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91 PHIL 625
PARAS; July 16, 1952
- Manila Terminal Company, Inc. hereinafter to be referred as to the petitioner, undertook the arrastre
service in some of the piers in Manila's Port Area at the request and under the control of the United
States Ar my. The petitioner hired some thirty men as watchmen on twelve-hour shifts at a compensation
of P3 per day for the day shift and P6 per day for the night shift.

- The watchmen of the petitioner continued in the service with a number of substitutions and additions,
their salaries having been raised during the month of February to P4 per day for the day shift and P6.25
per day for the nightshift. The private respondent sent a letter to Department of Labor requesting that
the matter of overtime pay be investigated. But nothing was done by the Dept of Labor.

- Later on, the petitioner instituted the system of strict eight-hour shifts.

- The private respondent filed an amended petition wi th the Court of Industrial Relations praying, among
others, that the petitioner be ordered to pay its watchmen or police force overtime pay from the
commencement of their employment.

- By virtue of Customs Administrative Order No. 81 and Executive Order No. 228 of the President of the
Philippines, the entire police force of the petitioner was consolidated with the Manila Harvor Police of the
Customs Patrol Service, a Government agency under the exclusive control of the Commissioner of
Customs and the Secretary of Finance The Manila Terminal Relief and Mutual Aid Association will
hereafter be referred to as the Association.

- Judge V. Jimenez Yanson of the Court of Industrial Relations in his decision ordered the petitioner to pay
to its police force but regards to overtime service after the watchmen had been integrated into the
Manila Harbor Police, the has no jurisdiction because it affects the Bur eau of Customs, an instrumentality
of the Government having no independent personality and which cannot be sued without the consent of
the State.
- The petitioner filed a motion for reconsideration. The Association also filed a motion for reconsideration
in so far its other demands were dismissed. Both resolutions were denied.

- The public respondent decision was to pay the private respondents their overtime on regular days at the
regular rate and additional amount of 25 percent, overtime on Sundays and legal holidays at the regular
rate only, and watchmen are not entitled to night differential pay for past services. The petitioner has
filed a present petition for certiorari.

- WON overtime pay should be granted to the workers

- Petitioner stressed that the contract between it and the Association stipulates 12 hrs a day at certain
rates including overtime, but the record does not bear out these allegations.
- In times of acute employment, people go from office to office to search for work, and the workers here
found themselves required to render 12 hrs a day. True, there was an agreement, but did the workers
have freedom to bargain much less insist in the observance of the Eight Hour Labor Law?
- We note that after petitioner instituted 8 hr shifts, no reduction was made in salaries which its watchmen
received under the 12 hr agreement.

- Petitioner’s allegation that the Association had acquiesced in the 12 hr shifts for more than 18 mos is not
accurate. Only one of the members entered in September 1945. The rest followed during the next few
- The Association can’t be said to have impliedly waived the ri ght to over time pay, for the obvious reason
that it could not have expressly waived it.
- Estoppel and laches can’t also be invoked against Association. First, it is contrary to spirit of the Eight
Hour Labor Law. Second, law obligates employer to observe it. Third, employee is at a disadvantage as to
be reluctant in asserting any claim.
- The argument that the nullity of the employment contract precludes recovery by the Association of
overtime pay is untenable. The employer may not be heard to plead its own neglect as exemption or
- Also, Commonwealth Act 444 expressly provides for payment of ex tra compensation in cases where
overtime services are required.
- The point that payment of overtime pay may lead to ruin of the petitioner can’t be accepted. It is
significant that not all watchmen should receive back overtime pay for the whole period, since the
members enter ed the firm in different times.
- The Eight-Hour Labor Law was designed not only to safeguard the health and welfare of the laborer or
employee, but in a way to minimize unemployment by forcing employers, in cases where more than 8 -
hour operation is necessary, to utilize different shifts of laborers or employees working only for eight
hours each.
G.R. No. 126383 November 28, 1997

 Then Labor Secretary Franklin M. Drilon issued Policy Instruction No. 4 in line with R.A. 5901 which “requires
that the covered hospital workers who used to work 7 days a week should be paid for such number of days for
working only 5 days or 40 hours a week”.
 Petitioners filed a complaint for the expeditious implementation and payment by r espondent” Juan De Dios
Hospital “. The Labor Arbiter and NLRC both dismissed their complaints and MR was also denied. Hence, this
 In said Policy Instruction, it was provided that: “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.”

WON the intent of Art. 83, LCP, is that persons in subject hospitals and clinics who have completed the 40 -
hour/5-day workweek in any given workweek are entitled to a full weekly wage for seven days.

No.What Article 83 merely provides are: (1) the r egular 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/5-day
workweek in any given workweek”.

Also, 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 ra te” ” for work performed in excess of forty hours a week.

RADA V. NLRC JAN. 9 , 1992

In 1977, Hilario Rada was contracted by Philnor Consultants and Planners, Inc as a driver. He was assigned to a
specific project in Manila. The contract he signed was for 2.3 years. His task was to drive employees to the project
from 7am to 4pm. He was allowed to bring home the company vehicle in order to provide a timely transportation
service to the other project workers. The project he was assigned to was not completed as scheduled hence, since
he has a satisfactory record, he was re-contracted for an additional 10 months. After 10 months the project was
not yet completed. Several contracts thereafter were made until the project was finished in 1985.

At the completion of the project, Rada was terminated as his employment was co-terminous with the project. He
later sued Philnor for non payment of separation pay and overtime pay. He said he is entitled to be paid OT pay
because he uses extra time to get to the project site from his home and from the project site to his home everyday
– in total, he spends an average of 3 hours OT every day.

ISSUE: Whether or not Rada is entitled to separation pay and OT pay.

HELD: Separ ation pay – NO. Overtime pay – Yes.

Separation Pay

The SC ruled that Rada was a project employee whose work was coterminous with the project for which he was
hired. Project employees, as distinguished from regular or non-project employees, are mentioned in Section 281 of
the Labor Code as those ‘where the employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the engagement of the employee.

‘Project employees are not entitled to ter mination pay if they are terminated as a result of the completion of the
project or any phase thereof in which they are employed, regardless of the number of projects in which they have
been employed by a particular construction company. Moreover, the company is not required to obtain clearance
from the Secretary of Labor in connection with such termination.’

OT Pay

Rada is entitled to OT pay. The fact that he picks up employees of Philnor at certain specified poi nts along EDSA in
going to the project site and drops them off at the same points on his way back from the field office going home to
Marikina, Metro Manila is not merely incidental to Rada’s job as a driver. On the contrary, said transportation
arrangement had been adopted, not so much for the convenience of the employees, but primarily for the benefit
of Philnor. As embodied in Philnor’s memorandum, they allowed their drivers to bring home their transport
vehicles in order for them to provide a timely tra nsport service and to avoid delay – not really so that the drivers
could enjoy the benefits of the company vehicles nor for them to save on fair.


GRN L-63122 February 20, 1984


Petitioner is a labor union composed of faculty members of the r espondent University of Pangasinan, an
educational institution duly organized and existing by virtue of the laws of the Philippines.

Th petitioner filed a complaint against the private respondent with the Arbitration Branch of the NLRC- Dagupan
City seeking: (a) the payment of Emergency Cost of Living Allowances (ECOLA) for November 7 to December 5,

1981, a semestral break; (b) salary increases from the 60% of the incremental proceeds of increased tuition fees;
and (c) payment of salaries for suspended ex tra loads.

The petitioner’s members are full -time professors, instructors, and teachers of respondent University. The
teachers in the college level teach for a normal duration of 10 months a s chool year, divided into 2 semesters of 5
months each, excluding the 2 months summer vacation. These teachers are paid their salaries on a regular monthly

During the semestral break (Nov. 7- Dec. 5, 1981), they wer e not paid their ECOLA. The private respondent claims
that the teachers are not entitled thereto because the semestral break is not an integral part of the school year
and there being no actual services rendered by the teachers during said period, the principle of “No work, no pay”

During the same school year (1981-1982), the private respondent was authorized by the Ministry of Education and
Culture to collect, from its students a 15% increase of tuition fees. Petitioner’s members demanded a salary
increase effective the first semester of said schoolyear to be taken from the 60% percent incremental proceeds of
the said increased tuition fees as mandated by the PD 451. Private respondent refused.


1981 OF THE 1981-82 SCHOOL YEAR.

Yes. According to various Presidential Decrees on ECOLAs “Allowances of Fulltime Employees . . .” that “Employees
shall be paid in full the required monthly allowance regardless of the number of their regular working days if they
incur no absences during the month. If they incur absences without pay, the amounts corresponding to the
absences may be deducted from the monthly allowance . . .”; and on “Leave of Absence Without Pay”, that “All
covered employees shall be entitled to the allowance provided herein when they are on leave of absence with
The petitioner’s members are full -time employees receiving their monthly salaries irrespective of the number of
working days or teaching hours in a month. However, they find themselves in a situation where they are f orced to
go on leave during semestral breaks. These semestral breaks are in the nature of work interruptions beyond the
employees’ control. As such, these breaks cannot be considered as absences within the meaning of the law for
which deductions may be made from monthly allowances. The “No work, no pay” principle does not apply in the
instant case. The petitioner’s members received their regular salaries during this period. It is clear from the
provision of law that it contemplates a “no work” situation where the employees voluntarily absent themselves.
Petitioners, in the case at bar, do not voluntarily absent themselves during semestral breaks. Rather, they are
constrained to take mandatory leave from work. For this they cannot be faulted nor can they be b egrudged that
which is due them under the law.

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” the converse of which finds application in the case at bar. Petitioners cannot be considered to be
on leave without pay so as not to be entitled to ECO LA, for, as earlier stated, the petitioners were paid their wages
in full for the months of November and Dec ember of 1981, notwithstanding the intervening semestral break.

Although said to be on forced leave, professors and teachers are, nevertheless, burdened with the task of working
during a period of time supposedly available for rest and private matters. Ther e are papers to correct, students to
evaluate, deadlines to meet, and periods within which to submit grading reports. Although they may be considered
by the respondent to be on leave, the semestal break could not be used effectively for the teacher’s own purposes
for the nature of a teacher’s job imposes upon him further duties which must be done during the said period of

time. Arduous preparation is necessary for the delicate task of educating our children. Teaching involves not only
an application of skill and an imparting of knowledge, but a responsibility which entails self ded ication and
sacrifice. It would be unfair for the private respondent to consider these teachers as employees on leave without
pay to suit its purposes and, yet, in the meantime, continue availing of their services as they prepare for the next
semester or complete all of the last semester’s requirements.

Thus, the semestral break may also be considered as “hours worked.” For this, the teachers are paid regular
salaries and, for this, they should be entitled to ECO LA. The purpose of the law is to augment the income of
employees to enable them to cope with the harsh living conditions brought about by inflation; and to protect
employees and their wages against the ravages brought by these conditions

With regard to the second issue, under Section 3 of Presidential Decree 451, “no increase in tuition or other school
fees or charges shall be approved 60% 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; . . .”
Such allowances must be taken in resources of the school not derived from tuition fees.

If the school happen to have no other resources to grant allowances and benefits, either mandated by law or
secured by collective bargaining, such allowances and benefits should be charged against the return to
investments referred.

The law is clear. The 60% 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.

Law provides that 60% of tuition fee increase should go to wage increases and 40% to institutional developments,
student assistance, extension services, and return on investments. Framers of the law intended this portion (return
on investments) of the increases in tuition fees to be a general fund to cover up for the univer sity’s miscellaneous

Petition for certiorari is GRANTED.

G.R. No. L-17068 December 30, 1961

REYES, J.B.L., J.:

The petitioner NASSCO, a government-owned and controlled corporation, is the owner of several barges and
tugboats used in the transportation of cargoes and personnel in connection with its business of shipbuilding and
repair. In order that its bargeman could immediately be called to duty whenever their services are needed, they
are required to stay in their respective barges, for which reason they are given living quarters therein as well as
subsistence allowance of P1.50 per day during the time they are on board. However, upon prior authority of their
superior officers, they may leave their barges when said barges are idle.

The 39 crew members of petitioner's tugboat service, including therein respondent Dominador Malondras, filed a
complaint for the payment of overtime compensation .In the course of the proceeding, the parties entered into a
stipulation of facts wherein the NASSCO recognized and admitted –

4. That to meet the exigencies of the service in the performance of the above work, petitioners ha ve to
work when so required in excess of eight (8) hours a day and/or during Sundays and legal holidays (actual

overtime service is subject to determination on the basis of the logbook of the vessels, time sheets and
other per tinent records of the respondent).
6. The petitioners are paid by the respondent their regular salaries and subsistence allowance, without
additional compensation for overtime work;
On February 20, 1960, the Court ordered the examiner to make a re -examination of the records with a view to
determining Malondras' overtime service from January 1, 1954 to December 31, 1956, and from January 1, 1957 to
April 30, 1957, but without deducting from the compensation to be paid to him his subsistence allowance. The
examiner, on April 23, 1960, submitted a report giving Malondras an average of sixteen (16) overtime hours a day,
on the basis of his time sheets, and recommending the payment to him of the total amount of P15,242.15 as
overtime compensation during the periods covered by the report.

Issue: Whether or not Malondras is entitled to the 16 hours overtime as a worker in a barge.

Held: The only matter to be deter mined here is, the number of hours of overtime for which Malondras should be
paid for the periods January 1, 1954 to Dec ember 31, 1956, and from January to April 30, 1957. Respondents urge
that this is a question of fact and not subject to review by this Court, ther e being sufficient evidence to support the
Industrial Court's ruling on this point. It appears, however, that in crediting Malondras with 16 hours of overtime
service daily for the periods in question, the court examiner relied only on his daily time sheets which, although
approved by petitioner's officers in charge and its auditors, do not show the actual number of hours of work
rendered by him each day.

We can not agree with the Court below that respondent Malondras should be paid overtime compensation for
every hour in excess of the regular working hours that he was on board his vessel or barge each day, irrespective of
whether or not he actually put in work during those hours. Seamen are required to stay on board their vessels by
the very nature of their duties, and it is for this reason that, in addition to their regular compensation, they are
given free living quarters and subsistence allowances when required to be on board. It could not have been the
purpose of our law to require their employers to pay them overtime even when they are not actually working;
otherwise, every sailor on board a vessel would be entitled to overtime for sixteen hours each day, even if he had
spent all those hours resting or sleeping in his bunk, after his regular tour of duty. The correct criterion in
determining whether or not sailors are entitled to overtime pay is not, therefor e, whether they were on board and
can not leave ship beyond the regular eight working hours a day, but whether they actually rendered service in
excess of said number of hours.

While Malondras' daily time sheets do not show his actual working hours, nevertheless, petitioner has already
admitted in the Stipulation of Facts in this case that Malondras and his co-claimants did render service beyond
eight (8) hours a day when so required by the exigencies of the service; and in fact, Malondras was credited and
already paid for five (5) hours daily overtime work during the period from May 1 to December 31, 1957, under the
examiner's first report. Since Malondras has been at the same job since 1954, it can be reasonably inferred that
the overtime service he put in whenever he was required to be aboard his barge all day from 1954 to 1957 would
be mor e or less consistent.

WHEREFORE, the order appealed from is modified in the sense that respondent Malondras should be credited five
(5) overtime hours instead of sixteen (16) hours a day for the periods covered by the examiner's report.


(G.R. No. L-15422. November 30, 1962)


At the National Development Co., a government-owned and controlled corporation, there were four shifts of work.
One shift was from 8 a.m. to 4 p.m., while the three other shifts were from 6 a.m. to 2 p.m; then from 2 p.m. to 10

p.m. and, finally, from 10 p.m. to 6 a.m. I n each shift, there was a one-hour mealtime period, to wit: From (1) 11
a.m. to 12 noon for those working between 6 a.m. and 2 p.m. and from (2) 7 p.m. to 8 p.m. for those working
between 2 p.m. and 10 p.m.

The r ecords disclose that although there was a one-hour mealtime, petitioner nevertheless credited the workers
with eight hours of work for each shift and paid them for the same number of hours. However, since 1953,
whenever workers in one shift were required to continue working until the next shift, petitioner instead of
crediting them with eight hours of overtime work, has been paying them for six hours only, petitioner that the two
hours corresponding to the mealtime periods should not be included in computing compensation.

After hearing, Judge Arseni o I. Martinez of the CIR issued an order dated March 19, 1959, holding that mealtime
should be counted in the determination of overtime work and accordingly ordered petitioner to pay P101,407.96
by way of overtime compensation. Petitioner filed a motion for reconsideration but the same was dismissed by the
CIR en banc on the ground that petitioner failed to furnish the union a copy of its motion.


Whether the CIR have jurisdiction and correct in deciding the case.


The CIR correctly concluded that work in petitioner company was continuous and therefore the mealtime breaks
should be counted as working time for purposes of overtime compensation.

Also, petitioner's motion for reconsideration having been dismissed for its failure to serve a copy of th e same on
the union, there is no decision of the CIR en banc that petitioner can bring to this Court for review.

WHEREFORE, the order of March 19, 1959 and the resolution of April 27, 1959 are hereby affirmed and the appeal
is dismissed, without pronouncement as to costs.


ASSOCIATION (ALU-TUCP), respondents.


On 14 August 1992 petitioner issued a memorandum to all factory-based employees advising all its monthly
salaried employees in its Marikina Tire Plant, except those in the Warehouse and Quality Assurance Department
working on shifts, a change in work schedule effective 14 September 1992 thus —



Effective Monday, September 14, 1992, the new work schedule of the factory office will be as follows:

7:45 A.M. — 4:45 P.M. (Monday to Friday)

7:45 A.M. — 11:45 A.M. (Saturday).

Coffee break time will be ten minutes only anytime between:

9:30 A.M. — 10:30 A.M. and

2:30 P.M. — 3:30 P.M.

Lunch break will be between:

12:00 NN — 1:00 P.M. (Monday to Friday).

Excluded from the above schedule are the Warehouse and QA employees who are on shifting. Their work
and break time schedules will be maintained as it is now.

Since private respondent felt affected adversely by the change in the work schedule and discontinuance of the 30 -
minute paid "on call" lunch break, it filed on behalf of its members a complaint with the Labor Arbiter for unfair
labor practice, discrimination and evasion of liability pursuant to the resolution of this Court in Sime Darby
International Tire Co., Inc. v. NLRC. However, the Labor Arbiter dismissed the complaint on the ground that the
change in the work schedule and the elimination of the 30 -minute paid lunch break of the factory workers
constituted a valid exercise of management pr erogative and that the new work schedule, break time and one-hour
lunch break did not have the effect of diminishing the benefits granted to factory workers as the working tim e did
not exceed eight (8) hours.

The Labor Arbiter further held that the factory workers would be unjustly enriched if they continued to be paid
during their lunch break even if they were no longer "on call" or required to work during the break. He also r uled
that the decision in the earlier Sime Darby case was not applicable to the instant case because the former involved
discrimination of certain employees who wer e not paid for their 30 -minute lunch break while the rest of the
factory workers were paid; hence, this Court ordered that the discriminated employees be similarly paid the
additional compensation for their lunch break.

Private respondent appealed to respondent National Labor Relations Commission (NLRC) which sustained the
Labor Arbiter and dismissed the appeal. However, upon motion for reconsideration by private respondent, the
NLRC, this time with two (2) new commissioners replacing those who earlier retired, reversed its earlier decision of
20 April 1994 as well as the decision of the Labor Arbiter. The NLRC considered the decision of this Court in the
Sime Darby case of 1990 as the law of the case wherein petitioner was ordered to pay "the money value of these
covered employees deprived of lunch and/or working time breaks." The public responden t declared that the new
work schedule deprived the employees of the benefits of a time-honored company practice of providing its
employees a 30-minute paid lunch break resulting in an unjust diminution of company privileges prohibited by Art.
100 of the Labor Code, as amended. Hence, this petition alleging that public respondent committed grave abuse of
discretion amounting to lack or excess of jurisdiction: (a) in ruling that petitioner committed unfair labor practice in
the implementation of the change in the work schedule of its employees from 7:45 a.m. — 3:45 p.m. to 7:45 a.m.
— 4:45 p.m. with one-hour lunch break from 12:00 nn to 1:00 p.m.; (b) in holding that there was diminution of
benefits when the 30-minute paid lunch break was eliminated; (c) in failing to consider that in the earlier Sime
Darby case affirming the decision of the NLRC, petitioner was authorized to discontinue the practice of having a
30-minute paid lunch break should it decide to do so; and, (d) in ignoring petitioner's inherent man agement
prerogative of determining and fixing the work schedule of its employees which is expressly recognized in the
collective bargaining agreement between petitioner and private respondent.

The Office of the Solicitor General filed in a lieu of comment a manifestation and motion recommending that the
petitioner be granted, alleging that the 14 August 1992 memorandum which contained the new work schedule
was not discriminatory of the union members nor did it constitute unfair labor practice on the part of petitioner.


1. Whether the change of work schedule, which management deems necessary to increase production,
constitutes unfair labor practice.


Every business enterprise endeavors to increase its profits. In the process, it may devise means to attain that goal.
Even as the law is solicitous of the welfare of the employees, it must also protect the right of an employer to
exercise what are clearly management prerogatives. Thus, management is free to regulate, according to its own
discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time,
place and manner of work, processes to be followed, supervision of workers, working regulations, transfer of
employees, work supervision, lay off of workers and discipline, dismissal and recall of workers. Further,
management retains the prerogative, whenever exigencies of the service so require, to change the working hours
of its employees. So long as such prerogative is exercised in good faith for the advancement of the employer's
interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or
under valid agreements, this Court will uphold such exercise.

WHEREFORE, the Petition is GRANTED. The Resolution of the Na tional Labor Relations Commission dated 29
November 1994 is SET ASIDE and the decision of the Labor Arbiter dated 26 November 1993 dismissing the
complaint against petitioner for unfair labor practice is AFFIRMED.


September 30, 1981| Abad Santos, J.| Labor Relations
Digester: Melliza, Frente Sur L.

SUMMARY: Bisig filed a petition for declaratory relief seeking that their Christmas bonus be included as part of
their basic pay for the computation of overtime pay.Bisig cites NAWASA vs. NAW ASA Consolidated Unions where it
was declared that the 'regular rate' is also deemed to include other incentives and bonuses which employers may
receive as part of their regular pay.On the other hand, PRC argued that, per the CBA, it was never intended to
include the employees' Christmas bonus in the computation of the overtime pay. Court ruled for PRC. Court said
that, per the CBA’sprovision regarding overtime pay, it was only the regular base pay that was considered to
compute the overtime pay. Further, what is important in the Nawasa ruling is that the the product resulting from
the computation must always be equal or higher than the statutory requirement of 25% more than the regular
wage. Here, the Nawasa ruling was not violated, since the formula adopted by the CBA i s 50% more than the
regular base pay, which when computed is much higher than what can be arrived at using the statutor y formula.

DOCTRINE: "Regular base pay"means regular basic pay which necessarily EXCLUDES money rec eived in different
concepts such as Christmas bonus and other fringe benefits.


 In 1966, petitioner union Bisig ng Manggagawa ng Philippine Refining Company, Inc. filed with the Court of
First Instance of Manila a petition for declaratory relief seeking, among others, the judgement that their
Christmas bonus be included as part of thei r basic pay for the computation of overtime pay.

 Petitioner based its contention primarily on the ruling of the Supreme Cour t in NAW ASA vs. NAW ASA
Consolidated Unions, et all G.R. No. L-18938, August 31, 1964, 11 SCRA 766 wher e it was declared that the
'regular rate' is also deemed to include other incentives and bonuses which employers may receive as part of
their regular pay.
 Respondent Philippine Refining Company, Inc. on the other hand contended that in their collective bargaining
agreement (CBA), the parties never intended to include the employees' Christmas bonus in the computation
of the overtime pay, and that it did agree to raise the overtime rate to 50% instead of 25% of the regular base
pay precisely on the consideration that it be based only on the regular base pay and should not include
Christmas bonus.

RULIN G:PETITION DISMISSED, the decision appealed from is affirmed.

WON in the interpretation of the CBA re overtime pay, the term “regular base pay” should include Christmas

 The Supr eme Court ruled that the term "regular base pay" is clear, unequivocal and requires no interpretation.
It held that the term means regular basic pay which necessarily EXCLUDES money received in different
concepts such as Christmas bonus and other fringe benefits. The Court observed that in framing up their CBA
specially on the provision regarding overtime pay, it was only the regular base pay that was considered, and
the same fact was undeniably known to the petitioner - the very reason, according to the court, why it
attempted to have a different provision pertaining to overtime pay which would include Christmas bonus and
other benefits. This factual information by itself constrains the petitioner to question the intention of that
particular phrase in their CBA pertaining to overtime pay but could only claim that it violated the Nawasa
doctrine and insist that it be reformed to confor m to said doctrine.
 The Supr eme Court held that the Nawasa ruling did not limit that the computation of overtime pay to be
based solely on the employees' regular wage or salary, which according to law includes bonuses and other
benefits. What is important is that the product resulting from the computation must always be equal or higher
than the statutory requirement of 25% more than the r egular wage. In the case at bar, the formula adopted by
the CBA is 50% more than the regular base pay, which when computer is much higher than what can be
arrived at using the statutory formula. Thus, the Court declared that the provisions of the CBA as to the
computation of overtime pay has amply complied with what is required by law, and therefor e is valid and not
in contravention to the Nawasa doctrine.


AUGUST 22, 1996
G.R. No. 105963
Panganiban, J.

Facts: The respondent used to be a security guard under the employ of the petitioner company. He works for 12
hours a day and is receiving a monthly salary. He was then dismissed by the petitioner company. Because of this,
the r espondent filed a complaint with the Labor Arbiter for the payment of his overtime pay. The Labor Arbiter
ruled that the respondent is entitled to an overtime pay. The NLRC affi rmed the decision of the Labor Arbiter.
Hence, the current petition.

The petitioner contends that the fact that the monthly salary of the petitioner is higher than the minimum wage
provided by law is already compensatory of the excess of 4 hours of work r endered by the said employee. It argues
that the salary of the petitioner already includes the payment for the excess of 4 hours of work rendered by the
respondent. It also contends that since there is a meeting of the minds between the respondent and the
petitioner, ther e is already a perfected contract which means that the parties are bound by their agreements.

Issue: Whether or not the r espondent is entitled to an overtime pay.

Ruling: The Supr eme Court ruled that the respondent is entitled to an overtime pay. The contention of the
petitioner that since the respondent’s monthly salary is higher than the minimum wage, it is already
commensurate of the 4 hours excess of work rendered by the respondent. The Supreme Court held that the fact
that one’s salary is higher than the minimum wage does not in any way offset the other benefits that are due to
the employees, in the absence of an agreement to the contrary. To consider the overtime pay of the respondent
included in his monthly salary would be in contravention of the rule against non-diminution of benefits and a
violation of the Labor Code since it prescribes a certain manner on how overtime pay is included. Moreover, the
Supreme Court found that contrary to what the petitioner aver, as shown in the compu tation of the petitioner
itself, the monthly salary of the respondent is only a basic salary which is exclusive of all the other benefits that the
respondent is to receive.

With regard to the petitioner’s second contention that there is already a perfected contract, hence the terms and
conditions imposed therein binds the parties to the contract, the Supreme Court held that while such contention
has the weight and force of law, it is still subject to certain exception. The general right to contract is subj ect to a
limitation that such terms and conditions must not be contrary to law, public order, public policy, morals and good
customs. Employment contracts are imbued with public interest and are therefore subject to the police power of
the state. The subject contract in the case at bar is contrary to labor laws. Therefore, not binding to the parties of
the case.


G.R. No. 121004 January 28, 1998


Petitioner Romeo Lagatic was employed in May 1986 by Cityland. As a marketing specialist, he was tasked with
soliciting sales for the company, with the corresponding duties of accepting call -ins, referrals, and making client
calls and cold calls (the practice of prospecting for clients through the telephone directory). Cityland, believing that
the same is an effective and cost-efficient method of finding clients, requires all its marketing specialists to make
cold calls but nonetheless requires submission of daily progress reports on the same in order to assess to
determine the results thereof.

On November 1992, petitioner was suspended for three days for failing to submit cold call reports on various d ates
of September and October 1992 notwithstanding a written reprimand for infraction of the same committed a year
earlier and a warning that further non-compliance would result to ter mination.

Notwithstanding the aforesaid suspension and warning, petitioner again failed to submit cold call reports for five
(5) days of February 1993. He was verbally reminded to submit the same and was even given up to February 17,
1993 to do so. Instead of complying with said directive, Petitioner, on February 16, 1993, wro te a note, TO HELL
WITH COLD CALLS! WHO CARES? and exhibited the same to his co-employees. To worsen matters, he left the same
lying on his desk where everyone could see it.

On February 23, 1993, petitioner received a memorandum requiring him to explain why Cityland should not make
good its previous warning for his failure to submit cold call reports, as well as for issuing the written statement
aforementioned. On February 24, 1993, he sent a letter-reply alleging that his failure to submit cold call reports
should not be deemed as gross insubordination. He denied any knowledge of the damaging statement, TO HELL

Finding petitioner guilty of gross insubordination, Cityland served a notice of dismissal upon him on February 26,
1993. Aggrieved by such dismissal, petitioner filed a complaint against Cityland for illegal dismissal, illegal
deduction, underpayment, overtime and rest day pay, damages and attorneys fees. The labor arbiter dismissed the
petition for lack of merit. On appeal, the same was affirmed by the NLRC; hence the present r ecourse.


Whether or not the respondent NLRC gravely abused its discretion in not finding the petitioner illegally dismissed.


The petition lacks merit.

To constitute a valid dismissal from employment, two requisites must be met, namely: (1) the employee must be
afforded due process, and (2) the dismissal must be for a valid cause.

Petitioner loses sight of the fact that except as provided for, or limited by, special laws, an employer is free to
regulate, according to his discretion and judgment, all aspects of employment. Employers may, thus, make
reasonable rules and regulations for the government of their employees, and when employees, with knowledge of
an established rule, enter the service, the rule becomes a part of the contract of employment. It is also generally
recognized that company policies and regulations, unless shown to be grossly oppressive or contrary to law, are
generally valid and binding on the parties and must be complied with.

Corollarily, an employee may be validly dismissed for violation of a reasonable company rule or regulation adopted
for the conduct of the company business. An employer cannot rationally be expected to retain the employment of
a person whose x x x lack of regard for his employers rules x x x has so plainly and completely been bared.
Petitioners continued infraction of company policy requiring cold call reports, as evidenced by the 28 instances of
non-submission of aforesaid reports, justifies his dismissal. He cannot be allowed to arrogate unto himself the
privilege of setting company policy on the effectivity of solicitation methods. To do so would be to sanction
oppression and the self-destruction of the employer.

More than that, his written statement shows his open defiance and disobedience to lawful rules and regulations of
the company. Likewise, said company policy of requiring cold calls and the concomitant reports thereon is clearly
reasonable and lawful, sufficiently known to petitioner, and in connec tion with the duties which he had been
engaged to discharge. There is, thus, just cause for his dismissal.


WHEREFORE, premises considered, the assailed Resolution is AFFIRMED and this petition is hereby DISMISSED for
lack of merit. Costs against petitioner. SO ORDERED.

Narvasa, C.J., (Chairman), Melo , Francisco , and Panganiban, JJ., concu r.


{G.R. No. 142824, December 19, 2001

Facts: Interphil Laboratories Employees Union-FFW is the sole and exclusive bargaining agent of the rank-and-file
employees of Interphil Laboratories, Inc., a company engaged in the business of manufacturing and packaging
pharmaceutical products. They had a Collective Bargaining Agreement (CBA) effective from 01 August 1990 to 31
July 1993.

Prior to the expiration of the CBA or sometime in February 1993, Allesandro G. Salazar, 1 Vice-President-Human
Resources Department of respondent company, was approached by Nestor Ocampo, the union president, and
Hernando Clemente, a union director. The two union officers inquired about the stand of the company regarding
the duration of the CBA which was set to expire in a few months. Salazar told the union officers that the matter
could be best discussed during the formal negotiations which would start soon.
In March 1993, Ocampo and Clemente again approached Salazar. They inquired once more about the CBA status
and received the same reply from Salazar. In April 1993, Ocampo requested for a meeting to discuss the duration
and effectivity of the CBA. Salazar acceded and a meeting was held on 15 April 1993 where the union officers
asked whether Salazar would be amenable to make the new CBA effective for two (2) years, s tarting 01 August
1993. Salazar, however, declared that it would still be premature to discuss the matter and that the company could
not make a decision at the moment. The very nex t day, or on 16 April 1993, all the rank -and-file employees of the
company refused to follow their regular two-shift work schedule of from 6:00 a.m. to 6 :00 p.m., and from 6 :00
p.m. to 6:00 a.m. At 2:00 p.m. and 2:00 a.m., respectively, the employees stopped working and left their workplace
without sealing the containers and securing the raw materials th ey were working on . When Salazar inquired about
the reason for their refusal to follow their normal work schedule, the employees told him to "ask the union
officers." To minimize the damage the overtime boycott was causing the compa ny, Salazar immediately asked for a
meeting with the union officers. In the meeting, Enrico Gonzales, a union director, told Salazar that the employees
would only return to their normal work schedule if the company would agree to their demands as to the ef fectivity
and duration of the new CBA. Salazar again told the union officers that the matter could be better discussed during
the formal renegotiations of the CBA. Since the union was apparently unsatisfied with the answer of the company,
the overtime boycott continued. In addition, the employees started to engage in a work slowdown campaign
during the time they wer e working, thus substantially delaying the production of the company. 2
On 14 May 1993, petitioner union submitted with respondent company its CBA proposal, and the latter filed its
On 03 September 1993, respondent company filed with the National Labor Relations Commission (NLRC) a petition
to declare illegal petitioner union's "overtime boycott" and "work slowdown" which, accordi ng to respondent
company, amounted to illegal strike. The case, docketed NLRC-NCR Case No. 00-09-05529-93, was assigned to
Labor Arbiter Manuel R. Caday.
On 22 October 1993, respondent company filed with the National Conciliation and Mediation Board (NCMB) an
urgent r equest for preventive mediation aimed to help the parties in their CBA negotiations. 3 The parties,
however, failed to arrive at an agreement and on 15 November 1993, respondent company filed with the Office of
the Secretary of Labor and Employment a petition for assumption of jurisdiction.
On 24 January 1994, petitioner union filed with the NCMB a Notice of Strike citing unfair labor practice allegedly
committed by respondent company. On 12 February 1994, the union staged a strike.

On 14 February 1994, Secretary of Labor Nieves Confesor issued an assumption order 4 over the labor dispute. On
02 March 1994, Secretary Confesor issued an order directing respondent company to "immediately accept all
striking workers, including the fifty-three (53) ter minated union officers, shop stewards and union members back
to work under the same ter ms and conditions prevailing prior to the strike, and to pay all the unpaid accrued year
end benefits of its employees in 1993."

On 05 September 1995, Labor Arbiter Cada y submitted his recommendation to the then Secretary of Labor
Leonardo A. Quisumbing.8 Then Secretary Quisumbing approved and adopted the report in his Order, dated 13
August 1997.
Hence, the present r ecourse where petitioner alleged

Issue: Whether or not the Honorable Fifth Division of Court of Appeals committed grave abuse?

Decision: On the matter of the authority and jurisdiction of the Secretary of Labor and Employment to rule on the
illegal strike committed by petitioner union, it is undisputed that the petition to declare the strike illegal before
Labor Arbiter Caday was filed long before the Secretary of Labor and Employment issued the assumption order on
14 February 1994. However, it cannot be denied that the issues of "overtime boycott" and "work slowdown"
amounting to illegal strike before Labor Arbiter Caday are intertwined with the labor dispute before the Labor
Secretary. In fact, on 16 March 1994, petitioner union even asked Labor Arbiter Caday to suspend the proceedings
before him and consoli date the same with the case before the Secretary of Labor.
The appellate court also correctly held that the question of the Secretary of Labor and Employment's jurisdiction
over labor and labor-related disputes was already settled in International Pharmaceutical, In c. vs. Hon. Secretary of
Labor and Associated Labor Union (ALU).
Anent the alleged misappreciation of the evidence proffered by the parties, it is axiomatic that the factual findings
of the Labor Arbiter, when sufficiently supported by the evidence on r ecord, must be accorded due respect by the
Supreme Court.12 Here, the report and recommendation of Labor Arbiter Caday was not only adopted by then
Secretary of Labor Quisumbing but was likewise affirmed by the Court of Appeals. We see no reason to depart
from their findings.

WHEREFORE, the petition is DENIED DUE CO URSE and the 29 December 1999 decision of the Court of Appeals is

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


This is a verified petition dated March 17, 1964 which was subsequently amended on July 31, 1964 filed by Nardo
Dayao and 70 others against Mercury Drug Co., Inc.,and/or Mariano Que, President & General Manager, and
Mercury Drug Co., Inc.

Dayao, et al. had filed a petition against Mercury Drug, Co. praying:

1) payment of their unpaid back wages for work done on Sundays and legal holidays plus 25c/c additional
compensation from date of their employment up to June 30, 1962;

2) payment of extra compensation on work done at night;

3) reinstatement of Januario Referente and Oscar Echalar to their former positions with back salaries; and, as
against the respondent union, for its disestablishment and the refund of all monies it had collected from

The Court of Industrial Relations (CIR) had rendered its decision that:

1. The claim of the petitioners for payment of back wages corresponding to the first four hours work rendered on
every other Sunday and first four hours on legal holidays should be denied for lack of merit;

2. Respondent Mercury Drug Company, Inc. is hereby ordered to pay the sixty-nine (69) petitioners:

(a) An additional sum equivalent to 25% of their respective basic or regular salaries for services rendered on
Sundays and legal holidays during the period from March 20, 1961 up to June 30, 1962; and

(b) Another additional sum or premium equivalent to 25% of their respective basic or regular salaries for nighttime
services rendered from March 20, 1961 up to June 30, 1962; and

3. Petitioners’ petition to convert them to monthly employees should be, as it is hereby, denied for lack of merit.

Not satisfied with the decision, the respondents filed a motion for its reconsideration. The motion for
reconsideration, was however, denied by the Court en banc.

W ith the decision of the CIR, Mercury Drug, Co. had filed the petition contending Dayao, et al.'s' claims for 25%
Sunday and Legal Holiday premiums are not supported by substantial evidence, thus infringing upon the cardinal
rights of the petitioner, and that ass uming it is, such premiums are already included in the salary of private


Whether Dayao, et al. are entitled to the 25% Sunday and Legal Holiday premiums.


The Court had declared that the contention of Mercury Drug, Co. is without merit.

While an employer may compel his employees to perform service on such days, the law nevertheless imposes upon
him the obligation to pay his employees at least 25% additional of their basic or regular salaries. Under Section 4 of
C. A. No. 444, no person, firm or corporation, business establishment or place of center of labour shall compel an
employee or laborer to work during Sundays and legal holidays unless he is paid an additional sum of at least
twenty-five per centum of his regular remuneration:Provided, However, That this prohibition shall not apply to
public utilities performing some public service such as supplying gas, electricity, power, water, or providing means
of transportation or communication.

Although a service enterprise, respondent company's employees are within the coverage of C. A. No. 444, as
amended known as the Eight Hour Labor Law, for they do not fall within the category or class of employees or
laborers excluded from its provisions.

In not giving weight to the evidence of the petitioner company, the respondent court sustained the private
respondents' evidence to the effect that their 25% additional compensation for work done on Sundays and Legal
Holidays were not included in their res pective monthly salaries. The private respondents presented evidence
through the testimonies of Nardo, Dayao, Ernesto Talampas, and Josias Federico who are themselves among the
employees who filed the case for unfair labor practice in the respondent court and are private respondents herein.

The petitioner-company's contention that the respondent court's conclusion on the issue of the 25% additional
compensation for work done on Sundays and legal holidays during the first four hours that the private respondents
had to work under their respective contracts of employment was not supported by substantial evidence is,
therefore, unfounded.

Furthermore, the Mercury Drug Co., Inc., maintains a chain of drugstores that are open every day of the week and,
for some stores, up to very late at night because of the nature of the pharmaceutical retail business. The
respondents knew that they had to work Sundays and holidays and at night, not as exceptions to the rule but as
part of the regular course of employment. Presented with contracts setting their compensation on an annual basis
with an express waiver of extra compensation for work on Sundays and holidays, the workers did not have much

The private respondents were at a disadvantage insofar as the contractual r elationship was concerned. Workers in
our country do not have the luxury or freedom of declining job openings or filing resignations even when some
terms and conditions of employment are not only onerous and inequitous but illegal.

It is precisely because of this situation that the framers of the Constitution embodied the provisions on social
justice (Section 6, Article II) and protection to labor (Section 9, Article II) in the Declaration of Principles and State

[G.R. No. 126529. April 15, 1998]

Private respondent, a corporation engaged in providing security services to its client, hired petitioner on
November 4, 1980 as one of its security guards. Thereafter, he was assigned to the Cat House Bar and Restaurant
with a monthly salary of P2,000.00 until its closure on August 31, 1993.
On May 4, 1994, petitioner filed a complaint against private respondent for underpayment of wages, non-
payment of salary from August 16-31, 1993, overtime pay, premium pay for holiday, rest day, night shift
differential, uniform allowance, service incentive leave pay and 13th month pay from the year 1990 to 1993 .
Private respondent, in its position paper, rejected petitioners claim alleging it merely acted as an agent of
the latter in securing his employment at the Cat House Bar and Restaurant.Thus, the liability for the cl aims of the
petitioner should be charged to Cat House Bar and its owner, being his direct employer .
In resolving the dispute in a decision dated May 31, 1995, the Labor Arbiter brushed aside the private
respondents contention that it was merely an agent of the petitioner and concluded :
and/or VICTOR C. PADILLA are hereby ORDERED to pay within ten (10) days from receipt hereof herein
complainant EDUARDO B. PRANGAN, the total sum of Nine Thousand Nine Hundred Thirty Two Pesos &
Sixteen Centavos (P9,932.16) premium pay for holiday and rest days, night shift differential, service
incentive leave pay, 13th month pay, uniform allowance, and unpaid salary.
Complainants other claims as well as respondents counter claim are hereby DISMISSSED either for the
reason of prescription and/or lack of merit.
Apparently not satisfied with the above-mentioned monetary award, petitioner appealed to the National
Labor Relations Commission (NLRC) contending that the Labor Arbiter erred in concluding that he only worked for
four hours and not twelve hours a day. Evidently, the shorter work hours resulted in a lower monetary award by
the Labor Arbiter. However, the NLRC dismissed his appeal for failure to file the same within ten-day reglementary

Undaunted, petitioner filed a motion for reconsideration which, in the interest of justice, was favorably
granted by the NLRC resulting in the reinstatement of his appeal. Nonetheless, petitioners victory was short-lived
as the NLRC eventually dismissed his appeal for lack of merit, the dispositive portion of the decision reads :
WHEREFORE, the appeal is hereby dismissed for lack of merit and decision is affirmed in toto.
Petitioner is now before us imputing grave abuse of discretion on the part of respondent NLRC (a) declaring
that he rendered only four hours and not twelve hours of work, and (b) affirming the monetary award .
The public respondent, through the Solicitor General, and the private respondent fi led their respective
comments on the petition refuting the allegation of the petitioner. Specifically, they asserted that the decision was
supported by ample evidence showing that petitioner indeed worked for only four hours and not twelve hours a
A review of the alleged error raised by the instant petition leads us to conclude that the same is factual in
nature which, as a rule, we do not pass upon. As a general rule, it is not for us to correct the NLRCs evaluation of
the evidence, as our task is confined to issues of jurisdiction or grave abuse of discretion. Obviously, however,
the same will not apply where the evidence require a reversal or modifica tion.
As proof of petitioners actual hours of work, private respondent submitted the daily time records allegedly
signed by the petitioner himself showing that he only worked four hours daily.
In contrast, petitioner argues that these daily time records were falsified for the simple reason that he was
not required to submit one. He further stressed that, assuming such documents exist, its authenticity and du e
execution are questionable and of doubtful source.
We find merit in the petition.
To be sure, findings of fact of quasi -judicial bodies like the NLRC, particularly when they coincide with those
of the Labor Arbiter, are accorded with respect even finality if supported by substantial evidence. In this regard,
we have defined substantial evidence as such amount of relevant evidence which a reasonable mind might accept
as adequate to justify a conclusion. Absent such quantum of evidence, the Court is not precluded from making its
own independent evaluation of facts.
In the instant case, there is no dispute that matters concerning an employees actual hours of work are within
the a mbit of management pr erogative. However, when an employer alleges that his employee works less than the
normal hours of employment as provided for in the law, he bears the burden of proving his allegation with clear
and satisfactory evidence.
In the instant petition, the NLRC, in declaring that petitioner only worked for four hours, relied solely on the
supposed daily time records of the petitioner submitted by the private respondent. We, however, are of the
opinion that these documents cannot be considered substantial evidence as to conclude that petitioner only
worked for four hours. It is worth mentioning that petitioner, in his Sur-Rejoinder to Respondents
Rejoinder, unequivocably stated that:
Complainant (petitioner herein) never made nor submitted any daily time record with respondent
company considering the fact that he was assigned to a single post and that the daily time records he
allegedly submitted with respondent company are all falsified and his signature appearing therein
Private respondent hardly bothered to controvert petitioners assertion, much less bolster its own
contention. As petitioners employer, private respondent has unlimited access to all relevant documents and
records on the hours of work of the petitioner. Yet, even as it insists that petitioner only worked for four hours and
not twelve, no employment contract, payroll, notice of assignment or posting, cash voucher or any other
convincing evidence which may attest to the actual hours of work of the petitioner were even presented. Instead,
what the private respondent offered as evidence were only petitioners daily time record, which the latter
categorically denied ever accomplishing, much less signing.
In said alleged daily time record, it showed that petitioner started work at 10:00 p.m. and would invariably
leave his post at exactly 2:00 a.m. Obviously, such unvarying recording of a daily time record is improbable and
contrary to human experience. It is impossible for an employee to arrive at the workplace and leave at exactly the
same time, day in day out. The very uniformity and regularity of the entries are badges of untruthfulness and as
such indices of dubiety.
Another consideration which militates against private respondents claim is the fact that in the personnel data
sheet of the petitioner, duly signed by the formers operation manager, it shows on its face that the latters hours

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

G.R. NO. 123520, JUNE 26, 1998

Ponente: Bellosillo

Issue: (1) Who has the burden of providing a claim for night shift differential pay, the worker who claims not to
have been paid night shift differentials, or the employer in custody of pertinent documents which would prove the
fact of payment of the same? (2) Were the requirements of due process substantially complied with in dismissing
the worker?


NSC a foreign corporation licensed to do business in the Phil. manufactures and assembles electronic parts for
export in mactan, lapu-lapu city. Santos was employed by NSC as a technicioan in its special products group
assigned to the graveyard shift from 10pm-6am.

On January 8, 1993 Santos did not report for work on his shift. He resumed his duties as night shift on January 9.
However, at the end of his shift, he made 2 entries in his DTR to make it appear that he worked on both the 8th
and 9th.

His supervisor Limisiaco, received the report that ther e was no technician in the graveyard shift on January 8.
Limsiaco then checked the DTRs and found out that Santos did not report on 8th and have found in the DTR the

Informal investigation were conducted by management and have required Santos to explain in writing why no
disciplinary action should be taken against him for dishonesty, falsifyi ng DTR and violation of company rules.
Santos explain that he was sick on the 8th and his DTR was a mere oversight or carelessness on his part.

Not satisfied with the explanation, NSC dismissed Santos for the violations made. Santos then filed a complain t for
illegal dismissal and non-payment of wages and other money claims.

Labor arbiter found that Santos was dismissed on legal grounds although he was not afforded due process,
ordering NSC to indemnify him and the unpaid night shift differentials.

NSC appealed to NLRC, but NLRC affirmed the labor arbiter holding that the conclusions were sufficiently
supported by the evidence.

NSC now imputes grave abuse of discretion to NLRC in affirming the labor arbiter. Contending that the night shift
differentials were never raised as an issue nor pusued by Santos; also denied that Santos was not given due
process because he was afforded ample opportunity to be heard.

Issues: (1) Was Santos illegally dismissed? (2) Santos entitled for the money claims?


The fact that Santos neglected to substantiate his claim for night shift differentials is not prejudicial to his cause.
After all, the burden of proving payment rests on petitioner NSC. Santos' allegation of non-payment of this
benefit, to which he is by law entitled, is a negative allegation which need not be supported by evidence unless it is
an essential part of his cause of action. It must be noted that his main cause of action is his illegal dismissal, and
the claim for night shift differential is but an incident of the protest against such dismissal. Thus, the burden of
proving that payment of such benefit has been made r ests upon the party who will suffer if no evidence at all is
presented by either party. By choosing not to fully and completely disclose information to prove that it had paid all
the night shift differentials due to private respondent, petitioner failed to discharge the burden of proof.

On the issue of due proce ss, we agree with petitioner that Santos was accorded full opportunity to be heard
before he was dismissed.

The essence of due process is simply an opportunity to be heard, or as applied to administrative proceedings, an
opportunity to explain one's side. In the instant case, petitioner furnished private respondent notice as to the
particular acts which constituted the ground for his dismissal. By requiring him to submit a written explanation
within 48 hours from receipt of the noti ce, the company gave him the opportunity to be heard in his defense.
Private respondent availed of this chance by submitting a written explanation. Furthermore, investigations on the
incident were actually conducted.

Finally, private respondent was notified on 14 January 1993 of the management's decision to terminate his

Thus, it is clear the minimum requirements of due process have been fulfilled by petitioner.

Petition Dismissed.


G.R. No. L-65482 December 1, 1987


FACTS: 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 deduc tion 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.

ISSUE: Whether or not the school faculty who according to their contracts are paid per lecture hour are entitled to
unworked holiday pay.

HELD: 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, judgmen t 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 entitl ed 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 decision of the NLRC was set aside and a new one was rendered to wit:
(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.

JANUARY 30, 2002 375 SCRA 311 GR. NO. 146775

It was October 17, 1992, the Department of Labor and Employment, Illiigan district office, conducted a
routine inspection in San Miguel Corporation in Illigan city. DOLE discovered that there was an underpayment by
SMC of regular Muslim holiday pay to its employees. SMC contested the findings and DOLE conducted summary
hearings. SMC failed to submit proof that it was paying regular Muslim holiday pay to its employees. DOLE issued a
compliance order to consider Muslim holidays as regular holidays and to pay both its Muslim and non -Muslim
employees a holiday pay within 30 days from the receipt of the order. SMC appealed to the DO LE main office in
Manila, but its appeal was dismissed for lack of merit. SMC, then, went to the Court of Appeals for a relief via a
petition for certiorari.

Whether or not there is a distinction between Muslims and non-Muslims as regards to the payment of
benefits for Muslim holidays.

Muslim holidays are legally observed within the area of jurisdiction of the ARMM. It is only upon
presidential proclamations that Muslim holidays may be officially observed outside the ARMM and generally
extends to Muslims to enable them to observe the said holidays.
There must be no distinction between Muslims and non-Muslims as regards payment of benefits for
Muslim holidays; wages and other emoluments are laid down by law and not based on faith or religion.

G.R. No. L- 52415 October 23, 1984
Ponente: MAKASIAR, J!1

FACTS: On June 20, 1975, the Union filed a complaint against the bank for the payment of holiday pay before the
then Department of Labor, NLRC, Regional Office IV in Manila. Conciliation having failed, and upon the request of
both parties, the case was certified for arbitration on July 7, 1975. On August 25, 1975, Labor Arbiter Ricarte T.
Soriano rendered a decision granting petitioner’s complaint for payment of holiday pay. Respondent bank did not
appeal from the said decision. Instead, it complied with the order of the Labor Arbiter by paying their holiday pay
up to and including January 1976.

P.D. 850 was promulgated amending the provisions of the Labor Code on the right to holiday pay. Accordingly by
authority of Article 5 of the Labor Code, the Department of Labor (now Ministry of Labor) pr omulgated the rules
and regulations for the implementation of holidays with pay.

The section reads: “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 9
was issued by the then Secretary of Labor on April 23,1976, interpreting the said rule. The bank, by reason of the
ruling laid down by the rule implementing Article 94 of the Labor Code and by Policy Instruction 9, stopped the
payment of holiday pay to an its employees.

On August 30,1976, the Union filed a motion for a writ of execution to enforce th e arbiter’s decision dated August
1975, which the bank opposed. On October 18,1976, the Labor Arbiter, instead of issuing a writ of execution,
issued an order enjoining the bank to continue paying its employees their regular holiday pay. On November 17,
1976, the bank appealed from the order of the Labor Arbiter to the NLRC. On 20 June 1978, the NLRC promulgated
its resolution dismissing the bank’s appeal, and ordering the issuance of the proper writ of execution. On
February 21,1979, the bank filed with the Office of the Minister of Labor a motion for reconsideration/appeal with

urgent prayer to stay execution. On August 13,1979 the NLRC issued an order directing the Chief of Research and
Information of the Commission to compute the holiday pay of the I BAA employees from April 1976 to the present
in accordance with the Labor Arbiter dated August 25,1975.

On November 10, 1979, the Office of the Minister of Labor, through Deputy Minister Amado Inciong, issued an
order setting aside the resolution of the NLRC dated June 20, 1978, and dismissing the case for lack of merit.

Issue: Whether or not the Ministry of Labor is correct in determining that monthly paid employees are excluded
from the benefits of holiday pay?

Held: From Article 92 of the Labor Code, as amended by Presidential Decree 850, and Ar ticle 82 of the same Code,
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.” Even if contemporaneous construction placed upon a statute by executive officers
whose duty is to enforce it is given great weight by the courts, still if such construction is so erroneous, the same
must be declared as null and void. So long, as the regulations relate solely to carrying into effect the provisions of
the law, they are valid. 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. A rule is binding on the Courts so long as the
procedure fixed for its promulgation is followed and its scope is within the s tatutory authority granted by the
legislature, even if the courts are not in agreement with the policy stated therein or its innate wisdom. Further,
administrative interpretation of the law is at best merely advisory, for it is the courts that finally determine what
the law means.

The Supr eme Court granted the petition, set aside the order of the Deputy Minister of Labor, and reinstated the
decision of the Labor Arbiter Ricarte T. Soriano.


G.R. NO. 114698 JULY 3, 1995


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 for th his finding of "(n)on -
payment of r egular holidays falling on a Sunday for monthly-paid employees."
Wellington sought reconsideration of the Labor Inspector's report, by letter dated August 10, 1991. However,
respondent’s arguments failed to persuade the Regional Director who, in an Order issued on July 28, 1992, ruled
and accordingly directed Wellington to pay its employees compensation corresponding to four (4) extra working
4 5
days. Wellington timely filed a motion for reconsideration of this Order of August 10, 1992. Its motion was
treated as an appeal and was acted on by respondent Undersecretary. By Order dated September 22, the latter
6 7
affirmed the challenged order of the Regional Director." Again, Wellington moved for reconsideration, and again
was rebuffed.
Wellington then instituted the special civil action of certio rari 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.

Whether a monthly-paid employee, rec eiving a fixed monthly compensation, is entitled to an additional pay aside
from his usual holiday pay, whenever a regular holiday falls on a Sunday

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. 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." This monthly salary shall serve as compensation "for all days in the month whether wo rked
or not," and "irrespective of the number of working days therein." . 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, no issue that to this extent, it complied with the minimum norm lai d 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, a s well as days when no work is
done by reason of fortuitous cause, as above specified , or causes not a ttributable to the employees.
There is no provision of law requiring any employer to make such adjustments i n 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 requi res 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," and to pay that salary "for all days in the
month whether worked or not," and "irrespective of the number of working days therein." 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 particula r 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 a void 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.

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.
Regalado, Puno and Mendoza, JJ., concur

G.R. No. 111359/ August 15, 1995

FACTS: Sometime in August 1986, the Petitioner called Respondent Caltex’s attention to alleged violations by
Caltex of Annex “B” of the 1985 CBA, e.g. non-payment of night-shift differential, non-payment of overtime pay
and non-payment at “first day-off rates” for work performed on a Saturday.

Respondent’s Industrial Relations manager immediately evaluated petitioner’s claims and accordingly informed
petitioner Union that differential payments would be timely implemented, which, however, was never

Petitioner’s Contention: Petitioner, then, instituted a complaint for unfair labor practice against Respondent
alleging violation of the provisions of the 1985 CBA. Petitioner Union charged Respondnet with shortchanging its
employees when it compensated work performed on the first 2 1/2 hours of Saturday, an employees’ day of rest,
at regular rates, when it should be paying at “day of rest” or “day off” rates.

Respondent’s Contention: Respondent denied the accusations of the Petitioner Union. It averred that Saturday
was never designated as a day of rest, much less a “day-off”. It maintained that the 1985 CBA provided only 1 day
of rest for employees at the Manila Office, as well as employees similarly situated at the Legazpi and Marinduque
Bulk Depots. This day of rest, according to Caltex, was Sunday.

It was stated in the CBA that the daily working schedules shall be established by management in accordance with
the requirements of efficient operations on the basis of eight (8) hours per day for any five (5) days. Provided,
however employees required to work in excess of forty (40) hours in any week shall be compensated in accordance
with Annex B of this Agreement.

Labor Arbiter ruled in favor of petitioner Union, while finding at the same time that private respondent Caltex was
not guilty of any unfair labor practice.

ISSUE: Whether or not and undertime work may be offset by an overtime work, respectively on separate days.

RULIN G: Article 88, Labor Code, as amended, provides:

Art. 88. Undertime not offset by overtime. — Undertime work on any particular day shall not be offset by
overtime work on any other day.Per mission given to the employee to go on leave on some other day of the week
shall not exempt the employer from paying the additional compensation required in this Chapter.
In order that work may be considered as overtime work, the hours worked must be in excess of and in addition to
the eight (8) hours worked during the prescribed daily work period, or the forty (40) hours worked during the
regular work week Monday thru Friday.

As provided in the 1985 CBA; under that CBA, Saturday is not a rest day or a “day off”. It is only when an employee
has been required on a Saturday to render work in excess of the forty (40) hours which constitute the regular work
week that such employee may be considered as performing overtime work on that Saturday. We consider that the
statutory prohibition against offsetting undertime one day with overtime another day has no application in the
case at bar.

Facts: 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 Cha rtered 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.

On the bases of the for egoing 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.
TO: All Regional Directors
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, wher e 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
These new interpretations must be uniformly and consistently upheld.
This issuance shall take effect immediately.

Issues: 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. ?

Decision: While it is true that the contemporaneous construction placed upon a statute by ex ecutive 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 thr ee
branches of the government, almost always in situations where some a gency 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).

Since the private respondent premises its action on the invalidated rule and poli cy 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 fa mily of the employer who are depend ent on him for
support, domestic helpers, persons in th e personal service of another, and workers who are paid
by results as determin ed by the Secreta ry of Labor in appropriate regulations. (Emphasis
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.
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.

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 Rel ations Commission which affirmed the October 30, 1975
resolution of the Labor Arbiter but deleted interest payments is REINSTATED.
G.R. No. L-147420 June 10, 2004


Petitioners argue that monthly-paid employees are considered paid for all days of the month including un-
worked days. Petitioners assert that they should be paid for all the 365 days in a year. They argue that since in the
computation of leave credits, ANTECO uses a divisor of 304, ANTECO is not paying them 61 days every year.
Petitioners base their claim on Section 2, Rule IV of Book III of the Omnibus Rules Implementing the Labor Code.

On 29 November 1996, the Labor Arbiter rendered a Decision in favor of petitioner s granting them wage
differentials amounting to P1,017,507.73 and attorney’s fees of 10%. ANTECO appealed the Decision to the NLRC
on 24 December 1996. On 27 November 1997, the NLRC reversed the Labor Arbiter’s Decision.

Whether or not petitioners are entitled to their money claim?

Petitioners’ claim is without basis

Section 2, Rule IV, Book III of the Implementing Rules and Policy Instructions No. 9 issued by the Secretary
(then Minister) 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.

The Labor Code 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 monthly-paid employees are presumed to b e paid for all days in the month whether worked or

Thus, Section 2 cannot serve as basis of any right or claim. Absent any other legal basis, petitioners’ claim
for wage differentials must fail.

The basic rule in this jurisdiction is "no work, no pay." The right to be paid for un-worked days is generally
limited to the ten legal holidays in a year.


G.R. No. L-58870 December 18, 1987



A case was filed against CIT by, 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. CIT maintained that it had paid the allowa nces 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. Minister of Labor and Employment issued the assailed Order 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.
In a nutshell, the pr esent 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.

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.

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.


This Court has consistently held, beginning with the University of th e 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 u nder section 3(a) of Pres.
Dec. No. 451, therefore, not against the 60% portion allocated for increases in salaries and wages.

In University of Pangasinan Faculty Union v. University of Pangasinan, supra:

... The sixty (60%) percent incremental proceeds from the tuition increase are to be devo ted entirely to wag e or
salary increases which means increases in basic sala ry. The law cannot be construed to include allowances which
are benefits over and above the basic salaries of the employees. To charge such b enefits to the 60% incremental
proceeds would be to r educe 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.
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.


G.R. No. 156367 May 16, 2005

Facts: Respondent Antonio Bautista has been employed by petitioner Auto Bus Transport Systems, Inc.
(Autobus), as driver-conductor with travel routes Manila-Tuguegarao via Baguio, Baguio- Tuguegarao via Manila
and Manila-Tabuk via Baguio. Respondent was paid on commission basis, 7% of the total gross income per travel,
on a twice a month basis. While he was driving he accidentally bumped the rear portion of Autobus No. 124.
Respondent averred that the accident happened because he was compelled b y the management to go back to
Roxas, Isabela, although he had not slept for almost 24 hours, as he had just arrived in Manila from Roxas, Isabela.
Respondent fur ther 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 respondent’s pleas
for reconsideration, the same was ignored by management. After a month, management sent him a letter of
termination. Bautista instituted a Complai nt for Illegal Dismissal with Money Claims for nonpayment of 13 month
pay and service incentive leave pay against Autobus.

Issue: Whether or not Bautista, who is paid on purely commission basis, is entitled to the grant of service incentive
leave pay.

Held: Employees engaged on task or contract basis or purely commission basis are not automatically exempted
from the grant of service incentive leave, unless, they fall under the classification of field personnel.

“Field personnel" is not mer ely concerned with the location where the employee regularly performs his
duties but also with the fact that the employee’s performance is unsupervised by the employer. They 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 deter mined 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 deter mined
with reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or not the
employee’s time and performance are constantly supervised by the employer.

The r espondent is not a field personnel but a regular employee who performs tasks usually necessary and
desirable to the usual trade of petitioner’s business. Accordingly, respondent is entitled to the grant of service
incentive leave. It is of judicial notice that along the routes that are plied by these bus companies, there a re its
inspectors assigned at strategic places who board the bus and inspect the passengers, xxxx. There is also the
mandatory once-a-week car barn or shop day, where the bus is regularly checked as to its mechanical, electrical
xxx. They too, must be at specific place at 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, ther e 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.



G.R. No. 151228, August 15, 2002

FACTS: Petitioner Rolando Tan is the president of Supreme Theater Corpora tion and the general manager of
Crown and Empire Theaters in Butuan City. Private respondent Leovigildo Lagrama is a painter, making ad
billboards and murals for the motion pictures shown at the Empress, Supreme, and Crown Theaters for more than
10 years, from September 1, 1988 to October 17, 1998.

On October 17, 1998, private respondent Lagrama was summoned by Tan and upbraided: "Nangihi na naman ka
sulod sa imong drawinganan." ("You again urinated inside your work area.") When Lagrama asked what Tan was
saying, Tan told him, "Ayaw daghang estorya. Dili ko gusto nga mo-drawing ka pa. Guikan karon, wala nay drawing.
Gawas." ("Don't say anything further. I don't want you to draw anymore. From now on, no more drawing. Get

Lagrama denied the charge against him. He claimed that he was not the only one who entered the drawing area
and that, even if the charge was true, it was a minor infraction to warrant his dismissal. However, everytime he
spoke, Tan shouted "Gawas" ("Get out"), leaving him with no other choice but to leave the premises.

Lagrama filed a complaint with the Sub-Regional Arbitration Branch No. X of the National Labor Relations
Commission (NLRC) in Butuan City. He alleged that he had been illegally dismissed and sought reinvestigation and
payment of 13th month pay, service incentive leave pay, salary differential, and damages.

Petitioner Tan denied that Lagrama was his employee. He asserted that Lagrama was an independent contractor
who did his work according to his methods, while he (petitioner) was only interested in the result ther eof. He cited
the admission of Lagrama during the conferences befor e the Labor Arbiter that he was paid on a fixed piece-work
basis, i.e., that he was paid for every painting turned out as ad billboard or mural for the pictures shown in the
three theaters, on the basis of a "no mur al/billboard dr awn, no pay" policy. He submitted the affidavits of other
cinema owners, an amusement park owner, and those supervising the construction of a church to prove that the
services of Lagrama were contracted by them. He denied having dismissed Lagrama and alleged that it was the
latter who r efused to paint for him after he was scolded for his habits.


 Lagrama works for Tan as painter of billboards and murals for the motion pictures shown at the theaters
managed by Tan for more than 10years
 Lagrama was dismissed for having urinated in his working area
 Lagrama filed a complaint for illegal dismissal and non payment of benefits
 Tan asserted that Lagrama was an independent contractor as he was paid in pie ce-work basis

W/N Lagrama is an independent contractor or an employee of Tan?


Lagrama is an employee not an independent contractor

Applying Four Fold Test

A. Power of Control - Evidence shows that the Lagrama performed his work as painter and under the supervision
and control of Tan.

Lagrama worked in a designated work area inside the theater of Tan for the use of which petitioner prescribed
rules, which rules included the observance of cleanliness and hygeine and prohibition against urinating in the work
area and any other place other than rest rooms and

Tan's control over Lagrama's work extended not only the use of work area but also the result of Lagrama;s work
and the manner and means by which the work was to be accomplished

Lagrama is not an independent contractor because he did not enjoy independence and freedom from the control
and supervision of Tan and he was subjected to Tan's control over the means and methods by which his work is to
be performed and accomplished

B. Payment of Wages

Lagrama wor ked for Tan on a fixed piece work basis is of no moment. Payment by result is a method of
compensation and does not define the essence of the relation.

That Lagrama was not reported as an employee to the SSS is not conclusive, on the question whether he was an
employee, otherwise Tan would be rewarded for his failure or even neglect to perform his obligation.

C. Power of Dismissal – by Tan stating that he had the right to fire Lagrama, Tan in effect acknowledged Lagrama
to be his employee

D. Power of Sele ction and Engagement of Employees – Tan engaged the services of Lagrama without the
intervention of third part


GR No. 187698 – Aug. 9, 2010 – Carpio-Morales


Rodolfo Serrano (peti tioner) was hired on Sept. 28, 1992 as bus conductor by Severino Santos Transit
(respondent), a bus company owned a operated by Severino Santos (co-respondent)

14 years of service after, petitioner applied for optional retirement from the company whose representative
advised him that he must fi rst sign the already prepared Quitclaim before his reti rement pay could be

Petitioner’s request to first go over the computation of his retirement pay was deni ed. He then signed the
Quitclaim on which he wrote “U.P.” (under protes t) after his signature, indicating his protest to the amount of
P75,277.45 which he received, computed by the company at 15 days per y ear of service.

Petitioner’s allegation:Petitioner soon after filed a complaint before the LA, alleging that the company erred
in its computation since under R.A. 7641 (Retirement Pay Law), his retirement pay should have been
computed at 22.5 days per y ear of s ervice to include the cash equivalent of the 5 -day SIL and 1/12 of the 13th
month pay which the company di d not.

Respondents’ allegation:The Quitclaim signed by petitioner barred his claim and, in any event, its
computation was correct since petitioner was not entitled to the 5 -day SIL and pro-rated 13th month pay for,
as a bus conductor, he was paid on a commission basis.

LA: ruled in favor of petitioner awardi ng him P116,135.45 as retirement pay differenti al, among others.

NLRC:revers ed the LA decision but ordered respondents to pay retirement differenti al in the amount of

CA: affirmed NLRC.

ISSUE: WON an employee paid on a commission basis is entitled to the 5-day SIL and pro-rated 13th month

HELD: Yes. The petition is granted.

R.A. 7641 amended Art. 287 of the Labor Code by providing for reti rement pay to qualified private sector
employees i n the abs ence of any reti rement plai n in the es tablishment. The perti nent provision of sai d law

“In the absence of a retirement plan or agreement providing for retirement benefits of employees in
the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond
sixty-five (65) years which is hereby declared the compulsory retirement age, who has s erved at
least five (5) years in the said establishment, may retire and shall be entitled to reti rement pay
equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six
(6) months bei ng considered as one whole y ear.

Unless the parties provide for broader inclusions, the term one-half (1/2) month sal ary shall mean
fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not
more than five (5) days of service incentive leaves. …”

Further, the Implementi ng Rules of said law provide that such ruleshall apply to all employees in the
private sector, regardless of their position, designation or status and irrespective of the method by
which their wages are paid, except to those specifically exempted under Section 2 of the s aid Impl ementing

Under Sec. 2 thereof, the rule shall not apply to the following employees:

1. Employees of the national government

2. Domestic helpers and persons in the personal service of another
3. Employees of retail, service and agricultural es tablishment or operations regularly employing not
more than ten (10) employees.

Under Sec. 5 of the same Impl ementing Rul es, it provides that for the purpose of determining the minimum
retirement pay due an employee, the term “one-half month salary” shall include all of the following:

1. Fifteen (15) days salary of the employee based on his latest s alary rate.
2. Cash equivalent of not more than five (5) days of service incentive leav e;
3. One-twelfth of the 13th month pay
4. All other benefits

In the present case, petitioner worked for 14 years for the bus company which did not adopt any retirement
scheme. Even if peti tioner as bus conductor was pai d on commission basis then, he falls within the coverage
of R.A. 7641 and its impl ementing rules. Thus, petitioner’s retirement pay should include the cash equivalent
of the 5-day SIL and 1/12 of the 13th month pay.

For purpos es, however, of applying the law on SIL, as well as on retirement, the SC notes that there is a
difference between drivers paid under the “boundary system” and conductors who are paid on
commission basis.

A taxi driver paid according to the “boundary system” is not enti tled to the 13th month and the SIL pay,

hence, his reti rement pay should be computed on the sole basis of his salary. In practice, taxi drivers do not
receive fixed wages. They retain only those sums in excess of the “boundary” or fee they pay to the owners or
operators of the vehicles.

Conductors, on the other hand, are paid a certain percentage of the bus’ earni ngs for the day. Hence, being
paid on purely commission basis.

Under P.D. 851 (SIL Law), the exclusion from its coverage of workers who are paid on a purely commission
basis is only with respect to field personnel. Hence, employees engaged on task or contract basis or paid
on purely commission basis are not automatically exempted from the grant of SIL, unless, they fall
under the classification of field personnel.

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 bei ng 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 s pecific 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.



The 99 persons named as petitioners in this proceedi ng were rank -and-file employees of res pondent Empire
Food Products, which hired them on various dates. Petitioners filed agains t private respondents a complaint
for payment of money claim[s] and for violation of labor standard[s] laws.

On January 23, 1991, petitioners filed a complaint docketed as NLRC Case No. RAB-III-01-1964-91 against
private respondents for:
After the submission by the parti es of their respective position papers and presentation of testimoni al
evidence, Labor Arbiter Ariel C. Santos absolved private res pondents of the charges of unfai r labor practice,
union busting, violation of the memorandum of agreement, underpayment of wages and denied petitioners'
pray er for actual, moral and exemplary damages. Labor Arbi ter Santos, however, directed the reinstatement
of the i ndividual compl ainants:

Whether or not the petitioners are “paky ao” or per pi ece workers and therefore not entitled to benefits as
that of a regular employee.

As to the other benefits, namely, holiday pay, premium pay, 13th month pay an d service incentive leav e which
the l abor arbiter failed to rule on but which petitioners prayed for in their complai nt, 15 we hold that
peti tioners are so entitled to these benefits. Three (3) factors lead us to conclude that petitioners, al though
piece-rate workers, were regular employees of private respondents. Firs t, 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 y ear, 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 compens ation was on a "per piece basis," the status and nature of their
employment was that of regular employees.
The Rules Implementing the Labor Code exclude certain employees from receiving benefits such as ni ghttime
pay, holiday pay, service i ncentive leave 17 and 13th month pay, 18 inter alia, "field personnel and other
employees whose time and performance is unsupervised by the employer, including those who are engaged
on task or contract basis, purely commission basis, or thos e who are paid a fixed amount for performing work
irrespective of the time consumed in the performance thereof." Pl ainly, petitioners as piece-rate workers do
not fall within this group. As mentioned earlier, not only did petitioners l abor 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 l ess than his average daily
earnings for the last sev en (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.
The Supreme Court in its decision held: DECLARING peti tioners 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 month's salary for every year of service with a fraction of six months of service considered
as one year.