Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 81477 April 19, 1989

DENTECH MANUFACTURING CORPORATION and JACINTO LEDESMA in his capacity as General Manager,
petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, CCLU, BENJAMIN MARBELLA, ARMANDO TORNO,
JUANITO TAJAN, JR. and JOEL TORNO, respondents.

GANCAYCO, J.:

FACTS
Dentech Manufacturing Corporation is a domestic corporation organized under Philippine laws owned and managed
by the petitioner Jacinto Ledesma. The firm is engaged in the manufacture and sale of dental equipment and
supplies.

Private respondents Benjamin Marbella, Armando Torno, Juanito Tajan, Jr. and Joel Torno are members of the
Confederation of Citizens Labor Union (CCLU), a labor organization registered with the DOLE. They used to be the
employees of Dentech, working as welders, upholsterers and painters. They were already employed with the
company when it was still a sole proprietorship. They were dismissed from the firm beginning February 14, 1985.

They filed a Complaint with the NLRC against Dentech and Ledesma for, among others, illegal dismissal and
violation of PD851. They were originally joined by another employee, one Raymundo Labarda, who later withdrew
his Complaint. At first, they only sought the payment of their 13th month pay under PD851 as well as their
separation pay, and the refund of the cashbond they filed with the company at the start of their employment. Later
on, they sought their reinstatement as wellas the payment of their 13th month pay and service incentive leave pay,
and separation pay in the event that they are not reinstated. It is alleged that they were dismissed from the firm for
pursuing union activities.

Dentech argued that they are not entitled to a 13th monthpay. They maintained that each of the private respondents
receive a total monthly compensation of more than P1,000 and that under Section 1 of PD 851, such employees are
not entitled to receive a 13th month pay. Also, the company is in bad financial
shape and that pursuant to Section 3, the firm is exempted from complying with the provisions of the Decree.
Dentech also contended that the refund of the cash bond filedby the Marbella, et al., is improper inasmuch as
the proceeds of the same had already been given to a certain carinderia to pay for their outstanding accounts.

ISSUES
1. WON the private respondents are entitled as a matter of rightto a 13th month pay
2. WON the refund of the cash bond is proper

HELD
1. YES
PD 851 was signed into law in 1975 by then President Ferdinand Marcos. Under the original provisions of Section 1,
all employers are required to pay all their employees receiving abasic salary of not more than P1,000 a month,
regardless of the nature of their employment, a 13th month pay not later than December 24 of every year. Under
Section 3 of the rules andregulations implementing PD 851, financially distressed employers, i., e., those currently
incurring substantial losses, arenot covered by the Decree. Section 7 requires, however, thatsuch distressed
employers must obtain the prior authorizationof the Secretary of Labor before they may qualify for suchexemption.

On May 1, 1978, PD 1364 was signed into law. The Decree enjoined the DOLE to stop accepting applications
for exemption under PD 851. On August 13, 1986, President Corazon Aquino issued Memorandum Order No. 28
which modified Section 1 of PD 851. The said issuance eliminated the P1,000 salary ceiling.

It is clearly appears that Dentech has no basis to claim that is is exempted from complying with the provisions of the
law relating to the 13th month pay.

P1,000 salary ceiling provided in PD 851 pertains to basic salary, not total monthly compensation. Dentech
admits that Marbella, at al., work only five days a week and that they each receive a basic daily wage of P40
only. A simple computation of the basic daily wage multiplied by the number of working days in a month
results in an amount of less than P1,000. Thus, there is no basis for the contention that the company is
exempted from the provision of PD 851 which mandated the payment of 13 th month pay to the employees
receiving less than one thousand pesos a month.

[NOTE: Cory’s Memo (1986) is not yet applicable as of the time Marbella, et al., were dismissed (1985).]

Even assuming, arguendo, that Marbella, et al., are each paida monthly salary of over P1,000, Dentech is still not in
aposition to claim exemption. The rules and regulationsimplementing PD 851 provide that a distressed employer
shall qualify for exemption from the requirements of the Decree onlyupon prior authorization from the Secretary of
Labor. No such prior authorization had been obtained by Dentech.

2. YES

The refund of the cash bond is in order. Article 114 of theLabor Code prohibits an employer from requiring his
employeesto file a cash bond or to make deposits, subject to certainexceptions.

Art. 114. Deposits for loss or damage.

No employer shall require his worker to make deposits from whichdeductions shall be made for the
reimbursement of loss of or damage to tools, materials, or equipment suppliedby the employer, except
when the employer is engagedin such trades, occupations or business where thepractice of making
deductions or requiting deposits is a recognized one, or is necessary or desirable as determined by the
Sec. of Labor in appropriate rules and regulations.

Dentech has not satisfactorily disputed the applicability of thisprovision to the case at bar. Considering further that
it failed toshow that it is authorized by law to require Marbella, et al., tofile the cash bond in question, the refund is in
order. The allegation that the proceeds of the cash bond had alreadybeen given to a certain carinderia to pay for the
accounts of the private respondents does not merit serious consideration. Noevidence or receipt has been shown to
prove such payment.

Disposition: Petition is hereby DISMISSED for lack of merit.