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ACT NO. 8972
AN ACT PROVIDING FOR BENEFITS AND
PRIVILEGES TO SOLO PARENTS AND THEIR
CHILDREN, APPROPRIATING FUNDS THEREFOR
AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of
the Philippines Congress assembled:
Section 1. Title. - This Act shall be known as the "Solo
Parents' Welfare Act of 2000."
Section 2. Declaration of Policy. - It is the policy of the
State to promote the family as the foundation of the nation,
strengthen its solidarity and ensure its total development.
Towards this end, it shall develop a comprehensive program
of services for solo parents and their children to be carried
out by the Department of Social Welfare and Development
(DSWD), the Department of Health (DOH), the Department
of Education, Culture and Sports (DECS), the Department of
the Interior and Local Government (DILG), the Commission
on Higher Education (CHED), the Technical Education and
Skills Development Authority (TESDA), the National
Housing Authority (NHA), the Department of Labor and
Employment (DOLE) and other related government and
nongovernment agencies.
Section 3. Definition of Terms. - Whenever used in this Act,
the following terms shall mean as follows:
(a) "Solo parent" - any individual who falls under any of the
following categories:
(1) A woman who gives birth as a result of rape and other
crimes against chastity even without a final conviction of the
offender: Provided, That the mother keeps and raises the
child;
(2) Parent left solo or alone with the responsibility of
parenthood due to death of spouse;
(3) Parent left solo or alone with the responsibility of
parenthood while the spouse is detained or is serving
sentence for a criminal conviction for at least one (1) year;
(4) Parent left solo or alone with the responsibility of
parenthood due to physical and/or mental incapacity of
spouse as certified by a public medical practitioner;
(5) Parent left solo or alone with the responsibility of
parenthood due to legal separation or de facto separation
from spouse for at least one (1) year, as long as he/she is
entrusted with the custody of the children;
(6) Parent left solo or alone with the responsibility of
parenthood due to declaration of nullity or annulment of
marriage as decreed by a court or by a church as long as
he/she is entrusted with the custody of the children;
(7) Parent left solo or alone with the responsibility of
parenthood due to abandonment of spouse for at least one
(1) year;
(8) Unmarried mother/father who has preferred to keep and
rear her/his child/children instead of having others care for
them or give them up to a welfare institution;
(9) Any other person who solely provides parental care and
support to a child or children;
(10) Any family member who assumes the responsibility of
head of family as a result of the death, abandonment,
disappearance or prolonged absence of the parents or solo
parent.
A change in the status or circumstance of the parent
claiming benefits under this Act, such that he/she is no
longer left alone with the responsibility of parenthood, shall
terminate his/her eligibility for these benefits.
(b) "Children" - refer to those living with and dependent
upon the solo parent for support who are unmarried,
unemployed and not more than eighteen (18) years of age, or
even over eighteen (18) years but are incapable of self-
support because of mental and/or physical defect/disability.
(c) "Parental responsibility" - with respect to their minor
children shall refer to the rights and duties of the parents as
defined in Article 220 of Executive Order No. 209, as
amended, otherwise known as the "Family Code of the
Philippines."
(d) "Parental leave" - shall mean leave benefits granted to a
solo parent to enable him/her to perform parental duties and
responsibilities where physical presence is required.
(e) "Flexible work schedule" - is the right granted to a solo
parent employee to vary his/her arrival and departure time
without affecting the core work hours as defined by the
employer.
Section 4. Criteria for Support. - Any solo parent whose
income in the place of domicile falls below the poverty
threshold as set by the National Economic and Development
Authority (NEDA) and subject to the assessment of the
DSWD worker in the area shall be eligible for
assistance: Provided, however, That any solo parent whose

income is above the poverty threshold shall enjoy the
benefits mentioned in Sections 6, 7 and 8 of this Act.
Section 5. Comprehensive Package of Social Development
and Welfare Services. - A comprehensive package of social
development and welfare services for solo parents and their
families will be developed by the DSWD, DOH, DECS,
CHED, TESDA, DOLE, NHA and DILG, in coordination
with local government units and a nongovernmental
organization with proven track record in providing services
for solo parents.
The DSWD shall coordinate with concerned agencies the
implementation of the comprehensive package of social
development and welfare services for solo parents and their
families. The package will initially include:
(a) Livelihood development services which include trainings
on livelihood skills, basic business management, value
orientation and the provision of seed capital or job
placement.
(b) Counseling services which include individual, peer
group or family counseling. This will focus on the resolution
of personal relationship and role conflicts.
(c) Parent effectiveness services which include the provision
and expansion of knowledge and skills of the solo parent on
early childhood development, behavior management, health
care, rights and duties of parents and children.
(d) Critical incidence stress debriefing which includes
preventive stress management strategy designed to assist
solo parents in coping with crisis situations and cases of
abuse.
(e) Special projects for individuals in need of protection
which include temporary shelter, counseling, legal
assistance, medical care, self-concept or ego-building, crisis
management and spiritual enrichment.
Section 6. Flexible Work Schedule. - The employer shall
provide for a flexible working schedule for solo parents:
Provided, That the same shall not affect individual and
company productivity: Provided, further, That any employer
may request exemption from the above requirements from
the DOLE on certain meritorious grounds.
Section 7. Work Discrimination. - No employer shall
discriminate against any solo parent employee with respect
to terms and conditions of employment on account of his/her
status.
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Section 8. Parental Leave. - In addition to leave privileges
under existing laws, parental leave of not more than seven
(7) working days every year shall be granted to any solo
parent employee who has rendered service of at least one (1)
year.
Section 9. Educational Benefits. - The DECS, CHED and
TESDA shall provide the following benefits and privileges:
(1) Scholarship programs for qualified solo parents and their
children in institutions of basic, tertiary and technical/skills
education; and
(2) Nonformal education programs appropriate for solo
parents and their children.
The DECS, CHED and TESDA shall promulgate rules and
regulations for the proper implementation of this program.
Section 10. Housing Benefits. - Solo parents shall be given
allocation in housing projects and shall be provided with
liberal terms of payment on said government low-cost
housing projects in accordance with housing law provisions
prioritizing applicants below the poverty line as declared by
the NEDA.
Section 11. Medical Assistance. - The DOH shall develop a
comprehensive health care program for solo parents and
their children. The program shall be implemented by the
DOH through their retained hospitals and medical centers
and the local government units (LGUs) through their
provincial/district/city/municipal hospitals and rural health
units (RHUs).
Section 12. Additional Powers and Functions of the DSWD.
The DSWD shall perform the following additional
powers and functions relative to the welfare of solo parents
and their families:
(a) Conduct research necessary to: (1) develop a new body
of knowledge on solo parents; (2) define executive and
legislative measures needed to promote and protect the
interest of solo parents and their children; and (3) assess the
effectiveness of programs designed for disadvantaged solo
parents and their children;
(b) Coordinate the activities of various governmental and
nongovernmental organizations engaged in promoting and
protecting the interests of solo parents and their children;
and
(c) Monitor the implementation of the provisions of this Act
and suggest mechanisms by which such provisions are
effectively implemented.

Section 13. Implementing Rules and Regulations. - An
interagency committee headed by the DSWD, in
coordination with the DOH, DECS, CHED, TESDA, DOLE,
NHA, and DILG is hereby established which shall
formulate, within ninety (90) days upon the effectivity of
this Act, the implementing rules and regulations in
consultation with the local government units,
nongovernment organizations and people's organizations.
Section 14. Appropriations. - The amount necessary to carry
out the provisions of this Act shall be included in the budget
of concerned government agencies in the General
Appropriations Act of the year following its enactment into
law and thereafter.1awphil.net
Section 15. Repealing Clause. - All laws, decrees, executive
orders, administrative orders or parts thereof inconsistent
with the provisions of this Act are hereby repealed, amended
or modified accordingly.
Section 16. Separability Clause. - If any provision of this
Act is held invalid or unconstitutional, other provisions not
affected thereby shall continue to be in full force and effect.
Section 17. Effectivity Clause. - This Act shall take effect
fifteen (15) days following its complete publication in
the Official Gazette or in at least two (2) newspaper of
general circulation.
Approved.
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[REPUBLIC ACT NO. 10361]
AN ACT INSTITUTING POLICIES FOR THE
PROTECTION
AND WELFARE OF DOMESTIC WORKERS
Be it enacted by the Senate and House of Representatives of
the Philippines in Congress assembled:
ARTICLE I
GENERAL PROVISIONS
SECTION 1. Short Title. This Act shall be known as the
Domestic Workers Act or Batas Kasambahay.
SEC. 2. Declaration of Policies. It is hereby declared that:
(a) The State strongly affirms labor as a primary social force
and is committed to respect, promote, protect and realize the
fundamental principles and rights at work including, but not
limited to, abolition of child labor, elimination of all forms
of forced labor, discrimination in employment and
occupation, and trafficking in persons, especially women
and children;
(b) The State adheres to internationally accepted working
conditions for workers in general, and establishes labor
standards for domestic workers in particular, towards decent
employment and income, enhanced coverage of social
protection, respect for human rights and strengthened social
dialogue;
(c) The State recognizes the need to protect the rights of
domestic workers against abuse, harassment, violence,
economic exploitation and performance of work that is
hazardous to their physical and mental health; and
(d) The State, in protecting domestic workers and
recognizing their special needs to ensure safe and healthful
working conditions, promotes gender-sensitive measures in
the formulation and implementation of policies and
programs affecting the local domestic work.
SEC. 3. Coverage. This Act applies to all domestic
workers employed and working within the country.
SEC. 4. Definition of Terms. As used in this Act, the term:
(a) Debt bondage refers to the rendering of service by the
domestic worker as security or payment for a debt where the
length and nature of service is not clearly defined or when
the value of the service is not reasonably applied in the
payment of the debt.

(b) Deployment expenses refers to expenses that are directly
used for the transfer of the domestic worker from place of
origin to the place of work covering the cost of
transportation. Advances or loans by the domestic worker
are not included in the definition of deployment expenses.
(c) Domestic work refers to work performed in or for a
household or households.
(d) Domestic worker or Kasambahay refers to any person
engaged in domestic work within an employment
relationship such as, but not limited to, the following:
general househelp, nursemaid or yaya, cook, gardener, or
laundry person, but shall exclude any person who performs
domestic work only occasionally or sporadically and not on
an occupational basis.
The term shall not include children who are under foster
family arrangement, and are provided access to education
and given an allowance incidental to education, i.e. baon,
transportation, school projects and school activities.
(e) Employer refers to any person who engages and controls
the services of a domestic worker and is party to the
employment contract.
(f) Household refers to the immediate members of the family
or the occupants of the house that are directly provided
services by the domestic worker.
(g) Private Employment Agency (PEA) refers to any
individual, legitimate partnership, corporation or entity
licensed to engage in the recruitment and placement of
domestic workers for local employment.
(h) Working children, as used under this Act, refers to
domestic workers who are fifteen (15) years old and above
but below eighteen (18) years old.
ARTICLE II
RIGHTS AND PRIVILEGES
SEC. 5. Standard of Treatment. The employer or any
member of the household shall not subject a domestic
worker or kasambahay to any kind of abuse nor inflict any
form of physical violence or harassment or any act tending
to degrade the dignity of a domestic worker.
SEC. 6. Board, Lodging and Medical Attendance. The
employer shall provide for the basic necessities of the
domestic worker to include at least three (3) adequate meals
a day and humane sleeping arrangements that ensure safety.
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The employer shall provide appropriate rest and assistance
to the domestic worker in case of illnesses and injuries
sustained during service without loss of benefits.
At no instance shall the employer withdraw or hold in
abeyance the provision of these basic necessities as
punishment or disciplinary action to the domestic worker.
SEC. 7. Guarantee of Privacy. Respect for the privacy of
the domestic worker shall be guaranteed at all times and
shall extend to all forms of communication and personal
effects. This guarantee equally recognizes that the domestic
worker is obliged to render satisfactory service at all times.
SEC. 8. Access to Outside Communication. The employer
shall grant the domestic worker access to outside
communication during free time: Provided, That in case of
emergency, access to communication shall be granted even
during work time. Should the domestic worker make use of
the employers telephone or other communication facilities,
the costs shall be borne by the domestic worker, unless such
charges are waived by the employer.
SEC. 9. Right to Education and Training. The employer
shall afford the domestic worker the opportunity to finish
basic education and may allow access to alternative learning
systems and, as far as practicable, higher education or
technical and vocational training. The employer shall adjust
the work schedule of the domestic worker to allow such
access to education or training without hampering the
services required by the employer.
SEC. 10. Prohibition Against Privileged Information. All
communication and information pertaining to the employer
or members of the household shall be treated as privileged
and confidential, and shall not be publicly disclosed by the
domestic worker during and after employment. Such
privileged information shall be inadmissible in evidence
except when the suit involves the employer or any member
of the household in a crime against persons, property,
personal liberty and security, and chastity.
ARTICLE III
PRE-EMPLOYMENT
SEC. 11. Employment Contract. An employment contract
shall be executed by and between the domestic worker and
the employer before the commencement of the service in a
language or dialect understood by both the domestic worker
and the employer. The domestic worker shall be provided a
copy of the duly signed employment contract which must
include the following:

(a) Duties and responsibilities of the domestic worker;
(b) Period of employment;
(c) Compensation;
(d) Authorized deductions;
(e) Hours of work and proportionate additional payment;
(f) Rest days and allowable leaves;
(g) Board, lodging and medical attention;
(h) Agreements on deployment expenses, if any;
(i) Loan agreement;
(j) Termination of employment; and
(k) Any other lawful condition agreed upon by both parties.
The Department of Labor and Employment (DOLE) shall
develop a model employment contract for domestic workers
which shall, at all times, be made available free of charge to
domestic workers, employers, representative organizations
and the general public. The DOLE shall widely disseminate
information to domestic workers and employers on the use
of such model employment contract.
In cases where the employment of the domestic worker is
facilitated through a private employment agency, the PEA
shall keep a copy of all employment contracts of domestic
workers and shall be made available for verification and
inspection by the DOLE.
SEC. 12. Pre-Employment Requirement. Prior to the
execution of the employment contract, the employer may
require the following from the domestic worker:
(a) Medical certificate or a health certificate issued by a
local government health officer;
(b) Barangay and police clearance;
(c) National Bureau of Investigation (NBI) clearance; and
(d) Duly authenticated birth certificate or if not available,
any other document showing the age of the domestic worker
such as voters identification card, baptismal record or
passport.
However, Section 12(a), (b), (c) and (d) shall be standard
requirements when the employment of the domestic worker
is facilitated through the PEA.
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The cost of the foregoing shall be borne by the prospective
employer or agency, as the case may be.
SEC. 13. Recruitment and Finders Fees. Regardless of
whether the domestic worker was hired through a private
employment agency or a third party, no share in the
recruitment or finders fees shall be charged against the
domestic worker by the said private employment agency or
third party.
SEC. 14. Deposits for Loss or Damage. It shall be
unlawful for the employer or any other person to require a
domestic worker to make deposits from which deductions
shall be made for the reimbursement of loss or damage to
tools, materials, furniture and equipment in the household.
SEC. 15. Prohibition on Debt Bondage. It shall be
unlawful for the employer or any person acting on behalf of
the employer to place the domestic worker under debt
bondage.
SEC. 16. Employment Age of Domestic Workers. It shall
be unlawful to employ any person below fifteen (15) years
of age as a domestic worker. Employment of working
children, as defined under this Act, shall be subject to the
provisionsof Section 10(A), paragraph 2 of Section 12-A,
paragraph 4 of Section 12-D, and Section 13 of Republic
Act No. 7610, as amended, otherwise known as the Special
Protection of Children Against Child Abuse, Exploitation
and Discrimination Act.
Working children shall be entitled to minimum wage, and all
benefits provided under this Act.
Any employer who has been sentenced by a court of law of
any offense against a working child under this Act shall be
meted out with a penalty one degree higher and shall be
prohibited from hiring a working child.
SEC. 17. Employers Reportorial Duties. The employers
shall register all domestic workers under their employment
in the Registry of Domestic Workers in the barangay where
the employers residence is located. The Department of the
Interior and Local Government (DILG) shall, in
coordination with the DOLE, formulate a registration system
for this purpose.
SEC. 18. Skills Training, Assessment and Certification. To
ensure productivity and assure quality services, the DOLE,
through the Technical Education and Skills Development
Authority (TESDA), shall facilitate access of domestic
workers to efficient training, assessment and certification
based on a duly promulgated training regulation.

ARTICLE IV
EMPLOYMENT TERMS AND CONDITIONS
SEC. 19. Health and Safety. The employer shall safeguard
the health and safety of the domestic worker in accordance
with laws, rules and regulations, with due consideration of
the peculiar nature of domestic work.
SEC. 20. Daily Rest Period. The domestic worker shall be
entitled to an aggregate daily rest period of eight (8) hours
per day.
SEC. 21. Weekly Rest Period. The domestic worker shall
be entitled to at least twenty-four (24) consecutive hours of
rest in a week. The employer and the domestic worker shall
agree in writing on the schedule of the weekly rest day of
the domestic worker: Provided, That the employer shall
respect the preference of the domestic worker as to the
weekly rest day when such preference is based on religious
grounds. Nothing in this provision shall deprive the
domestic worker and the employer from agreeing to the
following:
(a) Offsetting a day of absence with a particular rest day;
(b) Waiving a particular rest day in return for an equivalent
daily rate of pay;
(c) Accumulating rest days not exceeding five (5) days; or
(d) Other similar arrangements.
SEC. 22. Assignment to Nonhousehold Work. No domestic
worker shall be assigned to work in a commercial, industrial
or agricultural enterprise at a wage rate lower than that
provided for agricultural or nonagricultural workers. In such
cases, the domestic worker shall be paid the applicable
minimum wage.
SEC. 23. Extent of Duty. The domestic worker and the
employer may mutually agree for the former to temporarily
perform a task that is outside the latters household for the
benefit of another household. However, any liability that
will be incurred by the domestic worker on account of such
arrangement shall be borne by the original employer. In
addition, such work performed outside the household shall
entitle the domestic worker to an additional payment of not
less than the existing minimum wage rate of a domestic
worker. It shall be unlawful for the original employer to
charge any amount from the said household where the
service of the domestic worker was temporarily performed.
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SEC 24. Minimum Wage. The minimum wage of domestic
workers shall not be less than the following:
(a) Two thousand five hundred pesos (P2,500.00) a month
for those employed in the National Capital Region (NCR);
(b) Two thousand pesos (P2,000.00) a month for those
employed in chartered cities and first class municipalities;
and
(c) One thousand five hundred pesos (P1,500.00) a month
for those employed in other municipalities.
After one (1) year from the effectivity of this Act, and
periodically thereafter, the Regional Tripartite and
Productivity Wage Boards (RTPWBs) shall review, and if
proper, determine and adjust the minimum wage rates of
domestic workers.
SEC 25. Payment of Wages. Payment of wages shall be
made on time directly to the domestic worker to whom they
are due in cash at least once a month. The employer, unless
allowed by the domestic worker through a written consent,
shall make no deductions from the wages other than that
which is mandated by law. No employer shall pay the wages
of a domestic worker by means of promissory notes,
vouchers, coupons, tokens, tickets, chits, or any object other
than the cash wage as provided for under this Act.
The domestic worker is entitled to a thirteenth month pay as
provided for by law.
SEC. 26. Pay Slip. The employer shall at all times provide
the domestic worker with a copy of the pay slip containing
the amount paid in cash every pay day, and indicating all
deductions made, if any. The copies of the pay slip shall be
kept by the employer for a period of three (3) years.
SEC. 27. Prohibition on Interference in the Disposal of
Wages. It shall be unlawful for the employer to interfere
with the freedom of any domestic worker to dispose of the
latters wages. The employer shall not force, compel or
oblige the domestic worker to purchase merchandise,
commodities or other properties from the employer or from
any other person, or otherwise make use of any store or
services of such employer or any other person.
SEC 28. Prohibition Against Withholding of Wages. It
shall be unlawful for an employer, directly or indirectly, to
withhold the wages of the domestic worker. If the domestic
worker leaves without any justifiable reason, any unpaid
salary for a period not exceeding fifteen (15) days shall be
forfeited. Likewise, the employer shall not induce the
domestic worker to give up any part of the wages by force,

stealth, intimidation, threat or by any other means
whatsoever.
SEC. 29. Leave Benefits. A domestic worker who has
rendered at least one (1) year of service shall be entitled to
an annual service incentive leave of five (5) days with
pay: Provided, That any unused portion of said annual leave
shall not be cumulative or carried over to the succeeding
years. Unused leaves shall not be convertible to cash.
SEC. 30. Social and Other Benefits. A domestic worker
who has rendered at least one (1) month of service shall be
covered by the Social Security System (SSS), the Philippine
Health Insurance Corporation (PhilHealth), and the Home
Development Mutual Fund or Pag-IBIG, and shall be
entitled to all the benefits in accordance with the pertinent
provisions provided by law.
Premium payments or contributions shall be shouldered by
the employer. However, if the domestic worker is receiving
a wage of Five thousand pesos (P5,000.00) and above per
month, the domestic worker shall pay the proportionate
share in the premium payments or contributions, as provided
by law.
The domestic worker shall be entitled to all other benefits
under existing laws.
SEC. 31. Rescue and Rehabilitation of Abused Domestic
Workers. Any abused or exploited domestic worker shall
be immediately rescued by a municipal or city social welfare
officer or a social welfare officer from the Department of
Social Welfare and Development (DSWD) in coordination
with the concerned barangay officials. The DSWD and the
DILG shall develop a standard operating procedure for the
rescue and rehabilitation of abused domestic workers, and in
coordination with the DOLE, for possible subsequent job
placement.
ARTICLE V
POST EMPLOYMENT
SEC. 32. Termination of Service. Neither the domestic
worker nor the employer may terminate the contract before
the expiration of the term except for grounds provided for in
Sections 33 and 34 of this Act. If the domestic worker is
unjustly dismissed, the domestic worker shall be paid the
compensation already earned plus the equivalent of fifteen
(15) days work by way of indemnity. If the domestic worker
leaves without justifiable reason, any unpaid salary due not
exceeding the equivalent fifteen (15) days work shall be
forfeited. In addition, the employer may recover from the
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domestic worker costs incurred related to the deployment
expenses, if any: Provided, That the service has been
terminated within six (6) months from the domestic
workers employment.
If the duration of the domestic service is not determined
either in stipulation or by the nature of the service, the
employer or the domestic worker may give notice to end the
working relationship five (5) days before the intended
termination of the service.
The domestic worker and the employer may mutually agree
upon written notice to pre-terminate the contract of
employment to end the employment relationship.
SEC. 33. Termination Initiated by the Domestic Worker.
The domestic worker may terminate the employment
relationship at any time before the expiration of the contract
for any of the following causes:
(a) Verbal or emotional abuse of the domestic worker by the
employer or any member of the household;
(b) Inhuman treatment including physical abuse of the
domestic worker by the employer or any member of the
household;
(c) Commission of a crime or offense against the domestic
worker by the employer or any member of the household;
(d) Violation by the employer of the terms and conditions of
the employment contract and other standards set forth under
this law;
(e) Any disease prejudicial to the health of the domestic
worker, the employer, or member/s of the household; and
(f) Other causes analogous to the foregoing.
SEC. 34. Termination Initiated by the Employer. An
employer may terminate the services of the domestic worker
at any time before the expiration of the contract, for any of
the following causes:
(a) Misconduct or willful disobedience by the domestic
worker of the lawful order of the employer in connection
with the formers work;
(b) Gross or habitual neglect or inefficiency by the domestic
worker in the performance of duties;
(c) Fraud or willful breach of the trust reposed by the
employer on the domestic worker;

(d) Commission of a crime or offense by the domestic
worker against the person of the employer or any immediate
member of the employers family;
(e) Violation by the domestic worker of the terms and
conditions of the employment contract and other standards
set forth under this law;
(f) Any disease prejudicial to the health of the domestic
worker, the employer, or member/s of the household; and
(g) Other causes analogous to the foregoing.
SEC. 35. Employment Certification. Upon the severance of
the employment relationship, the employer shall issue the
domestic worker within five (5) days from request a
certificate of employment indicating the nature, duration of
the service and work performance.
ARTICLE VI
PRIVATE EMPLOYMENT AGENCIES
SEC. 36. Regulation of Private Employment Agencies
(PEAs). The DOLE shall, through a system of licensing
and regulation, ensure the protection of domestic workers
hired through the PEAs.
The PEA shall be jointly and severally liable with the
employer for all the wages, wage-related benefits, and other
benefits due a domestic worker.
The provision of Presidential Decree No. 442, as amended,
otherwise known as the Labor Code of the Philippines, on
qualifications of the PEAs with regard to nationality,
networth, owners and officers, office space and other
requirements, as well as nontransferability of license and
commission of prohibited practices, shall apply.
In addition, PEAs shall have the following responsibilities:
(a) Ensure that domestic workers are not charged or levied
any recruitment or placement fees;
(b) Ensure that the employment agreement between the
domestic worker and the employer stipulates the terms and
conditions of employment and all the benefits prescribed by
this Act;
(c) Provide a pre-employment orientation briefing to the
domestic worker and the employer about their rights and
responsibilities in accordance with this Act;
(d) Keep copies of employment contracts and agreements
pertaining to recruited domestic workers which shall be
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made available during inspections or whenever required by
the DOLE or local government officials;
(e) Assist domestic workers with respect to complaints or
grievances against their employers; and
(f) Cooperate with government agencies in rescue operations
involving abused or exploited domestic workers.
ARTICLE VII
SETTLEMENT OF DISPUTES
SEC. 37. Mechanism for Settlement of Disputes. All labor-
related disputes shall be elevated to the DOLE Regional
Office having jurisdiction over the workplace without
prejudice to the filing of a civil or criminal action in
appropriate cases. The DOLE Regional Office shall exhaust
all conciliation and mediation efforts before a decision shall
be rendered.
Ordinary crimes or offenses committed under the Revised
Penal Code and other special penal laws by either party shall
be filed with the regular courts.
ARTICLE VIII
SPECIAL PROVISIONS
SEC. 38. Information Program. The DOLE shall, in
coordination with the DILG, the SSS, the PhilHealth and
Pag-IBIG develop and implement a continuous information
dissemination program on the provisions of this Act, both at
the national and local level, immediately after the enactment
of this law.
SEC. 39. Araw Ng Mga Kasambahay. The date upon
which the President shall approve this Domestic Workers
Act shall be designated as the Araw ng mga
Kasambahay.
ARTICLE IX
PENAL AND MISCELLANEOUS PROVISIONS
SEC. 40. Penalty. Any violation of the provisions of this
Act declared unlawful shall be punishable with a fine of not
less than Ten thousand pesos (P10,000.00) but not more than
Forty thousand pesos (P40,000.00) without prejudice to the
filing of appropriate civil or criminal action by the aggrieved
party.
SEC. 41. Transitory Provision; Non-Diminution of Benefits.
All existing arrangements between a domestic worker and
the employer shall be adjusted to conform to the minimum
 9

standards set by this Act within a period of sixty (60) days

after the effectivity of this Act: Provided, That adjustments
pertaining to wages shall take effect immediately after the
determination and issuance of the appropriate wage order by
the RTWPBs: Provided, further, That nothing in this Act
shall be construed to cause the diminution or substitution of
any benefits and privileges currently enjoyed by the
domestic worker hired directly or through an agency.

SEC. 42. Implementing Rules and Regulations. Within

ninety (90) days from the effectivity of this Act, the
Secretary of Labor and Employment, the Secretary of Social
Welfare and Development, the Secretary of the Interior and
Local Government, and the Director General of the
Philippine National Police, in coordination with other
concerned government agencies and accredited
nongovernment organizations (NGOs) assisting domestic
workers, shall promulgate the necessary rules and
regulations for the effective implementation of this Act.

ARTICLE X

FINAL PROVISIONS

SEC. 43. Separability Clause. If any provision or part of

this Act is declared invalid or unconstitutional, the
remaining parts or provisions not affected shall remain in
full force and effect.

SEC. 44. Repealing Clause. All articles or provisions of

Chapter III (Employment of Househelpers) of Presidential
Decree No. 442, as amended and renumbered by Republic
Act No. 10151 are hereby expressly repealed. All laws,
decrees, executive orders, issuances, rules and regulations or
parts thereof inconsistent with the provisions of this Act are
hereby repealed or modified accordingly.

SEC. 45. Effectivity Clause. This Act shall take effect

fifteen (15) days after its complete publication in the Official
Gazette or in at least two (2) national newspapers of general
circulation.

A. Coverage/Types of Employees
Art. 82, LCP and IRR; R.A. No. 10361, RA 8972
G.R. No. 79255 January 20, 1992
UNION OF FILIPRO EMPLOYEES (UFE), petitioner,
vs.
BENIGNO VIVAR, JR., NATIONAL LABOR
RELATIONS COMMISSION and NESTL
PHILIPPINES, INC. (formerly FILIPRO,
INC.), respondents.
GUTIERREZ, JR., J.:
This labor dispute stems from the exclusion of sales
personnel from the holiday pay award and the change of the
divisor in the computation of benefits from 251 to 261 days.
On November 8, 1985, respondent Filipro, Inc. (now Nestle
Philippines, Inc.) filed with the National Labor Relations
Commission (NLRC) a petition for declaratory relief
seeking a ruling on its rights and obligations respecting
claims of its monthly paid employees for holiday pay in the
light of the Court's decision in Chartered Bank Employees
Association v. Ople (138 SCRA 273 [1985]).
Both Filipro and the Union of Filipino Employees (UFE)
agreed to submit the case for voluntary arbitration and
appointed respondent Benigno Vivar, Jr. as voluntary
arbitrator.
On January 2, 1980, Arbitrator Vivar rendered a decision
directing Filipro to:
pay its monthly paid employees holiday pay pursuant to
Article 94 of the Code, subject only to the exclusions and
limitations specified in Article 82 and such other legal
restrictions as are provided for in the Code. (Rollo,
p. 31)
Filipro filed a motion for clarification seeking (1) the
limitation of the award to three years, (2) the exclusion of
salesmen, sales representatives, truck drivers, merchandisers
and medical representatives (hereinafter referred to as sales
personnel) from the award of the holiday pay, and (3)
deduction from the holiday pay award of overpayment for
overtime, night differential, vacation and sick leave benefits
due to the use of 251 divisor. (Rollo, pp. 138-145)
Petitioner UFE answered that the award should be made
effective from the date of effectivity of the Labor Code, that
their sales personnel are not field personnel and are therefore
entitled to holiday pay, and that the use of 251 as divisor is
10
an established employee benefit which cannot be
diminished.
On January 14, 1986, the respondent arbitrator issued an
order declaring that the effectivity of the holiday pay award
shall retroact to November 1, 1974, the date of effectivity of
the Labor Code. He adjudged, however, that the company's
sales personnel are field personnel and, as such, are not
entitled to holiday pay. He likewise ruled that with the grant
of 10 days' holiday pay, the divisor should be changed from
251 to 261 and ordered the reimbursement of overpayment
for overtime, night differential, vacation and sick leave pay
due to the use of 251 days as divisor.
Both Nestle and UFE filed their respective motions for
partial reconsideration. Respondent Arbitrator treated the
two motions as appeals and forwarded the case to the NLRC
which issued a resolution dated May 25, 1987 remanding the
case to the respondent arbitrator on the ground that it has no
jurisdiction to review decisions in voluntary arbitration cases
pursuant to Article 263 of the Labor Code as amended by
Section 10, Batas Pambansa Blg. 130 and as implemented
by Section 5 of the rules implementing B.P. Blg. 130.
However, in a letter dated July 6, 1987, the respondent
arbitrator refused to take cognizance of the case reasoning
that he had no more jurisdiction to continue as arbitrator
because he had resigned from service effective May 1, 1986.
Hence, this petition.
The petitioner union raises the following issues:
1) Whether or not Nestle's sales personnel are entitled to
holiday pay; and
2) Whether or not, concomitant with the award of holiday
pay, the divisor should be changed from 251 to 261 days and
whether or not the previous use of 251 as divisor resulted in
overpayment for overtime, night differential, vacation and
sick leave pay.
The petitioner insists that respondent's sales personnel are
not field personnel under Article 82 of the Labor Code. The
respondent company controverts this assertion.
Under Article 82, field personnel are not entitled to holiday
pay. Said article defines field personnel as "non-agritultural
employees who regularly perform their duties away from the
principal place of business or branch office of the employer
and whose actual hours of work in the field cannot be
determined with reasonable certainty."

The controversy centers on the interpretation of the clause
"whose actual hours of work in the field cannot be
determined with reasonable certainty."
It is undisputed that these sales personnel start their field
work at 8:00 a.m. after having reported to the office and
come back to the office at 4:00 p.m. or 4:30 p.m. if they are
Makati-based.
The petitioner maintains that the period between 8:00 a.m. to
4:00 or 4:30 p.m. comprises the sales personnel's working
hours which can be determined with reasonable certainty.
The Court does not agree. The law requires that the actual
hours of work in the field be reasonably ascertained. The
company has no way of determining whether or not these
sales personnel, even if they report to the office before 8:00
a.m. prior to field work and come back at 4:30 p.m, really
spend the hours in between in actual field work.
We concur with the following disquisition by the respondent
arbitrator:
The requirement for the salesmen and other similarly
situated employees to report for work at the office at 8:00
a.m. and return at 4:00 or 4:30 p.m. is not within the realm
of work in the field as defined in the Code but an exercise of
purely management prerogative of providing administrative
control over such personnel. This does not in any manner
provide a reasonable level of determination on the actual
field work of the employees which can be reasonably
ascertained. The theoretical analysis that salesmen and other
similarly-situated workers regularly report for work at 8:00
a.m. and return to their home station at 4:00 or 4:30 p.m.,
creating the assumption that their field work is supervised, is
surface projection. Actual field work begins after 8:00
a.m., when the sales personnel follow their field itinerary,
and ends immediately before 4:00 or 4:30 p.m. when they
report back to their office. The period between 8:00 a.m. and
4:00 or 4:30 p.m. comprises their hours of work in the field,
the extent or scope and result of which are subject to their
individual capacity and industry and which "cannot be
determined with reasonable certainty." This is the reason
why effective supervision over field work of salesmen and
medical representatives, truck drivers and merchandisers is
practically a physical impossibility. Consequently, they are
excluded from the ten holidays with pay award. (Rollo, pp.
36-37)
Moreover, the requirement that "actual hours of work in the
field cannot be determined with reasonable certainty" must
be read in conjunction with Rule IV, Book III of the
Implementing Rules which provides:
11
Rule IV Holidays with Pay
Sec. 1. Coverage This rule shall apply to all employees
except:
xxx xxx xxx
(e) Field personnel and other employees whose time and
performance is unsupervised by the employer . . . (Emphasis
supplied)
While contending that such rule added another element not
found in the law (Rollo, p. 13), the petitioner nevertheless
attempted to show that its affected members are not covered
by the abovementioned rule. The petitioner asserts that the
company's sales personnel are strictly supervised as shown
by the SOD (Supervisor of the Day) schedule and the
company circular dated March 15, 1984 (Annexes 2 and
3, Rollo, pp. 53-55).
Contrary to the contention of the petitioner, the Court finds
that the aforementioned rule did not add another element to
the Labor Code definition of field personnel. The clause
"whose time and performance is unsupervised by the
employer" did not amplify but merely interpreted and
expounded the clause "whose actual hours of work in the
field cannot be determined with reasonable certainty." The
former clause is still within the scope and purview of Article
82 which defines field personnel. Hence, in deciding
whether or not an employee's actual working hours in the
field can be determined with reasonable certainty, query
must be made as to whether or not such employee's time and
performance is constantly supervised by the employer.
The SOD schedule adverted to by the petitioner does not in
the least signify that these sales personnel's time and
performance are supervised. The purpose of this schedule is
merely to ensure that the sales personnel are out of the office
not later than 8:00 a.m. and are back in the office not earlier
than 4:00 p.m.
Likewise, the Court fails to see how the company can
monitor the number of actual hours spent in field work by an
employee through the imposition of sanctions on
absenteeism contained in the company circular of March 15,
1984.
The petitioner claims that the fact that these sales personnel
are given incentive bonus every quarter based on their
performance is proof that their actual hours of work in the
field can be determined with reasonable certainty.
The Court thinks otherwise.

The criteria for granting incentive bonus are: (1) attaining or
exceeding sales volume based on sales target; (2) good
collection performance; (3) proper compliance with good
market hygiene; (4) good merchandising work; (5) minimal
market returns; and (6) proper truck maintenance. (Rollo, p.
190).
The above criteria indicate that these sales personnel are
given incentive bonuses precisely because of the difficulty
in measuring their actual hours of field work. These
employees are evaluated by the result of their work and not
by the actual hours of field work which are hardly
susceptible to determination.
In San Miguel Brewery, Inc. v. Democratic Labor
Organization (8 SCRA 613 [1963]), the Court had occasion
to discuss the nature of the job of a salesman. Citing the case
of Jewel Tea Co. v. Williams, C.C.A. Okla., 118 F. 2d 202,
the Court stated:
The reasons for excluding an outside salesman are fairly
apparent. Such a salesman, to a greater extent, works
individually. There are no restrictions respecting the time he
shall work and he can earn as much or as little, within the
range of his ability, as his ambition dictates. In lieu of
overtime he ordinarily receives commissions as extra
compensation. He works away from his employer's place of
business, is not subject to the personal supervision of his
employer, and his employer has no way of knowing the
number of hours he works per day.
While in that case the issue was whether or not salesmen
were entitled to overtime pay, the same rationale for their
exclusion as field personnel from holiday pay benefits also
applies.
The petitioner union also assails the respondent arbitrator's
ruling that, concomitant with the award of holiday pay, the
divisor should be changed from 251 to 261 days to include
the additional 10 holidays and the employees should
reimburse the amounts overpaid by Filipro due to the use of
251 days' divisor.
Arbitrator Vivar's rationale for his decision is as follows:
. . . The new doctrinal policy established which ordered
payment of ten holidays certainly adds to or accelerates the
basis of conversion and computation by ten days. With the
inclusion of ten holidays as paid days, the divisor is no
longer 251 but 261 or 262 if election day is counted. This is
indeed an extremely difficult legal question of interpretation
which accounts for what is claimed as falling within the
concept of "solutio indebti."
12
When the claim of the Union for payment of ten holidays
was granted, there was a consequent need to abandon that
251 divisor. To maintain it would create an impossible
situation where the employees would benefit with additional
ten days with pay but would simultaneously enjoy higher
benefits by discarding the same ten days for purposes of
computing overtime and night time services and considering
sick and vacation leave credits. Therefore, reimbursement of
such overpayment with the use of 251 as divisor arises
concomitant with the award of ten holidays with pay. (Rollo,
p. 34)
The divisor assumes an important role in determining
whether or not holiday pay is already included in the
monthly paid employee's salary and in the computation of
his daily rate. This is the thrust of our pronouncement
in Chartered Bank Employees Association v. Ople (supra).
In that case, We held:
It is argued that even without the presumption found in the
rules and in the policy instruction, the company practice
indicates that the monthly salaries of the employees are so
computed as to include the holiday pay provided by law.
The petitioner contends otherwise.
One strong argument in favor of the petitioner's stand is the
fact that the Chartered Bank, in computing overtime
compensation for its employees, employs a "divisor" of 251
days. The 251 working days divisor is the result of
subtracting all Saturdays, Sundays and the ten (10) legal
holidays from the total number of calendar days in a year. If
the employees are already paid for all non-working days, the
divisor should be 365 and not 251.
In the petitioner's case, its computation of daily ratio since
September 1, 1980, is as follows:
monthly rate x 12 months
251 days
Following the criterion laid down in the Chartered
Bank case, the use of 251 days' divisor by respondent Filipro
indicates that holiday pay is not yet included in the
employee's salary, otherwise the divisor should have been
261.
It must be stressed that the daily rate, assuming there are no
intervening salary increases, is a constant figure for the
purpose of computing overtime and night differential pay
and commutation of sick and vacation leave credits.

Necessarily, the daily rate should also be the same basis for
computing the 10 unpaid holidays.
The respondent arbitrator's order to change the divisor from
251 to 261 days would result in a lower daily rate which is
violative of the prohibition on non-diminution of benefits
found in Article 100 of the Labor Code. To maintain the
same daily rate if the divisor is adjusted to 261 days, then
the dividend, which represents the employee's annual salary,
should correspondingly be increased to incorporate the
holiday pay. To illustrate, if prior to the grant of holiday
pay, the employee's annual salary is P25,100, then dividing
such figure by 251 days, his daily rate is P100.00 After the
payment of 10 days' holiday pay, his annual salary already
includes holiday pay and totals P26,100 (P25,100 + 1,000).
Dividing this by 261 days, the daily rate is still P100.00.
There is thus no merit in respondent Nestle's claim of
overpayment of overtime and night differential pay and sick
and vacation leave benefits, the computation of which are all
based on the daily rate, since the daily rate is still the same
before and after the grant of holiday pay.
Respondent Nestle's invocation of solutio indebiti, or
payment by mistake, due to its use of 251 days as divisor
must fail in light of the Labor Code mandate that "all doubts
in the implementation and interpretation of this Code,
including its implementing rules and regulations, shall be
resolved in favor of labor." (Article 4). Moreover, prior to
September 1, 1980, when the company was on a 6-day
working schedule, the divisor used by the company was 303,
indicating that the 10 holidays were likewise not paid. When
Filipro shifted to a 5-day working schebule on September 1,
1980, it had the chance to rectify its error, if ever there was
one but did not do so. It is now too late to allege payment by
mistake.
Nestle also questions the voluntary arbitrator's ruling that
holiday pay should be computed from November 1, 1974.
This ruling was not questioned by the petitioner union as
obviously said decision was favorable to it. Technically,
therefore, respondent Nestle should have filed a separate
petition raising the issue of effectivity of the holiday pay
award. This Court has ruled that an appellee who is not an
appellant may assign errors in his brief where his purpose is
to maintain the judgment on other grounds, but he cannot
seek modification or reversal of the judgment or affirmative
relief unless he has also appealed. (Franco v. Intermediate
Appellate Court, 178 SCRA 331 [1989], citing La Campana
Food Products, Inc. v. Philippine Commercial and Industrial
Bank, 142 SCRA 394 [1986]). Nevertheless, in order to
fully settle the issues so that the execution of the Court's
decision in this case may not be needlessly delayed by
13
another petition, the Court resolved to take up the matter of
effectivity of the holiday pay award raised by Nestle.
Nestle insists that the reckoning period for the application of
the holiday pay award is 1985 when the Chartered
Bank decision, promulgated on August 28, 1985, became
final and executory, and not from the date of effectivity of
the Labor Code. Although the Court does not entirely agree
with Nestle, we find its claim meritorious.
In Insular Bank of Asia and America Employees' Union
(IBAAEU) v. Inciong, 132 SCRA 663 [1984], hereinafter
referred to as the IBAA case, the Court declared that Section
2, Rule IV, Book III of the implementing rules and Policy
Instruction No. 9, issued by the then Secretary of Labor on
February 16, 1976 and April 23, 1976, respectively, and
which excluded monthly paid employees from holiday pay
benefits, are null and void. The Court therein reasoned that,
in the guise of clarifying the Labor Code's provisions on
holiday pay, the aforementioned implementing rule and
policy instruction amended them by enlarging the scope of
their exclusion. The Chartered Bank case reiterated the
above ruling and added the "divisor" test.
However, prior to their being declared null and void, the
implementing rule and policy instruction enjoyed the
presumption of validity and hence, Nestle's non-payment of
the holiday benefit up to the promulgation of the IBAA case
on October 23, 1984 was in compliance with these
presumably valid rule and policy instruction.
In the case of De Agbayani v. Philippine National Bank, 38
SCRA 429 [1971], the Court discussed the effect to be given
to a legislative or executive act subsequently declared
invalid:
xxx xxx xxx
. . . It does not admit of doubt that prior to the declaration of
nullity such challenged legislative or executive act must
have been in force and had to be complied with. This is so as
until after the judiciary, in an appropriate case, declares its
invalidity, it is entitled to obedience and respect. Parties may
have acted under it and may have changed their positions.
What could be more fitting than that in a subsequent
litigation regard be had to what has been done while such
legislative or executive act was in operation and presumed to
be valid in all respects. It is now accepted as a doctrine that
prior to its being nullified, its existence as a fact must be
reckoned with. This is merely to reflect awareness that
precisely because the judiciary is the government organ
which has the final say on whether or not a legislative or
executive measure is valid, a period of time may have
 14

elapsed before it can exercise the power of judicial review holiday pay shall be 251 days. The holiday pay as above
that may lead to a declaration of nullity. It would be to directed shall be computed from October 23, 1984. In all
deprive the law of its quality of fairness and justice then, if other respects, the order of the respondent arbitrator is
there be no recognition of what had transpired prior to such hereby AFFIRMED.
adjudication.
SO ORDERED.
In the language of an American Supreme Court decision:
"The actual existence of a statute, prior to such a
determination of [unconstitutionality], is an operative fact
and may have consequences which cannot justly be ignored.
The past cannot always be erased by a new judicial
declaration. The effect of the subsequent ruling as to
invalidity may have to be considered in various aspects,
with respect to particular relations, individual and corporate,
and particular conduct, private and official." (Chicot County
Drainage Dist. v. Baxter States Bank, 308 US 371, 374
[1940]). This language has been quoted with approval in a
resolution in Araneta v. Hill (93 Phil. 1002 [1952]) and the
decision in Manila Motor Co., Inc. v. Flores (99 Phil. 738
[1956]). An even more recent instance is the opinion of
Justice Zaldivar speaking for the Court in Fernandez
v. Cuerva and Co. (21 SCRA 1095 [1967]. (At pp. 434-435)

The "operative fact" doctrine realizes that in declaring a law

or rule null and void, undue harshness and resulting
unfairness must be avoided. It is now almost the end of
1991. To require various companies to reach back to
1975 now and nullify acts done in good faith is unduly
harsh. 1984 is a fairer reckoning period under the facts of
this case.

Applying the aforementioned doctrine to the case at bar, it is

not far-fetched that Nestle, relying on the implicit validity of
the implementing rule and policy instruction before this
Court nullified them, and thinking that it was not obliged to
give holiday pay benefits to its monthly paid employees,
may have been moved to grant other concessions to its
employees, especially in the collective bargaining
agreement. This possibility is bolstered by the fact that
respondent Nestle's employees are among the highest paid in
the industry. With this consideration, it would be unfair to
impose additional burdens on Nestle when the non-payment
of the holiday benefits up to 1984 was not in any way
attributed to Nestle's fault.

The Court thereby resolves that the grant of holiday pay be

effective, not from the date of promulgation of the Chartered
Bank case nor from the date of effectivity of the Labor
Code, but from October 23, 1984, the date of promulgation
of the IBAA case.

WHEREFORE, the order of the voluntary arbitrator in

hereby MODIFIED. The divisor to be used in computing

G.R. No. L-24394 August 30, 1968
JUANITO CARLOS, petitioner-appellant,
vs.
ANTONIO J. VILLEGAS, as Mayor, City of Manila
and/or EULOGIO SAMIO, as Chief, Manila Fire.
Juanito Carlos for and in his behalf as petitioner-appellant.
Assistant City Fiscal Olimpio R. Navarro for respondents-
appellees.
ANGELES, J.:
This is an appeal from the decision of the Court of First
Instance of Manila dismissing the petition
for mandamus(Civil Case No. 53514) seeking to order the
respondents to cause the City of Manila to pay petitioner and
other members of the Uniformed Force Division of the
Manila Fire Department (MFD) for overtime services
rendered from January 1, 1962, up to the date when the
petition was filed January 4, 1963; to enforce immediately
the 40-Hour a Week Work Law to petitioner and said other
members of the MFD; and to pay damages sustained by
them as a consequence of the acts complained
of. 1wph1.t
The facts of the case are set forth in the stipulation of facts
submitted by the parties in the lower court, to wit: .
1. Under Sec. 15 of the Revised Charter of the City of
Manila (Rep. Act 409, as amended), "there shall be a chief
of the Fire Department, ... who shall have the management
and control of all matters relating to the administration of
said department, and the organization, government,
discipline, and disposition of fire forces; ... [Emphasis
supplied]
2. Pursuant to the foregoing provision, from September 16,
1957, to the present, the petitioner and other members of the
Uniformed Force Division of the Manila Fire Department
have been required and ordered by the Chief of the Manila
Fire Department, upon approval of the City Mayor, the
Commissioner of the Civil Service and the Office of the
President, to be 24 hours on duty and 24 hours off duty,
alternately; that is, a member of the MFD Uniformed Force
Division reports to his station at 8:00 o'clock in the morning
and continues on duty until 8:00 o'clock of the following
morning for 24 hours; he is then off duty for the next 24
hours immediately thereafter; this schedule continuous
throughout the days of the week regardless of Saturdays,
Sundays and holidays; for an average of eighty-four (84)
hours a week the firemen stay at the station and while there,
their duties are to clean and maintain the station, fire engines
15
or apparatuses and equipment to respond to fire and to
perform other duties required by ordinances and laws;
during the 24 hours' stay in the station, unless they are out
working to fight and extinguish fires, the firemen are given
time to rest from 12:00 noon to 4:00 o'clock in the
afternoon, and time to sleep from 9:00 o'clock in the evening
to 6:00 o'clock the following morning.
3. On July 10, 1957, the Chief of the Manila Fire
Department requested the Office of the President for
authority, in the interest of the service, for the members of
the Uniformed Force Division and of the Fire Alarm and
Radio Division of the department to render service without
overtime pay beyond the 40-hour-5-day a week requirement
of the law.
4. On December 9, 1962, a petition was addressed to the
Mayor, City of Manila, through the Chief, Fire Department,
Manila, claiming payment for overtime services rendered
effective January 1, 1962 and demanding the enforcement of
the 40-hour a week work law with respect to the Uniformed
Force Division of the Manila Fire Department, and the reply
thereto was that services rendered beyond a regular period
fixed by R.A. No. 1880 will not entitle the employee to
overtime pay as a matter of legal right, citing Opinion No.
218, Series of 1957, of the Secretary of Justice.
5. On December 26, 1962, petitioner addressed a petition to
His Excellency, the President of the Philippines, petitioning
also the latter to order the City of Manila to pay petitioner
and other members of the MFD Uniformed Force Division
for overtime services rendered during 1962 and caused to be
enforced the 40-hour a week law and there was no favorable
reply. "6. The parties herein reserve the right to submit
additional evidence should a necessity therefor arise.
"1wph1.t
No additional evidence was submitted thereafter, and upon
the foregoing stipulation of facts and the law applicable
thereon, the lower court dismissed the petition.
The issue for adjudication is whether the petitioner-appellant
and other firemen similarly situated are entitled to collect
overtime pay for overtime services rendered by them since
January 1, 1962.
The provisions of law that resolve the issue are neither those
of Republic Act 1880, otherwise known as the Forty Hour
Week Work Law, nor Commonwealth Act 444, the Eight-
Hour Labor Law, as suggested by the petitioner-appellant,
but the following sections of the Revised Administrative
Code, to wit: .

SEC. 566. Extension of hours and requirement of overtime
work. When the interests of the public service so require,
the head of any Department, Bureau, or Office may extend
the daily hours of labor, in what manner so ever fixed, for
any or all of the employees under him, and may likewise
require any or all of them to do overtime work not only on
work days but also on holidays.".
SEC. 259. Inhibition against payment of extra
compensation. In the absence of special provision,
persons regularly and permanently appointed under the Civil
Service Law or whose salary, wages or emoluments are
fixed by law or regulation shall not, for any service rendered
or labor done by them on holidays or for other overtime
work, receive or be paid any additional compensation; nor,
in the absence of special provision, shall any officer or
employee in an branch of the Government service receive
additional compensation on account of the discharge of
duties pertaining to the position of another or for the
performance of any public service whatever, whether such
service is rendered voluntarily or exacted of him under
authority of law." .
The petitioner-appellant contends that the above-quoted
portions of the Revised Administrative Code have been
repealed by the provisions of Commonwealth Act 444, in so
far as the provisions of the former are inconsistent with the
latter. The contention is erroneous. This Court has explicitly
declared1 that the Eight-Hour Labor Law was not intended
to apply to civil service employees who are still governed by
the above provisions of the Revised Administrative Code.
As there appears to be no debate over the employment of
petitioner-appellant and the other firemen similarly situated
as falling under the civil service, they being employees of
the City of Manila, a municipal corporation, in its
governmental capacity, We perceive no reason to deviate
from said ruling. And as We hold that the above sections of
the Revised Administrative Code are still legally in force, it
necessarily follows that Rule XV, section 3 of the Civil
Service Rules, a similar provision promulgated pursuant to
that of Section 16(e) of the Civil Service Act of 1959
(Republic Act No. 2260) is likewise applicable to petitioner-
appellant. Said provision reads:.
SEC. 3. When the nature of the duties to be performed or the
interest of the public service so requires, the head of any
Department or agency may extend the daily hours of work
specified for any or all the employees under him, and such
extension shall be without additional compensation unless
otherwise provided by law. Office and employees may be
required by the head of the Department or agency to work
on Saturdays, Sundays and public holidays also, without
16
additional compensation unless otherwise specifically
authorized by law.
It needs no lengthy explanation that the nature of work of a
fireman requires him to be always on the alert to respond to
fire alarms which may occur at any time of the day, for the
exigency of the service necessitates a round-the-clock
observance of his duties, which situation excepts him from
the applicability of Section 562 of the Revised
Administrative Code, as amended by Republic Act 18809
the Forty-Hour a Week Work Law, which provides, in part:
.1wph1.t
Such hours, except for schools, courts, hospitals and health
clinics or where the exigencies of service so require, shall be
as prescribed in the Civil Service Rules and as otherwise
from time to time disposed in temporary executive orders in
the discretion of the President of the Philippines but shall be
eight (8) hours a day, for five (5) days a week or a total of
forty (40) hours a week, exclusive of the time for lunch.
[Emphasis supplied].
Parallel to the instant case are the circumstances obtaining
in Department of Public Services Labor Union vs. CIR, et
al.,2 where this Court held that in view of the exigency of the
service, garbage collectors in Manila are not entitled to the
benefits of the Forty-Hour a Week Work Law.
In the light of the foregoing, the conclusion is inevitable that
the petitioner-appellant and other firemen of his situation are
not entitled to overtime pay and to the coverage of the said
Forty-Hour a Week Work Law.
Parenthetically, a side issue has come up in this appeal
during its pendency, and that is whether or not the City
Fiscal of Manila should continue his appearance for the
respondents-appellees, despite the creation of the office and
subsequent appointment of a City Legal Officer of Manila,
pursuant to Republic Act 5185, known as the
Decentralization Act of 1967, to take charge of civil cases
concerning the City. We believe this is not the proper forum
to first pass upon the question since the motion for
withdrawal of appearance filed by the City Fiscal and the
opposition thereto put at issue the validity of an
ordinance3 passed by the City Council of Manila which is
alleged to be in conflict with the said Decentralization Act.
Anyway, the said motion for withdrawal of appearance was
filed only on May 19, 1968, long after August 18, 1965,
when the case had been rested for resolution and when there
was no more need for further representation in behalf of the
parties.

G.R. No. L-18939 August 31, 1964
NATIONAL WATERWORKS and SEWERAGE
AUTHORITY, petitioner,
vs.
NWSA CONSOLIDATED UNIONS, ET
AL., respondents.
Govt. Corp. Counsel Simeon M. Gopengco and Asst. Govt.
Corp. Counsel Arturo B. Santos for petitioner.
Cipriano Cid and Associates and Israel Bocobo for
respondents.
Alfredo M. Montesa for intervenor-respondent.
BAUTISTA ANGELO, J.:
Petitioner National Waterworks & Sewerage Authority is a
government-owned and controlled corporation created under
Republic Act No. 1383, while respondent NWSA
Consolidated Unions are various labor organizations
composed of laborers and employees of the NAWASA. The
other respondents are intervenors Jesus Centeno, et al.,
hereinafter referred to as intervenors.
Acting on a certification of the President of the Philippines,
the Court of Industrial Relations conducted a hearing on
December 5, 1957 on the controversy then existing between
petitioner and respondent unions which the latter embodied
in a "Manifesto" dated December 51, 1957, namely:
implementation of the 40-Hour Week Law (Republic Act
No. 1880); alleged violations of the collective bargaining
agreement dated December 28, 1956 concerning "distress
pay"; minimum wage of P5.25; promotional appointments
and filling of vacancies of newly created positions;
additional compensation for night work; wage increases to
some laborers and employees; and strike duration pay. In
addition, respondent unions raised the issue of whether the
25% additional compensation for Sunday work should be
included in computing the daily wage and whether, in
determining the daily wage of a monthly-salaried employee,
the salary should be divided by 30 days.
On December 13, 1957, petitioner and respondent unions,
conformably to a suggestion of the Court of Industrial
Relations, submitted a joint stipulation of facts on the issues
concerning the 40-Hour Week Law, "distress pay,"
minimum wage of P5.25, filling of vacancies, night
compensation, and salary adjustments, reserving the right to
present evidence on matters not covered therein. On
December 4, 1957, respondent intervenors filed a petition in
intervention on the issue for additional compensation for
night work. Later, however, they amended their petition by
including a new demand for overtime pay in favor of Jesus
17
Centeno, Cesar Cabrera, Feliciano Duiguan, Cecilio
Remotigue, and other employees receiving P4,200.00 per
annum or more.
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. 1wph1.t
On February 5, 1958, petitioner filed a motion to dismiss the
claim for overtime pay alleging that respondent Court of
Industrial Relations was without jurisdiction to pass upon
the same because, as mere intervenors, the latter cannot raise
new issues not litigated in the principal case, the same not
being the lis mota therein involved. To this motion the
intervenors filed an opposition. Thereafter, respondent court
issued an order allowing the issue to be litigated. Petitioner's
motion to reconsider having been denied, it filed its answer
to the petition for intervention. Finally, on January 16, 1961,
respondent court rendered its decision stating substantially
as follows:
The NAWASA is an agency not performing governmental
functions and, therefore, is liable to pay additional
compensation for work on Sundays and legal holidays
conformably to Commonwealth Act No. 444, known as the
Eight-Hour Labor Law, even if said days should be within
the staggered five work days authorized by the President; the
intervenors do not fall within the category of "managerial
employees" as contemplated in Republic Act 2377 and so
are not exempt from the coverage of the Eight-Hour Labor
Law; even those intervenors attached to the General
Auditing Office and the Bureau of Public Works come
within the purview of Commonwealth Act No. 444; the
computation followed by NAWASA in computing overtime
compensation is contrary to Commonwealth Act 444; the
undertime of a worker should not be set-off against the
worker in determining whether the latter has rendered
service in excess of eight hours for that day; in computing
the daily wage of those employed on daily basis, the
additional 25% compensation for Sunday work should be
included; the computation used by the NAWASA for
monthly salaried employees to wit, dividing the monthly
basic pay by 30 is erroneous; the minimum wage awarded
by respondent court way back on November 25, 1950 in
Case No. 359-V entitled MWD Workers Union v.
Metropolitan Water District, applies even to those who were
employed long after the promulgation of the award and even
if their workers are hired only as temporary, emergency and
casual workers for a definite period and for a particular
project; the authority granted to NAWASA by the President

to stagger the working days of its workers should be limited
exclusively to those specified in the authorization and
should not be extended to others who are not therein
specified; and under the collective bargaining agreement
entered into between the NAWASA and respondent unions
on December 28, 1956, as well as under Resolution No. 29,
series of 1957 of the Grievance Committee, even those who
work outside the sewerage chambers should be paid 25%
additional compensation as "distress pay."
Its motion for reconsideration having been denied,
NAWASA filed the present petition for review raising
merely questions of law. Succinctly, these questions are:
1. Whether NAWASA is performing governmental
functions and, therefore, essentially a service agency of the
government;
2. Whether NAWASA is a public utility and, therefore,
exempted from paying additional compensation for work on
Sundays and legal holidays;
3. Whether the intervenors are "managerial employees"
within the meaning of Republic Act 2377 and, therefore, not
entitled to the benefits of Commonwealth Act No. 444, as
amended;
4. Whether respondent Court of Industrial Relations has
jurisdiction to adjudicate overtime pay considering that this
issue was not among the demands of respondent union in the
principal case but was merely dragged into the case by the
intervenors;
5. Whether those attached to the General Auditing Office
and the Bureau of Public Works come within the purview of
Commonwealth Act No. 444, as amended;
6. In determining whether one has worked in excess of eight
hours, whether the undertime for that day should be set off;
7. In computing the daily wage, whether the additional
compensation for Sunday work should be included;
8. What is the correct method to determine the equivalent
daily wage of a monthly salaried employee, especially in a
firm which is a public utility?;
9. Considering that the payment of night compensation is
not by virtue of any statutory provision but emanates only
from an award of respondent Court of Industrial Relations,
whether the same can be made retroactive and cover a
period prior to the promulgation of the award;
18
10. Whether the minimum wage fixed and awarded by
respondent Court of Industrial Relations in another case
(MWD Workers Union v. MWD CIR Case No. 359-V)
applies to those employed long after the promulgation
thereof, whether hired as temporary, emergency and casual
workers for a definite period and for a specific project;
11. How should the collection bargaining agreement of
December 28, 1956 and Resolution No. 29, series of 1957 of
the Grievance Committee be interpreted and construed
insofar as the stipulations therein contained relative to
"distress pay" is concerned?; and
12. Whether, under the first indorsement of the President of
the Philippines dated August 12, 1957, which authorizes
herein petitioner to stagger the working days of its
employees and laborers, those whose services are
indispensably continuous throughout the year may be
staggered in the same manner as the pump, valve, filter and
chlorine operators, guards, watchmen, medical services, and
those attached to the recreational facilities.
DISCUSSION OF THE ISSUES
1. Is NAWASA an agency that performs governmental
functions and, therefore, essentially a service agency of the
government? Petitioner sustains the affirmative because,
under Republic Act No. 1383, it is a public corporation, and
such it exist a an agency independent of the Department of
Public Works of our government. It also contends that under
the same Act the Public Service Commission does not have
control, supervision or jurisdiction over it in the fixing of
rates concerning of the operation of the service. It can also
incur indebtedness or issue bonds that are exempt from
taxation which circumstance implies that it is essentially a
government- function corporation because it enjoys that
attribute of sovereignty. Petitioner likewise invokes the
opinion of the Secretary of Justice which holds that the
NAWASA being essentially a service agency of the
government can be classified as a corporation performing
governmental function.
With this contention, we disagree. While under republic Act
No. 1383 the NAWASA is considered as a public
corporation it does not show that it was so created for the
government of a portion of the State. It should be borne in
mind that there are two kinds of public corporation, namely,
municipal and non-municipal. A municipal corporation in its
strict is the body politic constituted by the inhabitants of a
city or town for the purpose of local government thereof. It
is the body politic established by law particularly as an
agency of the State to assist in the civil government of the
country chiefly to regulate the local and internal affairs of

the city or town that is incorporated (62 C.J.S., p. 61). Non-
municipal corporations, on the other hand, are public
corporations created as agencies of the State for limited
purposes to take charge merely of some public or state work
other than community government (Elliot, Municipal
Corporations, 3rd ed., p. 7; McQuillin, Mun. Corp., 3rd ed.,
Vol. 1, p. 476).
The National Waterworks and Sewerage Authority was not
created for purposes of local government. It was created for
the "purpose of consolidating and centralizing all
waterworks, sewerage and drainage system in the
Philippines under one control and direction and general
supervision." The NAWASA therefore, though a public
corporation, is not a municipal corporation, because it is not
an agency of the State to regulate or administer the local
affairs of the town, city, or district which is incorporated.
Moreover, the NAWASA, by its charter, has personality and
power separate and distinct from the government. It is an
independent agency of the government although it ids
placed, for administrative purposes, under the Department of
Public Works and Communications. It has continuous
succession under its corporate name and sue and be sued in
court. It has corporate power to exercised by its board of
directors; it has its own assets and liabilities; and it may
charge rates for its services.
In Bacani vs. National Coconut Corporation, 53 O.G., 2798,
we stated: "To recapitulate, we may mention that the term
'Government of the Republic of the Philippines'... refers only
to that government entity through which the functions of the
government are exercised as an attribute of sovereignty, and
in this are included those arms through which political
authority is made effective whether they be provincial,
municipal or other form of local government. These are
what we call municipal corporations. They do not include
government entities which are given a corporate personality
separate and distinct from the government and which are
governed by the Corporation Law. Their powers, duties and
liabilities have to be determined in the light of that law and
of their corporate charter."
The same conclusion may be reached by considering the
powers, functions and activities of the NAWASA which are
enumerated in Section 2, Republic Act No. 1383, among
others, as follows:
(e) To construct, maintain and operate mains pipes, water
reservoirs, machinery, and other waterworks for the purpose
of supplying water to the inhabitants of its zone, both
domestic and other purposes; to purify the source of supply,
regulate the control and use, and prevent the waste of water;
19
and to fix water rates and provide for the collection of rents
therefor;
(f) To construct, maintain and operate such system of
sanitary sewers as may be necessary for the proper sanitation
of the cities and towns comprising the Authority and to
charge and collect such sums for construction and rates for
this service as may be determined by the Board to be
equitable and just;
(g) To acquire, purchase, hold, transfer, sell, lease, rent,
mortgage, encumber, and otherwise dispose of real and
personal property, including rights and franchises, within the
Philippines, as authorized by the purpose for which the
Authority was created and reasonably and necessarily
required of the transaction of the lawful business of the
same, unless otherwise provided in this Act;
The business of providing water supply and sewerage
service, as this Court held, "may for all practical purposes be
likened to an industry engaged in by coal companies, gas
companies, power plants, ice plants, and the like"
(Metropolitan Water District v. Court of Industrial
Relations, et al., L-4488, August 27, 1952). These are but
mere ministrant functions of government which are aimed at
advancing the general interest of society. As such they are
optional (Bacani v. National Coconut Corporation, supra).
And it has been held that "although the state may regulate
the service and rates of water plants owned and operated by
municipalities, such property is not employed for
governmental purposes and in the ownership operation
thereof the municipality acts in its proprietary capacity, free
from legislative interference" (1 McQuillin, p. 683).
In Mendoza v. De Leon, 33 Phil., 508, 509, this Court also
held:
Municipalities of the Philippine Islands organized under the
Municipal Code have both governmental and corporate or
business functions. Of the first class are the adoption of
regulations against fire and disease, preservation of the
public peace, maintenance of municipal prisons,
establishment of primary schools and post-offices, etc. Of
the latter class are the establishment of municipal
waterworks for the use of the inhabitants, the construction
and maintenance of municipal slaughterhouses, markets,
stables, bathing establishments, wharves, ferries, and
fisheries. ...
On the strength of the foregoing considerations, our
conclusions is that the NAWASA is not an agency
performing governmental functions. Rather, it performs
proprietary functions, and as such comes within the
coverage of Commonwealth Act No. 444.

2. We agree with petitioner that the NAWASA is a public
utility because its primary function is to construct, maintain
and operate water reservoirs and waterworks for the purpose
of supplying water to the inhabitants, as well as consolidate
and centralize all water supplies and drainage systems in the
Philippines. We likewise agree with petitioner that a public
utility is exempt from paying additional compensation for
work on Sundays and legal holidays conformably to Section
4 of Commonwealth Act No. 444 which provides that the
prohibition, regarding employment of Sundays and holidays
unless an additional sum of 25% of the employee's regular
remuneration is paid shall not apply to public utilities such
as those supplying gas, electricity, power, water or providing
means of transportation or communication. In other words,
the employees and laborers of NAWASA can be made to
work on Sundays and legal holidays without being required
to pay them an additional compensation of 25%.
It is to be noted, however, that in the case at bar it has been
stipulated that prior to the enactment of Republic Act No.
1880, providing for the implementation of the 40-Hour
Week Law, the Metropolitan Water District had been paying
25% additional compensation for work on Sundays and legal
holidays to its employees and laborers by virtue of
Resolution No. 47, series of 1948, of its board of Directors,
which practice was continued by the NAWASA when the
latter took over the service. And in the collective bargaining
agreement entered into between the NAWASA and
respondent unions it was agreed that all existing benefits
enjoyed by the employees and laborers prior to its effectivity
shall remain in force and shall form part of the agreement,
among which certainly is the 25% additional compensation
for work on Sundays and legal holidays therefore enjoyed by
said laborers and employees. It may, therefore, be said that
while under Commonwealth Act No. 444 a public utility is
not required to pay additional compensation to its employees
and workers for work done on Sundays and legal holidays,
there is, however, no prohibition for it to pay such additional
compensation if it voluntarily agrees to do so. The
NAWASA committed itself to pay this additional
compensation. It must pay not because of compulsion of law
but because of contractual obligation.
3. This issue raises the question whether the intervenors are
"managerial employees" within the meaning of Republic Act
2377 and as such are not entitled to the benefits of
Commonwealth Act No. 444, as amended. Section 2 of
Republic Act 2377 provides:
Sec. 2. This Act shall apply to all persons employed in any
industry or occupation, whether public or private with the
exception of farm laborers, laborers who prefer to be paid on
20
piece work basis, managerial employees, outside sales
personnel, domestic servants, persons in the personal service
of another and members of the family of the employer
working for him.
The term "managerial employee" in this Act shall mean
either (a) any person whose primary duty consists of the
management of the establishment in which he is employed
or of a customarily recognized department or subdivision
thereof, or (b) ally officer or member of the managerial staff.
One of the distinguishing characteristics managerial
employee may be known as expressed in the explanatory
note of Republic Act No. 2377 is that he is not subject to the
rigid observance of regular office hours. The true worth of
his service does not depend so much on the time he spends
in office but more on the results he accomplishes. In fact, he
is free to go out of office anytime.
On the other hand, in the Fair Labor Standards Act of the
United States, which was taken into account by the sponsors
of the present Act in defining the degree of work of a
managerial employee, we find interesting the following
dissertation of the nature of work o a managerial employee:
Decisions have consumed and applied a regulation in
substance providing that the term "professional" employee
shall mean any employee ... who is engaged in work
predominantly intellectual and varied in character, and
requires the consistent exercise of discretion and judgment
in its performance and is of such a character that the output
produced or the result accomplished cannot be standardized
in relation to a given period of time, and whose hours of
work of the same nature as that performed by non-exempt
employees do not exceed twenty percent of the hours
worked in the work week by the non-exempt employees,
except where such work is necessarily incident to work of a
professional nature; and which requires, first, knowledge of
an advanced type in a field of science or learning
customarily acquired by a prolonged course or specialized
intellectual instruction and study, or, second, predominantly
original and creative in character in a recognized field of
artistic endeavor. Stranger v. Vocafilm Corp., C.C.A. N.Y.,
151 F. 2d 894, 162 A.L.R. 216; Hofer v. Federal Cartridge
Corp., D.C. Minn. 71 F. Supp. 243; Aulen v. Triumph
Explosive, D.C. Md., 58 P. Supp. 4." (56 C.J.S., p. 666).
Under the provisions of the Fair Labor Standards Act 29
U.S.C.A., Section 23 (a) (1), executive employees are
exempted from the statutory requirements as to minimum
wages and overtime pay. ...

Thus the exemption attaches only where it appears that the
employee's primary duty consists of the management of the
establishment or of a customarily recognized department or
subdivision thereof, that he customarily and regularly directs
the work of other employees therein, that he has the
authority to hire or discharge other employees or that his
suggestions and recommendations as to the hiring or
discharging and as to the advancement and promotion or any
other change of status of other employees are given
particular weight, that he customarily and, regularly
exercises discretionary powers, ... . (56 C.J.S., pp. 666-668.)
The term "administrative employee" ordinarily applies only
to an employee who is compensated for his services at a
salary or fee of not less than a prescribed sum per month,
and who regularly and directly assists an employee
employed in a bona fide executive or administrative
capacity, where such assistance is nonmanual in nature and
requires the exercise of discretion and independent
judgment; or who performs under only general supervision,
responsible non-manual office or field work, directly related
to management policies or general business operations,
along specialized or technical lines' requiring special
training experience, or knowledge, and the exercise of
discretion and independent judgment; ... . (56 C.J.S., p. 671.)
The reason underlying each exemption is in reality apparent.
Executive, administrative and professional workers are not
usually employed at hourly wages nor is it feasible in the
case of such employees to provide a fixed hourly rate of pay
nor maximum hours of labor, Helena Glendale Perry Co. v.
Walling, C.C.A. Ark. 132 F. 2d 616, 619. (56 C.J.S., p. 664.)
The philosophy behind the exemption of managerial
employees from the 8-Hour Labor Law is that such workers
are not usually employed for every hour of work but their
compensation is determined considering their special
training, experience or knowledge which requires the
exercise of discretion and independent judgment, or perform
work related to management policies or general business
operations along specialized or technical lines. For these
workers it is not feasible to provide a fixed hourly rate of
pay or maximum hours of labor.
The intervenors herein are holding position of responsibility.
One of them is the Secretary of the Board of Directors.
Another is the private secretary of the general manager.
Another is a public relations officer, and many other chiefs
of divisions or sections and others are supervisors and
overseers. Respondent court, however, after examining
carefully their respective functions, duties and
responsibilities found that their primary duties do not bear
21
any direct relation with the management of the NAWASA,
nor do they participate in the formulation of its policies nor
in the hiring and firing of its employees. The chiefs of
divisions and sections are given ready policies to execute
and standard practices to observe for their execution. Hence,
it concludes, they have little freedom of action, as their main
function is merely to carry out the company's orders, plans
and policies.
To the foregoing comment, we agree. As a matter of fact,
they are required to observe working hours and record their
time work and are not free to come and go to their offices,
nor move about at their own discretion. They do not,
therefore, come within the category of "managerial
employees" within the meaning of the law.
4. Petitioner's claim is that the issue of overtime
compensation not having been raised in the original case but
merely dragged into it by intervenors, respondent court
cannot take cognizance thereof under Section 1, Rule 13, of
the Rules of Court.
Intervenors filed a petition for intervention alleging that
being employees of petitioner who have worked at night
since 1954 without having been fully compensated they
desire to intervene insofar as the payment of their night
work is concerned. Petitioner opposed the petition on the
ground that this matter was not in the original case since it
was not included in the dispute certified by the President of
the Philippines to the Court of Industrial Relations. The
opposition was overruled. This is now assigned as error.
There is no dispute that the intervenors were in the employ
of petitioner when they intervened and that their claim refers
to the 8-Hour Labor Law and since this Court has held time
and again that disputes that call for the application of the 8-
Hour Labor Law are within the jurisdiction of the Court of
Industrial Relations if they arise while the employer-
employee relationship still exists, it is clear that the matter
subject of intervention comes within the jurisdiction of
respondent court.1 The fact that the question of overtime
payment is not included in the principal casein the sense that
it is not one of the items of dispute certified to by the
President is of no moment, for it comes within the sound
discretion of the Court of Industrial Relations. Moreover, in
labor disputes technicalities of procedure should as much as
possible be avoided not only in the interest of labor but to
avoid multiplicity of action. This claim has no merit.
5. It is claimed that some intervenors are occupying
positions in the General Auditing Office and in the Bureau
of Public Works for they are appointed either by the Auditor
General or by the Secretary of Public Works and,

consequently, they are not officers of the NAWASA but of
the insular government, and as such are not covered by the
Eight-Hour Labor Law.
The status of the GAO employees assigned to, and working
in, government-controlled corporations has already been
decided by this Court in National Marketing Corporation, et
al. v. Court of Industrial Relations, et al., L-17804, January
31, 1963. In said case, this Court said:
We agree with appellants that members of the auditing force
can not be regarded as employees of the PRISCO in matters
relating to their compensation. They are appointed and
supervised by the Auditor General, have an independent
tenure, and work subject to his orders and instructions, and
not to those of the management of appellants. Above all, the
nature of their functions and duties, for the purpose of fiscal
control of appellants' operations, imperatively demands, as a
matter of policy, that their positions be completely
independent from interference or inducement on the part of
the supervised management, in order to assure a maximum
of impartiality in the auditing functions. Both independence
and impartiality require that the employees in question be
utterly free from apprehension as to their tenure and from
expectancy of benefits resulting from any action of the
management, since in either case there would be an
influence at work that could possibly lead, if not to positive
malfeasance, to, laxity and indifference that would gradually
erode and endanger the critical supervision entrusted to
these auditing employees.
The inclusion of their items in the PRISCO budget should be
viewed as no more than a designation by the national
government of the fund or source from which their
emoluments are to be drawn, and does not signify that they
are thereby made PRISCO employees.
The GAO employees assigned to the NAWASA are exactly
in the same position regarding their status, compensation
and right to overtime pay as the rest of the GAO employees
assigned to the defunct PRISCO, and following our ruling in
the PRISCO case, we hold that the GAO employees herein
are not covered by the 8-Hour Labor Law, but by other
pertinent laws on the matter.
The same thing may be said with regard to the employer of
the Bureau of Public Works assigned to, and working in, the
NAWASA. Their position is the same as that of the GAO
employees. Therefore, they are not also covered by the 8-
Hour Labor Law.
The respondent court, therefore, erred in considering them
as employees of the NAWASA for the mere reason that they
22
are paid out of its fund and are subject to its administration
and supervision.
6. A worker is entitled to overtime pay only for work in
actual service beyond eight hours. If a worker should incur
in undertime during his regular daily work, should said
undertime be deducted in computing his overtime work?
Petitioner sustains the affirmative while respondent unions
the negative, and respondent court decided the dispute in
favor of the latter. Hence this error.
There is merit in the decision of respondent court that the
method used by petitioner in offsetting the overtime with the
undertime and at the same time charging said undertime to
the accrued leave of the employee is unfair, for under such
method the employee is made to pay twice for his undertime
because his leave is reduced to that extent while he was
made to pay for it with work beyond the regular working
hours. The proper method should be to deduct the undertime
from the accrued leave but pay the employee the overtime to
which he is entitled. This method also obviates the irregular
schedule that would result if the overtime should be set off
against the undertime for that would place the schedule for
working hours dependent on the employee.
7. and 8. How is a daily wage of a weekly employee
computed in the light of Republic Act 1880?
According to petitioner, the daily wage should be computed
exclusively on the basic wage, without including the
automatic increase of 25% corresponding to the Sunday
differential. To include said Sunday differential would be to
increase the basic pay which is not contemplated by said
Act. Respondent court disagrees with this manner of
computation. It holds that Republic Act 1880 requires that
the basic weekly wage and the basic monthly salary should
not be diminished notwithstanding the reduction in the
number of working days a week. If the automatic increase
corresponding to the salary differential should not be
included there would be a diminution of the weekly wage of
the laborer concerned. Of course, this should only benefit
those who have been working seven days a week and had
been regularly receiving 25% additional compensation for
Sunday work before the effectivity of the Act.
It is evident that Republic Act 1880 does not intend to raise
the wages of the employees over what they are actually
receiving. Rather, its purpose is to limit the working days in
a week to five days, or to 40 hours without however
permitting any reduction in the weekly or daily wage of the
compensation which was previously received. The question
then to be determined is: what is meant by weekly or daily
wage? Does the regular wage include differential payments

for work on Sundays or at nights, or is it the total amount
received by the laborer for whatever nature or concept?
It has been held that for purposes of computing overtime
compensation a regular wage includes all payments which
the parties have agreed shall be received during the work
week, including piece work wages, differential payments for
working at undesirable times, such as at night or on Sundays
and holidays, and the cost of board and lodging customarily
furnished the employee (Walling v. Yangermah-Reynolds
Hardwook Co., 325 U.S. 419; Walling v. Harischfeger
Corp., 325 U.S. 427.) The "regular rate" of pay also
ordinarily includes incentive bonus or profit-sharing
payments made in addition to the normal basic pay (56
C.J.S., pp. 704-705), and it was also held that the higher rate
for night, Sunday and holiday work is just as much a regular
rate as the lower rate for daytime work. The higher rate is
merely an inducement to accept employment at times which
are not as desirable from a workman's standpoint
(International L. Ass'n v. National Terminals Corp. C.C.
Wise, 50 F. Supp. 26, affirmed C.C.A. Carbunao v. National
Terminals Corp. 139 F. 2d 853).
Respondent court, therefore, correctly included such
differential pay in computing the weekly wages of those
employees and laborers who worked seven days a week and
were continuously receiving 25% Sunday differential for a
period of three months immediately preceding the
implementation of Republic Act 1880.
The next issue refers to the method of computing the daily
rate of a monthly-salaried employee. Petitioner in computing
this daily rate divides the monthly basic pay of the employee
by 30 in accordance with Section 254 of the Revised
Administrative Code which in part provides that "In making
payment for part of a month, the amount to be paid for each
day shall be determined by dividing the monthly pay into as
many parts as there are days in the particular month." The
respondent court disagrees with this method and holds that
the way to determine the daily rate of a monthly employee is
to divide the monthly salary by the actual number of
working hours in the month. Thus, according to respondent
court, Section 8 (g) of Republic Act No. 1161, as amended
by Republic Act 1792, provides that the daily rate of
compensation is the total regular compensation for the
customary number of hours worked each day. In other
words, according to respondent court, the correct
computation shall be (a) the monthly salary divided by the
actual of working hours in a month or (b) the regular
monthly compensation divided by the number of working
days in a month.
23
This finding of respondent court should be modified insofar
as the employees of the General Auditing Office and of the
Bureau of Public Works assigned to work in the NAWASA
are concerned for, as already stated, they are government
employees and should be governed by Section 254 of the
Revised Administrative Code. This section provides that in
making payments for part of a month, the amount to be paid
for each day shall be determined by dividing the monthly
pay. Into as many parts as there are days in the particular
month. With this modification we find correct the finding of
the respondent court on this issue.
9. The Court of Industrial Relations awarded an additional
25% night compensation to some, workers with retroactive
effect, that is, effective even before the presentation of the
claim, provided that they had been given authorization by
the general manager to perform night work. It is petitioner's
theory that since there is no statute requiring payment of
additional compensation for night work but it can only be
granted either by the voluntary act of the employer or by an
award of the industrial court under its compulsory
arbitration power, such grant should only be prospective in
operation, and not retroactive, as authorized by the court.
It is of common occurrence that a working man who has
already rendered night time service takes him a long time
before he can muster enough courage to confront his
employer with the demand for payment for it for fear of
possible reprisal. It happens that many months or years are
allowed to pass by before he could be made to present such
claim against his employer, and so it is neither fair nor just
that he be deprived of what is due him simply because of his
silence for fear of losing the means of his livelihood. Hence,
it is not erroneous for the Court of Industrial Relations to
make the payment of such night compensation retroactive to
the date when the work was actually performed.
The power of the Court of Industrial Relations to order the
payment of compensation for overtime service prior to the
date of the filing of the claim has been recognized by this
Court (Luzon Stevedoring Co., Inc. v. Luzon Marine
Department Union, et al., L-9265, April 29, 1957). The same
reasons given therein for the retroactivity of overtime
compensation may also be given for the retroactivity of
payment of night compensation, as such reasoning runs
along the line already above-stated.
10. The Court of Industrial Relations in its resolution dated
November 25, 1950 issued in Case No. 359-V entitled
MWD Workers Union, et al. v. Metropolitan Water District,
fixed the following rates of minimum daily wage: P5.25 for
those working in Manila and suburbs; P4.50 for those

working in Quezon City; and P4.00 for those working in
Ipo. Montalban and Balara. It appears that in spite of the
notice to terminate said award filed with the court on
December 29, 1953, the Metropolitan Water District
continued paying the above wages and the NAWASA which
succeeded it adopted the same rates for sometime. In
September, 1955, the NAWASA hired the claimants as
temporary workers and it is now contended that said rates
cannot apply to these workers.
The Court of Industrial Relations, however, held that the
discontinuance of this minimum wage rate was improper
and ordered the payment of the difference to said workers
from the date the payment of said rates was discontinued,
advancing, among others, the following reasons: that the
resolution of November 25, 1950 is applicable not only to
those laborers already in the service but also to those who
may be employed thereafter; the notice of determination of
said award given on December 29, 1953 is not legally
effective because the same was given without hearing and
the employer continued paying the minimum wages even
after the notice of termination; and there is no showing that
the minimum wages violate Civil Service Law or the
principles underlying the WAPCO.
We find no valid reason to disagree with the foregoing
finding of the Court of Industrial Relations considering that
the award continued to be valid and effective in spite of the
notice of termination given by the employer. No good
reason is seen why such award should not apply to those
who may be employed after its approval by the court there
being nothing therein that may prevent its extension to them.
Moreover, the industrial court can at any time during the
effectiveness of an award or reopen any question involved
therein under Section 17 of Commonwealth Act No. 103,
and such is what said court has done when it made the award
extensive to the new employees, more so when they are
similarly situated. To do otherwise would be to foster
discrimination.
11. This issue has to do with the meaning of "distress pay."
Paragraph 3, Article VIII, of the collective bargaining
agreement entered into between the employer and
respondent unions, provides:
Because of the peculiar nature of the function of those
employees and laborers of the Sewerage Division who
actually work in the sewerage chambers, causing "unusual
distress" to them, they shall receive extra compensation
equivalent to twenty-five (25%) of their basic wage.
24
Pursuant to said agreement, a grievance committee was
created composed of representatives of management and
labor which adopted the following resolution:
Resolution No. 9
Series of 1957
BE IT RESOLVED, That the employees and laborers of the
Sewerage Division who actually work in the sewerage
chambers causing unusual distress to them, be paid extra
compensation equivalent to 25% of their basic wage, as
embodied in Article VIII, Paragraph 3 of the Collective
Bargaining Agreement; PROVIDED, however, that any
employee who may be required to work actually in the
sewerage chambers shall also be paid 25% extra
compensation and, PROVIDED FURTHER, that the term
"sewerage chambers" shall include pits, trenches, and other
excavations that are necessary to tap the sewer line, and
PROVIDED FINALLY that this will not prejudice any
laborer or employee who may be included in one way or
another in the term "unusual distress" within the purview of
Paragraph 3 of Article VIII, of the Collective Bargaining
Agreement.
And in a conference held between management and labor on
November 25, 1957, the following was agreed upon:
"Distress Management agreed to pay effective October 1,
1956 25% additional compensation for those who actually
work in and outside sewerage chambers in accordance with
Resolution No. 9 of the Grievance Committee."
The question that arose in connection with this distress pay
is with regard to the meaning of the phrase "who actually
work in and outside sewerage chambers." Petitioner
contends that the distress pay should be given only to those
who actually work inside the sewerage chambers while the
union maintains that such pay should be given to all those
whose work have to do with the sewerage chambers,
whether inside or outside. The Court of Industrial Relations
sustained the latter view holding that the distress pay should
be given to those who actually work in and outside the
sewerage chambers effective October 1, 1956. This view is
now disputed by petitioner.
The solution of the present issue hinges upon the
interpretation of paragraph 3, Article VIII of the collective
bargaining agreement, copied above, as explained by
Resolution No. 9, and the agreement of November 25, 1957,
also copied above, which stipulation has to be interpreted as
a whole pursuant to Article 1374 of the Civil Code. As thus
interpreted, we find that those who are entitled to the distress
pay are those employees and laborers who work in the
sewerage chambers whether they belong to the sewerage

division or not, and by sewerage chambers should be
understood to mean as the surroundings where the work is
actually done, not necessarily "inside the sewerage
chambers." This is clearly inferred from the conference held
in the Department of Labor on November 25, 1957 where it
was agreed that the compensation should be paid to those
who work "in and outside" the sewerage chambers in
accordance with the terms of Resolution No. 9 of the
Grievance Committee. It should be noted that according to
said resolution, sewerage chambers include "pits, trenches,
and other excavations that are necessary to tap the sewer
lines." And the reason given for this extra compensation is
the "unusual distress" that is caused to the laborers by
working in the sewerage chambers in the form and extent
above-mentioned.
It is clear then that all the laborers whether of the sewerage
division or not assigned to work in and outside the sewerage
chambers and suffer in unusual distress because of the
nature of their work are entitled to the extra compensatory.
And this conclusion is further bolstered by the findings of
the industrial court regarding the main activities of the
sewerage division.
Thus, the Court of Industrial Relations found that the
sewerage division has three main activities, to wit: (a)
cooperation of the sewerage pumping stations; (b) cleaning
and maintenance of sewer mains; and (c) installation and
repairs of house sewer connections.
The pump operators and the sewer attendants in the seven
pumping stations in Manila, according to the industrial
court, suffer unusual distress. The pump operators have to
go to the wet pit to see how the cleaning of the screen
protecting the pump is being performed, and go also to the
dry pit abutting the wet pit to make repairs in the breakdown
of the pumps. Although the operators used to stay near the
motor which is but a few meters from the pump, they
unavoidably smell the foul odor emitting from the pit.
Thesewerage attendants go down and work in the wet pit
containing sewerage materials in order to clean the screen.
A group assigned to the cleaning and maintenance of the
sewer mains which are located in the middle of the streets of
Manila is usually composed of a capataz and four sewerage
attendants. These attendants are rotated in going inside the
manholes, operation of the window glass, bailing out from
the main to the manhole and in supplying the water service
as necessity demand. These attendants come into contact
with dirt, stink, and smell, darkness and heat inside and near
the sewage pipes. The capataz goes from one manhole to
another seeing to it that the work is properly performed and
25
as such also suffers unusual distress although to a lesser
degree.
The group resigned to the third kind of activity is also
usually composed of a capataz and four attendants. Their
work is to connect sewer pipes from houses to the sewer
mains and to do this they excavate the trench across the
street from the proper line to the sewer main and then they
install the pipe after tapping the sewer main. In the tapping,
the sewer pipe is opened and so the sewerage gets out and
fills up the trench and the men have to wade in and work
with the sewerage water. The capataz has to go near the
filthy excavations or trenches full of filthy sewerage, matter
to aid the attendants in making pipe connections, especially
when these are complicated.
It cannot therefore be gainsaid that all there laborers suffer
unusual distress. The wet pits, trenches, manholes, which are
full of sewage matters, are filthy sources of germs and
different diseases. They emit foul and filthy odor dangerous
to health. Those working in such places and exposed directly
to the distress of contamination.
Premises considered, the decision of the Court of Industrial
Relations in this respect should be modified in the sense that
all employees and laborers, whether or not they belong to
the sewerage division, who actually work in and outside the
sewerage chambers, should be paid the distress pay or the
extra compensation equivalent to 25% of their basic wage
effective October 1, 1956.
12. On August 6, 1957, the NAWASA requested the
President of the Philippines for exemption from Executive
Order No. 251 which prescribes the office hours to be
observed in government and government-owned or
controlled corporations in order that it could stagger the
working hours of its employees and laborers. The request is
based on the fact that there are essential and indispensable
phases in the operation of the NAWASA that are required to
be attended to continuously for twenty-four hours for the
entire seven days of the week without interruption some of
which being the work performed by pump operators, valve
operators, filter operators, chlorine operators, watchmen and
guards, and medical personnel. This request was granted
and, accordingly, the NAWASA staggered the work
schedule of the employees and laborers performing the
activities above-mentioned. Respondent unions protested
against this staggering schedule of work and this protest
having been unheeded, they brought the matter to the Court
of Industrial Relations.
In resolving this issue, the industrial court justified the
staggering of the work days of those holding positions as

pump operators, valve operators, filter operators, chlorine
operators, watchmen and guards, and those in the medical
service for the reason that the same was made pursuant to
the authority granted by the President who in the valid
exercise of the powers conferred upon him by Republic Act
No. 1880 could prescribe the working days of employees
and laborers in government-owned and controlled
corporations depending upon the exigencies of the service.
The court, however, stated that the staggering should not
apply to the personnel in the construction, sewerage,
maintenance, machineries and shops because they work
below 365 days a year and their services are not continuous
to require staggering. From this portion of the decision, the
petitioner appeals.
Considering that respondent court found that the workers in
question work less than 365 days a year and their services
are not continuous to require staggering, we see no reason to
disturb this finding. This is contrary to the very essence of
the request that the staggering should be made only with
regard to those phases of the operation of the NAWASA that
have to be attended to continuously for twenty-four hours
without interruption which certainly cannot apply to the
workers mentioned in the last part of the decision of the
respondent court on the matter.
RECAPITULATION
In resume, this Court holds:
(1) The NAWASA, though a public corporation, does not
perform governmental functions. It performs proprietary
functions, and hence, it is covered by Commonwealth Act
No. 444;
(2) The NAWASA is a public utility. Although pursuant to
Section 4 of Commonwealth Act 444 it is not obliged to pay
an additional sum of 25% to its laborers for work done on
Sundays and legal holidays, yet it must pay said additional
compensation by virtue of the contractual obligation it
assumed under the collective bargaining agreement;
(3) The intervenors are not "managerial employees" as
defined in Republic Act No. 2377, hence they are covered
by Commonwealth Act No. 444, as amended;
(4) The Court of Industrial Relations has jurisdiction to
adjudicate overtime pay in the case at bar there being an
employer-employee relationship existing between
intervenors and petitioner;
(5) The GAO employees assigned to work in the NAWASA
cannot be regarded as employees of the NAWASA on
26
matters relating to compensation. They are employees of the
national government and are not covered by the Eight-Hour
Labor Law. The same may be said of the employees of the
Bureau of Public Works assigned to work in the NAWASA;
(6) The method used by the NAWASA in off-setting the
overtime with the undertime and at the same time charging
said undertime to the accrued leave is unfair;
(7) The differential pay for Sundays is a part of the legal
wage. Hence, it was correctly included in computing the
weekly wages of those employees and laborers who worked
seven days a week and were regularly receiving the 25%
salary differential for a period of three months prior to the
implementation of Republic Act 1880. This is so even if
petitioner is a public utility in view of the contractual
obligation it has assumed on the matter;
(8) In the computation of the daily wages of employees paid
by the month distinction should be made between
government employees like the GAO employees and those
who are not. The computation for government employees is
governed by Section 254 of the Revised Administrative
Code while for others the correct computation is the monthly
salary divided by the actual number of working hours in the
month or the regular monthly compensation divided by the
number of working days in the month;
(9) The Court of Industrial Relations did not err in ordering
the payment of night compensation from the time such
services were rendered. The laborer must be compensated
for nighttime work as of the date the same was rendered;
(10) The rates of minimum pay fixed in CIR Case No. 359-
V are applicable not only to those who were already in the
service as of the date of the decision but also to those who
were employed subsequent to said date;
(11) All the laborers, whether assigned to the sewerage
division or not who are actually working inside or outside
the sewerage chambers are entitled to distress pay; and
(12) There is no valid reason to disturb the finding of the
Court of Industrial Relations that the work of the personnel
in the construction, sewerage, maintenance, machineries and
shops of petitioner is not continous as to require staggering.
CONCLUSION
With the modification indicated in the above resume
as elaborated in this decision, we hereby affirm the decision
of respondent court in all other respects, without
pronouncement as to costs.

G.R. No. 75039 January 28, 1988
FRANKLIN BAKER COMPANY OF THE
PHILIPPINES, petitioner,
vs.
HONORABLE CRESENCIO B. TRAJANO,
PARAS, J.:
This is a petition for certiorari seeking the annulment of. (a)
the Order of Mediator-Arbiter Conchita J. Martinez of the
Ministry of Labor and Employment, Davao City, dated
September 17, 1984 in LRD Case No. R-22 MED-ROXI-
UR-28-84 entitled "In Re: Petition for Certification Election
Among the Office and Technical Employees of Franklin
Baker Company of the Philippines, Davao Plant at Coronan,
Sta. Cruz, Davao del Sur, Franklin Baker Company of the
Philippines, Davao Plant, Employer, Franklin Baker
Brotherhood Association (Technical and Office Employees)-
Association of Trade Unions (ATU)," insofar as it includes
the managerial employees (inspectors, foremen and
supervisors) in the certification election; (b) the Order of
April 7, 1986 of Director Cresencio B. Trajano, also of the
MOLE, dismissing the appeal of aforesaid Order of
September 17, 1985 for lack of merit; and (c) the Order of
June 6, 1986 of said Director denying reconsideration of his
Order of April 7, 1986 and affirming the same in toto (Rollo,
p. 90).
In brief, the undisputed facts of this case are as follows:
On April 23, 1984, private respondent Franklin Baker
Brotherhood Association-(ATU) filed a petition for
certification election among the office and technical
employees of petitioner company with the Ministry of Labor
and Employment, Regional Office No. XI, Davao City,
docketed as LRD No. R-22, MED-ROXI-UR-2884. Among
other things, it alleges that Franklin Baker Company of the
Phils. Davao Plant, had in its employ approximately ninety
(90) regular technical and office employees, which group is
separate and distinct from the regular rank and file
employees and is excluded from the coverage of existing
Collective Bargaining Agreement.
Petitioner company did not object to the holding of such an
election but manifested that out of the ninety (90) employees
sought to be represented by the respondent union, seventy
four (74) are managerial employees while two (2) others are
confidential employees, hence, must be excluded from the
certification election and from the bargaining unit that may
result from such election (Rollo, p. 3).
27
Hearings were held and thereafter, the parties agreed to file
their respective memoranda. Likewise, petitioner filed a
reply to private respondent's Memorandum (Rollo, p. 4).
Subsequently, on September 17, 1984, Med-Arbiter
Conchita J. Martinez issued an order, the dispositive part of
which reads:
Accordingly, the petition is hereby granted and a
certification election among the office and technical
employees of Franklin Baker Company of the Philippines,
Davao Plant is ordered within twenty (20) days from receipt
hereof. The choices shall be the following:
1. Franklin Baker Brotherhood Association-(ATU)
2. No Union
The representation officer assigned shall call the parties for a
pre-election conference at least five (5) days before the date
of the election to thresh out the mechanics of the election,
the finalization of the list of voters, the posting of notices
and other relevant matters.
The company's latest payroll shall be the basis for
determining the office and technical workers qualified to
vote.
SO ORDERED. (Rollo, pp. 47-48).
From the aforequoted order petitioner Company appealed to
the Bureau of Labor Relations, docketed as BLR Case No.
A-22884, praying that the appealed order be set aside and
another be issued declaring the seventy four (74) inspectors,
foremen and supervisors as managerial employees.
During the pendency of the appeal, sixty one (61) of the
employees involved, filed a Motion to Withdraw the petition
for certification election praying therein for their exclusion
from the Bargaining Unit and for a categorical declaration
that they are managerial employees, as they are performing
managerial functions (Rollo, p. 4).
On April 7, 1986, public respondent Bureau of Labor
Relations Cresencio B. Trajano issued a Resolution
affirming the order dated September 17, 1984, the
dispositive part of which reads:
WHEREFORE, the appealed Order dated September 17,
1985 is hereby affirmed and the appeal dismissed for lack of
merit. Let the certification election among the office and
technical employees of Franklin Baker Company of the
Philippines proceed without delay.

The latest payrolls of the company shall be used as basis of
determining the list of eligible voters. (Rollo, p. 77),
Petitioner company sought the reconsideration of the
aforequoted resolution but its motion was denied by Director
Cresencio B. Trajano in his order dated June 6, 1986, the
dispositive part of which reads:
WHEREFORE, the appeal of respondent company is,
dismissed for lack of merit and the Bureau's Resolution
dated April 1986 affirmed in toto.
Let, therefore, the pertinent papers of this case be
immediately forwarded to the Office of origin for the
conduct of the certification election. (Rollo, p. 90).
Hence, this petition.
In the resolution of July 30, 1986, the Second Division of
this Court without giving due course to the petition required
the respondents to file their comment (Rollo, p. 91). On
August 28, 1986, public respondent filed its comment
(Rollo, pp. 99 to 102). Likewise private respondent filed its
comment on September 5, 1986 (Rollo, pp. 104 to 107).
In the resolution of September 8, 1986, petitioner was
required to file its reply to public respondent's comment
(Rollo, p. 119) which reply was filed on September 18, 1986
(Rollo, pp. 122-127).
On October 20, 1986, this Court resolved to give due course
to the petition and required the parties to file their respective
Memoranda (Rollo, p. 133). In compliance with said
resolution, petitioner and private respondent filed their
Memoranda on December 8, 1986 and December 29, 1986,
respectively (Rollo, pp. 183-187). On the other hand, public
respondent filed with this Court a manifestation (Rollo, p.
153) to the effect that it is adopting as its memorandum its
comment dated August 18, 1986 (Rollo, p. 99) which
manifestation was noted by this Court in its resolution dated
November 26, 1986
(Rollo, p. 155).
The lone assignment of error raised by petitioner states:
Public respondent acted with grave abuse of discretion
amounting to lack of jurisdiction when he ruled that the 76
employees subject of this petition are not managerial
employees (inspectors, foremen, supervisors and the like)
and therefore, may participate in the certification election
among the office and technical employees. Such ruling is
contrary to jurisprudence and to the factual evidence
presented by petitioner which was not rebutted by private
respondent union and is therefore patently baseless.
28
From this assigned error two questions are raised by
petitioner, namely: (1) whether or not subject employees are
managerial employees under the purview of the Labor Code
and its Implementing Rules; and (2) whether the Director of
the Bureau of Labor Relations acted with abuse of discretion
in affirming the order of Mediator-Arbiter Conchita J.
Martinez.
There is no question that there are in the DAVAO Plant of
petitioner company approximately 90 regular technical and
office employees which form a unit, separate and distinct
from the regular rank and file employees and are excluded
from the coverage of existing Collective Bargaining
Agreement; that said group of employees organized
themselves as Franklin Baker Brotherhood Association
(technical and office employees) and affiliated with the local
chapter of the Association of trade Unions (ATU), a
legitimate labor organization with Registration Permit No.
8745 (Fed) LC and with office located at the 3rd Floor of
Antwell Bldg., Sta. Ana, Davao City; that petitioner
company did not object to the holding of such certification,
but only sought the exclusion of inspectors, foremen and
supervisors, members of Franklin Baker Brotherhood
Association (technical and office employees) numbering 76
from the certification election on the ground that they are
managerial employees.
A managerial employee is defined as one "who is vested
with powers or prerogatives to lay down and execute
management policies and/or to hire, transfer, suspend, lay-
off, recall, discharge, assign or discipline employees, or
to effectively recommend such managerial actions."
(Reynolds Phil. Corp. v. Eslava, 137 SCRA [1985], citing
Section 212 (K), Labor Code.
Also pertinent thereto is Section 1 (M) of the Implementing
Rules and Regulations, which is practically a restatement of
the above provision of law.
To sustain its posture, that the inspectors, foreman and
supervisors numbering 76 are managerial employees,
petitioner painstakingly demonstrates that subject employees
indeed participate in the formulation and execution of
company policies and regulations as to the conduct of work
in the plant, exercised the power to hire, suspend or dismiss
subordinate employees and effectively recommend such
action, by citing concrete cases, among which are: (1) Mr.
Ponciano Viola, a wet process inspector, who while in the
performance of his duty, found Mr. Enrique Asuncion, a
trimmer "forging", falsifying and simulating a company time
card (timesheet) resulting in payroll padding, immediately
recommended the dismissal of said erring employee,

resulting in the latter's discharge. (Employer's Memo, Rollo,
p.18); (2) Mr. Manuel Alipio, an opening inspector,
recommended for suspension Nut Operator Ephraim
Dumayos who was caught in the act of surreptitiously
transferring to a co-worker's bin some whole nuts which act
constitutes a violation of company policy; (3) Mr. Sofronio
Abangan, a line inspector, censured and thereafter
recommended the suspension of Mr. Romeo Fullante, for
being remiss in the proper and accurate counting of nuts; (4)
Binleader Dionisio Agtang was required to explain his
inefficiency of Mr. Saturnino Bangkas, Bin Loading
Inspector; (5) for disobeying the orders of Bin Loading
Inspector Mauricio Lumanog's order, Macario Mante,
Eduardo Adaptor, Rodolfo Irene and George Rellanos were
all recommended for suspension which culminated in an
investigation conducted by Lumanog's higher bosses (Ibid.,
p. 20).
It has also been shown that subject employees have the
power to hire, as evidenced by the hiring of Rolando Asis,
Roy Layson, Arcadio Gaudicos and Felix Arciaga, upon the
recommendation of Opening Inspector Serafin Suelo,
Processing Inspector Leonardo Velez and Laureano C. Lim,
Opening Inspector (Ibid., p. 21).
It will be noted, however, that in the performance of their
duties and functions and in the exercise of their
recommendatory powers, subject employees may only
recommend, as the ultimate power to hire, fire or suspend as
the case may be, rests upon the plant personnel manager.
The test of "supervisory" or "managerial status" depends on
whether a person possesses authority to act in the interest of
his employer in the matter specified in Article 212 (k) of the
Labor Code and Section 1 (m) of its Implementing Rules
and whether such authority is not merely routinary or
clerical in nature, but requires the use of independent
judgment. Thus, where such recommendatory powers as in
the case at bar, are subject to evaluation, review and final
action by the department heads and other higher executives
of the company, the same, although present, are not effective
and not an exercise of independent judgment as required by
law (National Warehousing Corp. v. CIR, 7 SCRA 602-603
[1963]).
Furthermore, in line with the ruling of this Court, subject
employees are not managerial employees because as borne
by the records, they do not participate in policy making but
are given ready policies to execute and standard practices to
observe, thus having little freedom of action (National
Waterworks and Sewerage Authority v. NWSA
Consolidated, L-18938, 11 SCRA 766 [1964]).
29
Petitioner's contention that the Director of the Bureau of
Labor Relations acted with abuse of discretion amounting to
lack of jurisdiction in holding that the 76 employees are not
managerial employees and must be included in the
certification election has no basis in fact and in law. Neither
is its contention that the use of the word's "and/or"
categorically shows that performance of the functions
enumerated in the law qualifies an employee as a managerial
employee.
It is well settled that the findings of fact of the Ministry of
Labor and National Labor Relations Commission are
entitled to great respect, unless the findings of fact and the
conclusions made therefrom, are not supported by
substantial evidence, or when there is grave abuse of
discretion committed by said public official (Kapisanan ng
Manggagawa sa Camara Shoes, 2nd Heirs of Santos
Camara, et al., 111 SCRA 477 [1982]; International
hardwood and Veneer Co. of the Philippines v. Leonardo,
117 SCRA 967 [1982]; Pan-Phil-Life, Inc. v. NLRC, 114
SCRA 866 [1982]; Pepsi-Cola Labor Union-BF LUTUPAS
Local Chapter N-896 v. NLRC, 114 SCRA 930 [1982];
Egyptair v. NLRC, 148 SCRA 125 [1987]; RJL Martinez
Fishing Corp. v. NLRC, G.R. Nos. 63550-51, 127 SCRA
455 [1984]; and Reyes v. Phil. Duplicators, G.R. No. 54996,
109 SCRA 489 [1981]).
By "grave abuse of discretion" is meant, such capricious and
whimsical exercise of judgment as is equivalent to lack of
jurisdiction. The abuse of discretion must be grave as where
the power is exercised in an arbitrary or despotic manner by
reason of passion or personal hostility and must be so patent
and gross as to amount to an evasion of positive duty or to a
virtual refusal to perform the duty enjoined by or to act at all
in contemplation of law (G.R. No. 59880, George Arguelles
[Hda. Emma Arguelles v. Romeo Yang, etc.], September 11,
1987).
Moreover, this Court has ruled that findings of
administrative agencies which have acquired expertise, like
the Labor Ministry, are accorded respect and finality
(Special Events and Central Shipping Office Workers Union
v. San Miguel Corp., 122 SCRA 557 [1983] and that the
remedy of certiorari does not lie in the absence of any
showing of abuse or misuse of power properly vested in the
Ministry of Labor and Employment (Buiser v. Leogardo, Jr.,
131 SCRA 151 [1984]).
After a careful review of the records, no plausible reason
could be found to disturb the findings of fact and the
conclusions of law of the Ministry of Labor.
 30

Even if We regard the employees concerned as "managerial G.R. No. 155207. April 29, 2005
employees," they can still join the union of the rank and file
employees. They cannot however form their own exclusive WILHELMINA S. OROZCO, Petitioners,
union as "managerial employees" (Bulletin Publishing vs.
Corporation v. Sanchez, 144 SCRA 628). THE FIFTH DIVISION OF THE HONORABLE
COURT OF APPEALS, PHILIPPINE DAILY
PREMISES CONSIDERED, the petition is DISMISSED, INQUIRER, AND LETICIA JIMENEZ
and the assailed resolution and orders are AFFIRMED. MAGSANOC, Respondents.

SO ORDERED. RESOLUTION

TINGA, J.:

Ostensibly, the question raised in this present petition is of

general interest to students of lawwhether a newspaper
columnist is an employee of the newspaper which publishes
the columns. However, for failure to file the appeal bond
required by law, the Court is impelled to defer the settlement
of the above issue until the jurisdictional requirement has
been duly complied with.

This Petition for Review under Rule 45 of the Rules of

Court assails the Resolution1 of the Court of Appeals Fifth
Division denying the Motion for Reconsideration filed by
Wilhelmina Orozco (Orozco) and the Decision2 of the same
division in CA-G.R. SP No. 50970, the dispositive portion
of which provides:

WHEREFORE, based on the foregoing, the petition is

hereby GRANTED. The assailed decision of the public
respondent NLRC affirming the decision of the Labor
Arbiter that private respondent Wilhelmina Orozco is an
employee of petitioner PDI is hereby SET ASIDE. Private
respondent Orozcos complaint is hereby DISMISSED for
lack of merit.

SO ORDERED.3

The above ruling of the Court of Appeals reversed

the Decision4 of the National Labor Relations Commission
(NLRC) which affirmed the Decision5 of the Labor
Arbiter,6 the decretal portion of which stated:

WHEREFORE, judgment is hereby rendered, finding

complainant to be an employee of respondent company;
ordering respondent company to reinstate her to her former
or equivalent position, with backwages.

Respondent company is also ordered to pay her 13th month

pay and service incentive leave pay.

Other claims are hereby dismissed for lack of merit.

SO ORDERED.7

This case arose out of the complaint filed by Orozco against
private respondents Philippine Daily Inquirer (PDI) and
Leticia Jimenez-Magsanoc (Magsanoc), the editor-in-chief
of the PDI at that time, for illegal dismissal, underpayment,
non-payment of allowance, separation pay, retirement pay,
service incentive leave pay, 13th month pay, moral and
exemplary damages, discrimination in pay and for attorneys
fees8 with the Arbitration Branch of the NLRC on 1 June
1993.9
Based on the records of this case, Orozco was engaged as a
columnist by PDI on 8 March 1990. She penned the column
"Feminist Reflections" which appeared in the Lifestyle
Section under the editorship of Lolita T. Logarta.10
Orozco worked by submitting weekly columns with a per
article wage of Two Hundred Fifty Pesos (250.00) which
was later increased to Three hundred Pesos (300.00).11
In June 1991, Magsanoc as editor-in-chief of PDI discussed
how to improve the Lifestyle section of the newspaper with
the Lifestyle editor. They agreed to cut down the number of
columnists and for this reason, PDI decided to drop or
terminate Orozcos column in November 1992.12
Orozcos column thus appeared in PDI for the last time on 7
November 1992. Upon inquiry at the office of Magsanoc as
to why her column was stopped, the secretary told Orozco
that it was Eugenia Apostol (Apostol), the chairperson of
PDI, who had decided to stop her column.13
Apostol was out of the country at that time so Orozco waited
until February 1993 to talk to her. In a telephone
conversation with Orozco, Apostol stated that she had been
told by Magsanoc that there were too many columnists in
the Lifestyle Section.14
Aggrieved at the stoppage of her column, Orozco filed the
instant case against private respondents before the NLRC.
The PDI raised as primary defense the claim that Orozco
was not an employee of the newspaper. However, in
a Decision dated 29 October 1993, Labor Arbiter Arthur L.
Amansec ruled that Orozco had been illegally dismissed,
after concluding that Orozco had indeed been an employee
of the PDI.
The PDI, through counsel, received a copy of the Labor
Arbiters Decision on 16 December 1993.15 It timely filed
a Notice and Memorandum dated 24 December 1993, but it
did not lodge a cash or surety bond in the amount equivalent
to the monetary award in the judgment appealed from. PDI
adverted to such failure on its part before the NLRC but
justified the same on the ground that the Decision of the
31
Labor Arbiter did not fix any amount but merely stated that
Orozco was entitled to backwages.
The NLRC dismissed the appeal in its Decision dated 23
August 1994. In this Decision, it made note of the failure of
PDI to perfect the appeal by filing the cash or surety bond.
Nonetheless, the NLRC ventured to delve on the merits, and
thereupon, affirmed the finding of the Labor Arbiter that
Orozco was an employee of PDI.
Private respondents elevated the case to the Supreme Court
by way of the special civil action of certiorari. Pursuant to
the ruling in St. Martin Funeral Homes v. NLRC,16 this
Court referred the case to the Court of Appeals.
On 11 July 2002, the Court of Appeals reversed the decision
of the NLRC by holding that Orozco is not an employee of
PDI. The reversal was grounded on factual premises, the
appellate court concluding that the NLRC had
misappreciated the facts and rendered a ruling wanting in
substantial evidence. It thereby dismissed Orozcos
complaint for lack of merit. The Court of Appeals likewise
dismissed Orozcos motion for reconsideration on 11
September 2002. Hence, this petition.
In her Memorandum, Orozco posits that the Court of
Appeals should have dismissed outright the private
respondents petition for certiorari for their failure to file a
cash bond or a surety bond as provided for in Article 223 of
the Labor Code.
In support of the argument, Orozco contends that a grievous
error tantamount to grave abuse of discretion was committed
by the Court of Appeals when it failed to appreciate the
observation of the NLRC that private respondents did not
perfect their appeal as they did not deposit on time any cash
or surety bond in compliance with the provision of Art. 223
of the Labor Code when they filed an appeal of the Labor
Arbiters decision at the NLRC. Orozco argues that the
posting of the cash or surety bond is mandatory and must be
made by the employer within the reglementary period of ten
(10) days from receipt of the Labor Arbiters decision so as
to perfect his appeal. Failing to do so, the employer loses the
right to appeal, and the Labor Arbiters decision becomes
final and executory, regardless of whether or not the NLRC
declares it so, by operation of law.17
The NLRC in its decision concluded that it had no
jurisdiction over PDIs appeal but proceeded nonetheless to
discuss the merits of the case. On the other hand, the Court
of Appeals made no mention at all of the jurisdictional
defect, whether in its recital of facts or discussion of the
arguments.

The novelty of the argument on the merits aside, it is
essential not to lose sight of the jurisdictional issue, as it
determines whether or not an appeal had indeed been
perfected.
The provisions of the Labor Code are quite clear cut on the
matter. The relevant portion of Article 223 states:
ART. 223. Appeal. - Decisions, awards or orders of the
Labor Arbiter are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar
days from receipt of such decisions, awards, or orders. . .
In case of a judgment involving a monetary award, an
appeal by the employer may be perfected only upon the
posting of a cash or surety bond issued by a reputable
bonding company duly accredited by the Commission in the
amount equivalent to the monetary award in the judgment
appealed from. (emphasis supplied)
By explicit provision of law, an appeal is
perfected only upon the posting of a cash or surety bond.
The reason behind the imposition of this requirement is not
difficult to divine. As the Court said in Viron Garments
Mftg., Co., Inc. v. NLRC:18
The requirement that the employer post a cash or surety
bond to perfect its/his appeal is apparently intended to assure
the workers that if they prevail in the case, they will receive
the money judgment in their favor upon the dismissal of the
employer's appeal. It was intended to discourage employers
from using an appeal to delay, or even evade, their
obligation to satisfy their employees' just and lawful
claims.19
But while the posting of a cash or surety bond is
jurisdictional and is a condition sine qua non to the
perfection of an appeal, there is a plethora of jurisprudence
recognizing exceptional instances wherein the Court relaxed
the bond requirement as a condition for posting the appeal.
In Olacao v. NLRC20 for example, the NLRC had discovered
that the separation pay awarded by the Labor Arbiter had
already been paid by the employer. Since a modification of
the Labor Arbiters Decision was the only way to forestall
the grant of separation pay twice, the NLRC allowed the
appeal perfected only on the twelfth (12th) day.21 In Cosico,
Jr. v. NLRC,22 the employer timely posted the bond based on
the monetary award for back wages and thirteenth month
pay, but excluding the exorbitant award for moral and
exemplary damages. The Court ruled that there was
substantial compliance, owing to the fact that the NLRC had
since excluded the award of damages from the computation
32
of the surety bond.23 And in Star Angel Handicraft v.
NLRC,24 the Court noted that a motion for reduction of the
appeal bond had been filed within the reglementary period,
and that the appeal should not be deemed perfected until the
NLRC has acted on the motion and the appellant has filed
the bond as fixed by the NLRC.25
In YBL v. NLRC,26 the appeal was interposed by the
employers on 11 September 1989, or only six (6) days from
the effectivity of the Interim Rules on Appeals which
incorporated for the first time the appeal bond requirement
imposed by Republic Act No. 6715, an amendatory law to
the Labor Code. The Court therein considered the apparent
fact that neither the counsel for the employer nor that for the
employee was already aware of the then new requirement
requiring the posting of a bond on appeal.27 The same
justification was cited with approval by the Court
in Blancaflor v. NLRC,28 and the same circumstance is
likewise apparent in Rada v. NLRC.29
In the case of Taberrah v. NLRC,30 the Court made note of
the fact that the assailed decision of the Labor Arbiter
concerned did not contain a computation of the monetary
award due the employees, a circumstance which is likewise
present in this case. In said case, the Court stated,
As a rule, compliance with the requirements for the
perfection of an appeal within the reglamentary period is
mandatory and jurisdictional. However, in National
Federation of Labor Unions v. Ladrido as well as in several
other cases, this Court relaxed the requirement of the posting
of an appeal bond within the reglementary period as a
condition for perfecting the appeal. This is in line with the
principle that substantial justice is better served by allowing
the appeal to be resolved on the merits rather than
dismissing it based on a technicality.31
The judgment of the Labor Arbiter in this case merely stated
that petitioner was entitled to backwages, 13th month pay
and service incentive leave pay without however including a
computation of the alleged amounts. As the private
respondents asserted in their motion for reconsideration
anent the NLRC decision:
III. NO BOND WAS FILED BECAUSE OF THE
VAGUENESS OF THE AWARD
The award as contained in the appealed 29 October 1993
decision did not state the exact amount to be awarded. In
particular, while it may be assumed, as stated in the decision
subject of this motion, the award be based on the 300.00
per column/article basis, this is not clear in the decision
which likewise mentioned an award for thirteenth (13th)

month pay and service incentive leave pay. Noteworthy is
the fact that the complainant, not being an employee, was
not being paid a fixed salary. Hence, herein respondents-
appellants requested in their memorandum on appeal that the
Commission fixes (sic) the amount of the bond, if it finds
the same necessary in exceptional cases like the present
case, to wit:
"xxx Respondents-appellants however manifest that they are
able and willing to post a bond that this Commission may fix
if the latter finds it necessary." (Notice and Memorandum on
Appeal dated 24 December 1993, p. 7).32(Emphasis in the
original)
In the case of NFLU v. Ladrido III,33 this Court postulated
that "private respondents cannot be expected to post such
appeal bond equivalent to the amount of the monetary award
when the amount thereof was not included in the decision of
the labor arbiter."34 The computation of the amount awarded
to petitioner not having been clearly stated in the decision of
the labor arbiter, private respondents had no basis for
determining the amount of the bond to be posted.
Thus, while the requirements for perfecting an appeal must
be strictly followed as they are considered indispensable
interdictions against needless delays and for orderly
discharge of judicial business,35 the law does admit of
exceptions when warranted by the circumstances.
Technicality should not be allowed to stand in the way of
equitably and completely resolving the rights and
obligations of the parties.36 But while this Court may relax
the observance of reglementary periods and technical rules
to achieve substantial justice,37 it is not prepared to give due
course to this petition and make a pronouncement on the
weighty issue obtaining in this case until the law has been
duly complied with and the requisite appeal bond duly paid
by private respondents.
WHEREFORE, without giving due course to the petition,
the Labor Arbiter is hereby ordered to clarify the amount of
the award due the petitioner. Private respondents are ordered
to post the requisite bond in accordance with Article 223 of
the Labor Code, whereupon, the petition will be given due
course. No pronouncement as to costs.
SO ORDERED.
33
G.R. No. 109210 April 17, 1996
ENGINEER LEONCIO V. SALAZAR, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION
(2nd Division) and H.L. CARLOS CONSTRUCTION,
CO. INC., respondents.
KAPUNAN, J.:p
This is a petition for certiorari * to annul the decision of the
National Labor Relations Commission in NLRC Case No.
002855-92 dated 27 .November 1992 which affirmed in
toto the decision of the Labor Arbiter in NLRC NCR-00-09-
05335-91 dated 29 January 1992 dismissing the complaint
filed by petitioner for lack of merit. The NLRC's resolution
dated 22 February 1993 is similarly impugned for denying
petitioner's motion for reconsideration.
The antecedent facts are as follows:
On 17 April 1990, private respondent, at a monthly salary of
P4,500.00, employed petitioner as construction/project
engineer for the construction of the Monte de Piedad
building in Cubao, Quezon City. Allegedly, by virtue of an
oral contract, petitioner would also receive a share in the
profits after completion of the project and that petitioner's
services in excess of eight (8) hours on regular days and
services rendered on weekends and legal holidays shall be
compensable overtime at the rate of P27.85 per hour.
On 16 April 1991, petitioner received a memorandum issued
by private respondent's project manager, Engr. Nestor A.
Delantar informing him of the termination of his services
effective on 30 April 1991. Reproduced hereunder is the
abovementioned memorandum:
April 16, 1991
MEMORANDUM TO:
LEONCIO V. SALAZAR
Project Engineer
MONTE DE PIEDAD BLDG. PROJECT
Quezon City
Due to the impending completion of the aforementioned
project and the lack of up-coming contracted works for our
company in the immediate future, volume of work for our
engineering and technical personnel has greatly been
diminished.

In view of this, you are hereby advised to wind up all
technical reports including accomplishments, change orders,
etc.
Further, you are advised that your services are being
terminated effective at the close of office hours on April 30,
1991.
This, however, has no prejudice to your re-employment in
this company in its local and overseas projects should the
need for your services arises.
Thank you for your invaluable services rendered to this
company.
(Sgd.) NESTOR A. DELANTAR
Project manager
Noted By:
(Sgd.) Mario B. Cornista
Vice President 1
On 13 September 1991, petitioner filed a complaint against
private respondent for illegal dismissal, unfair labor practice,
illegal deduction,
non-payment of wages, overtime rendered, service incentive
leave pay, commission, allowances, profit-sharing and
separation pay with the NLRC-NCR Arbitration Branch,
Manila. 2
On 29 January 1992, Labor Arbiter Raul T. Aquino rendered
a decision, the dispositive portion of which reads, thus:
WHEREFORE, responsive to the foregoing, the instant case
is hereby DISMISSED for lack of merits.
SO ORDERED. 3
The Labor Arbiter ruled that petitioner was a managerial
employee and therefore exempt from payment of benefits
such as overtime pay, service incentive leave pay and
premium pay for holidays and rest days. Petitioner, Labor
Arbiter Aquino further declared, was also not entitled to
separation pay. He was hired as a project employee and his
services were terminated due to the completion of the
project. 4
The Labor Arbiter, likewise, denied petitioner's claim for a
share in the project's profits, reimbursement of legal
expenses and unpaid wages for lack of basis. 5
On 14 April 1992, petitioner appealed to the National Labor
Relations Commission (NLRC).
34
On 27 November 1992, the NLRC rendered the assailed
decision, the dispositive portion of which reads as follows:
WHEREFORE, premises considered, the appeal is hereby
Dismissed and the assailed decision is Affirmed en toto.
SO ORDERED. 6
On 29 January 1993, petitioner filed a motion for
reconsideration which the NLRC denied for lack of merit on
22 February 1993. 7
Hence, the instant petition wherein the following issues were
raised:
I. Granting for the sake of argument without conceding, that
complainant-petitioner herein was a managerial employee,
was his verbal contract to be paid his overtime services as
stated in paragraph 2(b) of this Petition invalid? and the
payments of such overtime services as evidenced by
Exhibits "B" to "B-24" (the genuineness and authenticity of
which are not disputed) are they not evidentiary and of
corroborative value to the true unwritten agreement between
the parties in this case?
II. Is there any portion of the Labor Code that prohibits
contracts between employer and employee giving the latter
the benefit of being paid overtime services, as in this
particular case?
III. Where an employee was induced to accept a low or
distorted salary or wage level, because of an incentive
promise to receive a bigger compensation than that which
would be his true and correct wage level as shown by
documents for the payment of his distorted wages and
overtime services, is it not legally proper, in the alternative
to claim payment of the differential of his undistorted salary
or wage level when the promised incentive compensation is
denied by his employer after the completion of the job for
which he has employed?
IV. Is the Certificate of employment issued to an employee
by his employer, assailable by mere affidavits of denials to
the effect that said Certificate was issued because of the
insistence of the employee that it be made to include a
period he did not work, but which such fact of insistence or
request is also denied by the employee, because he really
worked during the period included in said Certificate?
V. Is the employer liable for the payment of the attorney's
pay incurred by his employee in a work connected criminal
prosecution against him for an act done by another employee
assigned by same employer to do the act which was the
subject of the criminal prosecution? 8

Petitioner prays that judgment be rendered, thus:
1. That the decision of the NLRC and its resolution denying
the Motion for Reconsideration be set aside on grounds of
grave abuse of discretion and;
2. That private respondent be ordered to pay petitioner the
following:
a. the premium pays for his overtime services of 368 hours
on ordinary days at 25%; 272 hours on Saturdays at 30%;
272 hours on Sundays plus 24 hours on legal holidays at
200% computed at the rate of P27.85 per hour of undistorted
wage level;
b. in the alternative, to pay at least one (1) percent of 4.5
million pesos profit share, or the sum total of the differential
of his salaries, in the amount of P2,184.00 per month, since
April 17, 1990 to April 30, 1991, his undistorted salary
being P6,684.00 per month; and to pay his unpaid salary for
15 days - May 1 to 15, 1991, with his undistorted salary rate;
c. the amount of P3,000.00 reimbursement for what he paid
his defense counsel in that criminal action which should
have instead been against respondent's general manager;
d. Separation pay of at least one month salary, he having
been terminated unreasonably without cause, and three days
service incentive leave pay; and to pay the costs; 9
Before proceeding to the merits of the petition, we shall first
resolve the procedural objection raised. Private respondent
prays for the outright dismissal of the instant petition on
grounds of wrong mode of appeal, it being in the form of a
petition for review on certiorari (Rule 45 of the Revised
Rules of Court) and not a special civil action
for certiorari (Rule 65 thereof) which is the correct mode of
appeal from decisions of the NLRC.
Although we agree with private respondent that appeals to
the Supreme Court from decisions of the NLRC should be in
the form of a special civil action for certiorari under Rule 65
of the Revised Rules of Court, this rule is not inflexible. In a
number of cases, 10 this Court has resolved to treat as special
civil actions for certiorari petitions erroneously captioned as
petitions for review on certiorari "in the interest of justice."
In People's Security, Inc. v. NLRC, 11 we elaborated, thus:
Indeed, this Court has time and again declared that the only
way by which a labor case may reach the Supreme Court is
through a petition for certiorari under Rule 65 of the Rules
of Court alleging lack or excess of jurisdiction or grave
abuse of discretion (Pearl S. Buck Foundation v. NLRC, 182
SCRA 446 [1990]).
35
This petition should not be dismissed on a mere technicality
however. "Dismissal of appeal purely on technical grounds
is frowned upon where the policy of the courts is to
encourage hearings of appeal on their merits. The rules of
procedure ought not to be applied in a very rigid technical
sense, rules of procedure are used only to help secure, not
override substantial justice. If a technical and rigid
enforcement of the rules is made, their aim would be
defeated" (Tamayo v. Court of Appeals, 209 SCRA 518, 522
[1992] citing Gregorio v. Court of Appeals, 72 SCRA 120
[1976]). Consequently, in the interest of justice, the instant
petition for review shall be treated as a special civil action
on certiorari. (Emphasis ours.)
Moving on to the merits, stated differently, the issues for our
resolution are the following:
1) Whether or not petitioner is entitled to overtime pay,
premium pay for services rendered on rest days and holidays
and service incentive leave pay, pursuant to Articles 87, 93,
94 and 95 of the Labor Code;
2) Whether or not petitioner is entitled to a share in the
profits of the construction project;.
3) Whether or not petitioner rendered services from 1 May
to 15 May 1991 and is, therefore, entitled to unpaid wages;
4) Whether or not private respondent is liable to reimburse
petitioner's legal expenses and;
5) Whether or not petitioner is entitled to separation pay.
On the first issue, the NLRC concurred with the Labor
Arbiter's ruling that petitioner was a managerial employee
and, therefore, exempt from payment of overtime pay,
premium pay for holidays and rest days and service
incentive leave pay under the law. The NLRC declared that:
Book III on conditions of employment exempts managerial
employees from its coverage on the grant of certain
economic benefits, which are the ones the complainant-
appellant was demanding from respondent. It is an
undisputed fact that appellant was a managerial employee
and such, he was not entitled to the economic benefits he
sought to recover. 12
Petitioner claims that since he performs his duties in the
project site or away from the principal place of business of
his employer (herein private respondent), he falls under the
category of "field personnel." However, petitioner
accentuates that his case constitutes the exception to the
exception because his actual working hours can be
determined as evidenced by the disbursement vouchers

containing payments of petitioner's salaries and overtime
services. 13 Strangely, petitioner is of the view that field
personnel may include managerial employees.
We are constrained to disagree with petitioner.
In his original complaint, petitioner stated that the nature of
his work is "supervisory-engineering." 14 Similarly, in his
own petition and in other pleadings submitted to this Court,
petitioner confirmed that his job was to supervise the
laborers in the construction project 15 Hence, although
petitioner cannot strictly be classified as a managerial
employee under Art. 82 of the Labor Code, 16 and sec. 2(b),
Rule I, Book III of the Omnibus Rules Implementing the
Labor Code, 17 nonetheless he is still not entitled to payment
of the aforestated benefits because he falls squarely under
another exempt category "officers or members of a
managerial staff" as defined under sec. 2(c) of the
abovementioned implementing rules:
Sec. 2. Exemption. The provisions of this Rule shall not
apply to the following persons if they qualify for exemption
under the condition set forth herein:
xxx xxx xxx
(c) Officers or members of a managerial staff if they
perform the following duties and responsibilities:
(1) The primary duty consists of the performance of work
directly related to management policies of their employer;
(2) Customarily and regularly exercise discretion and
independent judgment;
(3) [i] Regularly and directly assist a proprietor or a
managerial employee whose primary duty consists of the
management of the establishment in which he is employed
or subdivision thereof; or [ii] execute under general
supervision work along specialized or technical lines
requiring special training, experience, or knowledge; or [iii]
execute under general supervision special assignments and
tasks; and
(4) who do not devote more than 20 percent of their hours
worked in a work-week to activities which are not directly
and closely related to the performance of the work described
in paragraphs (1), (2), and (3) above.
A case in point is National Sugar Refineries Corporation
v. NLRC. 18 On the issue of "whether supervisory
employees, as defined in Article 212 (m), Book V of the
Labor Code, should be considered as officers or members of
the managerial staff under Article 82, Book III of the same
36
Code and hence not entitled to overtime, rest day and
holiday pay," 19 this Court ruled:
A cursory perusal of the Job Value Contribution Statements
of the union members will readily show that these
supervisory employees are under the direct supervision of
their respective department superintendents and that
generally they assist the latter in planning, organizing,
staffing, directing, controlling, communicating and in
making decisions in attaining the company's set goals and
objectives. These supervisory employees are likewise
responsible for the effective and efficient operation of their
respective departments. . . .
xxx xxx xxx
From the foregoing, it is apparent that the members of
respondent union discharge duties and responsibilities which
ineluctably qualify them as officers or members of the
managerial staff, as defined in Section 2, Rule I, Book III of
the aforestated Rules to Implement the Labor Code, viz.: (1)
their primary duty consists of the performance of work
directly related to management policies of their employer;
(2) they customarily and regularly exercise discretion and
independent judgment; (3) they regularly and directly assist
the managerial employee whose primary duty consists of the
management of a department of the establishment in which
they are employed; (4) they execute, under general
supervision, work along specialized or technical lines
requiring special training, experience, or knowledge; (5)
they execute, under general supervision, special assignments
and tasks; and (6) they do not devote more than 20% of their
hours worked in a work-week to activities which are not
directly and clearly related to the performance of their work
hereinbefore described.
Under the facts obtaining in this case, we are constrained to
agree with petitioner that the union members should be
considered as officers or members of the managerial staff
and are, therefore, exempt from the coverage of Article 82.
Perforce, they are not entitled to overtime, rest day and
holiday pay. 20
The aforequoted rationale equally applies to petitioner
herein considering in the main his supervisory duties as
private respondent's project engineer, duties which, it is
significant to note, petitioner does not dispute.
Petitioner, likewise, claims that the NLRC failed to give due
weight and consideration to the fact that private respondent
compensated him for his overtime services as indicated in
the various disbursement vouchers he submitted as evidence.

Petitioner's contention is unmeritorious. That petitioner was
paid overtime benefits does not automatically and
necessarily denote that petitioner is entitled to such benefits.
Art. 82 of the Labor Code specifically delineates who are
entitled to the overtime premiums and service incentive
leave pay provided under Art. 87, 93, 94 and 95 of the Labor
Code and the exemptions thereto. As previously determined,
petitioner falls under the exemptions and therefore has no
legal claim to the said benefits. It is well and good that
petitioner was compensated for his overtime services.
However, this does not translate into a right on the part of
petitioner to demand additional payment when, under the
law, petitioner is clearly exempted therefrom.
Going to the second issue, petitioner insists that private
respondent promised him a share in the profits after
completion of the construction project. It is because of this
oral agreement, petitioner elucidates, that he agreed to a
monthly salary of P4,500.00, an amount which he claims is
too low for a professional civil engineer like him with the
rank of project engineer.
Arguing further, petitioner states that payment of his
overtime services, as shown by the aforementioned
disbursement vouchers, proves the existence of this verbal
agreement since payment of his overtime services
constitutes part of this so-called understanding.
We cannot accede to petitioner's demand. Nowhere in the
disbursement vouchers can we find even the remotest hint of
a profit-sharing agreement between petitioner and private
respondent. Petitioner's rationalization stretches the
imagination way too far.
Thus, we concur with the ruling of the Labor Arbiter:
As to the issue of profit sharing, we simply cannot grant the
same on the mere basis of complainant's allegation that
respondent verbally promised him that he is entitled to a
share in the profits derive(d) from the projects. Benefits or
privileges of this nature (are) usually in writing, besides
complainant failed to (establish) that said benefits or
privileges (have) been given to any of respondent('s)
employees as a matter of practice or policy. 21 (Words in
parenthesis supplied.)
Anent the third issue, petitioner alleges that on 30 April
1991, before closing hours, private respondent's project
manager, Engineer Nestor Delantar advised him to continue
supervising the "finishing touches on many parts of the
building which took him and the assisting laborers until 15
May 1991." 22
37
As proof of his extended service, petitioner presented the
certificate of service issued by Engr. Delantar attesting to
petitioner's employment as project engineer from April 1990
to May 1991. 23
In contrast, private respondent argues that the
abovementioned certificate was issued solely to
accommodate petitioner who needed the same for his work
application abroad. It further stressed that petitioner failed to
prove he actually worked during the aforestated period.
On this score, we rule for the petitioner. The purpose for
which the said certificate was issued becomes irrelevant.
The fact remains that private respondent knowingly and
voluntarily issued the certificate. Mere denials and self-
serving statements to the effect that petitioner allegedly
promised not to use the certificate against private respondent
are not sufficient to overturn the same. Hence, private
respondent is estopped from assailing the contents of its own
certificate of service.
During the construction of the Monte de Piedad building, a
criminal complaint for unjust vexation was filed by one
Salvador Flores against the officers of the Monte de Piedad
& Savings Bank, the owner thereof, for constructing a
bunkhouse in front of his (Flores) apartment and making it
difficult for him to enter the same.
Petitioner avers that he was implicated in the complaint for
the sole reason that he was the construction engineer of the
project. Hence, private respondent, being the employer, is
obligated to pay petitioner's legal expenses, particularly,
reimbursement of the fees petitioner paid his counsel
amounting to P3,000.00. Petitioner argues that private
respondent's act of giving allowances to enable petitioner to
attend the hearings, as shown in the disbursement voucher
submitted as evidence, 24 constitutes an admission of the
aforestated obligation.
We agree with petitioner. Although not directly implicated
in the criminal complaint, private respondent is nonetheless
obligated to defray petitioner's legal expenses. Petitioner
was included in the complaint not in his personal capacity
but in his capacity as project engineer of private respondent
and the case arose in connection with his work as such. At
the construction site, petitioner is the representative of
private respondent being its employee and he acts for and in
behalf of private respondent. Hence, the inclusion of
petitioner in the complaint for unjust vexation, which was
work-related, is equivalent to inclusion of private respondent
itself.
 38

On the last issue, we rule that petitioner is a project
employee and, therefore, not entitled to separation pay.
The applicable provision is Article 280 of the Labor Code
which defines the term "project employee," thus:
Art. 280. Regular and Casual Employment. The
provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the
parties, an employment shall be deemed to be regular where
the employee has been engaged to perform activities which
are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has
been fixed for a specific period or undertaking the
completion or termination of which has been determined at
the time of the engagement of the employee or where the
work or services to be performed is seasonal in nature and
the employment is for the duration of the season. (Emphasis
ours.) 25
In the case at bench, it was duly established that private
respondent hired petitioner as project or construction
engineer specifically for its Monte de Piedad building
project. In his own words, petitioner declared:
xxx xxx xxx
2. That complainant-petitioner herein, by virtue of an oral
agreement entered into with private respondent herein
through its proprietor, president and general manager, Engr.
Honorio L. Carlos, on April 17, 1990, began to work as a
licensed Civil Engineer as construction or engineer of its
contracted project, the Monte de Piedad Bank Building, at
Cubao, Quezon City, on the following terms and conditions,
to wit:
xxx xxx xxx
Project employees are not entitled to termination pay if they
are terminated as a result of the completion of the project or
any phase thereof in which they are employed, regardless of
the number of projects in which they have been employed
by a particular construction company. Moreover, the
company is not required to obtain a clearance from the
Secretary of Labor in connection with such termination.
What is required of the company is a report to the nearest
Public Employment Office for statistical purposes.
xxx xxx xxx
Department Order No. 19 of the Department of Labor and
Employment (DOLE) entitled "Guidelines Governing the
Employment of Workers in the Construction Industry"
promulgated on 1 April 1993, reiterates the same rule. 30
WHEREFORE, premises considered, the assailed decision is
hereby MODIFIED as follows:
1) Private respondent is ordered to pay petitioner for
services rendered from 1 May to 15 May 1991; and,
2) Private respondent is ordered to reimburse petitioner's
legal expenses in the amount of P3,000.00.
In all other respects, the impugned decision is hereby
AFFIRMED.
SO ORDERED.

. . . (Emphasis ours.) 26

Accordingly, as project employee, petitioner's services are

deemed coterminous with the project, that is, petitioner's
services may be terminated as soon as the project for which
he was hired is completed. 27

There can be no dispute that petitioner's dismissal was due

to the completion of the construction of the Monte de Piedad
building. Petitioner himself stated that it took him and his
assisting laborers until 15 May 1991 to complete the
"finishing touches" on the said building. 28

Petitioner, thus, has no legal right to demand separation

pay. 29 Policy Instruction No. 20 entitled "Stabilizing
Employer-Employee Relations in the Construction Industry"
explicitly mandates that:

G.R. No. 94951 April 22, 1991
APEX MINING COMPANY, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and
SINCLITICA CANDIDO, respondents.
Bernabe B. Alabastro for petitioner.
Angel Fernandez for private respondent.
GANCAYCO, J.:
Is the househelper in the staff houses of an industrial
company a domestic helper or a regular employee of the said
firm? This is the novel issue raised in this petition.
Private respondent Sinclita Candida was employed by
petitioner Apex Mining Company, Inc. on May 18, 1973 to
perform laundry services at its staff house located at Masara,
Maco, Davao del Norte. In the beginning, she was paid on a
piece rate basis. However, on January 17, 1982, she was
paid on a monthly basis at P250.00 a month which was
ultimately increased to P575.00 a month.
On December 18, 1987, while she was attending to her
assigned task and she was hanging her laundry, she
accidentally slipped and hit her back on a stone. She
reported the accident to her immediate supervisor Mila de la
Rosa and to the personnel officer, Florendo D. Asirit. As a
result of the accident she was not able to continue with her
work. She was permitted to go on leave for medication. De
la Rosa offered her the amount of P 2,000.00 which was
eventually increased to P5,000.00 to persuade her to quit her
job, but she refused the offer and preferred to return to work.
Petitioner did not allow her to return to work and dismissed
her on February 4, 1988.
On March 11, 1988, private respondent filed a request for
assistance with the Department of Labor and Employment.
After the parties submitted their position papers as required
by the labor arbiter assigned to the case on August 24, 1988
the latter rendered a decision, the dispositive part of which
reads as follows:
WHEREFORE, Conformably With The Foregoing,
judgment is hereby rendered ordering the respondent, Apex
Mining Company, Inc., Masara, Davao del Norte, to pay the
complainant, to wit:
1 Salary
Differential P16,289.20
2. Emergency Living
39
Allowance 12,430.00
3. 13th Month Pay
Differential 1,322.32
4. Separation Pay
(One-month for
every year of
service [1973-19881) 25,119.30
or in the total of FIFTY FIVE THOUSAND ONE
HUNDRED SIXTY ONE PESOS AND 42/100
(P55,161.42).
SO ORDERED.1
Not satisfied therewith, petitioner appealed to the public
respondent National Labor Relations Commission (NLRC),
wherein in due course a decision was rendered by the Fifth
Division thereof on July 20, 1989 dismissing the appeal for
lack of merit and affirming the appealed decision. A motion
for reconsideration thereof was denied in a resolution of the
NLRC dated June 29, 1990.
Hence, the herein petition for review by certiorari, which
appopriately should be a special civil action for certiorari,
and which in the interest of justice, is hereby treated as
such.2 The main thrust of the petition is that private
respondent should be treated as a mere househelper or
domestic servant and not as a regular employee of petitioner.
The petition is devoid of merit.
Under Rule XIII, Section l(b), Book 3 of the Labor Code, as
amended, the terms "househelper" or "domestic servant" are
defined as follows:
The term "househelper" as used herein is synonymous to the
term "domestic servant" and shall refer to any person,
whether male or female, who renders services in and about
the employer's home and which services are usually
necessary or desirable for the maintenance and enjoyment
thereof, and ministers exclusively to the personal comfort
and enjoyment of the employer's family.3
The foregoing definition clearly contemplates such
househelper or domestic servant who is employed in the
employer's home to minister exclusively to the personal
comfort and enjoyment of the employer's family. Such
definition covers family drivers, domestic servants, laundry
 40

women, yayas, gardeners, houseboys and other similar interested in returning to her work for valid reasons, the
househelps. payment of separation pay to her is in order.

The definition cannot be interpreted to include househelp or WHEREFORE, the petition is DISMISSED and the
laundrywomen working in staffhouses of a company, like appealed decision and resolution of public respondent
petitioner who attends to the needs of the company's guest NLRC are hereby AFFIRMED. No pronouncement as to
and other persons availing of said facilities. By the same costs.
token, it cannot be considered to extend to then driver,
houseboy, or gardener exclusively working in the company, SO ORDERED.
the staffhouses and its premises. They may not be
considered as within the meaning of a "househelper" or
"domestic servant" as above-defined by law.

The criteria is the personal comfort and enjoyment of the

family of the employer in the home of said employer. While
it may be true that the nature of the work of a househelper,
domestic servant or laundrywoman in a home or in a
company staffhouse may be similar in nature, the difference
in their circumstances is that in the former instance they are
actually serving the family while in the latter case, whether
it is a corporation or a single proprietorship engaged in
business or industry or any other agricultural or similar
pursuit, service is being rendered in the staffhouses or within
the premises of the business of the employer. In such
instance, they are employees of the company or employer in
the business concerned entitled to the privileges of a regular
employee.

Petitioner contends that it is only when the househelper or

domestic servant is assigned to certain aspects of the
business of the employer that such househelper or domestic
servant may be considered as such as employee. The Court
finds no merit in making any such distinction. The mere fact
that the househelper or domestic servant is working within
the premises of the business of the employer and in relation
to or in connection with its business, as in its staffhouses for
its guest or even for its officers and employees, warrants the
conclusion that such househelper or domestic servant is and
should be considered as a regular employee of the employer
and not as a mere family househelper or domestic servant as
contemplated in Rule XIII, Section l(b), Book 3 of the Labor
Code, as amended.

Petitioner denies having illegally dismissed private

respondent and maintains that respondent abandoned her
work.1wphi1This argument notwithstanding, there is
enough evidence to show that because of an accident which
took place while private respondent was performing her
laundry services, she was not able to work and was
ultimately separated from the service. She is, therefore,
entitled to appropriate relief as a regular employee of
petitioner. Inasmuch as private respondent appears not to be

G.R. No. L-75038 August 23, 1993
ELIAS VILLUGA, RENATO ABISTADO, JILL
MENDOZA, ANDRES ABAD, BENJAMIN
BRIZUELA, NORLITO LADIA, MARCELO
AGUILAN, DAVID ORO, NELIA BRIZUELA, FLORA
ESCOBIDO, JUSTILITA CABANIG, and DOMINGO
SAGUIT, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION
(THIRD DIVISION) and BROAD STREET
TAILORING and/or RODOLFO
ZAPANTA, respondents.
Balguma, Macasaet & Associates for petitioners.
Teresita Gandionco Oledan for private respondents.
NOCON, J.:
A basic factor underlying the exercise of rights and the filing
of claims for benefits under the Labor Code and other
presidential issuances or labor legislations is the status and
nature of one's employment. Whether an employer-
employee relationship exist and whether such employment is
managerial in character or that of a rank and file employee
are primordial considerations before extending labor
benefits. Thus, petitioners in this case seek a definitive
ruling on the status and nature of their employment with
Broad Street Tailoring and pray for the nullification of the
resolution dated May 12, 1986 of the National Labor
Relations Commissions in NLRC Case No. RB-IV- 21558-
78-T affirming the decision of Labor Arbiter Ernilo V.
Pealosa dated May 28, 1979, which held eleven of them as
independent contractors and the remaining one as employee
but of managerial rank.
The facts of the case shows that petitioner Elias Villuga was
employed as cutter in the tailoring shop owned by private
respondent Rodolfo Zapanta and known as Broad Street
Tailoring located at Shaw Boulevard, Mandaluyong, Metro
Manila. As cutter, he was paid a fixed monthly salary of
P840.00 and a monthly transportation allowance of P40.00.
In addition to his work as cutter, Villuga was assigned the
chore of distributing work to the shop's tailors or sewers
when both the shop's manager and assistant manager would
be absent. He saw to it that their work conformed with the
pattern he had prepared and if not, he had them redone,
repaired or resewn.
41
The other petitioners were either ironers, repairmen and
sewers. They were paid a fixed amount for every item
ironed, repaired or sewn, regardless of the time consumed in
accomplishing the task. Petitioners did not fill up any time
record since they did not observe regular or fixed hours of
work. They were allowed to perform their work at home
especially when the volume of work, which depended on the
number of job orders, could no longer be coped up with.
From February 17 to 22, 1978, petitioner Villuga failed to
report for work allegedly due to illness. For not properly
notifying his employer, he was considered to have
abandoned his work.
In a complaint dated March 27, 1978, filed with the
Regional Office of the Department of Labor, Villuga
claimed that he was refused admittance when he reported for
work after his absence, allegedly due to his active
participation in the union organized by private respondent's
tailors. He further claimed that he was not paid overtime
pay, holiday pay, premium pay for work done on rest days
and holidays, service incentive leave pay and 13th month
pay.
Petitioners Renato Abistado, Jill Mendoza, Benjamin
Brizuela and David Oro also claimed that they were
dismissed from their employment because they joined the
Philippine Social Security Labor Union (PSSLU).
Petitioners Andres Abad, Norlito Ladia, Marcelo Aguilan,
Nelia Brizuela, Flora Escobido, Justilita Cabaneg and
Domingo Saguit claimed that they stopped working because
private respondents gave them few pieces of work to do
after learning of their membership with PSSLU. All the
petitioners laid claims under the different labor standard
laws which private respondent allegedly violated.
On May 28, 1979, Labor Arbiter Ernilo V. Pealosa
rendered a decision ordering the dismissal of the complaint
for unfair labor practices, illegal dismissal and other money
claims except petitioner Villuga's claim for 13th month pay
for the years 1976, 1977 and 1980. The dispositive portion
of the decision states as follows:
WHEREFORE, premises considered, the respondent Broad
Street Tailoring and/or Rodolfo Zapanta are hereby ordered
to pay complainant Elias Villuga the sum of ONE
THOUSAND TWO HUNDRED FORTY-EIGHT PESOS
AND SIXTY-SIX CENTAVOS (P1,248.66) representing
his 13th month pay for the years 1976, 1977 and 1978. His
other claims in this case are hereby denied for lack of merit.

The complaint insofar as the other eleven (11) complainants
are concerned should be, as it is hereby dismissed for want
of jurisdiction.1
On appeal, the National Labor Relations Commission
affirmed the questioned decision in a resolution dated May
12, 1986, the dispositive portion of which states as follows:
WHEREFORE, premises considered, the decision appealed
from is, as it is hereby AFFIRMED, and the appeal
dismissed. 2
Presiding Commissioner Guillermo C. Medina merely
concurred in the result while Commissioner Gabriel M.
Gatchalian rendered a dissenting opinion which states as
follows:
I am for upholding employer-employee relationship as
argued by the complainants before the Labor Arbiter and on
appeal. The further fact that the proposed decision
recognizes complainant's status as piece-rate worker all the
more crystallizes employer-employee relationship the
benefits prayed for must be granted. 3
Hence, petitioners filed this instant certiorari case on the
following grounds:
1. That the respondent National Labor Relations
Commission abused its discretion when it ruled that
petitioner/complainant, Elias Villuga falls within the
category of a managerial employee;
2. . . . when it ruled that the herein petitioners were not
dismissed by reason of their union activities;
3. . . . when it ruled that petitioners Andres Abad, Benjamin
Brizuela, Norlito Ladia, Marcelo Aguilan, David Oro, Nelia
Brizuela, Flora Escobido, Justilita Cabaneg and Domingo
Saguit were not employees of private respondents but were
contractors.
4. . . . when it ruled that petitioner Elias Villuga is not
entitled to overtime pay and services for Sundays and Legal
Holidays; and
5. . . . when it failed to grant petitioners their respective
claims under the provisions of P.D. Nos. 925, 1123 and
851.4
Under Rule 1, Section 2(c), Book III of the Implementing
Rules of Labor Code, to be a member of a managerial staff,
the following elements must concur or co-exist, to wit: (1)
that his primary duty consists of the performance of work
directly related to management policies; (2) that he
42
customarily and regularly exercises discretion and
independent judgment in the performance of his functions;
(3) that he regularly and directly assists in the management
of the establishment; and (4) that he does not devote his
twenty per cent of his time to work other than those
described above.
Applying the above criteria to petitioner Elias Villuga's case,
it is undisputed that his primary work or duty is to cut or
prepare patterns for items to be sewn, not to lay down or
implement any of the management policies, as there is a
manager and an assistant manager who perform said
functions. It is true that in the absence of the manager the
assistant manager, he distributes and assigns work to
employees but such duty, though involving discretion, is
occasional and not regular or customary. He had also the
authority to order the repair or resewing of defective item
but such authority is part and parcel of his function as cutter
to see to it that the items cut are sewn correctly lest the
defective nature of the workmanship be attributed to his
"poor cutting." Elias Villuga does not participate in policy-
making. Rather, the functions of his position involve
execution of approved and established policies. In Franklin
Baker Company of the Philippines v. Trajano, 5 it was held
that employees who do not participate in policy-making but
are given ready policies to execute and standard practices to
observe are not managerial employees. The test of
"supervisory or managerial status" depends on whether a
person possesses authority that is not merely routinary or
clerical in nature but one that requires use of independent
judgment. In other words, the functions of the position are
not managerial in nature if they only execute approved and
established policies leaving little or no discretion at all
whether to implement said policies or not. 6
Consequently, the exclusion of Villuga from the benefits
claimed under Article 87 (overtime pay and premium pay
for holiday and rest day work), Article 94, (holiday pay),
and Article 95 (service incentive leave pay) of the Labor
Code, on the ground that he is a managerial employee is
unwarranted. He is definitely a rank and file employee hired
to perform the work of the cutter and not hired to perform
supervisory or managerial functions. The fact that he is
uniformly paid by the month does not exclude him from the
benefits of holiday pay as held in the case of Insular Bank of
America Employees Union v. Inciong.7 He should therefore
be paid in addition to the 13th month pay, his overtime pay,
holiday pay, premium pay for holiday and rest day, and
service incentive leave pay.
As to the dismissal of the charge for unfair labor practices of
private respondent consisting of termination of employment

of petitioners and acts of discrimination against members of
the labor union, the respondent Commission correctly held
the absence of evidence that Mr. Zapanta was aware of
petitioners' alleged union membership on February 22, 1978
as the notice of union existence in the establishment with
proposal for recognition and collective bargaining
negotiation was received by management only an March 3,
1978. Indeed, self-serving allegations without concrete proof
that the private respondent knew of their membership in the
union and accordingly reacted against their membership do
not suffice.
Nor is private respondent's claim that petitioner Villuga
abandoned his work acceptable. For abandonment to
constitute a valid cause for dismissal, there must be a
deliberate and unjustified refusal of the employee to resume
his employment. Mere absence is not sufficient, it must be
accompanied by overt acts unerringly pointing to the fact
that the employee simply does not want to work
anymore.8 At any rate, dismissal of an employee due to his
prolonged absence without leave by reason of illness duly
established by the presentation of a medical certificate is not
justified.9 In the case at bar, however, considering that
petitioner Villuga absented himself for four (4) days without
leave and without submitting a medical certificate to support
his claim of illness, the imposition of a sanction is justified,
but surely, not dismissal, in the light of the fact that this is
petitioner's first offense. In lieu of reinstatement, petitioner
Villuga should be paid separation pay where reinstatement
can no longer be effected in view of the long passage of time
or because of the realities of the situation. 10 But petitioner
should not be granted backwages in addition to
reinstatement as the same is not just and equitable under the
circumstances considering that he was not entirely free from
blame. 11
As to the other eleven petitioners, there is no clear showing
that they were dismissed because the circumstances
surrounding their dismissal were not even alleged. However,
we disagree with the finding of respondent Commission that
the eleven petitioners are independent contractors.
For an employer-employee relationship to exist, the
following elements are generally considered: "(1) the
selection and engagement of the employee;
(2) the payment of wages; (3) the power of dismissal and (4)
the power to control the employee's conduct." 12
Noting that the herein petitioners were oftentimes allowed to
perform their work at home and were paid wages on a piece-
rate basis, the respondent Commission apparently found the
second and fourth elements lacking and ruled that "there is
43
no employer-employee relationship, for it is clear that
respondents are interested only in the result and not in the
means and manner and how the result is obtained."
Respondent Commission is in error. The mere fact that
petitioners were paid on a piece-rate basis is no argument
that herein petitioners were not employees. The term "wage"
has been broadly defined in Article 97 of the Labor Code as
remuneration or earnings, capable of being expressed in
terms of money whether fixed or ascertained on a time, task,
piece or commission
basis. . . ." The facts of this case indicate that payment by
the piece is just a method of compensation and does not
define the essence of the
relation. 13 The petitioners were allowed to perform their
work at home does not likewise imply absence of control
and supervision. The control test calls merely for the
existence of a right to control the manner of doing the work,
not the actual exercise of the right. 14
In determining whether the relationship is that of employer
and employee or one of an independent contractor, "each
case must be determined on its own facts and all the features
of the relationship are to be considered." 15Considering that
petitioners who are either sewers, repairmen or ironer, have
been in the employ of private respondent as early as 1972 or
at the latest in 1976, faithfully rendering services which are
desirable or necessary for the business of private respondent,
and observing management's approved standards set for their
respective lines of work as well as the customers'
specifications, petitioners should be considered employees,
not independent contractors.
Independent contractors are those who exercise independent
employment, contracting to do a piece of work according to
their own methods and without being subjected to control of
their employer except as to the result of their work. By the
nature of the different phases of work in a tailoring shop
where the customers' specifications must be followed to the
letter, it is inconceivable that the workers therein would not
be subjected to control.
In Rosario Brothers, Inc. v. Ople, 16 this Court ruled that
tailors and similar workers hired in the tailoring department,
although paid weekly wages on piece work basis, are
employees not independent contractors. Accordingly, as
regular employees, paid on a piece-rate basis, petitioners are
not entitled to overtime pay, holiday pay, premium pay for
holiday/rest day and service incentive leave pay. Their claim
for separation pay should also be defined for lack of
evidence that they were in fact dismissed by private
respondent. They should be paid, however, their 13th month
 44

pay under P.D. 851, since they are employees not

independent contractors.

WHEREFORE, in view of the foregoing reasons, the

assailed decision of respondent National Labor Relations
Commission is hereby MODIFIED by awarding

(a) in favor of petitioner Villuga, overtime pay, holiday pay,

premium pay for holiday and rest day, service incentive
leave pay and separation pay, in addition to his 13th month
pay; and

(b) in favor of the rest of the petitioners, their respective

13th month pay.

The case is hereby REMANDED to the National Labor

Relations Commission for the computation of the claims
herein-above mentioned.

SO ORDERED.

Narvasa C.J., Pa

A. Working Conditions: Arts. 83 to 96, LCP, IRR,
Rules 1-VI
G.R. No. 126383 November 28, 1997
SAN JUAN DE DIOS HOSPITAL EMPLOYEES
ASSOCIATION-AFW/MA. CONSUELO
MACQUILING LEONARDO MARTINEZ, DOMINGO
ELA, JR., RODOLFO CALUCIN, JR., PERLA
MENDOZA, REX RAPHAEL REYES, ROGELIO
BELMONTE, and 375 other EMPLOYEE-UNION
MEMBERS, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION,
and SAN JUAN DE DIOS HOSPITAL, respondents.
FRANCISCO, J.:
Petitioners, the rank-and-file employee-union officers and
members of San Juan De Dios Hospital Employees
Association, sent on July 08, 1991, a "four (4)-page letter
with attached support signatures . . . requesting and pleading
for the expeditious implementation and payment by
respondent" Juan De Dios Hospital "of the '40-HOURS/5-
DAY WORKWEEK' with compensable weekly two (2) days
off provided for by Republic Act 5901 as clarified for
enforcement by the Secretary of Labor's Policy Instructions
No. 54 dated April 12, 1988." 1 Respondent hospital failed
to give a favorable response; thus, petitioners filed a
complaint regarding their "claims for statutory benefits
under the above-cited law and policy issuance" 2, docketed
as NLRC NCR Case No. 00-08-04815-19. On February 26,
1992, the Labor Arbiter 3 dismissed the complaint.
Petitioners appealed before public respondent National
Labor Relations Commission 4 (NLRC), docketed as NLRC
NCR CA 003028-92, which affirmed the Labor Arbiter's
decision. Petitioners' subsequent motion for reconsideration
was denied; hence, this petition under Rule 65 of the Rules
of Court ascribing grave abuse of discretion on the part of
NLRC in concluding that Policy Instructions No. 54
"proceeds from a wrong interpretation of RA 5901" 5 and
Article 83 of the Labor Code.
As the Court sees it, the core issue is whether Policy
Instructions No. 54 issued by then Labor Secretary (now
Senator) Franklin M. Drilon is valid or not.
The policy instruction in question provides in full as
follows:
Policy Instruction No. 54
To: All Concerned
Subject: Working Hours and Compensation of
Hospital/Clinic Personnel
45
This issuance clarifies the enforcement policy of this
Department on the working hours and compensation of
personnel employed by hospitals/clinics with a bed capacity
of 100 or more and those located in cities and municipalities
with a population of one million or more.
Republic Act 5901 took effect on 21 June 1969 prescribes a
40-hour/5 day work week for hospital/clinic personnel. At
the same time, the Act prohibits the diminution of the
compensation of these workers who would suffer a
reduction in their weekly wage by reason of the shortened
workweek prescribed by the Act. In effect, RA 5901
requires that the covered hospital workers who used to work
seven (7) days a week should be paid for such number of
days for working only 5 days or 40 hours a week.
The evident intention of RA 5901 is to reduce the number of
hospital personnel, considering the nature of their work, and
at the same time guarantee the payment to them of a full
weekly wage for seven (7) days. This is quite clear in the
Exemplary Note of RA 5901 which states:
As compared with the other employees and laborers, these
hospital and health clinic personnel are over-worked despite
the fact that their duties are more delicate in nature. If we
offer them better working conditions, it is believed that the
"brain drain", that our country suffers nowadays as far as
these personnel are concerned will be considerably lessened.
The fact that these hospitals and health clinics personnel
perform duties which are directly concerned with the health
and lives of our people does not mean that they should work
for a longer period than most employees and laborers. They
are also entitled to as much rest as other workers. Making
them work longer than is necessary may endanger, rather
than protect the health of their patients. Besides, they are not
receiving better pay than the other workers. Therefore, it is
just and fair that they may be made to enjoy the privileges of
equal working hours with other workers except those
excepted by law. (Sixth Congress of the Republic of the
Philippines, Third Session, House of Representatives, H.
No. 16630)
The Labor Code in its Article 83 adopts and incorporates the
basic provisions of RA 5901 and retains its spirit and intent
which is to shorten the workweek of covered hospital
personnel and at the same time assure them of a full weekly
wage.
Consistent with such spirit and intent, it is the position of the
Department that personnel in subject hospital and clinics are
entitled to a full weekly wage for seven (7) days if they have
completed the 40-hour/5-day workweek in any given
workweek.
All enforcement and adjudicatory agencies of this
Department shall be guided by this issuance in the
disposition of cases involving the personnel of covered
hospitals and clinics.

Done in the City of Manila, this 12th day of April, 1988.
(Sgd.) FRANKLIN M. DRILON
Secretary
(Emphasis Added)
We note that Policy Instruction No. 54 relies and purports to
implement Republic Act No. 5901, otherwise known as "An
Act Prescribing Forty Hours A Week Of Labor For
Government and Private Hospitals Or Clinic Personnel",
enacted on June 21, 1969. Reliance on Republic Act No.
5901, however, is misplaced for the said statute, as correctly
ruled by respondent NLRC, has long been repealed with the
passage of the Labor Code on May 1, 1974, Article 302 of
which explicitly provides: "All labor laws not adopted as
part of this Code either directly or by reference are hereby
repealed. All provisions of existing laws, orders, decree,
rules and regulations inconsistent herewith are likewise
repealed." Accordingly, only Article 83 of the Labor Code
which appears to have substantially incorporated or
reproduced the basic provisions of Republic Act No. 5901
may support Policy Instructions No. 54 on which the latter's
validity may be gauged. Article 83 of the Labor Code states:
Art. 83. Normal Hours of Work. The normal hours of
work of any employee shall not exceed eight (8) hours a
day.
Health personnel in cities and municipalities with a
population of at least one million (1,000,000) or in hospitals
and clinics with a bed capacity of at least one hundred (100)
shall hold regular office hours for eight (8) hours a day, for
five (5) days a week, exclusive of time for meals, except
where the exigencies of the service require that such
personnel work for six (6) days or forty-eight (48) hours, in
which case they shall be entitled to an additional
compensation of at least thirty per cent (30%) of their
regular wage for work on the sixth day. For purposes of this
Article, "health personnel" shall include: resident physicians,
nurses, nutritionists, dietitians, pharmacists, social workers,
laboratory technicians, paramedical technicians,
psychologists, midwives, attendants and all other hospital or
clinic personnel. (Emphasis supplied)
A cursory reading of Article 83 of the Labor Code betrays
petitioners' position that "hospital employees" are entitled to
"a full weekly salary with paid two (2) days' off if they have
completed the 40-hour/5-day workweek". 6 What Article 83
merely provides are: (1) the regular office hour of eight
hours a day, five days per week for health personnel, and (2)
where the exigencies of service require that health personnel
work for six days or forty-eight hours then such health
personnel shall be entitled to an additional compensation of
at least thirty percent of their regular wage for work on the
sixth day. There is nothing in the law that supports then
Secretary of Labor's assertion that "personnel in subject
hospitals and clinics are entitled to a full weekly wage for
seven (7) days if they have completed the 40-hour/5-day
46
workweek in any given workweek". Needless to say, the
Secretary of Labor exceeded his authority by including a
two days off with pay in contravention of the clear mandate
of the statute. Such act the Court shall not countenance.
Administrative interpretation of the law, we reiterate, is at
best merely advisory, 7 and the Court will not hesitate to
strike down an administrative interpretation that deviates
from the provision of the statute.
Indeed, even if we were to subscribe with petitioners'
erroneous assertion that Republic Act No. 5901 has neither
been amended nor repealed by the Labor Code, we
nevertheless find Policy Instructions No. 54 invalid. A
perusal of Republic Act No. 5901 8 reveals nothing therein
that gives two days off with pay for health personnel who
complete a 40-hour work or 5-day workweek. In fact, the
Explanatory Note of House Bill No. 16630 (later passed into
law as Republic Act No. 5901) explicitly states that the bill's
sole purpose is to shorten the working hours of health
personnel and not to dole out a two days off with pay.
Hence:
The accompanying bill seeks to grant resident physicians,
staff nurses, nutritionist, midwives, attendants and other
hospital and health clinic personnel of public and private
hospitals and clinics, the privilege of enjoying the eight
hours a week exclusive of time for lunch granted by law to
all government employees and workers except those
employed in schools and in courts. At present those
hospitals and clinics, work six days a week, 8 hours a day or
48 hours a week.
As compared with the other employees and laborers, these
hospital and health clinic personnel are over-worked despite
the fact that their duties are more delicate in nature. If we
offer them better working conditions, it is believed that the
"brain drain", that our country suffers nowadays as far as
these personnel are concerned will be considerably lessened.
The fact that these hospitals and health clinic personnel
perform duties which are directly concerned with the health
and lives of our people does not mean that they should work
for a longer period than most employees and laborers. They
are also entitled to as much rest as other workers. Making
them work longer than is necessary may endanger, rather
than protect, the health of their patients. Besides, they are
not receiving better pay than the other workers. Therefore, it
is just and fair that they be made to enjoy the privileges of
equal working hours with other workers except those
excepted by law.
In the light of the foregoing, approval of this bill is strongly
recommended.
(SGD.) SERGIO H. LOYOLA
"Congressman, 3rd District
Manila" (Annex "F" of petition, emphasis supplied)
 47

Labor Law shall be entitled to an additional straight-time

Further, petitioners' position is also negated by the very rules
and regulations promulgated by the Bureau of Labor
Standards which implement Republic Act No. 5901.
Pertinent portions of the implementing rules provide:
RULES AND REGULATIONS IMPLEMENTING
REPUBLIC ACT NO. 5901
By virtue of Section 79 of the Revised Administrative Code,
as modified by section 18 of Implementation Report for
Reorganization Plan No. 20-A on Labor, vesting in the
Bureau of Labor Standards the authority to promulgate rules
and regulations to implement wage and hour laws, the
following rules and regulations to are hereby issued for the
implementation of Republic Act No. 5901.
CHAPTER I Coverage
Sec. 1. General Statement on Coverage. Republic Act No.
5901, hereinafter referred to as the Act, shall apply to:
pay which must be equivalent at least to their regular rate.
If petitioners are entitled to two days off with pay, then there
appears to be no sense at all why Section 15 of the
implementing rules grants additional compensation
equivalent to the regular rate plus at least twenty-five
percent thereof for work performed on Sunday to health
personnel, or an "additional straight-time pay which must be
equivalent at least to the regular rate" "[f]or work performed
in excess of forty hours a week. . . . Policy Instructions No.
54 to our mind unduly extended the statute. The Secretary of
Labor moreover erred in invoking the "spirit and intent" of
Republic Act No. 5901 and Article 83 of the Labor Code for
it is an elementary rule of statutory construction that when
the language of the law is clear and unequivocal, the law
must be taken to mean exactly what it says. 9 No additions
or revisions may be permitted. Policy Instructions No. 54
being inconsistent with and repugnant to the provision of
Article 83 of the Labor Code, as well as to Republic Act No.
5901, should be, as it is hereby, declared void.

(a) All hospitals and clinics, including those with a bed WHEREFORE, the decision appealed from is AFFIRMED.
capacity of less than one hundred, which are situated in No costs.
cities or municipalities with a population of one million or
more; and to SO ORDERED.

(b) All hospitals and clinics with a bed capacity of at

least one hundred, irrespective of the size of population of
the city or municipality where they may be situated.

xxx xxx xxx

Sec. 7. Regular Working Day. The regular working days of

covered employees shall be not more than five days in a
workweek. The workweek may begin at any hour and on
any day, including Saturday or Sunday, designated by the
employer.

Employers are not precluded from changing the time at

which the workday or workweek begins, provided that the
change is not intended to evade the requirements of these
regulations on the payment of additional compensation.

xxx xxx xxx

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

(b) For work performed in excess of forty hours a

week, excluding those rendered in excess of eight hours a
day during the week, employees covered by the Eight-Hour

Republic of the Philippines
SUPREME COURT
Manila
EN BANC
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
48
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
49
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
50
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
 51

(C.A. No. 444). Such employer may not therefore be heard and even 1948 and 1949. At any rate, we are constrained to
to plead his own neglect as exemption or defense. sustain the claim of the Association as a matter of simple
justice, consistent with the spirit and purpose of the Eight-
The employee in rendering extra service at the request of his Hour Labor Law. The petitioner, in the first place, was
employer has a right to assume that the latter has complied required to comply with the law and should therefore be
with the requirement of the law, and therefore has obtained made liable for the consequences of its violation.
the required permission from the Department of Labor.
It is high time that all employers were warned that the public
Moreover, the Eight-Hour Law, in providing that "any is interested in the strict enforcement of the Eight-Hour
agreement or contract between the employer and the laborer Labor Law. This was designed not only to safeguard the
or employee contrary to the provisions of this Act shall be health and welfare of the laborer or employee, but in a way
null avoid ab initio," (Commonwealth Act No. 444, sec. 6), to minimize unemployment by forcing employers, in cases
obviously intended said provision for the benefit of the where more than 8-hour operation is necessary, to utilize
laborers or employees. The employer cannot, therefore, different shifts of laborers or employees working only for
invoke any violation of the act to exempt him from liability eight hours each.
for extra compensation. This conclusion is further supported
by the fact that the law makes only the employer criminally Wherefore, the appealed decision, in the form voted by
liable for any violation. It cannot be pretended that, for the Judge Lanting, is affirmed, it being understood that the
employer to commit any violation of the Eight-Hour Labor petitioner's watchmen will be entitled to extra compensation
Law, the participation or acquiescence of the employee or only from the dates they respectively entered the service of
laborer is indispensable, because the latter in view of his the petitioner, hereafter to be duly determined by the Court
need and desire to live, cannot be considered as being on the of Industrial Relations. So ordered, without costs.
same level with the employer when it comes to the question
of applying for and accepting an employment. Feria, Pablo, Bengzon, Padilla, Tuason, Bautista Angelo,
and Labrador, JJ., concur.
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,

G.R. No. 119205 April 15, 1998
SIME DARBY PILIPINAS, INC. petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION
(2ND DIVISION) and SIME DARBY SALARIED
EMPLOYEES ASSOCIATION (ALU-
TUCP), respondents.
Is the act of management in revising the work schedule of its
employees and discarding their paid lunch break constitutive
of unfair labor practice?
Sime Darby Pilipinas, Inc., petitioner, is engaged in the
manufacture of automotive tires, tubes and other rubber
products. Sime Darby Salaried Employees Association
(ALU-TUCP), private respondent, is an association of
monthly salaried employees of petitioner at its Marikina
factory. Prior to the present controversy, all company
factory workers in Marikina including members of private
respondent union worked from 7:45 a.m. to 3:45 p.m. with a
30-minute paid "on call" lunch break.
On 14 August 1992 petitioner issued a memorandum to all
factory-based employees advising all its monthly salaried
employees in its Marikina Tire Plant, except those in the
Warehouse and Quality Assurance Department working on
shifts, a change in work schedule effective 14 September
1992 thus
TO: ALL FACTORY-BASED EMPLOYEES
RE: NEW WORK SCHEDULE
Effective Monday, September 14, 1992, the new work
schedule of the factory office will be as follows:
7:45 A.M. 4:45 P.M. (Monday to Friday)
7:45 A.M. 11:45 A.M. (Saturday).
Coffee break time will be ten minutes only anytime
between:
9:30 A.M. 10:30 A.M. and
2:30 P.M. 3:30 P.M.
Lunch break will be between:
12:00 NN 1:00 P.M. (Monday to Friday).
Excluded from the above schedule are the Warehouse and
QA employees who are on shifting. Their work and break
time schedules will be maintained as it is now.1
52
Since private respondent felt affected adversely by the
change in the work schedule and discontinuance of the 30-
minute paid "on call" lunch break, it filed on behalf of its
members a complaint with the Labor Arbiter for unfair labor
practice, discrimination and evasion of liability pursuant to
the resolution of this Court in Sime Darby International Tire
Co., Inc. v. NLRC.2 However, the Labor Arbiter dismissed
the complaint on the ground that the change in the work
schedule and the elimination of the 30-minute paid lunch
break of the factory workers constituted a valid exercise of
management prerogative and that the new work schedule,
break time and one-hour lunch break did not have the effect
of diminishing the benefits granted to factory workers as the
working time did not exceed eight (8) hours.
The Labor Arbiter further held that the factory workers
would be unjustly enriched if they continued to be paid
during their lunch break even if they were no longer "on
call" or required to work during the break. He also ruled that
the decision in the earlier Sime Darby case3 was not
applicable to the instant case because the former involved
discrimination of certain employees who were not paid for
their 30-minute lunch break while the rest of the factory
workers were paid; hence, this Court ordered that the
discriminated employees be similarly paid the additional
compensation for their lunch break.
Private respondent appealed to respondent National Labor
Relations Commission (NLRC) which sustained the Labor
Arbiter and dismissed the appeal.4 However, upon motion
for reconsideration by private respondent, the NLRC, this
time with two (2) new commissioners replacing those who
earlier retired, reversed its earlier decision of 20 April 1994
as well as the decision of the Labor Arbiter.5 The NLRC
considered the decision of this Court in the Sime Darby case
of 1990 as the law of the case wherein petitioner was
ordered to pay "the money value of these covered employees
deprived of lunch and/or working time breaks." The public
respondent declared that the new work schedule deprived
the employees of the benefits of a time-honored company
practice of providing its employees a 30-minute paid lunch
break resulting in an unjust diminution of company
privileges prohibited by Art. 100 of the Labor Code, as
amended. Hence, this petition alleging that public
respondent committed grave abuse of discretion amounting
to lack or excess of jurisdiction: (a) in ruling that petitioner
committed unfair labor practice in the implementation of the
change in the work schedule of its employees from 7:45 a.m.
3:45 p.m. to 7:45 a.m. 4:45 p.m. with one-hour lunch
break from 12:00 nn to 1:00 p.m.; (b) in holding that there
was diminution of benefits when the 30-minute paid lunch
break was eliminated; (c) in failing to consider that in the

earlier Sime Darby case affirming the decision of the NLRC,
petitioner was authorized to discontinue the practice of
having a 30-minute paid lunch break should it decide to do
so; and, (d) in ignoring petitioner's inherent management
prerogative of determining and fixing the work schedule of
its employees which is expressly recognized in the collective
bargaining agreement between petitioner and private
respondent.
The Office of the Solicitor General filed in a lieu of
comment a manifestation and motion recommending that the
petitioner be granted, alleging that the 14 August 1992
memorandum which contained the new work schedule was
not discriminatory of the union members nor did it constitute
unfair labor practice on the part of petitioner.
We agree, hence, we sustain petitioner. The right to fix the
work schedules of the employees rests principally on their
employer. In the instant case petitioner, as the employer,
cites as reason for the adjustment the efficient conduct of its
business operations and its improved production.6 It
rationalizes that while the old work schedule included a 30-
minute paid lunch break, the employees could be called
upon to do jobs during that period as they were "on call."
Even if denominated as lunch break, this period could very
well be considered as working time because the factory
employees were required to work if necessary and were paid
accordingly for working. With the new work schedule, the
employees are now given a one-hour lunch break without
any interruption from their employer. For a full one-hour
undisturbed lunch break, the employees can freely and
effectively use this hour not only for eating but also for their
rest and comfort which are conducive to more efficiency and
better performance in their work. Since the employees are
no longer required to work during this one-hour lunch break,
there is no more need for them to be compensated for this
period. We agree with the Labor Arbiter that the new work
schedule fully complies with the daily work period of eight
(8) hours without violating the Labor Code.7 Besides, the
new schedule applies to all employees in the factory
similarly situated whether they are union members or not.8
Consequently, it was grave abuse of discretion for public
respondent to equate the earlier Sime Darby case9 with the
facts obtaining in this case. That ruling in the former case is
not applicable here. The issue in that case involved the
matter of granting lunch breaks to certain employees while
depriving the other employees of such breaks. This Court
affirmed in that case the NLRC's finding that such act of
management was discriminatory and constituted unfair labor
practice.
53
The case before us does not pertain to any controversy
involving discrimination of employees but only the issue of
whether the change of work schedule, which management
deems necessary to increase production, constitutes unfair
labor practice. As shown by the records, the change effected
by management with regard to working time is made to
apply to all factory employees engaged in the same line of
work whether or not they are members of private respondent
union. Hence, it cannot be said that the new scheme adopted
by management prejudices the right of private respondent to
self-organization.
Every business enterprise endeavors to increase its profits.
In the process, it may devise means to attain that goal. 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.10 Thus, management
is free to regulate, according to its own discretion and
judgment, all aspects of employment, including hiring, work
assignments, working methods, time, place and manner of
work, processes to be followed, supervision of workers,
working regulations, transfer of employees, work
supervision, lay off of workers and discipline, dismissal and
recall of workers.11 Further, management retains the
prerogative, whenever exigencies of the service so require,
to change the working hours of its employees. So long as
such prerogative is exercised in good faith for the
advancement of the employer's interest and not for the
purpose of defeating or circumventing the rights of the
employees under special laws or under valid agreements,
this Court will uphold such exercise.12
While the Constitution is committed to the policy of social
justice and the protection of the working class, it should not
be supposed that every dispute will be automatically decided
in favor of labor. Management also has rights which, as
such, are entitled to respect and enforcement in the interest
of simple fair play. Although this Court has inclined more
often than not toward the worker and has upheld his cause in
his conflicts with the employer, such favoritism has not
blinded the Court to the rule that justice is in every case for
the deserving, to be dispensed in the light of the established
facts and the applicable law and doctrine.13
WHEREFORE, the Petition is GRANTED. The Resolution
of the National Labor Relations Commission dated 29
November 1994 is SET ASIDE and the decision of the
Labor Arbiter dated 26 November 1993 dismissing the
complaint against petitioner for unfair labor practice is
AFFIRMED.
SO ORDERED.

G.R. No. 78210 February 28, 1989
TEOFILO ARICA, DANILO BERNABE,
MELQUIADES DOHINO, ABONDIO OMERTA, GIL
TANGIHAN, SAMUEL LABAJO, NESTOR NORBE,
RODOLFO CONCEPCION, RICARDO RICHA,
RODOLFO NENO, ALBERTO BALATRO,
BENJAMIN JUMAMOY, FERMIN DAAROL,
JOVENAL ENRIQUEZ, OSCAR BASAL, RAMON
ACENA, JAIME BUGTAY, and 561 OTHERS,
HEREIN REPRESENTED BY KORONADO B.
APUZEN, petitioners
vs.
NATIONAL LABOR RELATIONS COMMISSION,
HONORABLE FRANKLIN DRILON, HONORABLE
CONRADO B. MAGLAYA, HONORABLE ROSARIO
B. ENCARNACION, and STANDARD (PHILIPPINES)
FRUIT CORPORATION, respondents.
Koronado B. Apuzen and Jose C. Espinas for petitioners.
The Solicitor General for public respondent.
Dominguez & Paderna Law Offices Co. for private
respondent.
PARAS, J.:
This is a petition for review on certiorari of the decision of
the National Labor Relations Commission dated December
12, 1986 in NLRC Case No. 2327 MC-XI-84 entitled
Teofilo Arica et al. vs. Standard (Phil.) Fruits Corporation
(STANFILCO) which affirmed the decision of Labor
Arbiter Pedro C. Ramos, NLRC, Special Task Force,
Regional Arbitration Branch No. XI, Davao City dismissing
the claim of petitioners.
This case stemmed from a complaint filed on April 9, 1984
against private respondent Stanfilco for assembly time,
moral damages and attorney's fees, with the aforementioned
Regional Arbitration Branch No. XI, Davao City.
After the submission by the parties of their respective
position papers (Annex "C", pp. 30-40; Annex "D", Rollo,
pp. 41-50), Labor Arbiter Pedro C. Ramos rendered a
decision dated October 9, 1985 (Annex 'E', Rollo, pp. 51-58)
in favor of private respondent STANFILCO, holding that:
Given these facts and circumstances, we cannot but agree
with respondent that the pronouncement in that earlier case,
i.e. the thirty-minute assembly time long practiced cannot be
considered waiting time or work time and, therefore, not
54
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-
55
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]).
56
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.
Melencio-Herrera (Chairperson), Padilla and Regalado,
JJ., concur.
Separate Opinions
SARMIENTO, J., Dissenting:
It is my opinion that res judicata is not a bar.
The decision penned by then Minister Blas Ople in ALU v.
STANFILCO (NLRC Case No. 26-LS-XI-76) relied upon
by the respondents as basis for claims of res judicata, is not,
to my mind, a controlling precedent. In that case, it was held
that the thirty-minute "waiting time" complained of was a
mere "assembly time" and not a waiting time as the term is
known in law, and hence, a compensable hour of work.
Thus:
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 1, 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 farms 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.
 57

In short, they are not subject to the absolute control of the assembly time had become, in truth and fact, a "waiting
company during this period, otherwise, their failure to report time" as contemplated by the Labor Code.
in the assembly time would justify the company to impose
disciplinary measures. The CBA does not contain any I vote, then, to grant the petition.
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.
(Decision, 6.)

Precisely, it is the petitioners' contention that the assembly

time in question had since undergone dramatic changes,
thus:

(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. (Supra, 4-5.)

The petitioners have vehemently maintained that in view

thereof, the instant case should be distinguished from the
first case. And I do not believe that the respondents have
successfully rebutted these allegations. The Solicitor
General relies solely on the decision of then Minister Ople,
the decision the petitioners precisely reject in view of the
changes in the conditions of the parties. The private
respondent on the other hand insists that these practices were
the same practices taken into account in ALU v.
STANFILCO. If this were so, the Ople decision was silent
thereon.

It is evident that the Ople decision was predicated on the

absence of any insinuation of obligatoriness in the course or
after the assembly activities on the part of the employees.(" .
. [T]hey 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;" supra, 6.) As indicated, however, by
the petitioners, things had since changed, and remarkably so,
and the latter had since been placed under a number of
restrictions. My considered opinion is that the thirty-minute

[G.R. No. L-63122. February 20, 1984.]
UNIVERSITY OF PANGASINAN FACULTY
UNION, Petitioner, v. UNIVERSITY OF PANGASINAN
And NATIONAL LABOR RELATIONS
COMMISSION, Respondents.
Tanopo, Serafico, Juanitez & Callanta Law Office and
Hermogenes S. Decano for Petitioner.
The Solicitor General for Respondents.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATIONS; LABOR
LAWS; PRESIDENTIAL DECREES ON EMERGENCY
COST OF LIVING ALLOWANCE; REQUISITES FOR
ENTITLEMENT TO ALLOWANCES PROVIDED
THEREUNDER. The various Presidential Decrees on
ECOLAs to wit: PDs 1614, 1634, 1678 and 1713, provide
on "Allowances of Fulltime Employees . . ." that
"Employees shall be paid in full the required monthly
allowance regardless of the number of their regular working
days if they incur no absences during the month. If they
incur absences without pay, the amounts corresponding to
the absences may be deducted from the monthly allowance .
. ." ; and on "Leave of Absence Without Pay", that "All
covered employees shall be entitled to the allowance
provided herein when they are on leave of absence with
pay."cralaw virtua1aw library
2. ID.; ID.; ID.; "NO WORK, NO PAY" PRINCIPLE NOT
APPLICABLE CASE AT BAR. It is beyond dispute
that the petitioners members are full-time employees
receiving their monthly salaries irrespective of the number
of working days or teaching hours in a month. However,
they find themselves in a most peculiar situation whereby
they are forced to go on leave during semestral breaks.
These semestral breaks are in the nature of work
interruptions beyond the employees control. The duration
of the semestral break varies from year to year dependent on
a variety of circumstances affecting at times only the private
respondent but at other times all educational institutions in
the country. As such, these breaks cannot be considered as
absences within the meaning of the law for which
deductions may be made from monthly allowances. The "No
58
work, no pay" principle does not apply in the instant case.
The petitioners members received their regular salaries
during this period. It is clear from the aforequoted provision
of law that it contemplates a "no work" situation where the
employees voluntarily absent themselves. Petitioners, in the
case at bar, certainly do not, ad voluntatem, absent
themselves during semestral breaks. Rather, they are
constrained to take mandatory leave from work. For this
they cannot be faulted nor can they be begrudged that which
is due them under the law.
3. ID.; ID.; ID.; EMPLOYEES WHETHER PAID ON
MONTHLY OR DAILY BASIS ENTITLED TO DAILY
LIVING ALLOWANCE WHEN PAID THEIR BASIC
WAGE. Respondents contention that the "factor
receiving a salary alone should not be the basis of receiving
ECOLA", is likewise, without merit. Particular attention is
brought to the Implementing Rules and Regulations of Wage
Order No. 1 to wit: "Sec. 5. Allowance for Unworked Days.
a) All covered employees whether paid on a monthly or
daily basis shall be entitled to their daily living allowance
when they are paid their basic.." . .
4. ID.; ID.; ID.; PURPOSE OF THE LAW. The legal
principles of "No work, no pay; No pay, no ECOLA" must
necessarily give way to the purpose of the law to augment
the income of employees to enable them to cope with the
harsh living conditions brought about by inflation; and to
protect employees and their wages against the ravages
brought by these conditions. Significantly, it is the
commitment of the State to protect labor and to provide
means by which the difficulties faced by the working force
may best be alleviated.
5. ID.; ID.; ID.; PRESIDENTIAL DECREE 451;
CONSTRUED. Respondent overlooks the elemental
principle of statutory construction that the general
statements in the whereas clauses cannot prevail over the
specific or particular statements in the law itself which
define or limit the purposes of the legislation or proscribe
certain acts. True, the whereas clauses of PD 451 provide for
salary and or wage increase and other benefits, however, the
same do not delineate the source of such funds and it is only
in Section 3 which provides for the limitations wherein the
intention of the framers of the law is clearly outlined. The
law is clear. The sixty (60%) percent incremental proceeds
from the tuition increase are to be devoted entirely to wage
or salary increases which means increases in basic salary.
The law cannot be construed to include allowances which
are benefits over and above the basic salaries of the
employees.

6. REMEDIAL LAW; APPEALS; FINDINGS OF FACT
OF NATIONAL LABOR RELATIONS COMMISSION
ARE BINDING WHEN FULLY SUBSTANTIATED BY
EVIDENCE. As evidenced by the payrolls submitted by
them during the period September 16 to September 30,
1981, the faculty members have been paid for the extra
loads. We agree with the respondents that this issue involves
a question of fact properly within the competence of the
respondent NLRC to pass upon. The findings of fact of the
respondent Commission are binding on this Court there
being no indication of their being unsubstantiated by
evidence.
DECISION
GUTIERREZ, JR., J.:
This is a petition for review on certiorari pursuant to Rule
65 of the Rules of Court to annul and to set aside the
decision of respondent National Labor Relations
Commission (NLRC) dated October 25, 1982, dismissing
the appeal of petitioner in NLRC Case No. RBI-47-82,
entitled "University of Pangasinan Faculty Union,
complainant, versus University of
Pangasinan, Respondent." chanrobles law library : red
Petitioner is a labor union composed of faculty members of
the respondent University of Pangasinan, an educational
institution duly organized and existing by virtue of the laws
of the Philippines.
On December 18, 1981, the petitioner, through its President,
Miss Consuelo Abad, filed a complaint against the private
respondent with the Arbitration Branch of the NLRC,
Dagupan District Office, Dagupan City. The complaint
seeks: (a) the payment of Emergency Cost of Living
Allowances (ECOLA) for November 7 to December 5,
1981, a semestral break; (b) salary increases from the sixty
(60%) percent of the incremental proceeds of increased
tuition fees; and (c) payment of salaries for suspended extra
loads.
The petitioners members are full-time professors,
59
instructors, and teachers of respondent University. The
teachers in the college level teach for a normal duration of
ten (10) months a school year, divided into two (2)
semesters of five (5) months each, excluding the two (2)
months summer vacation. These teachers are paid their
salaries on a regular monthly basis.
In November and December, 1981, the petitioners members
were fully paid their regular monthly salaries. However,
from November 7 to December 5, during the semestral
break, they were not paid their ECOLA. The private
respondent claims that the teachers are not entitled thereto
because the semestral break is not an integral part of the
school year and there being no actual services rendered by
the teachers during said period, the principle of "No work,
no pay" applies.
During the same school year (1981-1982), the private
respondent was authorized by the Ministry of Education and
Culture to collect, as it did collect, from its students a fifteen
(15%) percent increase of tuition fees. Petitioners members
demanded a salary increase effective the first semester of
said schoolyear to be taken from the sixty (60%) percent
incremental proceeds of the increased tuition fees. Private
respondent refused, compelling the petitioner to include said
demand in the complaint filed in the case at bar. While the
complaint was pending in the arbitration branch, the private
respondent granted an across-the-board salary increase of
5.86%. Nonetheless, the petitioner is still pursuing full
distribution of the 60% of the incremental proceeds as
mandated by the Presidential Decree No. 451.
Aside from their regular loads, some of petitioners
members were given extra loads to handle during the same
1981-1982 schoolyear. Some of them had extra loads to
teach on September 21, 1981, but they were unable to teach
as classes in all levels throughout the country were
suspended, although said days was proclaimed by the
President of the Philippines as a working holiday. Those
with extra loads to teach on said day claimed they were not
paid their salaries for those loads, but the private respondent
claims otherwise.
The issue to be resolved in the case at bar are the
following:chanrob1es virtual 1aw library
I
"WHETHER OR NOT PETITIONERS MEMBERS ARE
ENTITLED TO ECOLA DURING THE SEMESTRAL

BREAK FROM NOVEMBER 7 TO DECEMBER 5, 1981
OF THE 1981-82 SCHOOL YEAR.
II
"WHETHER OR NOT 60% OF THE INCREMENTAL
PROCEEDS OF INCREASED TUITION FEES SHALL BE
DEVOTED EXCLUSIVELY TO SALARY INCREASE,
III
"WHETHER OR NOT ALLEGED PAYMENT OF
SALARIES FOR EXTRA LOADS ON SEPTEMBER 21,
1981 WAS PROVEN BY SUBSTANTIAL
EVIDENCE."cralaw virtua1aw library
Anent the first issue, the various Presidential Decrees on
ECOLAs to wit: PDs 1614, 1634, 1678 and 1713, provide
on "Allowances of Fulltime Employees . . ." that
"Employees shall be paid in full the required monthly
allowance regardless of the number of their regular working
days if they incur no absences during the month. If they
incur absences without pay, the amounts corresponding to
the absences may be deducted from the monthly allowance .
. ." ; and on "Leave of Absence Without Pay", that "All
covered employees shall be entitled to the allowance
provided herein when they are on leave of absence with
pay."cralaw virtua1aw library
It is beyond dispute that the petitioners members are full-
time employees receiving their monthly salaries irrespective
of the number of working days or teaching hours in a month.
However, they find themselves in a most peculiar situation
whereby they are forced to go on leave during semestral
breaks. These semestral breaks are in the nature of work
interruptions beyond the employees control. The duration
of the semestral break varies from year to year dependent on
a variety of circumstances affecting at times only the private
respondent but at other times all educational institutions in
the country. As such, these breaks cannot be considered as
absences within the meaning of the law for which
deductions may be made from monthly allowances. The "No
work, no pay" principle does not apply in the instant case.
The petitioners members received their regular salaries
during this period. It is clear from the aforequoted provision
of law that it contemplates a "no work" situation where the
employees voluntarily absent themselves. Petitioners, in the
case at bar, certainly do not, ad voluntatem, absent
60
themselves during semestral breaks. Rather, they are
constrained to take mandatory leave from work. For this
they cannot be faulted nor can they be begrudged that which
is due them under the law. To a certain extent, the private
respondent can specify dates when no classes would be held.
Surely, it was not the intention of the framers of the law to
allow employers to withhold employee benefits by the
simple expedient of unilaterally imposing "no work" days
and consequently avoiding compliance with the mandate of
the law for those days.chanrobles.com.ph : virtual law
library
Respondents contention that "the fact of receiving a salary
alone should not be the basis of receiving ECOLA", is,
likewise, without merit. Particular attention is brought to the
Implementing Rules and Regulations of Wage Order No. 1
to wit.
SECTION 5. Allowance for Unworked Days.
"a) All covered employees whether paid on a monthly or
daily basis shall be entitled to their daily living allowance
when they are paid their basic wage."cralaw virtua1aw
library
x x x
This provision, at once refutes the above contention. It is
evident that the intention of the law is to grant ECOLA upon
the payment of basic wages. Hence, we have the principle of
"No pay, no ECOLA" the converse of which finds
application in the case at bar. Petitioners cannot be
considered to be on leave without pay so as not to be entitled
to ECOLA, for, as earlier stated, the petitioners were paid
their wages in full for the months of November and
December of 1981, notwithstanding the intervening
semestral break. This, in itself, is a tacit recognition of the
rather unusual state of affairs in which teachers find
themselves. Although said to be on forced leave, professors
and teachers are, nevertheless, burdened with the task of
working during a period of time supposedly available for
rest and private matters. There are papers to correct, students
to evaluate, deadlines to meet, and periods within which to
submit grading reports. Although they may be considered by
the respondent to be on leave, the semestral break could not
be used effectively for the teachers own purposes for the
nature of a teachers job imposes upon him further duties
which must be done during the said period of time. Learning
is a never ending process. Teachers and professors must
keep abreast of developments all the time. Teachers cannot

also wait for the opening of the next semester to begin their
work. Arduous preparation is necessary for the delicate task
of educating our children. Teaching involves not only an
application of skill and an imparting of knowledge, but a
responsibility which entails self dedication and sacrifice.
The task of teaching ends not with the perceptible efforts of
the petitioners members but goes beyond the classroom: a
continuum where only the visible labor is relieved by
academic intermissions. It would be most unfair for the
private respondent to consider these teachers as employees
on leave without pay to suit its purposes and, yet, in the
meantime, continue availing of their services as they prepare
for the next semester or complete all of the last semesters
requirements. Furthermore, we may also by analogy apply
the principle enunciated in the Omnibus Rules Implementing
the Labor Code to wit:chanrob1es virtual 1aw library
Sec. 4. Principles in Determining Hours Worked. The
following general principles shall govern in determining
whether the time spent by an employee is considered hours
worked for purposes of this Rule:chanrob1es virtual 1aw
library
x x x
"(d) The time during which an employee is inactive by
reason of interruptions in his work beyond his control shall
be considered time either if the imminence of the resumption
of work requires the employees presence at the place of
work or if the interval is too brief to be utilized effectively
and gainfully in the employees own interest." (Emphasis
supplied).
The petitioners members in the case at bar, are exactly in
such a situation. The semestral break scheduled is an
interruption beyond petitioners control and it cannot be
used "effectively nor gainfully in the employees interest.
Thus, the semestral break may also be considered as "hours
worked." For this, the teachers are paid regular salaries and,
for this, they should be entitled to ECOLA. Not only do the
teachers continue to work during this short recess but much
less do they cease to live for which the cost of living
allowance is intended. The legal principles of "No work, no
pay; No pay, no ECOLA" must necessarily give way to the
purpose of the law to augment the income of employees to
enable them to cope with the harsh living conditions brought
about by inflation; and to protect employees and their wages
against the ravages brought by these conditions.
Significantly, it is the commitment of the State to protect
labor and to provide means by which the difficulties faced
61
by the working force may best be alleviated. To submit to
the respondents interpretation of the no work, no pay policy
is to defeat this noble purpose. The Constitution and the law
mandate otherwise.chanrobles.com:cralaw:red
With regard to the second issue, we are called upon to
interpret and apply Section 3 of Presidential Decree 451 to
wit:chanrob1es virtual 1aw library
SEC. 3. Limitations. The increase in tuition or other
school fees or other charges as well as the new fees or
charges authorized under the next preceding section shall be
subject to the following conditions:jgc:chanrobles.com.ph
"(a) That no increase in tuition or other school fees or
charges shall be approved unless sixty (60%) per centum of
the proceeds is allocated for increase in salaries or wages of
the members of the faculty and all other employees of the
school concerned, and the balance for institutional
development, student assistance and extension services, and
return to investments: Provided, That in no case shall the
return to investments exceed twelve (12%) per centum of the
incremental proceeds; . . ."cralaw virtua1aw library
x x x
This Court had the occasion to rule squarely on this point in
the very recent case entitled, University of the East v.
University of the East Faculty Association, 117 SCRA 554.
We held that:jgc:chanrobles.com.ph
"In effect, the problem posed before Us is whether or not the
reference in Section 3(a) to increase in salaries or wages of
the faculty and all other employees of the schools
concerned as the first purpose to which the incremental
proceeds from authorized increases to tuition fees may be
devoted, may be construed to include allowances and
benefits. In the negative, which is the position of
respondents, it would follow that such allowances must be
taken in resources of the school not derived from tuition
fees.
"Without delving into the factual issue of whether or not
there could be any such other resources, We note that among
the items of second purpose stated in provision in question is
return in investment. And the law provides only for a
maximum, not a minimum. In other words, the schools may
get a return to investment of not more than 12%, but if
circumstances warrant, there is no minimum fixed by law
which they should get.

"On this predicate, We are of the considered view that, if the
school happen to have no other resources to grant
allowances and benefits, either mandated by law or secured
by collective bargaining, such allowances and benefits
should be charged against the return to investments referred
to in the second purpose stated in Section 3(a) of P.D.
451."cralaw virtua1aw library
Private respondent argues that the above interpretation
"disregarded the intention and spirit of the law" which
intention is clear from the "whereas" clauses as
follows:jgc:chanrobles.com.ph
"It is imperative that private educational institutions upgrade
classroom instruction . . . provide salary and or wage
increases and other benefits . . ."cralaw virtua1aw library
Respondent further contends that PD 451 was issued to
alleviate the sad plight of private schools, their personnel
and all those directly or indirectly on school income as the
decree was aimed
". . . to upgrade classroom instruction by improving their
facilities and bring competent teachers in all levels of
education, provide salary and or wage increases and other
benefits to their teaching, administrative, and other
personnel to keep up with the increasing cost of living."
(Emphasis supplied)
Respondent overlooks the elemental principle of statutory
construction that the general statements in the whereas
clauses cannot prevail over the specific or particular
statements in the law itself which define or limit the
purposes of the legislation or proscribe certain acts. True,
the whereas clauses of PD 451 provide for salary and or
wage increase and other benefits, however, the same do not
delineate the source of such funds and it is only in Section 3
which provides for the limitations wherein the intention of
the framers of the law is clearly outlined. The law is clear.
The sixty (60%) percent incremental proceeds from the
tuition increase are to be devoted entirely to wage or salary
increases which means increases in basic salary. The law
cannot be construed to include allowances which are
benefits over and above the basic salaries of the employees.
To charge such benefits to the 60% incremental proceeds
would be to reduce the increase in basic salary provided by
law, an increase intended also to help the teachers and other
workers tide themselves and their families over these
difficult economic times.chanrobles virtual lawlibrary
62
This Court is not guilty of usurpation of legislative functions
as claimed by the respondents. We expressed the opinion in
the University of the East case that benefits mandated by
law and collective bargaining may be charged to the 12%
return on investments within the 40% incremental proceeds
of tuition increase. As admitted by respondent, we merely
made this statement as a suggestion in answer to the
respondents query as to where then, under the law, can such
benefits be charged. We were merely interpreting the
meaning of the law within the confines of its provisions. The
law provides that 60% should go to wage increases and 40%
to institutional developments, student assistance, extension
services, and return on investments (ROI). Under the law,
the last item ROI has flexibility sufficient to accommodate
other purposes of the law and the needs of the university.
ROI is not set aside for any one purpose of the university
such as profits or returns on investments. The amount may
be used to comply with other duties and obligations imposed
by law which the university exercising managerial
prerogatives finds cannot under present circumstances, be
funded by other revenue sources. It may be applied to any
other collateral purpose of the university or invested
elsewhere. Hence, the framers of the law intended this
portion of the increases in tuition fees to be a general fund to
cover up for the universitys miscellaneous expenses and,
precisely, for this reason, it was not so delimited. Besides,
ROI is a return or profit over and above the operating
expenditures of the university, and still, over and above the
profits it may have had prior to the tuition increase. The
earning capacities of private educational institutions are not
dependent on the increases in tuition fees allowed by P.D.
451. Accommodation of the allowances required by law
require wise and prudent management of all the university
resources together with the incremental proceeds of tuition
increases. Cognizance should be taken of the fact that the
private respondent had, before PD 451, managed to grant all
allowances required by law. It cannot now claim that it
could not afford the same, considering that additional funds
are even granted them by the law in question. We find no
compelling reason, therefore, to deviate from our previous
ruling in the University of the East case even as we take the
second hard look at the decision requested by the
private Respondent. This case was decided in 1982 when
PDs 1614, 1634, 1678, and 1713 which are also the various
Presidential Decrees on ECOLA were already in force. PD
451 was interpreted in the light of these subsequent
legislations which bear upon but do not modify nor amend,
the same. We need not go beyond the ruling in the
University of the East case.
Coming now to the third issue, the respondents are of the
 63

considered view that as evidenced by the payrolls submitted September 21, 1981.
by them during the period September 16 to September 30,
1981, the faculty members have been paid for the extra SO ORDERED.
loads. We agree with the respondents that this issue involves
a question of fact properly within the competence of the
respondent NLRC to pass upon. The findings of fact of the
respondent Commission are binding on this Court there
being no indication of their being unsubstantiated by
evidence. We find no grave abuse in the findings of
respondent NLRC on this matter to warrant reversal.
Assuming arguendo, however, that the petitioners have not
been paid for these extra loads, they are not entitled to
payment following the principles of "No work, no pay." This
time, the rule applies. Involved herein is a matter different
from the payment of ECOLA under the first issue. We are
now concerned with extra, not regular loads for which the
petitioners are paid regular salaries every month regardless
of the number of working days or hours in such a month.
Extra loads should be paid for only when actually performed
by the employee. Compensation is based, therefore, on
actual work done and on the number of hours and days spent
over and beyond their regular hours of duty. Since there was
no work on September 21, 1981, it would now be unfair to
grant petitioners demand for extra wages on that
day.chanrobles law library : red

Finally, disposing of the respondents charge of petitioners

lack of legal capacity to sue, suffice it to say that this
question can no longer be raised initially on appeal
or certiorari. It is quite belated for the private respondent to
question the personality of the petitioner after it had dealt
with it as a party in the proceedings below. Furthermore, it
was not disputed that the petitioner is a duly registered labor
organization and as such has the legal capacity to sue and be
sued. Registration grants it the rights of a legitimate labor
organization and recognition by the respondent University is
not necessary for it to institute this action in behalf of its
members to protect their interests and obtain relief from
grievances. The issues raised by the petitioner do not
involve pure money claims but are more intricately
intertwined with conditions of employment.

WHEREFORE the petition for certiorari is hereby

GRANTED. The private respondent is ordered to pay its
regular fulltime teachers/employees emergency cost of
living allowances for the semestral break from November 7
to December 5, 1981 and the undistributed balance of the
sixty (60%) percent incremental proceeds from tuition
increases for the same schoolyear as outlined above. The
respondent Commission is sustained insofar as it DENIED
the payment of salaries for the suspended extra loads on

Shell Co. v. NLU G.R. No. 119205 1 of 8
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
GR No. L-1309 July 26, 1948
SHELL COMPANY OF THE PHILIPPINE ISLANDS,
LIMITED, recurrent, vs.
NATIONAL LABOR UNION appeal.
Messrs. Ross, Selph, Carrascoso and Janda on behalf of the
appellant.
Messrs. Paguia and Villanueva on behalf of the respondent.
BRIONES, J.:
Acting on a request from the working entity called "National
Labor Union," the Court of Industrial Relations has issued a
decision in which, among other things, the oil company
"The Shell Company of Philippine Islands, Limited" is
obliged to pay His workers who work at night (since the sun
goes until he gets up the next day) an additional
compensation of 50% of their regular wages if they worked
by day. It seems that the comania night service needs a
certain number of workers, because the planes from abroad
often come off and landing at night, and is thus necessary
that evening chores for supplying fuel and lubricants are
made, and other purposes. The oil company has
excepcionado against that decision from there this writ of
certiorari so that we reverse.
The appellant company claims and argues that not only there
is no legal provision empowering the Industrial Relations
Court to order the payment of additional workers who work
at night, but compensation, on the contrary, the
Commonwealth Act No. 444 relieve the employer of such
obligation since in the law where it is compulsory payment
of "overtime" (additional compensation) are provided, and
among such cases do not include the work at night.
Meanwhile, the labor union appeal argues that the authority
at issue is part of the extensive and effective powers to the
Commonwealth Act No. 103 - the charter of the Industrial
64
Relations Court - the court grants; and that Act No. 444
cited Commonwealth has no aplication to this case, as it is
necessarily limited in scope, particularly referring
exclusively to the maximum allowable time contidiano work
in industrial establishments - the day of 8 hours.
Our conclusion is that the labor union has appealed the
reason on your part. For clear and full elucidation of the
points discussed, we estmamos convenient, even at the risk
of prolonging this paper, transcribe relevant legal
lasdisposiciones are Articles 1, 4 and 13 of the
Commonwealth Act No. 103. Here they are:
SECTION 1. The Judge: his appointment, qualifications,
compensation, tenure. - There is hereby created a Court of
Industrial Relations, Which Shall Have jurisdiction over the
Entire Philippines, to consider, investigate, choose, and
settle any question, matter, controversy or dispute Arising
between, and / or Affecting, Employers and employees or
laborers , and landlords and tenants or farm-laborers, and
Regulate the relation Between them, subject to, and in
Accordance With, esta Provisions of the Act. The Court
Shall keep a record of all its proceedings and Shall be
presided over by a Judge to be appointed by the President of
the Philippines With the consent of the Commission on
Appointments of the National Assembly. The Judge of the
Court Shall hold office During good behavior Until He
Reaches the age of seventy years, or
Shell Co. v. NLU G.R. No. 119205 2 of 8
Becomes incapacitated to discharge the duties of His office.
His qualifications Shall be the same as provided in the
Constitution Those for members of the Supreme Court and I
Shall receive an annual compensation of ten thousand pesos
and Shall Be Entitled to traveling expenses and per diems
When performing official duties outside of the City of
Manila. The Department of Justice Shall Have executive
supervision over the Court.
SEC. 4. Strikes and lockouts. - The Court Shall take
cognizance for purpose of prevention, arbitration, and
settlement decision, of any industry or agricultural dispute
Causing or likely to cause a strike or lockout, form
Differences Arising as regards wages, shares or
compensation, hours of work or conditions of tenancy or
employment, Between Employers and employees or laborers
and Between landlords and tenants or farm-laborers,
provided That the number of employees, laborers or tenants
or farm-laborers Involved Exceeds thirty, and industry or
agricultural Such dispute is Submitted to the Court by the
Secretary of Labor, or by any or Both of the parties to the
controversy and certified by the Secretary of Labor as

Existing and proper to be Dealt With by the Court for the
sake of public interest. Such In all cases, the Secretary of
Labor or the party or parties Submitting the disputes, and
Specifically Shall Clearly state in writing the questions to be
decided. Upon the submission of Such a controversy or
question by the Secretary of Labor, His intervention therein
as authorized by law, Shall cease.
The Court Shall, before hearing the dispute and in the course
of Such hearing, endeavor to reconcile the parties and
induce them to settle the dispute by amicable agreement. If
any agreement as to the whole or any part of the dispute is
arrived at by the parties, a memorandum of Its terms Shall
Be made in writing, signed and Acknowledged by the
parties thereto before the Judge of the Court or any official
acting in His Behalf and authorized to administer oaths or
acknowledgments, or, before a notary public. The
memorandum Shall be filed in the office of the Clerk of the
Court, and, unless otherwise ordered by the Court, Shall, as
Between the parties to the agreement, have the same effect
as, and be Deemed to be, a decision or award .
SEC. 13. Character of the award. - In making an award,
order or decision, under the Provisions of section four of
esta Act, the Court Shall not be restricted to the specific
relief or Claimed Demands made by the parties to the
industry or agricultural dispute, but May include in the
award , any order or decision or determination Which my
matter be Deemed Necessary or expedient for the purpose of
setting the dispute or of preventative or agricultural industry
further disputes.
It is evident from the provisions transcribed the following:
(a) that when a dispute between the principal and the
employee or worker, viz arises. on issue of wages, the
Industrial Relations Court has jurisdiction throughout the
territory of the Philippines to consider, investigate and
resolve the dispute, setting wages deemed fair and
reasonable; (B) for the purposes of prevention, arbitration
decision and under the same Industrial Relations Court also
tien jurisdiction to hear any dispute - industrial and
agricultural - resulting from any differences over wages,
interests or compensation, hours work, employment
conditions or sharecropping between employers and
employees or workers and between owners and landowners
or agricultural workers subject to compliance with certain
requirements and conditions, when he sees that the dispute
causes or may cause a strike; (C) that in exercising its
powers specified above, the Industrial Relations Court is not
limited, to decide the dispute, to grant the remedy or
65
remedies requested by the parties to the dispute, but may
include in the order or decision any matter or for the purpose
of determining settle the dispute or to prevent further
industrial or agricultural disputes.
Shell Co. v. NLU G.R. No. 119205 3 of 8
In the case we are concerned there is undoubtedly an
industrial dispunta. While the company, the company Shell,
is not willing to pay their workers higher wages night the
workers back, the "NationalLabor Union", which are
affiliated workersin Shell, other wage claims for service
night - 50% more. Herein lies the dispute industrial dispute.
Now, what has made the Court of Industrial Relations, after
the conflict subject to its jurisdiction? Precisely what rules
the Act No. 103 Commonwealth charter of its creation and
operation, namely: consider, investigate and prosecute the
dispute, after resolviedola in the sense that resolved, ie
remunerating work night with 50% more than the wages of
day. And this is perfectly legal both within the scope of
Article 1 of the Act No. 103 empowers the Court of
Industrial Relations to decide any dispute over wages and
compensation in the way it deems reasonable and
appropriate, and within the framework of Article 4 of the
Act which authorizes the court to try and decide any
litigation or industrial or agricultural controversy determine
the outbreak of a strike or tends to cause it. But still: what
was done by the Industrial Relations Trbunal in this case is
also legal within the framework of Article 13 of the Act No.
103, article, as is seen, not only empowers the court to grant
the remedy recabanlas parts, but even go beyond, that is not
specifically requested to grant remedies, provided they are
encamienen to resolve once the dispute or to prevent the
outbreak of further disputes or strikes.
It is evident that these broad powers the proposed equipping
Estadose Industrial Relations Court to the maximum
possible utility and effectiveness, making it not a simple
academic agency, but truly active, dynamic and efficient - in
short, the official machinery for excellence in the formidable
and thorny task of resolving industrial disputes, yagricolas
of some sort, preventing and thereby avoiding such
stoppages and strikes that afflict and hurt not only
businesses and workers but, in general, any community. In
his concurring opinion issued in the case of Ang
authoritative Tibay v Court of Industrial Relations (RG No.
46496), the Magistado Laurel had rightly expressed the
fundamental idea that emphasizes the creation of the court,
with the following statement:

In Commonwealth Act No. 103, and by it, our government
no longer performs the role of mediator or intervenor but
mere That of supreme arbiter. (Emphasis added.).
The appellant argues, however, that while it is true that in
case of dispute the Court of Industrial relaciiones has, under
its organic law, the power to set wages, such power is not
absolute, but is subject to certain and cortapizas restrictions,
provided in the law commonly known law on the eight hours
the Commonwealth Act No. 444, which is entirely relevant
articles transacriben below:
SECTION 1. The legal working day for any person
employed by another Shall be of not more than eight hours
daily. When the work is not continuous, the time During
Which the laborer is not working and can leave His working
place and can rest completely Shall Not Be Counted.
SEC. 3. May be Performed Work beyond eight hours a day
in case of actual or impending emergencies Caused by
serious accidents, fire, flood, typhoon, earthquake, epidemic,
or other disaster or calamity in order to Prevent loss to life
and property or imminent danger to public safety; or in case
urgent work to be Performed on the machines, equipment, or
installations in order to avoid a serious loss Which
Otherwise the employer would suffer, or some other just
cause of a like nature; Such cases but in all the laborers and
employees Shall Be Entitled to receive compensation for the
overtime work Performed at the same rate as Their wages or
salary regularly, plus At least twenty-five per centum
additional.
In case of national emergency the government is empowered
to Establish rules and regulations for the operation of the
plants and factories and to determine the wages to be paid
the laborers.
Shell Co. v. NLU G.R. No. 119205 4 of 8
SEC. 4. No person, firm, or corporation, or business
establishment or place of work Shall center compel an
employee or laborer to work During Sundays and legal
holidays, UNLESS I have is paid an additional sum of at
Least twenty-five per centum of His Regular remuneration:
Provided however, That prohibition esta Shall not apply to
public utilities performing some public service: such as
supply supplying gas, electricity, power, water, or providing
Means of transportation or communication.
Since - argumentanlos recurring lawyers - that in these
articles where the payment of extra compensation or
additional authorized and are alone, namely specified: (a) in
case of "overtime" or work in excess of the regular hours for
66
reasons imperiosasde urgency because of some disaster or
accident, or to avoid losses or repair; (B) in the case of work
on Sundays and holidays; (C) emergency, and nothing that
refers to night work; then the order in question is illegal
because it is not authorized by law. "In the absence - stress
lawyers recurring - legislation Authorizing the payment of
additional compensation for work done at night, the Court of
Industrial Relations has no power or authority to order the
petitioner company to pay additional compensation for work
done by ITS laborers at night. Expressio unius. Where, as
inthe case at bar, EXPRESSLY statute specifies the cases
Where payment of additional compensation May be
Demanded, additional compensation May be allowed in
Those cases only, and in no others. The Provisions of the
Commonwealth Act No. 444 can not be enlarged by
implication or otherwise. Expressum facit cessare tacitum.
The argument is erroneous. Law No. 444 is not applicable to
this case, it is evident that it has a specific purpose, namely:
(a) fix the maximum 8-hour working day; (B) identify
certain exceptional cases you can authorize work outside the
working day; (C) provide a bonus, which should not be less
than 25% of regular salary for the "overtime" or work in
excess of 8 hours.
In the case of Manila Electric, applicant-appellant against
Utities The Public Employees' Association, appeal, L-1206
(45 Off. Gaz., 1760), this Court has held that the power
conferred by Article 1 of the law Commonwealth No. 103
the Industrial Relations Court to decide enjuciar and
industrial disputes and disputes between capital and labor,
including that of setting wages and compnsaciones of
employees and workers, has been restricted by Article 4 of
Law No Commonwealth . 444, at the same time limited to
25% of salary or regular compensation of workers the
minimum additional compensation that the court may grant
for work on Sundays and public holidays, exempted from
the payment of such additional compensation to entities
public utility providing a public service, such as supplying
gas, electricity, mortriz power, water, or provide
transportation or communication skills. Such restriction
becomes an exception to the general power of the court to
fix, in cases of dispute, wages and compensation to be paid
by employers to employees and workers; and inasmuch as
that Article 4 relates only to salary or compensation for
work during the day Sunday and public holidays, it
obviously can not refer to additional salary or compensation
for work beyond eight hours lajornada are usually made
from first hours of the morning to late in the evening, it is
one thing to work on days Sunday and public holidays, and
quite another night's work outside of the eight-hour working
days. Applying the legal maximum "expressio unius," it can

be sustained without fear of being wrong, that a law
provides an exception to the general provisions specified as
additional compensation for work days Sunday and public
holidays, excluding any another, as additional compensation
for work at night on weekdays. "Another case in Which May
esta maxim almost invariably Followed by statute Which Is
That Makes Certain of specific exceptions to STI General
provisions. Here wemay safely assume all other exceptions
That Were Intended to be excluded. " (Wabash R. Co.vs.
United States, 178 Fed 5, 101 CCA 133;. Cella Commision
Co. vs. Bohlinger, Fed 147, 419,. 78 CCA 467; Kunkalman
vs. Gibson, Ind 171, 503.; 84 NE 985; Hering vs. Clement
App Div 133, 293,.. 117 NY 747 Supp.).
Shell Co. v. NLU G.R. No. 119205 5 of 8
The work denoche the Shell company requires its workers
tally is not a 'overtime "in the sense that this word is used in
the Le No. 444, but a full day's work, also of 8 hours: only
that, rather than done in a day, it gets dark. In other words,
night work that is here is not only unexceso, prolongation or
"overtime" regular work day, but other work is absolutely
independent of the day shift. So there are two shifts: the shift
workers who work day; and the turn of those who work at
night. So it is not strange that the legislature did not include
this type of work between cases of "overtime" indicated in
the aforementioned law No. 444.
The question that, in our view, determine is whether among
the general powers of the Court of Industrial Relations who
are admitted without dipusta, consider this the day night as a
full day's work; of estimating it as more burdensome than
the day by day; and consequently to provide and arrange to
be remunerated with 50% more than regular wages daytime.
Our answer is yes: this is between the general powers of the
Court of Industrial Relations. If the court has, in cases of
dispute, the power to set wages it deems fair and reasonable
for the work day, there is no reason why it must not have the
same power over wages night; so work is the one and the
other. And as appreciation wing that night work is heavier
and cumbersome than the day and therefore deserve higher
pay, there is no motivospara revoke or alter. There is no
possible argument against universal fact that regular,
normal, ordinary work is the day, and night work is very
exceptional and justified only by certain unavoidable
imperative reasons. For something humanity has
trabajadosiempre of day.
67
Reasons of hygiene, medicine, morality, culture, sociology,
establish together the work of Nocho has many drawbacks,
as there is no choice but to do so is only fair to remunerated
better than usual to compensate certain hasa the workers'
point of such drawbacks. Undoubtedly night work not only
in the long run affects the health of workers, but this
deprives him of certain things that make relatively pleasant
life, like, viz., A full and uninterrupted rest and some
moments of solace , entertainment or spiritual and cultural
expansion that could have after work in the evening and
during the first hours of the night. It is said that the workers
can rest during the day after working all night; but it may
perhaps the rest of the body one day give him full tonic and
restorative effect that can only provide the natural sleep at
night? It is said also that some prefer to work at night under
our scorching weather, thus avoiding the heat of the day. We
fear, however, that this is better spoken than praticado. We
believe that from time immemorial the universal rule is that
man trabja night irremediable more by necessity than
pleasant convenience.
The vulgar, universal opinion, we must add the
opinionpericial, the specialist criterion. The opinion of
writers and experts strongly militates in favor of the theory
that night work is harder and onerous work that day,
considered for this with strong disgust and consequently
compelling the capitalistic managers to establish a higher
level of wages as an incentive for workers to accept it.
Virias authorities could be cited, but not to overextend this
paper we choose transcriber only a few, namely:
. . . Then, It Must Be Remembered That it is
distinctly unphysiological to turn the night into day and
deprive the body of the beneficial effects of sunshine. The
human organism Revolts against esta procedure. Added to
artificial lighting are reversed and unnatural times of eating,
resting, and sleeping. Much of the inferiority of Nightwork
can doubtless be traced to the failure of the workers to
secure proper rest and sleep, by day. Because of inability or
the lack of opportunity to sleep, nightworkers Their Often
spend days in performing domestic duties, joining the family
in the midday meal, 'tinkering about the place', watching the
baseball game, attending the theater or taking a ride in the
car. It is not strange That nightworkers Tend to be less
efficient than dayworkers and lose more time. . . (The
Management of Labor Relations, by Watkins & Dodd, page
524).

Shell Co. v. NLU G.R. No. 119205 6 of 8
Nightwork. - Nightwork've Gained a measure of prominence
in the modern industry system in Connection with
continuous industries, That Is, Which industries in the nature
of the Processes Makes it Necessary to keep machinery and
equipment in constant operation. Even in continuous
industries the tendency is definitely in the direction of four
shifts of 6 hours each, With provision for an automatic
change of shift for all workers Stated at intervals. Some
discussion has taken place with regard to the lengths of the
period Should any workers be allowed to REMAIN on the
night shift. A weekly change of shifts is common, specially
Where three or four shifts are in operation; in other cases the
change is made fortnightly or monthly; in still other
instances, no alternation is provided for, the remaining
workers on day - Nightwork or permanently, except Where
temporary Changes are made individually for convenience.
There is sharp difference of opinion Concerning the relative
Merits of These systems. Advocates of the change of shifts
weekly contend That the strain of Nightwork and the
difficulty of getting adequate sleep during the day make it
unwise for workers to REMAIN on the "graveyard" shift for
more than a week at a time. Opponents urged Repeated
Changes That make it more difficult to settle down to Either
That kind of shift and after the first week Nightwork
Becomes less while trying to sleep the Ability Increases by
day. Workers Themselves react in various ways to the
different systems. This much, however, Is Certain: Few
persons react favorably to Nightwork, Whether the shift be
continuous or alternating. Outside of continuous industries,
Nightwork can scarcely be justified, and, even in these, You
it presents serious Disadvantages Which Must Be
Recognized in planing for Industrial efficiency, stabilization
of the working force, the promotion of industry good-will,
and the conservation of the health and vitality of the
workers.
Nightwork Can not Be Regarded as desirable, Either from
the point of view of the employer or of the wage earner. It is
uneconomical UNLESS are unusually heavy overhead costs.
Frequently the scale of wages is higher as an inducement to
employees to accept employment on the night shift, and the
rate of production is Generally lower. (Management of
Labor Relations, by Watkins & Dodd, pp 522-524;.
Emphasis ours.)
. . . The lack of sunlight Tends to produce anemia
and tuberculosis and to predispose to other ills. Nightwork
Brings Increased liability to eyestrain and accident. Serious
moral dangers are there also likely to result from the
68
necessity of traveling the streets alone at night, and from the
interference With ordinary home life. From an economic
point of view,, Moreover, the investigations Showed That
Nightwork was unprofitable, Being lower to day work Both
in quality and in quantity. Wherever it HAD Been abolished,
in the long run Both the efficiency of the management and
of the workers was raised. Furthermore, it was found
Nightwork That laws are a valuable aid in enforcing acts
fixing the maximum period of employment. (Principles of
Labor Legislation, by Commons and Andrews, 4th Revised
Edition, p. 142.)
Special regulation of Nightwork for adult men is a
comparatively recent development. Some European
Countries Have ADOPTED special laws Placing limitations
on hours of Nightwork for men, and others prohibit Such
work except in Processes continuous. (Principles of Labor
Legislation, 4th Revised Edition by Common & Andrews, p.
147.)
Nightwork have almost invariably Been With disfavor
Looked upon by students of the problem Because of the
excessive strain Involved, Especially for women and young
persons, the large amount of lost time consequent upon
exhaustion of the workers, and the additional strain upon the
executive staff Responsibility , the tendency of excessively
fatigued workers to "keep going" on artificial stimulants, the
overall curtailment of time for rest, leisure, and culture
improvement, and the fact That night workers, to an
Shell Co. v. NLU G.R. No. 119205 7 of 8
extent, Although precluded from the activities of day life, do
Attempt to enter into These activities, With resultant
impairment of physical well-being. It is not contended, of
course, Nightwork That Could Be abolished in the
continuous-process industries, but it is possible to put Such
industries upon a Three- or four-shifts basis, and to prohibit
Nightwork for women and children. (Labor's Progress and
Problems, Vol. I, p. 464, by Professors Millis and
Montgomery.)
Nightwork. - Civilized peoples are beginning to Recognize
That the fact except in cases of necessity or in periods of
great emergency, Nightwork is socially undesirable. Under
our modern industry system, however, has Nightwork
Greatly aided the production of commodities, and have
Offered a significant method of cutting down the ever-
Increasing overhead costs of industry. This result has led to
believe That Employers Such work is Necessary and
profitable. Here again one meets a conflict of economic and

social interests. Under These Circumstances it is Necessary
to discover Whether Nightwork has deleterious effects upon
the health of laborers and Tends to reduce the ultimate
supply of efficient work. If it can adversely PROVED That
Nightwork Affects Both the quality and quantity of
productive labor, ITS discontinuance will undoubtedly be
sanctioned by Employers. From a social point of view, even
to Relatively high degree of efficiency in night operations
must be forfeited if it is Purchased With rapid exhaustion of
the health and energy of the workers. From an economic
point of view, Nightwork May be Necessary if the employer
is to meet the demand for His product, or if I have is to
Maintain his market in the face of mounting Variable
Increasing competition or production costs.
Industrial experience has shown That the possession of
extra-ordinary physical strength and self-monitoring
Facilitates the reversal of the ordinary routine of work day
and night rest, With the little or no unfavorable effect on
health and efficiency. Unusual vitality and self-monitoring,
however, are not common possessions. That it has-been
found The most serious obstacle to a reversal of the routine
is the lack of self-discipline. Many night workers Numerous
enter into the activities of sleep PRECLUDE That day life,
and continue to Attempt to do Their Work at night. Evidence
Gathered by the British Health of Munition Workers'
Committee places permanent night workers, Whether
Judged on the basis of output or loss of time, in a very
unfavorable positions as Compared With day workers.
Systems of Nightwork Differ. There is the continuous
system, in Which employees work by night and do not
Attend the establishment at all by day, and the discontinuous
system, in Which the workers change to turn the day at
regular intervals, Usually every other week. There are, of
course, minor variations In These systems, Depending upon
the nature of the industry and the wishes of management.
Such bodies as the British Health Munition Workers'
Committee Have Given us valuable conclusions Concerning
the effect of Nightwork. Continuous Nightwork is definitely
less productive than the discontinuous system. The output of
the continuous day shift does not make up for esta loss in
production.
There is,, Moreover, a marked difference Between the rates
of output of night and day shifts on the discontinuous plan.
Investigated In each case the inferiority of night work was
definitely established. This inferiority is evidently the result
of the night worker's failure to secure proper Amounts of
sleep and rest during the day. The system of continuous
69
shifts, Especially for women, is Investigators Regarded by
all as undesirable. Women on continuous Nightwork are
likely to perform domestic duties, and added strain esta
undoubtedly accounts for the Poorer results of Industrial
Their activities. The tendency to devote to amusement and
other things the time That Should be spent in rest and sleep
is as common Certainly Among Men Among women as
workers and accounts Largely for the loss of efficiency and
time on the part of Both
Shell Co. v. NLU G.R. No. 119205 8 of 8
Sexes in Nightwork.
The case against Nightwork, then a, may be Said to rest
upon several grounds. In the first place, there are the
injurious effects of permanent remotely Nightwork
Manifested in the later years of the worker's life. Importance
Of more immediate to the average worker is the
disarrangement of His social life, Including the recreational
activities of His leisure hours and the ordinary associations
of regular family relations. From an economic point of view,
Nightwork is to be discouraged Because of Its adverse effect
upon efficiency and output. A moral argument against
Nightwork in the case of women Is That the night shift
forces the workers to go to and from the factory in darkness.
Recent experiences of nations unavailable Industrial added
much to the evidence against the continuation of Nightwork,
except in extraordinary and unavoidable emergencies
Circumstances. The immediate prohibition of Nightwork for
all laborers is hardly practicable; ITS discontinuance in the
case of women employees is unquestionably desirable. 'The
night was made for rest and sleep and not for work' is a
common saying Among wage-earning people, and many of
them dream of Industrial an order in Which there will be no
night shift. (Labor Problems, 3rd Edition, pp. 325-328, by
Watkins & Dodd.).
In merits of the above, the appeal is denied certiorari filed
and the Court of Industrial Reclaciones confirmed, with
costs of a recurring charge. So it is ordered.
Paras, Pres. Acting Fair, Paul, Perfect, Bengzon, Padilla and
Tuason, JJ., Concur.

[G.R. No. 115755. December 4, 2000]
IMELDA B. DAMASCO, petitioner, vs. NATIONAL
LABOR RELATIONS COMMISSION, MANILA
GLASS SUPPLY and BONIFACIO K. SIA, respondents.
[G.R. No. 116101. December 4, 2000]
BONIFACIO K. SIA and MANILA GLASS
SUPPLY, petitioners, vs. NATIONAL LABOR
RELATIONS COMMISSION, LABOR ARBITER
DOMINADOR B. SALUDARES, DEPUTY SHERIFF
ANTONIO T. DATU and IMELDA B.
DAMASCO, respondents.
DECISION
QUISUMBING, J.:
These two petitions for certiorari seek to annul the decision
promulgated by public respondent National Labor Relations
Commission (NLRC) on March 21, 1994 in NLRC CA No.
L-001159, and its resolution dated May 11, 1994, which
denied petitioners respective motions for reconsideration.
Ms. Imelda Damasco is the petitioner in G.R. No. 115755
and private respondent in G.R. No. 116101. She was a
regular sales clerk in Manila Glass Supply in Olongapo City.
Manila Glass Supply is private respondent in G.R. No.
115755 and petitioner in G.R. No. 116101. It is a sole
proprietorship engaged in the sale of glass with main store in
Olongapo City and branch in Metro Manila. Bonifacio K.
Sia is private respondent in G.R. No. 115755 and petitioner
in G.R. No. 116101. He is the owner of Manila Glass
Supply.
The factual background of this case as summarized by the
labor arbiter is as follows:
That she [Damasco] was employed by respondents [Manila
Glass Supply and Bonifacio K. Sia] as Sales Clerk on
January 30, 1992, receiving lately a daily wage of P140.00;
that as sales clerk, she was ordered to do almost all the
works related to the glass business of respondents including
the cutting, sales and delivery of glass as well as balancing,
accounting and checking of capital and profits every end of
the month; that she was made to work from 8:30 in the
morning up to 9:30 in the evening continuously from
Monday to Sunday without having been paid overtime pay,
rest day pay and holiday pay; that during the period of her
employment, she was not paid any 13th month pay as well
as five (5) days service incentive leave pay; that on August
28, 1992 at around 7:00 oclock in the evening, while she
70
was working, respondent Bonifacio Sia called her up and
told her to finish all her works that night, but she told
respondent that she would not be able to finish them all
because it was already late; that she then left respondents
room but respondent called her again and asked her why she
could not finish what she was told to do, to which
complainant [Damasco] answered that it was already late
and there were still a lot of things to do; that respondent
asked her what she was doing since he (respondent) left for
Manila, to which complainant told him that she was
attending to the sales, to the field and to other things relative
to the business of respondent, to which respondent got mad
at her; that respondent asked complainant why she was not
teaching her two (2) other co-workers on what to do, and she
answered she would not do it anymore because if the other
co-workers should commit mistakes in accounting, she was
the first one to be lambasted by respondent and even
required to share in paying the shortages; that when
respondent heard this, he picked up and swiped an ashtray in
front of complainant and it broke, after which, he threw
some notebooks at complainant who began to tremble in fear
and her whole body shook; respondent ordered her to go out
of the room, lambasted her again and told her that he
(respondent)does not want to see her face anymore (ayaw ko
nang makita ang pagmumukha mo rito); that after
respondent had left, complainant again trembled and she
could not prevent herself from crying, her co-workers
applied alcohol on her because her body was cold, given
water to drink and after about an hour, complainant decided
not to finish her work anymore because she felt weak; that
one of his co-workers, Alma, brought her home and since
then, she did not report for work anymore because she
developed a phobia of respondent
Disputing the claim of complainant, respondents maintain as
follows: That sometime in the late part of August 1992,
complainant was instructed by respondent to report for work
in their store in Metro Manila as there is a necessity for her
detail thereat for reasons that the employees there are new
and do not have the experience and know-how in running
the store specifically with regards (sic) to the sale of glass;
that complainant manifested her objection to such detail for
reasons that her husband is working in Olongapo City and
she does not want to work in Manila; that thereafter,
complainant did not report for work in the respondents store
in Olongapo City, so respondent sent some of his employees
to the house of complainant but were told that she is sick
and cannot report for work; that sometime in the first week
of January 1993, respondent received a copy of the instant
complaint filed by complainant; that immediately,
respondent thru counsel sent a letter to complainant

directing her to report for work on January 13, 1993 at its
store in Olongapo City; that complainant ignored the letter
despite receipt thereof, hence, on January 15, 1993,
respondent again sent complainant another letter directing
her to report for work on January 22, 1993 but just the same,
complainant failed and refused to report for work; that it is
not true as claimed by complainant that respondent shouted
at her and swiped an ashtray from the table and threw at her
some notebooks. [1]
On December 7, 1992, Damasco filed before the NLRC
Regional Arbitration Branch in San Fernando, Pampanga, a
complaint against Bonifacio Sia and Manila Glass Supply
(jointly referred hereafter as Sia for easy reference). In the
one-page complaint form of the NLRC, Damasco indicated
that she is suing her employer for illegal dismissal and non-
payment of overtime pay.[2] However, in her complaint
affidavit and position paper filed later before the labor
arbiter, Damasco additionally charged her employer with
non-payment of 13th month pay, service incentive leave
pay, holiday pay and night shift differential.[3]
On September 2, 1993, the labor arbiter rendered judgment
in favor of Ms. Damasco. The labor official declared that Sia
has not shown any just or authorized cause in terminating
the services of Damasco, except for wild, generalized and
self-serving statements that Damasco committed serious
misconduct or willful disobedience of the lawful orders in
connection with her work. The labor arbiter also ruled that
Damasco is entitled to 13th month pay, service incentive
leave pay, holiday pay, overtime pay, and disposed of the
case, thus:
WHEREFORE, premises considered, judgment is hereby
entered in favor of the complainant and against respondents,
ordering the latter, as follows:
1.To pay the total sum of P112,570.32 representing unpaid
13th month pay, holiday pay, overtime and premiums pay,
five (5) days service incentive leave pay, backwages and
separation pay of complainant;
2.To pay attorneys fees in the sum of P11,257.00 which is
ten (10%) percent of the award; and
3.All other claims or issues, for want of substantial
evidence, are hereby DISMISSED.
SO DECIDED.[4]
On appeal, the NLRC upheld the labor arbiters finding that
Damasco was illegally dismissed but modified the labor
officials judgment, thus:
71
PREMISES CONSIDERED, the Decision of September 2,
1993, is hereby MODIFIED. Respondents are directed to
pay complainant the following:
I. Backwages .. P43,680.00
II. Separation Pay 36,400.00
III. 13th month pay . 10,920.00
IV. Service Incentive Leave Pay 2,100.00
V. Holiday Pay .. 4,200.00
VI. Attorneys fees .. 1,722.00
--------------
T O T A L ----- P99,022.00
SO ORDERED.[5]
Both parties filed motions for reconsideration which were
denied.
On July 4, 1994, the NLRC issued an entry of judgment
stating that the aforesaid judgment of the labor tribunal has
become final and executory.
On July 7, 1994, the labor arbiter, upon motion of Damasco,
issued a writ of execution. In compliance therewith, public
respondent deputy sheriff issued the next day a notice of
garnishment addressed to Far East Bank and Trust
Company, Olongapo City, against all credits and deposits of
Bonifacio Sia and/or Manila Glass Supply maintained in
said bank, sufficient to cover the monetary award in favor of
Damasco.[6]
In her petition, Damasco alleged that the NLRC committed
grave abuse of discretion:
IN DELETING THE AWARD FOR OVERTIME PAY
AND REDUCING THE ATTORNEYS FEES IN FAVOR
OF PETITIONER.[7]
In his memorandum, Sia raised the following issues for
resolution, thus:
A
WHETHER OR NOT PUBLIC RESPONDENT LABOR
ARBITER SALUDARES DEPRIVED PETITIONERS OF
THEIR RIGHT TO DUE PROCESS AND THUS
COMMITTED GRAVE ABUSE OF DISRCRETION,
AMOUNTING TO LACK OR EXCESS OF
JURISDICTION

B Damasco of her employment and erode her dignity as a
WHETHER OR NOT PUBLIC RESPONDENT NLRC
COMMITTED GRAVE ABUSE OF DISCRETION,
AMOUNTING TO LACK OR EXCESS OF
JURISDICTION, IN AFFIRMING, ALBEIT WITH
MODIFICATIONS, THE LABOR ARBITERS
PATENTLY NULL AND VOID DECISION.[8]
In our view, the crucial issue for resolution is whether or not
the NLRC committed grave abuse of discretion in affirming
the decision of the labor arbiter which held that Damasco
was illegally dismissed from her job.
On August 1, 1994, we decided to consolidate the two
petitions inasmuch as they involve the same parties and
intertwined issues. Likewise, we issued a temporary
restraining order, effective immediately and continuing until
further orders from this Court, enjoining the parties
concerned from implementing the subject writ of execution
and notice of garnishment dated July 7 and 8, 1994, which
were respectively issued by the labor arbiter and deputy
sheriff of NLRC Regional Arbitration Branch III, San
Fernando, Pampanga.[9]
We note that both petitioners did not comply with the rule
on certification against forum shopping. The certifications in
their respective petitions were executed by their lawyers,
which is not correct.[10] The certification of non-forum
shopping must be by the petitioner or a principal party and
not the attorney. This procedural lapse on the part of
petitioners could have warranted the outright dismissal of
their actions.[11]
But, the Court recognizes the need to resolve these two
petitions on their merits as a matter of social justice
involving labor and capital. After all, technicality should not
be allowed to stand in the way of equitably and completely
resolving herein the rights and obligations of these
parties.[12]Moreover, we must stress that technical rules of
procedure in labor cases are not to be strictly applied if the
result would be detrimental to the working woman.[13]
Sia contends that he was deprived of his right to due process
as the labor arbiter failed to conduct a hearing for the
reception of evidence. He also claims that the labor arbiters
finding that Damasco was illegally dismissed is not
supported by substantial evidence. On the contrary, Sia
insists, Damasco abandoned her work as she refused to be
detailed at her employers store in Metro Manila.
Sias contentions are bereft of merit. His words cannot hide
the oppressive acts obviously directed to deprive Ms.
72
worker.
It is now axiomatic that the essence of due process in
administrative proceedings is simply an opportunity to
explain ones side or an opportunity to seek reconsideration
of the action or ruling complained of.[14] A formal or trial-
type hearing is not at all times and in all instances essential
to due process, the requirements of which is satisfied where
parties are afforded fair and reasonable opportunity to
explain their side of the controversy at hand.[15]
As noted by the Solicitor General and petitioner Damasco,
the labor arbiter set the case several times for preliminary
conference but the parties failed to reached an amicable
settlement.[16] The labor arbiter then ordered the parties to
submit their position papers. In compliance therewith, the
parties submitted position papers where they set out and
argued the factual as well as the legal bases of their position.
Damasco filed her position paper, computation of money
claims and affidavit. For his part, Sia filed his position paper
and affidavit. Damasco, in turn, filed her affidavit in reply to
the affidavit of Sia. After both parties had filed their replies,
the case was deemed submitted for resolution as the labor
arbiter did not find it necessary to conduct a trial-type
hearing. Note that the filing of position papers and
supporting documents fulfills the requirements of due
process.[17] Further, it is within the discretion of the labor
arbiter to determine if there is a need for a hearing.[18] Thus,
we cannot subscribe to Sias posturing that the labor arbiter
gravely abused its discretion when he dispensed with the
hearing to receive further evidence.[19]
Moreover, Sia was given additional opportunity to argue his
case on appeal before the NLRC in a memorandum and
motion for reconsideration which pleadings were likewise
considered by that labor agency in the course of resolving
the case. Sia cannot thereafter interpose lack of due process
since he was given sufficient time and ample chances to be
heard in the present case. Consequently, the alleged defect in
the proceedings in the labor arbiter, if there be any, should
be deemed cured.[20] All told, Sias due process argument
must fail.
On Sias assertion that the labor arbiters finding is not
supported by ample evidence, suffice it to state that judicial
review of labor cases does not go as far as to evaluate the
sufficiency of evidence upon which the labor arbiter and
NLRC based their determinations.[21] Moreover, this Court
does not review supposed errors in the decision of the
NLRC which raise factual issues because findings of
agencies exercising quasi-judicial functions are accorded not

only respect but even finality aside from the consideration
that this Court is not a trier of facts.[22] In any case, in our
view, the labor arbiter used every reasonable means to
ascertain the facts by giving the parties ample opportunity to
present evidence. It is worth stressing that in controversies
between a worker and her employer doubts reasonably
arising from evidence or in the interpretation of agreements
should be resolved in the formers favor.[23] Thus, the labor
arbiter had reasonable ground to sustain the version of Ms.
Damasco on how she was unceremoniously dismissed from
her job. Furthermore, Sia did not quite succeed to convince
the NLRC to rule otherwise. Finally, the mere fact that the
worker seeks reinstatement and backpay directly rebuts the
employers bare claim of abandonment by the worker of his
employment.
Thus, going now to the specific issue of abandonment, we
find no merit in Sias allegation that Ms. Damasco
abandoned her job. To constitute abandonment, two
elements must concur: (1) the failure to report for work or
absence without valid or justifiable reason, and (2) a clear
intention to sever the employer-employee relationship, with
the second element as the more determinative factor when
manifested by some overt acts.[24]Abandoning ones job
means the deliberate, unjustified refusal of the employee to
resume his employment and the burden of proof is on the
employer to show a clear and deliberate intent on the part of
the employee to discontinue employment.
In this case, there are no overt acts established by Sia from
which we can infer the clear intention of Damasco to desist
from employment. Sias letters dated January 7 and 15, 1993,
for Damasco to report for work deserve scant consideration.
Note that those orders were made four months after
Damasco was told not to show herself again in the store, and
after Sia had received a copy of Damascos complaint for
illegal dismissal. It is indeed highly incredible for an
employer to require his employee without an approved leave
to report to work only after four months of absence. If at all,
the charge of abandonment is disingenuous to say the least.
Moreover, as noted by the NLRC, it was unlikely that
Damasco had abandoned her job for no reason at all
considering the hardship of the times. In addition, if
Damasco had truly forsaken her job, she would not have
bothered to file a complaint for illegal dismissal against her
employer and prayed for reinstatement. An employee who
forthwith took steps to protect her layoff could not by any
logic be said to have abandoned her work.[25]
As to Sias allegation that Ms. Damasco committed serious
misconduct or willful disobedience of lawful order in
connection with her work, we find no tenable support. Even
73
if Sia directed her to be assigned at his store in Metro
Manila, her act of refusing to be detailed in Metro Manila
could hardly be characterized a willful or intentional
disobedience of her employers order. It was Sias order that
appears to us whimsical if not vindictive.Reassignment to
Metro Manila is prejudicial to Ms. Damasco, as she and her
family are residing in Olongapo City. This would entail
separation from her family and additional expenses on her
part for transportation and food. Damascos reassignment
order was unreasonable, considering the attendant
circumstances.[26]
In sum, we conclude there is no valid and just cause to
terminate the employment of Ms. Damasco. The NLRC did
not gravely abuse its discretion in upholding the finding of
the labor arbiter that Ms. Damascos dismissal was not for
cause.
An employee who is unjustly dismissed from work is
entitled to reinstatement without loss of seniority rights and
other privileges as well as to his full backwages, inclusive of
allowances, and to other benefits or their monetary
equivalent computed from the time his compensation was
withheld from him up to the time of his actual
reinstatement.[27]
However, in our view, the circumstances obtaining in this
case do not warrant the reinstatement of Ms. Damasco.
Antagonism caused a severe strain in the relationship
between her and her employer. A more equitable disposition
would be an award of separation pay equivalent to one (1)
months pay for every year of service with the employer.[28]
Now, as regards Ms. Damascos contention that public
respondent gravely abused its discretion in deleting the
award for overtime pay for lack of factual basis, we find the
same impressed with merit. We note that Sia has admitted in
his pleadings that Damascos work starts at 8:30 in the
morning and ends up at 6:30 in the evening daily, except
holidays and Sundays. However, Sia claims that Damascos
basic salary of P140.00 a day is more than enough to cover
the one hour excess work which is the compensation they
allegedly agreed upon.[29]
Judicial admissions made by parties in the pleadings, or in
the course of the trial or other proceedings in the same case
are conclusive, no further evidence being required to prove
the same, and cannot be contradicted unless previously
shown to have been made through palpable mistake or that
no such admission was made.[30] In view of Sias formal
admission that Ms. Damasco worked beyond eight hours
daily, the latter is entitled to overtime compensation. No
further proof is required. Sia already admitted she worked an

extra hour daily. Thus, public respondent gravely erred in
deleting the award of overtime pay to Ms. Damasco on the
pretext that the claim has no factual basis.
Still, even assuming that Damasco received a wage which is
higher than the minimum provided by law, it does not follow
that any additional compensation due her can be offset by
her pay in excess of the minimum, in the absence of an
express agreement to that effect. Moreover, such
arrangement, if there be any, must appear in the manner
required by law on how overtime compensation must be
determined. For it is necessary to have a clear and definite
delineation between an employees regular and overtime
compensation to thwart violation of the labor standards
provision of the Labor Code.[31]
With regard to the award of attorneys fees the ten percent
(10%) attorneys fees is provided for in Article 111 of the
Labor Code. Considering the circumstances of this case, said
award is in order.
WHEREFORE, in G.R. No. 115755, the petition is
GRANTED. The judgment of the Labor Arbiter in favor of
petitioner Imelda B. Damasco dated September 2, 1993 is
REINSTATED in full. In G.R. No. 116101, the petition of
Bonifacio K. Sia and Manila Glass Supply is DISSMISSED
for lack of merit. Costs against petitioners Bonifacio K. Sia
and Manila Glass Supply.
SO ORDERED.
74
G.R. No. L-30279 July 30, 1982
PHILIPPINE NATIONAL BANK, petitioner,
vs.
PHILIPPINE NATIONAL BANK EMPLOYEES
ASSOCIATION (PEMA) and COURT OF
INDUSTRIAL RELATIONS, respondents.
Conrado E. Medina, Edgardo M. Magtalas and Nestor
Kalaw for petitioner.
Leon O. Ty, Gesmundo Fernandez & Zulueta, Oliver B.
Gesmundo and Israel Bocobo for respondents.
BARREDO, J.:
Appeal by the Philippine National Bank from the decision of
the trial court of the Court of Industrial Relations in Case
No. IPA-53 dated August 5, 1967 and affirmed en banc by
said court on January 15, 1968.
This case started on January 28, 1965 in consequence of the
certification of the President of the Philippines of an
industrial dispute between the Philippine National Bank
Employees Association (PEMA, for short), on the one hand,
and the Philippine National Bank (PNB, for short), on the
other, which arose from no more than the alleged failure of
the PNB to comply with its commitment of organizing a
Committee on Personnel Affairs to take charge of screening
and deliberating on the promotion of employees covered by
the collective bargaining agreement then in force between
the said parties. On January 28, 1965, the Industrial Court
issued an order aimed at settling the dispute temporarily
between the parties, which was certified by the President.
Pertinent portions of the order read thus:
xxx xxx xxx
1. That in order to settle the strike and for the employees to
return to work immediately starting January 29, 1965, the
Committee on Personnel Affairs is hereby created to start
functioning on February 1, 1965;
xxx xxx xxx
f. That in return for this concession, an injunction against
future strikes or lockouts shall be issued by the Court to last
for a period of six months but which shall terminate even
before that period should all disputes of the parties be
already resolved; (Page 84, Record.)
According to the very decision now on appeal, "on May 22,
1965, petitioner (private respondent herein) filed another

pleading submitting to this Court for determination certain
matters which it claims cannot be resolved by the parties,
which are as follows:
First Cause of Action
a. In a Resolution No. 1162 dated September 16, 1957, the
Respondent's Board of Directors approved a revision of the
computation of overtime pay retroactive as of July 1, 1954,
and authorized a recomputation of the regular one- hour and
extra overtime already rendered by all officers and
employees of the Respondent Bank.
The details of the benefits involved in said Resolution are
contained in a Memorandum of the Respondent Bank dated
September 18, 1957.
b. Since the grant of the benefits in question, the employees
of the Respondent, represented by the petitioner, have
always considered them to be a part of their salaries and/or
fringe benefits; nevertheless, the Respondent, in 1963,
without just cause, withdrew said benefits and in spite of
repeated demands refused, and still refuses to reinstate the
same up to the present.
Second Cause of Action
c. After the promulgation of the Decision in National
Waterworks and Sewerage Authority vs. NAWASA
Consolidated Unions, et al. G.R. No. L-18938, Aug. 31,
1964, the Petitioner has repeatedly requested Respondent
that the cost of living allowance and longevity pay be taken
into account in the computation of overtime pay, effective as
of the grant of said benefits on January 1, 1958, in
accordance with the ruling in said Decision of the Supreme
Court.
d. Until now Respondent has not taken any concrete steps
toward the payment of the differential overtime and
nighttime pays arising from the cost of living allowance and
longevity pay.
xxx xxx xxx
Respondent in its answer of June 7, 1965 took exception to
this mentioned petition on several grounds, namely, (1) the
said alleged causes of action were not disputes existing
between the parties, (2) the same are mere money claims and
therefore not within this Court's jurisdiction, and (3) that the
parties have not so stipulated under the collective bargaining
agreement between them, or the same is premature as the
pertinent collective bargaining agreement has not yet
expired." (Pp. 84-86, Record.) 1
75
Resolving the issues of jurisdiction and prematurity thus
raised by PNB, the court held:
As to the first ground, it is well to note that this Court in its
Order of January 28, 1965 has enjoined the parties not to
strike or lockout for a period of six (6) months starting from
said date. In a very definite sense the labor disputes between
the parties have been given a specific period for the
settlement of their differences. The fact that thereafter the
question of the manner of payment of overtime pay is being
put in issue, appears to indicate that this was a part of the
labor dispute. If we are to consider that this question,
particularly the second cause of action, has in fact existed as
early as 1958, shows the necessity of resolving the same
now. And the same would indeed be an existing issue
considering that the present certification came only in 1965.
It is further to be noted that the presidential certification has
not limited specific areas of the labor dispute embraced
within the said certification. It speaks of the existence of a
labor dispute between the parties and of a strike declared by
the PEMA, for which the Court has been requested to take
immediate steps in the exercise of its powers under the law.
Even on the assumption that the present issue is not one
embraced by the presidential certification or it is an issue
presented by one party on a cause arising subsequent to the
certification, the same would still be subject to the
jurisdiction of this Court. In "Apo Cement Workers Union
versus Cebu Portland Cement", Case No. 11 IPA (G.R. No.
L-12451, July 10, 1957), the Court en banc (where this Sala
has taken an opposite view) upheld its jurisdiction under the
circumstances just enumerated. It would seem that this
question has been further settled by our Supreme Court in
"National Waterworks & Sewerage Authority vs. NAWASA
Consolidated Unions, et al." (supra), which we quote in part:
xxx xxx xxx
4. Petitioner's claim that the issue of overtime compensation
not having been raised in the original case but merely
dragged into it by intervenors, respondent Court cannot take
cognizance thereof under Section 1, Rule 13 of the Rules of
Court.
xxx xxx xxx
... The fact that the question of overtime payment is not
included in the principal case in the sense that it is not one of
the items of dispute certified to by the President is of no
moment, for it comes within the sound discretion of the
Court of Industrial Relations. Moreover, in labor disputes
technicalities of procedure should as much as possible be

avoided not only in the interest of labor but to avoid
multiplicity of action. This claim has no merit.
xxx xxx xxx
As to the objection posed that the issues are mere money
claims, there appears to be no ground for the same. In the
first place, although the same involves a claim for additional
compensation it is also a part of the labor dispute existing
between the parties and subject to the compulsory arbitration
powers of the Court, pursuant to Section 10 of Rep. Act No.
875. In the second place, on the basis of the so-called
PRISCO doctrine (G.R. No. L- 13806, May 23,.1960), there
is an existing and current employer-employee relationship
between the respondent and the members of petitioner
union, for whom the additional overtime compensation is
claimed.
With respect to ground three of the answer on which
objection is based, on C.A. 444, as amended, Section 6
thereof, provides as follows:
'Any agreement or contract between the employer and the
laborer or employee contrary to the provisions of this Act
shall be null and void ab initio'.
The instant action is partially subject to the provisions of
Commonwealth Act 444, as amended. Even if, the parties
have stipulated to the extent that overtime will not be paid,
the same will not be binding. More so under the present
circumstances, where the only question is the correctness of
the computation of the overtime payments.
While the Court notes that the first cause of action has
become moot and academic in view of the compliance by
respondent, hence there is no further need to resolve the
same (t.s.n., pp. 5-7, August 16, 1965), the settlement of said
first cause of action further strengthens the view that the
second cause of action is indeed an existing dispute between
the parties. Both causes of fiction involve overtime
questions. Both stem from dates well beyond and before the
presidential certification of the present proceedings. If
respondent has been fit to take steps to expedite and resolve,
without court intervention, the first cause of action, it cannot
deny the existence of the second cause of action as the first
and second appear to be interrelated matters. (Pp. 86-89,
Record)
And We agree that the foregoing holding is well taken. It
would be more worthwhile to proceed to the basic issues
immediately than to add anything more of Our own
discourse to the sufficiently based disposition of the court a
quo of the above- mentioned preliminary questions.
76
After discussing the pros and cons on the issue involved in
the second cause of action as to whether or not the cost-of-
living allowance otherwise denominated as equity pay and
longevity pay granted by the bank, the first beginning
January 1, 1958 and the latter effective July 1, 1961, should
be included in the computation of overtime-pay, the court
granted the demands of PE MA, except the additional rate of
work for night pay, and rendered the following judgment:
WHEREFORE, in view of the foregoing, this Court hereby
promulgates the following:
1. The respondent Philippine National Bank is hereby
required to pay overtime and nighttime rates to its
employees from January 28, 1962; and such overtime
compensation shall be based on the sum total of the
employee's basic salary or wage plus cost of living
allowance and longevity pay under the following schedule:
'a. Overtime services rendered shall be paid at the rate of
time and one-third, but overtime work performed between
6:00 P.M. and 6- .00 A.M. shall be paid at the rate of 150%
or 50% beyond the regular rate;
'b. The rate for work performed in the night shift, or during
the period from 6:00 P.M. to 6:00 A.M. shall be
compensated at the rate of 150% or 50% beyond the regular
rate, provided the work performed involved a definite night
shift and not merely a continuation by way of overtime of
the regular and established hours of the respondent Bank.
2. The Chief of the Examining Division of the Court or any
of his duly designated representatives is hereby ordered to
compute the overtime rates due each employee of the
respondent Bank from January 28, 1962, in accordance with
the above determination; and to complete the same within a
period of sixty (60) days from receipt of this Order.
However, considering that the Philippine National Bank is a
government depository, and renders and performs functions
distinct and unique; and, while it may be a banking
institution, its relationship with other government agencies
and the public is such that it has no basis for comparison
with other banking institutions organized under the
corporation law or special charter. To require it to pay
immediately the liability after the exact amount shall have
been determined by the Court Examiner and duly approved
by the Court, as in other cases, would work undue hardship
to the whole government machinery, not to mention the
outstanding foreign liabilities and outside commitments, if
any. Moreover, the records show that this case was initiated
long before the taking over of the incumbent bank officials.

Accordingly, the Court feels that the payment shall be
subject to the negotiations by the parties as to time, amount,
and duration.
The Court may intervene in said negotiations for the purpose
of settling once and for all this case to maintain industrial
peace pursuant to Section 13 of Commonwealth Act 103, as
amended, if desired, however by the parties.
After all this is not an unfair labor practice case.
SO ORDERED. (Pp. 98-100, Record.)
In connection with the above decision, two interesting points
appear at once to be of determinative relevance:
The first is that in upholding its jurisdiction to take
cognizance of the demand in question about cost-of-living
allowance and longevity pay, the Industrial Court carefully
noted that it was not resolving a petition for declaratory
relief in the light of the decision of this Court in NAWASA
vs. NAWASA Consolidated Unions, G.R. No. L- 18938,
August 31, 1964, 11 SCRA 766. Thus the decision under
review states:
Incidentally, the present action is not one for declaratory
relief as to the applicability of a judicial decision to the
herein parties. A careful perusal of the pleadings indicates
that what is being sought is the payment of differential
overtime and nighttime pay based on existing law and
jurisprudence. The cause of action is not anchored on any
decision of any court but on provisions of the law which
have been in effect at the time of the occurrence of the cause
of the action in relation to a labor dispute. Hence, this is not
a petition for declaratory relief. (Pp. 94-95, Record.)
The second refers to a subsequent decision of the
same Industrial Court in Shell Oil Workers Union vs. Shell
Co., et al., Case No. 2410-V and Shell & Affiliates
Supervisors Union vs. Shell Company of the Philippines, et
al., Case No. 2411- V, in which the court made an
explanatory discourse of its understanding of the NAWASA
ruling, supra, and on that basis rejected the claim of the
workers. In brief, it held that (1) NAWASA does not apply
where the collective bargaining agreement does not provide
for the method of computation of overtime pay herein
insisted upon by private respondent PEMA and (2) the fact-
situation in the Shell cases differed from that of NAWASA,
since the sole and definite ratio decidendi in NAWASA was
merely that inasmuch as Republic Act 1880 merely fixed a
40-hour 5-day work for all workers, laborers and employees
including government-owned corporations like NAWASA,
the weekly pay of NAWASA workers working more than
77
five days a week should remain intact; with overtime pay in
excess of eight hours work and 25 % additional
compensation on Sundays. There was no pronouncement at
all therein regarding the basis of the computation of
overtime pay in regard to bonuses and other fringe benefits.
For being commendably lucid and comprehensive, We deem
it justified to quote from that Shell decision:
The main issue:
The Unions appear to have read the NAWASA case very
broadly. They would want it held that in view of the said
ruling of the Supreme Court, employers and employees
must, even in the face of existing bargaining contracts
providing otherwise, determine the daily and hourly rates of
employees in this manner: Add to basic pay all the money
value of all fringe benefits agreed upon or already received
by the workers individually and overtime pay shall be
computed thus
Basic yearly Rate plus Value of all Fringe Benefits divided
by number of days worked during the year equals daily
wage; Daily wage divided by 8 equals hourly rate. Hourly
rate plus premium rate equals hourly overtime rate.
The NAWASA case must be viewed to determine whether it
is that broad. NAWASA case must be understood in its
setting. The words used by the Supreme Court in its
reasoning should not be disengaged from the fact-situation
with which it was confronted and the specific question
which it was there required to decide. Above all care should
be taken not to lose sight of the truth that the facts obtaining,
the issue settled, and the law applied in the said case, and
these, though extractable from the records thereof as
material in the resolution herein, were, as they are, primarily
declarative of the rights and liabilities of the parties involved
therein.
Recourse to the records of the NAWASA case shows that
the fact- situation, as far as can be materially connected with
the instant case, is as follows:
In view of the enactment of Rep. Act 1880, providing that
the legal hours of work for government employees,
(including those in government-owned or controlled
corporations) shall be eight (8) hours a day for five (5) days
a week or forty (40) hours a week, its implementation by
NAWASA was disputed by the Union. The workers affected
were those who, for a period of three (3) months prior to or
immediately preceding the implementation of Rep. Act
1880, were working seven (7) days a week and were
continuously receiving 25% Sunday differential pay. The

manner of computing or determining the daily rate of
monthly salaried employees.
And the Supreme Court, specifically laid out the issue to be
decided, as it did decide, in the NAWASA, as follows:
7. and 8. How is a daily wage of a weekly employee
computed in the light of Republic Act 1880?'(G.R. L-18938)
Resolving the above issue, it was held;
According to petitioner, the daily wage should be computed
exclusively on the basic wage without including the
automatic increase of 25% corresponding to the Sunday
differential. To include said Sunday differential would be to
increase the basic pay which is not contemplated by said
Act. Respondent court disagrees with this manner of
computation. lt holds that Republic Act 1880 requires that
the basic weekly wage and the basic monthly salary should
not be diminished notwithstanding the reduction in the
number of working days a week. If the automatic increase
corresponding to the salary differential should not be
included there would be a diminution of the weekly wage of
the laborer concerned. Of course, this should only benefit
those who have been working seven days a week and had
been regularly receiving 25% additional compensation for
Sunday work before the effectivity of the Act.
It is thus necessary to analyze the Court's rationale in the
said NAWASA case, 'in the light of Rep. Act 1880', and the
'specific corollaries' discussed preparatory to arriving at a
final conclusion on the main issue. What was required to be
done, by way of implementing R. A. 1880? The statute
directs that working hours and days of government
employees (including those of government owned and
controlled proprietary corporations) shall be reduced to five
days-forty hours a week. But, the same law carried the
specific proviso, designed to guard against diminution of
salaries or earnings of affected employees. The Supreme
Court itself clearly spelled this out in the following
language: 'It is evident that Republic Act 1880 does not
intend to raise the wages of the employees over what they
are actually receiving. Rather, its purpose is to limit the
working days in a week to five days, or to 40 hours without
however permitting any reduction in the weekly or daily
wage of the compensation which was previously received. ...
If the object of the law was to keep intact, (not either to
increase it or decrease it) it is but natural that the Court
should concern itself, as it did, with the corollary, what is
the weekly wage of worker who, prior to R.A. 1880, had
been working seven (7) days a week and regularly receiving
differential payments for work on Sundays or at night? It
78
seems clear that the Court was only concerned in
implementing correctly R.A. 1880 by ensuring that in
diminishing the working days and hours of workers in one
week, no diminution should result in the worker's weekly or
daily wage. And, the conclusion reached by the Supreme
Court was to affirm or recognize the correctness of the
action taken by the industrial court including such
differential pay in computing the weekly wages of these
employees and laborers who worked seven days a week and
were continuously receiving 25% Sunday differential for a
period of three months immediately preceding the
implementation of R.A. 1880.' Nothing was said about
adding the money value of some other bonuses or
allowances or money value of other fringe benefits, received
outside the week or at some other periods. That was not
within the scope of the issue before the Court. in fact, the
limited application of the decision is expressed in the
decision itself. The resolution of this particular issue was for
the benefit of only a segment of the NAWASA employees.
Said the Court 'Of course, this should only benefit those who
have been working seven days a week and had been
regularly receiving 25% additional compensation for Sunday
work before the effectivity of the Act.'
Unions make capital of the following pronouncement of the
Supreme Court in the NAWASA case:
It has been held that for purposes of computing overtime
compensation a regular wage includes all payments which
the parties have agreed shall be received during the work
week, including piece-work wages, differential payments for
working at undesirable times, such as at night or on Sundays
and holidays, and the cost of board and lodging customarily
furnished the employee (Walling v. Yangerman-Reynolds
Hardwook Co., 325 U.S. 419; Walling v. Harischfeger Corp.
325 U.S. 427). The 'Regular rate of pay also ordinarily
includes incentive bonus or profit- sharing payments made
in addition to the normal basic pay (56 C.J.S., pp. 704-705),
and it was also held that the higher rate for night, Sunday
and holiday work is just as much as regular rate as the lower
rate for daytime work. The higher rate is merely an
inducement to accept employment at times which are not at
desirable form a workman's standpoint (International L.
Ass'n. Wise 50 F. Supp. 26, affirmed C.C.A. Carbunao v.
National Terminals Corp. 139 F. 853).
But this paragraph in the decision appears to have been used
and cited by the Court to sustain the action of the court a
quo: that it was correct to include the 25% Sunday premium
for the purpose of setting the weekly wage of specified
workers whose weekly earnings before the passage of R.A.
1880 would be diminished, if said premium pay regularly

received for three months were not included. It is significant
that the citations therein used by the Supreme Court are
excerpts from American decisions whose legislation on
overtime is at variance with the law in this jurisdiction in
this respect: the U.S. legislation considers work in excess of
forty hours a week as overtime; whereas, what is generally
considered overtime in the Philippines is work in excess 'of
the regular 8-hours a day. It is understandably material to
refer to precedents in the U.S. for purposes of computing
weekly wages under a 40- hour a week rule, since the
particular issue involved in NAWASA is the conversion of
prior weekly regular earnings into daily rates without
allowing diminution or addition.
No rule of universal application to other cases may,
therefore, be justifiably extracted from the NAWASA case.
Let it be enough that in arriving at just solution and correct
application of R.A. 1880, an inference was drawn from other
decisions that a regular wage includes payments 'agreed by
the parties to be received during the week.' But to use this
analogy in another fact- situation would unmitigatingly
stretch its value as basis for legal reasoning, for analogies
are not perfect and can bring a collapse if stretched far
beyond their logical and reasoned efficacy. Neither would it
be far to ascribe to the Supreme Court's citation of foreign
jurisprudence, which was used for purposes of analogy, the
force of statute law, for this would be the consequence if it
were allowed to be used as authority for all fact-situations,
even if different from the NAWASA case. This, because
courts do not legislate. All they do is apply the law.
The above discussions impel the objective analyst to reject
the proposition that the NAWASA decision is an embracing
and can be used with the authority of a statute's effects on
existing contracts.
It appears that the answer to dispute lies, not in the text of
the NAWASA case but in the terms and conditions and
practice in the implementation of, the agreement, an area
which makes resolution of the issue dependent on the
relation of the terms and conditions of the contract to the
phraseology and purpose of the Eight-Hour Labor Law (Act
444).
The more we read the NAWASA case, the more we are
convinced that the overtime computation set therein cannot
apply to the cases at bar. For to do so would lead to unjust
results, inequities between and among the employees
themselves and absurd situations. To apply the NAWASA
computation would require a different formula for each and
every employee, would require reference to and continued
use of individual earnings in the past, thus multiplying the
79
administrative difficulties of the Company. It would be
cumbersome and tedious a process to compute overtime pay
and this may again cause delays in payments, which in turn
could lead to serious disputes. To apply this mode of
computation would retard and stifle the growth of unions
themselves as Companies would be irresistibly drawn into
denying, new and additional fringe benefits, if not those
already existing, for fear of bloating their overhead expenses
through overtime which, by reason of being unfixed,
becomes instead a veritable source of irritant in labor
relations.
One other reason why application of the NAWASA case
should be rejected is that this Court is not prepared to accept
that it can lay down a less cumbersome formula for a
company-wide overtime pay other than that which is already
provided in the collective bargaining agreement. Courts
cannot make contracts for the parties themselves.
Commonwealth Act 444 prescribes that overtime work shall
be paid 'at the same rate as their regular wages or salary,
plus at least twenty-five per centum additional' (Secs. 4 &
5). The law did not define what is a 'regular wage or salary'.
What the law emphasized by way of repeated expression is
that in addition to 'regular wage', there must be paid an
additional 25% of that 'regular wage' to constitute overtime
rate of pay. The parties were thus allowed to agree on what
shag be mutually considered regular pay from or upon which
a 25% premium shall be based and added to make up
overtime compensation. This the parties did by agreeing and
accepting for a very long period to a basic hourly rate to
which a premium shall be added for purposes of overtime.
Also significant is the fact that Commonwealth Act 444
merely sets a minimum, a least premium rate for purposes of
overtime. In this case, the parties agreed to premium rates
four (4) or even six (6) times than that fixed by the Act. Far
from being against the law, therefore, the agreement
provided for rates 'commensurate with the Company's
reputation of being among the leading employers in the
Philippines' (Art. 1, Sec. 2, Coll. Barg. Agreement) at the
same time that the Company is maintained in a competitive
position in the market Coll. Barg. Agreement, lbid).
Since the agreed rates are way above prevailing statutory
wages and premiums, fixed by themselves bona fide through
negotiations favored by law, there appears no compelling
reason nor basis for declaring the same illegal. A basic
principle forming an important foundation of R.A. 875 is the
encouragement given to parties to resort to peaceful
settlement of industrial problems through collective
bargaining. It behooves this Court, therefore, to help develop

respect for those agreements which do not exhibit features of
illegality This is the only way to build confidence in the
democratic process of collective bargaining. Parties cannot
be permitted to avoid the implications and ramifications of
the agreement.
Although this Court has gone very far in resolving an doubts
and in giving great weight to evidence and presumptions in
favor of labor, it may not go as far as reconstruct the law to
fit particular cases." (Pp. 174-181, Record)
Proof of the correctness of the aforequoted considerations,
the appeal of the workers from the Industrial Court's
decision did not prosper. Affirming the appealed decision,
We held:
The theory, therefore, of the petitioners is to the effect that,
notwithstanding the terms and conditions of their existing
collective bargaining agreement with respondent Shell
Company, particularly Exhibit 'A-l' for the Petitioners and
Exhibit 'l-A' for the Respondent (which is Appendix 'B' of
the Collective Bargaining Agreement of the parties),
considering the ruling in the NAWASA case, a
recomputation should be made of their basic wage by adding
the money value of the fringe benefits enjoyed by them from
whence the premium rates agreed upon shall be computed in
order to arrive at the correct computation of their overtime
compensation from the Company. On the other hand,
respondent Shell Company maintains that the NAWASA
case should not be utilized as the basis for the alteration of
their mode of computing overtime rate of pay as set forth in
their collective Bargaining Agreement. It insists that their
collective bargaining agreement should be the law between
them.
After a careful and thorough re-examination of the
NAWASA case, supra, and a minute examination of the
facts and the evidence of the case now before Us, We rule
that the NAWASA case is not in point and, therefore, is
inapplicable to the case at bar.
The ruling of this Court in the NAWASA case contemplates
the regularity and continuity of the benefits enjoyed by the
employees or workers (for at least three (3) months) as the
condition precedent before such additional payments or
benefits are taken into account. This is evident in the
aforequoted ruling of this Court in the NAWASA case as
well as in the hereinbelow cited authorities, to wit:
The 'regular rate' of pay on the basis of which overtime must
be computed must reflect an payments which parties have
agreed shall be received regularly during the work week,
exclusive of overtime payments.' Walling v. Garlock
80
Packing Co. C.C.A.N.Y., 159 F. 2d 44, 45. (Page 289,
WORDS And PHRASES, Permanent Edition, Vol. 36A;
Italics supplied); and
As a general rule the words 'regular rate' mean the hourly
rate actually paid for the normal, non-overtime work week,
and an employee's regular compensation is the compensation
which regularly and actually reaches him, ... .' (56 C.J.S.
704; Emphasis supplied).
Even in the definition of wage under the Minimum Wage
Law, the words 'customarily furnished' are used in referring
to the additional payments or benefits, thus, -
'Wage' paid to any employee shag mean the remuneration or
earnings, however designated, capable of being expressed in
terms of money, whether fixed or ascertained on a time,
task, piece, commission basis, or other method of calculating
the same, which is payable by an employer to an employee
under a written or unwritten contract of employment for
work done or to be done or for services rendered or to be
rendered, and includes the fair and reasonable value, as
determined by the Secretary of Labor, of board, lodging or
other facilities customarily furnished by the employer to the
employee.' (Sec. 2 (g), R.A. No. 602).
Having been stipulated by the parties that ... the Tin Factory
Incentive Pay has ceased in view of the closure of the
factory in May 1966 the fringe benefits as described show
that they are occasionally not regularly enjoyed and that not
all employees are entitled to them', herein petitioners failed
to meet the test laid down by this Court in the NAWASA
case. Further, the collective bargaining agreement resorted
to by the parties being in accordance with R.A. 875, with its
provision on overtime pay far way beyond the premium rate
provided for in Sections 4 and 5 of Commonwealth Act 444,
the same should govern their relationship. Since this is their
contract entered into by them pursuant to bargaining
negotiations under existing laws, they are bound to respect
it. It is the duty of this Court to see to it that contracts
between parties, not tainted with infirmity or irregularity or
illegality, be strictly complied with by the parties
themselves. This is the only way by which unity and order
can be properly attained in our society.
It should be noted in passing that Commonwealth Act 444
prescribes only a minimum of at least 25% in addition to the
regular wage or salary of an employee to constitute his
overtime rate of pay, whereas, under Appendix 'B', (Exhs.
'A-l', Petitioners and 'l-A', Respondent) of the Collective
Bargaining Agreement of the parties, the premium rate of
overtime pay is as high as l50% on regular working days up
to 250 % on Sundays and recognized national holidays.

(Shell Oil Workers Union vs. Shell Company of the
Philippines, G.R. No. L-30658-59, March 31, 1976, 70
SCRA 242-243.)
In the instant case, on May 22, 1965 PEMA alleged in the
court below the following cause of action as amended on
June 7, 1965:
Since the start of the giving of cost of living allowance and
longevity pay and reiterated, after the promulgation of the
Decision in National Waterworks and Sewerage Authority
vs. NAWASA Consolidated Unions et al., G.R. No. L-
18938, August 31, 1964, the petitioner has repeatedly
requested respondent that the cost of living allowance and
longevity pay be taken into account in the computation of
overtime pay, effective as of the grant of said benefits on
January 1, 1958, in accordance with the ruling in said
Decision of the Supreme Court. (Page 14, PNB's Brief.)
To be sure, there could be some plausibility in PNB's pose
regarding the jurisdiction of the Industrial Court over the
above cause of action. But, as We have already stated, We
agree with the broader view adopted by the court a quo on
said point, and We find that it is in the best interests of an
concerned that this almost 25-year dispute be settled once
and for all without the need of going through other forums
only for the matter to ultimately come back to this Court
probably years later, taking particular note as We do, in this
regard, of the cases cited on pages 9-10 of PEMA's original
memo, as follows:
Realizing its error before in not considering the present case
a certified labor dispute, the Bank now concedes that the
case at bar 'belongs to compulsory arbitration'. Hence, the
lawful powers of the CIR over the same. However, the Bank
says 'overtime differential is but a money claim, (and)
respondent court does not have jurisdiction to take
cognizance of the same'.
But this is not a pure money claim (pp. 10-11, Opposition)
because other factors are involved - certification by the
President, the matter may likely cause a strike, the dispute
concerns national interest and comes within the CIR's
injunction against striking, and the employer-employee
relationship between the Bank and the employees has not
been severed. Besides, 'money claim' is embraced within the
term 'compensation' and therefore falls squarely under the
jurisdiction of the CIR in the exercise of its arbitration
power (Sec. 4, CA 103; Please see also Republic vs. CIR, L-
21303, Sept. 23/68; Makalintal J., NWSA Case, L-26894-
96, Feb. 28/69; Fernando, J.).
81
What confers jurisdiction on the Industrial Court, says
Justice J.B.L. Reyes, is not the form or manner of
certification by the President, but the referral to said court of
the industrial dispute between the employer and the
employees. (Liberation Steamship vs. CIR, etc., L-25389 &
25390, June 27/68).
In Phil. Postal Savings Bank, et al. vs. CIR, et al., L-24572,
Dec. 20/67, this Honorable Court, speaking through Chief
Justice Concepcion, held that the certification of the issue 'as
a dispute affecting an industry indispensable to the national
interest' leaves 'no room for doubt on the jurisdiction of the
CIR to settle such dispute.'
Relatedly, however, it is to be noted that it is clear from the
holding of the Industrial Court's decision We have earlier
quoted, "the cause of action (here) is not on any decision of
any court but on the provisions of the law which have been
in effect at the time of the occurrence of the cause of action
in relation to a labor dispute". Viewed from such perspective
laid by the lower court itself, it can hardly be said that it
indeed exercised purely its power of arbitration, which
means laying down the terms and conditions that should
govern the relationship between the employer and
employees of an enterprise following its own appreciation of
the relevant circumstances rather empirically. More
accurately understood, the court in fact indulged in an
interpretation of the applicable law, namely, CA 444, in the
light of its own impression of the opinion of this Court in
NAWASA and based its decision thereon.
Accordingly, upon the fact-situation of this case hereunder
to be set forth, the fundamental question for Us to decide is
whether or not the decision under appeal is in accordance
with that law and the cited jurisprudence. In brief, as PEMA
posits, is NAWASA four-square with this case? And even
assuming, for a while, that in a sense what is before Us is an
arbitration decision, private respondent itself admits in its
above-mentioned memorandum that this Court is not
without power and authority to determine whether or not
such arbitration decision is against the law or jurisprudence
or constitutes a grave abuse of discretion. Thus, in PEMA's
memorandum, it makes the observation that "(F)urthermore,
in the Shell cases, the unions are using the NAWASA
decision as a source of right for recomputation, while in the
PNB, the Union merely cites the NAWASA doctrine, not as
a source of right, but as a legal authority or reference by
both parties so the Union demand may be granted. " (Motion
to Dismiss, p. 3.)
Obviously, therefore, the polestar to which Our mental
vision must be focused in order that We may arrive at a

correct legal and equitable determination of this controversy
and, in the process make NAWASA better understood as
We believe it should be, is none other than Sections 3 and 4
of Com. Act No. 444, the Eight Hour Labor Law, which
pertinently provide thus:
SEC. 3. Work may be performed beyond eight hours a day
in case of actual or impending emergencies caused by
serious accidents, fire, flood, typhoon, earthquake, epidemic,
or other disaster or calamity in order to prevent loss to life
and property or imminent danger to public safety; or in case
of urgent work to be performed on the machines, equipment,
or installations in order to avoid a serious loss which the
employer would otherwise suffer, or some other just cause
of a similar nature; but in all such cases the laborers and
employees shall be entitled to receive compensation for the
overtime work performed at the same rate as their regular
wages or salary, plus at least twenty-five per centum
additional.
In case of national emergency the Government is
empowered to establish rules and regulations for the
operation of the plants and factories and to determine the
wages to be paid the laborers.
xxx xxx xxx
SEC. 4. No person, firm, or corporation, business
establishment or place or center of labor shall compel an
employee or laborer to work during Sundays and legal
holidays, unless he is paid an additional sum of at least
twenty-five per centum of his regular remuneration:
Provided, however, that this prohibition shall not apply to
public utilities performing some public service such as
supplying gas, electricity, power, water, or providing means
of transportation or communication.
The vital question is, what does "regular wage or salary"
mean or connote in the light of the demand of PEMA?
In Our considered opinion, the answer to such question lies
in the basic rationale of overtime pay. Why is a laborer or
employee who works beyond the regular hours of work
entitled to extra compensation called in this enlightened
time, overtime pay? Verily, there can be no other reason
than that he is made to work longer than what is
commensurate with his agreed compensation for the
statutorily fixed or voluntarily agreed hours of labor he is
supposed to do. When he thus spends additional time to his
work, the effect upon him is multi-faceted: he puts in more
effort, physical and/or mental; he is delayed in going home
to his family to enjoy the comforts thereof; he might have no
time for relaxation, amusement or sports; he might miss
82
important pre-arranged engagements; etc., etc. It is thus the
additional work, labor or service employed and the adverse
effects just mentioned of his longer stay in his place of work
that justify and is the real reason for the extra compensation
that he called overtime pay.
Overtime work is actually the lengthening of hours
developed to the interests of the employer and the
requirements of his enterprise. It follows that the wage or
salary to be received must likewise be increased, and more
than that, a special additional amount must be added to serve
either as encouragement or inducement or to make up fop
the things he loses which We have already referred to. And
on this score, it must always be borne in mind that wage is
indisputably intended as payment for work done or services
rendered. Thus, in the definition of wage for purposes of the
Minimum Wage Law, Republic Act No. 602, it is stated:
'Wage' paid to any employee shall mean the remuneration or
earnings, however designated, capable of being expressed in
terms of money, whether fixed or ascertained on a time task,
piece, commission basis or other method of calculating the
same, which is payable by an employer to an employee
under a written or unwritten contract of employment for
work done or to be done or for services rendered or to be
rendered and includes the fair and reasonable value as
determined by the Secretary of Labor, of board, lodging or
other facilities customarily furnished by the employer to the
employee. 'Fair and reasonable value' shall not include a
profit to the employer which reduces the wage received by
the employee below the minimum wage applicable to the
employee under this Act, nor shall any transaction between
an employer or any person affiliated with the employer and
the employee of the employer include any profit to the
employer or affiliated person which reduces the employee's
wage below the wage applicable to the employee under this
Act.' 2 (Emphasis supplied).
As can be seen, wage under said law, in whatever means or
form it is given to the worker, is "for work done or to be
done or for services rendered or to be rendered" and
logically "includes (only) the fair and reasonable value as
determined by the Secretary of Labor, of board, lodging or
other facilities customarily furnished by the employer to the
employee".
Indeed, for the purpose of avoiding any misunderstanding or
misinterpretation of the word "wage" used in the law and to
differentiate it from "supplement", the Wage Administration
Service to implement the Minimum Wage Law, defined the
latter as:

extra remuneration or benefits received by wage earners
from their employers and include but are not restricted to
pay for vacation and holidays not worked; paid sick leave or
maternity leave; overtime rate in excess of what is required
by law; pension, retirement, and death benefits; profit-
sharing, family allowances; Christmas, war risk and cost-of-
living bonuses; or other bonuses other than those paid as a
reward for extra output or time spent on the job. (Emphasis
ours).
In these times when humane and dignified treatment of labor
is steadily becoming universally an obsession of society, we,
in our country, have reached a point in employer- employee
relationship wherein employers themselves realize the
indispensability of at least making the compensation of
workers equal to the worth of their efforts as much as this
case can be statistically determined. Thus, in order to meet
the effects of uncertain economic conditions affecting
adversely the living conditions of wage earners, employers,
whenever the financial conditions of the enterprise permit,
grant them what has been called as cost-of-living allowance.
In other words, instead of leaving the workers to assume the
risks of or drift by themselves amidst the cross -currents of
country-wide economic dislocation, employers try their best
to help them tide over the hardships and difficulties of the
situation. Sometimes, such allowances are voluntarily
agreed upon in collective bargaining agreements. At other
times, it is imposed by the government as in the instances of
Presidential Decrees Nos. 525, 928, 1123, 1389, 1614, 1678,
1751 and 1790; Letters of Instructions No. 1056 and Wage
Order No. 1. Notably, Presidential Decree No. 1751
increased the statutory wage at all levels by P400 in addition
to integrating the mandatory emergency living allowances
under Presidential Decree No. 525 and Presidential Decree
No. 1123 into the basic pay of all covered workers.
Going over these laws, one readily notices two distinctive
features: First, it is evidently gratifying that the government,
in keeping with the humanitarian trend of the times, always
makes every effort to keep wages abreast with increased cost
of living conditions, doing it as soon as the necessity for it
arises. However, obviously, in order not to overdo things,
except when otherwise provided, it spares from such
obligation employers who by mutual agreement with their
workers are already paying what the corresponding law
provides (See Sec. 4 of P.D. No. 525; Section 2 of P.D. No.
851 until P.D. 1684 abolished all exemptions under P.D. No.
525, P.D. No. 1123, P.D. No. 851 and P.D. No. 928 among
distressed employers who even though given sufficient lapse
of time to make the necessary adjustment have not done
so.)3
83
In the case at bar, as already related earlier, the cost-of-
living allowance began to be granted in 1958 and the
longevity pay in 1981. In other words, they were granted by
PNB upon realizing the difficult plight of its labor force in
the face of the unusual inflationary situation in the economy
of the country, which, however acute, was nevertheless
expected to improve. There was thus evident an inherently
contingent character in said allowances. They were not
intended to be regular, much less permanent additional part
of the compensation of the employees and workers. To such
effect were the testimonies of the witnesses at the trial. For
instance, Mr. Ladislao Yuzon declared:
ATTORNEY GESMUNDO
Questioning ....
Q. Calling your attention to paragraph No. 1, entitled
monthly living allowance, which has been marked as Exhibit
'A-l', will you kindly tell us the history of this benefit-
monthly living allowance, why the same has been granted?
A. Well, in view of the increasing standard of living, we
decided to demand from management in our set of demands
... included in our set of demands in 1957-1958 a monthly
living allowance in addition to our basic salary. This benefit
was agreed upon and granted to take effect as of January 1,
1958. That was the first time it was enjoyed by the
employees of the Philippine National Bank. It started on a
lesser amount but year after year we have been demanding
for increases on this living allowance until we have attained
the present amount of P 1 50.00 a month, starting with
P40.00 when it was first granted. The same is still being
enjoyed by the employees on a much higher amount. There
were a few variations to that. (t. t.s.n., pp. 18-19, Hearing of
August 16, 1965)
which testimony was affirmed by Mr. Panfilo Domingo, on
cross- examination by counsel for the respondent, reading as
follows:
ATTORNEY GESMUNDO:
Q. Do you recall Mr. Domingo, that in denying the cost of
living allowance and longevity pay for incorporation with
the basic salary, the reason given by the management was
that as according to you, it will mean an added cost and '
furthermore it will increase the contribution of the
Philippine National Bank to the GSIS, is that correct?
A. This is one of the reasons, of the objections for the
inclusion of the living allowance and longevity pay to form
part of the basic pay, I mean among others, because the

basic reason why management would object is the cost of
living allowance is temporary in nature, the philosophy
behind the grant of this benefit, Nonetheless, it was the
understanding if I recall right that in the event that cost of
living should go down then there should be a corresponding
decrease in the cost of living allowance being granted I have
to mention this because this is the fundamental philosophy in
the grant of cost of living allowance. (Pp. 19-20, Record.)
Much less were they dependent on extra or special work
done or service rendered by the corresponding recipient.
Rather, they were based on the needs of their families as the
conditions of the economy warranted. Such is the inexorable
import of the pertinent provisions of the collective
bargaining agreement:
MONTHLY LIVING ALLOWANCE
All employees of the Bank shall be granted a monthly living
allowance of P140, plus P10 for each minor dependent child
below 21 years of age, but in no case shall the total
allowance exceed P200 or 25% of the monthly salary,
whichever is higher, subject to the following conditions:
a) That this new basic allowance shall be applicable to all
employees, irrespective of their civil status;
b) That a widow or widower shall also enjoy the basic
allowance of P140 a month, plus the additional benefit of
P10 for each minor dependent child but not to exceed P200
or 25% of basic salary whichever is higher.
c) That in case the husband and wife are both employees in
the Bank both shall enjoy this new basic monthly living
allowance of P140 but only one of spouses shall be entitled
to claim the additional benefit of P10 for each minor
legitimate or acknowledged child. (Pp. 30-31, PNB's memo.)
So also with the longevity pay; manifestly, this was not
based on the daily or monthly amount of work done or
service rendered it was more of a gratuity for their loyalty,
or their having been in the bank's employment for
consideration periods of time. Indeed, with particular
reference to the longevity pay, the then existing collective
bargaining contract expressly provided: "... That this benefit
shall not form part of the basic salaries of the officers so
affected."
PEMA may contend that the express exclusion of the
longevity pay, means that the cost-of-living allowance was
not intended to be excluded. Considering, however, the
contingent nature of the allowances and their lack of relation
to work done or service rendered, which in a sense may be
84
otherwise in respect to longevity pay PEMA's contention is
untenable. The rule of exclusio unius, exclusio
alterius would not apply here, if only because in the very
nature of the two benefits in question, considerations and
conclusions as to one of them could be non-sequitur as to
the other.
Withal, there is the indisputable significant fact that after
1958, everytime a collective bargaining agreement was
being entered into, the union always demanded the
integration of the cost-of-living allowances and longevity
pay, and as many times, upon opposition of the bank, no
stipulation to such effect has ever been included in any of
said agreements. And the express exclusion of longevity pay
was continued to be maintained.
On this point, the respondent court held that under its broad
jurisdiction, it was within the ambit of its authority to
provide for what the parties could not agree upon. We are
not persuaded to view the matter that way. We are not
convinced that the government, thru the Industrial Court,
then, could impose upon the parties in an employer-
employee conflict, terms and conditions which are
inconsistent with the existing law and jurisprudence,
particularly where the remedy is sought by the actors more
on such legal basis and not purely on the court's arbitration
powers.
As pointed out earlier in this opinion, Our task here is two-
fold: First, reviewing the decision under scrutiny as based on
law and jurisprudence, the question is whether or not the
rulings therein are correct. And second, reading such
judgment as an arbitration decision, did the court a quo
gravely abuse its discretion in holding, as it did, that cost-of-
living allowance and longevity pay should be included in the
computation of overtime pay?
In regard to the first question, We have already pointed out
to start with, that as far as longevity pay is concerned, it is
beyond question that the same cannot be included in the
computation of overtime pay for the very simple reason that
the contrary is expressly stipulated in the collective
bargaining agreement and, as should be the case, it is settled
that the terms and conditions of a collective bargaining
agreement constitute the law between the parties. (Mactan
Workers Union vs. Aboitiz, 45 SCRA 577. See also Shell
Oil Workers Union et al. vs. Shell Company of the
Philippines, supra) The contention of PEMA that the express
provision in the collective bargaining agreement that "this
benefit (longevity pay) shall not form part of the basic
salaries of the officers so affected" cannot imply the same
Idea insofar as the computation of the overtime pay is

concerned defies the rules of logic and mathematics. If the
basic pay cannot be deemed increased, how could the
overtime pay be based on any increased amount at all?
However, the matter of the cost-of-living allowance has to
be examined from another perspective, namely, that while
PEMA had been always demanding for its integration into
the basic pay, it never succeeded in getting the conformity of
PNB thereto, and so, all collective bargaining agreements
entered -4 into periodically by the said parties did not
provide therefor. And it would appear that PEMA took the
non-agreement of the bank in good grace, for the record
does not show that any remedial measure was ever taken by
it in connection therewith. In other words, the parties
seemed to be mutually satisfied that the matter could be
better left for settlement on the bargaining table sooner or
later, pursuant to the spirit of free bargaining underlying
Republic Act 875, the Industrial Peace Act then in force. Or,
as observed by PEMA in its memorandum, (page 23), the
parties "agreed to let the question remain open-pending
decision of authorities that would justify the demand of the
Union." Indeed, on pages 23-24 of said memorandum, the
following position of PEMA is stated thus:
Thus the following proceeding took place at the Court a quo:
ATTY. GESMUNDO:
That is our position, Your Honor, because apparently there
was an understanding reached between the parties as to their
having to wait for authorities and considering that the issue
or one of the issues then involved in the NAWASA case
pending in the CIR supports the stand of the union, that the
principle enunciated in connection with that issue is
applicable to this case.
xxx xxx xxx
Q. Do we understand from you, Mister Yuson, that it was
because of the management asking you for authorities in
allowing the integration of the cost of living allowance with
your basic salary and your failure to produce at the time
such authorities that the union then did not bring any case to
the Court?
A. Well, in the first place, it is not really my Idea to be
bringing matters to the Court during my time but I would
much prefer that we agree on the issue. Well, insofar as you
said that the management was asking me, welt I would say
that they were invoking (on) authorities that we can show in
order to become as a basis for granting or for agreeing with
us although we were aware of the existence of a pending
case which is very closely similar to our demand, yet we
85
decided to wait until this case should be decided by the
Court so that we can avail of the decision to present to
management as what they are asking for. (t.s.n., pp. 31-32,
35-36, Aug. 28,1965.)
Now, to complete proper understanding of the character of
the controversy before Us, and lest it be felt by those
concerned that We have overlooked a point precisely related
to the matter touched in the above immediately preceding
paragraph, it should be relevant to quote a portion of the
"Stipulation of Facts" of the parties hereto:
1. This particular demand was among those submitted by
Petitioner-Union in the current collective bargaining
negotiations to the Respondent Bank. However, since this
case was already filed in court on May 22, 1965, the parties
agreed not to include this particular demand in the
discussion, leaving the matter to the discretion and final
judicial determination of the courts of justice." (Page 81,
Rec.)
In fine, what the parties commonly desire is for this Court to
construe CA 444 in the light of NAWASA, considering the
fact- situation of the instant case.
In this respect, it is Our considered opinion, after mature
deliberation, that notwithstanding the portions of the
NAWASA's opinion relied upon by PEMA, there is nothing
in CA 444 that could justify its posture that cost-of-living
allowance should be added to the regular wage in computing
overtime pay.
After all, what was said in NAWASA that could be
controlling here? True, it is there stated that "for purposes of
computing overtime compensation, regular wage includes all
payments which the parties have agreed shall be received
during the work week, including - differential payments for
working at undesirable times, such as at night and the board
and lodging customarily furnished the employee. ... The
'regular rate' of pay also ordinarily includes incentive bonus
or profit-sharing payments made in addition to the normal
basic pay (56 C.J.S., pp. 704-705), and it was also held that
the higher rate for night, Sunday and holiday work is just as
much a regular rate as the lower rate for daytime work. The
higher rate is merely an inducement to accept employment at
times which are not as desirable from a workmen's
standpoint (International L. Ass'n vs. National Terminals
Corp. C.C. Wise, 50 F. Supp. 26, affirmed C.C.A. Carbunoa
v. National Terminals Corp. 139 F. 2d 853)." (11 SCRA, p.
783)
But nowhere did NAWASA refer to extra, temporary and
contingent compensation unrelated to work done or service

rendered, which as explained earlier is the very nature of
cost-of- living allowance. Withal, in strict sense, what We
have just quoted from NAWASA was obiter dictum, since
the only issue before the Court there was whether or not "in
computing the daily wage, (whether) the addition
compensation for Sunday should be included. " (See No. 7
of Record)
In any event, as stressed by Us in the Shell cases, the basis
of computation of overtime pay beyond that required by CA
444 must be the collective bargaining agreement, 4 for, to
reiterate Our postulation therein and in Bisig ng
Manggagawa, supra, it is not for the court to impose upon
the parties anything beyond what they have agreed upon
which is not tainted with illegality. On the other hand, where
the parties fail to come to an agreement, on a matter not
legally required, the court abuses its discretion when it
obliges any 6f them to do more than what is legally obliged.
Doctrinally, We hold that, in the absence of any specific
provision on the matter in a collective bargaining agreement,
what are decisive in determining the basis for the
computation of overtime pay are two very germane
considerations, namely, (1) whether or not the additional pay
is for extra work done or service rendered and (2) whether or
not the same is intended to be permanent and regular, not
contingent nor temporary and given only to remedy a
situation which can change any time. We reiterate, overtime
pay is for extra effort beyond that contemplated in the
employment contract, hence when additional pay is given
for any other purpose, it is illogical to include the same in
the basis for the computation of overtime pay. This holding
supersedes NAWASA.
Having arrived at the foregoing conclusions, We deem it
unnecessary to discuss any of the other issues raised by the
parties.
WHEREFORE, judgment is hereby rendered reversing the
decision appealed from, without costs.
Guerrero, De Castro, Plana, Escolin, Vasquez, Relova and
Gutierrez, Jr., JJ., concur.
Fernando, C.J., Concepcion and Abad Santos, JJ., took no
part.
Melencio-Herrera J., concur in the result.
Separate Opinions
86
AQUINO, J., concurring:
I concur in the result. This case involves the correctness of
the holding of the Court of Industrial Relations that the
Philippine National Bank should compute the overtime pay
of its employees from January 28, 1962 on the basis of the
sum total Of the. employee's basic salary or wage plus cost-
of- living allowance (equity pay) and longevity pay.
The Industrial Court relied on the ruling that in computing
the daily wage of employees and workers who worked seven
days a week their 25% Sunday differential pay should be
included. The computation should not be based exclusively
on the basic wage (National Waterworks and Sewerage
Authority vs. NAWASA Consolidated Unions, 120 Phil.
736, 754). That ruling was rendered in connection with the
computation of the worker's daily wage for purposes of the
five-day, forty-hour week prescribed in Republic Act No.
1880.
That ruling was in turn based on the holding that for
purposes of computing overtime pay a regular wage includes
all payments received by the worker for work at night,
Sundays and holidays and the cost of board and lodging
customarily furnished the employees (Walling vs.
Harnischfeger Corp., 325 U.S..427; Walling vs. Yangerman-
Reynolds Hardwood Co., 325 U.S. 419).
There is also a ruling that the regular pay includes incentive
bonus or profit-sharing payments made in addition to the
normal basic pay (56 C.J.S. 704-705) and that the higher rate
for night, Sunday and holiday work is just as much a regular
rate as the lower rate for daytime work. The higher rate is
merely an inducement to accept employment at times which
are not as desirable from a workman's standpoint
(International L. Assn. vs. National Terminals Corp., 50 F.
Supp. 26; Cabunac vs. National Terminals Corporation, 139
F. 2nd 853).
These rulings cannot be applied under the Eight- Hour Labor
Law, Commonwealth Act No. 444, because sections 3 and 4
thereof provide that the overtime pay should be based on the
"regular wages or salary" or "regular remuneration" of the
laborers and employees.
Those terms should be sensibly interpreted. They should be
given their ordinary meaning. Those terms do not include
the cost-of- living allowance, longevity pay or other fringe
benefits, which items constitute extra pay oradditions to the
regular or basic pay.

The rulings in American cases cited in the NWSA case are
not controlling and should not be applied to this case. Our
law makes the regular pay the basis for computing the
overtime pay. The collective bargaining agreements between
the PNB and the union provide that the longevity pay does
not "form part of the basic salaries of the employees
involved.
In Shell Oil Workers Union vs. Shell Company of the
Philippines, L-30658-59, March 31, 1976, 70 SCRA 238,
this Court held that, notwithstanding the ruling in the
NWSA case, the fringe benefits should not be added to the
basic pay in computing the overtime pay.
I agree that the Industrial Court erred in including the cost-
of-living allowance and the longevity pay as part of the
employee's basic salary or wage on which the overtime pay
should be based.
Teehankee, J., I reserve my vote.
Makasiar, J., I reserve my vote.
87
G.R. No. L-52415 October 23, 1984
INSULAR BANK OF ASIA AND AMERICA
EMPLOYEES' UNION (IBAAEU), petitioner,
vs.
HON. AMADO G. INCIONG, Deputy Minister,
Ministry of Labor and INSULAR BANK OF ASIA AND
AMERICA, respondents.
Sisenando R. Villaluz, Jr. for petitioner.
Abdulmaid Kiram Muin colloborating counsel for petitioner.
The Solicitor General Caparas, Tabios, Ilagan Alcantara &
Gatmaytan Law Office and Sycip, Salazar, Feliciano &
Hernandez Law Office for respondents.
MAKASIAR, J.:+.wph!1
This is a petition for certiorari to set aside the order dated
November 10, 1979, of respondent Deputy Minister of
Labor, Amado G. Inciong, in NLRC case No. RB-IV-1561-
76 entitled "Insular Bank of Asia and America Employees'
Union (complainant-appellee), vs. Insular Bank of Asia and
America" (respondent-appellant), the dispositive portion of
which reads as follows: t.hqw
xxx xxx xxx
ALL THE FOREGOING CONSIDERED, let the appealed
Resolution en banc of the National Labor Relations
Commission dated 20 June 1978 be, as it is hereby, set aside
and a new judgment. promulgated dismissing the instant
case for lack of merit (p. 109 rec.).
The antecedent facts culled from the records are as follows:
On June 20, 1975, petitioner filed a complaint against the
respondent bank for the payment of holiday pay before the
then Department of Labor, National Labor Relations
Commission, Regional Office No. IV in Manila.
Conciliation having failed, and upon the request of both
parties, the case was certified for arbitration on July 7, 1975
(p. 18, NLRC rec.
On August 25, 1975, Labor Arbiter Ricarte T. Soriano
rendered a decision in the above-entitled case, granting
petitioner's complaint for payment of holiday pay. Pertinent
portions of the decision read: t.hqw
xxx xxx xxx

The records disclosed that employees of respondent bank
were not paid their wages on unworked regular holidays as
mandated by the Code, particularly Article 208, to
wit: t.hqw Art. 94. Right to holiday pay. (a) Every worker shall be
Art. 208. Right to holiday pay.
(a) Every worker shall be paid his regular daily wage during
regular holidays, except in retail and service establishments
regularly employing less than 10 workers.
(b) The term "holiday" as used in this chapter, shall include:
New Year's Day, Maundy Thursday, Good Friday, the ninth
of April the first of May, the twelfth of June, the fourth of
July, the thirtieth of November, the twenty-fifth and the
thirtieth of December and the day designated by law for
holding a general election.
xxx xxx xxx
This conclusion is deduced from the fact that the daily rate
of pay of the bank employees was computed in the past with
the unworked regular holidays as excluded for purposes of
determining the deductible amount for absences
incurred Thus, if the employer uses the factor 303 days as a
divisor in determining the daily rate of monthly paid
employee, this gives rise to a presumption that the monthly
rate does not include payments for unworked regular
holidays. The use of the factor 303 indicates the number of
ordinary working days in a year (which normally has 365
calendar days), excluding the 52 Sundays and the 10 regular
holidays. The use of 251 as a factor (365 calendar days less
52 Saturdays, 52 Sundays, and 10 regular holidays) gives
rise likewise to the same presumption that the unworked
Saturdays, Sundays and regular holidays are unpaid. This
being the case, it is not amiss to state with certainty that the
instant claim for wages on regular unworked holidays is
found to be tenable and meritorious.
WHEREFORE, judgment is hereby rendered:
(a) xxx xxxx xxx
(b) Ordering respondent to pay wages to all its employees
for all regular h(olidays since November 1, 1974 (pp. 97-99,
rec., underscoring supplied).
Respondent bank did not appeal from the said decision.
Instead, it complied with the order of Arbiter Ricarte T.
Soriano by paying their holiday pay up to and including
January, 1976.
On December 16, 1975, Presidential Decree No. 850 was
promulgated amending, among others, the provisions of the
88
Labor Code on the right to holiday pay to read as
follows: t.hqw
paid his regular daily wages during regular holidays, except
in retail and service establishments regularly employing less
than ten (10) workers;
(b) The employer may require an employee to work on any
holiday but such employee shall be paid a compensation
equivalent to twice his regular rate and
(c) As used in this Article, "holiday" includes New Year's
Day, Maundy Thursday, Good Friday, the ninth of April, the
first of May, the twelfth of June, the fourth of July, the
thirtieth of November, the twenty-fifth and the thirtieth of
December, and the day designated by law for holding a
general election.
Accordingly, on February 16, 1976, by authority of Article 5
of the same Code, the Department of Labor (now Ministry
of Labor) promulgated the rules and regulations for the
implementation of holidays with pay. The controversial
section thereof reads: t.hqw
Sec. 2. Status of employees paid by the month. Employees
who are uniformly paid by the month, irrespective of the
number of working days therein, with a salary of not less
than the statutory or established minimum wage shall be
presumed to be paid for all days in the month whether
worked or not.
For this purpose, the monthly minimum wage shall not be
less than the statutory minimum wage multiplied by 365
days divided by twelve" (italics supplied).
On April 23, 1976, Policy Instruction No. 9 was issued by
the then Secretary of Labor (now Minister) interpreting the
above-quoted rule, pertinent portions of which
read: t.hqw
xxx xxx xxx
The ten (10) paid legal holidays law, to start with, is
intended to benefit principally daily employees. In the case
of monthly, only those whose monthly salary did not yet
include payment for the ten (10) paid legal holidays are
entitled to the benefit.
Under the rules implementing P.D. 850, this policy has been
fully clarified to eliminate controversies on the entitlement
of monthly paid employees, The new determining rule is
this: If the monthly paid employee is receiving not less than
P240, the maximum monthly minimum wage, and his

monthly pay is uniform from January to December, he is
presumed to be already paid the ten (10) paid legal holidays.
However, if deductions are made from his monthly salary on
account of holidays in months where they occur, then he is
still entitled to the ten (10) paid legal holidays. ..." (emphasis
supplied).
Respondent bank, by reason of the ruling laid down by the
aforecited rule implementing Article 94 of the Labor Code
and by Policy Instruction No. 9, stopped the payment of
holiday pay to an its employees.
On August 30, 1976, petitioner filed a motion for a writ of
execution to enforce the arbiter's decision of August 25,
1975, whereby the respondent bank was ordered to pay its
employees their daily wage for the unworked regular
holidays.
On September 10, 1975, respondent bank filed an opposition
to the motion for a writ of execution alleging, among others,
that: (a) its refusal to pay the corresponding unworked
holiday pay in accordance with the award of Labor Arbiter
Ricarte T. Soriano dated August 25, 1975, is based on and
justified by Policy Instruction No. 9 which interpreted the
rules implementing P. D. 850; and (b) that the said award is
already repealed by P.D. 850 which took effect on
December 16, 1975, and by said Policy Instruction No. 9 of
the Department of Labor, considering that its monthly paid
employees are not receiving less than P240.00 and their
monthly pay is uniform from January to December, and that
no deductions are made from the monthly salaries of its
employees on account of holidays in months where they
occur (pp. 64-65, NLRC rec.).
On October 18, 1976, Labor Arbiter Ricarte T. Soriano,
instead of issuing a writ of execution, issued an order
enjoining the respondent bank to continue paying its
employees their regular holiday pay on the following
grounds: (a) that the judgment is already final and the
findings which is found in the body of the decision as well
as the dispositive portion thereof is res judicata or is the law
of the case between the parties; and (b) that since the
decision had been partially implemented by the respondent
bank, appeal from the said decision is no longer available
(pp. 100-103, rec.).
On November 17, 1976, respondent bank appealed from the
above-cited order of Labor Arbiter Soriano to the National
Labor Relations Commission, reiterating therein its
contentions averred in its opposition to the motion for writ
of execution. Respondent bank further alleged for the first
time that the questioned order is not supported by evidence
insofar as it finds that respondent bank discontinued
89
payment of holiday pay beginning January, 1976 (p. 84,
NLRC rec.).
On June 20, 1978, the National Labor Relations
Commission promulgated its resolution en banc dismissing
respondent bank's appeal, the dispositive portion of which
reads as follows: t.hqw
In view of the foregoing, we hereby resolve to dismiss, as
we hereby dismiss, respondent's appeal; to set aside Labor
Arbiter Ricarte T. Soriano's order of 18 October 1976 and,
as prayed for by complainant, to order the issuance of the
proper writ of execution (p. 244, NLRC rec.).
Copies of the above resolution were served on the petitioner
only on February 9, 1979 or almost eight. (8) months after it
was promulgated, while copies were served on the
respondent bank on February 13, 1979.
On February 21, 1979, respondent bank filed with the Office
of the Minister of Labor a motion for reconsideration/appeal
with urgent prayer to stay execution, alleging therein the
following: (a) that there is prima facie evidence of grave
abuse of discretion, amounting to lack of jurisdiction on the
part of the National Labor Relations Commission, in
dismissing the respondent's appeal on pure technicalities
without passing upon the merits of the appeal and (b) that
the resolution appealed from is contrary to the law and
jurisprudence (pp. 260-274, NLRC rec.).
On March 19, 1979, petitioner filed its opposition to the
respondent bank's appeal and alleged the following grounds:
(a) that the office of the Minister of Labor has no
jurisdiction to entertain the instant appeal pursuant to the
provisions of P. D. 1391; (b) that the labor arbiter's decision
being final, executory and unappealable, execution is a
matter of right for the petitioner; and (c) that the decision of
the labor arbiter dated August 25, 1975 is supported by the
law and the evidence in the case (p. 364, NLRC rec.).
On July 30, 1979, petitioner filed a second motion for
execution pending appeal, praying that a writ of execution
be issued by the National Labor Relations Commission
pending appeal of the case with the Office of the Minister of
Labor. Respondent bank filed its opposition thereto on
August 8, 1979.
On August 13, 1979, the National Labor Relations
Commission issued an order which states: t.hqw
The Chief, Research and Information Division of this
Commission is hereby directed to designate a Socio-
Economic Analyst to compute the holiday pay of the

employees of the Insular Bank of Asia and America from
April 1976 to the present, in accordance with the Decision of
the Labor Arbiter dated August 25, 1975" (p. 80, rec.).
On November 10, 1979, the Office of the Minister of Labor,
through Deputy Minister Amado G. Inciong, issued an
order, the dispositive portion of which states: t.hqw ... (emphasis supplied).
ALL THE FOREGOING CONSIDERED, let the appealed
Resolution en banc of the National Labor Relations
Commission dated 20 June 1978 be, as it is hereby, set aside
and a new judgment promulgated dismissing the instant case
for lack of merit (p. 436, NLRC rec.).
Hence, this petition for certiorari charging public respondent
Amado G. Inciong with abuse of discretion amounting to
lack or excess of jurisdiction.
The issue in this case is: whether or not the decision of a
Labor Arbiter awarding payment of regular holiday pay can
still be set aside on appeal by the Deputy Minister of Labor
even though it has already become final and had been
partially executed, the finality of which was affirmed by the
National Labor Relations Commission sitting en banc, on
the basis of an Implementing Rule and Policy Instruction
promulgated by the Ministry of Labor long after the said
decision had become final and executory.
WE find for the petitioner.
I they occur. As explained in Policy Instruction No, 9, 'The
WE agree with the petitioner's contention that Section 2,
Rule IV, Book III of the implementing rules and Policy
Instruction No. 9 issued by the then Secretary of Labor are
null and void since in the guise of clarifying the Labor
Code's provisions on holiday pay, they in effect amended
them by enlarging the scope of their exclusion (p. 1 1, rec.).
Article 94 of the Labor Code, as amended by P.D. 850,
provides: t.hqw law must be taken to mean exactly what it says. In the case
Art. 94. Right to holiday pay. (a) Every worker shall be
paid his regular daily wage during regular holidays, except
in retail and service establishments regularly employing less
than ten (10) workers. ...
The coverage and scope of exclusion of the Labor Code's
holiday pay provisions is spelled out under Article 82
thereof which reads: t.hqw holiday pay. This is a flagrant violation of the mandatory
Art. 82. Coverage. The provision of this Title shall apply
to employees in all establishments and undertakings,
whether for profit or not, but not to government employees,
90
managerial employees, field personnel members of the
family of the employer who are dependent on him for
support domestic helpers, persons in the personal service of
another, and workers who are paid by results as determined
by the Secretary of Labor in appropriate regulations.
From the above-cited provisions, it is clear that monthly
paid employees are not excluded from the benefits of
holiday pay. However, the implementing rules on holiday
pay promulgated by the then Secretary of Labor excludes
monthly paid employees from the said benefits by inserting,
under Rule IV, Book Ill of the implementing rules, Section
2, which provides that: "employees who are uniformly paid
by the month, irrespective of the number of working days
therein, with a salary of not less than the statutory or
established minimum wage shall be presumed to be paid for
all days in the month whether worked or not. "
Public respondent maintains that "(T)he rules implementing
P. D. 850 and Policy Instruction No. 9 were issued to clarify
the policy in the implementation of the ten (10) paid legal
holidays. As interpreted, 'unworked' legal holidays are
deemed paid insofar as monthly paid employees are
concerned if (a) they are receiving not less than the statutory
minimum wage, (b) their monthly pay is uniform from
January to December, and (c) no deduction is made from
their monthly salary on account of holidays in months where
ten (10) paid legal holidays law, to start with, is intended to
benefit principally daily paid employees. In case of monthly,
only those whose monthly salary did not yet include
payment for the ten (10) paid legal holidays are entitled to
the benefit' " (pp. 340-341, rec.). This contention is
untenable.
It is elementary in the rules of statutory construction that
when the language of the law is clear and unequivocal the
at bar, the provisions of the Labor Code on the entitlement
to the benefits of holiday pay are clear and explicit - it
provides for both the coverage of and exclusion from the
benefits. In Policy Instruction No. 9, the then Secretary of
Labor went as far as to categorically state that the benefit is
principally intended for daily paid employees, when the law
clearly states that every worker shall be paid their regular
directive of Article 4 of the Labor Code, which states that
"All doubts in the implementation and interpretation of the
provisions of this Code, including its implementing rules
and regulations, shall be resolved in favor of labor."

Moreover, it shall always be presumed that the legislature
intended to enact a valid and permanent statute which would
have the most beneficial effect that its language permits
(Orlosky vs. Haskell, 155 A. 112.)
Obviously, the Secretary (Minister) of Labor had exceeded
his statutory authority granted by Article 5 of the Labor
Code authorizing him to promulgate the necessary
implementing rules and regulations.
Public respondent vehemently argues that the intent and
spirit of the holiday pay law, as expressed by the Secretary
of Labor in the case of Chartered Bank Employees
Association v. The Chartered Bank (NLRC Case No. RB-
1789-75, March 24, 1976), is to correct the disadvantages
inherent in the daily compensation system of employment
holiday pay is primarily intended to benefit the daily paid
workers whose employment and income are circumscribed
by the principle of "no work, no pay." This argument may
sound meritorious; but, until the provisions of the Labor
Code on holiday pay is amended by another law, monthly
paid employees are definitely included in the benefits of
regular holiday pay. As earlier stated, the presumption is
always in favor of law, negatively put, the Labor Code is
always strictly construed against management.
While it is true that the contemporaneous construction
placed upon a statute by executive officers whose duty is to
enforce it should be given great weight by the courts, still if
such construction is so erroneous, as in the instant case, the
same must be declared as null and void. It is the role of the
Judiciary to refine and, when necessary, correct
constitutional (and/or statutory) interpretation, in the context
of the interactions of the three branches of the government,
almost always in situations where some agency of the State
has engaged in action that stems ultimately from some
legitimate area of governmental power (The Supreme Court
in Modern Role, C. B. Swisher 1958, p. 36).
Thus. in the case of Philippine Apparel Workers Union vs.
National Labor Relations Commission (106 SCRA 444, July
31, 1981) where the Secretary of Labor enlarged the scope
of exemption from the coverage of a Presidential Decree
granting increase in emergency allowance, this Court ruled
that: t.hqw
... the Secretary of Labor has exceeded his authority when he
included paragraph (k) in Section 1 of the Rules
implementing P. D. 1 1 23.
xxx xxx xxx
91
Clearly, the inclusion of paragraph k contravenes the
statutory authority granted to the Secretary of Labor, and the
same is therefore void, as ruled by this Court in a long line
of cases . . . .. t.hqw
The recognition of the power of administrative officials to
promulgate rules in the administration of the statute,
necessarily limited to what is provided for in the legislative
enactment, may be found in the early case of United States
vs. Barrios decided in 1908. Then came in a 1914 decision,
United States vs. Tupasi Molina (29 Phil. 119) delineation of
the scope of such competence. Thus: "Of course the
regulations adopted under legislative authority by a
particular department must be in harmony with the
provisions of the law, and for the sole purpose of carrying
into effect its general provisions. By such regulations, of
course, the law itself cannot be extended. So long, however,
as the regulations relate solely to carrying into effect the
provisions of the law, they are valid." In 1936, in People vs.
Santos, this Court expressed its disapproval of an
administrative order that would amount to an excess of the
regulatory power vested in an administrative official We
reaffirmed such a doctrine in a 1951 decision, where we
again made clear that where an administrative order betrays
inconsistency or repugnancy to the provisions of the Act,
'the mandate of the Act must prevail and must be followed.
Justice Barrera, speaking for the Court in Victorias Milling
inc. vs. Social Security Commission, citing Parker as well as
Davis did tersely sum up the matter thus: "A rule is binding
on the Courts so long as the procedure fixed for its
promulgation is followed and its scope is within the
statutory authority granted by the legislature, even if the
courts are not in agreement with the policy stated therein or
its innate wisdom. ... On the other hand, administrative
interpretation of the law is at best merely advisory, for it is
the courts that finally determine chat the law means."
"It cannot be otherwise as the Constitution limits the
authority of the President, in whom all executive power
resides, to take care that the laws be faithfully executed. No
lesser administrative executive office or agency then can,
contrary to the express language of the Constitution assert
for itself a more extensive prerogative. Necessarily, it is
bound to observe the constitutional mandate. There must be
strict compliance with the legislative enactment. Its terms
must be followed the statute requires adherence to, not
departure from its provisions. No deviation is allowable. In
the terse language of the present Chief Justice, an
administrative agency "cannot amend an act of Congress."
Respondents can be sustained, therefore, only if it could be
shown that the rules and regulations promulgated by them
were in accordance with what the Veterans Bill of Rights

provides" (Phil. Apparel Workers Union vs. National Labor
Relations Commission, supra, 463, 464, citing Teozon vs.
Members of the Board of Administrators, PVA 33 SCRA
585; see also Santos vs. Hon. Estenzo, et al, 109 Phil. 419;
Hilado vs. Collector of Internal Revenue, 100 Phil. 295; Sy
Man vs. Jacinto & Fabros, 93 Phil. 1093; Olsen & Co., Inc.
vs. Aldanese and Trinidad, 43 Phil. 259).
This ruling of the Court was recently reiterated in the case
of American Wire & Cable Workers Union (TUPAS) vs. The
National Labor Relations Commission and American Wire
& Cable Co., Inc., G.R. No. 53337, promulgated on June 29,
1984.
In view of the foregoing, Section 2, Rule IV, Book III of the
Rules to implement the Labor Code and Policy instruction
No. 9 issued by the then Secretary of Labor must be
declared null and void. Accordingly, public respondent
Deputy Minister of Labor Amado G. Inciong had no basis at
all to deny the members of petitioner union their regular
holiday pay as directed by the Labor Code.
II
It is not disputed that the decision of Labor Arbiter Ricarte
T. Soriano dated August 25, 1975, had already become final,
and was, in fact, partially executed by the respondent bank.
However, public respondent maintains that on the authority
of De Luna vs. Kayanan, 61 SCRA 49, November 13, 1974,
he can annul the final decision of Labor Arbiter Soriano
since the ensuing promulgation of the integrated
implementing rules of the Labor Code pursuant to P.D. 850
on February 16, 1976, and the issuance of Policy Instruction
No. 9 on April 23, 1976 by the then Secretary of Labor are
facts and circumstances that transpired subsequent to the
promulgation of the decision of the labor arbiter, which
renders the execution of the said decision impossible and
unjust on the part of herein respondent bank (pp. 342-343,
rec.).
This contention is untenable.
To start with, unlike the instant case, the case of De Luna
relied upon by the public respondent is not a labor case
wherein the express mandate of the Constitution on the
protection to labor is applied. Thus Article 4 of the Labor
Code provides that, "All doubts in the implementation and
interpretation of the provisions of this Code, including its
implementing rules and regulations, shall be resolved in
favor of labor and Article 1702 of the Civil Code provides
that, " In case of doubt, all labor legislation and all labor
92
contracts shall be construed in favor of the safety and decent
living for the laborer.
Consequently, contrary to public respondent's allegations, it
is patently unjust to deprive the members of petitioner union
of their vested right acquired by virtue of a final judgment
on the basis of a labor statute promulgated following the
acquisition of the "right".
On the question of whether or not a law or statute can annul
or modify a judicial order issued prior to its promulgation,
this Court, through Associate Justice Claro M. Recto,
said: t.hqw
xxx xxx xxx
We are decidedly of the opinion that they did not. Said
order, being unappealable, became final on the date of its
issuance and the parties who acquired rights thereunder
cannot be deprived thereof by a constitutional provision
enacted or promulgated subsequent thereto. Neither the
Constitution nor the statutes, except penal laws favorable to
the accused, have retroactive effect in the sense of annulling
or modifying vested rights, or altering contractual
obligations" (China Ins. & Surety Co. vs. Judge of First
Instance of Manila, 63 Phil. 324, emphasis supplied).
In the case of In re: Cunanan, et al., 19 Phil. 585, March 18,
1954, this Court said: "... when a court renders a decision or
promulgates a resolution or order on the basis of and in
accordance with a certain law or rule then in force, the
subsequent amendment or even repeal of said law or rule
may not affect the final decision, order, or resolution already
promulgated, in the sense of revoking or rendering it void
and of no effect." Thus, the amendatory rule (Rule IV, Book
III of the Rules to Implement the Labor Code) cannot be
given retroactive effect as to modify final judgments. Not
even a law can validly annul final decisions (In re: Cunanan,
et al., Ibid).
Furthermore, the facts of the case relied upon by the public
respondent are not analogous to that of the case at bar. The
case of De Luna speaks of final and executory judgment,
while iii the instant case, the final judgment is partially
executed. just as the court is ousted of its jurisdiction to
annul or modify a judgment the moment it becomes final,
the court also loses its jurisdiction to annul or modify a writ
of execution upon its service or execution; for, otherwise,
we will have a situation wherein a final and executed
judgment can still be annulled or modified by the court upon
mere motion of a panty This would certainly result in
endless litigations thereby rendering inutile the rule of law.

Respondent bank counters with the argument that its partial
compliance was involuntary because it did so under pain of
levy and execution of its assets (p. 138, rec.). WE find no
merit in this argument. Respondent bank clearly manifested
its voluntariness in complying with the decision of the labor
arbiter by not appealing to the National Labor Relations
Commission as provided for under the Labor Code under
Article 223. A party who waives his right to appeal is
deemed to have accepted the judgment, adverse or not, as
correct, especially if such party readily acquiesced in the
judgment by starting to execute said judgment even before a
writ of execution was issued, as in this case. Under these
circumstances, to permit a party to appeal from the said
partially executed final judgment would make a mockery of
the doctrine of finality of judgments long enshrined in this
jurisdiction.
Section I of Rule 39 of the Revised Rules of Court provides
that "... execution shall issue as a matter of right upon the
expiration of the period to appeal ... or if no appeal has been
duly perfected." This rule applies to decisions or orders of
labor arbiters who are exercising quasi-judicial functions
since "... the rule of execution of judgments under the rules
should govern all kinds of execution of judgment, unless it is
otherwise provided in other laws" Sagucio vs. Bulos 5
SCRA 803) and Article 223 of the Labor Code provides that
"... decisions, awards, or orders of the Labor Arbiter or
compulsory arbitrators are final and executory unless
appealed to the Commission by any or both of the parties
within ten (10) days from receipt of such awards, orders, or
decisions. ..."
Thus, under the aforecited rule, the lapse of the appeal
period deprives the courts of jurisdiction to alter the final
judgment and the judgment becomes final ipso jure (Vega
vs. WCC, 89 SCRA 143, citing Cruz vs. WCC, 2
PHILAJUR 436, 440, January 31, 1978; see also Soliven vs.
WCC, 77 SCRA 621; Carrero vs. WCC and Regala vs.
WCC, decided jointly, 77 SCRA 297; Vitug vs. Republic, 75
SCRA 436; Ramos vs. Republic, 69 SCRA 576).
In Galvez vs. Philippine Long Distance Telephone Co., 3
SCRA 422, 423, October 31, 1961, where the lower court
modified a final order, this Court ruled thus: t.hqw
xxx xxx xxx
The lower court was thus aware of the fact that it was
thereby altering or modifying its order of January 8, 1959.
Regardless of the excellence of the motive for acting as it
did, we are constrained to hold however, that the lower court
had no authorities to make said alteration or modification. ...
93
xxx xxx xxx
The equitable considerations that led the lower court to take
the action complained of cannot offset the dem ands of
public policy and public interest which are also
responsive to the tenets of equity requiring that an issues
passed upon in decisions or final orders that have become
executory, be deemed conclusively disposed of and
definitely closed for, otherwise, there would be no end to
litigations, thus setting at naught the main role of courts of
justice, which is to assist in the enforcement of the rule of
law and the maintenance of peace and order, by settling
justiciable controversies with finality.
xxx xxx xxx
In the recent case of Gabaya vs. Mendoza, 113 SCRA 405,
406, March 30, 1982, this Court said: t.hqw
xxx xxx xxx
In Marasigan vs. Ronquillo (94 Phil. 237), it was
categorically stated that the rule is absolute that after a
judgment becomes final by the expiration of the period
provided by the rules within which it so becomes, no further
amendment or correction can be made by the court except
for clerical errors or mistakes. And such final judgment is
conclusive not only as to every matter which was offered
and received to sustain or defeat the claim or demand but as
to any other admissible matter which must have been offered
for that purpose (L-7044, 96 Phil. 526). In the earlier case of
Contreras and Ginco vs. Felix and China Banking Corp.,
Inc. (44 O.G. 4306), it was stated that the rule must be
adhered to regardless of any possible injustice in a
particular case for (W)e have to subordinate the equity of a
particular situation to the over-mastering need of certainty
and immutability of judicial pronouncements
xxx xxx xxx
III
The despotic manner by which public respondent Amado G.
Inciong divested the members of the petitioner union of their
rights acquired by virtue of a final judgment is tantamount to
a deprivation of property without due process of law Public
respondent completely ignored the rights of the petitioner
union's members in dismissing their complaint since he
knew for a fact that the judgment of the labor arbiter had
long become final and was even partially executed by the
respondent bank.
A final judgment vests in the prevailing party a right
recognized and protected by law under the due process

clause of the Constitution (China Ins. & Surety Co. vs.
Judge of First Instance of Manila, 63 Phil. 324). A final
judgment is "a vested interest which it is right and equitable
that the government should recognize and protect, and of
which the individual could no. be deprived arbitrarily
without injustice" (Rookledge v. Garwood, 65 N.W. 2d 785,
791).
lt is by this guiding principle that the due process clause is
interpreted. Thus, in the pithy language of then Justice, later
Chief Justice, Concepcion "... acts of Congress, as well as
those of the Executive, can deny due process only under
pain of nullity, and judicial proceedings suffering from the
same flaw are subject to the same sanction, any statutory
provision to the contrary notwithstanding (Vda. de
Cuaycong vs. Vda. de Sengbengco 110 Phil. 118, emphasis
supplied), And "(I)t has been likewise established that a
violation of a constitutional right divested the court of
jurisdiction; and as a consequence its judgment is null and
void and confers no rights" (Phil. Blooming Mills
Employees Organization vs. Phil. Blooming Mills Co., Inc.,
51 SCRA 211, June 5, 1973).
Tested by and pitted against this broad concept of the
constitutional guarantee of due process, the action of public
respondent Amado G. Inciong is a clear example of
deprivation of property without due process of law and
constituted grave abuse of discretion, amounting to lack or
excess of jurisdiction in issuing the order dated November
10, 1979.
WHEREFORE, THE PETITION IS HEREBY GRANTED,
THE ORDER OF PUBLIC RESPONDENT IS SET ASIDE,
AND THE DECISION OF LABOR ARBITER RICARTE
T. SORIANO DATED AUGUST 25, 1975, IS HEREBY
REINSTATED.
COSTS AGAINST PRIVATE RESPONDENT INSULAR
BANK OF ASIA AND AMERICA
SO ORDERED.1wph1.t
94
G.R. No. 111988 October 14, 1994
ASSOCIATED LABOR UNIONS (ALU)-TUCP in
behalf of its members at AMS FARMING
CORPORATION, petitioner,
vs.
VOLUNTARY ARBITRATOR ROSALINA
LETRONDO-MONTEJO and AMS FARMING
CORPORATION, respondent.
Seno, Mendoza and Associates for petitioner.
Castro, Enriquez, Carpio, Guillen and Associates for private
respondents.
MENDOZA, J.:
This is a petition for certiorari to set aside the decision dated
July 19, 1993 of public respondent Voluntary Arbitrator
Rosalina Letrondo-Montejo insofar as it dismissed the claim
of petitioner's members for holiday pay for December 4,
1992, which had been declared a special day for the holding
of Sangguniang Kabataan election.
The facts are as follows:
On December 27, 1990, petitioner Associated Labor Unions
(ALU-TUCP and private respondent AMS Farming
Corporation entered into a five-year Collective Bargaining
Agreement beginning November 1, 1990 and
ending midnight of October 31, 1995. The CBA covers the
regular daily-paid rank-and-file employees of private
respondent AMS Farming Corp. at Sampao, Kapalong,
Davao del Norte and Magatos, Asuncion, Davao del Norte.
Art. VII, sec 3. of the CBA provides:
New Year, Maundy Thursday, Good Friday, Araw ng
Kagitingan, 1st of May, 12th of June, Araw ng Dabaw, 4th
of July, Last Sunday of August, 1st November, 30th of
November, 25th of December, 30th of December and the
days designated by law for holding referendum and
local/national election shall be considered paid regular
holidays. Consequently, they shall receive their basic pay
even if they do not work on those days. Any employee
required to work on these holidays shall be paid at last TWO
HUNDRED PERCENT (200%) of his daily wage. Covered
employees performing overtime work on these days shall be
entitled to another THIRTY PERCENT (30%) overtime pay.
It is understood however, that any covered employee who
shall be absent for more than one day immediately preceding
the paid holiday shall not be entitled to the holiday pay.

The President of the Philippines declared December 4, 1992
a "special day" for the holding of election for Sangguniang
Kabataan (SK) throughout the nation. Employees covered
by the CBA subsequently filed claims for the payment to
them of holiday pay for that day. Private respondent,
however, refused their claims on the ground that December
4, 1992 was not a regular holiday within the contemplation
of the CBA.
The matter was eventually submitted to voluntary
arbitration. At the conference held on February 19, 1993, the
parties agreed, among others things, to submit the following
issue:
Is the Sangguniang Kabataan Election Day considered a
regular holiday for purpose of said Section 3, Article VII of
the CBA?
In connection with this issue, they agreed that the
Sangguniang Kabataan Election Day was a holiday as
decreed by the President of the Philippines.
The parties presented position papers and thereafter
submitted the case for resolution.
On July 19, 1993, public respondent rendered an
"Award"1 in which, while holding employees who had
become regular employees on November 1, 1990 entitled to
salary increases under the CBA, nonetheless dismissed their
claim for holiday pay for December 4, 1992 on the ground
that the Sangguniang Kabataan election "by any stretch of
the imagination cannot be considered as a local election
within the meaning of CBA because not all people can vote
in the said election but only qualified youths." According to
the Voluntary Arbitrator, "A 'local election' is generally
understood to mean the election by the people of their local
leaders like the governors, mayors, members of the
provincial and municipal councils, and barangay officials.
And when a local election is held, the day is declared a non-
working holiday. This is our experience in local and national
elections. In the case of the Sangguniang Kabataan (SK)
elections, it was a working holiday. Except for the qualified
youthful voters, not everybody noticed said election as not
everyone voted in the said election."
Hence, this petition, the only issue in which is whether the
election for the Sangguniang Kabataan on December 4, 1992
was a "local/national election" within the contemplation of
Art. VII, sec. 3 of the CBA so as to entitle petitioner's
members, who are employed at the AMS Farming Corp. to
the payment of holiday pay for that day.
95
We hold that it is and that, in denying petitioner's claim,
respondent Voluntary Arbitrator denied members of
petitioner union substantial justice as a result of her
erroneous interpretation of the CBA, thereby justifying
judicial review.2
First. The Sangguniang Kabataan (SK) is part of the local
government structure. The Local Government Code (Rep.
Act. No. 7160) creates in every barangay a Sangguniang
Kabataan composed of a chairman, seven (7) members, a
secretary and a treasurer.3 The chairman and the seven
members are elected by the Katipunan ng Kabataan, which
is composed of citizens of the Philippines residing in the
barangay for at least six (6) months, who are between the
ages of 15 and 21 and who are registered as members.4 The
chairman of the SK is an ex officio member of the
Sangguniang Baranggay with the same powers duties,
functions and privileges as the regular members of the
Sangguniang Barangay.5 The President of the Pederasyon ng
mga Sangguniang Kabataan, which is imposed of the SK
chairmen of the sangguniang kabataan of the barangays in
the province, city, or municipality, is an ex officio member
of the Sangguniang Panlalawigan, Sangguniang Panlungsod,
and Sangguniang Bayan.6
Hence, as the Solicitor General points out, the election for
members of the SK may properly be considered a "local
election" within the meaning of
Art. VII, sec 3 of the CBA and the day on which it is held to
be a holiday, thereby entitling petitioners members at the
AMS Farming Corp. to the payment of holiday on such day.
Second. The Voluntary Arbitrator held, however, that the
election for members of the SK cannot be considered a local
election as the election for Governors , Vice Governors,
Mayors and Vice Mayors and the various local legislative
assemblies (sanggunians) because the SK election is
participated in only by the youth who are between the ages
of 15 and 21 and for this reason the day is not a nonworking
holiday.
To begin with, it is not true that December 4, 1992 was not a
nonworking holiday. It was a nonworking holiday and this
was announced in the media.7 In Proclamation No. 118
dated December 2, 1992 President Ramos declared the day
as "a special day through the country on the occasion of the
Sangguniang Kabataan Elections" and enjoined all "local
government units through their respective Chief Local
Executives [to] extend all possible assistance and support to
ensure the smooth conduct of the general elections."
A "special day" is a "special day", as provided by the
Administrative Code of 1987.8 On the other hand, the term
 96

"general elections" means, in the context of SK elections,

the regular elections for members of the SK, as
distinguished from the special elections for such officers.9

Moreover, the fact that only those between 15 and 21 take

part in the election for members of the SK does not make
such election any less a regular local election. The
Constitution provides, for example, for the sectoral
representatives in the House of Representatives of, among
others, women and youth. 10 Only voters belonging to the
relevant sectors can take part in the election of their
representatives. Yet it cannot be denied that such election is
a regular national election and the day set for its holding, a
holiday.

Third. Indeed, the CBA provision in question merely

reiterates the provision on paid holidays. Thus, the Labor
Code provides:

Art. 94. Right to holiday pay. (a) Every worker shall be

paid his regular daily wage during regular holidays except in
retail and service establishments regularly employing less
than ten (10) workers;

(b) The employer may require an employee to work on any

holiday but such employee shall be paid a compensation
equivalent to twice his regular rate; and

(c) As used in this Article, "holiday" includes: New Years

Day, Maundy Thursday, Good Friday, the ninth of April, the
first of May, the twelfth of June, the fourth of July, the
thirtieth of November, the twenty-fifth and the thirtieth of
December, and the day designated by law for holding a
general election.

As already explained, the phrase "general election" means

regular local and national elections.

Consequently, whether in the context of the CBA or the

Labor Code, December 4, 1992 was a holiday for which
holiday pay should be paid by respondent employer.

WHEREFORE, the decision dated July 19, 1993 of public

respondent Rosalina Letrondo-Montejo, insofar as it
dismissed petitioner's claim for holiday pay, is SET ASIDE
and private respondent is ORDERED to pay petitioner's
members their regular holiday pay for December 4, 1992 in
accordance with Art. VII, sec. 3 of the Collective Bargaining
Agreement.

SO ORDERED.