[G.R. No. 186070, April 11 : 2011]

CLIENTLOGIC PHILPPINES, INC. (NOW KNOWN AS SITEL), JOSEPH

VELASQUEZ, IRENE ROA AND RODNEY SPIRES, PETITIONERS, VS. BENEDICT

CASTRO, RESPONDENT.

DECISION

NACHURA, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the

September 1, 2008 Decision[1]

and the January 7, 2009 Resolution[2]

of the Court of Appeals

(CA), affirming with modification the November 29, 2007 resolution[3]

of the National Labor

Relations Commission (NLRC), which held that respondent Benedict Castro was not illegally

dismissed. The CA, however, awarded respondent’s money claims, viz.:

WHEREFORE, premises considered, the instant Petition is PARTLY GRANTED. The

Resolutions dated 29 November 2007 and 23 January 2008 of the National Labor Relations

Commission (Third Division) in NLRC CN. RAB-CAR-02-0091-07 LAC NO. 08-002207-07 are

AFFIRMED with MODIFICATION in that the monetary awards of Executive Labor Arbiter

Vito C. Bose in his Decision dated 29 June 2007, as computed in Annex “A― thereof,

ONLY for holiday premiums of Php 16,913.35; service incentive leave pay of Php 8,456.65;

overtime pay of Php 578,753.10; and rest day pay of Php 26,384.80 which [petitioners] shall

jointly and solidarily pay to petitioner, are hereby REINSTATED. No pronouncement as to

costs.

SO ORDERED.[4]

The second assailed issuance of the CA denied petitioners’ motion for reconsideration.

The facts:

Respondent was employed by petitioner ClientLogic Philippines, Inc. (now known as shall

hereafter be referred to as SITEL on February 14, 2005 as a call center agent for its Bell South

Account. After six (6) months, he was promoted to the “Mentor― position, and thereafter to

the “Coach� position. A “Coach� is a team supervisor who is in charge of dealing

with customer complaints which could not be resolved by call center agents. In June 2006, he

was transferred to the Green Dot Account.

During respondent’s stint at the Dot Green Account, respondent noticed that some of the call

center agents under his helm would often make excuses to leave their work stations. Their most

common excuse was that they would visit the company’s medical clinic. To verify that they

were not using the clinic as an alibi to cut their work hours, respondent sent an e-mail to the

clinic’s personnel requesting for the details of the agents who sought medical consultation.

His request was denied on the ground that medical records of employees are highly confidential

and can only be disclosed in cases of health issues, and not to be used to build any disciplinary

case against them.

On October 11, 2006, respondent received a notice requiring him to explain why he should not

be penalized for: (1) violating Green Dot Company’s Policy and Procedure for Direct

Deposit Bank Info Request when he accessed a customer’s online account and then gave the

latter’s routing and reference numbers for direct deposit; and (2) gravely abusing his

discretion when he requested for the medical records of his team members. Respondent did not

deny the infractions imputed against him. He, however, justified his actuations by explaining that

the customer begged him to access the account because she did not have a computer or an

internet access and that he merely requested for a patient tracker, not medical records.

In November 2006, a poster showing SITEL’s organizational chart was posted on the

company’s bulletin board, but respondent’s name and picture were conspicuously

missing, and the name and photo of another employee appeared in the position which respondent

was supposedly occupying.

On January 22, 2007, SITEL posted a notice of vacancy for respondent’s position, and on

February 12, 2007, he received a Notice of Termination. These events prompted him to file a

complaint for illegal dismissal; non-payment of overtime pay, rest day pay, holiday pay, service

incentive leave pay; full backwages; damages; and attorney’s fees before the Labor Arbiter

(LA) against herein petitioners SITEL and its officers, Joseph Velasquez, Irene Roa, and Rodney

Spires.[5]

In their position paper,[6]

petitioners averred that respondent was dismissed on account of valid

and justifiable causes. He acted with serious misconduct which breached the trust and confidence

reposed in him by the company. He was duly furnished with the twin notices required by the

Labor Code and further, he is not entitled to overtime pay, rest day pay, night shift differential,

holiday pay, and service incentive leave pay because he was a supervisor, hence, a member of

the managerial staff.

In a decision dated June 29, 2007,[7]

the LA ruled in favor of respondent by declaring him

illegally dismissed and ordering petitioners to pay his full backwages and, in lieu of

reinstatement, his separation pay. The LA further awarded respondents money claims upon

finding that he was not occupying a managerial position. The decretal portion of the decision

reads:

WHEREFORE, all premises duly considered, [petitioners] are hereby found guilty of illegally

dismissing [respondent]. As such, [petitioners] shall be jointly and solidarily liable to pay

[respondent] his full backwages from the date of his dismissal to the finality of this decision,

computed as of today at One Hundred Thirty Eight Thousand Seven Hundred Fifty Nine

Pesos and 80/100 (P138,759.80) plus, Seven Hundred Sixty Three Thousand Two Hundred

Forty Eight Pesos and 67/100 (P763,248.67) representing his separation pay at one month pay

for every year of service, holiday pay and service incentive leave pay for the three years prior to

the filing of this case, overtime pay for six(6) hours daily, rest day pay and ten percent (10%) as

attorney’s fees.

All other claims are hereby dismissed for lack of evidence.

The computation of the foregoing monetary claims is hereto attached and made an integral part

hereof as Annex “A.―

SO ORDERED.[8]

Aggrieved, petitioners appealed to the NLRC which, in its November 29, 2007 resolution,[9]

reversed and set aside the decision of the LA by dismissing the complaint for lack of merit on the

ground that respondent’s employment was terminated for a just cause. The NLRC failed to

discuss the money claims.

On September 1, 2008, the CA affirmed the NLRC’s finding that there was no illegal

dismissal. Anent the money claims, the CA concurred with the LA’s ruling.[10]

Petitioners and respondent respectively moved for partial reconsideration, but their motions were

denied in the CA Resolution dated January 7, 2009.[11]

From the said denial, only petitioners

resorted to this Court through the petition at bar. Respondent’s failure to partially appeal the

CA’s Decision finding him not illegally dismissed has now rendered the same final and

executory; hence, the instant petition shall traverse only the issue on money claims.

Petitioners argue in the main[12]

that, as a team supervisor, respondent was a member of the

managerial staff; hence, he is not entitled to overtime pay, rest day pay, holiday pay, and service

incentive leave pay.

We deny the petition.

The petition hinges on the question of whether the duties and responsibilities performed by

respondent qualify him as a member of petitioners’ managerial staff. This is clearly a

question of fact, the determination of which entails an evaluation of the evidence on record.

The alleged errors of the CA lengthily enumerated in the petition[13]

are essentially factual in

nature and, therefore, outside the ambit of a petition for review on certiorari under Rule 45 of

the Rules of Civil Procedure. The Court does not try facts since such statutory duty is devolved

upon the labor. It is not for this Court to weigh and calibrate pieces of evidence otherwise

adequately passed upon by the labor tribunals especially when affirmed by the appellate court.[14]

Petitioners claim exception to the foregoing rule and assert that the factual findings of the LA

and the NLRC were conflicting. This is not true. The labor tribunals’ decisions were at odds

only with respect to the issue of illegal dismissal. Anent, the money claims issue, it cannot be

said that their rulings were contradictory because the NLRC, disappointingly, did not make any

finding thereon and it erroneously construed that the resolution of the money claims was

intertwined with the determination of the legality of respondent’s dismissal. Nonetheless, the

CA has already rectified such lapse when it made a definitive review of the LA’s factual

findings on respondent’s money claims. Agreeing with the LA, the CA held:

Article 82 of the Labor Code states that the provisions of the Labor Code on working conditions

and rest periods shall not apply to managerial employees. Generally, managerial employees are

not entitled to overtime pay for services rendered in excess of eight hours a day.

Article 212(m) of the Labor Code defines a managerial employee as “one who is vested with

powers or prerogatives to lay down and execute management policies and/or to hire, transfer,

suspend, lay-off, recall, discharge, assign or discipline employees, or to effectively recommend

such managerial actions.―

In his Position Paper, [respondent] states that he worked from 8:00 p.m. to 10:00 a.m. or 4 p.m.

to 12:00 p.m. of the following day; he was also required to work during his restdays and during

holidays but he was not paid; he was also not paid overtime pay, night shift differentials, and

service incentive leave. He was employed as call center agent on 14 February 2005, then

promoted as “Mentor― in August 2005, and again promoted to “Coach― position in

September 2005, which was the position he had when he was terminated. A “coach― is a

team supervisor who is in charge of dealing with customer complaints which could not be dealt

with by call center agents, and if a call center agent could not meet the needs of a customer, he

passes the customer’s call to the “coach.― Clearly, [respondent] is not a managerial

employee as defined by law. Thus, he is entitled to [his] money claims.

As correctly found by Executive Labor Arbiter Bose: “Employees are considered occupying

managerial positions if they meet all of the following conditions, namely:

“1) Their primary duty consists of management of the establishment in which they are

employed or of a department or subdivision thereof;

“2) They customarily and regularly direct the work of two or more employees therein;

“3) They have the authority to hire or fire other employees of lower rank; or their suggestions

and recommendations as to the hiring and firing and as to the promotion or any other change of

status of other employees are given particular weight.

“They are considered as officers or members of a managerial staff if they perform the

following duties and responsibilities:

“1) The primary duty consists of the performance of work directly related to management

policies of their employer;

“2) Customarily and regularly exercise discretion and independent judgment;

“3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary

duty consists of management of the establishment in which he is employed or subdivision

thereof; or (ii) execute under general supervision work along specialized or technical lines

requiring special training, experience, or knowledge; or (iii) execute, under general supervision,

special assignment and tasks x x x.

“[Respondent’s] duties do not fall under any of the categories enumerated above. His

work is not directly related to management policies. Even the circumstances shown by the instant

case reveal that [respondent] does not regularly exercise discretion and independent judgment.

[Petitioners] submitted a list of the responsibilities of ‘HR Manager/Supervisor’ and

‘Division Manager/Department Manager/Supervisors’ but these do not pertain to

[respondent] who does not have any of the said positions. He was just a team Supervisor and not

[an] HR or Department Supervisor.―[15]

We find no reversible error in the above ruling. The test of “supervisory― or

“managerial status― depends on whether a person possesses authority to act in the interest

of his employer and whether such authority is not merely routinary or clerical in nature, but

requires the use of independent judgment.[16]

The position held by respondent and its

concomitant duties failed to hurdle this test.

As a coach or team supervisor respondent’s main duty was to deal with customer complaints

which could not be handled or solved by call center agents. If the members of his team could not

meet the needs of a customer, they passed the customer’s call to respondent.

This job description does not indicate that respondent can exercise the powers and prerogatives

to effectively recommend such managerial actions which require the customary use of

independent judgment. There is no showing that he was actually conferred or actually exercising

the following duties attributable to a “member of the managerial staff,― viz.:

1) The primary duty consists of the performance of work directly related to management of

policies of their employer;

2) Customarily and regularly exercise discretion and independent judgment;

3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty

consists of management of the establishment in which he is employed or subdivision thereof; or

(ii) execute under general supervision work along specialized or technical lines requiring special

training, experience, or knowledge; or (iii) execute, under general supervision, special

assignment and tasks; and

4) Who do not devote more than 20 percent of their hours worked in a work week to activities

which are not directly and closely related to the performance of the work described in paragraphs

(1), (2), and (3) above.[17]

According to petitioners, respondent also performed the following duties, as shown in the

company’s Statement of Policy of Discipline:

a. Know and understand in full the Policy on Discipline including their underlying reasons.

b. Implement strictly and consistently the Policy on Discipline.

c. Ensure that the said Policy on Discipline is communicated to and understood by all

employees.

d. Monitor compliance by employees with the said Policy.

e. Advise HR Manager on the state of discipline in their respective departments; problems,

if any, and recommend solution(s) and corrective action(s).

As correctly observed by the CA and the LA, these duties clearly pertained to “Division

Managers/Department Managers/ Supervisors,― which respondent was not as he was merely a

team supervisor. Petitioners themselves described respondent as “the superior of a call center

agent; he heads and guides a specific number of agents, who form a team.―[18]

From the foregoing, respondent is thus entitled to his claims for holiday pay, service incentive

leave pay, overtime pay and rest day pay, pursuant to Book Three of the Labor Code, specifically

Article 82,[19]

in relation to Articles 87,[20]

93,[21]

and 95[22]

thereof.

WHEREFORE, premises considered, the Petition is hereby DENIED. The September 1, 2008

Decision and the January 7, 2009 Resolution of the Court of Appeals are AFFIRMED.

SO ORDERED.

[G.R. No. 173357, February 13, 2013]

ROWENA DE LEON CRUZ, Petitioner, v. BANK OF THE PHILIPPINE ISLANDS,

Respondents.

D E C I S I O N

PERALTA, J.:

This is a petition for review on certiorari1 of the Court of Appeals' Decision

2 dated April 27,

2006 in CA-G.R. SP No. 92202, and its Resolution dated July 13, 2006, denying petitioner's

motion for reconsideration.

The Court of Appeals affirmed the Decision of the National Labor Relations Commission

(NLRC), dated January 31, 2005, which reversed and set aside the Decision of the Labor Arbiter

finding the dismissal of petitioner Rowena de Leon Cruz to be illegal. The NLRC dismissed

petitioner's Complaint for lack of merit.

The facts are as follows:

Petitioner was hired by Far East Bank and Trust Company (FEBTC) in 1989. Upon the merger

of FEBTC with respondent Bank of the Philippine Islands (BPI) in April 2000, petitioner

automatically became an employee of respondent. Petitioner held the position of Assistant

Branch Manager of the BPI Ayala Avenue Branch in Makati City, and she was in charge of the

Trading Section.

On July 12, 2002, after 13 years of continuous service, respondent terminated petitioner on

grounds of gross negligence and breach of trust. Petitioner's dismissal was brought about by the

fraud perpetrated against three depositors, namely, Geoffrey L. Uymatiao, Maybel Caluag and

Evelyn G. Avila, in respondent's Ayala Avenue Branch.

The fraud committed against Uymatiao, Caluag and Avila was narrated by the NLRC and the

Court of Appeals as follows:

On June 2, 1997, Geoffrey Uymatiao deposited US$29,592.30 under a U.S. Dollar Certificate of

Deposit (USD CD) with respondent's Ayala Avenue Branch. As shown on the USD CD, it was

supposed to mature a month after its issuance or on July 2, 1997. Since the USD CD was not

presented by Uymatiao for redemption on July 2, 1997, it was automatically rolled over on a

monthly basis by the bank with a new USD CD being issued for each rolled-over USD CD, and

the rolled-over USD CD was kept by the bank.

On June 21, 2000, Uymatiao's USD CD, with due date on June 27, 2000, was pre-terminated and

the proceeds thereof, amounting to US$34,358.03, was credited to an account opened in the

name of Uymatiao by means of an Instruction Sheet. However, it was not Uymatiao who pre-

terminated the last USD CD, as the prior USD CD was still in his possession. When Uymatiao

discovered the fraud, he immediately wrote respondent a letter complaining that he was not the

one who pre-terminated the account. Upon investigation, it turned out that Uymatiao's signature

was forged and intercalated in the records of BPI Ayala Avenue Branch. Moreover, it was

petitioner who approved the pre-termination of Uymatiao's USD CD and the withdrawal of the

proceeds thereof.

Uymatiao also had a U.S. Dollar Savings Account. For a time, his savings account was dormant.

However, on June 23, 2003, the account was reactivated, without Uymatiao's consent, through an

alleged Instruction Sheet bearing the forged signature of Uymatiao and a spurious passbook. On

the same date that it was reactivated, the amount of US$15,000.00 was withdrawn. On July 7,

2002, the amount of US$3,500.00 was again withdrawn from Uymatiao's account.

Uymatiao complained about the illegal withdrawal. An investigation revealed that the Letter of

Instruction, which was used to reactivate the account, was a forgery. Moreover, it was found that

petitioner was the one who approved the reactivation and withdrawal of money from Uymatiao's

account.

The second defrauded depositor, Maybel Caluag, deposited US$5,848.30 under a USD CD,

which was supposed to mature on February 11, 2000. The automatic roll-over of Caluag's USD

CD would have continued, but on July 24, 2000, the same was pre-terminated and the proceeds

thereof, amounting to US$6,006.58, was credited to an account opened in the name of Caluag by

means of an Instruction Sheet. The amount was subsequently withdrawn.

On July 28, 2000, Caluag discovered the fraud and complained that she did not pre-terminate her

USD CD. She said that she was in Japan on July 24, 2000 and she did not authorize anyone to

pre-terminate her account. She presented the original certificate of deposit issued to her to prove

that she did not have her account pre-terminated. Upon investigation, it was found that petitioner

was the one who approved the pre-termination of Caluag's account.

The third defrauded depositor, Evelyn Avila, had a balance of US$20,575.12 in her U.S. Dollar

Savings Account as of March 31, 2000. On July 27, 2000, it was made to appear that Avila

withdrew the balance from her account. On February 28, 2001, Avila discovered the illegal

withdrawal and complained to respondent about it. She said that she was in Australia on July 27,

2000 when the withdrawal from her account was made. An investigation later showed that it was

petitioner who approved the withdrawal from Avila's account.

On April 19, 2002, BPI Vice-President Edwin S. Ragos issued a memorandum3 directing

petitioner to explain within 24 hours the aforementioned unauthorized pre-

terminations/withdrawals of US dollar deposits at the BPI Ayala Avenue Branch.

In petitioner's reply,4 she asserted that she followed the bank procedure/policy on pre-termination

of accounts, opening of transitory accounts and reactivation of dormant accounts. She explained

that upon verifying the authenticity of the signatures of the depositors involved, she approved the

withdrawals from certain accounts of these clients. With regard to the pre-termination of

Uymatiao's USD CD, petitioner claimed that the Trader presented to her what she believed was

an original and genuine client copy of the certificate of deposit, the surrender of which caused

the issuance of a new USD CD.

Moreover, petitioner stated that at the time the alleged fraudulent transactions took place, she

was not yet an Assistant Manager, but only a Cash II Officer of the branch, still operating under

the FEBTC set-up. As such, she was in charge of overseeing and supervising all the transactions

in the Trading Section, among other departments. Hence, her responsibilities required her only to

bring out signature card files from the vault to the Trading Section and to ensure that these files

were returned to the vault at the close of banking hours.

On May 22, 2002, an administrative hearing was held to give petitioner an opportunity to explain

her side of the controversy.

On July 10, 2002, a notice of termination5 was issued informing petitioner of her dismissal

effective July 12, 2002 on grounds of gross negligence and breach of trust for the following acts:

(1) allowing the issuance of USD CDs under the bank's safekeeping to an impostor without valid

consideration; (2) allowing USD CD pre-terminations based on such irregularly released

certificates; and (3) allowing withdrawals by third parties from clients' accounts, which resulted

in prejudice to the bank.

Petitioner filed an appeal before BPI President Xavier Loinaz, but her appeal was denied.

The aforementioned incidents of fraud resulted in the dismissal of three officers, including

petitioner, one trader; the suspension of two officers and one trader, and the reprimand of one

teller.6

Thereafter, petitioner filed a Complaint for illegal dismissal against respondent and its officers

with the Arbitral Office of the NLRC.

In her Position Paper, petitioner alleged that her employment record as an officer and staff had

always been beyond par and was not tainted with any fraud or anomaly. When the incidents took

place, she was barely two months as Service Officer of the Ayala Avenue Branch's Trading

Section, and she was hardly familiar with any bank client, not to mention the enormous volume

of transactions handled by the said BPI branch. Being new in her position, she had yet to adjust

to the system in place. Nonetheless, she followed the policies and procedural control prior to

affixing her initials as approving authority; hence, petitioner asserted that her dismissal was

grossly disproportionate as a penalty.

In respondent's Position Paper, respondent asserted that petitioner's dismissal is legal; hence,

petitioner has no cause of action against it. Respondent stated that there is no question that the

fraudulent incidents, which affected its three depositors, namely, Uymatiao, Caluag and Avila,

happened in its Ayala Avenue Branch, and that the fraudulent transactions were approved by

petitioner as borne out by her signature on the documents allowing the pre-termination of

certificates of dollar deposits and allowing the withdrawal of dollar deposits from the respective

savings account of the affected depositors. Respondent stated that in giving the aforementioned

unauthorized pre-termination and withdrawal transactions her seal of approval, petitioner

neglected to perform one, if not the most, basic banking requirement integral to these

transactions, which is to see to it that the persons who effected the pre-termination and

cancellation of the USD CDs and who made the withdrawals from the U.S. dollar savings

deposits and received the proceeds thereof were really the depositors themselves, namely,

Uymatiao, Caluag and Avila. According to respondent, as it happened, respondent never exerted

any effort to require such persons to produce satisfactory identification, which was the reason the

aforementioned incidents of fraud were successfully carried out. If it had been her own money

that was involved, petitioner would have asked for more than what was expected of her in this

case, which was simply to ask for satisfactory identification from the respective person effecting

the pre-termination of the certificate of deposit and making the withdrawal. Hence, respondent

submitted that petitioner's dismissal on grounds of gross negligence and breach of trust, resulting

in the substantial monetary loss to respondent in the sum of US$81,492.39, which it reimbursed

to the affected depositors, is legal and valid.

In a Decision7 dated April 1, 2004, the Labor Arbiter held that the dismissal of petitioner was

illegal. The dispositive portion of the decision reads:

WHEREFORE, decision is hereby rendered declaring the dismissal of complainant Rowena Cruz

illegal such that respondent Bank of the Philippine Islands is hereby ordered to reinstate her to

her former or substantially equivalent position without loss of seniority rights and other

privileges and to pay her backwages and attorney's fees in the amount of SIX HUNDRED

THIRTY-NINE THOUSAND ONE HUNDRED EIGHTY-SIX PESOS AND 16/100

(P639,186.16).8

The Labor Arbiter held that petitioner cannot be considered a managerial employee, and that her

dismissal on grounds of gross negligence and breach of trust was unjustified.

On appeal, the NLRC reversed and set aside the Decision of the Labor Arbiter, and it entered a

new decision dismissing petitioner's Complaint for lack of merit.9

The NLRC stated that the evidence showed that the pre-termination of the accounts of the

depositors involved and the withdrawal of money from such accounts were with the approval of

petitioner. A stamp of approval given by a bank officer, especially in sensitive transactions like

pre- termination of accounts and withdrawal of money, means that the corresponding documents

are in order and the validity of such documents had been verified. Otherwise, there would be no

integrity in the approval of these transactions, considering that approval is the last act that would

give effect to the transactions involved. According to the NLRC, the banking industry is such a

sensitive one that the trust given by a bank's depositors must be protected at all times even by the

lowest-ranking employee. As petitioner's signature appeared in the documents showing her

approval of the pre-termination of the accounts of the depositors involved and the withdrawal of

money from their accounts, the NLRC reversed the decision of the Labor Arbiter and ruled that

petitioner's dismissal was for a valid cause.

Petitioner filed a petition for certiorari with the Court of Appeals, alleging that the NLRC acted

with grave abuse of discretion amounting to lack or excess of jurisdiction for the following: (1)

Failing to consider with great respect and finality the factual findings of the Labor Arbiter that

petitioner followed all the policies and procedures in place and, hence, is not remiss in her duties;

(2) concluding that mere approval of the transactions by petitioner in itself was a valid cause for

dismissal; (3) concluding that petitioner could not be exculpated from liability by claiming that it

is not incumbent upon her to call the depositors to personally appear before her and confirm their

signatures when such is not required of petitioner; (4) not holding that the petitioner could not

have committed gross negligence at the time the questioned transactions occurred, as she was not

an Assistant Manager and her duties were that of a Cash II Officer; (5) not holding that there was

insufficient factual and legal basis to terminate petitioner's employment; (6) ignoring the

fundamental rule that all doubts must be resolved in favor of labor; (7) not affirming the award

of backwages; and (8) not affirming the award of attorney's fees.10

On April 27, 2006, the Court of Appeals rendered a Decision,11

the dispositive portion of which

reads:

WHEREFORE, premises considered, the Petition is hereby DENIED and is accordingly

DISMISSED. No costs.12

The Court of Appeals disagreed with petitioner's submission, in gist, that her termination was

grossly disproportionate to the omission she committed. It stressed that petitioner was holding a

highly confidential position, as Assistant Branch Manager, in the banking industry, which

required extraordinary diligence among its employees. If petitioner was still unfamiliar with the

terrain of her position, she should not have accepted it.

The Court of Appeals stated that petitioner is a managerial employee whose continuous

employment is dependent on the trust and confidence reposed on her by respondent. After the

incident wherein respondent lost thousands of U.S. dollars, it could not be expected that the trust

and confidence petitioner was previously enjoying could still be extended by respondent. Hence,

the Court of Appeals held that petitioner's dismissal based on the ground of loss of trust and

confidence was a valid exercise of management prerogative.

Petitioner's motion for reconsideration was denied by the Court of Appeals in a Resolution13

dated July 13, 2006.

Petitioner filed this petition, and raised in her Memorandum the following issues:

I

WHETHER OR NOT THE FINDINGS OF FACT OF LABOR ARBITER LEDA ARE TO BE

GIVEN MORE WEIGHT AND RESPECT GIVEN THE DOCTRINE LAID DOWN THAT

THOSE FINDINGS OF FACT OF THE LABOR ARBITER, IN THE ABSENCE OF ANY

FINDING OF ABUSE OF DISCRETION, ARE NOT TO BE DISTURBED ON APPEAL.

II

WHETHER OR NOT THE EVIDENCE SUBMITTED BY RESPONDENT BANK IS

SUBSTANTIAL IN CHARACTER TO WARRANT THE DISMISSAL OF THE

PETITIONER, GIVEN THE ELEMENTARY RULES IN LABOR THAT DOUBTS ARE TO

BE RESOLVED IN FAVOR OF LABOR AND THE BURDEN OF PROOF THAT

DISMISSAL IS FOR JUST CAUSE RESTS UPON THE EMPLOYER AND NOT ON THE

WEAKNESS OF THE EVIDENCE FOR THE EMPLOYEE.

III

WHETHER OR NOT THE PENALTY OF DISMISSAL IS DISPROPORTIONATE TO OR IS

IT COMMENSURATE TO THE ACTS ATTRIBUTED TO THE [PETITIONER] IN THE

PERFORMANCE OF HER DUTIES.14

Petitioner contends that the factual finding of the Labor Arbiter is to be respected and given

credence on appeal in the absence of abuse of discretion.

As the decision of the Labor Arbiter has been appealed to the NLRC, the NLRC has the power to

review the factual finding and resolution of the Labor Arbiter. It is a settled rule that only errors

of law are generally reviewed by this Court in petitions for review on certiorari of the decisions

of the Court of Appeals.15

However, an exception to this rule is when the findings of the NLRC,

as affirmed by the Court of Appeals, contradict those of the Labor Arbiter.16

In this case, the

Labor Arbiter found that petitioner was illegally dismissed, while the NLRC reversed the finding

of the Labor Arbiter, which reversal was affirmed by the Court of Appeals. In view of the

discordance between the findings of the Labor Arbiter, on one hand, and the NLRC and the

Court of Appeals, on the other, there is a need for the Court, in the exercise of its equity

jurisdiction, to review the factual findings and the conclusions based on the said findings.17

After a review of the records of the case, the Court agrees with the findings of the Court of

Appeals and the NLRC that petitioner's dismissal was for a valid cause.

Respondent dismissed petitioner from her employment on grounds of gross negligence and

breach of trust reposed on her by respondent under Article 282 (b) and (c) of the Labor Code.

Gross negligence connotes want or absence of or failure to exercise slight care or diligence, or

the entire absence of care.18

It evinces a thoughtless disregard of consequences without exerting

any effort to avoid them.19

On the other hand, the basic premise for dismissal on the ground of

loss of confidence is that the employees concerned hold a position of trust and confidence.20

It is

the breach of this trust that results in the employer's loss of confidence in the employee.21

In this case, respondent avers that petitioner held the position of Assistant Manager in its Ayala

Avenue Branch. However, petitioner contends that her position was only Cash II Officer.

The test of ―supervisory‖ or ―managerial status‖ depends on whether a person possesses

authority to act in the interest of his employer and whether such authority is not merely routinary

or clerical in nature, but requires the use of independent judgment.22

In respondent's Position Paper23

before the NLRC and its Memorandum,24

respondent stated that

the responsibility of petitioner, among others, were as follows: (1) to maintain the integrity of the

signature card files of certificates of deposits and/or detect spurious signature cards in the same

files; (2) to ensure that releases of original CDS are done only against valid considerations and

made only to the legitimate depositors or their duly authorized representatives; (3) to approve

payments or withdrawals of deposits by clients to ensure that such withdrawals are valid

transactions of the bank; and (4) to supervise the performance of certain rank-and-file employees

of the branch.

Petitioner holds a managerial status since she is tasked to act in the interest of her employer as

she exercises independent judgment when she approves pre-termination of USD CDs or the

withdrawal of deposits. In fact, petitioner admitted the exercise of independent judgment when

she explained that as regards the pre-termination of the USD CDs of Uymatiao and Caluag, the

transactions were approved on the basis of her independent judgment that the signatures in all the

documents presented to her by the traders matched, as shown in her reply25

dated April 23, 2002

to respondent's memorandum asking her to explain the unauthorized

preterminations/withdrawals of U.S. dollar deposits in the BPI Ayala Avenue Branch.

Petitioner contends that respondent failed to submit substantial evidence to warrant a conclusion

that she committed acts amounting to willful breach of trust and gross negligence. Petitioner

submits that although she approved the fraudulent pre-termination of the accounts involved as

well as the withdrawal of money from the accounts, before she affixed her signature on the

questioned transactions, she followed office procedures by requiring the presentation of the

original certificate on file with the branch bearing the client's signatures as proof that he holds

the original in his possession, withdrawal slips, which when matched by her (petitioner) with the

signature card on file with the branch, were found to be all the same.

Hence, all required signatures matched before she (petitioner) gave her approval. According to

petitioner, per respondent's policy, the signature card on file is the most exacting requirement in

branch operations; hence, even when an identification card is required from the bank's client, the

basis of approval would still be the signature card on file with the branch. Moreover, petitioner

reasons that she was barely two months with the BPI Ayala Avenue Branch when the questioned

transactions occurred. She asserts that she had no participation in the insertion of spurious

signature cards which was done prior to her designation as Cash II Officer of the Ayala Avenue

Branch.

Respondent counters that investigation disclosed that in approving the respective pre-termination

transactions of Uymatiao and Caluag, no sincere effort was made by petitioner to properly

identify the person or persons presenting the certificates of deposit for pre-termination. In other

words, petitioner did not see to it that it was really Uymatiao or Caluag who was pre-terminating

his/her USD CD. Neither did petitioner require that the original certificates of time deposit,

which were supposed to be in the possession of Uymatiao and Caluag, be surrendered in

exchange for the rolled-over certificates which were pre-terminated.

The Court notes that petitioner admitted that she did not call the depositors to appear before her,

although she performed other procedures to determine whether the subject transactions were with

the depositors' authorization.26

Petitioner did not determine if it was really Uymatiao and Caluag

who were pre-terminating their respective USD CD, as she based the identification of the said

clients from their matching signatures on the original certificate on file with the branch,

withdrawal slips and signature cards. Moreover, as stated by respondent, petitioner did not

require that the original certificates of time deposit in the possession of Uymatiao and Caluag be

surrendered to the bank when the rolled-over certificates were pre-terminated. If petitioner took

the precaution to identify that it was really Uymatiao and Caluag who were pre-terminating their

respective USD CD, and required that Uymatiao and Calaug surrender their respective original

certificates of time deposit in their possession upon pre-termination of the rolled-over

certificates, the fraud could have been averted.

In that regard, petitioner was remiss in the performance of her duty to approve the pre-

termination of certificates of deposits by legitimate depositors or their duly-authorized

representatives, resulting in prejudice to the bank, which reimbursed the monetary loss suffered

by the affected clients. Hence, respondent was justified in dismissing petitioner on the ground of

breach of trust. As long as there is some basis for such loss of confidence, such as when the

employer has reasonable ground to believe that the employee concerned is responsible for the

purported misconduct, and the nature of his participation therein renders him unworthy of the

trust and confidence demanded of his position, a managerial employee may be dismissed.27

Bristol Myers Squibb (Phils), Inc. v. Baban28

reiterated:

X X X [A]s a general rule, employers are allowed a wider latitude of discretion in terminating

the services of employees who perform functions by which their nature require the employer's

full trust and confidence. Mere existence of basis for believing that the employee has breached

the trust and confidence of the employer is sufficient and does not require proof beyond

reasonable doubt. Thus. when an employee has been guilty of breach of trust or his employer has

ample reason to distrust him. a labor tribunal cannot deny the employer the authority to dismiss

him.29

In fine, the dismissal of petitioner on the ground of breach of trust or loss of trust and confidence

is upheld.

WHEREFORE, the petition is DENIED. The Court of Appeals' Decision dated April 2 2006 in

CA-G.R. SP No. 92202, and its Resolution dated July 13, 2006 are hereby AFFIRMED.

No costs.

SO ORDERED.

G.R. No. 195466, July 02, 2014

ARIEL L. DAVID, DOING BUSINESS UNDER THE NAME AND STYLE “YIELS HOG

DEALER,” PETITIONER, VS. JOHN G. MACASIO, Respondent.

D E C I S I O N

BRION, J.:

We resolve in this petition for review on certiorari1 the challenge to the November 22, 2010

decision2 and the January 31, 2011 resolution

3 of the Court of Appeals (CA) in CA-G.R. SP No.

116003. The CA decision annulled and set aside the May 26, 2010 decision4 of the National

Labor Relations Commission (NLRC)5 which, in turn, affirmed the April 30, 2009 decision

6 of

the Labor Arbiter (LA). The LA‘s decision dismissed respondent John G. Macasio‘s monetary

claims.

The Factual Antecedents

In January 2009, Macasio filed before the LA a complaint7 against petitioner Ariel L. David,

doing business under the name and style ―Yiels Hog Dealer,‖ for non-payment of overtime pay,

holiday pay and 13th

month pay. He also claimed payment for moral and exemplary

damages and attorney’s fees. Macasio also claimed payment for service incentive leave (SIL).8

Macasio alleged9 before the LA that he had been working as a butcher for David since January 6,

1995. Macasio claimed that David exercised effective control and supervision over his work,

pointing out that David: (1) set the work day, reporting time and hogs to be chopped, as well as

the manner by which he was to perform his work; (2) daily paid his salary of P700.00, which was

increased from P600.00 in 2007, P500.00 in 2006 and P400.00 in 2005; and (3) approved and

disapproved his leaves. Macasio added that David owned the hogs delivered for chopping, as

well as the work tools and implements; the latter also rented the workplace. Macasio further

claimed that David employs about twenty-five (25) butchers and delivery drivers.

In his defense,10

David claimed that he started his hog dealer business in 2005 and that he only

has ten employees. He alleged that he hired Macasio as a butcher or chopper on ―pakyaw‖ or task

basis who is, therefore, not entitled to overtime pay, holiday pay and 13th

month pay pursuant to

the provisions of the Implementing Rules and Regulations (IRR) of the Labor Code. David

pointed out that Macasio: (1) usually starts his work at 10:00 p.m. and ends at 2:00 a.m. of the

following day or earlier, depending on the volume of the delivered hogs; (2) received the fixed

amount of P700.00 per engagement, regardless of the actual number of hours that he spent

chopping the delivered hogs; and (3) was not engaged to report for work and, accordingly, did

not receive any fee when no hogs were delivered.

Macasio disputed David‘s allegations.11

He argued that, first, David did not start his business

only in 2005. He pointed to the Certificate of Employment12

that David issued in his favor

which placed the date of his employment, albeit erroneously, in January 2000. Second, he

reported for work every day which the payroll or time record could have easily proved had David

submitted them in evidence.

Refuting Macasio‘s submissions,13

David claims that Macasio was not his employee as he hired

the latter on ―pakyaw” or task basis. He also claimed that he issued the Certificate of

Employment, upon Macasio‘s request, only for overseas employment purposes. He pointed to

the ―Pinagsamang Sinumpaang Salaysay,‖14

executed by Presbitero Solano and Christopher

(Antonio Macasio‘s co-butchers), to corroborate his claims.

In the April 30, 2009 decision,15

the LA dismissed Macasio‘s complaint for lack of merit. The

LA gave credence to David‘s claim that he engaged Macasio on ―pakyaw‖ or task basis. The LA

noted the following facts to support this finding: (1) Macasio received the fixed amount of

P700.00 for every work done, regardless of the number of hours that he spent in completing the

task and of the volume or number of hogs that he had to chop per engagement; (2) Macasio

usually worked for only four hours, beginning from 10:00 p.m. up to 2:00 a.m. of the following

day; and (3) the P700.00 fixed wage far exceeds the then prevailing daily minimum wage of

P382.00. The LA added that the nature of David‘s business as hog dealer supports this

―pakyaw” or task basis arrangement.

The LA concluded that as Macasio was engaged on ―pakyaw‖ or task basis, he is not entitled to

overtime, holiday, SIL and 13th

month pay.

The NLRC’s Ruling

In its May 26, 2010 decision,16

the NLRC affirmed the LA ruling.17

The NLRC observed that

David did not require Macasio to observe an eight-hour work schedule to earn the fixed P700.00

wage; and that Macasio had been performing a non-time work, pointing out that Macasio was

paid a fixed amount for the completion of the assigned task, irrespective of the time consumed in

its performance. Since Macasio was paid by result and not in terms of the time that he spent in

the workplace, Macasio is not covered by the Labor Standards laws on overtime, SIL and

holiday pay, and 13th

month pay under the Rules and Regulations Implementing the 13th month

pay law.18

Macasio moved for reconsideration19

but the NLRC denied his motion in its August 11, 2010

resolution,20

prompting Macasio to elevate his case to the CA via a petition for certiorari.21

The CA’s Ruling

In its November 22, 2010 decision,22

the CA partly granted Macasio‘s certiorari petition and

reversed the NLRC‘s ruling for having been rendered with grave abuse of discretion.

While the CA agreed with the LA and the NLRC that Macasio was a task basis employee, it

nevertheless found Macasio entitled to his monetary claims following the doctrine laid down in

Serrano v. Severino Santos Transit.23

The CA explained that as a task basis employee, Macasio

is excluded from the coverage of holiday, SIL and 13th

month pay only if he is likewise a ―field

personnel.‖ As defined by the Labor Code, a ―field personnel‖ is one who performs the work

away from the office or place of work and whose regular work hours cannot be determined with

reasonable certainty. In Macasio‘s case, the elements that characterize a ―field personnel‖ are

evidently lacking as he had been working as a butcher at David‘s ―Yiels Hog Dealer‖ business in

Sta. Mesa, Manila under David‘s supervision and control, and for a fixed working schedule that

starts at 10:00 p.m.

Accordingly, the CA awarded Macasio‘s claim for holiday, SIL and 13th

month pay for three

years, with 10% attorney‘s fees on the total monetary award. The CA, however, denied

Macasio‘s claim for moral and exemplary damages for lack of basis.

David filed the present petition after the CA denied his motion for reconsideration24

in the CA‘s

January 31, 2011 resolution.25

The Petition

In this petition,26

David maintains that Macasio‘s engagement was on a ―pakyaw‖ or task

basis. Hence, the latter is excluded from the coverage of holiday, SIL and 13th

month pay.

David reiterates his submissions before the lower tribunals27

and adds that he never had any

control over the manner by which Macasio performed his work and he simply looked on to the

―end-result.‖ He also contends that he never compelled Macasio to report for work and that

under their arrangement, Macasio was at liberty to choose whether to report for work or not as

other butchers could carry out his tasks. He points out that Solano and Antonio had, in fact,

attested to their (David and Macasio‘s) established ―pakyawan‖ arrangement that rendered a

written contract unnecessary. In as much as Macasio is a task basis employee – who is paid the

fixed amount of P700.00 per engagement regardless of the time consumed in the performance –

David argues that Macasio is not entitled to the benefits he claims. Also, he posits that because

he engaged Macasio on ―pakyaw‖ or task basis then no employer-employee relationship exists

between them.

Finally, David argues that factual findings of the LA, when affirmed by the NLRC, attain finality

especially when, as in this case, they are supported by substantial evidence. Hence, David posits

that the CA erred in reversing the labor tribunals‘ findings and granting the prayed monetary

claims.

The Case for the Respondent

Macasio counters that he was not a task basis employee or a ―field personnel‖ as David would

have this Court believe.28

He reiterates his arguments before the lower tribunals and adds that,

contrary to David‘s position, the P700.00 fee that he was paid for each day that he reported for

work does not indicate a ―pakyaw‖ or task basis employment as this amount was paid daily,

regardless of the number or pieces of hogs that he had to chop. Rather, it indicates a daily-wage

method of payment and affirms his regular employment status. He points out that David did not

allege or present any evidence as regards the quota or number of hogs that he had to chop as

basis for the ―pakyaw‖ or task basis payment; neither did David present the time record or

payroll to prove that he worked for less than eight hours each day. Moreover, David did not

present any contract to prove that his employment was on task basis. As David failed to prove

the alleged task basis or ―pakyawan‖ agreement, Macasio concludes that he was David‘s

employee.

Procedurally, Macasio points out that David‘s submissions in the present petition raise purely

factual issues that are not proper for a petition for review on certiorari. These issues – whether

he (Macasio) was paid by result or on ―pakyaw‖ basis; whether he was a ―field personnel‖;

whether an employer-employee relationship existed between him and David; and whether David

exercised control and supervision over his work – are all factual in nature and are, therefore,

proscribed in a Rule 45 petition. He argues that the CA‘s factual findings bind this Court, absent

a showing that such findings are not supported by the evidence or the CA‘s judgment was based

on a misapprehension of facts. He adds that the issue of whether an employer-employee

relationship existed between him and David had already been settled by the LA29

and the

NLRC30

(as well as by the CA per Macasio‘s manifestation before this Court dated November

15, 2012),31

in his favor, in the separate illegal case that he filed against David.

The Issue

The issue revolves around the proper application and interpretation of the labor law provisions

on holiday, SIL and 13th

month pay to a worker engaged on ―pakyaw‖ or task basis. In the

context of the Rule 65 petition before the CA, the issue is whether the CA correctly found the

NLRC in grave abuse of discretion in ruling that Macasio is entitled to these labor standards

benefits.

The Court’s Ruling

We partially grant the petition.

Preliminary considerations: the

Montoya ruling and the factual-

issue-bar rule

In this Rule 45 petition for review on certiorari of the CA‘s decision rendered under a Rule 65

proceeding, this Court‘s power of review is limited to resolving matters pertaining to any

perceived legal errors that the CA may have committed in issuing the assailed decision. This is in

contrast with the review for jurisdictional errors, which we undertake in an original certiorari

action. In reviewing the legal correctness of the CA decision, we examine the CA decision based

on how it determined the presence or absence of grave abuse of discretion in the NLRC decision

before it and not on the basis of whether the NLRC decision on the merits of the case was

correct.32

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.33

Moreover, the Court‘s power in a Rule 45 petition limits us to a review of questions of law raised

against the assailed CA decision.34

In this petition, David essentially asks the question – whether Macasio is entitled to holiday, SIL

and 13th

month pay. This one is a question of law. The determination of this question of law

however is intertwined with the largely factual issue of whether Macasio falls within the rule on

entitlement to these claims or within the exception. In either case, the resolution of this factual

issue presupposes another factual matter, that is, the presence of an employer-employee

relationship between David and Macasio.

In insisting before this Court that Macasio was not his employee, David argues that he engaged

the latter on ―pakyaw‖ or task basis. Very noticeably, David confuses engagement on ―pakyaw‖

or task basis with the lack of employment relationship. Impliedly, David asserts that their

―pakyawan‖ or task basis arrangement negates the existence of employment relationship.

At the outset, we reject this assertion of the petitioner. Engagement on ―pakyaw‖ or task basis

does not characterize the relationship that may exist between the parties, i.e., whether one of

employment or independent contractorship. Article 97(6) of the Labor Code defines wages as

―xxx 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[.]‖35

In relation to Article 97(6), Article 10136

of the Labor Code

speaks of workers paid by results or those whose pay is calculated in terms of the quantity or

quality of their work output which includes ―pakyaw‖ work and other non-time work.

More importantly, by implicitly arguing that his engagement of Macasio on ―pakyaw‖ or task

basis negates employer-employee relationship, David would want the Court to engage on a

factual appellate review of the entire case to determine the presence or existence of that

relationship. This approach however is not authorized under a Rule 45 petition for review of the

CA decision rendered under a Rule 65 proceeding.

First, the LA and the NLRC denied Macasio‘s claim not because of the absence of an employer-

employee but because of its finding that since Macasio is paid on pakyaw or task basis, then he is

not entitled to SIL, holiday and 13th

month pay. Second, we consider it crucial, that in the

separate illegal dismissal case Macasio filed with the LA, the LA, the NLRC and the CA

uniformly found the existence of an employer-employee relationship.37

In other words, aside from being factual in nature, the existence of an employer-employee

relationship is in fact a non-issue in this case. To reiterate, in deciding a Rule 45 petition for

review of a labor decision rendered by the CA under 65, the narrow scope of inquiry is whether

the CA correctly determined the presence or absence of grave abuse of discretion on the part of

the NLRC. In concrete question form, ―did the NLRC gravely abuse its discretion in denying

Macasio‘s claims simply because he is paid on a non-time basis?‖

At any rate, even if we indulge the petitioner, we find his claim that no employer-employee

relationship exists baseless. Employing the control test,38

we find that such a relationship exist in

the present case.

Even a factual review shows that

Macasio is David’s employee

To determine the existence of an employer-employee relationship, four elements generally need

to be considered, namely: (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. These

elements or indicators comprise the so-called ―four-fold‖ test of employment relationship.

Macasio‘s relationship with David satisfies this test.

First, David engaged the services of Macasio, thus satisfying the element of ―selection and

engagement of the employee.‖ David categorically confirmed this fact when, in his

―Sinumpaang Salaysay,‖ he stated that ―nag apply po siya sa akin at kinuha ko siya na

chopper[.]‖39

Also, Solano and Antonio stated in their ―Pinagsamang Sinumpaang Salaysay‖40

that ―[k]ami po ay nagtratrabaho sa Yiels xxx na pag-aari ni Ariel David bilang butcher‖ and

―kilala namin si xxx Macasio na isa ring butcher xxx ni xxx David at kasama namin siya sa

aming trabaho.‖

Second, David paid Macasio‘s wages. Both David and Macasio categorically stated in their

respective pleadings before the lower tribunals and even before this Court that the former had

been paying the latter P700.00 each day after the latter had finished the day‘s task. Solano and

Antonio also confirmed this fact of wage payment in their ―Pinagsamang Sinumpaang

Salaysay.‖41

This satisfies the element of ―payment of wages.‖

Third, David had been setting the day and time when Macasio should report for work. This

power to determine the work schedule obviously implies power of control. By having the power

to control Macasio‘s work schedule, David could regulate Macasio‘s work and could even refuse

to give him any assignment, thereby effectively dismissing him.

And fourth, David had the right and power to control and supervise Macasio‘s work as to the

means and methods of performing it. In addition to setting the day and time when Macasio

should report for work, the established facts show that David rents the place where Macasio had

been performing his tasks. Moreover, Macasio would leave the workplace only after he had

finished chopping all of the hog meats given to him for the day‘s task. Also, David would still

engage Macasio‘s services and have him report for work even during the days when only few

hogs were delivered for butchering.

Under this overall setup, all those working for David, including Macasio, could naturally be

expected to observe certain rules and requirements and David would necessarily exercise some

degree of control as the chopping of the hog meats would be subject to his specifications. Also,

since Macasio performed his tasks at David‘s workplace, David could easily exercise control and

supervision over the former. Accordingly, whether or not David actually exercised this right or

power to control is beside the point as the law simply requires the existence of this power to

control 4243

or, as in this case, the existence of the right and opportunity to control and supervise

Macasio.44

In sum, the totality of the surrounding circumstances of the present case sufficiently points to an

employer-employee relationship existing between David and Macasio.

Macasio is engaged on “pakyaw” or task basis

At this point, we note that all three tribunals – the LA, the NLRC and the CA – found that

Macasio was engaged or paid on ―pakyaw‖ or task basis. This factual finding binds the Court

under the rule that factual findings of labor tribunals when supported by the established facts and

in accord with the laws, especially when affirmed by the CA, is binding on this Court.

A distinguishing characteristic of ―pakyaw‖ or task basis engagement, as opposed to straight-

hour wage payment, is the non-consideration of the time spent in working. In a task-basis work,

the emphasis is on the task itself, in the sense that payment is reckoned in terms of completion of

the work, not in terms of the number of time spent in the completion of work.45

Once the work or

task is completed, the worker receives a fixed amount as wage, without regard to the standard

measurements of time generally used in pay computation.

In Macasio‘s case, the established facts show that he would usually start his work at 10:00

p.m. Thereafter, regardless of the total hours that he spent at the workplace or of the total

number of the hogs assigned to him for chopping, Macasio would receive the fixed amount of

P700.00 once he had completed his task. Clearly, these circumstances show a ―pakyaw‖ or task

basis engagement that all three tribunals uniformly found.

In sum, the existence of employment relationship between the parties is determined by applying

the ―four-fold‖ test; engagement on ―pakyaw‖ or task basis does not determine the parties‘

relationship as it is simply a method of pay computation. Accordingly, Macasio is David‘s

employee, albeit engaged on ―pakyaw‖ or task basis.

As an employee of David paid on pakyaw or task basis, we now go to the core issue of whether

Macasio is entitled to holiday, 13th month, and SIL pay.

On the issue of Macasio’s

entitlement to holiday, SIL

and 13th month pay

The LA dismissed Macasio‘s claims pursuant to Article 94 of the Labor Code in relation to

Section 1, Rule IV of the IRR of the Labor Code, and Article 95 of the Labor Code, as well as

Presidential Decree (PD) No. 851. The NLRC, on the other hand, relied on Article 82 of the

Labor Code and the Rules and Regulations Implementing PD No. 851. Uniformly, these

provisions exempt workers paid on ―pakyaw‖ or task basis from the coverage of holiday, SIL and

13th month pay.

In reversing the labor tribunals‘ rulings, the CA similarly relied on these provisions, as well as on

Section 1, Rule V of the IRR of the Labor Code and the Court‘s ruling in Serrano v. Severino

Santos Transit.46

These labor law provisions, when read together with the Serrano ruling,

exempt those engaged on ―pakyaw‖ or task basis only if they qualify as ―field personnel.‖

In other words, what we have before us is largely a question of law regarding the correct

interpretation of these labor code provisions and the implementing rules; although, to conclude

that the worker is exempted or covered depends on the facts and in this sense, is a question of

fact: first, whether Macasio is a ―field personnel‖; and second, whether those engaged on

―pakyaw‖ or task basis, but who are not ―field personnel,‖ are exempted from the coverage of

holiday, SIL and 13th month pay.

To put our discussion within the perspective of a Rule 45 petition for review of a CA decision

rendered under Rule 65 and framed in question form, the legal question is whether the CA

correctly ruled that it was grave abuse of discretion on the part of the NLRC to deny Macasio‘s

monetary claims simply because he is paid on a non-time basis without determining whether he

is a field personnel or not.

To resolve these issues, we need to re-visit the provisions involved.

Provisions governing SIL and holiday pay

Article 82 of the Labor Code provides the exclusions from the coverage of Title I, Book III of the

Labor Code - provisions governing working conditions and rest periods.

Art. 82. Coverage. — The provisions of [Title I] 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.

xxxx

―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. [emphases and

underscores ours]

Among the Title I provisions are the provisions on holiday pay (under Article 94 of the Labor

Code) and SIL pay (under Article 95 of the Labor Code). Under Article 82, ―field personnel‖ on

one hand and ―workers who are paid by results‖ on the other hand, are not covered by the Title I

provisions. The wordings of Article 82 of the Labor Code additionally categorize workers ―paid

by results‖ and ―field personnel‖ as separate and distinct types of employees who are exempted

from the Title I provisions of the Labor Code.

The pertinent portion of Article 94 of the Labor Code and its corresponding provision in the

IRR47

reads:chanroblesvirtuallawlibrary

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 (10)

workers[.] [emphasis ours]

xxxx

SECTION 1. Coverage. – This Rule shall apply to all employees except:

xxxx

(e) 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. [emphases ours]

On the other hand, Article 95 of the Labor Code and its corresponding provision in the IRR48

pertinently provides:chanroblesvirtual lawlibrary

Art. 95. Right to service incentive. (a) Every employee who has rendered at least one year of

service shall be entitled to a yearly service incentive leave of five days with pay.

(b) This provision shall not apply to those who are already enjoying the benefit herein provided,

those enjoying vacation leave with pay of at least five days and those employed in

establishments regularly employing less than ten employees or in establishments exempted from

granting this benefit by the Secretary of Labor and Employment after considering the viability or

financial condition of such establishment. [emphases ours]

xxxx

Section 1. Coverage. – This rule shall apply to all employees except:

xxxx

(e) Field personnel and other employees whose performance is unsupervised by the

employer including those who are engaged on task or contract basis, purely commission

basis, or those who are paid a fixed amount for performing work irrespective of the time

consumed in the performance thereof. [emphasis ours]

Under these provisions, the general rule is that holiday and SIL pay provisions cover all

employees. To be excluded from their coverage, an employee must be one of those that these

provisions expressly exempt, strictly in accordance with the exemption.

Under the IRR, exemption from the coverage of holiday and SIL pay refer to ―field personnel

and other employees whose time and performance is unsupervised by the employer including

those who are engaged on task or contract basis[.]‖ Note that unlike Article 82 of the Labor

Code, the IRR on holiday and SIL pay do not exclude employees ―engaged on task basis‖ as a

separate and distinct category from employees classified as ―field personnel.‖ Rather, these

employees are altogether merged into one classification of exempted employees.

Because of this difference, it may be argued that the Labor Code may be interpreted to mean that

those who are engaged on task basis, per se, are excluded from the SIL and holiday payment

since this is what the Labor Code provisions, in contrast with the IRR, strongly suggest. The

arguable interpretation of this rule may be conceded to be within the discretion granted to the LA

and NLRC as the quasi-judicial bodies with expertise on labor matters.

However, as early as 1987 in the case of Cebu Institute of Technology v. Ople49

the phrase ―those

who are engaged on task or contract basis‖ in the rule has already been interpreted to mean as

follows:chanroblesvirtuallawlibrary

[the phrase] should however, be related with "field personnel" applying the rule on ejusdem

generis that general and unlimited terms are restrained and limited by the particular terms that

they follow xxx Clearly, petitioner's teaching personnel cannot be deemed field personnel which

refers "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. [Par. 3, Article 82, Labor Code of the

Philippines]. Petitioner's claim that private respondents are not entitled to the service incentive

leave benefit cannot therefore be sustained.

In short, the payment of an employee on task or pakyaw basis alone is insufficient to exclude one

from the coverage of SIL and holiday pay. They are exempted from the coverage of Title I

(including the holiday and SIL pay) only if they qualify as ―field personnel.‖ The IRR therefore

validly qualifies and limits the general exclusion of ―workers paid by results‖ found in Article 82

from the coverage of holiday and SIL pay. This is the only reasonable interpretation since the

determination of excluded workers who are paid by results from the coverage of Title I is

―determined by the Secretary of Labor in appropriate regulations.‖

The Cebu Institute Technology ruling was reiterated in 2005 in Auto Bus Transport Systems, Inc.,

v. Bautista:chanroblesvirtuallawlibrary

A careful perusal of said provisions of law will result in the conclusion that the grant of service

incentive leave has been delimited by the Implementing Rules and Regulations of the Labor

Code to apply only to those employees not explicitly excluded by Section 1 of Rule

V. According to the Implementing Rules, Service Incentive Leave shall not apply to employees

classified as ―field personnel.‖ The phrase ―other employees whose performance is unsupervised

by the employer‖ must not be understood as a separate classification of employees to which

service incentive leave shall not be granted. Rather, it serves as an amplification of the

interpretation of the definition of field personnel under the Labor Code as those ―whose actual

hours of work in the field cannot be determined with reasonable certainty.‖

The same is true with respect to the phrase ―those who are engaged on task or contract basis,

purely commission basis.‖ Said phrase should be related with ―field personnel,‖ applying the

rule on ejusdem generis that general and unlimited terms are restrained and limited by the

particular terms that they follow.

The Autobus ruling was in turn the basis of Serrano v. Santos Transit which the CA cited in

support of granting Macasio‘s petition.

In Serrano, the Court, applying the rule on ejusdem generis50

declared that “employees engaged

on task or contract basis xxx are not automatically exempted from the grant of service

incentive leave, unless, they fall under the classification of field personnel.”51

The Court

explained that the phrase ―including those who are engaged on task or contract basis, purely

commission basis‖ found in Section 1(d), Rule V of Book III of the IRR should not be

understood as a separate classification of employees to which SIL shall not be granted. Rather,

as with its preceding phrase - ―other employees whose performance is unsupervised by the

employer‖ - the phrase ―including those who are engaged on task or contract basis‖ serves to

amplify the interpretation of the Labor Code definition of ―field personnel‖ as those ―whose

actual hours of work in the field cannot be determined with reasonable certainty.‖

In contrast and in clear departure from settled case law, the LA and the NLRC still interpreted

the Labor Code provisions and the IRR as exempting an employee from the coverage of Title I

of the Labor Code based simply and solely on the mode of payment of an employee. The

NLRC’s utter disregard of this consistent jurisprudential ruling is a clear act of grave

abuse of discretion.52

In other words, by dismissing Macasio‘s complaint without considering

whether Macasio was a ―field personnel‖ or not, the NLRC proceeded based on a significantly

incomplete consideration of the case. This action clearly smacks of grave abuse of discretion.

Entitlement to holiday pay

Evidently, the Serrano ruling speaks only of SIL pay. However, if the LA and the NLRC had

only taken counsel from Serrano and earlier cases, they would have correctly reached a similar

conclusion regarding the payment of holiday pay since the rule exempting ―field personnel‖ from

the grant of holiday pay is identically worded with the rule exempting ―field personnel‖ from the

grant of SIL pay. To be clear, the phrase ―employees engaged on task or contract basis‖ found in

the IRR on both SIL pay and holiday pay should be read together with the exemption of ―field

personnel.‖

In short, in determining whether workers engaged on ―pakyaw‖ or task basis‖ is entitled to

holiday and SIL pay, the presence (or absence) of employer supervision as regards the worker‘s

time and performance is the key: if the worker is simply engaged on pakyaw or task basis, then

the general rule is that he is entitled to a holiday pay and SIL pay unless exempted from the

exceptions specifically provided under Article 94 (holiday pay) and Article 95 (SIL pay) of the

Labor Code. However, if the worker engaged on pakyaw or task basis also falls within the

meaning of ―field personnel‖ under the law, then he is not entitled to these monetary benefits.

Macasio does not fall under the

classification of “field personnel”

Based on the definition of field personnel under Article 82, we agree with the CA that Macasio

does not fall under the definition of ―field personnel.‖ The CA‘s finding in this regard is

supported by the established facts of this case: first, Macasio regularly performed his duties at

David‘s principal place of business; second, his actual hours of work could be determined with

reasonable certainty; and, third, David supervised his time and performance of duties. Since

Macasio cannot be considered a ―field personnel,‖ then he is not exempted from the grant of

holiday, SIL pay even as he was engaged on ―pakyaw‖ or task basis.

Not being a ―field personnel,‖ we find the CA to be legally correct when it reversed the NLRC‘s

ruling dismissing Macasio‘s complaint for holiday and SIL pay for having been rendered with

grave abuse of discretion.

Entitlement to 13th

month pay

With respect to the payment of 13th

month pay however, we find that the CA legally erred in

finding that the NLRC gravely abused its discretion in denying this benefit to Macasio.

The governing law on 13th

month pay is PD No. 851.53

As with holiday and SIL pay, 13th

month

pay benefits generally cover all employees; an employee must be one of those expressly

enumerated to be exempted. Section 3 of the Rules and Regulations Implementing P.D. No.

85154

enumerates the exemptions from the coverage of 13th

month pay benefits. Under Section

3(e), ―employers of those who are paid on xxx task basis, and those who are paid a fixed

amount for performing a specific work, irrespective of the time consumed in the

performance thereof‖55

are exempted.

Note that unlike the IRR of the Labor Code on holiday and SIL pay, Section 3(e) of the Rules

and Regulations Implementing PD No. 851 exempts employees ―paid on task basis‖ without any

reference to ―field personnel.‖ This could only mean that insofar as payment of the 13th month

pay is concerned, the law did not intend to qualify the exemption from its coverage with the

requirement that the task worker be a ―field personnel‖ at the same time.

WHEREFORE, in light of these considerations, we hereby PARTIALLY GRANT the petition

insofar as the payment of 13th

month pay to respondent is concerned. In all other aspects, we

AFFIRM the decision dated November 22, 2010 and the resolution dated January 31, 2011 of

the Court of Appeals in CA-G.R. SP No. 116003.

SO ORDERED.

[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.

D E C I S I O N

MENDOZA, J.:

This is a petition for certiorari to set aside the decision, dated August 30, 1993, of the National Labor Relations Commission dismissing the appeal of petitioner Mercidar Fishing Corporation from the decision of the Labor Arbiter in NLRC NCR Case No. 09-05084-90, as well as the resolution dated October 25, 1993, of the NLRC denying reconsideration.

This case originated from a complaint filed on September 20, 1990 by private respondent Fermin Agao, Jr. against petitioner for illegal dismissal, violation of P.D. No. 851, and non-payment of five days service incentive leave for 1990. Private respondent had been employed as a bodegero or ships quartermaster on February 12, 1988. He

complained that he had been constructively dismissed by petitioner when the latter refused him assignments aboard its boats after he had reported to work on May 28, 1990.i[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.ii[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.iii[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 petitioners claim that it cannot be held liable for service incentive leave pay by fishermen in its employ as the latter supposedly are field personnel and thus not entitled to such pay under the Labor Code.iv[4]

The NLRC likewise denied petitioners motion for reconsideration of its decision in its order dated October 25, 1993.

Hence, this petition. Petitioner contends:

I

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

II

THE RESPONDENT COMMISSION ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT UPHELD THE FINDINGS OF THE LABOR ARBITER THAT HEREIN PETITIONER HAD CONSTRUCTIVELY DISMISSED FERMIN AGAO, JR., FROM EMPLOYMENT.

The petition has no merit.

Art. 82 of the Labor Code provides:

ART. 82. Coverage. - The provisions of this Title [Working Conditions and Rest Periods] shall apply to employees in all establishments and undertakings whether for profit or not, but not to government employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations.

. . . . . . . . . .

Field personnel shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty.

Petitioner argues essentially that since the work of private respondent is performed away from its principal place of business, it has no way of verifying his actual hours of work on the vessel. It contends that private respondent and other fishermen in its employ should be classified as field personnel who have no statutory right to service incentive leave pay.

In the case of Union of Filipro Employees (UFE) v. Vicar,v[5] this Court explained the meaning of the phrase whose actual hours of work in the field cannot be determined with reasonable certainty in Art. 82 of the Labor Code, as follows:

Moreover, the requirement that actual hours of work in the field cannot be determined with reasonable certainty must be read in conjunction with Rule IV, Book III of the Implementing Rules which provides:

Rule IV Holidays with Pay

Section 1. Coverage - This rule shall apply to all employees except:

. . . . . . . . . .

(e) Field personnel and other employees whose time and performance is unsupervised by the employer xxx (Italics supplied)

While contending that such rule added another element not found in the law (Rollo, p. 13), the petitioner nevertheless attempted to show that its affected members are not covered by the abovementioned rule. The petitioner asserts that the companys sales personnel are strictly supervised as shown by the SOD (Supervisor of the Day) schedule and the company circular dated March 15, 1984 (Annexes 2 and 3, Rollo, pp. 53-55).

Contrary to the contention of the petitioner, the Court finds that the aforementioned rule did not add another element to the Labor Code definition of field personnel. The clause whose time and performance is unsupervised by the employer did not amplify but merely interpreted and expounded the clause whose actual hours of work in the field cannot be determined with reasonable certainty. The former clause is still within the scope and purview of Article 82 which defines field personnel. Hence, in deciding whether or not an employees actual working hours in the field can be determined with reasonable certainty, query must be made as to whether or not such employees time and performance is constantly supervised by the employer.vi[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 personnels working hours which can be determined with reasonable certainty.

The Court does not agree. The law requires that the actual hours of work in the field be reasonably ascertained. The company has no way of determining whether or not these sales personnel, even if they report to the office before 8:00 a.m. prior to field work and come back at 4:30 p.m., really spend the hours in between in actual field work.vii[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 petitioners business offices, the fact remains that throughout the duration of their work they are under the effective control and supervision of petitioner through the vessels patron or master as the NLRC correctly held.viii[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 petitioners claim, private respondent presented when he reported to work on May 28, 1990.ix[9] As the NLRC held:

Anent grounds (a) and (b) of the appeal, the respondent, in a nutshell, would like us to believe that the Arbiter abused his discretion (or seriously erred in his findings of facts) in giving credence to the factual version of the complainant. But it is settled that (W)hen confronted with conflicting versions of factual matters, the Labor Arbiter has the discretion to determine which party deserves credence on the basis of evidence received. [Gelmart Industries (Phils.), Inc. vs. Leogardo, 155 SCRA 403, 409, L-70544, November 5, 1987]. And besides, it is settled in this jurisdiction that to constitute abandonment of position, there must be concurrence of the intention to abandon and some overt acts from which it may be inferred that the employee concerned has no more interest in working (Dagupan Bus Co., Inc. 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).x[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.xi[11] This is especially so where, as here, the agency and its subordinate who heard the case in the first instance are in full agreement as to the facts.xii[12]

As regards the labor arbiters award which was affirmed by respondent NLRC, there is no reason to apply the rule that reinstatement may not be ordered if, as a result of the case between the parties, their relation is strained.xiii[13] Even at this late stage of this dispute, petitioner continues to reiterate its offer to reinstate private respondent.xiv[14]

WHEREFORE, the petition is DISMISSED.

SO ORDERED.

[G.R. NOS. 169295-96 : November 20, 2006]

REMINGTON INDUSTRIAL SALES CORPORATION, Petitioner, v. ERLINDA

CASTANEDA, Respondent.

D E C I S I O N

PUNO, J.:

Before this Court is the Petition for Review on Certiorari1 filed by Remington Industrial Sales

Corporation to reverse and set aside the Decision2 of the Fourth Division of the Court of Appeals

in CA-G.R. SP Nos. 64577 and 68477, dated January 31, 2005, which dismissed petitioner's

consolidated petitions for certiorari, and its subsequent Resolution,3 dated August 11, 2005,

which denied petitioner's motion for reconsideration.

The antecedent facts of the case, as narrated by the Court of Appeals, are as follows:

The present controversy began when private respondent, Erlinda Castaneda ("Erlinda") instituted

on March 2, 1998 a complaint for illegal dismissal, underpayment of wages, non-payment of

overtime services, non-payment of service incentive leave pay and non-payment of 13th month

pay against Remington before the NLRC, National Capital Region, Quezon City. The complaint

impleaded Mr. Antonio Tan in his capacity as the Managing Director of Remington.

Erlinda alleged that she started working in August 1983 as company cook with a salary of Php

4,000.00 for Remington, a corporation engaged in the trading business; that she worked for six

(6) days a week, starting as early as 6:00 a.m. because she had to do the marketing and would

end at around 5:30 p.m., or even later, after most of the employees, if not all, had left the

company premises; that she continuously worked with Remington until she was

unceremoniously prevented from reporting for work when Remington transferred to a new site in

Edsa, Caloocan City. She averred that she reported for work at the new site in Caloocan City on

January 15, 1998, only to be informed that Remington no longer needed her services. Erlinda

believed that her dismissal was illegal because she was not given the notices required by law;

hence, she filed her complaint for reinstatement without loss of seniority rights, salary

differentials, service incentive leave pay, 13th month pay and 10% attorney's fees.

Remington denied that it dismissed Erlinda illegally. It posited that Erlinda was a domestic

helper, not a regular employee; Erlinda worked as a cook and this job had nothing to do with

Remington's business of trading in construction or hardware materials, steel plates and wire rope

products. It also contended that contrary to Erlinda's allegations that the (sic) she worked for

eight (8) hours a day, Erlinda's duty was merely to cook lunch and "merienda", after which her

time was hers to spend as she pleased. Remington also maintained that it did not exercise any

degree of control and/or supervision over Erlinda's work as her only concern was to ensure that

the employees' lunch and "merienda" were available and served at the designated time.

Remington likewise belied Erlinda's assertion that her work extended beyond 5:00 p.m. as she

could only leave after all the employees had gone. The truth, according to Remington, is that

Erlinda did not have to punch any time card in the way that other employees of Remington did;

she was free to roam around the company premises, read magazines, and to even nap when not

doing her assigned chores. Remington averred that the illegal dismissal complaint lacked factual

and legal bases. Allegedly, it was Erlinda who refused to report for work when Remington

moved to a new location in Caloocan City.

In a Decision4 dated January 19, 1999, the labor arbiter dismissed the complaint and ruled that

the respondent was a domestic helper under the personal service of Antonio Tan, finding that her

work as a cook was not usually necessary and desirable in the ordinary course of trade and

business of the petitioner corporation, which operated as a trading company, and that the latter

did not exercise control over her functions. On the issue of illegal dismissal, the labor arbiter

found that it was the respondent who refused to go with the family of Antonio Tan when the

corporation transferred office and that, therefore, respondent could not have been illegally

dismissed.

Upon appeal, the National Labor Relations Commission (NLRC) rendered a Decision,5 dated

November 23, 2000, reversing the labor arbiter, ruling, viz:

We are not inclined to uphold the declaration below that complainant is a domestic helper of the

family of Antonio Tan. There was no allegation by respondent that complainant had ever worked

in the residence of Mr. Tan. What is clear from the facts narrated by the parties is that

complainant continuously did her job as a cook in the office of respondent serving the needed

food for lunch and merienda of the employees. Thus, her work as cook inured not for the benefit

of the family members of Mr. Tan but solely for the individual employees of respondent.

Complainant as an employee of respondent company is even bolstered by no less than the

certification dated May 23, 1997 issued by the corporate secretary of the company certifying that

complainant is their bonafide employee. This is a solid evidence which the Labor Arbiter simply

brushed aside. But, such error would not be committed here as it would be at the height of

injustice if we are to declare that complainant is a domestic helper.

Complainant's work schedule and being paid a monthly salary of P4,000.00 are clear indication

that she is a company employee who had been employed to cater to the food needed by the

employees which were being provided by respondent to form part of the benefit granted them.

With regard to the issue of illegal dismissal, we believe that there is more reason to believe that

complainant was not dismissed because allegedly she was the one who refused to work in the

new office of respondent. However, complainant's refusal to join the workforce due to poor

eyesight could not be considered abandonment of work or voluntary resignation from

employment.

Under the Labor Code as amended, an employee who reaches the age of sixty years old (60

years) has the option to retire or to separate from the service with payment of separation

pay/retirement benefit.

In this case, we notice that complainant was already 60 years old at the time she filed the

complaint praying for separation pay or retirement benefit and some money claims.

Based on Article 287 of the Labor Code as amended, complainant is entitled to be paid her

separation pay/retirement benefit equivalent to one-half (1/2) month for every year of service.

The amount of separation pay would be based on the prescribed minimum wage at the time of

dismissal since she was then underpaid. In as much as complainant is underpaid of her wages, it

behooves that she should be paid her salary differential for the last three years prior to

separation/retirement.

x x x x x x x x x

WHEREFORE, premises considered, the assailed decision is hereby, SET ASIDE, and a new

one is hereby entered ordering respondents to pay complainant the following:

1. Salary differential - P12,021.12 2. Service Incentive Leave Pay - 2,650.00 3. 13th Month Pay

differential - 1,001.76 4. Separation Pay/retirement benefit - 36,075.00

Total - P51,747.88

SO ORDERED.

Petitioner moved to reconsider this decision but the NLRC denied the motion. This denial of its

motion prompted petitioner to file a Petition for Certiorari6 with the Court of Appeals, docketed

as CA-G.R. SP No. 64577, on May 4, 2001, imputing grave abuse of discretion amounting to

lack or excess of jurisdiction on the part of the NLRC in (1) reversing in toto the decision of the

labor arbiter, and (2) awarding in favor of respondent salary differential, service incentive leave

pay, 13th month pay differential and separation benefits in the total sum of P51,747.88.

While the petition was pending with the Court of Appeals, the NLRC rendered another Decision7

in the same case on August 29, 2001. How and why another decision was rendered is explained

in that decision as follows:

On May 17, 2001, complainant filed a Manifestation praying for a resolution of her Motion for

Reconsideration and, in support thereof, alleges that, sometime December 18, 2000, she mailed

her Manifestation and Motion for Reconsideration registered as Registered Certificate No.

188844; and that the said mail was received by the NLRC, through a certain Roland Hernandez,

on December 26, 2000. Certifications to this effect was issued by the Postmaster of the Sta. Mesa

Post Office bearing the date May 11, 2001 (Annexes A and B, Complainant's Manifestation).

Evidence in support of complainant's having actually filed a Motion for Reconsideration within

the reglementary period having been sufficiently established, a determination of its merits is

thus, in order.

On the merits, the NLRC found respondent's motion for reconsideration meritorious leading to

the issuance of its second decision with the following dispositive portion:

WHEREFORE, premises considered, the decision dated November 23, 2000, is MODIFIED by

increasing the award of retirement pay due the complainant in the total amount of SIXTY TWO

THOUSAND FOUR HUNDRED THIRTY-SEVEN and 50/100 (P62,437.50). All other

monetary relief so adjudged therein are maintained and likewise made payable to the

complainant.

SO ORDERED.

Petitioner challenged the second decision of the NLRC, including the resolution denying its

motion for reconsideration, through a second Petition for Certiorari8 filed with the Court of

Appeals, docketed as CA-G.R. SP No. 68477 and dated January 8, 2002, this time imputing

grave abuse of discretion amounting to lack of or excess of jurisdiction on the part of the NLRC

in (1) issuing the second decision despite losing its jurisdiction due to the pendency of the first

petition for certiorari with the Court of Appeals, and (2) assuming it still had jurisdiction to issue

the second decision notwithstanding the pendency of the first petition for certiorari with the

Court of Appeals, that its second decision has no basis in law since respondent's motion for

reconsideration, which was made the basis of the second decision, was not filed under oath in

violation of Section 14, Rule VII9 of the New Rules of Procedure of the NLRC and that it

contained no certification as to why respondent's motion for reconsideration was not decided on

time as also required by Section 10, Rule VI10

and Section 15, Rule VII11

of the aforementioned

rules.

Upon petitioner's motion, the Court of Appeals ordered the consolidation of the two (2) petitions,

on January 24, 2002, pursuant to Section 7, par. b(3), Rule 3 of the Revised Rules of the Court of

Appeals. It summarized the principal issues raised in the consolidated petitions as follows:

1. Whether respondent is petitioner's regular employee or a domestic helper;

2. Whether respondent was illegally dismissed; andcralawlibrary

3. Whether the second NLRC decision promulgated during the pendency of the first petition for

certiorari has basis in law.

On January 31, 2005, the Court of Appeals dismissed the consolidated petitions for lack of merit,

finding no grave abuse of discretion on the part of the NLRC in issuing the assailed decisions.

On the first issue, it upheld the ruling of the NLRC that respondent was a regular employee of

the petitioner since the former worked at the company premises and catered not only to the

personal comfort and enjoyment of Mr. Tan and his family, but also to that of the employees of

the latter. It agreed that petitioner enjoys the prerogative to control respondent's conduct in

undertaking her assigned work, particularly the nature and situs of her work in relation to the

petitioner's workforce, thereby establishing the existence of an employer-employee relationship

between them.

On the issue of illegal dismissal, it ruled that respondent has attained the status of a regular

employee in her service with the company. It noted that the NLRC found that no less than the

company's corporate secretary certified that respondent is a bonafide company employee and that

she had a fixed schedule and routine of work and was paid a monthly salary of P4,000.00; that

she served with petitioner for 15 years starting in 1983, buying and cooking food served to

company employees at lunch and merienda; and that this work was usually necessary and

desirable in the regular business of the petitioner. It held that as a regular employee, she enjoys

the constitutionally guaranteed right to security of tenure and that petitioner failed to discharge

the burden of proving that her dismissal on January 15, 1998 was for a just or authorized cause

and that the manner of dismissal complied with the requirements under the law.

Finally, on petitioner's other arguments relating to the alleged irregularity of the second NLRC

decision, i.e., the fact that respondent's motion for reconsideration was not under oath and had no

certification explaining why it was not resolved within the prescribed period, it held that such

violations relate to procedural and non-jurisdictional matters that cannot assume primacy over

the substantive merits of the case and that they do not constitute grave abuse of discretion

amounting to lack or excess of jurisdiction that would nullify the second NLRC decision.

The Court of Appeals denied petitioner's contention that the NLRC lost its jurisdiction to issue

the second decision when it received the order indicating the Court of Appeals' initial action on

the first petition for certiorari that it filed. It ruled that the NLRC's action of issuing a decision in

installments was not prohibited by its own rules and that the need for a second decision was

justified by the fact that respondent's own motion for reconsideration remained unresolved in the

first decision. Furthermore, it held that under Section 7, Rule 65 of the Revised Rules of Court,12

the filing of a petition for certiorari does not interrupt the course of the principal case unless a

temporary restraining order or a writ of preliminary injunction has been issued against the public

respondent from further proceeding with the case.

From this decision, petitioner filed a motion for reconsideration on February 22, 2005, which the

Court of Appeals denied through a resolution dated August 11, 2005.

Hence, the present Petition for Review .

The petitioner raises the following errors of law: (1) the Court of Appeals erred in affirming the

NLRC's ruling that the respondent was petitioner's regular employee and not a domestic helper;

(2) the Court of Appeals erred in holding that petitioner was guilty of illegal dismissal; and (3)

the Court of Appeals erred when it held that the issuance of the second NLRC decision is proper.

The petition must fail. We affirm that respondent was a regular employee of the petitioner and

that the latter was guilty of illegal dismissal.

Before going into the substantive merits of the present controversy, we shall first resolve the

propriety of the issuance of the second NLRC decision.

The petitioner contends that the respondent's motion for reconsideration, upon which the second

NLRC decision was based, was not under oath and did not contain a certification as to why it

was not decided on time as required under the New Rules of Procedure of the NLRC.13

Furthermore, the former also raises for the first time the contention that respondent's motion was

filed beyond the ten (10)-calendar day period required under the same Rules,14

since the latter

received a copy of the first NLRC decision on December 6, 2000, and respondent filed her

motion only on December 18, 2000. Thus, according to petitioner, the respondent's motion for

reconsideration was a mere scrap of paper and the second NLRC decision has no basis in law.

We do not agree.

It is well-settled that the application of technical rules of procedure may be relaxed to serve the

demands of substantial justice, particularly in labor cases.15

Labor cases must be decided

according to justice and equity and the substantial merits of the controversy.16

Rules of

procedure are but mere tools designed to facilitate the attainment of justice.17

Their strict and

rigid application, which would result in technicalities that tend to frustrate rather than promote

substantial justice, must always be avoided.18

This Court has consistently held that the requirement of verification is formal, and not

jurisdictional. Such requirement is merely a condition affecting the form of the pleading, non-

compliance with which does not necessarily render it fatally defective. Verification is simply

intended to secure an assurance that the allegations in the pleading are true and correct and not

the product of the imagination or a matter of speculation, and that the pleading is filed in good

faith.19

The court may order the correction of the pleading if verification is lacking or act on the

pleading although it is not verified, if the attending circumstances are such that strict compliance

with the rules may be dispensed with in order that the ends of justice may thereby be served.20

Anent the argument that respondent's motion for reconsideration, on which the NLRC's second

decision was based, was filed out of time, such issue was only brought up for the first time in the

instant petition where no new issues may be raised by a party in his pleadings without offending

the right to due process of the opposing party.

Nonetheless, the petitioner asserts that the respondent received a copy of the NLRC's first

decision on December 6, 2000, and the motion for reconsideration was filed only on December

18, 2000, or two (2) days beyond the ten (10)-calendar day period requirement under the New

Rules of Procedure of the NLRC and should not be allowed.21

This contention must fail.

Under Article 22322

of the Labor Code, the decision of the NLRC shall be final and executory

after ten (10) calendar days from the receipt thereof by the parties.

While it is an established rule that the perfection of an appeal in the manner and within the

period prescribed by law is not only mandatory but jurisdictional, and failure to perfect an appeal

has the effect of rendering the judgment final and executory, it is equally settled that the NLRC

may disregard the procedural lapse where there is an acceptable reason to excuse tardiness in the

taking of the appeal.23

Among the acceptable reasons recognized by this Court are (a) counsel's

reliance on the footnote of the notice of the decision of the Labor Arbiter that "the aggrieved

party may appeal. . . within ten (10) working days";24

(b) fundamental consideration of

substantial justice;25

(c) prevention of miscarriage of justice or of unjust enrichment, as where

the tardy appeal is from a decision granting separation pay which was already granted in an

earlier final decision;26

and (d) special circumstances of the case combined with its legal merits27

or the amount and the issue involved.28

We hold that the particular circumstances in the case at bar, in accordance with substantial

justice, call for a liberalization of the application of this rule. Notably, respondent's last day for

filing her motion for reconsideration fell on December 16, 2000, which was a Saturday. In a

number of cases,29

we have ruled that if the tenth day for perfecting an appeal fell on a Saturday,

the appeal shall be made on the next working day. The reason for this ruling is that on Saturdays,

the office of the NLRC and certain post offices are closed. With all the more reason should this

doctrine apply to respondent's filing of the motion for reconsideration of her cause, which the

NLRC itself found to be impressed with merit. Indeed, technicality should not be permitted to

stand in the way of equitably and completely resolving the rights and obligations of the parties

for the ends of justice are reached not only through the speedy disposal of cases but, more

importantly, through a meticulous and comprehensive evaluation of the merits of a case.

Finally, as to petitioner's argument that the NLRC had already lost its jurisdiction to decide the

case when it filed its petition for certiorari with the Court of Appeals upon the denial of its

motion for reconsideration, suffice it to state that under Section 7 of Rule 6530

of the Revised

Rules of Court, the petition shall not interrupt the course of the principal case unless a temporary

restraining order or a writ of preliminary injunction has been issued against the public respondent

from further proceeding with the case. Thus, the mere pendency of a special civil action for

certiorari, in connection with a pending case in a lower court, does not interrupt the course of the

latter if there is no writ of injunction.31

Clearly, there was no grave abuse of discretion on the

part of the NLRC in issuing its second decision which modified the first, especially since it failed

to consider the respondent's motion for reconsideration when it issued its first decision.

Having resolved the procedural matters, we shall now delve into the merits of the petition to

determine whether respondent is a domestic helper or a regular employee of the petitioner, and

whether the latter is guilty of illegal dismissal.

Petitioner relies heavily on the affidavit of a certain Mr. Antonio Tan and contends that

respondent is the latter's domestic helper and not a regular employee of the company since Mr.

Tan has a separate and distinct personality from the petitioner. It maintains that it did not

exercise control and supervision over her functions; and that it operates as a trading company

and does not engage in the restaurant business, and therefore respondent's work as a cook, which

was not usually necessary or desirable to its usual line of business or trade, could not make her

its regular employee.

This contention fails to impress.

In Apex Mining Company, Inc. v. NLRC,32

this Court held that a househelper in the staff houses

of an industrial company was a regular employee of the said firm. We ratiocinated that:

Under Rule XIII, Section 1(b), Book 3 of the Labor Code, as amended, the terms "househelper"

or "domestic servant" are defined as follows:

"The term 'househelper' as used herein is synonymous to the term 'domestic servant' and shall

refer to any person, whether male or female, who renders services in and about the employer's

home and which services are usually necessary or desirable for the maintenance and enjoyment

thereof, and ministers exclusively to the personal comfort and enjoyment of the employer's

family."

The foregoing definition clearly contemplates such househelper or domestic servant who is

employed in the employer's home to minister exclusively to the personal comfort and enjoyment

of the employer's family. Such definition covers family drivers, domestic servants, laundry

women, yayas, gardeners, houseboys and similar househelps.

x x x x x x x x x

The criteria is the personal comfort and enjoyment of the family of the employer in the home of

said employer. While it may be true that the nature of the work of a househelper, domestic

servant or laundrywoman in a home or in a company staffhouse may be similar in nature, the

difference in their circumstances is that in the former instance they are actually serving the

family while in the latter case, whether it is a corporation or a single proprietorship engaged in

business or industry or any other agricultural or similar pursuit, service is being rendered in the

staffhouses or within the premises of the business of the employer. In such instance, they are

employees of the company or employer in the business concerned entitled to the privileges of a

regular employee.

Petitioner contends that it is only when the househelper or domestic servant is assigned to certain

aspects of the business of the employer that such househelper or domestic servant may be

considered as such an employee. The Court finds no merit in making any such distinction. The

mere fact that the househelper or domestic servant is working within the premises of the business

of the employer and in relation to or in connection with its business, as in its staffhouses for its

guest or even for its officers and employees, warrants the conclusion that such househelper or

domestic servant is and should be considered as a regular employee of the employer and not as a

mere family househelper or domestic servant as contemplated in Rule XIII, Section 1(b), Book 3

of the Labor Code, as amended.

In the case at bar, the petitioner itself admits in its position paper33

that respondent worked at the

company premises and her duty was to cook and prepare its employees' lunch and merienda.

Clearly, the situs, as well as the nature of respondent's work as a cook, who caters not only to the

needs of Mr. Tan and his family but also to that of the petitioner's employees, makes her fall

squarely within the definition of a regular employee under the doctrine enunciated in the Apex

Mining case. That she works within company premises, and that she does not cater exclusively to

the personal comfort of Mr. Tan and his family, is reflective of the existence of the petitioner's

right of control over her functions, which is the primary indicator of the existence of an

employer-employee relationship.

Moreover, it is wrong to say that if the work is not directly related to the employer's business,

then the person performing such work could not be considered an employee of the latter. The

determination of the existence of an employer-employee relationship is defined by law according

to the facts of each case, regardless of the nature of the activities involved.34

Indeed, it would be

the height of injustice if we were to hold that despite the fact that respondent was made to cook

lunch and merienda for the petitioner's employees, which work ultimately redounded to the

benefit of the petitioner corporation, she was merely a domestic worker of the family of Mr. Tan.

We note the findings of the NLRC, affirmed by the Court of Appeals, that no less than the

company's corporate secretary has certified that respondent is a bonafide company employee;35

she had a fixed schedule and routine of work and was paid a monthly salary of P4,000.00;36

she

served with the company for 15 years starting in 1983, buying and cooking food served to

company employees at lunch and merienda, and that this service was a regular feature of

employment with the company.37

Indubitably, the Court of Appeals, as well as the NLRC, correctly held that based on the given

circumstances, the respondent is a regular employee of the petitioner. ςηαñrοblεš νιr†υαl lαω lιbrαrà ¿

Having determined that the respondent is petitioner's regular employee, we now proceed to

ascertain the legality of her dismissal from employment.

Petitioner contends that there was abandonment on respondent's part when she refused to report

for work when the corporation transferred to a new location in Caloocan City, claiming that her

poor eyesight would make long distance travel a problem. Thus, it cannot be held guilty of illegal

dismissal.

On the other hand, the respondent claims that when the petitioner relocated, she was no longer

called for duty and that when she tried to report for work, she was told that her services were no

longer needed. She contends that the petitioner dismissed her without a just or authorized cause

and that she was not given prior notice, hence rendering the dismissal illegal.

We rule for the respondent.

As a regular employee, respondent enjoys the right to security of tenure under Article 27938

of

the Labor Code and may only be dismissed for a just39

or authorized40

cause, otherwise the

dismissal becomes illegal and the employee becomes entitled to reinstatement and full

backwages computed from the time compensation was withheld up to the time of actual

reinstatement.

Abandonment is the deliberate and unjustified refusal of an employee to resume his

employment.41

It is a form of neglect of duty; hence, a just cause for termination of employment

by the employer under Article 282 of the Labor Code, which enumerates the just causes for

termination by the employer.42

For a valid finding of abandonment, these two factors should be

present: (1) the failure to report for work or absence without valid or justifiable reason; and (2) a

clear intention to sever employer-employee relationship, with the second as the more

determinative factor which is manifested by overt acts from which it may be deduced that the

employee has no more intention to work.43

The intent to discontinue the employment must be

shown by clear proof that it was deliberate and unjustified.44

This, the petitioner failed to do in

the case at bar.

Alongside the petitioner's contention that it was the respondent who quit her employment and

refused to return to work, greater stock may be taken of the respondent's immediate filing of her

complaint with the NLRC. Indeed, an employee who loses no time in protesting her layoff

cannot by any reasoning be said to have abandoned her work, for it is well-settled that the filing

of an employee of a complaint for illegal dismissal with a prayer for reinstatement is proof

enough of her desire to return to work, thus, negating the employer's charge of abandonment.45

In termination cases, the burden of proof rests upon the employer to show that the dismissal is

for a just and valid cause; failure to do so would necessarily mean that the dismissal was

illegal.46

The employer's case succeeds or fails on the strength of its evidence and not on the

weakness of the employee's defense.47

If doubt exists between the evidence presented by the

employer and the employee, the scales of justice must be tilted in favor of the latter.48

IN VIEW WHEREOF, the petition is DENIED for lack of merit. The assailed Decision dated

January 31, 2005, and the Resolution dated August 11, 2005, of the Court of Appeals in CA-G.R.

SP Nos. 64577 and 68477 are AFFIRMED. Costs against petitioner.

SO ORDERED.

[G.R. No. 111042. October 26, 1999.]

AVELINO LAMBO and VICENTE BELOCURA, Petitioners, v. NATIONAL LABOR

RELATIONS COMMISSION and J.C. TAILOR SHOP and/or JOHNNY CO,

Respondents.

D E C I S I O N

MENDOZA, J.:

This is a petition for certiorari to set aside the decision 1 of the National Labor Relations

Commission (NLRC) which reversed the awards made by the Labor Arbiter in favor of

petitioners, except one for P4,992.00 to each, representing 13th month pay.

The facts are as follows.

Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private

respondents J.C. Tailor Shop and/or Johnny Co on September 10, 1985 and March 3, 1985,

respectively. They worked from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays.

As in the case of the other 100 employees of private respondents, petitioners were paid on a

piece-work basis, according to the style of suits they made. Regardless of the number of pieces

they finished in a day, they were each given a daily pay of at least P64.00.

On January 17, 1989, petitioners filed a complaint against private respondents for illegal

dismissal and sought recovery of overtime pay, holiday pay, premium pay on holiday and rest

day, service incentive leave pay, separation pay, 13th month pay, and attorney‘s fees.chanroblesvirtual lawlibrary

After hearing, Labor Arbiter Jose G. Gutierrez found private respondents guilty of illegal

dismissal and accordingly ordered them to pay petitioners‘ claims. The dispositive portion of the

Labor Arbiter‘s decision reads:chanrob1es virtual 1aw library

WHEREFORE, in the light of the foregoing, judgment is hereby rendered declaring the

complainants to have been illegally dismissed and ordering the respondents to pay the

complainants the following monetary awards:chanrob1es virtual 1aw library

AVELINO LAMBO VICENTE BELOCURA

I. BACKWAGES P64,896.00 P64,896.00

II. OVERTIME PAY 13,447.90 13,447.90

III. HOLIDAY PAY 1,399.30 1,399.30

IV. 13TH MONTH PAY 4,992.00 4,992.00

V. SEPARATION PAY 9,984.00 11,648.00

TOTAL P94,719.20 P96,383.20 = P191,102.40

————— —————

Add: 10% Attorney‘s Fees 19,110.24

GRAND TOTAL P210,212.64

=============

or a total aggregate amount of TWO HUNDRED TEN THOUSAND TWO HUNDRED

TWELVE AND 64/100 (P210,212.64).

All other claims are dismissed for lack of merit.

SO ORDERED. 2

On appeal by private respondents, the NLRC reversed the decision of the Labor Arbiter. It found

that petitioners had not been dismissed from employment but merely threatened with a closure of

the business if they insisted on their demand for a "straight payment of their minimum wage,"

after petitioners, on January 17, 1989, walked out of a meeting with private respondents and

other employees. According to the NLRC, during that meeting, the employees voted to maintain

the company policy of paying them according to the volume of work finished at the rate of

P18.00 per dozen of tailored clothing materials. Only petitioners allegedly insisted that they be

paid the minimum wage and other benefits. The NLRC held petitioners guilty of abandonment of

work and accordingly dismissed their claims except that for 13th month pay. The dispositive

portion of its decision reads:chanrob1es virtual 1aw library

WHEREFORE, in view of the foregoing, the appealed decision is hereby vacated and a new one

entered ordering respondents to pay each of the complainants their 13th month pay in the amount

of P4,992.00. All other monetary awards are hereby deleted.

SO ORDERED. 3

Petitioners allege that they were dismissed by private respondents as they were about to file a

petition with the Department of Labor and Employment (DOLE) for the payment of benefits

such as Social Security System (SSS) coverage, sick leave and vacation leave. They deny that

they abandoned their work.

The petition is meritorious.

First. There is no dispute that petitioners were employees of private respondents although they

were paid not on the basis of time spent on the job but according to the quantity and the quality

of work produced by them. There are two categories of employees paid by results: (1) those

whose time and performance are supervised by the employer. (Here, there is an element of

control and supervision over the manner as to how the work is to be performed. A piece-rate

worker belongs to this category especially if he performs his work in the company premises.);

and (2) those whose time and performance are unsupervised. (Here, the employer‘s control is

over the result of the work. Workers on pakyao and takay basis belong to this group.) Both

classes of workers are paid per unit accomplished. Piece-rate payment is generally practiced in

garment factories where work is done in the company premises, while payment on pakyao and

takay basis is commonly observed in the agricultural industry, such as in sugar plantations where

the work is performed in bulk or in volumes difficult to quantify. 4 Petitioners belong to the first

category, i.e., supervised employees.

In determining the existence of an employer-employee relationship, the following elements must

be considered: (1) the selection and engagement of the employee; (2) the payment of wages; (3)

the power of dismissal; and (4) the power to control the employee‘s conduct. 5 Of these

elements, the most important criterion is whether the employer controls or has reserved the right

to control the employee not only as to the result of the work but also as to the means and

methods by which the result is to be accomplished. 6

In this case, private respondents exercised control over the work of petitioners. As tailors,

petitioners worked in the company‘s premises from 8:00 a.m. to 7:00 p.m. daily, including

Sundays and holidays. The mere fact that they were paid on a piece-rate basis does not negate

their status as regular employees of private respondents. The term "wage" is broadly defined in

Art. 97 of the Labor Code as remuneration or earnings, capable of being expressed in terms of

money whether fixed or ascertained on a time, task, piece or commission basis. Payment by the

piece is just a method of compensation and does not define the essence of the relations. 7 Nor

does the fact that petitioners are not covered by the SSS affect the employer-employee

relationship.

Indeed, the following factors show that petitioners, although piece-rate workers, were regular

employees of private respondents: (1) within the contemplation of Art. 280 of the Labor Code,

their work as tailors was necessary or desirable in the usual business of private respondents,

which is engaged in the tailoring business; (2) petitioners worked for private respondents

throughout the year, their employment not being dependent on a specific project or season; and,

(3) petitioners worked for private respondents for more than one year. 8

Second. Private respondents contend, however, that petitioners refused to report for work after

learning that the J.C. Tailoring and Dress Shop Employees Union had demanded their

(petitioners‘) dismissal for conduct unbecoming of employees. In support of their claim, private

respondents presented the affidavits 9 of Emmanuel Y. Caballero, president of the union, and

Amado Cabañero, member, that petitioners had not been dismissed by private respondents but

that practically all employees of the company, including the members of the union had asked

management to terminate the services of petitioners. The employees allegedly said they were

against petitioners‘ request for change of the mode of payment of their wages, and that when a

meeting was called to discuss this issue, a petition for the dismissal of petitioners was presented,

prompting the latter to walk out of their jobs and instead file a complaint for illegal dismissal

against private respondents on January 17, 1989, even before all employees could sign the

petition and management could act upon the same.

To justify a finding of abandonment of work, there must be proof of a deliberate and unjustified

refusal on the part of an employee to resume his employment. The burden of proof is on the

employer to show an unequivocal intent on the part of the employee to discontinue employment.

10 Mere absence is not sufficient. It must be accompanied by manifest acts unerringly pointing

to the fact that the employee simply does not want to work anymore. 11

Private respondents failed to discharge this burden. Other than the self-serving declarations in the

affidavits of their two employees, private respondents did not adduce proof of overt acts of

petitioners showing their intention to abandon their work. On the contrary, the evidence shows

that petitioners lost no time in filing the case for illegal dismissal against private Respondent.

This fact negates any intention on their part to sever their employment relationship. 12

Abandonment is a matter of intention; it cannot be inferred or presumed from equivocal acts. 13

Third. Private respondents invoke the compromise agreement, 14 dated March 2, 1993, between

them and petitioner Avelino Lambo, whereby in consideration of the sum of P10,000.00,

petitioner absolved private respondents from liability for money claims or any other obligations.

To be sure, not all quitclaims are per se invalid or against public policy. But those (1) where

there is clear proof that the waiver was wangled from an unsuspecting or gullible person or (2)

where the terms of settlement are unconscionable on their face are invalid. In these cases, the law

will step in to annul the questionable transaction. 15 However, considering that the Labor Arbiter

had given petitioner Lambo a total award of P94,719.20, the amount of P10,000.00 to cover any

and all monetary claims is clearly unconscionable. As we have held in another case, 16 the

subordinate position of the individual employee vis-a-vis management renders him especially

vulnerable to its blandishments, importunings, and even intimidations, and results in his

improvidently waiving benefits to which he is clearly entitled. Thus, quitclaims, waivers or

releases are looked upon with disfavor for being contrary to public policy and are ineffective to

bar claims for the full measure of the workers‘ legal rights. 17 An employee who is merely

constrained to accept the wages paid to him is not precluded from recovering the difference

between the amount he actually received and that amount which he should have received.

Fourth. The Labor Arbiter awarded backwages, overtime pay, holiday pay, 13th month pay,

separation pay and attorney‘s fees, corresponding to 10% of the total monetary awards, in favor

of petitioners.

As petitioners were illegally dismissed, they are entitled to reinstatement with backwages.

Considering that petitioners were dismissed from the service on January 17, 1989, i.e., prior to

March 21, 1989, 18 the Labor Arbiter correctly applied the rule in the Mercury Drug case, 19

according to which the recovery of backwages should be limited to three years without

qualifications or deductions. Any award in excess of three years is null and void as to the excess.

20

The Labor Arbiter correctly ordered private respondents to give separation pay. Considerable

time has lapsed since petitioners‘ dismissal, so that reinstatement would now be impractical and

hardly in the best interest of the parties. In lieu of reinstatement, separation pay should be

awarded to petitioners at the rate of one month salary for every year of service, with a fraction of

at least six (6) months of service being considered as one (1) year. 21

The awards for overtime pay, holiday pay and 13th month pay are in accordance with our finding

that petitioners are regular employees, although paid on a piece-rate basis. 22 These awards are

based on the following computation of the Labor Arbiter: chanrob1es virtual 1aw library

AVELINO LAMBO

I. BACKWAGES: Jan. 17/89 = 36 mos.

P 64.00/day x 26 days

1,664.00/mo. x 36 mos. = P 59,904.00

13th Mo. Pay:chanrob1es virtual 1aw library

P 1,664.00/yr. x 3 yrs. = 4, 992.00 P64,896.00

II. OVERTIME PAY: Jan. 17/86 - Jan. 17/89

Jan. 17/86 - April 30/87 = 15 mos. & 12 days =

(15 mos. x 26 days + 12 days) = 402 days

* 2 hours = 25%

402 days x 2 hrs./day = 804 hrs.

P 32.00/day ÷ 8 hrs. =

4.00/hr. x 25% =

1.00/hr. + P4.00/hr. = P 4,020.00

5.00/hr. x 804 hrs. =

May 1/87-Sept. 30/87 = 4 mos. & 26 days =

(4 mos. x 26 days + 26 days) = 130 days

130 days x 2 hrs./day = 260 hrs.

P 41.00/day ÷ 8 hrs. =

5.12/hr. x 25% =

1.28/hr. + P5.12/hr. = P 1,664.00

6.40/hr. x 260 hrs. =

Oct. 1/87-Dec. 13/87 = 2 mos. & 11 days =

(2 mos. x 26 days + 11 days) = 63 days

63 days x 2 hrs./day = 126 hrs.

P 49.00/day ÷ 8 hrs. =

6.12/hr. x 25% =

1.53/hr. + P6.12/hr. = P963.90

7.65/hr. x 126 hrs. =

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

(13 mos. x 26 days + 2 days) = 340 days

340 days x 2 hrs./day = 680 hrs.

P 64.00/day ÷ 8 hrs. =

8.00/hr. x 25% =

2.00/hr. + P8.00/hr. = P6,800.00 P13,447.90

10.00/hr. x 680 hrs. =

III. HOLIDAY PAY: …Jan. 17/86 - Jan. 17/89

Jan. 17/86 - April 30/87 = 12 RHs; 8 SHs

P 32.00/day x 200% =

64.00/day x 12 days = P768.00 P384.00

32.00/day x 12 days = (384.00)

32.00/day x 30% = 76.80 460.80

9.60/day x 8 days

May 1/87 - Sept. 30/87 = 3 RHs; 3 SHs

P 41.00/day x 200% =

82.00/day x 3 days = P246.00 P123.00

41.00/day x 3 days P123.00 = (123.00)

41.00/day x 30% = 36.90 159.90

12.30/day x 3 days =

Oct. 1/87 - Dec. 13/87 = 1 RH

P 49.00/day x 200% = P98.00 49.00

98.00/day x 1 day = (49.00)

49.00/day x 1 day =

Dec. 14/87 - Jan. 17/89 = 9 RHs; 8 SHs

P 64.00/day x 200% =

128.00/day x 9 days = P1,152.00 P 576.00

64.00/day x 9 days = (576.00)

64.00/day x 30% = 153.60 729.60 1,399.30

19.20/day x 8 days =

IV. 13TH MO. PAY: Jan. 17/86 - Jan. 17/89 = 3 yrs.

P 64.00/day x 26 days = 4,992.00

1,664.00/yr. x 3 yrs. =

V. SEPARATION PAY: Sept. 10/85 - Jan. 17/92 = 6 yrs.

1,664.00/mo. x 6 yrs. 9,984.00

TOTAL AWARD OF AVELINO LAMBO P94,719.20

==========

VICENTE BELOCURA

I. BACKWAGES: Jan. 17/89 - Jan. 17/92 = 36 mos.

Same computation as A. Lambo P64,896.00

II. OVERTIME PAY: Jan. 17/86 - Jan. 17/89

Same computation as A. Lambo 13,447.90

III. HOLIDAY PAY: Jan. 17/86 - Jan. 17/89

Same computation as A. Lambo 1,399.30

IV. 13TH MO. PAY: Jan. 17/86 - Jan. 17/89

Same computation as A. Lambo 4,992.00

V. SEPARATION PAY: March 3/85 - Jan. 17/92 = 7 yrs.

P1,664.00/mo. x 7 yrs. = 11,648.00

TOTAL AWARD OF VICENTE BELOCURA P96,383.20

=========

SUMMARY

AVELINO LAMBO VICENTE BELOCURA

I. BACKWAGES P64,896.00 P64,896.00

II. OVERTIME PAY 13,447.90 13,447.90

III. HOLIDAY PAY 1,399.30 1,399.30

III. HOLIDAY PAY 1,399.30 1,399.30

IV. 13TH MO. PAY 4,992.00 4,992.00

V. SEPARATION PAY 9,984.00 11,648.00

TOTAL P94,719.20 P96,383.20 = P 191,102.40

ADD: 10% Attorney‘s Fees 19,110.24

GRAND TOTAL P 210,212.64

==========

Except for the award of attorney‘s fees in the amount of P19,110.24, the above computation is

affirmed. The award of attorney‘s fees should be disallowed, it appearing that petitioners were

represented by the Public Attorney‘s Office. With regard to petitioner Avelino Lambo, the

amount of P10,000.00 paid to him under the compromise agreement should be deducted from the

total award of P94,719.20. Consequently, the award to each petitioner should be as follows: chanrob1es virtual 1aw l ibrary

AVELINO LAMBO VICENTE BELOCURA

I. BACKWAGES P64,896.00 P64,896.00

II. OVERTIME PAY 13,447.90 13,447.90

III. HOLIDAY PAY 1,399.30 1,399.30

III. HOLIDAY PAY 1,399.30 1,399.30

IV. 13TH MO. PAY 4,992.00 4,992.00

V. SEPARATION PAY 9,984.00 11,648.00

————— —————

P 94,719.20

Less 10,000.00

—————

TOTAL P 84,719.20 P 96,383.20

GRAND TOTAL P 210,212.64

============

WHEREFORE, the decision of the National Labor Relations Commission is SET ASIDE and

another one is RENDERED ordering private respondents to pay petitioners the total amount of

One Hundred Eighty-One Thousand One Hundred Two Pesos and 40/100 (P181,102.40), as

computed above.

SO ORDERED.

[G.R. No. L-9265. April 29, 1957.]

LUZON STEVEDORING CO., INC., Petitioner, v. LUZON MARINE DEPARTMENT

UNION and THE HON. MODESTO CASTILLO, THE HON. JOSE S. BAUTISTA, THE

HON. V. JIMENEZ YANSON and THE HON. JUAN L. LANTING, Judges of the Court

of Industrial Relations, Respondents.

Perkins, Ponce Enrile & Associates for Petitioner.

Mariano B. Tuason for respondent Judges of the Court of Industrial Relations.

Sioson, Roldan & Vidanes for respondent union.

SYLLABUS

1. MINIMUM WAGE LAW; NON-WORKING HOURS, CONSTRUED; PERIOD NOT

COUNTED IF REQUISITES ARE COMPLIED WITH. — A laborer need not leave the

premises of the factory, shop or boat in order that his period of rest shall not be counted, it being

enough that he "cease to work", may rest completely and leave or may leave at his will the spot

where he actually stays while working, to go somewhere else, whether within or outside the

premises of said factory, shop or boat. If these requisites are complied with, the period of such

rest shall not be counted.

2. ID.; ACTION TO RECOVER COMPENSATION FOR PAST OVERTIME WORK;

ESTOPPEL AND LACHES, NOT DEFENSES. — The principles of estoppel and laches cannot

be invoked against employees or laborers in an action for the recovery of compensation for past

overtime work. In the first place, it would be contrary to the spirit of the Eight Hour Labor Law,

under which the laborers cannot waive their right to extra compensation. In the second place, the

law principally obligates the employer to observe it, so much so that it punishes the employer for

its violation and leaves the employee free and blameless. In the third place, the employee or

laborer is in such a disadvantageous position as to be naturally reluctant or even apprehensive in

asserting a claim which may cause the employer to devise a way for exercising his right to

terminate the employment. Moreover, an employee or laborer, who can not expressly renounce

the right to extra compensation under the Eight-Hour Labor Law, may be compelled to

accomplish the same thing by mere silence or lapse of time, thereby frustrating the purpose of

the law by indirection. (Manila Terminal Co. v. Court of Industrial Relations Et. Al., 91 Phil.,

625, 48 Off. Gaz. 2725.) However, there may be cases in which the silence of the employee or

laborer who lets the time go by for quite a long period without claiming or asserting his right to

overtime compensation may favor the inference that he may not have worked any such overtime

or that his extra work has been duly compensated, but this is not so in the case at bar.

3. ID.; ID.; ID.; OVERTIME PAY IN ARREARS RETROACTS TO THE DATE WHEN

SERVICES WERE ACTUALLY RENDERED. — The employee, in rendering extra services at

the request of his employer, has a right to assume that the latter has complied with the

requirements of the law and therefore has obtained the required permission from the Department

of Labor (Gotamco Lumber Co. v. Ct. 8 Industrial Relations, 85 Phil., 242, 47 Off. Gaz., 3421).

Fear of possible unemployment sometimes is a very strong factor that gags the workingman from

demanding payment for such extra services and it may take him months or years before he could

be made to present a claim against his employer. To allow the workingman to be compensated

only from the date of the filing of the petition with the court would be to penalize him for his

acquiescence of silence which is beyond the intent of the law. It is not just and humane that he

should be deprived of what is lawfully his under the law, for the true intendment of

Commonwealth Act No. 444 is to compensate the worker for services rendered beyond the

statutory period and this should be made to retroact to the date when such services were actually

performed.

4. COURT OF INDUSTRIAL RELATIONS; NATURE AND POWERS OF; POWER TO

MODIFY OR ALTER JUDGMENT SO AS TO CONFORM WITH LAW AND EVIDENCE.

— For procedural purposes, the Court of Industrial Relations is a court with well-defined powers

vested by the law creating it with such other powers as generally pertain to a court of justice

(Sec. 20, Com. Act. No. 103). As such, the general rule that before a judgment becomes final, the

Court that rendered the same may alter or modify it so as to conform with the law and the

evidence, is applicable to the Court of Industrial Relations (Connel Bros. Co. (Phil.) v. National

Labor Union, G. R. No. L-3631, prom. January 30, 1956).

D E C I S I O N

FELIX, J.:

This case involves a petition for certiorari filed by the Luzon Stevedoring Co., Inc., to review a

resolution dated June 5, 1955, issued by the Court of Industrial Relations. On September 5, 1955,

with leave of court, a supplemental petition was filed by said petitioner, and both petitions were

given due course by resolution of this Court of September 15, 1955. The facts of the case may be

summarized as follows:chanrob1es virtual 1a w library

On June 21, 1948, herein respondent Luzon Marine Department Union filed a petition with the

Court of Industrial Relations containing several demands against herein petitioner Luzon

Stevedoring Co., Inc., among which were the petition for full recognition of the right of

COLLECTIVE bargaining, close shop and check off. However, on July 18, 1948, while the case

was still pending with the CIR, said labor union declared a strike which was ruled down as

illegal by this Court in case G. R. No. L-2660, promulgated on May 30, 1950. In view of said

ruling, the Union filed a "Constancia" with the Court of Industrial Relations praying that the

remaining unresolved demands of the Union presented in their original petition, be granted. Said

unresolved demands are the following:chanrob1es v irtual 1aw l ibrary

a. Point No. 2

"That the work performed in excess of eight (8) hours be paid an overtime pay of 50 per cent the

regular rate of pay, and that work performed on Sundays and legal holidays be paid double the

regular rate of pay."

b. Point No. 7

"That all officers, engineers and crew members of motor tugboats who have not received their

pay corresponding to the second half of December, 1941, be paid accordingly."

c. Point No. 11

"That Ciriaco Sarmiento, Chief Mate, M/V Marlin, Rafael Santos, Port Engineer, and Lorenzo de

la Cruz, Chief Engineer, M/V Shark, who have been suspended without justifiable cause and for

union activities, be reinstated with pay from time of suspension."

d. Point No. 12

"That all officers, engineers and crew members of the motor tugboats "Shark", "Herring", "Pike"

and "Ray", who have been discharged without justifiable cause and for union activities, be

reinstated with pay from time of discharge." (p. 65-66, Record).

On the basis of these demands, the case was set for hearing and the parties submitted their

respective evidence, both oral and documentary, from June 8, 1951, to January 7, 1954. In one of

the hearings of the case, the original intervenor in L-2660, Union de Obreros Estibadores de

Filipinas (UOEF), through counsel, moved for the withdrawal of said Union from the case,

which motion was granted by the Court.

After the parties had submitted exhaustive memoranda, the trial Judge rendered a decision on

February 10, 1955, finding that the company gave said employees 3 free meals every day and

about 20 minutes rest after each mealtime; that they worked from 6:00 a.m. to 6:00 p.m. every

day including Sundays and holidays, and for work performed in excess of 8 hours, the officers,

patrons and radio operators were given overtime pay in the amount of P4 each and P2 each for

the rest of the crew up to March, 1947, and after said date, these payments were increased to P5

and P2.50, respectively, until the time of their separation or the strike of July 19, 1948; that when

the tugboats underwent repairs, their personnel worked only 8 hours a day excluding Sundays

and holidays; that although there was an effort on the part of claimants to show that some had

worked beyond 6:00 p.m., the evidence was uncertain and indefinite and that demand was,

therefore, denied; that respondent Company, by the nature of its business and as defined by law

(Section 18-b of Commonwealth Act No. 146, as amended) is considered a public service

operator by the Public Service Commission in its decision in case No. 3035-C entitled

"Philippine Shipowners Association v. Luzon Stevedoring Co., Inc., Et. Al." (Exh. 23), and,

therefore, exempt from paying additional remuneration or compensation for work performed on

Sundays and legal holidays, pursuant to the provisions of section 4 of Commonwealth Act No.

444 (Manila Electric Co. v. Public Utilities Employees Association, 79 Phil., 408, 44 Off. Gaz.,

1760); and ruled that:jgc:chanrobles.com.ph

"For the above reasons, the aforementioned employees are only entitled to receive overtime pay

for work rendered in excess of 8 hours on ordinary days including Sundays and legal holidays.

"However, the respondent company has proved to the satisfaction of the Court that it has paid its

employees for such overtime work as shown above Exhs. 1 to 20-B).

"It is, therefore, only a matter of computation whether such over time pay by the respondent for

overtime services rendered covers the actual overtime work performed by the employees

concerned equivalent to 25 per cent which is the minimum rate fixed by law in the absence of

other proof to justify the granting of more beyond said minimum rate."cralaw virtua1aw library

Demands Nos. 11 and 12 regarding the reinstatement to the service of the employees named

therein were denied and respondent Company was only ordered to pay the separation pay and

overtime work rendered by Ciriaco Sarmiento, Rafael Santos and Lorenzo de la Cruz, after

making the pronouncement that their separation or dismissal was not due to union activities but

for valid and legal grounds.

The Luzon Marine Department Union, through counsel, therefore, filed a motion for

reconsideration praying that the decision of February 10, 1955, be modified so as to declare and

rule that the members of the Union who had rendered services from 6:00 a.m. to 6:00 p.m. were

entitled to 4 hours‘ overtime pay; that whatever little time allotted to the taking of their meals

should not be deducted from the 4 hours of overtime rendered by said employees, that the

amounts of P3 and P2 set aside for the daily meals of the employees be considered as part of

their actual compensation in determining the amount due to said employees for their unpaid

overtime work; that the employees separated from the service without just cause be paid their

unearned wages and salaries from the date of their separation up to the time the decision in case

L-2660 became final; and for such other relief as may be just and equitable in the premises.

Luzon Stevedoring Co., Inc. also sought for the reconsideration of the decision only in so far as it

interpreted that the period during which a seaman is aboard a tugboat shall be considered as

"working time" for the purpose of the Eight-Hour-Labor Law.

In pursuance of Section 1 of Commonwealth Act No. 103, as amended by Commonwealth Act

No. 254 and further amended by Commonwealth Act No. 559, the motions for reconsideration

were passed upon by the Court en banc, and on June 6, 1955, a resolution modifying the decision

of February 10, 1955, was issued, in the sense that the 4 hours of overtime work included in the

regular daily schedule of work from 6:00 a.m. to 6:00 p.m. should be paid independently of the

so-called "coffee-money", after making a finding that said extra amounts were given to crew

members of some tugboats for work performed beyond 6:00 p.m. over a period of some 16

weeks. The Company‘s motion for reconsideration was denied.

From this resolution, the Luzon Stevedoring Co., Inc. filed the present petition for certiorari and

when the Court of Industrial Relations, acting upon said Company‘s motion for clarification,

ruled that the 20 minutes‘ rest given the claimants after mealtime should not be deducted from

the 4 hours of overtime worked performed by said claimants, petitioner filed a supplemental

petition for certiorari dated September 5, 1955, and both petitions were given due course by this

Court.

Respondent Luzon Marine Labor Union filed within the reglementary period a motion to

dismiss, which this Court considered as an answer by resolution of October 14, 1955, alleging

that the decision, resolution and order of the Court of Industrial Relations sought to be reviewed

by petitioner do not present any question of law, the issues in said CIR case No. 147-V being

purely factual. The respondent Judges of the Court of Industrial Relations, represented by

counsel, timely filed an answer likewise asserting that there could have been no question of law

involved or error of law committed by the said Judges in the resolutions appealed from, same

having been based on purely findings of fact.

In this instance, petitioner does not seek to alter the lower court‘s finding that the regular daily

schedule of work of the members of the herein respondent Union was from 6:00 a.m. to 6:00

p.m. Petitioner, however, submits several "issues" which We will proceed to discuss one after the

other. They are the following:chanrob1es virtual 1aw library

I. Is the definition for "hours of work" as presently applied to dryland laborers equally applicable

to seamen? Or should a different criterion be applied by virtue of the fact that the seamen‘s

employment is completely different in nature as well as in condition of work from that of a

dryland laborer?

Petitioner questions the applicability to seamen of the interpretation given to the phrase "hours of

work" for the purpose of the Eight-Hour Labor Law, insinuating that although the seamen

concerned stayed in petitioner‘s tugboats, or merely within its compound, for 12 hours, yet their

work was not continuous but interrupted or broken. It has been the consistent stand of petitioner

that while it is true that the workers herein were required to report for work at 6:00 a.m. and were

made to stay up to 6:00 p.m., their work was not continuous and they could have left the

premises of their working place were it not for the inherent physical impossibility peculiar to the

nature of their duty which prevented them from leaving the tugboats. It is the Company‘s defense

that a literal interpretation of what constitutes non-working hours would result in absurdity if

made to apply to seamen aboard vessels in bays and rivers, and We are called upon to make an

interpretation of the law on "non-working hours" that may comprehend within its embrace not

only the non-working hours of laborers employed in land jobs, but also of that particular group

of seamen, i.e., those employed in vessels plying in rivers and bays, since admittedly there is no

need for such ruling with respect to officers and crew of interisland vessels which have aboard 2

shifts of said men and strictly follow the 8-hour working period.

Section 1 of Commonwealth Act No. 444, known as the Eight-Hour Labor Law, provides:jgc:chanrobles.com.ph

"SEC. 1. The legal working day for any person employed by another shall be of not more than

eight hours daily. When the work is not continuous, the time during which the laborer is not

working AND CAN LEAVE HIS WORKING PLACE and can rest completely, shall not be

counted."cralaw virtua1aw l ibrary

The requisites contained in this section are further implemented by contemporary regulations

issued by administrative authorities (Sections 4 and 5 of Chapter III, Article 1, Code of Rules

and Regulations to Implement the Minimum Wage Law).

For the purposes of this ease, We do not need to set for seamen a criterion different from that

applied to laborers on land, for under the provisions of the above quoted section, the only thing

to be done is to determine the meaning and scope of the term "working place" used therein. As

We understand this term, a laborer need not leave the premises of the factory, shop or boat in

order that his period of rest shall not be counted, it being enough that he "cease to work", may

rest completely and leave or may leave at his will the spot where he actually stays while

working, to go somewhere else, whether within or outside the premises of said factory, shop or

boat. If these requisites are complied with, the period of such rest shall not be counted.

In the case at bar We do not need to look into the nature of the work of claimant mariners to

ascertain the truth of petitioner‘s allegation that this kind of seamen have had enough "free time",

a task of which We are relieved, for although after an ocular inspection of the working premises

of the seamen affected in this case the trial Judge declared in his decision that the Company gave

the complaining laborers 3 free meals a day with a recess of 20 minutes after each meal, this

decision was specifically amended by the Court en banc in its Resolution of June 6, 1955,

wherein it held that the claimants herein rendered services to the Company from 6:00 a.m. to

6:00 p.m. including Sundays and holidays, which implies either that said laborers were not given

any recess at all, or that they were not allowed to leave the spot of their working place, or that

they could not rest completely. And such resolution being on a question essentially of fact, this

Court is now precluded to review the same (Com. Act No. 103, Sec. 15, as amended by Sec. 2 of

Com. Act No. 559; Rule 44 of the Rules of Court; Kaisahan Ng Mga Manggagawa sa Kahoy sa

Filipinas v. Gotamco Sawmill, 80 Phil., 521; Operators, Inc. v. Pelagio, 99 Phil., 893, and

others).

II. Should a person be penalized for following an opinion issued by the Secretary of Justice in the

absence of any judicial pronouncement whatsoever?

Petitioner cites Opinion No. 247, Series of 1941 of the Secretary of Justice to a query made by

the Secretary of Labor in connection with a similar subject matter as the one involved in this

issue, but that opinion has no bearing on the case at bar because it refers to officers and crew on

board interisland boats whose situation is different from that of mariners or sailors working in

small tugboats that ply along bays and rivers and have no cabins or resting places for persons

that man the same. Moreover, We cannot pass upon this second issue because, aside from the

fact that there appears nothing on record that would support petitioner‘s assertion that in its

dealing with its employees, it was guided by an opinion of the Secretary of Justice, the issue

involves a mere theoretical question.

III. When employees with full knowledge of the law, voluntarily agreed to work for so many

hours in consideration of a certain definite wage, and continue working without any protest for a

period of almost two years, is said compensation as agreed upon legally deemed and

retroactively presumed to constitute full payment for all services rendered, including whatever

overtime wages might be due? Especially so if such wages, though received years before the

enactment of the Minimum Wage Law, were already set mostly above said minimum wage?

IV. The members of respondent Union having expressly manifested acquiescence over a period

of almost two years with reference to the sufficiency of their wages and having made no protest

whatsoever with reference to said compensation, does the legal and equitable principle of

estoppel operate to bar them from making a claim for, or making any recovery of, back overtime

compensation?

We are going to discuss these two issues jointly. Section 6 of Commonwealth Act No. 444

provides:jgc:chanrobles.com.ph

"SEC. 6. Any agreement or contract between the employer and the laborer or employee contrary

to the provisions of this Act shall be null and void ab initio."cralaw virtua1aw library

In the case of the Manila Terminal Co. v. Court of Industrial Relations Et. Al., 91 Phil., 625, 48

Off. Gaz., 2725, this Court held: jgc:chanrobles.com.ph

"The principles of estoppel and laches cannot be invoked against employees or laborers in an

action for the recovery of compensation for past overtime work. In the first place, it would be

contrary to the spirit of the Eight-Hour Labor Law, under which, as already seen, the laborers

cannot waive their right to extra compensation. In the second place, the law principally obligates

the employer to observe it, so much so that it punishes the employer for its violation and leaves

the employee free and blameless. In the third place, the employee or laborer is in such a

disadvantageous position as to be naturally reluctant or even apprehensive in asserting a claim

which may cause the employer to devise a way for exercising his right to terminate the

employment.

Moreover, if the principle of estoppel and laches is to be applied, it would bring about a situation

whereby the employee or laborer who can not expressly renounce the right to extra compensation

under the Eight-Hour Labor Law, may be compelled to accomplish the same thing by mere

silence or lapse of time. thereby frustrating the purpose of the law by indirection."cralaw virtua1aw library

This is the law on the matter and We certainly adhere to it in the present case. We deem it,

however, convenient to say a few words of explanation so that the principle enunciated herein

may not lead to any misconstruction of the law in future cases. There is no question that the right

of the laborers to overtime pay cannot be waived. But there may be cases in which the silence of

the employee or laborer who lets the time go by for quite a long period without claiming or

asserting his right to overtime compensation may favor the inference that he has not worked any

such overtime or that his extra work has been duly compensated. But this is not so in the case at

bar. The complaining laborers have declared that long before the filing of this case, they had

informed Mr. Martinez, a sort of overseer of the petitioner, that they had been working overtime

and claiming the corresponding compensation therefor, and there is nothing on record to show

that the claimants, at least the majority of them, had received wages in excess of the minimum

wage later provided by Republic Act No. 602, approved April 6, 1951. On the contrary, in the

decision of the trial Judge, it appears that 34 out of the 58 claimants received salaries less than

the minimum wage authorized by said Minimum Wage Law, to wit: chanrob1es virtual 1aw l ibrary

Per month

1. Ambrosio Tañada oiler P82.50 but after passing the examinations his wages were increased to

P225 per month;

2. Patricio Santiago quartermaster 82.50 but after passing the examinations his wages were

increased to P225 per month;

3. Fidelino Villanueva oiler 82.50

4. Pedro Filamor quartermaster 82.50 then his wage was reduced to 67.50 per month as cook;

5. Emiliano Irabon seaman 67.50 then his wage was reduced to P60 and he stayed for 1 month

only;it was increased again to P67.50;

6. Juanito de Luna oiler 82.50

7. Benigno Curambao oiler 82.50

8. Salvador Mercadillo oiler 82.50

9. Nicasio Sta. Lucia cook 82.00

10. Damaso Arciaga seaman 82.50

11. Leonardo Patnugot oiler 82.50

12. Bienvenido Crisostomo oiler 82.50

13. Isidro Malabanan cook 82.00

14. Saturnino Tumbokon seaman 67.50

15. Bonifacio Cortez quarter-master 82.50

16. Victorio Carillo cook 67.50

17. Francisco Atilano cook 67.50

18. Gualberto Legaspi seaman 67.50

19. Numeriano Juanillo quarter-master 82.50

20. Moises Nicodemus quarter-master 82.50

21. Arsenio Indiano seaman 82.50

22. Ricardo Autencio oiler 82.50

23. Mateo Arciaga seaman 67.50

24. Romulo Magallanes quarter-master 82.50

25. Antonio Belbes seaman 67.50

26. Benjamin Aguirre quarter-master 82.50

27. Emilio Anastasio quarter-master 82.50

28. Baltazar Labrada oiler 82.50

29. Emeterio Magallanes seaman 67.50

30. Agripino Laurente quarter-master 82.50

31. Roberto Francisco oiler 82.50

32. Elias Matrocinio seaman 82.50

33. Baltazar Vega seaman 67.50

34. Jose Sanchez oiler 82.50

Consequently, for lack of the necessary supporting evidence for the petitioner, the inference

referred to above cannot be drawn in this case.

V. Granting, without conceding, that any overtime pay in arrears is due, what is the extent and

rule of retroactivity with reference to overtime pay in arrears as set forth and established by the

precedents and policies of the Court of Industrial Relations in past decisions duly affirmed by the

Honorable Supreme Court?

VI. Is the grant of a sizeable amount as back overtime wages by the Court of Industrial Relations

in consonance with the dictates of public policy and the avowed national and government policy

on economic recovery and financial stability?

In connection with issue No. 5, petitioner advances the theory that the computation of the

overtime payment in arrears should be based from the filing of the petition. In support of this

contention, petitioner cites the case of Gotamco Lumber Co. v. Court of Industrial Relations, 85

Phil., 242; 47 Off. Gaz., 3421. This case is not in point; it merely declares that Commonwealth

Act No. 444 imposes upon the employer the duty to secure the, permit for overtime work, and

the latter may not therefore be heard to plead his own negligence as exemption or defense. The

employee in rendering extra services at the request of his employer has a right to assume that the

latter has complied with the requirements of the law and therefore has obtained the required

permission from the Department of Labor (47 Off. Gaz., 3421). The other decisions of the Court

of Industrial Relations cited by petitioner, to wit: Cases 6-V, 7-V and 8-V, Gotamco & Co., Dy

Pac & Co., Inc. and D. C. Chuan; Case 110-V, National Labor Union v. Standard Vacuum Oil

Co.; Case No. 76-V, Dee Cho Workers, CLO v. Dee Cho Lumber Co., and Case No. 70-V,

National Labor Union v. Benguet Consolidated Mining Co., do not seem to have reached this

Court and to have been affirmed by Us.

It is of common occurrence that a workingman has already rendered services in excess of the

statutory period of 8 hours for some time before he can be led or he can muster enough courage

to confront his employer with a demand for payment thereof. Fear of possible unemployment

sometimes is a very strong factor that gags the workingman from asserting his right under the

law and it may take him months or years before he could be made to present a claim against his

employer. To allow the workingman to be compensated only from the date of the filing of the

petition with the court would be to penalize him for his acquiescence or silence which We have

declared in the case of the Manila Terminal Co. v. CIR, supra, to be beyond the intent of the law.

It is not just and humane that he should be deprived of what is lawfully his under the law, for the

true intendent of Commonwealth Act No. 444 is to compensate the worker for services rendered

beyond the statutory period and this should be made to retroact to the date when such services

were actually performed.

Anent issue No. VI, petitioner questions the reasonableness of the law providing for the grant of

overtime wages. It is sufficient for Us to state here that courts cannot go outside of the field of

interpretation so as to inquire into the motive or motives of Congress in enacting a particular

piece of legislation. This question, certainly, is not within Our province to entertain.

It may be alleged, however, that the delay in asserting the right to back overtime compensation

may cause an unreasonable or irreparable injury to the employer, because the accumulation of

such back overtime wages may become so great that their payment might cause the bankruptcy

or the closing of the business of the employer who might not be in a position to defray the same.

Perhaps this situation may occur, but We shall not delve on it this time because petitioner does

not claim that the payment of the back overtime wages it is ordered to pay to its claimant

laborers will cause the injury it foresees or force it to close its business, a situation which it

speaks of theoretically and in general.

VII. Should not a Court of Industrial Relations‘ resolution, en banc, which is clearly unsupported

in fact and in law, patently arbitrary and capricious and absolutely devoid of sustaining reason,

be declared illegal? Especially so, if the trial court‘s decision which the resolution en banc

reversed, is most detailed, exhaustive and comprehensive in its findings as well as most

reasonable and legal in its conclusions?

This issue was raised by petitioner in its supplemental petition and We have this much to say.

The Court of Industrial Relations has been considered "a court of justice" (Metropolitan

Transportation Service v. Paredes, * G. R. No. L-1232, prom. January 12, 1948), although in

another case. We said that it is "more an administrative board than a part of the integrated

judicial system of the nation" (Ang Tibay v. Court of Industrial Relations, 69 Phil., 635). But for

procedural purposes, the Court of Industrial Relations is a court with well-defined powers vested

by the law creating it and with such other powers as generally pertain to a court of justice (Sec.

20, Com. Act No. 103). As such, the general rule that before judgment becomes final, the Court

that rendered the same may alter or modify it so as to conform with the with the law and the

evidence, is applicable to the Court of Industrial Relations (Connel Bros. Co. (Phil.) v. National

Labor Union, G. R. No. L-3631 prom. January 30, 1956). The law also provides that after a

judge of the Court of Industrial Relations, duly designated by the Presiding Judge therein to hear

a particular case, had rendered a decision, any agrieved party may request for reconsideration

thereof and the judges of said Court shall sit together, the concurrence of the 3 of them being

necessary for the pronouncement of a decision, order or award (Sec. 1, Com. Act No. 103). It

was in virtue of these rules and upon motions for reconsideration presented by both parties that

resolution subject of the present petition was issued, the Court en banc finding it necessary to

modify a part of the decision of February 10, 1955, which is clearly within its power to do.

On the other hand, the issue under consideration is predicated on a situation which is not

obtaining in the case at bar, for it presupposes that the resolutions en banc of the respondent

Court "are clearly unsupported in fact and in law, patently arbitrary and capricious and

absolutely devoid of any sustaining reason", which does not seem to be the case as a matter of

fact.

Wherefore, and on the strength of the foregoing consideration, the resolutions of the Court of

Industrial Relations appealed from are hereby affirmed, with costs against petitioner. It is so

ordered.

Bengzon, Padilla, Reyes, A., Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L. and

Endencia, JJ., concur.

Endnotes:

[G.R. No. L-15422. November 30, 1962.]

NATIONAL DEVELOPMENT COMPANY, Petitioner, v. COURT OF INDUSTRIAL

RELATIONS and NATIONAL TEXTILE WORKERS UNION, Respondents.

Government Corporate Counsel Simeon M. Gopengco and Lorenzo R. Mosqueda for

Petitioner.

Mariano B. Tuason for the respondent Court of Industrial Relations.

Eulogio R. Lerum for respondent National Textile Workers Union.

SYLLABUS

1. COURT OF INDUSTRIAL RELATIONS; JURISDICTION; REQUISITES. — In order that

the Court of Industrial Relations will have jurisdiction over a case, the following requisites must

be complied with: (a) there must exist between the parties an employer-employee relationship or

the claimant must seek his reinstatement; and (b) the controversy must relate to a case certified

by the President to the Court of Industrial Relations as one involving national interest, or must

have a bearing on an unfair labor practice charge, or must arise either under the Eight-Hour

Labor Law, or under the Minimum Wage Law. In default of any of these circumstances, the

claim becomes a mere money claim that comes under the jurisdiction of the regular courts.

(Campos, Et. Al. v. Manila Railroad Co., Et Al., G.R. No. L-17905, may 25, 1962.)

2. ID.; MOTION FOR RECONSIDERATION; SERVICE ON ADVERSE PARTY

REQUIRED. — A motion for reconsideration, a copy of which has not been served on the

adverse party as required by the rules, stands on the same footing as one filed outside of the

period required by the rules of the Court of Industrial Relations. Hence, after its dismissal for

failure to make such service, there is no decision of the Court en banc that petitioner can bring to

the Supreme Court for review.

3. LABOR; COMPENSABLE WORK; WHEN IDLE TIME IS NOT COUNTED AS

WORKING TIME. — The idle time that an employee may spend for resting and during which

he may leave the spot or place of work though not the premises of his employer, is not counted

as working time only where the work is broken or is not continuous.

4. ID.; ID.; QUESTION OF WHAT IS COMPENSABLE WORK ONE OF FACT. — The

question of what constitutes compensable work is one of fact the determination of which depends

upon the particular circumstances, to be determined by the courts in controverted cases. (31 Am.

Jur., Sec. 626, pp. 877-878.)

D E C I S I O N

REGALA, J.:

This is a case for review from the Court of Industrial Relations. The pertinent facts are the

following.

At the National Development Co., a government-owned and controlled corporation, there were

four shifts of work. One shift was from 8 a.m. to 4 p.m., while the three other shifts were from 6

a.m. to 2 p.m.; then from 2 p.m. to 10 p.m. and, finally, from 10 p.m. to 6 a.m. In each shift,

there was a one-hour mealtime period, to wit: from (1) 11 a.m. to 12 noon for those working

between 6 a.m. and 2 p.m. and from (2) 7 p.m. to 8 p.m. for those working between 2 p.m. and

10 p.m.

The records disclose that although there was a one-hour mealtime, petitioner nevertheless

credited the workers with eight hours of work for each shift and paid them for the same number

of hours. However, since 1953, whenever workers in one shift were required to continue working

until the next shift, Petitioner, instead of crediting them with eight hours of overtime work, has

been paying them for six hours only, petitioner claiming that the two hours corresponding to the

mealtime periods should not be included in computing compensation. On the other hand,

respondent National Textile Workers Union whose members are employed at the NDC,

maintained the opposite view and asked the Court of Industrial Relations to order the payment of

additional overtime pay corresponding to the mealtime periods.

After hearing, Judge Arsenio I. Martinez of the CIR issued an order, dated March 19, 1959,

holding that mealtime should be counted in the determination of overtime work and accordingly

ordered petitioner to pay P101,407.96 by way of overtime compensation. Petitioner filed a

motion for reconsideration but the same was dismissed by the CIR en banc on the ground that

petitioner failed to furnish the union a copy of its motion.

Thereafter, petitioner appealed to this Court, contending, first, that the CIR has no jurisdiction

over claims for overtime compensation and, secondly, that the CIR did not make "a correct

appraisal of the facts, in the light of the evidence" in holding that mealtime periods should be

included in overtime work because workers could not leave their places of work and rest

completely during those hours.

In support of its contention that the CIR lost its jurisdiction over claims for overtime pay upon

the enactment of the Industrial Peace Act (Republic Act No. 875), petitioner cites a number of

decisions of this Court. On May 23, 1960, however, We ruled in Price Stabilization Corp. v.

Court of Industrial Relations, Et Al., 108 Phil., 138, 139, that.

"Analyzing these cases, the underlying principle, it will be noted in all of them, though not stated

in express terms, is that were the employer-employee relationship is still existing or is sought to

be reestablished because of its wrongful severance, (as where the employee seeks reinstatement),

the Court of Industrial Relations has jurisdiction over all claims arising out of, or in connection

with the employment, such as those related to the Minimum Wage Law and Eight- Hour Labor

Law. After the termination of their relationship and no reinstatement is sought, such claims

become mere money claims, and come within the jurisdiction of the regular courts.

"We are aware that in 2 cases, some statements implying a different view have been made, but

we now hold and declare the principle set forth in the next preceding paragraph as the one

governing all cases of this nature."cralaw virtua1aw library

This has been the constant doctrine of this Court since May 23, 1960 1

A more recent definition of the jurisdiction of the CIR is found in Campos, Et. Al. v. Manila

Railroad Co., Et Al., G. R. No. L-17905, May 25, 1962, in which We held that, for such

jurisdiction to come into play, the following requisites must be complied with: (a) there must

exist between the parties an employer-employee relationship or the claimant must seek his

reinstatement; and (b) the controversy must relate to a case certified by the President to the CIR

as one involving national interest, or must have a bearing on an unfair labor practice charge, or

must arise either under the Eight-Hour Labor Law, or under the Minimum Wage Law. In default

of any of these circumstances, the claim becomes a mere money claim that comes under the

jurisdiction of the regular courts. Here, petitioner does not deny the existence of an employer-

employee relationship between it and the members of the union. Neither is there any question

that the claim is based on the Eight-Hour Labor Law (Com. Act No. 444, as amended). We

therefore rule in favor of the Jurisdiction of the CIR over the present claim.

The other issue raised in the appeal is whether or not, on the basis of the evidence, the mealtime

breaks should be considered working time under the following provision of the law: jgc:chanrobles.com.ph

"The legal working day for any person employed by another shall be of not more than eight

hours daily. When the work is not continuous, the time during which the laborer is not working

and can leave his working place and can rest completely shall not be counted." (Sec. 1, Com. Act

No. 444, as amended. Emphasis ours.)

It will be noted that, under the law, the idle time that an employee may spend for resting and

during which he may leave the spot or place of work though not the premises 2 of his employer,

is not counted as working time only where the work is broken or is not continuous.

The determination as to whether work is continuous or not is mainly one of fact which We shall

not review as long as the same is supported by evidence. (Sec. 15, Com. Act No. 103, as

amended; Philippine Newspaper Guild v. Evening News, Inc., 86 Phil. 303).

That is why We brushed aside petitioner‘s contention in one case that workers who worked

under a 6 a.m. to 6 p.m. schedule had enough "free time" and therefore should not be credited

with four hours of overtime and held that the finding of the CIR "that claimants herein rendered

services to the Company from 6:00 a.m. to 6 p.m. including Sundays and holidays, . . . implies

either that they were not allowed to leave the spot of their working place, or that they could not

rest completely." (Luzon Stevedoring Co., Inc., v. Luzon Marine Department Union, Et Al., G.R.

No. L-9265, April 29, 1957).

Indeed, it has been said that no general rule can be laid down as to what constitutes compensable

work, but rather the question is one of fact depending upon the particular circumstances, to be

determined by the courts in controverted cases. (31 Am. Jur. Sec. 626 pp. 877-878.)

In this case, the CIR‘s finding that work in the petitioner company was continuous and did not

permit employees and laborers to rest completely is not without basis in evidence and following

our earlier rulings, We shall not disturbed the same. Thus, the CIR found: jgc:chanrobles.com.ph

"While it may be corrected to say that it is well-nigh impossible for an employee to work while

he is eating, yet under Section 1 of Com. Act No. 444 such a time for eating can only be

segregated or deducted from his work, if the same is not continuous and the employee can leave

his working place and rest completely. The time cards show that the work was continuous and

without interruption. There is also the evidence adduced by the petitioner that the pertinent

employees cannot freely leave their working places nor rest completely. There is furthermore the

aspect that during the period covered by the computation the work was on a 24 hour basis and as

previously stated divided into shifts."cralaw virtua1aw library

From these facts, the CIR correctly concluded that work in petition company was continuous and

therefore the mealtime breaks should be counted as working time for purposes of overtime

compensation.

Petitioner gives an eight-hour credit to its employees who work a single shift, say from 6 a.m. to

2 p.m. Why cannot it credit them sixteen hours should they work in two shifts?

There is another reason why this appeal should be dismissed and that is that there is no decision

by the CIR en banc from which petitioner can appeal to this Court. As already indicated above,

the records show that petitioner‘s motion for reconsideration of the order of March 19, 1959 was

dismissed by the CIR en banc because of petitioner‘s failure to serve a copy of the same on the

union.

Section 15 of the rules of the CIR, in relation to Section 1 of Commonwealth Act No. 103,

states:jgc:chanrobles.com.ph

"The movant shall file the motion (for reconsideration), in six copies within five (5) days from

the date on which he receives notice of the order or decision, object of the motion for

reconsideration, the same to be verified under oath with respect to the correctness of the

allegations of fact, and serving a copy thereof, personally or by registered mail, on the adverse

party. The latter may file an answer, in six (6) copies, duly verified under oath." (Emphasis ours.)

In one case (Bien, Et. Al. v. Castillo, etc., Et. Al. G.R. No. L- 7428, May 24, 1955), We

sustained the dismissal of a motion for reconsideration filed outside of the period provided in the

rules of the CIR. A motion for reconsideration, a copy of which has not been served on the

adverse party as required by the rules, stands on the same footing. For "in the very nature of

things, a motion for reconsideration against a ruling or decision by one Judge is, in effect an

appeal to the Court of Industrial Relations, en banc," the purpose being "to substitute the

decision or order of a collegiate court for the ruling or decision of any judge." The provision in

Commonwealth Act No. 103 authorizing the presentation of a motion for reconsideration of a

decision or order of the judge to the CIR, en banc, and not direct appeal therefrom to this Court,

is also in accord with the principle of exhaustion of administrative remedies before resort can be

made to this Court (Broce, Et. Al. v. The Court of Industrial Relations, Et Al., G.R. No. L-12367,

October 29, 1959).

Petitioner‘s motion for reconsideration having been dismissed for its failure to serve a copy of

the same on the union, there is no decision of the CIR en banc that petitioner can bring to this

Court for review.

WHEREFORE, the order of March 19, 1959 and the resolution of April 27, 1959 are hereby

affirmed and the appeal is dismissed, without pronouncement as to costs.

Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon and

Makalintal, JJ., concur.

Bengzon, C.J., took no part.

[G.R. No. 119205. April 15, 1998]

SIME DARBY PILIPINAS, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION (2ND DIVISION) and SIME DARBY SALARIED EMPLOYEES ASSOCIATION (ALU-TUCP), respondents.

D E C I S I O N

BELLOSILLO, J.:

Is the act of management in revising the work schedule of its employees and discarding their paid lunch break constitutive of unfair labor practice?

Sime Darby Pilipinas, Inc., petitioner, is engaged in the manufacture of automotive tires, tubes and other rubber products. Sime Darby Salaried Employees Association (ALU-TUCP), private respondent, is an association of monthly salaried employees of petitioner at its Marikina factory. Prior to the present controversy, all company factory workers in Marikina including members of private respondent union worked from 7:45 a.m. to 3:45 p.m. with a 30 minute paid on call lunch break.

On 14 August 1992 petitioner issued a memorandum to all factory-based employees advising all its monthly salaried employees in its Marikina Tire Plant, except those in the Warehouse and Quality Assurance Department working on shifts, a change in work schedule effective 14 September 1992 thus

TO: ALL FACTORY-BASED EMPLOYEES

RE: NEW WORK SCHEDULE

Effective Monday, September 14, 1992, the new work schedule factory office will be as follows:

7:45 A.M. 4:45 P.M. (Monday to Friday)

7:45 A.M. 11:45 P.M. (Saturday).

Coffee break time will be ten minutes only anytime between:

9:30 A.M. 10:30 A.M. and

2:30 P.M. 3:30 P.M.

Lunch break will be between:

12:00 NN 1:00 P.M. (Monday to Friday).

Excluded from the above schedule are the Warehouse and QA employees who are on shifting. Their work and break time schedules will be maintained as it is now.xiv[1]

Since private respondent felt affected adversely by the change in the work schedule and discontinuance of the 30-minute paid on call lunch break, it filed on behalf of its members a complaint with the Labor Arbiter for unfair labor practice, discrimination and evasion of liability pursuant to the resolution of this Court in Sime Darby International Tire Co., Inc. v. NLRC.xiv[2] However, the Labor Arbiter dismissed the complaint on the ground that the change in the work schedule and the elimination of the 30-minute paid lunch break of the factory workers constituted a valid exercise of management prerogative and that the new work schedule, break time and one-hour lunch break did not have the effect of diminishing the benefits granted to factory workers as the working time did not exceed eight (8) hours.

The Labor Arbiter further held that the factory workers would be justly enriched if they continued to be paid during their lunch break even if they were no longer on call or required to work during the break. He also ruled that the decision in the earlier Sime Darby casexiv[3] was not applicable to the instant case because the former involved discrimination of certain employees who were not paid for their 30-minute lunch break while the rest of the factory workers were paid; hence, this Court ordered that the discriminated employees be similarly paid the additional compensation for their lunch break.

Private respondent appealed to respondent National Labor Relations Commission (NLRC) which sustained the Labor Arbiter and dismissed the appeal.xiv[4] However, upon motion for reconsideration by private respondent, the NLRC, this time with two (2) new commissioners replacing those who earlier retired, reversed its arlier decision of 20 April 1994 as well as the decision of the Labor Arbiter.xiv[5] The NLRC considered the decision of this Court in the Sime Darby case of 1990 as the law of the case wherein petitioner was ordered to pay the money value of these covered employees deprived of lunch and/or working time breaks. The public respondent declared that the new work schedule deprived the employees of the benefits of time-honored company practice of providing its employees a 30-minute paid lunch break resulting in an unjust diminution of company privileges prohibited by Art. 100 of the Labor Code, as amended. Hence, this petition alleging that public respondent committed grave abuse of discretion amounting to lack or excess of jurisdiction: (a) in ruling that petitioner committed unfair labor practice in the implementation of the change in the work schedule of its employees from 7:45 a.m. 3:45 p.m. to 7:45 a.m. 4:45 p.m. with one-hour lunch break from 12:00 nn to 1:00 p.m.; (b) in holding that there was diminution of benefits when the 30-minute paid lunch break was eliminated; (c) in failing to consider that in the earlier Sime Darby case affirming the decision of the NLRC, petitioner was authorized to discontinue the practice of having a 30-minute paid lunch break should it decide to do so; and (d) in ignoring petitioners inherent management prerogative of determining and

fixing the work schedule of its employees which is expressly recognized in the collective bargaining agreement between petitioner and private respondent.

The Office of the Solicitor General filed in lieu of comment a manifestation and motion recommending that the petition be granted, alleging that the 14 August 1992 memorandum which contained the new work schedule was not discriminatory of the union members nor did it constitute unfair labor practice on the part of petitioner.

We agree, hence, we sustain petitioner. The right to fix the work schedules of the employees rests principally on their employer. In the instant case petitioner, as the employer, cites as reason for the adjustment the efficient conduct of its business operations and its improved production.xiv[6] It rationalizes that while the old work schedule included a 30-minute paid lunch break, the employees could be called upon to do jobs during that period as they were on call. Even if denominated as lunch break, this period could very well be considered as working time because the factory employees were required to work if necessary and were paid accordingly for working. With the new work schedule, the employees are now given a one-hour lunch break without any interruption from their employer. For a full one-hour undisturbed lunch break, the employees can freely and effectively use this hour not only for eating but also for their rest and comfort which are conducive to more efficiency and better performance in their work. Since the employees are no longer required to work during this one-hour lunch break, there is no more need for them to be compensated for this period. We agree with the Labor Arbiter that the new work schedule fully complies with the daily work period of eight (8) hours without violating the Labor Code.xiv[7] Besides, the new schedule applies to all employees in the factory similarly situated whether they are union members or not.xiv[8]

Consequently, it was grave abuse of discretion for public respondent to equate the earlier Sime Darby casexiv[9] with the facts obtaining in this case. That ruling in the former case is not applicable here. The issue in that case involved the matter of granting lunch breaks to certain employees while depriving the other employees of such breaks. This Court affirmed in that case the NLRCs finding that such act of management was discriminatory and constituted unfair labor practice.

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

Every business enterprise endeavors to increase its profits. In the process, it may devise means to attain that goal. Even as the law is solicitous of the welfare of the

employees, it must also protect the right of an employer to exercise what are clearly management prerogatives.xiv[10] Thus, management is free to regulate, according to its own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place and manner of work, processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, lay off of workers and discipline, dismissal and recall of workers.xiv[11] Further, management retains the prerogative, whenever exigencies of the service so require, to change the working hours of its employees. So long as such prerogative is exercised in good faith for the advancement of the employers interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements, this Court will uphold such exercise.xiv[12]

While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be supposed that every dispute will be automatically decided in favor of labor. Management also has right which, as such, are entitled to respect and enforcement in the interest of simple fair play. Although this Court has inclined more often than not toward the worker and has upheld his cause in his conflicts with the employer, such as favoritism has not blinded the Court to the rule that justice is in every case for the deserving, to be dispensed in the light of the established facts and the applicable law and doctrine.xiv[13]

WHEREFORE, the Petition is GRANTED. The Resolution of the National Labor Relations Commission dated 29 November 1994 is SET ASIDE and the decision of the Labor Arbiter dated 26 November 1993 dismissing the complaint against petitioner for unfair labor practice is AFFIRMED.

SO ORDERED.

FIRST DIVISION

[G.R. NO. 146881 : February 5, 2007]

COCA COLA BOTTLERS (PHILS.), INC./ERIC MONTINOLA, Manager, Petitioners, v.

DR. DEAN N. CLIMACO, Respondent.

D E C I S I O N

AZCUNA, J.:

This is a Petition for Review on Certiorari of the Decision of the Court of Appeals1 promulgated

on July 7, 2000, and its Resolution promulgated on January 30, 2001, denying petitioner's

motion for reconsideration. The Court of Appeals ruled that an employer-employee relationship

exists between respondent Dr. Dean N. Climaco and petitioner Coca-Cola Bottlers Phils., Inc.

(Coca-Cola), and that respondent was illegally dismissed.

Respondent Dr. Dean N. Climaco is a medical doctor who was hired by petitioner Coca-Cola

Bottlers Phils., Inc. by virtue of a Retainer Agreement that stated:

WHEREAS, the COMPANY desires to engage on a retainer basis the services of a physician and

the said DOCTOR is accepting such engagement upon terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the premises and the mutual agreement hereinafter

contained, the parties agree as follows:

1. This Agreement shall only be for a period of one (1) year beginning January 1, 1988 up to

December 31, 1988. The said term notwithstanding, either party may terminate the contract upon

giving a thirty (30)-day written notice to the other.

2. The compensation to be paid by the company for the services of the DOCTOR is hereby fixed

at PESOS: Three Thousand Eight Hundred (P3,800.00) per month. The DOCTOR may charge

professional fee for hospital services rendered in line with his specialization. All payments in

connection with the Retainer Agreement shall be subject to a withholding tax of ten percent

(10%) to be withheld by the COMPANY under the Expanded Withholding Tax System. In the

event the withholding tax rate shall be increased or decreased by appropriate laws, then the rate

herein stipulated shall accordingly be increased or decreased pursuant to such laws.

3. That in consideration of the above mentioned retainer's fee, the DOCTOR agrees to perform

the duties and obligations enumerated in the COMPREHENSIVE MEDICAL PLAN, hereto

attached as Annex "A" and made an integral part of this Retainer Agreement.

4. That the applicable provisions in the Occupational Safety and Health Standards, Ministry of

Labor and Employment shall be followed.

5. That the DOCTOR shall be directly responsible to the employee concerned and their

dependents for any injury inflicted on, harm done against or damage caused upon the employee

of the COMPANY or their dependents during the course of his examination, treatment or

consultation, if such injury, harm or damage was committed through professional negligence or

incompetence or due to the other valid causes for action.

6. That the DOCTOR shall observe clinic hours at the COMPANY'S premises from Monday to

Saturday of a minimum of two (2) hours each day or a maximum of TWO (2) hours each day or

treatment from 7:30 a.m. to 8:30 a.m. and 3:00 p.m. to 4:00 p.m., respectively unless such

schedule is otherwise changed by the COMPANY as [the] situation so warrants, subject to the

Labor Code provisions on Occupational Safety and Health Standards as the COMPANY may

determine. It is understood that the DOCTOR shall stay at least two (2) hours a day in the

COMPANY clinic and that such two (2) hours be devoted to the workshift with the most number

of employees. It is further understood that the DOCTOR shall be on call at all times during the

other workshifts to attend to emergency case[s];

7. That no employee-employer relationship shall exist between the COMPANY and the

DOCTOR whilst this contract is in effect, and in case of its termination, the DOCTOR shall be

entitled only to such retainer fee as may be due him at the time of termination.2

The Comprehensive Medical Plan,3 which contains the duties and responsibilities of respondent,

adverted to in the Retainer Agreement, provided:

A. OBJECTIVE

These objectives have been set to give full consideration to [the] employees' and dependents'

health:

1. Prompt and adequate treatment of occupational and non-occupational injuries and diseases.

2. To protect employees from any occupational health hazard by evaluating health factors related

to working conditions.

3. To encourage employees [to] maintain good personal health by setting up employee

orientation and education on health, hygiene and sanitation, nutrition, physical fitness, first aid

training, accident prevention and personnel safety.

4. To evaluate other matters relating to health such as absenteeism, leaves and termination.

5. To give family planning motivations.

B. COVERAGE

1. All employees and their dependents are embraced by this program.

2. The health program shall cover pre-employment and annual p.e., hygiene and sanitation,

immunizations, family planning, physical fitness and athletic programs and other activities such

as group health education program, safety and first aid classes, organization of health and safety

committees.

3. Periodically, this program will be reviewed and adjusted based on employees' needs.

C. ACTIVITIES

1. Annual Physical Examination.

2. Consultations, diagnosis and treatment of occupational and non-occupational illnesses and

injuries.

3. Immunizations necessary for job conditions.

4. Periodic inspections for food services and rest rooms.

5. Conduct health education programs and present education materials.

6. Coordinate with Safety Committee in developing specific studies and program to minimize

environmental health hazards.

7. Give family planning motivations.

8. Coordinate with Personnel Department regarding physical fitness and athletic programs.

9. Visiting and follow-up treatment of Company employees and their dependents confined in the

hospital.

The Retainer Agreement, which began on January 1, 1988, was renewed annually. The last one

expired on December 31, 1993. Despite the non-renewal of the Retainer Agreement, respondent

continued to perform his functions as company doctor to Coca-Cola until he received a letter4

dated March 9, 1995 from petitioner company concluding their retainership agreement effective

30 days from receipt thereof.

It is noted that as early as September 1992, petitioner was already making inquiries regarding his

status with petitioner company. First, he wrote a letter addressed to Dr. Willie Sy, the Acting

President and Chairperson of the Committee on Membership, Philippine College of Occupational

Medicine. In response, Dr. Sy wrote a letter5 to the Personnel Officer of Coca-Cola Bottlers

Phils., Bacolod City, stating that respondent should be considered as a regular part-time

physician, having served the company continuously for four (4) years. He likewise stated that

respondent must receive all the benefits and privileges of an employee under Article 157 (b)6 of

the Labor Code.

Petitioner company, however, did not take any action. Hence, respondent made another inquiry

directed to the Assistant Regional Director, Bacolod City District Office of the Department of

Labor and Employment (DOLE), who referred the inquiry to the Legal Service of the DOLE,

Manila. In his letter7 dated May 18, 1993, Director Dennis P. Ancheta, Legal Service, DOLE,

stated that he believed that an employer-employee relationship existed between petitioner and

respondent based on the Retainer Agreement and the Comprehensive Medical Plan, and the

application of the "four-fold" test. However, Director Ancheta emphasized that the existence of

employer-employee relationship is a question of fact. Hence, termination disputes or money

claims arising from employer-employee relations exceeding P5,000 may be filed with the

National Labor Relations Commission (NLRC). He stated that their opinion is strictly advisory.

An inquiry was likewise addressed to the Social Security System (SSS). Thereafter, Mr. Romeo

R. Tupas, OIC-FID of SSS-Bacolod City, wrote a letter8 to the Personnel Officer of Coca-Cola

Bottlers Phils., Inc. informing the latter that the legal staff of his office was of the opinion that

the services of respondent partake of the nature of work of a regular company doctor and that he

was, therefore, subject to social security coverage.

Respondent inquired from the management of petitioner company whether it was agreeable to

recognizing him as a regular employee. The management refused to do so.

On February 24, 1994, respondent filed a Complaint9 before the NLRC, Bacolod City, seeking

recognition as a regular employee of petitioner company and prayed for the payment of all

benefits of a regular employee, including 13th Month Pay, Cost of Living Allowance, Holiday

Pay, Service Incentive Leave Pay, and Christmas Bonus. The case was docketed as RAB Case

No. 06-02-10138-94.

While the complaint was pending before the Labor Arbiter, respondent received a letter dated

March 9, 1995 from petitioner company concluding their retainership agreement effective thirty

(30) days from receipt thereof. This prompted respondent to file a complaint for illegal dismissal

against petitioner company with the NLRC, Bacolod City. The case was docketed as RAB Case

No. 06-04-10177-95.

In a Decision10

dated November 28, 1996, Labor Arbiter Jesus N. Rodriguez, Jr. found that

petitioner company lacked the power of control over respondent's performance of his duties, and

recognized as valid the Retainer Agreement between the parties. Thus, the Labor Arbiter

dismissed respondent's complaint in the first case, RAB Case No. 06-02-10138-94. The

dispositive portion of the Decision reads:

WHEREFORE, premises considered, judgment is hereby rendered dismissing the instant

complaint seeking recognition as a regular employee.

SO ORDERED.11

In a Decision12

dated February 24, 1997, Labor Arbiter Benjamin Pelaez dismissed the case for

illegal dismissal (RAB Case No. 06-04-10177-95) in view of the previous finding of Labor

Arbiter Jesus N. Rodriguez, Jr. in RAB Case No. 06-02-10138-94 that complainant therein, Dr.

Dean Climaco, is not an employee of Coca-Cola Bottlers Phils., Inc.

Respondent appealed both decisions to the NLRC, Fourth Division, Cebu City.

In a Decision13

promulgated on November 28, 1997, the NLRC dismissed the appeal in both

cases for lack of merit. It declared that no employer-employee relationship existed between

petitioner company and respondent based on the provisions of the Retainer Agreement which

contract governed respondent's employment.

Respondent's motion for reconsideration was denied by the NLRC in a Resolution14

promulgated

on August 7, 1998.

Respondent filed a Petition for Review with the Court of Appeals.

In a Decision promulgated on July 7, 2000, the Court of Appeals ruled that an employer-

employee relationship existed between petitioner company and respondent after applying the

four-fold test: (1) the power to hire the employee; (2) the payment of wages; (3) the power of

dismissal; and (4) the employer's power to control the employee with respect to the means and

methods by which the work is to be accomplished.

The Court of Appeals held:

The Retainer Agreement executed by and between the parties, when read together with the

Comprehensive Medical Plan which was made an integral part of the retainer agreements,

coupled with the actual services rendered by the petitioner, would show that all the elements of

the above test are present.

First, the agreements provide that "the COMPANY desires to engage on a retainer basis the

services of a physician and the said DOCTOR is accepting such engagement x x x" (Rollo, page

25). This clearly shows that Coca-Cola exercised its power to hire the services of petitioner.

Secondly, paragraph (2) of the agreements showed that petitioner would be entitled to a final

compensation of Three Thousand Eight Hundred Pesos per month, which amount was later

raised to Seven Thousand Five Hundred on the latest contract. This would represent the element

of payment of wages.

Thirdly, it was provided in paragraph (1) of the agreements that the same shall be valid for a

period of one year. "The said term notwithstanding, either party may terminate the contract upon

giving a thirty (30) day written notice to the other." (Rollo, page 25). This would show that

Coca-Cola had the power of dismissing the petitioner, as it later on did, and this could be done

for no particular reason, the sole requirement being the former's compliance with the 30-day

notice requirement.

Lastly, paragraphs (3) and (6) of the agreements reveal that Coca-Cola exercised the most

important element of all, that is, control, over the conduct of petitioner in the latter's performance

of his duties as a doctor for the company.

It was stated in paragraph (3) that the doctor agrees to perform the duties and obligations

enumerated in the Comprehensive Medical Plan referred to above. In paragraph (6), the fixed

and definite hours during which the petitioner must render service to the company is laid down.

We say that there exists Coca-Cola's power to control petitioner because the particular objectives

and activities to be observed and accomplished by the latter are fixed and set under the

Comprehensive Medical Plan which was made an integral part of the retainer agreement.

Moreover, the times for accomplishing these objectives and activities are likewise controlled and

determined by the company. Petitioner is subject to definite hours of work, and due to this, he

performs his duties to Coca-Cola not at his own pleasure but according to the schedule dictated

by the company.

In addition, petitioner was designated by Coca-Cola to be a member of its Bacolod Plant's Safety

Committee. The minutes of the meeting of the said committee dated February 16, 1994 included

the name of petitioner, as plant physician, as among those comprising the committee.

It was averred by Coca-Cola in its comment that they exercised no control over petitioner for the

reason that the latter was not directed as to the procedure and manner of performing his assigned

tasks. It went as far as saying that "petitioner was not told how to immunize, inject, treat or

diagnose the employees of the respondent (Rollo, page 228). We believe that if the "control test"

would be interpreted this strictly, it would result in an absurd and ridiculous situation wherein we

could declare that an entity exercises control over another's activities only in instances where the

latter is directed by the former on each and every stage of performance of the particular activity.

Anything less than that would be tantamount to no control at all.

To our minds, it is sufficient if the task or activity, as well as the means of accomplishing it, is

dictated, as in this case where the objectives and activities were laid out, and the specific time for

performing them was fixed by the controlling party.15

Moreover, the Court of Appeals declared that respondent should be classified as a regular

employee having rendered six years of service as plant physician by virtue of several renewed

retainer agreements. It underscored the provision in Article 28016

of the Labor Code stating 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." Further, it held that the

termination of respondent's services without any just or authorized cause constituted illegal

dismissal.

In addition, the Court of Appeals found that respondent's dismissal was an act oppressive to

labor and was effected in a wanton, oppressive or malevolent manner which entitled respondent

to moral and exemplary damages.

The dispositive portion of the Decision reads:

WHEREFORE, in view of the foregoing, the Decision of the National Labor Relations

Commission dated November 28, 1997 and its Resolution dated August 7, 1998 are found to

have been issued with grave abuse of discretion in applying the law to the established facts, and

are hereby REVERSED and SET ASIDE, and private respondent Coca-Cola Bottlers, Phils.. Inc.

is hereby ordered to:

1. Reinstate the petitioner with full backwages without loss of seniority rights from the time his

compensation was withheld up to the time he is actually reinstated; however, if reinstatement is

no longer possible, to pay the petitioner separation pay equivalent to one (1) month's salary for

every year of service rendered, computed at the rate of his salary at the time he was dismissed,

plus backwages.

2. Pay petitioner moral damages in the amount of P50,000.00.

3. Pay petitioner exemplary damages in the amount of P50,000.00.

4. Give to petitioner all other benefits to which a regular employee of Coca-Cola is entitled from

the time petitioner became a regular employee (one year from effectivity date of employment)

until the time of actual payment.

SO ORDERED.17

Petitioner company filed a motion for reconsideration of the Decision of the Court of Appeals.

In a Resolution promulgated on January 30, 2001, the Court of Appeals stated that petitioner

company noted that its Decision failed to mention whether respondent was a full-time or part-

time regular employee. It also questioned how the benefits under their Collective Bargaining

Agreement which the Court awarded to respondent could be given to him considering that such

benefits were given only to regular employees who render a full day's work of not less that eight

hours. It was admitted that respondent is only required to work for two hours per day.

The Court of Appeals clarified that respondent was a "regular part-time employee and should be

accorded all the proportionate benefits due to this category of employees of [petitioner]

Corporation under the CBA." It sustained its decision on all other matters sought to be

reconsidered.

Hence, this petition filed by Coca-Cola Bottlers Phils., Inc.

The issues are:

1. THAT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR,

BASED ON A SUBSTANTIAL QUESTION OF LAW, IN REVERSING THE FINDINGS OF

THE LABOR ARBITERS AND THE NATIONAL LABOR RELATIONS COMMISSION,

CONTRARY TO THE DECISIONS OF THE HONORABLE SUPREME COURT ON THE

MATTER.

2. THAT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR,

BASED ON A SUBSTANTIAL QUESTION OF LAW, IN REVERSING THE FINDINGS OF

THE LABOR ARBITERS AND THE NATIONAL LABOR RELATIONS COMMISSION,

AND HOLDING INSTEAD THAT THE WORK OF A PHYSICIAN IS NECESSARY AND

DESIRABLE TO THE BUSINESS OF SOFTDRINKS MANUFACTURING, CONTRARY TO

THE RULINGS OF THE SUPREME COURT IN ANALOGOUS CASES.

3. THAT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR,

BASED ON A SUBSTANTIAL QUESTION OF LAW, IN REVERSING THE FINDINGS OF

THE LABOR ARBITERS AND THE NATIONAL LABOR RELATIONS COMMISSION,

AND HOLDING INSTEAD THAT THE PETITIONERS EXERCISED CONTROL OVER

THE WORK OF THE RESPONDENT.

4. THAT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR,

BASED ON A SUBSTANTIAL QUESTION OF LAW, IN REVERSING THE FINDINGS OF

THE LABOR ARBITERS AND THE NATIONAL LABOR RELATIONS COMMISSION,

AND FINDING THAT THERE IS EMPLOYER-EMPLOYEE RELATIONSHIP PURSUANT

TO ARTICLE 280 OF THE LABOR CODE.

5. THAT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR,

BASED ON A SUBSTANTIAL QUESTION OF LAW, IN REVERSING THE FINDINGS OF

THE LABOR ARBITERS AND THE NATIONAL LABOR RELATIONS COMMISSION,

AND FINDING THAT THERE EXISTED ILLEGAL DISMISSAL WHEN THE

EMPLOYENT OF THE RESPONDENT WAS TERMINATED WITHOUT JUST CAUSE.

6. THAT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR,

BASED ON A SUBSTANTIAL QUESTION OF LAW, IN REVERSING THE FINDINGS OF

THE LABOR ARBITERS AND THE NATIONAL LABOR RELATIONS COMMISSION,

AND FINDING THAT THE RESPONDENT IS A REGULAR PART TIME EMPLOYEE

WHO IS ENTITLED TO PROPORTIONATE BENEFITS AS A REGULAR PART TIME

EMPLOYEE ACCORDING TO THE PETITIONERS' CBA.

7. THAT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR,

BASED ON A SUBSTANTIAL QUESTION OF LAW, IN REVERSING THE FINDINGS OF

THE LABOR ARBITERS AND THE NATIONAL LABOR RELATIONS COMMISSION,

AND FINDING THAT THE RESPONDENT IS ENTITLED TO MORAL AND EXEMPLARY

DAMAGES.

The main issue in this case is whether or not there exists an employer-employee relationship

between the parties. The resolution of the main issue will determine whether the termination of

respondent's employment is illegal.

The Court, in determining the existence of an employer-employee relationship, has invariably

adhered to the four-fold test: (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, or the

so-called "control test," considered to be the most important element.18

The Court agrees with the finding of the Labor Arbiter and the NLRC that the circumstances of

this case show that no employer-employee relationship exists between the parties. The Labor

Arbiter and the NLRC correctly found that petitioner company lacked the power of control over

the performance by respondent of his duties. The Labor Arbiter reasoned that the Comprehensive

Medical Plan, which contains the respondent's objectives, duties and obligations, does not tell

respondent "how to conduct his physical examination, how to immunize, or how to diagnose and

treat his patients, employees of [petitioner] company, in each case." He likened this case to that

of Neri v. National Labor Relations Commission,19

which held:

In the case of petitioner Neri, it is admitted that FEBTC issued a job description which detailed

her functions as a radio/telex operator. However, a cursory reading of the job description shows

that what was sought to be controlled by FEBTC was actually the end result of the task, e.g., that

the daily incoming and outgoing telegraphic transfer of funds received and relayed by her,

respectively, tallies with that of the register. The guidelines were laid down merely to ensure that

the desired end result was achieved. It did not, however, tell Neri how the radio/telex machine

should be operated.

In effect, the Labor Arbiter held that petitioner company, through the Comprehensive Medical

Plan, provided guidelines merely to ensure that the end result was achieved, but did not control

the means and methods by which respondent performed his assigned tasks.

The NLRC affirmed the findings of the Labor Arbiter and stated that it is precisely because the

company lacks the power of control that the contract provides that respondent shall be directly

responsible to the employee concerned and their dependents for any injury, harm or damage

caused through professional negligence, incompetence or other valid causes of action.

The Labor Arbiter also correctly found that the provision in the Retainer Agreement that

respondent was on call during emergency cases did not make him a regular employee. He

explained, thus:

Likewise, the allegation of complainant that since he is on call at anytime of the day and night

makes him a regular employee is off-tangent. Complainant does not dispute the fact that outside

of the two (2) hours that he is required to be at respondent company's premises, he is not at all

further required to just sit around in the premises and wait for an emergency to occur so as to

enable him from using such hours for his own benefit and advantage. In fact, complainant

maintains his own private clinic attending to his private practice in the city, where he services his

patients, bills them accordingly - - and if it is an employee of respondent company who is

attended to by him for special treatment that needs hospitalization or operation, this is subject to

a special billing. More often than not, an employee is required to stay in the employer's

workplace or proximately close thereto that he cannot utilize his time effectively and gainfully

for his own purpose. Such is not the prevailing situation here. ςηαñrοblεš νιr†υαl lαω lιbrαrà ¿

In addition, the Court finds that the schedule of work and the requirement to be on call for

emergency cases do not amount to such control, but are necessary incidents to the Retainership

Agreement.

The Court also notes that the Retainership Agreement granted to both parties the power to

terminate their relationship upon giving a 30-day notice. Hence, petitioner company did not

wield the sole power of dismissal or termination.

The Court agrees with the Labor Arbiter and the NLRC that there is nothing wrong with the

employment of respondent as a retained physician of petitioner company and upholds the

validity of the Retainership Agreement which clearly stated that no employer-employee

relationship existed between the parties. The Agreement also stated that it was only for a period

of 1 year beginning January 1, 1988 to December 31, 1998, but it was renewed on a yearly basis.

Considering that there is no employer-employee relationship between the parties, the termination

of the Retainership Agreement, which is in accordance with the provisions of the Agreement,

does not constitute illegal dismissal of respondent. Consequently, there is no basis for the moral

and exemplary damages granted by the Court of Appeals to respondent due to his alleged illegal

dismissal.

WHEREFORE, the petition is GRANTED and the Decision and Resolution of the Court of

Appeals are REVERSED and SET ASIDE. The Decision and Resolution dated November 28,

1997 and August 7, 1998, respectively, of the National Labor Relations Commission are

REINSTATED.

No costs.

SO ORDERED.

[G.R. No. 98368. December 15, 1993.]

OPULENCIA ICE PLANT AND STORAGE AND/OR DR. MELCHOR OPULENCIA,

Petitioners, v. NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION),

LABOR ARBITER NUMERIANO VILLENA AND MANUEL P. ESITA, Respondents.

Inocentes, De Leon, Leogardo, Atienza, Magnaye & Azucena (IDLAMA) Law Offices, for

Petitioners.

Noli J. De los Santos for Private Respondent.

SYLLABUS

1. LABOR LAW AND OTHER SOCIAL LEGISLATION; LABOR RELATIONS; NO FORM

REQUIRED TO PROVE EMPLOYEE-EMPLOYER RELATIONS. — No particular form of

evidence is required to prove the existence of an employer-employee relationship. Any

competent and relevant evidence to prove the relationship may be admitted. For, if only

documentary evidence would be required to show that relationship, no scheming employer

would ever be brought before the bar of justice, as no employer would wish to come out with any

trace of the illegality he has authored considering that it should take much weightier proof to

invalidate a written instrument. (GSIS v. Custodio, No. L-26170, 27 January 1969; 26 SCRA

658, 664) Thus, as in this case where the employer-employee relationship between petitioners

and Esita was sufficiently proved by testimonial evidence, the absence of time sheet, time record

or payroll has become inconsequential.

2. ID.; ID.; EMPLOYMENT STATUES; EMPLOYEE WHO ARE REQUIRED TO REMAIN

ON CALL. — An employee who is required to remain on call in the employer‘s premises or so

close thereto that he cannot use the time effectively and gainfully for his own purpose shall be

considered as working while on call. (Sec. 5(b), Rule I, Book III, Implementing Rules of the

Labor Code) In sum, the determination of regular and casual employment (Art. 280 of the Labor

Code) is not affected by the fact that the employee‘s regular presence in the place of work is not

required, the more significant consideration being that the work of the employee is usually

necessary or desirable in the business of the employer. More importantly, Esita worked for 9

years and, under the Labor Code, "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 that activity in which he is employed . . ."cralaw virtua1aw library

3. ID.; ID.; ID.; BENEVOLENCE DOES NOT OPERATE AS A LICENSE TO CIRCUMVENT

THE LAW. — In allowing Esita to stay in the premises of the ice plant and permitting him to

cultivate crops to augment his income, there is no doubt that petitioners should be commended;

however, in view of the existence of an employer-employee relationship as found by public

respondents, we cannot treat humanitarian reasons as justification for emasculating or taking

away the rights and privileges of employees granted by law. Benevolence, it is said, does not

operated as a license to circumvent labor laws. If petitioners were genuinely altruistic in

extending to their employees privileges that are not even required by law, then there is no reason

why they should not be required to give their employees what they are entitled to receive.

Moreover, as found by public respondents, Esita was enjoying the same privileges granted to the

other employees of petitioners, so that in thus treating Esita, he cannot be considered any less

than a legitimate employee of petitioners.

D E C I S I O N

BELLOSILLO, J.:

MANUEL P. ESITA was for twenty (20) years a compressor operator of Tiongson Ice Plant in

San Pablo City. In 1980 he was hired as compressor operator-mechanic for the ice plants of

petitioner Dr. Melchor Opulencia located in Tanauan, Batangas, and Calamba, Laguna. Initially

assigned at the ice plant in Tanauan, Esita would work from seven o‘clock in the morning to five

o‘clock in the afternoon receiving a daily wage of P35.00.

In 1986, Esita was transferred to the ice plant in Calamba, which was then undergoing

overhauling, taking the place of compressor operator Lorenzo Eseta, who was relieved because

he was already old and weak, For less than a month, Esita helped in the construction-remodeling

of Dr. Opulencia‘s house.chanrobles.com : virtual law l ibrary

On 6 February 1989, for demanding the correct amount of wages due him, Esita was dismissed

from service. Consequently, he filed with Sub-Regional Arbitration Branch IV, San Pablo City, a

complaint for illegal dismissal, underpayment, non-payment for overtime, legal holiday,

premium for holiday and rest day, 13th month, separation/retirement pay and allowances against

petitioners.

Petitioners deny that Esita is an employee. They claim that Esita could not have been employed

in 1980 because the Tanauan ice plant was not in operation due to low voltage of electricity and

that Esita was merely a helper/peon of one of the contractors they had engaged to do major

repairs and renovation of the Tanauan ice plant in 1986. Petitioners further allege that when they

had the Calamba ice plant repaired and expanded, Esita likewise rendered services in a similar

capacity, and thus admitting that he worked as a helper/peon in the repair or remodeling of Dr.

Opulencia‘s residence in Tanauan.

Opulencia likewise maintains that while he refused the insistent pleas of Esita for employment in

the ice plants due to lack of vacancy, he nonetheless allowed him to stay in the premises of the

ice plant for free and to collect fees for crushing or loading ice of the customers and dealers of

the ice plant. Opulencia claims that in addition, Esita enjoyed free electricity and water, and was

allowed to cultivate crops within the premises of the ice plant to augment his income. Petitioners

however admit that "following the tradition of `pakikisama‘ and as a token of gratitude on the

part of the complainant (Esita), he helps in the cleaning of the ice plant premises and engine

room whenever he is requested to do so, and this happens only (at) twice a month."cralaw virtua1aw library

On 8 December 1989, Labor Arbiter Numeriano D. Villena rendered a decision 1 finding the

existence of an employer-employee relationship between petitioners and Esita and accordingly

directed them to pay him P33,518.02 representing separation pay, underpayment of wages,

allowances, 13th month, holiday, premium for holiday, and rest day pays. The claim for overtime

pay was however dismissed for lack of basis, i.e., Esita failed to prove that overtime services

were actually rendered.chanrobles.com : virtual law library

On 29 November 1990, the Third Division of the National Labor Relations Commission, in Case

No. RAB-IV-2-2206-89, affirmed the decision of Labor Arbiter Villena but reduced the

monetary award to P28,344.60 as it was not proven that Esita worked every day including rest

days and on the days before the legal holidays. On 26 March 1991, petitioners‘ motion for

reconsideration was denied.

In this present recourse, petitioners seek reversal of the ruling of public respondents Labor

Arbiter and NLRC, raising the following arguments: that public respondents have no jurisdiction

over the instant case; that Esita‘s work in the repair and construction of petitioners‘ ice plant and

the renovation of Dr. Opulencia‘s residence could not have ripened into a regular employment;

that petitioners‘ benevolence in allowing Esita to stay inside the company‘s premises free of

charge for humanitarian reason deserves commendation rather than imposition of undue penalty;

that Esita‘s name does not appear in the payrolls of the company which necessarily means that he

was not an employee; and, that Esita‘s statements are inconsistent and deserving of disbelief. On

13 May 1991, petitioners‘ prayer for a temporary restraining order to prevent respondents from

enforcing the assailed resolutions of NLRC was granted.

The instant petition lacks merit, hence, must be dismissed.

Petitioners allege that there is no employer-employee relationship between them and Esita;

consequently, public respondents have no jurisdiction over the case. Petitioners even go to the

extent of asserting that "in cases like the one at bar where employer-employee relationship has

been questioned from the very start, Labor Arbiters and the NLRC have no jurisdiction and

should not assume jurisdiction therein." chanrob les lawlibrary : rednad

While the Labor Arbiter and the NLRC may subsequently be found without jurisdiction over a

case when it would later appear that no employer-employee relationship existed between the

contending parties, such is not the situation in this case where the employer-employee

relationship between petitioners and Esita was clearly established. If the argument of petitioners

were to be allowed, then unscrupulous employers could readily avoid the jurisdiction of the

Labor Arbiters and NLRC, and may even elude compliance with labor laws only on the bare

assertion that an employer-employee relationship does not exist.

Petitioners further argue that "complainant miserably failed to present any documentary evidence

to prove his employment. There was no time sheet, pay slip and/or payroll/cash voucher to speak

of. Absence of these material documents are necessarily fatal to complainant‘s cause."cralaw virtua1aw library

We do not agree. No particular form of evidence is required to prove the existence of an

employer-employee relationship. Any competent and relevant evidence to prove the relationship

may be admitted. For, if only documentary evidence would be required to show that relationship,

no scheming employer would ever be brought before the bar of justice, as no employer would

wish to come out with any trace of the illegality he has authored considering that it should take

much weightier proof to invalidate a written instrument. 2 Thus, as in this case where the

employer-employee relationship between petitioners and Esita was sufficiently proved by

testimonial evidence, the absence of time sheet, time record or payroll has become

inconsequential.

The petitioners‘ reliance on Sevilla v. Court of Appeals 3 is misplaced. In that case, we did not

consider the inclusion of employee‘s name in the payroll as an independently crucial evidence to

prove an employer-employee relation. Moreover, for a payroll to be utilized to disprove the

employment of a person, it must contain a true and complete list of the employees. But, in this

case, the testimonies of petitioners‘ witnesses admit that not all the names of the employees were

reflected in the payroll.chanrobles v irtual lawl ibrary

In their Consolidated Reply, petitioners assert that "employees who were absent were naturally

not included in the weekly payrolls." 4 But this simply emphasizes the obvious. Petitioners‘

payrolls do not contain the complete list of the employees, so that the payroll slips cannot be an

accurate basis in determining who are or are not their employees. In addition, as the Solicitor

General observes: ". . . the payroll slips submitted by petitioners do not cover the entire period of

nine years during which private respondent claims to have been employed by them, but only the

periods from November 2 to November 29, 1986 and April 26 to May 30, 1987 . . . It should be

noted that petitioners repeatedly failed or refused to submit all the payroll slips covering the

period during which private respondent claims to have been employed by them despite repeated

directives from the Labor Arbiter . . ." 5 In this regard, we can aptly apply the disputable

presumption that evidence willfully suppressed would be adverse if produced. 6

Petitioners further contend that the claim of Esita that he worked from seven o‘clock in the

morning to five o‘clock in the afternoon, which is presumed to be continuous, is hardly credible

because otherwise he would not have had time to tend his crops. 7 As against this positive

assertion of Esita, it behooves petitioners to prove the contrary. It is not enough that they raise

the issue of probability, nay, improbability, of the conclusions of public respondents based on the

facts bared before them, for in case of doubt, the factual findings of the tribunal which had the

opportunity to peruse the conflicting pieces of evidence should be sustained.

The petitioners point out that even granting arguendo that Esita was indeed a mechanic, he could

never be a regular employee because his presence would be required only when there was need

for repair. We cannot sustain this argument. This circumstance cannot affect the regular status of

the employment of Esita. An employee who is required to remain on call in the employer‘s

premises or so close thereto that he cannot use the time effectively and gainfully for his own

purpose shall be considered as working while on call. 8 In sum, the determination of regular and

casual employment 9 is not affected by the fact that the employee‘s regular presence in the place

of work is not required, the more significant consideration being that the work of the employee is

usually necessary or desirable in the business of the employer. More importantly, Esita worked

for 9 years and, under the Labor Code, "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 that activity in which he is employed . . ." 10chanroblesvirtualawlibrary

The petitioners would give the impression that the repair of the ice plant and the renovation of

the residence of Dr. Opulencia were voluntarily extended by Esita because" [r]espondent did it

on their (sic) own." Unfortunately for petitioners, we cannot permit these baseless assertions to

prevail against the factual findings of public respondents which went through the sanitizing

process of a public hearing. The same observation may be made of the alleged inconsistencies in

Esita‘s testimonies. Moreover, on the claim that Esita‘s construction work could not ripen into a

regular employment in the ice plant because the construction work was only temporary and

unrelated to the ice-making business, needless to say, the one month spent by Esita in

construction is insignificant compared to his nine-year service as compressor operator in

determining the status of his employment as such, and considering further that it was Dr.

Opulencia who requested Esita to work in the construction of his house.

In allowing Esita to stay in the premises of the ice plant and permitting him to cultivate crops to

augment his income, there is no doubt that petitioners should be commended; however, in view

of the existence of an employer-employee relationship as found by public respondents, we

cannot treat humanitarian reasons as justification for emasculating or taking away the rights and

privileges of employees granted by law. Benevolence, it is said, does not operated as a license to

circumvent labor laws. If petitioners were genuinely altruistic in extending to their employees

privileges that are not even required by law, then there is no reason why they should not be

required to give their employees what they are entitled to receive. Moreover, as found by public

respondents, Esita was enjoying the same privileges granted to the other employees of

petitioners, so that in thus treating Esita, he cannot be considered any less than a legitimate

employee of petitioners.chanrobles.com .ph : virtual law library

WHEREFORE, there being no grave abuse of discretion on the part of public respondents, the

instant petition is DISMISSED. Accordingly, the restraining order we issued on 13 May 1991 is

LIFTED.

SO ORDERED.

[G.R. No. 76746. July 27, 1987.]

DURABUILT RECAPPING PLANT & COMPANY and EDUARDO LAO, GENERAL

MANAGER, Petitioners, v. NATIONAL LABOR RELATIONS COMMISSION, HON.

COMM. RICARDO C. CASTRO, HON. ARBITER AMELIA M. GULOY, KAPISANAN

NG MGA MANGGAGAWA SA DURABUILT and REYNALDO BODEGAS,

Respondents.

SYLLABUS

1. LABOR AND SOCIAL LEGISLATIONS; LABOR LAW; TERMINATION OF

EMPLOYMENT; BACKWAGES; RATIONALE BEHIND GRANT. — Backwages, in general,

are granted on grounds of equity for earnings which a worker or employee has lost due to his

dismissal from work (New Manila Candy Workers Union (NACONWA-PAFLU v. CIR, 86

SCRA 37). The general principle is that an employee is entitled to receive as backwages all the

amounts he may have lost starting from the date of his dismissal up to the time of his

reinstatement (Capital Garment Corporation v. Ople, 117 SCRA 473; New Manila Candy

Workers‘ Union (NACONWA-PAFLU) v. CIR, supra).

2. ID.; ID.; ID.; ID.; AMOUNT FIXED TO A JUST AND REASONABLE LEVEL WITHOUT

QUALIFICATION OR DEDUCTION; PURPOSE. — In a line of cases, this Court has

established a policy fixing the amount of backwages to a just and reasonable level without

qualification or deduction (Insular Life Assurance Co., Ltd. Employees‘ Association-NATU v.

Insular Life Assurance Co., Ltd., 76 SCRA 501; Feati University Club v. Feati University, 58

SCRA 395; Mercury Drug Co., Inc. v. CIR, 56 SCRA 694). In Insular Life Assurance

Employees‘ Association-NATU v. Insular Life Assurance Co., Ltd. (76 SCRA 50) we held that

to fix the amount of backwages without qualification or deduction simply means that the workers

are to be paid their backwages fixed as of the time of their dismissal or strike without deduction

for their earnings elsewhere during their lay-off and without qualification of their backwages as

thus fixed; i.e. unqualified by any wage increases or other benefits that may have been received

by their co-workers who were not dismissed or did not go on strike. The principle is justified "as

a realistic, reasonable and mutually beneficial solution for it relieves the employees from proving

their earnings during their lay-offs and the employer from submitting counterproofs. It was

meant to obviate the twin evils of idleness on the part of the employees and attrition and undue

delay in satisfying the award on the part of the employer" (New Manila Candy Workers Union

NACONWA-PAFLU v. CIR supra). The same was not to establish an inflexible rule of

computation of any backwages due an employee.

3. ID.; ID.; ID.; ID.; ID.; EMPLOYEE NOT ENTITLED TO BACKWAGES ON DAYS

WHERE NO WORK WAS REQUIRED. — The age-old rule governing the relation between

labor and capital, or management and employee of a "fair day‘s wage for a fair day‘s labor"

remains as the basic factor in determining employees‘ wages, and for that matter backwages. If

there is no work performed by the employee there can be no wage or pay unless, of course, the

laborer was able, willing and ready to work but was illegally locked out, or suspended (SSS v.

SSS Supervisors‘ Union-CUGCO, 117 SCRA 746). The illegal dismissal of the private

respondent is conceded by the petitioner. It is willing to pay backwages. However, the petitioner

argues that for days where no work was required and could be done by its employees, no wages

could have been earned and, thereafter, lost by said employees to justify an award of backwages.

We have held that where the failure of workers to work was not due to the employer‘s fault, the

burden of economic loss suffered by the employees should not be shifted to the employer. Each

party must bear his own loss (SSS v. SSS Supervisors‘ Union-CUGCO, supra; Pan-American

World Airways, Inc. v. CIR, 17 SCRA 813). As pointed out by the Solicitor General — ‗. . . to

allow payment of backwages of P24,316.68 as ordered by public respondents instead of

P3,834.16 as petitioners claim and which appears to be just and reasonable under the

circumstances of this case would not only be unconscionable but would be grossly unfair to other

employees who were not paid when petitioners‘ business was not in operation." (Rollo, p. 35).

D E C I S I O N

GUTIERREZ, JR., J.:

This is a petition to review the May 16, 1986 resolution of respondent National Labor Relations

Commission (NLRC) affirming the Labor Arbiter‘s order in NLRC Case No. NCR-7-3162083.

The sole issue raised is the proper basis for the computation of backwages in favor of an illegally

dismissed employee.

The facts of the case are simple and uncontroverted.

On July 11, 1983, a complaint for illegal dismissal was filed by respondent Reynaldo Bodegas,

against petitioner Durabuilt, a tire recapping company.

In a decision rendered by the Labor Arbiter on February 13, 1984, the private respondent was

ordered reinstated to his former position with full backwages, from the time he was terminated

up to the time he is actually reinstated, without loss of seniority rights and benefits accruing to

him.

The petitioners failed to file a seasonable appeal and entry of final judgment was made on July 8,

1985.

On August 8, 1985, the Acting Chief of Research and Information and the Corporation Auditing

Examiner of the then Ministry of Labor and Employment submitted a computation of

backwages, ECOLA, 13th month pay, sick and vacation leave benefits in favor of Reynaldo

Bodegas in the total amount of P24,316.38.

The petitioner filed its opposition to the computation on the ground that it contemplated a

straight computation of twenty-six (26) working days in one month when the period covered by

the computation was intermittently interrupted due to frequent brownouts and machine trouble

and that respondent Bodegas had only a total of 250.75 days of attendance in 1982 due to

absences. According to the petitioner, Bodegas is entitled only to the amount of P3,834.05

broken down as follows: salaries — P1,993.00; ECOLA-P1,433.50, and 13th month pay —

P407.55.

On October 23, 1985, the Labor Arbiter denied the opposition to the computation. The petitioner

appealed to the NLRC which, in an order dated May 16, 1986, affirmed the order of the Labor

Arbiter and dismissed the appeal.

Claiming grave abuse of discretion on the part of the public respondents, Durabuilt filed the

instant petition.chanroblesvirtualawlibrary

Backwages, in general, are granted on grounds of equity for earnings which a worker or

employee has lost due to his dismissal from work (New Manila Candy Workers Union

(NACONWA-PAFLU v. CIR, 86 SCRA 37).

The general principle is that an employee is entitled to receive as backwages all the amounts he

may have lost starting from the date of his dismissal up to the time of his reinstatement (Capital

Garment Corporation v. Ople, 117 SCRA 473; New Manila Candy Workers‘ Union

(NACONWA-PAFLU) v. CIR, supra).

In a line of cases, this Court has established a policy fixing the amount of backwages to a just

and reasonable level without qualification or deduction (Insular Life Assurance Co., Ltd.

Employees‘ Association-NATU v. Insular Life Assurance Co., Ltd., 76 SCRA 501; Feati

University Club v. Feati University, 58 SCRA 395; Mercury Drug Co., Inc. v. CIR, 56 SCRA

694). The respondents center their attention on the above underlined portion of this policy.

Hence, their contention that the deductions cited by the petitioners cannot be made.

In their bid to recover a greater amount of backwages, the rationale of the policy has escaped the

respondents‘ consideration. In Insular Life Assurance Employees‘ Association-NATU v. Insular

Life Assurance Co., Ltd. (76 SCRA 50) we held that to fix the amount of backwages without

qualification or deduction simply means that the workers are to be paid their backwages fixed as

of the time of their dismissal or strike without deduction for their earnings elsewhere during their

lay-off and without qualification of their backwages as thus fixed; i.e. unqualified by any wage

increases or other benefits that may have been received by their co-workers who were not

dismissed or did not go on strike. The principle is justified "as a realistic, reasonable and

mutually beneficial solution for it relieves the employees from proving their earnings during

their lay-offs and the employer from submitting counterproofs. It was meant to obviate the twin

evils of idleness on the part of the employees and attrition and undue delay in satisfying the

award on the part of the employer" (New Manila Candy Workers Union NACONWA-PAFLU v.

CIR supra). The same was not to establish an inflexible rule of computation of any backwages

due an employee.

The age-old rule governing the relation between labor and capital, or management and employee

of a "fair day‘s wage for a fair day‘s labor" remains as the basic factor in determining

employees‘ wages, and for that matter backwages. If there is no work performed by the

employee there can be no wage or pay unless, of course, the laborer was able, willing and ready

to work but was illegally locked out, or suspended (SSS v. SSS Supervisors‘ Union-CUGCO,

117 SCRA 746).

The illegal dismissal of the private respondent is conceded by the petitioner. It is willing to pay

backwages. However, the petitioner argues that for days where no work was required and could

be done by its employees, no wages could have been earned and, thereafter, lost by said

employees to justify an award of backwages. We quote with approval the Solicitor General‘s

comment, ** to wit:chanrobles law library

"From the indubitable facts on record, it appears that petitioners have valid reasons to claim that

certain days should not be considered days worked for purposes of computing private

respondent‘s backwages since their business was not in actual operation due to brownouts or

power interruption and the retrenchment of workers they had during the period of private

respondent‘s dismissal.

"It cannot be denied that during the past years particularly in 1983, there was chronic electrical

power interruption resulting to disruption of business operations. To alleviate the situation, the

government thru the Ministry of Trade and Industry called on the industrial sector to resort to the

so-called Voluntary Loan Curtailment Plan (or VLCP), whereby brownouts or electrical power

interruption was scheduled by area. The program while it may have been called "voluntary" was

not so as electrical power consumers had no choice then due to the prevailing energy crisis.

"Petitioners heeding the government‘s call, participated in the VLCP as indicated in their

statement of comformity dated November 23, 1982. Thus, beginning March 21, 1983 and every

Wednesday thereafter, petitioner‘s business (which indicentally is recapping rubber tires) was

not in actual operation. No less than the former Minister of Trade and Industry expressed his

gratitude to petitioners for participating in the VLCP. Petitioners substantiated claim therefore,

that the days during which they were not in operation due to the VLCP should be excluded in the

number of days worked for purposes of computing private respondents backwages stands

reasonable and should have been considered by the corporation auditing examiner.

"Moreover, as early as May 1978, the Ministry of Labor and Employment, thru Policy

Instruction No. 36, has said that —

"2. Brownouts running for more than twenty minutes may not be treated as hours worked

provided that any of the following conditions are present;

"a) The employees can leave their work place or go elsewhere whether within or without the

work premises; or

"b) The employees can use the time effectively for their own interest.

"It is of record that during electrical power interruptions, petitioners business was not in

operation. This was never disputed by private Respondent.

"Petitioners‘ claim that the period (December 1983) during which they effected retrenchment of

workers owing to economic crisis then prevailing likewise appears plausible. There is substantial

evidence consisting of reports to MOLE and Social Security System showing that petitioners had

laid off workers due to lack of raw materials. The petitioners payrolls submitted to support their

objection to computation indicate that the number of working days was reduced from the normal

weekly six working days to four working days for a great number of petitioners‘ workers.

Obviously, private respondent could not have been among those laid off, as at that time he was

already dismissed by petitioner." (Rollo, pp. 31-34).

Thus, we have held that where the failure of workers to work was not due to the employer‘s

fault, the burden of economic loss suffered by the employees should not be shifted to the

employer. Each party must bear his own loss (SSS v. SSS Supervisors‘ Union-CUGCO, supra;

Pan-American World Airways, Inc. v. CIR, 17 SCRA 813). As pointed out by the Solicitor

General —

‗. . . to allow payment of backwages of P24,316.68 as ordered by public respondents instead of

P3,834.16 as petitioners claim and which appears to be just and reasonable under the

circumstances of this case would not only be unconscionable but would be grossly unfair to other

employees who were not paid when petitioners‘ business was not in operation." (Rollo, p. 35).

Indeed, it would neither be fair nor just to allow respondent to recover something he has not

earned and could not have earned and to further penalize the petitioner company over and above

the losses it had suffered due to lack of raw materials and the energy-saving programs of the

government. The private respondent cannot be allowed to enrich himself at the expense of the

petitioner company. The computation of backwages should be based on daily rather than on

monthly pay schedules where, as in the case at bar, such basis is more realistic and accurate.

(Compania Maritima v. United Seamen‘s Union of the Philippines, 65 SCRA 393).chanroblesvirtualawlibrary

In conclusion, we again quote the Solicitor General‘s comment: jgc:chanrobles.com.ph

"Finally, what strengthens petitioners claim for mitigated liability is their evident good faith as

manifested by their reinstatement of private respondent while the case for illegal dismissal was

still pending and their willingness to pay backwages. While it is true that as a general rule order

of reinstatement carries with it an award of backwages (Art. 280, Labor Code) this Honorable

Court did not only mitigate but absolved employers from liability of backwages where good faith

is evident (Findlay Millar Timber Co. v. PLASLU, 6 SCRA 26; Cromwell Com. Employees &

Laborers Union v. CIR, 13 SCRA 259, Norton and Harrison Labor Union v. Harrison Co. Inc. 15

SCRA 310; PAL v. PALEA, 57 SCRA 489; Cruz v. MOLE, 120 SCRA 15). There is no

indication, to paraphrase this Honorable Court‘s ruling in Pantranco North Express Inc. v. NLRC

(126 SCRA 526) that private respondent was a ‗victim of arbitrary and high handed action."

(Rollo, pp. 34-35).

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

Labor Arbiter, Amelia M. Guloy in NLRC Case No. NCR-7-3162083, dated October 23, 1985,

as affirmed by the NLRC is SET ASIDE. The petitioner is ordered to pay private respondent his

backwages from the time he was terminated up to the time he was actually reinstated computed

on the basis of the number of days when petitioner‘s business was in actual operation. The

number of days where no work was required and could be done by petitioner‘s employees on

account of shutdowns due to electrical power interruptions, machine repair, and lack of raw

materials are not considered hours worked for purposes of computing the petitioner‘s obligation

to respondent employee. In no case shall the award exceed three year‘s backpay as above

computed.

SO ORDERED.

Fernan, Feliciano, Bidin and Cortes, JJ., concur.

[G.R. No. 132805. February 2, 1999.]

PHILIPPINE AIRLINES, INC., Petitioner, v. NATIONAL LABOR RELATIONS

COMMISSION, LABOR ARBITER ROMULUS PROTACIO and DR. HERMINIO A.

FABROS, Respondents.

D E C I S I O N

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:chanrob1es virtual 1aw library

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 1 declaring the

suspension of private 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: chanrob1es virtual 1aw library

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. 3

The NLRC likewise denied petitioner‘s motion for reconsideration. 4

Hence, this petition raising the following arguments: chanrob1es virtual 1aw library

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: chanrob1es virtual 1aw library

(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 conditions, 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.

Articles 83 and 85 of the Labor Code read:chanrob1es virtual 1aw library

ARTICLE 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)

ARTICLE 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.

Section 7, Rule I, Book III of the Omnibus Rules Implementing the Labor Code further states: chanrob1es v irtual 1aw l ibrary

SECTION 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. 6 Bad faith does not simply mean negligence

or bad judgment. It involves a state of mind dominated by ill will or motive. It implies a

conscious and intentional design to do a wrongful act for a dishonest purpose or some moral

obliquity. 7 The person claiming moral damages must prove the existence of bad faith by clear

and convincing 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.

SO ORDERED.

[G.R. No. 111359. August 15, 1995.]

CALTEX REGULAR EMPLOYEES AT MANILA OFFICE, LEGAZPI BULK DEPOT

AND MARINDUQUE BULK DEPOT - (MACLU), Petitioners, v. CALTEX

(PHILIPPINES), INC. and NATIONAL LABOR RELATIONS COMMISSION (FIRST

DIVISION), Respondents.

SYLLABUS

1. CIVIL LAW; CONTRACTS; INTERPRETATION THEREOF; THE

CONTEMPORANEOUS AND SUBSEQUENT CONDUCT OF THE PARTIES SHALL BE

PRINCIPALLY CONSIDERED; CASE AT BAR. — In all these CBAs (1973, 1976, 1979,

1982), Article III provide that only "work on an employee‘s one day of rest" shall be paid on the

basis of "day of rest rates." The relevant point here is that petitioner Union had never suggested

that more than 1 day of rest had been agreed upon, and certainly Caltex had never treated Article

III or any other portion of the CBAs as providing two (2) days of rest. It is well settled that the

contemporaneous and subsequent conduct of the parties may be taken into account by a court

called upon to interpret and apply a contract entered into by them.

2. LABOR AND SOCIAL LEGISLATION; LABOR STANDARDS; PROHIBITION

AGAINST OFF-SETTING UNDERTIME ONE DAY WITH OVER-TIME ON ANOTHER

DAY; NOT APPLICABLE IN CASE AT BAR., — The Court finds petitioner‘s contention

bereft of merit. Overtime work consists of hours worked on a given day in excess of the

applicable work period, which here is eight (8) hours. It is not enough that the hours worked fall

on disagreeable or inconvenient hours. In order that work may be considered as overtime work,

the hours worked must be in excess of and in addition to the eight (8) hours worked during the

prescribed daily work period, or the forty (40) hours worked during the regular work week

Monday thru Friday. In the present case, under the 1985 CBA, hours worked on a Saturday do

not, by that fact alone, necessarily constitute overtime work compensable at premium rates of

pay, contrary to petitioner‘s assertion. These are normal or regular work hours, compensable at

regular rates of pay, as provided in the 1985 CBA; under that CBA, Saturday is not a rest day or

a "day off." It is only when an employee has been required on a Saturday to render work in

excess of the forty (40) hours which constitute the regular work week that such employee may be

considered as performing overtime work on that Saturday. We consider that the statutory

prohibition against offsetting undertime one day with overtime another day has no application in

the case at bar.

D E C I S I O N

FELICIANO, J.:

In this petition for certiorari, petitioner Caltex Regular Employees Association at the Manila

office, Legazpi Bulk Depot and the Marinduque Bulk Depot (hereinafter referred to as "Union"),

seeks to annul and set aside the decision of the National Labor Relations Commission ("NLRC"),

promulgated on 5 March 1993, which reversed the decision of Labor Arbiter Valentin Guanio.

On 12 December 1985, petitioner Union and private respondent Caltex (Philippines), Inc.

("Caltex") entered into a Collective Bargaining Agreement ("1985 CBA") which was to be in

effect until midnight of 31 December 1988. The CBA included, among others, the following

provision:jgc:chanrobles.com.ph

"ARTICLE III

HOURS OF WORK

In conformity with Presidential Decree 442, otherwise known as the Labor Code of the

Philippines, as amended, the regular work week shall consist of eight (8) hours per day, seven (7)

days, Monday through Sunday, during which regular rates of pay shall be paid in accordance

with Annex B and work on the employee‘s one ‗Day of Rest,‘ shall be considered a special work

day, during which ‗Day of Rest‘ rates of pay shall be paid as provided in Annex B. Daily

working schedules shall be established by management in accordance with the requirements of

efficient operations on the basis of eight (8) hours per day for any five (5) days. Provided,

however, employees required to work in excess of forty (40) hours in any week shall be

compensated in accordance with Annex B of this Agreement. 1 (Emphasis supplied)

Pertinent portions of Annex "B" of the 1985 CBA are also quoted here as follows: jgc:chanrobles.com.ph

"Annex ‗B‘

Computation of:chanrob1es virtual 1aw library

Regular Day Pay

Overtime Pay

Night Shift Differential Pay

Day off Pay

Excess of 40 hours within a calendar week

Sunday Premium Pay

Holiday Premium Pay

Employee‘s Basic Hourly Wage Rate:chanrob1es v irtual 1aw l ibrary

Monthly Base Pay

———————

X = (21.667) (8)

A. Regular Pay

1) Hourly rate

= X

2) OT Hourly Rate 12 MN

= (X + 50% X)

3) NSD 6 PM — 12 MN

= (X + 25% X)

4) OT Hourly Rate NSD 6 PM-12 MN

= (X + 25% X) + 50% (X + 25% X)

5) NSD 12 MN — 6 AM

= (X + 50% X)

6) OT Hourly Rate NSD 12 MN — 6 AM

= (X + 50% X) + 50% (X + 50% X)

B. Regular First Day Off

1. Hourly Rate

= (X + 50% X)

2. OT Hourly Rate

= (X + 50% X) + 50% (X + 50% X)

3. NSD 6 PM - 12 MN

= [(X + 50% X) + 25% (X + 50% X)]

4. OT Hourly Rate NSD 6 PM -12 MN

= [(X + 50% X) + 25% (X + 50% X)] + 50% [(X + 50%

X) + 25% (X + 50%)]

5. NSD 12 MN - 6 AM

= [(X + 50% X) + 50% (X + 50% X)]

6. OT Hourly Rate NSD 12 MN - 6 AM

= [(X + 50% X) + 50% (X + 50% X)] +

50% [(X + 50%X) + 50% (X + 50%X)]

C. Regular Second Day off

1. Hourly Rate

= (X + 100% X)

2. OT Hourly Rate

= (X + 100% X) + 50% (X + 100% X)

3. NSD 6 PM — 12 MN

= [(X + 100% X) + 25% (X + 100%)]

4. OT Hourly Rate NSD 6 PM — 12 MN

= [(X + 100% X) + 25% (X + 100% X)] + 50% [(X +

100% X) + 25% (X + 100% X)]

5. NSD 12 MN — 6 AM

= [(X + 100% X) + 50% (X + 100% X)]

6. OT Hourly Rate NSD 12 MN — 6 AM

= [(X + 100% X) + 50% (X + 100% X)] + 50% [(x +

100% X) + 50% (X + 100% X)]

D. Excess of 40 Hours within a Calendar Week

1. Hourly Rate

= (X + 50% X)

2. OT Hourly Rate

= (X + 50% X) + 50% (X + 50% X)

3. NSD 6 PM — 12 MN

= [(X + 50% X) + 25% (X + 50% X)]

4. OT Hourly Rate NSD 6 PM — 12 MN

= [(X + 50% X) + 25% (X + 50% X)] + 50% [(X + 50%

X) + 25% (X + 50% X)]

5. NSD 12 MN — 6 AM

= [(X + 50% X) + 50% (X + 50% X)]

6. OT Hourly Rate NSD 12 MN — 6 AM

= [(X + 50% X) + 50% (X + 50% X)] + 50% [(X + 50%

X) + 50% (X + 50% X)]

E. Sunday as a Normal Work Day

1. Hourly Rate

= (X + 100% X)

2. OT Hourly Rate

= (X + 100% X) + 50% (X + 100% X)

3. NSD 6 PM — 12 MN

= [(X + 100% X) + 25% (X + 100% X)]

4. OT Hourly Rate NSD 6 PM — 12 MN

= [(X + 100% X) + 25% (X + 100% X)] + 50% [(X +

100% X) + 25% (X + 100% X)]

5. NSD 12 MN — 6 AM

= [(X + 100% X) + 50% (X + 100% X)]

6. OT Hourly Rate NSD 12 MN — 6 AM

= [(X + 100% X) + 50% (X + 100% X) ] + 50% [(X +

100% X) + 50% (X + 100% X)]

F. Sunday as day off

1. Hourly Rate

= (X + 100% X)

2. OT Hourly Rate

= (X + 100% X) + 50% (X + 100% X)

3. NSD 6 PM — 12 MN

= [(X + 100% X) + 25% (X + 100% X)]

4. OT Hourly Rate NSD 6 PM — 12 MN

= [(X + 100% X) + 25% (X + 100% X)] + 50% [(X +

100% X) + 25% (X + 100% X)]

5. NSD 12 MN — 6 AM

= [(X + 100% X) + 50% (X + 100% X)]

6. OT Hourly Rate NSD 12 MN — 6 AM

= [(X + 100% X) + 50% (X + 100% X) + 50% [(X + 100%

X) + 50% (X + 100% x)]

G. Holiday as Normal Work Day

1. Hourly Rate

= (X + 150% X)

2. OT Hourly Rate

= (X + 150% X) + 50% (X + 150%X)

3. NSD 6 PM — 12 MN

= [(X + 150% X) + 25% (X + 150% X)]

4. OT Hourly Rate NSD 6 PM — 12 MN

= [(X + 150% X) + 25% (X + 150% X) ] + 50% [(X +

150% X) + 25% (X+ 150% X)]

5. NSD 12 MN — 6 AM

= [(X + 150% X) + 50% (X + 150% X)]

6. OT Hourly Rate NSD 12 MN — 6 AM

= [(X + 150% X) + 50% (X + 150% X)] + 50% [(X +

150% X) + 50% (X + 150% X)]

H. Holiday as Day off

1. Hourly Rate

= (X + 150% X)

2. OT Hourly Rate

= (X + 150% X) + 50% (X + 150% X)

3. NSD 6 PM — 12 MN

= [(X + 150% X) + 25% (X + 150% X)]

4. OT Hourly Rate NSD 6 PM — 12 MN

= [(X + 150% X) + 25% (X + 150% X)] + 50% [(X +

150% X) + 25% (X + 150% X)]

5. NSD 12 MN — 6 AM

= [(X + 150% X) + 50% (X + 150% X)]

6. OT Hourly Rate

= [(X + 150% X) + 50% (X + 150% X)] + 50% [(X +

150% X) + 50% (X + 150% X)]

7. *Hourly Rate for less than 8 hours

= (150% X)

* For work of less than 8 hours, the employee will receive his basic daily rate —

(Monthly Base Pay)

——————————

21.667

plus the hourly rate multiplied by the number of hours worked." 2

Sometime in August 1986, the Union called Caltex‘s attention to alleged violations by Caltex of

Annex "B" of the 1985 CBA, e.g. non-payment of night-shift differential, non-payment of

overtime pay and non-payment at "first day-off rates" for work performed on a Saturday.

Caltex‘ s Industrial Relations manager immediately evaluated petitioner‘s claims and

accordingly informed petitioner Union that differential payments would be timely implemented.

In the implementation of the re-computed claims, however, no differential payment was made

with respect to work performed on the first 2 1/2 hours on a Saturday.

On 7 July 1987, the Union instituted a complaint for unfair labor practice against Caltex alleging

violation of the provisions of the 1985 CBA. Petitioner Union charged Caltex with shortchanging

its employees when Caltex compensated work performed on the first 2 1/2 hours of Saturday, an

employees‘ day of rest, at regular rates, when it should be paying at "day of rest" or "day off"

rates.

Caltex denied the accusations of the Union. It averred that Saturday was never designated as a

day of rest, much less a "day-off." It maintained that the 1985 CBA provided only 1 day of rest

for employees at the Manila Office, as well as employees similarly situated at the Legazpi and

Marinduque Bulk Depots. This day of rest, according to Caltex was Sunday.

In due time, the Labor Arbiter ruled in favor of petitioner Union, while finding at the same time

that private respondent Caltex was not guilty of any unfair labor practice. Labor Arbiter Valentin

C. Guanio, interpreting Article III and Annex "B" of the 1985 CBA, concluded that Caltex‘s

employees had been given two (2) days (instead of one [1] day) of rest, with the result that work

performed on the employee‘s first day of rest, viz. Saturday, should be compensated at "First

day-off" rates.

On appeal by Caltex, public respondent NLRC set aside the decision of Labor Arbiter Guanio.

The NLRC found that the conclusions of the Labor Arbiter were not supported by the evidence

on record. The NLRC, interpreting the provisions of the 1985 CBA, concluded that CBA granted

only one (1) day of rest, e.g., Sunday. The Union‘s motion for reconsideration was denied on 9

June 1993.

The controversy we must address in this Petition for Certiorari relates to the appropriate

interpretation of Article III in relation to Annex "B" of the parties‘ 1985 CBA.

After carefully examining the language of Article III, in relation to Annex "B" of the 1985 CBA,

quoted in limine, as well as relevant portions of earlier CBAs between the parties, we agree with

the NLRC that the intention of the parties to the 1985 CBA was to provide the employees with

only one (1) day of rest. The plain and ordinary meaning of the language of Article III is that

Caltex and the Union had agreed to pay "day of rest" rates for work performed on "an

employee‘s one day of rest." To the Court‘s mind, the use of the word "one" describing the

phrase "day of rest [of an employee]" emphasizes the fact that the parties had agreed that only a

single day of rest shall be scheduled and shall be provided to the employee.

It is useful to note that the contract clauses governing hours of work in previous CBAs executed

between private respondent Caltex and petitioner Union in 1973, 1976, 1979 and 1982 contained

provisions parallel if not identical to those set out in Article III of the 1985 CBA here before us.

Article III of the 1973 Collective Bargaining Agreement 3 provided as follows: jgc:chanrobles.com.ph

"Article III

Hours of Work

Section 1. In conformity with Presidential Decree No. 143, the regular work week shall consist

of eight (8) hours per day, seven (7) days, Monday through Sunday, during which regular rates

of pay shall be paid in accordance with Article IV, Section 1 and work on the employee‘s one

‗Day of Rest‘ shall be paid as provided in Article IV Section 8. Daily working schedules shall be

established by management in accordance with the requirements of efficient operations on the

basis of eight (8) hours Per day for any five (5) days; provided, however, employees required to

work in excess of forty (40) hours in any week shall be compensated in accordance with Article

IV, Section 7 of this Agreement." (Emphasis supplied)

Article III of the 1976 Collective Bargaining Agreement 4 read: jgc:chanrobles.com.ph

"Article III

Hours of Work

Section 1. In conformity with Presidential Decree No. 143, the regular work week shall consist

of eight (8) hours per day, seven (7) days, Monday through Sunday, during which regular rates

of pay shall be paid in accordance with Article IV, Section 1 and work on the employee‘s one

‗Day of Rest‘ shall be paid as provided in Article IV Section 8. Daily working schedules shall be

established by management in accordance with the requirements of efficient operations on the

basis of eight (8) hours per day for any five (5) days; provided, however, employees required to

work in excess of forty (40) hours in any week shall be compensated in accordance with Article

IV, Section 7 of this Agreement." (Emphasis supplied)

Article III of the 1979 Collective Bargaining Agreement 5 said: jgc:chanrobles.com.ph

"Article III

Hours of Work

Section 1. In conformity with Presidential Decree 442, otherwise known as the Labor Code of

the Philippines, as amended, the regular work week shall consist of eight (8) hours per day,

seven (7) days, Monday thru Sunday during which regular rates of pay shall be paid in

accordance with Article IV, Section 1 and work on the employee‘s one ‗Day of Rest‘ shall be

paid as provided in Article IV, Section 7. Daily working schedules shall be established by

management in accordance with the requirements of efficient operations on the basis of eight

hours per day for any five (5) days; provided, however, employees required to work in excess of

forty (40) hours in any week shall be compensated in accordance with Article IV, Section 6 of

this Agreement." (Emphasis supplied)

Article III of the 1982 Collective Bargaining Agreement 6 also provided as follows: jgc:chanrobles.com.ph

"Article III

Hours of Work

Section 1. In conformity with Presidential Decree 442, otherwise known as the Labor Code of

the Philippines, as amended, the regular work week shall consist of eight (8) hours per day,

seven (7) days, Monday thru Sunday, during which regular rates of pay shall be paid in

accordance with Article IV, Section 1 and work on the employees one ‗Day of Rest‘ shall be

paid as provided in Article IV, Section 7. Daily working schedules shall be established by

management in accordance with the requirements of efficient operations on the basis of eight

hours per day for any five (5) days; provided, however employees required to work in excess of

forty (40) hours in any week shall be compensated in accordance with Article IV, Section 6 of

this Agreement." (Emphasis supplied)

In all these CBAs (1973, 1976, 1979, 1982), Article III provide that only "work on an

employee‘s one day of rest" shall be paid on the basis of "day of rest rates." The relevant point

here is that petitioner Union had never suggested that more than 1 day of rest had been agreed

upon, and certainly Caltex had never treated Article III or any other portion of the CBAs as

providing two (2) days of rest. It is well settled that the contemporaneous and subsequent

conduct of the parties may be taken into account by a court called upon to interpret and apply a

contract entered into by them. 7

We note that Labor Arbiter Guanio surmised that the intention he implied from the contents of

Annex "B" was in conflict with the intention expressed in Article III (which, the Labor Arbiter

admitted, stipulated only one day of rest). According to the Labor Arbiter, when Annex "B"

referred to "First Day-off Rates" and "Second Day-off Rates, these were meant to express an

agreement that the parties intended to provide employees two (2) days of rest. He then declared

that Annex "B" should prevail over Article III because the former was a more specific provision

than the latter.

An annex expresses the idea of joining a smaller or subordinate thing with another, larger or of

higher importance. 8 An annex has a subordinate role, without any independent significance

separate from that to which it is tacked on. Annex "B," in the case at bar, is one such document.

It is not a memorandum of amendments or a codicil containing additional or new terms or

stipulations. Annex "B" cannot be construed as modifying or altering the terms expressed in the

body of the agreement contained in the 1985 CBA. It did not confer any rights upon employees

represented by petitioner Union; neither did it impose any obligations upon private respondent

Caltex. In fact, the contents of Annex "B" have no intelligible significance in and of themselves

when considered separately from the 1985 CBA.

Moreover, we are persuaded by private respondent‘s argument that Annex "B" was intended to

serve as a company-wide guide in computing compensation for work performed by all its

employees, including but not limited to the Manila Office employees represented by petitioner

Union. Private respondent also points out that the mathematical formulae contained in Annex

"B" are not all applicable to all classes of employees, there being some formulae applicable only

to particular groups or classes of employees. Thus, "First Day-off rates" and "Second Day-off

rates" are applicable only to employees stationed at the refinery and associated facilities like

depots and terminals which must be in constant twenty-four (24) hours a day, seven (7) days a

week, operation, hence necessitating the continuous presence of operations personnel. The work

of such operations personnel required them to be on duty for six (6) consecutive days. Upon the

other hand, "First Day-off rates" and "Second Day-off rates" are not applicable to personnel of

the Manila Office which consisted of other groups or categories of employees (e.g., office clerks,

librarians, computer operators, secretaries, collectors, etc.), 9 since the nature of their work did

not require them to be on duty for six (6) consecutive days.

We find, under the foregoing circumstances, that the purported intention inferred from Annex

"B" by the Labor Arbiter was based merely on conjecture and speculation.

We also note that the Labor Arbiter merely suspected that the parties agreed to provide two (2)

days of rest on the ground that they had so stipulated in their 1970 CBA. 10 A principal

difficulty with this view is that it disregards the fact that Article III of the 1985 CBA no longer

contained a particular proviso found in the 1970 CBA. In fact, all the CBAs subsequent to 1970

(1973, 1976, 1979, 1982) had similarly deleted the proviso in the 1970 CBA providing for two

(2) days-off. To the Court‘s mind, such deletion means only one thing — that is — the parties

had agreed to remove such stipulation. Accordingly, the proviso found in Article III of the 1970

CBA ceased to be a demandable obligation. Petitioner Union cannot now unilaterally re-insert

such a stipulation by strained inference from Annex "B." Upon the foregoing circumstances, we

must hold that the Labor Arbiter‘ s suspicion is without basis in the facts of record.

Petitioner Union also contended that private respondent Caltex in the instant petition was

violating the statutory prohibition against off-setting undertime for overtime work on another

day. 11 Union counsel attempted to establish this charge by asserting that the employees had

been required to render "overtime work" on a Saturday but compensated only at regular rates of

pay, because they had not completed the eight (8)-hour work period daily from Monday thru

Friday.

The Court finds petitioner‘s contention bereft of merit. Overtime work consists of hours worked

on a given day in excess of the applicable work period, which here is eight (8) hours. 12 It is not

enough that the hours worked fall on disagreeable or inconvenient hours. In order that work may

be considered as overtime work, the hours worked must be in excess of and in addition to the

eight (8) hours worked during the prescribed daily work period, or the forty (40) hours worked

during the regular work week Monday thru Friday.

In the present case, under the 1985 CBA, hours worked on a Saturday do not, by that fact alone,

necessarily constitute overtime work compensable at premium rates of pay, contrary to

petitioner‘s assertion. These are normal or regular work hours, compensable at regular rates of

pay, as provided in the 1985 CBA; under that CBA, Saturday is not a rest day or a "day off." It is

only when an employee has been required on a Saturday to render work in excess of the forty

(40) hours which constitute the regular work week that such employee may be considered as

performing overtime work on that Saturday. We consider that the statutory prohibition against

offsetting undertime one day with overtime another day has no application in the case at bar. 13

Petitioner‘s counsel, in his final attempt to lay a basis for compelling private respondent to pay

premium rates of pay for all hours worked on a Saturday, regardless of the number of hours

actually worked earlier during the week, i.e., on Monday to Friday, insists that private

respondent cannot require its employees to complete the 40-hour regular work week on a

Saturday, after it has allowed its employees to render only 37-1/2 hours of work.

The company practice of allowing employees to leave thirty (30) minutes earlier than the

scheduled off-time had been established primarily for the convenience of the employees most of

whom have had to commute from work place to home and in order that they may avoid the

heavy rush hour vehicular traffic. There is no allegation here by petitioner Union that such

practice was resorted to by Caltex in order to escape its contractual obligations. This practice,

while it effectively reduced to 37-1/2 the number of hours actually worked by employees who

had opted to leave ahead of off-time, is not be construed as modifying the other terms of the

1985 CBA. As correctly pointed out by private respondent, the shortened work period did not

result in likewise shortening the work required for purposes of determining overtime pay, as well

as for purposes of determining premium pay for work beyond forty (40) hours within the

calendar week. It follows that an employee is entitled to be paid premium rates, whether for work

in excess of (8) hours on any given day, or for work beyond the forty (40)-hour requirement for

the calendar week, only when the employee had, in fact, already rendered the requisite number of

hours — 8 or 40 — prescribed in the 1985 CBA.

In recapitulation, the parties‘ 1985 CBA stipulated that employees at the Manila Office, as well

as those similarly situated at the Legazpi and Marinduque Bulk Depots, shall be provided only

one (1) day of rest; Sunday, and not Saturday, was designated as this day of rest. Work

performed on a Saturday is accordingly to be paid at regular rates of pay, as a rule, unless the

employee shall have been required to render work in excess of forty (40) hours in a calendar

week. The employee must, however, have in fact rendered work in excess of forty (40) hours

before hours subsequently worked become payable at premium rates. We conclude that the

NLRC correctly set aside the palpable error committed by Labor Arbiter Guanio, when the latter

imposed upon one of the parties to the 1985 CBA, an obligation which it had never assumed.

WHEREFORE, petitioner Union having failed to show grave abuse of discretion amounting to

lack or excess of jurisdiction on the part of public respondent National Labor Relations

Commission in rendering its decision dated 5 March 1993, the Court Resolved to DISMISS the

Petition for lack of merit.

SO ORDERED.

Romero, Melo and Vitug, JJ., concur

[G.R. No. 122240. November 18, 1999.]

CRISTONICO B. LEGAHI, Petitioner, v. NATIONAL LABOR RELATIONS

COMMISSION and UNITED PHILIPPINE LINES, INC., NORTHSOUTH SHIP MGT.,

(PTE), LTD., SINGAPORE, GREGORIO V. DE LIMA, JR, TOR KARLSEN and

PIONEER INSURANCE & SURETY CORP., Respondents.

D E C I S I O N

KAPUNAN, J.:

At issue is the validity of petitioner‘s dismissal from his employment.

In a complaint filed with the Philippine Overseas Employment Administration (POEA),

Cristonico B. Legahi alleged that he was hired as "Chief Cook" aboard M/V "Federal Nord" by

the Northsouth Ship Management (PTE), Ltd., Singapore and represented by its local agent

United Philippine Lines, Inc. (UPLI).chanrobles virtual lawlibrary

The contract of employment stipulated that his term of employment was for ten months

beginning October 9, 1992 with a basic monthly salary of US$450.00 with 44 hours weekly as

minimum number of hours worked with a fixed overtime pay (OT) of $185.00 and three (3) days

leave with pay every month.

Sometime in November, 1992 petitioner was asked by the Shipmaster to prepare a victualling

cost statement for the month of October, 1992. After learning that such preparation involves

mathematical skills, as it would require estimation of food cost, value of stocks, etc. he intimated

that he did not know how to do such work as it was not part of the duties of a chief cook. He was

told that it was not a difficult job and that he only needed to copy the previous forms. After much

reluctance, petitioner nonetheless prepared the statement in deference to the Shipmaster.

In December, petitioner was requested again to prepare the victualling cost statement for the

month of November. He obeyed since he was afraid he would earn the ire of his superiors if he

refused.

Sometime in January, 1993, the Shipmaster asked petitioner to do the victualling cost statement

for December which he complied. On January 6, 1993, the Shipmaster requested the petitioner to

prepare a corrected victualling statement for the same month of December. Petitioner asked the

Shipmaster if he could defer the correction as he was busy doing his chores. The response

certainly did not sit well with the Shipmaster so he was called for a meeting which petitioner did

not attend.

On January 14, 1993, a committee was formed headed by the Shipmaster himself with the Chief

Officer, Chief Engineer and Bosun as members.

In this meeting, the Shipmaster read to him the offenses he committed on board. He was asked to

answer the charges but petitioner opted to remain silent. Thereafter, petitioner was informed that

he was dismissed.

The next day, petitioner was repatriated to the Philippines through the assistance of the

Philippine Consulate.

Upon arrival or on February 16, 1993, petitioner filed with the POEA a complaint for illegal

dismissal against private respondents. He sought the payment of his salary corresponding to the

unexpired portion of his contract, unpaid overtime pay, leave pay, salary differential and

damages.

In answer to the complaint, private respondent stated that prior to petitioner‘s deployment, he

was asked if he knew how to prepare the victualling cost statement which he answered yes. On

January 6, 1993, petitioner was asked to prepare the statement. He refused and even arrogantly

replied that "the Shipmaster should let some other officer do the job since he only came to the

ship to cook." On January 13, 1993, petitioner left the vessel without permission and did not

perform his job that day. On January 14, 1993, a committee was formed to hear the case of

petitioner. Petitioner remained silent so the committee decided to send him home. Contrary to

petitioner‘s allegation, it was not the Philippine Consulate, but the shipowner‘s agent, Navios

Ship Agencies, which arranged his repatriation. The respondent noticed petitioner to be very

homesick and surmised that he deliberately committed the offenses just so he could be sent

home. Upon his return, petitioner did not even report to the local representative UPLI implying

that he had no cause of action against them. Petitioner was terminated for just cause and must,

therefore, reimburse private respondent for the cost of repatriation.

On April 6, 1994, the POEA promulgated a decision finding that there was just cause for

petitioner‘s dismissal.chanrobles virtual lawlibrary

On appeal to the National Labor Relations Commission (NLRC), the Commission affirmed in

toto the POEA decision.

Hence, this petition.

To constitute a valid dismissal from employment, two (2) requisites must concur: (a) the

dismissal must be for any of the causes provided in Article 282 of the Labor Code, and (b) the

employee must be accorded due process, the elements of which are notice and the opportunity to

be heard and to defend himself. 1

Procedural due process requires that the employee must be apprised of the charges against him.

He must be given reasonable time to answer the charges, allowed ample opportunity to be heard

and defend himself, and assisted by a representative if the employee so desires. 2 Two written

notices are required before termination of employment can be legally effected. They are: (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; 3 not to mention the opportunity to answer and rebut the charges against him, in

between such notices. 4

In the case at bar, the evidence on record belies private respondents‘ claim that petitioner was

afforded due process. The abstract of the logbook states:jgc:chanrobles.com.ph

"M/V FEDERAL NORD"

ABSTRACT FROM DECK LOG BOOK RE: CH/COOK LEGAHI CRISTONICO B.

6th JANUARY 1993

AT 0900 HRS. TODAY THE MASTER WAS ASKING THE CH/COOK LAGAHE,

CRISTONICO IF HE OR THE R/OFF COULD HELP HIM WITH THE VICT. COST

STATEMENT WHICH HE WAS NOT ABLE TO DO HIMSELF CORRECT.

WHEN THE MASTER TOLD HIM TO TAKE TIME AND TRY TO CORRECT HIS REPLY

IN A BAD WAY WAS, LET SOME OFFICERS DO THE JOB. I ONLY COME TO THE SHIP

TO COOK. HE ALSO REFUSED TO MEET IN THE MASTER‘S OFFICE TOGETHER

WITH THE CH/OFFICER WHEN HE WAS ORDERED TO.

SINCE HE IS REFUSING TO TAKE ORDERS FROM THE MASTER OF THE SHIP HE

WILL BE SENT HOME IN FIRST POSSIBLE PORT WERE HE CAN BE RELIEFED (SIC).

13th JANUARY 1993

AT 0700 HRS. THE CH/COOK LEGAHI CRISTONICO B. LEFT THE VESSEL WITHOUT

PERMISSION, HE RETURNED LATER IN THE DAY BUT WAS NOT DOING ANY

WORK.

14th JANUARY 1993

AT 1030 HRS. A HEARING WAS HELD IN THE OWNERS OFFICE REGARDING THE

DISMISSAL OF CH/COOK LEGAHI CRISTONICO B. MASTER AS CHAIRMAN AND

COMMITTEE CONSISTING OF CH/OFF. PULGO LEONIDES T., CH/ENGR. SERMONINA

TOMAS C., AND BOSUN DAMOCLES CAMILO A. THE CASE OF DISMISSAL WAS

READ OUT FOR THE CH/COOK LEGAHI ACCORDING TO THE PROCEDURE PARA 16

IN THE SEAMAN‘S ACT. ENTERED IN THE LOG BOOK 6/1-93 AND 13/1-93. AT 1140

THE HEARING WAS ENDED, AND AT 1200 HRS. THE CH/COOK LEGAHI WILL LEAVE

THE VESSEL TO BE SENT HOME. 5

Reading between the lines from the entries of the logbook, which by the very nature of things

could well be self-serving, it is rather apparent that as early as January 6, 1993, the employer had

already decided to dismiss petitioner and sent home for his alleged refusal to obey the orders of

his superiors. On January 14, 1993, the committee read to petitioner his alleged offenses which

were his refusal to take orders from his superior on January 6 and his leaving the vessel without

permission on January 13. When petitioner remained silent, the committee informed him that he

was dismissed. He was sent home that same day. Petitioner was not given reasonable time to

answer the charges hurled against him or to defend himself. The notice apprising him of the

charges and the notice of dismissal were done in one morning — all in the January 14 committee

hearing. The submission that the entry in the logbook made on January 6 which stated that for

petitioner‘s refusal "to take orders from the master of the ship he will be sent home in first

possible port" was sufficient compliance of the first notice requirement is not well-taken. This is

not the kind of notice that satisfies due process contemplated by law. In such a case where there

is a failure to comply with the requirements of the law as to the notice and hearing, the dismissal

is certainly tainted with illegality.

On the substantive issue, we find no just cause for petitioner‘s dismissal. According to the

POEA, petitioner was found guilty for insubordination for his refusal "to obey the order of the

master to prepare the victual statement on January 6, 1993," 6 which was presumably for the

month of January.

The NLRC, which simply adopted in toto the findings of the POEA, concluded that complainant

refused albeit in a bad manner the request of the Shipmaster to prepare a correct victualling cost

statement for the month of December.chanrobles.com:cralaw:red

Based on the POEA findings, petitioner was dismissed because of his refusal to prepare the

victualling statement for the month of January, 1993. The facts as found by the POEA are all

muddled up. The victualling cost statement for the month of January was not yet due when he

was asked to prepare the same on January 6 of that month. A victualling cost statement was

necessary to show the food expense incurred for the past month, not for the present month. Thus,

from the victualling statements submitted for the month of October, November and December,

1992, it can be seen that the period indicated therein began on the first day of each month and

ended on the last day of said month. This means that the report for October was made in

November, for November in December, and that for December in January. Such being the case,

petitioner‘s refusal to prepare the victualling statement of January was justified since the

victualling cost for the month of January was not yet due or necessary.

On the other hand, the NLRC‘s conclusion that petitioner refused to correct the victualling

statement for the month of December as ordered to, was also not sufficient basis for his

dismissal. There is no doubt that petitioner had complied with his superior‘s orders to prepare the

statement for December. It was only the correction of the December statement that he requested

to defer which the Shipmaster took as a downright refusal to make and considered such act as a

serious and gross insubordination.

For willful disobedience to be considered as just cause for dismissal, the employee‘s conduct

must be willful or intentional, the willfulness being characterized by a wrongful and perverse

attitude and the order violated must have been reasonable, lawful, made known to the employee

and must pertain to the duties which he has been engaged to discharge. 7

In the instant case, it was actually not petitioner‘s duty to prepare the victualling statement. The

allegation that this was part of his duty as chief cook and the fact that he was aware of such duty

when he was interviewed for the post is only self-serving and without basis. The employment

contract does not mention anything that this was part of his duty as chief cook. 8 A perusal of the

victualling cost statement form meanwhile reveals that only the signatures of a Relieving Chief

Steward and the Chief Master were required. 9 Nowhere does it contain that the signature of the

chief cook was necessary. Even assuming that petitioner refused to obey the order of his superior

to prepare a corrected victualling cost statement for December, although he maintained that he

just asked for time to do it, as he was then busy performing his usual duty, which we believe to

be the case, his refusal cannot be considered as one being characterized by a "wrongful and

perverse attitude." From the beginning, petitioner already intimated that he did not know how to

accomplish the victual cost statement since it entailed some mathematical skills which he

admittedly did not have. Indeed, to use his own words, "he came aboard only to cook" His

capability on manual skill was limited to cooking and nothing more and for which reason he

applied for the job as chief cook and was eventually hired as such. The fact that he was able to

do the victualling cost statements for the past three months was an extra work on his part. His

failure or alleged refusal to go on with the work did not merit the severest penalty of dismissal

from the service and his immediate repatriation without even affording him due process of law.

10

Petitioner‘s dismissal without a valid cause constitute a breach of contract. Consequently, he

should only be paid the unexpired portion of his employment contract. However, the payment of

the overtime pay should be disallowed in the light of our ruling in the case of Cagampan v.

NLRC, 11 where we held that:chanroblesvirtual|awlibrary

Petitioners have conveniently adopted the view that the "guaranteed or fixed overtime pay of

30% of the basic salary per month" embodied in their employment contract should be awarded to

them as part of a "package benefit." They have theorized that even without sufficient evidence of

actual rendition of overtime work, they would automatically be entitled to overtime pay. Their

thinking is erroneous for being illogical and unrealistic. Their thinking even runs counter to the

intention behind the provision. The contract provision means that the fixed overtime pay of 30%

would be the basis for computing the overtime pay if and when overtime work would be

rendered. Simply, stated, the rendition of overtime work and the submission of sufficient proof

that said work was actually performed are conditions to be satisfied before a seaman could be

entitled to overtime pay which should be computed on the basis of 30% of the basic monthly

salary. In short, the contract provision guarantees the right to overtime pay but the entitlement to

such benefit must first be established. Realistically speaking, a seaman, by the very nature of his

job, stays on board a ship or vessel beyond the regular eight-hour work schedule. For the

employer to give him overtime pay for the extra hours when he might be sleeping or attending to

his personal chores or even just lulling away his time would be extremely unfair and

unreasonable.

We already resolved the question of overtime pay of worker aboard a vessel in the case of

National Shipyards and Steel Corporation v. CIR (3 SCRA 890). We ruled: chanrob1es virtual 1aw library

We can not agree with the Court below that respondent Malondras should be paid overtime

compensation for every hour in excess of the regular working hours that he was on board his

vessel or barge each day, irrespective of whether or not he actually put in work during those

hours. Seamen are required to stay on board their vessels by the very nature of their duties, and it

is for this reason that, in addition to their regular compensation, they are given free living

quarters and subsistence allowances when required to be on board. It could not have been the

purpose of our law to require their employers to pay them overtime even when they are not

actually working; otherwise, every sailor on board a vessel would be entitled to overtime for

sixteen hours each a day, even if he spent all those hours resting or sleeping in his bunk, after his

regular tour of duty. The correct criterion in determining whether or not sailors are entitled to

overtime pay is not, therefore, whether they were on board and can not leave ship beyond the

regular eight working hours a day, but whether they actually rendered service in excess of said

number of hours. (Emphasis supplied)

In the same vein, the claim for day‘s leave pay for the unexpired portion of the contract is

unwarranted since the same is given during the actual service of the seaman. 12

The claim for moral and exemplary damages are deleted for lack of sufficient basis. Considering

that petitioner was forced to litigate, we hold that the amount of P10,000.00 is a reasonable and

fair compensation for the legal services rendered by counsel.

WHEREFORE, the petition is GRANTED. The decision of the NLRC is SET ASIDE. Private

respondent is hereby ORDERED to pay only the petitioner his salary equivalent to seven (7)

months corresponding to the unexpired portion of the contract plus attorney‘s fees of P10,000.00.

SO ORDERED.chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph

Davide, Jr., C.J., Puno, Pardo and Ynares-Santiago, JJ., concur.

[G.R. No. 173648 : January 16, 2012]

ABDULJUAHID R. PIGCAULAN,* PETITIONER, VS. SECURITY AND CREDIT

INVESTIGATION, INC. AND/OR RENE AMBY REYES , RESPONDENTS.

D E C I S I O N

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;

x x x x

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.

x x x x

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.

SO ORDERED.

[G.R. NO. 172029 : August 6, 2008]

ASSOCIATION OF INTERNATIONAL SHIPPING LINES, INC., in its own behalf and in

representation of its members: AMERICAN TRANSPORT LINES, INC., AUSTRALIAN

NATIONAL LINE, FLEET TRANS INTERNATIONAL AND UNITED ARAB

SHIPPING CO., DONGNAMA SHIPPING CO., HANJIN SHIPPING COMPANY, LTD.,

HAPAG-LLOYD A/G, KNUTSEN LINE, KYOWA LINE, NEPTUNE ORIENT LINE,

ORIENT OVERSEAS CONTAINER LINE, P & O CONTAINERS, LTD., P & O SWIRE

CONTAINERS AND WILH WILHELMSEN LINE A/S, REGIONAL CONTAINERS

LINES (PTE), LTD., SENATOR LINE BREMEN GERMANY, TOKYO SENPAKU

KAISHA, LTD., UNIGLORY LINE, WAN HAI LINES, LTD., WESTWIND LINE, ZIM

ISRAEL NAVIGATION CO., LTD., COMPANIA SUD AMERICANA DE VAPORES

S.A., DEUTSCHE SEEREEDEREI ROSTOCK (DSR) GERMANY AND ARIMURA

SANGYO COMPANY, LTD., PACIFIC INTERNATIONAL LINES (PTE), LTD.,

COMPAGNIE MARITIME D' AFFRETEMENT (CMA), YANGMING MARINE

TRANSPORT CORP., NIPON YUSEN KAISHA, HYUNDAI MERCHANT MARINE

CO., LTD., MALAYSIAN INTERNATIONAL SHIPPING CORPORATION BERHAD,

BOLT ORIENT LINE, MITSUI O.S.K. LINES, LTD., PHILS. MICRONESIA & ORIENT

NAVIGATION CO. (PMSO LINE), LLOYD TRIESTINO DI NAVIGAZIONE S.P.A.N.,

HEUNG-A SHIPPING COMPANY, KAWASAKI KISEN KAISHAARIMURA SANGYO

COMPANY, LTD., AMERICAN PRESIDENT LINES, LTD., MAERSK FILIPINAS,

INC., EASTERN SHIPPING LINES, INC., NEDLLOYD LINES, INC., PHILIPPINE

PRESIDENT LINES, LTD., SEA-LAND SERVICE, INC., MADRIGAL-WAN HAI

LINES, Petitioners, v. UNITED HARBOR PILOTS' ASSOCIATION OF THE

PHILIPPINES, INC., Respondent.

D E C I S I O N

REYES, R.T., J.:

PAYMENT of nighttime and overtime differential of harbor pilots is the object of this Petition

for Review on Certiorari 1 of the Decision

2 of the Court of Appeals (CA) partly setting aside the

Order3 of the Regional Trial Court (RTC), Branch 36, Manila pertaining to a motion for

execution.

The Facts

On March 1, 1985, the Philippine Ports Authority (PPA) issued PPA Administrative Order (AO)

No. 03-85 substantially adopting the provisions of Customs Administrative Order (CAO) No. 15-

654 on the payment of additional charges for pilotage service

5 rendered "between 1800H to

1600H," or on "Sundays or Holidays," practically referring to "nighttime and overtime pay."

Section 16 of the AO reads:

Section 16. Payment of Pilotage Service Fees. - Any vessel which employs a Harbor Pilot

shall pay the pilotage fees prescribed in this Order and shall comply with the following

conditions:

x x x

c) When pilotage service is rendered at any port between 1800H to 1600H, Sundays or Holidays,

an additional charge of one hundred (100%) percentum over the regular pilotage fees shall

be paid by vessels engaged in foreign trade, and fifty (50%) percentum by coastwise vessels.

This additional charge or premium fee for nighttime pilotage service shall likewise be paid

when the pilotage service is commenced before and terminated after sunrise.

Provided, however, that no premium fee shall be considered for service rendered after 1800H if

it shall be proven that the service can be undertaken before such hours after the one (1) hour

grace period, as provided in paragraph (d) of this section, has expired. (Emphasis supplied)cralawlibrary

On February 3, 1986, responding to the clamor of harbor pilots for the increase and

rationalization of pilotage service charges, then President Ferdinand E. Marcos issued Executive

Order (EO) No. 1088 providing for uniform and modified rates for pilotage services rendered in

all Philippine ports. It fixed the rate of pilotage fees on the basis of the "vessel's tonnage" and

provided that the "rate for docking and undocking anchorage, conduction and shifting and other

related special services is equal to 100%." EO No. 1088 also contained a repealing clause stating

that all orders, letters of instruction, rules, regulations, and issuances inconsistent with it are

repealed or amended accordingly.6

Subsequently, pursuant to EO No. 1088, the PPA issued several resolutions disallowing overtime

premium or charge and recalling its recommendation for a reasonable night premium pay or

night differential pay, viz.:

RESOLUTION NO. 14867

RESOLVED, That on motion duly seconded, and in consideration of the proper court order(s)

mandating PPA to implement the pilotage rates under Executive Order No. 1088, the overtime

premium or charge collected by Harbor Pilots is hereby disallowed and Section 16(c) of

Article III of PPA Administrative Order No. 03-85, prescribing general guidelines on pilotage

services, be, as it is hereby repealed and modified accordingly;

RESOLVED FURTHER, That the General Manager, be, as he is hereby authorized, to issue the

corresponding amendatory guidelines.

RESOLUTION NO. 15418

RESOLVED, That on motion duly seconded, and after taking into consideration the respective

positions of the various Harbor Pilot associations and shipping groups, Board Resolution No.

1486, be, as it is hereby reiterated and affirmed, and Management, be, as it is hereby

directed to adopt a policy of no overtime pay for pilotage services;

RESOLVED FURTHER, That in lieu of the "no overtime pay policy," Management be, as it

is hereby directed, to recommend a reasonable night premium pay or night differential pay

for the conduct of the basic pilotage services."

RESOLUTION NO. 15549

RESOLVED, That on motion duly seconded, and taking into consideration the arguments raised

by the Association of International Shipping Lines, Inc., raising certain legal issues on the

adoption of Resolution No. 1541, as adopted on November 13, 1995, the proposed PPA

Administrative Order No. 19-95, hereto attached and incorporated by reference, recommending

amendments to Section 16(c) of PPA Administrative Order No. 03-85, disallowing overtime pay

and authorizing instead the collection of nighttime premium pay for pilotage services rendered

during nighttime (1800H to 0600H), be, as it is hereby deferred, for further legal review;

RESOLVED FURTHER, That pending review and clarification by the Office of the

Government Corporate Counsel of the legal issues on overtime pay/nighttime premium

pay, Resolution No. 1541, be, as it is hereby recalled and Resolution No. 1486, as adopted

on May 19, 1995, be, as it is hereby reaffirmed.

On the strength of PPA Resolution No. 1486, petitioners Association of International Shipping

Lines (AISL) and its members refused to pay respondent United Harbor Pilots' Association of

the Philippines, Inc. (UHPAP)'s claims for nighttime and overtime pay.10

In response, UHPAP

threatened to discontinue pilotage services should their claims be continually ignored.11

Petitioners then filed a petition for declaratory relief with the RTC, Branch 36, Manila, docketed

as Civil Case No. 96-78400. The issues raised there were: (1) whether EO No. 1088 authorized

the payment of nighttime and overtime pay; and (2) whether the rate of pilotage fees

enumerated in EO No. 1088 were for "every pilotage maneuver" or for the "entire package of

pilotage services."

On January 26, 1998, the RTC granted the petition and declared that respondent UHPAP is not

authorized to collect any overtime or night shift differential for pilotage services rendered. The

RTC disposed as follows:

WHEREFORE, judgment is hereby rendered granting the petition herein and it is hereby

declared that (1) respondent PPA is bereft of authority to impose and respondent UHPAP

is not authorized to collect any overtime or night shift differential for pilotage services

rendered; and (2) the rates of fees for pilotage services rendered refer to the totality of

pilotage services rendered and respondent UHPAP cannot legally charge separate fees for

each pilotage service rendered. All billings inconsistent with this decision are declared null and

void and petitioners are not liable therefor.

SO ORDERED.12

(Emphasis supplied)cralawlibrary

The trial court said that in view of the repealing clause in EO No. 1088, it was axiomatic that all

prior issuances inconsistent with it were deemed repealed. Thus, the provisions of Section 16 of

PPA AO No. 03-85 on nighttime and overtime pay were "effectively stricken-off the books." It

further held that since the rate of pilotage fees enumerated in EO No. 1088 was based on the

"vessel's tonnage," it meant that such rate referred to the "entire package of pilotage services."

According to the trial court, to rule otherwise is to frustrate the uniformity envisioned by the

rationalization scheme.

Respondent UHPAP moved for reconsideration but the motion was denied.

Desiring to secure for its members the payment of nighttime and overtime pay, respondent

UHPAP filed directly before this Court a Petition for Review on certiorari, docketed as G.R. No.

133763, raising the following legal issues for determination: (1) whether EO No. 1088 repealed

the provisions of CAO No. 15-65 and PPA AO No. 03-85, as amended, on payment of

additional pay for holidays work and premium pay for nighttime service; (2) whether the

rates, as fixed in the schedule of fees based on tonnage in EO No. 1088, are to be imposed on

every pilotage movement; and (3) whether EO No. 1088 deprived the PPA of its right, duty and

obligation to promulgate new rules and rates for payment of fees, including additional pay for

holidays and premium pay for nighttime services.

On November 13, 2002, this Court granted the petition and reversed the RTC. This Court held

then:

Section 3 of E.O. No. 1088 is a general repealing clause, the effect of which falls under the

category of an implied repeal as it does not identify the orders, rules or regulations it

intends to abrogate. A repeal by implication is frowned upon in this jurisdiction. It is not

favored, unless it is manifest that the legislative authority so intended or unless it is convincingly

and unambiguously demonstrated that the subject laws or orders are clearly repugnant and

patently inconsistent that they cannot co-exist. This is because the legislative authority is

presumed to know the existing law so that if repeal is intended, the proper step is to express it.

There is nothing in E.O. No. 1088 that reveals any intention on the part of Former President

Marcos to amend or supersede the provisions of PPA AO No. 03-85 on nighttime and overtime

pay. While it provides a general repealing clause, the same is made dependent upon its

actual inconsistency with other previous orders, rules, regulations or other issuance.

Unfortunately for AISL, we find no inconsistency between E.O. No. 1088 and the provisions

of PPA AO No. 03-85. At this juncture, it bears pointing out that these two orders dwell on

entirely different subject matters. E.O. No. 1088 provides for uniform and modified rates for

pilotage services rendered to foreign and coastwise vessels in all Philippine ports, public or

private. The purpose is to rationalize and standardize the pilotage service charges

nationwide. Upon the other hand, the subject matter of the controverted provisions of PPA

AO No. 03-85 is the payment of the additional charges of nighttime and overtime pay. Plainly,

E.O. No. 1088 involves the basic compensation for pilotage service while PPA AO No. 03-85

provides for the additional charges where pilotage service is rendered under certain

circumstances. Just as the various wage orders do not repeal the provisions of the Labor

Code on nighttime and overtime pay, the same principle holds true with respect to E.O. No.

1088 and PPA AO 03-85. Moreover, this Court adheres to the rule that every statute must be so

construed and harmonized with other statutes as to form a uniform system of jurisprudence. E.O.

No. 1088 and PPA AO No. 03-85 should thus be read together and harmonized to give effect to

both.

x x x

While E.O. No. 1088 prescribes the rates of pilotage fees on the basis of the "vessel's

tonnage," however, this does not necessarily mean that the said rate shall apply to the

totality of pilotage services. If it were so, the benefit intended by E.O. No. 1088 to harbor

pilots would be rendered useless and ineffectual. It would create an unjust if not an absurd

situation of reducing take home pay of the harbor pilots to a single fee, regardless of the

number of services they rendered from the time a vessel arrives up to its departure. It must

be remembered that pilotage services cover a variety of maneuvers such as "docking,"

"undocking anchorage," "conduction," "shifting" and other "related special services." To say

that the rate prescribed by E.O. No. 1088 refers to the totality of all these maneuvers is to

defeat the benefit intended by the law for harbor pilots. It should be stressed that E.O. No.

1088 was enacted in response to the clamor of harbor pilots for the increase and

rationalization of pilotage service charges through the imposition of uniform and adjusted

rates. Hence, in keeping with the benefit intended by E.O. No. 1088, the schedule of fees

fixed therein based on tonnage should be interpreted as applicable to "each pilotage

maneuver" and not to the "totality of the pilotage services."

The use of the word "and" between the words "docking" and "undocking" in paragraph 2 of

Section 1 of E.O. No. 1088 should not override the above-mentioned purpose of said law. It is a

basic precept of statutory construction that statutes should be construed not so much according to

the letter that killeth but in line with the purpose for which they have been enacted. Statutes are

to be given such construction as will advance the object, suppress the mischief, and secure the

benefits intended.

Furthermore, as can be gleaned from the drafts submitted by the PPA on the guidelines

pertaining to the uniform pilotage services to be rendered in all pilotage districts, the PPA is of

the interpretation that the rate of pilotage fees fixed by E.O. No. 1088 is to be separately imposed

on every pilotage maneuver done by the harbor pilots. This interpretation is likewise made clear

in PPA Memorandum Circular No. 42-98, dated October 8, 1998, which clarifies pilotage

charges for docking and undocking, as follows -

"To prevent disruption in pilotage service and considering the pendency of the final and

executory decision of the Supreme Court on the pilotage rates issue, it is hereby clarified that

pilotage fees for docking and undocking of vessels shall be paid as two (2) separate services x x

x."

The PPA is the proper government agency tasked with the duty of implementing E.O. No. 1088.

As such, its interpretation of said law carries great weight and consideration. In a catena of cases,

we ruled that the construction given to a statute by an administrative agency charged with the

interpretation and application of a statute is entitled to great respect and should be accorded great

weight by the courts. The exception, which does not obtain in the present case, is when such

construction is clearly shown to be in sharp conflict with the governing statute or the

Constitution and other laws. The rationale for this rule relates not only to the emergence of the

multifarious needs of a modern or modernizing society and the establishment of diverse

administrative agencies for addressing and satisfying those needs, it also relates to accumulation

of experience and growth of specialized capabilities by the administrative agency charged with

implementing a particular statute.

The charges and fees provided for in E.O. No. 1088 are therefore to be imposed for every

pilotage maneuver performed by the harbor pilots, as properly interpreted by the PPA, the

agency charged with its implementation.

x x x

Finally, on the third issue, we rule that E.O. No. 1088 does not deprive the PPA of its power

and authority to promulgate new rules and rates for payment of fees, including additional

charges. As we held in Philippine Interisland Shipping Association of the Philippines v. Court of

Appeals:

"The power of the PPA to fix pilotage rates and its authority to regulate pilotage still

remain notwithstanding the fact that a schedule for pilotage fees has already been

prescribed by the questioned executive order (referring to E.O. No. 1088). PPA is at liberty

to fix new rates of pilotage subject only to the limitation that such new rates should not go

below the rates fixed under E.O. No. 1088. x x x."

Our pronouncement is clearly in consonance with the provisions of Presidential Decree 857

which vests upon the PPA the power and authority (1) "to supervise, control, regulate x x x such

services as are necessary in the ports vested in, or belonging to the Authority"; (2) "to control,

regulate and supervise pilotage and the conduct of pilots in any Port District"; and (3) "to

impose, fix, prescribe, increase or decrease such rates, charges or fees x x x for the services

rendered by it or by any private organization within a Port District."13

(Emphasis supplied)cralawlibrary

The decision became final and executory on February 14, 2003.

On April 8, 2003, respondent UHPAP filed a motion for the issuance of a writ of execution with

the RTC.14

Petitioners opposed15

the motion.

On September 25, 2003, the RTC issued an Order16

denying respondent UHPAP's motion and

declaring that "pursuant to the decision of the Supreme Court in G.R. No. 133763, PPA

Resolution Nos. 1486, 1541, and 1554 are valid and effective thereby disallowing the collection

of overtime pay."17

The RTC explained:

x x x [W]hen the Supreme Court ruled and declared that Executive Order 1088 does not

deprive the PPA of its power and authority to promulgate rules and rates for payment of

fees including additional charges, it had effectively ruled on the validity of PPA resolutions

1486, 1541, and 1554. Said resolutions did not violate any provision of Executive Order 1088

and did not constitute any diminution of the rates provided by said Executive Order. They merely

repealed the collection of overtime premiums or charges which is provided not by Executive

Order 1088 but by another PPA Administrative Order 03-85. This is not inconsistent with the

ruling of the Supreme Court that Executive Order 1088 did not repeal the additional pay for

holiday work and premium pay for nighttime service, collectively referred to as overtime pay

provided in Customs Administrative Order No. 15-65 and PPA Administrative Order 03-85. The

Supreme Court did not consider subsequent PPA resolutions or administrative orders affecting

overtime pay because this was not brought out as an issue.

Resolutions 1486, 1541, and 1554 have no effect on Executive Order 1088 whatsoever.18

(Emphasis supplied)cralawlibrary

Respondent UHPAP then filed a Petition for Certiorari19

under Rule 65 with the CA, docketed

as CA-G.R. SP No. 87892. It contended that the RTC committed grave abuse of discretion

amounting to lack of jurisdiction when it practically overturned the final and executory decision

of this Court in G.R. No. 133763 by declaring in its September 25, 2003 Order that PPA

Resolution Nos. 1486, 1541, and 1554 were valid and effective.20

CA Disposition

In a Decision dated October 19, 2005, the CA partly granted respondent's petition in that it

affirmed the denial of the motion for the issuance of a writ of execution while, at the same time,

deleting portions of the challenged Order. The decretal portion of the CA Decision states:

IN VIEW OF ALL THE FOREGOING, the herein petition is hereby PARTLY GRANTED,

in such a way that the denial of UHPAP's motion for the issuance of a writ of execution is

AFFIRMED, while the declaration in the assailed Order of September 25, 2003 stating that

"pursuant to the decision of the Supreme Court in G.R. No. 133763, PPA resolutions 1486,

1541, and 1554 are valid and effective thereby disallowing the collection of overtime pay,"

is RECALLED and SET ASIDE and ordered DELETED from the said Order. No

pronouncement as to cost.

SO ORDERED.21

(Emphasis supplied)cralawlibrary

The CA set aside the declaration in the RTC Order dated September 25, 2003 that "pursuant to

the decision of the Supreme Court in G.R. No. 133763, PPA Resolution Nos. 1486, 1541, and

1554 are valid and effective thereby disallowing the collection of overtime pay." According to

the CA, the RTC committed grave abuse of discretion as "it really not only modified but reversed

a final and executory decision of the highest court of the land."22

The appellate court ruled that

when this Court, in G.R. No. 133763, declared ineffective the "pretended" repealing effect of EO

No. 1088 on PPA AO No. 03-85, the subject PPA Resolutions implementing Section 3 of EO

No. 1088 were automatically rendered without any legal effect as well.23

It also ruled that since

there was no inconsistency between EO No. 1088 and the provisions of PPA AO No. 03-85, the

latter was rendered in full legal force and effect.24

On November 10, 2005, petitioners filed a motion for partial reconsideration.25

It contended that

in resolving the issue of whether EO No. 1088 repealed the provisions of CAO No. 15-65 and

PPA AO No. 03-85 on nighttime and overtime pay, this Court, in G.R. No. 133763, did not

discuss the logical consequence of the resolution of the issue on PPA Resolution Nos. 1486,

1541, and 1554.26

It further asserted that PPA Resolution Nos. 1486, 1541, and 1554 remain

valid as they were issued pursuant to PPA's authority to regulate pilotage services.27

In a Resolution dated March 23, 2006, the CA denied petitioners' motion for partial

reconsideration. Hence, the present recourse.

Issue Petitioners, via Rule 45, submit the lone assignment that THE COURT OF APPEALS

COMMITTED SERIOUS REVERSIBLE ERROR IN INTERPRETING AND CONCLUDING

THAT THE RULING OF THE SUPREME COURT IN THE CASE OF "THE UNITED

HARBOR PILOTS' ASSOCIATION OF THE PHILIPPINES, INC. V. ASSOCIATION OF

THE INTERNATIONAL SHIPPING LINES, INC., ET AL., G.R. 133763," RENDERED

"WITHOUT LEGAL EFFECT" THE PPA RESOLUTION NOS. 1486, 1541, AND 1554

WHICH REPEALED OVERTIME AND NIGHTTIME PAY.28

Our Ruling The petition lacks merit.

This Court's ruling in G.R. No. 133763 that "EO No. 1088 did not repeal the provisions of

PPA AO No. 03-85 on nighttime and overtime pay," necessarily rendered PPA Resolution

Nos. 1486, 1541 and 1554 without any legal effect. Petitioners posit that notwithstanding the

declaration by this Court in G.R. No. 133763 that EO No. 1088 did not repeal the overtime and

nighttime pay provided under PPA AO 03-85, PPA Resolution Nos. 1486, 1541, and 1554 were

not rendered "without legal effect." They insist that in resolving in G.R. No. 133763 the issue of

whether EO No. 1088 repealed the provisions of PPA AO No. 03-85 on nighttime and overtime

pay, this Court did not discuss the logical consequence of the resolution of the issue on the

subject PPA Resolutions.29

We are not persuaded.

At the outset, it should be stressed that the PPA issued the subject resolutions - which disallowed

overtime pay and recalled PPA's recommendation for nighttime pay to harbor pilots - pursuant to

Section 3 of EO No. 1088 stating that "all orders, letters of instruction, rules, regulations and

issuances inconsistent with it are repealed or amended accordingly." The PPA, just like

petitioners,30

was of the belief that there was an actual inconsistency or an irreconcilable conflict

between EO No. 1088 and the provisions of PPA AO No. 03-85 on nighttime and overtime pay,

resulting in the implied repeal of the latter.31

But, as this Court pronounced in G.R. No. 133763, there is nothing in EO No. 1088 that reveals

any intention on the part of Former President Marcos to amend or supersede the provisions of

PPA AO No. 03-85 on nighttime and overtime pay. While Section 3 of EO No. 1088 provides a

general repealing clause, the same is made dependent upon its actual inconsistency with other

previous orders, rules, regulations or other issuance.

There is no inconsistency between EO No. 1088 and the provisions of PPA AO No. 03-85.

These two orders dwell on entirely different subject matters. EO No. 1088 provides for uniform

and modified rates for pilotage services rendered to foreign and coastwise vessels in all

Philippine ports, public or private. On the other hand, the subject matter of the provisions of PPA

AO No. 03-85 is the payment of the additional charges of nighttime and overtime pay. Plainly,

EO No. 1088 involves the basic compensation for pilotage service while PPA AO No. 03-85

provides for the additional charges where pilotage service is rendered under certain

circumstances.

Obviously, this Court's ruling in G.R. No. 133763 was that EO No. 1088 did not repeal the

provisions of PPA AO No. 03-85 on nighttime and overtime pay as there was no inconsistency

between the two orders. The ruling rendered "without legal effect" PPA Resolution Nos. 1486,

1541, and 1554, which were all issued by PPA pursuant to Section 3 of EO No. 1088. Upon the

other hand, the validity of the earlier PPA AO No. 03-85, which allowed nighttime and overtime

pay to harbor pilots, was affirmed.

It is noteworthy that when this Court, in G.R. No. 133763, reversed the RTC Decision dated

January 26, 1998 (which declared, among others, that in view of the repealing clause in EO No.

1088 respondent UHPAP is not authorized to collect any overtime or night shift differential for

pilotage services rendered), the Court likewise recognized the right of the members of

respondent UHPAP to overtime and nighttime pay under PPA AO No. 03-85. Indeed, a harbor

pilot who has rendered nighttime and overtime work must be paid nighttime and overtime pay.

Members of respondent UHPAP are entitled to nighttime and overtime pay. Undoubtedly,

pursuant to PPA AO No. 03-85, members of respondent UHPAP are legally entitled to nighttime

and overtime pay.

It bears pointing out that additional compensation for nighttime work is founded on public

policy.32

Working at night is violative of the law of nature for it is the period for rest and sleep.

An employee who works at night has less stamina and vigor. Thus, he can easily contract

disease. The lack of sunlight tends to produce anemia and tuberculosis and predispose him to

other ills. Night work brings increased liability to eyestrain and accident. Serious moral dangers

also are likely to result from the necessity of traveling the street alone at night, and from the

interference with normal home life.33

Hygienic, medical, moral, cultural and socio-biological

reasons are in accord that night work has many inconveniences and when there is no alternative

but to perform it, it is but just that the laborer should earn greater salary than ordinary work so as

to compensate the laborer to some extent for the said inconveniences.34

Anent the payment of overtime pay, the Court explained its rationale in Philippine National

Bank v. Philippine National Bank Employees Association (PEMA):35

x x x Why is a laborer or employee who works beyond the regular hours of work entitled to extra

compensation called in this enlightened time, overtime pay? Verily, there can be no other reason

than that he is made to work longer than what is commensurate with his agreed compensation for

the statutorily fixed or voluntarily agreed hours of labor he is supposed to do. When he thus

spends additional time to his work, the effect upon him is multi-faceted: he puts in more effort,

physical and/or mental; he is delayed in going home to his family to enjoy the comforts thereof;

he might have no time for relaxation, amusement or sports; he might miss important pre-

arranged engagements; etc., etc. It is thus the additional work, labor or service employed and the

adverse effects just mentioned of his longer stay in his place of work that justify and is the real

reason for the extra compensation that he called overtime pay.

Overtime work is actually the lengthening of hours developed to the interests of the employer

and the requirements of his enterprise. It follows that the wage or salary to be received must

likewise be increased, and more than that, a special additional amount must be added to serve

either as encouragement or inducement or to make up for the things he loses which we have

already referred to. And on this score, it must always be borne in mind that wage is indisputably

intended as payment for work done or services rendered.36

Moreover, We agree with the CA that the RTC correctly denied respondent's motion for

execution. It will be recalled that the original action before the RTC was one for declaratory

relief filed by petitioners praying for:

(1) a construction of Executive Order No. 1088 declaring that AISLI is not liable to pay overtime

and night shift differential to respondent UHPAP; andcralawlibrary

(2) a construction of Executive Order No. 1088 declaring that the schedule of rates provided

therein applies to the entire package of pilotage services under the compulsory pilotage scheme

and that UHPAP cannot separately charge AISLI for each pilotage service rendered.37

The disposition of the RTC in favor of petitioners in the declaratory relief petition was the

decision elevated by the UHPAP to this Court.38

Upon the reversal of the RTC decision by this

Court, UHPAP went back to the RTC on a motion for execution. Verily, that course of action on

the part of UHPAP was procedurally infirm.

In such civil actions for declaratory relief under Rule 63 of the Rules of Court, the judgment does

not entail an executory process, as the primary objective of petitioner is to determine any

question of construction or validity and for a declaration of concomitant rights and duties.39

The

proper remedy would have been for members of respondent UHPAP to claim for overnight and

nighttime pay before petitioners AISLI and its members.

WHEREFORE, the petition is DENIED and the appealed Decision AFFIRMED. Costs against

petitioners.

SO ORDERED.

[G.R. NO. 169434 : March 28, 2008]

LAZARO V. DACUT, CESARIO G. CAJOTE, ROMERLO F. TUNGALA, LOWEL Z.

ZUBISTA, and ORLANDO P. TABOY, Petitioners, v. COURT OF APPEALS (Special

Twelfth Division), STA. CLARA INTERNATIONAL TRANSPORT AND EQUIPMENT

CORPORATION, and NICANDRO LINAO, Respondents.

D E C I S I O N

QUISUMBING, J.:

Assailed in this Petition for Review are the Decision1 dated June 21, 2005 and the Resolution

2

dated August 22, 2005 of the Court of Appeals in CA-G.R. SP No. 76096, which affirmed the

Resolution3 dated May 20, 2002 of the National Labor Relations Commission (NLRC). The

NLRC had affirmed the decision4 of the Labor Arbiter in NLRC Case No. NCR-00-09-09578-

99, dismissing petitioners' complaint for constructive dismissal but ordering the payment of their

holiday pay, accrued sick and vacation leaves and wage differential.

The antecedent facts culled from the submissions below are as follows:

Petitioners Lazaro V. Dacut, Cesario G. Cajote, Romerlo F. Tungala, Lowel Z. Zubista, and

Orlando P. Taboy were crew members of the LCT "BASILISA", an inter-island cargo vessel

owned by private respondent Sta. Clara International Transport and Equipment Corporation.

On November 29, 1998, Dacut discovered a hole in the vessel's engine room. The company had

the hole patched up with a piece of iron and cement. Despite the repair, Dacut and Tungala

resigned in July 1999 due to the vessel's alleged unseaworthiness.5

On the other hand, Cajote went on leave from April 12-28, 1999 to undergo eye treatment. Since

then, he has incurred several unauthorized absences. Fearing that he will be charged as Absent

Without Leave (AWOL), Cajote resigned in June 1999.6

On September 22, 1999, petitioners filed a complaint7 for constructive dismissal amounting to

illegal dismissal (except for Zubista and Taboy); underpayment of wages, special and regular

holidays; non-payment of rest days, sick and vacation leaves, night shift differentials, subsistence

allowance, and fixed overtime pay; actual, moral and exemplary damages; and litigation costs

and attorney's fees.

Dacut and Tungala claimed that they resigned after Reynalyn G. Orlina, the secretary of the

Personnel Manager, told them that they will be paid their separation pay if they voluntarily

resigned. They also resigned because the vessel has become unseaworthy after the company

refused to have it repaired properly.8 Meanwhile, Cajote alleged that he resigned because the

company hired a replacement while he was still on leave. When he returned, the Operations

Manager told him that he will be paid his separation pay if he voluntarily resigned; otherwise, he

would be charged for being AWOL. On the other hand, Zubista claimed that his wage was below

the minimum set by the Regional Tripartite Wages and Productivity Board. Finally, petitioners

alleged that they were not paid their rest days, sick and vacation leaves, night shift differentials,

subsistence allowance, and fixed overtime pay.

After the Labor Arbiter declared the case submitted for decision, the company filed its reply to

petitioners' position paper. It countered that Dacut and Tungala voluntarily resigned due to the

vessel's alleged unseaworthiness while Cajote resigned to avoid being charged as AWOL. It also

claimed that petitioners' monetary claims had no basis.

On August 2, 2000, the Labor Arbiter dismissed petitioners' complaint. The Labor Arbiter ruled

that there was sufficient evidence to prove that the vessel was seaworthy. Thus, the fear of Dacut

and Tungala was unfounded, and they must bear the consequence of their resignation. The Labor

Arbiter also observed that Cajote has incurred excessive unauthorized absences which would

warrant his dismissal under the Labor Code. Thus, the Labor Arbiter upheld the company's

position that Cajote resigned to avoid being charged as AWOL. Finally, the Labor Arbiter noted

that except for the holiday pay, accrued sick and vacation leaves, and wage differential,

petitioners failed to substantiate their monetary claims. The Labor Arbiter thus held:

WHEREFORE, the foregoing premises considered, judgment is hereby rendered dismissing

complainants' charge for constructive dismissal and the concomitant prayer that goes therewith

for lack of merit. However, respondent is ordered to pay the following:

1. [Complainants'] holiday pay and the cash equivalent of their accrued sick leave/vacation leave

credits to:

Holiday Pay Accrued

Regular Special S/L - V/L Credits

Dacut P1,000.00 P1,099.98 P8,365.35

Tungala P 933.32 P 756.66 P7,850.00

Cajote P1,292.30 P 682.95 P2,100.00

Zubista P 923.04 P 714.98 P2,600.00

Taboy P1,307.68 P1,076.91 P5,000.00

[Total] P5,456.34 P4,331.48 P25,915.35

2. Zubista's wage differential amounting to THIRTY-FOUR THOUSAND SIX HUNDRED

EIGHTY-SEVEN PESOS and 70/100 (P34,687.70)[.]

SO ORDERED.9

Petitioners appealed to the NLRC alleging that the Labor Arbiter erred: (1) in entertaining the

company's reply after the case had been submitted for decision; (2) in not finding that Dacut,

Cajote and Tungala were constructively dismissed; (3) in not finding that petitioners were

entitled to their monetary claims; and (4) in not finding that petitioners were entitled to actual,

moral and exemplary damages as well as litigation costs and attorney's fees. At this point, Dacut

and Tungala further contended that they resigned because they were being harassed by the

company due to a complaint for violation of labor standards they had filed earlier against it.

On May 20, 2002, the NLRC affirmed the Labor Arbiter's decision.10

The NLRC clarified that

although the Labor Arbiter has declared the case submitted for decision, the Labor Arbiter may

still entertain the company's reply in order to ascertain the facts of the case. The NLRC also

declared that Dacut, Cajote and Tungala voluntarily executed their resignation letters. chanrobles virtual law library

Petitioners elevated the case to the Court of Appeals which likewise affirmed the findings of the

NLRC. Petitioners now come before us alleging that the appellate court committed serious errors

of law:

I.

'in holding that there was nothing irregular in admitting respondents' belatedly submitted reply

and making the same the primary basis of the decision despite the fact that petitioners had not

been given the chance to refute its contents.

II.

'IN HOLDING THAT PETITIONERS LAZARO DACUT, [ET] AL. VOLUNTARILY

RESIGNED FROM THEIR EMPLOYMENT AND WERE NOT CONSTRUCTIVELY

DISMISSED.

III.

'IN RULING THAT PETITIONERS [WERE] NOT ENTITLED TO THEIR OTHER

MONETARY CLAIMS.11

Essentially, we are asked to resolve: (1) whether the Labor Arbiter erred in admitting the

company's reply after the case had been submitted for decision; (2) whether Dacut, Tungala and

Cajote voluntarily resigned from their employment; and (3) whether petitioners were entitled to

their monetary claims.chanrobles v irtual law l ibrary

The first issue deals with technical rules and procedural matters. Well-settled is the rule that

technical rules of procedure are not binding in labor cases.12

In fact, it is the spirit and intention

of the Labor Code that labor officials shall use all reasonable means to ascertain the facts in each

case speedily and objectively, without regard to technicalities of law or procedure.13

In our view, the fact that the Labor Arbiter admitted the company's reply after the case had been

submitted for decision did not make the proceedings before him irregular. Petitioners were given

adequate opportunity in the NLRC and the Court of Appeals to rebut the company's evidence

against them.

The second and third issues require a review of factual matters. Under Rule 45 of the Rules of

Court, a Petition for Review on Certiorari shall only raise questions of law considering that the

findings of fact of the Court of Appeals are, as a general rule, conclusive upon and binding on

this Court. This doctrine applies with greater force in labor cases where the factual findings of

the labor tribunals are affirmed by the Court of Appeals. The reason is that labor officials are

deemed to have acquired expertise in matters within their jurisdiction and therefore, their factual

findings are generally accorded not only respect but also finality.14

Here, the Labor Arbiter, the NLRC, and the Court of Appeals were unanimous in finding that the

primary reason why Dacut and Tungala resigned was the vessel's alleged unseaworthiness as

borne by their pleadings before the Labor Arbiter. Dacut and Tungala never mentioned that they

resigned because they were being harassed by the company due to a complaint for violation of

labor standards they had filed against it. This ground was alleged only before the NLRC and not

a single act or incident was cited to prove this point. Even the alleged assurance by Orlina, that

they would be given separation pay, served merely as a secondary reason why they resigned. In

fact, we doubt that such assurance was even made considering that as secretary of the Personnel

Manager, it was not shown under what authority Orlina acted when she told Dacut and Tungala

to resign.

Likewise deserving scant consideration is Cajote's claim that the Operations Manager told him

that he will be paid separation pay if he resigned voluntarily; otherwise, he would be charged as

AWOL. Although the company already hired a replacement, Cajote admitted that he was still

employed at the time he resigned. In fact, the company tried to give him another assignment but

he refused it. Thus, the only reason why Cajote resigned was his long unauthorized absences

which would have warranted his dismissal in any case.

We find no reason to disturb all these factual findings because they are amply supported by

substantial evidence.

Apropos the monetary claims, there is insufficient evidence to prove petitioners' entitlement

thereto. As crew members, petitioners were required to stay on board the vessel by the very

nature of their duties, and it is for this reason that, in addition to their regular compensation, they

are given free living quarters and subsistence allowances when required to be on board. It could

not have been the purpose of our law to require their employers to give them overtime pay or

night shift differential, even when they are not actually working. Thus, the correct criterion in

determining whether they are entitled to overtime pay or night shift differential is not whether

they were on board and cannot leave ship beyond the regular eight working hours a day, but

whether they actually rendered service in excess of said number of hours.15

In this case,

petitioners failed to submit sufficient proof that overtime and night shift work were actually

performed to entitle them to the corresponding pay.

WHEREFORE, the instant petition is DENIED. The Decision dated June 21, 2005 and the

Resolution dated August 22, 2005 of the Court of Appeals in CA-G.R. SP No. 76096 are

AFFIRMED.

SO ORDERED.