SECOND DIVISION

G.R. No. 198935

November 27, 2013

MAYNILAD WATER SUPERVISORS ASSOCIATION, represented by ROBERTA

ESTINO, Petitioners,
vs.
MAYNILAD WATER SERVICES, INC., Respondent.
DECISION
PEREZ, J.:
For resolution is a Petition for Review on Certiorari1 under Rule 45 of the Rules of
Court, seeking to reverse, annul and set aside the Amended Decision and Resolution
issued by the Court of Appeals (CA) in CA-G.R. S.P. No. 101911, specifically the (a)
Amended Decision2 dated 31 January 2011 which reversed its earlier Decision dated 31
May 2010 and (b) Resolution3 dated 12 September 2011 which denied petitioner s
Motion for Reconsideration.
Culled from the records are the following antecedent facts:4
Petitioner Maynilad Water Supervisors Association (MWSA) is an association composed
of former supervisory employees of Metropolitan Waterworks and Sewerage System
(MWSS). These employees claim that during their employment with MWSS, they were
receiving a monthly cost of living allowance (COLA) equivalent to 40% of their basic
pay.
The payment of these allowances and other additional compensation, including the
COLA were, however, discontinued without qualification effective 1 November 1989
when the Department of Budget and Management (DBM) issued Corporate
Compensation Circular No. 10 (CCC No. 10). In 1997, MWSS was privatized and part of
it, MWSS West, was acquired by Maynilad Water Services, Inc. (Maynilad). Some of the
employees of MWSS, which included members of MWSA, were absorbed by Maynilad
subject to the terms and conditions of a Concession Agreement, a portion of which
reads:
Article 6.1.1 (ii)
One month prior to the Commencement Date, the Concessionaire shall make an offer to
employ each Concessionaire Employee, subject to a probationary period of six months
following the Commencement Date, at a salary or pay scale and with benefits at least
equal to those enjoyed by such Employee on the date of his or her separation from
MWSS. x x x
xxxx
Article 6.1.3. Non-Diminution of Benefits
The Concessionaire shall grant to all Concessionaire Employees employee benefits no
less favorable than those granted to such employees by the MWSS at the time of their
separation from MWSS, particularly those set forth in Exhibit F and the following:

224

xxxx
The payment of COLA was not among those listed as benefits in Exhibit "F."
In 1998, the Supreme Court promulgated a Decision5 declaring DBM CCC No.10
ineffective for failure to comply with the publication requirement. Consequently, MWSS
partially released the COLA payments for its employees, including members of MWSA,
covering the years 1989 to 1997, and up to year 1999 for its retained employees.
In 2002, MWSA filed a complaint before the Labor Arbiter praying for the payment of
their COLA from the year 1997, the time its members were absorbed by Maynilad, up to
the present. MWSA argued that since DBM CCC No. 10 was rendered ineffective, the
COLA should be paid as part of the benefits enjoyed by their members at the time of
their separation from MWSS, and which should form part of their salaries and benefits
with Maynilad.
In a decision dated 10 November 2006, the Labor Arbiter granted MWSAs claim and
directed Maynilad to pay the COLA of the supervisors retroactive to the date when they
were hired in 1997, with legal interest from the date of promulgation of the decision. It
also directed Maynilad to take necessary measures to ensure that the benefit is
incorporated in the employees monthly compensation.6
On 11 December 2006, Maynilad appealed the decision before the National Labor
Relations Commission (NLRC) and filed an Urgent Manifestation and Motion to Reduce
Bond.
The NLRC granted Maynilads motion and reversed on appeal the decision of the Labor
Arbiter. On 28 September 2007, MWSA filed a motion for reconsideration but this was
denied by the NLRC in its 23 October 2007 resolution.
Aggrieved, MWSA filed a petition for certiorari with the CA on 11 January 2008.
In a Decision7 dated 31 May 2010, the CA Ninth Division annulled and set aside the
decision of the NLRC. It thus reinstated the decision of the Labor Arbiter.
Maynilad filed a motion for reconsideration of the 31 May 2010 CA Decision.
On 31 January 2011, the CA Ninth Division reconsidered its earlier Decision. The
decretal portion of the amended decision reads:
WHEREFORE, premises considered, the Motion for Reconsideration is GRANTED.
Consequently, the Courts 31 May 2010 Decision is REVERSED and SET ASIDE, and the
07 September 2007 Decision and 23 October 2007 Resolution of the NLRC are
AFFIRMED, and are thus REINSTATED.8
MWSA filed a Motion for Reconsideration of the amended decision. Pending resolution 225
of the Motion for Reconsideration, MWSA moved for the inhibition of the members of
the Ninth Division of the CA. The members of the division recused from the case in a
Resolution dated 3 June 2011. Thereafter, the Second Division of the CA, to which the
case was raffled, issued a Resolution9 on 12 September 2011 denying MWSAs Motion
for Reconsideration.

Hence, this Petition for Review on Certiorari under Rule 45 of the Rules of Court.
ISSUES
Whether the CA erred in not holding that the MWSA members are entitled to COLA
under the Concession Agreement.
Whether the CA erred in not finding grave abuse of discretion on the part of NLRC when
the latter granted Maynilads appeal despite insufficiency of the appeal bond.
OUR RULING
Simply stated, the main issue in this case is whether Maynilad bound itself under the
Concession Agreement to pay the COLA of the employees it absorbed from MWSS. A
careful review of the Concession Agreement led us to conclude that both MWSS and
Maynilad never intended to include COLA as one of the benefits to be granted to the
absorbed employees.
The benefits agreed upon by the parties are stated in Exhibit "F" of the Concession
Agreement, to wit:
Existing MWSS Fringe Benefits
A. ALLOWANCES
PERA - P500.00 Salary Grade 1 to 23 except those with RATA
ACA P500.00 Salary Grade 1 to 25
RATA- 40% of basic Supervisory Level, Section Chiefs and up or equivalent ranks.
Technical and Executive Assistants
Medical 2,500/year
Rice 500/month
Uniform 2,000/year
Meal 25.00/day (for medical personnel P30.00/day)
Longevity 50.00/year of service/month
Children 30.00/child/month, maximum four (4) children below 21 years old
Hazard 50.00/month
B. BONUSES
Year-End Financial Assistance One (1) month Gross pay (Basic Salary plus PERA, ACA, 226
rice, meal, longevity, Children and RATA

Mid-Year One (1) month Gross Pay Christmas Bonus and Cash Gift One (1) month
Basic salary plus P1,000 cash gift
Anniversary (Bigay-pala) 4,000.00 or 50% of basic, whichever is greater
Productivity as of December 1995 Amount equivalent to P5,000 or 60% of gross pay,
exclusive of RATA, whichever is higher
C. PREMIUMS
Graveyard 50% (12MN 6:00 AM)
Nightwork 25% (6PM 6AM)
Holiday 125%
Sunday 150%
Overtime 125%
Distress 25% of basic pay (For Sewerage Department only)
D. PAID LEAVES
Vacation 15 days/year
Sick 15 days/year
Maternity 60 calendar days
Paternity 7 working days
Emergency Leave - 3 days/year
(Birthday/Funeral/Mourning/Graduation/Enrollment/Wedding/
Anniversary/Hospitalization/Accident/Relocation)
E. STUDY LEAVE
- Study now pay later scheme
- Grant (with contract to serve MWSS)10
It is clear from the aforesaid enumeration that COLA is not among the benefits to be
received by the absorbed employees. Contrary to the contention of MWSA, the
declaration by the Court of the ineffectiveness of DBM CCC No. 10 due to its nonpublication in the Official Gazette or in a newspaper of general circulation in the
country,11 did not give rise to the employees right to demand payment of the subject
benefit from Maynilad.
227
As far as their employment relationship with Maynilad is concerned, the same is not
affected by the De Jesus ruling because it is governed by a separate compensation

package provided for under the Concession Agreement. It would be erroneous to

presume that had the COLA been received during the time of the execution of the
contract, the benefit would have been included in Exhibit "F." First of all, we note that
the Courts ruling in the De Jesus case applies only to government-owned and
controlled corporations and not to private entities. Secondly, the parties to the
Concession Agreement could not have thought of including the COLA in Exhibit "F"
because as early as 1989, the government already resolved to remove the COLA,
among others, from the list of allowances being received by government employees.
Hence, the enactment of Republic Act R.A. No. 6758 or the Compensation and Position
Classification Act of 198912 which integrated the COLA into the standardized salary
rate. Section 12 thereof provides:
Consolidation of Allowances and Compensation. All allowances, except for
representation and transportation allowances; clothing and laundry allowances;
subsistence allowance of marine officers and crew on board government vessels and
hospital personnel; hazard pay; allowances of foreign service personnel stationed
abroad; and such other additional compensation not otherwise specified herein as may
be determined by the DBM, shall be deemed included in the standardized salary rates
herein prescribed. x x x
From the aforesaid provision, we note that all allowances were deemed integrated into
the standardized salary rates except:
(1) representation and transportation allowances;
(2) clothing and laundry allowances;
(3) subsistence allowances of marine officers and crew on board government vessels;
(4) subsistence allowances of hospital personnel;
(5) hazard pay;
(6) allowances of foreign service personnel stationed abroad; and
(7) such other additional compensation not otherwise specified in Section 12 as may be
determined by the DBM.
In Gutierrez v. DBM,13 which is a consolidated case involving over 20 governmentowned and controlled corporations, the Court found proper the inclusion of COLA in the
standardized salary rates. It settled that COLA, not being an enumerated exclusion, was
deemed already incorporated in the standardized salary rates of government employees
under the general rule of integration. In explaining its inclusion in the standardized
salary rates, the Court cited its ruling in National Tobacco Administration v. COA,14 in
that the enumerated fringe benefits in items (1) to (6) have one thing in common
they belong to one category of privilege called allowances which are usually granted to
officials and employees of the government to defray or reimburse the expenses incurred
in the performance of their official functions. Consequently, if these allowances are
228
consolidated with the standardized salary rates, then the government official or
employee will be compelled to spend his personal funds in attending to his duties. On
the other hand, item (7) is a "catch-all proviso" for benefits in the nature of allowances
similar to those enumerated.15

Clearly, COLA is not in the nature of an allowance intended to reimburse expenses

incurred by officials and employees of the government in the performance of their
official functions. It is not payment in consideration of the fulfillment of official duty.16
As defined, cost of living refers to "the level of prices relating to a range of everyday
items"17 or "the cost of purchasing those goods and services which are included in an
accepted standard level of consumption."18 Based on this premise, COLA is a benefit
intended to cover increases in the cost of living. Thus, it is and should be integrated
into the standardized salary rates.
From the aforesaid discussion, it is evident therefore, that at the time the MWSS
employees were absorbed by Maynilad in 1997, the COLA was already part and parcel
of their monthly salary. The non-publication of DBM CCC No. 10 in the Official Gazette
or newspaper of general circulation did not nullify the integration of COLA into the
standardized salary rates upon the effectivity of R.A. No. 6758.19 As held by this Court
in Phil. International Trading Corp. v. COA,20 the validity of R.A. No. 6758 should not be
made to depend on the validity of its implementing rules. To grant COLA to herein
petitioners now would create an absurd situation wherein they would be receiving an
additional COLA in the amount equivalent to 40% of their basic salary even if the Court
has already ruled that the COLA is already integrated in the employees basic salary.
Such conclusion would give the absorbed employees far greater rights than their former
co-employees or other government employees from whom COLA was eventually
disallowed.
The ruling of the Labor Arbiter which MWSA insists on is also erroneous in that it seeks
to have the COLA incorporated in the monthly compensation to be received by the
absorbed employees. It failed to consider that the employment contracts of the MWSA
members with MWSS were terminated prior to their employment with MAYNILAD.
Although they may have continued performing the same function, their employment is
already covered by an entirely new employment contract.
This Court has ruled that unless expressly assumed, labor contracts such as
employment contracts and collective bargaining agreements are not enforceable against
a transferee of an enterprise, labor contracts being in personam, thus binding only
between the parties.21 In the instant case, the only commitment of Maynilad under the
Concession Agreement it entered with MWSS was to provide the absorbed employees
with a compensation package "no less favorable than those granted to [them] by the
MWSS at the time of their separation from MWSS, particularly those set forth in Exhibit
F x x x."22 It is undisputed that Maynilad complied with such commitment. It cannot,
however, be compelled to assume the payment of an allowance which was not agreed
upon. Such would not only be unreasonable but also unfair for Maynilad. MWSS and
Maynilad could not have presumed that the COLA was part of the agreement when it
was no longer being received by the employees at the time of the execution of the
contract, which is the reckoning point of their new employment.
In Norton Resources and Development Corporation v. All Asia Bank Corporation,23 this 229
Court ruled that the agreement or contract between the parties is the formal expression
of the parties rights, duties and obligations. It is the best evidence of the intention of
the parties. Thus, when the terms of an agreement have been reduced to writing, it is
considered as containing all the terms agreed upon and there can be no evidence of
such terms other than the contents of the written agreement between the parties and
their successors in interest. Time and again, we have stressed the rule that a contract is

the law between the parties, and courts have no choice but to enforce such contract so
long as it is not contrary to law, morals, good customs or public policy. Otherwise,
courts would be interfering with the freedom of contract of the parties. Simply put,
courts cannot stipulate for the parties or amend the latters agreement, for to do so
would be to alter the real intention of the contracting parties when the contrary function
of courts is to give force and effect to the intention of the parties.
In fine, contrary to the allegation of MWSA, there is no ambiguity in the Concession
Agreement.1wphi1 Thus, there is nothing to be construed.
Anent the issue of the insufficiency of the appeal bond posted by Maynilad, we agree
with the NLRC that there was merit in the arguments forwarded in support of the prayer
for the reduction of the appeal bond. Maynilad sought the reduction of the appeal bond
to ten percent (10%) for the following reasons: a) that it had filed a Petition for
Rehabilitation before the Regional Trial Court of Quezon City; and b) that as a result
thereof, the Rehabilitation Court issued a Stay Order prohibiting it from selling,
encumbering, transferring or disposing in any manner any of its properties making it
impossible for it to fully comply with the appeal bond requirement.24 Our ruling in
Garcia, et al. v. KJ Commercial25 that the requirement on appeals may be relaxed when
there is substantial compliance with the Rules of Procedure of the NLRC or when the
appellant shows willingness to post a partial bond. Here, we note that Maynilad s
appeal was accompanied by an appeal bond in the amount of Twenty Five Million Pesos
(P25,000,000.00) with an Urgent Manifestation and Motion to Reduce Bond on the
ground that the labor arbiter failed to specify the exact amount of monetary award from
which the amount of the appeal bond is to be based.
In University Plans v. Solano,26 this Court reiterated the guidelines which the NLRC
must exercise in considering the motions for reduction of bond:
The bond requirement on appeals involving monetary awards has been and may be
relaxed in meritorious cases. These cases include instances in which (1) there was
substantial compliance with the Rules, (2) surrounding facts and circumstances
constitute meritorious grounds to reduce the bond, (3) a liberal interpretation of the
requirement of an appeal bond would serve the desired objective of resolving
controversies on the merits, or (4) the appellants, at the very least, exhibited their
willingness and/or good faith by posting a partial bond during the reglementary period.
It is evident that the aforesaid instances are present in the instant case.
WHEREFORE, premises considered, the instant Petition is hereby DENIED and the 31
January 2011 Amended Decision and 12 September 2011 Resolution of the Court of
Appeals in CA-G.R. SP No. 101911 is AFFIRMED in toto.
SO ORDERED.

SECOND DIVISION
G.R. No. 189404

December 11, 2013

WILGEN LOON, JERRY ARCILLA, ALBERTPEREYE, ARNOLD PEREYE,

EDGARDO OBOSE, ARNEL MALARAS, PATROCINO TOETIN, EVELYN
LEONARDO, ELMER GLOCENDA, RUFO CUNAMAY, ROLANDOSAJOL, ROLANDO
ABUCAYON, JENNIFER NATIVIDAD, MARITESS TORION, ARMANDO
LONZAGA, RIZAL GELLIDO, EVIRDE HAQUE,1 MYRNA VINAS, RODELITO
AYALA, WINELITO OJEL, RENATO RODREGO, NENA ABINA, EMALYN
OLIVEROS, LOUIE ILAGAN, JOEL ENTIG, ARNEL ARANETA, BENJAMIN COSE,
WELITO LOON and WILLIAM ALIPAO, Petitioners,
vs.
POWER MASTER, INC., TRI-C GENERAL SERVICES, and SPOUSES HOMER and
CARINA ALUMISIN, Respondents.
DECISION
BRION, J.:
We resolve the petition for review on certiorari,2 filed by petitioners Wilgen Loon, Jerry
Arcilla, Albert Pereye, Arnold Pereye, Edgardo Obose, Arnel Malaras, Patrocino Toetin,
Evelyn Leonardo, Elmer Glocenda, Rufo Cunamay, Rolando Sajol, Rolando Abucayon,
Jennifer Natividad, Maritess Torion, Armando Lonzaga, Rizal Gellido, Evirde Haque,
Myrna Vinas, Rodelito Ayala, Winelito Ojel, Renato Rodrego, Nena Abina, Emalyn
Oliveros, Louie Ilagan, Joel Entig, Arnel Araneta, Benjamin Cose, Welito Loon, William
Alipao (collectively, the petitioners), to challenge the June 5, 2009 decision3 and the
August 28, 2009 resolution4 of the Court of Appeals (CA) in CA-G.R. SP No. 95182.
The Factual Antecedents
Respondents Power Master, Inc. and Tri-C General Services employed and assigned the
petitioners as janitors and leadsmen in various Philippine Long Distance Telephone
Company (PLDT) offices in Metro Manila area. Subsequently, the petitioners filed a
complaint for money claims against Power Master, Inc., Tri-C General Services and their
officers, the spouses Homer and Carina Alumisin (collectively, the respondents). The
petitioners alleged in their complaint that they were not paid minimum wages,
overtime, holiday, premium, service incentive leave, and thirteenth month pays. They
further averred that the respondents made them sign blank payroll sheets. On June 11,
2001, the petitioners amended their complaint and included illegal dismissal as their
cause of action. They claimed that the respondents relieved them from service in
retaliation for the filing of their original complaint.
Notably, the respondents did not participate in the proceedings before the Labor Arbiter
except on April 19, 2001 and May 21, 2001 when Mr. Romulo Pacia, Jr. appeared on the
respondents behalf.5 The respondents counsel also appeared in a preliminary 231
mandatory conference on July 5, 2001.6 However, the respondents neither filed any
position paper nor proffered pieces of evidence in their defense despite their knowledge
of the pendency of the case.
The Labor Arbiters Ruling

In a decision7 dated March 15, 2002, Labor Arbiter (LA) Elias H. Salinas partially ruled
in favor of the petitioners. The LA awarded the petitioners salary differential, service
incentive leave, and thirteenth month pays. In awarding these claims, the LA stated
that the burden of proving the payment of these money claims rests with the employer.
The LA also awarded attorneys fees in favor of the petitioners, pursuant to Article 111
of the Labor Code.8
However, the LA denied the petitioners claims for backwages, overtime, holiday, and
premium pays. The LA observed that the petitioners failed to show that they rendered
overtime work and worked on holidays and rest days without compensation. The LA
further concluded that the petitioners cannot be declared to have been dismissed from
employment because they did not show any notice of termination of employment. They
were also not barred from entering the respondents premises.
The Proceedings before the NLRC
Both parties appealed the LAs ruling with the National Labor Relations Commission. The
petitioners disputed the LAs denial of their claim for backwages, overtime, holiday and
premium pays. Meanwhile, the respondents questioned the LAs ruling on the ground
that the LA did not acquire jurisdiction over their persons.
The respondents insisted that they were not personally served with summons and other
processes. They also claimed that they paid the petitioners minimum wages, service
incentive leave and thirteenth month pays. As proofs, they attached photocopied and
computerized copies of payroll sheets to their memorandum on appeal.9 They further
maintained that the petitioners were validly dismissed. They argued that the petitioners
repeated defiance to their transfer to different workplaces and their violations of the
company rules and regulations constituted serious misconduct and willful
disobedience.10
On January 3, 2003, the respondents filed an unverified supplemental appeal. They
attached photocopied and computerized copies of list of employees with automated
teller machine (ATM) cards to the supplemental appeal. This list also showed the
amounts allegedly deposited in the employees ATM cards.11 They also attached
documentary evidence showing that the petitioners were dismissed for cause and had
been accorded due process.
On January 22, 2003, the petitioners filed an Urgent Manifestation and Motion12 where
they asked for the deletion of the supplemental appeal from the records because it
allegedly suffered from infirmities. First, the supplemental appeal was not verified.
Second, it was belatedly filed six months from the filing of the respondents notice of
appeal with memorandum on appeal. The petitioners pointed out that they only agreed
to the respondents filing of a responsive pleading until December 18, 2002.13 Third
the attached documentary evidence on the supplemental appeal bore the petitioners
forged signatures.
They reiterated these allegations in an Urgent Motion to Resolve Manifestation and
Motion (To Expunge from the Records Respondents Supplemental Appeal, Reply and/or 232
Rejoinder) dated January 31, 2003.14 Subsequently, the petitioners filed an Urgent
Manifestation with Reiterating Motion to Strike-Off the Record Supplemental
Appeal/Reply, Quitclaims and Spurious Documents Attached to Respondents Appeal
dated August 7, 2003.15 The petitioners argued in this last motion that the payrolls

should not be given probative value because they were the respondents fabrications.
They reiterated that the genuine payrolls bore their signatures, unlike the respondents
photocopies of the payrolls. They also maintained that their signatures in the
respondents documents (which showed their receipt of thirteenth month pay) had been
forged.
The NLRC Ruling
In a resolution dated November 27, 2003, the NLRC partially ruled in favor of the
respondents.16 The NLRC affirmed the LAs awards of holiday pay and attorneys fees.
It also maintained that the LA acquired jurisdiction over the persons of the respondents
through their voluntary appearance.
However, it allowed the respondents to submit pieces of evidence for the first time on
appeal on the ground that they had been deprived of due process. It found that the
respondents did not actually receive the LAs processes. It also admitted the
respondents unverified supplemental appeal on the ground that technicalities may be
disregarded to serve the greater interest of substantial due process. Furthermore, the
Rules of Court do not require the verification of a supplemental pleading.
The NLRC also vacated the LAs awards of salary differential, thirteenth month and
service incentive leave pays. In so ruling, it gave weight to the pieces of evidence
attached to the memorandum on appeal and the supplemental appeal. It maintained
that the absence of the petitioners signatures in the payrolls was not an indispensable
factor for their authenticity. It pointed out that the payment of money claims was
further evidenced by the list of employees with ATM cards. It also found that the
petitioners signatures were not forged. It took judicial notice that many people use at
least two or more different signatures.
The NLRC further ruled that the petitioners were lawfully dismissed on grounds of
serious misconduct and willful disobedience. It found that the petitioners failed to
comply with various memoranda directing them to transfer to other workplaces and to
attend training seminars for the intended reorganization and reshuffling.
The NLRC denied the petitioners motion for reconsideration in a resolution dated April
28, 2006.17 Aggrieved, the petitioners filed a petition for certiorari under Rule 65 of the
Rules of Court before the CA.18
The CA Ruling
The CA affirmed the NLRCs ruling. The CA held that the petitioners were afforded
substantive and procedural due process. Accordingly, the petitioners deliberately did not
explain their side. Instead, they continuously resisted their transfer to other PLDT 233
offices and violated company rules and regulations. It also upheld the NLRCs findings
on the petitioners monetary claims.
The CA denied the petitioners motion for reconsideration in a resolution dated August
28, 2009, prompting the petitioners to file the present petition.19
The Petition
In the petition before this Court, the petitioners argue that the CA committed a

reversible error when it did not find that the NLRC committed grave abuse of discretion.
They reiterate their arguments before the lower tribunals and the CA in support of this
conclusion. They also point out that the respondents posted a bond from a surety that
was not accredited by this Court and by the NLRC. In effect, the respondents failed to
perfect their appeal before the NLRC. They further insist that the NLRC should not have
admitted the respondents unverified supplemental appeal.20
The Respondents Position
In their Comments, the respondents stress that the petitioners only raised the issue of
the validity of the appeal bond for the first time on appeal. They also reiterate their
arguments before the NLRC and the CA. They additionally submit that the petitioners
arguments have been fully passed upon and found unmeritorious by the NLRC and the
CA.21
The Issues
This case presents to us the following issues:
1) Whether the CA erred when it did not find that the NLRC committed grave abuse of
discretion in giving due course to the respondents appeal;
a) Whether the respondents perfected their appeal before the NLRC; and
b) Whether the NLRC properly allowed the respondents supplemental appeal
2) Whether the respondents were estopped from submitting pieces of evidence for the
first time on appeal;
3) Whether the petitioners were illegally dismissed and are thus entitled to backwages;
4) Whether the petitioners are entitled to salary differential, overtime, holiday,
premium, service incentive leave, and thirteenth month pays; and
5) Whether the petitioners are entitled to attorneys fees.
The Courts Ruling
The respondents perfected their
appeal with the NLRC because the
revocation of the bonding company's
authority has a prospective
application
Paragraph 2, Article 223 of the Labor Code provides that "[i]n case of a judgment 234
involving a monetary award, an appeal by the employer may be perfected only upon
the posting of a cash or surety bond issued by a reputable bonding company duly
accredited by the Commission in the amount equivalent to the monetary award in the
judgment appealed from."
Contrary to the respondents claim, the issue of the appeal bonds validity may be raised
for the first time on appeal since its proper filing is a jurisdictional requirement.22 The

requirement that the appeal bond should be issued by an accredited bonding company
is mandatory and jurisdictional. The rationale of requiring an appeal bond is to
discourage the employers from using an appeal to delay or evade the employees' just
and lawful claims. It is intended to assure the workers that they will receive the money
judgment in their favor upon the dismissal of the employers appeal.23
In the present case, the respondents filed a surety bond issued by Security Pacific
Assurance Corporation (Security Pacific) on June 28, 2002. At that time, Security Pacific
was still an accredited bonding company. However, the NLRC revoked its accreditation
on February 16, 2003.24 Nonetheless, this subsequent revocation should not prejudice
the respondents who relied on its then subsisting accreditation in good faith. In Del
Rosario v. Philippine Journalists, Inc.,25 we ruled that a bonding companys revocation
of authority is prospective in application.
However, the respondents should post a new bond issued by an accredited bonding
company in compliance with paragraph 4, Section 6, Rule 6 of the NLRC Rules of
Procedure. This provision states that "[a] cash or surety bond shall be valid and
effective from the date of deposit or posting, until the case is finally decided, resolved
or terminated or the award satisfied."
The CA correctly ruled that the
NLRC properly gave due course to
the respondents supplemental
appeal
The CA also correctly ruled that the NLRC properly gave due course to the respondents
supplemental appeal. Neither the laws nor the rules require the verification of the
supplemental appeal.26 Furthermore, verification is a formal, not a jurisdictional,
requirement. It is mainly intended for the assurance that the matters alleged in the
pleading are true and correct and not of mere speculation.27 Also, a supplemental
appeal is merely an addendum to the verified memorandum on appeal that was earlier
filed in the present case; hence, the requirement for verification has substantially been
complied with.
The respondents also timely filed their supplemental appeal on January 3, 2003. The
records of the case show that the petitioners themselves agreed that the pleading shall
be filed until December 18, 2002. The NLRC further extended the filing of the
supplemental pleading until January 3, 2003 upon the respondents motion for
extension.
A party may only adduce evidence
for the first time on appeal if he
adequately explains his delay in the
submission of evidence and he
sufficiently proves the allegations
sought to be proven
In labor cases, strict adherence to the technical rules of procedure is not required. Time 235
and again, we have allowed evidence to be submitted for the first time on appeal with
the NLRC in the interest of substantial justice.28 Thus, we have consistently supported
the rule that labor officials should use all reasonable means to ascertain the facts in
each case speedily and objectively, without regard to technicalities of law or procedure,

in the interest of due process.29

However, this liberal policy should still be subject to rules of reason and fairplay. The
liberality of procedural rules is qualified by two requirements: (1) a party should
adequately explain any delay in the submission of evidence; and (2) a party should
sufficiently prove the allegations sought to be proven.30 The reason for these
requirements is that the liberal application of the rules before quasi-judicial agencies
cannot be used to perpetuate injustice and hamper the just resolution of the case.
Neither is the rule on liberal construction a license to disregard the rules of
procedure.31
Guided by these principles, the CA grossly erred in ruling that the NLRC did not commit
grave abuse of discretion in arbitrarily admitting and giving weight to the respondents
pieces of evidence for the first time on appeal.
A. The respondents failed to
adequately explain their delay
in the submission of evidence
We cannot accept the respondents cavalier attitude in blatantly disregarding the NLRC
Rules of Procedure. The CA gravely erred when it overlooked that the NLRC blindly
admitted and arbitrarily gave probative value to the respondents evidence despite their
failure to adequately explain their delay in the submission of evidence. Notably, the
respondents delay was anchored on their assertion that they were oblivious of the
proceedings before the LA. However, the respondents did not dispute the LAs finding
that Mr. Romulo Pacia, Jr. appeared on their behalf on April 19, 2001 and May 21,
2001.32 The respondents also failed to contest the petitioners assertion that the
respondents counsel appeared in a preliminary mandatory conference on July 5,
2001.33
Indeed, the NLRC capriciously and whimsically admitted and gave weight to the
respondents evidence despite its finding that they voluntarily appeared in the
compulsory arbitration proceedings. The NLRC blatantly disregarded the fact that the
respondents voluntarily opted not to participate, to adduce evidence in their defense
and to file a position paper despite their knowledge of the pendency of the proceedings
before the LA. The respondents were also grossly negligent in not informing the LA of
the specific building unit where the respondents were conducting their business and
their counsels address despite their knowledge of their non-receipt of the processes.34
B. The respondents failed to
sufficiently prove the
allegations sought to be
proven
Furthermore, the respondents failed to sufficiently prove the allegations sought to be
proven. Why the respondents photocopied and computerized copies of documentary
evidence were not presented at the earliest opportunity is a serious question that lends
credence to the petitioners claim that the respondents fabricated the evidence for
purposes of appeal. While we generally admit in evidence and give probative value to
photocopied documents in administrative proceedings, allegations of forgery and
fabrication should prompt the adverse party to present the original documents for
inspection.35 It was incumbent upon the respondents to present the originals,

236

especially in this case where the petitioners had submitted their specimen signatures.
Instead, the respondents effectively deprived the petitioners of the opportunity to
examine and controvert the alleged spurious evidence by not adducing the originals.
This Court is thus left with no option but to rule that the respondents failure to present
the originals raises the presumption that evidence willfully suppressed would be adverse
if produced.36
It was also gross error for the CA to affirm the NLRCs proposition that "[i]t is of
common knowledge that there are many people who use at least two or more different
signatures."37 The NLRC cannot take judicial notice that many people use at least two
signatures, especially in this case where the petitioners themselves disown the
signatures in the respondents assailed documentary evidence.38 The NLRCs position is
unwarranted and is patently unsupported by the law and jurisprudence.
Viewed in these lights, the scales of justice must tilt in favor of the employees. This
conclusion is consistent with the rule that the employers cause can only succeed on the
strength of its own evidence and not on the weakness of the employees evidence.39
The petitioners are entitled to
backwages
Based on the above considerations, we reverse the NLRC and the CAs finding that the
petitioners were terminated for just cause and were afforded procedural due process. In
termination cases, the burden of proving just and valid cause for dismissing an
employee from his employment rests upon the employer. The employers failure to
discharge this burden results in the finding that the dismissal is unjustified.40 This is
exactly what happened in the present case.
The petitioners are entitled to salary
differential, service incentive,
holiday, and thirteenth month pays
We also reverse the NLRC and the CAs finding that the petitioners are not entitled to
salary differential, service incentive, holiday, and thirteenth month pays. As in illegal
dismissal cases, the general rule is that the burden rests on the defendant to prove
payment rather than on the plaintiff to prove non-payment of these money claims.41
The rationale for this rule is that the pertinent personnel files, payrolls, records,
remittances and other similar documents which will show that differentials, service
incentive leave and other claims of workers have been paid are not in the possession
of the worker but are in the custody and control of the employer.42
The petitioners are not entitled to
overtime and premium pays
However, the CA was correct in its finding that the petitioners failed to provide sufficient 237
factual basis for the award of overtime, and premium pays for holidays and rest days.
The burden of proving entitlement to overtime pay and premium pay for holidays and
rest days rests on the employee because these are not incurred in the normal course of
business.43 In the present case, the petitioners failed to adduce any evidence that
would show that they actually rendered service in excess of the regular eight working
hours a day, and that they in fact worked on holidays and rest days.

The petitioners are entitled to

attorneys fees
The award of attorneys fees is also warranted under the circumstances of this
case.1wphi1 An employee is entitled to an award of attorneys fees equivalent to ten
percent (10%) of the amount of the wages in actions for unlawful withholding of
wages.44
As a final note, we observe that Rodelito Ayala, Winelito Ojel, Renato Rodrego and
Welito Loon are also named as petitioners in this case. However, we deny their petition
for the reason that they were not part of the proceedings before the CA. Their failure to
timely seek redress before the CA precludes this Court from awarding them monetary
claims.
All told, we find that the NLRC committed grave abuse of discretion in admitting and
giving probative value to the respondents' evidence on appeal, which errors the CA
replicated when it upheld the NLRC rulings.
WHEREFORE, based on these premises, we REVERSE and SET ASIDE the decision
dated June 5, 2009, and the resolution dated August 28, 2009 of the Court of Appeals
in CA-G.R. SP No. 95182. This case is REMANDED to the Labor Arbiter for the sole
purpose of computing petitioners' (Wilgen Loon, Jerry Arcilla, Albert Pereye, Arnold
Pereye, Edgardo Obose, Arnel Malaras, Patrocino Toetin, Evelyn Leonardo, Elmer
Glocenda, Rufo Cunamay, Rolando Sajol, Rolando Abucayon, Jennifer Natividad,
Maritess Torion, Ammndo Lonzaga, Rizal Gellido, Evirdly Haque, Myrna Vinas, Nena
Abina, Emalyn Oliveros, Louie Ilagan, Joel Entig, Amel Araneta, Benjamin Cose and
William Alipao) full backwages (computed from the date of their respective dismissals
up to the finality of this decision) and their salary differential, service incentive leave,
holiday, thirteenth month pays, and attorney's fees equivalent to ten percent (10%) of
the withheld wages. The respondents are further directed to immediately post a
satisfactory bond conditioned on the satisfaction of the awards affirmed in this Decision.
SO ORDERED.
SECOND DIVISION
G.R. No. 195466

July 2, 2014

ARIEL L. DAVID, doing business under the name and style "YIELS HOG
DEALER," Petitioner,
vs.
JOHN G. MACASIO, Respondent.
DECISION
BRION, J.:
We resolve in this petition for review on certiorari1 the challenge to the November 22, 238
2010 decision2 and the January 31, 2011 resolution3 of the Court of Appeals (CA) in
CA-G.R. SP No. 116003. The CA decision annulled and set aside the May 26, 2010
decision4 of the National Labor Relations Commission (NLRC)5 which, in turn, affirmed
the April 30, 2009 Decision6 of the Labor Arbiter (LA). The LA's decision dismissed

respondent John G. Macasio's monetary claims.

The Factual Antecedents
In January 2009, Macasio filed before the LA a complaint7 against petitioner Ariel L.
David, doing business under the name and style "Yiels Hog Dealer," for non-payment of
overtime pay, holiday pay and 13th month pay. He also claimed payment for moral and
exemplary damages and attorneys fees. Macasio also claimed payment for service
incentive leave (SIL).8
Macasio alleged9 before the LA that he had been working as a butcher for David since
January 6, 1995. Macasio claimed that David exercised effective control and supervision
over his work, pointing out that David: (1) set the work day, reporting time and hogs to
be chopped, as well as the manner by which he was to perform his work; (2) daily paid
his salary of P700.00, which was increased from P600.00 in 2007, P500.00 in 2006 and
P400.00 in 2005; and (3) approved and disapproved his leaves. Macasio added that
David owned the hogs delivered for chopping, as well as the work tools and
implements; the latter also rented the workplace. Macasio further claimed that David
employs about twenty-five (25) butchers and delivery drivers.
In his defense,10 David claimed that he started his hog dealer business in 2005 and
that he only has ten employees. He alleged that he hired Macasio as a butcher or
chopper on "pakyaw" or task basis who is, therefore, not entitled to overtime pay,
holiday pay and 13th month pay pursuant to the provisions of the Implementing Rules
and Regulations (IRR) of the Labor Code. David pointed out that Macasio: (1) usually
starts his work at 10:00 p.m. and ends at 2:00 a.m. of the following day or earlier,
depending on the volume of the delivered hogs; (2) received the fixed amount of
P700.00 per engagement, regardless of the actual number of hours that he spent
chopping the delivered hogs; and (3) was not engaged to report for work and,
accordingly, did not receive any fee when no hogs were delivered.
Macasio disputed Davids allegations.11 He argued that, first, David did not start his
business only in 2005. He pointed to the Certificate of Employment12 that David issued
in his favor which placed the date of his employment, albeit erroneously, in January
2000. Second, he reported for work every day which the payroll or time record could
have easily proved had David submitted them in evidence.
Refuting Macasios submissions,13 David claims that Macasio was not his employee as
he hired the latter on "pakyaw" or task basis. He also claimed that he issued the
Certificate of Employment, upon Macasios request, only for overseas employment 239
purposes. He pointed to the "Pinagsamang Sinumpaang Salaysay,"14 executed by
Presbitero Solano and Christopher (Antonio Macasios co-butchers), to corroborate his
claims.
In the April 30, 2009 decision,15 the LA dismissed Macasios complaint for lack of merit.
The LA gave credence to Davids claim that he engaged Macasio on "pakyaw" or task
basis. The LA noted the following facts to support this finding: (1) Macasio received the
fixed amount of P700.00 for every work done, regardless of the number of hours that
he spent in completing the task and of the volume or number of hogs that he had to
chop per engagement; (2) Macasio usually worked for only four hours, beginning from
10:00 p.m. up to 2:00 a.m. of the following day; and (3) the P700.00 fixed wage far
exceeds the then prevailing daily minimum wage of P382.00. The LA added that the

nature of Davids business as hog dealer supports this "pakyaw" or task basis
arrangement.
The LA concluded that as Macasio was engaged on "pakyaw" or task basis, he is not
entitled to overtime, holiday, SIL and 13th month pay.
The NLRCs Ruling
In its May 26, 2010 decision,16 the NLRC affirmed the LA ruling.17 The NLRC observed
that David did not require Macasio to observe an eight hour work schedule to earn the
fixed P700.00 wage; and that Macasio had been performing a non-time work, pointing
out that Macasio was paid a fixed amount for the completion of the assigned task,
irrespective of the time consumed in its performance. Since Macasio was paid by result
and not in terms of the time that he spent in the workplace, Macasio is not covered by
the Labor Standards laws on overtime, SIL and holiday pay, and 13th month pay under
the Rules and Regulations Implementing the 13th month pay law.18
Macasio moved for reconsideration19 but the NLRC denied his motion in its August 11,
2010 resolution,20 prompting Macasio to elevate his case to the CA via a petition for
certiorari.21
The CAs Ruling
In its November 22, 2010 decision,22 the CA partly granted Macasios certiorari petition
and reversed the NLRCs ruling for having been rendered with grave abuse of discretion.
While the CA agreed with the LAand the NLRC that Macasio was a task basis employee,
it nevertheless found Macasio entitled to his monetary claims following the doctrine laid
down in Serrano v. Severino Santos Transit.23 The CA explained that as a task basis
employee, Macasio is excluded from the coverage of holiday, SIL and 13th month pay
only if he is likewise a "field personnel." As defined by the Labor Code, a "field
personnel" is one who performs the work away from the office or place of work and
whose regular work hours cannot be determined with reasonable certainty. In Macasios
case, the elements that characterize a "field personnel" are evidently lacking as he had
been working as a butcher at Davids "Yiels Hog Dealer" business in Sta. Mesa, Manila
under Davids supervision and control, and for a fixed working schedule that starts at
10:00 p.m.
Accordingly, the CA awarded Macasios claim for holiday, SIL and 13th month pay for
three years, with 10% attorneys fees on the total monetary award. The CA, however,
denied Macasios claim for moral and exemplary damages for lack of basis.
David filed the present petition after the CA denied his motion for reconsideration24 in
the CAs January 31, 2011 resolution.25
The Petition
In this petition,26 David maintains that Macasios engagement was on a "pakyaw" or 240
task basis. Hence, the latter is excluded from the coverage of holiday, SIL and 13th
month pay. David reiterates his submissions before the lower tribunals27 and adds that
he never had any control over the manner by which Macasio performed his work and he
simply looked on to the "end-result." He also contends that he never compelled Macasio

to report for work and that under their arrangement, Macasio was at liberty to choose
whether to report for work or not as other butchers could carry out his tasks. He points
out that Solano and Antonio had, in fact, attested to their (David and Macasios)
established "pakyawan" arrangement that rendered a written contract unnecessary. In
as much as Macasio is a task basis employee who is paid the fixed amount of P700.00
per engagement regardless of the time consumed in the performance David argues
that Macasio is not entitled to the benefits he claims. Also, he posits that because he
engaged Macasio on "pakyaw" or task basis then no employer-employee relationship
exists between them.
Finally, David argues that factual findings of the LA, when affirmed by the NLRC, attain
finality especially when, as in this case, they are supported by substantial evidence.
Hence, David posits that the CA erred in reversing the labor tribunals findings and
granting the prayed monetary claims.
The Case for the Respondent
Macasio counters that he was not a task basis employee or a "field personnel" as David
would have this Court believe.28 He reiterates his arguments before the lower tribunals
and adds that, contrary to Davids position, the P700.00 fee that he was paid for each
day that he reported for work does not indicate a "pakyaw" or task basis employment
as this amount was paid daily, regardless of the number or pieces of hogs that he had
to chop. Rather, it indicates a daily-wage method of payment and affirms his regular
employment status. He points out that David did not allege or present any evidence as
regards the quota or number of hogs that he had to chop as basis for the "pakyaw" or
task basis payment; neither did David present the time record or payroll to prove that
he worked for less than eight hours each day. Moreover, David did not present any
contract to prove that his employment was on task basis. As David failed to prove the
alleged task basis or "pakyawan" agreement, Macasio concludes that he was Davids
employee. Procedurally, Macasio points out that Davids submissions in the present
petition raise purely factual issues that are not proper for a petition for review on
certiorari. These issues whether he (Macasio) was paid by result or on "pakyaw"
basis; whether he was a "field personnel"; whether an employer-employee relationship
existed between him and David; and whether David exercised control and supervision
over his work are all factual in nature and are, therefore, proscribed in a Rule 45
petition. He argues that the CAs factual findings bind this Court, absent a showing that
such findings are not supported by the evidence or the CAs judgment was based on a
misapprehension of facts. He adds that the issue of whether an employer-employee
relationship existed between him and David had already been settled by the LA29 and
the NLRC30 (as well as by the CA per Macasios manifestation before this Court dated
November 15, 2012),31 in his favor, in the separate illegal case that he filed against
David.
The Issue
The issue revolves around the proper application and interpretation of the labor law 241
provisions on holiday, SIL and 13th month pay to a worker engaged on "pakyaw" or
task basis. In the context of the Rule 65 petition before the CA, the issue is whether the
CA correctly found the NLRC in grave abuse of discretion in ruling that Macasio is
entitled to these labor standards benefits.
The Courts Ruling

We partially grant the petition.

Preliminary considerations: the Montoya ruling and the factual-issue-bar rule
In this Rule 45 petition for review on certiorari of the CAs decision rendered under a
Rule 65 proceeding, this Courts power of review is limited to resolving matters
pertaining to any perceived legal errors that the CA may have committed in issuing the
assailed decision. This is in contrast with the review for jurisdictional errors, which we
undertake in an original certiorari action. In reviewing the legal correctness of the CA
decision, we examine the CA decision based on how it determined the presence or
absence of grave abuse of discretion in the NLRC decision before it and not on the basis
of whether the NLRC decision on the merits of the case was correct.32 In other words,
we have to be keenly aware that the CA undertook a Rule 65 review, not a review on
appeal, of the NLRC decision challenged before it.33
Moreover, the Courts power in a Rule 45 petition limits us to a review of questions of
law raised against the assailed CA decision.34
In this petition, David essentially asks the question whether Macasio is entitled to
holiday, SIL and 13th month pay. This one is a question of law. The determination of
this question of law however is intertwined with the largely factual issue of whether
Macasio falls within the rule on entitlement to these claims or within the exception. In
either case, the resolution of this factual issue presupposes another factual matter, that
is, the presence of an employer-employee relationship between David and Macasio.
In insisting before this Court that Macasio was not his employee, David argues that he
engaged the latter on "pakyaw" or task basis. Very noticeably, David confuses
engagement on "pakyaw" or task basis with the lack of employment relationship.
Impliedly, David asserts that their "pakyawan" or task basis arrangement negates the
existence of employment relationship.
At the outset, we reject this assertion of the petitioner. Engagement on "pakyaw" or
task basis does not characterize the relationship that may exist between the parties,
i.e., whether one of employment or independent contractorship. Article 97(6) of the
Labor Code defines wages as "xxx the remuneration or earnings, however designated,
capable of being expressed in terms of money, whether fixed or ascertained on a time,
task, piece, or commission basis, or other method of calculating the same, which is
payable by an employer to an employee under a written or unwritten contract of
employment for work done or to be done, or for services rendered or to be
rendered[.]"35 In relation to Article 97(6), Article 10136 of the Labor Code speaks of
workers paid by results or those whose pay is calculated in terms of the quantity or
quality of their work output which includes "pakyaw" work and other non-time work.
More importantly, by implicitly arguing that his engagement of Macasio on "pakyaw" or
task basis negates employer-employee relationship, David would want the Court to
engage on a factual appellate review of the entire case to determine the presence or 242
existence of that relationship. This approach however is not authorized under a Rule 45
petition for review of the CA decision rendered under a Rule 65 proceeding.
First, the LA and the NLRC denied Macasios claim not because of the absence of an
employer-employee but because of its finding that since Macasio is paid on pakyaw or

task basis, then he is not entitled to SIL, holiday and 13th month pay. Second, we
consider it crucial, that in the separate illegal dismissal case Macasio filed with the LA,
the LA, the NLRC and the CA uniformly found the existence of an employer-employee
relationship.37
In other words, aside from being factual in nature, the existence of an employeremployee relationship is in fact a non-issue in this case. To reiterate, in deciding a Rule
45 petition for review of a labor decision rendered by the CA under 65, the narrow
scope of inquiry is whether the CA correctly determined the presence or absence of
grave abuse of discretion on the part of the NLRC. In concrete question form, "did the
NLRC gravely abuse its discretion in denying Macasios claims simply because he is paid
on a non-time basis?"
At any rate, even if we indulge the petitioner, we find his claim that no employeremployee relationship exists baseless. Employing the control test,38 we find that such a
relationship exist in the present case.
Even a factual review shows that Macasio is Davids employee
To determine the existence of an employer-employee relationship, four elements
generally need to be considered, namely: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to
control the employees conduct. These elements or indicators comprise the so-called
"four-fold" test of employment relationship. Macasios relationship with David satisfies
this test.
First, David engaged the services of Macasio, thus satisfying the element of "selection
and engagement of the employee." David categorically confirmed this fact when, in his
"Sinumpaang Salaysay," he stated that "nag apply po siya sa akin at kinuha ko siya na
chopper[.]"39 Also, Solano and Antonio stated in their "Pinagsamang Sinumpaang
Salaysay"40 that "[k]ami po ay nagtratrabaho sa Yiels xxx na pag-aari ni Ariel David
bilang butcher" and "kilalanamin si xxx Macasio na isa ring butcher xxx ni xxx David at
kasama namin siya sa aming trabaho."
Second, David paid Macasios wages.Both David and Macasio categorically stated in
their respective pleadings before the lower tribunals and even before this Court that the
former had been paying the latter P700.00 each day after the latter had finished the
days task. Solano and Antonio also confirmed this fact of wage payment in their
"Pinagsamang Sinumpaang Salaysay."41 This satisfies the element of "payment of
wages."
Third, David had been setting the day and time when Macasio should report for work.
This power to determine the work schedule obviously implies power of control. By
having the power to control Macasios work schedule, David could regulate Macasios
work and could even refuse to give him any assignment, thereby effectively dismissing
him.
And fourth, David had the right and power to control and supervise Macasios work as
to the means and methods of performing it. In addition to setting the day and time 243
when Macasio should report for work, the established facts show that David rents the
place where Macasio had been performing his tasks. Moreover, Macasio would leave the
workplace only after he had finished chopping all of the hog meats given to him for the

days task. Also, David would still engage Macasios services and have him report for
work even during the days when only few hogs were delivered for butchering.
Under this overall setup, all those working for David, including Macasio, could naturally
be expected to observe certain rules and requirements and David would necessarily
exercise some degree of control as the chopping of the hog meats would be subject to
his specifications. Also, since Macasio performed his tasks at Davids workplace, David
could easily exercise control and supervision over the former. Accordingly, whether or
not David actually exercised this right or power to control is beside the point as the law
simply requires the existence of this power to control 4243 or, as in this case, the
existence of the right and opportunity to control and supervise Macasio.44
In sum, the totality of the surrounding circumstances of the present case sufficiently
points to an employer-employee relationship existing between David and Macasio.
Macasio is engaged on "pakyaw" or task basis
At this point, we note that all three tribunals the LA, the NLRC and the CA found
that Macasio was engaged or paid on "pakyaw" or task basis. This factual finding binds
the Court under the rule that factual findings of labor tribunals when supported by the
established facts and in accord with the laws, especially when affirmed by the CA, is
binding on this Court.
A distinguishing characteristic of "pakyaw" or task basis engagement, as opposed to
straight-hour wage payment, is the non-consideration of the time spent in working. In a
task-basis work, the emphasis is on the task itself, in the sense that payment is
reckoned in terms of completion of the work, not in terms of the number of time spent
in the completion of work.45 Once the work or task is completed, the worker receives a
fixed amount as wage, without regard to the standard measurements of time generally
used in pay computation.
In Macasios case, the established facts show that he would usually start his work at
10:00 p.m. Thereafter, regardless of the total hours that he spent at the workplace or of
the total number of the hogs assigned to him for chopping, Macasio would receive the
fixed amount of P700.00 once he had completed his task. Clearly, these circumstances
show a "pakyaw" or task basis engagement that all three tribunals uniformly found.
In sum, the existence of employment relationship between the parties is determined by
applying the "four-fold" test; engagement on "pakyaw" or task basis does not determine
the parties relationship as it is simply a method of pay computation. Accordingly,
Macasio is Davids employee, albeit engaged on "pakyaw" or task basis.
As an employee of David paid on pakyaw or task basis, we now go to the core issue of
whether Macasio is entitled to holiday, 13th month, and SIL pay.
On the issue of Macasios entitlement to holiday, SIL and 13th month pay
The LA dismissed Macasios claims pursuant to Article 94 of the Labor Code in relation 244
to Section 1, Rule IV of the IRR of the Labor Code, and Article 95 of the Labor Code, as
well as Presidential Decree (PD) No. 851. The NLRC, on the other hand, relied on Article
82 of the Labor Code and the Rules and Regulations Implementing PD No. 851.
Uniformly, these provisions exempt workers paid on "pakyaw" or task basis from the

coverage of holiday, SIL and 13th month pay.

In reversing the labor tribunals rulings, the CA similarly relied on these provisions, as
well as on Section 1, Rule V of the IRR of the Labor Code and the Courts ruling in
Serrano v. Severino Santos Transit.46 These labor law provisions, when read together
with the Serrano ruling, exempt those engaged on "pakyaw" or task basis only if they
qualify as "field personnel."
In other words, what we have before us is largely a question of law regarding the
correct interpretation of these labor code provisions and the implementing rules;
although, to conclude that the worker is exempted or covered depends on the facts and
in this sense, is a question of fact: first, whether Macasio is a "field personnel"; and
second, whether those engaged on "pakyaw" or task basis, but who are not "field
personnel," are exempted from the coverage of holiday, SIL and 13th month pay.
To put our discussion within the perspective of a Rule 45 petition for review of a CA
decision rendered under Rule 65 and framed in question form, the legal question is
whether the CA correctly ruled that it was grave abuse of discretion on the part of the
NLRC to deny Macasios monetary claims simply because he is paid on a non-time basis
without determining whether he is a field personnel or not.
To resolve these issues, we need tore-visit the provisions involved.
Provisions governing SIL and holiday pay
Article 82 of the Labor Code provides the exclusions from the coverage of Title I, Book
III of the Labor Code - provisions governing working conditions and rest periods.
Art. 82. Coverage. The provisions of [Title I] shall apply to employees in all
establishments and undertakings whether for profit or not, but not to government
employees, managerial employees, field personnel, members of the family of the
employer who are dependent on him for support, domestic helpers, persons in the
personal service of another, and workers who are paid by results as determined by the
Secretary of Labor in appropriate regulations.
xxxx
"Field personnel" shall refer to non-agricultural employees who regularly perform their
duties away from the principal place of business or branch office of the employer and
whose actual hours of work in the field cannot be determined with reasonable certainty. 245
[emphases and underscores ours]
Among the Title I provisions are the provisions on holiday pay (under Article 94 of the
Labor Code) and SIL pay (under Article 95 of the Labor Code). Under Article 82,"field
personnel" on one hand and "workers who are paid by results" on the other hand, are
not covered by the Title I provisions. The wordings of Article82 of the Labor Code
additionally categorize workers "paid by results" and "field personnel" as separate and
distinct types of employees who are exempted from the Title I provisions of the Labor
Code.
The pertinent portion of Article 94 of the Labor Code and its corresponding provision in
the IRR47 reads:

Art. 94. Right to holiday pay. (a) Every worker shall be paid his regular daily wage
during regular holidays, except in retail and service establishments regularly employing
less than (10) workers[.] [emphasis ours]
xxxx
SECTION 1. Coverage. This Rule shall apply to all employees except:
xxxx
(e)Field personnel and other employees whose time and performance is unsupervised
by the employer including those who are engaged on task or contract basis, purely
commission basis, or those who are paid a fixed amount for performing work
irrespective of the time consumed in the performance thereof. [emphases ours]
On the other hand, Article 95 of the Labor Code and its corresponding provision in the
IRR48 pertinently provides:
Art. 95. Right to service incentive. (a) Every employee who has rendered at least one
year of service shall be entitled to a yearly service incentive leave of five days with pay.
(b) This provision shall not apply to those who are already enjoying the benefit herein
provided, those enjoying vacation leave with pay of at least five days and those
employed in establishments regularly employing less than ten employees or in
establishments exempted from granting this benefit by the Secretary of Labor and
Employment after considering the viability or financial condition of such establishment.
[emphases ours]
xxxx
Section 1. Coverage. This rule shall apply to all employees except:
xxxx
(e) Field personnel and other employees whose performance is unsupervised by the
employer including those who are engaged on task or contract basis, purely commission
basis, or those who are paid a fixed amount for performing work irrespective of the
time consumed in the performance thereof. [emphasis ours]
Under these provisions, the general rule is that holiday and SIL pay provisions cover all
employees. To be excluded from their coverage, an employee must be one of those that
these provisions expressly exempt, strictly in accordance with the exemption. Under the 246
IRR, exemption from the coverage of holiday and SIL pay refer to "field personnel and
other employees whose time and performance is unsupervised by the employer
including those who are engaged on task or contract basis[.]" Note that unlike Article 82
of the Labor Code, the IRR on holiday and SIL pay do not exclude employees "engaged
on task basis" as a separate and distinct category from employees classified as "field
personnel." Rather, these employees are altogether merged into one classification of
exempted employees.
Because of this difference, it may be argued that the Labor Code may be interpreted to

mean that those who are engaged on task basis, per se, are excluded from the SIL and
holiday payment since this is what the Labor Code provisions, in contrast with the IRR,
strongly suggest. The arguable interpretation of this rule may be conceded to be within
the discretion granted to the LA and NLRC as the quasi-judicial bodies with expertise on
labor matters.
However, as early as 1987 in the case of Cebu Institute of Technology v. Ople49 the
phrase "those who are engaged on task or contract basis" in the rule has already been
interpreted to mean as follows:
[the phrase] should however, be related with "field personnel" applying the rule on
ejusdem generis that general and unlimited terms are restrained and limited by the
particular terms that they follow xxx Clearly, petitioner's teaching personnel cannot be
deemed field personnel which refers "to non-agricultural employees who regularly
perform their duties away from the principal place of business or branch office of the
employer and whose actual hours of work in the field cannot be determined with
reasonable certainty. [Par. 3, Article 82, Labor Code of the Philippines]. Petitioner's claim
that private respondents are not entitled to the service incentive leave benefit cannot
therefore be sustained.
In short, the payment of an employee on task or pakyaw basis alone is insufficient to
exclude one from the coverage of SIL and holiday pay. They are exempted from the
coverage of Title I (including the holiday and SIL pay) only if they qualify as "field
personnel." The IRR therefore validly qualifies and limits the general exclusion of
"workers paid by results" found in Article 82 from the coverage of holiday and SIL pay.
This is the only reasonable interpretation since the determination of excluded workers
who are paid by results from the coverage of Title I is "determined by the Secretary of
Labor in appropriate regulations."
The Cebu Institute Technology ruling was reiterated in 2005 in Auto Bus Transport
Systems, Inc., v. Bautista:
A careful perusal of said provisions of law will result in the conclusion that the grant of
service incentive leave has been delimited by the Implementing Rules and Regulations
of the Labor Code to apply only to those employees not explicitly excluded by Section 1
of Rule V. According to the Implementing Rules, Service Incentive Leave shall not apply
to employees classified as "field personnel." The phrase "other employees whose
performance is unsupervised by the employer" must not be understood as a separate
classification of employees to which service incentive leave shall not be granted. Rather,
it serves as an amplification of the interpretation of the definition of field personnel
under the Labor Code as those "whose actual hours of work in the field cannot be
determined with reasonable certainty."
The same is true with respect to the phrase "those who are engaged on task or contract
basis, purely commission basis." Said phrase should be related with "field personnel,"
applying the rule on ejusdem generis that general and unlimited terms are restrained
and limited by the particular terms that they follow.
The Autobus ruling was in turn the basis of Serrano v. Santos Transit which the CA cited
in support of granting Macasios petition.
247
In Serrano, the Court, applying the rule on ejusdem generis50 declared that "employees

engaged on task or contract basis xxx are not automatically exempted from the grant of
service incentive leave, unless, they fall under the classification of field personnel."51
The Court explained that the phrase "including those who are engaged on task or
contract basis, purely commission basis" found in Section 1(d), Rule V of Book III of the
IRR should not be understood as a separate classification of employees to which SIL
shall not be granted. Rather, as with its preceding phrase - "other employees whose
performance is unsupervised by the employer" - the phrase "including those who are
engaged on task or contract basis" serves to amplify the interpretation of the Labor
Code definition of "field personnel" as those "whose actual hours of work in the field
cannot be determined with reasonable certainty."
In contrast and in clear departure from settled case law, the LA and the NLRC still
interpreted the Labor Code provisions and the IRR as exempting an employee from the
coverage of Title I of the Labor Code based simply and solely on the mode of payment
of an employee. The NLRCs utter disregard of this consistent jurisprudential ruling is a
clear act of grave abuse of discretion.52 In other words, by dismissing Macasios
complaint without considering whether Macasio was a "field personnel" or not, the
NLRC proceeded based on a significantly incomplete consideration of the case. This
action clearly smacks of grave abuse of discretion.
Entitlement to holiday pay
Evidently, the Serrano ruling speaks only of SIL pay. However, if the LA and the NLRC
had only taken counsel from Serrano and earlier cases, they would have correctly
reached a similar conclusion regarding the payment of holiday pay since the rule
exempting "field personnel" from the grant of holiday pay is identically worded with the
rule exempting "field personnel" from the grant of SIL pay. To be clear, the phrase
"employees engaged on task or contract basis "found in the IRR on both SIL pay and
holiday pay should be read together with the exemption of "field personnel."
In short, in determining whether workers engaged on "pakyaw" or task basis" is entitled
to holiday and SIL pay, the presence (or absence) of employer supervision as regards
the workers time and performance is the key: if the worker is simply engaged on
pakyaw or task basis, then the general rule is that he is entitled to a holiday pay and
SIL pay unless exempted from the exceptions specifically provided under Article 94
(holiday pay) and Article95 (SIL pay) of the Labor Code. However, if the worker
engaged on pakyaw or task basis also falls within the meaning of "field personnel"
under the law, then he is not entitled to these monetary benefits.
Macasio does not fall under the classification of "field personnel"
Based on the definition of field personnel under Article 82, we agree with the CA that
Macasio does not fall under the definition of "field personnel." The CAs finding in this
regard is supported by the established facts of this case: first, Macasio regularly 248
performed his duties at Davids principal place of business; second, his actual hours of
work could be determined with reasonable certainty; and, third, David supervised his
time and performance of duties. Since Macasio cannot be considered a "field
personnel," then he is not exempted from the grant of holiday, SIL pay even as he was
engaged on "pakyaw" or task basis.
Not being a "field personnel," we find the CA to be legally correct when it reversed the
NLRCs ruling dismissing Macasios complaint for holiday and SIL pay for having been

rendered with grave abuse of discretion.

Entitlement to 13th month pay
With respect to the payment of 13th month pay however, we find that the CA legally
erred in finding that the NLRC gravely abused its discretion in denying this benefit to
Macasio.1wphi1
The governing law on 13th month pay is PD No. 851.53
As with holiday and SIL pay, 13th month pay benefits generally cover all employees; an
employee must be one of those expressly enumerated to be exempted. Section 3 of the
Rules and Regulations Implementing P.D. No. 85154 enumerates the exemptions from
the coverage of 13th month pay benefits. Under Section 3(e), "employers of those who
are paid on xxx task basis, and those who are paid a fixed amount for performing a
specific work, irrespective of the time consumed in the performance thereof"55 are
exempted.
Note that unlike the IRR of the Labor Code on holiday and SIL pay, Section 3(e) of the
Rules and Regulations Implementing PD No. 851 exempts employees "paid on task
basis" without any reference to "field personnel." This could only mean that insofar as
payment of the 13th month pay is concerned, the law did not intend to qualify the
exemption from its coverage with the requirement that the task worker be a "field
personnel" at the same time.
WHEREFORE, in light of these considerations, we hereby PARTIALLY GRANT the petition
insofar as the payment of 13th month pay to respondent is concerned. In all other
aspects, we AFFIRM the decision dated November 22, 2010 and the resolution dated
January 31, 2011 of the Court of Appeals in CA-G.R. SP No. 116003.
SO ORDERED.
THIRD DIVISION
LETRAN CALAMBA FACULTY G.R. NO. 156225
and EMPLOYEES ASSOCIATION,
Petitioner,
Present:
- versus NATIONAL LABOR RELATIONS
COMMISSION and COLEGIO DE SAN
JUAN DE LETRAN CALAMBA, INC.,
Respondents.
Promulgated:January 29, 2008
DECISION
AUSTRIA-MARTINEZ, J.:
Assailed in the present Petition for Review on Certiorari under Rule 45 of the Rules of
Court is the Decision[1] of the Court of Appeals (CA) promulgated on May 14, 2002 in

249

CA-G.R. SP No. 61552 dismissing the special civil action for certiorari filed before it; and
the Resolution[2] dated November 28, 2002, denying petitioner's Motion for
Reconsideration.
The facts of the case are as follows:
On October 8, 1992, the Letran Calamba Faculty and Employees Association (petitioner)
filed with Regional Arbitration Branch No. IV of the National Labor Relations Commission
(NLRC) a Complaint[3] against Colegio de San Juan de Letran, Calamba, Inc.
(respondent) for collection of various monetary claims due its members. Petitioner
alleged in its Position Paper that:
xxxx
2) [It] has filed this complaint in behalf of its members whose names and positions
appear in the list hereto attached as Annex A.
3) In the computation of the thirteenth month pay of its academic personnel,
respondent does not include as basis therefor their compensation for overloads. It only
takes into account the pay the faculty members receive for their teaching loads not
exceeding eighteen (18) units. The teaching overloads are rendered within eight (8)
hours a day.
4) Respondent has not paid the wage increases required by Wage Order No. 5 to its
employees who qualify thereunder.
5) Respondent has not followed the formula prescribed by DECS Memorandum Circular
No. 2 dated March 10, 1989 in the computation of the compensation per unit of excess
load or overload of faculty members. This has resulted in the diminution of the
compensation of faculty members.
6) The salary increases due the non-academic personnel as a result of job grading has
not been given. Job grading has been an annual practice of the school since 1980; the
same is done for the purpose of increasing the salaries of non-academic personnel and
as the counterpart of the ranking systems of faculty members.
7) Respondent has not paid to its employees the balances of seventy (70%) percent of
the tuition fee increases for the years 1990, 1991 and 1992.
8) Respondent has not also paid its employees the holiday pay for the ten (10) regular
holidays as provided for in Article 94 of the Labor Code.
9) Respondent has refused without justifiable reasons and despite repeated demands to
pay its obligations mentioned in paragraphs 3 to 7 hereof.
x x x x[4]
The complaint was docketed as NLRC Case No. RAB-IV-10-4560-92-L.
On January 29, 1993, respondent filed its Position Paper denying all the allegations of
petitioner.

250

On March 10, 1993, petitioner filed its Reply.

Prior to the filing of the above-mentioned complaint, petitioner filed a separate
complaint against the respondent for money claims with Regional Office No. IV of the
Department of Labor and Employment (DOLE).
On the other hand, pending resolution of NLRC Case No. RAB-IV-10-4560-92-L,
respondent filed with Regional Arbitration Branch No. IV of the NLRC a petition to
declare as illegal a strike staged by petitioner in January 1994.
Subsequently, these three cases were consolidated. The case for money claims
originally filed by petitioner with the DOLE was later docketed as NLRC Case No. RABIV-11-4624-92-L, while the petition to declare the subject strike illegal filed by
respondent was docketed as NLRC Case No. RAB-IV-3-6555-94-L.
On September 28, 1998, the Labor Arbiter (LA) handling the consolidated cases
rendered a Decision with the following dispositive portion:
WHEREFORE, premises considered, judgment is hereby rendered, as follows:
1. The money claims cases (RAB-IV-10-4560-92-L and RAB-IV-11-4624-92-L) are
hereby dismissed for lack of merit;
2. The petition to declare strike illegal (NLRC Case No. RAB-IV-3-6555-94-L) is hereby
dismissed, but the officers of the Union, particularly its President, Mr. Edmundo F.
Marifosque, Sr., are hereby reprimanded and sternly warned that future conduct similar
to what was displayed in this case will warrant a more severe sanction from this Office.
SO ORDERED.[5]
Both parties appealed to the NLRC.
On July 28, 1999, the NLRC promulgated its Decision[6] dismissing both appeals.
Petitioner filed a Motion for Reconsideration[7] but the same was denied by the NLRC in
its Resolution[8] dated June 21, 2000.
Petitioner then filed a special civil action for certiorari with the CA assailing the abovementioned NLRC Decision and Resolution.
On May 14, 2002, the CA rendered the presently assailed judgment dismissing the
petition.
Petitioner filed a Motion for Reconsideration but the CA denied it in its Resolution
promulgated on November 28, 2002.
Hence, herein petition for review based on the following assignment of errors:
I
THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE FACTUAL FINDINGS
OF THE NATIONAL LABOR RELATIONS COMMISSION CANNOT BE REVIEWED IN
CERTIORARI PROCEEDINGS.
II

251

THE COURT OF APPEALS GRAVELY ERRED IN REFUSING TO RULE SQUARELY ON THE

ISSUE OF WHETHER OR NOT THE PAY OF FACULTY MEMBERS FOR TEACHING
OVERLOADS SHOULD BE INCLUDED AS BASIS IN THE COMPUTATION OF THEIR
THIRTEENTH MONTH PAY.
III
THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE DECISION OF THE
NATIONAL LABOR RELATIONS COMMISSION IS SUPPORTED BY SUBSTANTIAL
EVIDENCE AND IN NOT GRANTING PETITIONER'S MONETARY CLAIMS.[9]
Citing Agustilo v. Court of Appeals,[10] petitioner contends that in a special civil action
for certiorari brought before the CA, the appellate court can review the factual findings
and the legal conclusions of the NLRC.
As to the inclusion of the overloads of respondent's faculty members in the computation
of their 13th-month pay, petitioner argues that under the Revised Guidelines on the
Implementation of the 13th-Month Pay Law, promulgated by the Secretary of Labor on
November 16, 1987, the basic pay of an employee includes remunerations or earnings
paid by his employer for services rendered, and that excluded therefrom are the cash
equivalents of unused vacation and sick leave credits, overtime, premium, night
differential, holiday pay and cost-of-living allowances. Petitioner claims that since the
pay for excess loads or overloads does not fall under any of the enumerated exclusions
and considering that the said overloads are being performed within the normal working
period of eight hours a day, it only follows that the overloads should be included in the
computation of the faculty members' 13th-month pay.
To support its argument, petitioner cites the opinion of the Bureau of Working
Conditions of the DOLE that payment of teaching overload performed within eight hours
of work a day shall be considered in the computation of the 13th-month pay.[11]
Petitioner further contends that DOLE-DECS-CHED-TESDA Order No. 02, Series of 1996
(DOLE Order) which was relied upon by the LA and the NLRC in their respective
Decisions cannot be applied to the instant case because the DOLE Order was issued
long after the commencement of petitioner's complaints for monetary claims; that the
prevailing rule at the time of the commencement of petitioner's complaints was to
include compensations for overloads in determining a faculty member's 13th-month
pay; that to give retroactive application to the DOLE Order issued in 1996 is to deprive
workers of benefits which have become vested and is a clear violation of the
constitutional mandate on protection of labor; and that, in any case, all doubts in the
implementation and interpretation of labor laws, including implementing rules and
regulations, should be resolved in favor of labor.
Lastly, petitioner avers that the CA, in concluding that the NLRC Decision was supported
by substantial evidence, failed to specify what constituted said evidence. Thus,
petitioner asserts that the CA acted arbitrarily in affirming the Decision of the NLRC.
In its Comment, respondent contends that the ruling in Agustilo is an exception rather
than the general rule; that the general rule is that in a petition for certiorari, judicial 252
review by this Court or by the CA in labor cases does not go so far as to evaluate the
sufficiency of the evidence upon which the proper labor officer or office based his or its
determination but is limited only to issues of jurisdiction or grave abuse of discretion

amounting to lack of jurisdiction; that before a party may ask that the CA or this Court
review the factual findings of the NLRC, there must first be a convincing argument that
the NLRC acted in a capricious, whimsical, arbitrary or despotic manner; and that in its
petition for certiorari filed with the CA, herein petitioner failed to prove that the NLRC
acted without or in excess of jurisdiction or with grave abuse of discretion.
Respondent argues that Agustilo is not applicable to the present case because in the
former case, the findings of fact of the LA and the NLRC are at variance with each
other; while in the present case, the findings of fact and conclusions of law of the LA
and the NLRC are the same.
Respondent also avers that in a special civil action for certiorari, the discretionary power
to review factual findings of the NLRC rests upon the CA; and that absent any findings
by the CA of the need to resolve any unclear or ambiguous factual findings of the NLRC,
the grant of the writ of certiorari is not warranted.
Further, respondent contends that even granting that the factual findings of the CA,
NLRC and the LA may be reviewed in the present case, petitioner failed to present valid
arguments to warrant the reversal of the assailed decision.
Respondent avers that the DOLE Order is an administrative regulation which interprets
the 13th-Month Pay Law (P.D. No. 851) and, as such, it is mandatory for the LA to apply
the same to the present case.
Moreover, respondent contends that the Legal Services Office of the DOLE issued an
opinion dated March 4, 1992,[12] that remunerations for teaching in excess of the
regular load, which includes overload pay for work performed within an eight-hour work
day, may not be included as part of the basic salary in the computation of the 13thmonth pay unless this has been included by company practice or policy; that petitioner
intentionally omitted any reference to the above-mentioned opinion of the Legal
Services Office of the DOLE because it is fatal to its cause; and that the DOLE Order is
an affirmation of the opinion rendered by the said Office of the DOLE.
Furthermore, respondent claims that, contrary to the asseveration of petitioner, prior to
the issuance of the DOLE Order, the prevailing rule is to exclude excess teaching load,
which is akin to overtime, in the computation of a teacher's basic salary and, ultimately,
in the computation of his 13th-month pay.
As to respondent's alleged non-payment of petitioner's consolidated money claims,
respondent contends that the findings of the LA regarding these matters, which were
affirmed by the NLRC and the CA, have clear and convincing factual and legal bases to
stand on.
The Courts Ruling
The Court finds the petition bereft of merit.
As to the first and third assigned errors, petitioner would have this Court review the 253
factual findings of the LA as affirmed by the NLRC and the CA, to wit.
With respect to the alleged non-payment of benefits under Wage Order No. 5, this
Office is convinced that after the lapse of the one-year period of exemption from
compliance with Wage Order No. 5 (Exhibit 1-B), which exemption was granted by then
Labor Minister Blas Ople, the School settled its obligations to its employees,

conformably with the agreement reached during the management-employees meeting

of June 26, 1985 (Exhibits 4-B up to 4-D, also Exhibit 6-x-1). The Union has presented
no evidence that the settlement reached during the June 26, 1985 meeting was the
result of coercion. Indeed, what is significant is that the agreement of June 26, 1985
was signed by Mr. Porferio Ferrer, then Faculty President and an officer of the
complaining Union. Moreover, the samples from the payroll journal of the School,
identified and offered in evidence in these cases (Exhibits 1-C and 1-D), shows that the
School paid its employees the benefits under Wage Order No. 5 (and even Wage Order
No. 6) beginning June 16, 1985.
Under the circumstances, therefore, the claim of the Union on this point must likewise
fail.
The claim of the Union for salary differentials due to the improper computation of
compensation per unit of excess load cannot hold water for the simple reason that
during the Schoolyears in point there were no classes from June 1-14 and October 1731. This fact was not refuted by the Union. Since extra load should be paid only when
actually performed by the employees, no salary differentials are due the Union
members.
The non-academic members of the Union cannot legally insist on wage increases due to
Job Grading. From the records it appears that Job Grading is a system adopted by the
School by which positions are classified and evaluated according to the prescribed
qualifications therefor. It is akin to a merit system whereby salary increases are made
dependent upon the classification, evaluation and grading of the position held by an
employee.
The system of Job Grading was initiated by the School in Schoolyear 1989-1990. In
1992, just before the first of the two money claims was filed, a new Job Grading
process was initiated by the School.
Under the circumstances obtaining, it cannot be argued that there were repeated grants
of salary increases due to Job Grading to warrant the conclusion that some benefit was
granted in favor of the non-academic personnel that could no longer be eliminated or
banished under Article 100 of the Labor Code. Since the Job Grading exercises of the
School were neither consistent nor for a considerable period of time, the monetary
claims attendant to an increase in job grade are non-existent.
The claim of the Union that its members were not given their full share in the tuition fee
increases for the Schoolyears 1989-1990, 1990-1991 and 1991-1992 is belied by the
evidence presented by the School which consists of the unrefuted testimony of its
Accounting Coordinator, Ms. Rosario Manlapaz, and the reports extrapolated from the
journals and general ledgers of the School (Exhibits 2, 2-A up to 2-G). The evidence
indubitably shows that in Schoolyear 1989-1990, the School incurred a deficit of
P445,942.25, while in Schoolyears 1990-1991 and 1991-1992, the School paid out, 91%
and 77%, respectively, of the increments in the tuition fees collected.
As regards the issue of non-payment of holiday pay, the individual pay records of the
School's employees, a sample of which was identified and explained by Ms. Rosario 254
Manlapaz (Exhibit 3), shows that said School employees are paid for all days worked in
the year. Stated differently, the factor used in computing the salaries of the employees
is 365, which indicates that their regular monthly salary includes payment of wages

during all legal holidays.[13]

This Court held in Odango v. National Labor Relations Commission[14] that:
The appellate courts jurisdiction to review a decision of the NLRC in a petition for
certiorari is confined to issues of jurisdiction or grave abuse of discretion. An
extraordinary remedy, a petition for certiorari is available only and restrictively in truly
exceptional cases. The sole office of the writ of certiorari is the correction of errors of
jurisdiction including the commission of grave abuse of discretion amounting to lack or
excess of jurisdiction. It does not include correction of the NLRCs evaluation of the
evidence or of its factual findings. Such findings are generally accorded not only respect
but also finality. A party assailing such findings bears the burden of showing that the
tribunal acted capriciously and whimsically or in total disregard of evidence material to
the controversy, in order that the extraordinary writ of certiorari will lie.[15]
In the instant case, the Court finds no error in the ruling of the CA that since nowhere
in the petition is there any acceptable demonstration that the LA or the NLRC acted
either with grave abuse of discretion or without or in excess of its jurisdiction, the
appellate court has no reason to look into the correctness of the evaluation of evidence
which supports the labor tribunals' findings of fact.
Settled is the rule that the findings of the LA, when affirmed by the NLRC and the CA,
are binding on the Supreme Court, unless patently erroneous.[16] It is not the function
of the Supreme Court to analyze or weigh all over again the evidence already
considered in the proceedings below.[17] In a petition for review on certiorari, this
Courts jurisdiction is limited to reviewing errors of law in the absence of any showing
that the factual findings complained of are devoid of support in the records or are
glaringly erroneous.[18] Firm is the doctrine that this Court is not a trier of facts, and
this applies with greater force in labor cases.[19] Findings of fact of administrative
agencies and quasi-judicial bodies, which have acquired expertise because their
jurisdiction is confined to specific matters, are generally accorded not only great respect
but even finality.[20] They are binding upon this Court unless there is a showing of
grave abuse of discretion or where it is clearly shown that they were arrived at
arbitrarily or in utter disregard of the evidence on record.[21] We find none of these
exceptions in the present case.
In petitions for review on certiorari like the instant case, the Court invariably sustains
the unanimous factual findings of the LA, the NLRC and the CA, specially when such
findings are supported by substantial evidence and there is no cogent basis to reverse 255
the same, as in this case.[22]
The second assigned error properly raises a question of law as it involves the
determination of whether or not a teacher's overload pay should be considered in the
computation of his or her 13th-month pay. In resolving this issue, the Court is
confronted with conflicting interpretations by different government agencies.
On one hand is the opinion of the Bureau of Working Conditions of the DOLE dated
December 9, 1991, February 28, 1992 and November 19, 1992 to the effect that if
overload is performed within a teacher's normal eight-hour work per day, the
remuneration that the teacher will get from the additional teaching load will form part
of the basic wage.[23]

This opinion is affirmed by the Explanatory Bulletin on the Inclusion of Teachers'

Overload Pay in the 13th-Month Pay Determination issued by the DOLE on December 3,
1993 under then Acting DOLE Secretary Cresenciano B. Trajano. Pertinent portions of
the said Bulletin read as follows:
1. Basis of the 13th-month pay computation
The Revised Implementing Guidelines of the 13th-Month Pay Law (P.D. 851, as
amended) provides that an employee shall be entitled to not less than 1/12 of the total
basic salary earned within a calendar year for the purpose of computing such
entitlement. The basic wage of an employee shall include:
x x x all remunerations or earnings paid by his employer for services rendered but do
not include allowances or monetary benefits which are not considered or integrated as
part of the regular or basic salary, such as the cash equivalent of unused vacation and
sick leave credits, overtime, premium, night differential and holiday pay, and cost-ofliving allowances. However, these salary-related benefits should be included as part of
the basic salary in the computation of the 13th month pay if by individual or collective
agreement, company practice or policy, the same are treated as part of the basic salary
of the employees.
Basic wage is defined by the Implementing Rules of RA 6727 as follows:
Basic Wage means all remuneration or earnings paid by an employer to a worker for
services rendered on normal working days and hours but does not include cost of living
allowances, 13th-month pay or other monetary benefits which are not considered as
part of or integrated into the regular salary of the workers xxx.
The foregoing definition was based on Article 83 of the Labor Code which provides that
the normal hours of work of any employee shall not exceed eight (8) hours a day. This
means that the basic salary of an employee for the purpose of computing the 13thmonth pay shall include all remunerations or earnings paid by an employer for services
rendered during normal working hours.
2. Overload work/pay
Overload on the other hand means the load in excess of the normal load of private
school teachers as prescribed by the Department of Education, Culture and Sports
(DECS) or the policies, rules and standards of particular private schools. In recognition 256
of the peculiarities of the teaching profession, existing DECS and School Policies and
Regulations for different levels of instructions prescribe a regular teaching load, the
total actual teaching or classroom hours of which a teacher can generally perform in
less than eight (8) hours per working day. This is because teaching may also require the
teacher to do additional work such as handling an advisory class, preparation of lesson
plans and teaching aids, evaluation of students and other related activities. Where,
however a teacher is engaged to undertake actual additional teaching work after
completing his/her regular teaching load, such additional work is generally referred to
as overload. In short, additional work in excess of the regular teaching load is overload
work. Regular teaching load and overload work, if any, may constitute a teacher's
working day.
Where a teacher is required to perform such overload within the eight (8) hours normal

working day, such overload compensation shall be considered part of the basic pay for
the purpose of computing the teacher's 13th-month pay. Overload work is sometimes
misunderstood as synonymous to overtime work as this term is used and understood in
the Labor Code. These two terms are not the same because overtime work is work
rendered in excess of normal working hours of eight in a day (Art. 87, Labor Code).
Considering that overload work may be performed either within or outside eight hours
in a day, overload work may or may not be overtime work.
3. Concluding Statement
In the light of the foregoing discussions, it is the position of this Department that all
basic salary/wage representing payments earned for actual work performed during or
within the eight hours in a day, including payments for overload work within eight
hours, form part of basic wage and therefore are to be included in the computation of
13th-month pay mandated by PD 851, as amended.[24] (Underscoring supplied)
On the other hand, the Legal Services Department of the DOLE holds in its opinion of
March 4, 1992 that remunerations for teaching in excess of the regular load shall be
excluded in the computation of the 13th-month pay unless, by school policy, the same
are considered as part of the basic salary of the qualified teachers.[25]
This opinion is later affirmed by the DOLE Order, pertinent portions of which are quoted
below:
xxxx
2. In accordance with Article 83 of the Labor Code of the Philippines, as amended, the
normal hours of work of school academic personnel shall not exceed eight (8) hours a
day. Any work done in addition to the eight (8) hours daily work shall constitute
overtime work.
3. The normal hours of work of teaching or academic personnel shall be based on their
normal or regular teaching loads. Such normal or regular teaching loads shall be in
accordance with the policies, rules and standards prescribed by the Department of
Education, Culture and Sports, the Commission on Higher Education and the Technical
Education and Skills Development Authority. Any teaching load in excess of the normal
or regular teaching load shall be considered as overload. Overload partakes of the
nature of temporary extra assignment and compensation therefore shall be considered
as an overload honorarium if performed within the 8-hour work period and does not
form part of the regular or basic pay. Overload performed beyond the eight-hour daily
work is overtime work.[26] (Emphasis supplied)
It was the above-quoted DOLE Order which was used by the LA as basis for ruling
against herein petitioner.
The petitioners claim that the DOLE Order should not be made to apply to the present
case because said Order was issued only in 1996, approximately four years after the 257
present case was initiated before the Regional Arbitration Branch of the NLRC, is not
without basis. The general rule is that administrative rulings and circulars shall not be
given retroactive effect.[27]
Nevertheless, it is a settled rule that when an administrative or executive agency

renders an opinion or issues a statement of policy, it merely interprets a pre-existing

law and the administrative interpretation is at best advisory for it is the courts that
finally determine what the law means.[28]
In the present case, while the DOLE Order may not be applicable, the Court finds that
overload pay should be excluded from the computation of the 13th-month pay of
petitioner's members.
In resolving the issue of the inclusion or exclusion of overload pay in the computation of
a teacher's 13th-month pay, it is decisive to determine what basic salary includes and
excludes.
In this respect, the Court's disquisition in San Miguel Corporation v. Inciong[29] is
instructive, to wit:
Under Presidential Decree 851 and its implementing rules, the basic salary of an
employee is used as the basis in the determination of his 13th month pay. Any
compensations or remunerations which are deemed not part of the basic pay is
excluded as basis in the computation of the mandatory bonus.

Under the Rules and Regulations Implementing Presidential Decree 851, the following
compensations are deemed not part of the basic salary:
a) Cost-of-living allowances granted pursuant to Presidential Decree 525 and Letter of
Instruction No. 174;
b) Profit sharing payments;
c) All allowances and monetary benefits which are not considered or integrated as part
of the regular basic salary of the employee at the time of the promulgation of the
Decree on December 16, 1975.
Under a later set of Supplementary Rules and Regulations Implementing Presidential
Decree 851 issued by the then Labor Secretary Blas Ople, overtime pay, earnings and
other remunerations are excluded as part of the basic salary and in the computation of
the 13th-month pay.
The exclusion of cost-of-living allowances under Presidential Decree 525 and Letter of
Instruction No. 174 and profit sharing payments indicate the intention to strip basic
salary of other payments which are properly considered as fringe benefits. Likewise, the 258
catch-all exclusionary phrase all allowances and monetary benefits which are not
considered or integrated as part of the basic salary shows also the intention to strip
basic salary of any and all additions which may be in the form of allowances or fringe
benefits.
Moreover, the Supplementary Rules and Regulations Implementing Presidential Decree
851 is even more emphatic in declaring that earnings and other remunerations which
are not part of the basic salary shall not be included in the computation of the 13thmonth pay.

While doubt may have been created by the prior Rules and Regulations Implementing
Presidential Decree 851 which defines basic salary to include all remunerations or
earnings paid by an employer to an employee, this cloud is dissipated in the later and
more controlling Supplementary Rules and Regulations which categorically, exclude
from the definition of basic salary earnings and other remunerations paid by employer
to an employee. A cursory perusal of the two sets of Rules indicates that what has
hitherto been the subject of a broad inclusion is now a subject of broad exclusion. The
Supplementary Rules and Regulations cure the seeming tendency of the former rules to
include all remunerations and earnings within the definition of basic salary.
The all-embracing phrase earnings and other remunerations which are deemed not part
of the basic salary includes within its meaning payments for sick, vacation, or maternity
leaves, premium for works performed on rest days and special holidays, pay for regular
holidays and night differentials. As such they are deemed not part of the basic salary
and shall not be considered in the computation of the 13th-month pay. If they were not
so excluded, it is hard to find any earnings and other remunerations expressly excluded
in the computation of the 13th-month pay. Then the exclusionary provision would prove
to be idle and with no purpose.
This conclusion finds strong support under the Labor Code of the Philippines. To cite a
few provisions:
Art. 87 Overtime work. Work may be performed beyond eight (8) hours a day provided
that the employee is paid for the overtime work, additional compensation equivalent to
his regular wage plus at least twenty-five (25%) percent thereof.
It is clear that overtime pay is an additional compensation other than and added to the
regular wage or basic salary, for reason of which such is categorically excluded from the
definition of basic salary under the Supplementary Rules and Regulations Implementing
Presidential Decree 851.
In Article 93 of the same Code, paragraph
c.) work performed on any special holiday shall be paid an additional compensation of
at least thirty percent (30%) of the regular wage of the employee.

It is likewise clear that premium for special holiday which is at least 30% of the regular
wage is an additional compensation other than and added to the regular wage or basic
salary. For similar reason it shall not be considered in the computation of the 13th
-month pay.[30]
In the same manner that payment for overtime work and work performed during
special holidays is considered as additional compensation apart and distinct from an
employee's regular wage or basic salary, an overload pay, owing to its very nature and 259
definition, may not be considered as part of a teacher's regular or basic salary, because
it is being paid for additional work performed in excess of the regular teaching load.
The peculiarity of an overload lies in the fact that it may be performed within the
normal eight-hour working day. This is the only reason why the DOLE, in its explanatory
bulletin, finds it proper to include a teacher's overload pay in the determination of his or
her 13th-month pay. However, the DOLE loses sight of the fact that even if it is

performed within the normal eight-hour working day, an overload is still an additional or
extra teaching work which is performed after the regular teaching load has been
completed. Hence, any pay given as compensation for such additional work should be
considered as extra and not deemed as part of the regular or basic salary.
Moreover, petitioner failed to refute private respondent's contention that excess
teaching load is paid by the hour, while the regular teaching load is being paid on a
monthly basis; and that the assignment of overload is subject to the availability of
teaching loads. This only goes to show that overload pay is not integrated with a
teacher's basic salary for his or her regular teaching load. In addition, overload varies
from one semester to another, as it is dependent upon the availability of extra teaching
loads. As such, it is not legally feasible to consider payments for such overload as part
of a teacher's regular or basic salary. Verily, overload pay may not be included as basis
for determining a teacher's 13th-month pay.
WHEREFORE, the instant petition is DENIED. The assailed Decision and Resolution of
the Court of Appeals are AFFIRMED.
SO ORDERED.
260