 Coverage and Exclusions

 Labor Standards Benefits Covered Under Art. 83, Normal Hours of Work
 Exceptions
Hours of Work of Hospital and Clinic Personnel
 San Juan De Dios Hospital Employees Association-AFW vs. NLRC, G.R.
No. 126383, November 28, 1997

[G.R. No. 126383. November 28, 1997]

SAN JUAN DE DIOS HOSPITAL EMPLOYEES ASSOCIATION-AFW/MA. CONSUELO MAQUILING,

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

DECISION
FRANCISCO, J.:

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

Policy Instruction No. 54

To: All Concerned

Subject: Working Hours and Compensation of Hospital/Clinic Personnel

This issuance clarifies the enforcement policy of this Department on the working hours and compensation
of personnel employed by hospital/clinics with a bed capacity of 100 or more and those located in cities
and municipalities with a population of one million or more.
Republic Act 5901 took effect on 21 June 1969 prescribes a 40-hour/5 day work week for hospital/clinic
personnel. At the same time, the Act prohibits the diminution of the compensation of these workers who
would suffer a reduction in their weekly wage by reason of the shortened workweek prescribed by the
Act.In effect, RA 5901 requires that the covered hospital workers who used to work seven (7) days a
week should be paid for such number of days for working only 5 days or 40 hours a week.

The evident intention of RA 5901 is to reduce the number of hospital personnel, considering the nature of
their work, and at the same time guarantee the payment to them of a full weekly wage for seven (7)
days. This is quite clear in the Exemplary Note of RA 5901 which states:

As compared with the other employees and laborers, these hospital and health clinic personnel are over-
worked despite the fact that their duties are more delicate in nature. If we offer them better working
conditions, it is believed that the brain drain, that our country suffers nowadays as far as these personnel
are concerned will be considerably lessened. The fact that these hospitals and health clinics personnel
perform duties which are directly concerned with the health and lives of our people does not mean that
they should work for a longer period than most employees and laborers. They are also entitled to as
much rest as other workers. Making them work longer than is necessary may endanger, rather than
protect the health of their patients. Besides, they are not receiving better pay than the other
workers. Therefore, it is just and fair that they may be made to enjoy the privileges of equal working hours
with other workers except those excepted by law. (Sixth Congress of the Republic of the Philippines,
Third Session, House of Representatives, H. No. 16630)

The Labor Code in its Article 83 adopts and incorporates the basic provisions of RA 5901 and retains its
spirit and intent which is to shorten the workweek of covered hospital personnel and at the same time
assure them of a full weekly wage.

Consistent with such spirit and intent, it is the position of the Department that personnel in subject
hospital and clinics are entitled to a full weekly wage for seven (7) days it they have completed the 40-
hours/5-day workweek in any given workweek.

All enforcement and adjudicatory agencies of this Department shall be guided by this issuance in the
disposition of cases involving the personnel of covered hospitals and clinics.

Done in the City of Manila, this 12th day of April, 1988.

(Sgd.) FRANKLIN M. DRILON

Secretary

(Emphasis Added)

We note that Policy Instruction No. 54 relies and purports to implement Republic Act No. 5901,
otherwise known as An Act Prescribing Forty Hours A Week Of Labor For Government and Private
Hospitals Or Clinic Personnel, enacted on June 21, 1969. Reliance on Republic Act No. 5901, however,
is misplaced for the said statute, as correctly ruled by respondent NLRC, has long been repealed with the
passage of the Labor Code on May 1, 1974, Article 302 of which explicitly provides: All labor laws not
adopted as part of this Code either directly or by reference are hereby repealed. All provisions of existing
laws, orders, decrees, rules and regulations inconsistent herewith are likewise repealed. Accordingly, only
Article 83 of the Labor Code which appears to have substantially incorporated or reproduced the basic
provisions of Republic Act No. 5901 may support Policy Instructions No. 54 on which the latters validity
may be gauged. Article 83 of the Labor Code states:
Art. 83. Normal Hours of Work. -- The normal hours of work of any employee shall not exceed eight (8)
hours a day.

Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in
hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for
eight (8) hours a day, for five (5) days a week, exclusive of time for meals, except where the exigencies of
the service require that such personnel work for six (6) days or forty-eight (48) hours, in which case they
shall be entitled to an additional compensation of at least thirty per cent (30%) of their regular wage for
work on the sixth day. For purposes of this Article, health personnel shall include: resident physicians,
nurses, nutritionists, dietitians, pharmacists, social workers, laboratory technicians, paramedical
technicians, psychologists, midwives, attendants and all other hospital or clinic personnel. (Underscoring
supplied)

A cursory reading of Article 83 of the Labor Code betrays petitioners position that hospital employees
are entitled to a full weekly salary with paid two (2) days off if they have completed the 40-hour/5-day
workweek.[6] What Article 83 merely provides are: (1) the regular office hour of eight hours a day, five
days per week for health personnel, and (2) where the exigencies of service require that health personnel
work for six days or forty-eight hours then such health personnel shall be entitled to an additional
compensation of at least thirty percent of their regular wage for work on the sixth day. There is nothing in
the law that supports then Secretary of Labors assertion that personnel in subject hospitals and clinics
are entitled to a full weekly wage for seven (7) days if they have completed the 40-hour/5-day workweek
in any given workweek. Needless to say, the Secretary of Labor exceeded his authority by including a two
days off with pay in contravention of the clear mandate of the statute. Such act the Court shall not
countenance. Administrative interpretation of the law, we reiterate, is at best merely advisory, [7]and the
Court will not hesitate to strike down an administrative interpretation that deviates from the provision of
the statute.
Indeed, even if we were to subscribe with petitioners erroneous assertion that Republic Act No. 5901
has neither been amended nor repealed by the Labor Code, we nevertheless find Policy Instructions No.
54 invalid. A perusal of Republic Act No. 5901[8] reveals nothing therein that gives two days off with pay
for health personnel who complete a 40-hour work or 5-day workweek. In fact, the Explanatory Note of
House Bill No. 16630 (later passed into law as Republic Act No. 5901) explicitly states that the bills sole
purpose is to shorten the working hours of health personnel and not to dole out a two days off with pay.
Hence:

The accompanying bill seeks to grant resident physicians, staff nurses, nutritionists, midwives, attendants
and other hospital and health clinic personnel of public and private hospitals and clinics, the privilege of
enjoying the eight hours a week exclusive of time for lunch granted by law to all government employees
and workers except those employed in schools and in courts. At present those hospitals and health clinic
personnel including those employed in private hospitals and clinics, work six days a week, 8 hours a day
or 48 hours a week.

As compared with the other employees and laborers, these hospital and health clinic personnel are over-
worked despite the fact that their duties are more delicate in nature. If we offer them better working
conditions, it is believed that the brain drain, that our country suffers nowadays as far as these personnel
are concerned will be considerably lessened. The fact that these hospitals and health clinic personnel
perform duties which are directly concerned with the health and lives of our people does not mean that
they should work for a longer period than most employees and laborers. They are also entitled to as
much rest as other workers. Making them work longer than is necessary may endanger, rather than
protect, the health of their patients. Besides, they are not receiving better pay than the other
workers. Therefore, it is just and fair that they be made to enjoy the privileges of equal working hours with
other workers except those excepted by law.

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

 (SGD.) SERGIO H. LOYOLA

Congressman, 3rd District Manila

(Annex F of petition, underscoring

supplied)

Further, petitioners' position is also negated by the very rules and regulations promulgated by the Bureau
of Labor Standards which implement Republic Act No. 5901. Pertinent portions of the implementing rules
provide:

RULES AND REGULATIONS IMPLEMENTING REPUBLIC ACT NO. 5901

By virtue of Section 79 of the Revised Administrative Code, as modified by section 18 of Implementation

Report for Reorganization Plan No. 20-A on Labor, vesting in the Bureau of Labor Standards the authority
to promulgate rules and regulations to implement wage and hour laws, the following rules and regulations
are hereby issued for the implementation of Republic Act No. 5901.

CHAPTER I Coverage

Section 1. General Statement on Coverage. Republic Act No. 5901, hereinafter referred to as the Act,
shall apply to:

(a) All hospitals and clinics, including those with a bed capacity of less than one hundred, which are
situated in cities or municipalities with a population of one million or more; and to

(b) All hospitals and clinics with a bed capacity of at least one hundred, irrespective of the size of
population of the city or municipality where they may be situated.

xxx xxx xxx

Section 7. Regular Working Day. The regular working days of covered employees shall be not more
than five days in a workweek. The workweek may begin at any hour and on any day, including Saturday
or Sunday, designated by the employer.

Employers are not precluded from changing the time at which the workday or workweek begins, provided
that the change is not intended to evade the requirements of these regulations on the payment of
additional compensation.

xxx xxx xxx

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

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

 Interphil Laboratories Employees Union vs. Interphil Laboratories Inc., G.R.

No. 142824, December 19, 2001

[G.R. No. 142824. December 19, 2001]

INTERPHIL LABORATORIES EMPLOYEES UNION-FFW, ENRICO GONZALES and MA. THERESA

MONTEJO, petitioners, vs. INTERPHIL LABORATORIES, INC., AND HONORABLE
LEONARDO A. QUISUMBING, SECRETARY OF LABOR AND EMPLOYMENT, respondents.

DECISION
KAPUNAN, J.:

Assailed in this petition for review on certiorari are the decision, promulgated on 29 December 1999,
and the resolution, promulgated on 05 April 2000, of the Court of Appeals in CA-G.R. SP No. 50978.
Culled from the questioned decision, the facts of the case are as follows:
Interphil Laboratories Employees Union-FFW is the sole and exclusive bargaining agent of the rank-
and-file employees of Interphil Laboratories, Inc., a company engaged in the business of manufacturing
and packaging pharmaceutical products. They had a Collective Bargaining Agreement (CBA) effective
from 01 August 1990 to 31 July 1993.
Prior to the expiration of the CBA or sometime in February 1993, Allesandro G. Salazar, [1] Vice-
President-Human Resources Department of respondent company, was approached by Nestor Ocampo,
the union president, and Hernando Clemente, a union director. The two union officers inquired about the
stand of the company regarding the duration of the CBA which was set to expire in a few months. Salazar
told the union officers that the matter could be best discussed during the formal negotiations which would
start soon.
In March 1993, Ocampo and Clemente again approached Salazar. They inquired once more about
the CBA status and received the same reply from Salazar. In April 1993, Ocampo requested for a
meeting to discuss the duration and effectivity of the CBA. Salazar acceded and a meeting was held on
15 April 1993 where the union officers asked whether Salazar would be amenable to make the new CBA
effective for two (2) years, starting 01 August 1993. Salazar, however, declared that it would still be
premature to discuss the matter and that the company could not make a decision at the moment. The
very next day, or on 16 April 1993, all the rank-and-file employees of the company refused to follow their
regular two-shift work schedule of from 6:00 a.m. to 6:00 p.m., and from 6:00 p.m. to 6:00 a.m. At 2:00
p.m. and 2:00 a.m., respectively, the employees stopped working and left their workplace without
sealing the containers and securing the raw materials they were working on. When Salazar inquired
about the reason for their refusal to follow their normal work schedule, the employees told him to "ask the
union officers." To minimize the damage the overtime boycott was causing the company, Salazar
immediately asked for a meeting with the union officers. In the meeting, Enrico Gonzales, a union
director, told Salazar that the employees would only return to their normal work schedule if the company
would agree to their demands as to the effectivity and duration of the new CBA. Salazar again told the
union officers that the matter could be better discussed during the formal renegotiations of the CBA.Since
the union was apparently unsatisfied with the answer of the company, the overtime boycott continued. In
addition, the employees started to engage in a work slowdown campaign during the time they were
working, thus substantially delaying the production of the company. [2]
On 14 May 1993, petitioner union submitted with respondent company its CBA proposal, and the
latter filed its counter-proposal.
On 03 September 1993, respondent company filed with the National Labor Relations Commission
(NLRC) a petition to declare illegal petitioner unions overtime boycott and work slowdown which,
according to respondent company, amounted to illegal strike. The case, docketed NLRC-NCR Case No.
00-09-05529-93, was assigned to Labor Arbiter Manuel R. Caday.
On 22 October 1993, respondent company filed with the National Conciliation and Mediation Board
(NCMB) an urgent request for preventive mediation aimed to help the parties in their CBA
negotiations.[3] The parties, however, failed to arrive at an agreement and on 15 November 1993,
respondent company filed with Office of the Secretary of Labor and Employment a petition for assumption
of jurisdiction.
On 24 January 1994, petitioner union filed with the NCMB a Notice of Strike citing unfair labor
practice allegedly committed by respondent company. On 12 February 1994, the union staged a strike.
On 14 February 1994, Secretary of Labor Nieves Confesor issued an assumption order[4] over the
labor dispute. On 02 March 1994, Secretary Confesor issued an order directing respondent company to
immediately accept all striking workers, including the fifty-three (53) terminated union officers, shop
stewards and union members back to work under the same terms and conditions prevailing prior to the
strike, and to pay all the unpaid accrued year end benefits of its employees in 1993.[5] On the other hand,
petitioner union was directed to strictly and immediately comply with the return to work orders issued by
(the) Office x x x.[6] The same order pronounced that (a)ll pending cases which are direct offshoots of the
instant labor dispute are hereby subsumed herewith.[7]
In the interim, the case before Labor Arbiter Caday continued. On 16 March 1994, petitioner union
filed an Urgent Manifestation and Motion to Consolidate the Instant Case and to Suspend Proceedings
seeking the consolidation of the case with the labor dispute pending before the Secretary of
Labor. Despite objection by respondent company, Labor Arbiter Caday held in abeyance the proceedings
before him. However, on 06 June 1994, Acting Labor Secretary Jose S. Brillantes, after finding that the
issues raised would require a formal hearing and the presentation of evidentiary matters, directed the
Labor Arbiters Caday and M. Sol del Rosario to proceed with the hearing of the cases before them and to
thereafter submit their report and recommendation to his office.
On 05 September 1995, Labor Arbiter Caday submitted his recommendation to the then Secretary of
Labor Leonardo A. Quisumbing.[8] Then Secretary Quisumbing approved and adopted the report in his
Order, dated 13 August 1997, hence:

WHEREFORE, finding the said Report of Labor Arbiter Manuel R. Caday to be supported by substantial
evidence, this Office hereby RESOLVES to APPROVE and ADOPT the same as the decision in this
case, and judgment is hereby rendered:

(1) Declaring the overtime boycott and work slowdown as illegal strike;
(2) Declaring the respondent union officers namely:

Nestor Ocampo - President

Carmelo Santos - Vice-President

Marites Montejo - Treasurer/Board Member

Rico Gonzales - Auditor

Rod Abuan - Director

Segundino Flores - Director

Hernando Clemente - Director

who spearheaded and led the overtime boycott and work slowdown, to have lost their employment
status; and

(3) Finding the respondents guilty of unfair labor practice for violating the then existing CBA
which prohibits the union or any employee during the existence of the CBA from staging
a strike or engaging in slowdown or interruption of work and ordering them to cease and
desist from further committing the aforesaid illegal acts.

Petitioner union moved for the reconsideration of the order but its motion was denied. The union
went to the Court of Appeals via a petition for certiorari. In the now questioned decision promulgated on
29 December 1999, the appellate court dismissed the petition. The unions motion for reconsideration was
likewise denied.
Hence, the present recourse where petitioner alleged:

THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS, LIKE THE HONORABLE PUBLIC
RESPONDENT IN THE PROCEEDINGS BELOW, COMMITTED GRAVE ABUSE OF DISCRETION,
AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION WHEN IT COMPLETELY
DISREGARDED PAROL EVIDENCE RULE IN THE EVALUATION AND APPRECIATION OF EVIDENCE
PROFERRED BY THE PARTIES.

THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION, WHEN IT DID NOT
DECLARE PRIVATE RESPONDENTS ACT OF EXTENDING SUBSTANTIAL SEPARATION PACKAGE
TO ALMOST ALL INVOLVED OFFICERS OF PETITIONER UNION, DURING THE PENDENCY OF THE
CASE, AS TANTAMOUNT TO CONDONATION, IF INDEED, THERE WAS ANY MISDEED
COMMITTED.

THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION WHEN IT HELD THAT
THE SECRETARY OF LABOR AND EMPLOYMENT HAS JURISDICTION OVER A CASE (A PETITION
TO DECLARE STRIKE ILLEGAL) WHICH HAD LONG BEEN FILED AND PENDING BEFORE THE
LABOR ARBITER.[9]

We sustain the questioned decision.

On the matter of the authority and jurisdiction of the Secretary of Labor and Employment to rule on
the illegal strike committed by petitioner union, it is undisputed that the petition to declare the strike illegal
before Labor Arbiter Caday was filed long before the Secretary of Labor and Employment issued the
assumption order on 14 February 1994. However, it cannot be denied that the issues of overtime boycott
and work slowdown amounting to illegal strike before Labor Arbiter Caday are intertwined with the labor
dispute before the Labor Secretary. In fact, on 16 March 1994, petitioner union even asked Labor Arbiter
Caday to suspend the proceedings before him and consolidate the same with the case before the
Secretary of Labor. When Acting Labor Secretary Brillantes ordered Labor Arbiter Caday to continue with
the hearing of the illegal strike case, the parties acceded and participated in the proceedings, knowing
fully well that there was also a directive for Labor Arbiter Caday to thereafter submit his report and
recommendation to the Secretary. As the appellate court pointed out, the subsequent participation of
petitioner union in the continuation of the hearing was in effect an affirmation of the jurisdiction of the
Secretary of Labor.
The appellate court also correctly held that the question of the Secretary of Labor and Employments
jurisdiction over labor-related disputes was already settled in International Pharmaceutical, Inc. vs. Hon.
Secretary of Labor and Associated Labor Union (ALU)[10] where the Court declared:

In the present case, the Secretary was explicitly granted by Article 263(g) of the Labor Code the authority
to assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry
indispensable to the national interest, and decide the same accordingly. Necessarily, this authority to
assume jurisdiction over the said labor dispute must include and extend to all questions and controversies
arising therefrom, including cases over which the labor arbiter has exclusive jurisdiction.

Moreover, Article 217 of the Labor Code is not without, but contemplates, exceptions thereto. This is
evident from the opening proviso therein reading (e)xcept as otherwise provided under this Code x x
x. Plainly, Article 263(g) of the Labor Code was meant to make both the Secretary (or the various regional
directors) and the labor arbiters share jurisdiction, subject to certain conditions. Otherwise, the Secretary
would not be able to effectively and efficiently dispose of the primary dispute. To hold the contrary may
even lead to the absurd and undesirable result wherein the Secretary and the labor arbiter concerned
may have diametrically opposed rulings. As we have said, (i)t is fundamental that a statute is to be read in
a manner that would breathe life into it, rather than defeat it.

In fine, the issuance of the assailed orders is within the province of the Secretary as authorized by Article
263(g) of the Labor Code and Article 217(a) and (5) of the same Code, taken conjointly and rationally
construed to subserve the objective of the jurisdiction vested in the Secretary. [11]

Anent the alleged misappreciation of the evidence proffered by the parties, it is axiomatic that the
factual findings of the Labor Arbiter, when sufficiently supported by the evidence on record, must be
accorded due respect by the Supreme Court.[12] Here, the report and recommendation of Labor Arbiter
Caday was not only adopted by then Secretary of Labor Quisumbing but it was likewise affirmed by the
Court of Appeals. We see no reason to depart from their findings.
Petitioner union maintained that the Labor Arbiter and the appellate court disregarded the parol
evidence rule[13] when they upheld the allegation of respondent company that the work schedule of its
employees was from 6:00 a.m. to 6:00 p.m. and from 6:00 p.m. to 6:00 a.m. According to petitioner union,
the provisions of their CBA on working hours clearly stated that the normal working hours were from 7:30
a.m. to 4:30 p.m.[14] Petitioner union underscored that the regular work hours for the company was only
eight (8) hours. It further contended that the Labor Arbiter as well as the Court of Appeal should not have
admitted any other evidence contrary to what was stated in the CBA.
The reliance on the parol evidence rule is misplaced. In labor cases pending before the Commission
or the Labor Arbiter, the rules of evidence prevailing in courts of law or equity are not controlling.[15]Rules
of procedure and evidence are not applied in a very rigid and technical sense in labor cases. [16] Hence,
the Labor Arbiter is not precluded from accepting and evaluating evidence other than, and even contrary
to, what is stated in, the CBA.
In any event, the parties stipulated:
Section 1. Regular Working Hours - A normal workday shall consist of not more than eight (8) hours. The
regular working hours for the Company shall be from 7:30 A.M. to 4:30 P.M. The schedule of shift work
shall be maintained; however the company may change the prevailing work time at its discretion, should
such change be necessary in the operations of the Company. All employees shall observe such rules as
have been laid down by the company for the purpose of effecting control over working hours.[17]

It is evident from the foregoing provision that the working hours may be changed, at the discretion of
the company, should such change be necessary for its operations, and that the employees shall observe
such rules as have been laid down by the company. In the case before us, Labor Arbiter Caday found
that respondent company had to adopt a continuous 24-hour work daily schedule by reason of the nature
of its business and the demands of its clients. It was established that the employees adhered to the said
work schedule since 1988. The employees are deemed to have waived the eight-hour schedule since
they followed, without any question or complaint, the two-shift schedule while their CBA was still in force
and even prior thereto. The two-shift schedule effectively changed the working hours stipulated in the
CBA. As the employees assented by practice to this arrangement, they cannot now be heard to claim that
the overtime boycott is justified because they were not obliged to work beyond eight hours.
As Labor Arbiter Caday elucidated in his report:

Respondents' attempt to deny the existence of such regular overtime schedule is belied by their own
awareness of the existence of the regular overtime schedule of 6:00 A.M. to 6:00 P.M. and 6:00 P.M. to
6:00 A.M. of the following day that has been going on since 1988. Proof of this is the case undisputedly
filed by the union for and in behalf of its members, wherein it is claimed that the company has not been
computing correctly the night premium and overtime pay for work rendered between 2:00 A.M. and 6:00
A.M. of the 6:00 P.M. to 6:00 A.M. shift. (tsn pp. 9-10, testimony of Alessandro G. Salazar during hearing
on August 9, 1994). In fact, the union Vice-President Carmelo C. Santos, demanded that the company
make a recomputation of the overtime records of the employees from 1987 (Exh. "P"). Even their own
witness, union Director Enrico C. Gonzales, testified that when in 1992 he was still a Quality Control
Inspector at the Sucat Plant of the company, his schedule was sometime at 6:00 A.M. to 6:00 P.M.,
sometime at 6:00 A.M. to 2:00 P.M., at 2:00 P.M. to 10:00 P.M. and sometime at 6:00 P.M. to 6:00 A.M.,
and when on the 6 to 6 shifts, he received the commensurate pay (t.s.n. pp. 7-9, hearing of January 10,
1994). Likewise, while in the overtime permits, dated March 1, 6, 8, 9 to 12, 1993, which were passed
around daily for the employees to sign, his name appeared but without his signatures, he however had
rendered overtime during those dates and was paid because unlike in other departments, it has become
a habit to them to sign the overtime schedule weekly (t.s.n. pp. 26-31, hearing of January 10, 1994). The
awareness of the respondent union, its officers and members about the existence of the regular overtime
schedule of 6:00 A.M. to 6:00 P.M. and 6:00 P.M. to 6:00 A.M. of the following day will be further shown
in the discussion of the second issue.[18]

As to the second issue of whether or not the respondents have engaged in "overtime boycott" and "work
slowdown" from April 16, 1993 up to March 7, 1994, both amounting to illegal strike, the evidence
presented is equally crystal clear that the "overtime boycott" and "work slowdown" committed by the
respondents amounted to illegal strike.

As undisputably testified to by Mr. Alessandro G. Salazar, the company's Vice-President-Human

Resources Department, sometime in February, 1993, he was approached by the union President
Nestor Ocampo and Union Director Hernando Clemente who asked him as to what was the stand of the
company regarding the duration of the CBA between the company and which was set to expire on July
31, 1993. He answered that the matter could be best discussed during the formal renegotiations which
anyway was to start soon. This query was followed up sometime in March, 1993, and his answer was the
same. In early April, 1993, the union president requested for a meeting to discuss the duration and
effectivity of the CBA. Acceding to the request, a meeting was held on April 15, 1993 wherein the union
officers asked him if he would agree to make the new CBA effective on August 1, 1993 and the term
thereof to be valid for only two (2) years.When he answered that it was still premature to discuss the
matter, the very next day, April 16, 1993, all the rank and file employees of the company refused to follow
their regular two-shift work schedule of 6:00 A.M. to 6:00 P.M. and 6:00 P.M. to 6:00 A.M., when after the
8-hours work, they abruptly stopped working at 2:00 P.M. and 2:00 A.M., respectively, leaving their place
of work without sealing the containers and securing the raw materials they were working on. When he
saw the workers leaving before the end of their shift, he asked them why and their reply was "asked (sic)
the union officers." Alarmed by the overtime boycott and the damage it was causing the company, he
requested for a meeting with the union officers. In the meeting, he asked them why the regular work
schedule was not being followed by the employees, and union Director Enrico Gonzales, with the support
of the other union officers, told him that if management would agree to a two-year duration for the new
CBA and an effectivity date of August 1, 1993, all employees will return to the normal work schedule of
two 12-hour shifts. When answered that the management could not decide on the matter at the moment
and to have it discussed and agreed upon during the formal renegotiations, the overtime boycott
continued and the employees at the same time employed a work slowdown campaign during working
hours, causing considerable delay in the production and complaints from the clients/customers (Exh. "O",
Affidavit of Alessandro G. Salazar which formed part of his direct testimony). This testimonial narrations of
Salazar was, as earlier said, undisputed because the respondents' counsel waived his cross examination
(t.s.n. p. 15, hearing on August 9, 1994).

Aside from the foregoing undisputed testimonies of Salazar, the testimonies of other Department
Managers pointing to the union officers as the instigators of the overtime boycott and work slowdown, the
testimony of Epifanio Salumbides (Exh. "Y") a union member at the time the concerted activities of the
respondents took place, is quoted hereunder:

2. Noon Pebrero 1993, ipinatawag ng Presidente ng Unyon na si Nestor Ocampo ang lahat ng taga-
maintenance ng bawat departamento upang dumalo sa isang miting. Sa miting na iyon, sinabi ni Rod
Abuan, na isang Direktor ng Unyon, na mayroon ilalabas na memo ang Unyon na nag-uutos sa mga
empleyado ng Kompanya na mag-imbento ng sari-saring dahilan para lang hindi sila makapagtrabaho
ng "overtime". Sinabihan rin ako ni Tessie Montejo na siya namang Treasurer ng Unyon na 'Manny,
huwag ka na lang pumasok sa Biyernes para hindi ka masabihan ng magtrabaho ng Sabado at Linggo'
na siya namang araw ng "overtime" ko. x x x

3. Nakalipas ang dalawaang buwan at noong unang bahagi ng Abril 1993, miniting kami ng Shop
Stewards namin na sina Ariel Abenoja, Dany Tansiongco at Vicky Baron. Sinabihan kami na huwag ng
mag-ovetime pag nagbigay ng senyas ang Unyon ng "showtime."

4. Noong umaga ng ika-15 ng Abril 1993, nagsabi na si Danny Tansiongco ng "showtime". Dahil dito wala
ng empleyadong nag-overtime at sabay-sabay silang umalis, maliban sa akin. Ako ay pumasok rin noong
Abril 17 at 18, 1993 na Sabado at Linggo.

5. Noong ika-19 ng Abril 1993, ako ay ipinatawag ni Ariel Abenoja Shop Steward, sa opisina ng
Unyon. Nadatnan ko doon ang halos lahat ng opisyales ng Unyon na sina:

Nestor Ocampo ----- Presidente

Carmelo Santos ----- Bise-Presidente

Nanding Clemente -- Director

Tess Montejo------- Chief Steward

Segundo Flores ------ Director

Enrico Gonzales ----- Auditor

Boy Alcantara ------- Shop Steward

Rod Abuan ----------- Director

at marami pang iba na hindi ko na maala-ala. Pagpasok ko, ako'y pinaligiran ng mga opisyales ng
Unyon. Tinanong ako ni Rod Aguan kung bakit ako "nag-ovetime" gayong "Binigyan ka na namin ng
instruction na huwag pumasok, pinilit mo pa ring pumasok." "Management ka ba o Unyonista." Sinagot ko
na ako ay Unyonista. Tinanong niya muli kung bakit ako pumasok. Sinabi ko na wala akong maibigay na
dahilan para lang hindi pumasok at "mag-overtime." Pagkatapos nito, ako ay pinagmumura ng mga
opisyales ng Unyon kaya't ako ay madaliang umalis.

x x x"

Likewise, the respondents' denial of having a hand in the work slowdown since there was no change in
the performance and work efficiency for the year 1993 as compared to the previous year was even
rebuffed by their witness M. Theresa Montejo, a Quality Control Analyst. For on cross-examination, she
(Montejo) admitted that she could not answer how she was able to prepare the productivity reports from
May 1993 to February 1994 because from April 1993 up to April 1994, she was on union leave. As such,
the productivity reports she had earlier shown was not prepared by her since she had no personal
knowledge of the reports (t.s.n. pp. 32-35, hearing of February 27, 1995). Aside from this admission, the
comparison made by the respondents was of no moment, because the higher production for the years
previous to 1993 was reached when the employees regularly rendered overtime work. But undeniably,
overtime boycott and work slowdown from April 16, 1993 up to March 7, 1994 had resulted not only in
financial losses to the company but also damaged its business reputation.

Evidently, from all the foregoing, respondents' unjustified unilateral alteration of the 24-hour work
schedule thru their concerted activities of "overtime boycott" and "work slowdown" from April 16, 1993 up
to March 7, 1994, to force the petitioner company to accede to their unreasonable demands, can be
classified as a strike on an installment basis, as correctly called by petitioner company. xxx[19]

It is thus undisputed that members of the union by their own volition decided not to render overtime
services in April 1993.[20] Petitioner union even admitted this in its Memorandum, dated 12 April 1999,
filed with the Court of Appeals, as well as in the petition before this Court, which both stated that
"(s)sometime in April 1993, members of herein petitioner, on their own volition and in keeping with the
regular working hours in the Company x x x decided not to render overtime". [21] Such admission confirmed
the allegation of respondent company that petitioner engaged in overtime boycott and work slowdown
which, to use the words of Labor Arbiter Caday, was taken as a means to coerce respondent company to
yield to its unreasonable demands.
More importantly, the overtime boycott or work slowdown by the employees constituted a violation of
their CBA, which prohibits the union or employee, during the existence of the CBA, to stage a strike or
engage in slowdown or interruption of work.[22] In Ilaw at Buklod ng Manggagawa vs. NLRC,[23] this Court
ruled:

x x x (T)he concerted activity in question would still be illicit because contrary to the workers explicit
contractual commitment that there shall be no strikes, walkouts, stoppage or slowdown of work, boycotts,
secondary boycotts, refusal to handle any merchandise, picketing, sit-down strikes of any kind,
sympathetic or general strikes, or any other interference with any of the operations of the COMPANY
during the term of xxx (their collective bargaining) agreement.

What has just been said makes unnecessary resolution of SMCs argument that the workers concerted
refusal to adhere to the work schedule in force for the last several years, is a slowdown, an inherently
illegal activity essentially illegal even in the absence of a no-strike clause in a collective bargaining
contract, or statute or rule. The Court is in substantial agreement with the petitioners concept of a
slowdown as a strike on the installment plan; as a willful reduction in the rate of work by concerted action
of workers for the purpose of restricting the output of the employer, in relation to a labor dispute; as an
activity by which workers, without a complete stoppage of work, retard production or their performance of
duties and functions to compel management to grant their demands. The Court also agrees that such a
slowdown is generally condemned as inherently illicit and unjustifiable, because while the employees
continue to work and remain at their positions and accept the wages paid to them, they at the same time
select what part of their allotted tasks they care to perform of their own volition or refuse openly or
secretly, to the employers damage, to do other work; in other words, they work on their own terms. x x
x.[24]

Finally, the Court cannot agree with the proposition that respondent company, in extending
substantial separation package to some officers of petitioner union during the pendency of this case, in
effect, condoned the illegal acts they committed.
Respondent company correctly postured that at the time these union officers obtained their
separation benefits, they were still considered employees of the company. Hence, the company was
merely complying with its legal obligations.[25] Respondent company could have withheld these benefits
pending the final resolution of this case. Yet, considering perhaps the financial hardships experienced by
its employees and the economic situation prevailing, respondent company chose to let its employees
avail of their separation benefits. The Court views the gesture of respondent company as an act of
generosity for which it should not be punished.
WHEREFORE, the petition is DENIED DUE COURSE and the 29 December 1999 decision of the
Court of Appeals is AFFIRMED.
SO ORDERED.

Compressed Work Week

Change of Workings Hours:
 Union Carbide Labor Union (NLU) vs. Union Carbide Phil. Inc. G.R. No. L-
41314, November 13, 1992

DECISION

MELO, J.:

This refers to a petition for review of the decision of the then Secretary of Labor Blas Ople handed down
on February 7, 1975 which set aside the decision of the Arbitrator ordering reinstatement with
backwages, and instead adjudged the payment of separation pay; and the resolution dated July 24, 1975
denying petitioner’s motion for reconsideration for lack of merit.

The undisputed facts as found by the Secretary of Labor are as follows:

". . . Complainants Agapito Duro, Alfredo Torio, and Rustico Javillonar, were dismissed from their
employment after an application for clearance to terminate them was approved by the Secretary of Labor
on December 19, 1972. Respondent’s application for clearance was premised on "willful violation of
Company regulations, gross insubordination and refusal to submit to a Company investigation . . ."

Prior events leading to the dismissal of complainants are recited in the Arbitrator’s decision, which we
quote:

‘It appears that the Company is operating on three (3) shifts namely: morning, afternoon and night shifts.
The workers in the third shift normally work from Monday to Saturday, the last working day being Friday
or forty (40) hours a week or from Monday to Friday.

‘Sometime in July 1972 there seems to be a change in the working schedule from Monday to Friday as
contained in the collective bargaining agreement aforecited to Sunday thru Thursday. The change
became effective July 5, 1972. The third shift employees were required to start the new work schedule
from Sunday thru Thursday.

‘On November 6, 1972, the night shift employees filed a demand to maintain the old working schedule
from Monday thru Friday. (Letter of November 6, 1972 addressed to the Committee on Labor Relation,
UCLU). The demand was referred to the Labor Management Relation Committee and discussed from
November 15, up to November 24, 1972. In the discussions had, it was arrived at that all night shift
operating personnel were allowed to start their work Monday and on Saturday. This excepted the
employees in the maintenance and preparation crews whose work schedule is presumed to be
maintained from Sunday to Thursday. The work schedule between management representatives and the
alleged officers of the Union (Varias group) was approved and disseminated to take effect November 26,
1972. (Exh. "2" Respondent).

‘In manifestation of their dissention to the new work schedule, the three respondents Duro, Torio, and
Javillonar did not report for work on November 26, 1972 which was a Sunday since it was not a working
day according to the provisions of the Collective Bargaining Agreement. (Exh. "A" -Complainant). Their
absence caused their suspension for fourteen (14) days." (pp. 29-30, Rollo).

On May 4, 1973, the Arbitrator rendered a decision ordering the reinstatement with backwages of the
complainants. On June 8, 1973, the National Labor Relations Commission dismissed respondent
company’s appeal for having been filed out of time. A motion for reconsideration which was treated as an
appeal was then filed by respondent company before the Secretary of Labor, resulting in the modification
of the Arbitrator’s decision by awarding complainants separation pay. A motion for reconsideration
subsequently filed by the petitioner was denied for lack of merit.

Hence, this petition.

The main issue in this case is whether or not the complainants could be validly dismissed from their
employment on the ground of insubordination for refusing to comply with the new work schedule.

Petitioner alleges that the change in the company’s working schedule violated the existing Collective
Bargaining Agreement of the parties. Hence, complainants cannot be dismissed since their refusal to
comply with the re-scheduled working hours was based on a provision of the Collective Bargaining
Agreement. Petitioner further contends that the dismissal of the complainants violated Section 9, Article II
of the 1973 Constitution which provides "the right of workers to self-organization, collective bargaining,
security of tenure and just and humane conditions of work."

The petition has no merit.

Although Article XIX of the CBA provides for the duration of the agreement, which We quote:

"This agreement shall become effective on September 1, 1971 and shall remain in full force and effect
without change until August 31, 1974. Unless the parties hereto agree otherwise, negotiation for renewal,
or renewal and modification, or a new agreement may not be initiated before July 1, 1974."

this does not necessarily mean that the company can no longer change its working schedule, for Section
2, Article II of the same CBA expressly provides that:

"SECTION 2. In the exercise of its functions of management, the COMPANY shall have the sole and
exclusive right and power, among other things, to direct the operations and the working force of its
business in all respects; to be the sole judge in determining the capacity or fitness of an employee for the
position or job to which he has been assigned; to schedule the hours of work, shifts and work schedules;
to require work to be done in excess of eight hours or on Sundays or holidays as the exigencies of the
service may require; to plan, schedule, direct, curtail and control factory operations and schedules of
production; to introduce and install new or improved production methods or facilities; to designate the
work and the employees to perform it; to select and hire new employees; to train new employees and
improve the skill and ability of employees; to make rules and regulations governing conduct and safety; to
transfer employees from one job to another or from one shift to another; to classify or reclassify
employees; and to make such changes in the duties of its employees as the COMPANY may see fit or
convenient for the proper conduct of its business."

Verily and wisely, management retained the prerogative, whenever exigencies of the service so require,
to change the working hours of its employees. And as long as such prerogative is exercised in good faith
for the advancement of the employer’s interest and not for the purpose of defeating or circumventing the
rights of the employees under special laws or under valid agreements, this Court will uphold such
exercise (San Miguel Brewery Sales Force Union (PTGWO) v. Ople, 170 SCRA 25 [1989]).

Thus, in the case of Abbott Laboratories (Phil.), Inc. v. NLRC (154 SCRA 713 [1987]), We ruled:

". . . Even as the law is solicitous of the welfare of employees, it must also protect the right of an employer
to exercise what are clearly management prerogatives. The free will of management to conduct its own
business affairs to achieve its purpose cannot be denied." (p. 717).

Further, the incident complained of took place sometime in 1972, so there is no violation of the 1973
Constitution to speak of because the guarantee of security of tenure embodied under Section 9, Article II
may not be given a retroactive effect. It is the basic norm that provisions of the fundamental law should be
given prospective application only, unless legislative intent for its retroactive application is so provided.

As pointed out by Justice Isagani Cruz, to wit:

"Finally, it should be observed that the provisions of the Constitution should be given only a prospective
application unless the contrary is clearly intended. Were the rule otherwise, rights already acquired or
vested might be unduly disturbed or withdrawn even in the absence of an unmistakable intention to place
them within the scope of the Constitution." (p. 10, Constitutional Law, Isagani Cruz, 1991 Edition).

We agree with the findings arrived at by both Arbitrator and the Secretary of Labor that there is no unfair
labor practice in this case. Neither was there gross and habitual neglect of complainants’ duties. Nor did
the act of complainants in refusing to follow the new working hours amount to serious misconduct or
willful disobedience to the orders of respondent company.

Although no serious objections may be offered to the Arbitrator’s conclusion to order reinstatement with
backwages of the complainants, We now refrain from doing so considering that reinstatement is no longer
feasible due to the fact that the controversy started more than 20 years ago aside from the obviously
strained relations between the parties.

WHEREFORE, the decision appealed from is hereby AFFIRMED.

SO ORDERED.

 A. Soriano Aviation vs. Employee’s Assn. of A. Soriano Aviation, G.R. No.

166879, August 14, 2009

DECISION
CARPIO MORALES, J.:
On May 22, 1997, A. Soriano Aviation (petitioner or the company) which is engaged in providing
transportation of guests to and from Amanpulo and El Nido resorts in Palawan, and respondent
Employees Association of A. Soriano Aviation (the Union), the duly-certified exclusive bargaining agent of
the rank and file employees of petitioner, entered into a Collective Bargaining Agreement (CBA) effective
January 1, 1997 up to December 31, 1999. The CBA included a No-Strike, No-Lock-out clause.

On May 1 & 12, and June 12, 1997, which were legal holidays and peak season for the company,
eight mechanics-members of respondent Union, its herein co-respondents Albert Aguila (Aguila),
Reynante Amimita (Amimita), Galmier Balisbis (Balisbis), Raymond Barco (Barco), Gerardo Bungabong
(Bungabong), Josefino Espino (Espino), Jeffrey Neri (Neri) and Rodolfo Ramos, Jr. (Ramos), refused to
render overtime work.

Petitioner treated the refusal to work as a concerted action which is a violation of the No-Strike,
No-Lockout clause in the CBA. It thus meted the workers a 30-day suspension. It also filed on July 31,
1997 a complaint for illegal strike against them, docketed as NLRC Case No. 07-05409-97, which was
later dismissed at its instance in order to give way to settlement, without prejudice to its re-filing should
settlement be unavailing.

The attempted settlement between the parties having been futile, the Union filed a Notice of
Strike with the National Conciliation and Mediation Board (NCMB) on October 3, 1997, attributing to
petitioner the following acts: (1) union busting, (2) illegal dismissal of union officer, (3) illegal suspension
of eight mechanics, (4) violation of memorandum of agreement, (5) coercion of employees and
interrogation of newly-hired mechanics with regard to union affiliation, (6) discrimination against the
aircraft mechanics, (7) harassment through systematic fault-finding, (8) contractual labor, and (9)
constructive dismissal of the Union President, Julius Vargas (Vargas).

As despite conciliation no amicable settlement of the dispute was arrived at, the Union went on
strike on October 22, 1997.

Meanwhile, pursuant to its reservation in NLRC Case No. 07-05409-97, petitioner filed a Motion
to Re-Open the Case which was granted by Labor Arbiter Manuel P. Asuncion by Order of October 21,
1997.

By Decision[1] dated September 28, 1998 rendered in petitioners complaint in NLRC Case No. 07-
05409-97, the Labor Arbiter declared that the newly implemented work-shift schedule was a valid
exercise of management prerogative and the refusal of herein individual respondents to work on three
consecutive holidays was a form of protest by the Union, hence, deemed a concerted action. Noting that
the Union failed to comply with the formal requirements prescribed by the Labor Code in the holding of
strike, the strike was declared illegal.

The Union appealed to the NLRC which dismissed it in a per curiam Decision[2] dated September
14, 1999, and the subsequent motion for reconsideration was denied by Resolution dated November 11,
1999.

In the interim or on June 16, 1998, eight months into the second strike, petitioner filed a complaint against
respondents before the Labor Arbiter, praying for the declaration as illegal of the strike on account of their
alleged pervasive and widespread use of force and violence and for the loss of their employment, citing
the following acts committed by them: publicly shouting of foul and vulgar words to company officers and
non-striking employees; threatening of officers and non-striking employees with bodily harm and dousing
them with water while passing by the strike area; destruction of or inflicting of damage to company
property, as well as private property of company officers; and putting up of placards and streamers
containing vulgar and insulting epithets including imputing crime on the company.

By Decision[3] of June 15, 2000, Labor Arbiter Ramon Valentin C. Reyes declared the second strike
illegal. Taking judicial notice of the September 28, 1998 Decision of Labor Arbiter Asuncion, he noted that
as the Union went on the first strike on a non-strikeable issue ─ the questioned change of work schedule,
it violated the No-Strike, No-Lockout clause in the CBA and, in any event, the Union failed to comply with
the requirements for a valid strike.

The Labor Arbiter went on to hold that the Union deliberately resorted to the use of violent and
unlawful acts in the course of the second strike, hence, the individual respondents were deemed to have
lost their employment.

On appeal, the National Labor Relations Commission (NLRC) affirmed in toto the Labor Arbiters
decision, by Resolution[4] dated October 31, 2001. It held that even if the strike were legal at the onset,
the commission of violent and unlawful acts by individual respondents in the course thereof rendered it
illegal.

Its motion for reconsideration having been denied by Resolution[5] dated December 14, 2001,
the Union appealed to the Court of Appeals.
By the assailed Decision of April 16, 2004,[6] the appellate court reversed and set aside the NLRC
ruling, holding that the acts of violence committed by the Union members in the course of the strike were
not, as compared to the acts complained of in Shell Oil Workers Union v. Shell Company of the
Philippines,[7] First City Interlink Transportation Co., Inc., v. Roldan-Confesor[8] and Maria Cristina
Fertilizer Plant Employees Association v. Tandaya, [9] (this case was applied by the Labor Arbiter in his
Decision of September 28, 2008) where the acts of violence resulted in loss of employment, concluded
that the acts in the present case were not as serious or pervasive as in these immediately-cited cases to
call for loss of employment of the striking employees.

Specifically, the appellate court noted that at the time petitioner filed its complaint in June 1998,
almost eight months had already elapsed from the commencement of the strike and, in the interim, the
alleged acts of violence were committed only during nine non-consecutive days, viz: one day in October,
two days in November, four days in December, all in 1997, and two days in January 1998. To the
appellate court, these incidents did not warrant the conversion of an otherwise legal strike into an illegal
one, and neither would it result in the loss of employment of the strikers. For, so the appellate court held,
the incidents consisted merely of name-calling and using of banners imputing negligence and criminal
acts to the company and its officers, which do not indicate a degree of violence that could be categorized
as grave or serious to warrant the loss of employment of the individual strikers found to be responsible.
By Resolution of January 25, 2005, the appellate court denied petitioners motion for reconsideration,
hence, the present petition.

Petitioner insists that, contrary to the appellate courts finding, the questioned acts of the strikers were of a
serious character, widespread and pervasive; and that the Unions imputation of crime and negligence on
its part, and the prolonged strike resulted in its loss of goodwill and business, particularly the termination
of its lease and air-service contract with Amanpulo, the loss of its after-sales repair service agreement
with Bell Helicopters, the loss of its accreditation as the Beechcraft service facility, and the decision of El
Nido to put up its own aviation company.

Apart from the acts of violence committed by the strikers, petitioner bases its plea that the strike should
be declared illegal on the violation of the No-Strike-No-Lockout clause in the CBA, the strike having
arisen from non-strikeable issues. Petitioner proffers that what actually prompted the holding of the strike
was the implementation of the new shift schedule, a valid exercise of management prerogative.

In issue then is whether the strike staged by respondents is illegal due to the alleged commission of
illegal acts and violation of the No Strike-No Lockout clause of the CBA and, if in the affirmative, whether
individual respondents are deemed to have lost their employment status on account thereof.

The Court rules in the affirmative.

The Court notes that, as found by the Labor Arbiter in NLRC Case No. 07-05409-97, the first
strike or the mechanics refusal to work on 3 consecutive holidays was prompted by their disagreement
with the management-imposed new work schedule. Having been grounded on a non-strikeable issue and
without complying with the procedural requirements, then the same is a violation of the No Strike-No
Lockout Policy in the existing CBA. Respecting the second strike, where the Union complied with
procedural requirements, the same was not a violation of the No Strike- No Lockout provisions, as a No
Strike-No Lockout provision in the Collective Bargaining Agreement (CBA) is a valid stipulation but may
be invoked only by employer when the strike is economic in nature or one which is conducted to force
wage or other concessions from the employer that are not mandated to be granted by the law. It would be
inapplicable to prevent a strike which is grounded on unfair labor practice. [10] In the present case,
the Union believed in good faith that petitioner committed unfair labor practice when it went on strike on
account of the 30-day suspension meted to the striking mechanics, dismissal of a union officer and
perceived union-busting, among others. As held in Malayang Samahan ng mga Manggaggawa sa M.
Greenfield v. Ramos:[11]

On the submission that the strike was illegal for being grounded on a non-strikeable
issue, that is, the intra-union conflict between the federation and the local union, it bears
reiterating that when respondent company dismissed the union officers, the issue
was transformed into a termination dispute and brought respondent company into
the picture. Petitioners believed in good faith that in dismissing them upon request by
the federation, respondent company was guilty of unfair labor practice in that it violated
the petitioners right to self-organization. The strike was staged to protest respondent
companys act of dismissing the union officers. Even if the allegations of unfair labor
practice are subsequently found out to be untrue, the presumption of legality of
the strike prevails. (Emphasis supplied)

Be that as it may, the Court holds that the second strike became invalid due to the commission of
illegal action in its course.

It is hornbook principle that the exercise of the right of private sector employees to strike is not
absolute. Thus Section 3 of Article XIII of the Constitution provides:

SECTION 3. x x x

It shall guarantee the rights of all workers to self-organization, collective

bargaining and negotiations and peaceful concerted activities, including the right
to strike in accordance withlaw. They shall be entitled to security of tenure, humane
conditions of work, and a living wage. They shall also participate in policy and decision-
making processes affecting their rights and benefits as may be provided by
law. (Emphasis and underscoring supplied)

Indeed, even if the purpose of a strike is valid, the strike may still be held illegal where
the means employed are illegal. Thus, the employment of violence, intimidation, restraint or coercion in
carrying out concerted activities which are injurious to the right to property renders a strike illegal. And so
is picketing or the obstruction to the free use of property or the comfortable enjoyment of life or property,
when accompanied by intimidation, threats, violence, and coercion as to constitute nuisance.[12]

Apropos is the following ruling in Sukhothai Cuisine v. Court of Appeals:[13]

 Well-settled is the rule that even if the strike were to be declared valid because
its objective or purpose is lawful, the strike may still be declared invalid where the means
employed are illegal. Among such limits are the prohibited activities under Article 264 of
the Labor Code, particularly paragraph (e), which states that no person engaged in
picketing shall:

a) commit any act of violence, coercion, or intimidation or

b) obstruct the free ingress to or egress from the employer's
premises for lawful purposes, or
c) obstruct public thoroughfares.

The following acts have been held to be prohibited activities: where

the strikers shouted slanderous and scurrilous words against the owners of the
vessels; where the strikers used unnecessary and obscene language or epithets to
prevent other laborers to go to work, and circulated libelous statements against the
employer which show actual malice; where the protestors used abusive and
threatening language towards the patrons of a place of business or against co-
employees, going beyond the mere attempt to persuade customers to withdraw their
patronage; where the strikers formed a human cordon and blocked all the ways and
approaches to the launches and vessels of the vicinity of the workplace and perpetrated
acts of violence and coercion to prevent work from being performed; and where
the strikers shook their fists and threatened non-striking employees with bodily
harm if they persisted to proceed to the workplace. Permissible activities of the
picketing workers do not include obstruction of access of customers. (emphasis
supplied)

The appellate court found in the present case, as in fact it is not disputed, that the acts
complained of were the following:[14]

1. On 29 October 1997, while Robertus M. Cohen, personnel manager of the

Company, was eating at the canteen, petitioner Rodolfo Ramos shouted insults
and other abusive, vulgar and foul-mouthed word with the use of a
megaphone, such as, sige, ubusin mo yung pagkain, kapal ng mukha
mo; that when he left the canteen to go back to his office he was splashed with
water from behind so that his whole back was drenched; that when he
confronted that strikers at the picket line accompanied by three (3) security
guards, to find out who was responsible, he was told by petitioner Oswald Espion
who was then holding a thick piece of wood approximately two (2) feet long to
leave.

2. On the same day, 29 October 1997, petitioners Julius Vargas, Jeffrey Neri,
and Rodolfo Ramos, together with Jose Brin, shouted to Capt. Ben Hur Gomez,
the chief operating officer of the Company, in this wise, Matanda ka na,
balatuba ka pa rin. Mangungurakot ka sa kompanya!

3. In the morning of 11 November 1997, petitioner Ramos was reported to

have shouted to Mr. Maximo Cruz, the Mechanical and Engineering Manager of
the Company, Max, mag-resign ka na, ang baho ng bunganga mo!
4. In the afternoon of the same day, 11 November 1997, petitioner Jeffrey Neri
was said to have shouted these words Max, mag-resign ka na, ang baho ng
bunganga mo! to Mr. Maximo Cruz;
`
5. On 12 November 1997. petitioners Julius Vargas, Jeffrey Neri, Oswald
Espion, Raymond Barco, together with Jose Brin, were reported to have shouted
to Capt. Gomez and Mr. Maximo Cruz, Matanda ka na, balatuba ka pa
rin! Max, ang baho ng bunganga mo, kasing baho ng ugali mo!

6. On the same day, 12 November 1997, petitioner Oswald Espion was said to
have shouted to the non-striking employees and officers of the
Company, putang-ina ninyo!

7. Also, on 12 November 1997, petitioner Oswald Espion was reported to have

thrown gravel and sand to the car owned by Celso Villamor Gomez, lead
man of the Company, as the said car was traveling along company
premises near the picket line; (apart from the marks of mud, gravel and sand
found on the entire body of the car, no heavy damages, however, appears to
have been sustained by the car).

8. On 08 December 1997, petitioners Julius Vargas, Rey Espero, Rey Barry,

Galmier Balisbis, Rodolfo Ramos, Sonny Bawasanta and Arturo Ines, together
with Jose Brin, shouted, Max, ang sama mo talaga, lumabas ka dito at
pipitpitin ko ang mukha mo! Cohen, inutil ka talaga. Nagpahaba ka pa ng
balbas para kang tsonggo! Cohen, lumabas ka dito at hahalikan kita.

9. On 10 December 1997, petitioners Vargas and Espion were reported to

have shouted to Mr. Maximino Cruz, Hoy, Max Cruz, wala kang alam dyan,
huwag kang poporma-porma dyan! and then flashed the dirty finger at him;

10. On 15 December 1997, petitioner Neri was said to have shouted to non-
striking employees at the canteen, Hoy, mga iskerol, kain lang ng kain, mga
putangina ninyo!

11. Also on 15 December 1997, petitioners Vargas, Neri, Espion, Mar Nimuan,
Ramir Licuanan, Albert Aguila and Sonny Bawasanta, together with Jose
Brin, splashed water over Edmund C. Manibog, Jr., security guard of the
Company;

12. On 20 December 1997, the strikers admittedly lit and threw firecrackers
purportedly outside the Company premises, as part of a noise barrage,
while the Company was having its Christmas party inside the Company
premises;

13. On 14 January 1998, when Chris A. Oballas, collector of the Company,

boarded a public utility jeepney where Jose Brin, a striker, was also passenger,
Jose Brin was said to have shouted to the other passengers and driver of the
jeepney, Mga pasahero, driver, itong tao ito sherol, ang kapal ng
mukha. Iyong pinagtrabahuhan namin kinakain nito, ibenebent[a] kami nito,
hudas ito! Mga pasahero, tingnan niyo, hindi makatingin-tingin sa akin,
hindi makapagsalita. Hoy, tingin ka sa akin, napahiya ka sa mga ginagawa
mo ano? and, that when Chris Oballas was alighting from the jeepney, he
was kicked on his leg by Jose Brin; and,

14. On 15 January 1998, while Julio Tomas, Avionics Technician of the

Company, and his girlfriend, Elizabeth Gali, also an employee of the Company,
 were waiting for their ride, several union members shouted to Elizabeth
Gali, Beth iwanan mo na yang taong yan, walang kwentang tao yan! Beth,
paano na yung pinagsamahan natin? irked, Julio Tomas upon boarding the
passenger jeepney with his girlfriend threw a P2.00 coin in the direction of the
picketers, the coin hit the windshield of a privately-owned jeepney belonging to
petitioner Espion which was parked alongside the premises of the strike area;
The act of Tomas, provoked the petitioners Espion and Amimita to follow Tomas,
who when left alone inside the tricycle after his girlfriend took a separate tricycle
to her home, was approached by petitioners Espion and Amimita; petitioner
Espion then threw a P2.00 coin at him, and while pointing a baseball bat to his
face shouted, Huwag mong uulitin yung ginawa mo kundi tatamaan ka sa
akin! (Emphasis and italics in the original)

The Court notes that the placards and banners put up by the striking workers in the company
premises read: ANDRES SORIANO AVIATION, INC. CAUGHT IN THE ACT, ATTEMPTING TO BRIBE
GOVERNMENT OFFICIALS BEWARE, NOW A NAME YOU CAN TRASH, ASAI DETERIORATING
SAFETY RECORD KILLS 2 DEAD + VARIOUS (IN PLANE CRASH) FLIGHT MISHAPS BEWARE, FLY
AT YOUR OWN RISK, ANDRES SORIANO AVIATION, INC. DETERIORATING SAFETY RECORD
KILLS INNOCENT PEOPLE IN PLANE CRASH, THE CAUSE: UNTRAINED MECHANICS DOING
AIRCRAFT RELEASE, THE RESULT: SLIPSHOD MAINTENANCE AND SLOPPY PLANE
INSPECTION, WANNA FLY BLIND?, BENHUR GOMEZ DRAGS COMPANY TO DEBT AND
SHAMEFUL EXPERIENCE (MAHIYA KA NAMAN, OY!), A. SORIANO AVIATION, INC., DEAD PEOPLE
IN PLANE CRASH, ELY BONIFACIO (MASAKIT ANG TOTOO) MAGNANAKAW NG PIYESA, PALITAN
NA RIN! TINGNAN NYO KUNG NAGNANAKAW, MEKANIKO DE EROPLANO Y HUELGA UN VIAJE DE
PELIGRO, AIRCRAFT MANAGEMENT BULOK; A. SORIANO AVIATION KILLS PEOPLE FOR LAX
OVERSIGHT OF SAFETY PROC. (ELY BONIFACIO-PATALSIKIN NA RIN, MANDARAMBONG
MUKHANG KWARTA, SAAN MO DINALA ANG DORNIER SPECIAL TOOLS? IKAW HA!), ELY
BONIFACIO KAWATAN BANTAY SALAKAY, AMANPULO AND EL NIDO GUESTS, BEWARE OF ASAI
FLIGHTS, AIRCRAFT MECHANICS STILL ON STRIKE, GOING TO BORACAY AND EL NIDO IS GOOD
BUT FLYING WITH A. SORIANO AVIATION? THINK TWICE! ACHTUNG: A SORIANO AVIATION DEAD
PEOPLE IN PLANE CRASH INSURANCE ENTITLEMENTS DENIED DUE TO CAR VIOLATIONS,
UNDRESS SORIANO AVIATION, INC. UNRELIABLE FIXED BASED OPERATOR KILLS PEOPLE FOR
LAX OVERSIGHT OF SAFETY PROCEDURES.

It cannot be gainsaid that by the above-enumerated undisputed acts, the Union committed illegal acts
during the strike. The Union members repeated name-calling, harassment and threats of bodily harm
directed against company officers and non-striking employees and, more significantly, the putting up of
placards, banners and streamers with vulgar statements imputing criminal negligence to the company,
which put to doubt reliability of its operations, come within the purview of illegal acts under Art. 264 and
jurisprudence.
 That the alleged acts of violence were committed in nine non-consecutive days during the almost
eight months that the strike was on-going does not render the violence less pervasive or widespread to
be excusable. Nowhere in Art. 264 does it require that violence must be continuous or that it should be for
the entire duration of the strike.

The appellate court took against petitioner its filing of its complaint to have the strike declared
illegal almost eight months from the time it commenced. Art. 264 does not, however, state for purposes of
having a strike declared as illegal that the employer should immediately report the same. It only lists what
acts are prohibited. It is thus absurd to expect an employer to file a complaint at the first instance that an
act of violence is alleged to be committed, especially, as in the present case, when an earlier complaint to
have the refusal of the individual respondents to work overtime declared as an illegal strike was still
pending an issue resolved in its favor only on September 25, 1998.

The records show that the Union went on strike on October 22, 1997, and the first reported
harassment incident occurred on October 29, 1997, while the last occurred in January, 1998. Those
instances may have been sporadic, but as found by the Labor Arbiter and the NLRC, the display of
placards, streamers and banners even up to the time the appeal was being resolved by the NLRC works
against the Unions favor.

The acts complained of including the display of placards and banners imputing criminal
negligence on the part of the company and its officers, apparently with the end in view of intimidating the
companys clientele, are, given the nature of its business, that serious as to make the second strike illegal.
Specifically with respect to the putting up of those banners and placards, coupled with the name-calling
and harassment, the same indicates that it was resorted to to coerce the resolution of the dispute the very
evil which Art. 264 seeks to prevent.

While the strike is the most preeminent economic weapon of workers to force management to
agree to an equitable sharing of the joint product of labor and capital, it exerts some disquieting effects
not only on the relationship between labor and management, but also on the general peace and progress
of society and economic well-being of the State.[15] If such weapon has to be used at all, it must be used
sparingly and within the bounds of law in the interest of industrial peace and public welfare.

As to the issue of loss of employment of those who participated in the illegal strike, Sukhothai[16] instructs:

In the determination of the liabilities of the individual respondents, the applicable

provision is Article 264(a) of the Labor Code:

Art. 264. Prohibited Activities (a) x x x

xxxx
 x x x x Any union officer who knowingly participates in an illegal strike and
any worker or union officer who knowingly participates in the commission
of illegal acts during an illegal strike may be declared to have lost his employment
status: Provided, That mere participation of a worker in a lawful strike shall not
constitute sufficient ground for termination of his employment, even if a
replacement had been hired by the employer during such lawful strike.

xxxx

In Samahang Manggagawa sa Sulpicio Lines, Inc.-NAFLU v. Sulpicio Lines,

Inc., this Court explained that the effects of such illegal strikes, outlined in Article 264,
make a distinction between workers and union officers who participate therein: an
ordinary striking worker cannot be terminated for mere participation in an illegal. There
must be proof that he or she committed illegal acts during a strike. A union officer,
on the other hand, may be terminated from work when he knowingly participates in
an illegal strike, and like other workers, when he commits an illegal act during an
illegal strike. In all cases, the striker must be identified. But proof beyond reasonable
doubt is not required. Substantial evidence available under the attendant circumstances,
which may justify the imposition of the penalty of dismissal, may suffice. [17] (Emphasis
supplied)

The liability for prohibited acts has thus to be determined on an individual basis. A perusal of the
Labor Arbiters Decision, which was affirmed in toto by the NLRC, shows that on account of the staging of
the illegal strike, individual respondents were all deemed to have lost their employment, without
distinction as to their respective participation.

Of the participants in the illegal strike, whether they knowingly participated in the illegal strike in
the case of union officers or knowingly participated in the commission of violent acts during the illegal
strike in the case of union members, the records do not indicate. While respondent Julius Vargas was
identified to be a union officer, there is no indication if he knowingly participated in the illegal strike. The
Court not being a trier of facts, the remand of the case to the NLRC is in order only for the purpose of
determining the status in the Union of individual respondents and their respective liability, if any.

WHEREFORE, the petition is GRANTED. The Court of Appeals Decision and Resolution dated
April 16, 2004 and January 25, 2005, respectively, are REVERSED and SET ASIDE. The Resolutions
dated October 31, 2001 and December 14, 2001 of the National Labor Relations Commission affirming
the Decision of the Labor Arbiter in NLRC-NCR Case No. 00-06-04890-98 are AFFIRMED with
the MODIFICATION in light of the foregoing discussions.

The case is accordingly REMANDED to the National Labor Relations Commission for the
purpose of determining the Union status and respective liabilities, if any, of the individual respondents.

SO ORDERED.
  Manila Jockey Club Employees Labor Union vs. Manila Jockey Club Inc.
G.R. No. 167760, March 7, 2007

DECISION

GARCIA, J.:

Challenged in this petition for review under Rule 45 of the Rules of Court is the decision[1] dated
December 17, 2004 of the Court of Appeals (CA), as reiterated in its resolution [2] of April 4, 2005,
dismissing the petition for review of herein petitioner in CA-G.R. SP No. 69240, entitled Manila Jockey
Club Employees Labor Union- PTGWO v. Manila Jockey Club, Inc.

The facts:

Petitioner Manila Jockey Club Employees Labor Union-PTGWO and respondent Manila Jockey Club,
Inc., a corporation with a legislative franchise to conduct, operate and maintain horse races, entered into
a Collective Bargaining Agreement (CBA) effective January 1, 1996 to December 31, 2000. The CBA
governed the economic rights and obligations of respondents regular monthly paid rank-and-file
employees.[3] In the CBA, the parties agreed to a 7-hour work schedule from 9:00 a.m. to 12:00 noon and
from1:00 p.m. to 5:00 p.m. on a work week of Monday to Saturday, as contained under Section 1, Article
IV,[4] of the same CBA, to wit:

Section 1. Both parties to this Agreement agree to observe the seven-hour work
schedule herewith scheduled to be from 9:00 a.m. to 12:00 noon and 1:00 p.m. to 5
p.m. on work week of Monday to Saturday. All work performed in excess of seven (7)
hours work schedule and on days not included within the work week shall be considered
overtime and paid as such. Except those monthly compensation which
includes work performed during Saturday, Sunday, and Holiday when races are held at
the Club.

xxx xxx xxx

Accordingly, overtime on an ordinary working day shall be remunerated in an amount

equivalent to the worker's regular basic wage plus twenty five percent (25%)
thereof. Where the employee is permitted or suffered to work on legally mandated
holidays or on his designated rest day which is not a legally mandated holiday, thirty
percent (30%) shall be added to his basic wage for a seven hour work; while work
rendered in excess of seven hours on legally mandated holidays and rest days not
falling within the aforestated categories day shall be additionally compensated for the
overtime work equivalent to his rate for the first seven hours on a legally mandated
holiday or rest day plus thirty percent (30%) thereof.

The CBA likewise reserved in respondent certain management prerogatives, including the determination
of the work schedule, as provided under Section 2, Article XI:

Section 2. The COMPANY shall have exclusive control in the management of the offices
and direction of the employees. This shall include, but shall not be limited to, the right to
plan, direct and control office operations, to hire, assign and transfer employees from
one job to another or from one department to another; to promote, demote, discipline,
suspend, discharge or terminate employees for proper cause and/or in accordance with
 law, to relieve employees from duty because of lack of work or for other legitimate
reasons; or to introduce new or improved methods or facilities; or to change existing
methods or facilities to change the schedules of work; and to make and enforce rules
and regulations to carry out the functions of management, provided, however, that the
COMPANY will not use these rights for the purpose of discrimination against any
employee because of his membership in the UNION. Provided, further, that the
prerogatives provided for under this Section shall be subject to, and in accordance with
pertinent directives, proclamations and their implementing rules and regulations.

On April 3, 1999, respondent issued an inter-office memorandum declaring that, effective April
20, 1999, the hours of work of regular monthly-paid employees shall be from 1:00 p.m. to 8:00 p.m. when
horse races are held, that is, every Tuesday and Thursday. The memorandum, however, maintained
the 9:00 a.m. to 5:00 p.m. schedule for non-race days.

On October 12, 1999, petitioner and respondent entered into an Amended and Supplemental
CBA retaining Section 1 of Article IV and Section 2 of Article XI, supra, and clarified that any conflict
arising therefrom shall be referred to a voluntary arbitrator for resolution.

Subsequently, before a panel of voluntary arbitrators of the National Conciliation and Mediation
Board (NCMB), petitioner questioned the above office memorandum as violative of the prohibition
against non-diminution of wages and benefits guaranteed under Section 1, Article IV, of the CBA which
specified the work schedule of respondent's employees to be from 9:00 a.m. to 5:00 p.m. Petitioner
claimed that as a result of the memorandum, the employees are precluded from rendering their usual
overtime work from 5:00 p.m. to 9:00 p.m.

The NCMBs panel of voluntary arbitrators, in a decision dated October 18, 2001, upheld
respondent's prerogative to change the work schedule of regular monthly-paid employees under Section
2, Article XI, of the CBA. Petitioner moved for reconsideration but the panel denied the motion.
Dissatisfied, petitioner then appealed the panels decision to the CA in CA-G.R. SP No. 69240. In
the herein assailed decision of December 17, 2004, the CA upheld that of the panel and denied
petitioners subsequent motion for reconsideration via its equally challenged resolution of April 4, 2005.

Hence, petitioners present recourse, raising the following issues:

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN HOLDING

THAT RESPONDENT MJCI DID NOT RELINQUISH PART OF ITS MANAGEMENT
PREROGATIVE WHEN IT STIPULATED A WORK SCHEDULE IN THE CBA.

II

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN HOLDING

THAT RESPONDENT MJCI DID NOT VIOLATE THE NON-DIMINUTION PROVISION
CONTAINED IN ARTICLE 100 OF THE LABOR CODE.

We DENY.

Respondent, as employer, cites the change in the program of horse races as reason for the
adjustment of the employees work schedule. It rationalizes that when the CBA was signed, the horse
races started at 10:00 a.m. When the races were moved to 2:00 p.m., there was no other choice for
management but to change the employees' work schedule as there was no work to be done in the
morning. Evidently, the adjustment in the work schedule of the employees is justified.

We are not unmindful that every business enterprise endeavors to increase profits. As it is, the
Court will not interfere with the business judgment of an employer in the exercise of its prerogative to
devise means to improve its operation, provided that it does not violate the law, CBAs, and the general
principles of justice and fair play. We have thus held that management is free to regulate, according to its
own discretion and judgment, all aspects of employment, including hiring, work assignments, working
methods, time, place and manner of work, processes to be followed, supervision of workers, working
regulations, transfer of employees, work supervision, layoff of workers and discipline, dismissal, and
recall of workers.[5]

While it is true that Section 1, Article IV of the CBA provides for a 7-hour work schedule
from 9:00 a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m. from Mondays to Saturdays, Section 2,
Article XI, however, expressly reserves on respondent the prerogative to change existing methods or
facilities to change the schedules of work. As aptly ruled by the CA:

x x x. Such exact language lends no other meaning but that while respondent
may have allowed the initial determination of the work schedule to be done through
collective bargaining, it expressly retained the prerogative to change it.

Moreover, it cannot be said that in agreeing to Section 1 of Article IV,

respondent already waived that customary prerogative of management to set the work
schedule. Had that been the intention, Section 2 of Article XI would not have made any
reference at all to the retention by respondent of that prerogative. The CBA would have
instead expressly prohibited respondent from exercising it. x x x As it were, however, the
CBA expressly recognized in respondent the prerogative to change the work
schedule. This effectively rules out any notion of waiver on the part of respondent of its
prerogative to change the work schedule.

The same provision of the CBA also grants respondent the prerogative to relieve employees from duty
because of lack of work. Petitioners argument, therefore, that the change in work schedule violates
Article 100 of the Labor Code because it resulted in the diminution of the benefit enjoyed by regular
monthly-paid employees of rendering overtime work with pay, is untenable. Section 1, Article IV, of the
CBA does not guarantee overtime work for all the employees but merely provides that "all work
performed in excess of seven (7) hours work schedule and on days not included within the work week
shall be considered overtime and paid as such."

Respondent was not obliged to allow all its employees to render

overtime work everyday for the whole year, but only those employees
whose services were needed after their regular working hours and only
upon the instructions of management. The overtime pay was not given to each employee consistently,
deliberately and unconditionally, but as a compensation for additional services rendered. Thus, overtime
pay does not fall within the definition of benefits under Article 100 of the Labor Code on prohibition
against elimination or diminution of benefits.

While the Constitution is committed to the policy of social justice and the protection of the working class,
it should not be presumed that every labor dispute will be automatically decided in favor of labor. The
partiality for labor has not in any way diminished our belief that justice in every case is for the deserving,
to be dispensed in the light of the established facts and the applicable law and doctrine.[6]

WHEREFORE, the instant petition is DENIED and the assailed decision and resolution of the CA
are AFFIRMED.

Costs against petitioner.

SO ORDERED.

 Art. 84 Hours Worked: Rule 1 Omnibus Rules Implementing the Labor Code.
o Principles in determining hours worked
 Durabilt Recapping Plant Company vs. NLRC G.R. No. L-76746, July 27,
1987

DECISION

GUTIERREZ, JR., J.:

This is a petition to review the May 16, 1986 resolution of respondent National Labor Relations
Commission (NLRC) affirming the Labor Arbiter’s order in NLRC Case No. NCR-7-3162083. The sole
issue raised is the proper basis for the computation of backwages in favor of an illegally dismissed
employee.

The facts of the case are simple and uncontroverted.

On July 11, 1983, a complaint for illegal dismissal was filed by respondent Reynaldo Bodegas, against
petitioner Durabuilt, a tire recapping company.

In a decision rendered by the Labor Arbiter on February 13, 1984, the private respondent was ordered
reinstated to his former position with full backwages, from the time he was terminated up to the time he is
actually reinstated, without loss of seniority rights and benefits accruing to him.

The petitioners failed to file a seasonable appeal and entry of final judgment was made on July 8, 1985.

On August 8, 1985, the Acting Chief of Research and Information and the Corporation Auditing Examiner
of the then Ministry of Labor and Employment submitted a computation of backwages, ECOLA, 13th
month pay, sick and vacation leave benefits in favor of Reynaldo Bodegas in the total amount of
P24,316.38.

The petitioner filed its opposition to the computation on the ground that it contemplated a straight
computation of twenty-six (26) working days in one month when the period covered by the computation
was intermittently interrupted due to frequent brownouts and machine trouble and that respondent
Bodegas had only a total of 250.75 days of attendance in 1982 due to absences. According to the
petitioner, Bodegas is entitled only to the amount of P3,834.05 broken down as follows: salaries —
P1,993.00; ECOLA-P1,433.50, and 13th month pay — P407.55.

On October 23, 1985, the Labor Arbiter denied the opposition to the computation. The petitioner appealed
to the NLRC which, in an order dated May 16, 1986, affirmed the order of the Labor Arbiter and dismissed
the appeal.
Claiming grave abuse of discretion on the part of the public respondents, Durabuilt filed the instant
petition.

Backwages, in general, are granted on grounds of equity for earnings which a worker or employee has
lost due to his dismissal from work (New Manila Candy Workers Union (NACONWA-PAFLU v. CIR, 86
SCRA 37).

The general principle is that an employee is entitled to receive as backwages all the amounts he may
have lost starting from the date of his dismissal up to the time of his reinstatement (Capital Garment
Corporation v. Ople, 117 SCRA 473; New Manila Candy Workers’ Union (NACONWA-PAFLU) v. CIR,
supra).

In a line of cases, this Court has established a policy fixing the amount of backwages to a just and
reasonable level without qualification or deduction (Insular Life Assurance Co., Ltd. Employees’
Association-NATU v. Insular Life Assurance Co., Ltd., 76 SCRA 501; Feati University Club v. Feati
University, 58 SCRA 395; Mercury Drug Co., Inc. v. CIR, 56 SCRA 694). The respondents center their
attention on the above underlined portion of this policy. Hence, their contention that the deductions cited
by the petitioners cannot be made.

In their bid to recover a greater amount of backwages, the rationale of the policy has escaped the
respondents’ consideration. In Insular Life Assurance Employees’ Association-NATU v. Insular Life
Assurance Co., Ltd. (76 SCRA 50) we held that to fix the amount of backwages without qualification or
deduction simply means that the workers are to be paid their backwages fixed as of the time of their
dismissal or strike without deduction for their earnings elsewhere during their lay-off and without
qualification of their backwages as thus fixed; i.e. unqualified by any wage increases or other benefits that
may have been received by their co-workers who were not dismissed or did not go on strike. The principle
is justified "as a realistic, reasonable and mutually beneficial solution for it relieves the employees from
proving their earnings during their lay-offs and the employer from submitting counterproofs. It was meant
to obviate the twin evils of idleness on the part of the employees and attrition and undue delay in
satisfying the award on the part of the employer" (New Manila Candy Workers Union NACONWA-PAFLU
v. CIR supra). The same was not to establish an inflexible rule of computation of any backwages due an
employee.

The age-old rule governing the relation between labor and capital, or management and employee of a
"fair day’s wage for a fair day’s labor" remains as the basic factor in determining employees’ wages, and
for that matter backwages. If there is no work performed by the employee there can be no wage or pay
unless, of course, the laborer was able, willing and ready to work but was illegally locked out, or
suspended (SSS v. SSS Supervisors’ Union-CUGCO, 117 SCRA 746).

The illegal dismissal of the private respondent is conceded by the petitioner. It is willing to pay
backwages. However, the petitioner argues that for days where no work was required and could be done
by its employees, no wages could have been earned and, thereafter, lost by said employees to justify an
award of backwages. We quote with approval the Solicitor General’s comment, ** to wit:

"From the indubitable facts on record, it appears that petitioners have valid reasons to claim that certain
days should not be considered days worked for purposes of computing private respondent’s backwages
since their business was not in actual operation due to brownouts or power interruption and the
retrenchment of workers they had during the period of private respondent’s dismissal.

"It cannot be denied that during the past years particularly in 1983, there was chronic electrical power
interruption resulting to disruption of business operations. To alleviate the situation, the government thru
the Ministry of Trade and Industry called on the industrial sector to resort to the so-called Voluntary Loan
Curtailment Plan (or VLCP), whereby brownouts or electrical power interruption was scheduled by area.
The program while it may have been called "voluntary" was not so as electrical power consumers had no
choice then due to the prevailing energy crisis.
"Petitioners heeding the government’s call, participated in the VLCP as indicated in their statement of
comformity dated November 23, 1982. Thus, beginning March 21, 1983 and every Wednesday thereafter,
petitioner’s business (which indicentally is recapping rubber tires) was not in actual operation. No less
than the former Minister of Trade and Industry expressed his gratitude to petitioners for participating in
the VLCP. Petitioners substantiated claim therefore, that the days during which they were not in operation
due to the VLCP should be excluded in the number of days worked for purposes of computing private
respondents backwages stands reasonable and should have been considered by the corporation auditing
examiner.

"Moreover, as early as May 1978, the Ministry of Labor and Employment, thru Policy Instruction No. 36,
has said that —

"2. Brownouts running for more than twenty minutes may not be treated as hours worked provided that
any of the following conditions are present;

"a) The employees can leave their work place or go elsewhere whether within or without the work
premises; or

"b) The employees can use the time effectively for their own interest.

"It is of record that during electrical power interruptions, petitioners business was not in operation. This
was never disputed by private Respondent.

"Petitioners’ claim that the period (December 1983) during which they effected retrenchment of workers
owing to economic crisis then prevailing likewise appears plausible. There is substantial evidence
consisting of reports to MOLE and Social Security System showing that petitioners had laid off workers
due to lack of raw materials. The petitioners payrolls submitted to support their objection to computation
indicate that the number of working days was reduced from the normal weekly six working days to four
working days for a great number of petitioners’ workers. Obviously, private respondent could not have
been among those laid off, as at that time he was already dismissed by petitioner." (Rollo, pp. 31-34).

Thus, we have held that where the failure of workers to work was not due to the employer’s fault, the
burden of economic loss suffered by the employees should not be shifted to the employer. Each party
must bear his own loss (SSS v. SSS Supervisors’ Union-CUGCO, supra; Pan-American World Airways,
Inc. v. CIR, 17 SCRA 813). As pointed out by the Solicitor General —

‘. . . to allow payment of backwages of P24,316.68 as ordered by public respondents instead of

P3,834.16 as petitioners claim and which appears to be just and reasonable under the circumstances of
this case would not only be unconscionable but would be grossly unfair to other employees who were not
paid when petitioners’ business was not in operation." (Rollo, p. 35).

Indeed, it would neither be fair nor just to allow respondent to recover something he has not earned and
could not have earned and to further penalize the petitioner company over and above the losses it had
suffered due to lack of raw materials and the energy-saving programs of the government. The private
respondent cannot be allowed to enrich himself at the expense of the petitioner company. The
computation of backwages should be based on daily rather than on monthly pay schedules where, as in
the case at bar, such basis is more realistic and accurate. (Compania Maritima v. United Seamen’s Union
of the Philippines, 65 SCRA 393).

In conclusion, we again quote the Solicitor General’s comment:

"Finally, what strengthens petitioners claim for mitigated liability is their evident good faith as manifested
by their reinstatement of private respondent while the case for illegal dismissal was still pending and their
willingness to pay backwages. While it is true that as a general rule order of reinstatement carries with it
an award of backwages (Art. 280, Labor Code) this Honorable Court did not only mitigate but absolved
employers from liability of backwages where good faith is evident (Findlay Millar Timber Co. v. PLASLU, 6
SCRA 26; Cromwell Com. Employees & Laborers Union v. CIR, 13 SCRA 259, Norton and Harrison
Labor Union v. Harrison Co. Inc. 15 SCRA 310; PAL v. PALEA, 57 SCRA 489; Cruz v. MOLE, 120 SCRA
15). There is no indication, to paraphrase this Honorable Court’s ruling in Pantranco North Express Inc. v.
NLRC (126 SCRA 526) that private respondent was a ‘victim of arbitrary and high handed action." (Rollo,
pp. 34-35).

WHEREFORE, in view of the foregoing, the petition is hereby GRANTED. The order of the Labor Arbiter,
Amelia M. Guloy in NLRC Case No. NCR-7-3162083, dated October 23, 1985, as affirmed by the NLRC
is SET ASIDE. The petitioner is ordered to pay private respondent his backwages from the time he was
terminated up to the time he was actually reinstated computed on the basis of the number of days when
petitioner’s business was in actual operation. The number of days where no work was required and could
be done by petitioner’s employees on account of shutdowns due to electrical power interruptions,
machine repair, and lack of raw materials are not considered hours worked for purposes of computing the
petitioner’s obligation to respondent employee. In no case shall the award exceed three year’s backpay
as above computed.

SO ORDERED.

o Waiting time and working time on call

 Opulencia Ice Plant and Storage vs. NLRC, G.R. No. 98368, December 15,
1993

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-98368 December 15, 1993

OPULENCIA ICE PLANT AND STORAGE AND/OR DR. MELCHOR OPULENCIA, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION), LABOR ARBITER NUMERIANO
VILLENA AND MANUEL P. ESITA, respondents.

Inocentes, De Leon, Leogardo, Atienza, Magnaye & Azucena (IDLAMA) Law Offices for petitioners.

Noli J. De los Santos for private respondent.

BELLOSILLO, J.:

MANUEL P. ESITA was for twenty (20) years a compressor operator of Tiongson Ice Plant in San Pablo
City. In 1980 he was hired as compressor operator-mechanic for the ice plants of petitioner Dr. Melchor
Opulencia located in Tanauan, Batangas, and Calamba, Laguna. Initially assigned at the ice plant in
Tanauan, Esita would work from seven o'clock in the morning to five o'clock in the afternoon receiving a
daily wage of P35.00.
In 1986, Esita was transferred to the ice plant in Calamba, which was then undergoing overhauling, taking
the place of compressor operator Lorenzo Eseta, who was relieved because he was already old and
weak. For less than a month, Esita helped in the construction-remodeling of Dr. Opulencia's house.

On 6 February 1989, for demanding the correct amount of wages due him, Esita was dismissed from
service. Consequently, he filed with Sub-Regional Arbitration Branch IV, San Pablo City, a complaint for
illegal dismissal, underpayment, non-payment for overtime, legal holiday, premium for holiday and rest
day, 13th month, separation/retirement pay and allowances against petitioners.

Petitioners deny that Esita is an employee. They claim that Esita could not have been employed in 1980
because the Tanauan ice plant was not in operation due to low voltage of electricity and that Esita was
merely a helper/peonof one of the contractors they had engaged to do major repairs and renovation of the
Tanauan ice plant in 1986. Petitioners further allege that when they had the Calamba ice plant repaired
and expanded, Esita likewise rendered services in a similar capacity, and thus admitting that he worked
as a helper/peon in the repair or remodeling of Dr. Opulencia's residence in Tanauan.

Opulencia likewise maintains that while he refused the insistent pleas of Esita for employment in the ice
plants due to lack of vacancy, he nonetheless allowed him to stay in the premises of the ice plant for free
and to collect fees for crushing or loading ice of the customers and dealers of the ice plant. Opulencia
claims that in addition, Esita enjoyed free electricity and water, and was allowed to cultivate crops within
the premises of the ice plant to augment his income. Petitioners however admit that "following the
tradition of 'pakikisama' and as a token of gratitude of the part of the complainant (Esita), he helps in the
cleaning of the ice plant premises and engine room whenever he is requested to do so, and this happens
only (at) twice a month."

On 8 December 1989, Labor Arbiter Nemeriano D. Villena rendered a decision 1 finding the existence of
an employer-employee relationship between petitioners and Esita and accordingly directed them to pay
him P33,518.02 representing separation pay, underpayment of wages, allowances, 13th month, holiday,
premium for holiday, and rest day pays. The claim for overtime pay was however dismissed for lack of
basis, i.e., Esita failed to prove that overtime services were actually rendered.

On 29 November 1990, the Third Division of the National Labor Relations Commission, in Case No. RAB-
IV-2-2206-89, affirmed the decision of Labor Arbiter Villena but reduced the monetary award to
P28,344.60 as it was not proven that Esita worked every day including rest days and on the days before
the legal holidays. On 26 March 1991, petitioners' motion for reconsideration was denied.

In this present recourse, petitioners seek reversal of the ruling of public respondents Labor Arbiter and
NLRC, raising the following arguments: that public respondents have no jurisdiction over the instant case;
that Esita's work in the repair and construction of Dr. Opulencia's residence could not have ripened into a
regular employment; that petitioners' benevolence in allowing Esita to stay inside the company's premises
free of charge for humanitarian reason deserves commendation rather than imposition of undue penalty;
that Esita's name does not appear in the payrolls of the company which necessarily means that he was
not an employee; and, that Esita's statements are inconsistent and deserving of disbelief. On 13 May
1991, petitioners' prayer for a temporary restraining order to prevent respondents from enforcing the
assailed resolutions of NLRC was granted.

The instant petition lacks merit, hence, must be dismissed.

Petitioners allege that there is no employer-employee relationship between them and Esita; consequently,
public respondents have no jurisdiction over the case. Petitioners even go to the extent of asserting that
"in case like the one at bar where employer-employee relationship has been questioned from the very
start, Labor Arbiters and the NLRC have no jurisdiction and should not assume jurisdiction therein."
While the Labor Arbiter and the NLRC may subsequently be found without jurisdiction over a case when it
would later appear that no employer-employee relationship existed between the contending parties, such
is not the situation in this case where the employer-employee relationship between the petitioners and
Esita was clearly established. If the argument of petitioners were to be allowed, then unscrupulous
employers could readily avoid the jurisdiction of the Labor Arbiters and NLRC, and may even elude
compliance with labor laws only on the bare assertion that an employer-employee relationship does not
exist.

Petitioners further argue that "complainant miserably failed to present any documentary evidence to prove
his employment. There was no time sheet, pay slip and/or payroll/cash voucher to speak of. Absence of
these material documents are necessary fatal to complainant's cause."

We do not agree. No particular form of evidence is required to prove the existence of an employer-
employee relationship. Any competent and relevant evidence to prove the relationship may be admitted.
For, if only documentary evidence would be required to show that relationship, no scheming employer
would ever be brought before the bar of justice, as no employer would wish to come out with any trace of
the illegality he has authored considering that it should take much weightier proof to invalidate a written
instrument. 2 Thus, as in this case where the employer-employee relationship between petitioners and
Esita was sufficiently proved by testimonial evidence, the absence of time sheet, time record or payroll
has become inconsequential.

The petitioners' reliance on Sevilla v. Court of Appeals 3 is misplaced. In that case, we did not consider
the inclusion of employer's name in the payroll as an independently crucial evidence to prove an
employer-employee relation. Moreover, for a payroll to be utilized to disprove the employment of a
person, it must contain a true and complete list of the employees. But, in this case, the testimonies of
petitioners' witnesses admit that not all the names of the employees were reflected in the payroll.

In their Consolidated Reply, petitioners assert that "employees who were absent were naturally not
included in the weekly payrolls." 4 But this simply emphasizes the obvious. Petitioners' payrolls do not
contain the complete list of the employees, so that the payroll slips cannot be an accurate basis in
determining who are and are not their employees. In addition, as the Solicitor General observes: ". . . . the
payroll slips submitted by petitioners do not cover the entire period of nine years during which private
respondent claims to have been employed by them, but only the periods from November 2 to November
29, 1986 and April 26 to May 30, 1987 . . . . It should be noted that petitioners repeatedly failed or refused
to submit all payroll slips covering the period during which private respondent claims to have been
employed by them despite repeated directives from the Labor Arbiter . . . ." 5 In this regard, we can aptly
apply the disputable presumption that evidence willfully suppressed would be adverse if produced. 6

Petitioners further contend that the claim of Esita that he worked from seven o'clock in the morning to five
o'clock in the afternoon, which is presumed to be continuous, is hardly credible because otherwise he
would not have had the time to tend his crops. 7 As against this positive assertion of Esita, it behooves
petitioners to prove the contrary. It is not enough that they raise the issue of probability, nay,
improbability, of the conclusions of public respondents based on the facts bared before them, for in case
of doubt, the factual findings of the tribunal which had the opportunity to peruse the conflicting pieces of
evidence should be sustained.

The petitioners point out that even granting arguendo that Esita was indeed a mechanic, he could never
be a regular employee because his presence would be required only when there was a need for repair.
We cannot sustain this argument. This circumstance cannot affect the regular status of employment of
Esita. An employee who is required to remain on call in the employer's premises or so close thereto that
he cannot use the time effectively and gainfully for his own purpose shall be considered as working while
on call. 8 In sum, the determination of regular and casual employment 9 is not affected by the fact that the
employee's regular presence in the place of work is not required, the more significant consideration being
that the work of the employee is usually necessary or desirable in the business of the employer. More
importantly, Esita worked for 9 years and, under the Labor Code, "any employee who has rendered at
least one year of service, whether such service is continuous or broken, shall be considered a regular
employee with respect to that activity in which he is employed . . . ." 10

The petitioners would give the impression that the repair of the ice plant and the renovation of the
residence of Dr. Opulencia were voluntarily extended by Esita because "[r]espondent did it on their (sic)
own." Unfortunately for petitioners, we cannot permit these baseless assertions to prevail against the
factual findings of public respondents which went through the sanitizing process of a public hearing. The
same observation may be made of the alleged inconsistencies in Esita's testimonies. Moreover, on the
claim that Esita's construction work could not ripen into a regular employment in the ice plant because the
construction work was only temporary and unrelated to the ice-making business, needless to say, the one
month spent by Esita in construction is insignificant compared to his nine-year service as compressor
operator in determining the status of his employment as such, and considering further that it was Dr.
Opulencia who requested Esita to work in the construction of his house.

In allowing Esita to stay in the premises of the ice plant and permitting him to cultivate crops to augment
his income, there is no doubt that petitioners should be commended; however, in view of the existence of
an employer-employee relationship as found by public respondents, we cannot treat humanitarian
reasons as justification for emasculating or taking away the rights and privileges of employees granted by
law. Benevolence, it is said, does not operate as a license to circumvent labor laws. If petitioners were
genuinely altruistic in extending to their employees privileges that are not even required by law, then there
is no reason why they should not be required to give their employees what they are entitled to receive.
Moreover, as found by public respondents, Esita was enjoying the same privileges granted to the other
employees of petitioners, so that in thus treating Esita, he cannot be considered any less than a
legitimate employee of petitioners.

WHEREFORE, there being no grave abuse of discretion on the part of public respondents, the instant
petition is DISMISSED. Accordingly, the restraining order we issued on 13 May 1991 is LIFTED.

SO ORDERED.

 Arica vs. NLRC 170 SCRA 776

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 78210 February 28, 1989

TEOFILO ARICA, DANILO BERNABE, MELQUIADES DOHINO, ABONDIO OMERTA, GIL

TANGIHAN, SAMUEL LABAJO, NESTOR NORBE, RODOLFO CONCEPCION, RICARDO RICHA,
RODOLFO NENO, ALBERTO BALATRO, BENJAMIN JUMAMOY, FERMIN DAAROL, JOVENAL
ENRIQUEZ, OSCAR BASAL, RAMON ACENA, JAIME BUGTAY, and 561 OTHERS, HEREIN
REPRESENTED BY KORONADO B. APUZEN, petitioners
vs.
NATIONAL LABOR RELATIONS COMMISSION, HONORABLE FRANKLIN DRILON, HONORABLE
CONRADO B. MAGLAYA, HONORABLE ROSARIO B. ENCARNACION, and STANDARD
(PHILIPPINES) FRUIT CORPORATION, respondents.

Koronado B. Apuzen and Jose C. Espinas for petitioners.

The Solicitor General for public respondent.

Dominguez & Paderna Law Offices Co. for private respondent.

PARAS, J.:

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

This case stemmed from a complaint filed on April 9, 1984 against private respondent Stanfilco for
assembly time, moral damages and attorney's fees, with the aforementioned Regional Arbitration Branch
No. XI, Davao City.

After the submission by the parties of their respective position papers (Annex "C", pp. 30-40; Annex "D",
Rollo, pp. 41-50), Labor Arbiter Pedro C. Ramos rendered a decision dated October 9, 1985 (Annex 'E',
Rollo, pp. 51-58) in favor of private respondent STANFILCO, holding that:

Given these facts and circumstances, we cannot but agree with respondent that the
pronouncement in that earlier case, i.e. the thirty-minute assembly time long practiced
cannot be considered waiting time or work time and, therefore, not compensable, has
become the law of the case which can no longer be disturbed without doing violence to
the time- honored principle of res-judicata.

WHEREFORE, in view of the foregoing considerations, the instant complaint should

therefore be, as it is hereby, DISMISSED.

SO ORDERED. (Rollo, p. 58)

On December 12, 1986, after considering the appeal memorandum of complainant and the opposition of
respondents, the First Division of public respondent NLRC composed of Acting Presiding Commissioner
Franklin Drilon, Commissioner Conrado Maglaya, Commissioner Rosario D. Encarnacion as Members,
promulgated its Resolution, upholding the Labor Arbiters' decision. The Resolution's dispositive portion
reads:

'Surely, the customary functions referred to in the above- quoted provision of the
agreement includes the long-standing practice and institutionalized non-compensable
assembly time. This, in effect, estopped complainants from pursuing this case.

The Commission cannot ignore these hard facts, and we are constrained to uphold the
dismissal and closure of the case.

WHEREFORE, let the appeal be, as it is hereby dismissed, for lack of merit.

SO ORDERED. (Annex "H", Rollo, pp. 86-89).

On January 15, 1987, petitioners filed a Motion for Reconsideration which was opposed by private
respondent (Annex "I", Rollo, pp. 90-91; Annex J Rollo, pp. 92-96).
Public respondent NLRC, on January 30, 1987, issued a resolution denying for lack of merit petitioners'
motion for reconsideration (Annex "K", Rollo, p. 97).

Hence this petition for review on certiorari filed on May 7, 1987.

The Court in the resolution of May 4, 1988 gave due course to this petition.

Petitioners assign the following issues:

1) Whether or not the 30-minute activity of the petitioners before the scheduled working
time is compensable under the Labor Code.

2) Whether or not res judicata applies when the facts obtaining in the prior case and in
the case at bar are significantly different from each other in that there is merit in the case
at bar.

3) Whether or not there is finality in the decision of Secretary Ople in view of the
compromise agreement novating it and the withdrawal of the appeal.

4) Whether or not estoppel and laches lie in decisions for the enforcement of labor
standards (Rollo, p. 10).

Petitioners contend that the preliminary activities as workers of respondents STANFILCO in the assembly
area is compensable as working time (from 5:30 to 6:00 o'clock in the morning) since these preliminary
activities are necessarily and primarily for private respondent's benefit.

These preliminary activities of the workers are as follows:

(a) First there is the roll call. This is followed by getting their individual work assignments
from the foreman.

(b) Thereafter, they are individually required to accomplish the Laborer's Daily
Accomplishment Report during which they are often made to explain about their reported
accomplishment the following day.

(c) Then they go to the stockroom to get the working materials, tools and equipment.

(d) Lastly, they travel to the field bringing with them their tools, equipment and materials.

All these activities take 30 minutes to accomplish (Rollo, Petition, p. 11).

Contrary to this contention, respondent avers that the instant complaint is not new, the very same claim
having been brought against herein respondent by the same group of rank and file employees in the case
of Associated Labor Union and Standard Fruit Corporation, NLRC Case No. 26-LS-XI-76 which was filed
way back April 27, 1976 when ALU was the bargaining agent of respondent's rank and file workers. The
said case involved a claim for "waiting time", as the complainants purportedly were required to assemble
at a designated area at least 30 minutes prior to the start of their scheduled working hours "to ascertain
the work force available for the day by means of a roll call, for the purpose of assignment or reassignment
of employees to such areas in the plantation where they are most needed." (Rollo, pp. 64- 65)
Noteworthy is the decision of the Minister of Labor, on May 12, 1978 in the aforecited case (Associated
Labor Union vs. Standard (Phil.) Fruit Corporation, NLRC Case No. 26-LS-XI-76 where significant
findings of facts and conclusions had already been made on the matter.

The Minister of Labor held:

The thirty (30)-minute assembly time long practiced and institutionalized by mutual
consent of the parties under Article IV, Section 3, of the Collective Bargaining Agreement
cannot be considered as waiting time within the purview of Section 5, Rule I, Book III of
the Rules and Regulations Implementing the Labor Code. ...

Furthermore, the thirty (30)-minute assembly is a deeply- rooted, routinary practice of the
employees, and the proceedings attendant thereto are not infected with complexities as
to deprive the workers the time to attend to other personal pursuits. They are not new
employees as to require the company to deliver long briefings regarding their respective
work assignments. Their houses are situated right on the area where the farm are
located, such that after the roll call, which does not necessarily require the personal
presence, they can go back to their houses to attend to some chores. In short, they are
not subject to the absolute control of the company during this period, otherwise, their
failure to report in the assembly time would justify the company to impose disciplinary
measures. The CBA does not contain any provision to this effect; the record is also bare
of any proof on this point. This, therefore, demonstrates the indubitable fact that the thirty
(30)-minute assembly time was not primarily intended for the interests of the employer,
but ultimately for the employees to indicate their availability or non-availability for work
during every working day. (Annex "E", Rollo, p. 57).

Accordingly, the issues are reduced to the sole question as to whether public respondent National Labor
Relations Commission committed a grave abuse of discretion in its resolution of December 17, 1986.

The facts on which this decision was predicated continue to be the facts of the case in this questioned
resolution of the National Labor Relations Commission.

It is clear that herein petitioners are merely reiterating the very same claim which they filed through the
ALU and which records show had already long been considered terminated and closed by this Court in
G.R. No. L-48510. Therefore, the NLRC can not be faulted for ruling that petitioners' claim is already
barred by res-judicata.

Be that as it may, petitioners' claim that there was a change in the factual scenario which are "substantial
changes in the facts" makes respondent firm now liable for the same claim they earlier filed against
respondent which was dismissed. It is thus axiomatic that the non-compensability of the claim having
been earlier established, constitute the controlling legal rule or decision between the parties and remains
to be the law of the case making this petition without merit.

As aptly observed by the Solicitor General that this petition is "clearly violative of the familiar principle
of res judicata.There will be no end to this controversy if the light of the Minister of Labor's decision dated
May 12, 1979 that had long acquired the character of finality and which already resolved that petitioners'
thirty (30)-minute assembly time is not compensable, the same issue can be re-litigated again." (Rollo, p.
183)

This Court has held:

In this connection account should be taken of the cognate principle that res
judicata operates to bar not only the relitigation in a subsequent action of the issues
squarely raised, passed upon and adjudicated in the first suit, but also the ventilation in
 said subsequent suit of any other issue which could have been raised in the first but was
not. The law provides that 'the judgment or order is, with respect to the matter directly
adjudged or as to any other matter that could have been raised in relation thereto,
conclusive between the parties and their successors in interest by title subsequent to the
commencement of the action .. litigating for the same thing and in the same capacity.' So,
even if new causes of action are asserted in the second action (e.g. fraud, deceit, undue
machinations in connection with their execution of the convenio de transaccion), this
would not preclude the operation of the doctrine of res judicata. Those issues are also
barred, even if not passed upon in the first. They could have been, but were not, there
raised. (Vda. de Buncio v. Estate of the late Anita de Leon, 156 SCRA 352 [1987]).

Moreover, as a rule, the findings of facts of quasi-judicial agencies which have acquired expertise
because their jurisdiction is confined to specific matters are accorded not only respect but at times even
finality if such findings are supported by substantial evidence (Special Events & Central Shipping Office
Workers Union v. San Miguel Corporation, 122 SCRA 557 [1983]; Dangan v. NLRC, 127 SCRA 706
[1984]; Phil. Labor Alliance Council v. Bureau of Labor Relations, 75 SCRA 162 [1977]; Mamerto v.
Inciong, 118 SCRA 265 (1982]; National Federation of Labor Union (NAFLU) v. Ople, 143 SCRA 124
[1986]; Edi-Staff Builders International, Inc. v. Leogardo, Jr., 152 SCRA 453 [1987]; Asiaworld Publishing
House, Inc. v. Ople, 152 SCRA 219 [1987]).

The records show that the Labor Arbiters' decision dated October 9, 1985 (Annex "E", Petition) pointed
out in detail the basis of his findings and conclusions, and no cogent reason can be found to disturb these
findings nor of those of the National Labor Relations Commission which affirmed the same.

PREMISES CONSIDERED, the petition is DISMISSED for lack of merit and the decision of the National
Labor Relations Commission is AFFIRMED.

SO ORDERED.

 Pan American World Airways System vs. Pan American Employees Assn.
L-16275, February 23, 1961

DECISION

REYES, J.B.L., J.:

Appeal by certiorari from the decision of the Court of Industrial Relations in Case No. 1055 - V dated
October 10, 1959, and its resolution en banc denying the motion for reconsideration filed by the petitioner
herein.

The dispositive portion of the appealed decision reads:

"WHEREFORE, the Court orders the Chief of the Examining Division or his representative to compute the
overtime compensation due the aforesaid fourteen (14) aircraft mechanics and the two employees from
the Communication Department, based on the time sheet of said employees from February 23 1952 up to
the including July 15, 1958 and to submit his report within 30 days for further disposition by the Court; and
the company shall show to the Court Examiner such time sheets and other documents that may be
necessary in the aforesaid computation; and two (2) representatives for the company and two (2)
representatives for the union shall be chosen to help the Court Examiner in said computation.
"The company is also ordered to permanently adopt the straight 8- hour shift inclusive of meal period
which is mutually beneficial to the parties.

"SO ORDERED."cralaw virtua1aw library

In this appeal, petitioner advances five propositions which, briefly, are as follows: (1) the Industrial Court
has no jurisdiction to order the payment of overtime compensation, it being a mere monetary claim
cognizable by regular courts; (2) the finding that the one-hour meal period should be considered overtime
work (deducting 15 minutes as time allotted for eating) is not supported by substantial evidence; (3) the
court below had no authority to delegate its judicial functions by ordering the Chief of the Examining
Division or his representative to compute the overtime pay; (4) the finding that there was no agreement to
withdraw Case No. 1055 - V in consideration of the wage increases in the Collective Bargaining Contract
(Exh. "A") is not supported by substantial evidence; and (5) the court below had no authority to order the
Company to adopt a straight 8-hour shift inclusive of meal period.

On the issue of jurisdiction over claims for overtime pay, we have since definitely ruled in a number of
recent decisions that the Industrial Court may properly take cognizance of such cases if, at the time of the
petition, the complainants were still in the service of the employer, or, having been separated from such
service, should ask for reinstatement; otherwise, such claims should be brought before the regular courts.
(NASSCO v. CIR, Et Al., L-13888, April 29, 1960; FRISCO v. CIR, Et Al., L-13806, May 23, 1960; Board
of Liquidators, Et Al., v. CIR, Et Al., L-15485, May 23, 1960; Sta. Cecilia Sawmills Co. v. CIR, L-14254 &
L-14255, May 27, 1960; Ajax-International Corp. v. Seguritan, L-16038, October 25, 1960; Sampaguita
Pictures, Inc., Et. Al. v. CIR, L-16404, October 25, 1960). Since, in the instant case, there is no question
that the employees claiming overtime compensation were still in the service of the company when the
case was filed, the jurisdiction of the Court of Industrial Relations cannot be assailed. In fact, since it is
not pretended that, thereafter, the complainants were discharged or otherwise terminated their
relationship with the company for any reason, all of said complainants could still be with the company up
to the present.

Petitioner herein claims that the one-hour meal period should not be considered as overtime work (after
deducting 15 minutes), because the evidence showed that complainants could rest completely and were
not in any manner under the control of the company during that period. The court below found, on the
contrary, that during the so-called meal period, the mechanics were required to stand by for emergency
work; that if they happened not to be available when called, they were reprimanded by the leadman; that
as in fact it happened on many occasions, the mechanics had been called from their meals or told to
hurry up eating to perform work during this period. Far from being unsupported by substantial evidence,
the record clearly confirms the above factual findings of the Industrial Court.

Similarly, this Court is satisfied with the finding that there was no agreement to withdraw Case No. 1055-V
in consideration of the wage increases obtained by the union and set forth in the Collective Bargaining
Agreement Exhibits "A." As reasoned out by the court below, such alleged agreement would have been
incorporated in the contract if it existed. The fact that the union filed a motion to dismiss without prejudice,
after the Collective Bargaining Contract had been signed, did not necessarily mean that it had agreed to
withdraw the case in consideration of the wage increases. The motion itself (Annex "B", Petition
for Certiorari) was expressly based on an understanding that the company would "formulate a schedule of
work which shall be in consonance with C. A. 444." All in all, there is substantial evidence in the record to
support the finding of the court below that no such agreement was made.

It is next contended that in ordering the Chief of the Examining Division or his representative to compute
the compensation due, the Industrial Court unduly delegated its judicial functions and thereby rendered
an incomplete decision. We do not believe so. Computation of the overtime pay involves a mechanical
function, at most. And the report would still have to be submitted to the Industrial Court for its approval, by
the very terms of the order itself. That there was no specification of the amount of overtime pay in the
decision did not make it incomplete, since this matter would necessarily be made clear enough in the
implementation of the decision (see Malate Taxicab & Garage, Inc. v. CIR, Et Al., L-8718, May 11, 1956).
The Industrial Court’s order for permanent adoption of a straight 8-hour shift including the meal period
was but a consequence of its finding that the meal hour was not one of complete rest, but was actually a
work hour, since, for its duration, the laborers had to be on ready call. Of course, if the Company
practices in this regard should be modified to afford the mechanics a real rest during that hour (f. ex., by
installing an entirely different emergency crew, or any similar arrangement), then the modification of this
part of the decision may be sought from the Court below. As things now stand, we see no warrant for
altering the decision.

The judgment appealed from is affirmed. Costs against Appellant.

Bengzon, Padilla, Bautista Angelo, Labrador, Concepcion, Barrera, Paredes and Dizon, J.J., concur.

o Travel Time
 Travel from home to work
 Travel that is all in the day’s work
 Travel away from home
 Rada vs. NLRC 205 SCRA 69

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 96078 January 9, 1992

HILARIO RADA, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION (Second Division) and PHILNOR CONSULTANTS
AND PLANNERS, INC., respondents.

Cabellero, Calub, Aumentado & Associates Law Offices for petitioner.

REGALADO, J.:

In this special civil action for certiorari, petitioner Rada seeks to annul the decision of respondent National
Labor Relations Commission (NLRC), dated November 19, 1990, reversing the decision of the labor
arbiter which ordered the reinstatement of petitioner with backwages and awarded him overtime pay. 1

The facts, as stated in the Comment of private respondent Philnor Consultants and Planners, Inc.
(Philnor), are as follows:

Petitioner's initial employment with this Respondent was under a "Contract of

Employment for a Definite Period" dated July 7, 1977, copy of which is hereto attached
and made an integral part hereof as Annex A whereby Petitioner was hired as "Driver" for
the construction supervision phase of the Manila North Expressway Extension, Second
Stage (hereinafter referred to as MNEE Stage 2) for a term of "about 24 months effective
July 1, 1977.

xxx xxx xxx

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

follows:

It is hereby understood that the Employer does not have a continuing

need for the services of the Employee beyond the termination date of
this contract and that the Employee's services shall automatically, and
without notice, terminate upon the completion of the above specified
phase of the project; and that it is further understood that the
engagement of his/her services is coterminus with the same and not with
the whole project or other phases thereof wherein other employees of
similar position as he/she have been hired. (Par. 7, emphasis supplied)

Petitioner's first contract of employment expired on June 30, 1979. Meanwhile, the main
project, MNEE Stage 2, was not finished on account of various constraints, not the least
of which was inadequate funding, and the same was extended and remained in progress
beyond the original period of 2.3 years. Fortunately for the Petitioner, at the time the first
contract of employment expired, Respondent was in need of Driver for the extended
project. Since Petitioner had the necessary experience and his performance under the
first contract of employment was found satisfactory, the position of Driver was offered to
Petitioner, which he accepted. Hence a second Contract of Employment for a Definite
Period of 10 months, that is, from July 1, 1979 to April 30, 1980 was executed between
Petitioner and Respondent on July 7, 1979. . . .

In March 1980 some of the areas or phases of the project were completed, but the bulk of
the project was yet to be finished. By that time some of those project employees whose
contracts of employment expired or were about to expire because of the completion of
portions of the project were offered another employment in the remaining portion of the
project. Petitioner was among those whose contract was about to expire, and since his
service performance was satisfactory, respondent renewed his contract of employment in
April 1980, after Petitioner agreed to the offer. Accordingly, a third contract of
employment for a definite period was executed by and between the Petitioner and the
Respondent whereby the Petitioner was again employed as Driver for 19 months, from
May 1, 1980 to November 30, 1981, . . .

This third contract of employment was subsequently extended for a number of times, the
last extension being for a period of 3 months, that is, from October 1, 1985 to December
31, 1985, . . .

The last extension, from October 1, 1985 to December 31, 1985 (Annex E) covered by an
"Amendment to the Contract of Employment with a Definite Period," was not extended
any further because Petitioner had no more work to do in the project. This last extension
was confirmed by a notice on November 28, 1985 duly acknowledged by the Petitioner
the very next day, . . .

Sometime in the 2nd week of December 1985, Petitioner applied for "Personnel
Clearance" with Respondent dated December 9, 1985 and acknowledged having
received the amount of P3,796.20 representing conversion to cash of unused leave
 credits and financial assistance. Petitioner also released Respondent from all obligations
and/or claims, etc. in a "Release, Waiver and Quitclaim" . . . 2

Culled from the records, it appears that on May 20, 1987, petitioner filed before the NLRC, National
Capital Region, Department of Labor and Employment, a Complaint for non-payment of separation pay
and overtime pay. On June 3, 1987, Philnor filed its Position Paper alleging, inter alia, that petitioner was
not illegally terminated since the project for which he was hired was completed; that he was hired under
three distinct contracts of employment, each of which was for a definite period, all within the estimated
period of MNEE Stage 2 Project, covering different phases or areas of the said project; that his work was
strictly confined to the MNEE Stage 2 Project and that he was never assigned to any other project of
Philnor; that he did not render overtime services and that there was no demand or claim for him for such
overtime pay; that he signed a "Release, Waiver and Quitclaim" releasing Philnor from all obligations and
claims; and that Philnor's business is to provide engineering consultancy services, including supervision
of construction services, such that it hires employees according to the requirements of the project
manning schedule of a particular contract. 3

On July 2, 1987, petitioner filed an Amended Complaint alleging that he was illegally dismissed and that
he was not paid overtime pay although he was made to render three hours overtime work form Monday to
Saturday for a period of three years.

On July 7, 1987, petitioner filed his Position Paper claiming that he was illegally dismissed since he was a
regular employee entitled to security of tenure; that he was not a project employee since Philnor is not
engaged in the construction business as to be covered by Policy Instructions No. 20; that the contract of
employment for a definite period executed between him and Philnor is against public policy and a clear
circumvention of the law designed merely to evade any benefits or liabilities under the statute; that his
position as driver was essential, necessary and desirable to the conduct of the business of Philnor; that
he rendered overtime work until 6:00 p.m. daily except Sundays and holidays and, therefore, he was
entitled to overtime pay. 4

In his Reply to Respondent's Position Paper, petitioner claimed that he was a regular employee pursuant
to Article 278(c) of the Labor Code and, thus, he cannot be terminated except for a just cause under
Article 280 of the Code; and that the public respondent's ruling in Quiwa vs. Philnor Consultants and
Planners, Inc. 5 is not applicable to his case since he was an administrative employee working as a
company driver, which position still exists and is essential to the conduct of the business of Philnor even
after the completion of his contract of employment. 6Petitioner likewise avers that the contract of
employment for a definite period entered into between him and Philnor was a ploy to defeat the intent of
Article 280 of the Labor Code.

On July 28, 1987, Philnor filed its Respondent's Supplemental Position Paper, alleging therein that
petitioner was not a company driver since his job was to drive the employees hired to work at the MNEE
Stage 2 Project to and from the filed office at Sto. Domingo Interchange, Pampanga; that the office hours
observed in the project were from 7:00 a.m. to 4:00 p.m. Mondays through Saturdays; that Philnor
adopted the policy of allowing certain employees, not necessarily the project driver, to bring home project
vehicles to afford fast and free transportation to and from the project field office considering the distance
between the project site and the employees' residence, to avoid project delays and inefficiency due to
employee tardiness caused by transportation problem; that petitioner was allowed to use a project vehicle
which he used to pick up and drop off some ten employees along Epifanio de los Santos Avenue (EDSA),
on his way home to Marikina, Metro Manila; that when he was absent or on leave, another employee
living in Metro Manila used the same vehicle in transporting the same employees; that the time used by
petitioner to and from his residence to the project site from 5:30 a.m. to 7:00 a.m. and from 4:00 p.m. to
6:00 p.m., or about three hours daily, was not overtime work as he was merely enjoying the benefit and
convenience of free transportation provided by Philnor, otherwise without such vehicle he would have
used at least four hours by using public transportation and spent P12.00 daily fare; that in the case
of Quiwa vs. Philnor Consultants and Planners, Inc., supra, the NLRC upheld Philnor's position that
Quiwa was a project employee and he was not entitled to termination pay under Policy Instructions No.
20 since his employment was coterminous with the completion of the project.

On August 25, 1987, Philnor filed its Respondent's Reply/Comments to Complainant's Rejoinder and
Reply, submitting therewith two letters dated January 5, 1985 and February 6, 1985, signed by MNEE
Stage 2 Project employees, including herein petitioner, where they asked what termination benefits could
be given to them as the MNEE Stage 2 Project was nearing completion, and Philnor's letter-reply dated
February 22, 1985 informing them that they are not entitled to termination benefits as they are
contractual/project employees.

On August 31, 1989, Labor Arbiter Dominador M. Cruz rendered a decision 7 with the following dispositive
portion:

WHEREFORE, in view of all the foregoing considerations, judgment is hereby rendered:

(1) Ordering the respondent company to reinstate the complainant to his former position
without loss of seniority rights and other privileges with full backwages from the time of
his dismissal to his actual reinstatement;

(2) Directing the respondent company to pay the complainant overtime pay for the three
excess hours of work performed during working days from January 1983 to December
1985; and

(3) Dismissing all other claims for lack of merit.

SO ORDERED.

Acting on Philnor's appeal, the NLRC rendered its assailed decision dated November 19, 1990, setting
aside the labor arbiter's aforequoted decision and dismissing petitioner's complaint.

Hence this petition wherein petitioner charges respondent NLRC with grave abuse of discretion
amounting to lack of jurisdiction for the following reasons:

1. The decision of the labor arbiter, dated August 31, 1989, has already become final and executory;

2. The case of Quiwa vs. Philnor Consultants and Planners, Inc. is not binding nor is it applicable to this
case;

3. The petitioner is a regular employee with eight years and five months of continuous services for his
employer, private respondent Philnor;

4. The claims for overtime services, reinstatement and full backwages are valid and meritorious and
should have been sustained; and

5. The decision of the labor arbiter should be reinstated as it is more in accord with the facts, the law and
evidence.

The petition is devoid of merit.

1. Petitioner questions the jurisdiction of respondent NLRC in taking cognizance of the appeal filed by
Philnor in spite of the latter's failure to file a supersedeas bond within ten days from receipt of the labor
arbiter's decision, by reason of which the appeal should be deemed to have been filed out of time. It will
be noted, however, that Philnor was able to file a bond although it was made beyond the 10-day
reglementary period.

While it is true that the payment of the supersedeas bond is an essential requirement in the perfection of
an appeal, however, where the fee had been paid although payment was delayed, the broader interests
of justice and the desired objective of resolving controversies on the merits demands that the appeal be
given due course. Besides, it was within the inherent power of the NLRC to have allowed late payment of
the bond, considering that the aforesaid decision of the labor arbiter was received by private respondent
on October 3, 1989 and its appeal was duly filed on October 13, 1989. However, said decision did not
state the amount awarded as backwages and overtime pay, hence the amount of the supersedeas bond
could not be determined. It was only in the order of the NLRC of February 16, 1990 that the amount of the
supersedeas bond was specified and which bond, after an extension granted by the NLRC, was timely
filed by private respondent.

Moreover, as provided by Article 221 of the Labor Code, "in any proceeding before the Commission or
any of the Labor Arbiters, the rules of evidence prevailing in Courts of law or equity shall not be
controlling and it is the spirit and intention of this Code that the Commission and its members and the
Labor Arbiters shall use every and all reasonable means to ascertain the facts in each case speedily and
objectively without regard to technicalities of law or procedure, all in the interest of due process. 8 Finally,
the issue of timeliness of the appeal being an entirely new and unpleaded matter in the proceedings
below it may not now be raised for the first time before this Court. 9

2. Petitioner postulates that as a regular employee, he is entitled to security of tenure, hence he cannot
be terminated without cause. Private respondent Philnor believes otherwise and asserts that petitioner is
merely a project employee who was terminated upon the completion of the project for which he was
employed.

In holding that petitioner is a regular employee, the labor arbiter found that:

. . . There is no question that the complainant was employed as driver in the respondent
company continuously from July 1, 1977 to December 31, 1985 under various contracts
of employment. Similarly, there is no dispute that respondent Philnor Consultant &
Planner, Inc., as its business name connotes, has been engaged in providing to its
client(e)le engineering consultancy services. The record shows that while the different
labor contracts executed by the parties stipulated definite periods of engaging the
services of the complainant, yet the latter was suffered to continue performing his job
upon the expiration of one contract and the renewal of another. Under these
circumstances, the complaint has obtained the status of regular employee, it appearing
that he has worked without fail for almost eight years, a fraction of six months considered
as one whole year, and that his assigned task as driver was necessary and desirable in
the usual trade/business of the respondent employer. Assuming to be true, as spelled out
in the employment contract, that the Employer has no "continuing need for the services of
the Employe(e) beyond the termination date of this contract and that the Employee's
services shall automatically, and without notice, terminate upon completion of the above
specified phase of the project," still we cannot see our way clear why the complainant
was hired and his services engaged contract after contract straight from 1977 to 1985
which, to our considered view, lends credence to the contention that he worked as
regular driver ferrying early in the morning office personnel to the company main office in
Pampanga and bringing back late in the afternoon to Manila, and driving company
executives for inspection of construction workers to the jobsites. All told, we believe that
the complainant, under the environmental facts obtaining in the case at bar, is a regular
employee, the provisions of written agreement to the
contrary notwithstanding and regardless of the oral understanding of the parties . . . 10
On the other hand, respondent NLRC declared that, as between the uncorroborated and unsupported
assertions of petitioners and those of private respondent which are supported by documents, greater
credence should be given the latter. It further held that:

Complainant was hired in a specific project or undertaking as driver. While such project
was still on-going he was hired several times with his employment period fixed every time
his contract was renewed. At the completion of the specific project or undertaking his
employment contract was not renewed.

We reiterate our ruling in the case of (Quiwa) vs. Philnor Consultants and Planners,
Inc., NLRC RAB III 5-1738-84, it is being applicable in this case, viz.:

. . . While it is true that the activities performed by him were necessary or

desirable in the usual business or trade of the respondent as
consultants, planners, contractor and while it is also true that the duration
of his employment was for a period of about seven years, these
circumstances did not make him a
regular employee in contemplation of Article 281 of (the) Labor Code. . .
. 11

Our ruling in Sandoval Shipyards, Inc. vs. National Labor Relations Commission, et al. 12 is applicable to
the case at bar. Thus:

We hold that private respondents were project employees whose work was coterminous
with the project or which they were hired. Project employees, as distinguished from
regular or non-project employees, are mentioned in section 281 of the Labor Code as
those "where the employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the engagement of
the employee."

Policy Instructions No. 20 of the Secretary of Labor, which was issued to stabilize
employer-employee relations in the construction industry, provides:

Project employees are those employed in connection with a particular

construction project. Non-project (regular) employees are those
employed by a construction company without reference to any particular
project.

Project employees are not entitled to termination pay if they are

terminated as a result of the completion of the project or any phase
thereof in which they are employed, regardless of the number of projects
in which they have been employed by a particular construction company.
Moreover, the company is not required to obtain clearance from the
Secretary of Labor in connection with such termination.

The petitioner cited three of its own cases wherein the National Labor Relations
Commission, Deputy Minister of Labor and Employment Inciong and the Director of the
National Capital Region held that the layoff of its project employees was lawful. Deputy
Minister Inciong in TFU Case No. 1530, In Re Sandoval Shipyards, Inc. Application for
Clearance to Terminate Employees, rendered the following ruling on February 26, 1979;

We feel that there is merit in the contention of the applicant corporation.

To our mind, the employment of the employees concerned were fixed for
a specific project or undertaking.For the nature of the business the
 corporation is engaged into is one which will not allow it to employ
workers for an indefinite period.

It is significant to note that the corporation does not construct vessels for
sale or otherwise which will demand continuous productions of ships and
will need permanent or regular workers. It merely accepts contracts for
shipbuilding or for repair of vessels form third parties and, only, on
occasion when it has work contract of this nature that it hires workers to
do the job which, needless to say, lasts only for less than a year or
longer.

The completion of their work or project automatically terminates their

employment, in which case, the employer is, under the law, only obliged
to render a report on the termination of the employment. (139-
140, Rollo of G.R. No. 65689) (Emphasis supplied)

In Cartagenas, et al. vs. Romago Electric Company, Inc., et al., 13 we likewise held that:

As an electrical contractor, the private respondent depends for its business on the
contracts it is able to obtain from real estate developers and builders of buildings. Since
its work depends on the availability of such contracts or "projects," necessarily the
duration of the employment's of this work force is not permanent but co-terminus with the
projects to which they are assigned and from whose payrolls they are paid. It would be
extremely burdensome for their employer who, like them, depends on the availability of
projects, if it would have to carry them as permanent employees and pay them wages
even if there are no projects for them to work on. (Emphasis supplied.)

It must be stressed herein that although petitioner worked with Philnor as a driver for eight years, the fact
that his services were rendered only for a particular project which took that same period of time to
complete categorizes him as a project employee. Petitioner was employed for one specific project.

A non-project employee is different in that the employee is hired for more than one project. A non-project
employee, vis-a-vis a project employee, is best exemplified in the case of Fegurin, et al. vs. National
Labor Relations Commission, et al. 14 wherein four of the petitioners had been working with the company
for nine years, one for eight years, another for six years, the shortest term being three years. In holding
that petitioners are regular employees, this Court therein explained:

Considering the nature of the work of petitioners, that of carpenter, laborer or mason,
their respective jobs would actually be continuous and on-going. When a project to which
they are individually assigned is completed, they would be assigned to the next project or
a phase thereof. In other words, they belonged to a "work pool" from which the company
would draw workers for assignment to other projects at its discretion. They are, therefore,
actually "non-project employees."

From the foregoing, it is clear that petitioner is a project employee considering that he does not belong to
a "work pool" from which the company would draw workers for assignment to other projects at its
discretion. It is likewise apparent from the facts obtaining herein that petitioner was utilized only for one
particular project, the MNEE Stage 2 Project of respondent company. Hence, the termination of herein
petitioner is valid by reason of the completion of the project and the expiration of his employment
contract.

3. Anent the claim for overtime compensation, we hold that petitioner is entitled to the same. The fact that
he picks up employees of Philnor at certain specified points along EDSA in going to the project site and
drops them off at the same points on his way back from the field office going home to Marikina, Metro
Manila is not merely incidental to petitioner's job as a driver. On the contrary, said transportation
arrangement had been adopted, not so much for the convenience of the employees, but primarily for the
benefit of the employer, herein private respondent. This fact is inevitably deducible from the
Memorandum of respondent company:

The herein Respondent resorted to the above transport arrangement because from its
previous project construction supervision experiences, Respondent found out that project
delays and inefficiencies resulted from employees' tardiness; and that the problem of
tardiness, in turn, was aggravated by transportation problems, which varied in degrees in
proportion to the distance between the project site and the employees' residence. In view
of this lesson from experience, and as a practical, if expensive, solution to employees'
tardiness and its concomitant problems, Respondent adopted the policy of allowing
certain employees — not necessarily project drivers — to bring home project vehicles, so
that employees could be afforded fast, convenient and free transportation to and from the
project field office. . . . 15

Private respondent does not hesitate to admit that it is usually the project driver who is tasked with picking
up or dropping off his fellow employees. Proof thereof is the undisputed fact that when petitioner is
absent, another driver is supposed to replace him and drive the vehicle and likewise pick up and/or drop
off the other employees at the designated points on EDSA. If driving these employees to and from the
project site is not really part of petitioner's job, then there would have been no need to find a replacement
driver to fetch these employees. But since the assigned task of fetching and delivering employees is
indispensable and consequently mandatory, then the time required of and used by petitioner in going
from his residence to the field office and back, that is, from 5:30 a.m. to 7:00 a.m. and from 4:00 p.m. to
around 6:00 p.m., which the labor arbiter rounded off as averaging three hours each working day, should
be paid as overtime work. Quintessentially, petitioner should be given overtime pay for the three excess
hours of work performed during working days from January, 1983 to December, 1985.

WHEREFORE, subject to the modification regarding the award of overtime pay to herein petitioner, the
decision appealed from is AFFIRMED in all other respects.

SO ORDERED.

o Preliminary and Postliminary Activities

o Attendance in lectures, meetings and training programs
 Sugue vs. Triumph International, January 30, 2009

DECISION

LEONARDO-DE CASTRO, J.:

Before us are consolidated petitions for review on certiorari under Rule 45 of the 1997 Rules of Civil
Procedure filed by both contending parties assailing the Decision [1] dated April 23, 2004 and the
Resolution[2] dated July 21, 2004 rendered by the Court of Appeals (CA) in CA-G.R. SP No. 68591.
In G.R. No. 164804, petitioners Virginia Sugue (Sugue) and the Heirs of Renato Valderrama
(Valderrama) question the CA decision which partly granted their appeal but deleted the attorneys fees
and reduced the moral and exemplary damages awarded to them.

On the other hand, in G.R. No. 164784, petitioner Triumph International (Phils.), Inc. (Triumph hereafter)
assails the CA decision for setting aside an earlier decision[3] of the National Labor Relations Commission
(NLRC) dated June 13, 2001 which ruled in its favor.
The antecedents of the case show that Triumph hired Sugue in May 1990 as its Assistant Manager for
Marketing and was subsequently promoted to Marketing Services Manager with a monthly salary
of P82,500.00. On the other hand, Valderrama was hired in April 1993 as Direct Sales Manager with a
monthly salary of P121,000.00. Their main function/responsibility was to ensure that the companys sales
targets and objectives were met.

Beginning sometime in October 1999, Triumphs top management began to notice a sharp decline in the
sales of the company. Moreover, in the following months, the actual sales figures continued to be
significantly below the sales targets set by Valderrama himself. This persistent below target sales
performance was the subject of correspondence between Valderrama and his superiors from November
1999 to July 2000.[4]

On June 1, 2000, Sugue and Valderrama filed a complaint with the NLRC against Triumph for payment of
money claims arising from allegedly unpaid vacation and sick leave credits, birthday leave and 14 th month
pay for the period 1999-2000. Said complaint was docketed as NLRC-NCR-Case No. 00-06-03008-
2000.[5]

On June 19, 2000, Sugue and Valderrama personally attended the preliminary conference of the said
case. The following day, a memorandum was issued by Triumphs Managing Director/General Manager,
Alfredo Escueta, reminding all department heads of existing company policy that requires department
heads to notify him (Escueta) before leaving the office during work hours. [6] That same day, Triumphs
Personnel Manager, Ralph Funtila, issued separate memoranda to Sugue and Valderrama requiring them
to inform the office of the General Manager of their whereabouts on June 19, 2000 from 9:06 a.m. to
11:15 a.m. They replied that they attended the aforementioned preliminary conference.[7]

On June 23, 2000, Valderrama and Sugue were directed to submit a written explanation as to why they
used company time and the company vehicle and driver in attending the preliminary conference at the
NLRC and why they left the office without advising the Managing Director. They explained that they
believed they may use company time and the company vehicle since the hearing they attended was
pursuant to a complaint that they filed as employees of the company.
On June 28, 2000, Triumph charged the one-half day utilized by Sugue and Valderrama in attending the
NLRC hearing on June 19, 2000 to their vacation leave credits.

In the pleadings, Valderrama likewise complained that his request for an executive check-up on June 19,
2000 was disapproved by Triumph. Thereafter, Valderrama did not report for work on July 3 to 5,
2000 due allegedly to persistent cough and vertigo, but his request for sick leave on those dates was
disapproved by Triumph because he failed to submit a medical certificate as required by the companys
rules and policies.

Subsequently, on July 10, 2000, Triumph issued a show cause memo to Valderrama requiring him to
explain, among others, his departments dismal performance since October 1999, within 48 hours from
receipt.[8] On July 11, 2000, Valderrama replied to the show cause memo.[9]

On July 17, 2000, Valderrama wrote the company a letter stating that he considered himself
constructively dismissed due to the unreasonable pressures and harassments he suffered the past
months which prevented him from effectively exercising his tasks as Direct Sales Manager. [10]

Subsequently, on July 28, 2000, Triumph issued a memorandum requiring Valderrama to explain, under
pain of dismissal, his continued absences without official leave. Valderrama failed to respond, thus,
on August 11, 2000, Triumph decided to terminate Valderramas employment for abandonment of work.[11]

Meanwhile, on July 25, 2000, Sugue also wrote the company stating that she considers herself
constructively dismissed.[12] From the pleadings, Sugues charge of constructive dismissal was based on
the fact that her request for vacation leave from July 14 to 15, 2000 was subject to the condition that she
first submit a report on the companys 2001 Marketing Plan. Also, the approval of her request for
executive check-up was deferred. Then, on July 18, 2000, she received a memorandum instructing her to
report to Mr. Efren Temblique, who was appointed OIC for Marketing as a result of a reorganization
prompted by Valderramas continued absences. Sugue claimed that such act by Triumph was an outright
demotion considering that Mr. Temblique was her former assistant.

On August 11, 2000, Triumph required Sugue to explain why she should not be terminated for continued
absences without official leave.[13] Sugue failed to comply, thus, on September 1, 2000, her employment
was terminated for abandonment of work.[14]

Prior to the actual termination of their employment by Triumph, Sugue and Valderrama filed on July 31,
2000 a complaint for constructive dismissal against Triumph, docketed as NLRC NCR Case No. 00-07-
03965-2000.[15]
The following day, on August 1, 2000, Valderrama commenced his employment as Sales Director of Fila
Phils., Inc., a competitior of Triumph.
On March 15, 2001, Labor Arbiter Salimathar Nambi rendered a decision, declaring that Sugue
and Valderrama were constructively dismissed. The dispositive portion of the Labor Arbiters decision
follows:

WHEREFORE, premises considered, judgment is hereby rendered ordering respondent

Triumph International (Phils.), Inc. to:

1) Pay, since reinstatement is not feasible, complainants Virginia A. Sugue

and Renato Valderrama their separation pay computed at one month salary
for every year of service from their initial engagement on May 1990 and April
1993, respectively.

2) Pay both complainants full backwages from the time that they were
constructively dismissed, i.e. from 17 July 2000 in the case of Valderrama
and from 25 July 2000 in the case of Sugue until finality of judgment.

3) Pay P2,000,000.00 as moral damages to each of the complainants

4) Pay P1,000,000.00 as exemplary damages to each of the complainants.

5) Reimburse the complainants the 20% of the amounts claimed as attorneys

fees.

SO ORDERED.[16]

Aggrieved, Triumph filed an appeal with the NLRC,[17] and in a decision dated June 13, 2001, the
First Division of the NLRC granted the appeal and reversed the ruling of Labor Arbiter Nambi.

Not satisfied with the NLRC decision, Sugue and Valderrama elevated the matter to the CA by
way of a petition for certiorari. While the matter was pending with the CA, Valderrama passed away
(on July 3, 2003) and notice of his death was filed by his counsel.[18]

On April 23, 2004, the CA rendered its assailed decision, the dispositive portion of which reads:

WHEREFORE, the petition is partly granted. The Decision dated June 13,
2001 of public respondent NLRC is hereby set aside, and the Decision dated March 15,
2001 of the labor arbiter is reinstated, subject to the deletion of the award of attorneys
 fees and the reduction of the award of moral damages to P500,000.00 and exemplary
damages to 250,000.00, for each of the petitioners.

SO ORDERED.[19]

Triumphs subsequent motion for reconsideration as well as the motion for partial reconsideration
filed by Sugue and the heirs of Valderrama were both denied by the appellate court in its resolution
dated July 21, 2004.

Hence, the parties filed the present petitions which were consolidated by this Court in a
Resolution dated September 27, 2004.[20]

In G.R. No. 164804, petitioners therein Sugue and the heirs of Valderrama allege that the Court
of Appeals gravely erred in deleting the labor arbiters award of attorneys fees. [21]

In G.R. No. 164784, petitioner therein Triumph cites the following reasons why the Court should
rule in its favor:

The Court of Appeals gravely erred and contravened prevailing jurisprudence in

abandoning the NLRCs findings of fact and making its own findings. The rule is basic that
the factual findings of the NLRC are accorded respect, if not finality, considering that the
same were based on evidence on record. Reassessment of evidence is beyond the
province of a writ of certiorari.

II

The Court of Appeals gravely erred and contravened the law and jurisprudence
in ruling that Valderama and Sugue were constructively dismissed, and are entitled to
separation pay, backwages and damages. The facts of the case, as correctly found by
the NLRC based on evidence on record, clearly belie their contention that they were
constructively dismissed.[22]
 From the allegations of the respective parties in their pleadings, it is clear that the controversies
involved in the two consolidated cases center on the question of whether Valderrama and Sugue were
constructively dismissed by Triumph.

At the outset, it should be stated that the main issue in this case involves a question of fact. It is
an established rule that the jurisdiction of the Supreme Court in cases brought before it from the
CA via Rule 45 of the 1997 Rules of Civil Procedure is generally limited to reviewing errors of law. [23] This
Court is not a trier of facts. In the exercise of its power of review, the findings of fact of the CA are
conclusive and binding and consequently, it is not our function to analyze or weigh evidence all over
again.[24]

The above rule, however, is not without exceptions. In Sta. Maria v. Court of Appeals,[25] we
enumerated the instances when the factual findings of the CA are not deemed conclusive, to wit: (1)
when the conclusion is a finding grounded entirely on speculations, surmises or conjecture; (2) when the
inference made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of discretion;
(4) when the judgment is based on a misapprehension of facts; (5) when the findings of facts are
conflicting; (6) when the CA, in making its findings, went beyond the issues of the case and the same are
contrary to the admission of both the appellant and the appellee; (7) when the findings are contrary to
those of the trial court; (8) when the findings are conclusions without citation of specific evidence on
which they are based; (9) when the facts set forth in the petition as well as in the petitioners main and
reply briefs are not disputed by the respondent; and (10) when the findings of fact are premised on the
supposed evidence and contradicted by the evidence on record.

In the instant case, it appears that there is a divergence between the findings of facts of the
NLRC and that of the CA. Hence, we are constrained to review the factual findings made by the NLRC
and the appellate court.

After a thorough review of the evidence on record, we find sufficient reasons to uphold Triumphs
position.

Constructive dismissal is defined as an involuntary resignation resorted to when continued

employment becomes impossible, unreasonable or unlikely; when there is a demotion in rank or a
diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes
unbearable to an employee.[26]

On a preliminary point, we note that Sugue and Valderrama discuss extensively in their pleadings
alleged denial of leave applications and unpaid cash conversion of unused leaves and other monetary
benefits which moved them to file a complaint for monetary claims on June 1, 2000.[27] We find no need to
pass upon these matters here precisely because they are the subject matters of a separate case and
properly threshed out therein. In any event, it is Sugue and Valderramas theory that Triumphs acts of
harassment, upon which they base their charge of constructive dismissal, were in retaliation for their filing
of the aforementioned complaint for unpaid benefits.[28] The acts which purportedly show discrimination
and bad faith on the part of Triumph are summarized below:

In the case of Valderrama:

1. The half-day he spent in attending the NLRC hearing on June 19, 2000 was charged to
his vacation leave credit;

2. His application for sick leave for July 3 to 5, 2000 was disapproved; and

3. His request for executive check-up was denied.

In the case of Sugue:

1. The half-day she spent in attending the NLRC hearing on June 19, 2000 was charged to her
vacation leave credit;

2. The approval of her application for leave of absence for July 14 and 15, 2000 was made
subject to the condition that she should first submit a report on the 2001 Marketing Plan;

3. The approval of her request for executive check-up was deferred until after the visit of the
companys regional marketing manager; and

4. A memorandum was issued instructing her to report to her former assistant, Mr. Temblique,
which was allegedly tantamount to a demotion.
 According to Sugue and Valderrama, this series of discriminatory acts committed by Triumph
created an adverse working environment rendering it impossible for them to continue working for
Triumph. Hence, their severance from the company was not of their own making and therefore amounted
to constructive dismissal which is tantamount to an illegal termination of employment.

With respect to the first alleged discriminatory act, we can conceive of no reason to ascribe bad
faith or malice to Triumph for charging to the leave credits of Sugue and Valderrama the half-day that
they spent in attending the preliminary conference of the case they instituted against Triumph. It is fair
and reasonable for Triumph to do so considering that Sugue and Valderrama did not perform work for
one-half day on June 19, 2000.

Indeed, we find it surprising that Sugue and Valderrama would even have the temerity to contend
that the hours they spent in attending the hearing were compensable time. As the NLRC correctly pointed
out, as early as the case of J.B. Heilbronn Co. v. National Labor Union,[29] this Court held that:

When the case of strikes, and according to the CIR even if the strike is legal, strikers may
not collect their wages during the days they did not go to work, for the same reasons if
not more, laborers who voluntarily absent themselves from work to attend the
hearing of a case in which they seek to prove and establish their demands against
the company, the legality and propriety of which demands is not yet known, should
lose their pay during the period of such absence from work. The age-old rule
governing the relation between labor and capital or management and employee is
that a "fair day's wage for a fair day's labor." If there is no work performed by the
employee there can be no wage or pay, unless of course, the laborer was able, willing
and ready to work but was illegally locked out, dismissed or suspended. It is hardly fair
or just for an employee or laborer to fight or litigate against his employer on the
employer's time.

In a case where a laborer absents himself from work because of a strike or

to attend a conference or hearing in a case or incident between him and his
employer, he might seek reimbursement of his wages from his union which had declared
the strike or filed the case in the industrial court. Or, in the present case, he might have
his absence from his work charged against his vacation leave. xxx (Emphasis ours)

This doctrine in Heilbronn was reiterated in Manila Trading & Supply Co. v. Manila Trading Labor
Association[30] and quoted favorably in later cases.[31] Triumph is, thus, justified in charging Sugue and
Valderramas half-day absence to their vacation leave credits.
 Corollarily, we cannot uphold the CAs approval of the Labor Arbiters finding that the memoranda
issued by Triumph in connection with the June 19, 2000 hearing constitute undue harassment.

To begin with, the complained of Memorandum dated June 20, 2000 issued by Mr. Escueta,
regarding the company policy that required department heads to give prior notice to the General Manager
if they will be away from the office during office hours, did not single out Sugue and Valderrama but was
addressed to all department heads. Contrary to Sugue and Valderramas assertion that said policy was
being retroactively applied to them, it is plain on the face of the same memorandum (a copy of which was
even attached to their Position Paper filed with the Labor Arbiter) [32] that the policy of requiring department
heads to give notice to the Office of the Managing Director/General Manager should they leave the office
during regular work hours had been in force since 1997. The memoranda of Mr. Funtila, requiring Sugue
and Valderrama to inform the office of the General Manager of their whereabouts on the morning of June
19, 2000, could not be deemed a form of harassment but rather it was in keeping with due process.
Notwithstanding the fact that the company had received summons for the same hearing, the company
could not simply assume that the hearing was the reason for Valderrama and Sugues absence. When an
employer believes that there has been a possible violation of company rules or policies, the law, in fact,
requires the employer to give the employee ample opportunity to explain. Finally, the memoranda
informing Valderrama and Sugue that they cannot use company time and the company vehicle when
attending hearings for the case they filed against the company and that their absence would be charged
against their vacation leaves were, as discussed above, in accordance with existing jurisprudence and
principles of fair play. Verily, this is not a case of ordinary workers with limited resources who were being
unlawfully pressured or prevented by their employer from pursuing their claims. Sugue and Valderrama
are highly educated managers who were ably represented by counsel and were then being paid
handsome compensation packages by Triumph. Even assuming that Sugue and Valderrama in good faith
believed that they are merely exercising their legal right to prosecute their monetary claims when they
chose to absent themselves from work to attend the June 19, 2000, it would have imposed little burden
on them to have the courtesy to inform their employer beforehand of their intention to personally attend
the hearing and the decency to do so on their own time and at their own expense.

Anent Sugue and Valderramas claim that they were unjustly denied availment of their leaves as
part of a scheme on the part of Triumph to harass them, we find the same patently without merit.

In the case of Valderrama, he applied for sick leave for the period July 3 to 5, 2000 allegedly
because of persistent cough and vertigo, but this was disapproved by Triumph. The record, however,
reveals that he failed to comply with the companys requirement that an application for sick leave for two
or more days must be supported by a medical certificate which must be verified by the company
physician. He was even given twenty-four (24) hours to submit the same but he totally ignored it. That his
sick leave application was denied was mainly due to his own fault and must not be unduly blamed on his
employer.

For her part, Sugue condemns Triumph for putting a condition on the approval of her two days
vacation leave for July 14 and 15, 2000, when she was required to first submit a report on the 2001
Marketing Plan. To be very accurate, Mr. Escuetas memorandum dated July 13, 2000 advised Sugue that
her application for leave will be approved if she will commit to submit her reports in connection with the
2001 Marketing Plan by July 17, 2000, which was two days after her leave. Again, we find nothing
discriminatory in such a condition considering that she was unable to show that she was the only
employee whose leave application has been subjected to a condition. Discrimination is the failure to treat
all persons equally when no reasonable distinction can be found between those favored and those not
favored.[33] Sugue obviously failed to substantiate her claim of discrimination. To be sure, he who asserts
must prove.[34] On the contrary, the record shows that as early as October 12, 1999, a memorandum was
issued by Triumph addressed to all department heads that leave applications may be approved,
disapproved or postponed depending on the (1) business status due to CBA; (2) companys urgent need
for their presence; and (3) CBA negotiations status.[35] Evidently, this directive applies not just to Sugue
but to all department heads. Although this memorandum was supposedly in force only until December
1999, it establishes a precedent for the company imposing conditions on the approval of leave
applications of department heads.

As for the nature of the condition itself, we do not see how it can be deemed unreasonable or in
bad faith for the employer to require its employee to complete her assignments on time or before taking a
vacation leave. Being the Marketing Services Manager, Sugues reports were indispensable in the
preparation of the 2001 Marketing Plan plus the fact that the company had been experiencing a
significant decline in sales at that time which all the more emphasizes the need for her to submit an
updated report relative to the 2001 Initial Marketing Plan. For sure, she failed to show that the company
prevented her from availing of her vacation leave afterwards or at some other time. Clearly then, there
was no discrimination nor harassment to speak of.

Third, both Sugue and Valderrama question the denial by Triumph of their request for executive
check-up. It should be noted that Triumph did not completely turn down their request. Based on Sugue
and Valderramas own evidence, their request was merely deferred because the 2001 Initial Marketing
Plan was due on June 26, 2000 and Triumphs regional product manager was scheduled to visit the
country on June 26 to 29, 2000.[36] As Valderrama was the Direct Sales Manager and Sugue was the
Marketing Services Manager, their presence on those dates was undoubtedly needed. Thus, their
contention that the approval of their request was indefinitely withheld is apocryphal. In fact, there is
nothing that prevented them from scheduling their executive check-up after the visit of the regional
marketing manager.

It is worth stressing that in the grant of vacation and sick leave privileges to an employee, the
employer is given leeway to impose conditions on the entitlement to the same as the grant of vacation
and sick leave is not a standard of law, but a prerogative of management. It is a mere concession or act
of grace of the employer and not a matter of right on the part of the employee. [37] Thus, it is well within the
power and authority of an employer to deny an employees application for leave and the same cannot be
perceived as discriminatory or harassment.

Sugue next asserts that she was demoted when she was directed to report to Mr. Efren
Temblique who was her subordinate and when she was stripped of her usual functions. We are far from
convinced. Demotion involves a situation where an employee is relegated to a subordinate or less
important position constituting a reduction to a lower grade or rank, with a corresponding decrease in
salaries, benefits and privileges.[38]

The evidence on hand belies Sugues assertion, the truth being that prior to the reorganization,
Mr. Temblique occupied the position of Assistant Manager for Direct Sales,[39] and as such was
Valderramas subordinate and not of Sugue. Sugue likewise failed to adequately prove her assertion that
she reported directly to the General Manager, Mr. Escueta, when she was Marketing Services Manager
or that she was not subordinate to Valderrama. To show that she was reporting directly to Mr. Escueta,
Sugue adverts to Annexes U and V of her Position Paper. However, Annexes U and V were merely
memoranda addressed to Mr. Escueta involving Sugues application for leave and did not relate to the
discharge of her functions.[40] On the other hand, there is on record memoranda issued by Sugue
concerning work matters which were addressed to Valderrama, not Mr. Escueta. [41]

The evidence on record suggests that the Marketing Services Department was part of the Direct
Sales Department. As Direct Sales Manager, Valderramas responsibilities not only included sales but
also marketing for which he was tasked to closely coordinate with the regional sales/marketing head
office in Hongkong.[42] The record would also show that Sugue considered herself as belonging to the
Direct Sales Department.[43] It is unsurprising then that when the Direct Sales Department was
reorganized due to Valderramas unexpected departure on July 17, 2000, Sugues Marketing Services
Department was included in the reorganization. It would appear from Mr. Escuetas Memorandum dated
July 18, 2000 (Re: Direct Sales Reorganization) the sales and marketing responsibilities of Mr.
Valderrama were taken over by Mr. Edilberto S. Rivera and Temblique, as OIC for Direct Sales and
Marketing, respectively.

In view of Valderramas sudden severance of his employment coupled with the substantially low
sales Triumph had been experiencing for the past nine months, the company saw an imperative need to
effect a reorganization in its sales department, and this included the temporary designation of Temblique
as OIC for Marketing concurrently with his position as Assistant Manager for Direct Sales-SMSD.[44] When
Sugue was directed to report to Temblique, she was not being made to report to Temblique as Assistant
Manager for Direct Sales-SMSD but as the newly designated OIC for Marketing, i.e., the officer chiefly
responsible for all marketing matters. Furthermore, we find no merit in Sugues contention that she was in
any way stripped of her usual functions. A careful perusal of Annexes EE and FF of her Position Position
shows that she continued to be the head of Marketing Services, under the supervision of Temblique as
OIC for Marketing.

As we see it, Triumphs directive for Sugue to report to Temblique was not unreasonable,
inconvenient or prejudicial to her considering that it did not entail a demotion in rank or diminution of
salaries, benefits and other privileges. Even assuming there was a change in the personalities to whom
Sugue is required to report, she continued to assume her position as Marketing Services Manager and to
exercise the same functions. Neither did she assert, much less prove, that there was any diminution in
her salary or other benefits. We ruled in Philippine Wireless, Inc. v. NLRC[45] that there is no demotion
where there is no reduction in position, rank or salary.

In fine, we find that Triumphs reorganization was intended to improve management operations
especially in the light of the poor sales performance of the company during that period. The act of
management in reorganizing the sales department in order to achieve its objectives is a legitimate
exercise of its management prerogatives, barring any showing of bad faith which is absent in the instant
case. Indeed, labor laws discourage interference in employers judgments concerning the conduct of their
business. The law must protect not only the welfare of employees, but also the right of employers. [46]

All told, Triumph did not act with discrimination, insensibility or disdain towards Sugue and
Valderrama, which foreclosed any choice on their part except to forego their continued employment.
Purely conjectural are their assertions that the disapproval of their leave applications, the denial of their
request for executive check-up and the alleged demotion, were carried out by Triumph in retaliation to
their filing of a complaint for unpaid money claims against the company. Sugue and Valderrama offered
insufficient proof to substantiate their allegations. For this reason, their bare and self-serving charges of
constructive dismissal, when unsupported by the evidence on record, cannot be given credence.

Worth noting at this point is that as early as June 21, 2000, Valderrama had accepted
employment with Fila Philippines, Inc. as its Sales Director. Although his appointment was to take effect
only on August 1, 2000, it cannot be denied that he had finalized or was finalizing his employment deal
with Fila while he was still employed with Triumph as shown by Filas inter-office memo dated June 21,
2000 announcing to its employees Valderramas appointment effective August 1, 2000.[47] Unlike the
Labor Arbiter and the CA, we do not view this circumstance as insignificant. It is evident that Valderrama
already had a firm understanding with Fila as of June 21, 2000 so much so that his arrival was highly
anticipated and even formally announced by his new employer on said date. This undeniably
demonstrated that Valderrama intended to leave his employment with Triumph even before the company
issued a show cause memo (on July 10, 2000) for him to explain, among others, his below target sales
performance and before he informed the company that he considered himself constructively dismissed on
July 17, 2001. It may be inferred therefrom that he filed the constructive dismissal case merely as a
subterfuge to evade liability for breach of his employment contract with Triumph which requires 60-day
notice prior to resignation. The circumstance that he did not pray for reinstatement in his complaint
bolsters the theory that the constructive dismissal case was a tool designed to conceal his impending
transfer to Fila.

Having failed to substantiate their claim of constructive dismissal, Sugue and Valderrama should
be deemed to have abandoned their work, thus, their dismissal is warranted. Abandonment is the
deliberate and unjustified refusal of an employee to resume his employment, without any intention of
returning. It is a form of neglect of duty, hence, a just cause for termination of employment by the
employer. For abandonment to be a valid ground for dismissal, two elements must then be satisfied: (1)
the failure to report for work or absence without valid or justifiable reason; and (2) a clear intention to
sever the employer-employee relationship. The second element is the more determinative factor and
must be evinced by overt acts.[48]

The abovementioned elements are present in the instant case. First, Sugue and Valderramas
failure to report for work was without justifiable reason. As earlier discussed, their allegation of
discrimination and harassment lacks factual basis, thus, under the circumstances, we find their absences
to be unjustified and without any valid reason. Second, their overt act of writing letters informing Triumph
that they considered themselves constructively dismissed was a clear manifestation of their intention to
desist from their employment. Too, their defiance and disregard of the memorandum sent by Triumph
requiring them to explain their unauthorized absences demonstrated a clear intention on their part to
sever their employer-employee relationship. This is particularly true with Valderrama who, even before
unilaterally terminating his employment with Triumph, had already sought regular employment elsewhere
and in fact was set to join a competitor, Fila Phils., Inc.

Further, they filed a complaint for constructive dismissal without praying for reinstatement. By
analogy, we point to the doctrine that abandonment of work is inconsistent with the filing of a complaint
for illegal dismissal is not applicable where the complainant does not pray for reinstatement and just asks
for separation pay instead.[49] In this case, Sugue and Valderrama opted not to ask for reinstatement and
even for separation pay, which clearly contradicts their stance that they did not abandon their work, for it
appears they have no intention of ever returning to their positions in Triumph. In addition, we cannot
subscribe to the CAs view that Triumphs issuance of show cause memos and notices of termination for
abandonment were mere afterthought since they were preceded by Sugues and Valderramas letters
informing the company that they considered themselves constructively dismissed. Logically, Triumph
could not have issued show cause memos or termination notices for abandonment before Sugue and
Valderrama unilaterally declared themselves constructively dismissed and stopped reporting for work
without justifiable reason.

Indeed, the law imposes many obligations on the employer such as providing just compensation
to workers, and observance of the procedural requirements of notice and hearing in the termination of
employment. On the other hand, the law also recognizes the right of the employer to expect from its
workers not only good performance, adequate work and diligence, but also good conduct and loyalty. The
employer may not be compelled to continue to employ such persons whose continuance in the service
will patently be inimical to his interests.[50] Triumph has adequately shown the existence of a just and valid
cause in terminating the employment of Sugue and Valderrama, and has faithfully complied with the
procedural requirements of due process for valid termination of employment.

Anent Sugue and the heirs of Valderramas petition regarding the CAs deletion of the award of attorneys
fees, a discussion on the propriety of the award of damages and attorneys fees is rendered unnecessary
in view of their failure to prove constructive dismissal.

WHEREFORE, the petition for review filed by Virginia Sugue and the Heirs of Renato Valderrama in G.R.
No. 164804 is DENIED while the petition for review filed by Triumph International (Phils.), Inc. in G.R. No.
164784 is GRANTED. Accordingly, the assailed decision and resolution of the Court of Appeals are
hereby REVERSED and SET ASIDE. The National Labor Relations Commissions Decision dated June
13, 2001 is REINSTATED.

SO ORDERED.

o Attendance in CBA Negotiations

o Attendance or participation in strikes or pickets
o Working time of sea based workers or seamen
o Semestral Breaks
 University of Pangasinan Faculty Union vs. Univesity of Pangasinan,
February 20, 1984

DECISION

GUTIERREZ, JR., J.:

This is a petition for review on certiorari pursuant to Rule 65 of the Rules of Court to annul and to set
aside the decision of respondent National Labor Relations Commission (NLRC) dated October 25, 1982,
dismissing the appeal of petitioner in NLRC Case No. RBI-47-82, entitled "University of Pangasinan
Faculty Union, complainant, versus University of Pangasinan, Respondent." : red

Petitioner is a labor union composed of faculty members of the respondent University of Pangasinan, an
educational institution duly organized and existing by virtue of the laws of the Philippines.

On December 18, 1981, the petitioner, through its President, Miss Consuelo Abad, filed a complaint
against the private respondent with the Arbitration Branch of the NLRC, Dagupan District Office, Dagupan
City. The complaint seeks: (a) the payment of Emergency Cost of Living Allowances (ECOLA) for
November 7 to December 5, 1981, a semestral break; (b) salary increases from the sixty (60%) percent of
the incremental proceeds of increased tuition fees; and (c) payment of salaries for suspended extra loads.

The petitioner’s members are full-time professors, instructors, and teachers of respondent University. The
teachers in the college level teach for a normal duration of ten (10) months a school year, divided into two
(2) semesters of five (5) months each, excluding the two (2) months summer vacation. These teachers
are paid their salaries on a regular monthly basis.

In November and December, 1981, the petitioner’s members were fully paid their regular monthly
salaries. However, from November 7 to December 5, during the semestral break, they were not paid their
ECOLA. The private respondent claims that the teachers are not entitled thereto because the semestral
break is not an integral part of the school year and there being no actual services rendered by the
teachers during said period, the principle of "No work, no pay" applies.

During the same school year (1981-1982), the private respondent was authorized by the Ministry of
Education and Culture to collect, as it did collect, from its students a fifteen (15%) percent increase of
tuition fees. Petitioner’s members demanded a salary increase effective the first semester of said
schoolyear to be taken from the sixty (60%) percent incremental proceeds of the increased tuition fees.
Private respondent refused, compelling the petitioner to include said demand in the complaint filed in the
case at bar. While the complaint was pending in the arbitration branch, the private respondent granted an
across-the-board salary increase of 5.86%. Nonetheless, the petitioner is still pursuing full distribution of
the 60% of the incremental proceeds as mandated by the Presidential Decree No. 451.

Aside from their regular loads, some of petitioner’s members were given extra loads to handle during the
same 1981-1982 schoolyear. Some of them had extra loads to teach on September 21, 1981, but they
were unable to teach as classes in all levels throughout the country were suspended, although said days
was proclaimed by the President of the Philippines as a working holiday. Those with extra loads to teach
on said day claimed they were not paid their salaries for those loads, but the private respondent claims
otherwise.

The issue to be resolved in the case at bar are the following:

"WHETHER OR NOT PETITIONER’S MEMBERS ARE ENTITLED TO ECOLA DURING THE

SEMESTRAL BREAK FROM NOVEMBER 7 TO DECEMBER 5, 1981 OF THE 1981-82 SCHOOL YEAR.

II

"WHETHER OR NOT 60% OF THE INCREMENTAL PROCEEDS OF INCREASED TUITION FEES

SHALL BE DEVOTED EXCLUSIVELY TO SALARY INCREASE,

III

"WHETHER OR NOT ALLEGED PAYMENT OF SALARIES FOR EXTRA LOADS ON SEPTEMBER 21,
1981 WAS PROVEN BY SUBSTANTIAL EVIDENCE."cralaw virtua1aw library

Anent the first issue, the various Presidential Decrees on ECOLAs to wit: PD’s 1614, 1634, 1678 and
1713, provide on "Allowances of Fulltime Employees . . ." that "Employees shall be paid in full the
required monthly allowance regardless of the number of their regular working days if they incur no
absences during the month. If they incur absences without pay, the amounts corresponding to the
absences may be deducted from the monthly allowance . . ." ; and on "Leave of Absence Without Pay",
that "All covered employees shall be entitled to the allowance provided herein when they are on leave of
absence with pay."cralaw virtua1aw library

It is beyond dispute that the petitioner’s members are full-time employees receiving their monthly salaries
irrespective of the number of working days or teaching hours in a month. However, they find themselves
in a most peculiar situation whereby they are forced to go on leave during semestral breaks. These
semestral breaks are in the nature of work interruptions beyond the employees’ control. The duration of
the semestral break varies from year to year dependent on a variety of circumstances affecting at times
only the private respondent but at other times all educational institutions in the country. As such, these
breaks cannot be considered as absences within the meaning of the law for which deductions may be
made from monthly allowances. The "No work, no pay" principle does not apply in the instant case. The
petitioner’s members received their regular salaries during this period. It is clear from the aforequoted
provision of law that it contemplates a "no work" situation where the employees voluntarily absent
themselves. Petitioners, in the case at bar, certainly do not, ad voluntatem, absent themselves during
semestral breaks. Rather, they are constrained to take mandatory leave from work. For this they cannot
be faulted nor can they be begrudged that which is due them under the law. To a certain extent, the
private respondent can specify dates when no classes would be held. Surely, it was not the intention of
the framers of the law to allow employers to withhold employee benefits by the simple expedient of
unilaterally imposing "no work" days and consequently avoiding compliance with the mandate of the law
for those days.

Respondent’s contention that "the fact of receiving a salary alone should not be the basis of receiving
ECOLA", is, likewise, without merit. Particular attention is brought to the Implementing Rules and
Regulations of Wage Order No. 1 to wit.

SECTION 5. Allowance for Unworked Days. —

"a) All covered employees whether paid on a monthly or daily basis shall be entitled to their daily living
allowance when they are paid their basic wage."cralaw virtua1aw library

x x x

This provision, at once refutes the above contention. It is evident that the intention of the law is to grant
ECOLA upon the payment of basic wages. Hence, we have the principle of "No pay, no ECOLA" the
converse of which finds application in the case at bar. Petitioners cannot be considered to be on leave
without pay so as not to be entitled to ECOLA, for, as earlier stated, the petitioners were paid their wages
in full for the months of November and December of 1981, notwithstanding the intervening semestral
break. This, in itself, is a tacit recognition of the rather unusual state of affairs in which teachers find
themselves. Although said to be on forced leave, professors and teachers are, nevertheless, burdened
with the task of working during a period of time supposedly available for rest and private matters. There
are papers to correct, students to evaluate, deadlines to meet, and periods within which to submit grading
reports. Although they may be considered by the respondent to be on leave, the semestral break could
not be used effectively for the teacher’s own purposes for the nature of a teacher’s job imposes upon him
further duties which must be done during the said period of time. Learning is a never ending process.
Teachers and professors must keep abreast of developments all the time. Teachers cannot also wait for
the opening of the next semester to begin their work. Arduous preparation is necessary for the delicate
task of educating our children. Teaching involves not only an application of skill and an imparting of
knowledge, but a responsibility which entails self dedication and sacrifice. The task of teaching ends not
with the perceptible efforts of the petitioner’s members but goes beyond the classroom: a continuum
where only the visible labor is relieved by academic intermissions. It would be most unfair for the private
respondent to consider these teachers as employees on leave without pay to suit its purposes and, yet, in
the meantime, continue availing of their services as they prepare for the next semester or complete all of
the last semester’s requirements. Furthermore, we may also by analogy apply the principle enunciated in
the Omnibus Rules Implementing the Labor Code to wit:

Sec. 4. Principles in Determining Hours Worked. — The following general principles shall govern in
determining whether the time spent by an employee is considered hours worked for purposes of this
Rule:

x x x

"(d) The time during which an employee is inactive by reason of interruptions in his work beyond his
control shall be considered time either if the imminence of the resumption of work requires the
employee’s presence at the place of work or if the interval is too brief to be utilized effectively and
gainfully in the employee’s own interest." (Emphasis supplied).

The petitioner’s members in the case at bar, are exactly in such a situation. The semestral break
scheduled is an interruption beyond petitioner’s control and it cannot be used "effectively nor gainfully in
the employee’s interest’. Thus, the semestral break may also be considered as "hours worked." For this,
the teachers are paid regular salaries and, for this, they should be entitled to ECOLA. Not only do the
teachers continue to work during this short recess but much less do they cease to live for which the cost
of living allowance is intended. The legal principles of "No work, no pay; No pay, no ECOLA" must
necessarily give way to the purpose of the law to augment the income of employees to enable them to
cope with the harsh living conditions brought about by inflation; and to protect employees and their wages
against the ravages brought by these conditions. Significantly, it is the commitment of the State to protect
labor and to provide means by which the difficulties faced by the working force may best be alleviated. To
submit to the respondents’ interpretation of the no work, no pay policy is to defeat this noble purpose. The
Constitution and the law mandate otherwise.

With regard to the second issue, we are called upon to interpret and apply Section 3 of Presidential
Decree 451 to wit:

SEC. 3. Limitations. — The increase in tuition or other school fees or other charges as well as the new
fees or charges authorized under the next preceding section shall be subject to the following conditions:

"(a) That no increase in tuition or other school fees or charges shall be approved unless sixty (60%) per
centum of the proceeds is allocated for increase in salaries or wages of the members of the faculty and all
other employees of the school concerned, and the balance for institutional development, student
assistance and extension services, and return to investments: Provided, That in no case shall the return
to investments exceed twelve (12%) per centum of the incremental proceeds; . . ."cralaw virtua1aw library

x x x

This Court had the occasion to rule squarely on this point in the very recent case entitled, University of
the East v. University of the East Faculty Association, 117 SCRA 554. We held that:

"In effect, the problem posed before Us is whether or not the reference in Section 3(a) to ‘increase in
salaries or wages of the faculty and all other employees of the schools concerned’ as the first purpose to
which the incremental proceeds from authorized increases to tuition fees may be devoted, may be
construed to include allowances and benefits. In the negative, which is the position of respondents, it
would follow that such allowances must be taken in resources of the school not derived from tuition fees.

"Without delving into the factual issue of whether or not there could be any such other resources, We note
that among the items of second purpose stated in provision in question is return in investment. And the
law provides only for a maximum, not a minimum. In other words, the schools may get a return to
investment of not more than 12%, but if circumstances warrant, there is no minimum fixed by law which
they should get.

"On this predicate, We are of the considered view that, if the school happen to have no other resources to
grant allowances and benefits, either mandated by law or secured by collective bargaining, such
allowances and benefits should be charged against the return to investments referred to in the second
purpose stated in Section 3(a) of P.D. 451."cralaw virtua1aw library

Private respondent argues that the above interpretation "disregarded the intention and spirit of the law"
which intention is clear from the "whereas" clauses as follows:

"It is imperative that private educational institutions upgrade classroom instruction . . . provide salary and
or wage increases and other benefits . . ."cralaw virtua1aw library

Respondent further contends that PD 451 was issued to alleviate the sad plight of private schools, their
personnel and all those directly or indirectly on school income as the decree was aimed —

". . . to upgrade classroom instruction by improving their facilities and bring competent teachers in all
levels of education, provide salary and or wage increases and other benefits to their teaching,
administrative, and other personnel to keep up with the increasing cost of living." (Emphasis supplied)

Respondent overlooks the elemental principle of statutory construction that the general statements in the
whereas clauses cannot prevail over the specific or particular statements in the law itself which define or
limit the purposes of the legislation or proscribe certain acts. True, the whereas clauses of PD 451
provide for salary and or wage increase and other benefits, however, the same do not delineate the
source of such funds and it is only in Section 3 which provides for the limitations wherein the intention of
the framers of the law is clearly outlined. The law is clear. The sixty (60%) percent incremental proceeds
from the tuition increase are to be devoted entirely to wage or salary increases which means increases in
basic salary. The law cannot be construed to include allowances which are benefits over and above the
basic salaries of the employees. To charge such benefits to the 60% incremental proceeds would be to
reduce the increase in basic salary provided by law, an increase intended also to help the teachers and
other workers tide themselves and their families over these difficult economic times.

This Court is not guilty of usurpation of legislative functions as claimed by the respondents. We
expressed the opinion in the University of the East case that benefits mandated by law and collective
bargaining may be charged to the 12% return on investments within the 40% incremental proceeds of
tuition increase. As admitted by respondent, we merely made this statement as a suggestion in answer to
the respondent’s query as to where then, under the law, can such benefits be charged. We were merely
interpreting the meaning of the law within the confines of its provisions. The law provides that 60% should
go to wage increases and 40% to institutional developments, student assistance, extension services, and
return on investments (ROI). Under the law, the last item ROI has flexibility sufficient to accommodate
other purposes of the law and the needs of the university. ROI is not set aside for any one purpose of the
university such as profits or returns on investments. The amount may be used to comply with other duties
and obligations imposed by law which the university exercising managerial prerogatives finds cannot
under present circumstances, be funded by other revenue sources. It may be applied to any other
collateral purpose of the university or invested elsewhere. Hence, the framers of the law intended this
portion of the increases in tuition fees to be a general fund to cover up for the university’s miscellaneous
expenses and, precisely, for this reason, it was not so delimited. Besides, ROI is a return or profit over
and above the operating expenditures of the university, and still, over and above the profits it may have
had prior to the tuition increase. The earning capacities of private educational institutions are not
dependent on the increases in tuition fees allowed by P.D. 451. Accommodation of the allowances
required by law require wise and prudent management of all the university resources together with the
incremental proceeds of tuition increases. Cognizance should be taken of the fact that the private
respondent had, before PD 451, managed to grant all allowances required by law. It cannot now claim
that it could not afford the same, considering that additional funds are even granted them by the law in
question. We find no compelling reason, therefore, to deviate from our previous ruling in the University of
the East case even as we take the second hard look at the decision requested by the
private Respondent. This case was decided in 1982 when PDs 1614, 1634, 1678, and 1713 which are
also the various Presidential Decrees on ECOLA were already in force. PD 451 was interpreted in the
light of these subsequent legislations which bear upon but do not modify nor amend, the same. We need
not go beyond the ruling in the University of the East case.

Coming now to the third issue, the respondents are of the considered view that as evidenced by the
payrolls submitted by them during the period September 16 to September 30, 1981, the faculty members
have been paid for the extra loads. We agree with the respondents that this issue involves a question of
fact properly within the competence of the respondent NLRC to pass upon. The findings of fact of the
respondent Commission are binding on this Court there being no indication of their being unsubstantiated
by evidence. We find no grave abuse in the findings of respondent NLRC on this matter to warrant
reversal. Assuming arguendo, however, that the petitioners have not been paid for these extra loads, they
are not entitled to payment following the principles of "No work, no pay." This time, the rule applies.
Involved herein is a matter different from the payment of ECOLA under the first issue. We are now
concerned with extra, not regular loads for which the petitioners are paid regular salaries every month
regardless of the number of working days or hours in such a month. Extra loads should be paid for only
when actually performed by the employee. Compensation is based, therefore, on actual work done and
on the number of hours and days spent over and beyond their regular hours of duty. Since there was no
work on September 21, 1981, it would now be unfair to grant petitioner’s demand for extra wages on that
day. : red
Finally, disposing of the respondent’s charge of petitioner’s lack of legal capacity to sue, suffice it to say
that this question can no longer be raised initially on appeal or certiorari. It is quite belated for the private
respondent to question the personality of the petitioner after it had dealt with it as a party in the
proceedings below. Furthermore, it was not disputed that the petitioner is a duly registered labor
organization and as such has the legal capacity to sue and be sued. Registration grants it the rights of a
legitimate labor organization and recognition by the respondent University is not necessary for it to
institute this action in behalf of its members to protect their interests and obtain relief from grievances.
The issues raised by the petitioner do not involve pure money claims but are more intricately intertwined
with conditions of employment.

WHEREFORE the petition for certiorari is hereby GRANTED. The private respondent is ordered to pay its
regular fulltime teachers/employees emergency cost of living allowances for the semestral break from
November 7 to December 5, 1981 and the undistributed balance of the sixty (60%) percent incremental
proceeds from tuition increases for the same schoolyear as outlined above. The respondent Commission
is sustained insofar as it DENIED the payment of salaries for the suspended extra loads on September
21, 1981.

SO ORDERED.

 Sibal vs. Notre Dame of Greater Manila, G.R. No. 75093, February 23, 1990

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 75093 February 23, 1990

DELIA R. SIBAL, petitioner,

vs.
NOTRE DAME OF GREATER MANILA, NATIONAL LABOR RELATIONS COMMISSION, respondents.

Semproniano S. Ochoco for petitioner.

Williard B. Riano for private respondent.

PARAS, J.:

In this petition for certiorari, petitioner Delia R. Sibal prays for the reversal of the decision dated April 11,
1986 of public respondent National Labor Relations Commission which affirmed the decision of the Labor
Arbiter dated October 8, 1982 awarding to petitioner separation pay but denied her claim (1) for
compensation for teaching Health subject to 19 sections; (2) for moral damages; and (3) negating the
existence of unfair labor practice. The within petition further seeks the reinstatement of petitioner to her
former position as school nurse in respondent school without loss of seniority rights with fun backwages
from the date of her illegal dismissal up to the time of actual reinstatement; and finally, seeks the
desistance of private respondent Notre Dame of Greater Manila from further committing unfair labor
practice.

The prefatory facts and proceedings as aptly summed up by the Solicitor General and which stand
undisputed are:
Petitioner Delia R. Sibal was employed as school nurse by private respondent Notre
Dame of Greater Manila starting January 1973. Prior to school year 1976-1977, she was
compensated on a 12-month basis, although she worked only during the ten-month
period of classes. She was not required to report for work for the entire Christmas and
summer vacations. However, on March 10, 1976, respondent's director, Fr. Enrique
Gonzales, requested her to shorten her summer vacation, from two weeks after the last
day of classes to two weeks before the first day of classes of the next school year.
Petitioner acceded to the request (Rec. p. 246).

Sometime in April 1980, Fr. Gonzales required petitioner to report during that summer to
help in the library. In a letter dated April 11, 1980, petitioner contested the order, stating
that it will necessitate a change in the terms and conditions of her employment and that
library work is alien to her profession as nurse (Rec. p. 45). Fr. Gonzales relented.

In November 1980, Fr. Gonzales was replaced by Fr. Pablo Garcia, an American, as new
director. Fr. Garcia required petitioner to report for work during the summer before the
beginning of school year 1981-1982. Petitioner informed him that her contract does not
require her to report for work during the summer vacation. Fr. Garcia promised to verify
her allegation. However, he failed to inform petitioner of his findings. Thus, in order that
her failure to report for work may not be misinterpreted, petitioner filed leaves of absence
extending from April 1, 1981 to June 14, 1981 (Rec. pp. 223-225). Petitioner failed to
receive her vacation pay.

During school year 1981-1982, petitioner was assigned to teach health subjects to 900
students spread out in nineteen (19) sections of the entire high school department. This
situation came about because the two (2) teachers of the health subjects had left the
school. Petitioner, however, was not given compensation for teaching, notwithstanding
the fact that other teachers were duly compensated for extra work done. During that
school year petitioner tried to arrange for a meeting with Fr. Garcia regarding her
vacation pay, but to no avail because Fr. Garcia was always busy. In October 1981, Fr.
Garcia suffered a heart attack which necessitated his hospitalization. In December 1981,
petitioner received her 13th month pay which was computed on the basis of a 10-month
period only.

On April 5, 1982, Fr. Garcia again required petitioner to work during that summer to
update all the clinical records of the students (Rec. p. 242). In a letter dated April 7, 1982,
petitioner objected to the order by reiterating that her contract does not require her to
report for work during summer. In addition, she reminded Fr. Garcia that she had not
received any compensation for teaching health subjects the past school year (Rec. p. 6).
On the same day, Fr. Garcia replied in a letter to the effect that it was imperative for her
to report for work during the summer because it is the best time to update the clinical
records when no students could disturb her. Also, petitioner was not entitled to extra
compensation for teaching because teaching was allegedly part of her regular working
program as a school nurse (Rec. p. 221).

On April 14, 1982, petitioner, apart from reiterating her objection to the order, called the
attention of Fr. Garcia to the school's failure to pay her salary for the summer of 1981 and
of the deficiency in her 13th month pay for that year (Rec. p. 8). The following day, Fr.
Garcia adamantly refused to consider petitioner's demands and threatened to take
drastic measures against her if she remains obstinate in her refusal to follow his order to
report for work that summer (Rec. p. 243). This letter was followed the next day by a
memorandum to the same effect (Rec. p. 244). In a letter dated April 19, 1982, petitioner,
for the fourth time, informed Fr. Garcia that her contract does not require her to report for
work during summer, and she does not intend to do so that summer of 1982 (Rec. p.
241).
 Failing to receive the compensation demanded, May 10, 1982, petitioner filed a complaint
for non-payment of the following; (1) vacation pay for four (4) summer months; (2)
compensation for teaching health subjects; and (3) deficiency in the 13th month pay for
1981 (Annexes A, B, petition). Summons was served on respondent school on the
opening day of classes on June 14, 1982 (Rec. p. 19). That very day when petitioner
reported for work, respondent school served petitioner her letter of termination effective
immediately and it also submitted a copy of the termination paper to the Ministry of Labor
and Employment (MOLE) (Rec. pp. 218- 219). The following day, petitioner filed an
amended complaint, adding two more charges: illegal dismissal and unfair labor practice
(Annex C, D, petition). For the next four to five weeks, more than 20 teachers and
personnel, backed up by the Faculty Association of respondent school, pressed for the
ouster of Fr. Garcia with the Ministry of Education, Culture, and Sports (MECS) by virtue
of PD 176 and the following charges: oppressive behavior, arrogance, contempt for
Filipinos in general and Filipino teachers in particular; unfairness in dealing with
personnel; dictatorial conduct; and use of abusive language (See Annexes A to F of
Annex F, petition). Fr. Garcia was eventually replaced on September 8, 1983.

In the meantime, respondent school filed its position paper on June 29, 1982, while
petitioner filed hers on July 1, 1982 (Rec. pp. 22, 210). In the hearing of July 13, 1982,
petitioner directed clarificatory questions to Miss Cristina Sison, corporate secretary of
respondent school (Rec. pp. 57-141). On July 27, 1982, respondent filed its
memorandum, while petitioner filed hers on August 2, 1982 (Rec. pp. 142, 162).

On October 8, 1982, the Labor Arbiter rendered a decision. Petitioner filed a

memorandum of partial appeal on November 11, 1982 (Annex F, petition). Respondent
filed opposition to the appeal on January 5, 1983. On January 18, 1983, petitioner filed
reply to the opposition. In an urgent ex parte manifestation dated September 20, 1983,
petitioner informed the NLRC that Fr. Pablo Garcia had been replaced by Fr. Jose Arong,
a Filipino, as new director effective September 8, 1983 (Annex G, petition). On April 11,
1986, public respondent NLRC rendered the questioned decision which affirmed the
decision of the Labor Arbiter. (Rollo, pp. 131-136).

Petitioner thus resorted to this petition which she filed on July 15, 1986.

Petitioner and both the Solicitor General and public respondent NLRC have narrowed down the issues for
resolution to the following:

1. Whether or not the award of separation pay instead of reinstatement is the proper
remedy under the circumstances;

2. Whether or not petitioner is entitled to compensation for teaching health subjects; and

3. Whether or not unfair labor practice existed which would entitle petitioner to moral
damages.

For the affirmative resolution of the aforestated issues, petitioner alleges the following:

1. Respondent NLRC failed to give full respect to the constitutional mandate on security
of tenure when the majority decision affirmed the decision of the Labor Arbiter separating
and, in effect, dismissing petitioner on the basis of her perception that petitioner and the
director could no longer work harmoniously. The award of separation pay would defeat
and render nugatory the Constitutional guaranty of security of tenure.
 2. Petitioner is entitled to compensation relative to her teaching job which is distinct and
separate from her duties as school nurse.

3. Petitioner was, from the very start, subjected to harassment and fabricated charges.
She had suffered and continues to suffer from the time of her dismissal on June 14, 1982
up to the present. She must be entitled to an award of moral damages.

Public respondent NLRC, however, submits the following:

1. The relationship between petitioner and respondent school had come to the point that
reinstatement of petitioner would cause undue burden on both parties. It would affect
petitioner's performance of her duties as school nurse and private respondent's business.

2. Teaching health subjects is allied to petitioner's job as school nurse, particularly so

when the same is done within the official eight (8) working hour schedule.

3. Petitioner failed to prove her membership in a union. There was no union among the
employees of the school in which case the instances where unfair labor practice may be
committed, with the exception of one instance, and predicated on the existence of a
union, would not apply. Private respondent has not been found guilty of unfair labor
practice and it, therefore, follows that she is not entitled to moral damages.

This Court finds merit in the petition.

The Labor Arbiter herself had found that the termination of petitioner was not supported by any just cause
or reason. Yet, she erroneously ordered separation pay instead of reinstatement with backwages based
on the alleged reason that petitioner's working relations with the former director, Father Garcia, had
become so strained and deteriorated that it became impossible for them to work harmoniously again. And
the NLRC affirmed such finding which is untrue and merely speculative.

It should be noted that the alleged conflict between the petitioner and the director was strictly official in
nature, the cause of which was the violation of the terms of employment by the latter. Petitioner's
assertion of her right to unpaid salaries and bonus differential was not motivated by any personal
consideration. Rather, she simply claimed benefits which, under the law, she was entitled to and legally
due her. In her act of asserting these money claims, petitioner observed utmost tact, courtesy and civility
so as not to unduly offend the sensibilities of the director by waiting for his frill recovery from his illness
before sending her formal letter of demand; and only after the school refused to satisfy her money claims
did she file the formal complaint with the proper NLRC branch. Ironically, however, the director gave her a
downright shabby treatment by terminating her services without prior notice and without first filing a case
against her wherein she could have defended herself . The school did not even give credit to her more
than nine (9) years of continuous service. Petitioner's termination was a blatant disregard of due process
and Constitutional guarantee of protection to labor.

Thus, in the case of Callanta v. Carnation Philippines, Inc. (145 SCRA 268), this Court held that one's
employment, profession, trade or calling is a "property right", and the wrongful interference therewith is an
actionable wrong. The right is considered to be property within the protection of a constitutional guaranty
of due process of law.

Significantly, about a month after petitioner's termination on June 14, 1982, more than twenty teachers
and personnel of respondent school, backed by the Faculty Association, petitioned for the ouster of
Director Fr. Garcia for serious charges under P.D. 176. Consequently, Fr. Garcia was replaced on
September 8, 1983. Clearly, therefore, when the assailed NLRC decision was rendered on April 11, 1986,
the alleged "strained relations" or "irritant factors" which the Labor Arbiter capitalized on had been totally
eliminated. Respondent NLRC obviously failed to consider this and thus perpetuated the error committed
by the Labor Arbiter in her prior decision. The eventual replacement of Fr. Garcia all the more confirmed
the discriminatory and oppressive treatment which he gave petitioner.

The dissenting NLRC Commissioner aptly observed thus:

Moreover, it should be emphasized, that no strained relations should arise from a valid
and legal act of asserting ones right, such as in the instant case, for otherwise, an
employee who shall assert his/ her right could be easily separated from the service by
merely paying his/her separation pay on the pretext that his/her relationship with his/her
employer had already become strained.

To Our mind, strained relations in order that it may justify the award of separation pay in
lieu of reinstatement with backwages, should be such, that they are so compelling and so
serious in character, that the continued employment of an employee is so obnoxious to
the person or business of the employer, and that the continuation of such employment
has become inconsistent with peace and tranquility which is an Ideal atmosphere in every
workplace. (pp. 98-99, Rollo)

The respondent NLRC erred is sustaining the Labor Arbiter's ruling that petitioner is not entitled to
compensation for teaching health subjects allegedly because petitioner taught during her regular working
hours; the subject Health is allied to her profession as nurse; and she and respondent school had no
clear understanding regarding extra compensation.

The Solicitor General who normally and expectedly speaks for the NLRC has ably refuted the position
taken by the latter. The Court thus finds valid and decisive the following submission of the Solicitor
General:

It is submitted, however, that petitioner is entitled to compensation for teaching health

subjects. Although the subject taught is Health and allied to her profession, and is taught
during regular working hours, petitioner's teaching the subject in the classroom and her
administering to the health needs of students in the clinic involve two different and distinct
jobs. They cannot be equated with each other for they refer to different functions.
Teaching requires preparation of lesson plans, examinations and grades, while clinical
work entails preparation of clinical records and treating illnesses of students in school.
There can be no doubt that teaching health subjects is extra work for petitioner, and
therefore necessitates extra compensation. After all it has been the practice of the school
to pay extra compensation to teachers who were given extra load even during regular
working hours (Annex G of Annex F, Petition). The fact that respondent school failed to
produce the records of those teachers prove that they were paid for extra work. Hence,
petitioner should likewise be paid compensation. (pp. 138-139, Rollo)

It must be noted that petitioner has established that in several precedents, non-teaching personnel of
respondent school who were made to handle teaching jobs were actually paid actual compensation.
Besides, justice and equity demand that since the principle of equal work has long been observed in this
jurisdiction, then it should follow that an extra pay for extra work should also be applied.

Significantly, this Court has enunciated in the care of University of Pangasinan Faculty Union v. University
of Pangasinan (127 SCRA 691) that semestral breaks may be considered as "hours worked" under the
Rules implementing the Labor Code and that regular professors and teachers are entitled to ECOLA
during the semestral breaks, their "absence" from work not being of their own will.

The records show that when summons with attached complaint of petitioner for money claims was served
on respondent school on June 14, 1982, said respondent, on the very day, gave petitioner her walking
papers. Respondent did not waste any time in dismissing her in brazen violation of these provisions of the
Labor Code, as amended:

Art. 118 of the Labor Code provides:

Retaliatory measures. — It shall be unlawful for an employer to refuse to pay or reduce

the wages and benefits, discharges or in any manner discriminate against any employee
who has filed any complaint or instituted any proceeding under this Title or has testified
or is about to testify in such proceedings.(Emphasis supplied)

Thus, too, Art. 249 (f) provides:

Art. 249. Unfair tabor practice of employers. — It shall be unlawful for an employer to
commit any of the following unfair labor practice.

xxx xxx xxx

xxx xxx xxx

(f) to dismiss, discharge, or otherwise prejudice or discriminate against an employee for

having given or being about to give testimony under this Code,

xxx xxx xxx

For the aforestated violations, respondent becomes liable under Arts. 289 and 290 of the same Code.

This Court has, time and again, condemned illegal termination of services of employees. In Remerco
Garments Manufacturing v. Minister of Labor and Employment (135 SCRA 167), it declared that while it is
true that it is the sole prerogative of the management to dismiss or lay-off an employee, the exercise of
such a prerogative, however, must be made without abuse of discretion, for what is at stake is not only
private respondent's position (petitioner in this case) but also his means of livelihood.

In arguing for petitioner's entitlement to moral damages, the Solicitor General has aptly summed up her
plight. The Solicitor General has submitted this valid justification for the award of moral damages under
Art. 1701 of the Labor Code:

Petitioner had been the subject of discrimination for over a year before she was ultimately
dismissed. When she justifiably refused to obey the order to report for work for two
summers, she was not given her vacation pay for both occasions. Unlike her, the doctor
and dentist who worked in the same clinic, were not required to report during summer
and were given their respective vacation pay. Again, petitioner, unlike the teachers who
accepted extra load, was not given extra compensation when she taught health subjects
to 900 students for one year. By withholding such compensation, respondent school
stood to gain at the expense of petitioner, the amount of the salary which it could have
paid to two (2) health teachers. Petitioner's 13th month pay was likewise underpaid
because the basis for computation was only ten months, and not one year as in the case
of other regular office personnel. Finally, petitioner's travails culminated in her
unceremonious termination without due process at the beginning of the school year on
June 14, 1982, by the service of her termination paper antedated June 11, 1982.
Termination without due process is specifically prohibited by Rule XIV Section 1 under
Section 8 of the Rules Implementing BP Blg. 130:
 Security of tenure and due process. — No worker shall be dismissed
except for a just or authorized cause provided by law and after due
process.

The series of discriminatory and oppressive acts of respondent school against petitioner
invariably makes respondent liable for moral damages under Art. 1701, which prohibits
acts of capital or labor against each other, and Art. 21 on human relations in relation to
Art. 2219 No. 10 and Art. 2220, all of the Civil Code (Philippine Refining Co., Inc. v.
Garcia, 18 SCRA 107). (Rollo, pp. 140-141)

WHEREFORE, the appealed decision of respondent NLRC is hereby SET ASIDE. Private respondent is
hereby ordered to REINSTATE petitioner to her former position without loss of seniority rights and with
backwages for three (3) years from the time of her illegal dismissal; to pay her the regular extra
compensation relative to her teaching health subjects; and to pay her moral damages, the amount of
which shall be determined by respondent NLRC. Let this case be remanded to the NLRC for the proper
implementation of this decision.

SO ORDERED.

o Work interruptions due to brown-outs

 Durabilt Recapping Plant Company vs. NLRC G.R. No. L-76746, July 27,
1987

DECISION

GUTIERREZ, JR., J.:

This is a petition to review the May 16, 1986 resolution of respondent National Labor Relations
Commission (NLRC) affirming the Labor Arbiter’s order in NLRC Case No. NCR-7-3162083. The sole
issue raised is the proper basis for the computation of backwages in favor of an illegally dismissed
employee.

The facts of the case are simple and uncontroverted.

On July 11, 1983, a complaint for illegal dismissal was filed by respondent Reynaldo Bodegas, against
petitioner Durabuilt, a tire recapping company.

In a decision rendered by the Labor Arbiter on February 13, 1984, the private respondent was ordered
reinstated to his former position with full backwages, from the time he was terminated up to the time he is
actually reinstated, without loss of seniority rights and benefits accruing to him.

The petitioners failed to file a seasonable appeal and entry of final judgment was made on July 8, 1985.

On August 8, 1985, the Acting Chief of Research and Information and the Corporation Auditing Examiner
of the then Ministry of Labor and Employment submitted a computation of backwages, ECOLA, 13th
month pay, sick and vacation leave benefits in favor of Reynaldo Bodegas in the total amount of
P24,316.38.

The petitioner filed its opposition to the computation on the ground that it contemplated a straight
computation of twenty-six (26) working days in one month when the period covered by the computation
was intermittently interrupted due to frequent brownouts and machine trouble and that respondent
Bodegas had only a total of 250.75 days of attendance in 1982 due to absences. According to the
petitioner, Bodegas is entitled only to the amount of P3,834.05 broken down as follows: salaries —
P1,993.00; ECOLA-P1,433.50, and 13th month pay — P407.55.

On October 23, 1985, the Labor Arbiter denied the opposition to the computation. The petitioner appealed
to the NLRC which, in an order dated May 16, 1986, affirmed the order of the Labor Arbiter and dismissed
the appeal.

Claiming grave abuse of discretion on the part of the public respondents, Durabuilt filed the instant
petition.

Backwages, in general, are granted on grounds of equity for earnings which a worker or employee has
lost due to his dismissal from work (New Manila Candy Workers Union (NACONWA-PAFLU v. CIR, 86
SCRA 37).

The general principle is that an employee is entitled to receive as backwages all the amounts he may
have lost starting from the date of his dismissal up to the time of his reinstatement (Capital Garment
Corporation v. Ople, 117 SCRA 473; New Manila Candy Workers’ Union (NACONWA-PAFLU) v. CIR,
supra).

In a line of cases, this Court has established a policy fixing the amount of backwages to a just and
reasonable level without qualification or deduction (Insular Life Assurance Co., Ltd. Employees’
Association-NATU v. Insular Life Assurance Co., Ltd., 76 SCRA 501; Feati University Club v. Feati
University, 58 SCRA 395; Mercury Drug Co., Inc. v. CIR, 56 SCRA 694). The respondents center their
attention on the above underlined portion of this policy. Hence, their contention that the deductions cited
by the petitioners cannot be made.

In their bid to recover a greater amount of backwages, the rationale of the policy has escaped the
respondents’ consideration. In Insular Life Assurance Employees’ Association-NATU v. Insular Life
Assurance Co., Ltd. (76 SCRA 50) we held that to fix the amount of backwages without qualification or
deduction simply means that the workers are to be paid their backwages fixed as of the time of their
dismissal or strike without deduction for their earnings elsewhere during their lay-off and without
qualification of their backwages as thus fixed; i.e. unqualified by any wage increases or other benefits that
may have been received by their co-workers who were not dismissed or did not go on strike. The principle
is justified "as a realistic, reasonable and mutually beneficial solution for it relieves the employees from
proving their earnings during their lay-offs and the employer from submitting counterproofs. It was meant
to obviate the twin evils of idleness on the part of the employees and attrition and undue delay in
satisfying the award on the part of the employer" (New Manila Candy Workers Union NACONWA-PAFLU
v. CIR supra). The same was not to establish an inflexible rule of computation of any backwages due an
employee.

The age-old rule governing the relation between labor and capital, or management and employee of a
"fair day’s wage for a fair day’s labor" remains as the basic factor in determining employees’ wages, and
for that matter backwages. If there is no work performed by the employee there can be no wage or pay
unless, of course, the laborer was able, willing and ready to work but was illegally locked out, or
suspended (SSS v. SSS Supervisors’ Union-CUGCO, 117 SCRA 746).

The illegal dismissal of the private respondent is conceded by the petitioner. It is willing to pay
backwages. However, the petitioner argues that for days where no work was required and could be done
by its employees, no wages could have been earned and, thereafter, lost by said employees to justify an
award of backwages. We quote with approval the Solicitor General’s comment, ** to wit:

"From the indubitable facts on record, it appears that petitioners have valid reasons to claim that certain
days should not be considered days worked for purposes of computing private respondent’s backwages
since their business was not in actual operation due to brownouts or power interruption and the
retrenchment of workers they had during the period of private respondent’s dismissal.

"It cannot be denied that during the past years particularly in 1983, there was chronic electrical power
interruption resulting to disruption of business operations. To alleviate the situation, the government thru
the Ministry of Trade and Industry called on the industrial sector to resort to the so-called Voluntary Loan
Curtailment Plan (or VLCP), whereby brownouts or electrical power interruption was scheduled by area.
The program while it may have been called "voluntary" was not so as electrical power consumers had no
choice then due to the prevailing energy crisis.

"Petitioners heeding the government’s call, participated in the VLCP as indicated in their statement of
comformity dated November 23, 1982. Thus, beginning March 21, 1983 and every Wednesday thereafter,
petitioner’s business (which indicentally is recapping rubber tires) was not in actual operation. No less
than the former Minister of Trade and Industry expressed his gratitude to petitioners for participating in
the VLCP. Petitioners substantiated claim therefore, that the days during which they were not in operation
due to the VLCP should be excluded in the number of days worked for purposes of computing private
respondents backwages stands reasonable and should have been considered by the corporation auditing
examiner.

"Moreover, as early as May 1978, the Ministry of Labor and Employment, thru Policy Instruction No. 36,
has said that —

"2. Brownouts running for more than twenty minutes may not be treated as hours worked provided that
any of the following conditions are present;

"a) The employees can leave their work place or go elsewhere whether within or without the work
premises; or

"b) The employees can use the time effectively for their own interest.

"It is of record that during electrical power interruptions, petitioners business was not in operation. This
was never disputed by private Respondent.

"Petitioners’ claim that the period (December 1983) during which they effected retrenchment of workers
owing to economic crisis then prevailing likewise appears plausible. There is substantial evidence
consisting of reports to MOLE and Social Security System showing that petitioners had laid off workers
due to lack of raw materials. The petitioners payrolls submitted to support their objection to computation
indicate that the number of working days was reduced from the normal weekly six working days to four
working days for a great number of petitioners’ workers. Obviously, private respondent could not have
been among those laid off, as at that time he was already dismissed by petitioner." (Rollo, pp. 31-34).

Thus, we have held that where the failure of workers to work was not due to the employer’s fault, the
burden of economic loss suffered by the employees should not be shifted to the employer. Each party
must bear his own loss (SSS v. SSS Supervisors’ Union-CUGCO, supra; Pan-American World Airways,
Inc. v. CIR, 17 SCRA 813). As pointed out by the Solicitor General —

‘. . . to allow payment of backwages of P24,316.68 as ordered by public respondents instead of

P3,834.16 as petitioners claim and which appears to be just and reasonable under the circumstances of
this case would not only be unconscionable but would be grossly unfair to other employees who were not
paid when petitioners’ business was not in operation." (Rollo, p. 35).

Indeed, it would neither be fair nor just to allow respondent to recover something he has not earned and
could not have earned and to further penalize the petitioner company over and above the losses it had
suffered due to lack of raw materials and the energy-saving programs of the government. The private
respondent cannot be allowed to enrich himself at the expense of the petitioner company. The
computation of backwages should be based on daily rather than on monthly pay schedules where, as in
the case at bar, such basis is more realistic and accurate. (Compania Maritima v. United Seamen’s Union
of the Philippines, 65 SCRA 393).

In conclusion, we again quote the Solicitor General’s comment:

"Finally, what strengthens petitioners claim for mitigated liability is their evident good faith as manifested
by their reinstatement of private respondent while the case for illegal dismissal was still pending and their
willingness to pay backwages. While it is true that as a general rule order of reinstatement carries with it
an award of backwages (Art. 280, Labor Code) this Honorable Court did not only mitigate but absolved
employers from liability of backwages where good faith is evident (Findlay Millar Timber Co. v. PLASLU, 6
SCRA 26; Cromwell Com. Employees & Laborers Union v. CIR, 13 SCRA 259, Norton and Harrison
Labor Union v. Harrison Co. Inc. 15 SCRA 310; PAL v. PALEA, 57 SCRA 489; Cruz v. MOLE, 120 SCRA
15). There is no indication, to paraphrase this Honorable Court’s ruling in Pantranco North Express Inc. v.
NLRC (126 SCRA 526) that private respondent was a ‘victim of arbitrary and high handed action." (Rollo,
pp. 34-35).

WHEREFORE, in view of the foregoing, the petition is hereby GRANTED. The order of the Labor Arbiter,
Amelia M. Guloy in NLRC Case No. NCR-7-3162083, dated October 23, 1985, as affirmed by the NLRC
is SET ASIDE. The petitioner is ordered to pay private respondent his backwages from the time he was
terminated up to the time he was actually reinstated computed on the basis of the number of days when
petitioner’s business was in actual operation. The number of days where no work was required and could
be done by petitioner’s employees on account of shutdowns due to electrical power interruptions,
machine repair, and lack of raw materials are not considered hours worked for purposes of computing the
petitioner’s obligation to respondent employee. In no case shall the award exceed three year’s backpay
as above computed.

SO ORDERED.

o Burden of proving hours worked.

o Seaman
 Cagampan vs. NLRC, March 22, 1994

DECISION

PARAS, J.:

Presented before Us for review is the decision of public respondent National Labor Relations Commission
handed down on March 16, 1988 reversing the decision of the Philippine Overseas Employment
Administration and correspondingly dismissing the cases for lack of merit. The POEA decision granted
overtime pay to petitioners equivalent to 30% of their basic pay.

We do not dispute the facts as found by the Solicitor General. Thus:

"On April 17 and 18, 1985, Petitioners, all seamen, entered into separate contracts of employment with
the Golden Light Ocean Transport, Ltd., through its local agency, private respondent ACE MARITIME
AGENCIES, INC. Petitioners, with their respective ratings and monthly salary rates, are as follows:

Petitioners Rating Salary per month

Julio Cagampan 2nd Engineer US$500.00

Silvino Vicera 2nd Engineer US$800.00

Juanito de Jesus Ordinary Seaman US$120.00

Jorge C. de Castro Ordinary Seaman US$160.00

Arnold Miranda 3rd Officer US$310.00

Maximo Rosello Cook US$230.00

Aniceto Betana 3rd Engineer US$400.00

"Petitioners were deployed on May 7, 1985, and discharged on July 12, 1986.

"Thereafter, petitioners collectively and or individually filed complaints for non-payment of overtime pay,
vacation pay and terminal pay against private Respondent. In addition, they claimed that they were made
to sign their contracts in blank. Likewise, petitioners averred that although they agreed to render services
on board the vessel Rio Colorado managed by Golden Light Ocean Transport, Ltd., the vessel they
actually boarded was MV ‘SOIC I’ managed by Columbus Navigation. Two (2) petitioners, Jorge de
Castro and Juanito de Jesus, charged that although they were employed as ordinary seamen (OS), they
actually performed the work and duties of Able Seamen (AB).

"Private respondent was furnished with copies of petitioners’ complaints and summons, but it failed to file
its answer within the reglementary period. Thus, on January 12, 1987, an Order was issued declaring that
private respondent has waived its right to present evidence in its behalf and that the cases are submitted
for decision (Page 68, Records).

"On August 5, 1987, the Philippine Overseas Employment Administration (POEA) rendered a Decision
dismissing petitioners’ claim for terminal pay but granted their prayer for leave pay and overtime pay. The
dispositive portion of the Decision reads:

‘IN VIEW OF THE FOREGOING, judgment is hereby rendered ordering respondent (private respondent)
Ace Maritime Agencies, Inc. to pay the following complainants (petitioners) in the amounts opposite their
names:

1. Julio Cagampan — US$583.33 plus US$2,125.00 representing the 30% guaranteed overtime pay;

2. Silvino Vicera — US$933.33 plus US$3,400.00 representing the 30% guaranteed overtime pay;

3. Jorge de Castro — US$233.33 plus US$850.00 representing the 30% guaranteed overtime pay;

4. Juanito de Jesus — US$233.33 plus US$850.00 representing the 30% guaranteed overtime pay;

5. Lauro Diongzon — US$233.33 plus US$850.00 representing the 30% guaranteed overtime pay;

6. Arnold Miranda — US$455.00 plus US$1,659.50 representing the 30% guaranteed overtime pay;

7. Maximo Rosello — US$303.33 plus US$1,105.00 representing the 30% guaranteed overtime pay; and

8. Aniceto Betana — US$583.33 plus US$2,125.00 representing the 30% guaranteed overtime pay.

‘The payments represent their leave pay equivalent to their respective salary (sic) of 35 days and should
be paid in Philippine currency at the current rate of exchange at the time of actual payment.’ (pp. 81-82,
Records)

"Private respondent appealed from the POEA’s Decision to the NLRC on August 24, 1987. On March 16,
1988, the NLRC promulgated a Decision, the dispositive portion of which reads:

‘WHEREFORE, premises considered, the appealed decision is hereby REVERSED and SET ASIDE and
another one entered dismissing these cases for lack of merit.’ (p. 144, Records)

"On May 8, 1988, petitioners filed an Urgent Motion for Reconsideration of the NLRC’s Decision (p. 210,
Records), but the same was denied by the NLRC for lack of merit in its Resolution dated September 12,
1988 (p. 212, Records)."cralaw virtua1aw library

Hence, this appeal from the decision and resolution of the respondent NLRC.

Petitioners allege that respondent Commission gravely abused its discretion or erred in deciding in favor
of private respondent company by reason of the following:

1. Respondent NLRC overlooked the fact that private respondent company had repeatedly failed and
refused to file its answer to petitioners’ complaints with their supporting documents.

2. Respondent Commission erred in reversing and setting aside the POEA decision and correspondingly
dismissing the appeal of petitioners, allegedly in contravention of law and jurisprudence.

Private respondent maritime company disclaims the aforesaid allegations of petitioners through these
arguments:

1. As borne out by the records, its former counsel attended all the hearings before the POEA wherein he
raised the basis objection that the complaint of petitioners was so generally couched that a more detailed
pleading with supporting documents was repeatedly requested for the latter to submit.cralawnad

2. The NLRC never abused its discretion in arriving at assailed decision considering that the same was
based on the Memorandum on Appeal dated August 14, 1987 filed by private Respondent.

3. In the hearings conducted by respondent Commission, all the arguments of both parties were properly
ventilated and considered by said Commission in rendering its decision.

4. The Labor Code basically provides that the rules of evidence prevailing in courts of law or equity shall
not be controlling and it is the spirit and intention of the Code that the Commission and its members and
Labor Arbiters should use every and all reasonable means to ascertain the facts in each case speedily
and objectively and without regard to technicalities of law and procedure, all in the interest of due
process.

5. Petitioners’ motion for reconsideration of the NLRC decision did not invoke the merits of the case but
merely raised purely technical and procedural matters. Even assuming that private respondent,
technically speaking, waived the presentation of evidence, its appeal to the NLRC was valid since it
involved merely a correct interpretation and clarification of certain provisions of the contract the validity of
which has never been questioned.

The Solicitor General, arguing for public respondent NLRC, contends:

1. Petitioners’ assumption that a party who is declared to have waived his right to present evidence also
loses his right to appeal from an adverse judgment made against him is a falsity for, although the
technical rules of evidence prevailing in the courts of law or equity do not bind labor tribunals, even the
Rules of Court allows a party declared in default to appeal from said judgment by attaching the propriety
of the relief awarded therein.

2. The NLRC did not abuse its discretion in the rendition of subject decision because the evidence
presented by petitioners in support of their complaint is by itself sufficient to back up the decision. The
issue of the disallowance of overtime pay stems from an interpretation of particular provisions of the
employment contract.

We cannot sustain petitioners’ position.

The failure of respondent to submit its responsive pleading was not fatal as to invalidate its case before
the Phil. Overseas Employment Authority. Evidently, such formal or technical defect was rectified by the
fact that the POEA proceeded with the hearings on the case where both parties were given sufficient
leeway to ventilate their cases.

Petitioners’ manifest pursuit of their claims before the POEA in the absence of the answer produced the
effect of condoning the failure of private respondent to submit the said answer. Their submission to the
POEA’s authority without questioning its jurisdiction to continue the hearings further strengthens the fact
that the alleged technical defect had already been cured. After all, what is there to complain of when the
POEA handed down a decision favorable to petitioners with the allowance of the latter’s leave pay and
overtime pay.

Notably, it was only when private respondent appealed the NLRC decision to this Court that petitioners
suddenly unearth the issue of private respondent’s default in the POEA case. Had the decision favoring
them not been reversed by the NLRC, petitioners could have just clammed up. They resorted to bringing
up a technical, not a substantial, defect in their desperate attempt to sway the Court’s decision in their
favor.

Private respondent has pointedly argued that the NLRC anchored its decision primarily upon the
Memorandum on Appeal. In the case of Manila Doctors Hospital v. NLRC (153 SCRA 262) this Court
ruled that the National Labor Relations Commission and the Labor Arbiter have authority under the Labor
Code to decide a case based on the position papers and documents submitted without resorting to the
technical rules of evidence.

On the issue of whether or not petitioners should be entitled to terminal pay, We sustain the finding of
respondent NLRC that petitioners were actually paid more than the amounts fixed in their employment
contracts. The pertinent portion of the NLRC decision reads as follows.

"On this award for leave pay to the complainants (petitioners), the (private) respondent maintains that the
actually they were paid much more than what they were legally entitled to under their contract This fact
has not been disputed by the complainants (petitioners.) Thus, as mentioned in (private) respondent’s
Memorandum on Appeal dated 14 August 1967, their overpayment is more than enough and sufficient to
offset whatever claims for leave pay they filed in this case and for which the POEA favorably considered
in their favor. For complainant (petitioner) Aniceto Betana, it appears that under the crew contract his
monthly salary was US$400 while he was overpaid by US$100 as he actually received US$500. In fine,
Betana had received at least US1,400 excess salary for a period of fourteen (14) months which was the
period of his employment. In the case of complainant (petitioner) Jorge C. de Castro his stipulated
monthly pay was US$160 but he actually received a monthly pay of US$200 or an overpayment of
US$560 for the same period of service. For complainant (petitioner) Juanito R. de Jesus, his
overpayment is US$1120. Complainant (petitioner) Arnold J. Miranda has also the same amount of
excess payment as de Jesus. Indeed, We cannot simply ignore this material fact. It is our duty to prevent
a miscarriage of justice for if We sustain the award for leave pay in the face of undisputed facts that the
complainants (petitioners) were even paid much more than what they should receive by way of leave pay,
then they would be enriching themselves at the expense of others. Accordingly, justice and equity compel
Us to deny this award."cralaw virtua1aw library

Even as the denial of petitioners’ terminal pay by the NLRC has been justified, such denial should not
have been applied to petitioners Julio Cagampan and Silvino Vicera. For, a deeper scrutiny of the records
by the Solicitor General has revealed that the fact of overpayment does not cover the aforenamed
petitioners since the amounts awarded them were equal only to the amounts stipulated in the crew
contracts. Since petitioners Cagampan and Vicera were not overpaid by the company, they should be
paid the amounts of US$583.33 and US$933.33, respectively. Further examination by the Solicitor
General shows that petitioner Maximo Rosello was also overpaid in the amount of US$420.00.

Hence, with respect to petitioners Cagampan and Vicera, the NLRC decision must be modified
correspondingly.

As regards the question of overtime pay, the NLRC cannot be faulted for disallowing the payment of said
pay because it merely straightened out the distorted interpretation asserted by petitioners and defined the
correct interpretation of the provision on overtime pay embodied in the contract conformably with settled
doctrines on the matter. Notably, the NLRC ruling on the disallowance of overtime pay is ably supported
by the fact that petitioners never produced any proof of actual performance of overtime work.

Petitioners have conveniently adopted the view that the "guaranteed or fixed overtime pay of 30% of the
basic salary per month" embodied in their employment contract should be awarded to them as part of a
"package benefit." They have theorized that even without sufficient evidence of actual rendition of
overtime work, they would automatically be entitled to overtime pay. Their theory is erroneous for being
illogical and unrealistic. Their thinking even runs counter to the intention behind the provision. The
contract provision means that the fixed overtime pay of 30% would be the basis for computing the
overtime pay if and when overtime work would be rendered. Simply, stated, the rendition of overtime work
and the submission of sufficient proof that said work was actually performed are conditions to be satisfied
before a seaman could be entitled to overtime pay which should be computed on the basis of 30% of the
basic monthly salary. In short, the contract provision guarantees the right to overtime pay but the
entitlement to such benefit must first be established. Realistically speaking, a seaman, by the very nature
of his job, stays on board a ship or vessel beyond the regular eight-hour work schedule. For the employer
to give him overtime pay for the extra hours when he might be sleeping or attending to his personal
chores or even just lulling away his time would be extremely unfair and unreasonable.

We already resolved the question of overtime pay of a worker aboard a vessel in the case of National
Shipyards and Steel Corporation v. CIR (3 SCRA 890). We ruled:

"We can not agree with the Court below that respondent Malondras should be paid overtime
compensation for every hour in excess of the regular working hours that he was on board his vessel or
barge each day, irrespective of whether or not he actually put in work during those hours. Seamen are
required to stay on board their vessels by the very nature of their duties, and it is for this reason that, in
addition to their regular compensation, they are given free living quarters and subsistence allowances
when required to be on board. It could not have been the purpose of our law to require their employers to
pay them overtime even when they are not actually working; otherwise, every sailor on board a vessel
would be entitled to overtime for sixteen hours each day, even if he spent all those hours resting or
sleeping in his bunk, after his regular tour of duty. The correct criterion in determining whether or not
sailors are entitled to overtime pay is not, therefore, whether they were on board and can not leave ship
beyond the regular eight working hours a day, but whether they actually rendered service in excess of
said number of hours. (Emphasis supplied).

The aforequoted ruling is a reiteration of Our resolution in Luzon Stevedoring Co., Inc. v. Luzon Marine
Department Union, Et. Al. (G.R. No. 9265, April 29, 1957).

WHEREFORE, the decision of the NLRC is hereby AFFIRMED with the modification that petitioners
Cagampan and Vicera are awarded their leave pay according to the terms of the contract.

SO ORDERED.