MANILA

TERMINAL
COMPANY
INC
V
CIR(MANILA
TERMINAL
RELIEF
AND
MUTUAL AID ASSN)
91 PHIL 625
PARAS; July 16, 1952
FACTS
- Manila Terminal Co undertook arrastre service in
Port Area, under control of US Army. It hired
watchmen on 12 hr shifts.
- Manila Terminal began post-war operation of
arrastre service under control of Bureau of
Customs. The watchmen continued in the service,
with salary raise.
A member of the Manila Terminal Relief and
Mutual Aid Association wrote to Dept of Labor
requesting that the matter of overtime pay be
investigated, but nothing happened.
- Members of the Association filed demand with
Department of Labor, including overtime pay, but
nothing happened.
- Manila Terminal Company instituted system of
strict 8 hr shifts.
- The Association was organized for the first time,
and an amended petition was filed with CIR
praying that the petitioner be ordered to pay its
watchmen or police force overtime pay.
- The petitioners police force was consolidated
with the Manila Harbor Police of the Customs
Patrol Service, a govt agency under Commissioner
of Customs and Secretary of Finance.
- CIR, while dismissing other demands, ordered
the petitioner to pay its police force regular or
base pay and overtime compensation.
With
reference to overtime pay after the watchmen had
been integrated into the Manila Harbor Police, the
judge ruled that court has no jurisdiction because
it affects the Bureau of Customs.
- In a separate opinion, Judge Lanting ruled:
> decision should be affirmed in so far as it grants
compensation for overtime on regular days
> as to compensation for work on Sundays and
legal holidays, petitioner should pay compensation
that corresponds to the overtime at the regular
rate only
> watchmen are not entitled to night differential
ISSUE
WON overtime pay should be granted to the
workers
HELD
YES
- Petitioner stressed that the contract between it
and the Association stipulates 12 hrs a day at
certain rates including overtime, but the record
does not bear out these allegations.
- In times of acute employment, people go from
office to office to search for work, and the workers
here found themselves required to render 12 hrs a
day. True, there was an agreement, but did the
workers have freedom to bargain much less insist
in the observance of the Eight Hour Labor Law?
- We note that after petitioner instituted 8 hr
shifts, no reduction was made in salaries which its
watchmen received under the 12 hr agreement.
- Petitioners allegation that the Association had
acquiesced in the 12 hr shifts for more than 18
mos is not accurate. Only one of the members
entered in September 1945. The rest followed
during the next few months.

- The Association cant be said to have impliedly

waived the right to overtime pay, for the obvious
reason that it could not have expressly waived it.
- Estoppel and laches cant also be invoked against
Association. First, it is contrary to spirit of the
Eight Hour Labor Law. Second, law obligates
employer to observe it. Third, employee is at a
disadvantage as to be reluctant in asserting any
claim.
- The argument that the nullity of the employment
contract precludes recovery by the Association of
overtime pay is untenable. The employer may not
be heard to plead its own neglect as exemption or
defense.
- Also, Commonwealth Act 444 expressly provides
for payment of extra compensation in cases where
overtime services are required.
- The point that payment of overtime pay may lead
to ruin of the petitioner cant be accepted. It is
significant that not all watchmen should receive
back overtime pay for the whole period, since the
members entered the firm in different times.
- The Eight-Hour Labor Law was designed not only
to safeguard the health and welfare of the laborer
or employee, but in a way to minimize
unemployment by forcing employers, in cases
where more than 8-hour operation is necessary, to
utilize different shifts of laborers or employees
working only for eight hours each.
International Pharmaceuticals, Inc. v. NLRC
March 9, 1998
Nature: Petition for certiorari
Ponente: Mendoza, J.
FACTS:
International Pharmaceuticals, Inc. (IPI)
employed private respondent Virginia
Quintia as Medical Director of its R&D
dept. replacing one Diana Villaraza.
Because
that
year,
the
government
launched
a
program
encouraging
development of herbal medicine, IPI
decided to venture into that and hired
private respondent as pharmacologist only
for this purpose. Hence, the contention that
private respondent was a project employee.
The contract of employment provided for a
term of one year subject to renewal by
mutual consent at least 30 days before
expiration. It was also agreed that Quintia
can continue teaching as a full-time faculty
member at Cebu Doctors Hospital.
Quintia claimed that when her contract was
about to expire, she was invited by Xavier
University to be chairperson of its
pharmacology dept. But Castillo, present
and gen mgr of IPI asked her to stay and
assured her of security of tenure. Hence,
she declined the offer of Xavier and
remained an employ and as company
physician of IPI after her contract expired.
This continued until her termination on July
12, 1986.
She alleges that her reason for her
termination was because she led the rank
and file employees in the demand for a full
disclosure of the Savings and Loan
Associations
financial
status.
Her

participation was resented by association

officers.
On July 10, 1986, Quintia was replaced as
head of the R&D dept by Paz Wong. Two
days later, she received a memorandum
officially terminating her services.
Quintia filed a complaint for illegal
dismissal praying for reinstatement and
payment of full backwages and moral
damages.
LA found private respondent to have been
illegally dismissed. He held that private
respondent was a regular employee and not
a project employee and could not be
dismissed without just causes. NLRC
affirmed ruling and asked LA to determine
whether reinstatement is possible.

ISSUE: WON reinstatement is feasible

HELD: Petition DISMISSED.
RATIO:
Art. 280. Regular and casual employment . - The
provisions of written agreement to the contrary
notwithstanding and regardless of the oral
agreement of the parties, an employment shall be
deemed to be regular where the employee has
been engaged to perform activities which are
usually necessary or desirable in the usual
business or trade of the employer except where
the employment has been fixed for a specific
project or undertaking, the completion or
termination of which has been determined at the
time of the engagement of the employee or where
the work or service to be performed is seasonal in
nature and the employment is for the duration of
the season.
An employment shall be deemed to be casual if it
is not covered by the preceding paragraph:
Provided, That any employee who has rendered at
least one year of service, whether such service is
continuous or broken, shall be considered a
regular employee with respect to the activity in
which he is employed and his employment shall
continue while such activity exists.
In Brent School, Inc. v. Zamora, it was held that
although work done under a contract is necessary
and desirable in relation to the usual business of
the employer, a contract for a fixed period may
nonetheless be made so long as it is entered into
freely, voluntarily and knowingly by the parties.
When complainant was allowed to continue
working without the benefit of a contract after the
expiration of the one year period provided in their
written contract, that act completely changed the
complexion of the relationship between the
parties.
Quintias status as an employee is not disputed in
this case. Therefore, in determining whether she
was a project employee or a regular employee, the
question is whether her work was necessary and
desirable
to
the
main
business
of
the
employer. It is true that, as held in Singer,
parties can enter into an agreement for the
rendering of services by one to the other and that
however necessary such services may be to the
latters business the contract will not necessarily
give rise to an employer-employee relationship if
the elements of such relationship are not
present. But that is not the question in this
case. Quintia was an employee. The question is

whether, given the fact that she was an employee,

she was a regular or a project employee,
considering that she had been continued in the
service of petitioner for more than two years
following the expiration of her written contract.
Petitioners allegations are contrary to the factual
findings of both the NLRC and the Labor Arbiter,
particularly their findings that she was the head of
petitioners
Research
and
Development
department; that in addition, she performed the
function of company physician; and that she
undertook various civic activities in behalf of
petitioner and that this engagement lasted for
more than three years (1983 - 1986). Certainly, as
the NLRC observed, these facts show complainant
working not as consultant but as a regular
employee albeit a managerial one. It should be
added that Quintia was hired to replace one
Diana Villaraza, which suggests that the position
to which she was appointed by petitioner was
an existing one, so much so that after the
termination of Quintias employment, somebody
else (Paz Wong) was appointed in her place. If
private respondents employment was for a
particular project which had allegedly been
terminated, why would there be a need to replace
her?
There is no mention whatsoever of any project or
of any consultancy in the contract. As aptly
observed by the Solicitor General, the duties of
Quintia as provided for in the contract reject any
notion of consultancy. Clearly, she was hired as
Medical
Director
of
the
Research
and
Development department of petitioner company
and not as consultant nor for any particular
project. The work she performed was manifestly
necessary and desirable to the usual business of
petitioner, considering that it is engaged in the
manufacture
and
production
of
medicinal
preparations.
We agree with the Labor Arbiter that the fact that
she was not required to report at a fixed hour or to
keep fixed hours of work does not detract from her
status as a regular employee. As petitioner itself
admits, Quintia was a managerial employee and
therefore not covered by the Labor Code
provisions on hours of work. What this Court said
in once case is apropos:
The primary standard, . . . of determining a
regular employment is the reasonable connection
between the particular activity performed by the
employee in relation to the usual business or trade
of the employer. The test is whether the former is
usually necessary or desirable in the usual
business or trade of the employer. The connection
can be determined by considering the nature of
the work performed and its relation to the scheme
of the particular business or trade in its
entirety. Also, if the employee has been
performing the job for at least one year, even if the
performance is not continuous or merely
intermittent, the law deems the repeated and
continuing need for its performance as sufficient
evidence of the necessity if not indispensability of
that activity to the business. Hence, the
employment is also considered regular, but only
with respect to such activity and while such
activity exists
2. WON after petitioner discontinued its herbal
medicine project after it had been shown not to be

viable, private respondents employment had to be

terminated, too
As this Court has held
Agency, Inc. v. NLRC:

in Western

Shipping

Loss of confidence is a valid ground for the

dismissal of managerial employees . . . But even
managerial employees enjoy security of tenure, . . .
and, . . . can only be dismissed after cause is
shown in an appropriate proceeding. The loss of
confidence must be substantiated by evidence. The
burden of proof is on the employer to show
grounds justifying the loss of confidence.
3. WON reinstatement of private respondent is
not feasible because the position which she held
was abolished on account of its decision to
discontinue its herbal medicine development
project and that, in any event, because the
position is a sensitive one which needs an
employee in whom the petitioner has full faith and
confidence.
As regards the claim that the position has already
been abolished and, therefore, reinstatement is
impossible, suffice it to state that the factual
findings of the Labor Arbiter belie this. A
replacement for private respondent was appointed
two (2) days prior to her termination. If the
position had been abolished, there would have
been no necessity for a replacement.
But we agree that because of antagonism
generated by this case and the private
respondents own preference for separation pay,
reinstatement would no longer be feasible.
Case Title: SAN MIGUEL BREWERY, INC. VS.
DEMOCRATIC LABOR ORGANIZATION, ET AL
G.R. No.: L 18353 Date: July 31, 1963
Petitioner: San Miguel Brewery, Inc.
Respondent: Democratic Labor Organization,
et al. Ponente: J. Bautista
FACTS:
Petition for review of a decision of the Court of
Industrial Relations.
Herein respondent filed
complaint the San Miguel Brewery embodying 12
demands for the betterment of the condition of
employment of its members. The union manifested
its desire to confine its claim to its demands for
overtime night shift differential pay and
attorneys fees, additional separation pay and sick
and vacation leave compensation.
Judge Bautista rendered decision that with regard
to overtime compensation, the Eight Hour Labor
law applies to the employees concerned for those
working in the field or engaged in the sale of the
companys products outside its premises should be
paid the extra compensation accorded them in
addition to the monthly salary and commission by
earned by them, regardless of the meal allowance
given to employees who work up to late at night.

No. The Court ruled that where after the morning

roll call the outside or field sales personnel leave
the plant of the company to go on their respective
sales routes and they do not have a daily time
record but the sales routes are so planned that
they can be completed within 8 hours at most, and
they
receive
monthly
salaries
and
sales
commission in variable amounts, so that they are
made to work beyond the required eight hours
similar to piece work, pakiao, or commission
basis regardless of the time employed, and the
employees participation depends on their
industry, it is held that the Eight Hour Labor Law
has no application to said outside or field sales
personnel and that they are not entitled to
overtime compensation. The decision of Industrial
Court is modified.
FAR EAST AGRICULTURAL SUPPLY, INC. VS
JIMMY LEBATIQUE

FACTS:
In March 1996, Lebatique was hired as a driver by
FAR EAST AGRICULTURAL SUPPLY, INC. with a
daily wage of P223.50. His job as a driver includes
the delivery of animal feeds to the clients of the
company. He must report either in the morning or
in the afternoon to make the deliveries.

On January 24, 2000, Lebatique was suspended by

Manuel Uy (brother of FEASIs General Manager
Alexander Uy) for allegedly using the company
vehicle illegally.
On the same day, Lebatique filed a complaint for
nonpayment of overtime pay against Alexander Uy.

Uy summoned Lebatique and asked why he was

claiming overtime pay. Lebatique said since he
started working with the company he has never
been paid OT pay. Uy consulted with his brother.
On January 29, 2000, Uy told Lebatique to look for
another job.

Lebatique then filed an Illegal Dismissal case

against the company.

The Labor Arbiter ruled in favor of Lebatique. Uy

was ordered to reinstate Lebatique and at the
same time to pay Lebatique his 13 th month pay,
back wages (time when case was pending), service
incentive leave pay and OT pay all amounting to
P196,659.72.

Motion for Reconsideration in the industrial court

en banc was denied, hence, this petition.
ISSUE:
Whether or not outside or field sales personnel are
entitled to the benefits of the Eight Hour Labor
law?
HELD:

Uy argued that Lebatique was not dismissed and

that he was merely suspended; that he abandoned
his job; and that Lebatique was a field personnel
not entitled to overtime pay and service incentive
leave.

ISSUE: Whether or not Lebatique is a field

personnel.
HELD: No. Lebatique is a regular employee.

Uy illegally dismissed Lebatique when he told him

to look for another job. Judging at the sequence of
event, Lebatique earned the ire of Uy when he
filed a complaint for nonpayment of OT pay on the
day Lebatique was suspended by Manuel Uy. Such
is not a valid reason for dismissing Lebatique.
Uy cannot therefore
suspended Lebatique.

claim

that

he

merely

Further, Lebatique did not abandon his job. His

filing of this case is proof enough that he had no
intention to abandon his job.
To constitute abandonment as a just cause for
dismissal, there must be:
(a) absence without justifiable reason; and
(b) a clear intention, as manifested by some overt
act, to sever the employer-employee relationship.
None of the above was proven by Uy.
Also, Lebatique is not a field personnel as defined
above for the following reasons:
(1) company drivers, including Lebatique, are
directed to deliver the goods at a specified time
and place;
(2) they are not given the discretion to solicit,
select and contact prospective clients; and
(3) Far East issued a directive that company
drivers should stay at the clients premises during
truck-ban hours which is from 5:00 to 9:00 a.m.
and 5:00 to 9:00 p.m.
As a regular employee, Lebatique is entitled to
service incentive leave and OT pay.
The Supreme Court affirmed the Labor Arbiters
decision but remanded the case for properly
computing Lebatiques OT pay taking in to
consideration the companys time keeping records.

Field Personnel Defined

Field personnel are those who regularly perform
their duties away from the principal place of
business of the employer and whose actual hours
of work in the field cannot be determined with
reasonable certainty.

MERCIDAR FISHING CORPORATION

NLRC & FERMIN AGAO, JR.

VS.

FACTS:
This case originated from a complaint filed on
September 20, 1990 by private respondent
FerminAgao, Jr. against petitioner for illegal
dismissal, violation of P.D. No. 851, and nonpayment of five days service incentive leave for
1990. Private respondent had been employed as a
"bodegero" or ship's quartermaster on February
12, 1988. He complained that he had been
constructively dismissed by petitioner when the
latter refused him assignments aboard its boats
after he had reported to work on May 28, 1990.
Private respondent alleged that he had been sick
and thus allowed to go on leave without pay for
one month from April 28, 1990 but that when he
reported to work at the end of such period with
a health clearance, he was told to come back
another time as he could not be reinstated
immediately. Thereafter, petitioner refused to give
him work. For this reason, private respondent
asked for a certificate of employment from
petitioner on September 6, 1990. However, when
he came back for the certificate on September 10,
petitioner refused to issue the certificate unless he
submitted
his
resignation.
Since
private
respondent refused to submit such letter unless he
was given separation pay, petitioner prevented him
from entering the premises. Petitioner, on the
other hand, alleged that it was private respondent
who actually abandoned his work.
ISSUE:
Whether or not the fishing crew members are
considered field personnel as classified in Art. 82
of the Labor Code.
HELD:
Art. 82 of the Labor Code provides: The
provisions of this title [Working Conditions and
Rest Periods] shall apply to employees in all
establishments and undertakings whether for
profit or not, but not to government employees,
field personnel, members of the family of the
employer who are dependent on him for support,
domestic helpers, persons in the personal service
of another, and workers who are paid by results as
determined by the Secretary of Labor in
appropriate regulations. "Field personnel" shall
refer to non-agricultural employees who regularly
perform their duties away from the principal place
of business or branch office of the employer and
whose actual hours of work in the field cannot be
determined with reasonable certainty. In contrast,
in the case at bar, during the entire course of their
fishing voyage, fishermen employed by petitioner
have no choice but to remain on board its vessel.
Although they perform non-agricultural work away
from petitioner's business offices, the fact remains
that throughout the duration of their work they are
under the effective control and supervision of
petitioner through the vessel's patron or master.
Labor Congress of the Philippines vs. NLRC
G.R. No. 1239381
May 21, 1998
FACTS: The 99 persons named as petitioners in
this proceeding were rank-and-file employees of
respondent Empire Food Products, which hired
them on various dates. Petitioners filed against
private respondents a complaint for payment of
money claims and for violation of labor standards
laws They also filed a petition for direct
certification of petitioner Labor Congress of the
Philippines as their bargaining representative. In

an Order dated October 24, 1990, Mediator

Arbiter approved the memorandum of agreement
and certified LCP "as the sole and exclusive
bargaining
agent
among
the
rank-and-file
employees of Empire Food Products for purposes
of collective bargaining with respect to wages,
hours of work and other terms and conditions of
employment".
On November 1990, petitioners through LCP
President
Navarro
submitted
to
private
respondents a proposal for collective bargaining.
On January 1991, petitioners filed a complaint
against private respondents for Unfair Labor
Practice by way of Illegal Lockout and/or
Dismissal; Union busting thru Harassments [sic],
threats, and interfering with the rights of
employees to self-organization; Violation of the
Memorandum of Agreement dated October 23,
1990; Underpayment of Wages in violation of R.A.
No. 6640 and R.A. No. 6727, such as Wages
promulgated by the Regional Wage Board; Actual,
Moral and Exemplary Damages."

that in no case shall the holiday pay be less than

the applicable statutory minimum wage rate.

ISSUE: Whether or not the petitioners are entitled

to labor standard benefits considering they are
paid by piece rate worker.

The Revised Guidelines as well as the Rules and

Regulations identify those workers who fall under
the piece-rate category as those who are paid a
standard amount for every piece or unit of work
produced that is more or less regularly replicated,
without regard to the time spent in producing the
same.

RULING: The petitioners are so entitled to these

benefits namely, holiday pay, premium pay, 13th
month pay and service incentive leave. Three (3)
factors lead us to conclude that petitioners,
although piece-rate workers, were regular
employees of private respondents. First, as to the
nature of petitioners' tasks were necessary or
desirable in the usual business of private
respondents,
who
were
engaged
in
the
manufacture and selling of such food products;
second, petitioners worked for private respondents
throughout the year, and third, the length of time
that petitioners worked for private respondents.
Thus, while petitioners' mode of compensation was
on a "per piece basis," the status and nature of
their employment was that of regular employees.

In addition, the Revised Guidelines on the

Implementation of the 13th Month Pay Law, in
view of the modifications to P.D. No. 851 19 by
Memorandum Order No. 28, clearly exclude the
employer of piece rate workers from those
exempted from paying 13th month pay, to wit:
2. EXEMPTED EMPLOYERS
The following employers are still not covered by
P.D. No. 851:
d. Employers of those who are paid on purely
commission, boundary or task basis, and those
who are paid a fixed amount for performing
specific work, irrespective of the time consumed in
the performance thereof, except where the
workers are paid on piece-rate basis in which case
the employer shall grant the required 13th month
pay to such workers.

As to overtime pay, the rules, however, are

different. According to Sec 2(e), Rule I, Book III of
the Implementing Rules, workers who are paid by
results including those who are paid on piecework, takay, pakiao, or task basis, if their output
rates are in accordance with the standards
prescribed under Sec. 8, Rule VII, Book III, of
these regulations, or where such rates have been
fixed by the Secretary of Labor in accordance with
the aforesaid section, are not entitled to receive
overtime pay. As such, petitioners are beyond the
ambit of exempted persons and are therefore
entitled to overtime pay.

The Rules Implementing the Labor Code exclude

certain employees from receiving benefits such as
nighttime pay, holiday pay, service incentive leave
and 13th month pay, "field personnel and other
employees whose time and performance is
unsupervised by the employer, including those who
are engaged on task or contract basis, purely
commission basis, or those who are paid a fixed
amount for performing work irrespective of the
time consumed in the performance thereof."
Plainly, petitioners as piece-rate workers do not
fall within this group. As mentioned earlier, not
only did petitioners labor under the control of
private respondents as their employer, likewise did
petitioners toil throughout the year with the
fulfillment of their quota as supposed basis for
compensation.
Further, in Section 8(b), Rule IV, Book III which we
quote hereunder, piece workers are specifically
mentioned as being entitled to holiday pay.
SEC. 8. Holiday pay of certain employees.
(b) Where a covered employee is paid by results or
output, such as payment on piece work, his holiday
pay shall not be less than his average daily
earnings for the last seven (7) actual working days
preceding the regular holiday: Provided, however,

UNIVERSITY OF PANGASINAN FACULTY

UNION,
Petitioner,
v.
UNIVERSITY
OF
PANGASINAN
And
NATIONAL
LABOR
RELATIONS COMMISSION, Respondents.
G.R. No. L-63122 February 20, 1984

FACTS:
University of Pangasinan did not entitle its faculty
to ECOLA during the semestral break and when it
increased its tuition fee, it refused its faculty the
salary increase 60% of the incremental proceeds
of increased tuition fees.

ISSUES:
WON faculty members of a university are entitled
to ECOLA during semestral breaks.

HELD:
Yes.Per various PDs on ECOLA, ECOLA pay
includes LOA without pay.The contention that the
fact of receiving a salary should not be the basis of
receiving ECOLA is without merit as per IRR of
Wage Order No. 1: Allowance for Unworked days:
a) All covered employees whether paid on a
monthly or daily basis shall be entitled to their
daily living allowance when they are paid their
basic wage.

The intention of the law is to grant ECOLA upon

the payment of basic wages. Hence the principle,
No pay, no ECOLA.

Also applied by analogy is the principle enunciated

in the ORI-LCP: Sec. 4. Principles in Determining
Hours Worked d) The time during which an
employee is inactive by reason of interruptions in
his work beyond his control shall be considered
time either if the imminence of the resumption of
work requires the employees presence at the
place of work or if the interval is too brief to be
utilized effectively and gainfully in the employees
own interest.

RADA VS NLRC
January 9, 1992
FACTS:
In
1977, Rada was
contracted
by
Philnor
Consultants and Planners, Inc as a driver. He was
assigned to a specific project in Manila.The
contract he signed was for 2.3 years. His task was
to drive employees to the project from 7am to
4pm. He was allowed to bring home the company
vehicle in order to provide a timely transportation
service to the other project workers. The project
he was assigned to was not completed as
scheduled hence, since he has a satisfactory
record, he was re-contracted for an additional
10months. After 10 months the project was not yet
completed.
Several
contracts
thereafter
were made until the project was finished in1985.At
the
completion
of
the
project, Rada was
terminated as his employment was co-terminous
with the project. He later sued Philnor for non
payment of separation pay and overtime pay. He
said he is entitled to be paid OT pay because he
uses extra time to get to the project site from his
home and from the project site to his home
everydayin total, he spends an average of 3 hours
OT everyday.
ISSUE:
Whether or not Rada is entitled to separation pay
and OT pay.
HELD:
Separation payNO.
Overtime payYes.

Separation Pay
The SC ruled that Rada was a project employee
whose work was coterminous with the project for
which he was hired. Project employees, as
distinguished
from
regular
or
non-project
employees, are mentioned in Section 281 of the
Labor Code as those 'where the employment has
been fixed for a specific project or undertaking the
completion or termination of which has been
determined at the time of the engagement of the
employee.'Project employees are not entitled to
termination pay if they are terminated as a result
of the completion of the project or any phase
thereof in which they are employed, regardless of
the number of projects in which they have been
employed by a particular construction company.
Moreover, the company is not required to obtain
clearance from the Secretary of Labor in
connection with such termination.'
OT Pay
Rada is entitled to OT pay. The fact that he picks
up employees of Philnor at certain specified points
along EDSA in going to the project site and drops
them off at the same points on his way back from
the field office going home to Marikina, Metro
Manila is not merely incidental to Rada's job as a
driver. On the contrary, said transportation
arrangement had been adopted, not so much for
the convenience of the employees, but primarily
for the benefit of Philnor. As embodied in Philnors
memorandum, they allowed their drivers to bring
home their transport vehicles in order for them to
provide a timely transport service and to avoid
delaynot really so that the drivers could enjoy the
benefits of the company vehicles nor for them to
save on fair.
ABDULJUAHID R. PIGCAULAN VS SECURITY
AND CREDIT INVESTIGATION, INC. AND/OR
RENE AMBY REYES G.R. No. 173648
FACTS:
Canoy and Pigcaulan were both employed by SCII
as security guards and were assigned to SCIIs
different clients. Subsequently, however, Canoy
and Pigcaulan filed with the Labor Arbiter
separate complaints for underpayment of salaries
and non-payment of overtime, holiday, rest day,
service
incentive
leave
and
13th
month
pays. Respondents, however, maintained that
Canoy and Pigcaulan were paid their just salaries
and other benefits under the law; that the salaries
they received were above the statutory minimum
wage and the rates provided by the Philippine
Association of Detective and Protective Agency
Operators (PADPAO) for security guards; that their
holiday pay were already included in the
computation of their monthly salaries; that they
were paid additional premium of 30% in addition
to their basic salary whenever they were required
to work on Sundays and 200% of their salary for
work done on holidays; and, that Canoy and
Pigcaulan were paid the corresponding 13th month
pay for the years 1998 and 1999. Labor arbiter
favored to the Petitioner and NLRC affirmed the
decision of the labor arbiter. Respondent appeal to
the Court of Appeals set aside the ruling of the
NLRC and Labor Arbiter. Hence, the present
Petition for Review on Certiorari.
ISSUES
I. The Honorable Court of
Appeals erred when it dismissed the

complaint on mere alleged failure of

the Labor Arbiter and the NLRC to
observe the prescribed form of
decision, instead of remanding the
case for reformation of the decision
to include the desired detailed
computation.
II. The Honorable Court of
Appeals erred when it [made]
complainants
suffer
the
consequences of the alleged nonobservance by the Labor Arbiter and
NLRC of the prescribed forms of
decisions considering that they have
complied with all needful acts
required to support their claims.
III. The Honorable Court of
Appeals erred when it dismissed the
complaint allegedly due to absence
of legal and factual [bases] despite
attendance of substantial evidence
in the records.
RULING
The Verification and Certification of Non-Forum
Shopping attached to the petition was executed by
Pigcaulan alone, it was plainly and particularly
indicated under the name of the lawyer who
prepared the same, Atty. Josefel P. Grageda, that
he is the Counsel for Petitioner Adbuljuahid
Pigcaulan only. In view of these, there is
therefore, no doubt, that the petition was brought
only on behalf of Pigcaulan. Since no appeal from
the CA Decision was brought by Canoy, same has
already become final and executory as to
him. Canoy failed to show any reasonable cause
for his failure to join Pigcaulan to personally sign
the Certification of Non-Forum Shopping. It is his
duty, as a litigant, to be prudent in pursuing his
claims against SCII, especially so, if he was indeed
suffering from financial distress.
The Labor Arbiter and the NLRC erred in this
regard. The handwritten itemized computations
are self-serving, unreliable and unsubstantial
evidence to sustain the grant of salary
differentials, particularly overtime pay. Unsigned
and unauthenticated as they are, there is no way
of verifying the truth of the handwritten entries
stated therein. Written only in pieces of paper and
solely prepared by Canoy and Pigcaulan, these
representative daily time records, as termed by
the Labor Arbiter, can hardly be considered as
competent evidence to be used as basis to prove
that the two were underpaid of their salaries. We
find nothingcontention that he had rendered
service beyond eight hours to entitle him to
overtime pay and during Sundays to entitle him to
restday pay. Hence, in the absence of any in the
records
which
could
substantially
support
Pigcaulans concrete proof that additional service
beyond the normal working hours and days had
indeed been rendered, we cannot affirm the grant
of overtime pay to Pigcaulan.
Pigcaulan is entitled to holiday pay, service
incentive leave pay and proportionate 13 th month
pay for year 2000. Article 94 of the Labor Code
provides that Every worker shall be paid his
regular daily wage during regular holidays, except
in retail and service establishments regularly
employing less than ten (10) workers. While
Article 95 of the Labor Code provides Every

employee who has rendered at least one year of

service shall be entitled to a yearly service
incentive of five days with pay. Hence for he
rendered service for more than a year
already. Furthermore, under Presidential Decree
No. 851,[31] he should be paid his 13 th month
pay. As employer, SCII has the burden of proving
that it has paid these benefits to its employees.
The CA is not correct in dismissing Pigcaulans
claims in its entirety.
Consistent with the rule that all money claims
arising from an employer-employee relationship
shall be filed within three years from the time the
cause of action accrued,[34] Pigcaulan can only
demand the amounts due him for the period within
three years preceding the filing of the complaint in
2000. Furthermore, since the records are
insufficient to use as bases to properly compute
Pigcaulans claims, the case should be remanded
to the Labor Arbiter for a detailed computation of
the monetary benefits due to him.
MANTRADE/FMMC DIVISION EMPLOYEES
AND WORKERS UNION V BACUNGAN
144 SCRA 510
FERIA; September 30, 1986
NATURE
Petition for Certiorari and Mandamus
FACTS
- Petitioner employees question the validity of the
pertinent section of the Rules and Regulations
Implementing the Labor Code as amended on
which respondent arbitrator Froilan M. Bacungan
based his decision ruling that Mantrade Devt Corp
is not under legal obligation to pay holiday pay (as
provided for in Article 94 of the Labor Code) to its
monthly paid employees who are uniformly paid by
the month, irrespective of the number of working
days therein, with a salary of not less than the
statutory or established minimum wage, and that
this rule is applicable not only as of March 2, 1976
but as of November 1, 1974.
- Respondent corporation contends, among others
that petitioner is barred from pursuing the present
action in view of (1) Article 263 of the Labor Code;
(2) the pertinent provision of the CBA between
petitioner and respondent corporation; and (3)
Article 2044 of the Civil Code; that the special civil
action of certiorari does not lie because
respondent arbitrator is not an "officer exercising
judicial functions" within the contemplation of
Rule 65, Section 1, of the Rules of Court; that the
instant petition raises an error of judgment on the
part of respondent arbitrator and not an error of
jurisdiction; that it prays for the annulment of
certain rules and regulations issued by the DOLE,
not for the annulment of the voluntary arbitration
proceedings; and that appeal by certiorari under
Section 29 of the Arbitration Law, Republic Act No.
876, is not applicable to the case at bar because
arbitration in labor disputes is expressly excluded
by Section 3 of said law.
ISSUES
1. WON decisions of arbitrators are subject to
judicial review
2. WON Mantrade employees are entitled to
holiday pay
3. WON mandamus lies in the case at bar
HELD
1. YES

- Oceanic Bic Division (FFW) vs. Romero (July 16,

1984): The decisions of voluntary arbitrators must
be given the highest respect and as a general rule
must be accorded a certain measure of finality. It
is not correct, however, that this respect precludes
the exercise of judicial review over their decisions.
Article 262 of the Labor Code making voluntary
arbitration
awards
final,
inappealable
and
executory, except where the money claims exceed
P100,000.00 or 40% of the paid-up capital of the
employer or where there is abuse of discretion or
gross incompetence refers to appeals to the
National Labor Relations Commission and not to
judicial review. Judicial review still lies where want
of jurisdiction, grave abuse of discretion, violation
of due process, denial of substantial justice, or
erroneous interpretation of the Law are brought to
SCs attention.
2. YES
- Under Art. 94 of the Labor Code, monthly
salaried employees are not among those excluded
from receiving holiday pay. But they appear to be
excluded under Sec. 2, Rule IV, Book III of the
Rules
and
Regulations
implementing
said
provision.
- Insular Bank of Asia and America Employees'
Union (IBAAEU) vs. Inciong (October 24, 1984):
Section 2, Rule IV, Book III of the implementing
rules and Policy Instruction No. 9, issued by the
then Secretary of Labor are null and void since in
the guise of clarifying the Labor Code's provisions
on holiday pay, they in effect amended them by
enlarging the scope of their exclusion.
- Chartered Bank Employees Association vs. Ople
(August
28,
1985):
An
administrative
interpretation which diminishes the benefits of
labor more than what the statute delimits or
withholds is obviously ultra vires.
3. YES
- While it is true that mandamus is not proper to
enforce a contractual obligation, the remedy being
an action for specific performance, in view of the
above cited subsequent decisions of this Court
clearly defining the legal duty to grant holiday pay
to monthly salaried employees, mandamus is an
appropriate equitable remedy.
Disposition Questioned decision of respondent
arbitrator is SET ASIDE and respondent
corporation is ordered to GRANT holiday pay to its
monthly salaried employees. No costs.

SHELL OIL WORKERS UNION vs. SHELL

COMPANY OF THE PHILIPPINES, LTD., and
THE COURT OF INDUSTRIAL RELATIONS
G.R. No. L-28607, May 31, 1971.

FACTS:
Respondent Shell Company of the Philippines
(COMPANY) dissolved its security guard section
stationed
at
its
Pandacan
Installation,
notwithstanding its (guard section) continuance
and that such is assured by an existing collective

bargaining contract. The respondent company

transferred 18 security guards to its other
department and consequently hired a private
security agency to undertake the work of said
security guards. This resulted in a strike called by
petitioner Shell Oil Workers Union (UNION), The
President certified it to respondent Court of
Industrial Relations (CIR). CIR declared the strike
illegal on the ground that such dissolution was a
valid exercise of a management prerogative. Thus
this appeal is taken.

Petitioner argued that the 18 security guards

affected are part of the bargaining unit and
covered by the existing collective bargaining
contract, as such, their transfers and eventual
dismissals are illegal being done in violation of the
existing contract. The Company maintained that in
contracting out the security service and
redeploying the 18 security guards affected, it was
merely performing its legitimate prerogative to
adopt the most efficient and economical method of
operation, that said action was motivated by
business
consideration
in
line
with
past
established practice and made after notice to and
discussion with the Union, that the 18 guards
concerned were dismissed for wilfully refusing to
obey the transfer order, and that the strike staged
by the Union is illegal.

ISSUE:
Whether the existing collective bargaining
contract on maintaining security guard section,
among others, constitute a bar to the decision of
the management to contract out security guards.

RULING:
YES. The strike was legal because there was a
violation of the collective bargaining agreement by
Company. It was part of the CBA that the Security
Guard Section will remain. Yet, the Company did
not comply with the stipulation in CBA. It was thus
an assurance of security of tenure, at least, during
the lifetime of the agreement. For what is involved
is the integrity of the agreement reached, the
terms of which should be binding on both parties

The stand of Shell Company as to the scope of

management prerogative is not devoid of
plausibility, management prerogative of the
Company would have been valid if it were not
bound by what was stipulated in CBA. The freedom
to
manage
the
business
remains
with
management. It cannot be denied the faculty of
promoting efficiency and attaining economy by a
study of what units are essential for its operation.
To it belongs the ultimate determination of
whether services should be performed by its
personnel or contracted to outside agencies.
However, while management has the final say on
such matter, the labor union is not to be
completely left out.

An unfair labor practice is committed by a labor

union or its agent by its refusal to bargain
collectively
with
the
employer.
Collective
bargaining does not end with the execution of an
agreement, being a continuous process, the duty
to bargain necessarily imposing on the parties the
obligation to live up to the terms of such a
collective bargaining agreement if entered into, it
is undeniable that non-compliance therewith
constitutes an unfair labor practice.

The right to self-organization guarded by the

Industrial Peace Act explicitly includes the right
to engage in concerted activities for the purpose
of collective bargaining and to the mutual aid or
protection. The employee, tenant or laborer is
inhibited from striking or walking out of his
employment only when so enjoined by the CIR and
after a dispute has been submitted thereto and
pending award or decision by the court of such
dispute.

In the present case, the employees or laborers may

strike before being ordered not to do so and before
an industrial dispute is submitted to the CIR,
subject to the power of the latter, after hearing
when public interest so requires or when the
dispute cannot, in its opinion, be promptly decided
or settled, to order them to return to work, with
the consequence that if the strikers fail to return
to work, when so ordered, the court may authorize
the employer to accept other employees or
laborers. Thus a strike may not be staged only
when, during the pendency of an industrial
dispute, the CIR has issued the proper injunction
against the laborers (section 19, Commonwealth
Act No. 103, as amended).

WHEREFORE, the decision of respondent Court of

Industrial Relations of August 5, 1967 is reversed.

NOTE: BELIEF IN GOOD FAITH THAT EMPLOYER

COMMITTED
UNFAIR
LABOR
PRACTICE
RENDERS STRIKE LEGAL:
It is not even required that there be in fact an
unfair labor practice committed by the employer. It
suffices, if such a belief in good faith is entertained
by labor, as the inducing factor for staging a
strike. So it was declared: As a consequence, we
hold that the strike in question had been called to
offset what petitioners were wanted in believing in
good faith to be unfair labor practices on the part
of Management, that petitioners were not bound,
therefore, to wait for the expiration of thirty (30)
days from notice of strike before staging the same,
that said strike was not, accordingly, illegal and
that the strikers had not thereby lost their status
as employees of respondents herein.

JOSE RIZAL COLLEGE VS NLRC

The National Alliance of Teachers sued Jose Rizal

College for alleged nonpayment of unworked
holidays from 1975 to 1977. The members of the
Alliance concerned are faculty members who are
paid on the basis of student contract hour.

ISSUE: Whether or not the school faculty are

entitled to unworked holiday pay.

HELD: As far as unworked regular holidays are

concerned, the teachers are not entitled to holiday
pay. Regular holidays specified as such by law are
known to both school and faculty members as no
class days; certainly the latter do not expect
payment for said unworked days, and this was
clearly in their minds when they entered into the
teaching contracts.
On the other hand, the teachers are entitled to be
paid for unworked special holidays. Otherwise
stated, the faculty member, although forced to
take a rest, does not earn what he should earn on
that day. Be it noted that when a special public
holiday is declared, the faculty member paid by
the hour is deprived of expected income, and it
does not matter that the school calendar is
extended in view of the days or hours lost, for their
income that could be earned from other sources is
lost during the extended days. Similarly, when
classes are called off or shortened on account of
typhoons, floods, rallies, and the like, these faculty
members must likewise be paid, whether or not
extensions are ordered.

SAN MIGUEL CORPORATION, petitioner,

vs.
THE HONORABLE COURT OF APPEALSFORMER THIRTEENTH DIVISION, HON.
UNDERSECRETARY JOSE M. ESPAOL, JR.,
Hon. CRESENCIANO B. TRAJANO, and HON.
REGIONAL DIRECTOR ALLAN M. MACARAYA,
respondents.

FACTS:
The Department of Labor and Employment
conducted a routine inspection in San Miguel
Corporation, Iligan City and it was discovered that
there was underpayment by SMC of regular
Muslim holiday pay to its employees. DOLE sent a
copy of inspection result to SMC which the latter
contested the findings. SMC failed to submit proof
and hence the Director of DOLE of Iligan District
Office issued a compliance order to pay both its
Muslim and non-Muslim employees the Muslim
Holidays. SMC appealed to DOLE main office but
dismissed for having been filed late but later on
reconsidered because it is within reglementary
period but still dismissed for lack of merit. Hence,
this
present
petition
for
certiorari.
ISSUE:
Whether or not non-Muslim employees working in
Muslim areas is entitled to Muslim Holiday Pay.

HELD:
The Supreme Court dismissed the petition and
ordered the petitioner to pay its non-Muslim
employees. The basis for this decision were
Articles 169 and 170 of P.D. No. 1083 Code of
Muslim Personal Laws which listed all official
Muslim holidays and provincies and cities where
officially observed. In this case, SMC is located in
Iligan which is covered in the those provisions.
Also Article 169 and 170 of PD No. 1083 should be
read in conjunction with Article 94 of Labor Code
which provides for the right of every worker to be
paid of holiday pay.
Petitioner asserts Art.3(3) of PD No. 1083 provides
that it shall be applicable only to Muslims.
However, the Court said that said article declares
that nothing herein shall be construed to operate
to the prejudice of a non-Muslim. There should be
no distinction between Muslims and non-Muslims
as regards payment of benefits for Muslim
holidays.

It was said also that the The Court of Appeals did

not err in sustaining Undersecretary Espaol who
stated: Assuming arguendo that the respondents
position is correct, then by the same token,
Muslims throughout the Philippines are also not
entitled to holiday pays on Christian holidays
declared by law as regular holidays. We must
remind the respondent-appellant that wages and
other emoluments granted by law to the working
man are determined on the basis of the criteria
laid down by laws and certainly not on the basis of
the workers faith or religion.

PNCC SKYWAY TRAFFIC MANAGEMENT AND

SECURITY
DIVISION
WORKERS
ORGANIZATION (PSTMSDWO), represented
by its President, RENE SORIANO, Petitioner,
v.
PNCC
SKYWAY
CORPORATION,
Respondent. PERALTA, J.:
FACTS:
Petitioner PNCC Skyway Corporation Traffic
Management and Security Division Workers'
Organization (PSTMSDWO) is a labor union duly
registered with the DOLE. Respondent PNCC
Skyway Corporation is a corporation duly
organized and operating under and by virtue of the
laws of the Philippines.
On November 15, 2002, petitioner and respondent
entered into a Collective Bargaining Agreement
(CBA) incorporating the terms and conditions of
their agreement which included vacation leave and
expenses for security license provisions.
Article VIII, Section 1 (b) of the CBA, the pertinent
provisions of the CBA relative to vacation leave
and sick leave that the company shall schedule the
vacation leave of employees during the year taking
into consideration the request of preference of the
employees. Any unused vacation leave shall be
converted to cash and shall be paid to the
employees on the first week of December each
year."
Petitioner objected to the implementation of the
said memorandum. It insisted that the individual
members of the union have the right to schedule
their vacation leave. It opined that the unilateral

scheduling of the employees' vacation leave was

done to avoid the monetization of their vacation
leave in December 2004.
Petitioner also demanded that the expenses for the
required in-service training of its member security
guards, as a requirement for the renewal of their
license, be shouldered by the respondent.
However, the respondent did not accede to
petitioner's demands and stood firm on its decision
to schedule all the vacation leave of petitioner's
members.
Due to the disagreement between the parties,
petitioner elevated the matter to the DOLE-NCMB
for preventive mediation. For failure to settle the
issue amicably, the parties agreed to submit the
issue before the voluntary arbitrator.
Respondent filed a motion for reconsideration,
which the voluntary arbitrator denied. Aggrieved,
respondent filed a Petition for Certiorari with
Prayer for Temporary Restraining Order and/or
Writ of Preliminary Injunction with the CA, and the
CA annulled and setting aside the decision and
order of the voluntary arbitrator. The CA ruled that
since the provisions of the CBA were clear, the
voluntary arbitrator has no authority to interpret
the same beyond what was expressly written.
Petitioner filed a motion for reconsideration, which
the CA denied Hence, the instant petition
assigning the following errors:
ISSUE: Whether the Court of Appeals erred in
holding that the management has sole discretion
to schedule the vacation leave of the petitioner
HELD: The decision of the Court of Appeals is
sustained.
LABOR LAW
The rule is that where the language of a contract
is plain and unambiguous, its meaning should be
determined without reference to extrinsic facts or
aids. The intention of the parties must be gathered
from that language, and from that language alone.
Stated differently, where the language of a written
contract is clear and unambiguous, the contract
must be taken to mean that which, on its face, it
purports to mean, unless some good reason can be
assigned to show that the words used should be
understood in a different sense.
In the case at bar, the contested provision of the
CBA is clear and unequivocal. Article VIII, Section
1 (b) of the CBA categorically provides that the
scheduling of vacation leave shall be under the
option of the employer. The preference requested
by the employees is not controlling because
respondent retains its power and prerogative to
consider or to ignore said request.
Thus, if the terms of a CBA are clear and leave no
doubt upon the intention of the contracting
parties, the literal meaning of its stipulation shall
prevail. RFM Corporation-Flour Division and SFI
Feeds Division v. Kasapian ng Manggagawang
Pinagkaisa-RFM
(KAMPI-NAFLU-KMU)
and
Sandigan
at
Ugnayan
ng
Manggagawang
Pinagkaisa-SFI (SUMAPI-NAFLU-KMU)G.R. No.
162324, February 4, 2009.In fine, the CBA must be
strictly adhered to and respected if its ends have
to be achieved, being the law between the parties.
The parties cannot be allowed to change the terms

they agreed upon on the ground that the same are

not favorable to them.
There is, thus, no basis for the Voluntary Arbitrator
to interpret the subject provision relating to the
schedule of vacation leaves as being subject to the
discretion of the union members. There is simply
nothing in the CBA which grants the union
members this right.
It must be noted the grant to management of the
right to schedule vacation leaves is not without
good reason. Indeed, if union members were given
the unilateral discretion to schedule their vacation
leaves, the same may result in significantly
crippling the number of key employees of the
petitioner manning the toll ways on holidays and
other peak seasons, where union members may
wittingly or unwittingly choose to have a vacation.
Put another way, the grant to management of the
right to schedule vacation leaves ensures that
there would always be enough people manning
and servicing the toll ways, which in turn assures
the public plying the same orderly and efficient toll
way service.
Indeed, the multitude or scarcity of
manning the tollways should not rest
option of the employees, as the public
skyway system should be assured of
security and convenience.

personnel
upon the
using the
its safety,

Although the preferred vacation leave schedule of

petitioner's members should be given priority, they
cannot demand, as a matter of right, that their
request be automatically granted by the
respondent. If the petitioners were given the
exclusive right to schedule their vacation leave
then said right should have been incorporated in
the CBA. In the absence of such right and in view
of the mandatory provision in the CBA giving
respondent the right to schedule the vacation
leave of its employees, compliance therewith is
mandated by law.
In the grant of vacation leave privileges to an
employee, the employer is given the leeway to
impose conditions on the entitlement to and
commutation of the same, as the grant of vacation
leave is not a standard of law, but a prerogative of
management.Sobrepe, Jr. v. Court of Appeals, 345
Phil. 714. It is a mere concession or act of grace of
the employer and not a matter of right on the part
of the employee. Thus, it is well within the power
and authority of an employer to impose certain
conditions, as it deems fit, on the grant of vacation
leaves, such as having the option to schedule the
same.
PHILIPPINE HOTELIERS, INC., DUSIT HOTEL
NIKKO-MANILA petitionera, vs. NATIONAL
UNION
OF
WORKERS
IN
HOTEL,
RESTAURANT AND ALLIED INDUSTRIES
(NUWHRAIN)
DUSIT
HOTEL
NIKKO
CHAPTER, respondent.
G.R. No. 181972 August 25, 2009 ChicoNazario., J.
FACTS:
11/5/01 - Wage Order No. 9 (WO#9) took effect.
It granted P 30 ECOLA to all private sector
workers and employees in NCR with a daily wage
rate of P 250 to P 290 .

3/20/02 - NUWHRAIN (Union) sent a letter to

Director Maraan of DOLE-NCR reporting the noncompliance of Dusit with the ECOLA required
under WO#9 while there was an ongoing
compulsory arbitration before the NLRC due to a
bargaining deadlock between the Union and Dusit.
Labor Standards Officer Navidad conducted 2
inspections of the hotel. The first inspection
revealed the employees were receiving more than
P 290 daily wage, hence WO#9 did not apply
(note: payrolls were not submitted yet). The
second inspection revealed there were 144
employees affected by WO#9.
10/09/02 - NLRC rendered a decision in the
compulsory arbitration granting 3 rounds of wage
increases (P 500/mo. retroacting to Jan. 1, 2001; P
550/mo. in Jan 1, 2002; P 600/mo. in Jan. 1, 2003).
10/22/02 - DOLE-NCR issued a Compliance
Order directing the hotel to pay the 144 affected
employees the total amount of P1,218,240
corresponding to unpaid ECOLA under WO#9,
plus the penalty of double indemnity, pursuant to
Section 12 of RA 6727.
o Dusit filed an MR. It alleged the DOLE-NCR
Order had become moot and academic considering
the wage increase granted by the NLRC, which
took the employees out of the coverage of WO#9.
DOLE-NCR set aside its Order and dismissed the
complaint of the Union.
o The Union appealed before the DOLE Secretary,
maintaining the wage increases granted by the
NLRC should not be deemed compliance by Dusit
with WO#9. DOLE Acting Sec. Imson initially
granted the Union's appeal, but later reversed
upon Dusit's MR. He admitted he had disregarded
that the wage increase granted in the NLRC
decision retroacted to Jan. 1, 2001. Hence, the
wage increase already constituted complience with
WO#9. Union filed an MR which was denied.
o The Union appealed to the CA, which ruled in
their favor. Referring to Section 13 of WO#9, the
CA declared that wage increases/allowances
granted by the employer shall not be credited as
compliance with the prescribed increase in the
WO, unless so provided in the law or the CBA
itself. CA ordered Dusit to pay ECOLA to the 144
employees. Dusit filed an MR which was denied.
ISSUES AND HELD:
1) W/N the 144 affected employees are still
entitled to the ECOLA under WO#9 despite
the wage increases. NO.
Only 82 employees are still entitled to the ECOLA
(1st tranch) after applying the wage increase.
The reliance of the Union on Section 13 of WO#9
is misplaced. This section would apply only if Dusit
were proposing to pay its employees the wage
increases in place of the ECOLA. The position of
Dusit is merely that the retroactive increases place
said employees beyond the coverage of WO No. 9.
The retroactively increased salaries of the
employees granted in the NLRC decision should be
used as bases for determining W/N they were
entitled to ECOLA under WO#9. Otherwise, the
Court would be sanctioning unjust enrichment on
the part of the employees.

 After applying the 1st round of the wage

increase, only 82 hotel employees had daily salary
rates falling within the range of P250 to P290.
Thus, upon the effectivity of WO#9, only the said
82 employees were entitled to receive the first
tranch of ECOLA, equivalent to P15 per day.
After the 2nd round of the wage increase, the
daily salary rates of all hotel employees were
already above P 290. Consequently, by 01/01/02,
no hotel employee was qualified to receive ECOLA.
W/N (as Dusit argues) the 82 employees' receipt of
their shares in the service charges already
constituted substantial compliance with WO#9
NO.
Pursuant to Labor Code Art. 96, the hotel
employees have a right to their share in the
service charges. Undoubtedly, their right to their
shares in the service charges collected by Dusit is
distinct and separate from their right to ECOLA;
gratification by Dusit of one does not result in the
satisfaction of the other.
2) W/N Dusit is liable for the penalty of
double indemnity. NO.
Under Section 2(m) of DOLE Department Order
No. 10, Series of 1998, the Notice of Inspection
Result (issued prior to the Compliance Order)
should contain an advice that the employer shall
be liable for double indemnity in case of
refusal/failure to correct the violation within 5
calendar days.
Here, the Notice of Inspection Result dated
05/29/02 did not contain such an advice. This
deprived Dusit of the opportunity to decide and act
accordingly within the 5-day period so as to avoid
the penalty

METROPOLITAN
BANK
and
TRUST
COMPANY vs. NATIONAL LABOR RELATIONS
COMMISSION,
FELIPE
A.
PATAG
and
BIENVENIDO C. FLORA, G.R. No. 152928,
June 18, 2009
LEONARDO-DE CASTRO, J.:

FACTS:
Respondents Felipe Patag (Patag) and Bienvenido
Flora (Flora) were former employees of petitioner
Metropolitan
Bank
and
Trust
Company
(Metrobank). Both respondents availed of the
banks compulsory retirement plan in accordance
with the 1995 Officers Benefits Memorandum. At
the time of his retirement on February 1, 1998,
Patag was an Assistant Manager. Flora was a
Senior Manager when he retired on April 1, 1998.
Both of them received their respective retirement
benefits computed at 185% of their gross monthly
salary for every year of service as provided under
the said 1995 Memorandum.

Early in 1998, Collective Bargaining Agreement

(CBA) negotiations were on-going between
Metrobank and its rank and file employees for the
period 1998-2000. Patag wrote a letter dated

February 2, 1998 to the bank requesting that his

retirement benefits be computed at the new rate
should there be an increase thereof in anticipation
of possible changes in officers benefits after the
signing of the new CBA with the rank and file.
Flora likewise wrote Metrobank in March 25,
1998, requesting the bank to use as basis in the
computation of their retirement benefits the
increased rate of 200% as embodied in the just
concluded CBA between the bank and its rank and
file employees. Metrobank did not reply to their
requests.

The records show that since the 1986-1988 CBA,

and continuing with each CBA concluded
thereafter with its rank and file employees,
Metrobank would issue a Memorandum granting
similar or better benefits to its managerial
employees or officers, retroactive to January 1 st of
the first year of effectivity of the CBA. When the
1998-2000 CBA was approved, Metrobank, in line
with its past practice, issued on June 10, 1998, a
Memorandum on Officers Benefits, which
provided for improved benefits to its officers (the
1998 Officers Benefits Memorandum). This
Memorandum was signed by then Metrobank
President Antonio S. Abacan, Jr. Pertinently, the
compulsory retirement benefit for officers was
increased from 185% to 200% effective January 1,
1998, but with the condition that the benefits shall
only be extended to those who remain in service as
of June 15, 1998.

Consequently on August 31, 1998, Patag and

Flora, through their counsel, wrote a letter to
Metrobank demanding the payment of their unpaid
retirement benefits, representing the increased
benefits they should have received under the 1998
Officers Benefits Memorandum.

On September 25, 1998, Patag and Flora filed with

the Labor Arbiter their consolidated complaint
against
Metrobank
for
underpayment
of
retirement benefits and damages, asserting that
pursuant
to
the
1998
Officers
Benefits
Memorandum, they were entitled to additional
retirement benefits. Patag, for his part, also
claimed he was entitled to payment of his 1997
profit share and 1998 structural adjustment.

The Labor Arbiter rendered a decision, dismissing

the complaint of Patag and Flora. Patag and Flora
filed an appeal with the NLRC. The Third Division
of the NLRC partially granted the appeal and
directed Metrobank to pay Patag and Flora their
unpaid beneficial improvements under the 1998
Officers Benefits Memorandum. Aggrieved with
the ruling of the NLRC, Metrobank elevated the
matter to the CA by way of a petition for certiorari.
The CA promulgated its assailed decision
dismissing Metrobanks petition and affirming the
resolution of the NLRC. Petitioners subsequent
motion for reconsideration was denied by the CA.

Hence, the instant petition for review on certiorari

under Rule 45 of the 1997 Rules of Civil
Procedure.

ISSUE:
Whether respondents can still recover higher
benefits under the 1998 Officers Benefits
Memorandum despite the fact that they have
compulsorily retired prior to the issuance of said
memorandum and did not meet the condition
therein requiring them to be employed as of June
15, 1998.

HELD:
Yes.
To be considered a company practice, the giving of
the benefits should have been done over a long
period of time, and must be shown to have been
consistent and deliberate. The test or rationale of
this rule on long practice requires an indubitable
showing that the employer agreed to continue
giving the benefits knowing fully well that said
employees are not covered by the law requiring
payment thereof.

In other words, for over a decade, Metrobank has

consistently, deliberately and voluntarily
granted improved benefits to its officers, after the

signing of each CBA with its rank and file

employees, retroactive to January 1st of the same
year as the grant of improved benefits and without
the condition that the officers should remain
employees as of a certain date. This undeniably
indicates a unilateral and voluntary act on
Metrobanks part, to give said benefits to its
officers, knowing that such act was not required
by law or the company retirement plan.

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,
jurisprudence has not laid down any hard and fast
rule. In the case of Davao Fruits Corporation v.
Associated Labor Unions, the company practice of
including in the computation of the 13th-month
pay the maternity leave pay and cash equivalent of
unused vacation and sick leave lasted for six (6)
years. In another case, Tiangco v. Leogardo, Jr.,
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. While in Sevilla Trading
v. Semana, the employer 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. 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.
The
common
denominator in these cases appears to be the
regularity and deliberateness of the grant of
benefits over a significant period of time.