G.R. No.

L-4148

July 16, 1952

MANILA TERMINAL COMPANY, INC., petitioner,

vs.
THE COURT OF INDUSTRIAL RELATIONS and MANILA TERMINAL RELIEF AND MUTUAL AID ASSOCIATION, respondents.
Perkins, Ponce Enrile and Contreras for petitioner.
Antonio V. Raquiza, Honesto Ricobal and Perfecto E. Llacarfor respondent Association.
Mariano R. Padilla for respondent Court of Industrial Relations.
PARAS, C. J.:
On September 1, 1945, the Manila Terminal Company, Inc. hereinafter to be referred as to the petitioner, undertook the arrastre
service in some of the piers in Manila's Port Area at the request and under the control of the United States Army. The petitioner hired
some thirty men as watchmen on twelve-hour shifts at a compensation of P3 per day for the day shift and P6 per day for the night
shift. On February 1, 1946, the petitioner began the postwar operation of the arrastre service at the present at the request and under
the control of the Bureau of Customs, by virtue of a contract entered into with the Philippine Government. The watchmen of the
petitioner continued in the service with a number of substitutions and additions, their salaries having been raised during the month of
February to P4 per day for the day shift and P6.25 per day for the nightshift. On March 28, 1947, Dominador Jimenez, a member of
the Manila Terminal Relief and Mutual Aid Association, sent a letter to the Department of Labor, requesting that the matter of
overtime pay be investigated, but nothing was done by the Department. On April 29, 1947, Victorino Magno Cruz and five other
employees, also member of the Manila Transit Mutual Aid Association, filed a 5-point demand with the Department of Labor, including
overtime pay, but the Department again filed to do anything about the matter. On May 27, 1947, the petitioner instituted the system
of strict eight-hour shifts. On June 19, 1947, the Manila Port Terminal Police Association, not registered in accordance with the
provisions of Commonwealth Act No. 213, filed a petition with the Court of Industrial Relations. On July 16, 1947, the Manila Terminal
Relief and Mutual Aid Association was organized for the first time, having been granted certificate No. 375 by the Department of
Labor. On July 28, 1947, Manila Terminal Relief and Mutual Aid Association filed an amended petition with the Court of Industrial
Relations praying, among others, that the petitioner be ordered to pay its watchmen or police force overtime pay from the
commencement of their employment. On May 9, 1949, by virtue of Customs Administrative Order No. 81 and Executive Order No. 228
of the President of the Philippines, the entire police force of the petitioner was consolidated with the Manila Harvor Police of the
Customs Patrol Service, a Government agency under the exclusive control of the Commissioner of Customs and the Secretary of
Finance The Manila Terminal Relief and Mutual Aid Association will hereafter be referred to as the Association.
Judge V. Jimenez Yanson of the Court of Industrial Relations in his decision of April 1, 1950, as amended on April 18, 1950, while
dismissing other demands of the Association for lack of jurisdiction, ordered the petitioner to pay to its police force
(a) Regular or base pay corresponding to four hours' overtime plus 25 per cent thereof as additional overtime compensation for the
period from September 1, 1945 to May 24, 1947;
(b) Additional compensation of 25 per cent to those who worked from 6:00 p.m. to 6:00 a.m. during the same period:
(c) Additional compensation of 50 per cent for work performed on Sundays and legal holidays during the same period;
(d) Additional compensation of 50 per cent for work performed on Sundays and legal holidays from May 24, 1947 to May 9, 1949; and
(e) Additional compensation of 25 per cent for work performed at night from May 29, 1947 to May 9, 1949.
With reference to the pay for overtime service after the watchmen had been integrated into the Manila Harbor Police, Judge Yanson
ruled that the court has no jurisdiction because it affects the Bureau of Customs, an instrumentality of the Government having no
independent personality and which cannot be sued without the consent of the State. (Metran vs. Paredes, 45. Off. Gaz., 2835.)
The petitioner find a motion for reconsideration. The Association also filed a motion for reconsideration in so far its other demands
were dismissed. Judge Yanson, concurred in by Judge Jose S. Bautista, promulgated on July 13, 1950, a resolution denying both
motions for reconsideration. Presiding Judge Arsenio C. Roldan, in a separate opinion concurred in by Judge Modesto Castillo, agreed
with the decision of Judge Yanson of April 1, 1950, as to the dismissal of other demands of the Association, but dissented therefrom as
to the granting of overtime pay. In a separate decisive opinion, Judge Juan S. Lanting concurred in the dismissal of other demands of
the Association. With respect to overtime compensation, Judge Lanting ruled:
1. The decision under review should be affirmed in so far it grants compensation for overtime on regular days (not Sunday and legal
holidays)during the period from the date of entrance to duty to May 24, 1947, such compensation to consists of the amount
corresponding to the four hours' overtime at the regular rate and an additional amount of 25 per cent thereof.
2. As to the compensation for work on Sundays and legal holidays, the petitioner should pay to its watchmen the compensation that
corresponds to the overtime (in excess of 8 hours) at the regular rate only, that is, without any additional amount, thus modifying the
decision under review accordingly.
3. The watchmen are not entitled to night differential pay for past services, and therefore the decision should be reversed with the
respect thereto.

The petitioner has filed a present petition for certiorari. Its various contentions may be briefly summed up in the following
propositions: (1) The Court of Industrial Relations has no jurisdiction to render a money judgment involving obligation in arrears. (2)
The agreement under which its police force were paid certain specific wages for twelve-hour shifts, included overtime compensation.
(3) The Association is barred from recovery by estoppel and laches. (4) the nullity or invalidity of the employment contract precludes
any recovery by the Association. (5) Commonwealth Act No. 4444 does not authorize recovery of back overtime pay.
The contention that the Court of Industrial Relations has no jurisdiction to award a money judgment was already overruled by this
Court in G.R. No. L-4337, Detective & protective Bureau, Inc. vs. Court of Industrial Relations and United Employees Welfare
Association, 90 Phil., 665, in this wise: "It is also argued that the respondent court has no jurisdiction to award overtime pay, which is
money judgment. We believe that under Commonwealth Act No. 103 the Court is empowered to make the order for the purpose of
settling disputes between the employer and employee 1. As a matter of fact this Court has confirmed an order of the Court of
Industrial Relations requiring the Elks Club to pay to its employees certain sum of money as overtime back wages from June 3, 1939
to March 13, 1941. This, in spite the allegation of lack or excess of jurisdiction on the part of said court. (45 Off. Gaz., 3829; 80 Phil.
272)"
The important point stressed by the petitioner is that the contract between it and the Association upon the commencement of the
employment of its watchman was to the certain rates of pay, including overtime compensation namely, P3 per day for the day shift
and P6 per day for night shift beginning September 1, 1945, and P4 per day shift and P6.25 per day for the night shift since February,
1946. The record does not bear out these allegations. The petitioner has relied merely on the facts that its watchmen had worked on
twelve-hour shifts at specific wages per day and that no complaint was made about the matter until, first on March 28, 1947 and,
secondly, on April 29, 1947.
In times of acute unemployment, the people, urged by the instinct of self-preservation, go from place to place and from office to office
in search for any employment, regardless of its terms and conditions, their main concern in the first place being admission to some
work. Specially for positions requiring no special qualifications, applicants would be good as rejected if they ever try to be inquisitive
about the hours of work or the amount of salary, ever attempt to dictate their terms. The petitioner's watchmen must have railroaded
themselves into their employment, so to speak, happy in the thought that they would then have an income on which to subsist. But,
at the same time, they found themselves required to work for twelve hours a day. True, there was agreement to work, but can it fairly
be supposed that they had the freedom to bargain in any way, much less to insist in the observance of the Eight Hour Labor Law?
As was aptly said in Floyd vs. Du Bois Soap Co., 1942, 317 U. S. 596, 63 Sup. Ct. 159; 6 CCH Labor Cases, Par. 51, 147, "A contract of
employment, which provides for a weekly wage for a specified number of hours, sufficient to cover both the statutory minimum wage
and overtime compensation, if computed on the basis of the statutory minimum wage, and which makes no provision for a fixed
hourly rate or that the weekly wage includes overtime compensation, does not meet the requirements of the Act."
Moreover, we note that after the petition had instituted the strict eight-hour shifts, no reduction was made in the salaries which its
watchmen received under the twelve hour arrangement. Indeed, as admitted by the petitioner, "when the members or the
respondent union were placed on strict eight-hour shifts, the lowest salary of all the members of the respondent union was P165 a
month, or P5.50 daily, for both day and night shifts." Although it may be argued that the salary for the night shift was somewhat
lessened, the fact that the rate for the day shift was increased in a sense tends to militate against the contention that the salaries
given during the twelve-hour shifts included overtime compensation.
Petitioner's allegation that the association had acquiesced in the twelve-hour shifts for more than 18 months, is not accurate, because
the watchmen involved in this case did not enter the service of the petitioner, at one time, on September 1, 1945. As Judge Lanting
found, "only one of them entered the service of the company on said date, very few during the rest of said month, some during the
rest of that year (1945) and in 1946, and very many in 1947, 1948 and 1949."
The case at bar is quite on all fours with the case of Detective & Protective Bureau, Inc. vs. Court of Industrial Relations and United
Employees Welfare Association, supra, in which the facts were as follows: "The record discloses that upon petition properly submitted,
said court made an investigation and found that the members of the United Employees Welfare Association (hereafter called the
Association) were in the employ of the petitioner Detective and Protective Bureau, Inc. (herein called the Bureau) which is engaged in
the business of furnishing security guards to commercial and industrial establishments, paying to said members monthly salaries out
of what it received from the establishments benefited by guard service. The employment called for daily tours of duty for more than
eight hours, in addition to work on Sundays and holidays. Nonetheless the members performed their labors without receiving extra
compensation." The only difference is that, while in said case the employees concerned were paid monthly salaries, in the case now
before us the wages were computed daily. In the case cited, we held the following:
It appears that the Bureau had been granting the members of the Association, every month, "two days off" days in which
they rendered no service, although they received salary for the whole month. Said Bureau contended below that the pay
corresponding to said 2 day vacation corresponded to the wages for extra work. The court rejected the contention, quite
properly we believe, because in the contract there was no agreement to that effect; and such agreement, if any, would
probably be contrary to the provisions of the Eight-Hour Law (Act No. 444, sec. 6) and would be null and void ab initio.
It is argued here, in opposition to the payment, that until the commencement of this litigation the members of the
Association never claimed for overtime pay. That may be true. Nevertheless the law gives them the right to extra
compensation. And they could not be held to have impliedly waived such extra compensation, for the obvious reason that
could not have expressly waived it.
The foregoing pronouncements are in point. The Association cannot be said to have impliedly waived the right to overtime
compensation, for the obvious reason that they could not have expressly waived it."

The principle of estoppel and the laches cannot well be invoked against the Association. 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 or laborer 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 any claim which may cause the employer to devise a way for exercising
his right to terminate the employment.
If the principle of estoppel and laches is to be applied, it may bring about a situation, whereby the employee or laborer, who cannot
expressly renounce their 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 law by indirection.
While counsel for the petitioner has cited authorities in support of the doctrine invoked, there are also authorities pointed out in the
opinion of Judge Lanting to the contrary. Suffice it to say, in this connection, that we are inclined to rule adversely against petitioner
for the reasons already stated.
The argument that the nullity or invalidity of the employment contract precludes recovery by the Association of any overtime pay is
also untenable. The argument, based on the supposition that the parties are in pari delicto, was in effect turned down in Gotamo
Lumber Co. vs. Court of Industrial Relations,* 47 Off. Gaz., 3421, wherein we ruled: "The petitioner maintains that as the overtime
work had been performed without a permit from the Department of Labor, no extra compensation should be authorized. Several
decisions of this court are involved. But those decisions were based on the reasoning that as both the laborer and employer were
duty bound to secure the permit from the Department of Labor, both were in pari delicto. However the present law in effect imposed
that duty upon the employer (C.A. No. 444). Such employer may not therefore be heard to plead his own neglect as exemption or
defense.
The employee in rendering extra service at the request of his employer has a right to assume that the latter has complied
with the requirement of the law, and therefore has obtained the required permission from the Department of Labor.
Moreover, the Eight-Hour Law, in providing that "any agreement or contract between the employer and the laborer or employee
contrary to the provisions of this Act shall be null avoid ab initio," (Commonwealth Act No. 444, sec. 6), obviously intended said
provision for the benefit of the laborers or employees. The employer cannot, therefore, invoke any violation of the act to exempt him
from liability for extra compensation. This conclusion is further supported by the fact that the law makes only the employer criminally
liable for any violation. It cannot be pretended that, for the employer to commit any violation of the Eight-Hour Labor Law, the
participation or acquiescence of the employee or laborer is indispensable, because the latter in view of his need and desire to live,
cannot be considered as being on the same level with the employer when it comes to the question of applying for and accepting an
employment.
Petitioner also contends that Commonwealth Act No. 444 does not provide for recovery of back overtime pay, and to support this
contention it makes referrence to the Fair Labor Standards Act of the United States which provides that "any employer who violates
the provisions of section 206 and section 207 of this title shall be liable to the employee or employees affected in the amount of their
unpaid minimum wages or their unpaid overtime compensation as the case may be," a provision not incorporated in
Commonwealth Act No. 444, our Eight-Hour Labor Law. We cannot agree to the proposition, because sections 3 and 5 of
Commonwealth Act 444 expressly provides for the payment of extra compensation in cases where overtime services are required,
with the result that the employees or laborers are entitled to collect such extra compensation for past overtime work. To hold
otherwise would be to allow an employer to violate the law by simply, as in this case, failing to provide for and pay overtime
compensation.
The point is stressed that the payment of the claim of the Association for overtime pay covering a period of almost two years may
lead to the financial ruin of the petitioner, to the detriment of its employees themselves. It is significant, however, that not all the
petitioner's watchmen would receive back overtime pay for the whole period specified in the appealed decision, since the record
shows that the great majority of the watchmen were admitted in 1946 and 1947, and even 1948 and 1949. At any rate, we are
constrained to sustain the claim of the Association as a matter of simple justice, consistent with the spirit and purpose of the EightHour Labor Law. The petitioner, in the first place, was required to comply with the law and should therefore be made liable for the
consequences of its violation.
It is high time that all employers were warned that the public is interested in the strict enforcement of the Eight-Hour Labor Law. This
was designed not only to safeguard the health and welfare of the laborer or employee, but in a way to minimize unemployment by
forcing employers, in cases where more than 8-hour operation is necessary, to utilize different shifts of laborers or employees working
only for eight hours each.
Wherefore, the appealed decision, in the form voted by Judge Lanting, is affirmed, it being understood that the petitioner's watchmen
will be entitled to extra compensation only from the dates they respectively entered the service of the petitioner, hereafter to be duly
determined by the Court of Industrial Relations. So ordered, without costs.
Feria, Pablo, Bengzon, Padilla, Tuason, Bautista Angelo, and Labrador, JJ., concur.

[G.R. No. 106331 March 9, 1998]

INTERNATIONAL PHARMACEUTICALS, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION (NLRC), FOURTH
DIVISION, and DR. VIRGINIA CAMACHO QUINTIA, respondents.
DECISION
MENDOZA, J.:
This is a petition for certiorari to set aside the decision of the National Labor Relations Commission which affirmed in toto the
decision of the Labor Arbiter, finding petitioner guilty of the illegal dismissal of private respondent Virginia Camacho Quintia, as well
as its resolution denying reconsideration.
Petitioner International Pharmaceuticals, Inc. (IPI) is a corporation engaged in the manufacture, production and sale of
pharmaceutical products. In March 1983, it employed private respondent Virginia Camacho Quintia as Medical Director of its Research
and Development department, replacing one Diana Villaraza. [1] The government, in that year, launched a program encouraging the
development of herbal medicine and offering incentives to interested parties. Petitioner decided to venture into the development of
herbal medicine, although it is now alleged that this was merely experimental, to find out if it would be feasible to include herbal
medicine in its business.[2] One of the government requirements was the hiring of a pharmacologist. Petitioner avers that it was only
for this purpose that private respondent was hired, hence its contention that private respondent was a project employee.
The contract of employment provided for a term of one year from the date of its execution onMarch 19, 1983, subject to renewal
by mutual consent of the parties at least thirty days before its expiration. It provided for a monthly compensation of P4,000.00. It was
agreed that Quintia could continue teaching at the Cebu Doctors Hospital, [3] where she was, at that time, a full-time member of the
faculty.
Quintia claimed that when her contract of employment was about to expire, she was invited by Xavier University in Cagayan de
Oro City to be the chairperson of its pharmacology department.However, Pio Castillo, the president and general manager, prevailed
upon her to stay, assuring her of security of tenure. Because of this assurance, she declined the offer of Xavier University.
[4]
Indeed, after her contract expired on March 19, 1984, she remained in the employ of petitioner where she not only performed the
work of Medical Director of its Research and Development department but also that of company physician. This continued until her
termination on July 12, 1986.
In her complaint, private respondent alleges that the reason for her termination was her taking up the cudgels for the rank and
file employees when she felt they were given a raw deal by the officers of their own Savings and Loan Association. She claimed that
sometime in June 1986, while Pio Castillo was in China, the Association declared dividends to its members. Due to complaints of the
employees, meetings were held during which private respondent pointed out the inequality in the imposition of interest rate to the
low-salaried employees and led them in the demand for a full disclosure of the associations financial status. Her participation was
resented by the associations officers, all of whom were appointed by management, so that when Castillo arrived, private respondent
was summoned to Castillos office where she was berated for her acts and humiliated in front of some laborers. When she sought
permission to explain her side, she was arrogantly turned down and told to leave. [5]
On July 10, 1986, Quintia was replaced as head of the Research and Development department by Paz Wong. Two days later, on
July 12, 1986, she received an inter-office memorandum officially terminating her services allegedly because of the expiration of her
contract of employment.
On January 21, 1987,[6] private respondent filed a complaint, charging petitioner with illegal dismissal and praying that petitioner
be ordered to reinstate private respondent and to pay her full backwages and moral damages. [7]
In its position paper, petitioner claimed that private respondent had been hired on a consultancy basis coterminous with the
duration of the project involving the development of herbal medicine and that her employment was terminated upon the
abandonment of that project. It explained that Quintiasemployment, which lasted for more than two years after the original contract
expired, was by virtue of an oral agreement with the same terms as the written contract or, at the very least, by virtue of implied
extensions of the said contract which lasted until the company decided that nothing would come out from said project. [8]
In a decision rendered on December 18, 1990, the Labor Arbiter found private respondent to have been illegally dismissed. He
held that private respondent was a regular employee and not a project employee and so could not be dismissed without just and/or
legal causes as provided in the Labor Code. Moreover, he found that petitioner failed to observe due process in terminating Quintias
services. For this reason, the Labor Arbiter ordered the petitioner to reinstate private respondent and to pay her backwages for three
years, including 13th month pay and Service Incentive Leave, moral damages and attorneys fees amounting to P177,099.94. He
further ruled that if reinstatement was no longer feasible, petitioner should pay private respondent P6,000 as separation pay.
On appeal, the NLRC affirmed the ruling in a decision dated May 26, 1992. Petitioner moved for reconsideration, but its motion
was denied for lack of merit. The NLRC directed the Labor Arbiter to conduct a hearing to determine whether reinstatement was
feasible. Hence, this petition.
We find the petition to be without merit.
First. Art. 280 of the Labor Code provides:

Art. 280. Regular and casual employment. - The provisions of written agreement to the contrary notwithstanding and regardless of
the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform
activities which are usually necessary or desirable in the usual business or trade of the employer except where the employment has
been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the
engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the
duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That any employee who has
rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with
respect to the activity in which he is employed and his employment shall continue while such activity exists.
In Brent School, Inc. v. Zamora,[9] it was held that although work done under a contract is necessary and desirable in relation to
the usual business of the employer, a contract for a fixed period may nonetheless be made so long as it is entered into freely,
voluntarily and knowingly by the parties. Applying this ruling to the case at bar, the NLRC held that the written contract between
petitioner and private respondent was valid, but, after its expiration on March 18, 1984, as the petitioner had decided to continue her
services, it must respect the security of tenure of the employee in accordance with Art. 280. It said:
To our mind, when complainant was allowed to continue working without the benefit of a contract after the expiration of the one year
period provided in their written contract, that act completely changed the complexion of the relationship between the parties.
The NLRC cited the following facts to justify its ruling: Quintia was continued as Medical Director and even given the additional
function of company physician after the expiration of the original contract; she undertook various civic activities for and in behalf of
petitioner, such as conducting free clinics and giving out IPI products; she did work which was necessary and desirable in relation to
the trade or business of petitioner; and her employment lasted for more than (3) three years.
Petitioner contends:
(1) that the NLRCs reliance on Art. 280 is clearly contrary to this Courts decisions;
(2) that private respondents tasks are really not necessary and desirable to the usual business of petitioner;
(3) that there is clearly no legal or factual basis to support respondent NLRCs reliance on the absence of a new written contract as
indicating that respondent Quintia became a regular employee.[10]
Petitioners first ground is that the ruling of the NLRC is contrary to the Brent School decision. He contends that Art. 280 should
not be so interpreted as to render employment contracts with a fixed term invalid. But the NLRC precisely upheld the validity of the
contract in accordance with the Brent School case. Indeed, the validity of the written contract is not in issue in this case. What is in
issue is whether private respondent did not become a regular employee after the expiration of the written contract on March 18, 1984
on the basis of the facts pointed out by the NLRC, simply because there was in the beginning a contract of employment with a fixed
term.
Petitioner also invokes the ruling in Singer Sewing Machine v. Drilon[11] in which it was stated:
The definition that regular employees are those who perform activities which are desirable and necessary for the business of the
employer is not determinative in this case. Any agreement may provide that one party shall render services for and in behalf of
another for a consideration (no matter how necessary for the latters business) even without being hired as an employee. This is
precisely true in the case of an independent contractorship as well as in an agency agreement. The Court agrees with the petitioners
argument that Article 280 is not the yardstick for determining the existence of an employment relationship because it merely
distinguishes between two kinds of employees, i.e., regular employees and casual employees, for purposes of determining the right
of an employee to certain benefits, to join or form a union, or to security of tenure. Article 280 does not apply where the existence of
an employment relationship is in dispute.
Petitioner argues:
Even assuming arguendo that respondent Quintia was performing tasks which were necessary and desirable to the main business of
petitioner, said standard cannot apply since said Article merely distinguishes between regular and casual employment for the
purpose of determining entitlement to benefits under the Labor Code. In this case, respondent Quintias alleged status as regular
employee has precisely been disputed by petitioner. And, as this Honorable Court noted in the foregoing case, an agreement may
provide that one party will render services, no matter how necessary for the other partys business, without being hired as
a regular employee, and this is precisely the nature of the contract entered into by the parties in this case. [12]
Clearly, petitioner misapplies the ruling in Singer. Quintias status as an employee is not disputed in this case. Therefore, in
determining whether she was a project employee or a regular employee, the question is whether her work was necessary and
desirable to the main business of the employer.It is true that, as held in Singer, parties can enter into an agreement for the rendering
of services by one to the other and that however necessary such services may be to the latters business the contract will not
necessarily give rise to an employer-employee relationship if the elements of such relationship are not present. But that is not the
question in this case. Quintia was an employee. The question is whether, given the fact that she was an employee, she was a regular
or a project employee, considering that she had been continued in the service of petitioner for more than two years following the
expiration of her written contract.

Petitioners second point is that private respondents tasks were not really necessary and desirable in respect of the usual
business of petitioner, the work done by Quintia being on a temporary basis only. [13] According to petitioner, Quintias engagement was
only for the duration of its herbal medicine development project. In addition, petitioner points out that private respondent was not
required to keep fixed office hours and this arrangement continued even after the expiration of the written contract, thus indicating
the temporary nature of her employment.
Petitioners allegations are contrary to the factual findings of both the NLRC and the Labor Arbiter, particularly their findings that
she was the head of petitioners Research and Development department; that in addition, she performed the function of company
physician; and that she undertook various civic activities in behalf of petitioner and that this engagement lasted for more than three
years (1983 - 1986).[14] Certainly, as the NLRC observed, these facts show complainant working not as consultant but as a regular
employee albeit a managerial one. [15] It should be added that Quintia was hired to replace one Diana Villaraza, [16] which suggests that
the position to which she was appointed by petitioner was an existing one, so much so that after the termination of
Quintias employment, somebody else (Paz Wong) was appointed in her place. [17] If private respondents employment was for a
particular project which had allegedly been terminated, why would there be a need to replace her?
We are not prepared to throw overboard the findings of both the NLRC and the Labor Arbiter on the matter. These are essentially
factual matters which are within the competence of the labor agencies to determine. Their findings are accorded by this Court respect
and finality if, as in this case, they are supported by substantial evidence. [18]
Indeed, the terms of the written employment contract are clear:
. . . That the FIRST PARTY is a manufacturer of medicines and pharmaceutical preparations, while the SECOND PARTY is a Doctor of
Medicine and Pharmacologist of long standing;
That the FIRST PARTY desires to hire the SECOND PARTY as Medical Director of its Research and Development department, which the
latter accepts, under the following terms and conditions, to wit:
1. That the SECOND PARTY shall perform and/or cause the performance of the following:
a) Microbiological research and testing;
b) Clinical research and testing;
c) Prove and support First Partys claims in its brochures, literature and advertisements;
d) Register with and cause the approval by Food and Drug Administration of all pharmaceutical and medical preparations developed
and tested by the First Partys R&D department; and
e) To do and perform such other duties as may, from time to time, be assigned by the First Party consonant to and in accord with the
position herein conferred. . . .
There is no mention whatsoever of any project or of any consultancy in the contract. As aptly observed by the Solicitor General,
the duties of Quintia as provided for in the contract reject any notion of consultancy. Clearly, she was hired as Medical Director of the
Research and Development department of petitioner company and not as consultant nor for any particular project. The work she
performed was manifestly necessary and desirable to the usual business of petitioner, considering that it is engaged in the
manufacture and production of medicinal preparations. Petitioner itself admits that research and development are part of its business.
[19]

We agree with the Labor Arbiter that the fact that she was not required to report at a fixed hour or to keep fixed hours of work
does not detract from her status as a regular employee. As petitioner itself admits, Quintia was a managerial employee [20] and
therefore not covered by the Labor Code provisions on hours of work. What this Court said in once case [21] is apropos:
The primary standard, . . . of determining a regular employment is the reasonable connection between the particular activity
performed by the employee in relation to the usual business or trade of the employer. The test is whether the former is usually
necessary or desirable in the usual business or trade of the employer. The connection can be determined by considering the nature of
the work performed and its relation to the scheme of the particular business or trade in its entirety. Also, if the employee has been
performing the job for at least one year, even if the performance is not continuous or merely intermittent, the law deems the
repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the
business. Hence, the employment is also considered regular, but only with respect to such activity and while such activity exists.
Neither does the fact that private respondent was teaching full-time at the Cebu Doctors College negate her regular status since
this fact does not affect the nature of Quintias work. Whether ones employment is regular is not determined by the number of hours
one works, but by the nature of the work and by the length of time one has been in that particular job.
Considering the foregoing, it is clear that Quintia became a regular employee of petitioner after her contract expired on March
18, 1984 and her services were continued for more than two years in the usual trade or business of the employer.

Petitioner goes on to state his third point that there is clearly no legal or factual basis to support respondent NLRCs reliance on
the absence of a new written contract as indicating that respondent Quintia became a regular employee. [22] In support, the petitioner
again cites the Brent Schoolcase[23] where it was recognized that term contracts can be made orally. [24] Hence, it is argued thatthe
mere fact that there was no subsequent written contract does not mean that the original agreement was abandoned and/or that
respondent became a regular employee due to the absence thereof and/or that the parties had executed a new agreement, in the
absence of evidence showing intent to abandon and/or novate the same. It posits that, based on the acts of the parties, an implied
renewal was entered into, or, at the very least, petitioner claims, the absence of a written contract only indicates that the parties
impliedly agreed to extend their written contract.
There is absolutely no principle of law to support the proposition urged by petitioner. On the other hand the written contract in
this case provided that it was subject to renewal by mutual consent of the parties at least thirty days before its expiration on March
18, 1984. There is no evidence to show that the parties mutually agreed to renew their contract. On the other hand, to sustain
petitioners contention that there was an implied extension after the expiration of the original contract would make it possible for
employers like petitioner to circumvent Art. 280 of the Labor Code and thus prevent an employee from becoming regular through the
simple expedient of making him sign a contract for a term and then extend to him a contract term, after term, after term.
Moreover, assuming that petitioner is correct that there was at least an implied renewal of the written contract containing the
same terms and conditions, then Quintias termination should have been effective in March of 1986 or March of 1987 rather than July
of 1986. It should be noted that the fixed term stated in the written contract allegedly renewed is one year. Considering that the said
contract was executed on March 19, 1983, then if there really were implied renewals with the same terms and conditions, private
respondents employment should not have been terminated in July of 1986. As discussed earlier, the decision of the NLRC is based not
alone on inference drawn from the expiration of the contract but on facts which, in light of Art. 280, show that private respondents
work was in pursuance of the business of petitioner.
Second. Prescinding from the premise that private respondent was a project employee, petitioner claims that because it had
discontinued its herbal medicine project after it had been shown not to be viable, private respondents employment had to be
terminated, too.
We have already shown why this claim has no basis and no merit. Petitioner was unable to prove that it had actually undertaken
a project. Private respondents contract will be searched in vain for any mention of a project. What it states is that Quintias
employment was one for a definite period, not for a project as petitioner would have it. A project employment is one where the
employment has been fixed for a specific project/undertaking, the completion or termination of which has been determined at the
time of the engagement of the employee.[25] Quintias engagement after the expiration of the written contract cannot be said to have
been pre-determined because, if petitioners other claim is to be believed, it was essentially contingent upon the feasibility of herbal
medicine as part of petitioners business and for as long as the herbal medicine development was being pursued by it.
It follows from the conclusion that private respondent Quintia was a regular employee that she could only be dismissed for just
or authorized cause.[26] The records are bereft of any evidence showing the existence of any of the specified causes in the Labor
Code. It may be that an employer is allowed wider discretion in terminating employment in respect of managerial personnel
compared to rank-and-file employees, and that such managerial employees can be separated from the service for loss of confidence.
[27]
However, a mere allegation of such ground is not sufficient. As this Court has held in Western Shipping Agency, Inc. v. NLRC:[28]
Loss of confidence is a valid ground for the dismissal of managerial employees . . . But even managerial employees enjoy security of
tenure, . . . and, . . . can only be dismissed after cause is shown in an appropriate proceeding. The loss of confidence must be
substantiated by evidence. The burden of proof is on the employer to show grounds justifying the loss of confidence.
Petitioner in this case failed to discharge this burden, as both the Labor Arbiter and the NLRC found.
Moreover, as the labor arbiter found, petitioner failed to accord due process to private respondent in terminating her services. In
the case of Aurora Land Projects Corp. v. NLRC it was stated: [29]
The law requires that the employer must furnish the worker sought to be dismissed with two written notices before termination of
employee can be legally effected: (1) notice which apprises the employee of the particular acts or omissions for which his dismissal is
sought; and (2) the subsequent notice which informs the employee of the employers decision to dismiss him (Section 13, BP 130;
Sections 2-6, Rule XIV, Book V Rules and Regulations Implementing the Labor Code as amended).Failure to comply with the
requirements taints the dismissal with illegality. This procedure is mandatory; in the absence of which, any judgment reached by
management is void and inexistent.(Tingson, Jr. v. NLRC, 185 SCRA 498 [1990]; National Service Corporation v. NLRC, 168 SCRA 122
[1988]; Ruffy v. NLRC, 182 SCRA 365 [1990].
The memoranda dated July 12, 1986 and July 10, 1986, copies of which were furnished the complainant, informing her of the
termination of her contract and the appointment of a replacement, without apprising her of the particular acts or omissions for which
her dismissal was sought, do not suffice to satisfy the requirements of notice. Nor was petitioner given the opportunity to be heard.
[30]
Consequently, her dismissal from the service was illegal.
Third. Petitioner contends that the reinstatement of private respondent is not feasible because the position which she held was
abolished on account of its decision to discontinue its herbal medicine development project and that, in any event, because the
position is a sensitive one which needs an employee in whom the petitioner has full faith and confidence. It is also contended that
reinstatement would be untenable considering the antagonism engendered as a result of this case. [31]

As regards the claim that the position has already been abolished and, therefore, reinstatement is impossible, suffice it to state
that the factual findings of the Labor Arbiter belie this. A replacement for private respondent was appointed two (2) days prior to her
termination. If the position had been abolished, there would have been no necessity for a replacement.
But we agree that because of antagonism generated by this case and the private respondents own preference for separation
pay, reinstatement would no longer be feasible. It would thus be in the best interest of the parties to order the payment of separation
pay in lieu of reinstatement. Such an amount should not be equivalent to one-half month salary for every year of service only, as
ordered by the Labor Arbiter and affirmed by the NLRC but, in accordance with our decisions,[32] it must be equivalent to one month
salary for every year of service.
Private respondent should be given separation pay and backwages in accordance with the Labor Code. The backwages,
however, are to be computed only for three years from July 12, 1986, the date of her dismissal, without deduction or
qualification, considering that the dismissal was madebefore the effectivity on March 21, 1989, of R.A. No. 6715, which provides for
the payment of full backwages to employees who are illegally dismissed. [33]
WHEREFORE, the petition is DISMISSED. The decision of the National Labor Relations Commission is MODIFIED by ordering
petitioner to pay private respondent separation pay equivalent to one month salary for every year of service. In all other respects, the
decision of the NLRC is AFFIRMED.
SO ORDERED.
Regalado (Chairman), Melo, Puno and Martinez, JJ., concur.

G.R. No. 112574 October 8, 1998

MERCIDAR FISHING CORPORATION represented by its President DOMINGO B. NAVAL, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and FERMIN AGAO, JR., respondents.

MENDOZA, J.:
This is a petition for certiorari to set aside the decision, dated August 30, 1993, of the National Labor Relations Commission
dismissing the appeal of petitioner Mercidar Fishing Corporation from the decision of the Labor Arbiter in NLRC NCR Case No. 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 ship's quartermaster on February 12, 1988. He complained that he had been constructively dismissed
by petitioner when the latter refused him assignments aboard its boats after he had reported to work on May 28, 1990. 1
Private respondent alleged that he had been sick and thus allowed to go on leave without pay for one month from April 28, 1990 but
that when he reported to work at the end of such period with a health clearance, he was told to come back another time as he could
not be reinstated immediately. Thereafter, petitioner refused to give him work. For this reason, private respondent asked for a
certificate of employment from petitioner on September 6, 1990. However, when he came back for the certificate on September 10,
petitioner refused to issue the certificate unless he submitted his resignation. Since private respondent refused to submit such letter
unless he was given separation pay, petitioner prevented him from entering the premises. 2
Petitioner, on the other hand, alleged that it was private respondent who actually abandoned his work. It claimed that the latter failed
to report for work after his leave had expired and was, in fact, absent without leave for three months until August 28, 1998. Petitioner
further claims that, nonetheless, it assigned private respondent to another vessel, but the latter was left behind on September 1,
1990. Thereafter, private respondent asked for a certificate of employment on September 6 on the pretext that he was applying to
another fishing company. On September 10, 1990, he refused to get the certificate and resign unless he was given separation pay. 3
On February 18, 1992, Labor Arbiter Arthur L. Amansec rendered a decision disposing of the case as follows:
ACCORDINGLY, respondents are ordered to reinstate complainant with backwages, pay him his 13th month pay and
incentive leave pay for 1990.
All other claims are dismissed.
SO ORDERED.

Petitioner appealed to the NLRC which, on August 30, 1993, dismissed the appeal for lack of merit. The NLRC dismissed petitioner's
claim that it cannot be held liable for service incentive leave pay by fishermen in its employ as the latter supposedly are "field
personnel" and thus not entitled to such pay under the Labor Code. 4
The NLRC likewise denied petitioner's motion for reconsideration of its decision in its order dated October 25, 1993.
Hence, this petition. Petitioner contends:
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.
xxx xxx xxx
"Field personnel" shall refer to non-agricultural employees who regularly perform their duties away from the
principal place of business or branch office of the employer and whose actual hours of work in the field cannot be
determined with reasonable certainty.
Petitioner argues essentially that since the work of private respondent is performed away from its principal place of business, it has
no way of verifying his actual hours of work on the vessel. It contends that private respondent and other fishermen in its employ
should be classified as "field personnel" who have no statutory right to service incentive leave pay.
In the case of Union of Pilipro Employees (UFE) v. Vicar, 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
Sec. 1. Coverage This rule shall apply to all employees except:
xxx xxx xxx
(e) Field personnel and other employees whose time and performance is unsupervised by the
employer . . . (Emphasis supplied).
While contending that such rule added another element not found in the law (Rollo, p. 13), the petitioner
nevertheless attempted to show that its affected members are not covered by the abovementioned rule. The
petitioner asserts that the company's sales personnel are strictly supervised as shown by the SOD (Supervisor of
the Day) schedule and the company circular dated March 15, 1984 (Annexes 2 and 3, Rollo, pp. 53-55).
Contrary to the contention of the petitioner, the Court finds that the aforementioned rule did not add another
element to the Labor Code definition of field personnel. The clause "whose time and performance is unsupervised
by the employer" did not amplify but merely interpreted and expounded the clause "whose actual hours of work in
the field cannot be determined with reasonable certainty." The former clause is still within the scope and purview of
Article 82 which defines field personnel. Hence, in deciding whether or not an employee's actual working hours in
the field can be determined with reasonable certainty, query must be made as to whether or not such employee's
time and performance is constantly supervised by the employer. 6

Accordingly, it was held in the aforementioned case that salesmen of Nestle Philippines, Inc. were field personnel:
It is undisputed that these sales personnel start their field work at 8:00 a.m. after having reported to the office and
come back to the office at 4:00 p.m. or 4:30 p.m. if they are Makati-based.
The petitioner maintains that the period between 8:00 a.m. to 4:00 or 4:30 p.m. comprises the sales personnel's
working hours which can be determined with reasonable certainty.
The Court does not agree. The law requires that the actual hours of work in the field be reasonably ascertained. The
company has no way of determining whether or not these sales personnel, even if they report to the office before
8:00 a.m. prior to field work and come back at 4:30 p.m., really spend the hours in between in actual field work. 7
In contrast, in the case at bar, during the entire course of their fishing voyage, fishermen employed by petitioner have no choice but
to remain on board its vessel. Although they perform non-agricultural work away from petitioner's business offices, the fact remains
that throughout the duration of their work they are under the effective control and supervision of petitioner through the vessel's
patron or master as the NLRC correctly held. 8
Neither did petitioner gravely abuse its discretion in ruling that private respondent had constructively been dismissed by petitioner.
Such factual finding of both the NLRC and the Labor Arbiter is based not only on the pleadings of the parties but also on a medical
certificate of fitness which, contrary to petitioner's claim private respondent presented when he reported to work on May 28,
1990. 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, 309, L-70544, November 5, 1987]. And besides, it is settled in
this jurisdiction that "to constitute abandonment of position, there must be concurrence of the intention to abandon
and some overt acts from which it may be inferred that the employee concerned has no more interest in working"
(Dagupan Bus Co., Inc. vs. NLRC, 191 SCRA 328), and that the filing of the complaint which asked for reinstatement
plus backwages (Record, p. 20) is inconsistent with respondents' defense of abandonment (Hua Bee Shirt Factory
vs. NLRC, 188 SCRA 586). 10
It is trite to say that the factual findings of quasi-judicial bodies are generally binding as long as they are supported substantially by
evidence in the record of the case. 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. 12
As regards the labor arbiter's award which was affirmed by respondent NLRC, there is no reason to apply the rule that reinstatement
may not be ordered if, as a result of the case between the parties, their relation is
strained. 13 Even at this late stage of this dispute, petitioner continues to reiterate its offer to reinstate private respondent. 14
WHEREFORE, the petition is DISMISSED.
SO ORDERED.
Regalado, Melo, Puno and Martinez, JJ., concur.

G.R. No. 162813

February 12, 2007

FAR EAST AGRICULTURAL SUPPLY, INC. and/or ALEXANDER UY, Petitioners,

vs.
JIMMY LEBATIQUE and THE HONORABLE COURT OF APPEALS, Respondents.
DECISION
QUISUMBING, J.:
Before us is a petition for review on certiorari assailing the Decision 1 dated September 30, 2003 of the Court of Appeals in CA-G.R. SP
No. 76196 and its Resolution2 dated March 15, 2004 denying the motion for reconsideration. The appellate court had reversed the
Decision3 dated October 15, 2002 of the National Labor Relations Commission (NLRC) setting aside the Decision 4 dated June 27, 2001
of the Labor Arbiter.
Petitioner Far East Agricultural Supply, Inc. (Far East) hired on March 4, 1996 private respondent Jimmy Lebatique as truck driver with
a daily wage of P223.50. He delivered animal feeds to the companys clients.
On January 24, 2000, Lebatique complained of nonpayment of overtime work particularly on January 22, 2000, when he was required
to make a second delivery in Novaliches, Quezon City. That same day, Manuel Uy, brother of Far Easts General Manager and

petitioner Alexander Uy, suspended Lebatique apparently for illegal use of company vehicle. Even so, Lebatique reported for work the
next day but he was prohibited from entering the company premises.
On January 26, 2000, Lebatique sought the assistance of the Department of Labor and Employment (DOLE) Public Assistance and
Complaints Unit concerning the nonpayment of his overtime pay. According to Lebatique, two days later, he received a telegram from
petitioners requiring him to report for work. When he did the next day, January 29, 2000, Alexander asked him why he was claiming
overtime pay. Lebatique explained that he had never been paid for overtime work since he started working for the company. He also
told Alexander that Manuel had fired him. After talking to Manuel, Alexander terminated Lebatique and told him to look for another
job.
On March 20, 2000, Lebatique filed a complaint for illegal dismissal and nonpayment of overtime pay. The Labor Arbiter found that
Lebatique was illegally dismissed, and ordered his reinstatement and the payment of his full back wages, 13th month pay, service
incentive leave pay, and overtime pay. The dispositive portion of the decision is quoted herein in full, as follows:
WHEREFORE, we find the termination of complainant illegal. He should thus be ordered reinstated with full backwages. He is likewise
ordered paid his 13th month pay, service incentive leave pay and overtime pay as computed by the Computation and Examination
Unit as follows:
a) Backwages:
01/25/00 - 10/31/00 = 9.23 mos.
P 223.50 x 26 x 9.23 = P 53,635.53
11/01/00 06/26/01 = 7.86 mos.
P 250.00 x 26 x 7.86 = 51,090.00 P 104,725.53
13th Month Pay: 1/12 of P 104,725.53 = 8,727.13
Service Incentive Leave Pay
01/25/00 10/31/00 = 9.23 mos.
P 223.50 x 5/12 x 9.23 = P 859.54
11/01/00 06/26/01 = 7.86 mos.
P 250.00 x 5/12 x 7.86 = [818.75] 1,678.29 115,130.95
b) Overtime Pay: (3 hours/day)
03/20/97 4/30/97 = 1.36 mos.
P 180/8 x 1.25 x 3 x 26 x 1.36 = P 2,983.50
05/01/97 02/05/98 = 9.16 mos.
P 185/8 x 1.25 x 3 x 26 x 9.16 = 20,652.94
02/06/98 10/30/99 = 20.83 mos.
P 198/8 x 1.25 x 3 x 26 x [20.83] = 50,265.39
10/31/99 01/24/00 = 2.80 mos.
P 223.50/8 x 1.25 x 3 x 26 x 2.80 = 7,626.94 81,528.77
TOTAL AWARD P 196,659.72
SO ORDERED.5

On appeal, the NLRC reversed the Labor Arbiter and dismissed the complaint for lack of merit. The NLRC held that there was no
dismissal to speak of since Lebatique was merely suspended. Further, it found that Lebatique was a field personnel, hence, not
entitled to overtime pay and service incentive leave pay. Lebatique sought reconsideration but was denied.
Aggrieved, Lebatique filed a petition for certiorari with the Court of Appeals.1awphi1.net
The Court of Appeals, in reversing the NLRC decision, reasoned that Lebatique was suspended on January 24, 2000 but was illegally
dismissed on January 29, 2000 when Alexander told him to look for another job. It also found that Lebatique was not a field personnel
and therefore entitled to payment of overtime pay, service incentive leave pay, and 13th month pay.
It reinstated the decision of the Labor Arbiter as follows:
WHEREFORE, premises considered, the decision of the NLRC dated 27 December 2002 is hereby REVERSEDand the Labor Arbiters
decision dated 27 June 2001 REINSTATED.
SO ORDERED.6
Petitioners moved for reconsideration but it was denied.
Hence, the instant petition wherein petitioners assign the following errors:
THE COURT OF APPEALS ERRED IN REVERSING THE DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION DATED 15
OCTOBER 2002 AND IN RULING THAT THE PRIVATE RESPONDENT WAS ILLEGALLY DISMISSED.
THE COURT OF APPEALS ERRED IN REVERSING THE DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION DATED 15
OCTOBER 2002 AND IN RULING THAT PRIVATE RESPONDENT IS NOT A FIELD PERSONNEL AND THER[E]FORE ENTITLED TO OVERTIME
PAY AND SERVICE INCENTIVE LEAVE PAY.
THE COURT OF APPEALS ERRED IN NOT DISMISSING THE PETITION FOR CERTIORARI FOR FAILURE OF PRIVATE RESPONDENT TO
ATTACH CERTIFIED TRUE COPIES OF THE QUESTIONED DECISION AND RESOLUTION OF THE PUBLIC RESPONDENT. 7
Simply stated, the principal issues in this case are: (1) whether Lebatique was illegally dismissed; and (2) whether Lebatique was a
field personnel, not entitled to overtime pay.
Petitioners contend that, (1) Lebatique was not dismissed from service but merely suspended for a day due to violation of company
rules; (2) Lebatique was not barred from entering the company premises since he never reported back to work; and (3) Lebatique is
estopped from claiming that he was illegally dismissed since his complaint before the DOLE was only on the nonpayment of his
overtime pay.
Also, petitioners maintain that Lebatique, as a driver, is not entitled to overtime pay since he is a field personnel whose time outside
the company premises cannot be determined with reasonable certainty. According to petitioners, the drivers do not observe regular
working hours unlike the other office employees. The drivers may report early in the morning to make their deliveries or in the
afternoon, depending on the production of animal feeds and the traffic conditions. Petitioners also aver that Lebatique worked for less
than eight hours a day.8
Lebatique for his part insists that he was illegally dismissed and was not merely suspended. He argues that he neither refused to
work nor abandoned his job. He further contends that abandonment of work is inconsistent with the filing of a complaint for illegal
dismissal. He also claims that he is not a field personnel, thus, he is entitled to overtime pay and service incentive leave pay.
After consideration of the submission of the parties, we find that the petition lacks merit. We are in agreement with the decision of the
Court of Appeals sustaining that of the Labor Arbiter.
It is well settled that in cases of illegal dismissal, the burden is on the employer to prove that the termination was for a valid
cause.9 In this case, petitioners failed to discharge such burden. Petitioners aver that Lebatique was merely suspended for one day
but he abandoned his work thereafter. To constitute abandonment as a just cause for dismissal, there must be: (a) absence without
justifiable reason; and (b) a clear intention, as manifested by some overt act, to sever the employer-employee relationship. 10
The records show that petitioners failed to prove that Lebatique abandoned his job. Nor was there a showing of a clear intention on
the part of Lebatique to sever the employer-employee relationship. When Lebatique was verbally told by Alexander Uy, the
companys General Manager, to look for another job, Lebatique was in effect dismissed. Even assuming earlier he was merely
suspended for illegal use of company vehicle, the records do not show that he was afforded the opportunity to explain his side. It is
clear also from the sequence of the events leading to Lebatiques dismissal that it was Lebatiques complaint for nonpayment of his
overtime pay that provoked the management to dismiss him, on the erroneous premise that a truck driver is a field personnel not
entitled to overtime pay.
An employee who takes steps to protest his layoff cannot by any stretch of imagination be said to have abandoned his work and the
filing of the complaint is proof enough of his desire to return to work, thus negating any suggestion of abandonment. 11 A contrary
notion would not only be illogical but also absurd.

It is immaterial that Lebatique had filed a complaint for nonpayment of overtime pay the day he was suspended by managements
unilateral act. What matters is that he filed the complaint for illegal dismissal on March 20, 2000, after he was told not to report for
work, and his filing was well within the prescriptive period allowed under the law.
On the second issue, Article 82 of the Labor Code is decisive on the question of who are referred to by the term "field personnel." It
provides, as follows:
ART. 82. Coverage. - The provisions of this title [Working Conditions and Rest Periods] shall apply to employees in all establishments
and undertakings whether for profit or not, but not to government employees, managerial employees, field personnel, members of
the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and
workers who are paid by results as determined by the Secretary of Labor in appropriate regulations.
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.
In Auto Bus Transport Systems, Inc. v. Bautista,12 this Court emphasized that the definition of a "field personnel" is not merely
concerned with the location where the employee regularly performs his duties but also with the fact that the employees performance
is unsupervised by the employer. We held that field personnel are those who regularly perform their duties away from the principal
place of business of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. Thus,
in order to determine whether an employee is a field employee, it is also necessary to ascertain if actual hours of work in the field can
be determined with reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or not the employees
time and performance are constantly supervised by the employer.13
As correctly found by the Court of Appeals, Lebatique is not a field personnel as defined above for the following reasons: (1) company
drivers, including Lebatique, are directed to deliver the goods at a specified time and place; (2) they are not given the discretion to
solicit, select and contact prospective clients; and (3) Far East issued a directive that company drivers should stay at the clients
premises during truck-ban hours which is from 5:00 to 9:00 a.m. and 5:00 to 9:00 p.m. 14 Even petitioners admit that the drivers can
report early in the morning, to make their deliveries, or in the afternoon, depending on the production of animal feeds. 15 Drivers, like
Lebatique, are under the control and supervision of management officers. Lebatique, therefore, is a regular employee whose tasks are
usually necessary and desirable to the usual trade and business of the company. Thus, he is entitled to the benefits accorded to
regular employees of Far East, including overtime pay and service incentive leave pay.
Note that all money claims arising from an employer-employee relationship shall be filed within three years from the time the cause
of action accrued; otherwise, they shall be forever barred. 16 Further, if it is established that the benefits being claimed have been
withheld from the employee for a period longer than three years, the amount pertaining to the period beyond the three-year
prescriptive period is therefore barred by prescription. The amount that can only be demanded by the aggrieved employee shall be
limited to the amount of the benefits withheld within three years before the filing of the complaint. 17
Lebatique timely filed his claim for service incentive leave pay, considering that in this situation, the prescriptive period commences
at the time he was terminated.18 On the other hand, his claim regarding nonpayment of overtime pay since he was hired in March
1996 is a different matter. In the case of overtime pay, he can only demand for the overtime pay withheld for the period within three
years preceding the filing of the complaint on March 20, 2000. However, we find insufficient the selected time records presented by
petitioners to compute properly his overtime pay. The Labor Arbiter should have required petitioners to present the daily time
records, payroll, or other documents in managements control to determine the correct overtime pay due Lebatique.
WHEREFORE, the petition is DENIED for lack of merit. The Decision dated September 30, 2003 of the Court of Appeals in CA-G.R. SP
No. 76196 and its Resolution dated March 15, 2004 are AFFIRMED with MODIFICATIONto the effect that the case is
hereby REMANDED to the Labor Arbiter for further proceedings to determine the exact amount of overtime pay and other monetary
benefits due Jimmy Lebatique which herein petitioners should pay without further delay.
Costs against petitioners.
SO ORDERED.

LABOR CONGRESS v. NLRC

DECISION
DAVIDE, JR., J.:
In this special civil action for certiorari under Rule 65, petitioners seek to reverse the 29 March 1995 resolution [1] of the National
Labor Relations Commission (NLRC) in NLRC RAB III Case No. 01-1964-91 which affirmed the Decision [2] of Labor Arbiter Ariel C. Santos
dismissing their complaint for utter lack of merit.

The antecedents of this case as summarized by the Office of the Solicitor General in its Manifestation and Motion in Lieu of
Comment,[3] are as follows:
The 99 persons named as petitioners in this proceeding were rank-and-file employees of respondent Empire Food Products, which
hired them on various dates (Paragraph 1, Annex A of Petition, Annex B; Page 2, Annex F of Petition).
Petitioners filed against private respondents a complaint for payment of money claim[s] and for violation of labor standard[s] laws
(NLRC Case No. RAB-111-10-1817-90). They also filed a petition for direct certification of petitioner Labor Congress of the Philippines
as their bargaining representative (Case No. R0300-9010-RU-005).
On October 23, 1990, petitioners represented by LCP President Benigno B. Navarro, Sr. and private respondents Gonzalo Kehyeng and
Evelyn Kehyeng in behalf of Empire Food Products, Inc. entered into a Memorandum of Agreement which provided, among others, the
following:
1. That in connection with the pending Petition for Direct Certification filed by the Labor Congress with the DOLE, Management of the
Empire Food Products has no objection [to] the direct certification of the LCP Labor Congress and is now recognizing the Labor
Congress of the Philippines (LCP) and its Local Chapter as the SOLE and EXCLUSIVE Bargaining Agent and Representative for all rank
and file employees of the Empire Food Products regarding WAGES, HOURS OF WORK, AND OTHER TERMS AND CONDITIONS OF
EMPLOYMENT;
2. That with regards [sic] to NLRC CASE NO. RAB-III-10-1817-90 pending with the NLRC parties jointly and mutually agreed that the
issues thereof, shall be discussed by the parties and resolve[d] during the negotiation of the Collective Bargaining Agreement;
3. That Management of the Empire Food Products shall make the proper adjustment of the Employees Wages within fifteen (15) days
from the signing of this Agreement and further agreed to register all the employees with the SSS;
4. That Employer, Empire Food Products thru its Management agreed to deduct thru payroll deduction UNION DUES and other
Assessment[s] upon submission by the LCP Labor Congress individual Check-Off Authorization[s] signed by the Union Members
indicating the amount to be deducted and further agreed all deduction[s] made representing Union Dues and Assessment[s] shall be
remitted immediately to the LCP Labor Congress Treasurer or authorized representative within three (3) or five (5) days upon
deductions [sic], Union dues not deducted during the period due, shall be refunded or reimbursed by the
Employer/Management. Employer/Management further agreed to deduct Union dues from non-union members the same amount
deducted from union members without need of individual Check-Off Authorizations [for] Agency Fee;
5. That in consideration [of] the foregoing covenant, parties jointly and mutually agreed that NLRC CASE NO. RAB-III-10-1817-90 shall
be considered provisionally withdrawn from the Calendar of the National Labor Relations Commission(NLRC), while the Petition for
direct certification of the LCP Labor Congress parties jointly move for the direct certification of the LCP Labor Congress;
6. That parties jointly and mutually agreed that upon signing of this Agreement, no Harassments [sic], Threats, Interferences [sic] of
their respective rights under the law, no Vengeance or Revenge by each partner nor any act of ULP which might disrupt the
operations of the business;
7. Parties jointly and mutually agreed that pending negotiations or formalization of the propose[d] CBA, this Memorandum of
Agreement shall govern the parties in the exercise of their respective rights involving the Management of the business and the terms
and condition[s] of employment, and whatever problems and grievances may arise by and between the parties shall be resolved by
them, thru the most cordial and good harmonious relationship by communicating the other party in writing indicating said grievances
before taking any action to another forum or government agencies;
8. That parties [to] this Memorandum of Agreement jointly and mutually agreed to respect, abide and comply with all the terms and
conditions hereof. Further agreed that violation by the parties of any provision herein shall constitute an act of ULP. (Annex A of
Petition).
In an Order dated October 24, 1990, Mediator Arbiter Antonio Cortez approved the memorandum of agreement and certified LCP as
the sole and exclusive bargaining agent among the rank-and-file employees of Empire Food Products for purposes of collective
bargaining with respect to wages, hours of work and other terms and conditions of employment (Annex B of Petition).
On November 9, 1990, petitioners through LCP President Navarro submitted to private respondents a proposal for collective
bargaining (Annex C of Petition).
On January 23, 1991, petitioners filed a complaint docketed as NLRC Case No. RAB-III-01-1964-91 against private respondents for:
a. Unfair Labor Practice by way of Illegal Lockout and/or Dismissal;
b. Union busting thru Harassments [sic], threats, and interfering with the rights of employees to self-organization;
c. Violation of the Memorandum of Agreement dated October 23, 1990;
d. Underpayment of Wages in violation of R.A. No. 6640 and R.A. No. 6727, such as Wages promulgated by the Regional Wage Board;

e. Actual, Moral and Exemplary Damages. (Annex D of Petition)

After the submission by the parties of their respective position papers and presentation of testimonial evidence, Labor Arbiter Ariel C.
Santos absolved private respondents of the charges of unfair labor practice, union busting, violation of the memorandum of
agreement, underpayment of wages and denied petitioners prayer for actual, moral and exemplary damages. Labor Arbiter Santos,
however, directed the reinstatement of the individual complainants:
The undersigned Labor Arbiter is not oblivious to the fact that respondents have violated a cardinal rule in every establishment that a
payroll and other papers evidencing hours of work, payments, etc. shall always be maintained and subjected to inspection and
visitation by personnel of the Department of Labor and Employment. As such penalty, respondents should not escape liability for this
technicality, hence, it is proper that all individual complainants except those who resigned and executed quitclaim[s] and releases
prior to the filing of this complaint should be reinstated to their former position[s] with the admonition to respondents that any
harassment, intimidation, coercion or any form of threat as a result of this immediately executory reinstatement shall be dealt with
accordingly.
SO ORDERED. (Annex G of Petition)
On appeal, the National Labor Relations Commission vacated the Decision dated April 14, 1972 [sic] and remanded the case to the
Labor Arbiter for further proceedings for the following reasons:
The Labor Arbiter, through his decision, noted that xxx complainant did not present any single witness while respondent presented
four (4) witnesses in the persons of Gonzalo Kehyeng, Orlando Cairo, Evelyn Kehyeng and Elvira Bulagan xxx (p. 183, Records), that
xxx complainant before the National Labor Relations Commission must prove with definiteness and clarity the offense charged. xxx
(Record, p. 183); that xxx complainant failed to specify under what provision of the Labor Code particularly Art. 248 did respondents
violate so as to constitute unfair labor practice xxx (Record, p. 183); that complainants failed to present any witness who may
describe in what manner respondents have committed unfair labor practice xxx (Record, p. 185); that xxx complainant LCP failed to
present anyone of the so-called 99 complainants in order to testify who committed the threats and intimidation xxx (Record, p. 185).
Upon review of the minutes of the proceedings on record, however, it appears that complainant presented witnesses, namely,
BENIGNO NAVARRO, JR. (28 February 1991, RECORD, p. 91; 8 March 1991, RECORD, p. 92, who adopted its POSITION PAPER AND
CONSOLIDATED AFFIDAVIT, as Exhibit A and the annexes thereto as Exhibit B, B-1 to B-9, inclusive. Minutes of the proceedings on
record show that complainant further presented other witnesses, namely: ERLINDA BASILIO (13 March 1991, RECORD, p. 93;
LOURDES PANTILLO, MARIFE PINLAC, LENIE GARCIA (16 April 1991, Record, p. 96, see back portion thereof; 2 May 1991, Record, p.
102; 16 May 1991, Record, p. 103; 11 June 1991, Record, p. 105). Formal offer of Documentary and Testimonial Evidence was made
by complainant on June 24, 1991 (Record, p. 106-109)
The Labor Arbiter must have overlooked the testimonies of some of the individual complainants which are now on record. Other
individual complainants should have been summoned with the end in view of receiving their testimonies. The complainants should be
afforded the time and opportunity to fully substantiate their claims against the respondents. Judgment should be rendered only based
on the conflicting positions of the parties. The Labor Arbiter is called upon to consider and pass upon the issues of fact and law raised
by the parties.
Toward this end, therefore, it is Our considered view [that] the case should be remanded to the Labor Arbiter of origin for further
proceedings.(Annex H of Petition)
In a Decision dated July 27, 1994, Labor Arbiter Santos made the following determination:
Complainants failed to present with definiteness and clarity the particular act or acts constitutive of unfair labor practice.
It is to be borne in mind that a declaration of unfair labor practice connotes a finding of prima facie evidence of probability that a
criminal offense may have been committed so as to warrant the filing of a criminal information before the regular court. Hence,
evidence which is more than a scintilla is required in order to declare respondents/employers guilty of unfair labor practice. Failing in
this regard is fatal to the cause of complainants. Besides, even the charge of illegal lockout has no leg to stand on because of the
testimony of respondents through their guard Orlando Cairo (TSN, July 31, 1991 hearing; p. 5-35) that on January 21, 1991,
complainants refused and failed to report for work, hence guilty of abandoning their post without permission from respondents. As a
result of complainants[] failure to report for work, the cheese curls ready for repacking were all spoiled to the prejudice of
respondents. Under cross-examination, complainants failed to rebut the authenticity of respondents witness testimony.
As regards the issue of harassments [sic], threats and interference with the rights of employees to self-organization which is actually
an ingredient of unfair labor practice, complainants failed to specify what type of threats or intimidation was committed and who
committed the same. What are the acts or utterances constitutive of harassments [sic] being complained of? These are the specifics
which should have been proven with definiteness and clarity by complainants who chose to rely heavily on its position paper through
generalizations to prove their case.
Insofar as violation of [the] Memorandum of Agreement dated October 23, 1990 is concerned, both parties agreed that:
2 - That with regards [sic] to the NLRC Case No. RAB III-10-1817-90 pending with the NLRC, parties jointly and
mutually agreed that the issues thereof shall be discussed by the parties and resolve[d] during the negotiation
of the CBA.

The aforequoted provision does not speak of [an] obligation on the part of respondents but on a resolutory condition that may occur
or may not happen. This cannot be made the basis of an imposition of an obligation over which the National Labor Relations
Commission has exclusive jurisdiction thereof.
Anent the charge that there was underpayment of wages, the evidence points to the contrary. The enumeration of complainants
wages in their consolidated Affidavits of merit and position paper which implies underpayment has no leg to stand on in the light of
the fact that complainants admission that they are piece workers or paid on a pakiao [basis] i.e. a certain amount for every thousand
pieces of cheese curls or other products repacked. The only limitation for piece workers or pakiao workers is that they should receive
compensation no less than the minimum wage for an eight (8) hour work [sic]. And compliance therewith was satisfactorily explained
by respondent Gonzalo Kehyeng in his testimony (TSN, p. 12-30) during the July 31, 1991 hearing. On cross-examination,
complainants failed to rebut or deny Gonzalo Kehyengs testimony that complainants have been even receiving more than the
minimum wage for an average workers [sic]. Certainly, a lazy worker earns less than the minimum wage but the same cannot be
attributable to respondents but to the lazy workers.
Finally, the claim for moral and exemplary damages has no leg to stand on when no malice, bad faith or fraud was ever proven to
have been perpetuated by respondents.
WHEREFORE, premises considered, the complaint is hereby DISMISSED for utter lack of merit. (Annex I of Petition). [4]
On appeal, the NLRC, in its Resolution dated 29 March 1995, [5] affirmed in toto the decision of Labor Arbiter Santos. In so doing,
the NLRC sustained the Labor Arbiters findings that: (a) there was a dearth of evidence to prove the existence of unfair labor practice
and union busting on the part of private respondents; (b) the agreement of 23 October 1990 could not be made the basis of an
obligation within the ambit of the NLRCs jurisdiction, as the provisions thereof, particularly Section 2, spoke of a resolutory condition
which could or could not happen; (c) the claims for underpayment of wages were without basis as complainants were
admittedly pakiao workers and paid on the basis of their output subject to the lone limitation that the payment conformed to the
minimum wage rate for an eight-hour workday; and (d) petitioners were not underpaid.
Their motion for reconsideration having been denied by the NLRC in its Resolution of 31 October 1995, [6] petitioners filed the
instant special civil action for certiorari raising the following issues:
I
WHETHER OR NOT THE PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION GRAVELY ABUSED ITS DISCRETION
WHEN IT DISREGARDED ORIGNORED NOT ONLY THE EVIDENCE FAVORABLE TO HEREIN PETITIONERS, APPLICABLE
JURISPRUDENCE BUT ALSO ITS OWN DECISIONS AND THAT OF THIS HONORABLE HIGHEST TRIBUNAL WHICH [WAS]
TANTAMOUNT NOT ONLY TO THE DEPRIVATION OF PETITIONERS RIGHT TO DUE PROCESS BUT WOULD RESULT [IN] MANIFEST
INJUSTICE.
II
WHETHER OR NOT THE PUBLIC RESPONDENT GRAVELY ABUSED ITS DISCRETION WHEN IT DEPRIVED THE PETITIONERS OF THEIR
CONSTITUTIONAL RIGHT TO SELF-ORGANIZATION, SECURITY OF TENURE, PROTECTION TO LABOR, JUST AND HUMANE
CONDITIONS OF WORK AND DUE PROCESS.
III
WHETHER OR NOT THE PETITIONERS WERE ILLEGALLY EASED OUT [OF] OR CONSTRUCTIVELY DISMISSED FROM THEIR ONLY
MEANS OF LIVELIHOOD.
IV
WHETHER OR NOT PETITIONERS SHOULD BE REINSTATED FROM THE DATE OF THEIR DISMISSAL UP TO THE TIME OF THEIR
REINSTATEMENT, WITH BACKWAGES, STATUTORY BENEFITS, DAMAGES AND ATTORNEYS FEES. [7]
We required respondents to file their respective Comments.
In their Manifestation and Comment, private respondents asserted that the petition was filed out of time. As petitioners
admitted in their Notice to File petition for Review on Certiorari that they received a copy of the resolution (denying their motion for
reconsideration) on 13 December 1995, they had only until 29 December 1995 to file the petition. Having failed to do so, the NLRC
thus already entered judgment in private respondents favor.
In their Reply, petitioners averred that Mr. Navarro, a non-lawyer who filed the notice to file a petition for review on their behalf,
mistook which reglementary period to apply. Instead of using the reasonable time criterion for certiorari under Rule 65, he used the
15-day period for petitions for review on certiorari under Rule 45. They hastened to add that such was a mere technicality which
should not bar their petition from being decided on the merits in furtherance of substantial justice, especially considering that
respondents neither denied nor contradicted the facts and issues raised in the petition.

In its Manifestation and Motion in Lieu of Comment, the Office of the Solicitor General (OSG) sided with petitioners. It pointed out
that the Labor Arbiter, in finding that petitioners abandoned their jobs, relied solely on the testimony of Security Guard Rolando Cairo
that petitioners refused to work on 21 January 1991, resulting in the spoilage of cheese curls ready for repacking. However, the OSG
argued, this refusal to report for work for a single day did not constitute abandonment, which pertains to a clear, deliberate and
unjustified refusal to resume employment, and not mere absence. In fact, the OSG stressed, two days after allegedly abandoning
their work, petitioners filed a complaint for,inter alia, illegal lockout or illegal dismissal. Finally, the OSG questioned the lack of
explanation on the part of Labor Arbiter Santos as to why he abandoned his original decision to reinstate petitioners.
In view of the stand of the OSG, we resolved to require the NLRC to file its own Comment.
In its Comment, the NLRC invokes the general rule that factual findings of an administrative agency bind a reviewing court and
asserts that this case does not fall under the exceptions. The NLRC further argues that grave abuse of discretion may not be imputed
to it, as it affirmed the factual findings and legal conclusions of the Labor Arbiter only after carefully reviewing, weighing and
evaluating the evidence in support thereof, as well as the pertinent provisions of law and jurisprudence.
In their Reply, petitioners claim that the decisions of the NLRC and the Labor Arbiter were not supported by substantial
evidence; that abandonment was not proved; and that much credit was given to self-serving statements of Gonzalo Kehyeng, owner
of Empire Foods, as to payment of just wages.
On 7 July 1997, we gave due course to the petition and required the parties to file their respective memoranda. However, only
petitioners and private respondents filed their memoranda, with the NLRC merely adopting its Comment as its Memorandum.
We find for petitioners.
Invocation of the general rule that factual findings of the NLRC bind this Court is unavailing under the circumstances. Initially,
we are unable to discern any compelling reason justifying the Labor Arbiters volte face from his 14 April 1992 decision reinstating
petitioners to his diametrically opposed 27 July 1994 decision, when in both instances, he had before him substantially the same
evidence.Neither do we find the 29 March 1995 NLRC resolution to have sufficiently discussed the facts so as to comply with the
standard of substantial evidence. For one thing, the NLRC confessed its reluctance to inquire into the veracity of the Labor Arbiters
factual findings, staunchly declaring that it was not about to substitute [its] judgment on matters that are within the province of the
trier of facts.Yet, in the 21 July 1992 NLRC resolution, [8] it chastised the Labor Arbiter for his errors both in judgment and
procedure, for which reason it remanded the records of the case to the Labor Arbiter for compliance with the pronouncements
therein.
What cannot escape from our attention is that the Labor Arbiter did not heed the observations and pronouncements of the NLRC
in its resolution of 21 July 1992, neither did he understand the purpose of the remand of the records to him. In said resolution, the
NLRC summarized the grounds for the appeal to be:
1. that there is a prima facie evidence of abuse of discretion and acts of gross incompetence committed by the Labor Arbiter in
rendering the decision.
2. that the Labor Arbiter in rendering the decision committed serious errors in the findings of facts.
After which, the NLRC observed and found:
Complainant alleged that the Labor Arbiter disregarded the testimonies of the 99 complainants who submitted their Consolidated
Affidavit of Merit and Position Paper which was adopted as direct testimonies during the hearing and cross-examined by respondents
counsel.
The Labor Arbiter, through his decision, noted that x x x complainant did not present any single witness while respondent presented
four (4) witnesses in the persons of Gonzalo Kehyeng, Orlando Cairo, Evelyn Kehyeng and Elvira Bulagan x x x (Records, p. 183), that
x x x complainant before the National Labor Relations Commission must prove with definiteness and clarity the offense charged. x x
x (Record, p. 183; that x x x complainant failed to specify under what provision of the Labor Code particularly Art. 248 did
respondents violate so as to constitute unfair labor practice x x x (Record, p. 183); that complainants failed to present any witness
who may describe in what manner respondents have committed unfair labor practice x x x (Record, p. 185); that x x x complainant a
[sic] LCP failed to present anyone of the so called 99 complainants in order to testify who committed the threats and intimidation x x
x (Record, p. 185).
Upon review of the minutes of the proceedings on record, however, it appears that complainant presented witnesses, namely
BENIGNO NAVARRO, JR. (28 February 1991, RECORD, p. 91; 8 March 1991, RECORD, p. 92), who adopted its POSITION PAPER AND
CONSOLIDATED AFFIDAVIT, as Exhibit A and the annexes thereto as Exhibit B, B-1 to B-9, inclusive. Minutes of the proceedings on
record show that complainant further presented other witnesses, namely: ERLINDA BASILIO (13 March 1991, RECORD, p. 93;
LOURDES PANTILLO, MARIFE PINLAC, LENI GARCIA (16 April 1991, Record, p. 96, see back portion thereof; 2 May 1991, Record, p. 102;
16 May 1991, Record, p. 103; 11 June 1991, Record, p. 105). Formal offer of Documentary and Testimonial Evidence was made by the
complainant on June 24, 1991 (Record, p. 106-109).
The Labor Arbiter must have overlooked the testimonies of some of the individual complainants which are now on record. Other
individual complainants should have been summoned with the end in view of receiving their testimonies. The complainants should
[have been] afforded the time and opportunity to fully substantiate their claims against the respondents. Judgment should [have

been] rendered only based on the conflicting positions of the parties. The Labor Arbiter is called upon to consider and pass upon the
issues of fact and law raised by the parties.
Toward this end, therefore, it is Our considered view the case should be remanded to the Labor Arbiter of origin for further
proceedings.
Further, We take note that the decision does not contain a dispositive portion or fallo. Such being the case, it may be well said that
the decision does not resolve the issues at hand. On another plane, there is no portion of the decision which could be carried out by
way of execution.
It may be argued that the last paragraph of the decision may be categorized as the dispositive portion thereof:
xxxxx
The undersigned Labor Arbiter is not oblivious [to] the fact that respondents have violated a cardinal rule in every establishment that
a payroll and other papers evidencing hour[s] of work, payment, etc. shall always be maintained and subjected to inspection and
visitation by personnel of the Department of Labor and Employment. As such penalty, respondents should not escape liability for this
technicality, hence, it is proper that all the individual complainants except those who resigned and executed quitclaim[s] and
release[s] prior to the filing of this complaint should be reinstated to their former position with the admonition to respondents that
any harassment, intimidation, coercion or any form of threat as a result of this immediately executory reinstatement shall be dealt
with accordingly.
SO ORDERED.
It is Our considered view that even assuming arguendo that the respondents failed to maintain their payroll and other papers
evidencing hours of work, payment etc., such circumstance, standing alone, does not warrant the directive to reinstate complainants
to their former positions. It is [a] well settled rule that there must be a finding of illegal dismissal before reinstatement be mandated.
In this regard, the LABOR ARBITER is hereby directed to include in his clarificatory decision, after receiving evidence, considering and
resolving the same, the requisite dispositive portion. [9]
Apparently, the Labor Arbiter perceived that if not for petitioners, he would not have fallen victim to this stinging rebuke at the
hands of the NLRC. Thus does it appear to us that the Labor Arbiter, in concluding in his 27 July 1994 Decision that petitioners
abandoned their work, was moved by, at worst, spite, or at best, lackadaisically glossed over petitioners evidence. On this score, we
find the following observations of the OSG most persuasive:
In finding that petitioner employees abandoned their work, the Labor Arbiter and the NLRC relied on the testimony of Security Guard
Rolando Cairo that on January 21, 1991, petitioners refused to work.As a result of their failure to work, the cheese curls ready for
repacking on said date were spoiled.
The failure to work for one day, which resulted in the spoilage of cheese curls does not amount to abandonment of work. In fact two
(2) days after the reported abandonment of work or on January 23, 1991, petitioners filed a complaint for, among others, unfair labor
practice, illegal lockout and/or illegal dismissal. In several cases, this Honorable Court held that one could not possibly abandon his
work and shortly thereafter vigorously pursue his complaint for illegal dismissal (De Ysasi III v. NLRC, 231 SCRA 173; Ranara v. NLRC,
212 SCRA 631; Dagupan Bus Co. v. NLRC, 191 SCRA 328; Atlas Consolidated Mining and Development Corp. v. NLRC, 190 SCRA
505; Hua Bee Shirt Factory v. NLRC, 186 SCRA 586; Mabaylan v. NLRC, 203 SCRA 570 and Flexo Manufacturing v. NLRC, 135 SCRA
145). In Atlas Consolidated, supra, this Honorable Court explicitly stated:
It would be illogical for Caballo, to abandon his work and then immediately file an action seeking for his reinstatement. We can not
believe that Caballo, who had worked for Atlas for two years and ten months, would simply walk away from his job unmindful of the
consequence of his act, i.e. the forfeiture of his accrued employment benefits. In opting to finally to [sic] contest the legality of his
dismissal instead of just claiming his separation pay and other benefits, which he actually did but which proved to be futile after all,
ably supports his sincere intention to return to work, thus negating Atlas stand that he had abandoned his job.
In De Ysasi III v. NLRC (supra), this Honorable Court stressed that it is the clear, deliberate and unjustified refusal to resume
employment and not mere absence that constitutes abandonment. The absence of petitioner employees for one day on January 21,
1991 as testified [to] by Security Guard Orlando Cairo did not constitute abandonment.
In his first decision, Labor Arbiter Santos expressly directed the reinstatement of the petitioner employees and admonished the
private respondents that any harassment, intimidation, coercion or any form of threat as a result of this immediately executory
reinstatement shall be dealt with accordingly.
In his second decision, Labor Arbiter Santos did not state why he was abandoning his previous decision directing the reinstatement of
petitioner employees.
By directing in his first decision the reinstatement of petitioner employees, the Labor Arbiter impliedly held that they did not abandon
their work but were not allowed to work without just cause.

That petitioner employees are pakyao or piece workers does not imply that they are not regular employees entitled to
reinstatement. Private respondent Empire Food Products, Inc. is a food and fruit processing company. In Tabas v. California
Manufacturing Co., Inc. (169 SCRA 497), this Honorable Court held that the work of merchandisers of processed food, who coordinate
with grocery stores and other outlets for the sale of the processed food is necessary in the day-to-day operation[s] of the
company. With more reason, the work of processed food repackers is necessary in the day-to-day operation[s] of respondent Empire
Food Products.[10]
It may likewise be stressed that the burden of proving the existence of just cause for dismissing an employee, such as
abandonment, rests on the employer, [11] a burden private respondents failed to discharge.
Private respondents, moreover, in considering petitioners employment to have been terminated by abandonment, violated their
rights to security of tenure and constitutional right to due process in not even serving them with a written notice of such termination.
[12]
Section 2, Rule XIV, Book V of the Omnibus Rules Implementing the Labor Code provides:
SEC. 2. Notice of Dismissal. - Any employer who seeks to dismiss a worker shall furnish him a written notice stating the particular acts
or omission constituting the grounds for his dismissal. In cases of abandonment of work, the notice shall be served at the workers last
known address.
Petitioners are therefore entitled to reinstatement with full back wages pursuant to Article 279 of the Labor Code, as amended
by R.A. No. 6715. Nevertheless, the records disclose that taking into account the number of employees involved, the length of time
that has lapsed since their dismissal, and the perceptible resentment and enmity between petitioners and private respondents which
necessarily strained their relationship, reinstatement would be impractical and hardly promotive of the best interests of the parties. In
lieu of reinstatement then, separation pay at the rate of one month for every year of service, with a fraction of at least six (6) months
of service considered as one (1) year, is in order.[13]
That being said, the amount of back wages to which each petitioner is entitled, however, cannot be fully settled at this
time. Petitioners, as piece-rate workers having been paid by the piece, [14] there is need to determine the varying degrees of
production and days worked by each worker. Clearly, this issue is best left to the National Labor Relations Commission.
As to the other benefits, namely, holiday pay, premium pay, 13 th month pay and service incentive leave which the labor arbiter
failed to rule on but which petitioners prayed for in their complaint, [15] we hold that petitioners are so entitled to these benefits. Three
(3) factors lead us to conclude that petitioners, although piece-rate workers, were regular employees of private respondents. First, as
to the nature of petitioners tasks, their job of repacking snack food was necessary or desirable in the usual business of private
respondents, who were engaged in the manufacture and selling of such food products; second, petitioners worked for private
respondents throughout the year, their employment not having been dependent on a specific project or season; and third, the length
of time[16] that petitioners worked for private respondents. Thus, while petitioners mode of compensation was on a per piece basis,
the status and nature of their employment was that of regular employees.
The Rules Implementing the Labor Code exclude certain employees from receiving benefits such as nighttime pay, holiday pay,
service incentive leave[17] and 13th month pay, [18] inter alia, field personnel and other employees whose time and performance is
unsupervised by the employer, including those who are engaged on task or contract basis, purely commission basis, or those who are
paid a fixed amount for performing work irrespective of the time consumed in the performance thereof. Plainly, petitioners as piecerate workers do not fall within this group. As mentioned earlier, not only did petitioners labor under the control of private respondents
as their employer, likewise did petitioners toil throughout the year with the fulfillment of their quota as supposed basis for
compensation. Further, in Section 8 (b), Rule IV, Book III which we quote hereunder, piece workers are specifically mentioned as being
entitled to holiday pay.
SEC. 8. Holiday pay of certain employees.(b) Where a covered employee is paid by results or output, such as payment on piece work, his holiday pay shall not be less
than his average daily earnings for the last seven (7) actual working days preceding the regular holiday: Provided,
however, that in no case shall the holiday pay be less than the applicable statutory minimum wage rate.
In addition, the Revised Guidelines on the Implementation of the 13 th Month Pay Law, in view of the modifications to P.D. No.
851[19] by Memorandum Order No. 28, clearly exclude the employer of piece rate workers from those exempted from paying
13th month pay, to wit:
2. EXEMPTED EMPLOYERS
The following employers are still not covered by P.D. No. 851:
d. Employers of those who are paid on purely commission, boundary or task basis, and those who are paid a fixed amount
for performing specific work, irrespective of the time consumed in the performance thereof, except where the
workers are paid on piece-rate basis in which case the employer shall grant the required 13th month pay to such
workers. (italics supplied)
The Revised Guidelines as well as the Rules and Regulations identify those workers who fall under the piece-rate category as those
who are paid a standard amount for every piece or unit of work produced that is more or less regularly replicated, without regard to
the time spent in producing the same.[20]

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

G.R. No. 191281

December 5, 2012

BEST WEAR GARMENTS and/or WARREN PARDILLA, Petitioners,

vs.
ADELAIDA B. DE LEMOS and CECILE M. OCUBILLO, Respondents.
DECISION
VILLARAMA, J.:
This is a petition for review on certiorari under Rule 45 assailing the Decision 1 dated February 24, 2009 and Resolution2 dated
February 10, 2010 of the Court of Appeals (CA) in CA-G.R. SP No. 102002. TheCA reversed the Decision 3 dated August 28, 2007 of the
National Labor Relations Commission (NLRC) and reinstated the September 5, 2005 Decision 4 of the Labor Arbiter.
Petitioner Best Wear Garments is a sole proprietorship represented by its General Manager Alex Sitosta. Respondents Cecile M.
Ocubillo and Adelaida B. De Lemos were hired as sewers on piece-rate basis by petitioners on October 27, 1993 andJuly 12, 1994,
respectively.
On May 20, 2004, De Lemos filed a complaint5 for illegal dismissal with prayer for backwages and other accrued benefits, separation
pay, service incentive leave pay and attorneys fees. A similar complaint 6 was filed by Ocubillo on June 10, 2004. Both alleged in their
position paper that in August 2003, Sitosta arbitrarily transferred them to other areas of operation of petitioners garments company,
which they said amounted to constructive dismissal as it resulted in less earnings for them.
De Lemos claimed that after two months in her new assignment, she was able to adjust but Sitosta again transferred her to a
"different operation where she could not earn [as] much as before because by-products require long period of time to finish." She
averred that the reason for her transfer was her refusal "to render [overtime work] up to 7:00 p.m." Her request to be returned to her

previous assignment was rejected and she was "constrained not to report for work as Sitosta had become indifferent to her since said
transfer of operation." She further alleged that her last salary was withheld by petitioner company. 7
On her part, Ocubillo alleged that her transfer was precipitated by her having "incurred excessive absences since 2001." Her
absences were due to the fact that her father became very sick since 2001 until his untimely demise on November 9, 2003; aside
from this, she herself became very sickly. She claimed that from September to October 2003, Sitosta assigned her to different
machines "whichever is available" and that "there were times, she could not earn for a day because there was no available machine
to work for [sic]." Sitosta also allegedly required her to render overtime work up to 7:00 p.m. which she refused "because she was
only paid up to 6:25 p.m."8
Petitioners denied having terminated the employment of respondents who supposedly committed numerous absences without leave
(AWOL). They claimed that sometime in February 2004, De Lemos informed Sitosta that due to personal problem, she intends to
resign from the company. She then demanded the payment of separation pay. In March 2004, Ocubillo likewise intimated her
intention to resign and demanded separation pay. Sitosta explained to both De Lemos and Ocubillo that the company had no existing
policy on granting separation pay, and hence he could not act on their request. De Lemos never reported back to work since March
2004, while Ocubillo failed to report for work from October 2004 to the present.
As to the allegation of respondents that the reason for their transfer was their refusal to render overtime work until 7:00 p.m.,
petitioners asserted that respondents are piece-rate workers and hence they are not paid according to the number of hours worked.
On September 5, 2005, Labor Arbiter Arden S. Anni rendered a Decision granting respondents claims, as follows:
WHEREFORE, ALL THE FOREGOING CONSIDERED, judgment is rendered, as follows:
1. Declaring that complainants were constructively, nay, illegally dismissed from employment;
2. Ordering respondents to pay each of the complainants SEPARATION PAY equivalent to one-month salary for every year of
service, a fraction of at least six (6) months being considered as one (1) whole year;
3. Ordering respondents to pay each of the complainants BACKWAGES computed from the time of their dismissal up to the
finality of this decision.
For this purpose, both parties are directed to submit their respective computations of the total amount awarded for approval by this
office.
All other claims are dismissed for lack of merit.
SO ORDERED.9
Labor Arbiter Anni ruled that since respondents neither resigned nor abandoned their jobs, the ambiguities in the circumstances
surrounding their dismissal are resolved in favor of the workers. It was emphasized that respondents could no longer be deemed
terminated for reason of AWOL because this prerogative should have been exercised before the dismissals have been effected.
Moreover, it would have been illogical for respondents to resign and then file a complaint for illegal dismissal.
Petitioners appealed to the NLRC which reversed the Labor Arbiters decision and dismissed respondents complaints. The NLRC found
no basis for the charge of constructive dismissal, thus:
Complainants alleged demotion is vague. They simply allege that by reason of their transfer in August 2003, they did not earn as
much as they earned in their previous assignments. They failed to state how much they earned before and after their transfer, if only
to determine whether or not there was indeed a diminution in their earnings. Further, it is to be stressed that complainants were paid
on a piece rate basis, which simply means that the more output, they produced the more earnings they will have. In other words, the
earning is dependent upon complainants.
We find more credible respondents assertion that complainants transfer was a valid exercise of management prerogative.
Respondent company points out that it is engaged in the business of garments manufacturing as a sub-contractor. That, the kind of
work it performs is dependent into with its client which specifies the work it has to perform. And, that corollary
thereto, the work to be performed by its employees will depend on the work specifications in the contract. Thus, if
complainants have been assigned to different operations, it was pursuant to the requirements of its contracts. x x x.
In furtherance of their defense that complainants were not dismissed, either actual or constructive in August 2003, respondents
allege that complainants continued to report for work until February 2004 for complainant De Lemos and August 2004 for
complainant Ocubillo. We lend credence to this allegation of respondents because it remains unrebutted by complainants.
It is to be noted that it was only [on] May 20, 2004 and June 10, 2004 that the instant consolidated cases were filed by
complainant De Lemos and Ocubillo, respectively. It may not be amiss to state that the date of filing jibe with respondents allegation
that sometime in February and March 2004, complainants intimated their intention to resign and demanded for payment of
separation pay but was not favorably acted upon by management.

Be that as it may, considering that complainants were not dismissed by respondents, they should be ordered to report back to work
without backwages and for the respondents to accept them.
WHEREFORE, premises considered, the Decision dated September 5, 2005 is hereby SET ASIDE and a new one entered dismissing
complainants charge of illegal dismissal for lack of merit. However, there being no dismissal, complainants Adelaida B. De Lemos and
Cecile M. Ocubillo are hereby directed to report back to work without backwages within ten (10) days from receipt of this Resolution
and for the respondent Company to accept them under the same terms and conditions at the time of their employment.
SO ORDERED.10 (Italics in the original; emphasis supplied)
Respondents filed a motion for reconsideration which the NLRC denied. Thus, they elevated the case to the CA alleging grave abuse
of discretion on the part of the NLRC.
By Decision dated February 24, 2009, the CA granted the petition for certiorari, reversed the ruling of the NLRC and reinstated the
Labor Arbiters decision with modification that the service incentive leave pay shall be excluded in the computation of the monetary
award. The CA found no valid and legitimate business reason for the transfer order which entailed the reduction of respondents
earnings. Because respondents plea to be returned to their former posts was not heeded by petitioners, no other conclusion "is
discernible from the attendant circumstances except the fact that [respondents] transfer was unreasonable, inconvenient and
prejudicial to them which [is] tantamount to a constructive dismissal." 11 Moreover, the unauthorized absences of respondents did not
warrant a finding of abandonment in view of the length of their service with petitioner company and the difficulty in finding similar
employment. The CA further invoked the rule that an employee who forthwith takes steps to protest his layoff cannot by any logic be
said to have abandoned his work.
Petitioners filed a motion for partial reconsideration which was denied by the CA.
Hence, this petition alleging that the CA has glaringly overlooked and clearly erred in its findings of fact and in applying the law on
constructive dismissal.
At the outset, it must bestated that the main issue in this case involves a question of fact. It is an established rule that the jurisdiction
of the Supreme Court in cases brought before it from the CA via Rule 45 of the 1997 Rules of Civil Procedure is generally limited to
reviewing errors of law. This Court is not a trier of facts. In the exercise of its power of review, the findings of fact of the CA are
conclusive and binding and consequently, it is not our function to analyze or weigh evidence all over again. 12
There are, however, recognized exceptions13 to this rule such as when there is a divergence between the findings of facts of the NLRC
and that of the CA.14 In this case, the CAs findings are contrary to those of the NLRC. There is, therefore, a need to review the records
to determine which of them should be preferred as more conformable to evidentiary facts. 15
The right of employees to security of tenure does not give them vested rights to their positions to the extent of depriving
management of its prerogative to change their assignments or to transfer them. Thus, an employer may transfer or assign employees
from one office or area of operation to another, provided there is no demotion in rank or diminution of salary, benefits, and other
privileges, and the action is not motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion
without sufficient cause.16
In Blue Dairy Corporation v. NLRC,17 we held that:
x x x. The managerial prerogative to transfer personnel must be exercised without grave abuse of discretion, bearing in mind the
basic elements of justice and fair play. Having the right should not be confused with the manner in which that right is exercised. Thus,
it cannot be used as a subterfuge by the employer to rid himself of an undesirable worker. In particular, the employer must be able to
show that the transfer is not unreasonable, inconvenient or prejudicial to the employee; nor does it involve a demotion in rank or a
diminution of his salaries, privileges and other benefits. Should the employer fail to overcome this burden of proof, the employees
transfer shall be tantamount to constructive dismissal, which has been defined as a quitting because continued employment is
rendered impossible, unreasonable or unlikely; as an offer involving a demotion in rank and diminution in pay. Likewise, constructive
dismissal exists when an act of clear discrimination, insensibility or disdain by an employer has become so unbearable to the
employee leaving him with no option but to forego with his continued employment. 18
With the foregoing as guidepost, we hold that the CA erred in reversing the NLRCs ruling that respondents were not constructively
dismissed.
Being piece-rate workers assigned to individual sewing machines, respondents earnings depended on the quality and quantity of
finished products. That their work output might have been affected by the change in their specific work assignments does not
necessarily implythat any resultingreduction in payis tantamount to constructive dismissal. Workers under piece-rate employment
have no fixed salaries and their compensation is computed on the basis of accomplished tasks. As admitted by respondent De Lemos,
some garments or by-products took a longer time to finish so they could not earn as much as before. Also,the type of sewing jobs
available would depend on the specifications made by the clients of petitioner company. Under these circumstances, it cannot be said
that the transfer was unreasonable, inconvenient or prejudicial to the respondents. Such deployment of sewers to work on different
types of garments as dictated by present business necessity is within the ambit of management prerogative which, in the absence of
bad faith, ill motive or discrimination, should not be interfered with by the courts.
The records are bereft of any showing of clear discrimination, insensibility or disdain on the part of petitioners in transferring
respondents to perform a different type of sewing job.It is unfair to charge petitioners with constructive dismissal simply because the

respondents insist that their transfer to a new work assignment was against their will. We have long stated that "the objection to the
transfer being grounded on solely upon the personal inconvenience or hardship that will be caused to the employee by reason of the
transfer is not a valid reason to disobey an order of transfer." 19 That respondents eventually discontinued reporting for work after their
plea to be returned to their former work assignment was their personal decision, for which the petitioners should not be held liable
particularly as the latter did not, in fact, dismiss them.
Indeed, there was no evidence that respondents were dismissed from employment.1wphi1 In fact, petitioners expressed willingness
to accept them back to work. There being no termination of employment by the employer, the award of backwages cannot be
sustained. It is well settled that backwages may be granted only when there is a finding of illegal dismissal. 20 In cases where there is
no evidence of dismissal, the remedy is reinstatement but without backwages. 21
The constitutional policy of providing full protection to labor is not intended to oppress or destroy management. 22While the
Constitution is committed to the policy of social justice and the protection of the working class, it should not be supposed that every
labor dispute will be automatically decided in favor of labor. Management also has its rights which are entitled to respect and
enforcement in the interest of simple fair play. 23 Thus, where management prerogative to transfer employees is validly exercised, as
in this case, courts will decline to interfere.
WHEREFORE, the petition for review on certiorari is GRANTED. The Decision dated February 24, 2009 and Resolution dated
February 10, 2010 of the Court of Appeals in CA-G.R. SP No. 102002 are SET ASIDE. The Decision dated August 28, 2007 of the
National Labor Relations Commission is hereby REINSTATED and UPHELD.
No pronouncement as to costs.
SO ORDERED.

G.R. No. 153511

July 18, 2012

LEGEND HOTEL (MANILA), owned by TITANIUM CORPORATION, and/or, NELSON NAPUD, in his capacity as the President
of Petitioner Corporation, Petitioner,
vs.
HERNANI S. REALUYO, also known as JOEY ROA, Respondent.
DECISION
BERSAMIN, J.:
This labor case for illegal dismissal involves a pianist employed to perform in the restaurant of a hotel. On August 9, 1999,
respondent, whose stage name was Joey R. Roa, filed a complaint for alleged unfair labor practice, constructive illegal dismissal, and
the underpayment/nonpayment of his premium pay for holidays, separation pay, service incentive leave pay, and 13111 month pay.
He prayed for attorney's fees, moral damages off P100,000.00 and exemplary damages for P100,000.00. 1
Respondent averred that he had worked as a pianist at the Legend Hotels Tanglaw Restaurant from September 1992 with an initial
rate of P400.00/night that was given to him after each nights performance; that his rate had increased to P750.00/night; and that
during his employment, he could not choose the time of performance, which had been fixed from 7:00 pm to 10:00 pm for three to six
times/week. He added that the Legend Hotels restaurant manager had required him to conform with the venues motif; that he had
been subjected to the rules on employees representation checks and chits, a privilege granted to other employees; that on July 9,
1999, the management had notified him that as a cost-cutting measure his services as a pianist would no longer be required effective
July 30, 1999; that he disputed the excuse, insisting that Legend Hotel had been lucratively operating as of the filing of his complaint;
and that the loss of his employment made him bring his complaint. 2
In its defense, petitioner denied the existence of an employer-employee relationship with respondent, insisting that he had been only
a talent engaged to provide live music at Legend Hotels Madison Coffee Shop for three hours/day on two days each week; and stated
that the economic crisis that had hit the country constrained management to dispense with his services.
On December 29, 1999, the Labor Arbiter (LA) dismissed the complaint for lack of merit upon finding that the parties had no
employer-employee relationship.3 The LA explained thusly:
xxx
On the pivotal issue of whether or not there existed an employer-employee relationship between the parties, our finding is in the
negative. The finding finds support in the service contract dated September 1, 1992 xxx.
xxx
Even if we grant the initial non-existence of the service contract, as complainant suggests in his reply (third paragraph, page 4), the
picture would not change because of the admission by complainant in his letter dated October 8, 1996 (Annex "C") that what he was
receiving was talent fee and not salary.

This is reinforced by the undisputed fact that complainant received his talent fee nightly, unlike the regular employees of the hotel
who are paid by monthly xxx.
xxx
And thus, absent the power to control with respect to the means and methods by which his work was to be accomplished, there is no
employer-employee relationship between the parties xxx.
xxx
WHEREFORE, this case must be, as it is hereby, DISMISSED for lack of merit.
SO ORDERED.4
Respondent appealed, but the National Labor Relations Commission (NLRC) affirmed the LA on May 31, 2001. 5
Respondent assailed the decision of the NLRC in the Court of Appeals (CA) on certiorari.
On February 11, 2002, the CA set aside the decision of the NLRC,6 holding:
xxx
Applying the above-enumerated elements of the employee-employer relationship in this case, the question to be asked is, are those
elements present in this case?
The answer to this question is in the affirmative.
xxx
Well settled is the rule that of the four (4) elements of employer-employee relationship, it is the power of control that is more
decisive.
In this regard, public respondent failed to take into consideration that in petitioners line of work, he was supervised and controlled by
respondents restaurant manager who at certain times would require him to perform only tagalog songs or music, or wear barong
tagalog to conform with Filipiniana motif of the place and the time of his performance is fixed by the respondents from 7:00 pm to
10:00 pm, three to six times a week. Petitioner could not choose the time of his performance. xxx.
As to the status of petitioner, he is considered a regular employee of private respondents since the job of the petitioner was in
furtherance of the restaurant business of respondent hotel. Granting that petitioner was initially a contractual employee, by the sheer
length of service he had rendered for private respondents, he had been converted into a regular employee xxx.
xxx
xxx In other words, the dismissal was due to retrenchment in order to avoid or minimize business losses, which is recognized by law
under Article 283 of the Labor Code, xxx.
xxx
WHEREFORE, foregoing premises considered, this petition is GRANTED. xxx. 7
Issues
In this appeal, petitioner contends that the CA erred:
I. XXX WHEN IT RULED THAT THERE IS THE EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE PETITIONER
HOTEL AND RESPONDENT ROA.
II. XXX IN FINDING THAT ROA IS A REGULAR EMPLOYEE AND THAT THE TERMINATION OF HIS SERVICES WAS ILLEGAL. THE CA
LIKEWISE ERRED WHEN IT DECLARED THE REINSTATEMENT OF ROA TO HIS FORMER POSITION OR BE GIVEN A SEPARATION
PAY EQUIVALENT TO ONE MONTH FOR EVERY YEAR OF SERVICE FROM SEPTEMBER 1999 UNTIL JULY 30, 1999 CONSIDERING
THE ABSENCE OF AN EMPLOYMENT RELATIONSHIP BETWEEN THE PARTIES.
III. XXX WHEN IT DECLARED THAT ROA IS ENTITLED TO BACKWAGES, SERVICE INCENTIVE LEAVE AND OTHER BENEFITS
CONSIDERING THAT THERE IS NO EMPLOYER EMPLOYEE RELATIONSHIP BETWEEN THE PARTIES.

IV. XXX WHEN IT NULLIFIED THE DECISION DATED MAY 31, 2001 IN NLRC NCR CA NO. 023404-2000 OF THE NLRC AS WELL AS
ITS RESOLUTION DATED JUNE 29, 2001 IN FAVOR OF HEREIN PETITIONER HOTEL WHEN HEREIN RESPONDENT ROA FAILED TO
SHOW PROOF THAT THE NLRC AND THE LABOR ARBITER HAVE COMMITTED GRAVE ABUSE OF DISCRETION OR LACK OF
JURISDICTION IN THEIR RESPECTIVE DECISIONS.
V. XXX WHEN IT OVERLOOKED THE FACT THAT THE PETITION WHICH ROA FILED IS IMPROPER SINCE IT RAISED QUESTIONS OF
FACT.
VI. XXX WHEN IT GAVE DUE COURSE TO THE PETITION FILED BY ROA WHEN IT IS CLEARLY IMPROPER AND SHOULD HAVE
BEEN DISMISSED OUTRIGHT CONSIDERING THAT A PETITION FOR CERTIORARI UNDER RULE 65 IS LIMITED ONLY TO
QUESTIONS OR ISSUES OF GRAVE ABUSE OF DISCRETION OR LACK OF JURISDICTION COMMITTED BY THE NLRC OR THE
LABOR ARBITER, WHICH ISSUES ARE NOT PRESENT IN THE CASE AT BAR.
The assigned errors are divided into the procedural issue of whether or not the petition for certiorari filed in the CA was the proper
recourse; and into two substantive issues, namely: (a) whether or not respondent was an employee of petitioner; and (b) if
respondent was petitioners employee, whether he was validly terminated.
Ruling
The appeal fails.
Procedural Issue:
Certiorari was a proper recourse
Petitioner contends that respondents petition for certiorari was improper as a remedy against the NLRC due to its raising mainly
questions of fact and because it did not demonstrate that the NLRC was guilty of grave abuse of discretion.
The contention is unwarranted. There is no longer any doubt that a petition for certiorari brought to assail the decision of the NLRC
may raise factual issues, and the CA may then review the decision of the NLRC and pass upon such factual issues in the process. 8 The
power of the CA to review factual issues in the exercise of its original jurisdiction to issue writs of certiorari is based on Section 9 of
Batas Pambansa Blg. 129, which pertinently provides that the CA "shall have the power to try cases and conduct hearings, receive
evidence and perform any and all acts necessary to resolve factual issues raised in cases falling within its original and appellate
jurisdiction, including the power to grant and conduct new trials or further proceedings."
Substantive Issue No. 1:
Employer-employee relationship existed between the parties
We next ascertain if the CA correctly found that an employer-employee relationship existed between the parties.
The issue of whether or not an employer-employee relationship existed between petitioner and respondent is essentially a question of
fact.9 The factors that determine the issue include who has the power to select the employee, who pays the employees wages, who
has the power to dismiss the employee, and who exercises control of the methods and results by which the work of the employee is
accomplished.10 Although no particular form of evidence is required to prove the existence of the relationship, and any competent and
relevant evidence to prove the relationship may be admitted, 11 a finding that the relationship exists must nonetheless rest on
substantial evidence, which is that amount of relevant evidence that a reasonable mind might accept as adequate to justify a
conclusion.12
Generally, the Court does not review factual questions, primarily because the Court is not a trier of facts. However, where, like here,
there is a conflict between the factual findings of the Labor Arbiter and the NLRC, on the one hand, and those of the CA, on the other
hand, it becomes proper for the Court, in the exercise of its equity jurisdiction, to review and re-evaluate the factual issues and to
look into the records of the case and re-examine the questioned findings. 13
A review of the circumstances reveals that respondent was, indeed, petitioners employee. He was undeniably employed as a pianist
in petitioners Madison Coffee Shop/Tanglaw Restaurant from September 1992 until his services were terminated on July 9, 1999.
First of all, petitioner actually wielded the power of selection at the time it entered into the service contract dated September 1, 1992
with respondent. This is true, notwithstanding petitioners insistence that respondent had only offered his services to provide live
music at petitioners Tanglaw Restaurant, and despite petitioners position that what had really transpired was a negotiation of his
rate and time of availability. The power of selection was firmly evidenced by, among others, the express written recommendation
dated January 12, 1998 by Christine Velazco, petitioners restaurant manager, for the increase of his remuneration. 14
Petitioner could not seek refuge behind the service contract entered into with respondent. It is the law that defines and governs an
employment relationship, whose terms are not restricted to those fixed in the written contract, for other factors, like the nature of the
work the employee has been called upon to perform, are also considered. The law affords protection to an employee, and does not
countenance any attempt to subvert its spirit and intent. Any stipulation in writing can be ignored when the employer utilizes the

stipulation to deprive the employee of his security of tenure. The inequality that characterizes employer-employee relations generally
tips the scales in favor of the employer, such that the employee is often scarcely provided real and better options. 15
Secondly, petitioner argues that whatever remuneration was given to respondent were only his talent fees that were not included in
the definition of wage under the Labor Code; and that such talent fees were but the consideration for the service contract entered
into between them.
The argument is baseless.
Respondent was paid P400.00 per three hours of performance from 7:00 pm to 10:00 pm, three to six nights a week. Such rate of
remuneration was later increased to P750.00 upon restaurant manager Velazcos recommendation. There is no denying that the
remuneration denominated as talent fees was fixed on the basis of his talent and skill and the quality of the music he played during
the hours of performance each night, taking into account the prevailing rate for similar talents in the entertainment industry. 16
Respondents remuneration, albeit denominated as talent fees, was still considered as included in the term wage in the sense and
context of the Labor Code, regardless of how petitioner chose to designate the remuneration. Anent this, Article 97(f) of the Labor
Code clearly states:
xxx wage paid to any employee shall mean the remuneration or earnings, however designated, capable of being expressed in terms
of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is
payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for
services rendered or to be rendered, and includes the fair and reasonable value, as determined by the Secretary of Labor, of board,
lodging, or other facilities customarily furnished by the employer to the employee.
Clearly, respondent received compensation for the services he rendered as a pianist in petitioners hotel. Petitioner cannot use the
service contract to rid itself of the consequences of its employment of respondent. There is no denying that whatever amounts he
received for his performance, howsoever designated by petitioner, were his wages.
It is notable that under the Rules Implementing the Labor Code and as held in Tan v. Lagrama, 17 every employer is required to pay his
employees by means of a payroll, which should show in each case, among others, the employees rate of pay, deductions made from
such pay, and the amounts actually paid to the employee. Yet, petitioner did not present the payroll of its employees to bolster its
insistence of respondent not being its employee.
That respondent worked for less than eight hours/day was of no consequence and did not detract from the CAs finding on the
existence of the employer-employee relationship. In providing that the " normal hours of work of any employee shall not exceed eight
(8) hours a day," Article 83 of the Labor Code only set a maximum of number of hours as "normal hours of work" but did not prohibit
work of less than eight hours.
Thirdly, the power of the employer to control the work of the employee is considered the most significant determinant of the
existence of an employer-employee relationship.18 This is the so-called control test, and is premised on whether the person for whom
the services are performed reserves the right to control both the end achieved and the manner and means used to achieve that
end.19
Petitioner submits that it did not exercise the power of control over respondent and cites the following to buttress its submission,
namely: (a) respondent could beg off from his nightly performances in the restaurant for other engagements; (b) he had the sole
prerogative to play and perform any musical arrangements that he wished; (c) although petitioner, through its manager, required him
to play at certain times a particular music or song, the music, songs, or arrangements, including the beat or tempo, were under his
discretion, control and direction; (d) the requirement for him to wear barong Tagalog to conform with the Filipiniana motif of the venue
whenever he performed was by no means evidence of control; (e) petitioner could not require him to do any other work in the
restaurant or to play the piano in any other places, areas, or establishments, whether or not owned or operated by petitioner, during
the three hour period from 7:00 pm to 10:00 pm, three to six times a week; and (f) respondent could not be required to sing, dance or
play another musical instrument.
A review of the records shows, however, that respondent performed his work as a pianist under petitioners supervision and control.
Specifically, petitioners control of both the end achieved and the manner and means used to achieve that end was demonstrated by
the following, to wit:
a. He could not choose the time of his performance, which petitioners had fixed from 7:00 pm to 10:00 pm, three to six times
a week;
b. He could not choose the place of his performance;
c. The restaurants manager required him at certain times to perform only Tagalog songs or music, or to wear barong Tagalog
to conform to the Filipiniana motif; and
d. He was subjected to the rules on employees representation check and chits, a privilege granted to other employees.
Relevantly, it is worth remembering that the employer need not actually supervise the performance of duties by the employee, for it
sufficed that the employer has the right to wield that power.

Lastly, petitioner claims that it had no power to dismiss respondent due to his not being even subject to its Code of Discipline, and
that the power to terminate the working relationship was mutually vested in the parties, in that either party might terminate at will,
with or without cause.
The claim is contrary to the records. Indeed, the memorandum informing respondent of the discontinuance of his service because of
the present business or financial condition of petitioner20 showed that the latter had the power to dismiss him from employment. 21
Substantive Issue No. 2:
Validity of the Termination
Having established that respondent was an employee whom petitioner terminated to prevent losses, the conclusion that his
termination was by reason of retrenchment due to an authorized cause under the Labor Code is inevitable.
Retrenchment is one of the authorized causes for the dismissal of employees recognized by the Labor Code. It is a management
prerogative resorted to by employers to avoid or to minimize business losses. On this matter, Article 283 of the Labor Code states:
Article 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of any
employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of
operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by
serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date
thereof. xxx. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or
undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at
least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered
one (1) whole year.
The Court has laid down the following standards that an employer should meet to justify retrenchment and to foil abuse, namely:
(a) The expected losses should be substantial and not merely de minimis in extent;
(b) The substantial losses apprehended must be reasonably imminent;
(c) The retrenchment must be reasonably necessary and likely to effectively prevent the expected losses; and
(d) The alleged losses, if already incurred, and the expected imminent losses sought to be forestalled must be proved by
sufficient and convincing evidence.22
Anent the last standard of sufficient and convincing evidence, it ought to be pointed out that a less exacting standard of proof would
render too easy the abuse of retrenchment as a ground for termination of services of employees. 23
Was the retrenchment of respondent valid?
In termination cases, the burden of proving that the dismissal was for a valid or authorized cause rests upon the employer. Here,
petitioner did not submit evidence of the losses to its business operations and the economic havoc it would thereby imminently
sustain. It only claimed that respondents termination was due to its "present business/financial condition." This bare statement fell
short of the norm to show a valid retrenchment. Hence, we hold that there was no valid cause for the retrenchment of respondent.
Indeed, not every loss incurred or expected to be incurred by an employer can justify retrenchment.1wphi1 The employer must
prove, among others, that the losses are substantial and that the retrenchment is reasonably necessary to avert such losses. Thus, by
its failure to present sufficient and convincing evidence to prove that retrenchment was necessary, respondents termination due to
retrenchment is not allowed.
The Court realizes that the lapse of time since the retrenchment might have rendered respondent's reinstatement to his former job no
longer feasible. If that should be true, then petitioner should instead pay to him separation pay at the rate of one. month pay for
every year of service computed from September 1992 (when he commenced to work for the petitioners) until the finality of this
decision, and full backwages from the time his compensation was withheld until the finality of this decision.
WHEREFORE, we DENY the petition for review on certiorari, and AFFIRM the decision of the Court of Appeals promulgated on February
11, 2002, subject to the modification that should reinstatement be no longer feasible, petitioner shall pay to respondent separation
pay of one month for every year of service computed from September 1992 until the finality of this decision, and full backwages from
the time his compensation was withheld until the finality of this decision.
Costs of suit to be paid by the petitioners.
SO ORDERED.