[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 respondents 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 respondents 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 companys 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
clinics 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 Companys Policy and Procedure for Direct
Deposit Bank Info Request when he accessed a customers online account and then gave the
latters 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 SITELs organizational chart was posted on the
companys bulletin board, but respondents 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 respondents 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 attorneys 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
attorneys 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 respondents employment was terminated for a just cause. The NLRC failed to
discuss the money claims.
On September 1, 2008, the CA affirmed the NLRCs finding that there was no illegal
dismissal. Anent the money claims, the CA concurred with the LAs 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. Respondents failure to partially appeal the
CAs 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 respondents dismissal. Nonetheless, the
CA has already rectified such lapse when it made a definitive review of the LAs factual
findings on respondents 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 customers 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.

[Respondents] 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 respondents 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 customers 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
companys 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.
DECISION
PERALTA, J.:
This is a petition for review on certiorari1 of the Court of Appeals' Decision2 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 preterminated 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 preterminations/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 pretermination 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.
DECISION
BRION, J.:
We resolve in this petition for review on certiorari1 the challenge to the November 22, 2010
decision2 and the January 31, 2011 resolution3 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 decision6 of
the Labor Arbiter (LA). The LAs decision dismissed respondent John G. Macasios 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 attorneys 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 Davids 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 Macasios 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 Macasios request, only for overseas employment purposes. He pointed to
the Pinagsamang Sinumpaang Salaysay,14 executed by Presbitero Solano and Christopher
(Antonio Macasios co-butchers), to corroborate his claims.
In the April 30, 2009 decision,15 the LA dismissed Macasios complaint for lack of merit. The
LA gave credence to Davids 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 Davids 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 NLRCs 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 CAs Ruling
In its November 22, 2010 decision,22 the CA partly granted Macasios certiorari petition and
reversed the NLRCs 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 Macasios case, the elements that characterize a field personnel are

evidently lacking as he had been working as a butcher at Davids Yiels Hog Dealer business in
Sta. Mesa, Manila under Davids supervision and control, and for a fixed working schedule that
starts at 10:00 p.m.
Accordingly, the CA awarded Macasios claim for holiday, SIL and 13th month pay for three
years, with 10% attorneys fees on the total monetary award. The CA, however, denied
Macasios 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 CAs
January 31, 2011 resolution.25
The Petition
In this petition,26 David maintains that Macasios 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 Macasios) 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 Davids 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 Davids
employee.

Procedurally, Macasio points out that Davids 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 CAs factual findings bind this Court, absent
a showing that such findings are not supported by the evidence or the CAs 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 Macasios 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 Courts Ruling
We partially grant the petition.
Preliminary considerations: the
Montoya ruling and the factualissue-bar rule
In this Rule 45 petition for review on certiorari of the CAs decision rendered under a Rule 65
proceeding, this Courts 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 Courts 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 Macasios claim not because of the absence of an employeremployee 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
Macasios 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 Davids 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 employees conduct. These
elements or indicators comprise the so-called four-fold test of employment relationship.
Macasios 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 Salaysay40
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 Macasios 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 days 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 Macasios work schedule, David could regulate Macasios 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 Macasios 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 days task. Also, David would still
engage Macasios 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 Davids 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 straighthour 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 Macasios 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 Davids
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 Macasios
entitlement to holiday, SIL
and 13th month pay
The LA dismissed Macasios 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 Courts 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 Macasios
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:
chanroblesvirtuallawlibrary

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 Macasios 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
NLRCs utter disregard of this consistent jurisprudential ruling is a clear act of grave
abuse of discretion.52 In other words, by dismissing Macasios 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 workers
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 CAs finding in this regard is
supported by the established facts of this case: first, Macasio regularly performed his duties at
Davids 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 NLRCs
ruling dismissing Macasios 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 thereof55 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.
DECISION
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. 0905084-90, 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.
DECISION
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.
xxxxxxxxx
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; and

cralawlibrary

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, noncompliance 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.
xxxxxxxxx
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.
rbl r l l lbrr

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.
DECISION
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 attorneys fees.
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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 Arbiters decision reads:
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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:
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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% Attorneys 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:
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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 employers 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 employees 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 companys 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 Cabaero, 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 attorneys 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:
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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:

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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% Attorneys Fees 19,110.24
GRAND TOTAL P 210,212.64
==========
Except for the award of attorneys fees in the amount of P19,110.24, the above computation is
affirmed. The award of attorneys fees should be disallowed, it appearing that petitioners were
represented by the Public Attorneys 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:
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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).
DECISION
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:
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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:
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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:
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"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."
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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 Companys 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 Companys 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 courts 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:
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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 seamens
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 petitioners 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 Companys 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:

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"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."
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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 petitioners 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 petitioners 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:
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"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."
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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:
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"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."
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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:
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Per month
1. Ambrosio Taada 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 courts 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.)
DECISION

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 employeremployee 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 petitioners 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 CIRs 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 petitioners motion for reconsideration of the order of March 19, 1959 was
dismissed by the CIR en banc because of petitioners 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).
Petitioners 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.
DECISION
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 (ALUTUCP), 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.
DECISION
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 employeremployee 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 parttime 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.
rbl r l l lbrr

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 employers 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 employees 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 . . ."
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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.
DECISION
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 oclock in the morning to five
oclock 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. Opulencias house.
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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.
Opulencias 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."

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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.
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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 Esitas work in the repair and construction of petitioners ice plant and
the renovation of Dr. Opulencias residence could not have ripened into a regular employment;
that petitioners benevolence in allowing Esita to stay inside the companys premises free of
charge for humanitarian reason deserves commendation rather than imposition of undue penalty;
that Esitas name does not appear in the payrolls of the company which necessarily means that he
was not an employee; and, that Esitas 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."
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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 complainants 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 employees 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.
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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 oclock in the
morning to five oclock 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 employers
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 employees 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 . . ." 10
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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
Esitas testimonies. Moreover, on the claim that Esitas 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.
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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 days wage for a fair days 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 employers 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).
DECISION
GUTIERREZ, JR., J.:
This is a petition to review the May 16, 1986 resolution of respondent National Labor Relations
Commission (NLRC) affirming the Labor Arbiters 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.
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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 days wage for a fair days 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 Generals
comment, ** to wit:
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"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
respondents 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
respondents 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 governments 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, petitioners 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 employers
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 Seamens Union of the Philippines, 65 SCRA 393).
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In conclusion, we again quote the Solicitor Generals comment:

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"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 Courts 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 petitioners business was in actual operation. The
number of days where no work was required and could be done by petitioners 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 petitioners obligation
to respondent employee. In no case shall the award exceed three years 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.
DECISION
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:

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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 respondents 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:
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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 petitioners motion for reconsideration. 4
Hence, this petition raising the following arguments:

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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:
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(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 Arbiters 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 respondents suspension. The facts do not support

petitioners 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.
Acostas conditions, private respondent immediately left his home and returned to the clinic.
These facts belie petitioners 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:

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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:

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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
respondents 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 respondents 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 employees 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 petitioners 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 petitioners 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.
DECISION
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:
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"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 employees 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:
"Annex B
Computation of:

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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
Employees Basic Hourly Wage Rate:

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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 Caltexs 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 petitioners 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 Caltexs
employees had been given two (2) days (instead of one [1] day) of rest, with the result that work
performed on the employees 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 Unions 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
employees one day of rest." To the Courts 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:

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"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 employees 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:

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"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 employees 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:

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"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)
Article III of the 1982 Collective Bargaining Agreement 6 also provided as follows:

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"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
employees 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 respondents 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 Courts 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 petitioners 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
petitioners 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
Petitioners 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.
DECISION
KAPUNAN, J.:
At issue is the validity of petitioners 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).
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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 petitioners 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
petitioners allegation, it was not the Philippine Consulate, but the shipowners 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
petitioners dismissal.
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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 employers 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:
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"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 MASTERS 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 SEAMANS 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
petitioners 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 petitioners 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.
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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,
petitioners 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 NLRCs 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 superiors 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 employees 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 petitioners 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
Petitioners 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:
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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:
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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 days 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 attorneys fees of P10,000.00.
SO ORDERED.

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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.
DECISION
DEL CASTILLO, J.:
It is not for an employee to prove non-payment of benefits to which he is entitled by law. Rather,
it is on the employer that the burden of proving payment of these claims rests.
cralaw

This Petition for Review on Certiorari[1] assails the February 24, 2006 Decision[2] of the Court of
Appeals (CA) in CA-G.R. SP No. 85515, which granted the petition for certiorari filed
therewith, set aside the March 23, 2004[3] and June 14, 2004[4] Resolutions of the National Labor
Relations Commission (NLRC), and dismissed the complaint filed by Oliver R. Canoy (Canoy)
and petitioner Abduljuahid R. Pigcaulan (Pigcaulan) against respondent Security and Credit
Investigation, Inc. (SCII) and its General Manager, respondent Rene Amby Reyes. Likewise
assailed is the June 28, 2006 Resolution[5] denying Canoys and Pigcaulans Motion for
Reconsideration.[6]
Factual Antecedents
Canoy and Pigcaulan were both employed by SCII as security guards and were assigned to
SCIIs 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 Canoys and Pigcaulans 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 Canoys and Pigcaulans 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 SCIIs 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 Arbiters 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 SCIIs 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 Canoys 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 Pigcaulans
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 Canoys 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
Canoys 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 petitions 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 noncompliance 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, Canoys and Pigcaulans 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 Canoys action may not effectively serve as sufficient to
support Pigcaulans 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 NonForum 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 courts 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 partys 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 Canoys 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 Pigcaulans contention that he had rendered service
beyond eight hours to entitle him to overtime pay and during Sundays to entitle him to restday
pay. Hence, in the absence of any concrete proof that additional service beyond the normal
working hours and days had indeed been rendered, we cannot affirm the grant of overtime pay to
Pigcaulan.
Pigcaulan is entitled to holiday pay,
service incentive leave pay and
proportionate 13th month pay for year 2000.
However, with respect to the award for holiday pay, service incentive leave pay and 13th month
pay, we affirm and rule that Pigcaulan is entitled to these benefits.
Article 94 of the Labor Code provides that:
ART. 94. RIGHT TO HOLIDAY PAY. (a) Every worker shall be paid his regular daily wage
during regular holidays, except in retail and service establishments regularly employing less than
ten (10) workers;
xxxx
While Article 95 of the Labor Code provides:
ART. 95. RIGHT TO SERVICE INCENTIVE LEAVE. (a) Every employee who has rendered
at least one year of service shall be entitled to a yearly service incentive of five days with pay.
xxxx
Under the Labor Code, Pigcaulan is entitled to his regular rate on holidays even if he does not

work.[30] Likewise, express provision of the law entitles him to service incentive leave benefit
for he rendered service for more than a year already. Furthermore, under Presidential Decree
No. 851,[31] he should be paid his 13th month pay. As employer, SCII has the burden of proving
that it has paid these benefits to its employees.[32]
SCII presented payroll listings and transmittal letters to the bank to show that Canoy and
Pigcaulan received their salaries as well as benefits which it claimed are already integrated in the
employees monthly salaries. However, the documents presented do not prove SCIIs
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 Pigcaulans 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 Pigcaulans 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.
DECISION
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 Decision2 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. 15654 on the payment of additional charges for pilotage service5 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:
xxx
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.
xxx
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.
xxx
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)
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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)
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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)

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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 prearranged 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; and
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(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.
DECISION
QUISUMBING, J.:
Assailed in this Petition for Review are the Decision1 dated June 21, 2005 and the Resolution2
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-00-09-0957899, 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
Regular
Dacut

Special

Accrued
S/L - V/L Credits

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

P2,600.00

Taboy

P1,307.68 P1,076.91 P5,000.00

[Total]

P5,456.34 P4,331.48 P25,915.35

P 714.98

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.
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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.
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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.