THIRD DIVISION

[G.R. No. 126383. November 28, 1997.]

SAN JUAN DE DIOS HOSPITAL EMPLOYEES ASSOCIATION-AFW/MA. CONSUELO MAQUILING,
LEONARDO MARTINEZ, DOMINGO ELA, JR., RODOLFO CALUCIN, JR., PERLA MENDOZA, REX
RAPHAEL REYES, ROGELIO BELMONTE, AND 375 OTHER EMPLOYEE-UNION
MEMBERS, petitioners, vs.NATIONAL LABOR RELATIONS COMMISSION,
and SAN JUAN DE DIOS HOSPITAL, respondents.

SYNOPSIS
Petitioners sent a written request for the expeditious implementation and payment by
respondent, San Juan de Dios Hospital, of the "40-Hours/5-Day workweek" with compensable weekly two days off as
provided for by Republic Act 5901 as clarified for enforcement by the Secretary of Labor's Policy Instructions No. 54 dated
April 12, 1988. Respondent hospital failed to give a favorable response; thus, petitioners filed a complaint regarding their
"claims for statutory benefits under the above-cited law and policy issuance." The Labor Arbiter, however, dismissed the
complaint. Petitioners appealed before public respondent National Labor Relations Commission (NLRC), which affirmed
the Labor Arbiter's decision. Hence, this petition, ascribing grave abuse of discretion on the part of NLRC in concluding
that Policy Instructions No. 54 "proceeds from a wrong interpretation of RA 5901" and Article 83 of the Labor Code. The
core issue is whether Policy Instructions No. 54 issued by then Labor Secretary Franklin M. Drilon is valid or not.
The Supreme Court affirmed the decision appealed from. There is nothing in the law (Article 83 of the Labor Code) that
supports then Secretary of Labor's assertion that "personnel in subject hospitals and clinics are entitled to a full weekly
wage for seven (7) days if they have completed the 40-hour/5-day workweek in any given workweek". Needless to say,
the Secretary of Labor exceeded his authority by including two days off with pay in contravention of the clear mandate of
the statute. A perusal of Republic Act No. 5901 reveals nothing therein that gives two days off with pay for health
personnel who complete a 40-hour work or 5-day workweek. The Explanatory Note of House Bill No. 16630 (later passed
into law as Republic Act No. 5901) explicitly states that the bill's sole purpose is to shorten the working hours of health
personnel and not to dole out a two days off with pay.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; REPUBLIC ACT NO. 5901 ( AN ACT PRESCRIBING FORTY HOURS A WEEK
OF LABOR FOR GOVERNMENT AND PRIVATE HOSPITALS OR CLINIC PERSONNEL); REPEALED WITH THE
PASSAGE OF THE LABOR CODE ON MAY 1, 1974. Policy Instruction No. 54 relies and purports to implement
Republic Act No. 5901, otherwise known as "An Act Prescribing Forty Hours A Week of Labor For Government And
Private Hospitals Or Clinic Personnel", enacted on June 21, 1969. Reliance on Republic Act No. 5901, however is
misplaced for the said statute, as correctly ruled by respondent NLRC, has long been repealed with the passage of
the Labor Code on May 1, 1974, Article 302 of which explicitly provides: "All labor laws not adopted as part of this Code
either directly or by reference are repealed. All provisions of existing laws, orders, decrees, rules and regulations
inconsistent herewith are likewise repealed."
2. ID.; LABOR CODE; ARTICLE 83 THEREOF CONSTRUED; ADMINISTRATIVE INTERPRETATION; THE COURT
MAY STRIKE DOWN INTERPRETATION THAT DEVIATES FROM THE PROVISION OF THE STATUTE. Only Article
83 of the Labor Code which appears to have substantially incorporated or reproduced the basic provisions of Republic Act
No. 5901 may support Policy Instructions No. 54 on which the latter's validity may be gauged. A cursory reading of Article
83 of the Labor Code betrays petitioners' position that "hospital employees" are entitled to "a full weekly salary with paid
two (2) days' off if they have completed the 40-hours/5-day work week". What Article 83 merely provides are: (1) the
regular office hour of eight hours a day, five days per week for health personnel, and (2) where the exigencies of service
require that health personnel work for six days or forty-eight hours then such health personnel shall be entitled to an
additional compensation of at least thirty percent of their regular wage for work on the sixth day. There is nothing in the
law that supports then Secretary of Labor's assertion that "personnel in subject hospitals and clinics are entitled to a full
weekly wage for seven (7) days if they have completed the 40-hour/5-day workweek in any given workweek." Needless to
say, the Secretary of Labor exceeded his authority by including a two days off with pay in contravention of the clear
mandate of the statute. Such act the Court shall not countenance. Administrative interpretation of the law is at best merely
advisory, and the Court will not hesitate to strike down an administrative interpretation that deviates from the provision of
the statute.
3. ID.; SECRETARY OF LABOR'S POLICY INSTRUCTIONS NO. 54; DECLARED VOID BY THE COURT; RATIONALE.
Even if the Court was to subscribe with petitioner's erroneous assertion that Republic Act No. 5901 has neither been
amended nor repealed by the Labor Code, we nevertheless find Policy Instructions No. 54 invalid. A perusal of Republic
Act No. 5901 reveals nothing therein that gives two days off with pay for health personnel who complete a 40 or 5-day
workweek. In fact, the Explanatory Note of House Bill No. 16630 (later passed into law as Republic Act No. 5901)
explicitly states that the bill's sole purpose is to shorten the working hours of health personnel and not to dole out a two-
days off with pay. Further, petitioners' position is also negated by the very rules and regulations promulgated by the
Bureau of Labor Standards which implement Republic Act No. 5901. If petitioners are entitled to two days off with pay,
then there appears to be no sense at all why Section 15 of the implementing rules grants additional compensation
equivalent to the regular rate plus at least twenty-five percent thereof for work performed on Sunday to health personnel,
or an "additional straight-time pay which must be equivalent at least to the regular rate" "[f]or work performed in excess of
forty hours a week . . . Policy Instructions No. 54 to the Court's mind unduly extended the statute. The Secretary
of Labor moreover erred in invoking the "spirit and intent" of Republic Act No. 5901 and Article 83 of the Labor Code for it
is an elementary rule of statutory construction that when the language of the law is clear and unequivocal, the law must be
taken to mean exactly what it says. No additions or revisions may be permitted. Policy Instructions No. 54 being
inconsistent with and repugnant to the provisions of Article 83 of the Labor Code, as well as to Republic Act No. 5901,
should be, as it is hereby; declared void.
DECISION
FRANCISCO, J : p

Petitioners, the rank-and-file employee-union officers and members of San Juan De Dios Hospital Employees
Association, sent on July 08, 1991, a "four (4)- page letter with attached support signatures . . . requesting and pleading
for the expeditious implementation and payment by respondent" Juan De Dios Hospital "of the '40-HOURS/5-DAY
WORKWEEK' with compensable weekly two (2) days off provided for by Republic Act 5901 as clarified for enforcement by
the Secretary of Labor's Policy Instructions No. 54 dated April 12, 1988." 1 Respondent hospital failed to give a favorable
response; thus, petitioners filed a complaint regarding their "claims for statutory benefits under the above-cited law and
policy issuance" 2 , docketed as NLRC NCR Case No. 00-08-04815-91. On February 26, 1992,
the Labor Arbiter 3dismissed the complaint. Petitioners appealed before public
respondent National Labor Relations Commission 4 (NLRC), docketed as NLRC NCR CA 003028-92, which affirmed
the Labor Arbiter's decision. Petitioners' subsequent motion for reconsideration was denied; hence, this petition under
Rule 65 of the Rules of Court ascribing grave abuse of discretion on the part of NLRC in concluding that Policy
Instructions No. 54 "proceeds from a wrong interpretation of RA 5901" 5 and Article 83 of theLabor Code. LLjur

As the Court sees it, the core issue is whether Policy Instructions No. 54 issued by then Labor Secretary (now Senator)
Franklin M. Drilon is valid or not.
The policy instruction in question provides in full as follows:
"Policy Instruction No. 54
"To: All Concerned
"Subject: Working Hours and Compensation of Hospital/Clinic Personnel
"This issuance clarifies the enforcement policy of this Department on the working hours and compensation of
personnel employed by hospitals/clinics with a bed capacity of 100 or more and those located in cities and
municipalities with a population of one million or more.
"Republic Act 5901 took effect on 21 June 1969 prescribes a 40-hour/5 day work week for hospital/clinic personnel.
At the same time, the Act prohibits the diminution of the compensation of these workers who would suffer a
reduction in their weekly wage by reason of the shortened workweek prescribed by the Act. In effect, RA
5901requires that the covered hospital workers who used to work seven (7) days a week should be paid for such
number of days for working only 5 days or 40 hours a week. cdphil

"The evident intention of RA 5901 is to reduce the number of hospital personnel, considering the nature of their
work and at the same time guarantee the payment to them of a full weekly wage for seven (7) days. This is quite
clear in the Exemplary Note of RA 5901 which states:

'As compared with the other employees and laborers, these hospital and health clinic personnel are over-
worked despite the fact that their duties are more delicate in nature. If we offer them better working
conditions, it is believed that the "brain drain", that our country suffers nowadays as far as these personnel
are concerned will be considerably lessened. The fact that these hospitals and health clinics personnel
perform duties which are directly concerned with the health and lives of our people does not mean that
they should work for a longer period than most employees and laborers. They are also entitled to as much
rest as other workers. Making them work longer than is necessary may endanger, rather than protect the
health of their patients. Besides, they are not receiving better pay than the other workers. Therefore, it is
just and fair that they may be made to enjoy the privileges of equal working hours with other workers
except those excepted by law. (Sixth Congress of the Republic of the Philippines, Third Session, House of
Representatives, H. No. 16630)'

"The Labor Code in its Article 83 adopts and incorporates the basic provisions of RA 5901 and retains its spirit and
intent which is to shorten the workweek of coveredhospital personnel and at the same time assure them of a full
weekly wage.
 "Consistent with such spirit and intent, it is the position of the Department that personnel in subject hospital and
clinics are entitled to a full weekly wage for seven (7) days if they have completed the 40-hour/5-day workweek in
any given workweek.

"All enforcement and adjudicatory agencies of this Department shall be guided by this issuance in the disposition of
cases involving the personnel of covered hospitals and clinics.
"Done in the City of Manila, this 12th day of April, 1988.
"(Sgd.) FRANKLIN M. DRILON
Secretary"
(Emphasis Added)

We note that Policy Instruction No. 54 relies and purports to implement Republic Act No. 5901, otherwise known as "An
Act Prescribing Forty Hours A Week Of Labor For Government and Private Hospitals Or Clinic Personnel", enacted on
June 21, 1969. Reliance on Republic Act No. 5901, however, is misplaced for the said statute, as correctly ruled by
respondent NLRC, has long been repealed with the passage of the Labor Code on May 1, 1974, Article 302 of which
explicitly provides: "All labor laws not adopted as part of this Code either directly or by reference are hereby repealed. All
provisions of existing laws, orders, decrees, rules and regulations inconsistent herewith are likewise repealed."
Accordingly, only Article 83 of the Labor Code which appears to have substantially incorporated or reproduced the basic
provisions ofRepublic Act No. 5901 may support Policy Instructions No. 54 on which the latter's validity may be
gauged. Article 83 of the Labor Code states:
"Art. 83. Normal Hours of Work. The normal hours of work of any employee shall not exceed eight (8) hours a
day.

"Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in hospitals and
clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for eight (8) hours a day, for
five (5) days a week, exclusive of time for meals, except where the exigencies of the service require that such
personnel work for six (6) days or forty-eight (48) hours, in which case they shall be entitled to an additional
compensation of at least thirty per cent (30%) of their regular wage for work on the sixth day. For purposes of this
Article, "health personnel" shall include: resident physicians, nurses, nutritionists, dietitians, pharmacists, social
workers, laboratory technicians, paramedical technicians, psychologists, midwives, attendants and all
other hospital or clinic personnel." (Emphasis supplied)

A cursory reading of Article 83 of the Labor Code betrays petitioners' position that "hospital employees" are entitled to "a
full weekly salary with paid two (2) days' off if they have completed the 40-hour/5-day workweek". 6 What Article 83 merely
provides are: (1) the regular office hour of eight hours a day, five days per week for health personnel, and (2) where the
exigencies of service require that health personnel work for six days or forty-eight hours then such health personnel shall
be entitled to an additional compensation of at least thirty percent of their regular wage for work on the sixth day. There is
nothing in the law that supports then Secretary of Labor's assertion that "personnel in subject hospitals and clinics are
entitled to a full weekly wage for seven (7) days if they have completed the 40-hour/5-day workweek in any given
workweek". Needless to say, the Secretary of Labor exceeded his authority by including a two days off with pay in
contravention of the clear mandate of the statute. Such act the Court shall not countenance. Administrative interpretation
of the law, we reiterate, is at best merely advisory, 7 and the Court will not hesitate to strike down an administrative
interpretation that deviates from the provision of the statute.
Indeed, even if we were to subscribe with petitioners' erroneous assertion that Republic Act No. 5901 has neither been
amended nor repealed by the Labor Code, we nevertheless find Policy Instructions No. 54 invalid. A perusal of Republic
Act No. 5901 8 reveals nothing therein that gives two days off with pay for health personnel who complete a 40-hour work
or 5-day workweek. In fact, the Explanatory Note of House Bill No. 16630 (later passed into law as Republic Act No. 5901)
explicitly states that the bill's sole purpose is to shorten the working hours of health personnel and not to dole out a two
days off with pay. Hence:
"The accompanying bill seeks to grant resident physicians, staff nurses, nutritionists, midwives, attendants and
other hospital and health clinic personnel of public and private hospitals and clinics, the privilege of enjoying the
eight hours a week exclusive of time for lunch granted by law to all government employees and workers except
those employed in schools and in courts. At present those hospitals and health clinic personnel including those
employed in private hospitals and clinics, work six days a week, 8 hours a day or 48 hours a week.

"As compared with the other employees and laborers, these hospital and health clinic personnel are over-worked
despite the fact that their duties are more delicate in nature. If we offer them better working conditions, it is believed
that the 'brain drain', that our country suffers nowadays as far as these personnel are concerned will be
considerably lessened. The fact that these hospitals and health clinic personnel perform duties which are directly
concerned with the health and lives of our people does not mean that they should work for a longer period than
most employees and laborers. They are also entitled to as much rest as other workers. Making them work longer
than is necessary may endanger, rather than protect, the health of their patients. Besides, they are not receiving
 better pay than the other workers. Therefore, it is just and fair that they be made to enjoy the privileges of equal
working hours with other workers except those excepted by law.

"In the light of the foregoing, approval of this bill is strongly recommended.
"(SGD.) SERGIO H. LOYOLA
"Congressman, 3rd District
Manila" (Annex "F" of petition, emphasis supplied)

Further, petitioners' position is also negated by the very rules and regulations promulgated by the Bureau
of Labor Standards which implement Republic Act No. 5901. Pertinent portions of the implementing rules provide:
"RULES AND REGULATIONS IMPLEMENTING
REPUBLIC ACT NO. 5901

"By virtue of Section 79 of the Revised Administrative Code, as modified by section 18 of Implementation Report
for Reorganization Plan No. 20-A on Labor, vesting in the Bureau of Labor Standards the authority to promulgate
rules and regulations to implement wage and hour laws, the following rules and regulations are hereby issued for
the implementation of Republic Act No. 5901. LibLex

"CHAPTER I Coverage
"Section 1. General Statement on Coverage. Republic Act No. 5901, hereinafter referred to as the Act, shall
apply to:

'(a) All hospitals and clinics, including those with a bed capacity of less than one hundred, which are
situated in cities or municipalities with a population of one million or more; and to

'(b) All hospitals and clinics with a bed capacity of at least one hundred, irrespective of
the size of population of the city or municipality where they may be situated.'
xxx xxx xxx
"Section 7. Regular Working Day. The regular working days of covered employees shall be not more than five
days in a workweek. The workweek may begin at any hour and on any day, including Saturday or Sunday,
designated by the employer.

"Employers are not precluded from changing the time at which the workday or workweek begins, provided that the
change is not intended to evade the requirements of these regulations on the payment of additional compensation."
xxx xxx xxx
"Section 15. Additional Pay Under the Act and C. A. No. 444. (a) Employees of covered hospitals and clinics
who are entitled to the benefits provided under the Eight-Hour Labor Law, as amended, shall be paid an additional
compensation equivalent to their regular rate plus at least twenty-five percent thereof for work performed on
Sunday and Holidays, not exceeding eight hours, such employees shall be entitled to an additional compensation
of at least 25% of their regular rate.
"(b) For work performed in excess of forty hours a week, excluding those rendered in excess of eight hours a day
during the week, employees covered by the Eight-Hour Labor Law shall be entitled to an additional straight-time
pay which must be equivalent at least to their regular rate."

If petitioners are entitled to two days off with pay, then there appears to be no sense at all why Section 15 of the
implementing rules grants additional compensation equivalent to the regular rate plus at least twenty-five percent thereof
for work performed on Sunday to health personnel, or an "additional straight-time pay which must be equivalent at least to
the regular rate" "[f]or work performed in excess of forty hours a week . . . Policy Instructions No. 54 to our mind unduly
extended the statute. The Secretary of Labor moreover erred in invoking the "spirit and intent" of Republic Act No.
5901 and Article 83 of the Labor Code for it is an elementary rule of statutory construction that when the language of the
law is clear and unequivocal, the law must be taken to mean exactly what it says. 9 No additions or revisions may be
permitted. Policy Instructions No. 54 being inconsistent with and repugnant to the provision of Article 83 of
the Labor Code, as well as to Republic Act No. 5901, should be, as it is hereby, declared void.
WHEREFORE, the decision appealed from is AFFIRMED. No costs.

SO ORDERED.
 FIRST DIVISION
[G.R. No. 119205. April 15, 1998]
SIME DARBY PILIPINAS, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION (2ND DIVISION) and
SIME DARBY SALARIED EMPLOYEES ASSOCIATION (ALU-TUCP), respondents.
DECISION
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

RE: NEW WORK SCHEDULE

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

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

7:45 A.M. 11:45 P.M. (Saturday).

Coffee break time will be ten minutes only anytime between:

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

2:30 P.M. 3:30 P.M.

Lunch break will be between:

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

Excluded from the above schedule are the Warehouse and QA employees who are on shifting. Their work and
break time schedules will be maintained as it is now.[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 justly 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 arlier 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 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 petitioners 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 lieu of comment a manifestation and motion recommending that the petition 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.[6] It 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 NLRCs 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 employers 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 right 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 as 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., (Chairman), Vitug, Panganiban, and Quisumbing, JJ., concur.
 SECOND DIVISION
[G.R. No. 132805. February 2, 1999]
PHILIPPINE AIRLINES, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER
ROMULUS PROTACIO and DR. HERMINIO A. FABROS, respondents.
DECISION
PUNO, J.:

Petitioner Philippine Airlines, Inc. assails the decision of the National Labor Relations Commission dismissing its appeal from the decision of Labor
Arbiter Romulus S. Protacio which declared the suspension of private respondent Dr. Herminio A. Fabros illegal and 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.

The facts are as follow:

Private respondent was employed as flight surgeon at petitioner company. He was assigned at the PAL Medical Clinic at Nichols and was on
duty from 4:00 in the afternoon until 12:00 midnight.
On February 17, 1994, at around 7:00 in the evening, private respondent left the clinic to have his dinner at his residence, which was about five-
minute drive away. A few minutes later, the clinic received an emergency call from the PAL Cargo Services. One of its employees, Mr. Manuel Acosta,
had suffered a heart attack. The nurse on duty, Mr. Merlino 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 private respondent reached the clinic at
around 7:51 in the evening, Mr. Eusebio had already left with the patient. Mr. Acosta died the following day.
Upon learning about the incident, PAL Medical Director Dr. Godofredo B. Banzon ordered the Chief Flight Surgeon to conduct an
investigation. The Chief Flight Surgeon, in turn, required private respondent to explain why no disciplinary sanction should be taken against him.
In his explanation, private respondent 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
was given ten days to submit a written answer to the administrative charge.
In his answer, private respondent reiterated the assertions in his previous explanation. He further 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, petitioner company decided to suspend private respondent for three
months effective December 16, 1994.
Private respondent filed a complaint for illegal suspension against petitioner.
On July 16, 1996, Labor Arbiter Romulus A. Protasio rendered a decision [1] 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. The dispositive portion of the decision reads:

WHEREFORE, in view of all the foregoing, judgment is hereby rendered declaring the suspension of complainant as illegal, and ordering the
respondents the restitution to the complainant of all employment benefits equivalent to his period of suspension, and the payment to the complainant
of P500,000.00 by way of moral damages. [2]

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.[3] The NLRC likewise denied petitioners motion for reconsideration.[4]
Hence, this petition raising the following arguments:

1. The public respondents acted without or in excess of their jurisdiction and with grave abuse of discretion in nullifying the 3-
month suspension of private respondent despite the fact that the private respondent has committed an offense that warranted
the imposition of disciplinary action.

2. The public respondents acted without or in excess of their jurisdiction and with grave abuse of discretion in holding the
petitioner liable for moral damages:

(a) Despite the fact that no formal hearing whatsoever was conducted for complainant to substantiate his claim;

(b) Despite the absence of proof that the petitioner acted in bad faith in imposing the 3-month suspension; and

(c) Despite the fact that the Labor Arbiter's award of moral damages is highly irregular, considering that it was more than
what the private respondent prayed for.[5]
 We find that public respondents did not err in nullifying the three-month suspension of private respondent. They, however, erred in awarding
moral damages to private respondent.
First, as regards the legality of private respondents suspension. The facts do not support petitioners allegation that private respondent abandoned
his post on the evening of February 17, 1994. Private respondent 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 full-time 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.
Articles 83 and 85 of the Labor Code read:

Art. 83. Normal hours of work.The normal hours of work of any employee shall not exceed eight (8) hours a day.

Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in hospitals and clinics with a bed
capacity of at least one hundred (100) shall hold regular office hours for eight (8) hours a day, for five (5) days a week, exclusive of
time for meals, except where the exigencies of the service require that such personnel work for six (6) days or forty-eight (48) hours,
in which case they shall be entitled to an additional compensation of at least thirty per cent (30%) of their regular wage for work on
the sixth day. For purposes of this Article, health personnel shall include: resident physicians, nurses, nutritionists, dieticians,
pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists, midwives, attendants and all other
hospital or clinic personnel.(emphasis supplied)

Art. 85. Meal periods.Subject to such regulations as the Secretary of Labor may prescribe, it shall be the duty of every employer to
give his employees not less than sixty (60) minutes time-off for their regular meals.

Section 7, Rule I, Book III of the Omnibus Rules Implementing the Labor Code further states:

Sec. 7. Meal and Rest Periods.Every employer shall give his employees, regardless of sex, not less than one (1) hour time-off for
regular meals, except in the following cases when a meal period of not less than twenty (20) minutes may be given by the employer
provided that such shorter meal period is credited as compensable hours worked of the employee;

(a) Where the work is non-manual work in nature or does not involve strenuous physical exertion;

(b) Where the establishment regularly operates not less than sixteen hours a day;

(c) In cases of actual or impending emergencies or there is urgent work to be performed on machineries, equipment or installations to
avoid serious loss which the employer would otherwise suffer; and

(d) Where the work is necessary to prevent serious loss of perishable goods.

Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be considered as compensable working time.

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.
We now go to the award of moral damages to private respondent.
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.[6] Bad faith does not simply mean negligence or bad judgment. It involves a state of mind dominated by ill
will or motive. It implies a conscious and intentional design to do a wrongful act for a dishonest purpose or some moral obliquity.[7] The person claiming
moral damages must prove the existence of bad faith by clear and convincing evidence for the law always presumes good faith. [8]
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, albeiterroneous, 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. Also, it is evident from the facts that petitioner gave
private respondent all the opportunity to refute the charge against him and to defend himself. These negate the existence of bad faith on the part of
petitioner. Under the circumstances, we hold that private respondent is not entitled to moral damages.
IN VIEW WHEREOF, 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. SO ORDERED.
 SECOND DIVISION
[G.R. No. 163147. October 10, 2007.]
LINTON COMMERCIAL CO., INC. and DESIREE ONG, petitioners, vs. ALEX A. HELLERA,
FRANCISCO RACASA, DANTE ESCARLAN, DONATO SASA, RODOLFO OLINAR, DANIEL
CUSTODIO, ARTURO POLLO, ROBERT OPELIA, B. PILAPIL, WINIFREG BLANDO, JUANITO
GUILLERMO, DONATO BONETE, ISAGANI YAP, CESAR RAGONON, BENEDICTO ILAGAN,
REXTE SOLANOY, RODOLFO LIM, ERNESTO ALCANTARA, DANTE DUMAPE, FELIPE CAGOCO
JR., JOSE NARCE, NELIO CANTIGA, QUIRINO C. ADA, MANUEL BANZON, JOEL F. ADA,
SATPARAM ELMER, ROMEO BALAIS, CLAUDIO S. MORALES, DANILO NORLE, LEONCIO
RACASA, NOEL LEONCIO RACASA, NOEL ACEDILLA, ELPIDIO E. VERGABINIA, JR., CONRADO
CAGOCO, ROY BORAGOY, EDUARDO GULTIA, REYNALDO SANTOS, LINO VALENCIA, ROY
DURANO, LEO VALENCIA, ROBERTO BLANDO, JAYOMA A., NOMER ALTAREJOS, RAMON
OLINAR III, SATURNINO C. EBAYA, FERNANDO R. REBUCAS, NICANOR L. DE CASTRO,
EDUARDO GONZALES, ISAGANI GONZALES, THOMAS ANDRAB, JR., MINIETO DURANO,
ERNESTO VALLENTE, NONITO I. DULA, NESTOR M. BONETE, JOSE SALONOY, ALBERTO
LAGMAN, ROLANDO TORRES, ROLANDO TOLDO, ROLINDO CUALQUIERA, ARMANDO LIMA,
FELIX D. DUMARE, ALFREDO SELAPIO, MARTIN V. VILLACAMPA, JR., CARLITO PABLE,
DANTE ESCARLAN, M. DURANO, RAMON ROSO, LORETA RAFAEL, and ELEZAR
MELLEJOR, respondents.
DECISION
TINGA, J :p

This is a petition for review under Rule 45 of the Rules of Civil Procedure seeking the reversal of the Decision 1 of the
Court of Appeals promulgated on 12 December 2003 as well as its Resolution 2 promulgated on 2 April 2004 denying
petitioners' motion for reconsideration.
This case originated from a labor complaint filed before the National Labor Relations Commission (NLRC) in which herein
respondents contended that petitioner Linton Commercial Company, Inc. (Linton) had committed illegal reduction of work
when it imposed a reduction of work hours thereby affecting its employees.
Linton is a domestic corporation engaged in the business of importation, wholesale, retail and fabrication of steel and its
by-products. 3 Petitioner Desiree Ong is Linton's vice president. 4 On 17 December 1997, Linton issued a
memorandum 5 addressed to its employees informing them of the company's decision to suspend its operations from 18
December 1997 to 5 January 1998 due to the currency crisis that affected its business operations. Linton submitted an
establishment termination report 6 to the Department of Labor and Employment (DOLE) regarding the temporary closure
of the establishment covering the said period. The company's operation was to resume on 6 January 1998.
On 7 January 1997, 7 Linton issued another memorandum 8 informing them that effective 12 January 1998, it would
implement a new compressed workweek of three (3) days on a rotation basis. In other words, each worker would be
working on a rotation basis for three working days only instead for six days a week. On the same day, Linton submitted an
establishment termination report 9 concerning the rotation of its workers. Linton proceeded with the implementation of the
new policy without waiting for its approval by DOLE.
Aggrieved, sixty-eight (68) workers (workers) filed a Complaint for illegal reduction of workdays with the Arbitration Branch
of the NLRC on 17 July 1998.
On the other hand, the workers pointed out that Linton implemented the reduction of work hours without observing Article
283 of the Labor Code, which required submission of notice thereof to DOLE one month prior to the implementation of
reduction of personnel, since Linton filed only the establishment termination report enacting the compressed workweek on
the very date of its implementation. 10CHDTEA

Petitioners, on the other hand, contended that the devaluation of the peso created a negative impact in international trade
and affected their business because a majority of their raw materials were imported. They claimed that their business
suffered a net loss of P3,569,706.57 primarily due to currency devaluation and the slump in the market. Consequently,
Linton decided to reduce the working days of its employees to three (3) days on a rotation basis as a cost-cutting
measure. Further, petitioners alleged that the compressed workweek was actually implemented on 12 January 1998 and
not on 7 January 1998, and that Article 283 was not applicable to the instant case. 11
Pending decision of the Labor Arbiter, twenty-one (21) of the workers signed individual release and quitclaim documents
stating that they had voluntarily tendered their resignation as employees of Linton and that they had been fully paid of all
monetary compensation due them. 12
On 28 January 2000, the Labor Arbiter rendered a Decision 13 finding petitioners guilty of illegal reduction of work hours
and directing them to pay each of the workers their three (3) days/week's worth of work compensation from 12 January
1998 to 13 July 1998.
Petitioners appealed to the National Labor Relations Commission (NLRC). In a Resolution 14 promulgated on 29 June
2001, the NLRC reversed the decision of the Labor Arbiter. The NLRC held that an employer has the prerogative to
control all aspects of employment in its business organization, including the supervision of workers, work regulation, lay-
off of workers, dismissal and recall of workers. The NLRC took judicial notice of the Asian currency crisis in 1997 and
1998 thus finding Linton's decision to implement a compressed workweek as a valid exercise of management prerogative.
Moreover, the NLRC ruled that Article 283 of the Labor Code, which requires an employer to submit a written notice to
DOLE one (1) month prior to the closure or reduction of personnel, is not applicable to the instant case because no
closure was undertaken and no reduction of employees was implemented by Linton. Lastly, the NLRC took note that there
were twenty-one (21) complainants-workers15 who had already resigned and executed individual waivers and quitclaims.
Consequently, the NRLC considered them as dropped from the list of complainants. The workers' motion for
reconsideration was denied in a Resolution 16 dated 24 September 2001.
The workers then filed before the Court of Appeals 17 a petition for certiorari under Rule 65 of the Rules of Civil Procedure
assailing the decision 18 of the NLRC and its resolution 19 that denied their Motion for Reconsideration. In the petition, the
workers claimed that the NLRC erred in finding that the one (1) month notice requirement under Article 283 of the Labor
Code did not apply to the instant case; that Linton did not exceed the limits of its business prerogatives; and that Linton
was able to establish a factual basis on record to justify the reduction of work days.
In its Comment, 20 Linton highlighted the fact that the caption, the body as well as the verification of the petition submitted
by complainants-workers indicated solely "Alex Hellera, et al." as petitioners. Linton argued that the petition was defective
and did not necessarily include the other workers in the proceedings before the NLRC. Linton also mentioned that 21 out
of the 68 complainants-workers executed individual resignation letters and individual waivers and quitclaims. 21 With these
waivers and quitclaims, Linton raised in issue whether the petition still included the signatories of said documents.
Moreover, Linton pointed out that the caption of the petition did not include the NLRC as party respondent, which made for
another jurisdictional defect. The rest of its arguments were merely a reiteration of its arguments before the NLRC.
In reversing the NLRC, the Court of Appeals, in its Decision 22 dated 12 December 2003 ruled that the failure to indicate
all the names of petitioners in the caption of the petition was not violative of the Rules of Court because the records of the
case showed that there were sixty-eight (68) original complainants who filed the complaint before the Arbitration Branch of
the NLRC. The appellate court likewise considered the quitclaims and release documents as "ready documents" which did
not change the fact that the 21 workers were impelled to sign the same. The appellate court gave no credence to the said
quitclaims, considering the economic disadvantage that would be suffered by the employees. The appellate court also
noted that the records did not show that the 21 workers desisted from pursuing the petition and that the waivers and
quitclaims would not bar the 21 complainants from continuing the action. 23 CIAac S

On the failure to include the NLRC as party respondent, the appellate court treated the NLRC as a nominal party which
ought to be joined as party to the petition simply because the technical rules require its presence on record. The inclusion
of the NLRC in the body of the petition was deemed by the appellate court as substantial compliance with the rules.
On the main issues, the Court of Appeals ruled that the employees were constructively dismissed because the short
period of time between the submission of the establishment termination report informing DOLE of its intention to observe
a compressed workweek and the actual implementation thereat was a manifestation of Linton's intention to eventually
retrench the employees. It found that Linton had failed to observe the substantive and procedural requirements of a valid
dismissal or retrenchment to avoid or minimize business losses since it had failed to present adequate, credible and
persuasive evidence that it was indeed suffering, or would imminently suffer, from drastic business losses. Linton's
financial statements for 1997-1998 showed no indication of financial losses, and the alleged loss of P3,645,422.00 in
1997 was considered insubstantial considering its total asset of P1,065,948,601.00. Hence, the appellate court
considered Linton's losses as de minimis.24
Lastly, the appellate court found Linton to have failed to adopt a more sensible means of cutting the costs of its operations
in less drastic measures not grossly unfavorable to labor. Hence, Linton failed to establish enough factual basis to justify
the necessity of a reduced workweek. 25

Petitioners filed a motion for reconsideration 26 which the appellate court denied through a Resolution 27 dated 2 April
2004.
In filing the instant petition for review, petitioners allege that the Court of Appeals erred when it considered the petition as
having been filed by all sixty (68) workers, in disregard of the fact that only "Alex Hellera, et al." was indicated as petitioner
in the caption, body and verification of the petition and twenty-one (21) of the workers executed waivers and quitclaims.
Petitioners further argue that the Court of Appeals erred in annulling the release and quitclaim documents signed by 21
employees because no such relief was prayed for in the petition. The validity of the release and quitclaim was also not
raised as an issue before the labor arbiter nor the NLRC. Neither was it raised in the very petition filed before the Court of
Appeals. Petitioners conclude that the Court of Appeals, therefore, had invalidated the waivers and quitclaims motu
proprio.
Petitioners also allege that the Court of Appeals erred when it held that the reduction of workdays is equivalent to
constructive dismissal. They posit that there was no reduction of salary but instead only a reduction of working days from
six to three days per week. Petitioners add that the reduction of workdays, while not expressly covered by any of the
provisions of the Labor Code, is analogous to the situation contemplated in Article 286 28 of the Labor Code because the
company implemented the reduction of workdays to address its financial losses. Lastly, they note that since there was no
retrenchment, the one-month notice requirement under Article 283 of the Labor Code is not applicable.
First, we resolve the procedural issues of the case. Rule 7, Section 1 of the Rules of Court states that the names of the
parties shall be indicated in the title of the original complaint or petition. However, the rules itself endorses its liberal
construction if it promotes the objective of securing a just, speedy and inexpensive disposition of the action or
proceeding. 29 Pleadings shall be construed liberally so as to render substantial justice to the parties and to determine
speedily and inexpensively the actual merits of the controversy with the least regard to technicalities. 30 ATHCac

In Vlason Enterprises Corporation v. Court of Appeals 31 the Court pronounced that, while the general rule requires the
inclusion of the names of all the parties in the title of a complaint, the non-inclusion of one or some of them is not fatal to
the cause of action of a plaintiff, provided there is a statement in the body of the petition indicating that a defendant was
made a party to such action. If in Vlason the Court found that the absence of defendant's name in the caption would not
cause the dismissal of the action, more so in this case where only the names of some of petitioners were not reflected.
This is consistent with the general rule that mere failure to include the name of a party in the title of a complaint is not fatal
by itself. 32
Petitioners likewise challenge the absence of the names of the other workers in the body and verification of the petition.
The workers' petition shows that the petition stipulated as parties-petitioners "Alex A. Hellera, et al." as employees of
Linton, meaning that there were more than one petitioner who were all workers of Linton. The petition also attached the
resolution 33 of the NLRC where the names of the workers clearly appear. As documents attached to a complaint form part
thereof, 34 the petition, therefore has sufficiently indicated that the rest of the workers were parties to the petition.
With respect to the absence of the workers' signatures in the verification, the verification requirement is deemed
substantially complied with when some of the parties who undoubtedly have sufficient knowledge and belief to swear to
the truth of the allegations in the petition had signed the same. Such verification is deemed a sufficient assurance that the
matters alleged in the petition have been made in good faith or are true and correct, and not merely speculative. 35 The
verification in the instant petition states that Hellera, the affiant, is the president of the union of "which complainants are all
members and officers." 36 As the matter at hand is a labor dispute between Linton and its employees, the union president
undoubtedly has sufficient knowledge to swear to the truth of the allegations in the petition. Hellera's verification
sufficiently meets the purpose of the requirements set by the rules.
Moreover, the Court has ruled that the absence of a verification is not jurisdictional, but only a formal defect. 37 Indeed, the
Court has ruled in the past that a pleading required by the Rules of Court to be verified may be given due course even
without a verification if the circumstances warrant the suspension of the rules in the interest of justice. 38
We turn to the propriety of the Court of Appeals' ruling on the invalidity of the waivers and quitclaims executed by the 21
workers. It must be remembered that the petition filed before the Court of Appeals was a petition for certiorari under Rule
65 in which, as a rule, only jurisdictional questions may be raised, including matters of grave abuse of discretion which are
equivalent to lack of jurisdiction. 39 The issue on the validity or invalidity of the waivers and quitclaims was not raised as an
issue in the petition. Neither was it raised in the NLRC. There is no point of reference from which one can determine
whether or not the NLRC committed grave abuse of discretion in its finding on the validity and binding effect of the waivers
and quitclaims since this matter was never raised in issue in the first place.
In addition, petitioners never had the opportunity to support or reinforce the validity of the waivers and quitclaims because
the authenticity and binding effect thereof were never challenged. In the interest of fair play, justice and due process, the
documents should not have been unilaterally evaluated by the Court of Appeals. Thus, the corresponding modification of
its Decision should be ordained.
After resolving the technical aspects of this case, we now proceed to the merits thereof. The main issue in this labor
dispute is whether or not there was an illegal reduction of work when Linton implemented a compressed workweek by
reducing from six to three the number of working days with the employees working on a rotation basis.
In Philippine Graphic Arts, Inc. v. NLRC, 40 the Court upheld for the validity of the reduction of working hours, taking into
consideration the following: the arrangement was temporary, it was a more humane solution instead of a retrenchment of
personnel, there was notice and consultations with the workers and supervisors, a consensus were reached on how to
deal with deteriorating economic conditions and it was sufficiently proven that the company was suffering from losses.
The Bureau of Working Conditions of the DOLE, moreover, released a bulletin 41 providing for in determining when an
employer can validly reduce the regular number of working days. The said bulletin states that a reduction of the number of
regular working days is valid where the arrangement is resorted to by the employer to prevent serious losses due to
causes beyond his control, such as when there is a substantial slump in the demand for his goods or services or when
there is lack of raw materials.
Although the bulletin stands more as a set of directory guidelines than a binding set of implementing rules, it has one main
consideration, consistent with the ruling inPhilippine Graphic Arts Inc., in determining the validity of reduction of working
hours that the company was suffering from losses.
Petitioners attempt to justify their action by alleging that the company was suffering from financial losses owing to the
Asian currency crisis. Was petitioners' claim of financial losses supported by evidence?
The lower courts did not give credence to the income statement submitted by Linton because the same was not audited
by an independent auditor. 42 The NLRC, on the other hand, took judicial notice of the Asian currency crisis which resulted
in the devaluation of the peso and a slump in market demand. 43 The Court of Appeals for its part held that Linton failed to
present adequate, credible and persuasive evidence to show that it was in dire straits and indeed suffering, or would
imminently suffer, from drastic business losses. It did not find the reduction of work hours justifiable, considering that the
alleged loss of P3,645,422.00 in 1997 is insubstantial compared to Linton's total asset of P1,065,948,601.76. 44 AcICTS

A close examination of petitioners' financial reports for 1997-1998 shows that, while the company suffered a loss of
P3,645,422.00 in 1997, it retained a considerable amount of earnings 45 and operating income. 46 Clearly then, while
Linton suffered from losses for that year, there remained enough earnings to sufficiently sustain its operations. In
business, sustained operations in the black is the ideal but being in the red is a cruel reality. However, a year of financial
losses would not warrant the immolation of the welfare of the employees, which in this case was done through a reduced
workweek that resulted in an unsettling diminution of the periodic pay for a protracted period. Permitting reduction of work
and pay at the slightest indication of losses would be contrary to the State's policy to afford protection to labor and provide
full employment. 47
Certainly, management has the prerogative to come up with measures to ensure profitability or loss minimization.
However, such privilege is not absolute. Management prerogative must be exercised in good faith and with due regard to
the rights of labor. 48

As previously stated, financial losses must be shown before a company can validly opt to reduce the work hours of its
employees. However, to date, no definite guidelines have yet been set to determine whether the alleged losses are
sufficient to justify the reduction of work hours. If the standards set in determining the justifiability of financial losses under
Article 283 (i.e., retrenchment) or Article 286 (i.e., suspension of work) of the Labor Code were to be considered,
petitioners would end up failing to meet the standards. On the one hand, Article 286 applies only when there is a bona fide
suspension of the employer's operation of a business or undertaking for a period not exceeding six (6) months. 49 Records
show that Linton continued its business operations during the effectivity of the compressed workweek, which spanned
more than the maximum period. On the other hand, for retrenchment to be justified, any claim of actual or potential
business losses must satisfy the following standards: (1) the losses incurred are substantial and not de minimis; (2) the
losses are actual or reasonably imminent; (3) the retrenchment is reasonably necessary and is likely to be effective in
preventing the expected losses; and (4) the alleged losses, if already incurred, or the expected imminent losses sought to
be forestalled, are proven by sufficient and convincing evidence. 50 Linton failed to comply with these standards.
All taken into account, the compressed workweek arrangement was unjustified and illegal. Thus, petitioners committed
illegal reduction of work hours.
In assessing the monetary award in favor of respondents, the Court has taken the following factors into account:
(1) The compressed workweek arrangement was lifted after six (6) months, or on 13 July 1998. 51 Thus, Linton
resumed its regular operations and discontinued the emergency measure;
(2) The claims of the workers, as reflected in their pleadings, were narrowed to petitioners' illegal reduction of their
work hours and the non-payment of their compensation for three (3) days a week from 12 January 1998 to 13 July
1998. They did not assert any other claims;
(3) As found by the NLRC, 21 of the workers are no longer entitled to any monetary award since they had already
executed their respective waivers and quitclaims. We give weight to the finding and exclude the 21 workers as
recipients of the award to be granted in this case. Consequently, only the following workers are entitled to the award,
with the amounts respectively due them stated opposite their names:
1. Alex A. Hellera - P16,368.30 3. Dante Escarlan - 15,912.00
2. Francisco Racasa - 16,458.00 4. Donato Sasa - 15,580.50
 5. Rodolfo Olinar - 15,912.00 27. Jayoma A. - 15,561.00
6. Daniel Custodio - 15,912.00 28. Ramon Olinar III - 15,678.00
7. Arturo Pollo - 16,660.80 29. Saturnino C. Ebaya - 15,919.80
8. B. Pilapil - 16,075.80 30. Nicanor L. de Castro - 16,614.00
9. Donato Bonete - 15,600.00 31. Eduardo Gonzales - 15,678.00
10. Isagani Yap - 15,678.00 32. Isagani Gonzales - 16,469.70
11. Cesar Ragonon - 16,068.00 33. Thomas Andrab, Jr. - 15,912.00
12. Benedicto Bagan - 15,775.50 34. Minieto Durano - 16,660.80
13. Rexte Solanoy - 15,678.00 35. Ernesto Vallente - 15,997.80
14. Felipe Cagoco, Jr. - 15,990.00 36. Nestor M. Bonete - 15,705.30
15. Jose Narce - 16,348.80 37. Jose Salonoy - 16,458.00
16. Quirino C. Ada - 15,990.00 38. Alberto Lagman - 16,660.80
17. Salfaram Elmer - 16,302.00 39. Rolando Torres - 15,678.00
18. Romeo Balais - 16,302.00 40. Rolindo Cualquiera - 16,068.00
19. Claudio S. Morales - 15,947.10 41. Armando Lima - 16,426.80
20. Elpidio E. Vergabinia - 15,561.00 42. Alfredo Selapio - 16,060.20
21. Conrado Cagoco - 15,990.00 43. Martin V. Villacampa - 15,939.30
22. Roy Boragoy - 15,892.50 44. Carlito Pable - 16,263.00
23. Reynaldo Santos - 16,200.60 45. Dante Escarlan - 15,912.00
24. Lino Valencia - 15,678.00 46. M. Durano - 16,614.00
25. Roy Durano - 15,678.00 47. Ramon Roso - 16,302.00 52
26. Leo Valencia - 15,678.00

(4) The Labor Arbiter's decision in favor of respondents was reversed by the NLRC. Considering that there is no
provision for appeal from the decision of the NLRC, 53 petitioners should not be deemed at fault in not paying the
award as ordered by the Labor Arbiter. Petitioners' liability only gained a measure of certainty only when the Court of
Appeals reversed the NLRC decision. In the interest of justice, the 6% legal interest on the award should commence
only from the date of promulgation of the Court of Appeals' Decision on 12 December 2003.
WHEREFORE, the Petition is GRANTED IN PART. The decision of the Court of Appeals reinstating the decision of the
Labor Arbiter is AFFIRMED with MODIFICATION to the effect that the 21 workers who executed waivers and quitclaims
are no longer entitled to back payments. Petitioners are ORDERED TO PAY respondents, except the aforementioned 21
workers, the monetary award as computed, 54 pursuant to the decision of the Labor Arbiter 55 with interest at the rate of
6% per annum from 12 December 2003, the date of promulgation of the Court of Appeals' decision, until the finality of this
decision, and thereafter at the rate of 12% per annum until full payment.
SO ORDERED.
||| (Linton Commercial Co., Inc. v. Hellera, G.R. No. 163147, [October 10, 2007], 561 PHIL 536-555)
 THIRD DIVISION
[G.R. No. 151309. October 15, 2008.]
BISIG MANGGAGAWA SA TRYCO and/or FRANCISCO SIQUIG, as Union President, JOSELITO
LARIO, VIVENCIO B. BARTE, SATURNINO EGERA and SIMPLICIO AYA-AY, petitioners, vs.
NATIONAL LABOR RELATIONS COMMISSION, TRYCO PHARMA CORPORATION, and/or
WILFREDO C. RIVERA,respondents.
DECISION
NACHURA, J : p

This petition seeks a review of the Decision 1 of the Court of Appeals (CA) dated July 24, 2001 and Resolution
dated December 20, 2001, which affirmed the finding of the National Labor Relations Commission (NLRC) that the
petitioners' transfer to another workplace did not amount to a constructive dismissal and an unfair labor practice. STcHDC

The pertinent factual antecedents are as follows:

Tryco Pharma Corporation (Tryco) is a manufacturer of veterinary medicines and its principal office is located
in Caloocan City. Petitioners Joselito Lario, Vivencio Barte, Saturnino Egera and Simplicio Aya-ay are its regular
employees, occupying the positions of helper, shipment helper and factory workers, respectively, assigned to the
Production Department. They are members of Bisig Manggagawa sa Tryco (BMT), the exclusive bargaining
representative of the rank-and-file employees.
Tryco and the petitioners signed separate Memorand[a] of Agreement 2 (MOA), providing for a compressed
workweek schedule to be implemented in the company effective May 20, 1996. The MOA was entered into pursuant to
Department of Labor and Employment Department Order (D.O.) No. 21, Series of 1990,Guidelines on the
Implementation of Compressed Workweek. As provided in the MOA, 8:00 a.m. to 6:12 p.m., from Monday to Friday,
shall be considered as the regular working hours, and no overtime pay shall be due and payable to the employee for
work rendered during those hours. The MOA specifically stated that the employee waives the right to claim overtime
pay for work rendered after 5:00 p.m. until 6:12 p.m. from Monday to Friday considering that the compressed workweek
schedule is adopted in lieu of the regular workweek schedule which also consists of 46 hours. However, should an
employee be permitted or required to work beyond 6:12 p.m., such employee shall be entitled to overtime pay.
Tryco informed the Bureau of Working Conditions of the Department of Labor and Employment of the
implementation of a compressed workweek in the company. 3
In January 1997, BMT and Tryco negotiated for the renewal of their collective bargaining agreement (CBA) but
failed to arrive at a new agreement.
Meantime, Tryco received the Letter dated March 26, 1997 from the Bureau of Animal Industry of the
Department of Agriculture reminding it that its production should be conducted in San Rafael, Bulacan, not in Caloocan
City:
MR. WILFREDO C. RIVERA
President, Tryco Pharma Corporation
San Rafael, Bulacan
Subject: LTO as VDAP Manufacturer at San Rafael, Bulacan
Dear Mr. Rivera:
This is to remind you that your License to Operate as Veterinary Drug and Product Manufacturer is
addressed at San Rafael, Bulacan, and so, therefore, your production should be done at the above mentioned
address only. Further, production of a drug includes propagation, processing, compounding, finishing, filling,
repacking, labeling, advertising, storage, distribution or sale of the veterinary drug product. In no instance,
therefore, should any of the above be done at your business office at 117 M. Ponce St., EDSA, Caloocan City.DISTcH

Please be guided accordingly.

Thank you.
Very truly yours,
(sgd.) EDNA ZENAIDA V. VILLACORTE, D.V.M.
Chief, Animal Feeds Standard Division 4
Accordingly, Tryco issued a Memorandum 5 dated April 7, 1997 which directed petitioner Aya-ay to report to
the company's plant site in Bulacan. When petitioner Aya-ay refused to obey, Tryco reiterated the order on April 18,
1997. 6 Subsequently, through a Memorandum 7 dated May 9, 1997, Tryco also directed petitioners Egera, Lario and
Barte to report to the company's plant site in Bulacan.
 BMT opposed the transfer of its members to San Rafael, Bulacan, contending that it constitutes unfair labor
practice. In protest, BMT declared a strike on May 26, 1997.
In August 1997, petitioners filed their separate complaints 8 for illegal dismissal, underpayment of wages,
nonpayment of overtime pay and service incentive leave, and refusal to bargain against Tryco and its President, Wilfredo
C. Rivera. In their Position Paper, 9 petitioners alleged that the company acted in bad faith during the CBA negotiations
because it sent representatives without authority to bind the company, and this was the reason why the negotiations
failed. They added that the management transferred petitioners Lario, Barte, Egera and Aya-ay from Caloocan to San
Rafael, Bulacan to paralyze the union. They prayed for the company to pay them their salaries from May 26 to 31, 1997,
service incentive leave, and overtime pay, and to implement Wage Order No. 4.
In their defense, respondents averred that the petitioners were not dismissed but they refused to comply with
the management's directive for them to report to the company's plant in San Rafael, Bulacan. They denied the allegation
that they negotiated in bad faith, stating that, in fact, they sent the Executive Vice-President and Legal Counsel as the
company's representatives to the CBA negotiations. They claim that the failure to arrive at an agreement was due to
the stubbornness of the union panel. IEaCDH

Respondents further averred that, long before the start of the negotiations, the company had already been
planning to decongest the Caloocan office to comply with the government policy to shift the concentration of
manufacturing activities from the metropolis to the countryside. The decision to transfer the company's production
activities to San Rafael, Bulacan was precipitated by the letter-reminder of the Bureau of Animal Industry.
On February 27, 1998, the Labor Arbiter dismissed the case for lack of merit. 10 The Labor Arbiter held that the
transfer of the petitioners would not paralyze or render the union ineffective for the following reasons: (1) complainants
are not members of the negotiating panel; and (2) the transfer was made pursuant to the directive of the Department of
Agriculture.
The Labor Arbiter also denied the money claims, ratiocinating that the nonpayment of wages was justified
because the petitioners did not render work from May 26 to 31, 1997; overtime pay is not due because of the
compressed workweek agreement between the union and management; and service incentive leave pay cannot be
claimed by the complainants because they are already enjoying vacation leave with pay for at least five days. As for the
claim of noncompliance with Wage Order No. 4, the Labor Arbiter held that the issue should be left to the grievance
machinery or voluntary arbitrator.
On October 29, 1999, the NLRC affirmed the Labor Arbiter's Decision, dismissing the case, thus:
PREMISES CONSIDERED, the Decision of February 27, 1998 is hereby AFFIRMED and complainants'
appeal therefrom DISMISSED for lack of merit. Complainants Joselito Lario, Vivencio Barte, Saturnino Egera and
Simplicio Aya-ay are directed to report to work at respondents' San Rafael Plant, Bulacan but without backwages.
Respondents are directed to accept the complainants back to work.
SO ORDERED. 11
On December 22, 1999, the NLRC denied the petitioners' motion for reconsideration for lack of merit. 12

Left with no recourse, petitioners filed a petition for certiorari with the CA.
On July 24, 2001, the CA dismissed the petition for certiorari and ruled that the transfer order was a
management prerogative not amounting to a constructive dismissal or an unfair labor practice. The CA further sustained
the enforceability of the MOA, particularly the waiver of overtime pay in light of this Court's rulings upholding a waiver
of benefits in exchange of other valuable privileges. The dispositive portion of the said CA decision reads:
WHEREFORE, the instant petition is DISMISSED. The Decision of the Labor Arbiter dated February 27,
1998 and the Decision and Resolution of the NLRC promulgated on October 29, 1999 and December 22, 1999,
respectively, in NLRC-NCR Case Nos. 08-05715-97, 08-06115-97 and 08-05920-97, are AFFIRMED.
SO ORDERED. 13
The CA denied the petitioners' motion for reconsideration on December 20, 2001. 14
Dissatisfied, petitioners filed this petition for review raising the following issues:
A
THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE PATENTLY ERRONEOUS
RULING OF THE LABOR ARBITER AND THE COMMISSION THAT THERE WAS NO DISMISSAL, MUCH LESS
ILLEGAL DISMISSAL, OF THE INDIVIDUAL PETITIONERS. IDcHCS

THE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING AND CONCLUDING THAT PRIVATE
RESPONDENTS COMMITTED ACTS OF UNFAIR LABOR PRACTICE.
 C

THE COURT OF APPEALS ERRED IN NOT FINDING AND CONCLUDING THAT PETITIONERS ARE
ENTITLED TO THEIR MONEY CLAIMS AND TO DAMAGES, AS WELL AS LITIGATION COSTS AND
ATTORNEY'S FEES. 15
The petition has no merit.
We have no reason to deviate from the well-entrenched rule that findings of fact of labor officials, who are
deemed to have acquired expertise in matters within their respective jurisdiction, are generally accorded not only respect
but even finality, and bind us when supported by substantial evidence. 16 This is particularly true when the findings of
the Labor Arbiter, the NLRC and the CA are in absolute agreement. 17 In this case, the Labor Arbiter, the NLRC, and
the CA uniformly agreed that the petitioners were not constructively dismissed and that the transfer orders did not
amount to an unfair labor practice. But if only to disabuse the minds of the petitioners who have persistently pursued
this case on the mistaken belief that the labor tribunals and the appellate court committed grievous errors, this Court
will go over the issues raised in this petition.

Petitioners mainly contend that the transfer orders amount to a constructive dismissal. They maintain that the
letter of the Bureau of Animal Industry is not credible because it is not authenticated; it is only a ploy, solicited by
respondents to give them an excuse to effect a massive transfer of employees. They point out that the Caloocan City
office is still engaged in production activities until now and respondents even hired new employees to replace them.
We do not agree.
We refuse to accept the petitioners' wild and reckless imputation that the Bureau of Animal Industry conspired
with the respondents just to effect the transfer of the petitioners. There is not an iota of proof to support this outlandish
claim. Absent any evidence, the allegation is not only highly irresponsible but is grossly unfair to the government agency
concerned. Even as this Court has given litigants and counsel a relatively wide latitude to present arguments in support
of their cause, we will not tolerate outright misrepresentation or baseless accusation. Let this be fair warning to counsel
for the petitioners.
Furthermore, Tryco's decision to transfer its production activities to San Rafael, Bulacan, regardless of whether
it was made pursuant to the letter of the Bureau of Animal Industry, was within the scope of its inherent right to control
and manage its enterprise effectively. While the law is solicitous of the welfare of employees, it must also protect the
right of an employer to exercise what are clearly management prerogatives. The free will of management to conduct its
own business affairs to achieve its purpose cannot be denied. 18 cDTSH E

This prerogative extends to the management's right to regulate, according to its own discretion and judgment,
all aspects of employment, including the freedom to transfer and reassign employees according to the requirements of
its business. 19 Management's prerogative of transferring and reassigning employees from one area of operation to
another in order to meet the requirements of the business is, therefore, generally not constitutive of constructive
dismissal. 20 Thus, the consequent transfer of Tryco's personnel, assigned to the Production Department was well within
the scope of its management prerogative.
When the transfer is not unreasonable, or inconvenient, or prejudicial to the employee, and it does not involve
a demotion in rank or diminution of salaries, benefits, and other privileges, the employee may not complain that it
amounts to a constructive dismissal. 21 However, the employer has the burden of proving that the transfer of an
employee is for valid and legitimate grounds. The employer must show that the transfer is not unreasonable,
inconvenient, or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries,
privileges and other benefits. 22
Indisputably, in the instant case, the transfer orders do not entail a demotion in rank or diminution of salaries,
benefits and other privileges of the petitioners. Petitioners, therefore, anchor their objection solely on the ground that it
would cause them great inconvenience since they are all residents of Metro Manila and they would incur additional
expenses to travel daily from Manila to Bulacan.
The Court has previously declared that mere incidental inconvenience is not sufficient to warrant a claim of
constructive dismissal. 23 Objection to a transfer that is grounded solely upon the personal inconvenience or hardship
that will be caused to the employee by reason of the transfer is not a valid reason to disobey an order of transfer. 24
Incidentally, petitioners cite Escobin v. NLRC 25 where the Court held that the transfer of the employees therein
was unreasonable. However, the distance of the workplace to which the employees were being transferred can hardly
compare to that of the present case. In that case, the employees were being transferred from Basilan to Manila; hence,
the Court noted that the transfer would have entailed the separation of the employees from their families who were
residing in Basilan and accrual of additional expenses for living accommodations in Manila. In contrast, the distance
from Caloocan to San Rafael, Bulacan is not considerably great so as to compel petitioners to seek living
accommodations in the area and prevent them from commuting to Metro Manila daily to be with their families.
 Petitioners, however, went further and argued that the transfer orders amounted to unfair labor practice because
it would paralyze and render the union ineffective. DHcTaE

To begin with, we cannot see how the mere transfer of its members can paralyze the union. The union was not
deprived of the membership of the petitioners whose work assignments were only transferred to another location.
More importantly, there was no showing or any indication that the transfer orders were motivated by an intention
to interfere with the petitioners' right to organize. Unfair labor practice refers to acts that violate the workers' right to
organize. With the exception of Article 248 (f) of the Labor Code of the Philippines, the prohibited acts are related to the
workers' right to self-organization and to the observance of a CBA. Without that element, the acts, no matter how unfair,
are not unfair labor practices. 26
Finally, we do not agree with the petitioners' assertion that the MOA is not enforceable as it is contrary to law.
The MOA is enforceable and binding against the petitioners. Where it is shown that the person making the waiver did
so voluntarily, with full understanding of what he was doing, and the consideration for the quitclaim is credible and
reasonable, the transaction must be recognized as a valid and binding undertaking. 27
D.O. No. 21 sanctions the waiver of overtime pay in consideration of the benefits that the employees will derive
from the adoption of a compressed workweek scheme, thus:
The compressed workweek scheme was originally conceived for establishments wishing to save on
energy costs, promote greater work efficiency and lower the rate of employee absenteeism, among others.
Workers favor the scheme considering that it would mean savings on the increasing cost of transportation fares
for at least one (1) day a week; savings on meal and snack expenses; longer weekends, or an additional 52 off-
days a year, that can be devoted to rest, leisure, family responsibilities, studies and other personal matters, and
that it will spare them for at least another day in a week from certain inconveniences that are the normal incidents
of employment, such as commuting to and from the workplace, travel time spent, exposure to dust and motor
vehicle fumes, dressing up for work, etc. Thus, under this scheme, the generally observed workweek of six (6)
days is shortened to five (5) days but prolonging the working hours from Monday to Friday without the employer
being obliged for pay overtime premium compensation for work performed in excess of eight (8) hours on
weekdays, in exchange for the benefits abovecited that will accrue to the employees.
Moreover, the adoption of a compressed workweek scheme in the company will help temper any inconvenience
that will be caused the petitioners by their transfer to a farther workplace.
Notably, the MOA complied with the following conditions set by the DOLE, under D.O. No. 21, to protect the
interest of the employees in the implementation of a compressed workweek scheme: cCSDaI

1. The employees voluntarily agree to work more than eight (8) hours a day the total in a week of which shall not
exceed their normal weekly hours of work prior to adoption of the compressed workweek arrangement;
2. There will not be any diminution whatsoever in the weekly or monthly take-home pay and fringe benefits of the
employees;
3. If an employee is permitted or required to work in excess of his normal weekly hours of work prior to the adoption
of the compressed workweek scheme, all such excess hours shall be considered overtime work and shall
be compensated in accordance with the provisions of the Labor Code or applicable Collective Bargaining
Agreement (CBA);

4. Appropriate waivers with respect to overtime premium pay for work performed in excess of eight (8) hours a day
may be devised by the parties to the agreement.
5. The effectivity and implementation of the new working time arrangement shall be by agreement of the parties.

PESALA v. NLRC, 28 cited by the petitioners, is not applicable to the present case. In that case, an employment
contract provided that the workday consists of 12 hours and the employee will be paid a fixed monthly salary rate that
was above the legal minimum wage. However, unlike the present MOA which specifically states that the employee
waives his right to claim overtime pay for work rendered beyond eight hours, the employment contract in that case was
silent on whether overtime pay was included in the payment of the fixed monthly salary. This necessitated the
interpretation by the Court as to whether the fixed monthly rate provided under the employment contract included
overtime pay. The Court noted that if the employee is paid only the minimum wage but with overtime pay, the amount
is still greater than the fixed monthly rate as provided in the employment contract. It, therefore, held that overtime pay
was not included in the agreed fixed monthly rate.
Considering that the MOA clearly states that the employee waives the payment of overtime pay in exchange of
a five-day workweek, there is no room for interpretation and its terms should be implemented as they are written.
WHEREFORE, the petition is DENIED. The Court of Appeals Decision dated July 24, 2001 and Resolution
dated December 20, 2001 are AFFIRMED.
SO ORDERED.
 THIRD DIVISION
[G.R. No. 211141. June 29, 2016.]
HILARIO DASCO, REYMIR PARAFINA, RICHARD PARAFINA, EDILBERTO ANIA, MICHAEL
ADANO, JAIME BOLO, RUBEN E. GULA, ANTONIO CUADERNO and JOVITO
CATANGUI, petitioners, vs. PHILTRANCO SERVICE ENTERPRISES, INC./CENTURION SOLANO,
Manager, respondents.
DECISION
REYES, J : p

This appeal by petition for review on certiorari 1 seeks to annul and set aside the Decision 2 dated August 30,
2013 and Resolution 3 dated January 28, 2014 of the Court of Appeals (CA) in CA-G.R. SP No. 126210, which nullified
and set aside the Decision 4 dated February 22, 2012 and Resolution 5 dated May 30, 2012 of the National Labor
Relations Commission (NLRC) in NLRC-NCR Case No. 07-10173-11, and reinstated the Decision 6 dated October 17,
2011 of the Labor Arbiter (LA), dismissing the monetary claims of Hilario Dasco, Reymir Parafina, Richard Parafina,
Edilberto Ania, Michael Adano, Jaime Bolo, Ruben E. Gula, Antonio Cuaderno and Jovito Catangui (petitioners). HTcADC

The Facts
This case stemmed from a complaint 7 for regularization, underpayment of wages, non-payment of service
incentive leave (SIL) pay, and attorney's fees, filed by the petitioners against Philtranco Service Enterprises, Inc.,
(PSEI), a domestic corporation engaged in providing public utility transportation, and its Manager, Centurion Solano
(respondents).
On various dates from 2006 to 2010, the petitioners were employed by the respondents as bus drivers and/or
conductors with travel routes of Manila (Pasay) to Bicol, Visayas and Mindanao, and vice versa. 8
On July 4, 2011, the petitioners filed a case against the respondents alleging that: (1) they were already qualified
for regular employment status since they have been working with the respondents for several years; (2) they were paid
only P404.00 per round trip, which lasts from two to five days, without overtime pay and below the minimum wage rate;
(3) they cannot be considered as field personnel because their working hours are controlled by the respondents from
dispatching to end point and their travel time is monitored and measured by the distance because they are in the
business of servicing passengers where time is of the essence; and (4) they had not been given their yearly five-day
SIL since the time they were hired by the respondents. 9
In response, the respondents asserted that: (1) the petitioners were paid on a fixed salary rate of P0.49 centavos
per kilometer run, or minimum wage, whichever is higher; (2) the petitioners are seasonal employees since their
contracts are for a fixed period and their employment was dependent on the exigency of the extraordinary public demand
for more buses during peak months of the year; and (3) the petitioners are not entitled to overtime pay and SIL pay
because they are field personnel whose time outside the company premises cannot be determined with reasonable
certainty since they ply provincial routes and are left alone in the field unsupervised. 10
Ruling of the LA
On October 17, 2011, the LA rendered a Decision 11 in favor of the respondents but declared the petitioners as
regular employees of the respondents. 12 The LA held that the respondents were able to prove that the petitioners were
paid on a fixed salary of P0.49 per kilometer run, or minimum wage, whichever is higher. The LA also found that the
petitioners are not entitled to holiday pay and SIL pay because they are considered as field personnel. 13
Dissatisfied with the LA's decision, the petitioners interposed a Partial Appeal 14 filed on December 8, 2011
before the NLRC.
Ruling of the NLRC
In a Decision 15 dated February 22, 2012, the NLRC granted the petitioners' appeal and modified the LA's
decision, the dispositive part of which reads:
WHEREFORE, premises considered, the Partial Appeal is GRANTED. The Decision of the [LA] dated
October 17, 2011 is hereby MODIFIED in that [PSEI] is directed to pay [the petitioners] wage differentials covering
a period of three (3) years counted backwards from the time they filed their complaint against respondents but
taking into consideration the respective dates of employment and the prevailing minimum wage rate applicable.
[PSEI] is likewise directed to pay [the petitioners SIL] and overtime benefits limited also for a period of three (3)
years counted backwards from the time they filed their complaint against respondents.
SO ORDERED. 16
The NLRC held that the petitioners are not field personnel considering that they ply specific routes with fixed
time schedules determined by the respondents; thus, they are entitled to minimum wage, SIL pay, and overtime
benefits. 17 With regard to the respondents' claim that the petitioners have a fixed term contract, the NLRC concurred
with the findings of the LA that the respondents failed to show any document, such as employment contracts and
employment records, that would show the dates of hiring, as well as the fixed period agreed upon. 18
 The respondents filed a Motion for Reconsideration 19 on March 12, 2012 but it was denied in a
Resolution 20 dated May 30, 2012; hence, they filed a Petition for Certiorari 21 before the CA.
Meanwhile, during the pendency of this case before the CA, the petitioners filed a motion for issuance of writ of
execution to enforce the NLRC decision. Accordingly, a Writ of Execution dated November 6, 2012 was issued. By
virtue of such writ, two units of buses owned by PSEI were levied and sold in a public auction, for the amount of
P600,000.00. Thereafter, a corresponding Sheriff's Certificate of Sale was issued. 22
Ruling of the CA
The CA, in its Decision 23 dated August 30, 2013, reversed and set aside the NLRC rulings and reinstated the
LA's decision. Consequently, the writ of execution, levy, auction sale and certificate of sale of PSEI's properties were
declared null and void. The petitioners and the NLRC Sheriff were directed to return the subject properties or turn over
the monetary value thereof to the respondents. 24
In overturning the NLRC's decision, the CA considered the petitioners as field workers and, on that basis, denied
their claim for benefits, such as overtime pay and SIL pay. According to the CA, there was no way for the respondents
to supervise the petitioners on their job. The petitioners are practically on their own in plying the routes in the field, as
in fact, they can deviate from the fixed routes, take short cuts, make detours, and take breaks, among others. The
petitioners work time and performance are not constantly supervised by the respondents, thus making them field
personnel. 25 aSc ITE

Aggrieved by the foregoing disquisition, the petitioners moved for reconsideration 26 but it was denied by the
CA in its Resolution 27 dated January 28, 2014. Hence, the present petition for review on certiorari.
The Issue
The main issue in this case is whether the petitioners as bus drivers and/or conductors are field personnel, and
thus entitled to overtime pay and SIL pay. 28
Ruling of the Court
The petition is impressed with merit.
Again, the Court reiterates that as a rule, it is not a trier of facts and this applies with greater force in labor
cases. Hence, factual findings of quasi-judicial bodies like the NLRC, particularly when they coincide with those of the
LA and if supported by substantial evidence, are accorded respect and even finality by this Court. But where the findings
of the NLRC and the LA are contradictory, as in the present case, this Court may delve into the records and examine
for itself the questioned findings. 29
Nevertheless, the facts and the issues surrounding this petition are no longer novel for this Court. The
determination of whether bus drivers and/or conductors are considered as field personnel was already threshed out in
the case of Auto Bus Transport Systems, Inc. v. Bautista, 30 where the Court explained that:
As a general rule, [field personnel] are those whose performance of their job/service is
not supervised by the employer or his representative, the workplace being away from the
principal office and whose hours and days of work cannot be determined with reasonable
certainty; hence, they are paid specific amount for rendering specific service or performing
specific work. If required to be at specific places at specific times, employees including drivers
cannot be said to be field personnel despite the fact that they are performing work away from
the principal office of the employee. . . .
xxx xxx xxx
. . . At this point, it is necessary to stress that the definition of a "field personnel" is not merely concerned
with the location where the employee regularly performs his duties but also with the fact that the employee's
performance is unsupervised by the employer. As discussed above, field personnel are those who regularly
perform their duties away from the principal place of business of the employer and whose actual hours of work in
the field cannot be determined with reasonable certainty. Thus, in order to conclude whether an employee is a field
employee, it is also necessary to ascertain if actual hours of work in the field can be determined with reasonable
certainty by the employer. In so doing, an inquiry must be made as to whether or not the employee's time and
performance are constantly supervised by the employer. 31
Guided by the foregoing norms, the NLRC properly concluded that the petitioners are not field personnel but
regular employees who perform tasks usually necessary and desirable to the respondents' business. Evidently, the
petitioners are not field personnel as defined above and the NLRC's finding in this regard is supported by the established
facts of this case: (1) the petitioners, as bus drivers and/or conductors, are directed to transport their passengers at a
specified time and place; (2) they are not given the discretion to select and contract with prospective passengers; (3)
their actual work hours could be determined with reasonable certainty, as well as their average trips per month; and (4)
the respondents supervised their time and performance of duties.
 In order to monitor their drivers and/or conductors, as well as the passengers and the bus itself, the bus
companies put checkers, who are assigned at tactical places along the travel routes that are plied by their buses. The
drivers and/or conductors are required to be at the specific bus terminals at a specified time. In addition, there are
always dispatchers in each and every bus terminal, who supervise and ensure prompt departure at specified times and
arrival at the estimated proper time. Obviously, these drivers and/or conductors cannot be considered as field personnel
because they are under the control and constant supervision of the bus companies while in the performance of their
work.
As correctly observed by the NLRC:
[I]t is undisputed that [the petitioners] as bus drivers/conductors ply specific routes of [PSEI], . . . averaging 2 to 5
days per round trip. They follow fixed time schedules of travel and follow the designated route of [PSEI]. Thus, in
carrying out their functions as bus drivers/conductors, they are not at liberty to deviate from the fixed time schedules
for departure or arrival or change the routes other than those specifically designated for [PSEI], in accordance with
the franchise granted to the [PSEI] as a public utility provider. In other words, [the petitioners] are clearly under the
strict supervision and control of [PSEI] in the performance of their functions otherwise the latter will not be able to
carry out its business as public utility service provider in accordance with its franchise. 32
The Court agrees with the above-quoted findings of the NLRC. Clearly, the petitioners, as bus drivers and/or
conductors, are left alone in the field with the duty to comply with the conditions of the respondents' franchise, as well
as to take proper care and custody of the bus they are using. Since the respondents are engaged in the public utility
business, the petitioners, as bus drivers and/or conductors, should be considered as regular employees of the
respondents because they perform tasks which are directly and necessarily connected with the respondents' business.
Thus, they are consequently entitled to the benefits accorded to regular employees of the respondents, including
overtime pay and SIL pay.
WHEREFORE, the petition is GRANTED. The Decision dated August 30, 2013 and Resolution dated January
28, 2014 of the Court of Appeals in CA-G.R. SP No. 126210 are REVERSED and SET ASIDE. The Decision dated
February 22, 2012 and Resolution dated May 30, 2012 of the National Labor Relations Commission in NLRC-NCR
Case No. 07-10173-11 are REINSTATED. HEITAD

SO ORDERED.
||| (Dasco v. Philtranco Service Enterprises, Inc., G.R. No. 211141, [June 29, 2016])
 FIRST DIVISION
[G.R. No. 219569. August 17, 2016.]
HSY MARKETING LTD., CO., * petitioner, vs. VIRGILIO O. VILLASTIQUE, respondent.
DECISION
PERLAS-BERNABE, J : p

Assailed in this petition for review on certiorari 1 are the Decision 2 dated October 29, 2014 and the
Resolution 3 dated July 14, 2015 of the Court of Appeals (CA) in CA-G.R. SP No. 05002-MIN, which affirmed the
Resolutions dated April 30, 2012 4 and June 29, 2012 5 of the National Labor Relations Commission (NLRC) in NLRC
Case No. MAC-02-012459-2012 (RAB-X-04-00179-2011), upholding the Labor Arbiter's (LA) dismissal of respondent
Virgilio O. Villastique's (respondent) complaint for illegal dismissal against petitioner HSY Marketing Ltd., Co.
(petitioner), and the award of separation pay in lieu of reinstatement, as well as service incentive leave pay, in favor of
respondent. 6
The Facts
On January 3, 2003, petitioner hired respondent as a field driver for Fabulous Jeans & Shirt & General
Merchandise 7 (Fabulous Jeans), tasked to deliver ready-to-wear items and/or general merchandise for a daily
compensation of P370.00. 8 On January 10, 2011, respondent figured in an accident when the service vehicle (a 2010-
model Mitsubishi Strada pick up) he was driving in Iligan City bumped a pedestrian, Ryan Dorataryo
(Dorataryo). 9 Fabulous Jeans shouldered the hospitalization and medical expenses of Dorataryo in the amount of
P64,157.15, which respondent was asked to reimburse, but to no avail. 10 On February 24, 2011,11 respondent was
allegedly required to sign a resignation letter, which he refused to do. A couple of days later, he tried to collect his salary
for that week but was told that it was withheld because of his refusal to resign. 12 Convinced that he was already
terminated on February 26, 2011, 13 he lost no time in filing a complaint for illegal dismissal with money claims 14 against
petitioner, Fabulous Jeans, and its owner, Alexander G. Arqueza (Arqueza; collectively, petitioner, et al.) before the
NLRC, docketed as RAB-X-04-00179-2011.
In their defense, 15 petitioner, et al. contended that respondent had committed several violations in the course
of his employment, and had been found by his superior and fellow employees to be a negligent and reckless driver,
which resulted in the vehicular mishap involving Dorataryo. 16 After they paid for Dorataryo's hospitalization and medical
expenses, respondent went on absence without leave, presumably to evade liability for his recklessness. 17 Since
respondent was the one who refused to report for work, he should be considered as having voluntarily severed his own
employment. 18 Thus, his money claims cannot prosper as he was not terminated.
The LA Ruling
In a Decision 19 dated November 28, 2011, the LA dismissed the charge of illegal dismissal, finding no evidence
to substantiate respondent's claim that he was dismissed from his job on February 26, 2011. 20 The LA declared that
neither was there a notice of termination issued to him, nor was he prevented from showing up in petitioner's place of
business. 21 There was likewise no evidence submitted by petitioner that respondent had indeed voluntarily
resigned. 22 According to the LA, mere absence or failure to report for work, even after a notice to return, is not
tantamount to abandonment. 23 However, it was not even shown that respondent was notified in writing to report for
work, or warned that his continued failure to report would be construed as abandonment or resignation. 24 Thus, the LA
ruled that the employer-employee relationship between the parties should be maintained. 25 Nonetheless, since the LA
pronounced that there were strained relations between the parties, petitioner was not ordered to reinstate respondent,
and instead, was directed to pay the latter the amount of P86,580.00 as separation pay. 26
Also, the LA awarded respondent the amount of P16,418.75 as service incentive leave pay, pointing out that
respondent was a field driver who regularly performed work outside petitioner's place of business and whose hours of
work could not be ascertained with reasonable certainty; and that petitioner had failed to present the payroll or pay slips
to prove that respondent was paid such benefit. 27
Finally, the LA dismissed the complaint against Fabulous Jeans and Arqueza for lack of factual and evidentiary
basis, finding petitioner to be respondent's employer. 28
Aggrieved, petitioner, et al. appealed 29 the case to the NLRC, imputing error on the part of the LA in holding
that respondent did not voluntarily resign from his employment, and in awarding separation pay and service incentive
leave pay. 30 They likewise asserted that petitioner was not the employer of respondent. 31 ETHID a

The NLRC Ruling

In a Resolution 32 dated April 30, 2012, the NLRC affirmed the finding of the LA that there was no illegal
dismissal to speak of, stressing the failure of respondent to discharge the burden of proof, which shifted to him when
his employer denied having dismissed him. 33 Similarly, the NLRC found no evidence of deliberate or unjustified refusal
on the part of respondent to resume his employment, or of overt acts unerringly pointing to the fact that respondent did
not want to work anymore. 34
 Petitioner, et al. moved for reconsideration, 35 but was denied in a Resolution 36 dated June 29, 2012.
Undaunted, they elevated the case to the CA by way ofcertiorari. 37
The CA Ruling
In a Decision 38 dated October 29, 2014, the CA affirmed in toto the NLRC Resolutions, observing that the
failure of petitioner, et al. to present the alleged resignation letter of respondent belied their claim that he voluntarily
resigned; and that the fact of filing by respondent of the labor complaint was inconsistent with the charge of
abandonment. 39 Thus, the CA found no grave abuse of discretion on the part of the NLRC in sustaining the award of
separation pay, which respondent had expressly prayed for from the very start of the proceedings, 40 thereby
foreclosing, by implication, reinstatement as a relief. 41 In addition, the CA held that reinstatement was no longer feasible
considering the resentment and enmity between the parties. 42
On the issue of respondent's entitlement to service incentive leave pay, the CA declared that respondent was
not a field personnel but a regular employee whose task was necessary and desirable to the usual trade and business
of his employer, which, thus, entitled him to the benefit in question. 43
Finally, the CA debunked petitioner's contention that it is a total stranger to the case, not having shown that it
has a personality separate and distinct from that of Fabulous Jeans. 44
Again, petitioner, et al. moved for reconsideration, 45 but was denied in a Resolution 46 dated July 14, 2015;
hence, this petition solely filed by herein petitioner.
The Issues Before the Court
The issues for the Court's resolution are whether or not the CA correctly: (a) found that an employment
relationship existed between the parties in this case; (b)affirmed the findings of the NLRC that respondent did not
voluntarily resign from work and petitioner did not dismiss him from employment, and consequently, awarded
respondent separation pay; and (c) declared respondent to be a regular employee and thus, awarded him service
incentive leave pay.
The Court's Ruling
The petition is partly meritorious.
I.
The Court first resolves the issue on the parties' employment relationship.
Case law instructs that the issue of whether or not an employer-employee relationship exists in a given
case is essentially a question of fact. It is settled that the Court is not a trier of facts, and this rule applies with greater
force in labor cases. 47 Generally, it may only look into factual issues in labor cases when the factual findings of the LA,
the NLRC, and the CA are conflicting. 48 Hence, if there is no cogent reason to hold otherwise, the Court ought to defer
to the findings of the foregoing tribunals on this question of fact.
In this case, it should be recalled that in the LA's November 28, 2011 Decision, the LA categorically declared
petitioner to be the employer of respondent and accordingly, dismissed the complaint against Fabulous Jeans and
Arqueza. 49 Consequently, in the Memorandum of Appeal 50 before the NLRC, where Fabulous Jeans joined petitioner
as respondent-appellant, it was argued that the LA should have dismissed the charges against petitioner instead,
considering that respondent was employed as a field driver for Fabulous Jeans, and that there was no employer-
employee relationship between him and petitioner. 51 The NLRC failed to explicitly address the said issue in its April 30,
2012 Resolution, referring to respondents-appellants (petitioner, et al. in this case) collectively as the employer.
However, it particularly debunked petitioner's assertion that there was ample evidence that respondent voluntarily
resigned and that he refused to return to work anymore; 52and pinpointed petitioner as the one that knew where to look
for respondent after the latter had allegedly disappeared. 53 The CA, on the other hand, minced no words when it
declared petitioner as attempting to avoid liability by claiming that it has a separate and distinct personality from that of
Fabulous Jeans without offering evidence to buttress the same. 54 Hence, considering that the LA, the NLRC, and the
CA consistently found petitioner liable as the employer of respondent, the Court sees no compelling reason to depart
from their judgment on this score.
In fact, it is even worth noting that respondent claimed in his Position Paper 55 before the LA that he was hired
by petitioner and was required to report for work at its store in Cagayan de Oro City. 56 This was confirmed by petitioner
in its own Position Paper, 57 declaring respondent to be "a field driver for the Cagayan de Oro Branch of (petitioner)
HSY MARKETING LTD., CO., (NOVO JEANS & SHIRT)." 58 Clearly, petitioner should be bound by such admission and
must not be allowed to continue to deny any employer-employee relationship with respondent. cSEDTC

To add, the Court had already exposed the practice of setting up "distributors" or "dealers" which are, in reality,
dummy companies that allow the mother company to avoid employer-employee relations and, consequently, shield the
latter from liability from employee claims in case of illegal dismissal, closure, unfair labor practices, and the
like. 59 Respondent had categorically alleged the commission of such pernicious practice in his Affidavit 60 dated July
14, 2011, as follows:
2. That for the many years that I have been employed with NOVO, I have observed that although they used the
business name NOVO Jeans and Shirts, the ownership of each and every branch in the entire Mindanao
was put under different corporate names like a) Asian Distributor in Bayugan; b) Novotel (with Hotel) in
Ozamis City; c) HSY Marketing Limited Corporation as their mother corporation; d) Fabulous Jeans and
Shirts in Iligan City and Cagayan de Oro City;
3. That the different ownership used by Respondent NOVO in its different branches was to minimize business tax; 61
Despite these statements, petitioner failed to present evidence to rebut the same. Therefore, it cannot be
allowed to evade liability as the employer of respondent.
II.
The Court likewise upholds the unanimous conclusion of the lower tribunals that respondent had not been
dismissed at all. Other than the latter's unsubstantiated allegation of having been verbally terminated from his work, no
substantial evidence was presented to show that he was indeed dismissed or was prevented from returning to his work.
In the absence of any showing of an overt or positive act proving that petitioner had dismissed respondent, the latter's
claim of illegal dismissal cannot be sustained, as such supposition would be self-serving, conjectural, and of no
probative value. 62
Similarly, petitioner's claims of respondent's voluntary resignation and/or abandonment deserve scant
consideration, considering petitioner's failure to discharge the burden of proving the deliberate and unjustified refusal
of respondent to resume his employment without any intention of returning. It was incumbent upon petitioner to ascertain
respondent's interest or non-interest in the continuance of his employment, 63 but to no avail.
Hence, since there is no dismissal or abandonment to speak of, the appropriate course of action is to reinstate
the employee (in this case, herein respondent) without, however, the payment of backwages. 64
Notably, the reinstatement ordered here should not be construed as a relief proceeding from illegal dismissal;
instead, it should be considered as a declaration or affirmation that the employee may return to work because he was
not dismissed in the first place. 65 For this reason, the Court agrees with petitioner that the LA, the NLRC, and the CA
erred in awarding separation pay in spite of the finding that respondent had not been dismissed. Properly
speaking, liability for the payment of separation pay is but a legal consequence of illegal dismissal where
reinstatement is no longer viable or feasible. As a relief granted in lieu of reinstatement, it goes without saying that
an award of separation pay is inconsistent with a finding that there was no illegal dismissal. 66 This is because an
employee who had not been dismissed, much less illegally dismissed, cannot be reinstated. 67 Moreover, as
there is no reinstatement to speak of, respondent cannot invoke the doctrine of strained relations 68 to support
his prayer for the award of separation pay. In the case of Capili v. NLRC, 69 the Court explained that:
The award of separation pay cannot be justified solely because of the existence of "strained relations"
between the employer and the employee. It must be given to the employee only as an alternative to
reinstatement emanating from illegal dismissal. When there is no illegal dismissal, even if the relations are
strained, separation pay has no legal basis. Besides, the doctrine on "strained relations" cannot be applied
indiscriminately since every labor dispute almost invariably results in "strained relations;" otherwise, reinstatement
can never be possible simply because some hostility is engendered between the parties as a result of their
disagreement. That is human nature. 70 (Emphasis supplied)
In fine, petitioner is ordered to reinstate respondent to his former position without the payment of backwages.
If respondent voluntarily chooses not to return to work, he must then be considered as having resigned from
employment. This is without prejudice, however, to the willingness of both parties to continue with their former contract
of employment or enter into a new one whenever they so desire. 71
III.
While petitioner should not be adjudged liable for separation pay, the Court nonetheless sustains the award of
service incentive leave pay in favor of respondent, in accordance with the finding of the CA that respondent was a
regular employee of petitioner and is, therefore, entitled to such benefit. As the CA aptly pointed out:
[R]espondent is not a field personnel as defined above because of the nature of his job as a company driver.
Expectedly, respondent is directed to deliver the goods at a specified time and place and he is not given the
discretion to solicit, select[,] and contact prospective clients. Respondent in his Position Paper claimed that he was
required to report for work from 8:00 a.m. to 8:00 p.m. at the company's store located at Velez-Gomez Street,
Cagayan de Oro City. Certainly then, respondent was under the control and supervision of petitioners. Respondent,
therefore, is a regular employee whose task is usually necessary and desirable to the usual trade and business of
the company. Thus, he is entitled to the benefits accorded to regular employees, including service incentive leave
pay. 72SDAaTC
 The Court has already held that company drivers who are under the control and supervision of
management officers like respondent herein are regular employees entitled to benefits including service
incentive leave pay. 73 "Service incentive leave is a right which accrues to every employee who has served 'within 12
months, whether continuous or broken reckoned from the date the employee started working, including authorized
absences and paid regular holidays unless the working days in the establishment as a matter of practice or policy, or
that provided in the employment contracts, is less than 12 months, in which case said period shall be considered as
one [(1)] year.' It is also commutable to its money equivalent if not used or exhausted at the end of the year. In other
words, an employee who has served for one (1) year is entitled to it. He may use it as leave days or he may collect its
monetary value." 74
Petitioner, as the employer of respondent, and having complete control over the records of the company, could
have easily rebutted the said monetary claim against it by presenting the vouchers or payrolls showing payment of the
same. However, since petitioner opted not to lift a finger in providing the required documentary evidence, the ineluctable
conclusion that may be derived therefrom is that it never paid said benefit and must, perforce, be ordered to settle its
obligation to respondent. 75
WHEREFORE, the petition is PARTLY GRANTED. The Decision dated October 29, 2014 and the Resolution
dated July 14, 2015 of the Court of Appeals in CA-G.R. SP No. 05002-MIN are
hereby AFFIRMED with MODIFICATION deleting the award of separation pay in the amount of P86,580.00. Instead,
petitioner HSY Marketing Ltd., Co. is ORDERED to reinstate respondent Virgilio O. Villastique to his former position
without payment of backwages in accordance with this Decision. Furthermore, petitioner is ORDERED to pay
respondent his unpaid service incentive leave pay in the amount of P16,418.75.
SO ORDERED.
||| (HSY Marketing Ltd., Co. v. Villastique, G.R. No. 219569, [August 17, 2016])
 THIRD DIVISION
[G.R. No. 192282. October 5, 2016.]
A. NATE CASKET MAKER AND/OR ARMANDO and ANELY NATE, petitioners, vs. ELIAS V.
ARANGO, EDWIN M. MAPUSAO, JORGE C. CARIO, JERMIE MAPUSAO, WILSON A. NATE,
EDGAR A. NATE, MICHAEL A. MONTALES, CELSO A. NATE, BENIES A. LLONA and ALLAN A.
MONTALES, respondents.
DECISION
PERALTA, J : p

Before us is a Petition for Review on Certiorari 1 under Rule 45 of the Rules of Court which seeks the reversal
of the Decision 2 dated January 6, 2010, and Resolution 3 dated May 13, 2010 of the Court of Appeals (CA) in CA-G.R.
SP No. 106965. The CA reversed and set aside the Decision 4 of the National Labor Relations
Commission (NLRC),Sixth Division, in NLRC NCR Case No. 00-02-01233-07 which affirmed the Decision 5 of the Labor
Arbiter dismissing the complaint for illegal dismissal, underpayment of wages, and non-payment of overtime pay, holiday
pay, service incentive leave pay and 13th month pay filed by respondents.
The factual antecedents are as follows:
Petitioners Armando and Anely Nate are the owners/proprietors of A. Nate Casket Maker. They employed
respondents on various dates as carpenters,mascilladors and painters in their casket-making business from 1998 until
their alleged termination in March 2007. Petitioners alleged in their Position Paper 6 that respondents
are pakyaw workers who are paid per job order. 7 Respondents are "stay-in" workers with free board and lodging, but
they would "always" drink, quarrel with each other on petty things such that they could not accomplish the job orders
on time. Hence, petitioners would then be compelled to "contract out" to other workers for the job to be finished. On
February 3, 2007, they met with respondents in order to present a proposed employment agreement which would
change the existing pakyaw system to "contractual basis" and would provide for vacation leave and sick leave pay and
other benefits given to regular employees. Petitioners alleged that the proposed employment agreement would be more
beneficial to respondents. 8
On the other hand, respondents alleged in their Position Paper, 9 that they worked from Monday to Saturday,
from 7:00 a.m. to 10:00 p.m.,with no overtime pay and any monetary benefits despite having claimed for such. On
March 15, 2007, they were called by petitioners and were made to sign a Contract of Employment 10 with the following
terms and conditions: (1) they shall be working on contractual basis for a period of five months; (2) renewal of
employment contract after such period shall be on a case-to-case basis or subject to respondents' efficiency and
performance; (3) petitioners shall reserve the right to terminate their employment should their performance fall below
expectations or if the conditions under which they were employed no longer exist; (4) their wages shall be on a piece-
rate basis; (5) in the performance of their tasks, they shall be obliged to strictly follow their work schedules; (6) they
shall not be eligible to avail of sick leave or vacation leave, nor receive 13th month pay and/or bonuses, or any other
benefits given to a regular employee. Respondents then alleged that when they were adamant and eventually refused
to sign the contract, petitioners told them to go home because their employment has been terminated. TCASc E

On February 8, 2007, respondents filed a Complaint for illegal dismissal and non-payment of separation pay
against petitioners. On March 15, 2007, they amended the complaint to include claims for underpayment of wages, non-
payment of overtime pay, holiday pay, 5-day service incentive leave pay and 13th month pay.
On August 15, 2007, Labor Arbiter (LA) Eduardo J. Carpio, issued a Decision dismissing the complaint for lack
of merit. While the LA acknowledged that respondents being pakyaw workers are considered regular employees, he
ruled that petitioners did not terminate the services of respondents and believed in the denial of petitioners that
respondents were called to their office on March 15, 2007 since respondents already initiated the present case on
February 8, 2007. On the issue of underpayment, the LA held that respondents were earning more than the minimum
wage per day; and as pakyaw workers, though they are deemed regular workers, they are not entitled to overtime pay,
holiday pay, service incentive leave pay and 13th month pay citing the case of field personnel and those paid on purely
commission basis.
Thereafter, respondents elevated the case before the NLRC, Sixth Division. On July 29, 2008, the NLRC
affirmed the Decision of the LA and held that no substantial evidence was presented to show that petitioners terminated
the employment of respondents. It stated that pakyaw workers are not entitled to money claims because their work
depends on the availability of job orders from petitioners' clients. Also, there was no proof that overtime work was
rendered by respondents. A motion for reconsideration was filed by respondents but the same was denied.
Aggrieved, respondents filed a petition for certiorari before the CA. In a Decision dated January 6, 2010, the
CA reversed and set aside the decision of the NLRC. The fallo states:
WHEREFORE, the petition for certiorari is GRANTED. Public Respondent's Decision dated July 29, 2008
and Resolution dated November 7, 2008 in NLRC LAC No. 12-003252-07 (NCR Case No. 00-02-01233-07) are
REVERSED AND SET ASIDE, and in lieu thereof, a new one is ENTERED, declaring petitioners to have been
illegally dismissed and ordering private respondents to pay them backwages, separation pay and other monetary
 benefits as required by law. Upon the finality of this decision and for the enforcement of the same, the Labor Arbiter
of origin is directed to conduct further proceedings for the purpose of determining the amount of backwages and
separation pay due petitioners.
SO ORDERED. 11
A motion for reconsideration was filed by petitioners but the same was denied by the Court of Appeals on May
13, 2010.
Hence, this petition, raising the following issues for resolution:
1. THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OR EXCESS OF JURISDICTION IN DECLARING THAT COMPLAINANTS WERE ILLEGALLY
DISMISSED; [and]
2. THERE ARE SERIOUS ERRORS IN THE FINDINGS OF FACTS WHICH, IF NOT CORRECTED, WOULD
CAUSE GRAVE AND IRREPARABLE DAMAGE TO THE PRIVATE RESPONDENTS. 12
Petitioners emphasized in their petition that they had always agreed and admitted 13 from the beginning of the
case the regular employment status of respondents. According to petitioners, what they are insisting, contrary to the
findings of the CA, is the alleged fact that they never dismissed the respondents from their employment. They argued
that since petitioners' business depended on the availability of job orders, necessarily the duration of respondents'
employment is not permanent but coterminous with the completion of such job orders. They further argued that since
respondents are "pakyaw" workers or "paid by result," they are not entitled to their money claims. cTDaEH

In their Comment to the Petition, respondents countered that only questions of law may be raised in a petition
for review on certiorari and that the errors being raised by petitioners are questions of fact.
A petition for review on certiorari under Rule 45 is a mode of appeal where the issue is limited to questions of
law. In labor cases, a Rule 45 petition is limited to reviewing whether the Court of Appeals correctly determined the
presence or absence of grave abuse of discretion and deciding other jurisdictional errors of the National Labor Relations
Commission. 14
The case of Career Philippines Shipmanagement, Inc., et al. v. Serna,15 citing Montoya v. Transmed Manila
Corp./Mr. Ellena, et al.,16 is instructive on the parameters of judicial review under Rule 45:
As a rule, only questions of law may be raised in a Rule 45 petition. In one case, we discussed the
particular parameters of a Rule 45 appeal from the CA's Rule 65 decision on a labor case, as follows:
In a Rule 45 review, we consider the correctness of the assailed CA decision, in
contrast with the review for jurisdictional error that we undertake under Rule 65. Furthermore,
Rule 45 limits us to the review of questions of law raised against the assailed CA decision. In
ruling for legal correctness, we have to view the CA decision in the same context that the petition
for certiorari it ruled upon was presented to it; we have to examine the CA decision from the
prism of whether it correctly determined the presence or absence of grave abuse of
discretion in the NLRC decision before it, not on the basis of whether the NLRC decision
on the merits of the case was correct.In other words, we have to be keenly aware that the CA
undertook a Rule 65 review, not a review on appeal, of the NLRC decision challenged before
it. 17
Therefore, in this kind of petition, the proper question to be raised is, "Did the CA correctly determine whether
the NLRC committed grave abuse of discretion in ruling on the case?" In other words, did the CA correctly determine
whether the NLRC ruling had basis in fact and in law? In Our Rule 45 review, this Court must deny the petition if it finds
that the CA correctly acted. These parameters shall be used in resolving the substantive issues in this petition. 18
To resolve the issue of whether petitioners are guilty of illegal dismissal, We necessarily have to determine the
veracity of the parties' allegations, a function we are ordinarily barred from performing when deciding a Rule 45 petition.
However, due to the conflicting factual findings of the NLRC and the CA, we find the review of the evidence on record
compelling and proper. 19
The crux of the dispute boils down to two issues, namely, (a) whether respondents' employment was terminated,
and (b) whether respondents who arepakyaw workers and considered regular workers are entitled to overtime pay,
holiday pay, service incentive leave pay and 13th month pay. Both issues are clearly factual in nature as they involved
appreciation of evidence presented before the NLRC.
There is no doubt that respondents have been under the employ of petitioners for some years. The conflict
arose when petitioners presented to respondents an employment contract hereunder reproduced:
A. NATE CASKET MAKER
30 Espirito St. Pangulo
Malabon, Metro Manila
CONTRACT OF EMPLOYMENT
 DATE: February 3, 2007
You are hereby assigned as worker/laborer at A. NATE CASKET MAKER. The following constitute the
terms and conditions under which the management of NATE CASKET MAKER governs. cSaATC

You will be working a 5-month contract basis. Your contract will be renewed on a case-to-case basis or
based upon the efficiency of your performance. The company also reserves the right to discontinue or terminate
your employment anytime if your performance does not come to expectations or if the conditions under which you
have been employed no longer exist.
You will be receiving remuneration on a per item/piece basis [i.e.,per casket made].You are obliged to
follow strictly your schedules to work or perform your duty. During the period of your employment, you will not [be]
eligible to earn or receive any sick leave pay, [vacation] leave pay, or any other benefits given to regular employees
such as 13th month pay and bonuses.
This contract and other conditions of your employment are governed further by existing company policies
and regulations, of which you have already been oriented into, and by future company policies which may be
issued from time to time.
Mr. and Mrs. Armando and Anely NATE
Proprietor Proprietress
I hereby accept this employment contract knowing and understanding fully well the terms and conditions
under which it shall be governed. I hereby acknowledge that I have been thoroughly oriented and I fully understand
the whole company policies, rules and regulations and thereby agree to abide by them when employed.
DATE: February 3, 2007 EMPLOYEE/WORKER 20
The said contract with a short term of five (5) months, renewable upon the terms set by petitioners, was
presented to respondents on February 3, 2007 21 (not February 8, 2007).Naturally, respondents who had been
continuously reporting to the petitioners since 1998 without any interruption would have second thoughts on signing the
said contract. Feeling disgruntled, they filed a Complaint with the NLRC on February 8, 2016 for money claims. To their
minds, it was a way to protect their status of employment. It was explained in the Rejoinder they presented to the LA
that it was purely money claims but, not being learned nor assisted by a lawyer, they also checked the box for "illegal
dismissal." 22
When the petitioners received the summons on March 15, 2007 in connection with the complaint, respondents
were ordered by petitioners to go to the latter's office. 23 Because there was no dismissal yet, and thinking perhaps that
it was for an amicable settlement of their claims, respondents went to the office of petitioners. However, respondents
were presented with the same contract. According to respondents, their refusal to sign the contract irated petitioners
who then told them to go home and not to report for work anymore. 24 This prompted respondents to file an amended
complaint for illegal dismissal and money claims.
The meeting on March 15, 2007 was denied by petitioners as well as the dismissal of respondents. It is worth
noting, however, that in the Position Paper of petitioners, they alleged that their offer of the said employment contract
to respondents was caused by the alleged refusal/failure of the latter to report for work as a result of the alleged drinking
and petty quarrels:
8. Considering that the complainants refuse to do their work, a meeting was held on February 8, 2007, to have a
proposal for a change of [pakyaw] system to that of contractual basis, giving them the sample employment
agreement for them to study. The herein respondents explained to them that the change of work system to that of
a contract basis which is beneficial to the complainants,the employees will receive a vacation and sick leave, or
any other benefits given to a regular [employee]. ...25
Clearly, the aforequoted allegation in the Position Paper of petitioners is contrary to the terms and conditions
stated in the employment contract. It is specifically stated in the employment agreement that during the period of
employment, respondents would not be eligible to earn or receive any sick leave pay, vacation leave pay, or any other
benefits given to regular employees such as 13th month pay and bonuses. Hence, the key to understanding petitioners'
motive in severing respondents' employment lies in the tenor of the contract itself which is the opposite to what is alleged
by petitioners in their position paper. Moreover, as correctly observed by the CA, there was the absence of proof to
show that petitioners conducted an investigation on the alleged drinking and petty quarrelling of respondents nor did
the petitioners provide respondents with an opportunity to explain their side with respect to charges against them. The
validity of the charge must be established in a manner consistent with due process. These circumstances, taken
together, lead Us to conclude that petitioners indeed terminated respondents' employment. The positive assertion of
respondents that they were dismissed by petitioners is more convincing than the mere denial of petitioners. cHD AIS

In termination cases, the burden of proving just and valid cause for dismissing an employee from his
employment rests upon the employer, and the latter's failure to do so would result in a finding that the dismissal is
unjustified. Petitioners failed to discharge this burden. 26
 It must be emphasized that employers cannot seek refuge under whatever terms of the agreement they had
entered into with their employees. The law, in defining their contractual relationship, does so, not necessarily or
exclusively upon the terms of their written or oral contract, but also on the basis of the nature of the work of employees
who had been called upon to perform. The law affords protection to an employee, and it will not countenance any
attempt to subvert its spirit and intent. A stipulation in an agreement can be ignored as and when it is utilized to deprive
the employee of his security of tenure. The sheer inequality that characterizes employer-employee relations, where the
scales generally tip against the employee, often scarcely provides him real and better options. 27
Furthermore, petitioners agreed that respondents are regular employees. Article 280 of the Labor
Code provides:
Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are usually necessary or desirable in the usual
business or trade of the employer, except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of the engagement of the
employee or where the work or services to be performed is seasonal in nature and the employment is for the
duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph; Provided,
That, any employee who has rendered at least one year of service, whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in which he is employed and his employment
shall continue while such activity exist.
This provision classifies employees into regular, project, seasonal, and casual. It further classifies regular
employees into two kinds: (1) those "engaged to perform activities which are usually necessary or desirable in the usual
business or trade of the employer";and (2) casual employees who have "rendered at least one year of service, whether
such service is continuous or broken."
A regular employment, whether it is one or not, is aptly gauged from the concurrence, or the non-concurrence,
of the following factors (a) the manner of selection and engagement of the putative employee; (b) the mode of
payment of wages; (c) the presence or absence of the power of dismissal; and (d) the presence or absence of the power
to control the conduct of the putative employee or the power to control the employee with respect to the means or
methods by which his work is to be accomplished. The "control test" assumes primacy in the overall consideration.
Under this test, an employment relation obtains where work is performed or services are rendered under the control
and supervision of the party contracting for the service, not only as to the result of the work but also as to the manner
and details of the performance desired. 28 ISHCcT

There is no dispute that the tasks performed by respondents as carpenters, painters, and mascilladors were
necessary and desirable in the usual business of petitioners who are engaged in the manufacture and selling of caskets.
We have to also consider the length of time that respondents worked for petitioners, commencing on various dates from
1998 to 2007. In addition, the power of control of petitioners over respondents is clearly present in this case.
Respondents follow the steps in making a casket, as instructed by the petitioners, like carpentry, mascilla,rubbing and
painting. They had their own notebooks where they listed the work completed with their signature and the date finished.
The same would be checked by petitioners as basis for the compensation for the day. Thus, petitioners wielded control
over the respondents in the discharge of their work.
It should be remembered that the control test merely calls for the existence of the right to control, and not
necessarily the exercise thereof. It is not essential that the employer actually supervises the performance of duties by
the employee. It is enough that the former has a right to wield the power. 29 Hence, pakyawworkers are considered
regular employees for as long as their employers exercise control over them. Thus, while respondents' mode of
compensation was on a per-piece basis, the status and nature of their employment was that of regular employees. 30
As regular employees, respondents were entitled to security of tenure and could be dismissed only for just or
authorized causes and after the observance of due process. The right to security of tenure is guaranteed under Article
XIII, Section 3 of the 1987 Constitution:
Article XIII. Social Justice and Human Rights Labor
It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and
peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security
of tenure,humane conditions of work, and a living wage. They shall also participate in policy and decision-making
processes affecting their rights and benefits as may be provided by law. 31
Likewise, Article 279 of the Labor Code also provides for the right to security of tenure, thus:
Art. 279. Security of tenure. In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to
 his full backwages,inclusive of allowances, and to his other benefits or their monetary equivalent computed from
the time his compensation was withheld from him up to the time of his actual reinstatement. 32
Therefore, on the right to security of tenure, no employee shall be dismissed, unless there are just or authorized
causes and only after compliance with procedural and substantive due process. Section 2, Rule XIV, Book V of
the Omnibus Rules Implementing the Labor Code provides: C AacTH

SEC. 2. Notice of Dismissal. Any employer who seeks to dismiss a worker shall furnish him a written
notice stating the particular acts or omission constituting the grounds for his dismissal. In cases of abandonment
of work, the notice shall be served at the workers' last known address.
Petitioners violated respondents' rights to security of tenure and constitutional right to due process in not even
serving them with a written notice of termination which would recite any valid or just cause for their dismissal.
Respondents were merely told that their services are terminated. Thus, the Court of Appeals correctly ruled that private
respondents were illegally dismissed.
Under Article 279 of the Labor Code as aforestated, an employee unjustly dismissed from work is entitled to
reinstatement and backwages, among others. Reinstatement restores the employee who was unjustly dismissed to the
position from which he was removed, that is, to his status quo ante dismissal, while the grant of backwages allows the
same employee to recover from the employer that which he had lost by way of wages as a result of his dismissal. These
twin remedies reinstatement and payment of backwages make the dismissed employee whole who can then look
forward to continued employment. Thus, do these two remedies give meaning and substance to the constitutional right
of labor to security of tenure. 33 Respondents are, therefore, entitled to reinstatement with full backwages pursuant to
Article 279 of the Labor Code,as amended by R.A. No. 6715.
On reinstatement, the CA ordered payment of separation pay in lieu of reinstatement. The accepted doctrine is
that separation pay may avail in lieu of reinstatement if reinstatement is no longer practical or in the best interest of the
parties. Separation pay in lieu of reinstatement may likewise be awarded if the employee decides not to be reinstated.
We defer to the findings of the Court of Appeals and authorized under jurisprudence, that separation pay in lieu of
reinstatement is warranted in this case. 34 Respondents filed their complaint in 2007. Nine (9) years are a substantial
period 35 to bar reinstatement. The dispositive portion of the CA Decision is consistent with the premise that the
respondents were entitled to reinstatement by reason of their illegal dismissal, but they could receive instead separation
pay in lieu of reinstatement if reinstatement is no longer practicable.
That being said, the amount of backwages to which each respondent is entitled, however, cannot be fully settled
at this time. As respondents are piece-rate workers being 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 NLRC. In Labor Congress
of the Philippines v. NLRC, 36 the Court was confronted with a situation wherein several workers paid on a piece-rate
basis were entitled to backwages by reason of illegal dismissal. The Court noted that as the piece-rate workers had
been paid by the piece, "there [was] a need to determine the varying degrees of production and days worked by each
worker," and that "this issue is best left to the [NLRC]." We believe the same result should obtain in this case, and the
NLRC be tasked to conduct the proper determination of the appropriate amount of backwages due to each of the
respondents. 37 IAETDc

Nonetheless, even as the case should be remanded to the NLRC for the proper determination of backwages,
nothing in this decision should be construed in a manner that would impede the award of separation pay to the
respondents as previously rendered by the CA. 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. 38
As to the other benefits, namely, holiday pay, 13th month pay, service incentive leave pay and overtime pay
which respondents prayed for in their complaint, We affirm the ruling of the CA that respondents are so entitled to these
benefits.
In the case of David v. Macasio,39 We held that workers engaged on pakyaw or "task basis" are entitled to
holiday and service incentive leave pay (SIL) provided they are not field personnel:
In short, in determining whether workers engaged on "pakyaw" or "task basis" is entitled to holiday and
SIL pay, the presence (or absence) of employer supervision as regards the worker's time and performance is the
key: if the worker is simply engaged on "pakyaw" or task basis, then the general rule is that he is entitled to a
holiday pay and SIL pay unless exempted from the exceptions specifically provided under Article 94 (holiday
pay) 40 and Article 95 (SIL pay) 41 of the Labor Code.However, if the worker engaged on pakyaw or task basis also
falls within the meaning of "field personnel" under the law, then he is not entitled to these monetary benefits.42
Based on the definition of field personnel under Article 82, 43 respondents do not fall under the definition of "field
personnel." First, respondents regularly performed their duties at petitioners' place of business; second, their actual
hours of work could be determined with reasonable certainty; and, third, petitioners supervised their time and
performance of their duties. Since respondents cannot be considered as "field personnel," then they are not exempted
from the grant of holiday and SIL pay even as they were engaged on pakyaw or task basis.
 With respect to the payment of 13th month pay, however, We find that respondents are not entitled to such
benefit. Again, as We ruled in the case of David v. Macasio:44
The governing law on 13th month pay is Presidential Decree No. 851. 45 As with holiday and SIL pay,
13th month pay benefits generally cover all employees; an employee must be one of those expressly enumerated
to be exempted. Section 3 of the Rules and Regulations Implementing 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 ...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 Rules and
Regulations Implementing PD 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. 46
All told, We need to stress that the Constitution affords full protection to labor, and that in light of this
Constitutional mandate, We must be vigilant in striking down any attempt of the management to exploit or oppress the
working class. The law, in protecting the rights of the employees, authorizes neither oppression nor self-destruction of
the employer. It should be made clear that when the law tilts the scales of justice in favor of labor, it is in recognition of
the inherent economic inequality between labor and management. The intent is to balance the scales of justice; to put
the two parties on relatively equal positions. 47 DcH SEa

WHEREFORE,the Petition is PARTIALLY GRANTED in so far as the payment of 13th month pay to
respondents is concerned. In all other aspects, the CourtAFFIRMS the Decision dated January 6, 2010 and the
Resolution dated May 13, 2010 of the Court of Appeals in CA-G.R. SP No. 106965.
SO ORDERED.
||| (A. Nate Casket Maker v. Arango, G.R. No. 192282, [October 5, 2016])