WEEKLY REST PERIODS

THIRD DIVISION
[G.R. No. 126383. November 28, 1997]
SAN

JUAN DE DIOS HOSPITAL EMPLOYEES ASSOCIATION-AFW/MA.

CONSUELO MAQUILING, LEONARDO MARTINEZ, DOMINGO ELA,
JR., RODOLFO CALUCIN, JR., PERLA MENDOZA, REX RAPHAEL
REYES, ROGELIO BELMONTE, AND 375 OTHER EMPLOYEE-UNION
MEMBERS, petitioners, vs. NATIONAL
LABOR
RELATIONS
COMMISSION, AND SAN JUAN DE DIOS HOSPITAL, respondents.

FRANCISCO, J.:
Petitioners, the rank-and-file employee-union officers and members of San
Juan De Dios Hospital Employees Association, sent on July 08, 1991, a four (4)-page
letter with attached support signatures x xx requesting and pleading for the
expeditious implementation and payment by respondent Juan De Dios Hospital "of
the 40 HOURS/5-DAY WORKWEEK with compensable weekly two (2) days off
provided for by Republic Act 5901 as clarified for enforcement by the Secretary of
Labors Policy Instructions No. 54 dated April 12, 1988. [1] Respondent hospital failed
to give a favorable response; thus, petitioners filed a complaint regarding their claims
for statutory benefits under the above-cited law and policy issuance [2], docketed as
NLRC NCR Case No. 00-08-04815-91. On February 26, 1992, the Labor
Arbiter[3] dismissed the complaint. Petitioners appealed before public respondent
National Labor Relations Commission[4] (NLRC), docketed as NLRC NCR CA
003028-92, which affirmed the Labor Arbiters decision. Petitioners subsequent
motion for reconsideration was denied; hence, this petition under Rule 65 of the
Rules of Court ascribing grave abuse of discretion on the part of NLRC in concluding
that Policy Instructions No. 54 proceeds from a wrong interpretation of RA 5901 [5] and
Article 83 of the Labor Code.
As the Court sees it, the core issue is whether Policy Instructions No. 54
issued by then Labor Secretary (now Senator) Franklin M. Drilon is valid or not.
The policy instruction in question provides in full as follows:

wage by reason of the shortened workweek prescribed by the Act. In effect, RA 5901
requires that the covered hospital workers who used to work seven (7) days a week
should be paid for such number of days for working only 5 days or 40 hours a week.
The evident intention of RA 5901 is to reduce the number of hospital personnel,
considering the nature of their work, and at the same time guarantee the payment to
them of a full weekly wage for seven (7) days. This is quite clear in the Exemplary
Note of RA 5901 which states:
As compared with the other employees and laborers, these hospital and health clinic
personnel are over-worked despite the fact that their duties are more delicate in
nature. If we offer them better working conditions, it is believed that the brain drain,
that our country suffers nowadays as far as these personnel are concerned will be
considerably lessened. The fact that these hospitals and health clinics personnel
perform duties which are directly concerned with the health and lives of our people
does not mean that they should work for a longer period than most employees and
laborers.They are also entitled to as much rest as other workers. Making them work
longer than is necessary may endanger, rather than protect the health of their
patients. Besides, they are not receiving better pay than the other
workers. Therefore, it is just and fair that they may be made to enjoy the privileges of
equal working hours with other workers except those excepted by law. (Sixth
Congress of the Republic of the Philippines, Third Session, House of
Representatives, H. No. 16630)
The Labor Code in its Article 83 adopts and incorporates the basic provisions of RA
5901 and retains its spirit and intent which is to shorten the workweek of covered
hospital personnel and at the same time assure them of a full weekly wage.
Consistent with such spirit and intent, it is the position of the Department that
personnel in subject hospital and clinics are entitled to a full weekly wage for seven
(7) days it they have completed the 40-hours/5-day workweek in any given
workweek.
All enforcement and adjudicatory agencies of this Department shall be guided by this
issuance in the disposition of cases involving the personnel of covered hospitals and
clinics.
Done in the City of Manila, this 12th day of April, 1988.
(Sgd.) FRANKLIN M. DRILON

Policy Instruction No. 54

Secretary

To: All Concerned

(Emphasis Added)

Subject: Working Hours and Compensation of Hospital/Clinic Personnel

We note that Policy Instruction No. 54 relies and purports to implement

Republic Act No. 5901, otherwise known as An Act Prescribing Forty Hours A Week
Of Labor For Government and Private Hospitals Or Clinic Personnel, enacted on
June 21, 1969. Reliance on Republic Act No. 5901, however, is misplaced for the
said statute, as correctly ruled by respondent NLRC, has long been repealed with the
passage of the Labor Code on May 1, 1974, Article 302 of which explicitly
provides: All labor laws not adopted as part of this Code either directly or by
reference are hereby repealed. All provisions of existing laws, orders, decrees, rules
and regulations inconsistent herewith are likewise repealed. Accordingly, only Article
83 of the Labor Code which appears to have substantially incorporated or
reproduced the basic provisions of Republic Act No. 5901 may support Policy

This issuance clarifies the enforcement policy of this Department on the working
hours and compensation of personnel employed by hospital/clinics with a bed
capacity of 100 or more and those located in cities and municipalities with a
population of one million or more.
Republic Act 5901 took effect on 21 June 1969 prescribes a 40-hour/5 day work
week for hospital/clinic personnel. At the same time, the Act prohibits the diminution
of the compensation of these workers who would suffer a reduction in their weekly

Instructions No. 54 on which the latters validity may be gauged. Article 83 of the
Labor Code states:
Art. 83. Normal Hours of Work. -- The normal hours of work of any employee shall
not exceed eight (8) hours a day.
Health personnel in cities and municipalities with a population of at least one million
(1,000,000) or in hospitals and clinics with a bed capacity of at least one hundred
(100) shall hold regular office hours for eight (8) hours a day, for five (5) days a
week, exclusive of time for meals, exceptwhere the exigencies of the service require
that such personnel work for six (6) days or forty-eight (48) hours, in which case they
shall be entitled to an additional compensation of at least thirty per cent (30%) of
their regular wage for work on the sixth day. For purposes of this Article, health
personnel shall include: resident physicians, nurses, nutritionists, dietitians,
pharmacists, social workers, laboratory technicians, paramedical technicians,
psychologists, midwives, attendants and all other hospital or clinic personnel.
(Underscoring supplied)
A cursory reading of Article 83 of the Labor Code betrays petitioners position
that hospital employees are entitled to a full weekly salary with paid two (2) days off if
they have completed the 40-hour/5-day workweek. [6] What Article 83 merely provides
are: (1) the regular office hour of eight hours a day, five days per week for health
personnel, and (2) where the exigencies of service require that health personnel
work for six days or forty-eight hours then such health personnel shall be entitled to
an additional compensation of at least thirty percent of their regular wage for work on
the sixth day. There is nothing in the law that supports then Secretary of Labors
assertion that personnel in subject hospitals and clinics are entitled to a full weekly
wage for seven (7) days if they have completed the 40-hour/5-day workweek in any
given workweek. Needless to say, the Secretary of Labor exceeded his authority by
including a two days off with pay in contravention of the clear mandate of the
statute. Such act the Court shall not countenance. Administrative interpretation of the
law, we reiterate, is at best merely advisory, [7] and the Court will not hesitate to strike
down an administrative interpretation that deviates from the provision of the statute.
Indeed, even if we were to subscribe with petitioners erroneous assertion that
Republic Act No. 5901 has neither been amended nor repealed by the Labor Code,
we nevertheless find Policy Instructions No. 54 invalid. A perusal of Republic Act No.
5901[8] reveals nothing therein that gives two days off with pay for health personnel
who complete a 40-hour work or 5-day workweek. In fact, the Explanatory Note of
House Bill No. 16630 (later passed into law as Republic Act No. 5901) explicitly
states that the bills sole purpose is to shorten the working hours of health personnel
and not to dole out a two days off with pay.
Hence:
The accompanying bill seeks to grant resident physicians, staff nurses, nutritionists,
midwives, attendants and other hospital and health clinic personnel of public and
private hospitals and clinics, the privilege of enjoying the eight hours a week
exclusive of time for lunch granted by law to all government employees and workers
except those employed in schools and in courts. At present those hospitals and
health clinic personnel including those employed in private hospitals and clinics, work
six days a week, 8 hours a day or 48 hours a week.
As compared with the other employees and laborers, these hospital and health clinic
personnel are over-worked despite the fact that their duties are more delicate in
nature. If we offer them better working conditions, it is believed that the brain drain,
that our country suffers nowadays as far as these personnel are concerned will be

considerably lessened. The fact that these hospitals and health clinic personnel
perform duties which are directly concerned with the health and lives of our people
does not mean that they should work for a longer period than most employees and
laborers.They are also entitled to as much rest as other workers. Making them work
longer than is necessary may endanger, rather than protect, the health of their
patients. Besides, they are not receiving better pay than the other
workers. Therefore, it is just and fair that they be made to enjoy the privileges of
equal working hours with other workers except those excepted by law.

xxx xxx xxx

Section 15. Additional Pay Under the Act and C.A. No. 444. (a) Employees of
covered hospitals and clinics who are entitled to the benefits provided under the
Eight-Hour Labor Law, as amended, shall be paid an additional compensation
equivalent to their regular rate plus at least twenty-five percent thereof for work
performed on Sunday and Holidays, not exceeding eight hours, such employees
shall be entitled to an additional compensation of at least 25% of their regular rate.

In the light of the foregoing, approval of this bill is strongly recommended.

(b) For work performed in excess of forty hours a week, excluding those rendered in
excess of eight hours a day during the week, employees covered by the Eight-Hour
Labor Law shall be entitled to an additional straight-time pay which must be
equivalent at least to their regular rate.

(SGD.) SERGIO H.
LOYOLA
Congressman, 3rd District Manila
(
Annex F of petition, underscoring supplied)
Further, petitioners' position is also negated by the very rules and regulations
promulgated by the Bureau of Labor Standards which implement Republic Act No.
5901. Pertinent portions of the implementing rules provide:
RULES AND REGULATIONS IMPLEMENTING REPUBLIC ACT NO. 5901
By virtue of Section 79 of the Revised Administrative Code, as modified by section 18
of Implementation Report for Reorganization Plan No. 20-A on Labor, vesting in the
Bureau of Labor Standards the authority to promulgate rules and regulations to
implement wage and hour laws, the following rules and regulations are hereby issued
for the implementation of Republic Act No. 5901.

If petitioners are entitled to two days off with pay, then there appears to be no
sense at all why Section 15 of the implementing rules grants additional compensation
equivalent to the regular rate plus at least twenty-five percent thereof for work
performed on Sunday to health personnel, or an additional straight-time pay which
must be equivalent at least to the regular rate [f]or work performed in excess of forty
hours a week xxx. Policy Instructions No. 54 to our mind unduly extended the
statute. The Secretary of Labor moreover erred in invoking the spirit and intent of
Republic Act No. 5901 and Article 83 of the Labor Code for it is an elementary rule of
statutory construction that when the language of the law is clear and unequivocal, the
law must be taken to mean exactly what it says. [9] No additions or revisions may be
permitted. Policy Instructions No. 54 being inconsistent with and repugnant to the
provision of Article 83 of the Labor Code, as well as to Republic Act No. 5901, should
be, as it is hereby, declared void.
WHEREFORE, the decision appealed from is AFFIRMED. No costs.
SO ORDERED.

CHAPTER I Coverage
Section 1. General Statement on Coverage. Republic Act No. 5901, hereinafter
referred to as the Act, shall apply to:
(a) All hospitals and clinics, including those with a bed capacity of less than one
hundred, which are situated in cities or municipalities with a population of one million
or more; and to
(b) All hospitals and clinics with a bed capacity of at least one hundred, irrespective
of the size of population of the city or municipality where they may be situated.
xxx xxx xxx
Section 7. Regular Working Day. The regular working days of covered employees
shall be not more than five days in a workweek. The workweek may begin at any
hour and on any day, including Saturday or Sunday, designated by the employer.
Employers are not precluded from changing the time at which the workday or
workweek begins, provided that the change is not intended to evade the
requirements of these regulations on the payment of additional compensation.
REGULAR HOLIDAYS

ninth of April the first of May, the

twelfth of June, the fourth of July, the
thirtieth of November, the twenty-fifth
and the thirtieth of December and the
day designated by law for holding a
general election.

G.R. No. L-52415 October 23, 1984

INSULAR BANK OF ASIA AND AMERICA EMPLOYEES' UNION
(IBAAEU), petitioner,
vs.
HON. AMADO G. INCIONG, Deputy Minister, Ministry of Labor and INSULAR
BANK OF ASIA AND AMERICA, respondents.
This is a petition for certiorari to set aside the order dated November 10, 1979, of
respondent Deputy Minister of Labor, Amado G. Inciong, in NLRC case No. RB-IV1561-76 entitled "Insular Bank of Asia and America Employees' Union (complainantappellee), vs. Insular Bank of Asia and America" (respondent-appellant), the
dispositive portion of which reads as follows: t.hqw
xxxxxxxxx
ALL THE FOREGOING CONSIDERED, let the appealed
Resolution en banc of the National Labor Relations
Commission dated 20 June 1978 be, as it is hereby, set aside
and a new judgment. promulgated dismissing the instant case
for lack of merit (p. 109 rec.).
The antecedent facts culled from the records are as follows:
On June 20, 1975, petitioner filed a complaint against the respondent bank for the
payment of holiday pay before the then Department of Labor, National Labor
Relations Commission, Regional Office No. IV in Manila. Conciliation having failed,
and upon the request of both parties, the case was certified for arbitration on July 7,
1975 (p. 18, NLRC rec.
On August 25, 1975, Labor Arbiter Ricarte T. Soriano rendered a decision in the
above-entitled case, granting petitioner's complaint for payment of holiday pay.
Pertinent portions of the decision read: t.hqw
xxxxxxxxx
The records disclosed that employees of respondent bank
were not paid their wages on unworked regular holidays as
mandated by the Code, particularly Article 208, to wit: t.
hqw
Art. 208. Right to holiday pay.
(a) Every worker shall be paid his
regular daily wage during regular
holidays, except in retail and service
establishments regularly employing
less than 10 workers.
(b) The term "holiday" as used in this
chapter, shall include: New Year's Day,
Maundy Thursday, Good Friday, the

November, the twenty-fifth and the thirtieth of December, and

the day designated by law for holding a general election.
Accordingly, on February 16, 1976, by authority of Article 5 of the same Code, the
Department of Labor (now Ministry of Labor) promulgated the rules and regulations
for the implementation of holidays with pay. The controversial section thereof
reads: t.hqw

xxxxxxxxx
This conclusion is deduced from the fact that the daily rate of
pay of the bank employees was computed in the past with the
unworked regular holidays as excluded for purposes of
determining the deductible amount for absences
incurred Thus, if the employer uses the factor 303 days as a
divisor in determining the daily rate of monthly paid employee,
this gives rise to a presumption that the monthly rate does not
include payments for unworked regular holidays. The use of
the factor 303 indicates the number of ordinary working days
in a year (which normally has 365 calendar days), excluding
the 52 Sundays and the 10 regular holidays. The use of 251
as a factor (365 calendar days less 52 Saturdays, 52
Sundays, and 10 regular holidays) gives rise likewise to the
same presumption that the unworked Saturdays, Sundays
and regular holidays are unpaid. This being the case, it is not
amiss to state with certainty that the instant claim for wages
on regular unworked holidays is found to be tenable and
meritorious.
WHEREFORE, judgment is hereby rendered:
(a) xxxxxxx xxx
(b) Ordering respondent to pay wages to all its employees for
all regular h(olidays since November 1, 1974 (pp. 97-99, rec.,
underscoring supplied).
Respondent bank did not appeal from the said decision. Instead, it complied with the
order of Arbiter Ricarte T. Soriano by paying their holiday pay up to and including
January, 1976.
On December 16, 1975, Presidential Decree No. 850 was promulgated amending,
among others, the provisions of the Labor Code on the right to holiday pay to read as
follows: t.hqw
Art. 94. Right to holiday pay. (a) Every worker shall be paid
his regular daily wages during regular holidays, except in
retail and service establishments regularly employing less
than ten (10) workers;
(b) The employer may require an employee to work on any
holiday but such employee shall be paid a compensation
equivalent to twice his regular rate and
(c) As used in this Article, "holiday" includes New Year's Day,
Maundy Thursday, Good Friday, the ninth of April, the first of
May, the twelfth of June, the fourth of July, the thirtieth of

Sec. 2. Status of employees paid by the month.

Employees who are uniformly paid by the month,
irrespective of the number of working days therein, with a
salary of not less than the statutory or established minimum
wage shall be presumed to be paid for all days in the month
whether worked or not.
For this purpose, the monthly minimum wage shall not be less
than the statutory minimum wage multiplied by 365 days
divided by twelve" (italics supplied).
On April 23, 1976, Policy Instruction No. 9 was issued by the then Secretary of Labor
(now Minister) interpreting the above-quoted rule, pertinent portions of which
read: t.hqw
xxxxxxxxx
The ten (10) paid legal holidays law, to start with, is intended
to benefit principally daily employees. In the case of monthly,
only those whose monthly salary did not yet include payment
for the ten (10) paid legal holidays are entitled to the benefit.
Under the rules implementing P.D. 850, this policy has been
fully clarified to eliminate controversies on the entitlement of
monthly paid employees, The new determining rule is this: If
the monthly paid employee is receiving not less than P240,
the maximum monthly minimum wage, and his monthly pay is
uniform from January to December, he is presumed to be
already paid the ten (10) paid legal holidays. However, if
deductions are made from his monthly salary on account of
holidays in months where they occur, then he is still entitled to
the ten (10) paid legal holidays. ..." (emphasis supplied).
Respondent bank, by reason of the ruling laid down by the aforecited rule
implementing Article 94 of the Labor Code and by Policy Instruction No. 9, stopped
the payment of holiday pay to an its employees.
On August 30, 1976, petitioner filed a motion for a writ of execution to enforce the
arbiter's decision of August 25, 1975, whereby the respondent bank was ordered to
pay its employees their daily wage for the unworked regular holidays.
On September 10, 1975, respondent bank filed an opposition to the motion for a writ
of execution alleging, among others, that: (a) its refusal to pay the corresponding
unworked holiday pay in accordance with the award of Labor Arbiter Ricarte T.
Soriano dated August 25, 1975, is based on and justified by Policy Instruction No. 9
which interpreted the rules implementing P. D. 850; and (b) that the said award is
already repealed by P.D. 850 which took effect on December 16, 1975, and by said
Policy Instruction No. 9 of the Department of Labor, considering that its monthly paid

employees are not receiving less than P240.00 and their monthly pay is uniform from
January to December, and that no deductions are made from the monthly salaries of
its employees on account of holidays in months where they occur (pp. 64-65, NLRC
rec.).
On October 18, 1976, Labor Arbiter Ricarte T. Soriano, instead of issuing a writ of
execution, issued an order enjoining the respondent bank to continue paying its
employees their regular holiday pay on the following grounds: (a) that the judgment is
already final and the findings which is found in the body of the decision as well as the
dispositive portion thereof is res judicata or is the law of the case between the
parties; and (b) that since the decision had been partially implemented by the
respondent bank, appeal from the said decision is no longer available (pp. 100-103,
rec.).

On August 13, 1979, the National Labor Relations Commission issued an order
which states: t.hqw
The Chief, Research and Information Division of this
Commission is hereby directed to designate a SocioEconomic Analyst to compute the holiday pay of the
employees of the Insular Bank of Asia and America from April
1976 to the present, in accordance with the Decision of the
Labor Arbiter dated August 25, 1975" (p. 80, rec.).
On November 10, 1979, the Office of the Minister of Labor, through Deputy Minister
Amado G. Inciong, issued an order, the dispositive portion of which states: t.
hqw

On November 17, 1976, respondent bank appealed from the above-cited order of
Labor Arbiter Soriano to the National Labor Relations Commission, reiterating therein
its contentions averred in its opposition to the motion for writ of execution.
Respondent bank further alleged for the first time that the questioned order is not
supported by evidence insofar as it finds that respondent bank discontinued payment
of holiday pay beginning January, 1976 (p. 84, NLRC rec.).
On June 20, 1978, the National Labor Relations Commission promulgated its
resolution en banc dismissing respondent bank's appeal, the dispositive portion of
which reads as follows: t.hqw
In view of the foregoing, we hereby resolve to dismiss, as we
hereby dismiss, respondent's appeal; to set aside Labor
Arbiter Ricarte T. Soriano's order of 18 October 1976 and, as
prayed for by complainant, to order the issuance of the proper
writ of execution (p. 244, NLRC rec.).
Copies of the above resolution were served on the petitioner only on February 9,
1979 or almost eight. (8) months after it was promulgated, while copies were served
on the respondent bank on February 13, 1979.

ALL THE FOREGOING CONSIDERED, let the appealed

Resolution en banc of the National Labor Relations
Commission dated 20 June 1978 be, as it is hereby, set aside
and a new judgment promulgated dismissing the instant case
for lack of merit (p. 436, NLRC rec.).
Hence, this petition for certiorari charging public respondent Amado G. Inciong with
abuse of discretion amounting to lack or excess of jurisdiction.
The issue in this case is: whether or not the decision of a Labor Arbiter awarding
payment of regular holiday pay can still be set aside on appeal by the Deputy
Minister of Labor even though it has already become final and had been partially
executed, the finality of which was affirmed by the National Labor Relations
Commission sitting enbanc, on the basis of an Implementing Rule and Policy
Instruction promulgated by the Ministry of Labor long after the said decision had
become final and executory.
WE find for the petitioner.
I

On February 21, 1979, respondent bank filed with the Office of the Minister of Labor
a motion for reconsideration/appeal with urgent prayer to stay execution, alleging
therein the following: (a) that there is prima facie evidence of grave abuse of
discretion, amounting to lack of jurisdiction on the part of the National Labor
Relations Commission, in dismissing the respondent's appeal on pure technicalities
without passing upon the merits of the appeal and (b) that the resolution appealed
from is contrary to the law and jurisprudence (pp. 260-274, NLRC rec.).
On March 19, 1979, petitioner filed its opposition to the respondent bank's appeal
and alleged the following grounds: (a) that the office of the Minister of Labor has no
jurisdiction to entertain the instant appeal pursuant to the provisions of P. D. 1391; (b)
that the labor arbiter's decision being final, executory and unappealable, execution is
a matter of right for the petitioner; and (c) that the decision of the labor arbiter dated
August 25, 1975 is supported by the law and the evidence in the case (p. 364, NLRC
rec.).
On July 30, 1979, petitioner filed a second motion for execution pending appeal,
praying that a writ of execution be issued by the National Labor Relations
Commission pending appeal of the case with the Office of the Minister of Labor.
Respondent bank filed its opposition thereto on August 8, 1979.

WE agree with the petitioner's contention that Section 2, Rule IV, Book III of the
implementing rules and Policy Instruction No. 9 issued by the then Secretary of
Labor are null and void since in the guise of clarifying the Labor Code's provisions on
holiday pay, they in effect amended them by enlarging the scope of their exclusion (p.
1 1, rec.).
Article 94 of the Labor Code, as amended by P.D. 850, provides: t.hqw
Art. 94. Right to holiday pay. (a) Every worker shall be paid
his regular daily wage during regular holidays, except in retail
and service establishments regularly employing less than ten
(10) workers. ...
The coverage and scope of exclusion of the Labor Code's holiday pay provisions is
spelled out under Article 82 thereof which reads: t.hqw
Art. 82. Coverage. The provision of this Title shall apply to
employees in all establishments and undertakings, whether
for profit or not, but not to government employees,
managerial employees, field personnel members of the family

of the employer who are dependent on him for support

domestic helpers, persons in the personal service of another,
and workers who are paid by results as determined by the
Secretary of Labor in appropriate regulations.
... (emphasis supplied).
From the above-cited provisions, it is clear that monthly paid employees are not
excluded from the benefits of holiday pay. However, the implementing rules on
holiday pay promulgated by the then Secretary of Labor excludes monthly paid
employees from the said benefits by inserting, under Rule IV, Book Ill of the
implementing rules, Section 2, which provides that: "employees who are uniformly
paid by the month, irrespective of the number of working days therein, with a salary
of not less than the statutory or established minimum wage shall be presumed to be
paid for all days in the month whether worked or not. "
Public respondent maintains that "(T)he rules implementing P. D. 850 and Policy
Instruction No. 9 were issued to clarify the policy in the implementation of the ten (10)
paid legal holidays. As interpreted, 'unworked' legal holidays are deemed paid insofar
as monthly paid employees are concerned if (a) they are receiving not less than the
statutory minimum wage, (b) their monthly pay is uniform from January to December,
and (c) no deduction is made from their monthly salary on account of holidays in
months where they occur. As explained in Policy Instruction No, 9, 'The ten (10) paid
legal holidays law, to start with, is intended to benefit principally daily paid
employees. In case of monthly, only those whose monthly salary did not yet include
payment for the ten (10) paid legal holidays are entitled to the benefit' " (pp. 340-341,
rec.). This contention is untenable.
It is elementary in the rules of statutory construction that when the language of the
law is clear and unequivocal the law must be taken to mean exactly what it says. In
the case at bar, the provisions of the Labor Code on the entitlement to the benefits of
holiday pay are clear and explicit - it provides for both the coverage of and exclusion
from the benefits. In Policy Instruction No. 9, the then Secretary of Labor went as far
as to categorically state that the benefit is principally intended for daily paid
employees, when the law clearly states that every worker shall be paid their regular
holiday pay. This is a flagrant violation of the mandatory directive of Article 4 of the
Labor Code, which states that "All doubts in the implementation and interpretation of
the provisions of this Code, including its implementing rules and regulations, shall be
resolved in favor of labor." Moreover, it shall always be presumed that the legislature
intended to enact a valid and permanent statute which would have the most
beneficial effect that its language permits (Orlosky vs. Haskell, 155 A. 112.)
Obviously, the Secretary (Minister) of Labor had exceeded his statutory authority
granted by Article 5 of the Labor Code authorizing him to promulgate the necessary
implementing rules and regulations.
Public respondent vehemently argues that the intent and spirit of the holiday pay law,
as expressed by the Secretary of Labor in the case of Chartered Bank Employees
Association v. The Chartered Bank (NLRC Case No. RB-1789-75, March 24, 1976),
is to correct the disadvantages inherent in the daily compensation system of
employment holiday pay is primarily intended to benefit the daily paid workers
whose employment and income are circumscribed by the principle of "no work, no
pay." This argument may sound meritorious; but, until the provisions of the Labor
Code on holiday pay is amended by another law, monthly paid employees are
definitely included in the benefits of regular holiday pay. As earlier stated, the
presumption is always in favor of law, negatively put, the Labor Code is always
strictly construed against management.

While it is true that the contemporaneous construction placed upon a statute by

executive officers whose duty is to enforce it should be given great weight by the
courts, still if such construction is so erroneous, as in the instant case, the same
must be declared as null and void. It is the role of the Judiciary to refine and, when
necessary, correct constitutional (and/or statutory) interpretation, in the context of the
interactions of the three branches of the government, almost always in situations
where some agency of the State has engaged in action that stems ultimately from
some legitimate area of governmental power (The Supreme Court in Modern Role,
C. B. Swisher 1958, p. 36).
Thus. in the case of Philippine Apparel Workers Union vs. National Labor Relations
Commission (106 SCRA 444, July 31, 1981) where the Secretary of Labor enlarged
the scope of exemption from the coverage of a Presidential Decree granting increase
in emergency allowance, this Court ruled that: t.hqw
... the Secretary of Labor has exceeded his authority when he
included paragraph (k) in Section 1 of the Rules implementing
P. D. 1 1 23.
xxxxxxxxx
Clearly, the inclusion of paragraph k contravenes the statutory
authority granted to the Secretary of Labor, and the same is
therefore void, as ruled by this Court in a long line of
cases . . . .. t.hqw
The recognition of the power of
administrative officials to promulgate
rules in the administration of the
statute, necessarily limited to what is
provided for in the legislative
enactment, may be found in the early
case of United States vs. Barrios
decided in 1908. Then came in a 1914
decision, United States vs. Tupasi
Molina (29 Phil. 119) delineation of the
scope of such competence. Thus: "Of
course the regulations adopted under
legislative authority by a particular
department must be in harmony with
the provisions of the law, and for the
sole purpose of carrying into effect its
general
provisions.
By
such
regulations, of course, the law itself
cannot be extended. So long,
however, as the regulations relate
solely to carrying into effect the
provisions of the law, they are valid."
In 1936, in People vs. Santos, this
Court expressed its disapproval of an
administrative order that would
amount to an excess of the regulatory
power vested in an administrative
official We reaffirmed such a doctrine
in a 1951 decision, where we again
made
clear
that
where
an
administrative
order
betrays
inconsistency or repugnancy to the
provisions of the Act, 'the mandate of

the Act must prevail and must be

followed. Justice Barrera, speaking for
the Court in Victorias Milling inc. vs.
Social Security Commission, citing
Parker as well as Davis did tersely
sum up the matter thus: "A rule is
binding on the Courts so long as the
procedure fixed for its promulgation is
followed and its scope is within the
statutory authority granted by the
legislature, even if the courts are not
in agreement with the policy stated
therein or its innate wisdom. ... On the
other
hand,
administrative
interpretation of the law is at best
merely advisory, for it is the courts that
finally determine chat the law means."
"It cannot be otherwise as the
Constitution limits the authority of the
President, in whom all executive
power resides, to take care that the
laws be faithfully executed. No lesser
administrative executive office or
agency then can, contrary to the
express language of the Constitution
assert for itself a more extensive
prerogative. Necessarily, it is bound to
observe the constitutional mandate.
There must be strict compliance with
the legislative enactment. Its terms
must be followed the statute requires
adherence to, not departure from its
provisions. No deviation is allowable.
In the terse language of the present
Chief Justice, an administrative
agency "cannot amend an act of
Congress." Respondents can be
sustained, therefore, only if it could be
shown that the rules and regulations
promulgated by them were in
accordance with what the Veterans Bill
of Rights provides" (Phil. Apparel
Workers Union vs. National Labor
Relations
Commission, supra, 463,
464, citing Teozon vs. Members of the
Board of Administrators, PVA 33
SCRA 585; see also Santos vs. Hon.
Estenzo, et al, 109 Phil. 419; Hilado
vs. Collector of Internal Revenue, 100
Phil. 295; Sy Man vs. Jacinto
&Fabros, 93 Phil. 1093; Olsen & Co.,
Inc. vs. Aldanese and Trinidad, 43
Phil. 259).
This ruling of the Court was recently reiterated in the case of American Wire & Cable
Workers Union (TUPAS) vs. The National Labor Relations Commission and
American Wire & Cable Co., Inc., G.R. No. 53337, promulgated on June 29, 1984.

In view of the foregoing, Section 2, Rule IV, Book III of the Rules to implement the
Labor Code and Policy instruction No. 9 issued by the then Secretary of Labor must
be declared null and void. Accordingly, public respondent Deputy Minister of Labor
Amado G. Inciong had no basis at all to deny the members of petitioner union their
regular holiday pay as directed by the Labor Code.
II
It is not disputed that the decision of Labor Arbiter Ricarte T. Soriano dated August
25, 1975, had already become final, and was, in fact, partially executed by the
respondent bank.
However, public respondent maintains that on the authority of De Luna vs. Kayanan,
61 SCRA 49, November 13, 1974, he can annul the final decision of Labor Arbiter
Soriano since the ensuing promulgation of the integrated implementing rules of the
Labor Code pursuant to P.D. 850 on February 16, 1976, and the issuance of Policy
Instruction No. 9 on April 23, 1976 by the then Secretary of Labor are facts and
circumstances that transpired subsequent to the promulgation of the decision of the
labor arbiter, which renders the execution of the said decision impossible and unjust
on the part of herein respondent bank (pp. 342-343, rec.).
This contention is untenable.
To start with, unlike the instant case, the case of De Luna relied upon by the public
respondent is not a labor case wherein the express mandate of the Constitution on
the protection to labor is applied. Thus Article 4 of the Labor Code provides that, "All
doubts in the implementation and interpretation of the provisions of this Code,
including its implementing rules and regulations, shall be resolved in favor of labor
and Article 1702 of the Civil Code provides that, " In case of doubt, all labor
legislation and all labor contracts shall be construed in favor of the safety and decent
living for the laborer.
Consequently, contrary to public respondent's allegations, it is patently unjust to
deprive the members of petitioner union of their vested right acquired by virtue of a
final judgment on the basis of a labor statute promulgated following the acquisition of
the "right".
On the question of whether or not a law or statute can annul or modify a judicial order
issued prior to its promulgation, this Court, through Associate Justice Claro M. Recto,
said: t.hqw
xxxxxxxxx
We are decidedly of the opinion that they did not. Said order,
being unappealable, became final on the date of its issuance
and the parties who acquired rights thereunder cannot be
deprived thereof by a constitutional provision enacted or
promulgated subsequent thereto. Neither the Constitution nor
the statutes, except penal laws favorable to the accused,
have retroactive effect in the sense of annulling or modifying
vested rights, or altering contractual obligations" (China Ins. &
Surety Co. vs. Judge of First Instance of Manila, 63 Phil. 324,
emphasis supplied).
In the case of In re: Cunanan, et al., 19 Phil. 585, March 18, 1954, this Court said: "...
when a court renders a decision or promulgates a resolution or order on the basis of

and in accordance with a certain law or rule then in force, the subsequent
amendment or even repeal of said law or rule may not affect the final decision, order,
or resolution already promulgated, in the sense of revoking or rendering it void and of
no effect." Thus, the amendatory rule (Rule IV, Book III of the Rules to Implement the
Labor Code) cannot be given retroactive effect as to modify final judgments. Not
even a law can validly annul final decisions (In re: Cunanan, et al., Ibid).

xxxxxxxxx
The equitable considerations that led the lower court to take
the action complained of cannot offset the dem ands of public
policy and public interest which are also responsive to the
tenets of equity requiring that an issues passed upon in
decisions or final orders that have become executory, be
deemed conclusively disposed of and definitely closed for,
otherwise, there would be no end to litigations, thus setting at
naught the main role of courts of justice, which is to assist in
the enforcement of the rule of law and the maintenance of
peace and order, by settling justiciable controversies with
finality.

Furthermore, the facts of the case relied upon by the public respondent are not
analogous to that of the case at bar. The case of De Luna speaks of final and
executory judgment, while iii the instant case, the final judgment is partially executed.
just as the court is ousted of its jurisdiction to annul or modify a judgment the
moment it becomes final, the court also loses its jurisdiction to annul or modify a writ
of execution upon its service or execution; for, otherwise, we will have a situation
wherein a final and executed judgment can still be annulled or modified by the court
upon mere motion of a panty This would certainly result in endless litigations thereby
rendering inutile the rule of law.
Respondent bank counters with the argument that its partial compliance was
involuntary because it did so under pain of levy and execution of its assets (p. 138,
rec.). WE find no merit in this argument. Respondent bank clearly manifested its
voluntariness in complying with the decision of the labor arbiter by not appealing to
the National Labor Relations Commission as provided for under the Labor Code
under Article 223. A party who waives his right to appeal is deemed to have accepted
the judgment, adverse or not, as correct, especially if such party readily acquiesced
in the judgment by starting to execute said judgment even before a writ of execution
was issued, as in this case. Under these circumstances, to permit a party to appeal
from the said partially executed final judgment would make a mockery of the doctrine
of finality of judgments long enshrined in this jurisdiction.

xxxxxxxxx
In the recent case of Gabaya vs. Mendoza, 113 SCRA 405, 406, March 30, 1982,
this Court said: t.hqw

In Galvez vs. Philippine Long Distance Telephone Co., 3 SCRA 422, 423, October
31, 1961, where the lower court modified a final order, this Court ruled thus: t.
hqw
xxxxxxxxx
The lower court was thus aware of the fact that it was thereby
altering or modifying its order of January 8, 1959. Regardless
of the excellence of the motive for acting as it did, we are
constrained to hold however, that the lower court had no
authorities to make said alteration or modification. ...

Tested by and pitted against this broad concept of the constitutional guarantee of due
process, the action of public respondent Amado G. Inciong is a clear example of
deprivation of property without due process of law and constituted grave abuse of
discretion, amounting to lack or excess of jurisdiction in issuing the order dated
November 10, 1979.
WHEREFORE, THE PETITION IS HEREBY GRANTED, THE ORDER OF PUBLIC
RESPONDENT IS SET ASIDE, AND THE DECISION OF LABOR ARBITER
RICARTE T. SORIANO DATED AUGUST 25, 1975, IS HEREBY REINSTATED.

xxxxxxxxx
In Marasigan vs. Ronquillo (94 Phil. 237), it was categorically
stated that the rule is absolute that after a judgment becomes
final by the expiration of the period provided by the rules
within which it so becomes, no further amendment or
correction can be made by the court except for clerical errors
or mistakes. And such final judgment is conclusive not only as
to every matter which was offered and received to sustain or
defeat the claim or demand but as to any other admissible
matter which must have been offered for that purpose (L7044, 96 Phil. 526). In the earlier case of Contreras and
Ginco vs. Felix and China Banking Corp., Inc. (44 O.G. 4306),
it was stated that the rule must be adhered to regardless of
any possible injustice in a particular case for (W)e have to
subordinate the equity of a particular situation to the overmastering need of certainty and immutability of judicial
pronouncements

Section I of Rule 39 of the Revised Rules of Court provides that "... execution shall
issue as a matter of right upon the expiration of the period to appeal ... or if no appeal
has been duly perfected." This rule applies to decisions or orders of labor arbiters
who are exercising quasi-judicial functions since "... the rule of execution of
judgments under the rules should govern all kinds of execution of judgment, unless it
is otherwise provided in other laws" Sagucio vs. Bulos 5 SCRA 803) and Article 223
of the Labor Code provides that "... decisions, awards, or orders of the Labor Arbiter
or compulsory arbitrators are final and executory unless appealed to the Commission
by any or both of the parties within ten (10) days from receipt of such awards, orders,
or decisions. ..."
Thus, under the aforecited rule, the lapse of the appeal period deprives the courts of
jurisdiction to alter the final judgment and the judgment becomes final ipso jure (Vega
vs. WCC, 89 SCRA 143, citing Cruz vs. WCC, 2 PHILAJUR 436, 440, January 31,
1978; see also Soliven vs. WCC, 77 SCRA 621; Carrero vs. WCC and Regala vs.
WCC, decided jointly, 77 SCRA 297; Vitug vs. Republic, 75 SCRA 436; Ramos vs.
Republic, 69 SCRA 576).

lt is by this guiding principle that the due process clause is interpreted. Thus, in the
pithy language of then Justice, later Chief Justice, Concepcion "... acts of Congress,
as well as those of the Executive, can deny due process only under pain of nullity,
and judicial proceedings suffering from the same flaw are subject to the same
sanction,any statutory provision to the contrary notwithstanding (Vda. deCuaycong
vs. Vda. de Sengbengco 110 Phil. 118, emphasis supplied), And "(I)t has been
likewise established that a violation of a constitutional right divested the court of
jurisdiction; and as a consequence its judgment is null and void and confers no
rights" (Phil. Blooming Mills Employees Organization vs. Phil. Blooming Mills Co.,
Inc., 51 SCRA 211, June 5, 1973).

xxxxxxxxx
III
The despotic manner by which public respondent Amado G. Inciong divested the
members of the petitioner union of their rights acquired by virtue of a final judgment
is tantamount to a deprivation of property without due process of law Public
respondent completely ignored the rights of the petitioner union's members in
dismissing their complaint since he knew for a fact that the judgment of the labor
arbiter had long become final and was even partially executed by the respondent
bank.
A final judgment vests in the prevailing party a right recognized and protected by law
under the due process clause of the Constitution (China Ins. & Surety Co. vs. Judge
of First Instance of Manila, 63 Phil. 324). A final judgment is "a vested interest which
it is right and equitable that the government should recognize and protect, and of
which the individual could no. be deprived arbitrarily without injustice" (Rookledge v.
Garwood, 65 N.W. 2d 785, 791).

COSTS AGAINST PRIVATE RESPONDENT INSULAR BANK OF ASIA AND

AMERICA
SO ORDERED.1wph1.t

MANTRADE V. BACUNGAN (CANT FIND)

G.R. No. 79255 January 20, 1992

UNION
OF
FILIPRO
EMPLOYEES
(UFE), petitioner,
vs.
BENIGNO VIVAR, JR., NATIONAL LABOR RELATIONS COMMISSION and
NESTL PHILIPPINES, INC. (formerly FILIPRO, INC.), respondents.
This labor dispute stems from the exclusion of sales personnel from the holiday pay
award and the change of the divisor in the computation of benefits from 251 to 261
days.
On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed
with the National Labor Relations Commission (NLRC) a petition for declaratory relief
seeking a ruling on its rights and obligations respecting claims of its monthly paid
employees for holiday pay in the light of the Court's decision in Chartered Bank
Employees Association v. Ople (138 SCRA 273 [1985]).
Both Filipro and the Union of Filipino Employees (UFE) agreed to submit the case for
voluntary arbitration and appointed respondent BenignoVivar, Jr. as voluntary
arbitrator.

On January 2, 1980, Arbitrator Vivar rendered a decision directing Filipro to:

pay its monthly paid employees holiday pay pursuant to
Article 94 of the Code, subject only to the exclusions and
limitations specified in Article 82 and such other legal
restrictions as are provided for in the Code. (Rollo,
p. 31)
Filipro filed a motion for clarification seeking (1) the limitation of the award to three
years, (2) the exclusion of salesmen, sales representatives, truck drivers,
merchandisers and medical representatives (hereinafter referred to as sales
personnel) from the award of the holiday pay, and (3) deduction from the holiday pay
award of overpayment for overtime, night differential, vacation and sick leave
benefits due to the use of 251 divisor. (Rollo, pp. 138-145)
Petitioner UFE answered that the award should be made effective from the date of
effectivity of the Labor Code, that their sales personnel are not field personnel and
are therefore entitled to holiday pay, and that the use of 251 as divisor is an
established employee benefit which cannot be diminished.
On January 14, 1986, the respondent arbitrator issued an order declaring that the
effectivity of the holiday pay award shall retroact to November 1, 1974, the date of
effectivity of the Labor Code. He adjudged, however, that the company's sales
personnel are field personnel and, as such, are not entitled to holiday pay. He
likewise ruled that with the grant of 10 days' holiday pay, the divisor should be
changed from 251 to 261 and ordered the reimbursement of overpayment for
overtime, night differential, vacation and sick leave pay due to the use of 251 days as
divisor.
Both Nestle and UFE filed their respective motions for partial reconsideration.
Respondent Arbitrator treated the two motions as appeals and forwarded the case to
the NLRC which issued a resolution dated May 25, 1987 remanding the case to the
respondent arbitrator on the ground that it has no jurisdiction to review decisions in
voluntary arbitration cases pursuant to Article 263 of the Labor Code as amended by
Section 10, Batas PambansaBlg. 130 and as implemented by Section 5 of the rules
implementing B.P. Blg. 130.
However, in a letter dated July 6, 1987, the respondent arbitrator refused to take
cognizance of the case reasoning that he had no more jurisdiction to continue as
arbitrator because he had resigned from service effective May 1, 1986.
Hence, this petition.
The petitioner union raises the following issues:
1) Whether or not Nestle's sales personnel are entitled to holiday pay; and
2) Whether or not, concomitant with the award of holiday pay, the divisor should be
changed from 251 to 261 days and whether or not the previous use of 251 as divisor
resulted in overpayment for overtime, night differential, vacation and sick leave pay.
The petitioner insists that respondent's sales personnel are not field personnel under
Article 82 of the Labor Code. The respondent company controverts this assertion.

Under Article 82, field personnel are not entitled to holiday pay. Said article defines
field personnel as "non-agritultural employees who regularly perform their duties
away from the principal place of business or branch office of the employer and
whose actual hours of work in the field cannot be determined with reasonable
certainty."

Sec. 1. Coverage This rule shall apply to all employees

except:

The controversy centers on the interpretation of the clause "whose actual hours of
work in the field cannot be determined with reasonable certainty."

(e) Field personnel and other employees whose time and

performance is unsupervised by the employer . . . (Emphasis
supplied)

It is undisputed that these sales personnel start their field work at 8:00 a.m. after
having reported to the office and come back to the office at 4:00 p.m. or 4:30 p.m. if
they are Makati-based.
The petitioner maintains that the period between 8:00 a.m. to 4:00 or 4:30 p.m.
comprises the sales personnel's working hours which can be determined with
reasonable certainty.
The Court does not agree. The law requires that the actual hours of work in the field
be reasonably ascertained. The company has no way of determining whether or not
these sales personnel, even if they report to the office before 8:00 a.m. prior to field
work and come back at 4:30 p.m, really spend the hours in between in actual field
work.
We concur with the following disquisition by the respondent arbitrator:
The requirement for the salesmen and other similarly situated
employees to report for work at the office at 8:00 a.m. and
return at 4:00 or 4:30 p.m. is not within the realm of work in
the field as defined in the Code but an exercise of purely
management prerogative of providing administrative control
over such personnel. This does not in any manner provide a
reasonable level of determination on the actual field work of
the employees which can be reasonably ascertained. The
theoretical analysis that salesmen and other similarly-situated
workers regularly report for work at 8:00 a.m. and return to
their home station at 4:00 or 4:30 p.m., creating the
assumption that their field work is supervised, is surface
projection. Actual field work begins after 8:00 a.m., when the
sales personnel follow their field itinerary, and ends
immediately before 4:00 or 4:30 p.m. when they report back
to their office. The period between 8:00 a.m. and 4:00 or 4:30
p.m. comprises their hours of work in the field, the extent or
scope and result of which are subject to their individual
capacity and industry and which "cannot be determined with
reasonable certainty." This is the reason why effective
supervision over field work of salesmen and medical
representatives, truck drivers and merchandisers is practically
a physical impossibility. Consequently, they are excluded from
the ten holidays with pay award. (Rollo, pp. 36-37)
Moreover, the requirement that "actual hours of work in the field cannot be
determined with reasonable certainty" must be read in conjunction with Rule IV, Book
III of the Implementing Rules which provides:
Rule IV Holidays with Pay

xxxxxxxxx

While contending that such rule added another element not found in the law ( Rollo,
p. 13), the petitioner nevertheless attempted to show that its affected members are
not covered by the abovementioned rule. The petitioner asserts that the company's
sales personnel are strictly supervised as shown by the SOD (Supervisor of the Day)
schedule and the company circular dated March 15, 1984 (Annexes 2 and 3, Rollo,
pp. 53-55).
Contrary to the contention of the petitioner, the Court finds that the aforementioned
rule did not add another element to the Labor Code definition of field personnel. The
clause "whose time and performance is unsupervised by the employer" did not
amplify but merely interpreted and expounded the clause "whose actual hours of
work in the field cannot be determined with reasonable certainty." The former clause
is still within the scope and purview of Article 82 which defines field personnel.
Hence, in deciding whether or not an employee's actual working hours in the field
can be determined with reasonable certainty, query must be made as to whether or
not such employee's time and performance is constantly supervised by the employer.
The SOD schedule adverted to by the petitioner does not in the least signify that
these sales personnel's time and performance are supervised. The purpose of this
schedule is merely to ensure that the sales personnel are out of the office not later
than 8:00 a.m. and are back in the office not earlier than 4:00 p.m.
Likewise, the Court fails to see how the company can monitor the number of actual
hours spent in field work by an employee through the imposition of sanctions on
absenteeism contained in the company circular of March 15, 1984.
The petitioner claims that the fact that these sales personnel are given incentive
bonus every quarter based on their performance is proof that their actual hours of
work in the field can be determined with reasonable certainty.
The Court thinks otherwise.
The criteria for granting incentive bonus are: (1) attaining or exceeding sales volume
based on sales target; (2) good collection performance; (3) proper compliance with
good market hygiene; (4) good merchandising work; (5) minimal market returns; and
(6) proper truck maintenance. (Rollo, p. 190).
The above criteria indicate that these sales personnel are given incentive bonuses
precisely because of the difficulty in measuring their actual hours of field work. These
employees are evaluated by the result of their work and not by the actual hours of
field work which are hardly susceptible to determination.
In San Miguel Brewery, Inc. v. Democratic Labor Organization (8 SCRA 613 [1963]),
the Court had occasion to discuss the nature of the job of a salesman. Citing the
case of Jewel Tea Co. v. Williams, C.C.A. Okla., 118 F. 2d 202, the Court stated:

The reasons for excluding an outside salesman are fairly

apparent. Such a salesman, to a greater extent, works
individually. There are no restrictions respecting the time he
shall work and he can earn as much or as little, within the
range of his ability, as his ambition dictates. In lieu of overtime
he ordinarily receives commissions as extra compensation.
He works away from his employer's place of business, is not
subject to the personal supervision of his employer, and his
employer has no way of knowing the number of hours he
works per day.

days. The 251 working days divisor is the result of subtracting

all Saturdays, Sundays and the ten (10) legal holidays from
the total number of calendar days in a year. If the employees
are already paid for all non-working days, the divisor should
be 365 and not 251.

Appellate Court, 178 SCRA 331 [1989], citing La Campana Food Products, Inc. v.
Philippine Commercial and Industrial Bank, 142 SCRA 394 [1986]). Nevertheless, in
order to fully settle the issues so that the execution of the Court's decision in this
case may not be needlessly delayed by another petition, the Court resolved to take
up the matter of effectivity of the holiday pay award raised by Nestle.

In the petitioner's case, its computation of daily ratio since September 1, 1980, is as
follows:

Nestle insists that the reckoning period for the application of the holiday pay award is
1985 when the Chartered Bank decision, promulgated on August 28, 1985, became
final and executory, and not from the date of effectivity of the Labor Code. Although
the Court does not entirely agree with Nestle, we find its claim meritorious.

monthly rate x 12 months

While in that case the issue was whether or not salesmen were entitled to overtime
pay, the same rationale for their exclusion as field personnel from holiday pay
benefits also applies.
The petitioner union also assails the respondent arbitrator's ruling that, concomitant
with the award of holiday pay, the divisor should be changed from 251 to 261 days to
include the additional 10 holidays and the employees should reimburse the amounts
overpaid by Filipro due to the use of 251 days' divisor.
Arbitrator Vivar's rationale for his decision is as follows:
. . . The new doctrinal policy established which ordered
payment of ten holidays certainly adds to or accelerates the
basis of conversion and computation by ten days. With the
inclusion of ten holidays as paid days, the divisor is no longer
251 but 261 or 262 if election day is counted. This is indeed
an extremely difficult legal question of interpretation which
accounts for what is claimed as falling within the concept of
"solutioindebti."
When the claim of the Union for payment of ten holidays was
granted, there was a consequent need to abandon that 251
divisor. To maintain it would create an impossible situation
where the employees would benefit with additional ten days
with pay but would simultaneously enjoy higher benefits by
discarding the same ten days for purposes of computing
overtime and night time services and considering sick and
vacation leave credits. Therefore, reimbursement of such
overpayment with the use of 251 as divisor arises
concomitant with the award of ten holidays with pay. (Rollo, p.
34)
The divisor assumes an important role in determining whether or not holiday pay is
already included in the monthly paid employee's salary and in the computation of his
daily rate. This is the thrust of our pronouncement inChartered Bank Employees
Association v. Ople (supra). In that case, We held:
It is argued that even without the presumption found in the
rules and in the policy instruction, the company practice
indicates that the monthly salaries of the employees are so
computed as to include the holiday pay provided by law. The
petitioner contends otherwise.
One strong argument in favor of the petitioner's stand is the
fact that the Chartered Bank, in computing overtime
compensation for its employees, employs a "divisor" of 251

Following the criterion laid down in the Chartered Bank case, the use of 251 days'
divisor by respondent Filipro indicates that holiday pay is not yet included in the
employee's salary, otherwise the divisor should have been 261.

In Insular Bank of Asia and America Employees' Union (IBAAEU) v. Inciong, 132
SCRA 663 [1984], hereinafter referred to as the IBAA case, the Court declared that
Section 2, Rule IV, Book III of the implementing rules and Policy Instruction No. 9,
issued by the then Secretary of Labor on February 16, 1976 and April 23, 1976,
respectively, and which excluded monthly paid employees from holiday pay benefits,
are null and void. The Court therein reasoned that, in the guise of clarifying the Labor
Code's provisions on holiday pay, the aforementioned implementing rule and policy
instruction amended them by enlarging the scope of their exclusion. The Chartered
Bank case reiterated the above ruling and added the "divisor" test.

It must be stressed that the daily rate, assuming there are no intervening salary
increases, is a constant figure for the purpose of computing overtime and night
differential pay and commutation of sick and vacation leave credits. Necessarily, the
daily rate should also be the same basis for computing the 10 unpaid holidays.

However, prior to their being declared null and void, the implementing rule and policy
instruction enjoyed the presumption of validity and hence, Nestle's non-payment of
the holiday benefit up to the promulgation of the IBAA case on October 23, 1984 was
in compliance with these presumably valid rule and policy instruction.

The respondent arbitrator's order to change the divisor from 251 to 261 days would
result in a lower daily rate which is violative of the prohibition on non-diminution of
benefits found in Article 100 of the Labor Code. To maintain the same daily rate if the
divisor is adjusted to 261 days, then the dividend, which represents the employee's
annual salary, should correspondingly be increased to incorporate the holiday pay. To
illustrate, if prior to the grant of holiday pay, the employee's annual salary is P25,100,
then dividing such figure by 251 days, his daily rate is P100.00 After the payment of
10 days' holiday pay, his annual salary already includes holiday pay and totals
P26,100 (P25,100 + 1,000). Dividing this by 261 days, the daily rate is still P100.00.
There is thus no merit in respondent Nestle's claim of overpayment of overtime and
night differential pay and sick and vacation leave benefits, the computation of which
are all based on the daily rate, since the daily rate is still the same before and after
the grant of holiday pay.

In the case of De Agbayani v. Philippine National Bank, 38 SCRA 429 [1971], the
Court discussed the effect to be given to a legislative or executive act subsequently
declared invalid:

251 days

Respondent Nestle's invocation of solutioindebiti, or payment by mistake, due to its

use of 251 days as divisor must fail in light of the Labor Code mandate that "all
doubts in the implementation and interpretation of this Code, including its
implementing rules and regulations, shall be resolved in favor of labor." (Article 4).
Moreover, prior to September 1, 1980, when the company was on a 6-day working
schedule, the divisor used by the company was 303, indicating that the 10 holidays
were likewise not paid. When Filipro shifted to a 5-day working schebule on
September 1, 1980, it had the chance to rectify its error, if ever there was one but did
not do so. It is now too late to allege payment by mistake.
Nestle also questions the voluntary arbitrator's ruling that holiday pay should be
computed from November 1, 1974. This ruling was not questioned by the petitioner
union as obviously said decision was favorable to it. Technically, therefore,
respondent Nestle should have filed a separate petition raising the issue of effectivity
of the holiday pay award. This Court has ruled that an appellee who is not an
appellant may assign errors in his brief where his purpose is to maintain the
judgment on other grounds, but he cannot seek modification or reversal of the
judgment or affirmative relief unless he has also appealed. (Franco v. Intermediate

xxxxxxxxx
. . . It does not admit of doubt that prior to the declaration of
nullity such challenged legislative or executive act must have
been in force and had to be complied with. This is so as until
after the judiciary, in an appropriate case, declares its
invalidity, it is entitled to obedience and respect. Parties may
have acted under it and may have changed their positions.
What could be more fitting than that in a subsequent litigation
regard be had to what has been done while such legislative or
executive act was in operation and presumed to be valid in all
respects. It is now accepted as a doctrine that prior to its
being nullified, its existence as a fact must be reckoned with.
This is merely to reflect awareness that precisely because the
judiciary is the government organ which has the final say on
whether or not a legislative or executive measure is valid, a
period of time may have elapsed before it can exercise the
power of judicial review that may lead to a declaration of
nullity. It would be to deprive the law of its quality of fairness
and justice then, if there be no recognition of what had
transpired prior to such adjudication.
In the language of an American Supreme Court decision:
"The actual existence of a statute, prior to such a
determination of [unconstitutionality], is an operative fact and
may have consequences which cannot justly be ignored. The
past cannot always be erased by a new judicial declaration.
The effect of the subsequent ruling as to invalidity may have

to be considered in various aspects, with respect to

particular relations, individual and corporate, and particular
conduct, private and official." (Chicot County Drainage Dist. v.
Baxter States Bank, 308 US 371, 374 [1940]). This language
has been quoted with approval in a resolution in Araneta
v. Hill (93 Phil. 1002 [1952]) and the decision inManila Motor
Co., Inc. v. Flores (99 Phil. 738 [1956]). An even more recent
instance is the opinion of Justice Zaldivar speaking for the
Court in Fernandez v. Cuerva and Co. (21 SCRA 1095
[1967]. (At pp. 434-435)
The "operative fact" doctrine realizes that in declaring a law or rule null and void,
undue harshness and resulting unfairness must be avoided. It is now almost the end
of 1991. To require various companies to reach back to 1975now and nullify acts
done in good faith is unduly harsh. 1984 is a fairer reckoning period under the facts
of this case.
Applying the aforementioned doctrine to the case at bar, it is not far-fetched that
Nestle, relying on the implicit validity of the implementing rule and policy instruction
before this Court nullified them, and thinking that it was not obliged to give holiday
pay benefits to its monthly paid employees, may have been moved to grant other
concessions to its employees, especially in the collective bargaining agreement. This
possibility is bolstered by the fact that respondent Nestle's employees are among the
highest paid in the industry. With this consideration, it would be unfair to impose
additional burdens on Nestle when the non-payment of the holiday benefits up to
1984 was not in any way attributed to Nestle's fault.

Mr.
Arturo
Fernandez
President Oceanic Pharmacal Employees Union (FFW)
Makati, Rizal
Dear Mr. Fernandez:
Subject: Supplementary Agreement to CBA
This is to confirm in writing the agreement made between
your panel and our own panel on April 24, 1976 on the
following points:
1) Emergency Allowance The management of OPI will continue its
present practice of extending emergency allowance to all employees
receiving less than P1,000.00 per month as basic pay.
2) Holiday Pay OPI management will likewise continue to give
holiday pay to monthly-salaried employees.
Please be informed too that we shall continue to extend the said
benefits unless otherwise directed by other new requirements, rules,
laws, decrees, etc. on the subject.

for unfair labor practice and violation of the CBA regarding holiday pay. In a decision
dated March 24, 1977, Labor Arbiter Apolonio R. Reyes ordered the Company to
resume payment of the holiday p .pay effective October 25, 1976. On appeal by the
Company to the National Labor Relations Commission, the appeal was dismissed for
lack of merit. Still not satisfied, the Company appealed to the Minister of Labor who,
on April 16, 1979, rendered a decision with the following dispositive portion:
"Wherefore, the Resolution appealed from is hereby set aside, and a new judgment
entered dismissing this case for lack of merit."
We required the respondents to comment on the petition, which they did. Private
respondent, as expected, urges us to dismiss the petition. However, the Solicitor
General recommends that the petition be given due course. We did so on November
12, 1979. Hence this decision.
We have to reverse the decision of the Minister of Labor.
The issue in this case is whether the Company may discontinue the holiday pay it
had agreed to give pursuant to its letter dated April 27, 1976, by invoking the last
paragraph thereof, namely: "Please be informed too that we shall continue to extend
the said benefits unless otherwise directed by other new requirements, rules, laws,
decrees, etc. on the subject." Stated in other words, is the discontinuance of the of
the benefit justified by Section 2, Rule IV, Book III of the Rules and Regulation
Implementing the Labor Code and Policy Instructions No. 9 of the Minister of Labor,
as stated in the second paragraph of the Company's memorandum dated October
25, 1976? These issuances are respectively as follows:

Very truly yours,

The Court thereby resolves that the grant of holiday pay be effective, not from the
date of promulgation of the Chartered Bank case nor from the date of effectivity of
the Labor Code, but from October 23, 1984, the date of promulgation of the IBAA
case.
WHEREFORE, the order of the voluntary arbitrator in hereby MODIFIED. The divisor
to be used in computing holiday pay shall be 251 days. The holiday pay as above
directed shall be computed from October 23, 1984. In all other respects, the order of
the respondent arbitrator is hereby AFFIRMED.

OCEANIC PHARMACAL, INC.

On October 25, 1976, the Company posted on its bulletin board the following
memorandum:

For this purpose, the monthly minimum wage shall not be less
than the statutory minimum wage multiplied by 365 days
divided by twelve. (Issued in February 16, 1976.)

To : All Concern
From : Personnel Dept.

SO ORDERED.

G.R. No. L-50568 November 7, 1979

OCEANIC PHARMACAL EMPLOYEES UNION (FFW), complainant/appellant,
vs.
HON.
AMADO
G.
INCIONG
and
OCEANIC
PHARMACAL
INC, respondents/appellees.

'This is a petition to review a decision of Deputy Minister Amado G. Inciong who

acted by authority of tile Minister of Labor in NLRC Case No. RB-IV-10042-77.
Oceanic Pharmacal Employees Union and Oceanic Pharmacal, Inc. had a collective
bargaining agreement (CBA) good from March 1, 1976 to February 28, 1979. On
April 27, 1976, the following letter was sent to the Union:

Ref.
:
Discontinuance
Employees
of
The
Regular Holidays.

Section 2. Status of employees paid by the month.

Employees who are uniformly paid by the month, irrespective
of the number of working days therein, with a salary of not
less than the statutory or established minimum wages shall
be presumed to be paid for all days in the month whether
worked or not.

of
The
Regular

Payment
Holidays

to
Regular
Pay
For

This has reference to the payment of the subject benefit forming part
of the supplemental Collective Bargaining Agreement dated April 27,
1976.
This commitment to pay said benefit is being discontinued on account to the proviso
in the said memo of the General Manager dated April 27, 1976, taken in relation to
Section 2, Rule IV, Book Ill of the Implementing Rules, Policy Instruction No. 9 and
the decision of the Secretary of Labor in the Chartered Bank Case dated September
7. 1976.
For your information and dissemination.
The Union objected to the discontinuance of the holiday pay and when an amicable
settlement could not be reached, the Union filed a complaint against the Company

Policy Instructions No. 9 The rules implementing PD 850

have clarified the policy in the implementation of the ten (10)
paid legal holidays. Before PD 850, the number of working
days a year in a firm was considered important in determining
entitlement to the benefit. Thus, where an employee was
working for at least 313 days, he was considered definitely
already paid. If he was working for less than 313, there was
no certainty whether the ten (10) paid legal holidays were
already paid to him or not.
The ten (10) paid legal holidays law, to start with, is intended
to benefit principally daily employees. ln the case of monthly,
only those whose monthly salary did not yet include payment
for the ten (10) paid legal holidays are entitled to the benefit.
Under the rules implementing PD 850, this policy has been
fully clarified to eliminate controversies on the entitlement of
monthly paid employees. The new determining rule is this: If
the monthly paid employee is receiving not less than P240,
the maximum monthly minimum wage, and his monthly pay is

uniform from January to December, he is presumed to be

already paid the ten (10) paid legal holidays. However, if
deductions are made from his monthly salary on account of
holidays in months where they occur, then he is still entitled to
the ten (10) paid legal holidays.
These new interpretations must be uniformly and consistently
upheld.
This issuance shall take effect immediately. (Issued on
February 23, 1916.)
As stated by the Solicitor General, the questions above stated should be answered in
the negative for the following reasons:
1. Section 2, Rule IV, Book Ill of the Rules and Regulations Implementing the Labor
Code was promulgated on February 16, 1976. On the other hand, Policy Instructions
No. 9 was issued on February 23, 1976. Since the said rules and policy instructions
were already existing and effective prior to the execution of the Supplementary
Agreement on April 27, 1976, it is clear that respondent company agreed to continue
giving holiday pay to its monthly paid employees knowing fully well that said
employees are not covered by the law requiring payment of holiday pay. When
respondent company, therefore, interposed the condition that it "shall continue to
extend the said benefits unless otherwise directed by other new requirements, rules,
laws, decrees, etc. on the subject," it was referring to laws, decrees, rules, etc. other
than the abovecited issuances.
2. Even granting arguendo that the said issuance were promulgated after the
execution of the agreement, there is still no justification for withdrawal of holiday pay
benefits by respondent. company, in view of Section 11, Rule IV, Book III of the
Implementing Rules and Regulations, which explicitly provides:
Sec. 11. Relation to agreements. Nothing in this Rule shall
justify an employer in withdrawing or reducing any benefits,
supplements or payments for unworked holidays as provided
it) existing individual or collective agreement or employer
practice or policy."
In the case of States Marine Corporation v. Cebu Seaman's Association (G.R. No. L12444, February 28, 1963; 7 SCRA 294), this Court, on the basis of a similar
provision in the Minimum Wage Law (R.A. No. 602), ruled that nothing in the Act
justified an employer in reducing the wage paid to any of his employees in excess of
the minimum wage established under the Act or in reducing supplements furnished
on the date of enactment.
Evidently, there is no legal basis for the withdrawal of holiday benefits by the
Company. Consequently, its violation of the Supplementary Agreement constitutes
unfair labor practice.
It shall be unfair labor practice for an employer to violate a
collective bargaining agreement (Art. 248, Labor Code)
WHEREFORE, the decision appealed from is hereby reversed and those of the
Labor Arbiter and NLRC are reinstated. No costs.

SO ORDERED.

IN VIEW OF THE FOREGOING, let the Resolution of the Commission

dated December 19, 1977 be, as it is hereby, set aside and a new
judgment, granting the Motion To Quash Execution, and this case
dismissed, for lack of merit.

G.R. No. L-50184 April 11, 1980

SO ORDERED. (Pp. 129-130, Record.)

CITIBANK
PHILS.
EMPLOYEES
UNION

NATU, petitioner,
vs.
THE HONORABLE MINISTER OF LABOR and CITIBANK, N. A., respondents.

For the sake of further clarity, the following important details alleged in the petition
and not denied by respondents may be added:
IV.

BARREDO, J.:

That in their letter of submission addressed to Atty. Ruben F. Santos,

their common choice for voluntary arbitrator, the parties spelled out the
terms of their arbitration agreement, as follows:

Petition for certiorari praying that the order of the respondent Minister of Labor dated
February 19, 1979 setting aside the resolution of National Labor Relations
Commission of December 19, 1977, which in turn dismiss private respondent
Citibank, N. A.'s appeal from the order dated December 13, 1976 of Executive Labor
Arbiter Guillermo C. Medina denying said respondent's motion to quash the writ of
execution issued against it in Case No. RB4-8-6332-75, entitled FNCB Employees
Union Natu vs. First National City Bank, by virtue of the award made in said case
by the mutually chosen lone voluntary Arbitrator Ruben F. Santos of December 19,
1975.

Pursuant to the pertinent provisions of the existing Collective

Bargaining Agreement between the First National City Bank
and the First National City Bank Employees Union and the
provisions of Article 262 (subsequently re-numbered 263) of
the Labor Code, as amended, the following question by the
undersigned is submitted to you for resolution as voluntary
arbitrator:

The basic facts are stated in the order under review, which being quite brief may be
quoted in full as basis for further discussion:

Whether or not employees of the Bank are

legally entitled to holiday pay provided under
Article 208 (now 94) of the Labor Code,
considering their contractual wage scale.

Briefly, the undisputed facts are as follows: On 5 August 1975,

petitioner filed the instant case for payment of regular holiday pay
pursuant to Article 208 (a) of the Labor Code. Upon failure of
concilation efforts to settle the case, the parties agreed to submit their
dispute to voluntary arbitration.
After hearing, the Voluntary Arbitrator rendered an Award, dated 15
December 1975, ordering respondent to pay the employees herein
concerned, their holiday pay on the basis of his finding that the
monthly salary of said employees does not include their pay for
unworked holidays. The award was partially implemented by the
respondent when it paid to the employees concerned their accrued
holiday pay benefits covering the period November 1974 to December
1975.
However, when the promulgation of the Integrated Implementing Rules
of the Labor Code, pursuant to P. D. 850 on 16 February 1976 and the
issuance by the Secretary of Labor on 23 April 1976 of Policy
Instructions No. 9, the respondent stopped such payment. Hence,
petitioner filed the subject motion for execution to enforce the award of
the Voluntary Arbitrator. As mentioned above, the Executive Labor
Arbiter, in his order dated 13 December 1976, ordered respondent to
continue paying the unworked regular holidays to its monthly paid
employees covered by the Award of the Voluntary Arbitrator, dated 15
December 1975. This was affirmed by the Commission and now
before us on appeal.

It is understood that the arbitrator may adopt such

procedure, and call such hearing, as he may consider to be
convenient for the purpose of arriving at a just decision. The
costs of arbitration shall be borne equally by the Bank and
the Union.
V.
That the pertinent provisions of the parties' Collective
Bargaining Agreement referred to in said submission relate to
Step 4 of Article XVI of the Agreement, entitled 'Grievance',
and reads as follows:
Should the grievance remain unsettled within
the period stated in Step 3, the matter shall
be submitted to final and binding resolution by
an arbitration Committee consisting of three
(3) members, mutually designated by the
BANK and the UNION and specifically named
in Annex '2' whose tenure of office shall be
co-extensive with the life of this contract
unless earlier terminated by mutual
agreement of the BANK and the UNION.
(Emphasis supplied.)
as well as to paragraph (d) thereof, which state that:

The decision of the Arbitration Committee shall be in writing

and shall be concurred in and signed by at least two (2)
members of the Arbitration Committee. The decision of the
Arbitration Committee sham be final and binding upon the
BANK, the UNION, and the employee or employees
concerned,and may be enforced in any court of competent
jurisdiction. (Emphasis supplied.)

and the purported clarification thereof in Policy Instructions No. 9 of 23 February,

1976 (also his as follows:

a magnificent contribution to the attainment of the social justice objectives envisioned

in the Constitution.

If the monthly-paid employee is receiving not less than P240,

the maximum monthly minimum wage, and his monthly pay is
uniform from January to December, he is presumed to be
already paid the ten (10) paid legal holidays. (Emphasis
supplied.) (Page 6, Record.)

With the foregoing view We have taken of the legal situation under controversy, We
find no need to dwell on any of the other issues discussed by the parties, whether
factual or legal, regarding the manner of computing and determining whether or not a
given monthly wage includes unworked holidays. We hold that regardless of any law
anterior or posterior to the Arbitrator's award, the collective bargaining agreement in
this case has been correspondingly amended in a manner that is unalterable,
immovable and immutable like the rock of Gibraltar, during the lifetime of the said
collective bargaining agreement.

VI
That, on the other hand, the pertinent provisions of Article 262
(now 263) of the Labor Code referred to in the parties'
submission are quoted as follows:
ART. 263. Voluntary arbitration All
disputes, grievances and matters
referred to in the immediately
preceding Article which are not settled
through the grievance procedure
provided in the collective agreement
shall be referred to voluntary
arbitration
prescribed
in
said
agreement.
x xx
Voluntary arbitration awards or
decisions shall be final inappealable,
and executory. However, voluntary
arbitration awards or decisions on
money claims involving an amount
exceeding One Hundred Thousand
Pesos (P100,000.00) or forty per cent
(40%) of the paid-up capital of the
respondent employer, whichever is
lower, may be appealed to the
Commission on grounds of abuse of
discretion or gross incompetence. (Pp.
3-5, Record.)
Thus, as stated in the order here at issue, the sole reason given by respondent
Minister of Labor for in effect refusing further implementation of the Arbitrator's award
was the subsequent promulgation by him of the Integrated Implementing Rules of the
Labor Code, pursuant to P. D. 850 which pertinently provides that:
Section 2. Status of employees paid by the
month. Employees who are uniformly paid by the month,
irrespective of the number of working days therein, with a
salary of not less than the statutory or established minimum
wage shall be presumed to be paid for all days in the month
whether worked or not.
(Section 2, Rule IV, Book Three of the Rules and Regulations
Implementing the Labor Code.

In other words and briefly, the position of respondent Minister is that assuming the
final and executory character of the award in question, the same could still be
modified or set aside, as contended by the Solicitor General in his comment dated
August 6, 1979, in consequence or by reason of the supervening acts of respondent
Minister, citing, in support of such contention, the cases of Ocampo vs. Sanchez, 97
Phil. 479 in which the Supreme Court ruled that " when after judgment has been
rendered and the latter has become final facts and circumstances transpire which
render its execution impossible or unjust, the interested party may ask to modify or
later judgment to harmonize the same with justice and the facts (Molina vs. Dela
Riva, 8 Phil. 569; Behn, Meyer & Co. vs. McMicking, 1 Phil. 279; Warner Barners&
Co. vs. Jaucian, 13 Phil. 4; Espiritu vs. Cross-filed and Guash, 14 Phil. 588; Flor
Unata vs. Lichauco and Salinas, 36 Phil. 809, emphasis supplied." (Pp. 134i35, Rec.)
After mature deliberation, We have arrived at the conclusion that the respondent's
position is not well taken. The situation before Us in the instant case has no parity
with those obtaining in the instances where this Court sanctioned departure from the
terms of a final and executory judgment by reason of supervening events that would
make literal execution in whole or in part of such judgment unjust and inequitable. It
should be clear to anyone conversant with the elementary principles of collective
bargaining and the constitutional injunction assuring the rights of workers thereto
(Sec. a, Article II, Constitution of the Philippines) that the terms and conditions of a
collective bargaining agreement constitute the sacred law between the parties as
long as they do not contravene public order, interest or policy. We might say that the
prohibition in the Constitution's Bill of Rights against the passage or promulgation of
any law impairing the obligation of contracts applies with perhaps greater force to
collective bargaining agreements, considering that these deal with the rights and
interests of labor to which the charter explicitly affords protection. (Sec. 9, Article II.)
The award of the arbitrator in this case is not to be equated with a judicial decision. In
effect, when in relation to a controversy as to working conditions, which necessarily
include the amount of wages, allowances, bonuses, overtime pay, holiday pay, etc.,
the parties submit their differences to arbitration, they do not seek any judicial
pronouncement technically as such they are merely asking the arbitrator to fix for
them what would be the fair and just condition or term regarding the matter in dispute
that should govern further collective bargaining relations between them. Stated
differently, the arbitrator's award when stipulated by the parties to be conclusive
becomes part and parcel of the CBA. Viewed in this sense, which We are fully
convinced is most consistent with the principles of collective bargaining, the
subsequent or supervening facts referred to by the Solicitor General consisting of
acts of none other than the respondent Minister may not be invoked to alter, modify,
reform, much less abrogate, the new terms, so to speak, of the collective bargaining
inserted by virtue of the award of the arbitrator. To do otherwise would violate the
proscription of the Constitution against impairment of the obligation of contracts.
Importantly, the argument that the implementation of the arbitrator's award would
contravene public policy (referring to the Policy Instructions of the Minister of Labor)
is unavailing, for the simple reason that for an employer to agree either
spontaneously or through arbitration to pay to this workers higher compensation than
that provided by law cannot obviously be against public policy but, on the contrary, is

WHEREFORE, the order of the respondent Minister of Labor of February 19, 1979 is
hereby set aside and the resolution of the National Labor Regulations Commission of
December 19, 1977 is affirmed, with costs against the private respondent.

G.R. No. L-44717 August 28, 1985

THE
CHARTERED
BANK
EMPLOYEES
ASSOCIATION, petitioner,
vs.
HON. BLAS F. OPLE, in his capacity as the Incumbent Secretary of Labor, and
THE CHARTERED BANK,respondents.

This is a petition for certiorari seeking to annul the decision of the respondent
Secretary, now Minister of Labor which denied the petitioner's claim for holiday pay
and its claim for premium and overtime pay differentials. The petitioner claims that
the respondent Minister of Labor acted contrary to law and jurisprudence and with
grave abuse of discretion in promulgating Sec. 2, Rule IV, Book III of the Integrated
Rules and in issuing Policy Instruction No. 9, both referring to holidays with pay.
On May 20, 1975, the Chartered Bank Employees Association, in representation of
its monthly paid employees/members, instituted a complaint with the Regional Office
No. IV, Department of Labor, now Ministry of Labor and Employment (MOLE) against
private respondent Chartered Bank, for the payment of ten (10) unworked legal
holidays, as well as for premium and overtime differentials for worked legal holidays
from November 1, 1974.
The memorandum for the respondents summarizes the admitted and/or undisputed
facts as follows:
l. The work force of respondent bank consists of 149 regular
employees, all of whom are paid by the month;
2. Under their existing collective bargaining agreement, (Art.
VII thereof) said monthly paid employees are paid for
overtime work as follows:
Section l. The basic work week for all employees excepting
security guards who by virtue of the nature of their work are
required to be at their posts for 365 days per year, shall be
forty (40) hours based on five (5) eight (8) hours days,
Monday to Friday.

Section 2. Time and a quarter hourly rate shall be paid for

authorized work performed in excess of eight (8) hours from
Monday through Friday and for any hour of work performed
on Saturdays subject to Section 5 hereof.
Section 3. Time and a half hourly rate shall be paid for
authorized work performed on Sundays, legal and special
holidays.
xxxxxxxxx
xxxxxxxxx
Section 5. The provisions of Section I above notwithstanding
the BANK may revert to the six (6) days work week, to include
Saturday for a four (4) hour day, in the event the Central Bank
should require commercial banks to open for business on
Saturday.
3. In computing overtime pay and premium pay for work done
during regular holidays, the divisor used in arriving at the daily
rate of pay is 251 days although formerly the divisor used was
303 days and this was when the respondent bank was still
operating on a 6-day work week basis. However, for purposes
of computing deductions corresponding to absences without
pay the divisor used is 365 days.
4. All regular monthly paid employees of respondent bank are
receiving salaries way beyond the statutory or minimum rates
and are among the highest paid employees in the banking
industry.
5. The salaries of respondent bank's monthly paid employees
suffer no deduction for holidays occurring within the month.

SUBJECT: PAID LEGAL HOLIDAYS

The rules implementing PD 850 have clarified the policy in the
implementation of the ten (10) paid legal holidays. Before PD
850, the number of working days a year in a firm was
considered important in determining entitlement to the benefit.
Thus, where an employee was working for at least 313 days,
he was considered definitely already paid. If he was working
for less than 313, there was no certainty whether the ten (10)
paid legal holidays were already paid to him or not.
The ten (10) paid legal holidays law, to start with, is intended
to benefit principally daily employees. In the case of monthly,
only those whose monthly salary did not yet include payment
for the ten (10) paid legal holidays are entitled to the benefit.
Under the rules implementing PD 850, this policy has been
fully clarified to eliminate controversies on the entitlement of
monthly paid employees. The new determining rule is this: 'If
the monthly paid employee is receiving not less than P240,
the maximum monthly minimum wage, and his monthly pay is
uniform from January to December, he is presumed to be
already paid the ten (10) paid legal holidays. However, if
deductions are made from his monthly salary on account of
holidays in months where they occur, then he is still entitled to
the ten (10) paid legal holidays.
These new interpretations must be uniformly and consistently
upheld.
This issuance shall take effect immediately.
The issues are presented in the form of the following assignments of errors:
First Error

On the bases of the foregoing facts, both the arbitrator and the National Labor
Relations Commission (NLRC) ruled in favor of the petitioners ordering the
respondent bank to pay its monthly paid employees, holiday pay for the ten (10) legal
holidays effective November 1, 1974 and to pay premium or overtime pay
differentials to all employees who rendered work during said legal holidays. On
appeal, the Minister of Labor set aside the decision of the NLRC and dismissed the
petitioner's claim for lack of merit basing its decision on Section 2, Rule IV, Book Ill of
the Integrated Rules and Policy Instruction No. 9, which respectively provide:
Sec. 2. Status of employees paid by the month. Employees
who are uniformly paid by the month, irrespective of the
number of working days therein, with a salary of not less than
the statutory or established minimum wage shall be
presumed to be paid for all days in the month whether worked
or not.

Whether or not the Secretary of Labor

erred and acted contrary to law in
promulgating Sec. 2, Rule IV, Book III
of the Integrated Rules and Policy
Instruction No. 9.
Second Error
Whether or not the respondent
Secretary of Labor abused his
discretion and acted contrary to law in
applying Sec. 2, Rule IV of the
Integrated Rules and Policy Instruction
No. 9 abovestated to private
respondent's monthly-paid employees.

POLICY INSTRUCTION NO. 9

Third Error
TO: All Regional Directors

Whether or not the respondent

Secretary of Labor, in not giving due
credence to the respondent bank's
practice of paying its employees base
pay of 100% and premium pay of 50%
for work done during legal holidays,
acted contrary to law and abused his
discretion in denying the claim of
petitioners for unworked holidays and
premium
and
overtime
pay
differentials for worked holidays.
The petitioner contends that the respondent Minister of Labor gravely abused his
discretion in promulgating Section 2, Rule IV, Book III of the Integrated Rules and
Policy Instruction No. 9 as guidelines for the implementation of Articles 82 and 94 of
the Labor Code and in applying said guidelines to this case. It maintains that while it
is true that the respondent Minister has the authority in the performance of his duty to
promulgate rules and regulations to implement, construe and clarify the Labor Code,
such power is limited by provisions of the statute sought to be implemented,
construed or clarified. According to the petitioner, the so-called "guidelines"
promulgated by the respondent Minister totally contravened and violated the Code by
excluding the employees/members of the petitioner from the benefits of the holiday
pay, when the Code itself did not provide for their expanding the Code's clear and
concise conclusion and notwithstanding the Code's clear and concise phraseology
defining those employees who are covered and those who are excluded from the
benefits of holiday pay.
On the other hand, the private respondent contends that the questioned guidelines
did not deprive the petitioner's members of the benefits of holiday pay but merely
classified those monthly paid employees whose monthly salary already includes
holiday pay and those whose do not, and that the guidelines did not deprive the
employees of holiday pay. It states that the question to be clarified is whether or not
the monthly salaries of the petitioner's members already includes holiday pay. Thus,
the guidelines were promulgated to avoid confusion or misconstruction in the
application of Articles 82 and 94 of the Labor Code but not to violate them.
Respondent explains that the rationale behind the promulgation of the questioned
guidelines is to benefit the daily paid workers who, unlike monthly-paid employees,
suffer deductions in their salaries for not working on holidays. Hence, the Holiday
Pay Law was enacted precisely to countervail the disparity between daily paid
workers and monthly-paid employees.
The decision in Insular Bank of Asia and America Employees' Union (IBAAEU) v.
Inciong (132 SCRA 663) resolved a similar issue. Significantly, the petitioner in that
case was also a union of bank employees. We ruled that Section 2, Rule IV, Book III
of the Integrated Rules and Policy Instruction No. 9, are contrary to the provisions of
the Labor Code and, therefore, invalid This Court stated:
It is elementary in the rules of statutory construction that
when the language of the law is clear and unequivocal the
law must be taken to mean exactly what it says. In the case at
bar, the provisions of the Labor Code on the entitlement to the
benefits of holiday pay are clear and explicit it provides for
both the coverage of and exclusion from the benefit. In Policy
Instruction No. 9, the then Secretary of Labor went as far as
to categorically state that the benefit is principally intended for
daily paid employees, when the law clearly states that every
worker shall be paid their regular holiday pay. This is flagrant
violation of the mandatory directive of Article 4 of the Labor
Code, which states that 'All doubts in the implementation and
interpretation of the provisions of this Code, including its

implementing rules and regulations, shall be resolved in favor

of labor.' Moreover, it shall always be presumed that the
legislature intended to enact a valid and permanent statute
which would have the most beneficial effect that its language
permits (Orlosky v. Hasken, 155 A. 112)
Obviously, the Secretary (Minister) of Labor had exceeded his
statutory authority granted by Article 5 of the Labor Code
authorizing him to promulgate the necessary implementing
rules and regulations.
We further ruled:
While it is true that the contemporaneous construction placed
upon a statute by executive officers whose duty is to enforce
it should be given great weight by the courts, still if such
construction is so erroneous, as in the instant case, the same
must be declared as null and void. It is the role of the
Judiciary to refine and, when necessary correct constitutional
(and/or statutory) interpretation, in the context of the
interactions of the three branches of the government, almost
always in situations where some agency of the State has
engaged in action that stems ultimately from some legitimate
area of governmental power (The Supreme Court in Modern
Role, C.B. Swisher 1958, p. 36).

The questioned Section 2, Rule IV, Book III of the Integrated Rules and the
Secretary's Policy Instruction No. 9 add another excluded group, namely, "employees
who are uniformly paid by the month." While the additional exclusion is only in the
form of a presumption that all monthly paid employees have already been paid
holiday pay, it constitutes a taking away or a deprivation which must be in the law if it
is to be valid. An administrative interpretation which diminishes the benefits of labor
more than what the statute delimits or withholds is obviously ultra vires.
It is argued that even without the presumption found in the rules and in the policy
instruction, the company practice indicates that the monthly salaries of the
employees are so computed as to include the holiday pay provided by law. The
petitioner contends otherwise.
One strong argument in favor of the petitioner's stand is the fact that the Chartered
Bank, in computing overtime compensation for its employees, employs a "divisor" of
251 days. The 251 working days divisor is the result of subtracting all Saturdays,
Sundays and the ten (10) legal holidays from the total number of calendar days in a
year. If the employees are already paid for all non-working days, the divisor should
be 365 and not 251.

Since the private respondent premises its action on the invalidated rule and policy
instruction, it is clear that the employees belonging to the petitioner association are
entitled to the payment of ten (10) legal holidays under Articles 82 and 94 of the
Labor Code, aside from their monthly salary. They are not among those excluded by
law from the benefits of such holiday pay.
Presidential Decree No. 850 states who are excluded from the holiday provisions of
that law. It states:
ART. 82. Coverage. The provision of this Title shall apply to
employees in all establishments and undertakings, whether
for profit or not, but not to government employees,
managerial employees, field personnel members of the family
of the employer who are dependent on him for support,
domestic helpers, persons in the personal service of another,
and workers who are paid by results as determined by the
Secretary of Labor in appropriate regulations. (Emphasis
supplied).

WHEREFORE, the September 7, 1976 order of the public respondent is hereby

REVERSED and SET ASIDE. The March 24, 1976 decision of the National Labor
Relations Commission which affirmed the October 30, 1975 resolution of the Labor
Arbiter but deleted interest payments is REINSTATED.
SO ORDERED.

G.R. No. 162813

February 12, 2007

The situation is muddled somewhat by the fact that, in computing the employees'
absences from work, the respondent bank uses 365 as divisor. Any slight doubts,
however, must be resolved in favor of the workers. This is in keeping with the
constitutional mandate of promoting social justice and affording protection to labor
(Sections 6 and 9, Article II, Constitution). The Labor Code, as amended, itself
provides:

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

vs.
JIMMY LEBATIQUE and THE HONORABLE COURT OF APPEALS, Respondents.

ART. 4. Construction in favor of labor. All doubts in the

implementation and interpretation of the provisions of this
Code, including its implementing rules and regulations, shall
be resolved in favor of labor.

Before us is a petition for review on certiorari assailing the Decision 1 dated

September 30, 2003 of the Court of Appeals in CA-G.R. SP No. 76196 and its
Resolution2 dated March 15, 2004 denying the motion for reconsideration. The
appellate court had reversed the Decision3 dated October 15, 2002 of the National
Labor Relations Commission (NLRC) setting aside the Decision 4 dated June 27,
2001 of the Labor Arbiter.

xxxxxxxxx
In view of the foregoing, Section 2, Rule IV, Book III of the
Rules to implement the Labor Code and Policy Instruction No.
9 issued by the then Secretary of Labor must be declared null
and void. Accordinglyl public respondent Deputy Minister of
Labor Amado G. Inciong had no basis at all to deny the
members of petitioner union their regular holiday pay as
directed by the Labor Code.

benefits for "employees in all establishments and undertakings, whether for profit or
not" and lists specifically the employees not entitled to those benefits, the
administrative agency implementing that law cannot exclude certain employees from
its coverage simply because they are paid by the month or because they are already
highly paid. The remedy lies in a clear redrafting of the collective bargaining
agreement with a statement that monthly pay already includes holiday pay or an
amendment of the law to that effect but not an administrative rule or a policy
instruction.

Any remaining doubts which may arise from the conflicting or different divisors used
in the computation of overtime pay and employees' absences are resolved by the
manner in which work actually rendered on holidays is paid. Thus, whenever monthly
paid employees work on a holiday, they are given an additional 100% base pay on
top of a premium pay of 50%. If the employees' monthly pay already includes their
salaries for holidays, they should be paid only premium pay but not both base pay
and premium pay.
The contention of the respondent that 100% base pay and 50% premium pay for
work actually rendered on holidays is given in addition to monthly salaries only
because the collective bargaining agreement so provides is itself an argument in
favor of the petitioner stand. It shows that the Collective Bargaining Agreement
already contemplated a divisor of 251 days for holiday pay computations before the
questioned presumption in the Integrated Rules and the Policy Instruction was
formulated. There is furthermore a similarity between overtime pay, which is
computed on the basis of 251 working days a year, and holiday pay, which should be
similarly treated notwithstanding the public respondents' issuances. In both cases
overtime work and holiday work- the employee works when he is supposed to be
resting. In the absence of an express provision of the CBA or the law to the contrary,
the computation should be similarly handled.
We are not unmindful of the fact that the respondent's employees are among the
highest paid in the industry. It is not the intent of this Court to impose any undue
burdens on an employer which is already doing its best for its personnel. we have to
resolve the labor dispute in the light of the parties' own collective bargaining
agreement and the benefits given by law to all workers. When the law provides

Petitioner Far East Agricultural Supply, Inc. (Far East) hired on March 4, 1996 private
respondent Jimmy Lebatique as truck driver with a daily wage of P223.50. He
delivered animal feeds to the companys clients.
On January 24, 2000, Lebatique complained of nonpayment of overtime work
particularly on January 22, 2000, when he was required to make a second delivery in
Novaliches, Quezon City. That same day, Manuel Uy, brother of Far Easts General
Manager and petitioner Alexander Uy, suspended Lebatique apparently for illegal use
of company vehicle. Even so, Lebatique reported for work the next day but he was
prohibited from entering the company premises.
On January 26, 2000, Lebatique sought the assistance of the Department of Labor
and Employment (DOLE) Public Assistance and Complaints Unit concerning the
nonpayment of his overtime pay. According to Lebatique, two days later, he received
a telegram from petitioners requiring him to report for work. When he did the next
day, January 29, 2000, Alexander asked him why he was claiming overtime pay.
Lebatique explained that he had never been paid for overtime work since he started
working for the company. He also told Alexander that Manuel had fired him. After
talking to Manuel, Alexander terminated Lebatique and told him to look for another
job.
On March 20, 2000, Lebatique filed a complaint for illegal dismissal and nonpayment
of overtime pay. The Labor Arbiter found that Lebatique was illegally dismissed, and
ordered his reinstatement and the payment of his full back wages, 13th month pay,

service incentive leave pay, and overtime pay. The dispositive portion of the decision
is quoted herein in full, as follows:

TOTAL AWARD P 196,659.72

Lebatique is estopped from claiming that he was illegally dismissed since his
complaint before the DOLE was only on the nonpayment of his overtime pay.

SO ORDERED.5
WHEREFORE, we find the termination of complainant illegal. He should thus be
ordered reinstated with full backwages. He is likewise ordered paid his 13th month
pay, service incentive leave pay and overtime pay as computed by the Computation
and Examination Unit as follows:
a) Backwages:
01/25/00 - 10/31/00 = 9.23 mos.

On appeal, the NLRC reversed the Labor Arbiter and dismissed the complaint for
lack of merit. The NLRC held that there was no dismissal to speak of since Lebatique
was merely suspended. Further, it found that Lebatique was a field personnel, hence,
not entitled to overtime pay and service incentive leave pay. Lebatique sought
reconsideration but was denied.
Aggrieved, Lebatique
Appeals.1awphi1.net

filed

petition

for

certiorari

with

the

Court

of

P 223.50 x 26 x 9.23 = P 53,635.53

P 250.00 x 26 x 7.86 = 51,090.00 P 104,725.53

The Court of Appeals, in reversing the NLRC decision, reasoned that Lebatique was
suspended on January 24, 2000 but was illegally dismissed on January 29, 2000
when Alexander told him to look for another job. It also found that Lebatique was not
a field personnel and therefore entitled to payment of overtime pay, service incentive
leave pay, and 13th month pay.

13th Month Pay: 1/12 of P 104,725.53 = 8,727.13

It reinstated the decision of the Labor Arbiter as follows:

Service Incentive Leave Pay

WHEREFORE, premises considered, the decision of the NLRC dated 27 December

2002 is hereby REVERSEDand the Labor Arbiters decision dated 27 June
2001 REINSTATED.

11/01/00 06/26/01 = 7.86 mos.

01/25/00 10/31/00 = 9.23 mos.

P 223.50 x 5/12 x 9.23 = P 859.54
11/01/00 06/26/01 = 7.86 mos.
P 250.00 x 5/12 x 7.86 = [818.75] 1,678.29 115,130.95
b) Overtime Pay: (3 hours/day)

SO ORDERED.6
Petitioners moved for reconsideration but it was denied.
Hence, the instant petition wherein petitioners assign the following errors:
THE COURT OF APPEALS ERRED IN REVERSING THE DECISION OF THE
NATIONAL LABOR RELATIONS COMMISSION DATED 15 OCTOBER 2002 AND IN
RULING THAT THE PRIVATE RESPONDENT WAS ILLEGALLY DISMISSED.

03/20/97 4/30/97 = 1.36 mos.

P 180/8 x 1.25 x 3 x 26 x 1.36 = P 2,983.50
05/01/97 02/05/98 = 9.16 mos.
P 185/8 x 1.25 x 3 x 26 x 9.16 = 20,652.94
02/06/98 10/30/99 = 20.83 mos.
P 198/8 x 1.25 x 3 x 26 x [20.83] = 50,265.39
10/31/99 01/24/00 = 2.80 mos.
P 223.50/8 x 1.25 x 3 x 26 x 2.80 = 7,626.94 81,528.77

THE COURT OF APPEALS ERRED IN REVERSING THE DECISION OF THE

NATIONAL LABOR RELATIONS COMMISSION DATED 15 OCTOBER 2002 AND IN
RULING THAT PRIVATE RESPONDENT IS NOT A FIELD PERSONNEL AND
THER[E]FORE ENTITLED TO OVERTIME PAY AND SERVICE INCENTIVE LEAVE
PAY.
THE COURT OF APPEALS ERRED IN NOT DISMISSING THE PETITION FOR
CERTIORARI FOR FAILURE OF PRIVATE RESPONDENT TO ATTACH CERTIFIED
TRUE COPIES OF THE QUESTIONED DECISION AND RESOLUTION OF THE
PUBLIC RESPONDENT.7
Simply stated, the principal issues in this case are: (1) whether Lebatique was
illegally dismissed; and (2) whether Lebatique was a field personnel, not entitled to
overtime pay.
Petitioners contend that, (1) Lebatique was not dismissed from service but merely
suspended for a day due to violation of company rules; (2) Lebatique was not barred
from entering the company premises since he never reported back to work; and (3)

Also, petitioners maintain that Lebatique, as a driver, is not entitled to overtime pay
since he is a field personnel whose time outside the company premises cannot be
determined with reasonable certainty. According to petitioners, the drivers do not
observe regular working hours unlike the other office employees. The drivers may
report early in the morning to make their deliveries or in the afternoon, depending on
the production of animal feeds and the traffic conditions. Petitioners also aver that
Lebatique worked for less than eight hours a day.8
Lebatique for his part insists that he was illegally dismissed and was not merely
suspended. He argues that he neither refused to work nor abandoned his job. He
further contends that abandonment of work is inconsistent with the filing of a
complaint for illegal dismissal. He also claims that he is not a field personnel, thus,
he is entitled to overtime pay and service incentive leave pay.
After consideration of the submission of the parties, we find that the petition lacks
merit. We are in agreement with the decision of the Court of Appeals sustaining that
of the Labor Arbiter.
It is well settled that in cases of illegal dismissal, the burden is on the employer to
prove that the termination was for a valid cause. 9 In this case, petitioners failed to
discharge such burden. Petitioners aver that Lebatique was merely suspended for
one day but he abandoned his work thereafter. To constitute abandonment as a just
cause for dismissal, there must be: (a) absence without justifiable reason; and (b) a
clear intention, as manifested by some overt act, to sever the employer-employee
relationship.10
The records show that petitioners failed to prove that Lebatique abandoned his job.
Nor was there a showing of a clear intention on the part of Lebatique to sever the
employer-employee relationship. When Lebatique was verbally told by Alexander Uy,
the companys General Manager, to look for another job, Lebatique was in effect
dismissed. Even assuming earlier he was merely suspended for illegal use of
company vehicle, the records do not show that he was afforded the opportunity to
explain his side. It is clear also from the sequence of the events leading to
Lebatiques dismissal that it was Lebatiques complaint for nonpayment of his
overtime pay that provoked the management to dismiss him, on the erroneous
premise that a truck driver is a field personnel not entitled to overtime pay.
An employee who takes steps to protest his layoff cannot by any stretch of
imagination be said to have abandoned his work and the filing of the complaint is
proof enough of his desire to return to work, thus negating any suggestion of
abandonment.11 A contrary notion would not only be illogical but also absurd.
It is immaterial that Lebatique had filed a complaint for nonpayment of overtime pay
the day he was suspended by managements unilateral act. What matters is that he
filed the complaint for illegal dismissal on March 20, 2000, after he was told not to
report for work, and his filing was well within the prescriptive period allowed under
the law.
On the second issue, Article 82 of the Labor Code is decisive on the question of who
are referred to by the term "field personnel." It provides, as follows:
ART. 82. Coverage. - The provisions of this title [Working Conditions and Rest
Periods] shall apply to employees in all establishments and undertakings whether for

profit or not, but not to government employees, managerial employees, field

personnel, members of the family of the employer who are dependent on him for
support, domestic helpers, persons in the personal service of another, and workers
who are paid by results as determined by the Secretary of Labor in appropriate
regulations.
x xxx
"Field personnel" shall refer to non-agricultural employees who regularly perform
their duties away from the principal place of business or branch office of the
employer and whose actual hours of work in the field cannot be determined with
reasonable certainty.
In Auto Bus Transport Systems, Inc. v. Bautista, 12 this Court emphasized that the
definition of a "field personnel" is not merely concerned with the location where the
employee regularly performs his duties but also with the fact that the employees
performance is unsupervised by the employer. We held that field personnel are those
who regularly perform their duties away from the principal place of business of the
employer and whose actual hours of work in the field cannot be determined with
reasonable certainty. Thus, in order to determine whether an employee is a field
employee, it is also necessary to ascertain if actual hours of work in the field can be
determined with reasonable certainty by the employer. In so doing, an inquiry must
be made as to whether or not the employees time and performance are constantly
supervised by the employer.13
As correctly found by the Court of Appeals, Lebatique is not a field personnel as
defined above for the following reasons: (1) company drivers, including Lebatique,
are directed to deliver the goods at a specified time and place; (2) they are not given
the discretion to solicit, select and contact prospective clients; and (3) Far East
issued a directive that company drivers should stay at the clients premises during
truck-ban hours which is from 5:00 to 9:00 a.m. and 5:00 to 9:00 p.m. 14 Even
petitioners admit that the drivers can report early in the morning, to make their
deliveries, or in the afternoon, depending on the production of animal
feeds.15 Drivers, like Lebatique, are under the control and supervision of
management officers. Lebatique, therefore, is a regular employee whose tasks are
usually necessary and desirable to the usual trade and business of the company.
Thus, he is entitled to the benefits accorded to regular employees of Far East,
including overtime pay and service incentive leave pay.

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

Lebatique timely filed his claim for service incentive leave pay, considering that in this
situation, the prescriptive period commences at the time he was terminated. 18 On the
other hand, his claim regarding nonpayment of overtime pay since he was hired in
March 1996 is a different matter. In the case of overtime pay, he can only demand for
the overtime pay withheld for the period within three years preceding the filing of the
complaint on March 20, 2000. However, we find insufficient the selected time records
presented by petitioners to compute properly his overtime pay. The Labor Arbiter
should have required petitioners to present the daily time records, payroll, or other
documents in managements control to determine the correct overtime pay due
Lebatique.

WHEREFORE, judgment is hereby rendered as follows:

1. The faculty and personnel of the respondent Jose Rizal
College who are paid their salary by the month uniformly in a
school year, irrespective of the number of working days in a
month, without deduction for holidays, are presumed to be
already paid the 10 paid legal holidays and are no longer
entitled to separate payment for the said regular holidays;

Costs against petitioners.

SO ORDERED.

G.R. No. L-65482 December 1, 1987

2. The personnel of the respondent Jose Rizal College who

are paid their wages daily are entitled to be paid the 10
unworked regular holidays according to the pertinent
provisions of the Rules and Regulations Implementing the
Labor Code;

JOSE
RIZAL
COLLEGE, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION AND NATIONAL ALLIANCE OF
TEACHERS/OFFICE WORKERS, respondents.

This is a petition for certiorari with prayer for the issuance of a writ of preliminary
injunction, seeking the annulment of the decision of the National Labor Relations
Commission * in NLRC Case No. RB-IV 23037-78 (Case No. R4-1-1081-71) entitled
"National Alliance of Teachers and Office Workers and Juan E. Estacio, Jaime
Medina, et al. vs. Jose Rizal College" modifying the decision of the Labor Arbiter as
follows:
WHEREFORE, in view of the foregoing considerations, the
decision appealed from is MODIFIED, in the sense that
teaching personnel paid by the hour are hereby declared to
be entitled to holiday pay.
SO ORDERED.
The factual background of this case which is undisputed is as follows:

Note that all money claims arising from an employer-employee relationship shall be
filed within three years from the time the cause of action accrued; otherwise, they
shall be forever barred.16 Further, if it is established that the benefits being claimed
have been withheld from the employee for a period longer than three years, the
amount pertaining to the period beyond the three-year prescriptive period is therefore
barred by prescription. The amount that can only be demanded by the aggrieved
employee shall be limited to the amount of the benefits withheld within three years
before the filing of the complaint. 17

After the parties had submitted their respective position papers, the Labor
Arbiter ** rendered a decision on February 5, 1979, the dispositive portion of which
reads:

Petitioner is a non-stock, non-profit educational institution duly organized and

existing under the laws of the Philippines. It has three groups of employees
categorized as follows: (a) personnel on monthly basis, who receive their monthly
salary uniformly throughout the year, irrespective of the actual number of working
days in a month without deduction for holidays; (b) personnel on daily basis who are
paid on actual days worked and they receive unworked holiday pay and (c) collegiate
faculty who are paid on the basis of student contract hour. Before the start of the
semester they sign contracts with the college undertaking to meet their classes as
per schedule.
Unable to receive their corresponding holiday pay, as claimed, from 1975 to 1977,
private respondent National Alliance of Teachers and Office Workers (NATOW) in
behalf of the faculty and personnel of Jose Rizal College filed with the Ministry of
Labor a complaint against the college for said alleged non-payment of holiday pay,
docketed as Case No. R04-10-81-72. Due to the failure of the parties to settle their
differences on conciliation, the case was certified for compulsory arbitration where it
was docketed as RB-IV-23037-78 (Rollo, pp. 155-156).

3. Collegiate faculty of the respondent Jose Rizal College

who by contract are paid compensation per student contract
hour are not entitled to unworked regular holiday pay
considering that these regular holidays have been excluded in
the programming of the student contact hours. (Rollo. pp. 2627)
On appeal, respondent National Labor Relations Commission in a decision
promulgated on June 2, 1982, modified the decision appealed from, in the sense that
teaching personnel paid by the hour are declared to be entitled to holiday pay (Rollo.
p. 33).
Hence, this petition.
The sole issue in this case is whether or not the school faculty who according to their
contracts are paid per lecture hour are entitled to unworked holiday pay.
Labor Arbiter Julio Andres, Jr. found that faculty and personnel employed by
petitioner who are paid their salaries monthly, are uniformly paid throughout the
school year regardless of working days, hence their holiday pay are included therein
while the daily paid employees are renumerated for work performed during holidays
per affidavit of petitioner's treasurer (Rollo, pp. 72-73).
There appears to be no problem therefore as to the first two classes or categories of
petitioner's workers.
The problem, however, lies with its faculty members, who are paid on an hourly
basis, for while the Labor Arbiter sustains the view that said instructors and
professors are not entitled to holiday pay, his decision was modified by the National
Labor Relations Commission holding the contrary. Otherwise stated, on appeal the
NLRC ruled that teaching personnel paid by the hour are declared to be entitled to
holiday pay.
Petitioner maintains the position among others, that it is not covered by Book V of the
Labor Code on Labor Relations considering that it is a non- profit institution and that
its hourly paid faculty members are paid on a "contract" basis because they are

required to hold classes for a particular number of hours. In the programming of

these student contract hours, legal holidays are excluded and labelled in the
schedule as "no class day. " On the other hand, if a regular week day is declared a
holiday, the school calendar is extended to compensate for that day. Thus petitioner
argues that the advent of any of the legal holidays within the semester will not affect
the faculty's salary because this day is not included in their schedule while the
calendar is extended to compensate for special holidays. Thus the programmed
number of lecture hours is not diminished (Rollo, pp. 157- 158).
The Solicitor General on the other hand, argues that under Article 94 of the Labor
Code (P.D. No. 442 as amended), holiday pay applies to all employees except those
in retail and service establishments. To deprive therefore employees paid at an
hourly rate of unworked holiday pay is contrary to the policy considerations
underlying such presidential enactment, and its precursor, the Blue Sunday Law
(Republic Act No. 946) apart from the constitutional mandate to grant greater rights
to labor (Constitution, Article II, Section 9). (Reno, pp. 76-77).
In addition, respondent National Labor Relations Commission in its decision
promulgated on June 2, 1982, ruled that the purpose of a holiday pay is obvious; that
is to prevent diminution of the monthly income of the workers on account of work
interruptions. In other words, although the worker is forced to take a rest, he earns
what he should earn. That is his holiday pay. It is no excuse therefore that the school
calendar is extended whenever holidays occur, because such happens only in cases
of special holidays (Rollo, p. 32).
Subject holiday pay is provided for in the Labor Code (Presidential Decree No. 442,
as amended), which reads:
Art. 94. Right to holiday pay (a) Every worker shall be paid
his regular daily wage during regular holidays, except in retail
and service establishments regularly employing less than ten
(10) workers;
(b) The employer may require an employee to work on any
holiday but such employee shall be paid a compensation
equivalent to twice his regular rate; ... "
and in the Implementing Rules and Regulations, Rule IV, Book III, which
reads:
SEC. 8. Holiday pay of certain employees. (a) Private
school teachers, including faculty members of colleges and
universities, may not be paid for the regular holidays during
semestral vacations. They shall, however, be paid for the
regular holidays during Christmas vacations. ...
Under the foregoing provisions, apparently, the petitioner, although a non-profit
institution is under obligation to give pay even on unworked regular holidays to hourly
paid faculty members subject to the terms and conditions provided for therein.
We believe that the aforementioned implementing rule is not justified by the
provisions of the law which after all is silent with respect to faculty members paid by
the hour who because of their teaching contracts are obliged to work and consent to
be paid only for work actually done (except when an emergency or a fortuitous event
or a national need calls for the declaration of special holidays). Regular holidays
specified as such by law are known to both school and faculty members as no class

days;" certainly the latter do not expect payment for said unworked days, and this
was clearly in their minds when they entered into the teaching contracts.
On the other hand, both the law and the Implementing Rules governing holiday pay
are silent as to payment on Special Public Holidays.
It is readily apparent that the declared purpose of the holiday pay which is the
prevention of diminution of the monthly income of the employees on account of work
interruptions is defeated when a regular class day is cancelled on account of a
special public holiday and class hours are held on another working day to make up
for time lost in the school calendar. Otherwise stated, the faculty member, although
forced to take a rest, does not earn what he should earn on that day. Be it noted that
when a special public holiday is declared, the faculty member paid by the hour is
deprived of expected income, and it does not matter that the school calendar is
extended in view of the days or hours lost, for their income that could be earned from
other sources is lost during the extended days. Similarly, when classes are called off
or shortened on account of typhoons, floods, rallies, and the like, these faculty
members must likewise be paid, whether or not extensions are ordered.
Petitioner alleges that it was deprived of due process as it was not notified of the
appeal made to the NLRC against the decision of the labor arbiter.
The Court has already set forth what is now known as the "cardinal primary"
requirements of due process in administrative proceedings, to wit: "(1) the right to a
hearing which includes the right to present one's case and submit evidence in
support thereof; (2) the tribunal must consider the evidence presented; (3) the
decision must have something to support itself; (4) the evidence must be substantial,
and substantial evidence means such evidence as a reasonable mind might accept
as adequate to support a conclusion; (5) the decision must be based on the evidence
presented at the hearing, or at least contained in the record and disclosed to the
parties affected; (6) the tribunal or body of any of its judges must act on its or his own
independent consideration of the law and facts of the controversy, and not simply
accept the views of a subordinate; (7) the board or body should in all controversial
questions, render its decisions in such manner that the parties to the proceeding can
know the various issues involved, and the reason for the decision rendered. "
(Doruelo vs. Commission on Elections, 133 SCRA 382 [1984]).
The records show petitioner JRC was amply heard and represented in the instant
proceedings. It submitted its position paper before the Labor Arbiter and the NLRC
and even filed a motion for reconsideration of the decision of the latter, as well as an
"Urgent Motion for Hearing En Banc" (Rollo, p. 175). Thus, petitioner's claim of lack
of due process is unfounded.
PREMISES CONSIDERED, the decision of respondent National Labor Relations
Commission is hereby set aside, and a new one is hereby RENDERED:
(a) exempting petitioner from paying hourly paid faculty members their pay for
regular holidays, whether the same be during the regular semesters of the school
year or during semestral, Christmas, or Holy Week vacations;
(b) but ordering petitioner to pay said faculty members their regular hourly rate on
days declared as special holidays or for some reason classes are called off or
shortened for the hours they are supposed to have taught, whether extensions of
class days be ordered or not; in case of extensions said faculty members shall
likewise be paid their hourly rates should they teach during said extensions.

SO ORDERED.

G.R. No. 114698 July 3, 1995

WELLINGTON
INVESTMENT
AND
MANUFACTURING
CORPORATION, petitioner,
vs.
CRESENCIANO B. TRAJANO, Under-Secretary of Labor and Employment,
ELMER ABADILLA, and 34 others, respondents.
The basic issue raised by petitioner in this case is, as its counsel puts it, "whether or
not a monthly-paid employee, receiving a fixed monthly compensation, is entitled to
an additional pay aside from his usual holiday pay, whenever a regular holiday falls
on a Sunday."
The case arose from a routine inspection conducted by a Labor Enforcement Officer
on August 6, 1991 of the Wellington Flour Mills, an establishment owned and
operated by petitioner Wellington Investment and Manufacturing Corporation
(hereafter, simply Wellington). The officer thereafter drew up a report, a copy of
which was "explained to and received by" Wellington's personnel manager, in which
he set forth his finding of "(n)on-payment of regular holidays falling on a Sunday for
monthly-paid employees." 1
Wellington sought reconsideration of the Labor Inspector's report, by letter dated
August 10, 1991. It argued that "the monthly salary of the company's monthlysalaried employees already includes holiday pay for all regular holidays . . . (and
hence) there is no legal basis for the finding of alleged non-payment of regular
holidays falling on a Sunday." 2 It expounded on this thesis in a position paper
subsequently submitted to the Regional Director, asserting that it pays its monthlypaid employees a fixed monthly compensation "using the 314 factor which
undeniably covers and already includes payment for all the working days in a month
as well as all the 10 unworked regular holidays within a year." 3
Wellington's arguments failed to persuade the Regional Director who, in an Order
issued on July 28, 1992, ruled that "when a regular holiday falls on a Sunday, an
extra or additional working day is created and the employer has the obligation to pay
the employees for the extra day except the last Sunday of August since the payment
for the said holiday is already included in the 314 factor," and accordingly directed
Wellington to pay its employees compensation corresponding to four (4) extra
working days. 4
Wellington timely filed a motion for reconsideration of this Order of August 10, 1992,
pointing out that it was in effect being compelled to "shell out an additional pay for an
alleged extra working day" despite its complete payment of all compensation lawfully
due its workers, using the 314 factor. 5 Its motion was treated as an appeal and was
acted on by respondent Undersecretary. By Order dated September 22, the latter
affirmed the challenged order of the Regional Director, holding that "the divisor being
used by the respondent (Wellington) does not reliably reflect the actual working days
in a year, " and consequently commanded Wellington to pay its employees the "six
additional working days resulting from regular holidays falling on Sundays in 1988,
1989 and 1990." 6 Again, Wellington moved for reconsideration, 7and again was
rebuffed. 8
Wellington then instituted the special civil action of certiorari at bar in an attempt to
nullify the orders above mentioned. By Resolution dated July 4, 1994, this Court
authorized the issuance of a temporary restraining order enjoining the respondents
from enforcing the questioned orders. 9

Every worker should, according to the Labor Code, 10 "be paid his regular daily
wage during regular holidays, except in retail and service establishments regularly
employing less than ten (10) workers;" this, of course, even if the worker does no
work on these holidays. The regular holidays include: "New Year's Day, Maundy
Thursday, Good Friday, the ninth of April, the first of May, the twelfth of June, the
fourth of July, the thirtieth of November, the twenty-fifth of December, and the day
designated by law for holding a general election (or national referendum or
plebiscite). 11

the circumstance that whenever a regular holiday coincides

with a Sunday, an additional working day is created and left
unpaid. In other words, while the said divisor may be utilized
as proof evidencing payment of 302 working days, 2 special
days and the ten regular holidays in a calendar year, the
same does not cover or include payment of additional working
days created as a result of some regular holidays falling on
Sundays.

Particularly as regards employees "who are uniformly paid by the month, "the
monthly minimum wage shall not be less than the statutory minimum wage multiplied
by 365 days divided by twelve." 12 This monthly salary shall serve as compensation
"for all days in the month whether worked or not," and "irrespective of the number of
working days therein." 13 In other words, whether the month is of thirty (30) or thirtyone (31) days' duration, or twenty-eight (28) or twenty-nine (29) (as in February), the
employee is entitled to receive the entire monthly salary. So, too, in the event of the
declaration of any special holiday, or any fortuitous cause precluding work on any
particular day or days (such as transportation strikes, riots, or typhoons or other
natural calamities), the employee is entitled to the salary for the entire month and the
employer has no right to deduct the proportionate amount corresponding to the days
when no work was done. The monthly compensation is evidently intended precisely
to avoid computations and adjustments resulting from the contingencies just
mentioned which are routinely made in the case of workers paid on daily basis.

He pointed out that in 1988 there was "an increase of three (3) working days
resulting from regular holidays falling on Sundays;" hence Wellington "should pay for
317 days, instead of 314 days." By the same process of ratiocination, respondent
Undersecretary theorized that there should be additional payment by Wellington to its
monthly-paid employees for "an increment of three (3) working days" for 1989 and
again, for 1990. What he is saying is that in those years, Wellington should have
used the "317 factor," not the "314 factor."

In Wellington's case, there seems to be no question that at the time of the inspection
conducted by the Labor Enforcement Officer on August 6, 1991, it was and had been
paying its employees "a salary of not less than the statutory or established minimum
wage," and that the monthly salary thus paid was "not . . . less than the statutory
minimum wage multiplied by 365 days divided by twelve," supra. There is, in other
words, no issue that to this extent, Wellington complied with the minimum norm laid
down by law.
Apparently the monthly salary was fixed by Wellington to provide for compensation
for every working day of the year including the holidays specified by law and
excluding only Sundays. In fixing the salary, Wellington used what it calls the "314
factor;" that is to say, it simply deducted 51 Sundays from the 365 days normally
comprising a year and used the difference, 314, as basis for determining the monthly
salary. The monthly salary thus fixed actually covers payment for 314 days of the
year, including regular and special holidays, as well as days when no work is done
by reason of fortuitous cause, as above specified, or causes not attributable to the
employees.
The Labor Officer who conducted the routine inspection of Wellington discovered that
in certain years, two or three regular holidays had fallen on Sundays. He reasoned
that this had precluded the enjoyment by the employees of a non-working day, and
the employees had consequently had to work an additional day for that month. This
ratiocination received the approval of his Regional Director who opined 14 that "when
a regular holiday falls on a Sunday, an extra or additional working day is created and
the employer has the obligation to pay its employees for the extra day except the last
Sunday of August since the payment for the said holiday is already included in the
314 factor." 15
This ingenuous theory was adopted and further explained by respondent Labor
Undersecretary, to whom the matter was appealed, as follows: 16
. . . By using said (314) factor, the respondent (Wellington)
assumes that all the regular holidays fell on ordinary days and
never on a Sunday. Thus, the respondent failed to consider

The theory loses sight of the fact that the monthly salary in Wellington which is
based on the so-called "314 factor" accounts for all 365 days of a year; i.e.,
Wellington's "314 factor" leaves no day unaccounted for; it is paying for all the days
of a year with the exception only of 51 Sundays.
The respondents' theory would make each of the years in question (1988, 1989,
1990), a year of 368 days. Pursuant to this theory, no employer opting to pay his
employees by the month would have any definite basis to determine the number of
days in a year for which compensation should be given to his work force. He would
have to ascertain the number of times legal holidays would fall on Sundays in all the
years of the expected or extrapolated lifetime of his business. Alternatively, he would
be compelled to make adjustments in his employees' monthly salaries every year,
depending on the number of times that a legal holiday fell on a Sunday.
There is no provision of law requiring any employer to make such adjustments in the
monthly salary rate set by him to take account of legal holidays falling on Sundays in
a given year, or, contrary to the legal provisions bearing on the point, otherwise to
reckon a year at more than 365 days. As earlier mentioned, what the law requires of
employers opting to pay by the month is to assure that "the monthly minimum wage
shall not be less than the statutory minimum wage multiplied by 365 days divided by
twelve," 17 and to pay that salary "for all days in the month whether worked or not,"
and "irrespective of the number of working days therein." 18 That salary is due and
payable regardless of the declaration of any special holiday in the entire country or a
particular place therein, or any fortuitous cause precluding work on any particular day
or days (such as transportation strikes, riots, or typhoons or other natural calamities),
or cause not imputable to the worker. And as also earlier pointed out, the legal
provisions governing monthly compensation are evidently intended precisely to avoid
re-computations and alterations in salary on account of the contingencies just
mentioned, which, by the way, are routinely made between employer and employees
when the wages are paid on daily basis.
The public respondents argue that their challenged conclusions and dispositions may
be justified by Section 2, Rule X, Book III of the Implementing Rules, giving the
Regional Director power 19
. . . to order and administer (in cases where employeremployee relations still exist), after due notice and hearing,
compliance with the labor standards provisions of the Code
and the other labor legislations based on the findings of their
Regulations Officers or Industrial Safety Engineers (Labor
Standard and Welfare Officers) and made in the course of

inspection, and to issue writs of execution to the appropriate

authority for the enforcement of his order, in line with the
provisions of Article 128 in relation to Articles 289 and 290 of
the Labor Code, as amended. . . .
The respondents beg the question. Their argument assumes that there are some
"labor standards provisions of the Code and the other labor legislations" imposing on
employers the obligation to give additional compensation to their monthly-paid
employees in the event that a legal holiday should fall on a Sunday in a particular
month with which compliance may be commanded by the Regional Director
when the existence of said provisions is precisely the matter to be established.
In promulgating the orders complained of the public respondents have attempted to
legislate, or interpret legal provisions in such a manner as to create obligations
where none are intended. They have acted without authority, or at the very least, with
grave abuse of their discretion. Their acts must be nullified and set aside.
WHEREFORE, the orders complained of, namely: that of the respondent
Undersecretary dated September 22, 1993, and that of the Regional Director dated
July 30, 1992, are NULLIFIED AND SET ASIDE, and the proceeding against
petitioner DISMISSED.
SO ORDERED.

The purpose of vacation leave is to afford to a laborer chance to get a

much-needed rest to replenish his worn out energies and acquire a new
vitality to enable him to efficient perform his duties, and not merely to give
him additional salary or bounty. This privilege must be demanded in its
opportunity time and if he allows the years to go by in silence, he was it. It
becomes a mere concession or act of grace of the employer. (See also,
Philippine Air Lines, Inc. vs. Balanguit, et al., 53 Off. Gaz., 8549;
Tanguilig, et al., vs. Theo H. Davis and Co., L-9144, May 30, 1959.)
Upon the other hand, the award for hospitalization expenses is based upon Article
1689 of the Civil Code of the Philippines which, Chua Lo Tan maintains, does not
justify said award. Said article reads:
SERVICE INCENTIVE LEAVE
G.R. No. L-16298
September 29, 1962
ESTEBAN
vs.
CHUA
LO
TAN,
CHUA LO TAN, defendant-appellant.

CUAJAO, plaintiff-appellant,
ET

AL., defendants,

In his complaint, filed on November 29, 1956, plaintiff Esteban Cuajao seeks to
recover from defendants Chua Lo Tan and Chua Luan & Co., Inc., the aggregate
sum of P2,015.80 allegedly representing hospitalization expenses in the sum of
P435.80 and vacation leave pay, as former driver of said defendants, in the sum of
P1,580.00, with interest thereon, aside from attorney's fees and costs. Defendants
filed separate answer admitting some allegations of the complaint, denying other
allegations thereof and setting up several affirmative defenses, as counterclaim for
damages. Subsequently, the complaint was, on motion of defendant Chua Luan &
Co., Inc., dismissed as regards this defendant. In due course, the Court of First
Instance of Manila later rendered a decision rejecting plaintiff's claim for vacation
leave and sentencing defendant Chua Lo Tan to pay to plaintiff the sum of P435.80
as hospitalization expenses, with interest thereon, from the filing of said complaint
until fully paid, as well as the costs. Both parties have appealed from this decision:
plaintiff, insofar as his claim for vacation leave was concerned; and Chua Lo Tan, as
regards the hospitalization expenses.
The main facts are not disputed. As the family driver of Chua Lo Tan, plaintiff earned
P5.00 a day from August 1, 1951 to November 4, 1956. Plaintiff was hospitalized for
nineteen (19) days in 1951, thirteen (13) days in 1952, and three (3) days in 1953,
and spent altogether P435.80 for hospitalization and medicine. During the period of
his employment, he did not enjoy any vacation leave, which at the rate of four (4)
days a month, as provided in Article 1695 of the Civil Code of the Philippines, would
have aggregated, if accumulated, to 316 days vacation leave, worth, at the rate of
P5.00 a day, P1,580.00. This notwithstanding, the lower court held that plaintiff is not
entitled to recover the latter amount, upon ground of waiver of his right thereto, in
view of his failure to demand payment of said vacation leave, as right thereto
accrued.
Plaintiff maintains that there has been no such waiver on his part, he having testified
that seasonable demands had been made by him upon Chua Lo Tan. The lower
court, however, gave credence to the testimony of the latter to the contrary and, we
believe, correctly, plaintiff having remained in the service of Chua Lo Tan for about
six (6) years, despite the fact that Chua Lo Tan had allegedly not heeded such
demands. Moreover, we cannot review the findings of fact of said court on this point,
plaintiff having stated in the notice therein filed by him that he appealed directly to the
Supreme Court, to raise the questions of law specified in his notice of
appeal.1awphl.nt
Plaintiff insists that his right to vacation leave cannot be waived, but this Court has
already held otherwise Sun Ripe Coconut Products, Inc. vs. National Labor Union, L7964 (51 Off. Gaz., 5133-5137), in which we declared:

Household service shall always be reasonably compensated. Any

stipulation that household service is without compensation shall be void.
Such compensation shall be in addition to the house helper's lodging,
food, and medical attendance.
The issue is whether the phrase "medical attendance" as used in this provision,
includes "expenses of capitalization". The question is one of first impression in this
jurisdiction, although the Court of Appeals has decided it in the negative in Zamora
vs. Sy, 52 Off. Gaz., 1513. Neither does it appear to be settled either in the American
or in the British jurisprudence. In fact, it would seem that the right to "medical
attendance" exclusive of hospitalization is purely statutory in character. What is
more, even where specifically conferred at by statute, said right to medical
attendance is deemed subject to the "rule of necessity" (People vs. Pierson, 103, 16
N.Y. 921, 68 N.E. 243), in the sense that said right is dependent upon the need for
said medical attendance. Hence, the question whether "expenses of hospitalization"
are included in "medical attendance", should not, and cannot, be decided in abstract.
The determination of the issue must depend upon the circumstances surrounding
each case.
In the one at bar, plaintiff has done no more than testify about the fact of his
hospitalization and the illness for which he had been treated - namely, hemorrhoid
aside - from identifying and presenting the bills allegedly paid by him therefor. There
is absolutely no evidence expert or otherwise regarding the necessity of his
confinement in a hospital. He did not even try to prove that Chua Lo Tan had been
advised of his (plaintiff's) illness or of his hospitalization, either prior or subsequently
thereto. Needless to say it is only fair that, except in cases of extreme urgency, the
party who may have to defray the cost of medical attendance and/or hospitalization,
be given a say which Chua Lo Tan has not had - in the choice of the physician
who will treat the patient and/or the hospital in which he will be confined. In these
circumstances, we find that even if the expenses of hospitalization could, in proper
cases, be deemed to be within the purview of "medical attendance", on which we do
not express an opinion the lower court on erred in sentencing Chua Lo Tan to pay
said expenses of hospitalization.
WHEREFORE, the award for said expenses is set aside and, with this modification,
the decision appealed from is hereby affirmed in all other respect, without costs. It is
so ordered.

FIRST DIVISION
[G. R. No. 123938. May 21, 1998]

LABOR CONGRESS OF THE PHILIPPINES (LCP) for and in behalf of its

members, ANA MARIE OCAMPO, MARY INTAL, ANNABEL CARESO,
MARLENE MELQIADES, IRENE JACINTO, NANCY GARCIA, IMELDA
SARMIENTO, LENITA VIRAY, GINA JACINTO, ROSEMARIE DEL
ROSARIO, CATHERINE ASPURNA, WINNIE PENA, VIVIAN BAA,
EMILY LAGMAN, LILIAN MARFIL, NANCY DERACO, JANET
DERACO, MELODY JACINTO, CAROLYN DIZON, IMELDA
MANALOTO, NORY VIRAY, ELIZA SALAZAR, GIGI MANALOTO,
JOSEFINA BASILIO, MARY ANN MAYATI, ZENAIDA GARCIA, MERLY
CANLAS, ERLINDA MANALANG, ANGELINA QUIAMBAO, LANIE
GARCIA,
ELVIRA
PIEDRA,
LOURDES
PANLILIO,
LUISA
PANLILIO, LERIZA PANLILIO, ALMA CASTRO, ALDA DAVID, MYRA T.
OLALIA, MARIFE PINLAC, NENITA DE GUZMAN, JULIE GACAD,
EVELYN MANALO, NORA PATIO, JANETH CARREON, ROWENA
MENDOZA, ROWENA MANALO, LENY GARCIA, FELISISIMA PATIO,
SUSANA SALOMON, JOYDEE LANSANGAN, REMEDIOS AGUAS,
JEANIE
LANSANGAN,
ELIZABETH
MERCADO,
JOSELYN
MANALESE, BERNADETH RALAR, LOLITA ESPIRITU, AGNES
SALAS, VIRGINIA MENDIOLA, GLENDA SALITA, JANETH RALAR,
ERLINDA BASILIO, CORA PATIO, ANTONIA CALMA, AGNES
CARESO, GEMMA BONUS, MARITESS OCAMPO, LIBERTY
GELISANGA, JANETH MANARANG, AMALIA DELA CRUZ, EVA
CUEVAS, TERESA MANIAGO, ARCELY PEREZ, LOIDA BIE, ROSITA
CANLAS, ANALIZA ESGUERRA, LAILA MANIAGO, JOSIE MANABAT,
ROSARIO DIMATULAC, NYMPA TUAZON, DAIZY TUASON, ERLINDA
NAVARRO, EMILY MANARANG, EMELITA CAYANAN, MERCY
CAYANAN, LUZVIMINDA CAYANAN, ANABEL MANALO, SONIA
DIZON, ERNA CANLAS, MARIAN BENEDICTA, DOLORES DOLETIN,
JULIE DAVID, GRACE VILLANUEVA, VIRGINIA MAGBAG, CORAZON
RILLION, PRECY MANALILI, ELENA RONOZ, IMELDA MENDOZA,
EDNA CANLAS and ANGELA CANLAS, petitioners, vs. NATIONAL
LABOR RELATIONS COMMISSION, EMPIRE FOOD PRODUCTS, its
Proprietor/President & Manager, MR. GONZALO KEHYENG and
MRS. EVELYN KEHYENG, respondents.
In this special civil action for certiorari under Rule 65, petitioners seek to
reverse the 29 March 1995 resolution[1] of the National Labor Relations Commission
(NLRC) in NLRC RAB III Case No. 01-1964-91 which affirmed the Decision [2] of
Labor Arbiter Ariel C. Santos dismissing their complaint for utter lack of merit.
The antecedents of this case as summarized by the Office of the Solicitor
General in its Manifestation and Motion in Lieu of Comment, [3] are as follows:
The 99 persons named as petitioners in this proceeding were rank-and-file
employees of respondent Empire Food Products, which hired them on various dates
(Paragraph 1, Annex A of Petition, Annex B; Page 2, Annex F of Petition).
Petitioners filed against private respondents a complaint for payment of money
claim[s] and for violation of labor standard[s] laws (NLRC Case No. RAB-111-101817-90). They also filed a petition for direct certification of petitioner Labor
Congress of the Philippines as their bargaining representative (Case No. R03009010-RU-005).
On October 23, 1990, petitioners represented by LCP President Benigno B. Navarro,
Sr. and private respondents Gonzalo Kehyeng and Evelyn Kehyeng in behalf of
Empire Food Products, Inc. entered into a Memorandum of Agreement which
provided, among others, the following:

1. That in connection with the pending Petition for Direct Certification filed by the
Labor Congress with the DOLE, Management of the Empire Food Products has no
objection [to] the direct certification of the LCP Labor Congress and is now
recognizing the Labor Congress of the Philippines (LCP) and its Local Chapter as the
SOLE and EXCLUSIVE Bargaining Agent and Representative for all rank and file
employees of the Empire Food Products regarding WAGES, HOURS OF WORK,
AND OTHER TERMS AND CONDITIONS OF EMPLOYMENT;
2. That with regards [sic] to NLRC CASE NO. RAB-III-10-1817-90 pending with the
NLRC parties jointly and mutually agreed that the issues thereof, shall be discussed
by the parties and resolve[d] during the negotiation of the Collective Bargaining
Agreement;
3. That Management of the Empire Food Products shall make the proper adjustment
of the Employees Wages within fifteen (15) days from the signing of this Agreement
and further agreed to register all the employees with the SSS;
4. That Employer, Empire Food Products thru its Management agreed to deduct thru
payroll deduction UNION DUES and other Assessment[s] upon submission by the
LCP Labor Congress individual Check-Off Authorization[s] signed by the Union
Members indicating the amount to be deducted and further agreed all deduction[s]
made representing Union Dues and Assessment[s] shall be remitted immediately to
the LCP Labor Congress Treasurer or authorized representative within three (3) or
five (5) days upon deductions [sic], Union dues not deducted during the period due,
shall
be
refunded
or
reimbursed
by
the
Employer/Management. Employer/Management further agreed to deduct Union dues
from non-union members the same amount deducted from union members without
need of individual Check-Off Authorizations [for] Agency Fee;
5. That in consideration [of] the foregoing covenant, parties jointly and mutually
agreed that NLRC CASE NO. RAB-III-10-1817-90 shall be considered provisionally
withdrawn from the Calendar of the National Labor Relations Commission(NLRC),
while the Petition for direct certification of the LCP Labor Congress parties jointly
move for the direct certification of the LCP Labor Congress;
6. That parties jointly and mutually agreed that upon signing of this Agreement, no
Harassments [sic], Threats, Interferences [sic] of their respective rights under the law,
no Vengeance or Revenge by each partner nor any act of ULP which might disrupt
the operations of the business;
7. Parties jointly and mutually agreed that pending negotiations or formalization of
the propose[d] CBA, this Memorandum of Agreement shall govern the parties in the
exercise of their respective rights involving the Management of the business and the
terms and condition[s] of employment, and whatever problems and grievances may
arise by and between the parties shall be resolved by them, thru the most cordial and
good harmonious relationship by communicating the other party in writing indicating
said grievances before taking any action to another forum or government agencies;
8. That parties [to] this Memorandum of Agreement jointly and mutually agreed to
respect, abide and comply with all the terms and conditions hereof. Further agreed
that violation by the parties of any provision herein shall constitute an act of
ULP. (Annex A of Petition).
In an Order dated October 24, 1990, Mediator Arbiter Antonio Cortez approved the
memorandum of agreement and certified LCP as the sole and exclusive bargaining
agent among the rank-and-file employees of Empire Food Products for purposes of

collective bargaining with respect to wages, hours of work and other terms and
conditions of employment (Annex B of Petition).

99 complainants in order to testify who committed the threats and intimidation xxx
(Record, p. 185).

On November 9, 1990, petitioners through LCP President Navarro submitted to

private respondents a proposal for collective bargaining (Annex C of Petition).

Upon review of the minutes of the proceedings on record, however, it appears that
complainant presented witnesses, namely, BENIGNO NAVARRO, JR. (28 February
1991, RECORD, p. 91; 8 March 1991, RECORD, p. 92, who adopted its POSITION
PAPER AND CONSOLIDATED AFFIDAVIT, as Exhibit A and the annexes thereto as
Exhibit B, B-1 to B-9, inclusive. Minutes of the proceedings on record show that
complainant further presented other witnesses, namely: ERLINDA BASILIO (13
March 1991, RECORD, p. 93; LOURDES PANTILLO, MARIFE PINLAC, LENIE
GARCIA (16 April 1991, Record, p. 96, see back portion thereof; 2 May 1991,
Record, p. 102; 16 May 1991, Record, p. 103; 11 June 1991, Record, p. 105). Formal
offer of Documentary and Testimonial Evidence was made by complainant on June
24, 1991 (Record, p. 106-109)

On January 23, 1991, petitioners filed a complaint docketed as NLRC Case No.
RAB-III-01-1964-91 against private respondents for:
a. Unfair Labor Practice by way of Illegal Lockout and/or Dismissal;
b. Union busting thru Harassments [sic], threats, and interfering with the rights of
employees to self-organization;
c. Violation of the Memorandum of Agreement dated October 23, 1990;
d. Underpayment of Wages in violation of R.A. No. 6640 and R.A. No. 6727, such as
Wages promulgated by the Regional Wage Board;

The Labor Arbiter must have overlooked the testimonies of some of the individual
complainants which are now on record. Other individual complainants should have
been summoned with the end in view of receiving their testimonies. The
complainants should be afforded the time and opportunity to fully substantiate their
claims against the respondents. Judgment should be rendered only based on the
conflicting positions of the parties. The Labor Arbiter is called upon to consider and
pass upon the issues of fact and law raised by the parties.

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

After the submission by the parties of their respective position papers and
presentation of testimonial evidence, Labor Arbiter Ariel C. Santos absolved private
respondents of the charges of unfair labor practice, union busting, violation of the
memorandum of agreement, underpayment of wages and denied petitioners prayer
for actual, moral and exemplary damages. Labor Arbiter Santos, however, directed
the reinstatement of the individual complainants:
The undersigned Labor Arbiter is not oblivious to the fact that respondents have
violated a cardinal rule in every establishment that a payroll and other papers
evidencing hours of work, payments, etc. shall always be maintained and subjected
to inspection and visitation by personnel of the Department of Labor and
Employment. As such penalty, respondents should not escape liability for this
technicality, hence, it is proper that all individual complainants except those who
resigned and executed quitclaim[s] and releases prior to the filing of this
complaint should be reinstated to their former position[s] with the admonition to
respondents that any harassment, intimidation, coercion or any form of threat as a
result of this immediately executory reinstatement shall be dealt with accordingly.
SO ORDERED. (Annex G of Petition)
On appeal, the National Labor Relations Commission vacated the Decision dated
April 14, 1972 [sic] and remanded the case to the Labor Arbiter for further
proceedings for the following reasons:
The Labor Arbiter, through his decision, noted that xxx complainant did not present
any single witness while respondent presented four (4) witnesses in the persons of
Gonzalo Kehyeng, Orlando Cairo, Evelyn Kehyeng and Elvira Bulagan xxx (p. 183,
Records), that xxx complainant before the National Labor Relations Commission
must prove with definiteness and clarity the offense charged. xxx (Record, p. 183);
that xxx complainant failed to specify under what provision of the Labor Code
particularly Art. 248 did respondents violate so as to constitute unfair labor practice
xxx (Record, p. 183); that complainants failed to present any witness who may
describe in what manner respondents have committed unfair labor practice xxx
(Record, p. 185); that xxx complainant LCP failed to present anyone of the so-called

Toward this end, therefore, it is Our considered view [that] the case should be
remanded to the Labor Arbiter of origin for further proceedings.(Annex H of Petition)
In a Decision dated July 27, 1994, Labor Arbiter Santos made the following
determination:
Complainants failed to present with definiteness and clarity the particular act or acts
constitutive of unfair labor practice.
It is to be borne in mind that a declaration of unfair labor practice connotes a finding
of prima facie evidence of probability that a criminal offense may have been
committed so as to warrant the filing of a criminal information before the regular
court. Hence, evidence which is more than a scintilla is required in order to declare
respondents/employers guilty of unfair labor practice. Failing in this regard is fatal to
the cause of complainants. Besides, even the charge of illegal lockout has no leg to
stand on because of the testimony of respondents through their guard Orlando Cairo
(TSN, July 31, 1991 hearing; p. 5-35) that on January 21, 1991, complainants
refused and failed to report for work, hence guilty of abandoning their post without
permission from respondents. As a result of complainants[] failure to report for work,
the cheese curls ready for repacking were all spoiled to the prejudice of
respondents. Under cross-examination, complainants failed to rebut the authenticity
of respondents witness testimony.
As regards the issue of harassments [sic], threats and interference with the rights of
employees to self-organization which is actually an ingredient of unfair labor practice,
complainants failed to specify what type of threats or intimidation was committed and
who committed the same. What are the acts or utterances constitutive of
harassments [sic] being complained of? These are the specifics which should have
been proven with definiteness and clarity by complainants who chose to rely heavily
on its position paper through generalizations to prove their case.
Insofar as violation of [the] Memorandum of Agreement dated October 23, 1990 is
concerned, both parties agreed that:

2 - That with regards [sic] to the NLRC Case No. RAB III-101817-90 pending with the NLRC, parties jointly and
mutually agreed that the issues thereof shall be
discussed by the parties and resolve[d] during the
negotiation of the CBA.
The aforequoted provision does not speak of [an] obligation on the part of
respondents but on a resolutory condition that may occur or may not happen. This
cannot be made the basis of an imposition of an obligation over which the National
Labor Relations Commission has exclusive jurisdiction thereof.
Anent the charge that there was underpayment of wages, the evidence points to the
contrary. The enumeration of complainants wages in their consolidated Affidavits of
merit and position paper which implies underpayment has no leg to stand on in the
light of the fact that complainants admission that they are piece workers or paid on
a pakiao [basis] i.e. a certain amount for every thousand pieces of cheese curls or
other products repacked. The only limitation for piece workers or pakiao workers is
that they should receive compensation no less than the minimum wage for an eight
(8) hour work [sic]. And compliance therewith was satisfactorily explained by
respondent Gonzalo Kehyeng in his testimony (TSN, p. 12-30) during the July 31,
1991 hearing. On cross-examination, complainants failed to rebut or deny Gonzalo
Kehyengs testimony that complainants have been even receiving more than the
minimum wage for an average workers [sic]. Certainly, a lazy worker earns less than
the minimum wage but the same cannot be attributable to respondents but to the
lazy workers.
Finally, the claim for moral and exemplary damages has no leg to stand on when no
malice, bad faith or fraud was ever proven to have been perpetuated by respondents.
WHEREFORE, premises considered, the complaint is hereby DISMISSED for utter
lack of merit. (Annex I of Petition).[4]
On appeal, the NLRC, in its Resolution dated 29 March 1995, [5] affirmed in
toto the decision of Labor Arbiter Santos. In so doing, the NLRC sustained the Labor
Arbiters findings that: (a) there was a dearth of evidence to prove the existence of
unfair labor practice and union busting on the part of private respondents; (b) the
agreement of 23 October 1990 could not be made the basis of an obligation within
the ambit of the NLRCs jurisdiction, as the provisions thereof, particularly Section 2,
spoke of a resolutory condition which could or could not happen; (c) the claims for
underpayment of wages were without basis as complainants were
admittedly pakiao workers and paid on the basis of their output subject to the lone
limitation that the payment conformed to the minimum wage rate for an eight-hour
workday; and (d) petitioners were not underpaid.
Their motion for reconsideration having been denied by the NLRC in its
Resolution of 31 October 1995, [6] petitioners filed the instant special civil action
for certiorari raising the following issues:
I
WHETHER OR NOT THE PUBLIC RESPONDENT NATIONAL LABOR
RELATIONS COMMISSION GRAVELY ABUSED ITS DISCRETION WHEN IT
DISREGARDED OR IGNORED NOT ONLY THE EVIDENCE FAVORABLE
TO HEREIN PETITIONERS, APPLICABLE JURISPRUDENCE BUT ALSO
ITS OWN DECISIONS AND THAT OF THIS HONORABLE HIGHEST
TRIBUNAL WHICH [WAS] TANTAMOUNT NOT ONLY TO THE

DEPRIVATION OF PETITIONERS RIGHT TO DUE PROCESS BUT WOULD

RESULT [IN] MANIFEST INJUSTICE.

In view of the stand of the OSG, we resolved to require the NLRC to file its
own Comment.

II

In its Comment, the NLRC invokes the general rule that factual findings of an
administrative agency bind a reviewing court and asserts that this case does not fall
under the exceptions. The NLRC further argues that grave abuse of discretion may
not be imputed to it, as it affirmed the factual findings and legal conclusions of the
Labor Arbiter only after carefully reviewing, weighing and evaluating the evidence in
support thereof, as well as the pertinent provisions of law and jurisprudence.

WHETHER OR NOT THE PUBLIC RESPONDENT GRAVELY ABUSED ITS

DISCRETION WHEN IT DEPRIVED THE PETITIONERS OF THEIR
CONSTITUTIONAL RIGHT TO SELF-ORGANIZATION, SECURITY OF
TENURE, PROTECTION TO LABOR, JUST AND HUMANE CONDITIONS
OF WORK AND DUE PROCESS.
III
WHETHER OR NOT THE PETITIONERS WERE ILLEGALLY EASED OUT
[OF] OR CONSTRUCTIVELY DISMISSED FROM THEIR ONLY MEANS OF
LIVELIHOOD.
IV
WHETHER OR NOT PETITIONERS SHOULD BE REINSTATED FROM THE
DATE OF THEIR DISMISSAL UP TO THE TIME OF THEIR
REINSTATEMENT, WITH BACKWAGES, STATUTORY BENEFITS,
DAMAGES AND ATTORNEYS FEES.[7]
We required respondents to file their respective Comments.
In their Manifestation and Comment, private respondents asserted that the
petition was filed out of time. As petitioners admitted in their Notice to File petition for
Review on Certiorari that they received a copy of the resolution (denying their motion
for reconsideration) on 13 December 1995, they had only until 29 December 1995 to
file the petition. Having failed to do so, the NLRC thus already entered judgment in
private respondents favor.
In their Reply, petitioners averred that Mr. Navarro, a non-lawyer who filed the
notice to file a petition for review on their behalf, mistook which reglementary period
to apply. Instead of using the reasonable time criterion for certiorari under Rule 65,
he used the 15-day period for petitions for review on certiorari under Rule 45. They
hastened to add that such was a mere technicality which should not bar their petition
from being decided on the merits in furtherance of substantial justice, especially
considering that respondents neither denied nor contradicted the facts and issues
raised in the petition.
In its Manifestation and Motion in Lieu of Comment, the Office of the Solicitor
General (OSG) sided with petitioners. It pointed out that the Labor Arbiter, in finding
that petitioners abandoned their jobs, relied solely on the testimony of Security Guard
Rolando Cairo that petitioners refused to work on 21 January 1991, resulting in the
spoilage of cheese curls ready for repacking. However, the OSG argued, this refusal
to report for work for a single day did not constitute abandonment, which pertains to
a clear, deliberate and unjustified refusal to resume employment, and not mere
absence. In fact, the OSG stressed, two days after allegedly abandoning their work,
petitioners filed a complaint for, inter alia, illegal lockout or illegal dismissal. Finally,
the OSG questioned the lack of explanation on the part of Labor Arbiter Santos as to
why he abandoned his original decision to reinstate petitioners.

In their Reply, petitioners claim that the decisions of the NLRC and the Labor
Arbiter were not supported by substantial evidence; that abandonment was not
proved; and that much credit was given to self-serving statements of Gonzalo
Kehyeng, owner of Empire Foods, as to payment of just wages.
On 7 July 1997, we gave due course to the petition and required the parties to
file their respective memoranda. However, only petitioners and private respondents
filed their memoranda, with the NLRC merely adopting its Comment as its
Memorandum.
We find for petitioners.
Invocation of the general rule that factual findings of the NLRC bind this Court
is unavailing under the circumstances. Initially, we are unable to discern any
compelling reason justifying the Labor Arbiters volte face from his 14 April 1992
decision reinstating petitioners to his diametrically opposed 27 July 1994 decision,
when in both instances, he had before him substantially the same evidence. Neither
do we find the 29 March 1995 NLRC resolution to have sufficiently discussed the
facts so as to comply with the standard of substantial evidence. For one thing, the
NLRC confessed its reluctance to inquire into the veracity of the Labor Arbiters
factual findings, staunchly declaring that it was not about to substitute [its] judgment
on matters that are within the province of the trier of facts. Yet, in the 21 July 1992
NLRC resolution,[8] it chastised the Labor Arbiter for his errors both in judgment and
procedure, for which reason it remanded the records of the case to the Labor Arbiter
for compliance with the pronouncements therein.
What cannot escape from our attention is that the Labor Arbiter did not heed
the observations and pronouncements of the NLRC in its resolution of 21 July 1992,
neither did he understand the purpose of the remand of the records to him. In said
resolution, the NLRC summarized the grounds for the appeal to be:
1. that there is a prima facie evidence of abuse of discretion and acts of gross
incompetence committed by the Labor Arbiter in rendering the decision.
2. that the Labor Arbiter in rendering the decision committed serious errors in the
findings of facts.
After which, the NLRC observed and found:
Complainant alleged that the Labor Arbiter disregarded the testimonies of the 99
complainants who submitted their Consolidated Affidavit of Merit and Position Paper
which was adopted as direct testimonies during the hearing and cross-examined by
respondents counsel.

The Labor Arbiter, through his decision, noted that x xx complainant did not present
any single witness while respondent presented four (4) witnesses in the persons of
Gonzalo Kehyeng, Orlando Cairo, Evelyn Kehyeng and Elvira Bulagan x xx
(Records, p. 183), that x xx complainant before the National Labor Relations
Commission must prove with definiteness and clarity the offense charged. x
xx (Record, p. 183; that x xx complainant failed to specify under what provision of the
Labor Code particularly Art. 248 did respondents violate so as to constitute unfair
labor practice x xx (Record, p. 183); that complainants failed to present any witness
who may describe in what manner respondents have committed unfair labor practice
x xx (Record, p. 185); that x xx complainant a [sic] LCP failed to present anyone of
the so called 99 complainants in order to testify who committed the threats and
intimidation x xx (Record, p. 185).

SO ORDERED.

Upon review of the minutes of the proceedings on record, however, it appears that
complainant presented witnesses, namely BENIGNO NAVARRO, JR. (28 February
1991, RECORD, p. 91; 8 March 1991, RECORD, p. 92), who adopted its POSITION
PAPER AND CONSOLIDATED AFFIDAVIT, as Exhibit A and the annexes thereto as
Exhibit B, B-1 to B-9, inclusive. Minutes of the proceedings on record show that
complainant further presented other witnesses, namely: ERLINDA BASILIO (13
March 1991, RECORD, p. 93; LOURDES PANTILLO, MARIFE PINLAC, LENI
GARCIA (16 April 1991, Record, p. 96, see back portion thereof; 2 May 1991,
Record, p. 102; 16 May 1991, Record, p. 103; 11 June 1991, Record, p. 105). Formal
offer of Documentary and Testimonial Evidence was made by the complainant on
June 24, 1991 (Record, p. 106-109).

Apparently, the Labor Arbiter perceived that if not for petitioners, he would not
have fallen victim to this stinging rebuke at the hands of the NLRC. Thus does it
appear to us that the Labor Arbiter, in concluding in his 27 July 1994 Decision that
petitioners abandoned their work, was moved by, at worst, spite, or at best,
lackadaisically glossed over petitioners evidence. On this score, we find the following
observations of the OSG most persuasive:

The Labor Arbiter must have overlooked the testimonies of some of the individual
complainants which are now on record. Other individual complainants should have
been summoned with the end in view of receiving their testimonies. The
complainants should [have been] afforded the time and opportunity to fully
substantiate their claims against the respondents. Judgment should [have been]
rendered only based on the conflicting positions of the parties. The Labor Arbiter is
called upon to consider and pass upon the issues of fact and law raised by the
parties.
Toward this end, therefore, it is Our considered view the case should be remanded to
the Labor Arbiter of origin for further proceedings.
Further, We take note that the decision does not contain a dispositive portion or
fallo. Such being the case, it may be well said that the decision does not resolve the
issues at hand. On another plane, there is no portion of the decision which could be
carried out by way of execution.
It may be argued that the last paragraph of the decision may be categorized as the
dispositive portion thereof:
x xxxx
The undersigned Labor Arbiter is not oblivious [to] the fact that respondents have
violated a cardinal rule in every establishment that a payroll and other papers
evidencing hour[s] of work, payment, etc. shall always be maintained and subjected
to inspection and visitation by personnel of the Department of Labor and
Employment. As such penalty, respondents should not escape liability for this
technicality, hence, it is proper that all the individual complainants except those who
resigned and executed quitclaim[s] and release[s] prior to the filing of this complaint
should be reinstated to their former position with the admonition to respondents that
any harassment, intimidation, coercion or any form of threat as a result of this
immediately executory reinstatement shall be dealt with accordingly.

It is Our considered view that even assuming arguendo that the respondents failed to
maintain their payroll and other papers evidencing hours of work, payment etc., such
circumstance, standing alone, does not warrant the directive to reinstate
complainants to their former positions. It is [a] well settled rule that there must be a
finding of illegal dismissal before reinstatement be mandated.
In this regard, the LABOR ARBITER is hereby directed to include in his clarificatory
decision, after receiving evidence, considering and resolving the same, the requisite
dispositive portion.[9]

In finding that petitioner employees abandoned their work, the Labor Arbiter and the
NLRC relied on the testimony of Security Guard Rolando Cairo that on January 21,
1991, petitioners refused to work. As a result of their failure to work, the cheese curls
ready for repacking on said date were spoiled.
The failure to work for one day, which resulted in the spoilage of cheese curls does
not amount to abandonment of work. In fact two (2) days after the reported
abandonment of work or on January 23, 1991, petitioners filed a complaint for,
among others, unfair labor practice, illegal lockout and/or illegal dismissal. In several
cases, this Honorable Court held that one could not possibly abandon his work and
shortly thereafter vigorously pursue his complaint for illegal dismissal (De Ysasi III v.
NLRC, 231 SCRA 173; Ranara v. NLRC, 212 SCRA 631; Dagupan Bus Co. v. NLRC,
191 SCRA 328; Atlas Consolidated Mining and Development Corp. v. NLRC, 190
SCRA 505; Hua Bee Shirt Factory v. NLRC, 186 SCRA 586; Mabaylan v. NLRC, 203
SCRA 570 and Flexo Manufacturing v. NLRC, 135 SCRA 145). In Atlas Consolidated,
supra, this Honorable Court explicitly stated:
It would be illogical for Caballo, to abandon his work and then immediately file an
action seeking for his reinstatement. We can not believe that Caballo, who had
worked for Atlas for two years and ten months, would simply walk away from his job
unmindful of the consequence of his act, i.e. the forfeiture of his accrued employment
benefits. In opting to finally to [sic] contest the legality of his dismissal instead of just
claiming his separation pay and other benefits, which he actually did but which
proved to be futile after all, ably supports his sincere intention to return to work, thus
negating Atlas stand that he had abandoned his job.
In De Ysasi III v. NLRC (supra), this Honorable Court stressed that it is the clear,
deliberate and unjustified refusal to resume employment and not mere absence that
constitutes abandonment. The absence of petitioner employees for one day on
January 21, 1991 as testified [to] by Security Guard Orlando Cairo did not constitute
abandonment.
In his first decision, Labor Arbiter Santos expressly directed the reinstatement of the
petitioner employees and admonished the private respondents that any harassment,
intimidation, coercion or any form of threat as a result of this immediately executory
reinstatement shall be dealt with accordingly.

In his second decision, Labor Arbiter Santos did not state why he was abandoning
his previous decision directing the reinstatement of petitioner employees.
By directing in his first decision the reinstatement of petitioner employees, the Labor
Arbiter impliedly held that they did not abandon their work but were not allowed to
work without just cause.
That petitioner employees are pakyao or piece workers does not imply that they are
not regular employees entitled to reinstatement. Private respondent Empire Food
Products, Inc. is a food and fruit processing company. In Tabas v. California
Manufacturing Co., Inc.(169 SCRA 497), this Honorable Court held that the work of
merchandisers of processed food, who coordinate with grocery stores and other
outlets for the sale of the processed food is necessary in the day-to-day operation[s]
of the company. With more reason, the work of processed food repackers is
necessary in the day-to-day operation[s] of respondent Empire Food Products. [10]
It may likewise be stressed that the burden of proving the existence of just
cause for dismissing an employee, such as abandonment, rests on the
employer, [11] a burden private respondents failed to discharge.
Private respondents, moreover, in considering petitioners employment to have
been terminated by abandonment, violated their rights to security of tenure and
constitutional right to due process in not even serving them with a written notice of
such termination.[12]Section 2, Rule XIV, Book V of the Omnibus Rules Implementing
the Labor Code provides:
SEC. 2. Notice of Dismissal. - Any employer who seeks to dismiss a worker shall
furnish him a written notice stating the particular acts or omission constituting the
grounds for his dismissal. In cases of abandonment of work, the notice shall be
served at the workers last known address.
Petitioners are therefore entitled to reinstatement with full back wages
pursuant to Article 279 of the Labor Code, as amended by R.A. No.
6715. Nevertheless, the records disclose that taking into account the number of
employees involved, the length of time that has lapsed since their dismissal, and the
perceptible resentment and enmity between petitioners and private respondents
which necessarily strained their relationship, reinstatement would be impractical and
hardly promotive of the best interests of the parties. In lieu of reinstatement then,
separation pay at the rate of one month for every year of service, with a fraction of at
least six (6) months of service considered as one (1) year, is in order.[13]
That being said, the amount of back wages to which each petitioner is entitled,
however, cannot be fully settled at this time. Petitioners, as piece-rate workers having
been paid by the piece, [14] there is need to determine the varying degrees of
production and days worked by each worker. Clearly, this issue is best left to the
National Labor Relations Commission.
As to the other benefits, namely, holiday pay, premium pay, 13 th month pay
and service incentive leave which the labor arbiter failed to rule on but which
petitioners prayed for in their complaint, [15] we hold that petitioners are so entitled to
these benefits. Three (3) factors lead us to conclude that petitioners, although piecerate workers, were regular employees of private respondents. First, as to the nature
of petitioners tasks, their job of repacking snack food was necessary or desirable in
the usual business of private respondents, who were engaged in the manufacture
and selling of such food products; second, petitioners worked for private respondents
throughout the year, their employment not having been dependent on a specific
project or season; and third, the length of time [16] that petitioners worked for private

respondents. Thus, while petitioners mode of compensation was on a per piece

basis, the status and nature of their employment was that of regular employees.

more, the National Labor Relations Commission would be in a better position to

determine the exact amounts owed petitioners, if any.

The Rules Implementing the Labor Code exclude certain employees from
receiving benefits such as nighttime pay, holiday pay, service incentive leave [17] and
13th month pay,[18] inter alia, field personnel and other employees whose time and
performance is unsupervised by the employer, including those who are engaged on
task or contract basis, purely commission basis, or those who are paid a fixed
amount for performing work irrespective of the time consumed in the performance
thereof. Plainly, petitioners as piece-rate workers do not fall within this group. As
mentioned earlier, not only did petitioners labor under the control of private
respondents as their employer, likewise did petitioners toil throughout the year with
the fulfillment of their quota as supposed basis for compensation. Further, in Section
8 (b), Rule IV, Book III which we quote hereunder, piece workers are specifically
mentioned as being entitled to holiday pay.

As to the claim that private respondents violated petitioners right to selforganization, the evidence on record does not support this claim. Petitioners relied
almost entirely on documentary evidence which, per se, did not prove any
wrongdoing on private respondents part. For example, petitioners presented their
complaint[21] to prove the violation of labor laws committed by private
respondents. The complaint, however, is merely the pleading alleging the plaintiffs
cause or causes of action.[22] Its contents are merely allegations, the verity of which
shall have to be proved during the trial. They likewise offered their Consolidated
Affidavit of Merit and Position Paper [23] which, like the offer of their Complaint, was a
tautological exercise, and did not help nor prove their cause. In like manner, the
petition for certification election [24] and the subsequent order of certification [25] merely
proved that petitioners sought and acquired the status of bargaining agent for all
rank-and-file employees. Finally, the existence of the memorandum of
agreement[26]offered to substantiate private respondents non-compliance therewith,
did not prove either compliance or non-compliance, absent evidence of concrete,
overt acts in contravention of the provisions of the memorandum.

SEC. 8. Holiday pay of certain employees.(b) Where a covered employee is paid by results or output, such as payment
on piece work, his holiday pay shall not be less than his average daily
earnings for the last seven (7) actual working days preceding the
regular holiday: Provided, however, that in no case shall the holiday
pay be less than the applicable statutory minimum wage rate.
In addition, the Revised Guidelines on the Implementation of the 13 th Month
Pay Law, in view of the modifications to P.D. No. 851 [19] by Memorandum Order No.
28, clearly exclude the employer of piece rate workers from those exempted from
paying 13th month pay, to wit:

IN VIEW WHEREOF, the instant petition is hereby GRANTED. The Resolution

of the National Labor Relations Commission of 29 March 1995 and the Decision of
the Labor Arbiter of 27 July 1994 in NLRC Case No. RAB-III-01-1964-91 are hereby
SET ASIDE, and another is hereby rendered:
1. DECLARING petitioners to have been illegally dismissed by private
respondents, thus entitled to full back wages and other privileges,
and separation pay in lieu of reinstatement at the rate of one
months salary for every year of service with a fraction of six
months of service considered as one year;

SUN VALLEY REALTY, INC., STATE REALTY & INVESTMENT CORP.,

HONORABLE COMMISSIONERS GABRIEL M. GATCHALIAN and MIGUEL B.
VARELA, in their capacity as Commissioners of the National Labor Relations
Commission, Third Division, respondents.
Petitioners were employed in April 1967 as maintenance men tasked with the upkeep
of the roads and water system of the Sun Valley Subdivision. On January 11, 1980,
they were notified by State Realty and Investment Corporation that their services
would be terminated effective January 31, 1980 in view, allegedly, of the termination
of the contract between Sun Valley Realty, Inc. and State Realty and Investment
Corporation. Thus, on January 31, 1980, petitioners' employment was terminated
without private respondents having filed any application for clearance to terminate
much less a prior clearance from the Ministry of Labor. On February 26, 1980,
petitioners filed their complaint for illegal dismissal, emergency living allowance and
payment of service incentive leave.
At the Arbitration Branch of the Ministry of Labor, National Capital Region, the parties
agreed to submit their case for decision on the basis of their respective position
papers, instead of holding trial.
On December 5, 1980, the Labor Arbiter rendered a decision declaring petitioners'
dismissal illegal. The dispositive portion of the decision reads:
WHEREFORE, premises considered the respondent is
hereby ordered to pay the herein complainants their
separation pay of one month salary for every year of service;
1. Pay the complainants their allowance under P.D. 525, from
August 1974 to December 1976;

2. EXEMPTED EMPLOYERS
The following employers are still not covered by P.D. No. 851:
d. Employers of those who are paid on purely commission, boundary or
task basis, and those who are paid a fixed amount for
performing specific work, irrespective of the time consumed in
the performance thereof, except where the workers are paid
on piece-rate basis in which case the employer shall grant
the required 13th month pay to such workers. (italics
supplied)
The Revised Guidelines as well as the Rules and Regulations identify those workers
who fall under the piece-rate category as those who are paid a standard amount for
every piece or unit of work produced that is more or less regularly replicated, without
regard to the time spent in producing the same. [20]
As to overtime pay, the rules, however, are different. According to Sec. 2(e),
Rule I, Book III of the Implementing Rules, workers who are paid by results including
those who are paid on piece-work, takay, pakiao, or task basis, if their output rates
are in accordance with the standards prescribed under Sec. 8, Rule VII, Book III, of
these regulations, or where such rates have been fixed by the Secretary of Labor in
accordance with the aforesaid section, are not entitled to receive overtime pay. Here,
private respondents did not allege adherence to the standards set forth in Sec. 8 nor
with the rates prescribed by the Secretary of Labor. As such, petitioners are beyond
the ambit of exempted persons and are therefore entitled to overtime pay. Once

2. REMANDING the records of this case to the National Labor

Relations Commission for its determination of the back wages and
other benefits and separation pay, taking into account the
foregoing observations; and
3. DIRECTING the National Labor Relations Commission to resolve
the referred issues within sixty (60) days from its receipt of a copy
of this decision and of the records of the case and to submit to this
Court a report of its compliance hereof within ten (10) days from
the rendition of its resolution.
Costs against private respondents.
SO ORDERED.

2. Pay complainants their allowance under P.D. 525, 1123

and 1614, minus the amount they already received
corresponding to their allowances;
3. Pay complainants five days salary for every year of service
as their service incentive leave pay.
The Socio-Economic Analyst of this Office is hereby directed
to compute the foregoing award and submit a report to this
Labor Arbiter within ten (10) days from receipt of this
Decision.
SO ORDERED.
On January 6, 1981, private respondents appealed to the National Labor Relations
Commission. On February 24, 1984, the NLRC, in a two and a half-page Decision,
reversed the decision of the Labor Arbiter, solely on the ground that Petitioner's
Position Paper-Affidavit was not verified, and therefore "cannot be legally considered
as evidence." From the NLRC decision, petitioners interposed the present action
which was given due course by this Court on November 26, 1984.

G.R. No. L-67272 June 30, 1988

BONIFACIO MURILLO, JOSE DOMINGO, ARSENIO TAGURA, NICASIO CANETE,
and
MARIO
VELASQUEZ, petitioners,
vs.

Petitioners call attention to the fact that private respondents received a copy of the
Labor Arbiter's decision on December 18, 1980, and that they (private respondents)
filed their appeal to the National Labor Relations Commission only on January 6,
1981, which is beyond the ten (10) calendar days allowed by law within which appeal

from the decision of the Labor Arbiter may be made. Thus, it is argued, the appeal by
private respondents to the NLRC was filed out of time. Petitioners rely on the case
of Vir-Jen Shipping and Marine Services, Inc. v. NLRC, et al. [G.R. Nos. 58011-12,
July 20, 1982, 115 SCRA 347], to support their position that the decision of the Labor
Arbiter had become final and executory, and thus, beyond review by the NLRC.
This argument of petitioners must fail. The ruling in the Vir-Jen case cannot be
applied to the present case since the appeal to the NLRC was filed by private
respondents prior to the promulgation of this Court's decision in theVir-Jen case. As
stated in the subsequent case of RJL Martinez Corporation v. NLRC, (G.R. Nos.
63550-51, January 31, 1984, 127 SCRA 454]:
... If we were to reckon the 10-day reglementary period to
appeal as calendar days, as held in the case of Vir-Jen
Shipping and Marine Services, Inc. vs. NLRC, et al., private
respondents' appeal was, indeed, filed out of time. However, it
was clear from Vir-Jen that the calendar day basis of
computation would only apply "henceforth" or to future cases.
That ruling was not affected by this Court's Resolution of
November 18, 1983 reconsidering its Decision of July 20,
1982. When the appeal herein was filed on April 19, 1982, the
governing proviso was found in Section 7, Rule XIII of the
Rules and Regulations Implementing the Labor Code along
with NLRC Resolution No. 1, Series of 1977, which based the
computation on "working days." [RJL Martinez Fishing
Corporation v. NLRC, G.R. Nos. 63550-51, January 31, 1984,
127 SCRA 454 at 459-60].
From December 18, 1980 to January 6, 1981 is exactly ten (10) working days
considering the holidays and the Saturdays and Sundays that supervened during that
period. In other words, private respondent's appeal to the NLRC having been filed
during the time that the prevailing period of appeal was ten (10) working days and
prior to the promulgation of the Vir-Jen case on July 20, 1982, it must be held to have
been timely filed.
There is, however, merit in this petition.
1. The lack of verification of the Position Paper-Affidavit of petitioners is a formal,
rather than a substantial, defect. It is not fatal in this case. It could have been easily
corrected by requiring an oath [Del Rosario and Sons Logging Enterprises, Inc. v.
NLRC, G.R. No. 64204, May 31, 1985, 136 SCRA 669].
2. Coming now to the more important issue of whether or not petitioners were legally
dismissed, the Court notes that at the time of petitioners' dismissal, Article 278 of the
Labor Code as implemented by Rule XIV (Clearance to Shut Down or to Dismiss),
Book V, of the Rules and Regulations Implementing the Labor Code, was still in
force. Article 278 read:
Art. 278. Miscellaneous provisions
xxxxxxxxx
(b) With or without a collective agreement, no employer may
shut down his establishment or terminate the employment of
employees with at least one year of service during the last
two years, whether such service is continuous or broken,

without prior authority issued in accordance with such rules

and regulations as the Secretary may promulgate.

All money claims accruing prior to the effectivity of this Code

shall be filed with the appropriate entities established under
this Code within one (1) year from the date of effectivity, and
shall be processed or determined in accordance with
implementing rules and regulations of the Code; otherwise,
they shall be forever barred.

xxxxxxxxx
And the Rules provided:
Sec. 1. Requirement for shutdown or dismissal. No
employer may shut down his establishment or dismiss any of
his employees with at least one year of service during the last
two years, whether the service is broken or continuous,
without prior clearance issued therefor in accordance with this
Rule. Any provision in a collective agreement dispensing with
the clearance requirement shall be null and void.
Sec. 2. Shutdown or dismissal without clearance. Any
shutdown or dismissal without prior clearance shall be
conclusively presumed to be termination of employment
without a just cause....
It is undisputed that no clearance to terminate was ever secured by private
respondents prior to the termination of employment of petitioners. In fact, even as
petitioners were terminated on January 31, 1980, it was only on February 14, 1980
that an application for clearance was filed by private respondents. Hence, petitioners'
dismissal must be conclusively presumed to be without just cause.
Private respondents contend, however, that prior clearance was not required in
cases of complete cessation of operations, and that only a report was necessary.
[Rollo, pp. 113-114].
The fact that private respondents intended to shut down operations due to business
reverses is immaterial. The Rules cited above are clear that clearance was likewise
required before one could shut down his business. There is no showing that private
respondent applied for a clearance to shut down prior to petitioners' dismissal from
work.

We thus rule that all claims which accrued more than three (3) years prior to
February 26, 1980 are no longer recoverable.
Private respondents also claim that petitioners are not entitled to service incentive
leave inasmuch as establishments employing less than ten (10) employees are
exempted by the Labor Code and the Implementing Rules from paying service
incentive leave. Attention is called to the complaint where petitioners alleged that
there were only six (6) employees in Sun Valley Subdivision "excluding others."
Petitioners' allegation that there were six (6) employees in Sun Valley Subdivision
"excluding others" in effect stated that there were other employees of the corporation,
except that they were not stationed in Sun Valley Subdivision. Note, however, that
the clear policy of the Labor Code is to include all establishments, except a few
classes, under the coverage of the provision granting service incentive leave to
workers. Private respondents' claim is that they fell within the exception. Hence, it
was incumbent upon them to prove that they belonged to a class excepted by law
from the general rule. Specifically, it was the duty of respondents, not of petitioners,
to prove that there were less than ten (10) employees in the company. Having failed
to discharge its task, private respondents must be deemed to be covered by the
general rule, notwithstanding the failure of petitioners to allege the exact number of
employees of the corporation. In other words, petitioners must be deemed entitled to
service incentive leave.
5. Lastly, private respondent State Realty and Investment Corporation contends that
it cannot be held liable because it was merely the managing agent of the other
respondent Sun Valley Realty, Inc. In other words, it is asserted that the employer of
petitioners was Sun Valley Realty, Inc. only, and not State Realty and Investment
Corporation.

3. On the issue of payment of statutory benefits, private respondents claim that

benefits under Presidential Decrees Nos. 525, 1123, and 1614 were fully paid.

The issue of the existence of an employer-employee relationship between the parties

is a question of fact, and the finding of the Labor Arbiter on this point is entitled not
only to respect but also the stamp of finality [See RJL Martinez Fishing Corp. v.
NLRC, supra].

Suffice it to say that whether or not the benefits were paid is a question of fact. Since
there is substantial evidence to support the findings of the Labor Arbiter that
petitioners were underpaid, this Court will not disturb the conclusions of the Labor
Arbiter.

WHEREFORE, the petition is hereby GRANTED. The Decision of the National Labor
Relations Commission is SET ASIDE, whereas, the Decision of the Labor Arbiter is
hereby REINSTATED with the modification that petitioners are hereby awarded only
those claims accruing within three years prior to February 26, 1980.

There is merit, however, in respondents' contention that claims that accrued more
than three years before the complaint was filed on February 26, 1980 had
prescribed. Article 292 of the Labor Code is clear.

SO ORDERED.

Art. 292. Money claims. All money claims arising from

employer-employee relations arising during the effectivity of
this Code shall be filed within three (3) years from the time
the cause of action accrued; otherwise they shall be forever
barred.

G.R. No. 102132. March 19, 1993.

DAVAO INTEGRATED PORT STEVEDORING SERVICES, petitioner, vs. RUBEN
V. ABARQUEZ, in his capacity as an accredited Voluntary Arbitrator and THE
ASSOCIATION OF TRADE UNIONS (ATU-TUCP), respondents.

In this petition for certiorari, petitioner Davao Integrated Port Services Corporation
seeks to reverse the Award 1 issued on September 10, 1991 by respondent Ruben
V. Abarquez, in his capacity as Voluntary Arbitrator of the National Conciliation and
Mediation Board, Regional Arbitration Branch XI in Davao City in Case No. AC-211BX1-10-003-91 which directed petitioner to grant and extend the privilege of
commutation of the unenjoyed portion of the sick leave with pay benefits to its
intermittent field workers who are members of the regular labor pool and the present
regular extra pool in accordance with the Collective Bargaining Agreement (CBA)
executed between petitioner and private respondent Association of Trade Unions
(ATU-TUCP), from the time it was discontinued and henceforth.

1,126 1,200 11 11

1,351 1,425 14 14

1,201 1,275 12 12

1,426 1,500 15 15

1,276 1,350 13 13
1,351 1,425 14 14

The conditions for the availment of the herein vacation and sick leaves shall be in
accordance with the above provided Sections 1 and 2 hereof, respectively."

1,426 1,500 15 15
The facts are as follows:
Petitioner Davao Integrated Port Stevedoring Services (petitioner-company) and
private respondent ATU-TUCP (Union), the exclusive collective bargaining agent of
the rank and file workers of petitioner-company, entered into a collective bargaining
agreement (CBA) on October 16, 1985 which, under Sections 1 and 3, Article VIII
thereof, provide for sick leave with pay benefits each year to its employees who have
rendered at least one (1) year of service with the company, thus:
"ARTICLE VIII
Section 1. Sick Leaves The Company agrees to grant 15 days sick leave with pay
each year to every regular non-intermittent worker who already rendered at least one
year of service with the company. However, such sick leave can only be enjoyed
upon certification by a company designated physician, and if the same is not enjoyed
within one year period of the current year, any unenjoyed portion thereof, shall be
converted to cash and shall be paid at the end of the said one year period. And
provided however, that only those regular workers of the company whose work are
not intermittent, are entitled to the herein sick leave privilege.

The conditions for the availment of the herein vacation and sick leaves shall be in
accordance with the above provided Sections 1 and 2 hereof, respectively."
Upon its renewal on April 15, 1989, the provisions for sick leave with pay benefits
were reproduced under Sections 1 and 3, Article VIII of the new CBA, but the
coverage of the said benefits was expanded to include the "present Regular Extra
Labor Pool as of the signing of this Agreement." Section 3, Article VIII, as revised,
provides, thus:
"Section 3. All intermittent field workers of the company who are members of the
Regular Labor Pool and present Regular Extra Labor Pool as of the signing of this
agreement shall be entitled to vacation and sick leaves per year of service with pay
under the following schedule based on the number of hours rendered including
overtime, to wit:

xxxxxxxxx
Hours of Service Per Vacation Sick Leave
Section 3. All intermittent field workers of the company who are members of the
Regular Labor Pool shall be entitled to vacation and sick leaves per year of service
with pay under the following schedule based on the number of hours rendered
including overtime, to wit:
Hours of Service Per Vacation Sick Leave
Calendar Year Leave
Less than 750 NII NII
751 825 6 days 6 days
826 900 7 7
901 925 8 8
926 1,050 9 9
1,051 1,125 10 10

Calendar Year Leave

Less than 750 NII NII
751 825 6 days 6 days
826 900 7 7
901 925 8 8

During the effectivity of the CBA of October 16, 1985 until three (3) months after its
renewal on April 15, 1989, or until July 1989 (a total of three (3) years and nine (9)
months), all the field workers of petitioner who are members of the regular labor pool
and the present regular extra labor pool who had rendered at least 750 hours up to
1,500 hours were extended sick leave with pay benefits. Any unenjoyed portion
thereof at the end of the current year was converted to cash and paid at the end of
the said one-year period pursuant to Sections 1 and 3, Article VIII of the CBA. The
number of days of their sick leave per year depends on the number of hours of
service per calendar year in accordance with the schedule provided in Section 3,
Article VIII of the CBA.
The commutation of the unenjoyed portion of the sick leave with pay benefits of the
intermittent workers or its conversion to cash was, however, discontinued or
withdrawn when petitioner-company under a new assistant manager, Mr. Benjamin
Marzo (who replaced Mr. Cecilio Beltran, Jr. upon the latter's resignation in June
1989), stopped the payment of its cash equivalent on the ground that they are not
entitled to the said benefits under Sections 1 and 3 of the 1989 CBA.
The Union objected to the said discontinuance of commutation or conversion to cash
of the unenjoyed sick leave with pay benefits of petitioner's intermittent workers
contending that it is a deviation from the true intent of the parties that negotiated the
CBA; that it would violate the principle in labor laws that benefits already extended
shall not be taken away and that it would result in discrimination between the nonintermittent and the intermittent workers of the petitioner-company.
Upon failure of the parties to amicably settle the issue on the interpretation of
Sections 1 and 3, Article VIII of the 1989 CBA, the Union brought the matter for
voluntary arbitration before the National Conciliation and Mediation Board, Regional
Arbitration Branch XI at Davao City by way of complaint for enforcement of the CBA.
The parties mutually designated public respondent Ruben Abarquez, Jr. to act as
voluntary arbitrator.
After the parties had filed their respective position papers, 2 public respondent
Ruben Abarquez, Jr. issued on September 10, 1991 an Award in favor of the Union
ruling that the regular intermittent workers are entitled to commutation of their
unenjoyed sick leave with pay benefits under Sections 1 and 3 of the 1989 CBA, the
dispositive portion of which reads:

926 1,050 9 9
1,051 1,125 10 10
1,126 1,200 11 11

"WHEREFORE, premises considered, the management of the respondent Davao

Integrated Port Stevedoring Services Corporation is hereby directed to grant and
extend the sick leave privilege of the commutation of the unenjoyed portion of the
sick leave of all the intermittent field workers who are members of the regular labor
pool and the present extra pool in accordance with the CBA from the time it was
discontinued and henceforth.

1,201 1,275 12 12
SO ORDERED."
1,276 1,350 13 13

Petitioner-company disagreed with the aforementioned ruling of public respondent,

hence, the instant petition.
Petitioner-company argued that it is clear from the language and intent of the last
sentence of Section 1, Article VIII of the 1989 CBA that only the regular workers
whose work are not intermittent are entitled to the benefit of conversion to cash of the
unenjoyed portion of sick leave, thus: ". . . And provided, however, that only those
regular workers of the Company whose work are not intermittent are entitled to the
herein sick leave privilege."
Petitioner-company further argued that while the intermittent workers were paid the
cash equivalent of their unenjoyed sick leave with pay benefits during the previous
management of Mr. Beltran who misinterpreted Sections 1 and 3 of Article VIII of the
1985 CBA, it was well within petitioner-company's rights to rectify the error it had
committed and stop the payment of the said sick leave with pay benefits. An error in
payment, according to petitioner-company, can never ripen into a practice.
We find the arguments unmeritorious.
A collective bargaining agreement (CBA), as used in Article 252 of the Labor Code,
refers to a contract executed upon request of either the employer or the exclusive
bargaining representative incorporating the agreement reached after negotiations
with respect to wages, hours of work and all other terms and conditions of
employment, including proposals for adjusting any grievances or questions arising
under such agreement.
While the terms and conditions of a CBA constitute the law between the parties, 3 it
is not, however, an ordinary contract to which is applied the principles of law
governing ordinary contracts. 4 A CBA, as a labor contract within the contemplation
of Article 1700 of the Civil Code of the Philippines which governs the relations
between labor and capital, is not merely contractual in nature but impressed with
public interest, thus, it must yield to the common good. As such, it must 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 is
negotiated and purpose which it is intended to serve. 5
It is thus erroneous for petitioner to isolate Section 1, Article VIII of the 1989 CBA
from the other related section on sick leave with pay benefits, specifically Section 3
thereof, in its attempt to justify the discontinuance or withdrawal of the privilege of
commutation or conversion to cash of the unenjoyed portion of the sick leave benefit
to regular intermittent workers. The manner they were deprived of the privilege
previously recognized and extended to them by petitioner-company during the
lifetime of the CBA of October 16, 1985 until three (3) months from its renewal on
April 15, 1989, or a period of three (3) years and nine (9) months, is not only tainted
with arbitrariness but likewise discriminatory in nature. Petitioner-company is of the
mistaken notion that since the privilege of commutation or conversion to cash of the
unenjoyed portion of the sick leave with pay benefits is found in Section 1, Article
VIII, only the regular non-intermittent workers and no other can avail of the said
privilege because of the proviso found in the last sentence thereof.
It must be noted that the 1989 CBA has two (2) sections on sick leave with pay
benefits which apply to two (2) distinct classes of workers in petitioner's company,
namely: (1) the regular non-intermittent workers or those workers who render a daily
eight-hour service to the company and are governed by Section 1, Article VIII of the
1989 CBA; and (2) intermittent field workers who are members of the regular labor
pool and the present regular extra labor pool as of the signing of the agreement on
April 15, 1989 or those workers who have irregular working days and are governed
by Section 3, Article VIII of the 1989 CBA.

It is not disputed that both classes of workers are entitled to sick leave with pay
benefits provided they comply with the conditions set forth under Section 1 in relation
to the last paragraph of Section 3, to wit: (1) the employee-applicant must be regular
or must have rendered at least one year of service with the company; and (2) the
application must be accompanied by a certification from a company-designated
physician.
Sick leave benefits, like other economic benefits stipulated in the CBA such as
maternity leave and vacation leave benefits, among others, are by their nature,
intended to be replacements for regular income which otherwise would not be earned
because an employee is not working during the period of said leaves. 6 They are
non-contributory in nature, in the sense that the employees contribute nothing to the
operation of the benefits. 7 By their nature, upon agreement of the parties, they are
intended to alleviate the economic condition of the workers.
After a careful examination of Section 1 in relation to Section 3, Article VIII of the
1989 CBA in light of the facts and circumstances attendant in the instant case, we
find and so hold that the last sentence of Section 1, Article VIII of the 1989 CBA,
invoked by petitioner-company does not bar the regular intermittent workers from the
privilege of commutation or conversion to cash of the unenjoyed portion of their sick
leave with pay benefits, if qualified. For the phrase "herein sick leave privilege," as
used in the last sentence of Section 1, refers to the privilege of having a fixed 15-day
sick leave with pay which, as mandated by Section 1, only the non-intermittent
workers are entitled to. This fixed 15-day sick leave with pay benefit should be
distinguished from the variable number of days of sick leave, not to exceed 15 days,
extended to intermittent workers under Section 3 depending on the number of hours
of service rendered to the company, including overtime pursuant to the schedule
provided therein. It is only fair and reasonable for petitioner-company not to stipulate
a fixed 15-day sick leave with pay for its regular intermittent workers since, as the
term "intermittent" implies, there is irregularity in their work-days. Reasonable and
practical
interpretation
must
be
placed
on
contractual
provisions.
Interpetatiofiendaestut res magisvaleat quam pereat. Such interpretation is to be
adopted, that the thing may continue to have efficacy rather than fail. 8
We find the same to be a reasonable and practical distinction readily discernible in
Section 1, in relation to Section 3, Article VIII of the 1989 CBA between the two
classes of workers in the company insofar as sick leave with pay benefits are
concerned. Any other distinction would cause discrimination on the part of
intermittent workers contrary to the intention of the parties that mutually agreed in
incorporating the questioned provisions in the 1989 CBA.
Public respondent correctly observed that the parties to the CBA clearly intended the
same sick leave privilege to be accorded the intermittent workers in the same way
that they are both given the same treatment with respect to vacation leaves - noncommutable and non-cumulative. If they are treated equally with respect to vacation
leave privilege, with more reason should they be on par with each other with respect
to sick leave privileges. 9 Besides, if the intention were otherwise, during its
renegotiation, why did not the parties expressly stipulate in the 1989 CBA that regular
intermittent workers are not entitled to commutation of the unenjoyed portion of their
sick leave with pay benefits?
Whatever doubt there may have been early on was clearly obliterated when
petitioner-company recognized the said privilege and paid its intermittent workers the
cash equivalent of the unenjoyed portion of their sick leave with pay benefits during
the lifetime of the CBA of October 16, 1985 until three (3) months from its renewal on
April 15, 1989. Well-settled is it that the said privilege of commutation or conversion
to cash, being an existing benefit, the petitioner-company may not unilaterally
withdraw, or diminish such benefits. 10 It is a fact that petitioner-company had, on
several instances in the past, granted and paid the cash equivalent of the unenjoyed

portion of the sick leave benefits of some intermittent workers. 11 Under the
circumstances, these may be deemed to have ripened into company practice or
policy which cannot be peremptorily withdrawn. 12
Moreover, petitioner-company's objection to the authority of the Voluntary Arbitrator
to direct the commutation of the unenjoyed portion of the sick leave with pay benefits
of intermittent workers in his decision is misplaced. Article 261 of the Labor Code is
clear. The questioned directive of the herein public respondent is the necessary
consequence of the exercise of his arbitral power as Voluntary Arbitrator under Article
261 of the Labor Code "to hear and decide all unresolved grievances arising from the
interpretation or implementation of the Collective Bargaining Agreement." We,
therefore, find that no grave abuse of discretion was committed by public respondent
in issuing the award (decision). Moreover, his interpretation of Sections 1 and 3,
Article VIII of the 1989 CBA cannot be faulted with and is absolutely correct.
WHEREFORE, in view of the foregoing, the petition is DISMISSED. The award
(decision) of public respondent dated September 10, 1991 is hereby AFFIRMED. No
costs.
SO ORDERED.

SECOND DIVISION
[G.R. No. 123825. August 31, 1999]
MARK ROCHE INTERNATIONAL AND/OR EDUARDO DAYOT and SUSAN
DAYOT, petitioners,
vs.
NATIONAL
LABOR
RELATIONS
COMMISSION, MARK ROCHE WORKERS UNION and WILMA
PATACAY, EILEEN RUFON, LILIA BRIONES, BEATRIZ MANAGAYTAY,
DELIA ARELLANO, ANITA MARCELO, RIO MARIANO, MARISSA
SADILI, ESTRELLA MALLARI, DELIA LAROYA, and DIVINA
VILLARBA, respondents.
This is a special civil action under Rule 65 of the Rules of Court to nullify the
14 August 1995 Decision of the National Labor Relations Commission which affirmed
with modification the Decision of Labor Arbiter Eduardo J. Carpio. The Labor Arbiter
held that private respondents were illegally constructively dismissed and ordered
petitioners to reinstate them and pay them back wages as well as their proportionate
13th month pay, service incentive leave pay and salary differentials. The NLRC set
aside the award of incentive leave pay.
Petitioners Eduardo Dayot and Susan Dayot were President and Vice
President, respectively, of their co-petitioner Mark Roche International (MRI), a
corporation organized and existing under the laws of the Philippines, engaged in the
garments business. Private respondents Eileen Rufon, Lilia Briones, Beatriz
Managaytay, Delia Arellano, Anita Marcelo, Rio Mariano, Marissa Sadili, Wilma
Patacay, Estella Mallari, Delia Laroya and DivinaVillarba were employed as sewers
of MRI with lengths of service varying from three (3) to nine (9) years.
On different dates private respondents filed separate complaints for
underpayment of wages and non-payment of overtime pay against petitioners MRI,
Eduardo Dayot and Susan Dayot. Private respondents alleged that they usually
worked eleven (11) to twelve (12) hours daily, except on Mondays during which they

worked eight (8) hours, and were paid wages on a piece-rate basis amounting
to P450.00 to P600.00 per week. They likewise asserted that sometime in 1992 they
were unable to avail of their SSS benefits, e.g., salary loan, sickness benefits and
maternity benefits because, as they found out, the company did not remit their
contributions to the SSS.
On 11 October 1992 private respondents sought the assistance of a labor
organization which helped them organize the Mark Roche Workers Union
(MRWU). On 14 October 1992 they registered the union with the Department of
Labor and Employment - National Capital Region (DOLE-NCR) and on the same
date filed a Petition for Certification Election before the Med-Arbitration Board.
On 27 October 1992 petitioners received a notice of hearing of the
petition. Apparently irked by the idea of a union within the company, petitioners
ordered private respondents to withdraw the petition and further threatened them that
should they insist in the organization of a union they would be dismissed. Unfazed,
private respondents refused. As expected, on 29 October 1992 they were discharged
from work.
On 30 October 1992 private respondents amended their earlier complaints to
include as additional causes of action their illegal dismissal, unfair labor practice,
non-payment of 13th month pay, underpayment for legal holidays, and for damages.
Petitioners countered that private respondents were not dismissed from work
but
voluntarily
abandoned
their
jobs
thereby
paralyzing
company
operations. Petitioners likewise contended that private respondents incurred
numerous absences without prior notice and clearance from their superiors as
evidenced by several company memos sent to them. Only DivinaVillarba showed up
and told petitioners that she was voluntary resigning because she had found better
employment elsewhere. It was only later that petitioners learned that private
respondents absences were due to their preoccupation with the organization of a
labor union. Notwithstanding these absences, petitioners expressed their willingness
to reinstate private respondents within a reasonable time. They however disclaimed
knowledge of any deficiency owing to private respondents since all the benefits due
them as required by law were fully paid, except overtime pay which they were not
entitled to on account of their being piece-rate workers.
On 3 March 1993 the Labor Arbiter rendered his decision declaring as illegal
the constructive dismissal of private respondents. Petitioners were thus ordered to
immediately reinstate private respondents as sewers and to pay each of them his (a)
back wages computed from 29 October 1992 to 31 March 1993 in the amount
of P15,524.08 subject to adjustments until reinstated but not to exceed three (3)
years; (b) proportionate share in the 13th month pay for the period January to
October 1992 in the amount of P2,538.77; unpaid five (5) days service incentive
leave pay for 1989, 1990 and 1991 in the amount of P1,565.00; and, (c) wage
differentials in the amount of P24,707.38.
On appeal the NLRC affirmed the reinstatement of private respondents and
the payment of back wages, salary differentials and proportionate 13th month pay
but set aside the award of service incentive leave pay on the ground that private
respondents were not entitled thereto as they were piece-rate workers. Petitioners
moved for reconsideration but was denied for lack of merit.
Petitioners now contend that the NLRC committed grave abuse of discretion
amounting to lack or excess of jurisdiction in sustaining the Labor Arbiter by declaring
private respondents as having been constructively dismissed from their jobs, hence,
illegal. On the contrary, they argue that private respondents voluntarily abandoned
their jobs without justifiable reason nor prior notice. The NLRC disregarded the

company memos addressed to each of the private respondents which were indicative
of their intention to leave the company and showed their propensity to incur frequent
absences in violation of company rules and regulations.
Abandonment, as a just and valid ground for dismissal, means the deliberate
and unjustified refusal of an employee to resume his employment. The burden of
proof is on the employer to show an unequivocal intent on the part of the employee
to discontinue employment. The intent cannot be lightly inferred or legally presumed
from certain ambivalent acts. There must be a concurrence of both the intention to
abandon and some overt act from which it can be deducted that the employee has
no more intention to resume his work.[1]
These are not obtaining in the instant case. No overt act was established by
petitioners from which to infer the clear intention of private respondents to desist from
their employment. The company memos submitted by petitioner could not be the
basis of such intention since they referred to absences incurred by private
respondents long before their dismissal. The lack of proximity of those absences to
the actual dismissal rendered them unreliable, even worthless. Moreover, as
correctly found by the NLRC, it was unlikely that private respondents had abandoned
their jobs considering their lengths of service in the company and the difficulty in
finding similar employment. In addition, if they had truly forsaken their jobs, they
would not have bothered to file a complaint for constructive dismissal against
petitioners immediately after they were dismissed and prayed for their
reinstatement. An employee who forthwith takes steps to protest his layoff cannot by
any logic be said to have abandoned his work. [2] On the contrary, there is ample proof
showing that private respondents were dismissed from their jobs for their refusal to
withdraw their petition for certification election filed before the DOLE.
However, it must be made clear here that the dismissal of private respondents
was not a constructive dismissal but an illegal dismissal, and this is where both the
NLRC and the Labor Arbiter erred. Constructive dismissal or a constructive discharge
has been defined as a quitting because continued employment is rendered
impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a
diminution in pay.[3] In the instant case, private respondents were not demoted in rank
nor their pay diminished considerably. They were simply told without prior warning or
notice that there was no more work for them. After receiving the notice of hearing of
the petition for certification election on 27 October 1992, petitioners immediately told
private respondents that they were no longer employed. Evidently it was the filing of
the petition for certification election and organization of a union within the company
which led petitioners to dismiss private respondents and not petitioners' allegations of
absence or abandonment by private respondents. The formation of a labor union has
never been a ground for valid termination, and where there is an absence of clear,
valid and legal cause, the law considers the termination illegal. [4]
Petitioners likewise contend that the NLRC acted with grave abuse of
discretion in granting private respondents reinstatement with payment of back
wages. They argue that reinstatement can no longer be effected in view of the lapse
of a considerable period of time from the dismissal of private respondents in October
1992 to the time the order for reinstatement was released. As for the award of back
wages, they assert that it is capricious and arbitrary since it only encourages
indolence and promotes enrichment of private respondents at the expense of
petitioners.
The award of reinstatement and back wages belongs to an illegally dismissed
employee by direct provision of law and cannot be defeated by mere allegations of
inconvenience, inconceivability or implausibility. Article 279 of the Labor Code
provides that an illegally dismissed employee is entitled to reinstatement without loss
of seniority rights and other privileges and to his full back wages from the time his
compensation was withheld from him up to the time of his actual reinstatement. Back

wages are granted on grounds of equity for earnings which a worker or employee
has lost due to his illegal dismissal. [5] Petitioners are however given the alternative of
paying separation pay to illegally dismissed employees where reinstatement is no
longer possible.
Petitioners further aver that the NLRC likewise abused its discretion when it
affirmed the Labor Arbiters ruling that private respondents were not paid their money
claims. They insist that they have already paid private respondents all the amounts
and benefits due them and that had the Labor Arbiter conducted trial on the merits,
they could have presented documents proving their claim to be true.
The decision of the Labor Arbiter not to schedule the case for another hearing
could not be considered arbitrary. The holding of a hearing is discretionary with the
Labor Arbiter and is something which the parties cannot demand as a matter of right.
[6]
It is entirely within the bounds of the Labor Arbiters authority to decide a case
based on mere position papers and supporting documents without a formal trial or
hearing. The requirements of due process are satisfied when the parties are given
the opportunity to submit position papers wherein they are supposed to attach all the
documents that would prove their claim in case it be decided that no hearing should
be conducted or was necessary.
In case of employees money claims, the employer bears the burden to prove
that employees have received their wages and benefits and that the same were paid
in accordance with law. It is incumbent upon the employer to present the necessary
documents to prove such claims. In their position paper, petitioners failed to present
necessary documentary evidence to substantiate their allegation that private
respondents money claims were fully paid. They cannot use the absence of trial as
an excuse for their failure as they could have presented documentary evidence at
any time before the Labor Arbiter and, on appeal, before the NLRC. Hence, they
cannot at this late stage bewail that they were not afforded due process.
Finally, as correctly held by the NLRC, private respondents as piece-rate
employees are not entitled to service incentive leave pay as well as holiday pay even
if they are entitled to other benefits like COLA and 13th month pay. Service incentive
leave pay shall not apply to employees whose performance is unsupervised by the
employer, including those who are paid in a fixed amount for performing work
irrespective of the time consumed in the performance thereof. [7]
WHEREFORE, this Court finds that private respondents Eileen Rufon, Lilia
Briones, Beatriz Managaytay, Delia Arellano, Anita Marcelo, Rio Mariano, Marissa
Sadili, Wilma Patacay, Estrella Mallari, Delia Laroya and DivinaVillarba were illegally
dismissed - not merely illegally constructively dismissed - by petitioners Mark Roche
International and/or Eduardo Dayot and Susan Dayot, and to this extent, the assailed
Decision of public respondent National Labor Relations Commission affirming that of
the Labor Arbiter, is MODIFIED. However, it is AFFIRMED insofar as it ordered the
reinstatement of private respondents with back wages, salary differentials and 13th
month pay. The service incentive leave pay awarded by the Labor Arbier but deleted
by the National Labor Relations Commission is likewise DELETED.
SO ORDERED.

SECOND DIVISION
[G.R. No. 156367. May 16, 2005]

AUTO

BUS TRANSPORT SYSTEMS,

BAUTISTA, respondent.

INC.,

petitioner,

vs. ANTONIO

However, still based on the above-discussed premises, the respondent must pay to
the complainant the following:

Before Us is a Petition for Review on Certiorari assailing the Decision[1] and

Resolution[2] of the Court of Appeals affirming the Decision [3] of the National Labor
Relations Commission (NLRC). The NLRC ruling modified the Decision of the Labor
Arbiter (finding respondent entitled to the award of 13 th month pay and service
incentive leave pay) by deleting the award of 13 th month pay to respondent.

a. his 13th month pay from the date of his hiring to the date of his
dismissal, presently computed at P78,117.87;

ISSUES
1. Whether or not respondent is entitled to service incentive leave;

b. his service incentive leave pay for all the years he had been
in service with the respondent, presently computed at
P13,788.05.

THE FACTS
Since 24 May 1995, respondent Antonio Bautista has been employed by
petitioner Auto Bus Transport Systems, Inc. (Autobus), as driver-conductor with travel
routes Manila-Tuguegarao via Baguio, Baguio- Tuguegarao via Manila and ManilaTabuk via Baguio. Respondent was paid on commission basis, seven percent (7%) of
the total gross income per travel, on a twice a month basis.
On 03 January 2000, while respondent was driving Autobus No. 114 along
Sta. Fe, Nueva Vizcaya, the bus he was driving accidentally bumped the rear portion
of Autobus No. 124, as the latter vehicle suddenly stopped at a sharp curve without
giving any warning.

All other claims of both complainant and respondent are hereby dismissed for lack of
merit.[5]
Not satisfied with the decision of the Labor Arbiter, petitioner appealed the
decision to the NLRC which rendered its decision on 28 September 2001, the
decretal portion of which reads:
[T]he Rules and Regulations Implementing Presidential Decree No. 851, particularly
Sec. 3 provides:
Section 3. Employers covered. The Decree shall apply to all employers except to:

Respondent averred that the accident happened because he was compelled

by the management to go back to Roxas, Isabela, although he had not slept for
almost twenty-four (24) hours, as he had just arrived in Manila from Roxas, Isabela.
Respondent further alleged that he was not allowed to work until he fully paid the
amount of P75,551.50, representing thirty percent (30%) of the cost of repair of the
damaged buses and that despite respondents pleas for reconsideration, the same
was ignored by management. After a month, management sent him a letter of
termination.
Thus, on 02 February 2000, respondent instituted a Complaint for Illegal
Dismissal with Money Claims for nonpayment of 13 th month pay and service
incentive leave pay against Autobus.
Petitioner, on the other hand, maintained that respondents employment was
replete with offenses involving reckless imprudence, gross negligence, and
dishonesty. To support its claim, petitioner presented copies of letters, memos,
irregularity reports, and warrants of arrest pertaining to several incidents wherein
respondent was involved.
Furthermore, petitioner avers that in the exercise of its management
prerogative, respondents employment was terminated only after the latter was
provided with an opportunity to explain his side regarding the accident on 03 January
2000.
On 29 September 2000, based on the pleadings and supporting evidence
presented by the parties, Labor Arbiter Monroe C. Tabingan promulgated a Decision,
[4]
the dispositive portion of which reads:
WHEREFORE, all premises considered, it is hereby found that the complaint for
Illegal Dismissal has no leg to stand on. It is hereby ordered DISMISSED, as it is
hereby DISMISSED.

xxxxxxxxx
e) employers of those who are paid on purely commission, boundary, or task basis,
performing a specific work, irrespective of the time consumed in the performance
thereof. xxx.
Records show that complainant, in his position paper, admitted that he was paid on a
commission basis.
In view of the foregoing, we deem it just and equitable to modify the assailed
Decision by deleting the award of 13th month pay to the complainant.
WHEREFORE, the Decision dated 29 September 2000 is MODIFIED by deleting the
award of 13th month pay. The other findings are AFFIRMED. [6]
In other words, the award of service incentive leave pay was maintained.
Petitioner thus sought a reconsideration of this aspect, which was subsequently
denied in a Resolution by the NLRC dated 31 October 2001.
Displeased with only the partial grant of its appeal to the NLRC, petitioner
sought the review of said decision with the Court of Appeals which was subsequently
denied by the appellate court in a Decision dated 06 May 2002, the dispositive
portion of which reads:
WHEREFORE, premises considered, the Petition is DISMISSED for lack of merit;
and the assailed Decision of respondent Commission in NLRC NCR CA No. 0265842000 is hereby AFFIRMED in toto. No costs.[7]
Hence, the instant petition.

2. Whether or not the three (3)-year prescriptive period provided under Article
291 of the Labor Code, as amended, is applicable to respondents claim
of service incentive leave pay.
RULING OF THE COURT
The disposition of the first issue revolves around the proper interpretation of
Article 95 of the Labor Code vis--vis Section 1(D), Rule V, Book III of the
Implementing Rules and Regulations of the Labor Code which provides:
Art. 95. RIGHT TO SERVICE INCENTIVE LEAVE
(a) Every employee who has rendered at least one year of service shall
be entitled to a yearly service incentive leave of five days with
pay.
Book III, Rule V: SERVICE INCENTIVE LEAVE
SECTION 1. Coverage. This rule shall apply to all employees except:
(d) Field personnel and other employees whose performance is
unsupervised by the employer including those who are engaged
on task or contract basis, purely commission basis, or those who
are paid in a fixed amount for performing work irrespective of the
time consumed in the performance thereof; . . .
A careful perusal of said provisions of law will result in the conclusion that the
grant of service incentive leave has been delimited by the Implementing Rules and
Regulations of the Labor Code to apply only to those employees not explicitly
excluded by Section 1 of Rule V. According to the Implementing Rules, Service
Incentive Leave shall not apply to employees classified as field personnel. The
phrase other employees whose performance is unsupervised by the employer must
not be understood as a separate classification of employees to which service
incentive leave shall not be granted. Rather, it serves as an amplification of the
interpretation of the definition of field personnel under the Labor Code as those
whose actual hours of work in the field cannot be determined with reasonable
certainty.[8]
The same is true with respect to the phrase those who are engaged on task
or contract basis, purely commission basis. Said phrase should be related with field
personnel, applying the rule on ejusdem generis that general and unlimited terms are
restrained and limited by the particular terms that they follow. [9] Hence, employees
engaged on task or contract basis or paid on purely commission basis are not
automatically exempted from the grant of service incentive leave, unless, they fall
under the classification of field personnel.
Therefore, petitioners contention that respondent is not entitled to the grant of
service incentive leave just because he was paid on purely commission basis is
misplaced. What must be ascertained in order to resolve the issue of propriety of the
grant of service incentive leave to respondent is whether or not he is a field
personnel.

According to Article 82 of the Labor Code, field personnel shall refer to nonagricultural employees who regularly perform their duties away from the principal
place of business or branch office of the employer and whose actual hours of work in
the field cannot be determined with reasonable certainty. This definition is further
elaborated in the Bureau of Working Conditions (BWC), Advisory Opinion to
Philippine Technical-Clerical Commercial Employees Association [10] which states that:
As a general rule, [field personnel] are those whose performance of their job/service
is not supervised by the employer or his representative, the workplace being away
from the principal office and whose hours and days of work cannot be determined
with reasonable certainty; hence, they are paid specific amount for rendering specific
service or performing specific work. If required to be at specific places at specific
times, employees including drivers cannot be said to be field personnel despite the
fact that they are performing work away from the principal office of the employee.
[Emphasis ours]
To this discussion by the BWC, the petitioner differs and postulates that under
said advisory opinion, no employee would ever be considered a field personnel
because every employer, in one way or another, exercises control over his
employees. Petitioner further argues that the only criterion that should be considered
is the nature of work of the employee in that, if the employees job requires that he
works away from the principal office like that of a messenger or a bus driver, then he
is inevitably a field personnel.
We are not persuaded. At this point, it is necessary to stress that the definition
of a field personnel is not merely concerned with the location where the employee
regularly performs his duties but also with the fact that the employees performance is
unsupervised by the employer. As discussed above, field personnel are those who
regularly perform their duties away from the principal place of business of the
employer and whose actual hours of work in the field cannot be determined with
reasonable certainty. Thus, in order to conclude whether an employee is a field
employee, it is also necessary to ascertain if actual hours of work in the field can be
determined with reasonable certainty by the employer. In so doing, an inquiry must
be made as to whether or not the employees time and performance are constantly
supervised by the employer.
As observed by the Labor Arbiter and concurred in by the Court of Appeals:
It is of judicial notice that along the routes that are plied by these bus companies,
there are its inspectors assigned at strategic places who board the bus and inspect
the passengers, the punched tickets, and the conductors reports. There is also the
mandatory once-a-week car barn or shop day, where the bus is regularly checked as
to its mechanical, electrical, and hydraulic aspects, whether or not there are
problems thereon as reported by the driver and/or conductor. They too, must be at
specific place as [sic] specified time, as they generally observe prompt departure and
arrival from their point of origin to their point of destination. In each and every depot,
there is always the Dispatcher whose function is precisely to see to it that the bus
and its crew leave the premises at specific times and arrive at the estimated proper
time. These, are present in the case at bar. The driver, the complainant herein, was
therefore under constant supervision while in the performance of this work. He
cannot be considered a field personnel. [11]
We agree in the above disquisition. Therefore, as correctly concluded by the
appellate court, respondent is not a field personnel but a regular employee who
performs tasks usually necessary and desirable to the usual trade of petitioners
business. Accordingly, respondent is entitled to the grant of service incentive leave.

The question now that must be addressed is up to what amount of service

incentive leave pay respondent is entitled to.
The response to this query inevitably leads us to the correlative issue of
whether or not the three (3)-year prescriptive period under Article 291 of the Labor
Code is applicable to respondents claim of service incentive leave pay.
Article 291 of the Labor Code states that all money claims arising from
employer-employee relationship shall be filed within three (3) years from the time the
cause of action accrued; otherwise, they shall be forever barred.
In the application of this section of the Labor Code, the pivotal question to be
answered is when does the cause of action for money claims accrue in order to
determine the reckoning date of the three-year prescriptive period.
It is settled jurisprudence that a cause of action has three elements, to wit, (1)
a right in favor of the plaintiff by whatever means and under whatever law it arises or
is created; (2) an obligation on the part of the named defendant to respect or not to
violate such right; and (3) an act or omission on the part of such defendant violative
of the right of the plaintiff or constituting a breach of the obligation of the defendant to
the plaintiff.[12]
To properly construe Article 291 of the Labor Code, it is essential to ascertain
the time when the third element of a cause of action transpired. Stated differently, in
the computation of the three-year prescriptive period, a determination must be made
as to the period when the act constituting a violation of the workers right to the
benefits being claimed was committed. For if the cause of action accrued more than
three (3) years before the filing of the money claim, said cause of action has already
prescribed in accordance with Article 291.[13]
Consequently, in cases of nonpayment of allowances and other monetary
benefits, if it is established that the benefits being claimed have been withheld from
the employee for a period longer than three (3) years, the amount pertaining to the
period beyond the three-year prescriptive period is therefore barred by prescription.
The amount that can only be demanded by the aggrieved employee shall be limited
to the amount of the benefits withheld within three (3) years before the filing of the
complaint.[14]
It is essential at this point, however, to recognize that the service incentive
leave is a curious animal in relation to other benefits granted by the law to every
employee. In the case of service incentive leave, the employee may choose to either
use his leave credits or commute it to its monetary equivalent if not exhausted at the
end of the year.[15] Furthermore, if the employee entitled to service incentive leave
does not use or commute the same, he is entitled upon his resignation or separation
from work to the commutation of his accrued service incentive leave. As enunciated
by the Court in Fernandez v. NLRC:[16]
The clear policy of the Labor Code is to grant service incentive leave pay to workers
in all establishments, subject to a few exceptions. Section 2, Rule V, Book III of the
Implementing Rules and Regulations provides that [e]very employee who has
rendered at least one year of service shall be entitled to a yearly service incentive
leave of five days with pay. Service incentive leave is a right which accrues to every
employee who has served within 12 months, whether continuous or broken reckoned
from the date the employee started working, including authorized absences and paid

regular holidays unless the working days in the establishment as a matter of practice
or policy, or that provided in the employment contracts, is less than 12 months, in
which case said period shall be considered as one year. It is also commutable to its
money equivalent if not used or exhausted at the end of the year. In other words, an
employee who has served for one year is entitled to it. He may use it as leave days
or he may collect its monetary value. To limit the award to three years, as the solicitor
general recommends, is to unduly restrict such right.[17] [Italics supplied]
Correspondingly, it can be conscientiously deduced that the cause of action of
an entitled employee to claim his service incentive leave pay accrues from the
moment the employer refuses to remunerate its monetary equivalent if the employee
did not make use of said leave credits but instead chose to avail of its commutation.
Accordingly, if the employee wishes to accumulate his leave credits and opts for its
commutation upon his resignation or separation from employment, his cause of
action to claim the whole amount of his accumulated service incentive leave shall
arise when the employer fails to pay such amount at the time of his resignation or
separation from employment.
Applying Article 291 of the Labor Code in light of this peculiarity of the service
incentive leave, we can conclude that the three (3)-year prescriptive period
commences, not at the end of the year when the employee becomes entitled to the
commutation of his service incentive leave, but from the time when the employer
refuses to pay its monetary equivalent after demand of commutation or upon
termination of the employees services, as the case may be.
The above construal of Art. 291, vis--vis the rules on service incentive leave,
is in keeping with the rudimentary principle that in the implementation and
interpretation of the provisions of the Labor Code and its implementing regulations,
the workingmans welfare should be the primordial and paramount consideration.
[18]
The policy is to extend the applicability of the decree to a greater number of
employees who can avail of the benefits under the law, which is in consonance with
the avowed policy of the State to give maximum aid and protection to labor. [19]
In the case at bar, respondent had not made use of his service incentive leave
nor demanded for its commutation until his employment was terminated by petitioner.
Neither did petitioner compensate his accumulated service incentive leave pay at the
time of his dismissal. It was only upon his filing of a complaint for illegal dismissal,
one month from the time of his dismissal, that respondent demanded from his former
employer commutation of his accumulated leave credits. His cause of action to claim
the payment of his accumulated service incentive leave thus accrued from the time
when his employer dismissed him and failed to pay his accumulated leave credits.
Therefore, the prescriptive period with respect to his claim for service
incentive leave pay only commenced from the time the employer failed to
compensate his accumulated service incentive leave pay at the time of his dismissal.
Since respondent had filed his money claim after only one month from the time of his
dismissal, necessarily, his money claim was filed within the prescriptive period
provided for by Article 291 of the Labor Code.
WHEREFORE, premises considered, the instant petition is hereby DENIED.
The assailed Decision of the Court of Appeals in CA-G.R. SP. No. 68395 is hereby
AFFIRMED. No Costs.
SO ORDERED.