment is prohibited by law or is prejudicial to his health or to the health of his co-
employees, the employee shall be entitled to termination pay equivalent at least to his one month
salary, or to one-half month pay for every year of service, whichever is higher, a fraction of at least
six (6) months being considered as one whole year.
xxx
Sec. 10. Basis of termination pay. — The computation of the termination pay of an employee as
provided herein shall be based on his latest salary rate, unless the same was reduced by the
employer to defeat the intention of the Code, in which case the basis of computation shall be the rate
before its deduction. (Emphasis supplied)
On June 26,1978, the Labor Arbiter rendered a decision, the dispositive portion of which reads (p. 78, Rollo):
RESPONSIVE TO THE FOREGOING, respondent should be as it is hereby, ordered to pay the

complainants separation pay equivalent to their one month salary (exclusive of commissions,
allowances, etc.) for every year of service that they have worked with the company.
SO ORDERED.
The appeal by petitioners to the National Labor Relations Commission was dismissed for lack of merit.
Hence, the present petition.
On June 2, 1980, the Court, acting on the verified "Notice of Voluntary Abandonment and Withdrawal of Petition
dated April 7, 1980 filed by petitioner Romeo Cipres, based on the ground that he wants "to abide by the decision
appealed from" since he had "received, to his full and complete satisfaction, his separation pay," resolved to dismiss
the petition as to him.
The issue is whether or not earned sales commissions and allowances should be included in the monthly
salary of petitioners for the purpose of computation of their separation pay.
The petition is impressed with merit.
Petitioners' position was that in arriving at the correct and legal amount of separation pay due them,
whether under the Labor Code or the CBA, their basic salary, earned sales commissions and allowances
should be added together. They cited Article 97(f) of the Labor Code which includes commission as part on one's
salary, to wit;
(f) 'Wage' paid to any employee shall mean the remuneration or earnings, however designated,
capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece,
or commission basis, or other method of calculating the same, which is payable by an employer to
an employee under a written or unwritten contract of employment for work done or to be done, or for
services rendered or to be rendered, and includes the fair and reasonable value, as determined by
the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to
the employee. 'Fair reasonable value' shall not include any profit to the employer or to any person
affiliated with the employer.
Zuellig argues that if it were really the intention of the Labor Code as well as its implementing rules to include
commission in the computation of separation pay, it could have explicitly said so in clear and unequivocal terms.
Furthermore, in the definition of the term "wage", "commission" is used only as one of the features or designations
attached to the word remuneration or earnings.
Insofar as the issue of whether or not allowances should be included in the monthly salary of petitioners for the
purpose of computation of their separation pay is concerned, this has been settled in the case of Santos v. NLRC,
et al., G.R. No. 76721, September 21, 1987, 154 SCRA 166, where We ruled that "in the computation of backwages
and separation pay, account must be taken not only of the basic salary of petitioner but also of her transportation
and emergency living allowances." This ruling was reiterated in Soriano v. NLRC, et al., G.R. No. 75510, October
27, 1987, 155 SCRA 124 and recently, in Planters Products, Inc. v. NLRC, et al., G.R. No. 78524, January 20,
1989.
We shall concern ourselves now with the issue of whether or not earned sales commission should be included in the
monthly salary of petitioner for the purpose of computation of their separation pay.
Article 97(f) by itself is explicit that commission is included in the definition of the term "wage". It has been
repeatedly declared by the courts that where the law speaks in clear and categorical language, there is no room for
interpretation or construction; there is only room for application (Cebu Portland Cement Co. v. Municipality of Naga,
G.R. Nos. 24116-17, August 22, 1968, 24 SCRA 708; Gonzaga v. Court of Appeals, G.R.No. L-2 7455, June
28,1973, 51 SCRA 381). A plain and unambiguous statute speaks for itself, and any attempt to make it clearer is
vain labor and tends only to obscurity. How ever, it may be argued that if We correlate Article 97(f) with Article XIV
of the Collective Bargaining Agreement, Article 284 of the Labor Code and Sections 9(b) and 10 of the
Implementing Rules, there appears to be an ambiguity. In this regard, the Labor Arbiter rationalized his decision in
this manner (pp. 74-76, Rollo):
The definition of 'wage' provided in Article 96 (sic) of the Code can be correctly be (sic) stated as a
general definition. It is 'wage ' in its generic sense. A careful perusal of the same does not show any
indication that commission is part of salary. We can say that commission by itself may be considered
a wage. This is not something novel for it cannot be gainsaid that certain types of employees like
agents, field personnel and salesmen do not earn any regular daily, weekly or monthly salaries, but
rely mainly on commission earned.
Upon the other hand, the provisions of Section 10, Rule 1, Book VI of the implementing rules in
conjunction with Articles 273 and 274 (sic) of the Code specifically states that the basis of the
termination pay due to one who is sought to be legally separated from the service is 'his latest salary
rates.
x x x.
Even Articles 273 and 274 (sic) invariably use 'monthly pay or monthly salary'.
The above terms found in those Articles and the particular Rules were intentionally used to express
the intent of the framers of the law that for purposes of separation pay they mean to be specifically
referring to salary only.
.... Each particular benefit provided in the Code and other Decrees on Labor has its own pecularities
and nuances and should be interpreted in that light. Thus, for a specific provision, a specific meaning
is attached to simplify matters that may arise there from. The general guidelines in (sic) the
formation of specific rules for particular purpose. Thus, that what should be controlling in matters
concerning termination pay should be the specific provisions of both Book VI of the Code and the
Rules. At any rate, settled is the rule that in matters of conflict between the general provision of law
and that of a particular- or specific provision, the latter should prevail.

On its part, the NLRC ruled (p. 110, Rollo):
From the aforequoted provisions of the law and the implementing rules, it could be deduced that
wage is used in its generic sense and obviously refers to the basic wage rate to be ascertained on a
time, task, piece or commission basis or other method of calculating the same. It does not, however,
mean that commission, allowances or analogous income necessarily forms part of the employee's
salary because to do so would lead to anomalies (sic), if not absurd, construction of the word
"salary." For what will prevent the employee from insisting that emergency living allowance, 13th
month pay, overtime, and premium pay, and other fringe benefits should be added to the
computation of their separation pay. This situation, to our mind, is not the real intent of the Code and
its rules.
We rule otherwise. The ambiguity between Article 97(f), which defines the term 'wage' and Article XIV of the
Collective Bargaining Agreement, Article 284 of the Labor Code and Sections 9(b) and 10 of the Implementing
Rules, which mention the terms "pay" and "salary", is more apparent than real. Broadly, the word "salary" means a
recompense or consideration made to a person for his pains or industry in another man's business. Whether it be
derived from "salarium," or more fancifully from "sal," the pay of the Roman soldier, it carries with it the fundamental
idea of compensation for services rendered. Indeed, there is eminent authority for holding that the words "wages"
and "salary" are in essence synonymous (Words and Phrases, Vol. 38 Permanent Edition, p. 44 citing Hopkins vs.
Cromwell, 85 N.Y.S. 839,841,89 App. Div. 481; 38 Am. Jur. 496). "Salary," the etymology of which is the Latin word
"salarium," is often used interchangeably with "wage", the etymology of which is the Middle English word "wagen".
Both words generally refer to one and the same meaning, that is, a reward or recompense for services performed.
Likewise, "pay" is the synonym of "wages" and "salary" (Black's Law Dictionary, 5th Ed.). Inasmuch as the words
"wages", "pay" and "salary" have the same meaning, and commission is included in the definition of "wage", the
logical conclusion, therefore, is, in the computation of the separation pay of petitioners, their salary base should
include also their earned sales commissions.
The aforequoted provisions are not the only consideration for deciding the petition in favor of the petitioners.
We agree with the Solicitor General that granting, in gratia argumenti, that the commissions were in the form of
incentives or encouragement, so that the petitioners would be inspired to put a little more industry on the jobs
particularly assigned to them, still these commissions are direct remuneration services rendered which contributed
to the increase of income of Zuellig . Commission is the recompense, compensation or reward of an agent,
salesman, executor, trustees, receiver, factor, broker or bailee, when the same is calculated as a percentage on the
amount of his transactions or on the profit to the principal (Black's Law Dictionary, 5th Ed., citing Weiner v. Swales,
217 Md. 123, 141 A.2d 749, 750). The nature of the work of a salesman and the reason for such type of
remuneration for services rendered demonstrate clearly that commission are part of petitioners' wage or salary. We
take judicial notice of the fact that some salesmen do not receive any basic salary but depend on commissions and
allowances or commissions alone, are part of petitioners' wage or salary. We take judicial notice of the fact that
some salesman do not received any basic salary but depend on commissions and allowances or commissions
alone, although an employer-employee relationship exists. Bearing in mind the preceeding dicussions, if we adopt
the opposite view that commissions, do not form part of wage or salary, then, in effect, We will be saying that this
kind of salesmen do not receive any salary and therefore, not entitled to separation pay in the event of discharge
from employment. Will this not be absurd? This narrow interpretation is not in accord with the liberal spirit of our
labor laws and considering the purpose of separation pay which is, to alleviate the difficulties which confront a
dismissed employee thrown the the streets to face the harsh necessities of life.
Additionally, in Soriano v. NLRC, et al., supra, in resolving the issue of the salary base that should be used in
computing the separation pay, We held that:
The commissions also claimed by petitioner ('override commission' plus 'net deposit incentive') are
not properly includible in such base figure since such commissions must be earned by actual market
transactions attributable to petitioner.
Applying this by analogy, since the commissions in the present case were earned by actual market
transactions attributable to petitioners, these should be included in their separation pay. In the computation

thereof, what should be taken into account is the average commissions earned during their last year of
employment.
The final consideration is, in carrying out and interpreting the Labor Code's provisions and its implementing
regulations, the workingman's welfare should be the primordial and paramount consideration. This kind of
interpretation gives meaning and substance to the liberal and compassionate spirit of the law as provided for in
Article 4 of the Labor Code which states that "all doubts in the implementation and interpretation of the provisions of
the Labor Code including its implementing rules and regulations shall be resolved in favor of labor" (Abella v. NLRC,
G.R. No. 71812, July 30,1987,152 SCRA 140; Manila Electric Company v. NLRC, et al., G.R. No. 78763, July
12,1989), and Article 1702 of the Civil Code which provides that "in case of doubt, all labor legislation and all labor
contracts shall be construed in favor of the safety and decent living for the laborer.
ACCORDINGLY, the petition is hereby GRANTED. The decision of the respondent National Labor Relations
Commission is MODIFIED by including allowances and commissions in the separation pay of petitioners Jose
Songco and Amancio Manuel. The case is remanded to the Labor Arbiter for the proper computation of said
separation pay.

19.) G.R. No. 118506 April 18, 1997
NORMA MABEZA, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, PETER NG/HOTEL SUPREME, respondents.
KAPUNAN, J.:
This petition seeking the nullification of a resolution of public respondent National Labor Relations Commission
dated April 28, 1994 vividly illustrates why courts should be ever vigilant in the preservation of the constitutionally
enshrined rights of the working class. Without the protection accorded by our laws and the tempering of courts, the
natural and historical inclination of capital to ride roughshod over the rights of labor would run unabated.
The facts of the case at bar, culled from the conflicting versions of petitioner and private respondent, are illustrative.
Petitioner Norma Mabeza contends that around the first week of May, 1991, she and her co-employees at the
Hotel Supreme in Baguio City were asked by the hotel's management to sign an instrument attesting to the
latter's compliance with minimum wage and other labor standard provisions of law. The instrument
1
provides: 2
JOINT AFFIDAVIT
We, SYLVIA IGANA, HERMINIGILDO AQUINO, EVELYN OGOY, MACARIA JUGUETA, ADELAIDA
NONOG, NORMA MABEZA, JONATHAN PICART and JOSE DIZON, all of legal ages (sic), Filipinos
and residents of Baguio City, under oath, depose and say:
1. That we are employees of Mr. Peter L. Ng of his Hotel Supreme situated at No. 416 Magsaysay
Ave., Baguio City.
2. That the said Hotel is separately operated from the Ivy's Grill and Restaurant;
3. That we are all (8) employees in the hotel and assigned in each respective shifts;
4. That we have no complaints against the management of the Hotel Supreme as we are paid
accordingly and that we are treated well.
5. That we are executing this affidavit voluntarily without any force or intimidation and for the
purpose of informing the authorities concerned and to dispute the alleged report of the Labor
Inspector of the Department of Labor and Employment conducted on the said establishment on
February 2, 1991.
IN WITNESS WHEREOF, we have hereunto set our hands this 7th day of May, 1991 at Baguio City,
Philippines.
(Sgd.) (Sgd.) (Sgd.)

SYLVIA IGAMA HERMINIGILDO AQUINO EVELYN OGOY
(Sgd.) (Sgd.) (Sgd.)

MACARIA JUGUETA ADELAIDA NONOG NORMA MABEZA.
(Sgd.) (Sgd.)
JONATHAN PICART JOSE DIZON

SUBSCRIBED AND SWORN to before me this 7th day of May, 1991, at Baguio City, Philippines.
Asst. City Prosecutor
Petitioner signed the affidavit but refused to go to the City Prosecutor's Office to swear to the veracity and
contents of the affidavit as instructed by management. The affidavit was nevertheless submitted on the same day to
the Regional Office of the Department of Labor and Employment in Baguio City.
As gleaned from the affidavit, the same was drawn by management for the sole purpose of refuting findings of the
Labor Inspector of DOLE (in an inspection of respondent's establishment on February 2, 1991) apparently adverse
to the private respondent. 3
After she refused to proceed to the City Prosecutor's Office — on the same day the affidavit was submitted
to the Cordillera Regional Office of DOLE — petitioner avers that she was ordered by the hotel management
to turn over the keys to her living quarters and to remove her belongings from the hotel
premises. According to her, respondent strongly chided her for refusing to proceed to the City
4
Prosecutor's Office to attest to the affidavit. She thereafter reluctantly filed a leave of absence from her job
5
which was denied by management. When she attempted to return to work on May 10, 1991, the hotel's cashier,
Margarita Choy, informed her that she should not report to work and, instead, continue with her unofficial
leave of absence. Consequently, on May 13, 1991, three days after her attempt to return to work, petitioner filed a
complaint for illegal dismissal before the Arbitration Branch of the National Labor Relations Commission — CAR
Baguio City. In addition to her complaint for illegal dismissal, she alleged underpayment of wages, non-payment of
holiday pay, service incentive leave pay, 13th month pay, night differential and other benefits. The complaint was
docketed as NLRC Case No. RAB-CAR-05-0198-91 and assigned to Labor Arbiter Felipe P. Pati.
Responding to the allegations made in support of petitioner's complaint for illegal dismissal, private respondent
Peter Ng alleged before Labor Arbiter Pati that petitioner "surreptitiously left (her job) without notice to the
management" and that she actually abandoned her work. He maintained that there was no basis for the money
6
claims for underpayment and other benefits as these were paid in the form of facilities to petitioner and the hotel's
other employee. Pointing to the Affidavit of May 7, 1991, the private respondent asserted that his employees
7
actually have no problems with management. In a supplemental answer submitted eleven (11) months after the
original complaint for illegal dismissal was filed, private respondent raised a new ground, loss of confidence, which
was supported by a criminal complaint for Qualified Theft he filed before the prosecutor's office of the City of Baguio
against petitioner on July 4, 1991. 8
On May 14, 1993, Labor Arbiter Pati rendered a decision dismissing petitioner's complaint on the ground of loss of
confidence. His disquisitions in support of his conclusion read as follows:
It appears from the evidence of respondent that complainant carted away or stole one (1) blanket, 1
piece bedsheet, 1 piece thermos, 2 pieces towel (Exhibits "9", "9-A," "9-B," "9-C" and "10" pages 12-
14 TSN, December 1, 1992).
In fact, this was the reason why respondent Peter Ng lodged a criminal complaint against
complainant for qualified theft and perjury. The fiscal's office finding a prima facie evidence that
complainant committed the crime of qualified theft issued a resolution for its filing in court but
dismissing the charge of perjury (Exhibit "4" for respondent and Exhibit "B-7" for complainant). As a
consequence, complainant was charged in court for the said crime (Exhibit "5" for respondent and
Exhibit "B-6" for the complainant).
With these pieces of evidence, complainant committed serious misconduct against her employer
which is one of the just and valid grounds for an employer to terminate an employee (Article 282 of
the Labor Code as amended). 9
On April 28, 1994, respondent NLRC promulgated its assailed

Resolution — affirming the Labor Arbiter's decision. The resolution substantially incorporated the findings of the
10

Labor Arbiter. Unsatisfied, petitioner instituted the instant special civil action for certiorari under Rule 65 of the
11
Rules of Court on the following grounds: 12
1. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION
COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING TO GRAVE ABUSE OF
DISCRETION IN ITS FAILURE TO CONSIDER THAT THE ALLEGED LOSS OF CONFIDENCE IS
A FALSE CAUSE AND AN AFTERTHOUGHT ON THE PART OF THE RESPONDENT-EMPLOYER
TO JUSTIFY, ALBEIT ILLEGALLY, THE DISMISSAL OF THE COMPLAINANT FROM HER
EMPLOYMENT;
DISCRETION IN ADOPTING THE RULING OF THE LABOR ARBITER THAT THERE WAS NO
UNDERPAYMENT OF WAGES AND BENEFITS ON THE BASIS OF EXHIBIT "8" (AN UNDATED
SUMMARY OF COMPUTATION PREPARED BY ALLEGEDLY BY RESPONDENT'S EXTERNAL
ACCOUNTANT) WHICH IS TOTALLY INADMISSIBLE AS AN EVIDENCE TO PROVE PAYMENT
OF WAGES AND BENEFITS;
DISCRETION IN FAILING TO CONSIDER THE EVIDENCE ADDUCED BEFORE THE LABOR
ARBITER AS CONSTITUTING UNFAIR LABOR PRACTICE COMMITTED BY THE RESPONDENT.
The Solicitor General, in a Manifestation in lieu of Comment dated August 8, 1995 rejects private respondent's
principal claims and defenses and urges this Court to set aside the public respondent's assailed resolution. 13
We agree.
It is settled that in termination cases the employer bears the burden of proof to show that the dismissal is for just
cause, the failure of which would mean that the dismissal is not justified and the employee is entitled to
reinstatement. 14
In the case at bar, the private respondent initially claimed that petitioner abandoned her job when she failed to
return to work on May 8, 1991. Additionally, in order to strengthen his contention that there existed sufficient cause
for the termination of petitioner, he belatedly included a complaint for loss of confidence, supporting this with
charges that petitioner had stolen a blanket, a bedsheet and two towels from the hotel. Appended to his last
15
complaint was a suit for qualified theft filed with the Baguio City prosecutor's office.
From the evidence on record, it is crystal clear that the circumstances upon which private respondent anchored his
claim that petitioner "abandoned" her job were not enough to constitute just cause to sanction the termination of her
services under Article 283 of the Labor Code. For abandonment to arise, there must be concurrence of two things:
1) lack of intention to work; and 2) the presence of overt acts signifying the employee's intention not to work.
16 17
In the instant case, respondent does not dispute the fact that petitioner tried to file a leave of absence when she
learned that the hotel management was displeased with her refusal to attest to the affidavit. The fact that she made
this attempt clearly indicates not an intention to abandon but an intention to return to work after the period of her
leave of absence, had it been granted, shall have expired.
Furthermore, while absence from work for a prolonged period may suggest abandonment in certain instances, mere
absence of one or two days would not be enough to sustain such a claim. The overt act (absence) ought
to unerringly point to the fact that the employee has no intention to return to work, which is patently not the case
18
here. In fact, several days after she had been advised to take an informal leave, petitioner tried to resume working
with the hotel, to no avail. It was only after she had been repeatedly rebuffed that she filed a case for illegal
dismissal. These acts militate against the private respondent's claim that petitioner abandoned her job. As the
Solicitor General in his manifestation observed:

Petitioner's absence on that day should not be construed as abandonment of her job. She did not
report because the cashier told her not to report anymore, and that private respondent Ng did not
want to see her in the hotel premises. But two days later or on the 10th of May, after realizing that
she had to clarify her employment status, she again reported for work. However, she was prevented
from working by private respondents. 19
We now come to the second cause raised by private respondent to support his contention that petitioner was validly
dismissed from her job.
Loss of confidence as a just cause for dismissal was never intended to provide employers with a blank check for
terminating their employees. Such a vague, all-encompassing pretext as loss of confidence, if unqualifiedly given
the seal of approval by this Court, could readily reduce to barren form the words of the constitutional guarantee of
security of tenure. Having this in mind, loss of confidence should ideally apply only to cases involving employees
occupying positions of trust and confidence or to those situations where the employee is routinely charged with the
care and custody of the employer's money or property. To the first class belong managerial employees, i.e., those
vested with the powers or prerogatives to lay down management policies and/or to hire, transfer, suspend, lay-off,
recall, discharge, assign or discipline employees or effectively recommend such managerial actions; and to the
second class belong cashiers, auditors, property custodians, etc., or those who, in the normal and routine exercise
of their functions, regularly handle significant amounts of money or property. Evidently, an ordinary chambermaid
who has to sign out for linen and other hotel property from the property custodian each day and who has to account
for each and every towel or bedsheet utilized by the hotel's guests at the end of her shift would not fall under any of
these two classes of employees for which loss of confidence, if ably supported by evidence, would normally apply.
Illustrating this distinction, this Court in Marina Port Services, Inc. vs. NLRC, has stated that:
20
To be sure, every employee must enjoy some degree of trust and confidence from the employer as
that is one reason why he was employed in the first place. One certainly does not employ a person
he distrusts. Indeed, even the lowly janitor must enjoy that trust and confidence in some measure if
only because he is the one who opens the office in the morning and closes it at night and in this
sense is entrusted with the care or protection of the employer's property. The keys he holds are the
symbol of that trust and confidence.
By the same token, the security guard must also be considered as enjoying the trust and confidence
of his employer, whose property he is safeguarding. Like the janitor, he has access to this property.
He too, is charged with its care and protection.
Notably, however, and like the janitor again, he is entrusted only with the physical task of protecting
that property. The employer's trust and confidence in him is limited to that ministerial function. He is
not entrusted, in the Labor Arbiter's words, with the duties of safekeeping and safeguarding
company policies, management instructions, and company secrets such as operation devices. He is
not privy to these confidential matters, which are shared only in the higher echelons of management.
It is the persons on such levels who, because they discharge these sensitive duties, may be
considered holding positions of trust and confidence. The security guard does not belong in such
category. 21
More importantly, we have repeatedly held that loss of confidence should not be simulated in order to justify what
would otherwise be, under the provisions of law, an illegal dismissal. "It should not be used as a subterfuge for
causes which are illegal, improper and unjustified. It must be genuine, not a mere afterthought to justify an earlier
action taken in bad faith."
22
In the case at bar, the suspicious delay in private respondent's filing of qualified theft charges against petitioner long
after the latter exposed the hotel's scheme (to avoid its obligations as employer under the Labor Code) by her act of
filing illegal dismissal charges against the private respondent would hardly warrant serious consideration of loss of
confidence as a valid ground for dismissal. Notably, the Solicitor General has himself taken a position opposite the
public respondent and has observed that:
If petitioner had really committed the acts charged against her by private respondents (stealing
supplies of respondent hotel), private respondents should have confronted her before dismissing her
on that ground. Private respondents did not do so. In fact, private respondent Ng did not raise the
matter when petitioner went to see him on May 9, 1991, and handed him her application for leave. It
took private respondents 52 days or up to July 4, 1991 before finally deciding to file a criminal
complaint against petitioner, in an obvious attempt to build a case against her.
The manipulations of private respondents should not be countenanced. 23
Clearly, the efforts to justify petitioner's dismissal — on top of the private respondent's scheme of inducing his
employees to sign an affidavit absolving him from possible violations of the Labor Code — taints with evident bad
faith and deliberate malice petitioner's summary termination from employment.
Having said this, we turn to the important question of whether or not the dismissal by the private
respondent of petitioner constitutes an unfair labor practice.
The answer in this case must inevitably be in the affirmative.
The pivotal question in any case where unfair labor practice on the part of the employer is alleged is whether or not
the employer has exerted pressure, in the form of restraint, interference or coercion, against his employee's right to
institute concerted action for better terms and conditions of employment. Without doubt, the act of compelling
employees to sign an instrument indicating that the employer observed labor standards provisions of law when he
might have not, together with the act of terminating or coercing those who refuse to cooperate with the employer's
scheme constitutes unfair labor practice. The first act clearly preempts the right of the hotel's workers to seek better
terms and conditions of employment through concerted action.
We agree with the Solicitor General's observation in his manifestation that "[t]his actuation . . . is analogous to the
situation envisaged in paragraph (f) of Article 248 of the Labor Code" which distinctly makes it an unfair labor
24
practice "to dismiss, discharge or otherwise prejudice or discriminate against an employee for having given or being
about to give testimony" under the Labor Code. For in not giving positive testimony in favor of her employer,
25
petitioner had reserved not only her right to dispute the claim and proffer evidence in support thereof but also to
work for better terms and conditions of employment.
For refusing to cooperate with the private respondent's scheme, petitioner was obviously held up as an example to
all of the hotel's employees, that they could only cause trouble to management at great personal inconvenience.
Implicit in the act of petitioner's termination and the subsequent filing of charges against her was the warning that
they would not only be deprived of their means of livelihood, but also possibly, their personal liberty.
This Court does not normally overturn findings and conclusions of quasi-judicial agencies when the same are ably
supported by the evidence on record. However, where such conclusions are based on a misperception of facts or
where they patently fly in the face of reason and logic, we will not hesitate to set aside those conclusions. Going into
the issue of petitioner's money claims, we find one more salient reason in this case to set things right: the labor
arbiter's evaluation of the money claims in this case incredibly ignores existing law and jurisprudence on the matter.
Its blatant one-sidedness simply raises the suspicion that something more than the facts, the law and jurisprudence
may have influenced the decision at the level of the Arbiter.
Labor Arbiter Pati accepted hook, line and sinker the private respondent's bare claim that the reason the monetary
benefits received by petitioner between 1981 to 1987 were less than minimum wage was because petitioner did not
factor in the meals, lodging, electric consumption and water she received during the period in her
computations. Granting that meals and lodging were provided and indeed constituted facilities, such
26
facilities could not be deducted without the employer complying first with certain legal requirements.
Without satisfying these requirements, the employer simply cannot deduct the value from the employee's
ages. First, proof must be shown that such facilities are customarily furnished by the trade. Second, the
provision of deductible facilities must be voluntarily accepted in writing by the employee. Finally, facilities
must be charged at fair and reasonable value. 27

These requirements were not met in the instant case. Private respondent "failed to present any company
policy or guideline to show that the meal and lodging . . . (are) part of the salary;" he failed to provide
28
proof of the employee's written authorization; and, he failed to show how he arrived at the valuations. 29
Curiously, in the case at bench, the only valuations relied upon by the labor arbiter in his decision were figures
furnished by the private respondent's own accountant, without corroborative evidence. On the pretext that records
prior to the July 16, 1990 earthquake were lost or destroyed, respondent failed to produce payroll records, receipts
and other relevant documents, where he could have, as has been pointed out in the Solicitor General's
manifestation, "secured certified copies thereof from the nearest regional office of the Department of Labor, the SSS
or the BIR."
30
More significantly, the food and lodging, or the electricity and water consumed by the petitioner were not
facilities but supplements. A benefit or privilege granted to an employee for the convenience of the
employer is not a facility. The criterion in making a distinction between the two not so much lies in the kind
(food, lodging) but the purpose. Considering, therefore, that hotel workers are required to work different
31
shifts and are expected to be available at various odd hours, their ready availability is a necessary matter in
the operations of a small hotel, such as the private respondent's hotel.
It is therefore evident that petitioner is entitled to the payment of the deficiency in her wages equivalent to
the full wage applicable from May 13, 1988 up to the date of her illegal dismissal.
Additionally, petitioner is entitled to payment of service incentive leave pay, emergency cost of living allowance,
night differential pay, and 13th month pay for the periods alleged by the petitioner as the private respondent has
never been able to adduce proof that petitioner was paid the aforestated benefits.
However, the claims covering the period of October 1987 up to the time of filing the case on May 13, 1988 are
barred by prescription as P.D. 442 (as amended) and its implementing rules limit all money claims arising out of
employer-employee relationship to three (3) years from the time the cause of action accrues. 32
We depart from the settled rule that an employee who is unjustly dismissed from work normally should be reinstated
without loss of seniority rights and other privileges. Owing to the strained relations between petitioner and private
respondent, allowing the former to return to her job would only subject her to possible harassment and future
embarrassment. In the instant case, separation pay equivalent to one month's salary for every year of continuous
service with the private respondent would be proper, starting with her job at the Belfront Hotel.
In addition to separation pay, backwages are in order. Pursuant to R.A. 6715 and our decision in Osmalik
Bustamante, et al. vs. National Labor Relations Commission, petitioner is entitled to full backwages from the time
33
of her illegal dismissal up to the date of promulgation of this decision without qualification or deduction.
Finally, in dismissal cases, the law requires that the employer must furnish the employee sought to be terminated
from employment with two written notices before the same may be legally effected. The first is a written notice
containing a statement of the cause(s) for dismissal; the second is a notice informing the employee of the
employer's decision to terminate him stating the basis of the dismissal. During the process leading to the second
notice, the employer must give the employee ample opportunity to be heard and defend himself, with the assistance
of counsel if he so desires.
Given the seriousness of the second cause (qualified theft) of the petitioner's dismissal, it is noteworthy that the
private respondent never even bothered to inform petitioner of the charges against her. Neither was petitioner given
the opportunity to explain the loss of the articles. It was only almost two months after petitioner had filed a complaint
for illegal dismissal, as an afterthought, that the loss was reported to the police and added as a supplemental
answer to petitioner's complaint. Clearly, the dismissal of petitioner without the benefit of notice and hearing prior to
her termination violated her constitutional right to due process. Under the circumstance an award of One Thousand
Pesos (P1,000.00) on top of payment of the deficiency in wages and benefits for the period aforestated would be
proper.

WHEREFORE, premises considered, the RESOLUTION of the National Labor Relations Commission dated April
24, 1994 is REVERSED and SET ASIDE, with costs. For clarity, the economic benefits due the petitioner are hereby
summarized as follows:
1) Deficiency wages and the applicable ECOLA from May 13, 1988 up to the date of petitioner's illegal dismissal;
2) Service incentive leave pay; night differential pay and 13th month pay for the same period;
3) Separation pay equal to one month's salary for every year of petitioner's continuous service with the private
respondent starting with her job at the Belfront Hotel;
4) Full backwages, without qualification or deduction, from the date of petitioner's illegal dismissal up to the date of
promulgation of this decision pursuant to our ruling in Bustamante vs. NLRC. 34
5) P1,000.00.

20.) G.R. No. 172161 March 2, 2011
SLL INTERNATIONAL CABLES SPECIALIST and SONNY L. LAGON, Petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION, 4th DIVISION, ROLDAN LOPEZ, EDGARDO ZUÑIGA and
DANILO CAÑETE, Respondents.
DECISION
MENDOZA, J.:
Assailed in this petition for review on certiorari are the January 11, 2006 Decision1 and the March 31, 2006
Resolution2 of the Court of Appeals (CA), in CA-G.R. SP No. 00598 which affirmed with modification the March 31,
2004 Decision3 and December 15, 2004 Resolution4 of the National Labor Relations Commission (NLRC). The
NLRC Decision found the petitioners, SLL International Cables Specialist (SLL) and its manager, Sonny L.
Lagon (petitioners), not liable for the illegal dismissal of Roldan Lopez, Danilo Cañete and Edgardo Zuñiga (private
respondents) but held them jointly and severally liable for payment of certain monetary claims to said respondents.
A chronicle of the factual antecedents has been succinctly summarized by the CA as follows:
Sometime in 1996, and January 1997, private respondents Roldan Lopez (Lopez for brevity) and Danilo
Cañete (Cañete for brevity), and Edgardo Zuñiga (Zuñiga for brevity) respectively, were hired by petitioner
Lagon as apprentice or trainee cable/lineman. The three were paid the full minimum wage and other benefits but
since they were only trainees, they did not report for work regularly but came in as substitutes to the regular workers
or in undertakings that needed extra workers to expedite completion of work. After their training, Zuñiga, Cañete and
Lopez were engaged as project employees by the petitioners in their Islacom project in Bohol. Private respondents
started on March 15, 1997 until December 1997. Upon the completion of their project, their employment was also
terminated. Private respondents received the amount of ₱145.00, the minimum prescribed daily wage for Region
VII. In July 1997, the amount of ₱145 was increased to ₱150.00 by the Regional Wage Board (RWB) and in October
of the same year, the latter was increased to ₱155.00. Sometime in March 1998, Zuñiga and Cañete were engaged
again by Lagon as project employees for its PLDT Antipolo, Rizal project, which ended sometime in (sic) the late
September 1998. As a consequence, Zuñiga and Cañete’s employment was terminated. For this project, Zuñiga
and Cañete received only the wage of ₱145.00 daily. The minimum prescribed wage for Rizal at that time
was ₱160.00.
Sometime in late November 1998, private respondents re-applied in the Racitelcom project of Lagon in Bulacan.
Zuñiga and Cañete were re-employed. Lopez was also hired for the said specific project. For this, private
respondents received the wage of ₱145.00. Again, after the completion of their project in March 1999, private
respondents went home to Cebu City.
On May 21, 1999, private respondents for the 4th time worked with Lagon’s project in Camarin, Caloocan City with
Furukawa Corporation as the general contractor. Their contract would expire on February 28, 2000, the period of
completion of the project. From May 21, 1997-December 1999, private respondents received the wage of
₱145.00. At this time, the minimum prescribed rate for Manila was ₱198.00. In January to February 28, the
three received the wage of ₱165.00. The existing rate at that time was ₱213.00.
For reasons of delay on the delivery of imported materials from Furukawa Corporation, the Camarin project was not
completed on the scheduled date of completion. Face[d] with economic problem[s], Lagon was constrained to cut
down the overtime work of its worker[s][,] including private respondents. Thus, when requested by private
respondents on February 28, 2000 to work overtime, Lagon refused and told private respondents that if they
insist, they would have to go home at their own expense and that they would not be given anymore time nor
allowed to stay in the quarters. This prompted private respondents to leave their work and went home to
Cebu. On March 3, 2000, private respondents filed a complaint for illegal dismissal, non-payment of wages,
holiday pay, 13th month pay for 1997 and 1998 and service incentive leave pay as well as damages and
attorney’s fees.

In their answers, petitioners admit employment of private respondents but claimed that the latter were only project
employees[,] for their services were merely engaged for a specific project or undertaking and the same were
covered by contracts duly signed by private respondents. Petitioners further alleged that the food allowance of
₱63.00 per day as well as private respondents allowance for lodging house, transportation, electricity, water
and snacks allowance should be added to their basic pay. With these, petitioners claimed that private
respondents received higher wage rate than that prescribed in Rizal and Manila.
Lastly, petitioners alleged that since the workplaces of private respondents were all in Manila, the complaint should
be filed there. Thus, petitioners prayed for the dismissal of the complaint for lack of jurisdiction and utter lack of
merit. (Citations omitted.)
On January 18, 2001, Labor Arbiter Reynoso Belarmino (LA) rendered his decision5 declaring that his office had
jurisdiction to hear and decide the complaint filed by private respondents. Referring to Rule IV, Sec. 1 (a) of the
NLRC Rules of Procedure prevailing at that time,6 the LA ruled that it had jurisdiction because the "workplace," as
defined in the said rule, included the place where the employee was supposed to report back after a temporary
detail, assignment or travel, which in this case was Cebu.
As to the status of their employment, the LA opined that private respondents were regular employees because they
were repeatedly hired by petitioners and they performed activities which were usual, necessary and desirable in the
business or trade of the employer.
With regard to the underpayment of wages, the LA found that private respondents were underpaid. It ruled that the
free board and lodging, electricity, water, and food enjoyed by them could not be included in the computation of their
wages because these were given without their written consent.
The LA, however, found that petitioners were not liable for illegal dismissal. The LA viewed private respondents’ act
of going home as an act of indifference when petitioners decided to prohibit overtime work.7
In its March 31, 2004 Decision, the NLRC affirmed the findings of the LA. In addition, the NLRC noted that not a
single report of project completion was filed with the nearest Public Employment Office as required
by the Department of Labor and Employment (DOLE) Department Order No. 19, Series of 1993.8 The NLRC later
denied9 the motion for reconsideration10 subsequently filed by petitioners.
When the matter was elevated to the CA on a petition for certiorari, it affirmed the findings that the private
respondents were regular employees. It considered the fact that they performed functions which were the regular
and usual business of petitioners. According to the CA, they were clearly members of a work pool from which
petitioners drew their project employees.
The CA also stated that the failure of petitioners to comply with the simple but compulsory requirement to submit a
report of termination to the nearest Public Employment Office every time private respondents’ employment was
terminated was proof that the latter were not project employees but regular employees.
The CA likewise found that the private respondents were underpaid. It ruled that the board and lodging, electricity,
water, and food enjoyed by the private respondents could not be included in the computation of their wages
because these were given without their written consent. The CA added that the private respondents were entitled to
13th month pay.
The CA also agreed with the NLRC that there was no illegal dismissal. The CA opined that it was the petitioners’
prerogative to grant or deny any request for overtime work and that the private respondents’ act of leaving the
workplace after their request was denied was an act of abandonment.
In modifying the decision of the labor tribunal, however, the CA noted that respondent Roldan Lopez did not work in
the Antipolo project and, thus, was not entitled to wage differentials. Also, in computing the differentials for the
period January and February 2000, the CA disagreed in the award of differentials based on the minimum daily wage
of ₱223.00, as the prevailing minimum daily wage then was only ₱213.00. Petitioners sought reconsideration but
the CA denied it in its March 31, 2006 Resolution.11

In this petition for review on certiorari,12 petitioners seek the reversal and setting aside of the CA decision anchored
on this lone:
GROUND/ASSIGNMENT OF ERROR
THE PUBLIC RESPONDENT NLRC COMMITTED A SERIOUS ERROR IN LAW IN AWARDING WAGE
DIFFERENTIALS TO THE PRIVATE COMPLAINANTS ON THE BASES OF MERE TECHNICALITIES, THAT IS,
FOR LACK OF WRITTEN CONFORMITY x x x AND LACK OF NOTICE TO THE DEPARTMENT OF LABOR AND
EMPLOYMENT (DOLE)[,] AND THUS, THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING WITH
MODIFICATION THE NLRC DECISION IN THE LIGHT OF THE RULING IN THE CASE OF JENNY M. AGABON
and VIRGILIO AGABON vs, NLRC, ET AL., GR NO. 158963, NOVEMBER 17, 2004, 442 SCRA 573, [AND
SUBSEQUENTLY IN THE CASE OF GLAXO WELLCOME PHILIPPINES, INC. VS. NAGAKAKAISANG
EMPLEYADO NG WELLCOME-DFA (NEW –DFA), ET AL., GR NO. 149349, 11 MARCH 2005], WHICH FINDS
APPLICATION IN THE INSTANT CASE BY ANALOGY.13
Petitioners reiterated their position that the value of the facilities that the private respondents enjoyed
should be included in the computation of the "wages" received by them. They argued that the rulings in
Agabon v. NLRC14and Glaxo Wellcome Philippines, Inc. v. Nagkakaisang Empleyado Ng Wellcome-DFA15 should be
applied by analogy, in the sense that the lack of written acceptance of the employees of the facilities enjoyed by
them should not mean that the value of the facilities could not be included in the computation of the private
respondents’ "wages."
On November 29, 2006, the Court resolved to issue a Temporary Restraining Order (TRO) enjoining the public
respondent from enforcing the NLRC and CA decisions until further orders from the Court.
After a thorough review of the records, however, the Court finds no merit in the petition.
This petition generally involves factual issues, such as, whether or not there is evidence on record to support the
findings of the LA, the NLRC and the CA that private respondents were project or regular employees and that their
salary differentials had been paid. This calls for a re-examination of the evidence, which the Court cannot entertain.
Settled is the rule that factual findings of labor officials, who are deemed to have acquired expertise in matters within
their respective jurisdiction, are generally accorded not only respect but even finality, and bind the Court when
supported by substantial evidence. It is not the Court’s function to assess and evaluate the evidence
all over again, particularly where the findings of both the Labor tribunals and the CA concur. 16
As a general rule, on payment of wages, a party who alleges payment as a defense has the burden of proving
it.17 Specifically with respect to labor cases, the burden of proving payment of monetary claims rests on the
employer, the rationale being that the pertinent personnel files, payrolls, records, remittances and other similar
documents — which will show that overtime, differentials, service incentive leave and other claims of workers have
been paid — are not in the possession of the worker but in the custody and absolute control of the employer.18
In this case, petitioners, aside from bare allegations that private respondents received wages higher than the
prescribed minimum, failed to present any evidence, such as payroll or payslips, to support their defense of
payment. Thus, petitioners utterly failed to discharge the onus probandi.
Private respondents, on the other hand, are entitled to be paid the minimum wage, whether they are regular or non-
regular employees.
Section 3, Rule VII of the Rules to Implement the Labor Code19 specifically enumerates those who are not covered
by the payment of minimum wage. Project employees are not among them.
On whether the value of the facilities should be included in the computation of the "wages" received by
private respondents, Section 1 of DOLE Memorandum Circular No. 2 provides that an employer may provide
subsidized meals and snacks to his employees provided that the subsidy shall not be less that 30% of the
fair and reasonable value of such facilities. In such cases, the employer may deduct from the wages of the
employees not more than 70% of the value of the meals and snacks enjoyed by the latter, provided that
such deduction is with the written authorization of the employees concerned.
Moreover, before the value of facilities can be deducted from the employees’ wages, the following requisites must all
be attendant: first, proof must be shown that such facilities are customarily furnished by the trade; second, the
provision of deductible facilities must be voluntarily accepted in writing by the employee; and finally, facilities must
be charged at reasonable value.20 Mere availment is not sufficient to allow deductions from employees’ wages.21
These requirements, however, have not been met in this case. SLL failed to present any company policy or
guideline showing that provisions for meals and lodging were part of the employee’s salaries. It also failed
to provide proof of the employees’ written authorization, much less show how they arrived at their
valuations. At any rate, it is not even clear whether private respondents actually enjoyed said facilities.
The Court, at this point, makes a distinction between "facilities" and "supplements." It is of the view that the
food and lodging, or the electricity and water allegedly consumed by private respondents in this case were
not facilities but supplements. In the case of Atok-Big Wedge Assn. v. Atok-Big Wedge Co.,22 the two terms were
distinguished from one another in this wise:
"Supplements," therefore, constitute extra remuneration or special privileges or benefits given to or

received by the laborers over and above their ordinary earnings or wages. "Facilities," on the other hand,
are items of expense necessary for the laborer's and his family's existence and subsistence so that by
express provision of law (Sec. 2[g]), they form part of the wage and when furnished by the employer are
deductible therefrom, since if they are not so furnished, the laborer would spend and pay for them just the
same.
In short, the benefit or privilege given to the employee which constitutes an extra remuneration above and over his
basic or ordinary earning or wage is supplement; and when said benefit or privilege is part of the laborers' basic
wages, it is a facility. The distinction lies not so much in the kind of benefit or item (food, lodging, bonus or sick
leave) given, but in the purpose for which it is given.23 In the case at bench, the items provided were given freely by
SLL for the purpose of maintaining the efficiency and health of its workers while they were working at their
respective projects.1avvphi1
For said reason, the cases of Agabon and Glaxo are inapplicable in this case. At any rate, these were cases of
dismissal with just and authorized causes. The present case involves the matter of the failure of the petitioners to
comply with the payment of the prescribed minimum wage.
The Court sustains the deletion of the award of differentials with respect to respondent Roldan Lopez. As correctly
pointed out by the CA, he did not work for the project in Antipolo.
WHEREFORE, the petition is DENIED. The temporary restraining order issued by the Court on November 29, 2006
is deemed, as it is hereby ordered, DISSOLVED.

21.) G.R. No. 204651, August 06, 2014
OUR HAUS REALTY DEVELOPMENT CORPORATION, Petitioner, v. ALEXANDER PARIAN, JAY C.

ERINCO, ALEXANDER CANLAS, BERNARD TENEDERO AND JERRY SABULAO, Respondents.
DECISION
BRION, J.:
We resolve in this petition for review on certiorari1 the challenge to the May 7, 2012 decision2 and the
November 27, 2012 resolution3 (assailed CA rulings) of the Court of Appeals (CA) in CA-G.R. SP No.
123273. These assailed CA rulings affirmed the July 20, 2011 decision4 and the December 2, 2011
resolution5 (NLRC rulings) of the National Labor Relations Commission (NLRC) in NLRC LAC No. 02-
000489-11 (NLRC NCR Case No. 06-08544-10). The NLRC rulings in turn reversed and set aside the
December 10, 2010 decision6 of the labor arbiter (LA).
Factual Antecedents
Respondents Alexander Parian, Jay Erinco, Alexander Canlas, Jerry Sabulao and Bernardo Tenedero
were all laborers working for petitioner Our Haus Realty Development Corporation (Our Haus), a
company engaged in the construction business. The respondents’ respective employment records
and daily wage rates from 2007 to 2010 are summarized in the table7 below: cralawlawlibrary
Name Date Years of Year and Place of Daily Rate

Hired Service Assignment
Alexander M. Parian October 1999 10 years 2007-2010- Quezon City P353.50
Jay C. Erinco January 2000 10 years 2008- Quezon City P342.00
2009- Antipolo
2010- Quezon City
Alexander R. Canlas 2005 5 years 2007-2010- Quezon City P312.00
Jerry Q. Sabulao August 1999 10 years 2008- Quezon City P342.00
2009- Antipolo
2010- Quezon City
Bernardo N. 1994 16 years 2007-2010- Quezon City P383.50
Tenedero
Sometime in May 2010, Our Haus experienced financial distress. To alleviate its condition, Our Haus
suspended some of its construction projects and asked the affected workers, including the
respondents, to take vacation leaves.8 cralawred
Eventually, the respondents were asked to report back to work but instead of doing so, they filed
with the LA a complaint for underpayment of their daily wages. They claimed that except for
respondent Bernardo N. Tenedero, their wages were below the minimum rates prescribed
in the following wage orders from 2007 to 2010: chanRoblesvirtualLawlibrary
1. Wage Order No. NCR-13, which provides for a daily minimum wage rate of P362.00 for
the non-agriculture sector (effective from August 28, 2007 until June 13, 2008); and ChanRoblesVirtualawlibrary
2. Wage Order No. NCR-14, which provides for a daily minimum wage rate of P382.00 for
the non-agriculture sector (effective from June 14, 2008 until June 30, 2010).

The respondents also alleged that Our Haus failed to pay them their holiday, service incentive leave
(SIL), 13th month and overtime pays.9 cralawred
The Labor Arbitration Rulings
Before the LA, Our Haus primarily argued that the respondents’ wages complied with the
law’s minimum requirement. Aside from paying the monetary amount of the respondents’
wages, Our Haus also subsidized their meals (3 times a day), and gave them free lodging
near the construction project they were assigned to. 10 In determining the total amount of the
respondents’ daily wages, the value of these benefits should be considered, in line with Article
97(f)11 of the Labor Code.
Our Haus also rejected the respondents’ other monetary claims for lack of proof that they were
entitled to it.12
cralawred
On the other hand, the respondents argued that the value of their meals should not be considered in
determining their wages’ total amount since the requirements set under Section 413 of
DOLE14 Memorandum Circular No. 215 were not complied with.
The respondents pointed out that Our Haus never presented any proof that they agreed in writing to
the inclusion of their meals’ value in their wages.16 Also, Our Haus failed to prove that the value of
the facilities it furnished was fair and reasonable.17 Finally, instead of deducting the maximum
amount of 70% of the value of the meals, Our Haus actually withheld its full value (which was
Php290.00 per week for each employee).18 cralawred
The LA ruled in favor of Our Haus. He held that if the reasonable values of the board and lodging
would be taken into account, the respondents’ daily wages would meet the minimum wage rate.19 As
to the other benefits, the LA found that the respondents were not able to substantiate their claims for
it.20
cralawred
The respondents appealed the LA’s decision to the NLRC, which in turn, reversed it. Citing the case
of Mayon Hotel & Restaurant v. Adana,21 the NLRC noted that the respondents did not authorize Our
Haus in writing to charge the values of their board and lodging to their wages. Thus, the same cannot
be credited.
The NLRC also ruled that the respondents are entitled to their respective proportionate 13th month
payments for the year 2010 and SIL payments for at least three years, immediately preceding May
31, 2010, the date when the respondents left Our Haus. However, the NLRC sustained the LA’s ruling
that the respondents were not entitled to overtime pay since the exact dates and times when they
rendered overtime work had not been proven.22 cralawred
Our Haus moved for the reconsideration23 of the NLRC’s decision and submitted new evidence (the
five kasunduans) to show that the respondents authorized Our Haus in writing to charge the values
of their meals and lodging to their wages.
The NLRC denied Our Haus’ motion, thus it filed a Rule 65 petition24 with the CA. In its petition, Our
Haus propounded a new theory. It made a distinction between deduction and charging. A written
authorization is only necessary if the facility’s value will be deducted and will not be needed if it will
merely be charged or included in the computation of wages.25 Our Haus claimed that it did not
actually deduct the values of the meals and housing benefits. It only considered these in computing
the total amount of wages paid to the respondents for purposes of compliance with the minimum
wage law. Hence, the written authorization requirement should not apply.
Our Haus also asserted that the respondents’ claim for SIL pay should be denied as this was not
included in their pro forma complaint. Lastly, it questioned the respondents’ entitlement to attorney’s
fees because they were not represented by a private lawyer but by the Public Attorney’s Office
(PAO).
The CA’s Ruling
The CA dismissed Our Haus’ certiorari petition and affirmed the NLRC rulings in toto. It found no real
distinction between deduction and charging,26 and ruled that the legal requirements before any
deduction or charging can be made, apply to both. Our Haus, however, failed to prove that it
complied with any of the requirements laid down in Mabeza v. National Labor Relations
Commission.27 Accordingly, it cannot consider the values of its meal and housing facilities in the
computation of the respondents’ total wages.
Also, the CA ruled that since the respondents were able to allege non-payment of SIL in their position
paper, and Our Haus, in fact, opposed it in its various pleadings,28 then the NLRC properly considered
it as part of the respondents’ causes of action. Lastly, the CA affirmed the respondent’s entitlement
to attorney’s fees.29 cralawred
Our Haus filed a motion for reconsideration but the CA denied its motion, prompting it to file the
present petition for review on certiorari under Rule 45.
The Petition
Our Haus submits that the CA erred in ruling that the legal requirements apply without
distinction — whether the facility’s value will be deducted or merely included in the
computation of the wages. At any rate, it complied with the requirements for deductibility
of the value of the facilities. First, the five kasunduans executed by the respondents
constitute the written authorization for the inclusion of the board and lodging’s values to
their wages. Second, Our Haus only withheld the amount of P290.00 which represents the
food’s raw value; the weekly cooking cost (cook’s wage, LPG, water) at P239.40 per
person is a separate expense that Our Haus did not withhold from the respondents’
wages.30 This disproves the respondents’ claim that it deducted the full amount of the
meals’ value.
Lastly, the CA erred in ruling that the claim for SIL pay may still be granted though not raised in the
complaint; and that the respondents are entitled to an award of attorney’s fees.31 cralawred
The Case for the Respondents
The respondents prayed for the denial of the petition.32 They maintained that the CA did not err in
ruling that the values of the board and lodging cannot be deducted from their wages for failure to
comply with the requirements set by law.33 And though the claim for SIL pay was not included in
their pro forma complaint, they raised their claims in their position paper and Our Haus had the
opportunity to contradict it in its pleadings.34 cralawred
Finally, under the PAO law, the availment of the PAO’s legal services does not exempt its clients from
an award of attorney’s fees.35 cralawred
The Court’s Ruling
We resolve to DENY the petition.
The nature of a Rule 45 petition — only questions of law
Basic is the rule that only questions of law may be raised in a Rule 45 petition.36 However, in this

case, we are confronted with mixed questions of fact and law that are subsumed under the issue of
whether Our Haus complied with the legal requirements on the deductibility of the value of facilities.
Strictly, factual issues cannot be considered under Rule 45 except in the course of resolving if the CA
correctly determined whether or not the NLRC committed grave abuse of discretion in considering
and appreciating the factual issues before it.37
cralawred
In ruling for legal correctness, we have to view the CA decision in the same context that the petition
for certiorari it ruled upon was presented to it; we have to examine the CA decision from the prism of
whether it correctly determined the presence or absence of grave abuse of discretion in the NLRC
decision before it, not on the basis of whether the NLRC decision, on the merits of the case, was
correct. In other words, we have to be keenly aware that the CA undertook a Rule 65 review, not a
review on appeal, of the NLRC decision challenged before it. This is the approach that should be basic
in a Rule 45 review of a CA ruling in a labor case. In question form, the question to ask in the
present case is: did the CA correctly determine that the NLRC did not commit grave abuse of
discretion in ruling on the case?38 We rule that the CA correctly did.
No substantial distinction between

deducting and charging a facility’s
value from the employee’s wage;
the legal requirements for creditability
apply to both
To justify its non-compliance with the requirements for the deductibility of a facility, Our
Haus asks us to believe that there is a substantial distinction between the deduction and
the charging of a facility’s value to the wages. Our Haus explains that in deduction, the
amount of the wage (which may already be below the minimum) would still be lessened by
the facility’s value, thus needing the employee’s consent. On the other hand, in charging,
there is no reduction of the employee’s wage since the facility’s value will just be
theoretically added to the wage for purposes of complying with the minimum wage
requirement.39 cralawred
Our Haus’ argument is a vain attempt to circumvent the minimum wage law by trying to create a
distinction where none exists.
In reality, deduction and charging both operate to lessen the actual take-home pay of an
employee; they are two sides of the same coin. In both, the employee receives a lessened
amount because supposedly, the facility’s value, which is part of his wage, had already
been paid to him in kind. As there is no substantial distinction between the two, the
requirements set by law must apply to both.
As the CA correctly ruled, these requirements, as summarized in Mabeza, are the following: chanRoblesvirtualLawlibrary
a. proof must be shown that such facilities are customarily furnished by the trade;
b. the provision of deductible facilities must be voluntarily accepted in writing by the
employee; and
c. The facilities must be charged at fair and reasonable value.40
We examine Our Haus’ compliance with each of these requirements in seriatim.

The facility must be customarily
furnished by the trade
In a string of cases, we have concluded that one of the badges to show that a facility is customarily
furnished by the trade is the existence of a company policy or guideline showing that
provisions for a facility were designated as part of the employees’ salaries.41 To comply with
this, Our Haus presented in its motion for reconsideration with the NLRC the joint sinumpaang
salaysay of four of its alleged employees. These employees averred that they were recipients of free
lodging, electricity and water, as well as subsidized meals from Our Haus.42 cralawred
We agree with the NLRC’s finding that the sinumpaang salaysay statements submitted by Our Haus
are self-serving. For one, Our Haus only produced the documents when the NLRC had already earlier
determined that Our Haus failed to prove that it was traditionally giving the respondents
their board and lodging. This document did not state whether these benefits had been
consistently enjoyed by the rest of Our Haus’ employees. Moreover, the records reveal that
the board and lodging were given on a per project basis. Our Haus did not show if these
benefits were also provided in its other construction projects, thus negating its claimed
customary nature.
Even assuming the sinumpaang salaysay to be true, this document would still work against Our Haus’
case. If Our Haus really had the practice of freely giving lodging, electricity and water provisions to
its employees, then Our Haus should not deduct its values from the respondents’ wages. Otherwise,
this will run contrary to the affiants’ claim that these benefits were traditionally given free of charge.
Apart from company policy, the employer may also prove compliance with the first requirement by
showing the existence of an industry-wide practice of furnishing the benefits in question
among enterprises engaged in the same line of business. If it were customary among
construction companies to provide board and lodging to their workers and treat their values as part
of their wages, we would have more reason to conclude that these benefits were really facilities.
However, Our Haus could not really be expected to prove compliance with the first
requirement since the living accommodation of workers in the construction industry is not
simply a matter of business practice. Peculiar to the construction business are the occupational
safety and health (OSH) services which the law itself mandates employers to provide to their
workers. This is to ensure the humane working conditions of construction employees despite their
constant exposure to hazardous working environments. Under Section 16 of DOLE Department
Order (DO) No. 13, series of 1998,43 employers engaged in the construction business
are required to provide the following welfare amenities: chanRoblesvirtualLawlibrary
16.1 Adequate supply of safe drinking water
16.2 Adequate sanitary and washing facilities
16.3 Suitable living accommodation for workers, and as may be applicable, for their
families
16.4 Separate sanitary, washing and sleeping facilities for men and women workers. [emphasis
ours]chanrobleslaw
Moreover, DOLE DO No. 56, series of 2005, which sets out the guidelines for the implementation of
DOLE DO No. 13, mandates that the cost of the implementation of the requirements for the
construction safety and health of workers, shall be integrated to the overall project cost.44 The
rationale behind this is to ensure that the living accommodation of the workers is not substandard
and is strictly compliant with the DOLE’s OSH criteria.
As part of the project cost that construction companies already charge to their clients, the
value of the housing of their workers cannot be charged again to their employees’ salaries.
Our Haus cannot pass the burden of the OSH costs of its construction projects to its employees by
deducting it as facilities. This is Our Haus’ obligation under the law.
Lastly, even if a benefit is customarily provided by the trade, it must still pass the purpose
test set by jurisprudence. Under this test, if a benefit or privilege granted to the employee
is clearly for the employer’s convenience, it will not be considered as a facility but a
supplement.45 Here, careful consideration is given to the nature of the employer’s business in
relation to the work performed by the employee. This test is used to address inequitable situations
wherein employers consider a benefit deductible from the wages even if the factual circumstances
show that it clearly redounds to the employers’ greater advantage.
While the rules serve as the initial test in characterizing a benefit as a facility, the purpose test
additionally recognizes that the employer and the employee do not stand at the same bargaining
positions on benefits that must or must not form part of an employee’s wage. In the ultimate
analysis, the purpose test seeks to prevent a circumvention of the minimum wage law.
a1. The purpose test in jurisprudence

Under the law,46 only the value of the facilities may be deducted from the employees’
wages but not the value of supplements. Facilities include articles or services for the
benefit of the employee or his family but exclude tools of the trade or articles or services
primarily for the benefit of the employer or necessary to the conduct of the employer’s
business.47 cralawred
The law also prescribes that the computation of wages shall exclude whatever
benefits, supplements or allowances given to employees. Supplements are paid to employees on
top of their basic pay and are free of charge.48 Since it does not form part of the wage, a
supplement’s value may not be included in the determination of whether an employer complied with
the prescribed minimum wage rates.
In the present case, the board and lodging provided by Our Haus cannot be categorized as facilities
but as supplements. In SLL International Cables Specialist v. National Labor Relations
Commission,49 this Court was confronted with the issue on the proper characterization of the free
board and lodging provided by the employer. We explained: chanRoblesvirtualLawlibrary
The Court, at this point, makes a distinction between “facilities” and “supplements”. It is of the view
that the food and lodging, or the electricity and water allegedly consumed by private respondents in
this case were not facilities but supplements. In the case of Atok-Big Wedge Assn. v. Atok-Big Wedge
Co., the two terms were distinguished from one another in this wise: cralawlawlibrary
“Supplements”, therefore, constitute extra remuneration or special privileges or benefits given to or

received by the laborers over and above their ordinary earnings or wages. “Facilities”, on the other
hand, are items of expense necessary for the laborer's and his family's existence and subsistence so
that by express provision of law (Sec. 2[g]), they form part of the wage and when furnished by the
employer are deductible therefrom, since if they are not so furnished, the laborer would spend and
pay for them just the same.
In short, the benefit or privilege given to the employee which constitutes an extra remuneration
above and over his basic or ordinary earning or wage is supplement; and when said benefit or
privilege is part of the laborers' basic wages, it is a facility. The distinction lies not so much in
the kind of benefit or item (food, lodging, bonus or sick leave) given, but in the purpose
for which it is given. In the case at bench, the items provided were given freely by SLL for the
purpose of maintaining the efficiency and health of its workers while they were working at
their respective projects.50
Ultimately, the real difference lies not on the kind of the benefit but on the purpose why it was
given by the employer. If it is primarily for the employee’s gain, then the benefit is a facility; if its
provision is mainly for the employer’s advantage, then it is a supplement. Again, this is to ensure
that employees are protected in circumstances where the employer designates a benefit as
deductible from the wages even though it clearly works to the employer’s greater convenience or
advantage.
Under the purpose test, substantial consideration must be given to the nature of the employer’s
business in relation to the character or type of work performed by the employees involved.
Our Haus is engaged in the construction business, a labor-intensive enterprise. The success of its
projects is largely a function of the physical strength, vitality and efficiency of its laborers. Its
business will be jeopardized if its workers are weak, sickly, and lack the required energy to perform
strenuous physical activities. Thus, by ensuring that the workers are adequately and well fed, the
employer is actually investing on its business.
Unlike in office enterprises where the work is focused on desk jobs, the construction industry relies
heavily and directly on the physical capacity and endurance of its workers. This is not to say that
desk jobs do not require muscle strength; we simply emphasize that in the construction business,
bulk of the work performed are strenuous physical activities.
Moreover, in the construction business, contractors are usually faced with the problem of meeting
target deadlines. More often than not, work is performed continuously, day and night, in order to
finish the project on the designated turn-over date. Thus, it will be more convenient to the employer
if its workers are housed near the construction site to ensure their ready availability during urgent or
emergency circumstances. Also, productivity issues like tardiness and unexpected absences would be
minimized. This observation strongly bears in the present case since three of the respondents are not
residents of the National Capital Region. The board and lodging provision might have been a
substantial consideration in their acceptance of employment in a place distant from their provincial
residences.
Based on these considerations, we conclude that even under the purpose test, the
subsidized meals and free lodging provided by Our Haus are actually supplements.
Although they also work to benefit the respondents, an analysis of the nature of these
benefits in relation to Our Haus’ business shows that they were given primarily for Our
Haus’ greater convenience and advantage. If weighed on a scale, the balance tilts more
towards Our Haus’ side. Accordingly, their values cannot be considered in computing the
total amount of the respondents’ wages.
Under the circumstances, the daily wages paid to the respondents are clearly below the prescribed
minimum wage rates in the years 2007-2010.
The provision of deductible facilities

must be voluntarily accepted in writing
by the employee In Mayon Hotel, we reiterated that a facility may only be deducted from the wage
if the employer was authorized in writing by the concerned employee.51 As it diminishes the take-
home pay of an employee, the deduction must be with his express consent.
Again, in the motion for reconsideration with the NLRC, Our Haus belatedly submitted
five kasunduans, supposedly executed by the respondents, containing their conformity to the
inclusion of the values of the meals and housing to their total wages. Oddly, Our Haus only offered
these documents when the NLRC had already ruled that respondents did not accomplish any written
authorization, to allow deduction from their wages. These five kasunduans were also undated,
making us wonder if they had really been executed when respondents first assumed their jobs.
Moreover, in the earlier sinumpaang salaysay by Our Haus’ four employees, it was not mentioned
that they also executed a kasunduan for their board and lodging benefits. Because of these
surrounding circumstances and the suspicious timing when the five kasunduans were submitted as
evidence, we agree with the CA that the NLRC committed no grave abuse of discretion in
disregarding these documents for being self serving.

The facility must be charged at
a fair and reasonable value Our Haus admitted that it deducted the amount of P290.00 per
week from each of the respondents for their meals. But it now submits that it did not actually
withhold the entire amount as it did not figure in the computation the money it expended for the
salary of the cook, the water, and the LPG used for cooking, which amounts to P249.40 per week per
person. From these, it appears that the total meal expense per week for each person is P529.40,
making Our Haus’ P290.00 deduction within the 70% ceiling prescribed by the rules.
However, Our Haus’ valuation cannot be plucked out of thin air. The valuation of a facility must
be supported by relevant documents such as receipts and company records for it to be
considered as fair and reasonable. In Mabeza, we noted: chanRoblesvirtualLawlibrary
Curiously, in the case at bench, the only valuations relied upon by the labor arbiter in his
decision were figures furnished by the private respondent's own accountant, without
corroborative evidence. On the pretext that records prior to the July 16, 1990 earthquake were
lost or destroyed, respondent failed to produce payroll records, receipts and other relevant
documents, where he could have, as has been pointed out in the Solicitor General's
manifestation, “secured certified copies thereof from the nearest regional office of the
Department of Labor, the SSS or the BIR”.52 [emphasis ours]
In the present case, Our Haus never explained how it came up with the values it assigned for
the benefits it provided; it merely listed its supposed expenses without any supporting document.
Since Our Haus is using these additional expenses (cook’s salary, water and LPG) to support its claim
that it did not withhold the full amount of the meals’ value, Our Haus is burdened to present evidence
to corroborate its claim. The records however, are bereft of any evidence to support Our Haus’ meal
expense computation. Even the value it assigned for the respondents’ living accommodations was not
supported by any documentary evidence. Without any corroborative evidence, it cannot be said that
Our Haus complied with this third requisite.
A claim not raised in the pro forma

complaint may still be raised in the
position paper.
Our Haus questions the respondents’ entitlement to SIL pay by pointing out that this claim was not
included in the pro forma complaint filed with the NLRC. However, we agree with the CA that such
omission does not bar the labor tribunals from touching upon this cause of action since this was
raised and discussed in the respondents’ position paper. In Samar-Med Distribution v. National Labor
Relations Commission,53 we held: chanRoblesvirtualLawlibrary
Firstly, petitioner’s contention that the validity of Gutang’s dismissal should not be determined
because it had not been included in his complaint before the NLRC is bereft of merit. The complaint
of Gutang was a mere checklist of possible causes of action that he might have against Roleda. Such
manner of preparing the complaint was obviously designed to facilitate the filing of complaints by
employees and laborers who are thereby enabled to expediently set forth their grievances in a
general manner. But the non-inclusion in the complaint of the issue on the dismissal did not
necessarily mean that the validity of the dismissal could not be an issue. The rules of the
NLRC require the submission of verified position papers by the parties should they fail to agree
upon an amicable settlement, and bar the inclusion of any cause of action not mentioned in the
complaint or position paper from the time of their submission by the parties. In view of this,
Gutang’s cause of action should be ascertained not from a reading of his complaint
alone but also from a consideration and evaluation of both his complaint and position
paper.54
The respondents’ entitlement to

the other monetary benefits
Generally a party who alleges payment as a defense has the burden of proving it. Particularly
in labor cases, the burden of proving payment of monetary claims rests on the employer on
the reasoning that the pertinent personnel files, payrolls, records, remittances and other similar
documents — which will show that overtime, differentials, service incentive leave and other claims of
workers have been paid — are not in the possession of the worker but in the custody and
absolute control of the employer.55 cralawred
Unfortunately, records will disclose the absence of any credible document which will show that
respondents had been paid their 13th month pay, holiday and SIL pays. Our Haus merely presented
a hand-written certification from its administrative officer that its employees automatically become
entitled to five days of service incentive leave as soon as they pass probation. This certification was
not even subscribed under oath. Our Haus could have at least submitted its payroll or copies of the
pay slips of respondents to show payment of these benefits. However, it failed to do so.
Respondents are entitled to

attorney’s fees.
Finally, we affirm that respondents are entitled to attorney’s fees. Our Haus’ asserts that
respondents’ availment of free legal services from the PAO disqualifies them from such award. We
find this untenable.
It is settled that in actions for recovery of wages or where an employee was forced to litigate and,
thus, incur expenses to protect his rights and interest, the award of attorney’s fees is legally and
morally justifiable.56 Moreover, under the PAO Law or Republic Act No. 9406, the costs of the
suit, attorney’s fees and contingent fees imposed upon the adversary of the PAO clients after a
successful litigation shall be deposited in the National Treasury as trust fund and shall be disbursed
for special allowances of authorized officials and lawyers of the PAO. 57
cralawred
Thus, the respondents are still entitled to attorney’s fees. The attorney’s fees awarded to them shall
be paid to the PAO. It serves as a token recompense to the PAO for its provision of free legal services
to litigants who have no means of hiring a private lawyer.
WHEREFORE, in light of these considerations, we conclude that the Court of Appeals correctly found
that the National Labor Relations Commission did not abuse its discretion in its decision of July 20,
2011 and Resolution of December 2, 2011. Consequently we DENY the petition and AFFIRM the
Court of Appeals’ decision dated May 7, 2012 and resolution dated November 27, 2012 in CA-G.R. SP
No. 123273. No costs.

22.) G.R. No. 81176 April 19, 1989
PLASTIC TOWN CENTER CORPORATION, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION AND NAGKAKAISANG LAKAS NG MANGGAGAWA (NLM)-
KATIPUNAN, respondents.
Generosa R. Jacinto for petitioner.
The Solicitor General for public respondent.
GUTIERREZ, JR., J.:
An issue in this petition is the interpretation of certain provisions of the Collective Bargaining Agreement (CBA)
between Plastic Town Center Corporation and the respondent union.
On September 7,1984, the respondent Nagkakaisang Lakas ng Manggagawa (NLM)-Katipunan filed a complaint
dated August 30, 1984 charging the petitioner with:
a. Violation of Wage Order No. 5, by crediting the Pl.00 per day increase in the CBA as part of the compliance with
said Wage Order No. 5, and y instead of thirty (30) days equivalent to one (1) month as gratuity pay to resigning
employees. (p. 3, Rollo)
b. Unfair labor practice thru violation of the CBA by giving only twenty-six (26) days pay instead of thirty (30) days
equivalent to one (1) month as gratuity pay to resigning employees. (p. 3, Rollo)
On July 25,1985, Labor Arbiter Ruben Alberto ruled in favor of Plastic Town Center Corporation. The pertinent
portions of the decision read as follows:
... In this particular case, the P1.00 increase was ahead of the implementation of the CBA provision
or could be said was advantageous to complainant members, chronologically stated. For the above
cogent reason we can not fault respondent for its refusal to grant a second Pl.00 increase on July 1,
1984.
xxx xxx xxx
Complainant sustains the view that a month salary pertains to salary for 30 days, citing the provision
of the Civil Code on the matter.
Upon the other hand, respondents understanding of the controverted provision is pragmatic or
practical. Since the workers are paid on daily basis, it computed the salary received by the worker in
a month as a month salary. In this case the salary of 26 days is a month salary.
We agree with the respondent's interpretation. As daily wage earner, there would be no instance that
the worker would work for 30 days a month since work does not include Sunday or rest days. In the
mind of the daily worker in a month he could not expect a month salary exceeding the equivalent of
26 days service. To award the daily wage earner pay for more than 26 days is pay for days he does
not work. But as regards the monthly- paid workers he expects his monthly salary to be fixed which
is a month salary. Hence, a distinction separates him with the daily wages.
IN VIEW OF THE FOREGOING, the unfair labor practice charge should be, as it is hereby
dismissed for lack of legal and factual basis. (pp- 56-57, Rollo)

On August 30, 1987, the respondent labor union appealed to the National Labor Relations Commission.
On June 30, 1987, the NLRC rendered the questioned decision with the following dispositive portion:
WHEREFORE, the appealed decision is hereby reversed and the respondent is ordered to grant
Pl.00 increase for July 1, 1984 and the equivalent of thirty days salary in gratuity pay, as required by
its CBA with the complainants. (p. 39, Rollo)
The motion for reconsideration of said decision was denied on December 7, 1987. Hence, this petition.
The applicable provisions of the CBA read as follows:
Section 1 -The company agrees to grant permanent regular rank and file workers covered by this
Agreement who have rendered at least one year of continuous service, across-the-board wage
increases as follows:
a. Effective 1 July, 1983-Pl.00 per worked day;
b Effective 1 July, 1984-Pl.00 per worked day;
c. Effective 1 July, 1985-Pl.00 per worked day;
Section 3- It is agreed and understood by the parties herein that the aforementioned increase in pay
shall be credited against future allowances or wage orders hereinafter implemented or enforced by
virtue of Letters of Instructions, Decrees and other labor legislation. (pp. 36-37, Rollo)
Wage Order No. 4 provided for the integration of the mandatory emergency cost of living allowances (ECOLA)
under Presidential Decrees 1614,1634,1678 and 1713 into the basic pay of all covered workers effective May 1,
1984. It further provided that after the integration, the applicable statutory minimum daily wage rate must be
complied with, which in this case is P32.00.
The petitioner incurred a deficiency of P1.00 in the wage rate after integrating the ECOLA with basic pay. So the
petitioner advanced to May 1, 1984 or two months earlier the implementation of the one-peso wage increase
provided for in the CBA starting July 1, 1984 for the benefit of the workers.
The petitioner argues that it did not credit the Pl.00 per day across the board increase under the CBA as
compliance with Wage Order No. 5 implemented on June 16,1984 since it gave an additional P3.00 per day
to the basic salary pursuant to said order. It, however, credited the Pl.00 a day increase to the requirement under
Wage Order No. 4 to which the private respondents allegedly did not object.
The other controverted provision of the CBA reads:
Section 2. It is the intention of both the COMPANY and the UNION, that the grant of gratuity pay by
the COMPANY herein set forth is to reward employees and laborers, who have rendered satisfactory
and efficient service with the COMPANY. THUS, in case of voluntary resignation, which is not
covered by Section 1 above, the COMPANY nevertheless agrees to grant a gratuity pay to the
resigning employee or laborer as follows:
1. Two to Five years of service : 1 month salary
2. Six (6) to Ten (10) yrs. of : Two and One-half (21/2)service months salary
3 Eleven (ll) to Fifteen yrs. of service : 4 months salary
4 Sixteen (16) to twenty yrs. of : 5 months

5 Twenty one yrs. of service and above : Twelve (12) months salary.
(p. 38, Rollo)
The petitioner alleges that one month salary for daily paid workers should be computed on the basis of twenty-six
(26) days and not thirty (30) days since daily wage workers do not work every day of the month including Sundays
and holidays.
The petition is devoid of merit.
The subject for interpretation in this petition for review is not the Labor Code or its implementing rules and
regulations but the provisions of the collective bargaining agreement entered into by management and the labor
union. As a contract, it constitutes the law between the parties (Fegurin v. National Labor Relations Commission,
120 SCRA 910 [1983]) and in interpreting contracts, the rules on contract must govern.
Contracts which are not ambiguous are to be interpreted according to their literal meaning and should not be
interpreted beyond their obvious intendment (Herrera v. Petrophil Corp., 146 SCRA 385 [1986]).
In the case at bar, the petitioner alleges that on May 1, 1984, it granted a Pl.00 increase pursuant to Wage
Order No. 4 which in consonance with Section 3 of the CBA was to be credited to the July 1, 1984 increase
under the CBA. It was, therefore, a July increase. Section 3 of the CBA, however, clearly states that CBA
granted increases shall be credited against future allowances or wage orders. Thus, the CBA increase to be
effected on July 1, 1984 can not be retroactively applied to mean compliance with Wage Order No. 4 which
took effect on May 1, 1984. The words of the contract are plain and readily understandable so we find no need for
any further construction or interpretation petition (Dihiansan v. Court of Appeals, 153 SCRA 712 [1987]).
Furthermore, we agree with the NLRC as it held:
It is our finding that the respondent is bound by the CBA to grant an increase on July 1, 1984.
In this case, between July 1, 1983 and July 1, 1984, there were actually two increases mandated by
Wage Order No. 4 on May 1, 1984 and by Wage Order No. 5 on June 16,1984. The fact that the
respondent had complied with Wage Order No. 4 and Wage Order No. 5 does not relieve it of its
obligation to grant the P1.00 increase under the CBA. (pp. 37-38, Rollo)
With regards to the second issue, the petitioner maintains that under the principle of "fair day's wage for
fair day's labor", gratuity pay should be computed on the basis of 26 days for one month salary considering
that the employees are daily paid.
We find no abuse of discretion on the part of the NLRC in granting gratuity pay equivalent to one month or 30 days
salary .
We quote with favor the NLRC decision which states:
xxx xxx xxx
... To say that awarding the daily wage earner salary for more than 26 days is paying him for days he
does not work misses the point entirely. The issue here is not payment for days worked but payment
of gratuity pay equivalent to one month or 30 days salary. (p. 29, Rollo)
Looking into the definition of gratuity, we find the following in Moreno's Philippine Law Dictionary, to wit:
Something given freely, or without recompense; a gift; something voluntarily given in return
for a favor or services; a bounty; a tip. -Pirovano v. De la Rama Steamship Co., 96 Phil. 357.

That paid to the beneficiary for past services rendered purely out of the generosity of the giver or
grantor.-Peralta v. Auditor General, 100 Phil. 1054.
Salary or compensation. The very term 'gratuity' differs from the words 'salary' or 'compensation' in
leaving the amount thereof, within the limits of reason, to the arvitrament of the giver.-Herranz &
Garriz v. Barbudo,12 Phil. 9.
From the foregoing, gratuity pay is therefore, not intended to pay a worker for actual services rendered. It is a
money benefit given to the workers whose purpose is "to reward employees or laborers, who have rendered
satisfactory and efficient service to the company." (Sec. 2, CBA) While it may be enforced once it forms part of
a contractual undertaking, the grant of such benefit is not mandatory so as to be considered a part of labor standard
law unlike the salary, cost of living allowances, holiday pay, leave benefits, etc., which are covered by the Labor
Code. Nowhere has it ever been stated that gratuity pay should be based on the actual number of days worked over
the period of years forming its basis. We see no point in counting the number of days worked over a ten-year period
to determine the meaning of "two and one- half months' gratuity." Moreover any doubts or ambiguity in the contract
between management and the union members should be resolved in the light of Article 1702 of the Civil Code that:
In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety
and decent living for the laborer.
This is also in consonance with the principle enunciated in the Labor Code that all doubts should be resolved in
favor of the worker.
The Civil Code provides that when months are not designated by name, a month is understood to be thirty (30)
days. The provision applies under the circumstances of this case.
In view of the foregoing, the public respondent did not act with grave abuse of discretion when it rendered the
assailed decision which is in accordance with law and jurisprudence.
WHEREFORE, the petition is hereby DISMISSED for lack of merit.

23.) G.R. No. 92174 December 10, 1993
BOIE-TAKEDA CHEMICALS, INC., petitioner,

vs.
HON. DIONISIO DE LA SERNA, Acting Secretary of the Department of Labor and Employment, respondent.
G.R. No. L-102552 December 10, 1993
PHILIPPINE FUJI XEROX CORP., petitioner,

vs.
CRESENCIANO B. TRAJANO, Undersecretary of the Department of Labor and Employment, and PHILIPPINE FUJI
XEROX EMPLOYEES UNION, respondents.
Herrera, Laurel, De los Reyes, Roxas & Teehankee for Boie-Takeda Chemicals, Inc. and Phil Xerox Corp.
The Solicitor General for public respondents.
NARVASA, C.J.:
What items or items of employee remuneration should go into the computation of thirteenth month pay is the basic
issue presented in these consolidated petitions. Otherwise stated, the question is whether or not the respondent
labor officials in computing said benefit, committed "grave abuse of discretion amounting to lack of jurisdiction," by
giving effect to Section 5 of the Revised Guidelines on the implementation of the Thirteenth Month Pay (Presidential
Decree No. 851) promulgated by then Secretary of Labor and Employment, Hon. Franklin Drilon, and overruling
petitioner's contention that said provision constituted a usurpation of legislative power because not justified by or
within the authority of the law sought to be implemented besides being violative of the equal protection of the law
clause of the Constitution.
Resolution of the issue entails, first, a review of the pertinent provisions of the laws and implementing regulations.
Sections 1 and 2 of Presidential Decree No. 851, the Thirteenth Month Pay Law, read as follows:
Sec 1. All employees are hereby required to pay all their employees receiving basic salary of not
more than P1,000.00 a month, regardless of the nature of the employment, a 13th month pay not
later than December 24 of every year.
Sec. 2. Employers already paying their employees a 13th month pay or its equivalent are not
covered by this Decree.
The Rules and Regulations Implementing P.D. 851 promulgated by then Labor Minister Blas Ople on December 22,
1975 contained the following relevant provisions relative to the concept of "thirteenth month pay" and the employers
exempted from giving it, to wit:
Sec. 2. Definition of certain terms. — . . .
a) "Thirteenth month pay" shall mean one twelfth (1/12) of the basic salary of an employee within a
calendar year;
b) "Basic Salary" shall include all remunerations or earnings paid by an employer to an employee for
services rendered but may not include cost of living allowances granted pursuant to Presidential
Decree No. 525 or Letter of Instructions No. 174, profit sharing payments, and all allowances and

monetary benefits which are not considered or integrated as part of the regular or basic salary of the
employee at the time of the promulgation of the Decree on December 16, 1975.
Sec. 3. Employers covered. — . . . (The law applies) to all employers except to:
xxx xxx xxx
c) Employers already paying their employers a 13-month pay or more in calendar year or is
equivalent at the time of this issuance;
xxx xxx xxx
e) Employers of those who are paid on purely commission, boundary, or task basis, and
those who are paid a fixed amount for performing a specific work, irrespective of the time
consumed in the performance thereof, except where the workers are paid on piece-rate basis
in which case the employer shall be covered by this issuance insofar as such workers are
concerned.
xxx xxx xxx
The term "its equivalent" as used in paragraph (c) shall include Christmas bonus, mid-year bonus,
profit-sharing payments and other cash bonuses amounting to not less than 1/12th of the basic
salary but shall not include cash and stock dividends, cost of living allowances and all other
allowances regularly enjoyed by the employee, as well as non-monetary benefits. Where an
employer pays less than 1/12th of the employee's basic salary, the employer shall pay the
difference.
Supplementary Rules and Regulations implementing P.D. 851 were subsequently issued by Minister Ople
which inter alia set out items of compensation not included in the computation of the 13th month pay, viz.:
Sec. 4. Overtime pay, earnings and other remunerations which are not part of the basic salary
shall not be included in the computation of the 13th month pay.
On August 13, 1986, President Corazon C. Aquino promulgated Memorandum Order No. 28, which contained a
single provision modifying Presidential Decree No. 851 by removing the salary ceiling of P1,000.00 a month set by
the latter, as follows:
Section 1 of Presidential Decree No. 851 is hereby modified to the extent that all employers are
hereby required to pay all their rank-and-file employees a 13th month pay not later than December
24, of every year.
Slightly more than a year later, on November 16, 1987, Revised Guidelines on the Implementation of the
13th Month Pay Law were promulgated by then Labor Secretary Franklin Drilon which, among other things,
defined with particularity what remunerative items were and were not embraced in the concept of 13th
month pay, and specifically dealt with employees who are paid a fixed or guaranteed wage plus
commission. The relevant provisions read:
4. Amount and payment of 13th Month Pay.
xxx xxx xxx
The basic salary of an employee for the purpose of computing the 13th month pay shall
include all remunerations or earnings paid by the employer for services rendered but does
not include allowances and monetary benefits which are not considered or integrated as part
of the regular or basic salary, such as the cash equivalent of unused vacation and sick leave
credits, overtime, premium, night differential and holiday pay, and cost-of-living allowances.
However, these salary-related benefits should be included as part of the basic salary in the
computation of the 13th month pay if by individual or collective agreement, company practice or
policy, the same are treated as part of the basic salary of the employees.
xxx xxx xxx
5. 13th Month Pay for Certain Types of Employees.
(a) Employees Paid by Results. — Employees who are paid on piece work basis are by law
entitled to the 13th month pay.
Employees who are paid a fixed or guaranteed wage plus commission are also entitled to the
mandated 13th month pay based on their total earnings during the calendar year, i.e., on both
their fixed or guaranteed wage and commission.
This was the state of the law when the controversies at bar arose out of the following antecedents:
(RE G.R. No. 92174) A routine inspection was conducted on May 2, 1989 in the premises of petitioner Boie-Takeda
Chemicals, Inc. by Labor
and Development Officer Reynaldo B. Ramos under Inspection Authority
No. 4-209-89. Finding that Boie-Takeda had not been including the commissions earned by its medical
representatives in the computation of their 13th month pay, Ramos served a Notice of Inspection Results 1 on
Boie-Takeda through its president, Mr. Benito Araneta, requiring Boie-Takeda within ten (10) calendar days from
notice to effect restitution or correction of "the underpayment of 13th month pay for the year(s) 1986, 1987 and 1988
of Med Rep (Revised Guidelines on the Implementation of 13th month pay # 5) in the total amount of P558,810.89."
Boie-Takeda wrote the Labor Department contesting the Notice of Inspection Results, and expressing the view "that
the commission paid to our medical representatives are not to be included in the computation of the 13th month
pay . . . (since the) law and its implementing rules speak of REGULAR or BASIC salary and therefore exclude all
other remunerations which are not part of the REGULAR salary." It pointed out that, "if no sales is (sic) made under
the effort of a particular representative, there is no commission during the period when no sale was transacted, so
that commissions are not and cannot be legally defined as regular in nature. 2
Regional Director Luna C. Piezas directed Boie-Takeda to appear before his Office on June 9 and 16, 1989. On the
appointed dates, however, and despite due notice, no one appeared for Boie-Takeda, and the matter had perforce
to be resolved on the basis of the evidence at hand. On July 24, 1989, Director Piezas issued an Order 3 directing
Boie-Takeda:
. . . to pay . . . (its) medical representatives and its managers the total amount of FIVE HUNDRED
SIXTY FIVE THOUSAND SEVEN HUNDRED FORTY SIX AND FORTY SEVEN CENTAVOS
(P565,746.47) representing underpayment of thirteenth (13th) month pay for the years 1986, 1987,
1988, inclusive, pursuant to the . . . revised guidelines within ten (10) days from receipt of this Order.
A motion for reconsideration 4 was seasonably filed by Boie-Takeda under date of August 3, 1989. Treated as an
appeal, it was resolved on
January 17, 1990 by then Acting Labor Secretary Dionisio de la Serna, who affirmed the July 24, 1989 Order with
modification that the sales commissions earned by Boie-Takeda's medical representatives before August 13, 1989,
the effectivity date of Memorandum Order No. 28 and its Implementing Guidelines, shall be excluded in the
computation of their 13th month pay. 5
Hence the petition docketed as G.R. No. 92174.
(RE G.R. No. 102552) A similar Routine Inspection was conducted in the premises of Philippine Fuji Xerox Corp. on
September 7, 1989 pursuant to Routine Inspection Authority No. NCR-LSED-RI-494-89. In his Notice of Inspection
Results, 6 addressed to the Manager, Mr. Nicolas O. Katigbak, Senior Labor and Employment Officer Nicanor M.
Torres noted the following violation committed by Philippine Fuji Xerox Corp., to wit:
Underpayment of 13th month pay of 62 employees, more or less — pursuant to Revised Guidelines
on the Implementation of the 13th month pay law for the period covering 1986, 1987 and 1988.
Philippine Fuji Xerox was requested to effect rectification and/or restitution of the noted violation within five (5)
working days from notice.
No action having been taken thereon by Philippine Fuji Xerox,

Mr. Eduardo G. Gonzales, President of the Philxerox Employee Union, wrote then Labor Secretary Franklin Drilon
requesting a follow-up of the inspection findings. Messrs. Nicolas and Gonzales were summoned to appear before
Labor Employment and Development Officer Mario F. Santos, NCR Office, Department of Labor for a conciliation
conference. When no amicable settlement was reached, the parties were required to file their position papers.
Subsequently, Regional Director Luna C. Piezas issued an Order dated August 23, 1990, 7 disposing as follows:
WHEREFORE, premises considered, Respondent PHILIPPINE FUJI XEROX is hereby ordered to

restitute to its salesmen the portion of the 13th month pay which arose out of the non-
implementation of the said revised guidelines, ten (10) days from receipt hereof, otherwise,
MR. NICANOR TORRES, the SR. LABOR EMPLOYMENT OFFICER is hereby Ordered to proceed
to the premises of the Respondent for the purpose of computing the said deficiency (sic) should
respondent fail to heed his Order.
Philippine Fuji Xerox appealed the aforequoted Order to the Office of the Secretary of Labor. In an Order dated
October 120, 1991, Undersecretary Cresenciano B. Trajano denied the appeal for lack of merit. Hence, the petition
in G.R. No. 102552, which was ordered consolidated with G.R. No. 92174 as involving the same issue.
In their almost identically-worded petitioner, petitioners, through common counsel, attribute grave abuse of
discretion to respondent labor officials Hon. Dionisio dela Serna and Undersecretary Cresenciano B. Trajano in
issuing the questioned Orders of January 17, 1990 and October 10, 1991, respectively. They maintain that under
P.D. 851, the 13th month pay is based solely on basic salary. As defined by the law itself and clarified by the
implementing and Supplementary Rules as well as by the Supreme Court in a long line of decisions,
remunerations which do not form part of the basic or regular salary of an employee, such as commissions,
should not be considered in the computation of the 13th month pay. This being the case, the Revised
Guidelines on the Implementation of the 13th Month Pay Law issued by then Secretary Drilon providing for the
inclusion of commissions in the 13th month pay, were issued in excess of the statutory authority conferred by P.D.
851. According to petitioners, this conclusion becomes even more evident when considered in light of the opinion
rendered by Labor Secretary Drilon himself in "In Re: Labor Dispute at the Philippine Long Distance Telephone
Company" which affirmed the contemporaneous interpretation by then Secretary Ople that commissions are
excluded from the basic salary. Petitioners further contend that assuming that Secretary Drilon did not exceed the
statutory authority conferred by P.D. 851, still the Revised Guidelines are null and void as they violate the equal
protection of the law clause.
Respondents through the Office of the Solicitor General question the propriety of petitioners' attack on the
constitutionality of the Revised Guidelines in a petition for certiorari which, they contend, should be confined purely
to the correction of errors and/or defects of jurisdiction, including matters of grave abuse of discretion amounting to
lack or excess of jurisdiction and not extend to a collateral attack on the validity and/or constitutionality of a law or
statute. They aver that the petitions do not advance any cogent reason or state any valid ground to sustain the
allegation of grave abuse of discretion, and that at any rate, P.D. No. 851, otherwise known as the 13th Month Pay
Law has already been amended by Memorandum Order No. 28 issued by President Corazon C. Aquino on August
13, 1986 so that commissions are now imputed into the computation of the 13th Month Pay. They add that the
Revised Guidelines issued by then Labor Secretary Drilon merely clarified a gray area occasioned by the silence of
the law as to the nature of commissions; and worked no violation of the equal protection clause of the Constitution,
said Guidelines being based on reasonable classification. Respondents point to the case of Songco vs. National
Labor Relations Commission, 183 SCRA 610, wherein the Court declared that Article 97(f) of the Labor Code is
explicit that commission is included in the definition of the term "wage".
We rule for the petitioners.

Contrary to respondents' contention, Memorandum Order No. 28 did not repeal, supersede or abrogate P.D. 851.
As may be gleaned from the language of the Memorandum Order No. 28, it merely "modified" Section 1 of the
decree by removing the P1,000.00 salary ceiling. The concept of 13th Month Pay as envisioned, defined and
implemented under P.D. 851 remained unaltered, and while entitlement to said benefit was no longer limited to
employees receiving a monthly basic salary of not more than P1,000.00, said benefit was, and still is, to be
computed on the basic salary of the employee-recipient as provided under P.D. 851. Thus, the interpretation given
to the term "basic salary" as defined in P.D. 851 applies equally to "basic salary" under Memorandum Order No. 28.
In the case of San Miguel Corp. vs. Inciong, 103 SCRA 139, this Court delineated the coverage of the term "basic
salary" as used in P.D. 851. We said at some length:
Under Presidential Decree 851 and its implementing rules, the basic salary of an employee is used
as the basis in the determination of his 13th month pay. Any compensations or remunerations which
are deemed not part of the basic pay is excluded as basis in the computation of the mandatory
bonus.
Under the Rules and Regulations implementing Presidential Decree 851, the following
compensations are deemed not part of the basic salary:
a) Cost-of-living allowances granted pursuant to Presidential Decree 525 and Letter

of Instructions No. 174;
b) Profit-sharing payments;
c) All allowances and monetary benefits which are not considered or integrated as
part of the regular basic salary of the employee at the time of the promulgation of the
Decree on December 16, 1975.
Under a later set of Supplementary Rules and Regulations Implementing Presidential Decree 851
Presidential Decree 851 issued by then Labor Secretary Blas Ople, overtime pay, earnings and
other remunerations are excluded as part of the basic salary and in the computation of the 13th
month pay.
The exclusion of the cost-of-living allowances under Presidential Decree 525 and Letter of
Instructions No. 174, and profit-sharing payments indicate the intention to strip basic salary of other
payments which are properly considered as "fringe" benefits. Likewise, the catch-all exclusionary
phrase "all allowances and monetary benefits which are not considered or integrated as part of the
basic salary" shows also the intention to strip basic salary of any and all additions which may be in
the form of allowances or "fringe" benefits.
Moreover, the Supplementary Rules and Regulations Implementing Presidential Decree 851 is even
more emphatic in declaring that earnings and other remunerations which are not part of the basic
salary shall not be included in the computation of the 13th-month pay.
While doubt may have been created by the prior Rules and Regulations Implementing Presidential
Decree 851 which defines basic salary to include all remunerations or earnings paid by an employer
to an employee, this cloud is dissipated in the later and more controlling Supplementary Rules and
Regulations which categorically exclude from the definitions of basic salary earnings and other
remunerations paid by an employer to an employee. A cursory perusal of the two sets of Rules
indicates that what has hitherto been the subject of a broad inclusion is now a subject of broad
exclusion. The Supplementary Rules and Regulations cure the seeming tendency of the former rules
to include all remunerations and earnings within the definition of basic salary.
The all embracing phrase "earnings and other remunerations" which are deemed not part of the
basic salary includes within its meaning payments for sick, vacation, or maternity leaves, premium
for works performed on rest days and special holidays, pays for regular holidays and night

differentials. As such they are deemed not part of the basic salary and shall not be considered in the
computation of the 13th-month pay. If they were not excluded, it is hard to find any "earnings and
other remunerations" expressly excluded in the computation of the 13th month pay. Then the
exclusionary provision would prove to be idle and with no purpose.
This conclusion finds strong support under the Labor Code of the Philippines. To cite a few
provisions:
Art. 87. Overtime Work. Work may be performed beyond eight (8) hours a day provided that the
employee is paid for the overtime work, additional compensation equivalent to his regular wage plus
at least twenty-five (25%) percent thereof.
It is clear that overtime pay is an additional compensation other than and added to the regular wage
or basic salary, for reason of which such is categorically excluded from the definition of basic salary
under the Supplementary Rules and Regulations Implementing Presidential Decree 851.
In Article 93 of the same Code, paragraph
c) work performed on any special holiday shall be paid an additional compensation of at least thirty
percent (30%) of the regular wage of the employee.
It is likewise clear the premiums for special holiday which is at least 30% of the regular wage is
an additional pay other than and added to the regular wage or basic salary. For similar reason, it
shall not be considered in the computation of the 13th month pay.
Quite obvious from the foregoing is that the term "basic salary" is to be understood in its common, generally-
accepted meaning, i.e., as a rate of pay for a standard work period exclusive of such additional payments as
bonuses and overtime. 8 This is how the term was also understood in the case of Pless v. Franks, 308 S.W. 2nd.
402, 403, 202 Tenn. 630, which held that in statutes providing that pension should not less than 50 percent of "basic
salary" at the time of retirement, the quoted words meant the salary that an employee (e.g., a policeman) was
receiving at the time he retired without taking into consideration any extra compensation to which he might be
entitled for extra work. 9
In remunerative schemes consisting of a fixed or guaranteed wage plus commission, the fixed or guaranteed wage
is patently the "basic salary" for this is what the employee receives for a standard work period. Commissions are
given for extra efforts exerted in consummating sales or other related transactions. They are, as such, additional
pay, which this Court has made clear do not form part of the "basic salary."
Respondents would do well to distinguish this case from Songco vs. National Labor Relations Commission, supra,
upon which they rely so heavily. What was involved therein was the term "salary" without the restrictive adjective
"basic". Thus, in said case, we construed the term in its generic sense to refer to all types of "direct remunerations
for services rendered," including commissions. In the same case, we also took judicial notice of the fact "that some
salesmen do not receive any basic salary but depend on commissions and allowances or commissions alone,
although an employer-employee relationship exists," which statement is quite significant in that it speaks of a "basic
salary" apart and distinct from "commissions" and "allowances". Instead of supporting respondents' stand, it would
appear that Songco itself recognizes that commissions are not part of "basic salary."
In including commissions in the computation of the 13th month pay, the second paragraph of Section 5(a) of the
Revised Guidelines on the Implementation of the 13th Month Pay Law unduly expanded the concept of "basic
salary" as defined in P.D. 851. It is a fundamental rule that implementing rules cannot add to or detract from the
provisions of the law it is designed to implement. Administrative regulations adopted under legislative authority by a
particular department must be in harmony with the provisions of the law they are intended to carry into effect. They
cannot widen its scope. An administrative agency cannot amend an act of Congress. 10
Having reached this conclusion, we deem it unnecessary to discuss the other issues raised in these petitions.

WHEREFORE, the consolidated petitions are hereby GRANTED. The second paragraph of Section 5 (a) of the
Revised Guidelines on the Implementation of the 13th Month Pay Law issued on November 126, 1987 by then
Labor Secretary Franklin M. Drilon is declared null and void as being violative of the law said Guidelines were
issued to implement, hence issued with grave abuse of discretion correctible by the writ of prohibition and certiorari.
The assailed Orders of January 17, 1990 and October 10, 1991 based thereon are SET ASIDE.

24.) G.R. No. 110068 February 15, 1995
PHILIPPINE DUPLICATORS, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and PHILIPPINE DUPLICATORS EMPLOYEES UNION-
TUPAS, respondents.
RESOLUTION
FELICIANO, J.:
On 11 November 1993, this Court, through its Third Division, rendered a decision dismissing the Petition
for Certiorari filed by petitioner Philippine Duplicators, Inc. (Duplicators) in G.R. No. 110068. The Court upheld the
decision of public respondent National Labor Relations Commission (NLRC), which affirmed the order of Labor
Arbiter Felipe T. Garduque II directing petitioner to pay 13th month pay to private respondent employees computed
on the basis of their fixed wages plus sales commissions. The Third Division also denied with finality on 15
December 1993 the Motion for Reconsideration filed (on 12 December 1993) by petitioner.
On 17 January 1994, petitioner Duplicators filed (a) a Motion for Leave to Admit Second Motion for Reconsideration
and (b) a Second Motion for Reconsideration. This time, petitioner invoked the decision handed down by this Court,
through its Second Division, on 10 December 1993 in the two (2) consolidated cases of Boie-Takeda Chemicals,
Inc. vs. Hon. Dionisio de la Serna and Philippine Fuji Xerox Corp. vs. Hon. Cresenciano B. Trajano, in G.R. Nos.
92174 and 102552, respectively. In its decision, the Second Division inter alia declared null and void the second
paragraph of Section 5 (a) of the Revised Guidelines issued by then Secretary of Labor Drilon. Petitioner submits
1
that the decision in the Duplicators case should now be considered as having been abandoned or reversed by
the Boie-Takeda decision, considering that the latter went "directly opposite and contrary to" the conclusion reached
in the former. Petitioner prays that the decision rendered in Duplicators be set aside and another be entered
directing the dismissal of the money claims of private respondent Philippine Duplicators' Employees' Union.
In view of the nature of the issues raised, the Third Division of this Court referred the petitioner's Second Motion for
Reconsideration, and its Motion for Leave to Admit the Second Motion for Reconsideration, to the Court en banc en
consulta. The Court en banc, after preliminary deliberation, and inorder to settle the condition of the relevant case
law, accepted G.R. No. 110068 as a banc case.
Deliberating upon the arguments contained in petitioner's Second Motion for Reconsideration, as well as its Motion
for Leave to Admit the Second Motion for Reconsideration, and after review of the doctrines embodied, respectively,
in Duplicators and Boie-Takeda, we consider that these Motions must fail.
The decision rendered in Boie-Takeda cannot serve as a precedent under the doctrine of stare decisis. The Boie-
Takeda decision was promulgated a month after this Court, (through its Third Division), had rendered the decision in
the instant case. Also, the petitioner's (first) Motion for Reconsideration of the decision dated 10 November 1993
had already been denied, with finality, on 15 December 1993, i.e.; before the Boie-Takeda decision became final on
5 January 1994.
Preliminarily, we note that petitioner Duplicators did not put in issue the validity of the Revised Guidelines on the
Implementary on of the 13th Month Pay Law, issued on November 16, 1987, by then Labor Secretary Franklin M.
Drilon, either in its Petition for Certiorari or in its (First) Motion for Reconsideration. In fact, petitioner's counsel relied
upon these Guidelines and asserted their validity in opposing the decision rendered by public respondent NLRC.
Any attempted change in petitioner's theory, at this late stage of the proceedings, cannot be allowed.
More importantly, we do not agree with petitioner that the decision in Boie-Takeda is "directly opposite or
contrary to" the decision in the present (Philippine Duplicators). To the contrary, the doctrines enunciated
in these two (2) cases in fact co-exist one with the other. The two (2) cases present quite different factual
situations (although the same word "commissions" was used or invoked) the legal characterizations of which must
accordingly differ.

The Third Division in Durplicators found that:
In the instant case, there is no question that the sales commission earned by the salesmen who
make or close a sale of duplicating machines distributed by petitioner corporation, constitute part of
the compensation or remuneration paid to salesmen for serving as salesmen, and hence as part of
the "wage" or salary of petitioner's salesmen. Indeed, it appears that petitioner pays its salesmen a
small fixed or guaranteed wage; the greater part of the salesmen's wages or salaries being
composed of the sales or incentive commissions earned on actual sales closed by them. No doubt
this particular galary structure was intended for the benefit of the petitioner corporation, on the
apparent assumption that thereby its salesmen would be moved to greater enterprise and diligence
and close more sales in the expectation of increasing their sales commissions. This, however, does
not detract from the character of such commissions as part of the salary or wage paid to each of its
salesmen for rendering services to petitioner corporation.
In other words, the sales commissions received for every duplicating machine sold constituted part of the
basic compensation or remuneration of the salesmen of Philippine Duplicators for doing their job. The
portion of the salary structure representing commissions simply comprised an automatic increment to the monetary
value initially assigned to each unit of work rendered by a salesman. Especially significant here also is the fact that
the fixed or guaranteed portion of the wages paid to the Philippine Duplicators' salesmen represented only 15%-
30% of an employee's total earnings in a year. We note the following facts on record:
Salesmen's Total Earnings and 13th Month Pay

For the Year 1986 2
Name of Total Amount Paid Montly Fixed

Salesman Earnings as 13th Month Pay Wages x 12 3
Baylon, P76,610.30 P1,350.00 P16,200.00

Benedicto
Bautista 90,780.85 1,182.00 14,184.00

Salvador
Brito, 64,382.75 1,238.00 14,856.00

Tomas
Bunagan, 89,287.75 1,266.00 15,192.00

Jorge
Canilan, 74,678.17 1,350.00 16,200.00

Rogelio
Dasig, 54,625.16 1,378,00 16,536.00

Jeordan
Centeno, 51,854.15 1,266.04 15,192.00

Melecio, Jr.
De los Santos 73,551.39 1,322.00 15,864.00

Ricardo
del Mundo, 108,230.35 1,406.00 16,872.00

Wilfredo
Garcia, 93,753.75 1,294.00 15,528.00

Delfin
Navarro, 98,618.71 1,266.00 15,192.00
Ma. Teresa
Ochosa, 66,275.65 1,406.00 16,872.00

Rolano
Quisumbing, 101,065.75 1,406.00 16,872.00

Teofilo
Rubina, 42,209.73 1,266.00 15,192.00

Emma
Salazar, 64,643.65 1,238.00 14,856.00

Celso
Sopelario, 52,622.27 1,350.00 16,200.00

Ludivico
Tan, 30,127.50 1,238.00 14,856.00

Leynard
Talampas, 146,510.25 1,434.00 17,208.00

Pedro
Villarin, 41,888.10 1,434.00 17,208.00

Constancio
Carrasco, 50,201.20 403.75*

Cicero
Punzalan, 24,351.89 1,266.00 15,192.00

Reynaldo
Poblador, 25,516.75 323.00*

Alberto
Cruz, 32,950.45 323.00*

Danilo
Baltazar, 15,681.35 323.00*

Carlito
Considering the above circumstances, the Third Division held, correctly, that the sales commissions were an
integral part of the basic salary structure of Philippine Duplicators' employees salesmen. These
commissions are not overtime payments, nor profit-sharing payments nor any other fringe benefit. Thus,
the salesmen's commissions, comprising a pre-determined percent of the selling price of the goods sold by
each salesman, were properly included in the term "basic salary" for purposes of computing their 13th
month pay.
In Boie-Takeda the so-called commissions "paid to or received by medical representatives of Boie-Takeda

Chemicals or by the rank and file employees of Philippine Fuji Xerox Co.," were excluded from the term
"basic salary" because these were paid to the medical representatives and rank-and-file employees as
"productivity bonuses." The Second Division characterized these payments as additional monetary benefits not
4
properly included in the term "basic salary" in computing their 13th month pay. We note that productivity bonuses
are generally tied to the productivity, or capacity for revenue production, of a corporation; such bonuses closely
resemble profit-sharing payments and have no clear director necessary relation to the amount of work actually done
by each individual employee. More generally, a bonus is an amount granted and paid ex gratia to the employee; its
payment constitutes an act of enlightened generosity and self-interest on the part of the employer, rather than as a
demandable or enforceable obligation. In Philippine Education Co. Inc. (PECO) v. Court of Industrial Relations, the 5
Court explained the nature of a bonus in the following general terms:
As a rule a bonus is an amount granted and paid to an employee for his industry loyalty which
contributed to the success of the employer's business and made possible the realization of profits. It
is an act of generosity of the employer for which the employee ought to be thankful and grateful. It is
also granted by an enlightened employer to spur the employee to greater efforts for the success of
the business and realization of bigger profits. . . . . From the legal point of view a bonus is not and
mandable and enforceable obligation. It is so when It is made part of the wage or salary or
compensation. In such a case the latter would be a fixed amount and the former would be a
contingent one dependent upon the realization of profits. . . . (Emphasis supplied)
6
In Atok-Big Wedge Mining Co., Inc. v. Atok-Big Wedge Mutual Benefit Association, the Court amplified:
7
. . . . Whether or not [a] bonus forms part of waqes depends upon the circumstances or conditions
for its payment. If it is an additional compensation which the employer promised and agreed to give
without any conditions imposed for its payment, such as success of business or greater production
or output, then it is part of the wage. But if it is paid only if profits are realized or a certain amount of
productivity achieved, it cannot be considered part of wages. . . . It is also paid on the basis of actual
or actual work accomplished. If the desired goal of production is not obtained, or the amount of
actual work accomplished, the bonus does not accrue. . . . (Emphasis supplied)
8
More recently, the non-demandable character of a bonus was stressed by the Court in Traders Royal Bank
v. National Labor Relations Commission: 9
A bonus is a "gratuity or act of liberality of the giver which the recipient has no right to demand as a
matter of right." (Aragon v. Cebu Portland Cement Co., 61 O.G. 4567). "It is something given in
addition to what is ordinarily received by or strictly due the recipient." The granting of a bonus is
basically a management prerogative which cannot be forced upon the employer "who may not be
obliged to assume the onerous burden of granting bonuses or other benefits aside from the
employee's basic salaries or wages . . ." (Kamaya Point Hotel v. NLRC, 177 SCRA 160
[1989]). (Emphasis supplied)
10
If an employer cannot be compelled to pay a productivity bonus to his employees, it should follow that such
productivity bonus, when given, should not be deemed to fall within the "basic salary" of employees when the time
comes to compute their 13th month pay.
It is also important to note that the purported "commissions" paid by the Boie-Takeda Company to its medical
representatives could not have been "sales commissions" in the same sense that Philippine Duplicators paid its
salesmen Sales commissions. Medical representatives are not salesmen; they do not effect any sale of any article
at all. In common commercial practice, in the Philippines and elsewhere, of which we take judicial notice, medical
representatives are employees engaged in the promotion of pharmaceutical products or medical devices
manufactured by their employer. They promote such products by visiting identified physicians and inform much
physicians, orally and with the aid of printed brochures, of the existence and chemical composition and virtues of
particular products of their company. They commonly leave medical samples with each physician visited; but those
samples are not "sold" to the physician and the physician is, as a matter of professional ethics, prohibited from
selling such samples to their patients. Thus, the additional payments made to Boie-Takeda's medical
representatives were not in fact sales commissions but rather partook of the nature of profit-sharing bonuses.
The doctrine set out in the decision of the Second Division is, accordingly, that additional payments made to
employees, to the extent they partake of the nature of profit-sharing payments, are properly excluded from the ambit
of the term "basic salary" for purposes of computing the 13th month pay due to employees. Such additional
payments are not "commissions" within the meaning of the second paragraph of Section 5 (a) of the Revised
Guidelines Implementing 13th Month Pay.

The Supplementary Rules and Regulations Implementing P.D. No. 851 subsequently issued by former Labor
Minister Ople sought to clarify the scope of items excluded in the computation of the 13th month pay; viz.:
Sec. 4. Overtime pay, earnings and other remunerations which are not part of the basic salary shall
not be included in the computation of the 13th month pay.
We observe that the third item excluded from the term "basic salary" is cast in open ended and apparently circular
terms: "other remunerations which are not part of the basic salary." However, what particular types of earnings and
remuneration are or are not properly included or integrated in the basic salary are questions to be resolved on a
case to case basis, in the light of the specific and detailed facts of each case. In principle, where these earnings and
remuneration are closely akin to fringe benefits, overtime pay or profit-sharing payments, they are
properly excluded in computing the 13th month pay. However, sales commissions which are effectively an
integral portion of the basic salary structure of an employee, shall be included in determining his 13th
month pay.
We recognize that both productivity bonuses and sales commissions may have an incentive effect. But there is
reason to distinguish one from the other here. Productivity bonuses are generally tied to the productivity or profit
generation of the employer corporation. Productivity bonuses are not directly dependent on the extent an individual
employee exerts himself. A productivity bonus is something extra for which no specific additional services are
rendered by any particular employee and hence not legally demandable, absent a contractual undertaking to pay it.
Sales commissions, on the other hand, such as those paid in Duplicators, are intimately related to or directly
proportional to the extent or energy of an employee's endeavors. Commissions are paid upon the specific results
achieved by a salesman-employee. It is a percentage of the sales closed by a salesman and operates as an integral
part of such salesman's basic pay.
Finally, the statement of the Second Division in Boie-Takeda declaring null and void the second paragraph of
Section 5(a) of the Revised Guidelines Implementing the 13th Month Pay issued by former Labor Secretary Drilon,
is properly understood as holding that that second paragraph provides no legal basis for including within the term
"commission" there used additional payments to employees which are, as a matter of fact, in the nature of profit-
sharing payments or bonuses. If and to the extent that such second paragraph is so interpreted and applied, it must
be regarded as invalid as having been issued in excess of the statutory authority of the Secretary of Labor. That
same second paragraph however, correctly recognizes that commissions, like those paid in Duplicators, may
constitute part of the basic salary structure of salesmen and hence should be included in determining the 13th
month pay; to this extent, the second paragraph is and remains valid.
ACCORDINGLY, the Motions for (a) Leave to File a Second Motion for Reconsideration and the (b) aforesaid
Second Reconsideration are DENIED for lack of merit. No further pleadings will be entertained.

25.) [G.R. No. 122827. March 29, 1999.]
LIDUVINO M. MILLARES, J. CAPISTRANO CORDITA, SHIRLEY P. UY, DIONISIO J. REQUINA,

GABRIEL A. DEJERO, NELSON T. GOMONIT, IMELDA IMPEYNADO, SULPICIO B. SUMILE, MA.
CONSUELO AVIEL, SILVINO S. GUEVARRA, FIDEL DUMANHOG, NELFA T. POLOTAN, LEMUEL
C. RISMA, JUANITO M. GONZALES, ROGELIO B. CABATUAN, EPIFANCIO E. GANANCIAL,
DOMINADOR D. ATOK, CONRADO U. SERRANO, ISIDRO J. BARNAJA, ROMEO VIRTUDAZO,
AVELINO NABLE, EDGAR TAMPOS, ERNESTO ORIAS, DALMACIO LEGARAY, ROMEO R. BULA,
ROBERTO G. GARCIA, RUDOLFO SUZON, JERRY S. DANO, AUGUST G. ESCUDERO, OSCAR B.
CATBAGAN, TEOFILO C. SISON, NARCISO BULASA, ALBERTO CORTEZ, LILIA C. CABRERA,
NESTOR A. ACASO, BIENVENIDO MOZO, ISIDORO A. ALMENDAREZ, VICENTE M. PILONGO,
ROBERTO N. LUMPOT, PATRICIO BANDOLA, MANUEL S. ESPINA, ISIDRO K. BALCITA, JR.,
EMMANUEL O. ABRAHAM, OLEGARIO A. EPIS, NESTOR D. PEREGRINO, RAMON A.
USANAGA, PRESTO BARTOLOME, BRADY EMPEYNADO, PORFERIO N. CONDADO, AQUILLO
V. CORDOVA, LEONARDO ESTOSI, PACIFICO B. DACORINA, PABLITO B. LLUBIT, ANTONIO
DOZA, LEONITO LABADIA, EDGARDO BELLIZA, FEDENCIO P. GEBERTAS, VIRGILIO D.
GULBE, MANUEL A. LERIO, JR., ROGELIO B. OCAMIA, RODOLFO A. CASTILLO, EDMUNDO L.
PLAZA, ROBERTO D. YAGONIA, JR., PETRONIO ESTELA, JR., CRISOLOGO A. LOGRONIO,
ERNESTO T. MORIO, ROGELIO M. DAVID, BENJAMIN U. ARLIGUE, APOLONIO MUNDO, JR.,
NENE M. ESPINOSA, NILO B. BALAORO, GERONIMO S. CONVI, VICENTE R. TARAGOZA,
YOLANDO A. SALAZAR, MANUEL A. NERI, ROGELIO C. TICAR, ROBERTO A. MACALAM,
MIGUEL MACARIOLA, WALTERIO DAPADAP, SILVERIO CUAMAG, EUPARQUIO PLANOS,
GILBERTO M. MIRA, REYNALDO BACSARSA, DIOSDADO B. ABING, ARISTARCO V. SALON,
TOMAS N. CATACTE, RODOLFO MEMORIA, PAPENIANO CURIAS, JOSE S. CANDIA,
DESIDERIO C. NAVARRO, EMMANUEL O. ABRAHAM, JOSELITO D. ARLAN, FRANCISCO S.
SANCHEZ, MANSUETO B. LINGGO, ISIDRO BARNAJA, ROMEO S. CABRERA, LEODEGARIO
CAINTIC, NESTOR G. BLANDO, FLORENCIO B. DELIZO, MILAN M. ETES, GONZALO C.
PADILLO, LEONARDO CAGAKIT, JOSEFINO E. DULGUIME, PEPITO G. ARREZA, AMADOR G.
CAGALAWAN, GAUDENCIO C. SARMIENTO, FLORENTINO J. BRACAMONTE, DOMINADOR H.
TY, LEOPOLDO T. SUPIL, JOSE A. DOHINOG, ANIANO T. REYES, CARLITO G. UY, PLACIDO D.
PADILLO, TERESITA C. ADRIANO, CANDIDO S. ADRIANO, and AVELINO G.
VENERACION, Petitioners, v. NATIONAL LABOR RELATIONS COMMISSION, (FIFTH
DIVISION), and PAPER INDUSTRIES CORPORATION OF THE PHILIPPINES
(PICOP), Respondents.
DECISION
BELLOSILLO, J.:
Petitioners numbering one hundred sixteen (116) 1 occupied the positions of Technical Staff, Unit
Manager, Section Manager, Department Manager, Division Manager and Vice President in the mill site
of respondent Paper Industries Corporation of the Philippines (PICOP) in Bislig, Surigao del Sur. In
1992 PICOP suffered a major financial setback allegedly brought about by the joint impact of
restrictive government regulations on logging and the economic crisis. To avert further losses, it
undertook a retrenchment program and terminated the services of petitioners. Accordingly,
petitioners received separation pay computed at the rate of one (1) month basic pay for every year
of service. Believing however that the allowances they allegedly regularly received on a monthly
basis during their employment should have been included in the computation thereof they lodged a
complaint for separation pay differentials.
The allowances in question pertained to the following —
1. Staff/Manager’s Allowance —
Respondent PICOP provides free housing facilities to supervisory and managerial employees assigned
in Bislig. The privilege includes free water and electric consumption. Owing however to shortage of
such facilities, it was constrained to grant Staff allowance instead to those who live in rented houses
outside but near the vicinity of the mill site. But the allowance ceases whenever a vacancy occurs in
the company’s housing facilities. The former grantee is then directed to fill the vacancy. For Unit,
Section and Department Managers, respondent PICOP gives an additional amount to meet the same
kind of expenses called Manager’s allowance.
2. Transportation Allowance —
To relieve respondent PICOP’s motor pool in Bislig from a barrage of requests for company vehicles
and to stabilize company vehicle requirements it grants transportation allowance to key officers and
Managers assigned in the mill site who use their own vehicles in the performance of their duties. It is
a conditional grant such that when the conditions no longer obtain, the privilege is discontinued. The
recipients of this kind of allowance are required to liquidate it by submitting a report with a detailed
enumeration of expenses incurred.
3. Bislig Allowance —
The Bislig Allowance is given to Division Managers and corporate officers assigned in Bislig on
account of the hostile environment prevailing therein. But once the recipient is transferred elsewhere
outside Bislig, the allowance ceases.
Applying Art. 97, par. (f), of the Labor Code which defines "wage," the Executive Labor Arbiter
opined that the subject allowances, being customarily furnished by respondent PICOP and regularly
received by petitioners, formed part of the latter’s wages. Resolving the controversy from another
angle, on the strength of the ruling in Santos v. NLRC 2 and Soriano v. NLRC 3 that in the
computation of separation pay account should be taken not just of the basic salary but also of the
regular allowances that the employee had been receiving, he concluded that the allowances should
be included in petitioners’ base pay. Thus respondent PICOP was ordered on 28 April 1994 to pay
petitioners Four Million Four Hundred Eighty-One Thousand Pesos (P4,481,000.00) representing
separation pay differentials plus ten per cent (10%) thereof as attorney’s fees. 4
The National Labor Relations Commission (NLRC) did not share the view of the Executive Labor
Arbiter. On 7 October 1994 it set aside the assailed decision by decreeing that the allowances did not
form part of the salary base used in computing separation pay. 5 Its ruling was based on the finding
that the cases relied upon the Executive Labor Arbiter were inapplicable since they involved illegal
dismissal where separation pay was granted in lieu of reinstatement which was no longer feasible.
Instead, what it considered in point was Estate of the late Eugene J . Kneebone v. NLRC 6 where the
Court held that representation and transportation allowances were deemed not part of salary and
should therefore be excluded in the computation of separation benefits. Relating the present case
with Art. 97, par. (f), of the Labor Code, the NLRC likewise found that petitioners’ allowances were
contingency-based and thus not included in their salaries. On 26 September 1995 reconsideration
was denied. 7
In this petition for certiorari, petitioners submit that their allowances are included in the definition of
"facilities" in Art. 97, par. (f), of the Labor Code, being necessary and indispensable for their
existence and subsistence. Furthermore they claim that their availment of the monetary equivalent of
those "facilities" on a monthly basis was characterized by permanency, regularity and customariness.
And to fortify their arguments they insist on the applicability of Santos, 8 Soriano, 9 The Insular Life
Assurance Company, 10 Planters Products, Inc. 11 and Songco 12 which are all against the NLRC
holding that the salary base in computing separation pay includes not just the basic salary but also
the regular allowances. chanroblesvirtuallawlibrary

There is no showing of grave abuse of discretion on the part of the NLRC. In case of retrenchment to
prevent losses, Art. 283 of the the Labor Code imposes on the employer an obligation to grant to the
affected employees separation pay equivalent to one (1) month pay or at least one-half (½) month
pay for every year of service, whichever is higher. Since the law speaks of "pay," the question arises,
"What exactly does the term connote?" We correlate Art. 283 with Art. 97 of the same Code on
definition of terms. "Pay" is not defined therein but "wage." In Songco the Court explained that both
words (as well as salary) generally refer to one and the same meaning, i.e., a reward or recompense
for services performed. Specifically, "wage" is defined in letter (f) as the remuneration or earnings,
however designated, capable of being expressed in terms of money, whether fixed or ascertained on
a time, task, piece, or commission basis, or other method of calculating the same, which is payable
by an employer to an employee under a written or unwritten contract of employment for work done
or to be done, or for services rendered or to be rendered and includes the fair and reasonable value,
as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished
by the employer to the employee.
We invite attention to the above-underlined clause. Stated differently, when an employer customarily
furnishes his employee board, lodging or other facilities, the fair and reasonable value thereof, as
determined by the Secretary of Labor and Employment, is included in "wage." In order to ascertain
whether the subject allowances form part of petitioner’s "wages," we divide the discussion on the
following — "customarily furnished;" "board, lodging or other facilities;" and, "fair and reasonable
value as determined by the Secretary of Labor." cralaw virtua1aw library
"Customary" is founded on long-established and constant practice 13 connoting regularity. 14 The

receipt of an allowance on a monthly basis does not ipso facto characterize it as regular and forming
part of salary 15 because the nature of the grant is a factor worth considering. We agree with the
observation of the Office of the Solicitor General that the subject allowances were temporarily, not
regularly, received by petitioners because —
In the case of the housing allowance, once a vacancy occurs in the company-provided housing
accommodations, the employee concerned transfers to the company premises and his housing
allowance is discontinued . . .
On the other hand, the transportation allowance is in the form of advances for actual transportation
expenses subject to liquidation . . . given only to employees who have personal cars.
The Bislig allowance is given to Division Managers and corporate officers assigned in Bislig, Surigao
del Norte. Once the officer is transferred outside Bislig, the allowance stops. 16
We add that in the availment of the transportation allowance, respondent PICOP set another
requirement that the personal cars be used by the employees in the performance of their duties.
When the conditions for availment ceased to exist, the allowance reached the cutoff point. The
finding of the NLRC along the same line likewise merits concurrence, i.e., petitioners’ continuous
enjoyment of the disputed allowances was based on contingencies the occurrence of which wrote finis
to such enjoyment.
Although it is quite easy to comprehend "board" and "lodging," it is not so with "facilities." Thus Sec.
5, Rule VII, Book III, of the Rules Implementing the Labor Code gives meaning to the term as
including articles or services for the benefit of the employee or his family but excluding tools of the
trade or articles or service primarily for the benefit of the employer or necessary to the conduct of
the employer’s business. The Staff/Manager’s allowance may fall under "lodging" but the
transportation and Bislig allowances are not embraced in "facilities" on the main consideration that
they are granted as well as the Staff/Manager’s allowance for respondent PICOP’s benefit and
convenience, i.e., to insure that petitioners render quality performance. In determining whether a
privilege is a facility, the criterion is not so much its kind but its purpose. 17 That the assailed
allowances were for the benefit and convenience of respondent company was supported by the
circumstance that they were not subjected to withholding tax. Revenue Audit Memo Order No. 1-87
pertinently provides —
3.2 . . . transportation, representation or entertainment expenses shall not constitute taxable

compensation if: chanrob1es virtual 1aw library
(a) It is for necessary travelling and representation or entertainment expenses paid or incurred by
the employee in the pursuit of the trade or business of the employer, and
(b) The employee is required to, and does, make an accounting/liquidation for such expense in
accordance with the specific requirements of substantiation for such category or expense.
Board and lodging allowances furnished to an employee not in excess of the latter’s needs and given
free of charge, constitute income to the latter except if such allowances or benefits are furnished to
the employee for the convenience of the employer and as necessary incident to proper performance
of his duties in which case such benefits or allowances do not constitute taxable income. 18
The Secretary of Labor and Employment under Sec. 6, Rule VII, Book III, of the Rules Implementing
the Labor Code may from time to time fix in appropriate issuances the "fair and reasonable value of
board, lodging and other facilities customarily furnished by an employer to his employees."
Petitioners’ allowances do not represent such fair and reasonable value as determined by the proper
authority simply because the Staff/Manager’s allowance and transportation allowance were amounts
given by respondent company in lieu of actual provisions for housing and transportation needs
whereas the Bislig allowance was given in consideration of being assigned to the hostile environment
then prevailing in Bislig. chanroblesvirtualawlibrary
The inevitable conclusion is that, as reached by the NLRC, subject allowances did not form part of
petitioners’ wages.
In Santos 19 the Court decreed that in the computation of separation pay awarded in lieu of
reinstatement, account must be taken not only of the basic salary but also of transportation and
emergency living allowances. Later, the Court in Soriano, citing Santos, was general in its holding
that the salary base properly used in computing separation pay where reinstatement was no longer
feasible should include not just the basic salary but also the regular allowances that the employee
had been receiving. Insular merely reiterated the aforementioned rulings. The rationale is not difficult
to discern. It is the obligation of the employer to pay an illegally dismissed employee the whole
amount of his salaries plus all other benefits, bonuses and general increases to which he would have
been normally entitled had he not been dismissed and had not stopped working. 20 The same holds
true in case of retrenched employees. And thus we applied Insular and Soriano in Planters in the
computation of separation pay of retrenched employees. Songco likewise involved retrenchment and
was relied upon in Planters, Soriano and Santos in determining the proper amount of separation pay.
As culled from the foregoing jurisprudence, separation pay when awarded to an illegally dismissed
employee in lieu of reinstatement or to a retrenched employee should be computed based not only
on the basic salary but also on the regular allowances that the employee had been receiving. But in
view of the previous discussion that the disputed allowances were not regularly received by
petitioners herein, there was no reason at all for petitioners to resort to the above cases.
Neither is Kneebone applicable, contrary to the finding of the NLRC, because of the difference in
factual circumstances. In Kneebone, the Court was tasked to resolve the issue whether the
representation and transportation allowances formed part of salary as to be considered in the
computation of retirement benefits. The ruling was in the negative on the main ground that the
retirement plan of the company expressly excluded such allowances from salary.
WHEREFORE, the petition is DISMISSED. The resolution of public respondent National Labor Relations
Commission dated 7 October 1994 holding that the Staff/Manager’s, transportation and Bislig
allowances did not form part of the salary base used in computing the separation pay of petitioners,
as well as its resolution dated 26 September 1995 denying reconsideration, is AFFIRMED. No costs.

26.)

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a.) G.R. No.

ST. LUKE'S MEDICAL CENTER, INC., Petitioner,

apology (handwritten letter) which reads as follows:

I am very sorry for bringing things from [SLMC] inside my bag.

Sorry po. Sorry po. Sorry po talaga. 13

Special Civil Actions

theft, pilferage, and misappropriation of funds, with termination from service.

provided under SLMC's Code of Discipline.

Aggrieved, Sanchez appealed to the NLRC. 38

The NLRC Ruling

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was illegally dismissed.

harsh and the one

and attorney's fees. 46

2013. Thus, it filed a petition for certiorari before the CA.

discretion in finding that Sanchez was illegally dismissed.

The Issue Before the Court

The Court's Ruling

The petition is meritorious.

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THE COCA-COLA EXPORT CORPORATION, Petitioner,

In support of its motion, petitioner company advanced the following arguments:

RESPONDENT’S BREACH OF PETITIONER’S TRUST IS CLEARLY SUPPORTED AND BORNE BY THE

RESPONDENT’S DISMISSAL IS NOT "HARSH" BUT IS COMPLETELY COMMENSURATE TO THE SEVERITY

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Monthly Rolling Estimate.

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Analysis of financial issues/questions raised by Corporate.

Ad hoc requests from Corporation for Information.

Accounting for REFPET project costs.

Foundation 3-year plan.

Finance representative in MRP II project.

CCFEL ROSS conversion project.

BLI and BII recapitalization.3

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This Court has always reminded that:

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(2) Underpayment of wages

(3) Overtime pay

(4) Thirteenth month pay

(5) Service incentive leave pay

(6) Full time of eight hours employment

(7) Recovery of benefits due to regular employees

(8) Night differential pay

(9) Moral damages and

(10) Attorneys fees,

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NATHANIEL N. DONGON, Petitioner, v. RAPID MOVERS AND FORWARDERS CO., INC.,

The prerogative of the employer to dismiss an employee on the ground of willful

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SO ORDERED.6 cralaw virtualaw library

x x x IN EXPRESSING RESERVATION ON THE GUILT OF THE PRIVATE RESPONDENT IN THE LIGHT OF

x x x.” (Emphasis, supplied)

WHEREFORE, premises considered, the Petition is GRANTED. The assailed 17 June

SO ORDERED.8 cralaw virtualaw library

Undaunted, the petitioner is now on appeal.

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The petition has merit.