Labor Law 1 Labor Standards Atty.

Sevillano Case 155-161

155 Article 82 LC; Hours of Work; Coverage

National Waterworks & Sewerage Authority vs. NWSA Consolidated Unions
11 SCRA 766, August 31, 1964

FACTS:
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.

The Court of Industrial Relations conducted a hearing on the controversy then existing between
petitioner and respondent unions which the latter embodied in a "Manifesto", namely: implementation
of the 40-Hour Week Law (Republic Act No. 1880); alleged violations of the collective bargaining
agreement 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. Also, the method used by the NAWASA in offsetting the overtime with the
undertime and at the same time charging said undertime to the accrued leave.

The respondent court rendered its decision stating that 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 and
granted the claims of the union.

ISSUE:
(1) Whether or not the method used by the NAWASA in offsetting the overtime with the undertime
and at the same time charging said undertime to the accrued leave is correct.
(2) Whether or not Differential pay for Sundays is part of legal wage.
(3) 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?

HELD:
(1) No, the method used by the NAWASA in offsetting the overtime with the undertime and at the
same time charging said undertime to the accrued leave is NOT correct.

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
Labor Law 1 Labor Standards Atty. Sevillano Case 155-161

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.

(2) Yes, Differential pay for Sundays is part of legal wage.

The differential pay for Sundays is a part of the legal wage. 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) Correct method to determine the equivalent daily wage of a monthly salaried employee,
especially in a firm which is a public utility.

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.

a. 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
Labor Law 1 Labor Standards Atty. Sevillano Case 155-161

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. The "regular rate" of pay also
ordinarily includes incentive bonus or profit-sharing payments made in addition to the
normal basic pay, 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

b. 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, 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, 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.

REFERENTIAL SYLLABUS:
Public corporations; NAWASA does not perform governmental but only proprietary function.The
National' Waterworks and Sewerage Authority is a government corporation performing not
governmental but proprietary functions, and as such comes within the coverage of Commonwealth Act
No. 444.
Same; Supply of water and sewerage service are ministrant functions.The business of providing water
supply and sewerage service are but ministrant functions of government.
Labor relations; Public utility obliged to pay differential sum under collective bargaining agreement.
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.
Same; Non-managerial employees covered by Commonwealth Act No. 444.Employees who have little
freedom of action and whose main function is merely to carry out the company's orders, plans and
policies, are not managerial employees and hence are covered by Commonwealth Act No. 444.
Same; Jurisdiction of Court of Industrial Relations determined at time dispute arose.The Court of
Industrial Relations has jurisdiction to adjudicate overtime pay where there was employer-employee
relationship existing between the parties at the time the dispute arose.
Same; Employees of other offices assigned to NAWASA not employees of latter.The GAO employees
assigned to work in the NAWASA even if they were paid out of the latter's funds cannot be regarded as
employees of the NAWASA on 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 Bureau of
Public Works assigned to work in the NAWASA.
Labor Law 1 Labor Standards Atty. Sevillano Case 155-161

Same; Offsetting overtime with undertime when unfair.The method used by the NAWASA in offsetting
the overtime with the undertime and at the same time charging said undertime to the accrued leave is
unfair.
Same; Differential pay for Sundays is part of legal wage.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.
Same; Different computation of daily wages of government and non-government employees.In the
computation of 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.
Same; Night compensation to be paid from time services were rendered.The laborers must be
compensated for nighttime work as of the date the same was rendered.
Same; Minimum wage rates applicable also to employees hired subsequent to date of decision.The
rates of minimum pay pay fixed in a CIR case 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,
Same; "Distress pay" applicable to all employees whose work have -to do with the sewerage chambers.
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.
Same; Staggering not required where work not continuous.Staggering of working hours is not required
where the evidence shows that the work is not continuous.

156 Article 82 LC; Hours of Work; Coverage

San Miguel Brewery, Inc. vs. Democratic Labor Org.
8 SCRA 613, July 31, 1963

FACTS:

Respondent Democratic Labor Assoc. filed a manifestation claiming for the following against petitioner
SMB: overtime pay, night-shift differential pay, attorneys fees. Separation pay, and sick and vacation
leave compensation. Judge Bautista, who was commissioned to receive the evidence and decide on the
case, ruled that those working outside the companys premises are entitled to overtime compensation,
hence, the Eight-Hour Labor Law applies to them.

ISSUE:
(1) Whether or not the Eight-Hour Labor Law finds application to outside of field sales personnel
(paid on a piece-work or pakiao).
(2) Whether or not the claimants who are watchmen and security guards entitled to extra pay for
work done on Sundays and Holidays.
Labor Law 1 Labor Standards Atty. Sevillano Case 155-161

HELD:

(1) No, the Eight-Hour Labor Law finds NO application to outside of field sales personnel.

Where after the morning roll call the outside or field sales personnel leave the plant of the
company to go on their respective sales routes and they do not have a daily time record but the
sales routes are so planned that they can be completed within 8 hours at most, and they receive
monthly salaries and sales commissions in variable amounts, so that they are made to work
beyond the required eight hours similar to piece work, "pakiao", or commission basis regardless
of the time employed, and the employees' participation depends on their industry, it is held that
the Eight-Hour Labor Law has no application to said outside or field sales personnel and that
they are not entitled to overtime compensation.

The Court is of opinion that the Eight-Hour Labor Law only has application where an employee
or laborer is paid on a monthly or daily basis, or is paid a monthly or daily compensation, in
which case, if he is made to work beyond the requisite period of 8 hours, he should be paid the
additional compensation prescribed by law. This law has no application when the employee or
laborer is paid on a piece-work, "pakiao", or commission basis, regardless of the time employed.
The philosophy behind this exemption is that his earnings in the form of commission based on
the gross receipts of the day. His participation depends upon his industry so that the more hours
he employs in the work the greater are his gross returns and the higher his commission.

(2) Yes, the claimants who are watchmen and security guards entitled to extra pay for work done
on Sundays and Holidays.

Watchmen who work on Sundays and holidays are entitled to extra pay for work done during
these days although they are paid on a monthly basis and are given one day off. Section 4 of
Commonwealth Act No. 444 expressly provides that no employer may compel an employee to
work during Sundays and legal holidays unless he is paid an additional sum of his regular
compensation. This proviso is mandatory, regardless of the nature of the compensation. The
only exception is with regard to public utilities who perform some public service.

REFERENTIAL SYLLABUS:
Labor laws; Eight-Hour Labor Law; No application to outside or field sales personnel.Where after the
morning roll call the outside or field sales personnel leave the plant of the company to go on their
respective sales routes and they do not have a daily time record but the sales routes are so planned that
they can be completed within 8 hours at most, and they receive monthly salaries and sales commissions
in variable amounts, so that they are made to work beyond the required eight hours similar to piece
work, "pakiao", or commission basis regardless of the time employed, and the employees' participation
depends on their industry, it is held that the Eight-Hour Labor Law has no application to said outside or
field sales personnel and that they are not entitled to overtime compensation.
Labor Law 1 Labor Standards Atty. Sevillano Case 155-161

Same; Same; Night salary differentials retroactive.Watchmen who rendered night duties once every
three weeks continuously during the period of their employment should be paid 25% additional
compensation for work from 6:00 to 12:00 p.m. and 75% additional compensation for work from 12:01
to 6:00 in the morning retroactive prior to date of demand because a similar claim had been filed long
before and had been the subject of negotiation between the union and the company which culminated
in a strike which fizzled out with the understanding that such claim should be settled in court.
Same; Same; Sundays and holidays pay.Watchmen who work on Sundays and holidays are entitled to
extra pay for work done during these days although they are paid on a monthly basis and are given one
day off. Section 4 of Commonwealth Act No. 444 expressly provides that no employer may compel an
employee to work during Sundays and legal holidays unless he is paid an additional sum of his regular
compensation. This proviso is mandatory, regardless of the nature of the compensation. The only
exception is with regard to public utilities who perform some public service.

157 Article 83-84 LC; Hours of Work; Normal Hours of Work; Hours of Work
Arica vs. National Labor Relations Commission
170 SCRA 776, February 28, 1989

FACTS:

Teofilo Arica et al and 561 others sued Standard Fruits Corporation (STANFILCO) Philippines for allegedly
not paying the workers for their assembly time which takes place every work day from 5:30am to 6am.
The assembly time consists of the roll call of the workers; their getting of assignments from the
foreman; their filling out of the Laborers Daily Accomplishment Report; their getting of tools and
equipments from the stockroom; and their going to the field to work. The workers alleged that this is
necessarily and primarily for STANFILCOs benefit.

ISSUE: Whether or not the workers assembly time should be paid.

HELD:

No, the workers assembly time should not be paid.

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."
Labor Law 1 Labor Standards Atty. Sevillano Case 155-161

Noteworthy is the decision of the Minister of Labor, on May 12, 1978 in the aforecited case (Associated
Labor Union vs. Standard (Phil.) Fruit Corporation, NLRC Case No. 26-LS-XI-76) where significant findings
of facts and conclusions had already been made on the matter. The Minister of Labor held: The thirty
(30)-minute assembly time long practiced and institutionalized by mutual consent of the parties under
Article IV, Section 3, of the Collective Bargaining Agreement cannot be considered as waiting time
within the purview of Section 5, Rule I, Book III of the Rules and Regulations Implementing the Labor
Code. x x x 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. 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.

REFERENTIAL SYLLABUS:
Labor Law; Labor Relations; Waiting Time; The 30-minute assembly time practiced by the employees of
the company (private respondent), cannot be considered waiting time, and is therefore not
compensable.Noteworthy is the decision of the Minister of Labor, on May 12, 1978 in the aforecited
case (Associated Labor Union vs. Standard (Phil.) Fruit Corporation, NLRC Case No. 26-LS-XI-76) where
significant findings of facts and conclusions had already been made on the matter. The Minister of Labor
held: The thirty (30)-minute assembly time long practiced and institutionalized by mutual consent of
the parties under Article IV, Section 3, of the Collective Bargaining Agreement cannot be considered as
waiting time within the purview of Section 5, Rule I, Book III of the Rules and Regulations Implementing
the Labor Code. x x x 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. 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.
Remedial Law; Civil Procedure; Judgments; Res Judicata; The principle of res judicata bars not only the
relitigation in a subsequent action of the issues 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.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 x x litigating for the same thing and in the same
Labor Law 1 Labor Standards Atty. Sevillano Case 155-161

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]).
Same; Evidence; Findings of Fact; Findings of fact of quasi-judicial bodies are accorded not only respect
but at times, finality as long as they are supported by substantial evidence.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 796 [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].

SARMIENTO, J., Dissenting:

Labor Law; Labor Relations; Labor Standards; Waiting Time; In view of the restrictions imposed upon
petitioners with respect to the practice of the 30-minute assembly time, said assembly time, has become,
in truth and in fact a waiting time as contemplated in the Labor Code.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 assembly time had become, in truth and
fact, a waiting time as contemplated by the Labor Code.

158 Article 83-84 LC; Hours of Work; Normal Hours of Work; Hours of Work
University of Pangasinan Faculty Union vs. University of Pangasinan
127 SCRA 691, February 20, 1984

FACTS:
ISSUE:
HELD:
REFERENTIAL SYLLABUS:
Labor Law; Regular professors and teachers are entitled to ECOLA during the semestral breaks, their
absence from work not being of their own will.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
Labor Law 1 Labor Standards Atty. Sevillano Case 155-161

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 farther 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.
Same; Semestral breaks may be considered as hours worked under the Rules implementing the Labor
Code.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 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.
Same; Statutes; Whereas clause cannot prevail over specific statements in the law itself.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.
Same; Same; The 60% incremental proceeds from tuition fee increases are to be devoted entirely to
salary increases of school personnel.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
Labor Law 1 Labor Standards Atty. Sevillano Case 155-161

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.
Same; Benefits mandated by law and the CBA between a University and its personnel may be charged to
the 12% return on investment within the 40% incremental proceeds of tuition fee increase.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.
Same; Factual findings of NLRC that regular teachers were paid for extra loads binding on the Supreme
Court.Coming now to the third issue, the respondents are of the considered view that as evidenced by
the payrolls submitted by them during the period September 16 to September 30, 1981, the faculty
members have been paid for the extra loads. We agree with the respondents that this issue involves a
question of fact properly within the competence of the respondent NLRC to pass upon. The findings of
fact of the respondent Commission are binding on this Court there being no indication of their being
unsubstantiated by evidence. We find no grave abuse in the findings of respondent NLRC on this matter
to warrant reversal. Assuming arguendo, however, that the petitioners have not been paid for these
extra loads, they are not entitled to payment following the principles of No work, no pay. This time,
the rule applies. Involved herein is a matter different from the payment of ECOLA under the first issue.
Labor Law 1 Labor Standards Atty. Sevillano Case 155-161

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.
Same; Action; Appeal Certiorari; A registered unions legal capacity to sue cannot be questioned for the
first time on appeal or certiorari.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.

159 Article 87 LC; Hours of Work; Overtime Pay; Premium Pay; Regular Wage
Emirate Security and Maintenance Systems, Inc. vs. Menese
658 SCRA 712, October 05, 2011

FACTS:

Respondent Glenda M. Menese (Menese) was a payroll and billing clerk of petitioner Emirate Security
and Maintenance System, Inc. (Agency) assigned to its security detachment at the Philippine General
Hospital (PGH). In two memoranda dated May 16, 2011 and May 22, 2001, respondent was transferred
to petitioners main office on Ortigas Ave., Mandaluyong City, as lady security guard. Her old position
was taken over by a certain Amy Claro, a protge of Violita G. Depula, the new chief of the UP-PGH
Security Division. On June 5, 2001, respondent Menese filed a complaint for constructive dismissal;
illegal reduction of salaries and allowances; separation pay; refund of contribution to cash bond;
overtime, holiday, rest day and premium pay; damages; and attorney's fees against the petitioners,
Agency and its General Manager, Robert A. Yan (Yan).

The petitioners, for their part, denied liability. They alleged that on May 8, 2001, Dapula informed the
agency in writing, through Yan, that she had been receiving numerous complaints from security guards
and other agency employees about Meneses unprofessional conduct. She told the petitioners that she
was not tolerating Meneses negative work attitude despite the fact that she is the wife of Special Police
Major Divino Menese who is a member of the UP Manila police force, and that as a matter of policy and
out of delicadeza, she does not condone nepotism in her division.

In a decision dated March 14, 2002, Labor Arbiter Jovencio LL. Mayor, Jr. declared Menese to have been
constructively dismissed. He found the petitioners wanting in good faith in transferring Menese to
another detachment as she would be suffering a demotion in rank and a diminution in pay. Accordingly,
he ordered the petitioners to immediately reinstate Menese and, solidarily, to pay her full backwages.
The petitioners appealed to the National Labor Relations Commission (NLRC). On September 30, 2003,
Labor Law 1 Labor Standards Atty. Sevillano Case 155-161

the NLRC Second Division issued a resolution granting the appeal and reversing the labor arbiters
decision. It ruled that Menese was not constructively dismissed but was merely transferred to another
detachment. The Court of Appeals set-aside the ruling of the NLRC and reinstated the Labor Arbiters
decision. Thus, this petition.

ISSUE: Whether or not the Respondent was constructively dismissed and whether or not Respondent is
entitled to overtime pay, among others.

HELD:

Yes, the Respondent was constructively dismissed and whether or not Respondent is entitled to
overtime pay, among others.

The Court notes as a starting point that at the time material to the case, Menese ceased to be the
agencys payroll and billing clerk at its PGH detachment. The position was taken away from her as she
had been transferred to the agencys main office on Ortigas Avenue, Mandaluyong City, upon the
request of Dapula, the new chief of the UP-PGH Security Division. The transfer was to be carried out
through a memorandum dated May 16, 2001 issued by Yan; a second memorandum dated May 22,
2001 issued by Personnel Officer Edwin J. Yabes, reminding Menese of Yans instruction for her to report
to the main office; and a third memorandum dated May 28, 2001, also issued by Yabes informing
Menese that it was her second notice to assume her work detail at the main office. Yabes instructed her
to report for work on May 30, 2001.

Had Yan inquired into Dapulas claim of Meneses alleged unprofessionalism, ideally through an
administrative investigation, he could have been provided with a genuine reason assuming proof of
Dapulas accusation existed for Meneses transfer or even for her dismissal, if warranted. That the agency
did not get into the bottom of Dapulas letter before it implemented Meneses transfer is indicative of the
sheer absence of an objective justification for the transfer. The most that the agency did was to write
Dapula a letter, through Yan, asking her to provide documents/evidence in support of her request for
Meneses transfer. Significantly, Yans request came after the labor arbiters summons to Yan regarding
Meneses complaint. Dapula never responded to Yans letter and neither did she provide the evidence
needed for the agencys defense in the complaint.

The Court cannot blame Menese for refusing Yans offer to be transferred. Not only was the transfer
arbitrary and done in bad faith, it would also result, as Menese feared, in a demotion in rank and a
diminution in pay. Although Yan informed Menese that based on the request of the client, she will be
transferred to another assignment which however will not involve any demotion in rank nor diminution
in her salaries and other benefits, the offer was such as to invite reluctance and suspicion as it was
couched in a very general manner. We find credible Meneses submission on this point, i.e., that under
the offered transfer: (1) she would hold the position of lady guard and (2) she would be paid in
accordance with the statutory minimum wage, or from P11,720.00 to P7,500.00.
Labor Law 1 Labor Standards Atty. Sevillano Case 155-161

REFERENTIAL SYLLABUS:
Labor Law; Management Prerogatives; Managerial prerogative to transfer personnel must be exercised
without abuse of discretion, bearing in mind the basic elements of justice and fair play.In Blue Dairy
Corporation v. NLRC, 314 SCRA 401 (1999), the Court stressed as a matter of principle that the
managerial prerogative to transfer personnel must be exercised without abuse of discretion, bearing in
mind the basic elements of justice and fair play. Having the right should not be confused with the
manner in which that right is exercised. Thus, it should not be used as a subterfuge by the employer to
get rid of an undesirable worker. Measured against this basic precept, the petitioners undoubtedly
abused their discretion or authority in transferring Menese to the agencys head office. She had become
undesirable because she stood in the way of Claros entry into the PGH detachment. Menese had to
go, thus the need for a pretext to get rid of her. The request of a client for the transfer became the
overriding command that prevailed over the lack of basis for the transfer.
Same; Same; It should not be used as a subterfuge by the employer to get rid of an undesirable
worker.We cannot blame Menese for refusing Yans offer to be transferred. Not only was the
transfer arbitrary and done in bad faith, it would also result, as Menese feared, in a demotion in rank
and a diminution in pay. Although Yan informed Menese that based on the request of the client, she
will be transferred to another assignment which however will not involve any demotion in rank nor
diminution in her salaries and other benefits, the offer was such as to invite reluctance and suspicion as
it was couched in a very general manner. We find credible Meneses submission on this point, i.e., that
under the offered transfer: (1) she would hold the position of lady guard and (2) she would be paid in
accordance with the statutory minimum wage, or from P11,720.00 to P7,500.00.

160-A Article 87 LC; Hours of Work; Overtime Pay; Premium Pay; Regular Wage
National Sugar Refineries Corporation vs. NLRC
220 SCRA 452, March 24, 1993

FACTS:

Petitioner National Sugar Refineries Corporation (NASUREFCO), a corporation which is fully owned and
controlled by the Government, operates three (3) sugar refineries located at Bukidnon, Iloilo and
Batangas. The Batangas refinery was privatized on April 11, 1992 pursuant to Proclamation No. 50. 1
Private respondent union represents the former supervisors of the NASUREFCO Batangas Sugar
Refinery.

On June 1, 1988, petitioner implemented a Job Evaluation (JE) Program affecting all employees, from
rank-and-file to department heads. The JE Program was designed to rationalized the duties and
functions of all positions, reestablish levels of responsibility, and recognize both wage and operational
structures. Jobs were ranked according to effort, responsibility, training and working conditions and
relative worth of the job. As a result, all positions were re-evaluated, and all employees including the
members of respondent union were granted salary adjustments and increases in benefits
commensurate to their actual duties and functions.
Labor Law 1 Labor Standards Atty. Sevillano Case 155-161

About ten years prior to the JE Program, the members of respondent union were treated in the same
manner as rank-and file employees. As such, they used to be paid overtime, rest day and holiday pay
pursuant to the provisions of Articles 87, 93 and 94 of the Labor Code as amended.

Respondent Union filed a case against respondents for payment of overtime, rest day and holiday pay.
Petitioner claims that the respondents are exempted from such benefits because they fall under
managerial staff. Labor Arbiter decided in favor of the respondents which was later on up held by NLRC.
Thus, this petition for certiorari.

ISSUE: Whether or not the respondent union is entitled to the overtime, rest day and holiday pay.

HELD:

No, the respondent union is NOT entitled to the overtime, rest day and holiday pay.

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.: x x x 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.

We likewise do not subscribe to the finding of the labor arbiter that the payment of the questioned
benefits to the union members has ripened into a contractual obligation. x x x The members of
respondent union were paid the questioned benefits for the reason that, at that time, they were
rightfully entitled thereto. Prior to the JE Program, they could not be categorically classified as members
or officers of the managerial staff considering that they were then treated merely on the same level as
rank-and-file. Consequently, the payment thereof could not be construed as constitutive of voluntary
employer practice, which cannot now be unilaterally withdrawn by petitioner.

The question whether a given employee is exempt from the benefits of the law is a factual one
dependent on the circumstances of the particular case. In determining whether an employee is within
the terms of the statutes, the criterion is the character of the work performed, rather than the title of
the employee's position. Consequently, while generally this Court is not supposed to review the factual
findings of respondent commission, substantial justice and the peculiar circumstances obtaining herein
mandate a deviation from the rule.

More specifically, their duties and functions include, among others, the following operations whereby
the employee:

1) assists the department superintendent in the following:

Labor Law 1 Labor Standards Atty. Sevillano Case 155-161

a) planning of systems and procedures relative to department activities;

b) organizing and scheduling of work activities of the department, which includes

employee shifting scheduled and manning complement;

c) decision making by providing relevant information data and other inputs;

d) attaining the company's set goals and objectives by giving his full support;

e) selecting the appropriate man to handle the job in the department; and

f) preparing annual departmental budget;

2) observes, follows and implements company policies at all times and recommends disciplinary
action on erring subordinates;

3) trains and guides subordinates on how to assume responsibilities and become more
productive;

4) conducts semi-annual performance evaluation of his subordinates and recommends

necessary action for their development/advancement;

5) represents the superintendent or the department when appointed and authorized by the
former;

6) coordinates and communicates with other inter and intra department supervisors when
necessary;

7) recommends disciplinary actions/promotions;

8) recommends measures to improve work methods, equipment performance, quality of service

and working conditions;

9) sees to it that safety rules and regulations and procedure and are implemented and followed
by all NASUREFCO employees, recommends revisions or modifications to said rules when
deemed necessary, and initiates and prepares reports for any observed abnormality within the
refinery;

10) supervises the activities of all personnel under him and goes to it that instructions to
subordinates are properly implemented; and

11) performs other related tasks as may be assigned by his immediate superior.
Labor Law 1 Labor Standards Atty. Sevillano Case 155-161

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 consist 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.

Quintessentially, with the promotion of the union members, they are no longer entitled to the benefits
which attach and pertain exclusively to their former positions. Entitlement to the benefits provided for
by law requires prior compliance with the conditions set forth therein. With the promotion of the
members of respondent union, they occupied positions which no longer meet the requirements
imposed by law. Their assumption of these positions removed them from the coverage of the law, ergo,
their exemption therefrom.

LAW CITED:
Article 82, Book III of the Labor Code on "Working Conditions and Rest Periods" and amplified in Section
2, Rule I, Book III of the Rules to Implement the Labor Code, to wit:

"Art. 82 Coverage. The provisions of this title shall apply to employees in all establishments
and undertakings whether for profit or not, but not to government employees, managerial
employees, field personnel, members of the family of the employer who are dependent on him
for support, domestic helpers, persons in the personal service of another, and workers who are
paid by results as determined by the Secretary of Labor in Appropriate regulations.

"As used herein, 'managerial employees' refer to those whose primary duty consists of the
management of the establishment in which they are employed or of a department or
subdivision thereof, and to other officers or members of the managerial staff." (Emphasis
supplied.)

xxx xxx xxx

'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

Labor Law 1 Labor Standards Atty. Sevillano Case 155-161

(b) Managerial employees, if they meet all of the following conditions, namely:

(1) Their primary duty consists of the management of the establishment in which they are
employed or of a department or subdivision thereof:

(2) They customarily and regularly direct the work of two or more employees therein:

(3) They have the authority to hire or fire other employees of lower rank; or their suggestions
and recommendations as to the hiring and firing and as to the promotion or any other change of
status of other employees are given particular weight.

(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 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 above."

REFERENTIAL SYLLABUS:
Labor Law; Constitutional Law; While social justice has an inclination to give favor and protection to the
working class, the cause of the labor sector is not upheld at all times as the management has also a right
entitled to respect and enforcement in the interest of simple fair play.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 labor dispute will be automatically decided in favor of labor. Management also has
its own rights which, as such, are entitled to respect and enforcement in the interest of simple fair play.
Out of its concern for those with less privileges in life, this Court has inclined more often than not
toward the worker and upheld his cause in his conflicts with the employer. Such favoritism, however,
has not blinded us 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.
Same; Classification of Employment; Criterion which determines whether a particular employee is within
the definition of a statute is the character of work performed rather than title or nomenclature of
Labor Law 1 Labor Standards Atty. Sevillano Case 155-161

position held.The question whether a given employee is exempt from the benefits of the law is a
factual one dependent on the circumstances of the particular case. In determining whether an employee
is within the terms of the statutes, the criterion is the character of the work performed, rather than the
title of the employee's position. Consequently, while generally this Court is not supposed to review the
factual findings of respondent commission, substantial justice and the peculiar circumstances obtaining
herein mandate a deviation from the rule.
Same; Same; Same; Overtime pay, etc.; Supervisory employees discharging functions that qualify them
as officers or members of the managerial staff considered exempt from the coverage of Article 82 of the
Labor Code and therefore, not entitled to overtime, rest day and holiday payThe 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.: x x x 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.
Same; Same; Same; Same; Payment of the questioned benefits has not ripened into a contractual
obligation as payment thereof was made at a time when they were rightfully entitled thereto.We
likewise do not subscribe to the finding of the labor arbiter that the payment of the questioned benefits
to the union members has ripened into a contractual obligation. x x x The members of respondent union
were paid the questioned benefits for the reason that, at that time, they were rightfully entitled thereto.
Prior to the JE Program, they could not be categorically classified as members or officers of the
managerial staff considering that they were then treated merely on the same level as rank-and-file.
Consequently, the payment thereof could not be construed as constitutive of voluntary employer
practice, which cannot now be unilaterally withdrawn by petitioner.
Same; Same; Same; Same; Same; Entitlement to benefits provided for by law requires prior compliance
with conditions set forth therein.Quintessentially, with the promotion of the union members, they are
no longer entitled to the benefits which attach and pertain exclusively to their former positions.
Entitlement to the benefits provided for by law requires prior compliance with the conditions set forth
therein. With the promotion of the members of respondent union, they occupied positions which no
longer meet the requirements imposed by law. Their assumption of these positions removed them from
the coverage of the law, ergo, their exemption therefrom.
Same; Management Prerogatives; Promotion of employees is a recognized management prerogative to
be exercised in good faith; Case at bar.Promotion of its employees is one of the
jurisprudentiallyrecognized exclusive prerogatives of management, provided it is done in good faith. In
the case at bar, private respondent union has miserably failed to convince this Court that the petitioner
acted in bad faith in implementing the JE Program. There is no showing that the JE Program was
intended to circumvent the law and deprive the members of respondent union of the benefits they used
to receive.

160-B Article 87 LC; Hours of Work; Overtime Pay; Premium Pay; Regular Wage
Cagampan vs. NLRC
195 SCRA 533, March 22, 1991
Labor Law 1 Labor Standards Atty. Sevillano Case 155-161

FACTS:

On April 17 and 18, 1985, petitioners, all seamen, entered into separate contracts of employment with
the Golden Light Ocean Transport, Ltd., through its local agency, private respondent ACE MARITIME
AGENCIES, INC. Petitioners have their respective ratings and monthly salary rates. Petitioners were
deployed on May 7, 1985, and discharged on July 12, 1986. Thereafter, petitioners collectively and/or
individually filed complaints for non-payment of overtime pay, vacation pay and terminal pay against
private respondent. In addition, they claimed that they were made to sign their contracts in blank.
Likewise, petitioners averred that although they agreed to render services on board the vessel Rio
Colorado managed by Golden Light Ocean Transport, Ltd., the vessel they actually boarded was MV
SOIC I managed by Columbus Navigation. Two (2) petitioners, Jorge de Castro and Juanito de Jesus,
charged that although they were employed as ordinary seamen (OS), they actually performed the work
and duties of Able Seamen (AB).

Respondent was furnished with a copy of the complaints but failed to answer, thus, POEA rendered
judgment in favor of the petitioners granting their petition except for the terminal pay. Respondent
appealed the above-stated decision to NLRC which reversed the POEA's ruling.

Petitioners, receiving an unfavorable decision from NLRC, filed a motion for reconsideration, raising a
technical error on the part of the petitioners in not submitting an answer to the POEA, which, under the
Rules of Court, is a waiver to present evidence on the part of the respondents.

On the evidence to support for the grant of the overtime pay, the petitioners provided no proof,
instead, they relied on the fact that the guaranteed or fixed overtime pay of 30% of the basic salary per
month embodied in their employment contract should be awarded to them as part of a package
benefit. They have theorized that even without sufficient evidence of actual rendition of overtime
work, they would automatically be entitled to overtime pay.

ISSUE: Whether or not the petitioners are entitled to overtime pay.

HELD:

No, the petitioners are NOT entitled to overtime pay.

Petitioners have conveniently adopted the view that the guaranteed or fixed overtime pay of 30% of
the basic salary per month embodied in their employment contract should be awarded to them as part
of a package benefit. They have theorized that even without sufficient evidence of actual rendition of
overtime work, they would automatically be entitled to overtime pay. They theory is erroneous for
being illogical and unrealistic. Their thinking even runs counter to the intention behind the provision.
The contract provision means that the fixed overtime pay of 30% would be the basis for computing the
overtime pay if and when overtime work would be rendered. Simply, stated, the rendition of overtime
work and the submission of sufficient proof that said work was actually performed are conditions to be
Labor Law 1 Labor Standards Atty. Sevillano Case 155-161

satisfied before a seaman could be entitled to overtime pay which should be computed on the basis of
30% of the basic monthly salary. In short, the contract provision guarantees the right to overtime pay
but the entitlement to such benefit must first be established. Realistically speaking, a seaman, by the
very nature of his job, stays on board a ship or vessel beyond the regular eight-hour work schedule. For
the employer to give him overtime pay for the extra hours when he might be sleeping or attending to his
personal chores or even just lulling away his time would be extremely unfair and unreasonable.

We already resolved the question of overtime pay of a worker aboard a vessel in the case of National
Shipyards and Steel Corporation v. CIR (3 SCRA 890). We ruled: We can not agree with the Court below
that respondent Malondras should be paid overtime compensation for every hour in excess of the
regular working hours that he was on board his vessel or barge each day, irrespective of whether or not
he actually put in work during those hours. Seamen are required to stay on board their vessels by the
very nature of their duties, and it is for this reason that, in addition to their regular compensation, they
are given free living quarters and subsistence allowances when required to be on board. It could not
have been the purpose of our law to require their employers to pay them overtime even when they are
not actually working; otherwise, every sailor on board a vessel would be entitled to overtime for sixteen
hours each day, even if he spent all those hours resting or sleeping in his bunk, after his regular tour of
duty. The correct criterion in determining whether or not sailors are entitled to overtime pay is not,
therefore, whether they were on board and can not leave ship beyond the regular eight working hours a
day, but whether they actually rendered service in excess of said number of hours. (Italics supplied)

REFERENTIAL SYLLABUS:
Labor Law; National Labor Relations Commission; Labor Arbiters; The NLRC and the Labor Arbiter have
authority under the Labor Code to decide a case based on the position papers and documents submitted
without resorting to the technical rules on evidence.Notably, it was only when private respondent
appealed the NLRC decision to this Court that petitioners suddenly unearth the issue of private
respondents default in the POEA case. Had the decision favoring them not been reversed by the NLRC,
petitioners could have just clammed up. They resorted to bringing up a technical, not a substantial,
defect in their desperate attempt to sway the Courts decision in their favor. Private respondent has
pointedly argued that the NLRC anchored its decision primarily upon the Memorandum on Appeal. In
the case of Manila Doctors Hospital v. NLRC (153 SCRA 262) this Court ruled that the National Labor
Relations Commission and the Labor Arbiter have authority under the Labor Code to decide a case based
on the position papers and documents submitted without resorting to the technical rules of evidence.
Same; Labor Standards; Overtime Pay; Seamen; Entitlement to overtime pay must first be established by
proof that said overtime work was actually performed, before an employee may avail of said benefit.
Petitioners have conveniently adopted the view that the guaranteed or fixed overtime pay of 30% of
the basic salary per month embodied in their employment contract should be awarded to them as part
of a package benefit. They have theorized that even without sufficient evidence of actual rendition of
overtime work, they would automatically be entitled to overtime pay. They theory is erroneous for
being illogical and unrealistic. Their thinking even runs counter to the intention behind the provision.
The contract provision means that the fixed overtime pay of 30% would be the basis for computing the
overtime pay if and when overtime work would be rendered. Simply, stated, the rendition of overtime
Labor Law 1 Labor Standards Atty. Sevillano Case 155-161

work and the submission of sufficient proof that said work was actually performed are conditions to be
satisfied before a seaman could be entitled to overtime pay which should be computed on the basis of
30% of the basic monthly salary. In short, the contract provision guarantees the right to overtime pay
but the entitlement to such benefit must first be established. Realistically speaking, a seaman, by the
very nature of his job, stays on board a ship or vessel beyond the regular eight-hour work schedule. For
the employer to give him overtime pay for the extra hours when he might be sleeping or attending to his
personal chores or even just lulling away his time would be extremely unfair and unreasonable.
Same; Same; Same; Same; The criterion in determining whether or not seamen are entitled to overtime
pay is not, whether they were on board and can not leave the ship beyond the regular 8-working hours a
day, but whether they actually rendered service in excess of said number of hours.We already resolved
the question of overtime pay of a worker aboard a vessel in the case of National Shipyards and Steel
Corporation v. CIR (3 SCRA 890). We ruled: We can not agree with the Court below that respondent
Malondras should be paid overtime compensation for every hour in excess of the regular working hours
that he was on board his vessel or barge each day, irrespective of whether or not he actually put in work
during those hours. Seamen are required to stay on board their vessels by the very nature of their
duties, and it is for this reason that, in addition to their regular compensation, they are given free living
quarters and subsistence allowances when required to be on board. It could not have been the purpose
of our law to require their employers to pay them overtime even when they are not actually working;
otherwise, every sailor on board a vessel would be entitled to overtime for sixteen hours each day, even
if he spent all those hours resting or sleeping in his bunk, after his regular tour of duty. The correct
criterion in determining whether or not sailors are entitled to overtime pay is not, therefore, whether
they were on board and can not leave ship beyond the regular eight working hours a day, but whether
they actually rendered service in excess of said number of hours. (Italics supplied)

161 Article 87 LC; Hours of Work; Overtime Pay; Premium Pay; Regular Wage
Lagatic vs. National Labor Relations Commission
285 SCRA 251, January 28, 1998

FACTS:

Petitioner seeks, in this petition for certiorari under Rule 65, the reversal of the resolution of the
National Labor Relations Commission dated May 12, 1995, affirming the February 17, 1994, decision of
Labor Arbiter Ricardo C. Nora finding that petitioner had been validly dismissed by private respondent
Cityland Development Corporation (hereafter referred to as Cityland) and that petitioner was not
entitled to separation pay, premium pay and overtime pay.

Petitioner Romeo Lagatic was employed in May 1986 by Cityland, first as a probationary sales agent, and
later on as a marketing specialist. He was tasked with soliciting sales for the company, with the
corresponding duties of accepting callins, referrals, and making client calls and cold calls. Cold calls refer
to the practice of prospecting for clients through the telephone directory.
Labor Law 1 Labor Standards Atty. Sevillano Case 155-161

Sales agent are required to submit daily report on the cold calls which the petitioner failed to do for a
number of days. Thus, a letter was given to him telling him to submit the daily report. Despite reminder,
he continued to fail in submitting the daily report. He was then suspended for three days for the
continuous disobedience. Following the suspension, he still fails to submit the said report. Moreover,
petitioner made it worse for himself when he wrote the statement, TO HELL WITH COLD CALLS! WHO
CARES? A verbal reminder was given to him but, again, failed to comply.

On February 23, 1993, petitioner received a memorandum requiring him to explain why Cityland should
not make good its previous warning for his failure to submit cold call reports, as well as for issuing the
written statement aforementioned. On February 24, 1993, he sent a letter-reply alleging that his failure
to submit cold call reports should not be deemed as gross insubordination. He denied any knowledge of
the damaging statement, TO HELL WITH COLD CALLS!

Finding petitioner guilty of gross insubordination, Cityland served a notice of dismissal upon him on
February 26, 1993. Aggrieved by such dismissal, petitioner filed a complaint against Cityland for illegal
dismissal, illegal deduction, underpayment, overtime and rest day pay, damages and attorneys fees.
The labor arbiter dismissed the petition for lack of merit. On appeal, the same was affirmed by the
NLRC; hence the present recourse.

ISSUE: Whether or not the petitioner is entitled to overtime pay.

HELD:

No, the petitioner is NOT entitled to overtime pay.

With respect to petitioners claims for overtime pay, rest day pay and holiday premiums, Cityland
maintains that Saturday and Sunday call-ins were voluntary activities on the part of sales personnel who
wanted to realize more sales and thereby earn more commissions. It is their contention that sales
personnel were clamoring for the privilege to attend Saturday and Sunday call-ins, as well as to
entertain walk-in clients at project sites during weekends, that Cityland had to stagger the schedule of
sales employees to give everyone a chance to do so. But simultaneously, Cityland claims that the same
were optional because call-ins and walk-ins were not scheduled every weekend. If there really were a
clamor on the part of sales staff to voluntarily work on weekends, so much so that Cityland needed to
schedule them, how come no callins or walk-ins were scheduled on some weekends?

In addition to the above, the labor arbiter and the NLRC sanctioned respondents practice of offsetting
rest day or holiday work with equivalent time on regular workdays on the ground that the same is
authorized by Department Order 21, Series of 1990. As correctly pointed out by petitioner, said D.O. was
misapplied in this case. The D.O. involves the shortening of the workweek from six days to five days but
with prolonged hours on those five days. Under this scheme, non-payment of overtime premiums was
allowed in exchange for longer weekends for employees. In the instant case, petitioners workweek was
never compressed. Instead, he claims payment for work over and above his normal 5 1/2 days of work in
Labor Law 1 Labor Standards Atty. Sevillano Case 155-161

a week. Applying by analogy the principle that overtime cannot be offset by undertime, to allow off-
setting would prejudice the worker. He would be deprived of the additional pay for the rest day work he
has rendered and which is utilized to offset his equivalent time off on regular workdays. To allow
Cityland to do so would be to circumvent the law on payment of premiums for rest day and holiday
work.

Notwithstanding the foregoing discussion, petitioner failed to show his entitlement to overtime and rest
day pay due, to the lack of sufficient evidence as to the number of days and hours when he rendered
overtime and rest day work. Entitlement to overtime pay must first be established by proof that said
overtime work was actually performed, before an employee may avail of said benefit. To support his
allegations, petitioner submitted in evidence minutes of meetings wherein he was assigned to work on
weekends and holidays at Citylands housing projects. Suffice it to say that said minutes do not prove
that petitioner actually worked on said dates. It is a basic rule in evidence that each party must prove his
affirmative allegations. This petitioner failed to do.

REFERENTIAL SYLLABUS:
Labor Law; Dismissals; Two requisites to constitute a valid dismissal from employment.To constitute a
valid dismissal from employment, two requisites must be met, namely: (1) the employee must be
afforded due process, and (2) the dismissal must be for a valid cause.
Same; Same; Company policies and regulations, unless shown to be grossly oppressive or contrary to law,
are generally valid and binding on the parties and must be complied with.Petitioner loses sight of the
fact that (e)xcept as provided for, or limited by, special laws, an employer is free to regulate, according
to his discretion and judgment, all aspects of employment. Employers may, thus, make reasonable
rules and regulations for the government of their employees, and when employees, with knowledge of
an established rule, enter the service, the rule becomes a part of the contract of employment. It is also
generally recognized that company policies and regulations, unless shown to be grossly oppressive or
contrary to law, are generally valid and binding on the parties and must be complied with. Corollarily,
an employee may be validly dismissed for violation of a reasonable company rule or regulation adopted
for the conduct of the company business. An employer cannot rationally be expected to retain the
employment of a person whose x x x lack of regard for his employers rules x x x has so plainly and
completely been bared.
Same; Same; The rule is that denial, if unsubstantiated by clear and convincing evidence, is negative and
self-serving evidence which has no weight in law.Moreover, petitioner made it worse for himself when
he wrote the statement, TO HELL WITH COLD CALLS! WHO CARES? When required to explain, he
merely denied any knowledge of the same. Cityland, on the other hand, submitted the affidavits of his
co-employees attesting to his authorship of the same. Petitioners only defense is denial. The rule,
however, is that denial, if unsubstantiated by clear and convincing evidence, is negative and self-serving
evidence which has no weight in law. More telling, petitioner, while making much capital out of his lack
of opportunity to confront the affiants, never, in all of his pleadings, categorically denied writing the
same. He only denied knowledge of the allegation that he issued such a statement.
Same; Same; Requisites of Willful Disobedience.Based on the foregoing, we find petitioner guilty of
willful disobedience. Willful disobedience requires the concurrence of at least two requisites: the
Labor Law 1 Labor Standards Atty. Sevillano Case 155-161

employees assailed conduct must have been willful or intentional, the willfulness being characterized
by a wrongful and perverse attitude; and the order violated must have been reasonable, lawful, made
known to the employee and must pertain to the duties which he had been engaged to discharge.
Same; Same; Due Process; The twin requirements of notice and hearing constitute the elements of due
process in the dismissal of employees.On the procedural aspect, petitioner claims that he was denied
due process. Well settled is the dictum that the twin requirements of notice and hearing constitute the
elements of due process in the dismissal of employees. Thus, the employer must furnish the employee
with two written notices before the termination of employment can be effected. The first apprises the
employee of the particular acts or omissions for which his dismissal is sought; the second informs him of
the employers decision to dismiss him.
Same; Same; Same; The requirement of a hearing is complied with as long as there was an opportunity
to be heard, and not necessarily that an actual hearing be conducted.Nonetheless, petitioner
contends that he has not been given the benefit of an effective hearing. He alleges that he was not
adequately informed of the results of the investigation conducted by the company, nor was he able to
confront the affiants who attested to his writing the statement, TO HELL WITH COLD CALLS! While we
have held that in dismissing employees, the employee must be afforded ample opportunity to be heard,
ample opportunity connoting every kind of assistance that management must afford the employee to
enable him to prepare adequately for his defense, it is also true that the requirement of a hearing is
complied with as long as there was an opportunity to be heard, and not necessarily that an actual
hearing be conducted. Petitioner had an opportunity to be heard as he submitted a letter-reply to the
charge.
Same; Same; Same; There is no necessity for a formal hearing where an employee admits responsibility
for an alleged misconduct.He, however, adduced no other evidence on his behalf. In fact, he admitted
his failure to submit cold call reports, praying that the same be not considered as gross insubordination.
As held by this Court in Bernardo vs. NLRC, there is no necessity for a formal hearing where an employee
admits responsibility for an alleged misconduct.
Same; Same; Benefits; Entitlement to overtime pay must first be established by proof that said overtime
work was actually performed, before an employee may avail of said benefit.Notwithstanding the
foregoing discussion, petitioner failed to show his entitlement to overtime and rest day pay due, to the
lack of sufficient evidence as to the number of days and hours when he rendered overtime and rest day
work. Entitlement to overtime pay must first be established by proof that said overtime work was
actually performed, before an employee may avail of said benefit. To support his allegations, petitioner
submitted in evidence minutes of meetings wherein he was assigned to work on weekends and holidays
at Citylands housing projects. Suffice it to say that said minutes do not prove that petitioner actually
worked on said dates. It is a basic rule in evidence that each party must prove his affirmative allegations.
This petitioner failed to do.