CASES FOR THIRD WEEK

1.) ARIEL L. DAVID, doing business under the name and style "YIELS HOG DEALER," Petitioner, v. JOHN G. MACASIO, Respondent.

G.R. No. 195466 July 2, 2014

TOPIC:

Art. 82 Labor Code

Book III, Rule 1, Sec. 2 IRR (Labor Code)

The IRR therefore validly qualifies and limits the general exclusion of "workers paid by results" found in Article 82 from the coverage of holiday and SIL pay. This is the only reasonable interpretation since the determination of excluded workers who are paid by results from the coverage of Title I is "determined by the Secretary of Labor in appropriate regulations."

Employee engaged in pakyaw basis is not excluded from the coverage of SIL or Holiday pay provided they are not field personnel.

The governing law on 13th moth pay is PD No. 851.53 exempts employees paid on task basis without reference to field personnel.

FACTS: Macasio filed before the LA a complaint against petitioner for non-payment of overtime pay, holiday pay and 13th month pay. He also claimed payment for moral and exemplary damages and attorneys fees. And payment for service incentive leave (SIL).

Macasio alleged that he had been working as a butcher for David since January 6, 1995.

Macasio claimed that David exercised effective control and supervision over his work, pointing out that David: (1) set the work day, reporting time and hogs to be chopped, as well as the manner by which he was to perform his work; (2) daily paid his salary of P700.00, which was increased from P600.00 in 2007, P500.00 in 2006 and P400.00 in 2005; and (3) approved and disapproved his leaves. Macasio added that David owned the hogs delivered for chopping, as well as the work tools and implements; the latter also rented the workplace

In his defense, David claimedThat he hired Macasio as a butcher or chopper on "pakyaw" or task basis who is, therefore, not entitled to overtime pay, holiday pay and 13th month pay pursuant to the provisions of the IRR of the Labor Code.

LABOR ARBITER

The LA gave credence to Davids claim that he engaged Macasio on "pakyaw" or task basis. The LA noted the following facts to support this finding: (1) Macasio received the fixed amount of P700.00 for every work done, regardless of the number of hours that he spent in completing the task and of the volume or number of hogs that he had to chop per engagement; (2) Macasio usually worked for only four hours, beginning from 10:00 p.m. up to 2:00 a.m. of the following day; and (3) the P700.00 fixed wage far exceeds the then prevailing daily minimum wage of P382.00. The LA added that the nature of Davids business as hog dealer supports this "pakyaw" or task basis arrangement. concluded that as Macasio was engaged on "pakyaw" or task basis, he is not entitled to overtime, holiday, SIL and 13th month pay.

NLRC affirmed the LA ruling. THUS, to the CA via a petition for certiorari.

CA partly granted Macasios certiorari petition and reversed the NLRCs ruling for having been rendered with grave abuse of discretion.

While the CA agreed with the LA and the NLRC that Macasio was a task basis employee, it nevertheless found Macasio entitled to his monetary claims following the doctrine laid down in Serrano v. Severino Santos Transit.

The CA explained that as a task basis employee, Macasio is excluded from the coverage of holiday, SIL and 13th month pay only if he is likewise a "field personnel." As defined by the Labor Code, a "field personnel" is one who performs the work away from the office or place of work and whose regular work hours cannot be determined with reasonable certainty. In Macasios case, the elements that characterize a "field personnel" are evidently lacking as he had been working as a butcher at Davids "Yiels Hog Dealer" business in Sta. Mesa, Manila under Davids supervision and control, and for a fixed working schedule that starts at 10:00 p.m.

the CA awarded Macasios claim for holiday, SIL and 13th month pay for three years, with 10% attY. fees on the total monetary award. The CA, however, denied Macasios claim for moral and exemplary damages for lack of basis.

ISSUES: (1) Whether there is employee employer relationship - YES

(2) Whether respondent Macasio engaged on PAKYAW or Task basis employee YES

(3) Whether respondent Macasia is a Field personnel - NO

(4) Whether respondent Macasio is entitled to 3th month pay NO

(5) Whether respondent Macasia is entitled to SIL, Holiday pay YES

RULING:

1.) Whether there is employee employer relationship YES

Macasio is Davids employee

To determine the existence of an employer-employee relationship, four elements generally need to be considered, namely: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employees conduct. These elements or indicators comprise the so-called "four-fold" test of employment relationship. Macasios relationship with David satisfies this test.

First, David engaged the services of Macasio, thus satisfying the element no. 1. David categorically confirmed this fact when, in his "Sinumpaang Salaysay," he stated that "nag apply po siya sa akin at kinuha ko siya na chopper. Also, Solano and Antonio stated in their "Pinagsamang Sinumpaang Salaysay"40 that "[k]ami po ay nagtratrabaho sa Yiels xxx na pag-aari ni Ariel David bilang butcher" and "kilalanamin si xxx Macasio na isa ring butcher xxx ni xxx David at kasama namin siya sa aming trabaho." Second, David paid Macasios wages. Third, David had been setting the day and time when Macasio should report for work. This power to determine the work schedule obviously implies power of control. David could regulate Macasios work and could even refuse to give him any assignment, thereby effectively dismissing him. And fourth, David had the right and power to control and supervise Macasios work as to the means and methods of performing it. In addition to setting the day and time when Macasio should report for work.

2.) Whether respondent Macasio engaged on PAKYAW or Task basis employee YES

YES. A distinguishing characteristic of "pakyaw" or task basis engagement, as opposed to straight-hour wage payment, is the non-consideration of the time spent in working. In a task-basis work, the emphasis is on the task itself, in the sense that payment is reckoned in terms of completion of the work, not in terms of the number of time spent in the completion of work.45 Once the work or task is completed, the worker receives a fixed amount as wage, without regard to the standard measurements of time generally used in pay computation

In Macasios case, the established facts show that he would usually start his work at 10:00 p.m. Thereafter, regardless of the total hours that he spent at the workplace or of the total number of the hogs assigned to him for chopping, Macasio would receive the fixed amount of P700.00 once he had completed his task. Clearly, these circumstances show a "pakyaw" or task basis engagement that all three tribunals uniformly found.

3.) Whether respondent Macasia is a Field personnel NO

Based on the definition of field personnel under Article 82, we agree with the CA that Macasio does not fall under the definition of "field personnel." The CAs finding in this regard is supported by the established facts of this case: first, Macasio regularly performed his duties at Davids principal place of business; second, his actual hours of work could be determined with reasonable certainty; and, third, David supervised his time and performance of duties. Since Macasio cannot be considered a "field personnel," then he is not exempted from the grant of holiday, SIL pay even as he was engaged on "pakyaw" or task basis.

4.) Whether respondent Macasio is entitled to 3th month pay NO

that the CA erred in finding that the NLRC gravely abused its discretion in denying this benefit to Macasio.

The governing law on 13th month pay is PD No. 851.53

13th month pay benefits generally cover all employees; an employee must be one of those expressly enumerated to be exempted. Section 3 of the IRR of P.D. No. 851 enumerates the exemptions from the coverage of 13th month pay benefits. Under Section 3(e), "employers of those who are paid on xxx task basis, and those who are paid a fixed amount for performing a specific work, irrespective of the time consumed in the performance thereof" are exempted.

Note that unlike the IRR of the Labor Code on holiday and SIL pay, Section 3(e) of the IRR ofPD No. 851 exempts employees "paid on task basis" without any reference to "field personnel." This could only mean that insofar as payment of the 13th month pay is concerned, the law did not intend to qualify the exemption from its coverage with the requirement that the task worker be a "field personnel" at the same time

5.) Whether respondent Macasia is entitled to SIL, Holiday pay YES

The payment of an employee on task or pakyaw basis alone is insufficient to exclude one from the coverage of SIL and holiday pay. They are exempted from the coverage of Title I (including the holiday and SIL pay) only if they qualify as "field personnel." The IRR therefore validly qualifies and limits the general exclusion of "workers paid by results" found in Article 82 from the coverage of holiday and SIL pay. This is the only reasonable interpretation since the determination of excluded workers who are paid by results from the coverage of Title I is "determined by the Secretary of Labor in appropriate regulations."

The Cebu Institute Technology ruling was reiterated in 2005 in Auto Bus Transport Systems, Inc., v. Bautista:

A careful perusal of said provisions of law will result in the conclusion that the grant of service incentive leave has been delimited by the IRR of the Labor Code to apply only to those employees not explicitly excluded by Section 1 of Rule V. According to the Implementing Rules, Service Incentive Leave shall not apply to employees classified as "field personnel." The phrase "other employees whose performance is unsupervised by the employer" must not be understood as a separate classification of employees to which service incentive leave shall not be granted. Rather, it serves as an amplification of the interpretation of the definition of field personnel under the Labor Code as those "whose actual hours of work in the field cannot be determined with reasonable certainty."

The same is true with respect to the phrase "those who are engaged on task or contract basis, purely commission basis." Said phrase should be related with "field personnel," applying the rule on ejusdem generis that general and unlimited terms are restrained and limited by the particular terms that they follow.

The Autobus ruling was in turn the basis of Serrano v. Santos Transit which the CA cited in support of granting Macasios petition.

In Serrano, the Court, applying the rule on ejusdem generis50 declared that "employees engaged on task or contract basis xxx are not automatically exempted from the grant of service incentive leave, unless, they fall under the classification of

field personnel."51 The Court explained that the phrase "including those who are engaged on task or contract basis, purely commission basis" found in Section 1(d), Rule V of Book III of the IRR should not be understood as a separate classification of employees to which SIL shall not be granted. Rather, as with its preceding phrase - "other employees whose performance is unsupervised by the employer" - the phrase "including those who are engaged on task or contract basis" serves to amplify the interpretation of the Labor Code definition of "field personnel" as those "whose actual hours of work in the field cannot be determined with reasonable certainty."

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

REFERENCE:

Provisions governing SIL and holiday pay

Article 82 of the Labor Code provides the exclusions from the coverage of Title I, Book III of the Labor Code - provisions governing working conditions and rest periods.

Art. 82. Coverage. The provisions of [Title I] shall apply to employees in all establishments and undertakings whether for profit or not, but not to government employees, managerial employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations.

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"Field personnel" shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty

Among the Title I provisions are the provisions on holiday pay (under Article 94 of the Labor Code) and SIL pay (under Article 95 of the Labor Code). Under Article 82,"field personnel" on one hand and "workers who are paid by results" on the other hand, are not covered by the Title I provisions. The wordings of Article82 of the Labor Code additionally categorize workers "paid by results" and "field personnel" as separate and distinct types of employees who are exempted from the Title I provisions of the Labor Code.

The pertinent portion of Article 94 of the Labor Code and its corresponding provision in the IRR (Section 1, Rule IV of Book 3) reads:

Art. 94. Right to holiday pay. (a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less than (10) workers.

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SECTION 1. Coverage. This Rule shall apply to all employees except:

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(e)Field personnel and other employees whose time and performance is unsupervised by the employer including those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof.

On the other hand, Article 95 of the Labor Code and its corresponding provision in the IRR(Section 1, Rule V of Book 3) pertinently provides:

Art. 95. Right to service incentive. (a) Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay.

(b) This provision shall not apply to those who are already enjoying the benefit herein provided, those enjoying vacation leave with pay of at least five days and those employed in establishments regularly employing less than ten employees or in establishments exempted from granting this benefit by the Secretary of Labor and Employment after considering the viability or financial condition of such establishment.

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

(e) Field personnel and other employees whose performance is unsupervised by the employer including those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof.

2. CHARLITO PEARANDA, G.R. No. 159577 - versus BAGANGA PLYWOOD CORPORATION and Promulgated: HUDSON CHUA, Respondents. May 3, 2006

Managerial employees and members of the managerial staff are exempted from the provisions of the Labor Code on labor standards. Since petitioner belongs to this class of employees, he is not entitled to overtime pay and premium pay for working on rest days.

FACTS: Sometime in June 1999 petitioner was hired by the respondent with a monthly salary of P5,000 to take charge of the operation and maintenance of its steam plant boiler (foreman/boiler head/ shift engineer). On December 2000, Pearanda filed a complaint before the NLR for illegal dismissal with money claim. Petitioner allege that he was dismissed without benefit of due process he was not paid his overtime pay, premium pay for working during holidays/rest days, night shift differentials and finally claims for payment of damages and attorneys fees having been forced to litigate the present complaint. Respondent as a defense allege that the termination of the petitioner was in accordance with the law, and that the petitioner was not entitled to the money claim since he is a managerial employee. LA ruled that there was no illegal dismissal. Petitioner file an appeal before the NLRC. NLRC ruled that petitioner is not entitled to the award because he is a managerial employee. Petitioners petition for certiorari was dismissed by the CA. hence present petition ISSUE: WON the petitioner is entitled to the claims RULING: no, the petitioner is not entitled to the claim for he is a member of the managerial staff. The Implementing Rules of the Labor Code define members of a managerial staff as those with the following duties and responsibilities: (1) The primary duty consists of the performance of work directly related to management policies of the employer; (2) Customarily and regularly exercise discretion and independent judgment; (3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the management of the establishment in which he is employed or subdivision thereof; or (ii) execute under general supervision work along specialized or technical lines requiring special training, experience, or knowledge; or (iii) execute under general supervision special assignments and tasks; and (4) who do not devote more than 20 percent of their hours worked in a workweek to activities which are not directly and closely related to the performance of the work described in paragraphs (1), (2), and (3) above Being a shift engineer, petitioners duties and responsibilities were as follows: 1. To supply the required and continuous steam to all consuming units at minimum cost. 2. To supervise, check and monitor manpower workmanship as well as operation of boiler and accessories. 3. To evaluate performance of machinery and manpower.

4. To follow-up supply of waste and other materials for fuel. 5. To train new employees for effective and safety while working. 6. Recommend parts and supplies purchases. 7. To recommend personnel actions such as: promotion, or disciplinary action. 8. To check water from the boiler, feedwater and softener, regenerate softener if beyond hardness limit. 9. Implement Chemical Dosing. 10. Perform other task as required by the superior from time to time The foregoing enumeration, particularly items 1, 2, 3, 5 and 7 illustrates that petitioner was a member of the managerial staff. His duties and responsibilities conform to the definition of a member of a managerial staff under the Implementing Rules. Petitioner supervised the engineering section of the steam plant boiler. His work involved overseeing the operation of the machines and the performance of the workers in the engineering section. This work necessarily required the use of discretion and independent judgment to ensure the proper functioning of the steam plant boiler. As supervisor, petitioner is deemed a member of the managerial staff. Article 82 of the Labor Code exempts managerial employees from the coverage of labor standards. Labor standards provide the working conditions of employees, including entitlement to overtime pay and premium pay for working on rest days. Under this provision, managerial employees are those whose primary duty consists of the management of the establishment in which they are employed or of a department or subdivision.

3. SIME DARBY PILIPINAS, INC. vs. NATIONAL LABOR RELATIONS COMMISSION (2ND DIVISION) and SIME DARBY SALARIED EMPLOYEES ASSOCIATION (ALU-TUCP) (G.R. No. 119205 April 15, 1998)

Topic: Right of an employer to exercise its management prerogatives

Even as the law is solicitous of the welfare of the employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. Thus, management is free to regulate, according to its own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place and manner of work, processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, lay off of workers and discipline, dismissal and recall of workers. Further, management retains the prerogative, whenever exigencies of the service so require, to change the working hours of its employees. So long as such prerogative is exercised in good faith for the advancement of the 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.

While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be supposed that every dispute will be automatically decided in favor of labor. Management also has rights which, as such, are entitled to respect and enforcement in the interest of simple fair play. Although this Court has inclined more often than not toward the worker and has upheld his cause in his conflicts with the employer, such favoritism has not blinded the Court to the rule that justice is in every case for the deserving, to be dispensed in the light of the established facts and the applicable law and doctrine.

FACTS: Petitioner Sime Darby Pilipinas, Inc. is engaged in the manufacture of automotive tires, tubes and other rubber products. Sime Darby Salaried Employees Association (ALU-TUCP), private respondent, is an association of monthly salaried employees of petitioner at its Marikina factory. Prior to the present controversy, all company factory workers in Marikina including members of private respondent union worked from 7:45 a.m. to 3:45 p.m. with a 30-minute paid "on call" lunch break.

On 14 August 1992 petitioner issued a memorandum to all factory-based employees advising all its monthly salaried employees in its Marikina Tire Plant, except those in the Warehouse and Quality Assurance Department working on shifts, a change in work schedule effective 14 September 1992 as follows: 7:45 A.M. 4:45 P.M. (Monday to Friday), 7:45 A.M. 11:45 A.M. (Saturday). Coffee break time was allotted ten minutes only anytime between: 9:30 A.M. 10:30 A.M. and 2:30 P.M. 3:30 P.M. Lunch break was scheduled between: 12:00 NN 1:00 P.M. (Monday to Friday).

Since private respondent felt affected adversely by the change in the work schedule and discontinuance of the 30-minute paid "on call" lunch break, it filed on behalf of its members a complaint with the Labor Arbiter for unfair labor practice, discrimination and evasion of liability pursuant to the resolution of this Court in Sime Darby International Tire Co., Inc. v. NLRC. However, the Labor Arbiter dismissed the complaint on the ground that the change in the work schedule and the elimination of the 30-minute paid lunch break of the factory workers constituted a valid exercise of management prerogative and that the new work schedule, break time and one-hour lunch break did not have the effect of diminishing the benefits granted to factory workers as the working time did not exceed eight (8) hours.

On appeal, respondent National Labor Relations Commission (NLRC) sustained the Labor Arbiter and dismissed the appeal. However, upon motion for reconsideration by private respondent, the NLRC, this time with two (2) new commissioners replacing those who earlier retired, reversed its earlier decision of 20 April 1994 as well as the decision of the Labor Arbiter. The NLRC declared that the new work schedule deprived the employees of the benefits of a time-honored company practice of providing its employees a 30-minute paid lunch break resulting in an unjust diminution of company privileges prohibited by Art. 100 of the Labor Code, as amended. Hence, this petition.

ISSUE: Whether or not the revision of the work schedule of employees discarding their paid lunch break was constitutive of unfair labor practice.

RULING: No, the Court in dismissing the complaint against petitioner, held that the right to fix the work schedules of the employees rests principally on their employer.

In the instant case petitioner, as the employer, cites as reason for the adjustment the efficient conduct of its business operations and its improved production. It rationalizes that while the old work schedule included a 30-minute paid lunch break, the employees could be called upon to do jobs during that period as they were "on call." Even if denominated as lunch break, this period could very well be considered as working time because the factory employees were required to work if necessary and were paid accordingly for working. With the new work schedule, the employees are now given a one-hour lunch break without any interruption from their employer. For a full one-hour undisturbed lunch break, the employees can freely and effectively use this hour not only for eating but also for their rest and comfort which are conducive to more efficiency and better performance in their work. Since the employees are no longer required to work during this one-hour lunch break, there is no more need for them to be compensated for this period.

We agree with the Labor Arbiter that the new work schedule fully complies with the daily work period of eight (8) hours without violating the Labor Code. Besides, the new schedule applies to all employees in the factory similarly situated whether they are union members or not. The ruling in the earlier Sime Darby case is not applicable here. The issue in that case involved the matter of granting lunch breaks to certain employees while depriving the other employees of such breaks. This Court affirmed in that case the NLRC's finding that such act of management was discriminatory and constituted unfair labor practice. The case before us does not pertain to any controversy involving discrimination of employees but only the issue of whether the change of work schedule, which management deems necessary to increase production, constitutes unfair labor practice.

4. RE: Meal Break G.R. No. L-16275 February 23, 1961

PAN AMERICAN WORLD AIRWAYS SYSTEM (PHILIPPINES), petitioner, vs. PAN AMERICAN EMPLOYEES ASSOCIATION, respondent. DOCTRINES: The one-hour meal period should be considered as overtime work (deducting 15 minutes as time allotted for eating) because during the so called meal period, the mechanics were required to stand by for emergency work. (It is not one of complete rest, but was actually a work hour) The adoption of a straight 8-hour shift including the meal period is valid because the meal hour was not one of complete rest, but was actually a work hour, since for its duration, the laborers had to be on ready call. FACTS This is an appeal by certiorari from the decision of the Court of Industrial Relations. The dispositive portion of the appealed decision reads: WHEREFORE, the Court orders the Chief of the Examining Division or his representative to compute the overtime compensation due the aforesaid fourteen (14) aircraft mechanic and the two employees from the Communication Department. The company is also ordered to permanently adopt the straight 8-hour shift inclusive of meal period which is mutually beneficial to the parties. ISSUES 1.) Whether or not the finding that the one-hour meal period should be considered overtime work (deducting 15 minutes as time allotted for eating) 2.) Whether or not the court below had the authority to order the company to adopt a straight 8-hour shift inclusive of meal period. RULING 1.) YES, the one-hour meal period should be considered overtime work. The court below found that during the so called meal period, the mechanics were required to stand by for emergency work; that if they happened not to be available when called, they were reprimanded by the leadman; that as in fact it happened on many occasions, the mechanics had been called from their meals or told to hurry Employees Association up eating to perform work during this period. The record clearly confirms the above factual findings of the Industrial Court. 2.) YES, it had the authority to order the company to adopt a straight 8-hour shift inclusive of meal period. The Industrial Court's order for permanent adoption of a straight 8-hour shift including the meal period was but a consequence of its finding that THE MEAL HOUR WAS NOT ONE OF COMPLETE REST, BUT WAS ACTUALLY A WORK HOUR, SINCE FOR ITS DURATION, THE LABORERS HAD TO BE ON RADY CALL. Of course, if the Company practices in this regard should be modified to afford the mechanics a real rest during that hour (f. ex., by installing an entirely different emergency crew, or any similar arrangement), then the modification of this part of the decision may be sought from the Court below. As things now stand, we see no warrant for altering the decision. Other Ruling:

On the issue of jurisdiction over claims for overtime pay, we have since definitely ruled in a recent decisions that the Industrial Court may properly take cognizance of such cases if, at the time of the petition, the complainants were still in the service of the employer, or, having been separated from such service, should ask for reinstatement; otherwise, such claims should be brought before the regular courts (NASSCO v. CIR, et al., L-13888, April 29, 1960; FRISCO v. CIR, et al., L-13806, May 23, 1960;xxx) Since, in the instant case there is no question that the employees claiming overtime compensation were still in the service of the company when the case was filed, the jurisdiction of the Court of Industrial Relations cannot be assailed.

5. Pigcaulan vs. Security and Credit, G.R. No. 173648, January 16, 2012

Ratio

It is not for an employee to prove non-payment of benefits to which he is entitled by law. Rather, it is on the employer that

the burden of proving payment of these claims rests.

Facts

Canoy and Pigcaulan were both employed by SCII as security guards and were assigned to SCIIs different clients.

Subsequently, however, Canoy and Pigcaulan filed with the Labor Arbiter separate complaints for underpayment of salaries

and non-payment of overtime, holiday, rest day, service incentive leave and 13th month pays. In support of their claim,

they have submitted their respective daily time records reflecting the number of hours served and their wages for the

same. They have also presented itemized lists of their claims for the corresponding periods served.

The respondent maintained that Cano and Pagcaulan were paid their just salaries and other benefits. In support

thereof, copies of payroll listings and lists of employees who received their 13th month pay for the periods December 1997

to November 1998 and December 1998 to November 1999 were presented.

The Labor Arbiter awarded Canoy and Pagcaulan their monetary claims and the NLRC affirmed the same.

However, the Court of Appeals set aside the rulings of both Labor Arbiter and NLRC after noting that there were no factual

and legal bases mentioned in the questioned rulings to support the conclusions made.

Issue

Whether or not Pigcaulan is entitled to Overtime, Holiday, SIL and 13th month Pay.

Whether or not the CA erred when it dismissed the complaint allegedly due to absence of legal and factual [bases]

despite attendance of substantial evidence in the records.

Ruling

NOTE: The Supreme Court has declared that the assailed CA decision for CANOY has become final and executory for failure

to appeal. It was Pagcaulan who signed the verification and certification and non-forum shopping.

There was no substantial evidence to support the grant of overtime pay.

The Labor Arbiter ordered reimbursement of overtime pay, holiday pay, service incentive leave pay and 13th

month pay for the year 2000 in favor of Canoy and Pigcaulan. The Labor Arbiter relied heavily on the itemized computations

they submitted which he considered as representative daily time records to substantiate the award of salary differentials.

The NLRC then sustained the award on the ground that there was substantial evidence of underpayment of salaries and

benefits.

The handwritten itemized computations are self-serving, unreliable and unsubstantial evidence to sustain the

grant of salary differentials, particularly overtime pay. Unsigned and unauthenticated as they are, there is no way of

verifying the truth of the handwritten entries stated therein. We find nothing in the records which could substantially

support Pigcaulans contention that he had rendered service beyond eight hours to entitle him to overtime pay and during

Sundays to entitle him to restday pay. Hence, in the absence of any concrete proof that additional service beyond the

normal working hours and days had indeed been rendered, we cannot affirm the grant of overtime pay to Pigcaulan.

Pigcaulan is entitled to holiday pay, service incentive leave pay and proportionate 13th month pay for year 2000.

Under the Labor Code, Pigcaulan is entitled to his regular rate on holidays even if he does not work. Likewise,

express provision of the law entitles him to service incentive leave benefit for he rendered service for more than a year

already.

SCII presented payroll listings and transmittal letters to the bank to show that Canoy and Pigcaulan received their

salaries as well as benefits which it claimed are already integrated in the employees monthly salaries. However, the

documents presented do not prove SCIIs allegation.

To repeat, the burden of proving payment of these monetary claims rests on SCII, being the employer. It is a rule

that one who pleads payment has the burden of proving it. "Even when the plaintiff alleges non-payment, still the

general rule is that the burden rests on the defendant to prove payment, rather than on the plaintiff to prove non-

payment." Since SCII failed to provide convincing proof that it has already settled the claims, Pigcaulan should be paid his

holiday pay, service incentive leave benefits and proportionate 13th month pay for the year 2000.

6. PAL vs. Pascua et al, [Gr No. 143258, Aug. 15, 2003]

Art. 280 (Labor Code):

Regular Employment:

1. the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or

trade of the employer;

2. any employee who has rendered at least one year of service, whether such service is continuous or broken.

FACTS:

April, August & September 1992: PAL hired private respondents as station attendants on a four or six-hour work-shift a day

at five to six days a week, and were assigned to PAL's Air services Department & ASD/CARGO to load cargo to departing &

unload cargo from arriving PAL international flights & flights of Cathay Pacific, Northwest Airlines & Thai Airlines with which

PAL had service contracts.

On occasion, PAL compelled private respondents to work overtime because of urgent necessity. The (contracts with private

respondents were extended twice, the last of which appears to have been for an indefinite period.

February 3, 1994: private respondent Joselito Pascua, in his and on behalf of other 79 part-time station attendants, filed

with DOLE a complaint for: (1) Regularization;(2) Underpayment of wages;(3) Overtime pay;(4) Thirteenth month pay;(5)

Service incentive leave pay;(6) Full time of eight hours employment;(7) Recovery of benefits due to regular employees;(8)

Night differential pay;(9) Moral damages and;(10) Attorneys fees.

However, during the pendency of the case, PAL President & Chairman converted the employment status of private

respondents from temporary part-time to regular part-time.

February 24, 1995: private respondents dropped their money claim then pending before the Office of Executive Labor

Arbiter, thus leaving for consideration their complaint for regularization -conversion of their employment status from part-

time to regular (working on an 8-hour shift).

Executive Labor Arbiter: dismissed private respondents complaint because private respondents' remaining cause of action

was rendered moot and academic by their supervening regularization

NLRC: declared private respondents as regular employees of PAL with an eight-hour work-shift.

MR of Petitioner was denied so petitioner filed a special civil action for certiorari with CA to annul the NLRC decision.

CA: dismissed the said petition.

ISSUES:

1. Did petitioners act of converting respondents status from temporary to regular employees render the original complaint

for regularization moot and academic?

2. Did the appellate court err when it upheld the decision of the NLRC to accord respondents regular full-time employment

although petitioner, in the exercise of its management prerogative, requires only part-time services?

RULING:

1. No, the petitioner only converted the private respondents' status from temporary part-time to regular part-time. The

mere regularization of respondents would still not entitle them to all benefits under the CBA, which regular full-time

employees enjoy. In fact, regular part-time employees are covered by the benefits under Personnel Policies and Procedures

Manual, not the CBA. The dismissal then of the complaint by the labor arbiter is reversible error, and the NLRC still acted

within its power and authority as a quasi-judicial agency in finding that respondents deserve more than just being regular

employees but must be regular full-time employees.

(2) No, CA did not err because management prerogative is not absolute and it could not be

used to circumvent the law and public policy on labor and social

justice. Records show that respondents were first hired to work for a period of one year. Notwithstanding the fact that

respondents perform duties that are usually necessary or desirable in the usual trade or business of petitioner, respondents

were considered temporary employees as their engagement was fixed for a specific period. However, equally borne by the

records, is the fact that respondents employment was extended for more than two years. Evidently, there was a continued

and repeated necessity for their services, which puts to naught the contention that respondents, beyond the one-year

period, still continued to be temporary part-time employees. Article 280 of the Labor Code provides that any employee who

has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular

employee with respect to the activity in which he is employed, and his employment shall continue while such activity

actually exists.

Additional Notes bcn mosimang pangutana:

An issue becomes moot and academic when it ceases to present a justiciable controversy, so that a declaration on the

issue would be of no practical use or value. In that situation, there is no actual substantial relief to which respondents

would be entitled and which would be negated by the dismissal of their original complaint.

7. PERPETUAL HELP CREDIT COOPERATIVE, INC. (PHCCI) V.FABURADA

Topic: Part-time Worker

FACTS:

Private respondents Faburada et. al. filed a complaint against PHCCI for illegal dismissal, premium pay, separation pay,

wage differential, moral damages and attorneys fees. PHCCI filed a motion to dismiss on the ground that noemployer-

employee relationship exists since privaterespondents are all members and co-owners of thecooperative. Also, private

respondents have not exhausted the remedies provided in the coop by laws. PHCCI also filed a supplemental motion to

dismiss alledging that RA 6939, the Cooperative Development Authority Law, requires conciliation or mediation within the

cooperative before a resort to judicial proceeding. 3.The Labor Arbiter ruled in favor of the private respondents, holding

that the case is impressed with employer-employee relationship and that the laws on cooperatives is subservient to the

Labor Code. The NLRC affirmed.

ISSUE: WON private respondent, Faburada was a regular employee.

HELD: YES. Art. 280, Labor Code comprehends 3 kinds of employees: 1)REGULAR EMPLOYEES or those whose work is

necessary or desirable to the usual business of the employer 2)PROJECT EMPLOYEES or those whoseemployment has been

fixed for a specificproject or undertaking the completion ortermination of which has been determined at the time of the

engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is

for the duration of the season 3)CASUAL EMPLOYEES or those who are neither regular nor project employees There are 2

separate instances whereby it can be determined that an employment is regular: 1)If the particular activity performed by

the employee is necessary or desirable in the usual business or trade of the employer 2)If the employee has been

performing the job for at least a year Private respondents were rendering services necessary to the day-to-day operations

of PHCCI. This alone qualified them as regular employees. Moreover, all of them except one worked with PHCCI for more

than 1 year. That Faburada worked only on a part-time basis does not mean that he is not a regular employee .Regularity of

employment is not determined by the number of hours one works but by the nature and length of time one has been in

that particular job.

8. G.R. No. L-58870 December 18, 1987

CEBU INSTITUTE OF TECHNOLOGY (CIT), petitioner,

vs.

HON. BLAS OPLE, in his capacity as Minister, Ministry of Labor and Employment, JULIUS ABELLA, ARSENIO ABELLANA,

RODRIGO ALIWALAS, ZOSIMO ALMOCERA, GERONIDES ANCOG, GREGORIO ASIA, ROGER BAJARIAS, BERNARDO

BALATAYO, JR., BASILIO CABALLES, DEMOCRITO TEVES, VOLTAIRE DELA CERNA, ROBERTO COBARRUBIAS, VILMA GOMEZ

CHUA, RUBEN GALLITO, EDGARDO CONCEPCION, VICTOR COQUILLA, JOSE DAKOYKOY, PATERNO WONG, EVELYN

LACAYA, RODRIGO GONZALES, JEOGINA GOZO, MIGUEL CABALLES, CONSUELO JAVELOSA, QUILIANO LASCO, FRANKLIN

LAUTA, JUSTINIANA LARGO, RONALD LICUPA, ALAN MILANO, MARIA MONSANTO, REYNALDO NOYNAY, RAMON

PARADELA, NATALIO PLAZA, LUZPURA QUIROGA, NOE RODIS, COSMENIA SAAVEDRA, LEONARDO SAGARIO, LETICIA

SERRA, SIEGFREDO TABANAG, LUCINO TAMAOSO, DANILO TERANTE, HELEN CALVO TORRES, ERNESTO VILLANUEVA,

DOLORES VILLONDO, EDWARD YAP, ROWENA VIVARES, DOLORES SANANAM, RODRIGO BACALSO, YOLANDA TABLANTE,

ROMERO BALATUCAN, CARMELITA LADOT, PANFILO CANETE, EMMANUEL CHAVEZ, JR., SERGIO GALIDO, ANGEL

COLLERA, ZOSIMO CUNANAN, RENE BURT LLANTO, GIL BATAYOLA, VICENTE DELANTE, CANDELARIO DE DIOS, JOSE MA.

ESTELLA, NECITA TRINIDAD, ROTELLO ILUMBA, TEODORICO JAYME, RAYMUNDO ABSIN, RUDY MANEJA, REYNA RAMOS,

ANASTACIA BLANCO, FE DELMUNDO, ELNORA MONTERA, MORRISON MONTESCLAROS, ELEAZAR PANIAMOGAN,

BERNARDO PILAPIL, RODOLFO POL, DEMOSTHENES REDOBLE, PACHECO ROMERO, DELLO SABANAL, SARAH SALINAS,

RENATO SOLATORIO, EDUARDO TABLANTE, EMMANUEL TAN, FELICISIMO TESALUNA, JOSE VERALLO, JR., MAGDALENO

VERGARA, ESMERALDA ABARQUEZ, MAC ARTHUR DACUYCUY ACOMPANADA, TRINIDAD ADLAWAN, FE ELIZORDO

ALCANTARA, REOSEBELLA AMPER, ZENAIDA BACALSO, ELIZA BADANA, GEORGIA BAS, ERLINDA BURIAS, ELDEFONSO

BURIAS, CORAZON CASENAS, REGINO CASTANEDA, GEORGE CATADA, CARMENCITA G. CHAVEZ, LORETIA CUNANAN,

FLORES DELFIN, TERESITA ESPINO, ELVIE GALANZA, AMADEA GALELA, TERESITA. JUNTILLA, LEONARDA KAPUNGAN,

ADORACION LANAWAN, LINDA LAYAO, GERARDO LAYSON, VIRGILIO LIBETARIO, RAYMOND PAUL LOGARTA, NORMA

LUCERO, ANATOLIA MENDEZ, ELIODORO MENDEZ, JUDALINE MONTE, ELMA OCAMPO, ESTEFA OLIVARES, GEORGE

ORAIS, CRISPINA PALANG, GRETA PEGARIDO, MELBA QUIACHON, REMEDIOS QUIROS, VIRGINIA RANCES, EDNA DELOS

REYES, VICENTE TAN, EMERGENCIA ROSELL, JULIETA TATING, MERCIA TECARRO, FELISA VERGARA, WEMINA VILLACIN,

MACRINA YBARSABAL, MILAGROS CATALAN, JULIETA AQUINDE, SONIA ARTIAGA, MA. TERESITA OBANDO, ASUNCION

ABAYAN, ESTHER CARREON, ECHEVARRE, BUENAFE SAMSON, CONCEPCION GONZALES, VITALIANA VENERACION,

LEONCIA ABELLAR, REYNITA VILLACARLOS. respondents.

No. L-68345 December 18, 1987

DIVINE WORD COLLEGE OF LEGAZPI, petitioner,

vs.

The Honorable Deputy Minister of Labor and Employment, VICENTE LEOGARDO, JR., the HONORABLE REGIONAL DIRECTOR

(Regional Office No. 5) of the Ministry of Labor & Employment GERARDO S. CASTILLO, CECILIA MANUEL and other alleged

complainants, respondents.

Nos. L-69224-5 December 18, 1987

FAR EASTERN UNIVERSITY EMPLOYEES LABOR UNION, petitioner,

vs.

FAR EASTERN UNIVERSITY and the NATIONAL LABOR RELATIONS COMMISSION, respondents.

No. 70832 December 18, 1987

GREGORIO T. FABROS, ROGELIO B. DE GUZMAN, CRESENCIANO ESPINO, JOSE RAMOS SUNGA, BAYLON BANEZ FERNANDO

ELESTERIO, ISMAEL TABO, AMABLE TUIBEO CELSO TUBAY, RAFAEL HERNANDEZ, GERONIMO JASARENO, MEL BALTAZAR,

MA. LOURDES PASCUAL, T. DEL ROSARIO ACADEMY TEACHERS and EMPLOYEES ASSOCIATION, DENNIS MONTE, BECKY

TORRES, LOIDA VELASCO, ROMLY NERY, DAISY N. AMPIG, PATRICIO DOLORES, ROGELIO RAMIREZ, and NILDA L. SEVILLA,

petitioners,

vs.

The HON. JAIME C. LAYA, in his capacity as Minister of Education, Culture and Sports, respondents.

No. L-76524 December 18, 1987

JASMIN BISCOCHO, ROWENA MARIANO, AGNES GALLEGO, MA. ANA ORDENES, ISABEL DE LEON, LUZVIMINDA FIDEL,

MARIQUIT REYES, SOTERA ORTIZ, ANGELINA ROXAS, BITUIN DE PANO, ELIZABETH ORDEN, APOLLO ORDEN, GUILLERMA

CERCANO, IMELDA CARINGAL, EFREN BATIFORA, ROSIE VALDEZ, DELIA QUILATEZ, FELIX RODRIGUEZ, OSCAR RODRIGUEZ,

JOVITA CEREZO, JOSEFINA BONDOC, BELEN POSADAS, DOLORES PALMA, ANTONINA CRUS, CONRADO BANAYAT, TERESITA

LORBES, and CORAZON MIRANDA, petitioners,

vs.

THE HONORABLE AUGUSTO SANCHEZ, in his capacity as Minister of Labor and Employment, ESPIRITU SANTO PAROCHIAL

SCHOOL AND ESPIRITU SANTO PAROCHIAL SCHOOL FACULTY ASSOCIATION,respondents.

No. 76596 December 18, 1987

RICARDO C. VALMONTE and CORAZON BADIOLA, petitioners,

vs.

THE HONORABLE AUGUSTO SANCHEZ, in his capacity as Minister of Labor and Employment, ESPIRITU SANTO PAROCHIAL

SCHOOL FACULTY ASSOCIATION, and ESPIRITU SANTO PAROCHIAL SCHOOL, respondents.

Facts:

This is a six consolidated cases involving various private schools, their teachers and non-teaching school personnel, and

even parents with children studying in said schools, as well as the then Minister of Labor and Employment, his Deputy, the

National Labor Relations Commission, and the then Minister of Education, Culture and Sports in order to dispose of

uniformly the common legal issue raised therein, namely, the allocation of the incremental proceeds of authorized tuition

fee increases of private schools provided for in section 3 (a) of Presidential Decree No. 451, and thereafter, under the

Education Act of 1982 (Batas Pambansa Blg. 232).

Specifically, the common problem presented by these cases requires an interpretation of section 3(a) of Pres. Decree No.

451 which states:

SEC. 3. Limitations. The increase in tuition or other school fees or other charges as well as the new fees or charges

authorized under the next preceding section shall be subject to the following conditions;

(a) That no increase in tuition or other school fees or charges shall be approved unless sixty (60%) per centum of the

proceeds is allocated for increase in salaries or wages of the members of the faculty and all other employees of the school

concerned, and the balance for institutional development, student assistance and extension services, and return to

investments: Provided That in no case shall the return to investments exceed twelve (12%) per centum of the incremental

proceeds;

xxx xxx xxx

In addition, there is also a need for a pronouncement on the effect of the subsequent enactment of B.P. Blg. 232 which

provides for the allocation of tuition fee increases in section 42 thereof.

The present controversy arises from the claims of some school personnel for allowances and other benefits and the refusal

of the private schools concerned to pay said allowances and benefits on the ground that said items should be deemed

included in the salary increases they had paid out of the 60% portion of the proceeds from tuition fee increases provided

for in section 3 (a) of Pres. Decree No. 451.

G. R. No. 58870 CEBU INSTITUTE OF TECHNOLOGY CASE

This case originated from a Complaint filed by private respondents, CIT Teachers, with the Regional Office No. VII of the

Ministry of Labor against petitioner Cebu Institute of Technology (CIT) for non-payment of:

a) cost of living allowances (COLA) under Pres. Dec. Nos. 525, 1123, 1614, 1678 and 1713,

b) thirteenth (13th) month pay differentials and

c) service incentive leave.

By virtue of an Order issued by a labor management committee through the then Deputy Minister of Labor Carmelo C.

Noriel, The said committee was to ascertain compliance with the legal requirements for the payment of COLA, thirteenth

(13th) month pay and service incentive leave.

During the conference, CIT held that it had paid the allowances mandated by various decrees but the same had been

integrated in the teacher's hourly rate. It also alleged that the payment of COLA by way of salary increases is in line with

Pres. Dec. No. 451. It also claimed in its position paper that it had paid thirteenth month pay to its employees and that it

was exempt from the payment of service incentive leave to its teachers who were employed on contract basis.

After the report and recommendation of the committee, public respondent, Minister of Labor and Employment issued an

Order and held that the basic hourly rate designated in the Teachers' Program is regarded as the basic hourly rate of

teachers exclusive of the COLA, and that COLA should not be taken from the 60% incremental proceeds of the approved

increase in tuition fee.

Hence, petitioner assails the aforesaid Order in this Special Civil Action of Certiorari with Preliminary Injunction and/or

Restraining Order.

G.R. No. L-68345 DIVINE WORD COLLEGE OF LEGAZPI CASE

A complaint was filed by the ten faculty members of the herein petitioner, Divine Word College of Legazpi for alleged non-

compliance with, among others, Pres. Dec. No. 451, i.e., allowances were charged to the 60% incremental proceeds of

tuition fee increase.

Thus, the Labor Regulation Section of Regional Office No. V (Legazpi City) of the Ministry of Labor and Employment

conducted an inspection of the employment records of said school.

On the basis of the report on the special inspection, it was found out that the school did not comply with Pres. Dec. No.

451. Hence, public respondent Regional Director issued an Order requiring compliance by the Divine Word College.

However, petitioner failed to comply with the issued order. Another order was then issued by respondent Regional

Director requiring petitioner to pay the faculty members- complainants (private respondents) the total amount of Six

Hundred Seventeen Thousand Nine Hundred Sixty Seven Pesos and Seventy Seven Centavos (P 617,967.77).

G.R. No. L-69224-5 FAR EASTERN UNIVERSITY CASE

Petitioner Union filed with the Ministry of Labor and Employment a complaint against respondent University for non-

payment of legal holiday pay and under-payment of the thirteenth (13th) month pay.

While the case was pending, the Union President, in his personal capacity, filed another complaint for violation of Pres. Dec.

No. 451 against the same respondent.

Thus, the case was consolidated and jointly heard and tried. The Labor Arbiter rendered a decision in favor of the petitioner

Union with a limitation that money claims beyond three (3) years from the time the course (sic) of action occurred are

already barred and the claim for based on P.D. 451 was dismissed.

On appeal by both parties, the respondent Commission modify the decision rendered by the Labor Arbiter by which

complainant's claims for legal holiday pay and 13th month pay are likewise dismissed for lack of merit and the dismissal of

the claim under P.D. 451 was Affirmed en toto.

G.R. No. 70832 FABROS CASE

The case is a petition in the nature of a class suit brought by petitioners in behalf of the faculty members and other

employees of more than 4000 private schools nationwide.

Petitioners seek to enjoin the implementation of paragraphs 7 to 7.5 of MECS Order No. 5, series of 1985 on the ground

that the said order is null and void for being contrary to Pres. Dec. No. 451 and the rulings of the Supreme Court in the

cases of University of the East v. UE Faculty Association [G.R. No. L-57387, September 20, 1982, 117 SCRA 5541, University

of Pangasinan Faculty Union v. University of Pangasinan and NLRC [G.R. No. 63122, February 20, 1984, 127 SCRA 691 ], St.

Louis University Faculty Club v. NLRC and St. Louis University [G.R. No. 65585, September 28, 1984, 132 SCRA 380].

On September 11, 1982, Batas Pambansa Blg. 232 (Education Act of 1982) was signed into law. On the matter of tuition and

other school fees of private schools, section 42 of said law provides as follows:

Sec. 42. Tuition and other School Fees. Each private School shall determine its rate of tuition and other school fees or

charges. The rates and charges adopted by schools pursuant to this provision shall be collectible, and their application or

use authorized subject to rules and regulations promulgated by the Ministry of Education, Culture and Sports. (Emphasis

supplied).

Invoking section 42 of B.P. Blg. 232, among others, as its legal basis, the then Minister of Education Jaime C. Laya

promulgated on April 1, 1985 the disputed MECS Order No. 25, s. 1985 entitled Rules and Regulations To Implement the

Provisions of B.P. Blg. 232. The Education Act of 1982, Relative to Student Fees for School Year 1985-1986. The relevant

portions of said Order:

7. Application or Use of Tuition and Other School Fees or Charges.

7.1. The proceeds from tuition fees and other school charges as well as other income of each school shall be treated as an

institutional fund which shall be administered and managed for the support of school purposes strictly: Provided, That for

the purpose of generating additional financial resources or income for the operational support and maintenance of each

school two or more schools may pool their institutional funds, in whole or in part, subject to the prior approval of their

respective governing boards.

7.2. Tuition fees shag be used to cover the general expenses of operating the school in order to allow it to meet the

minimum standards required by the Ministry or any other higher standard, to which the school aspires. They may be used

to meet the costs of operation for maintaining or improving the quality of instruction/training/research through improved

facilities and through the payment of adequate and competitive compensation for its faculty and support personnel,

including compliance with mandated increases in personnel compensation and/or allowance.

7.3. Tuition fees shag be used to cover minimum and necessary costs including the following: (a) compensation of school

personnel such as teaching or academic staff, school administrators, academic non-teaching personnel, and non-academic

personnel, (b) maintenance and operating expenses, including power and utilities, rentals, depreciation, office supplies; and

(c) interest expenses and installment payments on school debts.

7.4. Not less than sixty (60) percent of the incremental tuition proceeds shall be used for salaries or wages, allowances and

fringe benefits of faculty and support staff, including cost of living allowance, imputed costs of contributed services,

thirteenth (13th) month pay, retirement fund contributions, social security, medicare, unpaid school personnel claims and

payments as may be prescribed by mandated wage orders. collective bargaining agreements and voluntary employer

practices, Provided That increases in fees specifically authorized for the purposes listed in paragraph 4.3.3 hereof shall be

used entirely for those purposes. (Italics supplied).

7.5. Other student fees and charges as may be approved, including registration, library, laboratory, athletic, application,

testing fees and charges shall be used exclusively for the indicated purposes, including (a) the acquisition and maintenance

of equipment, furniture and fixtures, and buildings, (b) the payment of debt amortization and interest charges on debt

incurred for school laboratory, athletic, or other purposes, and (c) personal services and maintenance and operating

expenses incurred to operate the facilities or services for which fees and charges are collected.

The Petition prayed for the issuance of a temporary restraining order which was granted by this Court after hearing.

G. R. No. L-76524 BISCOCHO CASE

The Espiritu Santo Parochial School and the Espiritu Santo Parochial School Faculty Association were parties to a labor

dispute which arose from a deadlock in collective bargaining. The parties entered into conciliation proceedings. The union

went on strike after efforts at the conciliation failed.

Subsequently, a return to work agreement was forged between the parties and both agreed to submit their labor dispute to

the jurisdiction of the Minister of Labor.

In the exercise of his power to assume jurisdiction, the Ministry of Labor and Employment issued an Order declaring the

strike staged by the Union to be legal.

xxx xxxx xxx

e) the parties to execute a collective bargaining agreement with an economic package equivalent to 90% of the proceeds

from tuition fee increases for school year 1985-1986 and another 90% for school year 1986-1987 and 85% for school year

1987-1988. The amount aforementioned shall be divided equally to all members of the bargaining unit as their respective

salary adjustments. Such other benefits being enjoyed by the members of the bargaining unit prior to the negotiation of the

CBA shall remain the same and shall not be reduced.

f) the School to deduct the amount equivalent to ten (10%) per cent of the backwages payable to all members of the

bargaining unit as negotiation fee and to deliver the same to the Union Treasurer for proper disposition

Pursuant to the said order, petitioners, employees and faculty members of the respondent School, filed the present petition

for prohibition to restrain the implementation of the said Order contending that that said Order and agreements affect

their rights to the 60% incremental proceeds under Pres. Dec. No. 451 which provide for the exclusive application of the

60% incremental proceeds to basic salary.

G.R. No. 76596 VALMONTE CASE

This Petition was filed by parents with children studying at respondent school, Espiritu Santo Parochial School to nullify the

Order dated April 14, 1986 issued by public respondent, then Minister of Labor and Employment, specifically paragraphs (e)

and (f) thereof, quoted in the Biscocho case.

The award contained in the said Order is the result of the assumption of jurisdiction by the public respondent over a labor

dispute involving the private respondents school and faculty association. The latter had earlier filed a notice of strike

because of a bargaining deadlock on the demands of its members for additional economic benefits. After numerous

conciliation conferences held while the union was on strike, the parties voluntarily agreed that the public respondent shall

assume jurisdiction over all the disputes between them. As to the subject matter of the instant case, the public respondent

found that the latest proposals of the respondent school was to give 85% of the proceeds from tuition fee increases for the

school years to be divided among the teachers and employees as salary adjustments. What the respondent faculty

association offered to accept was a package of 95% for school year 1985-1986, 90% for school year 1986- 1987. The

respondent school offered to strike the middle of the two positions, hence the Order complained of by the petitioners.

Issues:

Sub-Issue (Common to the Cases)

1. Whether or not allowances and other fringe benefits of employees may be charged against the 60% portion of the

incremental proceeds provided for in sec. 3(a) of Pres. Dec. No. 451.

ARGUMENTS:

Cebu Institute of Technology

Petitioner contends that the salary increases it had paid to its employees should be considered to have included the COLA

in consonant to Pres. Dec. No. 451 and its Implementing Rules.

The line of reasoning of the petitioner appears to be based on the major premise that under said decree and rules, 60% of

the incremental proceeds from tuition fee increases may be applied to salaries, allowances and other benefits of teachers

and other school personnel. In support of thereof, petitioner cites various implementing rules and regulations of the then

Minister of Education, Culture and Sports, to the effect that 60% of the incremental proceeds may be applied to salaries,

allowances and other benefits for members of the faculty and other school personnel

Petitioner concludes that the salary increases it had granted the CIT teachers out of the 60% portion of the incremental

proceeds of its tuition fee increases from 1974-1980 pursuant to Pres. Dec. No. 451 and the MECS implementing rules and

regulations must be deemed to have included the COLA payable to said employees for those years

Divine Word College Case

Petitioner Divine Word College of Legazpi (DWC) advances the theory that the COLA, 13th month pay and other personnel

benefits decreed by law, must be deemed chargeable against the 60% portion allocated for increase of salaries or wages of

faculty and all other school employees.

In support of this stance, petitioner points out that said personnel benefits are not included in the enumeration of the

items for which the balance (less 60%) or 40% portion of the incremental proceeds may be alloted under section 3(a) of

Pres. Dec. No. 45, that the 60% incremental proceeds of authorized tuition fee increases may be applied to increases in

emoluments and/or benefits for members of faculty, including staff and administrative employees of the school as the valid

interpretation of the law, as against that made by the respondent Deputy Minister of Labor in the assailed Order.

According to the petitioner, the discrimination takes the form of requiring said class of employers to give 60% of their

profits to their employees in addition to the COLA mandated by law, while other employers have to contend only with

salary increases and COLA.

Far Eastern University case

It is the petitioner's contention that in respect of Pres. Dec. No. 451, the decision of the NLRC is a defiance of the rulings of

this Court in the cases of University of the East v. U.E. Faculty, Association et al. and of University of Pangasinan Faculty

Union v. University of Pangasinan and NLRC (supra).

The Union submits that monetary benefits, other than increases in basic salary, are not chargeable to the 60% incremental

proceeds.

The Union agreed with the position taken by the Solicitor General that under Pres. Dec. No. 451, 60% of the tuition fee

increases, shall answer exclusively for salary increase. However, it expressed disagreement with the opinion that during the

effectivity of B.P. Blg. 232, the 60% incremental proceeds shall answer not only for salary increases but also for other

employment benefits.

The Union argues that whereas "Pres. Dec. No. 451 is a law on a particular subject, viz., increase of tuition fee by

educational institutions and how such increase shall be allocated B.P. Blg. 232 is not a law on a particular subject of increase

of tuition fee . . . ; at most it is a general legislation on tuition fee as it touches on such subject in general, " [Comment on

Compliance; Rollo, p. 376], Suppletory to its argument that B.P. Blg. 232 did not impliedly repeal Pres. Dec. No. 451, the

Union also invokes the principle that a special or particular law cannot be repealed by a general law.

Courts Ruling on the FIRST SUB-ISSUE

The court reiterate the case of University of the East,

that if the schools have no resources other than those derived from tuition fee increases, allowances and benefits should

be charged against the proceeds of tuition fee increases which the law allows for return on investments under section 3(a)

of Pres. Dec. No. 451, therefore, not against the 60% portion allocated for increases in salaries and wages (See 117 SCRA at

571).

Section 3(a) of Pres. Dec. No. 451 imposes among the conditions for the approval of tuition fee increases, the allocation of

60% per cent of the incremental proceeds thereof for increases in salaries or wages of school personnel and not for any

other item such as allowances or other fringe benefits.

As aptly put by the Court in University of Pangasinan Faculty Union v. University of Pangasinan, supra:

... The sixty (60%) percent incremental proceeds from the tuition increase are to be devoted entirely to wage or salary

increases which means increases in basic salary. The law cannot be construed to include allowances which are benefits over

and above the basic salaries of the employees. To charge such benefits to the 60% incremental proceeds would be to

reduce the increase in basic salary provided by law, an increase intended also to help the teachers and other workers tide

themselves and their families over these difficult economic times. [Emphasis supplied] (127 SCRA 691, 702).

This interpretation of the law is consistent with the legislative intent expressed in the Decree itself, i.e., to alleviate the sad

plight of private schools and that of their personnel wrought by slump in enrollment and increasing operational costs on the

part of the schools, and the increasing costs of living on the part of the personnel. While coming to the aid of the private

school system by simplifying the procedure for increasing tuition fees, the Decree imposes as a condition for the approval

of any such increase in fees, the allocation of 60% of the incremental proceeds thereof, to increases in salaries or wages of

school personnel.

This condition makes for a quid pro quo of the approval of any tuition fee hike by a school, thereby assuring the school

personnel concerned, of a share in its proceeds. The condition having been imposed to attain one of the main objectives of

the Decree, which is to help the school personnel cope with the increasing costs of living, the same cannot be interpreted in

a sense that would diminish the benefit granted said personnel.

As to the alleged implementing rules and regulations promulgated by the then MECS to the effect that allowances and

other benefits may be charged against the 60% portion of the proceeds of tuition fee increases provided for in Section 3(a)

of Pres. Dec. No. 45 1, suffice it to say that these were issued ultra vires, and therefore not binding upon this Court.

The rule-making authority granted by Pres. Dec. No. 451 is confined to the implementation of the Decree and to the

imposition of limitations upon the approval of tuition fee increases, to wit:

SEC. 4. Rules and Regulations. The Secretary of Education and Culture is hereby authorized, empowered and directed to

issue the requisite rules and regulations for the effective implementation of this Decree. He may, in addition to the

requirements and limitations provided for under Sections 2 and 3 hereof, impose other requirements and limitations as he

may deem proper and reasonable.

The power does not allow the inclusion of other items in addition to those for which 60% of the proceeds of tuition fee

increases are allocated under Section 3(a) of the Decree.

Since the implementing rules and regulations cited by the private schools adds allowances and other benefits to the items

included in the allocation of 60% of the proceeds of tuition fee increases expressly provided for by law, the same were

issued in excess of the rule-making authority of said agency, and therefore without binding effect upon the courts.

At best the same may be treated as administrative interpretations of the law and as such, they may be set aside by this

Court in the final determination of what the law means.

2. Whether or not allowances and other fringe benefits may be charged against the 60% portion of the incremental

proceeds of tuition fee increases upon the effectivity of the Education Act of 1982 (B.P. Blg. 232).

ARGUMENTS:

Fabros case

In assailing MECS Order No. 25, s. 1985, petitioners argue that the matter of allocating the proceeds from tuition fee

increases is still governed by Pres. Dec. No. 451. It is their opinion that section 42 of B.P. Blg. 232 did not repeal Pres. Dec.

No. 451.

Reasons:

1. There is no conflict between section 42 of B.P. Blg. 232 and section 3(a) of Pres. Dec. No. 451 or any semblance of

inconsistency to deduce a case of a repeal by implication.

2. Pres. Dec. No. 451 is a specific law upon a particular subject-the purposes and distribution of the incremental

proceeds of tuition fee increases, while B.P. Blg. 232 is a general law on the educational system; as such, a specific law is not

repealed by a subsequent general law in the absence of a clear intention.

3. Pres. Dec. No. 451 is still the only law on the subject of tuition fee increases there being no prescription or

provision in section 42 of B.P. Blg. 232 or elsewhere in the law.

Courts Ruling on the SECOND SUB-ISSUE

On the matter of tuition fee increases section 42 of B.P. Blg. 232 provides:

SEC. 42. Tuition and Other School Fees. Each private school shall determine its rate of tuition and other school fees or

charges. The rates and charges adopted by schools pursuant to this provision shall be collectible and their application or use

authorized, subject to rules and regulations promulgated by the Ministry of Education, Culture and Sports. (Emphasis

supplied).

The Court after comparing section 42 of B.P. Blg. 232 and Pres. Dec. No. 451, particularly section 3(a) thereof, finds evident

irreconcilable differences.

Under Pres. Dec. No. 451, the authority to regulate the imposition of tuition and other school fees or charges by private

schools is lodged with the Secretary of Education and Culture (Sec. 1), where section 42 of B.P. Blg. 232 liberalized the

procedure by empowering each private school to determine its rate of tuition and other school fees or charges.

Pres. Dec. No. 451 provides that 60% of the incremental proceeds of tuition fee increases shall be applied or used to

augment the salaries and wages of members of the faculty and other employees of the school, while B.P. Blg. 232 provides

that the increment shall be applied or used in accordance with the regulations promulgated by the MECS.

The Court leads to resolve that the question is in favor of repeal.

Three Aspects of the disputed provisions of law:

1. The legislative authority under Pres. Dec. No. 451 retained the power to apportion the incremental proceeds of the

tuition fee increases; such power is delegated to the Ministry of Education and Culture under B.P. Blg. 232.

2. Pres. Dec. No. 451 limits the application or use of the increment to salary or wage increase, institutional

development, student assistance and extension services and return on investment, whereas B.P. Blg. 232 gives the MECS

discretion to determine the application or use of the increments.

3. The extent of the application or use of the increment under Pres. Dec. No. 451 is fixed at the pre-determined

percentage allocations; 60% for wage and salary increases, 12% for return in investment and the balance of 28% to

institutional development, student assistance and extension services, while under B.P. Blg. 232, the extent of the allocation

or use of the increment is likewise left to the discretion of the MECS.

3. Whether or not schools and their employees may enter into a collective bargaining agreement allocating more than 60%

of said incremental proceeds for salary increases and other benefits of said employees.

Biscocho and Valmonte cases

Assailed by the petitioners in the Biscocho and the Valmonte cases is the Order of the respondent Minister of Labor

directing the execution of a CBA between the school and the respondent Espiritu Santo Parochial School Faculty Association

which provides for an economic package equivalent to 90% of the proceeds of tuition fee increases for school year 1985-

1986, another 90% for school year 1986-1987 and 85% for school year 1987-1988.

The petitioners in the two cases seek the nullification of the MOLE Order for exactly opposite reasons.

In the Biscocho case, the controversy springs from what petitioners perceive to be a diminution of the benefits to be

received by the school employees insofar as the CBA allocates only 45% for salary increases instead of 60%, which

petitioners claim to be the portion set aside by Pres. Dec. No. 451 for that purpose. The question is whether or not the 90%

portion of the proceeds of tuition fee increases alloted for the economic package may be allocated for both salary increases

and allowances.

Petitioners in the Valmonte case believe that the MOLE cannot order the execution of a CBA which would allocate more

than 60% of the proceeds of tuition fee increases for salary increases of school employees. They argue that the assailed

Order collides with the provisions of Pres. Dec. No. 451 insofar as it allocates 90% of the tuition fee increases for salary

adjustments of the members of the bargaining unit which exceeds the 60% of the said increases allocated by the Decree for

the same purpose.

Courts Ruling on the Third Sub-Issue

Based on the aforequoted MECS and DECS rules and regulations which implement BP Blg. 232, the 60% portion of the

proceeds of tuition fee increases may now be allotted for both salaries and allowances and other benefits. The 60% figure

is, however, a minimum which means that schools and their employees may agree on a larger portion, or in this case, as

much as 90% for salaries and allowances and other benefits. This is not in any way to allow diminution or loss of the portion

allotted for institutional development of the school concerned. Thus, paragraph 7.5 of MECS Order No. 25, series of 1985

specifically provides that other student fees and charges like registration, library, laboratory or athletic fees shall be used

exclusively for the purposes indicated.

SPECIFIC ISSUES AND COURTS RULING

CEBU INSTITUTE OF TECHNOLOGY CASE

Issues:

1. Whether or not petitioner is exempted and/or not obliged to pay service incentive leave.

2. Whether or not private respondents claims for COLA and service incentive leave are barred by laches and

prescription.

Courts Ruling:

First Issue:

Rule V of the Implementing Rules and Regulations of the Labor Code to wit:

Sec. 1. Coverage. This rule [on Service Incentive Leave] shall apply to all employees, except:

xxx xxx xxx

(d) Field personnel and other employees whose performance is unsupervised by the employer including those who are

engaged on task or contract basis, purely commission basis, or those who are paid in a fixed amount for performing work

irrespective of the time consumed in the performance thereof; (MOLE Rules and Regulations, Rule V, Book III)

The phrase "those who are engaged on task or contract basis" should however, be related with "field personnel" applying

the rule on ejusdem generis that general and unlimited terms are restrained and limited by the particular terms that they

follow.

Clearly, petitioner's teaching personnel cannot be deemed field personnel which refers "to non-agricultural employees who

regularly perform their duties away from the principal place of business or branch office of the employer and whose actual

hours of work in the field cannot be determined with reasonable certainty. [Par. 3, Article 82, Labor Code of the

Philippines]. Petitioner's claim that private respondents are not entitled to the service incentive leave benefit cannot

therefore be sustained.

Second Issue:

Article 291 of the Labor Code which provides:

Art. 291. Money claims. All money claims arising from employer-employee , relations accruing during the effectivity of

this Code shall be filed within three (3) years from the time the cause of action accrued; otherwise, they shall be forever

barred.

All money claims accruing prior to the effectivity of this Code shall be filed with the appropriate entities established under

this Code within one (1) year from the date of effectivity, and shall be processed or determined in accordance with

implementing rules and regulations of the Code; otherwise, they shall be forever barred.

xxx xxx xxx

It is not fully accurate to conclude that the entire claims for COLA and service incentive leave are no longer recoverable.

DIVINE WORD COLLEGE CASE

Issues:

1. Whether or not the Regional Director has jurisdiction over money claims arising from employer-employee

relationship.

2. Whether or not the Regional Director and Deputy Minister of Labor adopted the report of the Labor Standards

Division without affording the petitioner the opportunity to be heard.

Courts Ruling:

First Issue:

The Secretary of Labor or his duly authorized representatives (which includes Regional Directors) are accorded the power to

investigate complaints for non- compliance with labor laws, particularly those which deal with labor standards such as

payment of wages and other forms of compensation, working hours, industrial safety, etc. This is provided for in article 128

of the Labor Code, as amended:

Art. 128. Visitorial and enforcement power.

(a) The Secretary of Labor or his duly authorized representatives including labor regulation officers, shall have access to

employers' records and premises at any time of the day or night, whenever work is being undertaken therein, and the right

to copy therefrom, to question any employee and investigate any fact, condition or matter which may be necessary to

determine violations or which may aid in the enforcement of this Code and of any labor law, wage order or rules and

regulations issued pursuant thereto.

(b) The Secretary of Labor or his duly authorized representatives shall have the power to order and administer, after due

notice and hearing, compliance with the labor standards provisions of this Code based on the findings of labor regulation

officers or industrial safety engineers made in the course of inspection, and to issue writs of execution to the appropriate

authority for the enforcement of their order, except in cases where the employer contests the findings of the labor

regulations officer and raises issues which cannot be resolved without considering evidentiary matters that are not

verifiable in the normal course of inspection. (Emphasis supplied).

Furthermore, Policy Instruction No. 6 which deals with the distribution of jurisdiction over labor cases restates inter alia

that "(L)abor standards cases arising from violation of labor standards laws discovered in the course of inspection or

complaints where employer-employee relations still exist" are under the exclusive original jurisdiction of the Regional

Director.

Even assuming that respondent Regional Director was without jurisdiction to entertain the case at bar, petitioner is now

barred at this stage to claim lack of jurisdiction having actively participated in the proceedings below. Petitioner never

questioned the jurisdiction of the respondent Regional Director.

Second Issue:

Petitioner had the opportunity to refute the report on the inspection conducted. It submitted a comment thereto, which

was in effect its position paper. The arguments therein and evidence attached thereto were considered by respondent

Regional Director in the order issued subsequently. They, therefore, had ample opportunity to present their side of the

controversy.

What due process contemplates is not merely the existence of an actual hearing. The "right to be heard" focuses more on

the substance rather than the form. In the case at bar, petitioner was actually heard through the pleadings that it filed with

the Regional Office V. As itself admitted in its petition that it was afforded the right to be heard on appeal, petitioner

cannot therefore insist that it was denied due process.

FAR EASTERN UNIVERSITY CASE

Issues:

1. WHETHER OR NOT 'TRANSPORTATION ALLOWANCE' SHOULD BE CONSIDERED AS 'EQUIVALENT TO 13TH-MONTH

PAY UNDER PRES. DEC. NO. 851.

Courts Ruling:

The issue on the thirteenth (13th) month pay involves an interpretation of the provisions of Pres. Dec. No. 851 which

requires all employers "to pay all their employees receiving a basic salary of not more than Pl,000 a month, regardless of

the nature of the employment, a 13th- month pay" (Sec. 1). However, "employer[s] already paying their employees a 13th-

month pay or its equivalent are not covered" (Sec. 2). (Emphasis supplied)

The Rules and Regulations Implementing Pres. Dec. No. 851 provide the following:

SEC. 3. Employees. The Decree shall apply to all employers except to: ...

c) Employers already paying their employees 13th-month or more in a calendar year or its equivalent at the time of this

issuance; ...

xxx xxx xxx

The term "its equivalent" as used in paragraph (c) hereof shall include Christmas bonus, mid-year bonus, profit-sharing

payments and other cash bonuses amounting to not less than 1/12th of the basic salary but shall not include cash and stock

dividends, cost of living allowances and all other allowances regularly enjoyed by the employer, as well as non-monetary

benefits. Where an employer pays less than 1/1 2th of the employees basic salary, the employer shall pay the difference.

The Court held that the benefit herein designated as "transportation allowance" is a form of bonus equivalent to the 13th

month pay. Nevertheless, where this does not amount to 1/12 of the employees basic salary, the employer shall pay the

difference.

The evident intention of the law was to grant an additional income in the form of a 13th month pay to employees not

already receiving the same.

To hold otherwise would be to impose an unreasonable and undue burden upon those employers who had demonstrated

their sensitivity and concern for the welfare of their employees. A contrary stance would indeed create an absurd situation

whereby an employer who started giving his employees the 13th month pay only because of the unmistakable force of the

law would be in a far better position than another who, by his own magnanimity or by mutual agreement, had long been

extending his employees the benefits contemplated under PD No. 851, by whatever nomenclature these benefits have

come to be known. Indeed, PD No. 851, a legislation benevolent in its purpose, never intended to bring about such

oppressive situation.

BISCOCHO CASE

Issue:

Whether or not the 60% incremental proceeds may be subjected to attorney's fees, negotiation fees, agency fees and the

like.

Courts Ruling:

The Court notes the fact that there are two classes of employees among the petitioners:

(1) those who are members of the bargaining unit and

(2) those who are not members of the bargaining unit.

The first class may be further subdivided into two:

a. those who are members of the collective bargaining agent and

b. those who are not.

It is clear that the questioned Order of the respondent Minister applies only to members of the bargaining unit. The CBA

prepared pursuant to said Order, however, covered employees who are not members of the bargaining unit, although said

CBA had not yet been signed at the time this petition was filed on November 24, 1986.

Assuming it was signed thereafter, the inclusion of employees outside the bargaining unit should be nullified as this does

not conform to said order which directed private respondents to execute a CBA covering only members of the bargaining

unit.

Being outside the coverage of respondent Minister's order, and thus, not entitled to the economic package involved

therein, employees who are non- members of the bargaining unit should not be assessed negotiation fees, attorney's fees,

agency fees and the like, for the simple reason that the resulting collective bargaining agreement does not apply to them. It

should be clear, however, that while non-members of the bargaining unit are not entitled to the