Republic of the Philippines

SUPREME COURT
Manila

SO ORDERED.

EN BANC
G.R. No. L-16275

February 23, 1961

PAN AMERICAN WORLD AIRWAYS SYSTEM (PHILIPPINES), petitioner,

vs.
PAN AMERICAN EMPLOYEES ASSOCIATION, respondent.
Ross,
Selph
and
Jose Espinas for respondent.

Carrascoso

for

petitioner.

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

Appeal by certiorari from the decision of the Court of Industrial Relations in
Case No. 1055-V dated October 10, 1959, and its resolution en bancdenying
the motion for reconsideration filed by the petitioner herein.
The dispositive portion of the appealed decision reads: .
WHEREFORE, the Court orders the Chief of the Examining
Division or his representative to compute the overtime
compensation due the aforesaid fourteen (14) aircraft mechanic
and the two employees from the Communication Department based
on the time sheet of said employees from February 23 1952 up to
and including July 15, 1958 and to submit his report within 30 days
for further disposition by the Court; and the company shall show to
the Court Examiner such time sheets an other documents that may
be necessary in the aforesaid computation; and two (2)
representatives for the company and two (2) representatives for the
union shall be chosen to help the Court Examiner in said
computation.
The company is also ordered to permanently adopt the straight 8hour shift inclusive of meal period which is mutually beneficial to the
parties.

In this appeal, petitioner advances five proposition which, briefly, are as

follows: (1) the Industrial Court has no jurisdiction to order the payment of
overtime compensation, it being a mere monetary claim cognizable by
regular courts; (2) the finding that the one-hour meal period should be
considered overtime work (deducting 15 minutes as time allotted for eating)
is not supported by substantial evidence; (3) the court below had no
authority to delegate its judicial functions by ordering the Chief of the
Examining Division or his representative to compute the overtime pay; (4)
the finding that there was no agreement to withdraw Case No. 1055-V in
consideration of the wage increases in the Collective Bargaining Contract
(Exh. "A") is not supported by substantial evidence; and (5) the court below
had no authority to order the company to adopt a straight 8-hour
shiftinclusive of meal period.
On the issue of jurisdiction over claims for overtime pay, we have since
definitely ruled in a recent decisions that the Industrial Court may properly
take cognizance of such cases if, at the time of the petition, the complainants
were still in the service of the employer, or, having been separated from such
service, should ask for reinstatement; otherwise, such claims should be
brought before the regular courts (NASSCO v. CIR, et al., L-13888, April 29,
1960; FRISCO v. CIR, et al., L-13806, May 23, 1960; Board of Liquidators, et
al. vs. CIR, et al., L-15485, May 23, 1960; Sta. Cecilia, Sawmills Co. vs. CIR,
L-14254 & L-14255, May 27, 1960; Ajax International Corp. v. Seguritan, L16038, October 25, 1960; Sampaguita Pictures, Inc., et al. vs. CIR, L-16404,
October 25, 1960). Since, in the instant case there is no question that the
employees claiming overtime compensation were still in the service of the
company when the case was filed, the jurisdiction of the Court of Industrial
Relations cannot be assailed. In fact, since it is not pretended that,
thereafter, the complainants were discharged or otherwise terminated their
relationship with the company for any reason, all of said complainants could
still be with the company up to the present.
Petitioner herein claims that the one-hour meal period should not be
considered as overtime work (after deducting 15 minutes), because the
evidence showed that complainants could rest completely, and were not in
any manner under the control of the company during that period. The court
below found, on the contrary, that during the so called meal period, the
mechanics were required to stand by for emergency work; that if they
happened not to be available when called, they were reprimanded by the

leadman; that as in fact it happened on many occasions, the mechanics had

been called from their meals or told to hurry Employees Association up
eating to perform work during this period. Far from being unsupported by
substantial evidence, the record clearly confirms the above factual findings
of the Industrial Court.
Similarly, this Court is satisfied with the finding that there was no agreement
to withdraw Case No. 1055-V in consideration of the wage increases
obtained by the, union and set forth in the Collective Bargaining Agreement
Exhibit "A". As reasoned out by the court below, such alleged agreement
would have been incorporated in the contract if it existed. The fact that the
union filed a motion to dismiss without prejudice, after the Collective
Bargaining Contract had been signed, did not necessarily mean that it had
agreed to withdraw the case in consideration of the wage increases. The
motion itself (Annex "B", Petition for Certiorari) was expressly based on an
understanding that the company would "formulate a schedule of work which
shall be in consonance with C. A. 444". All in all, there is substantial
evidence in the record to support the finding of the court below that no such
agreement was made.
It is next contended that in ordering the Chief of the Examining Division or
his representative to compute the compensation due, the Industrial Court
unduly delegated its judicial functions and thereby rendered an incomplete
decision. We do not believe so. Computation of the overtime pay involves a
mechanical function, at most. And the report would still have to be submitted
to the Industrial Court for its approval, by the very terms of the order itself.
That there was no specification of the amount of overtime pay in the decision
did not make it incomplete, since this matter would necessarily be made
clear enough in the implementation of the decision (see Malate Taxicab &
Garage, Inc. vs. CIR, et al., L-8718, May 11, 1956).
The Industrial Court's order for permanent adoption of a straight 8-hour shift
including the meal period was but a consequence of its finding that the meal
hour was not one of complete rest, but was actually a work hour, since for its
duration, the laborers had to be on ready call. Of course, if the Company
practices in this regard should be modified to afford the mechanics a real
rest during that hour (f. ex., by installing an entirely different emergency
crew, or any similar arrangement), then the modification of this part of the
decision may be sought from the Court below. As things now stand, we see
no warrant for altering the decision.

The judgment appealed from is affirmed. Costs against appellant.

Bengzon, Padilla, Bautista Angelo, Labrador, Concepcion , Barrera, Paredes
and Dizon, JJ., concur.

FIRST DIVISION

they are constrained to take mandatory leave from work. For this they cannot
be faulted nor can they be begrudged that which is due them under the law.

[G.R. No. L-63122. February 20, 1984.]

UNIVERSITY OF PANGASINAN FACULTY UNION, Petitioner, v.
UNIVERSITY OF PANGASINAN And NATIONAL LABOR
RELATIONS COMMISSION, Respondents.
Tanopo, Serafico, Juanitez & Callanta Law Office and
Hermogenes S. Decano for Petitioner.
The Solicitor General for Respondents.

SYLLABUS
1. LABOR AND SOCIAL LEGISLATIONS; LABOR LAWS; PRESIDENTIAL
DECREES ON EMERGENCY COST OF LIVING ALLOWANCE;
REQUISITES FOR ENTITLEMENT TO ALLOWANCES PROVIDED
THEREUNDER. The various Presidential Decrees on ECOLAs to wit:
PDs 1614, 1634, 1678 and 1713, provide on "Allowances of Fulltime
Employees . . ." that "Employees shall be paid in full the required monthly
allowance regardless of the number of their regular working days if they
incur no absences during the month. If they incur absences without pay, the
amounts corresponding to the absences may be deducted from the monthly
allowance . . ." ; and on "Leave of Absence Without Pay", that "All covered
employees shall be entitled to the allowance provided herein when they are
on
leave
of
absence
with
pay."cralaw
virtua1aw
library
2. ID.; ID.; ID.; "NO WORK, NO PAY" PRINCIPLE NOT APPLICABLE CASE
AT BAR. It is beyond dispute that the petitioners members are full-time
employees receiving their monthly salaries irrespective of the number of
working days or teaching hours in a month. However, they find themselves in
a most peculiar situation whereby they are forced to go on leave during
semestral breaks. These semestral breaks are in the nature of work
interruptions beyond the employees control. The duration of the semestral
break varies from year to year dependent on a variety of circumstances
affecting at times only the private respondent but at other times all
educational institutions in the country. As such, these breaks cannot be
considered as absences within the meaning of the law for which deductions
may be made from monthly allowances. The "No work, no pay" principle
does not apply in the instant case. The petitioners members received their
regular salaries during this period. It is clear from the aforequoted provision
of law that it contemplates a "no work" situation where the employees
voluntarily absent themselves. Petitioners, in the case at bar, certainly do
not, ad voluntatem, absent themselves during semestral breaks. Rather,

3. ID.; ID.; ID.; EMPLOYEES WHETHER PAID ON MONTHLY OR DAILY

BASIS ENTITLED TO DAILY LIVING ALLOWANCE WHEN PAID THEIR
BASIC WAGE. Respondents contention that the "factor receiving a salary
alone should not be the basis of receiving ECOLA", is likewise, without merit.
Particular attention is brought to the Implementing Rules and Regulations of
Wage Order No. 1 to wit: "Sec. 5. Allowance for Unworked Days. a) All
covered employees whether paid on a monthly or daily basis shall be
entitled to their daily living allowance when they are paid their basic.." . .
4. ID.; ID.; ID.; PURPOSE OF THE LAW. The legal principles of "No work,
no pay; No pay, no ECOLA" must necessarily give way to the purpose of the
law to augment the income of employees to enable them to cope with the
harsh living conditions brought about by inflation; and to protect employees
and their wages against the ravages brought by these conditions.
Significantly, it is the commitment of the State to protect labor and to provide
means by which the difficulties faced by the working force may best be
alleviated.
5. ID.; ID.; ID.; PRESIDENTIAL DECREE 451; CONSTRUED.
Respondent overlooks the elemental principle of statutory construction that
the general statements in the whereas clauses cannot prevail over the
specific or particular statements in the law itself which define or limit the
purposes of the legislation or proscribe certain acts. True, the whereas
clauses of PD 451 provide for salary and or wage increase and other
benefits, however, the same do not delineate the source of such funds and it
is only in Section 3 which provides for the limitations wherein the intention of
the framers of the law is clearly outlined. The law is clear. The sixty (60%)
percent incremental proceeds from the tuition increase are to be devoted
entirely to wage or salary increases which means increases in basic salary.
The law cannot be construed to include allowances which are benefits over
and
above
the
basic
salaries
of
the
employees.
6. REMEDIAL LAW; APPEALS; FINDINGS OF FACT OF NATIONAL LABOR
RELATIONS
COMMISSION
ARE
BINDING
WHEN
FULLY
SUBSTANTIATED BY EVIDENCE. As evidenced by the payrolls
submitted by them during the period September 16 to September 30, 1981,
the faculty members have been paid for the extra loads. We agree with the
respondents that this issue involves a question of fact properly within the
competence of the respondent NLRC to pass upon. The findings of fact of
the respondent Commission are binding on this Court there being no

indication

of

their

being

unsubstantiated

by

evidence

DECISION

GUTIERREZ, JR., J.:

This is a petition for review on certiorari pursuant to Rule 65 of the Rules of

Court to annul and to set aside the decision of respondent National Labor
Relations Commission (NLRC) dated October 25, 1982, dismissing the
appeal of petitioner in NLRC Case No. RBI-47-82, entitled "University of
Pangasinan Faculty Union, complainant, versus University of
Pangasinan, Respondent." chanrobles
law
library
:
red
Petitioner is a labor union composed of faculty members of the respondent
University of Pangasinan, an educational institution duly organized and
existing
by
virtue
of
the
laws
of
the
Philippines.
On December 18, 1981, the petitioner, through its President, Miss Consuelo
Abad, filed a complaint against the private respondent with the Arbitration
Branch of the NLRC, Dagupan District Office, Dagupan City. The complaint
seeks: (a) the payment of Emergency Cost of Living Allowances (ECOLA) for
November 7 to December 5, 1981, a semestral break; (b) salary increases
from the sixty (60%) percent of the incremental proceeds of increased tuition
fees; and (c) payment of salaries for suspended extra loads.
The petitioners members are full-time professors, instructors, and teachers
of respondent University. The teachers in the college level teach for a normal
duration of ten (10) months a school year, divided into two (2) semesters of
five (5) months each, excluding the two (2) months summer vacation. These
teachers are paid their salaries on a regular monthly basis.
In November and December, 1981, the petitioners members were fully paid
their regular monthly salaries. However, from November 7 to December 5,
during the semestral break, they were not paid their ECOLA. The private
respondent claims that the teachers are not entitled thereto because the
semestral break is not an integral part of the school year and there being no
actual services rendered by the teachers during said period, the principle of
"No
work,
no
pay"
applies.
During the same school year (1981-1982), the private respondent was
authorized by the Ministry of Education and Culture to collect, as it did
collect, from its students a fifteen (15%) percent increase of tuition fees.

Petitioners members demanded a salary increase effective the first

semester of said schoolyear to be taken from the sixty (60%) percent
incremental proceeds of the increased tuition fees. Private respondent
refused, compelling the petitioner to include said demand in the complaint
filed in the case at bar. While the complaint was pending in the arbitration
branch, the private respondent granted an across-the-board salary increase
of 5.86%. Nonetheless, the petitioner is still pursuing full distribution of the
60% of the incremental proceeds as mandated by the Presidential Decree
No.
451.
Aside from their regular loads, some of petitioners members were given
extra loads to handle during the same 1981-1982 schoolyear. Some of them
had extra loads to teach on September 21, 1981, but they were unable to
teach as classes in all levels throughout the country were suspended,
although said days was proclaimed by the President of the Philippines as a
working holiday. Those with extra loads to teach on said day claimed they
were not paid their salaries for those loads, but the private respondent
claims
otherwise.
The issue to be resolved in the case at bar are the following:chanrob1es
virtual 1aw library
I
"WHETHER OR NOT PETITIONERS MEMBERS ARE ENTITLED TO
ECOLA DURING THE SEMESTRAL BREAK FROM NOVEMBER 7 TO
DECEMBER 5, 1981 OF THE 1981-82 SCHOOL YEAR.
II
"WHETHER OR NOT 60% OF THE INCREMENTAL PROCEEDS OF
INCREASED TUITION FEES SHALL BE DEVOTED EXCLUSIVELY TO
SALARY INCREASE,
III
"WHETHER OR NOT ALLEGED PAYMENT OF SALARIES FOR EXTRA
LOADS ON SEPTEMBER 21, 1981 WAS PROVEN BY SUBSTANTIAL
EVIDENCE."cralaw
virtua1aw
library
Anent the first issue, the various Presidential Decrees on ECOLAs to wit:

PDs 1614, 1634, 1678 and 1713, provide on "Allowances of Fulltime

Employees . . ." that "Employees shall be paid in full the required monthly
allowance regardless of the number of their regular working days if they
incur no absences during the month. If they incur absences without pay, the
amounts corresponding to the absences may be deducted from the monthly
allowance . . ." ; and on "Leave of Absence Without Pay", that "All covered
employees shall be entitled to the allowance provided herein when they are
on
leave
of
absence
with
pay."cralaw
virtua1aw
library
It is beyond dispute that the petitioners members are full-time employees
receiving their monthly salaries irrespective of the number of working days or
teaching hours in a month. However, they find themselves in a most peculiar
situation whereby they are forced to go on leave during semestral breaks.
These semestral breaks are in the nature of work interruptions beyond the
employees control. The duration of the semestral break varies from year to
year dependent on a variety of circumstances affecting at times only the
private respondent but at other times all educational institutions in the
country. As such, these breaks cannot be considered as absences within the
meaning of the law for which deductions may be made from monthly
allowances. The "No work, no pay" principle does not apply in the instant
case. The petitioners members received their regular salaries during this
period. It is clear from the aforequoted provision of law that it contemplates a
"no work" situation where the employees voluntarily absent themselves.
Petitioners, in the case at bar, certainly do not, ad voluntatem, absent
themselves during semestral breaks. Rather, they are constrained to take
mandatory leave from work. For this they cannot be faulted nor can they be
begrudged that which is due them under the law. To a certain extent, the
private respondent can specify dates when no classes would be held. Surely,
it was not the intention of the framers of the law to allow employers to
withhold employee benefits by the simple expedient of unilaterally imposing
"no work" days and consequently avoiding compliance with the mandate of
the law for those days.chanrobles.com.ph : virtual law library
Respondents contention that "the fact of receiving a salary alone should not
be the basis of receiving ECOLA", is, likewise, without merit. Particular
attention is brought to the Implementing Rules and Regulations of Wage
Order
No.
1
to
wit.
SECTION

5.

Allowance

for

Unworked

Days.

Sec. 4. Principles in Determining Hours Worked. The following general

principles shall govern in determining whether the time spent by an
employee is considered hours worked for purposes of this Rule:chanrob1es
virtual 1aw library

"a) All covered employees whether paid on a monthly or daily basis shall be
entitled to their daily living allowance when they are paid their basic
wage."cralaw virtua1aw library
x

This provision, at once refutes the above contention. It is evident that the
intention of the law is to grant ECOLA upon the payment of basic wages.
Hence, we have the principle of "No pay, no ECOLA" the converse of which
finds application in the case at bar. Petitioners cannot be considered to be
on leave without pay so as not to be entitled to ECOLA, for, as earlier stated,
the petitioners were paid their wages in full for the months of November and
December of 1981, notwithstanding the intervening semestral break. This, in
itself, is a tacit recognition of the rather unusual state of affairs in which
teachers find themselves. Although said to be on forced leave, professors
and teachers are, nevertheless, burdened with the task of working during a
period of time supposedly available for rest and private matters. There are
papers to correct, students to evaluate, deadlines to meet, and periods
within which to submit grading reports. Although they may be considered by
the respondent to be on leave, the semestral break could not be used
effectively for the teachers own purposes for the nature of a teachers job
imposes upon him further duties which must be done during the said period
of time. Learning is a never ending process. Teachers and professors must
keep abreast of developments all the time. Teachers cannot also wait for the
opening of the next semester to begin their work. Arduous preparation is
necessary for the delicate task of educating our children. Teaching involves
not only an application of skill and an imparting of knowledge, but a
responsibility which entails self dedication and sacrifice. The task of teaching
ends not with the perceptible efforts of the petitioners members but goes
beyond the classroom: a continuum where only the visible labor is relieved
by academic intermissions. It would be most unfair for the private
respondent to consider these teachers as employees on leave without pay to
suit its purposes and, yet, in the meantime, continue availing of their
services as they prepare for the next semester or complete all of the last
semesters requirements. Furthermore, we may also by analogy apply the
principle enunciated in the Omnibus Rules Implementing the Labor Code to
wit:chanrob1es
virtual
1aw
library

"(d) The time during which an employee is inactive by reason of interruptions

in his work beyond his control shall be considered time either if the
imminence of the resumption of work requires the employees presence at

the place of work or if the interval is too brief to be utilized effectively and
gainfully in the employees own interest." (Emphasis supplied).
The petitioners members in the case at bar, are exactly in such a situation.
The semestral break scheduled is an interruption beyond petitioners control
and it cannot be used "effectively nor gainfully in the employees interest.
Thus, the semestral break may also be considered as "hours worked." For
this, the teachers are paid regular salaries and, for this, they should be
entitled to ECOLA. Not only do the teachers continue to work during this
short recess but much less do they cease to live for which the cost of living
allowance is intended. The legal principles of "No work, no pay; No pay, no
ECOLA" must necessarily give way to the purpose of the law to augment the
income of employees to enable them to cope with the harsh living conditions
brought about by inflation; and to protect employees and their wages against
the ravages brought by these conditions. Significantly, it is the commitment
of the State to protect labor and to provide means by which the difficulties
faced by the working force may best be alleviated. To submit to the
respondents interpretation of the no work, no pay policy is to defeat this
noble
purpose.
The
Constitution
and
the
law
mandate
otherwise.chanrobles.com:cralaw:red
With regard to the second issue, we are called upon to interpret and apply
Section 3 of Presidential Decree 451 to wit:chanrob1es virtual 1aw library
SEC. 3. Limitations. The increase in tuition or other school fees or other
charges as well as the new fees or charges authorized under the next
preceding
section
shall
be
subject
to
the
following
conditions:jgc:chanrobles.com.ph
"(a) That no increase in tuition or other school fees or charges shall be
approved unless sixty (60%) per centum of the proceeds is allocated for
increase in salaries or wages of the members of the faculty and all other
employees of the school concerned, and the balance for institutional
development, student assistance and extension services, and return to
investments: Provided, That in no case shall the return to investments
exceed twelve (12%) per centum of the incremental proceeds; . . ."cralaw
virtua1aw library
x

This Court had the occasion to rule squarely on this point in the very recent
case entitled, University of the East v. University of the East Faculty
Association, 117 SCRA 554. We held that:jgc:chanrobles.com.ph

"In effect, the problem posed before Us is whether or not the reference in
Section 3(a) to increase in salaries or wages of the faculty and all other
employees of the schools concerned as the first purpose to which the
incremental proceeds from authorized increases to tuition fees may be
devoted, may be construed to include allowances and benefits. In the
negative, which is the position of respondents, it would follow that such
allowances must be taken in resources of the school not derived from tuition
fees.
"Without delving into the factual issue of whether or not there could be any
such other resources, We note that among the items of second purpose
stated in provision in question is return in investment. And the law provides
only for a maximum, not a minimum. In other words, the schools may get a
return to investment of not more than 12%, but if circumstances warrant,
there is no minimum fixed by law which they should get.
"On this predicate, We are of the considered view that, if the school happen
to have no other resources to grant allowances and benefits, either
mandated by law or secured by collective bargaining, such allowances and
benefits should be charged against the return to investments referred to in
the second purpose stated in Section 3(a) of P.D. 451."cralaw virtua1aw
library
Private respondent argues that the above interpretation "disregarded the
intention and spirit of the law" which intention is clear from the "whereas"
clauses
as
follows:jgc:chanrobles.com.ph
"It is imperative that private educational institutions upgrade classroom
instruction . . . provide salary and or wage increases and other
benefits
.
.
."cralaw
virtua1aw
library
Respondent further contends that PD 451 was issued to alleviate the sad
plight of private schools, their personnel and all those directly or indirectly on
school
income
as
the
decree
was
aimed

". . . to upgrade classroom instruction by improving their facilities and bring

competent teachers in all levels of education, provide salary and or wage
increases and other benefits to their teaching, administrative, and other
personnel to keep up with the increasing cost of living." (Emphasis supplied)
Respondent overlooks the elemental principle of statutory construction that
the general statements in the whereas clauses cannot prevail over the
specific or particular statements in the law itself which define or limit the
purposes of the legislation or proscribe certain acts. True, the whereas
clauses of PD 451 provide for salary and or wage increase and other

benefits, however, the same do not delineate the source of such funds and it
is only in Section 3 which provides for the limitations wherein the intention of
the framers of the law is clearly outlined. The law is clear. The sixty (60%)
percent incremental proceeds from the tuition increase are to be devoted
entirely to wage or salary increases which means increases in basic salary.
The law cannot be construed to include allowances which are benefits over
and above the basic salaries of the employees. To charge such benefits to
the 60% incremental proceeds would be to reduce the increase in basic
salary provided by law, an increase intended also to help the teachers and
other workers tide themselves and their families over these difficult economic
times.chanrobles
virtual
lawlibrary
This Court is not guilty of usurpation of legislative functions as claimed by
the respondents. We expressed the opinion in the University of the East
case that benefits mandated by law and collective bargaining may be
charged to the 12% return on investments within the 40% incremental
proceeds of tuition increase. As admitted by respondent, we merely made
this statement as a suggestion in answer to the respondents query as to
where then, under the law, can such benefits be charged. We were merely
interpreting the meaning of the law within the confines of its provisions. The
law provides that 60% should go to wage increases and 40% to institutional
developments, student assistance, extension services, and return on
investments (ROI). Under the law, the last item ROI has flexibility sufficient to
accommodate other purposes of the law and the needs of the university. ROI
is not set aside for any one purpose of the university such as profits or
returns on investments. The amount may be used to comply with other
duties and obligations imposed by law which the university exercising
managerial prerogatives finds cannot under present circumstances, be
funded by other revenue sources. It may be applied to any other collateral
purpose of the university or invested elsewhere. Hence, the framers of the
law intended this portion of the increases in tuition fees to be a general fund
to cover up for the universitys miscellaneous expenses and, precisely, for
this reason, it was not so delimited. Besides, ROI is a return or profit over
and above the operating expenditures of the university, and still, over and
above the profits it may have had prior to the tuition increase. The earning
capacities of private educational institutions are not dependent on the
increases in tuition fees allowed by P.D. 451. Accommodation of the
allowances required by law require wise and prudent management of all the
university resources together with the incremental proceeds of tuition
increases. Cognizance should be taken of the fact that the private
respondent had, before PD 451, managed to grant all allowances required
by law. It cannot now claim that it could not afford the same, considering that
additional funds are even granted them by the law in question. We find no
compelling reason, therefore, to deviate from our previous ruling in the
University of the East case even as we take the second hard look at the

decision requested by the privateRespondent. This case was decided in

1982 when PDs 1614, 1634, 1678, and 1713 which are also the various
Presidential Decrees on ECOLA were already in force. PD 451 was
interpreted in the light of these subsequent legislations which bear upon but
do not modify nor amend, the same. We need not go beyond the ruling in the
University
of
the
East
case.
Coming now to the third issue, the respondents are of the considered view
that as evidenced by the payrolls submitted by them during the period
September 16 to September 30, 1981, the faculty members have been paid
for the extra loads. We agree with the respondents that this issue involves a
question of fact properly within the competence of the respondent NLRC to
pass upon. The findings of fact of the respondent Commission are binding
on this Court there being no indication of their being unsubstantiated by
evidence. We find no grave abuse in the findings of respondent NLRC on
this matter to warrant reversal. Assuming arguendo, however, that the
petitioners have not been paid for these extra loads, they are not entitled to
payment following the principles of "No work, no pay." This time, the rule
applies. Involved herein is a matter different from the payment of ECOLA
under the first issue. We are now concerned with extra, not regular loads for
which the petitioners are paid regular salaries every month regardless of the
number of working days or hours in such a month. Extra loads should be
paid for only when actually performed by the employee. Compensation is
based, therefore, on actual work done and on the number of hours and days
spent over and beyond their regular hours of duty. Since there was no work
on September 21, 1981, it would now be unfair to grant petitioners demand
for extra wages on that day.chanrobles law library : red
Finally, disposing of the respondents charge of petitioners lack of legal
capacity to sue, suffice it to say that this question can no longer be raised
initially on appeal or certiorari. It is quite belated for the private respondent to
question the personality of the petitioner after it had dealt with it as a party in
the proceedings below. Furthermore, it was not disputed that the petitioner is
a duly registered labor organization and as such has the legal capacity to
sue and be sued. Registration grants it the rights of a legitimate labor
organization and recognition by the respondent University is not necessary
for it to institute this action in behalf of its members to protect their interests
and obtain relief from grievances. The issues raised by the petitioner do not
involve pure money claims but are more intricately intertwined with
conditions
of
employment.
WHEREFORE the petition for certiorari is hereby GRANTED. The private
respondent is ordered to pay its regular fulltime teachers/employees
emergency cost of living allowances for the semestral break from November
7 to December 5, 1981 and the undistributed balance of the sixty (60%)

percent incremental proceeds from tuition increases for the same schoolyear
as outlined above. The respondent Commission is sustained insofar as it
DENIED the payment of salaries for the suspended extra loads on
September
21,
1981.
SO

ORDERED.

Teehankee, Melencio-Herrera, Plana and Relova, JJ., concur.

Republic of the Philippines
SUPREME COURT
Manila

pending with the CIR, said labor union declared a strike which was ruled
down as illegal by this Court in G.R. No. L-2660 promulgated on May 30,
1950. In view of said ruling, the Union filed a "Constancia" with the Court of
Industrial Relations praying that the remaining unresolved demands of the
Union presented in their original petition, be granted. Said unresolved
demands are the following:
a. Point No. 2.
That the work performed in excess of eight (8) hours he paid an
overtime pay of 50 per cent the regular rate of pay, and that work
performed on Sundays and legal holidays be paid double the
regular rate of pay.

EN BANC
b. Point No. 7.
G.R. No. L-9265

April 29, 1957

LUZON STEVEDORING CO., INC., petitioner,

vs.
LUZON MARINE DEPARTMENT UNION and THE HON. MODESTO
CASTILLO, THE HON. JOSE S. BAUTISTA, THE HON. V. JIMENEZ
YANSON and THE HON. JUAN L. LANTING, Judges of the Court of
Industrial Relations, respondents.
Perkins, Ponce Enrile and Associates for petitioner.
Mariano B. Tuason for respondent Judge of the Court of Industrial Relations.
Sioson, Roldan and Vidanes for respondent union.
FELIX, J.:
This case involves a petition for certiorari filed by the Luzon Stevedoring Co.,
Inc., to review a resolution dated June 5, 1955, issued by the Court of
Industrial Relations. On September 5, 1955, with leave of court, a
supplemental petition was filed by said petitioner, and both petitions were
given due course by resolution of this Court of September 15, 1955. The
facts of the case may be summarized as follows:
On June 21, 1948, herein respondent Luzon Marine Department Union filed
a petition with the Court of Industrial Relations containing several demands
against herein petitioner Luzon Stevedoring Co., Inc., among which were the
petition for full recognition of the right of COLLECTIVE bargaining, close
shop and check off. However, on July 18, 1948, while the case was still

That all officers, engineers and crew members of motor tugboats

who have not received their pay corresponding to the second half of
December, 1941, be paid accordingly.
c. Point No. 11.
That Ciriaco Sarmiento, Chief Mate, M/V Marlin, Rafael Santos,
Port Engineer, and Lorenzo de la Cruz, Chief Engineer, M/V Shark
who have been suspended without justifiable cause and for union
activities, be reinstated with pay from time of suspension.
d. Point No. 12.
That all officers, engineers and crew members of the motor
tugboats "Shark", "Hearing", "Pike" and "Ray", who have been
discharged without justifiable cause and for union activities, be
reinstate with pay from time of discharge. (p. 65-66, Record).
On the basis of these demands, the case was set for hearing and the parties
submitted their respective evidence, both oral and documentary, from June
8,1951, to January 7, 1954. In one of the hearings of the case, the original
intervenor in Union de Obreros Estibadores de Filipinas (UOEF), through
counsel, moved for the withdraw al of said Union from the case, which
motion was granted by the Court.

After the parties had submitted exhaustive memoranda, the trial Judge
rendered a decision on February 10, 1955, finding that the company gave
said employees 3 free meals every day and about 20 minutes rest after each
mealtime; that they worked from 6:00 am. to 6:00 p.m. every day including
Sundays and holidays, and for work performed in excess of 8 hours, the
officers, patrons and radio operators were given overtime pay in the amount
of P4 each and P2 each for the rest of the crew up to March, 1947, and after
said date, these payments were increased to P5 and P2.50, respectively,
until the time of their separation or the strike of July 19, 1948; that when the
tugboats underwent repairs, their personnel worked only 8 hours a day
excluding Sundays and holidays; that although there was an effort on the
part of claimants to show that some had worked beyond 6:00 p.m., the
evidence was uncertain and indefinite and that demand was, therefore,
denied; that respondent Company, by the nature of its business and as
defined by law (Section 18-b of Commonwealth Act as amended) is
considered a public service operator by the Public Service Commission in its
decision in case No. 3035-C entitled "Philippine Shipowners. Association vs.
Luzon Stevedoring Co., Inc., et al."(Exh. 23), and, therefore, exempt from
paying additional remuneration or compensation for work performed on
Sundays and legal holidays, pursuant to the provisions of section 4 of
Commonwealth Act No. 444 (Manila Electric Co. vs. Public Utilities
Employees Association, 79 Phil., 408. 44 Off. Gaz., 1760); and ruled that:
For the above reasons, the aforementioned employees are only
entitled to receive overtime pay for work rendered in excess of 8
hours on ordinary days including Sundays and legal holidays.
However, the respondent company has proved to the satisfaction of
the Court that it has paid its employees for such overtime work as
shown above Exhs. 1 to 20-B).
It is, therefore, only a matter of computation whether such over time
pay by the respondent for overtime services rendered covers the
actual overtime work performed by the employees concerned
equivalent to 25 per cent which is the minimum rate fixed by law in
the absence of other proof to justify the granting of more beyond
said minimum rate.
Demands Nos. 11 and 12 regarding the reinstatement to the service of the
employees named therein were denied and respondent Company was only
or to pay the separation pay and overtime work rendered by Ciriaco
Sarmiento, Rafael Santos and Lorenzo de la Cruz, after making the

pronouncement that their separation or dismissal was not due to union

activities but for valid and legal grounds.
The Luzon Marine Department Union, through counsel, therefore, filed a
motion for reconsideration praying that the decision of February 10, 1955, be
modified so as to declare and rule that the members of the Union who had
rendered services from 6:00 a.m. to 6:00 p.m. were entitled to 4 hours'
overtime pay; that allotted to the taking of their meals should not be
deducted from the 4 hours of overtime rendered by said employees, that the
amounts of P3 and P2 set aside for the daily meals of the employees be
considered as part of their actual compensation in determining the amount
due to said employees separated from the service without just cause be paid
their unearned wages and salaries from the date of their separation up to the
time the decision in case L-2660 became final; and for such other relief as
may be just and equitable in the premises.
Luzon Stevedoring Co., Inc. also sought for the reconsideration of the
decision only in so far as it interpreted that the period during which a seaman
is aboard a tugboat shall be considered as "working time" for the purpose of
the Eight-Hour-Labor Law.
In pursuance of Section 1 of Commonwealth Act No. 103, as amended by
Commonwealth Act No. 254 and further amended by Commonwealth Act
No. 559, the motions for reconsideration were passed upon by the Court en
banc, and on June 6, 1955, a resolution modifying the decision of February
10, 1955, was issued, in the sense that the 4 hours of overtime work
included in the regular daily schedule of work from 6:00 a.m. to 6:00 p.m.
should be paid independently of the so-called "coffee-money", after making a
finding that said extra amounts were given to crew members of some
tugboats for work performed beyond 6:00 p.m. over a period of some 16
weeks. The Company's motion for reconsideration was denied.
From this resolution, the Luzon Stevedoring Co., Inc. filed the present
petition for certiorari and when the Court of Industrial Relations, acting upon
said Company's motion for clarification, ruled that the 20 minutes' rest given
the claimants after mealtime should not be deducted from the 4 hours of
overtime worked performed by said claimants, petitioner filed a supplemental
petition for certiorari dated September 5, 1955, and both petitions were given
due course by this Court.
Respondent Luzon Marine Labor Union filed within the reglementary period
a motion to dismiss, which this Court considered as an answer by resolution
of October 14, 1955, alleging that the decision, resolution and order of the

Court of Industrial Relations sought to be reviewed by petitioner do not

present any question of law, the issues in said CIR case No. 147-V being
purely factual. The respondent Judges of the Court of Industrial Relations,
represented by counsel, timely filed an answer likewise asserting that there
could have been no question of law involved or error of law committed by the
said Judges in the resolutions appealed from, same having been based on
purely findings of fact.
In this instance, petitioner does not seek to alter the lower court's finding that
the regular daily schedule of work of the members of the herein respondent
Union was from 6:00 a.m. to 6:00 p.m. Petitioner, however, submits several
"issues" which We will proceed to discuss one after the other. They are the
following:
I. Is the definition for "hours of work" as presently applied to dryland laborers
equally applicable to seamen? Or should a different criterion be applied by
virtue of the fact that the seamen's employment is completely different in
nature as well as in condition of work from that of a dryland laborer?
Petitioner questions the applicability to seamen of the interpretation given to
the phrase "hours of work" for the purpose of the Eight-Hour Labor Law,
insinuating that although the seamen concerned stayed in petitioner's
tugboats, or merely within its compound, for 12 hours, yet their work was not
continuous but interrupted or broken. It has been the consistent stand of
petitioner that while it is true that the workers herein were required to report
for work at 6:00 a.m. and were made to stay up to 6:00 p.m., their work was
not continuous and they could have left the premises of their working place
were it not for the inherent physical impossibility peculiar to the nature of
their duty which prevented them from leaving the tugboats. It is the
Company's defense that a literal interpretation of what constitutes nonworking hours would result in absurdity if made to apply to seamen aboard
vessels in bays and rivers, and We are called upon to make an interpretation
of the law on "non-working hours" that may comprehend within its embrace
not only the non-working hours of laborers employed in land jobs, but also of
that particular group of seamen, i.e., those employed in vessels plying in
rivers and bays, since admittedly there is no need for such ruling with
respect to officers and crew of interisland vessels which have aboard 2 shifts
of said men and strictly follow the 8-hour working period.
Section 1 of Commonwealth Act No. 444, known as the Eight-Hour Labor
Law, provides:

SEC. 1. The legal working day for any person employed by another
shall be of not more than eight hours daily. When the work is not
continuous, the time during which the laborer is not working AND
CAN LEAVE HIS WORKING PLACE and can rest completely, shall
not be counted.
The requisites contained in this section are further implemented by
contemporary regulations issued by administrative authorities (Sections 4
and 5 of Chapter III, Article 1, Code of Rules and Regulations to Implement
the Minimum Wage Law).
For the purposes of this case, We do not need to set for seamen a criterion
different from that applied to laborers on land, for under the provisions of the
above quoted section, the only thing to be done is to determine the meaning
and scope of the term "working place" used therein. As We understand this
term, a laborer need not leave the premises of the factory, shop or boat in
order that his period of rest shall not be counted, it being enough that he
"cease to work", may rest completely and leave or may leave at his will
the spot where he actually stays while working, to go somewhere else,
whether within or outside the premises of said factory, shop or boat. If these
requisites are complied with, the period of such rest shall not be counted.
In the case at bar We do not need to look into the nature of the work of
claimant mariners to ascertain the truth of petitioners allegation that this kind
of seamen have had enough "free time", a task of which We are relieved, for
although after an ocular inspection of the working premises of the seamen
affected in this case the trial Judge declared in his decision that the
Company gave the complaining laborers 3 free meals a day with a recess of
20 minutes after each meal, this decision was specifically amended by the
Court en banc in its Resolution of June 6, 1955, wherein it held that the
claimants herein rendered services to the Company from 6:00 a.m. to 6:00
p.m. including Sundays and holidays, which implies either that said laborers
were not given any recess at all, or that they were not allowed to leave
the spot of their working place, or that they could not rest completely. And
such resolution being on a question essentially of fact, this Court is now
precluded to review the same (Com. Act No. 103, Sec. 15, as amended by
Sec. 2 of Com. Act No. 559; Rule 44 of the Rules of Court; Kaisahan Ng Mga
Manggagawa sa Kahoy sa Filipinas vs. Gotamco Sawmill, 80 Phil., 521;
Operators, Inc. vs. Pelagio, 99 Phil, 893, and others).
II. Should a person be penalized for following an opinion issued by the
Secretary of Justice in the absence of any judicial pronouncement
whatsoever?

Petitioner cites Opinion No. 247, Series of 1941 of the Secretary of Justice to
a query made by the Secretary of Labor in connection with a similar subject
matter as the one involved, in this issue, but that opinion has no bearing on
the case at bar because it refers to officers and crew on boardinterisland
boats whose situation is different from that of mariners or sailors working in
small tugboats that ply along bays and rivers and have no cabins or places
for persons that man the same. Moreover, We can not pass upon this
second issue because, aside from the fact that there appears nothing on
record that would support petitioner's assertion that in its dealing with its
employees, it was guided by an opinion of the Secretary of Justice, the issue
involves a mere theoretical question.
III. When employees with full knowledge of the law, voluntarily agreed to
work for so many hours in consideration of a certain definite wage, and
continue working without any protest for a period of almost two years, is said
compensation as agreed upon legally deemed and retroactively presumed to
constitute full payment for all services rendered, including whatever overtime
wages might be due? Especially so if such wages, though received years
before the enactment of the Minimum Wage Law, were already set mostly
above said minimum wage?
IV. The members set of respondent Union having expressly manifested
acquiescence over a period of almost two years with reference to the
sufficiency of their wages and having made no protest whatsoever with
reference to said compensation does the legal and equitable principle of
estoppel operate to bar them from making a claim for, or making any
recovery of, back overtime compensation?
We are going to discuss these two issues jointly. Section 6 of
Commonwealth Act No. 444 provides:
Sec. 6. Any agreement or contract between the employer and the laborer or
employee contrary to the provisions of this Act shall be null and voidab initio.

employer to observe it, so much so that it punishes the employer for

its violation and leaves the employee 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 a claim which may cause the employer to devise a way
for exercising his right to terminate the employment.
Moreover, if the principle of estoppel and laches is to be applied, it
would bring about a situation whereby the employee or laborer, can
not expressly renounce the 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 the law by indirection.
This is the law on the matter and We certainly adhere, to it in the present
case. We deem it, however, convenient to say a few words of explanation so
that the principle enunciated herein may not lead to any misconstruction of
the law in future cases. There is no question that the right of the laborers to
overtime pay cannot be waived. But there may be cases in which the silence
of the employee or laborer who lets the time go by for quite a long period
without claiming or asserting his right to overtime compensation may favor
the inference that he has not worked any such overtime or that his extra
work has been duly compensated. But this is not so in the case at bar. The
complaining laborers have declared that long before the filing of this case,
they had informed Mr. Martinez, a sort of overseer of the petitioner, that they
had been working overtime and claiming the corresponding compensation
therefor, and there is nothing on record to show that the claimants, at least
the majority of them, had received wages in excess of the minimum wage
later provided by Republic Act No. 602, approved April 6, 1951. On the
contrary, in the decision of the trial Judge, it appears that 34 out of the 58
claimants received salaries less than the minimum wage authorized by said
Minimum Wage Law, to wit:

Per month

In the case of the Manila Terminal Co. vs. Court of Industrial Relations et al.,
91 Phil., 625, 48 Off. Gaz., 2725, this Court held:
The principles of estoppel and laches cannot be, invoked against
employees or laborers in an action for the recovery of
compensation for past overtime work. 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

1. Ambrosio Taada ..
but after passing the examinations
his wages were increased to P225 per
month;

oiler

P82.50

2. Patricio Santiago ..
but after passing the examinations
his wages were increased to P225 per
month;

3. Fidelino Villanueva

quartermaster

oiler

82.50

11. Leonardo Patnugot

oiler

82.50

12. Bienvenido Crisostomo

oiler

82.50

13. Isidro Malabanan

cook

82.50

14. Saturnino Tumbokon

seaman

67.50

15. Bonifacio Cortez

quartermaster

82.50

16. Victorio Carillo

cook

67.50

82.50

4. Pedro Filamor
then his wage was reduced to
P67.50 per month as cook;

quartermaster

82.50

5. Emiliano Irabon .
then his wage was reduced to P60
and he stayed for 1 month only; it was
increased again to P67.50;

seaman

6. Juanito de Luna

oiler

82.50

17. Francisco Atilano

cook

67.50

7. Benigno Curambao

oiler

82.50

18. Gualberto Legaspi

seaman

67.50

8. Salvador Mercadillo

oiler

82.50

19. Numeriano Juanillo

quartermaster

82.50

9. Nicasio Sta. Lucia

cook

82.50

20. Moises Nicodemus

quartermaster

82.50

10. Damaso Arciaga

seaman

82.50

21. Arsenio Indiano

seaman

82.50

82.50

22. Ricardo Autencio

oiler

82.50

33. Baltazar Vega

seaman

67.50

23. Mateo Arciaga

seaman

67.50

34. Jose Sanchez

oiler

82.50

24. Romulo Magallanes

quartermaster

82.50

25. Antonio Belbes

seaman

67.50

26. Benjamin Aguirre

quartermaster

82.50

27. Emilio Anastasio

quartermaster

82.50

28. Baltazar Labrada

oiler

82.50

29. Emeterio Magallanes

seaman

67.50

30. Agripino Laurente

quartermaster

82.50

31. Roberto Francisco

oiler

82.50

32. Elias Matrocinio

seaman

82.50

Consequently, for lack of the necessary supporting evidence for the

petitioner, the inference referred to above cannot be drawn in this case.
V. Granting, without conceding, that any overtime pay in arrears is due, what
is the extent and rule of retro-activity with reference to overtime pay in
arrears as set forth and established by the precedents and policies of the
Court of Industrial Relations in past decisions duly affirmed by the Honorable
Supreme Court?
VI. Is the grant of a sizeable amount as back overtime wages by the Court of
Industrial Relations in consonance with the dictates of public policy and the
avowed national and government policy on economic recovery and financial
stability?
In connection with issue No. 5, petitioner advances the theory that the
computation of the overtime payment in arrears should be based from the
filing of the petition. In support of this contention, petitioner cites the case of
Gotamco Lumber Co. vs- Court of Industrial Relations, 85 Phil., 242; 47 Off.
Gaz., 3421. This case is not in point; it merely declares that Commonwealth
Act No. 444 imposes upon the employer the duty to secure the permit for
overtime work, and the latter may not therefore be heard to plead his own
negligence as exemption or defense. The employee in rendering extra
services at the request of his employer has a right to assume that the latter
has complied with the requirements of the law and therefore has obtained
the required permission from the Department of Labor (47 Off, Gaz., 3421).
The other decisions of the Court of Industrial Relations cited by petitioner, to
wit: Cases 6-V, 7-V and 8-V, Gotamco & Co., Dy Pac & Co., Inc. and D. C.
Chuan; Case 110-V, National Labor Union vs. Standard Vacuum Oil Co.;
Case No. 76-v, Dee Cho Workers, CLO vs. Dee Cho Lumber Co., and Case
No. 70-V, National Labor Union vs. Benguet Consolidated Mining Co., do not
seem to have reached this Court and to have been affirmed by Us.
It is of common occurrence that a workingman has already rendered
services in excess of the statutory period of 8 hours for some time before he

can be led or he can muster enough courage to confront his employer with a
demand for payment thereof. Fear of possible unemployment sometimes is
a very strong factor that gags the man from asserting his right under the law
and it may take him months or years before he could be made to present a
claim against his employer. To allow the workingman to be compensated
only from the date of the filing of the petition with the court would be to
penalize him for his acquiescence or silence which We have declared in the
case of the Manila Terminal Co. vs. CIR, supra, to be beyond the intent of
the law. It is not just and humane that he should be deprived of what is
lawfully his under the law, for the true intendent of Commonwealth Act No.
444 is to compensate the worker for services rendered beyond the statutory
period and this should be made to retroact to the date when such services
were actually performed.
Anent issue No. VI, petitioner questions the reasonableness of the law
providing for the grant of overtime wages. It is sufficient for Us to state here
that courts cannot go outside of the field of interpretation so as to inquire into
the motive or motives of Congress in enacting a particular piece of
legislation. This question, certainly, is not within Our province to entertain.
It may be alleged, however, that the delay in asserting the right to back
overtime compensation may cause an unreasonable or irreparable injury to
the employer, because the accumulation of such back overtime wages may
become so great that their payment might cause the bankruptcy or the
closing of the business of the employer who might not be in a position to
defray the same. Perhaps this situation may occur, but We shall not delve on
it this time because petitioner does not claim that the payment of the back
overtime wages it is ordered to pay to its claimant laborers will cause the
injury it foresees or force it to close its business, a situation which it speaks
of theoretically and in general.
VII. Should not a Court of Industrial Relations' resolution, en banc, which is
clearly unsupported in fact and in law, patently arbitrary and capricious and
absolutely devoid of sustaining reason, be declared illegal? Especially so, if
the trial court's decision which the resolution en bancreversed, is most
detailed, exhaustive and comprehensive in its findings as well as most
reasonable and legal in its conclusions? This issue was raised by petitioner
in its supplemental petition and We have this much to say. The Court of
Industrial Relations has been considered "a court of justice" (Metropolitan
Transportation Service vs. Paredes,* G.R. No. L-1232, prom. January 12,
1948), although in another case. We said that it is "more an administrative
board than a part of the integrated judicial system of the nation" (Ang Tibay
vs. Court of Industrial Relations, 69 Phil., 635). But for procedural purposes,
the Court of Industrial Relations is a court with well-defined powers vested

by the law creating it and with such other powers as generally pertain to a
court of justice (Sec. 20, Com. Act No. 103). As such, the general rule that
before a judgment becomes final, the Court that rendered the same may
alter or modify it so as to conform with the law and the evidence, is
applicable to the Court of Industrial Relations (Connel Bros. Co.(Phil.) vs.
National Labor Union, G.R. No. L-3631, prom. January 30, 1956). The law
also provides that after a judge of the Court of Industrial Relations, duly
designated by the Presiding Judge therein to hear a particular case, had
rendered a decision, any agrieved party may request for reconsideration
thereof and the judges of said Court shall sit together, the concurrence of the
3 of them being necessary for the pronouncement of a decision, order or
award (See. 1, Com. Act No. 103). It was in virtue of these rules and upon
motions for reconsideration presented by both parties that resolution subject
of the present petition was issued, the Court en banc finding it necessary to
modify a part of the decision of February 10, 1955, which is clearly within its
power to do.
On the other hand, the issue under consideration is predicated on a situation
which is not obtaining in the case at bar, for, it presupposes that the
resolutions en banc of the respondent Court "are clearly unsupported in fact
and in law, patently arbitrary and capricious and absolutely devoid of any
sustaining reason", which does not seem to be the case as a matter of fact.
Wherefore, and on the strength of the foregoing consideration, the
resolutions of the Court of Industrial Relations appealed from are hereby
affirmed, with costs against petitioner. It is so ordered.
Bengzon, Padilla, Reyes, A., Bautista Angelo, Labrador. Concepcion, Reyes,
J.B.L. and Endencia, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. Nos. 85122-24

March 22, 1991

JULIO N. CAGAMPAN, SILVINO C. VICERA, JORGE C. DE CASTRO,

JUANITO R. DE JESUS, ARNOLD J. MIRANDA, , MAXIMO O. ROSELLO
& ANICETO L. BETANA, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, & ACE MARITIME
AGENCIES, INC., respondents.
Benjamin S. David for petitioners.
De Luna, Sumnoad and Gaerlan for private respondent.
PARAS, J.:
Presented before Us for review is the decision of public respondent National
Labor Relations Commission handed down on March 16, 1988 reversing the
decision of the Philippine Oversees Employment Administration and
correspondingly dismissing the cases for lack of merit. The POEA decision
granted overtime pay to petitioners equivalent to 30% of their basic pay.
We do not dispute the facts as found by the Solicitor General. Thus:
On April 17 and 18,1985, petitioners, all seamen, entered into
separate contracts of employment with the Golden Light Ocean
Transport, Ltd., through its local agency, private respondent ACE
MARITIME AGENCIES, INC. Petitioners, with their respective
ratings and monthly salary rates, are as follows:

Juanito de Jesus

Ordinary Seaman

US$120.00

Jorge C. de Castro

Ordinary Seaman

US$160.00

Arnold Miranda

3rd Officer

US$310.00

Maximo Rosello

Cook

US$230.00

Aniceto Betana

3rd Engineer

US$400.00

Petitioners were deployed on May 7, 1985, and discharged on July

12, 1986.
Thereafter, petitioners collectively and/or individually filed complaints for nonpayment of overtime pay, vacation pay and terminal pay against private
respondent. In addition, they claimed that they were made to sign their
contracts in blank. Likewise, petitioners averred that although they agreed to
render services on board the vessel Rio Colorado managed by Golden Light
Ocean Transport, Ltd., the vessel they actually boarded was MV "SOIC I"
managed by Columbus Navigation. Two (2) petitioners, Jorge de Castro and
Juanito de Jesus, charged that although they were employed as ordinary
seamen (OS), they actually performed the work and duties of Able Seamen
(AB).
Private respondent was furnished with copies of petitioners' complaints and
summons, but it failed to file its answer within the reglementary period. Thus,
on January 12, 1987, an Order was issued declaring that private respondent
has waived its right to present evidence in its behalf and that the cases are
submitted for decision (Page 68, Records).
On August 5, 1987, the Philippine Overseas Employment Administration
(POEA) rendered a Decision dismissing petitioners' claim for terminal pay
but granted their prayer for leave pay and overtime pay. The dispositive
portion of the Decision reads:

Petitioners

Rating

Salary per month

Julio Cagampan

2nd Engineer

US$500.00

Silvino Vicera

2nd Engineer

US$800.00

IN VIEW OF THE FOREGOING, judgment is hereby rendered

ordering respondent (private respondent) Ace Maritime Agencies,
Inc. to pay the following complainants (petitioners) in the amounts
opposite their names:
1. Julio CagampanUS$583.33 plus US$2,125.00 representing
the 30% guaranteed overtime pay;

2. Silvino ViceraUS$933.33 plus US$3,400.00 representing the

30% guaranteed overtime pay;
3. Jorge de CastroUS$233.33 plus US$850.00 representing the
30% guaranteed overtime pay;
4. Juanito de JesusUS$233.33 plus US$850.00 representing the
30% guaranteed overtime pay;

Petitioners allege that respondent Commission gravely abused its discretion

or erred in deciding in favor of private respondent company by reason of the
following:
1. Respondent NLRC overlooked the fact that private respondent
company had repeatedly failed and refused to file its answer to
petitioners' complaints with their supporting documents.

5. Lauro DiongzonUS$233.33 plus US$850.00 representing the

30% guaranteed overtime pay;

2. Respondent Commission erred in reversing and setting aside the

POEA decision and correspondingly dismissing the appeal of
petitioners, allegedly in contravention of law and jurisprudence.

6. Arnold MirandaUS$455.00 plus US$1,659.50 representing the

30% guaranteed overtime pay;

Private respondent maritime company disclaims the aforesaid allegations of

petitioners through these arguments:

7. Maximo RoselloUS$303.33 plus US$1,105.00 representing the

30% guaranteed overtime pay; and

1. As borne out by the records, its former counsel attended all the
hearings before the POEA wherein he raised the basis objection
that the complaint of petitioners was so generally couched that a
more detailed pleading with supporting documents was repeatedly
requested for the latter to submit.

8. Aniceto BetanaUS$583.33 plus US$2,125.00 representing the

30% guaranteed overtime pay.
The payments represent their leave pay equivalent to their
respective salary (sic) of 35 days and should be paid in Philippine
currency at the current rate of exchange at the time of actual
payment. (pp. 81-82, Records)
Private respondent appealed from the POEA's Decision to the NLRC on
August 24, 1987. On March 16, 1988, the NLRC promulgated a Decision,
the dispositive portion of which reads:
WHEREFORE, premises considered, the appealed decision is
hereby REVERSED and SET ASIDE and another one entered
dismissing these cases for lack of merit. (p. 144, Records)
On May 8, 1988, petitioners filed an Urgent Motion for Reconsideration of
the NLRC's Decision (p. 210, Records), but the same was denied by the
NLRC for lack of merit in its Resolution dated September 12, 1988 (p. 212,
Records).
Hence, this appeal from the decision and resolution of the respondent
NLRC.

2. The NLRC never abused its discretion in arriving at assailed

decision considering that the same was based on the Memorandum
on Appeal dated August 14, 1987 filed by private respondent.
3. In the hearings conducted by respondent Commission, all the
arguments of both parties were properly ventilated and considered
by said Commission in rendering its decision.
4. The Labor Code basically provides that the rules of evidence
prevailing in courts of law or equity shall not be controlling and it is
the spirit and intention of the Code that the Commission and its
members and Labor Arbiters should use every and an reasonable
means to ascertain the facts in each case speedily and objectively
and without regard to technicalities of law and procedure, all in the
interest of due process.
5. Petitioners' motion for reconsideration of the NLRC decision did
not invoke the merits of the case but merely raised purely technical
and procedural matters. Even assuming that private respondent,
technically speaking, waived the presentation of evidence, its
appeal to the NLRC was valid since it involved merely a correct

interpretation and clarification of certain provisions of the contract

the validity of which has never been questioned.
The Solicitor General, arguing for public respondent NLRC, contends:
1. Petitioners' assumption that a party who is declared to have
waived his right to present evidence also loses his right to appeal
from an adverse judgment made against him is a falsity for,
although the technical rules of evidence prevailing in the courts of
law or equity do not bind labor tribunals, even the Rules of Court
allows a party declared in default to appeal from said judgment by
attaching the propriety of the relief awarded therein.
2. The NLRC did not abuse its discretion in the rendition of subject
decision because the evidence presented by petitioners in support
of their complaint is by itself sufficient to back up the decision. The
issue of the disallowance of overtime pay stems from an
interpretation of particular provisions of the employment contract.
We cannot sustain petitioners' position.
The failure of respondent to submit its responsive pleading was not fatal as
to invalidate its case before the Phil. Overseas Employment Authority.
Evidently, such formal or technical defect was rectified by the fact that the
POEA proceeded with the hearings on the case where both parties were
given sufficient leeway to ventilate their cases.
Petitioners' manifest pursuit of their claims before the POEA in the absence
of the answer produced the effect of condoning the failure of private
respondent to submit the said answer. Their submission to the POEA's
authority without questioning its jurisdiction to continue the hearings further
strengthens the fact that the alleged technical defect had already been
cured. After all, what is there to complain of when the POEA handed down a
decision favorable to petitioners with the allowance of the latter's leave pay
and overtime pay.
Notably, it was only when private respondent appealed the NLRC decision to
this Court that petitioners suddenly unearth the issue of private respondent's
default in the POEA case. Had the decision favoring them not been reversed
by the NLRC, petitioners could have just clammed up. They resorted to
bringing up a technical, not a substantial, defect in their desperate attempt to
sway the Court's decision in their favor.

Private respondent has pointedly argued that the NLRC anchored its
decision primarily upon the Memorandum on Appeal.1wphi1 In the case of
Manila Doctors Hospital v. NLRC (153 SCRA 262) this Court ruled that the
National Labor Relations Commission and the Labor Arbiter have authority
under the Labor Code to decide a case based on the position papers and
documents submitted without resorting to the technical rules of evidence.
On the issue of whether or not petitioners should be entitled to terminal
pay, We sustain the finding of respondent NLRC that petitioners were
actually paid more than the amounts fixed in their employment contracts.
The pertinent portion of the NLRC decision reads as follows.
On this award for leave pay to the complainants (petitioners),
the (private) respondent maintains that the actually they were paid
much more than what they were legally entitled to under their
contract. This fact has not been disputed by the complainants
(petitioners.) Thus, as mentioned in (private) respondent's
Memorandum on Appeal dated 14 August 1987, their overpayment
is more than enough and sufficient to offset whatever claims for
leave pay they filed in this case and for which the POEA favorably
considered in their favor. For complainant (petitioner) Aniceto
Betana, it appears that under the crew contract his monthly salary
was US$400 while he was overpaid by US$100 as he actually
received US$500. In fine, Betana had received at least US1,400
excess salary for a period of fourteen (14) months which was the
period of his employment. In the case of complainant
(petitioner) Jorge C. de Castro his stipulated monthly pay was
US$160 but he actually received a monthly pay of US$200 or an
overpayment of US$560 for the same period of service. For
complainant (petitioner) Juanito R. de Jesus, his overpayment is
US$1120. Complainant (petitioner) Arnold J. Miranda has also the
same amount of excess payment as de Jesus. Indeed, We cannot
simply ignore this material fact. It is our duty to prevent a
miscarriage of justice for if We sustain the award for leave pay in
the face of undisputed facts that the complainants (petitioners) were
even paid much more than what they should receive by way of
leave pay, then they would be enriching themselves at the expense
of others. Accordingly, justice and equity compel Us to deny this
award.
Even as the denial of petitioners' terminal pay by the NLRC has been
justified, such denial should not have been applied to petitioners Julio
Cagampan and Silvino Vicera. For, a deeper scrutiny of the records by the
Solicitor General has revealed that the fact of overpayment does not cover

the aforenamed petitioners since the amounts awarded them were equal
only to the amounts stipulated in the crew contracts. Since petitioners
Cagampan and Vicera were not overpaid by the company, they should be
paid the amounts of US$583.33 and US$933.33, respectively. Further
examination by the Solicitor General shows that petitioner Maximo Rosello
was also overpaid in the amount of US$420.00.
Hence, with respect to petitioners Cagampan and Vicera, the NLRC decision
must be modified correspondingly.
As regards the question of overtime pay, the NLRC cannot be faulted for
disallowing the payment of said pay because it merely straightened out the
distorted interpretation asserted by petitioners and defined the correct
interpretation of the provision on overtime pay embodied in the contract
conformably with settled doctrines on the matter. Notably, the NLRC ruling
on the disallowance of overtime pay is ably supported by the fact that
petitioners never produced any proof of actual performance of overtime
work.
Petitioners have conveniently adopted the view that the "guaranteed or fixed
overtime pay of 30% of the basic salary per month" embodied in their
employment contract should be awarded to them as part of a "package
benefit." They have theorized that even without sufficient evidence of actual
rendition of overtime work, they would automatically be entitled to overtime
pay. Their theory is erroneous for being illogical and unrealistic. Their
thinking even runs counter to the intention behind the provision. The contract
provision means that the fixed overtime pay of 30% would be the basis for
computing the overtime pay if and when overtime work would be rendered.
Simply, stated, the rendition of overtime work and the submission of
sufficient proof that said work was actually performed are conditions to be
satisfied before a seaman could be entitled to overtime pay which should be
computed on the basis of 30% of the basic monthly salary. In short, the
contract provision guarantees the right to overtime pay but the entitlement to
such benefit must first be established. Realistically speaking, a seaman, by
the very nature of his job, stays on board a ship or vessel beyond the regular
eight-hour work schedule. For the employer to give him overtime pay for the
extra hours when he might be sleeping or attending to his personal chores or
even just lulling away his time would be extremely unfair and unreasonable.
We already resolved the question of overtime pay of a worker aboard a
vessel in the case of National Shipyards and Steel Corporation v. CIR (3
SCRA 890). We ruled:

We can not agree with the Court below that respondent Malondras
should be paid overtime compensation for every hour in excess of
the regular working hours that he was on board his vessel or barge
each day, irrespective of whether or not he actually put in work
during those hours. Seamen are required to stay on board their
vessels by the very nature of their duties, and it is for this reason
that, in addition to their regular compensation, they are given free
living quarters and subsistence allowances when required to be on
board. It could not have been the purpose of our law to require their
employers to pay them overtime even when they are not actually
working; otherwise, every sailor on board a vessel would be entitled
to overtime for sixteen hours each day, even if he spent all those
hours resting or sleeping in his bunk, after his regular tour of
duty. The correct criterion in determining whether or not sailors are
entitled to overtime pay is not, therefore, whether they were on
board and can not leave ship beyond the regular eight working
hours a day, but whether they actually rendered service in excess
of said number of hours. (Emphasis supplied)
The aforequoted ruling is a reiteration of Our resolution in Luzon
Stevedoring Co., Inc. vs. Luzon Marine Department Union, et al. (G.R. No.
9265, April 29, 1957).
WHEREFORE, the decision of the NLRC is hereby AFFIRMED with the
modification that petitioners Cagampan and Vicera are awarded their leave
pay according to the terms of the contract.
SO ORDERED.
Melencio-Herrera, Padilla, Sarmiento and Regalado, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-15422

November 30, 1962

NATIONAL DEVELOPMENT COMPANY, petitioner,

vs.
COURT OF INDUSTRIAL RELATIONS and NATIONAL TEXTILE
WORKERS UNION, respondents.
Government Corporate Counsel Simeon M. Gopengco and Lorenzo R.
Mosqueda for petitioner.
Eulogio R. Lerum for respondent National Textile Workers Union.
Mariano B. Tuason for respondent Court of Industrial Relations.
REGALA, J.:
This is a case for review from the Court of Industrial Relations. The pertinent
facts are the following:
At the National Development Co., a government-owned and controlled
corporation, there were four shifts of work. One shift was from 8 a.m. to 4
p.m., while the three other shifts were from 6 a.m. to 2 p.m; then from 2 p.m.
to 10 p.m. and, finally, from 10 p.m. to 6 a.m. In each shift, there was a onehour mealtime period, to wit: From (1) 11 a.m. to 12 noon for those working
between 6 a.m. and 2 p.m. and from (2) 7 p.m. to 8 p.m. for those working
between 2 p.m. and 10 p.m.
The records disclose that although there was a one-hour mealtime,
petitioner nevertheless credited the workers with eight hours of work for each
shift and paid them for the same number of hours. However, since 1953,
whenever workers in one shift were required to continue working until the
next shift, petitioner instead of crediting them with eight hours of overtime
work, has been paying them for six hours only, petitioner that the two hours
corresponding to the mealtime periods should not be included in computing
compensation. On the other hand, respondent National Textile Workers
Union whose members are employed at the NDC, maintained the opposite

view and asked the Court of Industrial Relations to order the payment of
additional overtime pay corresponding to the mealtime periods.
After hearing, Judge Arsenio I. Martinez of the CIR issued an order dated
March 19, 1959, holding that mealtime should be counted in the
determination of overtime work and accordingly ordered petitioner to pay
P101,407.96 by way of overtime compensation. Petitioner filed a motion for
reconsideration but the same was dismissed by the CIR en banc on the
ground that petitioner failed to furnish the union a copy of its motion.
Thereafter, petitioner appealed to this Court, contending, first, that the CIR
has no jurisdiction over claims for overtime compensation and, secondary
that the CIR did not make "a correct appraisal of the facts, in the light of the
evidence" in holding that mealtime periods should be included in overtime
work because workers could not leave their places of work and rest
completely during those hours.
In support of its contention that the CIR lost its jurisdiction over claims for
overtime pay upon the enactment of the Industrial Peace Act (Republic Act
No. 875), petitioner cites a number of decisions of this Court. On May 23,
1960, however, We ruled in Price Stabilization Corp. v. Court of Industrial
Relations, et al., G.R. No. L-13206, that
Analyzing these cases, the underlying principle, it will be noted in all
of them, though not stated in express terms, is that where the
employer-employee relationship is still existing or is sought to be
reestablished because of its wrongful severance, (as where the
employee seeks reinstatement) the Court of Industrial Relations
has jurisdiction over all claims arising out of, or in connection with
the employment, such as those related to the Minimum Wage Law
and the Eight-Hour Labor Law. After the termination of their
relationship and no reinstatement is sought, such claims become
mere money claims, and come within the jurisdiction of the regular
courts,
We are aware that in 2 cases, some statements implying a different
view have been made, but we now hold and declare the principle
set forth in the next preceding paragraph as the one governing all
cases of this nature.

This has been the constant doctrine of this Court since May 23, 1960.1
A more recent definition of the jurisdiction of the CIR is found in Campos, et
al. v. Manila Railroad Co., et al., G.R. No. L-17905, May 25, 1962, in which
We held that, for such jurisdiction to come into play, the following requisites
must be complied with: (a) there must exist between the parties an
employer-employee relationship or the claimant must seek his
reinstatement; and (b) the controversy must relate to a case certified by the
President to the CIR as one involving national interest, or must arise either
under the Eight-Hour Labor Law, or under the Minimum Wage Law. In
default of any of these circumstances, the claim becomes a mere money
claim that comes under the jurisdiction of the regular courts. Here, petitioner
does not deny the existence of an employer-employee relationship between
it and the members of the union. Neither is there any question that the claim
is based on the Eight-Hour Labor Law (Com. Act No. 444, as amended). We
therefore rule in favor of the jurisdiction of the CIR over the present claim.
The other issue raised in the appeal is whether or not, on the basis of the
evidence, the mealtime breaks should be considered working time under the
following provision of the law;
The legal working day for any person employed by another shall be
of not more than eight hours daily. When the work is not
continuous, the time during which the laborer is not working and
can leave his working place and can rest completely shall not be
counted. (Sec. 1, Com. Act No. 444, as amended. Emphasis ours.)
It will be noted that, under the law, the idle time that an employee may spend
for resting and during which he may leave the spot or place of work though
not the premises2 of his employer, is not counted as working time only where
the work is broken or is not continuous.
The determination as to whether work is continuous or not is mainly one of
fact which We shall not review as long as the same is supported by
evidence. (Sec. 15, Com. Act No. 103, as amended, Philippine Newspaper
Guild v. Evening News, Inc., 86 Phil. 303).
That is why We brushed aside petitioner's contention in one case that
workers who worked under a 6 a.m. to 6 p.m. schedule had enough "free
time" and therefore should not be credited with four hours of overtime and

held that the finding of the CIR "that claimants herein rendered services to
the Company from 6:00 a.m. to 6:00 p.m. including Sundays and holidays, . .
. implies either that they were not allowed to leave the spot of their working
place, or that they could not rest completely" (Luzon Stevedoring Co., Inc. v.
Luzon Marine Department Union, et al., G.R. No. L-9265, April 29, 1957).
Indeed, it has been said that no general rule can be laid down is to what
constitutes compensable work, rather the question is one of fact depending
upon particular circumstances, to be determined by the controverted in
cases. (31 Am. Jurisdiction Sec. 626 pp. 878.)
In this case, the CIR's finding that work in the petitioner company was
continuous and did not permit employees and laborers to rest completely is
not without basis in evidence and following our earlier rulings, shall not
disturb the same. Thus, the CIR found:
While it may be correct to say that it is well-high impossible for an
employee to work while he is eating, yet under Section 1 of Com.
Act No. 444 such a time for eating can be segregated or deducted
from his work, if the same is continuous and the employee can
leave his working place rest completely. The time cards show that
the work was continuous and without interruption. There is also the
evidence adduced by the petitioner that the pertinent employees
can freely leave their working place nor rest completely. There is
furthermore the aspect that during the period covered the
computation the work was on a 24-hour basis and previously stated
divided into shifts.
From these facts, the CIR correctly concluded that work in petitioner
company was continuous and therefore the mealtime breaks should be
counted as working time for purposes of overtime compensation.
Petitioner gives an eight-hour credit to its employees who work a single shift
say from 6 a.m. to 2 p.m. Why cannot it credit them sixteen hours should
they work in two shifts?
There is another reason why this appeal should dismissed and that is that
there is no decision by the CIR en banc from which petitioner can appeal to
this Court. As already indicated above, the records show that petitioner's
motion for reconsideration of the order of March 19, 1959 was dismissed by

the CIR en banc because of petitioner's failure to serve a copy of the same
on the union.
Section 15 of the rules of the CIR, in relation to Section 1 of Commonwealth
Act No. 103, states:
The movant shall file the motion (for reconsideration), in six copies
within five (5) days from the date on which he receives notice of the
order or decision, object of the motion for reconsideration, the same
to be verified under oath with respect to the correctness of the
allegations of fact, and serving a copy thereof personally or by
registered mail, on the adverse party. The latter may file an answer,
in six (6) copies, duly verified under oath. (Emphasis ours.)
In one case (Bien, et al. v. Castillo, etc., et al., G.R. No. L-7428, May 24,
1955), We sustained the dismissal of a motion for reconsideration filed
outside of the period provided in the rules of the CIR. A motion for
reconsideration, a copy of which has not been served on the adverse party
as required by the rules, stands on the same footing. For "in the very nature
of things, a motion for reconsideration against a ruling or decision by one
Judge is in effect an appeal to the Court of Industrial Relations, en banc," the
purpose being "to substitute the decision or order of a collegiate court for the
ruling or decision of any judge." The provision in Commonwealth Act No. 103
authorizing the presentation of a motion for reconsideration of a decision or
order of the judge to the CIR, en banc and not direct appeal therefore to this
Court, is also in accord with the principal of exhaustion of administrative
remedies before resort can be made to this Court. (Broce, et al., v. The Court
of Industrial Relations, et al., G.R. No. L-12367, October 29, 1959).
Petitioner's motion for reconsideration having been dismissed for its failure
to serve a copy of the same on the union, there is no decision of the CIR en
banc that petitioner can bring to this Court for review.
WHEREFORE, the order of March 19, 1959 and the resolution of April 27,
1959 are hereby affirmed and the appeal is dismissed, without
pronouncement as to costs.
Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera,
Paredes,
Dizon
and
Makalintal concur.
Bengzon, C.J., took no part.

Republic of the Philippines

SUPREME COURT
Baguio City

RE: NEW WORK SCHEDULE

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

FIRST DIVISION
7:45 A.M. 4:45 P.M. (Monday to Friday)
7:45 A.M. 11:45 A.M. (Saturday).
G.R. No. 119205 April 15, 1998
Coffee break time will be ten minutes only anytime between:
SIME DARBY PILIPINAS, INC. petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (2ND DIVISION) and
SIME DARBY SALARIED EMPLOYEES ASSOCIATION (ALUTUCP), respondents.

9:30 A.M. 10:30 A.M. and

2:30 P.M. 3:30 P.M.
Lunch break will be between:

BELLOSILLO, J.:
Is the act of management in revising the work schedule of its employees and
discarding their paid lunch break constitutive of unfair labor practice?
Sime Darby Pilipinas, Inc., petitioner, is engaged in the manufacture of
automotive tires, tubes and other rubber products. Sime Darby Salaried
Employees Association (ALU-TUCP), private respondent, is an association
of monthly salaried employees of petitioner at its Marikina factory. Prior to
the present controversy, all company factory workers in Marikina including
members of private respondent union worked from 7:45 a.m.to 3:45 p.m.
with a 30-minute paid "on call" lunch break.
On 14 August 1992 petitioner issued a memorandum to all factory-based
employees advising all its monthly salaried employees in its Marikina Tire
Plant, except those in the Warehouse and Quality Assurance Department
working on shifts, a change in work schedule effective 14 September 1992
thus
TO: ALL FACTORY-BASED EMPLOYEES

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

Excluded from the above schedule are the Warehouse and QA
employees who are on shifting. Their work and break time
schedules will be maintained as it is now. 1
Since private respondent felt affected adversely by the change in the work
schedule and discontinuance of the 30-minute paid "on call" lunch break, it
filed on behalf of its members a complaint with the Labor Arbiter for unfair
labor practice, discrimination and evasion of liability pursuant to the
resolution
of
this
Court
in Sime
Darby
International
Tire
Co., Inc. v. NLRC. 2 However, the Labor Arbiter dismissed the complaint on
the ground that the change in the work schedule and the elimination of the
30-minute paid lunch break of the factory workers constituted a valid
exercise of management prerogative and that the new work schedule, break
time and one-hour lunch break did not have the effect of diminishing the
benefits granted to factory workers as the working time did not exceed eight
(8) hours.
The Labor Arbiter further held that the factory workers would be unjustly
enriched if they continued to be paid during their lunch break even if they
were no longer "on call" or required to work during the break. He also ruled

that the decision in the earlier Sime Darby case 3 was not applicable to the
instant case because the former involved discrimination of certain
employees who were not paid for their 30-minute lunch break while the rest
of the factory workers were paid; hence, this Court ordered that the
discriminated employees be similarly paid the additional compensation for
their lunch break.
Private respondent appealed to respondent National Labor Relations
Commission (NLRC) which sustained the Labor Arbiter and dismissed the
appeal. 4 However, upon motion for reconsideration by private respondent,
the NLRC, this time with two (2) new commissioners replacing those who
earlier retired, reversed its earlier decision of 20 April 1994 as well as the
decision of the Labor Arbiter. 5 The NLRC considered the decision of this
Court in the Sime Darby case of 1990 as the law of the case wherein
petitioner was ordered to pay "the money value of these covered employees
deprived of lunch and/or working time breaks." The public respondent
declared that the new work schedule deprived the employees of the benefits
of a time-honored company practice of providing its employees a 30-minute
paid lunch break resulting in an unjust diminution of company privileges
prohibited by Art. 100 of the Labor Code, as amended. Hence, this petition
alleging that public respondent committed grave abuse of discretion
amounting to lack or excess of jurisdiction: (a) in ruling that petitioner
committed unfair labor practice in the implementation of the change in the
work schedule of its employees from 7:45 a.m. 3:45 p.m. to 7:45 a.m.
4:45 p.m. with one-hour lunch break from 12:00 nn to 1:00 p.m.; (b) in
holding that there was diminution of benefits when the 30-minute paid lunch
break was eliminated; (c) in failing to consider that in the earlier Sime Darby
case affirming the decision of the NLRC, petitioner was authorized to
discontinue the practice of having a 30-minute paid lunch break should it
decide to do so; and, (d) in ignoring petitioner's inherent management
prerogative of determining and fixing the work schedule of its employees
which is expressly recognized in the collective bargaining agreement
between petitioner and private respondent.
The Office of the Solicitor General filed in a lieu of comment a manifestation
and motion recommending that the petitioner be granted, alleging that the 14
August 1992 memorandum which contained the new work schedule was not
discriminatory of the union members nor did it constitute unfair labor practice
on the part of petitioner.

We agree, hence, we sustain petitioner. The right to fix the work schedules
of the employees rests principally on their employer. In the instant case
petitioner, as the employer, cites as reason for the adjustment the efficient
conduct of its business operations and its improved production. 6It
rationalizes that while the old work schedule included a 30-minute paid lunch
break, the employees could be called upon to do jobs during that period as
they were "on call." Even if denominated as lunch break, this period could
very well be considered as working time because the factory employees
were required to work if necessary and were paid accordingly for working.
With the new work schedule, the employees are now given a one-hour lunch
break without any interruption from their employer. For a full one-hour
undisturbed lunch break, the employees can freely and effectively use this
hour not only for eating but also for their rest and comfort which are
conducive to more efficiency and better performance in their work. Since the
employees are no longer required to work during this one-hour lunch break,
there is no more need for them to be compensated for this period. We agree
with the Labor Arbiter that the new work schedule fully complies with the
daily work period of eight (8) hours without violating the Labor
Code. 7 Besides, the new schedule applies to all employees in the factory
similarly situated whether they are union members or not. 8
Consequently, it was grave abuse of discretion for public respondent to
equate the earlier Sime Darby case 9 with the facts obtaining in this case.
That ruling in the former case is not applicable here. The issue in that case
involved the matter of granting lunch breaks to certain employees while
depriving the other employees of such breaks. This Court affirmed in that
case the NLRC's finding that such act of management was discriminatory
and constituted unfair labor practice.
The case before us does not pertain to any controversy involving
discrimination of employees but only the issue of whether the change of
work schedule, which management deems necessary to increase
production, constitutes unfair labor practice. As shown by the records, the
change effected by management with regard to working time is made to
apply to all factory employees engaged in the same line of work whether or
not they are members of private respondent union. Hence, it cannot be said
that the new scheme adopted by management prejudices the right of private
respondent to self-organization.
Every business enterprise endeavors to increase its profits. In the process, it
may devise means to attain that goal. Even as the law is solicitous of the

welfare of the employees, it must also protect the right of an employer to

exercise what are clearly management prerogatives. 10 Thus, management is
free to regulate, according to its own discretion and judgment, all aspects of
employment, including hiring, work assignments, working methods, time,
place and manner of work, processes to be followed, supervision of workers,
working regulations, transfer of employees, work supervision, lay off of
workers and discipline, dismissal and recall of workers. 11 Further,
management retains the prerogative, whenever exigencies of the service so
require, to change the working hours of its employees. So long as such
prerogative is exercised in good faith for the advancement of the employer's
interest and not for the purpose of defeating or circumventing the rights of
the employees under special laws or under valid agreements, this Court will
uphold such exercise. 12
While the Constitution is committed to the policy of social justice and the
protection of the working class, it should not be supposed that every dispute
will be automatically decided in favor of labor. Management also has rights
which, as such, are entitled to respect and enforcement in the interest of
simple fair play. Although this Court has inclined more often than not toward
the worker and has upheld his cause in his conflicts with the employer, such
favoritism has not blinded the Court to the rule that justice is in every case
for the deserving, to be dispensed in the light of the established facts and
the applicable law and doctrine. 13
WHEREFORE, the Petition is GRANTED. The Resolution of the National
Labor Relations Commission dated 29 November 1994 is SET ASIDE and
the decision of the Labor Arbiter dated 26 November 1993 dismissing the
complaint against petitioner for unfair labor practice is AFFIRMED.
SO ORDERED.
Davide, Jr., Vitug, Panganiban and Quisumbing, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

Januario Referente and Oscar Echalar to their former

positions with back salaries; and, as against the
respondent union, for its disestablishment and the refund
of all monies it had collected from petitioners.

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

In separate motions, respondent management and

respondent union move to dismiss, the first on the ground
that:

MERCURY DRUG CO., INC., petitioner,

vs.
NARDO DAYAO, ET AL., respondents,

I. The petition states no cause of action.

Caparas & Ilagan for petitioner.

Gerardo P. Cabo Chan and Elias Banzali for respondents.

GUTIERREZ, JR., J.:

This is a petition for review on certiorari of the decision of the Court of
Industrial Relations dated March 30, 1968 in Case No. 1926-V and the
Resolution of the Court en banc dated July 6, 1968 denying two separate
motions for reconsideration filed by petitioners and respondents.
The factual background of Case No. 1926-V is summarized by the
respondent Court of Industrial Relations as follows:
This is a verified petition dated March 17, 1964 which was
subsequently amended on July 31, 1964 filed by Nardo
Dayao and 70 others against Mercury Drug Co., Inc.,
and/or Mariano Que, President & General Manager, and
Mercury Drug Co., Inc., Employees Association praying,
with respect to respondent corporation and its president
and general manager: 1) payment of their unpaid back
wages for work done on Sundays and legal holidays plus
25c/c additional compensation from date of their
employment up to June 30, 1962; 2) payment of extra
compensation on work done at night; 3) reinstatement of

II. This Court has no jurisdiction over the subject of the

claims of petitioners Januario Referente and Oscar
Echalar.
III. There is another action pending between the same
parties, namely, Mercury Drug Co., Inc., and/or Mariano
Que and Nardo Dayao.
while on the other hand, the second alleges that this Court has no
jurisdiction over the acts complained of against the respondent union.
For reasons stated in the Order dated March 24, 1965, two
Court resolved the motions to dismiss, as follows:
1. Ground No. 1 of management's motion to dismiss was
denied for lack of merit.
2. Its second ground was found meritorious and,
accordingly Januario Referente and Oscar Echalar were
dropped as party petitioners in this case.
3. The third ground was denied, holding that there still
exists the employer- employee relationship between Nardo
Dayao and the management.
4. With respect to the fourth ground, the Court held that on
the basis of section 7-A of C.A. No. 444, as amended by
R.A. No. 1993, 'it can be safely said that,

counting backward the three (3) year prescriptive period

from the date of the filing of the instant petition - March 20,
1964 - all-of petitioners' claims have not yet prescribed.'
5. In so far as respondent union's motion is concerned, the
Court held that 'petitioners' cause of action against the
respondent Association should be dismissed without
prejudice to the refiling of the same as an unfair labor
practice case.'
Only the respondent management moved to reconsider
the Order of March 24, 1965 but the same was denied by
the Court en banc in a resolution dated August 26, 1965.
Respondent submitted an answer to the amended petition
which was subsequently amended on January 6, 1966,
containing some admissions and some denials of the
material averments of the amended petition. By way of
affirmative and special defenses,, respondents alleged
that petitioners have no cause of action against Mariano
Que because their employer respondent Mercury Drug
Company, Inc., an existing corporation which has a
separate and distinct personality from its incorporators
stockholders and/or officer, that the company being a
service enterprise is excluded from the coverage of the
Eight Hour Labor Law, as amended; that no court has the
power to set wages, rates of pay, hours of employment, or
other conditions of employment to the extent of
disregarding an agreement thereon between the
respondent company and the petitioners, and of fixing
night differential wages; that the petitioners were fully paid
for services rendered under the terms and conditions of
the individual contracts of employment; that the petition
having been verified by only three of the petitioners
without showing that the others authorized the inclusion of
their names as petitioners does not confer jurisdiction to
this Court; that there is no employer-employee relationship
between management and petitioner Nardo Dayao and
that his claim has been released and/or barred by another
action and that petitioners' claims accuring before March
20, 1961 have prescribed." (Annex "P", pp. 110-112, rollo).

After hearing on the merits, the respondent court rendered its decision. The
dispositive portion of the March 30, 1968 decision reads:
IN VIEW OF THE FOREGOING, the Court hereby
resolves that:
1. The claim of the petitioners for payment of back wages
correspoding to the first four hours work rendered on every
other Sunday and first four hours on legal holidays should
be denied for lack of merit.
2. Respondent Mercury Drug Company, Inc.. is hereby
ordered to pay the sixty- nine (69) petitioners:
(a) An additional sum equivalent to 25%
of their respective basic or regular
salaries for services rendered on
Sundays and legal holidays during the
period from March 20. 1961 up to June
30, 1962; and
(b) Another additional sum or premium
equivalent to 25% of their respective
basic or regular salaries for nighttime
services rendered from March 20, 1961
up to June 30, 1962.
3. Petitioners' petition to convert them to monthly
employees should be, as it is hereby, denied for lack of
merit.
4. Respondent Mariano Que, being an officer and acted
only as an agent in behalf of the respondent corporation,
should be absolved from the money claims of herein
petitioners whose employer, according to the pleadings
and evidence, is the Mercury Drug Company,, Inc.
To expedite the computation of the money award, the
Chief Court Examiner or his authorized representative is
hereby directed to proceed to the office of the respondent

corporation at Bambang Street, Sta. Cruz, Manila, the

latter to make available to said employee its records, like
time records, payrolls and other pertinent papers, and
compute the money claims awarded in this decision and,
upon the completion thereof, to submit his report as soon
as possible for further disposition of the Court.
Not satisfied with the decision, the respondents filed a motion for its
reconsideration. The motion for reconsideration, was however, denied by the
Court en banc in its Resolution dated July 6, 1968.
Petitioner Mercury Drug Company, Inc., assigned the following errors in this
petition:
I
RESPONDENT CIR ERRED IN DECLARING THE
CONTRACTS OF EMPLOYMENT, EXHIBITS "A" AND
"B", NULL AND VOID AS BEING CONTRARY TO PUBLIC
POLICY AND IN SUSTAINING, ACCORDINGLY, PRIVATE
RESPONDENTS' CLAIMS FOR 25% SUNDAY AND
LEGAL HOLIDAY PREMIUMS BECAUSE SUCH
DECLARATION AND AWARD ARE NOT SUPPORTED BY
SUBSTANTIAL EVIDENCE, THUS INFRINGING UPON
THE CARDINAL RIGHTS OF THE PETITIONER; AND
ALSO BECAUSE THE VALIDITY OF SAID t CONTRACTS
OF EMPLOYMENT HAS NOT BEEN RAISED.
II
RESPONDENT CIR ERRED IN SUSTAINING PRIVATE
RESPONDENTS' CLAIMS FOR NIGHTTIME WORK
PREMIUMS NOT ONLY BECAUSE OF THE DECLARED
POLICY ON COLLECTIVE BARGAINING FREEDOM EX.
PRESSED IN REPUBLIC ACT 875 AND THE EXPRESS
PROHIBITION IN SECTION 7 OF SAID STATUTE, BUT
ALSO BECAUSE OF THE WAIVER OF SAID CLAIMS
AND THE TOTAL ABSENCE OF EVIDENCE THEREON.
III

RESPONDENT CIR ERRED IN MAKING AWARDS IN

FAVOR OF THE PRIVATE RESPONDENTS WHO
NEITHER GAVE EVIDENCE NOR EVEN APPEARED TO
SHOW THEIR INTEREST.
Three issues are discussed by the petitioner in its first assignment of error.
The first issue refers to its allegation that the respondent Court erred in
declaring the contracts of employment null and void and contrary to law. This
allegation is premised upon the following finding of the respondent court:
But the Court finds merit in the claim for the payment of
additional compensation for work done on Sundays and
holidays. While an employer may compel his employees to
perform service on such days, the law nevertheless
imposes upon him the obligation to pay his employees at
least 25% additional of their basic or regular salaries.
No person, firm or corporation, business
establishment or place of center of labor
shall compel an employee or laborer to
work during Sundays and legal holidays
unless he is paid an additional sum of at
least twenty-five per centum of his
regular
remuneration:
PROVIDED,
HOWEVER, That this prohibition shall
not apply to public utilities performing
some public service such as supplying
gas, electricity, power, water, or
providing means of transportation or
communication. (Section 4, C. A. No.
444) (Emphasis supplied)
Although a service enterprise, respondent company's
employees are within the coverage of C. A. No. 444, as
amended known as the Eight Hour Labor Law, for they do
not fall within the category or class of employees or
laborers excluded from its provisions. (Section 2, Ibid.)
The Court is not impressed by the argument that under the
contracts of employment the petitioners are not entitled to

such claim for the reason that the same are contrary to
law. Payment of extra or additional pay for services
rendered during Sundays and legal holidays is mandated
by law. Even assuming that the petitioners had agreed to
work on Sundays and legal holidays without any further
consideration than their monthly salaries, they are not
barred nevertheless from claiming what is due them,
because such agreement is contrary to public policy and is
declared nun and void by law.
Any agreement or contract between employer and the
laborer or employee contrary to the provisions of this Act
shall be null and void ab initio.
Under the cited statutory provision, the petitioners are
justified to receive additional amount equivalent to 25% of
their respective basic or regular salaries for work done on
Sundays and legal holidays for the period from March 20,
1961 to June 30, 1962. (Decision, pp. 119-120, rollo)

(P2,400.00), that includes the additional compensation for

work on Sundays and legal holidays.
Your firm being a Service Enterprise, you will be required
to perform work every day in a year as follows:
8 Hours work on regular days and-all special Holidays that
may be declared but with the 25% additional
compensation;
4 Hours work on every other Sundays of the month;
For any work performed in excess of the hours as above mentioned, you
shall be paid 25 % additional compensation per hour.
This appointment may be terminated without notice for cause and without
cause upon thirty days written notice.
This supersedes your appointment of July 1, 1959.

From a perusal of the foregoing statements of the respondent court, it can

be seen readily that the petitioner-company based its arguments in its first
assignment of error on the wrong premise. The contracts of employment
signed by the private respondents are on a standard form, an example of
which is that of private respondent Nardo Dayao quoted hereunder:
Mercury Drug Co.,
October 30, 1959

Inc.

Mr.
1015
Rizal Ave., Exten.

Nardo
Sta.

1580

Bambang,

Manila

Very truly yours,

MERCURY DRUG CO., INC.
(Sgd.) MARIANO QUE General Manager
ACCEPTED WITH FULL CONFORMITY:

Dayao
Catalina

Dear Mr. Dayao:

You are hereby appointed as Checker, in the Checking
Department of MERCURY DRUG CO., INC., effective July
1, 1959 and you shall receive an annual compensation the
amount of Two Thousand four hundred pesos only

(Sgd.)
NARDO
(EXH.
"A"
and
(Decision, pp. 114-115, rollo)

"l

DAYAO
")

These contracts were not declared by the respondent court null and void in
their entirety. The respondent court, on the basis of the conflicting evidence
presented by the parties, in effect: 1) rejected the theory of the petitioner
company that the 25% additional compensation claimed by the private
respondents for the four-hour work they rendered during Sundays and legal
holidays provided in their contracts of employment were covered by the

private respondents' respective monthly salaries; 2) gave credence to private

respondents', (Nardo Dayao, Ernesto Talampas and Josias Federico)
testimonies that the 25% additional compensation was not included in the
private respondents' respective monthly salaries and 3) ruled that any
agreement in a contract of employment which would exclude the 25%
additional compensation for work done during Sundays and holidays is null
and void as mandated by law.
On the second issue, the petitioner-company reiterated its stand that under
the,- respective contracts of employment of the private respondents, the
subject 25 % additional compensation had already been included in the
latter's respective monthly salaries. This contention is based on the
testimony of its lone witness, Mr. Jacinto Concepcion and pertinent exhibits.
Thus:
Exhibit A shows that for the period of October 30, 1960,
the annual compensation of private respondent Nardo
Dayao, including the additional compensation for the work
he renders during the first four (4) hours on every other
Sunday and on the eight (8) Legal Holidays at the time
was P2,400.00 or P200.00 per month. These amounts did
not represent basic salary only, but they represented the
basic daily wage of Nardo Dayao considered to be in the
amount of P7.36 x 305 ordinary working days at the time
or in the total amount of P2,144.80. So plus the amount of
P156.40 which is the equivalent of the Sunday and Legal
Holiday rate at P9.20 basic rate of P7.36 plus 25% thereof
or P1.84) x 17, the latter figure representing 13 Sundays
and 4 Legal Holidays of 8 hours each. ...
xxx xxx xxx
That the required minimum 25% Sunday and Legal
Holiday additional compensation was paid to and received
by the employees for the work they rendered on every
other Sunday and on the eight Legal Holidays for the
period October, 1959 to June 30, 1962 is further
corroborated by Exhibits 5, 6, 8, 9 and 9-A and the
testimony of Mr. Jacinto Concepcion thereon. (Brief for the
Petitioner, pp. 24, 27).

The aforesaid computations were not given credence by the respondent

court. In fact the same computations were not even mentioned in the court's
decision which shows that the court found such computations incredible. The
computations, supposedly patterned after the WAS Interpretative Bulletin
No. 2 of the Department Labor demonstrated in Exhibits "6", "7", "8", "9", and
"9-A", miserably failed to show the exact and correct annual salary as stated
in the respective contracts of employment of the respondent employees. The
figures arrived at in each case did not tally with the annual salaries on to the
employees' contracts of employment, the difference varying from P1.20 to as
much as P14.40 always against the interest of the employees. The
petitioner's defense consists of mathematical computations made after the
filing of the case in order to explain a clear attempt to make its employees
work without the extra compensation provided by law on Sundays and legal
holidays.
In not giving weight to the evidence of the petitioner company, the
respondent court sustained the private respondents' evidence to the effect
that their 25% additional compensation for work done on Sundays and Legal
Holidays were not included in their respective monthly salaries. The private
respondents presented evidence through the testimonies of Nardo Dayao,
Ernesto Talampas, and Josias Federico who are themselves among the
employees who filed the case for unfair labor practice in the respondent
court and are private respondents herein. The petitioner- company's
contention that the respondent court's conclusion on the issue of the 25%
additional compensation for work done on Sundays and legal holidays
during the first four hours that the private respondents had to work under
their respective contracts of employment was not supported by substantial
evidence is, therefore, unfounded. Much less do We find any grave abuse of
discretion on the part of the respondent court in its interpretation of the
employment contract's provision on salaries. In view of the controlling
doctrine that a grave abuse of discretion must be shown in order to warrant
our disturbing the findings of the respondent court, the reversal of the court's
endings on this matter is unwarranted. (Sanchez vs. Court of Industrial
Relations, 27 SCRA 490).
The last issue raised in the first assignment of error refers to a procedural
matter. The petitioner-company contends that ,-the question as to whether or
not the contracts of employment were null and void was not put in issue,
hence, the respondent court pursuant to the Rules of Court should have
refrained from ruling that such contracts of employment were null and void.
In this connection We restate our finding that the respondent court did not

declare the contracts of employment null and void in their entirety. Only the
objectionable features violative of law were nullified. But even granting that
the Court of Industrial Relations declared the contracts of employment wholly
void, it could do so notwithstanding the procedural objection. In Sanchez u.
Court of Industrial Relations, supra, this Court speaking through then
Justice, now Chief Justice Enrique M. Fernando, stated:
xxx xxx xxx
Moreover, petitioners appear to be oblivious of the
statutory mandate that respondent Court in the hearing,
investigation and determination of any question or
controversy and in the exercise of any of its duties or
power is to act 'according to justice and equity and
substantial merits of the case, without regard to
technicalities or legal forms and shall not be bound by any
technical rules of legal evidence' informing its mind 'in
such manner as it may deem just and equitable.' Again,
this Court has invariably accorded the most hospitable
scope to the breadth and amplitude with which such
provision is couched. So it has been from the earliest case
decided in 1939 to a 1967 decision.
Two issues are raised in the second assignment of error
by the petitioner-company. The first hinges on the
jurisdiction of the respondent court to award additional
compensation for nighttime work. Petitioner wants Us to
re- examine Our rulings on the question of nighttime work.
It contends that the respondent court has no jurisdiction to
award additional compensation for nighttime work because
of the declared policy on freedom of collective bargaining
expressed in Republic Act 875 and the express prohibition
in Section 7 of the said statute. A re- examination of the
decisions on nighttime pay differential was the focus of
attention in Rheem of the Philippines, Inc. et al., v. Ferrer,
et al (19 SCRA 130). The earliest cases cited by the
petitioner-company, Naric v. Naric Workers Union L12075, - May 29, 1959 and Philippine Engineers'
Syndicate u. Bautista, L-16440, February 29, 196.4, were
discussed lengthily. Thus -

xxx xxx xxx

2. On the claim for night differentials, no extended
discussion is necessary. To be read as controlling here is
Philippine Engineers' Syndicate, Inc. vs. Hon. Jose S.
Bautista, et al., L-16440, February 29, 1964, where this
Court, speaking thru Mr. Chief Justice Cesar Bengzon,
declared
Only one issue is raised: whether or not
upon the enactment of Republic Act 875,
the CIR lost its jurisdiction over claims
for additional compensation for regular
night work. Petitioner says that this Act
reduced the jurisdiction of respondent
court and limited it to specific cases
which this Court has defined as: ... (1)
when the labor dispute affects an
industry which is indispensable to the
national interest and is so certified by
the President to the industrial court
(Sec. 10, Republic Act 875); (2) when
the controversy refers to minimum wage
under the Minimum Wage Law
(Republic Act 602); (3) when it involves
hours of employment under the EightHour Labor Law (Commonwealth Act
444) and (4) when it involves an unfair
labor practice [Sec. 5(a), Republic Act
8751', [Paflu, et al. vs. Tan, et al., 52 Off.
Gaz, No. 13, 5836].
Petitioner insists that respondents' case
falls in none of these categories
because as held in two previous cases,
night work is not overtime but regular
work; and that respondent court's
authority to try the case cannot be
implied from its general jurisdiction and
broad powers' under Commonwealth Act
103 because Republic Act 875 precisely

curbed such powers limiting them to

certain specific litigations, beyond which
it is not permitted to act.
We believe petitioner to be in error. Its position collides
with our ruling in the Naric case [National Rice & Corn
Corp. (NARIC) vs. NARIC Workers' Union, et al., G.R. No.
L-12075, May 29, 1959] where we held;
While it is true that this Court made the
above comment in the aforementioned
case, it does not intend to convey the
Idea that work done at night cannot also
be an overtime work. The comment only
served to emphasize that the demand
which the Shell Company made upon its
laborers is not merely overtime work but
night work and so there was need to
differentiate night work from daytime
work. In fact, the company contended
that there was no law that required the
payment of additional compensation for
night work unlike an overtime work
which is covered by Commonwealth Act
No. 444 (Eight Hour Labor Law). And
this Court in that case said that while
there was no law actually requiring
payment of additional compensation for
night work, the industrial court has the
power to determine the wages that night
workers
should
receive
under
Commonwealth Act No. 103, and so it
justified the additional compensation in
the Shell case for 'hygienic, medical,
moral, cultural and sociological reasons.
xxx xxx xxx
True, in Paflu, et al. vs. Tan, et al., supra, and in a series of cases thereafter,
We held that the broad powers conferred by Commonwealth Act 103 on the
CIR may have been curtailed by Republic Act 875 which limited them to the

four categories therein expressed in line with the public policy of allowing
settlement of industrial disputes via the collective bargaining process; but
We find no cogent reason for concluding that a suit of this nature for extra
compensation for night work falls outside the domain of the industrial court.
Withal, the record does not show that the employer-employee relation
between the 64 respondents and the petitioner had ceased.
After the passage of Republic Act 875, this Court has not only upheld the
industrial court's assumption of jurisdiction over cases for salary differentials
and overtime pay [Chua Workers Union (NLU) vs. City Automotive Co., et
al., G.R. No. L- 11655, April 29, 1959; Prisco vs. CIR, et al., G.R. No. L13806, May 23, 1960] or for payment of additional compensation for work
rendered on Sundays and holidays and for night work [Nassco vs. Almin, et
al., G.R. No. L9055, November 28, 1958; Detective & Protective Bureau, Inc.
vs. Felipe Guevara, et al., G.R. No. L-8738, May 31, 1957] but has also
supported such court's ruling that work performed at night should be paid
more than work done at daytime, and that if that work is done beyond the
worker's regular hours of duty, he should also be paid additional
compensation for overtime work. [Naric vs. Naric Workers' Union. et al., G. R
No. L-12075, May 29, 1959, citing Shell Co. vs. National Labor Union, 81
Phil. 315]. Besides, to hold that this case for extra compensation now falls
beyond the powers of the industrial court to decide, would amount to a
further curtailment of the jurisdiction of said court to an extent which may
defeat the purpose of the Magna Carta to the prejudice of labor.' [Luis
Recato Dy, et al v-9. CIR, G.R. No. L-17788, May 25,1962]"
The petitioner-company's arguments on the respondent court's alleged lack
of jurisdiction over additional compensation for work done at night by the
respondents is without merit.
The other issue raised in the second assignment of error is premised on the
petitioner-company's contention that the respondent court's ruling on the
additional compensation for nighttime work is not supported by substantial
evidence.
This contention is untenable. Pertinent portions of the respondent court's
decision read:
xxx xxx xxx

There is no serious disagreement between the petitioners

and respondent management on the facts recited above.
The variance in the evidence is only with respect to the
money claims. Witnesses for petitioners declared they
worked on regular days and on every other Sunday and
also during all holidays; that for services rendered on
Sundays and holidays they were not paid for the first four
(4) hours and what they only received was the overtime
compensation corresponding to the number of hours after
or in excess of the first four hours; and that such payment
is being indicated in the overtime pay for work done in
excess of eight hours on regular working days. It is also
claimed that their nighttime services could well be seen on
their respective daily time records. .. (Emphasis supplied)
(p.116, rollo)
The respondent court's ruling on additional compensation for work done at
night is, therefore, not without evidence. Moreover, the petitioner-company
did not deny that the private respondents rendered nighttime work. In fact,
no additional evidence was necessary to prove that the private respondents
were entitled to additional compensation for whether or not they were
entitled to the same is a question of law which the respondent court
answered correctly. The "waiver rule" is not applicable in the case at bar.
Additional compensation for nighttime work is founded on public policy,
hence the same cannot be waived. (Article 6, Civil Code). On this matter, We
believe that the respondent court acted according to justice and equity and
the substantial merits of the case, without regard to technicalities or legal
forms and should be sustained.
The third assignment of error is likewise without merit. The fact that only
three of the private respondents testified in court does not adversely affect
the interests of the other respondents in the case. The ruling in Dimayuga V.
Court of Industrial Relations (G.R. No. L-0213, May 27, 1957) has been
abandoned in later rulings of this Court. In Philippine Land Air-Sea Labor
Union (PLASLU) vs. Sy Indong Company Rice And Corn Mill(11 SCRA 277)
We had occasion to re-examine the ruling in Dimayuga We stated:
The latter reversed the decision of the trial Judge as
regards the reinstatement with backwages of ... upon the
theory that this is not a class suit; that, consequently, it is
necessary and imperative that they should personally

testify and prove the charges in the complaint', and that,

having failed to do so, the decision of the trial Judge in
their favor is untenable under the rule laid down in
Dimayuga vs. Court of Industrial Relations, G.R. No. L0213 (May 27,1957).
We do not share the view taken in the resolution appealed
from. As the trial Judge correctly said, in Ms dissent from
said resolution,:
xxx xxx xxx
In the case of Sanchez v. Court of Industrial Relations, supra, this Court
stated:
To the reproach against the challenged order in the brief of
petitioners in view of only two of the seven claimants
testifying, a statement by this Court in Ormoc Sugar Co.,
Inc. vs. OSCO Workers Fraternity Labor Union would
suffice by way of refutation. Thus: "This Court fully agrees
with the respondent that quality and not quantity of
witnesses should be the primordial consideration in the
appraisal of evidence.' Barely eight days later, in another
decision, the above statement was given concrete
expression. Thus: 'The bases of the awards were not only
the respective affidavits of the claimants but the
testimonies of 24 witnesses (because 6 were not given
credence by the court below) who Identified the said 239
claimants. The contention of petitions on this point is
therefore unfounded Moveover in Philippine Land-Air-Sea
Labor Union (PLASLU) v. Sy Indong company Rice &
Corn Mill, this Court, through the present Chief Justice
rejected as untenable the theory of the Court of Industrial
Relations concerning the imperative needs of all the
claimants to testify personality and prove their charges in
the complaint. As tersely put: 'We do not share the view
taken in the resolution appealed from.
The petitioner's contention that its employees fully understood what they
signed when they entered into the contracts of employment and that they

should be bound by their voluntary commitments is anachronistic in this time

and age.
The Mercury Drug Co., Inc., maintains a chain of drugstores that are open
every day of the week and, for some stores, up to very late at night because
of the nature of the pharmaceutical retail business. The respondents knew
that they had to work Sundays and holidays and at night, not as exceptions
to the rule but as part of the regular course of employment. Presented with
contracts setting their compensation on an annual basis with an express
waiver of extra compensation for work on Sundays and holidays, the workers
did not have much choice. The private respondents were at a disadvantage
insofar as the contractual relationship was concerned. Workers in our
country do not have the luxury or freedom of declining job openings or filing
resignations even when some terms and conditions of employment are not
only onerous and inequitous but illegal. It is precisely because of this
situation that the framers of the Constitution embodied the provisions on
social justice (Section 6, Article 11) and protection to labor (Section 9, Article
I I) in the Declaration of Principles And State Policies.
It is pursuant to these constitutional mandates that the courts are ever
vigilant to protect the rights of workers who are placed in contractually
disadvantageous positions and who sign waivers or provisions contrary to
law and public policy.
WHEREFORE, the petition is hereby dismissed. The decision and resolution
appealed from are affirmed with costs against the petitioner.
SO ORDERED.
Teehankee (Chairman), Makasiar, Melencio-Herrera, Plana, Vasquez and
Relova, JJ.,concur.

NIGHT DIFFERENTIAL
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-20838

July 30, 1965

NATIONAL SHIPYARDS AND STEEL CORPORATION, petitioner,

vs.
COURT OF INDUSTRIAL RELATIONS and JOSE ABIDAY and 38
others, respondents.
Government Corporate Counsel Tomas P. Matic, Jr. and Assistant
Government Corporate Counsel Lorenzo R. Mosqueda for petitioner.
Manuel P. Calanog for respondents Jose Abiday, et al.
REGALA, J.:
The National Shipyards and Steel Corporation (hereinafter referred to as
NASSCO) seeks in this case a review, of an order of the Court of Industrial
Relations, requiring it to pay Jose Abiday and 38 other employees the
amount of P81,093.81 for overtime work.
For a background of this case, the following are the facts: NASSCO is the
owner of a number of vessels used in connection with its business of ship
building and repair. Respondents are employed as crew members of its
tugboats.
On April 15, 1957, respondents filed this case in the Court of Industrial
Relations where it was docketed as Case No. 1058-V, claiming overtime
compensation from the NASSCO. The case was submitted for decision on a
stipulation of facts of which the following form part.
4. That to meet the exigencies of the service in the performance of
the above work, petitioners (i.e., Abiday and the 38 other
employees) have to work when so required in excess of eight (8)
hours a day and/or during Sundays and legal holidays (actual

overtime service is subject to determination on the basis of the

logbook of the vessels time sheets and other pertinent records of
the respondent, i.e., NASSCO);
xxx

xxx

xxx

6. The petitioners are paid by the respondent their regular salaries

and subsistence allowance, without additional compensation for
overtime work.
On November 22, 1957, the Court of Industrial Relations issued an order
requiring NASSCO to pay respondents 25 per cent additional compensation
for work done in excess of eight hours and, for this purpose, directed its
examiner to make the computation on the basis of the log book, time sheets
and other records of the NASSCO.
The examiner submitted two reports, the first, which was filed on February
14, 1958, covering the period from January 1 to December 31, 1957, and the
second, which was filed on April 30, 1958, covering the period from January
1, 1954 to December 31, 1956, in both of which he credited respondents
with overtime work at an average of five hours a day.
These reports became the subject of review in this Court in two separate
petitions for certiorari filed by NASSCO. In G.R. No. L-13732 (NASSCO v.
CIR) decided on April 14, 1959, NASSCO challenged the jurisdiction of the
Court of Industrial Relations and raised the question of whether the order of
that court, which directed the computation of overtime pay, could be
considered a decision. The petition was dismiss for lack of merit. In G.R. No.
L-13888 (NASSCO v. CIR, decided on April 29, 1960), NASSCO raised
again the question of jurisdiction. Again the petition was dismissed, the
resolution on the first petition having become the law of the case.
On November 25, 1960, therefore, respondents filed a "petition" asking the
Court of Industrial Relations to direct its examiner to proceed with the
computation of overtime pay for the periods 1949-53 and 1958-60. This was
granted. On June 15, 1962, therefore, the examiner submitted a third report
which the Court of Industrial Relations in its order of November 27, 1962
approved. NASSCO asked for a reconsideration but the Court of Industrial
Relations en banc denied its motion. Hence this petition for review.

NASSCO'S position is that (1) there is no evidence to support the examiner's

finding that respondents rendered five hours of overtime service daily during
the periods 1949-53 and 1958-60 and (2) the Court of Industrial Relations
has no jurisdiction with respect to the claims of three of the respondents who
have ceased to be its employees.
With respect to its first contention, NASSCO avers that there is no evidence
as to the number of hours of overtime work rendered by the respondents
except the fact that they remained on board the vessels while sailing. It cites
the case of Luzon Stevedoring Co. v. Luzon Marine Department Union, G.R.
No. L-9265, April 29, 1957, in which it was held that the correct criterion in
determining whether or not sailors are entitled to overtime pay is not whether
they were on board and could not leave the ship beyond the regular eight
working hours a day but, rather, whether they actually rendered service in
excess of eight hours.
This case actually is a sequel of the first two cases already referred to above
(NASSCO v. CIR, G.R. No. L-13732, decided on April 14, 1959, and
NASSCO v. CIR, G.R. No. L-13888, decided on April 29, 1960).
The first error assigned by the petitioner that there was no evidence
submitted to support the Court's finding that respondents rendered five hours
overtime service, is not well taken. Pedro de Joya, the marine land surveyor
employed by the petitioner testified that the respondents had really worked
overtime as shown by their daily time sheets, payrolls, logbooks and other
pertinent records of the petitioner. De Joya stated that the crew of the ship or
launch of the petitioner were supposed to work on three 8-hour shifts but
they only had two men assigned on the deck, the captain and the master; in
the engine only 2 men engineers and two oilers were assigned; and in other
places in the launch or ship only two members of the crew were assigned so
that each member of the crew ordinarily worked a minimum of at least 12
hours each. He, testified further that sometimes the crew had to work more
than 12 hours due to repairs, storms and other calamities.
With regard to the second assignment of error, that the Court of Industrial
Relations has no jurisdiction with respect to the claim of three of the
respondents, this Court also believes that the same is not well taken. At the
time this case was decided by the Court of Industrial Relations the three
respondents Rodolfo Riaza, Gualberto Legaspi and Mauricio Zulueta were
actually employees of the petitioner. In fact, the first order of the court dated
November 22, 1957 granting the respondents overtime pay including the

three mentioned employees shows that to were actually working with the
petitioner, although at the time of filing of the motion dated November 25,
l960, for the continuation of the computation of overtime, they were no
longer employees of the petitioner.
Furthermore, the finding of the Court of Industrial Relations to the effect that
the said respondents had worked overtime is a finding of fact which the
Court cannot disturb if it is supported by sufficient evidence. We have
examined the records and We feel that the same is supported by evidence.
IN VIEW OF THE FOREGOING CONSIDERATIONS, the decision of the
Court of Industrial Relations is hereby sustained. Costs against the
petitioner.
Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Paredes, Dizon,
Makalintal, Bengzon, J.P., and Zaldivar, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-27761 September 30, 1981
BISIG NG MANGGAGAWA NG PHILIPPINE REFINING CO., INC., plaintiffappellants,
vs.
PHILIPPINE REFINING CO., INC., defendant-appellee.

ABAD SANTOS, J.:

This is an appeal from the decision of the Court of First Instance of Manila
dated December 8, 1966, in Civil Case No. 65082, holding that Christmas
bonus and other fringe benefits are excluded in the computation of the
overtime pay of the members of the appellant union under Section 6, Article
VI of the 1965 collective bargaining agreement which reads as follows:
Overtime pay at the rate of regular base pay plus 50%
thereof shag be paid for all work performed in excess of
eight hours on ordinary days within the work week (that is
to say, Monday to Friday).
On April 15,1966, the Bisig ng Manggagawa ng Philippine Refining
Company, Inc., as the representative union of the rank and file employees of
the Philippine Refining Co., Inc., filed with the Court of First Instance of
Manila a petition for declaratory relief praying, among others
That a declaratory judgment be rendered declaring and
adjudicating the qqqtive rights and duties of petitioner and
respon dent under the above quoted provision of their
Collective 13 - agreements and further declaring that the
Christmas bonus of one month or thirty days pay and other
de determinable benefits should be included for the

purpose of computation of the overtime pay spread

throughout the twelve months period of each year from
August, 1963 up to the present and subsequently
hereafter; and that respondent be therefore directed to pay
such differential in the overtime pay of all the employees of
the herein respondent ;
Petitioner union contended that the respondent company was under
obligation to include the employees' Christmas bonus and other fringe
benefits in the computation of their overtime pay by virtue of the ruling of this
Court in the case of NAWASA vs. NAWASA Consolidated Unions, et all G.R.
No. L-18938, August 31, 1964, 11 SCRA 766.
On May 3, 1966, the Philippine Refining Co.. Inc. filed its answer to the
petition alleging, among others, that never did the parties intend, in the 1965
collective bargaining agreement and in prior agreements, to include the
employees' Christmas bonus and other fringe benefits in the computation of
the overtime pay and that the company precisely agreed to a rate of 50%,
which is much higher than the 25% required by the Eight-Hour Labor Law
(Commonwealth Act No. 444, as amended), on the condition that in
computing the overtime pay only the "regular base pay" would be
considered. Furthermore, respondent company contended that the ruling of
this Court in the NAWASA case relative to the computation of overtime
compensation could not be applied to its employees since it was a private
corporation and not a government-owned or controlled corporation like the
NAWASA.
After the requisite pre-trial was held, the Court of First Instance of Manila
issued an order dated September 16, 1966, limiting the issues to the proper
interpretation of the above quoted provision of the 1965 collective bargaining
agreement and to the applicability to the case of the NAWASA ruling and
requiring the parties to submit evidence as to the circumstances under which
the questioned provision had been included in the agreement of 1965.
During the trial, the parties presented their respective witnesses from whose
testimonies the following facts were established: that the collective
bargaining agreements entered into between the parties before 1965 all
contained a provision similar to the aforequoted Sec. 6, Art. VI of the 1965
collective bargaining agreement; that in the enforcement of said earlier
agreements, the overtime compensation of the employees was computed on
the basis solely of their basic monthly pay, i.e., excluding the employees'

Christmas bonus and other fringe benefits; that in the negotiations which led
to the execution of the 1965 collective bargaining agreement, the matter of
the proper interpretation of the phrase "regular base pay" was discussed;
that the petitioner union demanded that the NAWASA ruling should be
applied by including the employees' Christmas bonus and other fringe
benefits in the computation of the overtime compensation; that the
respondent company refused to give in to such demand contending that
(1) the company agreed to a 5% overtime rate, which was higher than the
25% rate required by law, precisely on the condition that the same should be
computed solely on the basis of the employees' basic monthly salary,
excluding Christmas bonus and other fringe benefits; (2) the parties had the
freedom to choose the basis for computing the overtime pay provided that
the same should not be less than the minimum prescribed by law; and (3)
the NAWASA decision was inapplicable to a private corporation like the
Philippine Refining Co., Inc.; that while refusing to grant petitioner's demand,
the respondent company nevertheless agreed to submit to a court for
resolution the issue of the applicability to their case of the NAWASA ruling,
with the undertaking to abide by whatever decision the court would render;
and, that the parties agreed that, in the meantime, they would exclude the
Christmas bonus and other fringe benefits in the computation of the overtime
compensation.
On December 8, 1966, the Court of First Instance of Manila rendered a
decision the dispositive portion of which reads as follows:
IN VIEW OF THE FOREGOING, judgment is hereby
rendered, declaring that the term "regular base pay" in
Section 6, Ararticle VI of Exhibit A refers only to "regular
base pay" and does not include Christmas bonus and
other fringe benefits. Without pronouncement as to costs.
SO ORDERED.
Said court held that while the NAWASA ruling concerning the meaning of the
phrase "regular pay" of the Eight-Hour Labor Law could be applied to
employees of private corporations like the Philippine Refining Company, the
same was, nevertheless, inapplicable to the case at bar which involved the
interpretation of the phrase "regular base pay which was different from
"regular pay". It declared that "regular base pay" referred only to the basic or
monthly pay exclusive of Christmas bonus and other fringe benefits.
Furthermore, the validity of the provision of the 1965 collective bargaining

agreement concerning the computation of the employees' overtime pay on

the basis of their "regular base pay" was upheld by the court for the reason
that the same was even higher than the overtime pay prescribed by law. The
court emphasized that contracts are binding on the parties insofar as they
are not contrary to law, morals and public order.
A motion for reconsideration of the decision was filed by the petitioner union
but the same was denied in an order dated February 17, 1967. Hence, the
present appeal which raises pure questions of law, namely: (1) whether or
not the phrase "regular base pay" as used in the above-quoted provision of
the 1965 CBA includes Christmas bonus and other fringe benefits; and (2)
whether or not the stipulation in the CBA on overtime pay violates the
Nawasa doctrine if the answer to question No. I is in the negative.
We answer both questions in the negative.
The phrase "regular base pay" is clear, unequivocal and requires no
interpretation. It means regular basic pay and necessarily excludes money
received in different concepts such as Christmas bonus and other fringe
benefits. In this connection it is necessary to remember that in the
enforcement of previous collective bargaining agreements containing the
same provision of overtime pay at the rate of regular base pay plus 50@'c
thereof", the overtime compensation was invariably based only on the
regular basic pay, exclusive of Christmas bonus and other tinge benefits.
Appellant union knew all the while of such interpretation and precisely
attempted to negotiate for a provision in the subject collective bargaining
agreement that would include the Christmas bonus and other fringe benefits
in the computation of the overtime pay. Significantly, the appellee company
did not agree to change the phrase "regular base pay" as it could not
consent to the inclusion of the fringe benefits in the computation of the
overtime pay. Hence, the appellant union could not question the intended
definition of the phrase but could only claim that the same violated the
Nawasa doctrine and insist that the phrase should be redefined to conform
to said doctrine.
We are thus tasked not so much with the interpretation of the phrase
"regular base pay" in the CBA, which unquestionably excludes Christmas
bonus and other fringe benefits, but with the question of whether as
understood, the contractual stipulation violates the ruling laid down in the
Nawasa case.

The pertinent portions of the decision in the case of NAWASA vs. NAWASA
Consolidated Unions (L-18938, August 31, 1964, 11 SCRA 766, 782-783)
invoked by the appellant union read as follows:
It has been held that for purposes of computing overtime
compensation a regular wage includes all payments which
the parties have agreed shall be received during the work
week, including piece work wages, differential payments
for working at undesirable times, such as at night or on
Sundays and holidays, and the cost of board and lodging
customarily furnished the employee Walling v. YangermahReynolds Hardwork Co., 325 U.S. 419; Walling v.
Harischfeger Corp., 325 U.S. 427. The 'regular rate' of pay
also ordinarily includes incentive bonus or profit-sharing
payments made in addition to the normal basic pay (56
C.J.S., pp. 704-705), and it was also held that the higher
rate for night, Sunday and holiday work is just as much a
regular rate as the lower rate for daytime work. The higher
rate is merely an inducement to accept employment at
times which are not as desirable from a workman's
standpoint (International L. Ass'n. v. National Terminals
Corp. c.c. Wise, 50 F. Supp. 26, affirmed CCA Casbunao
v. National Terminals Corp. 139 F. 2d 853).
Respondent court, therefore, correctly included such
differential pay in computing the weekly wages of those
employees and laborers who worked seven days a week
and were continuously receiving 25% Sunday differential
for a period of three months immediately p g the
implementation of Republic Act 1880. "
The appellant union contends that by virtue of the forego. ing the Philippine
Refining Co., Inc., is under obligation to include the, employees' Christmas
bonus and other fringe benefits in the computation of their overtime
compensation which, as agreed, is "regular base pay plus 50% thereof".
The legal provisions pertinent to the subject of overtime compensation are
found in Secs. 3 and 4 of Commonwealth Act No. 444, as amended, which
read as follows:

SEC. 3. Work may be performed beyond eight hours a day

in case of actual or impending emergencies ...; but in all
such cases, the laborers and employees shall be entitled
to receive compensation for the overtime work performed
at the same rate as theirregular wages or salary, plus at
least twenty-five per centum additional.
SEC. 4. No person, firm, or corporation, business
establishment or place or center of labor shall compel an
employee or laborer to work during Sunday and legal
holidays, unless he is paid an additional sum of at
least twenty-five
per
centum
of
his
regular
renumeration (Emphasis supplied.)
Applying the aforequoted NAWASA ruling to the above provision of law, We
arrive at the following conclusion: an employers covered by said law are
under legal compulsion to grant their employees overtime compensation in
amounts not less than their basic pay and the fringe benefits regularly and
continuously received by them plus 25% thereof. This does not however
mean that agreements concerning overtime compensation should always
provide for a computation based on the employee's "regular wage or salary
i.e. regular base pay plus fringe benefits regularly and continuously received.
For it is axiomatic that in multiplication, the product is directly related to the
multiplicand the multiplier, and that the multiplicand Is inversely related to the
multiplier conviniently, the same product may be obtained despite reduction
of the multiplicand provided that the multiplier is correspondingly increased.
Conformably with the foregoing mathematical axioms there is still
compliance with the above-stated ruling despite the fact that the overtime
compensation is based only on the employee's "regular base pay" (the
multiplicand) as long as the rate of 25% (the multiplier) is increased by such
amount as to produce a result (the product) which is not less than the result
to be obtained in computing 25% of the employee's "regular wage or salary"
("regular base pay" plus fringe benefits regularly and continuously received).
In fine, the parties may agree for the payment of overtime compensation in
an amount to be determined by applying a formula other than the statutory
formula of "regular wage or qqqs plus at least twenty-five per centum
additional" provided that the result in applying the contractual formula is not
less than the result in applying said statutory formula.
In the case at bar, it is admitted that the contractual formula of "regular base
pay plus 50% thereof" yields an overtime compensation which is higher than

the result in applying the statutory formula as elaborated in the Nawasa

case. Consequently, its validity is upheld and the parties are enjoined to
accord due respect to it.
WHEREFORE, the decision appealed from is hereby affirmed in all respects.
Without pronouncement as to costs.
SO ORDERED.
Barredo (Chairman), Aquino, Concepcion Jr. and De Castro, JJ., concur.

PNB V PNB EMPLOYEES ASSOCIATION

115 SCRA 507

HELD: NO

July 30, 1982

Ratio Overtime pay is for extra effort beyond that contemplated in the
employment contract; additional pay given for any other purpose cannot be

NATURE

included in the basis for the computation of overtime pay.

Appeal from decision of the Court of Industrial Relations (CIR)

Absent a specific provision in the CBA, the bases for the computation of
overtime pay are 2 computations, namely:

FACTS
1. WON the additional pay is for extra work done or service rendered
PNB and PNB Employees Association (PEMA) had a dispute regarding the
proper computation of overtime pay. PEMA wanted the cost of living

2. WON the same is intended to be permanent and regular, not contingent

allowance (granted in 1958) and longevity pay (granted in 1961) to be

nor temporary as a given only to remedy a situation which can change any

included in the computation. PNB disagreed and the 2 parties later went

time.

before the CIR to resolve the dispute.

Reasoning
CIR decided in favor of PEMA and held that PNB should compute the
overtime pay of its employees on the basis of the sum total of the

Longevity pay cannot be included in the computation of overtime pay for

employees basic salary or wage plus cost of living allowance and longevity

the very simple reason that the contrary is expressly stipulated in the CBA,

pay. The CIR relied on the ruling in NAWASA v NAWASA Consolidated

which constitutes the law between the parties.

Unions, which held that for purposes of computing overtime compensation,

regular wage includes all payments which the parties have agreed shall be

As regards cost of living allowance, there is nothing in Commonwealth Act

received during the work week, including differentiated payments for working

444 [or the 8-hour Labor Law, now Art. 87 Labor Code] that could justify

at undesirable times, such as at night and the board and lodging customarily

PEMAs posture that it should be added to the regular wage in computing

furnished the employee. This prompted PNB to appeal, hence this case.

overtime pay. C.A. 444 prescribes that overtime work shall be paid at the
same rate as their regular wages or salary, plus at least 25% additional. The

ISSUE : WON the cost of living allowance and longevity pay should be

law did not define what is a regular wage or salary. What the law

included in the computation of overtime pay as held by the CIR

emphasized is that in addition to regular wage, there must be paid an

additional 25% of that regular wage to constitute overtime rate of pay.

**Overtime Pay Rationale Why is a laborer or employee who works beyond

Parties were thus allowed to agree on what shall be mutually considered

the regular hours of work entitled to extra compensation called, in this

regular pay from or upon which a 25% premium shall be based and added to

enlightened time, overtime pay?

makeup overtime compensation.

Verily, there can be no other reason than that he is made to work longer than
No rule of universal application to other cases may be justifiably extracted

what is commensurate with his agreed compensation for the statutorily fixed

from the NAWASA case. CIR relies on the part of the NAWASA decision

or voluntarily agreed hours of labor he is supposed to do. When he thus

where the SC cited American decisions whose legislation on overtime is at

spends additional time to his work, the effect upon him is multi- faceted; he

variance with the law in this jurisdiction. The US legislation considers work in

puts in more effort, physical and/or mental; he is delayed in going home to

excess of forty hours a week as overtime; whereas, what is generally

his family to enjoy the comforts thereof; he might have no time for relaxation,

considered overtime in the Philippines is work in excess of the regular 8

amusement or sports; he might miss important pre-arranged engagements;

hours a day. It is understandably material to refer to precedents in the US for

etc. It is thus the additional work, labor or service employed and the adverse

purposes of computing weekly wages under a 40-hour week rule, since the

effects just mentioned of his longer stay in his place of work that justify and

particular issue involved in NAWASA is the conversion of prior weekly

are the real reasons for the extra compensation that is called overtime pay.

regular earnings into daily rates without allowing diminution or addition.

**Overtime Pay Definition The additional pay for service orwork rendered or
To apply the NAWASA computation would require a different formula for

performed in excess of 8 hours a day by employees or laborers in

each and every employee. It would require reference to and continued use

employment covered by the 8 hour Labor Law [C.A. 444, now Art. 87 Labor

of individual earnings in the past, thus multiplying the administrative

Code] and not exempt from its requirements. It is computed by multiplying

difficulties of the Company. It would be cumbersome and tedious a process

the overtime hourly rate by the number of hours worked in excess of eight.

to compute overtime pay and this may again cause delays in payments,
which in turn could lead to serious disputes. To apply this mode of
computation would retard and stifle the growth of unions themselves as
Companies would be irresistibly drawn into denying, new and additional
fringe benefits, if not those already existing, for fear of bloating their
overhead expenses through overtime which, by reason of being unfixed,
becomes instead a veritable source of irritant in labor relations.

Disposition decision appealed from is REVERSED

QUITCLAIM
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-39387 June 29, 1982
PAMPANGA
SUGAR
DEVELOPMENT
CO.,
INC., petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS AND SUGAR WORKERS
ASSOCIATION, respondents.

MAKASIAR, J.:
Petitioner Pampanga Sugar Development Company, Inc. seeks the reversal
of the order dated June 6, 1974 of respondent Court of Industrial Relations
awarding to respondent Sugar Workers Association's (Union) counsel
attorney's fees equivalent to 20% of the judgment in CIR Case No. 4264ULP and ordering the lower court's Examining Division to compute the wage
and fringe benefits differentials due the 28 individual workers who did not
execute quitclaims as well as attorney's fees corresponding to 20% of the
benefits due to 53 workers who entered into agreements waiving their rights
and benefits under the decision dated December 4, 1972 in the aforecited
case; also, the setting aside of the CIR resolution of September 3, 1974
denying petitioner's motion for reconsideration of the questioned order (pp.
15 & 57, rec.).
For a better appreciation of this case, certain prefatory facts must be
recalled. Sometime in February, 1956, the workers' affiliates of respondent
Union staged a strike against petitioner company. This labor dispute was
certified by the President to the Court of Industrial Relations which was
docketed as Case No. 13-IPA. After six years, the said Court issued an order
on November 8, 1962 directing petitioner company to reinstate the members

of respondent union. On March 12, 1963 some 88 union members were thus
reinstated by petitioner. However, petitioner discriminated against the
reemployed workers with respect to wage rates, off-season pay, cost of living
allowance, milling bonus and Christmas bonus by depriving them of
aforesaid benefits or by granting to some members benefits lesser than
those given to members of the Pasudeco Workers Union, another labor
group in the service of petitioner. By reason of such denial and/or grant of
lower benefits to respondent's members because of their union affiliation and
union activities, respondent filed with the CIR a complaint dated September
10, 1964 for unfair labor practice against petitioner which case was docketed
as Case No. 4264-ULP.
On December 4, 1972, the CIR handed down a decision adjudging herein
petitioner guilty of unfair labor practice acts as charged and finding the same
to have been committed, and thereby directing petitioner to cease and desist
from further committing the said unfair labor practice acts and directing
petitioner to pay wage differentials to certain workers and fringe benefits as
would be found due and payable to them and to readmitted seasonal and
casual members of respondent union totalling 88 with the exception of 7
workers.
In a resolution dated May 28, 1973, the CIR denied petitioner's motion for
reconsideration of aforesaid decision filed on December 14, 1972. Petitioner
appealed the above decision and resolution to this Court on June 15, 1973
praying in its petition for the nullification of said decision and motion for
being contrary to law, and for the rendition of a new judgment dismissing CIR
Case No. 4264-ULP.
This Court, in its resolution of July 31, 1973, denied the said petition for
review (docketed as G.R. No. L-36994) for lack of merit. Petitioner then
moved for reconsideration of aforesaid denial which was denied on October
4, 1973 for lack of merit. Said resolution denying the motion for
reconsideration thus became final and executory on October 12, 1973.
With the finality of the December 4, 1972 decision having been settled,
respondent Union filed with the CIR a motion for computation of final
judgment and a petition for attorney's lien both dated October 17, 1973 (pp.
47 & 50, rec.).

Petitioner company filed its answer to motion for computation of final

judgment and the petition for attorney's lien under date of November 20,
1973 (p. 52, rec.).
The CIR, acting on the aforesaid motions of respondent Union, issued its
order of June 6, 1974 approving and granting to respondent's counsel, Atty.
Ignacio Lacsina, attorney's fees equivalent to 20% of the total amount of final
judgment or whatever recovery or settlement is made and directing its
Examining Division to compute the wage and fringe benefits differentials due
the 28 individual workers who did not waive or quitclaim their rights
established by the decision of December 4, 1972 as well as the attorney's
fees equivalent to 20% of the total wage and fringe benefits differentials due
the fifty-three (53) individual workers who executed agreements with the
company waiving and quitclaiming their rights, benefits and privileges under
the aforesaid decision (pp. 15 & 57, rec.).
Petitioner moved for reconsideration of aforecited order on June 26, 1974
and on July 5, 1974, the arguments supporting said motion for
reconsideration followed (pp. 63 & 65, rec.).
Respondent Union then filed its motion to strike out the motion for
reconsideration dated July 23, 1974 (p. 72, rec.). In a resolution of
September 3, 1974, respondent lower court denied petitioner's motion for
reconsideration.
Thus, this appeal from the subject order and resolution of the CIR.
Petitioner alleges the following assignment of errors:
1. The Court of Industrial Relations erred in awarding attorney's fees to the
union's counsel equivalent to 20% of the total amount of final judgment or
whatever recovery or settlement is made thereunder; because, aside from
being inequitable, exorbitant, excessive and unconscionable, the same is
without legal basis.

2. The Court of Industrial Relations erred in ordering the Chief of its

examining division or his duly authorized representative to examine the
payrolls, vouchers, books of account and other pertinent documents of
petitioner, and to compute the wage and fringe-benefits differentials allegedly
due the members of respondent Union because such examination and
computation have become academic.
3. The Court of Industrial Relations erred in not denying or dismissing the
two motions filed by respondent union on October 18, 1973 praying therein
that the union's counsel be awarded attorney's fees and that an order be
issued directing the examining division of the court to compute the wage and
fringe benefits differentials allegedly due the members of the union under the
decision of December 4, 1972.
Respondents, however, contend that
1. The issue of quitclaims is now res judicata;
2. The CIR finding that 81 members of respondent union
are entitled to adjudged benefits is no longer alterable
after decision has become final;
3. The CIR power to adjust unfair labor practices is
unaffected by individual settlements;
4. The rights of labor are unwaivable; quitclaims null and
void; and
5. The question regarding alleged unreasonableness of
award of attorney's fees, not raised before Court a quo, is
barred on appeal.
After a careful evaluation of the petitioners' and respondents' pleadings, this
Court, finds the allegations of petitioner to be without merit.
On the first assignment of error, paragraph (a), the petitioner failed to raise
the issue before the trial court. This Court notes that petitioner's answer to
the motion for computation of final judgment and to petition for attorney's lien
filed by the respondent in the trial court did not raise the foregoing issue. It is

a well-settled doctrine in this jurisdiction that issues not raised in the trial
court may not be raised on appeal. Otherwise, there will be no end to
litigations thus defeating the ends of justice.
Nevertheless, this Court finds the allegations to be devoid of merit.
Petitioner's contention that there is no basis for respondent's petition for
attorney's lien filed with the trial court containing allegations relative to
attorney's fees as agreed upon between him and his client, the complainant
Sugar Workers' Association, is untenable. The written conformity of the
President of said Sugar Workers Association on behalf thereof confirms the
existence of such an agreement on attorney's fees and constitutes an
irrefutable evidence of such agreement. The trial court, therefore, had
sufficient evidence upon which it based its decision. The petitioner did not
contest the allegations contained in the respondent's petition for attorney's
lien before the trial court. This constitutes an implied admission thereof.
Moreover, it is evident from the tenor of the trial court's order issued on June
6, 1974 that the said court carefully evaluated the respondent's petition for
attorney's lien and even reduced the percentage from 25 IC to 20 %.
On the first assignment of error, paragraph (b), this Court likewise finds the
same to be without merit. This issue has already been resolved by this Court
when the petitioner filed its first petition for certiorari (G.R. No. L- 36994)
seeking nullification of the trial court's judgment on the same issue.
Petitioner's allegations were rejected by this Court in said case. It may not
now be repeated and raised on appeal before this Court, the same being res
judicata.
Be that as it may, the allegations of petitioner to the effect that by reason of
the quitclaims there is nothing upon which the attorney's lien attaches, is not
valid. This Court finds the quitclaims not valid. Firstly, said quitclaims were
secured on December 27, 1972 by petitioner after it lost its case in the lower
court when the latter promulgated its decision on the case on December 4,
1972. Obviously in its desire to deny what is due the sugar workers
concerned and frustrate the decision of the lower court awarding benefits to
them, it used its moral ascendancy as employer over said workers to secure
said quitclaims. Predicated on said quitclaims, petitioner filed a petition for
certiorari before this Court but the same was denied by the Court on July 31,
1973 and October 4, 1973. Petitioner now has the audacity to return before
this Court still invoking said quitclaims, which We again reject.

Secondly, while rights may be waived, the same must not be contrary to law,
public order, public policy, morals or good customs or prejudicial to a third
person with a right recognized by law (Art. 6, New Civil Code). The quitclaim
agreements contain the following provisions in paragraph I 1, No. 3, thereof:
3. Nothing herein stipulated shall be construed as an
admission and/or recognition by the Party of The Second
Part of its failure refusal and/or omission as employer, to
faithfully comply with the pertinent laws, rules and
regulations and/or agreements, nor its liability therefor and
thereunder.
Needless to state, the foregoing provisions are contrary to law, It exempts
the petitioner from any legal liability. The above- quoted provision renders
the quitclaim agreements void ab initio in their entirety since they obligated
the workers concerned to forego their benefits, while at the same time,
exempted the petitioner from any liability that it may choose to reject. This
runs counter to Article 22 of the New Civil Code which provides that no one
shall be unjustly enriched at the expense of another.
Thirdly, the alleged quitclaim agreements are contrary to public policy. Once
a civil action is filed in court, the cause of action may not be the subject of
compromise unless the same is by leave of the court concerned. Otherwise,
this will render the entire judicial system irrelevant to the prejudice of the
national interest. Parties to litigations cannot be allowed to trifle with the
judicial system by coming to court and later on agreeing to a compromise
without the knowledge and approval of the court. This converts the judiciary
into a mere tool of party-litigants who act according to their whims and
caprices. This is more so when the court has already rendered its decision
on the issues submitted.
In the case at bar, the lower court has already rendered a decision on the
issues presented before the alleged quitclaims agreements were made. The
quitclaim agreements were secured by petitioner while it filed a petition for
certiorari before this Court for a review of the lower court's decision. The
quiclaim agreements taken together with the petitioner's petition for certiorari
of the trial court's decision clearly and unmistakably shows the bad faith of
the petitioner and its outright refusal to comply with its legal obligations. And
now it has the temerity to attempt to use this Court as its instrument for the
purpose.

This Court rejects the contention of petitioner to the effect that the lien of an
attorney on the judgment or decree for the payment of money and the
preference thereof which he has secured in favor of his client takes legal
effect only from and after, but not before notice of said lien has been entered
in the record and served on the adverse party, citing the cases of Menzi and
Co. vs. Bastida (63 Phil. 16) and Macondray & Co. vs. Jose (66 Phil. 590) in
support thereof.
This Court finds the petitioner's contentions and citations applicable only
when the case has already been decided with finality. In the case at bar, the
original case was decided with finality only after this Court denied the
petitioner's motion for reconsideration of this Court's denial of its petition for
certiorari on the lower court's decision.
This Court is appalled by the attempt of petitioner to mislead it by alleging
that the lower court recognized the validity and effectivity of the 53 individual
agreements when it declared allegedly that "rights may be waived. " The
records show that the lower court qualified its statement to the effect that the
waiver must not be contrary to law, public order, public policy, morals or good
customs, or prejudicial to a third person with a right recognized by law citing
Article 6 of the New Civil Code. This attempt by petitioner casts a serious
doubt on the integrity and good faith not only of the petitioner but also of its
counsel.
This Court rejects the allegation of petitioner to the effect that the 53
agreements gave substance to the policy of the Industrial Peace Act of
encouraging the parties to make all reasonable efforts to settle their
differences by mutual agreement, citing the case of Filomena Dionela, et al.
vs. CIR, et al. (L-18334, August 31, 1963).
Petitioner's contention and the case cited in support thereof apply only
where there is good faith on the part of the party litigants. In the case at bar,
petitioner acted with evident bad faith and malice. Petitioner secured the 53
quitclaim agreements individually with the 53 sugar workers without the
intervention of respondent's lawyer who was representing them before the
lower court. This subterfuge is tantamount to a sabotage of the interest of
respondent association. Needless to say, the means employed by petitioner
in dealing with the workers individually, instead of collectively through
respondent and its counsel, violates good morals as they undermine the
unity of respondent union and fuels industrial disputes, contrary to the
declared policy in the Industrial Peace Act.

This Court likewise rejects petitioner's allegation that the 53 quitclaim

agreements were in the nature of a compromise citing the case of Republic
vs. Estenzo, et al., (L-24656, September 25, 1968, 25 SCRA 122) and
Articles 2028 and 2040 of the New Civil Code.
Petitioner's allegations and citations apply only to compromises between the
party-litigants done in good faith. In the case at bar, there was no
compromise between the petitioner and the respondent Sugar Workers
Association. In respect of the 53 quitclaims, these are not compromise
agreements between the petitioner and respondent union. They are separate
documents of renunciation of individual rights. Compromise involves the
mutual renunciation of rights by both parties on a parity basis. The
quitclaims, however, bind the workers to renounce their rights while the
petitioner not only does not renounce anything but also acquires exemption
from any legal liability in connection therewith.
On the First Assignment of Error, Paragraph (c), the petitioner anchors his
allegations on the technical procedural requirements of Section 37, Rule 138
of the New Rules of Court. This Court, however, finds petitioner's allegation
without merit. Said provision of the Rules of Court is meant to protect the
interest of an attorney's client and the adverse party by seeing to it that they
are given the opportunity to contest the creation of the attorney's lien. It will
be noted from the records that the client Sugar Workers Union was not only
notified but also affixed its conformity to the respondents' motion for
attorney's lien. With respect to the adverse party, the petitioner in this case,
said adverse party's interest was amply protected by the lower court when
the latter admitted petitioner's answer to respondent's motion for
computation of final judgment and to respondent's counsel's petition for
attorney's lien. Petitioner did not raise the aforesaid technicality in its answer
before the lower court. It cannot now raise it for the first time on appeal.
On the First Assignment of Error, Paragraph (d), this Court finds petitioner's
allegations to the effect that the attorney's fees awarded are inequitable,
exorbitant, excessive and unconscionable, citing in the process the case of
Meralco Workers' Union vs. Gaerlan (32 SCRA 419), completely without
basis nor merit.
Again, petitioner did not raise this issue in the lower court. It cannot now
raise said issue for the first time on appeal before this Court. Nevertheless,
petitioner has failed to prove any of its allegations. Hence, this Court finds

the same worthless. The Meralco case does not apply in this case for the
reason that the facts and circusmtances are entirely different.
On the Second Assignment of Error, this Court finds petitioner's allegation to
the effect that the lower court erred in ordering the computation of judgment
on the ground that by reason of the quitclaim agreements the computation of
judgment has become academic, to be without merit and grossly inane.
The allegations of petitioner are premised on its previous allegations
regarding the quitclaims. This Court has earlier stated that the quitclaim
agreements are void ab initio. The lower court was correct in directing the
computation of judgment, there being a basis therefor.
On the Third Assignment of Error, this Court likewise finds petitioner's
allegations which are based on its allegations in support of the first and
second assignments of errors, without merit, as heretofore discussed.
WHEREFORE, THE PETITION IS HEREBY DISMISSED AND
RESPONDENT CIR (NOW THE NLRC) IS HEREBY DIRECTED TO
IMPLEMENT ITS ORDER DATED JUNE 6,1974.
COSTS AGAINST PETITIONER.
SO ORDERED.
Plana, Vasquez, Relova and Gutierrez, Jr., JJ., concur.
Teehankee (Chairman), J., concur in the result. Melencio-Herrera, J., is on
leave.
ART 87-88
Republic of the Philippines
SUPREME COURT
Manila
EN BANC

G.R. No. L-32019 October 26, 1973

NATIONAL WATERWORKS AND SEWERAGE AUTHORITY, petitioner,
vs.
NWSA CONSOLIDATED UNIONS, SIMEON CHONGCO and COURT OF
INDUSTRIAL RELATIONS, respondents.
Gov't. Corp. Counsel Leopoldo M. Abellera and Asst. Gov't. Corp. Counsel
Lorenzo R. Mosqueda for petitioner.
Alfredo M. Montesa and Jesus Centeno for respondent Simeon Chongco.

ANTONIO, J.:
Appeal by certiorari, petitioner contending as not in accord with law, the
order of the Court of Industrial Relations in Case No. 19-IPA(4), dated
February 25, 1970, (a) directing the payment of basic time compensation for
services rendered by Simeon Chongco, in excess of the official time of five
(5) hours but within eight (8) hours, during the summer months, (b) holding
that Republic Act No. 1993, which bars claims for overtime services
rendered beyond three (3) years prior to the demand, is not applicable, and
(c) ruling that any service rendered exceeding thirty (30) minutes beyond the
official working hours as evidenced in time records, is overtime service for
which the employee should be paid. Petitioner also assails the order of
February 25, 1970 for its purported failure to express "clearly and distinctly
the facts and the law on which it is based," as required by Section 12, Article
VIII, of the former Charter, now Section 9, Article X, of the new Constitution.
On October 23, 1967, Simeon Chongco filed with respondent Court of
Industrial Relations a "Motion to Extend Benefits" docketed as Case No. 19IPA(4), alleging that he was employed as Administrative Assistant of the
National Waterworks and Sewerage Authority (hereinafter referred to as the
NWSA), and at the time of filing of his motion, Chief of the Recreation
Section, with a salary of P4,860.00 per annum, with free quarters; that from
January, 1955 to June, 1965, he rendered overtime, night time, Sunday,
legal holiday and basic time services, but he was not paid in full for the said
services despite the decision of the Supreme Court in G.R. No. L-18938,
entitled "National Waterworks and Sewerage Authority vs. NWSA

Consolidated Unions, et al.," promulgated on August 31, 1964 (11 SCRA

766); and that pursuant to said decision, he was also entitled to an
adjustment of his basic weekly salary beginning July 1, 1957, equivalent to
seven-fifths (7/5) of his overall weekly wage prior to said date, but such
adjustment was not effected by the NWSA. Movant Chongco prayed that the
Court Examiner be directed to determine the amount of his claims, and that
the report of said examiner be submitted to respondent court preceding a
hearing in order that the merits of the motion and the correctness of the
report could be heard together.

The objections of the NWSA to the report were as follows: (a) The alleged
overtime and night time services covered in the report were not duly
authorized in writing by the NWSA General Manager, and any service
rendered in excess of eight (8) hours a day or at night time was voluntary
and did not redound to the NWSA's benefit. (b) The movant is not entitled to
additional compensation for work rendered on Sundays and legal holidays.
(c) The Examining Division arrogated unto itself judicial powers when it
included in the report additional compensation for services rendered within
eight (8) hours a day, which was not an award in the main case.

On November 10, 1967, the NWSA filed an opposition to Chongco's motion

professing lack of knowledge or information sufficient to form a belief as to
the truth of the averments in the motion regarding the movant's alleged
unpaid services. By way of special and affirmative defenses, the NWSA
alleged that the claim for overtime compensation accruing for more than
three (3) years prior to the filing of the motion had already prescribed; that
movant Chongco had no written authority from the NWSA's General
Manager to render overtime, night time, Sunday and legal holiday services;
and that Republic Act No. 1880 does not apply to employees like movant
Chongco who receive salaries on a monthly basis.

On June 7, 1968, Chongco filed a Petition to Admit Amended Motion to

Extend Benefits so as to include in his claim additional compensation for
work rendered on Saturdays after the effectivity of Republic Act No. 1880. In
an opposition filed by it on June 20, 1968, the NWSA denied the material
averments of movant's petition and argued that there is no law authorizing
payment of additional compensation for work done on Saturday, and that
payment for Saturday work was not among the awards made in the main
case.

In an Order dated November 23, 1967, Associate Judge Joaquin M.

Salvador of respondent court directed the court's Examining Division to
compute the claims of movant Chongco and to submit a report of the
computation for further disposition by the court.
On March 14, 1968, the Court Examiner submitted to the court a report
which found movant Chongco entitled to the following benefits: overtime
differential P1,023.69; Sunday and legal holiday differential P8,219.53;
and basic time differential P4,773.44, in the aggregate amount of
P14,016.66.
Both parties registered objections to the report. Movant Chongco's
objections were as follows: (a) The Court Examiner's report did not include
salary adjustment, which should have been effected on July 1, 1957, as
required by the court's Order of January 16, 1961, which was affirmed by the
Supreme Court in its decision in G.R. No. L-18938. (b) In computing his
overtime and other fringe benefits, the Court Examiner failed to take into
account the money value of the lodging furnished free by the NWSA to him
in the nature of quarters.

After trial, Associate Judge Joaquin M. Salvador of respondent court issued

an Order on February 25, 1970, the dispositive portion of which reads:
WHEREFORE, (a) The portion of the motion to extend
benefits (including the amended motion of June 7, 1968)
relative to the claims for payment of (1) overtime, (2)
Sundays & legal holidays and (3) Saturdays after June 30,
1957, and (4) basic time services is hereby granted; (b)
The Report of the Court Examiner dated March 14, 1968
covering the amount of P14,016.66 is hereby approved;
and (c) Respondent is hereby ordered to deposit with the
Clerk of Court within fifteen (15) days from receipt hereof
the sum of P14,016.66, plus the amount of deposit fee, for
further disposition.
The Clerk of Court is directed to issue the corresponding
writ of execution should NWSA fail to deposit the required
amount within the stated period.
The claims of movant for salary adjustment and adjusted
overtime are held in abeyance for further deliberation and

proceedings. In the meantime, the Court Examiner is

directed to compute the added overtime differential
movant would receive by including a new factor, the value
of his living quarters tentatively fixed at P100.00 a month,
and submit the same in a Report for further disposition.
SO ORDERED.
The NWSA moved for a reconsideration of the aforesaid Order of February
25, 1970. In a resolution dated April 1, 1970, respondent court en
bancdenied NWSA's motion. Hence, the present recourse.
1. Petitioner is of the view that Section 564 in relation to Section 652 of the
Revised Administrative Code 1 confers upon the head of a department,
bureau or office, the discretion to enforce a longer period of labor during the
summer months, depending on the exigencies of the service,
notwithstanding an Executive Order of the President of the Philippines,
reducing to five (5) continuous hours the period of labor from April 1 to June
15 of every year. In other words, when the petitioner required respondent
Chongco to work during the summer months, eight (8) hours a day, after July
1, 1957, when Republic Act No. 1880 went into effect, and seven (7) hours a
day prior thereto, those were regular hours of work for which he is not
entitled to additional compensation, for the same were already compensated
as they were included in his regular salary.
The same argument was advanced by petitioner in "National Waterworks
and Sewerage Authority vs. NWSA Consolidated Unions, Jesus Centeno, et
al. and Court of Industrial Relations" (G.R. No. L-30567) where petitioner, on
the same grounds, assailed the validity of the Order of the Court of Industrial
Relations dated March 31, 1969 in Case No. 19-IPA (Seventh Partial Report)
and the resolution of the said court en banc, sustaining said order. In the
aforecited order, the Court of Industrial Relations found, however, as fully
established by the evidence, that the NWSA Board had committed itself, per
Resolution No. 561, to the proposition that the official time of employees, in
accordance with the Executive Order of the President, during the summer
months, is five (5) hours, and, as a matter of fact, the NWSA paid the
summer differential claims of the intervenors covered by the First, Second,
Third and Fifth Partial Reports of the Court Examiner, after the Auditing
Department of the NWSA had verified the said claims and found them
correct, viz.: the 6th to 8th hours, during summer before and after the
approval of Republic Act No. 1880. On appeal by certiorari to Us, petitioner

contended that respondent CIR committed grave abuse of discretion when it

held that claimant-intervenor Ernesto Tongson, an employee of the NWSA,
was entitled to additional basic compensation for work performed on the 6th,
7th and 8th hours during the summer months from 1955 to 1965 when he
was required by the NWSA to work eight (8) hours a day after the effectivity
of Republic Act No. 1880, and seven (7) hours prior to the effectivity of said
law.
This petition of the NWSA was denied by the Court for lack of merit. Having
resolved that contention adversely against NWSA, the latter cannot raise it
anew against claimant Simeon Chongco, who is similarly situated as the
claimants in G. R. No. L-30567. We find no error, therefore, in the
respondent Court's finding that Simeon Chongco was entitled to overtime
differential during the summer months.
2. Petitioner, however, invokes the provisions of Republic Act No. 1993 to
bar Chongco's claims for overtime services. It is true that respondent
Chongco filed on October 23, 1967, his claim for payment of overtime
service rendered prior to October 23, 1964, but the controlling date should
be the date of the filing of the petition in the main case. Thus in National
Waterworks and Sewerage Authority vs. NWSA Consolidated Union, et al.,
L-26894-96, February 28, 1969, 27 SCRA 227, this Court held that Republic
Act No. 1993 is not applicable to bar the claims of the movants therein (CIR
Case No. 19-IPA), namely, Aurelio B. Zurbano, Francisco P. Domingo and
Rufo R. Febregas, who were not among the original intervenors in the main
case, because "[a]t the most what could be challenged even assuming that
this contention was impressed with plausibility would be the statutory claim,
not that arising from the collective bargaining agreement," but "even as to
that aspect, this alleged error need not occasion further thought,"
considering "there were doubts sincerely and honestly entertained as to
whether or not officials of the category now seeking to enjoy the benefits of
the Eight-Hour Labor Law were managerial employees," and only "upon
such rendition were such doubts erased." ... "In addition we made certain in
such decision that the benefits must be conferred to all similarly situated and
not to be withheld from some." Respondent Chongco being similarly situated
as
the
movants
in
L-26894-96, Our holding on the inapplicability of Republic Act No. 1993 must
perforce apply in his case.
3. Petitioner further contends that the respondent Court erred in ruling that
any service exceeding thirty (30) minutes beyond the official working hours

as evidenced in time records is overtime service, as it would make the

employer liable for overtime service the moment an employee punches his
card late, i.e., thirty (30) minutes from the end of the regular time. We find
such argument unpersuasive.
As applied to respondent Chongco's case, this argument has failed to
consider, first, that a written authorization to render overtime service is not
indispensable, a verbal order being sufficient (National Waterworks and
Sewerage Authority vs. NWSA Consolidated Union, et al., L-2689496,supra), and according to the respondent Court, "thru Resolution No. 561,
Series of 1961 (Exh. F) the NWSA Board of Directors itself waived the
written authorization requirement and authorized payment of overtime work
supported by any official records of the NWSA, such as payrolls, salary
index cards, time cards ..."; and second, the Chief of the Water Sources &
Treatment Division, Balara Filtration Plant testified that he approved all the
services of respondent Chongco reflected in the time cards, including
services rendered beyond the regular official working hours.
4. On the question whether or not the Order of February 25, 170 awarding
the claimant basic time differential has complied with Section 12, Article VIII
of the Constitution of the Philippines, which provides that "[n]o decision shall
be rendered by any court of record without expressing therein clearly and
distinctly the facts and the law on which it is based," 2 suffice it to state that
the aforesaid order actually makes reference to the facts and the law on
which it is based. Thus, in the Order of February 25, 1970, respondent Court
stated that the issue whether a written authorization for overtime work is
necessary, has already been resolved by the Supreme Court in the negative
in
G.
R.
No.
L-18938. In ruling favorably on Chongco's claim for overtime differential the
respondent Court, as basis thereof, made reference to (a) respondent
Chongco's uncontradicted testimony that he rendered official service as
evidenced by his time cards, and that his hours of work on Saturdays,
Sundays and legal holidays were occasioned by the exigencies of the
service; (b) the testimony of Mr. Salvador Rono, Chief of the Water Sources
& Treatment Division, Balara Filtration Plant, to the effect that he signed the
time cards of respondent Chongco covering the period from April, 1964
(except May, 1964), and his signatures meant that he was approving all the
services rendered by respondent Chongco on the dates specified therein,
including services rendered beyond the regular official working hours; (c) the
resolution in G. R. No. L-30657, promulgated on June 25, 1969, wherein this
Court in effect affirmed the payment of services rendered in excess of the

official time during summer months, but within eight (8) hours; and (d) the
records of the case showing that Chongco's claim for basic time differential
had previously been clarified by the Examining Division of the court, and that
the same consists of the 8th hour on ordinary days prior to July 1, 1957 and
the 6th, 7th and 8th hours on summer days prior to and after July 1, 1957.
WHEREFORE, the order appealed from is hereby affirmed, without
pronouncement as to costs. Makalintal, C.J., Zaldivar, Castro, Barredo,
Makasiar and Esguerra , JJ., concur. Teehankee, J., took no part.
ART 91-93
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-26844

September 30, 1969

FELIPE DE LEON, BALDOMERO SALVADOR, MARTINIANO

EVANGELISTA, VICENTE PANLAQUI, CASTOR TUASON, FRANCISCO
GONZALO, ENRIQUE PAGCU, CLAUDIO SICHON, ESTANISLAO
SICHON, RUBEN ICBAN, ABONDINO ISIP, LUIS P. ISIP, DIOSDADO P.
GONZALES, MAXIMO PAULE, FAUSTINO DIMATULAC, MATEO
BAUTISTA, WILFREDO AYCARDO, HORACIO OCAMPO, FABIAN
MENESES, FLORENTINO GARCIA and JOSE D. GALANG, petitioners,
vs.
PAMPANGA SUGAR DEVELOPMENT COMPANY, INC., respondent.
Juan
C.
Limin
for
Carlos, Madarang, Carballo and Valdez for respondent.

petitioners.

CASTRO, J.:
Review on certiorari of the resolution dated October 14, 1966 of the Court of
Industrial Relations (CIR) dismissing the petitioners' complaint in case 38-V.

The respondent Pampanga Sugar Development Company (PASUDECO)

operates a sugar central at San Fernando, Pampanga. The petitioners, 21 all
told, were its security guards required to work eight hours a day, seven days
a week. On November 28, 1961 the petitioners filed with the CIR a complaint
seeking payment to them of premium or differential pay in the total amount
P49,581.79, plus attorney's fees of P3,000 and costs of suit. Upon the
finding that the "petitioners were paid their monthly salaries plus 25%
additional compensation for work on Sundays and Holidays as provided for
by law and that work on said days is one of the terms and conditions of their
employment as security guards." CIR Judge Joaquin M. Salvador dismissed
the case. Acting on the petitioners' motion for reconsideration, the court en
banc affirmed Judge Salvador's order. Hence this appeal.
The petitioners' claim, in essence, is that under the authority of section 4 of
Commonwealth Act 444 as amended (Eight-Hour Labor Law), for a Sunday
or legal holiday work of not more than eight hours, each of them is entitled to
his monthly salary and his premium or differential compensation, i.e., his
wage for the said Sunday or legal holiday plus at least 25% thereof.
Sec. 4 of C.A. 444, as amended, reads:
No person, firm, or corporation, business establishment or place or
center of labor shall compel an employee or laborer to work during
Sundays and legal holidays, unless he is paid an additional sum of
at
least
twenty-five
per
centum
of
his
regular
remuneration: Provided, however, That this prohibition shall not
apply to public utilities performing some public service such as
supplying gas, electricity, power, water, or providing means of
transportation or communication.
The issue which the petitioners here pose is not one of novel perception.
In Manalo vs. Pampanga Sugar Development Company, Inc., L-26776, June
30, 1969, this Court disposed of a similar contention, thus:
The law is plain and unambiguous. It directs payment for work done
not exceeding eight hours during Sundays and legal holidays by an
employee or laborer not falling under the exception "an additional
sum of at least twenty-five per centum of his regular remuneration."
And we already said in one case that "(t)he minimum legal
additional compensation for work on Sundays and legal holidays is
25% of the laborer's regular remuneration." Thus, if said
employee or laborer regularly receives P6 a day for an eight-hour
work on an ordinary day and he is made to work for eight hours on

Sunday or legal holiday, he is entitled to his base pay of P6 plus

P1.50 (25% of P6), or a total of P7.50. His premium pay is P1.50,
the "twenty-five per centum of his regular remuneration of P6. It
does not include his base pay of P6. He gets that P6 for an eighthour work performed any day. And he gets the extra P1.50 if such
eight-hour work is rendered on a Sunday or legal holiday. This is
the most logical and reasonable import of the law. The CIR did not
err in following it.
The same signification is, contrary to petitioners' contention, given
to the term "premium pay" by the Department of Labor, as may be
gleaned from the following formula it devised in determining the
daily wage of monthly-salaried employees, except those employed
by public utilities, working the whole year round, including Sundays
and legal holidays:
Monthly salary multiplied by 12 (months) equals yearly salary;
yearly salary divided by 380.5 (days) equals daily wage.1awphl.nt
The figure 380.5 above is the sum of the 303 ordinary days of the
year and the 62 Sundays, and legal holidays of the same year and
15.5 (25% of 62). Stated otherwise, the last figure 15.5 is the
difference between 380.5 (theoretically, the number of days worked
by the employee in one year) and 365 days (the actual number of
days in a year). It is, in short, the equivalent in days of the
employee's 25% premium pay for 52 Sundays and 10 legal
holidays in one year. The premium pay is not, therefore, 125% as
petitioners want us to believe. Thus, if the employee's daily wage is
P6, his total premium pay for one year is P93 (P6 times 15.5).
Computed in another way, with the same daily wage, his premium
pay for one Sunday or legal holiday is P1.50 (25% of P6);
multiplying P1.50 by 62 (the number of Sundays and legal holidays
in one year), we get the same amount of P93. This is the amount of
premium pay to which he is entitled in one year in addition to his
fixed yearly salary.
Petitioners postulate that the monthly salary or, for that matter, the
yearly salary applies only to the ordinary working days and does not
take into account the Sundays and legal holidays found in a given
calendar month or year.
The position thus taken by petitioners-appellants, that they are
entitled to 125% premium, or extra pay, for work done in each

Sunday and holiday, would only apply if it is shown that the monthly
or yearly salaries stipulated are intended to cover work on ordinary
working days only or where the nature or conditions of employment
do not require work on Sundays and holidays. But where, in
agreeing to the monthly or yearly stipend, the parties knew, or had
reason to know, that the work would be continuous, without
interruption on Sundays and holidays, then the wage earner would
only be entitled to the 25% supplement (or extra pay) provided by
section 4 of the Eight-Hour Labor law, as the regular monthly or
yearly wage already covered the work done on Sundays and
holidays.
The import of the law and the decision in Manalo is that for work on Sundays
and legal holidays, the employer must pay the employee: (1) his regular
remuneration, or 100%; and (2) an additional sum of at least 25% of the
regular remuneration, which is called the "premium pay." In other words, the
pay for Sundays and legal holidays is 125% of the pay for ordinary days, but
only the excess of 25% is premium pay. With respect to employees paid on a
monthly basis, the first 100% (of the 125%), corresponding to the regular
remuneration, may or may not be included in the monthly salary. If it is, then
the employee is entitled to collect only the premium of 25%. If it is not, then
the employee has a right to receive the entire 125%.
The question that thus emerges is whether the petitioners' monthly salaries
already cover the 100% regular remuneration for Sundays and legal
holidays. 1
From the allegations in paragraph 3 of the petitioners' complaint it can be
clearly inferred that such regular remuneration of 100% is already
encompassed in the petitioners' monthly salaries. We hereunder quote the
itemization of the claim (which is essentially the same in respect to the other
petitioners) of the petitioner Felipe de Leon:
Period of employment for which claim is based
January 1, 1946 to October 31, 1957
Salary per month from January
1, 1946 to December 31, 1950 P95.00
Number

of

Sundays

and 300

Holidays from January 1, 1946

to December 31, 1950
Rate per day plus 25%

P3.95

300 Sundays and Holidays

multiplied by P3.95 rate per
each Sunday and Holiday
P1,185.00
From the particular precise statement, "Rate per day plus 25% - P3.95," 2 it
follows that the regular rate per ordinary day is P3.1666, which is 1/30th of
the monthly salary of P95. This means that in computing the daily wage,
each of the petitioners divided his monthly salary by 30, the average number
of days in a month, which includes Sundays and legal holidays. This is an
effective admission, or at least demonstrates awareness on the part of the
petitioners, that their monthly salaries covered work not only on ordinary
days but also on Sundays and legal holidays. 3 The allegation, "300 Sundays
and holidays multiplied by P3.95 rate per each Sunday and Holiday
P1,185.00," is correct. However, it must be remembered that of the amount
of P1,185, the sum of P948 had already been paid to De Leon as part of his
salary for the five-year period from January 1, 1946 to December 31, 1950.
The only question remaining is whether the 25% premium pay has also been
paid. In the order of Judge Salvador, affirmed by the court en banc, there is a
finding that the "petitioners were paid their monthly salaries plus 25%
additional compensation for work on Sundays and holidays." The factual
findings of the trial judge, unaltered or unmodified by the court en banc,
cannot be reviewed by this Court. 4 The findings of fact of the CIR are
conclusive on this Court, where they are supported by substantial evidence,
and the lower court has not acted with grave abuse of discretion in reaching
them. 5
ACCORDINGLY, the judgment a quo dismissing the complaint is affirmed.
No pronouncement as to costs.
Concepcion, C.J., Dizon, Makalintal,
Capistrano,
Teehankee
and
Reyes, J.B.L., J., is on leave.

Zaldivar, Sanchez,
Barredo,
JJ.,

Fernando,
concur.