Penaranda vs.

Baganga Plywood Corporation

Facts: In June 1999, Pearanda was hired by Baganga Plywood Corporation (owned
by Hudson Chua) to take charge of the operations and maintenance of its steam plant
boiler. Pearanda was employed as a Foreman/Boiler Head/Shift Engineer tasked to
do the following tasks among others:
1. To supply the required and continuous steam to all consuming units at minimum
cost.
2. To supervise, check and monitor manpower workmanship as well as operation of
boiler and accessories.
3. To evaluate performance of machinery and manpower.
xxx
5. To train new employees for effective and safety while working.
xxx
7. To recommend personnel actions such as: promotion, or disciplinary action.
xxx
In 2001, BPC shut down due to some repairs and maintenance. BPC did not technically
fire Pearanda but due to the latters insistence, BPC gave him his separation benefits.
BPC subsequently reopened but Pearanda did not reapply.
Pearanda now claims that BPC still needed to pay him his overtime pays and
premium pays.
The NLRC ruled that Pearanda is a managerial employee and as such he is not entitled
to overtime and premium pay as stated under the Labor Code. Pearanda appealed. He
said that he is not a managerial employee.
ISSUE: Whether or not Pearanda is entitled to overtime and premium pay.
HELD: No. Though there is an error made by the NLRC in finding Pearanda as a
managerial employee, the Supreme Court still ruled that Pearanda is not entitled to
overtime and premium pay.
Pearanda is not a managerial employee. Under the Implementing Rules and
Regulations of the Labor Code, managerial employees are those that perform the
following:
(1) Their primary duty consists of the management of the establishment in which they
are employed or of a department or subdivision thereof;
(2) They customarily and regularly direct the work of two or more employees therein;
(3) They have the authority to hire or fire other employees of lower rank; or their
suggestions and recommendations as to the hiring and firing and as to the promotion
or any other change of status of other employees are given particular weight.

Pearanda does not meet the above requirements.

Pearanda is instead considered as a managerial staff. Under the Implementing Rules
and Regulations of the Labor Code, managerial staffs are those that perform the
following:
(1) The primary duty consists of the performance of work directly related to
management policies of the employer;
(2) Customarily and regularly exercise discretion and independent judgment;
(3) (i) Regularly and directly assist a proprietor or a managerial employee whose
primary duty consists of the management of the establishment in which he is employed
or subdivision thereof; or (ii) execute under general supervision work along
specialized or technical lines requiring special training, experience, or knowledge; or
(iii) execute under general supervision special assignments and tasks; and
(4) who do not devote more than 20 percent of their hours worked in a workweek to
activities which are not directly and closely related to the performance of the work
described in paragraphs (1), (2), and (3) above.
Pearandas function as a shift engineer illustrates that he was a member of the
managerial staff. His duties and responsibilities conform to the definition of a member
of a managerial staff under the Implementing Rules.
Pearanda supervised the engineering section of the steam plant boiler. His work
involved overseeing the operation of the machines and the performance of the workers
in the engineering section. This work necessarily required the use of discretion and
independent judgment to ensure the proper functioning of the steam plant boiler.
Further, Pearanda in his position paper admitted that he was a supervisor for BPC.
As supervisor, petitioner is deemed a member of the managerial staff.

AUTO BUS TRANSPORT v. BAUTISTA (2005)

6.

Doctrine: Employees engaged on task or contract basis or paid on purely

commission basis are not automatically exempted from the grant of service
incentive leave, unless, they fall under the classification of field personnel.
FACTS:
1. Since May 24, 1995, Bautista has been employed by Auto Bus
Transport Systems as driver-conductor. He was paid on commission
basis, 7% of the total gross income per travel, on a twice a month
basis.
2. On January 2000, while he was driving Autobus No. 114 along Sta.
Fe, Nueva Vizcaya, the bus accidentally bumped the rear portion of
another Autobus as the latter vehicle suddenly stopped at a sharp
curve without warning.
3. Bautista averred that the accident happened because he was
compelled by the management to go back to Roxas, Isabela,
although he had not slept for almost 24 hours, as he had just arrived
in Manila from Roxas, Isabela. He was not allowed to work until he
fully paid the amount of P75,551.50, representing 30% of the cost of
repair of the damaged buses and that despite respondents pleas for
reconsideration, the same was ignored by management. After a
month, management sent him a letter of termination.
4. Bautista then instituted a complaint for illegal dismissal.
5. Auto Bus maintained that his employment was replete with offenses
involving reckless imprudence, gross negligence, and dishonesty. It
also averred that in the exercise of its management prerogative,
Bautista's employment was terminated only after the latter was
provided with an opportunity to explain his side regarding the
accident

7.

The Labor Arbiter dismissed the complaint but ordered Auto Bus to
pay Bautista his
i. 13th month pay from the date of hiring to dismissal
(P78,117.87) and
ii. Service Incentive Leave for all the years he had been in
service with Auto Bus (P13,778.05).
NLRC modified the LAs decision deleting the award for 13th month
pay and affirmed the other findings.

ISSUES:
1. Whether or not Bautista is entitled to Service Incentive Leave. (main
issue)
2. Whether or not his money claim for SIL has prescribed. (sub issue)
RULING + RATIO:
1.

YES. He is entitled to service incentive leave pay.

The grant of service incentive leave has been delimited by the Implementing
Rules and Regulations. According to the Implementing Rules, Service
Incentive Leave shall not apply to employees classified as field personnel.
The phrase other employees whose performance is unsupervised by the
employer must not be understood as a separate classification of employees to
which service incentive leave shall not be granted. Rather, it serves as an
amplification of the interpretation of the definition of field personnel under
the Labor Code as those whose actual hours of work in the field cannot be
determined with reasonable certainty.
The same is true with respect to the phrase those who are engaged on task or
contract basis, purely commission basis. Said phrase should be related with
field personnel, applying the rule on ejusdem generis that general and
unlimited terms are restrained and limited by the particular terms that they
follow. Hence, employees engaged on task or contract basis or paid on purely
commission basis are not

automatically exempted from the grant of service incentive leave, unless, they
fall under the classification of field personnel.
Therefore, petitioners contention that respondent is not entitled to the grant of
service incentive leave just because he was paid on purely commission basis
is misplaced. What must be ascertained in order to resolve the issue of
propriety of the grant of service incentive leave to respondent is whether or
not he is a field personnel.
According to Article 82 of the Labor Code, field personnel shall refer to nonagricultural employees who regularly perform their duties away from the
principal place of business or branch office of the employer and whose actual
hours of work in the field cannot be determined with reasonable certainty.
As observed by the LA and CA: It is of judicial notice that along the routes
that are plied by these bus companies, there are its inspectors assigned at
strategic places who board the bus and inspect the passengers, the punched
tickets, and the conductors reports. There is also the mandatory once-a-week
car barn or shop day, where the bus is regularly checked as to its mechanical,
electrical, and hydraulic aspects, whether or not there are problems thereon
as reported by the driver and/or conductor. They too, must be at specific
place as [sic] specified time, as they generally observe prompt departure and
arrival from their point of origin to their point of destination. In each and
every depot, there is always the Dispatcher whose function is precisely to see
to it that the bus and its crew leave the premises at specific times and arrive
at the estimated proper time. These, are present in the case at bar. The driver,
the complainant herein, was therefore under constant supervision while in the
performance of this work. He cannot be considered a field personnel.
Buatista is not a field personnel but a regular employee who performs tasks
usually necessary and desirable to the usual trade of petitioners business.
Accordingly, he is entitled to the grant of service incentive leave.

2.

NO. He filed his money claim within the prescriptive period.

Article 291 of the Labor Code states that all money claims arising from
employer-employee relationship shall be filed within three (3) years from the
time the cause of action accrued; otherwise, they shall be forever barred.
In the computation of the three-year prescriptive period, a determination must
be made as to the period when the act constituting a violation of the workers
right to the benefits being claimed was committed.
It is essential at this point, however, to recognize that the service incentive
leave is a curious animal in relation to other benefits granted by the law to
every employee. In the case of service incentive leave, the employee may
choose to either use his leave credits or commute it to its monetary equivalent
if not exhausted at the end of the year. Furthermore, if the employee entitled
to service incentive leave does not use or commute the same, he is entitled
upon his resignation or separation from work to the commutation of his
accrued service incentive leave.
Applying Article 291 of the Labor Code in light of this peculiarity of the
service incentive leave, we can conclude that the 3-year prescriptive period
commences, not at the end of the year when the employee becomes entitled
to the commutation of his service incentive leave, but from the time when the
employer refuses to pay its monetary equivalent after demand of commutation
or upon termination of the employees services, as the case may be.
In the case at bar, respondent had not made use of his service incentive leave
nor demanded for its commutation until his employment was terminated by
petitioner. Neither did petitioner compensate his accumulated service
incentive leave pay at the time of his dismissal. It was only upon his filing of
a complaint for illegal dismissal, one month from the time of his dismissal,
that respondent

demanded from his former employer commutation of his accumulated leave

credits. His cause of action to claim the payment of his accumulated service
incentive leave thus accrued from the time when his employer dismissed him and
failed to pay his accumulated leave credits. His money claim was filed within the
prescriptive period.
DISPOSITION: WHEREFORE, premises considered, the instant petition is
hereby DENIED. The assailed Decision of the Court of Appeals is hereby
AFFIRMED. No Costs.

DAVID vs. MACASIO

FACTS:
Macasio filed before the LA a complaint against petitioner for non-payment of
overtime pay, holiday pay and 13th month pay. He also claimed payment for
moral and exemplary damages and attorneys fees. And payment for service
incentive leave (SIL).
Macasio alleged that he had been working as a butcher for David since January
6, 1995.
Macasio claimed that David exercised effective control and supervision over his
work, pointing out that David:
1. set the work day, reporting time and hogs to be chopped, as well as the
manner by which he was to perform his work;
2. daily paid his salary of P700.00, which was increased from P600.00 in
2007, P500.00 in 2006 and P400.00 in 2005; and
3. approved and disapproved his leaves. Macasio added that David owned
the hogs delivered for chopping, as well as the work tools and
implements; the latter also rented the workplace
In his defense, David claimedThat he hired Macasio as a butcher or chopper on
"pakyaw" or task basis who is, therefore, not entitled to overtime pay, holiday
pay and 13th month pay pursuant to the provisions of the IRR of the Labor
Code.
LABOR ARBITER : The LA gave credence to Davids claim that he engaged
Macasio on "pakyaw" or task basis. The LA noted the following facts to support
this finding:
1. Macasio received the fixed amount of P700.00 for every work done,
regardless of the number of hours that he spent in completing the task
and of the volume or number of hogs that he had to chop per
engagement;
2. Macasio usually worked for only four hours, beginning from 10:00
p.m. up to 2:00 a.m. of the following day; and
3. the P700.00 fixed wage far exceeds the then prevailing daily minimum
wage of P382.00. The LA added that the nature of Davids business as
hog dealer supports this "pakyaw" or task basis arrangement. concluded
that as Macasio was engaged on "pakyaw" or task basis, he is not
entitled to overtime, holiday, SIL and 13th month pay.
NLRC affirmed the LA ruling. THUS, to the CA via a petition for certiorari.
CA partly granted Macasios certiorari petition and reversed the NLRCs
ruling for having been rendered with grave abuse of discretion.
While the CA agreed with the LA and the NLRC that Macasio was a task basis
employee, it nevertheless found Macasio entitled to his monetary claims
following the doctrine laid down in Serrano v. Severino Santos Transit.
The CA explained that as a task basis employee, Macasio is excluded from the
coverage of holiday, SIL and 13th month pay only if he is likewise a "field
personnel." As defined by the Labor Code, a "field personnel" is one who

performs the work away from the office or place of work and whose regular
work hours cannot be determined with reasonable certainty. In Macasios case,
the elements that characterize a "field personnel" are evidently lacking as
he had been working as a butcher at Davids "Yiels Hog Dealer" business in Sta.
Mesa, Manila under Davids supervision and control, and for a fixed working
schedule that starts at 10:00 p.m.
the CA awarded Macasios claim for holiday, SIL and 13th month pay for three
years, with 10% attY. fees on the total monetary award. The CA, however,
denied Macasios claim for moral and exemplary damages for lack of basis.

ISSUES:
1. Whether there is employee employer relationship - YES
2. Whether respondent Macasio engaged on PAKYAW or Task basis employee
YES
3. Whether respondent Macasia is a Field personnel - NO
4. Whether respondent Macasio is entitled to 3th month pay NO
5. Whether respondent Macasia is entitled to SIL, Holiday pay YES
RULING:
1. Whether there is employee employer relationship YES
Macasio is Davids employee
To determine the existence of an employer-employee relationship, four
elements generally need to be considered, namely: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the power to control the employees conduct. These elements
or indicators comprise the so-called "four-fold" test of employment
relationship. Macasios relationship with David satisfies this test.
First, David engaged the services of Macasio, thus satisfying the element no. 1.
David categorically confirmed this fact when, in his "Sinumpaang Salaysay," he
stated that "nag apply po siya sa akin at kinuha ko siya na chopper. Also, Solano
and Antonio stated in their "Pinagsamang Sinumpaang Salaysay"40 that "[k]ami
po ay nagtratrabaho sa Yiels xxx na pag-aari ni Ariel David bilang butcher" and
"kilalanamin si xxx Macasio na isa ring butcher xxx ni xxx David at kasama
namin siya sa aming trabaho." Second, David paid Macasios wages. Third,
David had been setting the day and time when Macasio should report for work.
This power to determine the work schedule obviously implies power of control.
David could regulate Macasios work and could even refuse to give him any
assignment, thereby effectively dismissing him. And fourth, David had the
right and power to control and supervise Macasios work as to the means and
methods of performing it. In addition to setting the day and time when Macasio
should report for work.
2.) Whether respondent Macasio engaged on PAKYAW or Task basis employee
YES

YES. A distinguishing characteristic of "pakyaw" or task basis

engagement, as opposed to straight-hour wage payment, is the nonconsideration of the time spent in working. In a task-basis work, the emphasis
is on the task itself, in the sense that payment is reckoned in terms of completion
of the work, not in terms of the number of time spent in the completion of
work.45 Once the work or task is completed, the worker receives a fixed amount
as wage, without regard to the standard measurements of time generally used in
pay computation
In Macasios case, the established facts show that he would usually start his
work at 10:00 p.m. Thereafter, regardless of the total hours that he spent at the
workplace or of the total number of the hogs assigned to him for chopping,
Macasio would receive the fixed amount of P700.00 once he had completed his
task. Clearly, these circumstances show a "pakyaw" or task basis engagement
that all three tribunals uniformly found.

3.) Whether respondent Macasia is a Field personnel NO

Based on the definition of field personnel under Article 82, we agree with the
CA that Macasio does not fall under the definition of "field personnel." The
CAs finding in this regard is supported by the established facts of this case:
first, Macasio regularly performed his duties at Davids principal place of
business; second, his actual hours of work could be determined with reasonable
certainty; and, third, David supervised his time and performance of duties. Since
Macasio cannot be considered a "field personnel," then he is not exempted
from the grant of holiday, SIL pay even as he was engaged on "pakyaw" or
task basis.
4.) Whether respondent Macasio is entitled to 3th month pay NO
that the CA erred in finding that the NLRC gravely abused its discretion in
denying this benefit to Macasio.
The governing law on 13th month pay is PD No. 851.53
13th month pay benefits generally cover all employees; an employee must be
one of those expressly enumerated to be exempted. Section 3 of the IRR of P.D.
No. 851 enumerates the exemptions from the coverage of 13th month pay
benefits. Under Section 3(e), "employers of those who are paid on xxx task
basis, and those who are paid a fixed amount for performing a specific
work, irrespective of the time consumed in the performance thereof" are
exempted.
Note that unlike the IRR of the Labor Code on holiday and SIL pay, Section 3(e)
of the IRR ofPD No. 851 exempts employees "paid on task basis" without any
reference to "field personnel." This could only mean that insofar as payment of
the 13th month pay is concerned, the law did not intend to qualify the exemption
from its coverage with the requirement that the task worker be a "field
personnel" at the same time
5.) Whether respondent Macasia is entitled to SIL, Holiday pay YES

Under these provisions, the general rule is that holiday and SIL pay provisions
cover all employees. To be excluded from their coverage, an employee must
be one of those that these provisions expressly exempt, strictly in
accordance with the exemption. Under the IRR, exemption from the coverage
of holiday and SIL pay refer to "field personnel and other employees whose
time and performance is unsupervised by the employer including those who are
engaged on task or contract basis[.]" Note that unlike Article 82 of the Labor
Code, the IRR on holiday and SIL pay do not exclude employees "engaged on
task basis" as a separate and distinct category from employees classified as
"field personnel." Rather, these employees are altogether merged into one
classification of exempted employees.

Labor Congress V NLRC (1998)

Petitioner: Labor Congress
Respondent: NLRC
DOCTRINE: The Rules Implementing the Labor Code exclude certain employees
from receiving benefits such as nighttime pay, holiday pay, service incentive
leave and 13th month pay, inter alia, "field personnel and other employees whose
time and performance is unsupervised by the employer, including those who are
engaged on task or contract basis, purely commission basis, or those who are paid a
fixed amount for performing work irrespective of the time consumed in the
performance thereof." Petitioners as piece-rate workers do not fall within this group.
FACTS:
1.
2.

3.

99 persons named as petitioners in this proceeding were rank-and-file employees

of respondent Empire Food Products
Labor Congress and its Local Chapter is the SOLE and EXCLUSIVE Bargaining
Agent and Representative for all rank and file employees of the Empire Food
Products regarding "WAGES, HOURS Of WORK, AND OTHER TERMS AND
CONDITIONS OF EMPLOYMENT
Petitioners filed a complaint with the NLRC alleging:

YES
Private respondents violated their rights to security of tenure and constitutional right
to due process in not even serving them with a written notice of such termination
Petitioners are therefore entitled to reinstatement with full back wages pursuant to
Article 279 of the Labor Code, as amended by R.A. No. 6715. Nevertheless, the
records disclose that taking into account the number of employees involved, the length
of time that has lapsed since their dismissal, and the perceptible resentment and enmity
between petitioners and private respondents which necessarily strained their
relationship, reinstatement would be impractical and hardly promotive of the best
interests of the parties. In lieu of reinstatement then, separation pay at the rate of one
month
for
every
year
of
service,
with
a fraction of at least six (6) months of service considered as one (1) year, is in order
That being said, the amount of back wages to which each petitioner is entitled,
however, cannot be fully settled at this time. Petitioners, as piece-rate workers having
been paid by the piece, there is need to determine the varying degrees of production
and days worked by each worker. Clearly, this issue is best left to the National Labor
Relations Commission.

a. Unfair Labor Practice by way of Illegal Lockout and/or Dismissal;

Second Issue: WoN petitioners should be reinstated with holiday pay, premium pay,
13th month pay and service incentive leave

b. Union busting thru Harassments [sic], threats, and interfering with the rights of
employees to self-organization;

YES

c. Violation of the Memorandum of Agreement dated October 23, 1990;

d. Underpayment of Wages in violation of R.A. No. 6640 and R.A. No. 6727, such as
Wages promulgated by the Regional Wage Board;
e. Actual, Moral and Exemplary Damages
4.

Labor Arbiter Ariel C. Santos absolved private respondents of the charges of

unfair labor practice, union busting, violation of the memorandum of agreement,
underpayment of wages and denied petitioners' prayer for actual, moral and
exemplary damages. Labor Arbiter Santos, however, directed the reinstatement of
the individual complainants

First Issue: WoN petitioners should be reinstated with backwages

Three (3) factors lead us to conclude that petitioners, although piece-rate workers,
were regular employees of private respondents. First, as to the nature of petitioners'
tasks, their job of repacking snack food was necessary or desirable in the usual
business of private respondents, who were engaged in the manufacture and selling of
such food products; second, petitioners worked for private respondents throughout the
year, their employment not having been dependent on a specific project or season; and
third, the length of time 16 that petitioners worked for private respondents. Thus, while
petitioners' mode of compensation was on a "per piece basis," the status and nature of
their employment was that of regular employees
The Rules Implementing the Labor Code exclude certain employees from receiving
benefits such as nighttime pay, holiday pay, service incentive leave and 13th month
pay, inter alia, "field personnel and other employees whose time and performance is

unsupervised by the employer, including those who are engaged on task or contract
basis, purely commission basis, or those who are paid a fixed amount for performing
work irrespective of the time consumed in the performance thereof." Plainly,
petitioners as piece-rate workers do not fall within this group.

As to overtime pay, the rules, are different. According to Sec. 2(e), Rule I, Book III
of the Implementing Rules, workers who are paid by results including those who are
paid on piece-work, takay, pakiao, or task basis, if their output rates are in
accordance with the standards prescribed under Sec. 8, Rule VII, Book III, of these
regulations, or where such rates have been fixed by the Secretary of Labor in
accordance with the aforesaid section, are not entitled to receive overtime pay. Here,
private respondents did not allege adherence to the standards set forth in Sec. 8 nor
with the rates prescribed by the Secretary of Labor. As such, petitioners are beyond
the ambit of exempted persons and are therefore entitled to overtime pay. Once
more, the National Labor Relations Commission would be in a better position to
determine the exact amounts owed petitioners, if any.

PAL vs. NLRC

FACTS:
Private respondent Dr. Fabros was employed as flight surgeon at petitioner
company. He was assigned at the PAL Medical Clinic and was on duty from 4:00
in the afternoon until 12:00 midnight.
On Feb.17, 1994, at around 7:00 in the evening, Dr. FAbros left the clinic to have
his dinner at his residence, which was abou t5-minute drive away. A few minutes
later, the clinic received an emergency call from the PAL Cargo Services. One of
its employeeshad suffered a heart attack. The nurse on duty, Mr. Eusebio, called
private respondent at home to inform him of the emergency. The patient arrived
at the clinic at 7:50 in the evening and Mr. Eusebio immediately rushed him to
the hospital. When Dr. Fabros reached the clinic at around 7:51 in the evening,
Mr. Eusebio had already left with the patient to the hospital. The patient died the
following day.
Upon learning about the incident, PAL Medical Director ordered the Chief Flight
Surgeon to conduct an investigation. In his explanation, Dr. Fabros asserted that
he was entitled to a thirty-minute meal break; that he immediately left his
residence upon being informed by Mr. Eusebio about the emergency and he
arrived at the clinic a few minutes later; that Mr. Eusebio panicked and brought
the patient to the hospital without waiting for him.
Finding private respondents explanation unacceptable, the management charged
private respondent with abandonment of post while on duty. He denied that he
abandoned his post on February 17, 1994. He said that he only left the clinic to
have his dinner at home. In fact, he returned to the clinic at 7:51 in the evening
upon being informed of the emergency.
After evaluating the charge as well as the answer of private respondent, he was
given a suspension for three months effective December 16, 1994.
Private respondent filed a complaint for illegal suspension against petitioner.
On July 16, 1996, the Labor Arbiter rendered a decision declaring the suspension
of private respondent illegal. It also ordered petitioner to pay private respondent
the amount equivalent to all the benefits he should have received during his period
of suspension plus P500,000.00 moral damages.
Petitioner appealed to the NLRC. The NLRC, however, dismissed the appeal after
finding that the decision of the Labor Arbiter is supported by the facts on record
and the law on the matter. The NLRC likewise denied petitioners motion for
reconsideration.
Hence, this petition.
ISSUE:
1. WON the nullifying of the 3-month suspension by the NLRC erroneous.
2. WON the awarding of moral damages is proper.
HELD: The petition is PARTIALLY GRANTED. The portion of the assailed decision
awarding moral damages to private respondent is DELETED. All other aspects of the
decision are AFFIRMED

(1). The legality of private respondents suspension:

Dr. Fabros left the clinic that night only to have his dinner at his house, which
was only a few minutes drive away from the clinic. His whereabouts were
known to the nurse on duty so that he could be easily reached in case of
emergency. Upon being informed of Mr. Acostas condition, private
respondent immediately left his home and returned to the clinic. These facts
belie petitioners claim of abandonment. Petitioner argues that being a fulltime employee, private respondent is obliged to stay in the company premises
for not less than eight (8) hours. Hence, he may not leave the company
premises during such time, even to take his meals.
We are not impressed. See Art. 83 and 85 of the Labor Code
Thus, the eight-hour work period does not include the meal break. Nowhere
in the law may it be inferred that employees must take their meals within the
company premises. Employees are not prohibited from going out of the
premises as long as they return to their posts on time.
Private respondents act, therefore, of going home to take his dinner does not
constitute abandonment.
(2). The award of moral damages: Not every employee who is illegally dismissed or
suspended is entitled to damages.
As a rule, moral damages are recoverable only where the dismissal or
suspension of the employee was attended by bad faith or fraud, or constituted
an act oppressive to labor, or was done in a manner contrary to morals, good
customs or public policy
In the case at bar, there is no showing that the management of petitioner
company was moved by some evil motive in suspending private respondent.
It suspended private respondent on an honest, albeit erroneous, belief that
private respondents act of leaving the company premises to take his meal at
home constituted abandonment of post which warrants the penalty of
suspension.
Under the circumstances, we hold that private respondent is not entitled to
moral damages.

ARICA vs. NLRC

FACTS: Teofilo Arica et al and 561 others sued Standard Fruits Corporation
(STANFILCO) Philippines for allegedly not paying the workers for their assembly
time which takes place every work day from 5:30am to 6am. The assembly time
consists of the roll call of the workers; their getting of assignments from the foreman;
their filling out of the Laborers Daily Accomplishment Report; their getting of tools
and equipments from the stockroom; and their going to the field to work. The workers
alleged that this is necessarily and primarily for STANFILCOs benefit.
ISSUE: Whether or not the workers assembly time should be paid.
HELD: No. The thirty minute assembly time long practiced and institutionalized by
mutual consent of the parties under Article IV, Section 3, of the Collective Bargaining
Agreement cannot be considered as waiting time within the purview of Section 5,
Rule I, Book III of the Rules and Regulations Implementing the Labor Code . . .
Furthermore, the thirty (30)-minute assembly is a deeply-rooted, routinary practice of
the employees, and the proceedings attendant thereto are not infected with
complexities as to deprive the workers the time to attend to other personal pursuits. In
short, they are not subject to the absolute control of the company during this period,
otherwise, their failure to report in the assembly time would justify the company to
impose disciplinary measures.

RADA vs. NLRC

FACTS: In 1977, Hilario Rada was contracted by Philnor Consultants and Planners,
Inc as a driver. He was assigned to a specific project in Manila. The contract he signed
was for 2.3 years. His task was to drive employees to the project from 7am to 4pm. He
was allowed to bring home the company vehicle in order to provide a timely
transportation service to the other project workers. The project he was assigned to was
not completed as scheduled hence, since he has a satisfactory record, he was recontracted for an additional 10 months. After 10 months the project was not yet
completed. Several contracts thereafter were made until the project was finished in
1985.
At the completion of the project, Rada was terminated as his employment was coterminous with the project. He later sued Philnor for non payment of separation pay
and overtime pay. He said he is entitled to be paid OT pay because he uses extra time
to get to the project site from his home and from the project site to his home everyday
in total, he spends an average of 3 hours OT every day.
ISSUE: Whether or not Rada is entitled to separation pay and OT pay.
HELD: Separation pay NO. Overtime pay Yes.
Separation Pay
The SC ruled that Rada was a project employee whose work was coterminous with the
project for which he was hired. Project employees, as distinguished from regular or
non-project employees, are mentioned in Section 281 of the Labor Code as those
where the employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the engagement
of the employee.
Project employees are not entitled to termination pay if they are terminated as a result
of the completion of the project or any phase thereof in which they are employed,
regardless of the number of projects in which they have been employed by a particular
construction company. Moreover, the company is not required to obtain clearance
from the Secretary of Labor in connection with such termination.
OT Pay
Rada is entitled to OT pay. The fact that he picks up employees of Philnor at certain
specified points along EDSA in going to the project site and drops them off at the same
points on his way back from the field office going home to Marikina, Metro Manila is
not merely incidental to Radas job as a driver. On the contrary, said transportation
arrangement had been adopted, not so much for the convenience of the employees, but
primarily for the benefit of Philnor. As embodied in Philnors memorandum, they
allowed their drivers to bring home their transport vehicles in order for them to provide
a timely transport service and to avoid delay not really so that the drivers could enjoy
the benefits of the company vehicles nor for them to save on fair.

RB MICHAEL vs. GALIT

THE FACTS:
Respondent was employed by petitioner R.B. Michael Press as an offset machine
operator, During his employment, Galit was tardy for a total of 190 times and was
absent without leave for a total of nine and a half days. Respondent was ordered
to render overtime service in order to comply with a job order deadline, but he
refused to do so. The following day respondent reported for work but petitioner
Escobia told him not to work, and to return later in the afternoon for a hearing.
When he returned, a copy of an Office Memorandum was served on him
Petitioners aver that Galit was dismissed due to the following offenses: (1)
tardiness constituting neglect of duty; (2) serious misconduct; and (3)
insubordination or willful disobedience.
Respondent was terminated from employment, gave him his two-day salary and
a termination letter.
Respondent subsequently filed a complaint for illegal dismissal and money claims
before the National Labor Relations Commission (NLRC)
The CA found that it was not the tardiness and absences committed by respondent,
but his refusal to render overtime work which caused the termination of his
employment. It ruled that the timeframe in which respondent was afforded
procedural due process is dubitable; he could not have been afforded ample
opportunity to explain his side and to adduce evidence on his behalf. It further
ruled that the basis for computing his backwages should be his daily salary at the
time
of
his
dismissal
which
was
PhP 230, and that his backwages should be computed from the time of his
dismissal up to the finality of the CAs decision.

daily wage earner and hence is paid based on such arrangement. For said daily paid
workers, the principle of "a days pay for a days work" is squarely applicable. Hence
it cannot be construed in any wise that such nonpayment of the daily wage on the days
he was absent constitutes a penalty.
Insubordination or willful disobedience
The charge of insubordination is meritorious. For willful disobedience to be a valid
cause for dismissal, these two elements must concur: (1) the employee's assailed
conduct must have been willful, that is, characterized by a wrongful and perverse
attitude; and (2) the order violated must have been reasonable, lawful, made known to
the employee, and must pertain to the duties which he had been engaged to discharge.
In the present case, there is no question that petitioners' order for respondent to render
overtime service to meet a production deadline complies with the second requisite. Art.
89 of the Labor Code empowers the employer to legally compel his employees to
perform overtime work against their will to prevent serious loss or damage.
In the present case, petitioners' business is a printing press whose production schedule
is sometimes flexible and varying. It is only reasonable that workers are sometimes
asked to render overtime work in order to meet production deadlines. respondent
refused to do so for no apparent reason. Respondent, on the other hand, claims that the
reason why he refused to render overtime work was because he was not feeling well
that day. The fact that respondent refused to provide overtime work despite his
knowledge that there is a production deadline that needs to be met, and that without
him, the offset machine operator, no further printing can be had, shows his wrongful
and perverse mental attitude; thus, there is willfulness. Respondent's excuse that he
was not feeling well that day is unbelievable and obviously an afterthought. He failed
to present any evidence other than his own assertion that he was sick.
Due process: twin notice and hearing requirement

THE ISSUES
(1). whether there was just cause to terminate the employment of respondent
(2). whether due process was observed in the dismissal process
(3). whether respondent is entitled to backwages and other benefits despite his refusal
to be reinstated.
THE COURTS RULING:
Respondents tardiness cannot be considered condoned by petitioners
In the case at bar, respondent did not adduce any evidence to show waiver or
condonation on the part of petitioners. Thus the finding of the CA that petitioners
cannot use the previous absences and tardiness because respondent was not subjected
to any penalty is bereft of legal basis. The petitioners did not impose any punishment
for the numerous absences and tardiness of respondent. Thus, said infractions can be
used collectively by petitioners as a ground for dismissal. Respondent is admittedly a

Under the twin notice requirement, the employees must be given two (2) notices before
his employment could be terminated: (1) a first notice to apprise the employees of their
fault, and (2) a second notice to communicate to the employees that their employment
is being terminated. Not to be taken lightly of course is the hearing or opportunity for
the employee to defend himself personally or by counsel of his choice.
On the surface, it would seem that petitioners observed due process (twin notice and
hearing requirement): On February 23, 1999 petitioner notified respondent of the
hearing to be conducted later that day. On the same day before the hearing, respondent
was furnished a copy of an office memorandum which contained a list of his offenses,
and a notice of a scheduled hearing in the afternoon of the same day. A scrutiny of the
disciplinary process undertaken by petitioners leads us to conclude that they only paid
lip service to the due process requirements.
The undue haste in effecting respondent's termination shows that the termination
process was a mere simulation the required notices were given, a hearing was even

scheduled and held, but respondent was not really given a real opportunity to defend
himself; and it seems that petitioners had already decided to dismiss respondent from
service, even before the first notice had been given.
In the February 24, 1999 notice of dismissal, petitioners simply justified respondent's
dismissal by citing his admission of the offenses charged. It did not specify the details
surrounding the offenses and the specific company rule or Labor Code provision upon
which the dismissal was grounded. As a consequence of the violation of his statutory
right to due process and following Agabon , petitioners are liable jointly and solidarily
to pay nominal damages to the respondent in the amount of PhP30,000.

CALTEX REGULAR EMPLOYEES v. CALTEX

G.R. No. 111359, August 15, 1995
NATURE OF THE CASE: this was a petition for certiorari where the petitioner
sought to annul the NLRC decision which reversed the Labor Arbiter who ruled in
favor of the petitioner and held that the employees were given two days of rest and
that work performed on the first day of rest should be compensated.
FACTS: Petitioner union filed a complaint for unfair labor practice against respondent
company alleging violations of the CBA. Union charged Caltex with shortchanging its
employees when it compensated work performed on the first 2 hours of Saturday,
an employees day of rest, at regular rates, when it should be paying at day-off rates.
This was grounded on the contention that, according to the union, the CBA granted
employees two day offs.
Another point raised by the union was that Caltex was guilty of violating the statutory
prohibition against offsetting undertime for overtime work on another day on the
ground that the employees had been required to render overtime work on a Saturday
but compensated only at regular rates of pay, because they had not completed the eight
hours work period daily from Monday thru Friday.
The labor arbiter ruled in favor of petitioner, which was reversed by the NLRC upon
appeal. The NLRC concluded that CBA granted only one day of rest (which was
Sunday).
ISSUE: Whether the CBA granted the employees two days of rest. Corollarily,
whether the union is correct in charging that rate on Saturday should be for a day-off
rate as against the normal rate.
HELD: No on both issues.
RATIO DECIDENDI:
(On First Issue)
After carefully examining the language of Article III, in relation to Annex "B" of the
1985 CBA, quoted in limine, as well as relevant portions of earlier CBAs between
the parties, The Court agreed with the NLRC that the intention of the parties to the
1985 CBA was to provide the employees with only one (1) day of rest. The plain and
ordinary meaning of the language of Article III is that Caltex and the Union had
agreed to pay "day of rest" rates for work performed on "an employee's one day of
rest". To the Court's mind, the use of the word "one" describing the phrase "day of
rest [of an employee]" emphasizes the fact that the parties had agreed that only a
single day of rest shall be scheduled and shall be provided to the employee.

The Court also noted that the contract clauses governing hours of work in previous
CBAs executed between private respondent Caltex and petitioner Union in 1973, 1976,
1979 and 1982 contained provisions parallel if not identical to those set out in Article
III of the 1985 CBA. In all these CBAs (1973, 1976, 1979, 1982), Article III provided
that only "work on an employee's one day of rest "shall be paid on the basis of "day of
rest rates". The relevant point here was that petitioner Union had never suggested that
more than 1 day of rest had been agreed upon, and certainly Caltex had never treated
Article III or any other portion of the CBAs as providing two (2) days of rest. It is well
settled that the contemporaneous and subsequent conduct of the parties may be taken
into account by a court called upon to interpret and apply a contract entered into by
them.
The Court agreed with Respondent that the mathematical formulae contained in Annex
"B" are not all applicable to all classes of employees.Thus, "First Day-off rates" and
"Second Day-off rates" are applicable only to employees stationed at the refinery and
associated facilities like depots and terminals which must be in constant twenty-four
(24) hours a day, seven (7) days a week, operation, hence necessitating the continuous
presence of operations personnel. The work of such operations personnel required
them to be on duty for six (6) consecutive days. Upon the other hand, "First Day-off
rates" and "Second Day-off rates" are not applicable to personnel of the Manila Office
which consisted of other groups or categories of employees (e.g., office clerks,
librarians, computer operators, secretaries, collectors, etc.), since the nature of their
work did not require them to be on duty for six (6) consecutive days.
(On Second Issue)
The company practice of allowing employees to leave thirty (30) minutes earlier than
the scheduled off-time had been established primarily for the convenience of the
employees most of whom have had to commute from work place to home and in order
that they may avoid the heavy rush hour vehicular traffic. There is no allegation here
by petitioner Union that such practice was resorted to by Caltex in order to escape its
contractual obligations. This practice, while it effectively reduced to 37-1/2 the
number of hours actually worked by employees who had opted to leave ahead of offtime, is not be construed as modifying the other terms of the 1985 CBA. As correctly
pointed out by private respondent, the shortened work period did not result in likewise
shortening the work required for purposes of determining overtime pay, as well as for
purposes of determining premium pay for work beyond forty (40) hours within the
calendar week. It follows that an employee is entitled to be paid premium rates,
whether for work in excess of eight (8) hours on any given day, or for work beyond
the forty (40)-hour requirement for the calendar week, only when the employee had, in
fact already rendered the requisite number of hours 8 or 40 prescribed in the
1985 CBA.
In recapitulation, the parties in the 1985 CBA stipulated that employees at the Manila
Office, as well as those similarly situated at the Legazpi and Marinduque Bulk Depots,
shall be provided only one (1) day of rest; Sunday, and not Saturday, was designated

as this day of rest. Work performed on a Saturday is accordingly to be paid at regular

rates of pay, as a rule, unless the employee shall have been required to render work in
excess of forty (40) hours in a calendar week. The employee must, however, have in
fact rendered work in excess of forty (40) hours before hours subsequently worked
become payable at premium rates. The Court concluded that the NLRC correctly set
aside the palpable error committed by the Labor Arbiter, when the latter imposed upon
one of the parties to the 1985 CBA, an obligation which it had never assumed.
DISPOSITIVE: Petition dismissed.

UNION OF FILIPINO EMPLOYEES vs. VIVAR

Facts:
On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed
with the National Labor Relations Commission (NLRC) a petition for claims of its
monthly paid employees for holiday pay.
Abitrator Vivar: Filipro to pay its monthly paid employees holiday pay pursuant to Art
94 of Labor Code, subject to exclusions and limitations in Art 82.

Under Article 82, field personnel are not entitled to holiday pay. Said article defines
field personnel as non-agritultural employees who regularly perform their duties
away from the principal place of business or branch office of the employer and whose
actual hours of work in the field cannot be determined with reasonable certainty.
The law requires that the actual hours of work in the field be reasonably ascertained.
The company has no way of determining whether or not these sales personnel, even if
they report to the office before 8:00 a.m. prior to field work and come back at 4:30
p.m, really spend the hours in between in actual field work.

Filipro filed a motion for clarification seeking (1) the limitation of the award to three
years, (2) the exclusion of salesmen, sales representatives, truck drivers,
merchandisers and medical representatives (hereinafter referred to as sales personnel)
from the award of the holiday pay, and (3) deduction from the holiday pay award of
overpayment for overtime, night differential, vacation and sick leave benefits due to
the use of 251 divisor.

Moreover, the requirement that actual hours of work in the field cannot be determined
with reasonable certainty must be read in conjunction with Rule IV, Book III of the
Implementing Rules which provides:

Petitioner UFE answered that the award should be made effective from the date of
effectivity of the Labor Code, that their sales personnel are not field personnel and are
therefore entitled to holiday pay, and that the use of 251 as divisor is an established
employee benefit which cannot be diminished.

xxx xxx xxx

Arbitrator Vivar: On January 14, 1986, the respondent arbitrator issued an order
declaring that the effectivity of the holiday pay award shall retroact to November 1,
1974, the date of effectivity of the Labor Code. He adjudged, however, that the
companys sales personnel are field personnel and, as such, are not entitled to holiday
pay. He likewise ruled that with the grant of 10 days holiday pay, the divisor should
be changed from 251 to 261 and ordered the reimbursement of overpayment for
overtime, night differential, vacation and sick leave pay due to the use of 251 days as
divisor.

Hence, in deciding whether or not an employees actual working hours in the field can
be determined with reasonable certainty, query must be made as to whether or not such
employees time and performance is constantly supervised by the employer.

Issues:
1) Whether or not Nestles sales personnel are entitled to holiday pay; and
2) Whether or not, concomitant with the award of holiday pay, the divisor should be
changed from 251 to 261 days and whether or not the previous use of 251 as divisor
resulted in overpayment for overtime, night differential, vacation and sick leave pay.
Held:
1. Sales personnel are not entitled to holiday pay.

Rule IV Holidays with Pay

Sec. 1. Coverage This rule shall apply to all employees except:

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

2. The divisor in computing the award of holiday pay should still be 251 days.
While in that case the issue was whether or not salesmen were entitled to overtime pay,
the same rationale for their exclusion as field personnel from holiday pay benefits also
applies.
The petitioner union also assails the respondent arbitrators ruling that, concomitant
with the award of holiday pay, the divisor should be changed from 251 to 261 days to
include the additional 10 holidays and the employees should reimburse the amounts
overpaid by Filipro due to the use of 251 days divisor.
The 251 working days divisor is the result of subtracting all Saturdays, Sundays and
the ten (10) legal holidays from the total number of calendar days in a year. If the
employees are already paid for all non-working days, the divisor should be 365 and
not 251.

In the petitioners case, its computation of daily ratio since September 1, 1980, is as
follows:
monthly rate x 12 months / 251 days
The use of 251 days divisor by respondent Filipro indicates that holiday pay is not yet
included in the employees salary, otherwise the divisor should have been 261.
It must be stressed that the daily rate, assuming there are no intervening salary
increases, is a constant figure for the purpose of computing overtime and night
differential pay and commutation of sick and vacation leave credits. Necessarily, the
daily rate should also be the same basis for computing the 10 unpaid holidays.
The respondent arbitrators order to change the divisor from 251 to 261 days would
result in a lower daily rate which is violative of the prohibition on non-diminution of
benefits found in Article 100 of the Labor Code. To maintain the same daily rate if the
divisor is adjusted to 261 days, then the dividend, which represents the employees
annual salary, should correspondingly be increased to incorporate the holiday pay.
To illustrate, if prior to the grant of holiday pay, the employees annual salary is
P25,100, then dividing such figure by 251 days, his daily rate is P100.00 After the
payment of 10 days holiday pay, his annual salary already includes holiday pay and
totals P26,100 (P25,100 + 1,000). Dividing this by 261 days, the daily rate is still
P100.00. There is thus no merit in respondent Nestles claim of overpayment of
overtime and night differential pay and sick and vacation leave benefits, the
computation of which are all based on the daily rate, since the daily rate is still the
same before and after the grant of holiday pay.
SC Decision:
The Court thereby resolves that the grant of holiday pay be effective, not from the date
of promulgation of the Chartered Bank case nor from the date of effectivity of the
Labor Code, but from October 23, 1984, the date of promulgation of the IBAA case
(Insular Bank of Asia and America Employees Union (IBAAEU) v. Inciong, where
the court declared that Sec 2, Rule IV, Book III of IRR which excluded monthly paid
employees from holiday pay benefits, are null and void).
WHEREFORE, the order of the voluntary arbitrator in hereby MODIFIED. The
divisor to be used in computing holiday pay shall be 251 days. The holiday pay as
above directed shall be computed from October 23, 1984. In all other respects, the
order of the respondent arbitrator is hereby AFFIRMED.

Trans Action Overseas Corp. vs

Secretary of Labor (1997)

6.

Petitioner: Trans Action Overseas Corp.

Respondent: Secretary of Labor
Ponencia: Romero, J.
Digest Author: Gullas, J.
DOCTRINE: Jurisdiction of the DOLE over overseas employment
The power to suspend or cancel any license or authority to recruit employees for
overseas employment is concurrently vested with the POEA and the Secretary of
Labor.

Petitioner contends that Secretary Confesor acted with grave abuse of

discretion in rendering the assailed orders on the following grounds:
a. It is the Philippine Overseas Employment Administration (POEA)
which has the exclusive and original jurisdiction to hear and decide
illegal recruitment cases, including the authority to cancel
recruitment licenses
b. The cancellation order based on the 1987 POEA Schedule of
Penalties is not valid for non-compliance with the Revised
Administrative Code of 1987 regarding its registration with the
U.P. Law Center.

ISSUE:
Whether or not the Secretary of Labor and Employment has jurisdiction to cancel or
revoke the license of a private fee-charging employment agency.

FACTS:
PROVISION: Article 35 of the Labor Code
1.

Petitioner Trans Action Overseas Corporation, a private fee-charging

employment agency, scoured Iloilo City for possible recruits for alleged job
vacancies in Hong Kong.

2.

Private respondents (PRs) sought employment as domestic helpers through

petitioners employees. P.Rs paid fees ranging from Php1,000 to
Php14,000

3.

Petitioner failed to deploy PRs, who allegedly made prompt payment based
on petitioners promise to expedite their deployment.

4.

Their demands for refund proved unavailing; thus, they were constrained to
institute complaints against petitioner for violation of Articles 32 and 34(a)
of the Labor Code. They filed the complaints with the Department of Labor
and Employment (DOLE)

5.

ART. 35. Suspension and/or Cancellation of License or Authority. - The Minister of

Labor shall have the power to suspend or cancel any license or authority to recruit
employees for overseas employment for violation of rules and regulations issued by
the Ministry of Labor, the Overseas Employment Development Board, and the
National Seamen Board, or for violation of the provisions of this and other
applicable laws, General Orders and Letters of Instructions.
RULING + RATIO:
The Secretary of Labor has the jurisdiction, concurrently with the POEA, to revoke
or cancel the license of a private fee-charging employment agency. Article 35,
quoted above, is unambiguous in its wording granting such authority.

the Secretary of Labor has the power under Section 35 of the law to apply
these sanctions, as well as the authority, conferred by Section 36, not only
to restrict and regulate the recruitment and placement activities of all
agencies, but also to promulgate rules and regulations to carry out the
objectives and implement the provisions governing said activities. (Eastern
Assurance vs. Secretary of Labor)

A non-licensee or non-holder of authority means any person, corporation or

entity which has not been issued a valid license or authority to engage in
recruitment and placement by the Secretary of Labor, or whose license or
authority has been suspended, revoked or cancelled by the POEA or the
Secretary. (People v. Diaz)

Regarding the minor issue in 6 (b) above, the court stated that the license of
the petitioner was cancelled on the authority of Article 35 of the Labor

The DOLE, through Labor Undersecretary Nieves Confesor, ruled in favor

of the PRs, and demanded:
a.
b.

Petitioner to issue refunds for payments it received.

More importantly, DOLE suspended Trans Actions license to
operate as an overseas recruitment and placement agency for 66
months, and under the schedule of penalties, any suspension
amounting to a period of 12 months merits the imposition of the
penalty of cancellation, the license of respondent TRANS
ACTION OVERSEAS CORPORATION to participate in the
overseas placement and recruitment of workers is hereby ordered
CANCELLED, effective immediately.

Code, as amended, and not pursuant to the 1987 POEA Revised Rules on
Schedule of Penalties, as was wrongly posited by the petitioner.
DISPOSITION: Petition dismissed. Trans Action loses

G.R. No. 171231 : February 17, 2010

authority to interpret the same beyond what was expressly written.

PNCC SKYWAY TRAFFIC MANAGEMENT AND SECURITY DIVISION

WORKERS ORGANIZATION (PSTMSDWO), represented by its President,
RENE SORIANO, Petitioner, v. PNCC SKYWAY CORPORATION,
Respondent.

Petitioner filed a motion for reconsideration, which the CA denied Hence, the instant
petition assigning the following errors:
ISSUE: Whether the Court of Appeals erred in holding that the management has sole
discretion to schedule the vacation leave of the petitioner

PERALTA, J.:
HELD: The decision of the Court of Appeals is sustained.
FACTS:
Petitioner PNCC Skyway Corporation Traffic Management and Security Division
Workers' Organization (PSTMSDWO) is a labor union duly registered with the
DOLE. Respondent PNCC Skyway Corporation is a corporation duly organized and
operating under and by virtue of the laws of the Philippines.

LABOR LAW

On November 15, 2002, petitioner and respondent entered into a Collective

Bargaining Agreement (CBA) incorporating the terms and conditions of their
agreement which included vacation leave and expenses for security license
provisions.

The rule is that where the language of a contract is plain and unambiguous, its
meaning should be determined without reference to extrinsic facts or aids. The
intention of the parties must be gathered from that language, and from that language
alone. Stated differently, where the language of a written contract is clear and
unambiguous, the contract must be taken to mean that which, on its face, it purports
to mean, unless some good reason can be assigned to show that the words used
should be understood in a different sense.

Article VIII, Section 1 (b) of the CBA, the pertinent provisions of the CBA relative
to vacation leave and sick leave that the company shall schedule the vacation leave
of employees during the year taking into consideration the request of preference of
the employees. Any unused vacation leave shall be converted to cash and shall be
paid to the employees on the first week of December each year."

In the case at bar, the contested provision of the CBA is clear and unequivocal.
Article VIII, Section 1 (b) of the CBA categorically provides that the scheduling of
vacation leave shall be under the option of the employer. The preference requested
by the employees is not controlling because respondent retains its power and
prerogative to consider or to ignore said request.

Petitioner objected to the implementation of the said memorandum. It insisted that

the individual members of the union have the right to schedule their vacation leave.
It opined that the unilateral scheduling of the employees' vacation leave was done to
avoid the monetization of their vacation leave in December 2004.

Thus, if the terms of a CBA are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of its stipulation shall prevail. RFM
Corporation-Flour Division and SFI Feeds Division v. Kasapian ng Manggagawang
Pinagkaisa-RFM (KAMPI-NAFLU-KMU) and Sandigan at Ugnayan ng
Manggagawang Pinagkaisa-SFI (SUMAPI-NAFLU-KMU)G.R. No. 162324,
February 4, 2009.In fine, the CBA must be strictly adhered to and respected if its
ends have to be achieved, being the law between the parties. The parties cannot be
allowed to change the terms they agreed upon on the ground that the same are not
favorable to them.

Petitioner also demanded that the expenses for the required in-service training of its
member security guards, as a requirement for the renewal of their license, be
shouldered by the respondent. However, the respondent did not accede to petitioner's
demands and stood firm on its decision to schedule all the vacation leave of
petitioner's members.
Due to the disagreement between the parties, petitioner elevated the matter to the
DOLE-NCMB for preventive mediation. For failure to settle the issue amicably, the
parties agreed to submit the issue before the voluntary arbitrator.

There is, thus, no basis for the Voluntary Arbitrator to interpret the subject provision
relating to the schedule of vacation leaves as being subject to the discretion of the
union members. There is simply nothing in the CBA which grants the union
members this right.

Respondent filed a motion for reconsideration, which the voluntary arbitrator denied.
Aggrieved, respondent filed a Petition for Certiorari with Prayer for Temporary
Restraining Order and/or Writ of Preliminary Injunction with the CA, and the CA
annulled and setting aside the decision and order of the voluntary arbitrator. The CA
ruled that since the provisions of the CBA were clear, the voluntary arbitrator has no

It must be noted the grant to management of the right to schedule vacation leaves is
not without good reason. Indeed, if union members were given the unilateral
discretion to schedule their vacation leaves, the same may result in significantly
crippling the number of key employees of the petitioner manning the toll ways on
holidays and other peak seasons, where union members may wittingly or unwittingly

choose to have a vacation. Put another way, the grant to management of the right to
schedule vacation leaves ensures that there would always be enough people manning
and servicing the toll ways, which in turn assures the public plying the same orderly
and efficient toll way service.
Indeed, the multitude or scarcity of personnel manning the tollways should not rest
upon the option of the employees, as the public using the skyway system should be
assured of its safety, security and convenience.
Although the preferred vacation leave schedule of petitioner's members should be
given priority, they cannot demand, as a matter of right, that their request be
automatically granted by the respondent. If the petitioners were given the exclusive
right to schedule their vacation leave then said right should have been incorporated
in the CBA. In the absence of such right and in view of the mandatory provision in
the CBA giving respondent the right to schedule the vacation leave of its employees,
compliance therewith is mandated by law.
In the grant of vacation leave privileges to an employee, the employer is given the
leeway to impose conditions on the entitlement to and commutation of the same, as
the grant of vacation leave is not a standard of law, but a prerogative of
management.Sobrepe, Jr. v. Court of Appeals, 345 Phil. 714. It is a mere concession
or act of grace of the employer and not a matter of right on the part of the employee.
Thus, it is well within the power and authority of an employer to impose certain
conditions, as it deems fit, on the grant of vacation leaves, such as having the option
to schedule the same.

Philippine Hoteliers, Inc. (Dusit Hotel) vs. National

Union of Workers in Hotel, Restaurant and Allied
Industries
GR No. 181972, August 25, 2009
FACTS:
WO No. 9, approved by the Regional Tripartite Wages and Productivity Board
(RTWPB) of the National Capital Region (NCR), took effect on 5 November
2001. It grants P30.00 ECOLA to particular employees and workers of all private
sectors.
Section 13. Wage increases/allowances granted by an employer in an organized
establishment with three (3) months prior to the effectivity of this Order shall be
credited as compliance with the prescribed increase set forth herein, provided the
corresponding bargaining agreement provision allowing creditability exists. In the
absence of such an agreement or provision in the CBA, any increase granted by the
employer shall not be credited as compliance with the increase prescribed in this
Order.

Union, and awarding salary increases under the CBA to hotel employees retroactive
to 1 January 2001, already rendered the DOLE-NCR Order moot and
academic. With the increase in the salaries of the hotel employees, along with the
hotel employees share in the service charges, the 144 hotel employees, covered by
the DOLE-NCR Order, would already be receiving salaries beyond the coverage of
WO No. 9.
The DOLE Secretary favored Dusit Hotel, hence, the Union appealed with the Court
of Appeals via a Petition for Review under Rule 43 of the Rules of Court. The Court
of Appeal ruled in favor of the Union and declared that wage increases/allowances
granted by the employer shall not be credited as compliance with the prescribed
increase in the same Wage Order, unless so provided in the law or the CBA itself;
and there was no such provision in the case at bar.
Dusit Hotel filed an MR but it was denied for lack of merit by the Court of Appeals,
hence this case.
ISSUE: Were the 144 hotel employees were still entitled to ECOLA granted by WO
No. 9 despite the increases in their salaries, retroactive to 1 January 2001, ordered by
NLRC in the latters Decision dated 9 October 2002?
RULING:

The Union reported the non-compliance of Dusit Hotel with WO No. 9, which
affected 144 hotel employees. Meanwhile there was an on-going compulsory
arbitration before the National Labor Relations Commission (NLRC) due to a
bargaining deadlock between the Union and Dusit Hotel; and it also requested
immediate assistance on this matter.
An inspection was held, and the DOLE-NCR, directed Dusit Hotel to pay 144 of its
employees the total amount of P1,218,240.00, corresponding to their unpaid ECOLA
under WO No. 9; plus, the penalty of double indemnity, pursuant to Section 12 of
Republic Act No. 6727, as amended by Republic Act No. 8188.
In the meantime, the NLRC rendered a Decision dated 9 October 2002 in NLRCNCR-CC No. 000215-02 the compulsory arbitration involving the Collective
Bargaining Agreement (CBA) deadlock between Dusit Hotel and the Union
granting the hotel employees the following wage increases, in accord with the CBA:
Effective January 1, 2001- P500.00/month
Effective January 1, 2002- P550.00/month
Effective January 1, 2003- P600.00/month
Dusit Hotel filed a Motion for Reconsideration of the DOLE-NCR Order, arguing
that the NLRC, resolving the bargaining deadlock between Dusit Hotel and the

The Court agrees with Dusit Hotel that the increased salaries of the employees
should be used as bases for determining whether they were entitled to ECOLA under
WO No. 9. The very fact that the NLRC decreed that the salary increases of the
Dusit Hotel employees shall be retroactive to 1 January 2001 and 1 January 2002,
means that said employees were already supposed to receive the said salary increases
beginning on these dates. The increased salaries were the rightful salaries of the
hotel employees by 1 January 2001, then again by 1 January 2002. Although
belatedly paid, the hotel employees still received their salary increases.
It is only fair and just, therefore, that in determining entitlement of the hotel
employees to ECOLA, their increased salaries by 1 January 2001 and 1 January 2002
shall be made the bases. There is no logic in recognizing the salary increases for one
purpose (i.e., to recover the unpaid amounts thereof) but not for the other (i.e., to
determine entitlement to ECOLA). For the Court to rule otherwise would be to
sanction unjust enrichment on the part of the hotel employees, who would be
receiving increases in their salaries, which would place them beyond the coverage of
Section 1 of WO No. 9, yet still be paid ECOLA under the very same provision.