Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

G.R. No. 142824            December 19, 2001

INTERPHIL LABORATORIES EMPLOYEES UNION-FFW, ENRICO GONZALES and MA. THERESA MONTEJO,petitioners, vs.INTERPHIL LABORATORIES, INC., AND HONORABLE LEONARDO A. QUISUMBING, SECRETARY OF LABOR AND EMPLOYMENT, respondents.

KAPUNAN, J.:

Assailed in this petition for review on certiorari are the decision, promulgated on 29 December 1999, and the resolution, promulgated on 05 April 2000, of the Court of Appeals in CA-G.R. SP No. 50978.

Culled from the questioned decision, the facts of the case are as follows:

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

Prior to the expiration of the CBA or sometime in February 1993, Allesandro G. Salazar,1 Vice-President-Human Resources Department of respondent company, was approached by Nestor Ocampo, the union president, and Hernando Clemente, a union director. The two union officers inquired about the stand of the company regarding

the duration of the CBA which was set to expire in a few months. Salazar told the union officers that the matter could be best discussed during the formal negotiations which would start soon.

In March 1993, Ocampo and Clemente again approached Salazar. They inquired once more about the CBA status and received the same reply from Salazar. In April 1993, Ocampo requested for a meeting to discuss the duration and effectivity of the CBA. Salazar acceded and a meeting was held on 15 April 1993 where the union officers asked whether Salazar would be amenable to make the new CBA effective for two (2) years, starting 01 August 1993. Salazar, however, declared that it would still be premature to discuss the matter and that the company could not make a decision at the moment. The very next day, or on 16 April 1993, all the rank-and-file employees of the company refused to follow their regular two-shift work schedule of from 6:00 a.m. to 6:00 p.m., and from 6:00 p.m. to 6:00 a.m. At 2:00 p.m. and 2:00 a.m., respectively, the employees stopped working and left their workplace without sealing the containers and securing the raw materials they were working on. When Salazar inquired about the reason for their refusal to follow their normal work schedule, the employees told him to "ask the union officers." To minimize the damage the overtime boycott was causing the company, Salazar immediately asked for a meeting with the union officers. In the meeting, Enrico Gonzales, a union director, told Salazar that the employees would only return to their normal work schedule if the company would agree to their demands as to the effectivity and duration of the new CBA. Salazar again told the union officers that the matter could be better discussed during the formal renegotiations of the CBA. Since the union was apparently unsatisfied with the answer of the company, the overtime boycott continued. In addition, the employees started to engage in a work slowdown campaign during the time they were working, thus substantially delaying the production of the company.2

On 14 May 1993, petitioner union submitted with respondent company its CBA proposal, and the latter filed its counter-proposal.

On 03 September 1993, respondent company filed with the National Labor Relations Commission (NLRC) a petition to declare illegal petitioner union's "overtime boycott" and "work slowdown" which, according to respondent company, amounted to illegal strike. The case, docketed NLRC-NCR Case No. 00-09-05529-93, was assigned to Labor Arbiter Manuel R. Caday.

On 22 October 1993, respondent company filed with the National Conciliation and Mediation Board (NCMB) an urgent request for preventive mediation aimed to help the parties in their CBA negotiations.3 The parties, however, failed to arrive at an agreement and on 15 November 1993, respondent company filed with the Office of the Secretary of Labor and Employment a petition for assumption of jurisdiction.

On 24 January 1994, petitioner union filed with the NCMB a Notice of Strike citing unfair labor practice allegedly committed by respondent company. On 12 February 1994, the union staged a strike.

On 14 February 1994, Secretary of Labor Nieves Confesor issued an assumption order4 over the labor dispute. On 02 March 1994, Secretary Confesor issued an order directing respondent company to "immediately accept all striking workers, including the fifty-three (53) terminated union officers, shop stewards and union members back to work under the same terms and conditions prevailing prior to the strike, and to pay all the unpaid accrued year end benefits of its employees in 1993."5 On the other hand, petitioner union was directed to "strictly and immediately comply with the return-to-work orders issued by (the) Office x x x6 The same order pronounced that "(a)ll pending cases which are direct

offshoots of the instant labor dispute are hereby subsumed herewith."7

In the i, the case before Labor Arbiter Caday continued. On 16 March 1994, petitioner union filed an "Urgent Manifestation and Motion to Consolidate the Instant Case and to Suspend Proceedings" seeking the consolidation of the case with the labor dispute pending before the Secretary of Labor. Despite objection by respondent company, Labor Arbiter Caday held in abeyance the proceedings before him. However, on 06 June 1994, Acting Labor Secretary Jose S. Brillantes, after finding that the issues raised would require a formal hearing and the presentation of evidentiary matters, directed Labor Arbiters Caday and M. Sol del Rosario to proceed with the hearing of the cases before them and to thereafter submit their report and recommendation to his office.

On 05 September 1995, Labor Arbiter Caday submitted his recommendation to the then Secretary of Labor Leonardo A. Quisumbing.8 Then Secretary Quisumbing approved and adopted the report in his Order, dated 13 August 1997, hence:

WHEREFORE, finding the said Report of Labor Arbiter Manuel R. Caday to be supported by substantial evidence, this Office hereby RESOLVES to APPROVE and ADOPT the same as the decision in this case, and judgment is hereby rendered:

(1) Declaring the 'overtime boycott' and 'work slowdown' as illegal strike;

(2) Declaring the respondent union officers namely:

Nestor Ocampo President

Carmelo Santos Vice-PresidentMarites Montejo Treasurer/Board Member

Rico Gonzales Auditor

Rod Abuan DirectorSegundino Flores Director

Hernando Clemente Director

who spearheaded and led the overtime boycott and work slowdown, to have lost their employment status; and

(3) Finding the respondents guilty of unfair labor practice for violating the then existing CBA which prohibits the union or any employee during the existence of the CBA from staging a strike or engaging in slowdown or interruption of work and ordering them to cease and desist from further committing the aforesaid illegal acts.

Petitioner union moved for the reconsideration of the order but its motion was denied. The union went to the Court of Appeals via a petition for certiorari. In the now questioned decision promulgated on 29 December 1999, the appellate court dismissed the petition. The union's motion for reconsideration was likewise denied.

Hence, the present recourse where petitioner alleged:

THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS, LIKE THE HONORABLE PUBLIC RESPONDENT IN THE PROCEEDINGS BELOW, COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION WHEN IT COMPLETELY DISREGARDED "PAROL EVIDENCE RULE" IN THE EVALUATION AND APPRECIATION OF EVIDENCE PROFERRED BY THE PARTIES.

THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION, WHEN IT DID NOT DECLARE PRIVATE RESPONDENT'S ACT OF EXTENDING SUBSTANTIAL SEPARATION PACKAGE TO ALMOST ALL INVOLVED OFFICERS OF PETITIONER UNION, DURING THE PENDENCY OF THE CASE, AS TANTAMOUNT TO CONDONATION, IF INDEED, THERE WAS ANY MISDEED COMMITTED.

THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION WHEN IT HELD THAT THE SECRETARY OF LABOR AND EMPLOYMENT HAS JURISDICTION OVER A CASE (A PETITION TO DECLARE STRIKE ILLEGAL) WHICH HAD LONG BEEN FILED AND PENDING BEFORE THE LABOR ARBITER.9

We sustain the questioned decision.

On the matter of the authority and jurisdiction of the Secretary of Labor and Employment to rule on the illegal strike committed by petitioner union, it is undisputed that the petition to declare the strike illegal before Labor Arbiter Caday was filed long before the Secretary of Labor and Employment issued the assumption order on 14 February 1994. However, it cannot be denied that the issues of "overtime boycott" and "work slowdown" amounting to illegal strike before Labor Arbiter Caday are intertwined with the labor dispute before the Labor Secretary. In fact, on 16 March 1994, petitioner union

even asked Labor Arbiter Caday to suspend the proceedings before him and consolidate the same with the case before the Secretary of Labor. When Acting Labor Secretary Brillantes ordered Labor Arbiter Caday to continue with the hearing of the illegal strike case, the parties acceded and participated in the proceedings, knowing fully well that there was also a directive for Labor Arbiter Caday to thereafter submit his report and recommendation to the Secretary. As the appellate court pointed out, the subsequent participation of petitioner union in the continuation of the hearing was in effect an affirmation of the jurisdiction of the Secretary of Labor.

The appellate court also correctly held that the question of the Secretary of Labor and Employment's jurisdiction over labor and labor-related disputes was already settled in International Pharmaceutical, Inc. vs. Hon. Secretary of Labor and Associated Labor Union (ALU)10 where the Court declared:

In the present case, the Secretary was explicitly granted by Article 263(g) of the Labor Code the authority to assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, and decide the same accordingly. Necessarily, this authority to assume jurisdiction over the said labor dispute must include and extend to all questions and controversies arising therefrom, including cases over which the labor arbiter has exclusive jurisdiction.

Moreover, Article 217 of the Labor Code is not without, but contemplates, exceptions thereto. This is evident from the opening proviso therein reading '(e)xcept as otherwise provided under this Code . . .' Plainly, Article 263(g) of the Labor Code was meant to make both the Secretary (or

the various regional directors) and the labor arbiters share jurisdiction, subject to certain conditions. Otherwise, the Secretary would not be able to effectively and efficiently dispose of the primary dispute. To hold the contrary may even lead to the absurd and undesirable result wherein the Secretary and the labor arbiter concerned may have diametrically opposed rulings. As we have said, '(i)t is fundamental that a statute is to be read in a manner that would breathe life into it, rather than defeat it.

In fine, the issuance of the assailed orders is within the province of the Secretary as authorized by Article 263(g) of the Labor Code and Article 217(a) and (5) of the same Code, taken conjointly and rationally construed to subserve the objective of the jurisdiction vested in the Secretary.11

Anent the alleged misappreciation of the evidence proffered by the parties, it is axiomatic that the factual findings of the Labor Arbiter, when sufficiently supported by the evidence on record, must be accorded due respect by the Supreme Court.12 Here, the report and recommendation of Labor Arbiter Caday was not only adopted by then Secretary of Labor Quisumbing but was likewise affirmed by the Court of Appeals. We see no reason to depart from their findings.

Petitioner union maintained that the Labor Arbiter and the appellate court disregarded the "parol evidence rule"13when they upheld the allegation of respondent company that the work schedule of its employees was from 6:00 a.m. to 6:00 p.m. and from 6:00 p.m. to 6:00 am. According to petitioner union, the provisions of their CBA on working hours clearly stated that the normal working hours were "from 7:30 a.m. to 4:30 p.m."14 Petitioner union underscored that the regular work hours for the company was only eight (8) hours. It further contended that the Labor

Arbiter as well as the Court of Appeals should not have admitted any other evidence contrary to what was stated in the CBA.

The reliance on the parol evidence rule is misplaced. In labor cases pending before the Commission or the Labor Arbiter, the rules of evidence prevailing in courts of law or equity are not controlling.15 Rules of procedure and evidence are not applied in a very rigid and technical sense in labor cases.16 Hence, the Labor Arbiter is not precluded from accepting and evaluating evidence other than, and even contrary to, what is stated in the CBA.

In any event, the parties stipulated:

Section 1. Regular Working Hours — A normal workday shall consist of not more than eight (8) hours. The regular working hours for the Company shall be from 7:30 A.M. to 4:30 P.M. The schedule of shift work shall be maintained; however the company may change the prevailing work time at its discretion, should such change be necessary in the operations of the Company. All employees shall observe such rules as have been laid down by the company for the purpose of effecting control over working hours.17

It is evident from the foregoing provision that the working hours may be changed, at the discretion of the company, should such change be necessary for its operations, and that the employees shall observe such rules as have been laid down by the company. In the case before us, Labor Arbiter Caday found that respondent company had to adopt a continuous 24-hour work daily schedule by reason of the nature of its business and the demands of its clients. It was established that the employees adhered to the said work schedule since 1988. The employees are deemed to have waived the eight-hour schedule since they followed, without any question or complaint, the

two-shift schedule while their CBA was still in force and even prior thereto. The two-shift schedule effectively changed the working hours stipulated in the CBA. As the employees assented by practice to this arrangement, they cannot now be heard to claim that the overtime boycott is justified because they were not obliged to work beyond eight hours.

As Labor Arbiter Caday elucidated in his report:

Respondents' attempt to deny the existence of such regular overtime schedule is belied by their own awareness of the existence of the regular overtime schedule of 6:00 A.M. to 6:00 P.M. and 6:00 P.M. to 6:00 A.M. of the following day that has been going on since 1988. Proof of this is the case undisputedly filed by the union for and in behalf of its members, wherein it is claimed that the company has not been computing correctly the night premium and overtime pay for work rendered between 2:00 A.M. and 6:00 A.M. of the 6:00 P.M. to 6:00 A.M. shift. (tsn pp. 9-10, testimony of Alessandro G. Salazar during hearing on August 9, 1994). In fact, the union Vice-President Carmelo C. Santos, demanded that the company make a recomputation of the overtime records of the employees from 1987 (Exh. "P"). Even their own witness, union Director Enrico C. Gonzales, testified that when in 1992 he was still a Quality Control Inspector at the Sucat Plant of the company, his schedule was sometime at 6:00 A.M. to 6:00 P.M., sometime at 6:00 A.M. to 2:00 P.M., at 2:00 P.M. to 10:00 P.M. and sometime at 6:00 P.M. to 6:00 A.M., and when on the 6 to 6 shifts, he received the commensurate pay (t.s.n. pp. 7-9, hearing of January 10, 1994). Likewise, while in the overtime permits, dated March 1, 6, 8, 9 to 12, 1993, which were passed around daily for the employees to sign, his name appeared but without his signatures,

he however had rendered overtime during those dates and was paid because unlike in other departments, it has become a habit to them to sign the overtime schedule weekly (t.s.n. pp. 26-31, hearing of January 10, 1994). The awareness of the respondent union, its officers and members about the existence of the regular overtime schedule of 6:00 A.M. to 6:00 P.M. and 6:00 P.M. to 6:00 A.M. of the following day will be further shown in the discussion of the second issue.18

As to the second issue of whether or not the respondents have engaged in "overtime boycott" and "work slowdown" from April 16, 1993 up to March 7, 1994, both amounting to illegal strike, the evidence presented is equally crystal clear that the "overtime boycott" and "work slowdown" committed by the respondents amounted to illegal strike.

As undisputably testified to by Mr. Alessandro G. Salazar, the company's Vice-President-Human Resources Department, sometime in February, 1993, he was approached by the union President Nestor Ocampo and Union Director Hernando Clemente who asked him as to what was the stand of the company regarding the duration of the CBA between the company and which was set to expire on July 31, 1993. He answered that the matter could be best discussed during the formal renegotiations which anyway was to start soon. This query was followed up sometime in March, 1993, and his answer was the same. In early April, 1993, the union president requested for a meeting to discuss the duration and effectivity of the CBA. Acceding to the request, a meeting was held on April 15, 1993 wherein the union officers asked him if he would agree to make the new CBA

effective on August 1, 1993 and the term thereof to be valid for only two (2) years. When he answered that it was still premature to discuss the matter, the very next day, April 16, 1993, all the rank and file employees of the company refused to follow their regular two-shift work schedule of 6:00 A.M. to 6:00 P.M. and 6:00 P.M. to 6:00 A.M., when after the 8-hours work, they abruptly stopped working at 2:00 P.M. and 2:00 A.M., respectively, leaving their place of work without sealing the containers and securing the raw materials they were working on. When he saw the workers leaving before the end of their shift, he asked them why and their reply was "asked (sic) the union officers." Alarmed by the overtime boycott and the damage it was causing the company, he requested for a meeting with the union officers. In the meeting, he asked them why the regular work schedule was not being followed by the employees, and union Director Enrico Gonzales, with the support of the other union officers, told him that if management would agree to a two-year duration for the new CBA and an effectivity date of August 1, 1993, all employees will return to the normal work schedule of two 12-hour shifts. When answered that the management could not decide on the matter at the moment and to have it discussed and agreed upon during the formal renegotiations, the overtime boycott continued and the employees at the same time employed a work slowdown campaign during working hours, causing considerable delay in the production and complaints from the clients/customers (Exh. "O", Affidavit of Alessandro G. Salazar which formed part of his direct testimony). This testimonial narrations of Salazar was, as earlier said, undisputed because the respondents' counsel waived his cross

examination (t.s.n. p. 15, hearing on August 9, 1994).

Aside from the foregoing undisputed testimonies of Salazar, the testimonies of other Department Managers pointing to the union officers as the instigators of the overtime boycott and work slowdown, the testimony of Epifanio Salumbides (Exh. "Y") a union member at the time the concerted activities of the respondents took place, is quoted hereunder:

"2. Noon Pebrero 1993, ipinatawag ng Presidente ng Unyon na si Nestor Ocampo ang lahat ng taga-maintenance ng bawat departamento upang dumalo sa isang miting. Sa miting na iyon, sinabi ni Rod Abuan, na isang Direktor ng Unyon, na mayroon ilalabas na memo ang Unyon na nag-uutos sa mga empleyado ng Kompanya na mag-imbento ng sari-saring dahilan para lang hindi sila makapagtrabaho ng "overtime". Sinabihan rin ako ni Tessie Montejo na siya namang Treasurer ng Unyon na 'Manny, huwag ka na lang pumasok sa Biyernes para hindi ka masabihan ng magtrabaho ng Sabado at Linggo' na siya namang araw ng "overtime" ko x x x

"3. Nakalipas ang dalawang buwan at noong unang bahagi ng Abril 1993, miniting kami ng Shop Stewards namin na sina Ariel Abenoja, Dany Tansiongco at Vicky Baron. Sinabihan kami na huwag ng mag-overtime pag

nagbigay ng senyas ang Unyon ng "showtime."

"4. Noong umaga ng ika-15 ng Abril 1993, nagsabi na si Danny Tansiongco ng "showtime". Dahil dito wala ng empleyadong nag-overtime at sabay-sabay silang umalis, maliban sa akin. Ako ay pumasok rin noong Abril 17 at 18, 1993 na Sabado at Linggo.

"5. Noong ika-19 ng Abril 1993, ako ay ipinatawag ni Ariel Abenoja Shop Steward, sa opisina ng Unyon. Nadatnan ko doon ang halos lahat ng opisyales ng Unyon na sina:

Nestor Ocampo Presidente

Carmelo Santos Bise-PresidenteNanding Clemente Director

TessMontejo Chief StewardSegundo Flores Director

Enrico Gonzales AuditorBoy Alcantara Shop Steward

Rod Abuan Director

at marami pang iba na hindi ko na maala-ala. Pagpasok ko, ako'y pinaligiran ng mga opisyales ng Unyon. Tinanong ako ni Rod Aguan kung bakit ako "nag-overtime" gayong "Binigyan ka na namin ng instruction na huwag pumasok, pinilit mo pa ring pumasok." "Management ka ba o Unyonista." Sinagot ko na ako ay Unyonista. Tinanong niya muli kung bakit ako pumasok. Sinabi ko

na wala akong maibigay na dahilan para lang hindi pumasok at "mag-overtime." Pagkatapos nito, ako ay pinagmumura ng mga opisyales ng Unyon kaya't ako ay madaliang umalis.

xxx           xxx           xxx

Likewise, the respondents' denial of having a hand in the work slowdown since there was no change in the performance and work efficiency for the year 1993 as compared to the previous year was even rebuffed by their witness Ma. Theresa Montejo, a Quality Control Analyst. For on cross-examination, she (Montejo) admitted that she could not answer how she was able to prepare the productivity reports from May 1993 to February 1994 because from April 1993 up to April 1994, she was on union leave. As such, the productivity reports she had earlier shown was not prepared by her since she had no personal knowledge of the reports (t.s.n. pp. 32-35, hearing of February 27, 1995). Aside from this admission, the comparison made by the respondents was of no moment, because the higher production for the years previous to 1993 was reached when the employees regularly rendered overtime work. But undeniably, overtime boycott and work slowdown from April 16, 1993 up to March 7, 1994 had resulted not only in financial losses to the company but also damaged its business reputation.

Evidently, from all the foregoing, respondents' unjustified unilateral alteration of the 24-hour work schedule thru their concerted activities of "overtime boycott" and "work slowdown" from April 16, 1993 up to March 7, 1994, to force the petitioner company to accede to their unreasonable

demands, can be classified as a strike on an installment basis, as correctly called by petitioner company x x x19

It is thus undisputed that members of the union by their own volition decided not to render overtime services in April 1993.20 Petitioner union even admitted this in its Memorandum, dated 12 April 1999, filed with the Court of Appeals, as well as in the petition before this Court, which both stated that "(s)ometime in April 1993, members of herein petitioner, on their own volition and in keeping with the regular working hours in the Company x x x decided not to render overtime".21 Such admission confirmed the allegation of respondent company that petitioner engaged in "overtime boycott" and "work slowdown" which, to use the words of Labor Arbiter Caday, was taken as a means to coerce respondent company to yield to its unreasonable demands.

More importantly, the "overtime boycott" or "work slowdown" by the employees constituted a violation of their CBA, which prohibits the union or employee, during the existence of the CBA, to stage a strike or engage in slowdown or interruption of work.22 In Ilaw at Buklod ng Manggagawa vs. NLRC ,23 this Court ruled:

x x x (T)he concerted activity in question would still be illicit because contrary to the workers' explicit contractual commitment "that there shall be no strikes, walkouts, stoppage or slowdown of work, boycotts, secondary boycotts, refusal to handle any merchandise, picketing, sit-down strikes of any kind, sympathetic or general strikes, or any other interference with any of the operations of the COMPANY during the term of x x x (their collective bargaining) agreement."

What has just been said makes unnecessary resolution of SMC's argument that the

workers' concerted refusal to adhere to the work schedule in force for the last several years, is a slowdown, an inherently illegal activity essentially illegal even in the absence of a no-strike clause in a collective bargaining contract, or statute or rule. The Court is in substantial agreement with the petitioner's concept of a slowdown as a "strike on the installment plan;" as a willful reduction in the rate of work by concerted action of workers for the purpose of restricting the output of the employer, in relation to a labor dispute; as an activity by which workers, without a complete stoppage of work, retard production or their performance of duties and functions to compel management to grant their demands. The Court also agrees that such a slowdown is generally condemned as inherently illicit and unjustifiable, because while the employees "continue to work and remain at their positions and accept the wages paid to them," they at the same time "select what part of their allotted tasks they care to perform of their own volition or refuse openly or secretly, to the employer's damage, to do other work;" in other words, they "work on their own terms." x x x24

Finally, the Court cannot agree with the proposition that respondent company, in extending substantial separation package to some officers of petitioner union during the pendency of this case, in effect, condoned the illegal acts they committed.

Respondent company correctly postured that at the time these union officers obtained their separation benefits, they were still considered employees of the company. Hence, the company was merely complying with its legal obligations.25 Respondent company could have withheld these benefits pending the final resolution of this case. Yet, considering perhaps the financial hardships experienced by its employees and the economic situation prevailing,

respondent company chose to let its employees avail of their separation benefits. The Court views the gesture of respondent company as an act of generosity for which it should not be punished.

WHEREFORE, the petition is DENIED DUE COURSE and the 29 December 1999 decision of the Court of Appeals is AFFIRMED.

SO ORDERED.

.R. No. L-15422           November 30, 1962

NATIONAL DEVELOPMENT COMPANY, petitioner, vs.COURT OF INDUSTRIAL RELATIONS and NATIONAL TEXTILE WORKERS UNION, respondents.

Government Corporate Counsel Simeon M. Gopengco and Lorenzo R. Mosqueda for petitioner.Eulogio R. Lerum for respondent National Textile Workers Union.Mariano B. Tuason for respondent Court of Industrial Relations.

REGALA, J.:

This is a case for review from the Court of Industrial Relations. The pertinent facts are the following:

At the National Development Co., a government-owned and controlled corporation, there were four shifts of work. One shift was from 8 a.m. to 4 p.m., while the three other shifts were from 6 a.m. to 2 p.m; then from 2 p.m. to 10 p.m. and, finally, from 10 p.m. to 6 a.m. In each shift, there was a one-hour mealtime period, to wit: From (1) 11 a.m. to 12 noon for those working between 6 a.m. and 2 p.m. and from (2) 7 p.m. to 8 p.m. for those working between 2 p.m. and 10 p.m.

The records disclose that although there was a one-hour mealtime, petitioner nevertheless credited the workers with eight hours of work for each shift and paid them for the same number of hours. However, since 1953, whenever workers in one shift were required to continue working until the next shift, petitioner instead of crediting them with eight hours of overtime work, has been paying them for six hours only, petitioner that the two hours corresponding to

the mealtime periods should not be included in computing compensation. On the other hand, respondent National Textile Workers Union whose members are employed at the NDC, maintained the opposite view and asked the Court of Industrial Relations to order the payment of additional overtime pay corresponding to the mealtime periods.

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

Thereafter, petitioner appealed to this Court, contending, first, that the CIR has no jurisdiction over claims for overtime compensation and, secondary that the CIR did not make "a correct appraisal of the facts, in the light of the evidence" in holding that mealtime periods should be included in overtime work because workers could not leave their places of work and rest completely during those hours.

In support of its contention that the CIR lost its jurisdiction over claims for overtime pay upon the enactment of the Industrial Peace Act (Republic Act No. 875), petitioner cites a number of decisions of this Court. On May 23, 1960, however, We ruled in Price Stabilization Corp. v. Court of Industrial Relations, et al., G.R. No. L-13206, that

Analyzing these cases, the underlying principle, it will be noted in all of them, though not stated in express terms, is that where the employer-employee relationship is still existing or is sought to be reestablished because of its wrongful

severance, (as where the employee seeks reinstatement) the Court of Industrial Relations has jurisdiction over all claims arising out of, or in connection with the employment, such as those related to the Minimum Wage Law and the Eight-Hour Labor Law. After the termination of their relationship and no reinstatement is sought, such claims become mere money claims, and come within the jurisdiction of the regular courts,

We are aware that in 2 cases, some statements implying a different view have been made, but we now hold and declare the principle set forth in the next preceding paragraph as the one governing all cases of this nature.

This has been the constant doctrine of this Court since May 23, 1960.1

A more recent definition of the jurisdiction of the CIR is found in Campos, et al. v. Manila Railroad Co., et al., G.R. No. L-17905, May 25, 1962, in which We held that, for such jurisdiction to come into play, the following requisites must be complied with: (a) there must exist between the parties an employer-employee relationship or the claimant must seek his reinstatement; and (b) the controversy must relate to a case certified by the President to the CIR as one involving national interest, or must arise either under the Eight-Hour Labor Law, or under the Minimum Wage Law. In default of any of these circumstances, the claim becomes a mere money claim that comes under the jurisdiction of the regular courts. Here, petitioner does not deny the existence of an employer-employee relationship between it and the members of the union. Neither is there any question that the claim is based on the Eight-Hour Labor Law (Com. Act No. 444, as amended). We

therefore rule in favor of the jurisdiction of the CIR over the present claim.

The other issue raised in the appeal is whether or not, on the basis of the evidence, the mealtime breaks should be considered working time under the following provision of the law;

The legal working day for any person employed by another shall be of not more than eight hours daily.When the work is not continuous, the time during which the laborer is not working and can leave his working place and can rest completely shall not be counted. (Sec. 1, Com. Act No. 444, as amended. Emphasis ours.)

It will be noted that, under the law, the idle time that an employee may spend for resting and during which he may leave the spot or place of work though not the premises2 of his employer, is not counted as working time only where the work is broken or is not continuous.

The determination as to whether work is continuous or not is mainly one of fact which We shall not review as long as the same is supported by evidence. (Sec. 15, Com. Act No. 103, as amended, Philippine Newspaper Guild v. Evening News, Inc., 86 Phil. 303).

That is why We brushed aside petitioner's contention in one case that workers who worked under a 6 a.m. to 6 p.m. schedule had enough "free time" and therefore should not be credited with four hours of overtime and held that the finding of the CIR "that claimants herein rendered services to the Company from 6:00 a.m. to 6:00 p.m. including Sundays and holidays, . . . implies either that they were not allowed to leave the spot of their working place, or that they could not rest completely" (Luzon Stevedoring Co., Inc. v. Luzon Marine Department Union, et al., G.R. No. L-9265, April 29, 1957).

Indeed, it has been said that no general rule can be laid down is to what constitutes compensable work, rather the question is one of fact depending upon particular circumstances, to be determined by the controverted in cases. (31 Am. Jurisdiction Sec. 626 pp. 878.)

In this case, the CIR's finding that work in the petitioner company was continuous and did not permit employees and laborers to rest completely is not without basis in evidence and following our earlier rulings, shall not disturb the same. Thus, the CIR found:

While it may be correct to say that it is well-high impossible for an employee to work while he is eating, yet under Section 1 of Com. Act No. 444 such a time for eating can be segregated or deducted from his work, if the same is continuous and the employee can leave his working place rest completely. The time cards show that the work was continuous and without interruption. There is also the evidence adduced by the petitioner that the pertinent employees can freely leave their working place nor rest completely. There is furthermore the aspect that during the period covered the computation the work was on a 24-hour basis and previously stated divided into shifts.

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

Petitioner gives an eight-hour credit to its employees who work a single shift say from 6 a.m. to 2 p.m. Why cannot it credit them sixteen hours should they work in two shifts?

There is another reason why this appeal should dismissed and that is that there is no decision by the CIR en bancfrom which petitioner can appeal to this Court. As already indicated above, the records show that petitioner's motion for reconsideration of the order of March 19, 1959 was dismissed by the CIR en banc because of petitioner's failure to serve a copy of the same on the union.

Section 15 of the rules of the CIR, in relation to Section 1 of Commonwealth Act No. 103, states:

The movant shall file the motion (for reconsideration), in six copies within five (5) days from the date on which he receives notice of the order or decision, object of the motion for reconsideration, the same to be verified under oath with respect to the correctness of the allegations of fact, and serving a copy thereof personally or by registered mail, on the adverse party. The latter may file an answer, in six (6) copies, duly verified under oath. (Emphasis ours.)

In one case (Bien, et al. v. Castillo, etc., et al., G.R. No. L-7428, May 24, 1955), We sustained the dismissal of a motion for reconsideration filed outside of the period provided in the rules of the CIR. A motion for reconsideration, a copy of which has not been served on the adverse party as required by the rules, stands on the same footing. For "in the very nature of things, a motion for reconsideration against a ruling or decision by one Judge is in effect an appeal to the Court of Industrial Relations, en banc," the purpose being "to substitute the decision or order of a collegiate court for the ruling or decision of any judge." The provision in Commonwealth Act No. 103 authorizing the presentation of a motion for reconsideration of a decision or order of the judge to the CIR,en banc and not direct appeal therefore to this Court, is also in accord with the principal of exhaustion of administrative remedies before resort can be made to this Court. (Broce, et al., v. The Court

of Industrial Relations, et al., G.R. No. L-12367, October 29, 1959).

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

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

Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon and Makalintal concur.Bengzon, C.J., took no part.

G.R. No. 126529 April 15, 1998

EDUARDO B. PRANGAN, petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION (NLRC), MASAGANA SECURITY SERVICES CORPORATION, and/or VICTOR C. PADILLA, respondents.

 

ROMERO, J.:

Private respondent, a corporation engaged in providing security services to its client, hired petitioner on November 4, 1980 as one of its security guards. Thereafter, he was assigned to the Cat House Bar and Restaurant with a monthly salary of P2,000.00 until its closure on August 31, 1993.

On May 4, 1994, petitioner filed a complaint 1 against private respondent for underpayment of wages, non-payment of salary from August 16-31, 1993, overtime pay, premium pay for holiday, rest day, night shift differential, uniform allowance, service incentive leave pay and 13th month pay from the year 1990 to 1993.

Private respondent, in its position paper, 2 rejected petitioner's claim alleging it merely acted as an agent of the latter in securing his employment at the Cat House Bar and Restaurant. Thus, the liability for the claims of the petitioner should be charged to Cat House Bar and its owner, being his direct employer.

In resolving the dispute in a decision dated May 31, 1995, 3 the Labor Arbiter brushed aside the private respondent's contention that it was merely an agent of the petitioner and concluded:

WHEREFORE, PREMISES CONSIDERED, respondents MASAGANA SECURITY SERVICE CORPORATION and/or VICTOR C. PADILLA are hereby ORDERED to pay within ten (10) days from receipt hereof herein complainant EDUARDO B. PRANGAN, the total sum of Nine Thousand Nine Hundred Thirty Two Pesos & Sixteen Centavos (P9,932.16) premium pay for holiday and rest days, night shift differential, service incentive leave pay, 13th month pay, uniform allowance, and unpaid salary.

Complainant's other claims as well as respondents' counter claim are hereby DISMISSED either for the reason of prescription and/or lack of merit.

SO ORDERED.

Apparently not satisfied with the above-mentioned monetary award, petitioner appealed to the National Labor Relations Commission (NLRC) contending that the Labor Arbiter erred in concluding that he only worked for four hours and not twelve hours a day. Evidently, the shorter work hours resulted in a lower monetary award by the Labor Arbiter. However, the NLRC dismissed his appeal for failure to file the same within ten-day reglementary period. 4

Undaunted, petitioner failed a motion for reconsideration which, in the "interest of justice," was favorably granted by the NLRC resulting in the reinstatement of his appeal. Nonetheless, petitioner's victory was short-lived as the NLRC eventually dismissed his appeal for lack of merit, 5 the dispositive portion of the decision reads:

WHEREFORE, the appeal is hereby dismissed for lack of merit and decision is affirmed in toto.

SO ORDERED.

Petitioner is now before us imputing grave abuse of discretion on the part of respondent NLRC (a) declaring that he rendered only four hours and not twelve hours of work, and (b) affirming the monetary award.

The public respondent, through the Solicitor General, and the private respondent filed their respective comments on the petition refuting the allegation of the petitioner. Specifically, they asserted that the decision was supported by ample evidence showing that petitioner indeed worked for only four hours and not twelve hours a day.

A review of the alleged error raised by the instant petition leads us to conclude that the same is factual in nature which, as a rule, we do not pass upon. As a general rule, it is not for us to correct the NLRC's evaluation of the evidence, as our task is confined to issues of jurisdiction or grave abuse of discretion. 6 Obviously, however, the same will not apply where the evidence requires a reversal or modification. 7

As proof of petitioner's actual hours of work, private respondent submitted the daily time records allegedly signed by the petitioner himself showing that he only worked four hours daily.

In contrast, petitioner argues that these daily time records were falsified for the simple reason that he was not required to submit one. He further stressed that, assuming such documents exist, its authenticity and due execution are questionable and of doubtful source.

We find merit in the petition.

To be sure, findings of fact of quasi-judicial bodies like the NLRC, particularly when they coincide with those of the Labor Arbiter, are accorded with respect even finality if supported by substantial evidence. 8 In this regard, we have defined substantial evidence as such amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. 9 Absent such quantum of evidence, the Court is not precluded from making its own independent evaluation of facts. 10

In the instant case, there is no dispute that matters concerning an employee's actual hours of work are within the ambit of management prerogative. However, when an employer alleges that his employee work less than the normal hours of employment as provided for in the law, 11 he bears the burden of proving his allegation with clear and satisfactory evidence.

In the instant petition, the NLRC, in declaring that petitioner only worked for four hours, relied solely on the supposed daily time records of the petitioner submitted by the private respondent. 12 We, however, are of the opinion that these documents cannot be considered substantial evidence as to conclude that petitioner only worked for four hours. It is worth mentioning that petitioner, in his Sur-Rejoinder to Respondents' Rejoinder, 13 unequivocally stated that:

Complainant (petitioner herein) never made nor submitted any daily time record with respondent company considering the fact that he was assigned to a single post and that the daily time records he allegedly submitted with respondent company are all falsified and his signature appearing therein forged.

Private respondent hardly bothered to controvert petitioner's assertion, much less bolster its own contention. As petitioner's employer, private respondent has unlimited access to all relevant documents and records on the hours of work of the

petitioner. Yet, even as it insists that petitioner only worked for four hours and not twelve, no employment contract, payroll, notice of assignment or posting, cash voucher or any other convincing evidence which may attest to the actual hours of work of the petitioner was even presented. Instead, what the private respondent offered as evidence was only petitioner's daily time record, which the latter categorically denied ever accomplishing, much less signing.

In said alleged daily time record, it showed that petitioner started work at 10:00 p.m. and would invariably leave his post at exactly 2:00 a.m. Obviously, such unvarying recording of a daily time record is improbable and contrary to human experience. It is impossible for an employee to arrive at the workplace and leave at exactly the same time, day in day out. The very uniformity and regularity of the entries are "badges of untruthfulness and as such indices of dubiety. 14

Another consideration which militates against private respondent's claim is the fact that in the personnel data sheet of the petitioner, 15 duly signed by the former's operation manager, it shows on its face that the latter's hours of work are from 7:00 p.m. to 7:00 a.m. or twelve hours a day. Hence, private respondent is estopped from assailing the contents of its own documents.

Further, the attendance sheets of Cat House Bar and Restaurant 16 showed that petitioner worked from 7:00 p.m. to 7:00 a.m. daily, documents which were never repudiated by the private respondent.

All told, private respondent has not adequately proved that petitioner's actual hours of work is only four hours. Its unexplained silence contravening the personnel data sheet and the attendance sheets of Cat House Bar and Restaurant presented by the petitioner showing he worked for twelve hours, has assumed the character of an admission. No reason was

proffered for this silence despite private respondent, being the employer, could have easily done so.

As is well-settled, if doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the employee. Since it is a time-honored rule that in controversies between a laborer and his master, doubts reasonably arising from the evidence, or in the interpretation of agreements and writings should he resolved in the former's favor. 17

WHEREFORE, in view of the foregoing, the instant petition is hereby GRANTED. Accordingly, the decision of the NLRC dated July 31, 1996 is hereby VACATED. Whatever money claims due to the petitioner shall be computed on the basis of a twelve-hour daily work schedule. For this purpose, the case is hereby REMANDED to the Labor Arbiter for immediate recomputation of said claims in accordance with the foregoing findings. No costs.

SO ORDERED.

Republic of the PhilippinesSUPREME COURTManila

EN BANC

G.R. No. L-16275             February 23, 1961

PAN AMERICAN WORLD AIRWAYS SYSTEM (PHILIPPINES), petitioner, vs.PAN AMERICAN EMPLOYEES ASSOCIATION, respondent.

Ross, Selph and Carrascoso for petitioner.Jose Espinas for respondent.

REYES, J.B.L., J.:

Appeal by certiorari from the decision of the Court of Industrial Relations in Case No. 1055-V dated October 10, 1959, and its resolution en banc denying the motion for reconsideration filed by the petitioner herein.

The dispositive portion of the appealed decision reads: .

WHEREFORE, the Court orders the Chief of the Examining Division or his representative to compute the overtime compensation due the aforesaid fourteen (14) aircraft mechanic and the two employees from the Communication Department based on the time sheet of said employees from February 23 1952 up to and including July 15, 1958 and to submit his report within 30 days for further disposition by the Court; and the company shall show to the Court Examiner such time sheets an other documents that may be necessary in the aforesaid computation; and two (2)

representatives for the company and two (2) representatives for the union shall be chosen to help the Court Examiner in said computation.

The company is also ordered to permanently adopt the straight 8-hour shift inclusive of meal period which is mutually beneficial to the parties.

SO ORDERED.

In this appeal, petitioner advances five proposition which, briefly, are as follows: (1) the Industrial Court has no jurisdiction to order the payment of overtime compensation, it being a mere monetary claim cognizable by regular courts; (2) the finding that the one-hour meal period should be considered overtime work (deducting 15 minutes as time allotted for eating) is not supported by substantial evidence; (3) the court below had no authority to delegate its judicial functions by ordering the Chief of the Examining Division or his representative to compute the overtime pay; (4) the finding that there was no agreement to withdraw Case No. 1055-V in consideration of the wage increases in the Collective Bargaining Contract (Exh. "A") is not supported by substantial evidence; and (5) the court below had no authority to order the company to adopt a straight 8-hour shift inclusive of meal period.

On the issue of jurisdiction over claims for overtime pay, we have since definitely ruled in a recent decisions that the Industrial Court may properly take cognizance of such cases if, at the time of the petition, the complainants were still in the service of the employer, or, having been separated from such service, should ask for reinstatement; otherwise, such claims should be brought before the regular courts (NASSCO v. CIR, et al., L-13888, April 29, 1960; FRISCO v. CIR, et al., L-13806, May 23, 1960; Board of Liquidators, et al. vs. CIR, et al., L-15485, May 23, 1960; Sta. Cecilia, Sawmills Co. vs. CIR, L-

14254 & L-14255, May 27, 1960; Ajax International Corp. v. Seguritan, L-16038, October 25, 1960; Sampaguita Pictures, Inc., et al. vs. CIR, L-16404, October 25, 1960). Since, in the instant case there is no question that the employees claiming overtime compensation were still in the service of the company when the case was filed, the jurisdiction of the Court of Industrial Relations cannot be assailed. In fact, since it is not pretended that, thereafter, the complainants were discharged or otherwise terminated their relationship with the company for any reason, all of said complainants could still be with the company up to the present.

Petitioner herein claims that the one-hour meal period should not be considered as overtime work (after deducting 15 minutes), because the evidence showed that complainants could rest completely, and were not in any manner under the control of the company during that period. The court below found, on the contrary, that during the so called meal period, the mechanics were required to stand by for emergency work; that if they happened not to be available when called, they were reprimanded by the leadman; that as in fact it happened on many occasions, the mechanics had been called from their meals or told to hurry Employees Association up eating to perform work during this period. Far from being unsupported by substantial evidence, the record clearly confirms the above factual findings of the Industrial Court.

Similarly, this Court is satisfied with the finding that there was no agreement to withdraw Case No. 1055-V in consideration of the wage increases obtained by the, union and set forth in the Collective Bargaining Agreement Exhibit "A". As reasoned out by the court below, such alleged agreement would have been incorporated in the contract if it existed. The fact that the union filed a motion to dismiss without prejudice, after the Collective Bargaining Contract had been signed, did not necessarily mean that it had agreed to withdraw the case in consideration of the wage increases. The motion itself (Annex "B", Petition for Certiorari) was expressly based on an

understanding that the company would "formulate a schedule of work which shall be in consonance with C. A. 444". All in all, there is substantial evidence in the record to support the finding of the court below that no such agreement was made.

It is next contended that in ordering the Chief of the Examining Division or his representative to compute the compensation due, the Industrial Court unduly delegated its judicial functions and thereby rendered an incomplete decision. We do not believe so. Computation of the overtime pay involves a mechanical function, at most. And the report would still have to be submitted to the Industrial Court for its approval, by the very terms of the order itself. That there was no specification of the amount of overtime pay in the decision did not make it incomplete, since this matter would necessarily be made clear enough in the implementation of the decision (see Malate Taxicab & Garage, Inc. vs. CIR, et al., L-8718, May 11, 1956).

The Industrial Court's order for permanent adoption of a straight 8-hour shift including the meal period was but a consequence of its finding that the meal hour was not one of complete rest, but was actually a work hour, since for its duration, the laborers had to be on ready call. Of course, if the Company practices in this regard should be modified to afford the mechanics a real rest during that hour (f. ex., by installing an entirely different emergency crew, or any similar arrangement), then the modification of this part of the decision may be sought from the Court below. As things now stand, we see no warrant for altering the decision.

The judgment appealed from is affirmed. Costs against appellant.

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

MERCURY DRUG CO., INC., petitioner, vs.NARDO DAYAO, ET AL., respondents,

Caparas & Ilagan for petitioner.

Gerardo P. Cabo Chan and Elias Banzali for respondents.

 

GUTIERREZ, JR., J.:

This is a petition for review on certiorari of the decision of the Court of Industrial Relations dated March 30, 1968 in Case No. 1926-V and the Resolution of the Court en banc dated July 6, 1968 denying two separate motions for reconsideration filed by petitioners and respondents.

The factual background of Case No. 1926-V is summarized by the respondent Court of Industrial Relations as follows:

This is a verified petition dated March 17, 1964 which was subsequently amended on July 31, 1964 filed by Nardo Dayao and 70 others against Mercury Drug Co., Inc., and/or Mariano Que, President & General Manager, and Mercury Drug Co., Inc., Employees Association praying, with respect to respondent corporation and its president and general manager: 1) payment of their unpaid back wages for work done on Sundays and legal holidays plus 25c/c additional compensation from date

of their employment up to June 30, 1962; 2) payment of extra compensation on work done at night; 3) reinstatement of Januario Referente and Oscar Echalar to their former positions with back salaries; and, as against the respondent union, for its disestablishment and the refund of all monies it had collected from petitioners.

In separate motions, respondent management and respondent union move to dismiss, the first on the ground that:

I. The petition states no cause of action.

II. This Court has no jurisdiction over the subject of the claims of petitioners Januario Referente and Oscar Echalar.

III. There is another action pending between the same parties, namely, Mercury Drug Co., Inc., and/or Mariano Que and Nardo Dayao.

while on the other hand, the second alleges that this Court has no jurisdiction over the acts complained of against the respondent union.

For reasons stated in the Order dated March 24, 1965, two Court resolved the motions to dismiss, as follows:

1. Ground No. 1 of management's motion to dismiss was denied for lack of merit.

2. Its second ground was found meritorious and, accordingly Januario Referente and Oscar Echalar were dropped as party petitioners in this case.

3. The third ground was denied, holding that there still exists the employer- employee relationship between Nardo Dayao and the management.

4. With respect to the fourth ground, the Court held that on the basis of section 7-A of C.A. No. 444, as amended by R.A. No. 1993, 'it can be safely said that,

counting backward the three (3) year prescriptive period from the date of the filing of the instant petition - March 20, 1964 - all-of petitioners' claims have not yet prescribed.'

5. In so far as respondent union's motion is concerned, the Court held that 'petitioners' cause of action against the respondent Association should be dismissed without prejudice to the refiling of the same as an unfair labor practice case.'

Only the respondent management moved to reconsider the Order of March 24, 1965 but the same was denied by the Court en banc in a

resolution dated August 26, 1965. Respondent submitted an answer to the amended petition which was subsequently amended on January 6, 1966, containing some admissions and some denials of the material averments of the amended petition. By way of affirmative and special defenses,, respondents alleged that petitioners have no cause of action against Mariano Que because their employer respondent Mercury Drug Company, Inc., an existing corporation which has a separate and distinct personality from its incorporators stockholders and/or officer, that the company being a service enterprise is excluded from the coverage of the Eight Hour Labor Law, as amended; that no court has the power to set wages, rates of pay, hours of employment, or other conditions of employment to the extent of disregarding an agreement thereon between the respondent company and the petitioners, and of fixing night differential wages; that the petitioners were fully paid for services rendered under the terms and conditions of the individual contracts of employment; that the petition having been verified by only three of the petitioners without showing that the others authorized the inclusion of their names as petitioners does not confer jurisdiction to this Court; that there is no employer-employee relationship between management and petitioner Nardo Dayao and that his claim has been released and/or barred by another action and

that petitioners' claims accuring before March 20, 1961 have prescribed." (Annex "P", pp. 110-112, rollo).

After hearing on the merits, the respondent court rendered its decision. The dispositive portion of the March 30, 1968 decision reads:

IN VIEW OF THE FOREGOING, the Court hereby resolves that:

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

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

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

(b) Another additional sum or premium equivalent to 25% of their

respective basic or regular salaries for nighttime services rendered from March 20, 1961 up to June 30, 1962.

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

4. Respondent Mariano Que, being an officer and acted only as an agent in behalf of the respondent corporation, should be absolved from the money claims of herein petitioners whose employer, according to the pleadings and evidence, is the Mercury Drug Company,, Inc.

To expedite the computation of the money award, the Chief Court Examiner or his authorized representative is hereby directed to proceed to the office of the respondent corporation at Bambang Street, Sta. Cruz, Manila, the latter to make available to said employee its records, like time records, payrolls and other pertinent papers, and compute the money claims awarded in this decision and, upon the completion thereof, to submit his report as soon as possible for further disposition of the Court.

Not satisfied with the decision, the respondents filed a motion for its reconsideration. The motion for reconsideration, was however, denied by the Court en banc in its Resolution dated July 6, 1968.

Petitioner Mercury Drug Company, Inc., assigned the following errors in this petition:

I

RESPONDENT CIR ERRED IN DECLARING THE CONTRACTS OF EMPLOYMENT, EXHIBITS "A" AND "B", NULL AND VOID AS BEING CONTRARY TO PUBLIC POLICY AND IN SUSTAINING, ACCORDINGLY, PRIVATE RESPONDENTS' CLAIMS FOR 25% SUNDAY AND LEGAL HOLIDAY PREMIUMS BECAUSE SUCH DECLARATION AND AWARD ARE NOT SUPPORTED BY SUBSTANTIAL EVIDENCE, THUS INFRINGING UPON THE CARDINAL RIGHTS OF THE PETITIONER; AND ALSO BECAUSE THE VALIDITY OF SAID t CONTRACTS OF EMPLOYMENT HAS NOT BEEN RAISED.

II

RESPONDENT CIR ERRED IN SUSTAINING PRIVATE RESPONDENTS' CLAIMS FOR NIGHTTIME WORK PREMIUMS NOT ONLY BECAUSE OF THE DECLARED POLICY ON COLLECTIVE BARGAINING FREEDOM EX. PRESSED IN REPUBLIC ACT 875 AND THE EXPRESS PROHIBITION IN SECTION 7 OF SAID STATUTE, BUT ALSO BECAUSE OF THE WAIVER OF SAID CLAIMS

AND THE TOTAL ABSENCE OF EVIDENCE THEREON.

III

RESPONDENT CIR ERRED IN MAKING AWARDS IN FAVOR OF THE PRIVATE RESPONDENTS WHO NEITHER GAVE EVIDENCE NOR EVEN APPEARED TO SHOW THEIR INTEREST.

Three issues are discussed by the petitioner in its first assignment of error. The first issue refers to its allegation that the respondent Court erred in declaring the contracts of employment null and void and contrary to law. This allegation is premised upon the following finding of the respondent court:

But the Court finds merit in the claim for the payment of additional compensation for work done on Sundays and holidays. While an employer may compel his employees to perform service on such days, the law nevertheless imposes upon him the obligation to pay his employees at least 25% additional of their basic or regular salaries.

No person, firm or corporation, business establishment or place of center of labor shall compel an employee or laborer to work during Sundays and legal

holidays unless he is paid an additional sum of at least twenty-five per centum of his regular remuneration: PROVIDED, HOWEVER, That this prohibition shall not apply to public utilities performing some public service such as supplying gas, electricity, power, water, or providing means of transportation or communication. (Section 4, C. A. No. 444) (Emphasis supplied)

Although a service enterprise, respondent company's employees are within the coverage of C. A. No. 444, as amended known as the Eight Hour Labor Law, for they do not fall within the category or class of employees or laborers excluded from its provisions. (Section 2, Ibid.)

The Court is not impressed by the argument that under the contracts of employment the petitioners are not entitled to such claim for the reason that the same are contrary to law. Payment of extra or additional pay for services rendered during

Sundays and legal holidays is mandated by law. Even assuming that the petitioners had agreed to work on Sundays and legal holidays without any further consideration than their monthly salaries, they are not barred nevertheless from claiming what is due them, because such agreement is contrary to public policy and is declared nun and void by law.

Any agreement or contract between employer and the laborer or employee contrary to the provisions of this Act shall be null and void ab initio.

Under the cited statutory provision, the petitioners are justified to receive additional amount equivalent to 25% of their respective basic or regular salaries for work done on Sundays and legal holidays for the period from March 20, 1961 to June 30, 1962. (Decision, pp. 119-120, rollo)

From a perusal of the foregoing statements of the respondent court, it can be seen readily that the petitioner-company based its arguments in its first assignment of error on the wrong premise. The contracts of employment signed by the private respondents are on a standard form, an example of which is that of private respondent Nardo Dayao quoted hereunder:

Mercury Drug Co., Inc. 1580 Bambang, Manila October 30, 1959

Mr. Nardo Dayao 1015 Sta. Catalina Rizal Ave., Exten.

Dear Mr. Dayao:

You are hereby appointed as Checker, in the Checking Department of MERCURY DRUG CO., INC., effective July 1, 1959 and you shall receive an annual compensation the amount of Two Thousand four hundred pesos only (P2,400.00), that includes the additional compensation for work on Sundays and legal holidays.

Your firm being a Service Enterprise, you will be required to perform work every day in a year as follows:

8 Hours work on regular days and-all special Holidays that may be declared but with the 25% additional compensation;

4 Hours work on every other Sundays of the month;

For any work performed in excess of the hours as above mentioned, you shall be paid 25 % additional compensation per hour.

This appointment may be terminated without notice for cause and without cause upon thirty days written notice.

This supersedes your appointment of July 1, 1959.

Very truly yours,

MERCURY DRUG CO., INC.

(Sgd.) MARIANO QUE General Manager

ACCEPTED WITH FULL CONFORMITY:

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

These contracts were not declared by the respondent court null and void in their entirety. The respondent court, on the basis of the conflicting evidence presented by the parties, in effect: 1) rejected the theory of the petitioner company that the 25% additional compensation claimed by the private respondents for the four-hour work they rendered during Sundays and legal holidays provided in their contracts of employment were covered by the private respondents' respective monthly salaries; 2) gave credence to private respondents', (Nardo Dayao, Ernesto Talampas and Josias Federico) testimonies that the 25% additional compensation was not included in the private respondents' respective monthly salaries and 3) ruled that any agreement in a contract of employment which would exclude the 25% additional compensation for work done during Sundays and holidays is null and void as mandated by law.

On the second issue, the petitioner-company reiterated its stand that under the,- respective contracts of employment of the private respondents, the subject 25 % additional compensation had already been included in the latter's respective monthly salaries. This contention is based on the testimony of its lone witness, Mr. Jacinto Concepcion and pertinent exhibits. Thus:

Exhibit A shows that for the period of October 30, 1960, the annual

compensation of private respondent Nardo Dayao, including the additional compensation for the work he renders during the first four (4) hours on every other Sunday and on the eight (8) Legal Holidays at the time was P2,400.00 or P200.00 per month. These amounts did not represent basic salary only, but they represented the basic daily wage of Nardo Dayao considered to be in the amount of P7.36 x 305 ordinary working days at the time or in the total amount of P2,144.80. So plus the amount of P156.40 which is the equivalent of the Sunday and Legal Holiday rate at P9.20 basic rate of P7.36 plus 25% thereof or P1.84) x 17, the latter figure representing 13 Sundays and 4 Legal Holidays of 8 hours each. ...

xxx xxx xxx

That the required minimum 25% Sunday and Legal Holiday additional compensation was paid to and received by the employees for the work they rendered on every other Sunday and on the eight Legal Holidays for the period October, 1959 to June 30, 1962 is further corroborated by Exhibits 5, 6, 8, 9 and 9-A and the testimony of Mr. Jacinto Concepcion thereon. (Brief for the Petitioner, pp. 24, 27).

The aforesaid computations were not given credence by the respondent court. In fact the same computations were not even mentioned in the court's decision which shows that the court found such

computations incredible. The computations, supposedly patterned after the WAS Interpretative Bulletin No. 2 of the Department Labor demonstrated in Exhibits "6", "7", "8", "9", and "9-A", miserably failed to show the exact and correct annual salary as stated in the respective contracts of employment of the respondent employees. The figures arrived at in each case did not tally with the annual salaries on to the employees' contracts of employment, the difference varying from P1.20 to as much as P14.40 always against the interest of the employees. The petitioner's defense consists of mathematical computations made after the filing of the case in order to explain a clear attempt to make its employees work without the extra compensation provided by law on Sundays and legal holidays.

In not giving weight to the evidence of the petitioner company, the respondent court sustained the private respondents' evidence to the effect that their 25% additional compensation for work done on Sundays and Legal Holidays were not included in their respective monthly salaries. The private respondents presented evidence through the testimonies of Nardo Dayao, Ernesto Talampas, and Josias Federico who are themselves among the employees who filed the case for unfair labor practice in the respondent court and are private respondents herein. The petitioner- company's contention that the respondent court's conclusion on the issue of the 25% additional compensation for work done on Sundays and legal holidays during the first four hours that the private respondents had to work under their respective contracts of employment was not supported by substantial evidence is, therefore, unfounded. Much less do We find any grave abuse of discretion on the part of the respondent court in its interpretation of the employment contract's provision on salaries. In view of the controlling doctrine that a grave abuse of discretion must be shown in order to warrant our disturbing the findings of the respondent court, the reversal of the court's endings on this matter is unwarranted. (Sanchez vs. Court of Industrial Relations, 27 SCRA 490).

The last issue raised in the first assignment of error refers to a procedural matter. The petitioner-company contends that ,-the question as to whether or not the contracts of employment were null and void was not put in issue, hence, the respondent court pursuant to the Rules of Court should have refrained from ruling that such contracts of employment were null and void. In this connection We restate our finding that the respondent court did not declare the contracts of employment null and void in their entirety. Only the objectionable features violative of law were nullified. But even granting that the Court of Industrial Relations declared the contracts of employment wholly void, it could do so notwithstanding the procedural objection. In Sanchez u. Court of Industrial Relations, supra, this Court speaking through then Justice, now Chief Justice Enrique M. Fernando, stated:

xxx xxx xxx

Moreover, petitioners appear to be oblivious of the statutory mandate that respondent Court in the hearing, investigation and determination of any question or controversy and in the exercise of any of its duties or power is to act 'according to justice and equity and substantial merits of the case, without regard to technicalities or legal forms and shall not be bound by any technical rules of legal evidence' informing its mind 'in such manner as it may deem just and equitable.' Again, this Court has invariably accorded the most hospitable scope to the breadth and amplitude with which such provision is couched. So it has been from the earliest case decided in 1939 to a 1967 decision.

Two issues are raised in the second assignment of error by the petitioner-company. The first hinges on the jurisdiction of the respondent court to award additional compensation for nighttime work. Petitioner wants Us to re- examine Our rulings on the question of nighttime work. It contends that the respondent court has no jurisdiction to award additional compensation for nighttime work because of the declared policy on freedom of collective bargaining expressed in Republic Act 875 and the express prohibition in Section 7 of the said statute. A re- examination of the decisions on nighttime pay differential was the focus of attention in Rheem of the Philippines, Inc. et al., v. Ferrer, et al (19 SCRA 130). The earliest cases cited by the petitioner-company, Naric v. Naric Workers Union L-12075, - May 29, 1959 and Philippine Engineers' Syndicate u. Bautista, L-16440, February 29, 196.4, were discussed lengthily. Thus -

xxx xxx xxx

2. On the claim for night differentials, no extended discussion is necessary. To be read as controlling here is Philippine Engineers' Syndicate, Inc. vs. Hon. Jose S. Bautista, et al., L-16440, February 29, 1964, where this Court, speaking thru Mr. Chief Justice Cesar Bengzon, declared —

Only one issue is raised: whether or not upon the enactment of Republic Act 875, the CIR lost its jurisdiction over claims for additional compensation for regular night work. Petitioner says that this Act reduced the jurisdiction of respondent court and limited it to specific cases which this Court has defined as: ... (1) when the labor dispute affects an industry which is indispensable to the national interest and is so certified by the President to the industrial court (Sec. 10, Republic Act 875); (2) when the controversy refers to minimum wage under the Minimum Wage Law (Republic Act 602); (3) when it involves hours of employment under the Eight-

Hour Labor Law (Commonwealth Act 444) and (4) when it involves an unfair labor practice [Sec. 5(a), Republic Act 8751', [Paflu, et al. vs. Tan, et al., 52 Off. Gaz, No. 13, 5836].

Petitioner insists that respondents' case falls in none of these categories because as held in two previous cases, night work is not overtime but regular work; and that respondent court's authority to try the case cannot be implied from its general jurisdiction and broad powers' under Commonwealth Act 103 because Republic Act 875 precisely curbed such powers limiting them to certain specific litigations, beyond which it is not permitted to act.

We believe petitioner to be in error. Its position collides with our ruling in the Naric case [National Rice & Corn Corp. (NARIC) vs. NARIC Workers' Union, et al., G.R. No. L-12075, May 29, 1959] where we held;

While it is true that this Court made the above comment in the aforementioned case, it does not intend to convey the Idea that work done at night cannot also be an overtime work. The comment only served to emphasize that the demand which the Shell Company made upon its laborers is not merely overtime work but night work and so there was need to differentiate night work from daytime work. In fact, the company contended that there was no law that required the payment of additional compensation for night work unlike an overtime work

which is covered by Commonwealth Act No. 444 (Eight Hour Labor Law). And this Court in that case said that while there was no law actually requiring payment of additional compensation for night work, the industrial court has the power to determine the wages that night workers should receive under Commonwealth Act No. 103, and so it justified the additional compensation in the Shell case for 'hygienic, medical, moral, cultural and sociological reasons.

xxx xxx xxx

True, in Paflu, et al. vs. Tan, et al., supra, and in a series of cases thereafter, We held that the broad powers conferred by Commonwealth Act 103 on the CIR may have been curtailed by Republic Act 875 which limited them to the four categories therein expressed in line with the public policy of allowing settlement of industrial disputes via the collective bargaining process; but We find no cogent reason for concluding that a suit of this nature for extra

compensation for night work falls outside the domain of the industrial court. Withal, the record does not show that the employer-employee relation between the 64 respondents and the petitioner had ceased.

After the passage of Republic Act 875, this Court has not only upheld the industrial court's assumption of jurisdiction over cases for salary differentials and overtime pay [Chua Workers Union (NLU) vs. City Automotive Co., et al., G.R. No. L- 11655, April 29, 1959; Prisco vs. CIR, et al., G.R. No. L-13806, May 23, 1960] or for payment of additional compensation for work rendered on Sundays and holidays and for night work [Nassco vs. Almin, et al., G.R. No. L9055, November 28, 1958; Detective & Protective Bureau, Inc. vs. Felipe Guevara, et al., G.R. No. L-8738, May 31, 1957] but has also supported such court's ruling that work performed at night should be paid more than work done at daytime, and that if that work is done beyond the worker's regular hours of duty, he should also be paid additional compensation for overtime work. [Naric vs. Naric Workers' Union. et al., G. R No. L-12075, May 29, 1959, citing Shell Co. vs. National Labor Union, 81 Phil. 315]. Besides, to hold that this case for extra compensation now falls beyond the powers of the industrial court to decide, would amount to a further curtailment of the jurisdiction of said court to an extent which may defeat the purpose of the Magna Carta to the prejudice of labor.' [Luis Recato Dy, et al v-9. CIR, G.R. No. L-17788, May 25,1962]"

The petitioner-company's arguments on the respondent court's alleged lack of jurisdiction over additional compensation for work done at night by the respondents is without merit.

The other issue raised in the second assignment of error is premised on the petitioner-company's contention that the respondent court's ruling on the additional compensation for nighttime work is not supported by substantial evidence.

This contention is untenable. Pertinent portions of the respondent court's decision read:

xxx xxx xxx

There is no serious disagreement between the petitioners and respondent management on the facts recited above. The variance in the evidence is only with respect to the money claims. Witnesses for petitioners declared they worked on regular days and on every other Sunday and also during all holidays; that for services rendered on Sundays and holidays they were not paid for the first four (4) hours and what they only received was the overtime compensation corresponding to the number of hours after or in excess of the first four hours; and that such payment is being indicated in the overtime pay for work done in excess of eight hours on regular working days. It is also claimed that their nighttime services could well be seen on their respective daily time records. .. (Emphasis supplied) (p.116, rollo)

The respondent court's ruling on additional compensation for work done at night is, therefore, not without evidence. Moreover, the petitioner-company did not deny that the private respondents rendered nighttime work. In fact, no additional evidence was necessary to prove that the private respondents were entitled to additional compensation for whether or not they were entitled to the same is a question of law which the respondent court answered correctly. The "waiver rule" is not applicable in the case at bar. Additional compensation for nighttime work is founded on public policy, hence the same cannot be

waived. (Article 6, Civil Code). On this matter, We believe that the respondent court acted according to justice and equity and the substantial merits of the case, without regard to technicalities or legal forms and should be sustained.

The third assignment of error is likewise without merit. The fact that only three of the private respondents testified in court does not adversely affect the interests of the other respondents in the case. The ruling in Dimayuga V. Court of Industrial Relations (G.R. No. L-0213, May 27, 1957) has been abandoned in later rulings of this Court.In Philippine Land Air-Sea Labor Union (PLASLU) vs. Sy Indong Company Rice And Corn Mill (11 SCRA 277) We had occasion to re-examine the ruling in Dimayuga We stated:

The latter reversed the decision of the trial Judge as regards the reinstatement with backwages of ... upon the theory that this is not a class suit; that, consequently, it is necessary and imperative that they should personally testify and prove the charges in the complaint', and that, having failed to do so, the decision of the trial Judge in their favor is untenable under the rule laid down in Dimayuga vs. Court of Industrial Relations, G.R. No. L-0213 (May 27,1957).

We do not share the view taken in the resolution appealed from. As the trial Judge correctly said, in Ms dissent from said resolution,:

xxx xxx xxx

In the case of Sanchez v. Court of Industrial Relations, supra, this Court stated:

To the reproach against the challenged order in the brief of petitioners in view of only two of the seven claimants testifying, a statement by this Court in Ormoc Sugar Co., Inc. vs. OSCO Workers Fraternity Labor Union would suffice by way of refutation. Thus: "This Court fully agrees with the respondent that quality and not quantity of witnesses should be the primordial consideration in the appraisal of evidence.' Barely eight days later, in another decision, the above statement was given concrete expression. Thus: 'The bases of the awards were not only the respective affidavits of the claimants but the testimonies of 24 witnesses (because 6 were not given credence by the court below) who Identified the said 239 claimants. The contention of petitions on this point is therefore unfounded Moveover in Philippine Land-Air-Sea Labor Union (PLASLU) v. Sy Indong company Rice & Corn Mill, this Court, through the present Chief Justice rejected as untenable the theory of the Court of Industrial Relations concerning the imperative needs of all the claimants to testify personality and prove their charges in the complaint. As tersely put: 'We do not share the view taken in the resolution appealed from.

The petitioner's contention that its employees fully understood what they signed when they entered into the contracts of employment and that they should be bound by their voluntary commitments is anachronistic in this time and age.

The Mercury Drug Co., Inc., maintains a chain of drugstores that are open every day of the week and, for some stores, up to very late at night because of the nature of the pharmaceutical retail business. The respondents knew that they had to work Sundays and holidays and at night, not as exceptions to the rule but as part of the regular course of employment. Presented with contracts setting their compensation on an annual basis with an express waiver of extra compensation for work on Sundays and holidays, the workers did not have much choice. The private respondents were at a disadvantage insofar as the contractual relationship was concerned. Workers in our country do not have the luxury or freedom of declining job openings or filing resignations even when some terms and conditions of employment are not only onerous and inequitous but illegal. It is precisely because of this situation that the framers of the Constitution embodied the provisions on social justice (Section 6, Article 11) and protection to labor (Section 9, Article I I) in the Declaration of Principles And State Policies.

It is pursuant to these constitutional mandates that the courts are ever vigilant to protect the rights of workers who are placed in contractually disadvantageous positions and who sign waivers or provisions contrary to law and public policy.

WHEREFORE, the petition is hereby dismissed. The decision and resolution appealed from are affirmed with costs against the petitioner.

SO ORDERED.

[G.R. No. 146073. January 13, 2003.]

JERRY E. ACEDERA, ANTONIO PARILLA, AND OTHERS LISTED IN ANNEX "A,"

1 Petitioners-Appellants, v. INTERNATIONAL CONTAINER TERMINAL SERVICES, INC. (ICTSI), NATIONAL LABOR RELATIONS

COMMISSION and HON. COURT OF APPEALS, Respondents-Appellants.

D E C I S I O N

CARPIO MORALES, J.:

For consideration is the petition for review on certiorari assailing the decision of the Court of Appeals affirming that of the National Labor Relations Commission (NLRC) which affirmed the decision of the Labor Arbiter denying herein petitioners-appellants’ Complaint-in-Intervention with Motion for Intervention.chanrob1es virtua1 1aw 1ibrary

The antecedent facts are as follows:chanrob1es virtual 1aw library

Petitioners-appellants Jerry Acedera, Et. Al. are employees of herein private respondent International Container Terminal Services, Inc. (ICTSI) and are officers/members of Associated Port Checkers & Workers Union-International Container Terminal Services, Inc. Local Chapter (APCWU-ICTSI), a labor organization duly registered as a local affiliate of the Associated Port Checkers & Workers Union (APCWU).

When ICTSI started its operations in 1988, it determined the rate of pay of its employees by using 304 days, the number of days of work of the employees in a year, as divisor. 2 

On September 28, 1990, ICTSI entered into its first

Collective Bargaining Agreement (CBA) with APCWU with a term of five years effective until September 28, 1995. 3 The CBA was renegotiated and thereafter renewed through a second CBA that took effect on September 29, 1995, effective for another five years. 4 Both CBAs contained an identically-worded provision on hours and days of work reading:chanrob1es virtual 1aw library

Article IX

Regular Hours of Work and Days of Labor

Section 1. The regular working days in a week shall be five (5) days on any day from Monday to Sunday, as may be scheduled by the COMPANY, upon seven (7) days prior notice unless any of this day is declared a special holiday. 5 (Emphasis omitted)

In accordance with the above-quoted provision of the CBA, the employees’ work week was reduced to five days or a total of 250 days a year. ICTSI, however, continued using the 304-day divisor in computing the wages of the employees. 6 

On November 10, 1990, the Regional Tripartite Wage and Productivity Board (RTWPB) in the National Capital Region decreed a P17.00 daily wage increase for all workers and employees receiving P125.00 per day or lower in the National Capital Region. 7 The then president of APCWU, together with some union members, thus requested the ICTSI’s Human Resource Department/Personnel Manager to compute the actual monthly increase in the employees’ wages by multiplying the RTWPB mandated increase by 365 days and dividing the product by 12 months. 8 

Heeding the proposal and following the implementation of the new wage order, ICTSI stopped using 304 days as divisor and started using 365 days in determining the daily wage of its employees and other consequential compensation, even if the employees’ work week consisted of only

five days as agreed upon in the CBA. 9 

In early 1997, ICTSI went on a retrenchment program and laid off its on-call employees. 10 This prompted the APCWU-ICTSI to file a notice of strike which included as cause of action not only the retrenchment of the employees but also ICTSI’s use of 365 days as divisor in the computation of wages. 11 The dispute respecting the retrenchment was resolved by a compromise settlement 12 while that respecting the computation of wages was referred to the Labor Arbiter. 13 

On February 26, 1997, APCWU, on behalf of its members and other employees similarly situated, filed with the Labor Arbiter a complaint against ICTSI which was dismissed for APCWU’s failure to file its position paper. 14 Upon the demand of herein petitioners-appellants, APCWU filed a motion to revive the case which was granted. APCWU thereupon filed its position paper on August 22, 1997. 15 

On December 8, 1997, petitioners-appellants filed with the Labor Arbiter a Complaint-in-Intervention with Motion to Intervene. 16 In the petition at bar, they justified their move to intervene in this wise:chanrob1es virtual 1aw library

[S]hould the union succeed in prosecuting the case and in getting a favorable reward it is actually they that would benefit from the decision. On the other hand, should the union fail to prove its case, or to prosecute the case diligently, the individual workers or members of the union would suffer great and immeasurable loss. . . . [t]hey wanted to insure by their intervention that the case would thereafter be prosecuted with all due diligence and would not again be dismissed for lack of interest to prosecute on the part of the union. 17 

The Labor Arbiter rendered a decision, the dispositive portion of which reads:chanrob1es virtual 1aw library

WHEREFORE, decision is hereby rendered declaring that the correct divisor in computing the daily wage and other labor standard benefits of the employees of respondent ICTSI who are members of complainant Union as well as the other employees similarly situated is two hundred fifty (250) days such that said respondent is hereby ordered to pay the employees concerned the differentials representing the underpayment of said salaries and other benefits reckoned three (3) years back from February 26, 1997, the date of filing of this complaint or computed from February 27 1994 until paid, but for purposes of appeal, the salary differentials are temporarily computed for one year in the amount of Four Hundred Sixty Eight Thousand Forty Pesos (P468,040.00). 18 

In the same decision, the Labor Arbiter denied petitioners-appellants’ Complaint-in-Intervention with Motion for Intervention upon a finding that they are already well represented by APCWU. 19 

On appeal, the NLRC reversed the decision of the Labor Arbiter and dismissed APCWU’s complaint for lack of merit. 20 The denial of petitioners-appellants’ intervention was, however, affirmed. 21 

Unsatisfied with the decision of the NLRC, APCWU filed a petition for certiorari with the Court of Appeals while petitioners-appellants filed theirs with this Court which referred the petition 22 to the Court of Appeals.

The Court of Appeals dismissed APCWU’s petition on the following grounds: failure to allege when its motion for reconsideration of the NLRC decision was filed, failure to attach the necessary appendices to the petition, and failure to file its motion for extension to file its petition within the reglementary period. 23 

As for petitioners-appellants’ petition for certiorari, it was dismissed by the Court of Appeals in this wise:chanrob1es virtual 1aw library

It is clear from the records that herein petitioners, claiming to be employees of respondent ICTSI, are already well represented by its employees union, APCWU, in the petition before this Court (CA-G.R. SP. No. 53266) although the same has been dismissed. The present petition is, therefore a superfluity that deserves to be dismissed. Furthermore, only Acedera signed the Certificate of non-forum shopping. On this score alone, this petition should likewise be dismissed. We find that the same has no merit considering that herein petitioners have not presented any meritorious argument that would justify the reversal of the Decision of the NLRC.

Article IX of the CBA provides:chanrob1es virtual 1aw library

REGULAR HOURS OF WORK AND DAYS OF LABOR

"Section 1. The regular working days in a week shall be five (5) days on any day from Monday to Sunday, as may be scheduled by the COMPANY, upon seven (7) days prior notice unless any of this day is declared a special holiday."cralaw virtua1aw library

This provision categorically states the required number of working days an employee is expected to work for a week. It does not, however, indicate the manner in which an employee’s salary is to be computed. In fact, nothing in the CBA makes any referral to any divisor which should be the basis for determining the salary. The NLRC, therefore, correctly ruled that." . . the absence of any express or specific provision in the CBA that 250 days should be used as divisor altogether makes the position of the Union untenable."cralaw virtua1aw library

x       x       x

Considering that herein petitioners themselves requested that 365 days be used as the divisor in computing their wage increase and later did not raise or object to the same during the negotiations of the new CBA, they are clearly estopped to now complain of such computation only because they no longer benefit from it. Indeed, the 365 divisor for the past seven (7) years has already become practice and law between the company and its employees. 24 (Emphasis supplied)

x       x       x

Hence, the present petition of petitioners-appellants who fault the Court of Appeals as follows:chanrob1es virtual 1aw library

I

. . . IN REJECTING THE CBA OF THE PARTIES AS THE SOURCE OF THE DIVISOR TO DETERMINE THE WORKERS’ DAILY RATE TOTALLY DISREGARDED THE APPLICABLE LANDMARK DECISIONS OF THE HONORABLE SUPREME COURT ON THE MATTER.

II

. . . [IN] DISREGARD[ING] APPLICABLE DECISIONS OF THIS HONORABLE COURT WHEN IT RULED THAT THE PETITIONERS-APPELLANTS ARE ALREADY IN ESTOPPEL.

III

. . . IN RULING THAT THE PETITIONERS-APPELLANTS HAVE NO LEGAL RIGHT TO INTERVENE IN AND PURSUE THIS CASE AND

THAT THEIR INTERVENTION IS A SUPERFLUITY.

IV

. . . IN HOLDING, ALTHOUGH MERELY AS AN OBITER DICTUM, THAT ONLY PETITIONER JERRY ACEDERA SIGNED THE CERTIFICATE OF NON-FORUM SHOPPING.25cralaw:red

The third assigned error respecting petitioners-appellants’ right to intervene shall first be passed upon, it being determinative of their right to raise the other assigned errors.

Petitioners-appellants anchor their right to intervene on Rule 19 of the 1997 Rules of Civil Procedure, Section 1 of which reads:chanrob1es virtual 1aw library

Section 1. Who may intervene. — A person who has legal interest in the matter in litigation, or in the success of either of the parties, or an interest against both, or is so situated to be adversely affected by a distribution or other disposition of property in the custody of the court or of an officer thereof may, with leave of court, be allowed to intervene in the action. The court shall consider whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the original parties, and whether or not the intervenor’s right may be fully protected in a separate proceeding.

They stress that they have complied with the requisites for intervention because (1) they are the ones who stand to gain or lose by the direct legal operation and effect of any judgment that may be rendered in this case, (2) no undue delay or prejudice would result from their intervention since their Complaint-in-Intervention with Motion for Intervention was filed while the Labor Arbiter was still hearing the case and before any decision thereon

was rendered, and (3) it was not possible for them to file a separate case as they would be guilty of forum shopping because the only forum available for them was the Labor Arbiter. 26 

Petitioners-appellants, however, failed to consider, in addition to the rule on intervention, the rule on representation, thusly:chanrob1es virtual 1aw library

Sec. 3. Representatives as parties. — Where the action is allowed to be prosecuted or defended by a representative or someone acting in a fiduciary capacity, the beneficiary shall be included in the title of the case and shall be deemed to be the real party in interest. A representative may be a trustee of an express trust, a guardian, an executor or administrator, or a party authorized by law or these Rules . . . 27 (Emphasis supplied)

A labor union is one such party authorized to represent its members under Article 242(a) of the Labor Code which provides that a union may act as the representative of its members for the purpose of collective bargaining. This authority includes the power to represent its members for the purpose of enforcing the provisions of the CBA. That APCWU acted in a representative capacity "for and in behalf of its Union members and other employees similarly situated," the title of the case filed by it at the Labor Arbiter’s Office so expressly states.

While a party acting in a representative capacity, such as a union, may be permitted to intervene in a case, ordinarily, a person whose interests are already represented will not be permitted to do the same 28 except when there is a suggestion of fraud or collusion or that the representative will not act in good faith for the protection of all interests represented by him. 29 

Petitioners-appellants cite the dismissal of the case filed by ICTSI, first by the Labor Arbiter, and later by the Court of Appeals. 30 The dismissal of the case does not, however, by itself show the existence of

fraud or collusion or a lack of good faith on the part of APCWU. There must be clear and convincing evidence of fraud or collusion or lack of good faith independently of the dismissal. This, petitioners-appellants failed to proffer.

Petitioners-appellants likewise express their fear that APCWU would not prosecute the case diligently because of its "sweetheart relationship" with ICTSI. 31 There is nothing on record, however, to support this alleged relationship which allegation surfaces as a mere afterthought because it was never raised early on. It was raised only in petitioners-appellants’ reply to ICTSI’s comment in the petition at bar, the last pleading submitted to this Court, which was filed on June 20, 2001 or more than 42 months after petitioners-appellants filed their Complaint-in-Intervention with Motion to Intervene with the Labor Arbiter.chanrob1es virtua1 1aw 1ibrary

To reiterate, for a member of a class to be permitted to intervene in a representative action, fraud or collusion or lack of good faith on the part of the representative must be proven. It must be based on facts borne on record. Mere assertions, as what petitioners-appellants proffer, do not suffice.

The foregoing discussion leaves it unnecessary to discuss the other assigned errors.

WHEREFORE, the present petition is hereby DENIED.

G.R. No. L-39387 June 29, 1982

PAMPANGA SUGAR DEVELOPMENT CO., INC., petitioner, vs.COURT OF INDUSTRIAL RELATIONS AND SUGAR WORKERS ASSOCIATION, respondents.

 

MAKASIAR, J.:

Petitioner Pampanga Sugar Development Company, Inc. seeks the reversal of the order dated June 6, 1974 of respondent Court of Industrial Relations awarding to respondent Sugar Workers Association's (Union) counsel attorney's fees equivalent to 20% of the judgment in CIR Case No. 4264- ULP and ordering the lower court's Examining Division to compute the wage and fringe benefits differentials due the 28 individual workers who did not execute quitclaims as well as attorney's fees corresponding to 20% of the benefits due to 53 workers who entered into agreements waiving their rights and benefits under the decision dated December 4, 1972 in the aforecited case; also, the setting aside of the CIR resolution of September 3, 1974 denying petitioner's motion for reconsideration of the questioned order (pp. 15 & 57, rec.).

For a better appreciation of this case, certain prefatory facts must be recalled. Sometime in February, 1956, the workers' affiliates of respondent Union staged a strike against petitioner company. This labor dispute was certified by the President to the Court of Industrial Relations which was docketed as Case No. 13-IPA. After six years, the said Court issued an order on November 8, 1962 directing petitioner company to reinstate the members of respondent union. On March 12, 1963 some 88 union members were thus reinstated by petitioner.

However, petitioner discriminated against the reemployed workers with respect to wage rates, off-season pay, cost of living allowance, milling bonus and Christmas bonus by depriving them of aforesaid benefits or by granting to some members benefits lesser than those given to members of the Pasudeco Workers Union, another labor group in the service of petitioner. By reason of such denial and/or grant of lower benefits to respondent's members because of their union affiliation and union activities, respondent filed with the CIR a complaint dated September 10, 1964 for unfair labor practice against petitioner which case was docketed as Case No. 4264-ULP.

On December 4, 1972, the CIR handed down a decision adjudging herein petitioner guilty of unfair labor practice acts as charged and finding the same to have been committed, and thereby directing petitioner to cease and desist from further committing the said unfair labor practice acts and directing petitioner to pay wage differentials to certain workers and fringe benefits as would be found due and payable to them and to readmitted seasonal and casual members of respondent union totalling 88 with the exception of 7 workers.

In a resolution dated May 28, 1973, the CIR denied petitioner's motion for reconsideration of aforesaid decision filed on December 14, 1972. Petitioner appealed the above decision and resolution to this Court on June 15, 1973 praying in its petition for the nullification of said decision and motion for being contrary to law, and for the rendition of a new judgment dismissing CIR Case No. 4264-ULP.

This Court, in its resolution of July 31, 1973, denied the said petition for review (docketed as G.R. No. L-36994) for lack of merit. Petitioner then moved for reconsideration of aforesaid denial which was denied on October 4, 1973 for lack of merit. Said resolution denying the motion for reconsideration thus became final and executory on October 12, 1973.

With the finality of the December 4, 1972 decision having been settled, respondent Union filed with the CIR a motion for computation of final judgment and a petition for attorney's lien both dated October 17, 1973 (pp. 47 & 50, rec.).

Petitioner company filed its answer to motion for computation of final judgment and the petition for attorney's lien under date of November 20, 1973 (p. 52, rec.).

The CIR, acting on the aforesaid motions of respondent Union, issued its order of June 6, 1974 approving and granting to respondent's counsel, Atty. Ignacio Lacsina, attorney's fees equivalent to 20% of the total amount of final judgment or whatever recovery or settlement is made and directing its Examining Division to compute the wage and fringe benefits differentials due the 28 individual workers who did not waive or quitclaim their rights established by the decision of December 4, 1972 as well as the attorney's fees equivalent to 20% of the total wage and fringe benefits differentials due the fifty-three (53) individual workers who executed agreements with the company waiving and quitclaiming their rights, benefits and privileges under the aforesaid decision (pp. 15 & 57, rec.).

Petitioner moved for reconsideration of aforecited order on June 26, 1974 and on July 5, 1974, the arguments supporting said motion for reconsideration followed (pp. 63 & 65, rec.).

Respondent Union then filed its motion to strike out the motion for reconsideration dated July 23, 1974 (p. 72, rec.). In a resolution of September 3, 1974, respondent lower court denied petitioner's motion for reconsideration.

Thus, this appeal from the subject order and resolution of the CIR.

Petitioner alleges the following assignment of errors:

1. The Court of Industrial Relations erred in awarding attorney's fees to the union's counsel equivalent to 20% of the total amount of final judgment or whatever recovery or settlement is made thereunder; because, aside from being inequitable, exorbitant, excessive and unconscionable, the same is without legal basis.

2. The Court of Industrial Relations erred in ordering the Chief of its examining division or his duly authorized representative to examine the payrolls, vouchers, books of account and other pertinent documents of petitioner, and to compute the wage and fringe-benefits differentials allegedly due the members of respondent Union because such examination and computation have become academic.

3. The Court of Industrial Relations erred in not denying or dismissing the two motions filed by respondent union on October 18, 1973 praying therein that the union's counsel be awarded attorney's fees and that an order be issued directing the examining division of the court to compute the wage and fringe benefits differentials allegedly due the members of the union under the decision of December 4, 1972.

Respondents, however, contend that —

1. The issue of quitclaims is now res judicata;

2. The CIR finding that 81 members of respondent union are entitled to adjudged benefits is no longer alterable after decision has become final;

3. The CIR power to adjust unfair labor practices is unaffected by individual settlements;

4. The rights of labor are unwaivable; quitclaims null and void; and

5. The question regarding alleged unreasonableness of award of attorney's fees, not raised before Court a quo, is barred on appeal.

After a careful evaluation of the petitioners' and respondents' pleadings, this Court, finds the allegations of petitioner to be without merit.

On the first assignment of error, paragraph (a), the petitioner failed to raise the issue before the trial court. This Court notes that petitioner's answer to the motion for computation of final judgment and to petition for attorney's lien filed by the respondent in the trial court did not raise the foregoing issue. It is a well-settled doctrine in this jurisdiction that issues not raised in the trial court may not be raised on appeal. Otherwise, there will be no end to litigations thus defeating the ends of justice.

Nevertheless, this Court finds the allegations to be devoid of merit. Petitioner's contention that there is no basis for respondent's petition for attorney's lien filed with the trial court containing allegations relative to attorney's fees as agreed upon between him and his client, the complainant Sugar Workers' Association, is untenable. The written conformity of the President of said Sugar Workers Association on behalf thereof confirms the existence of such an agreement on attorney's fees and constitutes an irrefutable evidence of such agreement. The trial court, therefore, had sufficient evidence upon which it based its decision. The petitioner did not contest the allegations contained in the respondent's petition for attorney's lien before the trial court. This

constitutes an implied admission thereof. Moreover, it is evident from the tenor of the trial court's order issued on June 6, 1974 that the said court carefully evaluated the respondent's petition for attorney's lien and even reduced the percentage from 25 IC to 20 %.

On the first assignment of error, paragraph (b), this Court likewise finds the same to be without merit. This issue has already been resolved by this Court when the petitioner filed its first petition for certiorari (G.R. No. L- 36994) seeking nullification of the trial court's judgment on the same issue. Petitioner's allegations were rejected by this Court in said case. It may not now be repeated and raised on appeal before this Court, the same being res judicata.

Be that as it may, the allegations of petitioner to the effect that by reason of the quitclaims there is nothing upon which the attorney's lien attaches, is not valid. This Court finds the quitclaims not valid. Firstly, said quitclaims were secured on December 27, 1972 by petitioner after it lost its case in the lower court when the latter promulgated its decision on the case on December 4, 1972. Obviously in its desire to deny what is due the sugar workers concerned and frustrate the decision of the lower court awarding benefits to them, it used its moral ascendancy as employer over said workers to secure said quitclaims. Predicated on said quitclaims, petitioner filed a petition for certiorari before this Court but the same was denied by the Court on July 31, 1973 and October 4, 1973. Petitioner now has the audacity to return before this Court still invoking said quitclaims, which We again reject.

Secondly, while rights may be waived, the same must not be contrary to law, public order, public policy, morals or good customs or prejudicial to a third person with a right recognized by law (Art. 6, New Civil Code). The quitclaim agreements contain the following provisions in paragraph I 1, No. 3, thereof:

3. Nothing herein stipulated shall be construed as an admission and/or recognition by the Party of The Second Part of its failure refusal and/or omission as employer, to faithfully comply with the pertinent laws, rules and regulations and/or agreements, nor its liability therefor and thereunder.

Needless to state, the foregoing provisions are contrary to law, It exempts the petitioner from any legal liability. The above- quoted provision renders the quitclaim agreements void ab initio in their entirety since they obligated the workers concerned to forego their benefits, while at the same time, exempted the petitioner from any liability that it may choose to reject. This runs counter to Article 22 of the New Civil Code which provides that no one shall be unjustly enriched at the expense of another.

Thirdly, the alleged quitclaim agreements are contrary to public policy. Once a civil action is filed in court, the cause of action may not be the subject of compromise unless the same is by leave of the court concerned. Otherwise, this will render the entire judicial system irrelevant to the prejudice of the national interest. Parties to litigations cannot be allowed to trifle with the judicial system by coming to court and later on agreeing to a compromise without the knowledge and approval of the court. This converts the judiciary into a mere tool of party-litigants who act according to their whims and caprices. This is more so when the court has already rendered its decision on the issues submitted.

In the case at bar, the lower court has already rendered a decision on the issues presented before the alleged quitclaims agreements were made. The quitclaim agreements were secured by petitioner while it filed a petition for certiorari before this Court for a review of the lower court's decision. The quiclaim agreements taken together with the

petitioner's petition for certiorari of the trial court's decision clearly and unmistakably shows the bad faith of the petitioner and its outright refusal to comply with its legal obligations. And now it has the temerity to attempt to use this Court as its instrument for the purpose.

This Court rejects the contention of petitioner to the effect that the lien of an attorney on the judgment or decree for the payment of money and the preference thereof which he has secured in favor of his client takes legal effect only from and after, but not before notice of said lien has been entered in the record and served on the adverse party, citing the cases of Menzi and Co. vs. Bastida (63 Phil. 16) and Macondray & Co. vs. Jose (66 Phil. 590) in support thereof.

This Court finds the petitioner's contentions and citations applicable only when the case has already been decided with finality. In the case at bar, the original case was decided with finality only after this Court denied the petitioner's motion for reconsideration of this Court's denial of its petition for certiorari on the lower court's decision.

This Court is appalled by the attempt of petitioner to mislead it by alleging that the lower court recognized the validity and effectivity of the 53 individual agreements when it declared allegedly that "rights may be waived. " The records show that the lower court qualified its statement to the effect that the waiver must not be contrary to law, public order, public policy, morals or good customs, or prejudicial to a third person with a right recognized by law citing Article 6 of the New Civil Code. This attempt by petitioner casts a serious doubt on the integrity and good faith not only of the petitioner but also of its counsel.

This Court rejects the allegation of petitioner to the effect that the 53 agreements gave substance to the policy of the Industrial Peace Act of encouraging the parties to make all reasonable efforts to settle their

differences by mutual agreement, citing the case of Filomena Dionela, et al. vs. CIR, et al. (L-18334, August 31, 1963).

Petitioner's contention and the case cited in support thereof apply only where there is good faith on the part of the party litigants. In the case at bar, petitioner acted with evident bad faith and malice. Petitioner secured the 53 quitclaim agreements individually with the 53 sugar workers without the intervention of respondent's lawyer who was representing them before the lower court. This subterfuge is tantamount to a sabotage of the interest of respondent association. Needless to say, the means employed by petitioner in dealing with the workers individually, instead of collectively through respondent and its counsel, violates good morals as they undermine the unity of respondent union and fuels industrial disputes, contrary to the declared policy in the Industrial Peace Act.

This Court likewise rejects petitioner's allegation that the 53 quitclaim agreements were in the nature of a compromise citing the case of Republic vs. Estenzo, et al., (L-24656, September 25, 1968, 25 SCRA 122) and Articles 2028 and 2040 of the New Civil Code.

Petitioner's allegations and citations apply only to compromises between the party-litigants done in good faith. In the case at bar, there was no compromise between the petitioner and the respondent Sugar Workers Association. In respect of the 53 quitclaims, these are not compromise agreements between the petitioner and respondent union. They are separate documents of renunciation of individual rights. Compromise involves the mutual renunciation of rights by both parties on a parity basis. The quitclaims, however, bind the workers to renounce their rights while the petitioner not only does not renounce anything but also acquires exemption from any legal liability in connection therewith.

On the First Assignment of Error, Paragraph (c), the petitioner anchors his allegations on the technical procedural requirements of Section 37, Rule 138 of the New Rules of Court. This Court, however, finds petitioner's allegation without merit. Said provision of the Rules of Court is meant to protect the interest of an attorney's client and the adverse party by seeing to it that they are given the opportunity to contest the creation of the attorney's lien. It will be noted from the records that the client Sugar Workers Union was not only notified but also affixed its conformity to the respondents' motion for attorney's lien. With respect to the adverse party, the petitioner in this case, said adverse party's interest was amply protected by the lower court when the latter admitted petitioner's answer to respondent's motion for computation of final judgment and to respondent's counsel's petition for attorney's lien. Petitioner did not raise the aforesaid technicality in its answer before the lower court. It cannot now raise it for the first time on appeal.

On the First Assignment of Error, Paragraph (d), this Court finds petitioner's allegations to the effect that the attorney's fees awarded are inequitable, exorbitant, excessive and unconscionable, citing in the process the case of Meralco Workers' Union vs. Gaerlan (32 SCRA 419), completely without basis nor merit.

Again, petitioner did not raise this issue in the lower court. It cannot now raise said issue for the first time on appeal before this Court. Nevertheless, petitioner has failed to prove any of its allegations. Hence, this Court finds the same worthless. The Meralco case does not apply in this case for the reason that the facts and circusmtances are entirely different.

On the Second Assignment of Error, this Court finds petitioner's allegation to the effect that the lower court erred in ordering the computation of judgment on the ground that by reason of the quitclaim agreements the computation of judgment has become academic, to be without merit and grossly inane.

The allegations of petitioner are premised on its previous allegations regarding the quitclaims. This Court has earlier stated that the quitclaim agreements are void ab initio. The lower court was correct in directing the computation of judgment, there being a basis therefor.

On the Third Assignment of Error, this Court likewise finds petitioner's allegations which are based on its allegations in support of the first and second assignments of errors, without merit, as heretofore discussed.

WHEREFORE, THE PETITION IS HEREBY DISMISSED AND RESPONDENT CIR (NOW THE NLRC) IS HEREBY DIRECTED TO IMPLEMENT ITS ORDER DATED JUNE 6,1974.

COSTS AGAINST PETITIONER.

SO ORDERED.

G.R. No. 152456             April 28, 2004

SEVILLA TRADING COMPANY, petitioner, vs.A.V.A. TOMAS E. SEMANA, SEVILLA TRADING WORKERS UNION–SUPER, respondents.

DECISION

PUNO, J.:

On appeal is the Decision1 of the Court of Appeals in CA-G.R. SP No. 63086 dated 27 November 2001 sustaining the Decision2 of Accredited Voluntary Arbitrator Tomas E. Semana dated 13 November 2000, as well as its subsequent Resolution3 dated 06 March 2002 denying petitioner’s Motion for Reconsideration.

The facts of the case are as follows:

For two to three years prior to 1999, petitioner Sevilla Trading Company (Sevilla Trading, for short), a domestic corporation engaged in trading business, organized and existing under Philippine laws, added to the base figure, in its computation of the 13th-month pay of its employees, the amount of other benefits received by the employees which are beyond the basic pay. These benefits included:

(a) Overtime premium for regular overtime, legal and special holidays;

(b) Legal holiday pay, premium pay for special holidays;

(c) Night premium;

(d) Bereavement leave pay;

(e) Union leave pay;

(f) Maternity leave pay;

(g) Paternity leave pay;

(h) Company vacation and sick leave pay; and

(i) Cash conversion of unused company vacation and sick leave.

Petitioner claimed that it entrusted the preparation of the payroll to its office staff, including the computation and payment of the 13th-month pay and other benefits. When it changed its person in charge of the payroll in the process of computerizing its payroll, and after audit was conducted, it allegedly discovered the error of including non-basic pay or other benefits in the base figure used in the computation of the 13th-month pay of its employees. It cited the Rules and Regulations Implementing P.D. No. 851 (13th-Month Pay Law), effective December 22, 1975, Sec. 2(b) which stated that:

"Basic salary" shall include all remunerations or earnings paid by an employer to an employee for services rendered but may not include cost-of-living allowances granted pursuant to P.D. No. 525 or Letter of Instruction No. 174, profit-sharing payments, and all allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary of the employee at the time of the promulgation of the Decree on December 16, 1975.

Petitioner then effected a change in the computation of the thirteenth month pay, as follows:

13th-month

pay=

net basic pay

12 months

where:

net basic pay

= gross pay – (non-basic pay or other benefits)

Now excluded from the base figure used in the computation of the thirteenth month pay are the following:

a) Overtime premium for regular overtime, legal and special holidays;

b) Legal holiday pay, premium pay for special holidays;

c) Night premium;

d) Bereavement leave pay;

e) Union leave pay;

f) Maternity leave pay;

g) Paternity leave pay;

h) Company vacation and sick leave pay; and

i) Cash conversion of unused vacation/sick leave.

Hence, the new computation reduced the employees’ thirteenth month pay. The daily piece-rate workers represented by private respondent Sevilla Trading Workers Union – SUPER (Union, for short), a duly organized and registered union, through the Grievance Machinery in their Collective Bargaining Agreement, contested the new computation and reduction of their thirteenth month pay. The parties failed to resolve the issue.

On March 24, 2000, the parties submitted the issue of "whether or not the exclusion of leaves and other related benefits in the computation of 13th-month pay is valid" to respondent Accredited Voluntary Arbitrator Tomas E. Semana (A.V.A. Semana, for short) of the National Conciliation and Mediation Board, for consideration and resolution.

The Union alleged that petitioner violated the rule prohibiting the elimination or diminution of employees’ benefits as provided for in Art. 100 of the Labor Code, as amended. They claimed that paid leaves, like sick leave, vacation leave, paternity leave, union leave, bereavement leave, holiday pay and other leaves with pay in the CBA should be included in the base figure in the computation of their 13th-month pay.

On the other hand, petitioner insisted that the computation of the 13th-month pay is based on basic salary, excluding benefits such as leaves with pay, as per P.D. No. 851, as amended. It maintained that, in adjusting its computation of the 13th-month pay, it merely rectified the mistake its personnel committed in the previous years.

A.V.A. Semana decided in favor of the Union. The dispositive portion of his Decision reads as follows:

WHEREFORE, premises considered, this Voluntary Arbitrator hereby declared that:

1. The company is hereby ordered to include sick leave and vacation leave, paternity leave, union leave, bereavement leave and other leave with pay in the CBA, premium for work done on rest days and special holidays, and pay for regular holidays in the computation of the 13th-month pay to all covered and entitled employees;

2. The company is hereby ordered to pay corresponding backwages to all covered and entitled employees arising from the exclusion of said benefits in the computation of 13th-month pay for the year 1999.

Petitioner received a copy of the Decision of the Arbitrator on December 20, 2000. It filed before the Court of Appeals, a "Manifestation and Motion for Time to File Petition for Certiorari" on January 19, 2001. A month later, on February 19, 2001, it filed its Petition for Certiorari under Rule 65 of the 1997 Rules of Civil Procedure for the nullification of the Decision of the Arbitrator. In addition to its earlier allegations, petitioner claimed that assuming the old computation will be upheld, the reversal to the old computation can only be made to the extent of including non-basic benefits actually included by petitioner in the base figure in the computation of their 13th-month pay in the prior years. It must exclude those non-basic benefits which, in the first place, were not included in the original computation. The appellate court denied due course to, and dismissed the petition.

Hence, this appeal. Petitioner Sevilla Trading enumerates the grounds of its appeal, as follows:

1. THE DECISION OF THE RESPONDENT COURT TO REVERT TO THE OLD COMPUTATION OF THE 13th-MONTH PAY ON THE BASIS THAT THE OLD COMPUTATION HAD RIPENED INTO PRACTICE IS WITHOUT LEGAL BASIS.

2. IF SUCH BE THE CASE, COMPANIES HAVE NO MEANS TO CORRECT ERRORS IN COMPUTATION WHICH WILL CAUSE GRAVE AND IRREPARABLE DAMAGE TO EMPLOYERS.4

First, we uphold the Court of Appeals in ruling that the proper remedy from the adverse decision of the arbitrator is a petition for review under Rule 43 of the 1997 Rules of Civil Procedure, not a petition for certiorari under Rule 65. Section 1 of Rule 43 states:

RULE 43

Appeals from the Court of Tax Appeals andQuasi-Judicial Agencies to the Court of

Appeals

SECTION 1. Scope. — This Rule shall apply to appeals from judgments or final orders of the Court of Tax Appeals and from awards, judgments, final orders or resolutions of or authorized by any quasi-judicial agency in the exercise of its quasi-judicial functions. Among these agencies are the Civil Service Commission, Central Board of Assessment Appeals, Securities and Exchange Commission, Office of the President, Land Registration Authority, Social Security Commission, Civil Aeronautics Board, Bureau of Patents, Trademarks and Technology Transfer, National Electrification Administration, Energy Regulatory Board, National

Telecommunications Commission, Department of Agrarian Reform under Republic Act No. 6657, Government Service Insurance System, Employees Compensation Commission, Agricultural Inventions Board, Insurance Commission, Philippine Atomic Energy Commission, Board of Investments, Construction Industry Arbitration Commission, and voluntary arbitrators authorized by law. [Emphasis supplied.]

It is elementary that the special civil action of certiorari under Rule 65 is not, and cannot be a substitute for an appeal, where the latter remedy is available, as it was in this case. Petitioner Sevilla Trading failed to file an appeal within the fifteen-day reglementary period from its notice of the adverse decision of A.V.A. Semana. It received a copy of the decision of A.V.A. Semana on December 20, 2000, and should have filed its appeal under Rule 43 of the 1997 Rules of Civil Procedure on or before January 4, 2001. Instead, petitioner filed on January 19, 2001 a "Manifestation and Motion for Time to File Petition for Certiorari," and on February 19, 2001, it filed a petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure. Clearly, petitioner Sevilla Trading had a remedy of appeal but failed to use it.

A special civil action under Rule 65 of the Rules of Court will not be a cure for failure to timely file a petition for review on certiorari under Rule 45 (Rule 43, in the case at bar) of the Rules of Court. Rule 65 is an independent action that cannot be availed of as a substitute for the lost remedy of an ordinary appeal, including that under Rule 45 (Rule 43, in the case at bar), especially if such loss or lapse was occasioned by one’s own neglect or error in the choice of remedies.5

Thus, the decision of A.V.A. Semana had become final and executory when petitioner Sevilla Trading filed its petition for certiorari on February 19, 2001.

More particularly, the decision of A.V.A. Semana became final and executory upon the lapse of the fifteen-day reglementary period to appeal, or on January 5, 2001. Hence, the Court of Appeals is correct in holding that it no longer had appellate jurisdiction to alter, or much less, nullify the decision of A.V.A. Semana.

Even assuming that the present petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure is a proper action, we still find no grave abuse of discretion amounting to lack or excess of jurisdiction committed by A.V.A. Semana. "Grave abuse of discretion" has been interpreted to mean "such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, or, in other words where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and it must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law."6 We find nothing of that sort in the case at bar.

On the contrary, we find the decision of A.V.A. Semana to be sound, valid, and in accord with law and jurisprudence. A.V.A. Semana is correct in holding that petitioner’s stance of mistake or error in the computation of the thirteenth month pay is unmeritorious. Petitioner’s submission of financial statements every year requires the services of a certified public accountant to audit its finances. It is quite impossible to suggest that they have discovered the alleged error in the payroll only in 1999. This implies that in previous years it does not know its cost of labor and operations. This is merely basic cost accounting. Also, petitioner failed to adduce any other relevant evidence to support its contention. Aside from its bare claim of mistake or error in the computation of the thirteenth month pay, petitioner merely appended to its petition a copy of the 1997-2002 Collective Bargaining Agreement and an alleged "corrected" computation of the thirteenth month pay. There was no explanation whatsoever

why its inclusion of non-basic benefits in the base figure in the computation of their 13th-month pay in the prior years was made by mistake, despite the clarity of statute and jurisprudence at that time.

The instant case needs to be distinguished from Globe Mackay Cable and Radio Corp. vs. NLRC,7 which petitioner Sevilla Trading invokes. In that case, this Court decided on the proper computation of the cost-of-living allowance (COLA) for monthly-paid employees. Petitioner Corporation, pursuant to Wage Order No. 6 (effective 30 October 1984), increased the COLA of its monthly-paid employees by multiplying the P3.00 daily COLA by 22 days, which is the number of working days in the company. The Union disagreed with the computation, claiming that the daily COLA rate of P3.00 should be multiplied by 30 days, which has been the practice of the company for several years. We upheld the contention of the petitioner corporation. To answer the Union’s contention of company practice, we ruled that:

Payment in full by Petitioner Corporation of the COLA before the execution of the CBA in 1982 and in compliance with Wage Orders Nos. 1 (26 March 1981) to 5 (11 June 1984), should not be construed as constitutive of voluntary employer practice, which cannot now be unilaterally withdrawn by petitioner. To be considered as such, it should have been practiced over a long period of time, and must be shown to have been consistent and deliberate . . . The test of long practice has been enunciated thus:

. . . Respondent Company agreed to continue giving holiday pay knowing fully well that said employees are not covered by the law requiring payment of holiday pay." (Oceanic Pharmacal

Employees Union [FFW] vs. Inciong, 94 SCRA 270 [1979])

Moreover, before Wage Order No. 4, there was lack of administrative guidelines for the implementation of the Wage Orders. It was only when the Rules Implementing Wage Order No. 4 were issued on 21 May 1984 that a formula for the conversion of the daily allowance to its monthly equivalent was laid down.

Absent clear administrative guidelines, Petitioner Corporation cannot be faulted for erroneous application of the law . . .

In the above quoted case, the grant by the employer of benefits through an erroneous application of the law due to absence of clear administrative guidelines is not considered a voluntary act which cannot be unilaterally discontinued. Such is not the case now. In the case at bar, the Court of Appeals is correct when it pointed out that as early as 1981, this Court has held in San Miguel Corporation vs. Inciong8 that:

Under Presidential Decree 851 and its implementing rules, the basic salary of an employee is used as the basis in the determination of his 13th-month pay. Any compensations or remunerations which are deemed not part of the basic pay is excluded as basis in the computation of the mandatory bonus.

Under the Rules and Regulations Implementing Presidential Decree 851, the following compensations are deemed not part of the basic salary:

a) Cost-of-living allowances granted pursuant to Presidential

Decree 525 and Letter of Instruction No. 174;

b) Profit sharing payments;

c) All allowances and monetary benefits which are not considered or integrated as part of the regular basic salary of the employee at the time of the promulgation of the Decree on December 16, 1975.

Under a later set of Supplementary Rules and Regulations Implementing Presidential Decree 851 issued by the then Labor Secretary Blas Ople, overtime pay, earnings and other remunerations are excluded as part of the basic salary and in the computation of the 13th-month pay.

The exclusion of cost-of-living allowances under Presidential Decree 525 and Letter of Instruction No. 174 and profit sharing payments indicate the intention to strip basic salary of other payments which are properly considered as "fringe" benefits. Likewise, the catch-all exclusionary phrase "all allowances and monetary benefits which are not considered or integrated as part of the basic salary" shows also the intention to strip basic salary of any and all additions which may be in the form of allowances or "fringe" benefits.

Moreover, the Supplementary Rules and Regulations Implementing Presidential Decree 851 is even more empathic in declaring that earnings and other remunerations which are not part of the basic salary shall not be included in the computation of the 13th-month pay.

While doubt may have been created by the prior Rules and Regulations Implementing Presidential Decree 851 which defines basic salary to include all remunerations or earnings paid by an employer to an employee, this cloud is dissipated in the later and more controlling Supplementary Rules and Regulations which categorically, exclude from the definition of basic salary earnings and other remunerations paid by employer to an employee. A cursory perusal of the two sets of Rules indicates that what has hitherto been the subject of a broad inclusion is now a subject of broad exclusion. The Supplementary Rules and Regulations cure the seeming tendency of the former rules to include all remunerations and earnings within the definition of basic salary.

The all-embracing phrase "earnings and other remunerations" which are deemed not part of the basic salary includes within its meaning payments for sick, vacation, or maternity leaves, premium for works performed on rest days and special holidays, pay for regular holidays and night differentials. As such they are deemed not part of the basic salary and shall not be considered in the computation of the 13th-month pay. If they were not so excluded, it is hard to find any "earnings and other remunerations" expressly excluded in the computation of the 13th-month pay. Then the exclusionary provision would prove to be idle and with no purpose.

In the light of the clear ruling of this Court, there is, thus no reason for any mistake in the construction or application of the law. When petitioner Sevilla Trading still included over the years non-basic benefits of its employees, such as maternity leave pay, cash equivalent of unused vacation and sick leave, among others in the computation of the 13th-

month pay, this may only be construed as a voluntary act on its part. Putting the blame on the petitioner’s payroll personnel is inexcusable.

In Davao Fruits Corporation vs. Associated Labor Unions, we likewise held that:9

The "Supplementary Rules and Regulations Implementing P.D. No. 851" which put to rest all doubts in the computation of the thirteenth month pay, was issued by the Secretary of Labor as early as January 16, 1976, barely one month after the effectivity of P.D. No. 851 and its Implementing Rules. And yet, petitioner computed and paid the thirteenth month pay, without excluding the subject items therein until 1981. Petitioner continued its practice in December 1981, after promulgation of the aforequoted San Migueldecision on February 24, 1981, when petitioner purportedly "discovered" its mistake.

From 1975 to 1981, petitioner had freely, voluntarily and continuously included in the computation of its employees’ thirteenth month pay, without the payments for sick, vacation and maternity leave, premium for work done on rest days and special holidays, and pay for regular holidays. The considerable length of time the questioned items had been included by petitioner indicates a unilateral and voluntary act on its part, sufficient in itself to negate any claim of mistake.

A company practice favorable to the employees had indeed been established and the payments made pursuant thereto, ripened into benefits enjoyed by them. And any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or eliminated by the employer, by virtue of Sec. 10 of the Rules and Regulations Implementing P.D. No. 851, and Art. 100 of the Labor Code of the Philippines which prohibit the

diminution or elimination by the employer of the employees’ existing benefits. [Tiangco vs. Leogardo, Jr., 122 SCRA 267 (1983)]

With regard to the length of time the company practice should have been exercised to constitute voluntary employer practice which cannot be unilaterally withdrawn by the employer, we hold that jurisprudence has not laid down any rule requiring a specific minimum number of years. In the above quoted case of Davao Fruits Corporation vs. Associated Labor Unions,10 the company practice lasted for six (6) years. In another case,Davao Integrated Port Stevedoring Services vs. Abarquez,11 the employer, for three (3) years and nine (9) months, approved the commutation to cash of the unenjoyed portion of the sick leave with pay benefits of its intermittent workers. While in Tiangco vs. Leogardo, Jr.,12 the employer carried on the practice of giving a fixed monthly emergency allowance from November 1976 to February 1980, or three (3) years and four (4) months. In all these cases, this Court held that the grant of these benefits has ripened into company practice or policy which cannot be peremptorily withdrawn. In the case at bar, petitioner Sevilla Trading kept the practice of including non-basic benefits such as paid leaves for unused sick leave and vacation leave in the computation of their 13th-month pay for at least two (2) years. This, we rule likewise constitutes voluntary employer practice which cannot be unilaterally withdrawn by the employer without violating Art. 100 of the Labor Code:

Art. 100. Prohibition against elimination or diminution of benefits. – Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of promulgation of this Code.

IN VIEW WHEREOF, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 63086 dated 27 November 2001 and its Resolution dated 06 March 2002 are hereby AFFIRMED.

SO ORDERED.

.R. No. 91231             February 4, 1991

NESTLÉ PHILIPPINES, INC., petitioner, vs.THE NATIONAL LABOR RELATIONS COMMISSION and UNION OF FILIPRO EMPLOYEES, respondents.

Siguion Reyna, Montecillo & Ongsiako for petitioner.Banzuela, Flores, Miralles, Raneses, Sy, Taquio & Associates for private respondent.

GRIÑO-AQUINO, J.:

Nestlé Philippines, Inc., by this petition for certiorari, seeks to annul, on the ground of grave abuse of discretion, the decision dated August 8, 1989 of the National Labor Relations Commission (NLRC), Second Division, in Cert. Case No. 0522 entitled, "In Re: Labor Dispute of Nestlé Philippines, Inc." insofar as it modified the petitioner's existing non-contributory Retirement Plan.

Four (4) collective bargaining agreements separately covering the petitioner's employees in its:

1. Alabang/Cabuyao factories;

2. Makati Administration Office. (Both Alabang/Cabuyao factories and Makati office were represented by the respondent, Union of Filipro Employees [UFE]);

3. Cagayan de Oro Factory represented by WATU; and

4. Cebu/Davao Sales Offices represented by the Trade Union of the Philippines and Allied Services (TUPAS),

all expired on June 30, 1987.

Thereafter, UFE was certified as the sole and exclusive bargaining agent for all regular rank-and-file employees at the petitioner's Cagayan de Oro factory, as well as its Cebu/Davao Sales Office.

In August, 1987, while the parties, were negotiating, the employees at Cabuyao resorted to a "slowdown" and walk-outs prompting the petitioner to shut down the factory. Marathon collective bargaining negotiations between the parties ensued.

On September 2, 1987, the UFE declared a bargaining deadlock. On September 8, 1987, the Secretary of Labor assumed jurisdiction and issued a return to work order. In spite of that order, the union struck, without notice, at the Alabang/Cabuyao factory, the Makati office and Cagayan de Oro factory on September 11, 1987 up to December 8, 1987. The company retaliated by dismissing the union officers and members of the negotiating panel who participated in the illegal strike. The NLRC affirmed the dismissals on November 2, 1988.

On January 26, 1988, UFE filed a notice of strike on the same ground of CBA deadlock and unfair labor practices. However, on March 30, 1988, the company was able to conclude a CBA with the union at the Cebu/Davao Sales Office, and on August 5, 1988, with the Cagayan de Oro factory workers. The union assailed the validity of those agreements and filed a case of unfair labor practice against the company on November 16, 1988.

After conciliation efforts of the National Conciliation and Mediation Board (NCMB) yielded negative results, the dispute was certified to the NLRC by the Secretary of Labor on October 28, 1988.

After the parties had filed their pleadings, the NLRC issued a resolution on June 5, 1989, whose pertinent disposition regarding the union's demand for liberalization of the company's retirement plan for its workers, provides as follows:

x x x           x x x          x x x

7. Retirement Plan

The company shall continue implementing its retirement plan modified as follows:

a) for fifteen years of service or less — an amount equal to 100% of the employee's monthly salary for every year of service;

b) more than 15 but less than 20 years — 125% of the employee's monthly salary for every year of service;

c) 20 years or more — 150% of the employee's monthly salary for every year of service. (pp. 58-59, Rollo.)

Both parties separately moved for reconsideration of the decision.

On August 8, 1989, the NLRC issued a resolution denying the motions for reconsideration. With regard to the Retirement Plan, the NLRC held:

Anent management's objection to the modification of its Retirement Plan, We find no cogent reason to alter our previous decision on this matter.

While it is not disputed that the plan is non-contributory on the part of the workers, tills does not automatically remove it from the ambit of collective bargaining negotiations. On the contrary, the plan is specifically mentioned in the previous bargaining agreements (Exhibits "R-1" and "R-4"), thereby integrating or incorporating the provisions thereof to the agreement. By reason of its incorporation, the plan assumes a consensual character which cannot be terminated or modified at will by either party. Consequently, it becomes part and parcel of CBA negotiations.

However, We need to clarify Our resolution on this issue. When we increased the emoluments in the plan, the conditions for the availment of the benefits set forth therein remain the same. (p. 32, Rollo.)

On December 14, 1989, the petitioner filed this petition for certiorari, alleging that since its retirement plan is non-contributory, it (Nestlé) has the sole and exclusive prerogative to define the terms of the plan "because the workers have no vested and demandable rights thereunder, the grant thereof being not a contractual obligation but merely gratuitous. At most the company can only be directed to maintain the same but not to change its terms. It should be left to the discretion of the company on how to improve or mollify the same" (p. 10, Rollo).

The Court agrees with the NLRC's finding that the Retirement Plan was "a collective bargaining issue right from the start" (p. 109, Rollo) for the improvement of the existing Retirement Plan was one of the original CBA proposals submitted by the UFE on May 8, 1987 to Arthur Gilmour, president of Nestlé Philippines. The union's original proposal was to modify the existing plan by including a provision for early retirement. The company did not question the validity of that proposal as a collective bargaining

issue but merely offered to maintain the existing non-contributory retirement plan which it believed to be still adequate for the needs of its employees, and competitive with those existing in the industry. The union thereafter modified its proposal, but the company was adamant. Consequently, the impassé on the retirement plan become one of the issues certified to the NLRC for compulsory arbitration.

The company's contention that its retirement plan is non-negotiable, is not well-taken.1âwphi1 The NLRC correctly observed that the inclusion of the retirement plan in the collective bargaining agreement as part of the package of economic benefits extended by the company to its employees to provide them a measure of financial security after they shall have ceased to be employed in the company, reward their loyalty, boost their morale and efficiency and promote industrial peace, gives "a consensual character" to the plan so that it may not be terminated or modified at will by either party (p. 32, Rollo).

The fact that the retirement plan is non-contributory, i.e., that the employees contribute nothing to the operation of the plan, does not make it a non-issue in the CBA negotiations. As a matter of fact, almost all of the benefits that the petitioner has granted to its employees under the CBA — salary increases, rice allowances, mid-year bonuses, 13th and 14th month pay, seniority pay, medical and hospitalization plans, health and dental services, vacation, sick & other leaves with pay — are non-contributory benefits. Since the retirement plan has been an integral part of the CBA since 1972, the Union's demand to increase the benefits due the employees under said plan, is a valid CBA issue. The deadlock between the company and the union on this issue was resolvable by the Secretary of Labor, or the NLRC, after the Secretary had assumed jurisdiction over the labor dispute (Art. 263, subparagraph [i] of the Labor Code).

The petitioner's contention, that employees have no vested or demandable right to a non-contributory retirement plan, has no merit for employees do have a vested and demandable right over existing benefits voluntarily granted to them by their employer. The latter may not unilaterally withdraw, eliminate or diminish such benefits (Art. 100, Labor Code; Tiangco, et al. vs. Hon. Leogardo, et al., 122 SCRA 267).

This Court ruled similarly in Republic Cement Corporation vs. Honorable Panel of Arbitrators, G.R. No. 89766, Feb. 19, 1990:

. . . Petitioner's claim that retirement benefits, being noncontributory in nature, are not proper subjects for voluntary arbitration is devoid of merit. The expired CBA previously entered into by the parties included provisions for the implementation of a "Retirement and Separation Plan." it is only to be expected that the parties would seek a renewal or an improvement of said item in the new CBA. In fact, the parties themselves expressly included retirement benefits among the economic issues to be resolved by voluntary arbitration. Petitioner is estopped from now contesting the validity of the increased award granted by the arbitrators. (p. 145, Rollo.)

The NLRC's resolution of the bargaining deadlock between Nestlé and its employees is neither arbitrary, capricious, nor whimsical. The benefits and concessions given to the employees were based on the NLRC's evaluation of the union's demands, the evidence adduced by the parties, the financial capacity of the Company to grant the demands, its longterm viability, the economic conditions prevailing in the country as they affect the purchasing power of the employees as well as its concommitant effect on the other factors of production, and the recent trends in the industry to which the Company

belongs (p. 57, Rollo). Its decision is not vitiated by abuse of discretion.

WHEREFORE, the petition for certiorari is dismissed, with costs against the petitioner.

SO ORDERED.

G.R. No. 74156 June 29, 1988

GLOBE MACKAY CABLE AND RADIO CORPORATION, FREDERICK WHITE and JESUS SANTIAGO,petitioners, vs.NATIONAL LABOR RELATIONS COMMISSION, FFW-GLOBE MACKAY EMPLOYEES UNION and EDA CONCEPCION, respondents.

Castillo, Laman, Tan & Pantaleon for petitioners.

Edwin D. Dellaban for private respondents.

 

MELENCIO-HERRERA, J.:

A special civil action for certiorari with a prayer for a Temporary Restraining Order to enjoin respondents from enforcing the Decision of 10 March 1986 of the National Labor Relations Commission (NLRC), in NCR Case No. 1-168-85 entitled "FFW-Globe Mackay Employees Union, et al., vs. Globe Mackay Cable & Radio Corporation, et al.," the dispositive portion of which reads:

WHEREFORE, premises considered, the appealed Decision is as it is hereby SET ASIDE and another one issued:

1. Declaring respondents-appellees (petitioners herein) guilty of illegal deductions of cost-of-living allowance;

2. Ordering respondents-appellees to pay complainants-appellants their back allowances reckoned

from the time of illegal deduction; and

3. Ordering respondents-appellees from further illegally deducting the allowances of complainants-appellants.

SO ORDERED.

Presiding Commissioner of the NLRC, Diego P. Atienza, concurred in the result, while Commissioner Cleto T. Villaltuya dissented and voted to affirm in toto the Labor Arbiter's Decision.

On 19 May 1986, we issued the Temporary Restraining Order enjoining respondents from enforcing the assailed Decision. On 2 September 1987, we gave due course to the petition and required the submittal of memoranda, by the parties, which has been complied with.

The facts follow:

Wage Order No. 6, which took effect on 30 October 1984, increased the cost-of-living allowance of non-agricultural workers in the private sector. Petitioner corporation complied with the said Wage Order by paying its monthly-paid employees the mandated P3.00 per day COLA. However, in computing said COLA, Petitioner Corporation multiplied the P 3.00 daily COLA by 22 days, which is the number of working days in the company.

Respondent Union disagreed with the computation of the monthly COLA claiming that the daily COLA rate of P3.00 should be multiplied by 30 days to arrive at the monthly COLA rate. The union alleged furthermore that prior to the effectivity of Wage Order No. 6, Petitioner Corporation had been computing and paying the monthly COLA on the

basis of thirty (30) days per month and that this constituted an employer practice, which should not be unilaterally withdrawn.

After several grievance proceedings proved futile, the Union filed a complaint against Petitioner Corporation, its President, F. White, and Vice-President, J. Santiago, for illegal deduction, underpayment, unpaid allowances, and violation of Wage Order No. 6. Petitioners White and Santiago were sought to be held personally liable for the money claims thus demanded.

Labor Arbiter Adelaido F. Martinez sustained the position of Petitioner Corporation by holding that since the individual petitioners acted in their corporate capacity they should not have been impleaded; and that the monthly COLA should be computed on the basis of twenty two (22) days, since the evidence showed that there are only 22 paid days in a month for monthly-paid employees in the company. His reasoning, inter alia, was as follows:

To compel the respondent company to use 30 days in a month to compute the allowance and retain 22 days for vacation and sick leave, overtime pay and other benefits is inconsistent and palpably unjust. If 30 days is used as divisor, then it must be used for the computation of all benefits, not just the allowance. But this is not fair to complainants, not to mention that it will contravene the provision of the parties' CBA.

On appeal, the NLRC reversed the Labor Arbiter, as heretofore stated, and held that Petitioner Corporation was guilty of illegal deductions, upon the following considerations: (1) that the P3.00 daily COLA under Wage Order No. 6 should be paid and computed on

the basis of thirty (30) days instead of twenty-two (22) days since workers paid on a monthly basis are entitled to COLA on Saturdays, Sundays and legal holidays "even if unworked;" (2) that the full allowance enjoyed by Petitioner Corporation's monthly-paid employees before the CBA executed between the parties in 1982 constituted voluntary employer practice, which cannot be unilaterally withdrawn; and (3) that petitioners White and Santiago were properly impleaded as respondents in the case below.

Hence, this Petition, anchored on the charge of grave abuse of discretion by the NLRC.

We are constrained to reverse the reversal.

Section 5 of the Rules Implementing Wage Orders Nos. 2, 3, 5 and 6 uniformly read as follows:

Section 5. Allowance for Unworked Days.

All covered employees shall be entitled to their daily living allowance during the days that they are paid their basic wage, even if unworked. (Emphasis supplied)

The primordial consideration, therefore, for entitlement to COLA is that basic wage is being paid. In other words, the payment of COLA is mandated only for the days that the employees are paid their basic wage, even if said days are unworked. So that, on the days that employees are not paid their basic wage, the payment of COLA is not mandated. As held in University of Pangasinan Faculty Union vs. University of Pangasinan, L-63122, February 20, 1984, 127 SCRA 691):

... it is evident that the intention of the law is to grant ECOLA upon

the payment of basic wages. Hence, we have the principle of 'No Pay, No ECOLA.

Applied to monthly-paid employees if their monthly salary covers all the days in a month, they are deemed paid their basic wages for all those days and they should be entitled to their COLA on those days "even if unworked," as the NLRC had opined. Peculiar to this case, however, is the circumstance that pursuant to the Collective Bargaining Agreement (CBA) between Petitioner Corporation and Respondent Union, the monthly basic pay is computed on the basis of five (5) days a week, or twenty two (22) days a month. Thus, the pertinent provisions of that Agreement read:

Art. XV(a)—Eight net working hours shall constitute the regular work day for five days.

Art. XV(b)—Forty net hours of work, 5 working days, shall constitute the regular work week.

Art. XVI, Sec. 1(b)—All overtime worked in excess of eight net hours daily or in excess of 5 days weekly shall be computed on hourly basis at the rate of time and one half.

The Labor Arbiter also found that in determining the hourly rate of monthly paid employees for purposes of computing overtime pay, the monthly wage is divided by the number of actual work days in a month and then, by eight (8) working hours. If a monthly-paid employee renders overtime work, he is paid his basic salary rate plus one-half thereof. For example, after examining the specimen payroll of employee Jesus L. Santos, the Labor Arbiter found:

the employee Jesus L. Santos, who worked on Saturday and Sunday

was paid base pay plus 50% premium. This is over and above his monthly basic pay as supported by the fact that base pay was paid. If the 6th and 7th days of the week are deemed paid even if unworked and included in the monthly salary, Santos should not have been paid his base pay for Saturday and Sunday but should have received only the 50% overtime premium.

Similarly, the specimen payrolls of employees, Dennis Dungon and Rene Sanvictores, showed that in computing the vacation and sick leaves of the employees, Petitioner Corporation consistently used twenty-two (22) days.

Under the peculiar circumstances obtaining, therefore, where the company observes a 5-day work week, it will have to be held that the COLA should be computed on the basis of twenty two (22) days, which is the period during which the monthly-paid employees of Petitioner Corporation receive their basic wage. The CBA is the law between the parties and, if not acceptable, can be the subject of future re-negotiation.

2) Payment in full by Petitioner Corporation of the COLA before the execution of the CBA in 1982 and in compliance with Wage Orders Nos. 1 (26 March 1981) to 5 (11 June 1984), should not be construed as constitutive of voluntary employer practice, which cannot now be unilaterally withdrawn by petitioner. To be considered as such, it should have been practiced over a long period of time, and must be shown to have been consistent and deliberate. Adequate proof is wanting in this respect. The test of long practice has been enunciated thus:

... Respondent Company agreed to continue giving holiday pay knowing fully well that said

employees are not covered by the law requiring payment of holiday pay.' (Oceanic Pharmacal Employees Union [FFW] vs. Inciong, L-50568, November 7, 1979, 94 SCRA 270). (Emphasis ours)

Moreover, before Wage Order No. 4, there was lack of administrative guidelines for the implementation of the Wage Orders. It was only when the Rules Implementing Wage Order No. 4 were issued on 21 May 1984 that a formula for the conversion of the daily allowance to its monthly equivalent was laid down, thus:

Section 3. Application of Section 2--

xxx xxx xxx

(a) Monthly rates for non-agricultural workers covered Under PDs 1614, 1634, 1678 and 1713:

xxx xxx xxx

(3) For workers who do not work and are not considered paid on Saturdays and Sundays:

P60 + P90 + P60 + (P2.00 x 262) divided by 12 = P 253.70 (Emphasis ours)

As the Labor Arbiter had analyzed said formula:

Under the aforecited formula/guideline, issued for the first time, when applied to a company like respondent which observes a 5-day work week (or where 2 days in a week, not necessarily Saturday and Sunday, are not considered paid), the monthly equivalent of a daily allowance is arrived at by multiplying the daily allowance by 262 divided by 12. This formula results in the equivalent of 21.8 days in a month.

Absent clear administrative guidelines, Petitioner Corporation cannot be faulted for erroneous application of the law. Payment may be said to have been made by reason of a mistake in the construction or application of a "doubtful or difficult question of law." (Article 2155, 1 in relation to Article 2154 2 of the Civil Code). Since it is a past error that is being corrected, no vested right may be said to have arisen nor any diminution of benefit under Article 100 of the Labor Code 3 may be said to have resulted by virtue of the correction.

With the conclusions thus reached, there is no further need to discuss the liability of the officers of Petitioner Corporation.

WHEREFORE, certiorari is granted, the Decision of the National Labor Relations Commission, dated 10 March 1986, is SET ASIDE, and the Decision of the Labor Arbiter, dated 9 May 1985, is hereby REINSTATED. The Temporary Restraining Order heretofore issued is hereby made permanent.

SO ORDERED.