G.R. No. 126383 November 28, 1997 SAN JUAN DE DIOS HOSPITAL EMPLOYEES ASSOCIATION-AFW/MA.

CONSUELO MACQUILING LEONARDO MARTINEZ, DOMINGO ELA, JR., RODOLFO CALUCIN, JR., PERLA MENDOZA, REX RAPHAEL REYES, ROGELIO BELMONTE, and 375 other EMPLOYEE-UNION MEMBERS, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, and SAN JUAN DE DIOS HOSPITAL, respondents. FRANCISCO, J.: Petitioners, the rank-and-file employee-union officers and members of San Juan De Dios Hospital Employees Association, sent on July 08, 1991, a "four (4)-page letter with attached support signatures . . . requesting and pleading for the expeditious implementation and payment by respondent" Juan De Dios Hospital "of the '40-HOURS/5-DAY WORKWEEK' with compensable weekly two (2) days off provided for by Republic Act 5901 as clarified for enforcement by the Secretary of Labor's Policy Instructions No. 54 dated April 12, 1988." 1 Respondent hospital failed to give a favorable response; thus, petitioners filed a complaint regarding their "claims for statutory benefits under the above-cited law and policy issuance" 2, docketed as NLRC NCR Case No. 00-08-04815-19. On February 26, 1992, the Labor Arbiter 3 dismissed the complaint. Petitioners appealed before public respondent National Labor Relations Commission 4 (NLRC), docketed as NLRC NCR CA 003028-92, which affirmed the Labor Arbiter's decision. Petitioners' subsequent motion for reconsideration was denied; hence, this petition under Rule 65 of the Rules of Court ascribing grave abuse of discretion on the part of NLRC in concluding that Policy Instructions No. 54 "proceeds from a wrong interpretation of RA 5901" 5 and Article 83 of the Labor Code. As the Court sees it, the core issue is whether Policy Instructions No. 54 issued by then Labor Secretary (now Senator) Franklin M. Drilon is valid or not. The policy instruction in question provides in full as follows: Policy Instruction No. 54 To: All Concerned

Subject: Working Hours and Compensation of Hospital/Clinic Personnel This issuance clarifies the enforcement policy of this Department on the working hours and compensation of personnel employed by hospitals/clinics with a bed capacity of 100 or more and those located in cities and municipalities with a population of one million or more. Republic Act 5901 took effect on 21 June 1969 prescribes a 40-hour/5 day work week for hospital/clinic personnel. At the same time, the Act prohibits the diminution of the compensation of these workers who would suffer a reduction in their weekly wage by reason of the shortened workweek prescribed by the Act. In effect, RA 5901 requires that the covered hospital workers who used to work seven (7) days a week should be paid for such number of days for working only 5 days or 40 hours a week. The evident intention of RA 5901 is to reduce the number of hospital personnel, considering the nature of their work, and at the same time guarantee the payment to them of a full weekly wage for seven (7) days. This is quite clear in the Exemplary Note of RA 5901 which states: As compared with the other employees and laborers, these hospital and health clinic personnel are over-worked despite the fact that their duties are more delicate in nature. If we offer them better working conditions, it is believed that the "brain drain", that our country suffers nowadays as far as these personnel are concerned will be considerably lessened. The fact that these hospitals and health clinics personnel perform duties which are directly concerned with the health and lives of our people does not mean that they should work for a longer period than most employees and laborers. They are also entitled to as much rest as other workers. Making them work longer than is necessary may endanger, rather than protect the health of their patients. Besides, they are not receiving better pay than the other workers. Therefore, it is just and fair that they may be made to enjoy the privileges of equal working hours with other workers except those excepted by law. (Sixth Congress of the Republic of the Philippines, Third Session, House of Representatives, H. No. 16630) The Labor Code in its Article 83 adopts and incorporates the basic provisions of RA 5901 and retains its spirit and intent which is to shorten the workweek of covered hospital personnel and at the same time assure them of a full weekly wage. Consistent with such spirit and intent, it is the position of the Department that personnel in subject hospital and clinics are entitled to a full weekly wage for seven (7) days if they have completed the 40-hour/5-day workweek in any given workweek. All enforcement and adjudicatory agencies of this Department shall be guided by this issuance in the disposition of cases involving the personnel of covered hospitals and clinics. Done in the City of Manila, this 12th day of April, 1988. (Sgd.) FRANKLIN M. DRILON Secretary (Emphasis Added) We note that Policy Instruction No. 54 relies and purports to implement Republic Act No. 5901, otherwise known as "An Act Prescribing Forty Hours A Week Of Labor For Government and Private Hospitals Or Clinic Personnel", enacted on June 21, 1969. Reliance on Republic Act No. 5901, however, is misplaced for the said statute, as correctly ruled by respondent NLRC, has long been repealed with the passage of the Labor Code on May 1, 1974, Article 302 of which explicitly provides: "All labor laws not adopted as part of this Code either directly or

by reference are hereby repealed. All provisions of existing laws, orders, decree, rules and regulations inconsistent herewith are likewise repealed." Accordingly, only Article 83 of the Labor Code which appears to have substantially incorporated or reproduced the basic provisions of Republic Act No. 5901 may support Policy Instructions No. 54 on which the latter's validity may be gauged. Article 83 of the Labor Code states: Art. 83. Normal Hours of Work. The normal hours of work of any employee shall not exceed eight (8) hours a day.

Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for eight (8) hours a day, for five (5) days a week, exclusive of time for meals, except where the exigencies of the service require that such personnel work for six (6) days or forty-eight (48) hours, in which case they shall be entitled to an additional compensation of at least thirty per cent (30%) of their regular wage for work on the sixth day. For purposes of this Article, "health personnel" shall include: resident physicians, nurses, nutritionists, dietitians, pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists, midwives, attendants and all other hospital or clinic personnel. (Emphasis supplied) A cursory reading of Article 83 of the Labor Code betrays petitioners' position that "hospital employees" are entitled to "a full weekly salary with paid two (2) days' off if they have completed the 40-hour/5-day workweek". 6 What Article 83 merely provides are: (1) the regular office hour of eight hours a day, five days per week for health personnel, and (2) where the exigencies of service require that health personnel work for six days or forty-eight hours then such health personnel shall be entitled to an additional compensation of at least thirty percent of their regular wage for work on the sixth day. There is nothing in the law that supports then Secretary of Labor's assertion that "personnel in subject hospitals and clinics are entitled to a full weekly wage for seven (7) days if they have completed the 40-hour/5day workweek in any given workweek". Needless to say, the Secretary of Labor exceeded his authority by including a two days off with pay in contravention of the clear mandate of the statute. Such act the Court shall not countenance. Administrative interpretation of the law, we reiterate, is at best merely advisory, 7 and the Court will not hesitate to strike down an administrative interpretation that deviates from the provision of the statute. Indeed, even if we were to subscribe with petitioners' erroneous assertion that Republic Act No. 5901 has neither been amended nor repealed by the Labor Code, we nevertheless find Policy Instructions No. 54 invalid. A perusal of Republic Act No. 5901 8 reveals nothing therein that gives two days off with pay for health personnel who complete a 40-hour work or 5-day workweek. In fact, the Explanatory Note of House Bill No. 16630 (later passed into law as Republic Act No. 5901) explicitly states that the bill's sole purpose is to shorten the working hours of health personnel and not to dole out a two days off with pay. Hence: The accompanying bill seeks to grant resident physicians, staff nurses, nutritionist, midwives, attendants and other hospital and health clinic personnel of public and private hospitals and clinics, the privilege of enjoying the eight hours a week exclusive of time for lunch granted by law to all government employees and workers except those employed in schools and in courts. At present those hospitals and clinics, work six days a week, 8 hours a day or 48 hours a week. As compared with the other employees and laborers, these hospital and health clinic personnel are over-worked despite the fact that their duties are more delicate in nature. If we offer them better working conditions, it is believed that the "brain drain", that our country suffers nowadays as far as these personnel are concerned will be considerably lessened. The fact that these hospitals and health clinic personnel perform duties which are directly concerned with the health and lives of our people does not mean that they should work for a longer period than most employees and laborers. They are also entitled to as much rest as other workers. Making them work longer than is necessary may endanger, rather than protect, the health of their patients. Besides, they are not receiving better pay than the other workers. Therefore, it is just and fair that they be made to enjoy the privileges of equal working hours with other workers except those excepted by law. In the light of the foregoing, approval of this bill is strongly recommended. (SGD.) SERGIO H. LOYOLA "Congressman, 3rd District Manila" (Annex "F" of petition, emphasis supplied) Further, petitioners' position is also negated by the very rules and regulations promulgated by the Bureau of Labor Standards which implement Republic Act No. 5901. Pertinent portions of the implementing rules provide: RULES AND REGULATIONS IMPLEMENTING REPUBLIC ACT NO. 5901 By virtue of Section 79 of the Revised Administrative Code, as modified by section 18 of Implementation Report for Reorganization Plan No. 20-A on Labor, vesting in the Bureau of Labor Standards the authority to promulgate rules and regulations to implement wage and hour laws, the following rules and regulations to are hereby issued for the implementation of Republic Act No. 5901. CHAPTER I Coverage Sec. 1. General Statement on Coverage. Republic Act No. 5901, hereinafter referred to as the Act, shall apply to:

(a) All hospitals and clinics, including those with a bed capacity of less than one hundred, which are situated in cities or municipalities with a population of one million or more; and to (b) All hospitals and clinics with a bed capacity of at least one hundred, irrespective of the size of population of the city or municipality where they may be situated. xxx xxx xxx

Sec. 7. Regular Working Day. The regular working days of covered employees shall be not more than five days in a workweek. The workweek may begin at any hour and on any day, including Saturday or Sunday, designated by the employer. Employers are not precluded from changing the time at which the workday or workweek begins, provided that the change is not intended to evade the requirements of these regulations on the payment of additional compensation. xxx xxx xxx

Sec. 15. Additional Pay Under the Act and C.A. No. 444. (a) Employees of covered hospitals and clinics who are entitled to the benefits provided under the Eight-Hour Labor Law, as amended, shall be paid an additional compensation equivalent to their regular rate plus at least twenty-five percent thereof for work performed on Sunday and Holidays, not exceeding eight hours, such employees shall be entitled to an additional compensation of at least 25% of their regular rate. (b) For work performed in excess of forty hours a week, excluding those rendered in excess of eight hours a day during the week, employees covered by the Eight-Hour Labor Law shall be entitled to an additional straight-time pay which must be equivalent at least to their regular rate. If petitioners are entitled to two days off with pay, then there appears to be no sense at all why Section 15 of the implementing rules grants additional compensation equivalent to the regular rate plus at least twenty-five percent thereof for work performed on Sunday to health personnel, or an "additional straight-time pay which must be equivalent at least to the regular rate" "[f]or work performed in excess of forty hours a week. . . . Policy Instructions No. 54 to our mind unduly extended the statute. The Secretary of Labor moreover erred in invoking the "spirit and intent" of Republic Act No. 5901 and Article 83 of the Labor Code for it is an elementary rule 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. 9 No additions or revisions may be permitted. Policy Instructions No. 54 being inconsistent with and repugnant to the provision of Article 83 of the Labor Code, as well as to Republic Act No. 5901, should be, as it is hereby, declared void. WHEREFORE, the decision appealed from is AFFIRMED. No costs. SO ORDERED. INSULAR BANK OF ASIA AND AMERICA EMPLOYEES' UNION (IBAAEU), petitioner, vs. HON. AMADO G. INCIONG, Deputy Minister, Ministry of Labor and INSULAR BANK OF ASIA AND AMERICA, respondents. G.R. No. L-52415 October 23, 1984 MAKASIAR, J.: This is a petition for certiorari to set aside the order dated November 10, 1979, of respondent Deputy Minister of Labor, Amado G. Inciong, in NLRC case No. RB-IV-1561-76 entitled "Insular Bank of Asia and America Employees' Union (complainant-appellee), vs. Insular Bank of Asia and America" (respondent-appellant), the dispositive portion of which reads as follows: xxx xxx xxx ALL THE FOREGOING CONSIDERED, let the appealed Resolution en banc of the National Labor Relations Commission dated 20 June 1978 be, as it is hereby, set aside and a new judgment. promulgated dismissing the instant case for lack of merit (p. 109 rec.). The antecedent facts culled from the records are as follows: On June 20, 1975, petitioner filed a complaint against the respondent bank for the payment of holiday pay before the then Department of Labor, National Labor Relations Commission, Regional Office No. IV in Manila. Conciliation having failed, and upon the request of both parties, the case was certified for arbitration on July 7, 1975 (p. 18, NLRC rec. On August 25, 1975, Labor Arbiter Ricarte T. Soriano rendered a decision in the above-entitled case, granting petitioner's complaint for payment of holiday pay. Pertinent portions of the decision read: xxx xxx xxx The records disclosed that employees of respondent bank were not paid their wages on unworked regular holidays as mandated by the Code, particularly Article 208, to wit: Art. 208. Right to holiday pay. (a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less than 10 workers. (b) The term "holiday" as used in this chapter, shall 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 and the thirtieth of December and the day designated by law for holding a general election. xxx xxx xxx

This conclusion is deduced from the fact that the daily rate of pay of the bank employees was computed in the past with the unworked regular holidays as excluded for purposes of determining the deductible amount for absences incurred Thus, if the employer uses the factor 303 days as a divisor in determining the daily rate of monthly paid employee, this gives rise to a presumption that the monthly rate does not include payments for unworked regular holidays. The use of the factor 303 indicates the number of ordinary working days in a year (which normally has 365 calendar days), excluding the 52 Sundays and the 10 regular holidays. The use of 251 as a factor (365 calendar days less 52 Saturdays, 52 Sundays, and 10 regular holidays) gives rise likewise to the same presumption that the unworked Saturdays, Sundays and regular holidays are unpaid. This being the case, it is not amiss to state with certainty that the instant claim for wages on regular unworked holidays is found to be tenable and meritorious. WHEREFORE, judgment is hereby rendered: (a) xxx xxxx xxx

(b) Ordering respondent to pay wages to all its employees for all regular h(olidays since November 1, 1974 (pp. 97-99, rec., underscoring supplied). Respondent bank did not appeal from the said decision. Instead, it complied with the order of Arbiter Ricarte T. Soriano by paying their holiday pay up to and including January, 1976. On December 16, 1975, Presidential Decree No. 850 was promulgated amending, among others, the provisions of the Labor Code on the right to holiday pay to read as follows: Art. 94. Right to holiday pay. (a) Every worker shall be paid his regular daily wages during regular holidays, except in retail and service establishments regularly employing less than ten (10) workers; (b) 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 and (c) As used in this Article, "holiday" includes 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 and the thirtieth of December, and the day designated by law for holding a general election. Accordingly, on February 16, 1976, by authority of Article 5 of the same Code, the Department of Labor (now Ministry of Labor) promulgated the rules and regulations for the implementation of holidays with pay. The controversial section thereof reads: Sec. 2. Status of employees paid by the month. Employees who are uniformly paid by the month, irrespective of the number of working days therein, with a salary of not less than the statutory or established minimum wage shall be presumed to be paid for all days in the month whether worked or not. For this purpose, the monthly minimum wage shall not be less than the statutory minimum wage multiplied by 365 days divided by twelve" (italics supplied). On April 23, 1976, Policy Instruction No. 9 was issued by the then Secretary of Labor (now Minister) interpreting the above-quoted rule, pertinent portions of which read: t.hqw xxx xxx xxx

The ten (10) paid legal holidays law, to start with, is intended to benefit principally daily employees. In the case of monthly, only those whose monthly salary did not yet include payment for the ten (10) paid legal holidays are entitled to the benefit. Under the rules implementing P.D. 850, this policy has been fully clarified to eliminate controversies on the entitlement of monthly paid employees, The new determining rule is this: If the monthly paid employee is receiving not less than P240, the maximum monthly minimum wage, and his monthly pay is uniform from January to December, he is presumed to be already paid the ten (10) paid legal holidays. However, if deductions are made from his monthly salary on account of holidays in months where they occur, then he is still entitled to the ten (10) paid legal holidays. ..." (emphasis supplied). Respondent bank, by reason of the ruling laid down by the aforecited rule implementing Article 94 of the Labor Code and by Policy Instruction No. 9, stopped the payment of holiday pay to an its employees. On August 30, 1976, petitioner filed a motion for a writ of execution to enforce the arbiter's decision of August 25, 1975, whereby the respondent bank was ordered to pay its employees their daily wage for the unworked regular holidays. On September 10, 1975, respondent bank filed an opposition to the motion for a writ of execution alleging, among others, that: (a) its refusal to pay the corresponding unworked holiday pay in accordance with the award of Labor Arbiter Ricarte T. Soriano dated August 25, 1975, is based on and justified by Policy Instruction No. 9 which interpreted the rules implementing P. D. 850; and (b) that the said award is already repealed by P.D. 850 which took effect on December 16, 1975, and by said Policy Instruction No. 9 of the Department of Labor, considering that its monthly paid employees are not receiving less than P240.00 and their monthly pay is uniform from January to December, and that no deductions are made from the monthly salaries of its employees on account of holidays in months where they occur (pp. 64-65, NLRC rec.).

On October 18, 1976, Labor Arbiter Ricarte T. Soriano, instead of issuing a writ of execution, issued an order enjoining the respondent bank to continue paying its employees their regular holiday pay on the following grounds: (a) that the judgment is already final and the findings which is found in the body of the decision as well as the dispositive portion thereof is res judicata or is the law of the case between the parties; and (b) that since the decision had been partially implemented by the respondent bank, appeal from the said decision is no longer available (pp. 100-103, rec.). On November 17, 1976, respondent bank appealed from the above-cited order of Labor Arbiter Soriano to the National Labor Relations Commission, reiterating therein its contentions averred in its opposition to the motion for writ of execution. Respondent bank further alleged for the first time that the questioned order is not supported by evidence insofar as it finds that respondent bank discontinued payment of holiday pay beginning January, 1976 (p. 84, NLRC rec.). On June 20, 1978, the National Labor Relations Commission promulgated its resolution en banc dismissing respondent bank's appeal, the dispositive portion of which reads as follows: In view of the foregoing, we hereby resolve to dismiss, as we hereby dismiss, respondent's appeal; to set aside Labor Arbiter Ricarte T. Soriano's order of 18 October 1976 and, as prayed for by complainant, to order the issuance of the proper writ of execution (p. 244, NLRC rec.). Copies of the above resolution were served on the petitioner only on February 9, 1979 or almost eight. (8) months after it was promulgated, while copies were served on the respondent bank on February 13, 1979. On February 21, 1979, respondent bank filed with the Office of the Minister of Labor a motion for reconsideration/appeal with urgent prayer to stay execution, alleging therein the following: (a) that there is prima facie evidence of grave abuse of discretion, amounting to lack of jurisdiction on the part of the National Labor Relations Commission, in dismissing the respondent's appeal on pure technicalities without passing upon the merits of the appeal and (b) that the resolution appealed from is contrary to the law and jurisprudence (pp. 260274, NLRC rec.). On March 19, 1979, petitioner filed its opposition to the respondent bank's appeal and alleged the following grounds: (a) that the office of the Minister of Labor has no jurisdiction to entertain the instant appeal pursuant to the provisions of P. D. 1391; (b) that the labor arbiter's decision being final, executory and unappealable, execution is a matter of right for the petitioner; and (c) that the decision of the labor arbiter dated August 25, 1975 is supported by the law and the evidence in the case (p. 364, NLRC rec.). On July 30, 1979, petitioner filed a second motion for execution pending appeal, praying that a writ of execution be issued by the National Labor Relations Commission pending appeal of the case with the Office of the Minister of Labor. Respondent bank filed its opposition thereto on August 8, 1979. On August 13, 1979, the National Labor Relations Commission issued an order which states: The Chief, Research and Information Division of this Commission is hereby directed to designate a Socio-Economic Analyst to compute the holiday pay of the employees of the Insular Bank of Asia and America from April 1976 to the present, in accordance with the Decision of the Labor Arbiter dated August 25, 1975" (p. 80, rec.). On November 10, 1979, the Office of the Minister of Labor, through Deputy Minister Amado G. Inciong, issued an order, the dispositive portion of which states: ALL THE FOREGOING CONSIDERED, let the appealed Resolution en banc of the National Labor Relations Commission dated 20 June 1978 be, as it is hereby, set aside and a new judgment promulgated dismissing the instant case for lack of merit (p. 436, NLRC rec.). Hence, this petition for certiorari charging public respondent Amado G. Inciong with abuse of discretion amounting to lack or excess of jurisdiction. The issue in this case is: whether or not the decision of a Labor Arbiter awarding payment of regular holiday pay can still be set aside on appeal by the Deputy Minister of Labor even though it has already become final and had been partially executed, the finality of which was affirmed by the National Labor Relations Commission sitting en banc, on the basis of an Implementing Rule and Policy Instruction promulgated by the Ministry of Labor long after the said decision had become final and executory. WE find for the petitioner. I WE agree with the petitioner's contention that Section 2, Rule IV, Book III of the implementing rules and Policy Instruction No. 9 issued by the then Secretary of Labor are null and void since in the guise of clarifying the Labor Code's provisions on holiday pay, they in effect amended them by enlarging the scope of their exclusion (p. 1 1, rec.). Article 94 of the Labor Code, as amended by P.D. 850, provides: Art. 94. Right to holiday pay. (a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less than ten (10) workers. ... The coverage and scope of exclusion of the Labor Code's holiday pay provisions is spelled out under Article 82 thereof which reads: Art. 82. Coverage. The provision of this Title shall apply to employees in all establishments and undertakings, whether for profit or not, but not to government employees, managerial employees, field personnel members of the family of the employer who are dependent on him for support domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations.

... (emphasis supplied). From the above-cited provisions, it is clear that monthly paid employees are not excluded from the benefits of holiday pay. However, the implementing rules on holiday pay promulgated by the then Secretary of Labor excludes monthly paid employees from the said benefits by inserting, under Rule IV, Book Ill of the implementing rules, Section 2, which provides that: "employees who are uniformly paid by the month, irrespective of the number of working days therein, with a salary of not less than the statutory or established minimum wage shall be presumed to be paid for all days in the month whether worked or not. " Public respondent maintains that "(T)he rules implementing P. D. 850 and Policy Instruction No. 9 were issued to clarify the policy in the implementation of the ten (10) paid legal holidays. As interpreted, 'unworked' legal holidays are deemed paid insofar as monthly paid employees are concerned if (a) they are receiving not less than the statutory minimum wage, (b) their monthly pay is uniform from January to December, and (c) no deduction is made from their monthly salary on account of holidays in months where they occur. As explained in Policy Instruction No, 9, 'The ten (10) paid legal holidays law, to start with, is intended to benefit principally daily paid employees. In case of monthly, only those whose monthly salary did not yet include payment for the ten (10) paid legal holidays are entitled to the benefit' " (pp. 340-341, rec.). This contention is untenable. It is elementary in 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. In the case at bar, the provisions of the Labor Code on the entitlement to the benefits of holiday pay are clear and explicit - it provides for both the coverage of and exclusion from the benefits. In Policy Instruction No. 9, the then Secretary of Labor went as far as to categorically state that the benefit is principally intended for daily paid employees, when the law clearly states that every worker shall be paid their regular holiday pay. This is a flagrant violation of the mandatory directive of Article 4 of the Labor Code, which states that "All doubts in the implementation and interpretation of the provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of labor." Moreover, it shall always be presumed that the legislature intended to enact a valid and permanent statute which would have the most beneficial effect that its language permits (Orlosky vs. Haskell, 155 A. 112.) Obviously, the Secretary (Minister) of Labor had exceeded his statutory authority granted by Article 5 of the Labor Code authorizing him to promulgate the necessary implementing rules and regulations. Public respondent vehemently argues that the intent and spirit of the holiday pay law, as expressed by the Secretary of Labor in the case of Chartered Bank Employees Association v. The Chartered Bank (NLRC Case No. RB-1789-75, March 24, 1976), is to correct the disadvantages inherent in the daily compensation system of employment holiday pay is primarily intended to benefit the daily paid workers whose employment and income are circumscribed by the principle of "no work, no pay." This argument may sound meritorious; but, until the provisions of the Labor Code on holiday pay is amended by another law, monthly paid employees are definitely included in the benefits of regular holiday pay. As earlier stated, the presumption is always in favor of law, negatively put, the Labor Code is always strictly construed against management. While it is true that the contemporaneous construction placed upon a statute by executive officers whose duty is to enforce it should be given great weight by the courts, still if such construction is so erroneous, as in the instant case, the same must be declared as null and void. It is the role of the Judiciary to refine and, when necessary, correct constitutional (and/or statutory) interpretation, in the context of the interactions of the three branches of the government, almost always in situations where some agency of the State has engaged in action that stems ultimately from some legitimate area of governmental power (The Supreme Court in Modern Role, C. B. Swisher 1958, p. 36). Thus. in the case of Philippine Apparel Workers Union vs. National Labor Relations Commission (106 SCRA 444, July 31, 1981) where the Secretary of Labor enlarged the scope of exemption from the coverage of a Presidential Decree granting increase in emergency allowance, this Court ruled that: ... the Secretary of Labor has exceeded his authority when he included paragraph (k) in Section 1 of the Rules implementing P. D. 1 1 23. xxx xxx xxx Clearly, the inclusion of paragraph k contravenes the statutory authority granted to the Secretary of Labor, and the same is therefore void, as ruled by this Court in a long line of cases . . . .. The recognition of the power of administrative officials to promulgate rules in the administration of the statute, necessarily limited to what is provided for in the legislative enactment, may be found in the early case of United States vs. Barrios decided in 1908. Then came in a 1914 decision, United States vs. Tupasi Molina (29 Phil. 119) delineation of the scope of such competence. Thus: "Of course the regulations adopted under legislative authority by a particular department must be in harmony with the provisions of the law, and for the sole purpose of carrying into effect its general provisions. By such regulations, of course, the law itself cannot be extended. So long, however, as the regulations relate solely to carrying into effect the provisions of the law, they are valid." In 1936, in People vs. Santos, this Court expressed its disapproval of an administrative order that would amount to an excess of the regulatory power vested in an administrative official We reaffirmed such a doctrine in a 1951 decision, where we again made clear that where an administrative order betrays inconsistency or repugnancy to the provisions of the Act, 'the mandate of the Act must prevail and must be followed. Justice Barrera, speaking for the Court in Victorias Milling inc. vs. Social Security Commission, citing Parker as well as Davis did tersely sum up the matter thus: "A rule is binding on the Courts so long as the procedure fixed for its promulgation is followed and its scope is within the statutory authority granted by the legislature, even if the courts are not in agreement with the policy stated therein or its innate wisdom. ... On the other hand, administrative interpretation of the law is at best merely advisory, for it is the courts that finally determine chat the law means." "It cannot be otherwise as the Constitution limits the authority of the President, in whom all executive power resides, to take care that the laws be faithfully executed. No lesser administrative executive office or agency then can, contrary to the express language of the Constitution assert for itself a more extensive prerogative. Necessarily, it is bound to observe the constitutional mandate. There must be strict compliance with the legislative enactment. Its terms must be followed the statute requires adherence to, not departure from its provisions. No deviation is allowable. In the terse language of the present Chief Justice, an administrative agency "cannot amend an act of

Congress." Respondents can be sustained, therefore, only if it could be shown that the rules and regulations promulgated by them were in accordance with what the Veterans Bill of Rights provides" (Phil. Apparel Workers Union vs. National Labor Relations Commission, supra, 463, 464, citing Teozon vs. Members of the Board of Administrators, PVA 33 SCRA 585; see also Santos vs. Hon. Estenzo, et al, 109 Phil. 419; Hilado vs. Collector of Internal Revenue, 100 Phil. 295; Sy Man vs. Jacinto & Fabros, 93 Phil. 1093; Olsen & Co., Inc. vs. Aldanese and Trinidad, 43 Phil. 259). This ruling of the Court was recently reiterated in the case of American Wire & Cable Workers Union (TUPAS) vs. The National Labor Relations Commission and American Wire & Cable Co., Inc., G.R. No. 53337, promulgated on June 29, 1984. In view of the foregoing, Section 2, Rule IV, Book III of the Rules to implement the Labor Code and Policy instruction No. 9 issued by the then Secretary of Labor must be declared null and void. Accordingly, public respondent Deputy Minister of Labor Amado G. Inciong had no basis at all to deny the members of petitioner union their regular holiday pay as directed by the Labor Code. II It is not disputed that the decision of Labor Arbiter Ricarte T. Soriano dated August 25, 1975, had already become final, and was, in fact, partially executed by the respondent bank. However, public respondent maintains that on the authority of De Luna vs. Kayanan, 61 SCRA 49, November 13, 1974, he can annul the final decision of Labor Arbiter Soriano since the ensuing promulgation of the integrated implementing rules of the Labor Code pursuant to P.D. 850 on February 16, 1976, and the issuance of Policy Instruction No. 9 on April 23, 1976 by the then Secretary of Labor are facts and circumstances that transpired subsequent to the promulgation of the decision of the labor arbiter, which renders the execution of the said decision impossible and unjust on the part of herein respondent bank (pp. 342-343, rec.). This contention is untenable. To start with, unlike the instant case, the case of De Luna relied upon by the public respondent is not a labor case wherein the express mandate of the Constitution on the protection to labor is applied. Thus Article 4 of the Labor Code provides that, "All doubts in the implementation and interpretation of the provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of labor and Article 1702 of the Civil Code provides that, " In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer. Consequently, contrary to public respondent's allegations, it is patently unjust to deprive the members of petitioner union of their vested right acquired by virtue of a final judgment on the basis of a labor statute promulgated following the acquisition of the "right". On the question of whether or not a law or statute can annul or modify a judicial order issued prior to its promulgation, this Court, through Associate Justice Claro M. Recto, said: xxx xxx xxx We are decidedly of the opinion that they did not. Said order, being unappealable, became final on the date of its issuance and the parties who acquired rights thereunder cannot be deprived thereof by a constitutional provision enacted or promulgated subsequent thereto. Neither the Constitution nor the statutes, except penal laws favorable to the accused, have retroactive effect in the sense of annulling or modifying vested rights, or altering contractual obligations" (China Ins. & Surety Co. vs. Judge of First Instance of Manila, 63 Phil. 324, emphasis supplied). In the case of In re: Cunanan, et al., 19 Phil. 585, March 18, 1954, this Court said: "... when a court renders a decision or promulgates a resolution or order on the basis of and in accordance with a certain law or rule then in force, the subsequent amendment or even repeal of said law or rule may not affect the final decision, order, or resolution already promulgated, in the sense of revoking or rendering it void and of no effect." Thus, the amendatory rule (Rule IV, Book III of the Rules to Implement the Labor Code) cannot be given retroactive effect as to modify final judgments. Not even a law can validly annul final decisions (In re: Cunanan, et al., Ibid). Furthermore, the facts of the case relied upon by the public respondent are not analogous to that of the case at bar. The case of De Luna speaks of final and executory judgment, while iii the instant case, the final judgment is partially executed. just as the court is ousted of its jurisdiction to annul or modify a judgment the moment it becomes final, the court also loses its jurisdiction to annul or modify a writ of execution upon its service or execution; for, otherwise, we will have a situation wherein a final and executed judgment can still be annulled or modified by the court upon mere motion of a panty This would certainly result in endless litigations thereby rendering inutile the rule of law. Respondent bank counters with the argument that its partial compliance was involuntary because it did so under pain of levy and execution of its assets (p. 138, rec.). WE find no merit in this argument. Respondent bank clearly manifested its voluntariness in complying with the decision of the labor arbiter by not appealing to the National Labor Relations Commission as provided for under the Labor Code under Article 223. A party who waives his right to appeal is deemed to have accepted the judgment, adverse or not, as correct, especially if such party readily acquiesced in the judgment by starting to execute said judgment even before a writ of execution was issued, as in this case. Under these circumstances, to permit a party to appeal from the said partially executed final judgment would make a mockery of the doctrine of finality of judgments long enshrined in this jurisdiction. Section I of Rule 39 of the Revised Rules of Court provides that "... execution shall issue as a matter of right upon the expiration of the period to appeal ... or if no appeal has been duly perfected." This rule applies to decisions or orders of labor arbiters who are exercising quasi-judicial functions since "... the rule of execution of judgments under the rules should govern all kinds of execution of judgment, unless it is otherwise provided in other laws" Sagucio vs. Bulos 5 SCRA 803) and Article 223 of the Labor Code provides that "... decisions, awards, or orders of the Labor Arbiter or compulsory arbitrators are final and executory unless appealed to the Commission by any or both of the parties within ten (10) days from receipt of such awards, orders, or decisions. ..."

Thus, under the aforecited rule, the lapse of the appeal period deprives the courts of jurisdiction to alter the final judgment and the judgment becomes final ipso jure (Vega vs. WCC, 89 SCRA 143, citing Cruz vs. WCC, 2 PHILAJUR 436, 440, January 31, 1978; see also Soliven vs. WCC, 77 SCRA 621; Carrero vs. WCC and Regala vs. WCC, decided jointly, 77 SCRA 297; Vitug vs. Republic, 75 SCRA 436; Ramos vs. Republic, 69 SCRA 576). In Galvez vs. Philippine Long Distance Telephone Co., 3 SCRA 422, 423, October 31, 1961, where the lower court modified a final order, this Court ruled thus: xxx xxx xxx The lower court was thus aware of the fact that it was thereby altering or modifying its order of January 8, 1959. Regardless of the excellence of the motive for acting as it did, we are constrained to hold however, that the lower court had no authorities to make said alteration or modification. ... xxx xxx xxx The equitable considerations that led the lower court to take the action complained of cannot offset the dem ands of public policy and public interest which are also responsive to the tenets of equity requiring that an issues passed upon in decisions or final orders that have become executory, be deemed conclusively disposed of and definitely closed for, otherwise, there would be no end to litigations, thus setting at naught the main role of courts of justice, which is to assist in the enforcement of the rule of law and the maintenance of peace and order, by settling justiciable controversies with finality. xxx xxx xxx In the recent case of Gabaya vs. Mendoza, 113 SCRA 405, 406, March 30, 1982, this Court said xxx xxx xxx In Marasigan vs. Ronquillo (94 Phil. 237), it was categorically stated that the rule is absolute that after a judgment becomes final by the expiration of the period provided by the rules within which it so becomes, no further amendment or correction can be made by the court except for clerical errors or mistakes. And such final judgment is conclusive not only as to every matter which was offered and received to sustain or defeat the claim or demand but as to any other admissible matter which must have been offered for that purpose (L-7044, 96 Phil. 526). In the earlier case of Contreras and Ginco vs. Felix and China Banking Corp., Inc. (44 O.G. 4306), it was stated that the rule must be adhered to regardless of any possible injustice in a particular case for (W)e have to subordinate the equity of a particular situation to the over-mastering need of certainty and immutability of judicial pronouncements xxx xxx xxx III The despotic manner by which public respondent Amado G. Inciong divested the members of the petitioner union of their rights acquired by virtue of a final judgment is tantamount to a deprivation of property without due process of law Public respondent completely ignored the rights of the petitioner union's members in dismissing their complaint since he knew for a fact that the judgment of the labor arbiter had long become final and was even partially executed by the respondent bank. A final judgment vests in the prevailing party a right recognized and protected by law under the due process clause of the Constitution (China Ins. & Surety Co. vs. Judge of First Instance of Manila, 63 Phil. 324). A final judgment is "a vested interest which it is right and equitable that the government should recognize and protect, and of which the individual could no. be deprived arbitrarily without injustice" (Rookledge v. Garwood, 65 N.W. 2d 785, 791). lt is by this guiding principle that the due process clause is interpreted. Thus, in the pithy language of then Justice, later Chief Justice, Concepcion "... acts of Congress, as well as those of the Executive, can deny due process only under pain of nullity, and judicial proceedings suffering from the same flaw are subject to the same sanction, any statutory provision to the contrary notwithstanding (Vda. de Cuaycong vs. Vda. de Sengbengco 110 Phil. 118, emphasis supplied), And "(I)t has been likewise established that a violation of a constitutional right divested the court of jurisdiction; and as a consequence its judgment is null and void and confers no rights" (Phil. Blooming Mills Employees Organization vs. Phil. Blooming Mills Co., Inc., 51 SCRA 211, June 5, 1973). Tested by and pitted against this broad concept of the constitutional guarantee of due process, the action of public respondent Amado G. Inciong is a clear example of deprivation of property without due process of law and constituted grave abuse of discretion, amounting to lack or excess of jurisdiction in issuing the order dated November 10, 1979. WHEREFORE, THE PETITION IS HEREBY GRANTED, THE ORDER OF PUBLIC RESPONDENT IS SET ASIDE, AND THE DECISION OF LABOR ARBITER RICARTE T. SORIANO DATED AUGUST 25, 1975, IS HEREBY REINSTATED. COSTS AGAINST PRIVATE RESPONDENT INSULAR BANK OF ASIA AND AMERICA SO ORDERED.

G.R. No. L-48437, September 30, 1986] MANTRADE/FMMC DIVISION EMPLOYEES AND WORKERS UNION (REPRESENTED BY PHILIPPINE SOCIAL SECURITY LABOR UNION - PSSLU FED. - TUCP, PETITIONER, VS. ARBITRATOR FROILAN M. BACUNGAN AND MANTRADE DEVELOPMENT CORPORATION, RESPONDENTS. DECISION FERIA, J.: This is a petition for Certiorari and Mandamus filed by petitioner against arbitrator Froilan M. Bacungan and Mantrade Development Corporation arising from the decision of respondent arbitrator, the dispositive part of which reads as follows: "CONSIDERING ALL THE ABOVE, We rule that Mantrade Development Corporation is not under legal obligation to pay holiday pay (as provided for in Article 94 of the Labor Code in the third official Department of Labor edition) to its monthly paid employees who are

uniformly paid by the month, irrespective of the number of working days therein, with a salary of not less than the statutory or established minimum wage, and this rule is applicable not only as of March 2, 1976 but as of November 1, 1974." Petitioner questions the validity of the pertinent section of the Rules and Regulations implementing the Labor Code as amended on which respondent arbitrator based his decision. On the other hand, respondent corporation has raised procedural and substantive objections. It contends that petitioner is barred from pursuing the present action in view of Article 263 of the Labor Code which provides in part that "voluntary arbitration awards or decisions shall be final, inappealable, and executory," as well as the rules implementing the same; the pertinent provision of the Collective Bargaining Agreement between petitioner and respondent corporation; and Article 2044 of the Civil Code which provides that "any stipulation that the arbitrators' award or decision shall be final, is valid, without prejudice to Articles 2038, 2039, and 2040." Respondent corporation further contends that the special civil action of certiorari does not lie because respondent arbitrator is not an "officer exercising judicial functions" within the contemplation of Rule 65, Section 1, of the Rules of Court; that the instant petition raises an error of judgment on the part of respondent arbitrator and not an error of jurisdiction; that it prays for the annulment of certain rules and regulations issued by the Department of Labor, not for the annulment of the voluntary arbitration proceedings; and that appeal by certiorari under Section 29 of the Arbitration Law, Republic Act No. 876, is not applicable to the case at bar because arbitration in labor disputes is expressly excluded by Section 3 of said law. These contentions have been ruled against in the decision of this Court in the case of Oceanic Bic Division (FFW) vs. Romero, promulgated on July 16, 1984, wherein it stated: "We agree with the petitioner that the decisions of voluntary arbitrators must be given the highest respect and as a general rule must be accorded a certain measure of finality. This is especially true where the arbitrator chosen by the parties enjoys the first rate credentials of Professor Flerida Ruth Pineda Romero, Director of the U. P. Law Center and an academician of unquestioned expertise in the field of Labor Law. It is not correct, however, that this respect precludes the exercise of judicial review over their decisions. Article 262 of the Labor Code making voluntary arbitration awards final, inappealable and executory, except where the money claims exceed P100,000.00 or 40% of the paid-up capital of the employer or where there is abuse of discretion or gross incompetence refers to appeals to the National Labor Relations Commission and not to judicial review. "In spite of statutory provisions making 'final' the decisions of certain administrative agencies, we have taken cognizance of petitions questioning these decisions where want of jurisdiction, grave abuse of discretion, violation of due process, denial of substantial justice, or erroneous interpretation of the Law were brought to our attention. x x x x x x x x x x x x

"A voluntary arbitrator by the nature of her functions acts in a quasi-judicial capacity. There is no reason why her decisions involving interpretation of law should be beyond this Court's review. Administrative officials are presumed to act in accordance with law and yet we do not hesitate to pass upon their work where a question of law is involved or where a showing of abuse of discretion in their official acts is properly raised in petitions for certiorari." (130 SCRA 392, 399, 400-401) In denying petitioner's claim for holiday pay, respondent arbitrator stated that although monthly salaried employees are not among those excluded from receiving such additional pay under Article 94 of the Labor Code of the Philippines, to wit: ART. 94. Right to holiday pay. - (a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less than ten (10) workers; (b) The employer may require an employee to work on any holiday but such employee shall be paid compensation equivalent to twice his regular rate; and (c) As used in this Article, "holiday" includes: 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 and the thirtieth of December, and the day designated by law for holding a general election. they appear to be excluded under Sec. 2, Rule IV, Book III of the Rules and Regulations implementing said provision which reads thus: SEC. 2. Status of employees paid by the month. - Employees who are uniformly paid by the month, irrespective of the number of working days therein, with a salary of not less than the statutory or established minimum wage shall be presumed to be paid for all days in the month whether worked or not. Respondent arbitrator further opined that respondent corporation does not have any legal obligation to grant its monthly salaried employees holiday pay, unless it is argued that the pertinent section of the Rules and Regulations implementing Section 94 of the Labor Code is not in conformity with the law, and thus, without force and effect. This issue was subsequently decided on October 24, 1984 by a division of this Court in the case of Insular Bank of Asia and America Employees' Union (IBAAEU) vs. Inciong,wherein it held as follows: "WE agree with the petitioner's contention that Section 2, Rule IV, Book III of the implementing rules and Policy Instruction No. 9 issued by the then Secretary of Labor are null and void since in the guise of clarifying the Labor Code's provisions on holiday pay, they in effect amended them by enlarging the scope of their exclusion (p. 11, rec.).

"Article 94 of the Labor Code, as amended by P. D. 850, provides: 'Art. 94. Right to holiday pay.- (a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less than ten (10) workers. x x x' "The coverage and scope of exclusion of the Labor Code's holiday pay provisions is spelled out under Article 82 thereof which reads: 'Art. 82. Coverage.- The provision of this Title shall apply to employees in all establishments and undertakings, whether for profit or not, but not to government employees, managerial employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations.' xxx xxx xxx "From the above-cited provisions, it is clear that monthly paid employees are not excluded from the benefits of holiday pay. However, the implementing rules on holiday pay promulgated by the then Secretary of Labor excludes monthly paid employees from the said benefits by inserting under Rule IV, Book III of the implementing rules, Section 2, which provides that: 'employees who are uniformly paid by the month, irrespective of the number of working days therein, with a salary of not less than the statutory or established minimum wage shall be presumed to be paid for all days in the month whether worked or not.'" (132 SCRA 663, 672-673) This ruling was reiterated by the Court en banc on August 28, 1985 in the case of Chartered Bank Employees Association vs. Ople, wherein it added that: "The questioned Sec. 2, Rule IV, Book III of the Integrated Rules and the Secretary's Policy Instruction No. 9 add another excluded group, namely 'employees who are uniformly paid by the month'. While the additional exclusion is only in the form of a presumption that all monthly paid employees have already been paid holiday pay, it constitutes a taking away or a deprivation which must be in the law if it is to be valid. An administrative interpretation which diminishes the benefits of labor more than what the statute delimits or withholds is obviously ultra vires." (138 SCRA 273, 282. See also CBTC Employees Union vs. Clave,January 7, 1986, 141 SCRA 9.) Lastly, respondent corporation contends that mandamus does not lie to compel the performance of an act which the law does not clearly enjoin as a duty. True it is also that mandamus is not proper to enforce a contractual obligation, the remedy being an action for specific performance (Province of Pangasinan vs. Reparations Commission,November 29, 1977, 80 SCRA 376). In the case at bar, however, in view of the above-cited subsequent decisions of this Court clearly defining the legal duty to grant holiday pay to monthly salaried employees, mandamus is an appropriate equitable remedy (Dionisio vs. Paterno, July 23, 1980, 98 SCRA 677; Gonzales vs. Government Service Insurance System, September 10, 1981, 107 SCRA 492). WHEREFORE, the questioned decision of respondent arbitrator is SET ASIDE and respondent corporation is ordered to GRANT holiday pay to its monthly salaried employees. No costs. SO ORDERED.

UNION OF FILIPRO EMPLOYEES (UFE), petitioner, vs. BENIGNO VIVAR, JR., NATIONAL LABOR RELATIONS COMMISSION and NESTL PHILIPPINES, INC. (formerly FILIPRO, INC.), respondents. G.R. No. 79255 January 20, 1992 GUTIERREZ, JR., J.: This labor dispute stems from the exclusion of sales personnel from the holiday pay award and the change of the divisor in the computation of benefits from 251 to 261 days. On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the National Labor Relations Commission (NLRC) a petition for declaratory relief seeking a ruling on its rights and obligations respecting claims of its monthly paid employees for holiday pay in the light of the Court's decision in Chartered Bank Employees Association v. Ople (138 SCRA 273 [1985]). Both Filipro and the Union of Filipino Employees (UFE) agreed to submit the case for voluntary arbitration and appointed respondent Benigno Vivar, Jr. as voluntary arbitrator. On January 2, 1980, Arbitrator Vivar rendered a decision directing Filipro to: pay its monthly paid employees holiday pay pursuant to Article 94 of the Code, subject only to the exclusions and limitations specified in Article 82 and such other legal restrictions as are provided for in the Code. (Rollo, p. 31) Filipro filed a motion for clarification seeking (1) the limitation of the award to three years, (2) the exclusion of salesmen, sales representatives, truck drivers, merchandisers and medical representatives (hereinafter referred to as sales personnel) from the award of the holiday pay, and (3) deduction from the holiday pay award of overpayment for overtime, night differential, vacation and sick leave benefits due to the use of 251 divisor. (Rollo, pp. 138-145) Petitioner UFE answered that the award should be made effective from the date of effectivity of the Labor Code, that their sales personnel are not field personnel and are therefore entitled to holiday pay, and that the use of 251 as divisor is an established employee benefit which cannot be diminished.

On January 14, 1986, the respondent arbitrator issued an order declaring that the effectivity of the holiday pay award shall retroact to November 1, 1974, the date of effectivity of the Labor Code. He adjudged, however, that the company's sales personnel are field personnel and, as such, are not entitled to holiday pay. He likewise ruled that with the grant of 10 days' holiday pay, the divisor should be changed from 251 to 261 and ordered the reimbursement of overpayment for overtime, night differential, vacation and sick leave pay due to the use of 251 days as divisor. Both Nestle and UFE filed their respective motions for partial reconsideration. Respondent Arbitrator treated the two motions as appeals and forwarded the case to the NLRC which issued a resolution dated May 25, 1987 remanding the case to the respondent arbitrator on the ground that it has no jurisdiction to review decisions in voluntary arbitration cases pursuant to Article 263 of the Labor Code as amended by Section 10, Batas Pambansa Blg. 130 and as implemented by Section 5 of the rules implementing B.P. Blg. 130. However, in a letter dated July 6, 1987, the respondent arbitrator refused to take cognizance of the case reasoning that he had no more jurisdiction to continue as arbitrator because he had resigned from service effective May 1, 1986. Hence, this petition. The petitioner union raises the following issues: 1) Whether or not Nestle's sales personnel are entitled to holiday pay; and

2) Whether or not, concomitant with the award of holiday pay, the divisor should be changed from 251 to 261 days and whether or not the previous use of 251 as divisor resulted in overpayment for overtime, night differential, vacation and sick leave pay. The petitioner insists that respondent's sales personnel are not field personnel under Article 82 of the Labor Code. The respondent company controverts this assertion. Under Article 82, field personnel are not entitled to holiday pay. Said article defines field personnel as "non-agritultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty." The controversy centers on the interpretation of the clause "whose actual hours of work in the field cannot be determined with reasonable certainty." It is undisputed that these sales personnel start their field work at 8:00 a.m. after having reported to the office and come back to the office at 4:00 p.m. or 4:30 p.m. if they are Makati-based. The petitioner maintains that the period between 8:00 a.m. to 4:00 or 4:30 p.m. comprises the sales personnel's working hours which can be determined with reasonable certainty. The Court does not agree. The law requires that the actual hours of work in the field be reasonably ascertained. The company has no way of determining whether or not these sales personnel, even if they report to the office before 8:00 a.m. prior to field work and come back at 4:30 p.m, really spend the hours in between in actual field work. We concur with the following disquisition by the respondent arbitrator: The requirement for the salesmen and other similarly situated employees to report for work at the office at 8:00 a.m. and return at 4:00 or 4:30 p.m. is not within the realm of work in the field as defined in the Code but an exercise of purely management prerogative of providing administrative control over such personnel. This does not in any manner provide a reasonable level of determination on the actual field work of the employees which can be reasonably ascertained. The theoretical analysis that salesmen and other similarly-situated workers regularly report for work at 8:00 a.m. and return to their home station at 4:00 or 4:30 p.m., creating the assumption that their field work is supervised, is surface projection. Actual field work begins after 8:00 a.m., when the sales personnel follow their field itinerary, and ends immediately before 4:00 or 4:30 p.m. when they report back to their office. The period between 8:00 a.m. and 4:00 or 4:30 p.m. comprises their hours of work in the field, the extent or scope and result of which are subject to their individual capacity and industry and which "cannot be determined with reasonable certainty." This is the reason why effective supervision over field work of salesmen and medical representatives, truck drivers and merchandisers is practically a physical impossibility. Consequently, they are excluded from the ten holidays with pay award. (Rollo, pp. 36-37) Moreover, the requirement that "actual hours of work in the field cannot be determined with reasonable certainty" must be read in conjunction with Rule IV, Book III of the Implementing Rules which provides: Rule IV Holidays with Pay Sec. 1. xxx (e) Coverage This rule shall apply to all employees except: xxx xxx

Field personnel and other employees whose time and performance is unsupervised by the employer . . . (Emphasis supplied)

While contending that such rule added another element not found in the law (Rollo, p. 13), the petitioner nevertheless attempted to show that its affected members are not covered by the abovementioned rule. The petitioner asserts that the company's sales personnel are strictly supervised as shown by the SOD (Supervisor of the Day) schedule and the company circular dated March 15, 1984 (Annexes 2 and 3, Rollo, pp. 53-55). Contrary to the contention of the petitioner, the Court finds that the aforementioned rule did not add another element to the Labor Code definition of field personnel. The clause "whose time and performance is unsupervised by the employer" did not amplify but merely interpreted and expounded the clause "whose actual hours of work in the field cannot be determined with reasonable certainty." The former clause is still within the scope and purview of Article 82 which defines field personnel. Hence, in deciding whether or not an employee's actual working hours in the field can be determined with reasonable certainty, query must be made as to whether or not such employee's time and performance is constantly supervised by the employer. The SOD schedule adverted to by the petitioner does not in the least signify that these sales personnel's time and performance are supervised. The purpose of this schedule is merely to ensure that the sales personnel are out of the office not later than 8:00 a.m. and are back in the office not earlier than 4:00 p.m. Likewise, the Court fails to see how the company can monitor the number of actual hours spent in field work by an employee through the imposition of sanctions on absenteeism contained in the company circular of March 15, 1984. The petitioner claims that the fact that these sales personnel are given incentive bonus every quarter based on their performance is proof that their actual hours of work in the field can be determined with reasonable certainty. The Court thinks otherwise. The criteria for granting incentive bonus are: (1) attaining or exceeding sales volume based on sales target; (2) good collection performance; (3) proper compliance with good market hygiene; (4) good merchandising work; (5) minimal market returns; and (6) proper truck maintenance. (Rollo, p. 190). The above criteria indicate that these sales personnel are given incentive bonuses precisely because of the difficulty in measuring their actual hours of field work. These employees are evaluated by the result of their work and not by the actual hours of field work which are hardly susceptible to determination. In San Miguel Brewery, Inc. v. Democratic Labor Organization (8 SCRA 613 [1963]), the Court had occasion to discuss the nature of the job of a salesman. Citing the case of Jewel Tea Co. v. Williams, C.C.A. Okla., 118 F. 2d 202, the Court stated: The reasons for excluding an outside salesman are fairly apparent. Such a salesman, to a greater extent, works individually. There are no restrictions respecting the time he shall work and he can earn as much or as little, within the range of his ability, as his ambition dictates. In lieu of overtime he ordinarily receives commissions as extra compensation. He works away from his employer's place of business, is not subject to the personal supervision of his employer, and his employer has no way of knowing the number of hours he works per day. While in that case the issue was whether or not salesmen were entitled to overtime pay, the same rationale for their exclusion as field personnel from holiday pay benefits also applies. The petitioner union also assails the respondent arbitrator's ruling that, concomitant with the award of holiday pay, the divisor should be changed from 251 to 261 days to include the additional 10 holidays and the employees should reimburse the amounts overpaid by Filipro due to the use of 251 days' divisor. Arbitrator Vivar's rationale for his decision is as follows: . . . The new doctrinal policy established which ordered payment of ten holidays certainly adds to or accelerates the basis of conversion and computation by ten days. With the inclusion of ten holidays as paid days, the divisor is no longer 251 but 261 or 262 if election day is counted. This is indeed an extremely difficult legal question of interpretation which accounts for what is claimed as falling within the concept of "solutio indebti." When the claim of the Union for payment of ten holidays was granted, there was a consequent need to abandon that 251 divisor. To maintain it would create an impossible situation where the employees would benefit with additional ten days with pay but would simultaneously enjoy higher benefits by discarding the same ten days for purposes of computing overtime and night time services and considering sick and vacation leave credits. Therefore, reimbursement of such overpayment with the use of 251 as divisor arises concomitant with the award of ten holidays with pay. (Rollo, p. 34) The divisor assumes an important role in determining whether or not holiday pay is already included in the monthly paid employee's salary and in the computation of his daily rate. This is the thrust of our pronouncement in Chartered Bank Employees Association v. Ople (supra). In that case, We held: It is argued that even without the presumption found in the rules and in the policy instruction, the company practice indicates that the monthly salaries of the employees are so computed as to include the holiday pay provided by law. The petitioner contends otherwise.

One strong argument in favor of the petitioner's stand is the fact that the Chartered Bank, in computing overtime compensation for its employees, employs a "divisor" of 251 days. The 251 working days divisor is the result of subtracting all Saturdays, Sundays and the ten (10) legal holidays from the total number of calendar days in a year. If the employees are already paid for all non-working days, the divisor should be 365 and not 251. In the petitioner's case, its computation of daily ratio since September 1, 1980, is as follows: monthly rate x 12 months 251 days Following the criterion laid down in the Chartered Bank case, the use of 251 days' divisor by respondent Filipro indicates that holiday pay is not yet included in the employee's salary, otherwise the divisor should have been 261. It must be stressed that the daily rate, assuming there are no intervening salary increases, is a constant figure for the purpose of computing overtime and night differential pay and commutation of sick and vacation leave credits. Necessarily, the daily rate should also be the same basis for computing the 10 unpaid holidays. The respondent arbitrator's order to change the divisor from 251 to 261 days would result in a lower daily rate which is violative of the prohibition on non-diminution of benefits found in Article 100 of the Labor Code. To maintain the same daily rate if the divisor is adjusted to 261 days, then the dividend, which represents the employee's annual salary, should correspondingly be increased to incorporate the holiday pay. To illustrate, if prior to the grant of holiday pay, the employee's annual salary is P25,100, then dividing such figure by 251 days, his daily rate is P100.00 After the payment of 10 days' holiday pay, his annual salary already includes holiday pay and totals P26,100 (P25,100 + 1,000). Dividing this by 261 days, the daily rate is still P100.00. There is thus no merit in respondent Nestle's claim of overpayment of overtime and night differential pay and sick and vacation leave benefits, the computation of which are all based on the daily rate, since the daily rate is still the same before and after the grant of holiday pay. Respondent Nestle's invocation of solutio indebiti, or payment by mistake, due to its use of 251 days as divisor must fail in light of the Labor Code mandate that "all doubts in the implementation and interpretation of this Code, including its implementing rules and regulations, shall be resolved in favor of labor." (Article 4). Moreover, prior to September 1, 1980, when the company was on a 6-day working schedule, the divisor used by the company was 303, indicating that the 10 holidays were likewise not paid. When Filipro shifted to a 5-day working schebule on September 1, 1980, it had the chance to rectify its error, if ever there was one but did not do so. It is now too late to allege payment by mistake. Nestle also questions the voluntary arbitrator's ruling that holiday pay should be computed from November 1, 1974. This ruling was not questioned by the petitioner union as obviously said decision was favorable to it. Technically, therefore, respondent Nestle should have filed a separate petition raising the issue of effectivity of the holiday pay award. This Court has ruled that an appellee who is not an appellant may assign errors in his brief where his purpose is to maintain the judgment on other grounds, but he cannot seek modification or reversal of the judgment or affirmative relief unless he has also appealed. (Franco v. Intermediate Appellate Court, 178 SCRA 331 [1989], citing La Campana Food Products, Inc. v. Philippine Commercial and Industrial Bank, 142 SCRA 394 [1986]). Nevertheless, in order to fully settle the issues so that the execution of the Court's decision in this case may not be needlessly delayed by another petition, the Court resolved to take up the matter of effectivity of the holiday pay award raised by Nestle. Nestle insists that the reckoning period for the application of the holiday pay award is 1985 when the Chartered Bank decision, promulgated on August 28, 1985, became final and executory, and not from the date of effectivity of the Labor Code. Although the Court does not entirely agree with Nestle, we find its claim meritorious. In Insular Bank of Asia and America Employees' Union (IBAAEU) v. Inciong, 132 SCRA 663 [1984], hereinafter referred to as the IBAA case, the Court declared that Section 2, Rule IV, Book III of the implementing rules and Policy Instruction No. 9, issued by the then Secretary of Labor on February 16, 1976 and April 23, 1976, respectively, and which excluded monthly paid employees from holiday pay benefits, are null and void. The Court therein reasoned that, in the guise of clarifying the Labor Code's provisions on holiday pay, the aforementioned implementing rule and policy instruction amended them by enlarging the scope of their exclusion. The Chartered Bank case reiterated the above ruling and added the "divisor" test. However, prior to their being declared null and void, the implementing rule and policy instruction enjoyed the presumption of validity and hence, Nestle's non-payment of the holiday benefit up to the promulgation of the IBAA case on October 23, 1984 was in compliance with these presumably valid rule and policy instruction. In the case of De Agbayani v. Philippine National Bank, 38 SCRA 429 [1971], the Court discussed the effect to be given to a legislative or executive act subsequently declared invalid: xxx xxx xxx

. . . It does not admit of doubt that prior to the declaration of nullity such challenged legislative or executive act must have been in force and had to be complied with. This is so as until after the judiciary, in an appropriate case, declares its invalidity, it is entitled to obedience and respect. Parties may have acted under it and may have changed their positions. What could be more fitting than that in a subsequent litigation regard be had to what has been done while such legislative or executive act was in operation and presumed to be valid in all respects. It is now accepted as a doctrine that prior to its being nullified, its existence as a fact must be reckoned with. This is merely to

reflect awareness that precisely because the judiciary is the government organ which has the final say on whether or not a legislative or executive measure is valid, a period of time may have elapsed before it can exercise the power of judicial review that may lead to a declaration of nullity. It would be to deprive the law of its quality of fairness and justice then, if there be no recognition of what had transpired prior to such adjudication. In the language of an American Supreme Court decision: "The actual existence of a statute, prior to such a determination of [unconstitutionality], is an operative fact and may have consequences which cannot justly be ignored. The past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as to invalidity may have to be considered in various aspects, with respect to particular relations, individual and corporate, and particular conduct, private and official." (Chicot County Drainage Dist. v. Baxter States Bank, 308 US 371, 374 [1940]). This language has been quoted with approval in a resolution in Araneta v. Hill (93 Phil. 1002 [1952]) and the decision in Manila Motor Co., Inc. v. Flores (99 Phil. 738 [1956]). An even more recent instance is the opinion of Justice Zaldivar speaking for the Court in Fernandez v. Cuerva and Co. (21 SCRA 1095 [1967]. (At pp. 434-435) The "operative fact" doctrine realizes that in declaring a law or rule null and void, undue harshness and resulting unfairness must be avoided. It is now almost the end of 1991. To require various companies to reach back to 1975 now and nullify acts done in good faith is unduly harsh. 1984 is a fairer reckoning period under the facts of this case. Applying the aforementioned doctrine to the case at bar, it is not far-fetched that Nestle, relying on the implicit validity of the implementing rule and policy instruction before this Court nullified them, and thinking that it was not obliged to give holiday pay benefits to its monthly paid employees, may have been moved to grant other concessions to its employees, especially in the collective bargaining agreement. This possibility is bolstered by the fact that respondent Nestle's employees are among the highest paid in the industry. With this consideration, it would be unfair to impose additional burdens on Nestle when the non-payment of the holiday benefits up to 1984 was not in any way attributed to Nestle's fault. The Court thereby resolves that the grant of holiday pay be effective, not from the date of promulgation of the Chartered Bank case nor from the date of effectivity of the Labor Code, but from October 23, 1984, the date of promulgation of the IBAA case. WHEREFORE, the order of the voluntary arbitrator in hereby MODIFIED. The divisor to be used in computing holiday pay shall be 251 days. The holiday pay as above directed shall be computed from October 23, 1984. In all other respects, the order of the respondent arbitrator is hereby AFFIRMED. SO ORDERED.

OCEANIC PHARMACAL EMPLOYEES UNION (FFW), complainant/appellant, vs. HON. AMADO G. INCIONG and OCEANIC PHARMACAL INC, respondents/appellees. G.R. No. L-50568 November 7, 1979 ABAD SANTOS, J.: 'This is a petition to review a decision of Deputy Minister Amado G. Inciong who acted by authority of tile Minister of Labor in NLRC Case No. RB-IV-10042-77. Oceanic Pharmacal Employees Union and Oceanic Pharmacal, Inc. had a collective bargaining agreement (CBA) good from March 1, 1976 to February 28, 1979. On April 27, 1976, the following letter was sent to the Union: Mr. Arturo Fernandez President Oceanic Pharmacal Employees Union (FFW) Makati, Rizal Dear Mr. Fernandez: Subject: Supplementary Agreement to CBA This is to confirm in writing the agreement made between your panel and our own panel on April 24, 1976 on the following points: 1) Emergency Allowance The management of OPI will continue its present practice of extending emergency allowance to all employees receiving less than P1,000.00 per month as basic pay. 2) Holiday Pay OPI management will likewise continue to give holiday pay to monthly-salaried employees.

Please be informed too that we shall continue to extend the said benefits unless otherwise directed by other new requirements, rules, laws, decrees, etc. on the subject. Very truly yours, OCEANIC PHARMACAL, INC. R. A. ALCANTARA President-Treasurer

On October 25, 1976, the Company posted on its bulletin board the following memorandum: October 25, 1976 To From : : All Concern

Personnel Dept.

Ref. : Discontinuance of The Payment to Regular Employees of The Regular Holidays Pay For Regular Holidays. This has reference to the payment of the subject benefit forming part of the supplemental Collective Bargaining Agreement dated April 27, 1976. This commitment to pay said benefit is being discontinued on account to the proviso in the said memo of the General Manager dated April 27, 1976, taken in relation to Section 2, Rule IV, Book Ill of the Implementing Rules, Policy Instruction No. 9 and the decision of the Secretary of Labor in the Chartered Bank Case dated September 7. 1976. For your information and dissemination. The Union objected to the discontinuance of the holiday pay and when an amicable settlement could not be reached, the Union filed a complaint against the Company for unfair labor practice and violation of the CBA regarding holiday pay. In a decision dated March 24, 1977, Labor Arbiter Apolonio R. Reyes ordered the Company to resume payment of the holiday p . pay effective October 25, 1976. On appeal by the Company to the National Labor Relations Commission, the appeal was dismissed for lack of merit. Still not satisfied, the Company appealed to the Minister of Labor who, on April 16, 1979, rendered a decision with the following dispositive portion: "Wherefore, the Resolution appealed from is hereby set aside, and a new judgment entered dismissing this case for lack of merit." We required the respondents to comment on the petition, which they did. Private respondent, as expected, urges us to dismiss the petition. However, the Solicitor General recommends that the petition be given due course. We did so on November 12, 1979. Hence this decision. We have to reverse the decision of the Minister of Labor. The issue in this case is whether the Company may discontinue the holiday pay it had agreed to give pursuant to its letter dated April 27, 1976, by invoking the last paragraph thereof, namely: "Please be informed too that we shall continue to extend the said benefits unless otherwise directed by other new requirements, rules, laws, decrees, etc. on the subject." Stated in other words, is the discontinuance of the of the benefit justified by Section 2, Rule IV, Book III of the Rules and Regulation Implementing the Labor Code and Policy Instructions No. 9 of the Minister of Labor, as stated in the second paragraph of the Company's memorandum dated October 25, 1976? These issuances are respectively as follows: Section 2. Status of employees paid by the month. Employees who are uniformly paid by the month, irrespective of the number of working days therein, with a salary of not less than the statutory or established minimum wages shall be presumed to be paid for all days in the month whether worked or not. For this purpose, the monthly minimum wage shall not be less than the statutory minimum wage multiplied by 365 days divided by twelve. (Issued in February 16, 1976.) Policy Instructions No. 9 The rules implementing PD 850 have clarified the policy in the implementation of the ten (10) paid legal holidays. Before PD 850, the number of working days a year in a firm was considered important in determining entitlement to the benefit. Thus, where an employee was working for at least 313 days, he was considered definitely already paid. If he was working for less than 313, there was no certainty whether the ten (10) paid legal holidays were already paid to him or not. The ten (10) paid legal holidays law, to start with, is intended to benefit principally daily employees. ln the case of monthly, only those whose monthly salary did not yet include payment for the ten (10) paid legal holidays are entitled to the benefit. Under the rules implementing PD 850, this policy has been fully clarified to eliminate controversies on the entitlement of monthly paid employees. The new determining rule is this: If the monthly paid employee is receiving not less than P240, the maximum monthly minimum wage, and his monthly pay is uniform from January to December, he is presumed to be already paid the ten (10) paid legal holidays. However, if deductions are made from his monthly salary on account of holidays in months where they occur, then he is still entitled to the ten (10) paid legal holidays. These new interpretations must be uniformly and consistently upheld. This issuance shall take effect immediately. (Issued on February 23, 1916.) As stated by the Solicitor General, the questions above stated should be answered in the negative for the following reasons:

1. Section 2, Rule IV, Book Ill of the Rules and Regulations Implementing the Labor Code was promulgated on February 16, 1976. On the other hand, Policy Instructions No. 9 was issued on February 23, 1976. Since the said rules and policy instructions were already existing and effective prior to the execution of the Supplementary Agreement on April 27, 1976, it is clear that respondent company agreed to continue giving holiday pay to its monthly paid employees knowing fully well that said employees are not covered by the law requiring payment of holiday pay. When respondent company, therefore, interposed the condition that it "shall continue to extend the said benefits unless otherwise directed by other new requirements, rules, laws, decrees, etc. on the subject," it was referring to laws, decrees, rules, etc. other than the abovecited issuances. 2. Even granting arguendo that the said issuance were promulgated after the execution of the agreement, there is still no justification for withdrawal of holiday pay benefits by respondent. company, in view of Section 11, Rule IV, Book III of the Implementing Rules and Regulations, which explicitly provides: Sec. 11. Relation to agreements. Nothing in this Rule shall justify an employer in withdrawing or reducing any benefits, supplements or payments for unworked holidays as provided it) existing individual or collective agreement or employer practice or policy." In the case of States Marine Corporation v. Cebu Seaman's Association (G.R. No. L-12444, February 28, 1963; 7 SCRA 294), this Court, on the basis of a similar provision in the Minimum Wage Law (R.A. No. 602), ruled that nothing in the Act justified an employer in reducing the wage paid to any of his employees in excess of the minimum wage established under the Act or in reducing supplements furnished on the date of enactment. Evidently, there is no legal basis for the withdrawal of holiday benefits by the Company. Consequently, its violation of the Supplementary Agreement constitutes unfair labor practice. It shall be unfair labor practice for an employer to violate a collective bargaining agreement (Art. 248, Labor Code) WHEREFORE, the decision appealed from is hereby reversed and those of the Labor Arbiter and NLRC are reinstated. No costs. SO ORDERED. CITIBANK PHILS. EMPLOYEES UNION NATU, petitioner, vs. THE HONORABLE MINISTER OF LABOR and CITIBANK, N. A., respondents. G.R. No. L-50184 April 11, 1980 BARREDO, J.: Petition for certiorari praying that the order of the respondent Minister of Labor dated February 19, 1979 setting aside the resolution of National Labor Relations Commission of December 19, 1977, which in turn dismiss private respondent Citibank, N. A.'s appeal from the order dated December 13, 1976 of Executive Labor Arbiter Guillermo C. Medina denying said respondent's motion to quash the writ of execution issued against it in Case No. RB4-8-6332-75, entitled FNCB Employees Union Natu vs. First National City Bank, by virtue of the award made in said case by the mutually chosen lone voluntary Arbitrator Ruben F. Santos of December 19, 1975. The basic facts are stated in the order under review, which being quite brief may be quoted in full as basis for further discussion: Briefly, the undisputed facts are as follows: On 5 August 1975, petitioner filed the instant case for payment of regular holiday pay pursuant to Article 208 (a) of the Labor Code. Upon failure of concilation efforts to settle the case, the parties agreed to submit their dispute to voluntary arbitration. After hearing, the Voluntary Arbitrator rendered an Award, dated 15 December 1975, ordering respondent to pay the employees herein concerned, their holiday pay on the basis of his finding that the monthly salary of said employees does not include their pay for unworked holidays. The award was partially implemented by the respondent when it paid to the employees concerned their accrued holiday pay benefits covering the period November 1974 to December 1975. However, when the promulgation of the Integrated Implementing Rules of the Labor Code, pursuant to P. D. 850 on 16 February 1976 and the issuance by the Secretary of Labor on 23 April 1976 of Policy Instructions No. 9, the respondent stopped such payment. Hence, petitioner filed the subject motion for execution to enforce the award of the Voluntary Arbitrator. As mentioned above, the Executive Labor Arbiter, in his order dated 13 December 1976, ordered respondent to continue paying the unworked regular holidays to its monthly paid employees covered by the Award of the Voluntary Arbitrator, dated 15 December 1975. This was affirmed by the Commission and now before us on appeal. IN VIEW OF THE FOREGOING, let the Resolution of the Commission dated December 19, 1977 be, as it is hereby, set aside and a new judgment, granting the Motion To Quash Execution, and this case dismissed, for lack of merit. SO ORDERED. (Pp. 129-130, Record.) For the sake of further clarity, the following important details alleged in the petition and not denied by respondents may be added: IV. That in their letter of submission addressed to Atty. Ruben F. Santos, their common choice for voluntary arbitrator, the parties spelled out the terms of their arbitration agreement, as follows:

Pursuant to the pertinent provisions of the existing Collective Bargaining Agreement between the First National City Bank and the First National City Bank Employees Union and the provisions of Article 262 (subsequently re-numbered 263) of the Labor Code, as amended, the following question by the undersigned is submitted to you for resolution as voluntary arbitrator: Whether or not employees of the Bank are legally entitled to holiday pay provided under Article 208 (now 94) of the Labor Code, considering their contractual wage scale. It is understood that the arbitrator may adopt such procedure, and call such hearing, as he may consider to be convenient for the purpose of arriving at a just decision. The costs of arbitration shall be borne equally by the Bank and the Union. V. That the pertinent provisions of the parties' Collective Bargaining Agreement referred to in said submission relate to Step 4 of Article XVI of the Agreement, entitled 'Grievance', and reads as follows: Should the grievance remain unsettled within the period stated in Step 3, the matter shall be submitted to final and binding resolution by an arbitration Committee consisting of three (3) members, mutually designated by the BANK and the UNION and specifically named in Annex '2' whose tenure of office shall be co-extensive with the life of this contract unless earlier terminated by mutual agreement of the BANK and the UNION. (Emphasis supplied.) as well as to paragraph (d) thereof, which state that: The decision of the Arbitration Committee shall be in writing and shall be concurred in and signed by at least two (2) members of the Arbitration Committee. The decision of the Arbitration Committee sham be final and binding upon the BANK, the UNION, and the employee or employees concerned, and may be enforced in any court of competent jurisdiction. (Emphasis supplied.) VI That, on the other hand, the pertinent provisions of Article 262 (now 263) of the Labor Code referred to in the parties' submission are quoted as follows: ART. 263. Voluntary arbitration All disputes, grievances and matters referred to in the immediately preceding Article which are not settled through the grievance procedure provided in the collective agreement shall be referred to voluntary arbitration prescribed in said agreement. xxx Voluntary arbitration awards or decisions shall be final inappealable, and executory. However, voluntary arbitration awards or decisions on money claims involving an amount exceeding One Hundred Thousand Pesos (P100,000.00) or forty per cent (40%) of the paid-up capital of the respondent employer, whichever is lower, may be appealed to the Commission on grounds of abuse of discretion or gross incompetence. (Pp. 3-5, Record.) Thus, as stated in the order here at issue, the sole reason given by respondent Minister of Labor for in effect refusing further implementation of the Arbitrator's award was the subsequent promulgation by him of the Integrated Implementing Rules of the Labor Code, pursuant to P. D. 850 which pertinently provides that: Section 2. Status of employees paid by the month. Employees who are uniformly paid by the month, irrespective of the number of working days therein, with a salary of not less than the statutory or established minimum wage shall be presumed to be paid for all days in the month whether worked or not. (Section 2, Rule IV, Book Three of the Rules and Regulations Implementing the Labor Code. and the purported clarification thereof in Policy Instructions No. 9 of 23 February, 1976 (also his as follows: If the monthly-paid employee is receiving not less than P240, the maximum monthly minimum wage, and his monthly pay is uniform from January to December, he is presumed to be already paid the ten (10) paid legal holidays. (Emphasis supplied.) (Page 6, Record.) In other words and briefly, the position of respondent Minister is that assuming the final and executory character of the award in question, the same could still be modified or set aside, as contended by the Solicitor General in his comment dated August 6, 1979, in consequence or by reason of the supervening acts of respondent Minister, citing, in support of such contention, the cases of Ocampo vs. Sanchez, 97 Phil. 479 in which the Supreme Court ruled that "when after judgment has been rendered and the latter has become final facts and circumstances transpire which render its execution impossible or unjust, the interested party may ask to modify or later judgment to harmonize the same with justice and the facts (Molina vs. Dela Riva, 8 Phil. 569; Behn, Meyer & Co. vs. McMicking, 1 Phil. 279; Warner Barners & Co. vs. Jaucian, 13 Phil. 4; Espiritu vs. Cross-filed and Guash, 14 Phil. 588; Flor Unata vs. Lichauco and Salinas, 36 Phil. 809, emphasis supplied." (Pp. 134i35, Rec.) After mature deliberation, We have arrived at the conclusion that the respondent's position is not well taken. The situation before Us in the instant case has no parity with those obtaining in the instances where this Court sanctioned departure from the terms of a final and

executory judgment by reason of supervening events that would make literal execution in whole or in part of such judgment unjust and inequitable. It should be clear to anyone conversant with the elementary principles of collective bargaining and the constitutional injunction assuring the rights of workers thereto (Sec. a, Article II, Constitution of the Philippines) that the terms and conditions of a collective bargaining agreement constitute the sacred law between the parties as long as they do not contravene public order, interest or policy. We might say that the prohibition in the Constitution's Bill of Rights against the passage or promulgation of any law impairing the obligation of contracts applies with perhaps greater force to collective bargaining agreements, considering that these deal with the rights and interests of labor to which the charter explicitly affords protection. (Sec. 9, Article II.) The award of the arbitrator in this case is not to be equated with a judicial decision. In effect, when in relation to a controversy as to working conditions, which necessarily include the amount of wages, allowances, bonuses, overtime pay, holiday pay, etc., the parties submit their differences to arbitration, they do not seek any judicial pronouncement technically as such they are merely asking the arbitrator to fix for them what would be the fair and just condition or term regarding the matter in dispute that should govern further collective bargaining relations between them. Stated differently, the arbitrator's award when stipulated by the parties to be conclusive becomes part and parcel of the CBA. Viewed in this sense, which We are fully convinced is most consistent with the principles of collective bargaining, the subsequent or supervening facts referred to by the Solicitor General consisting of acts of none other than the respondent Minister may not be invoked to alter, modify, reform, much less abrogate, the new terms, so to speak, of the collective bargaining inserted by virtue of the award of the arbitrator. To do otherwise would violate the proscription of the Constitution against impairment of the obligation of contracts. Importantly, the argument that the implementation of the arbitrator's award would contravene public policy (referring to the Policy Instructions of the Minister of Labor) is unavailing, for the simple reason that for an employer to agree either spontaneously or through arbitration to pay to this workers higher compensation than that provided by law cannot obviously be against public policy but, on the contrary, is a magnificent contribution to the attainment of the social justice objectives envisioned in the Constitution. With the foregoing view We have taken of the legal situation under controversy, We find no need to dwell on any of the other issues discussed by the parties, whether factual or legal, regarding the manner of computing and determining whether or not a given monthly wage includes unworked holidays. We hold that regardless of any law anterior or posterior to the Arbitrator's award, the collective bargaining agreement in this case has been correspondingly amended in a manner that is unalterable, immovable and immutable like the rock of Gibraltar, during the lifetime of the said collective bargaining agreement. WHEREFORE, the order of the respondent Minister of Labor of February 19, 1979 is hereby set aside and the resolution of the National Labor Regulations Commission of December 19, 1977 is affirmed, with costs against the private respondent.

THE CHARTERED BANK EMPLOYEES ASSOCIATION, petitioner, vs. HON. BLAS F. OPLE, in his capacity as the Incumbent Secretary of Labor, and THE CHARTERED BANK, respondents. G.R. No. L-44717 August 28, 1985 GUTIERREZ, JR., J.: This is a petition for certiorari seeking to annul the decision of the respondent Secretary, now Minister of Labor which denied the petitioner's claim for holiday pay and its claim for premium and overtime pay differentials. The petitioner claims that the respondent Minister of Labor acted contrary to law and jurisprudence and with grave abuse of discretion in promulgating Sec. 2, Rule IV, Book III of the Integrated Rules and in issuing Policy Instruction No. 9, both referring to holidays with pay. On May 20, 1975, the Chartered Bank Employees Association, in representation of its monthly paid employees/members, instituted a complaint with the Regional Office No. IV, Department of Labor, now Ministry of Labor and Employment (MOLE) against private respondent Chartered Bank, for the payment of ten (10) unworked legal holidays, as well as for premium and overtime differentials for worked legal holidays from November 1, 1974. The memorandum for the respondents summarizes the admitted and/or undisputed facts as follows: l. The work force of respondent bank consists of 149 regular employees, all of whom are paid by the month; 2. Under their existing collective bargaining agreement, (Art. VII thereof) said monthly paid employees are paid for overtime work as follows: Section l. The basic work week for all employees excepting security guards who by virtue of the nature of their work are required to be at their posts for 365 days per year, shall be forty (40) hours based on five (5) eight (8) hours days, Monday to Friday. Section 2. Time and a quarter hourly rate shall be paid for authorized work performed in excess of eight (8) hours from Monday through Friday and for any hour of work performed on Saturdays subject to Section 5 hereof. Section 3. Time and a half hourly rate shall be paid for authorized work performed on Sundays, legal and special holidays. xxx xxx xxx xxx xxx xxx Section 5. The provisions of Section I above notwithstanding the BANK may revert to the six (6) days work week, to include Saturday for a four (4) hour day, in the event the Central Bank should require commercial banks to open for business on Saturday.

3. In computing overtime pay and premium pay for work done during regular holidays, the divisor used in arriving at the daily rate of pay is 251 days although formerly the divisor used was 303 days and this was when the respondent bank was still operating on a 6-day work week basis. However, for purposes of computing deductions corresponding to absences without pay the divisor used is 365 days. 4. All regular monthly paid employees of respondent bank are receiving salaries way beyond the statutory or minimum rates and are among the highest paid employees in the banking industry. 5. The salaries of respondent bank's monthly paid employees suffer no deduction for holidays occurring within the month.

On the bases of the foregoing facts, both the arbitrator and the National Labor Relations Commission (NLRC) ruled in favor of the petitioners ordering the respondent bank to pay its monthly paid employees, holiday pay for the ten (10) legal holidays effective November 1, 1974 and to pay premium or overtime pay differentials to all employees who rendered work during said legal holidays. On appeal, the Minister of Labor set aside the decision of the NLRC and dismissed the petitioner's claim for lack of merit basing its decision on Section 2, Rule IV, Book Ill of the Integrated Rules and Policy Instruction No. 9, which respectively provide: Sec. 2. Status of employees paid by the month. Employees who are uniformly paid by the month, irrespective of the number of working days therein, with a salary of not less than the statutory or established minimum wage shall be presumed to be paid for all days in the month whether worked or not. POLICY INSTRUCTION NO. 9 TO: All Regional Directors SUBJECT: PAID LEGAL HOLIDAYS The rules implementing PD 850 have clarified the policy in the implementation of the ten (10) paid legal holidays. Before PD 850, the number of working days a year in a firm was considered important in determining entitlement to the benefit. Thus, where an employee was working for at least 313 days, he was considered definitely already paid. If he was working for less than 313, there was no certainty whether the ten (10) paid legal holidays were already paid to him or not. The ten (10) paid legal holidays law, to start with, is intended to benefit principally daily employees. In the case of monthly, only those whose monthly salary did not yet include payment for the ten (10) paid legal holidays are entitled to the benefit. Under the rules implementing PD 850, this policy has been fully clarified to eliminate controversies on the entitlement of monthly paid employees. The new determining rule is this: 'If the monthly paid employee is receiving not less than P240, the maximum monthly minimum wage, and his monthly pay is uniform from January to December, he is presumed to be already paid the ten (10) paid legal holidays. However, if deductions are made from his monthly salary on account of holidays in months where they occur, then he is still entitled to the ten (10) paid legal holidays. These new interpretations must be uniformly and consistently upheld. This issuance shall take effect immediately. The issues are presented in the form of the following assignments of errors: First Error Whether or not the Secretary of Labor erred and acted contrary to law in promulgating Sec. 2, Rule IV, Book III of the Integrated Rules and Policy Instruction No. 9. Second Error Whether or not the respondent Secretary of Labor abused his discretion and acted contrary to law in applying Sec. 2, Rule IV of the Integrated Rules and Policy Instruction No. 9 abovestated to private respondent's monthly-paid employees. Third Error Whether or not the respondent Secretary of Labor, in not giving due credence to the respondent bank's practice of paying its employees base pay of 100% and premium pay of 50% for work done during legal holidays, acted contrary to law and abused his discretion in denying the claim of petitioners for unworked holidays and premium and overtime pay differentials for worked holidays. The petitioner contends that the respondent Minister of Labor gravely abused his discretion in promulgating Section 2, Rule IV, Book III of the Integrated Rules and Policy Instruction No. 9 as guidelines for the implementation of Articles 82 and 94 of the Labor Code and in applying said guidelines to this case. It maintains that while it is true that the respondent Minister has the authority in the performance of his duty to promulgate rules and regulations to implement, construe and clarify the Labor Code, such power is limited by provisions of the statute sought to be implemented, construed or clarified. According to the petitioner, the so-called "guidelines" promulgated by the respondent Minister totally contravened and violated the Code by excluding the employees/members of the petitioner from the benefits of the holiday pay, when the Code itself did not provide for their expanding the Code's clear and concise conclusion and notwithstanding the Code's clear and concise phraseology defining those employees who are covered and those who are excluded from the benefits of holiday pay.

On the other hand, the private respondent contends that the questioned guidelines did not deprive the petitioner's members of the benefits of holiday pay but merely classified those monthly paid employees whose monthly salary already includes holiday pay and those whose do not, and that the guidelines did not deprive the employees of holiday pay. It states that the question to be clarified is whether or not the monthly salaries of the petitioner's members already includes holiday pay. Thus, the guidelines were promulgated to avoid confusion or misconstruction in the application of Articles 82 and 94 of the Labor Code but not to violate them. Respondent explains that the rationale behind the promulgation of the questioned guidelines is to benefit the daily paid workers who, unlike monthly-paid employees, suffer deductions in their salaries for not working on holidays. Hence, the Holiday Pay Law was enacted precisely to countervail the disparity between daily paid workers and monthly-paid employees. The decision in Insular Bank of Asia and America Employees' Union (IBAAEU) v. Inciong (132 SCRA 663) resolved a similar issue. Significantly, the petitioner in that case was also a union of bank employees. We ruled that Section 2, Rule IV, Book III of the Integrated Rules and Policy Instruction No. 9, are contrary to the provisions of the Labor Code and, therefore, invalid This Court stated: It is elementary in 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. In the case at bar, the provisions of the Labor Code on the entitlement to the benefits of holiday pay are clear and explicit it provides for both the coverage of and exclusion from the benefit. In Policy Instruction No. 9, the then Secretary of Labor went as far as to categorically state that the benefit is principally intended for daily paid employees, when the law clearly states that every worker shall be paid their regular holiday pay. This is flagrant violation of the mandatory directive of Article 4 of the Labor Code, which states that 'All doubts in the implementation and interpretation of the provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of labor.' Moreover, it shall always be presumed that the legislature intended to enact a valid and permanent statute which would have the most beneficial effect that its language permits (Orlosky v. Hasken, 155 A. 112) Obviously, the Secretary (Minister) of Labor had exceeded his statutory authority granted by Article 5 of the Labor Code authorizing him to promulgate the necessary implementing rules and regulations. We further ruled: While it is true that the contemporaneous construction placed upon a statute by executive officers whose duty is to enforce it should be given great weight by the courts, still if such construction is so erroneous, as in the instant case, the same must be declared as null and void. It is the role of the Judiciary to refine and, when necessary correct constitutional (and/or statutory) interpretation, in the context of the interactions of the three branches of the government, almost always in situations where some agency of the State has engaged in action that stems ultimately from some legitimate area of governmental power (The Supreme Court in Modern Role, C.B. Swisher 1958, p. 36). xxx xxx xxx

In view of the foregoing, Section 2, Rule IV, Book III of the Rules to implement the Labor Code and Policy Instruction No. 9 issued by the then Secretary of Labor must be declared null and void. Accordinglyl public respondent Deputy Minister of Labor Amado G. Inciong had no basis at all to deny the members of petitioner union their regular holiday pay as directed by the Labor Code. Since the private respondent premises its action on the invalidated rule and policy instruction, it is clear that the employees belonging to the petitioner association are entitled to the payment of ten (10) legal holidays under Articles 82 and 94 of the Labor Code, aside from their monthly salary. They are not among those excluded by law from the benefits of such holiday pay. Presidential Decree No. 850 states who are excluded from the holiday provisions of that law. It states: ART. 82. Coverage. The provision of this Title shall apply to employees in all establishments and undertakings, whether for profit or not, but not to government employees, managerial employees, field personnel members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations. (Emphasis supplied). The questioned Section 2, Rule IV, Book III of the Integrated Rules and the Secretary's Policy Instruction No. 9 add another excluded group, namely, "employees who are uniformly paid by the month." While the additional exclusion is only in the form of a presumption that all monthly paid employees have already been paid holiday pay, it constitutes a taking away or a deprivation which must be in the law if it is to be valid. An administrative interpretation which diminishes the benefits of labor more than what the statute delimits or withholds is obviously ultra vires. 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. The situation is muddled somewhat by the fact that, in computing the employees' absences from work, the respondent bank uses 365 as divisor. Any slight doubts, however, must be resolved in favor of the workers. This is in keeping with the constitutional mandate of

promoting social justice and affording protection to labor (Sections 6 and 9, Article II, Constitution). The Labor Code, as amended, itself provides: ART. 4. Construction in favor of labor. All doubts in the implementation and interpretation of the provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of labor. Any remaining doubts which may arise from the conflicting or different divisors used in the computation of overtime pay and employees' absences are resolved by the manner in which work actually rendered on holidays is paid. Thus, whenever monthly paid employees work on a holiday, they are given an additional 100% base pay on top of a premium pay of 50%. If the employees' monthly pay already includes their salaries for holidays, they should be paid only premium pay but not both base pay and premium pay. The contention of the respondent that 100% base pay and 50% premium pay for work actually rendered on holidays is given in addition to monthly salaries only because the collective bargaining agreement so provides is itself an argument in favor of the petitioner stand. It shows that the Collective Bargaining Agreement already contemplated a divisor of 251 days for holiday pay computations before the questioned presumption in the Integrated Rules and the Policy Instruction was formulated. There is furthermore a similarity between overtime pay, which is computed on the basis of 251 working days a year, and holiday pay, which should be similarly treated notwithstanding the public respondents' issuances. In both cases overtime work and holiday work- the employee works when he is supposed to be resting. In the absence of an express provision of the CBA or the law to the contrary, the computation should be similarly handled. We are not unmindful of the fact that the respondent's employees are among the highest paid in the industry. It is not the intent of this Court to impose any undue burdens on an employer which is already doing its best for its personnel. we have to resolve the labor dispute in the light of the parties' own collective bargaining agreement and the benefits given by law to all workers. When the law provides benefits for "employees in all establishments and undertakings, whether for profit or not" and lists specifically the employees not entitled to those benefits, the administrative agency implementing that law cannot exclude certain employees from its coverage simply because they are paid by the month or because they are already highly paid. The remedy lies in a clear redrafting of the collective bargaining agreement with a statement that monthly pay already includes holiday pay or an amendment of the law to that effect but not an administrative rule or a policy instruction. WHEREFORE, the September 7, 1976 order of the public respondent is hereby REVERSED and SET ASIDE. The March 24, 1976 decision of the National Labor Relations Commission which affirmed the October 30, 1975 resolution of the Labor Arbiter but deleted interest payments is REINSTATED. SO ORDERED. FAR EAST AGRICULTURAL SUPPLY, INC. and/or ALEXANDER UY, Petitioners, vs. JIMMY LEBATIQUE and THE HONORABLE COURT OF APPEALS, Respondents. G.R. No. 162813 February 12, 2007 DECISION QUISUMBING, J.: Before us is a petition for review on certiorari assailing the Decision1 dated September 30, 2003 of the Court of Appeals in CA-G.R. SP No. 76196 and its Resolution2 dated March 15, 2004 denying the motion for reconsideration. The appellate court had reversed the Decision3 dated October 15, 2002 of the National Labor Relations Commission (NLRC) setting aside the Decision4 dated June 27, 2001 of the Labor Arbiter. Petitioner Far East Agricultural Supply, Inc. (Far East) hired on March 4, 1996 private respondent Jimmy Lebatique as truck driver with a daily wage of P223.50. He delivered animal feeds to the companys clients. On January 24, 2000, Lebatique complained of nonpayment of overtime work particularly on January 22, 2000, when he was required to make a second delivery in Novaliches, Quezon City. That same day, Manuel Uy, brother of Far Easts General Manager and petiti oner Alexander Uy, suspended Lebatique apparently for illegal use of company vehicle. Even so, Lebatique reported for work the next day but he was prohibited from entering the company premises. On January 26, 2000, Lebatique sought the assistance of the Department of Labor and Employment (DOLE) Public Assistance and Complaints Unit concerning the nonpayment of his overtime pay. According to Lebatique, two days later, he received a telegram from petitioners requiring him to report for work. When he did the next day, January 29, 2000, Alexander asked him why he was claiming overtime pay. Lebatique explained that he had never been paid for overtime work since he started working for the company. He also told Alexander that Manuel had fired him. After talking to Manuel, Alexander terminated Lebatique and told him to look for another job. On March 20, 2000, Lebatique filed a complaint for illegal dismissal and nonpayment of overtime pay. The Labor Arbiter found that Lebatique was illegally dismissed, and ordered his reinstatement and the payment of his full back wages, 13th month pay, service incentive leave pay, and overtime pay. The dispositive portion of the decision is quoted herein in full, as follows: WHEREFORE, we find the termination of complainant illegal. He should thus be ordered reinstated with full backwages. He is likewise ordered paid his 13th month pay, service incentive leave pay and overtime pay as computed by the Computation and Examination Unit as follows:

a) Backwages: 01/25/00 - 10/31/00 = 9.23 mos. P 223.50 x 26 x 9.23 = P 53,635.53 11/01/00 06/26/01 = 7.86 mos. P 250.00 x 26 x 7.86 = 51,090.00 P 104,725.53 13th Month Pay: 1/12 of P 104,725.53 = 8,727.13 Service Incentive Leave Pay 01/25/00 10/31/00 = 9.23 mos. P 223.50 x 5/12 x 9.23 = P 859.54 11/01/00 06/26/01 = 7.86 mos. P 250.00 x 5/12 x 7.86 = [818.75] 1,678.29 115,130.95 b) Overtime Pay: (3 hours/day) 03/20/97 4/30/97 = 1.36 mos. P 180/8 x 1.25 x 3 x 26 x 1.36 = P 2,983.50 05/01/97 02/05/98 = 9.16 mos. P 185/8 x 1.25 x 3 x 26 x 9.16 = 20,652.94 02/06/98 10/30/99 = 20.83 mos. P 198/8 x 1.25 x 3 x 26 x [20.83] = 50,265.39 10/31/99 01/24/00 = 2.80 mos. P 223.50/8 x 1.25 x 3 x 26 x 2.80 = 7,626.94 81,528.77 TOTAL AWARD P 196,659.72 SO ORDERED. On appeal, the NLRC reversed the Labor Arbiter and dismissed the complaint for lack of merit. The NLRC held that there was no dismissal to speak of since Lebatique was merely suspended. Further, it found that Lebatique was a field personnel, hence, not entitled to overtime pay and service incentive leave pay. Lebatique sought reconsideration but was denied. Aggrieved, Lebatique filed a petition for certiorari with the Court of Appeals. The Court of Appeals, in reversing the NLRC decision, reasoned that Lebatique was suspended on January 24, 2000 but was illegally dismissed on January 29, 2000 when Alexander told him to look for another job. It also found that Lebatique was not a field personnel and therefore entitled to payment of overtime pay, service incentive leave pay, and 13th month pay. It reinstated the decision of the Labor Arbiter as follows: WHEREFORE, premises considered, the decision of the NLRC dated 27 December 2002 is hereby REVERSED and the Labor Arbiters de cision dated 27 June 2001 REINSTATED. SO ORDERED. Petitioners moved for reconsideration but it was denied. Hence, the instant petition wherein petitioners assign the following errors: THE COURT OF APPEALS ERRED IN REVERSING THE DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION DATED 15 OCTOBER 2002 AND IN RULING THAT THE PRIVATE RESPONDENT WAS ILLEGALLY DISMISSED. THE COURT OF APPEALS ERRED IN REVERSING THE DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION DATED 15 OCTOBER 2002 AND IN RULING THAT PRIVATE RESPONDENT IS NOT A FIELD PERSONNEL AND THER[E]FORE ENTITLED TO OVERTIME PAY AND SERVICE INCENTIVE LEAVE PAY. THE COURT OF APPEALS ERRED IN NOT DISMISSING THE PETITION FOR CERTIORARI FOR FAILURE OF PRIVATE RESPONDENT TO ATTACH CERTIFIED TRUE COPIES OF THE QUESTIONED DECISION AND RESOLUTION OF THE PUBLIC RESPONDENT.7 Simply stated, the principal issues in this case are: (1) whether Lebatique was illegally dismissed; and (2) whether Lebatique was a field personnel, not entitled to overtime pay. Petitioners contend that, (1) Lebatique was not dismissed from service but merely suspended for a day due to violation of company rules; (2) Lebatique was not barred from entering the company premises since he never reported back to work; and (3) Lebatique is estopped from claiming that he was illegally dismissed since his complaint before the DOLE was only on the nonpayment of his overtime pay. Also, petitioners maintain that Lebatique, as a driver, is not entitled to overtime pay since he is a field personnel whose time outside the company premises cannot be determined with reasonable certainty. According to petitioners, the drivers do not observe regular working hours unlike the other office employees. The drivers may report early in the morning to make their deliveries or in the afternoon, depending on the production of animal feeds and the traffic conditions. Petitioners also aver that Lebatique worked for less than eight hours a day.

Lebatique for his part insists that he was illegally dismissed and was not merely suspended. He argues that he neither refused to work nor abandoned his job. He further contends that abandonment of work is inconsistent with the filing of a complaint for illegal dismissal. He also claims that he is not a field personnel, thus, he is entitled to overtime pay and service incentive leave pay. After consideration of the submission of the parties, we find that the petition lacks merit. We are in agreement with the decision of the Court of Appeals sustaining that of the Labor Arbiter. It is well settled that in cases of illegal dismissal, the burden is on the employer to prove that the termination was for a valid cause.9 In this case, petitioners failed to discharge such burden. Petitioners aver that Lebatique was merely suspended for one day but he abandoned his work thereafter. To constitute abandonment as a just cause for dismissal, there must be: (a) absence without justifiable reason; and (b) a clear intention, as manifested by some overt act, to sever the employer-employee relationship.10 The records show that petitioners failed to prove that Lebatique abandoned his job. Nor was there a showing of a clear intention on the part of Lebatique to sever the employer-employee relationship. When Lebatique was verbally told by Alexander Uy, the companys General Manager, to look for another job, Lebatique was in effect dismissed. Even assuming earlier he was merely suspended for illegal use of company vehicle, the records do not show that he was afforded the opportunity to explain his side. It is clear also from the sequence of the events leading to Lebatiques dismissal that it was Lebatiques complaint for nonpayment of his overtime pay that provoked the management to dismiss him, on the erroneous premise that a truck driver is a field personnel not entitled to overtime pay. An employee who takes steps to protest his layoff cannot by any stretch of imagination be said to have abandoned his work and the filing of the complaint is proof enough of his desire to return to work, thus negating any suggestion of abandonment.11 A contrary notion would not only be illogical but also absurd. It is immaterial that Lebatique had filed a complaint for nonpayment of overtime pay the day he was suspended by managements unilateral act. What matters is that he filed the complaint for illegal dismissal on March 20, 2000, after he was told not to report for work, and his filing was well within the prescriptive period allowed under the law. On the second issue, Article 82 of the Labor Code is decisive on the question of who are referred to by the term "field personnel." It provides, as follows: ART. 82. Coverage. - The provisions of this title [Working Conditions and Rest Periods] shall apply to employees in all establishments and undertakings whether for profit or not, but not to government employees, managerial employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations. xxxx "Field personnel" shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. In Auto Bus Transport Systems, Inc. v. Bautista, this Court emphasized that the definition of a "field personnel" is not merely concerned with the location where the employee regularly performs his duties but also with the fact that the employees perfo rmance is unsupervised by the employer. We held that field personnel are those who regularly perform their duties away from the principal place of business of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. Thus, in order to determine whether an employee is a field employee, it is also necessary to ascertain if actual hours of work in the field can be determined with reasonable certainty by the employer. In so doing, an inquiry must be made as to whet her or not the employees time and performance are constantly supervised by the employer. As correctly found by the Court of Appeals, Lebatique is not a field personnel as defined above for the following reasons: (1) company drivers, including Lebatique, are directed to deliver the goods at a specified time and place; (2) they are not given the discretion to solicit, select and contact prospective clients; and (3) Far East issued a directive that company drivers should stay at the clients premises during truck-ban hours which is from 5:00 to 9:00 a.m. and 5:00 to 9:00 p.m.14 Even petitioners admit that the drivers can report early in the morning, to make their deliveries, or in the afternoon, depending on the production of animal feeds. Drivers, like Lebatique, are under the control and supervision of management officers. Lebatique, therefore, is a regular employee whose tasks are usually necessary and desirable to the usual trade and business of the company. Thus, he is entitled to the benefits accorded to regular employees of Far East, including overtime pay and service incentive leave pay. Note that all money claims arising from an employer-employee relationship shall be filed within three years from the time the cause of action accrued; otherwise, they shall be forever barred. Further, if it is established that the benefits being claimed have been withheld from the employee for a period longer than three years, the amount pertaining to the period beyond the three-year prescriptive period is therefore barred by prescription. The amount that can only be demanded by the aggrieved employee shall be limited to the amount of the benefits withheld within three years before the filing of the complaint. Lebatique timely filed his claim for service incentive leave pay, considering that in this situation, the prescriptive period commences at the time he was terminated.18 On the other hand, his claim regarding nonpayment of overtime pay since he was hired in March 1996 is a different matter. In the case of overtime pay, he can only demand for the overtime pay withheld for the period within three years preceding the filing of the complaint on March 20, 2000. However, we find insufficient the selected time records presented by petitioners

to compute properly his overtime pay. The Labor Arbiter should have required petitioners to present the daily time records, payroll, or other documents in managements control to determine the correct overtime pay due Lebatique. WHEREFORE, the petition is DENIED for lack of merit. The Decision dated September 30, 2003 of the Court of Appeals in CA-G.R. SP No. 76196 and its Resolution dated March 15, 2004 are AFFIRMED with MODIFICATION to the effect that the case is hereby REMANDED to the Labor Arbiter for further proceedings to determine the exact amount of overtime pay and other monetary benefits due Jimmy Lebatique which herein petitioners should pay without further delay. Costs against petitioners. SO ORDERED.

JOSE RIZAL COLLEGE, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION AND NATIONAL ALLIANCE OF TEACHERS/OFFICE WORKERS, respondents. G.R. No. L-65482 December 1, 1987 PARAS, J.: This is a petition for certiorari with prayer for the issuance of a writ of preliminary injunction, seeking the annulment of the decision of the National Labor Relations Commission * in NLRC Case No. RB-IV 23037-78 (Case No. R4-1-1081-71) entitled "National Alliance of Teachers and Office Workers and Juan E. Estacio, Jaime Medina, et al. vs. Jose Rizal College" modifying the decision of the Labor Arbiter as follows: WHEREFORE, in view of the foregoing considerations, the decision appealed from is MODIFIED, in the sense that teaching personnel paid by the hour are hereby declared to be entitled to holiday pay. SO ORDERED. The factual background of this case which is undisputed is as follows: Petitioner is a non-stock, non-profit educational institution duly organized and existing under the laws of the Philippines. It has three groups of employees categorized as follows: (a) personnel on monthly basis, who receive their monthly salary uniformly throughout the year, irrespective of the actual number of working days in a month without deduction for holidays; (b) personnel on daily basis who are paid on actual days worked and they receive unworked holiday pay and (c) collegiate faculty who are paid on the basis of student contract hour. Before the start of the semester they sign contracts with the college undertaking to meet their classes as per schedule. Unable to receive their corresponding holiday pay, as claimed, from 1975 to 1977, private respondent National Alliance of Teachers and Office Workers (NATOW) in behalf of the faculty and personnel of Jose Rizal College filed with the Ministry of Labor a complaint against the college for said alleged non-payment of holiday pay, docketed as Case No. R04-10-81-72. Due to the failure of the parties to settle their differences on conciliation, the case was certified for compulsory arbitration where it was docketed as RB-IV-23037-78 (Rollo, pp. 155-156). After the parties had submitted their respective position papers, the Labor Arbiter ** rendered a decision on February 5, 1979, the dispositive portion of which reads: WHEREFORE, judgment is hereby rendered as follows: 1. The faculty and personnel of the respondent Jose Rizal College who are paid their salary by the month uniformly in a school year, irrespective of the number of working days in a month, without deduction for holidays, are presumed to be already paid the 10 paid legal holidays and are no longer entitled to separate payment for the said regular holidays; 2. The personnel of the respondent Jose Rizal College who are paid their wages daily are entitled to be paid the 10 unworked regular holidays according to the pertinent provisions of the Rules and Regulations Implementing the Labor Code; 3. Collegiate faculty of the respondent Jose Rizal College who by contract are paid compensation per student contract hour are not entitled to unworked regular holiday pay considering that these regular holidays have been excluded in the programming of the student contact hours. (Rollo. pp. 26-27) On appeal, respondent National Labor Relations Commission in a decision promulgated on June 2, 1982, modified the decision appealed from, in the sense that teaching personnel paid by the hour are declared to be entitled to holiday pay (Rollo. p. 33). Hence, this petition. The sole issue in this case is whether or not the school faculty who according to their contracts are paid per lecture hour are entitled to unworked holiday pay. Labor Arbiter Julio Andres, Jr. found that faculty and personnel employed by petitioner who are paid their salaries monthly, are uniformly paid throughout the school year regardless of working days, hence their holiday pay are included therein while the daily paid employees are renumerated for work performed during holidays per affidavit of petitioner's treasurer (Rollo, pp. 72-73).

There appears to be no problem therefore as to the first two classes or categories of petitioner's workers. The problem, however, lies with its faculty members, who are paid on an hourly basis, for while the Labor Arbiter sustains the view that said instructors and professors are not entitled to holiday pay, his decision was modified by the National Labor Relations Commission holding the contrary. Otherwise stated, on appeal the NLRC ruled that teaching personnel paid by the hour are declared to be entitled to holiday pay. Petitioner maintains the position among others, that it is not covered by Book V of the Labor Code on Labor Relations considering that it is a non- profit institution and that its hourly paid faculty members are paid on a "contract" basis because they are required to hold classes for a particular number of hours. In the programming of these student contract hours, legal holidays are excluded and labelled in the schedule as "no class day. " On the other hand, if a regular week day is declared a holiday, the school calendar is extended to compensate for that day. Thus petitioner argues that the advent of any of the legal holidays within the semester will not affect the faculty's salary because this day is not included in their schedule while the calendar is extended to compensate for special holidays. Thus the programmed number of lecture hours is not diminished (Rollo, pp. 157- 158). The Solicitor General on the other hand, argues that under Article 94 of the Labor Code (P.D. No. 442 as amended), holiday pay applies to all employees except those in retail and service establishments. To deprive therefore employees paid at an hourly rate of unworked holiday pay is contrary to the policy considerations underlying such presidential enactment, and its precursor, the Blue Sunday Law (Republic Act No. 946) apart from the constitutional mandate to grant greater rights to labor (Constitution, Article II, Section 9). (Reno, pp. 76-77). In addition, respondent National Labor Relations Commission in its decision promulgated on June 2, 1982, ruled that the purpose of a holiday pay is obvious; that is 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. It is no excuse therefore that the school calendar is extended whenever holidays occur, because such happens only in cases of special holidays (Rollo, p. 32). Subject holiday pay is provided for in the Labor Code (Presidential Decree No. 442, as amended), which reads: Art. 94. Right to holiday pay (a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less than ten (10) workers; (b) 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; ... " and in the Implementing Rules and Regulations, Rule IV, Book III, which reads: SEC. 8. Holiday pay of certain employees. (a) Private school teachers, including faculty members of colleges and universities, may not be paid for the regular holidays during semestral vacations. They shall, however, be paid for the regular holidays during Christmas vacations. ... Under the foregoing provisions, apparently, the petitioner, although a non-profit institution is under obligation to give pay even on unworked regular holidays to hourly paid faculty members subject to the terms and conditions provided for therein. We believe that the aforementioned implementing rule is not justified by the provisions of the law which after all is silent with respect to faculty members paid by the hour who because of their teaching contracts are obliged to work and consent to be paid only for work actually done (except when an emergency or a fortuitous event or a national need calls for the declaration of special holidays). Regular holidays specified as such by law are known to both school and faculty members as no class days;" certainly the latter do not expect payment for said unworked days, and this was clearly in their minds when they entered into the teaching contracts. On the other hand, both the law and the Implementing Rules governing holiday pay are silent as to payment on Special Public Holidays. It is readily apparent that the declared purpose of the holiday pay which is the prevention of diminution of the monthly income of the employees on account of work interruptions is defeated when a regular class day is cancelled on account of a special public holiday and class hours are held on another working day to make up for time lost in the school calendar. Otherwise stated, the faculty member, although forced to take a rest, does not earn what he should earn on that day. Be it noted that when a special public holiday is declared, the faculty member paid by the hour is deprived of expected income, and it does not matter that the school calendar is extended in view of the days or hours lost, for their income that could be earned from other sources is lost during the extended days. Similarly, when classes are called off or shortened on account of typhoons, floods, rallies, and the like, these faculty members must likewise be paid, whether or not extensions are ordered. Petitioner alleges that it was deprived of due process as it was not notified of the appeal made to the NLRC against the decision of the labor arbiter. The Court has already set forth what is now known as the "cardinal primary" requirements of due process in administrative proceedings, to wit: "(1) the right to a hearing which includes the right to present one's case and submit evidence in support thereof; (2) the tribunal must consider the evidence presented; (3) the decision must have something to support itself; (4) the evidence must be substantial, and substantial evidence means such evidence as a reasonable mind might accept as adequate to support a conclusion; (5) the decision must be based on the evidence presented at the hearing, or at least contained in the record and disclosed to the parties affected; (6) the tribunal

or body of any of its judges must act on its or his own independent consideration of the law and facts of the controversy, and not simply accept the views of a subordinate; (7) the board or body should in all controversial questions, render its decisions in such manner that the parties to the proceeding can know the various issues involved, and the reason for the decision rendered. " (Doruelo vs. Commission on Elections, 133 SCRA 382 [1984]). The records show petitioner JRC was amply heard and represented in the instant proceedings. It submitted its position paper before the Labor Arbiter and the NLRC and even filed a motion for reconsideration of the decision of the latter, as well as an "Urgent Motion for Hearing En Banc" (Rollo, p. 175). Thus, petitioner's claim of lack of due process is unfounded. PREMISES CONSIDERED, the decision of respondent National Labor Relations Commission is hereby set aside, and a new one is hereby RENDERED: (a) exempting petitioner from paying hourly paid faculty members their pay for regular holidays, whether the same be during the regular semesters of the school year or during semestral, Christmas, or Holy Week vacations; (b) but ordering petitioner to pay said faculty members their regular hourly rate on days declared as special holidays or for some reason classes are called off or shortened for the hours they are supposed to have taught, whether extensions of class days be ordered or not; in case of extensions said faculty members shall likewise be paid their hourly rates should they teach during said extensions. SO ORDERED.

WELLINGTON INVESTMENT AND MANUFACTURING CORPORATION, petitioner, vs. CRESENCIANO B. TRAJANO, Under-Secretary of Labor and Employment, ELMER ABADILLA, and 34 others, respondents. G.R. No. 114698 July 3, 1995 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." 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." 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." 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. 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. 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." Again, Wellington moved for reconsideration, and again was rebuffed. 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. Every worker should, according to the Labor Code, "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). 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." This ingenuous theory was adopted and further explained by respondent Labor Undersecretary, to whom the matter was appealed, as follows: . . . 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 . . . 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.

ESTEBAN CUAJAO, plaintiff-appellant, vs. CHUA LO TAN, ET AL., defendants, CHUA LO TAN, defendant-appellant. G.R. No. L-16298 September 29, 1962 CONCEPCION, J.: In his complaint, filed on November 29, 1956, plaintiff Esteban Cuajao seeks to recover from defendants Chua Lo Tan and Chua Luan & Co., Inc., the aggregate sum of P2,015.80 allegedly representing hospitalization expenses in the sum of P435.80 and vacation leave pay, as former driver of said defendants, in the sum of P1,580.00, with interest thereon, aside from attorney's fees and costs. Defendants filed separate answer admitting some allegations of the complaint, denying other allegations thereof and setting up several affirmative defenses, as counterclaim for damages. Subsequently, the complaint was, on motion of defendant Chua Luan & Co., Inc., dismissed as regards this defendant. In due course, the Court of First Instance of Manila later rendered a decision rejecting plaintiff's claim for vacation leave and sentencing defendant Chua Lo Tan to pay to plaintiff the sum of P435.80 as hospitalization expenses, with interest thereon, from the filing of said complaint until fully paid, as well as the costs. Both parties have appealed from this decision: plaintiff, insofar as his claim for vacation leave was concerned; and Chua Lo Tan, as regards the hospitalization expenses. The main facts are not disputed. As the family driver of Chua Lo Tan, plaintiff earned P5.00 a day from August 1, 1951 to November 4, 1956. Plaintiff was hospitalized for nineteen (19) days in 1951, thirteen (13) days in 1952, and three (3) days in 1953, and spent altogether P435.80 for hospitalization and medicine. During the period of his employment, he did not enjoy any vacation leave, which at the rate of four (4) days a month, as provided in Article 1695 of the Civil Code of the Philippines, would have aggregated, if accumulated, to 316 days vacation leave, worth, at the rate of P5.00 a day, P1,580.00. This notwithstanding, the lower court held that plaintiff is not entitled to recover the latter amount, upon ground of waiver of his right thereto, in view of his failure to demand payment of said vacation leave, as right thereto accrued. Plaintiff maintains that there has been no such waiver on his part, he having testified that seasonable demands had been made by him upon Chua Lo Tan. The lower court, however, gave credence to the testimony of the latter to the contrary and, we believe, correctly, plaintiff having remained in the service of Chua Lo Tan for about six (6) years, despite the fact that Chua Lo Tan had allegedly not heeded such demands. Moreover, we cannot review the findings of fact of said court on this point, plaintiff having stated in the notice therein filed by him that he appealed directly to the Supreme Court, to raise the questions of law specified in his notice of appeal.1awphl.nt Plaintiff insists that his right to vacation leave cannot be waived, but this Court has already held otherwise Sun Ripe Coconut Products, Inc. vs. National Labor Union, L-7964 (51 Off. Gaz., 5133-5137), in which we declared: The purpose of vacation leave is to afford to a laborer chance to get a much-needed rest to replenish his worn out energies and acquire a new vitality to enable him to efficient perform his duties, and not merely to give him additional salary or bounty. This privilege must be demanded in its opportunity time and if he allows the years to go by in silence, he was it. It becomes a mere concession or act of grace of the employer. (See also, Philippine Air Lines, Inc. vs. Balanguit, et al., 53 Off. Gaz., 8549; Tanguilig, et al., vs. Theo H. Davis and Co., L-9144, May 30, 1959.) Upon the other hand, the award for hospitalization expenses is based upon Article 1689 of the Civil Code of the Philippines which, Chua Lo Tan maintains, does not justify said award. Said article reads: Household service shall always be reasonably compensated. Any stipulation that household service is without compensation shall be void. Such compensation shall be in addition to the house helper's lodging, food, and medical attendance. The issue is whether the phrase "medical attendance" as used in this provision, includes "expenses of capitalization". The question is one of first impression in this jurisdiction, although the Court of Appeals has decided it in the negative in Zamora vs. Sy, 52 Off. Gaz., 1513. Neither does it appear to be settled either in the American or in the British jurisprudence. In fact, it would seem that the right to "medical attendance" exclusive of hospitalization is purely statutory in character. What is more, even where specifically conferred at by statute, said right to medical attendance is deemed subject to the "rule of necessity" (People vs. Pierson, 103, 16 N.Y. 921, 68 N.E. 243), in the sense that said right is dependent upon the need for said medical attendance. Hence, the question whether "expenses of hospitalization" are included in "medical attendance", should not, and cannot, be decided in abstract. The determination of the issue must depend upon the circumstances surrounding each case.

In the one at bar, plaintiff has done no more than testify about the fact of his hospitalization and the illness for which he had been treated - namely, hemorrhoid aside - from identifying and presenting the bills allegedly paid by him therefor. There is absolutely no evidence expert or otherwise regarding the necessity of his confinement in a hospital. He did not even try to prove that Chua Lo Tan had been advised of his (plaintiff's) illness or of his hospitalization, either prior or subsequently thereto. Needless to say it is only fair that, except in cases of extreme urgency, the party who may have to defray the cost of medical attendance and/or hospitalization, be given a say which Chua Lo Tan has not had - in the choice of the physician who will treat the patient and/or the hospital in which he will be confined. In these circumstances, we find that even if the expenses of hospitalization could, in proper cases, be deemed to be within the purview of "medical attendance", on which we do not express an opinion the lower court on erred in sentencing Chua Lo Tan to pay said expenses of hospitalization. WHEREFORE, the award for said expenses is set aside and, with this modification, the decision appealed from is hereby affirmed in all other respect, without costs. It is so ordered. LABOR CONGRESS OF THE PHILIPPINES (LCP) for and in behalf of its members, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, EMPIRE FOOD PRODUCTS, its Proprietor/President & Manager, MR. GONZALO KEHYENG and MRS. EVELYN KEHYENG, respondents. G. R. No. 123938. May 21, 1998 DAVIDE, JR., J.: In this special civil action for certiorari under Rule 65, petitioners seek to reverse the 29 March 1995 resolution[1] of the National Labor Relations Commission (NLRC) in NLRC RAB III Case No. 01-1964-91 which affirmed the Decision[2] of Labor Arbiter Ariel C. Santos dismissing their complaint for utter lack of merit. The antecedents of this case as summarized by the Office of the Solicitor General in its Manifestation and Motion in Lieu of Comment,[3] are as follows: The 99 persons named as petitioners in this proceeding were rank-and-file employees of respondent Empire Food Products, which hired them on various dates (Paragraph 1, Annex A of Petition, Annex B; Page 2, Annex F of Petition). Petitioners filed against private respondents a complaint for payment of money claim[s] and for violation of labor standard[s] laws (NLRC Case No. RAB-111-10-1817-90). They also filed a petition for direct certification of petitioner Labor Congress of the Philippines as their bargaining representative (Case No. R0300-9010-RU-005). On October 23, 1990, petitioners represented by LCP President Benigno B. Navarro, Sr. and private respondents Gonzalo Kehyeng and Evelyn Kehyeng in behalf of Empire Food Products, Inc. entered into a Memorandum of Agreement which provided, among others, the following: 1. That in connection with the pending Petition for Direct Certification filed by the Labor Congress with the DOLE, Management of the Empire Food Products has no objection [to] the direct certification of the LCP Labor Congress and is now recognizing the Labor Congress of the Philippines (LCP) and its Local Chapter as the SOLE and EXCLUSIVE Bargaining Agent and Representative for all rank and file employees of the Empire Food Products regarding WAGES, HOURS OF WORK, AND OTHER TERMS AND CONDITIONS OF EMPLOYMENT; 2. That with regards [sic] to NLRC CASE NO. RAB-III-10-1817-90 pending with the NLRC parties jointly and mutually agreed that the issues thereof, shall be discussed by the parties and resolve[d] during the negotiation of the Collective Bargaining Agreement; 3. That Management of the Empire Food Products shall make the proper adjustment of the Employees Wages within fifteen (15) days from the signing of this Agreement and further agreed to register all the employees with the SSS; 4. That Employer, Empire Food Products thru its Management agreed to deduct thru payroll deduction UNION DUES and other Assessment[s] upon submission by the LCP Labor Congress individual Check-Off Authorization[s] signed by the Union Members indicating the amount to be deducted and further agreed all deduction[s] made representing Union Dues and Assessment[s] shall be remitted immediately to the LCP Labor Congress Treasurer or authorized representative within three (3) or five (5) days upon deductions [sic], Union dues not deducted during the period due, shall be refunded or reimbursed by the Employer/Management. Employer/Management further agreed to deduct Union dues from non-union members the same amount deducted from union members without need of individual Check-Off Authorizations [for] Agency Fee; 5. That in consideration [of] the foregoing covenant, parties jointly and mutually agreed that NLRC CASE NO. RAB-III-10-1817-90 shall be considered provisionally withdrawn from the Calendar of the National Labor Relations Commission(NLRC), while the Petition for direct certification of the LCP Labor Congress parties jointly move for the direct certification of the LCP Labor Congress; 6. That parties jointly and mutually agreed that upon signing of this Agreement, no Harassments [sic], Threats, Interferences [sic] of their respective rights under the law, no Vengeance or Revenge by each partner nor any act of ULP which might disrupt the operations of the business; 7. Parties jointly and mutually agreed that pending negotiations or formalization of the propose[d] CBA, this Memorandum of Agreement shall govern the parties in the exercise of their respective rights involving the Management of the business and the terms and condition[s] of employment, and whatever problems and grievances may arise by and between the parties shall be resolved by them, thru the most cordial and good harmonious relationship by communicating the other party in writing indicating said grievances before taking any action to another forum or government agencies;

8. That parties [to] this Memorandum of Agreement jointly and mutually agreed to respect, abide and comply with all the terms and conditions hereof. Further agreed that violation by the parties of any provision herein shall constitute an act of ULP. (An nex A of Petition). In an Order dated October 24, 1990, Mediator Arbiter Antonio Cortez approved the memorandum of agreement and certified LCP as the sole and exclusive bargaining agent among the rank-and-file employees of Empire Food Products for purposes of collective bargaining with respect to wages, hours of work and other terms and conditions of employment (Annex B of Petition). On November 9, 1990, petitioners through LCP President Navarro submitted to private respondents a proposal for collective bargaining (Annex C of Petition). On January 23, 1991, petitioners filed a complaint docketed as NLRC Case No. RAB-III-01-1964-91 against private respondents for: a. Unfair Labor Practice by way of Illegal Lockout and/or Dismissal; b. Union busting thru Harassments [sic], threats, and interfering with the rights of employees to self-organization; c. Violation of the Memorandum of Agreement dated October 23, 1990; d. Underpayment of Wages in violation of R.A. No. 6640 and R.A. No. 6727, such as Wages promulgated by the Regional Wage Board; e. Actual, Moral and Exemplary Damages. (Annex D of Petition) After the submission by the parties of their respective position papers and presentation of testimonial evidence, Labor Arbiter Ariel C. Santos absolved private respondents of the charges of unfair labor practice, union busting, violation of the memorandum of agreement, underpayment of wages and denied petitioners prayer for actual, moral and exemplary damages. Labor Arbiter Santos, however, directed the reinstatement of the individual complainants: The undersigned Labor Arbiter is not oblivious to the fact that respondents have violated a cardinal rule in every establishment that a payroll and other papers evidencing hours of work, payments, etc. shall always be maintained and subjected to inspection and visitation by personnel of the Department of Labor and Employment. As such penalty, respondents should not escape liability for this technicality, hence, it is proper that all individual complainants except those who resigned and executed quitclaim[s] and releases prior to the filing of this complaint should be reinstated to their former position[s] with the admonition to respondents that any harassment, intimidation, coercion or any form of threat as a result of this immediately executory reinstatement shall be dealt with accordingly. SO ORDERED. (Annex G of Petition) On appeal, the National Labor Relations Commission vacated the Decision dated April 14, 1972 [sic] and remanded the case to the Labor Arbiter for further proceedings for the following reasons: The Labor Arbiter, through his decision, noted that xxx complainant did not present any single witness while respondent pres ented four (4) witnesses in the persons of Gonzalo Kehyeng, Orlando Cairo, Evelyn Kehyeng and Elvira Bulagan xxx (p. 183, Records), that xxx complainant before the National Labor Relations Commission must prove with definiteness and clarity the offense charged. xxx (Record, p. 183); that xxx complainant failed to specify under what provision of the Labor Code particularly Art. 248 did respondents violate so as to constitute unfair labor practice xxx (Record, p. 183); that complainants failed to present any witness who may describe in what manner respondents have committed unfair labor practice xxx (Record, p. 185); that xxx complainant LCP failed to present anyone of the so -called 99 complainants in order to testify who committed the threats and intimidation xxx (Record, p. 185). Upon review of the minutes of the proceedings on record, however, it appears that complainant presented witnesses, namely, BENIGNO NAVARRO, JR. (28 February 1991, RECORD, p. 91; 8 March 1991, RECORD, p. 92, who adopted its POSITION PAPER AND CONSOLIDATED AFFIDAVIT, as Exhibit A and the annexes thereto as Exhibit B, B-1 to B-9, inclusive. Minutes of the proceedings on record show that complainant further presented other witnesses, namely: ERLINDA BASILIO (13 March 1991, RECORD, p. 93; LOURDES PANTILLO, MARIFE PINLAC, LENIE GARCIA (16 April 1991, Record, p. 96, see back portion thereof; 2 May 1991, Record, p. 102; 16 May 1991, Record, p. 103; 11 June 1991, Record, p. 105). Formal offer of Documentary and Testimonial Evidence was made by complainant on June 24, 1991 (Record, p. 106-109) The Labor Arbiter must have overlooked the testimonies of some of the individual complainants which are now on record. Other individual complainants should have been summoned with the end in view of receiving their testimonies. The complainants should be afforded the time and opportunity to fully substantiate their claims against the respondents. Judgment should be rendered only based on the conflicting positions of the parties. The Labor Arbiter is called upon to consider and pass upon the issues of fact and law raised by the parties. Toward this end, therefore, it is Our considered view [that] the case should be remanded to the Labor Arbiter of origin for further proceedings.(Annex H of Petition) In a Decision dated July 27, 1994, Labor Arbiter Santos made the following determination:

Complainants failed to present with definiteness and clarity the particular act or acts constitutive of unfair labor practice. It is to be borne in mind that a declaration of unfair labor practice connotes a finding of prima facie evidence of probability that a criminal offense may have been committed so as to warrant the filing of a criminal information before the regular court. Hence, evidence which is more than a scintilla is required in order to declare respondents/employers guilty of unfair labor practice. Failing in this regard is fatal to the cause of complainants. Besides, even the charge of illegal lockout has no leg to stand on because of the testimony of respondents through their guard Orlando Cairo (TSN, July 31, 1991 hearing; p. 5-35) that on January 21, 1991, complainants refused and failed to report for work, hence guilty of abandoning their post without permission from respondents. As a result of complainants*+ failure to report for work, the cheese curls ready for repacking were all spoiled to the prejudice of respondents. Under cross-examination, complainants failed to rebut the authenticity of respondents witness testimony. As regards the issue of harassments [sic], threats and interference with the rights of employees to self-organization which is actually an ingredient of unfair labor practice, complainants failed to specify what type of threats or intimidation was committed and who committed the same. What are the acts or utterances constitutive of harassments [sic] being complained of? These are the specifics which should have been proven with definiteness and clarity by complainants who chose to rely heavily on its position paper through generalizations to prove their case. Insofar as violation of [the] Memorandum of Agreement dated October 23, 1990 is concerned, both parties agreed that: 2 - That with regards [sic] to the NLRC Case No. RAB III-10-1817-90 pending with the NLRC, parties jointly and mutually agreed that the issues thereof shall be discussed by the parties and resolve[d] during the negotiation of the CBA. The aforequoted provision does not speak of [an] obligation on the part of respondents but on a resolutory condition that may occur or may not happen. This cannot be made the basis of an imposition of an obligation over which the National Labor Relations Commission has exclusive jurisdiction thereof. Anent the charge that there was underpayment of wages, the evidence points to the contrary. The enumeration of complainants wages in their consolidated Affidavits of merit and position paper which implies underpayment has no leg to stand on in the light of the fact that complainants admission that they are piece workers or paid on a pakiao *basis+ i.e. a certain amount for every thousand piec es of cheese curls or other products repacked. The only limitation for piece workers or pakiao workers is that they should receive compensation no less than the minimum wage for an eight (8) hour work [sic]. And compliance therewith was satisfactorily explained by respondent Gonzalo Kehyeng in his testimony (TSN, p. 12-30) during the July 31, 1991 hearing. On cross-examination, complainants failed to rebut or deny Gonzalo Kehyengs testimony that complainants have been even receiving more than the minimum wage for an average workers [sic]. Certainly, a lazy worker earns less than the minimum wage but the same cannot be attributable to respondents but to the lazy workers. Finally, the claim for moral and exemplary damages has no leg to stand on when no malice, bad faith or fraud was ever proven to have been perpetuated by respondents. WHEREFORE, premises considered, the complaint is hereby DISMISSED for utter lack of merit. (Annex I of Petition).*4+ On appeal, the NLRC, in its Resolution dated 29 March 1995,[5] affirmed in toto the decision of Labor Arbiter Santos. In so doing, the NLRC sustained the Labor Arbiters findings that: (a) there was a dearth of evidence to prove the existence of unfair labor practi ce and union busting on the part of private respondents; (b) the agreement of 23 October 1990 could not be made the basis of an obligation within the ambit of the NLRCs jurisdiction, as the provisions thereof, particularly Section 2, spoke of a resolutory condition which co uld or could not happen; (c) the claims for underpayment of wages were without basis as complainants were admittedly pakiao workers and paid on the basis of their output subject to the lone limitation that the payment conformed to the minimum wage rate for an eight-hour workday; and (d) petitioners were not underpaid. Their motion for reconsideration having been denied by the NLRC in its Resolution of 31 October 1995,[6] petitioners filed the instant special civil action for certiorari raising the following issues: I WHETHER OR NOT THE PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION GRAVELY ABUSED ITS DISCRETION WHEN IT DISREGARDED OR IGNORED NOT ONLY THE EVIDENCE FAVORABLE TO HEREIN PETITIONERS, APPLICABLE JURISPRUDENCE BUT ALSO ITS OWN DECISIONS AND THAT OF THIS HONORABLE HIGHEST TRIBUNAL WHICH [WAS] TANTAMOUNT NOT ONLY TO THE DEPRIVATION OF PETITIONERS RIGHT TO DUE PROCESS BUT WOULD RESULT *IN+ MANIFEST INJUSTICE. II WHETHER OR NOT THE PUBLIC RESPONDENT GRAVELY ABUSED ITS DISCRETION WHEN IT DEPRIVED THE PETITIONERS OF THEIR CONSTITUTIONAL RIGHT TO SELF-ORGANIZATION, SECURITY OF TENURE, PROTECTION TO LABOR, JUST AND HUMANE CONDITIONS OF WORK AND DUE PROCESS. III WHETHER OR NOT THE PETITIONERS WERE ILLEGALLY EASED OUT [OF] OR CONSTRUCTIVELY DISMISSED FROM THEIR ONLY MEANS OF LIVELIHOOD.

IV WHETHER OR NOT PETITIONERS SHOULD BE REINSTATED FROM THE DATE OF THEIR DISMISSAL UP TO THE TIME OF THEIR REINSTATEMENT, WITH BACKWAGES, STATUTORY BENEFITS, DAMAGES AND ATTORNEYS FEES.*7+ We required respondents to file their respective Comments. In their Manifestation and Comment, private respondents asserted that the petition was filed out of time. As petitioners admitted in their Notice to File petition for Review on Certiorari that they received a copy of the resolution (denying their motion for reconsideration) on 13 December 1995, they had only until 29 December 1995 to file the petition. Having failed to do so, the NLRC thus already entered judgment in private respondents favor. In their Reply, petitioners averred that Mr. Navarro, a non-lawyer who filed the notice to file a petition for review on their behalf, mistook which reglementary period to apply. Instead of using the reasonable time criterion for certiorari under Rule 65, he used t he 15-day period for petitions for review on certiorari under Rule 45. They hastened to add that such was a mere technicality which should not bar their petition from being decided on the merits in furtherance of substantial justice, especially considering that respondents neither denied nor contradicted the facts and issues raised in the petition. In its Manifestation and Motion in Lieu of Comment, the Office of the Solicitor General (OSG) sided with petitioners. It pointed out that the Labor Arbiter, in finding that petitioners abandoned their jobs, relied solely on the testimony of Security Guard Rolando Cairo that petitioners refused to work on 21 January 1991, resulting in the spoilage of cheese curls ready for repacking. However, the OSG argued, this refusal to report for work for a single day did not constitute abandonment, which pertains to a clear, deliberate and unjustified refusal to resume employment, and not mere absence. In fact, the OSG stressed, two days after allegedly abandoning their work, petitioners filed a complaint for, inter alia, illegal lockout or illegal dismissal. Finally, the OSG questioned the lack of explanation on the part of Labor Arbiter Santos as to why he abandoned his original decision to reinstate petitioners. In view of the stand of the OSG, we resolved to require the NLRC to file its own Comment. In its Comment, the NLRC invokes the general rule that factual findings of an administrative agency bind a reviewing court and asserts that this case does not fall under the exceptions. The NLRC further argues that grave abuse of discretion may not be imputed to it, as it affirmed the factual findings and legal conclusions of the Labor Arbiter only after carefully reviewing, weighing and evaluating the evidence in support thereof, as well as the pertinent provisions of law and jurisprudence. In their Reply, petitioners claim that the decisions of the NLRC and the Labor Arbiter were not supported by substantial evidence; that abandonment was not proved; and that much credit was given to self-serving statements of Gonzalo Kehyeng, owner of Empire Foods, as to payment of just wages. On 7 July 1997, we gave due course to the petition and required the parties to file their respective memoranda. However, only petitioners and private respondents filed their memoranda, with the NLRC merely adopting its Comment as its Memorandum. We find for petitioners. Invocation of the general rule that factual findings of the NLRC bind this Court is unavailing under the circumstances. Initially, we are unable to discern any compelling reason justifying the Labor Arbiters volte face from his 14 April 1992 decision reinstating petitione rs to his diametrically opposed 27 July 1994 decision, when in both instances, he had before him substantially the same evidence. Neither do we find the 29 March 1995 NLRC resolution to have sufficiently discussed the facts so as to comply with the standard of substantial evidence. For one thing, the NLRC confessed its reluctance to inquire into the veracity of the Labor Arbiters f actual findings, staunchly declaring that it was not about to substitute *its+ judgment on matters that are within the province of the trier of facts. Yet, in the 21 July 1992 NLRC resolution,[8] it chastised the Labor Arbiter for his errors both in judgment and procedure, for which reason it remanded the records of the case to the Labor Arbiter for compliance with the pronouncements therein. What cannot escape from our attention is that the Labor Arbiter did not heed the observations and pronouncements of the NLRC in its resolution of 21 July 1992, neither did he understand the purpose of the remand of the records to him. In said resolution, the NLRC summarized the grounds for the appeal to be: 1. that there is a prima facie evidence of abuse of discretion and acts of gross incompetence committed by the Labor Arbiter in rendering the decision. 2. that the Labor Arbiter in rendering the decision committed serious errors in the findings of facts.

After which, the NLRC observed and found: Complainant alleged that the Labor Arbiter disregarded the testimonies of the 99 complainants who submitted their Consolidated Affidavit of Merit and Position Paper which was adopted as direct testimonies during the hearing and cross-examined by respondents counsel. The Labor Arbiter, through his decision, noted that x x x complainant did not present any single witness while respondent pr esented four (4) witnesses in the persons of Gonzalo Kehyeng, Orlando Cairo, Evelyn Kehyeng and Elvira Bulagan x x x (Records, p. 183), that x x x

complainant before the National Labor Relations Commission must prove with definiteness and clarity the offense charged. x x x (Record, p. 183; that x x x complainant failed to specify under what provision of the Labor Cod e particularly Art. 248 did respondents violate so as to constitute unfair labor practice x x x (Record, p. 183); that complainants failed to present any witness who may describ e in what manner respondents have committed unfair labor practice x x x (Record, p. 185); that x x x complainant a *sic+ LCP failed to present anyone of the so called 99 complainants in order to testify who committed the threats and intimidation x x x (Record, p. 185 ). Upon review of the minutes of the proceedings on record, however, it appears that complainant presented witnesses, namely BENIGNO NAVARRO, JR. (28 February 1991, RECORD, p. 91; 8 March 1991, RECORD, p. 92), who adopted its POSITION PAPER AND CONSOLIDATED AFFIDAVIT, as Exhibit A and the annexes thereto as Exhibit B, B-1 to B-9, inclusive. Minutes of the proceedings on record show that complainant further presented other witnesses, namely: ERLINDA BASILIO (13 March 1991, RECORD, p. 93; LOURDES PANTILLO, MARIFE PINLAC, LENI GARCIA (16 April 1991, Record, p. 96, see back portion thereof; 2 May 1991, Record, p. 102; 16 May 1991, Record, p. 103; 11 June 1991, Record, p. 105). Formal offer of Documentary and Testimonial Evidence was made by the complainant on June 24, 1991 (Record, p. 106-109). The Labor Arbiter must have overlooked the testimonies of some of the individual complainants which are now on record. Other individual complainants should have been summoned with the end in view of receiving their testimonies. The complainants should [have been] afforded the time and opportunity to fully substantiate their claims against the respondents. Judgment should [have been] rendered only based on the conflicting positions of the parties. The Labor Arbiter is called upon to consider and pass upon the issues of fact and law raised by the parties. Toward this end, therefore, it is Our considered view the case should be remanded to the Labor Arbiter of origin for further proceedings. Further, We take note that the decision does not contain a dispositive portion or fallo. Such being the case, it may be well said that the decision does not resolve the issues at hand. On another plane, there is no portion of the decision which could be carried out by way of execution. It may be argued that the last paragraph of the decision may be categorized as the dispositive portion thereof: x x x x x The undersigned Labor Arbiter is not oblivious [to] the fact that respondents have violated a cardinal rule in every establishment that a payroll and other papers evidencing hour[s] of work, payment, etc. shall always be maintained and subjected to inspection and visitation by personnel of the Department of Labor and Employment. As such penalty, respondents should not escape liability for this technicality, hence, it is proper that all the individual complainants except those who resigned and executed quitclaim[s] and release[s] prior to the filing of this complaint should be reinstated to their former position with the admonition to respondents that any harassment, intimidation, coercion or any form of threat as a result of this immediately executory reinstatement shall be dealt with accordingly. SO ORDERED. It is Our considered view that even assuming arguendo that the respondents failed to maintain their payroll and other papers evidencing hours of work, payment etc., such circumstance, standing alone, does not warrant the directive to reinstate complainants to their former positions. It is [a] well settled rule that there must be a finding of illegal dismissal before reinstatement be mandated. In this regard, the LABOR ARBITER is hereby directed to include in his clarificatory decision, after receiving evidence, considering and resolving the same, the requisite dispositive portion.[9] Apparently, the Labor Arbiter perceived that if not for petitioners, he would not have fallen victim to this stinging rebuke at the hands of the NLRC. Thus does it appear to us that the Labor Arbiter, in concluding in his 27 July 1994 Decision that petitioners abandoned their work, was moved by, at worst, spite, or at best, lackadaisically glossed over petitioners evidence. On this score, we find the following observations of the OSG most persuasive: In finding that petitioner employees abandoned their work, the Labor Arbiter and the NLRC relied on the testimony of Security Guard Rolando Cairo that on January 21, 1991, petitioners refused to work. As a result of their failure to work, the cheese curls ready for repacking on said date were spoiled. The failure to work for one day, which resulted in the spoilage of cheese curls does not amount to abandonment of work. In fact two (2) days after the reported abandonment of work or on January 23, 1991, petitioners filed a complaint for, among others, unfair labor practice, illegal lockout and/or illegal dismissal. In several cases, this Honorable Court held that one could not possibly abandon his work and shortly thereafter vigorously pursue his complaint for illegal dismissal (De Ysasi III v. NLRC, 231 SCRA 173; Ranara v. NLRC, 212 SCRA 631; Dagupan Bus Co. v. NLRC, 191 SCRA 328; Atlas Consolidated Mining and Development Corp. v. NLRC, 190 SCRA 505; Hua Bee Shirt Factory v. NLRC, 186 SCRA 586; Mabaylan v. NLRC, 203 SCRA 570 and Flexo Manufacturing v. NLRC, 135 SCRA 145). In Atlas Consolidated, supra, this Honorable Court explicitly stated: It would be illogical for Caballo, to abandon his work and then immediately file an action seeking for his reinstatement. W e can not believe that Caballo, who had worked for Atlas for two years and ten months, would simply walk away from his job unmindful of the consequence of his act, i.e. the forfeiture of his accrued employment benefits. In opting to finally to [sic] contest the legality of his dismissal instead of just claiming his separation pay and other benefits, which he actually did but which proved to be futile after all, ably supports his sincere intention to return to work, thus negating Atlas stand that he had abandoned his job.

In De Ysasi III v. NLRC (supra), this Honorable Court stressed that it is the clear, deliberate and unjustified refusal to resume employment and not mere absence that constitutes abandonment. The absence of petitioner employees for one day on January 21, 1991 as testified [to] by Security Guard Orlando Cairo did not constitute abandonment. In his first decision, Labor Arbiter Santos expressly directed the reinstatement of the petitioner employees and admonished the private respondents that any harassment, intimidation, coercion or any form of threat as a result of this immediately executory reinstatement shall be dealt with accordingly. In his second decision, Labor Arbiter Santos did not state why he was abandoning his previous decision directing the reinstatement of petitioner employees. By directing in his first decision the reinstatement of petitioner employees, the Labor Arbiter impliedly held that they did not abandon their work but were not allowed to work without just cause. That petitioner employees are pakyao or piece workers does not imply that they are not regular employees entitled to reinstatement. Private respondent Empire Food Products, Inc. is a food and fruit processing company. In Tabas v. California Manufacturing Co., Inc. (169 SCRA 497), this Honorable Court held that the work of merchandisers of processed food, who coordinate with grocery stores and other outlets for the sale of the processed food is necessary in the day-to-day operation[s] of the company. With more reason, the work of processed food repackers is necessary in the day-to-day operation[s] of respondent Empire Food Products.[10] It may likewise be stressed that the burden of proving the existence of just cause for dismissing an employee, such as abandonment, rests on the employer, [11] a burden private respondents failed to discharge. Private respondents, moreover, in considering petitioners employment to have been terminated by abandonment, violated their rights to security of tenure and constitutional right to due process in not even serving them with a written notice of such termination.[12] Section 2, Rule XIV, Book V of the Omnibus Rules Implementing the Labor Code provides: SEC. 2. Notice of Dismissal. - Any employer who seeks to dismiss a worker shall furnish him a written notice stating the particular acts or omission constituting the grounds for his dismissal. In cases of abandonment of work, the notice shall be served at the workers last known address. Petitioners are therefore entitled to reinstatement with full back wages pursuant to Article 279 of the Labor Code, as amended by R.A. No. 6715. Nevertheless, the records disclose that taking into account the number of employees involved, the length of time that has lapsed since their dismissal, and the perceptible resentment and enmity between petitioners and private respondents which necessarily strained their relationship, reinstatement would be impractical and hardly promotive of the best interests of the parties. In lieu of reinstatement then, separation pay at the rate of one month for every year of service, with a fraction of at least six (6) months of service considered as one (1) year, is in order.[13] That being said, the amount of back wages to which each petitioner is entitled, however, cannot be fully settled at this time. Petitioners, as piece-rate workers having been paid by the piece,[14] there is need to determine the varying degrees of production and days worked by each worker. Clearly, this issue is best left to the National Labor Relations Commission. As to the other benefits, namely, holiday pay, premium pay, 13th month pay and service incentive leave which the labor arbiter failed to rule on but which petitioners prayed for in their complaint,[15] we hold that petitioners are so entitled to these benefits. Three (3) factors lead us to conclude that petitioners, although piece-rate workers, were regular employees of private respondents. First, as to the nature of petitioners tasks, their job of repacking snack food was necessary or desirable in the usual business of private respondents , who were engaged in the manufacture and selling of such food products; second, petitioners worked for private respondents throughout the year, their employment not having been dependent on a specific project or season; and third, the length of time[16] that petitioners worked for private respondents. Thus, while petitioners mode of compensation was on a per piece basis, the status and nature of the ir employment was that of regular employees. The Rules Implementing the Labor Code exclude certain employees from receiving benefits such as nighttime pay, holiday pay, service incentive leave*17+ and 13th month pay,*18+ inter alia, field personnel and other employees whose time and performance is un supervised by the employer, including those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof. Plainly, petitioners as piece -rate workers do not fall within this group. As mentioned earlier, not only did petitioners labor under the control of private respondents as their employer, likewise did petitioners toil throughout the year with the fulfillment of their quota as supposed basis for compensation. Further, in Section 8 (b), Rule IV, Book III which we quote hereunder, piece workers are specifically mentioned as being entitled to holiday pay. SEC. 8. Holiday pay of certain employees.(b) Where a covered employee is paid by results or output, such as payment on piece work, his holiday pay shall not be less than his average daily earnings for the last seven (7) actual working days preceding the regular holiday: Provided, however, that in no case shall the holiday pay be less than the applicable statutory minimum wage rate. In addition, the Revised Guidelines on the Implementation of the 13th Month Pay Law, in view of the modifications to P.D. No. 851[19] by Memorandum Order No. 28, clearly exclude the employer of piece rate workers from those exempted from paying 13th month pay, to wit:

2. EXEMPTED EMPLOYERS The following employers are still not covered by P.D. No. 851: d. Employers of those who are paid on purely commission, boundary or task basis, and those who are paid a fixed amount for performing specific work, irrespective of the time consumed in the performance thereof, except where the workers are paid on piece-rate basis in which case the employer shall grant the required 13th month pay to such workers. (italics supplied) The Revised Guidelines as well as the Rules and Regulations identify those workers who fall under the piece-rate category as those who are paid a standard amount for every piece or unit of work produced that is more or less regularly replicated, without regard to the time spent in producing the same.[20] As to overtime pay, the rules, however, are different. According to Sec. 2(e), Rule I, Book III of the Implementing Rules, workers who are paid by results including those who are paid on piece-work, takay, pakiao, or task basis, if their output rates are in accordance with the standards prescribed under Sec. 8, Rule VII, Book III, of these regulations, or where such rates have been fixed by the Secretary of Labor in accordance with the aforesaid section, are not entitled to receive overtime pay. Here, private respondents did not allege adherence to the standards set forth in Sec. 8 nor with the rates prescribed by the Secretary of Labor. As such, petitioners are beyond the ambit of exempted persons and are therefore entitled to overtime pay. Once more, the National Labor Relations Commission would be in a better position to determine the exact amounts owed petitioners, if any. As to the claim that private respondents violated petitioners right to self -organization, the evidence on record does not support this claim. Petitioners relied almost entirely on documentary evidence which, per se, did not prove any wrongdoing on privat e respondents part. For example, petitioners presented their complaint[21] to prove the violation of labor laws committed by private respondents. The complaint, however, is merely the pleading alleging the plaintiffs cause or causes of action.*22+ I ts contents are merely allegations, the verity of which shall have to be proved during the trial. They likewise offered their Consolidated Affidavit of Merit and Position Paper[23] which, like the offer of their Complaint, was a tautological exercise, and did not help nor prove their cause. In like manner, the petition for certification election[24] and the subsequent order of certification[25] merely proved that petitioners sought and acquired the status of bargaining agent for all rank-and-file employees. Finally, the existence of the memorandum of agreement[26] offered to substantiate private respondents non-compliance therewith, did not prove either compliance or non-compliance, absent evidence of concrete, overt acts in contravention of the provisions of the memorandum. IN VIEW WHEREOF, the instant petition is hereby GRANTED. The Resolution of the National Labor Relations Commission of 29 March 1995 and the Decision of the Labor Arbiter of 27 July 1994 in NLRC Case No. RAB-III-01-1964-91 are hereby SET ASIDE, and another is hereby rendered: 1. DECLARING petitioners to have been illegally dismissed by private respondents, thus entitled to full back wages and other privileges, and separation pay in lieu of reinstatement at the rate of one months salary for every year of service with a fraction of six months of service considered as one year; 2. REMANDING the records of this case to the National Labor Relations Commission for its determination of the back wages and other benefits and separation pay, taking into account the foregoing observations; and 3. DIRECTING the National Labor Relations Commission to resolve the referred issues within sixty (60) days from its receipt of a copy of this decision and of the records of the case and to submit to this Court a report of its compliance hereof within ten (10) days from the rendition of its resolution. Costs against private respondents. SO ORDERED. BONIFACIO MURILLO, JOSE DOMINGO, ARSENIO TAGURA, NICASIO CANETE, and MARIO VELASQUEZ, petitioners, vs. SUN VALLEY REALTY, INC., STATE REALTY & INVESTMENT CORP., HONORABLE COMMISSIONERS GABRIEL M. GATCHALIAN and MIGUEL B. VARELA, in their capacity as Commissioners of the National Labor Relations Commission, Third Division, respondents. G.R. No. L-67272 June 30, 1988 CORTES, J.: Petitioners were employed in April 1967 as maintenance men tasked with the upkeep of the roads and water system of the Sun Valley Subdivision. On January 11, 1980, they were notified by State Realty and Investment Corporation that their services would be terminated effective January 31, 1980 in view, allegedly, of the termination of the contract between Sun Valley Realty, Inc. and State Realty and Investment Corporation. Thus, on January 31, 1980, petitioners' employment was terminated without private respondents having filed any application for clearance to terminate much less a prior clearance from the Ministry of Labor. On February 26, 1980, petitioners filed their complaint for illegal dismissal, emergency living allowance and payment of service incentive leave. At the Arbitration Branch of the Ministry of Labor, National Capital Region, the parties agreed to submit their case for decision on the basis of their respective position papers, instead of holding trial.

On December 5, 1980, the Labor Arbiter rendered a decision declaring petitioners' dismissal illegal. The dispositive portion of the decision reads: WHEREFORE, premises considered the respondent is hereby ordered to pay the herein complainants their separation pay of one month salary for every year of service; 1. Pay the complainants their allowance under P.D. 525, from August 1974 to December 1976;

2. Pay complainants their allowance under P.D. 525, 1123 and 1614, minus the amount they already received corresponding to their allowances; 3. Pay complainants five days salary for every year of service as their service incentive leave pay.

The Socio-Economic Analyst of this Office is hereby directed to compute the foregoing award and submit a report to this Labor Arbiter within ten (10) days from receipt of this Decision. SO ORDERED. On January 6, 1981, private respondents appealed to the National Labor Relations Commission. On February 24, 1984, the NLRC, in a two and a half-page Decision, reversed the decision of the Labor Arbiter, solely on the ground that Petitioner's Position Paper-Affidavit was not verified, and therefore "cannot be legally considered as evidence." From the NLRC decision, petitioners interposed the present action which was given due course by this Court on November 26, 1984. Petitioners call attention to the fact that private respondents received a copy of the Labor Arbiter's decision on December 18, 1980, and that they (private respondents) filed their appeal to the National Labor Relations Commission only on January 6, 1981, which is beyond the ten (10) calendar days allowed by law within which appeal from the decision of the Labor Arbiter may be made. Thus, it is argued, the appeal by private respondents to the NLRC was filed out of time. Petitioners rely on the case of Vir-Jen Shipping and Marine Services, Inc. v. NLRC, et al. [G.R. Nos. 58011-12, July 20, 1982, 115 SCRA 347], to support their position that the decision of the Labor Arbiter had become final and executory, and thus, beyond review by the NLRC. This argument of petitioners must fail. The ruling in the Vir-Jen case cannot be applied to the present case since the appeal to the NLRC was filed by private respondents prior to the promulgation of this Court's decision in the Vir-Jen case. As stated in the subsequent case of RJL Martinez Corporation v. NLRC, (G.R. Nos. 63550-51, January 31, 1984, 127 SCRA 454]: ... If we were to reckon the 10-day reglementary period to appeal as calendar days, as held in the case of Vir-Jen Shipping and Marine Services, Inc. vs. NLRC, et al., private respondents' appeal was, indeed, filed out of time. However, it was clear from Vir-Jen that the calendar day basis of computation would only apply "henceforth" or to future cases. That ruling was not affected by this Court's Resolution of November 18, 1983 reconsidering its Decision of July 20, 1982. When the appeal herein was filed on April 19, 1982, the governing proviso was found in Section 7, Rule XIII of the Rules and Regulations Implementing the Labor Code along with NLRC Resolution No. 1, Series of 1977, which based the computation on "working days." [RJL Martinez Fishing Corporation v. NLRC, G.R. Nos. 63550-51, January 31, 1984, 127 SCRA 454 at 459-60]. From December 18, 1980 to January 6, 1981 is exactly ten (10) working days considering the holidays and the Saturdays and Sundays that supervened during that period. In other words, private respondent's appeal to the NLRC having been filed during the time that the prevailing period of appeal was ten (10) working days and prior to the promulgation of the Vir-Jen case on July 20, 1982, it must be held to have been timely filed. There is, however, merit in this petition. 1. The lack of verification of the Position Paper-Affidavit of petitioners is a formal, rather than a substantial, defect. It is not fatal in this case. It could have been easily corrected by requiring an oath [Del Rosario and Sons Logging Enterprises, Inc. v. NLRC, G.R. No. 64204, May 31, 1985, 136 SCRA 669]. 2. Coming now to the more important issue of whether or not petitioners were legally dismissed, the Court notes that at the time of petitioners' dismissal, Article 278 of the Labor Code as implemented by Rule XIV (Clearance to Shut Down or to Dismiss), Book V, of the Rules and Regulations Implementing the Labor Code, was still in force. Article 278 read: Art. 278. Miscellaneous provisions xxx xxx xxx

(b) With or without a collective agreement, no employer may shut down his establishment or terminate the employment of employees with at least one year of service during the last two years, whether such service is continuous or broken, without prior authority issued in accordance with such rules and regulations as the Secretary may promulgate. xxx xxx xxx

And the Rules provided: Sec. 1. Requirement for shutdown or dismissal. No employer may shut down his establishment or dismiss any of his employees with at least one year of service during the last two years, whether the service is broken or continuous, without prior clearance issued therefor in accordance with this Rule. Any provision in a collective agreement dispensing with the clearance requirement shall be null and void. Sec. 2. Shutdown or dismissal without clearance. Any shutdown or dismissal without prior clearance shall be conclusively presumed to be termination of employment without a just cause.... It is undisputed that no clearance to terminate was ever secured by private respondents prior to the termination of employment of petitioners. In fact, even as petitioners were terminated on January 31, 1980, it was only on February 14, 1980 that an application for clearance was filed by private respondents. Hence, petitioners' dismissal must be conclusively presumed to be without just cause. Private respondents contend, however, that prior clearance was not required in cases of complete cessation of operations, and that only a report was necessary. [Rollo, pp. 113-114]. The fact that private respondents intended to shut down operations due to business reverses is immaterial. The Rules cited above are clear that clearance was likewise required before one could shut down his business. There is no showing that private respondent applied for a clearance to shut down prior to petitioners' dismissal from work. 3. On the issue of payment of statutory benefits, private respondents claim that benefits under Presidential Decrees Nos. 525, 1123, and 1614 were fully paid. Suffice it to say that whether or not the benefits were paid is a question of fact. Since there is substantial evidence to support the findings of the Labor Arbiter that petitioners were underpaid, this Court will not disturb the conclusions of the Labor Arbiter. There is merit, however, in respondents' contention that claims that accrued more than three years before the complaint was filed on February 26, 1980 had prescribed. Article 292 of the Labor Code is clear. Art. 292. Money claims. All money claims arising from employer-employee relations arising during the effectivity of this Code shall be filed within three (3) years from the time the cause of action accrued; otherwise they shall be forever barred. All money claims accruing prior to the effectivity of this Code shall be filed with the appropriate entities established under this Code within one (1) year from the date of effectivity, and shall be processed or determined in accordance with implementing rules and regulations of the Code; otherwise, they shall be forever barred. We thus rule that all claims which accrued more than three (3) years prior to February 26, 1980 are no longer recoverable. Private respondents also claim that petitioners are not entitled to service incentive leave inasmuch as establishments employing less than ten (10) employees are exempted by the Labor Code and the Implementing Rules from paying service incentive leave. Attention is called to the complaint where petitioners alleged that there were only six (6) employees in Sun Valley Subdivision "excluding others." Petitioners' allegation that there were six (6) employees in Sun Valley Subdivision "excluding others" in effect stated that there were other employees of the corporation, except that they were not stationed in Sun Valley Subdivision. Note, however, that the clear policy of the Labor Code is to include all establishments, except a few classes, under the coverage of the provision granting service incentive leave to workers. Private respondents' claim is that they fell within the exception. Hence, it was incumbent upon them to prove that they belonged to a class excepted by law from the general rule. Specifically, it was the duty of respondents, not of petitioners, to prove that there were less than ten (10) employees in the company. Having failed to discharge its task, private respondents must be deemed to be covered by the general rule, notwithstanding the failure of petitioners to allege the exact number of employees of the corporation. In other words, petitioners must be deemed entitled to service incentive leave. 5. Lastly, private respondent State Realty and Investment Corporation contends that it cannot be held liable because it was merely the managing agent of the other respondent Sun Valley Realty, Inc. In other words, it is asserted that the employer of petitioners was Sun Valley Realty, Inc. only, and not State Realty and Investment Corporation. The issue of the existence of an employer-employee relationship between the parties is a question of fact, and the finding of the Labor Arbiter on this point is entitled not only to respect but also the stamp of finality [See RJL Martinez Fishing Corp. v. NLRC, supra]. WHEREFORE, the petition is hereby GRANTED. The Decision of the National Labor Relations Commission is SET ASIDE, whereas, the Decision of the Labor Arbiter is hereby REINSTATED with the modification that petitioners are hereby awarded only those claims accruing within three years prior to February 26, 1980. SO ORDERED.

DAVAO INTEGRATED PORT STEVEDORING SERVICES, petitioner, vs. RUBEN V. ABARQUEZ, in his capacity as an accredited Voluntary Arbitrator and THE ASSOCIATION OF TRADE UNIONS (ATU-TUCP), respondents. G.R. No. 102132. March 19, 1993. SYLLABUS 1. LABOR LAWS AND SOCIAL LEGISLATION; LABOR RELATIONS; COLLECTIVE BARGAINING AGREEMENT; DEFINED; NATURE THEREOF; CONSTRUCTION TO BE PLACED THEREON. A collective bargaining agreement (CBA), as used in Article 252 of the Labor Code, refers to a contract executed upon request of either the employer or the exclusive bargaining representative incorporating the agreement reached after negotiations with respect to wages, hours of work and all other terms and conditions of employment, including proposals for adjusting any grievances or questions arising under such agreement. While the terms and conditions of a CBA constitute the law between the parties, it is not, however, an ordinary contract to which is applied the principles of law governing ordinary contracts. A CBA, as a labor contract within the contemplation of Article 1700 of the Civil Code of the Philippines which governs the relations between labor and capital, is not merely contractual in nature but impressed with public interest, thus, it must yield to the common good. As such, it must be construed liberally rather than narrowly and technically, and the courts must place a practical and realistic construction upon it, giving due consideration to the context in which it is negotiated and purpose which it is intended to serve. 2. ID.; ID.; ID.; ID.; ID.; ID.; CASE AT BAR. It is thus erroneous for petitioner to isolate Section 1, Article VIII of the 1989 CBA from the other related section on sick leave with pay benefits, specifically Section 3 thereof, in its attempt to justify the discontinuance or withdrawal of the privilege of commutation or conversion to cash of the unenjoyed portion of the sick leave benefit to regular intermittent workers. The manner they were deprived of the privilege previously recognized and extended to them by petitioner-company during the lifetime of the CBA of October 16, 1985 until three (3) months from its renewal on April 15, 1989, or a period of three (3) years and nine (9) months, is not only tainted with arbitrariness but likewise discriminatory in nature. It must be noted that the 1989 CBA has two (2) sections on sick leave with pay benefits which apply to two (2) distinct classes of workers in petitioner's company, namely: (1) the regular nonintermittent workers or those workers who render a daily eight-hour service to the company and are governed by Section 1, Article VIII of the 1989 CBA; and (2) intermittent field workers who are members of the regular labor pool and the present regular extra labor pool as of the signing of the agreement on April 15, 1989 or those workers who have irregular working days and are governed by Section 3, Article VIII of the 1989 CBA. It is not disputed that both classes of workers are entitled to sick leave with pay benefits provided they comply with the conditions set forth under Section 1 in relation to the last paragraph of Section 3, to wit: (1) the employee-applicant must be regular or must have rendered at least one year of service with the company; and (2) the application must be accompanied by a certification from a company-designated physician. the phrase "herein sick leave privilege," as used in the last sentence of Section 1, refers to the privilege of having a fixed 15-day sick leave with pay which, as mandated by Section 1, only the non-intermittent workers are entitled to. This fixed 15day sick leave with pay benefit should be distinguished from the variable number of days of sick leave, not to exceed 15 days, extended to intermittent workers under Section 3 depending on the number of hours of service rendered to the company, including overtime pursuant to the schedule provided therein. It is only fair and reasonable for petitioner-company not to stipulate a fixed 15-day sick leave with pay for its regular intermittent workers since, as the term "intermittent" implies, there is irregularity in their work-days. Reasonable and practical interpretation must be placed on contractual provisions. Interpetatio fienda est ut res magis valeat quam pereat. Such interpretation is to be adopted, that the thing may continue to have efficacy rather than fail. 3. ID.; ID.; ID.; SICK LEAVE BENEFITS; NATURE AND PURPOSE. Sick leave benefits, like other economic benefits stipulated in the CBA such as maternity leave and vacation leave benefits, among others, are by their nature, intended to be replacements for regular income which otherwise would not be earned because an employee is not working during the period of said leaves. They are noncontributory in nature, in the sense that the employees contribute nothing to the operation of the benefits. By their nature, upon agreement of the parties, they are intended to alleviate the economic condition of the workers. 4. ID.; ID.; JURISDICTION OF VOLUNTARY ARBITRATOR; CASE AT BAR. Petitioner-company's objection to the authority of the Voluntary Arbitrator to direct the commutation of the unenjoyed portion of the sick leave with pay benefits of intermittent workers in his decision is misplaced. Article 261 of the Labor Code is clear. The questioned directive of the herein public respondent is the necessary consequence of the exercise of his arbitral power as Voluntary Arbitrator under Article 261 of the Labor Code "to hear and decide all unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement." We, therefore, find that no grave abuse of discretion was committed by public respondent in issuing the award (decision). Moreover, his interpretation of Sections 1 and 3, Article VIII of the 1989 CBA cannot be faulted with and is absolutely correct. 5. ID.; CONDITIONS OF EMPLOYMENT; PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS; BENEFITS GRANTED PURSUANT TO COMPANY PRACTICE OR POLICY CANNOT BE PEREMPTORILY WITHDRAWN. Whatever doubt there may have been early on was clearly obliterated when petitioner-company recognized the said privilege and paid its intermittent workers the cash equivalent of the unenjoyed portion of their sick leave with pay benefits during the lifetime of the CBA of October 16, 1985 until three (3) months from its renewal on April 15, 1989. Well-settled is it that the said privilege of commutation or conversion to cash, being an existing benefit, the petitioner-company may not unilaterally withdraw, or diminish such benefits. It is a fact that petitioner-company had, on several instances in the past, granted and paid the cash equivalent of the unenjoyed portion of the sick leave benefits of some intermittent workers. Under the circumstances, these may be deemed to have ripened into company practice or policy which cannot be peremptorily withdrawn. DECISION ROMERO, J p: In this petition for certiorari, petitioner Davao Integrated Port Services Corporation seeks to reverse the Award 1 issued on September 10, 1991 by respondent Ruben V. Abarquez, in his capacity as Voluntary Arbitrator of the National Conciliation and Mediation Board, Regional Arbitration Branch XI in Davao City in Case No. AC-211-BX1-10-003-91 which directed petitioner to grant and extend the privilege of commutation of the unenjoyed portion of the sick leave with pay benefits to its intermittent field workers who are members of the regular

labor pool and the present regular extra pool in accordance with the Collective Bargaining Agreement (CBA) executed between petitioner and private respondent Association of Trade Unions (ATU-TUCP), from the time it was discontinued and henceforth. The facts are as follows: Petitioner Davao Integrated Port Stevedoring Services (petitioner-company) and private respondent ATU-TUCP (Union), the exclusive collective bargaining agent of the rank and file workers of petitioner-company, entered into a collective bargaining agreement (CBA) on October 16, 1985 which, under Sections 1 and 3, Article VIII thereof, provide for sick leave with pay benefits each year to its employees who have rendered at least one (1) year of service with the company, thus: "ARTICLE VIII Section 1. Sick Leaves The Company agrees to grant 15 days sick leave with pay each year to every regular non-intermittent worker who already rendered at least one year of service with the company. However, such sick leave can only be enjoyed upon certification by a company designated physician, and if the same is not enjoyed within one year period of the current year, any unenjoyed portion thereof, shall be converted to cash and shall be paid at the end of the said one year period. And provided however, that only those regular workers of the company whose work are not intermittent, are entitled to the herein sick leave privilege. xxx xxx xxx Section 3. All intermittent field workers of the company who are members of the Regular Labor Pool shall be entitled to vacation and sick leaves per year of service with pay under the following schedule based on the number of hours rendered including overtime, to wit:

Hours of Service Per Calendar Year Less than 750 751 825 826 900 901 925 926 1,050 1,051 1,125 1,126 1,200 1,201 1,275 1,276 1,350 1,351 1,425 1,426 1,500 Leave NII 6 days 7 8 9 10 11 12 13 14 15

Vacation Sick Leave

NII 6 days 7 8 9 10 11 12 13 14 15

The conditions for the availment of the herein vacation and sick leaves shall be in accordance with the above provided Sections 1 and 2 hereof, respectively." Upon its renewal on April 15, 1989, the provisions for sick leave with pay benefits were reproduced under Sections 1 and 3, Article VIII of the new CBA, but the coverage of the said benefits was expanded to include the "present Regular Extra Labor Pool as of the signing of this Agreement." Section 3, Article VIII, as revised, provides, thus: "Section 3. All intermittent field workers of the company who are members of the Regular Labor Pool and present Regular Extra Labor Pool as of the signing of this agreement shall be entitled to vacation and sick leaves per year of service with pay under the following schedule based on the number of hours rendered including overtime, to wit:

Hours of Service Per Calendar Year Less than 750 751 825 826 900 901 925 926 1,050 1,051 1,125 1,126 1,200 1,201 1,275 1,276 1,350 1,351 1,425 1,426 1,500 Leave NII 6 days 7 8 9 10 11 12 13 14 15

Vacation Sick Leave

NII 6 days 7 8 9 10 11 12 13 14 15

The conditions for the availment of the herein vacation and sick leaves shall be in accordance with the above provided Sections 1 and 2 hereof, respectively." During the effectivity of the CBA of October 16, 1985 until three (3) months after its renewal on April 15, 1989, or until July 1989 (a total of three (3) years and nine (9) months), all the field workers of petitioner who are members of the regular labor pool and the present regular extra labor pool who had rendered at least 750 hours up to 1,500 hours were extended sick leave with pay benefits. Any unenjoyed portion thereof at the end of the current year was converted to cash and paid at the end of the said one-year period pursuant to Sections 1 and 3, Article VIII of the CBA. The number of days of their sick leave per year depends on the number of hours of service per calendar year in accordance with the schedule provided in Section 3, Article VIII of the CBA. The commutation of the unenjoyed portion of the sick leave with pay benefits of the intermittent workers or its conversion to cash was, however, discontinued or withdrawn when petitioner-company under a new assistant manager, Mr. Benjamin Marzo (who replaced Mr. Cecilio Beltran, Jr. upon the latter's resignation in June 1989), stopped the payment of its cash equivalent on the ground that they are not entitled to the said benefits under Sections 1 and 3 of the 1989 CBA. The Union objected to the said discontinuance of commutation or conversion to cash of the unenjoyed sick leave with pay benefits of petitioner's intermittent workers contending that it is a deviation from the true intent of the parties that negotiated the CBA; that it would violate the principle in labor laws that benefits already extended shall not be taken away and that it would result in discrimination between the non-intermittent and the intermittent workers of the petitioner-company. Upon failure of the parties to amicably settle the issue on the interpretation of Sections 1 and 3, Article VIII of the 1989 CBA, the Union brought the matter for voluntary arbitration before the National Conciliation and Mediation Board, Regional Arbitration Branch XI at Davao City by way of complaint for enforcement of the CBA. The parties mutually designated public respondent Ruben Abarquez, Jr. to act as voluntary arbitrator. After the parties had filed their respective position papers, 2 public respondent Ruben Abarquez, Jr. issued on September 10, 1991 an Award in favor of the Union ruling that the regular intermittent workers are entitled to commutation of their unenjoyed sick leave with pay benefits under Sections 1 and 3 of the 1989 CBA, the dispositive portion of which reads: "WHEREFORE, premises considered, the management of the respondent Davao Integrated Port Stevedoring Services Corporation is hereby directed to grant and extend the sick leave privilege of the commutation of the unenjoyed portion of the sick leave of all the intermittent field workers who are members of the regular labor pool and the present extra pool in accordance with the CBA from the time it was discontinued and henceforth. SO ORDERED." Petitioner-company disagreed with the aforementioned ruling of public respondent, hence, the instant petition. Petitioner-company argued that it is clear from the language and intent of the last sentence of Section 1, Article VIII of the 1989 CBA that only the regular workers whose work are not intermittent are entitled to the benefit of conversion to cash of the unenjoyed portion of sick leave, thus: ". . . And provided, however, that only those regular workers of the Company whose work are not intermittent are entitled to the herein sick leave privilege."

Petitioner-company further argued that while the intermittent workers were paid the cash equivalent of their unenjoyed sick leave with pay benefits during the previous management of Mr. Beltran who misinterpreted Sections 1 and 3 of Article VIII of the 1985 CBA, it was well within petitioner-company's rights to rectify the error it had committed and stop the payment of the said sick leave with pay benefits. An error in payment, according to petitioner-company, can never ripen into a practice. We find the arguments unmeritorious. A collective bargaining agreement (CBA), as used in Article 252 of the Labor Code, refers to a contract executed upon request of either the employer or the exclusive bargaining representative incorporating the agreement reached after negotiations with respect to wages, hours of work and all other terms and conditions of employment, including proposals for adjusting any grievances or questions arising under such agreement. While the terms and conditions of a CBA constitute the law between the parties, 3 it is not, however, an ordinary contract to which is applied the principles of law governing ordinary contracts. 4 A CBA, as a labor contract within the contemplation of Article 1700 of the Civil Code of the Philippines which governs the relations between labor and capital, is not merely contractual in nature but impressed with public interest, thus, it must yield to the common good. As such, it must be construed liberally rather than narrowly and technically, and the courts must place a practical and realistic construction upon it, giving due consideration to the context in which it is negotiated and purpose which it is intended to serve. 5 It is thus erroneous for petitioner to isolate Section 1, Article VIII of the 1989 CBA from the other related section on sick leave with pay benefits, specifically Section 3 thereof, in its attempt to justify the discontinuance or withdrawal of the privilege of commutation or conversion to cash of the unenjoyed portion of the sick leave benefit to regular intermittent workers. The manner they were deprived of the privilege previously recognized and extended to them by petitioner-company during the lifetime of the CBA of October 16, 1985 until three (3) months from its renewal on April 15, 1989, or a period of three (3) years and nine (9) months, is not only tainted with arbitrariness but likewise discriminatory in nature. Petitioner-company is of the mistaken notion that since the privilege of commutation or conversion to cash of the unenjoyed portion of the sick leave with pay benefits is found in Section 1, Article VIII, only the regular nonintermittent workers and no other can avail of the said privilege because of the proviso found in the last sentence thereof. It must be noted that the 1989 CBA has two (2) sections on sick leave with pay benefits which apply to two (2) distinct classes of workers in petitioner's company, namely: (1) the regular non-intermittent workers or those workers who render a daily eight-hour service to the company and are governed by Section 1, Article VIII of the 1989 CBA; and (2) intermittent field workers who are members of the regular labor pool and the present regular extra labor pool as of the signing of the agreement on April 15, 1989 or those workers who have irregular working days and are governed by Section 3, Article VIII of the 1989 CBA. It is not disputed that both classes of workers are entitled to sick leave with pay benefits provided they comply with the conditions set forth under Section 1 in relation to the last paragraph of Section 3, to wit: (1) the employee-applicant must be regular or must have rendered at least one year of service with the company; and (2) the application must be accompanied by a certification from a companydesignated physician. Sick leave benefits, like other economic benefits stipulated in the CBA such as maternity leave and vacation leave benefits, among others, are by their nature, intended to be replacements for regular income which otherwise would not be earned because an employee is not working during the period of said leaves. 6 They are non-contributory in nature, in the sense that the employees contribute nothing to the operation of the benefits. 7 By their nature, upon agreement of the parties, they are intended to alleviate the economic condition of the workers. After a careful examination of Section 1 in relation to Section 3, Article VIII of the 1989 CBA in light of the facts and circumstances attendant in the instant case, we find and so hold that the last sentence of Section 1, Article VIII of the 1989 CBA, invoked by petitionercompany does not bar the regular intermittent workers from the privilege of commutation or conversion to cash of the unenjoyed portion of their sick leave with pay benefits, if qualified. For the phrase "herein sick leave privilege," as used in the last sentence of Section 1, refers to the privilege of having a fixed 15-day sick leave with pay which, as mandated by Section 1, only the non-intermittent workers are entitled to. This fixed 15-day sick leave with pay benefit should be distinguished from the variable number of days of sick leave, not to exceed 15 days, extended to intermittent workers under Section 3 depending on the number of hours of service rendered to the company, including overtime pursuant to the schedule provided therein. It is only fair and reasonable for petitioner-company not to stipulate a fixed 15-day sick leave with pay for its regular intermittent workers since, as the term "intermittent" implies, there is irregularity in their workdays. Reasonable and practical interpretation must be placed on contractual provisions. Interpetatio fienda est ut res magis valeat quam pereat. Such interpretation is to be adopted, that the thing may continue to have efficacy rather than fail. 8 We find the same to be a reasonable and practical distinction readily discernible in Section 1, in relation to Section 3, Article VIII of the 1989 CBA between the two classes of workers in the company insofar as sick leave with pay benefits are concerned. Any other distinction would cause discrimination on the part of intermittent workers contrary to the intention of the parties that mutually agreed in incorporating the questioned provisions in the 1989 CBA. Public respondent correctly observed that the parties to the CBA clearly intended the same sick leave privilege to be accorded the intermittent workers in the same way that they are both given the same treatment with respect to vacation leaves - non-commutable and non-cumulative. If they are treated equally with respect to vacation leave privilege, with more reason should they be on par with each other with respect to sick leave privileges. 9 Besides, if the intention were otherwise, during its renegotiation, why did not the parties

expressly stipulate in the 1989 CBA that regular intermittent workers are not entitled to commutation of the unenjoyed portion of their sick leave with pay benefits? Whatever doubt there may have been early on was clearly obliterated when petitioner-company recognized the said privilege and paid its intermittent workers the cash equivalent of the unenjoyed portion of their sick leave with pay benefits during the lifetime of the CBA of October 16, 1985 until three (3) months from its renewal on April 15, 1989. Well-settled is it that the said privilege of commutation or conversion to cash, being an existing benefit, the petitioner-company may not unilaterally withdraw, or diminish such benefits. 10 It is a fact that petitioner-company had, on several instances in the past, granted and paid the cash equivalent of the unenjoyed portion of the sick leave benefits of some intermittent workers. 11 Under the circumstances, these may be deemed to have ripened into company practice or policy which cannot be peremptorily withdrawn. 12 Moreover, petitioner-company's objection to the authority of the Voluntary Arbitrator to direct the commutation of the unenjoyed portion of the sick leave with pay benefits of intermittent workers in his decision is misplaced. Article 261 of the Labor Code is clear. The questioned directive of the herein public respondent is the necessary consequence of the exercise of his arbitral power as Voluntary Arbitrator under Article 261 of the Labor Code "to hear and decide all unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement." We, therefore, find that no grave abuse of discretion was committed by public respondent in issuing the award (decision). Moreover, his interpretation of Sections 1 and 3, Article VIII of the 1989 CBA cannot be faulted with and is absolutely correct. WHEREFORE, in view of the foregoing, the petition is DISMISSED. The award (decision) of public respondent dated September 10, 1991 is hereby AFFIRMED. No costs. SO ORDERED. G.R. No. 123825. August 31, 1999 MARK ROCHE INTERNATIONAL AND/OR EDUARDO DAYOT and SUSAN DAYOT, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, MARK ROCHE WORKERS UNION and WILMA PATACAY, EILEEN RUFON, LILIA BRIONES, BEATRIZ MANAGAYTAY, DELIA ARELLANO, ANITA MARCELO, RIO MARIANO, MARISSA SADILI, ESTRELLA MALLARI, DELIA LAROYA, and DIVINA VILLARBA, respondents. DECISION BELLOSILLO, J.: This is a special civil action under Rule 65 of the Rules of Court to nullify the 14 August 1995 Decision of the National Labor Relations Commission which affirmed with modification the Decision of Labor Arbiter Eduardo J. Carpio. The Labor Arbiter held that private respondents were illegally constructively dismissed and ordered petitioners to reinstate them and pay them back wages as well as their proportionate 13th month pay, service incentive leave pay and salary differentials. The NLRC set aside the award of incentive leave pay. Petitioners Eduardo Dayot and Susan Dayot were President and Vice President, respectively, of their co-petitioner Mark Roche International (MRI), a corporation organized and existing under the laws of the Philippines, engaged in the garments business. Private respondents Eileen Rufon, Lilia Briones, Beatriz Managaytay, Delia Arellano, Anita Marcelo, Rio Mariano, Marissa Sadili, Wilma Patacay, Estella Mallari, Delia Laroya and Divina Villarba were employed as sewers of MRI with lengths of service varying from three (3) to nine (9) years. On different dates private respondents filed separate complaints for underpayment of wages and non-payment of overtime pay against petitioners MRI, Eduardo Dayot and Susan Dayot. Private respondents alleged that they usually worked eleven (11) to twelve (12) hours daily, except on Mondays during which they worked eight (8) hours, and were paid wages on a piece-rate basis amounting to P450.00 to P600.00 per week. They likewise asserted that sometime in 1992 they were unable to avail of their SSS benefits, e.g., salary loan, sickness benefits and maternity benefits because, as they found out, the company did not remit their contributions to the SSS. On 11 October 1992 private respondents sought the assistance of a labor organization which helped them organize the Mark Roche Workers Union (MRWU). On 14 October 1992 they registered the union with the Department of Labor and Employment - National Capital Region (DOLE-NCR) and on the same date filed a Petition for Certification Election before the Med-Arbitration Board. On 27 October 1992 petitioners received a notice of hearing of the petition. Apparently irked by the idea of a union within the company, petitioners ordered private respondents to withdraw the petition and further threatened them that should they insist in the organization of a union they would be dismissed. Unfazed, private respondents refused. As expected, on 29 October 1992 they were discharged from work. On 30 October 1992 private respondents amended their earlier complaints to include as additional causes of action their illegal dismissal, unfair labor practice, non-payment of 13th month pay, underpayment for legal holidays, and for damages. Petitioners countered that private respondents were not dismissed from work but voluntarily abandoned their jobs thereby paralyzing company operations. Petitioners likewise contended that private respondents incurred numerous absences without prior notice and clearance from their superiors as evidenced by several company memos sent to them. Only Divina Villarba showed up and told petitioners that she was voluntary resigning because she had found better employment elsewhere. It was only later that petitioners learned that private respondents absences were due to their preoccupation with the organization of a labor union. Notwithstanding these absences, petitioners expressed their willingness to reinstate private respondents within a reasonable time. They however disclaimed knowledge of

any deficiency owing to private respondents since all the benefits due them as required by law were fully paid, except overtime pay which they were not entitled to on account of their being piece-rate workers. On 3 March 1993 the Labor Arbiter rendered his decision declaring as illegal the constructive dismissal of private respondents. Petitioners were thus ordered to immediately reinstate private respondents as sewers and to pay each of them his (a) back wages computed from 29 October 1992 to 31 March 1993 in the amount of P15,524.08 subject to adjustments until reinstated but not to exceed three (3) years; (b) proportionate share in the 13th month pay for the period January to October 1992 in the amount of P2,538.77; unpaid five (5) days service incentive leave pay for 1989, 1990 and 1991 in the amount of P1,565.00; and, (c) wage differentials in the amount of P24,707.38. On appeal the NLRC affirmed the reinstatement of private respondents and the payment of back wages, salary differentials and proportionate 13th month pay but set aside the award of service incentive leave pay on the ground that private respondents were not entitled thereto as they were piece-rate workers. Petitioners moved for reconsideration but was denied for lack of merit. Petitioners now contend that the NLRC committed grave abuse of discretion amounting to lack or excess of jurisdiction in sustaining the Labor Arbiter by declaring private respondents as having been constructively dismissed from their jobs, hence, illegal. On the contrary, they argue that private respondents voluntarily abandoned their jobs without justifiable reason nor prior notice. The NLRC disregarded the company memos addressed to each of the private respondents which were indicative of their intention to leave the company and showed their propensity to incur frequent absences in violation of company rules and regulations. Abandonment, as a just and valid ground for dismissal, means the deliberate and unjustified refusal of an employee to resume his employment. The burden of proof is on the employer to show an unequivocal intent on the part of the employee to discontinue employment. The intent cannot be lightly inferred or legally presumed from certain ambivalent acts. There must be a concurrence of both the intention to abandon and some overt act from which it can be deducted that the employee has no more intention to resume his work.[1] These are not obtaining in the instant case. No overt act was established by petitioners from which to infer the clear intention of private respondents to desist from their employment. The company memos submitted by petitioner could not be the basis of such intention since they referred to absences incurred by private respondents long before their dismissal. The lack of proximity of those absences to the actual dismissal rendered them unreliable, even worthless. Moreover, as correctly found by the NLRC, it was unlikely that private respondents had abandoned their jobs considering their lengths of service in the company and the difficulty in finding similar employment. In addition, if they had truly forsaken their jobs, they would not have bothered to file a complaint for constructive dismissal against petitioners immediately after they were dismissed and prayed for their reinstatement. An employee who forthwith takes steps to protest his layoff cannot by any logic be said to have abandoned his work.[2] On the contrary, there is ample proof showing that private respondents were dismissed from their jobs for their refusal to withdraw their petition for certification election filed before the DOLE. However, it must be made clear here that the dismissal of private respondents was not a constructive dismissal but an illegal dismissal, and this is where both the NLRC and the Labor Arbiter erred. Constructive dismissal or a constructive discharge has been defined as a quitting because continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a diminution in pay.[3] In the instant case, private respondents were not demoted in rank nor their pay diminished considerably. They were simply told without prior warning or notice that there was no more work for them. After receiving the notice of hearing of the petition for certification election on 27 October 1992, petitioners immediately told private respondents that they were no longer employed. Evidently it was the filing of the petition for certification election and organization of a union within the company which led petitioners to dismiss private respondents and not petitioners' allegations of absence or abandonment by private respondents. The formation of a labor union has never been a ground for valid termination, and where there is an absence of clear, valid and legal cause, the law considers the termination illegal.[4] Petitioners likewise contend that the NLRC acted with grave abuse of discretion in granting private respondents reinstatement with payment of back wages. They argue that reinstatement can no longer be effected in view of the lapse of a considerable period of time from the dismissal of private respondents in October 1992 to the time the order for reinstatement was released. As for the award of back wages, they assert that it is capricious and arbitrary since it only encourages indolence and promotes enrichment of private respondents at the expense of petitioners. The award of reinstatement and back wages belongs to an illegally dismissed employee by direct provision of law and cannot be defeated by mere allegations of inconvenience, inconceivability or implausibility. Article 279 of the Labor Code provides that an illegally dismissed employee is entitled to reinstatement without loss of seniority rights and other privileges and to his full back wages from the time his compensation was withheld from him up to the time of his actual reinstatement. Back wages are granted on grounds of equity for earnings which a worker or employee has lost due to his illegal dismissal.[5] Petitioners are however given the alternative of paying separation pay to illegally dismissed employees where reinstatement is no longer possible. Petitioners further aver that the NLRC likewise abused its discretion when it aff irmed the Labor Arbiters ruling that private respondents were not paid their money claims. They insist that they have already paid private respondents all the amounts and benefits due them and that had the Labor Arbiter conducted trial on the merits, they could have presented documents proving their claim to be true. The decision of the Labor Arbiter not to schedule the case for another hearing could not be considered arbitrary. The holding of a hearing is discretionary with the Labor Arbiter and is something which the parties cannot demand as a matter of right.[6] It is entirely within the bounds of the Labor Arbiters authority to decide a case based on mere position papers and supporting documents without a for mal trial or hearing. The requirements of due process are satisfied when the parties are given the opportunity to submit position papers wherein they

are supposed to attach all the documents that would prove their claim in case it be decided that no hearing should be conducted or was necessary. In case of employees money claims, the employer bears the burden to prove that employees have received their wages and benef its and that the same were paid in accordance with law. It is incumbent upon the employer to present the necessary documents to prove such claims. In their position paper, petitioners failed to present necessary documentary evidence to substantiate their allegation that private respondents money claims were fully paid. They cannot use the absence of trial as an excuse for their failure as they could have presented documentary evidence at any time before the Labor Arbiter and, on appeal, before the NLRC. Hence, they cannot at this late stage bewail that they were not afforded due process. Finally, as correctly held by the NLRC, private respondents as piece-rate employees are not entitled to service incentive leave pay as well as holiday pay even if they are entitled to other benefits like COLA and 13th month pay. Service incentive leave pay shall not apply to employees whose performance is unsupervised by the employer, including those who are paid in a fixed amount for performing work irrespective of the time consumed in the performance thereof.[7] WHEREFORE, this Court finds that private respondents Eileen Rufon, Lilia Briones, Beatriz Managaytay, Delia Arellano, Anita Marcelo, Rio Mariano, Marissa Sadili, Wilma Patacay, Estrella Mallari, Delia Laroya and Divina Villarba were illegally dismissed - not merely illegally constructively dismissed - by petitioners Mark Roche International and/or Eduardo Dayot and Susan Dayot, and to this extent, the assailed Decision of public respondent National Labor Relations Commission affirming that of the Labor Arbiter, is MODIFIED. However, it is AFFIRMED insofar as it ordered the reinstatement of private respondents with back wages, salary differentials and 13th month pay. The service incentive leave pay awarded by the Labor Arbier but deleted by the National Labor Relations Commission is likewise DELETED. SO ORDERED.

[G.R. No. 156367. May 16, 2005] AUTO BUS TRANSPORT SYSTEMS, INC., petitioner, vs. ANTONIO BAUTISTA, respondent. DECISION CHICO-NAZARIO, J.: Before Us is a Petition for Review on Certiorari assailing the Decision[1] and Resolution[2] of the Court of Appeals affirming the Decision[3] of the National Labor Relations Commission (NLRC). The NLRC ruling modified the Decision of the Labor Arbiter (finding respondent entitled to the award of 13th month pay and service incentive leave pay) by deleting the award of 13th month pay to respondent. THE FACTS Since 24 May 1995, respondent Antonio Bautista has been employed by petitioner Auto Bus Transport Systems, Inc. (Autobus), as driverconductor with travel routes Manila-Tuguegarao via Baguio, Baguio- Tuguegarao via Manila and Manila-Tabuk via Baguio. Respondent was paid on commission basis, seven percent (7%) of the total gross income per travel, on a twice a month basis. On 03 January 2000, while respondent was driving Autobus No. 114 along Sta. Fe, Nueva Vizcaya, the bus he was driving accidentally bumped the rear portion of Autobus No. 124, as the latter vehicle suddenly stopped at a sharp curve without giving any warning. Respondent averred that the accident happened because he was compelled by the management to go back to Roxas, Isabela, although he had not slept for almost twenty-four (24) hours, as he had just arrived in Manila from Roxas, Isabela. Respondent further alleged that he was not allowed to work until he fully paid the amount of P75,551.50, representing thirty percent (30%) of the cost of repair of the damaged buses and that despite respondents pleas for reconsideration, the same was ignored by management. After a month, management sent him a letter of termination. Thus, on 02 February 2000, respondent instituted a Complaint for Illegal Dismissal with Money Claims for nonpayment of 13th month pay and service incentive leave pay against Autobus. Petitioner, on the other hand, maintained that respondents employment was replete with offenses involving reckle ss imprudence, gross negligence, and dishonesty. To support its claim, petitioner presented copies of letters, memos, irregularity reports, and warrants of arrest pertaining to several incidents wherein respondent was involved. Furthermore, petitioner avers that in the exercise of its management prerogative, respondents employment was terminated only after the latter was provided with an opportunity to explain his side regarding the accident on 03 January 2000. On 29 September 2000, based on the pleadings and supporting evidence presented by the parties, Labor Arbiter Monroe C. Tabingan promulgated a Decision,[4] the dispositive portion of which reads: WHEREFORE, all premises considered, it is hereby found that the complaint for Illegal Dismissal has no leg to stand on. It is hereby ordered DISMISSED, as it is hereby DISMISSED. However, still based on the above-discussed premises, the respondent must pay to the complainant the following: a. his 13th month pay from the date of his hiring to the date of his dismissal, presently computed at P78,117.87;

b. his service incentive leave pay for all the years he had been in service with the respondent, presently computed at P13,788.05. All other claims of both complainant and respondent are hereby dismissed for lack of merit.[5] Not satisfied with the decision of the Labor Arbiter, petitioner appealed the decision to the NLRC which rendered its decision on 28 September 2001, the decretal portion of which reads: [T]he Rules and Regulations Implementing Presidential Decree No. 851, particularly Sec. 3 provides: Section 3. Employers covered. The Decree shall apply to all employers except to: xxx xxx xxx

e) employers of those who are paid on purely commission, boundary, or task basis, performing a specific work, irrespective of the time consumed in the performance thereof. xxx. Records show that complainant, in his position paper, admitted that he was paid on a commission basis. In view of the foregoing, we deem it just and equitable to modify the assailed Decision by deleting the award of 13th month pay to the complainant. WHEREFORE, the Decision dated 29 September 2000 is MODIFIED by deleting the award of 13th month pay. The other findings are AFFIRMED.[6] In other words, the award of service incentive leave pay was maintained. Petitioner thus sought a reconsideration of this aspect, which was subsequently denied in a Resolution by the NLRC dated 31 October 2001. Displeased with only the partial grant of its appeal to the NLRC, petitioner sought the review of said decision with the Court of Appeals which was subsequently denied by the appellate court in a Decision dated 06 May 2002, the dispositive portion of which reads: WHEREFORE, premises considered, the Petition is DISMISSED for lack of merit; and the assailed Decision of respondent Commission in NLRC NCR CA No. 026584-2000 is hereby AFFIRMED in toto. No costs.[7] Hence, the instant petition. ISSUES 1. Whether or not respondent is entitled to service incentive leave; 2. Whether or not the three (3)-year prescriptive period provided under Article 291 of the Labor Code, as amended, is applicable to respondents claim of service incentive leave pay. RULING OF THE COURT The disposition of the first issue revolves around the proper interpretation of Article 95 of the Labor Code vis--vis Section 1(D), Rule V, Book III of the Implementing Rules and Regulations of the Labor Code which provides: Art. 95. RIGHT TO SERVICE INCENTIVE LEAVE (a) Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay. Book III, Rule V: SERVICE INCENTIVE LEAVE SECTION 1. Coverage. This rule shall apply to all employees except: (d) Field personnel and other employees whose performance is unsupervised by the employer including those who are engaged on task or contract basis, purely commission basis, or those who are paid in a fixed amount for performing work irrespective of the time consumed in the performance thereof; . . . A careful perusal of said provisions of law will result in the conclusion that the grant of service incentive leave has been delimited by the Implementing Rules and Regulations of the Labor Code to apply only to those employees not explicitly excluded by Section 1 of Rule V. According to the Implementing Rules, Service Incentive Leave shall not apply to employees classified as field personnel. T he phrase other employees whose performance is unsupervised by the employer must not be understood as a separate classification of employees

to which service incentive leave shall not be granted. Rather, it serves as an amplification of the interpretation of the definition of field personnel under the Labor Code as those whose actual hours of work in the field cannot be determined with reasonable certainty.*8+ The same is true with respect to the phrase those who are engaged on task or contract basis, purely commission basis. Said phrase should be related with field personnel, applying the rule on ejusdem generis that general and unlimited terms are restrained and limited by the particular terms that they follow.[9] Hence, employees engaged on task or contract basis or paid on purely commission basis are not automatically exempted from the grant of service incentive leave, unless, they fall under the classification of field personnel. Therefore, petitioners contention that respondent is not entitled to the grant of service incentive leave just because he wa s paid on purely commission basis is misplaced. What must be ascertained in order to resolve the issue of propriety of the grant of service incentive leave to respondent is whether or not he is a field personnel. According to Article 82 of the Labor Code, field personnel shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. This definition is further elaborated in the Bureau of Working Conditions (BWC), Advisory Opinion to Philippine Technical-Clerical Commercial Employees Association[10] which states that: As a general rule, [field personnel] are those whose performance of their job/service is not supervised by the employer or his representative, the workplace being away from the principal office and whose hours and days of work cannot be determined with reasonable certainty; hence, they are paid specific amount for rendering specific service or performing specific work. If required to be at specific places at specific times, employees including drivers cannot be said to be field personnel despite the fact that they are performing work away from the principal office of the employee. [Emphasis ours] To this discussion by the BWC, the petitioner differs and postulates that under said advisory opinion, no employee would ever be considered a field personnel because every employer, in one way or another, exercises control over his employees. Petitioner further argues that the only criterion that should be considered is the nature of work of the employee in that, if the employees job requires that he works away from the principal office like that of a messenger or a bus driver, then he is inevitably a field personnel. We are not persuaded. At this point, it is necessary to stress that the definition of a field personnel is not merely conc erned with the location where the employee regularly performs his duties but also with the fact that the employees performance is unsupervised by the employer. As discussed above, field personnel are those who regularly perform their duties away from the principal place of business of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. Thus, in order to conclude whether an employee is a field employee, it is also necessary to ascertain if actual hours of work in the field can be determined with reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or not the employees time and performance are constantly supervised by the employer. As observed by the Labor Arbiter and concurred in by the Court of Appeals: It is of judicial notice that along the routes that are plied by these bus companies, there are its inspectors assigned at strategic places who board the bus and inspect the passengers, the punched tickets, and the conductors reports. There is also the mandatory once -a-week car barn or shop day, where the bus is regularly checked as to its mechanical, electrical, and hydraulic aspects, whether or not there are problems thereon as reported by the driver and/or conductor. They too, must be at specific place as [sic] specified time, as they generally observe prompt departure and arrival from their point of origin to their point of destination. In each and every depot, there is always the Dispatcher whose function is precisely to see to it that the bus and its crew leave the premises at specific times and arrive at the estimated proper time. These, are present in the case at bar. The driver, the complainant herein, was therefore under constant supervision while in the performance of this work. He cannot be considered a field personnel.[11] We agree in the above disquisition. Therefore, as correctly concluded by the appellate court, respondent is not a field personnel but a regular employee who performs tasks usually necessary and desirable to the usual trade of petitioners business. Accordingly , respondent is entitled to the grant of service incentive leave. The question now that must be addressed is up to what amount of service incentive leave pay respondent is entitled to. The response to this query inevitably leads us to the correlative issue of whether or not the three (3)-year prescriptive period under Article 291 of the Labor Code is applicable to respondents claim of service incentive leave pay. Article 291 of the Labor Code states that all money claims arising from employer-employee relationship shall be filed within three (3) years from the time the cause of action accrued; otherwise, they shall be forever barred. In the application of this section of the Labor Code, the pivotal question to be answered is when does the cause of action for money claims accrue in order to determine the reckoning date of the three-year prescriptive period. It is settled jurisprudence that a cause of action has three elements, to wit, (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff.[12]

To properly construe Article 291 of the Labor Code, it is essential to ascertain the time when the third element of a cause of action transpired. Stated differently, in the computation of the three-year prescriptive period, a determination must be made as to the period when the act constituting a violation of the workers right to the benefits being claimed was committed. For if the cause of action accrued more than three (3) years before the filing of the money claim, said cause of action has already prescribed in accordance with Article 291.[13] Consequently, in cases of nonpayment of allowances and other monetary benefits, if it is established that the benefits being claimed have been withheld from the employee for a period longer than three (3) years, the amount pertaining to the period beyond the three-year prescriptive period is therefore barred by prescription. The amount that can only be demanded by the aggrieved employee shall be limited to the amount of the benefits withheld within three (3) years before the filing of the complaint.[14] It is essential at this point, however, to recognize that the service incentive leave is a curious animal in relation to other benefits granted by the law to every employee. In the case of service incentive leave, the employee may choose to either use his leave credits or commute it to its monetary equivalent if not exhausted at the end of the year.[15] Furthermore, if the employee entitled to service incentive leave does not use or commute the same, he is entitled upon his resignation or separation from work to the commutation of his accrued service incentive leave. As enunciated by the Court in Fernandez v. NLRC:[16] The clear policy of the Labor Code is to grant service incentive leave pay to workers in all establishments, subject to a few exceptions. Section 2, Rule V, Book III of the Implementing Rules and Regulations provides that *e+very employee who has rendered at lea st one year of service shall be entitled to a yearly service incentive leave of five days with pay. Service incentive leave is a right which accrues to every employee who has served within 12 months, whether continuous or broken reckoned from the date the employee started working, including authorized absences and paid regular holidays unless the working days in the establishment as a matter of practice or policy, or that provided in the employment contracts, is less than 12 months, in which case said period shall be considered as one year. It is also commutable to its money equivalent if not used or exhausted at the end of the year. In other words, an employee who has serv ed for one year is entitled to it. He may use it as leave days or he may collect its monetary value. To limit the award to three years, as the solicitor general recommends, is to unduly restrict such right.[17] [Italics supplied] Correspondingly, it can be conscientiously deduced that the cause of action of an entitled employee to claim his service incentive leave pay accrues from the moment the employer refuses to remunerate its monetary equivalent if the employee did not make use of said leave credits but instead chose to avail of its commutation. Accordingly, if the employee wishes to accumulate his leave credits and opts for its commutation upon his resignation or separation from employment, his cause of action to claim the whole amount of his accumulated service incentive leave shall arise when the employer fails to pay such amount at the time of his resignation or separation from employment. Applying Article 291 of the Labor Code in light of this peculiarity of the service incentive leave, we can conclude that the three (3)-year prescriptive period commences, not at the end of the year when the employee becomes entitled to the commutation of his service incentive leave, but from the time when the employer refuses to pay its monetary equivalent after demand of commutation or upon termination of the employees services, as the case may be. The above construal of Art. 291, vis--vis the rules on service incentive leave, is in keeping with the rudimentary principle that in the implementation and interpretation of the provisions of the Labor Code and its implementing regulations, the workingmans welf are should be the primordial and paramount consideration.[18] The policy is to extend the applicability of the decree to a greater number of employees who can avail of the benefits under the law, which is in consonance with the avowed policy of the State to give maximum aid and protection to labor.[19] In the case at bar, respondent had not made use of his service incentive leave nor demanded for its commutation until his employment was terminated by petitioner. Neither did petitioner compensate his accumulated service incentive leave pay at the time of his dismissal. It was only upon his filing of a complaint for illegal dismissal, one month from the time of his dismissal, that respondent demanded from his former employer commutation of his accumulated leave credits. His cause of action to claim the payment of his accumulated service incentive leave thus accrued from the time when his employer dismissed him and failed to pay his accumulated leave credits. Therefore, the prescriptive period with respect to his claim for service incentive leave pay only commenced from the time the employer failed to compensate his accumulated service incentive leave pay at the time of his dismissal. Since respondent had filed his money claim after only one month from the time of his dismissal, necessarily, his money claim was filed within the prescriptive period provided for by Article 291 of the Labor Code. WHEREFORE, premises considered, the instant petition is hereby DENIED. The assailed Decision of the Court of Appeals in CA-G.R. SP. No. 68395 is hereby AFFIRMED. No Costs. SO ORDERED.

G.R. No. L-50999 March 23, 1990 JOSE SONGCO, ROMEO CIPRES, and AMANCIO MANUEL, petitioners, vs NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION), LABOR ARBITER FLAVIO AGUAS, and F.E. ZUELLIG (M), INC., respondents. MEDIALDEA, J.: This is a petition for certiorari seeking to modify the decision of the National Labor Relations Commission in NLRC Case No. RB-IV-20840-78T entitled, "Jose Songco and Romeo Cipres, Complainants-Appellants, v. F.E. Zuellig (M), Inc., Respondent-Appellee" and NLRC Case No. RNIV-20855-78-T entitled, "Amancio Manuel, Complainant-Appellant, v. F.E. Zuellig (M), Inc., Respondent-Appellee," which dismissed the appeal of petitioners herein and in effect affirmed the decision of the Labor Arbiter ordering private respondent to pay petitioners separation pay equivalent to their one month salary (exclusive of commissions, allowances, etc.) for every year of service. The antecedent facts are as follows: Private respondent F.E. Zuellig (M), Inc., (hereinafter referred to as Zuellig) filed with the Department of Labor (Regional Office No. 4) an application seeking clearance to terminate the services of petitioners Jose Songco, Romeo Cipres, and Amancio Manuel (hereinafter referred to as petitioners) allegedly on the ground of retrenchment due to financial losses. This application was seasonably opposed by petitioners alleging that the company is not suffering from any losses. They alleged further that they are being dismissed because of their membership in the union. At the last hearing of the case, however, petitioners manifested that they are no longer contesting their dismissal. The parties then agreed that the sole issue to be resolved is the basis of the separation pay due to petitioners. Petitioners, who were in the sales force of Zuellig received monthly salaries of at least P40,000. In addition, they received commissions for every sale they made. The collective Bargaining Agreement entered into between Zuellig and F.E. Zuellig Employees Association, of which petitioners are members, contains the following provision (p. 71, Rollo): ARTICLE XIV Retirement Gratuity Section l(a)-Any employee, who is separated from employment due to old age, sickness, death or permanent lay-off not due to the fault of said employee shall receive from the company a retirement gratuity in an amount equivalent to one (1) month's salary per year of service. One month of salary as used in this paragraph shall be deemed equivalent to the salary at date of retirement; years of service shall be deemed equivalent to total service credits, a fraction of at least six months being considered one year, including probationary employment. (Emphasis supplied) On the other hand, Article 284 of the Labor Code then prevailing provides: Art. 284. Reduction of personnel. The termination of employment of any employee due to the installation of labor saving-devices, redundancy, retrenchment to prevent losses, and other similar causes, shall entitle the employee affected thereby to separation pay. In case of termination due to the installation of labor-saving devices or redundancy, the separation pay shall be equivalent to one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and other similar causes, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year. (Emphasis supplied) In addition, Sections 9(b) and 10, Rule 1, Book VI of the Rules Implementing the Labor Code provide: xxx Sec. 9(b). Where the termination of employment is due to retrechment initiated by the employer to prevent losses or other similar causes, or where the employee suffers from a disease and his continued employment is prohibited by law or is prejudicial to his health or to the health of his co-employees, the employee shall be entitled to termination pay equivalent at least to his one month salary, or to one-half month pay for every year of service, whichever is higher, a fraction of at least six (6) months being considered as one whole year. xxx Sec. 10. Basis of termination pay. The computation of the termination pay of an employee as provided herein shall be based on his latest salary rate, unless the same was reduced by the employer to defeat the intention of the Code, in which case the basis of computation shall be the rate before its deduction. (Emphasis supplied) On June 26,1978, the Labor Arbiter rendered a decision, the dispositive portion of which reads (p. 78, Rollo): RESPONSIVE TO THE FOREGOING, respondent should be as it is hereby, ordered to pay the complainants separation pay equivalent to their one month salary (exclusive of commissions, allowances, etc.) for every year of service that they have worked with the company. SO ORDERED. The appeal by petitioners to the National Labor Relations Commission was dismissed for lack of merit. Hence, the present petition.

On June 2, 1980, the Court, acting on the verified "Notice of Voluntary Abandonment and Withdrawal of Petition dated April 7, 1980 filed by petitioner Romeo Cipres, based on the ground that he wants "to abide by the decision appealed from" since he had "received, to his full and complete satisfaction, his separation pay," resolved to dismiss the petition as to him. The issue is whether or not earned sales commissions and allowances should be included in the monthly salary of petitioners for the purpose of computation of their separation pay. The petition is impressed with merit. Petitioners' position was that in arriving at the correct and legal amount of separation pay due them, whether under the Labor Code or the CBA, their basic salary, earned sales commissions and allowances should be added together. They cited Article 97(f) of the Labor Code which includes commission as part on one's salary, to wit; (f) 'Wage' paid to any employee shall mean the remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered, and includes the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee. 'Fair reasonable value' shall not include any profit to the employer or to any person affiliated with the employer. Zuellig argues that if it were really the intention of the Labor Code as well as its implementing rules to include commission in the computation of separation pay, it could have explicitly said so in clear and unequivocal terms. Furthermore, in the definition of the term "wage", "commission" is used only as one of the features or designations attached to the word remuneration or earnings. Insofar as the issue of whether or not allowances should be included in the monthly salary of petitioners for the purpose of computation of their separation pay is concerned, this has been settled in the case of Santos v. NLRC, et al., G.R. No. 76721, September 21, 1987, 154 SCRA 166, where We ruled that "in the computation of backwages and separation pay, account must be taken not only of the basic salary of petitioner but also of her transportation and emergency living allowances." This ruling was reiterated in Soriano v. NLRC, et al., G.R. No. 75510, October 27, 1987, 155 SCRA 124 and recently, in Planters Products, Inc. v. NLRC, et al., G.R. No. 78524, January 20, 1989. We shall concern ourselves now with the issue of whether or not earned sales commission should be included in the monthly salary of petitioner for the purpose of computation of their separation pay. Article 97(f) by itself is explicit that commission is included in the definition of the term "wage". It has been repeatedly declared by the courts that where the law speaks in clear and categorical language, there is no room for interpretation or construction; there is only room for application (Cebu Portland Cement Co. v. Municipality of Naga, G.R. Nos. 24116-17, August 22, 1968, 24 SCRA 708; Gonzaga v. Court of Appeals, G.R.No. L-2 7455, June 28,1973, 51 SCRA 381). A plain and unambiguous statute speaks for itself, and any attempt to make it clearer is vain labor and tends only to obscurity. How ever, it may be argued that if We correlate Article 97(f) with Article XIV of the Collective Bargaining Agreement, Article 284 of the Labor Code and Sections 9(b) and 10 of the Implementing Rules, there appears to be an ambiguity. In this regard, the Labor Arbiter rationalized his decision in this manner (pp. 74-76, Rollo): The definition of 'wage' provided in Article 96 (sic) of the Code can be correctly be (sic) stated as a general definition. It is 'wage ' in its generic sense. A careful perusal of the same does not show any indication that commission is part of salary. We can say that commission by itself may be considered a wage. This is not something novel for it cannot be gainsaid that certain types of employees like agents, field personnel and salesmen do not earn any regular daily, weekly or monthly salaries, but rely mainly on commission earned. Upon the other hand, the provisions of Section 10, Rule 1, Book VI of the implementing rules in conjunction with Articles 273 and 274 (sic) of the Code specifically states that the basis of the termination pay due to one who is sought to be legally separated from the service is 'his latest salary rates. x x x. Even Articles 273 and 274 (sic) invariably use 'monthly pay or monthly salary'. The above terms found in those Articles and the particular Rules were intentionally used to express the intent of the framers of the law that for purposes of separation pay they mean to be specifically referring to salary only. .... Each particular benefit provided in the Code and other Decrees on Labor has its own pecularities and nuances and should be interpreted in that light. Thus, for a specific provision, a specific meaning is attached to simplify matters that may arise there from. The general guidelines in (sic) the formation of specific rules for particular purpose. Thus, that what should be controlling in matters concerning termination pay should be the specific provisions of both Book VI of the Code and the Rules. At any rate, settled is the rule that in matters of conflict between the general provision of law and that of a particular- or specific provision, the latter should prevail. On its part, the NLRC ruled (p. 110, Rollo): From the aforequoted provisions of the law and the implementing rules, it could be deduced that wage is used in its generic sense and obviously refers to the basic wage rate to be ascertained on a time, task, piece or commission basis or other method of calculating the same. It does not, however, mean that commission, allowances or analogous income necessarily forms part of the employee's salary because to do so would lead to anomalies (sic), if not absurd, construction of the word "salary." For what will prevent the employee from insisting that emergency living allowance, 13th month pay, overtime, and premium pay, and other fringe benefits should be added to the computation of their separation pay. This situation, to our mind, is not the real intent of the Code and its rules.

We rule otherwise. The ambiguity between Article 97(f), which defines the term 'wage' and Article XIV of the Collective Bargaining Agreement, Article 284 of the Labor Code and Sections 9(b) and 10 of the Implementing Rules, which mention the terms "pay" and "salary", is more apparent than real. Broadly, the word "salary" means a recompense or consideration made to a person for his pains or industry in another man's business. Whether it be derived from "salarium," or more fancifully from "sal," the pay of the Roman soldier, it carries with it the fundamental idea of compensation for services rendered. Indeed, there is eminent authority for holding that the words "wages" and "salary" are in essence synonymous (Words and Phrases, Vol. 38 Permanent Edition, p. 44 citing Hopkins vs. Cromwell, 85 N.Y.S. 839,841,89 App. Div. 481; 38 Am. Jur. 496). "Salary," the etymology of which is the Latin word "salarium," is often used interchangeably with "wage", the etymology of which is the Middle English word "wagen". Both words generally refer to one and the same meaning, that is, a reward or recompense for services performed. Likewise, "pay" is the synonym of "wages" and "salary" (Black's Law Dictionary, 5th Ed.). Inasmuch as the words "wages", "pay" and "salary" have the same meaning, and commission is included in the definition of "wage", the logical conclusion, therefore, is, in the computation of the separation pay of petitioners, their salary base should include also their earned sales commissions. The aforequoted provisions are not the only consideration for deciding the petition in favor of the petitioners. We agree with the Solicitor General that granting, in gratia argumenti, that the commissions were in the form of incentives or encouragement, so that the petitioners would be inspired to put a little more industry on the jobs particularly assigned to them, still these commissions are direct remuneration services rendered which contributed to the increase of income of Zuellig . Commission is the recompense, compensation or reward of an agent, salesman, executor, trustees, receiver, factor, broker or bailee, when the same is calculated as a percentage on the amount of his transactions or on the profit to the principal (Black's Law Dictionary, 5th Ed., citing Weiner v. Swales, 217 Md. 123, 141 A.2d 749, 750). The nature of the work of a salesman and the reason for such type of remuneration for services rendered demonstrate clearly that commission are part of petitioners' wage or salary. We take judicial notice of the fact that some salesmen do not receive any basic salary but depend on commissions and allowances or commissions alone, are part of petitioners' wage or salary. We take judicial notice of the fact that some salesman do not received any basic salary but depend on commissions and allowances or commissions alone, although an employer-employee relationship exists. Bearing in mind the preceeding dicussions, if we adopt the opposite view that commissions, do not form part of wage or salary, then, in effect, We will be saying that this kind of salesmen do not receive any salary and therefore, not entitled to separation pay in the event of discharge from employment. Will this not be absurd? This narrow interpretation is not in accord with the liberal spirit of our labor laws and considering the purpose of separation pay which is, to alleviate the difficulties which confront a dismissed employee thrown the the streets to face the harsh necessities of life. Additionally, in Soriano v. NLRC, et al., supra, in resolving the issue of the salary base that should be used in computing the separation pay, We held that: The commissions also claimed by petitioner ('override commission' plus 'net deposit incentive') are not properly includible in such base figure since such commissions must be earned by actual market transactions attributable to petitioner. Applying this by analogy, since the commissions in the present case were earned by actual market transactions attributable to petitioners, these should be included in their separation pay. In the computation thereof, what should be taken into account is the average commissions earned during their last year of employment. The final consideration is, in carrying out and interpreting the Labor Code's provisions and its implementing regulations, the workingman's welfare should be the primordial and paramount consideration. This kind of interpretation gives meaning and substance to the liberal and compassionate spirit of the law as provided for in Article 4 of the Labor Code which states that "all doubts in the implementation and interpretation of the provisions of the Labor Code including its implementing rules and regulations shall be resolved in favor of labor" (Abella v. NLRC, G.R. No. 71812, July 30,1987,152 SCRA 140; Manila Electric Company v. NLRC, et al., G.R. No. 78763, July 12,1989), and Article 1702 of the Civil Code which provides that "in case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer. ACCORDINGLY, the petition is hereby GRANTED. The decision of the respondent National Labor Relations Commission is MODIFIED by including allowances and commissions in the separation pay of petitioners Jose Songco and Amancio Manuel. The case is remanded to the Labor Arbiter for the proper computation of said separation pay. SO ORDERED. G.R. No. L-58870 December 18, 1987 CEBU INSTITUTE OF TECHNOLOGY (CIT), petitioner, vs. HON. BLAS OPLE, in his capacity as Minister, Ministry of Labor and Employment, JULIUS ABELLA, ARSENIO ABELLANA, RODRIGO ALIWALAS, ZOSIMO ALMOCERA, GERONIDES ANCOG, GREGORIO ASIA, ROGER BAJARIAS, BERNARDO BALATAYO, JR., BASILIO CABALLES, DEMOCRITO TEVES, VOLTAIRE DELA CERNA, ROBERTO COBARRUBIAS, VILMA GOMEZ CHUA, RUBEN GALLITO, EDGARDO CONCEPCION, VICTOR COQUILLA, JOSE DAKOYKOY, PATERNO WONG, EVELYN LACAYA, RODRIGO GONZALES, JEOGINA GOZO, MIGUEL CABALLES, CONSUELO JAVELOSA, QUILIANO LASCO, FRANKLIN LAUTA, JUSTINIANA LARGO, RONALD LICUPA, ALAN MILANO, MARIA MONSANTO, REYNALDO NOYNAY, RAMON PARADELA, NATALIO PLAZA, LUZPURA QUIROGA, NOE RODIS, COSMENIA SAAVEDRA, LEONARDO SAGARIO, LETICIA SERRA, SIEGFREDO TABANAG, LUCINO TAMAOSO, DANILO TERANTE, HELEN CALVO TORRES, ERNESTO VILLANUEVA, DOLORES VILLONDO, EDWARD YAP, ROWENA VIVARES, DOLORES SANANAM, RODRIGO BACALSO, YOLANDA TABLANTE, ROMERO BALATUCAN, CARMELITA LADOT, PANFILO CANETE, EMMANUEL CHAVEZ, JR., SERGIO GALIDO, ANGEL COLLERA, ZOSIMO CUNANAN, RENE BURT LLANTO, GIL BATAYOLA, VICENTE DELANTE, CANDELARIO DE DIOS, JOSE MA. ESTELLA, NECITA TRINIDAD, ROTELLO ILUMBA, TEODORICO JAYME, RAYMUNDO ABSIN, RUDY MANEJA, REYNA RAMOS, ANASTACIA BLANCO, FE DELMUNDO, ELNORA MONTERA, MORRISON MONTESCLAROS, ELEAZAR PANIAMOGAN, BERNARDO PILAPIL, RODOLFO POL, DEMOSTHENES REDOBLE, PACHECO ROMERO, DELLO SABANAL, SARAH SALINAS, RENATO SOLATORIO, EDUARDO

TABLANTE, EMMANUEL TAN, FELICISIMO TESALUNA, JOSE VERALLO, JR., MAGDALENO VERGARA, ESMERALDA ABARQUEZ, MAC ARTHUR DACUYCUY ACOMPANADA, TRINIDAD ADLAWAN, FE ELIZORDO ALCANTARA, REOSEBELLA AMPER, ZENAIDA BACALSO, ELIZA BADANA, GEORGIA BAS, ERLINDA BURIAS, ELDEFONSO BURIAS, CORAZON CASENAS, REGINO CASTANEDA, GEORGE CATADA, CARMENCITA G. CHAVEZ, LORETIA CUNANAN, FLORES DELFIN, TERESITA ESPINO, ELVIE GALANZA, AMADEA GALELA, TERESITA. JUNTILLA, LEONARDA KAPUNGAN, ADORACION LANAWAN, LINDA LAYAO, GERARDO LAYSON, VIRGILIO LIBETARIO, RAYMOND PAUL LOGARTA, NORMA LUCERO, ANATOLIA MENDEZ, ELIODORO MENDEZ, JUDALINE MONTE, ELMA OCAMPO, ESTEFA OLIVARES, GEORGE ORAIS, CRISPINA PALANG, GRETA PEGARIDO, MELBA QUIACHON, REMEDIOS QUIROS, VIRGINIA RANCES, EDNA DELOS REYES, VICENTE TAN, EMERGENCIA ROSELL, JULIETA TATING, MERCIA TECARRO, FELISA VERGARA, WEMINA VILLACIN, MACRINA YBARSABAL, MILAGROS CATALAN, JULIETA AQUINDE, SONIA ARTIAGA, MA. TERESITA OBANDO, ASUNCION ABAYAN, ESTHER CARREON, ECHEVARRE, BUENAFE SAMSON, CONCEPCION GONZALES, VITALIANA VENERACION, LEONCIA ABELLAR, REYNITA VILLACARLOS. respondents. No. L-68345 December 18, 1987 DIVINE WORD COLLEGE OF LEGAZPI, petitioner, vs. The Honorable Deputy Minister of Labor and Employment, VICENTE LEOGARDO, JR., the HONORABLE REGIONAL DIRECTOR (Regional Office No. 5) of the Ministry of Labor & Employment GERARDO S. CASTILLO, CECILIA MANUEL and other alleged complainants, respondents. Nos. L-69224-5 December 18, 1987FAR EASTERN UNIVERSITY EMPLOYEES LABOR UNION, petitioner, vs. FAR EASTERN UNIVERSITY and the NATIONAL LABOR RELATIONS COMMISSION, respondents. No. 70832 December 18, 1987 GREGORIO T. FABROS, ROGELIO B. DE GUZMAN, CRESENCIANO ESPINO, JOSE RAMOS SUNGA, BAYLON BANEZ FERNANDO ELESTERIO, ISMAEL TABO, AMABLE TUIBEO CELSO TUBAY, RAFAEL HERNANDEZ, GERONIMO JASARENO, MEL BALTAZAR, MA. LOURDES PASCUAL, T. DEL ROSARIO ACADEMY TEACHERS and EMPLOYEES ASSOCIATION, DENNIS MONTE, BECKY TORRES, LOIDA VELASCO, ROMLY NERY, DAISY N. AMPIG, PATRICIO DOLORES, ROGELIO RAMIREZ, and NILDA L. SEVILLA, petitioners, vs. The HON. JAIME C. LAYA, in his capacity as Minister of Education, Culture and Sports, respondents. No. L-76524 December 18, 1987 JASMIN BISCOCHO, ROWENA MARIANO, AGNES GALLEGO, MA. ANA ORDENES, ISABEL DE LEON, LUZVIMINDA FIDEL, MARIQUIT REYES, SOTERA ORTIZ, ANGELINA ROXAS, BITUIN DE PANO, ELIZABETH ORDEN, APOLLO ORDEN, GUILLERMA CERCANO, IMELDA CARINGAL, EFREN BATIFORA, ROSIE VALDEZ, DELIA QUILATEZ, FELIX RODRIGUEZ, OSCAR RODRIGUEZ, JOVITA CEREZO, JOSEFINA BONDOC, BELEN POSADAS, DOLORES PALMA, ANTONINA CRUS, CONRADO BANAYAT, TERESITA LORBES, and CORAZON MIRANDA, petitioners, vs. THE HONORABLE AUGUSTO SANCHEZ, in his capacity as Minister of Labor and Employment, ESPIRITU SANTO PAROCHIAL SCHOOL AND ESPIRITU SANTO PAROCHIAL SCHOOL FACULTY ASSOCIATION, respondents. No. 76596 December 18, 1987 RICARDO C. VALMONTE and CORAZON BADIOLA, petitioners, vs. THE HONORABLE AUGUSTO SANCHEZ, in his capacity as Minister of Labor and Employment, ESPIRITU SANTO PAROCHIAL SCHOOL FACULTY ASSOCIATION, and ESPIRITU SANTO PAROCHIAL SCHOOL, respondents. CORTES, J.: Six cases involving various private schools, their teachers and non-teaching school personnel, and even parents with children studying in said schools, as well as the then Minister of Labor and Employment, his Deputy, the National Labor Relations Commission, and the then Minister of Education, Culture and Sports, have been consolidated in this single Decision in order to dispose of uniformly the common legal issue raised therein, namely, the allocation of the incremental proceeds of authorized tuition fee increases of private schools provided for in section 3 (a) of Presidential Decree No. 451, and thereafter, under the Education Act of 1982 (Batas Pambansa Blg. 232). Specifically, the common problem presented by these cases requires an interpretation of section 3(a) of Pres. Decree No. 451 which states: SEC. 3. Limitations. The increase in tuition or other school fees or other charges as well as the new fees or charges authorized under the next preceding section shall be subject to the following conditions; (a) That no increase in tuition or other school fees or charges shall be approved unless sixty (60%) per centum of the proceeds is allocated for increase in salaries or wages of the members of the faculty and all other employees of the school concerned, and the balance for institutional development, student assistance and extension services, and return to investments: Provided That in no case shall the return to investments exceed twelve (12%) per centum of the incremental proceeds; xxx xxx xxx

In addition, there is also a need for a pronouncement on the effect of the subsequent enactment of B.P. Blg. 232 which provides for the allocation of tuition fee increases in section 42 thereof. In a nutshell, the present controversy was precipitated by the claims of some school personnel for allowances and other benefits and the refusal of the private schools concerned to pay said allowances and benefits on the ground that said items should be deemed included in the salary increases they had paid out of the 60% portion of the proceeds from tuition fee increases provided for in section 3 (a) of Pres. Decree No. 451. The interpretation and construction of laws being a matter of judicial power and duty [Marbury v. Madison, 1 Cranch 137 (1803); Endencia v. David, 93 Phil. 696 (1953)], this Court has been called upon to resolve the controversy. In the process of reading and at times, having to decipher, the numerous pleadings filed in the six cases, the Court found that the main issue has been approached by the parties from almost diametrical points, thereby bringing into focus three sub-issues: first, whether or not allowances and other fringe benefits of faculty members and other school employees may be charged against the 60% portion of the tuition fee increases provided for in section 3(a) of Pres. Dec. No. 451: second, whether or not the same items may be charged against said portion under the provisions of B.P. Blg. 232: and, third, whether or not schools and their employees may enter into a collective bargaining agreement allocating more than 60% of said incremental proceeds for salary increases and other benefits of said employees. After these sub-issues have been resolved, the Court will tackle the other incidents attending the individual cases, seriatim. The factual antecedents that brought these cases before this Tribunal are as follows:

I..

FACTUAL BACKGROUND OF EACH CASE

A. CEBU INSTITUTE OF TECHNOLOGY CASE This case originated from a Complaint filed with the Regional Office No. VII of the Ministry of Labor on February 11, 1981 against petitioner Cebu Institute of Technology (CIT) by private respondents, Panfilo Canete, et al., teachers of CIT, for non-payment of: a) cost of living allowances (COLA) under Pres. Dec. Nos. 525, 1123, 1614, 1678 and 1713, b) thirteenth (13th) month pay differentials and c) service incentive leave. By virtue of an Order issued by the then Deputy Minister of Labor Carmelo C. Noriel, a labor-management committee composed of one representative each from the Ministry of Labor and Employment (MOLE), the Minister of Education, Culture and Sports (MECS), and two representatives each from CIT and from the teachers was created. Said committee was to ascertain compliance with the legal requirements for the payment of COLA, thirteenth (13th) month pay and service incentive leave [Rollo, p. 84]. The position taken by CIT during the conference held by the labor management committee was that it had paid the allowances mandated by various decrees but the same had been integrated in the teacher's hourly rate. It alleged that the payment of COLA by way of salary increases is in line with Pres. Dec. No. 451. It also claimed in its position paper that it had paid thirteenth month pay to its employees and that it was exempt from the payment of service incentive leave to its teachers who were employed on contract basis [Rollo, pp. 85-86]. After the report and recommendation of the committee, herein public respondent, then Minister of Labor and Employment issued the assailed Order dated September 29, 1981 and held that the basic hourly rate designated in the Teachers' Program is regarded as the basic hourly rate of teachers exclusive of the COLA, and that COLA should not be taken from the 60% incremental proceeds of the approved increase in tuition fee. The dispositive portion of the Order reads: PREMISES CONSIDERED, CIT is hereby ordered to pay its teaching staff the following: 1) 2) 3) COLA under P.D.'s 525 and 1123 from February 1978 up to 1981; COLA under P.D.'s l6l4,1634,1678 and l7l3;and Service incentive leave from l978 upto l981.

CIT is further directed to integrate into the basic salaries of its teachers and (sic) COLA under P.D.'s 525 and 1123 starting on January 1981, pursuant to P.D. 1751. For purposes of integration, the hourly rate shown in its Teachers' Program for school year 198182 shall be considered as the basic hourly rate. SO ORDERED. Petitioner assails the aforesaid Order in this Special Civil Action of certiorari with Preliminary Injunction and/or Restraining Order. The Court issued a Temporary Restraining Order on December 7, 1981 against the enforcement of the questioned Order of the Minister of Labor and Employment. B. DIVINE WORD COLLEGE OF LEGAZPI CASE Upon a complaint filed by ten faculty members for alleged non-compliance by herein petitioner Divine Word College of Legazpi with, among others, Pres. Dec. No. 451, i.e., allowances were charged to the 60% incremental proceeds of tuition fee increase, the Labor Regulation Section of Regional Office No. V (Legazpi City) of the Ministry of Labor and Employment conducted an inspection of the employment records of said school. On the basis of the report on the special inspection that the school did not comply with Pres. Dec. No. 451, herein respondent Regional Director issued an Order dated May 30, 1983, requiring compliance by the Divine Word College. The latter filed a Memorandum of Appeal from said Order which the Regional Director treated as a Motion for Reconsideration. Upon failure of the school to comply with the aforesaid Order, another Order (August 2, 1983) was issued by herein respondent Regional Director requiring herein petitioner to pay the faculty members- complainants (herein private respondents) the amounts indicated therein or the total sum of Six Hundred Seventeen Thousand Nine Hundred Sixty Seven Pesos and Seventy Seven Centavos (P 617,967.77). Petitioner's Motion for Reconsideration of the Order was denied. On appeal, the respondent Deputy Minister of Labor and Employment affirmed the Order of the Regional Director, viz: xxx xxx xxx

Coming now to the substantial merit of the case, we share the view that the emergency allowances due the complainants under the several presidential decrees (PD's 525, 1123, etc.) cannot be charged by the respondent against the 60% of the incremental proceeds from increase in tuition fees authorized under PD 451, not only because as per decision of the Supreme Court (UE vs. UE Faculty Association, et. al., G.R. No. 57387, September 30, 1982) said allowances whether mandated by law or secured by collective bargaining should be taken only from the return to investment referred to in the decree if the school has no other resources to grant the allowances but not from the 60% incremental proceeds, but also because to hold otherwise would, to our mind, inevitably result in the loss of one benefit due the complainants-that is the salary or wage increase granted them by PD 451. In other words, we believe that by paying the complainants' allowances out of the 60% incremental proceeds intended for their salary increase they are practically being deprived of one benefit-their share in the 60% incremental proceeds in terms of salary or wage increase.

WHEREFORE, for the reasons abovestated, the Order appealed from is hereby AFFIRMED, and the appeal DISMISSED, for lack of merit. SO ORDERED. (Annex "K " to Petition; Rollo, p. 108, 110). This special civil action of certiorari and Prohibition with Preliminary Injunction questions the interpretation of, and application by the respondent Deputy Minister, of the provisions of Pres. Dec. No. 45 1, as set forth in the assailed Order. On March 25, 1985, after considering the allegations, issues and arguments adduced in the Petition as well as the Comment thereon of the public respondent and dispensing with the private respondents' Comment, the Court resolved to dismiss the Petition for lack of merit (Rollo, p. 198). On April 26, 1985, petitioner filed a Motion for Reconsideration with Motion to Consider the Case En Banc. On June 26, 1985 the First Division of the Court referred the case to the Court En Banc for consolidation with G.R. No. 70832, entitled "Gregorio T. Fabros, et al vs. Hon. Jaime C. Laya, etc. " since it involves the same issue on the application of 60% incremental proceeds of authorized tuition fee increases [Rollo, p. 235]. The Court EN BANC resolved to accept the case. (Resolution of July 16, 1985). These cases were further consolidated with other cases involving the same issues. C. FAR EASTERN UNIVERSITY CASE On December 17, 1978, petitioner Union filed with the Ministry of Labor and Employment a complaint against respondent University for non-payment of legal holiday pay and under-payment of the thirteenth (13th) month pay. On July 7, 1979, while the case was pending, the Union President, in his personal capacity, filed another complaint for violation of Pres. Dec. No. 451 against the same respondent. The two cases were forthwith consolidated and jointly heard and tried. On March 10, 1980, Labor Arbiter Ruben A. Aquino promulgated a decision the dispositive portion of which is quoted hereunder: RESPONSIVE TO THE FOREGOING, respondent is hereby directed, within ten (10) days from receipt hereof, to: 1. To (sic) pay the paid legal holidays that it withdrew since January 14, 1976 up to the present; and

2. Pay the 13th month pay differential of complainant's for the covered period December 16, 1975 to December 17, 1978, date of filing of complaint for non-payment of legal holiday pay and under payment of the 13th month pay, and thereafter. Barred forever are money claims beyond three (3) years from the time the course (sic) of action occurred. Respondent's formula on transportation allowance which was deducted from the 13th month pay is thus subject to this prescriptive period, for purposes of computation of differentials for the 13th month pay. The claim under PD 451 is hereby dismissed for lack of merit. SO ORDERED. (Annex " E " to Petition; Rollo, p. 55, 65-66). Both parties appealed the decision of the Labor Arbiter. On September 18, 1984, the respondent Commission disposed of the appeal in the following manner: RESPONSIVE TO THE FOREGOING, the Decision of Labor Arbiter Ruben A. Aquino in the instant case dated March 10, 1980 is hereby Modified in the sense that complainant's claims for legal holiday pay and 13th month pay are likewise dismissed for lack of merit and the dismissal of the claim under P.D. 451 is hereby Affirmed en (sic) toto. (Annex "A" to Petition: Rollo, p. 24, 35). Petitioner's Motion for Reconsideration dated September 29, 1984 was denied for lack of merit on November 8, 1984. Before this Court is the petition on certiorari filed by the Union assailing the abovementioned decision of the Commissioner. D. FABROS CASE This petition is in the nature of a class suit brought by petitioners in behalf of the faculty members and other employees of more than 4000 private schools nationwide. Petitioners seek to enjoin the implementation of paragraphs 7 to 7.5 of MECS Order No. 5, series of 1985 on the ground that the said order is null and void for being contrary to Pres. Dec. No. 451 and the rulings of the Supreme Court in the cases of University of the East v. UE Faculty Association [G.R. No. L-57387, September 20, 1982, 117 SCRA 5541, University of Pangasinan Faculty Union v. University of Pangasinan and NLRC [G.R. No. 63122, February 20, 1984, 127 SCRA 691 ], St. Louis University Faculty Club v. NLRC and St. Louis University [G.R. No. 65585, September 28, 1984, 132 SCRA 380]. On September 11, 1982, Batas Pambansa Blg. 232 (Education Act of 1982) was signed into law. On the matter of tuition and other school fees of private schools, section 42 of said law provides as follows:

Sec. 42. Tuition and other School Fees. Each private School shall determine its rate of tuition and other school fees or charges. The rates and charges adopted by schools pursuant to this provision shall be collectible, and their application or use authorized subject to rules and regulations promulgated by the Ministry of Education, Culture and Sports. (Emphasis supplied). Invoking section 42 of B.P. Blg. 232, among others, as its legal basis, the then Minister of Education Jaime C. Laya promulgated on April 1, 1985 the disputed MECS Order No. 25, s. 1985 entitled Rules and Regulations To Implement the Provisions of B.P. Blg. 232. The Education Act of 1982, Relative to Student Fees for School Year 1985-1986. The relevant portions of said Order are quoted hereunder: 7. Application or Use of Tuition and

Other School Fees or Charges. 7.1. The proceeds from tuition fees and other school charges as well as other income of each school shall be treated as an institutional fund which shall be administered and managed for the support of school purposes strictly: Provided, That for the purpose of generating additional financial resources or income for the operational support and maintenance of each school two or more schools may pool their institutional funds, in whole or in part, subject to the prior approval of their respective governing boards. 7.2. Tuition fees shag be used to cover the general expenses of operating the school in order to allow it to meet the minimum standards required by the Ministry or any other higher standard, to which the school aspires. They may be used to meet the costs of operation for maintaining or improving the quality of instruction/training/research through improved facilities and through the payment of adequate and competitive compensation for its faculty and support personnel, including compliance with mandated increases in personnel compensation and/or allowance. 7.3. Tuition fees shag be used to cover minimum and necessary costs including the following: (a) compensation of school personnel such as teaching or academic staff, school administrators, academic non-teaching personnel, and non-academic personnel, (b) maintenance and operating expenses, including power and utilities, rentals, depreciation, office supplies; and (c) interest expenses and installment payments on school debts. 7.4. Not less than sixty (60) percent of the incremental tuition proceeds shall be used for salaries or wages, allowances and fringe benefits of faculty and support staff, including cost of living allowance, imputed costs of contributed services, thirteenth (13th) month pay, retirement fund contributions, social security, medicare, unpaid school personnel claims and payments as may be prescribed by mandated wage orders. collective bargaining agreements and voluntary employer practices, Provided That increases in fees specifically authorized for the purposes listed in paragraph 4.3.3 hereof shall be used entirely for those purposes. (Italics supplied). 7.5. Other student fees and charges as may be approved, including registration, library, laboratory, athletic, application, testing fees and charges shall be used exclusively for the indicated purposes, including (a) the acquisition and maintenance of equipment, furniture and fixtures, and buildings, (b) the payment of debt amortization and interest charges on debt incurred for school laboratory, athletic, or other purposes, and (c) personal services and maintenance and operating expenses incurred to operate the facilities or services for which fees and charges are collected. The Petition prayed for the issuance of a temporary restraining order which was granted by this Court after hearing. The dispositive portion of the resolution dated May 28, 1985 reads as follows: After due consideration of the allegations of the petition dated May 22, 1985 and the arguments of the parties, the Court Resolved to ISSUE, effective immediately and continuing until further orders from this Court, a TEMPORARY RESTRAINING ORDER enjoining the respondent from enforcing or implementing paragraphs 7.4 to 7.5 of MECS Order No. 25, s. 1985, which provide for the use and application of sixty per centum (60%) of the increases in tuition and other school fees or charges authorized by public respondent for the school year 1985-1986 in a manner inconsistent with section 3(a), P.D. No. 451, (which allocates such 60% of the increases exclusively "for increases in salaries or wages of the members of the faculty and other employees of the school concerned.") and directing accordingly that such 60% of the authorized increases shall be held in escrow by the respective colleges and universities, i.e., shall be kept intact and not disbursed for any purpose pending the Court's resolution of the issue of the validity of the aforementioned MECS Order in question. (Rollo, p. 21). In the same resolution, the Philippine Association of Colleges and Universities (PACU) was impleaded as respondent. Subsequent to the issuance of this resolution, four (4) schools, represented in this petition, moved for the lifting of the temporary restraining order as to them. In separate resolutions, this Court granted their prayers. Ateneo de Manila University, De La Sale University (Taft Avenue) and De La Salle University-South, through their respective counsels, manifested that for the school year 1985-1986, tuition fee increase was approved by the MECS and that on the basis of Pres. Dec. No. 451, 60% of the tuition fee increases shall answer for salary increase. However, a budgeted salary increase, exclusive of living allowances and other benefits, was approved for the same school year which when computed amounts to more than the 60%. This Court granted the motions in separate resolutions lifting the temporary restraining order with respect to these schools in order that they may proceed with the implementation of the general salary increase for their employees.

In the case of St. Louis University, its Faculty Club, Administrative Personnel Association and the University itself joined in a petition seeking for leave that 49% of the increase in tuition and other fees for school year 1985-1986 be released. Petitioners manifested that the remaining balance shall continue to be held in escrow by the University. In a resolution dated January 28, 1986, the Court resolved as follows: Accordingly, the Temporary Restraining Order issued by this Court on May 28, 1985 is hereby ordered LIFTED with respect to Saint Louis University of Baguio City in order that it may proceed immediately with the implementation of salary increases for its employees. D. BISCOCHO CASE The Espiritu Santo Parochial School and the Espiritu Santo Parochial School Faculty Association were parties to a labor dispute which arose from a deadlock in collective bargaining. The parties entered into conciliation proceedings. The union went on strike after efforts at the conciliation failed. Subsequently, a return to work agreement was forged between the parties and both agreed to submit their labor dispute to the jurisdiction of the Minister of Labor. In the exercise of his power to assume jurisdiction, the Ministry of Labor and Employment issued an Order dated April 14, 1986 which provides for the following: IN CONSIDERATION OF ALL THE FOREGOING, the Ministry hereby declares the strike staged by the Union to be legal and orders the following: a) the School to submit the pertinent record of employment of Romualdo Noriego to the Research and Information Division of the NLRC for computation of his underpayment of wages and for the parties to abide by the said computation; b) the School to submit all pertinent record of collections of tuition fee increases for school year (sic) 1982-1983, 1983-1984 and 1984-1985 to the Research and Information Division of the NLRC for proper computation and for equal distribution of the amount to all employees and teachers during the abovementioned school year (sic) as their salary adjustment under P.D. 461; c) the parties to wait for the final resolution of the illegal dismissal (case) docketed as NLRC NCR Case No. 5-1450-85 and to abide by the said resolution; d) to furnish the MECS a copy of this order for them to issue the guidelines in the implementation of PRODED Program;

e) the parties to execute a collective bargaining agreement with an economic package equivalent to 90% of the proceeds from tuition fee increases for school year 1985-1986 and another 90% for school year 1986-1987 and 85% for school year 1987-1988. The amount aforementioned shall be divided equally to all members of the bargaining unit as their respective salary adjustments. Such other benefits being enjoyed by the members of the bargaining unit prior to the negotiation of the CBA shall remain the same and shall not be reduced. f) the School to deduct the amount equivalent to ten (10%) per cent of the backwages payable to all members of the bargaining unit as negotiation fee and to deliver the same to the Union Treasurer for proper disposition (Emphasis supplied). SO ORDERED. (Rollo, pp. 16-17) Pursuant to the said order, private respondent Union agreed to incorporate in their proposed collective bargaining agreement (CBA) with the School the following: 2) The Union and School Administration will incorporate the following in their CBA -

1) The computation of the tuition fee increase shall be gross to gross from which the corresponding percentage of 90% will be taken. The resulting amount will be divided among 141.5 employees for 1985-86 and 132.5 employees for 1986-87. 1/2 of the resulting increase will be added to basic and divided by 13.3 to arrive at monthly increase in basic. The other 1/2 will be divided by 12.3 to arrive at monthly increase in living allowance. xxx 4) xxx xxx xxx

Upon request/demand of the Union, School win deduct from backwages of managerial employees and others outside the bargaining unit what Union win charge its own members in the form of attorney's fees, special assessment and union dues/agency fee.

5) The signing of the CBA and payment of backwages and others shall be on November 26, 1986 at the Espiritu Santo Parochial School Library. (Rollo, pp. 3-4). The herein petitioners, Jasmin Biscocho and 26 others, all employees and faculty members of the respondent School, filed the present petition for prohibition to restrain the implementation of the April 14, 1986 Order of respondent Labor Minister as well as the agreements arrived at pursuant thereto. They contend that said Order and agreements affect their rights to the 60% incremental proceeds under Pres. Dec. No. 451 which provide for the exclusive application of the 60% incremental proceeds to basic salary. Acting on the petitioners' prayer, this Court immediately issued a temporary restraining order on November 25, 1986 ". . . enjoining the respondents from enforcing, implementing and proceeding with the questioned order of April 14, 1986 and collective bargaining agreement executed between respondents Union and the School Administration in pursuance thereof." [Rollo, p. 20]. F. VALMONTE CASE This Petition was filed by parents with children studying at respondent school, Espiritu Santo Parochial School to nullify the Order dated April 14, 1986 issued by public respondent, then Minister of Labor and Employment, specifically paragraphs (e) and (f) thereof, quoted in the Biscocho case. The award contained in the said Order is the result of the assumption of jurisdiction by the public respondent over a labor dispute involving the private respondents school and faculty association. The latter had earlier filed a notice of strike because of a bargaining deadlock on the demands of its members for additional economic benefits. After numerous conciliation conferences held while the union was on strike, the parties voluntarily agreed that the public respondent shall assume jurisdiction over all the disputes between them. As to the subject matter of the instant case, the public respondent found that the latest proposals of the respondent school was to give 85% of the proceeds from tuition fee increases for the school years to be divided among the teachers and employees as salary adjustments. What the respondent faculty association offered to accept was a package of 95% for school year 1985-1986, 90% for school year 1986- 1987. The respondent school offered to strike the middle of the two positions, hence the Order complained of by the petitioners [See Annex "A", Petition; Rollo, pp. 9, 14-15; Comment of the Respondent Faculty Association: Rollo, p. 26]. II. RESOLUTION OF THE COMMON LEGAL ISSUE

This long-drawn controversy has sadly placed on the balance diverse interests, opposed yet intertwined, and all deserving, and demanding, the protection of the State. On one arm of the balance hang the economic survival of private schools and the private school system, undeniably performing a complementary role in the State's efforts to maintain an adequate educational system in the country. Perched precariously on the other arm of the same balance is the much-needed financial uplift of schoolteachers, extolled for all times as the molders of the minds of youth, hence of every nation's future. Ranged with them with needs and claims as insistent are other school personnel. And then, anxiously waiting at the sidelines, is the interest of the public at large, and of the State, in the continued availability to all who desire it, high-standard education consistent with national goals, at a reasonable and affordable price. Amidst these opposing forces the task at hand becomes saddled with the resultant implications that the interpretation of the law would bear upon such varied interests. But this Court can not go beyond what the legislature has laid down. Its duty is to say what the law is as enacted by the lawmaking body. That is not the same as saying what the law should be or what is the correct rule in a given set of circumstances. It is not the province of the judiciary to look into the wisdom of the law nor to question the policies adopted by the legislative branch. Nor is it the business of this Tribunal to remedy every unjust situation that may arise from the application of a particular law. It is for the legislature to enact remedial legislation if that be necessary in the premises. But as always, with apt judicial caution and cold neutrality, the Court must carry out the delicate function of interpreting the law, guided by the Constitution and existing legislation and mindful of settled jurisprudence. The Court's function is therefore limited, and accordingly, must confine itself to the judicial task of saying what the law is, as enacted by the lawmaking body. FIRST SUB-ISSUE A. Whether or not allowances and other fringe benefits of employees may be charged against the 60% portion of the incremental proceeds provided for in sec. 3(a) of Pres. Dec. No. 451. 1. Arguments raised in the Cebu Institute of Technology case

In maintaining its position that the salary increases it had paid to its employees should be considered to have included the COLA, Cebu Institute of Technology (CIT) makes reference to Pres. Dec. No. 451 and its Implementing Rules. The line of reasoning of the petitioner appears to be based on the major premise that under said decree and rules, 60% of the incremental proceeds from tuition fee increases may be applied to salaries, allowances and other benefits of teachers and other school personnel. In support of this major premise, petitioner cites various implementing rules and regulations of the then Minister of Education, Culture and Sports, to the effect that 60% of the incremental proceeds may be applied to salaries, allowances and other benefits for members of the faculty and other school personnel [Petition citing Implementing Rules and Regulations of Pres. Dec. No. 451 of various dates; Rollo, pp. 318-320]. Petitioner concludes that the salary increases it had granted the CIT teachers out of the 60% portion of the incremental proceeds of its tuition fee increases from

1974-1980 pursuant to Pres. Dec. No. 451 and the MECS implementing rules and regulations must be deemed to have included the COLA payable to said employees for those years [Rollo, pp. 911]. With leave of Court, the Philippine Association of Colleges and Universities, filed its Memorandum as Intervenor in support of the proposition that schools may pay the COLA to faculty members and other employees out of the 60% of the increase in tuition fees. In addition to the arguments already set forth in the memorandum of the petitioner CIT, intervenor PACU attacks the Decision of this Court in University of the East v. University of the East Faculty Association et. all G.R. No. 57387 as "not doctrinal" and inapplicable to the CIT case. The Court held in the UE case, which was promulgated on September 30, 1982, during the pendency of these cases, that: ... allowances and benefits should be chargeable to the return to investment referred to in Sec. 3(a), if the schools should happen to have no other resources than incremental proceeds of authorized tuition fee increases ... (See Dispositive Portion of the Decision) Intervenor PACU alleges that the aforecited U.E. decision does not categorically rule that COLA and other fringe benefits should not be charged against the 60% incremental proceeds of the authorized tuition fee increase. The Solicitor General, on the other hand, argues in support of the Order of the public respondent that Pres. Dec. No. 451 allocates the 60% proceeds of tuition fee increases exclusively for salary increases of teachers and non- teaching supportive personnel of the school concerned, and that the Decree does not provide that said salary increases would take the place of the COLA [Rollo, p. 244-245]. He cites as authority for this stance, two (2) memoranda of the then President dated June 6, 1978 and March 30, 1979 both of which provide that the 60% incremental proceeds of tuition fee increases "shall be allocated for the increase in the salaries of teachers and supportive personnel. " Anent the U.E. case, the Solicitor General states that the Supreme Court in deciding said case took note of the stand of the Office of the President that the 60% incremental proceeds shall be solely applied to salaries of faculty members and employees. On August 7, 1986, considering the supervening events, including the change of administration, that have transpired during the pendency of these cases, the Court required the Solicitor General to state whether or not he maintains the action and position taken by his predecessor-in-office. In his Compliance with said Resolution, the Solicitor General Manifested the position that: a. If the tuition fee increase was collected during the effectivity oil Presidential Decree No. 451, 60% thereof shall answer exclusively for salary increase of school personnel. Other employment benefits shall be covered by the 12% allocated for return of investment, this is in accordance with the ruling of this Honorable Court in University of the East vs. U.E. Faculty Association, et. al (117 SCRA 554), ... and reiterated in University of Pangasinan Faculty Union v. University of Pangasinan, et. al. (127 SCRA 691) and St. Louis Faculty Club u. NLRC (132 SCRA 380). b. If the salary increase was collected during the effectivity of Batas Pambansa Blg. (sic) 232, 60% thereof shall answer not only for salary increase of school personnel but also for other employment benefits. (Rollo, at pp. 513-514) 2. Arguments raised in the Divine Word College Case

Petitioner Divine Word College of Legazpi (DWC) advances the theory that the COLA, 13th month pay and other personnel benefits decreed by law, must be deemed chargeable against the 60% portion allocated for increase of salaries or wages of faculty and all other school employees. In support of this stance, petitioner points out that said personnel benefits are not included in the enumeration of the items for which the balance (less 60%) or 40% portion of the incremental proceeds may be alloted under section 3(a) of Pres. Dec. No. 451 [Rollo, pp. 29-30. Petitioner likewise cites the interpretation of the respondent Minister of Education, Culture and Sports embodied in the Implementing Rules and Regulations of P.D. 451, DEC Issuance, May 13, 1987; Rollo, p. 30], that the 60% incremental proceeds of authorized tuition fee increases may be applied to increases in emoluments and/or benefits for members of faculty, including staff and administrative employees of the school as the valid interpretation of the law, as against that made by the respondent Deputy Minister of Labor in the assailed Order. If the latter interpretation is upheld, petitioner would go as far as questioning the constitutionality of Pres. Dec. No. 451 upon the ground that the same discriminates against the petitioner and other private schools as a class of employers. According to the petitioner, the discrimination takes the form of requiring said class of employers to give 60% of their profits to their employees in addition to the COLA mandated by law, while other employers have to contend only with salary increases and COLA [Petition; Rollo, p. 46]. With regard to the Decision of this Court in the U.E. case, petitioner claims exemption therefrom upon the ground that the Court's interpretation of a law cannot be applied retroactively to parties who have relied upon the previous administrative interpretation which has not been declared invalid or unconstitutional [Petition; Rollo, pp. 50-51 1. Petitioner further argues on this point that if the court had intended to invalidate the MECS interpretation of the Decree, it should have positively stated so in the Decision [Petition; Rollo, p. 50]. The Comment of the public respondents cite as settled jurisprudence applicable to the case at bar, the ruling of this Court in the U.E. case, supra, which was reiterated in the subsequent cases of University of Pangasinan Faculty Union v. University of Pangasinan et all and St. Louis Faculty Club v. NLRC, et al. Public respondents Deputy Minister of Labor and Employment and Regional Director of the MOLE (Region V) likewise attack the validity of the Revised Implementing Rules and Regulations of Pres. Dec. No. 451 cited by the petitioner insofar as said rules direct the allotment of the 60% of incremental proceeds from tuition fee hikes for retirement plan, faculty development and allowances. They argue that said rules and regulations were invalid for having been promulgated in excess of the rule-making authority of the then Minister of Education under Pres. Dec. No. 451 which mandates that the 60% of incremental proceeds from tuition fee hikes should be allotted solely for salary

increases [Comment; Rollo, pp. 184-185]. Finally, with respect to the issue on the allege unconstitutionality of Pres. Dec. No. 451, the public respondents posit that a legislation (such as Pres. Dec. No. 451) which affects a particular class does not infringe the constitutional guarantee of equal protection of the law as long as it applies uniformly and without discrimination to everyone of that class [Comment; Rollo, p. 14]. 3. Arguments raised in the Far Eastern University case It is the petitioner's contention that in respect of Pres. Dec. No. 451, the decision of the NLRC is a defiance of the rulings of this Court in the cases of University of the East v. U.E. Faculty, Association et al. and of University of Pangasinan Faculty Union v. University of Pangasinan and NLRC (supra). The Union submits that monetary benefits, other than increases in basic salary, are not chargeable to the 60% incremental proceeds. The respondent University in its Comment dated June 13, 1982 refers to Article 97(f) of the Labor Code which provides a definition of the term "wages" to support its position that "salaries or wages" as used in Pres. Dec. No. 451 should be interpreted to include other benefits in terms of money. As mentioned in the Cebu Institute of Technology case, the Solicitor General filed its Compliance with this Court's resolution dated August 7, 1986 requiring him to manifest whether public respondents maintain the position they have taken in these consolidated cases. The resolution of September 25, 1986 required petitioners to Comment on said Compliance. The Comment dated December 6, 1986 was received by this Court after petitioner Union was required to show cause why no disciplinary action should be taken against them for failure to comply earlier. The Union agreed with the position taken by the Solicitor General that under Pres. Dec. No. 451, 60% of the tuition fee increases, shall answer exclusively for salary increase. However, it expressed disagreement with the opinion that during the effectivity of B.P. Blg. 232, the 60% ncremental proceeds shall answer not only for salary increases but also for other employment benefits. The Union argues that whereas "Pres. Dec. No. 451 is a law on a particular subject, viz., increase of tuition fee by educational institutions and how such increase shall be allocated B.P. Blg. 232 is not a law on a particular subject of increase of tuition fee . . . ; at most it is a general legislation on tuition fee as it touches on such subject in general, " [Comment on Compliance; Rollo, p. 376], Suppletory to its argument that B.P. Blg. 232 did not impliedly repeal Pres. Dec. No. 451, the Union also invokes the principle that a special or particular law cannot be repealed by a general law. RESOLUTION OF THE FIRST SUB-ISSUE This Court has consistently held, beginning with the University of the East case, that if the schools have no resources other than those derived from tuition fee increases, allowances and benefits should be charged against the proceeds of tuition fee increases which the law allows for return on investments under section 3(a) of Pres. Dec. No. 451, therefore, not against the 60% portion allocated for increases in salaries and wages (See 117 SCRA at 571). This ruling was reiterated in the University of Pangasinan case and in the Saint Louis University case. There is no cogent reason to reverse the Court's ruling in the aforecited cases. Section 3(a) of Pres. Dec. No. 451 imposes among the conditions for the approval of tuition fee increases, the allocation of 60% per cent of the incremental proceeds thereof for increases in salaries or wages of school personnel and not for any other item such as allowances or other fringe benefits. As aptly put by the Court in University of Pangasinan Faculty Union v. University of Pangasinan, supra: ... The sixty (60%) percent incremental proceeds from the tuition increase are to be devoted entirely to wage or salary increases which means increases in basic salary. The law cannot be construed to include allowances which are benefits over and above the basic salaries of the employees. To charge such benefits to the 60% incremental proceeds would be to reduce the increase in basic salary provided by law, an increase intended also to help the teachers and other workers tide themselves and their families over these difficult economic times. [Italics supplied] (127 SCRA 691, 702). This interpretation of the law is consistent with the legislative intent expressed in the Decree itself, i.e., to alleviate the sad plight of private schools and that of their personnel wrought by slump in enrollment and increasing operational costs on the part of the schools, and the increasing costs of living on the part of the personnel (Preamble, Pres. Dec. No. 451). While coming to the aid of the private school system by simplifying the procedure for increasing tuition fees, the Decree imposes as a condition for the approval of any such increase in fees, the allocation of 60% of the incremental proceeds thereof, to increases in salaries or wages of school personnel. This condition makes for a quid pro quo of the approval of any tuition fee hike by a school, thereby assuring the school personnel concerned, of a share in its proceeds. The condition having been imposed to attain one of the main objectives of the Decree, which is to help the school personnel cope with the increasing costs of living, the same cannot be interpreted in a sense that would diminish the benefit granted said personnel. In the light of existing laws which exclude allowances from the basic salary or wage in the computation of the amount of retirement and other benefits payable to an employee, this Court will not adopt a different meaning of the terms "salaries or wages" to mean the opposite, i.e. to include allowances in the concept of salaries or wages. As to the alleged implementing rules and regulations promulgated by the then MECS to the effect that allowances and other benefits may be charged against the 60% portion of the proceeds of tuition fee increases provided for in Section 3(a) of Pres. Dec. No. 45 1, suffice it to say that these were issued ultra vires, and therefore not binding upon this Court. The rule-making authority granted by Pres. Dec. No. 451 is confined to the implementation of the Decree and to the imposition of limitations upon the approval of tuition fee increases, to wit:

SEC. 4. Rules and Regulations. The Secretary of Education and Culture is hereby authorized, empowered and directed to issue the requisite rules and regulations for the effective implementation of this Decree. He may, in addition to the requirements and limitations provided for under Sections 2 and 3 hereof, impose other requirements and limitations as he may deem proper and reasonable. The power does not allow the inclusion of other items in addition to those for which 60% of the proceeds of tuition fee increases are allocated under Section 3(a) of the Decree. Rules and regulations promulgated in accordance with the power conferred by law would have the force and effect of law [Victorias Milling Company, Inc. v. Social Security Commission, 114 Phil. 555 (1962)] if the same are germane to the subjects of the legislation and if they conform with the standards prescribed by the same law [People v. Maceren, G.R. No. L-32166, October 18, 1977, 79 SCRA 450]. Since the implementing rules and regulations cited by the private schools adds allowances and other benefits to the items included in the allocation of 60% of the proceeds of tuition fee increases expressly provided for by law, the same were issued in excess of the rule-making authority of said agency, and therefore without binding effect upon the courts. At best the same may be treated as administrative interpretations of the law and as such, they may be set aside by this Court in the final determination of what the law means. SECOND SUB-ISSUE B. Whether or not allowances and other fringe benefits may be charged against the 60% portion of the incremental proceeds of tuition fee increases upon the effectivity of the Education Act of 1982 (B.P. Blg. 232). 1. Arguments raised in the Fabros case

In assailing MECS Order No. 25, s. 1985, petitioners argue that the matter of allocating the proceeds from tuition fee increases is still governed by Pres. Dec. No. 451. It is their opinion that section 42 of B.P. Blg. 232 did not repeal Pres. Dec. No. 451 for the following reasons: first, there is no conflict between section 42 of B.P. Blg. 232 and section 3(a) of Pres. Dec. No. 451 or any semblance of inconsistency to deduce a case of a repeal by implication: second, Pres. Dec. No. 451 is a specific law upon a particular subject-the purposes and distribution of the incremental proceeds of tuition fee increases, while B.P. Blg. 232 is a general law on the educational system; as such, a specific law is not repealed by a subsequent general law in the absence of a clear intention; and third, Pres. Dec. No. 451 is still the only law on the subject of tuition fee increases there being no prescription or provision in section 42 of B.P. Blg. 232 or elsewhere in the law. They furthermore aver that the disputed MECS Order which imposed additional burdens against the 60% incremental proceeds of tuition fee increases are not provided in either Pres. Dec. No. 451 or B.P. Blg. 232. The logical result as intimated by petitioners is that the inclusion of paragraph 7.4 and related paragraphs 7 to 7.3 and 7.5 in the questioned MECS order contravenes the statutory authority granted to the public respondent, and the same are therefore, void. Respondent PACU takes the contrary view contending that MECS Order No. 25, s. 1985, complies with the mandate of section 42 of B.P. Blg. 232 which law had already repealed Pres. Dec. No. 451. PACU notes that the University of the East case invoked by petitioners is not applicable because the issue in that case does not involve the effect of B.P. Blg. 232 on Pres. Dec. No. 451. The Solicitor General, representing the public respondent, after giving a summary of the matters raised by petitioner and respondent PACU, points out that the decisive issue in this case is whether B.P. Big. 232 has repealed Pres. Dec. No. 451 because on the answer to this question depends the validity of MECS Order No. 25, s. 1985. Public respondent holds the view consistent with that of PACU on the matter of B.P. Blg. 232 having repealed Pres. Dec. No. 451. To support this contention, the Solicitor General compared the respective provisions of the two laws to show the inconsistency and incompatibility which would result in a repeal by implication. RESOLUTION OF THE SECOND SUB-ISSUE On the matter of tuition fee increases section 42 of B.P. Blg. 232 provides: SEC. 42. Tuition and Other School Fees. Each private school shall determine its rate of tuition and other school fees or charges. The rates and charges adopted by schools pursuant to this provision shall be collectible and their application or use authorized, subject to rules and regulations promulgated by the Ministry of Education, Culture and Sports. (Emphasis supplied). The enactment of B.P. Blg. 232 and the subsequent issuance of MECS Order No. 25, s. 1985 revived the old controversy on the application and use of the incremental proceeds from tuition fee increases. As can be gleaned from the pleadings and arguments of the parties in these cases, one side, composed of the teachers and other employees of the private schools, insist on the applicability of section 3(a) of Pres. Dec. No. 451 as interpreted arid applied in the University of the East, University of Pangasinan and St Louis University cases, while the private schools uphold the view that the matter of allocating the incremental proceeds from tuition fee increases is governed by section 42 of B.P. Blg. 232 as implemented by the MECS Rules and Regulations. As stated, the latter's argument is premised on the allegation that B.P. Blg. 232 impliedly repealed Pres. Dec. No. 451. On the second sub-issue, therefore, this Court upholds the view taken by the Solicitor General in the Fabros case, that the decisive issue is whether B.P. Blg. 232 has repealed Pres. Dec. No. 451. In recognition of the vital role of private schools in the country's educational system, the government has provided measures to regulate their activities. As early as March 10, 1917, the power to inspect private schools, to regulate their activities, to give them official permits to operate under certain conditions and to revoke such permits for cause was granted to the then Secretary of Public Instruction by Act No. 2706 as amended by Act No. 3075 and Commonwealth Act No. 180. Republic Act No. 6139, enacted on August 31, 1970, provided for the

regulation of tuition and other fees charged by private schools in order to discourage the collection of exorbitant and unreasonable fees. In an effort to simplify the "cumbersome and time consuming" procedure prescribed under Rep. Act No. 6139 and "to alleviate the sad plight of private schools," Pres. Dec. No. 451 was enacted on May 11, 1974. While this later statute was being implemented, the legislative body envisioned a comprehensive legislation which would introduce changes and chart directions in the educational system, hence, the enactment of B.P. Blg. 232. What then was the effect of B.P. Blg. 232 on Pres. Dec. No. 451? The Court after comparing section 42 of B.P. Blg. 232 and Pres. Dec. No. 451, particularly section 3(a) thereof, finds evident irreconcilable differences. Under Pres. Dec. No. 451, the authority to regulate the imposition of tuition and other school fees or charges by private schools is lodged with the Secretary of Education and Culture (Sec. 1), where section 42 of B.P. Blg. 232 liberalized the procedure by empowering each private school to determine its rate of tuition and other school fees or charges. Pres. Dec. No. 451 provides that 60% of the incremental proceeds of tuition fee increases shall be applied or used to augment the salaries and wages of members of the faculty and other employees of the school, while B.P. Blg. 232 provides that the increment shall be applied or used in accordance with the regulations promulgated by the MECS. A closer look at these differences leads the Court to resolve the question in favor of repeal. As pointed out by the Solicitor General, three aspects of the disputed provisions of law support the above conclusion. First, the legislative authority under Pres. Dec. No. 451 retained the power to apportion the incremental proceeds of the tuition fee increases; such power is delegated to the Ministry of Education and Culture under B.P. Blg. 232. Second, Pres. Dec. No. 451 limits the application or use of the increment to salary or wage increase, institutional development, student assistance and extension services and return on investment, whereas B.P. Blg. 232 gives the MECS discretion to determine the application or use of the increments. Third, the extent of the application or use of the increment under Pres. Dec. No. 451 is fixed at the pre-determined percentage allocations; 60% for wage and salary increases, 12% for return in investment and the balance of 28% to institutional development, student assistance and extension services, while under B.P. Blg. 232, the extent of the allocation or use of the increment is likewise left to the discretion of the MECS. The legislative intent to depart from the statutory limitations under Pres. Dec. No. 451 is apparent in the second sentence of section 42 of B.P. Blg. 232. Pres. Dec. No. 451 and section 42 of B.P. Blg. 232 which cover the same subject matter, are so clearly inconsistent and incompatible with each other that there is no other conclusion but that the latter repeals the former in accordance with section 72 of B.P. Blg. 232 to wit: Sec. 72. Repealing clause. All laws or parts thereof inconsistent with any provision of this Act shall be deemed repealed or modified, as the case may be. Opinion No. 16 of the Ministry of Justice dated January 29, 1985, quoted below, supports the above conclusion: Both P.D. No. 451 and B.P. Blg. 232 deal with the imposition of tuition and other school fees or charges and their use and application, although the latter is broader in scope as it covers other aspects of the education system. We note substantial differences or inconsistencies between the provisions of the two laws. P.D. No. 451 prescribes certain limitations in the increase of tuition and other school fees and their application, whereas the latter law, B.P. Blg. 232 s silent on the matter. Under P.D. 451, rates of tuition/school fees need prior approval of the Secretary of Education, Culture (now Minister of Education, Culture and Sports), who also determines the reasonable rates for new school fees, whereas under B.P. Blg. 232, each private school determines its rate of tuition and other school fees or charges. P.D. No. 451 authorizes the Secretary of Education and Culture to issue requisite rules and regulations to implement the said Decree and for that purpose, he is empowered to impose other requirements and limitations as he may deem proper and reasonable in addition to the limitations prescribed by the Decree for increases in tuition fees and school charges, particularly, the limitations imposed in the allocation of increases in fees and charges, whereas under B.P. Blg. 232, the collection and application or use of rates and charges adopted by the school are subject to rules and regulations promulgated by the Ministry of Education, Culture and Sports without any mention of the statutory limitations on the application or use of the fees or charges. The authority granted to private schools to determine its rates of tuition and unconditional authority vested in the Ministry of Education, Culture and Sports to determine by rules and regulations the collection and application or use of tuition or fees rates and charges under B.P. Big. 232 constitute substantial and irreconcilable incompatibility with the provisions of P.D. No. 451, which should be for that reason deemed to have been abrogated by the subsequent legislation. Moreover, B.P. Blg. 232 is a comprehensive legislation dealing with the establishment and maintenance of an integrated system of education and as such, covers the entire subject matter of the earlier law, P.D. No. 451. The omission of the limitations or conditions imposed in P.D. No. 451 for increases in tuition fees and school charges is an indication of a legislative intent to do away with the said limitations or conditions. (Crawford, supra, p. 674). It has also been said that an act which purports to set out in full all that it intends to contain, operates as a repeal of anything omitted which was contained in the old act and not included in the amendatory act." (People vs. Almuete 69 SCRA 410; People vs. Adillo 68 SCRA 90) (Ministry of Justice, Op. No. 16, s. 1985). Having concluded that under B.P. Big. 232 the collection and application or use of tuition and other school fees are subject only to the limitations under the rules and regulations issued by the Ministry, the crucial point now shifts to the said implementing rules. The guidelines and regulations on tuition and other school fees issued after the enactment of B.P. Blg. 232 consistently permit the charging of allowances and other benefits against the 60% incremental proceeds. Such was the tenor in the MECS Order No. 23, s. 1983; MECS

Order No. 15, s. 1984; MECS Order No. 25, s. 1985; MECS Order No. 22, s. 1986; and DECS Order No. 37, s. 1987. The pertinent portion of the latest order reads thus: In any case of increase at least sixty percent (60%) of the incremental proceeds should be allocated for increases in or provisions for salaries or wages, allowances and fringe benefits of faculty and other staff, including accruals to cost of living allowance, 13th month pay, social security, medicare and retirement contribution and increases as may be provided in mandated wage orders, collective bargaining agreements or voluntary employer practices. The validity of these orders, particularly MECS Order No. 25, s. 1985, is attacked on the ground that the additional burdens charged against ". . . the 60% of the proceeds of the increases in tuition fees constitute both as [sic] an excess of statutory authority and as (sic) a substantial impairment of the accrued, existing and protected rights and benefits of the members of faculty and non-academic personnel of private schools." Memorandum for Petitioners, Rollo, p. 1911. Petitioners alleged that these additional burdens under the MECS Order are not provided in the law itself, either in section 42 of B.P. Blg. 232 or section 3(a) of Pres. Dec. No. 451, except increases in salaries in the latter provision. Section 42 of B.P. Blg. 232 grants to the Minister of Education (now Secretary of Education) rule-making authority to fill in the details on the application or use of tuition fees and other school charges. In the same vein is section 70 of the same law which states: SEC. 70. Rule-making Authority. The Minister of Education, Culture and Sports charged with the administration and enforcement of this Act, shall promulgate the necessary implementing rules and regulations. Contrary to the petitioners' insistence that the questioned rules and regulations contravene the statutory authority granted to the Minister of Education, this Court finds that there was a valid exercise of rule-making authority. The statutory grant of rule-making power to administrative agencies like the Secretary of Education is a valid exception to the rule on nondelegation of legislative power provided two conditions concur, namely: 1) the statute is complete in itself, setting forth the policy to be executed by the agency, and 2) said statute fixes a standard to which the latter must conform [Vigan Electric Light Co., Inc. v. Public Service Commission, G.R. No. L-19850, January 30, 1964, and Pelaez v. Auditor General, G. R. No. L-23825, December 24, 1965]. The Education Act of 1982 is "an act providing for the establishment and maintenance of an integrated system for education " with the following basic policy: It is the policy of the State to establish and maintain a complete, adequate and integrated system of education relevant to the goals of national development. Toward this end, the government shall ensure, within the context of a free and democratic system, maximum contribution of the educational system to the attainment of the following national development goals: 1. 2. To achieve and maintain an accelerating rate of economic development and social progress; To assure the maximum participation of all the people in the attainment and enjoyment of the benefits of such growth; and

3. To achieve and strengthen national unity and consciousness and preserve, develop and promote desirable cultural, moral and spiritual values in a changing world. The State shall promote the right of every individual to relevant quality education, regardless of sex, age, creed, socioeconomic status, physical and mental conditions, racial or ethnic origin, political or other affiliation. The State shall therefore promote and maintain equality of access to education as well as the enjoyment of the benefits of education by all its citizens. The State shall promote the right of the nation's cultural communities in the exercise of their right to develop themselves within the context of their cultures, customs, traditions, interests and belief, and recognizes education as an instrument for their maximum participation in national development and in ensuring their involvement in achieving national unity. (Section 3, Declaration of Basic Policy). With the foregoing basic policy as well as, specific policies clearly set forth in its various provisions, the Act is complete in itself and does not leave any part of the policy-making, a strictly legislative function, to any administrative agency. Coming now to the presence or absence of standards to guide the Minister of Education in the exercise of rule-making power, the pronouncement in Edu v. Ericta [G.R. No. L-32096, October 24, 1970, 35 SCRA 481, 497] is relevant: The standard may be either expressed or implied. If the former, the non-delegation objection is easily met. The standard though does not have to be spelled out specifically. It could be implied from the policy and purpose of the act considered as a whole. In the Reflector Law, clearly the legislative objective is public safety. What is sought to be attained as in Calalang v. Williams is "safe transit upon the roads." (Italics supplied). Thus, in the recent case of Tablarin et al. v. Hon. Gutierrez, et al. (G.R. No. 78164, July 31, 1987], the Court held that the necessary standards are set forth in Section 1 of the 1959 Medical Act, i.e., "the standardization and regulation of medical education" as well as in other provisions of the Act. Similarly, the standards to be complied with by Minister of Education in this case may be found in the various policies set forth in the Education Act of 1982.

MECS Order No. 25, s. 1985 touches upon the economic relationship between some members and elements of the educational community, i.e., the private schools and their faculty and support staff. In prescribing the minimum percentage of tuition fee increments to be applied to the salaries, allowances and fringe benefits of the faculty and support staff, the Act affects the economic status and the living and working conditions of school personnel, as well as the funding of the private schools. The policies and objectives on the welfare and interests of the various members of the educational community are found in section 5 of B.P. Blg. 232. which states: SEC. 5. Declaration of Policy and Objectives. It is likewise declared government policy to foster, at all times, a spirit of shared purposes and cooperation among the members and elements of the educational community, and between the community and other sectors of society, in the realization that only in such an atmosphere can the true goals and objectives of education be fulfilled. Moreover, the State shall: 1. Aid and support the natural right and duty of parents in the rearing of the youth through the educational system.

2. Promote and safeguard the welfare and interests of the students by defining their rights and obligations, according them privileges, and encouraging the establishment of sound relationships between them and the other members of the school community. 3. Promote the social and economic status of an school personnel, uphold their rights, define their obligations, and improve their living and working conditions and career prospects. 4. Extend support to promote the viability of those institutions through which parents, students and school personnel seek to attain their educational goals. On the other hand, the policy on the funding of schools in general, are laid down in section 33: SEC. 33. Declaration of Policy. It is hereby declared to be a policy of the State that the national government shall contribute to the financial support of educational programs pursuant to the goals of education as declared in the Constitution. Towards this end, the government shall: 1. Adopt measures to broaden access to education through financial assistance and other forms of incentives to schools, teachers, pupils and students; and 2. Encourage and stimulate private support to education through, inter alia, fiscal and other assistance measures.

Given the abovementioned policies and objectives, there are sufficient standards to guide the Minister of Education in promulgating rules and regulations to implement the provisions of the Education Act of 1982, As in the Ericta and Tablarin cases, there is sufficient compliance with the requirements of the non-delegation principle. THIRD SUB-ISSUE C. Whether or not schools and their employees may enter into a collective bargaining agreement allocating more than 60% of said incremental proceeds for salary increases and other benefits of said employees. 1. Arguments raised in the Biscocho and Valmonte cases

Assailed by the petitioners in the Biscocho and the Valmonte cases is the Order of the respondent Minister of Labor directing the execution of a CBA between the school and the respondent Espiritu Santo Parochial School Faculty Association which provides for an economic package equivalent to 90% of the proceeds of tuition fee increases for school year 1985-1986, another 90% for school year 1986-1987 and 85% for school year 1987-1988. Pursuant to said Order, petitioners in the Biscocho case alleged that the parties had agreed to incorporate in their CBA a provision which allocates one-half (1/2) of the 90% portion of the proceeds or 45% to increases in the monthly basic salaries and the other one-half (1/2) or 45% to increases in monthly living allowance. The petitioners in the two cases seek the nullification of the MOLE Order for exactly opposite reasons. In the Biscocho case, the controversy springs from what petitioners perceive to be a diminution of the benefits to be received by the school employees insofar as the CBA allocates only 45% for salary increases instead of 60%, which petitioners claim to be the portion set aside by Pres. Dec. No. 451 for that purpose. Parenthetically, the case questions the allocation of the remaining 45% of the 90% economic package under the CBA, to allowances. Stripped down to its essentials, the question is whether or not the 90% portion of the proceeds of tuition fee increases alloted for the economic package may be allocated for both salary increases and allowances. On the other hand, petitioners in the Valmonte case believe that the MOLE cannot order the execution of a CBA which would allocate more than 60% of the proceeds of tuition fee increases for salary increases of school employees. Furthermore, petitioners question the authority of the then Minister of Labor and Employment to issue the aforequoted Order insofar as this allocates the tuition fee increases of the respondent private school. According to them, only the Minister of Education, Culture and Sports has the authority to promulgate rules and regulations on the use of tuition fees and increases thereto, pursuant to the provisions of B.P. Blg. 232. They further argue that the assailed Order collides with the provisions of Pres. Dec. No. 451 insofar as it allocates 90% of the tuition fee increases for salary

adjustments of the members of the bargaining unit which exceeds the 60% of the said increases allocated by the Decree for the same purpose. Before delving further into the questions raised, this Court notes that in the Valmonte case, respondent Minister and respondent Faculty Association raise a procedural objection to the filing of the Petition: the standing of the petitioners to bring this suit. Both respondents decry the petitioners' lack of the interest required in Rule 65 of the Rules of Court for the filing of the Petition for certiorari and Prohibition, since the latter do not appear to be in any way aggrieved by the enforcement of the Order. Petitioners-parents did not even participate in the proceedings below which led to the issuance of the assailed Order. This Court finds merit in the respondents' objection. Under Rule 65 of the Rules of Court (Secs. 1 and 2), only a person aggrieved by the act or proceeding in question may file a petition for certiorari and/or prohibition. The Valmonte petition fails to indicate how the petitioners would be aggrieved by the assailed Order. It appears that the petitioners are not parties and never at any time intervened in the conciliation conferences and arbitration proceedings before the respondent Minister. The parties therein, who stand to be directly affected by the Order of the respondent Minister, do not contest the validity of said Order. The petition does not even state that petitioners act as representative of the parents' association in the School or in behalf of other parents similarly situated. If indeed, petitioners Valmonte and Badiola are aggrieved by the said Order, they should have intervened and moved for a reconsideration of respondent Minister's Order before filing the instant petition. Petitioners failed to show that the case falls under any one of the recognized exceptions to the rule that a motion for reconsideration should first be availed of before filing a petition for certiorari and prohibition. In view of the foregoing, the resolution of the third sub-issue will be based mainly on the arguments raised in the Biscocho case. RESOLUTION OF THE THIRD SUB-ISSUE The Biscocho case involves the issue on the allocation of the incremental proceeds of the tuition fee increases applied for by the respondent Espiritu Santo Parochial School for school years 1985-1986, 1986-1987, and 1987-1988. With the repeal of Pres. Dec. No. 451 by B.P. Blg. 232, the allocation of the proceeds of any authorized tuition fee increase must be governed by specific rules and regulations issued by the Minister (now Secretary) of Education pursuant to his broadened rule making authority under section 42 of the new law. Thus, insofar as the proceeds of the authorized tuition fee increases for school year 1985-1986 are concerned, the allocation must conform with the pertinent section of MECS Order No. 25, s. 1985, to wit: 7. xxx Application or Use of Tuition and Other School Fees or Charges. xxx xxx

7.4. Not less than sixty (60) percent of the incremental tuition proceeds shall be used for salaries or wages, allowances and fringe benefits of faculty and support staff, including cost of living allowance, imputed costs of contributed services, thirteenth (13th) month pay, retirement fund contributions, social security, medicare, unpaid school personnel claims, and payments as may be prescribed by mandated wage orders, collective bargaining agreements and voluntary employer practices: Provided, That increases in fees specifically authorized for the purposes fisted in paragraph 4.3.3 hereof shall be used entirely for those purposes. xxx xxx xxx

With regard to the proceeds of the tuition fee increases for school year 1986-1987, the applicable rules are those embodied in MECS Order No. 22, s. 1986 which made reference to MECS Order No. 25, s. 1985, the pertinent portion of which is quoted above. Finally, as to the proceeds of the tuition fee increases for school year 1987- 1988, DECS Order No. 37, s. 1987 must apply: c. Allocation of lncremental Proceeds

(1) In any case of increase at least sixty percent (60%) of the incremental proceeds should be allocated for increases in or provisions for salaries or wages, allowances and fringe benefits of faculty and other staff, including accruals to cost of living allowance, 13th month pay, social security, medicare and retirement contributions and increases as may be provided in mandated wage orders, collective bargaining agreements or voluntary employer practices. (2) Provided, that in all cases of increase the allocation of the incremental proceeds shall be without prejudice to the Supreme Court cases on the interpretation and applicability of existing legislations on tuition and other fees especially on the allocation and use of any incremental proceeds of tuition and other fees increases. (Emphasis supplied). xxx xxx xxx

Based on the aforequoted MECS and DECS rules and regulations which implement BP Blg. 232, the 60% portion of the proceeds of tuition fee increases may now be allotted for both salaries and allowances and other benefits. The 60% figure is, however, a minimum which means that schools and their employees may agree on a larger portion, or in this case, as much as 90% for salaries and allowances and other benefits. This is not in anyway to allow diminution or loss of the portion allotted for institutional development of the school concerned. Thus, paragraph 7.5 of MECS Order No. 25, series of 1985 specifically provides that other student fees and charges like registration, library, laboratory or athletic fees shall be used exclusively for the purposes indicated.

III

RESOLUTION OF THE SPECIFIC ISSUES

CEBU INSTITUTE OF TECHNOLOGY CASE Petitioner assigns three other errors in the petition for certiorari: 1 RESPONDENT MINISTER OF THE MINISTRY OF LABOR AND EMPLOYMENT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO A DENIAL OF DUE PROCESS OF LAW IN DIRECTLY ISSUING THE ORDER DATED SEPTEMBER 29,1981 WITHOUT CONDUCTING A FORMAL INVESTIGATION AND ARBITRATION PROCEEDINGS. 2 PUBLIC RESPONDENT ERRED IN NOT DECLARING THAT PETITIONER IS EXEMPTED AND/OR NOT OBLIGED TO PAY SERVICE INCENTIVE LEAVE. 3 PUBLIC RESPONDENT ERRED IN NOT DECLARING THAT PRIVATE RESPONDENTS' CLAIMS FOR COLA AND SERVICE INCENTIVE LEAVE ARE FULLY BARRED BY LACHES AND/OR EXTINGUISHED BY PRESCRIPTION. 1. Petitioner assails the Order of the Minister of Labor on the ground that the same was issued without the benefit of a hearing and was merely based on the report of the labor management committee which is allegedly without power to pass upon the issues raised. On this premise, petitioner claims that it was denied its right to due process. Petitioner's contention is without merit. The Labor Management Committee was empowered to investigate the complaint against the petitioner for non-payment of the cost of living allowance, 13th month pay and service incentive leave from 1974-1981 [Annex "F"; Rollo, p. 37]. In the committee, petitioner was represented by its counsel, registrar and assistant accountant and in the conferences that were held, the representatives of the petitioner were present. Furthermore, the petitioner's position paper submitted to the committee reflects that in all the deliberations, it was never denied the right to present evidence and be heard on all the issues raised, particularly to demonstrate that it had complied with the various COLA, 13th month pay and service incentive leave decrees. The evidence presented during the conferences and the position paper of the parties were made the basis of the committee's report and recommendation which in turn became the basis of the order of the Minister of Labor directing the petitioner to pay the complainants their COLA and service incentive leave benefits. It could not therefore be contended that the petitioner was deprived of his right to be heard when it appears on the record that it was permitted to ventilate its side of the issues. There was sufficient compliance with the requirements of due process. In the face of the wellsettled principle that administrative agencies are not strictly bound by the technical rules of procedure, this Court dismisses the petitioner's claim that formal investigative and arbitration proceedings should be conducted. "While a day in court is a matter of right in judicial proceedings, in administrative proceedings it is otherwise since they rest upon different principles." [Cornejo v. Gabriel and Provincial Board of Rizal, 41 Phil. 188 (1920); Tajonera v. Lamaroza, G.R. Nos. L-48907 and L-49035, December 19,1981, 110 SCRA 438]. 2. Going now to the matter of service incentive leave benefits, petitioner claims that private respondents are engaged by the school on a contract basis as shown by the individual teachers contract which defines the nature, scope and period of their employment; hence, they are not entitled to the said benefit according to Rule V of the Implementing Rules and Regulations of the Labor Code to wit: Sec. 1. xxx Coverage. This rule [on Service Incentive Leave] shall apply to all employees, except: xxx xxx

(d) Field personnel and other employees whose performance is unsupervised by the employer including those who are engaged on task or contract basis, purely commission basis, or those who are paid in a fixed amount for performing work irrespective of the time consumed in the performance thereof; (MOLE Rules and Regulations, Rule V, Book III) The phrase "those who are engaged on task or contract basis" should however, be related with "field personnel " applying the rule on ejusdem generis that general and unlimited terms are restrained and limited by the particular terms that they follow, [Vera v. Cuevas, G.R. No. L-33693, May 31, 1979, 90 SCRA 379]. Clearly, petitioner's teaching personnel cannot be deemed field personnel which refers "to nonagricultural 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. [Par. 3, Article 82, Labor Code of the Philippines]. Petitioner's claim that private respondents are not entitled to the service incentive leave benefit cannot therefore be sustained. 3. As a last ditch effort to bar private respondents'claims, petitioner asserts that the same are barred by laches and/or extinguished by prescription according to Article 291 of the Labor Code which provides: Art. 291. Money claims. All money claims arising from employer-employee , relations accruing during the effectivity of this Code shall be filed within three (3) years from the time the cause of action accrued; otherwise, they shall be forever barred.

All money claims accruing prior to the effectivity of this Code shall be filed with the appropriate entities established under this Code within one (1) year from the date of effectivity, and shall be processed or determined in accordance with implementing rules and regulations of the Code; otherwise, they shall be forever barred. xxx xxx xxx

Considering that the complaint alleging non-payment of benefits was filed only on February 11, 1981, petitioner argues that prescription has already set in. From the aforequoted provision, it is not fully accurate to conclude that the entire claims for COLA and service incentive leave are no longer recoverable. This Court finds no reason to disturb the following pronouncement of the Minister of Labor: xxx xxx xxx

Simply stated, claims for COLA under P.D. 525, which took effect on August 1, 1974, for the months of August, September and October 1974 must be filed within one (1) year from November 1, 1974, otherwise they shall be considered prescribed; claims under the same decree that accrued on or after November 1, 1974 should be initiated within three (3) years from the date of accrual thereof, otherwise the same shall be deemed extinguished. Although this particular claim was filed on February 11, 1981, petitioners herein are entitled to COLA under P.D. 525 from February 1978 up to the present since the COLA that accrued in February 1978 has not yet prescribed at the time that the claim was filed in February 1981. In the same vein, petitioners herein should be granted COLA under P.D. 1123 from February 1978 up to 1981 inasmuch as said decree became effective only on May 11, 1977. Further, petitioners are entitled to the full amount of COLA provided under P.D.'s 1614, 1634, 1678 and 1713. It must be pointed out that the earliest of the just cited four (4) decrees, i.e., P.D. 1614, just took effect on April 1, 1979. Thus, the prescriptive period under Art. 292 of the Labor Code, as amended, does not as yet apply to money claims under the just mentioned decrees. DIVINE WORD COLLEGE CASE In assailing the disputed Order, petitioner contends that the public respondents acted with grave and patent abuse of discretion amounting to lack of jurisdiction in that: 1. The Regional Director has no jurisdiction over money claims arising from employer-employee relationship; and

2. The Regional Director and Deputy Minister of Labor adopted the report of the Labor Standards Division without affording the petitioner the opportunity to be heard. 1. Petitioner school claims that the case at bar is a money claim and should therefore be within the original and exclusive jurisdiction of the Labor Arbiter pursuant to article 217 of the Labor Code, as amended. It appears from the record, however, that the original complaint filed by ten (10) faculty members of the Divine Word College was for noncompliance with Pres. Dec. No. 451 and with Labor Code provisions on service incentive leave, holiday and rest day pay and which complaint specifically prayed that an inspection of the College be conducted. Contrary to the petitioner's protestation of lack of jurisdiction, the Secretary of Labor or his duly authorized representatives (which includes Regional Directors) are accorded the power to investigate complaints for non- compliance with labor laws, particularly those which deal with labor standards such as payment of wages and other forms of compensation, working hours, industrial safety, etc. This is provided for in article 128 of the Labor Code, as amended: Art. 128. Visitorial and enforcement power. (a) The Secretary of Labor or his duly authorized representatives including labor regulation officers, shall have access to employers' records and premises at any time of the day or night, whenever work is being undertaken therein, and the right to copy therefrom, to question any employee and investigate any fact, condition or matter which may be necessary to determine violations or which may aid in the enforcement of this Code and of any labor law, wage order or rules and regulations issued pursuant thereto. (b) The Secretary of Labor or his duly authorized representatives shall have the power to order and administer, after due notice and hearing, compliance with the labor standards provisions of this Code based on the findings of labor regulation officers or industrial safety engineers made in the course of inspection, and to issue writs of execution to the appropriate authority for the enforcement of their order, except in cases where the employer contests the findings of the labor regulations officer and raises issues which cannot be resolved without considering evidentiary matters that are not verifiable in the normal course of inspection. (Emphasis supplied). Furthermore, Policy Instruction No. 6 which deals with the distribution of jurisdiction over labor cases restates inter alia that "(L)abor standards cases arising from violation of labor standards laws discovered in the course of inspection or complaints where employeremployee relations still exist" are under the exclusive original jurisdiction of the Regional Director. Even assuming that respondent Regional Director was without jurisdiction to entertain the case at bar, petitioner is now barred at this stage to claim lack of jurisdiction having actively participated in the proceedings below. Petitioner never questioned the jurisdiction of the respondent Regional Director.

2.

The petitioner claims that it was never afforded the opportunity to be heard and was therefore denied due process.

There is no dispute that an inspection of the College was conducted after a complaint by some faculty members was filed with the Regional Office of the Ministry of Labor and Employment. A report was submitted on the basis of the findings contained therein. Petitioner was furnished a copy of said report to which it filed a comment. Finding this to be without merit, the Regional Director issued an order giving petitioner ten (10) days to manifest its compliance with the findings, otherwise, another would be issued to enforce payment. Petitioner appealed but instead of resolving the memorandum of appeal, which the Regional Director treated as a motion for reconsideration, said Director issued another Order dated August 2, 1983 directing the payment of the employees' share in the sixty (60%) percent incremental proceeds. Petitioner moved for a reconsideration of the latest order which the Regional Director, however, denied, thereby elevating the case to the Office of the Minister of Labor and Employment. The foregoing facts demonstrate that petitioner had the opportunity to refute the report on the inspection conducted. It submitted a comment thereto, which was in effect its position paper. The arguments therein and evidence attached thereto were considered by respondent Regional Director in the order issued subsequently. They, therefore, had ample opportunity to present their side of the controversy. What due process contemplates is not merely the existence of an actual hearing. The "right to be heard" focuses more on the substance rather than the form. In the case at bar, petitioner was actually heard through the pleadings that it filed with the Regional Office V. As it itself admitted in its petition that it was afforded the right to be heard on appeal [See Rollo, p. 581, petitioner cannot therefore insist that it was denied due process. FAR EASTERN UNIVERSITY CASE Two other issues are raised in this petition, to wit: 1 WHETHER OR NOT 'TRANSPORTATION ALLOWANCE' SHOULD BE CONSIDERED AS 'EQUIVALENT TO 13TH-MONTH PAY UNDER PRES. DEC. NO. 851. 2 WHETHER OR NOT LEGAL HOLIDAY PAY BENEFIT COULD BE VALIDLY WITHDRAWN AFTER BEING PRACTICED CONTINUOUSLY FOR EIGHT (8) MONTHS. 1. The issue on the thirteenth (13th) month pay involves an interpretation of the provisions of Pres. Dec. No. 851 which requires all employers "to pay all their employees receiving a basic salary of not more than Pl,000 a month, regardless of the nature of the employment, a 13th- month pay" (Sec. 1). However, "employer[s] already paying their employees a 13th-month pay or its equivalent are not covered" (Sec. 2). (Emphasis supplied) The Rules and Regulations Implementing Pres. Dec. No. 851 provide the following: SEC. 3. Employees. The Decree shall apply to all employers except to: ... c) xxx Employers already paying their employees 13th-month or more in a calendar year or its equivalent at the time of this issuance; ... xxx xxx

The term "its equivalent" as used in paragraph (c) hereof shall include Christmas bonus, mid-year bonus, profit-sharing payments and other cash bonuses amounting to not less than 1/12th of the basic salary but shall not include cash and stock dividends, cost of living allowances and all other allowances regularly enjoyed by the employer, as well as non-monetary benefits. Where an employer pays less than 1/1 2th of the employees basic salary, the employer shall pay the difference. In the case at bar, the 13th month pay is paid in the following manner: FOR REGULAR EMPLOYEES: Transportation Allowance (TA) 50% of basic for the first year of service plus additional 5% every year thereafter but not to exceed 100% of basic salary Christmas Bonus (CB) 50% of basic salary for the first year of service plus additional 5% every year thereafter but not to exceed 100% of basic salary. For employees who have served the University for more than 10 years, the University pays them emoluments equivalent to the 14 months salaries.

13th Month Pay Formula: Monthly Rate x No. of months served for the year Less TA/CB = 13th Mo. pay 12 months FOR CASUAL EMPLOYEES: 13th Month Pay Formula: Add salaries from 16 December of previous year to 15th December of present year [and] divide by 12 months = 13th Mo. Pay (Rollo, pp. 60, 72). The University's answer to the Union's claim of underpayment of the 13th month pay is that the "transportation allowance" paid to its employees partakes the nature of a mid-year bonus which under section 2 of Pres. Dec. No. 851 and section 3(c) of the Implementing Rules and Regulations is equivalent to the 13th month pay, The Labor Arbiter ordered FEU to pay the 13th month pay differentials of the complainants reasoning that: CLEARLY, transportation allowance cannot be considered as equivalent" of 13th month pay as it is neither a Christmas bonus, mid-year bonus, profit sharing payment, or other cash bonuses, pursuant to paragraphs (c) and (e), Section 3 of PD 851. The regularity of its payment further cements this proposition. PERFORCE, complainants are underpaid of their 13th month pay in an amount equivalent to 50% of their basic salary for the lst year of service, plus additional 5% every year thereafter but not to exceed 100% of their basic salary which, per respondent's formula, corresponds to their transportation allowance. (Rollo, p. 61). On appeal, the Third Division of the National Labor Relations Commission reversed the Labor Arbiter's ruling by dismissing the complainant's claim for underpayment of the 13th month pay for lack of merit. The NLRC ruled that: From the above findings and conclusion, it is clear that insofar as employees with ten (10) years of service or more are concerned, they receive the equivalent of one (1) month pay for Christmas bonus and another one (1) month pay as transportation allowance or a total of fourteen (14) months salary in a year. Obviously, this group of employees are fully paid of their 13th month pay and are not therefore subject to the instant claim. As it is only those with less than ten (10) years of service are included or encompassed by the Labor Arbiter's resolution on this particular issue. With this clarification, we shall now proceed to discuss the crux of the controversy, that is, the determination of whether or not the so designated "transportation allowance" being paid to the employees should be considered among those deemed equivalent to 13th month pay. As adverted earlier, the Labor Arbiter opined that it cannot be so considered as the equivalent of 13th month pay. xxx xxx xxx

In passing upon the issue, we deemed it best to delve deeper into the nature and intendment of the transportation allowances as designated by both the complainants and the respondent. Complainants claim that the transportation allowance they enjoy has always been called and termed allowance and never as bonus since the time the same was given to them. They assert that it simply was intended as an allowance and not a bonus. It would appear however that complainants do not dispute respondent's stand that transportation allowance is being paid only every March of each year as distinguished from other allowances that are being paid on a monthly basis or on a bimonthly basis; that the amount of transportation allowance to be paid is dependent on the length of service of the employee concerned (i.e. 50% basic in the first year and additional 5% for each succeeding years, etc.); that the said method of computing the amount of the transportation allowance to be paid the complainants is Identical to that used in determining Christmas bonus (respondent's exhibit 8) that the reason behind said transportation allowance is to financially assist employees in meeting their tax obligations as the same become due on or about the month of March of each year. xxx xxx xxx

We are inclined to believe and so hold that by the manner by which said transportation allowance is being paid (only once a year) as well as the method in determining the amount to be paid (similar to Christmas bonus) and considering further the reason behind said payment (easing the burden of taxpayer-employee), the said transportation allowance given out by respondent while designating as such, partakes the nature of a mid-year bonus. It bears to note in passing that in providing for transportation allowance, respondent was not compelled by law nor by the CBA (Annex "A" of respondent's Appeal) as nowhere in the CBA nor in the Labor Code can be found any provision on transportation allowance. It was therefore a benefit that stemmed out purely from the voluntary act and generosity of the respondent FEU. Moreover, said transportation allowance is only being paid once a year. On the other hand, regular allowances not considered as 13th month pay equivalent under P.D. 851, to our mind, refer to those paid on regular intervals and catering for specific employees' needs and requirements that recur on a regular basis. Verily, if the intendment behind the disputed transportation allowance is to answer for the daily recurring transportation expenses of the employees, the same should have been paid to employees on regular periodic intervals. All

indications, as we see it, point out to conclusion that the disputed transportation allowance, while dominated as such apparently for lack of better term, is in fact a form of bonus doled out by the respondent during the month of March every year. Hence, we hold that it is one of those that can very well be considered as equivalent to the 13th month pay (Rollo, pp. 73, 74, 75, 76). This Court sustains the aforequoted view of public respondent. The benefit herein designated as "transportation allowance" is a form of bonus equivalent to the 13th month pay. Nevertheless, where this does not amount to 1/12 of the employees basic salary, the employer shall pay the difference. The evident intention of the law was to grant an additional income in the form of a 13th month pay to employees not already receiving the same. This Court ruled in National Federation of Sugar Workers (NFSW) v. Ovejera [G.R. No. 59743, May 31, 1982, 114 SCRA 354]. Otherwise put, the intention was to grant some relief not to all workers but only to the unfortunate ones not actually paid a 13th month salary or what amounts to it, by whatever name called: but it was not envisioned that a double burden would be imposed on the employer already paying his employees a 13th month pay or its equivalent whether out of pure generosity or on the basis of a binding agreement and, in the latter case, regardless of the conditional character of the grant (such as making the payment dependent on profit), so long as there is actual payment. Otherwise, what was conceived to be a 13th month salary would in effect become a 14th or possibly 15th month pay. xxx xxx xxx

Pragmatic considerations also weigh heavily in favor of crediting both voluntary and contractual bonuses for the purpose of determining liability for the 13th month pay. To require employers (already giving their employees a 13th month salary or its equivalent) to give a second 13th month pay would be unfair and productive of undesirable results. To the employer who had acceded and is already bound to give bonuses to his employees, the additional burden of a 13th month pay would amount to a penalty for his munificence or liberality. The probable reaction of one so circumstanced would be to withdraw the bonuses or resist further voluntary grants for fear that if and when a law is passed giving the same benefits, his prior concessions might not be given due credit; and this negative attitude would have an adverse impact on the employees (pp.369,370). The case of Dole Philippines, Inc. v. Leogardo [G.R. No. 60018, October 23, 1982, 117 SCRA 938 (1982)], citing the ruling in the above case also pointed out that: To hold otherwise would be to impose an unreasonable and undue burden upon those employers who had demonstrated their sensitivity and concern for the welfare of their employees. A contrary stance would indeed create an absurd situation whereby an employer who started giving his employees the 13th month pay only because of the unmistakable force of the law would be in a far better position than another who, by his own magnanimity or by mutual agreement, had long been extending his employees the benefits contemplated under PD No. 851, by whatever nomenclature these benefits have come to be known. Indeed, PD No. 851, a legislation benevolent in its purpose, never intended to bring about such oppressive situation. (p. 944) 2. Presidential Decree No. 570-A was issued on November 1, 1974 amending certain articles of Presidential Decree No. 442 (Labor Code of the Philippines promulgated on May 1, 1974 which took effect six months thereafter). Section 28 thereof provides that: Section 28. A new provision is hereby substituted in lieu of the original provision of Article 258 of the same Code to read as follows: Art. 258. Right to holiday pay(a) Every worker shall be paid his regular holidays, except in retail and service establishments regularly employing less than ten (10) workers; (b) The term "holiday" as used in this Chapter, shall 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 and thirtieth of December and the day designated by law for holding a general election. (c) When employer may require work on holidays. The employer may require an employee to work on any holiday but such employee shall be paid a compensation equivalent twice his regular rate. Presidential Decree No. 850 issued on December 16, 1975 also amending certain articles of Pres. Dec. No. 442 adopted the aforequoted provision. Two months later, on February 16, 1976, the Rules and Regulations Implementing the Labor Code, as amended, was released the pertinent portion of which states that: Section 2. Status of employees paid by the month. Employees who are uniformly paid by the month, irrespective of the number of working days therein, with a salary of not less than the statutory or established minimum wage shall be presumed to be paid for all days in the month whether worked or not. For this purpose, the monthly minimum wage shall not be less than the statutory minimum wage multiplied by 365 days divided by twelve. (e) Section 3. Holiday Pay. Every employer shall pay his employees their regular daily wage for any unworked regular holiday.

As used in the Rule, the term 'holiday' shall exclusively refer to: 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 and thirtieth of December and the day designated by law for a general election or national referendum or plebiscite (MOLE Rules and Reg. Book III, Rule IV, sec. 2 (1976). After one week, on February 23, 1976, the Minister of Labor issued Policy Instruction No. 9, to clarify further the right to holiday pay, thus: The Rules Implementing PD 850 have clarified the policy in the implementation of the ten (10) paid legal holidays. Before PD 850. the number of working days a year in a firm was considered important in determining entitlement to the benefit. Thus, where an employee was working for at least 313 days, he was definitely already paid. If he was working for less than 313, there was no certainty whether the ten (10) paid legal holidays were already paid to him or not. The ten (10) paid legal holidays law, to start with, is intended to benefit principally daily employees. In the case of monthly, only those whose monthly salary did not yet include payment for the ten (10) paid legal holidays are entitled to the benefit. Under the rules implementing PD 850, this policy has been fully clarified to eliminate controversies on the entitlement of monthly paid employees. The new determining rule is this: If the monthly paid employee is receiving not less than P 240, the maximum monthly minimum wage, and his monthly pay is uniform from January to December, he is presumed to be already paid the ten (10) paid legal holidays. However, if deductions are made from his monthly salary on account of holidays in months where they occur, then he is entitled to the ten (10) legal holidays. These new interpretations must be uniformly and consistently upheld. This issuance shall take effect immediately. In the meantime, respondent University paid its employees holiday pay for the following days: DATE HOLIDAYS PAID for the previous nine legal holidays for the previous June 12 and July 4 or the previous Nov. 30, Dec. 25

June 9, 1975 August, 1975 Jan. 14, 1976 and 30 and Jan. 1

After January 14, 1976, however, the University ceased paying the holiday pay allegedly by reason of Policy Instruction No. 9. Specifically, the University claimed that the monthly salary of its employees was, as of 1976, more than P 240.00 without deductions from their monthly salary on account of holidays in months where they occurred and that therefore, by virtue of Policy Instruction No. 9, they were no longer entitled to the ten paid legal holidays. Petitioners, upon the other hand, contend that Policy Instruction No. 9 could not have possibly been the reason that prompted the University to withdraw such benefits from its faculty and employees because said implementing rule was issued only on April 23, 1976 or four months later. The Labor Arbiter ruled in favor of the complainant Union for the reason that ". . . the payment of the 10-paid legal holiday benefits from June 8, 1975 up to January 14, 1976 is considered an employer practice that can no longer be withdrawn." [Decision; Rollo, p. 59]. As in the case of the 13th month pay, the NLRC reversed the Labor Arbiter's ruling. The NLRC held that: Apparently, Arbiter Ruben Aquino concluded that payment by the respondent of the legal holiday pay preceded the effectivity of the Rules and Regulations Implementing P.D. 850 and which rules took effect on February 16, 1976. Hence, his conclusion that the payment of the legal holiday pay stemmed out from company practice and not from law. Tracing back, however, the payments made by respondent of said holiday pay will show that, if ever, the same was made pursuant to P.D. 570-A which took effect on November 1, 1974. Noteworthy is the undisputed fact that respondent first paid its employees legal holiday pay in June 1975 corresponding to nine (9) legal holidays. It bears to note that from the time of the effectivity of P.D. 570-A which was in November of 1974 up to June of 1975, the time respondent first paid legal holiday pay for nine (9) legal holidays, there, were indeed more or less nine legal holidays that transpired to wit: November 30, 1974, December 25, 1974, December 30, 1974, January 1, 1975, February 27, 1975 (Referendum Day), Maundy Thursday of 1975, Good Friday of 1975, April 9, 1975 and finally, May 1st of 1975. We are therefore inclined to lend credence to respondent's claim that the payment of legal holiday pay was in fact made pursuant to law, P.D. 570-A in particular, it is not one that arose out of company practice or policy. Finding that said payment was made based on an honest although erroneous interpretation of law, which interpretation was later on corrected by the issuance (sic) of Policy Instruction No. 9 and which issuance prompted respondent to withdraw the holiday pay benefits extended to the employees who were paid on a regular monthly basis, and finding further that under Policy Instructions No. 9, said subject employees are deemed paid their holiday pay as they were paid on a monthly basis at a wage rate presumably above the statutory minimum, we believe and so hold that the withdrawal of said holiday pay benefit was valid and justifiable under the circumstances (Rollo, pp. 33-4).

This Court cannot sustain the foregoing decision of public respondent. Said decision relied on Section 2, Rule IV, Book Ill of the implementing rules and on Policy Instruction No. 9 which were declared by this Court to be null and void in Insular Bank of Asia and America Employee's Union (IBAAEU) v. Inciong (G.R. No. 52415, October 23, 1984, 132 SCRA 6631. In disposing of the issue at hand, this Court reiterates the ruling in that case, to wit: WE agree with the petitioner's contention that Section 2, Rule IV, Book Ill of the implementing rules and Policy Instruction No. 9 issued by the then Secretary of Labor are nun and void since in the guise of clarifying the Labor Code's provision on holiday pay, they in fact amended them by enlarging the scope of their exclusion. xxx xxx xxx

It is elementary in 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. In the case at bar, the provisions of the Labor Code on the entitlement to the benefits of holiday pay are clear and explicit it provides for both the coverage of and exclusion from the benefits. In Policy Instruction No. 9, the then Secretary of Labor went as far as to categorically state that the benefit is principally intended for daily paid employees, when the law clearly states that every worker shall be paid their regular holiday pay. This is a flagrant violation of the mandatory directive of Article 4 of the Labor Code, which states that "All doubts in the implementation and interpretation of the provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of labor. " Moreover, it shall always be presumed that the legislature intended to enact a valid and permanent statute which would have the most beneficial effect that its language permits (Orlosky vs. Haskell, 155 A. 112). (pp. 673-4). BISCOCHO CASE At issue also in this petition is whether the 60% incremental proceeds may be subjected to attorney's fees, negotiation fees, agency fees and the like. The Court notes the fact that there are two classes of employees among the petitioners: (1) those who are members of the bargaining unit and (2) those who are not members of the bargaining unit. The first class may be further subdivided into two: those who are members of the collective bargaining agent and those who are not. It is clear that the questioned Order of the respondent Minister applies only to members of the bargaining unit. The CBA prepared pursuant to said Order, however, covered employees who are not members of the bargaining unit, although said CBA had not yet been signed at the time this petition was filed on November 24, 1986. Assuming it was signed thereafter, the inclusion of employees outside the bargaining unit should be nullified as this does not conform to said order which directed private respondents to execute a CBA covering only members of the bargaining unit. Being outside the coverage of respondent Minister's order, and thus, not entitled to the economic package involved therein, employees who are non- members of the bargaining unit should not be assessed negotiation fees, attorney's fees, agency fees and the like, for the simple reason that the resulting collective bargaining agreement does not apply to them. It should be clear, however, that while nonmembers of the bargaining unit are not entitled to the economic package provided by said order, they are, in lieu thereof, still entitled to their share in the 60% incremental proceeds of increases in tuition or other school fees or charges. As far as assessment of fees against employees of the collective bargaining unit who are not members of the collective bargaining agent is concerned, Article 249 of the Labor Code, as amended by B.P. Blg. 70, provides the rule: Art. 249. Unfair labor practices of employers.xxx xxx xxx

(e) ... Employees of an appropriate collective bargaining unit who are not members of the recognized collective bargaining agent may be assessed a reasonable fee equivalent to the dues and other fees paid by members of the recognized collective bargaining agent, if such non- union members accept the benefits under the collective agreement . . . Employees of the collective bargaining unit who are not members of the collective bargaining agent have to pay the foregoing fees if they accept the benefits under the collective bargaining agreement and if such fees are not unreasonable. Petitioners who are members of the bargaining unit failed to show that the equivalent of ten (10%) percent of their backwages sought to be deducted is unreasonable. WHEREFORE, the Court rules: CEBU INSTITUTE OF TECHNOLOGY CASE In G.R. No. 58870, the Order of respondent Minister of Labor and Employment dated September 29, 1981 is SUSTAINED insofar as it ordered petitioner Cebu Institute of Technology to pay its teaching staff the following: (1) (2) (3) Cost of living allowance under Pres. Dec.Nos.525 and 1123 from February 1978 up to 1981; Cost of living allowance under Pres. Dec. Nos. 1614, 1634, 1678 and 1713; and Service incentive leave due them from 1978.

The Temporary Restraining Order issued by this Court on December 7, 1981 is hereby LIFTED and SET ASIDE. No costs. DIVINE WORD COLLEGE CASE The petition in G.R. No. 68345 is DENIED for lack of merit. The questioned Orders of respondent Deputy Minister of Labor and Employment, dated December 19, 1983 and July 4, 1984 are SUSTAINED insofar as said Orders denied the payment of the emergency cost of living allowances of private respondents faculty teachers of the Divine Word College of Legazpi out of the sixty (60%) incremental proceeds of tuition and other school fee increases collected during the effectivity of Pres. Dec. No. 451. The Rules and Regulations implementing Pres. Dec. No. 451 are hereby declared invalid for being ultra vires No costs. FAR EASTERN UNIVERSITY CASE The Decision of public respondent National Labor Relations Commission dated September 18, 1984 is REVERSED insofar as it affirmed in toto the dismissal of petitioner Far Eastern University Employee Labor Union's claim under Pres. Dec. No. 451 and its claim for payment of holiday pay. Private respondent Far Eastern University is therefore ordered to pay its employees the following: (1) Their sixty (60) percent share in the increases in tuition and other school fees or charges which shall be allocated exclusively for increase in salaries or wages if the tuition or other school fee increase was collected during the effectivity of Pres. Dec. No. 451; (2) Their claim for holiday pay which was withdrawn since January 14, 1976 up to the present.

The Decision of respondent National Labor Relations Commission, however, is SUSTAINED insofar as it denied petitioner's claim for thirteenth (1 3th month pay. No costs. FABROS CASE In G.R. No. 70832, the Petition for certiorari and Prohibition is DISMISSED. MECS Order No. 25. s. 1985, particularly paragraphs 7.0 to 7.5 thereof, which provide for the use and application of sixty (60%) percent of the increases in tuition and other school fees or charges, having been issued pursuant to B.P. Blg. 232 which repealed Pres. Dec. No. 451, is hereby declared VALID. The Temporary Restraining Order issued by this Court dated May 29, 1985 is LIFTED and SET ASIDE. No costs. BISCOCHO CASE The assailed portions of the Order of the Minister of Labor and Employment dated April 14, 1986 are AFFIRMED. The collective bargaining agreement prepared pursuant thereto should, however, be MODIFIED to cover only members of the bargaining unit. Only petitioners who are members of the collective bargaining unit, if they accept the benefits under the resulting collective bargaining agreement, shall be charged ten (10%) percent of the payable backwages as negotiation fees. The Temporary Restraining Order dated November 25, 1986 is LIFTED and SET ASIDE. No costs. VALMONTE CASE The petition in G.R. No. 76596 is DISMISSED for lack of merit. Effective September 1, 1982, the application and use of the proceeds from increases in tuition fees and other schools fees or charges shall be governed by section 42 of B.P. Blg. 232 as implemented by the Rules and Regulations issued by the then Ministry, now Department of Education, Culture and Sports. SO ORDERED. G.R. No. 81176 April 19, 1989 PLASTIC TOWN CENTER CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION AND NAGKAKAISANG LAKAS NG MANGGAGAWA (NLM)-KATIPUNAN, respondents. GUTIERREZ, JR., J.: An issue in this petition is the interpretation of certain provisions of the Collective Bargaining Agreement (CBA) between Plastic Town Center Corporation and the respondent union. On September 7,1984, the respondent Nagkakaisang Lakas ng Manggagawa (NLM)-Katipunan filed a complaint dated August 30, 1984 charging the petitioner with: a. Violation of Wage Order No. 5, by crediting the Pl.00 per day increase in the CBA as part of the compliance with said Wage Order No. 5, and y instead of thirty (30) days equivalent to one (1) month as gratuity pay to resigning employees. (p. 3, Rollo) b. Unfair labor practice thru violation of the CBA by giving only twenty-six (26) days pay instead of thirty (30) days equivalent to one (1) month as gratuity pay to resigning employees. (p. 3, Rollo) On July 25,1985, Labor Arbiter Ruben Alberto ruled in favor of Plastic Town Center Corporation. The pertinent portions of the decision read as follows: ... In this particular case, the P1.00 increase was ahead of the implementation of the CBA provision or could be said was advantageous to complainant members, chronologically stated. For the above cogent reason we can not fault respondent for its refusal to grant a second Pl.00 increase on July 1, 1984. xxx xxx xxx

Complainant sustains the view that a month salary pertains to salary for 30 days, citing the provision of the Civil Code on the matter. Upon the other hand, respondents understanding of the controverted provision is pragmatic or practical. Since the workers are paid on daily basis, it computed the salary received by the worker in a month as a month salary. In this case the salary of 26 days is a month salary. We agree with the respondent's interpretation. As daily wage earner, there would be no instance that the worker would work for 30 days a month since work does not include Sunday or rest days. In the mind of the daily worker in a month he could not expect a month salary exceeding the equivalent of 26 days service. To award the daily wage earner pay for more than 26 days is pay for days he does not work. But as regards the monthly- paid workers he expects his monthly salary to be fixed which is a month salary. Hence, a distinction separates him with the daily wages. IN VIEW OF THE FOREGOING, the unfair labor practice charge should be, as it is hereby dismissed for lack of legal and factual basis. (pp- 5657, Rollo) On August 30, 1987, the respondent labor union appealed to the National Labor Relations Commission. On June 30, 1987, the NLRC rendered the questioned decision with the following dispositive portion: WHEREFORE, the appealed decision is hereby reversed and the respondent is ordered to grant Pl.00 increase for July 1, 1984 and the equivalent of thirty days salary in gratuity pay, as required by its CBA with the complainants. (p. 39, Rollo) The motion for reconsideration of said decision was denied on December 7, 1987. Hence, this petition. The applicable provisions of the CBA read as follows: Section 1 -The company agrees to grant permanent regular rank and file workers covered by this Agreement who have rendered at least one year of continuous service, across-the-board wage increases as follows: a. Effective 1 July, 1983-Pl.00 per worked day; b Effective 1 July, 1984-Pl.00 per worked day; c. Effective 1 July, 1985-Pl.00 per worked day; Section 3It is agreed and understood by the parties herein that the aforementioned increase in pay shall be credited against future allowances or wage orders hereinafter implemented or enforced by virtue of Letters of Instructions, Decrees and other labor legislation. (pp. 36-37, Rollo) Wage Order No. 4 provided for the integration of the mandatory emergency cost of living allowances (ECOLA) under Presidential Decrees 1614,1634,1678 and 1713 into the basic pay of all covered workers effective May 1, 1984. It further provided that after the integration, the applicable statutory minimum daily wage rate must be complied with, which in this case is P32.00. The petitioner incurred a deficiency of P1.00 in the wage rate after integrating the ECOLA with basic pay. So the petitioner advanced to May 1, 1984 or two months earlier the implementation of the one-peso wage increase provided for in the CBA starting July 1, 1984 for the benefit of the workers. The petitioner argues that it did not credit the Pl.00 per day across the board increase under the CBA as compliance with Wage Order No. 5 implemented on June 16,1984 since it gave an additional P3.00 per day to the basic salary pursuant to said order. It, however, credited the Pl.00 a day increase to the requirement under Wage Order No. 4 to which the private respondents allegedly did not object. The other controverted provision of the CBA reads: Section 2. It is the intention of both the COMPANY and the UNION, that the grant of gratuity pay by the COMPANY herein set forth is to reward employees and laborers, who have rendered satisfactory and efficient service with the COMPANY. THUS, in case of voluntary resignation, which is not covered by Section 1 above, the COMPANY nevertheless agrees to grant a gratuity pay to the resigning employee or laborer as follows: 1. 2. 3 4 5 Two to Five years of service : 1 month salary Six (6) to Ten (10) yrs. of : Two and One-half (21/2)service months salary Eleven (ll) to Fifteen yrs. of service : 4 months salary Sixteen (16) to twenty yrs. of : 5 months Twenty one yrs. of service and above : Twelve (12) months salary.

(p. 38, Rollo) The petitioner alleges that one month salary for daily paid workers should be computed on the basis of twenty-six (26) days and not thirty (30) days since daily wage workers do not work every day of the month including Sundays and holidays. The petition is devoid of merit. The subject for interpretation in this petition for review is not the Labor Code or its implementing rules and regulations but the provisions of the collective bargaining agreement entered into by management and the labor union. As a contract, it constitutes the law between the parties (Fegurin v. National Labor Relations Commission, 120 SCRA 910 [1983]) and in interpreting contracts, the rules on contract must govern. Contracts which are not ambiguous are to be interpreted according to their literal meaning and should not be interpreted beyond their obvious intendment (Herrera v. Petrophil Corp., 146 SCRA 385 [1986]). In the case at bar, the petitioner alleges that on May 1, 1984, it granted a Pl.00 increase pursuant to Wage Order No. 4 which in consonance with Section 3 of the CBA was to be credited to the July 1, 1984 increase under the CBA. It was, therefore, a July increase. Section 3 of the CBA, however, clearly states that CBA granted increases shall be credited against future allowances or wage orders. Thus, the CBA increase to be effected on July 1, 1984 can not be retroactively applied to mean compliance with Wage Order No. 4 which took effect on May 1, 1984. The words of the contract are plain and readily understandable so we find no need for any further construction or interpretation petition (Dihiansan v. Court of Appeals, 153 SCRA 712 [1987]). Furthermore, we agree with the NLRC as it held: It is our finding that the respondent is bound by the CBA to grant an increase on July 1, 1984. In this case, between July 1, 1983 and July 1, 1984, there were actually two increases mandated by Wage Order No. 4 on May 1, 1984 and by Wage Order No. 5 on June 16,1984. The fact that the respondent had complied with Wage Order No. 4 and Wage Order No. 5 does not relieve it of its obligation to grant the P1.00 increase under the CBA. (pp. 37-38, Rollo) With regards to the second issue, the petitioner maintains that under the principle of "fair day's wage for fair day's labor", gratuity pay should be computed on the basis of 26 days for one month salary considering that the employees are daily paid. We find no abuse of discretion on the part of the NLRC in granting gratuity pay equivalent to one month or 30 days salary . We quote with favor the NLRC decision which states: xxx xxx xxx

... To say that awarding the daily wage earner salary for more than 26 days is paying him for days he does not work misses the point entirely. The issue here is not payment for days worked but payment of gratuity pay equivalent to one month or 30 days salary. (p. 29, Rollo) Looking into the definition of gratuity, we find the following in Moreno's Philippine Law Dictionary, to wit: Something given freely, or without recompense; a gift; something voluntarily given in return for a favor or services; a bounty; a tip. Pirovano v. De la Rama Steamship Co., 96 Phil. 357. That paid to the beneficiary for past services rendered purely out of the generosity of the giver or grantor.-Peralta v. Auditor General, 100 Phil. 1054. Salary or compensation. The very term 'gratuity' differs from the words 'salary' or 'compensation' in leaving the amount thereof, within the limits of reason, to the arvitrament of the giver.-Herranz & Garriz v. Barbudo,12 Phil. 9. From the foregoing, gratuity pay is therefore, not intended to pay a worker for actual services rendered. It is a money benefit given to the workers whose purpose is "to reward employees or laborers, who have rendered satisfactory and efficient service to the company." (Sec. 2, CBA) While it may be enforced once it forms part of a contractual undertaking, the grant of such benefit is not mandatory so as to be considered a part of labor standard law unlike the salary, cost of living allowances, holiday pay, leave benefits, etc., which are covered by the Labor Code. Nowhere has it ever been stated that gratuity pay should be based on the actual number of days worked over the period of years forming its basis. We see no point in counting the number of days worked over a ten-year period to determine the meaning of "two and one- half months' gratuity." Moreover any doubts or ambiguity in the contract between management and the union members should be resolved in the light of Article 1702 of the Civil Code that: In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer. This is also in consonance with the principle enunciated in the Labor Code that all doubts should be resolved in favor of the worker. The Civil Code provides that when months are not designated by name, a month is understood to be thirty (30) days. The provision applies under the circumstances of this case.

In view of the foregoing, the public respondent did not act with grave abuse of discretion when it rendered the assailed decision which is in accordance with law and jurisprudence. WHEREFORE, the petition is hereby DISMISSED for lack of merit. SO ORDERED. G.R. No. L-31832 October 23, 1982 SOCIAL SECURITY SYSTEM, petitioner, vs. SSS SUPERVISORS' UNION-CUGCO and COURT OF INDUSTRIAL RELATIONS, respondents. MELENCIO-HERRERA, J.: This Petition seeks to review on certiorari the Orders of respondent Court of Industrial Relations (CIR) on the issue of whether or not petitioner Social Security System (SSS) may be held liable for the payment of wages of members of respondent Union who admittedly did not work during the 17-day strike declared in 1968 by the rank and file Union (the Philippine Association of Free Labor Unions [PAFLU]). For a brief factual background, it should be stated that the instant case is an offshoot of Case No. 46-IPA (49) certified to the CIR by the President of the Philippines for compulsory arbitration of labor dispute between the SSS and the PAFLU concerning the interpretation of certain provisions of their Collective Bargaining Agreement. The PAFLU had staged a strike in defiance of the CIR Order of August 29, 1968 "enjoining the parties, for the sake of industrial peace . . . to maintain the status quo-the Union not to declare any strike and the Management not to dismiss nor suspend any of its employees nor to declare any lockout." On 3 September 1968, in that same case, the SSS filed an Urgent Petition to declare the strike illegal. On 26 September 1968, respondent Union (the SSS Supervisors' Union) filed a Motion for Intervention in the said case averring, inter alia, that it had not participated in the strike: that its members wanted to report for work but were prevented by the picketers from entering the work premises; that under the circumstances, they were entitled to their salaries corresponding to the duration of the strike, which could be deducted from the accrued leave credits of their members. The SSS had no objection to the intervention sought but opposed the demand for the payment of salaries pertaining to the entire period of the strike. In its Order of 12 March 1969, intervention was allowed by respondent Court, and pending resolution of the claim for salaries, the SSS was directed to pay the same, chargeable in the meantime to the accrued leave credits of the members 1 pending the determination of the question of the illegality of the strike. Reconsideration of that Order sought by the SSS was denied on 6 November 1969. On 24 November 1969, respondent Court issued an Order 2 directing the CIR Examining Division to compute immediately the money equivalent of the salaries of the members of respondent Union as well as the salaries of those employees who were not members of the striking Union (PAFLU) and to deposit the amount computed, for further disposition. The SSS challenged on certiorari the said Orders before this Court (G.R. No. L-31234), particularly the order to deposit, grounded on the overlapping membership in the two Unions and the impossibility of compliance. We denied the Petition on 2 December 1969 and the proceedings below were resumed. Upon a joint Motion for clarification of its Order of 24 November 1969, respondent Court, through Judge Joaquin M. Salvador, issued the Order of 3 March 1970, ordering the payment of salaries of the members of respondent Union during the strike period, but not to be chargeable to accrued leave credits. The reasons given were that this Court had already declared the strike premature, and that the members of respondent Union had not participated in the strike and had actually manifested their desire to work but could not cross the heavy picket lines during the height of the strike. The SSS moved to reconsider the Order of 3 March 1970 arguing that since respondent Union members actually rendered no service at all during the strike, they were not entitled to the payment of salaries. Respondent Court, en banc, denied reconsideration on 25 March 1970 for lack of sufficient justification. Contending that the Industrial Court had no authority to issue the Order dated 3 March 1970 and its Resolution en banc dated 25 March 1970, petitioner asks this Tribunal to have them annulled. We find for the petitioner based on the equitable tenet of a "fair day's wage for a fair day's labor." The age-old rule governing the relation between labor and capital or management and employee is that of a 'fair day's wage for a fair day's labor.' If there is no work performed by the employee there can be no wage or pay, unless of course the laborer was able, willing and ready to work but was illegally locked out, dismissed or suspended. It is hardly fair or just for an employee or laborer to fight or litigate against his employer on the employer's time.<re||an1w> 3 In this case, the failure to work on the part of the members of respondent Union was due to circumstances not attributable to themselves. But neither should the burden of the economic loss suffered by them be shifted to their employer, the SSS, which was equally faultless, considering that the situation was not a direct consequence of the employer's lockout or unfair labor practice. Under the circumstances, it is but fair that each party must bear his own loss. Considering, therefore, that the parties had no hand or participation in the situation they were in, and that the stoppage of the work was not the direct consequence of the company's lockout or unfair labor practice, 'the economic loss should not be shifted to the employer.'

Justice and equity demand that each must have to bear its own loss, thus placing the parties in equal footing where none should profit from the other there being no fault of either. 4 WHEREFORE, we hereby set aside respondent Court's Order dated 3 March 1970 as affirmed by its Resolution en banc dated 25 March 1970, without pronouncement as to costs. SO ORDERED. G.R. No. 76746 July 27, 1987 DURABUILT RECAPPING PLANT & COMPANY and EDUARDO LAO, GENERAL MANAGER, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, HON. COMM. RICARDO C. CASTRO, HON. ARBITER AMELIA M. GULOY, KAPISANAN NG MGA MANGGAGAWA SA DURABUILT and REYNALDO BODEGAS, respondents. GUTIERREZ, JR., J.: This is a petition to review the May 16, 1986 resolution of respondent National Labor Relations Commission (NLRC) affirming the Labor Arbiter's order in NLRC Case No. NCR-73162083. The sole issue raised is the proper basis for the computation of backwages in favor of an illegally dismissed employee. The facts of the case are simple and uncontroverted. On July 11, 1983, a complaint for illegal dismissal was filed by respondent Reynaldo Bodegas, against petitioner Durabuilt, a tire recapping company. In a decision rendered by the Labor Arbiter on February 13, 1984, the private respondent was ordered reinstated to his former position with full backwages, from the time he was terminated up to the time he is actually reinstated, without loss of seniority rights and benefits accruing to him. The petitioners failed to file a seasonable appeal and entry of final judgment was made on July 8, 1985. On August 8, 1985, the Acting Chief of Research and Information and the Corporation Auditing Examiner of the then Ministry of Labor and Employment submitted a computation of backwages, ECOLA, 13th month pay, sick and vacation leave benefits in favor of Reynaldo Bodegas in the total amount of P24,316.38. The petitioner filed its opposition to the computation on the ground that it contemplated a straight computation of twenty six (26) working days in one month when the period covered by the computation was intermittently interrupted due to frequent brownouts and machine trouble and that respondent Bodegas had only a total of 250.75 days of attendance in 1982 due to absences. According to the petitioner, Bodegas is entitled only to the amount of P3,834.05 broken down as follows: salaries P1,993.00; ECOLA P1,433.50, and 13th month pay P407.55. On October 23, 1985, the Labor Arbiter denied the opposition to the computation. The petitioner appealed to the NLRC which, in an order dated May 16, 1986, affirmed the order of the Labor Arbiter and dismissed the appeal. Claiming grave abuse of discretion on the part of the public respondents, Durabuilt filed the instant petition. Backwages, in general, are granted on grounds of equity for earnings which a worker or employee has lost due to his dismissal from work (New Manila Candy Workers Union (NACONWA-PAFLU v. CIR, 86 SCRA 37). The general principle is that an employee is entitled to receive as backwages all the amounts he may have lost starting from the date of his dismissal up to the time of his reinstatement (Capital Garment Corporation v. Ople, 117 SCRA 473; New Manila Candy Workers' Union (NACONWA-PAFLU) v. CIR, supra). In a line of cases, this Court has established a policy fixing the amount of backwages to a just and reasonable level without qualification or deduction (Insular Life Assurance Co., Ltd. Employees' Association-NATU v. Insular Life Assurance Co., Ltd., 76 SCRA 501; Feati University Club v. Feati University, 58 SCRA 395; Mercury Drug Co., Inc. v. CIR, 56 SCRA 694). The respondents center their attention on the above underlined portion of this policy. Hence, their contention that the deductions cited by the petitioners cannot be made. In their bid to recover a greater amount of backwages, the rationale of the policy has escaped the respondents' consideration. In Insular Life Assurance Employees Association-NATU v. Insular Life Assurance Co., Ltd. (76 SCRA 50) we held that to fix the amount of backwages without qualification or deduction simply means that the workers are to be paid their backwages fixed as of the time of their dismissal or strike without deduction for their earnings elsewhere during their law-off and without qualification of their backwages as thus fixed; i.e. unqualified by any wage increases or other benefits that may have been received by their co-workers who were not dismissed or did not go on strike. The principle is justified "as a realistic, reasonable and mutually beneficial solution for it relieves the employees from proving their earnings during their law-offs and the employer from submitting counter proofs. It was meant to obviate the twin evils of Idleness on the part of the employees and attrition and undue delay in satisfying the award on the part of the employer" (New Manila Candy Workers Union NACONWA-PAFLU v. CIR supra). The same was not to establish an inflexible rule of computation of any Backwages due an employee. The age-old rule governing the relation between labor and capital, or management and employee of a "fair day's wage for a fair day's labor" remains as the basic factor in determining employees' wages, and for that matter backwages. If there is no work performed by the employee there can be no wage or pay unless, of course, the laborer was able, willing and ready to work but was illegally locked out, or suspended (SSS v. SSS Supervisors Union-CUGCO, 117 SCRA 746).

The illegal dismissal of the private respondent is conceded by the petitioner. It is willing to pay backwages. However, the petitioner argues that for days where no work was required and could be done by its employees, no wages could have been earned and, thereafter, lost by said employees to justify an award of backwages. We quote with approval the Solicitor General's comment,* to wit: From the indubitable facts on record, it appears that petitioners have valid reasons to claim that certain days should not be considered days worked for purposes of computing private respondent's backwages since their business was not in actual operation due to brownouts or power interruption and the retrenchment of workers they had during the period of private respondent's dismissal. It cannot be denied that during the past years particularly in 1983, there was chronic electrical power interruption resulting to disruption of business operations. To alleviate the situation, the government thru the Ministry of Trade and Industry called on the industrial sector to resort to the so-called Voluntary Loan Curtailment Plan (or VLCP), whereby brownouts or electrical power interruption was scheduled by area. The program while it may have been called 1. voluntary" was not so as electrical power consumers had no choice then due to the prevailing energy crisis. Petitioners heeding the government's call, participated in the VLCP as indicated in their statement of conformity dated November 23, 1982. Thus, beginning March 21, 1983 and every Wednesday thereafter, petitioner's business (which indicentally is recapping rubber tires) was not in actual operation. No less than the former Minister of Trade and Industry expressed his gratitude to petitioners for participating in the VLCP. Petitioners substantiated claim therefore, that the days during which they were not in operation due to the VLCP should be excluded in the number of days worked for purposes of computing private respondents backwages stands reasonable and should have been considered by the corporation auditing examiner.1avvphi1 Moreover, as early as May 1978, the Ministry of Labor and Employment, thru Policy Instruction No. 36, has said that 2. Brownouts running for more than twenty minutes may not be treated as hours worked provided that any of the following conditions are present; a) The employees can leave their work place or go elsewhere whether within or without the work premises; or b) The employees can use the time effectively for their own interest. It is of record that during electrical power interruptions, petitioners business was not in operation. This was never disputed by private respondent. Petitioners' claim that the period (December 1983) during which they effected retrenchment of workers owing to economic crisis then prevailing likewise appears plausible. There is substantial evidence consisting of reports to MOLE and Social Security System showing that petitioners had laid off workers due to lack of raw materials. The petitioners payrolls submitted to support their objection to computation indicate that the number of working days was reduced from the normal weekly six working days to four working days for a great number of petitioners' workers. Obviously, private respondent could not have been among those laid off, as at that time he was already dismissed by petitioner. (Rollo, pp. 31-34). Thus, we have held that where the failure of workers to work was not due to the employer's fault, the burden of economic loss suffered by the employees should not be shifted to the employer. Each party must bear his own loss (SSS v. SSS Supervisors' Union-CUGCO, supra; PanAmerican World Airways, Inc. v. CIR, 17 SCRA 813). As pointed out by the Solicitor General ... to allow payment of backwages of P24,316.68 as ordered by public respondents instead of P3,834.16 as petitioners claim and which appears to be just and reasonable under the circumstances of this case would not only be unconscionable but would be grossly unfair to other employees who were not paid when petitioners' business was not in operation. (Rollo, p. 35). Indeed, it would neither be fair nor just to allow respondent to recover something he has not earned and could not have earned and to further penalize the petitioner company over and above the losses it had suffered due to lack of raw materials and the energy-saving programs of the government. The private respondent cannot be allowed to enrich himself at the expense of the petitioner company. The computation of backwages should be based on daily rather than on monthly pay schedules where, as in the case at bar, such basis is more realistic and accurate. (Compania Maritima v. United Seamen's Union of the Philippines, 65 SCRA 393). In conclusion, we again quote the Solicitor General's comment: Finally, what strengthens petitioners claim for mitigated liability is their evident good faith as manifested by their reinstatement of private respondent while the case for illegal dismissal was still pending and their willingness to pay backwages. While it is true that as a general rule order of reinstatement carries with it an award of backwages (Art. 280, Labor Code) this Honorable Court did not only mitigate but absolved employers from liability of backwages where good faith is evident (Findlay Millar Timber Co. v. PLASLU, 6 SCRA 26: Cromwell Com. Employees & Laborers Union v. CIR, 13 SCRA 259, Norton and Harrison Labor Union v. Harrison Co. Inc. 15 SCRA 310; PAL v. PALEA, 57 SCRA 489; Cruz v. MOLE, 120 SCRA 15). There is no indication, to paraphrase this Honorable Court's ruling in Pantranco North Express Inc. v. NLRC (126 SCRA 526) that private respondent was a "victim of arbitrary and high handed action. Rollo, pp. 34-35). WHEREFORE, in view of the foregoing, the petition is hereby GRANTED. The order of the Labor Arbiter, Amelia M. Guloy in NLRC Case No. NCR-7-3162083, dated October 23, 1985, as affirmed by the NLRC is SET ASIDE. The petitioner is ordered to pay private respondent his backwages from the time he was terminated up to the time he was actually reinstated computed on the basis of the number of days when petitioner's business was in actual operation. The number of days where no work was required and could be done by petitioner's

employees on account of shutdowns due to electrical power interruptions, machine repair, and lack of raw materials are not considered hours worked for purposes of computing the petitioner's obligation to respondent employee. In no case shall the award exceed three year's backpay as above computed. SO ORDERED. G.R. No. 121927 April 22, 1998ANTONIO W. IRAN (doing business under the name and style of Tones Iran Enterprises), petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION (Fourth Division), GODOFREDO O. PETRALBA, MORENO CADALSO, PEPITO TECSON, APOLINARIO GOTHONG GEMINA, JESUS BANDILAO, EDWIN MARTIN, CELSO LABIAGA, DIOSDADO GONZALGO, FERNANDO M. COLINA, respondents.

ROMERO, J.: Whether or not commissions are included in determining compliance with the minimum wage requirement is the principal issue presented in this petition. Petitioner Antonio Iran is engaged in softdrinks merchandising and distribution in Mandaue City, Cebu, employing truck drivers who double as salesmen, truck helpers, and non-field personnel in pursuit thereof. Petitioner hired private respondents Godofredo Petralba, Moreno Cadalso, Celso Labiaga and Fernando Colina as drivers/salesmen while private respondents Pepito Tecson, Apolinario Gimena, Jesus Bandilao, Edwin Martin and Diosdado Gonzalgo were hired as truck helpers. Drivers/salesmen drove petitioner's delivery trucks and promoted, sold and delivered softdrinks to various outlets in Mandaue City. The truck helpers assisted in the delivery of softdrinks to the different outlets covered by the driver/salesmen. As part of their compensation, the driver/salesmen and truck helpers of petitioner received commissions per case of softdrinks sold at the following rates: SALESMEN: Ten Centavos (P0.10) per case of Regular softdrinks. Twelve Centavos (P0.12) per case of Family Size softdrinks. TRUCK HELPERS: Eight Centavos (P0.08) per case of Regular softdrinks. Ten Centavos (P0.10) per case of Family Size softdrinks. Sometime in June 1991, petitioner, while conducting an audit of his operations, discovered cash shortages and irregularities allegedly committed by private respondents. Pending the investigation of irregularities and settlement of the cash shortages, petitioner required private respondents to report for work everyday. They were not allowed, however, to go on their respective routes. A few days thereafter, despite aforesaid order, private respondents stopped reporting for work, prompting petitioner to conclude that the former had abandoned their employment. Consequently, petitioner terminated their services. He also filed on November 7, 1991, a complaint for estafa against private respondents. On the other hand, private respondents, on December 5, 1991, filed complaints against petitioner for illegal dismissal, illegal deduction, underpayment of wages, premium pay for holiday and rest day, holiday pay, service incentive leave pay, 13th month pay, allowances, separation pay, recovery of cash bond, damages and attorney's fees. Said complaints were consolidated and docketed as Rab VII-12-179191, RAB VII-12-1825-91 and RAB VII-12-1826-91, and assigned to Labor Arbiter Ernesto F. Carreon. The labor arbiter found that petitioner had validly terminated private respondents, there being just cause for the latter's dismissal. Nevertheless, he also ruled that petitioner had not complied with minimum wage requirements in compensating private respondents, and had failed to pay private respondents their 13th month pay. The labor arbiter, thus, rendered a decision on February 18, 1993, the dispositive portion of which reads: WHEREFORE, premises considered, judgment is hereby rendered ordering the respondent Antonio W. Iran to pay the complainants the following: 1. Celso Labiaga P10,033.10 2. Godofredo Petralba 1,250.00 3. Fernando Colina 11,753.10 4. Moreno Cadalso 11,753.10 5. Diosdado Gonzalgo 7,159.04 6. Apolinario Gimena 8,312.24 7. Jesus Bandilao 14,729.50 8. Pepito Tecson. 9,126.55 Attorney's Fees (10%) 74,116.63 of the gross award 7,411.66 GRAND TOTAL AWARD P81,528.29

======== The other claims are dismissed for lack of merit. SO ORDERED. 1 Both parties seasonably appealed to the NLRC, with petitioner contesting the labor arbiter's refusal to include the commissions he paid to private respondents in determining compliance with the minimum wage requirement. He also presented, for the first time on appeal, vouchers denominated as 13th month pay signed by private respondents, as proof that petitioner had already paid the latter their 13th month pay. Private respondents, on the other hand, contested the findings of the labor arbiter holding that they had not been illegally dismissed, as well as mathematical errors in computing Jesus Bandilao's wage differentials. The NLRC, in its decision of December 21, 1994, affirmed the validity of private respondent's dismissal, but found that said dismissal did not comply with the procedural requirements for dismissing employees. Furthermore, it corrected the labor arbiter's award of wage differentials to Jesus Bandilao. The dispositive portion of said decision reads: WHEREFORE, premises considered, the decision is hereby MODIFIED in that complainant Jesus Bandilao's computation for wage differential is corrected from P154.00 to P4,550.00. In addition to all the monetary claim (sic) originally awarded by the Labor Arbiter a quo, P1,000.00 is hereby granted to each complainants (sic) as indemnity fee for failure of respondents to observe procedural due process. SO ORDERED. 2 Petitioner's motion for reconsideration of said decision was denied on July 31, 1995, prompting him to elevate this case to this Court, raising the following issues: 1. THE HONORABLE COMMISSION ACTED WITH GRAVE ABUSE OF DISCRETION AND CONTRARY TO LAW AND JURISPRUDENCE IN AFFIRMING THE DECISION OF THE LABOR ARBITER A QUO EXCLUDING THE COMMISSIONS RECEIVED BY THE PRIVATE RESPONDENTS IN COMPUTING THEIR WAGES; 2. THE HONORABLE COMMISSION ACTED WITH GRAVE ABUSE OF DISCRETION IN FINDING PETITIONER GUILTY OF PROCEDURAL LAPSES IN TERMINATING PRIVATE RESPONDENTS AND IN AWARDING EACH OF THE LATTER P1,000.00 AS INDEMNITY FEE; 3. THE HONORABLE COMMISSION GRAVELY ERRED IN NOT CREDITING THE ADVANCE AMOUNT RECEIVED BY THE PRIVATE RESPONDENTS AS PART OF THEIR 13TH MONTH PAY. The petition is impressed with merit. The NLRC, in denying petitioner's claim that commissions be included in determining compliance with the minimum wage ratiocinated thus: Respondent (petitioner herein) insist assiduously that the commission should be included in the computation of actual wages per agreement. We will not fall prey to this fallacious argument. An employee should receive the minimum wage as mandated by law and that the attainment of the minimum wage should not be dependent on the commission earned by an employee. A commission is an incentive for an employee to work harder for a better production that will benefit both the employer and the employee. To include the commission in the computation of wage in order to comply with labor standard laws is to negate the practice that a commission is granted after an employee has already earned the minimum wage or even beyond it. 3 This holding is unsupported by law and jurisprudence. Article 97(f) of the Labor Code defines wage as follows: Art. 97(f) "Wage" paid to any employee shall mean the remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered and includes the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee. xxx xxx xxx (Emphasis supplied)

This definition explicitly includes commissions as part of wages. While commissions are, indeed, incentives or forms of encouragement to inspire employees to put a little more industry on the jobs particularly assigned to them, still these commissions are direct remunerations for services rendered. In fact, commissions have been defined as the recompense, compensation or reward of an agent, salesman, executor, trustee, receiver, factor, broker or bailee, when the same is calculated as a percentage on the amount of his transactions or on the profit to the principal. The nature of the work of a salesman and the reason for such type of remuneration for services rendered demonstrate clearly that commissions are part of a salesman's wage or salary. 4 Thus, the commissions earned by private respondents in selling softdrinks constitute part of the compensation or remuneration paid to drivers/salesmen and truck helpers for serving as such, and hence, must be considered part of the wages paid them. The NLRC asserts that the inclusion of commissions in the computation of wages would negate the practice of granting commissions only after an employee has earned the minimum wage or over. While such a practice does exist, the universality and prevalence of such a

practice is questionable at best. In truth, this Court has taken judicial notice of the fact that some salesmen do not receive any basic salary but depend entirely on commissions and allowances or commissions alone, although an employer-employee relationship exists. 5 Undoubtedly, this salary structure is intended for the benefit of the corporation establishing such, on the apparent assumption that thereby its salesmen would be moved to greater enterprise and diligence and close more sales in the expectation of increasing their sales commissions. This, however, does not detract from the character of such commissions as part of the salary or wage paid to each of its salesmen for rendering services to the corporation. 6 Likewise, there is no law mandating that commissions be paid only after the minimum wage has been paid to the employee. Verily, the establishment of a minimum wage only sets a floor below which an employee's remuneration cannot fall, not that commissions are excluded from wages in determining compliance with the minimum wage law. This conclusion is bolstered by Philippine Agricultural Commercial and Industrial Workers Union vs. NLRC, 7 where this Court acknowledged that drivers and conductors who are compensated purely on a commission basis are automatically entitled to the basic minimum pay mandated by law should said commissions be less than their basic minimum for eight hours work. It can, thus, be inferred that were said commissions equal to or even exceed the minimum wage, the employer need not pay, in addition, the basic minimum pay prescribed by law. It follows then that commissions are included in determining compliance with minimum wage requirements. With regard to the second issue, it is settled that in terminating employees, the employer must furnish the worker with two written notices before the latter can be legally terminated: (a) a notice which apprises the employee of the particular acts or omissions for which his dismissal is sought, and (b) the subsequent notice which informs the employee of the employer's decision to dismiss him. 8 (Emphasis ours) Petitioner asseverates that no procedural lapses were committed by him in terminating private respondents. In his own words: . . . when irregularities were discovered, that is, when the misappropriation of several thousands of pesos was found out, the petitioner instructed private respondents to report back for work and settle their accountabilities but the latter never reported for work. This instruction by the petitioner to report back for work and settle their accountabilities served as notices to private respondents for the latter to explain or account for the missing funds held in trust by them before they disappeared. 9 Petitioner considers this return-to-work order as equivalent to the first notice apprising the employee of the particular acts or omissions for which his dismissal is sought. But by petitioner's own admission, private respondents were never told in said notice that their dismissal was being sought, only that they should settle their accountabilities. In petitioner's incriminating words: It should be emphasized here that at the time the misappropriation was discovered and subsequently thereafter, the petitioner's first concern was not effecting the dismissal of private respondents but the recovery of the misappropriated funds thus the latter were advised to report back to work. 10 As above-stated, the first notice should inform the employee that his dismissal is being sought. Its absence in the present case makes the termination of private respondents defective, for which petitioner must be sanctioned for his non-compliance with the requirements of or for failure to observe due process. 11 The twin requirements of notice and hearing constitute the essential elements of due process, and neither of these elements can be disregarded without running afoul of the constitutional guarantee. Not being mere technicalities but the very essence of due process, to which every employee is entitled so as to ensure that the employer's prerogative to dismiss is not exercised arbitrarily, 12 these requisites must be complied with strictly. Petitioner makes much capital of private respondents' failure to report to work, construing the same as abandonment which thus authorized the latter's dismissal. As correctly pointed out by the NLRC, to which the Solicitor General agreed, Section 2 of Book V, Rule XIV of the Omnibus Rules Implementing the Labor Code requires that in cases of abandonment of work, notice should be sent to the worker's last known address. If indeed private respondents had abandoned their jobs, it was incumbent upon petitioner to comply with this requirement. This, petitioner failed to do, entitling respondents to nominal damages in the amount of P5,000.00 each, in accordance with recent jurisprudence, 13 to vindicate or recognize their right to procedural due process which was violated by petitioner. Lastly, petitioner argues that the NLRC gravely erred when it disregarded the vouchers presented by the former as proof of his payment of 13th month pay to private respondents. While admitting that said vouchers covered only a ten-day period, petitioner argues that the same should be credited as amounts received by private respondents as part of their 13th month pay, Section 3(e) of the Rules and Regulations Implementing P.D. No. 851 providing that the employer shall pay the difference when he pays less than 1/12th of the employee's basic salary. 14 While it is true that the vouchers evidencing payments of 13th month pay were submitted only on appeal, it would have been more in keeping with the directive of Article 221 15 of the Labor Code for the NLRC to have taken the same into account. 16 Time and again, we have allowed evidence to be submitted on appeal, emphasizing that, in labor cases, technical rules of evidence are not binding. 17 Labor officials should use every and all reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure. 18 It must also be borne in mind that the intent of P.D. No. 851 is the granting of additional income in the form of 13th month pay to employees not as yet receiving the same and not that a double burden should be imposed on the employer who is already paying his employees a 13th month pay or its equivalent. 19 An employer who pays less than 1/12th of the employees basic salary as their 13th month pay is only required to pay the difference. 20 The foregoing notwithstanding, the vouchers presented by petitioner covers only a particular year. It does not cover amounts for other years claimed by private respondents. It cannot be presumed that the same amounts were given on said years. Hence, petitioner is entitled to credit only the amounts paid for the particular year covered by said vouchers.

WHEREFORE, in view of the foregoing, the decision of the NLRC dated July 31, 1995, insofar as it excludes the commissions received by private respondents in the determination of petitioner's compliance with the minimum wage law, as well as its exclusion of the particular amounts received by private respondents as part of their 13th month pay is REVERSED and SET ASIDE. This case is REMANDED to the Labor Arbiter for a recomputation of the alleged deficiencies. For non-observance of procedural due process in effecting the dismissal of private respondents, said decision is MODIFIED by increasing the award of nominal damages to private respondents from P1,000.00 to P5,000.00 each. No costs. SO ORDERED. [G.R. No. 122827. March 29, 1999] LIDUVINO M. MILLARES, J. CAPISTRANO CORDITA, SHIRLEY P. UY, DIONISIO J. REQUINA, GABRIEL A. DEJERO, NELSON T. GOMONIT, IMELDA IMPEYNADO SULPICIO B. SUMILE, MA. CONSUELO AVIEL, SILVINO S. GUEVARRA, FIDEL DUMANHOG, NELFA T. POLOTAN, LEMUEL C. RISMA, JUANITO M. GONZALES, ROGELIO B. CABATUAN, EPIFANCIO E. GANANCIAL, DOMINADOR D. ATOK, CONRADO U. SERRANO, ISIDRO J. BARNAJA, ROMEO VIRTUDAZO, AVELINO NABLE, EDGAR TAMPOS, ERNESTO ORIAS, DALMACIO LEGARAY, ROMEO R . BULA, ROBERTO G. GARCIA, RUDOLFO SUZON, JERRY S. DANO, AUGUST G. ESCUDERO, OSCAR B. CATBAGAN, TEOFILO C. SISON, NARCISO BULASA, ALBERTO CORTEZ, LILIA C. CABRERA, NESTOR A. ACASO, BIENVENIDO MOZO, ISIDORO A. ALMENDAREZ, VICENTE M. PILONGO, ROBERTO N. LUMPOT, PATRICIO BANDOLA, MANUEL S. ESPINA, ISIDRO K. BALCITA, JR., EMMANUEL O. ABRAHAM, OLEGARIO A. EPIS, NESTOR D. PEREGRINO, RAMON A. USANAGA, PRESTO BARTOLOME, BRADY EMPEYNADO, PORFERIO N. CONDADO, AQUILLO V. CORDOVA, LEONARDO ESTOSI, PACIFICO B. DACORINA, PABLITO B. LLUBIT, ANTONIO DOZA, LEONITO LABADIA, EDGARDO BELLIZA, FEDENCIO P. GEBERTAS, VIRGILIO D. GULBE, MANUEL A. LERIO, JR., ROGELIO B. OCAMIA, RODOLFO A. CASTILLO, EDMUNDO L PLAZA, ROBERTO D. YAGONIA, JR., PETRONIO ESTELA, JR, CRISOLOGO A. LOGRONIO, ERNESTO T. MORIO, ROGELIO M. DAVID, BENJAMIN U. ARLIGUE, APOLONIO MUNDO, JR., NENE M. E NOSA, NILO B. BALAORO, GERONIMO S. CONVI, VICENTE R. TARAGOZA, YOLANDO A. SALAZAR, MANUEL A. NERI, ROGELIO C. TICAR, ROBERTO A. MACALAM, MIGUEL MACARIOLA, WALTERIO DAPADAP, SILVERIO CUAMAG, EUPARQUIO PLANOS, GILBERTO M. MIRA, REYNALDO BACSARSA, DIOSDADO B. ABING, ARISTARCO V. SALON, TOMAS N. CATACTE, RODOLFO MEMORIA, PAPENIANO CURIAS, JOSE S. CANDIA, DESIDERIO C. NAVARRO, EMMANUEL O. ABRAHAM, JOSELITO D. ARLAN, FRANCISCO S. SANCHEZ, MANSUETO B. LINGGO, ISIDRO BARNAJA, ROMEO S. CABRERA, LEODEGARIO CAINTIC, NESTOR G. BLANDO, FLORENCIO B. DELIZO, MILAN M. ETES, GONZALO C. PADILLO, LEONARDO CAGAKIT, JOSEFINO E. DULGUIME, PEPITO G. ARREZA, AMADOR G. CAGALAWAN, GAUDENCIO C. SARMIENTO, FLORENTINO J. BRACAMONTE, DOMINADOR H. TY, LEOPOLDO T. SUPIL, JOSE A. DOHINOG, ANIANO T. REYES, CARLITO G. UY, PLACIDO D. PADILLO, TERESITA C. ADRIANO, CANDIDO S. ADRIANO, and AVELINO G. VENERACION, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, (FIFTH DIVISION), and PAPER INDUSTRIES CORPORATION OF THE PHILIPPINES (PICOP), respondents. DECISION BELLOSILLO, J.: Petitioners numbering one hundred sixteen (116)[1] occupied the positions of Technical Staff, Unit Manager, Section Manager, Department Manager, Division Manager and Vice President in the mill site of respondent Paper Industries Corporation of the Philippines (PICOP) in Bislig, Surigao del Sur. In 1992 PICOP suffered a major financial setback allegedly brought about by the joint impact of restrictive government regulations on logging and the economic crisis. To avert further losses, it undertook a retrenchment program and terminated the services of petitioners. Accordingly, petitioners received separation pay computed at the rate of one (1) month basic pay for every year of service. Believing however that the allowances they allegedly regularly received on a monthly basis during their employment should have been included in the computation thereof they lodged a complaint for separation pay differentials. The allowances in question pertained to the following 1. Staff/Manager's Allowance Respondent PICOP provides free housing facilities to supervisory and managerial employees assigned in Bislig. The privilege includes free water and electric consumption. Owing however to shortage of such facilities, it was constrained to grant Staff allowance instead to those who live in rented houses outside but near the vicinity of the mill site. But the allowance ceases whenever a vacancy occurs in the company's housing facilities. The former grantee is then directed to fill the vacancy. For Unit, Section and Department Managers, respondent PICOP gives an additional amount to meet the same kind of expenses called Manager's allowance. 2. Transportation Allowance To relieve respondent PICOP's motor pool in Bislig from a barrage of requests for company vehicles and to stabilize company vehicle requirements it grants transportation allowance to key officers and Managers assigned in the mill site who use their own vehicles in the performance of their duties. It is a conditional grant such that when the conditions no longer obtain, the privilege is discontinued. The recipients of this kind of allowance are required to liquidate it by submitting a report with a detailed enumeration of expenses incurred. 3. Bislig Allowance The Bislig Allowance is given to Division Managers and corporate officers assigned in Bislig on account of the hostile environment prevailing therein. But once the recipient is transferred elsewhere outside Bislig, the allowance ceases. Applying Art.,97, par. (f), of the Labor Code which defines if wage," the Executive Labor Arbiter opined that the subject allowances, being customarily furnished by respondent PICOP and regularly received by petitioners, formed part of the latter's wages. Resolving the controversy from another angle, on the strength of the ruling in Santos v. NLRC[2] and Soriano v. NLRC[3] that in the computation of separation pay account should be taken not just of the basic salary but also of the regular allowances that the employee had been

receiving, he concluded that the allowances should be included in petitioners' base pay. Thus respondent PICOP was ordered on 28 April 1994 to pay petitioners Four Million Four Hundred Eighty-One Thousand Pesos (P4,481,000.00) representing separation pay differentials plus ten per cent (10%) thereof as attorney's fees.[4] The National Labor Relations Commission (NLRC) did not share the view of the Executive Labor Arbiter. On 7 October 1994 it set aside the assailed decision by decreeing that the allowances did not form part of the salary base used in computing separation pay.[5] Its ruling was based on the finding that the cases relied upon by the Executive Labor Arbiter were inapplicable since they involved illegal dismissal where separation pay was granted in lieu of reinstatement which was no longer feasible. Instead, what it considered in point was Estate of the late Eugene J. Kneebone v. NLRC[6] where the Court held that representation and transportation allowances were deemed not part of salary and should therefore be excluded in the computation of separation benefits. Relating the present case with Art. 97, par. (f), of the Labor Code, the NLRC likewise found that petitioners' allowances were contingency-based and thus not included in their salaries. On 26 September 1995 reconsideration was denied.[7] In this petition for certiorari, petitioners submit that their allowances are included in the definition of "facilities" in Art. 97, par. (f), of the Labor Code, being necessary and indispensable for their existence and subsistence. Furthermore they claim that their availment of the monetary equivalent of those "facilities" on a monthly basis was characterized by permanency, regularity and customariness. And to fortify their arguments they insist on the applicability of Santos,[8] Soriano,[9] The Insular Life Assurance Company,[10] Planters Products, Inc.[11] and Songco[12] which are all against the NLRC holding that the salary base in computing separation pay includes not just the basic salary but also the regular allowances. There is no showing of grave abuse of discretion on the part of the NLRC. In case of retrenchment to prevent losses, Art. 283 of the the Labor Code imposes on the employer an obligation to grant to the affected employees separation pay equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. Since the law speaks of "pay," the question arises, "What exactly does the term connote?" We correlate Art. 283 with Art. 97 of the same Code on definition of terms. "Pay" is not defined therein but "wage." In Songco the Court explained that both words (as well as salary) generally refer to one and the same meaning, i.e., a reward or recompense for services performed. Specifically, "wage" is defined in letter (f) as the remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered and includes the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee. We invite attention to the above-underlined clause. Stated differently, when an employer customarily furnishes his employee board, lodging or other facilities, the fair and reasonable value thereof, as determined by the Secretary of Labor and Employment, is included in "wage." In order to ascertain whether the subject allowances form part of petitioner's "wages," we divide the discussion on the following "customarily furnished;" "board, lodging or other facilities;" and, "fair and reasonable value as determined by the Secretary of Labor." "Customary" is founded on long-established and constant practice[13] connoting regularity.[14] The receipt of an allowance on a monthly basis does not ipso facto characterize it as regular and forming part of salary[15] because the nature of the grant is a factor worth considering. We agree with the observation of the Office of the Solicitor General- that the subject allowances were temporarily, not regularly, received by petitioners because In the case of the housing allowance, once a vacancy occurs in the company-provided housing accommodations, the employee concerned transfers to the company premises and his housing allowance is discontinued x x x x On the other hand, the transportation allowance is in the form of advances for actual transportation expenses subject to liquidation x x x given only to employees who have personal cars. The Bislig allowance is given to Division Managers and corporate officers assigned in Bislig, Surigao del Norte. Once the officer is transferred outside Bislig, the allowance stops.[16] We add that in the availment of the transportation allowance, respondent PICOP set another requirement that the personal cars be used by the employees in the performance of their duties. When the conditions for availment ceased to exist, the allowance reached the cutoff point. The finding of the NLRC along the same line likewise merits concurrence, i.e., petitioners' continuous enjoyment of the disputed allowances was based on contingencies the occurrence of which wrote finis to such enjoyment. Although it is quite easy to comprehend "board" and "lodging," it is not so with "facilities." Thus Sec. 5, Rule VII, Book III, of the Rules Implementing the Labor Code gives meaning to the term as including articles or services for the benefit of the employee or his family but excluding tools of the trade or articles or service primarily for the benefit of the employer or necessary to the conduct of the employer's business. The Staff /Manager's allowance may fall under "lodging" but the transportation and Bislig allowances are not embraced in "facilities" on the main consideration that they are granted as well as the Staff/Manager's allowance for respondent PICOP's benefit and convenience, i.e., to insure that petitioners render quality performance. In determining whether a privilege is a facility, the criterion is not so much its kind but its purpose.[17] That the assailed allowances were for the benefit and convenience of respondent company was supported by the circumstance that they were not subjected to withholding tax. Revenue Audit Memo Order No. 1-87 pertinently provides 3.2 x x x x transportation, representation or entertainment expenses shall not constitute taxable compensation if:

(a) It is for necessary travelling and representation or entertainment expenses paid or incurred by the employee in the pursuit of the trade or business of the employer, and (b) The employee is required to, and does, make an accounting/liquidation for such expense in accordance with the specific requirements of substantiation for such category or expense. Board and lodging allowances furnished to an employee not in excess of the latter's needs and given free of charge, constitute income to the latter except if such allowances or benefits are furnished to the employee for the convenience of the employer and as necessary incident to proper performance of his duties in which case such benefits or allowances do not constitute taxable income.[18] The Secretary of Labor and Employment under Sec. 6, Rule VII, Book III, of the Rules Implementing the Labor Code may from time to time fix in appropriate issuances the "fair and reasonable value of board, lodging and other facilities customarily furnished by an employer to his employees." Petitioners' allowances do not represent such fair and reasonable value as determined by the proper authority simply because the Staff/Manager's allowance and transportation allowance were amounts given by respondent company in lieu of actual provisions for housing and transportation needs whereas the Bislig allowance was given in consideration of being assigned to the hostile environment then prevailing in Bislig. The inevitable conclusion is that, as reached by the NLRC, subject allowances did not form part of petitioners' wages. In Santos[19] the Court decreed that in the computation of separation pay awarded in lieu of reinstatement, account must be taken not only of the basic salary but also of transportation and emergency living allowances. Later, the Court in Soriano, citing Santos, was general in its holding that the salary base properly used in computing separation pay where reinstatement was no longer feasible should include not just the basic salary but also the regular allowances that the employee had been receiving. Insular merely reiterated the aforementioned rulings. The rationale is not difficult to discern. It is the obligation of the employer to pay an illegally dismissed employee the whole amount of his salaries plus all other benefits, bonuses and general increases to which he would have been normally entitled had he not been dismissed and had not stopped working.[20] The same holds true in case of retrenched employees. And thus we applied Insular and Soriano in Planters in the computation of separation pay of retrenched employees. Songco likewise involved retrenchment and was relied upon in Planters, Soriano and Santos in determining the proper amount of separation pay. As culled from the foregoing jurisprudence, separation pay when awarded to an illegally dismissed employee in lieu of reinstatement or to a retrenched employee should be computed based not only on the basic salary but also on the regular allowances that the employee had been receiving. But in view of the previous discussion that the disputed allowances were not regularly received by petitioners herein, there was no reason at all for petitioners to resort to the above cases. Neither is Kneebone applicable, contrary to the finding of the NLRC, because of the difference in factual circumstances. In Kneebone, the Court was tasked to resolve the issue whether the representation and transportation allowances formed part of salary as to be considered in the computation of retirement benefits. The ruling was in the negative on the main ground that the retirement plan of the company expressly excluded such allowances from salary. WHEREFORE, the petition is DISMISSED. The resolution of public respondent National Labor Relations Commission dated 7 October 1994 holding that the Staff /Manager's, transportation and Bislig allowances did not form part of the salary base used in computing the separation pay of petitioners, as well as its resolution dated 26 September 1995 denying reconsideration, is AFFIRMED. No costs. SO ORDERED. [G.R. No. 111042. October 26, 1999] AVELINO LAMBO and VICENTE BELOCURA, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and J.C. TAILOR SHOP and/or JOHNNY CO, respondents. DECISION MENDOZA, J.: This is a petition for certiorari to set aside the decision[1] of the National Labor Relations Commission (NLRC) which reversed the awards made by the Labor Arbiter in favor of petitioners, except one for P4,992.00 to each, representing 13th month pay. The facts are as follows. Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private respondents J.C. Tailor Shop and/or Johnny Co on September 10, 1985 and March 3, 1985, respectively. They worked from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. As in the case of the other 100 employees of private respondents, petitioners were paid on a piece-work basis, according to the style of suits they made. Regardless of the number of pieces they finished in a day, they were each given a daily pay of at least P64.00. On January 17, 1989, petitioners filed a complaint against private respondents for illegal dismissal and sought recovery of overtime pay, holiday pay, premium pay on holiday and rest day, service incentive leave pay, separation pay, 13th month pay, and attorneys fees. After hearing, Labor Arbiter Jose G. Gutierrez found private respondents guilty of illegal dismissal and accordingly ordered them to pay petitioners claims. The dispositive portion of the Labor Arbiters decision reads: WHEREFORE, in the light of the foregoing, judgment is hereby rendered declaring the complainants to have been illegally dismissed and ordering the respondents to pay the complainants the following monetary awards: AVELINO LAMBO VICENTE BELOCURA

I.

BACKWAGES

P64,896.00 13,447.90 1,399.30 4,992.00 9,984.00 P94,719.20

P64,896.00 13,447.90 1,399.30 4,992.00 11,648.00 P96,383.20 = P191,102.40 19,110.24 P210,212.64 ======

II. OVERTIME PAY III. HOLIDAY PAY IV. 13TH MONTH PAY V. SEPARATION PAY TOTAL

Add: 10% Attorneys Fees GRAND TOTAL

or a total aggregate amount of TWO HUNDRED TEN THOUSAND TWO HUNDRED TWELVE AND 64/100 (P210,212.64). All other claims are dismissed for lack of merit. SO ORDERED.[2] On appeal by private respondents, the NLRC reversed the decision of the Labor Arbiter. It found that petitioners had not been dismissed from employment but merely threatened with a closure of the business if they insisted on their demand for a straight payment of their minimum wage, after petitioners, on January 17, 1989, walked out of a meeting with private respondents and other em ployees. According to the NLRC, during that meeting, the employees voted to maintain the company policy of paying them according to the volume of work finished at the rate of P18.00 per dozen of tailored clothing materials. Only petitioners allegedly insisted that they be paid the minimum wage and other benefits. The NLRC held petitioners guilty of abandonment of work and accordingly dismissed their claims except that for 13th month pay. The dispositive portion of its decision reads: WHEREFORE, in view of the foregoing, the appealed decision is hereby vacated and a new one entered ordering respondents to pay each of the complainants their 13th month pay in the amount of P4,992.00. All other monetary awards are hereby deleted. SO ORDERED.[3] Petitioners allege that they were dismissed by private respondents as they were about to file a petition with the Department of Labor and Employment (DOLE) for the payment of benefits such as Social Security System (SSS) coverage, sick leave and vacation leave. They deny that they abandoned their work. The petition is meritorious. First. There is no dispute that petitioners were employees of private respondents although they were paid not on the basis of time spent on the job but according to the quantity and the quality of work produced by them. There are two categories of employees paid by results: (1) those whose time and performance are supervised by the employer. (Here, there is an element of control and supervision over the manner as to how the work is to be performed. A piece-rate worker belongs to this category especially if he performs his work in the company premises.); and (2) those whose time and performance are unsupervised. (Here, the employers control is over the res ult of the work. Workers on pakyao and takay basis belong to this group.) Both classes of workers are paid per unit accomplished. Piece-rate payment is generally practiced in garment factories where work is done in the company premises, while payment on pakyao and takay basis is commonly observed in the agricultural industry, such as in sugar plantations where the work is performed in bulk or in volumes difficult to quantify.[4] Petitioners belong to the first category, i.e., supervised employees. In determining the existence of an employer-employee relationship, the following elements must be considered: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employees conduct.[5] Of these elements, the most important criterion is whether the employer controls or has reserved the right to control the employee not only as to the result of the work but also as to the means and methods by which the result is to be accomplished.[6] In this case, private respondents exercised control over the work of petitioners. As tailors, petitioners worked in the companys premises from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. The mere fact that they were paid on a piece-rate basis does not negate their status as regular employees of private respondents. The term wage is broadly defined in Art. 97 of the Labor Code as remuneration or earnings, capable of being expressed in terms of money whether fixed or ascertained on a time, task, piece or commission basis. Payment by the piece is just a method of compensation and does not define the essence of the relations.[7] Nor does the fact that petitioners are not covered by the SSS affect the employer-employee relationship. Indeed, the following factors show that petitioners, although piece-rate workers, were regular employees of private respondents: (1) within the contemplation of Art. 280 of the Labor Code, their work as tailors was necessary or desirable in the usual business of private respondents, which is engaged in the tailoring business; (2) petitioners worked for private respondents throughout the year, their

employment not being dependent on a specific project or season; and, (3) petitioners worked for private respondents for more than one year.[8] Second. Private respondents contend, however, that petitioners refused to report for work after learning that the J.C. Tailoring and Dress Shop Employees Union had demanded their (petitioners) dismissal for conduct unbecoming of employee s. In support of their claim, private respondents presented the affidavits[9] of Emmanuel Y. Caballero, president of the union, and Amado Cabaero, member, that petitioners had not been dismissed by private respondents but that practically all employees of the company, including the members of the union had asked management to terminate the services of petitioners. The employees allegedly said they were against peti tioners request for change of the mode of payment of their wages, and that when a meeting was called to discuss this issue, a petition for the dismissal of petitioners was presented, prompting the latter to walk out of their jobs and instead file a complaint for illegal dismissal against private respondents on January 17, 1989, even before all employees could sign the petition and management could act upon the same. To justify a finding of abandonment of work, there must be proof of a deliberate and unjustified refusal on the part of an employee to resume his employment. The burden of proof is on the employer to show an unequivocal intent on the part of the employee to discontinue employment.[10] Mere absence is not sufficient. It must be accompanied by manifest acts unerringly pointing to the fact that the employee simply does not want to work anymore.[11] Private respondents failed to discharge this burden. Other than the self-serving declarations in the affidavits of their two employees, private respondents did not adduce proof of overt acts of petitioners showing their intention to abandon their work. On the contrary, the evidence shows that petitioners lost no time in filing the case for illegal dismissal against private respondent. This fact negates any intention on their part to sever their employment relationship.[12] Abandonment is a matter of intention; it cannot be inferred or presumed from equivocal acts.[13] Third. Private respondents invoke the compromise agreement,[14] dated March 2, 1993, between them and petitioner Avelino Lambo, whereby in consideration of the sum of P10,000.00, petitioner absolved private respondents from liability for money claims or any other obligations. To be sure, not all quitclaims are per se invalid or against public policy. But those (1) where there is clear proof that the waiver was wangled from an unsuspecting or gullible person or (2) where the terms of settlement are unconscionable on their face are invalid. In these cases, the law will step in to annul the questionable transaction.[15] However, considering that the Labor Arbiter had given petitioner Lambo a total award of P94,719.20, the amount of P10,000.00 to cover any and all monetary claims is clearly unconscionable. As we have held in another case,[16] the subordinate position of the individual employee vis-a-vis management renders him especially vulnerable to its blandishments, importunings, and even intimidations, and results in his improvidently waiving benefits to which he is clearly entitled. Thus, quitclaims, waivers or releases are looked upon with disfavor for being contrary to public policy and are ineffective to bar claims for the full measure of the workers legal rights.*17+ An employee who is merely constrained to accept the wage s paid to him is not precluded from recovering the difference between the amount he actually received and that amount which he should have received. Fourth. The Labor Arbiter awarded backwages, overtime pay, holiday pay, 13th month pay, separation pay and attorneys fees, corresponding to 10% of the total monetary awards, in favor of petitioners. As petitioners were illegally dismissed, they are entitled to reinstatement with backwages. Considering that petitioners were dismissed from the service on January 17, 1989, i.e., prior to March 21, 1989,[18] the Labor Arbiter correctly applied the rule in the Mercury Drug case,[19] according to which the recovery of backwages should be limited to three years without qualifications or deductions. Any award in excess of three years is null and void as to the excess.[20] The Labor Arbiter correctly ordered private respondents to give separation pay. Considerable time has lapsed since petitioners dismissal, so that reinstatement would now be impractical and hardly in the best interest of the parties. In lieu of reinstatement, separation pay should be awarded to petitioners at the rate of one month salary for every year of service, with a fraction of at least six (6) months of service being considered as one (1) year.[21] The awards for overtime pay, holiday pay and 13th month pay are in accordance with our finding that petitioners are regular employees, although paid on a piece-rate basis.[22] These awards are based on the following computation of the Labor Arbiter: AVELINO LAMBO I. BACKWAGES: Jan. 17/89 - Jan. 17/92 = 36 mos. P 64.00/day x 26 days 1,664.00/mo. x 36 mos. 13th Mo. Pay: P 1,664.00/yr. x 3 yrs. = 4, 992.00 P64,896.00 = = P 59,904.00

II. OVERTIME PAY: Jan. 17/86 - Jan. 17/89

Jan. 17/86 - April 30/87 = 15 mos. & 12 days = (15 mos. x 26 days + 12 days) = 402 days *2 hours = 25% 402 days x 2 hrs./day = 804 hrs. P 32.00/day 8 hrs. 4.00/hr. x 25% 1.00/hr. + P4.00/hr. = 5.00/hr. x 804 hrs. = May 1/87-Sept. 30/87 = P 4,020.00 = =

4 mos. & 26 days = (4 mos. x 26 days + 26 days) = 130 days 130 days x 2 hrs./day = 260 hrs.

P 41.00/day 8 hrs. 5.12/hr. x 25% 1.28/hr. + P5.12/hr. = 6.40/hr. x 260 hrs. = Oct. 1/87-Dec. 13/87 =

= =

P 1,664.00

2 mos. & 11 days = (2 mos. x 26 days + 11 days) = 63 days 63 days x 2 hrs./day = 126 hrs.

49.00/day 8 hrs. 6.12/hr. x 25% 1.53/hr. + P6.12/hr. = 7.65/hr. x 126 hrs. =

= =

P963.90

Dec. 14/87 - Jan. 17/89 = 13 mos. & 2 days = (13 mos. x 26 days + 2 days) = 340 days 340 days x 2 hrs./day = 680 hrs. P 64.00/day 8 hrs. 8.00/hr. x 25% 2.00/hr. + P8.00/hr. = 10.00/hr. x 680 hrs. = P6,800.00 P13,447.90 = =

III. HOLIDAY PAY: Jan. 17/86 - Jan. 17/89 Jan. 17/86 - April 30/87 = 12 RHs; 8 SHs P 32.00/day x 200% 64.00/day x 12 days 32.00/day x 12 days = = P768.00 = (384.00) P384.00

32.00/day x 30% 9.60/day x 8 days =

= 76.80 460.80

May 1/87 - Sept. 30/87 = 3 RHs; 3 SHs P 41.00/day x 200% 82.00/day x 3 days 41.00/day x 3 days 41.00/day x 30% 12.30/day x 3 days Oct. 1/87 - Dec. 13/87 = 1 RH P 49.00/day x 200% 98.00/day x 1 day 49.00/day x 1 day = = = P98.00 (49.00) 49.00 = = P246.00 = (123.00) P123.00 = = 36.90 159.90

Dec. 14/87 - Jan. 17/89 = 9 RHs; 8 SHs P 64.00/day x 200% 128.00/day x 9 days 64.00/day x 9 days 64.00/day x 30% 19.20/day x 8 days = = P1,152.00 = (576.00) P 576.00 = = 153.60 729.60 1,399.30

IV. 13TH MO. PAY: Jan. 17/86 - Jan. 17/89 = 3 yrs. P 64.00/day x 26 days 1,664.00/yr. x 3 yrs. = = 4,992.00

V. SEPARATION PAY: Sept. 10/85 - Jan. 17/92 = 6 yrs. 1,664.00/mo. x 6 yrs. = 9,984.00 P94,719.20 ====== VICENTE BELOCURA I. BACKWAGES: Jan. 17/89 - Jan. 17/92 = 36 mos. Same computation as A. Lambo II. OVERTIME PAY: Jan. 17/86 - Jan. 17/89 Same computation as A. Lambo III. HOLIDAY PAY: Jan. 17/86 - Jan. 17/89 Same computation as A. Lambo IV. 13TH MO. PAY: Jan. 17/86 - Jan. 17/89 Same computation as A. Lambo 4,992.00 1,399.30 13,447.90 P64,896.00

TOTAL AWARD OF AVELINO LAMBO

V. SEPARATION PAY: March 3/85 - Jan. 17/92 = 7 yrs. P1,664.00/mo. x 7 yrs. = TOTAL AWARD OF VICENTE BELOCURA 11,648.00 P96,383.20 ===== SUMMARY AVELINO LAMBO VICENTE BELOCURA I. BACKWAGES II. OVERTIME PAY III. IV. V. HOLIDAY PAY 13TH MO. PAY SEPARATION PAY P64,896.00 13,447.90 1,399.30 4,992.00 9,984.00 TOTAL P94,719.20 P64,896.00 13,447.90 1,399.30 4,992.00 11,648.00 P96,383.20 = P191,102.40 ADD: 10% Attorneys Fees GRAND TOTAL 19,110.24 P 210,212.64 ======= Except for the award of attorneys fees in the amount of P19,110.24, the above computation is affirmed. The award of attorneys fee s should be disallowed, it appearing that petitioners were represented by the Public Attorneys Office. With regard to petitio ner Avelino Lambo, the amount of P10,000.00 paid to him under the compromise agreement should be deducted from the total award of P94,719.20. Consequently, the award to each petitioner should be as follows: AVELINO LAMBO I. BACKWAGES II. OVERTIME PAY III. IV. V. HOLIDAY PAY 13TH MONTH PAY SEPARATION PAY P64,896.00 13,447.90 1,399.30 4,992.00 9,984.00 P Less TOTAL GRAND TOTAL 94,719.20 10,000.00 P96,383.20 P181,102.40 ====== vvvvvvvvvv WHEREFORE, the decision of the National Labor Relations Commission is SET ASIDE and another one is RENDERED ordering private respondents to pay petitioners the total amount of One Hundred Eighty-One Thousand One Hundred Two Pesos and 40/100 (P181,102.40), as computed above. SO ORDERED. VICENTE BELOCURA

P 64,896.00 13,447.90 1,399.30 4,992.00 11,648.00

P84,719.20

G.R. No. L-57636 May 16, 1983 REYNALDO TIANGCO and VICTORIA TIANGCO, petitioners, vs. HON. VICENTE LEOGARDO, JR., as Deputy Minister of the Ministry of Labor and Employment, AURELIO ILUSTRISIMO, ABRAHAM GILBUENA, ROGELIO CARABIO, JESUS GILBUENA, PEPITO GILBUENA, DOMINADOR LASERNA, CLEMENTE VILLARUEL, RUSTOM OFQUERIA, ERNESTO DIONG, GRACIANO DURANA, AGUEDO MARABE, SOLOMON CLARIN, ALCAFONE ESGANA, JUAN CASTRO, ANTONIO GILBUENA, GREGORIO LAYLAY, DANIEL CABRERA, ROBERTO BAYON-ON, ELIAS ESCARAN, ERNESTO BATOY, EDDIE BATOBALANOS, TOMAS CAPALAR, JUAN GIHAPON, JOSE OFQUERIA, FRUTO GIHAPON, PEPITO BATOY, and SERAFIO YADAWON, respondents CONCEPCION, JR., J.: Petition for certiorari and prohibition, with preliminary injunction and/or restraining order, to annul and set aside the order of the respondent Deputy Minister of Labor which modified and affirmed the order of Director of the National Capitol Region of the Ministry of Labor directing the petitioners to pay the private respondents their legal holiday pay, service incentive pay, and differentials in their emergency cost of living allowances. The petitioner, Reynaldo Tiangco, is a fishing operator who owns the Reynaldo Tiangco Fishing Company and a fleet of fishing vessels engaged in deep-sea fishing which operates from Navotas, Rizal. His business is capitalized at P2,000,000.00, 1 while the petitioner, Victoria Tiangco, is a fish broker whose business is capitalized at P100,000.00. 2 The private respondents, Aurelio Ilustrisimo, Pepito Gilbuena, Rogelio Carabio, Abraham Gilbuena, Rustom Ofqueria, Ernesto Diong, Jesus Gilbuena, Clemente (Emerenciano) Villaruel, Dominador Lacerna, and Graciano Durana, are batillos engaged by the petitioner Reynaldo Tiangco to unload the fish catch from the vessels and take them to the Fish Stall of the petitioner Victoria Tiangco. The private respondents, Eddie Batobalanos, Aguedo Marabe, Gregorio Laylay, Fruto Gihapon, Solomon Clarin, Pepito Batoy, Jose Ofqueria, Daniel Cabrera, Juan Castro, Alcafone Esgana, Tomas Capalar, Antonio Gilbuena, Ernesto Batoy, Serafio Yadawon, Juan Gihapon, Elias Escaran and Roberto Bayon-on, were batillos engaged by Victoria Tiangco. 3 The work of these batillos were limited to days of arrival of the fishing vessels and their working days in a month are comparatively few. Their working hours average four (4) hours a day. On April 8, 1980, the private respondents filed a complaint against the petitioners with the Ministry of Labor and Employment for nonpayment of their legal holiday pay and service incentive leave pay, as well as underpayment of their emergency cost of living allowances which used to be paid in full irrespective of their working days, but which were reduced effective February, 1980, in contravention of Article 100 of the new Labor Code which prohibits the elimination or diminution of existing benefits. 4 The petitioners denied the laborers' contention, claiming that the laborers were all given, in addition to their regular daily wage, a daily extra pay in amounts ranging from 30 centavos to 10 pesos which are sufficient to offset the laborers' claim for service incentive leave and legal holiday pay. As regards the claim for emergency allowance differentials, the petitioners admitted that they discontinued their practice of paying their employees a fixed monthly allowance, and effective February, 1980, they no longer paid allowances for non-working days. They argued, however, that no law was violated as their refusal to pay allowances for non-working days is in consonance with the principle of "no work, no allowance"; and that they could not pay private respondents a fixed monthly allowance without risking the viability of their business. 5 Resolving the case, the Director of the National Capitol Region of the Ministry of Labor and Employment ruled that the daily extra pay given to private respondents was a ,'production incentive benefit", separate and distinct from the service incentive leave pay and legal holiday pay, payment of which cannot be used to offset a benefit provided by law, and ordered the petitioners to pay the private respondents their service incentive leave pay and legal holiday pay. However, he denied the laborers' claim for differentials in the emergency cost of living allowance for the reason that the emergency cost of living allowance accrues only when the laborers actually work following the principle of "no work, no pay," and private respondents are not entitled to a fixed monthly allowance since they work on a part time basis which average only four (4) days a week. The private respondents should not be paid their allowances during non-working days. 6 From this order, both parties appealed. On May 22, 1981, the respondent Deputy Minister of Labor and Employment modified the order and directed the petitioners to restore and pay the individual respondents their fixed monthly allowance from March, 1980 and to pay them the amount of P58,860.00, as underpayment of their living allowance from May, 1977 to February 21, 1980. 7 When their motion for the reconsideration of the above order was denied, the petitioners interposed the present recourse. The petitioners claim that the respondent Deputy Minister of Labor and Employment acted in excess of jurisdiction, or with grave abuse of discretion in ordering them to pay the private respondents a fixed monthly allowance from March, 1980, despite the "no work, no pay," law; the private respondents' consent to receive an allowance for days worked for, as stated in their appeal; and the findings of the Director of the National Capitol Region that private respondents work for other employers and are part-time employees of the petitioners. Indeed, the record shows that the private respondents work for the petitioners on a part-time basis and their work average only four (4) days a week. It is not also disputed that the private respondents work for more than one employer so that the private respondents should be paid their living allowance only for the days they actually worked in a week or month and all the employers of the employee shall share proportionately in the payment of the allowance of the employee. Section 12 of the Rules and Regulations implementing P.D. 525 which made mandatory the payment of emergency cost of living allowances to workers in the private section, provides, as follows: Section 12. Allowance on Daily Paid & Part Time employees. Employees who are paid on a daily basis shall be paid their allowances for the number of days they actually worked in a week or month, on the basis of the scales provided in Section 7 hereof.

In case of part-time employment, the allowances shall be paid in the amount proportionate to the time worked by the employee, or higher. If employed by more than one employer, all employers of such employee shall share proportionately in the payment of the allowance of the employee. Section 11 of the Rules implementing P.D. 1123, increasing the emergency allowance under P.D. 525, also provides, as follows: Section 11. Allowances of full-time and part-time employees. Employees shall be paid in full the monthly allowances on the basis of the scales provided in Section 3 hereof, regardless of the number of their regular working days, if they incur no absence during the month. If they incur absences, the amounts corresponding to their absences may be deducted from the monthly allowance. In case of part-time employment, the allowance to be paid shall be proportionate to the time worked by the employee. This requirement shall apply to any employee with more than one employer. However, the respondent Deputy Minister of Labor and Employment correctly ruled that since the petitioners had been paying the private respondents a fixed monthly emergency allowance since November, 1976 up to February, 1980, as a matter of practice and/or verbal agreement between the petitioners and the private respondents, the discontinuance of the practice and/or agreement unilaterally by the petitioners contravened the provisions of the Labor Code, particularly Article 100 thereof which prohibits the elimination or diminution of existing benefits. Section 15 of the Rules on P.D. 525 and Section 16 of the Rules on P. D. 1123 also prohibits the diminution of any benefit granted to the employees under existing laws, agreements, and voluntary employer practice. Section 15 of the Rules on P.D. 525 provides, as follows: Section 15. Relation to Agreement. Nothing herein shall prevent the employer and his employees from entering into any agreement with terms more favorable to the employees than those provided therein, or be construed to sanction the diminution of any benefit granted to the employees under existing laws, agreements, and voluntary employer practice. Section 16 of the Rules on P.D. 1123 similarly prohibits diminution of benefits. It provides, as follows: Section 16. Relation to other agreements. Nothing herein shall prevent employers from granting allowances to their employees in excess of those provided under the Decree and the Rules nor shall it be construed to countenance any reduction of benefits already being enjoyed. The petitioners further claim that the respondent Deputy Minister of Labor and Employment erred in ordering them to pay the amount of P58,860.00 to the private respondents as underpayment of respondents' allowances from May, 1977 to February 20, 1980. The petitioners contend that the emergency cost of living allowances of the private respondents had been paid in full. We find no merit in the contention. However, a revision of the amount due the private respondents is in order for the reason that the respondent Deputy Minister of Labor and Employment failed to take into consideration, in computing the amount due each worker, the fact that the private respondents are employed by two different individuals whose businesses are divergent and capitalized at various amounts, contrary to the provisions of P.D. 525 and subsequent amendatory decrees, wherein the amount of the emergency cost of living allowance to be paid to a worker is made to depend upon the capitalization of the business of his employer or its total assets, whichever is higher. Thus, Section 7 of the Rules and Regulations implementing P.D. 525 reads, as follows: Section 7. Amount of Allowances. Every covered employer shall give to each of his employees who is receiving less than P600.00 a month not less than the following allowances; (a) P50.00 where the authorized capital stock or total assets, whichever is applicable and higher, is 71 million or more;

(b) P30.00 where the authorized capital stock or total assets, whichever is applicable and higher is at least P100,000.00 but less than P 1miilion and (c) P15.00 where the authorized capital stock or total assets, whichever is applicable and higher, is less than P100,000.00.

Nothing herein shall prevent employers from granting allowances to their employees who will receive more than P600.00 a month, including the allowances. An employer, however, may grant his employees an allowance which if added to their monthly salary, will not yield to them more than P600.00 a month. In this case, the private respondents admit that only ten (10) of them, namely: Aurelio Ilustrisimo, Pepito Gilbuena, Rogelio Carabio, Abraham Gilbuena, Rustom Ofquiera, Ernesto Diong, Jesus Gilbuena, Emerenciano Villaruel, Dominador Lacerna, and Graciano Durana, were employees of the petitioner Reynaldo Tiangco, while the remaining seventeen (17) were employed by the petitioner Victoria Tiangco. 8 Accordingly, the workers of the petitioner Victoria Tiangco, whose business as fish broker is capitalized at P100,000.00, 9 should receive a lesser amount of allowance (P30.00) than those workers employed by the petitioner Reynaldo Tiangco whose business, as a fishing operator with a fleet of fishing vessels, is capitalized at more than P2,000,000.00, and are entitled to receive a fixed monthly allowance of P50.00 a month, each. After P.D. 525, the following amendatory decrees, directing the payment of additional allowances to employees, were promulgated: 1. P.D. 1123. providing for an across-the-board increase of P60.00 a month effective May 1, 1977;

2.

P.D. 1614, which directed the payment of P60.00 monthly allowance effective April 1, 1979;

3. P.D. 1634, which provided for the payment of an additional P60.00 a month effective September 1, 1979, and another P30.00 a month beginning January 1, 1980; and 4. P.D. 1678,which directed the payment of an additional P2.00 a day from February 21, 1980.

Hence, for the period from November, 1976 to April 30, 1977, the petitioner Victoria Tiangco should pay her workers a fixed monthly allowance of P 30.00, while the workers of the petitioner Reynaldo Tiangco were entitled to a fixed monthly allowance of P50.00, each. The record shows that during this period, the petitioner Victoria Tiangco was paying her workers a monthly allowance of P30.00 each. 10 Accordingly, there was no underpayment for this period insofar as her batillos are concerned. The petitioner Reynaldo Tiangco, however, paid his employees P30.00, instead of P50.00, as mandated by law. 11 Therefore, there was an underpayment of P20.00 a month for each batillo under his employ. For the 6-month period, he should pay his workers differentials in the amount of P120.00 each. For the period from May, 1977 to March 1979, the workers of the petitioner Victoria Tiangco were entitled to a fixed monthly allowance of P90.00 in view of the promulgation of P.D. 1123 which granted an across-the-board increase of P60.00 a month in their allowances. For this period, however, the said petitioner paid her workers only P60.00 a month, or a difference of P30.00 a month. 12 There was, therefore, an underpayment of P690.00 for every batillo under her employ for the 23-month period. With the addition of P60.00 across-the-board increase in their allowances, the workers of the petitioner Reynaldo Tiangco were entitled to receive a fixed monthly allowance of P110.00. However, the record shows that his workers were only paid P60.00 a month, 13 or a difference of P50.00 a month. Consequently, each batillo hired by him should be paid a differential of P1,150.00 for the 23-month period. For the period from April, 1979 to August, 1979, the employees of the petitioner Victoria Tiangco were entitled to a fixed monthly allowance of P150.00 while the workers employed by the petitioner Reynaldo Tiangco were entitled to an allowance of P170.00, pursuant to P.D. 1614. The record shows, however, that both petitioners paid their workers only P120.00 a month. 14 There was a difference of P30.00 a month in the case of the petitioner Victoria Tiangco, and P50.00, a month, in the case of the petitioner Reynaldo Tiangco. Hence, for this period, the petitioner Victoria Tiangco should pay the amount of P150.00 to each batillo in her employ, while the petitioner Reynaldo Tiangco should pay the amount of P250.00, as differentials in the cost of living allowances of the workers under his employ. Upon the promulgation of P.D. 1634, directing the payment of an additional P60.00 a month effective September, 1979 and another P30.00 effective January 1, 1980, the workers of the petitioner Victoria Tiangco were entitled to receive a fixed monthly allowance of P210.00 a month from September, 1979, and P340.00, a month beginning January, 1980. The workers of the petitioner Reynaldo Tiangco, upon the other hand, were entitled to a monthly allowance of P230.00, effective September, 1979, and P260.00, a month beginning January, 1980. The record shows, however, that both petitioners paid their workers the amounts of P180.00 a month for the months of September to December, 1979, 15 and P210.00 a month for the months of January and February, 1980. 16 There was underpayment, therefore, in the allowances of the workers of the petitioner Victoria Tiangco in the amount of P30.00, a month, for the months of September, 1979 to February, 1980, or P180.00 for each batillo in her employ. The private respondents hired by the petitioner Reynaldo Tiangco, upon the other hand, are entitled to differentials in the amount of P50.00 a month for the same period, or P300.00 each. Then, beginning February, 21, 1980, the workers should be paid an additional P2.00, a day, pursuant to P.D. 1678. The record shows that the petitioners had complied with this requirement. 17 The petitioners, however, failed to pay the fixed monthly allowance of their workers which was P240.00, in the case of the workers employed by the petitioner Victoria Tiangco, and P260.00, in the case of the workers of the petitioner Reynaldo Tiangco. Thus, for the month of March, 1980, the petitioner Victoria Tiangco paid her workers varying amounts, the lowest of which was P30.00, paid to Eddie Batobalanos and Fruto Gihapon, and the highest of which was P210.00, paid to Juan Gihapon and Roberto Bayonon. 18 Hence, there was underpayment in their emergency cost of living allowances. But, since, the respondents employed by Victoria Tiangco are wining to accept P50.00 a month as differentials for the months of March, 1980 to May, 1980, 19 the workers employed by her should be paid P50.00, each, for the month of March, 1980, except Juan Gihapon and Roberto Bayon-on who should be paid P30.00, each, for the said month, having received the amount of P210.00, each as allowance for that month. For the month of April, 1980, the workers of the petitioner, Victoria Tiangco, were paid varying amounts ranging from P120.00 to P210.00. 20 Hence, there was also underpayment in their allowances. Accordingly, they should be paid the amount of P50.00, each, except for Juan Gihapon, Antonio Gilbuena, Juan Castro, and Aguedo Marabe, who should be paid P40.00, each, and Solomon Clarin, Daniel Cabrera, and Gregorio Laylay who should be paid P30.00 each. For the month of May, 1980, the petitioner Victoria Tiangco, paid her workers varying amounts less that what was provided for by law. 21 Hence, they should be paid the amount of P50.00, each, for this month. The petitioner, Reynaldo Tiangco, also paid the employees varying amounts, ranging from P210.00 to P250.00, as emergency cost of living allowance, for the month of March, 22, 1980. 22 Since they were entitled to a fixed monthly allowance of P260.00, each, there was underpayment in their cost of living allowances. Accordingly, the petitioner should pay the respondent Pepito Gilbuena the amount of P50.00; the respondents Dominador Lacerna and Graciano Durano, the amount of P40.00, each; the respondent Ernesto Diong, the amount of P30.00; the respondents Rustom Ofqueria and Aurelio Ilustrisimo, the amount of P20.00, each; and the respondents Abraham Gilbuena, Jesus Gilbuena, Rogelio Carabio, and Emerenciano Villaruel, the amount of P10.00 each.

For the month of April, 1980, the workers of the petitioner Reynaldo Tiangco, were not also paid their emergency cost of living allowance in full. 23 Hence, the said petitioner should pay his workers the amount of P30.00 each, except for Pepito Gilbuena, who should be paid the amount of P50.00, and Rustom Ofqueria, Jesus Gilbuena, and Graciano Durano, who are entitled to only P40.00 each. The petitioner, Reynaldo Tiangco did not also pay his workers their full cost of living allowance for the month of May, 1980. The workers were paid varying amounts of P130.00 to P150.00, instead of P260.00, as required by law. 24 Hence, they should be paid the amunt of P50.00 each for the month of May, 1980. WHEREFORE, the petitioners Victoria Tiangco and Reynaldo Tiangco should be, as they are hereby, ordered to PAY the private respondents the following amounts as differentials in their emergency cost of living allowance: Petitioner Victoria Tiangco: 1. Eddie Batobalanos............. Pl,170.00 2. Aguedo Morabe................. 1,160.00 3. Gregorio Laylay.................. 1,150.00 4. Fruto Gihapon..................... 1,170.00 5. Solomon Clarin ................... 1,150.00 6. Pepito Batoy........................ 1,170.00 7. Jose Ofqueria....................... 1,170.00 8. Daniel Cabrera..................... 1,150.00 9. Juan Castro.......................... 1,160.00 10.

Alcafone Esgana................. 1,170.00 11. Tomas Capalar .................... 1,170.00 12. Antonio Gilbuena................ 1,160.00 13. Ernesto Batoy...................... 1,170.00 14. Serapio Yadawon................ 1,150.00 15. Juan Gihapon....................... 1,140.00 16. Elias Escaran ...................... 1,150.00 17. Roberto Bayon-on.............. 1,130.00 Petitioner Reynaldo Tiangco: 1. Aurelio Ilustrisimo............ P l,920.00 2. Pepito Gilbuena................. 1,970.00 3. Rogelio Carabio................. 1,910.00 4.

Abraham Gilbuena............. 1,910.00 5. Rustom Ofqueria................ 1,930.00 6. Ernesto Diong.................... 1,930.00 7. Jesus Gilbuena................... 1,920.00 8. Emerenciano Villaruel........ 1,910.00 9. Dominador Lacerna............ 1,940.00 10. Graciano Durano................. 1,950.00 With this modification, the judgment appealed from is AFFIRMED in all other respects. With costs against the petitioners. SO ORDERED. G.R. No. 58094-95 March 15, 1989 MAMERTO B. ASIS, petitioner, vs. MINISTER OF LABOR AND EMPLOYMENT, CENTRAL AZUCARERA DE PILAR, and EMMANUEL JAVELLANA, respondents. NARVASA, J.: The facts of this case depict a picture that is hardly edifying: avidity trying to wear the mantle of right. The facts raise a twofold issue: whether a company which has been haled to court by its own in-house counsel is obliged to continue his employment and entrust its legal affairs to him, specially when his cause of action has been shown to be devoid of merit; and whether a firm is bound to retain in its service a personnel manager who has incited the very employees under his supervision and control to file complaints against it. Asserting a right to sue his employer for a legitimate grievance without meriting retaliatory action, the petitioner claims that his dismissal for such conduct or on the ground, essentially, of loss of confidence, was illegal; and he asks this Court to annul the judgment of the respondent Commission, which upheld the termination of his services in respondent company. Said claim finds no support in either the law or the established facts and must, therefore, be rejected. The petitioner was appointed Legal Counsel of the Central Azucarera de Pilar 1 Later, concurrently with his position as Legal Counsel, he was named Head of its Manpower and Services Department. In addition to his basic salaries and other fringe benefits, his employer granted him, and a few other officials of the company, a monthly ration of 200 liters of gasoline and a small tank of liquefied petroleum gas (LPG). 2 This monthly ration was temporarily revoked some five (5) years later as a cost reduction measure of the Central .3 The petitioner and the other officials adversely affected moved for reconsideration. Their plea was denied. The petitioner then commenced an action against the Central with the Regional Office of the Ministry of Labor and Employment, seeking restoration of his monthly ration of gasoline and LPG which, as aforesaid, had been temporarily suspended. The case was docketed as LRD Case No. 1632.

Shortly afterwards, he filed another action against his employer, docketed as LRD Case No. 1685, this time complaining against the Central's memorandum ordaining his relief (by being placed on leave of absence) as the Central's Legal Counsel and Head of the Manpower Services Department, impleaded by the petitioner as co-respondent was Emmanuel Q. Javellana, the Finance Manager and Comptroller of the Central, who had signed the memorandum for his relief. 4 The petitioner theorized that he had in effect been dismissed, illegally. 5 The two cases were jointly heard and decided by the Regional Director. The latter's judgments 6 was for the petitioner's reinstatement to his former positions without loss of seniority, benefits and other privileges, the payment to him of back wages from date of his relief up to time of reinstatement, and the delivery to him of the monthly benefits from the time of their temporary revocation up to actual restoration or, at his option, the money equivalent thereof. 7 The Deputy Minister of Labor however reversed this decision of the Regional Director, on appeal taken by the Central; the Deputy Minister ordered the dismissal of the petitioner's complaint. 8 The Deputy Minister found that the evidence satisfactorily established that the Central's suspension of the petitioner's and others' monthly ration of gasoline and LPG, had been caused by unavoidable financial constraints; that such a suspension, in line with its conservation and cost-saving policy, did not in truth effect any significant diminution of said benefits, since the petitioner was nevertheless entitled to reimbursement of the actual amount of gas consumed; that petitioner had encouraged his co-employees to file complaints against the Central over the rations issue, and this, as well as his institution of his own actions, had created an atmosphere of enmity in the Central, and caused the loss by the Central of that trust and confidence in him so essential in a lawyer-client relationship as that theretofore existing between them; and that under the circumstances, petitioner's discharge as the Central's Legal Counsel and Head of the Manpower & Services Department was justified. The Deputy Minister's order of dismissal was however subsequently modified, at the petitioner's instance, by decreeing the payment to the latter of separation pay equivalent to one month's salary for every year of service rendered. 9 The petitioner theorizes that apart from the fact that the Deputy Minister lacked jurisdiction to entertain the Central's appeal from the decision of the Regional Director, he had gravely abused his discretion in reaching his factual conclusions, pejoratively described as guesswork and speculation. The petitioner's theory of the Deputy Minister's lack of jurisdiction, founded on the tardy payment by the Central of the appeal fee of P 25.00, is quickly disposed of by simply adverting to our holding in Del Rosario & Sons Logging Enterprises, Inc. v. NLRC, 10 to wit: It may be that, as held in Acda vs. MOLE, 119 SCRA 306 [1982], payment of the appeal fee is by no means a mere technicality but is an essential requirement in the perfection of an appeal. However, where as in this case, the fee had been paid, unlike in the Acda case, although payment was delayed, the broader interest of justice and the desired objective of resolving controversies on the merits demanded that the appeal be given course as, in fact, it was so given by the NLRC. Besides, it was within the inherent power of the NLRC to have allowed the late payment of the appeal fee. As regards the temporary revocation of the petitioner's monthly ration of fuel, suffice it to point out that, as the Solicitor General stresses, this bad been occasioned by force of circumstances affecting the Central's business. The monthly ration was not a part of his basic salary, and is not indeed found in any of the management payroll vouchers pertinent to the petitioner. 11 Moreover, the adverse consequences of the suspension of the monthly rations had been largely if not entirely negated by the Central's undertaking to reimburse the petitioner for his actual consumption of fuel during the period of suspension. These facts are entirely distinct from those obtaining in the case of States Marine Corporation and Royal Line, Inc. v. Cebu Seamen's Association, Inc., 12 invoked by petitioner and thus preclude application of the ruling therein laid down to the case at bar. A review of the record demonstrates that there is substantial evidence supporting the factual findings of the respondent Deputy Minister. Said findings, as well as the legal conclusions derived therefrom, cannot be said to have been rendered with grave abuse of discretion, and will thus be affirmed. In fine, and as petitioner could not but have realized from the outset, neither he nor any other employee similarly situated had any legitimate grievance against the Central. WHEREFORE, the petition is DISMISSED for lack of merit, with costs against petitioner. G.R. No. L-24632 October 26, 1968 LEXAL LABORATORIES and/or JOSE ANGELES, Manager, petitioners, vs. NATIONAL CHEMICAL INDUSTRIES WORKERS UNION-PAFLU (Lexal Laboratories Chapter) and THE COURT OF INDUSTRIAL RELATIONS, respondents. SANCHEZ, J.: Condensed, the question before us is this: Are per diems included in backpay? This problem came about because of the implementation of the decision of the Court of Industrial Relations (CIR) of June 29, 19631 directing petitioner Lexal Laboratories (Lexal) to reinstate Guillermo Ponseca, a dismissed employee, to his former position "with full back wages from the day of his dismissal up to the time he is actually reinstated without loss of his seniority rights and of such other rights and privileges enjoyed by him prior to his lay-off." CIR, confirming the report of its Chief Examiner and Economist, ruled in its order of February 16, 1965 that Ponseca was entitled to back wages from November 5, 1958 when he ceased reporting for work, to November 24, 1963 a day prior to his reinstatement on November 25, 1963; and that for the number of days that he was supposed to be in Manila, he was to earn P4.50 a day, and during the periods when he should have been in the provinces, P4.50 a day plus a per diem of P4.00 or a total of P8.50 daily. This order was subsequently modified by CIR's resolution of May 22, 1965 which directed the deduction of P5,000.00 previously paid Ponseca under the judgment and P610.00 which Ponseca earned from other sources during his lay-off.

Petitioners vigorously objected to the inclusion of the P4.00 per diem in the computation of Ponseca's back wages because the latter "did not actually spend for his meals and lodgings for he was all the time in Manila, his station." CIR brushed this contention aside. Whereupon, petitioners appealed to this Court from the order of February 16, 1965 and the resolution of May 22, 1965.2 1. Our attention has not been drawn to a rule of law or jurisprudence which holds that per diems are integral parts of regular wages or salaries. Neither is it suggested in the record that per diems formed part of the terms of employment between petitioners and respondent union (of which Ponseca is a member), or with Ponseca himself for that matter. Nor was pronouncement made either in the original decision or in the questioned order and resolution of CIR that per diems are part of back wages. CIR simply hit upon the idea that per diems should be paid as part of the back wages because they were "paid to him regularly." Per diem, the dictionary definition tells us, is "a daily allowance" given "for each day he (an officer or employee) was away from his home base".3 It would seem to us that per diem is intended to cover the cost of lodging and subsistence of officers and employees when the latter are on duty outside of their permanent station.4 Lexal concedes that whenever its employee, Guillermo Ponseca, was out of Manila, he was allowed a per diem of P4.00 broken down as follows: P1.00 for breakfast; P1.00 for lunch; P1.00 for dinner; and P1.00 for lodging. Ponseca during the period involved did not leave Manila. Therefore, he spent nothing for meals and lodging outside of Manila. Because he spent nothing, there is nothing to be reimbursed. Since per diems are in the nature of reimbursement, Ponseca should not be entitled to per diems. Besides, back wages are what an employee has lost "in the way of wages" due to his dismissal. So that, because Ponseca earned P4.50 a day, "then that is the amount which he lost daily by reason of his dismissal, nothing more nothing less:"5 We, accordingly, rule that CIR erred in including per diems in the back wages due and payable to Guillermo Ponseca. 2. The rest is a matter of mathematical computation but first to the facts. The union's evidence is that since the last part of October, 1958 Ponseca had been reporting everyday to the bodega of respondents.6 Anyway, prior to Ponseca's dismissal, he worked daily either in Manila or in the provinces.7 But the order of February 15, 1965 credits Ponseca with 1,856 days for the period from November 5, 1958 to November 24, 1963. We checked the accuracy of this figure. We found that there should only be 1,846 days from November 5, 1958 to November 24, 1963, viz: November 5, 1958 to December 31, 1958 57 days January 1, 1959 to December 31, 1959 365 days January 1, 1960 to December 31, 1960 366 days January 1, 1961 to December 31, 1961 365 days January 1, 1962 to December 31, 1962 365 days January 1, 1963 to November 24, 1963 328 days TOTAL 1,846 days This brings us to the total amount due from Lexa1 to Guillermo Ponseca, as follows: . 1,846 days P8,307.00 Less: Advance payment x P4.50

P5,000.00

Earnings from other sources P610.00 P5,610.008 NET BACKPAY P2,697.00 . For the foregoing reasons, the order of February 16, 1965, and the resolution of May 22, 1965, both of the Court of Industrial Relations, in its Case No. 2002-ULP, entitled "National Chemical Industries Workers Union-PAFLU (Lexal Laboratories Chapter), Complainant, versus Lexal Laboratories and Jose Angeles, its Manager, Respondents", are hereby modified; and Judgment is hereby rendered ordering petitioner Lexal Laboratories to pay Guillermo Ponseca, by way of net backpay, the sum of P2,697.00. No costs. So ordered. G.R. No. 101761. March 24, 1993. NATIONAL SUGAR REFINERIES CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and NBSR SUPERVISORY UNION, (PACIWU) TUCP, respondents. DECISION REGALADO, J p: The main issue presented for resolution in this original petition for certiorari is whether supervisory employees, as defined in Article 212 (m), Book V of the Labor Code, should be considered as officers or members of the managerial staff under Article 82, Book III of the same Code, and hence are not entitled to overtime rest day and holiday pay. Petitioner National Sugar Refineries Corporation (NASUREFCO), a corporation which is fully owned and controlled by the Government, operates three (3) sugar refineries located at Bukidnon, Iloilo and Batangas. The Batangas refinery was privatized on April 11, 1992 pursuant to Proclamation No. 50. 1 Private respondent union represents the former supervisors of the NASUREFCO Batangas Sugar Refinery, namely, the Technical Assistant to the Refinery Operations Manager, Shift Sugar Warehouse Supervisor, Senior Financial/Budget Analyst, General Accountant, Cost Accountant, Sugar Accountant, Junior Financial/Budget Analyst, Shift Boiler Supervisor,, Shift Operations Chemist, Shift Electrical Supervisor, General Services Supervisor, Instrumentation Supervisor, Community Development Officer, Employment and Training Supervisor, Assistant Safety and Security Officer, Head and Personnel Services, Head Nurse, Property Warehouse Supervisor, Head of Inventory Control Section, Shift Process Supervisor, Day Maintenance Supervisor and Motorpool Supervisor. On June 1, 1988, petitioner implemented a Job Evaluation (JE) Program affecting all employees, from rank-and-file to department heads. The JE Program was designed to rationalized the duties and functions of all positions, reestablish levels of responsibility, and recognize both wage and operational structures. Jobs were ranked according to effort, responsibility, training and working conditions and relative worth of the job. As a result, all positions were re-evaluated, and all employees including the members of respondent union were granted salary adjustments and increases in benefits commensurate to their actual duties and functions. We glean from the records that for about ten years prior to the JE Program, the members of respondent union were treated in the same manner as rank-and file employees. As such, they used to be paid overtime, rest day and holiday pay pursuant to the provisions of Articles 87, 93 and 94 of the Labor Code as amended. With the implementation of the JE Program, the following adjustments were made: (1) the members of respondent union were re-classified under levels S-5 to S-8 which are considered managerial staff for purposes of compensation and benefits; (2) there was an increase in basic pay of the average of 50% of their basic pay prior to the JE Program, with the union members now enjoying a wide gap (P1,269.00 per month) in basic pay compared to the highest paid rank-and-file employee; (3) longevity pay was increased on top of alignment adjustments; (4) they were entitled to increased company COLA of P225.00 per month; (5) there was a grant of P100.00 allowance for rest day/holiday work. On May 11, 1990, petitioner NASUREFCO recognized herein respondent union, which was organized pursuant to Republic Act NO. 6715 allowing supervisory employees to form their own unions, as the bargaining representative of all the supervisory employees at the NASUREFCO Batangas Sugar Refinery. Two years after the implementation of the JE Program, specifically on June 20, 1990, the members of herein respondent union filed a complainant with the executive labor arbiter for non-payment of overtime, rest day and holiday pay allegedly in violation of Article 100 of the Labor Code. On January 7, 1991, Executive Labor Arbiter Antonio C. Pido rendered a decision 2 disposing as follows: "WHEREFORE, premises considered, respondent National Sugar refineries Corporation is hereby directed to 1. pay the individual members of complainant union the usual overtime pay, rest day pay and holiday pay enjoyed by them instead of the P100.00 special allowance which was implemented on June 11, 1988; and 2. pay the individual members of complainant union the difference in money value between the P100.00 special allowance and the overtime pay, rest day pay and holiday pay that they ought to have received from June 1, 1988.

All other claims are hereby dismissed for lack of merit. SO ORDERED." In finding for the members therein respondent union, the labor ruled that the along span of time during which the benefits were being paid to the supervisors has accused the payment thereof to ripen into contractual obligation; at the complainants cannot be estopped from questioning the validity of the new compensation package despite the fact that they have been receiving the benefits therefrom, considering that respondent union was formed only a year after the implementation of the Job Evaluation Program, hence there was no way for the individual supervisors to express their collective response thereto prior to the formation of the union; and the comparative computations presented by the private respondent union showed that the P100.00 special allowance given NASUREFCO fell short of what the supervisors ought to receive had the overtime pay rest day pay and holiday pay not been discontinued, which arrangement, therefore, amounted to a diminution of benefits. On appeal, in a decision promulgated on July 19, 1991 by its Third Division, respondent National Labor Relations Commission (NLRC) affirmed the decision of the labor arbiter on the ground that the members of respondent union are not managerial employees, as defined under Article 212 (m) of the Labor Code and, therefore, they are entitled to overtime, rest day and holiday pay. Respondent NLRC declared that these supervisory employees are merely exercising recommendatory powers subject to the evaluation, review and final action by their department heads; their responsibilities do not require the exercise of discretion and independent judgment; they do not participate in the formulation of management policies nor in the hiring or firing of employees; and their main function is to carry out the ready policies and plans of the corporation. 3 Reconsideration of said decision was denied in a resolution of public respondent dated August 30, 1991. 4 Hence this petition for certiorari, with petitioner NASUREFCO asseverating that public respondent commission committed a grave abuse of discretion in refusing to recognized the fact that the members of respondent union are members of the managerial staff who are not entitled to overtime, rest day and holiday pay; and in making petitioner assume the "double burden" of giving the benefits due to rankand-file employees together with those due to supervisors under the JE Program. We find creditable merit in the petition and that the extraordinary writ of certiorari shall accordingly issue. The primordial issue to be resolved herein is whether the members of respondent union are entitled to overtime, rest day and holiday pay. Before this can be resolved, however it must of necessity be ascertained first whether or not the union members, as supervisory employees, are to be considered as officers or members of the managerial staff who are exempt from the coverage of Article 82 of the Labor Code. It is not disputed that the members of respondent union are supervisory employees, as defined employees, as defined under Article 212(m), Book V of the Labor Code on Labor Relations, which reads: "(m) 'Managerial employee' is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharged, assign or discipline employees. Supervisory employees are those who, in the interest of the employer effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of those above definitions are considered rank-and-file employees of this Book." Respondent NLRC, in holding that the union members are entitled to overtime, rest day and holiday pay, and in ruling that the latter are not managerial employees, adopted the definition stated in the aforequoted statutory provision. Petitioner, however, avers that for purposes of determining whether or not the members of respondent union are entitled to overtime, rest day and holiday pay, said employees should be considered as "officers or members of the managerial staff" as defined under Article 82, Book III of the Labor Code on "Working Conditions and Rest Periods" and amplified in Section 2, Rule I, Book III of the Rules to Implement the Labor Code, to wit: "Art. 82 Coverage. The provisions of this title shall apply to employees in all establishments and undertakings whether for profit or not, but not to government employees, managerial employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in Appropriate regulations. "As used herein, 'managerial employees' refer to those whose primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof, and to other officers or members of the managerial staff." (Emphasis supplied.) xxx xxx xxx 'Sec. 2. Exemption. The provisions of this rule shall not apply to the following persons if they qualify for exemption under the condition set forth herein: xxx xxx xxx (b) Managerial employees, if they meet all of the following conditions, namely:

(1) Their primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof: (2) They customarily and regularly direct the work of two or more employees therein:

(3) They have the authority to hire or fire other employees of lower rank; or their suggestions and recommendations as to the hiring and firing and as to the promotion or any other change of status of other employees are given particular weight. (c) (1) (2) Officers or members of a managerial staff if they perform the following duties and responsibilities: The primary duty consists of the performance of work directly related to management policies of their employer; Customarily and regularly exercise discretion and independent judgment;

(3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the management of the establishment in which he is employed or subdivision thereof; or (ii) execute under general supervision work along specialized or technical lines requiring special training, experience, or knowledge; or (iii) execute under general supervision special assignments and tasks; and (4) Who do not devote more 20 percent of their hours worked in a work-week to activities which are not directly and closely related to the performance of the work described in paragraphs (1), (2), and above." It is the submission of petitioner that while the members of respondent union, as supervisors, may not be occupying managerial positions, they are clearly officers or members of the managerial staff because they meet all the conditions prescribed by law and, hence, they are not entitled to overtime, rest day and supervisory employees under Article 212 (m) should be made to apply only to the provisions on Labor Relations, while the right of said employees to the questioned benefits should be considered in the light of the meaning of a managerial employee and of the officers or members of the managerial staff, as contemplated under Article 82 of the Code and Section 2, Rule I Book III of the implementing rules. In other words, for purposes of forming and joining unions, certification elections, collective bargaining, and so forth, the union members are supervisory employees. In terms of working conditions and rest periods and entitlement to the questioned benefits, however, they are officers or members of the managerial staff, hence they are not entitled thereto. While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be supposed that every labor dispute will be automatically decided in favor of labor. Management also has its own rights which, as such, are entitled to respect and enforcement in the interest of simple fair play. Out of its concern for those with less privileges in life, this Court has inclined more often than not toward the worker and upheld his cause in his conflicts with the employer. Such favoritism, however, has not blinded us to the rule that justice is in every case for the deserving, to be dispensed in the light of the established facts and the applicable law and doctrine. 5 This is one such case where we are inclined to tip the scales of justice in favor of the employer. The question whether a given employee is exempt from the benefits of the law is a factual one dependent on the circumstances of the particular case, In determining whether an employee is within the terms of the statutes, the criterion is the character of the work performed, rather than the title of the employee's position. 6 Consequently, while generally this Court is not supposed to review the factual findings of respondent commission, substantial justice and the peculiar circumstances obtaining herein mandate a deviation from the rule. A cursory perusal of the Job Value Contribution Statements 7 of the union members will readily show that these supervisory employees are under the direct supervision of their respective department superintendents and that generally they assist the latter in planning, organizing, staffing, directing, controlling communicating and in making decisions in attaining the company's set goals and objectives. These supervisory employees are likewise responsible for the effective and efficient operation of their respective departments. More specifically, their duties and functions include, among others, the following operations whereby the employee: 1) a) assists the department superintendent in the following: planning of systems and procedures relative to department activities;

b) organizing and scheduling of work activities of the department, which includes employee shifting scheduled and manning complement; c) d) e) f) decision making by providing relevant information data and other inputs; attaining the company's set goals and objectives by giving his full support; selecting the appropriate man to handle the job in the department; and preparing annual departmental budget;

2) 3)

observes, follows and implements company policies at all times and recommends disciplinary action on erring subordinates; trains and guides subordinates on how to assume responsibilities and become more productive;

4) conducts semi-annual performance evaluation of his subordinates and recommends necessary action for their development/advancement; 5) 6) 7) 8) represents the superintendent or the department when appointed and authorized by the former; coordinates and communicates with other inter and intra department supervisors when necessary; recommends disciplinary actions/promotions; recommends measures to improve work methods, equipment performance, quality of service and working conditions;

9) sees to it that safety rules and regulations and procedure and are implemented and followed by all NASUREFCO employees, recommends revisions or modifications to said rules when deemed necessary, and initiates and prepares reports for any observed abnormality within the refinery; 10) and 11) supervises the activities of all personnel under him and goes to it that instructions to subordinates are properly implemented;

performs other related tasks as may be assigned by his immediate superior.

From the foregoing, it is apparent that the members of respondent union discharge duties and responsibilities which ineluctably qualify them as officers or members of the managerial staff, as defined in Section 2, Rule I Book III of the aforestated Rules to Implement the Labor Code, viz.: (1) their primary duty consists of the performance of work directly related to management policies of their employer; (2) they customarily and regularly exercise discretion and independent judgment; (3) they regularly and directly assist the managerial employee whose primary duty consist of the management of a department of the establishment in which they are employed (4) they execute, under general supervision, work along specialized or technical lines requiring special training, experience, or knowledge; (5) they execute, under general supervision, special assignments and tasks; and (6) they do not devote more than 20% of their hours worked in a work-week to activities which are not directly and clearly related to the performance of their work hereinbefore described. Under the facts obtaining in this case, we are constrained to agree with petitioner that the union members should be considered as officers and members of the managerial staff and are, therefore, exempt from the coverage of Article 82. Perforce, they are not entitled to overtime, rest day and holiday. The distinction made by respondent NLRC on the basis of whether or not the union members are managerial employees, to determine the latter's entitlement to the questioned benefits, is misplaced and inappropriate. It is admitted that these union members are supervisory employees and this is one instance where the nomenclatures or titles of their jobs conform with the nature of their functions. Hence, to distinguish them from a managerial employee, as defined either under Articles 82 or 212 (m) of the Labor Code, is puerile and in efficacious. The controversy actually involved here seeks a determination of whether or not these supervisory employees ought to be considered as officers or members of the managerial staff. The distinction, therefore, should have been made along that line and its corresponding conceptual criteria. II. We likewise no not subscribe to the finding of the labor arbiter that the payment of the questioned benefits to the union members has ripened into a contractual obligation. A. Prior to the JE Program, the union members, while being supervisors, received benefits similar to the rank-and-file employees such as overtime, rest day and holiday pay, simply because they were treated in the same manner as rank-and-file employees, and their basic pay was nearly on the same level as those of the latter, aside from the fact that their specific functions and duties then as supervisors had not been properly defined and delineated from those of the rank-and-file. Such fact is apparent from the clarification made by petitioner in its motion for reconsideration 8 filed with respondent commission in NLRC Case No. CA No. I-000058, dated August 16, 1991, wherein, it lucidly explained: "But, complainants no longer occupy the same positions they held before the JE Program. Those positions formerly classified as 'supervisory' and found after the JE Program to be rank-and-file were classified correctly and continue to receive overtime, holiday and restday pay. As to them, the practice subsists. "However, those whose duties confirmed them to be supervisory, were re-evaluated, their duties re-defined and in most cases their organizational positions re-designated to confirm their superior rank and duties. Thus, after the JE program, complainants cannot be said to occupy the same positions." 9 It bears mention that this positional submission was never refuted nor controverted by respondent union in any of its pleadings filed before herein public respondent or with this Court. Hence, it can be safely concluded therefrom that the members of respondent union were paid the questioned benefits for the reason that, at that time, they were rightfully entitled thereto. Prior to the JE Program, they could not be categorically classified as members or officers of the managerial staff considering that they were then treated merely on the same level as rank-and-file. Consequently, the payment thereof could not be construed as constitutive of voluntary employer practice,

which cannot be now be unilaterally withdrawn by petitioner. To be considered as such, it should have been practiced over a long period of time, and must be shown to have been consistent and deliberate. 10 The test or rationale of this rule on long practice requires an indubitable showing that the employer agreed to continue giving the benefits knowingly fully well that said employees are not covered by the law requiring payment thereof. 11 In the case at bar, respondent union failed to sufficiently establish that petitioner has been motivated or is wont to give these benefits out of pure generosity. B. It remains undisputed that the implementation of the JE Program, the members of private respondent union were re-classified under levels S-5 S-8 which were considered under the program as managerial staff purposes of compensation and benefits, that they occupied re-evaluated positions, and that their basic pay was increased by an average of 50% of their basic salary prior to the JE Program. In other words, after the JE Program there was an ascent in position, rank and salary. This in essence is a promotion which is defined as the advancement from one position to another with an increase in duties and responsibilities as authorized by law, and usually accompanied by an increase in salary. 12 Quintessentially, with the promotion of the union members, they are no longer entitled to the benefits which attach and pertain exclusively to their positions. Entitlement to the benefits provided for by law requires prior compliance with the conditions set forth therein. With the promotion of the members of respondent union, they occupied positions which no longer met the requirements imposed by law. Their assumption of these positions removed them from the coverage of the law, ergo, their exemption therefrom. As correctly pointed out by petitioner, if the union members really wanted to continue receiving the benefits which attach to their former positions, there was nothing to prevent them from refusing to accept their promotions and their corresponding benefits. As the sating goes by, they cannot have their cake and eat it too or, as petitioner suggests, they could not, as a simple matter of law and fairness, get the best of both worlds at the expense of NASUREFCO. Promotion of its employees is one of the jurisprudentially-recognized exclusive prerogatives of management, provided it is done in good faith. In the case at bar, private respondent union has miserably failed to convince this Court that the petitioner acted implementing the JE Program. There is no showing that the JE Program was intended to circumvent the law and deprive the members of respondent union of the benefits they used to receive. Not so long ago, on this particular score, we had the occasion to hold that: ". . . it is the prerogative of the management to regulate, according to its discretion and judgment, all aspects of employment. This flows from the established rule that labor law does not authorize the substitution of the judgment of the employer in the conduct of its business. Such management prerogative may be availed of without fear of any liability so long as it is exercised in good faith for the advancement of the employer's interest and not for the purpose of defeating on circumventing the rights of employees under special laws or valid agreement and are not exercised in a malicious, harsh, oppressive, vindictive or wanton manner or out of malice or spite." 13 WHEREFORE, the impugned decision and resolution of respondent National Labor Relations Commission promulgated on July 19, 1991 and August 30, 1991, respectively, are hereby ANNULLED and SET ASIDE for having been rendered and adopted with grave abuse of discretion, and the basic complaint of private respondent union is DISMISSED. G.R. No. L-12444 February 28, 1963 STATES MARINE CORPORATION and ROYAL LINE, INC., petitioners, vs. CEBU SEAMEN'S ASSOCIATION, INC., respondent. PAREDES, J.: Petitioners States Marine Corporation and Royal Line, Inc. were engaged in the business of marine coastwise transportation, employing therein several steamships of Philippine registry. They had a collective bargaining contract with the respondent Cebu Seamen's Association, Inc. On September 12, 1952, the respondent union filed with the Court of Industrial Relations (CIR), a petition (Case No. 740-V) against the States Marine Corporation, later amended on May 4, 1953, by including as party respondent, the petitioner Royal Line, Inc. The Union alleged that the officers and men working on board the petitioners' vessels have not been paid their sick leave, vacation leave and overtime pay; that the petitioners threatened or coerced them to accept a reduction of salaries, observed by other shipowners; that after the Minimum Wage Law had taken effect, the petitioners required their employees on board their vessels, to pay the sum of P.40 for every meal, while the masters and officers were not required to pay their meals and that because Captain Carlos Asensi had refused to yield to the general reduction of salaries, the petitioners dismissed said captain who now claims for reinstatement and the payment of back wages from December 25, 1952, at the rate of P540.00, monthly. The petitioners' shipping companies, answering, averred that very much below 30 of the men and officers in their employ were members of the respondent union; that the work on board a vessel is one of comparative ease; that petitioners have suffered financial losses in the operation of their vessels and that there is no law which provides for the payment of sick leave or vacation leave to employees or workers of private firms; that as regards the claim for overtime pay, the petitioners have always observed the provisions of Comm. Act No. 444, (Eight-Hour Labor Law), notwithstanding the fact that it does not apply to those who provide means of transportation; that the shipowners and operators in Cebu were paying the salaries of their officers and men, depending upon the margin of profits they could realize and other factors or circumstances of the business; that in enacting Rep. Act No. 602 (Minimum Wage Law), the Congress had in mind that the amount of P.40 per meal, furnished the employees should be deducted from the daily wages; that Captain Asensi was not dismissed for alleged union activities, but with the expiration of the terms of the contract between said officer and the petitioners, his services were terminated. A decision was rendered on February 21, 1957 in favor of the respondent union. The motion for reconsideration thereof, having been denied, the companies filed the present writ of certiorari, to resolve legal question involved. Always bearing in mind the deep-rooted principle that the factual findings of the Court of Industrial Relations should not be disturbed, if supported by substantial evidence, the different issues are taken up, in the order they are raised in the brief for the petitioners. 1. First assignment of error. The respondent court erred in holding that it had jurisdiction over case No. 740-V, notwithstanding the fact that those who had dispute with the petitioners, were less than thirty (30) in number.

The CIR made a finding that at the time of the filing of the petition in case No. 740-V, respondent Union had more than thirty members actually working with the companies, and the court declared itself with jurisdiction to take cognizance of the case. Against this order, the herein petitioners did not file a motion for reconsideration or a petition for certiorari. The finding of fact made by the CIR became final and conclusive, which We are not now authorized to alter or modify. It is axiomatic that once the CIR had acquired jurisdiction over a case, it continues to have that jurisdiction, until the case is terminated (Manila Hotel Emp. Association v. Manila Hotel Company, et al., 40 O.G. No. 6, p. 3027). It was abundantly shown that there were 56 members who signed Exhibits A, A-I to A-8, and that 103 members of the Union are listed in Exhibits B, B-1 to B-35, F, F-1 and K-2 to K-3. So that at the time of the filing of the petition, the respondent union had a total membership of 159, working with the herein petitioners, who were presumed interested in or would be benefited by the outcome of the case (NAMARCO v. CIR, L-17804, Jan. 1963). Annex D, (Order of the CIR, dated March 8, 1954), likewise belies the contention of herein petitioner in this regard. The fact that only 7 claimed for overtime pay and only 7 witnesses testified, does not warrant the conclusion that the employees who had some dispute with the present petitioners were less than 30. The ruling of the CIR, with respect to the question of jurisdiction is, therefore, correct. 2. Second assignment of error. The CIR erred in holding, that inasmuch as in the shipping articles, the herein petitioners have bound themselves to supply the crew with provisions and with such "daily subsistence as shall be mutually agreed upon" between the master and the crew, no deductions for meals could be made by the aforesaid petitioners from their wages or salaries. 3. Third assignment of error. The CIR erred in holding that inasmuch as with regard to meals furnished to crew members of a vessel, section 3(f) of Act No. 602 is the general rule, which section 19 thereof is the exception, the cost of said meals may not be legally deducted from the wages or salaries of the aforesaid crew members by the herein petitioners. 4. Fourth assignment of error. The CIR erred in declaring that the deduction for costs of meals from the wages or salaries after August 4, 1951, is illegal and same should be reimbursed to the employee concerned, in spite of said section 3, par. (f) of Act No. 602. It was shown by substantial evidence, that since the beginning of the operation of the petitioner's business, all the crew of their vessels have been signing "shipping articles" in which are stated opposite their names, the salaries or wages they would receive. All seamen, whether members of the crew or deck officers or engineers, have been furnished free meals by the ship owners or operators. All the shipping articles signed by the master and the crew members, contained, among others, a stipulation, that "in consideration of which services to be duly performed, the said master hereby agrees to pay to the said crew, as wages, the sums against their names respectively expressed in the contract; and to supply them with provisions as provided herein ..." (Sec. 8, par. [b], shipping articles), and during the duration of the contract "the master of the vessel will provide each member of the crew such daily subsistence as shall be mutually agreed daily upon between said master and crew; or, in lieu of such subsistence the crew may reserve the right to demand at the time of execution of these articles that adequate daily rations be furnished each member of the crew." (Sec. 8, par. [e], shipping articles). It is, therefore, apparent that, aside from the payment of the respective salaries or wages, set opposite the names of the crew members, the petitioners bound themselves to supply the crew with ship's provisions, daily subsistence or daily rations, which include food. This was the situation before August 4, 1951, when the Minimum Wage Law became effective. After this date, however, the companies began deducting the cost of meals from the wages or salaries of crew members; but no such deductions were made from the salaries of the deck officers and engineers in all the boats of the petitioners. Under the existing laws, therefore, the query converges on the legality of such deductions. While the petitioners herein contend that the deductions are legal and should not be reimbursed to the respondent union, the latter, however, claims that same are illegal and reimbursement should be made. Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted and approved by this Honorable Court, without prejudice to the parties adducing other evidence to prove their case not covered by this stipulation of facts. 1wph1.t We hold that such deductions are not authorized. In the coastwise business of transportation of passengers and freight, the men who compose the complement of a vessel are provided with free meals by the shipowners, operators or agents, because they hold on to their work and duties, regardless of "the stress and strain concomitant of a bad weather, unmindful of the dangers that lurk ahead in the midst of the high seas." Section 3, par. f, of the Minimum Wage Law, (R.A. No. 602), provides as follows (f) Until and unless investigations by the Secretary of Labor on his initiative or on petition of any interested party result in a different determination of the fair and reasonable value, the furnishing of meals shall be valued at not more than thirty centavos per meal for agricultural employees and not more than forty centavos for any other employees covered by this Act, and the furnishing of housing shall be valued at not more than twenty centavos daily for agricultural workers and not more than forty centavos daily for other employees covered by this Act. Petitioners maintain, in view of the above provisions, that in fixing the minimum wage of employees, Congress took into account the meals furnished by employers and that in fixing the rate of forty centavos per meal, the lawmakers had in mind that the latter amount should be deducted from the daily wage, otherwise, no rate for meals should have been provided. However, section 19, same law, states SEC. 19. Relations to other labor laws and practices. Nothing in this Act shall deprive an employee of the right to seek fair wages, shorter working hours and better working conditions nor justify an employer in violating any other labor law applicable to his employees, in reducing the wage now paid to any of his employees in excess of the minimum wage established under this Act, or in reducing supplements furnished on the date of enactment.

At first blush, it would appear that there exists a contradiction between the provisions of section 3(f) and section 19 of Rep. Act No. 602; but from a careful examination of the same, it is evident that Section 3(f) constitutes the general rule, while section 19 is the exception. In other words, if there are no supplements given, within the meaning and contemplation of section 19, but merely facilities, section 3(f) governs. There is no conflict; the two provisions could, as they should be harmonized. And even if there is such a conflict, the respondent CIR should resolve the same in favor of the safety and decent living laborers (Art. 1702, new Civil Code).. It is argued that the food or meals given to the deck officers, marine engineers and unlicensed crew members in question, were mere "facilities" which should be deducted from wages, and not "supplements" which, according to said section 19, should not be deducted from such wages, because it is provided therein: "Nothing in this Act shall deprive an employee of the right to such fair wage ... or in reducing supplements furnished on the date of enactment." In the case of Atok-Big Wedge Assn. v. Atok-Big Wedge Co., L-7349, July 19, 1955; 51 O.G. 3432, the two terms are defined as follows "Supplements", therefore, constitute extra remuneration or special privileges or benefits given to or received by the laborers over and above their ordinary earnings or wages. "Facilities", on the other hand, are items of expense necessary for the laborer's and his family's existence and subsistence so that by express provision of law (Sec. 2[g]), they form part of the wage and when furnished by the employer are deductible therefrom, since if they are not so furnished, the laborer would spend and pay for them just the same. In short, the benefit or privilege given to the employee which constitutes an extra remuneration above and over his basic or ordinary earning or wage, is supplement; and when said benefit or privilege is part of the laborers' basic wages, it is a facility. The criterion is not so much with the kind of the benefit or item (food, lodging, bonus or sick leave) given, but its purpose. Considering, therefore, as definitely found by the respondent court that the meals were freely given to crew members prior to August 4, 1951, while they were on the high seas "not as part of their wages but as a necessary matter in the maintenance of the health and efficiency of the crew personnel during the voyage", the deductions therein made for the meals given after August 4, 1951, should be returned to them, and the operator of the coastwise vessels affected should continue giving the same benefit.. In the case of Cebu Autobus Company v. United Cebu Autobus Employees Assn., L-9742, Oct. 27, 1955, the company used to pay to its drivers and conductors, who were assigned outside of the City limits, aside from their regular salary, a certain percentage of their daily wage, as allowance for food. Upon the effectivity of the Minimum Wage Law, however, that privilege was stopped by the company. The order CIR to the company to continue granting this privilege, was upheld by this Court. The shipping companies argue that the furnishing of meals to the crew before the effectivity of Rep. Act No. 602, is of no moment, because such circumstance was already taken into consideration by Congress, when it stated that "wage" includes the fair and reasonable value of boards customarily furnished by the employer to the employees. If We are to follow the theory of the herein petitioners, then a crew member, who used to receive a monthly wage of P100.00, before August 4, 1951, with no deduction for meals, after said date, would receive only P86.00 monthly (after deducting the cost of his meals at P.40 per meal), which would be very much less than the P122.00 monthly minimum wage, fixed in accordance with the Minimum Wage Law. Instead of benefiting him, the law will adversely affect said crew member. Such interpretation does not conform with the avowed intention of Congress in enacting the said law. One should not overlook a fact fully established, that only unlicensed crew members were made to pay for their meals or food, while the deck officers and marine engineers receiving higher pay and provided with better victuals, were not. This pictures in no uncertain terms, a great and unjust discrimination obtaining in the present case (Pambujan Sur United Mine Workers v. CIR, et al., L-7177, May 31, 1955). Fifth, Sixth and Seventh assignments of error. The CIR erred in holding that Severino Pepito, a boatsman, had rendered overtime work, notwithstanding the provisions of section 1, of C.A. No. 444; in basing its finding ofthe alleged overtime, on the uncorroborated testimony of said Severino Pepito; and in ordering the herein petitioners to pay him. Severino Pepito was found by the CIR to have worked overtime and had not been paid for such services. Severino Pepito categorically stated that he worked during the late hours of the evening and during the early hours of the day when the boat docks and unloads. Aside from the above, he did other jobs such as removing rusts and cleaning the vessel, which overtime work totalled to 6 hours a day, and of which he has not been paid as yet. This statement was not rebutted by the petitioners. Nobody working with him on the same boat "M/V Adriana" contrawise. The testimonies of boatswains of other vessels(M/V Iruna and M/V Princesa), are incompetent and unreliable. And considering the established fact that the work of Severino Pepito was continuous, and during the time he was not working, he could not leave and could not completely rest, because of the place and nature of his work, the provisions of sec. 1, of Comm. Act No. 444, which states "When the work is not continuous, the time during which the laborer is not working and can leave his working place and can rest completely shall not be counted", find no application in his case. 8. Eighth assignment of error. The CIR erred in ordering petitioners to reinstate Capt. Carlos Asensi to his former position, considering the fact that said officer had been employed since January 9, 1953, as captain of a vessel belonging to another shipping firm in the City of Cebu. The CIR held Finding that the claims of Captain Carlos Asensi for back salaries from the time of his alleged lay-off on March 20, 1952, is not supported by the evidence on record, the same is hereby dismissed. Considering, however, that Captain Asensi had been laid-off for a long time and that his failure to report for work is not sufficient cause for his absolute dismissal, respondents are hereby ordered to reinstate him to his former job without back salary but under the same terms and conditions of employment existing prior to his lay-off, without loss of seniority and other benefits already acquired by him prior to March 20, 1952. This Court is empowered to reduce the punishment meted

out to an erring employee (Standard Vacuum Oil Co., Inc. v. Katipunan Labor Union, G.R. No. L-9666, Jan. 30, 1957). This step taken is in consonance with section 12 of Comm. Act 103, as amended." (p. 16, Decision, Annex 'G'). The ruling is in conformity with the evidence, law and equity. Ninth and Tenth assignments of error. The CIR erred in denying a duly verified motion for new trial, and in overruling petitioner's motion for reconsideration. The motion for new trial, supported by an affidavit, states that the movants have a good and valid defense and the same is based on three orders of the WAS (Wage Administration Service), dated November 6, 1956. It is alleged that they would inevitably affect the defense of the petitioners. The motion for new trial is without merit. Having the said wage Orders in their possession, while the case was pending decision, it was not explained why the proper move was not taken to introduce them before the decision was promulgated. The said wage orders, dealing as they do, with the evaluation of meals and facilities, are irrelevant to the present issue, it having been found and held that the meals or food in question are not facilities but supplements. The original petition in the CIR having been filed on Sept. 12, 1952, the WAS could have intervened in the manner provided by law to express its views on the matter. At any rate, the admission of the three wage orders have not altered the decision reached in this case. IN VIEW HEREOF, the petition is dismissed, with costs against the petitioners. G.R. No. 74156 June 29, 1988 GLOBE MACKAY CABLE AND RADIO CORPORATION, FREDERICK WHITE and JESUS SANTIAGO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, FFW-GLOBE MACKAY EMPLOYEES UNION and EDA CONCEPCION, respondents. MELENCIO-HERRERA, J.: A special civil action for certiorari with a prayer for a Temporary Restraining Order to enjoin respondents from enforcing the Decision of 10 March 1986 of the National Labor Relations Commission (NLRC), in NCR Case No. 1-168-85 entitled "FFW-Globe Mackay Employees Union, et al., vs. Globe Mackay Cable & Radio Corporation, et al.," the dispositive portion of which reads: WHEREFORE, premises considered, the appealed Decision is as it is hereby SET ASIDE and another one issued: 1. Declaring respondents-appellees (petitioners herein) guilty of illegal deductions of cost-of-living allowance;

2. Ordering respondents-appellees to pay complainants-appellants their back allowances reckoned from the time of illegal deduction; and 3. Ordering respondents-appellees from further illegally deducting the allowances of complainants-appellants.

SO ORDERED. Presiding Commissioner of the NLRC, Diego P. Atienza, concurred in the result, while Commissioner Cleto T. Villaltuya dissented and voted to affirm in toto the Labor Arbiter's Decision. On 19 May 1986, we issued the Temporary Restraining Order enjoining respondents from enforcing the assailed Decision. On 2 September 1987, we gave due course to the petition and required the submittal of memoranda, by the parties, which has been complied with. The facts follow: Wage Order No. 6, which took effect on 30 October 1984, increased the cost-of-living allowance of non-agricultural workers in the private sector. Petitioner corporation complied with the said Wage Order by paying its monthly-paid employees the mandated P3.00 per day COLA. However, in computing said COLA, Petitioner Corporation multiplied the P 3.00 daily COLA by 22 days, which is the number of working days in the company. Respondent Union disagreed with the computation of the monthly COLA claiming that the daily COLA rate of P3.00 should be multiplied by 30 days to arrive at the monthly COLA rate. The union alleged furthermore that prior to the effectivity of Wage Order No. 6, Petitioner Corporation had been computing and paying the monthly COLA on the basis of thirty (30) days per month and that this constituted an employer practice, which should not be unilaterally withdrawn. After several grievance proceedings proved futile, the Union filed a complaint against Petitioner Corporation, its President, F. White, and Vice-President, J. Santiago, for illegal deduction, underpayment, unpaid allowances, and violation of Wage Order No. 6. Petitioners White and Santiago were sought to be held personally liable for the money claims thus demanded. Labor Arbiter Adelaido F. Martinez sustained the position of Petitioner Corporation by holding that since the individual petitioners acted in their corporate capacity they should not have been impleaded; and that the monthly COLA should be computed on the basis of twenty two (22) days, since the evidence showed that there are only 22 paid days in a month for monthly-paid employees in the company. His reasoning, inter alia, was as follows: To compel the respondent company to use 30 days in a month to compute the allowance and retain 22 days for vacation and sick leave, overtime pay and other benefits is inconsistent and palpably unjust. If 30 days is used as divisor, then it must be used for the computation of all benefits, not just the allowance. But this is not fair to complainants, not to mention that it will contravene the provision of the parties' CBA.

On appeal, the NLRC reversed the Labor Arbiter, as heretofore stated, and held that Petitioner Corporation was guilty of illegal deductions, upon the following considerations: (1) that the P3.00 daily COLA under Wage Order No. 6 should be paid and computed on the basis of thirty (30) days instead of twenty-two (22) days since workers paid on a monthly basis are entitled to COLA on Saturdays, Sundays and legal holidays "even if unworked;" (2) that the full allowance enjoyed by Petitioner Corporation's monthly-paid employees before the CBA executed between the parties in 1982 constituted voluntary employer practice, which cannot be unilaterally withdrawn; and (3) that petitioners White and Santiago were properly impleaded as respondents in the case below. Hence, this Petition, anchored on the charge of grave abuse of discretion by the NLRC. We are constrained to reverse the reversal. Section 5 of the Rules Implementing Wage Orders Nos. 2, 3, 5 and 6 uniformly read as follows: Section 5. Allowance for Unworked Days. All covered employees shall be entitled to their daily living allowance during the days that they are paid their basic wage, even if unworked. (Emphasis supplied) The primordial consideration, therefore, for entitlement to COLA is that basic wage is being paid. In other words, the payment of COLA is mandated only for the days that the employees are paid their basic wage, even if said days are unworked. So that, on the days that employees are not paid their basic wage, the payment of COLA is not mandated. As held in University of Pangasinan Faculty Union vs. University of Pangasinan, L-63122, February 20, 1984, 127 SCRA 691): ... it is evident that the intention of the law is to grant ECOLA upon the payment of basic wages. Hence, we have the principle of 'No Pay, No ECOLA. Applied to monthly-paid employees if their monthly salary covers all the days in a month, they are deemed paid their basic wages for all those days and they should be entitled to their COLA on those days "even if unworked," as the NLRC had opined. Peculiar to this case, however, is the circumstance that pursuant to the Collective Bargaining Agreement (CBA) between Petitioner Corporation and Respondent Union, the monthly basic pay is computed on the basis of five (5) days a week, or twenty two (22) days a month. Thus, the pertinent provisions of that Agreement read: Art. XV(a)Eight net working hours shall constitute the regular work day for five days. Art. XV(b)Forty net hours of work, 5 working days, shall constitute the regular work week. Art. XVI, Sec. 1(b)All overtime worked in excess of eight net hours daily or in excess of 5 days weekly shall be computed on hourly basis at the rate of time and one half. The Labor Arbiter also found that in determining the hourly rate of monthly paid employees for purposes of computing overtime pay, the monthly wage is divided by the number of actual work days in a month and then, by eight (8) working hours. If a monthly-paid employee renders overtime work, he is paid his basic salary rate plus one-half thereof. For example, after examining the specimen payroll of employee Jesus L. Santos, the Labor Arbiter found: the employee Jesus L. Santos, who worked on Saturday and Sunday was paid base pay plus 50% premium. This is over and above his monthly basic pay as supported by the fact that base pay was paid. If the 6th and 7th days of the week are deemed paid even if unworked and included in the monthly salary, Santos should not have been paid his base pay for Saturday and Sunday but should have received only the 50% overtime premium. Similarly, the specimen payrolls of employees, Dennis Dungon and Rene Sanvictores, showed that in computing the vacation and sick leaves of the employees, Petitioner Corporation consistently used twenty-two (22) days. Under the peculiar circumstances obtaining, therefore, where the company observes a 5-day work week, it will have to be held that the COLA should be computed on the basis of twenty two (22) days, which is the period during which the monthly-paid employees of Petitioner Corporation receive their basic wage. The CBA is the law between the parties and, if not acceptable, can be the subject of future re-negotiation. 2) Payment in full by Petitioner Corporation of the COLA before the execution of the CBA in 1982 and in compliance with Wage Orders Nos. 1 (26 March 1981) to 5 (11 June 1984), should not be construed as constitutive of voluntary employer practice, which cannot now be unilaterally withdrawn by petitioner. To be considered as such, it should have been practiced over a long period of time, and must be shown to have been consistent and deliberate. Adequate proof is wanting in this respect. The test of long practice has been enunciated thus: ... Respondent Company agreed to continue giving holiday pay knowing fully well that said employees are not covered by the law requiring payment of holiday pay.' (Oceanic Pharmacal Employees Union [FFW] vs. Inciong, L-50568, November 7, 1979, 94 SCRA 270). (Emphasis ours)

Moreover, before Wage Order No. 4, there was lack of administrative guidelines for the implementation of the Wage Orders. It was only when the Rules Implementing Wage Order No. 4 were issued on 21 May 1984 that a formula for the conversion of the daily allowance to its monthly equivalent was laid down, thus: Section 3. Application of Section 2-xxx xxx xxx

(a) Monthly rates for non-agricultural workers covered Under PDs 1614, 1634, 1678 and 1713: xxx xxx xxx

(3) For workers who do not work and are not considered paid on Saturdays and Sundays: P60 + P90 + P60 + (P2.00 x 262) divided by 12 = P 253.70 (Emphasis ours) As the Labor Arbiter had analyzed said formula: Under the aforecited formula/guideline, issued for the first time, when applied to a company like respondent which observes a 5-day work week (or where 2 days in a week, not necessarily Saturday and Sunday, are not considered paid), the monthly equivalent of a daily allowance is arrived at by multiplying the daily allowance by 262 divided by 12. This formula results in the equivalent of 21.8 days in a month. Absent clear administrative guidelines, Petitioner Corporation cannot be faulted for erroneous application of the law. Payment may be said to have been made by reason of a mistake in the construction or application of a "doubtful or difficult question of law." (Article 2155, 1 in relation to Article 2154 2 of the Civil Code). Since it is a past error that is being corrected, no vested right may be said to have arisen nor any diminution of benefit under Article 100 of the Labor Code 3 may be said to have resulted by virtue of the correction. With the conclusions thus reached, there is no further need to discuss the liability of the officers of Petitioner Corporation. WHEREFORE, certiorari is granted, the Decision of the National Labor Relations Commission, dated 10 March 1986, is SET ASIDE, and the Decision of the Labor Arbiter, dated 9 May 1985, is hereby REINSTATED. The Temporary Restraining Order heretofore issued is hereby made permanent. SO ORDERED. G.R. No. L-5276 March 3, 1953 ATOK-BIG WEDGE MINING CO., INC., petitioner, vs. ATOK-BIG WEDGE MUTUAL BENEFIT ASSOCIATION, respondent. LABRADOR, J.: This is an appeal by certiorari against a decision of the Court of Industrial Relations. On September 4, 1950, demand was submitted to petitioner by respondent union through its officers for various concession, among which were (a) an increase of P0.50 in wages, (b) commutation of sick and vacation leave if not enjoyed during the year, (c) various privileges, such as free medical care, medicine, and hospitalization, (d) right to a closed shop, check off, etc., (e) no dismissal without prior just cause and with a prior investigation, etc. Some of the demands, were granted by the petitioner, and the other were rejected, and so hearings were held and evidence submitted on the latter. After the hearing the respondent court rendered a decision, the most important provisions of which were those fixing the minimum wage for the laborers at P3.20, declaring that additional compensation representing efficiency bonus should not be included as part of the wage, and making the award effective from September 4, 1950. It is against these portion of the decision that this appeal is taken. On the issue of the wage, it is contended by petitioner that as the respondent court found that the laborer and his family at least need the amount of P2.58 for food, this should be the basis for the determination of his wage, not what he actually spends; that it is not justifiable to fix a wage higher than that provided by Republic Act No. 602; and that respondent union made the demand in accordance with a pernicious practice of claiming more after an original demand is granted. The respondent court found that P2.58 is the minimum amount actually needed by the laborer and his family. That does not mean that it is his actual expense. A person's needs increase as his means increase. This is true not only as to food but as to everything else education, clothing, entertainment, etc. The law guarantees the laborer a fair and just wage. The minimum must be fair and just. The "minimum wage" can by no means imply only the actual minimum. Some margin or leeway must be provided, over and above the minimum, to take care of contingencies such as increase of prices of commodities and desirable improvement in his mode of living. Certainly, the amount of P0.22 a day (difference between P2.80 fixed and P2.58 actual) is not excessive for this purpose. That the P3 minimum wage fixed in the law is still far below what is considered a fair and just minimum is shown by the fact that this amount is only for the year after the law takes effect, as thereafter the law fixes it at P4. Neither may it be correctly contended that the demand for increase is due to an alleged pernicious practice. Frequent demands for increase are indicative of a healthy spirit of wakefulness to the demands of a progressing and an increasingly more expensive world. We, therefore, find no reason or ground for disturbing the finding contained in the decision fixing the amount of P3.20 as the minimum wage. It is next contended that the efficiency bonus paid the laborer should have been included in his (minimum) wage, in the same manner as the value of living quarters. Whether or not bonus forms part of wages depends upon the circumstances or condition for its payment. If it is an additional compensation which the employer promised and agreed to give without any conditions imposed for its payment, such as success of business or greater production or output, then it is part of the wage. But if it is paid only if profits are realized or a certain amount of productivity achieved, it cannot be considered part of the wages. In the case at bar, it is not payable to all but to laborers only. It is also paid on the basis of actual production or actual work accomplished. If the desired goal of production is not obtained or the amount

of actual work accomplished, the bonus does not accrue. It is evidence that under the circumstances it is paid only when the labor becomes more efficient or more productive. It is only an inducement for efficiency, a prize therefor, not a part of the wage. The last question raised in the appeal is the grant of the increase from September 4, 1950, the date of the presentation of the original demand, instead of from April 5, 1951, the date of the amended demand. The decision states: Both parties agreed that any award should be retroactive to the date of the presentation of the demand, which is September 4, 1950. (Annex A, p. 5.) The terms of the stipulation are clearly against petitioner's contention. There being no question as to its (agreement) existence, the same must be given force and effect. The petition is hereby dismissed, with costs. [G.R. No. 127598. January 27, 1999] MANILA ELECTRIC COMPANY, petitioner, vs. THE HONORABLE SECRETARY OF LABOR LEONARDO QUISUMBING AND MERALCO EMPLOYEES AND WORKERS ASSOCIATION (MEWA), respondents. DECISION MARTINEZ, J.: In this petition for certiorari, the Manila Electric Company (MERALCO) seeks to annul the orders of the Secretary of labor dated August 19, 1996 and December 28, 1996, wherein the Secretary required MERALCO and its rank and file union- the Meralco Workers Association (MEWA) to execute a collective bargaining agreement (CBA) for the remainder of the parties 1992 -1997 CBA cycle, and to incorporate in this new CBA the Secretarys dispositions on the disputed economic and non-economic issues. MEWA is the duly recognized labor organization of the rank-and-file employees of MERALCO. On September 7, 1995, MEWA informed MERALCO of its intention to re-negotiate the terms and conditions of their existing 1992-1997 Collective Bargaining Agreement (CBA) covering the remaining period of two years starting from December 1, 1995 to November 30, 1997.[1] MERALCO signified its willingness to re-negotiate through its letter dated October 17, 1995[2] and formed a CBA negotiating panel for the purpose. On November 10, 1995, MEWA submitted its proposal[3] to MERALCO, which, in turn, presented a counter-proposal. Thereafter, collective bargaining negotiations proceeded. However, despite the series of meetings between the negotiating panels of MERALCO and MEWA, the parties failed to arrive at terms and conditions acceptable to both of them. On April 23, 1996, MEWA filed a Notice of Strike with the National Capital Region Branch of the National Conciliation and Mediation Board (NCMB) of the Department of Labor and Employment (DOLE) which was docketed as NCMB-NCR-NS-04-152-96, on the grounds of bargaining deadlock and unfair labor practices. The NCMB then conducted a series of conciliation meetings but the parties failed to reach an amicable settlement. Faced with the imminence of a strike, MERALCO on May 2, 1996, filed an Urgent Petition[4] with the Department of Labor and Employment which was docketed as OS-AJ No. 0503[1]96 praying that the Secretary assume jurisdiction over the labor dispute and to enjoin the striking employees to go back to work. The Labor Secretary granted the petition through its Order[5] of May 8, 1996, the dispositive portion of which reads: WHEREFORE, premises considered, this Office now assumes jurisdiction over the labor dispute obtaining between the parties pu rsuant to Article 263 (g) of the Labor Code. Accordingly, the parties are here enjoined from committing any act that may exacerbate the situation. To speed up the resolution of the dispute, the parties are also directed to submit their respective Position Papers within ten (10) days from receipt. Undersecretary Jose M. Espanol, Jr. is deputized to conduct conciliation conferences between the parties to bridge their dif ferences and eventually hammer out a solution that is mutually acceptable. He shall be assisted by the Legal Service. SO ORDERED. Thereafter, the parties submitted their respective memoranda and on August 19, 1996, the Secretary resolved the labor dispute through an Order,[6] containing the following awards: ECONOMIC DEMANDS Wage increase - P2,300.00 for the first year covering the period from December 1, 1995 to November 30, 1996 - P2,200.00 for the second year covering the period December 1, 1996 to November 30, 1997. Red Circle Rate (RCR) Allowance- all RCR allowances (promotional increases that go beyond the maximum range of a job classification salary) shall be integrated into the basic salary of employees effective December 1, 1995. Longevity Allowance- the integration of the longevity allowance into the basic wage is denied; the present policy is maintained. Longevity Increase- the present longevity bonus is maintained but the bonus shall be incorporated into the new CBA. Sick Leave- MEWAs demand for upgrading is denied; the companys present policy is maintained. However, those who have not used the sick leave benefit during a particular year shall be entitled to a one-day sick leave incentive.

Sick leave reserve- the present reserve of 25 days shall be reduced to 15 days; the employee has the option either to convert the excess of 10 days to cash or let it remain as long as he wants. In case he opts to let it remain, he may later on convert it to cash at his retirement or separation. Vacation Leave - MEWAs demand for upgrading denied & the companys present policy is maintained which must be incorporated into the new CBA but scheduled vacation leave may be rounded off to one full day at a time in case of a benefit involving a fraction of a day. Union Leave- of MEWAs officers, directors or stewards assigned to perform union duties or legitimate union activity is increased from 30 to 40 Mondays per month. Maternity, Paternity and Funeral leaves- the existing policy is to be maintained and must be incorporated in the new CBA unless a new law granting paternity leave benefit is enacted which is superior to what the company has already granted. Birthday Leave - unions demand is granted. If birthday falls on the employees rest day or on a non -working holiday, the worker shall be entitled to go on leave with pay on the next working day. Group Hospitalization & Surgical Insurance Plan (GHSIP) and Health Maintenance Plan (HMP)- present policy is maintained insofar as the cost sharing is concerned- 70% for the Company and 30% for MEWA. Health Maintenance Plan (HMP) for dependents - subsidized dependents increased from three to five dependents. Longevity Bonus- is increased from P140.00 to P200.00 for every year of service to be received by the employee after serving the Company for 5 years. Christmas Bonus and Special Christmas Grant- MEWAs demand of one month salary as Christmas Bonus and two months salary as Special Christmas Grant is granted and to be incorporated in the new CBA. Midyear Bonus- one months pay to be included in the CBA. Anniversary Bonus - unions demand is denied. Christmas Gift Certificate - company has the discretion as to whether it will give it to its employees. Retirement Benefits: a. b. c. Full retirement-present policy is maintained; one cavan of rice per month is granted to retirees; special retirement leave and allowance-present policy is maintained;

d. HMP coverage for retirees- HMP coverage is granted to retirees who have not reached the age of 70, with MERALCO subsidizing 100% of the monthly premium; those over 70 are entitled to not more than 30 days of hospitalization at the J.F. Cotton Hospital with the company shouldering the entire cost. e. f. g. HMP coverage for retirees dependents is denied Monthly pension of P3,000.00 for each retiree is denied. Death benefit for retirees beneficiaries is denied.

Optional retirement - unions demand is denied; present policy is maintained; employee is eligible for optional retir ement if he has rendered at least 18 years of service. Dental, Medical and Hospitalization Benefits- grant of all the allowable medical, surgical, dental and annual physical examination benefits, including free medicine whenever the same is not available at the JFCH. Resignation benefits- unions demand is denied. Night work- union demand is denied but present policy must be incorporated in CBA. Shortswing- work in another shift within the same day shall be considered as the employees work for the foll owing day and the employee shall be given additional four (4) hours straight time and the applicable excess time premium if he works beyond 8 hours in the other shift. High Voltage allowance- is increased from P45.00 to P55.00 to be given to any employee authorized by the Safety Division to perform work on or near energized bare lines & bus including stockman drivers & crane operators and other crew members on ground.

High Pole Allowance- is increased from P30.00 to P40.00 to be given to those authorized to climb poles up to at least 60 ft. from the ground. Members of the team including stockman drivers, crane operators and other crew members on the ground, are entitled to this benefit. Towing Allowance- where stockmen drive tow trailers with long poles and equipment on board, they shall be entitled to a towing allowance of P20.00 whether they perform the job on regular shift or on overtime. Employees Cooperative- a loan of P3 M seed money is granted to the proposed establishment of a cooperative, payable in twenty (20) years starting one year from the start of operations. Holdup Allowance- the union demand is denied; the present policy shall be maintained. Meal and Lodging Allowance- shall be increased effective December 1, 1995 as follows: Breakfast - from P25.00 to P35.00 Lunch - from P35.00 to P45.00 Dinner - from P35.00 to P45.00 Lodging - from P135.00 to P180.00 a night in all MERALCO franchise areas Payroll Treatment for Accident while on Duty- an employee shall be paid his salary and allowance if any is due plus average excess time for the past 12 months from the time of the accident up to the time of full recovery and placing of the employee back to normal duty or an allowance of P2,000.00, whichever is higher. Housing and Equity Assistance Loan- is increased to P60,000.00; those who have already availed of the privilege shall be allowed to get the difference. Benefits for Collectors: a. Company shall reduce proportionately the quota and monthly average product level (MAPL) in terms of equivalent bill assignment when an employee is on sick leave and paid vacation leave. b. When required to work on Saturdays, Sundays and holidays, an employee shall receive P60.00 lunch allowance and applicable transportation allowance as determined by the Company and shall also receive an additional compensation to one day fixed portion in addition to lunch and transportation allowance. c. The collector shall be entitled to an incentive pay of P25.00 for every delinquent account disconnected.

d. When a collector voluntarily performs other work on regular shift or overtime, he shall be entitled to remuneration based on his computed hourly compensation and the reimbursement of actually incurred transportation expenses. e. f. Collectors shall be provided with bobcat belt bags every year Collectors cash bond shall be deposited under his capital contribution to MESALA.

g. Collectors quota and MAPL shall be proportionately reduced during typhoons, floods, earthquakes and other similar force majeure events when it is impossible for a collector to perform collection work. Political Demands: a. Scope of the collective bargaining unit- the collective bargaining unit shall be composed of all regular rank-and-file employees hired by the company in all its offices and operative centers throughout its franchise area and those it may employ by reason of expansion, reorganization or as a result of operational exigencies. b. Union recognition and security -

i. The union shall be recognized by the Company as sole and exclusive bargaining representative of the rank-and-file employees included in the bargaining unit. The Company shall agree to meet only with Union officers and its authorized representatives on all matters involving the Union and all issues arising from the implementation and interpretation of the new CBA. ii. The union shall meet with the newly regularized employees for a period not to exceed four (4) hours, on company time, to acquaint the new regular employees of the rights, duties and benefits of Union membership. iii. The right of all rank-and-file employees to join the union shall be recognized in accordance with the maintenance of membership principle as a form of union security. c. Transfer of assignment and job security-

i. No transfer of an employee from one position to another shall be made if motivated by considerations of sex, race, creed, political and religious belief, seniority or union activity. ii. If the transfer is due to the reorganization or decentralization, the distance from the employees residence shall be conside red unless the transfer is accepted by the employee. If the transfer is extremely necessary, the transfer shall be made within the offices in the same district. iii. Personnel hired through agencies or contractors to perform the work done by covered employees shall not exceed one month. If extension is necessary, the union shall be informed. But the Company shall not permanently contract out regular or permanent positions that are necessary in the normal operation of the Company. d. Check off Union Dues- where the union increases its dues as approved by the Board of Directors, the Company shall check off such increase from the salaries of union members after the union submits check off authorizations signed by majority of the members. The Company shall honor only those individual authorizations signed by the majority of the union members and collectively submitted by the union to the Companys Salary Administration. e. Payroll Reinstatement- shall be in accordance with Article 223, p. 3 of the Labor Code.

f. Union Representation in Committees- the union is allowed to participate in policy formulation and in the decision-making process on matters affecting their rights and welfare, particularly in the Uniform Committee, the Safety Committee and other committees that may be formed in the future. Signing Bonus- P4,000.00 per member of the bargaining unit for the conclusion of the CBA Existing benefits already granted by the Company but which are not expressly or impliedly repealed in the new agreement shall remain subsisting and shall be included in the new agreement to be signed by the parties effective December 1, 1995. On August 30, 1996, MERALCO filed a motion for reconsideration[7] alleging that the Secretary of Labor committed grave abuse of discretion amounting to lack or excess of jurisdiction: 1. in awarding to MEWA a package that would cost at least P1.142 billion, a package that is grossly excessive and exorbitant, would not be affordable to MERALCO and would imperil its viability as a public utility affected with national interest. 2. in ordering the grant of a P4,500.00 wage increase, as well as a new and improved fringe benefits, under the remaining two (2) years of the CBA for the rank-and-file employees. 3. in ordering the incorporation into the CBA of all existing employee benefits, on the one hand, and those that MERALCO ha s unilaterally granted to its employees by virtue of voluntary company policy or practice, on the other hand. 4. in granting certain political demands presented by the union. 5. in ordering the CBA to be effective December 1995 instead of August 19, 1996 when he resolved the dispute. MERALCO filed a supplement to the motion for reconsideration on September 18, 1995, alleging that the Secretary of Labor did not properly appreciate the effect of the awarded wages and benefits on MERALCOs financial viability. MEWA likewise filed a motion asking the Secretary of Labor to reconsider its Order on the wage increase, leaves, decentralized filing of paternity and maternity leaves, bonuses, retirement benefits, optional retirement, medical, dental and hospitalization benefits, short swing and payroll treatment. On its political demands, MEWA asked the Secretary to rule its proposal to institute a Code of Discipline for its members and the unions representation in the administration of the Pension Fund. On December 28, 1996, the Secretary issued an Order*8+ resolving the parties separate motions, the modifications of the August 19, 199 6 Order being highlighted hereunder: 1) Effectivity of Agreement - December 1, 1995 to November 30, 1997. Economic Demands 2) Wage Increase: First year - P2,200.00 per month; Second year - P2,200.00 per month. 3) Integration of Red Circle Rate (RCR) and Longevity Allowance into Basic Salary -the RCR allowance shall be integrated into the basic salary of employees as of August 19, 1996 (the date of the disputed Order). 4) Longevity Bonus - P170 per year of service starting from 10 years of continuous service.

5) Vacation Leave - The status quo shall be maintained as to the number of vacation leave but employees sched uled vacation may be taken one day at a time in the manner that this has been provided in the supervisory CBA. 6) Sick Leave Reserve - is reduced to 15 days, with any excess payable at the end of the year. The employee has the option to avail of this cash conversion or to accumulate his sick leave credits up to 25 days for conversion to cash at retirement or separation from the service. 7) Birthday Leave - the grant of a day off when an employees birthday falls on a non-working day is deleted. 8) Retirement Benefits for Retirees - The benefits granted shall be effective on August 19, 1996, the date of the disputed order up to November 30, 1997, which is the date the CBA expires and shall apply to those who are members of the bargaining unit at the time the award is made. One sack of rice per quarter of the year shall be given to those retiring between August 19, 1996 and November 30, 1997. On HMP Coverage for Retirees- The parties maintain the status quo, that is, with the Company complying with th e present arrangement and the obligations to retirees as is. 9) Medical, Dental and Hospitalization Benefits - The cost of medicine unavailable at the J.F. Cotton Hospital shall be in accordance with MERALCOs Memorandum dated September 14, 1976. 10) GHSIP and HMP for Dependents - The number of dependents to be subsidized shall be reduced from 5 to 4 provided that their premiums are proportionately increased. 11) Employees Cooperative - The original award of P3 million pesos as seed money for the proposed Cooperative is reduced to P1.5 million pesos. 12) Shortswing - the original award is deleted. 13) Payroll Treatment for Accident on Duty - Company ordered to continue its present practice on payroll treatment for accident on duty without need to pay the excess time the Union demanded. Political Demands: 14) Scope of the collective bargaining unit - The bargaining unit shall be composed of all rank and file employees hired by the Company in accordance with the original Order. 15) Union recognition and security - The incorporation of a closed shop form of union security in the CBA; the Company is prohibited from entertaining individuals or groups of individuals only on matters that are exclusively within the domain of the union; the Company shall furnish the union with a complete list of newly regularized employees within a week from regularization so that the Union can meet these employees on the Unions and the employees own time. 16) Transfer of assignment and job security - Transfer is a prerogative of the Company but the transfer must be for a valid business reason, made in good faith and must be reasonably exercised. The CBA shall provide that No transfer of an employee from one position to another, without the employees written consent, shall be made if motivated by considerations of sex, race, creed, political and religious belief, age or union activity. 17) Contracting Out - The Company has the prerogative to contract out services provided that this move is based on valid business reasons in accordance with law, is made in good faith, is reasonably exercised and, provided further that if the contracting out involves more than six months, the Union must be consulted before its implementation. 18) Check off of union dues In any increase of union dues or contributions for mandatory activities, the union must submit to the Company a copy of its board resolution increasing the union dues or authorizing such contributions; If a board resolution is submitted, the Company shall deduct union dues from all union members after a majority of the union members have submitted their individual written authorizations. Only those check-off authorizations submitted by the union shall be honored by the Company. With respect to special assessments, attorneys fees, negotiation fees or any other extraordinary fees, individual authorizations shall be necessary before the company may so deduct the same. 19) Union Representation in Committees - The union is granted representation in the Safety Committee, the Uniform Committee and other committees of a similar nature and purpose involving personnel welfare, rights and benefits as well as duties. Dissatisfied, petitioner filed this petition contending that the Secretary of Labor gravely abused his discretion: 1). . . in awarding wage increases of P2,200.00 for 1996 and P2,200.00 for 1997;

2) . . . in awarding the following economic benefits: a. b. c. d. e. f. g. h. i. and j. Two months Christmas bonus; Rice Subsidy and retirement benefits for retirees; Loan for the employees cooperative; Social benefits such as GHSIP and HMP for dependents, employees cooperative and housing equity assistance loan; Signing bonus; Integration of the Red Circle Rate Allowance Sick leave reserve of 15 days The 40-day union leave; High pole/high voltage and towing allowance; Benefits for collectors

3) . . . in expanding the scope of the bargaining unit to all regular rank and file employees hired by the company in all its offices and operating centers and those it may employ by reason of expansion, reorganization or as a result of operational exigencies; 4) . . . in ordering for a closed shop when his original order for a maintenance of membership arrangement was not questioned by the parties; 5) . . . in ordering that Meralco should consult the union before any contracting out for more than six months; 6) . . . in decreeing that the union be allowed to have representation in policy and decision maki ng into matters affecting personnel welfare, rights and benefits as well as duties; 7) . . . in ruling for the inclusion of all terms and conditions of employment in the collective bargaining agreement; 8) . . . in exercising discretion in determining the retroactivity of the CBA; Both MEWA and the Solicitor General; on behalf of the Secretary of Labor, filed their comments to the petition. While the case was also set for oral argument on Feb 10, 1997, this hearing was cancelled due to MERALCO not having received the comment of the opposing parties. The parties were instead required to submit written memoranda, which they did. Subsequently, both petitioner and private respondent MEWA also filed replies to the opposing parties Memoranda, all of which We took into account in the resolution of this case. The union disputes the allegation of MERALCO that the Secretary abused his discretion in issuing the assailed orders arguing that he acted within the scope of the powers granted him by law and by the Constitution. The union contends that any judicial review is limited to an examination of the Secretarys decision-making/discretion - exercising process to determine if this process was attended by some capricious or whimsical act that constitutes grave abuse; in the absence of such abuse, his findings - considering that he has both jurisdiction and expertise to make them - are valid. The unions position is anchored on two premises: First, no reviewable abuse of discretion could have attended the Secr etarys arbitral award because the Secretary complied with constitutional norms in rendering the dispute award. The union posits that the yardstick for comparison and for the determination of the validity of the Secretarys actions should be the specific standards laid down by the Constitution itself. To the union, these standards include the State policy on the promotion of workers welfare,*9+ the principle of distributive justice,*10+ the right of the State to regulate the use of property,[11] the obligation of the State to protect workers, both organized and unorganized, and insure their enjoyment of humane conditions of work and a living wage, and the right of labor to a just share in the fruits of production.*12+ Second, no reversible abuse of discretion attended the Secretarys decision because the Secretary took all the relevant evidence into account, judiciously weighed them, and rendered a decision based on the facts and law. Also, the arbitral award should not be reversed given the Secretarys expertise in his field and the general rule that findings of fact based on such expertise is generally binding on this Court. To put matters in proper perspective, we go back to basic principles. The Secretary of Labors statutory power under Art. 2 63 (g) of the Labor Code to assume jurisdiction over a labor dispute in an industry indispensable to the national interest, and, to render an award on compulsory arbitration, does not exempt the exercise of this power from the judicial review that Sec. 1, Art. 8 of the Constitution mandates. This constitutional provision states: Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the government. Under this constitutional mandate, every legal power of the Secretary of Labor under the Labor Code, or, for that matter, any act of the Executive, that is attended by grave abuse of discretion is subject to review by this Court in an appropriate proceeding. To be sure, the existence of an executive power alone - whether granted by statute or by the Constitution - cannot exempt the executive action from judicial oversight, interference or reversal when grave abuse of discretion is, or is alleged to be, present. This is particularly true when

constitutional norms are cited as the applicable yardsticks since this Court is the final interpreter of the meaning and intent of the Constitution.[13] The extent of judicial review over the Secretary of Labors arbitral award is not limited to a determination of grave abuse i n the manner of the secretarys exercise of his statutory powers. This Court is entitled to, and must - in the exercise of its judicial power - review the substance of the Secretarys award when grave abuse of discretion is alleged to exist in the award, i.e., in the appreciation of and the conclusions the Secretary drew from the evidence presented. The natural and ever present limitation on the Secretarys acts is, of course, the Constitution. And we recognize that indee d the constitutional provisions the union cited are State policies on labor and social justice that can serve as standards in assessing the validity of a Secretary of Labors actions. However, we note that these provisions do not provide clear, precise and objective standards of conduct that lend themselves to easy application. We likewise recognize that the Constitution is not a lopsided document that only recognizes the interests of the working man; it too protects the interests of the property owner and employer as well.[14] For these reasons - and more importantly because a ruling on the breadth and scope of the suggested constitutional yardsticks is not absolutely necessary in the disposition of this case - we shall not use these yardsticks in accordance with the time-honored practice of avoiding constitutional interpretations when a decision can be reached using non-constitutional standards. We have repeatedly held that one of the essential requisites for a successful judicial inquiry into constitutional questions is that the resolution of the constitutional question must be necessary in deciding the case.[15] In this case we believe that the more appropriate and available standard - and one does not require a constitutional interpretation - is simply the standard of reasonableness. In laymans terms, reasonableness implies the absence of arbitrariness;[16] in legal parlance, this translates into the exercise of proper discretion and to the observance of due process. Thus, the question we have to answer in deciding this case is whether the Secretarys actions have been reasonable in light of the parties positions and the evidence they presented. MEWAs second premise - i.e., that the Secretary duly considered the evidence presented - is the main issue that we shall discuss at length below. Additionally, MEWA implied that we should take great care before reading an abuse of discretion on the part of the Secretary because of his expertise on labor issues and because his findings of fact deserve the highest respect from this Court. This Court has recognized the Secretary of Labors distinct expertise in the study and settlement of labor disputes falling under his power of compulsory arbitration.[17] It is also well-settled that factual findings of labor administrative officials, if supported by substantial evidence, are entitled not only to great respect but even to finality.*18+ We, therefore, have no difficulty in accepting the unions cav eat on how to handle a Secretary of Labors arbitral award. But at the same time, we also recognize the possibility that abuse of discretion may attend the exercise of the Secretarys arbitral functions; his findings in an arbitration case are usually based on position papers and their supporting documents (as they are in the present case), and not on the thorough examination of the parties contending claims that may be present in a court trial and in the face to-face adversarial process that better insures the proper presentation and appreciation of evidence.[19] There may also be grave abuse of discretion where the board, tribunal or officer exercising judicial function fails to consider evidence adduced by the parties.[20] Given the parties positions on the justiciability of the issues before us, the question we have to answer is one that goes into the su bstance of the Secretarys disputed orders: Did the Secretary properly consider and appreciate the evidence presented before him? We find, based on our consideration of the parties positions and the evidence on record, that the Secretary of Labor disrega rded and misappreciated evidence, particularly with respect to the wage award. The Secretary of Labor apparently also acted arbitrarily and even whimsically in considering a number of legal points; even the Solicitor General himself considered that the Secretary gravely abused his discretion on at least three major points: (a) on the signing bonus issue; (b) on the inclusion of confidential employees in the rank and file bargaining unit, and (c) in mandating a union security closed-shop regime in the bargaining unit. We begin with a discussion on the wages issue. The focal point in the consideration of the wage award is the projected net income for 1996 which became the basis for the 1996 wage award, which in turn - by extrapolation - became the basis for the (2nd Year) 1997 award. MERALCO projected that the net operating income for 1996 was 14.7% above the 1999 level or a total net operating income of 4.171 Billion, while the union placed the 1996 net operating income at 5.795 Billion. MERALCO based its projection on the increase of the income for the first 6 months of 1996 over the same period in 1995. The union, on the other hand, projected that the 1996 income would increase by 29% to 35% because the consumption of electric power is at its highest during the last two quarters with the advent of the Yuletide season. The union likewise relied heavily on a newspaper report citing an estimate by an all Asia capital financial analyst that the net operating income would amount to 5.795 Billion.[21] Based essentially on these considerations, the Secretary made the following computations and ordered his disputed wage award: Projected net operating Income for 1996 Principals and interests Dividends at 1995 rate Net amount left with the Company

5,795,000,000 1,426,571,703 1,636,949,000 2,729,479,297

Add: Tax credit equivalent to 35% of labor cost Companys net operating income

231,804,940 2,961,284,237

For 1997, the projected income is P7,613,612 which can easily absorb the incremental increase of P2,200 per month or a total of P4,500 during the last year of the CBA period. xxx xxx xxx

An overriding aim is to estimate the amount that is left with the Company after the awarded wages and benefits and the companys customary obligations are paid. This amount can be the source of an item not found in the above computations but which the Company must provide for, that is - the amount the company can use for expansion. Considering the expansion plans stated in the Companys Supplement that calls for capital e xpenditures of 6 billion, 6.263 billion and 5.802 billion for 1996, 1997 and 1998 respectively, We conclude that our original award of P2,300 per month for the first year and P2,200 for the second year will still leave much by way of retained income that can be used for expansion.*22+ (Underscoring ours.) We find after considering the records that the Secretary gravely abused his discretion in making this wage award because he disregarded evidence on record. Where he considered MERALCOs evidence at all, he apparently misappreciated this evidence in favor of claims that do not have evidentiary support. To our mind, the MERALCO projection had every reason to be reliable because it was based on actual and undisputed figures for the first six months of 1996.[23] On the other hand, the union projection was based on a speculation of Yuletide consumption that the union failed to substantiate. In fact, as against the unions unsubstantiated Yuletide consumption clai m, MERALCO adduced evidence in the form of historical consumption data showing that a lengthy consumption does not tend to rise during the Christmas period.[24] Additionally, the All-Asia Capital Report was nothing more than a newspaper report that did not show any specific breakdown or computations. While the union claimed that its cited figure is based on MERALCOs 10-year income stream,[25] no data or computation of this 10-year stream appear in the record. While the Secretary is not expected to accept the company-offered figures wholesale in determining a wage award, we find it a grave abuse of discretion to completely disregard data that is based on actual and undisputed record of financial performance in favor of the third-hand and unfounded claims the Secretary eventually relied upon. At the very least, the Secretary should have properly justified his disregard of the company figures. The Secretary should have also reasonably insured that the figure that served as the starting point for his computation had some substantial basis. Both parties extensely discussed the factors that the decision maker should consider in making a wage award. While We do not seek to enumerate in this decision the factors that should affect wage determination, we must emphasize that a collective bargaining dispute such as this one requires due consideration and proper balancing of the interests of the parties to the dispute and of those who might be affected by the dispute. To our mind, the best way in approaching this task holistically is to consider the available objective facts, including, where applicable, factors such as the bargaining history of the company, the trends and amounts of arbitrated and agreed wage awards and the companys previous CBAs, and industry trends in general. As a rule, affordability or ca pacity to pay should be taken into account but cannot be the sole yardstick in determining the wage award, especially in a public utility like MERALCO. In considering a public utility, the decision maker must always take into account the public interest aspects of the case; MERALCOs income and the amount of money available for operating expenses - including labor costs - are subject to State regulation. We must also keep in mind that high operating costs will certainly and eventually be passed on to the consuming public as MERALCO has bluntly warned in its pleadings. We take note of the middle ground approach employed by the Secretary in this case which we do not necessarily find to be th e best method of resolving a wage dispute. Merely finding the midway point between the demands of the company and the union, and splitting the difference is a simplistic solution that fails to recognize that the parties may already be at the limits of the wage le vels they can afford. It may lead to the danger too that neither of the parties will engage in principled bargaining; the company may keep its position artificially low while the union presents an artificially high position, on the fear that a Solomonic solution cannot be avoided. Thus, rather than encourage agreement, a middle ground approach instead promotes a play safe attitude that leads to more deadlocks than to successfully negotiated CBAs. After considering the various factors the parties cited, we believe that the interests of both labor and management are best served by a wage increase of P1,900.00 per month for the first year and another P1,900.00 per month for the second year of the two-year CBA term. Our reason for this is that these increases sufficiently protects the interest of the worker as they are roughly 15% of the monthly average salary of P11,600.00.*26+ They likewise sufficiently consider the employers costs and its overall wage structure, while at t he same time, being within the range that will not disrupt the wage trends in Philippine industries. The records shows that MERALCO, throughout its long years of existence, was never remiss in its obligation towards its employees. In fact, as a manifestation of its strong commitment to the promotion of the welfare and well-being of its employees, it has consistently improved their compensation package. For instance, MERALCO has granted salary increases[27] through the collective bargaining agreement the amount of which since 1980 for both rank-and-file and supervisory employees were as follows: AMOUNT OF CBA INCREASES DIFFERENCE

CBA COVERAGE RANK-AND-FILE SUPERVISORY AMOUNT PERCENT

1980 230.00 342.50 112.50 48.91%

1981 210.00 322.50 112.50 53.57

1982 200.00 312.50 112.50 56.25

TOTAL 640.00 977.50 337.50 52.73

1983 320.00 432.50 112.50 35.16

1984

350.00 462.50 112.50 32.14

1985 370.00 482.50 112.50 30.41

TOTAL 1,040.00 1,377.50 337.50 32.45

1986 860.00 972.50 112.50 13.08

1987 640.00 752.50 112.50 17.58

1988 600.00 712.50 112.50 18.75

TOTAL 2,100.00

2,437.50 337.50 16.07

1989 1,100.00 1,212.50 112.50 10.23

1990 1,200.00 1,312.50 112.50 9.38

1991 1,300.00 1,412.50 112.50 8.65

TOTAL 3,600.00 3,937.50 337.50 9.38

1992 1,400.00 1,742.50 342.50 24.46

1993 1,350.00 1,682.50

332.50 24.63

1994 1,150.00 1,442.50 292.50 25.43

TOTAL 3,900.00 4,867.50 967.50 24.81

Based on the above-quoted table, specifically under the column RANK-AND-FILE, it is easily discernible that the total wage increase of P3,800.00 for 1996 to 1997 which we are granting in the instant case is significantly higher than the total increases given in 1992 to 1994, or a span of three (3) years, which is only P3,900.00 a month. Thus, the Secretarys grant of P2,200.00 monthly wage increas e in the assailed order is unreasonably high a burden for MERALCO to shoulder. We now go to the economic issues. 1. CHRISTMAS BONUS MERALCO questions the Secretarys award of Christmas bonuses on the ground that what it had given its employees were specia l bonuses to mark or celebrate special occasions, such as when the Asia Money Magazine recognized MERALCO as the best managed company in Asia. These grants were given on or about Christmas time, and the timing of the grant apparently led the Secreta ry to the conclusion that what were given were Christmas bonuses given by way of a company practice on top of the legally required 13th month pay. The Secretary in granting the two-month bonus, considered the following factual finding, to wit: We note that each of the grant mentioned in the commonly adopted table of grants has a special description. Christmas bonuses were given in 1988 and 1989. However, the amounts of bonuses given differed. In 1988, it was P1,500. In 1989, it was month salary. The use of Christmas bonus title stopped after 1989. In 1990, what was given was a cash gift of months salary. The grants thereafter bore different titles and were for varying amounts. Significantly, the Company explained the reason for the 1995 bonuses and this explanation was not substantially contradicted by the Union. What comes out from all these is that while the Company has consistently given some amount by way of bonuses since 1988, the se awards were not given uniformly as Christmas bonuses or special Christmas grants although they may have been given at or about Christmas time. xxx xxx xxx

The Company is not therefore correct in its position that there is not established practice of giving Christmas bo nuses that has ripened to the status of being a term and condition of employment. Regardless of its nomenclature and purpose, the act of giving this bonus in the spirit of Christmas has ripened into a Company practice.*28+ It is MERALCOs position that the Secretary erred when he recognized that there was an established practice of giving a two -month Christmas bonus based on the fact that bonuses were given on or about Christmas time. It points out that the established practice attributed to MERALCO was neither for a considerable period of time nor identical in either amount or purpose. The purpose and title of the grants were never the same except for the Christmas bonuses of 1988 and 1989, and were not in the same amounts. We do not agree.

As a rule, a bonus is not a demandable and enforceable obligation;[29] it may nevertheless be granted on equitable consideration[30] as when the giving of such bonus has been the companys long and regular practice.*31+ To be considered a regular practice, th e giving of the bonus should have been done over a long period of time, and must be shown to have been consistent and deliberate.[32] Thus we have ruled in National Sugar Refineries Corporation vs. NLRC:[33] The test or rationale of this rule on long practice requires an indubitable showing that the employer agreed to continue giving the benefits knowing fully well that said employees are not covered by the law requiring payment thereof. In the case at bar, the record shows the MERALCO, aside from complying with the regular 13th month bonus, has further been giving its employees an additional Christmas bonus at the tail-end of the year since 1988. While the special bonuses differed in amount and bore different titles, it can not be denied that these were given voluntarily and continuously on or about Christmas time. The considerable length of time MERALCO has been giving the special grants to its employees indicates a unilateral and voluntary act on its part, to continue giving said benefits knowing that such act was not required by law. Indeed, a company practice favorable to the employees has been established and the payments made by MERALCO pursuant thereto ripened into benefits enjoyed by the employees. Consequently, the giving of the special bonus can no longer be withdrawn by the company as this would amount to a diminution of the employees existing benefits.*34+ We can not, however, affirm the Secretarys award of a two -month special Christmas bonus to the employees since there was no recognized company practice of giving a two-month special grant. The two-month special bonus was given only in 1995 in recognition of the employees prompt and efficient response during the calamities. Instead, a one -month special bonus, We believe, is sufficient, this being merely a generous act on the part of MERALCO. 2. RICE SUBSIDY and RETIREMENT BENEFITS for RETIREES It appears that the Secretary of Labor originally ordered the increase of the retirement pay, rice subsidy and medical benefits of MERALCO retirees. This ruling was reconsidered based on the position that retirees are no longer employees of the company and therefore are no longer bargaining members who can benefit from a compulsory arbitration award. The Secretary, however, ruled that all members of the bargaining unit who retire between August 19, 1996 and November 30, 1997 (i.e., the term of the disputed CBA under the Secret arys disputed orders) are entitled to receive an additional rice subsidy. The question squarely brought in this petition is whether the Secretary can issue an order that binds the retirement fund. The company alleges that a separate and independent trust fund is the source of retirement benefits for MERALCO retirees, while the union maintains that MERALCO controls these funds and may therefore be compelled to improve this benefit in an arbitral award. The issue requires a finding of fact on the legal personality of the retirement fund. In the absence of any evidence on record indicating the nature of the retirement funds legal personality, we rule that the issue should be remanded to the Secretary for reception of evidence as whether or not the MERALCO retirement fund is a separate and independent trust fund. The existence of a separate and independent juridical entity which controls an irrevocable retirement trust fund means that these retirement funds are beyond the scope of collective bargaining: they are administered by an entity not a party to the collective bargaining and the funds may not be touched without the trustees conformity. On the other hand, MERALCO control over these funds means that MERALCO may be compelled in the compulsory arbitration of a CBA deadlock where it is the employer, to improve retirement benefits since retirement is a term or condition of employment that is a mandatory subject of bargaining. 3. EMPLOYEES COOPERATIVE The Secretarys disputed ruling requires MERALCO to provide the employees covered by the bargaining unit with a loan of 1.5 M illion as seed money for the employees formation of a cooperative under the Cooperative Law, R.A. 6938. We see nothing in this law - whether expressed or implied - that requires employers to provide funds, by loan or otherwise, that employees can use to form a cooperative. The formation of a cooperative is a purely voluntary act under this law, and no party in any context or relationship is required by law to set up a cooperative or to provide the funds therefor. In the absence of such legal requirement, the Secretary has no basis to order the grant of a 1.5 million loan to MERALCO employees for the formation of a cooperative. Furthermore, we do not see the formation of an employees cooperative, in the absence of an agreement by the collective bargaining parties that this is a bargainable term or condition of employment, to be a term or condition of employment that can be imposed on the parties on compulsory arbitration. 4. GHSIP, HMP BENEFITS FOR DEPENDENTS and HOUSING EQUITY LOAN MERALCO contends that it is not bound to bargain on these benef its because these do not relate to wages, hours of work and other terms and conditions of employment hence, the denial of these demands cannot result in a bargaining impasse. The GHSIP, HMP benefits for dependents and the housing equity loan have been the subject of bargaining and arbitral awards in the past. We do not see any reason why MERALCO should not now bargain on these benefits. Thus, we agree with the Secretarys ruling: x x x Additionally and more importantly, GHSIP and HMP, aside from being contributory plans, have been the subject of previous rulings from this Office as bargainable matters. At this point, we cannot do any less and must recognize that GHSIP and HMP are matters where the union can demand and negotiate for improvements within the framework of the collective bargaining system.*35+

Moreover, MERALCO have long been extending these benefits to the employees and their dependents that they now become part of the terms and conditions of employment. In fact, MERALCO even pledged to continue giving these benefits. Hence, these benefits should be incorporated in the new CBA. With regard to the increase of the housing equity grant, we find P60,000.00 reasonable considering the prevailing economic crisis. 5. SIGNING BONUS On the signing bonus issue, we agree with the positions commonly taken by MERALCO and by the Office of the Solicitor General that the signing bonus is a grant motivated by the goodwill generated when a CBA is successfully negotiated and signed between the employer and the union. In the present case, this goodwill does not exist. In the words of the Solicitor General: When negotiations for the last two years of the 1992-1997 CBA broke down and the parties sought the assistance of the NCMB, but which failed to reconcile their differences, and when petitioner MERALCO bluntly invoked the jurisdiction of the Secretary of Labor in the resolution of the labor dispute, whatever goodwill existed between petitioner MERALCO and respondent union disappeared. xxx .*36+ In contractual terms, a signing bonus is justified by and is the consideration paid for the goodwill that existed in the negotiations that culminated in the signing of a CBA. Without the goodwill, the payment of a signing bonus cannot be justified and any order for such payment, to our mind, constitutes grave abuse of discretion. This is more so where the signing bonus is in the not insignificant total amount of P16 Million. 6. RED-CIRCLE-RATE ALLOWANCE An RCR allowance is an amount, not included in the basic salary, that is granted by the company to an employee who is promoted to a higher position grade but whose actual basic salary at the time of the promotion already exceeds the maximum salary for the position to which he or she is promoted. As an allowance, it applies only to specifics individuals whose salary levels are unique with respect to their new and higher positions. It is for these reasons that MERALCO prays that it be allowed to maintain the RCR allowance as a separate benefit and not be integrated in the basic salary. The integration of the RCR allowance in the basic salary of the employees had consistently been raised in the past CBAs (1989 and 1992) and in those cases, the Secretary decreed the integration of the RCR allowance in the basic salary. We do not see any reason why it should not be included in the present CBA. In fact, in the 1995 CBA between MERALCO and the supervisory union (FLAMES), the integration of the RCR allowance was recognized. Thus, Sec. 4 of the CBA provides: All Red-Circle-Rate Allowance as of December 1, 1995 shall be integrated in the basic salary of the covered employees who as of such date are receiving such allowance. Thereafter, the company rules on RCR allowance shall continue to be observed/applied.*3 7] For purposes of uniformity, we affirm the Secretarys order on the integration of the RCR allowance in the basic salary of th e employees. 7. SICK LEAVE RESERVE OF 15 DAYS MERALCO assails the Secretarys reduction of the sick leave reserve benefit fro m 25 days to 15 days, contending that the sick leave reserve of 15 days has reached the lowest safe level that should be maintained to give employees sufficient buffer in the event they fall ill. We find no compelling reason to deviate from the Secretarys ruling that the sick leave reserve is reduced to 15 days, with any excess convertible to cash at the end of the year. The employee has the option to avail of this cash conversion or to accumulate his sick leave credits up to 25 days for conversion to cash at his retirement or separation from the service. This arrangement is, in fact, beneficial to MERALCO. The latter admits that the diminution of this reserve does not seriously affect MERALCO because whatever is in res erve are sick leave credits that are payable to the employee upon separation from service. In fact, it may be to MERALCOs financial interest to pay these leave credits now under present salary levels than pay them at future higher salary levels.*38+ 8. 40-DAY UNION LEAVE MERALCO objects to the demand increase in union leave because the union leave granted to the union is already substantial. It argues that the union has not demonstrated any real need for additional union leave. The thirty (30) days union leave granted by the Secretary, to our mind, constitute sufficient time within which the union can carry out its union activities such as but not limited to the election of union officers, selection or election of appropriate bargaining agents, conduct referendum on union matters and other union-related matters in furtherance of union objectives. Furthermore, the union already enjoys a special union leave with pay for union authorized representatives to attend work education seminars, meetings, conventions and conferences where union representation is required or necessary, and Paid-Time-off for union officers, stewards and representatives for purpose of handling or processing grievances. 9. HIGH VOLTAGE/HIGH POLE/TOWING ALLOWANCE MERALCO argues that there is no justification for the increase of these allowances. The personnel concerned will not receive any additional risk during the life of the current CBA that would justify the increase demanded by the union. In the absence of such risk, then

these personnel deserve only the same salary increase that all other members of the bargaining unit will get as a result of the disputed CBA. MERALCO likewise assails the grant of the high voltage/high pole allowance to members of the team who are not exposed to the high voltage/high pole risks. The risks that justify the higher salary and the added allowance are personal to those who are exposed to those risks. They are not granted to a team because some members of the team are exposed to the given risks. The increase in the high-voltage allowance (from P45.00 to P55.00), high-pole allowance (from P30.00 to P40.00), and towing allowance is justified considering the heavy risk the employees concerned are exposed to. The high-voltage allowance is granted to an employee who is authorized by the company to actually perform work on or near energized bare lines and bus, while the high-pole allowance is given to those authorized to climb poles on a height of at least 60 feet from the ground to work thereat. The towing allowance, on the other hand, is granted to the stockman drivers who tow trailers with long poles and equipment on board. Based on the nature of the job of these concerned employees, it is imperative to give them these additional allowances for taking additional risks. These increases are not even commensurate to the danger the employees concerned are subjected to. Besides, no increase has been given by the company since 1992.[39] We do not, however, subscribe to the Secretarys order granting these allowances to the members of the team who are not exposed to the given risks. The reason is obvious- no risk, no pay. To award them the said allowances would be manifestly unfair for the company and even to those who are exposed to the risks, as well as to the other members of the bargaining unit who do not receive the said allowances. 10. BENEFITS FOR COLLECTORS

MERALCO opposes the Secretarys grant of benefits for collectors on the ground that this is grossly unreasonable both in scop e and on the premise it is founded. We have considered the arguments of the opposing parties regarding these benefits and find the Secretarys ruling on the (a) lunch allowance; (b) disconnection fee for delinquent accounts; (c) voluntary performance of other work at the instance of the Company; (d) bobcat belt bags; and (e) reduction of quota and MAPL during typhoons and other force majeure events, reasonable considering the risks taken by the company personnel involved, the nature of the employees functions and responsibilities and th e prevailing standard of living. We do not however subscribe to the Secretarys award on the following: (a) Reduction of quota and MAPL when the collector is on sick leave because the previous CBA has already provided for a reduction of this demand. There is no need to further reduce this. (b) Deposit of cash bond at MESALA because this is no longer necessary in view of the fact that collectors are no longer required to post a bond. We shall now resolve the non-economic issues. 1. SCOPE OF THE BARGAINING UNIT The Secretarys ruling on this issue states that: a. Scope of the collective bargaining unit. The union is demanding that the collective bargaining unit shall be composed o f all regular rank and file employees hired by the company in all its offices and operating centers through its franchise and those it may employ by reason of expansion, reorganization or as a result of operational exigencies. The law is that only managerial employees are excluded from any collective bargaining unit and supervisors are now allowed to form their own union (Art. 254 of the Labor Code as amended by R.A. 6715). We grant the union demand. Both MERALCO and the Office of the Solicitor General dispute this ruling because if disregards the rule We have established on the exclusion of confidential employee from the rank and file bargaining unit. In Pier 8 Arrastre vs. Confesor and General Maritime and Stevedores Union,[40] we ruled that: Put another way, the confidential employee does not share in the same community of interest that might otherwise make him eligible to join his rank and file co-workers, precisely because of a conflict in those interests. Thus, in Metrolab Industries vs. Roldan-Confesor,[41] We ruled: ..that the Secretarys order should exclude the confidential employees from the regular rank and file employees qualified to become members of the MEWA bargaining unit. From the foregoing disquisition, it is clear that employees holding a confidential position are prohibited from joining the union of the rank and file employees. 2. ISSUE OF UNION SECURITY The Secretary in his Order of August 19, 1996,[42] ruled that:

b. Union recognition and security. The union is proposing that it be recognized by the Company as sole and exclusive b argaining representative of the rank and file employees included in the bargaining unit for the purpose of collective bargaining regarding rates of pay, wages, hours of work and other terms and conditions of employment. For this reason, the Company shall agree to meet only with the Union officers and its authorized representatives on all matters involving the Union as an organization and all issues arising from the implementation and interpretation of the new CBA. Towards this end, the Company shall not entertain any individual or group of individuals on matters within the exclusive domain of the Union. Additionally, the Union is demanding that the right of all rank and file employees to join the Union shall be recognized by the Company. Accordingly, all rank and file employees shall join the union. xxx xxx xxx

These demands are fairly reasonable. We grant the same in accordance with the maintenance of membership principle as a form of union security." The Secretary reconsidered this portion of his original order when he said in his December 28, 1996 order that: x x x. when we decreed that all rank and file employees shall join the Union, we were actually decreeing the incorporation of a closed shop form of union security in the CBA between the parties. In Ferrer v. NLRC, 224 SCRA 410, the Supreme Court ruled that a CBA provision for a closed shop is a valid form of union security and is not a restriction on the right or freedom of association guaranteed by the Constitution, citing Lirag v. Blanco, 109 SCRA 87. MERALCO objected to this ruling on the grounds that: (a) it was never questioned by the parties; (b) there is no evidence presented that would justify the restriction on employee's union membership; and (c) the Secretary cannot rule on the union security demand because this is not a mandatory subject for collective bargaining agreement. We agree with MERALCOs contention. An examination of the records of the case shows that the union did not ask for a closed shop security regime; the Secretary in the first instance expressly stated that a maintenance of membership clause should govern; neither MERALCO nor MEWA raised the issue of union security in their respective motions for reconsideration of the Secretarys first disputed order; and that despite the parties clear acceptance of the Secretarys first ruling, the Secretary motu proprio reconsidered his maintenance of membership ruling in favor of the more stringent union shop regime. Under these circumstances, it is indubitably clear that the Secretary gravely abused his discretion when he ordered a union shop in his order of December 28, 1996. The distinctions between a maintenance of membership regime from a closed shop and their consequences in the relationship between the union and the company are well established and need no further elaboration. Consequently, We rule that the maintenance of membership regime should govern at MERALCO in accordance with the Secretarys order of August 19, 1996 which neither party disputed. 3. THE CONTRACTING OUT ISSUE This issue is limited to the validity of the requirement that the union be consulted before the implementation of any contracting out that would last for 6 months or more. Proceeding from our ruling in San Miguel Employees Union-PTGWO vs Bersamina,[43] (where we recognized that contracting out of work is a proprietary right of the employer in the exercise of an inherent management prerogative) the issue we see is whether the Secretarys consultation requirement is reasonable or unduly restrictive of the companys management prerogative. We note that the Secretary himself has considered that management should not be hampered in the operations of its business when he said that: We feel that the limitations imposed by the union advocates are too specific and may not be applicable to the situations tha t the company and the union may face in the future. To our mind, the greater risk with this type of limitation is that it will tend to curtail rather than allow the business growth that the company and the union must aspire for. Hence, we are for the general limitations we have stated above because they will allow a calibrated response to specific future situations the company and the union may face.*44+ Additionally, We recognize that contracting out is not unlimited; rather, it is a prerogative that management enjoys subject to well-defined legal limitations. As we have previously held, the company can determine in its best business judgment whether it should contract out the performance of some of its work for as long as the employer is motivated by good faith, and the contracting out must not have been resorted to circumvent the law or must not have been the result of malicious or arbitrary action.[45] The Labor Code and its implementing rules also contain specific rules governing contracting out (Department of Labor Order No. 10, May 30, 1997, Sections. 1-25). Given these realities, we recognize that a bala nce already exist in the parties relationship with respect to contracting out; MERALCO has its legally defined and protected management prerogatives while workers are guaranteed their own protection through specific labor provisions and the recognition of limits to the exercise of management prerogatives. From these premises, we can only conclude that the Secretarys added requirement only introduces an imbalance in the parties collective bargaining relationship on a matter tha t the law already sufficiently regulates. Hence, we rule that the Secretarys added requirement, being unreasonable, restrictive and potentially disruptive should be struck down.

4. UNION REPRESENTATION IN COMMITTEES As regards this issue, We quote with approval the holding of the Secretary in his Order of December 28, 1996, to wit: We see no convincing reason to modify our original Order on union representation in committees. It reiterates what the Arti cle 211 (A)(g) of the Labor Codes provides: To ensure the participation of workers in decision and policy-making processes affecting their rights, duties and welfare. Denying this opportunity to the Union is to lay the claim that only management has the monopoly of ideas that may improve management strategies in enhancing the Companys growth. What every company should remember is that there might be one among the Union members who may offer productive and viable ideas on expanding the Companys business horizons. The unions partic ipation in such committees might just be the opportune time for dormant ideas to come forward. So, the Company must welcome this development (see also PAL v. NLRC, et. al., G.R. 85985, August 13, 1995). It must be understood, however, that the committees referred to here are the Safety Committee, the Uniform Committee and other committees of a similar nature and purpose involving personnel welfare, rights and benefits as well as duties. We do not find merit in MERALCOs contention that the above -quoted ruling of the Secretary is an intrusion into the management prerogatives of MERALCO. It is worthwhile to note that all the Union demands and what the Secretarys order granted is that the Union be allowed to participate in policy formulation and decision-making process on matters affecting the Union members right, duties and welfare as required in Article 211 (A)(g) of the Labor Code. And this can only be done when the Union is allowed to have representatives in the Safety Committee, Uniform Committee and other committees of a similar nature. Certainly, such participation by the Union in the said committees is not in the nature of a co-management control of the business of MERALCO. What is granted by the Secretary is participation and representation. Thus, there is no impairment of management prerogatives. 5. INCLUSION OF ALL TERMS AND CONDITIONS IN THE CBA MERALCO also decries the Secretarys ruling in both the assailed Orders thatAll other benefits being enjoyed by the companys employees but which are not expressly or impliedly repeal ed in this new agreement shall remain subsisting and shall likewise be included in the new collective bargaining agreement to be signed by the parties effective December 1, 1995.*46+ claiming that the above-quoted ruling intruded into the employers freedom to contract by ordering the inclusion in the new CBA all other benefits presently enjoyed by the employees even if they are not incorporated in the new CBA. This matter of inclusion, MERALCO argues, was never discussed and agreed upon in the negotiations; nor presented as issues before the Secretary; nor were part of the previous CBAs between the parties. We agree with MERALCO. The Secretary acted in excess of the discretion allowed him by law when he ordered the inclusion of benefits, terms and conditions that the law and the parties did not intend to be reflected in their CBA. To avoid the possible problems that the disputed orders may bring, we are constrained to rule that only the terms and conditions already existing in the current CBA and was granted by the Secretary (subject to the modifications decreed in this decision) should be incorporated in the CBA, and that the Secretarys disputed orders should accordingly be modified. 6. RETROACTIVITY OF THE CBA Finally, MERALCO also assails the Secretarys order that the effectivity of the new CBA shall retroact to December 1, 1995, the date of the commencement of the last two years of the effectivity of the existing CBA. This retroactive date, MERALCO argues, is contrary to the ruling of this Court in Pier 8 Arrastre and Stevedoring Services, Inc. vs. Roldan-Confessor[47] which mandates that the effective date of the new CBA should be the date the Secretary of Labor has resolved the labor disputes. On the other hand, MEWA supports the ruling of the Secretary on the theory that he has plenary power and discretion to fix the date of effectivity of his arbitral award citing our ruling in St. Lukes Medical Center, Inc. vs. Torres.[48] MEWA also contends that if the arbitral award takes effect on the date of the Secretary Labors ruling on the parties motion for reconsideration (i.e., on December 28, 1996), an anomaly situation will result when CBA would be more than the 5-year term mandated by Article 253-A of the Labor Code. However, neither party took into account the factors necessary for a proper resolution of this aspect. Pier 8, for instance, does not involve a mid-term negotiation similar to this case, while St. Lukes does not take the hold over principle into account, i.e., the rule t hat although a CBA has expired, it continues to have legal effects as between the parties until a new CBA has been entered into.[49] Article 253-A serves as the guide in determining when the effectivity of the CBA at bar is to take effect. It provides that the representation aspect of the CBA is to be for a term of 5 years, while x x x *A+ll other provisions of the Collective Bargaining Agreement shall be re-negotiated not later than 3 years after its execution. Any agreement on such other provisions of the Collective Bargaining Agreement entered into within 6 months from the date of expiry of the term of such other provisions as fixed in such Collective Bargaining Agreement shall retroact to the day immediately following such date. If such agreement is entered into beyond 6 months, the parties shall agree on the duration of the effectivity thereof. x x x.

Under these terms, it is clear that the 5-year term requirement is specific to the representation aspect. What the law additionally requires is that a CBA must be re-negotiated within 3 years after its execution. It is in this re-negotiation that gives rise to the present CBA deadlock. If no agreement is reached within 6 months from the expiry date of the 3 years that follow the CBA execution, the law expressly gives the parties - not anybody else - the discretion to fix the effectivity of the agreement. Significantly, the law does not specifically cover the situation where 6 months have elapsed but no agreement has been reached with respect to effectivity. In this eventuality, we hold that any provision of law should then apply for the law abhors a vacuum.[50] One such provision is the principle of hold over, i.e., that in the absence of a new CBA, the parties must maintain the status quo and must continue in full force and effect the terms and conditions of the existing agreement until a new agreement is reached.[51] In this manner, the law prevents the existence of a gap in the relationship between the collective bargaining parties. Another legal principle that should apply is that in the absence of an agreement between the parties, then, an arbitrated CBA takes on the nature of any judicial or quasijudicial award; it operates and may be executed only respectively unless there are legal justifications for its retroactive application. Consequently, we find no sufficient legal ground on the other justification for the retroactive application of the disputed CBA, and therefore hold that the CBA should be effective for a term of 2 years counted from December 28, 1996 (the date of the Secretary of Labors disputed order on the parties motion for reconsideration) up to December 27, 1999. WHEREFORE, the petition is granted and the orders of public respondent Secretary of Labor dated August 19, 1996 and December 28, 1996 are set aside to the extent set forth above. The parties are directed to execute a Collective Bargaining Agreement incorporating the terms and conditions contained in the unaffected portions of the Secretary of Labors order of August 19, 1996 and December 28, 199 6, and the modifications set forth above. The retirement fund issue is remanded to the Secretary of Labor for reception of evidence and determination of the legal personality of the MERALCO retirement fund. SO ORDERED. G.R. No. 88168 August 30, 1990

TRADERS ROYAL BANK, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION & TRADERS ROYAL BANK EMPLOYEES UNION, respondents. GRIO-AQUINO, J.: This petition for certiorari seeks to nullify or set aside the decision dated September 2, 1988 of the National Labor Relations Commission, which found the petitioner, Traders Royal Bank (or TRB), guilty of diminution of benefits due the private respondents and ordered it to pay the said employees' claims for differentials in their holiday, mid-year, and year-end bonuses. On November 18, 1986, the Union, through its president, filed a letter-complaint against TRB with the Conciliation Division of the Bureau of Labor Relations claiming that: First, the management of TRB per memo dated October 10, 1986 paid the employees their HOLIDAY PAY, but has withheld from the Union the basis of their computation. Second, the computation in question, has allegedly decreased the daily salary rate of the employees. This diminution of existing benefits has decreased our overtime rate and has affected the employees' take home pay. Third, the diminution of benefits being enjoyed by the employees since time immemorial, e.g. mid-year bonus, from two (2) months gross pay to two (2) months basic and year-end bonus from three (3) months gross to only two (2) months. Fourth, the refusal by management to recall active union members from the branches which were being transferred without prior notice, solely at the instance of the branch manager. (p. 26, Rollo.) In its answer to the union's complaint, TRB pointed out that the NLRC, not the Bureau of Labor Relations, had jurisdiction over the money claims of the employees. On March 24, 1987, the Secretary of Labor certified the complaint to the NLRC for resolution of the following issues raised by the complainants: l) The Management of TRB per memo dated October 10, 1986 paid the employees their holiday pay but has withheld from the union the basis of their computation. 2) The computation in question has allegedly decreased the daily salary rate of the employees. This diminution of existing benefits has decreased our overtime rate and has affected the employees' take home pay. 3) The diminution of benefits being enjoyed by the employees since the (sic) immemorial, e.g. mid-year bonus, from two (2) months gross pay to two (2) months basic and year-end bonus from three (3) months gross to only two (2) months.

4) The refusal by management to recall active union members from the branches which were being transferred without prior notice, solely at the instance of the branch, manager. (p. 28, Rollo.) In the meantime, the parties who had been negotiating for a collective bargaining agreement, agreed on the terms of the CBA, to wit: 1. The whole of the bonuses given in previous years is not demandable, i.e., there is no diminution, as to be liable for a differential, if the bonus given is less than that in previous years. 2. Since only two months bonus is guaranteed, only to that extent are bonuses deemed part of regular compensation.

3. As regards the third and fourth bonuses, they are entirely dependent on the income of the bank, and not demandable as part of compensation. (pp. 67-68, Rollo.) Despite the terms of the CBA, however, the union insisted on pursuing the case, arguing that the CBA would apply prospectively only to claims arising after its effectivity. Petitioner, on the other hand, insisted that it had paid the employees holiday pay. The practice of giving them bonuses at year's end, would depend on how profitable the operation of the bank had been. Generally, the bonus given was two (2) months basic mid-year and two (2) months gross end-year. On September 2, 1988, the NLRC rendered a decision in favor of the employees, the dispositive portion of which reads: WHEREFORE, judgment is hereby rendered in favor of the petitioner and ordering respondent bank to pay petitioner members-employees the following: 1. Holiday differential for the period covering l983-1986 as embodied in Resolution No. 4984-1986 of respondent's Board of Directors but to start from November 11, 1983 and using the Divisor 251 days in determining the daily rate of the employees; 2. Mid-year bonus differential representing the difference between two (2) months gross pay and two (2) months basic pay and end-year bonus differential of one (1) month gross pay for 1986. The claim for holiday differential for the period earlier than November 11, 1983 is hereby dismissed, the same having prescribed. Likewise, the charge of unfair labor practice against the respondent company is hereby dismissed for lack of merit. (pp. 72-73, Rollo.) A motion for reconsideration was filed by TRB but it was denied. Hence, this petition for certiorari. There is merit in the petitioner's contention that the NLRC gravely abused its discretion in ordering it to pay mid-year/year-end bonus differential for 1986 to its employees. 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" (Aragon vs. Cebu Portland Cement Co., 61 O.G. 4597). "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" . . . (Kamaya Point Hotel vs. National Labor Relations Commission, Federation of Free Workers and Nemia Quiambao, G.R. No. 75289, August 31, 1989). It is clear from the above-cited rulings 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 the 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 midyear 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. WHEREFORE, the petition for certiorari is granted. The decision of the National Labor Relations Commission is modified by deleting the award of bonus differentials to the employees for 1986. In other respects, the decision is affirmed. Costs against the respondent union. SO ORDERED.

*G.R. No. 107487. September 29, 1997+ THE MANILA BANKING CORPORATION (Manilabank) and ARNULFO B. AURELLANO in his capacity as Statutory Receiver of Manilabank, petitioners, vs. THE NATIONAL LABOR RELATIONS COMMISSION, VICTOR L. MENDOZA, RODOLFO VE. TIMBOL, RUBEN G. ASEDILLO, FLORINDA S. DAYRIT, and 19 other Senior Officers similarly situated; HORACE REYES and 14 other Senior Managers similarly situated; AURORA VILLACERAN and 34 other Assistant Managers similarly situated; CONSUELO RIZARRI, EMERENCIANA SAMSON, BRENDA C. BERMUDEZ, FLORYPEE ABRIGO, EMMA BALDERAMA, and 211 other Junior Officers similarly situated, respondents. [G.R. No. 107902. September 29, 1997] THE MANILA BANKING CORPORATION (Manilabank) and ARNULFO B. AURELLANO in his capacity as Statutory Receiver of Manilabank, petitioners, vs. THE NATIONAL LABOR RELATIONS COMMISSION-NCR, LABOR ARBITER FELIPE PATI and VICTOR L. MENDOZA, RODOLFO VE. TIMBOL, RUBEN G. ASEDILLO, FLORINDA S. DAYRIT, and 19 other Senior Officers similarly situated; HORACE REYES, JOSE BELMONTE and 14 other Senior Managers and 53 Managers similarly situated; AURORA VILLACERAN and 34 other Assistant Managers similarly situated; CONSUELO RIZARRI, EMERENCIANA SAMSON, BRENDA C. BERMUDEZ, FLORYPEE ABRIGO, EMMA BALDERAMA, and 211 other Junior Officers similarly situated, respondents. DECISION KAPUNAN, J.: The principal issue presented for resolution in these petitions for certiorari[1] under Rule 65 of the Rules of Court is whether or not public respondent National Labor Relations Commission (NLRC) committed grave abuse of discretion in affirming with slight modifications Labor Arbiter Felipe Patis decision awarding herein private respondents claim of P193,338,212.33 consisting of: 1. Wage increase of 25% of gross monthly wage from January 1985 to December 1988; 2. Christmas Bonus of one and one-half (1-1/2) months pay from December 1985 to December 1987; 3. Mid-year Bonus of one (1) month pay from 1985 to 1988, inclusive; 4. Profit Sharing of 5% of net profit for 1985 and 1986; 5. Differentials on accrued leaves, retirement benefits and Christmas and Mid-year bonuses; 6. Longevity pay, Loyalty Bonus and Medical, Dental and Optical Benefits; 7. Uniform allowance of P600.00 per year from January 1985 to January 1988, inclusive; 8. One-half (1/2) month pay 1987 Christmas Bonus which was deducted from the retirement benefit of each complainant; 9. Travel Plan and Car Plan with respect to the 23 complainants Senior Officers; and 10. Car Plan and Gasoline Allowance benefits with respect to the 15 complainants, Senior Managers and 54 Assistant Managers. annual interest thereon of 12% and attorneys fees amounting to 10% of the said amount. The antecedents show that on June 5, 1984, petitioner Manila Banking Corporation (Manilabank) was placed under comptrollership by then Central Bank Governor Jose B. Fernandez in view of the banks financial distress.*2+ The decision of the Monetary Board of the Central Bank was based on the findings that the bank was experiencing liquidity problems and had incurred chronic reserve deficiencies against deposit liabilities. In fact on May 23, 1984, a month before it was placed under comptrollership, Manilabank was prohibited by the Monetary Board from granting new loans and making new investments except investments in government securities with Central Bank support, and from declaring cash or stock dividends.[3] A February 19, 1986 Central Bank report on Manilabanks financial condition as of December 31, 1985 disclosed, among other things, that the banks operations for the preceding year resulted in a net loss of P362.4 million. It likewise revealed that the banks financial condition continued to deteriorate.[4] Consequently, on May 22, 1987, the Monetary Board issued Resolution No. 505 prohibiting Manilabank from doing business in the Philippines. The said resolution reads: Finding to be true the statements of the Assistant to the Governor and Officer-in-Charge, Supervision and Examination Sector (SES) Department I, in his memorandum dated April 28, 1987 submitting a report on the financial condition of the Manila Banking Corporation (TMBC) as of March 31, 1987, that the financial condition of TMBC is one of insolvency and its continuance in business would involve probable loss to its depositors and creditors and considering, among other things, that: 1. During the 3-month period January 1 to March 31, 1987, TMBC incurred losses of 62.3 million , before interest on Central Bank overdraft and penalties on reserve deficiencies (242.9 million for the three months); 2. Prior notices had been made to TMBC of a condition which may be considered as one indicating insolvency as defined under Sec. 29 of R.A. No. 265, as amended, in various letters of Mr. Antonio T. Castro, Jr., Special Assistant to the Governor and Head, SES Department I, dated December 9, 1985, December 13, 1985 and October 16, 1986 and in a letter of the Governor, dated February 27, 1987;

3. Mr. Vicente G. Puyat, in response to his request conveyed by Mrs. Reyes to the Monetary Board, for a chance to appear before the Monetary Board in representation of the majority stockholders of TMBC, in connection with the rehabilitation plan for TMBC, had been invited three times to appear before the Board: first, on May 13, 1987, then on May 18, 1987 upon his request, and on May 22, 1987, which invitations he did not respond to himself and neither did he attend the Board meetings held on May 18, 1987 and May 22, 1987; 4. TMBC has not submitted a rehabilitation plan accepted to the Central Bank; and 5. The said Assistant to the Governor, who was present during the Monetary Board meeting held on May 22, 1987, had categorically confirmed that, after considering all the adjustments, TMBC would still be insolvent even with an additional capital infusion of P500 million. the Board decided as follows: 1. To prohibit TMBC to do business in the Philippines and place its assets and affairs under receivership in accordance with the provisions of Section 29 of R.A. No. 265, as amended; and 2. To designate the Assistant to the Governor and Officer-in-Charge, SES Department I, as Receiver of TMBC, to immediately take charge of its assets and liabilities, as expeditiously as possible collect and gather all the assets and administer the same for the benefit of its creditors exercising all the powers necessary for these purposes including, but not limited to, bringing suits and foreclosing mortgages in its name.[5] Thereafter, Feliciano Miranda, Jr. was designated as receiver. He immediately took charge of the banks assets and liabilities. He likewi se terminated the employment of about 343 officers and top managers of the bank. All these officers and top managers, who are private respondents herein, were paid whatever separation and/or retirement benefits were due them. On November 11, 1988, the Monetary Board issued Resolution No. 1003 ordering the liquidation of Manilabank on account of insolvency. The resolution reads as follows: Having determined and confirmed on the basis of the memorandum of the Special Assistant to the Governor and Head, Supervision and Examination Sector (SES) Department I, and Receiver, The Manila Banking Corporation (TMBC), dated November 4, 1988, submitting a report on the financial condition of TMBC as of July 31, 1988, that the financial condition of the bank continues to be one of insolvency and it can no longer resume business with safety to its depositors, creditors and the general public, considering the opinion of the Central Bank legal counsel that, with the Supreme Courts decision dated March 10, 1988 (a) setting aside the decision of the Court of Ap peals sustaining the decision of the Regional Trial Court to issue a writ of preliminary injunction dated July 14, 1987 against the enforcement of Monetary Board Resolution No. 505 dated May 22, 1987, (b) dissolving the said writ of preliminary injunction, and (c) making permanent the temporary restraining order issued by the Supreme Court on February 16, 1988, the liquidation of TMBC may now be ordered by the Monetary Board and that its authority to order such liquidation is not affected by the pendency of Civil Case No. 87-40659 nor of the Supreme Courts resolution of March 10, 1988 (enjoining the Court of Appeals from interfering in the receivership of TMBC), the Board decided as follows: 1. To order the liquidation of TMBC in accordance with Section 29 of R.A. No. 265, as amended; and 2. To designate Mr. Renan V. Santos, Special Assistant to the Governor, and Head, Supervision and Examination Sector Department V, as Liquidator of TMBC.[6] Of even date, private respondents filed a complaint against ManilaBank and its statutory receiver with the arbitration branch of the National Labor Relations Commission (NLRC) claiming entitlement to the following additional benefits alleged to have accrued from 1984 to their effective dates of termination, viz: (a) Wage increases; (b) Christmas bonuses; (c) Mid-year bonuses; (d) Profit sharing; (e) Car and travel plans; (f) Gasoline allowances; (g) Differentials on accrued leaves, retirement and other bonuses; (h) Longevity pay and loyalty pay; (i) Medical, dental and optical benefits; and (j) Uniform allowances.[7] Such claims to entitlement of the foregoing benefits was based on Manilabanks alleged practice, policy and tradition of awarding said benefits. They contended that the policy has ripened int o vested property rights in their favor. Manila bank, on its part, alleged that the additional benefits sought are without basis in fact and in law. It argued that the same are conferred by management only when it deems necessary to do so. The award of the said benefits is in the nature of a managem ent prerogative which, it contended, can be withheld by management upon a clear showing that the company is not in a position to grant them either because of financial difficulties or circumstances which do not warrant conferment of such benefits. And since it was experiencing financial distress, it claimed that it was in no position to give the benefits sought. Additionally, it asseverated that it was deprived of its right to present evidence in a full-blown trial by the labor arbiter. On November 14, 1989, Labor Arbiter Felipe Pati rendered his decision ordering Manilabank and its statutory receiver to pay in full all the claims of private respondents amounting to P193,338,212.33, plus 12% interest annually and 10% of the total award as attorne ys fees. The dispositive portion of the decision reads: WHEREFORE, judgment is hereby rendered in favor of the complainants and against the respondents, ordering and authorizing the Receiver RENAN V. SANTOS to pay, pursuant to the provisions of Article 110 of the Labor Code, as amended:

1.The complainants the net amount of claims due appearing opposite the name of each complainant listed in the Computation of Net Claim consisting of six (6) pages hereto attached and made part of this Decision; 2.The complainants counsel the amount equal to 10% of the total amount awarded to complainants in this action as attorneys fees. SO ORDERED.[8] On November 25, 1989, petitioners Manilabank and the CB statutory receiver appealed to the NLRC and posted an appeal bond in the form of a certification from the Central Bank to the effect that the portion of Manilabanks funds in an amount equal to that of the total award of the labor arbiter, has been reserved and set aside by the Central Bank to answer for the private respondents claims shoul d they finally be adjudged to be entitled thereto. On December 8, 1989, private respondents opposed the appeal and filed a motion for the issuance of a writ of execution of the labor arbiters judgment on the ground that the Central Bank certification cannot be considered as an appeal bond. On June 21, 1991, the NLRC issued an order requiring petitioners to deposit with the Cashier of the NLRC a cash bond or its equivalent in treasury bills, warrants and/or other government securities in the amount of P193,000,000.00, plus ten percent (10%) t hereof as attorneys fees within ten (10) days from receipt thereof. On July 5, 1991, petitioners moved to reconsider said order. However, pending resolution of said motion for reconsideration, petitioners submitted to the NLRC a Certificate of Time Deposit issued by the Philippine National Bank (PNB) in the amount of P212,700,000.00, payable to the receiver of Manilabank. On January 16, 1992, the NLRC held a hearing where the parties agreed that the certificate of time deposit submitted by Manilabank to the NLRC be considered substantial compliance of the requirement of an appeal bond, on the condition that it will be periodically renewed and re-deposited with the NLRC Cashier upon its maturity, and that the securities deposited should be free from any other claims or liens. On September 9, 1992, the NLRC issued a resolution on the merits of the case and, as above-stated, affirmed with slight modifications, the decision of the labor arbiter. The decretal portion of the same reads: WHEREFORE, except for the modification we provided on the manner medical, dental and optical benefits should be claimed/paid, and our awarding annual interest of 12% to whatever has been awarded below, the appealed decision is hereby affirmed and responde nts appeal is hereby dismissed. SO ORDERED.[9] Petitioners filed a motion for reconsideration from the aforequoted resolution. On October 14, 1992, private respondents filed an ex parte motion for the issuance of a writ of execution. Petitioners opposed the same, reasoning that the assets of Manilabank are exempt from execution and that the NLRC resolution had not become final and executory. On October 22, 1992, the NLRC issued an order directing petitioners, under pain of contempt, to renew the certificate of time deposit and to have the same issued in the name of , and deposited with, the cashier of the NLRC. In response, petitioners Manilabank and Arnulfo Aurellano filed petition for certiorari before this Court, docketed as G.R. No. 107487, to set aside said order alleging that the same was issued with grave abuse of discretion because it (as re-phrased): a. b. c. violated an existing statute.[10] arbitrary compelled the Receiver to violate his statutory duty to preserve Manilabanks assets for the benefit of all creditors.[11] whimsically deprived petitioners of their right to file a motion for reconsideration of the Order.[12]

d. was not anchored upon any cogent reason other than to preempt petitioners from invoking the corrective powers of this Honorable Court of last resort.[13] On November 26, 1992, petitioners earlier motion for reconsideration of the NLRC Decision dated September 9, 1992 was denied for lack of merit in an order which dispositively reads as follows: Wherefore, premises considered, order is hereby issued: 1. denying respondents motion for reconsideration;

2. directing the NLRC Cashier to hold in her custody re-submitted Certificate of Time Deposit No. 890530-D dated October 27, 1992 with maturity date on December 28, 1992; 3. directing the respondents to post an additional bond, either in cash, surety, or certificate of time deposit drawn in the name of the Cashier, NLRC, in the amount of P76,572,000.00 to cover, the additional award detailed in our September 9, 1992 resolution;

4. directing, accordingly, the Executive Clerk to cause the personal service of this Order upon the parties, particularly the respondents and their counsel; and 5. holding in abeyance the execution of our September 9, 1992 resolution (despite its finality now) for a period of ten (10) calendar days from respondents receipt of this Order, with the warning, however, that should this Commission not receive a restraining ord er from the Supreme Court within said period of ten (10) calendar days, then a writ of execution will be issued to enforce our now final judgment. SO ORDERED.[14] Consequently, petitioners filed another petition for certiorari before this Court, this time docketed as G.R. No. 107902, contending that: a. Public respondents, in grave abuse of discretion, effectively violated petitioners right due process because-

(1) The monstrous award totaling about P212 million was decided based purely on private respondents worthless papers which were never identified nor supported by any single affidavit. (2) The Labor Arbiter proceeded to decide the case solely on the bases of the pleadings filed, despite the enormity of the claims and the reapeted demands for a full-dress trial (which, ironically, were initially granted by the Office of the Labor Arbiter), made necessary by the conflicting factual allegations of the parties and the worthless papers passed off by private respondents as their evidence .[15] b. Public respondents unla wfully arrogated unto themselves the jurisdiction to pass upon the question of Manilabanks insolvency, despite the pleaded pendency of that prejudicial question before the RTC of Manila which had aquired exclusive jurisdiction to rule on the issue to the exclusion of all others.[16] c. The money award adjudged against the insolvent Manilabank violates all notions of justice and equity, considering that the beneficiaries thereof are former officers and top managers of Manilabank who, being part of management, were partly to blame for the banks financial decline.*17+ d. A statutory receiver has the power to adopt and implement prudent policies aimed at preserving the assets of an insolvent bank including regulating, according to his own discretion and judgment, all aspects of employment.[18] e. Public respondents arbitrary findings that salary increases, Christmas and mid-year bonuses and other benefits have been regularly and unconditionally paid by Manilabank to private respondents, and that Manilabank earned profits in 1984, 1985 and 1986, are contrary to the evidence on record and are based on pure unsubstantiated guesswork. [19] f. The award of attorneys fees is unconscionable, especially in light of its dissipative effect o f the remaining assets of the insolvent Manilabank and its prejudicial consequences on Manilabanks stockholders and creditors.*20+ g. The NLRCs award of legal interest on the amount awarded by the labor arbiter and its order to deposit an addition al bond to cover such interest have no legal basis and give an undue advantage to other creditors of the insolvent Manilabank.[21] h. The NLRCs threat to execute the judgment would be unlawful if carried out, because Manilabanks assets are legally exempt from execution.[22] On December 9, 1992, this Court ordered that G.R. No. 107902 be consolidated with G.R. No. 107487.[23] On December 16, 1992, this Court issued a Resolution temporarily enjoining public respondent NLRC from enforcing and/or carrying out the decision of the labor arbiter dated November 14, 1989 and its resolution dated September 9, 1992 and order dated November 26, 1992, all issued in NLRC NCR Case No. 00-11-04624-88.[24] G.R. No. 107902 is impressed with merit. Both the Labor Arbiter and the NLRC opted to award all the additional benefits claimed by the 343 private respondents who had already been duly paid separation pay and/or retirement benefits upon termination of their employment. The NLRC erroneously adopted the findings of the labor arbiter, misapplying the time-honored rule that factual findings of quasi-judicial agencies are accorded not only respect but even finality if supported by substantial evidence. It declared that the additional benefits sought are in the nature of bonuses which when made part of the wage or salary or compensation of an employee become demandable and enforceable.*25+ Both the Labor Arbiters and the NLRCs findings and conclusions are flawed. 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.[26] 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 employees basic salaries or wages,*27+ especially so if it is incapable of doing so . In Philippine Education Co., Inc. v. Court of Industrial Relations,[28] cited in Philippine duplicators, Inc. v. NLRC,[29] the Court expounded on the nature of a bonus, thus:

As a rule, a bonus is an amount granted and paid to an employee for his industry and loyalty which contributed to the success of the employers business and made possible the realization of profits. It is an act of generosity of the employer for which the em ployee ought to be thankful and grateful. It is also granted by an enlightened employer to spur the employee to greater efforts for the success of the business and realization of bigger profits. xxx From the legal point of view, a bonus is not a demandable and enforceable obligation. It is so when it is made part of the wage or salary or compensation. In such a case the latter would be fixed amount and the former would be a contingent one dependent upon the realization of profits. xxx . (Italics supplied).[30] 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-80s. 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 was 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. Consequently, on the ten (10) items awarded to herein private respondents (enumerated at page 3) which represent additional benefits, they having already been paid separation and retirement benefits, we rule as follows: First. The award of 5% profit sharing of petitioner banks net profits for the years 1985 and 1986 is deleted as there were clearly no profits to share during that period given the banks financial status in 1985 and 1986 when it was operating on net losses. Second. The award of wage increases and Christmas and mid-year bonuses from 1985 to 1988, being in the nature of gratuities and dependent as they on the petitioners liberality and capability to give, is likewise deleted for same reasons above stated. Third. The award of differentials on accrued leaves, retirement benefits and Christmas and mid-year bonuses is also deleted as a necessary and logical consequence of the denial of the wage increases and Christmas and mid-year bonuses. Fourth. The award of medical, dental and optical benefits is well-taken and, therefore, affirmed. Fifth. The claim for travel plans for 23 senior officers, and car plans and gasoline allowances for 23 senior officers, 15 senior managers and 54 assistant managers may only be granted to those officers who have not yet availed of the said benefit subject to the proper determination by the labor arbiter. Sixth and last. Claims for longevity pay, loyalty bonuses and uniform allowance of P600.00 for 1985 may be granted given the apparent loyalty and allegiance shown by herein private respondents to petitioner bank despite rough sailing during the said period of time. That disposes of G.R. No. 107902. With respect to G.R. No. 107487, the same is dismissed, the issues raised therein having been rendered moot and academic by the foregoing disquisitions and disposition. Besides, it is beyond dispute that employees indeed enjoy first preference in the event of bankruptcy or liquidation of an employers business.*31+ WHEREFORE, premises considered, G.R. No. 107902 is GRANTED and is hereby REMANDED to the Labor Arbiter for the proper computation of the monetary awards in accordance with the foregoing disquisition and with reasonable dispatch. G.R. No. 107487 is hereby DISMISSED. SO ORDERED. G.R. No. 111744 September 8, 1995 LOURDES G. MARCOS, ALEJANDRO T. ANDRADA, BALTAZARA J. LOPEZ AND VILMA L. CRUZ, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and INSULAR LIFE ASSURANCE CO., LTD., respondents. REGALADO, J.: This petition for certiorari seeks the nullification of the decision 1 of the National Labor Relations Commission (NLRC) promulgated on May 31, 1992 in NLRC NCR CA No. 004120-92, and its resolution dated August 27, 1993 denying petitioner's motion for reconsideration thereof. The said decision set aside on appeal, the decision of Labor Arbiter Alex Arcadio Lopez ordering private respondent to pay petitioners their service awards, anniversary bonus and prorated performance bonus in the amount of P144,579.00 and 10% attorney's fees in the amount of P14,457.90. 2 First, the undisputed facts. Petitioners were regular employees of private respondent Insular Life Assurance Co:, Ltd., but they were dismissed on November 1, 1990 when their positions were declared redundant. A special redundancy benefit was paid to them, which included payment of accrued vacation leave and fifty percent (50%) of unused current sick leave, special redundancy benefit, equivalent to three (3) months salary for every year of service; and additional cash benefits, in lieu of other benefits provided by the company or required by law. 3

Before the termination of their services, petitioner Marcos had been in the employ of private respondent for more than twenty (20) years, from August 26, ]970; petitioner Andrada, more than twenty-five (25) years, from July 26, 1965; petitioner Lopez, exactly thirty (30) years, from October 31, 1960; and petitioner Cruz, more than twenty (20) years, from March 1, 1970. 4 Petitioners, particularly Baltazara J. Lopez, sent a letter dated October 23, 1990 to respondent company questioning the redundancy package, She claimed that they should receive their respective service awards and other prorated bonuses which they had earned at the time they were dismissed. In addition, Lopez argued that "the cash service awards have already been budgeted in a fund distinct and apart from redundancy fund. 5 Thereafter, private respondent required petitioners to execute a "Release and Quitclaim," 6 and petitioners complied but with a written protest reiterating their previous demand that they were nonetheless entitled to receive their service awards. On March 21, 1991, petitioners inquired from the Legal Service of the Department of Labor and Employment 7 whether respondent corporation could legally refuse the payment of their service awards as mandated in their Employee's Manual. About three months later the labor department issued its opinion, with pertinent authorities, responding to petitioners' query as follows: xxx xxx xxx

This Department believes that your query presents several issues. These shall be addressed point by point, thus: First, the Department deems the service award to be part of the benefits of the employees of Insular Life. Company policies and practices are fertile sources of employee's rights. These must be applied uniformly as interpretation cannot vary from one employee to another. . . . xxx xxx xxx

While it may be argued that the above-cited case applies only to retirement benefits, we find solace in the cases of Liberation Steamship Co., Inc. vs. CIR and National Development Company vs. Unlicensed Crew members of Three Dons vessels (23 SCRA 1105) where the Supreme Court held that a gratuity or bonus, by reason of its long and regular concession indicating company practice, may become regarded as part of regular compensation and thus demandable. xxx xxx xxx

Second, the award is earned at the pertinent anniversary date. At this time, entitlement to the award becomes vested. The anniversary date is the only crucial determining factor. Since the award accrues on that date, it is of no moment that the entitled employee is separated from service (for whatever cause) before the awards are physically handed out. xxx xxx xxx

Third, even if the award has not accrued as when an employee is separated from service because of redundancy before the applicable 5th year anniversary, the material benefits of the award must be given, prorated, by Insular Life. This is especially true (in) redundancy, wherein he/she had no control. xxx xxx xxx

Fourth, the fact that you were required to sign "Release and Quitclaim" does not affect your right to the material benefits of the service award. . . . 8 Meanwhile, in the same year, private respondent celebrated its 80th anniversary wherein the management approved the grant of an anniversary bonus equivalent to one (1) month salary only to permanent and probationary employees as of November 15, 1990. 9 On March 26, 1991, respondent company announced the grant of performance bonus to both rank and file employees and supervisory specialist grade and managerial staff equivalent to two (2) months salary and 2.75 basic salary, respectively, as of December 30, 1990. The performance bonus, however, would be given only to permanent employees as of March 30, 1991. 10 Despite the aforequoted opinion of the Department of Labor and Employment, private respondent refused to pay petitioners service awards. This prompted the latter to file a consolidated complaint, which was assigned to NLRC Labor Arbiter Lopez, for payment of their service awards, including performance and anniversary bonuses. In their complaint, petitioners contended that they are likewise entitled to the performance and anniversary bonuses because, at the time the performance bonus was announced to be given, they were only short of two (2) months service to be entitled to the full amount thereof as they had already served the company for ten (10) months prior to the declaration of the grant of said benefit. Also, they lacked only fifteen (15) days to be entitled to the full amount of the anniversary bonus when it was announced to be given to employees as of November 15, 1990. In a decision dated October 8, 1992, the labor arbiter ordered respondent company to pay petitioners their service awards, anniversary bonuses and prorated performance bonuses, including ten percent (10%) thereof as attorney's fees.

Respondent company appealed to public respondent NLRC claiming grave abuse of discretion committed by the labor arbiter in holding it liable to pay said service award, performance and anniversary bonuses, and in not finding that petitioners were estopped from claiming the same as said benefits had already been given to them. In setting aside the decision of the labor arbiter, respondent NLRC upheld the validity of the quitclaim document executed by petitioners. For this conclusion, it rationalized that "(c)ertainly, before complainants signed the quitclaim and release, they are aware of the nature of such document. In fact, they never assailed the genuineness and due execution of the same. Hence, we can safely say that they were not placed under duress or were compelled by means of force to sign the document." 11 Furthermore, the NLRC held that "(n)either was there any unwritten agreement between complainants and respondent upon separation, which entitled the former to other renumerations or benefits. On the contrary, they voluntarily accepted the redundancy benefit package, otherwise, they would not have been separated from employment." 12 Hence, this petition wherein it is postulated that the basic issue is whether or not respondent NLRC committed reversible error or grave abuse of discretion in affirming the validity of the "Release and Quitclaim" and, consequently, that petitioners are not entitled to payment of service awards and other bonuses. 13 The Solicitor General public respondent NLRC and private respondent company duly filed their respective comments. 14 In their petition, petitioners stress that they have actually devoted much, if not all, of their employable life with private respondent; that given their length of service, their loyalty to the latter is easily demonstrable; and that the same length of service had rendered slim, if not eliminated, their chances of getting employed somewhere else." 15 On the other hand, respondent company reiterates its basic contention that the consideration for the settlement of petitioners' claim is credible and reasonable, more than satisfies the legal requirement therefor, and that petitioners, in executing the release and quitclaim, did so voluntarily and with full knowledge of the consequences thereof. 16 The petition being meritorious, we find for petitioners. Under prevailing jurisprudence, the fact that an employee has signed a satisfaction receipt for his claims does not necessarily result in the waiver thereof. The law does not consider as valid any agreement whereby a worker agrees to receive less compensation than what he is entitled to recover. A deed of release or quitclaim cannot bar an employee from demanding benefits to which he is legally entitled. 17 We have heretofore explained that the reason why quitclaims commonly frowned upon as contrary to public policy, and why they are held to be ineffective to bar claims for the full measure of the workers' legal rights, is the fact that the employer and the employee obviously do not stand on the same footing. The employer drove the employee to the wall. The latter must have harsh necessities of life. He thus found himself in no position to resist money proffered. His, then, is a case of adherence, not of choice. One thing sure, however, is that petitioners did not relent on their claim. They pressed it. They are deemed not have waived any of their rights. Renuntiatio non praesumitur. 18 Along this line, we have more trenchantly declared that quitclaims and/or complete releases executed by the employees do not estop them from pursuing their claims arising from unfair labor practices of the employer. The basic reason for this is that such quitclaims and/or complete releases are against public policy and, therefore, null and void. The acceptance of termination does not divest a laborer of the right to prosecute his employer for unfair labor practice acts. 19 While there maybe possible exceptions to this holding, we do not perceive any in the case at bar. Furthermore, in the instant case, it is an undisputed fact that when petitioners signed the instrument of release and quitclaim, they made a written manifestation reserving their right to demand the payment of their service awards. 20 The element of total voluntariness in executing that instrument is negated by the fact that they expressly stated therein their claim for the service awards, a manifestation equivalent to a protest and a disavowal of any waiver thereof. As earlier stated, petitioners even sought the opinion of the Department of Labor and Employment to determine where and how they stood in the controversy. This act only shows their adamant desire to obtain their service awards and to underscore their disagreement with the "Release and Quitclaim" they were virtually forced to sign in order to receive their separation pay. We have pointed out in Veloso, et al., vs. Department of Labor and Employment, et al., 21 that: While rights may be waived, the same must not be contrary to law, public order, public policy, morals or good customs or prejudicial to a third person with a right recognized by law. Article 6 of the Civil Code renders a quitclaim agreement void ab initio where the quitclaim obligates the workers concerned to forego their benefits while at the same time exempting the employer from any liability that it may choose to reject. This runs counter to Art. 22 of the Civil Code which provides that no one shall be unjustly enriched at the expense of another. We agree with the further observations of the Solicitor General who, in recommending the setting aside of the decision of respondent NLRC, called attention to the fact that "contrary to private respondent's contention, the "additional" redundancy package does not and could not have covered the payment of the service awards, performance and anniversary bonuses since the private respondent company has initially maintained the position that petitioners are not legally entitled to the same. . . . Surprisingly, in a sudden turnabout, private respondent now claims . . . that the subject awards and bonuses are integrated in the redundancy package. It is evident, therefore, that

private respondent has not truly consolidated the payment of the subject awards and bonuses in the redundancy package paid to the petitioners. 22 We are likewise in accord with the findings of the labor arbiter that petitioners are indeed entitled to receive service awards and other benefits, thus: Since each of the complainants have rendered services to respondent in multiple(s) of five years prior to their separation from employment, respondent should be paid their service awards for 1990. We are not impressed with the contention of the respondent that service award is a bonus and therefore is an act of gratuity which the complainants have no right to demand. Service awards are governed by respondent's employee's manual and (are) therefore contractual in nature. On the matter of anniversary and performance bonuses, it is not disputed that it is respondent's practice to give an anniversary bonus every five years from its incorporation; that pursuant to this practice, respondent declared an anniversary bonus for its 80th Anniversary in 1990; that per terms of this declaration, only the employees of respondent as of 15 November 1990 will be given the bonus; and that complainants were separated from respondent only 25 days before :the respondent's anniversary. On the other hand, it is also (not) disputed that respondent regularly gives performance bonuses; that for its commendable performance in 1990, respondent declared a performance bonus; that per terms of this declaration, only permanent employees of respondent as of March 30, 1991 will be given this bonus; and that complainants were employees of respondents for the first 10 months of 1990. We cannot see any cogent reason why an anniversary bonus which respondent gives only once in every five years were given to all employees of respondent as of 15 November 1990 (pro rata even to probationary employees; Annex 9) and not to complainants who have rendered service to respondent for most of the five year cycle. This is also true in the case of performance bonus which were given to permanent employees of respondent as of 30 March 1991 and not to employees who have been connected with respondent for most of 1990 but were separated prior to 30 March 1991. We believe that the prerogative of the employer to determine who among its employee shall be entitled to receive bonuses which are, as a matter of practice, given periodically cannot be exercised arbitrarily. 23 (Emphasis and corrections in parentheses supplied.) The grant of service awards in favor of petitioners is more importantly underscored in the precedent case of Insular Life Assurance Co., Ltd., et al. vs. NLRC, et al., 24 where this Court ruled that "as to the service award differentials claimed by some respondent union members, the company policy shall likewise prevail, the same being based on the employment contracts or collective bargaining agreements between the parties. As the petitioners had explained, pursuant to their policies on the matter, the service award differential is given at the end of the year to an employee who has completed years of service divisible by 5. A bonus is not a gift or gratuity, but is paid for some services or consideration and is in addition to what would ordinarily be given. 25 The term "bonus" as used in employment contracts, also conveys an idea of something which is gratuitous, or which may be claimed to be gratuitous, over and above the prescribed wage which the employer agrees to pay. While there is a conflict of opinion as to the validity of an agreement to pay additional sums for the performance of that which the promisee is already under obligation to perform, so as to give the latter the right to enforce such promise after performance, the authorities hold that if one enters into a contract of employment under an agreement that he shall be paid a certain salary by the week or some other stated period and, in addition, a bonus, in case he serves for a specified length of time, there is no reason for refusing to enforce the promise to pay the bonus, if the employee has served during the stipulated time, on the ground that it was a promise of a mere gratuity. This is true if the contract contemplates a continuance of the employment for a definite term, and the promise of the bonus is made at the time the contract is entered into. If no time is fixed for the duration of the contract of employment, but the employee enters upon or continues in service under an offer of a bonus if he remains therein for a certain time, his service, in case he remains for the required time, constitutes an acceptance of the offer of the employer to pay the bonus and, after that acceptance, the offer cannot be withdrawn, but can be enforced by the employee. 26 The weight of authority in American jurisprudence, with which we are persuaded to agree, is that after the acceptance of a promise by an employer to pay the bonus, the same cannot be withdrawn, but may be enforced by the employee. 27 However, in the case at bar, equity demands that the performance and anniversary bonuses should be prorated to the number of months that petitioners actually served respondent company in the year 1990. This observation should be taken into account in the computation of the amounts to be awarded to petitioners. WHEREFORE, the assailed decision and resolution of respondent National Labor Relations Commission are hereby SET ASIDE and the decision of Labor Arbiter Alex Arcadio Lopez is REINSTATED. SO ORDERED. G.R. No. 116960 April 2, 1996 BERNARDO JIMENEZ and JOSE JIMENEZ, as Operators of JJ's TRUCKING, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, PEDRO JUANATAS and FREDELITO JUANATAS, respondents. REGALADO, J.:p This petition for certiorari seeks the annulment of the decision of respondent National Labor Relations Commission (NLRC), dated May 27, 1994, as well as its resolution, dated August 8, 1994, denying petitioners's motion for reconsideration, 1 which assailed decision affirmed with modifications the adverse decision of the labor arbiter against herein petitioners.

On June 29, 1990, herein private respondent Pedro and Fredelito Juanatas, father and son, filed a claim for unpaid wages/commissions, separation pay and damages against JJ's Trucking and/or Dr. Bernardo Jimenez. Said respondents, as complainants therein, alleged that in December, 1987, they were hired by herein petitioner Bernardo Jimenez as driver/mechanic and helper, respectively, in his trucking firm, JJ Trucking. They were assigned to a ten-wheeler truck to haul soft drinks of Coca-Cola Bottling Company and paid on commission basis, initially fixed at 17% but later increased to 20% in 1988. Private respondents further alleged that for the years 1988 and 1989 they received only a partial commission of P84,000.00 from petitioners' total gross income of almost P1,000,000.00 for the said two years. Consequently, with their commission for that period being computed at 20% of said income, there was an unpaid balance to them of P106,211.86; that until March, 1990 when their services were illegally terminated, they were further entitled to P15,050.309 which, excluding the partial payment of P7,000.00, added up to a grand total of P114,261.86 due and payable to them; and that petitioners' refusal to pay their aforestated commission was a ploy to unjustly terminate them. Disputing the complaint, petitioners contend that respondent Fredelito Juanatas was not an employee of the firm but was merely a helper of his father Pedro; that all commissions for 1988 and 1989, as well as those up to March, 1990, were duly paid; and that the truck driven by respondent Pedro Juanatas was sold to one Winston Flores in 1991 and, therefore, private respondents were not illegally dismissed. 2 After hearings duly conducted, and with the submission of the parties' position/supporting papers, Labor Arbiter Rogue B. de Guzman rendered a decision dated March 9, 1993, with this decretal portion: WHEREFORE, decision is hereby issued ordering respondents JJ's Trucking and/or Dr. Bernardo Jimenez to pay jointly and severally complainant Pedro Juanatas a separation pay of FIFTEEN THOUSAND FIFTY (P15,050.00) PESOS, plus attorney's fee equivalent to ten percent (10%) of the award. The complaint of Fredelito Juanatas is hereby dismissed for lack of merit. 3 On appeal filed by private respondents, the NLRC modified the decision of the labor arbiter and disposed as follows: PREMISES CONSIDERED, the Decision of March 9, 1993 is hereby MODIFIED, to wit: 1. Complainant Fredelito Juanatas is hereby declared respondents' employee and shares in (the) commission and separation pay awarded to complainant Pedro Juanatas, his father. 2. Respondent JJ's Trucking and Dr. Bernardo Jimenez are jointly and severally liable to pay complainants their unpaid commissions in the total amount of Eighty Four Thousand Three Hundred Eighty Seven Pesos and 05/100 (P84,387.05). 3. 4. The award of attorney's fees is reduced accordingly to eight thousand four hundred thirty eight pesos and 70/100 (P8,438.70). The other findings stand affirmed. 4

Petitioners' motion for reconsideration having been denied thereafter in public respondent's resolution dated August 8, 1994, 5 petitioners have come to us in this recourse, raising for resolution the issues as to whether or not respondent NLRC committed grave abuse of discretion in ruling (a) that private respondents were not paid their commissions in full, and (b) that respondent Fredelito Juanatas was an employee of JJ's Trucking. The review of labor cases elevated to us on certiorari is confined to questions of jurisdiction or grave abuse of discretion. 6 As a rule, this Court does not review supposed errors in the decision of the NLRC which raise factual issues, because factual findings of agencies exercising quasi-judicial functions are accorded not only respect but even finality, 7 aside from the consideration that the Court is essentially not a trier of facts. However, in the case at bar, a review of the records thereof with an assessment of the facts is necessary since the factual findings of the NLRC and the labor arbiter are at odds with each other. 8 On the first issue, we find no reason to disturb the findings of respondent NLRC that the entire amount of commissions was not paid, this by reason of the evident failure of herein petitioners to present evidence that full payment thereof has been made. It is a basic rule in evidence that each party must prove his affirmative allegation. Since the burden of evidence lies with the party who asserts an affirmative allegation, the plaintiff or complainant has to prove his affirmative allegations in the complaint and the defendant or respondent has to prove the affirmative allegations in his affirmative defenses and counterclaim. Considering that petitioners herein assert that the disputed commissions have been paid, they have the bounden duty to prove that fact. As a general rule, one who pleads payment has the burden of proving it. 9 Even where the plaintiff must allege non-payment, the general rule is that the burden rests on the defendant to prove payment, rather than on the plaintiff to prove non-payment. 10 The debtor has the burden of showing with legal certainty that the obligation has been discharged by payment. 11 When the existence of a debt is fully established by the evidence contained in the record, the burden of proving that it has been extinguished by payment devolves upon the debtor who offers such a defense to the claim of the creditor. 12 Where the debtor introduces some evidence of payment, the burden of going forward with the evidence as distinct from the general burden of proof shifts to the creditor, who is then under a duty of producing some evidence to show non-payment. 13 In the instant case, the right of respondent Pedro Juanatas to be paid a commission equivalent to 17%, later increased to 20%, of the gross income is not disputed by petitioners. Although private respondents admit receipt of partial payment, petitioners still have to present

proof of full payment. Where the defendant sued for a debt admits that the debt was originally owed, and pleads payment in whole or in part, it is incumbent upon him to prove such payment. That a plaintiff admits that some payments have been made does not change the burden of proof. The defendant still has the burden of establishing payments beyond those admitted by plaintiff. 14 The testimony of petitioners which merely denied the claim of private respondents, unsupported by documentary evidence, is not sufficient to establish payment. Although petitioners submitted a notebook showing the alleged vales of private respondents for the year 1990, 15 the same is inadmissible and cannot be given probative value considering that it is not properly accomplished, is undated and unsigned, and is thus uncertain as to its origin and authenticity. 16 The positive testimony of a creditor may be sufficient of it self to show non-payment, even when met by indefinite testimony of the debtor. Similarly, the testimony of the debtor may also be sufficient to show payment, but, where his testimony is contradicted by the other party or by a disinterested witness, the issue may be determined against the debtor since he has the burden of proof. The testimony of the debtor creating merely an inference of payment will not be regarded as conclusive on that issue. 17 Hence, for failure to present evidence to prove payment, petitioners defaulted in their defense and in effect admitted the allegations of private respondents. With respect to the second issue, however, we agree with petitioners that the NLRC erred in holding that the son, Fredelito, was an employee of petitioners. We have consistently ruled that in determining the existence of an employer-employee relationship, the elements that are generally considered are the following: (1) the selection and engagement of the employee; (2) the Payment of wages; (3) the power of dismissal; and (4) the power to control the employee's conduct, 18 with the control test assuming primacy in the overall consideration. In the case at bar, the aforementioned elements are not present. The agreement was between petitioner JJ's Trucking and respondent Pedro Juanatas. The hiring of a helper was discretionary on the part of Pedro. Under their contract, should he employ a helper, he would be responsible for the latter's compensation. With or without a helper, respondent Pedro Juanatas was entitled to the same percentage of commission. Respondent Fredelito Juanatas was hired by his father, Pedro, and the compensation he received was paid by his father out of the latter's commission. Further, Fredelito was not subject to the control and supervision of and dismissal by petitioners but of and by his father. Even the Solicitor General, in his comment, agreed with the finding of the labor arbiter that Fredelito was not an employee of petitioners, to wit: Public respondent committed grave abuse of discretion in holding that said private respondent is an employee of JJ's Trucking on the ground that, citing Article 281 of the Labor Code, "Fredelito's functions as helper was (sic) necessary and desirable to respondent's trucking business". In the first place, Article 281 of the Labor Code does not refer to the basic factors that must underlie every existing employer-employee relationship, the absence of any of which will negate such existence. It refers instead to the qualifications of "(A)n employee who is allowed to work after a probationary period" and who, as a consequence, "shall be considered a regular employee." Secondly, the test in determining the existence of an employee-employer relationship is not the necessity and/or desirability of one's functions in relation to an employer's business, but "(1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee's conduct. The latter is the most important element" (Singer Sewing Machine Company vs. Drilon, 193 SCRA 270, 275; Deferia vs. NLRC, 194 SCRA 531, 525; Ecal vs. NLRC, 224, 228, Hijos De F. Escano, Inc vs. NLRC, 224 SCRA 781, 785). The aforequoted pertinent findings of the Labor Arbiter indicate (that) the foregoing requirements do not exist between petitioner and private respondent Fredelito Juanatas. Thus, the labor arbiter stated that respondent Fredelito Juanatas was never hired by petitioners. Instead the former's services were availed of by respondent Pedro Juanatas his father, who, at the same time, supervised and controlled his work and paid his commissions. Respondent NLRC's ruling did not traverse these findings of the labor arbiter. 19 WHEREFORE, the judgment of respondent National Labor Relations Commission is hereby AFFIRMED, with the MODIFICATION that paragraph 1 thereof, declaring Fredelito Juanatas an employee of petitioners and entitled to share in the award for commission and separation pay, is hereby DELETED. SO ORDERED. G.R. No. L-66598 December 19, 1986 PHILIPPINE BANK OF COMMUNICATIONS, petitioner, vs. THE NATIONAL LABOR RELATIONS COMMISSION, HONORABLE ARBITER TEODORICO L. DOGELIO and RICARDO ORPIADA respondents. FELICIANO, J.: Petitioner Philippine Bank of Communications and the Corporate Executive Search Inc. (CESI) entered into a letter agreement dated January 1976 under which (CESI) undertook to provide "Tempo[rary] Services" to petitioner Consisting of the "temporary services" of eleven (11) messengers. The contract period is described as being "from January 1976." The petitioner in truth undertook to pay a "daily service rate of P18, " on a per person basis. Attached to the letter agreement was a "List of Messengers assigned at Philippine Bank of Communications" which list included, as item No. 5 thereof, the name of private respondent Ricardo Orpiada. Ricardo Orpiada was thus assigned to work with the petitioner bank. As such, he rendered services to the bank, within the premises of the bank and alongside other people also rendering services to the bank. There was some question as to when Ricardo Orpiada commenced rendering services to the bank. As noted above, the letter agreement was dated January 1976. However, the position paper submitted by

(CESI) to the National Labor Relations Commission stated that (CESI) hired Ricardo Orpiada on 25 June 1975 as a Tempo Service employee, and assigned him to work with the petitioner bank "as evidenced by the appointment memo issued to him on 25 June 1975. " Be that as it may, on or about October 1976, the petitioner requested (CESI) to withdraw Orpiada's assignment because, in the allegation of the bank, Orpiada's services "were no longer needed." On 29 October 1976, Orpiada instituted a complaint in the Department of Labor (now Ministry of Labor and Employment) against the petitioner for illegal dismissal and failure to pay the 13th month pay provided for in Presidential Decree No. 851. This complaint was docketed as Case No. R04-1010184-76-E. After investigation, the Office of the Regional Director, Regional Office No. IV of the Department of Labor, issued an order dismissing Orpiada's complaint for failure of Mr. Orpiada to show the existence of an employer-employee relationship between the bank and himself. Despite the foregoing order, Orpiada succeeded in having his complaint certified for compulsory arbitration in Case No. RB-IV-11187-77 entitled "Ricardo Orpiada, complaint vs. Philippine Bank of Communications, respondent." During the compulsory arbitration proceedings, CE SI was brought into the picture as an additional respondent by the bank. Both the bank and (CESI) stoutly maintained that (CESI) (and not the bank) was the employer of Orpiada. On 12 September 1977, respondent Labor Arbiter Dogelio rendered a decision in Case No. RB-IV-11187-77, the dispositive portion of which read as follows: WHEREFORE, premises considered, respondent bank is hereby ordered to reinstate complainant to the same or equivalent position with full back wages and to pay the latter's 13th month pay for the year 1976. On 26 October 1977, the bank appealed the decision of the Labor Arbiter to the respondent NLRC. More than six years later and the record is silent on why the proceeding in the NLRC should have taken more than six years to resolve the NLRC promulgated its decision affirming the award of the Labor Arbiter and stating as follows: WHEREFORE, except for the modification reducing the complainant's back wages to two (2) years without qualification, the Decision appealed from is hereby AFFIRMED in an other respects. Accordingly, on 2 April 1984, the bank filed the present petition for certiorari with this Court seeking to annul and set aside (a) the decision of respondent Labor Arbiter Dogelio dated 12 September 1977 in Labor Case No. RB-IV-1118-77 and (b) the decision of the NLRC promulgated on 29 December 1983 affirming with some modifications the decision of the Labor Arbiter. This Court granted a temporary restraining order on 11 April 1984. The main issue as litigated by the parties in this case relates to whether or not an employer-employee relationship existed between the petitioner bank and private respondent Ricardo Orpiada. The petitioner bank maintains that no employer-employee relationship was established between itself and Ricardo Orpiada and that Ricardo Orpiada was an employee of (CESI) and not of the bank. The bank documents its position by pointing to the following provisions of its letter agreement with CE SI 1. The individual/s you i.e. (CESI) will assign to us i.e. petitioner) will be subject to our acceptance and will observe work-days, hours, and methods of work (sic); on the other hand, they will not be asked to perform job (sic) not normally related to the position/s for which Tempo Services were contracted. 2. Such individuals will nevertheless remain your own employees and you will therefore, retain all liabilities arising from the new Labor Code as amended Social Security Act and other applicable Governmental decrees, rules and regulations, provided that, on our part, we shaIl a. Require your employers assigned to us to properly accomplish your daily time record, to faithfully reflect all hours worked in our behalf whether such work be within or beyond eight hours of any day. b. Notify you of any change in the work assignment or contract period affecting any of your employers assigned to us within 24 hours, after such change is made. (Emphasis supplied) The above language of the agreement between the bank and CE SI is of course relevant and important as manifesting an intent to refrain from constituting an employer-employee relationship between the bank and the persons assigned or seconded to the bank by (CESI) That extent to which the parties were successful in realizing their intent is another matter, one that is dependent upon applicable law and not merely upon the terms of their contract. In the case of Viana vs. AI-Lagdan and Pica, 99 Phil. 408 (1956), this Court listed certain factors to be taken into account in determining the existence of an employer-employee relationship. These factors are: 1) 2) 3) The selection and engagement of the putative employee; The payment of wages; The power of dismissal- and

4) The power to control the putative employees' conduct, although the latter is the most important element. ... (99 Phil. at 411412; Emphasis supplied) In the present case, Orpiada was not previously selected by the bank. Rather, Orpiada was assigned to work in the bank by (CESI) Orpiada could not have found his way to the bank's offices had he not been first hired by (CESI) and later assigned to work in the bank's offices. The selection of Orpiada by (CESI) was, however, subject to the acceptance of the bank and the bank did accept him As will be seen shortly, (CESI) had hired Orpiada from the outside world precisely for the purpose of assigning or seconding him to the bank. With respect to the payment of Orpiada's wages, the bank remitted to CE SI amounts corresponding to the "daily service rate" of Orpiada and the others similarly assigned by (CESI) to the bank, and (CESI) paid to Orpiada and the others the wages pertaining to to them. It is not clear from the record whether the amounts remitted to (CESI) included some factor for CESIs fees; it seems safe to assume that (CESI) had required some amount in excess of the wages paid by (CESI) to Orpiada and the others to cover its own overhead expenses and provide some contribution to profit. The bank alleged that Orpiada did not appear in its payroll and this allegation was not denied by Orpiada. Indeed, the Labor Arbiter in Case No. R04-184-76-B found that Orpiada was listed in the payroll of (CESI) with (CESI) deducting amounts representing his Medicare and Social Security System premiums. A copy of the (CESI) payroll was presented, strangely enough, by Orpiada himself to Regional Office No. IV. In respect of the power of dismissal we note that the bank requested (CESI) to withdraw Orpiada's assignment and that (CESI) did, in fact, withdraw such assignment. Upon such withdrawal from his assignment with the bank, Orpiada was also terminated by (CESI) Indeed, it appears clear that Orpiada was hired by (CESI) specifically for assignment with the bank and that upon his withdrawal from such assignment upon request of the bank, Orpiada's employment with (CESI) was also severed, until some other client of (CESI) showed up in the horizon to which Orpiada could once more be assigned. In the position paper dated August 5, 1977 submitted by (CESI) before the NLRC, (CESI) explained the relationship between itself and Orpiada in lucid terms: 5. That as Petitioner herein was very well aware of from the very beginning, he was hired by Corporate Executive Search, Inc. as a temporary employee and as such, was being assigned to work with the latter's client Respondent herein that the rationale behind his hiring was the existence of a service contract between Corporate Executive Search Inc. and its client-company, the Philippine Bank of Communications, the herein Respondent, and that when this service contract was 0terminated, then the reason for his employment with Corporate Executive Search, Inc., ceased to exist and that therefore Corporate Executive Search Inc. had no alternative but to discontinue his employment until another opportune time for his hiring would present itself; 6. That Petitioner was not given his 13th-month pay under P.D. 851, because Corporate Executive Search Inc. gave the 13th month pay for 1976 to its employees in December 1976, and since the company had lost contact with the Petitioner by reason of his having ceased to be connected with it as of 22 October 1976, he was not among those given the 13th-month pay. (Emphasis supplied) Turning to the power to control Orpiada's conduct, it should be noted immediately that Orpiada performed his sections within the bank's premises, and not within the office premises of (CESI) As such, Orpiada must have been subject to at least the same control and supervision that the bank exercises over any other person physically within its premises and rendering services to or for the bank, in other words, any employee or staff member of the bank. It seems unreasonable to suppose that the bank would have allowed Orpiada and the other persons assigned to the bank by CE SI to remain within the bank's premises and there render services to the bank, without subjecting them to a substantial measure of control and supervision, whether in respect of the manner in which they discharged their functions, or in respect of the end results of their functions or activities, or both. Application of the above factors in the specific context of this case appears to yield mixed results so far as concerns the existence of an employer- employer relationship between the bank and Orpiada. The second ("payment of wages") and third ("power of dismissal") factors suggest that the relevant relationship was that subsisting between (CESI) and Orpiada, a relationship conceded by (CESI) to be one between employer and employee. Upon the other hand, the first ("selection and engagement") and fourth ("control of employee's conduct") factors indicate that some direct relationship did exist between Orpiada and the bank and that such relationship may be assimilated to employment. Perhaps the most important circumstance which emerges from an examination of the facts of the tri-lateral relationship between the bank, (CESI) and Orpiada is that the employer-employee relationship between (CESI) and Orpiada was established precisely in anticipation of, and for the very purpose of making possible, the secondment of Orpiada to the bank. It is therefore necessary to confront the task of determining the appropriate characterization of the relationship between the bank and (CESI) was that relationship one of employer and job (independent) contractor or one of employer and "labor-only" contractor? Articles 106 and 107 of the Labor Code of the Philippines (Presidential Decree No. 442, as amended) provides as follows: ART. 106. Contractor or sub-contractor.Whenever an employer enters into a contract with another person for the performance of the former's work, the employees of the contractor and of the latter's subcontractor, if any, shall be paid in accordance with the provisions in this Code. In the event that the contractor or sub-contractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or sub-contructor to such employees to the extent of the work performed under the contract in the same manner and extent that he is liable to employees directly employed by him The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provisions of this Code.

There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. ART. 107. Indirect employer. The provisions of the immediately preceding Article shall likewise apply to any person, part, nership association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project. (Emphasis supplied) Under the general rule set out in the first and second paragraphs of Article 106, an employer who enters into a contract with a contractor for the performance of work for the employer, does not thereby create an employer-employes relationship between himself and the employees of the contractor. Thus, the employees of the contractor remain the contractor's employees and his alone. Nonetheless when a contractor fails to pay the wages of his employees in accordance with the Labor Code, the employer who contracted out the job to the contractor becomes jointly and severally liable with his contractor to the employees of the latter "to the extent of the work performed under the contract" as such employer were the employer of the contractor's employees. The law itself, in other words, establishes an employer-employee relationship between the employer and the job contractor's employees for a limited purpose, i.e., in order to ensure that the latter get paid the wages due to them. A similar situation obtains where there is "labor only" contracting. The "labor-only" contractor-i.e "the person or intermediary" is considered "merely as an agent of the employer. " The employer is made by the statute responsible to the employees of the "labor only" contractor as if such employees had been directly employed by the employer. Thus, where "labor only" contracting exists in a given case, the statute itself implies or establishes an employer-employee relationship between the employer (the owner of the project) and the employees of the "labor only" contractor, this time for a comprehensive purpose: "employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code. " The law in effect holds both the employer and the "labor-only" contractor responsible to the latter's employees for the more effective safeguarding of the employees' rights under the Labor Code. Both the petitioner bank and (CESI) have insisted that (CESI) was not a "labor only" contractor. Section 9 of Rule VIII of Book III entitled "Conditions of Employment," of the Omnibus Rules Implementing the Labor Code provides as follows: Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an employer shag be deemed to be engaged in labor-only contracting where such person: (1) Does not have substantial capital or investment in the form of tools, equipment, machineries, work premises and other materials; and (2) The workers recruited and placed by such person are performing activities which are to the principal business or operations of the c workers are habitually employed, (b) Labor-only contracting as defined herein is hereby prohibited and the person acting as contractor shall be considered merely as an agent or intermediary of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him (c) For cases not file under this Article, the Secretary of Labor shall determine through appropriate orders whether or not the contracting out of labor is permissible in the light of the circumstances of each case and after considering the operating needs of the employer and the rights of the workers involved. In such case, he may prescribe conditions and restrictions to insure the protection and welfare of the workers. (Emphasis supplied) In contrast, job contracting-contracting out a particular job to an independent contractor is defined by the Implementing Rules as follows: Sec. 8. Job contracting. There is job contracting permissible under the Code if the following conditions are met: (1) The contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and (2) The contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of his business. (Emphasis supplied) The bank and (CESI) urge that (CESI) is not properly regarded as a "labor-only" contractor upon n the ground that (CESI) is possessed of substantial capital or investment in the form of office equipment, tools and trained service personnel. We are unable to agree with the bank and (CESI) on this score. The definition of "labor-only" contracting in Rule VIII, Book III of the Implementing Rules must be read in conjunction with the definition of job contracting given in Section 8 of the same Rules. The undertaking given by CESI in favor of the bank was not the performance of a specific job for instance, the carriage and delivery of documents and parcels to the addresses thereof. There appear to be many companies today which perform this discrete service, companies with their own personnel who pick up documents and packages from the offices of a client or customer, and who deliver such

materials utilizing their own delivery vans or motorcycles to the addresses. In the present case, the undertaking of (CESI) was to provide its client-thebank-with a certain number of persons able to carry out the work of messengers. Such undertaking of CESI was complied with when the requisite number of persons were assigned or seconded to the petitioner bank. Orpiada utilized the premises and office equipment of the bank and not those of (CESI) Messengerial work-the delivery of documents to designated persons whether within or without the bank premises is of course directly related to the day-to-day operations of the bank. Section 9(2) quoted above does not require for its applicability that the petitioner must be engaged in the delivery of items as a distinct and separate line of business. Succinctly put, CESI is not a parcel delivery company: as its name indicates, it is a recruitment and placement corporation placing bodies, as it were, in d ifferent client companies for longer or shorter periods of time. It is this factor that, to our mind, distinguishes this case from American President v. Clave et al, 114 SCRA 826 (1982) if indeed distinguishing way is needed. The bank urged that the letter agreement entered into with CESI was designed to enable the bank to obtain the temporary services of people necessary to enable the bank to cope with peak loads, to replace temporary workers who were out on vacation or sick leave, and to handle specialized work. There is, of course, nothing illegal about hiring persons to carry out "a specific project or undertaking the completion or termination of which [was] determined at the time of the engagement of [the] employee, or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season" (Article 281, Labor Code).<re||an1w > The letter agreement itself, however, merely required (CESI) to furnish the bank with eleven 11) messengers for " a contract period from January 19, 1976 ." The eleven (11) messengers were thus supposed to render "temporary" services for an indefinite or unstated period of time. Ricardo Orpiada himself was assigned to the bank's offices from 25 June 1975 and rendered services to the bank until sometime in October 1976, or a period of about sixteen months. Under the Labor Code, however, any employee who has rendered at least one year of service, whether such service is continuous or not, shall be considered a regular employee (Article 281, Second paragraph). Assuming, therefore, that Orpiada could properly be regarded as a casual (as distinguished from a regular) employee of the bank, he became entitled to be regarded as a regular employee of the bank as soon as he had completed one year of service to the bank. Employers may not terminate the service of a regular employee except for a just cause or when authorized under the Labor Code (Article 280, Labor Code). It is not difficult to see that to uphold the contractual arrangement between the bank and (CESI) would in effect be to permit employers to avoid the necessity of hiring regular or permanent employees and to enable them to keep their employees indefinitely on a temporary or casual status, thus to deny them security of tenure in their jobs. Article 106 of the Labor Code is precisely designed to prevent such a result. We hold that, in the circumstances 'instances of this case, (CESI) was engaged in "labor-only" or attracting vis-a-vis the petitioner and in respect c Ricardo Orpiada, and that consequently, the petitioner bank is liable to Orpiada as if Orpiada had been directly, employed not only by (CESI) but also by the bank. It may well be that the bank may in turn proceed against (CESI) to obtain reimbursement of, or some contribution to, the amounts which the bank will have to pay to Orpiada; but this it is not necessary to determine here. WHEREFORE, the petition for certiorari is DENIED and the decision promulgated on 29 December 1983 of the National Labor Relations Commission is AFFIRMED. The Temporary Restraining Order issued by this Court on 11 April 1984 is hereby lifted. Costs against petitioner. SO ORDERED. [G.R. Nos. 116476-84. May 21, 1998] ROSEWOOD PROCESSING, INC., petitioner, vs. NATIONAL LABOR RELATIONSCOMMISSION, NAPOLEON C. MAMON, ARSENIO GAZZINGAN, ROMEO C. VELASCO, ARMANDO L. BALLON, VICTOR E. ALDEZA, JOSE L. CABRERA, VETERANS PHILIPPINE SCOUT SECURITY AGENCY, and/or ENGR. SERGIO JAMILA IV, respondents. DECISION PANGANIBAN, J.: Under the Labor Code, an employer is solidarily liable for legal wages due security guards for the period of time they were assigned to it by its contracted security agency. However, in the absence of proof that the employer itself committed the acts constitutive of illegal dismissal or conspired with the security agency in the performance of such acts, the employer shall not be liable for back wages and/or separation pay arising as a consequence of such unlawful termination. The Case These are the legal principles on which this Court bases its resolution of this special civil action for certiorari, seeking the nullification of the April 28, 1994 Resolution and the July 12, 1994 Order of the National Labor Relations Commission, which dismissed petitioner s appeal from the labor arbiters Decision and denied its Motion for Reconsideration, respectively, in NLRC NCR Case Nos. 00 -05-02834-91, 00-0804630-91, 00-07-03966-91, 00-09-05617-91, 00-07-03967-91, 00-07-04455-91, 00-08-05030-91, 00-11-06389-91, and 00-03-01642-92. On May 13, 1991, a complaint for illegal dismissal; underpayment of wages; and for nonpayment of overtime pay, legal holiday pay, premium pay for holiday and rest day, thirteenth month pay, cash bond deposit, unpaid wages and damages was filed against Veterans Philippine Scout Security Agency and/or Sergio Jamila IV (collectively referred to as the security agency, for brevity). T hereafter, petitioner was impleaded as a third-party respondent by the security agency. In due course, Labor Arbiter Ricardo C. Nora rendered a consolidated Decision dated March 26, 1993, which disposed as follows:[1] IN VIEW OF ALL THE FOREGOING, respondents Veterans Philippine Scout Security Agency, Sergio Jamila IV, and third -party respondent Rosewood Processing, Inc. are hereby ordered to pay jointly and severally complainants the following amounts, to wit: 1. Napoleon Mamon 2. Arsenio Gazzingan P126,411.10 128,639.71

3. Rodolfo Velasco 4. Armando Ballon 5. Jose L. Cabrera 6. Victor Aldeza TOTAL

147,114.43 116,894.70 133,047.81 137,046.64 P789,154.39 ===========

representing their monetary benefits in the amount of SEVEN HUNDRED EIGHTY NINE THOUSAND ONE HUNDRED FIFTY FOUR PESOS AND 39/100 CENTAVOS (P789,154.39). Respondents are likewise ordered to pay attorneys fees in the amount of P78,915.43 within ten (10) days from receipt of this Decision. All other issues are hereby *d+ismissed for failure of the complainants to fully substantiate their claims. The appeal filed by petitioner was dismissed by the National Labor Relations Commission[2] in its Resolution promulgated April 28, 1994, for failure of the petitioner to file the required appeal bond within the reglementary period.[3] Pertinent portions of the challenged Resolution are herewith quoted: It appears on record that *petitioner+ received their copy of the *labor arbiters+ decision on April 2, 1993 and subsequently filed a Notice of Appeal with Memorandum of Appeal on April 26, 1993, in violation of Rule VI, Section 1, 3, and 6 of the 1990 N ew Rules of Procedure of the NLRC xxx. xxx xxx xxx

Clearly, the appeal filed by the [petitioners] on April 12, 1993 was not perfected within the reglementary period, and the decision dated March 26, 1993 became final and executory as of April 23, 1993. WHEREFORE, the appeal is hereby DISMISSED. In its motion for reconsideration, petitioner contended that it received a copy of the labor arbiters Decision only on April 6, 1993, and that it filed on April 16, 1993 within the prescribed time, a Notice of Appeal with a Memorandum on Appeal, a Motion to Reduce Appeal Bond and a surety bond issued by Prudential Guarantee and Assurance, Inc. in the amount of P50,000.[4] Though not opposed by the complainants and the security agency, the arguments stated in the motion were not taken up by Respondent Commission. Reconsideration was nonetheless denied by Respondent Commission in its Order of July 12, 1994, quoted below:[5] Section 14, Rule VII of the NLRC New Rules of Procedure allows *u+s to entertain a motion for reconsideration only on palpable or patent errors [w]e may have committed in [o]ur disputed April 28, 1994 resolution. There being no such assignment here, *petitioners+ motion for reconsideration dated May 19, 1994 is hereby DENIED for lack of merit. Hence, this recourse.[6] In a Resolution dated March 20, 1995, this Court issued a temporary restraining order enjoining the respondents and their agents from implementing and enforcing the assailed Resolution and Order until further notice.[7] The Facts Undisputed are the facts of this case, narrated by the labor arbiter as follows: All the complainants were employed by the *security agency+ as security guards: Napoleon Mamon on October 7, 1989; Arsenio Gazzingan on September 25, 1988; Rodolfo C. Velasco on January 5, 1987; Armando Ballon on June 28, 1990; Victor Aldeza on March 21, 1990; and Jose L. Cabrera [in] January 1988. Napoleon Mamon started working for the [security agency] on October 7, 1989 and was assigned as office guard for three (3) days without any pay nor allowance as it was allegedly an on[-the-]job training so there [was] no pay[.] On October 10, 1989, he was transferred to the residence of Mr. Benito Ong with 12 hours duty a day receiving a salary very much less than the minimum wage for eight (8) hours work until February 3, 1990 when he received an order transferring him to Rosewood Processing, Inc. effective that date xxx; [a]t Rosewood Processing, Inc., he was required to render also 12 hours duty every day with a salary of P2,600.00/month. He was not given his pay for February 1 and 2 by the paymaster of [the security agency] allegedly because the payroll could not be located so after 3 to 4 times of going back and forth to *the security agencys+ office to get his salary*;+ *after+ xxx two (2) days he gave up because he was alre ady spending more than what he could get thru transportation alone. On May 16, 1991, Rosewood Processing, Inc. asked for the relief of Mamon and other guards at Rosewood because they came to know that complainants filed a complaint for underpayment on May 13, 1991 with the National Labor Relations Commission[.] On May 18 to 19, 1991, [the security agency] assigned him to their [m]ain [o]ffice. After that,

complainant was floated until May 29, 1991 when he was assigned to Mead Johnson Philippines Corporation. [A]t about a week later, [the security agency+ received summons on complainants complaint for underpayment and he was called to *the security agencys+ office. When he reported, he was told to sign a Quitclaim and Waiver*+ by Lt. R. Rodriguez because according to the latter, he *cou ld] only get a measly sum from his complaint with the NLRC and if he (complainant) [signed] the quitclaim and waiver he [would] be retained at his present assignment which [was] giving quite a good salary and other benefits but if he [did] not sign the quitclaim and waiver, he [would] be relieved from his post and [would] no longer be given any assignment. xxx He was given up to the end of July 1991 to think it over. At the end of July 1991, h[e] was approached by the Security in Charge A. Azuela and asked him to sign the quitclaim and waiver and when he refused to sign, he was told that the following day August 1, 1991, he [would have] no more assignment and should report to their office. Thinking that it was only a joke, he reported the following day to the detachment commander Mr. A. Yadao and he was told that the main office xxx relieved him because he did not sign the quitclaim and waiver. He reported to their office asking for an assignment but he was told by R. Rodriguez that I no longer can be given an assignment so I had better resign. He went back several times to the office of the [security agency] but every time the answer was the same[:] that he better tender his resignation because he cannot be given any assignment although respondent was recruiting new guards and posting them. Arsenio Gazzingan started to work for the [security agency] on September 29, 1988. [Note: the introductory paragraph stated September 25, 1988.] He was assigned to Purefoods Breeding Farm at Calauan, Laguna and given a salary of P54.00 a day working eight (8) hours. After three (3) months, he was given an examination and passed the same. On December 26, 1988, he was given an increase and was paid P64.00/day working eight (8) hours; [h]e remained at the same post for 8 months and transferred to Purefoods Feed Mill at Sta. Rosa, Laguna, with the same salary and the same tour of duty, 8 hours[.] After four (4) months, he was transferred to Purefoods Grand Perry at Sta. Rosa, Laguna, and after eleven (11) days on June 1989, he was transferred to Rosewood Processing, Inc. at Meycauayan, Bulacan and required to work for 12 hours at a salary of P94.00/day for one year. [In] June 1990, he was assigned at Purefoods DELPAN [to] guard x x x a barge loaded with corn and rendered 12 hours work/day with a salary of only P148.00/day and after 24 days, he was floated for one month. He reported to *the security agencys+ office and was assigned to Purefoods Breeder Farm in Canlubang rendering 8 hou rs work per day receiving only P78.00/day. After 11 days, he asked to be transferred to Manila[.] [B]ecause of the distance from his home xxx the transfer was approved but instead of being transferred to Manila, he was assigned to Purefoods B-F-4 in Batangas rendering 12 hours duty/day and receiving only P148.00 per day until January 28, 1991[;] and again he requested for transfer which was also approved by the *security agencys+ office*,+ but since then he was told to come back again and again. *U+p to the present he has not been g iven any assignment. Because of the fact that his family [was] in danger of going hungry, he sought relief from the NLRC-NCR-Arbitration Branch. Rodolfo Velasco started working for the [security agency] on January 5, 1987. He was assigned to PCI Bank Elcano, Tondo Branch, as probationary, and [for] working 8 hours a day for 9 days he received only P400.00. On January 16, 1987, he was assigned to [the security agencys+ headquarters up to January 31, 1987, working 12 hours a day*; he+ received only P650.00 for the 16 days. On Septem ber 1, 1988, he was assigned to Imperial Synthetic Rubber Products rendering 12 hours duty per day until December 31, 1988 and was given a salary of P1,600.00/month. He was later transferred to various posts like Polypaper Products working 12 hours a day given a salary of P1,800.00 a month; Paramount Electrical, Inc. working 12 hours a day given P1,100.00 for 15 days; Rosewood Processing, Inc., rendering 12 hours duty per day receiving P2,200.00/month until May 16, 1991[;] Alen Engineering rendering 12 hours duty/day receiving P1,100/month; Purefoods Corporation on Delta II rendering 12 hours duty per day received P4,200.00 a month. He was relieved on August 24 and his salary for the period August 20 to 23 has not been paid by [the security agency.] He was suspended for no cause at all. Armando Ballon started as security guard with [the security agency] July 1990 [Note: the introductory paragraph stated June 28, 1990] and was assigned to Purefoods Corporation in Marikina for five (5) months and received a salary of P50.00 per day for 8 hours. He was transferred to Rosewood Processing, Inc. on November 6, 1990 rendering 12 hours duty as [d]etachment [c]ommander and a salary of P2,700.00/month including P200.00 officers allowance until May 15, 1991. On May 16, 1991, he applied for sick leave on orders of his doctor for 15 days but the HRM, Miss M. Andres[,] got angry and crumpled his application for sick leave, that [was] why he was not able to forward it to the SSS. After 15 days, he came back to the office of [the security agency] asking for an assignment and he was told that he [was] already terminated. Complainant found out that the reason why Miss Andres crumpled his application for sick leave was because of the complaint he previously filed and was dismissed for failure to appear. He then refiled this case to seek redress from this Office. Jose L. Cabrera started working for the [security agency] as security guard January, 1988 and was assigned to Alencor Residence rendering 12 hours duty per day and received a salary of P2,400.00 a month for 3 months[.] [I]n May, 1988, he was transferred to E & L Restaurant rendering 12 hours duty per day and receiv[ing] a salary of P1,500.00 per month for 6 months[.] [I]n January, 1989, he was transferred to Paramount rendering 12 hours duty per day receiving only P1,800.00 per month for 6 months[.] [I]n July 1989, he was transferred to Benito Ong*s+ residence rendering 12 hours duty per day and receiving a salary of P1,400.00 per month for 4 months*.+ *I+n December, 1989, he was transferred to Sea Trade International rendering xxx 12 hours duty per day and receiving a salary of P1,900 per month for 6 months[.] [I]n July, 1990, he was transferred to Holland Pacific & Paper Mills rendering 8 hours duty per day and receiving a salary of P2,400.00 per month until September 1990[.] [In] October 1990, he was transferred to RMG residence rendering 12 hours duty per day receiving a salary of P2,200.00 per month for 3 months[.] [In] February 1991, he was transferred to Purefoods Corporation at Mabini, Batangas rendering 12 hours duty per day with a salary of P3,600.00 per month for only one month because he was hospitalized due to a stab wound inflicted by his [d]etachment [c]ommander. When he was discharged from the hospital and after he was examined and declared fit to work by the doctor, he reported back to *the security agencys+ office but was given the run -around [and was told to] come back tomorrow*.+ *H+e *could+ see that *the agency was+ posting new recruits. He then complained to this Honorable Of fice to seek redress, hiring the services of a counsel. Victor Aldeza started working for the [security agency] on March 21, 1990 and was assigned to Meridian Condominium, rendering 12 hours work per day and receiving a salary of P1,500.00 per month. Although he knew that the salary was below minimum yet he persevered because he had spent much to get this job and stayed on until October 15, 1990[.] On October 16, 1990, he was transferred to Rosewood Processing, Inc., rendering 12 hours duty per day and receiving a salary of P2,600.00 per month up to May 15, 1991[.] On the later part of May 1991, he was assigned to UPSSA (Sandoval Shipyard) rendering 12 hours duty per day receiving a salary of P3,200.00 per month.

[Aldeza] complained to [the security agency] about the salary but [the agency] did not heed him; thus, he filed his complaint for underpayment*.+ *The agency+ upon complainants complaint for underpayment xxx, instead of adjusting his salary to meet the minimum prescribed by law[,] relieved him and left him floating[.] xxx When he complained of the treatment, he was told to resign because he could no longer be given any assignment. Because of this, complainant was forced to file another complaint for illegal dismissal. Labor Arbiters Ruling The labor arbiter noted the failure of the security agency to present evidence to refute the complainants allegation. Inste ad, it impleaded the petitioner as third-party respondent, contending that its actions were primarily caused by petitioners nonco mpliance with its obligations under the contract for security services, and the subsequent cancellation of the said contract. The labor arbiter held petitioner jointly and severally liable with the security agency as the complainants indirect employe r under Articles 106, 107 and 109 of the Labor Code, citing the case of Spartan Security & Detective Agency, Inc. vs. National Labor Relations Commission.[8] Although the security agency could lawfully place the complainants on floating status for a period not exceeding six months, the act was illegal because the former had issued a newspaper advertisement for new security guards. Since the relation between the co mplainants and the agency was already strained, the labor arbiter ordered the payment of separation pay in lieu of reinstatement. The award for wage differential, limited back wages and separation pay contained the following details: 1. Napoleon Mamon P45,959.02 72,764.38 __7,687.70 P126,411.10

Wage Differentials Backwages Separation Pay 2. Arsenio Gazzingan

Wage Differentials Backwages Separation Pay 3. Rodolfo Velasco

P24,855.76 96,096.25 __7,687.70 P128,639.71

Wage Differentials Backwages Separation Pay 4. Armando Ballon

P66,393.58 69,189.30 _11,531.55 P147,114.43

Wage Differentials Backwages Separation Pay 5. Jose Cabrera

P31,176.85 81,874.00 __3,843.85 P116,894.70

Wage Differentials Backwages Separation Pay 6. Victor Aldeza

P30,032.63 91,483.63 _11,531.55 P133,047.81

Wage Differentials Backwages Separation Pay

P49,406.86 83,795.93 __3,843.85 P137,046.64

P789,154.39 ========= Ruling of Respondent Commission As earlier stated, Respondent Commission dismissed petitioners appeal, because it was allegedly not perfected within the reglementary ten-day period. Petitioner received a copy of the labor arbiters Decision on April 2, 1993, and it filed its Memorandum of Appe al on April 12, 1993. However, it submitted the appeal bond on April 26, 1993, or twelve days after the expiration of the period for appeal per Rule VI, Sections 1, 3 and 6 of the 1990 Rules of Procedure of the National Labor Relations Commission. Thus, it ruled that the labor arbiters Decision became final and executory on April 13, 1993. In the assailed Order, Respondent Commission denied reconsideration, because petitioner allegedly failed to raise any palpable or patent error committed by said commission. Assignment of Errors Petitioner imputes the following errors to Respondent Commission: Respondent NLRC committed grave abuse of discretion amounting to lack of jurisdiction when it dismissed petitioners appeal despite the fact that the same was perfected within the reglementary period provided by law. Respondent NLRC committed grave abuse of discretion amounting to lack of jurisdiction when it dismissed petitioners appeal d espite the clearly meritorious grounds relied upon therein. Otherwise stated, the petition raises these two issues: first, whether the appeal from the labor arbiter to the NLRC was perfected on time; and second, whether petitioner is solidarily liable with the security agency for the payment of back wages, wage differential and separation pay. The Courts Ruling The petition is impressed with some merit and deserves partial grant. First Issue: Substantial Compliance with the Appeal Bond Requirement The perfection of an appeal within the reglementary period and in the manner prescribed by law is jurisdictional, and noncompliance with such legal requirement is fatal and effectively renders the judgment final and executory.[9] The Labor Code provides: ART. 223. Appeal.Decisions, awards or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. xxx xxx xxx xxx

In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from. xxx xxx x x x.

Indisputable is the legal doctrine that the appeal of a decision involving a monetary award in labor cases may be perfected only upon the posting of a cash or surety bond.*10+ The lawmakers intended the posting of the bond to be an indispensable requirem ent to perfect an employers appeal.*11+ However, in a number of cases, this Court has relaxed this requirement in order to bring about the immediate and appropriate resolution of controversies on the merits.*12+ Some of these cases include: (a) counsel s reliance on the footnote of the notice of the decision of the labor arbiter that the aggrieved party may appeal xxx within ten (10) working days; (b) fundamental consideration of substantial justice; (c) prevention of miscarriage of justice or of unjust enrichment, as where the tardy appeal is from a decision granting separation pay which was already granted in an earlier final decision; and (d) special circumstances of the case combined with its legal merits or the amount and the issue involved.*13+ In Quiambao vs. National Labor Relations Commission,[14] this Court ruled that a relaxation of the appeal bond requirement could be justified by substantial compliance with the rule. In Globe General Services and Security Agency vs. National Labor Relations Commission,[15] the Court observed that the NLRC, in actual practice, allows the reduction of the appeal bond upon motion of the appellant and on meritorious grounds; hence, petitioners in that case should have filed a motion to reduce the bond within the reglementary period for appeal.

That is the exact situation in the case at bar. Here, petitioner claims to have received the labor arbiters Decision on Apr il 6, 1993.[16] On April 16, 1993, it filed, together with its memorandum on appeal[17] and notice of appeal, a motion to reduce the appeal bond[18] accompanied by a surety bond for fifty thousand pesos issued by Prudential Guarantee and Assurance, Inc.[19] Ignoring petitio ners motion (to reduce bond), Respondent Commission rendered its assailed Resolution dismissing the appeal due to the late filing of the appeal bond. The solicitor general argues for the affirmation of the assailed Resolution for the sole reason that the appeal bond, even if it was filed on time, was defective, as it was not in an amount equivalent to the monetary award in the judgment appealed from. The Court disagrees. We hold that petitioners motion to reduce the bond is a substantial compliance with the Labor Code. This holding is consist ent with the norm that letter-perfect rules must yield to the broader interest of substantial justice.[20] Where a decision may be made to rest on informed judgment rather than rigid rules, the equities of the case must be accorded their due weight because labor determinations should not only be secundum rationem but also secundum caritatem.*21+ A judicious reading of the memorandum of appeal would have made it evident to Respondent Commission that the recourse was meritorious. Respondent Commission acted with grave abuse of discretion in peremptorily dismissing the appeal without passing upon -- in fact, ignoring -- the motion to reduce the appeal bond. We repeat: Considering the clear merits which appear, res ipsa loquitur, in the appeal from the labor arbiters Decision, and the petitioners substantial compliance with rules governing appeals, we hold that the NLRC gravely abused its discretion in dismissin g said appeal and in failing to pass upon the grounds alleged in the Motion for Reconsideration. Second Issue: Liability of an Indirect Employer The overriding premise in the labor arbiters Decision holding the security agency and the petitioner liable was that said pa rties offered no evidence refuting or rebutting the complainants computation of their monetary claims. The arbite r ruled that petitioner was liable in solidum with the agency for salary differentials based on Articles 106, 107 and 109 of the Labor Code which hold an employer jointly and severally liable with its contractor or subcontractor, as if it is the direct employer. We quote said provisions below: ART. 106. Contractor or subcontractor. -- Whenever an employer enters into a contract with another person for the performance of the formers work, the employees of the contractor and of the latters subcontracto r, if any, shall be paid in accordance with the provisions of this Code. In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. xxx xxx x x x.

ART. 107. Indirect employer. -- The provisions of the immediately preceding Article shall likewise apply to any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project. ART. 109. Solidary liability. -- The provisions of existing laws to the contrary notwithstanding, every employer or indirect employer shall be held responsible with his contractor or subcontractor for any violation of any provision of this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be considered as direct employers. Upon the other hand, back wages and separation pay were awarded because the complainants were constructively and illegally dismissed by the security agency which placed them on floating status and at the same time gave assignments to newly hired security guards. Noting that the relationship between the security agency and the complainants was already strained, the labor arbiter granted separation pay in lieu of reinstatement. In its memorandum of appeal, petitioner controverts its liability for the mentioned monetary awards on the following grounds:[22] A. Complainant Jose Cabrera never rendered security services to *petitioner+ or was *n+ever assigned as security guard *for+ the latters business establishment; B. Complainants Napoleon Mamon, Arsenio Gazzingan, Rodolfo Velasco, Armando Ballon and Victor Aldeza rendered security services to [petitioner] for a fixed period and were thereafter assigned to other entities or establishments or were floated or recalled to the headquarters of Veterans; and, C. The relationship between [petitioner] and Veterans was governed by a Contract for Guard Services under which [petitioner] dutifully paid a contract price of P3,500.00 a month for 12 hour duty per guard and later increased to P4,250.00 a month for 12 hour duty per guard which are within the prevailing rates in the industry and in accordance with labor standard laws. The first two grounds are meritorious. Legally untenable, however, is the contention that petitioner is not liable for any wage differential for the reason that it paid the employees in accordance with the contract for security services which it had entered into with the security agency. Notwithstanding the service contract between the petitioner and the security agency, the former is still solidarily liable to the

employees, who were not privy to said contract, pursuant to the aforecited provisions of the Code. Labor standard legislations are enacted to alleviate the plight of workers whose wages barely meet the spiraling costs of their basic needs. They are considered written in every contract, and stipulations in violation thereof are considered not written. Similarly, legislated wage increases are deemed amendments to the contract. Thus, employers cannot hide behind their contracts in order to evade their or their contractors or subcontractors liability for noncompliance with the statutory minimum wage. The joint and several liability of the employer or principal was enacted to ensure compliance with the provisions of the Code, principally those on statutory minimum wage. The contractor or subcontractor is made liable by virtue of his or her status as a direct employer, and the principal as the indirect employer of the contractors employees. This liability facilitates, if not guarantees, payment of the workers compensation, thus, giving the workers ample protection as mandated by the 1987 Constitution.[23] This is not unduly burdensome to the employer. Should the indirect employer be constrained to pay the workers, it can recover whatever amount it had paid in accordance with the terms of the service contract between itself and the contractor.[24] Withal, fairness likewise dictates that the petitioner should not, however, be held liable for wage differentials incurred while the complainants were assigned to other companies. Under these cited provisions of the Labor Code, should the contractor fail to pay the wages of its employees in accordance with law, the indirect employer (the petitioner in this case), is jointly and severally liable with the contractor, but such responsibility should be understood to be limited to the extent of the work performed under the contract, in the same manner and extent that he is liable to the employees directly employed by him. This liability of petitioner covers the payment of the workers performance of any work, task, job or project. So long as the work, task, job or project has been performed for petitioners benefit or on its behalf, the liability accrues for such period even if, later on, the employees are eventually transferred or reassigned elsewhere. We repeat: The indirect employers liability to the contractors employees extends only to the period during which they were working for the petitioner, and the fact that they were reassigned to another principal necessarily ends such responsibility. The principal is made liable to his indirect employees, because it can protect itself from irresponsible contractors by withholding such sums and paying them directly to the employees or by requiring a bond from the contractor or subcontractor for this purpose. Similarly, the solidary liability for payment of back wages and separation pay is limited, under Article 106, to the extent of the work performed under the contract; under Article 107, to the performance of any work, task, job or project; and under Article 109, to the extent of their civil liability under this Chapter *on payment of wages+. These provisions cannot apply to petitioner, considering that the complainants were no longer working for or assigned to it when they were illegally dismissed. Furthermore, an order to pay back wages and separation pay is invested with a punitive character, such that an indirect employer should not be made liable without a finding that it had committed or conspired in the illegal dismissal. The liability arising from an illegal dismissal is unlike an order to pay the statutory minimum wage, because the workers ri ght to such wage is derived from law. The proposition that payment of back wages and separation pay should be covered by Article 109, which holds an indirect employer solidarily responsible with his contractor or subcontractor for any violation of any provision of this Code, would have been tenable if there were proof -- there was none in this case -- that the principal/employer had conspired with the contractor in the acts giving rise to the illegal dismissal. With the foregoing discussion in mind, we now take up in detail the petitioners liability to each of the complainants. Case No. NCR-00-08-04630-91 Mamon worked for petitioner for a period of a little more than one year beginning February 3, 1990 until May 16, 1991. Inasmuch as petitioner was his indirect employer during such time, it should thus be severally liable for wage differential from the time of his employment until his relief from duty. He was relieved upon the request of petitioner, after it had learned of the complaint for underpayment of wages filed by Mamon and several other security guards. However, this was not a dismissal from work because Mamon was still working for the security agency and was immediately assigned, on May 29, 1991, to its other client, Mead Johnson Philippines. His dismissal came about later, when he refused to sign a quitclaim and waiver in favor of the security agency. Thus, he was illegally dismissed by the agency when he was no longer employed by petitioner, which cannot thus be held liable for back wages and separation pay in his case. Napoleon Mamon x x x received an order transferring him to Rosewood Processing, Inc. effective x x x February 3, 1990; x x x. On May 16, 1991, Rosewood Processing, Inc. asked for the relief of Mamon and other guards at Rosewood because they came to know that complainants filed a complaint for underpayment on May 13, 1991 with the National Labor Relations Commission[.] x x x After that, complainant was floated until May 29, 1991 when he was assigned to Mead Johnson Philippines Corporation. x x x [A] week later, [the security agency+ received summons on complainants complaint for underpayment and he was called to [the security agency] office. When he reported, he was told to sign a Quitclaim and Waiver*+ by Lt. R. Rodriguez x x x and x x x if he *did+ not sign the quit claim and waiver, he [would] be relieved from his post and [would] no longer be given any assignment. xxxx At the end of July 1991, he was approached by the Security in Charge, A. Azuela, x x x [for him] to sign the quitclaim and waiver[,] and when he refused to sign, he was told that x x x he ha[d] no more assignment and should report to their office. x x x [H]e reported the following day to the detachment commander, Mr. A. Yadao and he was told that the main office ha[d] relieved him x x x. He reported to their office asking for an assignment but he was told by R. Rodriguez that I no longer can be given an assignment so I had better resign. He went back several times to the office of the *securit y agency+ but every time the answer was the same x x x although respondent was recruiting new guards and posting them.*25+

Case No. NCR-00-07-03966-91 Gazzingan was assigned to petitioner as a security guard for a period of one year. For said period, petitioner is solidarily liable with the agency for underpayment of wages based on Articles 106, 107 and 109 of the Code. Arsenio Gazzingan x x x after eleven (11) days on June 1989, xxx was transferred to Rosewood Processing, Inc. x x x. [I]n June 1990, he was assigned at Purefoods DELPAN x x x. After 11 days, he asked to be transferred to Manila because of the distance from his home and the transfer was approved but instead of being transferred to Manila, he was assigned to Purefoods B-F-4 in Batangas x x x again he requested for transfer which was also approved by the [security agency] office but since then he was told to come back again and again and up to the present he has not been given any assignment. x x x x.*26+ His dismissal cannot be blamed on the petitioner. Like Mamon, Gazzingan had already been assigned to another client of the agency when he was illegally dismissed. Thus, Rosewood cannot be held liable, jointly and severally with the agency, for back wages and separation pay. Case No. NCR-00-07-03967-91 Rodolfo Velasco was assigned to petitioner from December 31, 1988 until May 16, 1991. Thus, petitioner is solidarily liable for wage differentials during such period. Petitioner is not, however, liable for back wages and separation pay, because Velasco was no longer working for petitioner at the time of his illegal dismissal. Rodolfo Velasco started working for the [security agency] on January 5, 1987. x x x [On] December 31, 1988 xxx he was x x x transferred to various posts like x x x Rosewood Processing, Inc., x x x until May 16, 1991 x x x. He was relieved on August 24 and his salary for the period August 20 to 23 has not been paid by *the security agency+; *h+e was suspended for no cause at all.*27+ Case No. NCR-00-07-0445-91 Petitioner was the indirect employer of Ballon during the period beginning November 6, 1990 until May 15, 1991; thus, it is liable for wage differentials for said period. However, it is not liable for back wages and separation pay, as there was no evidence presented to show that it participated in Ballons illegal dismissal. x x x *H+e *Armando Ballon+ was transferred to Rosewood Processing, Inc. on November 6, 1990 rendering 12 hours duty as [d]etachment *c+ommander and received a salary of P2,700.00/month including P200.00 officers allowance until May 15, 1991. On May 16, 19 91, he applied for sick leave on orders of his doctor for 15 days but the HRM, Miss M. Andres[,] got angry and crumpled his application for sick leave that is why he was not able to forward it to the SSS. After 15 days, he came back to the office of [the security agency] asking for an assignment and he was told that he [was] already terminated. Complainant found out that the reason why Miss Andres crumpled his application for sick leave was because of the complaint he previously filed and was dismissed for failure to appear. He then refiled this case to seek redress from this Office.*28+ Case No. NCR-00-08-05030-91 Petitioner is liable for wage differentials in favor of Aldeza during the period he worked with petitioner, that is, October 16, 1990 until May 15, 1991. x x x On October 16, 1990, he [Aldeza] was transferred to Rosewood Processing, Inc., x x x up to May 15, 1991[.] On the later part of May 1991, he was assigned to UPSSA (Sandoval Shipyard) x x x. Complainant [sic] complained to [the security agency] about the salary but [the security agency+ did not heed him; thus, he filed his complaint for underpayment*.+ *The security agency+ upon complainants complain t for underpayment reacted xxx, instead of adjusting his salary to meet the minimum prescribed by law[,] relieved him and left him floating[;] and when he complained of the treatment, he was told to resign because he could no longer be given any assignment. Because of this, complainant was forced to file another complaint for illegal dismissal.*29+ The cause of Aldezas illegal dismissal is imputable, not to petitioner, but solely to the security agency. In Aldezas case, the solidary liability for back wages and separation pay arising from Articles 106, 107 and 109 of the Code has no application. Case No. NCR-00-09-05617-91 Cabrera was an employee of the security agency, but he never rendered security services to petitioner. This fact is evident in the labor arbiters findings: Jose L. Cabrera started working for the *security agency+ as *a+ security guard on January, 1988 an d was assigned to Alencor Residence x x x. [I]n May, 1988, he was transferred to E & L Restaurant x x x[.] [I]n January, 1989, he was transferred to Paramount x x x[.] [I]n July 1989, he was transferred to Benito Ong*s+ residence x x x*.+ *I+n December, 1989, he was transferred to Sea Trade International xxx[.] [I]n July, 1990, he was transferred to Holland Pacific & Paper Mills x x x[.] [I]n October 1990, he was transferred to RMG [R]esidence x x x[.] [I]n February 1991, he was transferred to Purefoods Corporation at Mabini, Batangas x x x. When he was discharged from the hospital and after he was examined and declared fit to work by the doctor, he reported back to *the security agency+ office but was give n the runaround *and was told to+ come back tomorrow*,+ although he *could+ see that *it was+ posting new recruits. He then complained to this Honorable Office to seek redress, hiring the services of a counsel.*30+ Hence, petitioner is not liable to Cabrera for anything.

In all these cases, however, the liability of the security agency is without question, as it did not appeal from the Decisions of the labor arbiter and Respondent Commission. WHEREFORE, the petition is partially GRANTED. The assailed Decision is hereby MODIFIED, such that petitioner, with the security agency, is solidarily liable to PAY the complainants only wage differentials during the period that the complainants were actually under its employ, as above detailed. Petitioner is EXONERATED from the payment of back wages and separation pay. The temporary restraining order issued earlier is LIFTED, but the petitioner is deemed liable only for the aforementioned wage differentials which Respondent Commission is required to RECOMPUTE within fifteen days from the finality of this Decision. No costs. SO ORDERED. G.R. No. 78382 December 14, 1987 BROADWAY MOTORS, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and VICENTE APOLINARIO, respondents. FELICIANO, J.: By virtue of a written undated "Work Contract," 1 private respondent Vicente Apolinario, sometime in March 1967, began work as an auto painter in the premises of petitioner Broadway Motors, Inc. located at 1232 United Nations Avenue, Metro Manila. The contract was signed by Vicente Apolinario as "Contractor"and Mr. Johnny L. Chieng, Parts and Service Operations Manager of petitioner Corporation. Apolinario worked as an auto painter for a period of eighteen (18) years, until 23 January 1985 when he was barred from entering the premises of the petitioner Corporation, and his alleged involvement in a fist-fight with the shop superintendent of Broadway Motors the day before. On 21 February 1985, Apolinario commenced an action for illegal dismissal with the National Capital Region Arbitration Branch of the National Labor Relations Commission (NLRC). In his Complaint, which was docketed as NLRC Case No. 2587-85, Apolinario sought recovery from petitioner Corporation of (1) separation pay in the amount of P66,676.95, on the basis of an alleged monthly income of P7,408.55, (2) moral damages of P50,000.00, and (3) attorney's fees of P10,000.00. In a Decision dated 2 January 1986, the Labor Arbiter dismissed the complaint upon the ground that under the Work Contract and an "Addendum to Work Contract" dated 28 April 1984, 3 Apolinario, having supplied the workers himself included who performed the auto painting jobs for petitioner Corporation, was a mere contractor and could not, therefore, be considered as the latter's employee. From this decision, Apolinario interposed an appeal to the NLRC. On 4 February 1987, public respondent NLRC rendered a Decision, 4 the dispositive portion of which reads: WHEREFORE, the Decision appealed from is reversed and a new judgment entered ordering the respondent to pay complainant separation pay in the sum of FORTY FIVE THOUSAND (P45,000-00) PESOS plus 10% thereof as and for attorney's fees. SO ORDERED. In reversing the decision of the Labor Arbiter, public respondent NLRC found that a valid and binding employer-employee relationship had existed between petitioner Corporation and Apolinario. Since Apolinario was dismissed without any investigation having been previously conducted by petitioner Corporation to ascertain his participation in the fistfight within company premises, his dismissal was, accordingly, declared illegal by public respondent NLRC for non-compliance with the requirements of procedural due process. After a careful scrutiny of the records of this case, the Court considers that petitioner Corporation has not sufficiently shown that respondent NLRC had acted with grave abuse of discretion, or without or in excess of jurisdiction in rendering its decision dated 4 February 1987. Four factors are generally considered in determining the existence of an employer-employee relationship, namely: (a) the manner of selection and engagement of the putative employee; (b) the mode of payment of wages; (c) the presence or absence of a power of dismissal; and (d) the presence or absence of a power to control the putative employee's conduct. It is this latter factor, the so-called "control test," which is the most important criterion in such determination. 5 The record shows that Apolinario was hired directly by petitioner Corporation to work in the latter's auto repair shop as an auto painter, which fact is evidenced by the undated Work Contract executed between Apolinario and petitioner Corporation through its authorized representative. That petitioner corporation reserved unto itself the power of dismissal is evident from the fact that petitioner Corporation unilaterally undertook to terminate Apolinario's relationships with itself. Upon the other hand, it appears that Apolinario and his men (designated in the Work Contract as "Contract Workers") were compensated for the jobs they performed in lump sum payments described as "payment for sub-contract painting" or other repair job, from which amounts an unexplained "three percent (3 %) of fifteen percent (I 5 %) withholding tax " was deducted. It further appears that Apolinario invoiced, under the designation of "VM Automotive Repair Service, " to petitioner Corporation the salaries of his "Contract Workers" on which amounts, a three percent (3%) "sales tax" was added. The "Work Contract" also provided that Broadway Motors would negotiate only with Apolinario on any work order, and would refrain from dealing with any member of Apolinario's group of "Contract Workers. 6 Turning to the power to control Apolinario's conduct appears from the stipulations of the Work Contract that Apolinario and his "Contract Workers" were required not only to keep regular working hours, but to render overtime service as well, when such as necessitated either by the volume or immediacy of the work. 7 They were not allowed to negotiate with customers regarding the performance of any additional work beyond that which had been authorized by petitioner Corporation. 8 Any defect in the workmanship of their jobs was subject to correction by petitioner Corporation's designated supervisors and inspectors even as the work was still in progress, and not just

after the same had already been completed. 9 Furthermore, Apolinario and his men were expressly required to abide by petitioner Corporation's regulations and policies, "particularly on the wearing of uniforms and Identification cards, " which Id cards had to be worn at all times while within the work premises. Apolinario's "casual workers" were additionally required to deposit their Id cards with petitioner Corporation's security guard at the end of the working day. 10 In other words, Apolinario and his "Contract Workers" were under the direct control and supervision of the supervisors and managers of petitioner Corporation from the very moment they entered the work premises at the beginning of the working day, all throughout the performance of their duties for the day, until shop closing time. Petitioner Corporation urges that Apolinario was not its own employee but, rather, an independent contractor who conducted his own separate business under the trade name of "VM Automotive Repair Service" and had his own "Contract Workers." The indices of an owner-independent contractor relationship are set out in Section 8 of Rule VIII, Book Ill of the Omnibus Rules Implementing the Labor Code. Section 8 provides: Job contracting. There is job contracting permissible under the Code if the following conditions are met: (1) The contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and (2) The contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of his business. (Emphasis supplied.) "Job contracting" must be distinguished from "labor-only" contracting. "Labor-only" contracting is defined in Section 9 of Rule VIII, Book Ill of the Omnibus Rules Implementing the Labor Code, in the following terms: Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an employer shall be deemed to be engaged in labor-only contracting where such person: (1) Does not have substantial capital or investment in the form of tools, equipment, machineries, work premises and other materials; and (2) The workers recruited and Placed by such person are performing activities which are directly related to the principal business or operations of the employer in which workers are habitually employed. (b) Labor-only contracting as defined herein is hereby prohibited and the person acting as contractor shall be considered merely as an agent or intermediary of the employer who shall be responsible to the workers in the same manner and extent as if the latter were xxx xxx xxx (Emphasis supplied.)

The legal effect of a finding that a contractor was not a true independent contractor or "job contractor" but, rather, merely a "labor-only" contractor was explained in Philippine Bank of Communications v. National Labor Relations Commission et al. 11 ... The "labor-only" contractor i.e., "the person or intermediary is considered "merely as an agent of the employer." The employer is made by the statute responsible to the employees of the "labor only" contractor as if such employee had been directly employed by the employer. Thus, where "labor only contracting exists in a given case, the statute itself implies or establishes an employer-employee relationship between the employer (the owner of the project) and the employees of the "labor only contractor, this time for a comprehensive purpose: "employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code. The law in effect holds both the employer and the "labor-only" contractor responsible to the latter's employees for the more effective safeguarding of the employees' rights under the labor Code. (Emphasis supplied.) Thus, a finding that a contractor was a "labor-only" contractor is equivalent to a finding that an employer-employee relationship existed between the owner and the "labor-only" contractor including the latter"s "Contract Workers," that relationship being attributed by the law itself. Petitioner Corporation"s defense thus compels us to examine still further the relationship between itself and private respondent Apolinario in terms of the above indices of contracting "job" or "labor-only. " We note firstly that, under the Work Contract, Apolinario supplied only "labor and supervision (over his "Contract Workers") in the performance of automotive body painting work which the company (i.e., Broadway Motors) may from time to time, award to him under (the) contract." 12 Apolinario also undertook to "hire and bring in additional workers as may be required by the company, to handle additional work load or to accelerate or facilitate completion of work in process. 13 Petitioner Corporation supplied all the tools, equipment, machinery and materials necessary for Apolinario to carry out his assigned painting jobs, which painting jobs were executed by Apolinario and his men within the premises owned and maintained by petitioner Corporation. The control and direction exercised by petitioner Corporation over the work done by Apolinario and his "Contract Workers" was well- nigh complete, as indicated earlier. There was, furthermore, no evidence adduced by petitioner Corporation to show that Apolinario had substantial capital investment in "VM Automotive Repair Service" or that "VM Automotive Repair Service" carried on, in its own premises, a car repair business operation separate and distinct from that engaged in by petitioner Corporation, an operation the tools or equipment of which were owned by Apolinario and the customers of which were not customers of Broadway Motors. What the evidence of record reveals is that the alleged "Contract Work" carried out by Apolinario and his "Contract Workers," excepting overtime work, was performed during regular working hours six (6) days in a week, which circumstance must have made it virtually impossible for them to carry on any additional and

independent auto painting business outside the premises of Broadway Motors. Finally, Apolinario and his men were engaged in the performance of a line of work automobile painting which was directly related to, if not an integral part altogether of the regular business operations of petitioner Corporation i.e., that of an automotive repair shop. We conclude that while there is present in the relationship between petitioner Corporation and private respondent some factors suggestive of an owner- independent contractor relationship (e.g., the manner of payment of compensation to Apolinario and his "Contract Workers"), many other factors are present which demonstrate that that relationship is properly characterized as one of employer-employee. We conclude, further, that the same factors indicate the existence of a "labor-only" contracting arrangement between petitioner Corporation on the one hand as owner, and upon the other hand, Apolinario as "labor-only" contractor and his "Contract Workers." Thus, an employer-employee relationship must be held to have existed between petitioner Corporation and private respondent, whether considered as a result of the contractual arrangements between them or as a result of the operation of the Labor Code (at least from 1974 onwards) and its Implementing Rules. It follows, finally, that the ruling of public respondent NLRC that petitioner Corporation and private respondent were employer and employee, respectively, cannot be regarded as constituting a grave abuse of discretion or as rendered without or in excess of jurisdiction. In respect of public respondent NLRC"s finding that Apolinario was dismissed without any opportunity to present his side on the charge against him of participating in the fistfight with petitioner Corporation"s shop superintendent, no compelling reason has been shown by the petitioner Corporation why we should overturn such finding of fact. WHEREFORE, the Petition for certiorari is DISMISSED. The decision of the public respondent National Labor Relations Commission dated 4 February 1987 is hereby AFFIRMED. Costs against the petitioner. SO ORDERED. G.R. Nos. 97008-09 July 23, 1993 VIRGINIA G. NERI and JOSE CABELIN, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION FAR EAST BANK & TRUST COMPANY (FEBTC) and BUILDING CARE CORPORATION, respondents. BELLOSILLO, J.: Respondents are sued by two employees of Building Care Corporation, which provides janitorial and other specific services to various firms, to compel Far Bast Bank and Trust Company to recognize them as its regular employees and be paid the same wages which its employees receive. Building Care Corporation (BCC, for brevity), in the proceedings below, established that it had substantial capitalization of P1 Million or a stockholders equity of P1.5 Million. Thus the Labor Arbiter ruled that BCC was only job contracting and that consequently its employees were not employees of Far East Bank and Trust Company (FEBTC, for brevity). on appeal, this factual finding was affirmed by respondent National Labor Relations Commission (NLRC, for brevity). Nevertheless, petitioners insist before us that BCC is engaged in "labor-only" contracting hence, they conclude, they are employees of respondent FEBTC. Petitioners Virginia G. Neri and Jose Cabelin applied for positions with, and were hired by, respondent BCC, a corporation engaged in providing technical, maintenance, engineering, housekeeping, security and other specific services to its clientele. They were assigned to work in the Cagayan de Oro City Branch of respondent FEBTC on 1 May 1979 and 1 August 1980, respectively, Neri an radio/telex operator and Cabelin as janitor, before being promoted to messenger on 1 April 1989. On 28 June 1989, petitioners instituted complaints against FEBTC and BCC before Regional Arbitration Branch No. 10 of the Department of Labor and Employment to compel the bank to accept them as regular employees and for it to pay the differential between the wages being paid them by BCC and those received by FEBTC employees with similar length of service. On 16 November 1989, the Labor Arbiter dismissed the complaint for lack of merit. 1 Respondent BCC was considered an independent contractor because it proved it had substantial capital. Thus, petitioners were held to be regular employees of BCC, not FEBTC. The dismissal was appealed to NLRC which on 28 September 1990 affirmed the decision on appeal. 2 On 22 October 1990, NLRC denied reconsideration of its affirmance, 3 prompting petitioners to seek redress from this Court. Petitioners vehemently contend that BCC in engaged in "labor-only" contracting because it failed to adduce evidence purporting to show that it invested in the form of tools, equipment, machineries, work premises and other materials which are necessary in the conduct of its business. Moreover, petitioners argue that they perform duties which are directly related to the principal business or operation of FEBTC. If the definition of "labor-only" contracting 4 is to be read in conjunction with job contracting, 5 then the only logical conclusion is that BCC is a "labor only" contractor. Consequently, they must be deemed employees of respondent bank by operation of law since BCC is merely an agent of FEBTC following the doctrine laid down in Philippine Bank of Communications v. National Labor Relations Commission 6 where we ruled that where "labor-only" contracting exists, the Labor Code itself establishes an employer-employee relationship between the employer and the employees of the "labor-only" contractor; hence, FEBTC should be considered the employer of petitioners who are deemed its employees through its agent, "labor-only" contractor BCC. We cannot sustain the petition. Respondent BCC need not prove that it made investments in the form of tools, equipment, machineries, work premises, among others, because it has established that it has sufficient capitalization. The Labor Arbiter and the NLRC both determined that BCC had a capital stock of P1 million fully subscribed and paid for. 7 BCC is therefore a highly capitalized venture and cannot be deemed engaged in "labor-only" contracting.

It is well-settled that there is "labor-only" contracting where: (a) the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others; and, (b) the workers recruited and placed by such person are performing activities which are directly related to the principal business of the employer. 8 Article 106 of the Labor Code defines "labor-only" contracting thus Art. 106. Contractor or subcontractor. . . . . There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited by such persons are performing activities which are directly related to the principal business of such employer . . . . (emphasis supplied). Based on the foregoing, BCC cannot be considered a "labor-only" contractor because it has substantial capital. While there may be no evidence that it has investment in the form of tools, equipment, machineries, work premises, among others, it is enough that it has substantial capital, as was established before the Labor Arbiter as well as the NLRC. In other words, the law does not require both substantial capital and investment in the form of tools, equipment, machineries, etc. This is clear from the use of the conjunction "or". If the intention was to require the contractor to prove that he has both capital and the requisite investment, then the conjunction "and" should have been used. But, having established that it has substantial capital, it was no longer necessary for BCC to further adduce evidence to prove that it does not fall within the purview of "labor-only" contracting. There is even no need for it to refute petitioners' contention that the activities they perform are directly related to the principal business of respondent bank. Be that as it may, the Court has already taken judicial notice of the general practice adopted in several government and private institutions and industries of hiring independent contractors to perform special services. 9 These services range from janitorial, 10 security 11 and even technical or other specific services such as those performed by petitioners Neri and Cabelin. While these services may be considered directly related to the principal business of the employer, 12 nevertheless, they are not necessary in the conduct of the principal business of the employer. In fact, the status of BCC as an independent contractor was previously confirmed by this Court in Associated Labor Unions-TUCP v. National Labor Relations Commission, 13 where we held thus The public respondent ruled that the complainants are not employees of the bank but of the company contracted to serve the bank. Building Care Corporation is a big firm which services, among others, a university, an international bank, a big local bank, a hospital center, government agencies, etc. It is a qualified independent contractor. The public respondent correctly ruled against petitioner's contentions . . . . (Emphasis supplied). Even assuming ex argumenti that petitioners were performing activities directly related to the principal business of the bank, under the "right of control" test they must still be considered employees of BCC. In the case of petitioner Neri, it is admitted that FEBTC issued a job description which detailed her functions as a radio/telex operator. However, a cursory reading of the job description shows that what was sought to be controlled by FEBTC was actually the end-result of the task, e.g., that the daily incoming and outgoing telegraphic transfer of funds received and relayed by her, respectively, tallies with that of the register. The guidelines were laid down merely to ensure that the desired end-result was achieved. It did not, however, tell Neri how the radio/telex machine should be operated. In the Shipside case, 14 we ruled . . . . If in the course of private respondents' work (referring to the workers), SHIPSIDE occasionally issued instructions to them, that alone does not in the least detract from the fact that only STEVEDORES is the employer of the private respondents, for in legal contemplation, such instructions carry no more weight than mere requests, the privity of contract being between SHIPSIDE and STEVEDORES . . . . Besides, petitioners do not deny that they were selected and hired by BCC before being assigned to work in the Cagayan de Oro Branch of FFBTC. BCC likewise acknowledges that petitioners are its employees. The record is replete with evidence disclosing that BCC maintained supervision and control over petitioners through its Housekeeping and Special Services Division: petitioners reported for work wearing the prescribed uniform of BCC; leaves of absence were filed directly with BCC; and, salaries were drawn only from BCC. 15 As a matter of fact, Neri even secured a certification from BCC on 16 May 1986 that she was employed by the latter. On the other hand, on 24 May 1988, Cabelin filed a complaint for underpayment of wages, non-integration of salary adjustments mandated by Wage Orders Nos. 5 & 6 and R.A. 6640 as well as for illegal deduction 16 against BCC alone which was provisionally dismissed on 19 August 1988 upon Cabelin's manifestation that his money claim was negligible. 17 More importantly, under the terms and conditions of the contract, it was BCC alone which had the power to reassign petitioners. Their deployment to FEBTC was not subject to the bank's acceptance. Cabelin was promoted to messenger because the FEBTC branch manager promised BCC that two (2) additional janitors would be hired from the company if the promotion was to be effected. 18 Furthermore, BCC was to be paid in lump sum unlike in the situation in Philippine Bank of Communications 19 where the contractor, CESI, was to be paid at a daily rate on a per person basis. And, the contract therein stipulated that the CESI was merely to provide manpower that would render temporary services. In the case at bar, Neri and Cabelin were to perform specific special services. Consequently, petitioners cannot be held to be employees of FEBTC as BCC "carries an independent business" and undertaken the performance of its contract with various clients according to its "own manner and method, free from the control and supervision" of its principals in all matters "except as to the results thereof." 20

Indeed, the facts in Philippine Bank of Communications do not square with those of the instant case. Therein, the Court ruled that CESI was a "labor-only" contractor because upholding the contract between the contractor and the bank would in effect permit employers to avoid the necessity of hiring regular or permanent employees and would enable them to keep their employees indefinitely on a temporary or casual basis, thus denying them security of tenure in their jobs. This of course violates the Labor Code. BCC has not committed any violation. Also, the former case was for illegal dismissal; this case, on the other hand, is for conversion of employment status so that petitioners can receive the same salary being given to regular employees of FEBTC. But, as herein determined, petitioners are not regular employees of FEBTC but of BCC. At any rate, the finding that BCC in a qualified independent contractor precludes us from applying the Philippine Bank of Communications doctrine to the instant petition. The determination of employer-employee relationship involves factual findings. 21 Absent any grave abuse of discretion, and we find none in the case before us, we are bound by the findings of the Labor Arbiter as affirmed by respondent NLRC. IN VIEW OF THE FOREGOING, the Petition for Certiorari is DISMISSED. SO ORDERED. G.R. No. L-80680 January 26, 1989 DANILO B. TABAS, EDUARDO BONDOC, RAMON M. BRIONES, EDUARDO R. ERISPE, JOEL MADRIAGA, ARTHUR M. ESPINO, AMARO BONA, FERDINAND CRUZ, FEDERICO A. BELITA, ROBERTO P. ISLES, ELMER ARMADA, EDUARDO UDOG, PETER TIANSING, MIGUELITA QUIAMBOA, NOMER MATAGA, VIOLY ESTEBAN and LYDIA ORTEGA, petitioners, vs. CALIFORNIA MANUFACTURING COMPANY, INC., LILY-VICTORIA A. AZARCON, NATIONAL LABOR RELATIONS COMMISSION, and HON. EMERSON C. TUMANON, respondents. SARMIENTO, J.: On July 21, 1986, July 23, 1986, and July 28, 1986, the petitioners petitioned the National Labor Relations Commission for reinstatement and payment of various benefits, including minimum wage, overtime pay, holiday pay, thirteen-month pay, and emergency cost of living allowance pay, against the respondent, the California Manufacturing Company. 1 On October 7, 1986, after the cases had been consolidated, the California Manufacturing Company (California) filed a motion to dismiss as well as a position paper denying the existence of an employer-employee relation between the petitioners and the company and, consequently, any liability for payment of money claims. 2 On motion of the petitioners, Livi Manpower Services, Inc. was impleaded as a party-respondent. It appears that the petitioners were, prior to their stint with California, employees of Livi Manpower Services, Inc. (Livi), which subsequently assigned them to work as "promotional merchandisers" 3 for the former firm pursuant to a manpower supply agreement. Among other things, the agreement provided that California "has no control or supervisions whatsoever over [Livi's] workers with respect to how they accomplish their work or perform [Californias] obligation"; 4 the Livi "is an independent contractor and nothing herein contained shall be construed as creating between [California] and [Livi] . . . the relationship of principal[-]agent or employer[-]employee'; 5 that "it is hereby agreed that it is the sole responsibility of [Livi] to comply with all existing as well as future laws, rules and regulations pertinent to employment of labor" 6 and that "[California] is free and harmless from any liability arising from such laws or from any accident that may befall workers and employees of [Livi] while in the performance of their duties for [California]. 7 It was further expressly stipulated that the assignment of workers to California shall be on a "seasonal and contractual basis"; that "[c]ost of living allowance and the 10 legal holidays will be charged directly to [California] at cost "; and that "[p]ayroll for the preceeding [sic] week [shall] be delivered by [Livi] at [California's] premises." 8 The petitioners were then made to sign employment contracts with durations of six months, upon the expiration of which they signed new agreements with the same period, and so on. Unlike regular California employees, who received not less than P2,823.00 a month in addition to a host of fringe benefits and bonuses, they received P38.56 plus P15.00 in allowance daily. The petitioners now allege that they had become regular California employees and demand, as a consequence whereof, similar benefits. They likewise claim that pending further proceedings below, they were notified by California that they would not be rehired. As a result, they filed an amended complaint charging California with illegal dismissal. California admits having refused to accept the petitioners back to work but deny liability therefor for the reason that it is not, to begin with, the petitioners' employer and that the "retrenchment" had been forced by business losses as well as expiration of contracts. 9 It appears that thereafter, Livi re-absorbed them into its labor pool on a "wait-in or standby" status. 10 Amid these factual antecedents, the Court finds the single most important issue to be: Whether the petitioners are California's or Livi's employees. The labor arbiter's decision, 11 a decision affirmed on appeal, 12 ruled against the existence of any employer-employee relation between the petitioners and California ostensibly in the light of the manpower supply contract, supra, and consequently, against the latter's liability as and for the money claims demanded. In the same breath, however, the labor arbiter absolved Livi from any obligation because the "retrenchment" in question was allegedly "beyond its control ." 13 He assessed against the firm, nevertheless, separation pay and attorney's fees. We reverse. The existence of an employer-employees relation is a question of law and being such, it cannot be made the subject of agreement. Hence, the fact that the manpower supply agreement between Livi and California had specifically designated the former as the petitioners'

employer and had absolved the latter from any liability as an employer, will not erase either party's obligations as an employer, if an employer-employee relation otherwise exists between the workers and either firm. At any rate, since the agreement was between Livi and California, they alone are bound by it, and the petitioners cannot be made to suffer from its adverse consequences. This Court has consistently ruled that the determination of whether or not there is an employer-employee relation depends upon four standards: (1) the manner of selection and engagement of the putative employee; (2) the mode of payment of wages; (3) the presence or absence of a power of dismissal; and (4) the presence or absence of a power to control the putative employee's conduct. 14 Of the four, the right-of-control test has been held to be the decisive factor. 15 On the other hand, we have likewise held, based on Article 106 of the Labor Code, hereinbelow reproduced: ART. 106. Contractor or sub-contractor. Whenever an employee enters into a contract with another person for the performance of the former's work, the employees of the contractor and of the latter's sub-contractor, if any, shall be paid in accordance with the provisions of this Code. In the event that the contractor or sub-contractor fails to pay wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or sub-contractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provisions of this Code. There is 'labor-only' contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. that notwithstanding the absence of a direct employer-employee relationship between the employer in whose favor work had been contracted out by a "labor-only" contractor, and the employees, the former has the responsibility, together with the "labor-only" contractor, for any valid labor claims, 16 by operation of law. The reason, so we held, is that the "labor-only" contractor is considered "merely an agent of the employer," 17 and liability must be shouldered by either one or shared by both. 18 There is no doubt that in the case at bar, Livi performs "manpower services", 19 meaning to say, it contracts out labor in favor of clients. We hold that it is one notwithstanding its vehement claims to the contrary, and notwithstanding the provision of the contract that it is "an independent contractor." 20 The nature of one's business is not determined by self-serving appellations one attaches thereto but by the tests provided by statute and prevailing case law. 21 The bare fact that Livi maintains a separate line of business does not extinguish the equal fact that it has provided California with workers to pursue the latter's own business. In this connection, we do not agree that the petitioners had been made to perform activities 'which are not directly related to the general business of manufacturing," 22 California's purported "principal operation activity. " 23 The petitioner's had been charged with "merchandizing [sic] promotion or sale of the products of [California] in the different sales outlets in Metro Manila including task and occational [sic] price tagging," 24 an activity that is doubtless, an integral part of the manufacturing business. It is not, then, as if Livi had served as its (California's) promotions or sales arm or agent, or otherwise, rendered a piece of work it (California) could not have itself done; Livi, as a placement agency, had simply supplied it with the manpower necessary to carry out its (California's) merchandising activities, using its (California's) premises and equipment. 25 Neither Livi nor California can therefore escape liability, that is, assuming one exists. The fact that the petitioners have allegedly admitted being Livi's "direct employees" 26 in their complaints is nothing conclusive. For one thing, the fact that the petitioners were (are), will not absolve California since liability has been imposed by legal operation. For another, and as we indicated, the relations of parties must be judged from case to case and the decree of law, and not by declarations of parties. The fact that the petitioners have been hired on a "temporary or seasonal" basis merely is no argument either. As we held in Philippine Bank of Communications v. NLRC, 27 a temporary or casual employee, under Article 218 of the Labor Code, becomes regular after service of one year, unless he has been contracted for a specific project. And we cannot say that merchandising is a specific project for the obvious reason that it is an activity related to the day-to-day operations of California. It would have been different, we believe, had Livi been discretely a promotions firm, and that California had hired it to perform the latter's merchandising activities. For then, Livi would have been truly the employer of its employees, and California, its client. The client, in that case, would have been a mere patron, and not an employer. The employees would not in that event be unlike waiters, who, although at the service of customers, are not the latter's employees, but of the restaurant. As we pointed out in the Philippine Bank of Communications case: xxx xxx xxx ... The undertaking given by CESI in favor of the bank was not the performance of a specific job for instance, the carriage and delivery of documents and parcels to the addresses thereof. There appear to be many companies today which perform this discrete service,

companies with their own personnel who pick up documents and packages from the offices of a client or customer, and who deliver such materials utilizing their own delivery vans or motorcycles to the addressees. In the present case, the undertaking of CESI was to provide its client the bank with a certain number of persons able to carry out the work of messengers. Such undertaking of CESI was complied with when the requisite number of persons were assigned or seconded to the petitioner bank. Orpiada utilized the premises and office equipment of the bank and not those of CESI. Messengerial work the delivery of documents to designated persons whether within or without the bank premises-is of course directly related to the day-to-day operations of the bank. Section 9(2) quoted above does not require for its applicability that the petitioner must be engaged in the delivery of items as a distinct and separate line of business. Succinctly put, CESI is not a parcel delivery company: as its name indicates, it is a recruitment and placement corporation placing bodies, as it were, in different client companies for longer or shorter periods of time, ... 28 In the case at bar, Livi is admittedly an "independent contractor providing temporary services of manpower to its client. " 29 When it thus provided California with manpower, it supplied California with personnel, as if such personnel had been directly hired by California. Hence, Article 106 of the Code applies. The Court need not therefore consider whether it is Livi or California which exercises control over the petitioner vis-a-vis the four barometers referred to earlier, since by fiction of law, either or both shoulder responsibility. It is not that by dismissing the terms and conditions of the manpower supply agreement, we have, hence, considered it illegal. Under the Labor Code, genuine job contracts are permissible, provided they are genuine job contracts. But, as we held in Philippine Bank of Communications, supra, when such arrangements are resorted to "in anticipation of, and for the very purpose of making possible, the secondment" 30 of the employees from the true employer, the Court will be justified in expressing its concern. For then that would compromise the rights of the workers, especially their right to security of tenure. This brings us to the question: What is the liability of either Livi or California? The records show that the petitioners bad been given an initial six-month contract, renewed for another six months. Accordingly, under Article 281 of the Code, they had become regular employees-of-California-and had acquired a secure tenure. Hence, they cannot be separated without due process of law. California resists reinstatement on the ground, first, and as we Id, that the petitioners are not its employees, and second, by reason of financial distress brought about by "unfavorable political and economic atmosphere" 31 "coupled by the February Revolution." 32 As to the first objection, we reiterate that the petitioners are its employees and who, by virtue of the required one-year length-of-service, have acquired a regular status. As to the second, we are not convinced that California has shown enough evidence, other than its bare say so, that it had in fact suffered serious business reverses as a result alone of the prevailing political and economic climate. We further find the attribution to the February Revolution as a cause for its alleged losses to be gratuitous and without basis in fact. California should be warned that retrenchment of workers, unless clearly warranted, has serious consequences not only on the State's initiatives to maintain a stable employment record for the country, but more so, on the workingman himself, amid an environment that is desperately scarce in jobs. And, the National Labor Relations Commission should have known better than to fall for such unwarranted excuses and nebulous claims. WHEREFORE, the petition is GRANTED. Judgment is hereby RENDERED: (1): SETTING ASIDE the decision, dated March 20, 1987, and the resolution, dated August 19, 1987; (2) ORDERING the respondent, the California Manufacturing Company, to REINSTATE the petitioners with full status and rights of regular employees; and (3) ORDERING the respondent, the California Manufacturing Company, and the respondents, Livi Manpower Service, Inc. and/or Lily-Victoria Azarcon, to PAY, jointly and severally, unto the petitioners: (a) backwages and differential pays effective as and from the time they had acquired a regular status under the second paragraph, of Section 281, of the Labor Code, but not to exceed three (3) years, and (b) all such other and further benefits as may be provided by existing collective bargaining agreement(s) or other relations, or by law, beginning such time; and (4) ORDERING the private respondents to PAY unto the petitioners attorney's fees equivalent to ten (10%) percent of all money claims hereby awarded, in addition to those money claims. The private respondents are likewise ORDERED to PAY the costs of this suit. IT IS SO ORDERED. G.R. No. 86010 October 3, 1989 LEOPOLDO GUARIN and ONE HUNDRED TWENTY (120) OTHERS, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, LIPERCON SERVICES, INC., and/or NOVELTY PHILIPPINES, INC., respondents. GRIO-AQUINO, J.: The sole issue in this petition for certiorari is whether or not, as found by the National Labor Relations Commission (or NLRC), respondent Lipercon Services, Inc. is an independent contractor and that petitioners are its employees. Novelty Philippines, Inc. is a domestic corporation that is engaged in the garment manufacturing business. Lipercon Services, Inc. is also a domestic corporation which is engaged in business as a service contractor providing workers for other companies. On July 6, 1983, Novelty and Lipercon entered into a "Contract of Services" in which Lipercon, as the "CONTRACTOR," and Novelty, as the "COMPANY," agreed as follows: 1. The CONTRACTOR shall provide the COMPANY with Contractual Laborers/Helpers/Janitors as requested by the COMPANY from time to time and such other activities that may be contracted out at the discretion of the COMPANY.

2. In consideration for the above undertakings of the CONTRACTOR, the COMPANY expressly agrees to pay the CONTRACTOR a fee based on the rates as shown on Annex 'A' of this agreement which is deemed as incorporated herein. A three (3%) percent Contractor's Tax shall be charged to the client which is made part of the billing rate. 3. The CONTRACTOR shall employ the necessary personnel to efficiently, fully and speedily accomplish the work and services undertaken herein by the CONTRACTOR. The CONTRACTOR represents that its personnel shall be in such number as will be sufficient to cope with the requirements of the services and work herein undertaken and that such personnel shall be physically fit, with good moral character and has not been convicted of any crime. 4. The CONTRACTOR shall comply with all labor laws such as Minimum Wage Law, Eight Hour Labor Law, Social Security System, Medicare, Maternity Contribution, ECC and other laws relating to employers and employees. It is hereby expressly understood and agreed that the COMPANY shall not be liable in any manner whatsoever for non-compliance with any requirements involving employer-employee relationship and other matters relative to labor laws, and CONTRACTOR hereby renders the COMPANY free and harmless from any responsibility whatsoever for non- compliance with any such requirements and for any violation of any laws, rules and regulations. 5. The CONTRACTOR shall be answerable for any claim for losses caused by its personnel assigned to the COMPANY and for damages to property of the COMPANY, its employees, officers or agents or to third parties, or for personal injury, including death which may arise from the work or services under this contract from negligence of employees of the CONTRACTOR; provided, however that necessary investigation be made and that the loss and/or damage sustained was a result of negligence of the contractor's personnel. 6. It is the essence of this contract which is hereby agreed and understood by both parties that there is no employer-employee relationship between the COMPANY and employee assigned by the CONTRACTOR under this agreement. Therefore, the CONTRACTOR obliges itself and its successors in interest, to pay whatever salaries and wages may be due under this contract, including any and all obligations, claims which may arise as a result of the employer-employee relationship existing between the CONTRACTOR and its employees assigned under this agreement and warrants to hold the COMPANY free and harmless of and from any responsibility, liability or claim regarding employment. 7. The CONTRACTOR shall have exclusive discretion in the selection, engagement and discharge of its personnel, employees or agents or otherwise in the direction and control of the personnel, workers and employees of the CONTRACTOR shall be within its full control. 8. The COMPANY agrees to pay the amount due to the CONTRACTOR under this contract within seven (7) days after presentation of bills. If payment is not made within thirty (30) days after due date, a one (1%) percent interest per month shall be added to the unpaid balance. 9. This contract shall remain in full force from July 6, 1983 to July 5,1984 and is renewable at the option of the COMPANY. Either party may terminate this contract upon giving thirty (30) days notice to the other party. (pp. 17-18, Rollo.) Petitioners were hired by Lipercon and assigned to Novelty as helpers, janitors, janitresses, firemen, and mechanics under the above agreement. Petitioners worked for Novelty for some three years. On December 31, 1986, Novelty terminated its agreement with Lipercon, resulting in the dismissal of the petitioners. On January 9, 1987, petitioners filed a complaint for illegal dismissal against both Lipercon and Novelty (Case No. NLRC-NCR-1-107-87). Lipercon did not answer. In a decision dated June 29, 1987, the Labor Arbiter ruled that the petitioners were regular employees of Novelty and declared their dismissal illegal. Both employers appealed. Lipercon Services, Inc., on appeal, alleged that the decision was contrary to the facts of the case and not in conformity with the evidence on record and that the Executive Labor Arbiter gravely abused his discretion when he ruled that Lipercon Services, Inc. merely acted as an agent of Novelty Philippines, Inc. in the hiring and placement of the complainants. On August 19, 1988, the NLRC rendered a decision holding that Lipercon was an independent contractor and that the petitioners were its employees. The dispositive portion of the NLRC's decision reads as follows: WHEREFORE, premises considered, the appealed decision is hereby set aside and another judgment entered, ordering respondent Lipercon Services, Inc. to reinstate herein complainants to their former positions without loss of seniority rights and other related benefits granted by law with a limited backwages of one (1) year without qualification or deduction. In case reinstatement is no longer feasible, respondent Lipercon Services, Inc. is hereby ordered to grant complainants separation pay of one (1) month salary for every year of service, a fraction of six (6) months considered as one (1) whole year in addition to the one year backwages. (p. 26, Rollo.) The petition is meritorious. Articles 106 and 107 of the Labor Code of the Philippines provide:

ART. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person for the performance of the former's work, the employees of the contractor and of the latter's subcontractor, if any, shall be paid, in accordance with the provisions of this Code. In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this code, to prevent any violation or circumvention of any provision of this Code. There is 'labor-only' contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. ART. 107. Indirect Employer. The provisions of the immediately preceding Article shall likewise apply to any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project. Sections 8 and 9, Rule VIII, Book I of the Omnibus Rules implementing the Labor Code defines "job" contracting and "labor-only" contracting as follows: Sec. 8. Job contracting. There is job contracting permissible under the Code if the following conditions are met: (1) The contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and (2) The contractor has substantial capital or investment in the form of tools, equipments, machineries, work premises, and other materials which are necessary in the conduct of his business. Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an employer shall be deemed to be engaged in labor-only contracting where such person: (1) Does not have substantial capital or investment in the form of tools, equipments, machineries, work premises and other materials; and (2) The workers recruited and placed by such person are performing activities which are directly related to the principal business or operations of the employer in which workers are habitually employed. (b) Labor-only contracting as defined herein is hereby prohibited and the person acting as contractor shall be considered merely as an agent or intermediary of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. (c) For cases not falling under this article, the Secretary of Labor shall determine through appropriate orders whether or not the contracting out of labor is permissible in the light of the circumstances of each case and after considering the operating needs of the employer and the rights of the workers involved. In such case, he may prescribe conditions and restrictions to insurer the protection and welfare of the workers. It is clear from the foregoing definitions that under the "Contract of Services" between Lipercon and Novelty, Lipercon was a "labor-only" contractor, hence, only an agent of Novelty to procure workers for the latter, the real employer. The NLRC's finding that Lipercon was not a mere labor-only contractor because it has substantial capital or investment in the form of tools, equipment, machineries, work premises, is based on insubstantial evidence, as the NLRC pointed out, that "it (Lipercon) claims to be possessed among others, of substantial capital and equipment essential to carry out its business as a general independent contractor" (p. 25, Rollo). The law casts the burden on the contractor to prove that he/it has substantial capital, investment, tools, etc. The petitioners, on the other hand, need not prove the negative fact that the contractor does not have substantial capital, investment, and tools to engage in job contracting. The jobs assigned to the petitioners as mechanics, janitors, gardeners, firemen and grasscutters were directly related to the business of Novelty as a garment manufacturer. In the case of Philippine Bank of Communications vs. NLRC, 146 SCRA 347, we ruled that the work of a messenger is directly related to a bank's operations. In its Comment, Novelty contends that the services which are directly related to

manufacturing garments are sewing, textile cutting, designs, dying, quality control, personnel, administration, accounting, finance, customs, delivery and similar other activities; and that allegedly, "[i]t is only by stretching the imagination that one may conclude that the services of janitors, janitresses, firemen, grasscutters, mechanics and helpers are directly related to the business of manufacturing garments" (p. 78, Rollo). Not so, for the work of gardeners in maintaining clean and well-kept grounds around the factory, mechanics to keep the machines functioning properly, and firemen to look out for fires, are directly related to the daily operations of a garment factory. That fact is confirmed by Novelty's rehiring the workers or renewing the contract with Lipercon every year from 1983 to 1986, a period of three (3) years. As Lipercon was a "labor-only" contractor, the workers it supplied Novelty became regular employees of the latter. WHEREFORE, the decision of the NLRC is set aside and that of the Labor Arbiter is reinstated. Novelty Philippines, Inc. is ordered to reinstate the petitioners with backwages for one (1) year without qualification or deduction. In case reinstatement is no longer feasible, respondent Novelty Philippines, Inc. is hereby ordered to grant the complainants separation pay equivalent to one (1) month salary for every year of service, a fraction of six (6) months to be considered as one (1) whole year, in addition to their backwages. Costs against respondent Novelty Philippines, Inc. SO ORDERED.