Overtime Work

G.R. No. L-17068

December 30, 1961
NATIONAL SHIPYARDS AND STEEL CORPORATION, petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS and DOMINADOR MALONDRAS, respondents.
N. C. Virata for petitioner.
Mariano B. Tuason for respondent Court.
Manuel P. Calanog for respondent Dominador Malondras.
REYES, J.B.L., J.:
Petition filed by the National Shipyards and Steel Corporation (otherwise known as the NASSCO) to
review certain orders of the respondent Court of Industrial Relations requiring it to pay its bargeman
Dominador Malondras overtime service of 16 hours a day for a period from January 1, 1954 to
December 31, 1956, and from January 1, 1957 to April 30, 1957, inclusive.
The petitioner NASSCO, a government-owned and controlled corporation, is the owner of several
barges and tugboats used in the transportation of cargoes and personnel in connection with its
business of shipbuilding and repair. In order that its bargeman could immediately be called to duty
whenever their services are needed, they are required to stay in their respective barges, for which
reason they are given living quarters therein as well as subsistence allowance of P1.50 per day
during the time they are on board. However, upon prior authority of their superior officers, they may
leave their barges when said barges are idle.
On April 15, 1957, 39 crew members of petitioner's tugboat service, including therein respondent
Dominador Malondras, filed with the Industrial Court a complaint for the payment of overtime
compensation (Case No. 1059-V). In the course of the proceeding, the parties entered into a
stipulation of facts wherein the NASSCO recognized and admitted
4. That to meet the exigencies of the service in the performance of the above work,
petitioners have to work when so required in excess of eight (8) hours a day and/or during
Sundays and legal holidays (actual overtime service is subject to determination on the basis
of the logbook of the vessels, time sheets and other pertinent records of the respondent).
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6. The petitioners are paid by the respondent their regular salaries and subsistence
allowance, without additional compensation for overtime work;
Pursuant to the above stipulation, the Industrial Court, on November 22, 1957, issued an order
directing the court examiner to compute the overtime compensation due the claimants.
On February 14, 1958, the court examiner submitted his report covering the period from January 1 to
December 31, 1957. In said report, the examiner found that the petitioners in Case No. 1058-V,
including herein respondent Dominador Malondras, rendered an average overtime service of five (5)
hours each day for the period aforementioned, and upon approval of the report by the Court, all the
claimants, including Malondras, were paid their overtime compensation by the NASSCO.
Subsequently, on April 30, 1958, the court examiner submitted his second partial report covering the
period from January 1, 1954 to December 31, 1956, again giving each crewman an average of five
(5) overtime hours each day. Respondent Malondras was not, however, included in this report as his
daily time sheets were not then available. Again upon approval by the Court, the crewmen
concerned were paid their overtime compensation.
Because of his exclusion from the second report of the examiner, and his time sheets having been
located in the meantime, Dominador Malondras, on September 18, 1959, filed petitions in the same
case asking for the compensation and payment of his overtime compensation for the period from
January 1, 1954 to December 31, 1956, and from January to April 30, 1957 which, he alleged, was
not included in the first report of the examiner because his time sheets for these months could not be

found at the time. Malondras' petition was opposed by the NASSCO upon the argument, among
others, that its records do not indicate the actual number of working hours rendered by Malondras
during the periods in question. Acting on the petition and opposition, the Industrial Court ordered the
examiner to examine the log books, daily time sheets, and other pertinent records of the corporation
for the purpose of determining and computing whatever overtime service Malondras had rendered
from January 1, 1954 to December 31, 1956.
On January 15, 1960, the chief examiner submitted a report crediting Malondras with a total of 4,349
overtime hours from January 1, 1954 to December 31, 1956, at an average of five (5) overtime hours
a day, and after deducting the aggregate amount of subsistence allowance received by Malondras
during this period, recommended the payment to him of overtime compensation in the total sum of
P2,790.90.
On February 20, 1960, the Court ordered the examiner to make a re-examination of the records with
a view to determining Malondras' overtime service from January 1, 1954 to December 31, 1956, and
from January 1, 1957 to April 30, 1957, but without deducting from the compensation to be paid to
him his subsistence allowance. Pursuant to this last order, the examiner, on April 23, 1960,
submitted an amended report giving Malondras an average of sixteen (16) overtime hours a day, on
the basis of his time sheets, and recommending the payment to him of the total amount of
P15,242.15 as overtime compensation during the periods covered by the report. This report was,
over the NASSCO's vigorous objections, approved by the Court below on May 6, 1960. The
NASSCO moved for reconsideration, which was denied by the Court en banc, with one judge
dissenting. Whereupon, the NASSCO appealed to this Court.
There appears to be no question that respondent Malondras actually rendered overtime services
during the periods covered by the examiner's report. This is admitted in the stipulation of facts of the
parties in Case No. 1058-V; and it was on the basis of this admission that the Court below, in its
order of November 22, 1957, ordered the payment of overtime compensation to all the petitioners in
Case No. 1058-V, including respondent Dominador Malondras, after the overtime service rendered
by them had been determined and computed on the basis of the log books, time sheets and other
pertinent records of the petitioner corporation.
The only matter to be determined here is, therefore, the number of hours of overtime for which
Malondras should be paid for the periods January 1, 1954 to December 31, 1956, and from January
to April 30, 1957. Respondents urge that this is a question of fact and not subject to review by this
Court, there being sufficient evidence to support the Industrial Court's ruling on this point. It appears,
however, that in crediting Malondras with 16 hours of overtime service daily for the periods in
question, the court examiner relied only on his daily time sheets which, although approved by
petitioner's officers in charge and its auditors, do not show the actual number of hours of work
rendered by him each day but only indicate, according to the examiner himself, that:
almost everyday Dominador Malondras was on "Detail" or "Detailed on Board". According to
the officer in charge of Dominador Malondras, when he (Dominador Malondras) was on
"Detail" or "Detailed on Board", he was in the boat for twenty-four (24) hours.
In other words, the court examiner interpreted the words "Detail" or "Detailed on Board" to mean that
as long as respondent Malondras was in his barge for twenty-four hours, he should be paid overtime
for sixteen hours a day or the time in excess of the legal eight working hours that he could not leave
his barge. Petitioner NASSCO, upon the other hand, argues that the mere fact that Malondras was
required to be on board his barge all day so that he could immediately be called to duty when his
services were needed does not imply that he should be paid overtime for sixteen hours a day, but
that he should receive compensation only for the actual service in excess of eight hours that he can
prove. This question is clearly a legal one that may be reviewed and passed upon by this
Court.lawphil.net
We can not agree with the Court below that respondent Malondras should be paid overtime
compensation for every hour in excess of the regular working hours that he was on board his vessel
or barge each day, irrespective of whether or not he actually put in work during those hours. Seamen
are required to stay on board their vessels by the very nature of their duties, and it is for this reason

that, in addition to their regular compensation, they are given free living quarters and subsistence
allowances when required to be on board. It could not have been the purpose of our law to require
their employers to pay them overtime even when they are not actually working; otherwise, every
sailor on board a vessel would be entitled to overtime for sixteen hours each day, even if he had
spent all those hours resting or sleeping in his bunk, after his regular tour of duty. The correct
criterion in determining whether or not sailors are entitled to overtime pay is not, therefore, whether
they were on board and can not leave ship beyond the regular eight working hours a day, but
whether they actually rendered service in excess of said number of hours. We have ruled to that
effect in Luzon Stevedoring Co., Inc. vs. Luzon Marine Department Union, et al., L-9265, April 29,
1957:
I. Is the definition for "hours of work" as presently applied to dryland laborers equally
applicable to seamen? Or should a different criterion be applied by virtue of the fact that the
seaman's employment is completely different in nature as well as in condition of work from
that of a dryland laborer?
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Section 1 of Commonwealth Act No. 444, known as the Eight-Hour Labor Law, provides:
"SEC. 1. The legal working day for any person employed by another shall be of not
more than eight hours daily. When the work is not continuous, the time during which
the laborer is not working AND CAN LEAVE HIS WORKING PLACE and can rest
completely, shall not be counted."
The requisites contained in this section are further implemented by contemporary regulations
issued by administrative authorities (Sections 4 and 5 of Chapter III, Article 1, Code of Rules
and Regulations to implement the Minimum Wage Law).
For the purposes of this case, we do not need to set for seamen a criterion different from that
applied to laborers on land, for under the provisions of the above quoted section, the only
thing to be done is to determine the meaning and scope of the term "working place" used
therein. As we understand this term, alaborer need not leave the premises of the factory
shop or boat in order that his period of rest shall not be counted, it being enough that he
"cease to work", may rest completely and leave or may leave at his will the spot where he
actually stays while working, to go somewhere else, whether within or outside the premises
of said factory, shop or boat. If these requisites are complied with, the period of such rest
shall not be counted. (Emphasis supplied)
While Malondras' daily time sheets do not show his actual working hours, nevertheless, petitioner
has already admitted in the Stipulation of Facts in this case that Malondras and his co-claimants did
render service beyond eight (8) hours a day when so required by the exigencies of the service; and
in fact, Malondras was credited and already paid for five (5) hours daily overtime work during the
period from May 1 to December 31, 1957, under the examiner's first report. Since Malondras has
been at the same job since 1954, it can be reasonably inferred that the overtime service he put in
whenever he was required to be aboard his barge all day from 1954 to 1957 would be more or less
consistent. In truth, the other claimants who served with Malondras under the same conditions and
period have been finally paid for an overtime of 5 hours a day, and no substantial difference exists
between their case and the present one, which was not covered by the same award only because
Malondras' time records not found until later.
The next question is whether or not the subsistence allowance received by Malondras for the
periods covered by the report in question should be deducted from his overtime compensation. We
do not think so, for the Stipulation of the Facts of the parties show that this allowance is independent
of and has nothing to do with whatever additional compensation for overtime work was due the
petitioner NASSCO's bargemen. According to the petitioner itself, the reason why their bargemen
are given living quarters in their barges and subsistence allowance at the rate of P1.50 per day was
because they were required to stay in their respective barges in order that they could be immediately
called to duty when their services were needed (Petition, par. 5, p. 2). Petitioner having already paid

Malondras and his companions overtime for 1957 without deduction of the subsistence allowances
received by them during this period, and Malondras' companions having been paid overtime for the
other years also without deducting their subsistence allowances, there is no valid reason why
Malondras should be singled out now and his subsistence allowance deducted from the overtime
compensation still due him.
The last question involves petitioner's claim that it was error for the examiner to base Malondras'
overtime compensation for the whole year 1954 at P6.16 a day, when he was appointed in the
tubgoat service only on October 1, 1954, and before that was a derrick man with a daily salary of
P6.00. In answer, respondent Malondras asserts that the report of the examiner, based on his time
sheets from January 1, 1954, show that he had already been rendering overtime service from that
date. This answer does not, however, deny that Malondras started to get P6.16 a day only in
October, 1954, and was before that time receiving only P6.00 daily, as claimed by petitioner. We
think, therefore, that the records should be reexamined to find out Malondras' exact daily wage from
January 1, 1954 to September, 1954, and his overtime compensation for these months computed on
the basis thereof.
WHEREFORE, the order appealed from is modified in the sense that respondent Malondras should
be credited five (5) overtime hours instead of sixteen (16) hours a day for the periods covered by the
examiner's report. The court below is ordered to determine from the records the exact daily wage
received by respondent Malondras from January 1, 1954 to September, 1954, and to compute
accordingly his overtime compensation for that period. In all other respects, the judgment appealed
from is affirmed. No costs in this instance. So ordered.
G.R. No. L-30279 July 30, 1982
PHILIPPINE NATIONAL BANK, petitioner,
vs.
PHILIPPINE NATIONAL BANK EMPLOYEES ASSOCIATION (PEMA) and COURT OF
INDUSTRIAL RELATIONS, respondents.
Conrado E. Medina, Edgardo M. Magtalas and Nestor Kalaw for petitioner.
Leon O. Ty, Gesmundo Fernandez & Zulueta, Oliver B. Gesmundo and Israel Bocobo for
respondents.
BARREDO, J.:
Appeal by the Philippine National Bank from the decision of the trial court of the Court of Industrial
Relations in Case No. IPA-53 dated August 5, 1967 and affirmed en banc by said court on January
15, 1968.
This case started on January 28, 1965 in consequence of the certification of the President of the
Philippines of an industrial dispute between the Philippine National Bank Employees Association
(PEMA, for short), on the one hand, and the Philippine National Bank (PNB, for short), on the other,
which arose from no more than the alleged failure of the PNB to comply with its commitment of
organizing a Committee on Personnel Affairs to take charge of screening and deliberating on the
promotion of employees covered by the collective bargaining agreement then in force between the
said parties. On January 28, 1965, the Industrial Court issued an order aimed at settling the dispute
temporarily between the parties, which was certified by the President. Pertinent portions of the order
read thus:
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1. That in order to settle the strike and for the employees to return to work
immediately starting January 29, 1965, the Committee on Personnel Affairs is hereby
created to start functioning on February 1, 1965;
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f. That in return for this concession, an injunction against future
strikes or lockouts shall be issued by the Court to last for a period of

six months but which shall terminate even before that period should
all disputes of the parties be already resolved; (Page 84, Record.)
According to the very decision now on appeal, "on May 22, 1965, petitioner (private respondent
herein) filed another pleading submitting to this Court for determination certain matters which it
claims cannot be resolved by the parties, which are as follows:
First Cause of Action
a. In a Resolution No. 1162 dated September 16, 1957, the Respondent's Board of
Directors approved a revision of the computation of overtime pay retroactive as of
July 1, 1954, and authorized a recomputation of the regular one- hour and extra
overtime already rendered by all officers and employees of the Respondent Bank.
The details of the benefits involved in said Resolution are contained in a
Memorandum of the Respondent Bank dated September 18, 1957.
b. Since the grant of the benefits in question, the employees of the Respondent,
represented by the petitioner, have always considered them to be a part of their
salaries and/or fringe benefits; nevertheless, the Respondent, in 1963, without just
cause, withdrew said benefits and in spite of repeated demands refused, and still
refuses to reinstate the same up to the present.
Second Cause of Action
c. After the promulgation of the Decision in National Waterworks and Sewerage
Authority vs. NAWASA Consolidated Unions, et al. G.R. No. L-18938, Aug. 31, 1964,
the Petitioner has repeatedly requested Respondent that the cost of living allowance
and longevity pay be taken into account in the computation of overtime pay, effective
as of the grant of said benefits on January 1, 1958, in accordance with the ruling in
said Decision of the Supreme Court.
d. Until now Respondent has not taken any concrete steps toward the payment of the
differential overtime and nighttime pays arising from the cost of living allowance and
longevity pay.
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Respondent in its answer of June 7, 1965 took exception to this mentioned petition on several
grounds, namely, (1) the said alleged causes of action were not disputes existing between the
parties, (2) the same are mere money claims and therefore not within this Court's jurisdiction, and (3)
that the parties have not so stipulated under the collective bargaining agreement between them, or
the same is premature as the pertinent collective bargaining agreement has not yet expired." (Pp.
84-86, Record.) 1
Resolving the issues of jurisdiction and prematurity thus raised by PNB, the court held:
As to the first ground, it is well to note that this Court in its Order of January 28, 1965
has enjoined the parties not to strike or lockout for a period of six (6) months starting
from said date. In a very definite sense the labor disputes between the parties have
been given a specific period for the settlement of their differences. The fact that
thereafter the question of the manner of payment of overtime pay is being put in
issue, appears to indicate that this was a part of the labor dispute. If we are to
consider that this question, particularly the second cause of action, has in fact
existed as early as 1958, shows the necessity of resolving the same now. And the
same would indeed be an existing issue considering that the present certification
came only in 1965.
It is further to be noted that the presidential certification has not limited specific areas
of the labor dispute embraced within the said certification. It speaks of the existence
of a labor dispute between the parties and of a strike declared by the PEMA, for
which the Court has been requested to take immediate steps in the exercise of its
powers under the law.

Even on the assumption that the present issue is not one embraced by the
presidential certification or it is an issue presented by one party on a cause arising
subsequent to the certification, the same would still be subject to the jurisdiction of
this Court. In "Apo Cement Workers Union versus Cebu Portland Cement", Case No.
11 IPA (G.R. No. L-12451, July 10, 1957), the Court en banc (where this Sala has
taken an opposite view) upheld its jurisdiction under the circumstances just
enumerated. It would seem that this question has been further settled by our
Supreme Court in "National Waterworks & Sewerage Authority vs. NAWASA
Consolidated Unions, et al." (supra), which we quote in part:
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4. Petitioner's claim that the issue of overtime compensation not having been raised
in the original case but merely dragged into it by intervenors, respondent Court
cannot take cognizance thereof under Section 1, Rule 13 of the Rules of Court.
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... The fact that the question of overtime payment is not included in the principal case
in the sense that it is not one of the items of dispute certified to by the President is of
no moment, for it comes within the sound discretion of the Court of Industrial
Relations. Moreover, in labor disputes technicalities of procedure should as much as
possible be avoided not only in the interest of labor but to avoid multiplicity of action.
This claim has no merit.
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As to the objection posed that the issues are mere money claims, there appears to
be no ground for the same. In the first place, although the same involves a claim for
additional compensation it is also a part of the labor dispute existing between the
parties and subject to the compulsory arbitration powers of the Court, pursuant to
Section 10 of Rep. Act No. 875. In the second place, on the basis of the so-called
PRISCO doctrine (G.R. No. L- 13806, May 23,.1960), there is an existing and current
employer-employee relationship between the respondent and the members of
petitioner union, for whom the additional overtime compensation is claimed.
With respect to ground three of the answer on which objection is based, on C.A. 444,
as amended, Section 6 thereof, provides as follows:
'Any agreement or contract between the employer and the laborer or
employee contrary to the provisions of this Act shall be null and void
ab initio'.
The instant action is partially subject to the provisions of Commonwealth Act 444, as
amended. Even if, the parties have stipulated to the extent that overtime will not be
paid, the same will not be binding. More so under the present circumstances, where
the only question is the correctness of the computation of the overtime payments.
While the Court notes that the first cause of action has become moot and academic
in view of the compliance by respondent, hence there is no further need to resolve
the same (t.s.n., pp. 5-7, August 16, 1965), the settlement of said first cause of action
further strengthens the view that the second cause of action is indeed an existing
dispute between the parties. Both causes of fiction involve overtime questions. Both
stem from dates well beyond and before the presidential certification of the present
proceedings. If respondent has been fit to take steps to expedite and resolve, without
court intervention, the first cause of action, it cannot deny the existence of the
second cause of action as the first and second appear to be interrelated matters.
(Pp. 86-89, Record)
And We agree that the foregoing holding is well taken. It would be more worthwhile to proceed to the
basic issues immediately than to add anything more of Our own discourse to the sufficiently based
disposition of the court a quo of the above- mentioned preliminary questions.

After discussing the pros and cons on the issue involved in the second cause of action as to whether
or not the cost-of-living allowance otherwise denominated as equity pay and longevity pay granted
by the bank, the first beginning January 1, 1958 and the latter effective July 1, 1961, should be
included in the computation of overtime-pay, the court granted the demands of PE MA, except the
additional rate of work for night pay, and rendered the following judgment:
WHEREFORE, in view of the foregoing, this Court hereby promulgates the following:
1. The respondent Philippine National Bank is hereby required to pay overtime and
nighttime rates to its employees from January 28, 1962; and such overtime
compensation shall be based on the sum total of the employee's basic salary or
wage plus cost of living allowance and longevity pay under the following schedule:
'a. Overtime services rendered shall be paid at the rate of time and
one-third, but overtime work performed between 6:00 P.M. and 6- .00
A.M. shall be paid at the rate of 150% or 50% beyond the regular
rate;
'b. The rate for work performed in the night shift, or during the period
from 6:00 P.M. to 6:00 A.M. shall be compensated at the rate of 150%
or 50% beyond the regular rate, provided the work performed
involved a definite night shift and not merely a continuation by way of
overtime of the regular and established hours of the respondent
Bank.
2. The Chief of the Examining Division of the Court or any of his duly designated
representatives is hereby ordered to compute the overtime rates due each employee
of the respondent Bank from January 28, 1962, in accordance with the above
determination; and to complete the same within a period of sixty (60) days from
receipt of this Order. However, considering that the Philippine National Bank is a
government depository, and renders and performs functions distinct and unique; and,
while it may be a banking institution, its relationship with other government agencies
and the public is such that it has no basis for comparison with other banking
institutions organized under the corporation law or special charter. To require it to pay
immediately the liability after the exact amount shall have been determined by the
Court Examiner and duly approved by the Court, as in other cases, would work
undue hardship to the whole government machinery, not to mention the outstanding
foreign liabilities and outside commitments, if any. Moreover, the records show that
this case was initiated long before the taking over of the incumbent bank officials.
Accordingly, the Court feels that the payment shall be subject to the negotiations by
the parties as to time, amount, and duration.
The Court may intervene in said negotiations for the purpose of settling once and for
all this case to maintain industrial peace pursuant to Section 13 of Commonwealth
Act 103, as amended, if desired, however by the parties.
After all this is not an unfair labor practice case.
SO ORDERED. (Pp. 98-100, Record.)
In connection with the above decision, two interesting points appear at once to be of determinative
relevance:
The first is that in upholding its jurisdiction to take cognizance of the demand in question about costof-living allowance and longevity pay, the Industrial Court carefully noted that it was not resolving a
petition for declaratory relief in the light of the decision of this Court in NAWASA vs. NAWASA
Consolidated Unions, G.R. No. L- 18938, August 31, 1964, 11 SCRA 766. Thus the decision under
review states:
Incidentally, the present action is not one for declaratory relief as to the applicability
of a judicial decision to the herein parties. A careful perusal of the pleadings indicates
that what is being sought is the payment of differential overtime and nighttime pay

based on existing law and jurisprudence. The cause of action is not anchored on any
decision of any court but on provisions of the law which have been in effect at the
time of the occurrence of the cause of the action in relation to a labor dispute. Hence,
this is not a petition for declaratory relief. (Pp. 94-95, Record.)
The second refers to a subsequent decision of the same Industrial Court in Shell Oil Workers Union
vs. Shell Co., et al., Case No. 2410-V and Shell & Affiliates Supervisors Union vs. Shell Company of
the Philippines, et al., Case No. 2411- V, in which the court made an explanatory discourse of its
understanding of the NAWASA ruling, supra, and on that basis rejected the claim of the workers. In
brief, it held that (1) NAWASA does not apply where the collective bargaining agreement does not
provide for the method of computation of overtime pay herein insisted upon by private respondent
PEMA and (2) the fact-situation in the Shell cases differed from that of NAWASA, since the sole and
definite ratio decidendi in NAWASA was merely that inasmuch as Republic Act 1880 merely fixed a
40-hour 5-day work for all workers, laborers and employees including government-owned
corporations like NAWASA, the weekly pay of NAWASA workers working more than five days a week
should remain intact; with overtime pay in excess of eight hours work and 25 % additional
compensation on Sundays. There was no pronouncement at all therein regarding the basis of the
computation of overtime pay in regard to bonuses and other fringe benefits.
For being commendably lucid and comprehensive, We deem it justified to quote from that Shell
decision:
The main issue:
The Unions appear to have read the NAWASA case very broadly. They would want it
held that in view of the said ruling of the Supreme Court, employers and employees
must, even in the face of existing bargaining contracts providing otherwise,
determine the daily and hourly rates of employees in this manner: Add to basic pay
all the money value of all fringe benefits agreed upon or already received by the
workers individually and overtime pay shall be computed thus
Basic yearly Rate plus Value of all Fringe Benefits divided by number of days worked
during the year equals daily wage; Daily wage divided by 8 equals hourly rate. Hourly
rate plus premium rate equals hourly overtime rate.
The NAWASA case must be viewed to determine whether it is that broad. NAWASA
case must be understood in its setting. The words used by the Supreme Court in its
reasoning should not be disengaged from the fact-situation with which it was
confronted and the specific question which it was there required to decide. Above all
care should be taken not to lose sight of the truth that the facts obtaining, the issue
settled, and the law applied in the said case, and these, though extractable from the
records thereof as material in the resolution herein, were, as they are, primarily
declarative of the rights and liabilities of the parties involved therein.
Recourse to the records of the NAWASA case shows that the fact- situation, as far as
can be materially connected with the instant case, is as follows:
In view of the enactment of Rep. Act 1880, providing that the legal
hours of work for government employees, (including those in
government-owned or controlled corporations) shall be eight (8)
hours a day for five (5) days a week or forty (40) hours a week, its
implementation by NAWASA was disputed by the Union. The workers
affected were those who, for a period of three (3) months prior to or
immediately preceding the implementation of Rep. Act 1880, were
working seven (7) days a week and were continuously receiving 25%
Sunday differential pay. The manner of computing or determining the
daily rate of monthly salaried employees.
And the Supreme Court, specifically laid out the issue to be decided, as it did decide,
in the NAWASA, as follows:

7. and 8. How is a daily wage of a weekly employee computed in the light of Republic
Act 1880?'(G.R. L-18938)
Resolving the above issue, it was held;
According to petitioner, the daily wage should be computed
exclusively on the basic wage without including the automatic
increase of 25% corresponding to the Sunday differential. To include
said Sunday differential would be to increase the basic pay which is
not contemplated by said Act. Respondent court disagrees with this
manner of computation. lt holds that Republic Act 1880 requires that
the basic weekly wage and the basic monthly salary should not be
diminished notwithstanding the reduction in the number of working
days a week. If the automatic increase corresponding to the salary
differential should not be included there would be a diminution of the
weekly wage of the laborer concerned. Of course, this should only
benefit those who have been working seven days a week and had
been regularly receiving 25% additional compensation for Sunday
work before the effectivity of the Act.
It is thus necessary to analyze the Court's rationale in the said NAWASA case, 'in the
light of Rep. Act 1880', and the 'specific corollaries' discussed preparatory to arriving
at a final conclusion on the main issue. What was required to be done, by way of
implementing R. A. 1880? The statute directs that working hours and days of
government employees (including those of government owned and controlled
proprietary corporations) shall be reduced to five days-forty hours a week. But, the
same law carried the specific proviso, designed to guard against diminution of
salaries or earnings of affected employees. The Supreme Court itself clearly spelled
this out in the following language: 'It is evident that Republic Act 1880 does not
intend to raise the wages of the employees over what they are actually receiving.
Rather, its purpose is to limit the working days in a week to five days, or to 40 hours
without however permitting any reduction in the weekly or daily wage of the
compensation which was previously received. ...
If the object of the law was to keep intact, (not either to increase it or decrease it) it is
but natural that the Court should concern itself, as it did, with the corollary, what is
the weekly wage of worker who, prior to R.A. 1880, had been working seven (7) days
a week and regularly receiving differential payments for work on Sundays or at night?
It seems clear that the Court was only concerned in implementing correctly R.A.
1880 by ensuring that in diminishing the working days and hours of workers in one
week, no diminution should result in the worker's weekly or daily wage. And, the
conclusion reached by the Supreme Court was to affirm or recognize the correctness
of the action taken by the industrial court including such differential pay in computing
the weekly wages of these employees and laborers who worked seven days a week
and were continuously receiving 25% Sunday differential for a period of three months
immediately preceding the implementation of R.A. 1880.' Nothing was said about
adding the money value of some other bonuses or allowances or money value of
other fringe benefits, received outside the week or at some other periods. That was
not within the scope of the issue before the Court. in fact, the limited application of
the decision is expressed in the decision itself. The resolution of this particular issue
was for the benefit of only a segment of the NAWASA employees. Said the Court 'Of
course, this should only benefit those who have been working seven days a week
and had been regularly receiving 25% additional compensation for Sunday work
before the effectivity of the Act.'
Unions make capital of the following pronouncement of the Supreme Court in the
NAWASA case:

It has been held that for purposes of computing overtime

compensation a regular wage includes all payments which the parties
have agreed shall be received during the work week, including piecework wages, differential payments for working at undesirable times,
such as at night or on Sundays and holidays, and the cost of board
and lodging customarily furnished the employee (Walling v.
Yangerman-Reynolds Hardwook Co., 325 U.S. 419; Walling v.
Harischfeger Corp. 325 U.S. 427). The 'Regular rate of pay also
ordinarily includes incentive bonus or profit- sharing payments made
in addition to the normal basic pay (56 C.J.S., pp. 704-705), and it
was also held that the higher rate for night, Sunday and holiday work
is just as much as regular rate as the lower rate for daytime work.
The higher rate is merely an inducement to accept employment at
times which are not at desirable form a workman's standpoint
(International L. Ass'n. Wise 50 F. Supp. 26, affirmed C.C.A.
Carbunao v. National Terminals Corp. 139 F. 853).
But this paragraph in the decision appears to have been used and cited by the Court
to sustain the action of the court a quo: that it was correct to include the 25% Sunday
premium for the purpose of setting the weekly wage of specified workers whose
weekly earnings before the passage of R.A. 1880 would be diminished, if said
premium pay regularly received for three months were not included. It is significant
that the citations therein used by the Supreme Court are excerpts from American
decisions whose legislation on overtime is at variance with the law in this jurisdiction
in this respect: the U.S. legislation considers work in excess of forty hours a week as
overtime; whereas, what is generally considered overtime in the Philippines is work
in excess 'of the regular 8-hours a day. It is understandably material to refer to
precedents in the U.S. for purposes of computing weekly wages under a 40- hour a
week rule, since the particular issue involved in NAWASA is the conversion of prior
weekly regular earnings into daily rates without allowing diminution or addition.
No rule of universal application to other cases may, therefore, be justifiably extracted
from the NAWASA case. Let it be enough that in arriving at just solution and correct
application of R.A. 1880, an inference was drawn from other decisions that a regular
wage includes payments 'agreed by the parties to be received during the week.' But
to use this analogy in another fact- situation would unmitigatingly stretch its value as
basis for legal reasoning, for analogies are not perfect and can bring a collapse if
stretched far beyond their logical and reasoned efficacy. Neither would it be far to
ascribe to the Supreme Court's citation of foreign jurisprudence, which was used for
purposes of analogy, the force of statute law, for this would be the consequence if it
were allowed to be used as authority for all fact-situations, even if different from the
NAWASA case. This, because courts do not legislate. All they do is apply the law.
The above discussions impel the objective analyst to reject the proposition that the
NAWASA decision is an embracing and can be used with the authority of a statute's
effects on existing contracts.
It appears that the answer to dispute lies, not in the text of the NAWASA case but in
the terms and conditions and practice in the implementation of, the agreement, an
area which makes resolution of the issue dependent on the relation of the terms and
conditions of the contract to the phraseology and purpose of the Eight-Hour Labor
Law (Act 444).
The more we read the NAWASA case, the more we are convinced that the overtime
computation set therein cannot apply to the cases at bar. For to do so would lead to
unjust results, inequities between and among the employees themselves and absurd
situations. To apply the NAWASA computation would require a different formula for

each and every employee, would require reference to and continued use of individual
earnings in the past, thus multiplying the administrative difficulties of the Company. It
would be cumbersome and tedious a process to compute overtime pay and this may
again cause delays in payments, which in turn could lead to serious disputes. To
apply this mode of computation would retard and stifle the growth of unions
themselves as Companies would be irresistibly drawn into denying, new and
additional fringe benefits, if not those already existing, for fear of bloating their
overhead expenses through overtime which, by reason of being unfixed, becomes
instead a veritable source of irritant in labor relations.
One other reason why application of the NAWASA case should be rejected is that
this Court is not prepared to accept that it can lay down a less cumbersome formula
for a company-wide overtime pay other than that which is already provided in the
collective bargaining agreement. Courts cannot make contracts for the parties
themselves.
Commonwealth Act 444 prescribes that overtime work shall be paid 'at the same rate
as their regular wages or salary, plus at least twenty-five per centum additional'
(Secs. 4 & 5). The law did not define what is a 'regular wage or salary'. What the law
emphasized by way of repeated expression is that in addition to 'regular wage', there
must be paid an additional 25% of that 'regular wage' to constitute overtime rate of
pay. The parties were thus allowed to agree on what shag be mutually considered
regular pay from or upon which a 25% premium shall be based and added to make
up overtime compensation. This the parties did by agreeing and accepting for a very
long period to a basic hourly rate to which a premium shall be added for purposes of
overtime.
Also significant is the fact that Commonwealth Act 444 merely sets a minimum, a
least premium rate for purposes of overtime. In this case, the parties agreed to
premium rates four (4) or even six (6) times than that fixed by the Act. Far from being
against the law, therefore, the agreement provided for rates 'commensurate with the
Company's reputation of being among the leading employers in the Philippines' (Art.
1, Sec. 2, Coll. Barg. Agreement) at the same time that the Company is maintained in
a competitive position in the market Coll. Barg. Agreement, lbid).
Since the agreed rates are way above prevailing statutory wages and premiums,
fixed by themselves bona fide through negotiations favored by law, there appears no
compelling reason nor basis for declaring the same illegal. A basic principle forming
an important foundation of R.A. 875 is the encouragement given to parties to resort
to peaceful settlement of industrial problems through collective bargaining. It
behooves this Court, therefore, to help develop respect for those agreements which
do not exhibit features of illegality This is the only way to build confidence in the
democratic process of collective bargaining. Parties cannot be permitted to avoid the
implications and ramifications of the agreement.
Although this Court has gone very far in resolving an doubts and in giving great
weight to evidence and presumptions in favor of labor, it may not go as far as
reconstruct the law to fit particular cases." (Pp. 174-181, Record)
Proof of the correctness of the aforequoted considerations, the appeal of the workers from the
Industrial Court's decision did not prosper. Affirming the appealed decision, We held:
The theory, therefore, of the petitioners is to the effect that, notwithstanding the terms
and conditions of their existing collective bargaining agreement with respondent Shell
Company, particularly Exhibit 'A-l' for the Petitioners and Exhibit 'l-A' for the
Respondent (which is Appendix 'B' of the Collective Bargaining Agreement of the
parties), considering the ruling in the NAWASA case, a recomputation should be
made of their basic wage by adding the money value of the fringe benefits enjoyed
by them from whence the premium rates agreed upon shall be computed in order to

arrive at the correct computation of their overtime compensation from the Company.
On the other hand, respondent Shell Company maintains that the NAWASA case
should not be utilized as the basis for the alteration of their mode of computing
overtime rate of pay as set forth in their collective Bargaining Agreement. It insists
that their collective bargaining agreement should be the law between them.
After a careful and thorough re-examination of the NAWASA case, supra, and a
minute examination of the facts and the evidence of the case now before Us, We rule
that the NAWASA case is not in point and, therefore, is inapplicable to the case at
bar.
The ruling of this Court in the NAWASA case contemplates the regularity and
continuity of the benefits enjoyed by the employees or workers (for at least three (3)
months) as the condition precedent before such additional payments or benefits are
taken into account. This is evident in the aforequoted ruling of this Court in the
NAWASA case as well as in the hereinbelow cited authorities, to wit:
The 'regular rate' of pay on the basis of which overtime must be
computed must reflect an payments which parties have agreed shall
be received regularly during the work week, exclusive of overtime
payments.' Walling v. Garlock Packing Co. C.C.A.N.Y., 159 F. 2d 44,
45. (Page 289, WORDS And PHRASES, Permanent Edition, Vol.
36A; Italics supplied); and
As a general rule the words 'regular rate' mean the hourly rate
actually paid for the normal, non-overtime work week, and an
employee's regular compensation is the compensation which
regularly and actually reaches him, ... .' (56 C.J.S. 704; Emphasis
supplied).
Even in the definition of wage under the Minimum Wage Law, the words 'customarily
furnished' are used in referring to the additional payments or benefits, thus, 'Wage' paid to any employee shag mean the remuneration or earnings, however
designated, capable of being expressed in terms of money, whether fixed or
ascertained on a time, task, piece, commission basis, or other method of calculating
the same, which is payable by an employer to an employee under a written or
unwritten contract of employment for work done or to be done or for services
rendered or to be rendered, and includes the fair and reasonable value, as
determined by the Secretary of Labor, of board, lodging or other facilities customarily
furnished by the employer to the employee.' (Sec. 2 (g), R.A. No. 602).
Having been stipulated by the parties that ... the Tin Factory Incentive Pay has
ceased in view of the closure of the factory in May 1966 the fringe benefits as
described show that they are occasionally not regularly enjoyed and that not all
employees are entitled to them', herein petitioners failed to meet the test laid down
by this Court in the NAWASA case. Further, the collective bargaining agreement
resorted to by the parties being in accordance with R.A. 875, with its provision on
overtime pay far way beyond the premium rate provided for in Sections 4 and 5 of
Commonwealth Act 444, the same should govern their relationship. Since this is their
contract entered into by them pursuant to bargaining negotiations under existing
laws, they are bound to respect it. It is the duty of this Court to see to it that contracts
between parties, not tainted with infirmity or irregularity or illegality, be strictly
complied with by the parties themselves. This is the only way by which unity and
order can be properly attained in our society.
It should be noted in passing that Commonwealth Act 444 prescribes only a minimum
of at least 25% in addition to the regular wage or salary of an employee to constitute
his overtime rate of pay, whereas, under Appendix 'B', (Exhs. 'A-l', Petitioners and 'l-

A', Respondent) of the Collective Bargaining Agreement of the parties, the premium
rate of overtime pay is as high as l50% on regular working days up to 250 % on
Sundays and recognized national holidays. (Shell Oil Workers Union vs. Shell
Company of the Philippines, G.R. No. L-30658-59, March 31, 1976, 70 SCRA 242243.)
In the instant case, on May 22, 1965 PEMA alleged in the court below the following cause of action
as amended on June 7, 1965:
Since the start of the giving of cost of living allowance and longevity pay and
reiterated, after the promulgation of the Decision in National Waterworks and
Sewerage Authority vs. NAWASA Consolidated Unions et al., G.R. No. L-18938,
August 31, 1964, the petitioner has repeatedly requested respondent that the cost of
living allowance and longevity pay be taken into account in the computation of
overtime pay, effective as of the grant of said benefits on January 1, 1958, in
accordance with the ruling in said Decision of the Supreme Court. (Page 14, PNB's
Brief.)
To be sure, there could be some plausibility in PNB's pose regarding the jurisdiction of the Industrial
Court over the above cause of action. But, as We have already stated, We agree with the broader
view adopted by the court a quo on said point, and We find that it is in the best interests of an
concerned that this almost 25-year dispute be settled once and for all without the need of going
through other forums only for the matter to ultimately come back to this Court probably years later,
taking particular note as We do, in this regard, of the cases cited on pages 9-10 of PEMA's original
memo, as follows:
Realizing its error before in not considering the present case a certified labor dispute,
the Bank now concedes that the case at bar 'belongs to compulsory arbitration'.
Hence, the lawful powers of the CIR over the same. However, the Bank says
'overtime differential is but a money claim, (and) respondent court does not have
jurisdiction to take cognizance of the same'.
But this is not a pure money claim (pp. 10-11, Opposition) because other factors are
involved - certification by the President, the matter may likely cause a strike, the
dispute concerns national interest and comes within the CIR's injunction against
striking, and the employer-employee relationship between the Bank and the
employees has not been severed. Besides, 'money claim' is embraced within the
term 'compensation' and therefore falls squarely under the jurisdiction of the CIR in
the exercise of its arbitration power (Sec. 4, CA 103; Please see also Republic vs.
CIR, L- 21303, Sept. 23/68; Makalintal J., NWSA Case, L-26894-96, Feb. 28/69;
Fernando, J.).
What confers jurisdiction on the Industrial Court, says Justice J.B.L. Reyes, is not the
form or manner of certification by the President, but the referral to said court of the
industrial dispute between the employer and the employees. (Liberation Steamship
vs. CIR, etc., L-25389 & 25390, June 27/68).
In Phil. Postal Savings Bank, et al. vs. CIR, et al., L-24572, Dec. 20/67, this
Honorable Court, speaking through Chief Justice Concepcion, held that the
certification of the issue 'as a dispute affecting an industry indispensable to the
national interest' leaves 'no room for doubt on the jurisdiction of the CIR to settle
such dispute.'
Relatedly, however, it is to be noted that it is clear from the holding of the Industrial Court's decision
We have earlier quoted, "the cause of action (here) is not on any decision of any court but on the
provisions of the law which have been in effect at the time of the occurrence of the cause of action in
relation to a labor dispute". Viewed from such perspective laid by the lower court itself, it can hardly
be said that it indeed exercised purely its power of arbitration, which means laying down the terms
and conditions that should govern the relationship between the employer and employees of an

enterprise following its own appreciation of the relevant circumstances rather empirically. More
accurately understood, the court in fact indulged in an interpretation of the applicable law, namely,
CA 444, in the light of its own impression of the opinion of this Court in NAWASA and based its
decision thereon.
Accordingly, upon the fact-situation of this case hereunder to be set forth, the fundamental question
for Us to decide is whether or not the decision under appeal is in accordance with that law and the
cited jurisprudence. In brief, as PEMA posits, is NAWASA four-square with this case? And even
assuming, for a while, that in a sense what is before Us is an arbitration decision, private respondent
itself admits in its above-mentioned memorandum that this Court is not without power and authority
to determine whether or not such arbitration decision is against the law or jurisprudence or
constitutes a grave abuse of discretion. Thus, in PEMA's memorandum, it makes the observation
that "(F)urthermore, in the Shell cases, the unions are using the NAWASA decision as a source of
right for recomputation, while in the PNB, the Union merely cites the NAWASA doctrine, not as a
source of right, but as a legal authority or reference by both parties so the Union demand may be
granted. " (Motion to Dismiss, p. 3.)
Obviously, therefore, the polestar to which Our mental vision must be focused in order that We may
arrive at a correct legal and equitable determination of this controversy and, in the process make
NAWASA better understood as We believe it should be, is none other than Sections 3 and 4 of Com.
Act No. 444, the Eight Hour Labor Law, which pertinently provide thus:
SEC. 3. Work may be performed beyond eight hours a day in case of actual or
impending emergencies caused by serious accidents, fire, flood, typhoon,
earthquake, epidemic, or other disaster or calamity in order to prevent loss to life and
property or imminent danger to public safety; or in case of urgent work to be
performed on the machines, equipment, or installations in order to avoid a serious
loss which the employer would otherwise suffer, or some other just cause of a similar
nature; but in all such cases the laborers and employees shall be entitled to receive
compensation for the overtime work performed at the same rate as their regular
wages or salary, plus at least twenty-five per centum additional.
In case of national emergency the Government is empowered to establish rules and
regulations for the operation of the plants and factories and to determine the wages
to be paid the laborers.
xxx xxx xxx
SEC. 4. No person, firm, or corporation, business establishment or place or center of
labor shall compel an employee or laborer to work during Sundays and legal
holidays, unless he is paid an additional sum of at least twenty-five per centum of his
regular remuneration: Provided, however, that this prohibition shall not apply to public
utilities performing some public service such as supplying gas, electricity, power,
water, or providing means of transportation or communication.
The vital question is, what does "regular wage or salary" mean or connote in the light of the demand
of PEMA?
In Our considered opinion, the answer to such question lies in the basic rationale of overtime pay.
Why is a laborer or employee who works beyond the regular hours of work entitled to extra
compensation called in this enlightened time, overtime pay? Verily, there can be no other reason
than that he is made to work longer than what is commensurate with his agreed compensation for
the statutorily fixed or voluntarily agreed hours of labor he is supposed to do. When he thus spends
additional time to his work, the effect upon him is multi-faceted: he puts in more effort, physical
and/or mental; he is delayed in going home to his family to enjoy the comforts thereof; he might have
no time for relaxation, amusement or sports; he might miss important pre-arranged engagements;
etc., etc. It is thus the additional work, labor or service employed and the adverse effects just
mentioned of his longer stay in his place of work that justify and is the real reason for the extra
compensation that he called overtime pay.

Overtime work is actually the lengthening of hours developed to the interests of the employer and
the requirements of his enterprise. It follows that the wage or salary to be received must likewise be
increased, and more than that, a special additional amount must be added to serve either as
encouragement or inducement or to make up fop the things he loses which We have already
referred to. And on this score, it must always be borne in mind that wage is indisputably intended as
payment for work done or services rendered. Thus, in the definition of wage for purposes of the
Minimum Wage Law, Republic Act No. 602, it is stated:
'Wage' paid to any employee shall mean the remuneration or earnings, however
designated, capable of being expressed in terms of money, whether fixed or
ascertained on a time task, piece, commission basis or other method of calculating
the same, which is payable by an employer to an employee under a written or
unwritten contract of employment for work done or to be done or for services
rendered or to be rendered and includes the fair and reasonable value as determined
by the Secretary of Labor, of board, lodging or other facilities customarily furnished
by the employer to the employee. 'Fair and reasonable value' shall not include a
profit to the employer which reduces the wage received by the employee below the
minimum wage applicable to the employee under this Act, nor shall any transaction
between an employer or any person affiliated with the employer and the employee of
the employer include any profit to the employer or affiliated person which reduces the
employee's wage below the wage applicable to the employee under this
Act.' 2 (Emphasis supplied).
As can be seen, wage under said law, in whatever means or form it is given to the worker, is "for
work done or to be done or for services rendered or to be rendered" and logically "includes (only) the
fair and reasonable value as determined by the Secretary of Labor, of board, lodging or other
facilities customarily furnished by the employer to the employee".
Indeed, for the purpose of avoiding any misunderstanding or misinterpretation of the word "wage"
used in the law and to differentiate it from "supplement", the Wage Administration Service to
implement the Minimum Wage Law, defined the latter as:
extra remuneration or benefits received by wage earners from their employers and
include but are not restricted to pay for vacation and holidays not worked; paid sick
leave or maternity leave; overtime rate in excess of what is required by law; pension,
retirement, and death benefits; profit-sharing, family allowances; Christmas, war risk
and cost-of-living bonuses; or other bonuses other than those paid as a reward for
extra output or time spent on the job. (Emphasis ours).
In these times when humane and dignified treatment of labor is steadily becoming universally an
obsession of society, we, in our country, have reached a point in employer- employee relationship
wherein employers themselves realize the indispensability of at least making the compensation of
workers equal to the worth of their efforts as much as this case can be statistically determined. Thus,
in order to meet the effects of uncertain economic conditions affecting adversely the living conditions
of wage earners, employers, whenever the financial conditions of the enterprise permit, grant them
what has been called as cost-of-living allowance. In other words, instead of leaving the workers to
assume the risks of or drift by themselves amidst the cross -currents of country-wide economic
dislocation, employers try their best to help them tide over the hardships and difficulties of the
situation. Sometimes, such allowances are voluntarily agreed upon in collective bargaining
agreements. At other times, it is imposed by the government as in the instances of Presidential
Decrees Nos. 525, 928, 1123, 1389, 1614, 1678, 1751 and 1790; Letters of Instructions No. 1056
and Wage Order No. 1. Notably, Presidential Decree No. 1751 increased the statutory wage at all
levels by P400 in addition to integrating the mandatory emergency living allowances under
Presidential Decree No. 525 and Presidential Decree No. 1123 into the basic pay of all covered
workers.
Going over these laws, one readily notices two distinctive features: First, it is evidently gratifying that
the government, in keeping with the humanitarian trend of the times, always makes every effort to

keep wages abreast with increased cost of living conditions, doing it as soon as the necessity for it
arises. However, obviously, in order not to overdo things, except when otherwise provided, it spares
from such obligation employers who by mutual agreement with their workers are already paying
what the corresponding law provides (See Sec. 4 of P.D. No. 525; Section 2 of P.D. No. 851 until
P.D. 1684 abolished all exemptions under P.D. No. 525, P.D. No. 1123, P.D. No. 851 and P.D. No.
928 among distressed employers who even though given sufficient lapse of time to make the
necessary adjustment have not done so.)3
In the case at bar, as already related earlier, the cost-of-living allowance began to be granted in 1958
and the longevity pay in 1981. In other words, they were granted by PNB upon realizing the difficult
plight of its labor force in the face of the unusual inflationary situation in the economy of the country,
which, however acute, was nevertheless expected to improve. There was thus evident an inherently
contingent character in said allowances. They were not intended to be regular, much less permanent
additional part of the compensation of the employees and workers. To such effect were the
testimonies of the witnesses at the trial. For instance, Mr. Ladislao Yuzon declared:
ATTORNEY GESMUNDO
Questioning ....
Q. Calling your attention to paragraph No. 1, entitled monthly living
allowance, which has been marked as Exhibit 'A-l', will you kindly tell
us the history of this benefit- monthly living allowance, why the same
has been granted?
A. Well, in view of the increasing standard of living, we decided to
demand from management in our set of demands ... included in our
set of demands in 1957-1958 a monthly living allowance in addition to
our basic salary. This benefit was agreed upon and granted to take
effect as of January 1, 1958. That was the first time it was enjoyed by
the employees of the Philippine National Bank. It started on a lesser
amount but year after year we have been demanding for increases
on this living allowance until we have attained the present amount of
P 1 50.00 a month, starting with P40.00 when it was first granted. The
same is still being enjoyed by the employees on a much higher
amount. There were a few variations to that. (t. t.s.n., pp. 18-19,
Hearing of August 16, 1965)
which testimony was affirmed by Mr. Panfilo Domingo, on cross- examination by counsel for the
respondent, reading as follows:
ATTORNEY GESMUNDO:
Q. Do you recall Mr. Domingo, that in denying the cost of living
allowance and longevity pay for incorporation with the basic salary,
the reason given by the management was that as according to you, it
will mean an added cost and ' furthermore it will increase the
contribution of the Philippine National Bank to the GSIS, is that
correct?
A. This is one of the reasons, of the objections for the inclusion of the
living allowance and longevity pay to form part of the basic pay, I
mean among others, because the basic reason why management
would object is the cost of living allowance is temporary in nature, the
philosophy behind the grant of this benefit, Nonetheless, it was the
understanding if I recall right that in the event that cost of living
should go down then there should be a corresponding decrease in
the cost of living allowance being granted I have to mention this
because this is the fundamental philosophy in the grant of cost of
living allowance. (Pp. 19-20, Record.)

Much less were they dependent on extra or special work done or service rendered by the
corresponding recipient. Rather, they were based on the needs of their families as the conditions of
the economy warranted. Such is the inexorable import of the pertinent provisions of the collective
bargaining agreement:
MONTHLY LIVING ALLOWANCE
All employees of the Bank shall be granted a monthly living allowance of P140, plus
P10 for each minor dependent child below 21 years of age, but in no case shall the
total allowance exceed P200 or 25% of the monthly salary, whichever is higher,
subject to the following conditions:
a) That this new basic allowance shall be applicable to all employees,
irrespective of their civil status;
b) That a widow or widower shall also enjoy the basic allowance of
P140 a month, plus the additional benefit of P10 for each minor
dependent child but not to exceed P200 or 25% of basic salary
whichever is higher.
c) That in case the husband and wife are both employees in the Bank
both shall enjoy this new basic monthly living allowance of P140 but
only one of spouses shall be entitled to claim the additional benefit of
P10 for each minor legitimate or acknowledged child. (Pp. 30-31,
PNB's memo.)
So also with the longevity pay; manifestly, this was not based on the daily or monthly amount of work
done or service rendered it was more of a gratuity for their loyalty, or their having been in the bank's
employment for consideration periods of time. Indeed, with particular reference to the longevity pay,
the then existing collective bargaining contract expressly provided: "... That this benefit shall not form
part of the basic salaries of the officers so affected."
PEMA may contend that the express exclusion of the longevity pay, means that the cost-of-living
allowance was not intended to be excluded. Considering, however, the contingent nature of the
allowances and their lack of relation to work done or service rendered, which in a sense may be
otherwise in respect to longevity pay PEMA's contention is untenable. The rule of exclusio
unius, exclusio alterius would not apply here, if only because in the very nature of the two benefits in
question, considerations and conclusions as to one of them could be non-sequitur as to the other.
Withal, there is the indisputable significant fact that after 1958, everytime a collective bargaining
agreement was being entered into, the union always demanded the integration of the cost-of-living
allowances and longevity pay, and as many times, upon opposition of the bank, no stipulation to
such effect has ever been included in any of said agreements. And the express exclusion of
longevity pay was continued to be maintained.
On this point, the respondent court held that under its broad jurisdiction, it was within the ambit of its
authority to provide for what the parties could not agree upon. We are not persuaded to view the
matter that way. We are not convinced that the government, thru the Industrial Court, then, could
impose upon the parties in an employer-employee conflict, terms and conditions which are
inconsistent with the existing law and jurisprudence, particularly where the remedy is sought by the
actors more on such legal basis and not purely on the court's arbitration powers.
As pointed out earlier in this opinion, Our task here is two-fold: First, reviewing the decision under
scrutiny as based on law and jurisprudence, the question is whether or not the rulings therein are
correct. And second, reading such judgment as an arbitration decision, did the court a quo gravely
abuse its discretion in holding, as it did, that cost-of-living allowance and longevity pay should be
included in the computation of overtime pay?
In regard to the first question, We have already pointed out to start with, that as far as longevity pay
is concerned, it is beyond question that the same cannot be included in the computation of overtime
pay for the very simple reason that the contrary is expressly stipulated in the collective bargaining
agreement and, as should be the case, it is settled that the terms and conditions of a collective

bargaining agreement constitute the law between the parties. (Mactan Workers Union vs. Aboitiz, 45
SCRA 577. See also Shell Oil Workers Union et al. vs. Shell Company of the Philippines, supra) The
contention of PEMA that the express provision in the collective bargaining agreement that "this
benefit (longevity pay) shall not form part of the basic salaries of the officers so affected" cannot
imply the same Idea insofar as the computation of the overtime pay is concerned defies the rules of
logic and mathematics. If the basic pay cannot be deemed increased, how could the overtime pay be
based on any increased amount at all?
However, the matter of the cost-of-living allowance has to be examined from another perspective,
namely, that while PEMA had been always demanding for its integration into the basic pay, it never
succeeded in getting the conformity of PNB thereto, and so, all collective bargaining agreements
entered -4 into periodically by the said parties did not provide therefor. And it would appear that
PEMA took the non-agreement of the bank in good grace, for the record does not show that any
remedial measure was ever taken by it in connection therewith. In other words, the parties seemed
to be mutually satisfied that the matter could be better left for settlement on the bargaining table
sooner or later, pursuant to the spirit of free bargaining underlying Republic Act 875, the Industrial
Peace Act then in force. Or, as observed by PEMA in its memorandum, (page 23), the parties
"agreed to let the question remain open-pending decision of authorities that would justify the demand
of the Union." Indeed, on pages 23-24 of said memorandum, the following position of PEMA is stated
thus:
Thus the following proceeding took place at the Court a quo:
ATTY. GESMUNDO:
That is our position, Your Honor, because apparently there was an understanding
reached between the parties as to their having to wait for authorities and considering
that the issue or one of the issues then involved in the NAWASA case pending in the
CIR supports the stand of the union, that the principle enunciated in connection with
that issue is applicable to this case.
xxx xxx xxx
Q. Do we understand from you, Mister Yuson, that it was because of
the management asking you for authorities in allowing the integration
of the cost of living allowance with your basic salary and your failure
to produce at the time such authorities that the union then did not
bring any case to the Court?
A. Well, in the first place, it is not really my Idea to be bringing
matters to the Court during my time but I would much prefer that we
agree on the issue. Well, insofar as you said that the management
was asking me, welt I would say that they were invoking (on)
authorities that we can show in order to become as a basis for
granting or for agreeing with us although we were aware of the
existence of a pending case which is very closely similar to our
demand, yet we decided to wait until this case should be decided by
the Court so that we can avail of the decision to present to
management as what they are asking for. (t.s.n., pp. 31-32, 35-36,
Aug. 28,1965.)
Now, to complete proper understanding of the character of the controversy before Us, and lest it be
felt by those concerned that We have overlooked a point precisely related to the matter touched in
the above immediately preceding paragraph, it should be relevant to quote a portion of the
"Stipulation of Facts" of the parties hereto:
1. This particular demand was among those submitted by Petitioner-Union in the
current collective bargaining negotiations to the Respondent Bank. However, since
this case was already filed in court on May 22, 1965, the parties agreed not to

include this particular demand in the discussion, leaving the matter to the discretion
and final judicial determination of the courts of justice." (Page 81, Rec.)
In fine, what the parties commonly desire is for this Court to construe CA 444 in the light of
NAWASA, considering the fact- situation of the instant case.
In this respect, it is Our considered opinion, after mature deliberation, that notwithstanding the
portions of the NAWASA's opinion relied upon by PEMA, there is nothing in CA 444 that could justify
its posture that cost-of-living allowance should be added to the regular wage in computing overtime
pay.
After all, what was said in NAWASA that could be controlling here? True, it is there stated that "for
purposes of computing overtime compensation, regular wage includes all payments which the
parties have agreed shall be received during the work week, including - differential payments for
working at undesirable times, such as at night and the board and lodging customarily furnished the
employee. ... The 'regular rate' of pay also ordinarily includes incentive bonus or profit-sharing
payments made in addition to the normal basic pay (56 C.J.S., pp. 704-705), and it was also held
that the higher rate for night, Sunday and holiday work is just as much a regular rate as the lower
rate for daytime work. The higher rate is merely an inducement to accept employment at times which
are not as desirable from a workmen's standpoint (International L. Ass'n vs. National Terminals Corp.
C.C. Wise, 50 F. Supp. 26, affirmed C.C.A. Carbunoa v. National Terminals Corp. 139 F. 2d 853)."
(11 SCRA, p. 783)
But nowhere did NAWASA refer to extra, temporary and contingent compensation unrelated to work
done or service rendered, which as explained earlier is the very nature of cost-of- living allowance.
Withal, in strict sense, what We have just quoted from NAWASA was obiter dictum, since the only
issue before the Court there was whether or not "in computing the daily wage, (whether) the addition
compensation for Sunday should be included. " (See No. 7 of Record)
In any event, as stressed by Us in the Shell cases, the basis of computation of overtime pay beyond
that required by CA 444 must be the collective bargaining agreement, 4 for, to reiterate Our
postulation therein and in Bisig ng Manggagawa, supra, it is not for the court to impose upon the
parties anything beyond what they have agreed upon which is not tainted with illegality. On the other
hand, where the parties fail to come to an agreement, on a matter not legally required, the court
abuses its discretion when it obliges any 6f them to do more than what is legally obliged.
Doctrinally, We hold that, in the absence of any specific provision on the matter in a collective
bargaining agreement, what are decisive in determining the basis for the computation of overtime
pay are two very germane considerations, namely, (1) whether or not the additional pay is for extra
work done or service rendered and (2) whether or not the same is intended to be permanent and
regular, not contingent nor temporary and given only to remedy a situation which can change any
time. We reiterate, overtime pay is for extra effort beyond that contemplated in the employment
contract, hence when additional pay is given for any other purpose, it is illogical to include the same
in the basis for the computation of overtime pay. This holding supersedes NAWASA.
Having arrived at the foregoing conclusions, We deem it unnecessary to discuss any of the other
issues raised by the parties.
Caltez vs. CIR (3 November 1986)
G.R. No. L-27761 September 30, 1981
BISIG NG MANGGAGAWA NG PHILIPPINE REFINING CO., INC., plaintiff-appellants,
vs.
PHILIPPINE REFINING CO., INC., defendant-appellee.
ABAD SANTOS, J.:
This is an appeal from the decision of the Court of First Instance of Manila dated December 8, 1966,
in Civil Case No. 65082, holding that Christmas bonus and other fringe benefits are excluded in the

computation of the overtime pay of the members of the appellant union under Section 6, Article VI of
the 1965 collective bargaining agreement which reads as follows:
Overtime pay at the rate of regular base pay plus 50% thereof shag be paid for all
work performed in excess of eight hours on ordinary days within the work week (that
is to say, Monday to Friday).
On April 15,1966, the Bisig ng Manggagawa ng Philippine Refining Company, Inc., as the
representative union of the rank and file employees of the Philippine Refining Co., Inc., filed with the
Court of First Instance of Manila a petition for declaratory relief praying, among others
That a declaratory judgment be rendered declaring and adjudicating the qqqtive
rights and duties of petitioner and respon dent under the above quoted provision of
their Collective 13 - agreements and further declaring that the Christmas bonus of
one month or thirty days pay and other de determinable benefits should be included
for the purpose of computation of the overtime pay spread throughout the twelve
months period of each year from August, 1963 up to the present and subsequently
hereafter; and that respondent be therefore directed to pay such differential in the
overtime pay of all the employees of the herein respondent ;
Petitioner union contended that the respondent company was under obligation to include the
employees' Christmas bonus and other fringe benefits in the computation of their overtime pay by
virtue of the ruling of this Court in the case of NAWASA vs. NAWASA Consolidated Unions, et all
G.R. No. L-18938, August 31, 1964, 11 SCRA 766.
On May 3, 1966, the Philippine Refining Co.. Inc. filed its answer to the petition alleging, among
others, that never did the parties intend, in the 1965 collective bargaining agreement and in prior
agreements, to include the employees' Christmas bonus and other fringe benefits in the computation
of the overtime pay and that the company precisely agreed to a rate of 50%, which is much higher
than the 25% required by the Eight-Hour Labor Law (Commonwealth Act No. 444, as amended), on
the condition that in computing the overtime pay only the "regular base pay" would be considered.
Furthermore, respondent company contended that the ruling of this Court in the NAWASA case
relative to the computation of overtime compensation could not be applied to its employees since it
was a private corporation and not a government-owned or controlled corporation like the NAWASA.
After the requisite pre-trial was held, the Court of First Instance of Manila issued an order dated
September 16, 1966, limiting the issues to the proper interpretation of the above quoted provision of
the 1965 collective bargaining agreement and to the applicability to the case of the NAWASA ruling
and requiring the parties to submit evidence as to the circumstances under which the questioned
provision had been included in the agreement of 1965.
During the trial, the parties presented their respective witnesses from whose testimonies the
following facts were established: that the collective bargaining agreements entered into between the
parties before 1965 all contained a provision similar to the aforequoted Sec. 6, Art. VI of the 1965
collective bargaining agreement; that in the enforcement of said earlier agreements, the overtime
compensation of the employees was computed on the basis solely of their basic monthly pay, i.e.,
excluding the employees' Christmas bonus and other fringe benefits; that in the negotiations which
led to the execution of the 1965 collective bargaining agreement, the matter of the proper
interpretation of the phrase "regular base pay" was discussed; that the petitioner union demanded
that the NAWASA ruling should be applied by including the employees' Christmas bonus and other
fringe benefits in the computation of the overtime compensation; that the respondent company
refused to give in to such demand contending that (1) the company agreed to a 5% overtime rate,
which was higher than the 25% rate required by law, precisely on the condition that the same should
be computed solely on the basis of the employees' basic monthly salary, excluding Christmas bonus
and other fringe benefits; (2) the parties had the freedom to choose the basis for computing the
overtime pay provided that the same should not be less than the minimum prescribed by law; and (3)
the NAWASA decision was inapplicable to a private corporation like the Philippine Refining Co., Inc.;
that while refusing to grant petitioner's demand, the respondent company nevertheless agreed to
submit to a court for resolution the issue of the applicability to their case of the NAWASA ruling, with

the undertaking to abide by whatever decision the court would render; and, that the parties agreed
that, in the meantime, they would exclude the Christmas bonus and other fringe benefits in the
computation of the overtime compensation.
On December 8, 1966, the Court of First Instance of Manila rendered a decision the dispositive
portion of which reads as follows:
IN VIEW OF THE FOREGOING, judgment is hereby rendered, declaring that the
term "regular base pay" in Section 6, Ararticle VI of Exhibit A refers only to "regular
base pay" and does not include Christmas bonus and other fringe benefits. Without
pronouncement as to costs.
SO ORDERED.
Said court held that while the NAWASA ruling concerning the meaning of the phrase "regular pay" of
the Eight-Hour Labor Law could be applied to employees of private corporations like the Philippine
Refining Company, the same was, nevertheless, inapplicable to the case at bar which involved the
interpretation of the phrase "regular base pay which was different from "regular pay". It declared that
"regular base pay" referred only to the basic or monthly pay exclusive of Christmas bonus and other
fringe benefits. Furthermore, the validity of the provision of the 1965 collective bargaining agreement
concerning the computation of the employees' overtime pay on the basis of their "regular base pay"
was upheld by the court for the reason that the same was even higher than the overtime pay
prescribed by law. The court emphasized that contracts are binding on the parties insofar as they are
not contrary to law, morals and public order.
A motion for reconsideration of the decision was filed by the petitioner union but the same was
denied in an order dated February 17, 1967. Hence, the present appeal which raises pure questions
of law, namely: (1) whether or not the phrase "regular base pay" as used in the above-quoted
provision of the 1965 CBA includes Christmas bonus and other fringe benefits; and (2) whether or
not the stipulation in the CBA on overtime pay violates the Nawasa doctrine if the answer to question
No. I is in the negative.
We answer both questions in the negative.
The phrase "regular base pay" is clear, unequivocal and requires no interpretation. It means regular
basic pay and necessarily excludes money received in different concepts such as Christmas bonus
and other fringe benefits. In this connection it is necessary to remember that in the enforcement of
previous collective bargaining agreements containing the same provision of overtime pay at the rate
of regular base pay plus 50@'c thereof", the overtime compensation was invariably based only on
the regular basic pay, exclusive of Christmas bonus and other tinge benefits. Appellant union knew
all the while of such interpretation and precisely attempted to negotiate for a provision in the subject
collective bargaining agreement that would include the Christmas bonus and other fringe benefits in
the computation of the overtime pay. Significantly, the appellee company did not agree to change the
phrase "regular base pay" as it could not consent to the inclusion of the fringe benefits in the
computation of the overtime pay. Hence, the appellant union could not question the intended
definition of the phrase but could only claim that the same violated the Nawasa doctrine and insist
that the phrase should be redefined to conform to said doctrine.
We are thus tasked not so much with the interpretation of the phrase "regular base pay" in the CBA,
which unquestionably excludes Christmas bonus and other fringe benefits, but with the question of
whether as understood, the contractual stipulation violates the ruling laid down in the Nawasa case.
The pertinent portions of the decision in the case of NAWASA vs. NAWASA Consolidated Unions (L18938, August 31, 1964, 11 SCRA 766, 782-783) invoked by the appellant union read as follows:
It has been held that for purposes of computing overtime compensation a regular
wage includes all payments which the parties have agreed shall be received during
the work week, including piece work wages, differential payments for working at
undesirable times, such as at night or on Sundays and holidays, and the cost of
board and lodging customarily furnished the employee Walling v. YangermahReynolds Hardwork Co., 325 U.S. 419; Walling v. Harischfeger Corp., 325 U.S. 427.

The 'regular rate' of pay also ordinarily includes incentive bonus or profit-sharing
payments made in addition to the normal basic pay (56 C.J.S., pp. 704-705), and it
was also held that the higher rate for night, Sunday and holiday work is just as much
a regular rate as the lower rate for daytime work. The higher rate is merely an
inducement to accept employment at times which are not as desirable from a
workman's standpoint (International L. Ass'n. v. National Terminals Corp. c.c. Wise,
50 F. Supp. 26, affirmed CCA Casbunao v. National Terminals Corp. 139 F. 2d 853).
Respondent court, therefore, correctly included such differential pay in computing the
weekly wages of those employees and laborers who worked seven days a week and
were continuously receiving 25% Sunday differential for a period of three months
immediately p g the implementation of Republic Act 1880. "
The appellant union contends that by virtue of the forego. ing the Philippine Refining Co., Inc., is
under obligation to include the, employees' Christmas bonus and other fringe benefits in the
computation of their overtime compensation which, as agreed, is "regular base pay plus 50%
thereof".
The legal provisions pertinent to the subject of overtime compensation are found in Secs. 3 and 4 of
Commonwealth Act No. 444, as amended, which read as follows:
SEC. 3. Work may be performed beyond eight hours a day in case of actual or
impending emergencies ...; but in all such cases, the laborers and employees shall
be entitled to receive compensation for the overtime work performed at the same rate
as their regular wages or salary, plus at least twenty-five per centum additional.
SEC. 4. No person, firm, or corporation, business establishment or place or center of
labor shall compel an employee or laborer to work during Sunday and legal holidays,
unless he is paid an additional sum of at least twenty-five per centum of his regular
renumeration (Emphasis supplied.)
Applying the aforequoted NAWASA ruling to the above provision of law, We arrive at the following
conclusion: an employers covered by said law are under legal compulsion to grant their employees
overtime compensation in amounts not less than their basic pay and the fringe benefits regularly and
continuously received by them plus 25% thereof. This does not however mean that agreements
concerning overtime compensation should always provide for a computation based on the
employee's "regular wage or salary i.e. regular base pay plus fringe benefits regularly and
continuously received. For it is axiomatic that in multiplication, the product is directly related to the
multiplicand the multiplier, and that the multiplicand Is inversely related to the multiplier conviniently,
the same product may be obtained despite reduction of the multiplicand provided that the multiplier
is correspondingly increased. Conformably with the foregoing mathematical axioms there is still
compliance with the above-stated ruling despite the fact that the overtime compensation is based
only on the employee's "regular base pay" (the multiplicand) as long as the rate of 25% (the
multiplier) is increased by such amount as to produce a result (the product) which is not less than
the result to be obtained in computing 25% of the employee's "regular wage or salary" ("regular base
pay" plus fringe benefits regularly and continuously received). In fine, the parties may agree for the
payment of overtime compensation in an amount to be determined by applying a formula other than
the statutory formula of "regular wage or qqqs plus at least twenty-five per centum additional"
provided that the result in applying the contractual formula is not less than the result in applying said
statutory formula.
In the case at bar, it is admitted that the contractual formula of "regular base pay plus 50% thereof"
yields an overtime compensation which is higher than the result in applying the statutory formula as
elaborated in the Nawasa case. Consequently, its validity is upheld and the parties are enjoined to
accord due respect to it.
WHEREFORE, the decision appealed from is hereby affirmed in all respects. Without
pronouncement as to costs.
SO ORDERED.

G.R. No. L-31341 March 31, 1976

PHILIPPINE AIR LINES EMPLOYEES ASSOCIATION (PALEA) and PHILIPPINE AIR LINES
SUPERVISORS' ASSOCIATION (PALSA), petitioners,
vs.
PHILIPPINE AIR INES, INC., respondent.
G.R. No. L-31341-43 March 31, 1976
PHILIPPINE AIR LINES, INC., petitioner,
vs.
PHILIPPINE AIR LINES EMPLOYEES' ASSOCIATION, PHILIPPINE AIR LINES SUPERVISORS'
ASSOCIATION, and the COURT OF INDUSTRIAL RELATIONS, respondents.
Siguion Reyna, Montecillo, Belo & Ongsiako for Philippines Air lines, Inc.
Laquihon & Legayada for Philippine Air Lines Supervisors' Association (PALEA).
MAKASIAR, J.:
Before US are consolidated petitions to review the Court of industrial Relations en banc resolution
dated October 9, 1969 in CIR Case No. 43-IPA.
In G.R. No. L-31341 (PALEA vs. PAL), petitioners question the date of effectivity of the adjudicated
pay differentials due to the monthly-salaried employees of Philippine Air Lines, Inc.
In G.R. No. L-31343 (PAL vs. PALEA), petitioner assails the reversal by the Court of Industrial
Relations of its earlier resolution on the method employed by the Philippine Air Lines in computing
the basic daily and hourly rate of its monthly salaried employees.
On February 14, 1963, the Philippine Air Lines Employees' Association (PALEA) and the Philippine
Air Lines Supervisors' Association (PALSA) petitioners in G.R. No. L-31341 and respondents in
G.R. No. 31343 commenced an action against the Philippine Air Lines (PAL) in the Court of
Industrial Relations, praying that PAL be ordered to revise its method of computing the basic daily
and hourly rate of its monthly salaried employees, and necessarily, to pay them their accrued sala
differentials.
Sought to be revised is PAL's formula in computing wages of its employees:
Monthly salary x 12 365 (No. of calendar = x (Basic dailr rate) days in a year)
x 8 = Basic hourly rate
The unions would like PAL to modify the above formula in this wise:
Monthly salary x 12 No. of actual working = x (Basic daily rate) days
x 8 = Basic hourly rate
On May 23, 1964, the Court of Industrial Relations, through Presiding Judge Jose S. Bautista,
issued an order denying the unions' prayer for a modified wage formula. Pertinent portion of the
order reads:
On the issue of rate of pay, PALSA and PALEA seek to change the long standing
method in PAL of computing the basic daily and hourly rate of monthly salaried
employees for the purpose of determining overtime pay, Sunday and legal holiday
premium pay, night differential pay, vacation and sick leave pay, to wit, the monthly
salary multiplied by 12 and dividing the product thereof by 365 and then the quotient
by 8. PALEA and PALSA claim that the method of computing the basic daily and
hourly rate of monthly salaried employees of PAL prior to the implementation of the
40-hour week schedule in PAL should be by dividing the monthly salary by 26
working days, and after the 40-hour week schedule, by dividing the monthly salary by
20 working days, and then dividing the quotient thereof in each case by 8. From the
records, however, it appears that for may years since 1952, and even previously, PAL
has been consistently and regularly determining the basic and hourly rates of
monthly salaried employees by multiplying the monthly salary by 12 momths and

dividing the product by 365 days to arive at the basic daily rate, and dividing the
quotient by 8 to compute the basic hourly rate. There has been no attempt to revise
this formula notwithstanding the various negotiations PAL and with the unions ever
since its operations, and it was only on July 18, 1962, when PALSA, for the first time,
proposed that it be changed in accordance with what is now alleged in the petition.
This, however, was a mere proposal by PALSA for the adoption of a new formula; it
was not a demand for the application of a formula claimed to be correct under the
law. Under this circumstance, PALSA and PALEA are estopped from questioning the
correctness and propriety of PAL's method of determining the basic hourly and daily
rate of pay of its monthly salaried personnel, and considering the long period of time
that elapsed before they brought their petition, are barred from insisting or
demanding a different rate of pay formula.
xxx xxx xxx
Upon the foregoing, the Court, therefore, declares PAL's method of computing the
basic daily and hourly rate of its monthly salaried employees as legal and proper, and
denies the petition of PALSA and PALEA.
xxx xxx xxx
(pp. 47-48, 49, rec. G.R. No. L-31343).
On May 30, 1964, complaining unions promptly moved for the reconsideration of the above-sais
order (p. 51, rec. G.R. No. L-31343).
On June 9, 1964, the unions filed their memorandum in support of their motion for reconsideration
alleging that the questioned order is (a) contrary to law, and (b) contrary to evidence adduced during
the trial (p. 53, ree G.R. No. L-31343).
The unions attributed error to PAL's wage formula, particularly in the use of 365 days as divisor. The
unions contended that the use of 365 days as divisor would necessarily include off-days which,
under the terms of the collective bargaining agreements entered into between the parties,
were not paid days. This is so since for work done on an off-day, an employee was paid 100% plus
25%, or 100% plus 37- of his regular working hour rate.
On the issue of prescription, the unions pointed out:
With respect to the period of prescription, it is clear that since the claim arises from
the written contracts or collective bargaining agreements between the petitioner
unions and the PAL, the action thereon prescribes in ten years from the time the right
of action accrues, in accordance with Article 1144 of the New Civil Code. .... (p. 68,
rec., G.R. No. L-31343).
On June 26, 1964, the Philippine Air Lines answered point by point the unions' memorandum, in a
prompt reply.
On October 9, 1969, the Court of Industrial Relations, through Presiding Judge Arsenio I. Martinez,
ordered the reversal of its decision dated May 34, 1964 and sustained the unions' method of age
computation.
The industrial court, however, ordered the computation of pay differentials in accordance with the
sustained method of computation effective only July 1, 1957.
Said the Court of Industrial Relations in this regard:
... In this connection, however, it will be noted as previously stated, that this case was
considered as an incident of Case No. 39-IPA, in which the issues involved were
related to the respondent PAL of the 40-Hour Week Law (Rep. Act 1880) from the
date of its effectivity July 1, 1957. ...
This Cout therefore belives that in justice and equity and substantial merits of the
case, the aforesaid pay differentials due to the employees involved herein by the
application of the correct methods of computation of the rate of pay should be paid
by the respondent also beginning July 1, 1957 (p. 117, rec., G.R. No. L-31343).

From the above resolution, both parties appealed to this COURT. The Philippine Air Lines filed its
appeal petition on December 13, 1969, while PALEA filed its petition for review on certiorari on
January 3, 1970.
I
For easy comprehension, WE start with the Philippine Air Lines, Inc. versus Philippine Air Lines
Employees Association, Philippine Air Lines Supervisors Association, and the Court of Industrial
Relations, G.R. No. L-31343.
In this appeal PAL emphasizes three assignments of error, to wit:
1. RESPONDENT CIR ERRED AND COMMITTED GRAVE ABUSE OF
DISCRETION IN HOLDING THAT THE METHOD OF COMPUTATION USED BY
PAL IN DETERMINING TIIE BASIC DAILY OR HOURLY RATE OF ITS MONTLY
SALARIED EMPLOYEES WHICH IS:
MONTHLY SALARY x 1 365 (NO. OF CALENDAR DAYS IN YEAR) = x (BASIC
DAILY RATE)
x 8 = BASIC HOURLY RATE 8
IS NOT CORRECT, CONSIDERING THAT PAL, A PUBLIC UTILITY WHERE THERE
IS WORK EVERYDAY OF THE WEEK FOR MANY YEARS EVEN BEFORE
REPUBLIC ACT 602 AND WITH THE CONSENT AND APPROVAL OF THE
EMPLOYEES, CONSISTENT WITH SECTION 19 OF REPUBLIC ACT 602
PROHIBITING REDUCTION OF WAGES FOR OFF DAYS-WHICH WAS
SUSTAINED BY THIS HONORABLE COURT IN AUTOMOTIVE PARTS &
EQUIPMENT CO., INC. VS. JOSE B. LINGAD, G.R. NO. L- 26406, OCTOBER 31,
1969 HAS BEEN TREATING OFFSITE DAYS, 11 AS SATURDAYS, SUNDAYS,
COMPANY OBSERVED HOLIDAYS OR ANY OTHER DESIGNATED HOLIDAYS AS
PAID DAYS.
2. RESPONDENT CIR ERRED AND COMMITTED GRAVE ABUSE OF
DISCRETION IN NOT FINDING. THAT RESPONDENT UNIONS, BY THEIR LONG
PERIOD OF CONSENT, ACQUIESCENCE, INACTION AND ACCEPTANCE OF
BENEFITS THEREUNDER, ARE ESTOPPED AND BARRED FROM CLAIMING
THAT PAL'S FORMULA FOR DETERMINING THE BASIC DAILY AND HOURLY
RATE OF PAY IS INCORRECT.
3. RESPONDENT CIR ERED AND ACTED IN EXCESS OF ITS JURISDICTION IN
SENTENCING PAL TO PAY DIFFERENTIALS FOR OVERTIME WORK,
NIGHTWORK, HOLIDAY AND SUNDAY PAY FROM JULY 1, 1957 CONSIDERING
THAT UNDER THE THREE-YEAR PRESCRIPTIVE PERIOD PROVIDED IN
SECTION 7-a OF COMMONWEALTH ACT NO. 444, AS AMENDED, THE EIGHTHOUR LABOR LAW, RESPONDENT UNIONS, ASSUMING THEY HAD ANY
CAUSE OF ACTION, COULD RECOVER ONLY FROM FEBRUARY 14, 1960 UP TO
THE PRESENT, SINCE RESPONDENT UNIONS FILED THEIR ACTION ONLY ON
FEBRUARY 14, 1963.
A
PAL's maiden argument has a strong tendency to mislead. In an effort to emphasize that off-days are
paid and therefore should be reckoned with in determing the divisor for computing daily and hourly
rate, PAL leans heavily on what it considers as additional payment of 125% or 137 %, as the case
may be, of an employee's basic hourly rate, given to a worker who worked on his off-days. PAL
would like us to believe that the word "Additional" all but accentuates the existence of a regular basic
rate; otherwise, the 125% or 137% shall be in addition to what?
The industrial court, however, had this to say:
Moreover, it will be noted that before September 4, 1961, a monthly salaried
employee of PAL had to work 304 days only in a year,a nd after said date, he had to

work only 258 days in ayear, to be entitled to his equivalent yearly salary. When he
worked on his off-day, he was paid accordingly (125% or 137%), indicating that his
off-days were not with pay. It seems illogical for said employe to be paid 125% or
137 % of his basic daily rate, if such off-days are already wtih pay, as indicated by
the company (p. 107, rec., G.R. No. L-31343, emphasis supplied).
WE agree.
There should hardly be any doubt that off-days are not paid days, Precisely, off-days are rest days
for the worker. He is not required to work on such days. This finds support not only in the basic
principle in labor that the basis of remuneration or compensation is actual service rendered, but in
the ever pervading labor spirit aimed at humanizing the conditions of hie working man.
Since during his off-days an employee is not compelled to work he cannot, conversely, demand for
his corresponding pay. If, however, a worker works on his off-day, our welfare laws duly reward him
with a premium higher than what he would receive when he works on his regular working day.
Such being the case, the divisor in computing an employee's basic daily rate should be the actual
working days in a yar The number of off-days are not to be counted precisely because on such offdays, an employee is not required to work.
Simple common sense dictates that should an employee opt not to work which he can legally do
on an off-day, and for such he gets no pay, he would be unduly robbed of a portion of his
legitimate pay if and when in computing his basic daily and hourly rate, such off-day is deemed
subsumed by the divisor. For it is elementary in the fundamental process of division that with a
constant dividend, the bigger your divisor is, the smaller our quotient will be.
It bears emphasis that OUR view above constitutes the rationale behind the landmark ruling,
surprisingly, by the same trial Judge Jose S. Bautista of the Court of Industrial Relations, in National
Waterworks and Sewerage Authority vs. NWSA Consolidated Unions, et al., (G.R. No. L-18938,
August 31, 1964, 11 SCRA 766, 793-794), to which decision WE gave OUR affirmance.
PAL maintains that the NAWASA doctrine should not apply to a public utility like PAL which, from the
nature of its operations, requires a whole-year-round, uninterrupted work by personnel. What PAL
apparently forgets is that just like it, NAWASA is also a public utility which likewise requires its
workers to work the whole year round. Moreover, the NAWASA is a government-owned corporation
to which PAL is akin, it being a government-controlled corporation.
As will later be stated herein, PAL inked with the representative unions of the employees collective
bargaining agreements wherein it bound itself to duly compensate employer working on their offdays. The same situation obtained in the NAWASA case, wherein WE held:
And in the collective bargaining agreement entered into between the NAWASA and
respondent unions it was agreed that all existing benefits enjoyed by the employees
and laborers prior to its effectivity shall remain in force and shall form part of the
agreement, among which certainly is the 25% additional compensation for work on
Sundays and legal holidays theretofore enjoyed by said laborers and employees. It
may, therefore, be said that while under Commonwealth Act No. 444 a public utility is
not required to pay additional compensation to its employees and workers for work
done on Sundays and legal holidays, there is, however, no prohibition ofr it to pay
such additional compensation if it voluntarily agrees to do so. The NAWASA
committed itself to pay this additional compensation. It must pay not because of
compulsion of law but because of contractual obligation (11 SCRA 766, 776).
The settled NAWASA doctrine should not be disturbed.
B
PAL also vigorously argues that the unions' longstanding silence with respect, and acquiescence, to
PAL's method of computation has placed them in estoppel to impugn the correctness of the
questioned wage formula. PAL furthermore contends that laches has likewise set in precisely
because of stich long-standing inaction.

Our jurisprudence on estoppel is, however, to the effect that:

... (I)t is meet to recall that "mere innocent silence will not work estoppel. There must
also be some element of turpitude or neglignece connected with the silence by which
another is misled to his injury" (Civil Code of the philippines by Tolentino, Vol. IV, p.
600) ... [Beronilla vs. GSISK, G.R. No. L-21723, Nov. 26, 1970, 36 SCRA 44, 46, 55,
emphasis supplied].
In the case befor US, it is not denied that PAL's formula of determining daily and hourly rate of pay
has been decided and adopted by it unilaterally without the knowedge and express consent of the
employees. It was only later on that the employees came to know of the formula's irregularity and its
being violative of the collective bargaining agreements previously executed by PAL and the unions.
Precisely, PALSA immediately proposed that PAL and the unions. Precisely, PALSA immediately
proposed that PAL use the correct method of computation, which proposa PAL chose to ignore.
Clearly, therefore, the alleged long-standing silence by the PAL employees is in truth and in
fact innocent silence,which cannot place a party in estoppel.
The rationale for this is not difficult to see. The doctrine of estoppel had its origin in equity. As such,
its applicability depends, to a large extent, on the circumstances surrounding a particular case.
Where, therefore, the neglect or omission alleged to haveplaced a party in estoppel cannot be
invoked. This was the essence of OUR ruling in the case of Mirasol vs. Municipality of Tabaco (43
Phil. 610, 614). And this, in quintessence, was the compelling reason why in Lodovica vs. Court of
Appeals (L-29678, July 18, 1975, 65 SCRA 154, 158), WE held that a party who had no knowledge
of or gave no consent to a transaction may not be estopped by it.
Furthermore, jurisprudence likewise fortifies the position that in the interest of public policy, estoppel
and laches cannot arrest recover of evertime compensation. The case of Manila Terminal Co. vs.
CIR (G.R. NO. L-9265, April 29, 1957, 91 Phil. 625), is squarely in point. In this case We intoned.
The principle of estoppel and laches cannot well be invoked agains the Association.
In the first place, it would be contrary to the spirit of the Eight-Hour Labor Law, under
which, as already seen, the laborers cannot waive their right to extra compensation.
In the second place, the law principally obligates the employer to observe it, as much
so that it punishes the employer for its employer for its violation and leaves the
employee or laborer is in such a disadvantageous position as to be naturally
reluctant or even apprehensive in asserting any claim which may cause the
employher to devise a way for exercising his right to terminate the employment.
If the principle of estoppel and laches is to be applied, it may bring about a situation,
whereby theemployee or laborer, who cannot expressly renounce their right to extra
compensation under the Eight-Hour Labor Law, may be compelled to accomplish the
same thing by mere silence or lapse of time,thereby frustrating the purpose of the
law by indirection (91 Phil. 625, 633, emphasis supplied).
In another count, the unilateral adoption by PAL of an irregular wage formula being an act against
public policy, the doctrine of estoppel cannot give validity to the same (Auyong Hian vs. Court of Tax
Appeals, 59 SCRA 110, 112).
II
G.R. No. L-31341 is an appeal from that portion of the en banc resolution of the Court of Industrial
Relations dated October 9, 1969 in case 43-IPA making the payment of the adjudicated pay
differentials effective only from July 1, 1957.
In their lone assignment of error, February 14, 1953, or ten (10) years from the date of the filing of
their original complaint; because the claim for pay differentials is based on written contracts i.e.,
the collective bargaining agreements between PAL and the employees' representative uniuons
and under Article 1144(1) of the Civil Code, actions based on written contracts prescribe in ten (10)
years.

PAL, on the other hand, maintains that the employees' claim for pay differential is"an action to
enforce a cause of action under the Eight-Hour Labor Law (CA No. 444, as amended): (p. 592, rec.,
G.R. No. L-31341). As such, the applicable provision is Section 7-a of CA No. 4444, which reads:
Sec. 7-a. Any action to enforce any cause of action under this Act shall be
commenced within three years after the cause of action accrued, otherwise such
action shall be forever barred; provided, however, that actions already commenced
before the effecitve date of this Act shall not be affected by the period herein
prescribed (As amended by Rep. Act No. 1993, approved June 22, 1957, emphasis
supplied).
Moreover, PAL argues that even assuming that the issue calls for the application of Article 1144(1) of
the New Civil Code, a general law, still in case of conflict, Commonwealth ACt No. 444, as amended,
should prevail because the latter is a special law.
WE believe that the present case calls for the application of the Civil Code provisions on the
prescriptive period in the filing of actions based on written contracts. The rason should be fairly
obvious. Petitioners' claim fundamentally involves the strict compliance by PAL of the pvosions on
wage computation embodied in the collective bargaining agreements inked between it and the
employees representative unions. These collective bargaining agreements were: the PAS-PALEA
collective bargaining agreement of 1952-53; the PAL-PALEA collective bargaining agreement of
1956-59; the PAL-PALEA collective bargaining agreement of 1959-61 (with Article VI as
supplement); the PAL-PALEA agreement of September 4, 1961; the PAL-ACAP collective bargaining
agreement of 1952-54; the PAL-ACAP collective bargaining agreement of September 6, 1955; the
PAL-ACAP collective bargaining agreement of 1959-61; the PAL-PALSA collective bargaining
agreement of 1959-62; and the supplementary PAL-PALSA collective bargaining agreement (pp. 5455, rec., G.R. No. L-31343).
The three-year prescribed period fixed in the Eight-Hour Labor Law (CA No. 444, as amended) will
apply, if the claim for differentials for overtime work is solely based on said law, and not on a
collective bargaining agreement or any other contract. In the instant cases, the claim for overtime
compensation is not so much because of Commonwealth Act No. 444, as amended, but because the
claim is a demandable right of the employees, by reason of the above-mentioned collective
bargaining agreements. That is precisely why petitioners did not make any reference as to the
computation for overtime work under the Eight-Hour Labor Law (Secs. 3 and 4, CA No. 444), and
instead inissited that work computation provided in the collective bargaining agreements between
the parties be observed. Since the claim for pay differentials is principally anchored on the written
contracts between the litigants, the ten-year prescriptive period between the litigants, the ten-year
prescriptive period provided by Art. 1144(1) of the New Civil Code should govern. (General
Insurance and Surety Corp. vs. Republic, L-13873, January 31, 1963, 7 SCRA 4; Heirs of the
Deceased Juan Sindiong vs. Committee on Burnt Areas and Improvements of Cebu, L-15975, April
30, 1964, 10 SCRA 715; Conde vs. Cuenca and Malaga, L-9405, July 31, 1956; Veluz vs. Veluz, L23261, July 31, 1968, 24 SCRA 559).
Finally, granting arguendo that there is doubt as to what labor legislation to apply to the grievances
of the employees in the cases at bar, it is OUR view that that legislation which would enhance the
plight of the workers should be followed, consonant with the express pronouncement of the New
Civil Code that:
In case of doubt, all labor legislation and labor contracts should be construed in favor
of the safety and decent living of the laborer (Article 1702).
WHEREFORE, THE APPEALED RESOLUTION IS HEREBY AFFIRMED, WITH THE
MODIFICATION THAT PAY DIFFERENTIALS BE PAID EFFECTIVE FEBRUARY 14, 1953. WITH
COSTS AGAINST PHILIPPINE AIR LINES, INC. IN BOTH CASES.
G.R. No. L-17871
January 31, 1964

MANILA RAILROAD COMPANY, petitioner,

vs.
COURT OF INDUSTRIAL RELATIONS and STATION EMPLOYEES' UNION, respondents.
PADILLA, J.:
These are petitions for review by writ of certiorari three (3) identical orders or judgments rendered by
respondent Court of Industrial Relations on 20 October 1960 in C.I.R. Case No. 1123-V (G.R. No. L17871); 1 September 1960 in C.I.R. Case No.
1160-V (G.R. No. L-18200); and 22 August 1960 in C.I.R. Cases Nos. 17-IPA-(4) and 18-IPA-(2)
(G.R. Nos. L-18160 and L-18249) which were all affirmed by the Court sitting en banc on 16
November 1960, 17 October 1960 and 17 September 1960, respectively.
CASE NO. 1123-V
On 28 October 1958, respondent Union, a legitimate labor organization representing 800 station
employees of the Manila Railroad Company, a Government owned or controlled corporation, filed a
petition in the Court of Industrial Relations which was docketed as Case No. 1123-V entitled
"STATION EMPLOYEES' UNION versus MANILA RAILROAD COMPANY," alleging that about 40%
of its members had worked more than eight (8) hours a day and had not been paid an additional
compensation in accordance with law; that since 1 July 1957 the members of the respondent Union
had worked more than forty (40) hours a week and had not been paid an additional compensation in
violation of the provisions of Republic Act No. 1880 and Executive Order No. 251; that inspite of
repeated demands the petitioner company had refused to implement and comply with Republic Act
No. 1880; that this dispute is likely to cause a strike or lockout and is therefore imperative for the
Court of Industrial Relations to take a hand in the matter for the preservation of industrial peace; and
praying that the working hours of its members in excess of 8 hours a day and in excess of 40 hours
a week and 5 days a week be determined, and that the Manila Railroad Company be ordered to
comply with Commonwealth Act No. 444 and Republic Act No. 1880 and to pay to the workers
involved the deficiency in the salaries already paid and/or to be paid.
On 11 November 1958, the Manila Railroad Company moved for the dismissal of the petition for lack
of jurisdiction, but the Court of Industrial Relations deferred action on the motion until after trial. On
26 December 1958, the Manila Railroad Company filed its answer to the petition denying specifically
the allegations of the respondent Union, and alleging, by way of special and affirmative defenses,
that the petition states no valid cause of action; that the Court of Industrial Relations has no
jurisdiction over the subject matter of the action or suit; that the respondent Union is estopped from
demanding full implementation of Republic Act No. 1880 in connection with Executive Order No.
251, Series of 1957; that the nature of the work performed by the members of the respondent Union
is such that services has to be rendered every day because the exigencies of the services so
require, and for that reason they are not entitled to the benefits of the aforesaid law; that the
respondent Union's claim for overtime compensation rendered by some of its members had already
prescribed; and that granting without admitting that under Republic Act No. 1880, Saturdays are
legal holidays insofar as government corporations are concerned, the Manila Railroad Company,
however, is exempt under Commonwealth Act No. 444 from paying additional compensation for
being a public utility corporation. 1wph1.t
On 20 October 1960, after trial, the Court of Industrial Relations rendered judgment holding that it
has jurisdiction to implement Republic Act No. 1880; that the Manila Railroad Company is not among
those exempted from the coverage of Republic Act No. 1880; that the Manila Railroad Company
being a public utility, work rendered on the 6th and 7th day of the week should be treated as work in
any ordinary working day in the computation of overtime compensation; and ordering the Manila
Railroad Company to implement Republic Act No. 1880 and to pay double for work rendered on the
6th and 7th day of the week in accordance with its previous decision in Case No. 368-V, the Chief
Examiner of the Court or any of his assistants to make the necessary examination of the petitioner
company's (Manila Railroad Company) pertinent records to determine the services rendered by the
Union members on the 6th and 7th day of the week and to compute the corresponding pay including

overtime compensation commencing from the payroll period ending 31 October 1955 up to the
present.
On 28 October 1960, the Manila Railroad Company filed a motion for reconsideration alleging that
the said order of the Court of Industrial Relations of 20 October 1960 is contrary to law and the facts.
On 16 November 1960, the Court of Industrial Relations sitting in banc denied the motion.
Thereupon, the Manila Railroad Company filed the petition in this Court, G.R. No. L-17871.
CASE NO. 1169-V
On 5 February 1959, respondent Union, a legitimate labor organization representing about 213 crew
employees in the Manila and in the Northern and Southern Lines of the Manila Railroad Company,
filed a petition in the Court of Industrial Relations which was docketed therein as Case No. 1169-V
entitled "MRR YARD CREW UNION versus MANILA RAILROAD COMPANY".
The facts alleged in the petition are substantially the same as those pleaded in the petition of the
preceding ease, except that they had been paid additional compensation for work done in excess of
40 hours and more than five days a week from 1 January to 30 April 1958 and from 16 May 1958 up
to the date of the filing of the petition and that they had to engage the services of an attorney. So in
this case the claim for unpaid additional compensation for work done in excess of the legal hours
and days a week is from 1 July 1957 to 31 December 1957 and from 1 to 15 May 1958. The prayer
is the same as that in the preceding case with an additional prayer for lawful interest and reasonable
attorney's fees.
A motion to dismiss the petition for lack of jurisdiction over the subject matter of the action or suit
filed by the Manila Railroad Company on 10 February 1959 was denied in an order entered on 18
March 1959.
The answer filed by the Manila Railroad Company is substantially the same as that filed in the
preceding case, with an additional allegation that pursuant to Article VII of the Collective Bargaining
Agreement of 4 November 1957 entered into between the Manila Railroad Company and the
"Kapisanan Ng Mga Manggagawa sa Manila Railroad Company" which is the authorized
representative of the respondent Union, the days and the hours of labor of the members of the Union
who are directly connected with the operation of trains and buses; has been staggered and adjusted
by the department heads concerned to avoid disruption of the continuous operation of trains and
buses; that as staggered and adjusted, the days and hours of labor of members of the Union who
are directly connected with the operation of trains and buses do not exceed 40 hours a week
although their off days may not necessarily fall on Saturdays and Sundays; that under the facts and
the law the Union is not entitled to the relief prayed for, and prayer that the petition be dismissed.
The parties entered into a stipulation of facts, the pertinent portions of which as quoted in the Order
of the Court of Industrial Relations dated 1 September 1960 are as follows:
1. That on June 22, 1957, Republic Act No. 1880 otherwise known as the 40-Hour 5-Day a
Week Law, was enacted and, as implemented by Executive Order No. 251 by the President
of the Philippines, was made effective July 1, 1957;
2. ...
3. ...
4. That member of petitioner working at the Manila Terminal comprising the Tutuban Station,
Caloocan Station and local stations up to Paco Station worked six (6) days a week from July
1, to December 31, 1957, and five (5) days a week from January 1, 1958 to the present;
5. That members of petitioner in the Northern Lines compensation comprising the stations
from Meycauayan to San Fernando, La Union and Branches, and Southern Lines comprising
from Culi-Culi to Legaspi and Branch, worked from six (6) to seven (7) days a week from July
1 to December 31, 1957: six (6) days a week from January 1, 1958 to February 28, 1959;
and five (5) days week from March 1, 1959 to the present time:
6. That the one (1) or the two (2) days off given to member of petitioner, as the case may be,
mentioned in the next preceding paragraphs, are staggered and/or adjusted so that their off

days do not necessarily fall on Saturdays and Sundays; that neither do they enjoy their off
days at the same time; and, that this procedure or practice was done in order to avoid
disruption continuous operation of trains:
7. ...
8. ...
9. That respondent granted two (2) days off in a week effective January 1, 1958 to yard crew
in the Manila Terminal although the two (2) days off do not necessarily fall on Saturday and
Sundays:
10. That other matters not included in this Partial Stipulation of Facts, will be subject of
evidence in court.
On 1 September 1960, after hearing, the Court of Industrial Relations rendered judgment holding
that it has jurisdiction of overtime compensation cases in accordance with the opinion of the
Supreme Court in the case ofPrice Stabilization vs. CIR, et al. G.R. No. L-13806, promulgated on 23
May 1960; that while it is true this Republic Act No. 1880 does not provide for payment of service
rendered in excess of 40 hours or 5 days a week, yet the aforementioned law is complemented by
C.A. No. 444, as amended, the law on overtime compensation; that this must be so for otherwise
work rendered on the 6th and 7th days of the week would not be compensable; that this petition is
affected by the decision of the respondent Court in Case No. 368-V, insofar as the 7th day is
concerned; that since the Manila Railroad Company had already given the benefit of the law to other
employee since 1 July 1957, justice, and equity demand that other employees should be entitled to
the same benefits; that because the Manila Railroad Company is a public utility, work rendered on
the 6th and 7th day of the week in excess of eight hours a day should be treated as an ordinary day
in the computation of overtime compensation; and that the members of the Union who had worked
on the 6th and 7th day of the week should be paid double compensation in accordance with the
decision of the respondent court in Case No. 368-V, and ordering its Chief Examiner or any of his
assistants to proceed to the premises of the Manila Railroad Company and make the necessary
examination of the daily time records or any pertinent records of the members of the Union for the
purpose of determining the services rendered by them (the union members) on the 6th and 7th day
of the week or for every seven days of service, and compute their corresponding pay including
overtime compensation from 1 July 1957 up to the present and submit a report to the Court for its
further disposition.
A motion for reconsideration of the judgment thus rendered filed by the Manila Railroad Company on
9 September 1960 was denied by the Court of Industrial Relations sitting in banc on 17 October
1960. Thereupon, the Manila Railroad Company filed a petition in this Court, G.R. No. L-18200.
CASES Nos. 17-IPA-(4) and 18 IPA-(2)
On 4 November 1958, respondents "Union de Maquinistas, Fogoneros y Motormen" and "Union de
Empleados de Trenes", simultaneously filed two (2) separate but identical petitions in two (2) cases
then pending before the Court of Industrial Relations between the Unions and the Manila Railroad
Company arising from a strike staged by the Unions against the Manila Railroad Company on the
6th and 7th of October, 1957, certified by the President of the Philippines to the respondent court for
compulsory arbitration. These incidental petitions were docketed in said court as Cases Nos. 17-IPA(4) and 18-IPA-(2) titled "Union de Maquinistas, Fogoneros y Motormen versus Manila Railroad
Company" and "Union de Empleados de Trenes vs. Manila Railroad Company," respectively. After
alleging that in a motion dated 28 October 1958 the Union withdrew their additional demands set
forth in their amended petitions dated 1 February 1958 in order that the consideration of the
"additional demands" may not interfere with the disposition of the principal demands in each of main
cases without prejudice to submitting the same separate incidental cases, the rest of the allegations
in petition is the same as those in the two preceding cases concerning their claim for compensation
for services rendered in excess of 40 hours or 5 days a week.

On 18 November 1958, the Manila Railroad Company filed two (2) separate identical answers to
both petition setting up substantially the defense as that pleaded in two preceding cases and praying
for the dismissal of two petitions.
On 22 August 1960, after hearing, the Court of Industrial Relations rendered a judgment similar to
that the two preceding cases. The judgment added that regard to the locomotive drivers, firemen and
motormen, only the engine crew of switcher services and passenger trains have enjoyed the benefits
of the law and only September 1957, while the engine crew assigned to freight trains have not
enjoyed said benefits at all; that in case of train crew such as conductors, assistant conductors,
route agents, assistant route agents, and porters all have not enjoyed the benefits of the law.
A motion for reconsideration of the judgment thus rendered in the two cases filed by the Manila
Railroad Company on 27 August 1960 was denied by the respondent Court sitting en banc on 17
September 1960. Thereupon, the Manila Railroad Company filed a petition for review the judgment
in both cases (G.R. Nos. L-18160 and L-18249).
The Manila Railroad Company, a government-owned or controlled corporation, petitioner in the four
cases, contends that the respondent court has no jurisdiction over the controversy submitted to it for
judgment by the respondent labor unions; and that R.A. No. 1880 cannot be applied to it.
As the claim and demand for compensation for work done in excess of the hours prescribed by law,
which the employer has refused to pay, is a dispute that, if it is not settled, might to, a strike by the
workers and employees of the railroad company who are still in its employ, the respondent court has
jurisdiction to take cognizance, hear and decide the controversy.1
As to whether Act No. 1880 and Executive Order No. 251, series of 1957, apply to the Manila
Railroad Company, or, stated in another way, whether the Manila Railroad Company is included in
the aforesaid Act and Executive Order, suffice it to quote Section 3 of R.A. 1880
The provisions of existing law to the contrary notwithstanding, this Act shall also be
applicable to all laborers employed in government-owned and controlled corporations.
and part of the Executive Order which states "government-owned or controlled corporations;" and as
the Railroad Company does not come under the exceptions mentioned or provided in the Act and
Executive Order to wit: schools, courts hospitals and health clinics ... that are not bound to obey,
fulfill and comply with R.A. No. 1880 and Executive Order No. 251, series of 1951, it cannot require
or compel its laborers and employees to work in excess of the hours limited by the statute. And if it
does require to work in excess of the time limited by law, it has to pay compensation for overtime
work done or service rendered to it at the same rate as their regular wages or salary, plus at least
twenty-five per centum additional. (Sec. 3, C.A. No. 444.)
As to work done or service rendered during Sundays and legal holidays, the prohibition to the
employer of compulsion on the worker and employee to work or render service on those days, set
aside for the rest of the latter, may be avoided by the employer by paying the laborer employee his
regular remuneration, wages or salary an additional sum of at least twenty-five per cent his
remuneration, wage or salary. And this prohibit compel the laborer or employee to work on Sunday
legal holidays does not apply to public utilities performing some public service such as ... providing
means of transportation or communication (Section 4, C.A. No. 444). In other words, a public utility
such as the petitioner Railroad, Company providing means of transportation compel its laborers and
employees to work even on Sundays and legal holidays and pay them their regular wage or salary
for the day, unless the work done or service rendered is more than eight hours a day, in which the
laborer or employee must be paid for such overtime work performed or service rendered at the same
their regular wage or salary, plus at least twenty five per centum additional. The attention of the
Court has not been called to any law which requires the employer to pay twice as much or double
remuneration, wage or salary for work done or service rendered by the laborer or employee during
Sunday and legal holidays.
The orders or judgments under review are modified so far as it grants double compensation for work
or service rendered on the 6th and 7th days of the week, for under C.A. No. 444, they are entitled to
their regular or salary if the work done or service performed on days does not exceed eight hours,

and if it exceeds hours, the laborer or employee must be paid for such time work done or service
performed an additional or salary of at least twenty-five per centum of his salary wage or salary. The
rest of the judgments under being in accordance with law, the claim having been within the period
provided in R.A. No. 1993, is affirmed without pronouncement as to costs.
G.R. No. L-16223
February 27, 1962
FERMIN REOTAN, plaintiff-appellee,
vs.
NATIONAL RICE AND CORN CORPORATION, defendant-appellant.
G.R. No. L-16224
February 27, 1962
SILVESTRE REOTAN, plaintiff-appellee,
vs.
NATIONAL RICE AND CORN CORPORATION, defendant-appellant.
CONCEPCION, J.:
Appeal by the National Rice and Corn Corporation, hereafter referred to as the NARIC, from a
decision of the Court of First Instance of Manila in the above entitled three (3) cases, which were
jointly tried, sentencing the NARIC: (a) in Case No. 27483 (CA-G.R. No. 20151-R), to pay to Fermin
Reotan P5,806.61, with interest thereon at the rate of 6% per annum from September 14, 1955, plus
P500.00 as attorney's fees, and the costs; (b) in Case No. 27484 (CA-G.R. No. 20152-R), to pay to
Silvestre Reotan P3,647.03, with interest at the same rate and from the same date, and P500 as
attorney's fees, as well as the costs; and (c) in Case No. 27485 (CA-G.R. No. 20153-R), to pay to
Praxedes Balane P3,819.48, with the same rate of interest and from the same date, aside from P500
as attorney's fees, in addition to the costs.
Plaintiffs Fermin Reotan, Silvestre Reotan and Praxedes Balane were guards-watchmen in the
agencies or branches of the NARIC in Naga, Camarines Sur, Tabaco, Albay, and Daet, Camarines
Norte, respectively, the first, from December 1, 1946 to March 31, 1954, the second, from July 12,
1949 to February 12, 1954, and, the last, from September 12, 1949 to March 31, 1952. Inasmuch as
these agencies had each only two (2) guards-watchmen, the latter had been required by their
immediate superiors to work in two (2) shifts of 12 hours daily each, except when they were on
vacation or sick leave of absence. Having made demands of payment of the corresponding overtime
compensation which were not heeded by the NARIC, on July 15, 1954, plaintiffs filed their respective
claims for overtime with the Wage Administration Service, which, on February 16, 1955, rendered
decision in their favor. Inasmuch as, this notwithstanding, the NARIC persisted in its refusal to pay
said compensation, plaintiffs instituted the present separate actions, which were jointly heard and
disposed of in one decision, as above stated.
That plaintiffs had rendered the overtime services aforementioned has been fully established, not
only by their testimony and that of the corresponding officers-in-charge of the agencies of the NARIC
in Naga, Tabaco, and Daet, but, also, by their respective time-records, most of which duly certified
and found correct as to the prescribed office hours, and bearing the signatures of the officers-incharge were introduced in evidence. It was, also, proven satisfactorily that, some time-records
had been destroyed by anay, and consequently, could not be produced in court, and that said
overtime services were rendered by order of the aforementioned officers-in-charge, because it was
necessary to protect the properties of the NARIC therein and because the request of said officers for
authority to engage additional guards had not been approved by the management.
Upon the other hand, the NARIC maintains: (1) that its President-Manager had ordered that "except
in special cases of overtime work specifically approved by the management to be with pay, no
payment of overtime work will be approved", for pursuant to Resolution No. 479 of its Board of
Directors, "no overtime nor meal allowance shall be allowed unless previously approved by the
General Manager and only in cases of absolute necessity"; (2) that this case should be dismissed
because, upon petition filed by the NARIC Workers' Union in Case No. 746-V(8) of the Court of
Industrial Relations, the same extended to the NARIC workers in the provinces, the benefits of a
partial decision, rendered in said case, on February 16, 1953, granting differential pay to NARIC

workers in Manila who had rendered night work, overtime and work on Sundays and legal holidays,
for which reason an examiner of the Court of Industrial Relations reported thereto, inter alia, that
plaintiffs herein, namely, Fermin Reotan, Silvestre Reotan and Praxedes Balane were entitled for
such work, during the period from February 1945 to January 1953, to the sum of P5.82, P193.30 and
P151.23, respectively; (3) that the Eight-Hour Labor Law is inapplicable to the NARIC; and (4) that
the period during which said plaintiffs were on leave of absence should not have been included in
the computation of the amounts due them by way of overtime according to the decision appealed
from.
1. The authority of the officers-in-charge of the NARIC agencies in Naga, Tabaco and Daet to
require plaintiffs herein to render overtime services is not questioned. What the NARIC
contests is its obligation to pay for the aforementioned services, its President-Manager
having specifically instructed said officers-in-charge, in pursuance of a resolution of the
Board of Directors that there would be no compensation for said services "unless previously
approved by the General Manager and only in cases of absolute necessity". The lower Court
overruled this pretense upon the ground that: .
Section 6 of Commonwealth Act No. 444 specifically provides that 'any agreement or
contract between the employer and the laborer or employee contrary to the provision
of this Act shall be null and void ab initio'. Even in cases of disaster or calamity, to
prevent loss of life and property, Section 3 of said Commonwealth Act No. 444
provides that 'in all such cases the laborers and employees shall be entitled to
receive compensation for the overtime work performed at the same rate as the
regular wages or salary, plus at least 25 per centum additional'. Section 4 of the
same Act provides that 'no person, firm, or corporation ... shall compel an employee
or laborer to work during Sundays and legal holidays, unless he is paid an additional
sum of at least 25 per centum of his regular remuneration." .
We are fully in accord with this view, which is in line with our decision in Manila Railroad Co.
vs. CIR, G.R. No. L-4614 July 31, 1952) in which he held that: .
If the work performed was necessary, or that it benefited the company or that the
employee could not abandon his work at the end of his eight hour work because
there was no substitute ready to take his place and he performed overtime services
upon the order of his immediate superior, notwithstanding the fact that there was a
standing circular to the effect that before overtime work may be performed with pay,
the approval of the corresponding department head should be secured, such
overtime services are compensable inspite of the fact that said overtime services
were rendered without the prior approval of the Department Head.
2. On August 3, 1954 when the petition of counsel for the NARIC Workers Union for
extension, to the NARIC employees in the provinces, of the benefits of the partial decision in
Case No. 746-V(8) of the Court of Industrial Relations, dated February 16, 1953, granting
additional compensation or differential pay to NARIC employees in Manila for overtime work
and work rendered on Sundays and legal holidays, was filed plaintiffs herein were no
longer employees of the NARIC. Hence, insofar as they are concerned, said petition involved
no more than an ordinary claim for the recovery of a sum of money, which was beyond the
jurisdiction of the Court of Industrial Relations (Mindanao Bus Employees Labor Union vs.
Mindanao Bus Co., G.R. No. L-9795, December 28, 1957; Price Stabilization Corp.
[PRISCO] vs. CIR. et al., L-13806, May 23, 1960; Ajax International Corp. vs. Seguritan, et
al., L-16038, October 25, 1960; Sampaguita Pictures, Inc., et al. vs. CIR, et al., L-16404,
October 25, 1960; Pan American World Airways System [Philippines] vs. Pan American
Employees Association, L-16275, February 23, 1961; Philippine Wood Products, et al. vs.
CIR, et al., L-15270, June 30, 1961; Manila Port Service, et al. vs. CIR, et al., L-16994, June
30, 1961).
What is more, it appears from the affidavits of plaintiffs herein neither the admissibility nor
the accuracy of which has been impugned by the NARIC that the attorney for the NARIC

Workers' Union who filed said petition had not been authorized by said plaintiffs to represent
them in the aforementioned Case No. 746-V(8). Indeed, months before the presentation of
the above-mentioned petition of counsel for the NARIC Workers' Union, or on July 15, 1954,
plaintiffs herein had filed with the Wage Administration Service of the Department of Labor
their respective claims for the overtime services involved in the cases at bar.
Again, the same were filed on September 14, 1955, or ten (10) months before the filing of
the report of the examiner of the Court of Industrial Relations, dated July 10, 1956, stating
that the amounts due to plaintiffs herein as differential pay were P5.82, P193.80 and
P151.23, respectively. In any event, the NARIC does not claim that this report of the
examiner has been approved by said court. Hence, the plea of res adjudicata is groundless
and the lower court did not err in sustaining its jurisdiction to hear and decide these
cases. 1wph1.t
3. In support of the theory that the Eight Hour Labor Law is inapplicable thereto, the NARIC
relies upon the case of Tabora vs. Montelibano (52 Off. Gaz., 3058), in which we held that
employees of the NARIC may not be removed except in accordance with the provisions of
the Civil Service Law and regulations. Being concerned merely with the fixity of the tenure of
such employees, said case is not decisive on the question under consideration.
The Civil Service Law was, also, invoked the Price Stabilization Corporation vs. Court of
Industrial Relations,G.R. No. L-9797 (November 29, 1957) and Price Stabilization
Corporation vs. Court of Industrial Relations, No. L-9288 (December 29, 1958), to bolster up
the theory that the Eight Hour Labor Law was not applicable to the petitioners in both cases.
Yet, this contention was overruled, upon the ground that "section 10, Executive Order No.
350, Series of 1951, providing that officers and employees of the PRISCO are subject to the
Civil Service Law ... refer to the fixed tenure of office of its officers and employees who may
be removed only for cause as provided by law", citing precisely the case, among others,
of Tabora vs. Montelibano, supra. Moreover, we then said explicitly that the PRISCO.
... is a government-owned corporation run and operated like any ordinary corporation
which may realize profits and incur losses and the jurisdiction of the Court of
Industrial Relations in labor disputes involving government-owned corporations is
recognized. Moreover, it is a well-established doctrine that when the Government
engages in business, it abdicates part of its sovereign prerogatives and descends to
the level of a citizen, and thereby subjects itself to the laws and regulations
governing the relation of labor and management. Additional compensation for
overtime, Sundays and legal holidays' work, and for night time work, have been
granted to labor.
The applicability of this ruling to the NARIC becomes more apparent when we consider that
the same, like the Price Stabilization Corporation (PRISCO), has been credited inter alia to
stabilize prices with the only difference that the former is concerned with those of rice and
corn (Republic Act No. 663, Section 1), whereas the latter seeks to prevent "scarcity,
monopolization, hoarding, speculation, manipulation and profiteering affecting the supply,
distribution and movement" (and hence we stabilize the price) not only of rice and corn, but,
also of other products and that the Civil Service Law has been made applicable to the
NARIC by the same Executive Order No. 399, Series of 1951, which extended its operation
to the PRISCO.
4. It appearing that Fermin Reotan had been on leave of absence for 36 days and that
Silvestre Reotan and Praxedes Balane had been absent for one (1) day and four (4) days,
respectively, and that these absences had not been considered in computing the overtime
compensation due said plaintiffs, it is clear that the corresponding deductions should be
made therefrom.
With this modification, the decision appealed from is hereby affirmed, therefore, in all other respects,
and let these cases be remanded to the lower court for determination of the amount of said
deductions, without special pronouncement as to the costs of this instance. It is so ordered.

G.R. Nos. L-51612-13 July 22, 1986

GLOBAL INCORPORATED, petitioner,
vs.
HON. COMMISSIONERS DIEGO D. ATIENZA, GERONIMO Q. QUADRA and CLETO T.
VILLATUYA, and CLARITA ROSAL, respondents.
Federico V. Ganaden for private respondent.
PARAS, J.:
The instant petition for "Certiorari, mandamus with Preliminary Injunction and/or Restraining Order",
seeks a review of the Decision dated June 28, 1979 of the National labor Relations Commission,
which modified on appeal the decision of the Labor Arbiter Miguel P. Soriano, Jr. in NLRC Case Nos.
RB-IV-9962-77 and RB-IV-11544-77 entitled"Clarita Rosal vs. Global Incorporated"
From the records, what appear undisputed are the following:
Clarita Rosal, herein private respondent, commenced her employment with petitioner Global
Incorporated in February, 1970, as a "Sales Clerk" with a salary of P450.00 a month.
On November 11, 1976 Global Inc. filed with the Department of Labor, Regional Office No. 4, an
application for clearance to terminate the services of Clarita Rosal, for having violated company
rules and regulations by incurring repeated absences and tardiness. (Case No. T-IV-11-7480-76)
The subject employee was placed under preventive suspension on November 16, 1976 pending
resolution of the application for clearance.
On December 3, 1976, Clarita Rosal filed her opposition to the clearance application as well as a
counter-complaint against Global Inc., for illegal dismissal, overtime pay and premium pay. (Case
No. RB-IV-9962-77)
On February 3, 1977, the officer-in-charge of Regional Office No. 4, Ministry of labor, Vicente
Leogardo, Jr. lifted the preventive suspension of Clarita Rosal, finding her suspension not warranted,
and reinstated her to her former position without loss of rights and with full backwages from the time
of preventive suspension up to the date of her actual reinstatement. On the said issue of preventive
suspension, the officer-in-charge opined.
. . . , it appears that the continued presence of the subject employee does not pose a
serious and imminent threat to the life or property of the employer or co-employees.
Her tardiness does not in any way pose serious threat to the property of the
employer. As sales clerk, she was required to prepare reports and submit them
before closing of office hours in the afternoon. Herein complainant managed to
comply with such requirement without prejudice to company's interest.
Consequently, the hearings on the issue of termination and the counter-complaint for illegal
dismissal were consolidated and jointly held before Labor Arbiter Miguel P. Soriano, Jr., docketed
respectively as NLRC Case Nos. RB-IV-9962-77 and RB-IV-1154-77.
On May 31, 1978, the Labor Arbiter rendered his decision, the dispositive portion of which reads
WHEREFORE, all things considered, this complaint for illegal dismissal, overtime
compensation and premium pay is hereby ordered DISMISSED for lack of merit.
Accordingly, the clearance for complainant's termination is hereby GRANTED.
SO ORDERED.
Clarita Rosal appealed the aforesaid decision to the National Labor Relations Commission. On June
28, 1979, respondents, Commissioners Diego Atienza and Geronimo Quadra modified the appealed
decision as follows:
WHEREFORE, responsive to the foregoing, the following dispositions are made:
(a) respondent is ordered to pay complainant overtime pay at the rate of one hour
everyday starting Nov. 1, 1974 to Nov. 16, 1976 when she was suspended;

(b) respondent is likewise ordered to pay complainant backwages from Dec. 2, 1976
to May 31, 1978;
(c) the decision of the Labor Arbiter granting clearance to terminate the services of
the complainant is affirmed.
Compliance with the above orders is strictly enjoined and the respondent-appellee is
further ordered to submit to the Commission proof of compliance with this Decision
after ten (10) days from receipt of the same.
SO ORDERED.
Respondent Commissioner Cleto T. Villatuya voted to affirm the Labor Arbiter's decision.
Hence, the instant petition praying that after hearing, judgment be rendered reversing or declaring
the assailed decision null and void and affirming in toto the decision of the Labor Arbiter Miguel P.
Soriano, Jr.; to order the private respondent Clarita Rosal to pay the petitioner the sum of Two
Thousand Pesos (P2,000), as and for attorney's fees and to pay costs of suit; and that pending the
adjudication of the case on the merits, a writ of preliminary injunction or restraining order be issued
against the respondents or their representatives restraining them from executing or enforcing the
assailed decision.
In the Resolution of this Court dated Oct. 17, 1979 respondents were required to file their comment
within ten (10) days from notice. In the same resolution, a temporary restraining order was issued
enjoining the respondents from enforcing and/or carrying out the assailed decision.
In the subsequent Resolution dated March 21, 1980 this Court, acting on the Petition as well as the
respondents' Comments and petitioner's Reply to the said Comments resolved to give due course to
the petition and required the parties to file their respective memoranda, after which the case was
deemed submitted for decision.
Petitioner takes issue with the ruling of the National Labor Relations Commission granting
backwages and overtime pay in favor of private respondent Clarita Rosal. Thus, it argues , that if
both the Labor Arbiter who tried the case and the National Labor Relations Commission which
reviewed the same, found the grounds of absenteeism and tardiness as valid and just causes to
terminate the employment of Clarita Rosal, the inevitable conclusion is that the preventive
suspension on the same grounds is likewise just and valid. If the suspension is just and valid, she is
not entitled to backwages. (Be it noted that under the Rules of the Ministry, an employee
placed unjustly under preventive suspension is entitled to be paid her wages, even if she does not
work during said period). On the issue of overtime pay, it is the contention of petitioner that the grant
of overtime pay in favor of Clarita Rosal at the rate of one hour everyday starting Nov. 1, 1974 to
Nov. 16, 1976 is not justified as there is nothing in the record except her bare allegations which
would show that she truly and actually rendered said overtime work. Besides it is highly improbable,
if not impossible for Clarita Rosal to have rendered continuous overtime services from Nov. 1, 1974
to Nov. 16, 1976, or a period of two (2) years including Sundays and holidays.
After a careful review of the evidence on record as well as the arguments of both parties, We rule
1. On the issue of overtime pay, We agree with the conclusion of the labor Arbiter that the same
should be denied for want of sufficient factual and legal basis. The evidence on record shows that
the office hours of the petitioner are from 8:00 in the morning to 5:00 in the afternoon, with noon
break from 12:00 noon to 1:00 p.m. from Monday thru Saturday. No employee is authorized to work
after office hours, during Sundays and Holidays unless required by a written memorandum from the
General Manager. During the period from Nov. 1, 1974 to Nov. 16, 1976, no employee of the
company was never required to work after 5:00 in the afternoon. Neither did the company require
any employee to work during Sundays or Holidays except on Nov. 1, 1976, on which date
respondent Clarita Rosal was requested to work through a written memorandum signed by the
General Manager. Respondent Rosal admitted this, and that she was properly compensated for her
work on said date (Exh. "10").
The claim of Clarita Rosal that she rendered overtime work from Nov. 1, 1974 to Nov. 16, 1976 has
not been substantiated by adequate evidence. Her time records for said period show that she had no

time-in and time-out during Sundays and Holidays. Except for some time records where there were
no time-outs in the afternoon, Rosal's time records show that she regularly left the office at or a few
minutes after 5:00 o'clock in the afternoon. The records where there were no time-outs in the
afternoon were sufficiently explained by petitioner's witness as due to a mechanical defect in the
office bundy clock. The same omission of time-outs was found in the records of the other employees,
but only respondent complained.
2. On the issue of backwages, the National Labor Relation Commission ordered petitioner to pay
Clarita Rosal "backwages from Dec. 2, 1976 to May 31, 1978", the date when Asst. Secretary
Vicente Leogardo, Jr., rendered his decision lifting the preventive suspension of Clarita Rosal and
ordering petitioner to reinstate her to her former position without loss of rights and with full
backwages from the time of preventive suspension up to the date of her actual reinstatement.
We agree. We note that this decision of the Labor Arbiter ordering reinstatement had not been
complied with. Neither was it appealed by petitioner, therefore, the decision had become final and
executory. To exempt petitioner from the payment of backwages would be to give premium to the
blant disregard of orders of the Ministry of Labor. Moreover, it would be in consonance with
compassionate justice that Clarita Rosal be paid backwages during the period that she was
supposed to be reinstated.
Note that the only ground for the imposition of preventive suspension is provided for under Sec. 4,
Rule XIV of the Implementing Regulations of the Ministry of Labor which readsSEC. 4. Preventive suspension. The employer may place the employee concerned
under preventive suspension only if the continued employment of the employee
poses a serious and imminent threat to the life or property of the employer or of the
co-employees. Any preventive suspension before the filing of the application shall be
considered worked days, and shall be duly paid as such if the continued presence of
the employee concerned does not pose a serious threat to the life and property of the
employer or of the co-employees.
As aptly held by Asst. Secretary Leogardo Jr. (Officer-in-charge of Regional Office No. IV of the
Ministry of Labor), the continued presence of Clarita Rosal never posed a serious and imminent
threat to the life or property of the employer or co-employees as would warrant her preventive
suspension.
Accordingly, the assailed decision of the National Labor Relations Commissions is MODIFIED as
follows:
(a) the decision granting clearance to terminate the services of private respondent Clarita Rosal is
affirmed;
(b) petitioner is ordered to pay private respondent backwages from Dec. 2, 1976 to May 31, 1978;
(c) petitioner is ordered to pay costs of suit.
SO ORDERED.
G.R. No. 76746
July 27, 1987
DURABUILT RECAPPING PLANT & COMPANY and EDUARDO LAO, GENERAL
MANAGER, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, HON. COMM. RICARDO C. CASTRO, HON.
ARBITER AMELIA M. GULOY, KAPISANAN NG MGA MANGGAGAWA SA DURABUILT and
REYNALDO BODEGAS, respondents.
GUTIERREZ, JR., J.:
This is a petition to review the May 16, 1986 resolution of respondent National Labor Relations
Commission (NLRC) affirming the Labor Arbiter's order in NLRC Case No. NCR-73162083. The sole
issue raised is the proper basis for the computation of backwages in favor of an illegally dismissed
employee.
The facts of the case are simple and uncontroverted.

On July 11, 1983, a complaint for illegal dismissal was filed by respondent Reynaldo Bodegas,
against petitioner Durabuilt, a tire recapping company.
In a decision rendered by the Labor Arbiter on February 13, 1984, the private respondent was
ordered reinstated to his former position with full backwages, from the time he was terminated up to
the time he is actually reinstated, without loss of seniority rights and benefits accruing to him.
The petitioners failed to file a seasonable appeal and entry of final judgment was made on July 8,
1985.
On August 8, 1985, the Acting Chief of Research and Information and the Corporation Auditing
Examiner of the then Ministry of Labor and Employment submitted a computation of backwages,
ECOLA, 13th month pay, sick and vacation leave benefits in favor of Reynaldo Bodegas in the total
amount of P24,316.38.
The petitioner filed its opposition to the computation on the ground that it contemplated a straight
computation of twenty six (26) working days in one month when the period covered by the
computation was intermittently interrupted due to frequent brownouts and machine trouble and that
respondent Bodegas had only a total of 250.75 days of attendance in 1982 due to absences.
According to the petitioner, Bodegas is entitled only to the amount of P3,834.05 broken down as
follows: salaries P1,993.00; ECOLA P1,433.50, and 13th month pay P407.55.
On October 23, 1985, the Labor Arbiter denied the opposition to the computation. The petitioner
appealed to the NLRC which, in an order dated May 16, 1986, affirmed the order of the Labor Arbiter
and dismissed the appeal.
Claiming grave abuse of discretion on the part of the public respondents, Durabuilt filed the instant
petition.
Backwages, in general, are granted on grounds of equity for earnings which a worker or employee
has lost due to his dismissal from work (New Manila Candy Workers Union (NACONWA-PAFLU v.
CIR, 86 SCRA 37).
The general principle is that an employee is entitled to receive as backwages all the amounts he
may have lost starting from the date of his dismissal up to the time of his reinstatement (Capital
Garment Corporation v. Ople, 117 SCRA 473; New Manila Candy Workers' Union (NACONWAPAFLU) v. CIR, supra).
In a line of cases, this Court has established a policy fixing the amount of backwages to a just and
reasonable levelwithout qualification or deduction (Insular Life Assurance Co., Ltd. Employees'
Association-NATU v. Insular Life Assurance Co., Ltd., 76 SCRA 501; Feati University Club v. Feati
University, 58 SCRA 395; Mercury Drug Co., Inc. v. CIR, 56 SCRA 694). The respondents center
their attention on the above underlined portion of this policy. Hence, their contention that the
deductions cited by the petitioners cannot be made.
In their bid to recover a greater amount of backwages, the rationale of the policy has escaped the
respondents' consideration. In Insular Life Assurance Employees Association-NATU v. Insular Life
Assurance Co., Ltd. (76 SCRA 50) we held that to fix the amount of backwages without qualification
or deduction simply means that the workers are to be paid their backwages fixed as of the time of
their dismissal or strike without deduction for their earnings elsewhere during their law-off and
without qualification of their backwages as thus fixed; i.e. unqualified by any wage increases or other
benefits that may have been received by their co-workers who were not dismissed or did not go on
strike. The principle is justified "as a realistic, reasonable and mutually beneficial solution for it
relieves the employees from proving their earnings during their law-offs and the employer from
submitting counter proofs. It was meant to obviate the twin evils of Idleness on the part of the
employees and attrition and undue delay in satisfying the award on the part of the employer" (New
Manila Candy Workers Union NACONWA-PAFLU v. CIR supra). The same was not to establish an
inflexible rule of computation of any Backwages due an employee.
The age-old rule governing the relation between labor and capital, or management and employee of
a "fair day's wage for a fair day's labor" remains as the basic factor in determining employees'
wages, and for that matter backwages. If there is no work performed by the employee there can be

no wage or pay unless, of course, the laborer was able, willing and ready to work but was illegally
locked out, or suspended (SSS v. SSS Supervisors Union-CUGCO, 117 SCRA 746).
The illegal dismissal of the private respondent is conceded by the petitioner. It is willing to pay
backwages. However, the petitioner argues that for days where no work was required and could be
done by its employees, no wages could have been earned and, thereafter, lost by said employees to
justify an award of backwages. We quote with approval the Solicitor General's comment,* to wit:
From the indubitable facts on record, it appears that petitioners have valid reasons to claim
that certain days should not be considered days worked for purposes of computing private
respondent's backwages since their business was not in actual operation due to brownouts
or power interruption and the retrenchment of workers they had during the period of private
respondent's dismissal.
It cannot be denied that during the past years particularly in 1983, there was chronic
electrical power interruption resulting to disruption of business operations. To alleviate the
situation, the government thru the Ministry of Trade and Industry called on the industrial
sector to resort to the so-called Voluntary Loan Curtailment Plan (or VLCP), whereby
brownouts or electrical power interruption was scheduled by area. The program while it may
have been called 1. voluntary" was not so as electrical power consumers had no choice then
due to the prevailing energy crisis.
Petitioners heeding the government's call, participated in the VLCP as indicated in their
statement of conformity dated November 23, 1982. Thus, beginning March 21, 1983 and
every Wednesday thereafter, petitioner's business (which indicentally is recapping rubber
tires) was not in actual operation. No less than the former Minister of Trade and Industry
expressed his gratitude to petitioners for participating in the VLCP. Petitioners substantiated
claim therefore, that the days during which they were not in operation due to the VLCP
should be excluded in the number of days worked for purposes of computing private
respondents backwages stands reasonable and should have been considered by the
corporation auditing examiner.1avvphi1
Moreover, as early as May 1978, the Ministry of Labor and Employment, thru Policy
Instruction No. 36, has said that
2. Brownouts running for more than twenty minutes may not be treated as hours worked
provided that any of the following conditions are present;
a) The employees can leave their work place or go elsewhere whether within or
without the work premises; or
b) The employees can use the time effectively for their own interest.
It is of record that during electrical power interruptions, petitioners business was not in
operation. This was never disputed by private respondent.
Petitioners' claim that the period (December 1983) during which they effected retrenchment
of workers owing to economic crisis then prevailing likewise appears plausible. There is
substantial evidence consisting of reports to MOLE and Social Security System showing that
petitioners had laid off workers due to lack of raw materials. The petitioners payrolls
submitted to support their objection to computation indicate that the number of working days
was reduced from the normal weekly six working days to four working days for a great
number of petitioners' workers. Obviously, private respondent could not have been among
those laid off, as at that time he was already dismissed by petitioner. (Rollo, pp. 31-34).
Thus, we have held that where the failure of workers to work was not due to the employer's fault, the
burden of economic loss suffered by the employees should not be shifted to the employer. Each
party must bear his own loss (SSS v. SSS Supervisors' Union-CUGCO, supra; Pan-American World
Airways, Inc. v. CIR, 17 SCRA 813). As pointed out by the Solicitor General
... to allow payment of backwages of P24,316.68 as ordered by public respondents instead
of P3,834.16 as petitioners claim and which appears to be just and reasonable under the
circumstances of this case would not only be unconscionable but would be grossly unfair to

other employees who were not paid when petitioners' business was not in operation. (Rollo,
p. 35).
Indeed, it would neither be fair nor just to allow respondent to recover something he has not earned
and could not have earned and to further penalize the petitioner company over and above the losses
it had suffered due to lack of raw materials and the energy-saving programs of the government. The
private respondent cannot be allowed to enrich himself at the expense of the petitioner company.
The computation of backwages should be based on daily rather than on monthly pay schedules
where, as in the case at bar, such basis is more realistic and accurate. (Compania Maritima v. United
Seamen's Union of the Philippines, 65 SCRA 393).
In conclusion, we again quote the Solicitor General's comment:
Finally, what strengthens petitioners claim for mitigated liability is their evident good faith as
manifested by their reinstatement of private respondent while the case for illegal dismissal
was still pending and their willingness to pay backwages. While it is true that as a general
rule order of reinstatement carries with it an award of backwages (Art. 280, Labor Code) this
Honorable Court did not only mitigate but absolved employers from liability of backwages
where good faith is evident (Findlay Millar Timber Co. v. PLASLU, 6 SCRA 26: Cromwell
Com. Employees & Laborers Union v. CIR, 13 SCRA 259, Norton and Harrison Labor Union
v. Harrison Co. Inc. 15 SCRA 310; PAL v. PALEA, 57 SCRA 489; Cruz v. MOLE, 120 SCRA
15). There is no indication, to paraphrase this Honorable Court's ruling in Pantranco North
Express Inc. v. NLRC (126 SCRA 526) that private respondent was a "victim of arbitrary and
high handed action. Rollo, pp. 34-35).
WHEREFORE, in view of the foregoing, the petition is hereby GRANTED. The order of the Labor
Arbiter, Amelia M. Guloy in NLRC Case No. NCR-7-3162083, dated October 23, 1985, as affirmed
by the NLRC is SET ASIDE. The petitioner is ordered to pay private respondent his backwages from
the time he was terminated up to the time he was actually reinstated computed on the basis of the
number of days when petitioner's business was in actual operation. The number of days where no
work was required and could be done by petitioner's employees on account of shutdowns due to
electrical power interruptions, machine repair, and lack of raw materials are not considered hours
worked for purposes of computing the petitioner's obligation to respondent employee. In no case
shall the award exceed three year's backpay as above computed.
SO ORDERED.
G.R. No. L-33013 March 28, 1980
WILLIAM LINES INC. and ESPIRITU TAN, as Manager, petitioners,
vs.
EUGENIO LOPEZ and COURT OF INDUSTRIAL RELATIONS, respondents.
BARREDO, J.:
Petition for review by certiorari pursuant to Rule 43 of the Rules of Court of the decision of the
respondent Court of Industrial Relations (CIR), * dated September 24, 1970, 1 penned by then
Associate Judge, Amando C. Bugayong, which was affirmed by a resolution en banc of the same
court on November 3, 1970, 2 praying for the reversal of the aforesaid decision.
The factual and procedural antecedents follow. On May 5, 1947, petitioner corporation, which is
engaged in shipping business in the Philippines, employed claimant, now respondent, Eugenio
Lopez, as storekeeper of the M/V Luzon, with a monthly salary of P122.00. Later said claimantrespondent was transferred to the M/V Edward, then to M/V Victoriano, and finally to M/V Davao.
Claimant-respondent's services were terminated on October 13, 1962 when the M/V Davao was drydocked in Cebu. He received the separation pay of P1,586.00.
On March 17, 1964, approximately one (1) year, five (5) months and four (4) days after his services
were terminated, claimant-respondent, who was refused readmission to work by petitioners, filed a
petition with the CIR, claiming salary differentials in the amount of P2,816.00, premium pay for
services rendered on Sundays and holidays, as well as daily overtime compensation, with a request
for reinstatement. 3

Petitioners herein (respondents below) filed a motion to dismiss on the ground that the CIR had no
jurisdiction and that the petition stated no cause of action, but the CIR denied the motion and
directed petitioners to file their answer.
Petitioners maintained in their answer that the dismissal of claimant-respondent was lawful because
he had been paid his separation pay; that he was not entitled to premium pay because petitioner
was a public utility corporation; that the various claims had already prescribed; and that claimantrespondent never rendered overtime service because the nature of his work was without fixed time
and did not require him to work for more than eight (8) hours a day. 4
In its decision dated September 24, 1970, subject of this appeal, together with resolution en banc of
November 3, 1970, the CIR directed petitioner shipping corporation to
... immediately reinstate complainant Eugenio Lopez to his former work or to any
equivalent position, pay him the corresponding overtime compensation at the rate of
2 hours a day for the duration of his employment, computed on the basis of his actual
working days at his last rate. 5
Petitioners moved for a reconsideration of the decision before the CIR en banc, but in its resolution
of November 3, 1970 already adverted to, the motion was denied. 6 Hence, this appeal from the said
CIR decision and resolution.
Petitioners raise five (5) issues:
1. Whether or not the CIR has jurisdiction over the money claims ... for salary
differentials, premium pay for Sundays and holidays and overtime pay, considering
that herein claimant filed the said case long after the termination of the employeremployee relationship and considering further that he did not at an support his claim
for reinstatement with any proof that his dimissal was wrongful or illegal;
2. Whether or not the CIR, assuming it has jurisdiction over the case, could lawfully
order the reinstatement of herein claimant who had been laid off and paid his
severance pay, considering that there was no proof whatsoever presented by
claimant that his dismissal was illegal or wrongful;
3. Whether or not prescription and laches had set in to bar herein claimant's alleged
right to reinstatement;
4. Whether or not the CIR's finding of fact as to the number of claimant's working
hours during his employment is binding upon this ... Court, considering that such
finding was not at all supported by the evidence submitted in the instant case;
5. Whether or not the claim for overtime compensation of claimant, at least insofar as
those that have accrued for more than 3 years, has already prescribed under C.A.
444, as amended by R.A. 1993 and R.A. 2377.
Issues Nos. 1, 2 and 3 These issues are interrelated and will be discussed and resolved jointly.
With respect to the first issue, petitioner's position is that it is the regular courts, not the CIR, which
have jurisdiction over claimant-respondent's claim; that the CIR has jurisdiction over the same only if
"the employer-employee relationship is still existing or the employee seeks reinstatement"; that
claimant-respondent's employment had already been terminated; that "a new claim for reinstatement
by the employee in his petition is not sufficient to confer jurisdiction on the CIR if there is no
averment made by the employee in his petition that his dismissal was wrongful or illegal and that to
allow such an anomalous situation, i.e. the conferment of jurisdiction on the CIR by mere claim of
reinstatement in the petition without questioning the validity of the dismissal "would practically leave
the matter of jurisdiction of the court at the mercy of the whims and caprices of the employee" and is
"violative of the well-established rule that money claims in cases where the employer-employee
relationship is, terminated and no reinstatement is sought, already fall within the jurisdiction of the
regular courts." 7
Claimant-respondent having failed to file brief within the period which expired on June 26, 1971, the
case was considered submitted for decision without the said brief. 8

We held in Sy Huan v. Bautista 9 that

The jurisdiction of the Court of Industrial Relations under the law and ... jurisprudence extends only
to cases involving (a) labor disputes affecting an industry which is indispensable to the national
interest and is so certified by the President to the Court, Section 10, Republic Act No. 875; (b)
controversy about the Minimum Wage Law, Republic Act No. 602; (c) hours of employment under
the Eight-Hour Labor Law, Commonwealth Act No. 444; and (d) unfair labor practice, Sec. 5-(a)
Republic Act No. 875," citing cases. 10
We further held in the same case that
... such disputes and controversies ... must arise while the employer-employee
relationship between the parties exists, or the employee seeks reinstatement. When
such relationship is over and the employee does not seek reinstatement, all claims
become money claims that fall under the jurisdiction of the regular courts," also citing
cases. 11
In the particular case of Price Stabilization Corporation v. Court of Industrial Relations, et al., 12 We
held 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 employment, such as those related to the Minimum
Wage Law and the Eight-Hour Labor Law. After the termination of the relationship
and no reinstatement is sought, such claims become mere money claims, and come
within the jurisdiction of the regular courts. (Emphasis supplied.)
In the case at bar, allegations were made by petitioner in the petition claiming, inter alia, the right to
be reinstated to his former work, with back wages ... on the basis of which allegations, the
jurisdiction asserted by the CIR appears to be in accord with Sy Huan v. Bautista and Price
Stabilization Corporation v. Court of Industrial Relations, et al. supra.
And the records sustain that the dismissal of claimant-respondent was not wrongful. It is not
controverted that his employment with petitioners was without a definite period. Under R.A. No. 1052
(otherwise known as the Termination Pay Law), an employee may be dismissed by the employer
without just cause by serving at least one month advance notice to the employee, or by giving the
said employee one-half month for every year of service of the employee, whichever is longer, a
fraction of at least six months being considered as one whole year." 13Petitioners contend that
claimant-respondent was duly notified of the termination. 14 Although disputed, 15 the question of
actual notice becomes immaterial in view of petitioners' compliance with the alternative requirement,
as found by the CIR, that claimant-respondent accepted separation pay in the amount of
P1,586.00. 16 Additionally, the CIR also found that there was no substantial evidence to show that the
dismissal was illegal. 17 Since the burden of proof of illegal dismissal devolved upon claimantrespondent himself, his failure to discharge this burden defeats his allegation that he was illegally
dimissed. In the absence of such proof, there is no basis for the CIR to order the reinstatement of
claimant-respondent. Thus, under the circumstances, that court (now defunct) could not have
lawfully directed the reinstatement of claimant-respondent even if it had jurisdiction over the subject
matter of this action.
13 Section 1. In cases of employment, without a definite period, in a commercial. industrial. or
agricultural establishment or enterprise, the employer or the employee may eliminate at any time the
employment with just cause; or without just cause in the case of an employee by serving notice on
the employer at least one month in advance, or in the case of an employer, by serving such notice to
the employee at least one month in advance or one-half month for every year of service of the
employee, whichever is longer, a fraction of at least six months being considered as one whole year.
And, having concluded that no right to reinstatement exists, it becomes unnecessary to resolve the
third issue i.e. whether or not prescription and laches had set in to bar claimant-respondent's
alleged right to be reinstated.

Issues Nos. 4 and 5 With respect to the fourth issue, it is not true that there is no evidence to
support the CIR's finding that claimant-respondent worked at an average of "no less than 10 hours a
day, 2 hours more than the maximum requirement specified on the Eight-Hour Labor
Law." 18 Claimant-respondent's testimony is to the effect that his main duties were (a) to clean the
storeroom and (b) to serve food to the Passengers; that although there was "(N)o exact number of
hours" for either of these duties, he would "estimate" that 2 hours, more or less, were spent each
time in cleaning the storeroom, morning and afternoon, while 2 hours, more or less, were also
needed to serve food, which he did 3 times a day at 4:30 a.m., 10:00 a.m. and 3 p.m. 19 This
clearly averaged 10 hours a day. On the basis of the foregoing testimony, the trial court's finding that
he had been working no less than 10 hours daily is justified. At any rate, doubts should be resolved
in his favor to pursue the ends of the Eight-Hour Labor Law (R.A. No. 444), as amended, which is a
social legislation.
But, since Sec. 7-A of the Eight-Hour Labor Law allows the enforcement of an action "within three
years after the cause of action accrued, otherwise, such action shall be forever barred", claimantrespondent can collect only the overtime compensation for the 2 hours in excess of the regular 8
hours a day which accrued within 3 years immediately before the filing of the petition on March 17,
1964. Similar claims which accrued prior to the 3-year period or before March 17, 1961 have already
prescribed, and can no longer be enforced in this action. However, since claimant-respondent's
services were terminated on October 13, 1962, the computation of the 2-hour daily overtime will
cover the period from March 17, 1961 to October 13, 1962, or a period of 1 year, 6 months and 26
days, from which shall be excluded Sundays and legal holidays based on the principle that being on
board the vessel on these days were "part and parcel of" and "inherent" in his work. The herein
resolution likewise disposes of issue No. 5 raised by petitioners.
IN VIEW OF ALL THE FOREGOING, the appealed decision of the Court of Industrial Relations is
affirmed with the modifications above indicated, namely: petitioners are directed to pay to claimantrespondent overtime compensation at the rate of 2 hours a day, based on the last monthly salary
rate, from March 17, 1961 to October 13, 1962, excluding Sundays and legal holidays, without right
to reinstatement. Let the National Labor Relations Commissions (NLRC) be shed with a copy of this
decision.
SO ORDERED.
[G.R. No. 105963. August 22, 1996]
PAL EMPLOYEES SAVINGS AND LOAN ASSOCIATION, INC. (PESALA), petitioner, vs.
NATIONAL LABOR RELATIONS COMMISSION and ANGEL V. ESQUEJO, respondent.
DECISION
PANGANIBAN, J.:
Is an employee entitled to overtime pay for work rendered in excess of eight hours a day, given
the fact that his employment contract specifies a twelve-hour workday at a fixed monthly salary rate
that is above the legal minimum wage? This is the principal question answered by this Court in
resolving this petition which challenges the validity and legality of the Decision [1] of public respondent
National Labor Relations Commission[2] promulgated on April 23, 1992 in NLRC NCR CA No.
002522-91 entitledAngel V. Esquejo vs. PAL Employees Savings and Loan Association which
Decision modified (slightly as to amount) the earlier decision [3] dated November 11, 1991 of the labor
arbiter granting private respondents claim for overtime pay.
The Facts and the Case Below
On October 10, 1990, private respondent filed with public respondent a complaint docketed
as NLRC NCR Case No. 10-05457-90 for non-payment of overtime pay and non-payment of the
P25.00 statutory minimum wage increase mandated by Republic Act No. 6727.
Subsequently, private respondent filed a supplemental complaint for illegal suspension with prayer
for reinstatement and payment of backwages. However, before the case was submitted for
resolution, private respondent filed a Motion to Withdraw Supplemental Complaint on the ground that

a separate action for illegal suspension, illegal dismissal, etc. had been filed and was pending before
another labor arbiter. Hence, the issue decided by public respondent and which is under review by
this Court in this petition involves only his claim for overtime pay.
On November 26, 1990, private respondent filed his position paper [4] with the labor arbiter
alleging the following facts constituting his cause of action:
Complainant (herein private respondent) started working with respondent (PESALA) sometime
last March 1, 1986 as a company guard and was receiving a monthly basic salary of P1,990.00 plus
an emergency allowance in the amount of P510.00. He was required to work a (sic) twelve (12)
hours a day, a (sic) xerox copies of his appointment are hereto attached and marked as Annexes C
and D of this position paper;
That on December 10, 1986, respondent Board of Directors in its board meeting held on
November 21, 1986 approved a salary adjustment for the complainant increasing his monthly basic
salary to P2,310.00 and an emergency allowance of P510.00, a xerox copy of the salary adjustment
is hereto attached and marked as Annex E hereof;
That on August 25, 1987, because of his impressive performance on his assigned job, another
adjustment was approved by the President of the association increasing his monthly basic salary to
P2,880.00, a xerox copy of the salary adjustment is hereto attached and marked as Annex F hereof;
That from January 4, 1988 up to June 1990, several salary adjustments were made by the
respondent on the monthly basic salary of the complainant including a letter of appreciation for being
as (sic) one of the outstanding performers during the first half of 1988, the latest salary prior to the
filing of the complaint was P3,720.00, a (sic) xerox copies of all the documents relative to the salary
adjustments are hereto attached and marked as annexes G, H, I, J and K of this position paper;
That during his entire period of employment with respondent, the former was required to perform
overtime work without any additional compensation from the latter. It was also at this point wherein
the respondent refused to give the P25.00 increase on the minimum wage rates as provided for by
law. On October 12, 1990, complainant was suspended for the period of thirty seven (37) days for an
offense allegedly committed by the respondent sometime last August 1989.
On December 13, 1990, petitioner PESALA filed its position paper[5] alleging among other things:
On 01 March, 1986, complainant was appointed in a permanent status as the company guard of
respondent. In the Appointment Memorandum dated February 24, 1986 which has the conformity of
complainant, it is expressly stipulated therein that complainant is to receive a monthly salary of
P1,900.00 plus P510.00 emergency allowance for a twelve (12) hours work per day with one (1) day
off. A copy of said appointment memorandum is hereto attached as Annex A and made an integral
part hereof.
On 01 December, 1986, the monthly salary of complainant was increased to P2,310.00 plus
P510.00 emergency allowance. Later, or on 01 January, 1988, the monthly salary of complainant
was again increased to P3,420.00. And still later, or on 01 February, 1989, complainants monthly
salary was increased to P3,720.00. Copies of the memoranda evidencing said increase are hereto
attached as Annexes B, B-1 and B-2 and are made integral parts hereof.
On 29 November, 1989, the manager of respondent in the person of Sulpicio Jornales wrote to
complainant informing the latter that the position of a guard will be abolished effective November 30,
1989, and that complainant will be re-assigned to the position of a ledger custodian effective
December 1, 1989.
Pursuant to the above-mentioned letter-agreement of Mr. Jornales, complainant was formally
appointed by respondent as its ledger custodian on December 1, 1989. The monthly salary of
complainant as ledger custodian starting on December 1, 1989 was P3,720.00 for forty (40) working
hours a week or eight (8) working hours a day. A copy of said Appointment memorandum is hereto
attached as Annex C and made an integral part hereof.

On 29 August, 1990, complainant was administratively charged with serious misconduct or

disobedience of the lawful orders of respondent or its officers, and gross and habitual neglect of his
duties, committed as follows:
1. Sometime in August, 1989, you (referring to complainant Esquejo) forwarded the checks
corresponding to the withdrawals of Mr. Jose Jimenez and Mr. Anselmo dela Banda of
Davao and Iloilo Station, respectively, without the signature of the Treasurer and the
President of PESALA, in violation of your duty and function that you should see to it that
the said checks should be properly signed by the two PESALA officials before you send
out said checks of their addresses. As a result of which, there was a substantial delay in
the transmission of the checks to its owners resulting to an embarrassment on the part of
the PESALA officers and damage and injury to the receipients (sic) of the checks since
they needed the money badly.
2. Sometime in August, 1989, before you (complainant) went on your vacation, you failed to
leave or surrender the keys of the office, especially the keys to the main and back doors
which resulted to damage, injury and embarrassment to PESALA. This is a gross violation
of your assigned duties and you disobeyed the instruction of your Superior.
xxx xxx xxx
Herein complainant was informed of the aforequoted charges against him and was given the
opportunity to be heard and present evidence in his behalf as shown by the Notice of Hearing
(Annex D hereof) sent to him. Complainant did in fact appeared (sic) at the hearing, assisted by his
counsel, Atty. Mahinardo G. Mailig, and presented his evidence in the form of a Counter-Affidavit. A
copy of said Counter-Affidavit is hereto attached as Annex E and made an integral part hereof.
On 12 October, 1990, after due deliberation on the merits of the administrative charges filed
against herein complainant, the Investigating Officer in the person of Capt. Rogelio Enverga
resolved the same imposing a penalty of suspension of herein complainant, thus:
PENALTY: 1. For the first offense, you (referring to complainant Esquejo) are suspended for a
period of thirty (30) working days without pay effective October 15, 1990.
2. For the second offense, your (sic) are suspended for a period of seven (7) working days
without pay effective from the date the first suspension will expire.
On March 7, 1991, private respondent filed a detailed and itemized computation of his money
claims totaling P107,495.90, to which petitioner filed its comment on April 28, 1991. The computation
filed on March 7, 1991 was later reduced to P65,302.80. To such revised computation, the petitioner
submitted its comment on April 28, 1991.
Thereafter, labor arbiter Cornelio L. Linsangan rendered a decision dated November 11, 1991
granting overtime pay as follows:
WHEREFORE, judgment is hereby rendered:
1. Granting the claim for overtime pay covering the period October 10, 1987 to
November 30, 1989 in the amount of P28,344.55.
2. The claim for non-payment of P25.00 salary increase pursuant to Republic Act No.
6727 is dismissed for lack of merit.
Aggrieved by the aforesaid decision, petitioner appealed to public respondent NLRC only to be
rejected on April 23, 1992 via the herein assailed Decision, the dispositive portion of which reads as
follows:
WHEREFORE, premises considered, the award is reduced to an amount of TWENTY EIGHT
THOUSAND SIXTY-SIX PESOS AND 45/100 (P28,066.45). In all other respects, the Decision under
review is hereby AFFIRMED and the appeal DISMISSED for lack of merit.
No motion for reconsideration of the Decision was filed by the petitioner.[6]
What transpired afterwards is narrated by the Solicitor General in his memorandum, [7] which we
presume to be correct since petitioner did not contradict the same in its memorandum:

x x x Petitioner did not appeal the Decision of respondent NLRC. When it became final, the parties
were called to a conference on June 29, 1992 to determine the possibility of the parties voluntary
compliance with the Decision (Order of Labor Arbiter Linsangan, dated July 23, 1992).
x x x In their second conference, held on July 15, 1992, petitioner proposed to private respondent
a package compromise agreement in settlement of all pending claims. Private respondent for his
part demanded P150,000.00 as settlement of his complaint which was turned down by petitioner as
too excessive. Unfortunately, no positive results were achieved.
As a result, a pleading was filed by petitioner captioned: Motion to Defer Execution and Motion to
Re-Compute alleged overtime pay. Petitioner states that quite recently, the Employee Payroll Sheets
pertaining to the salaries, overtime pay, vacation and sick leave of Angel Esquejo were located.
x x x Petitioners Motion to Defer Execution and Motion to Re-Compute respondents overtime pay
was denied in an Order dated July 23, 1992.
x x x Petitioner moved to reconsider the Denial Order on July 27, 1992. Private respondent
opposed.
In the meantime, petitioner filed the instant special civil action for certiorari before this Court on
July 10, 1992. Later, on July 17, 1992, citing as reason that x x x quite recently, the Employee
Payroll Sheets which contained the salaries and overtime pay received by respondent Esquejo were
located in the bodega of the petitioner and based on said Payroll Sheets, it appears that substantial
overtime pay have been paid to respondent Esquejo in the amount of P24,283.22 for the period
starting January 1987 up to November 1989, petitioner asked this Court for the issuance of a
temporary restraining order or writ of preliminary injunction. On the same date of July 17, 1992, a
Supplemental Petition Based On Newly Discovered Evidence was filed by petitioner to which was
attached photocopies of payroll sheets of the aforestated period.
On July 29, 1992, this Court issued a temporary restraining order enjoining the respondents from
enforcing the Decision dated April 23, 1992 issued in NLRC NCR CA No. 002522-91, the case below
subject of the instant petition.
The Issues
For issues have been raised by the petitioner in its effort to obtain a reversal of the assailed
Decision, to wit:
I
THE RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION WHEN IT RULED
THAT PRIVATE RESPONDENT IS ENTITLED TO OVERTIME PAY WHEN THE SAME IS A GROSS
CONTRAVENTION OF THE CONTRACT OF EMPLOYMENT BETWEEN PETITIONER AND
RESPONDENT ESQUEJO AND A PATENT VIOLATION OF ARTICLES 1305, 1306 AND 1159 OF
THE CIVIL CODE.
II
THE RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION IN AWARDING
OVERTIME PAY OF P28,066.45 TO PRIVATE RESPONDENT WHEN THE SAME IS A CLEAR
VIOLATION OF ARTICLE 22 OF THE CIVIL CODE ON UNJUST ENRICHMENT.
III
THE RESPONDENT NLRC COMMITTED A GRAVE ABUSED OF DISCRETION WHEN IT RULED
THAT PRIVATE RESPONDENT WAS NOT PAID THE OVERTIME PAY BASED ON THE
COMPUTATION OF LABOR ARBITER CORNELIO LINSANGAN WHICH WAS AFFIRMED BY SAID
RESPONDENT NLRC WHEN THE SAME IS NOT SUPPORTED BY SUBSTANTIAL EVIDENCE
AND IT, THEREFORE, VIOLATED THE CARDINAL PRIMARY RIGHTS OF PETITIONER AS
PRESCRIBED IN ANG TIBAY VS. CIR 69 PHIL. 635.
IV

WHETHER OR NOT THE PETITIONERS SUPPLEMENTAL PETITION BASED ON NEWLY

DISCOVERED EVIDENCE MAY BE ADMITTED AS PART OF ITS EVIDENCE IT BEING VERY
VITAL TO THE JUDICIOUS DETERMINATION OF THE CASE.(Rollo, p. 367)
In essence the above issues boil down to this query: Is an employee entitled to overtime pay for
work rendered in excess of the regular eight hour day given the fact that he entered into a contract of
labor specifying a work-day of twelve hours at a fixed monthly rate above the legislative minimum
wage?
The Courts Ruling
At the outset, we would like to rectify the statement made by the Solicitor General that the
petitioner did not appeal from the Decision of (public) respondent NLRC. The elevation of the said
case by appeal is not possible. The only remedy available from an order or decision of the NLRC is a
petition for certiorari under Rule 65 of the Rules of Court alleging lack or excess of jurisdiction or
grave abuse of discretion.[8] The general rule now is that the special civil action of certiorari should be
instituted within a period of three months. [9] Hence, when the petition was filed on July 10, 1992,
three months had not yet elapsed from petitioners receipt of the assailed Decision (should really be
from receipt of the order denying the motion for reconsideration).
However, aside from failing to show clearly grave abuse of discretion on the part of
respondent NLRC, which we shall discuss shortly, the petitioner also failed to comply with the
mandatory requirement of filing a motion for reconsideration from the Decision of the Public
respondent before resorting to the remedy of certiorari. We have previously held that:
x x x. The implementing rules of respondent NLRC are unequivocal in requiring that a motion for
reconsideration of the order, resolution, or decision of respondent commission should be seasonably
filed as a precondition for pursuing any further or subsequent remedy, otherwise the said order,
resolution, or decision shall become final and executory after ten calendar days from receipts
thereof. Obviously, the rationale therefor is that the law intends to afford the NLRC an opportunity to
rectify such errors or mistakes it may have lapsed into before resort to the courts of justice can be
had. This merely adopts the rule that the function of a motion for reconsideration is to point to the
court the error that it may have committed and to give it a chance to correct itself. [10]
Additionally, the allegations in the petition clearly show that petitioner failed to file a motion for
reconsideration of the assailed Resolution before filing the instant petition. As correctly argued by
private respondent Rolando Tan, such failure constitutes a fatal infirmity x x x. The unquestioned rule
in his jurisdiction is that certiorari will lie only if there is no appeal or any other plain, speedy and
adequate remedy in the ordinary course of law against the acts of public respondent. In the instant
case, the plain and adequate remedy expressly provided by law was a motion for reconsideration of
the assailed decision, based on palpable or patent errors, to be made under oath and filed within ten
(10) calendar days from receipt of the questioned decision. And for failure to avail of the correct
remedy expressly provided by law, petitioner has permitted the subject Resolution to become final
and executory after the lapse of the ten day period within which to file such motion for
reconsideration.[11]
In brief, the filing of the instant petition was premature and did not toll the running of the 3 month
period. Thus, the assailed Decision became final and executory. On this ground alone, this petition
must therefore be dismissed.
However, in view of the importance of the substantial query raised in the petition, we have
resolved to decide the case on the merits also.
The First Issue: Was Overtime Pay Included?
The main disagreement between the parties centers on how the contract of employment of the
private respondent should be interpreted. The terms and conditions thereof read as follows:
Date: February 24, 1986
NAME : ESQUEJO, ANGEL

NATURE OF ACTION : APPOINTMENT

FROM :
POSITION TITLE : COMPANY GUARD
TO :
STATUS : PERMANENT
EFFECTIVE DATE : MARCH 1, 1986
FROM : P1,990.00 per month
plus P510.00 emergency
allowance
SALARY :
TO :
-----------------------------REMARKS : To confirm permanent
appointment as company
guard who will render 12
hours a day with one (1)
day off
-----------------------------RECOMMENDED BY: APPROVED BY:
(Signed) (Signed)
SULPICIO B. JORNALES CATALINO F. BANEZ
(Signed)
ANGEL V. ESQUEJO[12]
Petitioner faults the public respondent when it said that there was no meeting of minds between
the parties, since the employment contract explicitly states without any equivocation that the
overtime pay for work rendered for four (4) hours in excess of the eight (8) hour regular working
period is already included in the P1,990.00 basic salary. This is very clear from the fact that the
appointment states 12 hours a day work.[13] By its computations,[14] petitioner tried to illustrate that
private respondent was paid more than the legally required minimum salary then prevailing.
To prove its contention, petitioner argues that:
The legal minimum wage prescribed by our statutes, the legally computed overtime pay and the
monthly salaries being paid by petitioner to respondent Esquejo would show that indeed, the
overtime pay has always been absorbed and included in the said agreed monthly salaries.
In 1986, the legal minimum salary of Esquejo is computed as follows (per Appointment
Memoranda dated February 4, 1986 and June 6, 1986 [Annex C and D of Annex B of this Petition]):
54 x 314 days
12 months = P1,413.00 monthly salary
The hourly overtime pay is computed as follows:
54/8 hours = P6.75 x 4 hrs. = P27.00
P27.00 x 1.25 = P33.75 x 20 (should be 26) days = P887.50
(should be P877.50)
P1,413.00 - legal minimum wage
+ 887.50(877.50) - legal overtime pay
P2,290.50 - amount due to respondent
Esquejo under the law

P2,500.00 - gross salary of Esquejo per contract

-2,290.50
P 209.50 - Difference (Rollo, p. 371).
On the other hand, private respondent in his position paper claims that overtime pay is not so
incorporated and should be considered apart from the P1,990.00 basic salary.[15]
We find for the private respondent and uphold the respondent NLRCs ruling that he is entitled to
overtime pay.
Based on petitioners own computations, it appears that the basic salary plus emergency
allowance given to private respondent did not actually include the overtime pay claimed by private
respondent. Following the computations it would appear that by adding the legal minimum monthly
salary which at the time was P1,413.00 and the legal overtime pay P877.50, the total amount due
the private respondent as basic salary should have been P2,290.50. By adding the emergency cost
of living allowance (ECOLA) of P510.00 as provided by the employment contract, the total basic
salary plus emergency allowance should have amounted to P2,800.50. However, petitioner admitted
that it actually paid private respondent P1,990.00 as basic salary plus P510.00 emergency
allowance or a total of only P2,500.00. Undoubtedly, private respondent was shortchanged in the
amount of P300.50. Petitioners own computations thus clearly establish that private respondents
claim for overtime pay is valid.
Side Issue: Meeting of the Minds?
The petitioner contends that the employment contract between itself and the private respondent
perfectly satisfies the requirements of Article 1305 of the Civil Code as to the meeting of the minds
such that there was a legal and valid contract entered into by the parties. Thus, private respondent
cannot be allowed to question the said salary arrangements for the extra 4 hours overtime pay after
the lapse of 4 years and claim only now that the same is not included in the terms of the employment
contract.[16]
We disagree. Public respondent correctly found no such agreement as to overtime pay. In fact,
the contract was definite only as to the number of hours of work to be rendered but vague as to what
is covered by the salary stipulated. Such ambiguity was resolved by the public respondent, thus:
In resolving the issue of whether or not complainants overtime pay for the four (4) hours of work
rendered in excess of the normal eight hour work period is incorporated in the computation of his
monthly salary, respondent invokes its contract of employment with the complainant. Said contract
appears to be in the nature of a document identifiable as an appointment memorandum which took
effect on March 1, 1986 (Records, p. 56) by virtue of which complainant expressed conformity to his
appointment as company guard with a work period of twelve (12) hours a day with one (1) day
off. Attached to this post is a basic salary of P1,990.00 plus P510.00 emergency allowance. It is (a)
cardinal rule in the interpretation of a contract that if the terms thereof are clear and leave no doubt
upon the intention of the contracting parties, then the literal meaning of its stipulations shall
control. (Art. 1370, Civil Code of the Philippines).To this, respondent seeks refuge. Circumstances,
however, do not allow us to consider this rule in the light of complainants claim for overtime pay
which is an evident indication that as to this matter, it cannot be said that there was a meeting of the
minds between the parties, it appearing that respondent considered the four (4) hours work in
excess of the eight hours as overtime work and compensated by way of complainants monthly
salary while on the latters part, said work rendered is likewise claimed as overtime work but yet
unpaid in view of complainants being given only his basic salary. Complainant claims that the basic
salary could not possibly include therein the overtime pay for his work rendered in excess of eight
hours.Hence, respondents Appointment Memorandum cannot be taken and accorded credit as it is
so worded in view of this ambiguity. We therefore proceed to determine the issue in the light of
existing law related thereto. While it is true that the complainant received a salary rate which is
higher that the minimum provided by law, it does not however follow that any additional
compensation due the complainant can be offset by his salary in excess of the minimum, especially
in the absence of an express agreement to that effect. To consider otherwise would be in disregard

of the rule of nondiminution of benefits which are above the minimum being extended to the
employees. Furthermore, such arrangement is likewise in disregard of the manner required by the
law on how overtime compensation must be determined. There is further the possibility that in view
of subsequent increases in the minimum wage, the existing salary for twelve (12) hours could no
longer account for the increased wage level together with the overtime rate for work rendered in
excess of eight hours. This fertile ground for a violation of a labor standards provision can be
effectively thwarted if there is a clear and definite delineation between an employees regular and
overtime compensation. It is, further noted that a reading of respondents Appointment Memoranda
issued to the complainant on different dates (Records, pp. 56-60) shows that the salary being
referred to by the respondent which allegedly included complainants overtime pay, partakes of the
nature of a basic salary and as such, does not contemplate any other compensation above thereof
including complainants overtime pay.We therefore affirm complainants entitlement to the latter
benefit.[17]
Petitioner also insists that private respondents delay in asserting his right/claim demonstrates his
agreement to the inclusion of overtime pay in his monthly salary rate.This argument is
specious. First of all, delay cannot be attributed to the private respondent. He was hired on March 1,
1986. His twelve-hour work periods continued until November 30, 1989. On October 10, 1990 (just
before he was suspended) he filed his money claims with the labor arbiter. Thus, the public
respondent in upholding the decision of the arbiter computed the money claims for the three year
period from the date the claims were filed, with the computation starting as of October 10, 1987
onwards.
In connection with the foregoing, we should add that even if there had been a meeting of the
minds in the instant case, the employment contract could not have effectively shielded petitioner
from the just and valid claims of private respondent. Generally speaking, contracts are respected as
the law between the contracting parties, and they may establish such stipulations, clauses, terms
and conditions as they may see fit; and for as long as such agreements are not contrary to law,
morals, good customs, public policy or public order, they shall have the force of law between them.
[18]
However, x x x, while it is the inherent and inalienable right of every man to have the utmost
liberty of contracting, and agreements voluntarily and fairly made will be held valid and enforced in
the courts, the general right to contract is subject to the limitation that the agreement must not be in
violation of the Constitution, the statute or some rule of law (12 Am. Jur. pp. 641-642). [19] And under
the Civil Code, contracts of labor are explicitly subject to the police power of the State because they
are not ordinary contracts but are impressed with public interest. [20] Inasmuch as in this particular
instance the contract is question would have been deemed in violation of pertinent labor laws, the
provisions of said laws would prevail over the terms of the contract, and private respondent would
still be entitled to overtime pay.
Moreover, we cannot agree with petitioners assertion that by judging the intention of the parties
from their contemporaneous acts it would appear that the failure of respondent Esquejo to claim
such alleged overtime pay since 1986 clearly demonstrate(s) that the agreement on his gross salary
as contained in his appointment paper is conclusive on the matter of the inclusion of overtime pay.
(Rollo, pp. 13-15; also, Rollo, pp. 378-380). This is simply not the case here. The interpretation of the
provision in question having been put in issue, the Court is constrained to determine which
interpretation is more in accord with the intent of the parties. [21] To ascertain the intent of the parties,
the Court is bound to look at their contemporaneous and subsequent acts. [22] Private respondents
silence and failure to claim his overtime pay since 1986 cannot be considered as proving the
understanding on his part that the rate provided in his employment contract covers overtime
pay. Precisely, that is the very question raised by private respondent with the arbiter, because
contrary to the claim of petitioner, private respondent believed that he was not paid his overtime pay
and that such pay is not covered by the rate agreed upon and stated in his Appointment
Memorandum. The subsequent act of private respondent in filing money claims negates the theory
that there was clear agreement as to the inclusion of his overtime pay in the contracted salary

rate. When an employee fails to assert his right immediately upon violation thereof, such failure
cannot ipso facto be deemed as a waiver of the oppression. We must recognize that the worker and
his employer are not equally situated. When a worker keeps silent inspite of flagrant violations of his
rights, it may be because he is seriously fearful of losing his job. And the dire consequences thereof
on his family and his dependents prevent him from complaining. In short, his thoughts of sheer
survival weigh heavily against launching an attack upon his more powerful employer.
The petitioner contends that the agreed salary rate in the employment contract should be
deemed to cover overtime pay, otherwise serious distortions in wages would result since a mere
company guard will be receiving a salary much more that the salaries of other employees who are
much higher in rank and position than him in the company. (Rollo, p. 16) We find this argument
flimsy and undeserving of consideration. How can paying an employee the overtime pay due him
cause serious distortions in salary rates or scales? And how can other employees be aggrieved
when they did not render any overtime service?
Petitioners allegation that private respondent is guilty of laches is likewise devoid of merit. Laches
is defined as failure or neglect for an unreasonable and unexplained length of time to do that which,
by exercising due diligence, could or should have been done earlier. It is negligence or omission to
assert a right within an unreasonable time, warranting the presumption that the party entitled to
assert it has either abandoned or declined to assert it. [23] The question of laches is addressed to the
sound discretion of the court, and since it is an equitable doctrine, its application is controlled by
equitable considerations. It cannot work to defeat justice or to perpetrate fraud and injustice.
[24]
Laches cannot be charged against any worker when he has not incurred undue delay in the
assertion of his rights. Private respondent filed his complaint within the three-year reglementary
period. He did not sleep on his rights for an unreasonable length of time.[25]
Second Issue: Unjust Enrichment?
Petitioner contends that the award of overtime pay is plain and simple unjust and illegal
enrichment. Such award in effect sanctioned and approved the grant of payment to respondent
Esquejo which will result in double payment for the overtime work rendered by paid employee.
[26]
Also, per petitioner, (n)othing in the Labor Code nor in the Rules and Regulations issued in the
implementation thereof prohibits the manner of paying the overtime pay (by) including the same in
the salary.[27]
This is begging the issue. To reiterate, the main question raised before the labor tribunals is
whether the provision on wages in the contract of employment already included the overtime pay for
four (4) working hours rendered six days a week in excess of the regular eight-hour work. And we
hold that the tribunals below were correct in ruling that the stipulated pay did not include
overtime. Hence, there can be no undue enrichment in claiming what legally belongs to private
respondent.
Third Issue: Basis of NLRCs Decision?
Petitioner assails respondent NLRC for adopting that portion of the decision of the labor arbiter,
which reads as follows:
x x x Our conclusion is quite clear considering the fact that at the time of his employment in March
1986, during which the minimum wage was P37.00 a day for 8 hours work, complainants total takehome-pay working 12 hours a day including ECOLA, was only P2,500.00 a month. And immediately
prior to his appointment as Ledger Custodian effective December 1, 1989, with the working hours
reduced to 8 hours or 40 hours a week, complainants monthly salary was P3,420.00 (instead of
P5,161.01 minimum monthly with 4 hours overtime work everyday, or a difference of P1,741.01 a
month).
Accordingly, the claim for overtime pay reckoned from October 10, 1987 up to November 30, 1989
should be, as it is hereby, granted.[28] (Rollo, p. 201).

Petitioner believes that by adopting the above-quoted portion of the arbiters decision,
respondent NLRC violated the cardinal rule that its decisions must be supported by substantial
evidence. In doing so, petitioner claims that the NLRC violated its primary rights as enunciated in the
case of Ang Tibay vs. CIR.[29] In other words, petitioner holds the view that the arbiters decision failed
to explain how the amount of P5,161.01 was arrived at.[30]
Petitioner is in error. The public respondent did not adopt in toto the aforequoted portion of the
arbiters decision. It made its own computations and arrived at a slightly different amount, with a
difference of P278.10 from the award granted by the labor arbiter. To refute petitioners claim, public
respondent attached (as Annexes 1, 1-A 1-B and 1-C) to its Comment, the computations made by
the labor arbiter in arriving at the sum of P5,161.00. On the other hand, public respondent made its
own computation in its assailed Decision and arrived at a slightly different figure from that computed
by the labor arbiter:
Respondent claims that the award of P28,344.55 is bereft of any factual basis. Records show that
as per computation of the office of the Fiscal Examiner, (Records, p. 116) the said amount was
arrived at. The computation was however based on the assumption that the complainant regularly
reported for work. Records however show that the complainant absented himself from work for one
day in August 1989. (Records, p. 63) For this unworked day, no overtime pay must be due. As to the
rest of his period of employment subject to the three year limitation rule which dates from October
10, 1987 up to his appointment as Ledger Custodian on December 1, 1989 after which is regular
work period was already reduced to eight hours, there being no showing that the complainant
absented himself from work, and he being then required to work for a period of twelve hours daily,
We therefore rule on complainants entitlement to overtime compensation for the duration of the
aforesaid period in excess of one working day. Consequently, complainants overtime pay shall be
computed as follows:
OVERTIME PAY: (4 HRS/DAY)
October 10, 1987 December 13, 1987 = 2.10 mos.
P54/8 hrs. = P6.75 x 4 hrs. = P27.00
P27 x 1.25 = P33.75 x 26 x 2.10 mos. = P1,842.75
December 14, 1987 June 30, 1989 = 18.53 mos.
P64/8 hrs. = P8 x 4 hrs. = P32.00
P32 x 1.25 = P40 x 26 x 18.53 = P19,271.20
July 1, 1989 November 30, 1989 = 5 mos.
P89/8 hrs. = P11.12 x 4 hrs. = P44.50
P44.50 x 1.25 = P55.62 x 25 x 5 mos. = P6,952.50(P6,953.125)
TOTAL OVERTIME PAY
P28,066.45(P28,067.075) (Rollo, pp. 210-212).
Prescinding therefrom, it is evident that petitioner had no basis to argue that
respondent NLRC committed any grave abuse of discretion in quoting the questioned portion of the
labor arbiters holding.
Fourth Issue: Newly Discovered Evidence?
In its Supplemental Petition filed on July 17, 1996, petitioner alleges in part:
2. That only recently, the petitioner was able to locate the Employees Payroll Sheets which
contained the salaries, overtime pay, vacation and sick leaves of respondent Esquejo which pertains
to the period starting from January 1, 1987 up to November 1989. Therefore, said total amount of
overtime pay paid to and received by respondent Esquejo should be deducted from the computed
amount of P28,066.45 based on the questioned decision. (Rollo, p. 220).

Contrary to petitioners claim however, said documents consisting of payroll sheets, cannot be
considered as newly-discovered evidence since said papers were in its custody and possession all
along, petitioner being the employer of private respondent.
Furthermore, petitioner offers no satisfactory explanation why these documents were unavailable
at the time the case was being heard by the labor arbiter. In its Memorandum, petitioner excused
itself for its failure to present such evidence before the labor arbiter and respondent NLRC by saying
that petitioner(s office) appeared to be in disorder or in a state of confusion since the then officers (of
petitioner) were disqualified by the Monetary Board on grounds of misappropriation of funds of the
association and other serious irregularities. There was no formal turn-over of the documents from
the disqualified set of officers to the new officers of petitioner.[31] We find such excuse weak and
unacceptable, the same not being substantiated by any evidence on record. Moreover, payroll
records are normally not in the direct custody and possession of corporate officers but of their
subordinates, i.e., payroll clerks and the like. In the normal course of business, such payroll sheets
are not the subject of formal turnovers by outgoing officers to their successors in office. And if indeed
it is true that petitioner had been looking for such records or documents during the pendency of the
case with the labor arbiter and with public respondent, petitioner never alleged such search before
the said labor tribunals a quo. Hence, such bare allegations of facts cannot now be fairly appreciated
in this petition for certiorari, which is concerned only with grave abuse of discretion or lack (or
excess) of jurisdiction.
The Solicitor General quotes with approval a portion of private respondents Opposition to
petitioners motion for reconsideration thus:
It is clear from the payroll, although the substantial pages thereof do not show that the net amount
indicated therein have been received or duly acknowledged to have been received by the
complainant, THAT OVERTIME PAYMENTS THAT WERE MADE REFER TO WORK RENDERED
DURING COMPLAINANTS OFF DAYS. What has been rightfully claimed by the complainant and
awarded by this Honorable Office is the overtime works (sic) rendered by the complainant daily for
six (6) days a week computed at four (4) hours per day. This computation is based on the evidence
thus submitted by the parties. All appointments issued by the respondent carries (sic) with it (sic)
that the basic salary of the complainant is equivalent to 12 hours work everyday for six (6) days a
week, hence, the four (4) hours overtime daily was not considered and therefore not paid by the
respondent. (Rollo, p. 327).
It has been consistently held that factual issues are not proper subjects of a petition for certiorari,
as the power of the Supreme Court to review labor cases is limited to questions of jurisdiction and
grave abuse of discretion.[32] The introduction in this petition of so-called newly discovered evidence
is unwarranted. This Court is not a trier of facts and it is not its function to examine and evaluate the
evidence the evidence presented (or which ought to have been presented) in the tribunals below.[33]
WHEREFORE, in view of the foregoing considerations, the Petition is DISMISSED, the temporary
restraining order issued on July 30, 1992 LIFTED, and the assailed decision of the public
respondent AFFIRMED. Costs against petitioner.
SO ORDERED.
G.R. No. L-64967 September 23, 1985
ENGINEERING EQUIPMENT, INC., petitioner,
vs.
MINISTER OF LABOR, DIRECTOR OF EMPLOYMENT SERVICES and MIGUEL V.
ASPERA, respondents.
AQUINO, J:
This is a claim for overtime pay. Miguel Aspera, a mechanical engineer, worked for Engineering
Equipment, Inc. in Saudi Arabia for nearly a year from April 26, 1977 to April 16, 1978 at a monthly

salary of P750 (P860) with a six-day work week consisting of ten working hours. His written contract
of employment provides:
1. Work Schedule/Assignment. ... Your workdays shall be on a six-day work week
basis, with a working day consisting of ten (10) working hours. You may be required
to work overtime in excess of ten (10) hours each work day and to work on your
restdays and on Saudi Arabian legal holidays.
2. A monthly salary of P750.00 plus overtime pay for work rendered during
restdays/holidays and/or in excess of ten (10) hours during regular working days.
Aspera worked ten hours daily for 335 working days. He claims that his monthly salary should
correspond to eight hours of daily work and that for the additional two hours daily, he was entitled to
overtime pay at $1.2162 per hour or to $814.85 for 670 hours during 335 working days.
The Director of Employment Services and the National Labor Relations Commission sustained his
claim and awarded him that amount as overtime pay. They declared void the stipulation for a tenhour working day because it was contrary to Section 83 of the Labor Code, formerly Eight-Hour
Labor Law, which expressly provides that "the normal hours of work of any employee shall not
exceed eight (8) hours a day" and to section 87 of the same Code which provides that work
performed "beyond eight (8) hours a day" is treated as overtime work,
Hence, this recourse by the petitioner. It contends that Aspera was a managerial employee
exercising supervision and control over its rank-and-file employees with power to recommend
disciplinary action or their dismissal. Section 82 of the Labor Code provides that managerial
employees are not entitled to overtime pay.
It also asserts that Aspera was one of several employees who signed written contracts with a "builtin" overtime pay in the ten-hour working day and that their basic monthly pay was adjusted to reflect
the higher amount covering the guaranteed two-hour extra time whether worked or unworked.
Moreover, it argues that the contracts were submitted to BES Director Jonathan M.R.A. de la
Cruz, the same director who rendered the questioned decision He approved the same. Without his
approval, the petitioner would not have stipulated the ten-hour work schedule and would have
provided for a lower basic salary for an eight-hour working day.
In addition to his salary Aspera was given free board and lodging while in Saudi Arabia and free
transportation in going to and returning from that country.
We hold that under the particular circumstances of this case the Acting Minister of Labor and
Director De la Cruz committed a grave abuse of discretion amounting to lack of jurisdiction in
awarding overtime pay and in disregarding a contract that De la Cruz himself, who is supposed to
know the Eight-Hour Labor Law, had previously sealed with his imprimatur. Because of that
approval, the petitioner acted in good faith in enforcing the contract.
Furthermore, Aspera had not denied that he was a managerial employee within the meaning of
section 82. As such, he was not entitled to overtime pay.
WHEREFORE, the resolution of the Acting Minister of Labor dated November 16, 1981 is reversed
and set aside. Aspera's complaint is dismissed. No costs.
SO ORDERED.
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 petitionercompany 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 v9. 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 inPhilippine 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.