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Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 142824

December 19, 2001

INTERPHIL LABORATORIES EMPLOYEES


UNION-FFW, ENRICO GONZALES and MA.
THERESA MONTEJO,petitioners,
vs.
INTERPHIL LABORATORIES, INC., AND
HONORABLE LEONARDO A. QUISUMBING,
SECRETARY OF LABOR AND
EMPLOYMENT, respondents.
KAPUNAN, J.:
Assailed in this petition for review on certiorari are
the decision, promulgated on 29 December 1999, and
the resolution, promulgated on 05 April 2000, of the
Court of Appeals in CA-G.R. SP No. 50978.
Culled from the questioned decision, the facts of the
case are as follows:
Interphil Laboratories Employees Union-FFW is the
sole and exclusive bargaining agent of the rank-andfile employees of Interphil Laboratories, Inc., a
company engaged in the business of manufacturing
and packaging pharmaceutical products. They had a
Collective Bargaining Agreement (CBA) effective
from 01 August 1990 to 31 July 1993.
Prior to the expiration of the CBA or sometime in
February 1993, Allesandro G. Salazar,1 VicePresident-Human Resources Department of
respondent company, was approached by Nestor
Ocampo, the union president, and Hernando
Clemente, a union director. The two union officers

inquired about the stand of the company regarding


the duration of the CBA which was set to expire in a
few months. Salazar told the union officers that the
matter could be best discussed during the formal
negotiations which would start soon.
In March 1993, Ocampo and Clemente again
approached Salazar. They inquired once more about
the CBA status and received the same reply from
Salazar. In April 1993, Ocampo requested for a
meeting to discuss the duration and effectivity of the
CBA. Salazar acceded and a meeting was held on 15
April 1993 where the union officers asked whether
Salazar would be amenable to make the new CBA
effective for two (2) years, starting 01 August 1993.
Salazar, however, declared that it would still be
premature to discuss the matter and that the company
could not make a decision at the moment. The very
next day, or on 16 April 1993, all the rank-and-file
employees of the company refused to follow their
regular two-shift work schedule of from 6:00 a.m. to
6:00 p.m., and from 6:00 p.m. to 6:00 a.m. At 2:00
p.m. and 2:00 a.m., respectively, the employees
stopped working and left their workplace without
sealing the containers and securing the raw
materials they were working on. When Salazar
inquired about the reason for their refusal to follow
their normal work schedule, the employees told him
to "ask the union officers." To minimize the damage
the overtime boycott was causing the company,
Salazar immediately asked for a meeting with the
union officers. In the meeting, Enrico Gonzales, a
union director, told Salazar that the employees would
only return to their normal work schedule if the
company would agree to their demands as to the
effectivity and duration of the new CBA. Salazar
again told the union officers that the matter could be
better discussed during the formal renegotiations of
the CBA. Since the union was apparently unsatisfied
with the answer of the company, the overtime boycott
continued. In addition, the employees started to
engage in a work slowdown campaign during the

time they were working, thus substantially delaying


the production of the company.2
On 14 May 1993, petitioner union submitted with
respondent company its CBA proposal, and the latter
filed its counter-proposal.
On 03 September 1993, respondent company filed
with the National Labor Relations Commission
(NLRC) a petition to declare illegal petitioner union's
"overtime boycott" and "work slowdown" which,
according to respondent company, amounted to
illegal strike. The case, docketed NLRC-NCR Case
No. 00-09-05529-93, was assigned to Labor Arbiter
Manuel R. Caday.
On 22 October 1993, respondent company filed with
the National Conciliation and Mediation Board
(NCMB) an urgent request for preventive mediation
aimed to help the parties in their CBA
negotiations.3 The parties, however, failed to arrive at
an agreement and on 15 November 1993, respondent
company filed with the Office of the Secretary of
Labor and Employment a petition for assumption of
jurisdiction.
On 24 January 1994, petitioner union filed with the
NCMB a Notice of Strike citing unfair labor practice
allegedly committed by respondent company. On 12
February 1994, the union staged a strike.
On 14 February 1994, Secretary of Labor Nieves
Confesor issued an assumption order4 over the labor
dispute. On 02 March 1994, Secretary Confesor
issued an order directing respondent company to
"immediately accept all striking workers, including
the fifty-three (53) terminated union officers, shop
stewards and union members back to work under the
same terms and conditions prevailing prior to the
strike, and to pay all the unpaid accrued year end
benefits of its employees in 1993."5 On the other
hand, petitioner union was directed to "strictly and

immediately comply with the return-to-work orders


issued by (the) Office x x x6 The same order
pronounced that "(a)ll pending cases which are direct
offshoots of the instant labor dispute are hereby
subsumed herewith."7
In the i, the case before Labor Arbiter Caday
continued. On 16 March 1994, petitioner union filed
an "Urgent Manifestation and Motion to Consolidate
the Instant Case and to Suspend Proceedings" seeking
the consolidation of the case with the labor dispute
pending before the Secretary of Labor. Despite
objection by respondent company, Labor Arbiter
Caday held in abeyance the proceedings before him.
However, on 06 June 1994, Acting Labor Secretary
Jose S. Brillantes, after finding that the issues raised
would require a formal hearing and the presentation
of evidentiary matters, directed Labor Arbiters Caday
and M. Sol del Rosario to proceed with the hearing of
the cases before them and to thereafter submit their
report and recommendation to his office.
On 05 September 1995, Labor Arbiter Caday
submitted his recommendation to the then Secretary
of Labor Leonardo A. Quisumbing.8 Then Secretary
Quisumbing approved and adopted the report in his
Order, dated 13 August 1997, hence:
WHEREFORE, finding the said Report of
Labor Arbiter Manuel R. Caday to be
supported by substantial evidence, this
Office hereby RESOLVES to APPROVE
and ADOPT the same as the decision in this
case, and judgment is hereby rendered:
(1) Declaring the 'overtime boycott' and
'work slowdown' as illegal strike;
(2) Declaring the respondent union officers
namely:

Nestor Ocampo

President

the now questioned decision promulgated on 29


December 1999, the appellate court dismissed the
petition. The union's motion for reconsideration was
likewise denied.

Carmelo Santos

Vice-President

Hence, the present recourse where petitioner alleged:

Marites Montejo

Treasurer/Board Member

Rico Gonzales

Auditor

Rod Abuan

Director

Segundino Flores

Director

Hernando Clemente

Director

who spearheaded and led the overtime


boycott and work slowdown, to have lost
their employment status; and
(3) Finding the respondents guilty of unfair
labor practice for violating the then existing
CBA which prohibits the union or any
employee during the existence of the CBA
from staging a strike or engaging in
slowdown or interruption of work and
ordering them to cease and desist from
further committing the aforesaid illegal acts.
Petitioner union moved for the reconsideration of the
order but its motion was denied. The union went to
the Court of Appeals via a petition for certiorari. In

THE HONORABLE FIFTH DIVISION OF


THE COURT OF APPEALS, LIKE THE
HONORABLE PUBLIC RESPONDENT
IN THE PROCEEDINGS BELOW,
COMMITTED GRAVE ABUSE OF
DISCRETION, AMOUNTING TO LACK
AND/OR EXCESS OF JURISDICTION
WHEN IT COMPLETELY
DISREGARDED "PAROL EVIDENCE
RULE" IN THE EVALUATION AND
APPRECIATION OF EVIDENCE
PROFERRED BY THE PARTIES.
THE HONORABLE FIFTH DIVISION OF
THE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION,
AMOUNTING TO LACK AND/OR
EXCESS OF JURISDICTION, WHEN IT
DID NOT DECLARE PRIVATE
RESPONDENT'S ACT OF EXTENDING
SUBSTANTIAL SEPARATION PACKAGE
TO ALMOST ALL INVOLVED OFFICERS
OF PETITIONER UNION, DURING THE
PENDENCY OF THE CASE, AS
TANTAMOUNT TO CONDONATION, IF
INDEED, THERE WAS ANY MISDEED
COMMITTED.
THE HONORABLE FIFTH DIVISION OF
THE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION,
AMOUNTING TO LACK AND/OR
EXCESS OF JURISDICTION WHEN IT
HELD THAT THE SECRETARY OF
LABOR AND EMPLOYMENT HAS
JURISDICTION OVER A CASE (A

PETITION TO DECLARE STRIKE


ILLEGAL) WHICH HAD LONG BEEN
FILED AND PENDING BEFORE THE
LABOR ARBITER.9
We sustain the questioned decision.
On the matter of the authority and jurisdiction of the
Secretary of Labor and Employment to rule on the
illegal strike committed by petitioner union, it is
undisputed that the petition to declare the strike
illegal before Labor Arbiter Caday was filed long
before the Secretary of Labor and Employment
issued the assumption order on 14 February 1994.
However, it cannot be denied that the issues of
"overtime boycott" and "work slowdown" amounting
to illegal strike before Labor Arbiter Caday are
intertwined with the labor dispute before the Labor
Secretary. In fact, on 16 March 1994, petitioner union
even asked Labor Arbiter Caday to suspend the
proceedings before him and consolidate the same
with the case before the Secretary of Labor. When
Acting Labor Secretary Brillantes ordered Labor
Arbiter Caday to continue with the hearing of the
illegal strike case, the parties acceded and
participated in the proceedings, knowing fully well
that there was also a directive for Labor Arbiter
Caday to thereafter submit his report and
recommendation to the Secretary. As the appellate
court pointed out, the subsequent participation of
petitioner union in the continuation of the hearing
was in effect an affirmation of the jurisdiction of the
Secretary of Labor.
The appellate court also correctly held that the
question of the Secretary of Labor and Employment's
jurisdiction over labor and labor-related disputes was
already settled in International Pharmaceutical, Inc.
vs. Hon. Secretary of Labor and Associated Labor
Union (ALU)10 where the Court declared:
In the present case, the Secretary was
explicitly granted by Article 263(g) of the

Labor Code the authority to assume


jurisdiction over a labor dispute causing or
likely to cause a strike or lockout in an
industry indispensable to the national
interest, and decide the same accordingly.
Necessarily, this authority to assume
jurisdiction over the said labor dispute must
include and extend to all questions and
controversies arising therefrom, including
cases over which the labor arbiter has
exclusive jurisdiction.
Moreover, Article 217 of the Labor Code is
not without, but contemplates, exceptions
thereto. This is evident from the opening
proviso therein reading '(e)xcept as
otherwise provided under this Code . . .'
Plainly, Article 263(g) of the Labor Code
was meant to make both the Secretary (or
the various regional directors) and the labor
arbiters share jurisdiction, subject to certain
conditions. Otherwise, the Secretary would
not be able to effectively and efficiently
dispose of the primary dispute. To hold the
contrary may even lead to the absurd and
undesirable result wherein the Secretary and
the labor arbiter concerned may have
diametrically opposed rulings. As we have
said, '(i)t is fundamental that a statute is to
be read in a manner that would breathe life
into it, rather than defeat it.
In fine, the issuance of the assailed orders is
within the province of the Secretary as
authorized by Article 263(g) of the Labor
Code and Article 217(a) and (5) of the same
Code, taken conjointly and rationally
construed to subserve the objective of the
jurisdiction vested in the Secretary.11
Anent the alleged misappreciation of the evidence
proffered by the parties, it is axiomatic that the
factual findings of the Labor Arbiter, when
sufficiently supported by the evidence on record,

must be accorded due respect by the Supreme


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

All employees shall observe such rules as


have been laid down by the company for the
purpose of effecting control over working
hours.17
It is evident from the foregoing provision that the
working hours may be changed, at the discretion of
the company, should such change be necessary for its
operations, and that the employees shall observe such
rules as have been laid down by the company. In the
case before us, Labor Arbiter Caday found that
respondent company had to adopt a continuous 24hour work daily schedule by reason of the nature of
its business and the demands of its clients. It was
established that the employees adhered to the said
work schedule since 1988. The employees are
deemed to have waived the eight-hour schedule since
they followed, without any question or complaint, the
two-shift schedule while their CBA was still in force
and even prior thereto. The two-shift schedule
effectively changed the working hours stipulated in
the CBA. As the employees assented by practice to
this arrangement, they cannot now be heard to claim
that the overtime boycott is justified because they
were not obliged to work beyond eight hours.
As Labor Arbiter Caday elucidated in his report:
Respondents' attempt to deny the existence
of such regular overtime schedule is belied
by their own awareness of the existence of
the regular overtime schedule of 6:00 A.M.
to 6:00 P.M. and 6:00 P.M. to 6:00 A.M. of
the following day that has been going on
since 1988. Proof of this is the case
undisputedly filed by the union for and in
behalf of its members, wherein it is claimed
that the company has not been computing
correctly the night premium and overtime
pay for work rendered between 2:00 A.M.
and 6:00 A.M. of the 6:00 P.M. to 6:00 A.M.
shift. (tsn pp. 9-10, testimony of Alessandro
G. Salazar during hearing on August 9,
1994). In fact, the union Vice-President

Carmelo C. Santos, demanded that the


company make a recomputation of the
overtime records of the employees from
1987 (Exh. "P"). Even their own witness,
union Director Enrico C. Gonzales, testified
that when in 1992 he was still a Quality
Control Inspector at the Sucat Plant of the
company, his schedule was sometime at 6:00
A.M. to 6:00 P.M., sometime at 6:00 A.M. to
2:00 P.M., at 2:00 P.M. to 10:00 P.M. and
sometime at 6:00 P.M. to 6:00 A.M., and
when on the 6 to 6 shifts, he received the
commensurate pay (t.s.n. pp. 7-9, hearing of
January 10, 1994). Likewise, while in the
overtime permits, dated March 1, 6, 8, 9 to
12, 1993, which were passed around daily
for the employees to sign, his name
appeared but without his signatures, he
however had rendered overtime during those
dates and was paid because unlike in other
departments, it has become a habit to them
to sign the overtime schedule weekly (t.s.n.
pp. 26-31, hearing of January 10, 1994). The
awareness of the respondent union, its
officers and members about the existence of
the regular overtime schedule of 6:00 A.M.
to 6:00 P.M. and 6:00 P.M. to 6:00 A.M. of
the following day will be further shown in
the discussion of the second issue.18
As to the second issue of whether or not the
respondents have engaged in "overtime
boycott" and "work slowdown" from April
16, 1993 up to March 7, 1994, both
amounting to illegal strike, the evidence
presented is equally crystal clear that the
"overtime boycott" and "work slowdown"
committed by the respondents amounted to
illegal strike.
As undisputably testified to by Mr.
Alessandro G. Salazar, the company's VicePresident-Human Resources Department,
sometime in February, 1993, he was

approached by the union President Nestor


Ocampo and Union Director Hernando
Clemente who asked him as to what was the
stand of the company regarding the duration
of the CBA between the company and which
was set to expire on July 31, 1993. He
answered that the matter could be best
discussed during the formal renegotiations
which anyway was to start soon. This query
was followed up sometime in March, 1993,
and his answer was the same. In early April,
1993, the union president requested for a
meeting to discuss the duration and
effectivity of the CBA. Acceding to the
request, a meeting was held on April 15,
1993 wherein the union officers asked him if
he would agree to make the new CBA
effective on August 1, 1993 and the term
thereof to be valid for only two (2) years.
When he answered that it was still
premature to discuss the matter, the very
next day, April 16, 1993, all the rank and file
employees of the company refused to follow
their regular two-shift work schedule of 6:00
A.M. to 6:00 P.M. and 6:00 P.M. to 6:00
A.M., when after the 8-hours work, they
abruptly stopped working at 2:00 P.M. and
2:00 A.M., respectively, leaving their place
of work without sealing the containers and
securing the raw materials they were
working on. When he saw the workers
leaving before the end of their shift, he
asked them why and their reply was "asked
(sic) the union officers." Alarmed by the
overtime boycott and the damage it was
causing the company, he requested for a
meeting with the union officers. In the
meeting, he asked them why the regular
work schedule was not being followed by
the employees, and union Director Enrico
Gonzales, with the support of the other
union officers, told him that if management
would agree to a two-year duration for the
new CBA and an effectivity date of August

1, 1993, all employees will return to the


normal work schedule of two 12-hour shifts.
When answered that the management could
not decide on the matter at the moment and
to have it discussed and agreed upon during
the formal renegotiations, the overtime
boycott continued and the employees at the
same time employed a work slowdown
campaign during working hours, causing
considerable delay in the production and
complaints from the clients/customers (Exh.
"O", Affidavit of Alessandro G. Salazar
which formed part of his direct testimony).
This testimonial narrations of Salazar was,
as earlier said, undisputed because the
respondents' counsel waived his cross
examination (t.s.n. p. 15, hearing on August
9, 1994).
Aside from the foregoing undisputed
testimonies of Salazar, the testimonies of
other Department Managers pointing to the
union officers as the instigators of the
overtime boycott and work slowdown, the
testimony of Epifanio Salumbides (Exh.
"Y") a union member at the time the
concerted activities of the respondents took
place, is quoted hereunder:
"2. Noon Pebrero 1993, ipinatawag
ng Presidente ng Unyon na si
Nestor Ocampo ang lahat ng tagamaintenance ng bawat
departamento upang dumalo sa
isang miting. Sa miting na iyon,
sinabi ni Rod Abuan, na isang
Direktor ng Unyon, na mayroon
ilalabas na memo ang Unyon na
nag-uutos sa mga empleyado ng
Kompanya na mag-imbento ng
sari-saring dahilan para lang hindi
sila makapagtrabaho ng "overtime".
Sinabihan rin ako ni Tessie
Montejo na siya namang Treasurer

ng Unyon na 'Manny, huwag ka na


lang pumasok sa Biyernes para
hindi ka masabihan ng magtrabaho
ng Sabado at Linggo' na siya
namang araw ng "overtime" ko x x
x
"3. Nakalipas ang dalawang buwan
at noong unang bahagi ng Abril
1993, miniting kami ng Shop
Stewards namin na sina Ariel
Abenoja, Dany Tansiongco at
Vicky Baron. Sinabihan kami na
huwag ng mag-overtime pag
nagbigay ng senyas ang Unyon ng
"showtime."
"4. Noong umaga ng ika-15 ng
Abril 1993, nagsabi na si Danny
Tansiongco ng "showtime". Dahil
dito wala ng empleyadong nagovertime at sabay-sabay silang
umalis, maliban sa akin. Ako ay
pumasok rin noong Abril 17 at 18,
1993 na Sabado at Linggo.
"5. Noong ika-19 ng Abril 1993,
ako ay ipinatawag ni Ariel Abenoja
Shop Steward, sa opisina ng
Unyon. Nadatnan ko doon ang
halos lahat ng opisyales ng Unyon
na sina:

Nestor Ocampo

Presidente

Carmelo Santos

Bise-Presidente

Nanding Clemente

Director

TessMontejo

Chief Stewar

Segundo Flores

Director

Enrico Gonzales

Auditor

Boy Alcantara

Shop Stewar

Rod Abuan

Director

at marami pang iba na hindi ko na


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

xxx

xxx

Likewise, the respondents' denial of having


a hand in the work slowdown since there
was no change in the performance and work
efficiency for the year 1993 as compared to
the previous year was even rebuffed by their
witness Ma. Theresa Montejo, a Quality
Control Analyst. For on cross-examination,
she (Montejo) admitted that she could not
answer how she was able to prepare the
productivity reports from May 1993 to
February 1994 because from April 1993 up
to April 1994, she was on union leave. As
such, the productivity reports she had earlier
shown was not prepared by her since she
had no personal knowledge of the reports
(t.s.n. pp. 32-35, hearing of February 27,
1995). Aside from this admission, the
comparison made by the respondents was of
no moment, because the higher production
for the years previous to 1993 was reached
when the employees regularly rendered
overtime work. But undeniably, overtime
boycott and work slowdown from April 16,
1993 up to March 7, 1994 had resulted not
only in financial losses to the company but
also damaged its business reputation.
Evidently, from all the foregoing,
respondents' unjustified unilateral alteration
of the 24-hour work schedule thru their
concerted activities of "overtime boycott"
and "work slowdown" from April 16, 1993
up to March 7, 1994, to force the petitioner
company to accede to their unreasonable
demands, can be classified as a strike on an
installment basis, as correctly called by
petitioner company x x x19
It is thus undisputed that members of the union by
their own volition decided not to render overtime
services in April 1993.20 Petitioner union even
admitted this in its Memorandum, dated 12 April
1999, filed with the Court of Appeals, as well as in
the petition before this Court, which both stated that

"(s)ometime in April 1993, members of herein


petitioner, on their own volition and in keeping with
the regular working hours in the Company x x x
decided not to render overtime".21 Such admission
confirmed the allegation of respondent company that
petitioner engaged in "overtime boycott" and "work
slowdown" which, to use the words of Labor Arbiter
Caday, was taken as a means to coerce respondent
company to yield to its unreasonable demands.
More importantly, the "overtime boycott" or "work
slowdown" by the employees constituted a violation
of their CBA, which prohibits the union or employee,
during the existence of the CBA, to stage a strike or
engage in slowdown or interruption of
work.22 In Ilaw at Buklod ng Manggagawa vs.
NLRC ,23 this Court ruled:
x x x (T)he concerted activity in question
would still be illicit because contrary to the
workers' explicit contractual commitment
"that there shall be no strikes, walkouts,
stoppage or slowdown of work, boycotts,
secondary boycotts, refusal to handle any
merchandise, picketing, sit-down strikes of
any kind, sympathetic or general strikes, or
any other interference with any of the
operations of the COMPANY during the
term of x x x (their collective bargaining)
agreement."
What has just been said makes unnecessary
resolution of SMC's argument that the
workers' concerted refusal to adhere to the
work schedule in force for the last several
years, is a slowdown, an inherently illegal
activity essentially illegal even in the
absence of a no-strike clause in a collective
bargaining contract, or statute or rule. The
Court is in substantial agreement with the
petitioner's concept of a slowdown as a
"strike on the installment plan;" as a willful
reduction in the rate of work by concerted
action of workers for the purpose of

restricting the output of the employer, in


relation to a labor dispute; as an activity by
which workers, without a complete stoppage
of work, retard production or their
performance of duties and functions to
compel management to grant their demands.
The Court also agrees that such a slowdown
is generally condemned as inherently illicit
and unjustifiable, because while the
employees "continue to work and remain at
their positions and accept the wages paid to
them," they at the same time "select what
part of their allotted tasks they care to
perform of their own volition or refuse
openly or secretly, to the employer's
damage, to do other work;" in other words,
they "work on their own terms." x x x24
Finally, the Court cannot agree with the proposition
that respondent company, in extending substantial
separation package to some officers of petitioner
union during the pendency of this case, in effect,
condoned the illegal acts they committed.
Respondent company correctly postured that at the
time these union officers obtained their separation
benefits, they were still considered employees of the
company. Hence, the company was merely
complying with its legal obligations.25 Respondent
company could have withheld these benefits pending
the final resolution of this case. Yet, considering
perhaps the financial hardships experienced by its
employees and the economic situation prevailing,
respondent company chose to let its employees avail
of their separation benefits. The Court views the
gesture of respondent company as an act of
generosity for which it should not be punished.
WHEREFORE, the petition is DENIED DUE
COURSE and the 29 December 1999 decision of the
Court of Appeals is AFFIRMED.
SO ORDERED.

.R. No. L-15422

November 30, 1962

NATIONAL DEVELOPMENT
COMPANY, petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS and
NATIONAL TEXTILE WORKERS
UNION, respondents.
Government Corporate Counsel Simeon M.
Gopengco and Lorenzo R. Mosqueda for petitioner.
Eulogio R. Lerum for respondent National Textile
Workers Union.
Mariano B. Tuason for respondent Court of
Industrial Relations.
REGALA, J.:
This is a case for review from the Court of Industrial
Relations. The pertinent facts are the following:
At the National Development Co., a governmentowned and controlled corporation, there were four
shifts of work. One shift was from 8 a.m. to 4 p.m.,
while the three other shifts were from 6 a.m. to 2
p.m; then from 2 p.m. to 10 p.m. and, finally, from 10
p.m. to 6 a.m. In each shift, there was a one-hour
mealtime period, to wit: From (1) 11 a.m. to 12 noon
for those working between 6 a.m. and 2 p.m. and
from (2) 7 p.m. to 8 p.m. for those working between
2 p.m. and 10 p.m.
The records disclose that although there was a onehour mealtime, petitioner nevertheless credited the
workers with eight hours of work for each shift and
paid them for the same number of hours. However,
since 1953, whenever workers in one shift were
required to continue working until the next shift,

petitioner instead of crediting them with eight hours


of overtime work, has been paying them for six hours
only, petitioner that the two hours corresponding to
the mealtime periods should not be included in
computing compensation. On the other hand,
respondent National Textile Workers Union whose
members are employed at the NDC, maintained the
opposite view and asked the Court of Industrial
Relations to order the payment of additional overtime
pay corresponding to the mealtime periods.
After hearing, Judge Arsenio I. Martinez of the CIR
issued an order dated March 19, 1959, holding that
mealtime should be counted in the determination of
overtime work and accordingly ordered petitioner to
pay P101,407.96 by way of overtime compensation.
Petitioner filed a motion for reconsideration but the
same was dismissed by the CIR en banc on the
ground that petitioner failed to furnish the union a
copy of its motion.
Thereafter, petitioner appealed to this Court,
contending, first, that the CIR has no jurisdiction
over claims for overtime compensation and,
secondary that the CIR did not make "a correct
appraisal of the facts, in the light of the evidence" in
holding that mealtime periods should be included in
overtime work because workers could not leave their
places of work and rest completely during those
hours.
In support of its contention that the CIR lost its
jurisdiction over claims for overtime pay upon the
enactment of the Industrial Peace Act (Republic Act
No. 875), petitioner cites a number of decisions of
this Court. On May 23, 1960, however, We ruled
in Price Stabilization Corp. v. Court of Industrial
Relations, et al., G.R. No. L-13206, that

Analyzing these cases, the underlying


principle, it will be noted in all of them,
though not stated in express terms, is that
where the employer-employee relationship
is still existing or is sought to be
reestablished because of its wrongful
severance, (as where the employee seeks
reinstatement) the Court of Industrial
Relations has jurisdiction over all claims
arising out of, or in connection with the
employment, such as those related to the
Minimum Wage Law and the Eight-Hour
Labor Law. After the termination of their
relationship and no reinstatement is sought,
such claims become mere money claims,
and come within the jurisdiction of the
regular courts,
We are aware that in 2 cases, some
statements implying a different view have
been made, but we now hold and declare the
principle set forth in the next preceding
paragraph as the one governing all cases of
this nature.
This has been the constant doctrine of this Court
since May 23, 1960.1
A more recent definition of the jurisdiction of the
CIR is found in Campos, et al. v. Manila Railroad
Co., et al., G.R. No. L-17905, May 25, 1962, in
which We held that, for such jurisdiction to come into
play, the following requisites must be complied with:
(a) there must exist between the parties an employeremployee relationship or the claimant must seek his
reinstatement; and (b) the controversy must relate to
a case certified by the President to the CIR as one
involving national interest, or must arise either under

the Eight-Hour Labor Law, or under the Minimum


Wage Law. In default of any of these circumstances,
the claim becomes a mere money claim that comes
under the jurisdiction of the regular courts. Here,
petitioner does not deny the existence of an
employer-employee relationship between it and the
members of the union. Neither is there any question
that the claim is based on the Eight-Hour Labor Law
(Com. Act No. 444, as amended). We therefore rule
in favor of the jurisdiction of the CIR over the
present claim.
The other issue raised in the appeal is whether or not,
on the basis of the evidence, the mealtime breaks
should be considered working time under the
following provision of the law;
The legal working day for any person
employed by another shall be of not more
than eight hours daily.When the work is not
continuous, the time during which the
laborer is not working and can leave his
working place and can rest completely shall
not be counted. (Sec. 1, Com. Act No. 444,
as amended. Emphasis ours.)
It will be noted that, under the law, the idle time that
an employee may spend for resting and during which
he may leave the spot or place of work though not the
premises2 of his employer, is not counted as working
time only where the work is broken or is not
continuous.
The determination as to whether work is continuous
or not is mainly one of fact which We shall not
review as long as the same is supported by evidence.
(Sec. 15, Com. Act No. 103, as amended, Philippine

Newspaper Guild v. Evening News, Inc., 86 Phil.


303).
That is why We brushed aside petitioner's contention
in one case that workers who worked under a 6 a.m.
to 6 p.m. schedule had enough "free time" and
therefore should not be credited with four hours of
overtime and held that the finding of the CIR "that
claimants herein rendered services to the Company
from 6:00 a.m. to 6:00 p.m. including Sundays and
holidays, . . . implies either that they were not
allowed to leave the spot of their working place, or
that they could not rest completely" (Luzon
Stevedoring Co., Inc. v. Luzon Marine Department
Union, et al., G.R. No. L-9265, April 29, 1957).
Indeed, it has been said that no general rule can be
laid down is to what constitutes compensable work,
rather the question is one of fact depending upon
particular circumstances, to be determined by the
controverted in cases. (31 Am. Jurisdiction Sec. 626
pp. 878.)
In this case, the CIR's finding that work in the
petitioner company was continuous and did not
permit employees and laborers to rest completely is
not without basis in evidence and following our
earlier rulings, shall not disturb the same. Thus, the
CIR found:
While it may be correct to say that it is wellhigh impossible for an employee to work
while he is eating, yet under Section 1 of
Com. Act No. 444 such a time for eating can
be segregated or deducted from his work, if
the same is continuous and the employee
can leave his working place rest completely.
The time cards show that the work was

continuous and without interruption. There


is also the evidence adduced by the
petitioner that the pertinent employees can
freely leave their working place nor rest
completely. There is furthermore the aspect
that during the period covered the
computation the work was on a 24-hour
basis and previously stated divided into
shifts.
From these facts, the CIR correctly concluded that
work in petitioner company was continuous and
therefore the mealtime breaks should be counted as
working time for purposes of overtime compensation.
Petitioner gives an eight-hour credit to its employees
who work a single shift say from 6 a.m. to 2 p.m.
Why cannot it credit them sixteen hours should they
work in two shifts?
There is another reason why this appeal should
dismissed and that is that there is no decision by the
CIR en bancfrom which petitioner can appeal to this
Court. As already indicated above, the records show
that petitioner's motion for reconsideration of the
order of March 19, 1959 was dismissed by the
CIR en banc because of petitioner's failure to serve a
copy of the same on the union.
Section 15 of the rules of the CIR, in relation to
Section 1 of Commonwealth Act No. 103, states:
The movant shall file the motion (for
reconsideration), in six copies within five
(5) days from the date on which he receives
notice of the order or decision, object of the
motion for reconsideration, the same to be
verified under oath with respect to the

correctness of the allegations of fact,


and serving a copy thereof personally or by
registered mail, on the adverse party. The
latter may file an answer, in six (6) copies,
duly verified under oath. (Emphasis ours.)
In one case (Bien, et al. v. Castillo, etc., et al., G.R.
No. L-7428, May 24, 1955), We sustained the
dismissal of a motion for reconsideration filed
outside of the period provided in the rules of the CIR.
A motion for reconsideration, a copy of which has
not been served on the adverse party as required by
the rules, stands on the same footing. For "in the very
nature of things, a motion for reconsideration against
a ruling or decision by one Judge is in effect an
appeal to the Court of Industrial Relations, en banc,"
the purpose being "to substitute the decision or order
of a collegiate court for the ruling or decision of any
judge." The provision in Commonwealth Act No. 103
authorizing the presentation of a motion for
reconsideration of a decision or order of the judge to
the CIR,en banc and not direct appeal therefore to
this Court, is also in accord with the principal of
exhaustion of administrative remedies before resort
can be made to this Court. (Broce, et al., v. The Court
of Industrial Relations, et al., G.R. No. L-12367,
October 29, 1959).
Petitioner's motion for reconsideration having been
dismissed for its failure to serve a copy of the same
on the union, there is no decision of the CIR en
banc that petitioner can bring to this Court for review.
WHEREFORE, the order of March 19, 1959 and the
resolution of April 27, 1959 are hereby affirmed and
the appeal is dismissed, without pronouncement as to
costs.

Padilla, Bautista Angelo, Labrador, Concepcion,


Reyes, J.B.L., Barrera, Paredes, Dizon and
Makalintal concur.
Bengzon, C.J., took no part.

G.R. No. 126529 April 15, 1998


EDUARDO B. PRANGAN, petitioner,
vs.
NATIONAL LABOR RELATIONS
COMMISSION (NLRC), MASAGANA
SECURITY SERVICES CORPORATION, and/or
VICTOR C. PADILLA, respondents.

ROMERO, J.:
Private respondent, a corporation engaged in
providing security services to its client, hired
petitioner on November 4, 1980 as one of its security
guards. Thereafter, he was assigned to the Cat House
Bar and Restaurant with a monthly salary of
P2,000.00 until its closure on August 31, 1993.
On May 4, 1994, petitioner filed a complaint 1 against
private respondent for underpayment of wages, nonpayment of salary from August 16-31, 1993, overtime
pay, premium pay for holiday, rest day, night shift
differential, uniform allowance, service incentive
leave pay and 13th month pay from the year 1990 to
1993.
Private respondent, in its position paper, 2 rejected
petitioner's claim alleging it merely acted as an agent
of the latter in securing his employment at the Cat
House Bar and Restaurant. Thus, the liability for the
claims of the petitioner should be charged to Cat
House Bar and its owner, being his direct employer.
In resolving the dispute in a decision dated May 31,
1995, 3 the Labor Arbiter brushed aside the private

respondent's contention that it was merely an agent of


the petitioner and concluded:
WHEREFORE, PREMISES
CONSIDERED, respondents MASAGANA
SECURITY SERVICE CORPORATION
and/or VICTOR C. PADILLA are hereby
ORDERED to pay within ten (10) days from
receipt hereof herein complainant
EDUARDO B. PRANGAN, the total sum of
Nine Thousand Nine Hundred Thirty Two
Pesos & Sixteen Centavos (P9,932.16)
premium pay for holiday and rest days,
night shift differential, service incentive
leave pay, 13th month pay, uniform
allowance, and unpaid salary.
Complainant's other claims as well as
respondents' counter claim are hereby
DISMISSED either for the reason of
prescription and/or lack of merit.
SO ORDERED.

victory was short-lived as the NLRC eventually


dismissed his appeal for lack of merit, 5 the
dispositive portion of the decision reads:
WHEREFORE, the appeal is hereby
dismissed for lack of merit and decision is
affirmed in toto.
SO ORDERED.
Petitioner is now before us imputing grave abuse of
discretion on the part of respondent NLRC (a)
declaring that he rendered only four hours and not
twelve hours of work, and (b) affirming the monetary
award.
The public respondent, through the Solicitor General,
and the private respondent filed their respective
comments on the petition refuting the allegation of
the petitioner. Specifically, they asserted that the
decision was supported by ample evidence showing
that petitioner indeed worked for only four hours and
not twelve hours a day.

Apparently not satisfied with the above-mentioned


monetary award, petitioner appealed to the National
Labor Relations Commission (NLRC) contending
that the Labor Arbiter erred in concluding that he
only worked for four hours and not twelve hours a
day. Evidently, the shorter work hours resulted in a
lower monetary award by the Labor Arbiter.
However, the NLRC dismissed his appeal for failure
to file the same within ten-day reglementary period. 4

A review of the alleged error raised by the instant


petition leads us to conclude that the same is factual
in nature which, as a rule, we do not pass upon. As a
general rule, it is not for us to correct the NLRC's
evaluation of the evidence, as our task is confined to
issues of jurisdiction or grave abuse of
discretion. 6 Obviously, however, the same will not
apply where the evidence requires a reversal or
modification. 7

Undaunted, petitioner failed a motion for


reconsideration which, in the "interest of justice,"
was favorably granted by the NLRC resulting in the
reinstatement of his appeal. Nonetheless, petitioner's

As proof of petitioner's actual hours of work, private


respondent submitted the daily time records allegedly
signed by the petitioner himself showing that he only
worked four hours daily.

In contrast, petitioner argues that these daily time


records were falsified for the simple reason that he
was not required to submit one. He further stressed
that, assuming such documents exist, its authenticity
and due execution are questionable and of doubtful
source.

Complainant (petitioner herein) never made


nor submitted any daily time record with
respondent company considering the fact
that he was assigned to a single post and that
the daily time records he allegedly submitted
with respondent company are all falsified
and his signature appearing therein forged.

We find merit in the petition.


To be sure, findings of fact of quasi-judicial bodies
like the NLRC, particularly when they coincide with
those of the Labor Arbiter, are accorded with respect
even finality if supported by substantial evidence. 8 In
this regard, we have defined substantial evidence as
such amount of relevant evidence which a reasonable
mind might accept as adequate to justify a
conclusion. 9 Absent such quantum of evidence, the
Court is not precluded from making its own
independent evaluation of facts. 10
In the instant case, there is no dispute that matters
concerning an employee's actual hours of work are
within the ambit of management prerogative.
However, when an employer alleges that his
employee work less than the normal hours of
employment as provided for in the law, 11 he bears the
burden of proving his allegation with clear and
satisfactory evidence.
In the instant petition, the NLRC, in declaring that
petitioner only worked for four hours, relied solely on
the supposed daily time records of the petitioner
submitted by the private respondent. 12 We, however,
are of the opinion that these documents cannot be
considered substantial evidence as to conclude that
petitioner only worked for four hours. It is worth
mentioning that petitioner, in his Sur-Rejoinder to
Respondents' Rejoinder, 13 unequivocally stated that:

Private respondent hardly bothered to controvert


petitioner's assertion, much less bolster its own
contention. As petitioner's employer, private
respondent has unlimited access to all relevant
documents and records on the hours of work of the
petitioner. Yet, even as it insists that petitioner only
worked for four hours and not twelve, no
employment contract, payroll, notice of assignment
or posting, cash voucher or any other convincing
evidence which may attest to the actual hours of work
of the petitioner was even presented. Instead, what
the private respondent offered as evidence was only
petitioner's daily time record, which the latter
categorically denied ever accomplishing, much less
signing.
In said alleged daily time record, it showed that
petitioner started work at 10:00 p.m. and would
invariably leave his post at exactly 2:00 a.m.
Obviously, such unvarying recording of a daily time
record is improbable and contrary to human
experience. It is impossible for an employee to arrive
at the workplace and leave at exactly the same time,
day in day out. The very uniformity and regularity of
the entries are "badges of untruthfulness and as such
indices of dubiety. 14
Another consideration which militates against private
respondent's claim is the fact that in the personnel
data sheet of the petitioner, 15 duly signed by the

former's operation manager, it shows on its face that


the latter's hours of work are from 7:00 p.m. to 7:00
a.m. or twelve hours a day. Hence, private respondent
is estopped from assailing the contents of its own
documents.
Further, the attendance sheets of Cat House Bar and
Restaurant 16 showed that petitioner worked from
7:00 p.m. to 7:00 a.m. daily, documents which were
never repudiated by the private respondent.
All told, private respondent has not adequately
proved that petitioner's actual hours of work is only
four hours. Its unexplained silence contravening the
personnel data sheet and the attendance sheets of Cat
House Bar and Restaurant presented by the petitioner
showing he worked for twelve hours, has assumed
the character of an admission. No reason was
proffered for this silence despite private respondent,
being the employer, could have easily done so.
As is well-settled, if doubts exist between the
evidence presented by the employer and the
employee, the scales of justice must be tilted in favor
of the employee. Since it is a time-honored rule that
in controversies between a laborer and his master,
doubts reasonably arising from the evidence, or in the
interpretation of agreements and writings should he
resolved in the former's
favor. 17
WHEREFORE, in view of the foregoing, the instant
petition is hereby GRANTED. Accordingly, the
decision of the NLRC dated July 31, 1996 is hereby
VACATED. Whatever money claims due to the
petitioner shall be computed on the basis of a twelvehour daily work schedule. For this purpose, the case
is hereby REMANDED to the Labor Arbiter for

immediate recomputation of said claims in


accordance with the foregoing findings. No costs.
SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila
EN BANC
G.R. No. L-16275

February 23, 1961

PAN AMERICAN WORLD AIRWAYS SYSTEM


(PHILIPPINES), petitioner,
vs.
PAN AMERICAN EMPLOYEES
ASSOCIATION, respondent.
Ross, Selph and Carrascoso for petitioner.
Jose Espinas for respondent.
REYES, J.B.L., J.:
Appeal by certiorari from the decision of the Court
of Industrial Relations in Case No. 1055-V dated
October 10, 1959, and its resolution en banc denying
the motion for reconsideration filed by the petitioner
herein.
The dispositive portion of the appealed decision
reads: .
WHEREFORE, the Court orders the Chief
of the Examining Division or his
representative to compute the overtime
compensation due the aforesaid fourteen
(14) aircraft mechanic and the two
employees from the Communication
Department based on the time sheet of said
employees from February 23 1952 up to and
including July 15, 1958 and to submit his
report within 30 days for further disposition

by the Court; and the company shall show to


the Court Examiner such time sheets an
other documents that may be necessary in
the aforesaid computation; and two (2)
representatives for the company and two (2)
representatives for the union shall be chosen
to help the Court Examiner in said
computation.
The company is also ordered to permanently
adopt the straight 8-hour shift inclusive of
meal period which is mutually beneficial to
the parties.
SO ORDERED.
In this appeal, petitioner advances five proposition
which, briefly, are as follows: (1) the Industrial Court
has no jurisdiction to order the payment of overtime
compensation, it being a mere monetary claim
cognizable by regular courts; (2) the finding that the
one-hour meal period should be considered overtime
work (deducting 15 minutes as time allotted for
eating) is not supported by substantial evidence; (3)
the court below had no authority to delegate its
judicial functions by ordering the Chief of the
Examining Division or his representative to compute
the overtime pay; (4) the finding that there was no
agreement to withdraw Case No. 1055-V in
consideration of the wage increases in the Collective
Bargaining Contract (Exh. "A") is not supported by
substantial evidence; and (5) the court below had no
authority to order the company to adopt a straight 8hour shift inclusive of meal period.
On the issue of jurisdiction over claims for overtime
pay, we have since definitely ruled in a recent
decisions that the Industrial Court may properly take

cognizance of such cases if, at the time of the


petition, the complainants were still in the service of
the employer, or, having been separated from such
service, should ask for reinstatement; otherwise, such
claims should be brought before the regular courts
(NASSCO v. CIR, et al., L-13888, April 29, 1960;
FRISCO v. CIR, et al., L-13806, May 23, 1960;
Board of Liquidators, et al. vs. CIR, et al., L-15485,
May 23, 1960; Sta. Cecilia, Sawmills Co. vs. CIR, L14254 & L-14255, May 27, 1960; Ajax International
Corp. v. Seguritan, L-16038, October 25, 1960;
Sampaguita Pictures, Inc., et al. vs. CIR, L-16404,
October 25, 1960). Since, in the instant case there is
no question that the employees claiming overtime
compensation were still in the service of the company
when the case was filed, the jurisdiction of the Court
of Industrial Relations cannot be assailed. In fact,
since it is not pretended that, thereafter, the
complainants were discharged or otherwise
terminated their relationship with the company for
any reason, all of said complainants could still be
with the company up to the present.
Petitioner herein claims that the one-hour meal period
should not be considered as overtime work (after
deducting 15 minutes), because the evidence showed
that complainants could rest completely, and were not
in any manner under the control of the company
during that period. The court below found, on the
contrary, that during the so called meal period, the
mechanics were required to stand by for emergency
work; that if they happened not to be available when
called, they were reprimanded by the leadman; that as
in fact it happened on many occasions, the mechanics
had been called from their meals or told to hurry
Employees Association up eating to perform work
during this period. Far from being unsupported by
substantial evidence, the record clearly confirms the
above factual findings of the Industrial Court.

Similarly, this Court is satisfied with the finding that


there was no agreement to withdraw Case No. 1055V in consideration of the wage increases obtained by
the, union and set forth in the Collective Bargaining
Agreement Exhibit "A". As reasoned out by the court
below, such alleged agreement would have been
incorporated in the contract if it existed. The fact that
the union filed a motion to dismiss without prejudice,
after the Collective Bargaining Contract had been
signed, did not necessarily mean that it had agreed to
withdraw the case in consideration of the wage
increases. The motion itself (Annex "B", Petition
for Certiorari) was expressly based on an
understanding that the company would "formulate a
schedule of work which shall be in consonance with
C. A. 444". All in all, there is substantial evidence in
the record to support the finding of the court below
that no such agreement was made.
It is next contended that in ordering the Chief of the
Examining Division or his representative to compute
the compensation due, the Industrial Court unduly
delegated its judicial functions and thereby rendered
an incomplete decision. We do not believe so.
Computation of the overtime pay involves a
mechanical function, at most. And the report would
still have to be submitted to the Industrial Court for
its approval, by the very terms of the order itself.
That there was no specification of the amount of
overtime pay in the decision did not make it
incomplete, since this matter would necessarily be
made clear enough in the implementation of the
decision (see Malate Taxicab & Garage, Inc. vs. CIR,
et al., L-8718, May 11, 1956).
The Industrial Court's order for permanent adoption
of a straight 8-hour shift including the meal period
was but a consequence of its finding that the meal

hour was not one of complete rest, but was actually a


work hour, since for its duration, the laborers had to
be on ready call. Of course, if the Company practices
in this regard should be modified to afford the
mechanics a real rest during that hour (f. ex., by
installing an entirely different emergency crew, or
any similar arrangement), then the modification of
this part of the decision may be sought from the
Court below. As things now stand, we see no warrant
for altering the decision.
The judgment appealed from is affirmed. Costs
against appellant.

G.R. No. L-30452 September 30, 1982


MERCURY DRUG CO., INC., petitioner,
vs.
NARDO DAYAO, ET AL., respondents,
Caparas & Ilagan for petitioner.
Gerardo P. Cabo Chan and Elias Banzali for
respondents.

GUTIERREZ, JR., J.:


This is a petition for review on certiorari of the
decision of the Court of Industrial Relations dated
March 30, 1968 in Case No. 1926-V and the
Resolution of the Court en banc dated July 6, 1968
denying two separate motions for reconsideration
filed by petitioners and respondents.
The factual background of Case No. 1926-V is
summarized by the respondent Court of Industrial
Relations as follows:
This is a verified petition dated
March 17, 1964 which was
subsequently amended on July 31,
1964 filed by Nardo Dayao and 70
others against Mercury Drug Co.,
Inc., and/or Mariano Que, President
& General Manager, and Mercury
Drug Co., Inc., Employees
Association praying, with respect
to respondent corporation and its
president and general manager: 1)
payment of their unpaid back

wages for work done on Sundays


and legal holidays plus 25c/c
additional compensation from date
of their employment up to June 30,
1962; 2) payment of extra
compensation on work done at
night; 3) reinstatement of Januario
Referente and Oscar Echalar to
their former positions with back
salaries; and, as against the
respondent union, for its
disestablishment and the refund of
all monies it had collected from
petitioners.

For reasons stated in the Order


dated March 24, 1965, two Court
resolved the motions to dismiss, as
follows:

In separate motions, respondent


management and respondent union
move to dismiss, the first on the
ground that:

3. The third ground was denied,


holding that there still exists the
employer- employee relationship
between Nardo Dayao and the
management.

I. The petition states no cause of


action.
II. This Court has no jurisdiction
over the subject of the claims of
petitioners Januario Referente and
Oscar Echalar.
III. There is another action pending
between the same parties, namely,
Mercury Drug Co., Inc., and/or
Mariano Que and Nardo Dayao.
while on the other hand, the second alleges that this
Court has no jurisdiction over the acts complained of
against the respondent union.

1. Ground No. 1 of management's


motion to dismiss was denied for
lack of merit.
2. Its second ground was found
meritorious and, accordingly
Januario Referente and Oscar
Echalar were dropped as party
petitioners in this case.

4. With respect to the fourth


ground, the Court held that on the
basis of section 7-A of C.A. No.
444, as amended by R.A. No. 1993,
'it can be safely said that,
counting backward the three (3)
year prescriptive period from the
date of the filing of the instant
petition - March 20, 1964 - all-of
petitioners' claims have not yet
prescribed.'
5. In so far as respondent union's
motion is concerned, the Court held
that 'petitioners' cause of action
against the respondent Association

should be dismissed without


prejudice to the refiling of the same
as an unfair labor practice case.'
Only the respondent management
moved to reconsider the Order of
March 24, 1965 but the same was
denied by the Court en banc in a
resolution dated August 26, 1965.
Respondent submitted an answer to
the amended petition which was
subsequently amended on January
6, 1966, containing some
admissions and some denials of the
material averments of the amended
petition. By way of affirmative and
special defenses,, respondents
alleged that petitioners have no
cause of action against Mariano
Que because their employer
respondent Mercury Drug
Company, Inc., an existing
corporation which has a separate
and distinct personality from its
incorporators stockholders and/or
officer, that the company being a
service enterprise is excluded from
the coverage of the Eight Hour
Labor Law, as amended; that no
court has the power to set wages,
rates of pay, hours of employment,
or other conditions of employment
to the extent of disregarding an
agreement thereon between the
respondent company and the
petitioners, and of fixing night
differential wages; that the
petitioners were fully paid for
services rendered under the terms

and conditions of the individual


contracts of employment; that the
petition having been verified by
only three of the petitioners without
showing that the others authorized
the inclusion of their names as
petitioners does not confer
jurisdiction to this Court; that there
is no employer-employee
relationship between management
and petitioner Nardo Dayao and
that his claim has been released
and/or barred by another action and
that petitioners' claims accuring
before March 20, 1961 have
prescribed." (Annex "P", pp. 110112, rollo).
After hearing on the merits, the respondent court
rendered its decision. The dispositive portion of the
March 30, 1968 decision reads:
IN VIEW OF THE FOREGOING,
the Court hereby resolves that:
1. The claim of the petitioners for
payment of back wages
correspoding to the first four hours
work rendered on every other
Sunday and first four hours on legal
holidays should be denied for lack
of merit.
2. Respondent Mercury Drug
Company, Inc.. is hereby ordered to
pay the sixty- nine (69) petitioners:

(a) An additional
sum equivalent to
25% of their
respective basic
or regular salaries
for services
rendered on
Sundays and
legal holidays
during the period
from March 20.
1961 up to June
30, 1962; and
(b) Another
additional sum or
premium
equivalent to
25% of their
respective basic
or regular salaries
for nighttime
services rendered
from March 20,
1961 up to June
30, 1962.
3. Petitioners' petition to convert
them to monthly employees should
be, as it is hereby, denied for lack
of merit.
4. Respondent Mariano Que, being
an officer and acted only as an
agent in behalf of the respondent
corporation, should be absolved
from the money claims of herein
petitioners whose employer,

according to the pleadings and


evidence, is the Mercury Drug
Company,, Inc.
To expedite the computation of the
money award, the Chief Court
Examiner or his authorized
representative is hereby directed to
proceed to the office of the
respondent corporation at Bambang
Street, Sta. Cruz, Manila, the latter
to make available to said employee
its records, like time records,
payrolls and other pertinent papers,
and compute the money claims
awarded in this decision and, upon
the completion thereof, to submit
his report as soon as possible for
further disposition of the Court.
Not satisfied with the decision, the respondents filed
a motion for its reconsideration. The motion for
reconsideration, was however, denied by the Court en
banc in its Resolution dated July 6, 1968.
Petitioner Mercury Drug Company, Inc., assigned the
following errors in this petition:
I
RESPONDENT CIR ERRED IN
DECLARING THE CONTRACTS
OF EMPLOYMENT, EXHIBITS
"A" AND "B", NULL AND VOID
AS BEING CONTRARY TO
PUBLIC POLICY AND IN
SUSTAINING, ACCORDINGLY,
PRIVATE RESPONDENTS'

CLAIMS FOR 25% SUNDAY


AND LEGAL HOLIDAY
PREMIUMS BECAUSE SUCH
DECLARATION AND AWARD
ARE NOT SUPPORTED BY
SUBSTANTIAL EVIDENCE,
THUS INFRINGING UPON THE
CARDINAL RIGHTS OF THE
PETITIONER; AND ALSO
BECAUSE THE VALIDITY OF
SAID t CONTRACTS OF
EMPLOYMENT HAS NOT BEEN
RAISED.
II
RESPONDENT CIR ERRED IN
SUSTAINING PRIVATE
RESPONDENTS' CLAIMS FOR
NIGHTTIME WORK PREMIUMS
NOT ONLY BECAUSE OF THE
DECLARED POLICY ON
COLLECTIVE BARGAINING
FREEDOM EX. PRESSED IN
REPUBLIC ACT 875 AND THE
EXPRESS PROHIBITION IN
SECTION 7 OF SAID STATUTE,
BUT ALSO BECAUSE OF THE
WAIVER OF SAID CLAIMS AND
THE TOTAL ABSENCE OF
EVIDENCE THEREON.
III
RESPONDENT CIR ERRED IN
MAKING AWARDS IN FAVOR
OF THE PRIVATE
RESPONDENTS WHO NEITHER

GAVE EVIDENCE NOR EVEN


APPEARED TO SHOW THEIR
INTEREST.
Three issues are discussed by the petitioner in its first
assignment of error. The first issue refers to its
allegation that the respondent Court erred in
declaring the contracts of employment null and void
and contrary to law. This allegation is premised upon
the following finding of the respondent court:
But the Court finds merit in the
claim for the payment of additional
compensation for work done on
Sundays and holidays. While an
employer may compel his
employees to perform service on
such days, the law nevertheless
imposes upon him the obligation to
pay his employees at least 25%
additional of their basic or regular
salaries.
No person, firm
or corporation,
business
establishment or
place of 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.
(Section 4, C. A.
No. 444)
(Emphasis
supplied)
Although a service enterprise,
respondent company's employees
are within the coverage of C. A.
No. 444, as amended known as the
Eight Hour Labor Law, for they do
not fall within the category or class
of employees or laborers excluded
from its provisions. (Section 2,
Ibid.)
The Court is not impressed by the
argument that under the contracts
of employment the petitioners are
not entitled to such claim for the
reason that the same are contrary to

law. Payment of extra or additional


pay for services rendered during
Sundays and legal holidays is
mandated by law. Even assuming
that the petitioners had agreed to
work on Sundays and legal
holidays without any further
consideration than their monthly
salaries, they are not barred
nevertheless from claiming what is
due them, because such agreement
is contrary to public policy and is
declared nun and void by law.
Any agreement or contract between
employer and the laborer or
employee contrary to the provisions
of this Act shall be null and void ab
initio.
Under the cited statutory provision,
the petitioners are justified to
receive additional amount
equivalent to 25% of their
respective basic or regular salaries
for work done on Sundays and
legal holidays for the period from
March 20, 1961 to June 30, 1962.
(Decision, pp. 119-120, rollo)
From a perusal of the foregoing statements of the
respondent court, it can be seen readily that the
petitioner-company based its arguments in its first
assignment of error on the wrong premise. The
contracts of employment signed by the private
respondents are on a standard form, an example of
which is that of private respondent Nardo Dayao
quoted hereunder:

Mercury Drug Co., Inc. 1580


Bambang, Manila
October 30, 1959
Mr. Nardo Dayao
1015 Sta. Catalina
Rizal Ave., Exten.
Dear Mr. Dayao:
You are hereby appointed as
Checker, in the Checking
Department of MERCURY DRUG
CO., INC., effective July 1, 1959
and you shall receive an annual
compensation the amount of Two
Thousand four hundred pesos only
(P2,400.00), that includes the
additional compensation for work
on Sundays and legal holidays.
Your firm being a Service
Enterprise, you will be required to
perform work every day in a year
as follows:
8 Hours work on regular days andall special Holidays that may be
declared but with the 25%
additional compensation;
4 Hours work on every other
Sundays of the month;
For any work performed in excess of the hours as
above mentioned, you shall be paid 25 % additional
compensation per hour.

This appointment may be terminated without notice


for cause and without cause upon thirty days written
notice.
This supersedes your appointment of July 1, 1959.
Very truly yours,
MERCURY DRUG CO., INC.
(Sgd.) MARIANO QUE General
Manager
ACCEPTED WITH FULL
CONFORMITY:
(Sgd.) NARDO DAYAO
(EXH. "A" and "l ")
(Decision, pp. 114-115, rollo)
These contracts were not declared by the respondent
court null and void in their entirety. The respondent
court, on the basis of the conflicting evidence
presented by the parties, in effect: 1) rejected the
theory of the petitioner company that the 25%
additional compensation claimed by the private
respondents for the four-hour work they rendered
during Sundays and legal holidays provided in their
contracts of employment were covered by the private
respondents' respective monthly salaries; 2) gave
credence to private respondents', (Nardo Dayao,
Ernesto Talampas and Josias Federico) testimonies
that the 25% additional compensation was not
included in the private respondents' respective
monthly salaries and 3) ruled that any agreement in a
contract of employment which would exclude the
25% additional compensation for work done during

Sundays and holidays is null and void as mandated


by law.
On the second issue, the petitioner-company
reiterated its stand that under the,- respective
contracts of employment of the private respondents,
the subject 25 % additional compensation had already
been included in the latter's respective monthly
salaries. This contention is based on the testimony of
its lone witness, Mr. Jacinto Concepcion and
pertinent exhibits. Thus:
Exhibit A shows that for the period
of October 30, 1960, the annual
compensation of private respondent
Nardo Dayao, including the
additional compensation for the
work he renders during the first
four (4) hours on every other
Sunday and on the eight (8) Legal
Holidays at the time was P2,400.00
or P200.00 per month. These
amounts did not represent basic
salary only, but they represented
the basic daily wage of Nardo
Dayao considered to be in the
amount of P7.36 x 305 ordinary
working days at the time or in the
total amount of P2,144.80. So plus
the amount of P156.40 which is the
equivalent of the Sunday and Legal
Holiday rate at P9.20 basic rate of
P7.36 plus 25% thereof or P1.84) x
17, the latter figure representing 13
Sundays and 4 Legal Holidays of 8
hours each. ...
xxx xxx xxx

That the required minimum 25%


Sunday and Legal Holiday
additional compensation was paid
to and received by the employees
for the work they rendered on every
other Sunday and on the eight
Legal Holidays for the period
October, 1959 to June 30, 1962 is
further corroborated by Exhibits 5,
6, 8, 9 and 9-A and the testimony of
Mr. Jacinto Concepcion thereon.
(Brief for the Petitioner, pp. 24,
27).
The aforesaid computations were not given credence
by the respondent court. In fact the same
computations were not even mentioned in the court's
decision which shows that the court found such
computations incredible. The computations,
supposedly patterned after the WAS Interpretative
Bulletin No. 2 of the Department Labor demonstrated
in Exhibits "6", "7", "8", "9", and "9-A", miserably
failed to show the exact and correct annual salary as
stated in the respective contracts of employment of
the respondent employees. The figures arrived at in
each case did not tally with the annual salaries on to
the employees' contracts of employment, the
difference varying from P1.20 to as much as P14.40
always against the interest of the employees. The
petitioner's defense consists of mathematical
computations made after the filing of the case in
order to explain a clear attempt to make its
employees work without the extra compensation
provided by law on Sundays and legal holidays.
In not giving weight to the evidence of the petitioner
company, the respondent court sustained the private
respondents' evidence to the effect that their 25%

additional compensation for work done on Sundays


and Legal Holidays were not included in their
respective monthly salaries. The private respondents
presented evidence through the testimonies of Nardo
Dayao, Ernesto Talampas, and Josias Federico who
are themselves among the employees who filed the
case for unfair labor practice in the respondent court
and are private respondents herein. The petitionercompany's contention that the respondent court's
conclusion on the issue of the 25% additional
compensation for work done on Sundays and legal
holidays during the first four hours that the private
respondents had to work under their respective
contracts of employment was not supported by
substantial evidence is, therefore, unfounded. Much
less do We find any grave abuse of discretion on the
part of the respondent court in its interpretation of the
employment contract's provision on salaries. In view
of the controlling doctrine that a grave abuse of
discretion must be shown in order to warrant our
disturbing the findings of the respondent court, the
reversal of the court's endings on this matter is
unwarranted. (Sanchez vs. Court of Industrial
Relations, 27 SCRA 490).
The last issue raised in the first assignment of error
refers to a procedural matter. The petitioner-company
contends that ,-the question as to whether or not the
contracts of employment were null and void was not
put in issue, hence, the respondent court pursuant to
the Rules of Court should have refrained from ruling
that such contracts of employment were null and
void. In this connection We restate our finding that
the respondent court did not declare the contracts of
employment null and void in their entirety. Only the
objectionable features violative of law were nullified.
But even granting that the Court of Industrial
Relations declared the contracts of employment
wholly void, it could do so notwithstanding the

procedural objection. In Sanchez u. Court of


Industrial Relations, supra, this Court speaking
through then Justice, now Chief Justice Enrique M.
Fernando, stated:
xxx xxx xxx
Moreover, petitioners appear to be
oblivious of the statutory mandate
that respondent Court in the
hearing, investigation and
determination of any question or
controversy and in the exercise of
any of its duties or power is to act
'according to justice and equity and
substantial merits of the case,
without regard to technicalities or
legal forms and shall not be bound
by any technical rules of legal
evidence' informing its mind 'in
such manner as it may deem just
and equitable.' Again, this Court
has invariably accorded the most
hospitable scope to the breadth and
amplitude with which such
provision is couched. So it has been
from the earliest case decided in
1939 to a 1967 decision.
Two issues are raised in the second
assignment of error by the
petitioner-company. The first
hinges on the jurisdiction of the
respondent court to award
additional compensation for
nighttime work. Petitioner wants
Us to re- examine Our rulings on
the question of nighttime work. It

contends that the respondent court


has no jurisdiction to award
additional compensation for
nighttime work because of the
declared policy on freedom of
collective bargaining expressed in
Republic Act 875 and the express
prohibition in Section 7 of the said
statute. A re- examination of the
decisions on nighttime pay
differential was the focus of
attention in Rheem of the
Philippines, Inc. et al., v. Ferrer, et
al (19 SCRA 130). The earliest
cases cited by the petitionercompany, Naric v. Naric Workers
Union L-12075, - May 29, 1959
and Philippine Engineers'
Syndicate u. Bautista, L-16440,
February 29, 196.4, were discussed
lengthily. Thus xxx xxx xxx
2. On the claim for night
differentials, no extended
discussion is necessary. To be read
as controlling here is Philippine
Engineers' Syndicate, Inc. vs. Hon.
Jose S. Bautista, et al., L-16440,
February 29, 1964, where this
Court, speaking thru Mr. Chief
Justice Cesar Bengzon, declared
Only one issue is
raised: whether
or not upon the
enactment of

Republic Act
875, the CIR lost
its jurisdiction
over claims for
additional
compensation for
regular night
work. Petitioner
says that this Act
reduced the
jurisdiction of
respondent court
and limited it to
specific cases
which this Court
has defined as: ...
(1) when the
labor dispute
affects an
industry which is
indispensable to
the national
interest and is so
certified by the
President to the
industrial court
(Sec. 10,
Republic Act
875); (2) when
the controversy
refers to
minimum wage
under the
Minimum Wage
Law (Republic
Act 602); (3)
when it involves
hours of
employment

under the EightHour Labor Law


(Commonwealth
Act 444) and (4)
when it involves
an unfair labor
practice [Sec.
5(a), Republic
Act 8751', [Paflu,
et al. vs. Tan, et
al., 52 Off. Gaz,
No. 13, 5836].
Petitioner insists
that respondents'
case falls in none
of these
categories
because as held
in two previous
cases, night work
is not overtime
but regular work;
and that
respondent
court's authority
to try the case
cannot be implied
from its general
jurisdiction and
broad powers'
under
Commonwealth
Act 103 because
Republic Act 875
precisely curbed
such powers
limiting them to
certain specific

litigations,
beyond which it
is not permitted
to act.
We believe petitioner to be in error.
Its position collides with our ruling
in the Naric case [National Rice &
Corn Corp. (NARIC) vs. NARIC
Workers' Union, et al., G.R. No. L12075, May 29, 1959] where we
held;
While it is true
that this Court
made the above
comment in the
aforementioned
case, it does not
intend to convey
the Idea that
work done at
night cannot also
be an overtime
work. The
comment only
served to
emphasize that
the demand
which the Shell
Company made
upon its laborers
is not merely
overtime work
but night work
and so there was
need to
differentiate night

work from
daytime work. In
fact, the company
contended that
there was no law
that required the
payment of
additional
compensation for
night work unlike
an overtime work
which is covered
by
Commonwealth
Act No. 444
(Eight Hour
Labor Law). And
this Court in that
case said that
while there was
no law actually
requiring
payment of
additional
compensation for
night work, the
industrial court
has the power to
determine the
wages that night
workers should
receive under
Commonwealth
Act No. 103, and
so it justified the
additional
compensation in
the Shell case for
'hygienic,

medical, moral,
cultural and
sociological
reasons.
xxx xxx xxx
True, in Paflu, et al. vs. Tan, et al., supra, and in a
series of cases thereafter, We held that the broad
powers conferred by Commonwealth Act 103 on the
CIR may have been curtailed by Republic Act 875
which limited them to the four categories therein
expressed in line with the public policy of allowing
settlement of industrial disputes via the collective
bargaining process; but We find no cogent reason for
concluding that a suit of this nature for extra
compensation for night work falls outside the domain
of the industrial court. Withal, the record does not
show that the employer-employee relation between
the 64 respondents and the petitioner had ceased.
After the passage of Republic Act 875, this Court has
not only upheld the industrial court's assumption of
jurisdiction over cases for salary differentials and
overtime pay [Chua Workers Union (NLU) vs. City
Automotive Co., et al., G.R. No. L- 11655, April 29,
1959; Prisco vs. CIR, et al., G.R. No. L-13806, May
23, 1960] or for payment of additional compensation
for work rendered on Sundays and holidays and for
night work [Nassco vs. Almin, et al., G.R. No.
L9055, November 28, 1958; Detective & Protective
Bureau, Inc. vs. Felipe Guevara, et al., G.R. No. L8738, May 31, 1957] but has also supported such
court's ruling that work performed at night should be
paid more than work done at daytime, and that if that
work is done beyond the worker's regular hours of
duty, he should also be paid additional compensation
for overtime work. [Naric vs. Naric Workers' Union.

et al., G. R No. L-12075, May 29, 1959, citing Shell


Co. vs. National Labor Union, 81 Phil. 315]. Besides,
to hold that this case for extra compensation now
falls beyond the powers of the industrial court to
decide, would amount to a further curtailment of the
jurisdiction of said court to an extent which may
defeat the purpose of the Magna Carta to the
prejudice of labor.' [Luis Recato Dy, et al v-9. CIR,
G.R. No. L-17788, May 25,1962]"
The petitioner-company's arguments on the
respondent court's alleged lack of jurisdiction over
additional compensation for work done at night by
the respondents is without merit.
The other issue raised in the second assignment of
error is premised on the petitioner-company's
contention that the respondent court's ruling on the
additional compensation for nighttime work is not
supported by substantial evidence.
This contention is untenable. Pertinent portions of the
respondent court's decision read:
xxx xxx xxx
There is no serious disagreement
between the petitioners and
respondent management on the
facts recited above. The variance in
the evidence is only with respect to
the money claims. Witnesses for
petitioners declared they worked on
regular days and on every other
Sunday and also during all
holidays; that for services rendered
on Sundays and holidays they were
not paid for the first four (4) hours

and what they only received was


the overtime compensation
corresponding to the number of
hours after or in excess of the first
four hours; and that such payment
is being indicated in the overtime
pay for work done in excess of
eight hours on regular working
days. It is also claimed that their
nighttime services could well be
seen on their respective daily time
records. .. (Emphasis supplied)
(p.116, rollo)
The respondent court's ruling on additional
compensation for work done at night is, therefore, not
without evidence. Moreover, the petitioner-company
did not deny that the private respondents rendered
nighttime work. In fact, no additional evidence was
necessary to prove that the private respondents were
entitled to additional compensation for whether or not
they were entitled to the same is a question of law
which the respondent court answered correctly. The
"waiver rule" is not applicable in the case at bar.
Additional compensation for nighttime work is
founded on public policy, hence the same cannot be
waived. (Article 6, Civil Code). On this matter, We
believe that the respondent court acted according to
justice and equity and the substantial merits of the
case, without regard to technicalities or legal forms
and should be sustained.
The third assignment of error is likewise without
merit. The fact that only three of the private
respondents testified in court does not adversely
affect the interests of the other respondents in the
case. The ruling in Dimayuga V. Court of Industrial
Relations (G.R. No. L-0213, May 27, 1957) has been

abandoned in later rulings of this Court.In Philippine


Land Air-Sea Labor Union (PLASLU) vs. Sy Indong
Company Rice And Corn Mill (11 SCRA 277) We had
occasion to re-examine the ruling in Dimayuga We
stated:
The latter reversed the decision of
the trial Judge as regards the
reinstatement with backwages of ...
upon the theory that this is not a
class suit; that, consequently, it is
necessary and imperative that they
should personally testify and prove
the charges in the complaint', and
that, having failed to do so, the
decision of the trial Judge in their
favor is untenable under the rule
laid down in Dimayuga vs. Court
of Industrial Relations, G.R. No. L0213 (May 27,1957).
We do not share the view taken in
the resolution appealed from. As
the trial Judge correctly said, in Ms
dissent from said resolution,:
xxx xxx xxx
In the case of Sanchez v. Court of Industrial
Relations, supra, this Court stated:
To the reproach against the
challenged order in the brief of
petitioners in view of only two of
the seven claimants testifying, a
statement by this Court in Ormoc
Sugar Co., Inc. vs. OSCO Workers
Fraternity Labor Union would

suffice by way of refutation. Thus:


"This Court fully agrees with the
respondent that quality and not
quantity of witnesses should be the
primordial consideration in the
appraisal of evidence.' Barely eight
days later, in another decision, the
above statement was given concrete
expression. Thus: 'The bases of the
awards were not only the respective
affidavits of the claimants but the
testimonies of 24 witnesses
(because 6 were not given credence
by the court below) who Identified
the said 239 claimants. The
contention of petitions on this point
is therefore unfounded Moveover
in Philippine Land-Air-Sea Labor
Union (PLASLU) v. Sy Indong
company Rice & Corn Mill, this
Court, through the present Chief
Justice rejected as untenable the
theory of the Court of Industrial
Relations concerning the
imperative needs of all the
claimants to testify personality and
prove their charges in the
complaint. As tersely put: 'We do
not share the view taken in the
resolution appealed from.
The petitioner's contention that its employees fully
understood what they signed when they entered into
the contracts of employment and that they should be
bound by their voluntary commitments is
anachronistic in this time and age.

The Mercury Drug Co., Inc., maintains a chain of


drugstores that are open every day of the week and,
for some stores, up to very late at night because of
the nature of the pharmaceutical retail business. The
respondents knew that they had to work Sundays and
holidays and at night, not as exceptions to the rule but
as part of the regular course of employment.
Presented with contracts setting their compensation
on an annual basis with an express waiver of extra
compensation for work on Sundays and holidays, the
workers did not have much choice. The private
respondents were at a disadvantage insofar as the
contractual relationship was concerned. Workers in
our country do not have the luxury or freedom of
declining job openings or filing resignations even
when some terms and conditions of employment are
not only onerous and inequitous but illegal. It is
precisely because of this situation that the framers of
the Constitution embodied the provisions on social
justice (Section 6, Article 11) and protection to labor
(Section 9, Article I I) in the Declaration of Principles
And State Policies.
It is pursuant to these constitutional mandates that the
courts are ever vigilant to protect the rights of
workers who are placed in contractually
disadvantageous positions and who sign waivers or
provisions contrary to law and public policy.
WHEREFORE, the petition is hereby dismissed. The
decision and resolution appealed from are affirmed
with costs against the petitioner.
SO ORDERED.

[G.R. No. 146073. January 13, 2003.]


JERRY E. ACEDERA, ANTONIO PARILLA,
AND OTHERS LISTED IN ANNEX "A,"
1 Petitioners-Appellants, v. INTERNATIONAL
CONTAINER TERMINAL SERVICES, INC.
(ICTSI), NATIONAL LABOR RELATIONS
COMMISSION and HON. COURT OF
APPEALS, Respondents-Appellants.

Collective Bargaining Agreement (CBA) with


APCWU with a term of five years effective until
September 28, 1995. 3 The CBA was renegotiated
and thereafter renewed through a second CBA that
took effect on September 29, 1995, effective for
another five years. 4 Both CBAs contained an
identically-worded provision on hours and days of
work reading:chanrob1es virtual 1aw library
Article IX

DECISION

In early 1997, ICTSI went on a retrenchment


program and laid off its on-call employees. 10 This
prompted the APCWU-ICTSI to file a notice of strike
which included as cause of action not only the
retrenchment of the employees but also ICTSIs use
of 365 days as divisor in the computation of wages.
11 The dispute respecting the retrenchment was
resolved by a compromise settlement 12 while that
respecting the computation of wages was referred to
the Labor Arbiter. 13

Regular Hours of Work and Days of Labor


CARPIO MORALES, J.:
For consideration is the petition for review
on certiorari assailing the decision of the Court of
Appeals affirming that of the National Labor
Relations Commission (NLRC) which affirmed the
decision of the Labor Arbiter denying herein
petitioners-appellants Complaint-in-Intervention
with Motion for Intervention.chanrob1es virtua1 1aw
1ibrary
The antecedent facts are as follows:chanrob1es
virtual 1aw library
Petitioners-appellants Jerry Acedera, Et. Al. are
employees of herein private respondent International
Container Terminal Services, Inc. (ICTSI) and are
officers/members of Associated Port Checkers &
Workers Union-International Container Terminal
Services, Inc. Local Chapter (APCWU-ICTSI), a
labor organization duly registered as a local affiliate
of the Associated Port Checkers & Workers Union
(APCWU).
When ICTSI started its operations in 1988, it
determined the rate of pay of its employees by using
304 days, the number of days of work of the
employees in a year, as divisor. 2
On September 28, 1990, ICTSI entered into its first

Section 1. The regular working days in a week shall


be five (5) days on any day from Monday to Sunday,
as may be scheduled by the COMPANY, upon seven
(7) days prior notice unless any of this day is
declared a special holiday. 5 (Emphasis omitted)
In accordance with the above-quoted provision of the
CBA, the employees work week was reduced to five
days or a total of 250 days a year. ICTSI, however,
continued using the 304-day divisor in computing the
wages of the employees. 6
On November 10, 1990, the Regional Tripartite Wage
and Productivity Board (RTWPB) in the National
Capital Region decreed a P17.00 daily wage increase
for all workers and employees receiving P125.00 per
day or lower in the National Capital Region. 7 The
then president of APCWU, together with some union
members, thus requested the ICTSIs Human
Resource Department/Personnel Manager to compute
the actual monthly increase in the employees wages
by multiplying the RTWPB mandated increase by
365 days and dividing the product by 12 months. 8
Heeding the proposal and following the
implementation of the new wage order, ICTSI
stopped using 304 days as divisor and started using
365 days in determining the daily wage of its
employees and other consequential compensation,
even if the employees work week consisted of only
five days as agreed upon in the CBA. 9

On February 26, 1997, APCWU, on behalf of its


members and other employees similarly situated,
filed with the Labor Arbiter a complaint against
ICTSI which was dismissed for APCWUs failure to
file its position paper. 14 Upon the demand of herein
petitioners-appellants, APCWU filed a motion to
revive the case which was granted. APCWU
thereupon filed its position paper on August 22, 1997.
15
On December 8, 1997, petitioners-appellants filed
with the Labor Arbiter a Complaint-in-Intervention
with Motion to Intervene. 16 In the petition at bar,
they justified their move to intervene in this
wise:chanrob1es virtual 1aw library
[S]hould the union succeed in prosecuting the case
and in getting a favorable reward it is actually they
that would benefit from the decision. On the other
hand, should the union fail to prove its case, or to
prosecute the case diligently, the individual workers
or members of the union would suffer great and
immeasurable loss. . . . [t]hey wanted to insure by
their intervention that the case would thereafter be
prosecuted with all due diligence and would not
again be dismissed for lack of interest to prosecute on
the part of the union. 17
The Labor Arbiter rendered a decision, the
dispositive portion of which reads:chanrob1es virtual
1aw library

WHEREFORE, decision is hereby rendered declaring


that the correct divisor in computing the daily wage
and other labor standard benefits of the employees of
respondent ICTSI who are members of complainant
Union as well as the other employees similarly
situated is two hundred fifty (250) days such that said
respondent is hereby ordered to pay the employees
concerned the differentials representing the
underpayment of said salaries and other benefits
reckoned three (3) years back from February 26,
1997, the date of filing of this complaint or computed
from February 27 1994 until paid, but for purposes of
appeal, the salary differentials are temporarily
computed for one year in the amount of Four
Hundred Sixty Eight Thousand Forty Pesos
(P468,040.00). 18
In the same decision, the Labor Arbiter denied
petitioners-appellants Complaint-in-Intervention
with Motion for Intervention upon a finding that they
are already well represented by APCWU. 19
On appeal, the NLRC reversed the decision of the
Labor Arbiter and dismissed APCWUs complaint for
lack of merit. 20 The denial of petitioners-appellants
intervention was, however, affirmed. 21
Unsatisfied with the decision of the NLRC, APCWU
filed a petition for certiorari with the Court of
Appeals while petitioners-appellants filed theirs with
this Court which referred the petition 22 to the Court
of Appeals.
The Court of Appeals dismissed APCWUs petition
on the following grounds: failure to allege when its
motion for reconsideration of the NLRC decision was
filed, failure to attach the necessary appendices to the
petition, and failure to file its motion for extension to
file its petition within the reglementary period. 23
As for petitioners-appellants petition for certiorari, it
was dismissed by the Court of Appeals in this
wise:chanrob1es virtual 1aw library

It is clear from the records that herein petitioners,


claiming to be employees of respondent ICTSI, are
already well represented by its employees union,
APCWU, in the petition before this Court (CA-G.R.
SP. No. 53266) although the same has been
dismissed. The present petition is, therefore a
superfluity that deserves to be dismissed.
Furthermore, only Acedera signed the Certificate of
non-forum shopping. On this score alone, this
petition should likewise be dismissed. We find that
the same has no merit considering that herein
petitioners have not presented any meritorious
argument that would justify the reversal of the
Decision of the NLRC.
Article IX of the CBA provides:chanrob1es virtual
1aw library
REGULAR HOURS OF WORK AND DAYS OF
LABOR
"Section 1. The regular working days in a week shall
be five (5) days on any day from Monday to Sunday,
as may be scheduled by the COMPANY, upon seven
(7) days prior notice unless any of this day is
declared a special holiday."cralaw virtua1aw library
This provision categorically states the required
number of working days an employee is expected to
work for a week. It does not, however, indicate the
manner in which an employees salary is to be
computed. In fact, nothing in the CBA makes any
referral to any divisor which should be the basis for
determining the salary. The NLRC, therefore,
correctly ruled that." . . the absence of any express or
specific provision in the CBA that 250 days should be
used as divisor altogether makes the position of the
Union untenable."cralaw virtua1aw library
x

Considering that herein petitioners themselves


requested that 365 days be used as the divisor in

computing their wage increase and later did not raise


or object to the same during the negotiations of the
new CBA, they are clearly estopped to now complain
of such computation only because they no longer
benefit from it. Indeed, the 365 divisor for the past
seven (7) years has already become practice and law
between the company and its employees. 24
(Emphasis supplied)
x

Hence, the present petition of petitioners-appellants


who fault the Court of Appeals as follows:chanrob1es
virtual 1aw library
I
. . . IN REJECTING THE CBA OF THE PARTIES
AS THE SOURCE OF THE DIVISOR TO
DETERMINE THE WORKERS DAILY RATE
TOTALLY DISREGARDED THE APPLICABLE
LANDMARK DECISIONS OF THE HONORABLE
SUPREME COURT ON THE MATTER.
II
. . . [IN] DISREGARD[ING] APPLICABLE
DECISIONS OF THIS HONORABLE COURT
WHEN IT RULED THAT THE PETITIONERSAPPELLANTS ARE ALREADY IN ESTOPPEL.
III
. . . IN RULING THAT THE PETITIONERSAPPELLANTS HAVE NO LEGAL RIGHT TO
INTERVENE IN AND PURSUE THIS CASE AND
THAT THEIR INTERVENTION IS A
SUPERFLUITY.

IV
. . . IN HOLDING, ALTHOUGH MERELY AS AN
OBITER DICTUM, THAT ONLY PETITIONER
JERRY ACEDERA SIGNED THE CERTIFICATE
OF NON-FORUM SHOPPING.25cralaw:red
The third assigned error respecting petitionersappellants right to intervene shall first be passed
upon, it being determinative of their right to raise the
other assigned errors.
Petitioners-appellants anchor their right to intervene
on Rule 19 of the 1997 Rules of Civil Procedure,
Section 1 of which reads:chanrob1es virtual 1aw
library
Section 1. Who may intervene. A person who has
legal interest in the matter in litigation, or in the
success of either of the parties, or an interest against
both, or is so situated to be adversely affected by a
distribution or other disposition of property in the
custody of the court or of an officer thereof may, with
leave of court, be allowed to intervene in the action.
The court shall consider whether or not the
intervention will unduly delay or prejudice the
adjudication of the rights of the original parties, and
whether or not the intervenors right may be fully
protected in a separate proceeding.
They stress that they have complied with the
requisites for intervention because (1) they are the
ones who stand to gain or lose by the direct legal
operation and effect of any judgment that may be
rendered in this case, (2) no undue delay or prejudice
would result from their intervention since their
Complaint-in-Intervention with Motion for
Intervention was filed while the Labor Arbiter was
still hearing the case and before any decision thereon
was rendered, and (3) it was not possible for them to
file a separate case as they would be guilty of forum
shopping because the only forum available for them
was the Labor Arbiter. 26

appellants failed to proffer.


Petitioners-appellants, however, failed to consider, in
addition to the rule on intervention, the rule on
representation, thusly:chanrob1es virtual 1aw library
Sec. 3. Representatives as parties. Where the
action is allowed to be prosecuted or defended by a
representative or someone acting in a fiduciary
capacity, the beneficiary shall be included in the title
of the case and shall be deemed to be the real party in
interest. A representative may be a trustee of an
express trust, a guardian, an executor or
administrator, or a party authorized by law or these
Rules . . . 27 (Emphasis supplied)
A labor union is one such party authorized to
represent its members under Article 242(a) of the
Labor Code which provides that a union may act as
the representative of its members for the purpose of
collective bargaining. This authority includes the
power to represent its members for the purpose of
enforcing the provisions of the CBA. That APCWU
acted in a representative capacity "for and in behalf
of its Union members and other employees similarly
situated," the title of the case filed by it at the Labor
Arbiters Office so expressly states.
While a party acting in a representative capacity, such
as a union, may be permitted to intervene in a case,
ordinarily, a person whose interests are already
represented will not be permitted to do the same 28
except when there is a suggestion of fraud or
collusion or that the representative will not act in
good faith for the protection of all interests
represented by him. 29
Petitioners-appellants cite the dismissal of the case
filed by ICTSI, first by the Labor Arbiter, and later by
the Court of Appeals. 30 The dismissal of the case
does not, however, by itself show the existence of
fraud or collusion or a lack of good faith on the part
of APCWU. There must be clear and convincing
evidence of fraud or collusion or lack of good faith
independently of the dismissal. This, petitioners-

Petitioners-appellants likewise express their fear that


APCWU would not prosecute the case diligently
because of its "sweetheart relationship" with ICTSI.
31 There is nothing on record, however, to support
this alleged relationship which allegation surfaces as
a mere afterthought because it was never raised early
on. It was raised only in petitioners-appellants reply
to ICTSIs comment in the petition at bar, the last
pleading submitted to this Court, which was filed on
June 20, 2001 or more than 42 months after
petitioners-appellants filed their Complaint-inIntervention with Motion to Intervene with the Labor
Arbiter.chanrob1es virtua1 1aw 1ibrary
To reiterate, for a member of a class to be permitted
to intervene in a representative action, fraud or
collusion or lack of good faith on the part of the
representative must be proven. It must be based on
facts borne on record. Mere assertions, as what
petitioners-appellants proffer, do not suffice.
The foregoing discussion leaves it unnecessary to
discuss the other assigned errors.
WHEREFORE, the present petition is hereby
DENIED.

G.R. No. L-39387 June 29, 1982


PAMPANGA SUGAR DEVELOPMENT CO.,
INC., petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS AND
SUGAR WORKERS ASSOCIATION,
respondents.

MAKASIAR, J.:
Petitioner Pampanga Sugar Development Company,
Inc. seeks the reversal of the order dated June 6, 1974
of respondent Court of Industrial Relations awarding
to respondent Sugar Workers Association's (Union)
counsel attorney's fees equivalent to 20% of the
judgment in CIR Case No. 4264- ULP and ordering
the lower court's Examining Division to compute the
wage and fringe benefits differentials due the 28
individual workers who did not execute quitclaims as
well as attorney's fees corresponding to 20% of the
benefits due to 53 workers who entered into
agreements waiving their rights and benefits under
the decision dated December 4, 1972 in the aforecited
case; also, the setting aside of the CIR resolution of
September 3, 1974 denying petitioner's motion for
reconsideration of the questioned order (pp. 15 & 57,
rec.).
For a better appreciation of this case, certain
prefatory facts must be recalled. Sometime in
February, 1956, the workers' affiliates of respondent
Union staged a strike against petitioner company.
This labor dispute was certified by the President to
the Court of Industrial Relations which was docketed
as Case No. 13-IPA. After six years, the said Court

issued an order on November 8, 1962 directing


petitioner company to reinstate the members of
respondent union. On March 12, 1963 some 88 union
members were thus reinstated by petitioner. However,
petitioner discriminated against the reemployed
workers with respect to wage rates, off-season pay,
cost of living allowance, milling bonus and
Christmas bonus by depriving them of aforesaid
benefits or by granting to some members benefits
lesser than those given to members of the Pasudeco
Workers Union, another labor group in the service of
petitioner. By reason of such denial and/or grant of
lower benefits to respondent's members because of
their union affiliation and union activities, respondent
filed with the CIR a complaint dated September 10,
1964 for unfair labor practice against petitioner
which case was docketed as Case No. 4264-ULP.
On December 4, 1972, the CIR handed down a
decision adjudging herein petitioner guilty of unfair
labor practice acts as charged and finding the same to
have been committed, and thereby directing
petitioner to cease and desist from further committing
the said unfair labor practice acts and directing
petitioner to pay wage differentials to certain workers
and fringe benefits as would be found due and
payable to them and to readmitted seasonal and
casual members of respondent union totalling 88 with
the exception of 7 workers.
In a resolution dated May 28, 1973, the CIR denied
petitioner's motion for reconsideration of aforesaid
decision filed on December 14, 1972. Petitioner
appealed the above decision and resolution to this
Court on June 15, 1973 praying in its petition for the
nullification of said decision and motion for being
contrary to law, and for the rendition of a new
judgment dismissing CIR Case No. 4264-ULP.

This Court, in its resolution of July 31, 1973, denied


the said petition for review (docketed as G.R. No. L36994) for lack of merit. Petitioner then moved for
reconsideration of aforesaid denial which was denied
on October 4, 1973 for lack of merit. Said resolution
denying the motion for reconsideration thus became
final and executory on October 12, 1973.
With the finality of the December 4, 1972 decision
having been settled, respondent Union filed with the
CIR a motion for computation of final judgment and
a petition for attorney's lien both dated October 17,
1973 (pp. 47 & 50, rec.).
Petitioner company filed its answer to motion for
computation of final judgment and the petition for
attorney's lien under date of November 20, 1973 (p.
52, rec.).
The CIR, acting on the aforesaid motions of
respondent Union, issued its order of June 6, 1974
approving and granting to respondent's counsel, Atty.
Ignacio Lacsina, attorney's fees equivalent to 20% of
the total amount of final judgment or whatever
recovery or settlement is made and directing its
Examining Division to compute the wage and fringe
benefits differentials due the 28 individual workers
who did not waive or quitclaim their rights
established by the decision of December 4, 1972 as
well as the attorney's fees equivalent to 20% of the
total wage and fringe benefits differentials due the
fifty-three (53) individual workers who executed
agreements with the company waiving and
quitclaiming their rights, benefits and privileges
under the aforesaid decision (pp. 15 & 57, rec.).
Petitioner moved for reconsideration of aforecited
order on June 26, 1974 and on July 5, 1974, the

arguments supporting said motion for reconsideration


followed (pp. 63 & 65, rec.).
Respondent Union then filed its motion to strike out
the motion for reconsideration dated July 23, 1974 (p.
72, rec.). In a resolution of September 3, 1974,
respondent lower court denied petitioner's motion for
reconsideration.
Thus, this appeal from the subject order and
resolution of the CIR.
Petitioner alleges the following assignment of errors:
1. The Court of Industrial Relations erred in awarding
attorney's fees to the union's counsel equivalent to
20% of the total amount of final judgment or
whatever recovery or settlement is made thereunder;
because, aside from being inequitable, exorbitant,
excessive and unconscionable, the same is without
legal basis.

and fringe benefits differentials allegedly due the


members of the union under the decision of
December 4, 1972.

well-settled doctrine in this jurisdiction that issues


not raised in the trial court may not be raised on
appeal. Otherwise, there will be no end to litigations
thus defeating the ends of justice.

Respondents, however, contend that


1. The issue of quitclaims is
now res judicata;
2. The CIR finding that 81
members of respondent union are
entitled to adjudged benefits is no
longer alterable after decision has
become final;
3. The CIR power to adjust unfair
labor practices is unaffected by
individual settlements;
4. The rights of labor are
unwaivable; quitclaims null and
void; and

2. The Court of Industrial Relations erred in ordering


the Chief of its examining division or his duly
authorized representative to examine the payrolls,
vouchers, books of account and other pertinent
documents of petitioner, and to compute the wage
and fringe-benefits differentials allegedly due the
members of respondent Union because such
examination and computation have become
academic.

After a careful evaluation of the petitioners' and


respondents' pleadings, this Court, finds the
allegations of petitioner to be without merit.

3. The Court of Industrial Relations erred in not


denying or dismissing the two motions filed by
respondent union on October 18, 1973 praying
therein that the union's counsel be awarded attorney's
fees and that an order be issued directing the
examining division of the court to compute the wage

On the first assignment of error, paragraph (a), the


petitioner failed to raise the issue before the trial
court. This Court notes that petitioner's answer to the
motion for computation of final judgment and to
petition for attorney's lien filed by the respondent in
the trial court did not raise the foregoing issue. It is a

5. The question regarding alleged


unreasonableness of award of
attorney's fees, not raised before
Court a quo, is barred on appeal.

Nevertheless, this Court finds the allegations to be


devoid of merit. Petitioner's contention that there is
no basis for respondent's petition for attorney's lien
filed with the trial court containing allegations
relative to attorney's fees as agreed upon between
him and his client, the complainant Sugar Workers'
Association, is untenable. The written conformity of
the President of said Sugar Workers Association on
behalf thereof confirms the existence of such an
agreement on attorney's fees and constitutes an
irrefutable evidence of such agreement. The trial
court, therefore, had sufficient evidence upon which
it based its decision. The petitioner did not contest the
allegations contained in the respondent's petition for
attorney's lien before the trial court. This constitutes
an implied admission thereof. Moreover, it is evident
from the tenor of the trial court's order issued on June
6, 1974 that the said court carefully evaluated the
respondent's petition for attorney's lien and even
reduced the percentage from 25 IC to 20 %.
On the first assignment of error, paragraph (b), this
Court likewise finds the same to be without merit.
This issue has already been resolved by this Court
when the petitioner filed its first petition
for certiorari (G.R. No. L- 36994) seeking
nullification of the trial court's judgment on the same
issue. Petitioner's allegations were rejected by this
Court in said case. It may not now be repeated and
raised on appeal before this Court, the same being res
judicata.

Be that as it may, the allegations of petitioner to the


effect that by reason of the quitclaims there is nothing
upon which the attorney's lien attaches, is not valid.
This Court finds the quitclaims not valid. Firstly, said
quitclaims were secured on December 27, 1972 by
petitioner after it lost its case in the lower court when
the latter promulgated its decision on the case on
December 4, 1972. Obviously in its desire to deny
what is due the sugar workers concerned and frustrate
the decision of the lower court awarding benefits to
them, it used its moral ascendancy as employer over
said workers to secure said quitclaims. Predicated on
said quitclaims, petitioner filed a petition for
certiorari before this Court but the same was denied
by the Court on July 31, 1973 and October 4, 1973.
Petitioner now has the audacity to return before this
Court still invoking said quitclaims, which We again
reject.
Secondly, while rights may be waived, the same must
not be contrary to law, public order, public policy,
morals or good customs or prejudicial to a third
person with a right recognized by law (Art. 6, New
Civil Code). The quitclaim agreements contain the
following provisions in paragraph I 1, No. 3, thereof:
3. Nothing herein stipulated shall
be construed as an admission
and/or recognition by the Party of
The Second Part of its failure
refusal and/or omission as
employer, to faithfully comply with
the pertinent laws, rules and
regulations and/or agreements, nor
its liability therefor and thereunder.
Needless to state, the foregoing provisions are
contrary to law, It exempts the petitioner from any

legal liability. The above- quoted provision renders


the quitclaim agreements void ab initio in their
entirety since they obligated the workers concerned
to forego their benefits, while at the same time,
exempted the petitioner from any liability that it may
choose to reject. This runs counter to Article 22 of the
New Civil Code which provides that no one shall be
unjustly enriched at the expense of another.
Thirdly, the alleged quitclaim agreements are
contrary to public policy. Once a civil action is filed
in court, the cause of action may not be the subject of
compromise unless the same is by leave of the court
concerned. Otherwise, this will render the entire
judicial system irrelevant to the prejudice of the
national interest. Parties to litigations cannot be
allowed to trifle with the judicial system by coming
to court and later on agreeing to a compromise
without the knowledge and approval of the court.
This converts the judiciary into a mere tool of partylitigants who act according to their whims and
caprices. This is more so when the court has already
rendered its decision on the issues submitted.
In the case at bar, the lower court has already
rendered a decision on the issues presented before the
alleged quitclaims agreements were made. The
quitclaim agreements were secured by petitioner
while it filed a petition for certiorari before this Court
for a review of the lower court's decision. The
quiclaim agreements taken together with the
petitioner's petition for certiorari of the trial court's
decision clearly and unmistakably shows the bad
faith of the petitioner and its outright refusal to
comply with its legal obligations. And now it has the
temerity to attempt to use this Court as its instrument
for the purpose.

This Court rejects the contention of petitioner to the


effect that the lien of an attorney on the judgment or
decree for the payment of money and the preference
thereof which he has secured in favor of his client
takes legal effect only from and after, but not before
notice of said lien has been entered in the record and
served on the adverse party, citing the cases of Menzi
and Co. vs. Bastida (63 Phil. 16) and Macondray &
Co. vs. Jose (66 Phil. 590) in support thereof.
This Court finds the petitioner's contentions and
citations applicable only when the case has already
been decided with finality. In the case at bar, the
original case was decided with finality only after this
Court denied the petitioner's motion for
reconsideration of this Court's denial of its petition
for certiorari on the lower court's decision.
This Court is appalled by the attempt of petitioner to
mislead it by alleging that the lower court recognized
the validity and effectivity of the 53 individual
agreements when it declared allegedly that "rights
may be waived. " The records show that the lower
court qualified its statement to the effect that the
waiver must not be contrary to law, public order,
public policy, morals or good customs, or prejudicial
to a third person with a right recognized by law citing
Article 6 of the New Civil Code. This attempt by
petitioner casts a serious doubt on the integrity and
good faith not only of the petitioner but also of its
counsel.
This Court rejects the allegation of petitioner to the
effect that the 53 agreements gave substance to the
policy of the Industrial Peace Act of encouraging the
parties to make all reasonable efforts to settle their
differences by mutual agreement, citing the case of

Filomena Dionela, et al. vs. CIR, et al. (L-18334,


August 31, 1963).
Petitioner's contention and the case cited in support
thereof apply only where there is good faith on the
part of the party litigants. In the case at bar, petitioner
acted with evident bad faith and malice. Petitioner
secured the 53 quitclaim agreements individually
with the 53 sugar workers without the intervention of
respondent's lawyer who was representing them
before the lower court. This subterfuge is tantamount
to a sabotage of the interest of respondent
association. Needless to say, the means employed by
petitioner in dealing with the workers individually,
instead of collectively through respondent and its
counsel, violates good morals as they undermine the
unity of respondent union and fuels industrial
disputes, contrary to the declared policy in the
Industrial Peace Act.
This Court likewise rejects petitioner's allegation that
the 53 quitclaim agreements were in the nature of a
compromise citing the case of Republic vs. Estenzo,
et al., (L-24656, September 25, 1968, 25 SCRA 122)
and Articles 2028 and 2040 of the New Civil Code.
Petitioner's allegations and citations apply only to
compromises between the party-litigants done in
good faith. In the case at bar, there was no
compromise between the petitioner and the
respondent Sugar Workers Association. In respect of
the 53 quitclaims, these are not compromise
agreements between the petitioner and respondent
union. They are separate documents of renunciation
of individual rights. Compromise involves the mutual
renunciation of rights by both parties on a parity
basis. The quitclaims, however, bind the workers to
renounce their rights while the petitioner not only

does not renounce anything but also acquires


exemption from any legal liability in connection
therewith.

Court finds the same worthless. The Meralco case


does not apply in this case for the reason that the
facts and circusmtances are entirely different.

On the First Assignment of Error, Paragraph (c), the


petitioner anchors his allegations on the technical
procedural requirements of Section 37, Rule 138 of
the New Rules of Court. This Court, however, finds
petitioner's allegation without merit. Said provision
of the Rules of Court is meant to protect the interest
of an attorney's client and the adverse party by seeing
to it that they are given the opportunity to contest the
creation of the attorney's lien. It will be noted from
the records that the client Sugar Workers Union was
not only notified but also affixed its conformity to the
respondents' motion for attorney's lien. With respect
to the adverse party, the petitioner in this case, said
adverse party's interest was amply protected by the
lower court when the latter admitted petitioner's
answer to respondent's motion for computation of
final judgment and to respondent's counsel's petition
for attorney's lien. Petitioner did not raise the
aforesaid technicality in its answer before the lower
court. It cannot now raise it for the first time on
appeal.

On the Second Assignment of Error, this Court finds


petitioner's allegation to the effect that the lower
court erred in ordering the computation of judgment
on the ground that by reason of the quitclaim
agreements the computation of judgment has become
academic, to be without merit and grossly inane.

On the First Assignment of Error, Paragraph (d), this


Court finds petitioner's allegations to the effect that
the attorney's fees awarded are inequitable,
exorbitant, excessive and unconscionable, citing in
the process the case of Meralco Workers' Union vs.
Gaerlan (32 SCRA 419), completely without basis
nor merit.
Again, petitioner did not raise this issue in the lower
court. It cannot now raise said issue for the first time
on appeal before this Court. Nevertheless, petitioner
has failed to prove any of its allegations. Hence, this

The allegations of petitioner are premised on its


previous allegations regarding the quitclaims. This
Court has earlier stated that the quitclaim agreements
are void ab initio. The lower court was correct in
directing the computation of judgment, there being a
basis therefor.
On the Third Assignment of Error, this Court likewise
finds petitioner's allegations which are based on its
allegations in support of the first and second
assignments of errors, without merit, as heretofore
discussed.
WHEREFORE, THE PETITION IS HEREBY
DISMISSED AND RESPONDENT CIR (NOW THE
NLRC) IS HEREBY DIRECTED TO IMPLEMENT
ITS ORDER DATED JUNE 6,1974.
COSTS AGAINST PETITIONER.
SO ORDERED.

G.R. No. 152456

April 28, 2004

SEVILLA TRADING COMPANY, petitioner,


vs.
A.V.A. TOMAS E. SEMANA, SEVILLA
TRADING WORKERS UNION
SUPER, respondents.
DECISION
PUNO, J.:
1

On appeal is the Decision of the Court of Appeals in


CA-G.R. SP No. 63086 dated 27 November 2001
sustaining the Decision2 of Accredited Voluntary
Arbitrator Tomas E. Semana dated 13 November
2000, as well as its subsequent Resolution3 dated 06
March 2002 denying petitioners Motion for
Reconsideration.
The facts of the case are as follows:
For two to three years prior to 1999,
petitioner Sevilla Trading Company (Sevilla
Trading, for short), a domestic corporation
engaged in trading business, organized and
existing under Philippine laws, added to the
base figure, in its computation of the 13thmonth pay of its employees, the amount of
other benefits received by the employees
which are beyond the basic pay. These
benefits included:
(a) Overtime premium for regular
overtime, legal and special
holidays;
(b) Legal holiday pay, premium pay
for special holidays;
(c) Night premium;

(d) Bereavement leave pay;

Petitioner then effected a change in the computation


of the thirteenth month pay, as follows:

(e) Union leave pay;


(f) Maternity leave pay;
(g) Paternity leave pay;
(h) Company vacation and sick
leave pay; and
(i) Cash conversion of unused
company vacation and sick leave.
Petitioner claimed that it entrusted the preparation of
the payroll to its office staff, including the
computation and payment of the 13th-month pay and
other benefits. When it changed its person in charge
of the payroll in the process of computerizing its
payroll, and after audit was conducted, it allegedly
discovered the error of including non-basic pay or
other benefits in the base figure used in the
computation of the 13th-month pay of its employees.
It cited the Rules and Regulations Implementing P.D.
No. 851 (13th-Month Pay Law), effective December
22, 1975, Sec. 2(b) which stated that:
"Basic salary" shall include all
remunerations or earnings paid by an
employer to an employee for services
rendered but may not include cost-of-living
allowances granted pursuant to P.D. No. 525
or Letter of Instruction No. 174, profitsharing payments, and all allowances and
monetary benefits which are not considered
or integrated as part of the regular or basic
salary of the employee at the time of the
promulgation of the Decree on December
16, 1975.

13thmonth
pay

net basic
pay
=
12
months

where:
net
basic
pay

gross pay (non-basic pay or other


benefits)

Now excluded from the base figure used in the


computation of the thirteenth month pay are the
following:
a) Overtime premium for regular overtime,
legal and special holidays;
b) Legal holiday pay, premium pay for
special holidays;
c) Night premium;
d) Bereavement leave pay;
e) Union leave pay;
f) Maternity leave pay;
g) Paternity leave pay;
h) Company vacation and sick leave pay;
and
i) Cash conversion of unused vacation/sick
leave.

Hence, the new computation reduced the employees


thirteenth month pay. The daily piece-rate workers
represented by private respondent Sevilla Trading
Workers Union SUPER (Union, for short), a duly
organized and registered union, through the
Grievance Machinery in their Collective Bargaining
Agreement, contested the new computation and
reduction of their thirteenth month pay. The parties
failed to resolve the issue.
On March 24, 2000, the parties submitted the issue of
"whether or not the exclusion of leaves and other
related benefits in the computation of 13th-month pay
is valid" to respondent Accredited Voluntary
Arbitrator Tomas E. Semana (A.V.A. Semana, for
short) of the National Conciliation and Mediation
Board, for consideration and resolution.
The Union alleged that petitioner violated the rule
prohibiting the elimination or diminution of
employees benefits as provided for in Art. 100 of the
Labor Code, as amended. They claimed that paid
leaves, like sick leave, vacation leave, paternity
leave, union leave, bereavement leave, holiday pay
and other leaves with pay in the CBA should be
included in the base figure in the computation of their
13th-month pay.
On the other hand, petitioner insisted that the
computation of the 13th-month pay is based on basic
salary, excluding benefits such as leaves with pay, as
per P.D. No. 851, as amended. It maintained that, in
adjusting its computation of the 13th-month pay, it
merely rectified the mistake its personnel committed
in the previous years.
A.V.A. Semana decided in favor of the Union. The
dispositive portion of his Decision reads as follows:
WHEREFORE, premises considered, this
Voluntary Arbitrator hereby declared that:

1. The company is hereby ordered


to include sick leave and vacation
leave, paternity leave, union leave,
bereavement leave and other leave
with pay in the CBA, premium for
work done on rest days and special
holidays, and pay for regular
holidays in the computation of the
13th-month pay to all covered and
entitled employees;
2. The company is hereby ordered
to pay corresponding backwages to
all covered and entitled employees
arising from the exclusion of said
benefits in the computation of 13thmonth pay for the year 1999.
Petitioner received a copy of the Decision of the
Arbitrator on December 20, 2000. It filed before the
Court of Appeals, a "Manifestation and Motion for
Time to File Petition for Certiorari" on January 19,
2001. A month later, on February 19, 2001, it filed its
Petition for Certiorari under Rule 65 of the 1997
Rules of Civil Procedure for the nullification of the
Decision of the Arbitrator. In addition to its earlier
allegations, petitioner claimed that assuming the old
computation will be upheld, the reversal to the old
computation can only be made to the extent of
including non-basic benefits actually included by
petitioner in the base figure in the computation of
their 13th-month pay in the prior years. It must
exclude those non-basic benefits which, in the first
place, were not included in the original computation.
The appellate court denied due course to, and
dismissed the petition.
Hence, this appeal. Petitioner Sevilla Trading
enumerates the grounds of its appeal, as follows:
1. THE DECISION OF THE
RESPONDENT COURT TO REVERT TO
THE OLD COMPUTATION OF THE 13th-

MONTH PAY ON THE BASIS THAT THE


OLD COMPUTATION HAD RIPENED
INTO PRACTICE IS WITHOUT LEGAL
BASIS.
2. IF SUCH BE THE CASE, COMPANIES
HAVE NO MEANS TO CORRECT
ERRORS IN COMPUTATION WHICH
WILL CAUSE GRAVE AND
IRREPARABLE DAMAGE TO
EMPLOYERS.4
First, we uphold the Court of Appeals in ruling that
the proper remedy from the adverse decision of the
arbitrator is a petition for review under Rule 43 of the
1997 Rules of Civil Procedure, not a petition for
certiorari under Rule 65. Section 1 of Rule 43 states:
RULE 43
Appeals from the Court of Tax Appeals and
Quasi-Judicial Agencies to the Court of
Appeals
SECTION 1. Scope. This Rule shall
apply to appeals from judgments or final
orders of the Court of Tax Appeals and from
awards, judgments, final orders or
resolutions of or authorized by any quasijudicial agency in the exercise of its quasijudicial functions. Among these agencies are
the Civil Service Commission, Central
Board of Assessment Appeals, Securities
and Exchange Commission, Office of the
President, Land Registration Authority,
Social Security Commission, Civil
Aeronautics Board, Bureau of Patents,
Trademarks and Technology Transfer,
National Electrification Administration,
Energy Regulatory Board, National
Telecommunications Commission,
Department of Agrarian Reform under
Republic Act No. 6657, Government Service

Insurance System, Employees


Compensation Commission, Agricultural
Inventions Board, Insurance Commission,
Philippine Atomic Energy Commission,
Board of Investments, Construction Industry
Arbitration Commission, and voluntary
arbitrators authorized by law. [Emphasis
supplied.]
It is elementary that the special civil action of
certiorari under Rule 65 is not, and cannot be a
substitute for an appeal, where the latter remedy is
available, as it was in this case. Petitioner Sevilla
Trading failed to file an appeal within the fifteen-day
reglementary period from its notice of the adverse
decision of A.V.A. Semana. It received a copy of the
decision of A.V.A. Semana on December 20, 2000,
and should have filed its appeal under Rule 43 of the
1997 Rules of Civil Procedure on or before January
4, 2001. Instead, petitioner filed on January 19, 2001
a "Manifestation and Motion for Time to File Petition
for Certiorari," and on February 19, 2001, it filed a
petition for certiorari under Rule 65 of the 1997
Rules of Civil Procedure. Clearly, petitioner Sevilla
Trading had a remedy of appeal but failed to use it.
A special civil action under Rule 65 of the Rules of
Court will not be a cure for failure to timely file a
petition for review on certiorari under Rule 45 (Rule
43, in the case at bar) of the Rules of Court. Rule 65
is an independent action that cannot be availed of as a
substitute for the lost remedy of an ordinary appeal,
including that under Rule 45 (Rule 43, in the case at
bar), especially if such loss or lapse was occasioned
by ones own neglect or error in the choice of
remedies.5
Thus, the decision of A.V.A. Semana had become
final and executory when petitioner Sevilla Trading
filed its petition for certiorari on February 19, 2001.
More particularly, the decision of A.V.A. Semana
became final and executory upon the lapse of the
fifteen-day reglementary period to appeal, or on
January 5, 2001. Hence, the Court of Appeals is

correct in holding that it no longer had appellate


jurisdiction to alter, or much less, nullify the decision
of A.V.A. Semana.
Even assuming that the present petition for certiorari
under Rule 65 of the 1997 Rules of Civil Procedure is
a proper action, we still find no grave abuse of
discretion amounting to lack or excess of jurisdiction
committed by A.V.A. Semana. "Grave abuse of
discretion" has been interpreted to mean "such
capricious and whimsical exercise of judgment as is
equivalent to lack of jurisdiction, or, in other words
where the power is exercised in an arbitrary or
despotic manner by reason of passion or personal
hostility, and it 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 or to act at all in
contemplation of law."6 We find nothing of that sort
in the case at bar.
On the contrary, we find the decision of A.V.A.
Semana to be sound, valid, and in accord with law
and jurisprudence. A.V.A. Semana is correct in
holding that petitioners stance of mistake or error in
the computation of the thirteenth month pay is
unmeritorious. Petitioners submission of financial
statements every year requires the services of a
certified public accountant to audit its finances. It is
quite impossible to suggest that they have discovered
the alleged error in the payroll only in 1999. This
implies that in previous years it does not know its
cost of labor and operations. This is merely basic cost
accounting. Also, petitioner failed to adduce any
other relevant evidence to support its contention.
Aside from its bare claim of mistake or error in the
computation of the thirteenth month pay, petitioner
merely appended to its petition a copy of the 19972002 Collective Bargaining Agreement and an
alleged "corrected" computation of the thirteenth
month pay. There was no explanation whatsoever
why its inclusion of non-basic benefits in the base
figure in the computation of their 13th-month pay in
the prior years was made by mistake, despite the
clarity of statute and jurisprudence at that time.

The instant case needs to be distinguished


from Globe Mackay Cable and Radio Corp. vs.
NLRC,7 which petitioner Sevilla Trading invokes. In
that case, this Court decided on the proper
computation of the cost-of-living allowance (COLA)
for monthly-paid employees. Petitioner Corporation,
pursuant to Wage Order No. 6 (effective 30 October
1984), increased the COLA of its monthly-paid
employees by multiplying the P3.00 daily COLA by
22 days, which is the number of working days in the
company. The Union disagreed with the computation,
claiming that the daily COLA rate of P3.00 should be
multiplied by 30 days, which has been the practice of
the company for several years. We upheld the
contention of the petitioner corporation. To answer
the Unions contention of company practice, we ruled
that:
Payment in full by Petitioner Corporation of
the COLA before the execution of the CBA
in 1982 and in compliance with Wage
Orders Nos. 1 (26 March 1981) to 5 (11
June 1984), should not be construed as
constitutive of voluntary employer practice,
which cannot now be unilaterally withdrawn
by petitioner. To be considered as such, it
should have been practiced over a long
period of time, and must be shown to have
been consistent and deliberate . . . The test
of long practice has been enunciated thus:
. . . Respondent Company agreed to
continue giving holiday
pay knowing fully well that said
employees are not covered by the
law requiring payment of holiday
pay." (Oceanic Pharmacal
Employees Union [FFW] vs.
Inciong, 94 SCRA 270 [1979])
Moreover, before Wage Order No. 4, there
was lack of administrative guidelines for the
implementation of the Wage Orders. It was
only when the Rules Implementing Wage

Order No. 4 were issued on 21 May 1984


that a formula for the conversion of the daily
allowance to its monthly equivalent was laid
down.
Absent clear administrative guidelines,
Petitioner Corporation cannot be faulted for
erroneous application of the law . . .
In the above quoted case, the grant by the employer
of benefits through an erroneous application of the
law due to absence of clear administrative guidelines
is not considered a voluntary act which cannot be
unilaterally discontinued. Such is not the case now. In
the case at bar, the Court of Appeals is correct when
it pointed out that as early as 1981, this Court has
held in San Miguel Corporation vs. Inciong8 that:
Under Presidential Decree 851 and its
implementing rules, the basic salary of an
employee is used as the basis in the
determination of his 13th-month pay. Any
compensations or remunerations which are
deemed not part of the basic pay is excluded
as basis in the computation of the mandatory
bonus.
Under the Rules and Regulations
Implementing Presidential Decree 851, the
following compensations are deemed not
part of the basic salary:
a) Cost-of-living allowances
granted pursuant to Presidential
Decree 525 and Letter of
Instruction No. 174;
b) Profit sharing payments;
c) All allowances and monetary
benefits which are not considered
or integrated as part of the regular
basic salary of the employee at the

time of the promulgation of the


Decree on December 16, 1975.
Under a later set of Supplementary Rules
and Regulations Implementing Presidential
Decree 851 issued by the then Labor
Secretary Blas Ople, overtime pay, earnings
and other remunerations are excluded as
part of the basic salary and in the
computation of the 13th-month pay.
The exclusion of cost-of-living allowances
under Presidential Decree 525 and Letter of
Instruction No. 174 and profit sharing
payments indicate the intention to strip basic
salary of other payments which are properly
considered as "fringe" benefits. Likewise,
the catch-all exclusionary phrase "all
allowances and monetary benefits which are
not considered or integrated as part of the
basic salary" shows also the intention to
strip basic salary of any and all additions
which may be in the form of allowances or
"fringe" benefits.
Moreover, the Supplementary Rules and
Regulations Implementing Presidential
Decree 851 is even more empathic in
declaring that earnings and other
remunerations which are not part of the
basic salary shall not be included in the
computation of the 13th-month pay.
While doubt may have been created by the
prior Rules and Regulations Implementing
Presidential Decree 851 which defines basic
salary to include all remunerations or
earnings paid by an employer to an
employee, this cloud is dissipated in the later
and more controlling Supplementary Rules
and Regulations which categorically,
exclude from the definition of basic salary
earnings and other remunerations paid by

employer to an employee. A cursory perusal


of the two sets of Rules indicates that what
has hitherto been the subject of a broad
inclusion is now a subject of broad
exclusion. The Supplementary Rules and
Regulations cure the seeming tendency of
the former rules to include all remunerations
and earnings within the definition of basic
salary.
The all-embracing phrase "earnings and
other remunerations" which are deemed not
part of the basic salary includes within its
meaning payments for sick, vacation, or
maternity leaves, premium for works
performed on rest days and special holidays,
pay for regular holidays and night
differentials. As such they are deemed not
part of the basic salary and shall not be
considered in the computation of the 13thmonth pay. If they were not so excluded, it
is hard to find any "earnings and other
remunerations" expressly excluded in the
computation of the 13th-month pay. Then
the exclusionary provision would prove to
be idle and with no purpose.
In the light of the clear ruling of this Court, there is,
thus no reason for any mistake in the construction or
application of the law. When petitioner Sevilla
Trading still included over the years non-basic
benefits of its employees, such as maternity leave
pay, cash equivalent of unused vacation and sick
leave, among others in the computation of the 13thmonth pay, this may only be construed as a voluntary
act on its part. Putting the blame on the petitioners
payroll personnel is inexcusable.
In Davao Fruits Corporation vs. Associated Labor
Unions, we likewise held that:9
The "Supplementary Rules and Regulations
Implementing P.D. No. 851" which put to

rest all doubts in the computation of the


thirteenth month pay, was issued by the
Secretary of Labor as early as January 16,
1976, barely one month after the effectivity
of P.D. No. 851 and its Implementing Rules.
And yet, petitioner computed and paid the
thirteenth month pay, without excluding the
subject items therein until 1981. Petitioner
continued its practice in December 1981,
after promulgation of the aforequoted San
Migueldecision on February 24, 1981, when
petitioner purportedly "discovered" its
mistake.
From 1975 to 1981, petitioner had freely, voluntarily
and continuously included in the computation of its
employees thirteenth month pay, without the
payments for sick, vacation and maternity leave,
premium for work done on rest days and special
holidays, and pay for regular holidays. The
considerable length of time the questioned items had
been included by petitioner indicates a unilateral and
voluntary act on its part, sufficient in itself to negate
any claim of mistake.
A company practice favorable to the employees had
indeed been established and the payments made
pursuant thereto, ripened into benefits enjoyed by
them. And any benefit and supplement being enjoyed
by the employees cannot be reduced, diminished,
discontinued or eliminated by the employer, by virtue
of Sec. 10 of the Rules and Regulations
Implementing P.D. No. 851, and Art. 100 of the
Labor Code of the Philippines which prohibit the
diminution or elimination by the employer of the
employees existing benefits. [Tiangco vs. Leogardo,
Jr., 122 SCRA 267 (1983)]
With regard to the length of time the company
practice should have been exercised to constitute
voluntary employer practice which cannot be
unilaterally withdrawn by the employer, we hold that
jurisprudence has not laid down any rule requiring a
specific minimum number of years. In the above

quoted case of Davao Fruits Corporation vs.


Associated Labor Unions,10 the company practice
lasted for six (6) years. In another case,Davao
Integrated Port Stevedoring Services vs.
Abarquez,11 the employer, for three (3) years and
nine (9) months, approved the commutation to cash
of the unenjoyed portion of the sick leave with pay
benefits of its intermittent workers. While in Tiangco
vs. Leogardo, Jr.,12 the employer carried on the
practice of giving a fixed monthly emergency
allowance from November 1976 to February 1980, or
three (3) years and four (4) months. In all these cases,
this Court held that the grant of these benefits has
ripened into company practice or policy which cannot
be peremptorily withdrawn. In the case at bar,
petitioner Sevilla Trading kept the practice of
including non-basic benefits such as paid leaves for
unused sick leave and vacation leave in the
computation of their 13th-month pay for at least two
(2) years. This, we rule likewise constitutes voluntary
employer practice which cannot be unilaterally
withdrawn by the employer without violating Art.
100 of the Labor Code:
Art. 100. Prohibition against elimination or
diminution of benefits. Nothing in this Book shall
be construed to eliminate or in any way diminish
supplements, or other employee benefits being
enjoyed at the time of promulgation of this Code.
IN VIEW WHEREOF, the petition is DENIED.
The Decision of the Court of Appeals in CA-G.R. SP
No. 63086 dated 27 November 2001 and its
Resolution dated 06 March 2002 are
hereby AFFIRMED.
SO ORDERED.

.R. No. 91231

February 4, 1991

NESTL PHILIPPINES, INC., petitioner,


vs.
THE NATIONAL LABOR RELATIONS
COMMISSION and UNION OF FILIPRO
EMPLOYEES, respondents.
Siguion Reyna, Montecillo & Ongsiako for petitioner.
Banzuela, Flores, Miralles, Raneses, Sy, Taquio &
Associates for private respondent.

GRIO-AQUINO, J.:
Nestl Philippines, Inc., by this petition
for certiorari, seeks to annul, on the ground of grave
abuse of discretion, the decision dated August 8,
1989 of the National Labor Relations Commission
(NLRC), Second Division, in Cert. Case No. 0522
entitled, "In Re: Labor Dispute of Nestl Philippines,
Inc." insofar as it modified the petitioner's existing
non-contributory Retirement Plan.
Four (4) collective bargaining agreements separately
covering the petitioner's employees in its:
1. Alabang/Cabuyao factories;
2. Makati Administration Office. (Both
Alabang/Cabuyao factories and Makati
office were represented by the respondent,
Union of Filipro Employees [UFE]);
3. Cagayan de Oro Factory represented by
WATU; and

4. Cebu/Davao Sales Offices represented by


the Trade Union of the Philippines and
Allied Services (TUPAS),

After conciliation efforts of the National Conciliation


and Mediation Board (NCMB) yielded negative
results, the dispute was certified to the NLRC by the
Secretary of Labor on October 28, 1988.

all expired on June 30, 1987.


Thereafter, UFE was certified as the sole and
exclusive bargaining agent for all regular rank-andfile employees at the petitioner's Cagayan de Oro
factory, as well as its Cebu/Davao Sales Office.
In August, 1987, while the parties, were negotiating,
the employees at Cabuyao resorted to a "slowdown"
and walk-outs prompting the petitioner to shut down
the factory. Marathon collective bargaining
negotiations between the parties ensued.
On September 2, 1987, the UFE declared a
bargaining deadlock. On September 8, 1987, the
Secretary of Labor assumed jurisdiction and issued a
return to work order. In spite of that order, the union
struck, without notice, at the Alabang/Cabuyao
factory, the Makati office and Cagayan de Oro
factory on September 11, 1987 up to December 8,
1987. The company retaliated by dismissing the
union officers and members of the negotiating panel
who participated in the illegal strike. The NLRC
affirmed the dismissals on November 2, 1988.
On January 26, 1988, UFE filed a notice of strike on
the same ground of CBA deadlock and unfair labor
practices. However, on March 30, 1988, the company
was able to conclude a CBA with the union at the
Cebu/Davao Sales Office, and on August 5, 1988,
with the Cagayan de Oro factory workers. The union
assailed the validity of those agreements and filed a
case of unfair labor practice against the company on
November 16, 1988.

After the parties had filed their pleadings, the NLRC


issued a resolution on June 5, 1989, whose pertinent
disposition regarding the union's demand for
liberalization of the company's retirement plan for its
workers, provides as follows:
xxx

xxx

xxx

7. Retirement Plan
The company shall continue implementing
its retirement plan modified as follows:
a) for fifteen years of service or less an
amount equal to 100% of the employee's
monthly salary for every year of service;
b) more than 15 but less than 20 years
125% of the employee's monthly salary for
every year of service;
c) 20 years or more 150% of the
employee's monthly salary for every year of
service. (pp. 58-59, Rollo.)
Both parties separately moved for reconsideration of
the decision.
On August 8, 1989, the NLRC issued a resolution
denying the motions for reconsideration. With regard
to the Retirement Plan, the NLRC held:
Anent management's objection to the
modification of its Retirement Plan, We find
no cogent reason to alter our previous
decision on this matter.

While it is not disputed that the plan is noncontributory on the part of the workers, tills
does not automatically remove it from the
ambit of collective bargaining negotiations.
On the contrary, the plan is specifically
mentioned in the previous bargaining
agreements (Exhibits "R-1" and "R-4"),
thereby integrating or incorporating the
provisions thereof to the agreement. By
reason of its incorporation, the plan assumes
a consensual character which cannot be
terminated or modified at will by either
party. Consequently, it becomes part and
parcel of CBA negotiations.
However, We need to clarify Our resolution
on this issue. When we increased the
emoluments in the plan, the conditions for
the availment of the benefits set forth therein
remain the same. (p. 32, Rollo.)
On December 14, 1989, the petitioner filed this
petition for certiorari, alleging that since its
retirement plan is non-contributory, it (Nestl) has the
sole and exclusive prerogative to define the terms of
the plan "because the workers have no vested and
demandable rights thereunder, the grant thereof being
not a contractual obligation but merely gratuitous. At
most the company can only be directed to maintain
the same but not to change its terms. It should be left
to the discretion of the company on how to improve
or mollify the same" (p. 10, Rollo).
The Court agrees with the NLRC's finding that the
Retirement Plan was "a collective bargaining issue
right from the start" (p. 109, Rollo) for the
improvement of the existing Retirement Plan was one
of the original CBA proposals submitted by the UFE
on May 8, 1987 to Arthur Gilmour, president of
Nestl Philippines. The union's original proposal was
to modify the existing plan by including a provision
for early retirement. The company did not question
the validity of that proposal as a collective bargaining
issue but merely offered to maintain the existing non-

contributory retirement plan which it believed to be


still adequate for the needs of its employees, and
competitive with those existing in the industry. The
union thereafter modified its proposal, but the
company was adamant. Consequently, the impass on
the retirement plan become one of the issues certified
to the NLRC for compulsory arbitration.
The company's contention that its retirement plan is
non-negotiable, is not well-taken.1wphi1 The NLRC
correctly observed that the inclusion of the retirement
plan in the collective bargaining agreement as part of
the package of economic benefits extended by the
company to its employees to provide them a measure
of financial security after they shall have ceased to be
employed in the company, reward their loyalty, boost
their morale and efficiency and promote industrial
peace, gives "a consensual character" to the plan so
that it may not be terminated or modified at will by
either party (p. 32, Rollo).
The fact that the retirement plan is noncontributory, i.e., that the employees contribute
nothing to the operation of the plan, does not make it
a non-issue in the CBA negotiations. As a matter of
fact, almost all of the benefits that the petitioner has
granted to its employees under the CBA salary
increases, rice allowances, mid-year bonuses, 13th
and 14th month pay, seniority pay, medical and
hospitalization plans, health and dental services,
vacation, sick & other leaves with pay are noncontributory benefits. Since the retirement plan has
been an integral part of the CBA since 1972, the
Union's demand to increase the benefits due the
employees under said plan, is a valid CBA issue. The
deadlock between the company and the union on this
issue was resolvable by the Secretary of Labor, or the
NLRC, after the Secretary had assumed jurisdiction
over the labor dispute (Art. 263, subparagraph [i] of
the Labor Code).
The petitioner's contention, that employees have no
vested or demandable right to a non-contributory
retirement plan, has no merit for employees do have a

vested and demandable right over existing benefits


voluntarily granted to them by their employer. The
latter may not unilaterally withdraw, eliminate or
diminish such benefits (Art. 100, Labor Code;
Tiangco, et al. vs. Hon. Leogardo, et al., 122 SCRA
267).
This Court ruled similarly in Republic Cement
Corporation vs. Honorable Panel of Arbitrators, G.R.
No. 89766, Feb. 19, 1990:
. . . Petitioner's claim that retirement
benefits, being noncontributory in nature,
are not proper subjects for voluntary
arbitration is devoid of merit. The expired
CBA previously entered into by the parties
included provisions for the implementation
of a "Retirement and Separation Plan." it is
only to be expected that the parties would
seek a renewal or an improvement of said
item in the new CBA. In fact, the parties
themselves expressly included retirement
benefits among the economic issues to be
resolved by voluntary arbitration. Petitioner
is estopped from now contesting the validity
of the increased award granted by the
arbitrators. (p. 145, Rollo.)
The NLRC's resolution of the bargaining deadlock
between Nestl and its employees is neither arbitrary,
capricious, nor whimsical. The benefits and
concessions given to the employees were based on
the NLRC's evaluation of the union's demands, the
evidence adduced by the parties, the financial
capacity of the Company to grant the demands, its
longterm viability, the economic conditions
prevailing in the country as they affect the purchasing
power of the employees as well as its concommitant
effect on the other factors of production, and the
recent trends in the industry to which the Company
belongs (p. 57, Rollo). Its decision is not vitiated by
abuse of discretion.

WHEREFORE, the petition for certiorari is


dismissed, with costs against the petitioner.
SO ORDERED.

G.R. No. 74156 June 29, 1988

2. Ordering respondents-appellees
to pay complainants-appellants
their back allowances reckoned
from the time of illegal deduction;
and

GLOBE MACKAY CABLE AND RADIO


CORPORATION, FREDERICK WHITE and
JESUS SANTIAGO,petitioners,
vs.
NATIONAL LABOR RELATIONS
COMMISSION, FFW-GLOBE MACKAY
EMPLOYEES UNION and EDA
CONCEPCION, respondents.

3. Ordering respondents-appellees
from further illegally deducting the
allowances of complainantsappellants.

Castillo, Laman, Tan & Pantaleon for petitioners.


Edwin D. Dellaban for private respondents.

SO ORDERED.
Presiding Commissioner of the NLRC, Diego P.
Atienza, concurred in the result, while Commissioner
Cleto T. Villaltuya dissented and voted to affirm in
toto the Labor Arbiter's Decision.

MELENCIO-HERRERA, J.:
A special civil action for certiorari with a prayer for a
Temporary Restraining Order to enjoin respondents
from enforcing the Decision of 10 March 1986 of the
National Labor Relations Commission (NLRC), in
NCR Case No. 1-168-85 entitled "FFW-Globe
Mackay Employees Union, et al., vs. Globe Mackay
Cable & Radio Corporation, et al.," the dispositive
portion of which reads:
WHEREFORE, premises
considered, the appealed Decision
is as it is hereby SET ASIDE and
another one issued:
1. Declaring respondents-appellees
(petitioners herein) guilty of illegal
deductions of cost-of-living
allowance;

On 19 May 1986, we issued the Temporary


Restraining Order enjoining respondents from
enforcing the assailed Decision. On 2 September
1987, we gave due course to the petition and required
the submittal of memoranda, by the parties, which
has been complied with.
The facts follow:
Wage Order No. 6, which took effect on 30 October
1984, increased the cost-of-living allowance of nonagricultural workers in the private sector. Petitioner
corporation complied with the said Wage Order by
paying its monthly-paid employees the mandated
P3.00 per day COLA. However, in computing said
COLA, Petitioner Corporation multiplied the P 3.00
daily COLA by 22 days, which is the number of
working days in the company.

Respondent Union disagreed with the computation of


the monthly COLA claiming that the daily COLA
rate of P3.00 should be multiplied by 30 days to
arrive at the monthly COLA rate. The union alleged
furthermore that prior to the effectivity of Wage
Order No. 6, Petitioner Corporation had been
computing and paying the monthly COLA on the
basis of thirty (30) days per month and that this
constituted an employer practice, which should not
be unilaterally withdrawn.
After several grievance proceedings proved futile, the
Union filed a complaint against Petitioner
Corporation, its President, F. White, and VicePresident, J. Santiago, for illegal deduction,
underpayment, unpaid allowances, and violation of
Wage Order No. 6. Petitioners White and Santiago
were sought to be held personally liable for the
money claims thus demanded.
Labor Arbiter Adelaido F. Martinez sustained the
position of Petitioner Corporation by holding that
since the individual petitioners acted in their
corporate capacity they should not have been
impleaded; and that the monthly COLA should be
computed on the basis of twenty two (22) days, since
the evidence showed that there are only 22 paid days
in a month for monthly-paid employees in the
company. His reasoning, inter alia, was as follows:
To compel the respondent company
to use 30 days in a month to
compute the allowance and retain
22 days for vacation and sick leave,
overtime pay and other benefits is
inconsistent and palpably unjust. If
30 days is used as divisor, then it

must be used for the computation


of all benefits, not just the
allowance. But this is not fair to
complainants, not to mention that it
will contravene the provision of the
parties' CBA.
On appeal, the NLRC reversed the Labor Arbiter, as
heretofore stated, and held that Petitioner Corporation
was guilty of illegal deductions, upon the following
considerations: (1) that the P3.00 daily COLA under
Wage Order No. 6 should be paid and computed on
the basis of thirty (30) days instead of twenty-two
(22) days since workers paid on a monthly basis are
entitled to COLA on Saturdays, Sundays and legal
holidays "even if unworked;" (2) that the full
allowance enjoyed by Petitioner Corporation's
monthly-paid employees before the CBA executed
between the parties in 1982 constituted voluntary
employer practice, which cannot be unilaterally
withdrawn; and (3) that petitioners White and
Santiago were properly impleaded as respondents in
the case below.
Hence, this Petition, anchored on the charge of grave
abuse of discretion by the NLRC.
We are constrained to reverse the reversal.
Section 5 of the Rules Implementing Wage Orders
Nos. 2, 3, 5 and 6 uniformly read as follows:
Section 5. Allowance for
Unworked Days.
All covered employees shall be
entitled to their daily living
allowance during the days that they

are paid their basic wage, even if


unworked. (Emphasis supplied)
The primordial consideration, therefore, for
entitlement to COLA is that basic wage is being paid.
In other words, the payment of COLA is mandated
only for the days that the employees are paid their
basic wage, even if said days are unworked. So that,
on the days that employees are not paid their basic
wage, the payment of COLA is not mandated. As
held in University of Pangasinan Faculty Union vs.
University of Pangasinan, L-63122, February 20,
1984, 127 SCRA 691):
... 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.
Applied to monthly-paid employees if their monthly
salary covers all the days in a month, they are
deemed paid their basic wages for all those days and
they should be entitled to their COLA on those days
"even if unworked," as the NLRC had opined.
Peculiar to this case, however, is the circumstance
that pursuant to the Collective Bargaining Agreement
(CBA) between Petitioner Corporation and
Respondent Union, the monthly basic pay is
computed on the basis of five (5) days a week, or
twenty two (22) days a month. Thus, the pertinent
provisions of that Agreement read:
Art. XV(a)Eight net working
hours shall constitute the regular
work day for five days.

Art. XV(b)Forty net hours of


work, 5 working days, shall
constitute the regular work week.
Art. XVI, Sec. 1(b)All overtime
worked in excess of eight net hours
daily or in excess of 5 days weekly
shall be computed on hourly basis
at the rate of time and one half.
The Labor Arbiter also found that in determining the
hourly rate of monthly paid employees for purposes
of computing overtime pay, the monthly wage is
divided by the number of actual work days in a
month and then, by eight (8) working hours. If a
monthly-paid employee renders overtime work, he is
paid his basic salary rate plus one-half thereof. For
example, after examining the specimen payroll of
employee Jesus L. Santos, the Labor Arbiter found:
the employee Jesus L. Santos, who
worked on Saturday and Sunday
was paid base pay plus 50%
premium. This is over and above
his monthly basic pay as supported
by the fact that base pay was paid.
If the 6th and 7th days of the week
are deemed paid even if unworked
and included in the monthly salary,
Santos should not have been paid
his base pay for Saturday and
Sunday but should have received
only the 50% overtime premium.

Similarly, the specimen payrolls of employees,


Dennis Dungon and Rene Sanvictores, showed that in
computing the vacation and sick leaves of the
employees, Petitioner Corporation consistently used
twenty-two (22) days.
Under the peculiar circumstances obtaining,
therefore, where the company observes a 5-day work
week, it will have to be held that the COLA should be
computed on the basis of twenty two (22) days,
which is the period during which the monthly-paid
employees of Petitioner Corporation receive their
basic wage. The CBA is the law between the parties
and, if not acceptable, can be the subject of future renegotiation.
2) Payment in full by Petitioner Corporation of the
COLA before the execution of the CBA in 1982 and
in compliance with Wage Orders Nos. 1 (26 March
1981) to 5 (11 June 1984), should not be construed as
constitutive of voluntary employer practice, which
cannot now be unilaterally withdrawn by petitioner.
To be considered as such, it should have been
practiced over a long period of time, and must be
shown to have been consistent and deliberate.
Adequate proof is wanting in this respect. The test of
long practice has been enunciated thus:
... Respondent Company agreed to
continue giving holiday
pay knowing fully well that said
employees are not covered by the
law requiring payment of holiday
pay.' (Oceanic Pharmacal
Employees Union [FFW] vs.
Inciong, L-50568, November 7,

1979, 94 SCRA 270). (Emphasis


ours)

company like respondent which


observes a 5-day work week (or
where 2 days in a week, not
necessarily Saturday and Sunday,
are not considered paid), the
monthly equivalent of a daily
allowance is arrived at by
multiplying the daily allowance by
262 divided by 12. This formula
results in the equivalent of 21.8
days in a month.

Moreover, before Wage Order No. 4, there was lack


of administrative guidelines for the implementation
of the Wage Orders. It was only when the Rules
Implementing Wage Order No. 4 were issued on 21
May 1984 that a formula for the conversion of the
daily allowance to its monthly equivalent was laid
down, thus:
Section 3. Application of Section
2-xxx xxx xxx
(a) Monthly rates for nonagricultural workers covered Under
PDs 1614, 1634, 1678 and 1713:
xxx xxx xxx
(3) For workers who do not work
and are not considered paid on
Saturdays and Sundays:
P60 + P90 + P60 + (P2.00 x 262)
divided by 12 = P 253.70
(Emphasis ours)
As the Labor Arbiter had analyzed said formula:
Under the aforecited
formula/guideline, issued for the
first time, when applied to a

Absent clear administrative guidelines, Petitioner


Corporation cannot be faulted for erroneous
application of the law. Payment may be said to have
been made by reason of a mistake in the construction
or application of a "doubtful or difficult question of
law." (Article 2155, 1 in relation to Article 2154 2 of
the Civil Code). Since it is a past error that is being
corrected, no vested right may be said to have arisen
nor any diminution of benefit under Article 100 of the
Labor Code 3 may be said to have resulted by virtue
of the correction.
With the conclusions thus reached, there is no further
need to discuss the liability of the officers of
Petitioner Corporation.
WHEREFORE, certiorari is granted, the Decision of
the National Labor Relations Commission, dated 10
March 1986, is SET ASIDE, and the Decision of the
Labor Arbiter, dated 9 May 1985, is hereby
REINSTATED. The Temporary Restraining Order
heretofore issued is hereby made permanent.
SO ORDERED.