ASIA PACIFIC CHARTERING (PHILS.) INC., petitioner, vs. MARIA LINDA R.

FAROLAN, respondent.
Meal Allowance 750.00

DECISION
CARPIO MORALES, J.:
Before this Court is a Petition for Review under Rule 45 of the 1997 Rules of
Civil Procedure assailing the Court of Appeals 1) June 28, 2001 Decision[1] which set
aside the decision of the National Labor Relations Commission (NLRC) reversing that
of the Labor Arbiter, and 2) January 9, 2002[2] Resolution denying a reconsideration of
its decision.
Petitioner Asia Pacific Chartering (Phils) Inc. was, until 1996, the general sales
agent (GSA) of the Scandinavian Airline System (SAS), an off-line international airline
company with license to do business in the Philippines. As GSA, petitioner sold
passenger and cargo spaces for airlines operated by SAS.
Respondent Maria Linda R. Farolan was on December 16, 1992 hired as Sales
Manager of petitioner for its passenger and cargo GSA operations for SAS, following
her conformity to a December 10, 1992 letter-offer of employment[3] from petitioner
through its Vice President/Comptroller Catalino Bondoc. The pertinent portion of the
letter-offer reads:
Dear Ms. Farolan:
Confirming our previous discussions, ASIA-PACIFIC CHARTERING PHIL., INC. is
pleased to offer you the position of Sales Manager of its Passenger and Cargo Operations for
SCANDINAVIAN AIRLINES SYSTEM in the Philippines, commencing on December 16,
1992 on the following terms:
Please affix your signature below if you find the foregoing acceptable and return to us a signed
duplicate. Meanwhile, we certainly look forward to your joining us and rest assured of our
fullest support.
xxx
(Sgd) Maria Linda R. Farolan
Conforme: (Emphasis supplied).
It is gathered that Leslie Murray, the then Sales Manager of petitioner, talked to
respondent into accepting the position after verbally briefing her on the nature of the
position.
Soon after respondent assumed her post, she participated in a number of
meetings/seminars[4] including a Customer Service Seminar in Bangkok, Thailand, a
Regional Sales Meeting on the technical aspects of airline commercial operations in
February 1993, and a course on the highly technical airline computer reservations
system calledAmadeus, all geared towards improving her marketing and sales skills.
In September of 1993, respondent, upon instruction of Bondoc, submitted a
report[5] RE: OUR COMMENTS AND ACTIONS BEING TAKEN CONCERNING SAS
POOR P & L PERFORMANCE FOR JANUARY - JULY 1993 the pertinent portions
of which read:
1 January to July 1993 Sales x x x

1993 1992 CHANGE

Monthly
Seaman 233 423 (190)

Basic Pay P 22, 000.00

Expats/Tourists 503 716 (213)

PTAs 346 196 150

Housing Allowance 4,000.00

Refugees/IOM 53 864 (811)

xxx

Transportation Allowance
Explanations.

(200 liters of gas) Cash Equivalent

1. International Organization for Migration (IOM)-both Vietnam and Scandinavian
Governments have terminated projects for refugees; hence the tremendous decrease (94%) x
x x.
2. Seamans Fares-Rates not competitive enough.
3. Expats/Tourists-In a market where on-line carriers were dropping rates drastically, we
were losing passengers to said carriers.
1 The present Market:
1. As SAS is off-line, we have no control over space and to an extent our rates are
higher because of proration with delivering carriers.
2. On-lines do not prorate with other carriers therefore can dive fares x x x.
I have convinced Mr. Jespersen to bring down the fares to be more competitive. The reason he
did not do so earlier was because low-yield fares are low in priority for confirming seats. But
now that SAS is considering increasing their frequencies ex-Hongkong before year-end, this
will be advantageous to boosting our sales.
A. Measures to take remainder of 1993 and for 1994:
1. We have negotiated a lower fare for seamen (effective September) which is
competitive. We are already getting positive response from agents. Since this(sic) low-yield
sales, Hongkong did not adjust fare accordingly first half of 1993 because of space constraints.
2. As SAS still prefers high-yield sales, we have offered incentives to Ameco as Asian
Development Bank (ADB) (effective 1st June for one year) with Mr. Jespersens approval x x x.
In addition, ADB itself is willing to consider proposals we submit to them in the case of cost-
savings. In exchange, they can endorse to SAS a relevant share of their Europe travel x x x.
3. We have also negotiated a lower net fare for Economy Class. This rate is also competitive
and is in force.
4. Incentive Program for Agents-Using the points system similar to PALs promo (PALs
Smiles), to stimulate sales. We are at present fine-tuning mechanics for Hongkongs approval
which we intend to launch before Christmas. This promo is self-sustaining (no significant
expenses to be incurred)
5. We are currently pushing sales for Baltic area/Russia as we have the best rates. We have
identified the agents who have passengers to these destinations and we are focusing on them x
x x.(Emphasis and underscoring supplied).
As reflected in respondents report, there was a drop in SAS sales revenues
which to her was attributable to market forces beyond her control.
Noting the marked decline in SAS sales revenues, petitioner directed its high
ranking officer Roberto Zozobrado in January 1994 to conduct an investigation on the
matter and identify the problem/s and implement possible solutions.
Zozobrado thus informally took over some of respondents marketing and sales
responsibilities, albeit respondent retained her title as Sales Manager and continued
to receive her salary as such.
By petitioners claim, Zozobrado found out that respondent did not adopt any
sales strategy nor conduct any sales meeting or develop other sources of revenue for
SAS, she having simply let her sales staff perform their functions all by themselves; in
1994, Soren Jespersen, General Manager of SAS in Hongkong, Southern China,
Taipei and the Philippines, came to the Philippines to assess the statistics on SAS
sales revenues and SAS was convinced that respondent was not fit for the job of
Sales Manager; and in view of the changes introduced by Zozobrado, SAS-GSA
sales operations drew positive results.
On May 21, 1994, respondent received a message[6] from Jespersen reading:
Dear Linda and Bob [Zozobrado],
First of all congratulation to your sale result in April. You reached and exceeded the target by
50% In C/class (Fantastic!!!) and 1% In M/class. This is the second month in a row (and the
last 2 first in more than a year) and hopefully the beginning of a new and positive trend.
xxx
As you can see May looks very good.
With the agreed focus on selling the M/class and all the activities initiated, Im sure that the
rest of the period will pick very soon.
x x x (Underscoring supplied; Quoted verbatim).
On July 18, 1994,[7] respondent received another message from Jespersen
reading:
Dear Linda,
The sales report for June 1994 did unfortunately not reach target in C/class but in M/class you
managed very well. Totally 9% below target.
The pre bookings eff. 14 July looks very good and encouraging and with 2 weeks to go July
should not be a problem. (enclosed)
Please send my regards to all the girls and tell them to keep up the good work.
Just for reason of clarification. Enclosed to your action list is a production report for Jan-May
1994. The figures I send to you is only your long-haul sales and do not include European
sectors.The correct figure for the period will be 436,000 USD in target for long-haul (actual
362 TUSD) and 642 TUSD total with 514 TUSD achieved.
Please be so kind and inform Bob accordingly.
xxx
On even date, however, petitioner sent respondent a letter of termination[8] on
the ground of loss of confidence. The letter reads:
This confirms our (Bob Zozobrado and myself) July 4, 1994 verbal advice to you regarding
Managements decision to terminate your Services as our GSA Manager for SCANDINAVIAN
AIRLINES SYSTEMs Offline Operations in the Philippines, thirty (30) days upon receipt of
this Notice, due to our loss of confidence in your Managerial and Marketing capabilities. As
explained to you by Mr. Zozobrado and myself, records will show that under your
Management (or lack of it), our SAS-GSA performance is, as follows:
A. 1993 vs. 1992
Gross Revenue - 29 % shortfall
Operating Expenses - 2% over
Net Cash Flow - 79% shortfall
B. JAN-APR 94 vs. JAN-APR 92
Revenues - 34% shortfall
Operating Expenses - 6% over
Net Cash Flow - 94% shortfall
Several times in the past, we have made you aware in the need to improve your sales
performance and gain the respect of your staff which have openly expressed their concern on
their lack of direction under your management. Even our principal (SAS) had negative
comments about the way you handle urgent requirements of the Regional Office. SAS was
also alarmed by the aforementioned dismal overall Performance of APC/SAS. All these
prompted us to decide to replace you as our SAS GSA Manager to save the situation and our
representation of the SAS-GSA in the Philippines.
x x x (Quoted verbatim; Emphasis supplies).
Thus spawned the filing by respondent of a complaint for illegal dismissal
against petitioner, Bondoc, Zozobrado and one Donald Marshall (the record indicates
that he had ceased to be connected with petitioner when the case was pending
before the Labor Arbiter), with prayer for damages and attorneys fees. In her
complaint petitioner alleged that Bondoc and Zozobrado had asked her to tender her
resignation as she was not the person whom SAS was looking for to handle the
position of Sales Manager[9]but that she refused, hence, she was terminated by the
letter of July 18, 1994 letter.[10]
The Labor Arbiter, after a detailed analysis of the evidence for both parties,
found for respondent upon the following issues:
1. Whether or not complainant was validly terminated for cause;
2. Whether or not due process was observed when complainant was
terminated; and
3. Whether or not any of the parties are entitled to damages,
and disposed in his decision[11] as follows:
WHEREFORE, finding the dismissal of the complainant Ms Linda Farolan to be without just
cause, effected with malice, ill will and bad faith, respondent Asian Pacific Chartering
Philippine, Inc. is hereby ordered to pay her separation pay of Forty Four Thousand Pesos
(P44,000.00), and all the benefit that would have been due her under the premises. Asian
Pacific Chartering is likewise ordered to pay complainant moral damages in the amount of
One Million Five Hundred Thousand Pesos (P1,500,000.00) and exemplary damages in the
amount of Seven Hundred Fifty Thousand Pesos (P750,000.00), nominal damages of Five
Thousand Pesos (P5,000.00) and the equivalent of 25% of the total award as attorneys fees.
On appeal, the NLRC, by Decision of March 22, 1999,[12] reversed the Labor
Arbiters decision, it recognizing the right of petitioner as employer to terminate or
dismiss employees based on loss of trust and confidence, the right being a
management prerogative.
Respondents Motion for Reconsideration of the NLRC Decision having been
denied, she brought her case to the Court of Appeals via Certiorari. [13]
By Decision of June 28, 2001,[14] the Court of Appeals, as stated early on,
reversed the NLRC decision and disposed as follows:
WHEREFORE, premises considered, the challenged decision dated March 22, 1999 and the
Resolution dated July 16, 1999 of public respondent National Labor Relations Commission
(Second Division) are hereby set aside for having been issued with grave abuse of discretion
amounting to lack or in excess of jurisdiction. The decision dated September 17, 1998 of
Labor Arbiter Romulus S. Protacio is hereby upheld with modifications that the award of
attorneys fees shall only be equivalent to ten percent (10%) of the total monetary award. In
addition, the award for nominal damages is deleted for lack of basis. (Underscoring supplied).
Petitioner filed a motion for reconsideration[15] of the Court of Appeals decision but it
was denied, hence, the present Petition for Review on Certiorari[16] anchored on
the following grounds:
I unpleasantly conspicuous. Later, respondent Bondoc summoned complainant and told her to
THE CA DEFIED THE WELL-ESTABLISHED RULE THAT APC, AS EMPLOYER, HAS
THE MANAGEMENT PREROGATIVE TO REPLACE A SALES MANAGER WHOM IT
HAS REASONABLE GROUNDS TO BELIEVE CANNOT EFFECTIVELY DISCHARGE
THE DUTIES DEMANDED BY SUCH POSITION.
II
THE CA DECISION WAS PREMISED ON LACK OF EVIDENCE TO DISPROVE
RESPONDENTS THEORY THAT THE POOR SALES PERFORMANCE OF SAS WAS
DUE TO MARKET FORCES BEYOND HER CONTROL. YET, THE EVIDENCE ON
RECORD SHOWED THE CONTRARY. NO LESS THAN SAS CONFIRMED THAT
RESPONDENT WAS NOT FIT FOR THE POSITION OF MANAGER AND, THAT NO
SPECIAL CIRCUMSTANCES SUFFICIENT TO TRIGGER THE SHARP DECLINE IN
SALES SUPERVENED IN THE PHILIPPINE MARKET.
III
IN AWARDING MORAL AND EXEMPLARY DAMAGES, THE CA ACTED WITH
GRAVE ABUSE OF DISCRETION. EVEN ASSUMING, THAT RESPONDENTS
TERMINATION WAS WITHOUT JUST CAUSE, APC IS NOT LIABLE TO PAY
DAMAGES [MILLARES vs. NLRC, 328 SCRA 79 (2001)] COROLLARILY, APC IS
PRESUMED TO HAVE ACTED IN GOOD FAITH [GONZALES vs. NLRC, G.R. NO.
131653-26 March 2001]. THE CA, HOWEVER, REVERSED THE PRESUMPTION. IT
PRESUMED-WITHOUT ANY EVIDENCE WHATSOEVER-THAT APC ACTED IN BAD
FAITH IN TERMINATING RESPONDENT WITHOUT DUE REGARD TO THE HARSH
CONSEQUENCES OF THE TERMINATION
The issue in the main is whether or not respondents dismissal was legal.
A statement of the requisites for a valid dismissal of an employee is thus in
order, to wit: (a) the employee must be afforded due process, i.e., he must be given
opportunity to be heard and to defend himself; and (b) dismissal must be for a valid
cause as provided in Article 282 of the Labor Code or any of the authorized causes
under Article 283 and 284 of the same Code.[17]
As regards the first requisite, the following substantiated findings of the Labor
Arbiter, which were adopted by the Court of Appeals, reflect respondents deprivation
of due process:
xxx
[W]e find that the manner by which complainant was dismissed violated the basic precepts of
fairness and due process. First, without any semblance of, or written authority whatsoever
(TSN dated January 30, 1996, pp. 46 - 48), respondent Zozobrado took over the functions of
complainant. Complainant claims that she has been told it was upon the will of respondent
Marshall that she be replaced. Although respondent Zozobrado may have been merely giving
pointers and suggestions to the staff of complainant, the appearance of authority was
tender her resignation or face termination. Complainant, not having been given a justifiable
ground, refused to resign. Thereafter, she was finally terminated, without being afforded
the opportunity to be heard and to present evidence in her defense. She was never given
a written notice stating the particular acts or omission constituting the grounds for her
dismissal as required by law. x x x[18]
As regards the second requisite, the rule is settled that in termination cases, the
employer bears the onus of proving that the dismissal is for just cause failing which
the dismissal is not justified and the employee is entitled to reinstatement.[19]
Petitioner claims that respondent failed to live up to managements
expectation in light of her failure to adopt sales and marketing strategies to increase
sales revenues of SAS, which failure is reflective of her incompetence and
inefficiency, thus resulting to loss of revenues in 1993 and 1994.
Petitioner adds that had it not been through Zozobrados efforts, SAS sales
revenues could not have recovered.
Petitioner further claims that Jespersen was the one who initiated the
termination of respondent because of her dismal performance in handling its
operations.
And petitioner reiterates the principle that the right to dismiss a managerial
employee is a measure of self-preservation, it citing the cases of Grand Motor Parts
Corp. v. Minister of Labor et al.,[20] and Buiser et al. v. Legardo.[21]
Before passing on petitioners position, this Court deems it imperative to discuss
the nature of respondents job as sales manager of petitioner. It is not disputed that
her job description, and the terms and conditions of her employment, with the
exception of her salary and allowances, were never reduced to writing.
Recent decisions of this Court distinguish the treatment of managerial
employees from that of rank and file personnel insofar as the application of the
doctrine of loss of trust and confidence is concerned.[22]
Thus with respect to rank and file personnel, loss of trust and confidence as ground for valid
dismissal requires proof of involvement in the alleged events in question and that mere
uncorroborated assertions and accusations by the employer will not be sufficient. But as
regards a managerial employee, mere existence of a basis for believing that such employee has
breached the trust of his employer would suffice for his dismissal. (Underscoring supplied)
As enunciated in Samson v. NLRC, 330 SCRA 460,
Before one may be properly considered a managerial employee, all the following
conditions must be met:
(1) Their primary duty consists of the management of the establishment in which they
are employed or of a department or subdivision thereof;
(2) They customarily and regularly direct the work of two or more employees therein;
(3) They have the authority to hire or fire other employees of lower rank; or their suggestions
and recommendations as to the hiring and firing and as to the promotion or any other change
of status of other employees are given particular weight. (Section 2(b), Rule I, Book III of
the Omnibus Rules Implementing the Labor Code, emphasis supplied).
By respondents claim, her function, as verbally explained to her by Murray,
dealt mainly with servicing of existing clientele.[23] Bondoc, however, described
respondents functions and duties as critical.[24]
The following ruling of this Court in Paper Industries Corp. of the Philippines v.
Laguesma[25] is instructive:
Managerial employees are ranked as Top Managers, Middle Managers and First Line
Managers. The mere fact that an employee is designated manager does not ipso facto make
him one-designation should be reconciled with the actual job description of the employee for it
is the job description that determines the nature of employment. 24 (Underscoring supplied).
The absence of a written job description or prescribed work standards, however,
leaves this Court in the dark.
Even assuming, however, that respondent was a managerial employee, the
stated ground (in the letter of termination) for her dismissal, loss of confidence, should
have a basis and determination thereof cannot be left entirely to the employer.
Loss of trust and confidence to be a valid ground for an employees dismissal
must be based on a willful breach and founded on clearly established facts.[26] A
breach is willful if it is done intentionally, knowingly and purposely,
without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly,
heedlessly or inadvertently.[27]
While petitioner attributes the improvement of sales in 1994 to Zozobrado, the
fact remains that respondent was still the Sales Manager up to July 1994, in charge of
those sales meetings during which pertinent market strategies were developed and
utilized to increase sales.
In another vein, petitioner attributes loss of confidence to respondents alleged
gross inefficiency and incompetence, it citing, as earlier stated, the cases of Grand
Motor Parts Corp. (supra) and Buiser et al. (supra).
The Grand Motors case, however, involved a probationary employee-manager
who failed to, among other things, submit required monthly reports
and violated company policy, clearly mirroring his insubordination and disrespect to
express instructions of management.
While this Court, in the Buiser case (supra), held that [f]ailure to
observe prescribed standards of work, or to fulfill reasonable work assignments due
to inefficiency may be just cause for dismissal, petitioner has neither shown what
standards of work or reasonable work assignments were prescribed which
respondent failed to observe nor that if she did fail to observe any such, it was due to
inefficiency.
Finally and at all events, given respondents previous work experience as herein
below indicated, to wit:
Period Company Position
1960-1967 Express Tours, Inc. Clerk-Reservations &
Ticketing

Respondents detailed REPORT dated September 8, 1993, quoted above, 1968-1970 House of Travel, Inc. Sales Manager
relative to SAS profit and loss for 1993, which was closely examined and analyzed by
the Labor Arbiter, contains an explanation of what brought about the decline in sales
revenues. And it contains too a number of recommended measures on improvement 1971-1973 Super Travel Manager, Administration
of sales for the remainder of 1993 and for 1994.
1973-1978 American Express, Manager, World Health
As did the Labor Arbiter and the Court of Appeals, this Court finds respondents
explanation in her Report behind the decline in sales revenues as due to market
forces beyond respondents control plausible. In any event, there is no showing that Inc. Organization Account
the decline is reflective of any willfull breach of duties by respondent.
1978-1983 F.A.R. Travel President & General Manager Masters, Inc.
The two letters sent by SAS to respondent in 1994 in fact negate willful breach
of her duties by respondent. The first (received on May 21, 1994) congratulated her
and Zozobrado for exceeding sale (sic) result in April 1994. Petitioners argument that 1983-1984 Cebu Plaza Director, Convention
respondent could not invoke these letters in her favor as they were intended for
Zozobrado fails. The letters were addressed to respondent and Zozobrado. The 1985-1989 American Express, Manager-World Health
second letter (received on July 18, 1994) which was addressed to respondent, while
noting that the sales for June 1994 did not reach the target in C/class, noted that in Inc. Organization In-Plant Office
M/class she managed very well. And it went on to state that [t]he pre-bookings eff. 14
July looks (sic) very good and encouraging and with 2 weeks to go July should not be
a problem. In fact it requested respondent to send . . . regards to all the girls and tell Senior Manager-Asian
them to keep up the good work.

Development Bank In-Plant Office
1992-1994 Asia Pacific Sales Manager, Passenger
Chartering Phil. Inc. & Cargo GSA Operations,
Scandinavian Airlines System.
(Exhibit A, p. 72, Court of Appeals Rollo),
this Court is not prepared to find for petitioner. It bears noting that there is no showing
that respondent represented herself as possessed of the highest degree of skill and
care known in the trade. And it is not disputed that respondent was approached by
petitioners then Sales Manager Murray, and offered the position of Sales
Manager. She thus could not just be unceremoniously discharged for loss of
confidence arising from alleged incompetency[28].
While an employee may be dismissed because of inefficiency, neglect or carelessness, the law
implies a situation or undertaking by an employee in entering into a contract of
employment that he is competent to perform the work undertaken and is possessed of the
requisite skill and knowledge to enable him to do so, and that he will do the work of the
employer in a careful manner. If he is not qualified to do the work which he undertakes, if he
is incompetent, unskillful or inefficient, or if he executes his work in a negligent manner or is
otherwise guilty of neglect of duty, he may lawfully be discharged before the expiration of his
term of employment.[29]
In fine, this Court finds that respondent had been illegally dismissed and is
accordingly entitled to reinstatement to her former position without loss of seniority
rights and payment of backwages.[30] But as the matter of reinstatement is no longer
feasible as the GSA contract between SAS and petitioner had been terminated in May
of 1996, respondent is, as correctly held by the Court of Appeals, entitled to
separation pay in an amount equivalent to one (1) month salary for every year of
service, a fraction of six (6) months to be considered a year.
Having been hired on December 16, 1992 and terminated on July 18, 1994,
respondent is considered to have worked for two (2) years for purposes of computing
her separation pay.
Respondent is also entitled to the award of backwages computed from July 18,
1994 up to May of 1996.
As regards the award to respondent of moral and exemplary damages,
petitioner assails it in this wise: The award of damages in so far as the same was
based solely on respondents affidavit containing general and uncorroborated
statement that she suffered damages as a result of her termination is null and void [it
being] insufficient to overcome the presumption o good faith.
The following pertinent portions of petitioners Affidavit which Affidavit was
submitted as part of her testimony are self-explanatory, however.
xxx
8. On July 4, 1994, Messrs. Bondoc and Zozobrado summoned me and without
any clear explanation, ordered me to submit a letter of resignation; they
informed me that I was not the person whom SAS was looking for to handle the
position of Sales Manager; even as I was deeply hurt, shocked, and humiliated,
I declined to resign from my position as I strongly believed that the instruction
for me to resign was unjust and violative of my rights; during the conference, I
was never given the chance to know precisely why I was being asked to resign
or to explain my position; furthermore, I was informed then that Mr. Donald
Marshall was the one who decided and insisted on my termination.
9. On July 18, 1994, again without regard to the basic requirements of due process,
I was given a notice of termination signed by Mr. Bondoc; the supposed ground
for my termination was APCs alleged loss of confidence in my managerial and
marketing capabilities due to the companys alleged dismal performance during
my term of office as GSA Sales Manager; once more, I was never called to
answer this charge; a copy of the notice of termination is hereto attached as
Annex E;
10. The news of my termination circulated at once in the travel industry and as a
result, I was and still am frequently asked by my friends and acquaintances in
the industry about my termination from APC to my endless humiliation and
embarrassment; this up to now causes me endless emotional pain that I even
avoid my friends and acquaintances for fear that they might look at me
differently after my termination from APC; my reputation as a professional has
been totally shattered by the unjust act of APC;
11. Because of the extreme social humiliation, and serious anxiety over my now
besmirched reputation in the travel industry, I decided to seek legal advise; on
July 21, 1994, my counsel wrote APC demanding for my immediate reinstatement
without loss of seniority rights and for damages; a copy of the letter-demand is
hereto attached as Annex F;
x x x.
They need no amplification and/or corroboration. Indeed, petitioner was
deprived of due process and denied basic precepts of fairness when she was
terminated. Her resultant sufferings thus entitle her to an award of moral damages.
To warrant award of moral damages, it must be shown that the dismissal of the employee was
attended to by bad faith, or constituted an act opposite to labor, or was done in a manner
contrary to morals, good customs or public policy.[31]
Award of moral and exemplary damages for an illegally dismissed employee is proper where
the employee had been harassed and arbitrarily terminated by the employer.32
 In determining the amount of moral damages recoverable, however, the [G.R. No. 156367. May 16, 2005]
business, social and financial position of the offended party and the business or
financial position of the offender are taken into account. 33 Given petitioners business
position or standing before and at the time of termination and petitioners business and
financial position, this Court reduces the amount of moral damages awarded
AUTO BUS TRANSPORT SYSTEMS, INC., petitioner, vs. ANTONIO
to P500,000.00 which it finds reasonable. The amount of exemplary damages
BAUTISTA, respondent.
awarded is accordingly reduced too to P250,000.00.
WHEREFORE, the decision of the Court of Appeals is hereby AFFIRMED with DECISION
the MODIFICATION that the amount of moral damages and exemplary damages
awarded to respondent, Ma. Linda R. Farolan, is hereby reduced to Five Hundred CHICO-NAZARIO, J.:
Thousand (P500,000.00) Pesos and Two Hundred Fifty Thousand (P250,000.00)
Pesos, respectively. Before Us is a Petition for Review on Certiorari assailing the Decision[1] and
Resolution[2] of the Court of Appeals affirming the Decision[3] of the National Labor
Costs against petitioner.
Relations Commission (NLRC). The NLRC ruling modified the Decision of the Labor
SO ORDERED. Arbiter (finding respondent entitled to the award of 13 th month pay and service
incentive leave pay) by deleting the award of 13 th month pay to respondent.

THE FACTS

Since 24 May 1995, respondent Antonio Bautista has been employed by

petitioner Auto Bus Transport Systems, Inc. (Autobus), as driver-conductor with travel
routes Manila-Tuguegarao via Baguio, Baguio- Tuguegarao via Manila and Manila-
Tabuk via Baguio. Respondent was paid on commission basis, seven percent (7%) of
the total gross income per travel, on a twice a month basis.
On 03 January 2000, while respondent was driving Autobus No. 114 along Sta.
Fe, Nueva Vizcaya, the bus he was driving accidentally bumped the rear portion of
Autobus No. 124, as the latter vehicle suddenly stopped at a sharp curve without
giving any warning.
Respondent averred that the accident happened because he was compelled by
the management to go back to Roxas, Isabela, although he had not slept for almost
twenty-four (24) hours, as he had just arrived in Manila from Roxas, Isabela.
Respondent further alleged that he was not allowed to work until he fully paid the
amount of P75,551.50, representing thirty percent (30%) of the cost of repair of the
damaged buses and that despite respondents pleas for reconsideration, the same
was ignored by management. After a month, management sent him a letter of
termination.
Thus, on 02 February 2000, respondent instituted a Complaint for Illegal
Dismissal with Money Claims for nonpayment of 13th month pay and service incentive
leave pay against Autobus.
Petitioner, on the other hand, maintained that respondents employment was
replete with offenses involving reckless imprudence, gross negligence, and
dishonesty. To support its claim, petitioner presented copies of letters, memos,
irregularity reports, and warrants of arrest pertaining to several incidents wherein
respondent was involved.
 Furthermore, petitioner avers that in the exercise of its management prerogative,
respondents employment was terminated only after the latter was provided with an
opportunity to explain his side regarding the accident on 03 January 2000.
On 29 September 2000, based on the pleadings and supporting evidence
presented by the parties, Labor Arbiter Monroe C. Tabingan promulgated a
Decision,[4] the dispositive portion of which reads:
WHEREFORE, all premises considered, it is hereby found that the complaint for Illegal
Dismissal has no leg to stand on. It is hereby ordered DISMISSED, as it is hereby
DISMISSED.
However, still based on the above-discussed premises, the respondent must pay to the
complainant the following:
a. his 13th month pay from the date of his hiring to the date of his dismissal,
presently computed at P78,117.87;
b. his service incentive leave pay for all the years he had been in service
with the respondent, presently computed at P13,788.05.
All other claims of both complainant and respondent are hereby dismissed for lack of merit.[5]
Not satisfied with the decision of the Labor Arbiter, petitioner appealed the
decision to the NLRC which rendered its decision on 28 September 2001, the decretal
portion of which reads:
[T]he Rules and Regulations Implementing Presidential Decree No. 851, particularly Sec. 3
provides:
Section 3. Employers covered. The Decree shall apply to all employers except to:
xxx xxx xxx
e) employers of those who are paid on purely commission, boundary, or task basis, performing
a specific work, irrespective of the time consumed in the performance thereof. xxx.
Records show that complainant, in his position paper, admitted that he was paid on a
commission basis.
In view of the foregoing, we deem it just and equitable to modify the assailed Decision by
deleting the award of 13th month pay to the complainant.
WHEREFORE, the Decision dated 29 September 2000 is MODIFIED by deleting the award
of 13th month pay. The other findings are AFFIRMED.[6]
In other words, the award of service incentive leave pay was maintained.
Petitioner thus sought a reconsideration of this aspect, which was subsequently
denied in a Resolution by the NLRC dated 31 October 2001.
Displeased with only the partial grant of its appeal to the NLRC, petitioner
sought the review of said decision with the Court of Appeals which was subsequently
denied by the appellate court in a Decision dated 06 May 2002, the dispositive portion
of which reads:
WHEREFORE, premises considered, the Petition is DISMISSED for lack of merit; and the
assailed Decision of respondent Commission in NLRC NCR CA No. 026584-2000 is hereby
AFFIRMED in toto. No costs.[7]
Hence, the instant petition.
ISSUES
1. Whether or not respondent is entitled to service incentive leave;
2. Whether or not the three (3)-year prescriptive period provided under Article
291 of the Labor Code, as amended, is applicable to respondents claim of
service incentive leave pay.
RULING OF THE COURT
The disposition of the first issue revolves around the proper interpretation of
Article 95 of the Labor Code vis--vis Section 1(D), Rule V, Book III of the
Implementing Rules and Regulations of the Labor Code which provides:
Art. 95. RIGHT TO SERVICE INCENTIVE LEAVE
(a) Every employee who has rendered at least one year of service shall be entitled
to a yearly service incentive leave of five days with pay.
Book III, Rule V: SERVICE INCENTIVE LEAVE
SECTION 1. Coverage. This rule shall apply to all employees except:
(d) Field personnel and other employees whose performance is unsupervised by
the employer including those who are engaged on task or contract basis,
purely commission basis, or those who are paid in a fixed amount for
performing work irrespective of the time consumed in the performance
thereof; . . .
 A careful perusal of said provisions of law will result in the conclusion that the
grant of service incentive leave has been delimited by the Implementing Rules and
Regulations of the Labor Code to apply only to those employees not explicitly
excluded by Section 1 of Rule V. According to the Implementing Rules, Service
Incentive Leave shall not apply to employees classified as field personnel. The phrase
other employees whose performance is unsupervised by the employer must not be
understood as a separate classification of employees to which service incentive leave
shall not be granted. Rather, it serves as an amplification of the interpretation of the
definition of field personnel under the Labor Code as those whose actual hours of
work in the field cannot be determined with reasonable certainty. [8]
The same is true with respect to the phrase those who are engaged on task or
contract basis, purely commission basis. Said phrase should be related with field
personnel, applying the rule on ejusdem generis that general and unlimited terms are
restrained and limited by the particular terms that they follow. [9] Hence, employees
engaged on task or contract basis or paid on purely commission basis are not
automatically exempted from the grant of service incentive leave, unless, they fall
under the classification of field personnel.
Therefore, petitioners contention that respondent is not entitled to the grant of
service incentive leave just because he was paid on purely commission basis is
misplaced. What must be ascertained in order to resolve the issue of propriety of the
grant of service incentive leave to respondent is whether or not he is a field
personnel.
According to Article 82 of the Labor Code, field personnel shall refer to non-
agricultural employees who regularly perform their duties away from the principal
place of business or branch office of the employer and whose actual hours of work in
the field cannot be determined with reasonable certainty. This definition is further
elaborated in the Bureau of Working Conditions (BWC), Advisory Opinion to
Philippine Technical-Clerical Commercial Employees Association[10] which states that:
As a general rule, [field personnel] are those whose performance of their job/service is not
supervised by the employer or his representative, the workplace being away from the principal
office and whose hours and days of work cannot be determined with reasonable certainty;
hence, they are paid specific amount for rendering specific service or performing specific
work. If required to be at specific places at specific times, employees including drivers cannot
be said to be field personnel despite the fact that they are performing work away from the
principal office of the employee. [Emphasis ours]
To this discussion by the BWC, the petitioner differs and postulates that under
said advisory opinion, no employee would ever be considered a field personnel
because every employer, in one way or another, exercises control over his
employees. Petitioner further argues that the only criterion that should be considered
is the nature of work of the employee in that, if the employees job requires that he
works away from the principal office like that of a messenger or a bus driver, then he
is inevitably a field personnel.
We are not persuaded. At this point, it is necessary to stress that the definition of
a field personnel is not merely concerned with the location where the employee
regularly performs his duties but also with the fact that the employees performance is
unsupervised by the employer. As discussed above, field personnel are those who
regularly perform their duties away from the principal place of business of the
employer and whose actual hours of work in the field cannot be determined with
reasonable certainty. Thus, in order to conclude whether an employee is a field
employee, it is also necessary to ascertain if actual hours of work in the field can be
determined with reasonable certainty by the employer. In so doing, an inquiry must be
made as to whether or not the employees time and performance are constantly
supervised by the employer.
As observed by the Labor Arbiter and concurred in by the Court of Appeals:
It is of judicial notice that along the routes that are plied by these bus companies, there are its
inspectors assigned at strategic places who board the bus and inspect the passengers, the
punched tickets, and the conductors reports. There is also the mandatory once-a-week car barn
or shop day, where the bus is regularly checked as to its mechanical, electrical, and hydraulic
aspects, whether or not there are problems thereon as reported by the driver and/or conductor.
They too, must be at specific place as [sic] specified time, as they generally observe prompt
departure and arrival from their point of origin to their point of destination. In each and every
depot, there is always the Dispatcher whose function is precisely to see to it that the bus and its
crew leave the premises at specific times and arrive at the estimated proper time. These, are
present in the case at bar. The driver, the complainant herein, was therefore under constant
supervision while in the performance of this work. He cannot be considered a field
personnel.[11]
We agree in the above disquisition. Therefore, as correctly concluded by the
appellate court, respondent is not a field personnel but a regular employee who
performs tasks usually necessary and desirable to the usual trade of petitioners
business. Accordingly, respondent is entitled to the grant of service incentive leave.
The question now that must be addressed is up to what amount of service
incentive leave pay respondent is entitled to.
The response to this query inevitably leads us to the correlative issue of whether
or not the three (3)-year prescriptive period under Article 291 of the Labor Code is
applicable to respondents claim of service incentive leave pay.
Article 291 of the Labor Code states that all money claims arising from
employer-employee relationship shall be filed within three (3) years from the time the
cause of action accrued; otherwise, they shall be forever barred.
In the application of this section of the Labor Code, the pivotal question to be
answered is when does the cause of action for money claims accrue in order to
determine the reckoning date of the three-year prescriptive period.
It is settled jurisprudence that a cause of action has three elements, to wit, (1) a
right in favor of the plaintiff by whatever means and under whatever law it arises or is
created; (2) an obligation on the part of the named defendant to respect or not to
violate such right; and (3) an act or omission on the part of such defendant violative of
the right of the plaintiff or constituting a breach of the obligation of the defendant to
the plaintiff.[12]
To properly construe Article 291 of the Labor Code, it is essential to ascertain
the time when the third element of a cause of action transpired. Stated differently, in
the computation of the three-year prescriptive period, a determination must be made
as to the period when the act constituting a violation of the workers right to the
benefits being claimed was committed. For if the cause of action accrued more than
three (3) years before the filing of the money claim, said cause of action has already
prescribed in accordance with Article 291.[13]
Consequently, in cases of nonpayment of allowances and other monetary
benefits, if it is established that the benefits being claimed have been withheld from
the employee for a period longer than three (3) years, the amount pertaining to the
period beyond the three-year prescriptive period is therefore barred by prescription.
The amount that can only be demanded by the aggrieved employee shall be limited to
the amount of the benefits withheld within three (3) years before the filing of the
complaint.[14]
It is essential at this point, however, to recognize that the service incentive leave
is a curious animal in relation to other benefits granted by the law to every employee.
In the case of service incentive leave, the employee may choose to either use his
leave credits or commute it to its monetary equivalent if not exhausted at the end of
the year.[15] Furthermore, if the employee entitled to service incentive leave does not
use or commute the same, he is entitled upon his resignation or separation from work
to the commutation of his accrued service incentive leave. As enunciated by the Court
in Fernandez v. NLRC:[16]
The clear policy of the Labor Code is to grant service incentive leave pay to workers in all
establishments, subject to a few exceptions. Section 2, Rule V, Book III of the Implementing
Rules and Regulations provides that [e]very employee who has rendered at least one year of
service shall be entitled to a yearly service incentive leave of five days with pay. Service
incentive leave is a right which accrues to every employee who has served within 12 months,
whether continuous or broken reckoned from the date the employee started working, including
authorized absences and paid regular holidays unless the working days in the establishment as
a matter of practice or policy, or that provided in the employment contracts, is less than 12
months, in which case said period shall be considered as one year. It is also commutable to its
money equivalent if not used or exhausted at the end of the year. In other words, an employee
who has served for one year is entitled to it. He may use it as leave days or he may collect its
monetary value. To limit the award to three years, as the solicitor general recommends, is to
unduly restrict such right.[17] [Italics supplied]
The above construal of Art. 291, vis--vis the rules on service incentive leave, is
in keeping with the rudimentary principle that in the implementation and interpretation
of the provisions of the Labor Code and its implementing regulations, the
workingmans welfare should be the primordial and paramount consideration. [18] The
policy is to extend the applicability of the decree to a greater number of employees
who can avail of the benefits under the law, which is in consonance with the avowed
policy of the State to give maximum aid and protection to labor. [19]
In the case at bar, respondent had not made use of his service incentive leave
nor demanded for its commutation until his employment was terminated by petitioner.
Neither did petitioner compensate his accumulated service incentive leave pay at the
time of his dismissal. It was only upon his filing of a complaint for illegal dismissal, one
month from the time of his dismissal, that respondent demanded from his former
employer commutation of his accumulated leave credits. His cause of action to claim
the payment of his accumulated service incentive leave thus accrued from the time
when his employer dismissed him and failed to pay his accumulated leave credits.
Therefore, the prescriptive period with respect to his claim for service incentive
leave pay only commenced from the time the employer failed to compensate his
accumulated service incentive leave pay at the time of his dismissal. Since
respondent had filed his money claim after only one month from the time of his
dismissal, necessarily, his money claim was filed within the prescriptive period
provided for by Article 291 of the Labor Code.
WHEREFORE, premises considered, the instant petition is hereby DENIED. The
assailed Decision of the Court of Appeals in CA-G.R. SP. No. 68395 is hereby
AFFIRMED. No Costs.
SO ORDERED.

Correspondingly, it can be conscientiously deduced that the cause of action of

an entitled employee to claim his service incentive leave pay accrues from the
moment the employer refuses to remunerate its monetary equivalent if the employee
did not make use of said leave credits but instead chose to avail of its commutation.
Accordingly, if the employee wishes to accumulate his leave credits and opts for its
commutation upon his resignation or separation from employment, his cause of action
to claim the whole amount of his accumulated service incentive leave shall arise when
the employer fails to pay such amount at the time of his resignation or separation from
employment.
Applying Article 291 of the Labor Code in light of this peculiarity of the service
incentive leave, we can conclude that the three (3)-year prescriptive period
commences, not at the end of the year when the employee becomes entitled to the
commutation of his service incentive leave, but from the time when the employer
refuses to pay its monetary equivalent after demand of commutation or upon
termination of the employees services, as the case may be.
Republic of the Philippines
SUPREME COURT 3rd shift 8 P.M. — 4 A.M. (8 Hrs.) .55
Manila
Group B — 1st shift 4 A.M. — 4 P.M. (12 Hrs.) None
EN BANC
2nd shift 4 P.M. — 4 A.M. (12 Hrs.) .55

G.R. No. L-21348 June 30, 1966

On January 17, 1962, Tanglaw ng Paggawa and some 300 workers in the above-
RED V COCONUT PRODUCTS, LTD., petitioner, stated factory, members of the said union, who belong to Group B, filed a petition in
vs. the Court of Industrial Relations. Petitioners therein alleged that the petitioners-
COURT OF INDUSTRIAL RELATIONS, TANGLAW NG PAGGAWA, ALBERTO workers are shellers, parers, counters and haulers in the two shifts (Group B)
DELA CRUZ, ET AL.,respondents. consisting of 12 hours each shift, the first shift from 4: 00 A.M. to 4: 00 P.M. and the
second shift from 4 P.M. to 4 A.M.; that said workers change shift assignments every
week; that, accordingly, all of them work from 4 A.M. to 4 P.M. (first shift) for two
Romeo A. Real for petitioner. alternate weeks per month and from 4 P.M. to 4 A.M. (second shift) likewise for two
A. V. Villacorta for respondents. alternate weeks in a month; that although said workers perform work from 4 P.M. to 4
A.M., they receive only P.55 differential pay for the corresponding hours of night work;
BENGZON, J.P., J.: that their nightwork is equivalent to the nightwork of the 2nd and 3rd shifts of Group A
combined, so that they should receive what the 2nd and 3rd shifts of Group A,
Red V Coconut Products, Ltd. is a corporation with principal office and place of combined, receive as differential pay, namely, P.90 (P.75 plus P.35); that, therefore,
business at Lucena City. It has in that city a desiccated coconut factory. In said they are entitled to payment of P.35 more as differential pay, since up to the time of
factory, it has several hundred workers. About 800 of said workers are members the petition, they received only P.55 per night as differential pay.
of Tanglaw ng Paggawa labor union.
Said additional P.35 was asked by the petitioners-workers of Group B f or work done
Tanglaw ng Paggawa and Red V Coconut Products, Ltd. entered into a collective by them from 4 P.M. to 4 A.M. Their claim referred to the time from July 15, 1958 to
bargaining agreement on July 15, 1958. Subsequently, however, on October 5, 1961, the date of the petition, allegedly at P186.90 per sheller, parer, counter and hauler, or
the aforementioned company and union entered into another collective bargaining a total sum of P65,228.10 more or less.
agreement, to expire on October 31, 1965.
Respondent company therein filed on January 28, 1962 a motion to dismiss, stating
The 1958 collective bargaining agreement provided among other things for payment that the Court of Industrial Relations has no jurisdiction over the case for the reason
of differentials to night shift workers in the desiccated coconut factory.1äwphï1.ñët that the claim asserted in the petition is a simple money claim and that an
interpretation of a contract (the collective bargaining agreement is involved, which
pertains to the regular courts.
The 1961 collective bargaining agreement retained the same arrangement. It stated:
The Court of Industrial Relations denied said motion by resolution of February 17,
The present shift differential will remain in effect, namely, 35¢ for the second 1962 ruling that the claim is for unpaid overtime pay of laborers still employed by the
shift and 55¢ for the third Shift. company. Said court likewise denied a motion for reconsideration of the resolution.
Red V Coconut Products, Ltd. filed its answer on May 2, 1962.
In the factory, there are two groups of workers, the three-shift group — let us call it
Group A — and the two — shift group — which we shall call Group B. As observed by In the meanwhile, on April 25, 1962, Tanglaw ng Paggawa filed with the Court of
the parties thereto, differentials were paid to workers, under the 1958 and 1961 Industrial Relations a new and independent petition alleging unfair labor practice
contracts, thus: against Red V Coconut Products, Ltd. (CIR Case No. 3150 ULP). It was asserted
therein that the company refused to grant 15 days leave with pay to the members of
the union in violation of the 1961 collective bargaining agreement.
Hours of Work Differentials
The Court of Industrial Relations, on January 19, 1963 after trial, rendered its decision
Group A — 1st shift 4 A.M. — 12 Noon (8 Hrs.) None
on the petition for differential pay (CIR Case No. 1642-V). It found therein that the
petitioners-workers are engaged on pakiao or piece-work basis, and, therefore, are
2nd shift 12 Noon — 8 P.M. (8 Hrs.) .35
not entitled to overtime pay under the Eight-Hour Labor Law (Sec. 2, CA 444); that
their petition for night shift differentials based on the collective bargaining agreements Rosario, 94 Phil. 780, 781-782, the philosophy underlying the exclusion of piece
is meritorious because the company having paid night differentials indiscriminately to workers from the Eight-Hour Labor Law is that said workers are paid depending upon
the night shift workers of Group A and Group B alike, the payments should be uniform the work they do "irrespective of the amount of time employed" in doing said work.
and equal for the night shifts of both groups, that is, P.90. It therefore ordered Such freedom as to hours of work does not obtain in the case of the laborers herein
payment of the deficiency in said differentials to the workers of Group B. involved, since they are assigned by the employer to work in two shifts for 12 hours
each shift. Thus it cannot be said that for all purposes these workers fall outside the
Red V Coconut Products, Ltd. moved for reconsideration of said decision on January law requiring payment of compensation for work done in excess of eight hours. At
29, 1963. The Court of Industrial Relations en banc denied said motion by resolution least for the purpose of recovering the full differential pay stipulated in the bargaining
of February 25, 1963. And, hence, Red V Coconut Products, Ltd. filed this petition for agreement as due to laborers who perform 12 hours of work under the night shift, said
review herein. laborers should be deemedpro tanto or to that extent within the scope of the afore-
stated law.
Petitioner herein contends that the present case involves a mere money claim over
which the Court of Industrial Relations has no jurisdiction.1 Wherefore, the decision and resolution of the Court of Industrial Relations under
review are affirmed. So ordered.
It is exiomatic that to determine the issue of jurisdiction resort is to be made to the
allegations in the petition or complaint.2 The petition for shift differential in the present
case, it is true, did not expressly mention the Eight-Hour Labor Law. Nonetheless, it
clearly asserted that (1) petitioners-laborers "are working in the Red V Coconut
Products, Ltd." and (2) they "work in two (2) shifts (Blue and Red shifts) consisting of
approximately 12 hours each shift." Accordingly, from the said allegations, it is proper
to regard the petition, as the Court of Industrial Relations did, as one for overtime pay
by workers still employed by the company. As such it falls within the jurisdiction of the
Court of Industrial Relations. For the same is in effect an assertion not of a simple
money claim but, as respondent court rightly held, of a claim for overtime pay by
workers who are employees of the company.3

During the trial, as stated, evidence was adduced to the effect that the aforesaid
petitioners-workers were engaged on a piece-work basis. The same, however, does
not appear from the petition or complaint filed with the respondent court. It therefore
cannot affect its jurisdiction over the case, which was already acquired. For
jurisdiction, once acquired, continues until final adjudication of the litigation.4

Furthermore, although the Eight-Hour Labor Law provides that it does not cover those
workers who prefer to be paid on piece-work basis (Sec. 2, CA 444), nothing in said
law precludes an agreement for the payment of overtime compensation to piece-
workers. And in agreeing to the provision for payment of shift differentials to the
petitioners-workers aforementioned, in the bargaining agreement, as well as
in actually paying to them said differentials, though not in full, the company in
effect freely adhered to an application and implementation of the Eight-Hour Labor
Law, or its objectives, to said workers. It should be observed that while the provision
in the bargaining agreements speaks of shift differentials for the "second shift" and
the "third shift" and Group B has no third shift, said Group B has a second shift, which
performs work equivalent to that of the corresponding shifts of Group A. It follows that
respondent court did not err in ordering the company to pay the full and equivalent
amount of said differentials (P.90) corresponding, under the bargaining agreements,
to the workers who performed 12 hours of work, from 4 P.M. to 4 A.M.

And, finally, the laborers in question are not strictly under the full concept of piece-
workers as contemplated by law for the reason that their hours of work — that is, 12
hours per shift — are fixed by the employer. As ruled by this Court in Lara v. Del
G.R. No. L-15422 November 30, 1962
NATIONAL DEVELOPMENT COMPANY, petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS and NATIONAL TEXTILE WORKERS
UNION, respondents.
Government Corporate Counsel Simeon M. Gopengco and Lorenzo R. Mosqueda for
petitioner.
Eulogio R. Lerum for respondent National Textile Workers Union.
Mariano B. Tuason for respondent Court of Industrial Relations.
REGALA, J.:
This is a case for review from the Court of Industrial Relations. The pertinent facts are
the following:
At the National Development Co., a government-owned and controlled corporation,
there were four shifts of work. One shift was from 8 a.m. to 4 p.m., while the three
other shifts were from 6 a.m. to 2 p.m; then from 2 p.m. to 10 p.m. and, finally, from
10 p.m. to 6 a.m. In each shift, there was a one-hour mealtime period, to wit: From (1)
11 a.m. to 12 noon for those working between 6 a.m. and 2 p.m. and from (2) 7 p.m.
to 8 p.m. for those working between 2 p.m. and 10 p.m.
The records disclose that although there was a one-hour mealtime, petitioner
nevertheless credited the workers with eight hours of work for each shift and paid
them for the same number of hours. However, since 1953, whenever workers in one
shift were required to continue working until the next shift, petitioner instead of
crediting them with eight hours of overtime work, has been paying them for six hours
only, petitioner that the two hours corresponding to the mealtime periods should not
be included in computing compensation. On the other hand, respondent National
Textile Workers Union whose members are employed at the NDC, maintained the
opposite view and asked the Court of Industrial Relations to order the payment of
additional overtime pay corresponding to the mealtime periods.
After hearing, Judge Arsenio I. Martinez of the CIR issued an order dated March 19,
1959, holding that mealtime should be counted in the determination of overtime work
and accordingly ordered petitioner to pay P101,407.96 by way of overtime
compensation. Petitioner filed a motion for reconsideration but the same was
dismissed by the CIR en banc on the ground that petitioner failed to furnish the union
a copy of its motion.
Thereafter, petitioner appealed to this Court, contending, first, that the CIR has no
jurisdiction over claims for overtime compensation and, secondary that the CIR did
not make "a correct appraisal of the facts, in the light of the evidence" in holding that
mealtime periods should be included in overtime work because workers could not
leave their places of work and rest completely during those hours.
In support of its contention that the CIR lost its jurisdiction over claims for overtime
pay upon the enactment of the Industrial Peace Act (Republic Act No. 875), petitioner
cites a number of decisions of this Court. On May 23, 1960, however, We ruled
in Price Stabilization Corp. v. Court of Industrial Relations, et al., G.R. No. L-13206,
that
Analyzing these cases, the underlying principle, it will be noted in all of them,
though not stated in express terms, is that where the employer-employee
relationship is still existing or is sought to be reestablished because of its
wrongful severance, (as where the employee seeks reinstatement) the Court
of Industrial Relations has jurisdiction over all claims arising out of, or in
connection with the employment, such as those related to the Minimum
Wage Law and the Eight-Hour Labor Law. After the termination of their
relationship and no reinstatement is sought, such claims become mere
money claims, and come within the jurisdiction of the regular courts,
We are aware that in 2 cases, some statements implying a different view
have been made, but we now hold and declare the principle set forth in the
next preceding paragraph as the one governing all cases of this nature.
This has been the constant doctrine of this Court since May 23, 1960. 1
A more recent definition of the jurisdiction of the CIR is found in Campos, et al. v.
Manila Railroad Co., et al., G.R. No. L-17905, May 25, 1962, in which We held that,
for such jurisdiction to come into play, the following requisites must be complied with:
(a) there must exist between the parties an employer-employee relationship or the
claimant must seek his reinstatement; and (b) the controversy must relate to a case
certified by the President to the CIR as one involving national interest, or must arise
either under the Eight-Hour Labor Law, or under the Minimum Wage Law. In default
of any of these circumstances, the claim becomes a mere money claim that comes
under the jurisdiction of the regular courts. Here, petitioner does not deny the
existence of an employer-employee relationship between it and the members of the
union. Neither is there any question that the claim is based on the Eight-Hour Labor
Law (Com. Act No. 444, as amended). We therefore rule in favor of the jurisdiction of
the CIR over the present claim.
The other issue raised in the appeal is whether or not, on the basis of the evidence,
the mealtime breaks should be considered working time under the following provision
of the law;
The legal working day for any person employed by another shall be of not
more than eight hours daily. When the work is not continuous, the time
during which the laborer is not working and can leave his working place and
can rest completely shall not be counted. (Sec. 1, Com. Act No. 444, as
amended. Emphasis ours.)
It will be noted that, under the law, the idle time that an employee may spend for
resting and during which he may leave the spot or place of work though not the
premises2 of his employer, is not counted as working time only where the work is
broken or is not continuous.
The determination as to whether work is continuous or not is mainly one of fact which
We shall not review as long as the same is supported by evidence. (Sec. 15, Com.
Act No. 103, as amended, Philippine Newspaper Guild v. Evening News, Inc., 86 Phil.
303).
That is why We brushed aside petitioner's contention in one case that workers who
worked under a 6 a.m. to 6 p.m. schedule had enough "free time" and therefore
should not be credited with four hours of overtime and held that the finding of the CIR
"that claimants herein rendered services to the Company from 6:00 a.m. to 6:00 p.m.
including Sundays and holidays, . . . implies either that they were not allowed to leave
the spot of their working place, or that they could not rest completely" (Luzon
Stevedoring Co., Inc. v. Luzon Marine Department Union, et al., G.R. No. L-9265,
April 29, 1957).
Indeed, it has been said that no general rule can be laid down is to what constitutes
compensable work, rather the question is one of fact depending upon particular
circumstances, to be determined by the controverted in cases. (31 Am. Jurisdiction
Sec. 626 pp. 878.)
In this case, the CIR's finding that work in the petitioner company was continuous and
did not permit employees and laborers to rest completely is not without basis in
evidence and following our earlier rulings, shall not disturb the same. Thus, the CIR
found:
While it may be correct to say that it is well-high impossible for an employee
to work while he is eating, yet under Section 1 of Com. Act No. 444 such a
time for eating can be segregated or deducted from his work, if the same is
continuous and the employee can leave his working place rest completely.
The time cards show that the work was continuous and without interruption.
There is also the evidence adduced by the petitioner that the pertinent
employees can freely leave their working place nor rest completely. There is
furthermore the aspect that during the period covered the computation the
work was on a 24-hour basis and previously stated divided into shifts.
From these facts, the CIR correctly concluded that work in petitioner company was
continuous and therefore the mealtime breaks should be counted as working time for
purposes of overtime compensation.
Petitioner gives an eight-hour credit to its employees who work a single shift say from
6 a.m. to 2 p.m. Why cannot it credit them sixteen hours should they work in two
shifts?
There is another reason why this appeal should dismissed and that is that there is no
decision by the CIR en bancfrom which petitioner can appeal to this Court. As already
indicated above, the records show that petitioner's motion for reconsideration of the
order of March 19, 1959 was dismissed by the CIR en banc because of petitioner's
failure to serve a copy of the same on the union.
Section 15 of the rules of the CIR, in relation to Section 1 of Commonwealth Act No.
103, states:
The movant shall file the motion (for reconsideration), in six copies within five
(5) days from the date on which he receives notice of the order or decision,
object of the motion for reconsideration, the same to be verified under oath
with respect to the correctness of the allegations of fact, and serving a copy
thereof personally or by registered mail, on the adverse party. The latter may
file an answer, in six (6) copies, duly verified under oath. (Emphasis ours.)
In one case (Bien, et al. v. Castillo, etc., et al., G.R. No. L-7428, May 24, 1955), We
sustained the dismissal of a motion for reconsideration filed outside of the period
provided in the rules of the CIR. A motion for reconsideration, a copy of which has not
been served on the adverse party as required by the rules, stands on the same
footing. For "in the very nature of things, a motion for reconsideration against a ruling
or decision by one Judge is in effect an appeal to the Court of Industrial Relations, en
banc," the purpose being "to substitute the decision or order of a collegiate court for
the ruling or decision of any judge." The provision in Commonwealth Act No. 103
authorizing the presentation of a motion for reconsideration of a decision or order of
the judge to the CIR, en banc and not direct appeal therefore to this Court, is also in
accord with the principal of exhaustion of administrative remedies before resort can
be made to this Court. (Broce, et al., v. The Court of Industrial Relations, et al., G.R.
No. L-12367, October 29, 1959).
Petitioner's motion for reconsideration having been dismissed for its failure to serve a
copy of the same on the union, there is no decision of the CIR en banc that petitioner
can bring to this Court for review.
WHEREFORE, the order of March 19, 1959 and the resolution of April 27, 1959 are
hereby affirmed and the appeal is dismissed, without pronouncement as to costs.
G.R. No. L-12444 February 28, 1963
taken up, in the order they are raised in the brief for the petitioners.
STATES MARINE CORPORATION and ROYAL LINE, INC., petitioners,
vs.
CEBU SEAMEN'S ASSOCIATION, INC., respondent.
Pedro B. Uy Calderon for petitioners.
Gaudioso C. Villagonzalo for respondent.
PAREDES, J.:
Petitioners States Marine Corporation and Royal Line, Inc. were engaged in the
business of marine coastwise transportation, employing therein several steamships of
Philippine registry. They had a collective bargaining contract with the respondent
Cebu Seamen's Association, Inc. On September 12, 1952, the respondent union filed
with the Court of Industrial Relations (CIR), a petition (Case No. 740-V) against the
States Marine Corporation, later amended on May 4, 1953, by including as party
respondent, the petitioner Royal Line, Inc. The Union alleged that the officers and
men working on board the petitioners' vessels have not been paid their sick leave,
vacation leave and overtime pay; that the petitioners threatened or coerced them to
accept a reduction of salaries, observed by other shipowners; that after the Minimum
Wage Law had taken effect, the petitioners required their employees on board their
vessels, to pay the sum of P.40 for every meal, while the masters and officers were
not required to pay their meals and that because Captain Carlos Asensi had refused
to yield to the general reduction of salaries, the petitioners dismissed said captain
who now claims for reinstatement and the payment of back wages from December
25, 1952, at the rate of P540.00, monthly.
The petitioners' shipping companies, answering, averred that very much below 30 of
the men and officers in their employ were members of the respondent union; that the
work on board a vessel is one of comparative ease; that petitioners have suffered
financial losses in the operation of their vessels and that there is no law which
provides for the payment of sick leave or vacation leave to employees or workers of
private firms; that as regards the claim for overtime pay, the petitioners have always
observed the provisions of Comm. Act No. 444, (Eight-Hour Labor Law),
notwithstanding the fact that it does not apply to those who provide means of
transportation; that the shipowners and operators in Cebu were paying the salaries of
their officers and men, depending upon the margin of profits they could realize and
other factors or circumstances of the business; that in enacting Rep. Act No. 602
(Minimum Wage Law), the Congress had in mind that the amount of P.40 per meal,
furnished the employees should be deducted from the daily wages; that Captain
Asensi was not dismissed for alleged union activities, but with the expiration of the
terms of the contract between said officer and the petitioners, his services were
terminated.
A decision was rendered on February 21, 1957 in favor of the respondent union. The
motion for reconsideration thereof, having been denied, the companies filed the
present writ of certiorari, to resolve legal question involved. Always bearing in mind
the deep-rooted principle that the factual findings of the Court of Industrial Relations
should not be disturbed, if supported by substantial evidence, the different issues are
1. First assignment of error. — The respondent court erred in holding that it
had jurisdiction over case No. 740-V, notwithstanding the fact that those who
had dispute with the petitioners, were less than thirty (30) in number.
The CIR made a finding that at the time of the filing of the petition in
case No. 740-V, respondent Union had more than thirty members
actually working with the companies, and the court declared itself
with jurisdiction to take cognizance of the case. Against this order,
the herein petitioners did not file a motion for reconsideration or a
petition for certiorari. The finding of fact made by the CIR became
final and conclusive, which We are not now authorized to alter or
modify. It is axiomatic that once the CIR had acquired jurisdiction
over a case, it continues to have that jurisdiction, until the case is
terminated (Manila Hotel Emp. Association v. Manila Hotel
Company, et al., 40 O.G. No. 6, p. 3027). It was abundantly shown
that there were 56 members who signed Exhibits A, A-I to A-8, and
that 103 members of the Union are listed in Exhibits B, B-1 to B-35,
F, F-1 and K-2 to K-3. So that at the time of the filing of the petition,
the respondent union had a total membership of 159, working with
the herein petitioners, who were presumed interested in or would
be benefited by the outcome of the case (NAMARCO v. CIR, L-
17804, Jan. 1963). Annex D, (Order of the CIR, dated March 8,
1954), likewise belies the contention of herein petitioner in this
regard. The fact that only 7 claimed for overtime pay and only 7
witnesses testified, does not warrant the conclusion that the
employees who had some dispute with the present petitioners were
less than 30. The ruling of the CIR, with respect to the question of
jurisdiction is, therefore, correct.
2. Second assignment of error. — The CIR erred in holding, that inasmuch
as in the shipping articles, the herein petitioners have bound themselves to
supply the crew with provisions and with such "daily subsistence as shall be
mutually agreed upon" between the master and the crew, no deductions for
meals could be made by the aforesaid petitioners from their wages or
salaries.
3. Third assignment of error. — The CIR erred in holding that inasmuch as
with regard to meals furnished to crew members of a vessel, section 3(f) of
Act No. 602 is the general rule, which section 19 thereof is the exception, the
cost of said meals may not be legally deducted from the wages or salaries of
the aforesaid crew members by the herein petitioners.
4. Fourth assignment of error. — The CIR erred in declaring that the
deduction for costs of meals from the wages or salaries after August 4, 1951,
is illegal and same should be reimbursed to the employee concerned, in
spite of said section 3, par. (f) of Act No. 602.
It was shown by substantial evidence, that since the beginning of the operation of the
petitioner's business, all the crew of their vessels have been signing "shipping
articles" in which are stated opposite their names, the salaries or wages they would
receive. All seamen, whether members of the crew or deck officers or engineers,
have been furnished free meals by the ship owners or operators. All the shipping
articles signed by the master and the crew members, contained, among others, a
stipulation, that "in consideration of which services to be duly performed, the said
master hereby agrees to pay to the said crew, as wages, the sums against their
names respectively expressed in the contract; and to supply them with provisions as
provided herein ..." (Sec. 8, par. [b], shipping articles), and during the duration of the
contract "the master of the vessel will provide each member of the crew such daily
subsistence as shall be mutually agreed daily upon between said master and crew;
or, in lieu of such subsistence the crew may reserve the right to demand at the time of
execution of these articles that adequate daily rations be furnished each member of
the crew." (Sec. 8, par. [e], shipping articles). It is, therefore, apparent that, aside from
the payment of the respective salaries or wages, set opposite the names of the crew
members, the petitioners bound themselves to supply the crew with ship's provisions,
daily subsistence or daily rations, which include food.
This was the situation before August 4, 1951, when the Minimum Wage Law became
effective. After this date, however, the companies began deducting the cost of meals
from the wages or salaries of crew members; but no such deductions were made from
the salaries of the deck officers and engineers in all the boats of the petitioners.
Under the existing laws, therefore, the query converges on the legality of such
deductions. While the petitioners herein contend that the deductions are legal and
should not be reimbursed to the respondent union, the latter, however, claims that
same are illegal and reimbursement should be made.
Wherefore, the parties respectfully pray that the foregoing stipulation of facts be
admitted and approved by this Honorable Court, without prejudice to the parties
adducing other evidence to prove their case not covered by this stipulation of
facts. 1äwphï1.ñët
We hold that such deductions are not authorized. In the coastwise business of
transportation of passengers and freight, the men who compose the complement of a
vessel are provided with free meals by the shipowners, operators or agents, because
they hold on to their work and duties, regardless of "the stress and strain concomitant
of a bad weather, unmindful of the dangers that lurk ahead in the midst of the high
seas."
Section 3, par. f, of the Minimum Wage Law, (R.A. No. 602), provides as follows —
(f) Until and unless investigations by the Secretary of Labor on his initiative
or on petition of any interested party result in a different determination of the
fair and reasonable value, the furnishing of meals shall be valued at not
more than thirty centavos per meal for agricultural employees and not more
than forty centavos for any other employees covered by this Act, and the
furnishing of housing shall be valued at not more than twenty centavos daily
for agricultural workers and not more than forty centavos daily for other
employees covered by this Act.
Petitioners maintain, in view of the above provisions, that in fixing the minimum wage
of employees, Congress took into account the meals furnished by employers and that
in fixing the rate of forty centavos per meal, the lawmakers had in mind that the latter
amount should be deducted from the daily wage, otherwise, no rate for meals should
have been provided.
However, section 19, same law, states —
SEC. 19. Relations to other labor laws and practices.— Nothing in this Act
shall deprive an employee of the right to seek fair wages, shorter working
hours and better working conditions nor justify an employer in violating any
other labor law applicable to his employees, in reducing the wage now paid
to any of his employees in excess of the minimum wage established under
this Act, or in reducing supplements furnished on the date of enactment.
At first blush, it would appear that there exists a contradiction between the provisions
of section 3(f) and section 19 of Rep. Act No. 602; but from a careful examination of
the same, it is evident that Section 3(f) constitutes the general rule, while section 19 is
the exception. In other words, if there are no supplements given, within the meaning
and contemplation of section 19, but merely facilities, section 3(f) governs. There is
no conflict; the two provisions could, as they should be harmonized. And even if there
is such a conflict, the respondent CIR should resolve the same in favor of the safety
and decent living laborers (Art. 1702, new Civil Code)..
It is argued that the food or meals given to the deck officers, marine engineers and
unlicensed crew members in question, were mere "facilities" which should be
deducted from wages, and not "supplements" which, according to said section 19,
should not be deducted from such wages, because it is provided therein: "Nothing in
this Act shall deprive an employee of the right to such fair wage ... or in reducing
supplements furnished on the date of enactment." In the case of Atok-Big Wedge
Assn. v. Atok-Big Wedge Co., L-7349, July 19, 1955; 51 O.G. 3432, the two terms are
defined as follows —
"Supplements", therefore, constitute extra remuneration or special privileges
or benefits given to or received by the laborers over and above their ordinary
earnings or wages. "Facilities", on the other hand, are items of expense
necessary for the laborer's and his family's existence and subsistence so
that by express provision of law (Sec. 2[g]), they form part of the wage and
when furnished by the employer are deductible therefrom, since if they are
not so furnished, the laborer would spend and pay for them just the same.
In short, the benefit or privilege given to the employee which constitutes an extra
remuneration above and over his basic or ordinary earning or wage, is supplement;
and when said benefit or privilege is part of the laborers' basic wages, it is a facility.
The criterion is not so much with the kind of the benefit or item (food, lodging, bonus
or sick leave) given, but its purpose. Considering, therefore, as definitely found by the
respondent court that the meals were freely given to crew members prior to August 4,
1951, while they were on the high seas "not as part of their wages but as a necessary
matter in the maintenance of the health and efficiency of the crew personnel during
the voyage", the deductions therein made for the meals given after August 4, 1951,
should be returned to them, and the operator of the coastwise vessels affected should
continue giving the same benefit..
In the case of Cebu Autobus Company v. United Cebu Autobus Employees Assn., L-
9742, Oct. 27, 1955, the company used to pay to its drivers and conductors, who
were assigned outside of the City limits, aside from their regular salary, a certain
percentage of their daily wage, as allowance for food. Upon the effectivity of the
Minimum Wage Law, however, that privilege was stopped by the company. The order
CIR to the company to continue granting this privilege, was upheld by this Court.
The shipping companies argue that the furnishing of meals to the crew before the
effectivity of Rep. Act No. 602, is of no moment, because such circumstance was
already taken into consideration by Congress, when it stated that "wage" includes the
fair and reasonable value of boards customarily furnished by the employer to the
employees. If We are to follow the theory of the herein petitioners, then a crew
member, who used to receive a monthly wage of P100.00, before August 4, 1951,
with no deduction for meals, after said date, would receive only P86.00 monthly (after
deducting the cost of his meals at P.40 per meal), which would be very much less
than the P122.00 monthly minimum wage, fixed in accordance with the Minimum
Wage Law. Instead of benefiting him, the law will adversely affect said crew member.
Such interpretation does not conform with the avowed intention of Congress in
enacting the said law.
One should not overlook a fact fully established, that only unlicensed crew members
were made to pay for their meals or food, while the deck officers and marine
engineers receiving higher pay and provided with better victuals, were not. This
pictures in no uncertain terms, a great and unjust discrimination obtaining in the
present case (Pambujan Sur United Mine Workers v. CIR, et al., L-7177, May 31,
1955).
Fifth, Sixth and Seventh assignments of error.— The CIR erred in holding that
Severino Pepito, a boatsman, had rendered overtime work, notwithstanding the
provisions of section 1, of C.A. No. 444; in basing its finding ofthe alleged overtime,
on the uncorroborated testimony of said Severino Pepito; and in ordering the herein
petitioners to pay him. Severino Pepito was found by the CIR to have worked
overtime and had not been paid for such services. Severino Pepito categorically
stated that he worked during the late hours of the evening and during the early hours
of the day when the boat docks and unloads. Aside from the above, he did other jobs
such as removing rusts and cleaning the vessel, which overtime work totalled to 6
hours a day, and of which he has not been paid as yet. This statement was not
rebutted by the petitioners. Nobody working with him on the same boat "M/V Adriana"
contrawise. The testimonies of boatswains of other vessels(M/V Iruna and M/V
Princesa), are incompetent and unreliable. And considering the established fact that
the work of Severino Pepito was continuous, and during the time he was not working,
he could not leave and could not completely rest, because of the place and nature of
his work, the provisions of sec. 1, of Comm. Act No. 444, which states "When the
work is not continuous, the time during which the laborer is not working and can leave
his working place and can rest completely shall not be counted", find no application in
his case.
8. Eighth assignment of error.— The CIR erred in ordering petitioners to reinstate
Capt. Carlos Asensi to his former position, considering the fact that said officer had
been employed since January 9, 1953, as captain of a vessel belonging to another
shipping firm in the City of Cebu.
The CIR held —
Finding that the claims of Captain Carlos Asensi for back salaries from the
time of his alleged lay-off on March 20, 1952, is not supported by the
evidence on record, the same is hereby dismissed. Considering, however,
that Captain Asensi had been laid-off for a long time and that his failure to
report for work is not sufficient cause for his absolute dismissal, respondents
are hereby ordered to reinstate him to his former job without back salary but
under the same terms and conditions of employment existing prior to his lay-
off, without loss of seniority and other benefits already acquired by him prior
to March 20, 1952. This Court is empowered to reduce the punishment
meted out to an erring employee (Standard Vacuum Oil Co., Inc. v.
Katipunan Labor Union, G.R. No. L-9666, Jan. 30, 1957). This step taken is
in consonance with section 12 of Comm. Act 103, as amended." (p. 16,
Decision, Annex 'G').
The ruling is in conformity with the evidence, law and equity.
Ninth and Tenth assignments of error. — The CIR erred in denying a duly verified
motion for new trial, and in overruling petitioner's motion for reconsideration.
The motion for new trial, supported by an affidavit, states that the movants have a
good and valid defense and the same is based on three orders of the WAS (Wage
Administration Service), dated November 6, 1956. It is alleged that they would
inevitably affect the defense of the petitioners. The motion for new trial is without
merit. Having the said wage Orders in their possession, while the case was pending
decision, it was not explained why the proper move was not taken to introduce them
before the decision was promulgated. The said wage orders, dealing as they do, with
the evaluation of meals and facilities, are irrelevant to the present issue, it having
been found and held that the meals or food in question are not facilities but
supplements. The original petition in the CIR having been filed on Sept. 12, 1952, the
WAS could have intervened in the manner provided by law to express its views on the
matter. At any rate, the admission of the three wage orders have not altered the
decision reached in this case.
IN VIEW HEREOF, the petition is dismissed, with costs against the petitioners.
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.
[G.R. No. 121439. January 25, 2000]
AKLAN ELECTRIC COOPERATIVE INCORPORATED (AKELCO), petitioner,
vs. NATIONAL LABOR RELATIONS COMMISSION (Fourth Division), RODOLFO
M. RETISO and 165 OTHERS,[1] respondents.
DECISION
GONZAGA-REYES, J.:
In his petition for certiorari and prohibition with prayer for writ of preliminary injunction
and/or temporary restraining order, petitioner assails (a) the decision dated April 20, 1995, of
public respondent National Labor Relations Commission (NLRC), Fourth (4th) Division,
Cebu City, in NLRC Case No. V-0143-94 reversing the February 25, 1994 decision of Labor
Arbiter Dennis D. Juanon and ordering petitioner to pay wages in the aggregate amount of
P6,485,767.90 to private respondents, and (b) the resolution dated July 28, 1995 denying
petitioners motion for reconsideration, for having been issued with grave abuse of discretion.
A temporary restraining order was issued by this Court on October 9, 1995 enjoining public
respondent from executing the questioned decision upon a surety bond posted by petitioner in
the amount of P6,400,000.00.[2]
The facts as found by the Labor Arbiter are as follows:[3]
"These are consolidated cases/claims for non-payment of salaries and
wages, 13th month pay, ECOLA and other fringe benefits as rice, medical
and clothing allowances, submitted by complainant Rodolfo M. Retiso and
163 others, Lyn E. Banilla and Wilson B. Sallador against respondents
Aklan Electric Cooperative, Inc. (AKELCO), Atty. Leovigildo Mationg in
his capacity as General Manager; Manuel Calizo, in his capacity as Acting
Board President, Board of Directors, AKELCO.
Complainants alleged that prior to the temporary transfer of the office of
AKELCO from Lezo Aklan to Amon Theater, Kalibo, Aklan,
complainants were continuously performing their task and were duly paid
of their salaries at their main office located at Lezo, Aklan.
That on January 22, 1992, by way of resolution of the Board of Directors
of AKELCO allowed the temporary transfer holding of office at Amon
Theater, Kalibo, Aklan per information by their Project Supervisor, Atty.
Leovigildo Mationg, that their head office is closed and that it is
dangerous to hold office thereat;
Nevertheless, majority of the employees including herein complainants
continued to report for work at Lezo Aklan and were paid of their salaries.
That on February 6, 1992, the administrator of NEA, Rodrigo Cabrera,
wrote a letter addressed to the Board of AKELCO, that he is not
interposing any objections to the action taken by respondent Mationg
That on February 11, 1992, unnumbered resolution was passed by the
Board of AKELCO withdrawing the temporary designation of office at
Kalibo, Aklan, and that the daily operations must be held again at the main
office of Lezo, Aklan;[4]
That complainants who were then reporting at the Lezo office from
January 1992 up to May 1992 were duly paid of their salaries, while in the
meantime some of the employees through the instigation of respondent
Mationg continued to remain and work at Kalibo, Aklan;
That from June 1992 up to March 18, 1993, complainants who
continuously reported for work at Lezo, Aklan in compliance with the
aforementioned resolution were not paid their salaries;
That on March 19, 1993 up to the present, complainants were again
allowed to draw their salaries; with the exception of a few complainants
who were not paid their salaries for the months of April and May 1993;
Per allegations of the respondents, the following are the facts:
1. That these complainants voluntarily abandoned their respective
work/job assignments, without any justifiable reason and without notifying
the management of the Aklan Electric Cooperative, Inc. (AKELCO),
hence the cooperative suffered damages and systems loss;
2. That the complainants herein defied the lawful orders and other
issuances by the General Manager and the Board of Directors of the
AKELCO. These complainants were requested to report to work at the
Kalibo office x x x but despite these lawful orders of the General
Manager, the complainants did not follow and wilfully and maliciously
defied said orders and issuance of the General Manager; that the Board of
Directors passed a Resolution resisting and denying the claims of these
complainants, x x x under the principle of "no work no pay" which is
legally justified; That these complainants have "mass leave" from their
customary work on June 1992 up to March 18, 1993 and had a "sit-down"
stance for these periods of time in their alleged protest of the appointment
of respondent Atty. Leovigildo Mationg as the new General Manager of
the Aklan Electric Cooperative, Inc. (AKELCO) by the Board of Directors
and confirmed by the Administrator of the National Electrification
Administration (NEA), Quezon City; That they engaged in " . . .
slowdown mass leaves, sit downs, attempts to damage, destroy or sabotage
plant equipment and facilities of the Aklan Electric Cooperative, Inc.
(AKELCO)."
On February 25, 1994, a decision was rendered by Labor Arbiter Dennis D. Juanon dismissing
the complaints.[5]
Dissatisfied with the decision, private respondents appealed to the respondent Commission.
On appeal, the NLRCs Fourth Division, Cebu City,[6] reversed and set aside the Labor Arbiters
decision and held that private respondents are entitled to unpaid wages from June 16, 1992 to
March 18, 1993, thus:[7]
"The evidence on records, more specifically the evidence submitted by the
complainants, which are: the letter dated April 7, 1993 of Pedrito L.
Leyson, Office Manager of AKELCO (Annex "C"; complainants position
paper; Rollo, p.102) addressed to respondent Atty. Leovigildo T. Mationg;
respondent AKELCO General Manager; the memorandum of said Atty.
Mationg dated 14 April 1993, in answer to the letter of Pedrito Leyson
(Annex "D" complainants position paper); as well as the computation of
the unpaid wages due to complainants (Annexes "E" to "E-3";
complainants position paper, Rollo, pages 1024 to 1027) clearly show that
complainants had rendered services during the period - June 16, 1992 to
March 18, 1993. The record is bereft of any showing that the respondents
had submitted any evidence, documentary or otherwise, to controvert this
asseveration of the complainants that services were rendered during this
period. Subjecting these evidences submitted by the complainants to the
crucible of scrutiny, We find that respondent Atty. Mationg responded to
the request of the Office Manager, Mr. Leyson, which We quote, to wit:
"Rest assured that We shall recommend your aforesaid
request to our Board of Directors for their
consideration and appropriate action. This payment,
however, shall be subject, among others, to the
availability of funds."
This assurance is an admission that complainants are entitled to payment
for services rendered from June 16, 1992 to March 18, 1993, specially so
that the recommendation and request comes from the office manager
himself who has direct knowledge regarding the services and performance
of employees under him. For how could one office manager recommend
payment of wages, if no services were rendered by employees under him.
An office manager is the most qualified person to know the performance
of personnel under him. And therefore, any request coming from him for
payment of wages addressed to his superior as in the instant case shall be
given weight.
Furthermore, the record is clear that complainants were paid of their
wages and other fringe benefits from January, 1992 to May, 1992 and
from March 19, 1993 up to the time complainants filed the instant cases.
In the interegnum, from June 16, 1992 to March 18, 1993, complainants
were not paid of their salaries, hence these claims. We could see no rhyme
nor reason in respondents refusal to pay complainants salaries during this
 period when complainants had worked and actually rendered service to
AKELCO.
While the respondents maintain that complainants were not paid during
this interim period under the principle of "no work, no pay", however, no
proof was submitted by the respondents to substantiate this allegation. The
labor arbiter, therefore, erred in dismissing the claims of the complainants,
when he adopted the "no work, no pay" principle advanced by the
respondents.
WHEREFORE, in view of the foregoing, the appealed decision dated
February 25, 1994 is hereby Reversed and Set Aside and a new one
entered ordering respondent AKELCO to pay complainants their claims
amounting to P6,485,767.90 as shown in the computation (Annexes "E" to
"E-3")."
A motion for reconsideration was filed by petitioner but the same was denied by public
respondent in a resolution dated July 28, 1995.[8]
Petitioner brought the case to this Court alleging that respondent NLRC committed grave
abuse of discretion citing the following grounds:[9]
1. PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF
DISCRETION IN REVERSING THE FACTUAL FINDINGS AND
CONCLUSIONS OF THE LABOR ARBITER, AND DISREGARDING
THE EXPRESS ADMISSION OF PRIVATE RESPONDENTS THAT
THEY DEFIED PETITIONERS ORDER TRANSFERRING THE
PETITIONERS OFFICIAL BUSINESS OFFICE FROM LEZO TO
KALIBO AND FOR THEM TO REPORT THEREAT.
2. PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF
DISCRETION IN CONCLUDING THAT PRIVATE RESPONDENTS
WERE REALLY WORKING OR RENDERING SERVICE ON THE
BASIS OF THE COMPUTATION OF WAGES AND THE BIASED
RECOMMENDATION SUBMITTED BY LEYSON WHO IS ONE OF
THE PRIVATE RESPONDENTS WHO DEFIED THE LAWFUL
ORDERS OF PETITIONER.
3. PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF
DISCRETION IN CONSIDERING THE ASSURANCE BY
PETITIONERS GENERAL MANAGER MATIONG TO RECOMMEND
THE PAYMENT OF THE CLAIMS OF PRIVATE RESPONDENTS AS
AN ADMISSION OF LIABILITY OR A RECOGNITION THAT
COMPENSABLE SERVICES WERE ACTUALLY RENDERED.
4. GRANTING THAT PRIVATE RESPONDENTS CONTINUED TO
REPORT AT THE LEZO OFFICE, IT IS STILL GRAVE ABUSE OF
DISCRETION FOR PUBLIC RESPONDENT TO CONSIDER THAT
PETITIONER IS LEGALLY OBLIGATED TO RECOGNIZE SAID
CIRCUMSTANCE AS COMPENSABLE SERVICE AND PAY WAGES
TO PRIVATE RESPONDENTS FOR DEFYING THE ORDER FOR
THEM TO REPORT FOR WORK AT THE KALIBO OFFICE WHERE
THE OFFICIAL BUSINESS AND OPERATIONS WERE
CONDUCTED.
5. PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF
DISCRETION AND SERIOUS, PATENT AND PALPABLE ERROR IN
RULING THAT THE "NO WORK, NO PAY" PRINCIPLE DOES NOT
APPLY FOR LACK OF EVIDENTIARY SUPPORT WHEN PRIVATE
REPONDENTS ALREADY ADMITTED THAT THEY DID NOT
REPORT FOR WORK AT THE KALIBO OFFICE.
6. PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF
DISCRETION IN ACCORDING WEIGHT AND CREDIBILITY TO
THE SELF-SERVING AND BIASED ALLEGATIONS OF PRIVATE
RESPONDENTS, AND ACCEPTING THEM AS PROOF, DESPITE
THE ESTABLISHED FACT AND ADMISSION THAT PRIVATE
RESPONDENTS DID NOT REPORT FOR WORK AT THE KALIBO
OFFICE, OR THAT THEY WERE NEVER PAID FOR ANY WAGES
FROM THE TIME THEY DEFIED PETITIONERS ORDERS.
Petitioner contends that public respondent committed grave abuse of discretion in finding that
private respondents are entitled to their wages from June 16, 1992 to March 18, 1993, thus
disregarding the principle of "no work, no pay". It alleges that private respondents stated in
their pleadings that they not only objected to the transfer of petitioners business office to
Kalibo but they also defied the directive to report thereat because they considered the transfer
illegal. It further claims that private respondents refused to recognize the authority of
petitioners lawful officers and agents resulting in the disruption of petitioners business
operations in its official business office in Lezo, AKlan, forcing petitioner to transfer its office
from Lezo to Kalibo transferring all its equipments, records and facilities; that private
respondents cannot choose where to work, thus, when they defied the lawful orders of
petitioner to report at Kalibo, private respondents were considered dismissed as far as
petitioner was concerned. Petitioner also disputes private respondents allegation that they were
paid their salaries from January to May 1992 and again from March 19, 1993 up to the present
but not for the period from June 1992 to March 18, 1993 saying that private respondents
illegally collected fees and charges due petitioner and appropriated the collections among
themselves for which reason they are claiming salaries only for the period from June 1992 to
March 1993 and that private respondents were paid their salaries starting only in April 1993
when petitioners Board agreed to accept private respondents back to work at Kalibo office out
of compassion and not for the reason that they rendered service at the Lezo office. Petitioner
also adds that compensable service is best shown by timecards, payslips and other similar
documents and it was an error for public respondent to consider the computation of the claims
for wages and benefits submitted merely by private respondents as substantial evidence.
The Solicitor General filed its Manifestation in lieu of Comment praying that the decision of
respondent NLRC be set aside and payment of wages claimed by private respondents be
denied for lack of merit alleging that private respondents could not have worked for
petitioner's office in Lezo during the stated period since petitioner transferred its business
operation in Kalibo where all its records and equipments were brought; that computations of
the claims for wages and benefits submitted by private respondents to petitioner is not proof of
rendition of work. Filing its own Comment, public respondent NLRC claims that the original
and exclusive jurisdiction of this Court to review decisions or resolutions of respondent NLRC
does not include a correction of its evaluation of evidence as factual issues are not fit subject
for certiorari.
Private respondents, in their Comment, allege that review of a decision of NLRC in a petition
for certiorari under Rule 65 does not include the correctness of its evaluation of the evidence
but is confined to issues of jurisdiction or grave abuse of discretion and that factual findings of
administrative bodies are entitled to great weight, and accorded not only respect but even
finality when supported by substantial evidence. They claim that petitioner's Board of
Directors passed an unnumbered resolution on February 11, 1992 returning back the office to
Lezo from Kalibo Aklan with a directive for all employees to immediately report at Lezo; that
the letter-reply of Atty. Mationg to the letter of office manager Leyson that he will recommend
the payment of the private respondents' salary from June 16, 1992 to March 18, 1993 to the
Board of Directors was an admission that private respondents are entitled to such payment for
services rendered. Private respondents state that in appreciating the evidence in their favor,
public respondent NLRC at most may be liable for errors of judgment which, as differentiated
from errors of jurisdiction, are not within the province of the special civil action of certiorari.
Petitioner filed its Reply alleging that review of the decision of public respondent is proper if
there is a conflict in the factual findings of the labor arbiter and the NLRC and when the
evidence is insufficient and insubstantial to support NLRCs factual findings; that public
respondents findings that private respondents rendered compensable services were merely
based on private respondents computation of claims which is self-serving; that the alleged
unnumbered board resolution dated February 11, 1992, directing all employees to report to
Lezo Office was never implemented because it was not a valid action of AKELCOs legitimate
board.
The sole issue for determination is whether or not public respondent NLRC committed grave
abuse of discretion amounting to excess or want of jurisdiction when it reversed the findings
of the Labor Arbiter that private respondents refused to work under the lawful orders of the
petitioner AKELCO management; hence they are covered by the "no work, no pay" principle
and are thus not entitled to the claim for unpaid wages from June 16, 1992 to March 18, 1993.
We find merit in the petition.
At the outset, we reiterate the rule that in certiorari proceedings under Rule 65, this Court
does not assess and weigh the sufficiency of evidence upon which the labor arbiter and public
respondent NLRC based their resolutions. Our query is limited to the determination of whether
or not public respondent NLRC acted without or in excess of its jurisdiction or with grave
abuse of discretion in rendering the assailed resolutions.[10] While administrative findings of
fact are accorded great respect, and even finality when supported by substantial evidence,
nevertheless, when it can be shown that administrative bodies grossly misappreciated evidence
of such nature as to compel a contrary conclusion, this court had not hesitated to reverse their
factual findings.[11] Factual findings of administrative agencies are not infallible and will be set
aside when they fail the test of arbitrariness.[12] Moreover, where the findings of NLRC
contradict those of the labor arbiter, this Court, in the exercise of its equity jurisdiction, may
look into the records of the case and reexamine the questioned findings. [13]
We find cogent reason, as shown by the petitioner and the Solicitor General, not to affirm the
factual findings of public respondent NLRC.
We do not agree with the finding that private respondents had rendered services from June 16,
1992 to March 18, 1993 so as to entitle them to payment of wages. Public respondent based its
conclusion on the following: (a) the letter dated April 7, 1993 of Pedrito L. Leyson, Office
Manager of AKELCO addressed to AKELCOs General Manager, Atty. Leovigildo T.
Mationg, requesting for the payment of private respondents unpaid wages from June 16, 1992
to March 18, 1993; (b) the memorandum of said Atty. Mationg dated 14 April 1993, in answer
to the letter request of Pedrito Leyson where Atty. Mationg made an assurance that he will
recommend such request; (c) the private respondents own computation of their unpaid wages.
We find that the foregoing does not constitute substantial evidence to support the conclusion
that private respondents are entitled to the payment of wages from June 16, 1992 to March 18,
1993. Substantial evidence is that amount of relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion.[14] These evidences relied upon by public
respondent did not establish the fact that private respondents actually rendered services in the
Kalibo office during the stated period.
The letter of Pedrito Leyson to Atty. Mationg was considered by public respondent as
evidence that services were rendered by private respondents during the stated period, as the
recommendation and request came from the office manager who has direct knowledge
regarding the services and performance of employees under him. We are not convinced.
Pedrito Leyson is one of the herein private respondents who are claiming for unpaid wages
and we find his actuation of requesting in behalf of the other private respondents for the
payment of their backwages to be biased and self-serving, thus not credible.
On the other hand, petitioner was able to show that private respondents did not render services
during the stated period. Petitioners evidences show that on January 22, 1992, petitioners
Board of Directors passed a resolution temporarily transferring the Office from Lezo, Aklan to
Amon Theater, Kalibo, Aklan upon the recommendation of Atty. Leovigildo Mationg, then
project supervisor, on the ground that the office at Lezo was dangerous and unsafe. Such
transfer was approved by then NEA Administrator, Rodrigo E. Cabrera, in a letter dated
February 6, 1992 addressed to petitioners Board of Directors.[15] Thus, the NEA
Administrator, in the exercise of supervision and control over all electric cooperatives,
including petitioner, wrote a letter dated February 6, 1992 addressed to the Provincial Director
PC/INP Kalibo Aklan requesting for military assistance for the petitioners team in retrieving
the electric cooperatives equipments and other removable facilities and/or fixtures
consequential to the transfer of its principal business address from Lezo to Kalibo and in
maintaining peace and order in the cooperatives coverage area.[16] The foregoing establishes
the fact that the continuous operation of the petitioners business office in Lezo Aklan would
pose a serious and imminent threat to petitioners officials and other employees, hence the
necessity of temporarily transferring the operation of its business office from Lezo to Kalibo.
Such transfer was done in the exercise of a management prerogative and in the absence of
contrary evidence is not unjustified. With the transfer of petitioners business office from its
former office, Lezo, to Kalibo, Aklan, its equipments, records and facilities were also removed
from Lezo and brought to the Kalibo office where petitioners official business was being
conducted; thus private respondents allegations that they continued to report for work at Lezo
to support their claim for wages has no basis.
Moreover, private respondents in their position paper admitted that they did not report at the
Kalibo office, as Lezo remained to be their office where they continuously reported, to wit: [17]
"On January 22, 1991 by way of a resolution of the Board of Directors of
AKELCO it allowed the temporary holding of office at Amon Theater,
Kalibo, Aklan, per information by their project supervisor, Atty.
Leovigildo Mationg that their head office is closed and that it is dangerous
to hold office thereat.
Nevertheless, majority of the employees including the herein
complainants, continued to report for work at Lezo, Aklan and were paid
of their salaries.
xxx
The transfer of office from Lezo, Aklan to Kalibo, Aklan being illegal for
failure to comply with the legal requirements under P.D. 269, the
complainants remained and continued to work at the Lezo Office until
they were illegally locked out therefrom by the respondents. Despite the
illegal lock out however, complainants continued to report daily to the
location of the Lezo Office, prepared to continue in the performance of
their regular duties.
Complainants thus could not be considered to have abandoned their work
as Lezo remained to be their office and not Kalibo despite the temporary
transfer thereto. Further the fact that they were allowed to draw their
salaries up to May, 1992 is an acknowledgment by the management that
they are working during the period.
xxx
It must be pointed out that complainants worked and continuously
reported at Lezo office despite the management holding office at Kalibo.
In fact, they were paid their wages before it was withheld and then were
allowed to draw their salaries again on March 1993 while reporting at
Lezo up to the present.
Respondents acts and payment of complainants salaries and again from
March 1993 is an unequivocal recognition on the part of respondents that
the work of complainants is continuing and uninterrupted and they are
therefore entitled to their unpaid wages for the period from June 1992 to
March 1993."
The admission is detrimental to private respondents cause. Their excuse is that the transfer to
Kalibo was illegal but we agree with the Labor Arbiter that it was not for private respondents
to declare the managements act of temporarily transferring the AKELCO office to Kalibo as
an illegal act. There is no allegation nor proof that the transfer was made in bad faith or with
malice. The Labor Arbiter correctly rationalized in its decision as follows: [18]
"We do not subscribe to complainants theory and assertions. They, by
their own allegations, have unilaterally committed acts in violation of
managements/respondents directives purely classified as management
prerogative. They have taken amongst themselves declaring managements
acts of temporarily transferring the holding of the AKELCO office from
Lezo to Kalibo, Aklan as illegal. It is never incumbent upon themselves to
declare the same as such. It is lodged in another forum or body legally
mantled to do the same. What they should have done was first to follow
managements orders temporarily transferring office for it has the first
presumption of legality. Further, the transfer was only temporary. For:
"The employer as owner of the business, also has
inherent rights, among which are the right to select the
persons to be hired and discharge them for just and
valid cause; to promulgate and enforce reasonable
employment rules and regulations and to modify,
amend or revoke the same; to designate the work as
well as the employee or employees to perform it; to
transfer or promote employees; to schedule, direct,
curtail or control company operations; to introduce or
install new or improved labor or money savings
methods, facilities or devices; to create, merge, divide,
reclassify and abolish departments or positions in the
company and to sell or close the business.
xxx
Even as the law is solicitous of the welfare of the
employees it must also protect the right of an
employer to exercise what are clearly management
prerogatives. The free will of management to conduct
its own business affairs to achieve its purpose can not
be denied. The transfer of assignment of a medical
representative from Manila to the province has
therefore been held lawful where this was demanded
by the requirements of the drug companys marketing
operations and the former had at the time of his
employment undertaken to accept assignment
anywhere in the Philippines. (Abbot Laboratories
(Phils.), Inc., et al. vs. NLRC, et al., G.R. No. L-
76959, Oct. 12, 1987).
It is the employers prerogative to abolish a position which it deems no
longer necessary, and the courts, absent any findings of malice on the part
of the management, cannot erase that initiative simply to protect the
person holding office (Great Pacific Life Assurance Corporation vs.
NLRC, et al., G.R. No. 88011, July 30, 1990)."
Private respondents claim that petitioners Board of Directors passed an unnumbered resolution
dated February 11, 1992 returning back the office from its temporary office in Kalibo to Lezo.
Thus, they did not defy any lawful order of petitioner and were justified in continuing to
remain at Lezo office. This allegation was controverted by petitioner in its Reply saying that
such unnumbered resolution was never implemented as it was not a valid act of petitioners
Board. We are convinced by petitioners argument that such unnumbered resolution was not a
valid act of petitioners legitimate Board considering the subsequent actions taken by the
petitioners Board of Directors decrying private respondents inimical act and defiance, to wit
(1) Resolution No. 411, s. of 1992 on September 9, 1992, dismissing all AKELCO employees
who were on illegal strike and who refused to return to work effective January 31, 1992
despite the directive of the NEA project supervisor and petitioners acting general
manager;[19] (2) Resolution No. 477, s. of 1993 dated March 10, 1993 accepting back private
respondents who staged illegal strike, defied legal orders and issuances, out of compassion,
reconciliation, Christian values and humanitarian reason subject to the condition of "no work,
no pay"[20] (3) Resolution No. 496, s. of 1993 dated June 4, 1993, rejecting the demands of
private respondents for backwages from June 16, 1992 to March 1993 adopting the policy of
"no work, no pay" as such demand has no basis, and directing the COOP Legal Counsel to file
criminal cases against employees who misappropriated collections and officers who
authorized disbursements of funds without legal authority from the NEA and the AKELCO
Board.[21] If indeed there was a valid board resolution transferring back petitioners office to
Lezo from its temporary office in Kalibo, there was no need for the Board to pass the above-
cited resolutions.
We are also unable to agree with public respondent NLRC when it held that the assurance
made by Atty. Mationg to the letter-request of office manager Leyson for the payment of
private respondents wages from June 1992 to March 1993 was an admission on the part of
general manager Mationg that private respondents are indeed entitled to the same. The letter
reply of Atty. Mationg to Leyson merely stated that he will recommend the request for
payment of backwages to the Board of Directors for their consideration and appropriate action
and nothing else, thus, the ultimate approval will come from the Board of Directors. We find
well-taken the argument advanced by the Solicitor General as follows: [22]
The allegation of private respondents that petitioner had already approved
payment of their wages is without basis. Mationgs offer to recommend the
payment of private respondents' wages is hardly approval of their claim for
wages. It is just an undertaking to recommend payment. Moreover, the
offer is conditional. It is subject to the condition that petitioners Board of
Directors will give its approval and that funds were available. Mationgs
reply to Leysons letter for payment of wages did not constitute approval or
assurance of payment. The fact is that, the Board of Directors of petitioner
rejected private respondents demand for payment (Board Resolution No.
496, s. 1993).
We are accordingly constrained to overturn public respondents findings that petitioner is not
justified in its refusal to pay private respondents wages and other fringe benefits from June 16,
1992 to March 18, 1993; public respondents stated that private respondents were paid their
salaries from January to May 1992 and again from March 19, 1993 up to the present. As cited
earlier, petitioners Board in a Resolution No. 411 dated September 9, 1992 dismissed private
respondents who were on illegal strike and who refused to report for work at Kalibo office
effective January 31, 1992; since no services were rendered by private respondents they were
not paid their salaries. Private respondents never questioned nor controverted the Resolution
dismissing them and nowhere in their Comment is it stated that they questioned such
dismissal. Private respondents also have not rebutted petitioners claim that private respondents
illegally collected fees and charges due petitioner and appropriated the collections among
themselves to satisfy their salaries from January to May 1992, for which reason, private
respondents are merely claiming salaries only for the period from June 16, 1992 to March
1993.
Private respondents were dismissed by petitioner effective January 31, 1992 and were
accepted back by petitioner, as an act of compassion, subject to the condition of "no work, no
pay" effective March 1993 which explains why private respondents were allowed to draw their
salaries again. Notably, the letter-request of Mr. Leyson for the payment of backwages and
other fringe benefits in behalf of private respondents was made only in April 1993, after a
Board Resolution accepting them back to work out of compassion and humanitarian reason. It
took private respondents about ten months before they requested for the payment of their
backwages, and the long inaction of private respondents to file their claim for unpaid wages
cast doubts as to the veracity of their claim.
The age-old rule governing the relation between labor and capital, or management and
employee of a "fair days wage for a fair days labor" remains as the basic factor in determining
employees wages. If there is no work performed by the employee there can be no wage or pay
unless, of course, the laborer was able, willing and ready to work but was illegally locked out,
suspended or dismissed,[23] or otherwise illegally prevented from working,[24] a situation which
we find is not present in the instant case. It would neither be fair nor just to allow private
respondents to recover something they have not earned and could not have earned because
they did not render services at the Kalibo office during the stated period.
Finally, we hold that public respondent erred in merely relying on the computations of
compensable services submitted by private respondents. There must be competent proof such
as time cards or office records to show that they actually rendered compensable service during
the stated period to entitle them to wages. It has been established that the petitioners business
office was transferred to Kalibo and all its equipments, records and facilities were transferred
thereat and that it conducted its official business in Kalibo during the period in question. It was
incumbent upon private respondents to prove that they indeed rendered services for petitioner,
which they failed to do. It is a basic rule in evidence that each party must prove his affirmative
allegation. Since the burden of evidence lies with the party who asserts the affirmative
allegation, the plaintiff or complainant has to prove his affirmative allegations in the complaint
and the defendant or the respondent has to prove the affirmative allegation in his affirmative
defenses and counterclaim.[25]
WHEREFORE, in view of the foregoing, the petition for CERTIORARI is GRANTED.
Consequently the decision of public respondent NLRC dated April 20, 1995 and the
Resolution dated July 28, 1995 in NLRC Case No. V-0143-94 are hereby REVERSED and
SET ASIDE for having been rendered with grave abuse of discretion amounting to lack or
excess of jurisdiction. Private respondents complaint for payment of unpaid wages before the
Labor Arbiter is DISMISSED.
SO ORDERED.
 [G.R. No. 132805. February 2, 1999]
PHILIPPINE AIRLINES, INC., petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION, LABOR ARBITER ROMULUS PROTACIO and DR.
HERMINIO A. FABROS, respondents.
DECISION
PUNO, J.:
Petitioner Philippine Airlines, Inc. assails the decision of the National Labor Relations
Commission dismissing its appeal from the decision of Labor Arbiter Romulus S. Protacio
which declared the suspension of private respondent Dr. Herminio A. Fabros illegal and ordered
petitioner to pay private respondent the amount equivalent to all the benefits he should have
received during his period of suspension plus P500,000.00 moral damages.
The facts are as follow:
Private respondent was employed as flight surgeon at petitioner company. He was
assigned at the PAL Medical Clinic at Nichols and was on duty from 4:00 in the afternoon until
12:00 midnight.
On February 17, 1994, at around 7:00 in the evening, private respondent left the clinic to
have his dinner at his residence, which was about five-minute drive away. A few minutes later,
the clinic received an emergency call from the PAL Cargo Services. One of its employees, Mr.
Manuel Acosta, had suffered a heart attack. The nurse on duty, Mr. Merlino Eusebio, called
private respondent at home to inform him of the emergency. The patient arrived at the clinic at
7:50 in the evening and Mr. Eusebio immediately rushed him to the hospital. When private
respondent reached the clinic at around 7:51 in the evening, Mr. Eusebio had already left with
the patient. Mr. Acosta died the following day.
Upon learning about the incident, PAL Medical Director Dr. Godofredo B. Banzon
ordered the Chief Flight Surgeon to conduct an investigation. The Chief Flight Surgeon, in turn,
required private respondent to explain why no disciplinary sanction should be taken against him.
In his explanation, private respondent asserted that he was entitled to a thirty-minute meal
break; that he immediately left his residence upon being informed by Mr. Eusebio about the
emergency and he arrived at the clinic a few minutes later; that Mr. Eusebio panicked and
brought the patient to the hospital without waiting for him.
Finding private respondents explanation unacceptable, the management charged private
respondent with abandonment of post while on duty. He was given ten days to submit a written
answer to the administrative charge.
In his answer, private respondent reiterated the assertions in his previous explanation. He
further denied that he abandoned his post on February 17, 1994. He said that he only left the
clinic to have his dinner at home. In fact, he returned to the clinic at 7:51 in the evening upon
being informed of the emergency.
After evaluating the charge as well as the answer of private respondent, petitioner
company decided to suspend private respondent for three months effective December 16, 1994.
Private respondent filed a complaint for illegal suspension against petitioner.
On July 16, 1996, Labor Arbiter Romulus A. Protasio rendered a decision[1] declaring the
suspension of private respondent illegal. It also ordered petitioner to pay private respondent the
amount equivalent to all the benefits he should have received during his period of suspension
plus P500,000.00 moral damages. The dispositive portion of the decision reads:
WHEREFORE, in view of all the foregoing, judgment is hereby rendered declaring the
suspension of complainant as illegal, and ordering the respondents the restitution to the
complainant of all employment benefits equivalent to his period of suspension, and the
payment to the complainant of P500,000.00 by way of moral damages.[2]
Petitioner appealed to the NLRC. The NLRC, however, dismissed the appeal after finding
that the decision of the Labor Arbiter is supported by the facts on record and the law on the
matter.[3] The NLRC likewise denied petitioners motion for reconsideration.[4]
Hence, this petition raising the following arguments:
1. The public respondents acted without or in excess of their jurisdiction and with grave
abuse of discretion in nullifying the 3-month suspension of private respondent
despite the fact that the private respondent has committed an offense that warranted
the imposition of disciplinary action.
2. The public respondents acted without or in excess of their jurisdiction and with grave
abuse of discretion in holding the petitioner liable for moral damages:
(a) Despite the fact that no formal hearing whatsoever was conducted for
complainant to substantiate his claim;
(b) Despite the absence of proof that the petitioner acted in bad faith in imposing
the 3-month suspension; and
(c) Despite the fact that the Labor Arbiter's award of moral damages is highly
irregular, considering that it was more than what the private respondent
prayed for.[5]
We find that public respondents did not err in nullifying the three-month suspension of
private respondent. They, however, erred in awarding moral damages to private respondent.
First, as regards the legality of private respondents suspension. The facts do not support
petitioners allegation that private respondent abandoned his post on the evening of February 17,
1994. Private respondent left the clinic that night only to have his dinner at his house, which
was only a few minutes drive away from the clinic. His whereabouts were known to the nurse
on duty so that he could be easily reached in case of emergency. Upon being informed of Mr.
Acostas condition, private respondent immediately left his home and returned to the
clinic. These facts belie petitioners claim of abandonment.
Petitioner argues that being a full-time employee, private respondent is obliged to stay in
the company premises for not less than eight (8) hours. Hence, he may not leave the company
premises during such time, even to take his meals.
 We are not impressed.
Articles 83 and 85 of the Labor Code read:
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, dieticians, pharmacists, social workers, laboratory technicians, paramedical
technicians, psychologists, midwives, attendants and all other hospital or clinic
personnel. (emphasis supplied)
Art. 85. Meal periods.Subject to such regulations as the Secretary of Labor may prescribe, it
shall be the duty of every employer to give his employees not less than sixty (60) minutes
time-off for their regular meals.
Section 7, Rule I, Book III of the Omnibus Rules Implementing the Labor Code further
states:
Sec. 7. Meal and Rest Periods.Every employer shall give his employees, regardless of sex, not
less than one (1) hour time-off for regular meals, except in the following cases when a meal
period of not less than twenty (20) minutes may be given by the employer provided that such
shorter meal period is credited as compensable hours worked of the employee;
their posts on time. Private respondents act, therefore, of going home to take his dinner does not
constitute abandonment.
We now go to the award of moral damages to private respondent.
Not every employee who is illegally dismissed or suspended is entitled to damages. As a
rule, moral damages are recoverable only where the dismissal or suspension of the employee
was attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a
manner contrary to morals, good customs or public policy.[6] Bad faith does not simply mean
negligence or bad judgment. It involves a state of mind dominated by ill will or motive. It
implies a conscious and intentional design to do a wrongful act for a dishonest purpose or some
moral obliquity.[7] The person claiming moral damages must prove the existence of bad faith by
clear and convincing evidence for the law always presumes good faith.[8]
In the case at bar, there is no showing that the management of petitioner company was
moved by some evil motive in suspending private respondent. It suspended private respondent
on an honest, albeit erroneous, belief that private respondents act of leaving the company
premises to take his meal at home constituted abandonment of post which warrants the penalty
of suspension. Also, it is evident from the facts that petitioner gave private respondent all the
opportunity to refute the charge against him and to defend himself. These negate the existence
of bad faith on the part of petitioner. Under the circumstances, we hold that private respondent
is not entitled to moral damages.
IN VIEW WHEREOF, the petition is PARTIALLY GRANTED. The portion of the
assailed decision awarding moral damages to private respondent is DELETED. All other aspects
of the decision are AFFIRMED.
SO ORDERED.

(a) Where the work is non-manual work in nature or does not involve strenuous physical
exertion;

(b) Where the establishment regularly operates not less than sixteen hours a day;

(c) In cases of actual or impending emergencies or there is urgent work to be performed on

machineries, equipment or installations to avoid serious loss which the employer would
otherwise suffer; and

(d) Where the work is necessary to prevent serious loss of perishable goods.

Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be considered
as compensable working time.

Thus, the eight-hour work period does not include the meal break. Nowhere in the law
may it be inferred that employees must take their meals within the company
premises. Employees are not prohibited from going out of the premises as long as they return to
G.R. No. L-4148 July 16, 1952
MANILA TERMINAL COMPANY, INC., petitioner,
vs.
THE COURT OF INDUSTRIAL RELATIONS and MANILA TERMINAL RELIEF AND
MUTUAL AID ASSOCIATION, respondents.
Perkins, Ponce Enrile and Contreras for petitioner.
Antonio V. Raquiza, Honesto Ricobal and Perfecto E. Llacarfor respondent
Association.
Mariano R. Padilla for respondent Court of Industrial Relations.
PARAS, C. J.:
On September 1, 1945, the Manila Terminal Company, Inc. hereinafter to be referred
as to the petitioner, undertook the arrastre service in some of the piers in Manila's
Port Area at the request and under the control of the United States Army. The
petitioner hired some thirty men as watchmen on twelve-hour shifts at a
compensation of P3 per day for the day shift and P6 per day for the night shift. On
February 1, 1946, the petitioner began the postwar operation of the arrastre service at
the present at the request and under the control of the Bureau of Customs, by virtue
of a contract entered into with the Philippine Government. The watchmen of the
petitioner continued in the service with a number of substitutions and additions, their
salaries having been raised during the month of February to P4 per day for the day
shift and P6.25 per day for the nightshift. On March 28, 1947, Dominador Jimenez, a
member of the Manila Terminal Relief and Mutual Aid Association, sent a letter to the
Department of Labor, requesting that the matter of overtime pay be investigated, but
nothing was done by the Department. On April 29, 1947, Victorino Magno Cruz and
five other employees, also member of the Manila Transit Mutual Aid Association, filed
a 5-point demand with the Department of Labor, including overtime pay, but the
Department again filed to do anything about the matter. On May 27, 1947, the
petitioner instituted the system of strict eight-hour shifts. On June 19, 1947, the
Manila Port Terminal Police Association, not registered in accordance with the
provisions of Commonwealth Act No. 213, filed a petition with the Court of Industrial
Relations. On July 16, 1947, the Manila Terminal Relief and Mutual Aid Association
was organized for the first time, having been granted certificate No. 375 by the
Department of Labor. On July 28, 1947, Manila Terminal Relief and Mutual Aid
Association filed an amended petition with the Court of Industrial Relations praying,
among others, that the petitioner be ordered to pay its watchmen or police force
overtime pay from the commencement of their employment. On May 9, 1949, by
virtue of Customs Administrative Order No. 81 and Executive Order No. 228 of the
President of the Philippines, the entire police force of the petitioner was consolidated
with the Manila Harvor Police of the Customs Patrol Service, a Government agency
under the exclusive control of the Commissioner of Customs and the Secretary of
Finance The Manila Terminal Relief and Mutual Aid Association will hereafter be
referred to as the Association.
Judge V. Jimenez Yanson of the Court of Industrial Relations in his decision of April
1, 1950, as amended on April 18, 1950, while dismissing other demands of the
Association for lack of jurisdiction, ordered the petitioner to pay to its police force —
(a) Regular or base pay corresponding to four hours' overtime plus 25 per cent
thereof as additional overtime compensation for the period from September 1, 1945 to
May 24, 1947;
(b) Additional compensation of 25 per cent to those who worked from 6:00 p.m. to
6:00 a.m. during the same period:
(c) Additional compensation of 50 per cent for work performed on Sundays and legal
holidays during the same period;
(d) Additional compensation of 50 per cent for work performed on Sundays and legal
holidays from May 24, 1947 to May 9, 1949; and
(e) Additional compensation of 25 per cent for work performed at night from May 29,
1947 to May 9, 1949.
With reference to the pay for overtime service after the watchmen had been
integrated into the Manila Harbor Police, Judge Yanson ruled that the court has no
jurisdiction because it affects the Bureau of Customs, an instrumentality of the
Government having no independent personality and which cannot be sued without the
consent of the State. (Metran vs. Paredes, 45. Off. Gaz., 2835.)
The petitioner find a motion for reconsideration. The Association also filed a motion
for reconsideration in so far its other demands were dismissed. Judge Yanson,
concurred in by Judge Jose S. Bautista, promulgated on July 13, 1950, a resolution
denying both motions for reconsideration. Presiding Judge Arsenio C. Roldan, in a
separate opinion concurred in by Judge Modesto Castillo, agreed with the decision of
Judge Yanson of April 1, 1950, as to the dismissal of other demands of the
Association, but dissented therefrom as to the granting of overtime pay. In a separate
decisive opinion, Judge Juan S. Lanting concurred in the dismissal of other demands
of the Association. With respect to overtime compensation, Judge Lanting ruled:
1. The decision under review should be affirmed in so far it grants compensation for
overtime on regular days (not Sunday and legal holidays)during the period from the
date of entrance to duty to May 24, 1947, such compensation to consists of the
amount corresponding to the four hours' overtime at the regular rate and an additional
amount of 25 per cent thereof.
2. As to the compensation for work on Sundays and legal holidays, the petitioner
should pay to its watchmen the compensation that corresponds to the overtime (in
excess of 8 hours) at the regular rate only, that is, without any additional amount, thus
modifying the decision under review accordingly.
3. The watchmen are not entitled to night differential pay for past services, and
therefore the decision should be reversed with the respect thereto.
The petitioner has filed a present petition for certiorari. Its various contentions may be
briefly summed up in the following propositions: (1) The Court of Industrial Relations
has no jurisdiction to render a money judgment involving obligation in arrears. (2) The
agreement under which its police force were paid certain specific wages for twelve-
hour shifts, included overtime compensation. (3) The Association is barred from
recovery by estoppel and laches. (4) the nullity or invalidity of the employment
contract precludes any recovery by the Association. (5) Commonwealth Act No. 4444
does not authorize recovery of back overtime pay.
The contention that the Court of Industrial Relations has no jurisdiction to award a
money judgment was already overruled by this Court in G.R. No. L-4337, Detective &
protective Bureau, Inc. vs. Court of Industrial Relations and United Employees
Welfare Association, 90 Phil., 665, in this wise: "It is also argued that the respondent
court has no jurisdiction to award overtime pay, which is money judgment. We believe
that under Commonwealth Act No. 103 the Court is empowered to make the order for
the purpose of settling disputes between the employer and employee1. As a matter of
fact this Court has confirmed an order of the Court of Industrial Relations requiring the
Elks Club to pay to its employees certain sum of money as overtime back wages from
June 3, 1939 to March 13, 1941. This, in spite the allegation of lack or excess of
jurisdiction on the part of said court. (45 Off. Gaz., 3829; 80 Phil. 272)"
The important point stressed by the petitioner is that the contract between it and the
Association upon the commencement of the employment of its watchman was to the
certain rates of pay, including overtime compensation namely, P3 per day for the day
shift and P6 per day for night shift beginning September 1, 1945, and P4 per day shift
and P6.25 per day for the night shift since February, 1946. The record does not bear
out these allegations. The petitioner has relied merely on the facts that its watchmen
had worked on twelve-hour shifts at specific wages per day and that no complaint was
made about the matter until, first on March 28, 1947 and, secondly, on April 29, 1947.
In times of acute unemployment, the people, urged by the instinct of self-preservation,
go from place to place and from office to office in search for any employment,
regardless of its terms and conditions, their main concern in the first place being
admission to some work. Specially for positions requiring no special qualifications,
applicants would be good as rejected if they ever try to be inquisitive about the hours
of work or the amount of salary, ever attempt to dictate their terms. The petitioner's
watchmen must have railroaded themselves into their employment, so to speak,
happy in the thought that they would then have an income on which to subsist. But, at
the same time, they found themselves required to work for twelve hours a day. True,
there was agreement to work, but can it fairly be supposed that they had the freedom
to bargain in any way, much less to insist in the observance of the Eight Hour Labor
Law?
As was aptly said in Floyd vs. Du Bois Soap Co., 1942, 317 U. S. 596, 63 Sup. Ct.
159; 6 CCH Labor Cases, Par. 51, 147, "A contract of employment, which provides
for a weekly wage for a specified number of hours, sufficient to cover both the
statutory minimum wage and overtime compensation, if computed on the basis of the
statutory minimum wage, and which makes no provision for a fixed hourly rate or that
the weekly wage includes overtime compensation, does not meet the requirements of
the Act."
Moreover, we note that after the petition had instituted the strict eight-hour shifts, no
reduction was made in the salaries which its watchmen received under the twelve
hour arrangement. Indeed, as admitted by the petitioner, "when the members or the
respondent union were placed on strict eight-hour shifts, the lowest salary of all the
members of the respondent union was P165 a month, or P5.50 daily, for both day and
night shifts." Although it may be argued that the salary for the night shift was
somewhat lessened, the fact that the rate for the day shift was increased in a sense
tends to militate against the contention that the salaries given during the twelve-hour
shifts included overtime compensation.
Petitioner's allegation that the association had acquiesced in the twelve-hour shifts for
more than 18 months, is not accurate, because the watchmen involved in this case
did not enter the service of the petitioner, at one time, on September 1, 1945. As
Judge Lanting found, "only one of them entered the service of the company on said
date, very few during the rest of said month, some during the rest of that year (1945)
and in 1946, and very many in 1947, 1948 and 1949."
The case at bar is quite on all fours with the case of Detective & Protective Bureau,
Inc. vs. Court of Industrial Relations and United Employees Welfare
Association, supra, in which the facts were as follows: "The record discloses that
upon petition properly submitted, said court made an investigation and found that the
members of the United Employees Welfare Association (hereafter called the
Association) were in the employ of the petitioner Detective and Protective Bureau,
Inc. (herein called the Bureau) which is engaged in the business of furnishing security
guards to commercial and industrial establishments, paying to said members monthly
salaries out of what it received from the establishments benefited by guard service.
The employment called for daily tours of duty for more than eight hours, in addition to
work on Sundays and holidays. Nonetheless the members performed their labors
without receiving extra compensation." The only difference is that, while in said case
the employees concerned were paid monthly salaries, in the case now before us the
wages were computed daily. In the case cited, we held the following:
It appears that the Bureau had been granting the members of the
Association, every month, "two days off" days in which they rendered no
service, although they received salary for the whole month. Said Bureau
contended below that the pay corresponding to said 2 day vacation
corresponded to the wages for extra work. The court rejected the contention,
quite properly we believe, because in the contract there was no agreement
to that effect; and such agreement, if any, would probably be contrary to the
provisions of the Eight-Hour Law (Act No. 444, sec. 6) and would be null and
void ab initio.
It is argued here, in opposition to the payment, that until the commencement
of this litigation the members of the Association never claimed for overtime
pay. That may be true. Nevertheless the law gives them the right to extra
compensation. And they could not be held to have impliedly waived such
extra compensation, for the obvious reason that could not
have expressly waived it.
The foregoing pronouncements are in point. The Association cannot be said to have
impliedly waived the right to overtime compensation, for the obvious reason that they
could not have expressly waived it."
The principle of estoppel and the laches cannot well be invoked against the
Association. In the first place, it would be contrary to the spirit of the Eight Hour Labor
Law, under which as already seen, the laborers cannot waive their right to extra
compensation. In the second place, the law principally obligates the employer to
observe it, so much so that it punishes the employer for its violation and leaves the
employee or laborer free and blameless. In the third place, the employee or laborer is
in such a disadvantageous position as to be naturally reluctant or even apprehensive
in asserting any claim which may cause the employer to devise a way for exercising
his right to terminate the employment.
If the principle of estoppel and laches is to be applied, it may bring about a situation,
whereby the employee or laborer, who cannot expressly renounce their right to extra
compensation under the Eight-Hour Labor Law, may be compelled to accomplish the
same thing by mere silence or lapse of time, thereby frustrating the purpose of law by
indirection.
While counsel for the petitioner has cited authorities in support of the doctrine
invoked, there are also authorities pointed out in the opinion of Judge Lanting to the
contrary. Suffice it to say, in this connection, that we are inclined to rule adversely
against petitioner for the reasons already stated.
The argument that the nullity or invalidity of the employment contract precludes
recovery by the Association of any overtime pay is also untenable. The argument,
based on the supposition that the parties are in pari delicto, was in effect turned down
in Gotamo Lumber Co. vs. Court of Industrial Relations,* 47 Off. Gaz., 3421, wherein
we ruled: "The petitioner maintains that as the overtime work had been performed
without a permit from the Department of Labor, no extra compensation should be
authorized. Several decisions of this court are involved. But those decisions were
based on the reasoning that as both the laborer and employer were duty bound to
secure the permit from the Department of Labor, both were in pari delicto. However
the present law in effect imposed that duty upon the employer (C.A. No. 444). Such
employer may not therefore be heard to plead his own neglect as exemption or
defense.
The employee in rendering extra service at the request of his employer has a
right to assume that the latter has complied with the requirement of the law,
and therefore has obtained the required permission from the Department of
Labor.
Moreover, the Eight-Hour Law, in providing that "any agreement or contract between
the employer and the laborer or employee contrary to the provisions of this Act shall
be null avoid ab initio," (Commonwealth Act No. 444, sec. 6), obviously intended said
provision for the benefit of the laborers or employees. The employer cannot,
therefore, invoke any violation of the act to exempt him from liability for extra
compensation. This conclusion is further supported by the fact that the law makes
only the employer criminally liable for any violation. It cannot be pretended that, for
the employer to commit any violation of the Eight-Hour Labor Law, the participation or
acquiescence of the employee or laborer is indispensable, because the latter in view
of his need and desire to live, cannot be considered as being on the same level with
the employer when it comes to the question of applying for and accepting an
employment.
Petitioner also contends that Commonwealth Act No. 444 does not provide for
recovery of back overtime pay, and to support this contention it makes referrence to
the Fair Labor Standards Act of the United States which provides that "any employer
who violates the provisions of section 206 and section 207 of this title shall be liable to
the employee or employees affected in the amount of their unpaid minimum wages or
their unpaid overtime compensation as the case may be," — a provision not
incorporated in Commonwealth Act No. 444, our Eight-Hour Labor Law. We cannot
agree to the proposition, because sections 3 and 5 of Commonwealth Act 444
expressly provides for the payment of extra compensation in cases where overtime
services are required, with the result that the employees or laborers are entitled to
collect such extra compensation for past overtime work. To hold otherwise would be
to allow an employer to violate the law by simply, as in this case, failing to provide for
and pay overtime compensation.
The point is stressed that the payment of the claim of the Association for overtime pay
covering a period of almost two years may lead to the financial ruin of the petitioner,
to the detriment of its employees themselves. It is significant, however, that not all the
petitioner's watchmen would receive back overtime pay for the whole period specified
in the appealed decision, since the record shows that the great majority of the
watchmen were admitted in 1946 and 1947, and even 1948 and 1949. At any rate, we
are constrained to sustain the claim of the Association as a matter of simple justice,
consistent with the spirit and purpose of the Eight-Hour Labor Law. The petitioner, in
the first place, was required to comply with the law and should therefore be made
liable for the consequences of its violation.
It is high time that all employers were warned that the public is interested in the strict
enforcement of the Eight-Hour Labor Law. This was designed not only to safeguard
the health and welfare of the laborer or employee, but in a way to minimize
unemployment by forcing employers, in cases where more than 8-hour operation is
necessary, to utilize different shifts of laborers or employees working only for eight
hours each.
Wherefore, the appealed decision, in the form voted by Judge Lanting, is affirmed, it
being understood that the petitioner's watchmen will be entitled to extra compensation
only from the dates they respectively entered the service of the petitioner, hereafter to
be duly determined by the Court of Industrial Relations. So ordered, without costs.

[G.R. No. 100388. December 14, 2000]
SOCIAL SECURITY SYSTEM, petitioner, vs. THE COURT OF APPEALS and
CONCHITA AYALDE, respondents.
DECISION
YNARES-SANTIAGO, J.:
In a petition before the Social Security Commission, Margarita Tana, widow of the
late Ignacio Tana, Sr., alleged that her husband was, before his demise, an employee
of Conchita Ayalde as a farmhand in the two (2) sugarcane plantations she owned
(known as Hda. No. Audit B-70 located in Pontevedra, La Carlota City) and leased from
the University of the Philippines (known as Hda. Audit B-15-M situated in La Granja, La
Carlota City). She further alleged that Tana worked continuously six (6) days a week,
four (4) weeks a month, and for twelve (12) months every year between January 1961
to April 1979. For his labor, Tana allegedly received a regular salary according to the
minimum wage prevailing at the time. She further alleged that throughout the given
period, social security contributions, as well as medicare and employees compensation
premiums were deducted from Tanas wages. It was only after his death that Margarita
discovered that Tana was never reported for coverage, nor were his
contributions/premiums remitted to the Social Security System (SSS). Consequently,
she was deprived of the burial grant and pension benefits accruing to the heirs of Tana
had he been reported for coverage.
Hence, she prayed that the Commission issue an order directing:
1. respondents Conchita Ayalde and Antero Maghari as her administrator to
pay the premium contributions of the deceased Ignacio Tana, Sr. and
report his name for SSS coverage; and
2. the SSS to grant petitioner Margarita Tana the funeral and pension
benefits due her.[1]
The SSS, in a petition-in-intervention, revealed that neither Hda. B-70 nor
respondents Ayalde and Maghari were registered members-employers of the SSS, and
consequently, Ignacio Tana, Sr. was never registered as a member-
employee. Likewise, SSS records reflected that there was no way of verifying whether
the alleged premium contributions were remitted since the respondents were not
registered members-employers. Being the agency charged with the implementation
and enforcement of the provisions of the Social Security Law, as amended, the SSS
asked the Commissions leave to intervene in the case.[2]
In his answer, respondent Antero Maghari raised the defense that he was a mere
employee who was hired as an overseer of Hda. B-70 sometime during crop years
1964-65 to 1971-72, and as such, his job was limited to those defined for him by the
employer which never involved matters relating to the SSS. Hence, he prayed that the
case against him be dismissed for lack of cause of action.[3]
For her part, respondent Ayalde belied the allegation that Ignacio Tana, Sr. was
her employee, admitting only that he was hired intermittently as an independent
contractor to plow, harrow, or burrow Hda. No. Audit B-15-M. Tana used his own
carabao and other implements, and he followed his own schedule of work
hours. Ayalde further alleged that she never exercised control over the manner by
which Tana performed his work as an independent contractor. Moreover, Ayalde
averred that way back in 1971, the University of the Philippines had already terminated
the lease over Hda. B-15-M and she had since surrendered possession thereof to the
University of the Philippines. Consequently, Ignacio Tana, Sr. was no longer hired to
work thereon starting in crop year 1971-72, while he was never contracted to work in
Hda. No. Audit B-70. She also prayed for the dismissal of the case considering that
Ignacio Tana, Sr. was never her employee.[4]
After hearing both parties, the Social Security Commission issued a Resolution
on January 28, 1988, the dispositive portion of which reads:
After a careful evaluation of the testimonies of the petitioner and her witnesses, as
well as the testimony of the respondent together with her documentary evidences, this
Commission finds that the late Ignacio Tana was employed by respondent Conchita
Ayalde from January 1961 to March 1979. The testimony of the petitioner which was
corroborated by Agaton Libawas and Aurelio Tana, co-workers of the deceased
Ignacio Tana, sufficienty established the latters employment with the respondent.
As regards respondent Antero Maghari, he is absolved from liability because he is a
mere employee of Conchita Ayalde.
PREMISES CONSIDERED, this Commission finds and so holds that the late Ignacio
Tana had been employed continuously from January 1961 to March 1979 in Hda. B-
70 and Hda. B-15-M which are owned and leased, respectively, by respondent
Conchita (Concepcion) Ayalde with a salary based on the Minimum Wage prevailing
during his employment.
Not having reported the petitioners husband for coverage with the SSS, respondent
Conchita (Concepcion) Ayalde is, therefore, liable for the payment of damages
equivalent to the death benefits in the amount of P7,067.40 plus the amount of
P750.00 representing funeral benefit or a total of P7,817.40.
Further, the SSS is ordered to pay to the petitioner her accrued pension covering the
period after the 5-year guaranteed period corresponding to the employers liability.
SO ORDERED.[5]
Respondent Ayalde filed a motion for reconsideration[6]which the Commission
denied for lack of merit in an Order dated November 3, 1988. [7]
 Not satisfied with the Commissions ruling, Ayalde appealed to the Court of
Appeals, docketed as CA-G.R. SP No. 16427, raising the following assignment of
errors:
I of labor and social welfare laws should be resolved in favor of labor.
The Social Security Commission erred in not finding that there is sufficient evidence
to show that:
(a) The deceased Ignacio Tana, Sr. never worked in the farmland of respondent-
appellant situated in Pontevedra, La Carlota City, otherwise known as Hacienda No.
Audit B-70, (Pontevedra B-70 Farm for short), in any capacity, whether as a daily or
monthly laborer or as independent contractor;
(b) During the time that respondent-appellant was leasing a portion of the land of the
University of the Philippines, otherwise known as Hacienda Audit No. B-15-M, (La
Granja B-15 Farm for short), the deceased Ignacio Tana, Sr. was hired thereat on a
pakyaw basis, or as an independent contractor, performing the services of an arador
(Plower), for which he was proficient, using his own carabao and farming implements
on his own time and discretion within the period demanded by the nature of the job
contracted.
II
The Social Security Commission erred in holding that there is no evidence
whatsoever to show that respondent-appellant was no longer leasing La Granja B-15
Farm.
III
The Social Security Commission erred in not holding that the deceased Ignacio Tana,
having been hired as an independent contractor on pakyaw basis, did not fall within
the coverage of the Social Security Law.[8]
The Court of Appeals rendered judgment in favor of respondent-appellant
Conchita Ayalde and dismissed the claim of petitioner Margarita Tan.
The SSS, as intervenor-appellee, filed a Motion for Reconsideration, which was
denied on the ground that the arguments advanced are mere reiterations of issues and
arguments already considered and passed upon in the decision in question which are
utterly insufficient to justify a modification or reversal of said decision. [9]
Hence, this petition for review on certiorari on the following assigned errors:
1) The Court of Appeals was in error in ruling that an employee working
under the pakyaw system is considered under the law to be an
independent contractor.
2) The Court of Appeals was in error in not giving due consideration to the
fundamental tenet that doubts in the interpretation and implementation
3) The Court of Appeals was in error in disregarding the settled rule that the
factual findings of administrative bodies on matters within their
competence shall not be disturbed by the courts.
4) The Court of Appeals was in error in ruling that even granting arguendo
that Ignacio Tana was employed by Conchita Ayalde, such employment
did not entitle him to compulsory coverage since he was not paid any
regular daily wage or basic pay and he did not work for an uninterrupted
period of at least six months in a year in accordance with Section 8(j) (1)
of the SS Law.
The pivotal issue to be resolved in this petition is whether or not an agricultural
laborer who was hired on pakyaw basis can be considered an employee entitled to
compulsory coverage and corresponding benefits under the Social Security Law.
Petitioner, Social Security System (or SSS), argues that the deceased Ignacio
Tana, Sr., who was hired by Conchita Ayalde on pakyaw basis to perform specific tasks
in her sugarcane plantations, should be considered an employee; and as such, his heirs
are entitled to pension and burial benefits.
The Court of Appeals, however, ruled otherwise, reversing the ruling of the Social
Security Commission and declaring that the late Ignacio Tana, Sr. was an independent
contractor, and in the absence of an employer-employee relationship between Tana
and Ayalde, the latter cannot be compelled to pay to his heirs the burial and pension
benefits under the SS Law.
At the outset, we reiterate the well-settled doctrine that the existence of an
employer-employee relationship is ultimately a question of fact. [10] And while it is the
general rule that factual issues are not within the province of the Supreme Court, said
rule is not without exception. In cases, such as this one, where there are conflicting and
contradictory findings of fact, this Court has not hesitated to scrutinize the records to
determine the facts for itself.[11] Our disquisition of the facts shall be our guide as to
whose findings are supported by substantial evidence.
The mandatory coverage under the SSS Law (Republic Act No. 1161, as
amended by PD 1202 and PD 1636) is premised on the existence of an employer-
employee relationship, and Section 8(d) defines an employee as any person who
performs services for an employer in which either or both mental and physical efforts
are used and who receives compensation for such services where there is an employer-
employee relationship. The essential elements of an employer-employee relationship
are: (a) the selection and engagement of the employee; (b) the payment of wages; (c)
the power of dismissal; and (d) the power of control with regard to the means and
methods by which the work is to be accomplished, with the power of control being the
most determinative factor.[12]
 There is no question that Tana was selected and his services engaged by either To prove that it is material to the main question because if ever the hacienda
Ayalde herself, or by Antero Maghari, her overseer. Corollarily, they also held the maintains complete payrolls of their employees, then the burden of proof lies
prerogative of dismissing or terminating Tanas employment. The dispute is in the in the petitioner..
question of payment of wages. Claimant Margarita Tana and her corroborating
witnesses testified that her husband was paid daily wages per quincena as well as HEARING OFFICER:
on pakyaw basis. Ayalde, on the other hand, insists that Tana was paid solely Let the witness answer, if she knows.
on pakyaw basis. To support her claim, she presented payrolls covering the period
January of 1974 to January of 1976;[13] and November of 1978 to May of 1979.[14] WITNESS:
A careful perusal of the records readily show that the exhibits offered are not There was no payroll, only pad paper.
complete, and are but a mere sampling of payrolls. While the names of the supposed
laborers appear therein, their signatures are nowhere to be found. And while they cover ATTY. GALVAN: (continuing)
the years 1975, 1976 and portions of 1978 and 1979, they do not cover the 18-year
Q. Were the names of workers of the hacienda all listed in that pad paper every
period during which Tana was supposed to have worked in Ayaldes plantations. Also
payday?
an admitted fact is that these exhibits only cover Hda. B70, Ayalde having averred that
all her records and payrolls for the other plantation (Hda. B-15-M) were either destroyed A. Yes, we just sign on pad paper because we have no payroll to be signed.
or lost.[15]
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To our mind, these documents are not only sadly lacking, they are also unworthy
of credence. The fact that Tanas name does not appear in the payrolls for the years Q. What do you understand by payroll?
1975, 1976 and part of 1978 and 1979, is no proof that he did not work in Hda. B70 in
A. Payroll is the list where the whole laborers are listed and receive their salaries.
the years 1961 to 1974, and the rest of 1978 and 1979. The veracity of the alleged
documents as payrolls are doubtful considering that the laborers named therein never Q. And how did that differ from the pad paper which you said you signed?
affixed their signatures to show that they actually received the amounts indicated
corresponding to their names. Moreover, no record was shown pertaining to Hda. B- A. There is a difference.
15-M, where Tana was supposed to have worked. Even Ayalde admitted that she hired
Tana as arador and sometimes as laborer during milling in Hda. B-15-M.[16] In light of Q. What is the difference?
her incomplete documentary evidence, Ayaldes denial that Tana was her employee in A. In the payroll, at the end there is a column for signature but in the pad paper,
Hda. B-70 or Hda. B-15-M must fail. we only sign directly.
In contrast to Ayaldes evidence, or lack thereof, is Margarita Tanas positive Q. Did it contain the amount that you receive?
testimony, corroborated by two (2) other witnesses. On the matter of wages, they
testified as follows: A. Yes, sir.
Margarita Tana: Q. And the date corresponding to the payroll pad?
Q. During the employment of your late husband, was he paid any wages? A. I am not sure but it only enumerates our names and then we were given our
salaries.
A. Yes, he was paid.
Q. Now, did you have a copy of that?
Q. What was the manner of payment of his salary, was it on pakyaw or daily
basis? ATTY. GALVAN:
A. Daily basis. Objection, Your Honor, it is not the petitioner who had a copy, it is usually the
owner because the preparation of the payrolls is done by the employer who..
Q. How many times did he receive his salary in a months time?
ATTY. UNGCO:
A. 2 times.
That is why Im asking ..
Q. You mean, payday in Hda. B-70 is every 15 days?
HEARING OFFICER:
A. Yes, sir.
Let the witness answer. Objection overruled.
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WITNESS:
ATTY. GALVAN:
 I dont have.
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Q. When you are receiving daily wage of P4.00 how much was your quincenal
together with your husband?
A. The highest salary I received for my own was P30.00 in one quincena.
Q. What about the salary of your husband, how much?
A. The same.
Q. Was this P30.00 per quincena later on increased?
A. There was an increase because formerly it was P4.00 now it is P8.00.
Q. In 1979 how much was your husbands salary per quincena?
A. In one quincena my husband receives P60.00 while I only receive P30.00. [17]
AGATON LIBAWAS:
Q. During your employment, do you sign payrolls everytime you draw your salary?
A. We sign on intermediate pad.
Q. You mean, the practice of the hacienda is to have the names of the laborers
receiving that salaries listed on that intermediate pad?
A. Yes, sir.[18]
AURELIO TANA:
Q. By the way, how many times did you receive your salaries in a month?
A. We receive our wages twice a month that is, every 15 days.
Q. Did you sign payrolls everytime you received your salaries?
A. In the pad paper as substitute payroll.
Q. Do you know if all the workers of the hacienda were listed in that payrolls?
A. Yes, sir.
Q. Who was in charge in giving your salaries?
A. Antero Maghari.[19]
These witnesses did not waver in their assertion that while Tana was hired by
Ayalde as an arador on pakyaw basis, he was also paid a daily wage which Ayaldes
overseer disbursed every fifteen (15) days. It is also undisputed that they were made
to acknowledge receipt of their wages by signing on sheets of ruled paper, which are
different from those presented by Ayalde as documentary evidence. In fine, we find that
the testimonies of Margarita Tana, Agaton Libawas and Aurelio Tana prevail over the
incomplete and inconsistent documentary evidence of Ayalde.
In the parallel case of Opulencia Ice Plant and Storage v. NLRC, the petitioners
argued that since Manuel P. Esitas name does not appear in the payrolls of the
company it necessarily means that he was not an employee. This Court held:
Petitioners further argue that complainant miserably failed to present any
documentary evidence to prove his employment. There was no timesheet, pay slip
and/or payroll/cash voucher to speak of. Absence of these material documents are
necessarily fatal to complainants 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. 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.[20] (Underscoring ours)
Clearly, then, the testimonial evidence of the claimant and her witnesses
constitute positive and credible evidence of the existence of an employer-employee
relationship between Tana and Ayalde. As the employer, the latter is duty-bound to
keep faithful and complete records of her business affairs, not the least of which would
be the salaries of the workers. And yet, the documents presented have been selective,
few and incomplete in substance and content. Consequently, Ayalde has failed to
convince us that, indeed, Tana was not her employee.
The argument is raised that Tana is an independenent contractor because he was
hired and paid wages on pakyaw basis. We find this assertion to be specious for
several reasons.
First, while Tana was sometimes hired as an arador or plower for intermittent
periods, he was hired to do other tasks in Ayaldes plantations. Ayalde herself admitted
as much, although she minimized the extent of Tanas labors. On the other hand, the
claimant and her witnesses were direct and firm in their testimonies, to wit:
MARGARITA TANA:
Q. Was your late husbands work continuous or not?
A. His work was continuous except on Sundays.
Q. Mrs. Witness, in January 1961, how many days in a week did your late
husband work?
A. 4 weeks in January 1961.
Q. And how many months for that year did he work?
A. 12 months.
Q. Is this working pattern of your husband, considering that you testified that he
worked continuously, the same all throughout his employment from 1961 to
1978?
A. Yes, he worked continuously from 1961 to 1978 for 6 days a week, 4 weeks a
month and 12 months each year.
Q. Mrs. Witness, how many months did your husband work in 1979 considering
that he died in 1979?
A. 3 months.
Q. What was the nature of the work of your late husband from 1961 until his death
in 1979?
A. Cutting canes, hauling canes with the use of canecarts, plowing, hauling
fertilizers, weeding and stubble cleaning.
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Q. Now, the other co-workers of yours, you said they were Agaton Libawas,
Narciso Dueas, Juan Dueas, and Aurelio Tana, what were their jobs?
A. Hauling canes by the use of bull carts and cutting canes. Their works are the
same with that of my husbands.
Q. But you mentioned among the duties of your husband as arador meaning
plowing the fields?
A. Yes, he was also plowing because that is one of his duties. [21]
AGATON LIBAWAS:
Q. How about petitioner Margarita Tana and the late Ignacio Tana, were they
regular workers, or extra workers?
A. They were regular workers.
Q. In your case, Mr. Witness, considering that according to you, you are only a
relief worker, please inform the Commission how many months each year
from 1961 to 1984 did you work in Hda. B-70 and Hda. B-15M with Conchita
Ayalde?
A. During milling season, I worked 2 months, during cultivation if they are short of
plowers then they would call me to work for at least 3 months as a plower.
Q. So, all in all, each year, from 1961 to 1984 your average working months in
Hda. B-70 and B-15M are 5 months each year?
A. Yes, sir.
Q. Mr. Witness, to prove that you have worked there, will you please inform at
least 5 laborers of Hda. B-70 and B-15M of Conchita Ayalde?
A. Juan Dueas, Narciso Dueas, Aurelio Tana, Ignacio and Margarita Tana.
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Q. Will you please inform the Commission if the deceased Ignacio Tana which is
according to you, was a regular worker of the 2 haciendas, if how many
months did he work during lifetime from 1961 until he died in 1979?
A. His work was continuous.
Q. And by continuous you mean he worked straight 12 months each year except
in 1979?
A. He worked only for 10 months because the 2 months are already preparation
for cultivation.
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Q. And according to you, in a years time, you worked only for at least 5 months in
Hda. B-70 and B-15M, is that correct?
A. Yes.
Q. And during this time that you are working in your riceland you will agree with
me that you do not know whether the laborers of this Hda. B-70 and Had B-
15M are really working because you are devoting your time in your riceland,
is that correct?
A. I knew because the place of their work is just near my house, it is along the
way.
Q. How about when the canes are already tall, can you actually see the workers in
Hda. B-70 and B-15M when you are busy at your riceland?
A. Yes, because they have to pass in my house.
Q. Is there no other passage in that hacienda except that road in front of your
house?
A. Yes.
Q. Are you sure about that?
A. Yes, I am sure.[22]
AURELIO TANA:
Q. Do you know what is the work of the petitioner during the time when you were
together working in the field?
A. We were working together, like cutting and loading canes, hoeing, weeding,
applying fertilizers, digging canals and plowing.
Q. During your employment in the said hacienda where were you residing?
A. There inside the hacienda.
Q. What about the petitioner?
A. The same.
Q. How far is your house from the house of the petitioner?
 A. About 20 arms-length.
Q. How far is Hda. B-70 from Hda. B-15.
A. It is very near it is divided by the road.
Q. What road are you referring to?
A. Highway road from Barangay Buenavista to La Granja.
Q. During your employment will you please inform the Commission the frequency
of work of the late Ignacio Tana?
A. 4 weeks a month, 6 days a week, 12 months a year.
Q. Why is it that you are in a position to inform the Commission about the period
of employment of Ignacio Tana?
A. Because we were together working.[23]
It is indubitable, therefore, that Tana worked continuously for Ayalde, not only
as arador on pakyaw basis, but as a regular farmhand, doing backbreaking jobs for
Ayaldes business. There is no shred of evidence to show that Tana was only a
seasonal worker, much less a migrant worker. All witnesses, including Ayalde herself,
testified that Tana and his family resided in the plantation. If he was a
mere pakyaw worker or independent contractor, then there would be no reason for
Ayalde to allow them to live inside her property for free. The only logical explanation is
that he was working for most part of the year exclusively for Ayalde, in return for which
the latter gratuitously allowed Tana and his family to reside in her property.
The Court of Appeals, in finding for Ayalde, relied on the claimants and her
witnesses admission that her husband was hired as an arador on pakyaw basis, but it
failed to appreciate the rest of their testimonies. Just because he was, for short periods
of time, hired on pakyaw basis does not necessarily mean that he was not employed to
do other tasks for the remainder of the year. Even Ayalde admitted that Tana did other
jobs when he was not hired to plow. Consequently, the conclusion culled from their
testimonies to the effect that Tana was mainly and solely an arador was at best a
selective appreciation of portions of the entire evidence. It was the Social Security
Commission that took into consideration all the documentary and testimonial evidence
on record.
Secondly, Ayalde made much ado of her claim that Tana could not be her
employee because she exercised no control over his work hours and method of
performing his task as arador. It is also an admitted fact that Tana, Jr. used his own
carabao and tools. Thus, she contends that, applying the control test, Tana was not an
employee but an independent contractor.
A closer scrutiny of the records, however, reveals that while Ayalde herself may
not have directly imposed on Tana the manner and methods to follow in performing his
tasks, she did exercise control through her overseer.
Be that as it may, the power of control refers merely to the existence of the
power. It is not essential for the employer to actually supervise the performance of
duties of the employee; it is sufficient that the former has a right to wield the
power.[24] Certainly, Ayalde, on her own or through her overseer, wielded the power to
hire or dismiss, to check on the work, be it in progress or quality, of the laborers. As the
owner/lessee of the plantations, she possessed the power to control everyone working
therein and everything taking place therein.
Jurisprudence provides other equally important considerations which support the
conclusion that Tana was not an independent contractor. First, Tana cannot be said to
be engaged in a distinct occupation or business. His carabao and plow may be useful
in his livelihood, but he is not independently engaged in the business of farming or
plowing. Second, he had been working exclusively for Ayalde for eighteen (18) years
prior to his demise. Third, there is no dispute that Ayalde was in the business of growing
sugarcane in the two plantations for commercial purposes. There is also no question
that plowing or preparing the soil for planting is a major part of the regular business of
Ayalde.
Under the circumstances, the relationship between Ayalde and Tana has more of
the attributes of employer-employee than that of an independent contractor hired to
perform a specific project. In the case of Dy Keh Beng v. International Labor,[25] we
cited our long-standing ruling in Sunripe Coconut Products Co. v. Court of Industrial
Relations, to wit:
When a worker possesses some attributes of an employee and others of an
independent contractor, which make him fall within an intermediate area, he may be
classified under the category of an employee when the economic facts of the relations
make it more nearly one of employment than one of independent business enterprise
with respect to the ends sought to be accomplished. (Underscoring Ours)[26]
We find the above-quoted ruling to be applicable in the case of Tana. There is
preponderance of evidence to support the conclusion that he was an employee rather
than an independent contractor.
The Court of Appeals also erred when it ruled, on the alternative, that if ever Tana
was an employee, he was still ineligible for compulsory coverage because he was not
paid any regular daily wage and he did not work for an uninterrupted period of at least
six months in a year in accordance with Section 8(j) (I) of the Social Security Law.There
is substantial testimonial evidence to prove that Tana was paid a daily wage, and he
worked continuously for most part of the year, even while he was also occasionally
called on to plow the soil on a pakyaw basis. As a farm laborer who has worked
exclusively for Ayalde for eighteen (18) years, Tana should be entitled to compulsory
coverage under the Social Security Law, whether his service was continuous or broken.
Margarita Tana alleged that SSS premiums were deducted from Tanas salary,
testifying, thus:
Q. Were there deductions from the salaries of your husband while he was
employed with the respondent from 1961 to 1979?
A. Yes, there were deductions but I do not know because they were the ones
deducting it.
Q. Why do you know that his salaries were deducted for SSS premiums?
A. Because Antero Maghari asked me and my husband to sign SSS papers and
he told us that they will take care of everything.
Q. How much were the deductions every payday?
 A. I do not know how much because our daily wage was only P4.00. [27]
Agaton Libawas, also testified:
Q. Mr. Witness, in your 15-day wages do you notice any deductions from it?
A. There were deductions and we were informed that it was for SSS.
Q. Mr. Witness, since when were there deductions from your salaries?
A. Since 1961.
Q. Up to when?
A. Up to 1979.
Q. Mr. Witness, are you a member of the SSS?
A. No.
Q. How about petitioner, if you know?
A. No, also.
Q. What happened to the deductions did you not ask your employer?
A. We asked but we were answered that we were being remitted for our SSS.
Q. Did you not verify?
A. No, because I just relied on their statement.[28]
Ayalde failed to counter these positive assertions. Even on the assumption that
there were no deductions, the fact remains that Tana was and should have been
covered under the Social Security Law. The circumstances of his employment place
him outside the ambit of the exception provided in Section 8(j) of Republic Act No. 1611,
as amended by Section 4 of R.A. 2658.
WHEREFORE, in view of all the foregoing, the Decision of the Court of Appeals
in C.A.-G.R. SP No. 16427 and the Resolution dated June 14, 1991 are hereby
REVERSED and SET ASIDE. The Resolution of the Social Security Commission in
SSC Case No. 8851 is REINSTATED.
No costs.
SO ORDERED.