FIRST DIVISION salaries; and, as against the respondent union, for its
disestablishment and the refund of all monies it had collected
G.R. No. L-30452, September 30, 1982
MERCURY DRUG CO., INC., PETITIONER, VS. NARDO
DAYAO, ET AL., RESPONDENTS.
DECISION
GUTIERREZ, JR., J.:
This is a petition for review on certiorari of the decision of the
Court of Industrial Relations dated March 30, 1968 in Case No.
1926-V and the Resolution of the Court en banc dated July 6,
1968 denying two separate motions for reconsideration filed by
petitioners and respondents.
The factual background of Case No. 1926-V is summarized by the
respondent Court of Industrial Relations as follows:
"This is a verified petition dated March 17, 1964 which was
subsequently amended on July 31, 1964 filed by Nardo Dayao and
70 others against Mercury Drug Co., Inc., and/or Mariano Que,
President & General Manager, and Mercury Drug Co., Inc.,
Employees Association praying, with respect to respondent
corporation and its president and general manager: 1) payment
of their unpaid back wages for work done on Sundays and legal
holidays plus 25% additional compensation from date of their
employment up to June 30, 1962; 2) payment of extra
compensation on work done at night; 3) reinstatement of Januario
Referente and Oscar Echalar to their former positions with back
from petitioners.
"In separate motions, respondent management and respondent
union move to dismiss, the first on the ground that:
"I. The petition states no cause of action.
"II. This Court has no jurisdiction over the subject of the claims
of petitioners Januario Referente and Oscar Echalar.
"III . There is another action pending between the same parties,
namely, Mercury Drug Co., Inc., and/or Mariano Que and Nardo
Dayao.
while on the other hand, the second alleges that this Court has no
jurisdiction over the acts complained of against the respondent
union.
"For reasons stated in the Order dated March 24, 1965, this Court
resolved the motions to dismiss, as follows:
"1 . Ground No. 1 of management's motion to dismiss was denied
for lack of merit.
"2 . Its second ground was found meritorious and, accordingly
Januario Referente and Oscar Echalar were dropped as party
petitioners in this case.
"3 . The third ground was denied, holding that there still exists
the employer-employee relationship between Nardo Dayao and
the management.
"4 . With respect to the fourth ground, the Court held that on the
basis of Section 7-A of C.A. No. 444, as amended by R.A. No. 1993,
'it can be safely said that, counting backward the three (3) year
prescriptive period from the date of the filing of the instant
petition - March 20, 1964 - all of petitioners' claims have not yet
prescribed.'
"5. In so far as respondent union's motion is concerned, the Court
held that 'petitioners' cause of action against the respondent
Association should be dismissed without prejudice to the refiling
of the same as an unfair labor practice case.'
"Only the respondent management moved to reconsider the Order
of March 24, 1965 but the same was denied by the Court en banc
in a resolution dated August 26, 1965. Respondent submitted an
answer to the amended petition which was subsequently
amended on January 6, 1966, containing some admissions and
some denials of the material averments of the amended
petition. By way of affirmative and special defenses, respondents
alleged that petitioners have no cause of action against Mariano
Que because their employer is respondent Mercury Drug
Company, Inc., an existing corporation which has a separate and
distinct personality from its incorporators, stockholders and/or
officers; that the company being a service enterprise is excluded
from the coverage of the Eight Hour Labor Law, as amended; that
no court has the power to set wages, rates of pay, hours of
employment or other conditions of employment to the extent of
disregarding an agreement thereon between the respondent
company and the petitioners, and of fixing night differential
wages; that the petitioners were fully paid for services rendered
under the terms and conditions of the individual contracts of
employment; that the petition having been verified by only three
of the petitioners without showing that the others authorized the
inclusion of their names as petitioners does not confer jurisdiction
to this Court; that there is no employer-employee relationship
between management and petitioner Nardo Dayao and that his
claim has been released and/or barred by another action; and that
petitioners' claims accruing before March 20, 1961 have
prescribed." (Annex "P", pp. 110-112, rollo ).
After hearing on the merits, the respondent court rendered its
decision. The dispositive portion of the March 30, 1968 decision
reads:
"IN VIEW OF THE FOREGOING, the Court hereby resolves that:
"1 . The claim of the petitioners for payment of backwages
corresponding to the first four hours work rendered on every
other Sunday and first four hours on legal holidays should be
denied for lack of merit.
"2 . Respondent Mercury Drug Company, Inc., is hereby ordered
to pay the sixty-nine (69) petitioners:
"(a) An additional sum equivalent to 25% of their respective basic
or regular salaries for services rendered on Sundays and legal
holidays during the period from March 20, 1961 up to June 30,
1962; and
"(b) Another additional sum or premium equivalent to 25% of
their respective basic or regular salaries for nighttime services
rendered from March 20, 1961 up to June 30, 1962.
"3 . Petitioners' petition to convert them to monthly employees
should be, as it is hereby, denied for lack of merit.
"4 . Respondent Mariano Que, being an officer and acted only as
an agent in behalf of the respondent corporation, should be
absolved from the money claims of herein petitioners whose
employer, according to the pleadings and evidence, is the Mercury
Drug Company, Inc.
"To expedite the computation of the money award, the Chief
Court Examiner or his authorized representative is hereby
directed to proceed to the office of the respondent corporation at
Bambang Street, Sta. Cruz, Manila, the latter to make available
to said employee its records, like time records, payrolls and other
pertinent papers, and compute the money claims awarded in this
decision and, upon the completion thereof, to submit his report as
soon as possible for further disposition of the Court."
Not satisfied with the decision, the respondents filed a motion for
its reconsideration. The motion for reconsideration, was however,
denied by the Court en banc in its Resolution dated July 6, 1968.
Petitioner Mercury Drug Company, Inc ., assigned the following
errors in this petition:
I
RESPONDENT CIR ERRED IN DECLARING THE
CONTRACTS OF EMPLOYMENT, EXHIBITS "A" AND "B",
NULL AND VOID AS BEING CONTRARY TO PUBLIC POLICY
AND IN SUSTAINING, ACCORDINGLY, PRIVATE
RESPONDENTS' CLAIMS FOR 25% SUNDAY AND LEGAL
HOLIDAY PREMIUMS BECAUSE SUCH DECLARATION AND
AWARD ARE NOT SUPPORTED BY SUBSTANTIAL
EVIDENCE, THUS INFRINGING UPON THE CARDINAL
RIGHTS OF THE PETITIONER; AND ALSO BECAUSE THE
VALIDITY OF SAID CONTRACTS OF EMPLOYMENT HAS
NOT BEEN RAISED.
II
RESPONDENT CIR ERRED IN SUSTAINING PRIVATE
RESPONDENTS' CLAIMS FOR NIGHTTIME WORK
PREMIUMS NOT ONLY BECAUSE OF THE DECLARED
POLICY ON COLLECTIVE BARGAINING FREEDOM
EXPRESSED IN REPUBLIC ACT 875 AND THE EXPRESS
PROHIBITION IN SECTION 7 OF SAID STATUTE, BUT ALSO
BECAUSE OF THE WAIVER OF SAID CLAIMS AND THE
TOTAL ABSENCE OF EVIDENCE THEREON.
III
RESPONDENT CIR ERRED IN MAKING AWARDS IN FAVOR
OF THE PRIVATE RESPONDENTS WHO NEITHER GAVE
EVIDENCE NOR EVEN APPEARED TO SHOW THEIR
INTEREST.
Three issues are discussed by the petitioner in its first
assignment of error. The first issue refers to its allegation that
the respondent Court erred in declaring the contracts of
employment null and void and contrary to law. This allegation is
premised upon the following finding of the respondent court:
"But the Court finds merit in the claim for the payment of
additional compensation for work done on Sundays and
holidays. While an employer may compel his employees to
perform service on such days, the law nevertheless imposes upon
him the obligation to pay his employees at least 25% additional of
their basic of regular salaries.
"'No person, firm or corporation business establishment or place
of center of labor shall compel an employee or laborer to work
during Sundays and legal holidays unless he is paid an additional
sum of at least twenty-five per centum of his regular
remuneration: PROVIDED, HOWEVER, That this prohibition
shall not apply to public utilities performing some public service
such as supplying gas, electricity, power, water, or providing
means of transportation or communication.' (Section 4, C. A. No.
444) (Underlined supplied)
Although a service enterprise, respondent company's employees
are within the coverage of C. A. No. 444, as amended known as
the Eight Hour Labor Law, for they do not fall within the
category or class of employees or laborers excluded from its
provisions. (Section 2, ibid)
"The Court is not impressed by the argument that under the
contracts of employment the petitioners are not entitled to such
claim for the reason that the same are contrary to law. Payment
of extra or additional pay for services rendered during Sundays
and legal holidays is mandated by law. Even assuming that the
petitioners had agreed to work on Sundays and legal holidays
without any further consideration than their monthly salaries,
they are not barred nevertheless from claiming what is due them,
because such agreement is contrary to public policy and is
declared null and void by law.
"'Any agreement or contract between employer and the laborer or
employee contrary to the provisions of this Act shall be null and
void ab initio.'
"Under the cited statutory provision, the petitioners are justified
to receive additional amount equivalent to 25% of their respective
basic or regular salaries for work done on Sundays and legal
holidays for the period from March 20, 1961 to June 30, 1962."
(Decision, pp. 119-120, rollo)
From a perusal of the foregoing statements of the respondent
court, it can be seen readily that the petitioner-company based its
arguments in its first assignment of error on the wrong
premise. The contracts of employment signed by the private
respondents are on a standard form, an example of which is that
of private respondent Nardo Dayao quoted hereunder:
“Mercury Drug Co., Inc.
1580 Bambang, Manila
October 30, 1959
Mr. Nardo Dayao
1015 Sta. Catalina
Rizal Ave., Exten .
Dear Mr. Dayao:
You are hereby appointed as Checker, in the Checking
Department of MERCURY DRUG CO., INC., effective July 1,
1959 and you shall receive an annual compensation the amount of
Two Thousand four hundred pesos only (P2,400.00), that includes
the additional compensation for work on Sundays and legal
holidays.
Your firm being a Service Enterprise, you will be required to
perform work every day in a year as follows:
8 Hours work on regular days and all special Holidays that may
be declared but with the 25% additional compensation;
4 Hours work on every other Sundays of the month;
For any work performed in excess of the hours as above
mentioned, you shall be paid 25% additional compensation per
hour.
This appointment may be terminated without notice for cause
and without cause upon thirty days written notice.
This supersedes your appointment of July 1, 1959.
Very truly yours,
MERCURY DRUG CO., INC.
( Sgd .) MARIANO QUE
General Manager
ACCEPTED WITH FULL CONFORMITY:
( Sgd .) NARDO DAYPO'"
(EXHS. "A" and "1")
(Decision, pp. 114-115, rollo)
These contracts were not declared by the respondent court null
and void in their entirety. The respondent court, on the basis of
the conflicting evidence presented by the parties, in effect: 1)
rejected the theory of the petitioner company that the 25%
additional compensation claimed by the private respondents for
the four-hour work they rendered during Sundays and legal
holidays provided in their contracts of employment were covered
by the private respondents' respective monthly salaries; 2) gave
credence to private respondents', ( Nardo Dayao, Ernesto
Talampas and Josias Federico) testimonies that the 25%
additional compensation was not included in the private
respondents' respective monthly salaries and 3) ruled that any
agreement in a contract of employment which would exclude the
25% additional compensation for work done during Sundays and
holidays is null and void as mandated by law.
On the second issue, the petitioner-company reiterated its stand
that under the respective contracts of employment of the private
respondents, the subject 25% additional compensation had
already been included in the latter's respective monthly
salaries. This contention is based on the testimony of its lone
witness, Mr. Jacinto Concepcion and pertinent exhibits. Thus:
"Exhibit A shows that for the period of October 30, 1960, the
annual compensation of private respondent Nardo Dayao,
including the additional compensation for the work he renders
during the first four (4) hours on every other Sunday and on the
eight (8) Legal Holidays at the time was P2 ,400.00 or P200.00
per month. These amounts did not represent basic salary only,
but they represented the basic daily wage of Nardo Dayao
considered to be in the amount of P7.36 x 305 ordinary working
days at the time or in the total amount of P2 ,244.80. So plus the
amount of P156.40 which is the equivalent of the Sunday and
Legal Holiday rate at P9.20 (basic rate of P7.36 plus 25% thereof
or P1.84) x 17, the latter figure representing 13 Sundays and 4
Legal Holidays of 8 hours each. x x x
xxx xxx xxx
"That the required minimum 25% Sunday and Legal Holiday
additional compensation was paid to and received by the
employees for the work they rendered on every other Sunday and
on the eight Legal Holidays for the period October, 1959 to June
30, 1962 is further corroborated by Exhibits 5, 6, 8, 9 and 9-A and
the testimony of Mr. Jacinto Concepcion thereon." (Brief for the
Petitioner, pp. 24, 27).
The aforesaid computations were not given credence by the
respondent court. In fact the same computations were not even
mentioned in the court's decision which shows that the court
found such computations incredible. The computations,
supposedly patterned after the WAS Interpretative Bulletin No. 2
of the Department Labor demonstrated in Exhibits "6", "7", "8",
"9", and "9-A", miserably failed to show the exact and correct
annual salary as stated in the respective contracts of employment
of the respondent employees. The figures arrived at in each case
did not tally with the annual salaries on the employees' contracts
of employment, the difference varying from P1.20 to as much as
P14.40 always against the interest of the employees. The
petitioner's defense consists of mathematical computations made
after the filing of the case in order to explain a clear attempt to
make its employees work without the extra compensation
provided by law on Sundays and legal holidays.
In not giving weight to the evidence of the petitioner-company,
the respondent court sustained the private respondents' evidence
to the effect that their 25% additional compensation for work
done on Sundays and Legal Holidays were not included in their
respective monthly salaries. The private respondents presented
evidence through the testimonies of Nardo Dayao, Ernesto
Talampas, and Josias Federico who are themselves among the
employees who filed the case for unfair labor practice in the
respondent court and are private respondents herein. The
petitioner-company's contention that the respondent court's
conclusion on the issue of the 25% additional compensation for
work done on Sundays and legal holidays during the first four
hours that the private respondents had to work under their
respective contracts of employment was not supported by
substantial evidence is, therefore, unfounded. Much less do We
find any grave abuse of discretion on the part of the respondent
court in its interpretation of the employment contract's provision
on salaries. In view of the controlling doctrine that a grave abuse
of discretion must be shown in order to warrant our disturbing
the findings of the respondent court, the reversal of the court's
findings on this matter is unwarranted. (Sanchez vs. Court of
Industrial Relations, 27 SCRA 490).
The last issue raised in the first assignment of error refers to a
procedural matter. The petitioner-company contends that the
question as to whether or not the contracts of employment were
null and void was not put in issue, hence, the respondent court
pursuant to the Rules of Court should have refrained from ruling
that such contracts of employment were null and void. In this
connection We restate our finding that the respondent court did
not declare the contracts of employment null and void in their
entirety. Only the objectionable features violative of law were
nullified. But even granting that the Court of Industrial
Relations declared the contracts of employment wholly void, it
could do so notwithstanding the procedural objection. In Sanchez
v. Court of Industrial Relations, supra, this Court speaking
through then Justice, now Chief Justice Enrique M. Fernando,
stated:
xxx xxx xxx
"Moreover, petitioners appear to be oblivious of the statutory
mandate that respondent Court in the hearing, investigation and
determination of any question or controversy and in the exercise
of any of its duties or powers is to act 'according to justice and
equity and substantial merits of the case, without regard to
technicalities or legal forms and shall not be bound by any
technical rules of legal evidence' informing its mind 'in such
manner as it may deem just and equitable.' Again, this Court has
invariably accorded the most hospitable scope to the breadth and
amplitude with which such provision is couched. So it has been
from the earliest case decided in 1939 to a 1967 decision."
Two issues are raised in the second assignment of error by the
petitioner-company. The first hinges on the jurisdiction of the
respondent court to award additional compensation for nighttime
work. Petitioner wants Us to re-examine Our rulings on the
question of nighttime work. It contends that the respondent court
has no jurisdiction to award additional compensation for
nighttime work because of the declared policy on freedom of
collective bargaining expressed in Republic Act 875 and the
express prohibition in Section 7 of the said statute. A re-
examination of the decisions on nighttime pay differential was
the focus of attention in Rheem of the Philippines, Inc. et al. v.
Ferrer, et al (19 SCRA 130). The earliest cases cited by the
petitioner-company, Naric v. Naric Workers Union, L-12075, May
29, 1959 and Philippine Engineers' Syndicate v. Bautista, L-
16440, February 29, 1964, were discussed lengthily. Thus -
xxx xxx xxx
"2 . On the claim for night differentials, no extended discussion is
necessary. To be read as controlling here is Philippine Engineers'
Syndicate, Inc. vs. Hon. Jose S. Bautista, et al., L-16440,
February 29, 1964, where this Court, speaking thru Mr. Chief
Justice Cesar Bengzon, declared –
"'Only one issue is raised: whether or not upon the enactment of
Republic Act 875, the CIR lost its jurisdiction over claims for
additional compensation for regular night work. Petitioner says
that this Act reduced the jurisdiction of respondent court and
limited it to specific cases which this Court has defined as: 'x x x
(1) when the labor dispute affects an industry which is
indispensable to the national interest and is so certified by the
President to the industrial court (Sec. 10, Republic Act 875); (2)
when the controversy refers to minimum wage under the
Minimum Wage Law (Republic Act 602); (3) when it involves
hours of employment under the Eight-Hour Labor Law
(Commonwealth Act 444) and (4) when it involves an unfair labor
practice [Sec. 5(a), Republic Act 875]', [ Paflu, et al. vs. Tan, et al.,
52 Off. Gaz, No. 13, 5836].
"Petitioner insists that respondents' case falls in none of these
categories because as held in two previous cases, night work is
not overtime but regular work; and that respondent court's
authority to try the case cannot be implied from its 'general
jurisdiction and broad powers' under Commonwealth Act 103
because Republic Act 875 precisely curbed such powers limiting
them to certain specific litigations, beyond which it is not
permitted to act.
"We believe petitioner to be in error. Its position collides with our
ruling in the Naric case [National Rice & Corn Corp. (NARIC) vs.
NARIC Workers' Union, et al., G.R. No. L-12075, May 29, 1959]
where we held:
"'While it is true that this Court made the above comment in the
aforementioned case, it does not intend to convey the idea that
work done at night cannot also be an overtime work. The
comment only served to emphasize that the demand which the
Shell Company made upon its laborers is not merely overtime
work but night work and so there was need to differentiate night
work from daytime work. In fact, the company contended that
there was no law that required the payment of additional
compensation for night work unlike an overtime work which is
covered by Commonwealth Act No. 444 (Eight-Hour Labor
Law). And this Court in that case said that while there was no
law actually requiring payment of additional compensation for
night work, the industrial court has the power to determine the
wages that night workers should receive under Commonwealth
Act No. 103, and so it justified the additional compensation in the
Shell case for 'hygienic, medical, moral, cultural and sociological
reasons.'"
xxx xxx xxx
True, in Paflu, et al. vs. Tan, et al., supra, and in a series of cases
thereafter, We held that the broad powers conferred by
Commonwealth Act 103 on the CIR may have been curtailed by
Republic Act 875 which limited them to the four categories
therein expressed in line with the public policy of allowing
settlement of industrial disputes via the collective bargaining
process; but We find no cogent reason for concluding that a suit of
this nature for extra compensation for night work falls outside
the domain of the industrial court. Withal, the record does not
show that the employer-employee relation between the 65
respondents and the petitioner had ceased.
After the passage of Republic Act 875, this Court has not only
upheld the industrial court's assumption of jurisdiction over cases
for salary differentials and overtime pay [Chua Workers Union
(NLU) vs. City Automotive Co., et al., G.R. No. L-11655, April 29,
1959; Prisco vs. CIR, et al., G.R. No. L-13806, May 23, 1960] or for
payment of additional compensation for work rendered on
Sundays and holidays and for night work [ Nassco vs. Almin , et
al., G.R. No. L-9055, November 28, 1958; Detective & Protective
Bureau, Inc. vs. Felipe Guevara, et al., G.R. No. L-8738, May 31,
1957] but has also supported such court's ruling that work
performed at night should be paid more than work done at
daytime, and that if that work is done beyond the worker's
regular hours of duty, he should also be paid additional
compensation for overtime work. [ Naric vs. Naric Workers'
Union, et al., G.R. No. L-12075, May 29, 1959, citing Shell Co. vs.
National Labor Union, 81 Phil. 315]. Besides, to hold that this
case for extra compensation now falls beyond the powers of the
industrial court to decide, would amount to a further curtailment
of the jurisdiction of said court to an extent which may defeat the
purpose of the Magna Carta to the prejudice of labor.' [Luis
Recato Dy , et al. vs. CIR, G.R. No. L-17788, May 25, 1962]"
The petitioner-company's arguments on the respondent court's
alleged lack of jurisdiction over additional compensation for work
done at night by the respondents is without merit.
The other issue raised in the second assignment of error is
premised on the petitioner-company's contention that the
respondent court's ruling on the additional compensation for
nighttime work is not supported by substantial evidence.
This contention is untenable. Pertinent portions of the
respondent court's decision read:
xxx xxx xxx
"There is no serious disagreement between the petitioners and
respondent management on the facts recited above. The variance
in the evidence is only with respect to the money
claims. Witnesses for petitioners declared they worked on regular
days and on every other Sunday and also during all holidays; that
for services rendered on Sundays and holidays they were not paid
for the first four (4) hours and what they only received was the
overtime compensation corresponding to the number of hours
after or in excess of the first four after or in excess of the first four
hours; and that such payment is being indicated in the overtime
pay for work done in excess of eight hours on regular working
days. It is also claimed that their nighttime services could well be
seen on their respective daily time records. xx Underlined
supplied) (p. 116, rollo)
The respondent court's ruling on additional compensation for
work done at night is, therefore, not without evidence. Moreover,
the petitioner-company did not deny that the private respondents
rendered nighttime work. In fact, no additional evidence was
necessary to prove that the private respondents were entitled to
additional compensation for whether or not they were entitled to
the same is a question of law which the respondent court
answered correctly. The "waiver rule" is not applicable in the
case at bar. Additional compensation for nighttime work is
founded on public policy, hence the same cannot be
waived. (Article 6, Civil Code). On this matter, We believe that
the respondent court acted according to justice and equity and the
substantial merits of the case, without regard to technicalities or
legal forms and should be sustained.
The third assignment of error is likewise without merit. The fact
that only three of the private respondents testified in court does
not adversely affect the interests of the other respondents in the
case. The ruling in Dimayuga v. Court of Industrial
Relations (G.R. No. L-0213, May 27, 1957) has been abandoned
in later rulings of this Court. In Philippine Land-Air-Sea Labor
Union (PLASLU) v. Sy Indong Company Rice And Corn Mill (11
SCRA 277) We had occasion to re-examine the ruling in
Dimayuga. We stated:
"The latter reversed the decision of the trial Judge as regards the
reinstatement with backwages of x x x upon the theory that this
is not a class suit; that, 'consequently, it is necessary and
imperative that they should personally testify and prove the
charges in the complaint'; and that, having failed to do so, the
decision of the trial Judge in their favor is untenable under the
rule laid down in Dimayuga vs. Court of Industrial Relations,
G.R. No. L-0213 (May 27, 1957).
"We do not share the view taken in the resolution appealed
from. As the trial Judge correctly said, in his dissent from said
resolution : …"
xxx xxx xxx
In the case of Sanchez v. Court of Industrial Relations, supra, this
Court stated:
"To the reproach against the challenged order in the brief of
petitioners in view of only two of the seven claimants testifying, a
statement by this Court in Ormoc Sugar Co., Inc. vs. OSCO
Workers Fraternity Labor Union would suffice by way of
refutation. Thus: 'This Court fully agrees with the respondent
that quality and not quantity of witnesses should be the
primordial consideration in the appraisal of evidence.' Barely
eight days later, in another decision, the above statement was
given concrete expression. Thus: 'The bases of the awards were
not only the respective affidavits of the claimants but the
testimonies of 24 witnesses (because 6 were not given credence by
the court below) who identified the said 239 claimants. The
contention of petitioners on this point is therefore
unfounded'. Moreover in Philippine Land-Air-Sea Labor Union
(PLASLU) v. Sy Indong Company Rice & Corn Mill, this Court,
through the present Chief Justice, rejected as untenable the
theory of the Court of Industrial Relations concerning the
imperative needs of all the claimants to testify personally and
prove their charges in the complaint. As tersely put: 'We do not
share the view taken in the resolution appealed from.'"
The petitioner's contention that its employees fully understood
what they signed when they entered into the contracts of
employment and that they should be bound by their voluntary
commitments is anachronistic in this time and age.
The Mercury Drug Co., Inc ., maintains a chain of drugstores that
are open every day of the week and, for some stores, up to very
late at night because of the nature of the pharmaceutical retail
business. The respondents knew that they had to work Sundays
and holidays and at night, not as exceptions to the rule but as
part of the regular course of employment. Presented with
contracts setting their compensation on an annual basis with an
express waiver of extra compensation for work on Sundays and
holidays, the workers did not have much choice. The private
respondents were at a disadvantage insofar as the contractual
relationship was concerned. Workers in our country do not have
the luxury or freedom of declining job openings or filing
resignations even when some terms and conditions of
employment are not only onerous and inequitous but illegal. It is
precisely because of this situation that the framers of the
Constitution embodied the provisions on social justice (Section 6,
Article II) and protection to labor (Section 9, Article II) in the
Declaration of Principles And State Policies.

It is pursuant to these constitutional mandates that the courts

are ever vigilant to protect the rights of workers who are placed
in contractually disadvantageous positions and who sign waivers
or provisions contrary to law and public policy.

WHEREFORE, the petition is hereby dismissed. The decision

and resolution appealed from are affirmed with costs against the
petitioner.

SO ORDERED.
 THIRD DIVISION
G.R. No. 121004, January 28, 1998
ROMEO LAGATIC, PETITIONER, VS. NATIONAL LABOR
RELATIONS COMMISSION, CITYLAND DEVELOPMENT
CORPORATION, STEPHEN ROXAS, JESUS GO, GRACE
LIUSON, AND ANDREW LIUSON, RESPONDENTS.
DECISION
ROMERO, J.:
Petitioner seeks, in this petition for certiorari under Rule 65, the
reversal of the resolution of the National Labor Relations
Commission dated May 12, 1995, affirming the February 17,
1994, decision of Labor Arbiter Ricardo C. Nora finding that
petitioner had been validly dismissed by private respondent
Cityland Development Corporation (hereafter referred to as
Cityland) and that petitioner was not entitled to separation pay,
premium pay and overtime pay.
The facts of the case are as follows:
Petitioner Romeo Lagatic was employed in May 1986 by Cityland,
first as a probationary sales agent, and later on as a marketing
specialist. He was tasked with soliciting sales for the company,
with the corresponding duties of accepting call-ins, referrals, and
making client calls and cold calls. Cold calls refer to the practice
of prospecting for clients through the telephone directory.
Cityland, believing that the same is an effective and cost-efficient
method of finding clients, requires all its marketing specialists to
make cold calls. The number of cold calls depends on the sales
generated by each: more sales mean less cold calls. Likewise, in
order to assess cold calls made by the sales staff, as well as to
determine the results thereof, Cityland requires the submission of
daily progress reports on the same.
On October 22, 1991, Cityland issued a written reprimand to
petitioner for his failure to submit cold call reports for September
10, October 1 and 10, 1991. This notwithstanding, petitioner
again failed to submit cold call reports for September 2, 5, 8, 10,
11, 12, 15, 17, 18, 19, 20, 22, and 28, as well as for October 6, 8, 9,
10, 12, 13 and 14, 1992. Petitioner was required to explain his
inaction, with a warning that further non-compliance would
result in his termination from the company. In a reply dated
October 18, 1992, petitioner claimed that the same was an honest
omission brought about by his concentration on other aspects of
his job. Cityland found said excuse inadequate and, on November
9, 1992, suspended him for three days, with a similar warning.
Notwithstanding the aforesaid suspension and warning,
petitioner again failed to submit cold call reports for February 5,
6, 8, 10 and 12, 1993. He was verbally reminded to submit the
same and was even given up to February 17, 1993 to do so.
Instead of complying with said directive, petitioner, on February
16, 1993, wrote a note, “TO HELL WITH COLD CALLS! WHO
CARES?” and exhibited the same to his co-employees. To worsen
matters, he left the same lying on his desk where everyone could
see it.
On February 23, 1993, petitioner received a memorandum
requiring him to explain why Cityland should not make good its
previous warning for his failure to submit cold call reports, as
well as for issuing the written statement aforementioned. On
February 24, 1993, he sent a letter-reply alleging that his failure
to submit cold call reports should not be deemed as gross
insubordination. He denied any knowledge of the damaging
statement, “TO HELL WITH COLD CALLS!”
Finding petitioner guilty of gross insubordination, Cityland
served a notice of dismissal upon him on February 26, 1993.
Aggrieved by such dismissal, petitioner filed a complaint against
Cityland for illegal dismissal, illegal deduction, underpayment,
overtime and rest day pay, damages and attorney’s fees. The
labor arbiter dismissed the petition for lack of merit. On appeal,
the same was affirmed by the NLRC; hence the present recourse.
Petitioner raises the following issues:
1. WHETHER OR NOT RESPONDENT NLRC GRAVELY
ABUSED ITS DISCRETION IN NOT FINDING THAT
PETITIONER WAS ILLEGALLY DISMISSED;
2. WHETHER OR NOT RESPONDENT NLRC GRAVELY
ABUSED ITS DISCRETION IN RULING THAT
PETITIONER IS NOT ENTITLED TO SALARY
DIFFERENTIALS, BACKWAGES, SEPARATION PAY,
OVERTIME PAY, REST DAY PAY, UNPAID
COMMISSIONS, MORAL AND EXEMPLARY
DAMAGES AND ATTORNEY’S FEES.
The petition lacks merit.
To constitute a valid dismissal from employment, two requisites
must be met, namely: (1) the employee must be afforded due
process, and (2) the dismissal must be for a valid cause.[1] In the
case at bar, petitioner contends that his termination was illegal
on both substantive and procedural aspects. It is his submission
that the failure to submit a few cold calls does not qualify as
willful disobedience, as, in his experience, cold calls are one of the
least effective means of soliciting sales. He thus asserts that a
couple of cold call reports need not be accorded such tremendous
significance as to warrant his dismissal for failure to submit them
on time.
These arguments are specious. Petitioner loses sight of the fact
that “(e)xcept as provided for, or limited by, special laws, an
employer is free to regulate, according to his discretion and
judgment, all aspects of employment.”[2] Employers may, thus,
make reasonable rules and regulations for the government of
their employees, and when employees, with knowledge of an
established rule, enter the service, the rule becomes a part of the
contract of employment.[3] It is also generally recognized that
company policies and regulations, unless shown to be grossly
oppressive or contrary to law, are generally valid and binding on
the parties and must be complied with.[4] “Corollarily, an
employee may be validly dismissed for violation of a reasonable
company rule or regulation adopted for the conduct of the
company business. An employer cannot rationally be expected to
retain the employment of a person whose x x x lack of regard for
his employer’s rules x x x has so plainly and completely been
bared.”[5] Petitioner’s continued infraction of company policy
requiring cold call reports, as evidenced by the 28 instances of
non-submission of aforesaid reports, justifies his dismissal. He
cannot be allowed to arrogate unto himself the privilege of setting
company policy on the effectivity of solicitation methods. To do so
would be to sanction oppression and the self-destruction of the
employer.
Moreover, petitioner made it worse for himself when he wrote the
statement, “TO HELL WITH COLD CALLS! WHO CARES?”
When required to explain, he merely denied any knowledge of the
same. Cityland, on the other hand, submitted the affidavits of his
co-employees attesting to his authorship of the same. Petitioner’s
only defense is denial. The rule, however, is that denial, if
unsubstantiated by clear and convincing evidence, is negative and
self-serving evidence which has no weight in law.[6] More telling,
petitioner, while making much capital out of his lack of
opportunity to confront the affiants, never, in all of his pleadings,
categorically denied writing the same. He only denied knowledge
of the allegation that he issued such a statement.
Based on the foregoing, we find petitioner guilty of willful
disobedience. Willful disobedience requires the concurrence of at
least two requisites: the employee’s assailed conduct must have
been willful or intentional, the willfulness being characterized by
a wrongful and perverse attitude; and the order violated must
have been reasonable, lawful, made known to the employee and
must pertain to the duties which he had been engaged to
discharge.[7]
Petitioner’s failure to comply with Cityland’s policy of requiring
cold call reports is clearly willful, given the 28 instances of his
failure to do so, despite a previous reprimand and suspension.
More than that, his written statement shows his open defiance
and disobedience to lawful rules and regulations of the company.
Likewise, said company policy of requiring cold calls and the
concomitant reports thereon is clearly reasonable and lawful,
sufficiently known to petitioner, and in connection with the duties
which he had been engaged to discharge. There is, thus, just
cause for his dismissal.
On the procedural aspect, petitioner claims that he was denied
due process.
Well settled is the dictum that the twin requirements of notice
and hearing constitute the elements of due process in the
dismissal of employees. Thus, the employer must furnish the
employee with two written notices before the termination of
employment can be effected. The first apprises the employee of
the particular acts or omissions for which his dismissal is sought;
the second informs him of the employer’s decision to dismiss
him.[8]
In the case at bar, petitioner was notified of the charges against
him in a memorandum dated February 19, 1993, which he
received on February 23, 1993. He submitted a letter-reply
thereto on February 24, 1993, wherein he asked that his failure to
submit cold call reports be not interpreted as gross
insubordination.[9] He was given notice of his termination on
February 26, 1993. This chronology of events clearly show that
petitioner was served with the required written notices.
Nonetheless, petitioner contends that he has not been given the
benefit of an effective hearing. He alleges that he was not exemplary damages, as well as attorney’s fees and costs.
adequately informed of the results of the investigation conducted
by the company, nor was he able to confront the affiants who Petitioner anchors his claim for illegal deductions of commissions
attested to his writing the statement, “TO HELL WITH COLD on Cityland’s formula for determining commissions, viz:
CALLS!” While we have held that in dismissing employees, the
employee must be afforded ample opportunity to be heard, “ample Credits Earned (CE) less CUMULATIVE
COMMISSIONS=
opportunity” connoting every kind of assistance that management NEGATIVE (CN)
must afford the employee to enable him to prepare adequately for
less AMOUNTS RECEIVED (AR)
his defense,[10] it is also true that the requirement of a hearing is
complied with as long as there was an opportunity to be heard, CE = Monthly
= (CE – CN) – AR where
and not necessarily that an actual hearing be conducted.[11] Sales Volume x
Petitioner had an opportunity to be heard as he submitted a Commission Rate
letter-reply to the charge. He, however, adduced no other (CR)
evidence on his behalf. In fact, he admitted his failure to submit AR = Monthly
cold call reports, praying that the same be not considered as gross Compensation/.75
insubordination. As held by this Court in Bernardo vs. NLRC,[12]
CR = 4.5%
there is no necessity for a formal hearing where an employee
admits responsibility for an alleged misconduct. As to the written
Under said formula, an increase in salary would entail an
statement, “TO HELL WITH COLD CALLS!,” petitioner merely
increase in AR, thus diminishing the amount of commissions that
denied knowledge of the same. He failed to submit controverting
petitioner would receive. Petitioner construes the same as
evidence thereon although the memorandum of February 19,
violative of the non-diminution of benefits clause embodied in the
1993, clearly charged that he had shown said statement to
wage orders applicable to petitioner. Inasmuch as Cityland has
several sales personnel. Denials are weak forms of defenses,
paid petitioner commissions based on a higher AR each time
particularly when they are not substantiated by clear and
there has been a wage increase, the difference between the
convincing evidence. Given the foregoing, we hold that
original AR and the subsequent ARs have been viewed by
petitioner’s constitutional right to due process has not been
petitioner as illegal deductions, to wit:
violated.

As regards the second issue, petitioner contends that he is

entitled to amounts illegally deducted from his commissions, to
unpaid overtime, rest day and holiday premiums, to moral and
 Wage Date of Amount Corresponding Duration Total receives his basic salary without deductions. Petitioner’s
Order Effectivity of Increase in Up To argument that he is indebted to respondent by P1,410.00 is
Increase Quota (AR) 2/26/93 fallacious as his basic salary remains the same and he continues
to receive the same, regardless of his collections. The failure to
----------- ----------- ----------- ----------- ----------- -----------
attain a CE equivalent to the AR of P5,640.00 only means that
the difference would be credited to his CN for the next month.
RA 6640 1/1/88 P265.75 P 353.33 x 62 mos. P 21,906.46 Clearly, the purpose of the same is to encourage sales personnel
RA 6727 7/1/89 780.75 1,040.00 x 44 mos. 45,760.00 to accelerate their sales in order for them to earn commissions.
NCR 01 11/1/90 785.75 1,046.67 x 28 mos. 29,306.76
Additionally, there is no law which requires employers to pay
NCR 01- ------------
commissions, and when they do so, as stated in the letter-opinion
A
of the Department of Labor and Employment dated February 19,
Grand P
1993, “there is no law which prescribes a method for computing
Total 96,973.22[13]
commissions. The determination of the amount of commissions is
=======
the result of collective bargaining negotiations, individual
employment contracts or established employer practice.”[14] Since
Petitioner even goes as far as to claim that with the use of the formula for the computation of commissions was presented to
Cityland’s formula, he is indebted to the company in the amount and accepted by petitioner, such prescribed formula is in order.
of P 1,410.00, illustrated as follows: As to the allegation that said formula diminishes the benefits
being received by petitioner whenever there is a wage increase, it
Petitioner’s Basic = P 4,230.00 must be noted that his commissions are not meant to be in a fixed
Salary amount. In fact, there was no assurance that he would receive
= 4,230.00/.75 any commission at all. Non-diminution of benefits, as applied
A.R. = 5,640.00 here, merely means that the company may not remove the
privilege of sales personnel to earn a commission, not that they
Petitioner’s Basic
are entitled to a fixed amount thereof.
Salary – AR = P 1,410.00

With respect to petitioner’s claims for overtime pay, rest day pay
While it is true that an increase in salary would cause an increase
and holiday premiums, Cityland maintains that Saturday and
in AR, with the same being deducted from credits earned, thus
Sunday call-ins were voluntary activities on the part of sales
lessening his commissions, the fact remains that petitioner still
personnel who wanted to realize more sales and thereby earn
more commissions. It is their contention that sales personnel
were clamoring for the “privilege” to attend Saturday and Sunday
call-ins, as well as to entertain walk-in clients at project sites
during weekends, that Cityland had to stagger the schedule of
sales employees to give everyone a chance to do so. But
simultaneously, Cityland claims that the same were optional
because call-ins and walk-ins were not scheduled every weekend.
If there really were a clamor on the part of sales staff to
“voluntarily” work on weekends, so much so that Cityland needed
to schedule them, how come no call-ins or walk-ins were
scheduled on some weekends?
In addition to the above, the labor arbiter and the NLRC
sanctioned respondent’s practice of offsetting rest day or holiday
work with equivalent time on regular workdays on the ground
that the same is authorized by Department Order 21, Series of
1990. As correctly pointed out by petitioner, said D. O. was
misapplied in this case. The D. O. involves the shortening of the
workweek from six days to five days but with prolonged hours on
those five days. Under this scheme, non-payment of overtime
premiums was allowed in exchange for longer weekends for
employees. In the instant case, petitioner’s workweek was never
compressed. Instead, he claims payment for work over and above
his normal 5½ days of work in a week. Applying by analogy the
principle that overtime cannot be offset by undertime, to allow
off-setting would prejudice the worker. He would be deprived of
the additional pay for the rest day work he has rendered and
which is utilized to offset his equivalent time off on regular
workdays. To allow Cityland to do so would be to circumvent the
law on payment of premiums for rest day and holiday work.
Notwithstanding the foregoing discussion, petitioner failed to
show his entitlement to overtime and rest day pay due, to the lack
of sufficient evidence as to the number of days and hours when he
rendered overtime and rest day work. Entitlement to overtime
pay must first be established by proof that said overtime work
was actually performed, before an employee may avail of said
benefit.[15] To support his allegations, petitioner submitted in
evidence minutes of meetings wherein he was assigned to work on
weekends and holidays at Cityland’s housing projects. Suffice it to
say that said minutes do not prove that petitioner actually
worked on said dates. It is a basic rule in evidence that each party
must prove his affirmative allegations.[16] This petitioner failed to
do. He explains his failure to submit more concrete evidence as
being due to the decision rendered by the labor arbiter without
resolving his motion for the production and inspection of
documents in the control of Cityland. Petitioner conveniently
forgets that on January 27, 1994, he agreed to submit the case for
decision based on the records available to the labor arbiter. This
amounted to an abandonment of above-said motion, which was
then pending resolution.
Lastly, with the finding that petitioner’s dismissal was for a just
and valid cause, his claims for moral and exemplary damages, as
well as attorney’s fees, must fail.
WHEREFORE, premises considered, the assailed Resolution is
AFFIRMED and this petition is hereby DISMISSED for lack of
merit. Costs against petitioner.
SO ORDERED.
 THIRD DIVISION
G. R. No. 144664, March 15, 2004
ASIAN TRANSMISSION CORPORATION, PETITIONER,
VS. THE HON. COURT OF APPEALS, THIRTEENTH
DIVISION, HON. FROILAN M. BACUNGAN AS
VOLUNTARY ARBITRATOR, KISHIN A. LALWANI,
UNION, UNION REPRESENTATIVE TO THE PANEL
ARBITRATORS; BISIG NG ASIAN TRANSMISSION
LABOR UNION (BATLU); HON. BIENVENIDO T.
LAGUESMA IN HIS CAPACITY AS SECRETARY OF
LABOR AND EMPLOYMENT; AND DIRECTOR CHITA G.
CILINDRO IN HER CAPACITY AS DIRECTOR OF
BUREAU OF WORKING CONDITIONS, RESPONDENTS.
CARPIO MORALES, J.:
Petitioner, Asian Transmission Corporation, seeks via petition for
certiorari under Rule 65 of the 1995 Rules of Civil Procedure the
nullification of the March 28, 2000 Decision[1] of the Court of
Appeals denying its petition to annul 1) the March 11, 1993
“Explanatory Bulletin”[2] of the Department of Labor and
Employment (DOLE) entitled “Workers’ Entitlement to Holiday
Pay on April 9, 1993, Araw ng Kagitingan and Good Friday”,
which bulletin the DOLE reproduced on January 23, 1998, 2) the
July 31, 1998 Decision[3] of the Panel of Voluntary Arbitrators
ruling that the said explanatory bulletin applied as well to April
9, 1998, and 3) the September 18, 1998[4] Resolution of the Panel
of Voluntary Arbitration denying its Motion for Reconsideration.
The following facts, as found by the Court of Appeals, are
undisputed:
The Department of Labor and Employment (DOLE), through
Undersecretary Cresenciano B. Trajano, issued an Explanatory
Bulletin dated March 11, 1993 wherein it clarified, inter alia, that
employees are entitled to 200% of their basic wage on April 9,
1993, whether unworked, which[,] apart from being Good Friday
[and, therefore, a legal holiday], is also Araw ng Kagitingan
[which is also a legal holiday]. The bulletin reads:
“On the correct payment of holiday compensation on April 9, 1993
which apart from being Good Friday is also Araw ng Kagitingan,
i.e., two regular holidays falling on the same day, this
Department is of the view that the covered employees are entitled
to at least two hundred percent (200%) of their basic wage even if
said holiday is unworked. The first 100% represents the payment
of holiday pay on April 9, 1993 as Good Friday and the second
100% is the payment of holiday pay for the same date as Araw ng
Kagitingan.
Said bulletin was reproduced on January 23, 1998, when April 9,
1998 was both Maundy Thursday and Araw ng Kagitingan . . .
Despite the explanatory bulletin, petitioner [Asian Transmission
Corporation] opted to pay its daily paid employees only 100% of
their basic pay on April 9, 1998. Respondent Bisig ng Asian
Transmission Labor Union (BATLU) protested.
In accordance with Step 6 of the grievance procedure of the
Collective Bargaining Agreement (CBA) existing between
petitioner and BATLU, the controversy was submitted for 1. New Year’s Day January 1
voluntary arbitration. . . . On July 31, 1998, the Office of the Maundy
2. Movable Date
Voluntary Arbitrator rendered a decision directing petitioner to Thursday
pay its covered employees “200% and not just 100% of their regular 3. Good Friday Movable Date
daily wages for the unworked April 9, 1998 which covers two Araw ng
4. April 9
regular holidays, namely, Araw ng Kagitignan and Maundy Kagitingan
Thursday.” (Emphasis and underscoring supplied) (Bataan and
Corregidor Day)
Subject of interpretation in the case at bar is Article 94 of the 5. Labor Day May 1
Labor Code which reads: Independence
6. June 12
Day
ART. 94. Right to holiday pay. — (a) Every worker shall be paid National Heroes Last Sunday of
7.
his regular daily wage during regular holidays, except in retail Day August
and service establishments regularly employing less than ten (10) 8. Bonifacio Day November 30
workers; 9. Christmas Day December 25
10.Rizal Day December 30
(b) The employer may require an employee to work on any holiday
but such employee shall be paid a compensation equivalent to In deciding in favor of the Bisig ng Asian Transmission Labor
twice his regular rate; and Union (BATLU), the Voluntary Arbitrator held that Article 94 of
the Labor Code provides for holiday pay for every regular holiday,
(c) As used in this Article, “holiday” includes: New Year’s Day, the computation of which is determined by a legal formula which
Maundy Thursday, Good Friday, the ninth of April, the first of is not changed by the fact that there are two holidays falling on
May, the twelfth of June, the fourth of July, the thirtieth of one day, like on April 9, 1998 when it was Araw ng Kagitingan
November, the twenty-fifth and thirtieth of December and the day and at the same time was Maundy Thursday; and that that the
designated by law for holding a general election, law, as amended, enumerates ten regular holidays for every year
should not be interpreted as authorizing a reduction to nine the
which was amended by Executive Order No. 203 issued on June number of paid regular holidays “just because April 9 (Araw ng
30, 1987, such that the regular holidays are Kagitingan) in certain years, like 1993 and 1998, is also Holy
now: Friday or Maundy Thursday.”
In the assailed decision, the Court of Appeals upheld the findings
of the Voluntary Arbitrator, holding that the Collective
Bargaining Agreement (CBA) between petitioner and BATLU, the
law governing the relations between them, clearly recognizes
their intent to consider Araw ng Kagitingan and Maundy
Thursday, on whatever date they may fall in any calendar year,
as paid legal holidays during the effectivity of the CBA and that
“[t]here is no condition, qualification or exception for any variance
from the clear intent that all holidays shall be compensated.”[5]
The Court of Appeals further held that “in the absence of an
explicit provision in law which provides for [a] reduction of
holiday pay if two holidays happen to fall on the same day, any
doubt in the interpretation and implementation of the Labor Code
provisions on holiday pay must be resolved in favor of labor.”
By the present petition, petitioners raise the following issues:
I IV
WHETHER OR NOT THE RESPONDENT COURT OF
APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN
ERRONEOUSLY INTERPRETING THE TERMS OF THE
COLLECTIVE BARGAINING AGREEMENT BETWEEN THE
PARTIES AND SUBSTITUTING ITS OWN JUDGMENT IN
PLACE OF THE AGREEMENTS MADE BY THE PARTIES
THEMSELVES
II
WHETHER OR NOT THE RESPONDENT COURT OF
APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN
HOLDING THAT ANY DOUBTS ABOUT THE VALIDITY OF
THE POLICIES ENUNCIATED IN THE EXPLANATORY
BULLETIN WAS LAID TO REST BY THE REISSUANCE OF
THE SAID EXPLANATORY BULLETIN
III
WHETHER OR NOT THE RESPONDENT COURT OF
APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN
UPHOLDING THE VALIDITY OF THE EXPLANATORY
BULLETIN EVEN WHILE ADMITTING THAT THE SAID
BULLEITN WAS NOT AN EXAMPLE OF A JUDICIAL, QUASI-
JUDICIAL, OR ONE OF THE RULES AND REGULATIONS
THAT [Department of Labor and Employment] DOLE MAY
PROMULGATE
WHETHER OR NOT THE SECRETARY OF THE
DEPARTMENT OF LABOR AND EMPLOYMENT (DOLE) BY
ISSUING EXPLANATORY BULLETIN DATED MARCH 11,
1993, IN THE GUISE OF PROVIDING GUIDELINES ON ART.
94 OF THE LABOR CODE, COMMITTED GRAVE ABUSE OF
DISCRETION, AS IT LEGISLATED AND INTERPRETED
LEGAL PROVISIONS IN SUCH A MANNER AS TO CREATE
OBLIGATIONS WHERE NONE ARE INTENDED BY THE LAW
V
WHETHER OR NOT THE RESPONDENT COURT OF
APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN
SUSTAINING THE SECRETARY OF THE DEPARTMENT OF
LABOR IN REITERATING ITS EXPLANATORY BULLETIN
DATED MARCH 11, 1993 AND IN ORDERING THAT THE
SAME POLICY OBTAINED FOR APRIL 9, 1998 DESPITE THE
RULINGS OF THE SUPREME COURT TO THE CONTRARY
VI
WHETHER OR NOT RESPONDENTS’ ACTS WILL DEPRIVE
PETITIONER OF PROPERTY WITHOUT DUE PROCESS BY
THE “EXPLANATORY BULLETIN” AS WELL AS EQUAL
PROTECTION OF LAWS
The petition is devoid of merit.
At the outset, it bears noting that instead of assailing the Court of
Appeals Decision by petition for review on certiorari under Rule
45 of the 1997 Rules of Civil Procedure, petitioner lodged the
present petition for certiorari under Rule 65.
[S]ince the Court of Appeals had jurisdiction over the petition
under Rule 65, any alleged errors committed by it in the exercise
of its jurisdiction would be errors of judgment which are
reviewable by timely appeal and not by a special civil action of
certiorari. If the aggrieved party fails to do so within the
reglementary period, and the decision accordingly becomes final
and executory, he cannot avail himself of the writ of certiorari, his
predicament being the effect of his deliberate inaction.
The appeal from a final disposition of the Court of Appeals is a
petition for review under Rule 45 and not a special civil action
under Rule 65 of the Rules of Court, now Rule 45 and Rule 65,
respectively, of the 1997 Rules of Civil Procedure. Rule 45 is clear
that the decisions, final orders or resolutions of the Court of
Appeals in any case, i.e., regardless of the nature of the action or
proceeding involved, may be appealed to this Court by filing a
petition for review, which would be but a continuation of the
appellate process over the original case. Under Rule 45 the
reglementary period to appeal is fifteen (15) days from notice of
judgment or denial of motion for reconsideration.
xxx xxx xxx
For the writ of certiorari under Rule 65 of the Rules of Court to
issue, a petitioner must show that he has no plain, speedy and
adequate remedy in the ordinary course of law against its
perceived grievance. A remedy is considered “plain, speedy and
adequate” if it will promptly relieve the petitioner from the
injurious effects of the judgment and the acts of the lower court or
agency. In this case, appeal was not only available but also a
speedy and adequate remedy.[6]
The records of the case show that following petitioner’s receipt on
August 18, 2000 of a copy of the August 10, 2000 Resolution of the
Court of Appeals denying its Motion for Reconsideration, it filed
the present petition for certiorari on September 15, 2000, at
which time the Court of Appeals decision had become final and
executory, the 15-day period to appeal it under Rule 45 having
expired.
Technicality aside, this Court finds no ground to disturb the
assailed decision.
Holiday pay is a legislated benefit enacted as part of the
Constitutional imperative that the State shall afford protection to
labor.[7] Its purpose is not merely “to prevent diminution of the
monthly income of the workers on account of work interruptions.
In other words, although the worker is forced to take a rest, he
earns what he should earn, that is, his holiday pay.”[8] It is also
intended to enable the worker to participate in the national
celebrations held during the days identified as with great
historical and cultural significance.
Independence Day (June 12), Araw ng Kagitingan (April 9),
National Heroes Day (last Sunday of August), Bonifacio Day
(November 30) and Rizal Day (December 30) were declared
national holidays to afford Filipinos with a recurring opportunity
to commemorate the heroism of the Filipino people, promote
national identity, and deepen the spirit of patriotism. Labor Day
(May 1) is a day traditionally reserved to celebrate the
contributions of the working class to the development of the
nation, while the religious holidays designated in Executive
Order No. 203 allow the worker to celebrate his faith with his
family.
As reflected above, Art. 94 of the Labor Code, as amended, affords
a worker the enjoyment of ten paid regular holidays. [9] The
provision is mandatory,[10] regardless of whether an employee is
paid on a monthly or daily basis.[11] Unlike a bonus, which is a
management prerogative,[12] holiday pay is a statutory benefit
demandable under the law. Since a worker is entitled to the
enjoyment of ten paid regular holidays, the fact that two holidays
fall on the same date should not operate to reduce to nine the ten
holiday pay benefits a worker is entitled to receive.
It is elementary, under the rules of statutory construction, that
when the language of the law is clear and unequivocal, the law
must be taken to mean exactly what it says.[13] In the case at bar,
there is nothing in the law which provides or indicates that the
entitlement to ten days of holiday pay shall be reduced to nine
when two holidays fall on the same day.
Petitioner’s assertion that Wellington v. Trajano[14] has
“overruled” the DOLE March 11, 1993 Explanatory Bulletin does
not lie. In Wellington, the issue was whether monthly-paid
employees are entitled to an additional day’s pay if a holiday falls
on a Sunday. This Court, in answering the issue in the negative,
observed that in fixing the monthly salary of its employees,
Wellington took into account “every working day of the year
including the holidays specified by law and excluding only
Sunday.” In the instant case, the issue is whether daily-paid
employees are entitled to be paid for two regular holidays which
fall on the same day.[15]
In any event, Art. 4 of the Labor Code provides that all doubts in
the implementation and interpretation of its provisions, including
its implementing rules and regulations, shall be resolved in favor
of labor. For the working man’s welfare should be the primordial
and paramount consideration.[16]
Moreover, Sec. 11, Rule IV, Book III of the Omnibus Rules to
Implement the Labor Code provides that “Nothing in the law or
the rules shall justify an employer in withdrawing or reducing 5. Labor Day (May 1st)
any benefits, supplements or payments for unworked regular
holidays as provided in existing individual or collective agreement
or employer practice or policy.”[17]
6. Independence Day (June 12th)
From the pertinent provisions of the CBA entered into by the
parties, petitioner had obligated itself to pay for the legal holidays
as required by law. Thus, the 1997-1998 CBA incorporates the
following provision: 7. Bonifacio Day [November 30]

ARTICLE XIV
PAID LEGAL HOLIDAYS
8. Christmas Day (December 25th)
The following legal holidays shall be paid by the COMPANY as
required by law:

1. New Year’s Day (January 1st) 9. Rizal Day (December 30th)

2. Holy Thursday (moveable) 10. General Election designated by law, if

declared public non-working holiday

3. Good Friday (moveable)

11. National Heroes Day (Last Sunday of
August)

4. Araw ng Kagitingan (April 9th) Only an employee who works on the day immediately preceding
or after a regular holiday shall be entitled to the holiday pay.
A paid legal holiday occurring during the scheduled vacation
leave will result in holiday payment in addition to normal
vacation pay but will not entitle the employee to another vacation
leave.

Under similar circumstances, the COMPANY will give a day’s

wage for November 1st and December 31st whenever declared a
holiday. When required to work on said days, the employee will
be paid according to Art. VI, Sec. 3B hereof.[18]

WHEREFORE, the petition is hereby DISMISSED.

SO ORDERED.
 FIRST DIVISION
G.R. No. 146775, January 30, 2002
SAN MIGUEL CORPORATION, PETITIONER, VS. THE
HONORABLE COURT OF APPEALS-FORMER
THIRTEENTH DIVISION, HON. UNDERSECRETARY
JOSE M. ESPAÑOL, JR., HON. CRESENCIANO B.
TRAJANO, AND HON. REGIONAL DIRECTOR ALLAN M.
MACARAYA, RESPONDENTS.
DECISION
KAPUNAN, J.:
Assailed in the petition before us are the decision, promulgated
on 08 May 2000, and the resolution, promulgated on 18 October
2000, of the Court of Appeals in CA G.R. SP-53269.
The facts of the case are as follows:
On 17 October 1992, the Department of Labor and Employment
(DOLE), Iligan District Office, conducted a routine inspection in
the premises of San Miguel Corporation (SMC) in Sta. Filomena,
Iligan City. In the course of the inspection, it was discovered that
there was underpayment by SMC of regular Muslim holiday pay
to its employees. DOLE sent a copy of the inspection result to
SMC and it was received by and explained to its personnel officer
Elena dela Puerta.[1] SMC contested the findings and DOLE
conducted summary hearings on 19 November 1992, 28 May 1993
and 4 and 5 October 1993. Still, SMC failed to submit proof that
it was paying regular Muslim holiday pay to its
employees. Hence, Alan M. Macaraya, Director IV of DOLE
Iligan District Office issued a compliance order, dated 17
December 1993, directing SMC to consider Muslim holidays as
regular holidays and to pay both its Muslim and non-Muslim
employees holiday pay within thirty (30) days from the receipt of
the order.
SMC appealed to the DOLE main office in Manila but its appeal
was dismissed for having been filed late. The dismissal of the
appeal for late filing was later on reconsidered in the order of 17
July 1998 after it was found that the appeal was filed within the
reglementary period. However, the appeal was still dismissed for
lack of merit and the order of Director Macaraya was affirmed.
SMC went to this Court for relief via a petition for certiorari,
which this Court referred to the Court of Appeals pursuant to St.
Martin Funeral Homes vs. NLRC.[2]
The appellate court, in the now questioned decision, promulgated
on 08 May 2000, ruled, as follows:
WHEREFORE, the Order dated December 17, 1993 of Director
Macaraya and Order dated July 17, 1998 of Undersecretary
Español, Jr. is hereby MODIFIED with regards the payment of
Muslim holiday pay from 200% to 150% of the employee's basic
salary. Let this case be remanded to the Regional Director for the
proper computation of the said holiday pay.
SO ORDERED.[3]
Its motion for reconsideration having been denied for lack of
merit, SMC filed a petition for certiorari before this Court,
alleging that:
PUBLIC RESPONDENTS SERIOUSLY ERRED AND
COMMITTED GRAVE ABUSE OF DISCRETION WHEN THEY
GRANTED MUSLIM HOLIDAY PAY TO NON-MUSLIM
EMPLOYEES OF SMC-ILICOCO AND ORDERING SMC TO
PAY THE SAME RETROACTIVE FOR ONE (1) YEAR FROM
THE DATE OF THE PROMULGATION OF THE COMPLIANCE
ORDER ISSUED ON DECEMBER 17, 1993, IT BEING
CONTRARY TO THE PROVISIONS, INTENT AND PURPOSE
OF P.D. 1083 AND PREVAILING JURISPRUDENCE.
THE ISSUANCE OF THE COMPLIANCE ORDER WAS
TAINTED WITH GRAVE ABUSE OF DISCRETION IN THAT
SAN MIGUEL CORPORATION WAS NOT ACCORDED DUE
PROCESS OF LAW; HENCE, THE ASSAILED COMPLIANCE
ORDER AND ALL SUBSEQUENT ORDERS, DECISION AND
RESOLUTION OF PUBLIC RESPONDENTS WERE ALL
ISSUED WITH GRAVE ABUSE OF DISCRETION AND ARE
VOID AB INITIO.
THE HON. COURT OF APPEALS COMMITTED GRAVE
ABUSE OF DISCRETION WHEN IT DECLARED THAT
REGIONAL DIRECTOR MACARAYA, UNDERSECRETARY
TRAJANO AND UNDERSECRETARY ESPAÑOL, JR., WHO
ALL LIKEWISE ACTED WITH GRAVE ABUSE OF
DISCRETION AND WITHOUT OR IN EXCESS OF THEIR
JURISDICTION, HAVE JURISDICTION IN ISSUING THE
ASSAILED COMPLIANCE ORDER AND SUBSEQUENT
ORDERS, WHEN IN FACT THEY HAVE NO JURISDICTION
OR HAS LOST JURISDICTION OVER THE HEREIN LABOR
STANDARD CASE.[4]
At the outset, petitioner came to this Court via a petition for
certiorari under Rule 65 instead of an appeal under Rule 45 of the
1997 Rules of Civil Procedure. In National Irrigation
Administration vs. Court of Appeals,[5] the Court declared:
x x x (S)ince the Court of Appeals had jurisdiction over the
petition under Rule 65, any alleged errors committed by it in the
exercise of its jurisdiction would be errors of judgment which are
reviewable by timely appeal and not by a special civil action of
certiorari. If the aggrieved party fails to do so within the
reglementary period, and the decision accordingly becomes final
and executory, he cannot avail himself of the writ of certiorari, his
predicament being the effect of his deliberate inaction.
The appeal from a final disposition of the Court of Appeals is a
petition for review under Rule 45 and not a special civil action
under Rule 65 of the Rules of Court, now Rule 45 and Rule 65,
respectively, of the 1997 Rules of Civil Procedure. Rule 45 is clear
that decisions, final orders or resolutions of the Court of Appeals
in any case, i.e., regardless of the nature of the action or
proceeding involved, may be appealed to this Court by filing a
petition for review, which would be but a continuation of the
appellate process over the original case. Under Rule 45 the
reglementary period to appeal is fifteen (15) days from notice of
judgment or denial of motion for reconsideration.
xxx
For the writ of certiorari under Rule 65 of the Rules of Court to
issue, a petitioner must show that he has no plain, speedy and
adequate remedy in the ordinary course of law against its (d) ‘Id-ul-Fitr (Hari Raya Puasa), which falls on the first day
perceived grievance. A remedy is considered "plain, speedy and of the tenth lunar month of Shawwal, commemorating the
adequate" if it will promptly relieve the petitioner from the end of the fasting season; and
injurious effects of the judgment and the acts of the lower court or
(e) ‘Id-ul-Adha (Hari Raya Haji),which falls on the tenth day
agency. In this case, appeal was not only available but also a
of the twelfth lunar month of Dhu’l-Hijja.
speedy and adequate remedy.[6]
Well-settled is the rule that certiorari cannot be availed of as a
Art. 170. Provinces and cities where officially observed. - (1)
substitute for a lost appeal.[7] For failure of petitioner to file a
Muslim holidays shall be officially observed in the Provinces of
timely appeal, the questioned decision of the Court of Appeals had
Basilan, Lanao del Norte, Lanao del Sur, Maguindanao, North
already become final and executory.
Cotabato, Iligan, Marawi, Pagadian, and Zamboanga and in such
other Muslim provinces and cities as may hereafter be created;
In any event, the Court finds no reason to reverse the decision of
the Court of Appeals.
(2) Upon proclamation by the President of the Philippines,
Muslim holidays may also be officially observed in other provinces
Muslim holidays are provided under Articles 169 and 170, Title I,
and cities.
Book V, of Presidential Decree No. 1083,[8] otherwise known as
The foregoing provisions should be read in conjunction with
the Code of Muslim Personal Laws, which states:
Article 94 of the Labor Code, which provides:
Art. 169. Official Muslim holidays. - The following are hereby
Art. 94. Right to holiday pay. -
recognized as legal Muslim holidays:

(a) Every worker shall be paid his regular daily wage during
(a) ‘Amun Jadid (New Year), which falls on the first day of
regular holidays, except in retail and service
the first lunar month of Muharram;
establishments regularly employing less than ten (10)
(b) Maulid-un-Nabi (Birthday of the Prophet Muhammad), workers;
which falls on the twelfth day of the third lunar month of
(b) The employer may require an employee to work on any
Rabi-ul-Awwal;
holiday but such employee shall be paid a compensation
(c) Lailatul Isra Wal Mi’raj (Nocturnal Journey and equivalent to twice his regular rate; x x x.
Ascension of the Prophet Muhammad), which falls on the
Petitioner asserts that Article 3(3) of Presidential Decree No.
twenty-seventh day of the seventh lunar month of Rajab;
1083 provides that “(t)he provisions of this Code shall be
applicable only to Muslims x x x.” However, there should be no
distinction between Muslims and non-Muslims as regards
payment of benefits for Muslim holidays. The Court of Appeals
did not err in sustaining Undersecretary Español who stated:
Assuming arguendo that the respondent’s 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 worker’s faith or religion.
At any rate, Article 3(3) of Presidential Decree No. 1083 also
declares that “x x x nothing herein shall be construed to operate
to the prejudice of a non-Muslim.”
In addition, the 1999 Handbook on Workers’ Statutory Benefits,
approved by then DOLE Secretary Bienvenido E. Laguesma on 14
December 1999 categorically stated:
Considering that all private corporations, offices, agencies, and
entities or establishments operating within the designated
Muslim provinces and cities are required to observe Muslim
holidays, both Muslim and Christians working within the
Muslim areas may not report for work on the days
designated by law as Muslim holidays.[9]
On the question regarding the jurisdiction of the Regional
Director Allan M. Macaraya, Article 128, Section B of the Labor
Code, as amended by Republic Act No. 7730, provides:
“Article 128. Visitorial and enforcement power. -
xxx
(b) Notwithstanding the provisions of Article 129 and 217 of
this Code to the contrary, and in cases where the
relationship of employer-employee still exists, the
Secretary of Labor and Employment or his duly
authorized representatives shall have the power to issue
compliance orders to give effect to the labor standards
provisions of this Code and other labor legislation based
on the findings of labor employment and enforcement
officers or industrial safety engineers made in the course
of the inspection. The Secretary or his duly authorized
representative shall issue writs of execution to the
appropriate authority for the enforcement of their orders,
except in cases where the employer contests the findings
of the labor employment and enforcement officer and
raises issues supported by documentary proofs which
were not considered in the course of inspection.
xxx
In the case before us, Regional Director Macaraya acted as the
duly authorized representative of the Secretary of Labor and
Employment and it was within his power to issue the compliance
order to SMC. In addition, the Court agrees with the Solicitor
General that the petitioner did not deny that it was not paying
Muslim holiday pay to its non-Muslim employees. Indeed,
petitioner merely contends that its non-Muslim employees are not
entitled to Muslim holiday pay. Hence, the issue could be
resolved even without documentary proofs. In any case, there
was no indication that Regional Director Macaraya failed to
consider any documentary proof presented by SMC in the course
of the inspection.
Anent the allegation that petitioner was not accorded due process, SO ORDERED.
we sustain the Court of Appeals in finding that SMC was
furnished a copy of the inspection order and it was received by
and explained to its Personnel Officer. Further, a series of
summary hearings were conducted by DOLE on 19 November
1992, 28 May 1993 and 4 and 5 October 1993. Thus, SMC could
not claim that it was not given an opportunity to defend itself.

Finally, as regards the allegation that the issue on Muslim

holiday pay was already resolved in NLRC CA No. M-000915-92
(Napoleon E. Fernan vs. San Miguel Corporation Beer Division
and Leopoldo Zaldarriaga),[10] the Court notes that the case was
primarily for illegal dismissal and the claim for benefits was only
incidental to the main case. In that case, the NLRC Cagayan de
Oro City declared, in passing:
We also deny the claims for Muslim holiday pay for lack of factual
and legal basis. Muslim holidays are legally observed within the
area of jurisdiction of the present Autonomous Region for Muslim
Mindanao (ARMM), particularly in the provinces of
Maguindanao, Lanao del Sur, Sulu and Tawi-Tawi. It is only
upon Presidential Proclamation that Muslim holidays may be
officially observed outside the Autonomous Region and generally
extends to Muslims to enable them the observe said holidays.[11]
The decision has no consequence to issues before us, and as aptly
declared by Undersecretary Español, it “can never be a
benchmark nor a guideline to the present case x x x.”[12]

WHEREFORE, in view of the foregoing, the petition is

DISMISSED.
 EN BANC
G.R. No. 79255, January 20, 1992
UNION OF FILIPRO EMPLOYEES (UFE), PETITIONER,
VS. BENIGNO VIVAR, JR., NATIONAL LABOR
RELATIONS COMMISSION AND NESTLE PHILIPPINES,
INC. (FORMERLY FILIPRO, INC.), RESPONDENTS.
DECISION
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 Filipino 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-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.”
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. 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
Section 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 xxx (Underlining
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 cause “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 this 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:
"xxx 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 indebiti.’
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 rate, 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 schedule 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:
xxxxxxxxx
"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 [1953]) 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 is 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.
 SECOND DIVISION
G.R. No. 114698, July 03, 1995
WELLINGTON INVESTMENT AND MANUFACTURING
CORPORATION, PETITIONER, VS. CRESENCIANO B.
TRAJANO, UNDER-SECRETARY OF LABOR AND
EMPLOYMENT, ELMER ABADILLA, AND 34 OTHERS,
RESPONDENTS.
DECISION
NARVASA, C.J.:
The basic issue raised by petitioner in this case is, as its counsel
puts it, "whether or not a monthly-paid employee, receiving a
fixed monthly compensation, is entitled to an additional pay aside
from his usual holiday pay, whenever a regular holiday falls on a
Sunday."
The case arose from a routine inspection conducted by a Labor
Enforcement Officer on August 6, 1991 of the Wellington Flour
Mills, an establishment owned and operated by petitioner
Wellington Investment and Manufacturing Corporation
(hereafter, simply Wellington). The officer thereafter drew up a
report, a copy of which was "explained to and received by"
Wellington's personnel manager, in which he set forth his finding
of "(n)on-payment of regular holidays falling on a Sunday for
monthly-paid employees."[1]
Wellington sought reconsideration of the Labor Inspector's report,
by letter dated August 10, 1991. It argued that "the monthly
salary of the company's monthly-salaried employees already
includes holiday pay for all regular holidays ** (and hence) there
is no legal basis for the finding of alleged non-payment of regular
holidays falling on a Sunday."[2] It expounded on this thesis in a
position paper subsequently submitted to the Regional Director,
asserting that it pays its monthly-paid employees a fixed monthly
compensation "using the 314 factor which undeniably covers and
already includes payment for all the working days in a month as
well as all the 10 unworked regular holidays within a year."[3]
Wellington's arguments failed to persuade the Regional Director
who, in an Order issued on July 28, 1992, ruled that "when a
regular holiday falls on a Sunday, an extra or additional working
day is created and the employer has the obligation to pay the
employees for the extra day except the last Sunday of August
since the payment for the said holiday is already included in the
314 factor," and accordingly directed Wellington to pay its
employees compensation corresponding to four (4) extra working
days.[4]
Wellington timely filed a motion for reconsideration of this Order
of August 10, 1992, pointing out that it was in effect being
compelled to "shell out an additional pay for an alleged extra
working day" despite its complete payment of all compensation
lawfully due its workers, using the 314 factor.[5] Its motion was
treated as an appeal and was acted on by respondent
Undersecretary. By Order dated September 22, the latter
affirmed the challenged order of the Regional Director, holding
that "the divisor being used by the respondent (Wellington) does
not reliably reflect the actual working days in a year," and
consequently commanded Wellington to pay its employees the "six
additional working days resulting from regular holidays falling on
Sundays in 1988, 1989 and 1990."[6] Again, Wellington moved for
reconsideration,[7] and again was rebuffed.[8]
Wellington then instituted the special civil action of certiorari at
bar in an attempt to nullify the orders above mentioned. By
Resolution dated July 4, 1994, this Court authorized the issuance
of a temporary restraining order enjoining the respondents from
enforcing the questioned orders.[9]
Every worker should, according to the Labor Code,[10] "be paid his
regular daily wage during regular holidays, except in retail and
service establishments regularly employing less than ten (10)
workers;" this, of course, even if the worker does no work on these
holidays. The regular holidays include: "New Year's Day,
Maundy Thursday, Good Friday, the ninth of April, the first of
May, the twelfth of June, the fourth of July, the thirtieth of
November, the twenty-fifth of December, and the day designated
by law for holding a general election (or national referendum or
plebiscite).[11]
Particularly as regards employees "who are uniformly paid by the
month, "the monthly minimum wage shall not be less than the
statutory minimum wage multiplied by 365 days divided by
twelve."[12] This monthly salary shall serve as compensation "for
all days in the month whether worked or not," and "irrespective of
the number of working days therein."[13] In other words, whether
the month is of thirty (30) or thirty-one (31) days' duration, or
twenty-eight (28) or twenty-nine (29) (as in February), the
employee is entitled to receive the entire monthly salary. So, too,
in the event of the declaration of any special holiday, or any
fortuitous cause precluding work on any particular day or days
(such as transportation strikes, riots, or typhoons or other natural
calamities), the employee is entitled to the salary for the entire
month and the employer has no right to deduct the proportionate
amount corresponding to the days when no work was done. The
monthly compensation is evidently intended precisely to avoid
computations and adjustments resulting from the contingencies
just mentioned which are routinely made in the case of workers
paid on daily basis.
In Wellington's case, there seems to be no question that at the
time of the inspection conducted by the Labor Enforcement
Officer on August 6, 1991, it was and had been paying its
employees "a salary of not less than the statutory or established
minimum wage," and that the monthly salary thus paid was "not
** less than the statutory minimum wage multiplied by 365 days
divided by twelve," supra. There is, in other words, no issue that
to this extent, Wellington complied with the minimum norm laid
down by law.
Apparently the monthly salary was fixed by Wellington to provide
for compensation for every working day of the year including the
holidays specified by law — and excluding only Sundays. In
fixing the salary, Wellington used what it calls the "314 factor;"
that is to say, it simply deducted 51 Sundays from the 365 days
normally comprising a year and used the difference, 314, as basis
for determining the monthly salary. The monthly salary thus
fixed actually covers payment for 314 days of the year, including
regular and special holidays, as well as days when no work is
done by reason of fortuitous cause, as above specified, or causes
not attributable to the employees.
The Labor Officer who conducted the routine inspection of
Wellington discovered that in certain years, two or three regular
holidays had fallen on Sundays. He reasoned that this had
precluded the enjoyment by the employees of a non-working day,
and the employees had consequently had to work an additional
day for that month. This ratiocination received the approval of
his Regional Director who opined[14] that "when a regular holiday
falls on a Sunday, an extra or additional working day is created
and the employer has the obligation to pay its employees for the
extra day except the last Sunday of August since the payment for
the said holiday is already included in the 314 factor."[15]
This ingenuous theory was adopted and further explained by
respondent Labor Undersecretary, to whom the matter was
appealed, as follows:[16]
" * * By using said (314) factor, the respondent (Wellington)
assumes that all the regular holidays fell on ordinary days and
never on a Sunday. Thus, the respondent failed to consider the
circumstance that whenever a regular holiday coincides with a
Sunday, an additional working day is created and left unpaid. In
other words, while the said divisor may be utilized as proof
evidencing payment of 302 working days, 2 special days and the
ten regular holidays in a calendar year, the same does not cover
or include payment of additional working days created as a result
of some regular holidays falling on Sundays."
He pointed out that in 1988 there was "an increase of three (3)
working days resulting from regular holidays falling on Sundays;"
hence Wellington "should pay for 317 days, instead of 314 days."
By the same process of ratiocination, respondent Undersecretary
theorized that there should be additional payment by Wellington
to its monthly-paid employees for "an increment of three (3)
working days" for 1989 and again, for 1990. What he is saying is
that in those years, Wellington should have used the "317 factor,"
not the "314 factor."
The theory loses sight of the fact that the monthly salary in
Wellington -- which is based on the so-called "314 factor" —
accounts for all 365 days of a year; i.e., Wellington's "314 factor"
leaves no day unaccounted for; it is paying for all the days of a
year with the exception only of 51 Sundays.
The respondents' theory would make each of the years in question
(1988, 1989, 1990), a year of 368 days. Pursuant to this theory, no
employer opting to pay his employees by the month would have
any definite basis to determine the number of days in a year for
which compensation should be given to his work force. He would
have to ascertain the number of times legal holidays would fall on
Sundays in all the years of the expected or extrapolated lifetime
of his business. Alternatively, he would be compelled to make
adjustments in his employees' monthly salaries every year,
depending on the number of times that a legal holiday fell on a
Sunday.
There is no provision of law requiring any employer to make such
adjustments in the monthly salary rate set by him to take account
of legal holidays falling on Sundays in a given year, or, contrary
to the legal provisions bearing on the point, otherwise to reckon a
year at more than 365 days. As earlier mentioned, what the law
requires of employers opting to pay by the month is to assure that
"the monthly minimum wage shall not be less than the statutory
minimum wage multiplied by 365 days divided by twelve,"[17] and
to pay that salary "for all days in the month whether worked or
not," and "irrespective of the number of working days therein."[18]
That salary is due and payable regardless of the declaration of
any special holiday in the entire country or a particular place
therein, or any fortuitous cause precluding work on any
particular day or days (such as transportation strikes, riots, or
typhoons or other natural calamities), or cause not imputable to
the worker. And as also earlier pointed out, the legal provisions
governing monthly compensation are evidently intended precisely
to avoid re-computations and alterations in salary on account of
the contingencies just mentioned, which, by the way, are
routinely made between employer and employees when the wages
are paid on daily basis.
The public respondents argue that their challenged conclusions
and dispositions may be justified by Section 2, Rule X, Book III of
the Implementing Rules, giving the Regional Director power - [19]
" ** to order and administer (in cases where employer-employee
relations still exist), after due notice and hearing, compliance
with the labor standards provisions of the Code and the other
labor legislations based on the findings of their Regulations
Officers or Industrial Safety Engineers (Labor Standard and
Welfare Officers) and made in the course of inspection, and to
issue writs of execution to the appropriate authority for the
enforcement of his order, in line with the provisions of Article 128
in relation to Articles 289 and 290 of the Labor Code, as amended.
** ."
The respondents beg the question. Their argument assumes that
there are some "labor standards provisions of the Code and the
other labor legislations" imposing on employers the obligation to
give additional compensation to their monthly-paid employees in
the event that a legal holiday should fall on a Sunday in a
particular month — with which compliance may be commanded
by the Regional Director — when the existence of said provisions
is precisely the matter to be established.
In promulgating the orders complained of the public respondents
have attempted to legislate, or interpret legal provisions in such a
manner as to create obligations where none are intended. They
have acted without authority, or at the very least, with grave
abuse of their discretion. Their acts must be nullified and set
aside.
WHEREFORE, the orders complained of, namely: that of the
respondent Undersecretary dated September 22, 1993, and that of
the Regional Director dated July 30, 1992, are NULLIFIED AND
SET ASIDE, and the proceeding against petitioner DISMISSED.
SO ORDERED.
 THIRD DIVISION
G.R. No. 157775, October 19, 2007
LEYTE IV ELECTRIC COOPERATIVE, INC., PETITIONER,
VS. LEYECO IV EMPLOYEES UNION-ALU,
RESPONDENT.*
DECISION
AUSTRIA-MARTINEZ, J.:
Before the Court is a Petition for Review on Certiorari under Rule
45 of the Rules of Court assailing the Resolution [1] dated
September 4, 2002 of the Court of Appeals (CA) in CA- G.R. SP
No. 72336 which dismissed outright petitioner's Petition for
Certiorari for adopting a wrong mode of appeal and the CA
Resolution[2] dated February 28, 2003 which denied petitioner's
Motion for Reconsideration.
The facts:
On April 6, 1998, Leyte IV Electric Cooperative, Inc. (petitioner)
and Leyeco IV Employees Union-ALU (respondent) entered into a
Collective Bargaining Agreement (CBA)[3] covering petitioner
rank-and-file employees, for a period of five (5) years effective
January 1, 1998.
On June 7, 2000, respondent, through its Regional Vice-
President, Vicente P. Casilan, sent a letter to petitioner
demanding holiday pay for all employees, as provided for in the
CBA.[4]
On June 20, 2000, petitioner, through its legal counsel, sent a
letter-reply to Casilan, explaining that after perusing all
available pay slips, it found that it had paid all employees all the
holiday pays enumerated in the CBA.[5]
After exhausting the procedures of the grievance machinery, the
parties agreed to submit the issues of the interpretation and
implementation of Section 2, Article VIII of the CBA on the
payment of holiday pay, for arbitration of the National
Conciliation and Mediation Board (NCMB), Regional Office No.
VIII in Tacloban City.[6] The parties were required to submit
their respective position papers, after which the dispute was
submitted for decision.
While admitting in its Position Paper[7] that the employees were
paid all of the days of the month even if there was no work,
respondent alleged that it is not prevented from making separate
demands for the payment of regular holidays concomitant with
the provisions of the CBA, with its supporting documents
consisting of a letter demanding payment of holiday pay,
petitioner's reply thereto and respondent's rejoinder, a
computation in the amount of P1,054,393.07 for the unpaid legal
holidays, and several pay slips.
Petitioner, on the other hand, in its Position Paper,[8] insisted
payment of the holiday pay in compliance with the CBA
provisions, stating that payment was presumed since the formula
used in determining the daily rate of pay of the covered
employees is Basic Monthly Salary divided by 30 days or Basic
Monthly Salary multiplied by 12 divided by 360 days, thus with
said formula, the employees are already paid their regular and
special days, the days when no work is done, the 51 un-worked
Sundays and the 51 un-worked Saturdays.
On March 1, 2001, Voluntary Arbitrator Antonio C. Lopez, Jr.
rendered a Decision[9] in favor of respondent, holding petitioner
liable for payment of unpaid holidays from 1998 to 2000 in the
sum of P1,054,393.07. He reasoned that petitioner miserably
failed to show that it complied with the CBA mandate that
holiday pay be “reflected during any payroll period of occurrence”
since the payroll slips did not reflect any payment of the paid
holidays. He found unacceptable not only petitioner's
presumption of payment of holiday pay based on a formula used
in determining and computing the daily rate of each covered
employee, but also petitioner's further submission that the rate of
its employees is not less than the statutory minimum wage
multiplied by 365 days and divided by twelve.
On April 11, 2001, petitioner filed a Motion for Reconsideration [10]
but it was denied by the Voluntary Arbitrator in a Resolution[11]
dated June 17, 2002. Petitioner received said Resolution on June
27, 2002. [12]
Thirty days later, or on July 27, 2002,[13] petitioner filed a Petition
for Certiorari[14] in the CA, ascribing grave abuse of discretion
amounting to lack of jurisdiction to the Voluntary Arbitrator: (a)
for ignoring that in said company the divisor for computing the
applicable daily rate of rank-and-file employees is 360 days which
already includes payment of 13 un- worked regular holidays
under Section 2, Article VIII of the CBA;[15] and (b) for holding the
petitioner liable for the unpaid holidays just because the payroll
slips submitted as evidence did not show any payment for the
regular holidays.[16]
In a Resolution[17] dated September 4, 2002, the CA dismissed
outright petitioner's Petition for Certiorari for adopting a wrong
mode of appeal. It reasoned:
Considering that what is assailed in the present recourse is a
Decision of a Voluntary Arbitrator, the proper remedy is a
petition for review under Rule 43 of the 1997 Rules of Civil
Procedure; hence, the present petition for certiorari under Rule
65 filed on August 15, 2002, should be rejected, as such a petition
cannot be a substitute for a lost appeal. And in this case, the
period for appeal via a petition for review has already lapsed
since the petitioner received a copy of the Resolution denying its
motion for reconsideration on June 27, 2002, so that its last day
to appeal lapsed on July 12, 2002.
x x x x[18]
Petitioner filed a Motion for Reconsideration[19] but it was denied
by the CA in a Resolution[20] dated February 28, 2003.
Hence, the present petition anchored on the following grounds:
(1) The Honorable Court of Appeals erred in rejecting the petition
for certiorari under Rule 65 of the Rules of Court filed by
herein petitioner to assail the Decision of the Voluntary
Arbitrator. [21]
(2) Even if decisions of voluntary arbitrator or panel of voluntary
arbitrators are appealable to the Honorable Court of Appeals
under Rule 43, a petition for certiorari under Rule 65 is still
 available if it is grounded on grave abuse of
discretion. Hence, the Honorable Court of Appeals erred in
rejecting the petition for certiorari under Rule 65 of the Rules
of Court filed by herein petitioner.[22]
(3) The Honorable Court of Appeals erred in refusing to rule on
the legal issue presented by herein petitioner in the petition
for certiorari that it had filed and in putting emphasis instead
on a technicality of procedure. The legal issues needs a clear-
cut ruling by this Honorable Court for the guidance of herein
petitioner and private respondent.[23]
Petitioner contends that Rule 65 of the Rules of Court is the
applicable mode of appeal to the CA from judgments issued by a
voluntary arbitrator since Rule 43 only allows appeal from
judgments of particular quasi-judicial agencies and voluntary
arbitrators authorized by law and not those judgments and orders
issued under the Labor Code; that the petition before the CA did
not raise issues of fact but was founded on jurisdictional issues
and, therefore, reviewable through a special civil action for
certiorari under Rule 65; that technicalities of law and procedure
should not be utilized to subvert the ends of substantial justice.
In its Comment,[24] respondent avers that Luzon Development
Bank v. Association of Luzon Development Bank Employees [25] laid
down the prevailing rule that judgments of the Voluntary
Arbitrator are appealable to the CA under Section 1, Rule 43 of
the Rules of Court; that having failed to file the appropriate
remedy due to the lapse of the appeal period, petitioner cannot
simply invoke Rule 65 for its own convenience, as an alternative
remedy.
In its Reply,[26] petitioner submits that the ruling in Luzon
Development Bank does not expressly exclude the filing of a
petition for certiorari under Rule 65 of the Rules of Court to assail
a decision of a voluntary arbitrator. It reiterates that
technicalities of law and procedure should not be utilized to
subvert the ends of substantial justice.
It has long been settled in the landmark case Luzon Development
Bank that a voluntary arbitrator, whether acting solely or in a
panel, enjoys in law the status of a quasi-judicial agency; hence,
his decisions and awards are appealable to the CA. This is so
because the awards of voluntary arbitrators become final and
executory upon the lapse of the period to appeal; [27] and since
their awards determine the rights of parties, their decisions have
the same effect as judgments of a court. Therefore, the proper
remedy from an award of a voluntary arbitrator is a petition for
review to the CA, following Revised Administrative Circular No.
1-95, which provided for a uniform procedure for appellate review
of all adjudications of quasi-judicial entities, which is now
embodied in Section 1, Rule 43 of the 1997 Rules of Civil
Procedure, which reads:
SECTION 1. Scope. — This Rule shall apply to appeals from
judgments or final orders of the Court of Tax Appeals and from
awards, judgments, final orders or resolutions of or authorized by
any quasi-judicial agency in the exercise of its quasi- judicial
functions. Among these agencies are the Civil Service
Commission, Central Board of Assessment Appeals, Securities
and Exchange Commission, Office of the President, Land
Registration Authority, Social Security Commission, Civil
Aeronautics Board, Bureau of Patents, Trademarks and
Technology Transfer, National Electrification Administration,
Energy Regulatory Board, National Telecommunications
Commission, Department of Agrarian Reform under Republic Act
No. 6657, Government Service Insurance System, Employees
Compensation Commission, Agricultural Inventions Board,
Insurance Commission, Philippine Atomic Energy Commission,
Board of Investments, Construction Industry Arbitration
Commission, and voluntary arbitrators authorized by
law.[28] (Emphasis supplied)
Section 2, Rule 43 of the 1997 Rules of Civil Procedure which
provides that:
SEC. 2. Cases not covered. - This Rule shall not apply to
judgments or final orders issued under the Labor Code of the
Philippines.
did not alter the Court's ruling in Luzon Development
Bank. Section 2, Rule 42 of the 1997 Rules of Civil Procedure, is
nothing more than a reiteration of the exception to the exclusive
appellate jurisdiction of the CA,[29] as provided for in Section 9,
Batas Pambansa Blg. 129,[30] as amended by Republic Act No.
7902:[31]
(3) Exclusive appellate jurisdiction over all final judgments,
decisions, resolutions, orders or awards of Regional Trial Courts
and quasi-judicial agencies, instrumentalities, boards or
commissions, including the Securities and Exchange Commission,
the Employees’ Compensation Commission and the Civil Service
Commission, except those falling within the appellate
jurisdiction of the Supreme Court in accordance with the
Constitution, the Labor Code of the Philippines under
Presidential Decree No. 442, as amended, the provisions of
this Act and of subparagraph (1) of the third paragraph and
subparagraph (4) of the fourth paragraph of Section 17 of the
Judiciary Act of 1948.
The Court took into account this exception in Luzon Development
Bank but, nevertheless, held that the decisions of voluntary
arbitrators issued pursuant to the Labor Code do not come within
its ambit, thus:
x x x. The fact that [the voluntary arbitrator’s] functions and
powers are provided for in the Labor Code does not place him
within the exceptions to said Sec. 9 since he is a quasi-judicial
instrumentality as contemplated therein. It will be noted that,
although the Employees’ Compensation Commission is also
provided for in the Labor Code, Circular No. 1-91, which is the
forerunner of the present Revised Administrative Circular No. 1-
95, laid down the procedure for the appealability of its decisions
to the Court of Appeals under the foregoing rationalization, and
this was later adopted by Republic Act No. 7902 in amending Sec.
9 of B.P. 129.
A fortiori, the decision or award of the voluntary arbitrator or
panel of arbitrators should likewise be appealable to the Court of
Appeals, in line with the procedure outlined in Revised
Administrative Circular No. 1-95, just like those of the quasi-
judicial agencies, boards and commissions enumerated therein.
This would be in furtherance of, and consistent with, the original
purpose of Circular No. 1-91 to provide a uniform procedure for
the appellate review of adjudications of all quasi-judicial entities
not expressly excepted from the coverage of Sec. 9 of B.P. 129 by
either the Constitution or another statute. Nor will it run counter
to the legislative intendment that decisions of the NLRC be
reviewable directly by the Supreme Court since, precisely, the
cases within the adjudicative competence of the voluntary
arbitrator are excluded from the jurisdiction of the NLRC or the
labor arbiter.[32]
This ruling has been repeatedly reiterated in subsequent cases[33]
and continues to be the controlling doctrine. Thus, the general
rule is that the proper remedy from decisions of voluntary
arbitrators is a petition for review under Rule 43 of the Rules of
Court.
Nonetheless, a special civil action for certiorari under Rule 65 of
the Rules of Court is the proper remedy for one who complains
that the tribunal, board or officer exercising judicial or quasi-
judicial functions acted in total disregard of evidence
material to or decisive of the controversy.[34] As this Court
elucidated in Garcia v. National Labor Relations Commission[35] -
[I]n Ong v. People, we ruled that certiorari can be properly
resorted to where the factual findings complained of are not
supported by the evidence on record. Earlier, in Gutib v.
Court of Appeals, we emphasized thus:
[I]t has been said that a wide breadth of discretion is granted a
court of justice in certiorari proceedings. The cases in which
certiorari will issue cannot be defined, because to do so would be
to destroy its comprehensiveness and usefulness. So wide is the
discretion of the court that authority is not wanting to show that
certiorari is more discretionary than either prohibition or
mandamus. In the exercise of our superintending control over
inferior courts, we are to be guided by all the circumstances of
each particular case “as the ends of justice may require.” So it is
that the writ will be granted where necessary to prevent a
substantial wrong or to do substantial justice. [36]
In addition, while the settled rule is that an independent action
for certiorari may be availed of only when there is no appeal or
any plain, speedy and adequate remedy in the ordinary course of
law [37] and certiorari is not a substitute for the lapsed remedy of
appeal, [38] there are a few significant exceptions when the
extraordinary remedy of certiorari may be resorted to despite the
availability of an appeal, namely: (a) when public welfare and the
advancement of public policy dictate; (b) when the broader
interests of justice so require; (c) when the writs issued are
null; and (d) when the questioned order amounts to an oppressive
exercise of judicial authority.[39]
In this case, while the petition was filed on July 27, 2002, [40] 15
days after July 12, 2002, the expiration of the 15-day
reglementary period for filing an appeal under Rule 43, the
broader interests of justice warrant relaxation of the rules on
procedure. Besides, petitioner alleges that the Voluntary
Arbitrator’s conclusions have no basis in fact and in law; hence,
the petition should not be dismissed on procedural grounds.
The Voluntary Arbitrator gravely abused its discretion in giving a
strict or literal interpretation of the CBA provisions that the
holiday pay be reflected in the payroll slips. Such literal
interpretation ignores the admission of respondent in its Position
Paper[41] that the employees were paid all the days of the
month even if not worked. In light of such admission,
petitioner's submission of its 360 divisor in the computation of
employees’ salaries gains significance.
In Union of Filipro Employees v. Vivar, Jr.[42] the Court held that
“[t]he 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
ruling was applied in Wellington Investment and Manufacturing
Corporation v. Trajano,[43] Producers Bank of the Philippines v.
National Labor Relations Commission[44] and Odango v. National
Labor Relations Commission,[45] among others.[46]
In Wellington,[47] the monthly salary was fixed by Wellington to
provide for compensation for every working day of the year
including the holidays specified by law – and excluding only
Sundays. In fixing the salary, Wellington used what it called the
“314 factor”; that is, it simply deducted 51 Sundays from the 365
days normally comprising a year and used the difference, 314, as
basis for determining the monthly salary. The monthly salary
thus fixed actually covered payment for 314 days of the year,
including regular and special holidays, as well as days when no
work was done by reason of fortuitous cause, such as
transportation strike, riot, or typhoon or other natural calamity,
or cause not attributable to the employees.
In Producers Bank,[48] the employer used the divisor 314 in
arriving at the daily wage rate of monthly salaried
employees. The divisor 314 was arrived at by subtracting all
Sundays from the total number of calendar days in a year, since
Saturdays are considered paid rest days. The Court held that the
use of 314 as a divisor leads to the inevitable conclusion that the
ten legal holidays are already included therein.
In Odango v. National Labor Relations Commission,[49] the Court
ruled that the use of a divisor that was less than 365 days cannot
make the employer automatically liable for underpayment of
holiday pay. In said case, the employees were required to work
only from Monday to Friday and half of Saturday. Thus, the
minimum allowable divisor is 287, which is the result of 365 days,
less 52 Sundays and less 26 Saturdays (or 52 half
Saturdays). Any divisor below 287 days meant that the
employees were deprived of their holiday pay for some or all of
the ten legal holidays. The 304-day divisor used by the employer
was clearly above the minimum of 287 days.
In this case, the employees are required to work only from
Monday to Friday. Thus, the minimum allowable divisor is 263,
which is arrived at by deducting 51 un-worked Sundays and 51
un-worked Saturdays from 365 days. Considering that petitioner
used the 360-day divisor, which is clearly above the minimum,
indubitably, petitioner's employees are being given their holiday
pay.
Thus, the Voluntary Arbitrator should not have simply brushed
aside petitioner's divisor formula. In granting respondent's claim
of non-payment of holiday pay, a “double burden” was imposed
upon petitioner because it was being made to pay twice for its
employees' holiday pay when payment thereof had already been
included in the computation of their monthly salaries. Moreover,
it is absurd to grant respondent's claim of non-payment when
they in fact admitted that they were being paid all of the days of
the month even if not worked. By granting respondent's claim,
the Voluntary Arbitrator sanctioned unjust enrichment in favor of
the respondent and caused unjust financial burden to the
petitioner. Obviously, the Court cannot allow this.
While the Constitution is committed to the policy of social
justice[50] and the protection of the working class,[51] it should not
be supposed that every labor dispute would automatically be
decided in favor of labor. Management also has it own rights
which, as such, are entitled to respect and enforcement in the
interest of simple fair play. Out of concern for those with less
privileges in life, this Court has inclined more often than not
toward the worker and upheld his cause in his conflicts with the
employer. Such favoritism, however, has not blinded us to the
rule that justice is in every case for the deserving, to be dispensed
in the light of the established facts and the applicable law and
doctrine.[52]

WHEREFORE, the petition for review is GRANTED. The

Resolutions dated September 4, 2002 and February 28, 2003 of
the Court of Appeals in CA-G.R. SP No. 72336 are REVERSED
and SET ASIDE. The Decision dated March 1, 2001 and
Resolution dated June 17, 2002 of the Voluntary Arbitrator are
declared NULL and VOID.

SO ORDERED.
 THIRD DIVISION
G.R. No. 100701, March 28, 2001
PRODUCERS BANK OF THE PHILIPPINES,
PETITIONER, VS. NATIONAL LABOR RELATIONS
COMMISSION AND PRODUCERS BANK EMPLOYEES
ASSOCIATION,[1] RESPONDENTS.
DECISION
GONZAGA-REYES, J.:
Before us is a special civil action for certiorari with prayer for
preliminary injunction and/or restraining order seeking the
nullification of (1) the decision of public respondent in NLRC-
NCR Case No. 02-00753-88, entitled "Producers Bank Employees
Association v. Producers Bank of the Philippines," promulgated
on 30 April 1991, reversing the Labor Arbiter's dismissal of
private respondent's complaint and (2) public respondent's
resolution dated 18 June 1991 denying petitioner's motion for
partial reconsideration.
The present petition originated from a complaint filed by private
respondent on 11 February 1988 with the Arbitration Branch,
National Capital Region, National Labor Relations Commission
(NLRC), charging petitioner with diminution of benefits, non-
compliance with Wage Order No. 6 and non-payment of holiday
pay. In addition, private respondent prayed for damages. [2]
On 31 March 1989, Labor Arbiter Nieves V. de Castro found
private respondent's claims to be unmeritorious and dismissed its
complaint.[3] In a complete reversal, however, the NLRC[4] granted
all of private respondent's claims, except for damages.[5] The
dispositive portion of the NLRC's decision provides -
WHEREFORE, premises considered, the appealed Decision is, as
it is hereby, SET ASIDE and another one issued ordering
respondent-appellee to pay complainant-appellant:
1. The unpaid bonus (mid-year and
Christmas bonus) and 13th month pay;
2. Wage differentials under Wage Order No.
6 for November 1, 1984 and the
corresponding adjustment thereof; and
3. Holiday pay under Article 94 of the Labor
Code, but not to exceed three (3) years.
The rest of the claims are dismissed for lack of merit.
SO ORDERED.
Petition filed a Motion for Partial Reconsideration, which was
denied by the NLRC in a Resolution issued on 18 June 1991.
Hence, recourse to this Court.
Petitioner contends that the NLRC gravely abused its discretion
in ruling as it did for the succeeding reasons stated in its Petition
-
1. On the alleged diminution of benefits, the
NLRC gravely abused its discretion when
 (1) it contravened the Supreme Court
decision in Traders Royal Bank v. NLRC,
et al., G.R. No. 88168, promulgated on
August 30, 1990, (2) its ruling is not
justified by law and Art. 100 of the Labor
Code, (3) its ruling is contrary to the CBA,
and (4) the so-called "company practice
invoked by it has no legal and moral
bases" (p. 2, Motion for Partial
Reconsideration, Annex "H");
2. On the alleged non-compliance with Wage
Order No. 6, the NLRC again gravely
abused its discretion when it patently and
palpably erred in holding that it is "more
inclined to adopt the stance of appellant
(private respondent UNION) in this issue
since it is more in keeping with the law
and its implementing provisions and the
intendment of the parties as revealed in
their CBA" without giving any reason or
justification for such conclusions as the
stance of appellant (private respondent
UNION) does not traverse the clear and
correct finding and conclusion of the
Labor Arbiter.
Furthermore, the petitioner, under
conservatorship and distressed, is
exempted under Wage Order No. 6.
Finally, the "wage differentials under
Wage Order No. 6 for November 1, 1984
and the corresponding adjustment
thereof" (par. 2, dispositive portion, NLRC
Decision), has prescribed (p. 12, Motion
for Partial Reconsideration, Annex "H").
3. On the alleged non-payment of legal
holiday pay, the NLRC again gravely
abused its discretion when it patently and
palpably erred in approving and adopting
"the position of appellant (private
respondent UNION)" without giving any
reason or justification therefor which
position does not squarely traverse or
refute the Labor Arbiter's correct finding
and ruling (p. 18, Motion for Partial
Reconsideration, Annex "H").[6]
On 29 July 1991, the Court granted petitioner's prayer for a
temporary restraining order enjoining respondents from
executing the 30 April 1991 Decision and 18 June 1991
Resolution of the NLRC.[7]
Coming now to the merits of the petition, the Court shall discuss
the issues ad seriatim.
Bonuses
As to the bonuses, private respondent declared in its position
paper[8] filed with the NLRC that -
1. Producers Bank of the Philippines, a 5. By virtue of an alleged Monetary Board
banking institution, has been providing Resolution No. 1566, the bank only gave a
several benefits to its employees since one-half (1/2) month basic pay as
1971 when it started its operation. Among compliance of the 13th month pay and
the benefits it had been regularly giving is none for the Christmas bonus. In a
a mid-year bonus equivalent to an tabular form, here are the bank's
employee's one-month basic pay and a violations:
Christmas bonus equivalent to an
employee's one whole month salary (basic MID-YEAR CHRISTMAS
YEAR 13TH MO. PAY
pay plus allowance); BONUS BONUS
previous
one mo. basic one mo. basic one mo. basic
2. When P.D. 851, the law granting a 13th years
month pay, took effect, the basic pay one-half mo.
1984 [one mo. basic] - none -
previously being given as part of the basic
Christmas bonus was applied as one-half mo. one-half mo.
1985 - none -
compliance to it (P.D. 851), the allowances basic basic
remained as Christmas bonus; one-half mo.
1986 one-half mo. basic one mo. basic
basic
3. From 1981 up to 1983, the bank continued one-half mo.
1987 one-half mo. basic one mo. basic
giving one month basic pay as mid-year basic
bonus, one month basic pay as 13th month Private respondent argues that the mid-year and Christmas
pay but the Christmas bonus was no bonuses, by reason of their having been given for thirteen
longer based on the allowance but on the consecutive years, have ripened into a vested right and, as such,
basic pay of the employees which is can no longer be unilaterally withdrawn by petitioner without
higher; violating Article 100 of Presidential Decree No. 442[9] which
prohibits the diminution or elimination of benefits already being
4. In the early part of 1984, the bank was enjoyed by the employees. Although private respondent concedes
placed under conservatorship but it still that the grant of a bonus is discretionary on the part of the
provided the traditional mid-year bonus; employer, it argues that, by reason of its long and regular
concession, it may become part of the employee's regular
compensation.[10]

On the other hand, petitioner asserts that it cannot be compelled
to pay the alleged bonus differentials due to its depressed
financial condition, as evidenced by the fact that in 1984 it was
placed under conservatorship by the Monetary Board. According
to petitioner, it sustained losses in the millions of pesos from 1984
to 1988, an assertion which was affirmed by the labor arbiter.
Moreover, petitioner points out that the collective bargaining
agreement of the parties does not provide for the payment of any
mid-year or Christmas bonus. On the contrary, section 4 of the
collective bargaining agreement states that -
Acts of Grace. Any other benefits or privileges which are not
expressly provided in this Agreement, even if now accorded or
hereafter accorded to the employees, shall be deemed purely acts
of grace dependent upon the sole judgment and discretion of the
BANK to grant, modify or withdraw.[11]
A bonus is an amount granted and paid to an employee for his
industry and loyalty which contributed to the success of the
employer's business and made possible the realization of profits.
It is an act of generosity granted by an enlightened employer to
spur the employee to greater efforts for the success of the
business and realization of bigger profits.[12] The granting of a
bonus is a management prerogative, something given in addition
to what is ordinarily received by or strictly due the recipient. [13]
Thus, a bonus is not a demandable and enforceable obligation,[14]
except when it is made part of the wage, salary or compensation
of the employee.[15]
However, an employer cannot be forced to distribute bonuses
which it can no longer afford to pay. To hold otherwise would be
to penalize the employer for his past generosity. Thus, in Traders
Royal Bank v. NLRC,[16] we held that -
It is clear x x x that the petitioner may not be obliged to pay
bonuses to its employees. The matter of giving them bonuses over
and above their lawful salaries and allowances is entirely
dependent on the profits, if any, realized by the Bank from its
operations during the past year.
From 1979-1985, the bonuses were less because the income of the
Bank had decreased. In 1986, the income of the Bank was only
20.2 million pesos, but the Bank still gave out the usual two (2)
months basic mid-year and two months gross year-end bonuses.
The petitioner pointed out, however, that the Bank weakened
considerably after 1986 on account of political developments in
the country. Suspected to be a Marcos-owned or controlled bank,
it was placed under sequestration by the present administration
and is now managed by the Presidential Commission on Good
Government (PCGG).
In light of these submissions of the petitioner, the contention of
the Union that the granting of bonuses to the employees had
ripened into a company practice that may not be adjusted to the
prevailing financial condition of the Bank has no legal and moral
bases. Its fiscal condition having declined, the Bank may not be
forced to distribute bonuses which it can no longer afford to pay
and, in effect, be penalized for its past generosity to its employees.
Private respondent's contention, that the decrease in the mid-
year and year-end bonuses constituted a diminution of the
employees' salaries, is not correct, for bonuses are not part of
labor standards in the same class as salaries, cost of living
allowances, holiday pay, and leave benefits, which are provided
by the Labor Code.
This doctrine was reiterated in the more recent case of Manila
Banking Corporation v. NLRC[17] wherein the Court made the
following pronouncements -
By definition, a "bonus" is a gratuity or act of liberality of the
giver which the recipient has no right to demand as a matter of
right. It is something given in addition to what is ordinarily
received by or strictly due the recipient. The granting of a bonus
is basically a management prerogative which cannot be forced
upon the employer who may not be obliged to assume the onerous
burden of granting bonuses or other benefits aside from the
employee's basic salaries or wages, especially so if it is incapable
of doing so.
xxx xxx xxx
Clearly then, a bonus is an amount given ex gratia to an
employee by an employer on account of success in business or
realization of profits. How then can an employer be made liable to
pay additional benefits in the nature of bonuses to its employees
when it has been operating on considerable net losses for a given
period of time?
Records bear out that petitioner Manilabank was already in dire
financial straits in the mid-80's. As early as 1984, the Central
Bank found that Manilabank had been suffering financial losses.
Presumably, the problems commenced even before their discovery
in 1984. As earlier chronicled, the Central Bank placed petitioner
bank under comptrollership in 1984 because of liquidity problems
and excessive interbank borrowings. In 1987, it was placed under
receivership and ordered to close operation. In 1988, it was
ordered liquidated.
It is evident, therefore, that petitioner bank was operating on net
losses from the years 1984, 1985 and 1986, thus, resulting to its
eventual closure in 1987 and liquidation in 1988. Clearly, there
was no success in business or realization of profits to speak of
that would warrant the conferment of additional benefits sought
by private respondents. No company should be compelled to act
liberally and confer upon its employees additional benefits over
and above those mandated by law when it is plagued by economic
difficulties and financial losses. No act of enlightened generosity
and self-interest can be exacted from near empty, if not empty
coffers.
It was established by the labor arbiter[18] and the NLRC[19] and
admitted by both parties[20] that petitioner was placed under
conservatorship by the Monetary Board, pursuant to its authority
under Section 28-A of Republic Act No. 265,[21] as amended by
Presidential Decree No. 72,[22] which provides -
Sec. 28-A. Appointment of conservator. - Whenever, on the basis
of a report submitted by the appropriate supervising and
examining department, the Monetary Board finds that a bank is
in a state of continuing inability or unwillingness to maintain a
condition of solvency and liquidity deemed adequate to protect the
interest of depositors and creditors, the Monetary Board may
appoint a conservator to take charge of the assets, liabilities, and
the management of that banking institution, collect all monies
and debts due said bank and exercise all powers necessary to
preserve the assets of the bank, reorganize the management
thereof and restore its viability. He shall have the power to
overrule or revoke the actions of the previous management and
board of directors of the bank, any provision of law to the contrary
notwithstanding, and such other powers as the Monetary Board
shall deem necessary.
xxx xxx xxx
January-February 1988 P 9.271
These losses do not include the interest expenses on the overdraft
loan of the petitioner to the Central Bank, which interest as of
July 31, 1987, amounted to P610.065 Million, and penalties on
reserve deficiencies which amounted to P89.029 Million. The
principal balance of the overdraft amounted to P971.632 Million
as of March 16, 1988.[24]

Under Section 28-A, the Monetary Board may place a bank under
Petitioner was not only experiencing a decline in its profits, but
the control of a conservator when it finds that the bank is
was reeling from tremendous losses triggered by a bank-run
continuously unable or unwilling to maintain a condition of
which began in 1983. In such a depressed financial condition,
solvency or liquidity. In Central Bank of the Philippines v. Court
petitioner cannot be legally compelled to continue paying the
of Appeals,[23] the Court declared that the order placing petitioner
same amount of bonuses to its employees. Thus, the conservator
herein under conservatorship had long become final and its
was justified in reducing the mid-year and Christmas bonuses of
validity could no longer be litigated upon. Also, in the same case,
petitioner's employees. To hold otherwise would be to defeat the
the Court found that sometime in August, 1983, some news items
reason for the conservatorship which is to preserve the assets and
triggered a bank-run in petitioner which resulted in continuous
restore the viability of the financially precarious bank.
over-drawings on petitioner's demand deposit account with the
Ultimately, it is to the employees' advantage that the
Central Bank; the over-drawings reached P143.955 million by 17
conservatorship achieve its purposes for the alternative would be
January 1984; and as of 13 February 1990, petitioner had over-
petitioner's closure whereby employees would lose not only their
drawings of up to P1.233 billion, which evidences petitioner's
benefits, but their jobs as well.
continuing inability to maintain a condition of solvency and
liquidity, thus justifying the conservatorship. Our findings in the
13th Month Pay
Central Bank case coincide with petitioner's claims that it
continuously suffered losses from 1984 to 1988 as follows -
With regard to the 13th month pay, the NLRC adopted the
NET LOSSES IN MILLIONS position taken by private respondent and held that the
YEAR
OF PESOS conservator was not justified in diminishing or not paying the 13th
1984 P 144.418 month pay and that petitioner should have instead applied for an
1985 P 144.940 exemption, in accordance with section 7 of Presidential Decree
1986 P 132.940 No. 851 (PD 851), as amended by Presidential Decree No. 1364,
1987 P 84.182 but that it did not do so.[25] The NLRC held that the actions of the
conservator ran counter to the provisions of PD 851. nature of the employment, a 13th month pay, not later than
December 24 of every year.[30] However, employers already paying
In its position paper,[26] private respondent claimed that their employees a 13th month pay or its equivalent are not covered
petitioner made the following payments to its members - by the law. Under the Revised Guidelines on the Implementation
of the 13th-Month Pay Law,[31] the term "equivalent" shall be
CHRISTMAS
MID-YEAR 13th MONTH construed to include Christmas bonus, mid-year bonus, cash
YEAR BONUS
BONUS PAY bonuses and other payments amounting to not less than 1/12 of
the basic salary. The intention of the law was to grant some relief
1984 1 month basic ½ month basic None
- not to all workers - but only to those not actually paid a 13th
1985 ½ month basic ½ month basic None
month salary or what amounts to it, by whatever name called. It
1986 ½ month basic 1 month basic ½ month basic
was not envisioned that a double burden would be imposed on the
1987 ½ month basic 1 month basic ½ month basic
employer already paying his employees a 13 th month pay or its
However, in its Memorandum[27] filed before this Court, private
equivalent - whether out of pure generosity or on the basis of a
respondent revised its claims as follows -
binding agreement. To impose upon an employer already giving
MID-YEAR 13th MONTH CHRISTMAS his employees the equivalent of a 13th month pay would be to
YEAR
BONUS PAY BONUS penalize him for his liberality and in all probability, the employer
1984 1 month basic None ½ month basic would react by withdrawing the bonuses or resist further
1985 ½ month basic None ½ month basic voluntary grants for fear that if and when a law is passed giving
1986 ½ month basic ½ month basic 1 month basic the same benefits, his prior concessions might not be given due
1987 ½ month basic ½ month basic 1 month basic credit.[32]
1988 ½ month basic ½ month basic 1 month basic
Petitioner argues that it is not covered by PD 851 since the mid- In the case at bar, even assuming the truth of private
year and Christmas bonuses it has been giving its employees from respondent's claims as contained in its position paper or
1984 to 1988 exceeds the basic salary for one month (except for Memorandum regarding the payments received by its members in
1985 where a total of one month basic salary was given). Hence, the form of 13th month pay, mid-year bonus and Christmas bonus,
this amount should be applied towards the satisfaction of the 13 th it is noted that, for each and every year involved, the total
month pay, pursuant to Section 2 of PD 851.[28] amount given by petitioner would still exceed, or at least be equal
to, one month basic salary and thus, may be considered as an
PD 851, which was issued by President Marcos on 16 December "equivalent" of the 13th month pay mandated by PD 851. Thus,
1975, requires all employers to pay their employees receiving a petitioner is justified in crediting the mid-year bonus and
basic salary of not more than P1,000 a month,[29] regardless of the Christmas bonus as part of the 13th month pay.

Wage Order No. 6
Wage Order No. 6, which came into effect on 1 November 1984,
increased the statutory minimum wage of workers, with different
increases being specified for agricultural plantation and non-
agricultural workers. The bone of contention, however, involves
Section 4 thereof which reads -
All wage increase in wage and/or allowance granted by employers
between June 17, 1984 and the effectivity of this Order shall be
credited as compliance with the minimum wage and allowance
adjustments prescribed herein provided that where the increases
are less than the applicable amount provided in this Order, the
employer shall pay the difference. Such increases shall not
include anniversary wage increases provided in collective
bargaining agreements unless the agreement expressly provide
otherwise.
On 16 November 1984, the parties entered into a collective
bargaining agreement providing for the following salary
adjustments -
Article VIII. Section 1. Salary Adjustments. - Cognizant of the
effects of, among others, price increases of oil and other
commodities on the employees' wages and earnings, and the
certainty of continued governmental or statutory actions
adjusting employees' minimum wages, earnings, allowances,
bonuses and other fringe benefits, the parties have formulated
and agreed on the following highly substantial packaged
increases in salary and allowance which take into account and
cover (a) any deflation in income of employees because of such
price increases and inflation and (b) the expected governmental
response thereto in the form of statutory adjustments in wages,
allowances and benefits, during the next three (3) years of this
Agreement:
(i) Effective March 1, 1984 - P225.00 per month as salary increase
plus P100.00 per month as increase in allowance to employees
within the bargaining unit on March 1, 1984.
(ii) Effective March 1, 1985 - P125.00 per month as salary
increase plus P100.00 per month as increase in allowance to
employees within the bargaining unit on March 1, 1985.
(iii) Effective March 1, 1986 - P125.00 per month as salary
increase plus P100.00 per month as increase in allowance to
employees within the bargaining unit on March 1, 1986.
In addition, the collective bargaining agreement of the parties
also included a provision on the chargeability of such salary or
allowance increases against government-ordered or legislated
income adjustments -
Section 2. Pursuant to the MOLE Decision dated October 2, 1984
and Order dated October 24, 1984, the first-year salary and
allowance increases shall be chargeable against adjustments
under Wage Order No. 5, which took effect on June 16, 1984. The
chargeability of the foregoing salary increases against
government-ordered or legislated income adjustments subsequent
to Wage Order No. 5 shall be determined on the basis of the
provisions of such government orders or legislation.
Petitioner argues that it complied with Wage Order No. 6 because
the first year salary and allowance increase provided for under
the collective bargaining agreement can be credited against the
wage and allowance increase mandated by such wage order.
Under Wage Order No. 6, all increases in wages or allowances
granted by the employer between 17 June 1984 and 1 November
1984 shall be credited as compliance with the wage and allowance
adjustments prescribed therein. Petitioner asserts that although
the collective bargaining agreement was signed by the parties on
16 November 1984, the first year salary and allowance increase
was made to take effect retroactively, beginning from 1 March
1984 until 28 February 1985. Petitioner maintains that this
period encompasses the period of creditability provided for under
Wage Order No. 6 and that, therefore, the balance remaining
after applying the first year salary and allowance increase in the
collective bargaining agreement to the increase mandated by
Wage Order No. 5, in the amount of P125.00, should be made
chargeable against the increase prescribed by Wage Order No. 6,
and if not sufficient, petitioner is willing to pay the difference. [33]
On the other hand, private respondent contends that the first
year salary and allowance increases under the collective
bargaining agreement cannot be applied towards the satisfaction
of the increases prescribed by Wage Order No. 6 because the
former were not granted within the period of creditability
provided for in such wage order. According to private respondent,
the significant dates with regard to the granting of the first year
increases are 9 November 1984 - the date of issuance of the
MOLE Resolution, 16 November 1984 - the date when the
collective bargaining agreement was signed by the parties and 1
March 1984 - the retroactive date of effectivity of the first year
increases. Private respondent points out that none of these dates
fall within the period of creditability under Wage Order No. 6
which is from 17 June 1984 to 1 November 1984. Thus, petitioner
has not complied with Wage Order No. 6.[34]
The creditability provision in Wage Order No. 6 is based on
important public policy, that is, the encouragement of employers
to grant wage and allowance increases to their employees higher
than the minimum rates of increases prescribed by statute or
administrative regulation. Thus, we held in Apex Mining
Company, Inc. v. NLRC[35] that -
[t]o obliterate the creditability provisions in the Wage Orders
through interpretation or otherwise, and to compel employers
simply to add on legislated increases in salaries or allowances
without regard to what is already being paid, would be to penalize
employers who grant their workers more than the statutorily
prescribed minimum rates of increases. Clearly, this would be
counter-productive so far as securing the interest of labor is
concerned. The creditability provisions in the Wage Orders
prevent the penalizing of employers who are industry leaders and
who do not wait for statutorily prescribed increases in salary or
allowances and pay their workers more than what the law or
regulations require.
Section 1 of Article VIII of the collective bargaining agreement of
the parties states that "...the parties have formulated and agreed
on the following highly substantial packaged increases in salary
and allowance which take into account and cover (a) any deflation
in income of employees because of such price increases and
inflation and (b) the expected governmental response thereto in
the form of statutory adjustments in wages, allowances and
benefits, during the next three (3) years of this Agreement..." The
unequivocal wording of this provision manifests the clear intent
of the parties to apply the wage and allowance increases
stipulated in the collective bargaining agreement to any statutory
wage and allowance adjustments issued during the effectivity of
such agreement - from 1 March 1984 to 28 February 1987.
Furthermore, contrary to private respondent's contentions, there
is nothing in the wording of Section 2 of Article VIII of the
collective bargaining agreement that would prevent petitioner
from crediting the first year salary and allowance increases
against the increases prescribed by Wage Order No. 6.
It would be inconsistent with the abovestated rationale
underlying the creditability provision of Wage Order No. 6 if,
after applying the first year increase to Wage Order No. 5, the
balance was not made chargeable to the increases under Wage
Order No. 6 for the fact remains that petitioner actually granted
wage and allowance increases sufficient to cover the increases
mandated by Wage Order No. 5 and part of the increases
mandated by Wage Order No. 6.
Holiday Pay
Article 94 of the Labor Code provides that every worker shall be
paid his regular daily wage during regular holidays[36] and that
the employer may require an employee to work on any holiday
but such employee shall be paid a compensation equivalent to
twice his regular rate. In this case, the Labor Arbiter found that
the divisor used by petitioner in arriving at the employees' daily
rate for the purpose of computing salary-related benefits is 314.[37]
This finding was not disputed by the NLRC. [38] However, the
divisor was reduced to 303 by virtue of an inter-office
memorandum issued on 13 August 1986, to wit -
To increase the rate of overtime pay for rank and filers, we are
pleased to inform that effective August 18, 1986, the acting
Conservator approved the use of 303 days as divisor in the
computation of Overtime pay. The present Policy of 314 days as
divisor used in the computation for cash conversion and
determination of daily rate, among others, still remain,
Saturdays, therefore, are still considered paid rest days.
Corollarily, the Acting Convservator also approved the increase of
meal allowance from P25.00 to P30.00 for a minimum of four (4)
hours of work for Saturdays.
Proceeding from the unambiguous terms of the above quoted
memorandum, the Labor Arbiter observed that the reduction of
the divisor to 303 was for the sole purpose of increasing the
employees' overtime pay and was not meant to replace the use of
314 as the divisor in the computation of the daily rate for salary-
related benefits.[39]
Private respondent admits that, prior to 18 August 1986,
petitioner used a divisor of 314 in arriving at the daily wage rate
of monthly-salaried employees. Private respondent also concedes
that the divisor was changed to 303 for purposes of computing
overtime pay only. In its Memorandum, private respondent states
that -
49. The facts germane to this issue are not debatable. The
Memorandum Circular issued by the Acting Conservator is clear.
Prior to August 18, 1986, the petitioner bank used a divisor of 314
days in arriving at the daily wage rate of the monthly-salaried
employees. Effective August 18, 1986, this was changed. It
adopted the following formula:
Basic salary x 12 months = Daily Wage Rate
303 days
50. By utilizing this formula even up to the present, the
conclusion is inescapable that the petitioner bank is not actually
paying its employees the regular holiday pay mandated by law.
Consequently, it is bound to pay the salary differential of its
employees effective November 1, 1974 up to the present.
xxx xxx xxx
54. Since it is a question of fact, the Inter-office Memorandum
dated August 13, 1986 (Annex "E") provides for a divisor of 303
days in computing overtime pay. The clear import of this
document is that from the 365 days in a year, we deduct 52 rest
days which gives a total of 313 days. Now, if 313 days is the
number of working days of the employees then, there is a
disputable presumption that the employees are paid their holiday
pay. However, this is not so in the case at bar. The bank uses 303
days as its divisor. Hence, it is not paying its employees their
corresponding holiday pay.[40]
In Union of Filipro Employees v. Vivar, Jr.[41] the Court held that
"[t]he 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
was also our ruling in Chartered Bank Employees Association v.
Ople,[42] as follows -
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 form 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.
Apparently, the divisor of 314 is arrived at by subtracting all
Sundays from the total number of calendar days in a year, since
Saturdays are considered paid rest days, as stated in the inter-
office memorandum. Thus, the use of 314 as a divisor leads to the
inevitable conclusion that the ten legal holidays are already
included therein.
We agree with the labor arbiter that the reduction of the divisor
to 303 was done for the sole purpose of increasing the employees'
overtime pay, and was not meant to exclude holiday pay from the
monthly salary of petitioner's employees. In fact, it was expressly
stated in the inter-office memorandum - also referred to by
private respondent in its pleadings - that the divisor of 314 will
still be used in the computation for cash conversion and in the
determination of the daily rate. Thus, based on the records of this
case and the parties' own admissions, the Court holds that
petitioner has complied with the requirements of Article 94 of the
Labor Code.

Damages

As to private respondent's claim for damages, the NLRC was

correct in ruling that there is no basis to support the same.

WHEREFORE, for the reasons above stated, the 30 April 1991

Decision of public respondent in NLRC-NCR Case No. 02-00753-
88, entitled "Producers Bank Employees Association v. Producers
Bank of the Philippines," and its 18 June 1991 Resolution issued
in the same case are hereby SET ASIDE, with the exception of
public respondent's ruling on damages.

SO ORDERED.
 FIRST DIVISION
G.R. No. 164804, January 30, 2009
VIRGINIA A. SUGUE AND THE HEIRS OF RENATO S.
VALDERRAMA, PETITIONERS, VS. TRIUMPH
INTERNATIONAL (PHILS.), INC., RESPONDENT.
[G.R. No. 164784]
TRIUMPH INTERNATIONAL (PHILS.), INC.,
PETITIONER, VS. VIRGINIA A. SUGUE AND THE HEIRS
OF RENATO S. VALDERRAMA, RESPONDENTS.
DECISION
LEONARDO-DE CASTRO, J.:
Before us are consolidated petitions for review on certiorari under
Rule 45 of the 1997 Rules of Civil Procedure filed by both
contending parties assailing the Decision[1] dated April 23, 2004
and the Resolution[2] dated July 21, 2004 rendered by the Court of
Appeals (CA) in CA-G.R. SP No. 68591.
In G.R. No. 164804, petitioners Virginia Sugue (Sugue) and the
Heirs of Renato Valderrama (Valderrama) question the CA
decision which partly granted their appeal but deleted the
attorney's fees and reduced the moral and exemplary damages
awarded to them.
On the other hand, in G.R. No. 164784, petitioner Triumph
International (Phils.), Inc. (Triumph hereafter) assails the CA
decision for setting aside an earlier decision[3] of the National
Labor Relations Commission (NLRC) dated June 13, 2001 which
ruled in its favor.
The antecedents of the case show that Triumph hired Sugue in
May 1990 as its Assistant Manager for Marketing and was
subsequently promoted to Marketing Services Manager with a
monthly salary of P82,500.00. On the other hand, Valderrama
was hired in April 1993 as Direct Sales Manager with a monthly
salary of P121,000.00. Their main function/responsibility was to
ensure that the company's sales targets and objectives were met.
Beginning sometime in October 1999, Triumph's top management
began to notice a sharp decline in the sales of the company.
Moreover, in the following months, the actual sales figures
continued to be significantly below the sales targets set by
Valderrama himself. This persistent below target sales
performance was the subject of correspondence between
Valderrama and his superiors from November 1999 to July
2000.[4]
On June 1, 2000, Sugue and Valderrama filed a complaint with
the NLRC against Triumph for payment of money claims arising
from allegedly unpaid vacation and sick leave credits, birthday
leave and 14th month pay for the period 1999-2000. Said
complaint was docketed as NLRC-NCR-Case No. 00-06-03008-
2000.[5]
On June 19, 2000, Sugue and Valderrama personally attended
the preliminary conference of the said case. The following day, a
memorandum was issued by Triumph's Managing
Director/General Manager, Alfredo Escueta, reminding all
department heads of existing company policy that requires
department heads to notify him (Escueta) before leaving the office
during work hours.[6] That same day, Triumph's Personnel
Manager, Ralph Funtila, issued separate memoranda to Sugue
and Valderrama requiring them to inform the office of the
General Manager of their whereabouts on June 19, 2000 from
9:06 a.m. to 11:15 a.m. They replied that they attended the
aforementioned preliminary conference.[7]
On June 23, 2000, Valderrama and Sugue were directed to submit
a written explanation as to why they used company time and the
company vehicle and driver in attending the preliminary
conference at the NLRC and why they left the office without
advising the Managing Director. They explained that they
believed they may use company time and the company vehicle
since the hearing they attended was pursuant to a complaint that
they filed as employees of the company.
On June 28, 2000, Triumph charged the one-half day utilized by
Sugue and Valderrama in attending the NLRC hearing on June
19, 2000 to their vacation leave credits.
In the pleadings, Valderrama likewise complained that his
request for an executive check-up on June 19, 2000 was
disapproved by Triumph. Thereafter, Valderrama did not report
for work on July 3 to 5, 2000 due allegedly to persistent cough
and vertigo, but his request for sick leave on those dates was
disapproved by Triumph because he failed to submit a medical
certificate as required by the company's rules and policies.
Subsequently, on July 10, 2000, Triumph issued a show cause
memo to Valderrama requiring him to explain, among others, his
department's dismal performance since October 1999, within 48
hours from receipt.[8] On July 11, 2000, Valderrama replied to the
show cause memo.[9]
On July 17, 2000, Valderrama wrote the company a letter stating
that he considered himself constructively dismissed due to the
unreasonable pressures and harassments he suffered the past
months which prevented him from effectively exercising his tasks
as Direct Sales Manager.[10]
Subsequently, on July 28, 2000, Triumph issued a memorandum
requiring Valderrama to explain, under pain of dismissal, his
continued absences without official leave. Valderrama failed to
respond, thus, on August 11, 2000, Triumph decided to terminate
Valderrama's employment for abandonment of work.[11]
Meanwhile, on July 25, 2000, Sugue also wrote the company
stating that she considers herself constructively dismissed.[12]
From the pleadings, Sugue's charge of constructive dismissal was
based on the fact that her request for vacation leave from July 14
to 15, 2000 was subject to the condition that she first submit a
report on the company's 2001 Marketing Plan. Also, the approval
of her request for executive check-up was deferred. Then, on July
18, 2000, she received a memorandum instructing her to report to
Mr. Efren Temblique, who was appointed OIC for Marketing as a
result of a reorganization prompted by Valderrama's continued
absences. Sugue claimed that such act by Triumph was an
outright demotion considering that Mr. Temblique was her former
assistant.
On August 11, 2000, Triumph required Sugue to explain why she
should not be terminated for continued absences without official
leave.[13] Sugue failed to comply, thus, on September 1, 2000, her
employment was terminated for abandonment of work.[14]
Prior to the actual termination of their employment by Triumph,
Sugue and Valderrama filed on July 31, 2000 a complaint for
constructive dismissal against Triumph, docketed as NLRC NCR
Case No. 00-07-03965-2000.[15]
The following day, on August 1, 2000, Valderrama commenced his
employment as Sales Director of Fila Phils., Inc., a competitior of
Triumph.
On March 15, 2001, Labor Arbiter Salimathar Nambi rendered a
decision, declaring that Sugue and Valderrama were
constructively dismissed. The dispositive portion of the Labor
Arbiter's decision follows:
WHEREFORE, premises considered, judgment is hereby
rendered ordering respondent Triumph International (Phils.), Inc.
to:
1) Pay, since reinstatement is not feasible, complainants Virginia
A. Sugue and Renato Valderrama their separation pay
computed at one month salary for every year of service from
their initial engagement on May 1990 and April 1993,
respectively.
2) Pay both complainants full backwages from the time that they
were constructively dismissed, i.e. from 17 July 2000 in the
case of Valderrama and from 25 July 2000 in the case of Sugue
until finality of judgment.
3) Pay P2,000,000.00 as moral damages to each of the
complainants
4) Pay P1,000,000.00 as exemplary damages to each of the
complainants.
5) Reimburse the complainants the 20% of the amounts claimed
as attorney's fees.
SO ORDERED.[16]
Aggrieved, Triumph filed an appeal with the NLRC, [17] and in a
decision dated June 13, 2001, the First Division of the NLRC
granted the appeal and reversed the ruling of Labor Arbiter
Nambi.
Not satisfied with the NLRC decision, Sugue and Valderrama
elevated the matter to the CA by way of a petition for certiorari.
While the matter was pending with the CA, Valderrama passed
away (on July 3, 2003) and notice of his death was filed by his
counsel.[18]
On April 23, 2004, the CA rendered its assailed decision, the
dispositive portion of which reads:
WHEREFORE, the petition is partly granted. The Decision
dated June 13, 2001 of public respondent NLRC is hereby set
aside, and the Decision dated March 15, 2001 of the labor arbiter
is reinstated, subject to the deletion of the award of attorney's
fees and the reduction of the award of moral damages to
P500,000.00 and exemplary damages to 250,000.00, for each of
the petitioners.

SO ORDERED.[19]
Triumph's subsequent motion for reconsideration as well as the
motion for partial reconsideration filed by Sugue and the heirs of
Valderrama were both denied by the appellate court in its
resolution dated July 21, 2004.
Hence, the parties filed the present petitions which were
consolidated by this Court in a Resolution dated September 27,
2004.[20]
In G.R. No. 164804, petitioners therein Sugue and the heirs of
Valderrama allege that the Court of Appeals gravely erred in
deleting the labor arbiter's award of attorney's fees.[21]
In G.R. No. 164784, petitioner therein Triumph cites the
following reasons why the Court should rule in its favor:
I not our function to analyze or weigh evidence all over again. [24]
The Court of Appeals gravely erred and contravened prevailing
jurisprudence in abandoning the NLRC's findings of fact and
making its own findings. The rule is basic that the factual
findings of the NLRC are accorded respect, if not finality,
considering that the same were based on evidence on record.
Reassessment of evidence is beyond the province of a writ of
certiorari.
II
The Court of Appeals gravely erred and contravened the law and
jurisprudence in ruling that Valderama and Sugue were
constructively dismissed, and are entitled to separation pay,
backwages and damages. The facts of the case, as correctly found
by the NLRC based on evidence on record, clearly belie their
contention that they were constructively dismissed. [22]
From the allegations of the respective parties in their pleadings,
it is clear that the controversies involved in the two consolidated
cases center on the question of whether Valderrama and Sugue
were constructively dismissed by Triumph.
At the outset, it should be stated that the main issue in this case
involves a question of fact. It is an established rule that the
jurisdiction of the Supreme Court in cases brought before it from
the CA via Rule 45 of the 1997 Rules of Civil Procedure is
generally limited to reviewing errors of law.[23] This Court is not a
trier of facts. In the exercise of its power of review, the findings of
fact of the CA are conclusive and binding and consequently, it is
The above rule, however, is not without exceptions. In Sta. Maria
v. Court of Appeals,[25] we enumerated the instances when the
factual findings of the CA are not deemed conclusive, to wit: (1)
when the conclusion is a finding grounded entirely on
speculations, surmises or conjecture; (2) when the inference made
is manifestly mistaken, absurd or impossible; (3) when there is
grave abuse of discretion; (4) when the judgment is based on a
misapprehension of facts; (5) when the findings of facts are
conflicting; (6) when the CA, in making its findings, went beyond
the issues of the case and the same are contrary to the admission
of both the appellant and the appellee; (7) when the findings are
contrary to those of the trial court; (8) when the findings are
conclusions without citation of specific evidence on which they are
based; (9) when the facts set forth in the petition as well as in the
petitioner's main and reply briefs are not disputed by the
respondent; and (10) when the findings of fact are premised on
the supposed evidence and contradicted by the evidence on record.
In the instant case, it appears that there is a divergence between
the findings of facts of the NLRC and that of the CA. Hence, we
are constrained to review the factual findings made by the NLRC
and the appellate court.
After a thorough review of the evidence on record, we find
sufficient reasons to uphold Triumph's position.
Constructive dismissal is defined as an involuntary resignation
resorted to when continued employment becomes impossible,
unreasonable or unlikely; when there is a demotion in rank or a
diminution in pay; or when a clear discrimination, insensibility or
disdain by an employer becomes unbearable to an employee. [26]
On a preliminary point, we note that Sugue and Valderrama
discuss extensively in their pleadings alleged denial of leave
applications and unpaid cash conversion of unused leaves and
other monetary benefits which moved them to file a complaint for
monetary claims on June 1, 2000.[27] We find no need to pass upon
these matters here precisely because they are the subject matters
of a separate case and properly threshed out therein. In any
event, it is Sugue and Valderrama's theory that Triumph's acts of
harassment, upon which they base their charge of constructive
dismissal, were in retaliation for their filing of the
aforementioned complaint for unpaid benefits.[28] The acts which
purportedly show discrimination and bad faith on the part of
Triumph are summarized below:
In the case of Valderrama:
1. The half-day he spent in attending the NLRC
hearing on June 19, 2000 was charged to his
vacation leave credit;
2. His application for sick leave for July 3 to 5, 2000
was disapproved; and
3. His request for executive check-up was denied.
In the case of Sugue:
1. The half-day she spent in attending the NLRC
hearing on June 19, 2000 was charged to her
vacation leave credit;
2. The approval of her application for leave of
absence for July 14 and 15, 2000 was made
subject to the condition that she should first
submit a report on the 2001 Marketing Plan;
3. The approval of her request for executive check-
up was deferred until after the visit of the
company's regional marketing manager; and
4. A memorandum was issued instructing her to
report to her former assistant, Mr. Temblique,
which was allegedly tantamount to a demotion.
According to Sugue and Valderrama, this series of discriminatory
acts committed by Triumph created an adverse working
environment rendering it impossible for them to continue working unless of course, the laborer was able, willing and ready to work
for Triumph. Hence, their severance from the company was not of but was illegally locked out, dismissed or suspended. It is hardly
their own making and therefore amounted to constructive fair or just for an employee or laborer to fight or litigate
dismissal which is tantamount to an illegal termination of against his employer on the employer's time.
employment.
In a case where a laborer absents himself from work
With respect to the first alleged discriminatory act, we can because of a strike or to attend a conference or hearing in
conceive of no reason to ascribe bad faith or malice to Triumph for a case or incident between him and his employer, he might
charging to the leave credits of Sugue and Valderrama the half- seek reimbursement of his wages from his union which had
day that they spent in attending the preliminary conference of the declared the strike or filed the case in the industrial court. Or, in
case they instituted against Triumph. It is fair and reasonable for the present case, he might have his absence from his work
Triumph to do so considering that Sugue and Valderrama did not charged against his vacation leave. xxx (Emphasis ours)
perform work for one-half day on June 19, 2000.
This doctrine in Heilbronn was reiterated in Manila Trading &
Supply Co. v. Manila Trading Labor Association[30] and quoted
Indeed, we find it surprising that Sugue and Valderrama would
favorably in later cases.[31] Triumph is, thus, justified in charging
even have the temerity to contend that the hours they spent in
Sugue and Valderrama's half-day absence to their vacation leave
attending the hearing were compensable time. As the NLRC
credits.
correctly pointed out, as early as the case of J.B. Heilbronn Co. v.
National Labor Union,[29] this Court held that:
Corollarily, we cannot uphold the CA's approval of the Labor
When the case of strikes, and according to the CIR even if the
Arbiter's finding that the memoranda issued by Triumph in
strike is legal, strikers may not collect their wages during the
connection with the June 19, 2000 hearing constitute undue
days they did not go to work, for the same reasons if not more,
harassment.
laborers who voluntarily absent themselves from work to
attend the hearing of a case in which they seek to prove
To begin with, the complained of Memorandum dated June 20,
and establish their demands against the company, the
2000 issued by Mr. Escueta, regarding the company policy that
legality and propriety of which demands is not yet known,
required department heads to give prior notice to the General
should lose their pay during the period of such absence
Manager if they will be away from the office during office hours,
from work. The age-old rule governing the relation
did not single out Sugue and Valderrama but was addressed to all
between labor and capital or management and employee is
department heads. Contrary to Sugue and Valderrama's assertion
that a "fair day's wage for a fair day's labor." If there is no
that said policy was being retroactively applied to them, it is plain
work performed by the employee there can be no wage or pay,
on the face of the same memorandum (a copy of which was even
attached to their Position Paper filed with the Labor Arbiter) [32]
that the policy of requiring department heads to give notice to the
Office of the Managing Director/General Manager should they
leave the office during regular work hours had been in force since
1997. The memoranda of Mr. Funtila, requiring Sugue and
Valderrama to inform the office of the General Manager of their
whereabouts on the morning of June 19, 2000, could not be
deemed a form of harassment but rather it was in keeping with
due process. Notwithstanding the fact that the company had
received summons for the same hearing, the company could not
simply assume that the hearing was the reason for Valderrama
and Sugue's absence. When an employer believes that there has
been a possible violation of company rules or policies, the law, in
fact, requires the employer to give the employee ample
opportunity to explain. Finally, the memoranda informing
Valderrama and Sugue that they cannot use company time and
the company vehicle when attending hearings for the case they
filed against the company and that their absence would be
charged against their vacation leaves were, as discussed above, in
accordance with existing jurisprudence and principles of fair play.
Verily, this is not a case of ordinary workers with limited
resources who were being unlawfully pressured or prevented by
their employer from pursuing their claims. Sugue and
Valderrama are highly educated managers who were ably
represented by counsel and were then being paid handsome
compensation packages by Triumph. Even assuming that Sugue
and Valderrama in good faith believed that they are merely
exercising their legal right to prosecute their monetary claims
when they chose to absent themselves from work to attend the
June 19, 2000, it would have imposed little burden on them to
have the courtesy to inform their employer beforehand of their
intention to personally attend the hearing and the decency to do
so on their own time and at their own expense.
Anent Sugue and Valderrama's claim that they were unjustly
denied availment of their leaves as part of a scheme on the part of
Triumph to harass them, we find the same patently without
merit.
In the case of Valderrama, he applied for sick leave for the period
July 3 to 5, 2000 allegedly because of persistent cough and
vertigo, but this was disapproved by Triumph. The record,
however, reveals that he failed to comply with the company's
requirement that an application for sick leave for two or more
days must be supported by a medical certificate which must be
verified by the company physician. He was even given twenty-
four (24) hours to submit the same but he totally ignored it. That
his sick leave application was denied was mainly due to his own
fault and must not be unduly blamed on his employer.
For her part, Sugue condemns Triumph for putting a condition on
the approval of her two days vacation leave for July 14 and 15,
2000, when she was required to first submit a report on the 2001
Marketing Plan. To be very accurate, Mr. Escueta's memorandum
dated July 13, 2000 advised Sugue that her application for leave
will be approved if she will commit to submit her reports in
connection with the 2001 Marketing Plan by July 17, 2000, which
was two days after her leave. Again, we find nothing
discriminatory in such a condition considering that she was
unable to show that she was the only employee whose leave
application has been subjected to a condition. Discrimination is
the failure to treat all persons equally when no reasonable
distinction can be found between those favored and those not
favored.[33] Sugue obviously failed to substantiate her claim of
discrimination. To be sure, he who asserts must prove.[34] On the
contrary, the record shows that as early as October 12, 1999, a
memorandum was issued by Triumph addressed to all
department heads that leave applications may be approved,
disapproved or postponed depending on the (1) business status
due to CBA; (2) company's urgent need for their presence; and (3)
CBA negotiations status.[35] Evidently, this directive applies not
just to Sugue but to all department heads. Although this
memorandum was supposedly in force only until December 1999,
it establishes a precedent for the company imposing conditions on
the approval of leave applications of department heads.
As for the nature of the condition itself, we do not see how it can
be deemed unreasonable or in bad faith for the employer to
require its employee to complete her assignments on time or
before taking a vacation leave. Being the Marketing Services
Manager, Sugue's reports were indispensable in the preparation
of the 2001 Marketing Plan plus the fact that the company had
been experiencing a significant decline in sales at that time which
all the more emphasizes the need for her to submit an updated
report relative to the 2001 Initial Marketing Plan. For sure, she
failed to show that the company prevented her from availing of
her vacation leave afterwards or at some other time. Clearly then,
there was no discrimination nor harassment to speak of.
Third, both Sugue and Valderrama question the denial by
Triumph of their request for executive check-up. It should be
noted that Triumph did not completely turn down their request.
Based on Sugue and Valderrama's own evidence, their request
was merely deferred because the 2001 Initial Marketing Plan was
due on June 26, 2000 and Triumph's regional product manager
was scheduled to visit the country on June 26 to 29, 2000.[36] As
Valderrama was the Direct Sales Manager and Sugue was the
Marketing Services Manager, their presence on those dates was
undoubtedly needed. Thus, their contention that the approval of
their request was indefinitely withheld is apocryphal. In fact,
there is nothing that prevented them from scheduling their
executive check-up after the visit of the regional marketing
manager.
It is worth stressing that in the grant of vacation and sick leave
privileges to an employee, the employer is given leeway to impose
conditions on the entitlement to the same as the grant of vacation
and sick leave is not a standard of law, but a prerogative of
management. It is a mere concession or act of grace of the
employer and not a matter of right on the part of the employee.[37]
Thus, it is well within the power and authority of an employer to
deny an employee's application for leave and the same cannot be
perceived as discriminatory or harassment.
Sugue next asserts that she was demoted when she was directed
to report to Mr. Efren Temblique who was her subordinate and
when she was stripped of her usual functions. We are far from
convinced. Demotion involves a situation where an employee is
relegated to a subordinate or less important position constituting
a reduction to a lower grade or rank, with a corresponding
decrease in salaries, benefits and privileges.[38]
The evidence on hand belies Sugue's assertion, the truth being
that prior to the reorganization, Mr. Temblique occupied the
position of Assistant Manager for Direct Sales,[39] and as such was
Valderrama's subordinate and not of Sugue. Sugue likewise failed
to adequately prove her assertion that she reported directly to the
General Manager, Mr. Escueta, when she was Marketing Services
Manager or that she was not subordinate to Valderrama. To show
that she was reporting directly to Mr. Escueta, Sugue adverts to
Annexes U and V of her Position Paper. However, Annexes U and
V were merely memoranda addressed to Mr. Escueta involving
Sugue's application for leave and did not relate to the discharge of
her functions.[40] On the other hand, there is on record
memoranda issued by Sugue concerning work matters which were
addressed to Valderrama, not Mr. Escueta.[41]
The evidence on record suggests that the Marketing Services
Department was part of the Direct Sales Department. As Direct
Sales Manager, Valderrama's responsibilities not only included
sales but also marketing for which he was tasked to closely
coordinate with the regional sales/marketing head office in
Hongkong.[42] The record would also show that Sugue considered
herself as belonging to the Direct Sales Department. [43] It is
unsurprising then that when the Direct Sales Department was
reorganized due to Valderrama's unexpected departure on July
17, 2000, Sugue's Marketing Services Department was included
in the reorganization. It would appear from Mr. Escueta's
Memorandum dated July 18, 2000 (Re: Direct Sales
Reorganization) the sales and marketing responsibilities of Mr.
Valderrama were taken over by Mr. Edilberto S. Rivera and
Temblique, as OIC for Direct Sales and Marketing, respectively.
In view of Valderrama's sudden severance of his employment
coupled with the substantially low sales Triumph had been
experiencing for the past nine months, the company saw an
imperative need to effect a reorganization in its sales department,
and this included the temporary designation of Temblique as OIC
for Marketing concurrently with his position as Assistant
Manager for Direct Sales-SMSD.[44] When Sugue was directed to
report to Temblique, she was not being made to report to
Temblique as Assistant Manager for Direct Sales-SMSD but as
the newly designated OIC for Marketing, i.e., the officer chiefly
responsible for all marketing matters. Furthermore, we find no
merit in Sugue's contention that she was in any way stripped of
her usual functions. A careful perusal of Annexes EE and FF of
her Position Position shows that she continued to be the head of
Marketing Services, under the supervision of Temblique as OIC
for Marketing.
As we see it, Triumph's directive for Sugue to report to Temblique
was not unreasonable, inconvenient or prejudicial to her
considering that it did not entail a demotion in rank or
diminution of salaries, benefits and other privileges. Even
assuming there was a change in the personalities to whom Sugue
is required to report, she continued to assume her position as
Marketing Services Manager and to exercise the same functions.
Neither did she assert, much less prove, that there was any
diminution in her salary or other benefits. We ruled in Philippine
Wireless, Inc. v. NLRC[45] that there is no demotion where there is
no reduction in position, rank or salary.
In fine, we find that Triumph's reorganization was intended to
improve management operations especially in the light of the
poor sales performance of the company during that period. The
act of management in reorganizing the sales department in order
to achieve its objectives is a legitimate exercise of its management
prerogatives, barring any showing of bad faith which is absent in
the instant case. Indeed, labor laws discourage interference in
employers' judgments concerning the conduct of their business.
The law must protect not only the welfare of employees, but also
the right of employers.[46]
All told, Triumph did not act with discrimination, insensibility or
disdain towards Sugue and Valderrama, which foreclosed any
choice on their part except to forego their continued employment.
Purely conjectural are their assertions that the disapproval of
their leave applications, the denial of their request for executive
check-up and the alleged demotion, were carried out by Triumph
in retaliation to their filing of a complaint for unpaid money
claims against the company. Sugue and Valderrama offered
insufficient proof to substantiate their allegations. For this
reason, their bare and self-serving charges of constructive
dismissal, when unsupported by the evidence on record, cannot be
given credence.
Worth noting at this point is that as early as June 21, 2000,
Valderrama had accepted employment with Fila Philippines, Inc.
as its Sales Director. Although his appointment was to take effect
only on August 1, 2000, it cannot be denied that he had finalized
or was finalizing his employment deal with Fila while he was still
employed with Triumph as shown by Fila's inter-office memo
dated June 21, 2000 announcing to its employees Valderrama's
appointment effective August 1, 2000.[47] Unlike the Labor Arbiter
and the CA, we do not view this circumstance as insignificant. It
is evident that Valderrama already had a firm understanding
with Fila as of June 21, 2000 so much so that his arrival was
highly anticipated and even formally announced by his new
employer on said date. This undeniably demonstrated that
Valderrama intended to leave his employment with Triumph even
before the company issued a show cause memo (on July 10, 2000)
for him to explain, among others, his below target sales
performance and before he informed the company that he
considered himself constructively dismissed on July 17, 2001. It
may be inferred therefrom that he filed the constructive dismissal
case merely as a subterfuge to evade liability for breach of his
employment contract with Triumph which requires 60-day notice
prior to resignation. The circumstance that he did not pray for
reinstatement in his complaint bolsters the theory that the
constructive dismissal case was a tool designed to conceal his
impending transfer to Fila.
Having failed to substantiate their claim of constructive
dismissal, Sugue and Valderrama should be deemed to have
abandoned their work, thus, their dismissal is warranted.
Abandonment is the deliberate and unjustified refusal of an
employee to resume his employment, without any intention of
returning. It is a form of neglect of duty, hence, a just cause for
termination of employment by the employer. For abandonment to
be a valid ground for dismissal, two elements must then be
satisfied: (1) the failure to report for work or absence without
valid or justifiable reason; and (2) a clear intention to sever the
employer-employee relationship. The second element is the more
determinative factor and must be evinced by overt acts.[48]
The abovementioned elements are present in the instant case.
First, Sugue and Valderrama's failure to report for work was
without justifiable reason. As earlier discussed, their allegation of
discrimination and harassment lacks factual basis, thus, under
the circumstances, we find their absences to be unjustified and
without any valid reason. Second, their overt act of writing letters
informing Triumph that they considered themselves
constructively dismissed was a clear manifestation of their
intention to desist from their employment. Too, their defiance and
disregard of the memorandum sent by Triumph requiring them to
explain their unauthorized absences demonstrated a clear
intention on their part to sever their employer-employee
relationship. This is particularly true with Valderrama who, even
before unilaterally terminating his employment with Triumph,
had already sought regular employment elsewhere and in fact
was set to join a competitor, Fila Phils., Inc.
Further, they filed a complaint for constructive dismissal without
praying for reinstatement. By analogy, we point to the doctrine
that abandonment of work is inconsistent with the filing of a
complaint for illegal dismissal is not applicable where the
complainant does not pray for reinstatement and just asks for
separation pay instead.[49] In this case, Sugue and Valderrama
opted not to ask for reinstatement and even for separation pay,
which clearly contradicts their stance that they did not abandon
their work, for it appears they have no intention of ever returning
to their positions in Triumph. In addition, we cannot subscribe to
the CA's view that Triumph's issuance of show cause memos and
notices of termination for abandonment were mere afterthought
since they were preceded by Sugue's and Valderrama's letters
informing the company that they considered themselves
constructively dismissed. Logically, Triumph could not have
issued show cause memos or termination notices for
abandonment before Sugue and Valderrama unilaterally declared
themselves constructively dismissed and stopped reporting for
work without justifiable reason.
Indeed, the law imposes many obligations on the employer such
as providing just compensation to workers, and observance of the
procedural requirements of notice and hearing in the termination
of employment. On the other hand, the law also recognizes the
right of the employer to expect from its workers not only good
performance, adequate work and diligence, but also good conduct
and loyalty. The employer may not be compelled to continue to
employ such persons whose continuance in the service will
patently be inimical to his interests.[50] Triumph has adequately
shown the existence of a just and valid cause in terminating the
employment of Sugue and Valderrama, and has faithfully
complied with the procedural requirements of due process for
valid termination of employment.
Anent Sugue and the heirs of Valderrama's petition regarding the
CA's deletion of the award of attorney's fees, a discussion on the
propriety of the award of damages and attorney's fees is rendered
unnecessary in view of their failure to prove constructive
dismissal.
WHEREFORE, the petition for review filed by Virginia Sugue
and the Heirs of Renato Valderrama in G.R. No. 164804 is
DENIED while the petition for review filed by Triumph
International (Phils.), Inc. in G.R. No. 164784 is GRANTED.
Accordingly, the assailed decision and resolution of the Court of
Appeals are hereby REVERSED and SET ASIDE. The National
Labor Relations Commission's Decision dated June 13, 2001 is
REINSTATED.

SO ORDERED.