LIST OF CASES

1. Rada v NLRC, GR No 96078

2. Unison Labor v Union
3. Durabuilt v NLRC GR No. L -76746
4. Bisig v NLRC G.R. NO. 151309
5. Arica v NLRC GR No. G.R. No. 78210
6. Engineering v Ministry of Labor G.R. No. L-64967
7. Mercader v Manila Polo
8. Meralco Workers Union v. Manila Electric Company
9. Labor Congress v NLRC, G.R. No. 123938
10. Lambo v NLRC, G.R. No. 111042.
11. Reyes v NLRC, G.R. NO. 160233
12. Philippine Duplicators Inc v NLRC, G.R. No. 110068
13. GAA v CA G.R. No. L-44169
14. Honda Philippines Inc v Samahan ng Malayang Manggagawa
15. Vda de Racho v. Ilagan
16. Mayon Hotel v Adana
17. Equitable Banking Corp v Sadac

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LANTUD, NORA-JANNAH
1. HILARIO RADA, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION (Second
Division) and PHILNOR CONSULTANTS AND PLANNERS, INC., respondents.
G.R. No. 96078, January 9, 1992

DOCTRINES:

Project employees are those employed in connection with a particular construction

project.
Non-project (regular) employees are those employed by a construction company without
reference to any particular project.
Policy Instruction No. 20 - Project employees are not entitled to termination pay if they
are terminated as a result of the completion of the project or any phase thereof in which
they are employed, regardless of the number of projects in which they have been employed
by a particular construction company. Moreover, the company is not required to obtain
clearance from the Secretary of Labor in connection with such termination.
Reasonable connection rule – the test to determine a regular employment is the
reasonable connection between the particular activity performed by the employee in
relation to the usual business or trade of the employer; whether it is usually necessary or
desirable to such trade
Overtime pay

FACTS:
Petitioner was employed for almost 8 years from July 1977 to December 1985 by
the private respondent PHILNOR in three separate employment contract for definite
period, the first one for the period of 24 months, the second one for 9 months and the last
one for 19 months and additional 3 months. He was employed as a driver for PHILNOR’s
project of construction of Manila North Expressway Extension. The employment contract
stated that his engagement of his services is coterminous with the same. In December
1985, petitioner applied Personal Clearance with the Respondent and released Respondent
from all obligations and/or claims, etc. in a "Release, Waiver and Quitclaim"
In 1987, petitioner filed a Complaint for non-payment of separation pay and overtime pay.
Petitioner filed alleged that he was illegally dismissed and that he was not paid overtime
pay although he was made to render three hours overtime work form Monday to Saturday
for a period of three years. Philnor filed its Position Paper alleging, inter alia, that petitioner
was not illegally terminated since the project for which he was hired was completed; that
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he was hired under three distinct contracts of employment, each of which was for a definite
period, all within the estimated period of MNEE Stage 2 Project, covering different phases
or areas of the said project; that his work was strictly confined to the MNEE Stage 2 Project
and that he was never assigned to any other project of Philnor; that he did not render
overtime services and that there was no demand or claim for him for such overtime pay;
that he signed a "Release, Waiver and Quitclaim" releasing Philnor from all obligations and
claims; and that Philnor's business is to provide engineering consultancy services,
including supervision of construction services, such that it hires employees according to
the requirements of the project manning schedule of a particular contract.
The Labor Arbiter ruled in favor of the petitioner in stating that he is a regular employee.
The Labor Arbiter ordered his re-instatement and the payment of his overtime pay. On
appeal, the NLRC reversed the decision of the Labor Arbiter. Hence, this petition for
certiorari.

CONTENTION OF PETITIONER:

The petitioner claimed that he was a regular employee pursuant to Article 278(c) of the
Labor Code and, thus, he is entitled to security of tenure and cannot be terminated except
for a just cause under Article 280 of the Code; and that he was an administrative employee
working as a company driver, which position still exists and is essential to the conduct of
the business of Philnor even after the completion of his contract of employment. Petitioner
also questions the jurisdiction of respondent NLRC in taking cognizance of the appeal filed
by Philnor in spite of the latter's failure to file a supersedeas bond within ten days from
receipt of the labor arbiter's decision, by reason of which the appeal should be deemed to
have been filed out of time

CONTENTION OF RESPONDENTS PHILNOR:

PHILNOR alleged that petitioner was not a company driver since his job was to drive the
employees hired to work at the MNEE Stage 2 Project to and from the field; that the office
hours observed in the project were from 7:00 a.m. to 4:00 p.m. Mondays through
Saturdays; that Philnor adopted the policy of allowing certain employees, not necessarily
the project driver, to bring home project vehicles to afford fast and free transportation to
and from the project field office considering the distance between the project site and the
employees' residence, to avoid project delays and inefficiency due to employee tardiness
caused by transportation problem; that petitioner was allowed to use a project vehicle
which he used to pick up and drop off some ten employees; that when he was absent or on
leave, another employee living in Metro Manila used the same vehicle in transporting the
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same employees; that the time used by petitioner to and from his residence to the project
site from 5:30 a.m. to 7:00 a.m. and from 4:00 p.m. to 6:00 p.m., or about three hours daily,
was not overtime work as he was merely enjoying the benefit and convenience of free
transportation provided by Philnor, otherwise without such vehicle he would have used at
least four hours by using public transportation and spent P12.00 daily fare; that in the case
of Quiwa vs. Philnor Consultants and Planners, Inc., supra, the NLRC upheld Philnor's
position that Quiwa was a project employee and he was not entitled to termination pay
under Policy Instructions No. 20 since his employment was coterminous with the
completion of the project.

ISSUE:

1. Whether or not the appeal made by PHILNOR in NLRC was filed out of time?
2. Whether or not the petitioner was a regular employee who was illegally dismissed?
3. Whether or not the petitioner is entitled to (a) separation pay and (b) overtime pay?

RULING:

1. The appeal in NLRC was not filed out of time.

While it is true that the payment of the supersedeas bond is an essential requirement in the
perfection of an appeal, however, where the fee had been paid although payment was
delayed, the broader interests of justice and the desired objective of resolving
controversies on the merits demands that the appeal be given due course. Besides, it was
within the inherent power of the NLRC to have allowed late payment of the bond,
considering that the aforesaid decision of the labor arbiter was received by private
respondent on October 3, 1989 and its appeal was duly filed on October 13, 1989.

2. The petitioner was not a regular employee. He was only a project employee.

Petitioner was a project employee whose work was coterminous with the project or which
he was hired. Project employees, as distinguished from regular or non-project employees,
are mentioned in section 281 of the Labor Code as those "where the employment has been
fixed for a specific project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee.

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From the foregoing, it is clear that petitioner is a project employee considering that he does
not belong to a "work pool" from which the company would draw workers for assignment
to other projects at its discretion. It is likewise apparent from the facts obtaining herein
that petitioner was utilized only for one particular project, the MNEE Stage 2 Project of
respondent company. Hence, the termination of herein petitioner is valid by reason of the
completion of the project and the expiration of his employment contract.

3. He is not entitled to separation pay since he was not a regular employee.

However, he is entitled to overtime pay.

Anent the separation pay, Policy Instructions No. 20 of the Secretary of Labor, which was
issued to stabilize employer-employee relations in the construction industry, provides that
project employees are not entitled to termination pay if they are terminated as a result of
the completion of the project or any phase thereof in which they are employed, regardless
of the number of projects in which they have been employed by a particular construction
company. Moreover, the company is not required to obtain clearance from the Secretary of
Labor in connection with such termination.

Anent the claim for overtime compensation, we hold that petitioner is entitled to the same.
The fact that he picks up employees of Philnor at certain specified points along EDSA in
going to the project site and drops them off at the same points on his way back from the
field office going home to Marikina, Metro Manila is not merely incidental to petitioner's
job as a driver. Said transportation arrangement had been adopted, not so much for the
convenience of the employees, but primarily for the benefit of the employer, herein private
respondent. The herein Respondent resorted to the above transport arrangement because
from its previous project construction supervision experiences, Respondent found out that
project delays and inefficiencies resulted from employees' tardiness; and that the problem
of tardiness, in turn, was aggravated by transportation problems, which varied in degrees
in proportion to the distance between the project site and the employees' residence. Since
the assigned task of fetching and delivering employees is indispensable and consequently
mandatory, then the time required of and used by petitioner in going from his residence to
the field office and back, that is, from 5:30 a.m. to 7:00 a.m. and from 4:00 p.m. to around
6:00 p.m., which the labor arbiter rounded off as averaging three hours each working day,
should be paid as overtime work. Quintessentially, petitioner should be given overtime pay
for the three excess hours of work performed during working days from January, 1983 to
December, 1985.

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2. UNION CARBIDE LABOR UNION (NLU), petitioner, vs. UNION CARBIDE PHILIPPINES,
INC. AND THE HON. SECRETARY OF LABOR, respondents.
G.R. NO. 41314, November 13, 1992

DOCTRINES:

Management Prerogative
Laws, in this case, the 1973 Constitution, shall be given prospective effect unless
legislative intent for its retroactive application is so provided.

FACTS:
Complainants Agapito Duro, Alfredo Torio, and Rustico Javillonar, were dismissed
from their employment after an application for clearance to terminate them was approved
by the Secretary of Labor on December 19, 1972. Respondent's application for clearance
was premised on "willful violation of Company regulations, gross insubordination and
refusal to submit to a Company investigation.
It appears that the Company is operating on three (3) shifts namely: morning, afternoon
and night shifts. The workers in the third shift normally work from Monday to Saturday,
the last working day being Friday or forty (40) hours a week or from Monday to Friday.
Sometime in July 1972, there seems to be a change in the working schedule from Monday
to Friday as contained in the collective bargaining agreement to Sunday thru Thursday.

In manifestation of their dissention to the new work schedule, the three respondents Duro,
Torio, and Javillonar did not report for work on November 26, 1972 which was a Sunday
since it was not a working day according to the provisions of the Collective Bargaining
Agreement. Their absence caused their suspension for fourteen (14) days.

On May 4, 1973, the Arbitrator rendered a decision ordering the reinstatement with
backwages of the complainants. On June 8, 1973, the National Labor Relations Commission
dismissed respondent company's appeal for having been filed out of time. A motion for
reconsideration which was treated as an appeal was then filed by respondent company
before the Secretary of Labor, resulting in the modification of the Arbitrator's decision by
awarding complainants separation pay.

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CONTENTION OF PETITIONER:

Petitioner alleges that the change in the company's working schedule violated the existing
Collective Bargaining Agreement of the parties. Hence, complainants cannot be dismissed
since their refusal to comply with the re-scheduled working hours was based on a
provision of the Collective Bargaining Agreement. Petitioner further contends that the
dismissal of the complainants violated Section 9, Article II of the 1973 Constitution which
provides "the right of workers to self-organization, collective bargaining, security of tenure,
and just and humane conditions of work."

CONTENTION OF RESPONDENTS:

The respondents stated that under the said CBA, section 2 thereof provides that In the
exercise of its functions of management, the COMPANY shall have the sole and exclusive
right and power, among other things, to direct the operations and the working force of its
business in all respects; to be the sole judge in determining the capacity or fitness of an
employee for the position or job to which he has been assigned; to schedule the hours of
work, shifts and work schedules and to require work to be done in excess of eight hours
or Sundays or holidays as the exigencies of the service may require.

ISSUE:
Whether or not the company may change the working schedules?

RULING:
Yes, company may change the working schedules because of its management
prerogative.
Management retained the prerogative, whenever exigencies of the service so require, to
change the working hours of its employees. And as long as such prerogative is exercised in
good faith for the advancement of the employer's interest and not for the purpose of
defeating or circumventing the rights of the employees under special laws or under valid
agreements, this Court will uphold such exercise.
Further, the incident complained of took place sometime in 1972, so there is no violation of
the 1973 Constitution to speak of because the guarantee of security of tenure embodied
under Section 9, Article II may not be given a retroactive effect. It is the basic norm that

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provisions of the fundamental law should be given prospective application only, unless
legislative intent for its retroactive application is so provided.
We agree with the findings arrived at by both Arbitrator and the Secretary of Labor that
there is no unfair labor practice in this case. Neither was there gross and habitual neglect of
complainants' duties. Nor did the act of complainants in refusing to follow the new working
hours amount to serious misconduct or willful disobedience to the orders of respondent
company.

Although no serious objections may be offered to the Arbitrator's conclusion to order

reinstatement with backwages of the complainants, We now refrain from doing so
considering that reinstatement is no longer feasible due to the fact that the controversy
started more than 20 years ago aside from the obviously strained relations between the
parties.

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BANDING, FATMA SAHRA C.

3. BISIG MANGGAGAWA SA TRYCO AND/OR FRANCISCO SIGUIG, AS UNION

PRESIDENT, JOSELITO LARIO, VIVENCIO B. BARTE, SATURNINO EGERIA, AND
SIMPLICIO AYA-AY, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION,
TRYCO PHARMA CORPORATION, AND/OR WILFREDO C. RIVERA, respondents.
GR No. 151309, October 15, 2008

DOCTRINES:

UNFAIR LABOR PRACTICE – offenses committed by the employer or labor organization

which violate the constitutional rights of the workers and employees to self-organization.
ULP acts are inimical t the legitimate interests of both labor and management, disrupt
industrial peace and hinder the promotion of healthy and stable labor-management
relations. (Art. 248 of the Labor Code, as amended)
CONSTRUCTIVE DISMISSAL – refers to an involuntary resignation resorted to when
continued employment becomes impossible, unreasonable or unlikely; when there is a
demotion in rank or a diminution of pay; or where a clear discrimination, insensibility or
disdain by an employer becomes unbearable to an employee or an unwarranted transfer or
demotion of an employee, or other unjustified action prejudicial to the employee. The
employer has to prove that such managerial actions does not constitute constructive
dismissal.
MANAGEMENT PREROGATIVE - every employer has the inherent right to regulate,
according to his own discretion and judgment, all aspects of employment, including hiring,
work assignments, working methods, the time, the place, and manner of work, work
supervision, transfer of employees, lay-off of workers, and discipline, dismissal, and recall
of employees.

FACTS:
Tryco Pharma Corporation (Tryco) is a manufacturer of veterinary medicines and
its principal office is located in Caloocan City. Petitioners Lario, Barte, Egera, and Aya-ay
are its regular employees and are members of the Bisig Manggagawa sa Tryco (BMT), the
exclusive bargaining representative of the rank-and-file employees.

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Tryco and the petitioners signed separate MOA providing for a compressed workweek
schedule to be implemented in the company with 8am-6:12pm, from Monday to Friday, as
the regular working hours.
After the Department of Agriculture directed Trycos to transfer its production activities to
San Rafael, Bulacan, it ordered the petitioners to report to the company’s plan site in
Bulacan. The petitioners refused to obey contending that it constitutes unfair labor
practice.
LA dismissed on the ground that the petitioners were not constructively dismissed and that
the transfer orders did not amount to an unfair labor practice.
NLRC affirmed.
CA affirmed.

PETITIONERS’ CONTENTIONS:
1. The company acted in bad faith during the CBA negotiations because it sent
representatives without authority to bind the company, and this was the reason
why the negotiations failed.
2. The management transferred petitioners Larino, Barte, Egera and Aya-ay to Bulacan
to paralyze the union.
3. The transfer of personnel from Caloocan City to Bulacan City is tantamount to
constructive dismissal.

RESPONDENT’S CONTENTION:
1. They did not negotiate in bad faith, stating that, in fact, they sent the Executive Vice-
President and legal counsel as the company’s representatives to the CBA
negotiations. They claim that the failure to arrive at an agreement was due to the
stubbornness of the union panel.
2. Long before the start of negotiations, the company had already been planning to
decongest the Caloocan office to comply with the government policy to shift the
concentration of manufacturing activities from metropolis to the countryside. The
decision to transfer the company’s production was precipitated by the letter-
reminder of the Bureau of Animal Industry.
3. Petitioners were not dismissed but they refused to comply with the management’s
directive for them to report to the company’s plant in San Rafael, Bulacan.

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ISSUES:
1. Whether or not the transfer of Trycos personnel to its plant site in Bulacan
constitutes a constructive dismissal.
2. Whether or not the MOA is not enforceable as it is contrary to law.

RULING:
1. No. The transfer of the Trycos personnel was within the scope of the the
management prerogative. This prerogative extends to the managements right to
regulate, according to its own discretion and judgment, all aspects of employment,
including the freedom to transfer and reassign employees according to their
requirements of its business. When the transfer is not unreasonable, or
inconvenient, or prejudicial and it does not involve a demotion of work in rank or
diminution of salaries, benefits, and other privileges, the employees may not
complain that it amounts to constructive dismissal. A mere incidental inconvenience
is not sufficient to warrant a claim of constructive dismissal.

2. No. We do not agree with the petitioners’ assertion that the MOA on compressed
workweek scheme is not enforceable as it is contrary to law. It is binding and enforceable
against the petitioners. Where it is shown that the person making the waiver did so
voluntarily, with full understanding of what he was doing, and the consideration for the
quitclaim is credible and reasonable, the transaction must be recognized as a valid and
binding undertaking. MOA clearly states that the employee waives the payment of overtime
pay in exchange of a five-day workweek.
Unfair Labor Practice refers to the worker’s right to organize. With the exception
of Article 248(f) of the Labor Code of the Philippines, the prohibited acts are related to the
worker’s right to self organization and to the observance of a CBA. Without that element,
the acts, no matter how unfair, are not unfair labor practices.

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 4. DURABUILT RECAPPING PLANT & COMPANY and EDUARDO LAO, GENERAL
MANAGER, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, respondents.
GR No. 76746, July 27, 1987

DOCTRINES:

HOURS WORKED – Hours worked shall include: (a) all the time during which an employee
is required to be on duty or to be at a prescribed workplace; and (b) all the time during
which an employee is suffered or permitted to work. (Art. 84 of the Labor Code)
BACKWAGES – refers to all compensations including allowances, other benefits with
monetary equivalent that should have been earned by the employee but was not collected
by him because of unjust dismissal. It includes all amounts he could have earned starting
from the date of dismissal up to the time of reinstatement.
FAIR DAY’S WAGE FOR A FAIR DAY’S LABOR – continues to govern the relation between
labor and capital and remains a basic factor in determining employees wages. This doctrine
means that persons who work with substantially equal qualification, skill, effort and
responsibility, under similar conditions should be paid similar salaries, notwithstanding its
international character. If an employer accords employees the same position and rank, the
presumption is that these employees perform equal work.

FACTS:
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,
the private respondent was ordered reinstated to his former position with full back wages,
from the time he was terminated up to the time he is actually reinstated, without loss of
seniority rights and benefits accruing to him.
Petitioner filed its opposition to the computation. According to him, Bodegas is entitled
only to P3,834.05.
LA denied its opposition to the computation.
NLRC affirmed the LA’s order.

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PETITIONER’S CONTENTION:
Bodegas should only be entitled to a total of P3,834.05 and not P24,316.38, broken down as
follows:
Salaries – P1,993.00
ECOLA – P1,443.50
13th month pay – P407.55
The submitted computation contemplated a straight computation of 26 working days in
one month when the period covered by the computation was intermittently interrupted
due to frequent brownouts and machine trouble.

RESPONDENT’S CONTENTION:
Deductions cited by the petitioners cannot be made. The days during which they were not
in operation due to the brownouts should be included in the number of days worked for
the purpose of computing Bodegas’ backwages.

ISSUE:
Whether or not work interruptions due to brownouts are considered hours worked.

RULING:
No. Where the failure of the workers to work was due to the employer’s fault, the burden of
economic loss suffered by the employees should not be shifted to the employer. Each must
bear his own loss. 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
company over and above the losses it had suffered due to lack of raw materials and the
energy saving programs of the government.
Bodegas cannot be allowed to enrich himself at the expense of the company. The
computation of the backwages should be based on daily rather than on monthly pay
schedules where, as in case at bar, such basis is more realistic and adequate. The petitioner
is ordered to pay private respondent his backwages from the time he was terminated up to
the time has was actually reinstated computed on the basis of number of days when the
business was in actual operation.
The number of days where no work was required and could be done because of the
shutdowns due to electrical power interruptions, machine repair and lack of raw material
are not considered hours worked for purposes of computing the petitioner’s obligation to

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respondent employee. In no case shall the award exceed 3 years back pay as above
computed.

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DIRAMPATUN, NAIRA H.

5. TEOFILO ARICA, DANILO BERNABE, MELQUIADES DOHINO, ABONDIO OMERTA, GIL

TANGIHAN, SAMUEL LABAJO, NESTOR NORBE, RODOLFO CONCEPCION, RICARDO
RICHA, RODOLFO NENO, ALBERTO BALATRO, BENJAMIN JUMAMOY, FERMIN
DAAROL, JOVENAL ENRIQUEZ, OSCAR BASAL, RAMON ACENA, JAIME BUGTAY, and
561 OTHERS, HEREIN REPRESENTED BY KORONADO B. APUZEN, petitioners vs.

NATIONAL LABOR RELATIONS COMMISSION, HONORABLE FRANKLIN DRILON,

HONORABLE CONRADO B. MAGLAYA, HONORABLE ROSARIO B. ENCARNACION, and
STANDARD (PHILIPPINES) FRUIT CORPORATION, respondents
G. R. No. L-64967 September 23, 1985

DOCTRINES:

(1) Section 5, Rule 1, Book III of the Rules and Regulations Implementing the Labor
Code

SECTION 5. Waiting time. — (a) Waiting time spent by an employee shall be considered as
working time if waiting is an integral part of his work or the employee is required or
engaged by the employer to wait.

(b) An employee who is required to remain on call in the employer's premises or so close
thereto that he cannot use the time effectively and gainfully for his own purpose shall be
considered as working while on call. An employee who is not required to leave word at his
home or with company officials where he may be reached is not working while on call.

(2) Principle of res judicata operates to bar not only the re-litigation in a subsequent
action of the issues squarely raised, passed upon and adjudicated in the first suit, but also
the ventilation in said subsequent suit of any other issue which could have been raised in
the first but was not. 

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FACTS:

This case stemmed from a complaint filed against private respondent Stanfilco for
assembly time, moral damages and attorney’s fees, with the Regional Arbitration- Davao
City. The Labor Arbiter rendered a decision in favor of private respondent
STANFILCO, holding that:

“We cannot but agree with respondent that the pronouncement in that earlier case, i.e. the
thirty-minute assembly time long practiced cannot be considered waiting time or work
time and, therefore, not compensable, has become the law of the case which can no longer
be disturbed without doing violence to the time-honored principle of res judicata.”

NLRC uphold the Labor Arbiters’ decision and declared that:

“Surely, the customary functions referred to in the above-quoted provision of the agreement

includes the long-standing practice and institutionalized non-compensable assembly time.
This, in effect, estopped complainants from pursuing this case.

Petitioners filed a Motion for Reconsideration which was denied for lack of merit by public
respondent NLRC. Hence this petition for review on certiorari.

Contention of the petitioners:

Petitioners contend that the preliminary activities as workers of respondents STANFILCO

in the assembly area is compensable as working time (from 5:30am to 6:00 am) since these
preliminary activities are necessarily and primarily for private respondent’s benefit.

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These preliminary activities of the workers are as follows-.

(a) First there is the roll call. Followed by getting their individual work assignments from
the foreman.

(b) Then, they are individually required to accomplish the Laborer’s Daily Accomplishment
Report during which they are often made to explain about their reported accomplishment
the following day.

(c) Then they go to the stockroom to get the working materials, tools and equipment.

(d) Lastly, they travel to the field bringing with them their tools, equipment and materials.

All these activities take 30 minutes to accomplish.

Contention of the respondents:

The respondents aver that the 30-minute assembly time long practiced and
institutionalized by mutual consent of the parties under their Collective Bargaining
Agreement cannot be considered as ‘waiting time’ within the purview of Section 5, Rule 1,
Book III of the Rules and Regulations Implementing the Labor.

ISSUES:

(1) Whether or not the 30-minute activity of the petitioners before the scheduled
working time is compensable under the Labor Code.
(2) Whether or not the petitioner’s claim is barred by res judicata.

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RULING:

(1) No. The 30-minute activity of the petitioners before the scheduled working time is not
compensable. The Court held that the 30-minute assembly is a deeply-rooted, routinary
practice of the employees, and the proceedings attendant thereto are not infected with
complexities as to deprive the workers the time to attend to other personal pursuits. They
are not new employees as to require the company to deliver long briefings regarding their
respective work assignments. Their houses are situated right on the area where the farms
are located, such that after the roll call, which does not necessarily require the personal
presence, they can go back to their houses to attend to some chores. In short, they are not
subject to the absolute control of the company during this period, otherwise, their failure to
report in the assembly time would justify the company to impose disciplinary measures.
The evidence of the case demonstrates that the 30-minute assembly time was not primarily
intended for the interests of the employer, but ultimately for the employees to indicate
their availability or non-availability for work during every working day.

(2) Yes. The Court avers that herein petitioners are merely reiterating the very same claim
which they filed through the ALU and which records show had already long been
considered terminated and closed by this Court in G.R. No. L-48510. Therefore, the NLRC
can not be faulted for ruling that petitioners' claim is already barred by res-judicata.

Petitioners' claim that there was a change in the factual scenario which are "substantial
changes in the facts" makes respondent firm now liable for the same claim they earlier filed
against respondent which was dismissed is not tenable. It is thus axiomatic that the non-
compensability of the claim having been earlier established, constitute the controlling legal
rule or decision between the parties and remains to be the law of the case making this
petition without merit.

The Principle of res judicata operates to bar not only the re-litigation in a subsequent
action of the issues squarely raised, passed upon and adjudicated in the first suit, but also
the ventilation in said subsequent suit of any other issue which could have been raised in
the first but was not. So, even if new causes of action are asserted in the second action (e.g.
fraud, deceit, undue machinations), this would not preclude the operation of the doctrine
of res judicata. Those issues are also barred, even if not passed upon in the first. They could
have been, but were not, there raised

As aptly observed by the Solicitor General that this petition is "clearly violative of the
principle of res judicata.” 

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 6. ENGINEERING EQUIPMENT, INC., petitioner, vs.
MINISTER OF LABOR, DIRECTOR OF EMPLOYMENT SERVICES and MIGUEL V.
ASPERA, respondents.

G.R. No. L-64967 September 23, 1985

DOCTRINES:

(1) The stipulation of a ten-hour working day is void 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.

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(2) Composite or “package pay” or “all-inclusive salary” is an arrangement where the
employee’s salary includes the overtime pay. In other words, the overtime pay is “built-
in”.

(3) Sec. 82.of the Labor Code specifically provides that managerial employees, among
others, are not covered by the provisions on working conditions and rest periods, which
includes overtime pay.

FACTS:

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.

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 ten-hour 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 petition.

Contention of Respondent Aspera:

Aspera contends that he 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

20
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.

Contention of Petitioner Engineering Equipment Inc.:

The petitioner 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. That under Section 82 of the Labor Code, it 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 "built-in" 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.

ISSUE:
Whether or not Respondent Aspera is entitled to overtime pay.

RULING:

No. Aspera is not entitled to any overtime pay. Aspera was a managerial employee
exercising supervision and control over its rank-and-file employees with power to
recommend disciplinary action or their dismissal. Under Sec. 82 of the Labor Code, it
specifically provides that managerial employees, among others, are not covered by the
provisions on working conditions and rest periods, which includes overtime pay.
Therefore, Aspera being a managerial employee, which he did not deny, is not entitled to
overtime pay.

UMPAT, RASMIRAH

7. ALEJANDRO MERCADER, Plaintiff-Appellant, vs. MANILA POLO CLUB and ALEX D.

STEWART, Defendant-Appellees.
G.R. No. L-8373, September 28, 1956

DOCTRINES:

Art. 87 of the Labor Code. Overtime work.

Work may be performed beyond eight (8) hours a day provided that the employee is
paid for the overtime work, an additional compensation equivalent to his regular

21
 wage plus at least twenty-five percent (25%) thereof. Work performed beyond eight
hours on a holiday or rest day shall be paid an additional compensation equivalent
to the rate of the first eight hours on a holiday or rest day plus at least thirty percent
(30%) thereof.

Amicable Settlement is an agreement reached during mediation and conciliation

proceedings. Arbitration is a process wherein the third party from outside the
judicial system is chosen by parties to hear and decide their dispute.

3. “Whatever be the nature of his employment, whether permanent or temporary,

employee has no longer any action against the employer because he entered with
the latter in an amicable settlement whereby he renounced and waived any and all
claims against them.”

FACTS:
On May 11, 1946, Mercader was employed by the Manila Polo Club with a salary of
P375 per month. On August 19, 1949, the salary was increased to P400 allocated as
follows: P375 for regular pay, and P25.00 premium over regular pay for work on
Sundays and legal holidays, overtime and other special duty. He was also granted
two weeks leave with pay each year and 12 days-sick leave with pay in any one year
for proven illness.

On March 26, 1951, Mercader requested for leave with pay for a period from April 1
to August 1, which was granted, and on April 17, 1951, while still on vacation, he
received a letter from the manager of the Club, notifying him that the Club would
allow only two weeks sick leave for the year 1951 and would give one month’s
severance pay, for which a check for P405.00 was enclosed.

Mercader brought the matter to the Department of Labor where he filed the
corresponding claim for the amount of P10,000 for overtime work and other
privileges granted to him by the Club. After the corresponding proceedings, the
Secretary of Labor ordered Manila Polo Club to pay Mercader the sum of
P10,623,24.

On November 9, 1951, Mercader and his attorney entered into an amicable

settlement and subscribed to the following receipt:

‘RECEIVED from Gibbs, Chuidian & Quasha, as attorneys for the MANILA
POLO CLUB, Chartered Bank of India, Australia & China Check No. 192045 in
the sum of P7,000 and payable to Constancio Leuterio, as attorney for
Alejandro Mercader, in full settlement of any and all claims, including
overtime work, vacation and sick leave privileges, which said Alejandro
Mercader has or many have against the Manila Polo Club.

(Sgd.) ALEJANDRO MERCADER.

22
 (Sgd.) CONSTANCIO LEUTERIO.

Accordingly, the aforesaid case was completely closed.

Despite the settlement recited in the afore-quoted receipt, Mercader filed

with the Court of First Instance of Manila a complaint, stating that the Club
arbitrarily and capriciously, terminated his services in violation of the contract of
service and thus he was maliciously and arbitrarily deprived of his monthly income
and that as a result, he suffered untold mental anguish, serious anxiety, wounded
feelings, moral shame, social humiliation and besmirched reputation, and prayed
that the Defendant be ordered to pay him, by way of actual and compensatory
damages, the sum of P5,000 per annum from the date of his separation from the
service on May 15, 1951 up to the final termination of the case; the sum of P50,000,
by way of moral damages; the sum of P2,000, by way of attorney’s fees; and P200 by
way of litigation expenses.

CONTENTION OF THE PARTIES:

PLAINTIFF

1. The Defendant arbitrarily and capriciously, terminated his services in violation of

the contract of service and thus he was maliciously and arbitrarily deprived of his
monthly income and that as a result, he suffered untold mental anguish, serious
anxiety, wounded feelings, moral shame, social humiliation and besmirched
reputation.

2. Prayed that the Defendant be ordered to pay him, by way of actual and
compensatory damages, the sum of P5,000 per annum from the date of his
separation from the service on May 15, 1951 up to the final termination of the case.

DEFENDANT

1. Claimed that said separation was due to the fact that the Plaintiff was very much
behind in his work.

2. Pleaded that the Plaintiff is not entitled to recover any amount for on November 9,
1951.

3. The Plaintiff, in consideration of the sum of P7,000, released the Defendant from
all claims arising from his employment and his separation from the Club.

23
 4. Claim that it was already settled for P7,000 by virtue of the execution of the
receipt, quoted above, whereby the Plaintiff renounced any and all claims he may
have against the Defendant Club.

Hence, this appeal.

ISSUE:
Whether or not the overtime pay has been waived.

RULING:
YES. The settlement recited above, signed by the Plaintiff together with his counsel,
does constitute an absolute waiver of any and all claims including overtime work, vacation
and sick leave privileges which the Plaintiff had against the Manila Polo Club; consequently,
by virtue of said settlement, Plaintiff lost any action against the Defendant in connection
with his employment and separation from said Club. Plaintiff has lengthily discussed in his
brief about the nature of his employment and laboriously argued on the permanency of his
position as an employee of the Defendant Manila Polo Club; but, in our opinion, all these
questions are completely immaterial for, whatever be the nature of his employment,
whether permanent or temporary, the facts of the case show that he has no longer any
action against the Defendants because he entered with the latter in an amicable settlement
whereby he renounced and waived any and all claims against them.

Wherefore, the decision appealed from in so far as it dismisses the complaint is

hereby affirmed, and reversed as it orders the payment of P600 in favor of the Defendant
for litigation expenses and attorney’s fees. No pronouncement with regard to cost.

TATARO, SOLAIMAN M.

8. MERALCO WORKERS UNION, petitioner, vs. The Honorable Judge NICASIO YATCO
and MANILA ELECTRIC company, respondent.

G.R. No. L-19785, January 30, 1967

24
DOCTRINES:
Writ of preliminary injunction - an order granted at any stage of an action or proceeding
prior to the judgment or final order, requiring a party to an administrative case or any third
person to refrain from a particular act or acts.
Jurisdiciton - is the power and authority of the court to hear and decide a case.

Facts:
On May 15, 1962, the Company filed a complaint against the Union in the Court of
First Instance of Quezon City with a prayer for the issuance of a writ of preliminary
injunction ordering the Union "to restrain and desist from obstructing, stopping, blocking,
coercing, intimidating or in any way or manner preventing plaintiff Hermenegildo B. Reyes,
the executives and officials and the non-striking employees of the Company from going in
and out of its main office, of the Rockwell and Blaisdell power plants and all other offices,
stations and plants of the Company. Respondent Court granted the writ prayed for. Hence,
this petition.

Contentions of the Petitioner (Meralco Workers Union)

1. That the said Court of First Instance (RTC) has no jurisdiction of the case in issuing
writ of preliminary injunction because the matter being one which involved a labor
dispute.
2. That such no jurisdiction resulted to invalidity of the issuance of the writ of
preliminary injunction.

Contentions of the Respondent (Honorable Judge NICASIO YATCO and MANILA

ELECTRIC company)
1. That court has jurisdiction over the case considering the facts that the said
employees substantially shows the acts of violence relied upon by the plaintiffs
seeking from this Court a writ of preliminary injunction. Prayer for the issuance of
writ of preliminary injunction is about the demand of the workers, but for the acts of
violence and intimidation.
2. That the issuance of the writ of preliminary injunction is valid provided that acts of
violence and intimidation which on their face were unjustified, not to say unlawful.

Issue: Whether or not the issuance of the writ of preliminary injunction is improper.

25
Held:
No. The issuance of the writ of preliminary injunction is proper. Petitioner's
objection is without merit. The preliminary injunction issued by respondent Court was not
against the strike declared by the Union or the picketing it was conducting, but against acts
of violence and intimidation which on their face were unjustified, not to say unlawful.
Irrespective of the question of jurisdiction, an order of the court prohibiting the
commission of such acts cannot conceivably be a ground on which to base a claim for
damages. On the other hand, the parties having come to an amicable settlement of their
main dispute, apparently without any reservation as to any contemplated claim for
damages, a definite termination of this litigation would be more conducive to the
preservation of industrial peace and, from the long-range viewpoint, more beneficial to the
employees concerned.

9. LABOR CONGRESS OF THE PHILIPPINES (LCP), petitioner, vs NLRC, EMPIRE FOOD

PRODUCTS, its Proprietor/President & Manager, MR. GONZALO KEHYENG and MRS.
EVELYN KEHYENG, respondent.

G.R. No. 123938 May 21, 1998

DOCTRINES:

NOTICE OF DISMISSAL - Any employer who seeks to dismiss a worker shall furnish him a
written notice stating the particular acts or omission constituting the grounds for his

26
dismissal. In cases of abandonment of work, the notice shall be served at the worker's last
known address.

FACTS:

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

employees of respondent Empire Food Products, which hired them on various dates.
Petitioners filed against private respondents a complaint for payment of money claim[s]
and for violation of labor standard[s] laws.They also filed a petition for direct certification
of petitioner Labor Congress of the Philippines as their bargaining representative. On
October 23, 1990, petitioners represented by LCP President Benigno B. Navarro, Sr. and
private respondents Gonzalo Kehyeng and Evelyn Kehyeng in behalf of Empire Food
Products, Inc. entered into a Memorandum of Agreement.

On November 9, 1990, petitioners through LCP President Navarro submitted to private

respondents a proposal for collective bargaining.
On January 23, 1991, petitioners filed a complaint docketed as NLRC Case No. RAB-III-01-
1964-91 against private respondents for:

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

b. Union busting thru Harassments [sic], threats, and interfering with the rights of
employees to self-organization;
c. Violation of the Memorandum of Agreement dated October 23, 1990;
d. Underpayment of Wages in violation of R.A. No. 6640 and R.A. No. 6727, such as Wages
promulgated by the Regional Wage Board;
e. Actual, Moral and Exemplary Damages.

Labor Arbiter Santos absolved private respondents of the charges. Labor Arbiter Santos,
however, directed the reinstatement of the individual complainants.

On appeal, the National Labor Relations Commission vacated the Decision and remanded
the case to the Labor Arbiter for further proceedings.

On appeal, the NLRC, in its Resolution affirmed in toto the decision of Labor Arbiter Santos.
In so doing, the NLRC sustained the Labor Arbiter's findings.

Contentions of the Petitioners (LCP)

1. Petitioners averred that Mr. Navarro, a non-lawyer who filed the notice to file a
petition for review on their behalf, mistook which reglementary period to apply.
Instead of using the "reasonable time" criterion for certiorari under Rule 65, he used

27
 the 15-day period for petitions for review on certiorari under Rule 45. They
hastened to add that such was a mere technicality which should not bar their
petition from being decided on the merits in furtherance of substantial justice,
especially considering that respondents neither denied nor contradicted the facts
and issues raised in the petition.
2. Complainant alleged that the Labor Arbiter disregarded the testimonies of the 99
complainants who submitted their Consolidated Affidavit of Merit and Position
Paper which was adopted as direct testimonies during the hearing and cross-
examined by respondents' counsel.

Contentions of the Private Respondent/ NLRC

1. Private respondents asserted that the petition was filed out of time. As petitioners
admitted in their Notice to File Petition for Review on Certiorari that they received a
copy of the resolution (denying their motion for reconsideration) on 13 December
1995, they had only until 29 December 1995 to file the petition. Having failed to do
so, the NLRC thus already entered judgment in private respondents' favor.
2. Complainant did not present any single witness while respondent presented four
(4) witnesses in the persons of Gonzalo Kehyeng, Orlando Cairo, Evelyn Kehyeng
and Elvira Bulagan.

ISSUES:

1. whether or not the public respondent national labor relations commission gravely
abused its discretion when it disregarded or ignored not only the evidence favorable
to herein petitioners, applicable jurisprudence but also its own decisions and that of
this honorable highest tribunal which [was] tantamount not only to the deprivation
of petitioners' right to due process but would result in manifest injustice.
2. Whether or not the public respondent gravely abused its discretion when it
deprived the petitioners of their constitutional right to due process.
3. Whether or not the petitioners were illegally eased out of or constructively
dismissed from their only means of livelihood.
4. Whether or not petitioners should be reinstated from the date of their dismissal up
to the time of their reinstatement, with backwages, statutory benefits, damages and
attorney's fees.

HELD:

28
1. Yes. The public respondent national labor relations commission gravely abused its
discretion when it disregarded or ignored not only the evidence favorable to herein
petitioners, applicable jurisprudence but also its own decisions and that of this
honorable highest tribunal which was tantamount not only to the deprivation of
petitioners' right to due process but would result in manifest injustice. Invocation of
the general rule that factual findings of the NLRC bind this Court is unavailing under
the circumstances. Initially, we are unable to discern any compelling reason
justifying the Labor Arbiter's volte face from his 14 April 1992 decision reinstating
petitioners to his diametrically opposed 27 July 1994 decision, when in both
instances, he had before him substantially the same evidence. Neither do we find the
29 March 1995 NLRC resolution to have sufficiently discussed the facts so as to
comply with the standard of substantial evidence. For one thing, the NLRC confessed
its reluctance to inquire into the veracity of the Labor Arbiter's factual findings,
staunchly declaring that it was "not about to substitute its judgment on matters that
are within the province of the trier of facts." Yet, in the 21 July 1992 NLRC
resolution, 8 it chastised the Labor Arbiter for his errors both in judgment and
procedure; for which reason it remanded the records of the case to the Labor
Arbiter for compliance with the pronouncements therein.

2. Yes. The public respondent gravely abused its discretion when it deprived the
petitioners of their constitutional right to due process. Upon review of the minutes
of the proceedings on record, however, it appears that complainant presented
witnesses, namely BENIGNO NAVARRO, JR., who adopted its POSITION PAPER AND
CONSOLIDATED AFFIDAVIT as Exhibit A and the annexes thereto, inclusive. Minutes
of the proceedings on record show that complainant further presented other
witnesses, namely: ERLINDA BASILIO; LOURDES PANTILLO, MARIFE PINLAC, LENI
GARCIA Formal offer of Documentary and Testimonial Evidence was made by the
complainant.

3. Yes. The petitioners were illegally eased out of or constructively dismissed from
their only means of livelihood. It may likewise be stressed that the burden of
proving the existence of just cause for dismissing an employee, such as
abandonment, rests on the employer, a burden private respondents failed to
discharge. Private respondents, moreover, in considering petitioners' employment
to have been terminated by abandonment, violated their rights to security of tenure
and constitutional right to due process in not even serving them with a written
notice of such termination. Sec. 2. Notice of Dismissal — any employer who seeks to
dismiss a worker shall furnish him a written notice stating the particular acts or

29
 omission constituting the grounds for his dismissal. In cases of abandonment of
work, the notice shall be served at the worker's last known address.

4. Yes. Petitioners should be reinstated from the date of their dismissal up to the time
of their reinstatement, with backwages, statutory benefits, damages and attorney's
fees. etitioners are therefore entitled to reinstatement with full back wages pursuant
to Article 279 of the Labor Code, as amended by R.A. No. 6715. Nevertheless, the
records disclose that taking into account the number of employees involved, the
length of time that has lapsed since their dismissal, and the perceptible resentment
and enmity between petitioners and private respondents which necessarily strained
their relationship, reinstatement would be impractical and hardly promotive of the
best interests of the parties. In lieu of reinstatement then, separation pay at the rate
of one month for every year of service, with a fraction of at least six (6) months of
service considered as one (1) year, is in order.

BEDAR, FATIMAH SOMAYYAH D.

10. AVELINO LAMBO and VICENTE BELOCURA, Petitioners, v. NATIONAL LABOR

RELATIONS COMMISSION and J.C. TAILOR SHOP and/or JOHNNY CO, Respondents.

G.R. No. 111042. October 26, 1999

30
DOCTRINES:

Two categories of employees paid by results

1. Those whose time and performance are supervised by the employer; and

2. Those whose time and performance are unsupervised.

Elements of employer-employee relationship

1. the selection and engagement of the employee;

2. the payment of wages;

3. the power of dismissal; and

4.the power to control the employees conduct.

Abandonment of work
There must be proof of a deliberate and unjustified refusal on the part of an employee to
resume his employment. The burden of proof is on the employer to show an unequivocal
intent on the part of the employee to discontinue employment.

Wage
The term “wage” is broadly defined in Art. 97 of the Labor Code as remuneration or
earnings, capable of being expressed in terms of money whether fixed or ascertained on a
time, task, piece or commission basis. Payment by the piece is just a method of
compensation and does not define the essence of the relations.

FACTS:

Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private
respondents J.C. Tailor Shop and/or Johnny Co on September 10, 1985 and March 3, 1985,
respectively. They worked from 8:00 a.m. to 7:00 p.m. daily, including Sundays and
holidays. As in the case of the other 100 employees of private respondents, petitioners
were paid on a piece-work basis, according to the style of suits they made. Regardless of
the number of pieces they finished in a day, they were each given a daily pay of at
least P64.00.

31
On January 17, 1989, petitioners filed a complaint against private respondents for illegal
dismissal and sought recovery of overtime pay, holiday pay, premium pay on holiday and
rest day, service incentive leave pay, separation pay, 13th month pay, and attorneys fees.

Labor Arbiter Jose G. Gutierrez found private respondents guilty of illegal dismissal and
accordingly ordered them to pay petitioners’ claims. On appeal by private respondents, the
NLRC reversed the decision of the Labor Arbiter. It found that petitioners had not been
dismissed from employment but merely threatened with a closure of the business if they
insisted on their demand for a straight payment of their minimum wage. The NLRC held
petitioners guilty of abandonment of work and accordingly dismissed their claims except
that for 13th month pay.

PETITIONERS’ CONTENTION

Petitioners allege that they were dismissed by private respondents as they were about to
file a petition with the Department of Labor and Employment (DOLE) for the payment of
benefits such as Social Security System (SSS) coverage, sick leave and vacation leave. They
deny that they abandoned their work.

RESPONDENT’S CONTENTION

Private respondents contend that petitioners refused to report for work after learning that
the J.C. Tailoring and Dress Shop Employees Union had demanded their dismissal for
conduct unbecoming of employees. In support of their claim, private respondents
presented the affidavits of Emmanuel Y. Caballero, president of the union, and Amado
Cabaero, member, that petitioners had not been dismissed by private respondents but that
practically all employees of the company, including the members of the union had asked
management to terminate the services of petitioners.

ISSUE: 
1. Are Lambo and Belocura regular employees?

2. Was there abandonment of work by Lambo and Belocura?

RULING:

32
There is no dispute that petitioners were employees of private respondents although they
were paid not on the basis of time spent on the job but according to the quantity and the
quality of work produced by them. There is an element of control and supervision over the
manner as to how work is to be performed.

In this case, private respondents exercised control over the work of petitioners. As tailors,
petitioners worked in the company’s premises from 8:00 a.m. to 7:00 p.m. daily, including
Sundays and holidays. The mere fact that they were paid on a piece-rate basis does not
negate their status as regular employees and does not define the essence of the relations.
Nor does the fact that the petitioners are not covered by the SSS affect the employer-
employee relationship.

Indeed, the following factors show that petitioners, although piece-rate workers, were
regular employees of private respondents: (1) within the contemplation of Art. 280 of the
Labor Code, their work as tailors was necessary or desirable in the usual business of
private respondents, which is engaged in the tailoring business; (2) petitioners worked for
private respondents throughout the year, their employment not being dependent on a
specific project or season; and, (3) petitioners worked for private respondents for more
than one year.

There must be proof of a deliberate and unjustified refusal on the part of an employee to
resume his employment. The burden of proof is on the employer to show an unequivocal
intent on the part of the employee to discontinue employment. Mere absence is not
sufficient. It must be accompanied by manifest acts unerringly pointing to the fact that the
employee simply does not want to work anymore.
Private respondent failed to discharge this burden. Other than the self-serving declarations
in the affidavits of their two employees, private respondents did not adduce proof of overt
acts of petitioners showing their intention to abandon their work. Abandonment is a matter
of intention; it cannot be inferred or presumed from equivocal acts.
Private respondents invoke the compromise agreement, dated March 2, 1993, between
them and petitioner Avelino Lambo, whereby in consideration of the sum of P10,000.00,
petitioner absolved private respondents from liability for money claims or any other
obligations. To be sure, not all quitclaims are per se invalid or against public policy. But
those (1) where there is clear proof that the waiver was wangled from an unsuspecting or
gullible person or (2) where the terms of settlement are unconscionable on their face are
invalid. In these cases, the law will step in to annul the questionable transaction. However,
considering that the Labor Arbiter had given petitioner Lambo a total award of P94,719.20,
the amount of P10,000.00 to cover any and all monetary claims is clearly unconscionable.

33
11. ROGELIO REYES, Petitioner, v. NATIONAL LABOR RELATIONS COMMISSION, Fifth
Division, and UNIVERSAL ROBINA CORPORATION GROCERY DIVISION, Respondents.
G.R. NO. 160233 : August 8, 2007

DOCTRINES:

Art. 287. Retirement. - Any employee may be retired upon reaching the retirement age
established in the collective bargaining agreement or other applicable employment
contract.

34
xxx

In the absence of a retirement plan or agreement providing for retirement benefits of

employees in the establishment, an employee upon reaching the age of sixty (60) years or
more, but not beyond sixty five (65) years which is hereby declared the compulsory
retirement age, who has served at least five (5) years in the said establishment, may retire
and shall be entitled to retirement pay equivalent to at least one half (1/2) month salary for
every year of service, a fraction of at least six (6) months being considered as one whole
year.

Unless the parties provide for broader inclusions, the term one half (1/2) month salary
shall mean fifteen (15) days plus one twelfth (1/12) of the 13th month pay and the cash
equivalent of not more than five (5) days of service incentive leaves.

Two types of retirement

(a) compulsory and (b) optional. The first takes place at age 65, while the second is
primarily determined by the collective bargaining agreement or other employment
contract or employer's retirement plan. In the absence of any provision on optional
retirement in a collective bargaining agreement, other employment contract, or employer's
retirement plan, an employee may optionally retire upon reaching the age of 60 years or
more, but not beyond 65 years, provided he has served at least five years in the
establishment concerned.

Compensations not deemed part of the basic salary

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

a) Cost-of-living allowances granted pursuant to Presidential Decree 525 and Letter

of Instruction No. 174;

b) Profit sharing payments;

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

FACTS:

35
Petitioner was employed as a salesman at private respondents Grocery Division in Davao
City on August 12, 1977. He was eventually appointed as unit manager of Sales
Department-South Mindanao District, a position he held until his retirement on November
30, 1997. Thereafter, he received a letter regarding the computation of his separation pay.
Insisting that his retirement benefits and 13 th month pay must be based on the average
monthly salary of P42,766.19, which consists of P10,919.22 basic salary and P31,846.97
average monthly commission, petitioner refused to accept the check issued by private
respondent in the amount of P200,322.21. Instead, he filed a complaint before the
arbitration branch of the NLRC for, inter alia, 13th month pay.

The Labor Arbiter held that the sales commission is part of the basic salary of a unit
manager. On appeal, the NLRC modified the decision of the Labor Arbiter by excluding the
overriding commission in the computation of the 13 th month pay. Both parties moved for
reconsideration but was denied. Only petitioner filed a petition for certiorari before the
Court of Appeals but was dismissed for lack of merit. MR denied. Hence, this petition before
the SC.

PETITIONER’S CONTENTION

Petitioner contends that the commissions form part of the basic salary, citing the case of
Philippine Duplicators, Inc. v. National Labor Relations Commission, wherein the Court
held that commissions earned by salesmen form part of their basic salary.

RESPONDENT’S CONTENTION
Private respondent contends that petitioner knew that the overriding commission is not
included in the basic salary because it had not been considered as such for a long time in
the computation of the 13th month pay, leave commissions, absences and tardiness.
Petitioner himself stated in the complaint that his basic salary is P10,919.22, thus, he is
estopped from claiming otherwise. Moreover, in Boie-Takeda Chemicals, Inc. v. De la
Serna, the Supreme Court held that the fixed or guaranteed wage is patently "the basic
salary" for this is what the employee receives for a standard work period, and that
commissions are given for extra efforts exerted in consummating sales or other
transactions. Also, in Soriano v. National Labor Relations Commission, the Court clarified
that overriding commission is not properly includible in the basic salary as it must be
earned by actual market transactions attributable to the claimant. Thus, as a unit manager
who supervised the salesmen under his control and did not enter into actual sale

36
transactions, petitioner's overriding commissions must not be considered in the
computation of the retirement benefits and 13th month pay.

ISSUE:

Should petitioner's commissions be considered in the computation of his retirement

benefits and 13th month pay

RULING:

No, petitioner was receiving a monthly sum of P10,919.22 as salary corresponding to his
position as Unit Manager. Thus, as correctly ruled by public respondent NLRC, the
"overriding commissions" paid to him by Universal Robina Corp. could not have been 'sales
commissions' in the same sense that Philippine Duplicators paid its salesmen sales
commissions. Unit Managers are not salesmen; they do not effect any sale of article at all.
Therefore, any commission which they receive is certainly not the basic salary which
measures the standard or amount of work of complainant as Unit Manager. Accordingly,
the additional payments made to petitioner were not in fact sales commissions but rather
partook of the nature of profit-sharing business. Certainly, from the foregoing, the doctrine
in Boie-Takeda Chemicals and Philippine Fuji Xerox Corporation, which pronounced that
commissions are additional pay that does not form part of the basic salary, applies to the
present case.

Aside from the fact that as unit manager petitioner did not enter into actual sale
transactions, but merely supervised the salesmen under his control, the disputed
commissions were not regularly received by him. Only when the salesmen were able to
collect from the sale transactions can petitioner receive the commissions. Conversely, if no
collections were made by the salesmen, then petitioner would receive no commissions at
all. In fine, the commissions which petitioner received were not part of his salary structure
but were profit-sharing payments and had no clear, direct or necessary relation to the
amount of work he actually performed. The collection made by the salesmen from the sale
transactions was the profit of private respondent from which petitioner had a share in the
form of a commission.

Insofar as what constitutes "basic salary," the foregoing discussions equally apply to the
computation of petitioner's 13th month pay. As held in San Miguel Corporation v. Inciong:

37
Under Presidential Decree 851 and its implementing rules, the basic salary of an employee
is used as the basis in the determination of his 13th-month pay. Any compensations or
remunerations which are deemed not part of the basic pay is excluded as basis in the
computation of the mandatory bonus.

SAMPACO, SHARA-MYELLAH S.

12. PHILIPPINE DUPLICATORS, INC., petitioner, vs. NATIONAL LABOR RELATIONS

COMMISSION and PHILIPPINE DUPLICATORS EMPLOYEES UNION-TUPAS, respondent.

G.R. No. 110068, February 15, 1995

38
DOCTRINES:

1. The second paragraph of Section 5 (a) of the Revised Guidelines Implementing the
13th Month Pay reads as follows:

Employees who are paid a fixed or guaranteed wage plus commission

are also entitled to the mandated 13th month pay, based on their
total earnings during the calendar year, i.e., on both their fixed or
guaranteed wage and commission.

2. The Supplementary Rules and Regulations Implementing P.D. No. 851 sought to
clarify the scope of items excluded in the computation of the 13th month pay; viz.:

Sec. 4. Overtime pay, earnings and other remunerations which are

not part of the basic salary shall not be included in the computation
of the 13th month pay.

3. Doctrine of Stare Decisis

4. The doctrine set out in the decision of the Second Division: Additional payments
made to employees, to the extent they partake of the nature of profit-sharing
payments, are properly excluded from the ambit of the term "basic salary" for
purposes of computing the 13th month pay due to employees. Such additional
payments are not "commissions" within the meaning of the second paragraph of
Section 5 (a) of the Revised Guidelines Implementing 13th Month Pay.

FACTS:

On 11 November 1993, this Court, through its Third Division, rendered a decision
dismissing the Petition for Certiorari filed by petitioner Philippine Duplicators, Inc.
(Duplicators) in G.R. No. 110068. The Court upheld the decision of public respondent
National Labor Relations Commission (NLRC), which affirmed the order of Labor
Arbiter Felipe T. Garduque II directing petitioner to pay 13th month pay to private
respondent employees computed on the basis of their fixed wages plus sales
commissions. The Third Division also denied with finality on 15 December 1993 the
Motion for Reconsideration filed (on 12 December 1993) by petitioner.

On 17 January 1994, petitioner Duplicators filed: (a) a Motion for Leave to Admit
Second Motion for Reconsideration; and (b) a Second Motion for Reconsideration.

CONTENTIONS OF THE PETITIONER

39
 1. Petitioner invoked the decision handed down by this Court, through its Second
Division, in the two (2) consolidated cases of Boie-Takeda Chemicals,
Inc. vs. Hon. Dionisio de la Serna and Philippine Fuji Xerox Corp. vs. Hon. Cresenciano
B. Trajano.
2. Petitioner submits that the decision in the Duplicators case should now be
considered as having been abandoned or reversed by the Boie-Takeda decision,
considering that the latter went "directly opposite and contrary to" the conclusion
reached in the former. Petitioner prays that the decision rendered in Duplicators be
set aside and another be entered directing the dismissal of the money claims of
private respondent Philippine Duplicators' Employees' Union.

CONTENTION OF THE RESPONDENTS

1. The decision rendered in Boie-Takeda cannot serve as a precedent under the

doctrine of stare decisis. The Boie-Takeda decision was promulgated a month after
this Court, (through its Third Division), had rendered the decision in the instant
case. Also, the petitioner's (first) Motion for Reconsideration of the decision had
already been denied, with finality before the Boie-Takeda decision became final.

2. Petitioner Duplicators did not put in issue the validity of the Revised Guidelines on
the Implementary on of the 13th Month Pay Law, either in its Petition
for Certiorari or in its (First) Motion for Reconsideration. In fact, petitioner's
counsel relied upon these Guidelines and asserted their validity in opposing the
decision rendered by public respondent NLRC. Any attempted change in petitioner's
theory, at this late stage of the proceedings, cannot be allowed.

3. The doctrines enunciated in Boie-Takeda and Philippine Duplicators (instant case)

in fact co-exist one with the other. However, the purported "commissions" paid by
the Boie-Takeda Company to its medical representatives could not have been "sales
commissions" in the same sense that Philippine Duplicators paid its salesmen Sales
commissions.

ISSUE
1. Whether or not sales commission is included in the coverage of the basic salary
for purposes of computing 13th month pay.

RULING:

Yes. The third division found that sales commission is considered included in the
basic salary of the salesmen for purposes of computing 13th month pay.

As ruled in Atok-Big Wedge Mining Co., Inc.  v.  Atok-Big Wedge Mutual Benefit Association:

40
 Whether or not [a] bonus forms part of waqes depends upon the circumstances or
conditions for its payment.
A. PART OF THE WAGE - If it is an additional compensation which the employer
promised and agreed to give without any conditions imposed for its payment,
such as success of business or greater production or output.
B. NOT PART OF THE WAGE - if it is paid only if profits are realized or a certain
amount of productivity achieved. It is also paid on the basis of actual or actual
work accomplished. If the desired goal of production is not obtained, or the
amount of actual work accomplished, the bonus does not accrue.

In the instant case, there is no question that the sales commission earned by the salesmen
who make or close a sale of duplicating machines distributed by petitioner corporation,
constitute part of the compensation or remuneration paid to salesmen for serving as
salesmen, and hence as part of the "wage" or salary of petitioner's salesmen. Indeed, it
appears that petitioner pays its salesmen a small fixed or guaranteed wage; the greater part
of the salesmen's wages or salaries being composed of the sales or incentive commissions
earned on actual sales closed by them. No doubt this particular galary structure was
intended for the benefit of the petitioner corporation, on the apparent assumption that
thereby its salesmen would be moved to greater enterprise and diligence and close more
sales in the expectation of increasing their sales commissions. This, however, does not
detract from the character of such commissions as part of the salary or wage paid to each of
its salesmen for rendering services to Petitioner Corporation.

In other words, the sales commissions received for every duplicating machine sold
constituted part of the basic compensation or remuneration of the salesmen of
Philippine Duplicators for doing their job. The portion of the salary structure
representing commissions simply comprised an automatic increment to the monetary
value initially assigned to each unit of work rendered by a salesman.

The sales commissions are not overtime payments, nor profit-sharing payments nor any

other fringe benefit. Thus, the salesmen's commissions, comprising a pre-determined
percent of the selling price of the goods sold by each salesman, were properly
included in the term "basic salary" for purposes of computing their 13th month pay.

In Boie-Takeda,   commissions paid to or received by medical representatives or by the

rank and file employees were excluded from the term "basic salary" because these were
paid to the medical representatives and rank-and-file employees as "productivity
bonuses."

Productivity bonuses are payments as additional monetary benefits not properly included
in the term "basic salary" in computing their 13th month pay. These are generally tied to
the productivity, or capacity for revenue production, of a corporation; such bonuses closely
resemble profit-sharing payments and have no clear director necessary relation to the
amount of work actually done by each individual employee.

41
Finally, the statement of the Second Division in Boie-Takeda declaring null and void the
second paragraph of Section 5(a) of the Revised Guidelines Implementing the 13th Month
Pay, provides no legal basis for including within the term "commission" there used
additional payments to employees which are, as a matter of fact, in the nature of profit-
sharing payments or bonuses. That same second paragraph however, correctly recognizes
that commissions, like those paid in Duplicators, may constitute part of the basic salary
structure of salesmen and hence should be included in determining the 13th month pay; to
this extent, the second paragraph is and remains valid.

The Motions for (a) Leave to File a Second Motion for Reconsideration and the (b) aforesaid
Second Reconsideration are DENIED for lack of merit. No further pleadings will be
entertained.

MANGORAC, NORMINA MACARAMPAT

42
 13. ROSARIO A. GAA, petitioner, vs.
THE HONORABLE COURT OF APPEALS, EUROPHIL INDUSTRIES CORPORATION, and
CESAR R. ROXAS, Deputy Sheriff of Manila, respondents.

G.R. No. L-44169 December 3, 1985

DOCTRINES:
In determining whether a particular laborer or employee is really a "laborer," the character
of the work he does must be taken into consideration. He must be classified not according to
the arbitrary designation given to his calling, but with reference to the character of the
service required of him by his employer.

Article 1708 of the New Civil Code operates in favor of those who are laboring men or women
in the sense that their work is manual. Persons belonging to this class usually look to the
reward of a day's labor for immediate or present support, and such persons are more in need
of the exemption than any others.

FACTS:

Respondent Europhil Industries Corporation (Europhil) was formerly one of the tenants in
Trinity Building at T.M. Kalaw Street, Manila, while petitioner Rosario A. Gaa (Gaa) was
then the building administrator. Respondent commenced an action in the Court of First
Instance (CFI) of Manila for damages against petitioner "for having perpetrated certain acts
that respondent considered a trespass upon its rights, namely, cutting of its electricity, and
removing its name from the building directory and gate passes of its officials and
employees". The CFI rendered judgment in favor of respondent.

The said decision having become final and executory, a writ of garnishment was issued
garnishing petitioner’s "salary, commission and/or remuneration." Petitioner then filed
with the CFI - Manila a motion to lift said garnishment. Said motion was denied by the
lower court. A motion for reconsideration of said order was likewise denied, and then
petitioner filed with the Court of Appeals (CA) a petition for certiorari against said lower
court’s order. The CA dismissed the petition. Hence, the petitioner filed a petition for
review on certiorari before the Supreme Court.

CONTENTIONS
PETITIONER RESPONDENTS
Her salaries, commission and, or Petitioner is not a mere laborer as
remuneration are exempted from contemplated under Article 1708 as the
execution under Article 1708 of the New term laborer does not apply to one who
Civil Code which states that “The laborer’s holds a managerial or supervisory position
wage shall not be subject to execution or like that of petitioner, but only to those
attachment, except for debts incurred for "laborers occupying the lower strata." That

43
 food, shelter, clothing and medical the term "wages" means the pay given" as
attendance.” hire or reward to artisans, mechanics,
domestics or menial servants, and laborers
employed in manufactories, agriculture,
mines, and other manual occupation and
usually employed to distinguish the sums
paid to persons hired to perform manual
labor, skilled or unskilled, paid at stated
times, and measured by the day, week,
month, or season,", which is the ordinary
acceptation of the said term.

ISSUES:

1. Whether or not petitioner is considered a laborer as to exempt her salary from

garnishment under Art. 1708 of the New Civil Code?

2. Whether or not CA was correct in interpreting Article 1708 of the New Civil Code?

RULING:
1. No. It is beyond dispute that petitioner is not an ordinary or rank and file laborer
but "a responsibly place employee," of El Grande Hotel, responsible for planning,
directing, controlling, and coordinating the activities of all housekeeping personnel.
Considering the importance of petitioner's function in El Grande Hotel, it is
undeniable that petitioner is occupying a position equivalent to that of a managerial
or supervisory position.

In its broadest sense, the word "laborer" includes everyone who performs any kind
of mental or physical labor, but as commonly and customarily used and understood,
it only applies to one engaged in some form of manual or physical labor.

In Oliver vs. Macon Hardware Co., 98 Ga 249 SE 403, it was held that in determining
whether a particular laborer or employee is really a "laborer," the character of the
work he does must be taken into consideration. He must be classified not according
to the arbitrary designation given to his calling, but with reference to the character
of the service required of him by his employer.

In Kline vs. Russel, 113 Ga. 1085, 39 SE 477, citing Oliver vs. Macon Hardware Co.,
supra, it was held that a laborer, within the statute exempting from garnishment the
wages of a "laborer," is one whose work depends on mere physical power to
perform ordinary manual labor, and not one engaged in services consisting mainly
of work requiring mental skill or business capacity, and involving the exercise of
intellectual faculties.

44
 2. Yes. CA was correct in ruling that petitioner’s salaries, commission and other
remuneration due her do not constitute wages due a laborer which, under Article
1708 of the Civil Code, are not subject to execution or attachment.

Article 1708 used the word "wages" and not "salary" in relation to "laborer" when it
declared what are to be exempted from attachment and execution. The term
"wages" as distinguished from "salary", applies to the compensation for manual
labor, skilled or unskilled, paid at stated times, and measured by the day, week,
month, or season, while "salary" denotes a higher degree of employment, or a
superior grade of services, and implies a position of office: by contrast, the term
"wages" indicates considerable pay for a lower and less responsible character of
employment, while "salary" is suggestive of a larger and more important service.

The distinction between wages and salary was adverted to in Bell vs. Indian
Livestock Co., wherein it was said: " 'Wages' are the compensation given to a hired
person for service, and the same is true of 'salary'. The words seem to be
synonymous, convertible terms, though we believe that use and general acceptation
have given to the word 'salary' a significance somewhat different from the word
'wages' in this: that the former is understood to relate to position of office, to be the
compensation given for official or other service, as distinguished from 'wages', the
compensation for labor."

The Court do not think that the legislature intended the exemption in Article 1708 of
the New Civil Code to operate in favor of any but those who are laboring men or
women in the sense that their work is manual. Persons belonging to this class
usually look to the reward of a day's labor for immediate or present support, and
such persons are more in need of the exemption than any others. Petitioner is
definitely not within that class.

MACUMBAL, HANIMAI

14. HONDA PHILS., INC., petitioner, vs. SAMAHAN NG MALAYANG MANGGAGAWA SA

HONDA , respondent

45
 G.R. No. 145561, June 15, 2005

DOCTRINES

A collective bargaining agreement refers to the negotiated contract between a

legitimate labor organization and the employer concerning wages, hours of work and all
other terms and conditions of employment in a bargaining unit. As in all contracts, the
parties in a CBA may establish such stipulations, clauses, terms and conditions as they
may deem convenient provided these are not contrary to law, morals, good customs,
public order or public policy. Thus, where the CBA is clear and unambiguous, it becomes
the law between the parties and compliance therewith is mandated by the express policy
of the law.

Voluntary employer practice (“PRESENT PRACTICE” as phrased in the CBA) cannot be

unilaterally withdrawn by the employer without violating Art. 100 of the Labor Code.

Art. 100 of the Labor Code. Prohibition against elimination or diminution of benefits.

Nothing in this Book shall be construed to eliminate or in any way diminish supplements,
or other employee benefits being enjoyed at the time of promulgation of this Code.

Presidential Decree No. 851, otherwise known as the 13th Month Pay Law, which
required all employers to pay their employees a 13th month pay, was issued to protect
the level of real wages from the ravages of worldwide inflation.  The revised guidelines
also provided for a pro-ration of this benefit only in cases of resignation or separation
from work. As the rules state, under these circumstances, an employee is entitled to a
pay in proportion to the length of time he worked during the year, reckoned from the
time he started working during the calendar year.

FACTS:

Samahan ng Malayang Manggagawa sa Honda and Honda Phils. forged a Collective

Bargaining Agreement (CBA) effective until year 2000. In 1998, the parties re-negotiated
for the fourth and fifth years for their CBA but then the talks bogged down, respondent
union filed a Notice of Strike on the ground of bargaining deadlock. Thereafter, Honda filed
a Notice of Lockout. In 1999, respondent filed a second Notice of Strike on the ground of
unfair labor practice alleging that Honda illegally contracted out work for detriment of the
workers.

As a result, Honda announced its new computation of the 13th and 14th month pay to be
granted to all its employees whereby the thirty-one (31)-day long strike shall be
considered unworked days for purposes of computing said benefits. As per the company’s
new formula, the amount equivalent to 1/12 of the employees’ basic salary shall be
deducted from these bonuses, with a commitment however that in the event that the strike

46
is declared legal, Honda shall pay the amount deducted. In short, Honda wants to
implement a pro-rated computation of the benefits based on the "no work, no pay" rule. 

VOLUNTARY ARBITRATOR’S Decision: Honda’s pro-rated computation is INVALID.

COURT OF APPEALS: Dismissed the petition.

CONTENTIONS OF THE PARTIES:

PETITIONER RESPONDENT

1. Where the CBA is clear and unambiguous, 1. The phrase "present practice" as
it becomes the law between the parties and mentioned in the CBA does not refer to
compliance therewith is mandated by the computation of benefits but refers to the
express policy of the law. manner and requisites with respect to the
payment of the bonuses, i.e., 50% to be given
in May and the other 50% in December of
each year. 

2. Computation of the 13th month pay  2. The 13th month, 14th month and
should be based on the length of service and financial assistance benefits were all
not on the actual wage earned by the previously subject to deductions or pro-
worker. rating or that these were dependent upon
the company’s financial standing

ISSUE:

Whether the pro-rated computation of the 13th month pay and the other bonuses in
question is valid and lawful.

RULING:

IN FAVOR OF THE LABOR UNION.

1. Computation of the 13th month pay should be based on the length of service and not on
the actual wage earned by the worker. In the present case, there being no gap in the service
of the workers during the calendar year in question, the computation of the 13th month
pay should not be pro-rated but should be given in full.

For employees receiving regular wage, we have interpreted "basic salary" to mean, not the
amount actually received by an employee, but 1/12 of their standard monthly wage
multiplied by their length of service within a given calendar year. Thus, we exclude from
the computation of "basic salary" payments for sick, vacation and maternity leaves, night

47
differentials, regular holiday pay and premiums for work done on rest days and special
holidays. In Hagonoy Rural Bank v. NLRC,St. Michael Academy v. NLRC,Consolidated Food
Corporation v. NLRC,and similar cases, the 13th month pay due an employee was computed
based on the employee’s basic monthly wage multiplied by the number of months worked
in a calendar year prior to separation from employment.

The revised guidelines (P.D. 951, 13th Month Pay Law) also provided for a pro-ration of
this benefit only in cases of resignation or separation from work. As the rules state, under
these circumstances, an employee is entitled to a pay in proportion to the length of time he
worked during the year, reckoned from the time he started working during the calendar
year.

2. Full-month computation was the “present practice” intended to be maintained in the

CBA.

The Company (Honda) explicitly accepted that it was the strike held that prompted them to
adopt a pro-rata computation, aside from being in a state of rehabilitation due to 227M
substantial losses in 1997, 114M in 1998 and 215M lost of sales in 1999 due to strike. This
is an implicit acceptance that prior to the strike, a full month basic pay computation was
the "present practice" intended to be maintained in the CBA.

3. The foregoing interpretation of law and jurisprudence is more in keeping with the
underlying principle for the grant of this benefit. It is primarily given to alleviate the plight
of workers and to help them cope with the exorbitant increases in the cost of living.

15. JUANA T. VDA. DE RACHO, plaintiff-appellee, vs. MUNICIPALITY OF

ILAGAN, defendant-appellant.
G.R. No. L-23542, January 2, 1968

DOCTRINES:

48
Minimum Wage Law. Lack of funds of a municipality does not excuse it from paying the
statutory minimum wages to its employees, which, after all, is a mandatory statutory
obligation of the municipality.

FACTS:

Decedent Manuel Racho worked as market cleaner in the Municipality of Ilagan,

Isabela from July 1, 1954 until July 1, 1958 when he received a promotion, thus increasing
his salary of P660 to P720 per annum. In 1960, he resigned and was paid money value of
accumulated leaves.

Later on the same year he resigned, Manuel died intestate at Ilagan. His spouse, herein
plaintiff now files a claim for salary differentials with the Regional Office of the Department
of Labor which dropped the case later for lack of jurisdiction. The Court of First Instance of
Isabela ruled in the plaintiff’s favor, that defendant Municipality of Ilagan must pay
P1,766.00 to plaintiff representing the wage differentials and adjusted terminal leave of the
decedent from December 9, 1957 1 to May 23, 1960.

CONTENTIONS OF THE PARTIES

Plaintiff contends that Municipality of Ilagan must pay to plaintiff the wage differentials
and adjusted terminal leave of the decedent from December 9, 1957 1 to May 23, 1960,
based on the monthly wage rate of P120.00 pursuant to the Minimum Wage Law.

Defendant municipality submits that its shortage and lack of available funds and expected
revenue validly exempted it from complying with the Minimum Wage Law. Defendant
further proposes that it would eventually and gradually implement the Minimum Wage
Law, "if and when its revenues can afford." 

ISSUES:

Whether or not lack of funds of a municipality excuse it from paying the statutory
minimum wages.

RULING:

IN FAVOR OF PLAINTIFF.

Lack of funds of a municipality does not excuse it from paying the statutory minimum
wages to its employees, which, after all, is a mandatory statutory obligation of the
municipality.

49
Moreover, We cannot sanction appellant's proposition that it would eventually and
gradually implement the Minimum Wage Law, "if and when its revenues can afford." The
law — insofar as it affects government employees — took effect in 1952. 3 It should have
been implemented — or at least steps to implement it should have been taken — right
then. To excuse the defendant municipality now would be to permit it to benefit from its
non-feasance. It would also make the effectivity of the law dependent upon the will and
initiative of said municipality without statutory sanction. Defendant's remedy, therefore, is
not to seek an excuse from implementing the law but, as the lower court suggested, to
upgrade and improve its tax collection machinery with a view towards realizing more
revenues. Or, it could for the present forego all non-essential expenditures.

MAMAUAG, MARA BEATRICE

50
16. MAYON HOTEL & RESTAURANT, PACITA O. PO and/or JOSEFA PO LAM, petitioners,
vs.
ROLANDO ADANA, CHONA BUMALAY, ROGER BURCE, EDUARDO ALAMARES, AMADO
ALAMARES, EDGARDO TORREFRANCA, LOURDES CAMIGLA, TEODORO LAURENARIA,
WENEFREDO LOVERES, LUIS GUADES, AMADO MACANDOG, PATERNO LLARENA,
GREGORIO NICERIO, JOSE ATRACTIVO, MIGUEL TORREFRANCA, and SANTOS
BROÑOLA, respondents.

G.R. No. 157634             May 16, 2005

Doctrines:

Labor Law: Dismissals; Article 286 of the Labor Code - There is termination of employment
when an otherwise bona fide suspension of work exceeds six (6) months; Appeals – While
it is within the NLRC’s competence, as an appellate agency reviewing decisions of Labor
Arbiters, to disagree with and set aside the latter’s findings, it stands to reason that it
should state an acceptable cause therefore, otherwise it would be a whimsical, capricious,
oppressive, illogical, unreasonable exercise of quasi-judicial prerogative, subject to
invalidation by the extraordinary writ of certiorari.

Serious business losses is not a defense to payment of Labor Standard Benefits. It also do
not excuse the employer from complying with the clearance or report required under
Article 283 of the Labor Code and its implementing rules before terminating the
employment of its workers; The requirement of law mandating the giving of notices was
intended not only to enable the employees to look for another employment and therefore
ease the impact of the loss of their jobs and the corresponding income, but more
importantly, to give the Department of Labor and Employment (DOLE) the opportunity to
ascertain the verity of the alleged authorized termination.

While the Court recognizes the right of the employer to terminate the services of an
employee for a just or authorized cause, the dismissal of employees must be made within
the parameters of law and pursuant to the tenets of fair play.

Administrative Law: Factual findings of administrative bodies like the NLRC are affirmed
only if they are supported by substantial evidence that is manifest in the decision and on
the records.

Procedural Rules and Technicalities; Article 221 of the Labor Code is clear – technical rules
are not binding, and the application of technical rules of procedure may be relaxed in labor
cases to serve the demand of substantial justice.

Evidence: Damages: If doubts exist between the evidence presented by the employer and
the employee, the scales of justice must be tilted in favor in favor of the latter – the
employer must affirmatively show rationally adequate evidence that the dismissal was for
a justifiable cause; As a rule, moral damages are recoverable where the dismissal of the

51
employee was attended by bad faith or fraud or constituted an act oppressive to labor, or
was done in a manner contrary to morals, good customs, or public policy.

Evidence: One who pleads payment has the burden of proving it, and even where the
employees must allege nonpayment, the general rule is that the burden rests on the
defendant to prove nonpayment, rather than on the plaintiff to prove nonpayment.

Presumptions: Failure to submit pieces of evidence could only mean that if produced, they
would have been adverse to such party’s case; Failure of an employer to submit necessary
documents which are in its possession, in spite of orders to do so, gives rise to the
presumption that their presentation is prejudicial to its cause.

Facts:

Petitioner Mayon Hotel & Restaurant is a single proprietor business registered in the name
of petitioner Pacita O. Po, whose mother, petitioner Josefa Po Lam, manages the
establishment. The hotel and restaurant employed about sixteen (16) employees.
Due to the expiration and non-renewal of the lease contract for the rented space occupied
by the said hotel and restaurant at Rizal Street, the hotel operations of the business were
suspended on March 31, 1997. The operation of the restaurant was continued in its new
location at Elizondo Street, Legazpi City, while waiting for the construction of a new Mayon
Hotel & Restaurant at Peñ aranda Street, Legazpi City. Only nine (9) of the sixteen (16)
employees continued working in the Mayon Restaurant at its new site.
On various dates of April and May 1997, the 16 employees filed complaints for
underpayment of wages and other money claims against petitioners.
On July 14, 2000, a Joint Decision was rendered by the Labor Arbiter in favor of the
employees. The Labor Arbiter awarded substantially all of respondents' money claims, and
held that respondents Loveres, Macandog and Llarena were entitled to separation pay,
while respondents Guades, Nicerio and Alamares were entitled to their retirement pay. The
Labor Arbiter also held that based on the evidence presented, Josefa Po Lam is the
owner/proprietor of Mayon Hotel & Restaurant and the proper respondent in these cases.
On appeal to the NLRC, the decision of the Labor Arbiter was reversed, and all the
complaints were dismissed.
Respondents filed a motion for reconsideration with the NLRC and when this was denied,
they filed a petition for certiorari with the CA which rendered the now assailed decision.
Contention of Petitioners:
Petitioners contend that the CA should have sustained the NLRC finding that none of the
respondents were illegally dismissed, or entitled to separation or retirement pay.

52
According to petitioners, even the Labor Arbiter and the CA admit that when the illegal
dismissal case was filed by respondents on April 1997, they had as yet no cause of action.
Petitioners therefore conclude that the filing by respondents of the illegal dismissal case
was premature and should have been dismissed outright by the Labor Arbiter. Petitioners
also claim that since the validity of respondents' dismissal is a factual question, it is not for
the reviewing court to weigh the conflicting evidence.
Contention of Respondent:
Respondents contend that when petitioner Mayon Hotel & Restaurant suspended its hotel
operations and transferred its restaurant operations in Elizondo Street, respondents have
not been permitted to work nor recalled, even after the construction of the new premises at
Peñ aranda Street and the reopening of the hotel operations with the restaurant in this new
site and therefore constitute Illegal Dismissal and are entitled to monetary claims.

Issues:
1) Whether or not respondents were illegally dismissed by petitioner;
2) Whether or not respondents are entitled to their money claims due to
underpayment of wages, and nonpayment of holiday pay, rest day premium, SILP,
COLA, overtime pay, and night shift differential pay

Ruling:

1) Yes. Article 286 of the Labor Code is clear — there is termination of employment
when an otherwise bona fide suspension of work exceeds six (6) months. The
cessation of employment for more than six months was patent and the employer has
the burden of proving that the termination was for a just or authorized cause.

While the closure of the hotel operations in April of 1997 may have been temporary, we
hold that the evidence on record belie any claim of petitioners that the lay-off of
respondents on that same date was merely temporary. We find substantial evidence that
petitioners intended the termination to be permanent:
First, respondents Loveres, Macandog, Llarena, Guades, Nicerio and Alamares filed the
complaint for illegal dismissal immediately after the closure of the hotel operations in Rizal
Street, notwithstanding the alleged temporary nature of the closure of the hotel operations,
and petitioners' allegations that the employees assigned to the hotel operations knew
about this beforehand. 
Second, in their position paper submitted to the Labor Arbiter, petitioners invoked Article
286 of the Labor Code to assert that the employer-employee relationship was merely
suspended, and therefore the claim for separation pay was premature and without legal or

53
factual basis. But they made no mention of any intent to recall these respondents to work
upon completion of the new premises.
Third, petitioners held respondents, particularly Loveres, as responsible for
mismanagement of the establishment and for abuse of trust and confidence. The
vehemence of petitioners' accusation of mismanagement against respondents, especially
against Loveres, is inconsistent with the desire to recall them to work. 
Fourth, petitioners' memorandum on appeal also averred that the case was filed "not
because of the business being operated by them or that they were supposedly not receiving
benefits from the Labor Code which is true, but because of the fact that the source of their
livelihood, whether legal or immoral, was stopped on March 31, 1997, when the owner of
the building terminated the Lease Contract." 
Fifth, petitioners had inconsistencies in their pleadings (with the NLRC, CA and with this
Court) in referring to the closure, i.e., in the petition filed with this court, they assert that
there is no illegal dismissal because there was "only a temporary cessation or suspension of
operations of the hotel and restaurant due to circumstances beyond the control of
petitioners, and that is, the non-renewal of the lease contract..." And yet, in the same
petition, they also assert that: (a) the separation of respondents was due to severe financial
losses and reverses leading to the closure of the business; and (b) petitioner Pacita Po had
to close shop and was bankrupt and has no liquidity to put up her own building to house
Mayon Hotel & Restaurant.
Sixth, and finally, the uncontroverted finding of the Labor Arbiter that petitioners
terminated all the other respondents, by not employing them when the Hotel and
Restaurant transferred to its new site on Peñ aranda Street. Indeed, in this same
memorandum, petitioners referred to all respondents as "former employees of Mayon
Hotel & Restaurant."
These factors may be inconclusive individually, but when taken together, they lead us to
conclude that petitioners really intended to dismiss all respondents and merely used the
termination of the lease (on Rizal Street premises) as a means by which they could
terminate their employees.

Even assuming the cessation of employment on April 1997 was merely temporary,
it became dismissal by operation of law when petitioners failed to reinstate respondents
after the lapse of six (6) months, pursuant to Article 286 of the Labor Code.

We are not impressed by petitioners' claim that severe business losses justified their
failure to reinstate respondents. Serious business losses do not excuse the employer from
complying with the clearance or report required under Article 283 of the Labor Code and
its implementing rules before terminating the employment of its workers . In the absence of
justifying circumstances, the failure of petitioners to observe the procedural requirements
set out under Article 284, taints their actuations with bad faith, especially since they
claimed that they have been experiencing losses in the three years before 1997. To say the
54
least, if it were true that the lay-off was temporary but then serious business losses
prevented the reinstatement of respondents, then petitioners should have complied with
the requirements of written notice. The requirement of law mandating the giving of notices
was intended not only to enable the employees to look for another employment and
therefore ease the impact of the loss of their jobs and the corresponding income, but more
importantly, to give the Department of Labor and Employment (DOLE) the opportunity to
ascertain the verity of the alleged authorized cause of termination.

And even assuming that the closure was due to a reason beyond the control of the
employer, it still has to accord its employees some relief in the form of severance pay.

While we recognize the right of the employer to terminate the services of an employee for a
just or authorized cause, the dismissal of employees must be made within the parameters
of law and pursuant to the tenets of fair play. And in termination disputes, the burden of
proof is always on the employer to prove that the dismissal was for a just or authorized
cause. Where there is no showing of a clear, valid and legal cause for termination of
employment, the law considers the case a matter of illegal dismissal.

Under these circumstances, the award of damages was proper. As a rule, moral damages
are recoverable where the dismissal of the employee was attended by bad faith or fraud or
constituted an act oppressive to labor, or was done in a manner contrary to morals, good
customs or public policy. We believe that the dismissal of the respondents was attended
with bad faith and meant to evade the lawful obligations imposed upon an employer.

If doubts exist between the evidence presented by the employer and the employee, the
scales of justice must be tilted in favor of the latter — the employer must affirmatively
show rationally adequate evidence that the dismissal was for a justifiable cause. It is a time-
honored rule that in controversies between a laborer and his master, doubts reasonably
arising from the evidence, or in the interpretation of agreements and writing should be
resolved in the former's favor. The policy is to extend the doctrine to a greater number of
employees who can avail of the benefits under the law, which is in consonance with the
avowed policy of the State to give maximum aid and protection of labor.

2) Respondents have set out with particularity in their complaint, position paper, affidavits
and other documents the labor standard benefits they are entitled to, and which they
alleged that petitioners have failed to pay them. It was therefore petitioners' burden to
prove that they have paid these money claims. One who pleads payment has the burden of
proving it, and even where the employees must allege nonpayment, the general rule is that
the burden rests on the defendant to prove nonpayment, rather than on the plaintiff to
prove nonpayment. This petitioners failed to do so.

Petitioners failed to submit, despite repeated demands, the pertinent employee files,
payrolls, records, remittances and other similar documents which would show that
respondents rendered work entitling them to payment for overtime work, night shift
differential, premium pay for work on holidays and rest day, and payment of these as well
as the COLA and the SILP – documents which are not in respondents' possession but in the

55
custody and absolute control of petitioners. By choosing not to fully and completely
disclose information and present the necessary documents to prove payment of labor
standard benefits due to respondents, petitioners failed to discharge the burden of proof.
Indeed, petitioners' failure to submit the necessary documents which as employers are in
their possession, gives rise to the presumption that their presentation is prejudicial to its
cause.

The cost of meals and snacks purportedly provided to respondents cannot be deducted as
part of respondents' minimum wage. Even granting that meals and snacks were provided
and indeed constituted facilities, such facilities could not be deducted without compliance
with certain legal requirements. As stated in Mabeza v. NLRC, the employer simply cannot
deduct the value from the employee's wages without satisfying the following: (a) proof that
such facilities are customarily furnished by the trade; (b) the provision of deductible
facilities is voluntarily accepted in writing by the employee; and (c) the facilities are
charged at fair and reasonable value. The records are clear that petitioners failed to comply
with these requirements. There was no proof of respondents' written authorization.
Indeed, the Labor Arbiter found that while the respondents admitted that they were given
meals and merienda, the quality of food served to them was not what was provided for in
the Facility Evaluation Orders and it was only when they filed the cases that they came to
know of this supposed Facility Evaluation Orders. Petitioner Josefa Po Lam
herself admitted that she did not inform the respondents of the facilities she had applied
for. The law is clear that mere availment is not sufficient to allow deductions from
employees' wages.

Thus, we reinstate the award of monetary claims granted by the Labor Arbiter.

As only respondents Loveres, Guades, Macandog, Llarena, Nicerio, Atractivo and Broñ ola
specifically claimed damages from petitioners, then only they are entitled to exemplary
damages.

(1) Granting separation pay of one-half (1/2) month for every year of service to
respondents Loveres, Macandog and Llarena;

(2) Granting retirement pay for respondents Guades, Nicerio, and Alamares;

(3) Removing the deductions for food facility from the amounts due to all
respondents;

(4) Awarding moral damages of P20,000.00 each for respondents Loveres,

Macandog, Llarena, Guades, Nicerio, Atractivo, and Broñ ola;

(5) Deleting the award of exemplary damages of P10,000.00 from all respondents
except Loveres, Macandog, Llarena, Guades, Nicerio, Atractivo, and Broñ ola; and

(6) Granting attorney's fees of P10,000.00 each to all respondents.

56
MALAWANI, NAIF A.

57
 17. EQUITABLE BANKING CORPORATION (now known as EQUITABLE-PCI
BANK), petitioner vs.RICARDO SADAC, Respondent.

G.R. No. 164772, June 8, 2006

DOCTRINES:

1. Backwages
- are granted on grounds of equity to workers for earnings lost due to their illegal
dismissal from work. They are a reparation for the illegal dismissal of an
employee based on earnings which the employee would have obtained, either by
virtue of a lawful decree or order, as in the case of a wage increase under a wage
order, or by rightful expectation, as in the case of one’s salary or wage. The
outstanding feature of backwages is thus the degree of assuredness to an
employee that he would have had them as earnings had he not been illegally
terminated from his employment.

- in general are granted on grounds of equity for earnings which a worker or

employee has lost due to his illegal dismissal. It is not private compensation or
damages but is awarded in furtherance and effectuation of the public objective of
the Labor Code. Nor is it a redress of a private right but rather in the nature of a
command to the employer to make public reparation for dismissing an employee
either due to the former’s unlawful act or bad faith.

- without any deduction of income the employee may have derived from
employment elsewhere from the date of his dismissal up to his reinstatement,
that is, covering the entirety of the period of the dismissal.

- Bustamante v. National Labor Relations Commission backwages to be awarded

to an illegally dismissed employee, should not, as a general rule, be diminished
or reduced by the earnings derived by him elsewhere during the period of his
illegal dismissal.

2. Index animi sermo est - speech is the index of the mind.

3. ART. 279. Security of Tenure. – In cases of regular employment, the employer shall
not terminate the services of an employee except for a just cause or when
authorized by this Title. An employee who is unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights and other privileges and to
his full backwages, inclusive of allowances, and to his other benefits or their

58
 monetary equivalent computed from the time his compensation was withheld from
him up to the time of his actual reinstatement.

4. Allowances is sometimes used synonymously with "emoluments," as indirect or

contingent remuneration, which may or may not be earned, but which is sometimes
in the nature of compensation, and sometimes in the nature of
reimbursement. Allowances and benefits are granted to the employee apart or
separate from, and in addition to the wage or salary.

5. Salary increases are amounts which are added to the employee’s salary as an
increment thereto for varied reasons deemed appropriate by the employer. Salary
increases are not separate grants by themselves but once granted, they are deemed
part of the employee’s salary.

6. Computation of backwages is pegged at the wage rate at the time of the employee’s
dismissal, inclusive of regular allowances that the employee had been receiving such
as the emergency living allowances and the 13th month pay mandated under the
law.

7. An unqualified award of backwages means that the employee is paid at the wage
rate at the time of his dismissal.

8. Salary means a recompense or consideration made to a person for his pains or

industry in another man’s business. The etymology of which is the Latin word
"salarium," is often used interchangeably with "wage", the etymology of which is the
Middle English word "wagen". Both words generally refer to one and the same
meaning, that is, a reward or recompense for services performed. Likewise, "pay" is
the synonym of "wages" and "salary"

9. The rule is, he who alleges, not he who denies, must prove.

FACTS:

Sadac was appointed Vice President of the Legal Department of petitioner Bank
effective 1 August 1981, and subsequently General Counsel thereof on 8 December 1981.
Nine lawyers of the bank accused the Sadac of abusive conduct, inter alia and ultimately
petitioned for change of leadership. Sadac on the otherhand, requested for a full hearing
and formal investigation but was remained unheeded. On August 10, 1989, he was
removed from his office and ordered disentitled to any compensation and other benefits.

59
 The labor arbiter dismissed the complaint but was reversed by the NLRC and
affirmed by the higher court with modification.

Respondent Sadac filed with the Labor Arbiter a Motion for Execution thereof.
Likewise, petitioner Bank filed a Manifestation and Motion praying that the award in favor
of respondent Sadac be computed and that after payment is made, petitioner Bank be
ordered forever released from liability under said judgment.

The labor arbiter adopted the respondent computation which includes the salary
increase representing the backwages with 12% interest per annum which was then
reversed by the NLRC and subsequently in Court of Appeals adopted the labor arbiter’s
decision. Hence, the instant Petition for Review by petitioner Bank.

CONTENTION OF THE RESPONDENT:

The total amount of the monetary award is P6,030,456.59, representing his

backwages and other benefits, including the general increases which he should have
earned during the period of his illegal termination. He theorized that he started with a
monthly compensation of P12,500.00 in August 1981, when he was appointed as Vice
President of petitioner Bank’s Legal Department and later as its General Counsel in
December 1981. As of November 1989, when he was dismissed illegally, his monthly
compensation amounted to P29,365.00 or more than twice his original compensation. The
difference, he posited, can be attributed to the annual salary increases which he received
equivalent to 15 percent (15%) of his monthly salary. He anchored his claim on Article 279
of the Labor Code of the Philippines

CONTENTION OF THE PETITIONER:

The amount of monetary award due respondent Sadac is P2,981,442.98 only, to the
exclusion of the latter’s general salary increases and other claimed benefits which, it
maintained, were unsubstantiated. holding that an unqualified award of backwages means
that the employee is paid at the wage rate at the time of his dismissal. Furthermore,
petitioner Bank argued before the Labor Arbiter that the award of salary differentials is not
allowed, the established rule being that upon reinstatement, illegally dismissed employees
are to be paid their backwages without deduction and qualification as to 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.

Petitioners claimed that respondent based simply on expectancy or his assumption

that, because in the past he had been consistently rated for his outstanding performance
and his salary correspondingly increased, it is probable that he would similarly have been
given high ratings and salary increases but for his transfer to another position in the
company.

Also, petitioner Bank in its Supplement to Petition for Review, assailing the 26
October 2004 Supplemental Decision of the Court of Appeals which amended the fallo of its

60
6 April 2004 Decision to include "attorney’s fees equal to TEN PERCENT (10%) of all the
monetary award" granted to respondent Sadac. Petitioner Bank posits that neither the
dispositive portion of our 13 June 1997 Decision in G.R. No. 102467 nor the body thereof
awards attorney’s fees to respondent Sadac. It is postulated that the body of the 13 June
1997 Decision does not contain any findings of facts or conclusions of law relating to
attorney’s fees, thus, this Court did not intend to grant to respondent Sadac the same,
especially in the light of its finding that the petitioner Bank was not motivated by malice or
bad faith and that it did not act in a wanton, oppressive, or malevolent manner in
terminating the services of respondent Sadac.

ISSUE:

1. Whether periodic general increases in basic salary, check-up benefit, clothing

allowance, and cash conversion of vacation leave are included in the
computation of full backwages for illegally dismissed employees.

2. Whether or not respondent is entitled to check-up benefit, clothing allowance

and cash conversion of vacation leaves notwithstanding that he did not present
any evidence to prove entitlement to these claims.

3. Whether or not respondent is entitled to Attorneys Fee.

4. Whether or not respondent entitled to twelve percent (12%) interest per

annum.

RULING:
I.

The term ‘backwages without qualification and deduction’ means that the workers
are to be paid their backwages fixed as of the time of the dismissal or strike without
deduction for their earnings elsewhere during their layoff and without qualification of their
wages as thus fixed; i.e., unqualified by any wage increases or other benefits that may have
been received by their co-workers who are not dismissed or did not go on strike. Awards
including salary differentials are not allowed. The salary base properly used should,
however, include not only the basic salary but also the emergency cost of living allowances
and also transportation allowances if the workers are entitled thereto.

Backwages are granted on grounds of equity to workers for earnings lost due to
their illegal dismissal from work. They are a reparation for the illegal dismissal of an
employee based on earnings which the employee would have obtained, either by virtue of a
lawful decree or order, as in the case of a wage increase under a wage order, or by rightful
expectation, as in the case of one’s salary or wage. The outstanding feature of backwages is

61
thus the degree of assuredness to an employee that he would have had them as earnings
had he not been illegally terminated from his employment.

The mere fact that petitioner had been previously granted salary increases by
reason of his excellent performance does not necessarily guarantee that he would have
performed in the same manner and, therefore, qualify for the said increase later.
The court is not prepared to accept that this degree of assuredness applies to
respondent Sadac’s salary increases. There was no lawful decree or order supporting his
claim, such that his salary increases can be made a component in the computation of
backwages. What is evident is that salary increases are a mere expectancy. They are, by its
nature volatile and are dependent on numerous variables, including the company’s fiscal
situation and even the employee’s future performance on the job, or the employee’s
continued stay in a position subject to management prerogative to transfer him to another
position where his services are needed. In short, there is no vested right to salary increases.
That respondent Sadac may have received salary increases in the past only proves fact of
receipt but does not establish a degree of assuredness that is inherent in backwages. From
the foregoing, the plain conclusion is that respondent Sadac’s computation of his full
backwages which includes his prospective salary increases cannot be permitted.

II.

The rationalization that the acknowledgment by petitioner Bank in its computation

of certain benefits granted to respondent Sadac means that the latter is also entitled to the
other benefits as claimed by him but not acknowledged by petitioner Bank is untenable.
Mere allegations by respondent does not suffice in the absence of proof supporting the
same.

III.

At the outset it must be emphasized that when a final judgment becomes executory,
it thereby becomes immutable and unalterable. The only recognized exceptions are the
correction of clerical errors or the making of so-called nunc pro tunc entries which cause
no prejudice to any party, and, of course, where the judgment is void.Courts decision on 28
July 1997 renders moot whatever argument petitioner Bank raised against the grant of
attorney’s fees to respondent Sadac. Of even greater import is the settled rule that it is the
dispositive part of the judgment that actually settles and declares the rights and obligations
of the parties, finally, definitively, and authoritatively, notwithstanding the existence of
inconsistent statements in the body that may tend to confuse.

Juxtaposing the decretal portions of the NLRC Decision of 24 September 1991 with
that of the Court’s Decision of 13 June 1997, we find that what was deleted by the Court
was "the award of moral and exemplary damages," but not the award of "attorney’s fees
equivalent to Ten Percent (10%) of the monetary award." The issue on the grant of
attorney’s fees to respondent Sadac has been adequately and definitively threshed out and
settled with finality when petitioner Bank came to us for the first time on a Petition for
Certiorari in Equitable Banking Corporation v. National Labor Relations Commission,

62
docketed as G.R. No. 102467. The Court had spoken in its Decision of 13 June 1997 in the
said case which attained finality on 28 July 1997. It is now immutable.

IV.

When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts,

delicts or quasi-delicts is breached, the contravenor can be held liable for damages. The
provisions under Title XVIII on "Damages" of the Civil Code govern in determining the
measure of recoverable damages.

With regard particularly to an award of interest in the concept of actual or

compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as
follows:
1. When the obligation is breached, and it consists in the payment of a sum
of money, i.e., a loan or forbearance of money, the interest due should be
that which may have been stipulated in writing. Furthermore, the interest
due shall itself earn legal interest from the time it is judicially demanded.
In the absence of stipulation, the rate of interest shall be 12% per annum
to be computed from default, i.e., from judicial or extrajudicial demand
under and subject to the provisions of Article 1169 of the Civil Code.

2. When an obligation, not constituting a loan or forbearance of money, is

breached, an interest on the amount of damages awarded may be
imposed at the discretion of the court at the rate of 6% per annum. No
interest, however, shall be adjudged on unliquidated claims or damages
except when or until the demand can be established with reasonable
certainty. Accordingly, where the demand is established with reasonable
certainty, the interest shall begin to run from the time the claim is made
judicially or extrajudicially (Article 1169, Civil Code) but when such
certainty cannot be so reasonably established at the time the demand is
made, the interest shall begin to run only from the date the judgment of
the court is made (at which time the quantification of damages may be
deemed to have been reasonably ascertained). The actual base for the
computation of legal interest shall, in any case, be on the amount finally
adjudged.

3. When the judgment of the court awarding a sum of money becomes final
and executory, the rate of legal interest, whether the case falls under
paragraph 1 or paragraph 2 above, shall be 12% per annum from such
finality until its satisfaction, this interim period being deemed to be by
then an equivalent to a forbearance of credit.

63
 It is obvious that the legal interest of twelve percent (12%) per annum shall be
imposed from the time judgment becomes final and executory, until full satisfaction
thereof. Therefore, petitioner Bank is liable to pay interest from 28 July 1997, the finality of
our Decision in G.R. No. 102467.

64