G.R. No.

185556

March 28, 2011

SUPREME STEEL CORPORATION, Petitioner,

vs.
NAGKAKAISANG MANGGAGAWA NG SUPREME INDEPENDENT UNION (NMS-INDAPL), Respondent.
DECISION
NACHURA, J.:
This petition for review on certiorari assails the Court of Appeals (CA) Decision 1 dated
September 30, 2008, and Resolution dated December 4, 2008, which affirmed the finding of
the National Labor Relations Commission (NLRC) that petitioner violated certain provisions
of the Collective Bargaining Agreement (CBA).
Petitioner Supreme Steel Pipe Corporation is a domestic corporation engaged in the
business of manufacturing steel pipes for domestic and foreign markets. Respondent
Nagkakaisang Manggagawa ng Supreme Independent Union is the certified bargaining
agent of petitioners rank-and-file employees. The CBA2 in question was executed by the
parties to cover the period from June 1, 2003 to May 31, 2008.
The Case
On July 27, 2005, respondent filed a notice of strike with the National Conciliation and
Mediation Board (NCMB) on the ground that petitioner violated certain provisions of the CBA.
The parties failed to settle their dispute. Consequently, the Secretary of Labor certified the
case to the NLRC for compulsory arbitration pursuant to Article 263(g) of the Labor Code.
Respondent alleged eleven CBA violations, delineated as follows:
A. Denial to four employees of the CBA- provided wage increase
Article XII, Section 1 of the CBA provides:
Section 1. The COMPANY shall grant a general wage increase, over and above to all
employees, according to the following schedule:
A. Effective June 1, 2003 P14.00 per working day;
B. Effective June 1, 2004 P12.00 per working day; and
C. Effective June 1, 2005 P12.00 per working day.3
Respondent alleged that petitioner has repeatedly denied the annual CBA increases to at
least four individuals: Juan Nio, Reynaldo Acosta, Rommel Talavera, and Eddie Dalagon.
According to respondent, petitioner gives an anniversary increase to its employees upon
reaching their first year of employment. The four employees received their respective
anniversary increases and petitioner used such anniversary increase to justify the denial of
their CBA increase for the year.4

Petitioner explained that it has been the companys long standing practice that upon
reaching one year of service, a wage adjustment is granted, and, once wages are adjusted,
the increase provided for in the CBA for that year is no longer implemented. Petitioner
claimed that this practice was not objected to by respondent as evidenced by the employees
pay slips.5
Respondent countered that petitioner failed to prove that, as a matter of company practice,
the anniversary increase took the place of the CBA increase. It contended that all employees
should receive the CBA stipulated increase for the years 2003 to 2005. 6
B. Contracting-out labor
Article II, Section 6 of the CBA provides:
Section 6. Prohibition of Contracting Out of Work of Members of Bargaining Unit. Thirty (30)
days from the signing of this CBA, contractual employees in all departments, except
Warehouse and Packing Section, shall be phased out. Those contractual employees who
are presently in the workforce of the COMPANY shall no longer be allowed to work after the
expiration of their contracts without prejudice to being hired as probationary employees of
the COMPANY.7
Respondent claimed that, contrary to this provision, petitioner hired temporary workers for
five months based on uniformly worded employment contracts, renewable for five months,
and assigned them to almost all of the
departments in the company. It pointed out that, under the CBA, temporary workers are
allowed only in the Warehouse and Packing Section; consequently, employment of
contractual employees outside this section, whether direct or agency-hired, was absolutely
prohibited. Worse, petitioner never regularized them even if the position they occupied and
the services they performed were necessary and desirable to its business. Upon the
expiration of their contracts, these workers would be replaced with other workers with the
same employment status. This scheme is a clear circumvention of the laws on regular
employment. 8
Respondent argued that the right to self-organization goes beyond the maintenance of union
membership. It emphasized that the CBA maintains a union shop clause which gives the
regular employees 30 days within which to join respondent as a condition for their continued
employment. Respondent maintained that petitioners persistent refusal to grant regular
status to its employees, such as Dindo Buella, who is assigned in the Galvanizing
Department, violates the employees right to self-organization in two ways: (1) they are
deprived of a representative for collective bargaining purposes; and (2) respondent is
deprived the right to expand its membership. Respondent contended that a unions strength
lies in its number, which becomes crucial especially during negotiations; after all, an
employer will not bargain seriously with a union whose membership constitutes a minority of
the total workforce of the company. According to respondent, out of the 500 employees of the
company, only 147 are union members, and at least 60 employees would have been eligible
for union membership had they been recognized as regular employees. 9
For its part, petitioner admitted that it hired temporary workers. It purportedly did so to cope
with the seasonal increase of the job orders from abroad. In order to comply with the job
orders, petitioner hired the temporary workers to help the regular workers in the production
of steel pipes. Petitioner maintained that these workers do not affect respondents

membership. Petitioner claimed that it agreed to terminate these temporary employees on

the condition that the regular employees would have to perform the work that these
employees were performing, but respondent refused. Respondents refusal allegedly proved
that petitioner was not contracting out the services being performed by union members.
Finally, petitioner insisted that the hiring of temporary workers is a management
prerogative.10
C. Failure to provide shuttle service
Petitioner has allegedly reneged on its obligation to provide shuttle service for its employees
pursuant to Article XIV, Section 7 of the CBA, which provides:
Section 7. Shuttle Service. As per company practice, once the company vehicle used for the
purpose has been reconditioned.11
Respondent claimed that the company vehicle which would be used as shuttle service for its
employees has not been reconditioned by petitioner since the signing of the CBA on
February 26, 2004.12 Petitioner explained that it is difficult to implement this provision and
simply denied that it has reneged on its obligation. 13
D. Refusal to answer for the medical expenses incurred by three employees
Respondent asserted that petitioner is liable for the expenses incurred by three employees
who were injured while in the company premises. This liability allegedly stems from Article
VIII, Section 4 of the CBA which provides:
Section 4. The COMPANY agrees to provide first aid medicine and first aid service and
consultation free of charge to all its employees.14
According to respondent, petitioners definition of what constitutes first aid service is limited
to the bare minimum of treating injured employees while still within the company premises
and referring the injured employee to the Chinese General Hospital for treatment, but the
travel expense in going to the hospital is charged to the employee. Thus, when Alberto
Guevarra and Job Canizares, union members, were injured, they had to pay P90.00 each for
transportation expenses in going to the hospital for treatment and going back to the company
thereafter. In the case of Rodrigo Solitario, petitioner did not even shoulder the cost of the
first aid medicine, amounting to P2,113.00, even if he was injured during the company
sportsfest, but the amount was deducted, instead, from his salary. Respondent insisted that
this violates the above cited provision of the CBA.15
Petitioner insisted that it provided medicine and first aid assistance to Rodrigo Solitario. It
alleged that the latter cannot claim hospitalization benefits under Article VIII, Section 1 16 of
the CBA because he was not confined in a hospital. 17
1avvphi1

E. Failure to comply with the time-off with pay provision

Article II, Section 8 of the CBA provides:
Section 8. Time-Off with Pay. The COMPANY shall grant to the UNIONs duly authorized
representative/s or to any employee who are on duty, if summoned by the UNION to testify, if
his/her presence is necessary, a paid time-off for the handling of grievances, cases,

investigations, labor-management conferences provided that if the venue of the case is

outside Company premises involving [the] implementation and interpretation of the CBA, two
(2) representatives of the UNION who will attend the said hearing shall be considered timeoff with pay. If an employee on a night shift attends grievance on labor-related cases and
could not report for work due to physical condition, he may avail of union leave without need
of the two (2) days prior notice.18
Respondent contended that under the said provision, petitioner was obliged to grant a paid
time-off to respondents duly authorized representative or to any employee who was on duty,
when summoned by respondent to testify or when the employees presence was necessary
in the grievance hearings, meetings, or investigations.19
Petitioner admitted that it did not honor the claim for wages of the union officers who
attended the grievance meetings because these meetings were initiated by respondent itself.
It argued that since the union officers
were performing their functions as such, and not as employees of the company, the latter
should not be liable. Petitioner further asserted that it is not liable to pay the wages of the
union officers when the meetings are held beyond company time (3:00 p.m.). It claimed that
time-off with pay is allowed only if the venue of the meeting is outside company premises
and the meeting involves the implementation and interpretation of the CBA. 20
In reply, respondent averred that the above quoted provision does not make a qualification
that the meetings should be held during office hours (7:00 a.m. to 3:00 p.m.); hence, for as
long as the presence of the employee is needed, time spent during the grievance meeting
should be paid.21
F. Visitors free access to company premises Respondent charged petitioner with violation of
Article II, Section 7 of the CBA which provides:
Section 7. Free Access to Company Premises. Local Union and Federation officers (subject
to companys security measure) shall be allowed during working hours to enter the
COMPANY premises for the following reasons:
a. To investigate grievances that have arisen;
b. To interview Union Officers, Stewards and members during reasonable hours; and
c. To attend to any meeting called by the Management or the UNION.22
G. Failure to comply with reporting time-off provision
Respondent maintained that a brownout is covered by Article XII, Section 3 of the CBA which
states:
Section 3. Reporting Time-Off. The employees who have reported for work but are unable to
continue working because of emergencies such as typhoons, flood, earthquake,
transportation strike, where the COMPANY is affected and in case of fire which occurs in the
block where the home of the employee is situated and not just across the street and serious
illness of an immediate member of the family of the employee living with him/her and no one
in the house can bring the sick family member to the hospital, shall be paid as follows:

a. At least half day if the work stoppage occurs within the first four (4) hours of work;
and
b. A whole day if the work stoppage occurs after four (4) hours of work.23
Respondent averred that petitioner paid the employees salaries for one hour only of the
four-hour brownout that occurred on July 25, 2005 and refused to pay for the remaining three
hours. In defense, petitioner simply insisted that brownouts are not included in the above list
of emergencies.24
Respondent rejoined that, under the principle of ejusdem generis, brownouts or power
outages come within the "emergencies" contemplated by the CBA provision. Although
brownouts were not specifically identified as one of the emergencies listed in the said CBA
provision, it cannot be denied that brownouts fall within the same kind or class of the
enumerated emergencies. Respondent maintained that the intention of the provision was to
compensate the employees for occurrences which are beyond their control, and power
outage is one of such occurrences. It insisted that the list of emergencies is not an
exhaustive list but merely gives an idea as to what constitutes an actual emergency that is
beyond the control of the employee.25
H. Dismissal of Diosdado Madayag
Diosdado Madayag was employed as welder by petitioner. He was served a Notice of
Termination dated March 14, 2005 which read:
Please consider this as a Notice of Termination of employment effective March 14, 2005
under Art. 284 of the Labor Code and its Implementing Rules.
This is based on the medical certificate submitted by your attending physician, Lucy Anne E.
Mamba, M.D., Jose R. Reyes Memorial Medical Center dated March 7, 2005 with the
following diagnosis:
Diabetes Mellitus Type 2
Please be guided accordingly.26
Respondent contended that Madayags dismissal from employment is illegal because
petitioner failed to obtain a certification from a competent public authority that his disease is
of such nature or at such stage that it cannot be cured within six months even after proper
medical treatment. Petitioner also failed to prove that Madayags continued employment was
prejudicial to his health or that of his colleagues.27
Petitioner, on the other hand, alleged that Madayag was validly terminated under Art. 284 28 of
the Labor Code and that his leg was amputated by reason of diabetes, which disease is not
work-related. Petitioner claimed that it was willing to pay Madayag 13 days for every year of
service but respondent was asking for additional benefits.29
I. Denial of paternity leave benefit to two employees
Article XV, Section 2 of the CBA provides:

Section 2. Paternity Leave. As per law[,] [t]he Company shall, as much as possible, pay
paternity leave within 2 weeks from submission of documents.30
Petitioner admitted that it denied this benefit to the claimants for failure to observe the
requirement provided in the Implementing Rules and Regulations of Republic Act No. 8187
(Paternity Leave Act of 1995), that is, to notify the employer of the pregnancy of their wives
and the expected date of delivery.31
Respondent argued that petitioner is relying on technicalities by insisting that the denial was
due to the two employees failure to notify it of the pregnancy of their respective spouses. It
maintained that the notification requirement runs counter to the spirit of the law. Respondent
averred that, on grounds of social justice, the oversight to notify petitioner should not be
dealt with severely by denying the two claimants this benefit. 32
J. Discrimination and harassment
According to respondent, petitioner was contemptuous over union officers for protecting the
rights of union members. In an affidavit executed by Chito Guadaa, union secretary, he
narrated that Alfred Navarro, Officer-in-Charge of the Packing Department, had been harsh
in dealing with his fellow employees and would even challenge some workers to a fight. He
averred that Navarro had an overbearing attitude during work and grievance meetings. In
November 2004, Navarro removed Guadaa, a foreman, from his position and installed
another foreman from another section. The action was allegedly brought about by earlier
grievances against Navarros abuse. Petitioner confirmed his transfer to another section in
violation of Article VI, Section 6 of the CBA,33 which states in part:
Section 6. Transfer of Employment. No permanent positional transfer outside can be
effected by the COMPANY without discussing the grounds before the Grievance Committee.
All transfer shall be with advance notice of two (2) weeks. No transfer shall interfere with the
employees exercise of the right to self-organization. 34
Respondent also alleged that Ariel Marigondon, union president, was also penalized for
working for his fellow employees. One time, Marigondon inquired from management about
matters concerning tax discrepancies because it appeared that non-taxable items were
included as part of taxable income. Thereafter, Marigondon was transferred from one area of
operation to another until he was allegedly forced to accept menial jobs of putting control
tags on steel pipes, a kind of job which did not require his 16 years of expertise in examining
steel pipes.35
Edgardo Masangcay, respondents Second Vice President, executed an affidavit wherein he
cited three instances when his salary was withheld by petitioner. The first incident happened
on May 28, 2005 when petitioner refused to give his salary to his wife despite presentation of
a proof of identification (ID) and letter of authorization. On June 18, 2005, petitioner also
refused to release his salary to Pascual Lazaro despite submission of a letter of authority
and his ID and, as a result, he was unable to buy medicine for his child who was suffering
from asthma attack. The third instance happened on June 25, 2005 when his salary was
short of P450.00; this amount was however released the following week.36
Petitioner explained that the transfer of the employee from one department to another was
the result of downsizing the Warehouse Department, which is a valid exercise of
management prerogative. In Guadaas case, Navarro denied that he was being harsh but
claimed that he merely wanted to stress some points. Petitioner explained that Guadaa was

transferred when the section where he was assigned was phased out due to the installation
of new machines. Petitioner pointed out that the other workers assigned in said section were
also transferred.37
For the petitioner, Emmanuel Mendiola, Production Superintendent, also executed an
affidavit attesting that the allegation of Ariel Marigondon, that he was harassed and was a
victim of discrimination for being respondents President, had no basis. Marigondon pointed
out that after the job order was completed, he was reassigned to his original shift and
group.38
Petitioner also submitted the affidavits of Elizabeth Llaneta Aguilar, disbursement clerk and
hiring staff, and Romeo T. Sy, Assistant Personnel Manager. Aguilar explained that she did
not mean to harass Masangcay, but she merely wanted to make sure that he would receive
his salary. Affiant Sy admitted that he refused to release Masangcays salary to a woman
who presented herself as his (Masangcays) wife since nobody could attest to it. He claimed
that such is not an act of harassment but a precautionary measure to protect Masangcays
interest.39
K. Non-implementation of COLA in Wage Order Nos. RBIII-10 and 11
Respondent posited that any form of wage increase granted through the CBA should not be
treated as compliance with the wage increase given through the wage boards. Respondent
claimed that, for a number of years, petitioner has complied with Article XII, Section 2 of the
CBA which provides:
Section 2. All salary increase granted by the COMPANY shall not be credited to any future
contractual or legislated wage increases. Both increases shall be implemented separate and
distinct from the increases stated in this Agreement. It should be understood by both parties
that contractual salary increase are separate and distinct from legislated wage increases,
thus the increase brought by the latter shall be enjoyed also by all covered employees. 40
Respondent maintained that for every wage order that was issued in Region 3, petitioner
never hesitated to comply and grant a similar increase. Specifically, respondent cited
petitioners compliance with Wage Order No. RBIII-10 and grant of the mandated P15.00
cost of living allowance (COLA) to all its employees. Petitioner, however, stopped
implementing it to non-minimum wage earners on July 24, 2005. It contended that this
violates Article 100 of the Labor Code which prohibits the diminution of benefits already
enjoyed by the workers and that such grant of benefits had already ripened into a company
practice.41
Petitioner explained that the COLA provided under Wage Order No. RBIII-10 applies to
minimum wage earners only and that, by mistake, it implemented the same across the board
or to all its employees. After realizing its mistake, it stopped integrating the COLA to the basic
pay of the workers who were earning above the minimum wage.42
The NLRCs Ruling
Out of the eleven issues raised by respondent, eight were decided in its favor; two (denial of
paternity leave benefit and discrimination of union members) were decided in favor of
petitioner; while the issue on visitors free access to company premises was deemed settled
during the mandatory conference. The dispositive portion of the NLRC Decision dated March
30, 2007 reads:

WHEREFORE, Supreme Steel Pipe Corporation (the Company) is hereby ordered to:
1) implement general wage increase to Juan Nio, Eddie Dalagon and Rommel
Talavera pursuant to the CBA in June 2003, 2004 and 2005;
2) regularize workers Dindo Buella and 60 other workers and to respect CBA
provision on contracting-out labor;
3) recondition the company vehicle pursuant to the CBA;
4) answer for expenses involved in providing first aid services including
transportation expenses for this purpose, as well as to reimburse Rodrigo Solitario
the sum of P2,113.00;
5) pay wages of union members/officers who attended grievance meetings as
follows:
1) D. Serenilla

P115.24375

2) D. Miralpes

P115.80625

3) E. Mallari

P108.7625

4) C. Cruz

P114.65313

5) J. Patalbo

P161.0625

6) J.J. Muoz

P111.19375

7) C. Guadaa

P56.94375

8) J. Patalbo

P161.0625

9) E. Mallari

P108.7625

10) C. Guadaa

P113.8875

11) A. Marigondon

P170.30625

12) A. Marigondon

P181.66

13) A. Marigondon

P181.66

14) E. Masangcay

P175.75

15) A. Marigondon

P181.66

16) E. Masangcay

P175.75

17) A. Marigondon

P181.66

18) F. Servano

P174.02

19) R. Estrella

P181.50

20) A. Marigondon

P181.66

6) pay workers their salary for the 3 hours of the 4 hour brownout as follows:
1) Alagon, Jr., Pedro

P130.0875

2) Aliwalas, Cristeto

P108.5625

3) Baltazar, Roderick

P 90.1875

4) Baez, Oliver

P 90.9375

5) Prucal, Eduardo

P126.015

6) Calimquin, Rodillo

P131.0362

7) Clave, Arturo

P125.64

8) Cadavero, Rey

P108.5625

9) De Leon, Romulo

P124.35

10) Lactao, Noli

P126.015

11) Layco, Jr., Dandino

P130.5375

12) Legaspi, Melencio

P127.63

13) Quiachon, Rogelio

P130.5525

14) Sacmar, Roberto

P108.9375

15) Tagle, Farian

P129.3375

16) Villavicencio, Victor

P126.015

17) Agra, Romale

P126.015

18) Basabe, Luis

P128.5575

19) Bornasal, Joel

P127.53

20) Casitas, Santiago

P128.5575

21) Celajes, Bonifacio

P128.1825

22) Avenido, Jerry

P133.2487

23) Gagarin, Alfredo

P108.9375

24) Layson, Paulo

P131.745

25) Lledo, Asalem

P128.5575

26) Marigondon, Ariel

P131.745

27) Orcena, Sonnie

P126.015

28) Servano, Fernando

P126.015

29) Versola, Rodrigo

P126.015

7) reinstate Diosdado Madayag to his former position without loss of seniority rights
and to pay full backwages and other benefits from 14 March 2005, date of dismissal,
until the date of this Decision; if reinstatement is impossible[,] to pay separation pay
of one month pay for every year of service in addition to backwages;
8) dismiss the claim for paternity leave for failure of claimants to observe the
requirements;
9) dismiss the charge of harassment and discrimination for lack of merit; and to
10) continue to implement COLA under Wage Order Nos. [RBIII]-10 & 11 across the
board.
The issue on Visitors Free Access to Company Premises is dismissed for being moot and
academic after it was settled during the scheduled conferences.
SO ORDERED.43
Forthwith, petitioner elevated the case to the CA, reiterating its arguments on the eight
issues resolved by the NLRC in respondents favor.
The CAs Ruling
On September 30, 2008, the CA rendered a decision dismissing the petition, thus:
WHEREFORE, premises considered, the present petition is hereby DENIED DUE COURSE
and accordingly DISMISSED, for lack of merit. The assailed Decision dated March 30, 2007
and Resolution dated April 28, 2008 of the National Labor Relations Commission in NLRC
NCR CC No. 000305-05 are hereby AFFIRMED.
With costs against the petitioner.
SO ORDERED.44
According to the CA, petitioner failed to show that the NLRC committed grave abuse of
discretion in finding that it violated certain provisions of the CBA. The NLRC correctly held
that every employee is entitled to the wage increase under the CBA despite receipt of an
anniversary increase. The CA concluded that, based on the wording of the CBA, which uses
the words "general increase" and "over and above," it cannot be said that the parties have
intended the anniversary increase to be given in lieu of the CBA wage increase. 45
The CA declared that the withdrawal of the COLA under Wage Order No. RBIII-10 from the
employees who were not minimum wage earners amounted to a diminution of benefits
because such grant has already ripened into a company practice. It pointed out that there
was no ambiguity or doubt as to who were covered by the wage order. Petitioner, therefore,
may not invoke error or mistake in extending the COLA to all employees and such act can
only be construed as "as a voluntary act on the part of the employer."46 The CA opined that,

considering the foregoing, the ruling in Globe Mackay Cable and Radio Corp. v.
NLRC47 clearly did not apply as there was no doubtful or difficult question involved in the
present case.48
The CA sustained the NLRCs interpretation of Art. VIII, Section 4 of the CBA as including the
expenses for first aid medicine and transportation cost in going to the hospital. The CA
stressed that the CBA should be construed liberally rather than narrowly and technically, and
the courts must place a practical and realistic construction upon it, giving due consideration
to the context in which it was negotiated and the purpose which it intended to serve. 49
Based on the principle of liberal construction of the CBA, the CA likewise sustained the
NLRCs rulings on the issues pertaining to the shuttle service, time-off for attendance in
grievance meetings/hearings, and time-off due to brownouts.50
The CA further held that management prerogative is not unlimited: it is subject to limitations
found in law, a CBA, or the general principles of fair play and justice. It stressed that the CBA
provided such limitation on management prerogative to contract-out labor, and compliance
with the CBA is mandated by the express policy of the law.51
Finally, the CA affirmed the NLRCs finding that Madayags dismissal was illegal. It
emphasized that the burden to prove that the employees disease is of such nature or at
such stage that it cannot be cured within a period of six months rests on the employer.
Petitioner failed to submit a certification from a competent public authority attesting to such
fact; hence, Madayags dismissal is illegal.52
Petitioner moved for a reconsideration of the CAs decision. On December 4, 2008, the CA
denied the motion for lack of merit.53
Dissatisfied, petitioner filed this petition for review on certiorari, contending that the CA erred
in finding that it violated certain provisions of the CBA.
The Courts Ruling
The petition is partly meritorious.
It is a familiar and fundamental doctrine in labor law that the CBA is the law between the
parties and compliance therewith is mandated by the express policy of the law. If the terms of
a CBA are clear and there is no doubt as to the intention of the contracting parties, the literal
meaning of its stipulation shall prevail.54 Moreover, the CBA must be construed liberally rather
than narrowly and technically and the Court must place a practical and realistic construction
upon it.55 Any doubt in the interpretation of any law or provision affecting labor should be
resolved in favor of labor.56
Upon these well-established precepts, we sustain the CAs findings and conclusions on all
the issues, except the issue pertaining to the denial of the COLA under Wage Order No.
RBIII-10 and 11 to the employees who are not minimum wage earners.
The wording of the CBA on general wage increase cannot be interpreted any other way: The
CBA increase should be given to all employees "over and above" the amount they are
receiving, even if that amount already includes an anniversary increase. Stipulations in a
contract must be read together, not in isolation from one another.57Consideration of Article

XIII, Section 2 (non-crediting provision), bolsters such interpretation. Section 2 states that
"[a]ll salary increase granted by the company shall not be credited to any future contractual
or legislated wage increases." Clearly then, even if petitioner had already awarded an
anniversary increase to its employees, such increase cannot be credited to the "contractual"
increase as provided in the CBA, which is considered "separate and distinct."
Petitioner claims that it has been the company practice to offset the anniversary increase
with the CBA increase. It however failed to prove such material fact. Company practice, just
like any other fact, habits, customs, usage or patterns of conduct must be proven. The
offering party must allege and prove specific, repetitive conduct that might constitute
evidence of habit,58 or company practice. Evidently, the pay slips of the four employees do
not serve as sufficient proof.
Petitioners excuse in not providing a shuttle service to its employees is unacceptable. In
fact, it can hardly be considered as an excuse. Petitioner simply says that it is difficult to
implement the provision. It relies on the fact that "no time element [is] explicitly stated [in the
CBA] within which to fulfill the undertaking." We cannot allow petitioner to dillydally in
complying with its obligation and take undue advantage of the fact that no period is provided
in the CBA. Petitioner should recondition the company vehicle at once, lest it be charged
with and found guilty of unfair labor practice.
Petitioner gave a narrow construction to the wording of the CBA when it denied (a)
reimbursement for the first-aid medicines taken by Rodrigo Solitario when he was injured
during the company sportsfest and the transportation cost incurred by Alberto Guevara and
Job Canizares in going to the hospital, (b) payment of the wages of certain employees during
the time they spent at the grievance meetings, and (c) payment of the employees wages
during the brownout that occurred on July 25, 2002. As previously stated, the CBA must be
construed liberally rather than narrowly and technically. It is the duty of the courts to place a
practical and realistic construction upon the CBA, giving due consideration to the context in
which it is negotiated and the purpose which it is intended to serve. Absurd and illogical
interpretations should be avoided.59 A CBA, like any other contract, must be interpreted
according to the intention of the parties.60
The CA was correct in pointing out that the concerned employees were not seeking
hospitalization benefits under Article VIII, Section 1 of the CBA, but under Section 4 thereof;
hence, confinement in a hospital is not a prerequisite for the claim. Petitioner should
reimburse Solitario for the first aid medicines; after all, it is the duty of the employer to
maintain first- aid medicines in its premises.61 Similarly, Guevara and Canizares should also
be reimbursed for the transportation cost incurred in going to the hospital. The Omnibus
Rules Implementing the Labor Code provides that, where the employer does not have an
emergency hospital in its premises, the employer is obliged to transport an employee to the
nearest hospital or clinic in case of emergency.62
We likewise agree with the CA on the issue of nonpayment of the time-off for attending
grievance meetings. The intention of the parties is obviously to compensate the employees
for the time that they spend in a grievance meeting as the CBA provision categorically states
that the company will pay the employee "a paid time-off for handling of grievances,
investigations, labor-management conferences." It does not make a qualification that such
meeting should be held during office hours or within the company premises.
The employees should also be compensated for the time they were prevented from working
due to the brownout. The CBA enumerates some of the instances considered as

"emergencies" and these are "typhoons, flood earthquake, transportation strike." As correctly
argued by respondent, the CBA does not exclusively enumerate the situations which are
considered "emergencies." Obviously, the key element of the provision is that employees
"who have reported for work are unable to continue working" because of the incident. It is
therefore reasonable to conclude that brownout or power outage is considered an
"emergency" situation.
Again, on the issue of contracting-out labor, we sustain the CA. Petitioner, in effect, admits
having hired "temporary" employees, but it maintains that it was an exercise of management
prerogative, necessitated by the increase in demand for its product.
Indeed, jurisprudence recognizes the right to exercise management prerogative. Labor laws
also discourage interference with an employer's judgment in the conduct of its business. For
this reason, the Court often declines to interfere in legitimate business decisions of
employers. The law must protect not only the welfare of employees, but also the right of
employers.63 However, the exercise of management prerogative is not unlimited. Managerial
prerogatives are subject to limitations provided by law, collective bargaining agreements, and
general principles of fair play and justice.64 The CBA is the norm of conduct between the
parties and, as previously stated, compliance therewith is mandated by the express policy of
the law.65
The CBA is clear in providing that temporary employees will no longer be allowed in the
company except in the Warehouse and Packing Section. Petitioner is bound by this
provision. It cannot exempt itself from compliance by invoking management prerogative.
Management prerogative must take a backseat when faced with a CBA provision. If
petitioner needed additional personnel to meet the increase in demand, it could have taken
measures without violating the CBA.
Respondent claims that the temporary employees were hired on five-month contracts,
renewable for another five months. After the expiration of the contracts, petitioner would hire
other persons for the same work, with the same employment status.
Plainly, petitioners scheme seeks to prevent employees from acquiring the status of regular
employees. But the Court has already held that, where from the circumstances it is apparent
that the periods of employment have been imposed to preclude acquisition of security of
tenure by the employee, they should be struck down or disregarded as contrary to public
policy and morals.66 The primary standard to determine a regular employment is the
reasonable connection between the particular activity performed by the employee in relation
to the 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. 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 of
the employer. Hence, the employment is also considered regular, but only with respect to
such activity and while such activity exists.67
We also uphold the CAs finding that Madayags dismissal was illegal. It is already settled
that the burden to prove the validity of the dismissal rests upon the employer. Dismissal
based on Article 284 of the Labor Code is no different, thus:
The law is unequivocal: the employer, before it can legally dismiss its employee on the
ground of disease, must adduce a certification from a competent public authority that the

disease of which its employee is suffering is of such nature or at such a stage that it cannot
be cured within a period of six months even with proper treatment.
xxxx
In Triple Eight Integrated Services, Inc. v. NLRC, the Court explains why the submission of
the requisite medical certificate is for the employers compliance, thus:
The requirement for a medical certificate under Article 284 of the Labor Code cannot be
dispensed with; otherwise, it would sanction the unilateral and arbitrary determination by the
employer of the gravity or extent of the employees illness and thus defeat the public policy
on the protection of labor.
x x x x68
However, with respect to the issue of whether the COLA under Wage Order Nos. RBIII-10
and 11 should be implemented across the board, we hold a different view from that of the
CA. No diminution of benefits would result if the wage orders are not implemented across the
board, as no such company practice has been established.
Diminution of benefits is the unilateral withdrawal by the employer of benefits already
enjoyed by the employees. There is diminution of benefits when it is shown that: (1) the grant
or benefit is founded on a policy or has ripened into a practice over a long period of time; (2)
the practice is consistent and deliberate; (3) the practice is not due to error in the
construction or application of a doubtful or difficult question of law; and (4) the diminution or
discontinuance is done unilaterally by the employer.69
To recall, the CA arrived at its ruling by relying on the fact that there was no ambiguity in the
wording of the wage order as to the employees covered by it. From this, the CA concluded
that petitioner actually made no error or mistake, but acted voluntarily, in granting the COLA
to all its employees. It therefore took exception to the Globe Mackay case which, according
to it, applies only when there is a doubtful or difficult question involved.
The CA failed to note that Globe Mackay primarily emphasized that, for the grant of the
benefit to be considered voluntary, "it should have been practiced over a long period of time,
and must be shown to have been consistent and deliberate."70 The fact that the practice must
not have been due to error in the construction or application of a doubtful or difficult question
of law is a distinct requirement.
The implementation of the COLA under Wage Order No. RBIII-10 across the board, which
only lasted for less than a year, cannot be considered as having been practiced "over a long
period of time." While it is true that jurisprudence has not laid down any rule requiring a
specific minimum number of years in order for a practice to be considered as a voluntary act
of the employer, under existing jurisprudence on this matter, an act carried out within less
than a year would certainly not qualify as such. Hence, the withdrawal of the COLA Wage
Order No. RBIII-10 from the salaries of non-minimum wage earners did not amount to a
"diminution of benefits" under the law.
There is also no basis in enjoining petitioner to implement Wage Order No. RBIII-11 across
the board. Similarly, no proof was presented showing that the implementation of wage orders
across the board has ripened into a company practice. In the same way that we required

petitioner to prove the existence of a company practice when it alleged the same as defense,
at this instance, we also require respondent to show proof of the company practice as it is
now the party claiming its existence. Absent any proof of specific, repetitive conduct that
might constitute evidence of the practice, we cannot give credence to respondents claim.
The isolated act of implementing a wage order across the board can hardly be considered a
company practice,71 more so when such implementation was erroneously made.
WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. The CA
Decision September 30, 2008 and Resolution dated December 4, 2008 are AFFIRMED with
MODIFICATION that the order for petitioner to continue implementing Wage Order No. RBIII10 and 11 across the board is SET ASIDE. Accordingly, item 10 of the NLRC Decision dated
March 30, 2007 is modified to read "dismiss the claim for implementation of Wage Order
Nos. RBIII-10 and 11 to the employees who are not minimum wage earners."
SO ORDERED.

LUZON STEVEDORING CO., INC., petitioner,

vs.
LUZON MARINE DEPARTMENT UNION and THE HON. MODESTO CASTILLO, THE
HON. JOSE S. BAUTISTA, THE HON. V. JIMENEZ YANSON and THE HON. JUAN L.
LANTING, Judges of the Court of Industrial Relations, respondents.

Perkins, Ponce Enrile and Associates for petitioner.

Mariano B. Tuason for respondent Judge of the Court of Industrial Relations.
Sioson, Roldan and Vidanes for respondent union.
FELIX, J.:
This case involves a petition for certiorari filed by the Luzon Stevedoring Co., Inc., to review
a resolution dated June 5, 1955, issued by the Court of Industrial Relations. On September
5, 1955, with leave of court, a supplemental petition was filed by said petitioner, and both
petitions were given due course by resolution of this Court of September 15, 1955. The facts
of the case may be summarized as follows:
On June 21, 1948, herein respondent Luzon Marine Department Union filed a petition with
the Court of Industrial Relations containing several demands against herein petitioner Luzon
Stevedoring Co., Inc., among which were the petition for full recognition of the right of
COLLECTIVE bargaining, close shop and check off. However, on July 18, 1948, while the
case was still pending with the CIR, said labor union declared a strike which was ruled down
as illegal by this Court in G.R. No. L-2660 promulgated on May 30, 1950. In view of said
ruling, the Union filed a "Constancia" with the Court of Industrial Relations praying that the
remaining unresolved demands of the Union presented in their original petition, be granted.
Said unresolved demands are the following:
a. Point No. 2.
That the work performed in excess of eight (8) hours he paid an overtime pay of 50
per cent the regular rate of pay, and that work performed on Sundays and legal
holidays be paid double the regular rate of pay.
b. Point No. 7.
That all officers, engineers and crew members of motor tugboats who have not
received their pay corresponding to the second half of December, 1941, be paid
accordingly.
c. Point No. 11.
That Ciriaco Sarmiento, Chief Mate, M/V Marlin, Rafael Santos, Port Engineer, and
Lorenzo de la Cruz, Chief Engineer, M/V Shark who have been suspended without
justifiable cause and for union activities, be reinstated with pay from time of
suspension.
d. Point No. 12.
That all officers, engineers and crew members of the motor tugboats "Shark",
"Hearing", "Pike" and "Ray", who have been discharged without justifiable cause and
for union activities, be reinstate with pay from time of discharge. (p. 65-66, Record).
On the basis of these demands, the case was set for hearing and the parties submitted their
respective evidence, both oral and documentary, from June 8,1951, to January 7, 1954. In
one of the hearings of the case, the original intervenor in Union de Obreros Estibadores de

Filipinas (UOEF), through counsel, moved for the withdraw al of said Union from the case,
which motion was granted by the Court.
After the parties had submitted exhaustive memoranda, the trial Judge rendered a decision
on February 10, 1955, finding that the company gave said employees 3 free meals every day
and about 20 minutes rest after each mealtime; that they worked from 6:00 am. to 6:00 p.m.
every day including Sundays and holidays, and for work performed in excess of 8 hours, the
officers, patrons and radio operators were given overtime pay in the amount of P4 each and
P2 each for the rest of the crew up to March, 1947, and after said date, these payments
were increased to P5 and P2.50, respectively, until the time of their separation or the strike of
July 19, 1948; that when the tugboats underwent repairs, their personnel worked only 8
hours a day excluding Sundays and holidays; that although there was an effort on the part of
claimants to show that some had worked beyond 6:00 p.m., the evidence was uncertain and
indefinite and that demand was, therefore, denied; that respondent Company, by the nature
of its business and as defined by law (Section 18-b of Commonwealth Act as amended) is
considered a public service operator by the Public Service Commission in its decision in
case No. 3035-C entitled "Philippine Shipowners. Association vs. Luzon Stevedoring Co.,
Inc., et al."(Exh. 23), and, therefore, exempt from paying additional remuneration or
compensation for work performed on Sundays and legal holidays, pursuant to the provisions
of section 4 of Commonwealth Act No. 444 (Manila Electric Co. vs. Public Utilities Employees
Association, 79 Phil., 408. 44 Off. Gaz., 1760); and ruled that:
For the above reasons, the aforementioned employees are only entitled to receive
overtime pay for work rendered in excess of 8 hours on ordinary days including
Sundays and legal holidays.
However, the respondent company has proved to the satisfaction of the Court that it
has paid its employees for such overtime work as shown above Exhs. 1 to 20-B).
It is, therefore, only a matter of computation whether such over time pay by the
respondent for overtime services rendered covers the actual overtime work
performed by the employees concerned equivalent to 25 per cent which is the
minimum rate fixed by law in the absence of other proof to justify the granting of
more beyond said minimum rate.
Demands Nos. 11 and 12 regarding the reinstatement to the service of the employees
named therein were denied and respondent Company was only or to pay the separation pay
and overtime work rendered by Ciriaco Sarmiento, Rafael Santos and Lorenzo de la Cruz,
after making the pronouncement that their separation or dismissal was not due to union
activities but for valid and legal grounds.
The Luzon Marine Department Union, through counsel, therefore, filed a motion for
reconsideration praying that the decision of February 10, 1955, be modified so as to declare
and rule that the members of the Union who had rendered services from 6:00 a.m. to 6:00
p.m. were entitled to 4 hours' overtime pay; that allotted to the taking of their meals should
not be deducted from the 4 hours of overtime rendered by said employees, that the amounts
of P3 and P2 set aside for the daily meals of the employees be considered as part of their
actual compensation in determining the amount due to said employees separated from the
service without just cause be paid their unearned wages and salaries from the date of their
separation up to the time the decision in case L-2660 became final; and for such other relief
as may be just and equitable in the premises.

Luzon Stevedoring Co., Inc. also sought for the reconsideration of the decision only in so far
as it interpreted that the period during which a seaman is aboard a tugboat shall be
considered as "working time" for the purpose of the Eight-Hour-Labor Law.
In pursuance of Section 1 of Commonwealth Act No. 103, as amended by Commonwealth
Act No. 254 and further amended by Commonwealth Act No. 559, the motions for
reconsideration were passed upon by the Court en banc, and on June 6, 1955, a resolution
modifying the decision of February 10, 1955, was issued, in the sense that the 4 hours of
overtime work included in the regular daily schedule of work from 6:00 a.m. to 6:00 p.m.
should be paid independently of the so-called "coffee-money", after making a finding that
said extra amounts were given to crew members of some tugboats for work performed
beyond 6:00 p.m. over a period of some 16 weeks. The Company's motion for
reconsideration was denied.
From this resolution, the Luzon Stevedoring Co., Inc. filed the present petition
for certiorari and when the Court of Industrial Relations, acting upon said Company's motion
for clarification, ruled that the 20 minutes' rest given the claimants after mealtime should not
be deducted from the 4 hours of overtime worked performed by said claimants, petitioner
filed a supplemental petition for certiorari dated September 5, 1955, and both petitions were
given due course by this Court.
Respondent Luzon Marine Labor Union filed within the reglementary period a motion to
dismiss, which this Court considered as an answer by resolution of October 14, 1955,
alleging that the decision, resolution and order of the Court of Industrial Relations sought to
be reviewed by petitioner do not present any question of law, the issues in said CIR case No.
147-V being purely factual. The respondent Judges of the Court of Industrial Relations,
represented by counsel, timely filed an answer likewise asserting that there could have been
no question of law involved or error of law committed by the said Judges in the resolutions
appealed from, same having been based on purely findings of fact.
In this instance, petitioner does not seek to alter the lower court's finding that the regular
daily schedule of work of the members of the herein respondent Union was from 6:00 a.m. to
6:00 p.m. Petitioner, however, submits several "issues" which We will proceed to discuss one
after the other. They are the following:
I. Is the definition for "hours of work" as presently applied to dryland laborers equally
applicable to seamen? Or should a different criterion be applied by virtue of the fact that the
seamen's employment is completely different in nature as well as in condition of work from
that of a dryland laborer?
Petitioner questions the applicability to seamen of the interpretation given to the phrase
"hours of work" for the purpose of the Eight-Hour Labor Law, insinuating that although the
seamen concerned stayed in petitioner's tugboats, or merely within its compound, for 12
hours, yet their work was not continuous but interrupted or broken. It has been the consistent
stand of petitioner that while it is true that the workers herein were required to report for work
at 6:00 a.m. and were made to stay up to 6:00 p.m., their work was not continuous and they
could have left the premises of their working place were it not for the inherent physical
impossibility peculiar to the nature of their duty which prevented them from leaving the
tugboats. It is the Company's defense that a literal interpretation of what constitutes nonworking hours would result in absurdity if made to apply to seamen aboard vessels in bays
and rivers, and We are called upon to make an interpretation of the law on "non-working
hours" that may comprehend within its embrace not only the non-working hours of laborers

employed in land jobs, but also of that particular group of seamen, i.e., those employed in
vessels plying in rivers and bays, since admittedly there is no need for such ruling with
respect to officers and crew of interisland vessels which have aboard 2 shifts of said men
and strictly follow the 8-hour working period.
Section 1 of Commonwealth Act No. 444, known as the Eight-Hour Labor Law, provides:
SEC. 1. The legal working day for any person employed by another shall be of not
more than eight hours daily. When the work is not continuous, the time during which
the laborer is not working AND CAN LEAVE HIS WORKING PLACE and can rest
completely, shall not be counted.
The requisites contained in this section are further implemented by contemporary regulations
issued by administrative authorities (Sections 4 and 5 of Chapter III, Article 1, Code of Rules
and Regulations to Implement the Minimum Wage Law).
For the purposes of this case, We do not need to set for seamen a criterion different from
that applied to laborers on land, for under the provisions of the above quoted section, the
only thing to be done is to determine the meaning and scope of the term "working place"
used therein. As We understand this term, a laborer need not leave thepremises of the
factory, shop or boat in order that his period of rest shall not be counted, it being enough that
he "cease to work", may rest completely and leave or may leave at his will the spot where he
actually stays while working, to go somewhere else, whether within or outside the premises
of said factory, shop or boat. If these requisites are complied with, the period of such rest
shall not be counted.
In the case at bar We do not need to look into the nature of the work of claimant mariners to
ascertain the truth of petitioners allegation that this kind of seamen have had enough "free
time", a task of which We are relieved, for although after an ocular inspection of the working
premises of the seamen affected in this case the trial Judge declared in his decision that the
Company gave the complaining laborers 3 free meals a day with a recess of 20 minutes after
each meal, this decision was specifically amended by the Court en banc in its Resolution of
June 6, 1955, wherein it held that the claimants herein rendered services to the
Company from 6:00 a.m. to 6:00 p.m. including Sundays and holidays, which implies either
that said laborers were not given any recess at all, or that they were not allowed to leave
the spot of their working place, or that they could not rest completely. And such resolution
being on a question essentially of fact, this Court is now precluded to review the same (Com.
Act No. 103, Sec. 15, as amended by Sec. 2 of Com. Act No. 559; Rule 44 of the Rules of
Court; Kaisahan Ng Mga Manggagawa sa Kahoy sa Filipinas vs. Gotamco Sawmill, 80 Phil.,
521; Operators, Inc. vs. Pelagio, 99 Phil, 893, and others).
II. Should a person be penalized for following an opinion issued by the Secretary of Justice
in the absence of any judicial pronouncement whatsoever?
Petitioner cites Opinion No. 247, Series of 1941 of the Secretary of Justice to a query made
by the Secretary of Labor in connection with a similar subject matter as the one involved, in
this issue, but that opinion has no bearing on the case at bar because it refers to officers and
crew on board interisland boats whose situation is different from that of mariners or sailors
working in small tugboats that ply along bays and rivers and have no cabins or places for
persons that man the same. Moreover, We can not pass upon this second issue because,
aside from the fact that there appears nothing on record that would support petitioner's

assertion that in its dealing with its employees, it was guided by an opinion of the Secretary
of Justice, the issue involves a mere theoretical question.
III. When employees with full knowledge of the law, voluntarily agreed to work for so many
hours in consideration of a certain definite wage, and continue working without any protest
for a period of almost two years, is said compensation as agreed upon legally deemed and
retroactively presumed to constitute full payment for all services rendered, including
whatever overtime wages might be due? Especially so if such wages, though received years
before the enactment of the Minimum Wage Law, were already set mostly above said
minimum wage?
IV. The members set of respondent Union having expressly manifested acquiescence over a
period of almost two years with reference to the sufficiency of their wages and having made
no protest whatsoever with reference to said compensation does the legal and equitable
principle of estoppel operate to bar them from making a claim for, or making any recovery of,
back overtime compensation?
We are going to discuss these two issues jointly. Section 6 of Commonwealth Act No. 444
provides:
Sec. 6. Any agreement or contract between the employer and the laborer or employee
contrary to the provisions of this Act shall be null and void ab initio.
In the case of the Manila Terminal Co. vs. Court of Industrial Relations et al., 91 Phil., 625,
48 Off. Gaz., 2725, this Court held:
The principles of estoppel and laches cannot be, invoked against employees or
laborers in an action for the recovery of compensation for past overtime work. In the
first place, it would be contrary to the spirit of the Eight-Hour Labor Law, under which.
as already seen, the laborers cannot waive their right to extra compensation. In the
second place, the law principally obligates the employer to observe it, so much so
that it punishes the employer for its violation and leaves the employee free and
blameless. In the third place, the employee or laborer is in such a disadvantageous
position as to be naturally reluctant or even apprehensive in asserting a claim which
may cause the employer to devise a way for exercising his right to terminate the
employment.
Moreover, if the principle of estoppel and laches is to be applied, it would bring about
a situation whereby the employee or laborer, can not expressly renounce the right to
extra compensation under the Eight-Hour Labor Law, may be compelled to
accomplish the same thing by mere silence or lapse of time, thereby frustrating the
purpose of the law by indirection.
This is the law on the matter and We certainly adhere, to it in the present case. We deem it,
however, convenient to say a few words of explanation so that the principle enunciated
herein may not lead to any misconstruction of the law in future cases. There is no question
that the right of the laborers to overtime pay cannot be waived. But there may be cases in
which the silence of the employee or laborer who lets the time go by for quite a long period
without claiming or asserting his right to overtime compensation may favor the inference that
he has not worked any such overtime or that his extra work has been duly compensated. But
this is not so in the case at bar. The complaining laborers have declared that long before the
filing of this case, they had informed Mr. Martinez, a sort of overseer of the petitioner, that

they had been working overtime and claiming the corresponding compensation therefor, and
there is nothing on record to show that the claimants, at least the majority of them, had
received wages in excess of the minimum wage later provided by Republic Act No. 602,
approved April 6, 1951. On the contrary, in the decision of the trial Judge, it appears that 34
out of the 58 claimants received salaries less than the minimum wage authorized by said
Minimum Wage Law, to wit:

Per month

1. Ambrosio Taada ..
but after passing the examinations his
wages were increased to P225 per month;

oiler

P82.50

2. Patricio Santiago ..
but after passing the examinations his
wages were increased to P225 per month;

quartermaster

82.50

3. Fidelino Villanueva

oiler

82.50

4. Pedro Filamor
quartermaster
then his wage was reduced to P67.50 per
month as cook;

82.50

5. Emiliano Irabon .
seaman
then his wage was reduced to P60 and he
stayed for 1 month only; it was increased
again to P67.50;

82.50

6. Juanito de Luna

oiler

82.50

7. Benigno Curambao

oiler

82.50

8. Salvador Mercadillo

oiler

82.50

9. Nicasio Sta. Lucia

cook

82.50

10. Damaso Arciaga

seaman

82.50

11. Leonardo Patnugot

oiler

82.50

12. Bienvenido Crisostomo

oiler

82.50

13. Isidro Malabanan

cook

82.50

14. Saturnino Tumbokon

seaman

67.50

15. Bonifacio Cortez

quartermaster

82.50

16. Victorio Carillo

cook

67.50

17. Francisco Atilano

cook

67.50

18. Gualberto Legaspi

seaman

67.50

19. Numeriano Juanillo

quartermaster

82.50

20. Moises Nicodemus

quartermaster

82.50

21. Arsenio Indiano

seaman

82.50

22. Ricardo Autencio

oiler

82.50

23. Mateo Arciaga

seaman

67.50

24. Romulo Magallanes

quartermaster

82.50

25. Antonio Belbes

seaman

67.50

26. Benjamin Aguirre

quartermaster

82.50

27. Emilio Anastasio

quartermaster

82.50

28. Baltazar Labrada

oiler

82.50

29. Emeterio Magallanes

seaman

67.50

30. Agripino Laurente

quartermaster

82.50

31. Roberto Francisco

oiler

82.50

32. Elias Matrocinio

seaman

82.50

33. Baltazar Vega

seaman

67.50

34. Jose Sanchez

oiler

82.50

Consequently, for lack of the necessary supporting evidence for the petitioner, the inference
referred to above cannot be drawn in this case.
V. Granting, without conceding, that any overtime pay in arrears is due, what is the extent
and rule of retro-activity with reference to overtime pay in arrears as set forth and
established by the precedents and policies of the Court of Industrial Relations in past
decisions duly affirmed by the Honorable Supreme Court?
VI. Is the grant of a sizeable amount as back overtime wages by the Court of Industrial
Relations in consonance with the dictates of public policy and the avowed national and
government policy on economic recovery and financial stability?

In connection with issue No. 5, petitioner advances the theory that the computation of the
overtime payment in arrears should be based from the filing of the petition. In support of this
contention, petitioner cites the case of Gotamco Lumber Co. vs- Court of Industrial Relations,
85 Phil., 242; 47 Off. Gaz., 3421. This case is not in point; it merely declares that
Commonwealth Act No. 444 imposes upon the employer the duty to secure the permit for
overtime work, and the latter may not therefore be heard to plead his own negligence as
exemption or defense. The employee in rendering extra services at the request of his
employer has a right to assume that the latter has complied with the requirements of the law
and therefore has obtained the required permission from the Department of Labor (47 Off,
Gaz., 3421). The other decisions of the Court of Industrial Relations cited by petitioner, to wit:
Cases 6-V, 7-V and 8-V, Gotamco & Co., Dy Pac & Co., Inc. and D. C. Chuan; Case 110V, National Labor Union vs. Standard Vacuum Oil Co.; Case No. 76-v, Dee Cho Workers,
CLO vs. Dee Cho Lumber Co., and Case No. 70-V,National Labor Union vs. Benguet
Consolidated Mining Co., do not seem to have reached this Court and to have been affirmed
by Us.
It is of common occurrence that a workingman has already rendered services in excess of
the statutory period of 8 hours for some time before he can be led or he can muster enough
courage to confront his employer with a demand for payment thereof. Fear of possible
unemployment sometimes is a very strong factor that gags the man from asserting his right
under the law and it may take him months or years before he could be made to present a
claim against his employer. To allow the workingman to be compensated only from the date
of the filing of the petition with the court would be to penalize him for his acquiescence or
silence which We have declared in the case of the Manila Terminal Co. vs. CIR, supra, to be
beyond the intent of the law. It is not just and humane that he should be deprived of what is
lawfully his under the law, for the true intendent of Commonwealth Act No. 444 is to
compensate the worker for services rendered beyond the statutory period and this should be
made to retroact to the date when such services were actually performed.
Anent issue No. VI, petitioner questions the reasonableness of the law providing for the grant
of overtime wages. It is sufficient for Us to state here that courts cannot go outside of the
field of interpretation so as to inquire into the motive or motives of Congress in enacting a
particular piece of legislation. This question, certainly, is not within Our province to entertain.
It may be alleged, however, that the delay in asserting the right to back overtime
compensation may cause an unreasonable or irreparable injury to the employer, because the
accumulation of such back overtime wages may become so great that their payment might
cause the bankruptcy or the closing of the business of the employer who might not be in a
position to defray the same. Perhaps this situation may occur, but We shall not delve on it
this time because petitioner does not claim that the payment of the back overtime wages it is
ordered to pay to its claimant laborers will cause the injury it foresees or force it to close its
business, a situation which it speaks of theoretically and in general.
VII. Should not a Court of Industrial Relations' resolution, en banc, which is clearly
unsupported in fact and in law, patently arbitrary and capricious and absolutely devoid of
sustaining reason, be declared illegal? Especially so, if the trial court's decision which the
resolution en banc reversed, is most detailed, exhaustive and comprehensive in its findings
as well as most reasonable and legal in its conclusions? This issue was raised by petitioner
in its supplemental petition and We have this much to say. The Court of Industrial Relations
has been considered "a court of justice" (Metropolitan Transportation Service vs.
Paredes,* G.R. No. L-1232, prom. January 12, 1948), although in another case. We said that
it is "more an administrative board than a part of the integrated judicial system of the nation"

(Ang Tibay vs. Court of Industrial Relations, 69 Phil., 635). But for procedural purposes, the
Court of Industrial Relations is a court with well-defined powers vested by the law creating it
and with such other powers as generally pertain to a court of justice (Sec. 20, Com. Act No.
103). As such, the general rule that before a judgment becomes final, the Court that
rendered the same may alter or modify it so as to conform with the law and the evidence, is
applicable to the Court of Industrial Relations (Connel Bros. Co.(Phil.) vs. National Labor
Union, G.R. No. L-3631, prom. January 30, 1956). The law also provides that after a judge of
the Court of Industrial Relations, duly designated by the Presiding Judge therein to hear a
particular case, had rendered a decision, any agrieved party may request for reconsideration
thereof and the judges of said Court shall sit together, the concurrence of the 3 of them being
necessary for the pronouncement of a decision, order or award (See. 1, Com. Act No. 103).
It was in virtue of these rules and upon motions for reconsideration presented by both parties
that resolution subject of the present petition was issued, the Court en banc finding it
necessary to modify a part of the decision of February 10, 1955, which is clearly within its
power to do.
On the other hand, the issue under consideration is predicated on a situation which is not
obtaining in the case at bar, for, it presupposes that the resolutions en banc of the
respondent Court "are clearly unsupported in fact and in law, patently arbitrary and
capricious and absolutely devoid of any sustaining reason", which does not seem to be the
case as a matter of fact.
Wherefore, and on the strength of the foregoing consideration, the resolutions of the Court of
Industrial Relations appealed from are hereby affirmed, with costs against petitioner. It is so
ordered.

AKLAN ELECTRIC COOPERATIVE INCORPORATED

(AKELCO), petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION (Fourth Division), RODOLFO M. RETISO and 165
OTHERS, respondents.
[1]

DECISION
GONZAGA-REYES, J.:
In his petition for certiorari and prohibition with prayer for writ of preliminary
injunction and/or temporary restraining order, petitioner assails (a) the decision
dated April 20, 1995, of public respondent National Labor Relations
Commission (NLRC), Fourth (4th) Division, Cebu City, in NLRC Case No. V0143-94 reversing the February 25, 1994 decision of Labor Arbiter Dennis D.
Juanon and ordering petitioner to pay wages in the aggregate amount of
P6,485,767.90 to private respondents, and (b) the resolution dated July 28,
1995 denying petitioners motion for reconsideration, for having been issued
with grave abuse of discretion.
A temporary restraining order was issued by this Court on October 9, 1995
enjoining public respondent from executing the questioned decision upon a
surety bond posted by petitioner in the amount of P6,400,000.00.
[2]

The facts as found by the Labor Arbiter are as follows:

[3]

"These are consolidated cases/claims for non-payment of salaries

and wages, 13th month pay, ECOLA and other fringe benefits as
rice, medical and clothing allowances, submitted by complainant
Rodolfo M. Retiso and 163 others, Lyn E. Banilla and Wilson B.
Sallador against respondents Aklan Electric Cooperative, Inc.
(AKELCO), Atty. Leovigildo Mationg in his capacity as General
Manager; Manuel Calizo, in his capacity as Acting Board
President, Board of Directors, AKELCO.
Complainants alleged that prior to the temporary transfer of the
office of AKELCO from Lezo Aklan to Amon Theater, Kalibo,
Aklan, complainants were continuously performing their task and
were duly paid of their salaries at their main office located at
Lezo, Aklan.
That on January 22, 1992, by way of resolution of the Board of
Directors of AKELCO allowed the temporary transfer holding of
office at Amon Theater, Kalibo, Aklan per information by their
Project Supervisor, Atty. Leovigildo Mationg, that their head
office is closed and that it is dangerous to hold office thereat;
Nevertheless, majority of the employees including herein
complainants continued to report for work at Lezo Aklan and were
paid of their salaries.
That on February 6, 1992, the administrator of NEA, Rodrigo
Cabrera, wrote a letter addressed to the Board of AKELCO, that
he is not interposing any objections to the action taken by
respondent Mationg
That on February 11, 1992, unnumbered resolution was passed by
the Board of AKELCO withdrawing the temporary designation of
office at Kalibo, Aklan, and that the daily operations must be held
again at the main office of Lezo, Aklan;
[4]

That complainants who were then reporting at the Lezo office

from January 1992 up to May 1992 were duly paid of their
salaries, while in the meantime some of the employees through
the instigation of respondent Mationg continued to remain and
work at Kalibo, Aklan;

That from June 1992 up to March 18, 1993, complainants who

continuously reported for work at Lezo, Aklan in compliance with
the aforementioned resolution were not paid their salaries;
That on March 19, 1993 up to the present, complainants were
again allowed to draw their salaries; with the exception of a few
complainants who were not paid their salaries for the months of
April and May 1993;
Per allegations of the respondents, the following are the facts:
1. That these complainants voluntarily abandoned their respective
work/job assignments, without any justifiable reason and without
notifying the management of the Aklan Electric Cooperative, Inc.
(AKELCO), hence the cooperative suffered damages and systems
loss;
2. That the complainants herein defied the lawful orders and other
issuances by the General Manager and the Board of Directors of
the AKELCO. These complainants were requested to report to
work at the Kalibo office x x x but despite these lawful orders of
the General Manager, the complainants did not follow and
wilfully and maliciously defied said orders and issuance of the
General Manager; that the Board of Directors passed a Resolution
resisting and denying the claims of these complainants, x x x
under the principle of "no work no pay" which is legally justified;
That these complainants have "mass leave" from their customary
work on June 1992 up to March 18, 1993 and had a "sit-down"
stance for these periods of time in their alleged protest of the
appointment of respondent Atty. Leovigildo Mationg as the new
General Manager of the Aklan Electric Cooperative, Inc.
(AKELCO) by the Board of Directors and confirmed by the
Administrator of the National Electrification Administration
(NEA), Quezon City; That they engaged in " . . . slowdown mass
leaves, sit downs, attempts to damage, destroy or sabotage plant
equipment and facilities of the Aklan Electric Cooperative, Inc.
(AKELCO)."
On February 25, 1994, a decision was rendered by Labor Arbiter Dennis D.
Juanon dismissing the complaints.
[5]

Dissatisfied with the decision, private respondents appealed to the respondent

Commission.
On appeal, the NLRCs Fourth Division, Cebu City, reversed and set aside the
Labor Arbiters decision and held that private respondents are entitled to unpaid
wages from June 16, 1992 to March 18, 1993, thus:
[6]

[7]

"The evidence on records, more specifically the evidence

submitted by the complainants, which are: the letter dated April 7,
1993 of Pedrito L. Leyson, Office Manager of AKELCO (Annex
"C"; complainants position paper; Rollo, p.102) addressed to
respondent Atty. Leovigildo T. Mationg; respondent AKELCO
General Manager; the memorandum of said Atty. Mationg dated
14 April 1993, in answer to the letter of Pedrito Leyson (Annex
"D" complainants position paper); as well as the computation of
the unpaid wages due to complainants (Annexes "E" to "E-3";
complainants position paper, Rollo, pages 1024 to 1027) clearly
show that complainants had rendered services during the period June 16, 1992 to March 18, 1993. The record is bereft of any
showing that the respondents had submitted any evidence,
documentary or otherwise, to controvert this asseveration of the
complainants that services were rendered during this period.
Subjecting these evidences submitted by the complainants to the
crucible of scrutiny, We find that respondent Atty. Mationg
responded to the request of the Office Manager, Mr. Leyson,
which We quote, to wit:
"Rest assured that We shall recommend your
aforesaid request to our Board of Directors for their
consideration and appropriate action. This payment,
however, shall be subject, among others, to the
availability of funds."
This assurance is an admission that complainants are entitled to
payment for services rendered from June 16, 1992 to March 18,
1993, specially so that the recommendation and request comes
from the office manager himself who has direct knowledge
regarding the services and performance of employees under him.
For how could one office manager recommend payment of wages,
if no services were rendered by employees under him. An office
manager is the most qualified person to know the performance of
personnel under him. And therefore, any request coming from him

for payment of wages addressed to his superior as in the instant

case shall be given weight.
Furthermore, the record is clear that complainants were paid of
their wages and other fringe benefits from January, 1992 to May,
1992 and from March 19, 1993 up to the time complainants filed
the instant cases. In the interegnum, from June 16, 1992 to March
18, 1993, complainants were not paid of their salaries, hence these
claims. We could see no rhyme nor reason in respondents refusal
to pay complainants salaries during this period when complainants
had worked and actually rendered service to AKELCO.
While the respondents maintain that complainants were not paid
during this interim period under the principle of "no work, no
pay", however, no proof was submitted by the respondents to
substantiate this allegation. The labor arbiter, therefore, erred in
dismissing the claims of the complainants, when he adopted the
"no work, no pay" principle advanced by the respondents.
WHEREFORE, in view of the foregoing, the appealed decision
dated February 25, 1994 is hereby Reversed and Set Aside and a
new one entered ordering respondent AKELCO to pay
complainants their claims amounting to P6,485,767.90 as shown
in the computation (Annexes "E" to "E-3")."
A motion for reconsideration was filed by petitioner but the same was denied
by public respondent in a resolution dated July 28, 1995.
[8]

Petitioner brought the case to this Court alleging that respondent NLRC
committed grave abuse of discretion citing the following grounds:
[9]

1. PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF

DISCRETION IN REVERSING THE FACTUAL FINDINGS
AND CONCLUSIONS OF THE LABOR ARBITER, AND
DISREGARDING THE EXPRESS ADMISSION OF PRIVATE
RESPONDENTS THAT THEY DEFIED PETITIONERS
ORDER TRANSFERRING THE PETITIONERS OFFICIAL
BUSINESS OFFICE FROM LEZO TO KALIBO AND FOR
THEM TO REPORT THEREAT.
2. PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF
DISCRETION IN CONCLUDING THAT PRIVATE

RESPONDENTS WERE REALLY WORKING OR

RENDERING SERVICE ON THE BASIS OF THE
COMPUTATION OF WAGES AND THE BIASED
RECOMMENDATION SUBMITTED BY LEYSON WHO IS
ONE OF THE PRIVATE RESPONDENTS WHO DEFIED THE
LAWFUL ORDERS OF PETITIONER.
3. PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF
DISCRETION IN CONSIDERING THE ASSURANCE BY
PETITIONERS GENERAL MANAGER MATIONG TO
RECOMMEND THE PAYMENT OF THE CLAIMS OF
PRIVATE RESPONDENTS AS AN ADMISSION OF
LIABILITY OR A RECOGNITION THAT COMPENSABLE
SERVICES WERE ACTUALLY RENDERED.
4. GRANTING THAT PRIVATE RESPONDENTS CONTINUED
TO REPORT AT THE LEZO OFFICE, IT IS STILL GRAVE
ABUSE OF DISCRETION FOR PUBLIC RESPONDENT TO
CONSIDER THAT PETITIONER IS LEGALLY OBLIGATED
TO RECOGNIZE SAID CIRCUMSTANCE AS
COMPENSABLE SERVICE AND PAY WAGES TO PRIVATE
RESPONDENTS FOR DEFYING THE ORDER FOR THEM TO
REPORT FOR WORK AT THE KALIBO OFFICE WHERE THE
OFFICIAL BUSINESS AND OPERATIONS WERE
CONDUCTED.
5. PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF
DISCRETION AND SERIOUS, PATENT AND PALPABLE
ERROR IN RULING THAT THE "NO WORK, NO PAY"
PRINCIPLE DOES NOT APPLY FOR LACK OF
EVIDENTIARY SUPPORT WHEN PRIVATE REPONDENTS
ALREADY ADMITTED THAT THEY DID NOT REPORT FOR
WORK AT THE KALIBO OFFICE.
6. PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF
DISCRETION IN ACCORDING WEIGHT AND CREDIBILITY
TO THE SELF-SERVING AND BIASED ALLEGATIONS OF
PRIVATE RESPONDENTS, AND ACCEPTING THEM AS
PROOF, DESPITE THE ESTABLISHED FACT AND
ADMISSION THAT PRIVATE RESPONDENTS DID NOT
REPORT FOR WORK AT THE KALIBO OFFICE, OR THAT

THEY WERE NEVER PAID FOR ANY WAGES FROM THE

TIME THEY DEFIED PETITIONERS ORDERS.
Petitioner contends that public respondent committed grave abuse of discretion
in finding that private respondents are entitled to their wages from June 16,
1992 to March 18, 1993, thus disregarding the principle of "no work, no pay".
It alleges that private respondents stated in their pleadings that they not only
objected to the transfer of petitioners business office to Kalibo but they also
defied the directive to report thereat because they considered the transfer
illegal. It further claims that private respondents refused to recognize the
authority of petitioners lawful officers and agents resulting in the disruption of
petitioners business operations in its official business office in Lezo, AKlan,
forcing petitioner to transfer its office from Lezo to Kalibo transferring all its
equipments, records and facilities; that private respondents cannot choose
where to work, thus, when they defied the lawful orders of petitioner to report
at Kalibo, private respondents were considered dismissed as far as petitioner
was concerned. Petitioner also disputes private respondents allegation that they
were paid their salaries from January to May 1992 and again from March 19,
1993 up to the present but not for the period from June 1992 to March 18, 1993
saying that private respondents illegally collected fees and charges due
petitioner and appropriated the collections among themselves for which reason
they are claiming salaries only for the period from June 1992 to March 1993
and that private respondents were paid their salaries starting only in April 1993
when petitioners Board agreed to accept private respondents back to work at
Kalibo office out of compassion and not for the reason that they rendered
service at the Lezo office. Petitioner also adds that compensable service is best
shown by timecards, payslips and other similar documents and it was an error
for public respondent to consider the computation of the claims for wages and
benefits submitted merely by private respondents as substantial evidence.
The Solicitor General filed its Manifestation in lieu of Comment praying that
the decision of respondent NLRC be set aside and payment of wages claimed
by private respondents be denied for lack of merit alleging that private
respondents could not have worked for petitioner's office in Lezo during the
stated period since petitioner transferred its business operation in Kalibo where
all its records and equipments were brought; that computations of the claims for
wages and benefits submitted by private respondents to petitioner is not proof
of rendition of work. Filing its own Comment, public respondent NLRC claims
that the original and exclusive jurisdiction of this Court to review decisions or
resolutions of respondent NLRC does not include a correction of its evaluation
of evidence as factual issues are not fit subject for certiorari.

Private respondents, in their Comment, allege that review of a decision of

NLRC in a petition for certiorari under Rule 65 does not include the
correctness of its evaluation of the evidence but is confined to issues of
jurisdiction or grave abuse of discretion and that factual findings of
administrative bodies are entitled to great weight, and accorded not only respect
but even finality when supported by substantial evidence. They claim that
petitioner's Board of Directors passed an unnumbered resolution on February
11, 1992 returning back the office to Lezo from Kalibo Aklan with a directive
for all employees to immediately report at Lezo; that the letter-reply of Atty.
Mationg to the letter of office manager Leyson that he will recommend the
payment of the private respondents' salary from June 16, 1992 to March 18,
1993 to the Board of Directors was an admission that private respondents are
entitled to such payment for services rendered. Private respondents state that in
appreciating the evidence in their favor, public respondent NLRC at most may
be liable for errors of judgment which, as differentiated from errors of
jurisdiction, are not within the province of the special civil action of certiorari.
Petitioner filed its Reply alleging that review of the decision of public
respondent is proper if there is a conflict in the factual findings of the labor
arbiter and the NLRC and when the evidence is insufficient and insubstantial to
support NLRCs factual findings; that public respondents findings that private
respondents rendered compensable services were merely based on private
respondents computation of claims which is self-serving; that the alleged
unnumbered board resolution dated February 11, 1992, directing all employees
to report to Lezo Office was never implemented because it was not a valid
action of AKELCOs legitimate board.
The sole issue for determination is whether or not public respondent NLRC
committed grave abuse of discretion amounting to excess or want of
jurisdiction when it reversed the findings of the Labor Arbiter that private
respondents refused to work under the lawful orders of the petitioner AKELCO
management; hence they are covered by the "no work, no pay" principle and
are thus not entitled to the claim for unpaid wages from June 16, 1992 to March
18, 1993.
We find merit in the petition.
At the outset, we reiterate the rule that in certiorari proceedings under Rule 65,
this Court does not assess and weigh the sufficiency of evidence upon which
the labor arbiter and public respondent NLRC based their resolutions. Our
query is limited to the determination of whether or not public respondent
NLRC acted without or in excess of its jurisdiction or with grave abuse of

discretion in rendering the assailed resolutions. While administrative findings

of fact are accorded great respect, and even finality when supported by
substantial evidence, nevertheless, when it can be shown that administrative
bodies grossly misappreciated evidence of such nature as to compel a contrary
conclusion, this court had not hesitated to reverse their factual findings.
Factual findings of administrative agencies are not infallible and will be set
aside when they fail the test of arbitrariness. Moreover, where the findings of
NLRC contradict those of the labor arbiter, this Court, in the exercise of its
equity jurisdiction, may look into the records of the case and reexamine the
questioned findings.
[10]

[11]

[12]

[13]

We find cogent reason, as shown by the petitioner and the Solicitor General, not
to affirm the factual findings of public respondent NLRC.
We do not agree with the finding that private respondents had rendered services
from June 16, 1992 to March 18, 1993 so as to entitle them to payment of
wages. Public respondent based its conclusion on the following: (a) the letter
dated April 7, 1993 of Pedrito L. Leyson, Office Manager of AKELCO
addressed to AKELCOs General Manager, Atty. Leovigildo T. Mationg,
requesting for the payment of private respondents unpaid wages from June 16,
1992 to March 18, 1993; (b) the memorandum of said Atty. Mationg dated 14
April 1993, in answer to the letter request of Pedrito Leyson where Atty.
Mationg made an assurance that he will recommend such request; (c) the
private respondents own computation of their unpaid wages. We find that the
foregoing does not constitute substantial evidence to support the conclusion
that private respondents are entitled to the payment of wages from June 16,
1992 to March 18, 1993. Substantial evidence is that amount of relevant
evidence which a reasonable mind might accept as adequate to justify a
conclusion. These evidences relied upon by public respondent did not
establish the fact that private respondents actually rendered services in the
Kalibo office during the stated period.
[14]

The letter of Pedrito Leyson to Atty. Mationg was considered by public

respondent as evidence that services were rendered by private respondents
during the stated period, as the recommendation and request came from the
office manager who has direct knowledge regarding the services and
performance of employees under him. We are not convinced. Pedrito Leyson is
one of the herein private respondents who are claiming for unpaid wages and
we find his actuation of requesting in behalf of the other private respondents for
the payment of their backwages to be biased and self-serving, thus not credible.

On the other hand, petitioner was able to show that private respondents did not
render services during the stated period. Petitioners evidences show that on
January 22, 1992, petitioners Board of Directors passed a resolution
temporarily transferring the Office from Lezo, Aklan to Amon Theater, Kalibo,
Aklan upon the recommendation of Atty. Leovigildo Mationg, then project
supervisor, on the ground that the office at Lezo was dangerous and unsafe.
Such transfer was approved by then NEA Administrator, Rodrigo E. Cabrera, in
a letter dated February 6, 1992 addressed to petitioners Board of Directors.
Thus, the NEA Administrator, in the exercise of supervision and control over
all electric cooperatives, including petitioner, wrote a letter dated February 6,
1992 addressed to the Provincial Director PC/INP Kalibo Aklan requesting for
military assistance for the petitioners team in retrieving the electric
cooperatives equipments and other removable facilities and/or fixtures
consequential to the transfer of its principal business address from Lezo to
Kalibo and in maintaining peace and order in the cooperatives coverage area.
The foregoing establishes the fact that the continuous operation of the
petitioners business office in Lezo Aklan would pose a serious and imminent
threat to petitioners officials and other employees, hence the necessity of
temporarily transferring the operation of its business office from Lezo to
Kalibo. Such transfer was done in the exercise of a management prerogative
and in the absence of contrary evidence is not unjustified. With the transfer of
petitioners business office from its former office, Lezo, to Kalibo, Aklan, its
equipments, records and facilities were also removed from Lezo and brought to
the Kalibo office where petitioners official business was being conducted; thus
private respondents allegations that they continued to report for work at Lezo to
support their claim for wages has no basis.
[15]

[16]

Moreover, private respondents in their position paper admitted that they did not
report at the Kalibo office, as Lezo remained to be their office where they
continuously reported, to wit:
[17]

"On January 22, 1991 by way of a resolution of the Board of

Directors of AKELCO it allowed the temporary holding of office
at Amon Theater, Kalibo, Aklan, per information by their project
supervisor, Atty. Leovigildo Mationg that their head office is
closed and that it is dangerous to hold office thereat.
Nevertheless, majority of the employees including the herein
complainants, continued to report for work at Lezo, Aklan and
were paid of their salaries.
xxx

The transfer of office from Lezo, Aklan to Kalibo, Aklan being

illegal for failure to comply with the legal requirements under P.D.
269, the complainants remained and continued to work at the
Lezo Office until they were illegally locked out therefrom by the
respondents. Despite the illegal lock out however, complainants
continued to report daily to the location of the Lezo Office,
prepared to continue in the performance of their regular duties.
Complainants thus could not be considered to have abandoned
their work as Lezo remained to be their office and not Kalibo
despite the temporary transfer thereto. Further the fact that they
were allowed to draw their salaries up to May, 1992 is an
acknowledgment by the management that they are working during
the period.
xxx
It must be pointed out that complainants worked and continuously
reported at Lezo office despite the management holding office at
Kalibo. In fact, they were paid their wages before it was withheld
and then were allowed to draw their salaries again on March 1993
while reporting at Lezo up to the present.
Respondents acts and payment of complainants salaries and again
from March 1993 is an unequivocal recognition on the part of
respondents that the work of complainants is continuing and
uninterrupted and they are therefore entitled to their unpaid wages
for the period from June 1992 to March 1993."
The admission is detrimental to private respondents cause. Their excuse is that
the transfer to Kalibo was illegal but we agree with the Labor Arbiter that it
was not for private respondents to declare the managements act of temporarily
transferring the AKELCO office to Kalibo as an illegal act. There is no
allegation nor proof that the transfer was made in bad faith or with malice. The
Labor Arbiter correctly rationalized in its decision as follows:
[18]

"We do not subscribe to complainants theory and assertions. They,

by their own allegations, have unilaterally committed acts in
violation of managements/respondents directives purely classified
as management prerogative. They have taken amongst themselves
declaring managements acts of temporarily transferring the
holding of the AKELCO office from Lezo to Kalibo, Aklan as

illegal. It is never incumbent upon themselves to declare the same

as such. It is lodged in another forum or body legally mantled to
do the same. What they should have done was first to follow
managements orders temporarily transferring office for it has the
first presumption of legality. Further, the transfer was
onlytemporary. For:
"The employer as owner of the business, also has
inherent rights, among which are the right to select
the persons to be hired and discharge them for just
and valid cause; to promulgate and enforce
reasonable employment rules and regulations and to
modify, amend or revoke the same; to designate the
work as well as the employee or employees to
perform it; to transfer or promote employees; to
schedule, direct, curtail or control company
operations; to introduce or install new or improved
labor or money savings methods, facilities or
devices; to create, merge, divide, reclassify and
abolish departments or positions in the company and
to sell or close the business.
xxx
Even as the law is solicitous of the welfare of the
employees it must also protect the right of an
employer to exercise what are clearly management
prerogatives. The free will of management to
conduct its own business affairs to achieve its
purpose can not be denied. The transfer of
assignment of a medical representative from Manila
to the province has therefore been held lawful where
this was demanded by the requirements of the drug
companys marketing operations and the former had
at the time of his employment undertaken to accept
assignment anywhere in the Philippines. (Abbot
Laboratories (Phils.), Inc., et al. vs. NLRC, et al.,
G.R. No. L-76959, Oct. 12, 1987).
It is the employers prerogative to abolish a position which it
deems no longer necessary, and the courts, absent any findings of
malice on the part of the management, cannot erase that initiative

simply to protect the person holding office (Great Pacific Life

Assurance Corporation vs. NLRC, et al., G.R. No. 88011, July 30,
1990)."
Private respondents claim that petitioners Board of Directors passed an
unnumbered resolution dated February 11, 1992 returning back the office from
its temporary office in Kalibo to Lezo. Thus, they did not defy any lawful order
of petitioner and were justified in continuing to remain at Lezo office. This
allegation was controverted by petitioner in its Reply saying that such
unnumbered resolution was never implemented as it was not a valid act of
petitioners Board. We are convinced by petitioners argument that such
unnumbered resolution was not a valid act of petitioners legitimate Board
considering the subsequent actions taken by the petitioners Board of Directors
decrying private respondents inimical act and defiance, to wit (1) Resolution
No. 411, s. of 1992 on September 9, 1992, dismissing all AKELCO employees
who were on illegal strike and who refused to return to work effective January
31, 1992 despite the directive of the NEA project supervisor and petitioners
acting general manager; (2) Resolution No. 477, s. of 1993 dated March 10,
1993 accepting back private respondents who staged illegal strike, defied legal
orders and issuances, out of compassion, reconciliation, Christian values and
humanitarian reason subject to the condition of "no work, no pay" (3)
Resolution No. 496, s. of 1993 dated June 4, 1993, rejecting the demands of
private respondents for backwages from June 16, 1992 to March 1993 adopting
the policy of "no work, no pay" as such demand has no basis, and directing the
COOP Legal Counsel to file criminal cases against employees who
misappropriated collections and officers who authorized disbursements of
funds without legal authority from the NEA and the AKELCO Board. If
indeed there was a valid board resolution transferring back petitioners office to
Lezo from its temporary office in Kalibo, there was no need for the Board to
pass the above-cited resolutions.
[19]

[20]

[21]

We are also unable to agree with public respondent NLRC when it held that the
assurance made by Atty. Mationg to the letter-request of office manager Leyson
for the payment of private respondents wages from June 1992 to March 1993
was an admission on the part of general manager Mationg that private
respondents are indeed entitled to the same. The letter reply of Atty. Mationg to
Leyson merely stated that he will recommend the request for payment of
backwages to the Board of Directors for their consideration and appropriate
action and nothing else, thus, the ultimate approval will come from the Board
of Directors. We find well-taken the argument advanced by the Solicitor
General as follows:
[22]

The allegation of private respondents that petitioner had already

approved payment of their wages is without basis. Mationgs offer
to recommend the payment of private respondents' wages is
hardly approval of their claim for wages. It is just an undertaking
to recommend payment. Moreover, the offer is conditional. It is
subject to the condition that petitioners Board of Directors will
give its approval and that funds were available. Mationgs reply to
Leysons letter for payment of wages did not constitute approval or
assurance of payment. The fact is that, the Board of Directors of
petitioner rejected private respondents demand for payment
(Board Resolution No. 496, s. 1993).
We are accordingly constrained to overturn public respondents findings that
petitioner is not justified in its refusal to pay private respondents wages and
other fringe benefits from June 16, 1992 to March 18, 1993; public respondents
stated that private respondents were paid their salaries from January to May
1992 and again from March 19, 1993 up to the present. As cited earlier,
petitioners Board in a Resolution No. 411 dated September 9, 1992 dismissed
private respondents who were on illegal strike and who refused to report for
work at Kalibo office effective January 31, 1992; since no services were
rendered by private respondents they were not paid their salaries. Private
respondents never questioned nor controverted the Resolution dismissing them
and nowhere in their Comment is it stated that they questioned such dismissal.
Private respondents also have not rebutted petitioners claim that private
respondents illegally collected fees and charges due petitioner and appropriated
the collections among themselves to satisfy their salaries from January to May
1992, for which reason, private respondents are merely claiming salaries only
for the period from June 16, 1992 to March 1993.
Private respondents were dismissed by petitioner effective January 31, 1992
and were accepted back by petitioner, as an act of compassion, subject to the
condition of "no work, no pay" effective March 1993 which explains why
private respondents were allowed to draw their salaries again. Notably, the
letter-request of Mr. Leyson for the payment of backwages and other fringe
benefits in behalf of private respondents was made only in April 1993, after a
Board Resolution accepting them back to work out of compassion and
humanitarian reason. It took private respondents about ten months before they
requested for the payment of their backwages, and the long inaction of private
respondents to file their claim for unpaid wages cast doubts as to the veracity of
their claim.

The age-old rule governing the relation between labor and capital, or
management and employee of a "fair days wage for a fair days labor" remains
as the basic factor in determining employees wages. If there is no work
performed by the employee there can be no wage or pay unless, of course, the
laborer was able, willing and ready to work but was illegally locked out,
suspended or dismissed, or otherwise illegally prevented from working, a
situation which we find is not present in the instant case. It would neither be
fair nor just to allow private respondents to recover something they have not
earned and could not have earned because they did not render services at the
Kalibo office during the stated period.
[23]

[24]

Finally, we hold that public respondent erred in merely relying on the

computations of compensable services submitted by private respondents. There
must be competent proof such as time cards or office records to show that they
actually rendered compensable service during the stated period to entitle them
to wages. It has been established that the petitioners business office was
transferred to Kalibo and all its equipments, records and facilities were
transferred thereat and that it conducted its official business in Kalibo during
the period in question. It was incumbent upon private respondents to prove that
they indeed rendered services for petitioner, which they failed to do. It is a
basic rule in evidence that each party must prove his affirmative allegation.
Since the burden of evidence lies with the party who asserts the affirmative
allegation, the plaintiff or complainant has to prove his affirmative allegations
in the complaint and the defendant or the respondent has to prove the
affirmative allegation in his affirmative defenses and counterclaim.
[25]

WHEREFORE, in view of the foregoing, the petition for CERTIORARI is

GRANTED. Consequently the decision of public respondent NLRC dated April
20, 1995 and the Resolution dated July 28, 1995 in NLRC Case No. V-0143-94
are hereby REVERSED and SET ASIDE for having been rendered with grave
abuse of discretion amounting to lack or excess of jurisdiction. Private
respondents complaint for payment of unpaid wages before the Labor Arbiter is
DISMISSED.
SO ORDERED.

G.R. No. 78210 February 28, 1989

TEOFILO ARICA, DANILO BERNABE, MELQUIADES DOHINO, ABONDIO OMERTA, GIL
TANGIHAN, SAMUEL LABAJO, NESTOR NORBE, RODOLFO CONCEPCION, RICARDO
RICHA, RODOLFO NENO, ALBERTO BALATRO, BENJAMIN JUMAMOY, FERMIN
DAAROL, JOVENAL ENRIQUEZ, OSCAR BASAL, RAMON ACENA, JAIME BUGTAY,
and 561 OTHERS, HEREIN REPRESENTED BY KORONADO B. APUZEN, petitioners
vs.
NATIONAL LABOR RELATIONS COMMISSION, HONORABLE FRANKLIN DRILON,
HONORABLE CONRADO B. MAGLAYA, HONORABLE ROSARIO B. ENCARNACION,
and STANDARD (PHILIPPINES) FRUIT CORPORATION, respondents.
Koronado B. Apuzen and Jose C. Espinas for petitioners.
The Solicitor General for public respondent.
Dominguez & Paderna Law Offices Co. for private respondent.

PARAS, J.:
This is a petition for review on certiorari of the decision of the National Labor Relations
Commission dated December 12, 1986 in NLRC Case No. 2327 MC-XI-84 entitled Teofilo
Arica et al. vs. Standard (Phil.) Fruits Corporation (STANFILCO) which affirmed the decision
of Labor Arbiter Pedro C. Ramos, NLRC, Special Task Force, Regional Arbitration Branch
No. XI, Davao City dismissing the claim of petitioners.

This case stemmed from a complaint filed on April 9, 1984 against private respondent
Stanfilco for assembly time, moral damages and attorney's fees, with the aforementioned
Regional Arbitration Branch No. XI, Davao City.
After the submission by the parties of their respective position papers (Annex "C", pp. 30-40;
Annex "D", Rollo, pp. 41-50), Labor Arbiter Pedro C. Ramos rendered a decision dated
October 9, 1985 (Annex 'E', Rollo, pp. 51-58) in favor of private respondent STANFILCO,
holding that:
Given these facts and circumstances, we cannot but agree with respondent
that the pronouncement in that earlier case, i.e. the thirty-minute assembly
time long practiced cannot be considered waiting time or work time and,
therefore, not compensable, has become the law of the case which can no
longer be disturbed without doing violence to the time- honored principle
of res-judicata.
WHEREFORE, in view of the foregoing considerations, the instant complaint
should therefore be, as it is hereby, DISMISSED.
SO ORDERED. (Rollo, p. 58)
On December 12, 1986, after considering the appeal memorandum of complainant and the
opposition of respondents, the First Division of public respondent NLRC composed of Acting
Presiding Commissioner Franklin Drilon, Commissioner Conrado Maglaya, Commissioner
Rosario D. Encarnacion as Members, promulgated its Resolution, upholding the Labor
Arbiters' decision. The Resolution's dispositive portion reads:
'Surely, the customary functions referred to in the above- quoted provision of
the agreement includes the long-standing practice and institutionalized noncompensable assembly time. This, in effect, estopped complainants from
pursuing this case.
The Commission cannot ignore these hard facts, and we are constrained to
uphold the dismissal and closure of the case.
WHEREFORE, let the appeal be, as it is hereby dismissed, for lack of merit.
SO ORDERED. (Annex "H", Rollo, pp. 86-89).
On January 15, 1987, petitioners filed a Motion for Reconsideration which was opposed by
private respondent (Annex "I", Rollo, pp. 90-91; Annex J Rollo, pp. 92-96).
Public respondent NLRC, on January 30, 1987, issued a resolution denying for lack of merit
petitioners' motion for reconsideration (Annex "K", Rollo, p. 97).
Hence this petition for review on certiorari filed on May 7, 1987.
The Court in the resolution of May 4, 1988 gave due course to this petition.
Petitioners assign the following issues:

1) Whether or not the 30-minute activity of the petitioners before the

scheduled working time is compensable under the Labor Code.
2) Whether or not res judicata applies when the facts obtaining in the prior
case and in the case at bar are significantly different from each other in that
there is merit in the case at bar.
3) Whether or not there is finality in the decision of Secretary Ople in view of
the compromise agreement novating it and the withdrawal of the appeal.
4) Whether or not estoppel and laches lie in decisions for the enforcement of
labor standards (Rollo, p. 10).
Petitioners contend that the preliminary activities as workers of respondents STANFILCO in
the assembly area is compensable as working time (from 5:30 to 6:00 o'clock in the morning)
since these preliminary activities are necessarily and primarily for private respondent's
benefit.
These preliminary activities of the workers are as follows:
(a) First there is the roll call. This is followed by getting their individual work
assignments from the foreman.
(b) Thereafter, they are individually required to accomplish the Laborer's
Daily Accomplishment Report during which they are often made to explain
about their reported accomplishment the following day.
(c) Then they go to the stockroom to get the working materials, tools and
equipment.
(d) Lastly, they travel to the field bringing with them their tools, equipment
and materials.
All these activities take 30 minutes to accomplish (Rollo, Petition, p. 11).
Contrary to this contention, respondent avers that the instant complaint is not new, the very
same claim having been brought against herein respondent by the same group of rank and
file employees in the case of Associated Labor Union and Standard Fruit Corporation, NLRC
Case No. 26-LS-XI-76 which was filed way back April 27, 1976 when ALU was the
bargaining agent of respondent's rank and file workers. The said case involved a claim for
"waiting time", as the complainants purportedly were required to assemble at a designated
area at least 30 minutes prior to the start of their scheduled working hours "to ascertain the
work force available for the day by means of a roll call, for the purpose of assignment or
reassignment of employees to such areas in the plantation where they are most needed."
(Rollo, pp. 64- 65)
Noteworthy is the decision of the Minister of Labor, on May 12, 1978 in the aforecited case
(Associated Labor Union vs. Standard (Phil.) Fruit Corporation, NLRC Case No. 26-LS-XI-76
where significant findings of facts and conclusions had already been made on the matter.
The Minister of Labor held:

The thirty (30)-minute assembly time long practiced and institutionalized by

mutual consent of the parties under Article IV, Section 3, of the Collective
Bargaining Agreement cannot be considered as waiting time within the
purview of Section 5, Rule I, Book III of the Rules and Regulations
Implementing the Labor Code. ...
Furthermore, the thirty (30)-minute assembly is a deeply- rooted, routinary
practice of the employees, and the proceedings attendant thereto are not
infected with complexities as to deprive the workers the time to attend to
other personal pursuits. They are not new employees as to require the
company to deliver long briefings regarding their respective work
assignments. Their houses are situated right on the area where the farm are
located, such that after the roll call, which does not necessarily require the
personal presence, they can go back to their houses to attend to some
chores. In short, they are not subject to the absolute control of the company
during this period, otherwise, their failure to report in the assembly time
would justify the company to impose disciplinary measures. The CBA does
not contain any provision to this effect; the record is also bare of any proof on
this point. This, therefore, demonstrates the indubitable fact that the thirty
(30)-minute assembly time was not primarily intended for the interests of the
employer, but ultimately for the employees to indicate their availability or nonavailability for work during every working day. (Annex "E", Rollo, p. 57).
Accordingly, the issues are reduced to the sole question as to whether public respondent
National Labor Relations Commission committed a grave abuse of discretion in its resolution
of December 17, 1986.
The facts on which this decision was predicated continue to be the facts of the case in this
questioned resolution of the National Labor Relations Commission.
It is clear that herein petitioners are merely reiterating the very same claim which they filed
through the ALU and which records show had already long been considered terminated and
closed by this Court in G.R. No. L-48510. Therefore, the NLRC can not be faulted for ruling
that petitioners' claim is already barred by res-judicata.
Be that as it may, petitioners' claim that there was a change in the factual scenario which are
"substantial changes in the facts" makes respondent firm now liable for the same claim they
earlier filed against respondent which was dismissed. It is thus axiomatic that the noncompensability of the claim having been earlier established, constitute the controlling legal
rule or decision between the parties and remains to be the law of the case making this
petition without merit.
As aptly observed by the Solicitor General that this petition is "clearly violative of the familiar
principle of res judicata.There will be no end to this controversy if the light of the Minister of
Labor's decision dated May 12, 1979 that had long acquired the character of finality and
which already resolved that petitioners' thirty (30)-minute assembly time is not compensable,
the same issue can be re-litigated again." (Rollo, p. 183)
This Court has held:
In this connection account should be taken of the cognate principle that res
judicata operates to bar not only the relitigation in a subsequent action of the

issues squarely raised, passed upon and adjudicated in the first suit, but also
the ventilation in said subsequent suit of any other issue which could have
been raised in the first but was not. The law provides that 'the judgment or
order is, with respect to the matter directly adjudged or as to any other matter
that could have been raised in relation thereto, conclusive between the
parties and their successors in interest by title subsequent to the
commencement of the action .. litigating for the same thing and in the same
capacity.' So, even if new causes of action are asserted in the second action
(e.g. fraud, deceit, undue machinations in connection with their execution of
the convenio de transaccion), this would not preclude the operation of the
doctrine of res judicata. Those issues are also barred, even if not passed
upon in the first. They could have been, but were not, there raised. (Vda. de
Buncio v. Estate of the late Anita de Leon, 156 SCRA 352 [1987]).
Moreover, as a rule, the findings of facts of quasi-judicial agencies which have acquired
expertise because their jurisdiction is confined to specific matters are accorded not only
respect but at times even finality if such findings are supported by substantial evidence
(Special Events & Central Shipping Office Workers Union v. San Miguel Corporation, 122
SCRA 557 [1983]; Dangan v. NLRC, 127 SCRA 706 [1984]; Phil. Labor Alliance Council v.
Bureau of Labor Relations, 75 SCRA 162 [1977]; Mamerto v. Inciong, 118 SCRA 265 (1982];
National Federation of Labor Union (NAFLU) v. Ople, 143 SCRA 124 [1986]; Edi-Staff
Builders International, Inc. v. Leogardo, Jr., 152 SCRA 453 [1987]; Asiaworld Publishing
House, Inc. v. Ople, 152 SCRA 219 [1987]).
The records show that the Labor Arbiters' decision dated October 9, 1985 (Annex "E",
Petition) pointed out in detail the basis of his findings and conclusions, and no cogent reason
can be found to disturb these findings nor of those of the National Labor Relations
Commission which affirmed the same.
PREMISES CONSIDERED, the petition is DISMISSED for lack of merit and the decision of
the National Labor Relations Commission is AFFIRMED.
SO ORDERED.

HILARIO RADA, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION (Second Division) and PHILNOR
CONSULTANTS AND PLANNERS, INC., respondents.
Cabellero, Calub, Aumentado & Associates Law Offices for petitioner.

REGALADO, J.:
In this special civil action for certiorari, petitioner Rada seeks to annul the decision of
respondent National Labor Relations Commission (NLRC), dated November 19, 1990,
reversing the decision of the labor arbiter which ordered the reinstatement of petitioner with
backwages and awarded him overtime pay. 1
The facts, as stated in the Comment of private respondent Philnor Consultants and
Planners, Inc. (Philnor), are as follows:
Petitioner's initial employment with this Respondent was under a "Contract of
Employment for a Definite Period" dated July 7, 1977, copy of which is hereto
attached and made an integral part hereof as Annex A whereby Petitioner
was hired as "Driver" for the construction supervision phase of the Manila
North Expressway Extension, Second Stage (hereinafter referred to as
MNEE Stage 2) for a term of "about 24 months effective July 1, 1977.
xxx xxx xxx

Highlighting the nature of Petitioner's employment, Annex A specifically

provides as follows:
It is hereby understood that the Employer does not have a
continuing need for the services of the Employee beyond the
termination date of this contract and that the Employee's
services shall automatically, and without notice, terminate
upon the completion of the above specified phase of the
project; and that it is further understood that the engagement
of his/her services is coterminus with the same and not with
the whole project or other phases thereof wherein other
employees of similar position as he/she have been hired.
(Par. 7, emphasis supplied)
Petitioner's first contract of employment expired on June 30, 1979.
Meanwhile, the main project, MNEE Stage 2, was not finished on account of
various constraints, not the least of which was inadequate funding, and the
same was extended and remained in progress beyond the original period of
2.3 years. Fortunately for the Petitioner, at the time the first contract of
employment expired, Respondent was in need of Driver for the extended
project. Since Petitioner had the necessary experience and his performance
under the first contract of employment was found satisfactory, the position of
Driver was offered to Petitioner, which he accepted. Hence a second
Contract of Employment for a Definite Period of 10 months, that is, from July
1, 1979 to April 30, 1980 was executed between Petitioner and Respondent
on July 7, 1979. . . .
In March 1980 some of the areas or phases of the project were completed,
but the bulk of the project was yet to be finished. By that time some of those
project employees whose contracts of employment expired or were about to
expire because of the completion of portions of the project were offered
another employment in the remaining portion of the project. Petitioner was
among those whose contract was about to expire, and since his service
performance was satisfactory, respondent renewed his contract of
employment in April 1980, after Petitioner agreed to the offer. Accordingly, a
third contract of employment for a definite period was executed by and
between the Petitioner and the Respondent whereby the Petitioner was again
employed as Driver for 19 months, from May 1, 1980 to November 30,
1981, . . .
This third contract of employment was subsequently extended for a number
of times, the last extension being for a period of 3 months, that is, from
October 1, 1985 to December 31, 1985, . . .
The last extension, from October 1, 1985 to December 31, 1985 (Annex E)
covered by an "Amendment to the Contract of Employment with a Definite
Period," was not extended any further because Petitioner had no more work
to do in the project. This last extension was confirmed by a notice on
November 28, 1985 duly acknowledged by the Petitioner the very next
day, . . .

Sometime in the 2nd week of December 1985, Petitioner applied for

"Personnel Clearance" with Respondent dated December 9, 1985 and
acknowledged having received the amount of P3,796.20 representing
conversion to cash of unused leave credits and financial assistance.
Petitioner also released Respondent from all obligations and/or claims, etc. in
a "Release, Waiver and Quitclaim" . . . 2
Culled from the records, it appears that on May 20, 1987, petitioner filed before the NLRC,
National Capital Region, Department of Labor and Employment, a Complaint for nonpayment of separation pay and overtime pay. On June 3, 1987, Philnor filed its Position
Paper alleging, inter alia, that petitioner was not illegally terminated since the project for
which he was hired was completed; that he was hired under three distinct contracts of
employment, each of which was for a definite period, all within the estimated period of MNEE
Stage 2 Project, covering different phases or areas of the said project; that his work was
strictly confined to the MNEE Stage 2 Project and that he was never assigned to any other
project of Philnor; that he did not render overtime services and that there was no demand or
claim for him for such overtime pay; that he signed a "Release, Waiver and Quitclaim"
releasing Philnor from all obligations and claims; and that Philnor's business is to provide
engineering consultancy services, including supervision of construction services, such that it
hires employees according to the requirements of the project manning schedule of a
particular contract. 3
On July 2, 1987, petitioner filed an Amended Complaint alleging that he was illegally
dismissed and that he was not paid overtime pay although he was made to render three
hours overtime work form Monday to Saturday for a period of three years.
On July 7, 1987, petitioner filed his Position Paper claiming that he was illegally dismissed
since he was a regular employee entitled to security of tenure; that he was not a project
employee since Philnor is not engaged in the construction business as to be covered by
Policy Instructions No. 20; that the contract of employment for a definite period executed
between him and Philnor is against public policy and a clear circumvention of the law
designed merely to evade any benefits or liabilities under the statute; that his position as
driver was essential, necessary and desirable to the conduct of the business of Philnor; that
he rendered overtime work until 6:00 p.m. daily except Sundays and holidays and, therefore,
he was entitled to overtime pay. 4
In his Reply to Respondent's Position Paper, petitioner claimed that he was a regular
employee pursuant to Article 278(c) of the Labor Code and, thus, he cannot be terminated
except for a just cause under Article 280 of the Code; and that the public respondent's ruling
in Quiwa vs. Philnor Consultants and Planners, Inc. 5 is not applicable to his case since he was
an administrative employee working as a company driver, which position still exists and is
essential to the conduct of the business of Philnor even after the completion of his contract of
employment. 6 Petitioner likewise avers that the contract of employment for a definite period
entered into between him and Philnor was a ploy to defeat the intent of Article 280 of the Labor
Code.
On July 28, 1987, Philnor filed its Respondent's Supplemental Position Paper, alleging
therein that petitioner was not a company driver since his job was to drive the employees
hired to work at the MNEE Stage 2 Project to and from the filed office at Sto. Domingo
Interchange, Pampanga; that the office hours observed in the project were from 7:00 a.m. to
4:00 p.m. Mondays through Saturdays; that Philnor adopted the policy of allowing certain
employees, not necessarily the project driver, to bring home project vehicles to afford fast
and free transportation to and from the project field office considering the distance between

the project site and the employees' residence, to avoid project delays and inefficiency due to
employee tardiness caused by transportation problem; that petitioner was allowed to use a
project vehicle which he used to pick up and drop off some ten employees along Epifanio de
los Santos Avenue (EDSA), on his way home to Marikina, Metro Manila; that when he was
absent or on leave, another employee living in Metro Manila used the same vehicle in
transporting the same employees; that the time used by petitioner to and from his residence
to the project site from 5:30 a.m. to 7:00 a.m. and from 4:00 p.m. to 6:00 p.m., or about three
hours daily, was not overtime work as he was merely enjoying the benefit and convenience
of free transportation provided by Philnor, otherwise without such vehicle he would have
used at least four hours by using public transportation and spent P12.00 daily fare; that in
the case of Quiwa vs. Philnor Consultants and Planners, Inc., supra, the NLRC upheld
Philnor's position that Quiwa was a project employee and he was not entitled to termination
pay under Policy Instructions No. 20 since his employment was coterminous with the
completion of the project.
On August 25, 1987, Philnor filed its Respondent's Reply/Comments to Complainant's
Rejoinder and Reply, submitting therewith two letters dated January 5, 1985 and February 6,
1985, signed by MNEE Stage 2 Project employees, including herein petitioner, where they
asked what termination benefits could be given to them as the MNEE Stage 2 Project was
nearing completion, and Philnor's letter-reply dated February 22, 1985 informing them that
they are not entitled to termination benefits as they are contractual/project employees.
On August 31, 1989, Labor Arbiter Dominador M. Cruz rendered a decision 7 with the
following dispositive portion:
WHEREFORE, in view of all the foregoing considerations, judgment is
hereby rendered:
(1) Ordering the respondent company to reinstate the complainant to his
former position without loss of seniority rights and other privileges with full
backwages from the time of his dismissal to his actual reinstatement;
(2) Directing the respondent company to pay the complainant overtime pay
for the three excess hours of work performed during working days from
January 1983 to December 1985; and
(3) Dismissing all other claims for lack of merit.
SO ORDERED.
Acting on Philnor's appeal, the NLRC rendered its assailed decision dated November 19,
1990, setting aside the labor arbiter's aforequoted decision and dismissing petitioner's
complaint.
Hence this petition wherein petitioner charges respondent NLRC with grave abuse of
discretion amounting to lack of jurisdiction for the following reasons:
1. The decision of the labor arbiter, dated August 31, 1989, has already become final and
executory;

2. The case of Quiwa vs. Philnor Consultants and Planners, Inc. is not binding nor is it
applicable to this case;
3. The petitioner is a regular employee with eight years and five months of continuous
services for his employer, private respondent Philnor;
4. The claims for overtime services, reinstatement and full backwages are valid and
meritorious and should have been sustained; and
5. The decision of the labor arbiter should be reinstated as it is more in accord with the facts,
the law and evidence.
The petition is devoid of merit.
1. Petitioner questions the jurisdiction of respondent NLRC in taking cognizance of the
appeal filed by Philnor in spite of the latter's failure to file a supersedeas bond within ten
days from receipt of the labor arbiter's decision, by reason of which the appeal should be
deemed to have been filed out of time. It will be noted, however, that Philnor was able to file
a bond although it was made beyond the 10-day reglementary period.
While it is true that the payment of the supersedeas bond is an essential requirement in the
perfection of an appeal, however, where the fee had been paid although payment was
delayed, the broader interests of justice and the desired objective of resolving controversies
on the merits demands that the appeal be given due course. Besides, it was within the
inherent power of the NLRC to have allowed late payment of the bond, considering that the
aforesaid decision of the labor arbiter was received by private respondent on October 3,
1989 and its appeal was duly filed on October 13, 1989. However, said decision did not state
the amount awarded as backwages and overtime pay, hence the amount of the supersedeas
bond could not be determined. It was only in the order of the NLRC of February 16, 1990
that the amount of the supersedeas bond was specified and which bond, after an extension
granted by the NLRC, was timely filed by private respondent.
Moreover, as provided by Article 221 of the Labor Code, "in any proceeding before the
Commission or any of the Labor Arbiters, the rules of evidence prevailing in Courts of law or
equity shall not be controlling and it is the spirit and intention of this Code that the
Commission and its members and the Labor Arbiters shall use every and all reasonable
means to ascertain the facts in each case speedily and objectively without regard to
technicalities of law or procedure, all in the interest of due process. 8 Finally, the issue of timeliness of
the appeal being an entirely new and unpleaded matter in the proceedings below it may not now be raised for the first time before
this Court. 9

2. Petitioner postulates that as a regular employee, he is entitled to security of tenure, hence

he cannot be terminated without cause. Private respondent Philnor believes otherwise and
asserts that petitioner is merely a project employee who was terminated upon the completion
of the project for which he was employed.
In holding that petitioner is a regular employee, the labor arbiter found that:
. . . There is no question that the complainant was employed as driver in the
respondent company continuously from July 1, 1977 to December 31, 1985
under various contracts of employment. Similarly, there is no dispute that
respondent Philnor Consultant & Planner, Inc., as its business name

connotes, has been engaged in providing to its client(e)le engineering

consultancy services. The record shows that while the different labor
contracts executed by the parties stipulated definite periods of engaging the
services of the complainant, yet the latter was suffered to continue
performing his job upon the expiration of one contract and the renewal of
another. Under these circumstances, the complaint has obtained the status of
regular employee, it appearing that he has worked without fail for almost
eight years, a fraction of six months considered as one whole year, and that
his assigned task as driver was necessary and desirable in the usual
trade/business of the respondent employer. Assuming to be true, as spelled
out in the employment contract, that the Employer has no "continuing need
for the services of the Employe(e) beyond the termination date of this
contract and that the Employee's services shall automatically, and without
notice, terminate upon completion of the above specified phase of the
project," still we cannot see our way clear why the complainant was hired and
his services engaged contract after contract straight from 1977 to 1985
which, to our considered view, lends credence to the contention that he
worked as regular driver ferrying early in the morning office personnel to the
company main office in Pampanga and bringing back late in the afternoon to
Manila, and driving company executives for inspection of construction
workers to the jobsites. All told, we believe that the complainant, under the
environmental facts obtaining in the case at bar, is a regular employee, the
provisions of written agreement to the
contrary notwithstanding and regardless of the oral understanding of the
parties . . . 10
On the other hand, respondent NLRC declared that, as between the uncorroborated and
unsupported assertions of petitioners and those of private respondent which are supported
by documents, greater credence should be given the latter. It further held that:
Complainant was hired in a specific project or undertaking as driver. While
such project was still on-going he was hired several times with his
employment period fixed every time his contract was renewed. At the
completion of the specific project or undertaking his employment contract
was not renewed.
We reiterate our ruling in the case of (Quiwa) vs. Philnor Consultants and
Planners, Inc., NLRC RAB III 5-1738-84, it is being applicable in this
case, viz.:
. . . While it is true that the activities performed by him were
necessary or desirable in the usual business or trade of the
respondent as consultants, planners, contractor and while it is
also true that the duration of his employment was for a period
of about seven years, these circumstances did not make him
a
regular employee in contemplation of Article 281 of (the)
Labor Code. . . . 11
Our ruling in Sandoval Shipyards, Inc. vs. National Labor Relations Commission, et al. 12 is
applicable to the case at bar. Thus:

We hold that private respondents were project employees whose work was
coterminous with the project or which they were hired. Project employees, as
distinguished from regular or non-project employees, are mentioned in
section 281 of the Labor Code as those "where the employment has been
fixed for a specific project or undertaking the completion or termination of
which has been determined at the time of the engagement of the employee."
Policy Instructions No. 20 of the Secretary of Labor, which was issued to
stabilize employer-employee relations in the construction industry, provides:
Project employees are those employed in connection with a
particular construction project. Non-project (regular)
employees are those employed by a construction company
without reference to any particular project.
Project employees are not entitled to termination pay if they
are terminated as a result of the completion of the project or
any phase thereof in which they are employed, regardless of
the number of projects in which they have been employed by
a particular construction company. Moreover, the company is
not required to obtain clearance from the Secretary of Labor
in connection with such termination.
The petitioner cited three of its own cases wherein the National Labor
Relations Commission, Deputy Minister of Labor and Employment Inciong
and the Director of the National Capital Region held that the layoff of its
project employees was lawful. Deputy Minister Inciong in TFU Case No.
1530, In Re Sandoval Shipyards, Inc. Application for Clearance to Terminate
Employees, rendered the following ruling on February 26, 1979;
We feel that there is merit in the contention of the applicant
corporation. To our mind, the employment of the employees
concerned were fixed for a specific project or undertaking.For
the nature of the business the corporation is engaged into is
one which will not allow it to employ workers for an indefinite
period.
It is significant to note that the corporation does not construct
vessels for sale or otherwise which will demand continuous
productions of ships and will need permanent or regular
workers. It merely accepts contracts for shipbuilding or for
repair of vessels form third parties and, only, on occasion
when it has work contract of this nature that it hires workers to
do the job which, needless to say, lasts only for less than a
year or longer.
The completion of their work or project automatically
terminates their employment, in which case, the employer is,
under the law, only obliged to render a report on the
termination of the employment. (139-140, Rollo of G.R. No.
65689) (Emphasis supplied)

In Cartagenas, et al. vs. Romago Electric Company, Inc., et al., 13 we likewise held that:
As an electrical contractor, the private respondent depends for its business
on the contracts it is able to obtain from real estate developers and builders
of buildings. Since its work depends on the availability of such contracts or
"projects," necessarily the duration of the employment's of this work force is
not permanent but co-terminus with the projects to which they are assigned
and from whose payrolls they are paid. It would be extremely burdensome
for their employer who, like them, depends on the availability of projects, if it
would have to carry them as permanent employees and pay them wages
even if there are no projects for them to work on. (Emphasis supplied.)
It must be stressed herein that although petitioner worked with Philnor as a driver for eight
years, the fact that his services were rendered only for a particular project which took that
same period of time to complete categorizes him as a project employee. Petitioner was
employed for one specific project.
A non-project employee is different in that the employee is hired for more than one project. A
non-project employee,vis-a-vis a project employee, is best exemplified in the case
of Fegurin, et al. vs. National Labor Relations Commission, et al. 14 wherein four of the
petitioners had been working with the company for nine years, one for eight years, another for six
years, the shortest term being three years. In holding that petitioners are regular employees, this
Court therein explained:
Considering the nature of the work of petitioners, that of carpenter, laborer or
mason, their respective jobs would actually be continuous and on-going.
When a project to which they are individually assigned is completed, they
would be assigned to the next project or a phase thereof. In other words, they
belonged to a "work pool" from which the company would draw workers for
assignment to other projects at its discretion. They are, therefore, actually
"non-project employees."
From the foregoing, it is clear that petitioner is a project employee considering that he does
not belong to a "work pool" from which the company would draw workers for assignment to
other projects at its discretion. It is likewise apparent from the facts obtaining herein that
petitioner was utilized only for one particular project, the MNEE Stage 2 Project of
respondent company. Hence, the termination of herein petitioner is valid by reason of the
completion of the project and the expiration of his employment contract.
3. Anent the claim for overtime compensation, we hold that petitioner is entitled to the same.
The fact that he picks up employees of Philnor at certain specified points along EDSA in
going to the project site and drops them off at the same points on his way back from the field
office going home to Marikina, Metro Manila is not merely incidental to petitioner's job as a
driver. On the contrary, said transportation arrangement had been adopted, not so much for
the convenience of the employees, but primarily for the benefit of the employer, herein
private respondent. This fact is inevitably deducible from the Memorandum of respondent
company:
The herein Respondent resorted to the above transport arrangement
because from its previous project construction supervision experiences,
Respondent found out that project delays and inefficiencies resulted from
employees' tardiness; and that the problem of tardiness, in turn, was

aggravated by transportation problems, which varied in degrees in proportion

to the distance between the project site and the employees' residence. In
view of this lesson from experience, and as a practical, if expensive, solution
to employees' tardiness and its concomitant problems, Respondent adopted
the policy of allowing certain employees not necessarily project drivers
to bring home project vehicles, so that employees could be afforded fast,
convenient and free transportation to and from the project field office. . . . 15
Private respondent does not hesitate to admit that it is usually the project driver who is
tasked with picking up or dropping off his fellow employees. Proof thereof is the undisputed
fact that when petitioner is absent, another driver is supposed to replace him and drive the
vehicle and likewise pick up and/or drop off the other employees at the designated points on
EDSA. If driving these employees to and from the project site is not really part of petitioner's
job, then there would have been no need to find a replacement driver to fetch these
employees. But since the assigned task of fetching and delivering employees is
indispensable and consequently mandatory, then the time required of and used by petitioner
in going from his residence to the field office and back, that is, from 5:30 a.m. to 7:00 a.m.
and from 4:00 p.m. to around 6:00 p.m., which the labor arbiter rounded off as averaging
three hours each working day, should be paid as overtime work. Quintessentially, petitioner
should be given overtime pay for the three excess hours of work performed during working
days from January, 1983 to December, 1985.
WHEREFORE, subject to the modification regarding the award of overtime pay to herein
petitioner, the decision appealed from is AFFIRMED in all other respects.
SO ORDERED.