G.R. No.
114337 September 29, 1995
NITTO ENTERPRISES, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and ROBERTO CAPILI, respondents.
This petition for certiorari under Rule 65 of the Rules of Court seeking to annul the decision1 rendered by
public respondent National Labor Relations Commission, which reversed the decision of the Labor Arbiter.
Briefly, the facts of the case are as follows:
Petitioner Nitto Enterprises, a company engaged in the sale of glass and aluminum products, hired Roberto
Capili sometime in May 1990 as an apprentice machinist, molder and core maker as evidenced by an
apprenticeship agreement2 for a period of six (6) months from May 28, 1990 to November 28, 1990 with a
daily wage rate of P66.75 which was 75% of the applicable minimum wage.
At around 1:00 p.m. of August 2, 1990, Roberto Capili who was handling a piece of glass which he was
working on, accidentally hit and injured the leg of an office secretary who was treated at a nearby hospital.
Later that same day, after office hours, private respondent entered a workshop within the office premises
which was not his work station. There, he operated one of the power press machines without authority and
in the process injured his left thumb. Petitioner spent the amount of P1,023.04 to cover the medication of
private respondent.
The following day, Roberto Capili was asked to resign in a letter3 which reads:
Wala siyang tanggap ng utos mula sa superbisor at wala siyang experiensa kung papaano
gamitin and "TOOL" sa pagbuhat ng salamin, sarili niyang desisyon ang paggamit ng tool
at may disgrasya at nadamay pa ang isang sekretarya ng kompanya.
Sa araw ding ito limang (5) minute ang nakakalipas mula alas-singko ng hapon siya ay
pumasok sa shop na hindi naman sakop ng kanyang trabaho. Pinakialaman at kinalikot
ang makina at nadisgrasya niya ang kanyang sariling kamay.
Nakagastos ang kompanya ng mga sumusunod:
Emergency and doctor fee P715.00
Medecines (sic) and others 317.04
Bibigyan siya ng kompanya ng Siyam na araw na libreng sahod hanggang matanggal ang
tahi ng kanyang kamay.
Tatanggapin niya ang sahod niyang anim na araw, mula ika-30 ng Hulyo at ika-4 ng
Agosto, 1990.
Ang kompanya ang magbabayad ng lahat ng gastos pagtanggal ng tahi ng kanyang kamay,
pagkatapos ng siyam na araw mula ika-2 ng Agosto.
Sa lahat ng nakasulat sa itaas, hinihingi ng kompanya ang kanyang resignasyon, kasama
ng kanyang comfirmasyon at pag-ayon na ang lahat sa itaas ay totoo.
Naiintindihan ko ang lahat ng nakasulat sa itaas, at ang lahat ng ito ay aking pagkakasala
sa hindi pagsunod sa alintuntunin ng kompanya.
(Sgd.)
Roberto
Capili
Roberto
Capili
On August 3, 1990 private respondent executed a Quitclaim and Release in favor of petitioner for and in
consideration of the sum of P1,912.79.4
Three days after, or on August 6, 1990, private respondent formally filed before the NLRC Arbitration
Branch, National Capital Region a complaint for illegal dismissal and payment of other monetary benefits.
On October 9, 1991, the Labor Arbiter rendered his decision finding the termination of private respondent
as valid and dismissing the money claim for lack of merit. The dispositive portion of the ruling reads:
WHEREFORE, premises considered, the termination is valid and for cause, and the money
claims dismissed for lack of merit.
The respondent however is ordered to pay the complainant the amount of P500.00 as
financial assistance.
SO ORDERED.5
Labor Arbiter Patricio P. Libo-on gave two reasons for ruling that the dismissal of Roberto Capilian was
valid. First, private respondent who was hired as an apprentice violated the terms of their agreement when
he acted with gross negligence resulting in the injury not only to himself but also to his fellow worker.
Second, private respondent had shown that "he does not have the proper attitude in employment
particularly the handling of machines without authority and proper training.6
On July 26, 1993, the National Labor Relations Commission issued an order reversing the decision of the You are also to collect the amount of P122,690.85 representing his backwages as called
Labor Arbiter, the dispositive portion of which reads: for in the dispositive portion, and turn over such amount to this Office for proper
disposition.
WHEREFORE, the appealed decision is hereby set aside. The respondent is hereby
directed to reinstate complainant to his work last performed with backwages computed Petitioner filed a motion for reconsideration but the same was denied.
from the time his wages were withheld up to the time he is actually reinstated. The
Arbiter of origin is hereby directed to further hear complainant's money claims and to Hence, the instant petition for certiorari.
dispose them on the basis of law and evidence obtaining.
The issues raised before us are the following:
SO ORDERED.7
I
The NLRC declared that private respondent was a regular employee of petitioner by
ruling thus: WHETHER OR NOT PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF
DISCRETION IN HOLDING THAT PRIVATE RESPONDENT WAS NOT AN APPRENTICE.
As correctly pointed out by the complainant, we cannot understand how an
apprenticeship agreement filed with the Department of Labor only on June 7, 1990 could II
be validly used by the Labor Arbiter as basis to conclude that the complainant was hired
by respondent as a plain "apprentice" on May 28, 1990. Clearly, therefore, the
WHETHER OR NOT PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF
complainant was respondent's regular employee under Article 280 of the Labor Code, as
DISCRETION IN HOLDING THAT PETITIONER HAD NOT ADEQUATELY PROVEN THE
early as May 28,1990, who thus enjoyed the security of tenure guaranteed in Section 3,
EXISTENCE OF A VALID CAUSE IN TERMINATING THE SERVICE OF PRIVATE RESPONDENT.
Article XIII of our 1987 Constitution.
We find no merit in the petition.
The complainant being for illegal dismissal (among others) it then behooves upon
respondent, pursuant to Art. 227(b) and as ruled in Edwin Gesulgon vs. NLRC, et al. (G.R.
Petitioner assails the NLRC's finding that private respondent Roberto Capili cannot plainly be considered an
No. 90349, March 5, 1993, 3rd Div., Feliciano, J.) to prove that the dismissal of
apprentice since no apprenticeship program had yet been filed and approved at the time the agreement
complainant was for a valid cause. Absent such proof, we cannot but rule that the
was executed.
complainant was illegally dismissed.8

Petitioner further insists that the mere signing of the apprenticeship agreement already established an
On January 28, 1994, Labor Arbiter Libo-on called for a conference at which only private respondent's
employer-apprentice relationship.
representative was present.

Petitioner's argument is erroneous.

On April 22, 1994, a Writ of Execution was issued, which reads:

NOW, THEREFORE, finding merit in [private respondent's] Motion for Issuance of the
Writ, you are hereby commanded to proceed to the premises of [petitioner] Nitto
Enterprises and Jovy Foster located at No. l 74 Araneta Avenue, Portero, Malabon, Metro
Manila or at any other places where their properties are located and effect the
reinstatement of herein [private respondent] to his work last performed or at the option
of the respondent by payroll reinstatement.
The law is clear on this matter. Article 61 of the Labor Code provides:
Contents of apprenticeship agreement. Apprenticeship agreements, including the
main rates of apprentices, shall conform to the rules issued by the Minister of Labor and
Employment. The period of apprenticeship shall not exceed six months. Apprenticeship
agreements providing for wage rates below the legal minimum wage, which in no case
shall start below 75% per cent of the applicable minimum wage, may be entered into
only in accordance with apprenticeship program duly approved by the Minister of Labor
and Employment. The Ministry shall develop standard model programs of apprenticeship.
(emphasis supplied)
In the case at bench, the apprenticeship agreement between petitioner and private respondent was
executed on May 28, 1990 allegedly employing the latter as an apprentice in the trade of "care
maker/molder." On the same date, an apprenticeship program was prepared by petitioner and submitted
to the Department of Labor and Employment. However, the apprenticeship Agreement was filed only on
June 7, 1990. Notwithstanding the absence of approval by the Department of Labor and Employment, the
apprenticeship agreement was enforced the day it was signed.
Based on the evidence before us, petitioner did not comply with the requirements of the law. It is
mandated that apprenticeship agreements entered into by the employer and apprentice shall be entered
only in accordance with the apprenticeship program duly approved by the Minister of Labor and
Employment.
Prior approval by the Department of Labor and Employment of the proposed apprenticeship program is,
therefore, a condition sine quo non before an apprenticeship agreement can be validly entered into.
The act of filing the proposed apprenticeship program with the Department of Labor and Employment is a
preliminary step towards its final approval and does not instantaneously give rise to an employer-
apprentice relationship.
Article 57 of the Labor Code provides that the State aims to "establish a national apprenticeship program
through the participation of employers, workers and government and non-government agencies" and "to
establish apprenticeship standards for the protection of apprentices." To translate such objectives into
existence, prior approval of the DOLE to any apprenticeship program has to be secured as a condition sine
qua non before any such apprenticeship agreement can be fully enforced. The role of the DOLE in
apprenticeship programs and agreements cannot be debased.
Hence, since the apprenticeship agreement between petitioner and private respondent has no force and
effect in the absence of a valid apprenticeship program duly approved by the DOLE, private respondent's
assertion that he was hired not as an apprentice but as a delivery boy ("kargador" or "pahinante") deserves
credence. He should rightly be considered as a regular employee of petitioner as defined by Article 280 of
the Labor Code:
Art. 280. Regular and Casual Employment. The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or trade
of the employer, except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of
the engagement of the employee or where the work or services to be performed is
seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph: Provided, That, any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee
with respect to the activity in which he is employed and his employment shall continue
while such activity exists. (Emphasis supplied)
and pursuant to the constitutional mandate to "protect the rights of workers and promote their
welfare."9
Petitioner further argues that, there is a valid cause for the dismissal of private respondent.
There is an abundance of cases wherein the Court ruled that the twin requirements of due process,
substantive and procedural, must be complied with, before valid dismissal exists. 10 Without which, the
dismissal becomes void.
The twin requirements of notice and hearing constitute the essential elements of due process. This simply
means that the employer shall afford the worker ample opportunity to be heard and to defend himself with
the assistance of his representative, if he so desires.
Ample opportunity connotes every kind of assistance that management must accord the employee to
enable him to prepare adequately for his defense including legal representation. 11
As held in the case of Pepsi-Cola Bottling Co., Inc. v. NLRC: 12
The law requires that the employer must furnish the worker sought to be dismissed with
two (2) written notices before termination of employee can be legally effected: (1) notice
which apprises the employee of the particular acts or omissions for which his dismissal is
sought; and (2) the subsequent notice which informs the employee of the employer's
decision to dismiss him (Sec. 13, BP 130; Sec. 2-6 Rule XIV, Book V, Rules and Regulations
Implementing the Labor Code as amended). Failure to comply with the requirements
taints the dismissal with illegality. This procedure is mandatory, in the absence of which,
any judgment reached by management is void and in existent (Tingson, Jr. vs. NLRC, 185
SCRA 498 [1990]; National Service Corp. vs. NLRC, 168 SCRA 122; Ruffy vs. NLRC. 182
SCRA 365 [1990]).
The fact is private respondent filed a case of illegal dismissal with the Labor Arbiter only three days after he
was made to sign a Quitclaim, a clear indication that such resignation was not voluntary and deliberate.
Private respondent averred that he was actually employed by petitioner as a delivery boy ("kargador" or
"pahinante").
He further asserted that petitioner "strong-armed" him into signing the aforementioned resignation letter
and quitclaim without explaining to him the contents thereof. Petitioner made it clear to him that anyway,
he did not have a choice. 13
Petitioner cannot disguise the summary dismissal of private respondent by orchestrating the latter's
alleged resignation and subsequent execution of a Quitclaim and Release. A judicious examination of both
events belies any spontaneity on private respondent's part.
WHEREFORE, finding no abuse of discretion committed by public respondent National Labor Relations
Commission, the appealed decision is hereby AFFIRMED.
SO ORDERED.
G.R. No. 122917 July 12, 1999
MARITES BERNARDO, ELVIRA GO DIAMANTE, REBECCA E. DAVID, DAVID P. PASCUAL, RAQUEL ESTILLER,
ALBERT HALLARE, EDMUND M. CORTEZ, JOSELITO O. AGDON GEORGE P. LIGUTAN JR., CELSO M. YAZAR, ALEX
G. CORPUZ, RONALD M. DELFIN, ROWENA M. TABAQUERO, CORAZON C. DELOS REYES, ROBERT G. NOORA,
MILAGROS O. LEQUIGAN, ADRIANA F. TATLONGHARI, IKE CABANDUCOS, COCOY NOBELLO, DORENDA
CANTIMBUHAN, ROBERT MARCELO, LILIBETH Q. MARMOLEJO, JOSE E. SALES, ISABEL MAMAUAG, VIOLETA G.
MONTES, ALBINO TECSON, MELODY V. GRUELA, BERNADETH D. AGERO, CYNTHIA DE VERA, LANI R. CORTEZ,
MA. ISABEL B. CONCEPCION, DINDO VALERIO, ZENAIDA MATA, ARIEL DEL PILAR, MARGARET CECILIA
CANOZA, THELMA SEBASTIAN, MA. JEANETTE CERVANTES, JEANNIE RAMIL, ROZAIDA PASCUAL, PINKY
BALOLOA, ELIZABETH VENTURA, GRACE S. PARDO and TIMOSA, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and FAR EAST BANK AND TRUST COMPANY, respondents.
The Magna Carta for Disabled Persons mandates that qualified disabled persons be granted the same
terms and conditions of employment as qualified able-bodied employees. Once they have attained the
status of regular workers, they should be accorded all the benefits granted by law, notwithstanding written
or verbal contracts to the contrary. This treatments is rooted not merely on charity or accomodation, but
on justice for all.
The Case
Challenged in the Petition for Certiorari 1 before us is the June 20, 1995 Decision2 of the National Labor
Relations Commission (NLRC), 3 which affirmed the August, 22 1994 ruling of Labor Arbiter Cornelio L.
Linsangan. The labor arbiter's Decision disposed as follows: 4
WHEREFORE, judgment is hereby rendered dismissing the above-mentioned complaint
for lack of merit.
Also assailed is the August 4, 1995 Resolution 5 of the NLRC, which denied the Motion for Reconsideration.
The Facts
The facts were summarized by the NLRC in this wise: 6
Complainants numbering 43 (p. 176, Records) are deaf-mutes who were hired on various
periods from 1988 to 1993 by respondent Far East Bank and Trust Co. as Money Sorters
and Counters through a uniformly worded agreement called "Employment Contract for
Handicapped Workers". (pp. 68 & 69, Records) The full text of said agreement is quoted
below:
EMPLOYMENT CONTRACT FOR
HANDICAPPED WORKERS
This Contract, entered into by and between:
FAR EAST BANK AND TRUST COMPANY, a universal banking corporation
duly organized and existing under and by virtue of the laws of the
Philippines, with business address at FEBTC Building, Muralla,
Intramuros, Manila, represented herein by its Assistant Vice President,
MR. FLORENDO G. MARANAN, (hereinafter referred to as the "BANK");
-and-
, years old, of legal age, , and residing
at (hereinafter referred to as the ("EMPLOYEE").
WITNESSETH : That
WHEREAS, the BANK, cognizant of its social responsibility, realizes that
there is a need to provide disabled and handicapped persons gainful
employment and opportunities to realize their potentials, uplift their
socio-economic well being and welfare and make them productive,
self-reliant and useful citizens to enable them to fully integrate in the
mainstream of society;
WHEREAS, there are certain positions in the BANK which may be filled-
up by disabled and handicapped persons, particularly deaf-mutes, and
the BANK ha[s] been approached by some civic-minded citizens and
authorized government agencies [regarding] the possibility of hiring
handicapped workers for these positions;
WHEREAS, the EMPLOYEE is one of those handicapped workers who
[were] recommended for possible employment with the BANK;
NOW, THEREFORE, for and in consideration of the foregoing premises
and in compliance with Article 80 of the Labor Code of the Philippines
as amended, the BANK and the EMPLOYEE have entered into this
Employment Contract as follows:
1. The BANK agrees to employ and train the EMPLOYEE, and the
EMPLOYEE agrees to diligently and faithfully work with the BANK,
as Money Sorter and Counter.
2. The EMPLOYEE shall perform among others, the following duties and
responsibilities:
i. Sort out bills according to color;
ii. Count each denomination per
hundred, either manually or with
the aid of a counting machine;
iii. Wrap and label bills per
hundred;
iv. Put the wrapped bills into
bundles; and
v. Submit bundled bills to the bank
teller for verification.
3. The EMPLOYEE shall undergo a training period of one (1) month,
after which the BANK shall determine whether or not he/she should be
allowed to finish the remaining term of this Contract.
4. The EMPLOYEE shall be entitled to an initial compensation of
P118.00 per day, subject to adjustment in the sole judgment of the
BANK, payable every 15th and end of the month.1wphi1.nt
5. The regular work schedule of the EMPLOYEE shall be five (5) days per
week, from Mondays thru Fridays, at eight (8) hours a day. The
EMPLOYEE may be required to perform overtime work as circumstance
may warrant, for which overtime work he/she [shall] be paid an
additional compensation of 125% of his daily rate if performed during
ordinary days and 130% if performed during Saturday or [a] rest day.
6. The EMPLOYEE shall likewise be entitled to the following benefits:
i. Proportionate 13th month pay
based on his basic daily wage.
ii. Five (5) days incentive leave.
iii. SSS premium payment.
7. The EMPLOYEE binds himself/herself to abide [by] and comply with
all the BANK Rules and Regulations and Policies, and to conduct
himself/herself in a manner expected of all employees of the BANK.
8. The EMPLOYEE acknowledges the fact that he/she had been
employed under a special employment program of the BANK, for which
reason the standard hiring requirements of the BANK were not applied
in his/her case. Consequently, the EMPLOYEE acknowledges and
accepts the fact that the terms and conditions of the employment
generally observed by the BANK with respect to the BANK's regular
employee are not applicable to the EMPLOYEE, and that therefore, the
terms and conditions of the EMPLOYEE's employment with the BANK
shall be governed solely and exclusively by this Contract and by the
applicable rules and regulations that the Department of Labor and
Employment may issue in connection with the employment
of disabled and handicapped workers. More specifically, the EMPLOYEE
hereby acknowledges that the provisions of Book Six of the Labor Code
of the Philippines as amended, particularly on regulation of
employment and separation pay are not applicable to him/her.
9. The Employment Contract shall be for a period of six (6) months or
from to unless earlier terminated by the BANK for any just or
reasonable cause. Any continuation or extension of this Contract shall
be in writing and therefore this Contract will automatically expire at the
end of its terms unless renewed in writing by the BANK.
IN WITNESS WHEREOF, the parties, have hereunto affixed their
signature[s] this day of , at Intramuros, Manila,
Philippines.
In 1988, two (2) deaf-mutes were hired under this Agreement; in 1989 another two (2);
in 1990, nineteen (19); in 1991 six (6); in 1992, six (6) and in 1993, twenty-one (21). Their
employment[s] were renewed every six months such that by the time this case arose,
there were fifty-six (56) deaf-mutes who were employed by respondent under the said
 employment agreement. The last one was Thelma Malindoy who was employed in 1992 10. CELSO M. YAZAR Intramuros 8-Feb-93 8-Aug-93
and whose contract expired on July 1993. 11. ALEX G. CORPUZ Intramuros 15-Feb-93 15-Aug-93
12. RONALD M. DELFIN Intramuros 22-Feb-93 22-Aug-93
xxx xxx xxx
13. ROWENA M. TABAQUERO Intramuros 22-Feb-93 22-Aug-93
Disclaiming that complainants were regular employees, respondent Far East Bank and 14. CORAZON C. DELOS REYES Intramuros 8-Feb-93 8-Aug-93
Trust Company maintained that complainants who are a special class of workers the 15. ROBERT G. NOORA Intramuros 15-Feb-93 15-Aug-93
hearing impaired employees were hired temporarily under [a] special employment 16. MILAGROS O. LEQUIGAN Intramuros 1-Feb-93 1-Aug-93
arrangement which was a result of overtures made by some civic and political
17. ADRIANA F. TATLONGHARI Intramuros 22-Jan-93 22-Jul-93
personalities to the respondent Bank; that complainant[s] were hired due to "pakiusap"
which must be considered in the light of the context career and working environment 18. IKE CABUNDUCOS Intramuros 24-Feb-93 24-Aug-93
which is to maintain and strengthen a corps of professionals trained and qualified officers 19. COCOY NOBELLO Intramuros 22-Feb-93 22-Aug-93
and regular employees who are baccalaureate degree holders from excellent schools 20. DORENDA CATIMBUHAN Intramuros 15-Feb-93 15-Aug-93
which is an unbending policy in the hiring of regular employees; that in addition to this,
21. ROBERT MARCELO West 31 JUL 93 8 1-Aug-93
training continues so that the regular employee grows in the corporate ladder; that the
idea of hiring handicapped workers was acceptable to them only on a special 22. LILIBETH Q. MARMOLEJO West 15-Jun-90 21-Nov-93
arrangement basis; that it was adopted the special program to help tide over a group of 23. JOSE E. SALES West 6-Aug-92 12-Oct-93
workers such as deaf-mutes like the complainants who could do manual work for the 24. ISABEL MAMAUAG West 8-May-92 10-Nov-93
respondent Bank; that the task of counting and sorting of bills which was being
25. VIOLETA G. MONTES Intramuros 2-Feb-90 15-Jan-94
performed by tellers could be assigned to deaf-mutes that the counting and sorting of
money are tellering works which were always logically and naturally part and parcel of 26. ALBINO TECSON Intramuros 7-Nov-91 10-Nov-93
the tellers' normal functions; that from the beginning there have been no separate items 27. MELODY B. GRUELA West 28-Oct-91 3-Nov-93
in the respondent Bank plantilla for sortes or counters; that the tellers themselves 28. BERNADETH D. AGERO West 19-Dec-90 27-Dec-93
already did the sorting and counting chore as a regular feature and integral part of their
29. CYNTHIA DE VERA Bel-Air 26-Jun-90 3-Dec-93
duties (p. 97, Records); that through the "pakiusap" of Arturo Borjal, the tellers were
relieved of this task of counting and sorting bills in favor of deaf-mutes without creating 30. LANI R. CORTEZ Bel-Air 15-Oct-88 10-Dec-93
new positions as there is no position either in the respondent or in any other bank in the 31. MARIA ISABEL B.CONCEPCION West 6-Sep-90 6-Feb-94
Philippines which deals with purely counting and sorting of bills in banking operations. 32. DINDO VALERIO Intramuros 30-May-93 30-Nov-93
33. ZENAIDA MATA Intramuros 10-Feb-93 10-Aug-93
Petitioners specified when each of them was hired and dimissed, viz: 7
34. ARIEL DEL PILAR Intramuros 24-Feb-93 24-Aug-93
35. MARGARET CECILIA CANOZA Intramuros 27-Jul-90 4-Feb-94
NAME OF PETITIONER WORKPLACE Date Hired Date Dismissed
36. THELMA SEBASTIAN Intramuros 12-Nov-90 17-Nov-93
1. MARITES BERNARDO Intramuros 12-Nov-90 17-Nov-93
37. MA. JEANETTE CERVANTES West 6-Jun-92 7-Dec-93
2. ELVIRA GO DIAMANTE Intramuros 24-Jan-90 11-Jan-94
38. JEANNIE RAMIL Intramuros 23-Apr-90 12-Oct-93
3. REBECCA E. DAVID Intramuros 16-Apr-90 23-Oct-93
39. ROZAIDA PASCUAL Bel-Air 20-Apr-89 29-Oct-93
4. DAVID P. PASCUAL Bel-Air 15-Oct-88 21-Nov-94
40. PINKY BALOLOA West 3-Jun-91 2-Dec-93
5. RAQUEL ESTILLER Intramuros 2-Jul-92 4-Jan-94
41. ELIZABETH VENTURA West 12-Mar-90 FEB 94 [sic]
6. ALBERT HALLARE West 4-Jan-91 9-Jan-94
42. GRACE S. PARDO West 4-Apr-90 13-Mar-94
7. EDMUND M. CORTEZ Bel-Air 15-Jan-91 3-Dec-93
43. RICO TIMOSA Intramuros 28-Apr-93 28-Oct-93
8. JOSELITO O. AGDON Intramuros 5-Nov-90 17-Nov-93
9. GEORGE P. LIGUTAN JR. Intramuros 6-Sep-89 19-Jan-94
As earlier noted, the labor arbiter and, on appeal, the NLRC ruled against herein petitioners. Hence, this
recourse to this Court. 9
The Ruling of the NLRC
In affirming the ruling of the labor arbiter that herein petitioners could not be deemed regular employees
under Article 280 of the Labor Code, as amended, Respondent Commission ratiocinated as follows:
We agree that Art. 280 is not controlling herein. We give due credence to the conclusion
that complainants were hired as an accommodation to [the] recommendation of civic
oriented personalities whose employment[s] were covered by . . . Employment
Contract[s] with special provisions on duration of contract as specified under Art. 80.
Hence, as correctly held by the Labor Arbiter a quo, the terms of the contract shall be the
law between the parties. 10
The NLRC also declared that the Magna Carta for Disabled Persons was not applicable, "considering the
prevailing circumstances/milieu of the case."
Issues
In their Memorandum, petitioners cite the following grounds in support of their cause:
I. The Honorable Commission committed grave abuse of discretion in holding that the
petitioners money sorters and counters working in a bank were not regular
employees.
II. The Honorable Commission committed grave abuse of discretion in holding that the
employment contracts signed and renewed by the petitioners which provide for a
period of six (6) months were valid.
III. The Honorable Commission committed grave abuse of discretion in not applying the
provisions of the Magna Carta for the Disabled (Republic Act No. 7277), on proscription
against discrimination against disabled persons. 11
In the main, the Court will resolve whether petitioners have become regular employees.
This Court's Ruling
The petition is meritorious. However, only the employees, who worked for more than six months and
whose contracts were renewed are deemed regular. Hence, their dismissal from employement was illegal.
Preliminary Matter:
Propriety of Certiorari
Respondent Far East Bank and Trust Company argues that a review of the findings of facts of the NLRC is
not allowed in a petition for certiorari. Specifically, it maintains that the Court cannot pass upon the
findings of public respondent that petitioners were not regular employees.
True, the Court, as a rule, does not review the factual findings of public respondents in
a certiorari proceeding. In resolving whether the petitioners have become regular employees, we shall not
change the facts found by the public respondent. Our task is merely to determine whether the NLRC
committed grave abuse of discretion in applying the law to the established facts, as above-quoted from the
assailed Decision.
Main Issue
Are Petitioners Regular Employee?
Petitioners maintain that they should be considered regular employees, because their task as money
sorters and counters was necessary and desirable to the business of respondent bank. They further allege
that their contracts served merely to preclude the application of Article 280 and to bar them from
becoming regular employees.
Private respondent, on the other hand, submits that petitioners were hired only as "special workers and
should not in any way be considered as part of the regular complement of the Bank." 12 Rather, they were
"special" workers under Article 80 of the Labor Code. Private respondent contends that it never solicited
the services of petitioners, whose employment was merely an "accommodation" in response to the
requests of government officials and civic-minded citizens. They were told from the start, "with the
assistance of government representatives," that they could not become regular employees because there
were no plantilla positions for "money sorters," whose task used to be performed by tellers. Their contracts
were renewed several times, not because of need "but merely for humanitarian reasons." Respondent
submits that "as of the present, the "special position" that was created for the petitioners no longer exist[s]
in private respondent [bank], after the latter had decided not to renew anymore their special employment
contracts."
At the outset, let it be known that this Court appreciates the nobility of private respondent's effort to
provide employment to physically impaired individuals and to make them more productive members of
society. However, we cannot allow it to elude the legal consequences of that effort, simply because it now
deems their employment irrelevant. The facts, viewed in light of the Labor Code and the Magna Carta for
Disabled Persons, indubitably show that the petitioners, except sixteen of them, should be deemed regular
employees. As such, they have acquired legal rights that this Court is duty-bound to protect and uphold,
not as a matter of compassion but as a consequence of law and justice.
The uniform employment contracts of the petitioners stipulated that they shall be trained for a period of
one month, after which the employer shall determine whether or not they should be allowed to finish the
6-month term of the contract. Furthermore, the employer may terminate the contract at any time for a
just and reasonable cause. Unless renewed in writing by the employer, the contract shall automatically
expire at the end of the term.1wphi1.nt
According to private respondent, the employment contracts were prepared in accordance with Article 80
of the Labor code, which provides;
Art. 80. Employment agreement. Any employer who employs handicapped workers
shall enter into an employment agreement with them, which agreement shall include:
(a) The names and addresses of the handicapped workers to be
employed;
(b) The rate to be paid the handicapped workers which shall be not less
than seventy five (75%) per cent of the applicable legal minimum wage;
(c) The duration of employment period; and
(d) The work to be performed by handicapped workers.
The employment agreement shall be subject to inspection by the Secretary of Labor or
his duly authorized representatives.
The stipulations in the employment contracts indubitably conform with the aforecited provision.
Succeeding events and the enactment of RA No. 7277 (the Magna Carta for Disabled Persons), 13 however,
justify the application of Article 280 of the Labor Code.
Respondent bank entered into the aforesaid contract with a total of 56 handicapped workers and renewed
the contracts of 37 of them. In fact, two of them worked from 1988 to 1993. Verily, the renewal of the
contracts of the handicapped workers and the hiring of others lead to the conclusion that their tasks were
beneficial and necessary to the bank. More important, these facts show that they were qualified to
perform the responsibilities of their positions. In other words, their disability did not render them
unqualified or unfit for the tasks assigned to them.
In this light, the Magna Carta for Disabled Persons mandates that a qualified disabled employee should be
given the same terms and conditions of employment as a qualified able-bodied person. Section 5 of the
Magna Carta provides:
Sec. 5. Equal Opportunity for Employment. No disabled person shall be denied access
to opportunities for suitable employment. A qualified disabled employee shall be subject
to the same terms and conditions of employment and the same compensation,
privileges, benefits, fringe benefits, incentives or allowances as a qualified able bodied
person.
The fact that the employees were qualified disabled persons necessarily removes the employment
contracts from the ambit of Article 80. Since the Magna Carta accords them the rights of qualified able-
bodied persons, they are thus covered by Article 280 of the Labor Code, which provides:
Art. 280. Regular and Casual Employment. The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or trade
of the employer, except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of
the engagement of the employee or where the work or services to be performed is
seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph: Provided, That, any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered as regular employee
with respect to the activity in which he is employed and his employment shall continue
while such activity exists.
The test of whether an employee is regular was laid down in De Leon v. NLRC, 14 in which this Court held:
The primary standard, therefore, of determining regular employment is the reasonable
connection between the particular activity performed by the employee in relation to the
usual trade or business of the employer. The test is whether the former is usually
necessary or desirable in the usual business or trade of the employer. The connection can
be determined by considering the nature of the work performed and its relation to the
scheme of the particular business or trade in its entirety. Also if the employee has been
performing the job for at least one year, even if the performance is not continuous and
merely intermittent, the law deems repeated and continuing need for its performance as
sufficient evidence of the necessity if not indispensibility of that activity to the business.
Hence, the employment is considered regular, but only with respect to such activity, and
while such activity exist.
Without a doubt, the task of counting and sorting bills is necessary and desirable to the business of
respondent bank. With the exception of sixteen of them, petitioners performed these tasks for more than
six months. Thus, the following twenty-seven petitioners should be deemed regular employees: Marites
Bernardo, Elvira Go Diamante, Rebecca E. David, David P. Pascual, Raquel Estiller, Albert Hallare, Edmund
M. Cortez, Joselito O. Agdon, George P. Ligutan Jr., Lilibeth Q. Marmolejo, Jose E. Sales, Isabel Mamauag,
Violeta G. Montes, Albino Tecson, Melody V. Gruela, Bernadeth D. Agero, Cynthia de Vera, Lani R. Cortez,
Ma. Isabel B. Concepcion, Margaret Cecilia Canoza, Thelma Sebastian, Ma. Jeanette Cervantes, Jeannie
Ramil, Rozaida Pascual, Pinky Baloloa, Elizabeth Ventura and Grace S. Pardo.
As held by the Court, "Articles 280 and 281 of the Labor Code put an end to the pernicious practice of
making permanent casuals of our lowly employees by the simple expedient of extending to them
probationary appointments, ad infinitum."15 The contract signed by petitioners is akin to a probationary
employment, during which the bank determined the employees' fitness for the job. When the bank
renewed the contract after the lapse of the six-month probationary period, the employees thereby became
regular employees. 16 No employer is allowed to determine indefinitely the fitness of its employees.
As regular employees, the twenty-seven petitioners are entitled to security of tenure; that is, their services
may be terminated only for a just or authorized cause. Because respondent failed to show such
cause, 17 these twenty-seven petitioners are deemed illegally dismissed and therefore entitled to back
wages and reinstatement without loss of seniority rights and other privileges. 18 Considering the allegation
of respondent that the job of money sorting is no longer available because it has been assigned back to the
tellers to whom it originally belonged, 18petitioners are hereby awarded separation pay in lieu of
reinstatement. 20
Because the other sixteen worked only for six months, they are not deemed regular employees and hence
not entitled to the same benefits.
Applicability of the
Brent Ruling
Respondent bank, citing Brent School v. Zamora 21 in which the Court upheld the validity of an employment
contract with a fixed term, argues that the parties entered into the contract on equal footing. It adds that
the petitioners had in fact an advantage, because they were backed by then DSWD Secretary Mita Pardo de
Tavera and Representative Arturo Borjal.
We are not persuaded. The term limit in the contract was premised on the fact that the petitioners were
disabled, and that the bank had to determine their fitness for the position. Indeed, its validity is based on
Article 80 of the Labor Code. But as noted earlier, petitioners proved themselves to be qualified disabled
persons who, under the Magna Carta for Disabled Persons, are entitled to terms and conditions of
employment enjoyed by qualified able-bodied individuals; hence, Article 80 does not apply because
petitioners are qualified for their positions. The validation of the limit imposed on their contracts, imposed
by reason of their disability, was a glaring instance of the very mischief sought to be addressed by the new
law.
Moreover, it must be emphasized that a contract of employment is impressed with public
interest. 22 Provisions of applicable statutes are deemed written into the contract, and the "parties are not
at liberty to insulate themselves and their relationships from the impact of labor laws and regulations by
simply contracting with each other." 23Clearly, the agreement of the parties regarding the period of
employment cannot prevail over the provisions of the Magna Carta for Disabled Persons, which mandate
that petitioners must be treated as qualified able-bodied employees.
Respondent's reason for terminating the employment of petitioners is instructive. Because the Bangko
Sentral ng Pilipinas (BSP) required that cash in the bank be turned over to the BSP during business hours
from 8:00 a.m. to 5:00 p.m., respondent resorted to nighttime sorting and counting of money. Thus, it
reasons that this task "could not be done by deaf mutes because of their physical limitations as it is very
risky for them to travel at night." 24 We find no basis for this argument. Travelling at night involves risks to
handicapped and able-bodied persons alike. This excuse cannot justify the termination of their
employment.
Other Grounds Cited by Respondent
Respondent argues that petitioners were merely "accommodated" employees. This fact does not change
the nature of their employment. As earlier noted, an employee is regular because of the nature of work
and the length of service, not because of the mode or even the reason for hiring them.
Equally unavailing are private respondent's arguments that it did not go out of its way to recruit petitioners,
and that its plantilla did not contain their positions. In L. T. Datu v. NLRC, 25 the Court held that "the
determination of whether employment is casual or regular does not depend on the will or word of the
employer, and the procedure of hiring . . . but on the nature of the activities performed by the employee,
and to some extent, the length of performance and its continued existence."
Private respondent argues that the petitioners were informed from the start that they could not become
regular employees. In fact, the bank adds, they agreed with the stipulation in the contract regarding this
point. Still, we are not persuaded. The well-settled rule is that the character of employment is determined
not by stipulations in the contract, but by the nature of the work performed. 26 Otherwise, no employee
can become regular by the simple expedient of incorporating this condition in the contract of employment.
In this light, we iterate our ruling in Romares v. NLRC: 27
Art. 280 was emplaced in our statute books to prevent the circumvention of the
employee's right to be secure in his tenure by indiscriminately and completely ruling out
all written and oral agreements inconsistent with the concept of regular employment
defined therein. Where an employee has been engaged to perform activities which are
usually necessary or desirable in the usual business of the employer, such employee is
deemed a regular employee and is entitled to security of tenure notwithstanding the
contrary provisions of his contract of employment.
xxx xxx xxx
 At this juncture, the leading case of Brent School, Inc. v. Zamora proves instructive. As
reaffirmed in subsequent cases, this Court has upheld the legality of fixed-term
employment. It ruled that the decisive determinant in "term employment" should not be
the activities that the employee is called upon to perform but the day certain agreed
upon the parties for the commencement and termination of their employment
relationship. But this Court went on to say that where from the circumstances it is
apparent that the periods have been imposed to preclude acquisition of tenurial security
by the employee, they should be struck down or disregarded as contrary to public policy
and morals.
In rendering this Decision, the Court emphasizes not only the constitutional bias in favor of the working
class, but also the concern of the State for the plight of the disabled. The noble objectives of Magna Carta
for Disabled Persons are not based merely on charity or accommodation, but on justice and the equal
treatment of qualified persons, disabled or not. In the present case, the handicap of petitioners (deaf-
mutes) is not a hindrance to their work. The eloquent proof of this statement is the repeated renewal of
their employment contracts. Why then should they be dismissed, simply because they are physically
impaired? The Court believes, that, after showing their fitness for the work assigned to them, they should
be treated and granted the same rights like any other regular employees.
In this light, we note the Office of the Solicitor General's prayer joining the petitioners' cause. 28
WHEREFORE, premises considered, the Petition is hereby GRANTED. The June 20, 1995 Decision and the
August 4, 1995 Resolution of the NLRC are REVERSED and SET ASIDE. Respondent Far East Bank and Trust
Company is hereby ORDERED to pay back wages and separation pay to each of the following twenty-seven
(27) petitioners, namely, Marites Bernardo, Elvira Go Diamante, Rebecca E. David, David P. Pascual, Raquel
Estiller, Albert Hallare, Edmund M. Cortez, Joselito O. Agdon, George P. Ligutan Jr., Liliberh Q. Marmolejo,
Jose E. Sales, Isabel Mamauag, Violeta G. Montes, Albino Tecson, Melody V. Gruela, Bernadeth D. Agero,
Cynthia de Vera, Lani R. Cortez, Ma. Isabel B. Concepcion, Margaret Cecilia Canoza, Thelma Sebastian, Ma.
Jeanette Cervantes, Jeannie Ramil, Rozaida Pascual, Pinky Baloloa, Elizabeth Ventura and Grace S. Pardo.
The NLRC is hereby directed to compute the exact amount due each of said employees, pursuant to
existing laws and regulations, within fifteen days from the finality of this Decision. No costs.1wphi1.nt
SO ORDERED.
G.R. No. L-4148 July 16, 1952
MANILA TERMINAL COMPANY, INC., petitioner,
vs.
THE COURT OF INDUSTRIAL RELATIONS and MANILA TERMINAL RELIEF AND MUTUAL AID
ASSOCIATION, respondents.
Perkins, Ponce Enrile and Contreras for petitioner.
Antonio V. Raquiza, Honesto Ricobal and Perfecto E. Llacarfor respondent Association.
Mariano R. Padilla for respondent Court of Industrial Relations.
PARAS, C. J.:
On September 1, 1945, the 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 Army. 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. On February 1, 1946,
the petitioner began the postwar operation of the arrastre service at the present at the request and under
the control of the Bureau of Customs, by virtue of a contract entered into with the Philippine Government.
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. On March 28, 1947, Dominador Jimenez, a member of the Manila Terminal Relief
and Mutual Aid Association, sent a letter to the Department of Labor, requesting that the matter of
overtime pay be investigated, but nothing was done by the Department. On April 29, 1947, Victorino
Magno Cruz and five other employees, also member of the Manila Transit Mutual Aid Association, filed a 5-
point demand with the Department of Labor, including overtime pay, but the Department again filed to do
anything about the matter. On May 27, 1947, the petitioner instituted the system of strict eight-hour shifts.
On June 19, 1947, the Manila Port Terminal Police Association, not registered in accordance with the
provisions of Commonwealth Act No. 213, filed a petition with the Court of Industrial Relations. On July 16,
1947, the Manila Terminal Relief and Mutual Aid Association was organized for the first time, having been
granted certificate No. 375 by the Department of Labor. On July 28, 1947, Manila Terminal Relief and
Mutual Aid Association filed an amended petition with 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. On May 9, 1949, 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 of April 1, 1950, as amended on
April 18, 1950, while dismissing other demands of the Association for lack of jurisdiction, ordered the
petitioner to pay to its police force
(a) Regular or base pay corresponding to four hours' overtime plus 25 per cent thereof as additional
overtime compensation for the period from September 1, 1945 to May 24, 1947;
(b) Additional compensation of 25 per cent to those who worked from 6:00 p.m. to 6:00 a.m. during the
same period:
(c) Additional compensation of 50 per cent for work performed on Sundays and legal holidays during the
same period;
(d) Additional compensation of 50 per cent for work performed on Sundays and legal holidays from May
24, 1947 to May 9, 1949; and
(e) Additional compensation of 25 per cent for work performed at night from May 29, 1947 to May 9, 1949.
With reference to the pay for overtime service after the watchmen had been integrated into the Manila
Harbor Police, Judge Yanson ruled that the court has no jurisdiction because it affects the Bureau of
Customs, an instrumentality of the Government having no independent personality and which cannot be
sued without the consent of the State. (Metran vs. Paredes, 45. Off. Gaz., 2835.)
The petitioner find a motion for reconsideration. The Association also filed a motion for reconsideration in
so far its other demands were dismissed. Judge Yanson, concurred in by Judge Jose S. Bautista,
promulgated on July 13, 1950, a resolution denying both motions for reconsideration. Presiding Judge
Arsenio C. Roldan, in a separate opinion concurred in by Judge Modesto Castillo, agreed with the decision
of Judge Yanson of April 1, 1950, as to the dismissal of other demands of the Association, but dissented
therefrom as to the granting of overtime pay. In a separate decisive opinion, Judge Juan S. Lanting
concurred in the dismissal of other demands of the Association. With respect to overtime compensation,
Judge Lanting ruled:
1. The decision under review should be affirmed in so far it grants compensation for overtime on regular
days (not Sunday and legal holidays)during the period from the date of entrance to duty to May 24, 1947,
such compensation to consists of the amount corresponding to the four hours' overtime at the regular rate
and an additional amount of 25 per cent thereof.
2. As to the compensation for work on Sundays and legal holidays, the petitioner should pay to its
watchmen the compensation that corresponds to the overtime (in excess of 8 hours) at the regular rate
only, that is, without any additional amount, thus modifying the decision under review accordingly.
3. The watchmen are not entitled to night differential pay for past services, and therefore the decision
should be reversed with the respect thereto.
The petitioner has filed a present petition for certiorari. Its various contentions may be briefly summed up
in the following propositions: (1) The Court of Industrial Relations has no jurisdiction to render a money
judgment involving obligation in arrears. (2) The agreement under which its police force were paid certain
specific wages for twelve-hour shifts, included overtime compensation. (3) The Association is barred from
recovery by estoppel and laches. (4) the nullity or invalidity of the employment contract precludes any
recovery by the Association. (5) Commonwealth Act No. 4444 does not authorize recovery of back overtime
pay.
The contention that the Court of Industrial Relations has no jurisdiction to award a money judgment was
already overruled by this Court in G.R. No. L-4337, Detective & protective Bureau, Inc. vs. Court of Industrial
Relations and United Employees Welfare Association, 90 Phil., 665, in this wise: "It is also argued that the
respondent court has no jurisdiction to award overtime pay, which is money judgment. We believe that
under Commonwealth Act No. 103 the Court is empowered to make the order for the purpose of settling
disputes between the employer and employee1. As a matter of fact this Court has confirmed an order of
the Court of Industrial Relations requiring the Elks Club to pay to its employees certain sum of money as
overtime back wages from June 3, 1939 to March 13, 1941. This, in spite the allegation of lack or excess of
jurisdiction on the part of said court. (45 Off. Gaz., 3829; 80 Phil. 272)"
The important point stressed by the petitioner is that the contract between it and the Association upon the
commencement of the employment of its watchman was to the certain rates of pay, including overtime
compensation namely, P3 per day for the day shift and P6 per day for night shift beginning September 1,
1945, and P4 per day shift and P6.25 per day for the night shift since February, 1946. The record does not
bear out these allegations. The petitioner has relied merely on the facts that its watchmen had worked on
twelve-hour shifts at specific wages per day and that no complaint was made about the matter until, first
on March 28, 1947 and, secondly, on April 29, 1947.
In times of acute unemployment, the people, urged by the instinct of self-preservation, go from place to
place and from office to office in search for any employment, regardless of its terms and conditions, their
main concern in the first place being admission to some work. Specially for positions requiring no special
qualifications, applicants would be good as rejected if they ever try to be inquisitive about the hours of
work or the amount of salary, ever attempt to dictate their terms. The petitioner's watchmen must have
railroaded themselves into their employment, so to speak, happy in the thought that they would then have
an income on which to subsist. But, at the same time, they found themselves required to work for twelve
hours a day. True, there was agreement to work, but can it fairly be supposed that they had the freedom to
bargain in any way, much less to insist in the observance of the Eight Hour Labor Law?
As was aptly said in Floyd vs. Du Bois Soap Co., 1942, 317 U. S. 596, 63 Sup. Ct. 159; 6 CCH Labor Cases, Par.
51, 147, "A contract of employment, which provides for a weekly wage for a specified number of hours,
sufficient to cover both the statutory minimum wage and overtime compensation, if computed on the basis
of the statutory minimum wage, and which makes no provision for a fixed hourly rate or that the weekly
wage includes overtime compensation, does not meet the requirements of the Act."
Moreover, we note that after the petition had instituted the strict eight-hour shifts, no reduction was made
in the salaries which its watchmen received under the twelve hour arrangement. Indeed, as admitted by
the petitioner, "when the members or the respondent union were placed on strict eight-hour shifts, the
lowest salary of all the members of the respondent union was P165 a month, or P5.50 daily, for both day
and night shifts." Although it may be argued that the salary for the night shift was somewhat lessened, the
fact that the rate for the day shift was increased in a sense tends to militate against the contention that the
salaries given during the twelve-hour shifts included overtime compensation.
Petitioner's allegation that the association had acquiesced in the twelve-hour shifts for more than 18
months, is not accurate, because the watchmen involved in this case did not enter the service of the
petitioner, at one time, on September 1, 1945. As Judge Lanting found, "only one of them entered the
service of the company on said date, very few during the rest of said month, some during the rest of that
year (1945) and in 1946, and very many in 1947, 1948 and 1949."
The case at bar is quite on all fours with the case of Detective & Protective Bureau, Inc. vs. Court of
Industrial Relations and United Employees Welfare Association, supra, in which the facts were as follows:
"The record discloses that upon petition properly submitted, said court made an investigation and found
that the members of the United Employees Welfare Association (hereafter called the Association) were in
the employ of the petitioner Detective and Protective Bureau, Inc. (herein called the Bureau) which is
engaged in the business of furnishing security guards to commercial and industrial establishments, paying
to said members monthly salaries out of what it received from the establishments benefited by guard
service. The employment called for daily tours of duty for more than eight hours, in addition to work on
Sundays and holidays. Nonetheless the members performed their labors without receiving extra
compensation." The only difference is that, while in said case the employees concerned were paid monthly
salaries, in the case now before us the wages were computed daily. In the case cited, we held the
following:
It appears that the Bureau had been granting the members of the Association, every month, "two
days off" days in which they rendered no service, although they received salary for the whole
month. Said Bureau contended below that the pay corresponding to said 2 day vacation
corresponded to the wages for extra work. The court rejected the contention, quite properly we
believe, because in the contract there was no agreement to that effect; and such agreement, if
any, would probably be contrary to the provisions of the Eight-Hour Law (Act No. 444, sec. 6) and
would be null and void ab initio.
It is argued here, in opposition to the payment, that until the commencement of this litigation the
members of the Association never claimed for overtime pay. That may be true. Nevertheless the
law gives them the right to extra compensation. And they could not be held to
have impliedly waived such extra compensation, for the obvious reason that could not
have expressly waived it.
The foregoing pronouncements are in point. The Association cannot be said to have impliedly waived the
right to overtime compensation, for the obvious reason that they could not have expressly waived it."
The principle of estoppel and the laches cannot well be invoked against the Association. In the first place, it
would be contrary to the spirit of the Eight Hour Labor Law, under which as already seen, the laborers
cannot waive their right to extra compensation. In the second place, the law principally obligates the
employer to observe it, so much so that it punishes the employer for its violation and leaves the employee
or laborer free and blameless. In the third place, the employee or laborer is in such a disadvantageous
position as to be naturally reluctant or even apprehensive in asserting any claim which may cause the
employer to devise a way for exercising his right to terminate the employment.
If the principle of estoppel and laches is to be applied, it may bring about a situation, whereby the
employee or laborer, who cannot expressly renounce their right to extra compensation under the Eight-
Hour Labor Law, may be compelled to accomplish the same thing by mere silence or lapse of time, thereby
frustrating the purpose of law by indirection.
While counsel for the petitioner has cited authorities in support of the doctrine invoked, there are also
authorities pointed out in the opinion of Judge Lanting to the contrary. Suffice it to say, in this connection,
that we are inclined to rule adversely against petitioner for the reasons already stated.
The argument that the nullity or invalidity of the employment contract precludes recovery by the
Association of any overtime pay is also untenable. The argument, based on the supposition that the parties
are in pari delicto, was in effect turned down in Gotamo Lumber Co. vs. Court of Industrial Relations,* 47
Off. Gaz., 3421, wherein we ruled: "The petitioner maintains that as the overtime work had been
performed without a permit from the Department of Labor, no extra compensation should be authorized.
Several decisions of this court are involved. But those decisions were based on the reasoning that as both
the laborer and employer were duty bound to secure the permit from the Department of Labor, both were
in pari delicto. However the present law in effect imposed that duty upon the employer (C.A. No. 444).
Such employer may not therefore be heard to plead his own neglect as exemption or defense.
The employee in rendering extra service at the request of his employer has a right to assume that
the latter has complied with the requirement of the law, and therefore has obtained the required
permission from the Department of Labor.
Moreover, the Eight-Hour Law, in providing that "any agreement or contract between the employer and
the laborer or employee contrary to the provisions of this Act shall be null avoid ab initio," (Commonwealth
Act No. 444, sec. 6), obviously intended said provision for the benefit of the laborers or employees. The
employer cannot, therefore, invoke any violation of the act to exempt him from liability for extra
compensation. This conclusion is further supported by the fact that the law makes only the employer
criminally liable for any violation. It cannot be pretended that, for the employer to commit any violation of
the Eight-Hour Labor Law, the participation or acquiescence of the employee or laborer is indispensable,
because the latter in view of his need and desire to live, cannot be considered as being on the same level
with the employer when it comes to the question of applying for and accepting an employment.
Petitioner also contends that Commonwealth Act No. 444 does not provide for recovery of back overtime
pay, and to support this contention it makes referrence to the Fair Labor Standards Act of the United States
which provides that "any employer who violates the provisions of section 206 and section 207 of this title
shall be liable to the employee or employees affected in the amount of their unpaid minimum wages or
their unpaid overtime compensation as the case may be," a provision not incorporated in
Commonwealth Act No. 444, our Eight-Hour Labor Law. We cannot agree to the proposition, because
sections 3 and 5 of Commonwealth Act 444 expressly provides for the payment of extra compensation in
cases where overtime services are required, with the result that the employees or laborers are entitled to
collect such extra compensation for past overtime work. To hold otherwise would be to allow an employer
to violate the law by simply, as in this case, failing to provide for and pay overtime compensation.
The point is stressed that the payment of the claim of the Association for overtime pay covering a period of
almost two years may lead to the financial ruin of the petitioner, to the detriment of its employees
themselves. It is significant, however, that not all the petitioner's watchmen would receive back overtime
pay for the whole period specified in the appealed decision, since the record shows that the great majority
of the watchmen were admitted in 1946 and 1947, and even 1948 and 1949. At any rate, we are
constrained to sustain the claim of the Association as a matter of simple justice, consistent with the spirit
and purpose of the Eight-Hour Labor Law. The petitioner, in the first place, was required to comply with the
law and should therefore be made liable for the consequences of its violation.
"Dear Ms. Farolan:
Confirming our previous discussions, ASIA-PACIFIC CHARTERING PHIL., INC. is pleased to offer you the
position of Sales Manager of its Passenger and Cargo Operations for SCANDINAVIAN AIRLINES SYSTEM in
the Philippines, commencing on December 16, 1992 on the following terms:
Monthly

Basic Pay P 22, 000.00

It is high time that all employers were warned that the public is interested in the strict enforcement of the
Eight-Hour Labor Law. This was designed not only to safeguard the health and welfare of the laborer or Housing Allowance 4,000.00
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. Transportation Allowance Cash Equivalent
(200 liters of gas)
Wherefore, the appealed decision, in the form voted by Judge Lanting, is affirmed, it being understood that Meal Allowance 750.00
the petitioner's watchmen will be entitled to extra compensation only from the dates they respectively
entered the service of the petitioner, hereafter to be duly determined by the Court of Industrial Relations.
So ordered, without costs. Please affix your signature below if you find the foregoing acceptable and return to us a signed duplicate.
Meanwhile, we certainly look forward to your joining us and rest assured of our fullest support.
G.R. No.151370 December 4, 2002
xxx
ASIA PACIFIC CHARTERING (PHILS.) INC., petitioner,
vs. (Sgd) Maria Linda R. Farolan
MARIA LINDA R. FAROLAN, respondent.
Conforme:" (Emphasis supplied).
DECISION
It is gathered that Leslie Murray, the then Sales Manager of petitioner, talked to respondent into accepting
CARPIO MORALES, J.: the position after verbally briefing her on the nature of the position.

Before this Court is a Petition for Review under Rule 45 of the 1997 Rules of Civil Procedure assailing the Soon after respondent assumed her post, she participated in a number of meetings/seminars4 including a
Court of Appeals 1) June 28, 2001 Decision1 which set aside the decision of the National Labor Relations Customer Service Seminar in Bangkok, Thailand, a Regional Sales Meeting on the technical aspects of airline
Commission (NLRC) reversing that of the Labor Arbiter, and 2) January 9, 20022 Resolution denying a commercial operations in February 1993, and a course on the highly technical airline computer
reconsideration of its decision. reservations system called "Amadeus", all geared towards improving her marketing and sales skills.

Petitioner Asia Pacific Chartering (Phils) Inc. was, until 1996, the general sales agent (GSA) of the In September of 1993, respondent, upon instruction of Bondoc, submitted a report5 "RE: OUR COMMENTS
Scandinavian Airline System (SAS), an off-line international airline company with license to do business in AND ACTIONS BEING TAKEN CONCERNING SAS POOR P & L PERFORMANCE FOR JANUARY - JULY 1993" the
the Philippines. As GSA, petitioner sold passenger and cargo spaces for airlines operated by SAS. pertinent portions of which read:

Respondent Maria Linda R. Farolan was on December 16, 1992 hired as Sales Manager of petitioner for its "1 January to July 1993 Sales x x x
passenger and cargo GSA operations for SAS, following her conformity to a December 10, 1992 letter-offer
of employment3 from petitioner through its Vice President/Comptroller Catalino Bondoc. The pertinent
1993 1992 CHANGE
portion of the letter-offer reads:
 Seaman 233 423 (190) In addition, ADB itself is willing to consider proposals we submit to them in the case of
cost-savings. In exchange, they can endorse to SAS a relevant share of their Europe travel
Expats/Tourists 503 716 (213) x x x.

PTAs 346 196 150 3. We have also negotiated a lower net fare for Economy Class. This rate is also competitive and is
in force.
Refugees/IOM 53 864 811)

4. Incentive Program for Agents-Using the points system similar to PALs promo (PALs Smiles), to
xxx stimulate sales. We are at present fine-tuning mechanics for Hongkongs approval which we
intend to launch before Christmas. This promo is self-sustaining (no significant expenses to be
Explanations. incurred)

1. International Organization for Migration (IOM)-both Vietnam and Scandinavian 5. We are currently pushing sales for Baltic area/Russia as we have the best rates. We have
Governments have terminated projects for refugees; hence the tremendous decrease identified the agents who have passengers to these destinations and we are focusing on them x x
(94%) x x x. x." (Emphasis and underscoring supplied).

2. Seamans Fares-Rates not competitive enough. As reflected in respondents report, there was a drop in SAS sales revenues which to her was attributable
to market forces beyond her control.
3. Expats/Tourists-In a market where on-line carriers were dropping rates drastically, we
were losing passengers to said carriers. Noting the marked decline in SAS sales revenues, petitioner directed its high ranking officer Roberto
Zozobrado in January 1994 to conduct an investigation on the matter and identify the problem/s and
1 The present Market: implement possible solutions.

1. As SAS is off-line, we have no control over space and to an extent our rates are Zozobrado thus informally took over some of respondents marketing and sales responsibilities, albeit
higher because of proration with delivering carriers. respondent retained her title as Sales Manager and continued to receive her salary as such.

2. On-lines do not prorate with other carriers therefore can dive fares x x x.
I have convinced Mr. Jespersen to bring down the fares to be more competitive. The reason he did
not do so earlier was because low-yield fares are low in priority for confirming seats. But now that
SAS is considering increasing their frequencies ex-Hongkong before year-end, this will be
advantageous to boosting our sales.
By petitioners claim, Zozobrado found out that respondent did not adopt any sales strategy nor conduct
any sales meeting or develop other sources of revenue for SAS, she having simply let her sales staff
perform their functions all by themselves; in 1994, Soren Jespersen, General Manager of SAS in Hongkong,
Southern China, Taipei and the Philippines, came to the Philippines to assess the statistics on SAS sales
revenues and SAS was convinced that respondent was not fit for the job of Sales Manager; and in view of
the changes introduced by Zozobrado, SAS-GSA sales operations drew positive results.

A. Measures to take remainder of 1993 and for 1994: On May 21, 1994, respondent received a message6 from Jespersen reading:

1. We have negotiated a lower fare for seamen (effective September) which is competitive. We
are already getting positive response from agents. Since this(sic) low-yield sales, Hongkong did not
adjust fare accordingly first half of 1993 because of space constraints.
2. As SAS still prefers high-yield sales, we have offered incentives to Ameco as Asian Development
Bank (ADB) (effective 1st June for one year) with Mr. Jespersens approval x x x.
"Dear Linda and Bob [Zozobrado],
First of all congratulation to your sale result in April. You reached and exceeded the target by 50% In
C/class (Fantastic!!!) and 1% In M/class. This is the second month in a row (and the last 2 first in more than
a year) and hopefully the beginning of a new and positive trend.
xxx
As you can see May looks very good.
With the agreed focus on selling the M/class and all the activities initiated, Im sure that the rest of the
period will pick very soon.
x x x" (Underscoring supplied; Quoted verbatim).
On July 18, 1994,7 respondent received another message from Jespersen reading:
"Dear Linda,
The sales report for June 1994 did unfortunately not reach target in C/class but in M/class you managed
very well. Totally 9% below target.
The pre bookings eff. 14 July looks very good and encouraging and with 2 weeks to go July should not be a
problem. (enclosed)
Please send my regards to all the girls and tell them to keep up the good work.
Just for reason of clarification. Enclosed to your action list is a production report for Jan-May 1994. The
figures I send to you is only your long-haul sales and do not include European sectors. The correct figure for
the period will be 436,000 USD in target for long-haul (actual 362 TUSD) and 642 TUSD total with 514 TUSD
achieved.
Please be so kind and inform Bob accordingly.
xxx
On even date, however, petitioner sent respondent a letter of termination8 on the ground of "loss of
confidence." The letter reads:
"This confirms our (Bob Zozobrado and myself) July 4, 1994 verbal advice to you regarding Managements
decision to terminate your Services as our GSA Manager for SCANDINAVIAN AIRLINES SYSTEMs Offline
Operations in the Philippines, thirty (30) days upon receipt of this Notice, due to our loss of confidence in
your Managerial and Marketing capabilities. As explained to you by Mr. Zozobrado and myself, records will
show that under your Management (or lack of it), our SAS-GSA performance is, as follows:
A. 1993 vs. 1992
Gross Revenue - 29 % shortfall
Operating Expenses - 2% over
Net Cash Flow - 79% shortfall
B. JAN-APR 94 vs. JAN-APR 92
Revenues - 34% shortfall
Operating Expenses - 6% over
Net Cash Flow - 94% shortfall
Several times in the past, we have made you aware in the need to improve your sales performance and
gain the respect of your staff which have openly expressed their concern on their lack of direction under
your management. Even our principal (SAS) had negative comments about the way you handle urgent
requirements of the Regional Office. SAS was also alarmed by the aforementioned dismal overall
Performance of APC/SAS. All these prompted us to decide to replace you as our SAS GSA Manager to save
the situation and our representation of the SAS-GSA in the Philippines.
x x x" (Quoted verbatim; Emphasis supplies).
Thus spawned the filing by respondent of a complaint for illegal dismissal against petitioner, Bondoc,
Zozobrado and one Donald Marshall (the record indicates that he had ceased to be connected with
petitioner when the case was pending before the Labor Arbiter), with prayer for damages and attorneys
fees. In her complaint petitioner alleged that Bondoc and Zozobrado had asked her to tender her
resignation as she was not the person whom SAS was looking for to handle the position of Sales
Manager9 but that she refused, hence, she was terminated by the letter of July 18, 1994 letter. 10
The Labor Arbiter, after a detailed analysis of the evidence for both parties, found for respondent upon the
following issues:
1. Whether or not complainant was validly terminated for cause;
2. Whether or not due process was observed when complainant was terminated; and
3. Whether or not any of the parties are entitled to damages,
and disposed in his decision11 as follows:
"WHEREFORE, finding the dismissal of the complainant Ms Linda Farolan to be without just cause, effected
with malice, ill will and bad faith, respondent Asian Pacific Chartering Philippine, Inc. is hereby ordered to
pay her separation pay of Forty Four Thousand Pesos (P44,000.00), and all the benefit that would have
been due her under the premises. Asian Pacific Chartering is likewise ordered to pay complainant moral
damages in the amount of One Million Five Hundred Thousand Pesos (P1,500,000.00) and exemplary
damages in the amount of Seven Hundred Fifty Thousand Pesos (P750,000.00), nominal damages of Five
Thousand Pesos (P5,000.00) and the equivalent of 25% of the total award as attorneys fees."
On appeal, the NLRC, by Decision of March 22, 1999,12 reversed the Labor Arbiters decision, it recognizing
the right of petitioner as employer to terminate or dismiss employees based on loss of trust and
confidence, the right being a management prerogative.
Respondents Motion for Reconsideration of the NLRC Decision having been denied, she brought her case
to the Court of Appeals via Certiorari.13
By Decision of June 28, 2001,14 the Court of Appeals, as stated early on, reversed the NLRC decision and
disposed as follows:
"WHEREFORE, premises considered, the challenged decision dated March 22, 1999 and the Resolution
dated July 16, 1999 of public respondent National Labor Relations Commission (Second Division) are
hereby set aside for having been issued with grave abuse of discretion amounting to lack or in excess of
jurisdiction. The decision dated September 17, 1998 of Labor Arbiter Romulus S. Protacio is hereby upheld
with modifications that the award of attorneys fees shall only be equivalent to ten percent (10%) of the
total monetary award. In addition, the award for nominal damages is deleted for lack of basis."
(Underscoring supplied).
Petitioner filed a motion for reconsideration15 of the Court of Appeals decision but it was denied, hence,
the present Petition for Review on Certiorari16 anchored on the following grounds:
"I
THE CA DEFIED THE WELL-ESTABLISHED RULE THAT APC, AS EMPLOYER, HAS THE MANAGEMENT
PREROGATIVE TO REPLACE A SALES MANAGER WHOM IT HAS REASONABLE GROUNDS TO BELIEVE
CANNOT EFFECTIVELY DISCHARGE THE DUTIES DEMANDED BY SUCH POSITION.
II
THE CA DECISION WAS PREMISED ON LACK OF EVIDENCE TO DISPROVE RESPONDENTS THEORY THAT THE
POOR SALES PERFORMANCE OF SAS WAS DUE TO MARKET FORCES BEYOND HER CONTROL. YET, THE
EVIDENCE ON RECORD SHOWED THE CONTRARY. NO LESS THAN SAS CONFIRMED THAT RESPONDENT WAS
NOT FIT FOR THE POSITION OF MANAGER AND, THAT NO SPECIAL CIRCUMSTANCES SUFFICIENT TO
TRIGGER THE SHARP DECLINE IN SALES SUPERVENED IN THE PHILIPPINE MARKET.
III
IN AWARDING MORAL AND EXEMPLARY DAMAGES, THE CA ACTED WITH GRAVE ABUSE OF DISCRETION.
EVEN ASSUMING, THAT RESPONDENTS TERMINATION WAS WITHOUT JUST CAUSE, APC IS NOT LIABLE TO
PAY DAMAGES [MILLARES vs. NLRC, 328 SCRA 79 (2001)] COROLLARILY, APC IS PRESUMED TO HAVE ACTED
IN GOOD FAITH [GONZALES vs. NLRC, G.R. NO. 131653-26 March 2001]. THE CA, HOWEVER, REVERSED THE
PRESUMPTION. IT PRESUMED-WITHOUT ANY EVIDENCE WHATSOEVER-THAT APC ACTED IN BAD FAITH IN
TERMINATING RESPONDENT WITHOUT DUE REGARD TO THE HARSH CONSEQUENCES OF THE
TERMINATION
The issue in the main is whether or not respondents dismissal was legal.
A statement of the requisites for a valid dismissal of an employee is thus in order, to wit: (a) the employee
must be afforded due process, i.e., he must be given opportunity to be heard and to defend himself; and
(b) dismissal must be for a valid cause as provided in Article 282 of the Labor Code or any of the authorized
causes under Article 283 and 284 of the same Code.17
As regards the first requisite, the following substantiated findings of the Labor Arbiter, which were adopted
by the Court of Appeals, reflect respondents deprivation of due process:
"x x x
[W]e find that the manner by which complainant was dismissed violated the basic precepts of fairness and
due process. First, without any semblance of, or written authority whatsoever (TSN dated January 30, 1996,
pp. 46 - 48), respondent Zozobrado took over the functions of complainant. Complainant claims that she
has been told it was upon the will of respondent Marshall that she be replaced. Although respondent
Zozobrado may have been merely giving pointers and suggestions to the staff of complainant, the
appearance of authority was unpleasantly conspicuous. Later, respondent Bondoc summoned complainant
and told her to tender her resignation or face termination. Complainant, not having been given a justifiable
ground, refused to resign. Thereafter, she was finally terminated, without being afforded the opportunity
to be heard and to present evidence in her defense. She was never given a written notice stating the
particular acts or omission constituting the grounds for her dismissal as required by law. x x x"18
As regards the second requisite, the rule is settled that in termination cases, the employer bears the onus
of proving that the dismissal is for just cause failing which the dismissal is not justified and the employee is
entitled to reinstatement.19
Petitioner claims that respondent failed to live up to managements expectation in light of her failure to
adopt sales and marketing strategies to increase sales revenues of SAS, which failure is reflective of her
incompetence and inefficiency, thus resulting to loss of revenues in 1993 and 1994.
Petitioner adds that had it not been through Zozobrados efforts, SAS sales revenues could not have
recovered.
Petitioner further claims that Jespersen was the one who initiated the termination of respondent because
of her "dismal performance" in handling its operations.
And petitioner reiterates the principle that the right to dismiss a managerial employee is a measure of self-
preservation, it citing the cases of Grand Motor Parts Corp. v. Minister of Labor et al.,20 and Buiser et al. v.
Legardo.21
Before passing on petitioners position, this Court deems it imperative to discuss the nature of
respondents job as sales manager of petitioner. It is not disputed that her job description, and the terms
and conditions of her employment, with the exception of her salary and allowances, were never reduced to
writing.
Recent decisions of this Court distinguish the treatment of managerial employees from that of rank and file
personnel insofar as the application of the doctrine of loss of trust and confidence is concerned.22
"Thus with respect to rank and file personnel, loss of trust and confidence as ground for valid dismissal
requires proof of involvement in the alleged events in question and that mere uncorroborated assertions
and accusations by the employer will not be sufficient. But as regards a managerial employee, mere
existence of a basis for believing that such employee has breached the trust of his employer would suffice
for his dismissal." (Underscoring supplied)
As enunciated in Samson v. NLRC, 330 SCRA 460,
"Before one may be properly considered a managerial employee, all the following conditions must be met:
(1) Their primary duty consists of the management of the establishment in which they are
employed or of a department or subdivision thereof;
(2) They customarily and regularly direct the work of two or more employees therein;
(3) They have the authority to hire or fire other employees of lower rank; or their suggestions and
recommendations as to the hiring and firing and as to the promotion or any other change of
status of other employees are given particular weight. (Section 2(b), Rule I, Book III of the
Omnibus Rules Implementing the Labor Code, emphasis supplied).
By respondents claim, her function, as verbally explained to her by Murray, dealt mainly with servicing of
existing clientele.23 Bondoc, however, described respondents functions and duties as critical. 24
The following ruling of this Court in Paper Industries Corp. of the Philippines v. Laguesma25 is instructive:
"Managerial employees are ranked as Top Managers, Middle Managers and First Line Managers. The mere
fact that an employee is designated "manager" does not ipso facto make him one-designation should be
reconciled with the actual job description of the employee for it is the job description that determines the
nature of employment." 24 (Underscoring supplied).
The absence of a written job description or prescribed work standards, however, leaves this Court in the
dark.
Even assuming, however, that respondent was a managerial employee, the stated ground (in the letter of
termination) for her dismissal, "loss of confidence," should have a basis and determination thereof cannot
be left entirely to the employer.
Loss of trust and confidence to be a valid ground for an employees dismissal must be based on a willful
breach and founded on clearly established facts.26 A breach is willful if it is
done intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an act done
carelessly, thoughtlessly, heedlessly or inadvertently.27
Respondents detailed REPORT dated September 8, 1993, quoted above, relative to SAS profit and loss for
1993, which was closely examined and analyzed by the Labor Arbiter, contains an explanation of what
brought about the decline in sales revenues. And it contains too a number of recommended measures on
improvement of sales for the remainder of 1993 and for 1994.
As did the Labor Arbiter and the Court of Appeals, this Court finds respondents explanation in her Report
behind the decline in sales revenues as due to market forces beyond respondents control plausible. In any
event, there is no showing that the decline is reflective of any willfull breach of duties by respondent.
The two letters sent by SAS to respondent in 1994 in fact negate willful breach of her duties by respondent.
The first (received on May 21, 1994) congratulated her and Zozobrado for exceeding "sale (sic) result in
April" 1994. Petitioners argument that respondent could not invoke these letters in her favor as they were
intended for Zozobrado fails. The letters were addressed to respondent and Zozobrado. The second letter
(received on July 18, 1994) which was addressed to respondent, while noting that the sales for June 1994
did not reach the target in "C/class", noted that in "M/class" she "managed very well". And it went on to
state that "[t]he pre-bookings eff. 14 July looks (sic) very good and encouraging and with 2 weeks to go July
should not be a problem." In fact it requested respondent to "send . . . regards to all the girls and tell them
to keep up the good work."
While petitioner attributes the improvement of sales in 1994 to Zozobrado, the fact remains that
respondent was still the Sales Manager up to July 1994, in charge of those "sales meetings" during which
pertinent market strategies were developed and utilized to increase sales.
In another vein, petitioner attributes loss of confidence to respondents alleged "gross inefficiency and
incompetence," it citing, as earlier stated, the cases of Grand Motor Parts Corp. (supra) and Buiser et al.
(supra).
The Grand Motors case, however, involved a probationary employee-manager who failed to, among other
things, submit required monthly reports and violated company policy, clearly mirroring his insubordination
and disrespect to express instructions of management.
While this Court, in the Buiser case (supra), held that "[f]ailure to observe prescribed standards of work, or manner or is otherwise guilty of neglect of duty, he may lawfully be discharged before the expiration of his
to fulfill reasonable work assignments due to inefficiency" may be just cause for dismissal, petitioner has term of employment."29
neither shown what standards of work or reasonable work assignments were prescribed which respondent
failed to observe nor that if she did fail to observe any such, it was due to inefficiency. In fine, this Court finds that respondent had been illegally dismissed and is accordingly entitled to
reinstatement to her former position without loss of seniority rights and payment of backwages. 30 But as
Finally and at all events, given respondents previous work experience as herein below indicated, to wit: the matter of reinstatement is no longer feasible as the GSA contract between SAS and petitioner had been
terminated in May of 1996, respondent is, as correctly held by the Court of Appeals, entitled to separation
pay in an amount equivalent to one (1) month salary for every year of service, a fraction of six (6) months
"Period Company Position
to be considered a year.
1960-1967 Express Tours, Inc. Clerk-Reservations & Ticketing
Having been hired on December 16, 1992 and terminated on July 18, 1994, respondent is considered to
1968-1970 House of Travel, Inc. Sales Manager have worked for two (2) years for purposes of computing her separation pay.

1971-1973 Super Travel Manager, Administration

Respondent is also entitled to the award of backwages computed from July 18, 1994 up to May of 1996.
1973-1978 American Express, Manager, World Health Organization Account
Inc. As regards the award to respondent of moral and exemplary damages, petitioner assails it in this wise: "The
award of damages in so far as the same was based solely on respondents affidavit containing general and
1978-1983 F.A.R. Travel President & General Manager uncorroborated statement that she suffered damages as a result of her termination is null and void [it
Masters, Inc. being] insufficient to overcome the presumption o good faith."
1983-1984 Cebu Plaza Director, Convention
The following pertinent portions of petitioners Affidavit which Affidavit was submitted as part of her
1985-1989 American Express, Manager-World Health Organization In-Plant Office testimony are self-explanatory, however.
Inc. Senior Manager-Asian Development Bank In-Plant
Office "x x x

1992-1994 Asia Pacific Sales Manager, Passenger & Cargo GSA Operations,
Chartering Phil. Inc. Scandinavian Airlines System."
(Exhibit "A", p. 72, Court of Appeals Rollo),
this Court is not prepared to find for petitioner. It bears noting that there is no showing that respondent
represented herself as possessed of the highest degree of skill and care known in the trade. And it is not
disputed that respondent was approached by petitioners then Sales Manager Murray, and offered the
position of Sales Manager. She thus could not just be unceremoniously discharged for "loss of confidence"
arising from alleged incompetency28.
"While an employee may be dismissed because of inefficiency, neglect or carelessness, the law implies a
situation or undertaking by an employee in entering into a contract of employment that he is competent to
perform the work undertaken and is possessed of the requisite skill and knowledge to enable him to do so,
and that he will do the work of the employer in a careful manner. If he is not qualified to do the work which
he undertakes, if he is incompetent, unskillful or inefficient, or if he executes his work in a negligent
8. On July 4, 1994, Messrs. Bondoc and Zozobrado summoned me and without any clear explanation,
ordered me to submit a letter of resignation; they informed me that I was not the person whom SAS was
looking for to handle the position of Sales Manager; even as I was deeply hurt, shocked, and humiliated, I
declined to resign from my position as I strongly believed that the instruction for me to resign was unjust
and violative of my rights; during the conference, I was never given the chance to know precisely why I was
being asked to resign or to explain my position; furthermore, I was informed then that Mr. Donald Marshall
was the one who decided and insisted on my termination.
9. On July 18, 1994, again without regard to the basic requirements of due process, I was given a notice of
termination signed by Mr. Bondoc; the supposed ground for my termination was APCs alleged loss of
confidence in my managerial and marketing capabilities due to the companys alleged dismal performance
during my term of office as GSA Sales Manager; once more, I was never called to answer this charge; a
copy of the notice of termination is hereto attached as Annex E;
10. The news of my termination circulated at once in the travel industry and as a result, I was and still am
frequently asked by my friends and acquaintances in the industry about my termination from APC to my
endless humiliation and embarrassment; this up to now causes me endless emotional pain that I even
avoid my friends and acquaintances for fear that they might look at me differently after my termination
from APC; my reputation as a professional has been totally shattered by the unjust act of APC;
11. Because of the extreme social humiliation, and serious anxiety over my now besmirched reputation in
the travel industry, I decided to seek legal advise; on July 21, 1994, my counsel wrote APC demanding for
my immediate reinstatement without loss of seniority rights and for damages; a copy of the letter-demand
is hereto attached as Annex F;
x x x".
They need no amplification and/or corroboration. Indeed, petitioner was deprived of due process and
denied "basic precepts of fairness" when she was terminated. Her resultant sufferings thus entitle her to an
award of moral damages.
To warrant award of moral damages, it must be shown that the dismissal of the employee was attended to
by bad faith, or constituted an act opposite to labor, or was done in a manner contrary to morals, good
customs or public policy.31
Award of moral and exemplary damages for an illegally dismissed employee is proper where the employee
had been harassed and arbitrarily terminated by the employer.32
In determining the amount of moral damages recoverable, however, the business, social and financial
position of the offended party and the business or financial position of the offender are taken into
account.33 Given petitioners business position or standing before and at the time of termination and
petitioners business and financial position, this Court reduces the amount of moral damages awarded
to P500,000.00 which it finds reasonable. The amount of exemplary damages awarded is accordingly
reduced too to P250,000.00.
WHEREFORE, the decision of the Court of Appeals is hereby AFFIRMED with the MODIFICATION that the
amount of moral damages and exemplary damages awarded to respondent, Ma. Linda R. Farolan, is hereby
reduced to Five Hundred Thousand (P500,000.00) Pesos and Two Hundred Fifty Thousand (P250,000.00)
Pesos, respectively.
Costs against petitioner.
SO ORDERED.
G.R. No. 159577 May 3, 2006
CHARLITO PEARANDA, Petitioner,
vs.
BAGANGA PLYWOOD CORPORATION and HUDSON CHUA, Respondents.
DECISION
PANGANIBAN, CJ:
Managerial employees and members of the managerial staff are exempted from the provisions of the
Labor Code on labor standards. Since petitioner belongs to this class of employees, he is not entitled to
overtime pay and premium pay for working on rest days.
The Case
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, assailing the January 27, 20032 and
July 4, 20033 Resolutions of the Court of Appeals (CA) in CA-GR SP No. 74358. The earlier Resolution
disposed as follows:
"WHEREFORE, premises considered, the instant petition is hereby DISMISSED."4
The latter Resolution denied reconsideration.
On the other hand, the Decision of the National Labor Relations Commission (NLRC) challenged in the CA
disposed as follows:
"WHEREFORE, premises considered, the decision of the Labor Arbiter below awarding overtime pay and
premium pay for rest day to complainant is hereby REVERSED and SET ASIDE, and the complaint in the
above-entitled case dismissed for lack of merit.5
The Facts
Sometime in June 1999, Petitioner Charlito Pearanda was hired as an employee of Baganga Plywood
Corporation (BPC) to take charge of the operations and maintenance of its steam plant boiler.6 In May
2001, Pearanda filed a Complaint for illegal dismissal with money claims against BPC and its general
manager, Hudson Chua, before the NLRC.7
After the parties failed to settle amicably, the labor arbiter8 directed the parties to file their position papers
and submit supporting documents.9 Their respective allegations are summarized by the labor arbiter as
follows:
"[Pearanda] through counsel in his position paper alleges that he was employed by respondent [Baganga]
on March 15, 1999 with a monthly salary of P5,000.00 as Foreman/Boiler Head/Shift Engineer until he was
illegally terminated on December 19, 2000. Further, [he] alleges that his services [were] terminated
without the benefit of due process and valid grounds in accordance with law. Furthermore, he was not paid
his overtime pay, premium pay for working during holidays/rest days, night shift differentials and finally
claims for payment of damages and attorneys fees having been forced to litigate the present complaint.
"Upon the other hand, respondent [BPC] is a domestic corporation duly organized and existing under The Issues
Philippine laws and is represented herein by its General Manager HUDSON CHUA, [the] individual
respondent. Respondents thru counsel allege that complainants separation from service was done Petitioner states the issues in this wise:
pursuant to Art. 283 of the Labor Code. The respondent [BPC] was on temporary closure due to repair and
general maintenance and it applied for clearance with the Department of Labor and Employment, Regional "The [NLRC] committed grave abuse of discretion amounting to excess or lack of jurisdiction when it
Office No. XI to shut down and to dismiss employees (par. 2 position paper). And due to the insistence of entertained the APPEAL of the respondent[s] despite the lapse of the mandatory period of TEN
herein complainant he was paid his separation benefits (Annexes C and D, ibid). Consequently, when DAYS.1avvphil.net
respondent [BPC] partially reopened in January 2001, [Pearanda] failed to reapply. Hence, he was not
terminated from employment much less illegally. He opted to severe employment when he insisted
"The [NLRC] committed grave abuse of discretion amounting to an excess or lack of jurisdiction when it
payment of his separation benefits. Furthermore, being a managerial employee he is not entitled to
rendered the assailed RESOLUTIONS dated May 8, 2002 and AUGUST 16, 2002 REVERSING AND SETTING
overtime pay and if ever he rendered services beyond the normal hours of work, [there] was no office
ASIDE the FACTUAL AND LEGAL FINDINGS of the [labor arbiter] with respect to the following:
order/or authorization for him to do so. Finally, respondents allege that the claim for damages has no legal
and factual basis and that the instant complaint must necessarily fail for lack of merit." 10
"I. The finding of the [labor arbiter] that [Pearanda] is a regular, common employee entitled to
monetary benefits under Art. 82 [of the Labor Code].
The labor arbiter ruled that there was no illegal dismissal and that petitioners Complaint was premature
because he was still employed by BPC.11 The temporary closure of BPCs plant did not terminate his
"II. The finding that [Pearanda] is entitled to the payment of OVERTIME PAY and OTHER
employment, hence, he need not reapply when the plant reopened.
MONETARY BENEFITS."18
According to the labor arbiter, petitioners money claims for illegal dismissal was also weakened by his
The Courts Ruling
quitclaim and admission during the clarificatory conference that he accepted separation benefits, sick and
vacation leave conversions and thirteenth month pay.12
The Petition is not meritorious.
Nevertheless, the labor arbiter found petitioner entitled to overtime pay, premium pay for working on rest
days, and attorneys fees in the total amount of P21,257.98.13 Preliminary Issue:

Ruling of the NLRC Resolution on the Merits

Respondents filed an appeal to the NLRC, which deleted the award of overtime pay and premium pay for
working on rest days. According to the Commission, petitioner was not entitled to these awards because he
was a managerial employee.14
Ruling of the Court of Appeals
In its Resolution dated January 27, 2003, the CA dismissed Pearandas Petition for Certiorari. The
appellate court held that he failed to: 1) attach copies of the pleadings submitted before the labor arbiter
and NLRC; and 2) explain why the filing and service of the Petition was not done by personal service.15
In its later Resolution dated July 4, 2003, the CA denied reconsideration on the ground that petitioner still
failed to submit the pleadings filed before the NLRC.16
Hence this Petition.17
The CA dismissed Pearandas Petition on purely technical grounds, particularly with regard to the failure
to submit supporting documents.
In Atillo v. Bombay,19 the Court held that the crucial issue is whether the documents accompanying the
petition before the CA sufficiently supported the allegations therein. Citing this case, Piglas-Kamao v.
NLRC20 stayed the dismissal of an appeal in the exercise of its equity jurisdiction to order the adjudication
on the merits.
The Petition filed with the CA shows a prima facie case. Petitioner attached his evidence to challenge the
finding that he was a managerial employee.21 In his Motion for Reconsideration, petitioner also submitted
the pleadings before the labor arbiter in an attempt to comply with the CA rules.22 Evidently, the CA could
have ruled on the Petition on the basis of these attachments. Petitioner should be deemed in substantial
compliance with the procedural requirements.
Under these extenuating circumstances, the Court does not hesitate to grant liberality in favor of petitioner
and to tackle his substantive arguments in the present case. Rules of procedure must be adopted to help
promote, not frustrate, substantial justice.23 The Court frowns upon the practice of dismissing cases purely
on procedural grounds.24 Considering that there was substantial compliance,25 a liberal interpretation of
procedural rules in this labor case is more in keeping with the constitutional mandate to secure social
justice.26
First Issue:
Timeliness of Appeal
Under the Rules of Procedure of the NLRC, an appeal from the decision of the labor arbiter should be filed
within 10 days from receipt thereof.27
Petitioners claim that respondents filed their appeal beyond the required period is not substantiated. In
the pleadings before us, petitioner fails to indicate when respondents received the Decision of the labor
arbiter. Neither did the petitioner attach a copy of the challenged appeal. Thus, this Court has no means to
determine from the records when the 10-day period commenced and terminated. Since petitioner utterly
failed to support his claim that respondents appeal was filed out of time, we need not belabor that point.
The parties alleging have the burden of substantiating their allegations.28
Second Issue:
Nature of Employment
Petitioner claims that he was not a managerial employee, and therefore, entitled to the award granted by
the labor arbiter.
Article 82 of the Labor Code exempts managerial employees from the coverage of labor standards. Labor
standards provide the working conditions of employees, including entitlement to overtime pay and
premium pay for working on rest days.29 Under this provision, managerial employees are "those whose
primary duty consists of the management of the establishment in which they are employed or of a
department or subdivision."30
The Implementing Rules of the Labor Code state that managerial employees are those who meet the
following conditions:
"(1) Their primary duty consists of the management of the establishment in which they are
employed or of a department or subdivision thereof;
"(2) They customarily and regularly direct the work of two or more employees therein;
"(3) They have the authority to hire or fire other employees of lower rank; or their suggestions and
recommendations as to the hiring and firing and as to the promotion or any other change of
status of other employees are given particular weight."31
The Court disagrees with the NLRCs finding that petitioner was a managerial employee. However,
petitioner was a member of the managerial staff, which also takes him out of the coverage of labor
standards. Like managerial employees, officers and members of the managerial staff are not entitled to the
provisions of law on labor standards.32 The Implementing Rules of the Labor Code define members of a
managerial staff as those with the following duties and responsibilities:
"(1) The primary duty consists of the performance of work directly related to management policies
of the employer;
"(2) Customarily and regularly exercise discretion and independent judgment;
"(3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty
consists of the management of the establishment in which he is employed or subdivision thereof;
or (ii) execute under general supervision work along specialized or technical lines requiring special
training, experience, or knowledge; or (iii) execute under general supervision special assignments
and tasks; and
"(4) who do not devote more than 20 percent of their hours worked in a workweek to activities
which are not directly and closely related to the performance of the work described in paragraphs
(1), (2), and (3) above."33
As shift engineer, petitioners duties and responsibilities were as follows:
"1. To supply the required and continuous steam to all consuming units at minimum cost.
"2. To supervise, check and monitor manpower workmanship as well as operation of boiler and
accessories.
"3. To evaluate performance of machinery and manpower.
"4. To follow-up supply of waste and other materials for fuel.
"5. To train new employees for effective and safety while working.
"6. Recommend parts and supplies purchases.
"7. To recommend personnel actions such as: promotion, or disciplinary action.
 "8. To check water from the boiler, feedwater and softener, regenerate softener if beyond
hardness limit.
"9. Implement Chemical Dosing.
"10. Perform other task as required by the superior from time to time." 34
The foregoing enumeration, particularly items 1, 2, 3, 5 and 7 illustrates that petitioner was a member of
the managerial staff. His duties and responsibilities conform to the definition of a member of a managerial
staff under the Implementing Rules.
Petitioner supervised the engineering section of the steam plant boiler. His work involved overseeing the
operation of the machines and the performance of the workers in the engineering section. This work
necessarily required the use of discretion and independent judgment to ensure the proper functioning of
the steam plant boiler. As supervisor, petitioner is deemed a member of the managerial staff.35
Noteworthy, even petitioner admitted that he was a supervisor. In his Position Paper, he stated that he was
the foreman responsible for the operation of the boiler.36 The term foreman implies that he was the
representative of management over the workers and the operation of the department.37 Petitioners
evidence also showed that he was the supervisor of the steam plant.38 His classification as supervisor is
further evident from the manner his salary was paid. He belonged to the 10% of respondents 354
employees who were paid on a monthly basis; the others were paid only on a daily basis.39
This case originated from a complaint filed on September 20, 1990 by private respondent Fermin Agao, Jr.
against petitioner for illegal dismissal, violation of P.D. No. 851, and non-payment of five days service
incentive leave for 1990. Private respondent had been employed as a "bodegero" or ship's quartermaster
on February 12, 1988. He complained that he had been constructively dismissed by petitioner when the
latter refused him assignments aboard its boats after he had reported to work on May 28, 1990.1
Private respondent alleged that he had been sick and thus allowed to go on leave without pay for one
month from April 28, 1990 but that when he reported to work at the end of such period with a health
clearance, he was told to come back another time as he could not be reinstated immediately. Thereafter,
petitioner refused to give him work. For this reason, private respondent asked for a certificate of
employment from petitioner on September 6, 1990. However, when he came back for the certificate on
September 10, petitioner refused to issue the certificate unless he submitted his resignation. Since private
respondent refused to submit such letter unless he was given separation pay, petitioner prevented him
from entering the premises.2
Petitioner, on the other hand, alleged that it was private respondent who actually abandoned his work. It
claimed that the latter failed to report for work after his leave had expired and was, in fact, absent without
leave for three months until August 28, 1998. Petitioner further claims that, nonetheless, it assigned
private respondent to another vessel, but the latter was left behind on September 1, 1990. Thereafter,
private respondent asked for a certificate of employment on September 6 on the pretext that he was
applying to another fishing company. On September 10, 1990, he refused to get the certificate and resign
unless he was given separation pay.3

On February 18, 1992, Labor Arbiter Arthur L. Amansec rendered a decision disposing of the case as
On the basis of the foregoing, the Court finds no justification to award overtime pay and premium pay for
follows:
rest days to petitioner.

ACCORDINGLY, respondents are ordered to reinstate complainant with backwages, pay

WHEREFORE, the Petition is DENIED. Costs against petitioner.
him his 13th month pay and incentive leave pay for 1990.
SO ORDERED.
All other claims are dismissed.
G.R. No. 112574 October 8, 1998
SO ORDERED.
MERCIDAR FISHING CORPORATION represented by its President DOMINGO B. NAVAL, petitioner,
Petitioner appealed to the NLRC which, on August 30, 1993, dismissed the appeal for lack of merit. The
vs.
NLRC dismissed petitioner's claim that it cannot be held liable for service incentive leave pay by fishermen
NATIONAL LABOR RELATIONS COMMISSION and FERMIN AGAO, JR., respondents.
in its employ as the latter supposedly are "field personnel" and thus not entitled to such pay under the
Labor Code.4
This is a petition for certiorari to set aside the decision, dated August 30, 1993, of the National Labor
Relations Commission dismissing the appeal of petitioner Mercidar Fishing Corporation from the decision
The NLRC likewise denied petitioner's motion for reconsideration of its decision in its order dated October
of the Labor Arbiter in NLRC NCR Case No. 09-05084-90, as well as the resolution dated October 25, 1993,
25, 1993.
of the NLRC denying reconsideration.

Hence, this petition. Petitioner contends:

 I Rule IV Holidays with Pay
THE RESPONDENT COMMISSION PALPABLY ERRED IN RULING AND SUSTAINING THE
VIEW THAT FISHING CREW MEMBERS. LIKE FERMIN AGAO, JR., CANNOT BE CLASSIFIED
AS FIELD PERSONNEL UNDER ARTICLE 82 OF THE LABOR CODE.
II
THE RESPONDENT COMMISSION ACTED WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION WHEN IT UPHELD THE FINDINGS OF THE LABOR
ARBITER THAT HEREIN PETITIONER HAD CONSTRUCTIVELY DISMISSED FERMIN AGAO, JR.,
FROM EMPLOYMENT.
The petition has no merit.
Art. 82 of the Labor Code provides:
Art. 82. Coverage. The provisions of this Title [Working Conditions and Rest Periods]
shall apply to employees in all establishments and undertakings whether for profit or not,
but not to government employees, field personnel, members of the family of the
employer who are dependent on him for support, domestic helpers, persons in the
personal service of another, and workers who are paid by results as determined by the
Secretary of Labor in appropriate regulations.
xxx xxx xxx
"Field personnel" shall refer to non-agricultural employees who regularly perform their
duties away from the principal place of business or branch office of the employer and
whose actual hours of work in the field cannot be determined with reasonable certainty.
Petitioner argues essentially that since the work of private respondent is performed away from its principal
place of business, it has no way of verifying his actual hours of work on the vessel. It contends that private
respondent and other fishermen in its employ should be classified as "field personnel" who have no
statutory right to service incentive leave pay.
In the case of Union of Pilipro Employees (UFE) v. Vicar, 5 this Court explained the meaning of the phrase
"whose actual hours of work in the field cannot be determined with reasonable certainty" in Art. 82 of the
Labor Code, as follows:
Moreover, the requirement that "actual hours of work in the field cannot be determined
with reasonable certainty" must be read in conjunction with Rule IV, Book III of the
Implementing Rules which provides:
Sec. 1. Coverage This rule shall apply to all employees except:
xxx xxx xxx
(e) Field personnel and other employees whose time and performance is
unsupervised by the employer . . . (Emphasis supplied).
While contending that such rule added another element not found in the law (Rollo, p. 13),
the petitioner nevertheless attempted to show that its affected members are not covered
by the abovementioned rule. The petitioner asserts that the company's sales personnel are
strictly supervised as shown by the SOD (Supervisor of the Day) schedule and the company
circular dated March 15, 1984 (Annexes 2 and 3, Rollo, pp. 53-55).
Contrary to the contention of the petitioner, the Court finds that the aforementioned rule
did not add another element to the Labor Code definition of field personnel. The clause
"whose time and performance is unsupervised by the employer" did not amplify but
merely interpreted and expounded the clause "whose actual hours of work in the field
cannot be determined with reasonable certainty." The former clause is still within the
scope and purview of Article 82 which defines field personnel. Hence, in deciding whether
or not an employee's actual working hours in the field can be determined with reasonable
certainty, query must be made as to whether or not such employee's time and
performance is constantly supervised by the employer. 6
Accordingly, it was held in the aforementioned case that salesmen of Nestle Philippines, Inc. were field
personnel:
It is undisputed that these sales personnel start their field work at 8:00 a.m. after having
reported to the office and come back to the office at 4:00 p.m. or 4:30 p.m. if they are
Makati-based.
The petitioner maintains that the period between 8:00 a.m. to 4:00 or 4:30 p.m. comprises
the sales personnel's working hours which can be determined with reasonable certainty.
The Court does not agree. The law requires that the actual hours of work in the field be
reasonably ascertained. The company has no way of determining whether or not these
sales personnel, even if they report to the office before 8:00 a.m. prior to field work and
come back at 4:30 p.m., really spend the hours in between in actual field work.7
In contrast, in the case at bar, during the entire course of their fishing voyage, fishermen employed by
petitioner have no choice but to remain on board its vessel. Although they perform non-agricultural work
away from petitioner's business offices, the fact remains that throughout the duration of their work they are
under the effective control and supervision of petitioner through the vessel's patron or master as the NLRC
correctly held. 8
Neither did petitioner gravely abuse its discretion in ruling that private respondent had constructively been
dismissed by petitioner. Such factual finding of both the NLRC and the Labor Arbiter is based not only on the
pleadings of the parties but also on a medical certificate of fitness which, contrary to petitioner's claim
private respondent presented when he reported to work on May 28, 1990.9 As the NLRC held:
Anent grounds (a) and (b) of the appeal, the respondent, in a nutshell, would like us to
believe that the Arbiter abused his discretion (or seriously erred in his findings of facts) in
giving credence to the factual version of the complainant. But it is settled that "(W)hen
confronted with conflicting versions of factual matters," the Labor Arbiter has the
"discretion to determine which party deserves credence on the basis of evidence
received." [Gelmart Industries (Phils.), Inc. vs. Leogardo, 155 SCRA 403, 309, L-70544,
November 5, 1987]. And besides, it is settled in this jurisdiction that "to constitute
abandonment of position, there must be concurrence of the intention to abandon and
some overt acts from which it may be inferred that the employee concerned has no more
interest in working" (Dagupan Bus Co., Inc. vs. NLRC, 191 SCRA 328), and that the filing of
the complaint which asked for reinstatement plus backwages (Record, p. 20) is inconsistent
with respondents' defense of abandonment (Hua Bee Shirt Factory vs. NLRC, 188 SCRA
586). 10
It is trite to say that the factual findings of quasi-judicial bodies are generally binding as long as they are
supported substantially by evidence in the record of the case. 11 This is especially so where, as here, the
agency and its subordinate who heard the case in the first instance are in full agreement as to the facts. 12
As regards the labor arbiter's award which was affirmed by respondent NLRC, there is no reason to apply the
rule that reinstatement may not be ordered if, as a result of the case between the parties, their relation is
strained. 13 Even at this late stage of this dispute, petitioner continues to reiterate its offer to reinstate
private respondent. 14
WHEREFORE, the petition is DISMISSED.
SO ORDERED.
G.R. No. 156367 May 16, 2005
AUTO BUS TRANSPORT SYSTEMS, INC., petitioner,
vs.
ANTONIO BAUTISTA, respondent.
Before Us is a Petition for Review on Certiorari assailing the Decision1 and Resolution2 of the Court of
Appeals affirming the Decision3 of the National Labor Relations Commission (NLRC). The NLRC ruling
modified the Decision of the Labor Arbiter (finding respondent entitled to the award of 13 th month pay and
service incentive leave pay) by deleting the award of 13th month pay to respondent.
THE FACTS
Since 24 May 1995, respondent Antonio Bautista has been employed by petitioner Auto Bus Transport
Systems, Inc. (Autobus), as driver-conductor with travel routes Manila-Tuguegarao via Baguio, Baguio-
Tuguegarao via Manila and Manila-Tabuk via Baguio. Respondent was paid on commission basis, seven
percent (7%) of the total gross income per travel, on a twice a month basis.
On 03 January 2000, while respondent was driving Autobus No. 114 along Sta. Fe, Nueva Vizcaya, the bus
he was driving accidentally bumped the rear portion of Autobus No. 124, as the latter vehicle suddenly
stopped at a sharp curve without giving any warning.
Respondent averred that the accident happened because he was compelled by the management to go
back to Roxas, Isabela, although he had not slept for almost twenty-four (24) hours, as he had just arrived
in Manila from Roxas, Isabela. Respondent further alleged that he was not allowed to work until he fully
paid the amount of P75,551.50, representing thirty percent (30%) of the cost of repair of the damaged
buses and that despite respondents pleas for reconsideration, the same was ignored by management.
After a month, management sent him a letter of termination.
Thus, on 02 February 2000, respondent instituted a Complaint for Illegal Dismissal with Money Claims for
nonpayment of 13th month pay and service incentive leave pay against Autobus.
Petitioner, on the other hand, maintained that respondents employment was replete with offenses
involving reckless imprudence, gross negligence, and dishonesty. To support its claim, petitioner presented
copies of letters, memos, irregularity reports, and warrants of arrest pertaining to several incidents
wherein respondent was involved.
Furthermore, petitioner avers that in the exercise of its management prerogative, respondents
employment was terminated only after the latter was provided with an opportunity to explain his side
regarding the accident on 03 January 2000.
On 29 September 2000, based on the pleadings and supporting evidence presented by the parties, Labor
Arbiter Monroe C. Tabingan promulgated a Decision,4 the dispositive portion of which reads:
WHEREFORE, all premises considered, it is hereby found that the complaint for Illegal Dismissal
has no leg to stand on. It is hereby ordered DISMISSED, as it is hereby DISMISSED.
 However, still based on the above-discussed premises, the respondent must pay to the
complainant the following:
a. his 13th month pay from the date of his hiring to the date of his dismissal, presently
computed at P78,117.87;
b. his service incentive leave pay for all the years he had been in service with the
respondent, presently computed at P13,788.05.
5
All other claims of both complainant and respondent are hereby dismissed for lack of merit.
Not satisfied with the decision of the Labor Arbiter, petitioner appealed the decision to the NLRC which
rendered its decision on 28 September 2001, the decretal portion of which reads:
[T]he Rules and Regulations Implementing Presidential Decree No. 851, particularly Sec. 3
provides:
"Section 3. Employers covered. The Decree shall apply to all employers except to:
xxx xxx xxx
e) employers of those who are paid on purely commission, boundary, or task basis,
performing a specific work, irrespective of the time consumed in the performance
thereof. xxx."
Records show that complainant, in his position paper, admitted that he was paid on a commission
basis.
In view of the foregoing, we deem it just and equitable to modify the assailed Decision by deleting
the award of 13th month pay to the complainant.
WHEREFORE, the Decision dated 29 September 2000 is MODIFIED by deleting the award of
13th month pay. The other findings are AFFIRMED.6
In other words, the award of service incentive leave pay was maintained. Petitioner thus sought a
reconsideration of this aspect, which was subsequently denied in a Resolution by the NLRC dated 31
October 2001.
Displeased with only the partial grant of its appeal to the NLRC, petitioner sought the review of said
decision with the Court of Appeals which was subsequently denied by the appellate court in a Decision
dated 06 May 2002, the dispositive portion of which reads:
WHEREFORE, premises considered, the Petition is DISMISSED for lack of merit; and the
assailed Decision of respondent Commission in NLRC NCR CA No. 026584-2000 is hereby
AFFIRMED in toto. No costs.7
Hence, the instant petition.
ISSUES
1. Whether or not respondent is entitled to service incentive leave;
2. Whether or not the three (3)-year prescriptive period provided under Article 291 of the Labor Code, as
amended, is applicable to respondents claim of service incentive leave pay.
RULING OF THE COURT
The disposition of the first issue revolves around the proper interpretation of Article 95 of the Labor
Code vis--vis Section 1(D), Rule V, Book III of the Implementing Rules and Regulations of the Labor Code
which provides:
Art. 95. RIGHT TO SERVICE INCENTIVE LEAVE
(a) Every employee who has rendered at least one year of service shall be entitled to a
yearly service incentive leave of five days with pay.
Book III, Rule V: SERVICE INCENTIVE LEAVE
SECTION 1. Coverage. This rule shall apply to all employees except:
(d) Field personnel and other employees whose performance is unsupervised by the
employer including those who are engaged on task or contract basis, purely commission
basis, or those who are paid in a fixed amount for performing work irrespective of the
time consumed in the performance thereof; . . .
A careful perusal of said provisions of law will result in the conclusion that the grant of service incentive
leave has been delimited by the Implementing Rules and Regulations of the Labor Code to apply only to
those employees not explicitly excluded by Section 1 of Rule V. According to the Implementing Rules,
Service Incentive Leave shall not apply to employees classified as "field personnel." The phrase "other
employees whose performance is unsupervised by the employer" must not be understood as a separate
classification of employees to which service incentive leave shall not be granted. Rather, it serves as an
amplification of the interpretation of the definition of field personnel under the Labor Code as those
"whose actual hours of work in the field cannot be determined with reasonable certainty."8
The same is true with respect to the phrase "those who are engaged on task or contract basis, purely
commission basis." Said phrase should be related with "field personnel," applying the rule on ejusdem
generis that general and unlimited terms are restrained and limited by the particular terms that they
follow.9 Hence, employees engaged on task or contract basis or paid on purely commission basis are not
automatically exempted from the grant of service incentive leave, unless, they fall under the classification
of field personnel.
Therefore, petitioners contention that respondent is not entitled to the grant of service incentive leave
just because he was paid on purely commission basis is misplaced. What must be ascertained in order to
resolve the issue of propriety of the grant of service incentive leave to respondent is whether or not he is a
field personnel.
According to Article 82 of the Labor Code, "field personnel" shall refer to non-agricultural employees who
regularly perform their duties away from the principal place of business or branch office of the employer
and whose actual hours of work in the field cannot be determined with reasonable certainty. This definition
is further elaborated in the Bureau of Working Conditions (BWC), Advisory Opinion to Philippine Technical-
Clerical Commercial Employees Association10 which states that:
As a general rule, [field personnel] are those whose performance of their job/service is not
supervised by the employer or his representative, the workplace being away from the principal
office and whose hours and days of work cannot be determined with reasonable certainty; hence,
they are paid specific amount for rendering specific service or performing specific work. If required
to be at specific places at specific times, employees including drivers cannot be said to be field
personnel despite the fact that they are performing work away from the principal office of the
employee. [Emphasis ours]
To this discussion by the BWC, the petitioner differs and postulates that under said advisory opinion, no
employee would ever be considered a field personnel because every employer, in one way or another,
exercises control over his employees. Petitioner further argues that the only criterion that should be
considered is the nature of work of the employee in that, if the employees job requires that he works away
from the principal office like that of a messenger or a bus driver, then he is inevitably a field personnel.
We are not persuaded. At this point, it is necessary to stress that the definition of a "field personnel" is not
merely concerned with the location where the employee regularly performs his duties but also with the
fact that the employees performance is unsupervised by the employer. As discussed above, field personnel
are those who regularly perform their duties away from the principal place of business of the employer and
whose actual hours of work in the field cannot be determined with reasonable certainty. Thus, in order to
conclude whether an employee is a field employee, it is also necessary to ascertain if actual hours of work
in the field can be determined with reasonable certainty by the employer. In so doing, an inquiry must be
made as to whether or not the employees time and performance are constantly supervised by the
employer.
As observed by the Labor Arbiter and concurred in by the Court of Appeals:
It is of judicial notice that along the routes that are plied by these bus companies, there are its
inspectors assigned at strategic places who board the bus and inspect the passengers, the
punched tickets, and the conductors reports. There is also the mandatory once-a-week car barn
or shop day, where the bus is regularly checked as to its mechanical, electrical, and hydraulic
aspects, whether or not there are problems thereon as reported by the driver and/or conductor.
They too, must be at specific place as [sic] specified time, as they generally observe prompt
departure and arrival from their point of origin to their point of destination. In each and every
depot, there is always the Dispatcher whose function is precisely to see to it that the bus and its
crew leave the premises at specific times and arrive at the estimated proper time. These, are
present in the case at bar. The driver, the complainant herein, was therefore under constant
supervision while in the performance of this work. He cannot be considered a field personnel.11
We agree in the above disquisition. Therefore, as correctly concluded by the appellate court, respondent is
not a field personnel but a regular employee who performs tasks usually necessary and desirable to the
usual trade of petitioners business. Accordingly, respondent is entitled to the grant of service incentive
leave.
The question now that must be addressed is up to what amount of service incentive leave pay respondent
is entitled to.
The response to this query inevitably leads us to the correlative issue of whether or not the three (3)-year
prescriptive period under Article 291 of the Labor Code is applicable to respondents claim of service
incentive leave pay.
Article 291 of the Labor Code states that all money claims arising from employer-employee relationship
shall be filed within three (3) years from the time the cause of action accrued; otherwise, they shall be
forever barred.
In the application of this section of the Labor Code, the pivotal question to be answered is when does the
cause of action for money claims accrue in order to determine the reckoning date of the three-year
prescriptive period.
It is settled jurisprudence that a cause of action has three elements, to wit, (1) a right in favor of the
plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part of
the named defendant to respect or not to violate such right; and (3) an act or omission on the part of such
defendant violative of the right of the plaintiff or constituting a breach of the obligation of the defendant to
the plaintiff.12
To properly construe Article 291 of the Labor Code, it is essential to ascertain the time when the third
element of a cause of action transpired. Stated differently, in the computation of the three-year
prescriptive period, a determination must be made as to the period when the act constituting a violation of
the workers right to the benefits being claimed was committed. For if the cause of action accrued more
than three (3) years before the filing of the money claim, said cause of action has already prescribed in
accordance with Article 291.13
Consequently, in cases of nonpayment of allowances and other monetary benefits, if it is established that
the benefits being claimed have been withheld from the employee for a period longer than three (3) years,
the amount pertaining to the period beyond the three-year prescriptive period is therefore barred by
prescription. The amount that can only be demanded by the aggrieved employee shall be limited to the
amount of the benefits withheld within three (3) years before the filing of the complaint.14
It is essential at this point, however, to recognize that the service incentive leave is a curious animal in
relation to other benefits granted by the law to every employee. In the case of service incentive leave, the
employee may choose to either use his leave credits or commute it to its monetary equivalent if not
exhausted at the end of the year.15 Furthermore, if the employee entitled to service incentive leave does
not use or commute the same, he is entitled upon his resignation or separation from work to the
commutation of his accrued service incentive leave. As enunciated by the Court in Fernandez v. NLRC:16
The clear policy of the Labor Code is to grant service incentive leave pay to workers in all
establishments, subject to a few exceptions. Section 2, Rule V, Book III of the Implementing Rules
and Regulations provides that "[e]very employee who has rendered at least one year of service
shall be entitled to a yearly service incentive leave of five days with pay." Service incentive leave is
a right which accrues to every employee who has served "within 12 months, whether continuous
or broken reckoned from the date the employee started working, including authorized absences
and paid regular holidays unless the working days in the establishment as a matter of practice or
policy, or that provided in the employment contracts, is less than 12 months, in which case said
period shall be considered as one year." It is also "commutable to its money equivalent if not used
or exhausted at the end of the year." In other words, an employee who has served for one year is
entitled to it. He may use it as leave days or he may collect its monetary value. To limit the award
to three years, as the solicitor general recommends, is to unduly restrict such right. 17 [Italics
supplied]
Correspondingly, it can be conscientiously deduced that the cause of action of an entitled employee to
claim his service incentive leave pay accrues from the moment the employer refuses to remunerate its
monetary equivalent if the employee did not make use of said leave credits but instead chose to avail of its
commutation. Accordingly, if the employee wishes to accumulate his leave credits and opts for its
commutation upon his resignation or separation from employment, his cause of action to claim the whole
amount of his accumulated service incentive leave shall arise when the employer fails to pay such amount
at the time of his resignation or separation from employment.
Applying Article 291 of the Labor Code in light of this peculiarity of the service incentive leave, we can
conclude that the three (3)-year prescriptive period commences, not at the end of the year when the
employee becomes entitled to the commutation of his service incentive leave, but from the time when the
employer refuses to pay its monetary equivalent after demand of commutation or upon termination of the
employees services, as the case may be.
The above construal of Art. 291, vis--vis the rules on service incentive leave, is in keeping with the
rudimentary principle that in the implementation and interpretation of the provisions of the Labor Code
and its implementing regulations, the workingmans welfare should be the primordial and paramount
consideration.18 The policy is to extend the applicability of the decree to a greater number of employees
who can avail of the benefits under the law, which is in consonance with the avowed policy of the State to
give maximum aid and protection to labor.19
In the case at bar, respondent had not made use of his service incentive leave nor demanded for its
commutation until his employment was terminated by petitioner. Neither did petitioner compensate his
accumulated service incentive leave pay at the time of his dismissal. It was only upon his filing of a
complaint for illegal dismissal, one month from the time of his dismissal, that respondent demanded from
his former employer commutation of his accumulated leave credits. His cause of action to claim the
payment of his accumulated service incentive leave thus accrued from the time when his employer
dismissed him and failed to pay his accumulated leave credits.
Therefore, the prescriptive period with respect to his claim for service incentive leave pay only commenced
from the time the employer failed to compensate his accumulated service incentive leave pay at the time
of his dismissal. Since respondent had filed his money claim after only one month from the time of his
dismissal, necessarily, his money claim was filed within the prescriptive period provided for by Article 291
of the Labor Code.
WHEREFORE, premises considered, the instant petition is hereby DENIED. The assailed Decision of the
Court of Appeals in CA-G.R. SP. No. 68395 is hereby AFFIRMED. No Costs.
SO ORDERED.