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CONDITIONS OF EMPLOYMENT

G.R. No. 159577 May 3, 2006


CHARLITO PEÑARANDA, Petitioner,
vs.
BAGANGA PLYWOOD CORPORATION and HUDSON CHUA,
Respondents.
DECISION
PANGANIBAN, CJ:
Managerial employees and members of the managerial staff are
exempted from the provisions of the Labor Code on labor standards.
Since petitioner belongs to this class of employees, he is not entitled
to overtime pay and premium pay for working on rest days.
The Case
Before us is a Petition for Review1 under Rule 45 of the Rules of
Court, assailing the January 27, 20032 and July 4, 20033 Resolutions
of the Court of Appeals (CA) in CA-GR SP No. 74358. The earlier
Resolution disposed as follows:
"WHEREFORE, premises considered, the instant petition is hereby
DISMISSED."4
The latter Resolution denied reconsideration.
On the other hand, the Decision of the National Labor Relations
Commission (NLRC) challenged in the CA disposed as follows:
"WHEREFORE, premises considered, the decision of the Labor
Arbiter below awarding overtime pay and premium pay for rest day to
complainant is hereby REVERSED and SET ASIDE, and the
complaint in the above-entitled case dismissed for lack of merit.5
The Facts
Sometime in June 1999, Petitioner Charlito Peñaranda was hired as
an employee of Baganga Plywood Corporation (BPC) to take charge
of the operations and maintenance of its steam plant boiler.6 In May
2001, Peñaranda filed a Complaint for illegal dismissal with money
claims against BPC and its general manager, Hudson Chua, before
the NLRC.7
After the parties failed to settle amicably, the labor arbiter8 directed
the parties to file their position papers and submit supporting
documents.9 Their respective allegations are summarized by the
labor arbiter as follows:
"[Peñaranda] through counsel in his position paper alleges that he
was employed by respondent [Baganga] on March 15, 1999 with a
monthly salary of P5,000.00 as Foreman/Boiler Head/Shift Engineer
until he was illegally terminated on December 19, 2000. Further, [he]
alleges that his services [were] terminated without the benefit of due
process and valid grounds in accordance with law. Furthermore, he
was not paid his overtime pay, premium pay for working during
holidays/rest days, night shift differentials and finally claims for
payment of damages and attorney’s fees having been forced to
litigate the present complaint.
"Upon the other hand, respondent [BPC] is a domestic corporation
duly organized and existing under Philippine laws and is represented
herein by its General Manager HUDSON CHUA, [the] individual
respondent. Respondents thru counsel allege that complainant’s
separation from service was done pursuant to Art. 283 of the Labor
Code. The respondent [BPC] was on temporary closure due to repair
and general maintenance and it applied for clearance with the
Department of Labor and Employment, Regional Office No. XI to shut
down and to dismiss employees (par. 2 position paper). And due to
the insistence of herein complainant he was paid his separation
benefits (Annexes C and D, ibid). Consequently, when respondent
[BPC] partially reopened in January 2001, [Peñaranda] failed to
reapply. Hence, he was not terminated from employment much less
illegally. He opted to severe employment when he insisted payment
of his separation benefits. Furthermore, being a managerial employee
he is not entitled to overtime pay and if ever he rendered services
beyond the normal hours of work, [there] was no office order/or
authorization for him to do so. Finally, respondents allege that the
claim for damages has no legal and factual basis and that the instant
complaint must necessarily fail for lack of merit."10
The labor arbiter ruled that there was no illegal dismissal and that
petitioner’s Complaint was premature because he was still employed
by BPC.11 The temporary closure of BPC’s plant did not terminate his
employment, hence, he need not reapply when the plant reopened.
According to the labor arbiter, petitioner’s money claims for illegal
dismissal was also weakened by his quitclaim and admission during
the clarificatory conference that he accepted separation benefits, sick
and vacation leave conversions and thirteenth month pay.12
Nevertheless, the labor arbiter found petitioner entitled to overtime
pay, premium pay for working on rest days, and attorney’s fees in the
total amount of P21,257.98.13
Ruling of the NLRC
Respondents filed an appeal to the NLRC, which deleted the award
of overtime pay and premium pay for working on rest days. According
to the Commission, petitioner was not entitled to these awards
because he was a managerial employee.14
Ruling of the Court of Appeals
In its Resolution dated January 27, 2003, the CA dismissed
Peñaranda’s Petition for Certiorari. The appellate court held that he
failed to: 1) attach copies of the pleadings submitted before the labor
arbiter and NLRC; and 2) explain why the filing and service of the
Petition was not done by personal service.15
In its later Resolution dated July 4, 2003, the CA denied
reconsideration on the ground that petitioner still failed to submit the
pleadings filed before the NLRC.16
Hence this Petition.17
The Issues
Petitioner states the issues in this wise:
"The [NLRC] committed grave abuse of discretion amounting to
excess or lack of jurisdiction when it entertained the APPEAL of the
respondent[s] despite the lapse of the mandatory period of TEN
DAYS. 1avvphil.net

"The [NLRC] committed grave abuse of discretion amounting to an


excess or lack of jurisdiction when it rendered the assailed
RESOLUTIONS dated May 8, 2002 and AUGUST 16, 2002
REVERSING AND SETTING ASIDE the FACTUAL AND LEGAL
FINDINGS of the [labor arbiter] with respect to the following:
"I. The finding of the [labor arbiter] that [Peñaranda] is a regular,
common employee entitled to monetary benefits under Art. 82 [of the
Labor Code].
"II. The finding that [Peñaranda] is entitled to the payment of
OVERTIME PAY and OTHER MONETARY BENEFITS."18
The Court’s Ruling
The Petition is not meritorious.
Preliminary Issue:
Resolution on the Merits
The CA dismissed Peñaranda’s Petition on purely technical grounds,
particularly with regard to the failure to submit supporting documents.
In Atillo v. Bombay,19 the Court held that the crucial issue is whether
the documents accompanying the petition before the CA sufficiently
supported the allegations therein. Citing this case, Piglas-Kamao v.
NLRC20 stayed the dismissal of an appeal in the exercise of its equity
jurisdiction to order the adjudication on the merits.
The Petition filed with the CA shows a prima facie case. Petitioner
attached his evidence to challenge the finding that he was a
managerial employee.21 In his Motion for Reconsideration, petitioner
also submitted the pleadings before the labor arbiter in an attempt to
comply with the CA rules.22 Evidently, the CA could have ruled on the
Petition on the basis of these attachments. Petitioner should be
deemed in substantial compliance with the procedural requirements.
Under these extenuating circumstances, the Court does not hesitate
to grant liberality in favor of petitioner and to tackle his substantive
arguments in the present case. Rules of procedure must be adopted
to help promote, not frustrate, substantial justice.23 The Court frowns
upon the practice of dismissing cases purely on procedural grounds.24
Considering that there was substantial compliance,25 a liberal
interpretation of procedural rules in this labor case is more in keeping
with the constitutional mandate to secure social justice.26
First Issue:
Timeliness of Appeal
Under the Rules of Procedure of the NLRC, an appeal from the
decision of the labor arbiter should be filed within 10 days from
receipt thereof.27
Petitioner’s claim that respondents filed their appeal beyond the
required period is not substantiated. In the pleadings before us,
petitioner fails to indicate when respondents received the Decision of
the labor arbiter. Neither did the petitioner attach a copy of the
challenged appeal. Thus, this Court has no means to determine from
the records when the 10-day period commenced and terminated.
Since petitioner utterly failed to support his claim that respondents’
appeal was filed out of time, we need not belabor that point. The
parties alleging have the burden of substantiating their allegations.28
Second Issue:
Nature of Employment
Petitioner claims that he was not a managerial employee, and
therefore, entitled to the award granted by the labor arbiter.
Article 82 of the Labor Code exempts managerial employees from the
coverage of labor standards. Labor standards provide the working
conditions of employees, including entitlement to overtime pay and
premium pay for working on rest days.29 Under this provision,
managerial employees are "those whose primary duty consists of the
management of the establishment in which they are employed or of a
department or subdivision."30
The Implementing Rules of the Labor Code state that managerial
employees are those who meet the following conditions:
"(1) Their primary duty consists of the management of the
establishment in which they are employed or of a department or
subdivision thereof;
"(2) They customarily and regularly direct the work of two or more
employees therein;
"(3) They have the authority to hire or fire other employees of lower
rank; or their suggestions and recommendations as to the hiring and
firing and as to the promotion or any other change of status of other
employees are given particular weight."31
The Court disagrees with the NLRC’s finding that petitioner was a
managerial employee. However, petitioner was a member of the
managerial staff, which also takes him out of the coverage of labor
standards. Like managerial employees, officers and members of the
managerial staff are not entitled to the provisions of law on labor
standards.32 The Implementing Rules of the Labor Code define
members of a managerial staff as those with the following duties and
responsibilities:
"(1) The primary duty consists of the performance of work directly
related to management policies of the employer;
"(2) Customarily and regularly exercise discretion and independent
judgment;
"(3) (i) Regularly and directly assist a proprietor or a managerial
employee whose primary duty consists of the management of the
establishment in which he is employed or subdivision thereof; or (ii)
execute under general supervision work along specialized or
technical lines requiring special training, experience, or knowledge; or
(iii) execute under general supervision special assignments and
tasks; and
"(4) who do not devote more than 20 percent of their hours worked in
a workweek to activities which are not directly and closely related to
the performance of the work described in paragraphs (1), (2), and (3)
above."33
As shift engineer, petitioner’s duties and responsibilities were as
follows:
"1. To supply the required and continuous steam to all consuming
units at minimum cost.
"2. To supervise, check and monitor manpower workmanship as well
as operation of boiler and accessories.
"3. To evaluate performance of machinery and manpower.
"4. To follow-up supply of waste and other materials for fuel.
"5. To train new employees for effective and safety while working.
"6. Recommend parts and supplies purchases.
"7. To recommend personnel actions such as: promotion, or
disciplinary action.
"8. To check water from the boiler, feedwater and softener,
regenerate softener if beyond hardness limit.
"9. Implement Chemical Dosing.
"10. Perform other task as required by the superior from time to
time."34
The foregoing enumeration, particularly items 1, 2, 3, 5 and 7
illustrates that petitioner was a member of the managerial staff. His
duties and responsibilities conform to the definition of a member of a
managerial staff under the Implementing Rules.
Petitioner supervised the engineering section of the steam plant
boiler. His work involved overseeing the operation of the machines
and the performance of the workers in the engineering section. This
work necessarily required the use of discretion and independent
judgment to ensure the proper functioning of the steam plant boiler.
As supervisor, petitioner is deemed a member of the managerial
staff.35
Noteworthy, even petitioner admitted that he was a supervisor. In his
Position Paper, he stated that he was the foreman responsible for the
operation of the boiler.36 The term foreman implies that he was the
representative of management over the workers and the operation of
the department.37 Petitioner’s evidence also showed that he was the
supervisor of the steam plant.38 His classification as supervisor is
further evident from the manner his salary was paid. He belonged to
the 10% of respondent’s 354 employees who were paid on a monthly
basis; the others were paid only on a daily basis.39
On the basis of the foregoing, the Court finds no justification to award
overtime pay and premium pay for rest days to petitioner.
WHEREFORE, the Petition is DENIED. Costs against petitioner.
SO ORDERED.

AUTO BUS TRANSPORT SYSTEMS, INC.,


petitioner, vs. ANTONIO BAUTISTA,
respondent.
DECISION
CHICO-NAZARIO, J.:
Before Us is a Petition for Review on Certiorari assailing the
Decision[1] and Resolution[2] of the Court of Appeals affirming
the Decision[3] of the National Labor Relations Commission
(NLRC). The NLRC ruling modified the Decision of the Labor
Arbiter (finding respondent entitled to the award of 13th
month pay and service incentive leave pay) by deleting the
award of 13th month pay to respondent.
THE FACTS
Since 24 May 1995, respondent Antonio Bautista has been
employed by petitioner Auto Bus Transport Systems, Inc.
(Autobus), as driver-conductor with travel routes Manila-
Tuguegarao via Baguio, Baguio- Tuguegarao via Manila and
Manila-Tabuk via Baguio. Respondent was paid on
commission basis, seven percent (7%) of the total gross
income per travel, on a twice a month basis.
On 03 January 2000, while respondent was driving Autobus
No. 114 along Sta. Fe, Nueva Vizcaya, the bus he was
driving accidentally bumped the rear portion of Autobus No.
124, as the latter vehicle suddenly stopped at a sharp curve
without giving any warning.
Respondent averred that the accident happened because he
was compelled by the management to go back to Roxas,
Isabela, although he had not slept for almost twenty-four (24)
hours, as he had just arrived in Manila from Roxas, Isabela.
Respondent further alleged that he was not allowed to work
until he fully paid the amount of P75,551.50, representing
thirty percent (30%) of the cost of repair of the damaged
buses and that despite respondents pleas for
reconsideration, the same was ignored by management.
After a month, management sent him a letter of termination.
Thus, on 02 February 2000, respondent instituted a
Complaint for Illegal Dismissal with Money Claims for
nonpayment of 13th month pay and service incentive leave
pay against Autobus.
Petitioner, on the other hand, maintained that respondents
employment was replete with offenses involving reckless
imprudence, gross negligence, and dishonesty. To support
its claim, petitioner presented copies of letters, memos,
irregularity reports, and warrants of arrest pertaining to
several incidents wherein respondent was involved.
Furthermore, petitioner avers that in the exercise of its
management prerogative, respondents employment was
terminated only after the latter was provided with an
opportunity to explain his side regarding the accident on 03
January 2000.
On 29 September 2000, based on the pleadings and
supporting evidence presented by the parties, Labor Arbiter
Monroe C. Tabingan promulgated a Decision,[4] the
dispositive portion of which reads:
WHEREFORE, all premises considered, it is hereby found that the
complaint for Illegal Dismissal has no leg to stand on. It is hereby
ordered DISMISSED, as it is hereby DISMISSED.
However, still based on the above-discussed premises, the
respondent must pay to the complainant the following:
a. his 13th month pay from the date of his hiring to the date of his
dismissal, presently computed at P78,117.87;
b. his service incentive leave pay for all the years he had been in
service with the respondent, presently computed at P13,788.05.
All other claims of both complainant and respondent are hereby
dismissed for lack of merit.[5]
Not satisfied with the decision of the Labor Arbiter, petitioner
appealed the decision to the NLRC which rendered its
decision on 28 September 2001, the decretal portion of
which reads:
[T]he Rules and Regulations Implementing Presidential Decree
No. 851, particularly Sec. 3 provides:
Section 3. Employers covered. The Decree shall apply to all
employers except to:
xxx xxx xxx
e) employers of those who are paid on purely commission,
boundary, or task basis, performing a specific work, irrespective of
the time consumed in the performance thereof. xxx.
Records show that complainant, in his position paper, admitted that
he was paid on a commission basis.
In view of the foregoing, we deem it just and equitable to modify
the assailed Decision by deleting the award of 13th month pay to
the complainant.

WHEREFORE, the Decision dated 29 September 2000 is


MODIFIED by deleting the award of 13th month pay. The other
findings are AFFIRMED.[6]
In other words, the award of service incentive leave pay was
maintained. Petitioner thus sought a reconsideration of this
aspect, which was subsequently denied in a Resolution by
the NLRC dated 31 October 2001.
Displeased with only the partial grant of its appeal to the
NLRC, petitioner sought the review of said decision with the
Court of Appeals which was subsequently denied by the
appellate court in a Decision dated 06 May 2002, the
dispositive portion of which reads:
WHEREFORE, premises considered, the Petition is DISMISSED
for lack of merit; and the assailed Decision of respondent
Commission in NLRC NCR CA No. 026584-2000 is hereby
AFFIRMED in toto. No costs.[7]
Hence, the instant petition.
ISSUES
1. Whether or not respondent is entitled to service incentive
leave;
2. Whether or not the three (3)-year prescriptive period
provided under Article 291 of the Labor Code, as amended,
is applicable to respondents claim of service incentive leave
pay.
RULING OF THE COURT
The disposition of the first issue revolves around the proper
interpretation of Article 95 of the Labor Code vis--vis Section
1(D), Rule V, Book III of the Implementing Rules and
Regulations of the Labor Code which provides:
Art. 95. RIGHT TO SERVICE INCENTIVE LEAVE
(a) Every employee who has rendered at least one year of service
shall be entitled to a yearly service incentive leave of five days
with pay.
Book III, Rule V: SERVICE INCENTIVE LEAVE
SECTION 1. Coverage. This rule shall apply to all employees
except:

(d) Field personnel and other employees whose performance is


unsupervised by the employer including those who are engaged on
task or contract basis, purely commission basis, or those who are
paid in a fixed amount for performing work irrespective of the time
consumed in the performance thereof; . . .
A careful perusal of said provisions of law will result in the
conclusion that the grant of service incentive leave has been
delimited by the Implementing Rules and Regulations of the
Labor Code to apply only to those employees not explicitly
excluded by Section 1 of Rule V. According to the
Implementing Rules, Service Incentive Leave shall not apply
to employees classified as field personnel. The phrase other
employees whose performance is unsupervised by the
employer must not be understood as a separate
classification of employees to which service incentive leave
shall not be granted. Rather, it serves as an amplification of
the interpretation of the definition of field personnel under the
Labor Code as those whose actual hours of work in the field
cannot be determined with reasonable certainty.[8]
The same is true with respect to the phrase those who are
engaged on task or contract basis, purely commission basis.
Said phrase should be related with field personnel, applying
the rule on ejusdem generis that general and unlimited terms
are restrained and limited by the particular terms that they
follow.[9] Hence, employees engaged on task or contract
basis or paid on purely commission basis are not
automatically exempted from the grant of service incentive
leave, unless, they fall under the classification of field
personnel.
Therefore, petitioners contention that respondent is not
entitled to the grant of service incentive leave just because
he was paid on purely commission basis is misplaced. What
must be ascertained in order to resolve the issue of propriety
of the grant of service incentive leave to respondent is
whether or not he is a field personnel.
According to Article 82 of the Labor Code, field personnel
shall refer to non-agricultural employees who regularly
perform their duties away from the principal place of
business or branch office of the employer and whose actual
hours of work in the field cannot be determined with
reasonable certainty. This definition is further elaborated in
the Bureau of Working Conditions (BWC), Advisory Opinion
to Philippine Technical-Clerical Commercial Employees
Association[10] which states that:
As a general rule, [field personnel] are those whose performance of
their job/service is not supervised by the employer or his
representative, the workplace being away from the principal office
and whose hours and days of work cannot be determined with
reasonable certainty; hence, they are paid specific amount for
rendering specific service or performing specific work. If required
to be at specific places at specific times, employees including
drivers cannot be said to be field personnel despite the fact that
they are performing work away from the principal office of the
employee. [Emphasis ours]
To this discussion by the BWC, the petitioner differs and
postulates that under said advisory opinion, no employee
would ever be considered a field personnel because every
employer, in one way or another, exercises control over his
employees. Petitioner further argues that the only criterion
that should be considered is the nature of work of the
employee in that, if the employees job requires that he works
away from the principal office like that of a messenger or a
bus driver, then he is inevitably a field personnel.
We are not persuaded. At this point, it is necessary to stress
that the definition of a field personnel is not merely
concerned with the location where the employee regularly
performs his duties but also with the fact that the employees
performance is unsupervised by the employer. As discussed
above, field personnel are those who regularly perform their
duties away from the principal place of business of the
employer and whose actual hours of work in the field cannot
be determined with reasonable certainty. Thus, in order to
conclude whether an employee is a field employee, it is also
necessary to ascertain if actual hours of work in the field can
be determined with reasonable certainty by the employer. In
so doing, an inquiry must be made as to whether or not the
employees time and performance are constantly supervised
by the employer.
As observed by the Labor Arbiter and concurred in by the
Court of Appeals:
It is of judicial notice that along the routes that are plied by these
bus companies, there are its inspectors assigned at strategic places
who board the bus and inspect the passengers, the punched tickets,
and the conductors reports. There is also the mandatory once-a-
week car barn or shop day, where the bus is regularly checked as to
its mechanical, electrical, and hydraulic aspects, whether or not
there are problems thereon as reported by the driver and/or
conductor. They too, must be at specific place as [sic] specified
time, as they generally observe prompt departure and arrival from
their point of origin to their point of destination. In each and every
depot, there is always the Dispatcher whose function is precisely to
see to it that the bus and its crew leave the premises at specific
times and arrive at the estimated proper time. These, are present in
the case at bar. The driver, the complainant herein, was therefore
under constant supervision while in the performance of this work.
He cannot be considered a field personnel.[11]
We agree in the above disquisition. Therefore, as correctly
concluded by the appellate court, respondent is not a field
personnel but a regular employee who performs tasks
usually necessary and desirable to the usual trade of
petitioners business. Accordingly, respondent is entitled to
the grant of service incentive leave.
The question now that must be addressed is up to what
amount of service incentive leave pay respondent is entitled
to.
The response to this query inevitably leads us to the
correlative issue of whether or not the three (3)-year
prescriptive period under Article 291 of the Labor Code is
applicable to respondents claim of service incentive leave
pay.
Article 291 of the Labor Code states that all money claims
arising from employer-employee relationship shall be filed
within three (3) years from the time the cause of action
accrued; otherwise, they shall be forever barred.
In the application of this section of the Labor Code, the
pivotal question to be answered is when does the cause of
action for money claims accrue in order to determine the
reckoning date of the three-year prescriptive period.
It is settled jurisprudence that a cause of action has three
elements, to wit, (1) a right in favor of the plaintiff by
whatever means and under whatever law it arises or is
created; (2) an obligation on the part of the named defendant
to respect or not to violate such right; and (3) an act or
omission on the part of such defendant violative of the right
of the plaintiff or constituting a breach of the obligation of the
defendant to the plaintiff.[12]
To properly construe Article 291 of the Labor Code, it is
essential to ascertain the time when the third element of a
cause of action transpired. Stated differently, in the
computation of the three-year prescriptive period, a
determination must be made as to the period when the act
constituting a violation of the workers right to the benefits
being claimed was committed. For if the cause of action
accrued more than three (3) years before the filing of the
money claim, said cause of action has already prescribed in
accordance with Article 291.[13]
Consequently, in cases of nonpayment of allowances and
other monetary benefits, if it is established that the benefits
being claimed have been withheld from the employee for a
period longer than three (3) years, the amount pertaining to
the period beyond the three-year prescriptive period is
therefore barred by prescription. The amount that can only
be demanded by the aggrieved employee shall be limited to
the amount of the benefits withheld within three (3) years
before the filing of the complaint.[14]
It is essential at this point, however, to recognize that the
service incentive leave is a curious animal in relation to other
benefits granted by the law to every employee. In the case of
service incentive leave, the employee may choose to either
use his leave credits or commute it to its monetary
equivalent if not exhausted at the end of the year.[15]
Furthermore, if the employee entitled to service incentive
leave does not use or commute the same, he is entitled
upon his resignation or separation from work to the
commutation of his accrued service incentive leave. As
enunciated by the Court in Fernandez v. NLRC:[16]
The clear policy of the Labor Code is to grant service incentive
leave pay to workers in all establishments, subject to a few
exceptions. Section 2, Rule V, Book III of the Implementing Rules
and Regulations provides that [e]very employee who has rendered
at least one year of service shall be entitled to a yearly service
incentive leave of five days with pay. Service incentive leave is a
right which accrues to every employee who has served within 12
months, whether continuous or broken reckoned from the date the
employee started working, including authorized absences and paid
regular holidays unless the working days in the establishment as a
matter of practice or policy, or that provided in the employment
contracts, is less than 12 months, in which case said period shall be
considered as one year. It is also commutable to its money
equivalent if not used or exhausted at the end of the year. In other
words, an employee who has served for one year is entitled to it.
He may use it as leave days or he may collect its monetary value.
To limit the award to three years, as the solicitor general
recommends, is to unduly restrict such right.[17] [Italics supplied]
Correspondingly, it can be conscientiously deduced that the
cause of action of an entitled employee to claim his service
incentive leave pay accrues from the moment the employer
refuses to remunerate its monetary equivalent if the
employee did not make use of said leave credits but instead
chose to avail of its commutation. Accordingly, if the
employee wishes to accumulate his leave credits and opts
for its commutation upon his resignation or separation from
employment, his cause of action to claim the whole amount
of his accumulated service incentive leave shall arise when
the employer fails to pay such amount at the time of his
resignation or separation from employment.
Applying Article 291 of the Labor Code in light of this
peculiarity of the service incentive leave, we can conclude
that the three (3)-year prescriptive period commences, not at
the end of the year when the employee becomes entitled to
the commutation of his service incentive leave, but from the
time when the employer refuses to pay its monetary
equivalent after demand of commutation or upon termination
of the employees services, as the case may be.
The above construal of Art. 291, vis--vis the rules on service
incentive leave, is in keeping with the rudimentary principle
that in the implementation and interpretation of the
provisions of the Labor Code and its implementing
regulations, the workingmans welfare should be the
primordial and paramount consideration.[18] The policy is to
extend the applicability of the decree to a greater number of
employees who can avail of the benefits under the law,
which is in consonance with the avowed policy of the State
to give maximum aid and protection to labor.[19]
In the case at bar, respondent had not made use of his
service incentive leave nor demanded for its commutation
until his employment was terminated by petitioner. Neither
did petitioner compensate his accumulated service incentive
leave pay at the time of his dismissal. It was only upon his
filing of a complaint for illegal dismissal, one month from the
time of his dismissal, that respondent demanded from his
former employer commutation of his accumulated leave
credits. His cause of action to claim the payment of his
accumulated service incentive leave thus accrued from the
time when his employer dismissed him and failed to pay his
accumulated leave credits.
Therefore, the prescriptive period with respect to his claim
for service incentive leave pay only commenced from the
time the employer failed to compensate his accumulated
service incentive leave pay at the time of his dismissal.
Since respondent had filed his money claim after only one
month from the time of his dismissal, necessarily, his money
claim was filed within the prescriptive period provided for by
Article 291 of the Labor Code.
WHEREFORE, premises considered, the instant petition
is hereby DENIED. The assailed Decision of the Court of
Appeals in CA-G.R. SP. No. 68395 is hereby AFFIRMED.
No Costs.
SO ORDERED.

G.R. No. 79255 January 20, 1992


UNION OF FILIPRO EMPLOYEES (UFE), petitioner,
vs.
BENIGNO VIVAR, JR., NATIONAL LABOR RELATIONS
COMMISSION and NESTLÉ PHILIPPINES, INC. (formerly
FILIPRO, INC.), respondents.
Jose C. Espinas for petitioner.
Siguion Reyna, Montecillo & Ongsiako for private respondent.
GUTIERREZ, JR., J.:
This labor dispute stems from the exclusion of sales personnel from
the holiday pay award and the change of the divisor in the
computation of benefits from 251 to 261 days.
On November 8, 1985, respondent Filipro, Inc. (now Nestle
Philippines, Inc.) filed with the National Labor Relations Commission
(NLRC) a petition for declaratory relief seeking a ruling on its rights
and obligations respecting claims of its monthly paid employees for
holiday pay in the light of the Court's decision in Chartered Bank
Employees Association v. Ople (138 SCRA 273 [1985]).
Both Filipro and the Union of Filipino Employees (UFE) agreed to
submit the case for voluntary arbitration and appointed respondent
Benigno Vivar, Jr. as voluntary arbitrator.
On January 2, 1980, Arbitrator Vivar rendered a decision directing
Filipro to:
pay its monthly paid employees holiday pay pursuant to Article 94 of
the Code, subject only to the exclusions and limitations specified in
Article 82 and such other legal restrictions as are provided for in the
Code. (Rollo,
p. 31)
Filipro filed a motion for clarification seeking (1) the limitation of the
award to three years, (2) the exclusion of salesmen, sales
representatives, truck drivers, merchandisers and medical
representatives (hereinafter referred to as sales personnel) from the
award of the holiday pay, and (3) deduction from the holiday pay
award of overpayment for overtime, night differential, vacation and
sick leave benefits due to the use of 251 divisor. (Rollo, pp. 138-145)
Petitioner UFE answered that the award should be made effective
from the date of effectivity of the Labor Code, that their sales
personnel are not field personnel and are therefore entitled to holiday
pay, and that the use of 251 as divisor is an established employee
benefit which cannot be diminished.
On January 14, 1986, the respondent arbitrator issued an order
declaring that the effectivity of the holiday pay award shall retroact to
November 1, 1974, the date of effectivity of the Labor Code. He
adjudged, however, that the company's sales personnel are field
personnel and, as such, are not entitled to holiday pay. He likewise
ruled that with the grant of 10 days' holiday pay, the divisor should be
changed from 251 to 261 and ordered the reimbursement of
overpayment for overtime, night differential, vacation and sick leave
pay due to the use of 251 days as divisor.
Both Nestle and UFE filed their respective motions for partial
reconsideration. Respondent Arbitrator treated the two motions as
appeals and forwarded the case to the NLRC which issued a
resolution dated May 25, 1987 remanding the case to the respondent
arbitrator on the ground that it has no jurisdiction to review decisions
in voluntary arbitration cases pursuant to Article 263 of the Labor
Code as amended by Section 10, Batas Pambansa Blg. 130 and as
implemented by Section 5 of the rules implementing B.P. Blg. 130.
However, in a letter dated July 6, 1987, the respondent arbitrator
refused to take cognizance of the case reasoning that he had no
more jurisdiction to continue as arbitrator because he had resigned
from service effective May 1, 1986.
Hence, this petition.
The petitioner union raises the following issues:
1) Whether or not Nestle's sales personnel are entitled to holiday pay;
and
2) Whether or not, concomitant with the award of holiday pay, the
divisor should be changed from 251 to 261 days and whether or not
the previous use of 251 as divisor resulted in overpayment for
overtime, night differential, vacation and sick leave pay.
The petitioner insists that respondent's sales personnel are not field
personnel under Article 82 of the Labor Code. The respondent
company controverts this assertion.
Under Article 82, field personnel are not entitled to holiday pay. Said
article defines field personnel as "non-agritultural employees who
regularly perform their duties away from the principal place of
business or branch office of the employer and whose actual hours of
work in the field cannot be determined with reasonable certainty."
The controversy centers on the interpretation of the clause "whose
actual hours of work in the field cannot be determined with
reasonable certainty."
It is undisputed that these sales personnel start their field work at
8:00 a.m. after having reported to the office and come back to the
office at 4:00 p.m. or 4:30 p.m. if they are Makati-based.
The petitioner maintains that the period between 8:00 a.m. to 4:00 or
4:30 p.m. comprises the sales personnel's working hours which can
be determined with reasonable certainty.
The Court does not agree. The law requires that the actual hours of
work in the field be reasonably ascertained. The company has no
way of determining whether or not these sales personnel, even if they
report to the office before 8:00 a.m. prior to field work and come back
at 4:30 p.m, really spend the hours in between in actual field work.
We concur with the following disquisition by the respondent arbitrator:
The requirement for the salesmen and other similarly situated
employees to report for work at the office at 8:00 a.m. and return at
4:00 or 4:30 p.m. is not within the realm of work in the field as defined
in the Code but an exercise of purely management prerogative of
providing administrative control over such personnel. This does not in
any manner provide a reasonable level of determination on the actual
field work of the employees which can be reasonably ascertained.
The theoretical analysis that salesmen and other similarly-situated
workers regularly report for work at 8:00 a.m. and return to their home
station at 4:00 or 4:30 p.m., creating the assumption that their field
work is supervised, is surface projection. Actual field work begins
after 8:00 a.m., when the sales personnel follow their field itinerary,
and ends immediately before 4:00 or 4:30 p.m. when they report back
to their office. The period between 8:00 a.m. and 4:00 or 4:30 p.m.
comprises their hours of work in the field, the extent or scope and
result of which are subject to their individual capacity and industry
and which "cannot be determined with reasonable certainty." This is
the reason why effective supervision over field work of salesmen and
medical representatives, truck drivers and merchandisers is
practically a physical impossibility. Consequently, they are excluded
from the ten holidays with pay award. (Rollo, pp. 36-37)
Moreover, the requirement that "actual hours of work in the field
cannot be determined with reasonable certainty" must be read in
conjunction with Rule IV, Book III of the Implementing Rules which
provides:
Rule IV Holidays with Pay
Sec. 1. Coverage — This rule shall apply to all employees except:
xxx xxx xxx
(e) Field personnel and other employees whose time and
performance is unsupervised by the employer . . . (Emphasis
supplied)
While contending that such rule added another element not found in
the law (Rollo, p. 13), the petitioner nevertheless attempted to show
that its affected members are not covered by the abovementioned
rule. The petitioner asserts that the company's sales personnel are
strictly supervised as shown by the SOD (Supervisor of the Day)
schedule and the company circular dated March 15, 1984 (Annexes 2
and 3, Rollo, pp. 53-55).
Contrary to the contention of the petitioner, the Court finds that the
aforementioned rule did not add another element to the Labor Code
definition of field personnel. The clause "whose time and
performance is unsupervised by the employer" did not amplify but
merely interpreted and expounded the clause "whose actual hours of
work in the field cannot be determined with reasonable certainty."
The former clause is still within the scope and purview of Article 82
which defines field personnel. Hence, in deciding whether or not an
employee's actual working hours in the field can be determined with
reasonable certainty, query must be made as to whether or not such
employee's time and performance is constantly supervised by the
employer.
The SOD schedule adverted to by the petitioner does not in the least
signify that these sales personnel's time and performance are
supervised. The purpose of this schedule is merely to ensure that the
sales personnel are out of the office not later than 8:00 a.m. and are
back in the office not earlier than 4:00 p.m.
Likewise, the Court fails to see how the company can monitor the
number of actual hours spent in field work by an employee through
the imposition of sanctions on absenteeism contained in the company
circular of March 15, 1984.
The petitioner claims that the fact that these sales personnel are
given incentive bonus every quarter based on their performance is
proof that their actual hours of work in the field can be determined
with reasonable certainty.
The Court thinks otherwise.
The criteria for granting incentive bonus are: (1) attaining or
exceeding sales volume based on sales target; (2) good collection
performance; (3) proper compliance with good market hygiene; (4)
good merchandising work; (5) minimal market returns; and (6) proper
truck maintenance. (Rollo, p. 190).
The above criteria indicate that these sales personnel are given
incentive bonuses precisely because of the difficulty in measuring
their actual hours of field work. These employees are evaluated by
the result of their work and not by the actual hours of field work which
are hardly susceptible to determination.
In San Miguel Brewery, Inc. v. Democratic Labor Organization (8
SCRA 613 [1963]), the Court had occasion to discuss the nature of
the job of a salesman. Citing the case of Jewel Tea Co. v. Williams,
C.C.A. Okla., 118 F. 2d 202, the Court stated:
The reasons for excluding an outside salesman are fairly apparent.
Such a salesman, to a greater extent, works individually. There are
no restrictions respecting the time he shall work and he can earn as
much or as little, within the range of his ability, as his ambition
dictates. In lieu of overtime he ordinarily receives commissions as
extra compensation. He works away from his employer's place of
business, is not subject to the personal supervision of his employer,
and his employer has no way of knowing the number of hours he
works per day.
While in that case the issue was whether or not salesmen were
entitled to overtime pay, the same rationale for their exclusion as field
personnel from holiday pay benefits also applies.
The petitioner union also assails the respondent arbitrator's ruling
that, concomitant with the award of holiday pay, the divisor should be
changed from 251 to 261 days to include the additional 10 holidays
and the employees should reimburse the amounts overpaid by Filipro
due to the use of 251 days' divisor.
Arbitrator Vivar's rationale for his decision is as follows:
. . . The new doctrinal policy established which ordered payment of
ten holidays certainly adds to or accelerates the basis of conversion
and computation by ten days. With the inclusion of ten holidays as
paid days, the divisor is no longer 251 but 261 or 262 if election day
is counted. This is indeed an extremely difficult legal question of
interpretation which accounts for what is claimed as falling within the
concept of "solutio indebti."
When the claim of the Union for payment of ten holidays was granted,
there was a consequent need to abandon that 251 divisor. To
maintain it would create an impossible situation where the employees
would benefit with additional ten days with pay but would
simultaneously enjoy higher benefits by discarding the same ten days
for purposes of computing overtime and night time services and
considering sick and vacation leave credits. Therefore,
reimbursement of such overpayment with the use of 251 as divisor
arises concomitant with the award of ten holidays with pay. (Rollo, p.
34)
The divisor assumes an important role in determining whether or not
holiday pay is already included in the monthly paid employee's salary
and in the computation of his daily rate. This is the thrust of our
pronouncement in Chartered Bank Employees Association v. Ople
(supra). In that case, We held:
It is argued that even without the presumption found in the rules and
in the policy instruction, the company practice indicates that the
monthly salaries of the employees are so computed as to include the
holiday pay provided by law. The petitioner contends otherwise.
One strong argument in favor of the petitioner's stand is the fact that
the Chartered Bank, in computing overtime compensation for its
employees, employs a "divisor" of 251 days. The 251 working days
divisor is the result of subtracting all Saturdays, Sundays and the ten
(10) legal holidays from the total number of calendar days in a year. If
the employees are already paid for all non-working days, the divisor
should be 365 and not 251.
In the petitioner's case, its computation of daily ratio since September
1, 1980, is as follows:
monthly rate x 12 months
———————————
251 days
Following the criterion laid down in the Chartered Bank case, the use
of 251 days' divisor by respondent Filipro indicates that holiday pay is
not yet included in the employee's salary, otherwise the divisor
should have been 261.
It must be stressed that the daily rate, assuming there are no
intervening salary increases, is a constant figure for the purpose of
computing overtime and night differential pay and commutation of
sick and vacation leave credits. Necessarily, the daily rate should
also be the same basis for computing the 10 unpaid holidays.
The respondent arbitrator's order to change the divisor from 251 to
261 days would result in a lower daily rate which is violative of the
prohibition on non-diminution of benefits found in Article 100 of the
Labor Code. To maintain the same daily rate if the divisor is adjusted
to 261 days, then the dividend, which represents the employee's
annual salary, should correspondingly be increased to incorporate the
holiday pay. To illustrate, if prior to the grant of holiday pay, the
employee's annual salary is P25,100, then dividing such figure by
251 days, his daily rate is P100.00 After the payment of 10 days'
holiday pay, his annual salary already includes holiday pay and totals
P26,100 (P25,100 + 1,000). Dividing this by 261 days, the daily rate
is still P100.00. There is thus no merit in respondent Nestle's claim of
overpayment of overtime and night differential pay and sick and
vacation leave benefits, the computation of which are all based on the
daily rate, since the daily rate is still the same before and after the
grant of holiday pay.
Respondent Nestle's invocation of solutio indebiti, or payment by
mistake, due to its use of 251 days as divisor must fail in light of the
Labor Code mandate that "all doubts in the implementation and
interpretation of this Code, including its implementing rules and
regulations, shall be resolved in favor of labor." (Article 4). Moreover,
prior to September 1, 1980, when the company was on a 6-day
working schedule, the divisor used by the company was 303,
indicating that the 10 holidays were likewise not paid. When Filipro
shifted to a 5-day working schebule on September 1, 1980, it had the
chance to rectify its error, if ever there was one but did not do so. It is
now too late to allege payment by mistake.
Nestle also questions the voluntary arbitrator's ruling that holiday pay
should be computed from November 1, 1974. This ruling was not
questioned by the petitioner union as obviously said decision was
favorable to it. Technically, therefore, respondent Nestle should have
filed a separate petition raising the issue of effectivity of the holiday
pay award. This Court has ruled that an appellee who is not an
appellant may assign errors in his brief where his purpose is to
maintain the judgment on other grounds, but he cannot seek
modification or reversal of the judgment or affirmative relief unless he
has also appealed. (Franco v. Intermediate Appellate Court, 178
SCRA 331 [1989], citing La Campana Food Products, Inc. v.
Philippine Commercial and Industrial Bank, 142 SCRA 394 [1986]).
Nevertheless, in order to fully settle the issues so that the execution
of the Court's decision in this case may not be needlessly delayed by
another petition, the Court resolved to take up the matter of effectivity
of the holiday pay award raised by Nestle.
Nestle insists that the reckoning period for the application of the
holiday pay award is 1985 when the Chartered Bank decision,
promulgated on August 28, 1985, became final and executory, and
not from the date of effectivity of the Labor Code. Although the Court
does not entirely agree with Nestle, we find its claim meritorious.
In Insular Bank of Asia and America Employees' Union (IBAAEU) v.
Inciong, 132 SCRA 663 [1984], hereinafter referred to as the IBAA
case, the Court declared that Section 2, Rule IV, Book III of the
implementing rules and Policy Instruction No. 9, issued by the then
Secretary of Labor on February 16, 1976 and April 23, 1976,
respectively, and which excluded monthly paid employees from
holiday pay benefits, are null and void. The Court therein reasoned
that, in the guise of clarifying the Labor Code's provisions on holiday
pay, the aforementioned implementing rule and policy instruction
amended them by enlarging the scope of their exclusion. The
Chartered Bank case reiterated the above ruling and added the
"divisor" test.
However, prior to their being declared null and void, the implementing
rule and policy instruction enjoyed the presumption of validity and
hence, Nestle's non-payment of the holiday benefit up to the
promulgation of the IBAA case on October 23, 1984 was in
compliance with these presumably valid rule and policy instruction.
In the case of De Agbayani v. Philippine National Bank, 38 SCRA 429
[1971], the Court discussed the effect to be given to a legislative or
executive act subsequently declared invalid:
xxx xxx xxx
. . . It does not admit of doubt that prior to the declaration of nullity
such challenged legislative or executive act must have been in force
and had to be complied with. This is so as until after the judiciary, in
an appropriate case, declares its invalidity, it is entitled to obedience
and respect. Parties may have acted under it and may have changed
their positions. What could be more fitting than that in a subsequent
litigation regard be had to what has been done while such legislative
or executive act was in operation and presumed to be valid in all
respects. It is now accepted as a doctrine that prior to its being
nullified, its existence as a fact must be reckoned with. This is merely
to reflect awareness that precisely because the judiciary is the
government organ which has the final say on whether or not a
legislative or executive measure is valid, a period of time may have
elapsed before it can exercise the power of judicial review that may
lead to a declaration of nullity. It would be to deprive the law of its
quality of fairness and justice then, if there be no recognition of what
had transpired prior to such adjudication.
In the language of an American Supreme Court decision: "The actual
existence of a statute, prior to such a determination of
[unconstitutionality], is an operative fact and may have consequences
which cannot justly be ignored. The past cannot always be erased by
a new judicial declaration. The effect of the subsequent ruling as to
invalidity may have to be considered in various aspects, — with
respect to particular relations, individual and corporate, and particular
conduct, private and official." (Chicot County Drainage Dist. v. Baxter
States Bank, 308 US 371, 374 [1940]). This language has been
quoted with approval in a resolution in Araneta v. Hill (93 Phil. 1002
[1952]) and the decision in Manila Motor Co., Inc. v. Flores (99 Phil.
738 [1956]). An even more recent instance is the opinion of Justice
Zaldivar speaking for the Court in Fernandez v. Cuerva and Co. (21
SCRA 1095 [1967]. (At pp. 434-435)
The "operative fact" doctrine realizes that in declaring a law or rule
null and void, undue harshness and resulting unfairness must be
avoided. It is now almost the end of 1991. To require various
companies to reach back to 1975 now and nullify acts done in good
faith is unduly harsh. 1984 is a fairer reckoning period under the facts
of this case.
Applying the aforementioned doctrine to the case at bar, it is not far-
fetched that Nestle, relying on the implicit validity of the implementing
rule and policy instruction before this Court nullified them, and
thinking that it was not obliged to give holiday pay benefits to its
monthly paid employees, may have been moved to grant other
concessions to its employees, especially in the collective bargaining
agreement. This possibility is bolstered by the fact that respondent
Nestle's employees are among the highest paid in the industry. With
this consideration, it would be unfair to impose additional burdens on
Nestle when the non-payment of the holiday benefits up to 1984 was
not in any way attributed to Nestle's fault.
The Court thereby resolves that the grant of holiday pay be effective,
not from the date of promulgation of the Chartered Bank case nor
from the date of effectivity of the Labor Code, but from October 23,
1984, the date of promulgation of the IBAA case.
WHEREFORE, the order of the voluntary arbitrator in hereby
MODIFIED. The divisor to be used in computing holiday pay shall be
251 days. The holiday pay as above directed shall be computed from
October 23, 1984. In all other respects, the order of the respondent
arbitrator is hereby AFFIRMED.
SO ORDERED.

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.
DECISION
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-and-file 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,[if !supportFootnotes][1][endif] Vice-President-
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.[if
!supportFootnotes][2][endif]

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 unions 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.[if !supportFootnotes][3][endif] The parties, however, failed to
arrive at an agreement and on 15 November 1993, respondent
company filed with 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 order[if !supportFootnotes][4][endif] 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.[if
!supportFootnotes][5][endif]
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 x.[if !supportFootnotes][6][endif] The same order
pronounced that (a)ll pending cases which are direct offshoots of
the instant labor dispute are hereby subsumed herewith.[if
!supportFootnotes][7][endif]

In the interim, 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 the 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.[if !supportFootnotes][8][endif] 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
Carmelo Santos - Vice-President
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 now questioned decision
promulgated on 29 December 1999, the appellate court dismissed
the petition. The unions motion for reconsideration was likewise
denied.
Hence, the present recourse where petitioner alleged:
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
RESPONDENTS 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.[if !supportFootnotes][9][endif]
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 Employments jurisdiction over labor-
related disputes was already settled in International
Pharmaceutical, Inc. vs. Hon. Secretary of Labor and Associated
Labor Union (ALU)[if !supportFootnotes][10][endif] 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 x x x. 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.[if !supportFootnotes][11][endif]
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.[if
!supportFootnotes][12][endif]
Here, the report and recommendation of Labor
Arbiter Caday was not only adopted by then Secretary of Labor
Quisumbing but it 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[if
!supportFootnotes][13][endif]
when 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 a.m. 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.[if !supportFootnotes][14][endif] 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
Appeal 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.[if !supportFootnotes][15][endif] Rules of procedure and evidence are
not applied in a very rigid and technical sense in labor cases. [if
!supportFootnotes][16][endif]
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.[if
!supportFootnotes][17][endif]

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 24-hour 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.[if !supportFootnotes][18][endif]
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 Vice-President-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 taga-maintenance 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 dalawaang 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-ovetime 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 nag-
overtime 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
Tess Montejo------- Chief Steward
Segundo Flores ------ Director
Enrico Gonzales ----- Auditor
Boy Alcantara ------- Shop Steward
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 "nag-ovetime" 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
"mag-overtime." Pagkatapos nito, ako ay pinagmumura ng mga
opisyales ng Unyon kaya't ako ay madaliang umalis.
x x x"
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 M. 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. xxx[if !supportFootnotes][19][endif]
It is thus undisputed that members of the union by their own
volition decided not to render overtime services in April 1993.[if
!supportFootnotes][20][endif]
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)sometime 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".[if !supportFootnotes][21][endif] 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.[if
!supportFootnotes][22][endif]
In Ilaw at Buklod ng Manggagawa vs. NLRC,[if
!supportFootnotes][23][endif]
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 xxx (their
collective bargaining) agreement.
What has just been said makes unnecessary resolution of SMCs
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 petitioners
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 employers damage, to
do other work; in other words, they work on their own terms. x x
x.[if !supportFootnotes][24][endif]
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.[if !supportFootnotes][25][endif]
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.