G.R. No.
L-4148 July 16, 1952 with the Court of Industrial Relations praying, among others, that the petitioner
MANILA TERMINAL COMPANY, INC., petitioner,
vs.
THE COURT OF INDUSTRIAL RELATIONS and MANILA TERMINAL
RELIEF AND MUTUAL AID ASSOCIATION, respondents.
Perkins, Ponce Enrile and Contreras for petitioner.
Antonio V. Raquiza, Honesto Ricobal and Perfecto E. Llacarfor respondent
Association.
Mariano R. Padilla for respondent Court of Industrial Relations.
PARAS, C. J.:
On September 1, 1945, the Manila Terminal Company, Inc. hereinafter to be
referred as to the petitioner, undertook the arrastre service in some of the piers
in Manila's Port Area at the request and under the control of the United States
Army. The petitioner hired some thirty men as watchmen on twelve-hour shifts
at a compensation of P3 per day for the day shift and P6 per day for the night
shift. On February 1, 1946, the petitioner began the postwar operation of the
arrastre service at the present at the request and under the control of the
Bureau of Customs, by virtue of a contract entered into with the Philippine
Government. The watchmen of the petitioner continued in the service with a
number of substitutions and additions, their salaries having been raised during
the month of February to P4 per day for the day shift and P6.25 per day for the
nightshift. On March 28, 1947, Dominador Jimenez, a member of the Manila
Terminal Relief and Mutual Aid Association, sent a letter to the Department of
Labor, requesting that the matter of overtime pay be investigated, but nothing
was done by the Department. On April 29, 1947, Victorino Magno Cruz and five
other employees, also member of the Manila Transit Mutual Aid Association,
filed a 5-point demand with the Department of Labor, including overtime pay,
but the Department again filed to do anything about the matter. On May 27,
1947, the petitioner instituted the system of strict eight-hour shifts. On June 19,
1947, the Manila Port Terminal Police Association, not registered in
accordance with the provisions of Commonwealth Act No. 213, filed a petition
with the Court of Industrial Relations. On July 16, 1947, the Manila Terminal
Relief and Mutual Aid Association was organized for the first time, having been
granted certificate No. 375 by the Department of Labor. On July 28, 1947,
Manila Terminal Relief and Mutual Aid Association filed an amended petition
be ordered to pay its watchmen or police force overtime pay from the
commencement of their employment. On May 9, 1949, by virtue of Customs
Administrative Order No. 81 and Executive Order No. 228 of the President of
the Philippines, the entire police force of the petitioner was consolidated with
the Manila Harvor Police of the Customs Patrol Service, a Government agency
under the exclusive control of the Commissioner of Customs and the Secretary
of Finance The Manila Terminal Relief and Mutual Aid Association will hereafter
be referred to as the Association.
Judge V. Jimenez Yanson of the Court of Industrial Relations in his decision of
April 1, 1950, as amended on April 18, 1950, while dismissing other demands
of the Association for lack of jurisdiction, ordered the petitioner to pay to its
police force —
(a) Regular or base pay corresponding to four hours' overtime plus 25 per cent
thereof as additional overtime compensation for the period from September 1,
1945 to May 24, 1947;
(b) Additional compensation of 25 per cent to those who worked from 6:00 p.m.
to 6:00 a.m. during the same period:
(c) Additional compensation of 50 per cent for work performed on Sundays and
legal holidays during the same period;
(d) Additional compensation of 50 per cent for work performed on Sundays and
legal holidays from May 24, 1947 to May 9, 1949; and
(e) Additional compensation of 25 per cent for work performed at night from
May 29, 1947 to May 9, 1949.
With reference to the pay for overtime service after the watchmen had been
integrated into the Manila Harbor Police, Judge Yanson ruled that the court has
no jurisdiction because it affects the Bureau of Customs, an instrumentality of
the Government having no independent personality and which cannot be sued
without the consent of the State. (Metran vs. Paredes, 45. Off. Gaz., 2835.)
The petitioner find a motion for reconsideration. The Association also filed a
motion for reconsideration in so far its other demands were dismissed. Judge
Yanson, concurred in by Judge Jose S. Bautista, promulgated on July 13, 1950,
a resolution denying both motions for reconsideration. Presiding Judge Arsenio
C. Roldan, in a separate opinion concurred in by Judge Modesto Castillo,
agreed with the decision of Judge Yanson of April 1, 1950, as to the dismissal
of other demands of the Association, but dissented therefrom as to the granting
of overtime pay. In a separate decisive opinion, Judge Juan S. Lanting
concurred in the dismissal of other demands of the Association. With respect to
overtime compensation, Judge Lanting ruled:
1. The decision under review should be affirmed in so far it grants
compensation for overtime on regular days (not Sunday and legal
holidays)during the period from the date of entrance to duty to May 24, 1947,
such compensation to consists of the amount corresponding to the four hours'
overtime at the regular rate and an additional amount of 25 per cent thereof.
2. As to the compensation for work on Sundays and legal holidays, the
petitioner should pay to its watchmen the compensation that corresponds to the
overtime (in excess of 8 hours) at the regular rate only, that is, without any
additional amount, thus modifying the decision under review accordingly.
3. The watchmen are not entitled to night differential pay for past services, and
therefore the decision should be reversed with the respect thereto.
The petitioner has filed a present petition for certiorari. Its various contentions
may be briefly summed up in the following propositions: (1) The Court of
Industrial Relations has no jurisdiction to render a money judgment involving
obligation in arrears. (2) The agreement under which its police force were paid
certain specific wages for twelve-hour shifts, included overtime compensation.
(3) The Association is barred from recovery by estoppel and laches. (4) the
nullity or invalidity of the employment contract precludes any recovery by the
Association. (5) Commonwealth Act No. 4444 does not authorize recovery of
back overtime pay.
The contention that the Court of Industrial Relations has no jurisdiction to
award a money judgment was already overruled by this Court in G.R. No.
L-4337, Detective & protective Bureau, Inc. vs. Court of Industrial Relations
and United Employees Welfare Association, 90 Phil., 665, in this wise: "It is
also argued that the respondent court has no jurisdiction to award overtime pay,
which is money judgment. We believe that under Commonwealth Act No. 103
the Court is empowered to make the order for the purpose of settling disputes
between the employer and employee1. As a matter of fact this Court has
confirmed an order of the Court of Industrial Relations requiring the Elks Club to
pay to its employees certain sum of money as overtime back wages from June
3, 1939 to March 13, 1941. This, in spite the allegation of lack or excess of
jurisdiction on the part of said court. (45 Off. Gaz., 3829; 80 Phil. 272)"
The important point stressed by the petitioner is that the contract between it
and the Association upon the commencement of the employment of its
watchman was to the certain rates of pay, including overtime compensation
namely, P3 per day for the day shift and P6 per day for night shift beginning
September 1, 1945, and P4 per day shift and P6.25 per day for the night shift
since February, 1946. The record does not bear out these allegations. The
petitioner has relied merely on the facts that its watchmen had worked on
twelve-hour shifts at specific wages per day and that no complaint was made
about the matter until, first on March 28, 1947 and, secondly, on April 29, 1947.
In times of acute unemployment, the people, urged by the instinct of
self-preservation, go from place to place and from office to office in search for
any employment, regardless of its terms and conditions, their main concern in
the first place being admission to some work. Specially for positions requiring
no special qualifications, applicants would be good as rejected if they ever try to
be inquisitive about the hours of work or the amount of salary, ever attempt to
dictate their terms. The petitioner's watchmen must have railroaded themselves
into their employment, so to speak, happy in the thought that they would then
have an income on which to subsist. But, at the same time, they found
themselves required to work for twelve hours a day. True, there was agreement
to work, but can it fairly be supposed that they had the freedom to bargain in
any way, much less to insist in the observance of the Eight Hour Labor Law?
As was aptly said in Floyd vs. Du Bois Soap Co., 1942, 317 U. S. 596, 63 Sup.
Ct. 159; 6 CCH Labor Cases, Par. 51, 147, "A contract of employment, which
provides for a weekly wage for a specified number of hours, sufficient to cover
both the statutory minimum wage and overtime compensation, if computed on
the basis of the statutory minimum wage, and which makes no provision for a
fixed hourly rate or that the weekly wage includes overtime compensation, does
not meet the requirements of the Act."
Moreover, we note that after the petition had instituted the strict eight-hour
shifts, no reduction was made in the salaries which its watchmen received
under the twelve hour arrangement. Indeed, as admitted by the petitioner,
"when the members or the respondent union were placed on strict eight-hour
shifts, the lowest salary of all the members of the respondent union was P165 a
month, or P5.50 daily, for both day and night shifts." Although it may be argued
that the salary for the night shift was somewhat lessened, the fact that the rate
for the day shift was increased in a sense tends to militate against the
contention that the salaries given during the twelve-hour shifts included
overtime compensation.
Petitioner's allegation that the association had acquiesced in the twelve-hour
shifts for more than 18 months, is not accurate, because the watchmen
involved in this case did not enter the service of the petitioner, at one time, on
September 1, 1945. As Judge Lanting found, "only one of them entered the
service of the company on said date, very few during the rest of said month,
some during the rest of that year (1945) and in 1946, and very many in 1947,
1948 and 1949."
The case at bar is quite on all fours with the case of Detective & Protective
Bureau, Inc. vs. Court of Industrial Relations and United Employees Welfare
Association, supra, in which the facts were as follows: "The record discloses
that upon petition properly submitted, said court made an investigation and
found that the members of the United Employees Welfare Association
(hereafter called the Association) were in the employ of the petitioner Detective
and Protective Bureau, Inc. (herein called the Bureau) which is engaged in the
business of furnishing security guards to commercial and industrial
establishments, paying to said members monthly salaries out of what it
received from the establishments benefited by guard service. The employment
called for daily tours of duty for more than eight hours, in addition to work on
Sundays and holidays. Nonetheless the members performed their labors
without receiving extra compensation." The only difference is that, while in said
case the employees concerned were paid monthly salaries, in the case now
before us the wages were computed daily. In the case cited, we held the
following:
It appears that the Bureau had been granting the members of the Association,
every month, "two days off" days in which they rendered no service, although
they received salary for the whole month. Said Bureau contended below that
the pay corresponding to said 2 day vacation corresponded to the wages for
extra work. The court rejected the contention, quite properly we believe,
because in the contract there was no agreement to that effect; and such
agreement, if any, would probably be contrary to the provisions of the
Eight-Hour Law (Act No. 444, sec. 6) and would be null and void ab initio.
It is argued here, in opposition to the payment, that until the commencement of
this litigation the members of the Association never claimed for overtime pay.
That may be true. Nevertheless the law gives them the right to extra
compensation. And they could not be held to have impliedly waived such extra
compensation, for the obvious reason that could not have expressly waived it.
The foregoing pronouncements are in point. The Association cannot be said to
have impliedly waived the right to overtime compensation, for the obvious
reason that they could not have expressly waived it."
The principle of estoppel and the laches cannot well be invoked against the
Association. In the first place, it would be contrary to the spirit of the Eight Hour
Labor Law, under which as already seen, the laborers cannot waive their right
to extra compensation. In the second place, the law principally obligates the
employer to observe it, so much so that it punishes the employer for its violation
and leaves the employee or laborer free and blameless. In the third place, the
employee or laborer is in such a disadvantageous position as to be naturally
reluctant or even apprehensive in asserting any claim which may cause the
employer to devise a way for exercising his right to terminate the employment.
If the principle of estoppel and laches is to be applied, it may bring about a
situation, whereby the employee or laborer, who cannot expressly renounce
their right to extra compensation under the Eight-Hour Labor Law, may be
compelled to accomplish the same thing by mere silence or lapse of time,
thereby frustrating the purpose of law by indirection.
While counsel for the petitioner has cited authorities in support of the doctrine
invoked, there are also authorities pointed out in the opinion of Judge Lanting
to the contrary. Suffice it to say, in this connection, that we are inclined to rule
adversely against petitioner for the reasons already stated.
The argument that the nullity or invalidity of the employment contract precludes
recovery by the Association of any overtime pay is also untenable. The
argument, based on the supposition that the parties are in pari delicto, was in
effect turned down in Gotamo Lumber Co. vs. Court of Industrial Relations,* 47
Off. Gaz., 3421, wherein we ruled: "The petitioner maintains that as the
overtime work had been performed without a permit from the Department of
Labor, no extra compensation should be authorized. Several decisions of this
court are involved. But those decisions were based on the reasoning that as
both the laborer and employer were duty bound to secure the permit from the
Department of Labor, both were in pari delicto. However the present law in
effect imposed that duty upon the employer (C.A. No. 444). Such employer
may not therefore be heard to plead his own neglect as exemption or defense.
The employee in rendering extra service at the request of his employer has a
right to assume that the latter has complied with the requirement of the law, and
therefore has obtained the required permission from the Department of Labor.
Moreover, the Eight-Hour Law, in providing that "any agreement or contract
between the employer and the laborer or employee contrary to the provisions of
this Act shall be null avoid ab initio," (Commonwealth Act No. 444, sec. 6),
obviously intended said provision for the benefit of the laborers or employees.
The employer cannot, therefore, invoke any violation of the act to exempt him
from liability for extra compensation. This conclusion is further supported by the
fact that the law makes only the employer criminally liable for any violation. It
cannot be pretended that, for the employer to commit any violation of the
Eight-Hour Labor Law, the participation or acquiescence of the employee or
laborer is indispensable, because the latter in view of his need and desire to
live, cannot be considered as being on the same level with the employer when
it comes to the question of applying for and accepting an employment.
Petitioner also contends that Commonwealth Act No. 444 does not provide for
recovery of back overtime pay, and to support this contention it makes
referrence to the Fair Labor Standards Act of the United States which provides
that "any employer who violates the provisions of section 206 and section 207
of this title shall be liable to the employee or employees affected in the amount
of their unpaid minimum wages or their unpaid overtime compensation as the
case may be," — a provision not incorporated in Commonwealth Act No. 444,
our Eight-Hour Labor Law. We cannot agree to the proposition, because
sections 3 and 5 of Commonwealth Act 444 expressly provides for the payment
of extra compensation in cases where overtime services are required, with the
result that the employees or laborers are entitled to collect such extra
compensation for past overtime work. To hold otherwise would be to allow an
employer to violate the law by simply, as in this case, failing to provide for and
pay overtime compensation.
The point is stressed that the payment of the claim of the Association for
overtime pay covering a period of almost two years may lead to the financial
ruin of the petitioner, to the detriment of its employees themselves. It is
significant, however, that not all the petitioner's watchmen would receive back
overtime pay for the whole period specified in the appealed decision, since the
record shows that the great majority of the watchmen were admitted in 1946
and 1947, and even 1948 and 1949. At any rate, we are constrained to sustain
the claim of the Association as a matter of simple justice, consistent with the
spirit and purpose of the Eight-Hour Labor Law. The petitioner, in the first place,
was required to comply with the law and should therefore be made liable for the
consequences of its violation.
It is high time that all employers were warned that the public is interested in the
strict enforcement of the Eight-Hour Labor Law. This was designed not only to
safeguard the health and welfare of the laborer or employee, but in a way to
minimize unemployment by forcing employers, in cases where more than
8-hour operation is necessary, to utilize different shifts of laborers or employees
working only for eight hours each.
Wherefore, the appealed decision, in the form voted by Judge Lanting, is
affirmed, it being understood that the petitioner's watchmen will be entitled to
extra compensation only from the dates they respectively entered the service of
the petitioner, hereafter to be duly determined by the Court of Industrial
Relations. So ordered, without costs.
\G. R. No.151370 - December 4, 2002
ASIA PACIFIC CHARTERING (PHILS.) INC., Petitioner, vs. MARIA LINDA R.
FAROLAN, Respondent.
DECISION
CARPIO MORALES, J.:
Before this Court is a Petition for Review under Rule 45 of the 1997 Rules of
Civil Procedure assailing the Court of Appeals 1) June 28, 2001
Decision1 which set aside the decision of the National Labor Relations
Commission (NLRC) reversing that of the Labor Arbiter, and 2) January 9,
20022 Resolution denying a reconsideration of its decision.
Petitioner Asia Pacific Chartering (Phils) Inc. was, until 1996, the general sales
agent (GSA) of the Scandinavian Airline System (SAS), an off-line international
airline company with license to do business in the Philippines. As GSA,
petitioner sold passenger and cargo spaces for airlines operated by SAS.
Respondent Maria Linda R. Farolan was on December 16, 1992 hired as Sales
Manager of petitioner for its passenger and cargo GSA operations for SAS,
following her conformity to a December 10, 1992 letter-offer of
employment3 from petitioner through its Vice President/Comptroller Catalino
Bondoc. The pertinent portion of the letter-offer reads:
"Dear Ms. Farolan:
Confirming our previous discussions, ASIA-PACIFIC
CHARTERING PHIL., INC. is pleased to offer you the position
of Sales Manager of its Passenger and Cargo Operations for
SCANDINAVIAN AIRLINES SYSTEM in the Philippines,
commencing on December 16, 1992 on the following terms:
Monthly
Basic Pay P 22, 000.00
Housing Allowance 4,000.00
Transportation Allowance Cash Equivalent
(200 liters of gas)
Meal Allowance 750.00
Please affix your signature below if you find the foregoing
acceptable and return to us a signed duplicate. Meanwhile, we
certainly look forward to your joining us and rest assured of our
fullest support.
xxx
(Sgd) Maria Linda R. Farolan
Conforme:" (Emphasis supplied).
It is gathered that Leslie Murray, the then Sales Manager of petitioner, talked to
respondent into accepting the position after verbally briefing her on the nature
of the position.
Soon after respondent assumed her post, she participated in a number of
meetings/seminars4 including a Customer Service Seminar in Bangkok,
Thailand, a Regional Sales Meeting on the technical aspects of airline
commercial operations in February 1993, and a course on the highly technical
airline computer reservations system called "Amadeus", all geared towards
improving her marketing and sales skills.
In September of 1993, respondent, upon instruction of Bondoc, submitted a
report5 "RE: OUR COMMENTS AND ACTIONS BEING TAKEN
CONCERNING SAS POOR P & L PERFORMANCE FOR JANUARY - JULY
1993" the pertinent portions of which read:
"1 January to July 1993 Sales x x x
 2. On-lines do not prorate with other carriers
1993 1992 CHANGE
therefore can dive fares x x x.

Seaman 233 423 (190) I have convinced Mr. Jespersen to bring down the fares to be
more competitive. The reason he did not do so earlier was
Expats/Tourists 503 716 (213) because low-yield fares are low in priority for confirming seats.
But now that SAS is considering increasing their frequencies
ex-Hongkong before year-end, this will be advantageous to
PTAs 346 196 150
boosting our sales.

Refugees/IOM 53 864 811) A. Measures to take remainder of 1993 and for 1994:

1. We have negotiated a lower fare for

xxx
Explanations.
1. International Organization for Migration
(IOM)-both Vietnam and Scandinavian
Governments have terminated projects for
refugees; hence the tremendous decrease
(94%) x x x.
seamen (effective September) which is competitive. We are
already getting positive response from agents. Since this(sic)
low-yield sales, Hongkong did not adjust fare accordingly first
half of 1993 because of space constraints.
2. As SAS still prefers high-yield sales, we have offered
incentives to Ameco as Asian Development Bank (ADB)
(effective 1st June for one year) with Mr. Jespersens approval
x x x.

2. Seamans Fares-Rates not competitive In addition, ADB itself is willing to consider

enough. proposals we submit to them in the case of
cost-savings. In exchange, they can endorse
3. Expats/Tourists-In a market to SAS a relevant share of their Europe travel
where on-line carriers were dropping rates x x x.
drastically, we were losing passengers to
said carriers. 3. We have also negotiated a lower net fare for Economy Class.
This rate is also competitive and is in force.
1 The present Market:
4. Incentive Program for Agents-Using the points
1. As SAS is off-line, we have no control over system similar to PALs promo (PALs Smiles), to stimulate
space and to an extent our rates are sales. We are at present fine-tuning mechanics for Hongkongs
higher because of proration with delivering approval which we intend to launch before Christmas. This
carriers. promo is self-sustaining (no significant expenses to be
incurred)
 5. We are currently pushing sales for Baltic area/Russia as we
have the best rates. We have identified the agents who have
passengers to these destinations and we are focusing on them
x x x." (Emphasis and underscoring supplied).
As reflected in respondents report, there was a drop in SAS sales revenues
which to her was attributable to market forces beyond her control.
Noting the marked decline in SAS sales revenues, petitioner directed its high
ranking officer Roberto Zozobrado in January 1994 to conduct an investigation
on the matter and identify the problem/s and implement possible solutions.
Zozobrado thus informally took over some of respondents marketing and sales
responsibilities, albeit respondent retained her title as Sales Manager and
continued to receive her salary as such.
By petitioners claim, Zozobrado found out that respondent did not adopt any
sales strategy nor conduct any sales meeting or develop other sources of
revenue for SAS, she having simply let her sales staff perform their functions all
by themselves; in 1994, Soren Jespersen, General Manager of SAS in
Hongkong, Southern China, Taipei and the Philippines, came to the Philippines
to assess the statistics on SAS sales revenues and SAS was convinced that
respondent was not fit for the job of Sales Manager; and in view of the changes
introduced by Zozobrado, SAS-GSA sales operations drew positive results.
On May 21, 1994, respondent received a message6 from Jespersen reading:
"Dear Linda and Bob [Zozobrado],
First of all congratulation to your sale result in April. You reached and exceeded
the target by 50% In C/class (Fantastic!!!) and 1% In M/class. This is the
second month in a row (and the last 2 first in more than a year) and hopefully
the beginning of a new and positive trend.
xxx
As you can see May looks very good.
With the agreed focus on selling the M/class and all the activities initiated, Im
sure that the rest of the period will pick very soon.
x x x" (Underscoring supplied; Quoted verbatim).
On July 18, 1994,7 respondent received another message from Jespersen
reading:
"Dear Linda,
The sales report for June 1994 did unfortunately not reach target in C/class but
in M/class you managed very well. Totally 9% below target.
The pre bookings eff. 14 July looks very good and encouraging and with 2
weeks to go July should not be a problem. (enclosed)
Please send my regards to all the girls and tell them to keep up the good work.
Just for reason of clarification. Enclosed to your action list is a production report
for Jan-May 1994. The figures I send to you is only your long-haul sales and do
not include European sectors. The correct figure for the period will be 436,000
USD in target for long-haul (actual 362 TUSD) and 642 TUSD total with 514
TUSD achieved.
Please be so kind and inform Bob accordingly.
xxx
On even date, however, petitioner sent respondent a letter of termination 8 on
the ground of "loss of confidence." The letter reads:
"This confirms our (Bob Zozobrado and myself) July 4, 1994 verbal advice to
you regarding Managements decision to terminate your Services as our GSA
Manager for SCANDINAVIAN AIRLINES SYSTEMs Offline Operations in the
Philippines, thirty (30) days upon receipt of this Notice, due to our loss of
confidence in your Managerial and Marketing capabilities. As explained to you
by Mr. Zozobrado and myself, records will show that under your Management
(or lack of it), our SAS-GSA performance is, as follows:
 A. 1993 vs. 1992
Gross Revenue - 29 % shortfall
Operating Expenses - 2% over
Net Cash Flow - 79% shortfall
B. JAN-APR 94 vs. JAN-APR 92
Revenues - 34% shortfall
Operating Expenses - 6% over
Net Cash Flow - 94% shortfall
Several times in the past, we have made you aware in the need to improve your
sales performance and gain the respect of your staff which have openly
expressed their concern on their lack of direction under your management.
Even our principal (SAS) had negative comments about the way you handle
urgent requirements of the Regional Office. SAS was also alarmed by the
aforementioned dismal overall Performance of APC/SAS. All these prompted
us to decide to replace you as our SAS GSA Manager to save the situation and
our representation of the SAS-GSA in the Philippines.
x x x" (Quoted verbatim; Emphasis supplies).
Thus spawned the filing by respondent of a complaint for illegal dismissal
against petitioner, Bondoc, Zozobrado and one Donald Marshall (the record
indicates that he had ceased to be connected with petitioner when the case
was pending before the Labor Arbiter), with prayer for damages and attorneys
fees. In her complaint petitioner alleged that Bondoc and Zozobrado had asked
her to tender her resignation as she was not the person whom SAS was looking
for to handle the position of Sales Manager9 but that she refused, hence, she
was terminated by the letter of July 18, 1994 letter.10
The Labor Arbiter, after a detailed analysis of the evidence for both parties,
found for respondent upon the following issues:
1. Whether or not complainant was validly terminated for
cause;
2. Whether or not due process was observed when
complainant was terminated; and
3. Whether or not any of the parties are entitled to damages,
and disposed in his decision11 as follows:
"WHEREFORE, finding the dismissal of the complainant Ms Linda Farolan to
be without just cause, effected with malice, ill will and bad faith, respondent
Asian Pacific Chartering Philippine, Inc. is hereby ordered to pay her separation
pay of Forty Four Thousand Pesos (P44,000.00), and all the benefit that would
have been due her under the premises. Asian Pacific Chartering is likewise
ordered to pay complainant moral damages in the amount of One Million Five
Hundred Thousand Pesos (P1,500,000.00) and exemplary damages in the
amount of Seven Hundred Fifty Thousand Pesos (P750,000.00), nominal
damages of Five Thousand Pesos (P5,000.00) and the equivalent of 25% of
the total award as attorneys fees."
On appeal, the NLRC, by Decision of March 22, 1999,12 reversed the Labor
Arbiters decision, it recognizing the right of petitioner as employer to terminate
or dismiss employees based on loss of trust and confidence, the right being a
management prerogative.
Respondents Motion for Reconsideration of the NLRC Decision having been
denied, she brought her case to the Court of Appeals via Certiorari. 13
By Decision of June 28, 2001,14 the Court of Appeals, as stated early on,
reversed the NLRC decision and disposed as follows:
"WHEREFORE, premises considered, the challenged decision dated March 22,
1999 and the Resolution dated July 16, 1999 of public respondent National
Labor Relations Commission (Second Division) are hereby set aside for having
been issued with grave abuse of discretion amounting to lack or in excess of
jurisdiction. The decision dated September 17, 1998 of Labor Arbiter Romulus
S. Protacio is hereby upheld with modifications that the award of attorneys fees
shall only be equivalent to ten percent (10%) of the total monetary award. In
addition, the award for nominal damages is deleted for lack of basis."
(Underscoring supplied).
Petitioner filed a motion for reconsideration15 of the Court of Appeals decision
but it was denied, hence, the present Petition for Review on
Certiorari16 anchored on the following grounds:
"I
THE CA DEFIED THE WELL-ESTABLISHED RULE THAT
APC, AS EMPLOYER, HAS THE MANAGEMENT
PREROGATIVE TO REPLACE A SALES MANAGER WHOM
IT HAS REASONABLE GROUNDS TO BELIEVE CANNOT
EFFECTIVELY DISCHARGE THE DUTIES DEMANDED BY
SUCH POSITION.
II
THE CA DECISION WAS PREMISED ON LACK OF
EVIDENCE TO DISPROVE RESPONDENTS THEORY THAT
THE POOR SALES PERFORMANCE OF SAS WAS DUE TO
MARKET FORCES BEYOND HER CONTROL. YET, THE
EVIDENCE ON RECORD SHOWED THE CONTRARY. NO
LESS THAN SAS CONFIRMED THAT RESPONDENT WAS
NOT FIT FOR THE POSITION OF MANAGER AND, THAT
NO SPECIAL CIRCUMSTANCES SUFFICIENT TO TRIGGER
THE SHARP DECLINE IN SALES SUPERVENED IN THE
PHILIPPINE MARKET.
III
IN AWARDING MORAL AND EXEMPLARY DAMAGES, THE
CA ACTED WITH GRAVE ABUSE OF DISCRETION. EVEN
ASSUMING, THAT RESPONDENTS TERMINATION WAS
WITHOUT JUST CAUSE, APC IS NOT LIABLE TO PAY
DAMAGES [MILLARES vs. NLRC, 328 SCRA 79 (2001)]
COROLLARILY, APC IS PRESUMED TO HAVE ACTED IN
GOOD FAITH [GONZALES vs. NLRC, G.R. NO. 131653-26
March 2001]. THE CA, HOWEVER, REVERSED THE
PRESUMPTION. IT PRESUMED-WITHOUT ANY EVIDENCE
WHATSOEVER-THAT APC ACTED IN BAD FAITH IN
TERMINATING RESPONDENT WITHOUT DUE REGARD TO
THE HARSH CONSEQUENCES OF THE TERMINATION
The issue in the main is whether or not respondents dismissal was legal.
A statement of the requisites for a valid dismissal of an employee is thus in
order, to wit: (a) the employee must be afforded due process, i.e., he must be
given opportunity to be heard and to defend himself; and (b) dismissal must be
for a valid cause as provided in Article 282 of the Labor Code or any of the
authorized causes under Article 283 and 284 of the same Code.17
As regards the first requisite, the following substantiated findings of the Labor
Arbiter, which were adopted by the Court of Appeals, reflect respondents
deprivation of due process:
"x x x
[W]e find that the manner by which complainant was dismissed violated the
basic precepts of fairness and due process. First, without any semblance of, or
written authority whatsoever (TSN dated January 30, 1996, pp. 46 - 48),
respondent Zozobrado took over the functions of complainant. Complainant
claims that she has been told it was upon the will of respondent Marshall that
she be replaced. Although respondent Zozobrado may have been merely
giving pointers and suggestions to the staff of complainant, the appearance of
authority was unpleasantly conspicuous. Later, respondent Bondoc summoned
complainant and told her to tender her resignation or face termination.
Complainant, not having been given a justifiable ground, refused to resign.
Thereafter, she was finally terminated, without being afforded the opportunity to
be heard and to present evidence in her defense. She was never given a
written notice stating the particular acts or omission constituting the grounds for
her dismissal as required by law. x x x"18
As regards the second requisite, the rule is settled that in termination cases, the
employer bears the onus of proving that the dismissal is for just cause failing
which the dismissal is not justified and the employee is entitled to
reinstatement.19
Petitioner claims that respondent failed to live up to managements expectation
in light of her failure to adopt sales and marketing strategies to increase sales
revenues of SAS, which failure is reflective of her incompetence and
inefficiency, thus resulting to loss of revenues in 1993 and 1994.
Petitioner adds that had it not been through Zozobrados efforts, SAS sales
revenues could not have recovered.
Petitioner further claims that Jespersen was the one who initiated the
termination of respondent because of her "dismal performance" in handling its
operations.
And petitioner reiterates the principle that the right to dismiss a managerial
employee is a measure of self-preservation, it citing the cases of Grand Motor
Parts Corp. v. Minister of Labor et al.,20 and Buiser et al. v. Legardo.21
Before passing on petitioners position, this Court deems it imperative to discuss
the nature of respondents job as sales manager of petitioner. It is not disputed
that her job description, and the terms and conditions of her employment, with
the exception of her salary and allowances, were never reduced to writing.
Recent decisions of this Court distinguish the treatment of managerial
employees from that of rank and file personnel insofar as the application of the
doctrine of loss of trust and confidence is concerned.22
"Thus with respect to rank and file personnel, loss of trust and confidence as
ground for valid dismissal requires proof of involvement in the alleged events in
question and that mere uncorroborated assertions and accusations by the
employer will not be sufficient. But as regards a managerial employee, mere
existence of a basis for believing that such employee has breached the trust of
his employer would suffice for his dismissal." (Underscoring supplied)
As enunciated in Samson v. NLRC, 330 SCRA 460,
"Before one may be properly considered a managerial employee, all the
following conditions must be met:
(1) Their primary duty consists of the management of the
establishment in which they are employed or of a department
or subdivision thereof;
(2) They customarily and regularly direct the work of two or
more employees therein;
(3) They have the authority to hire or fire other employees of
lower rank; or their suggestions and recommendations as to
the hiring and firing and as to the promotion or any other
change of status of other employees are given particular
weight. (Section 2(b), Rule I, Book III of the Omnibus Rules
Implementing the Labor Code, emphasis supplied).
By respondents claim, her function, as verbally explained to her by Murray,
dealt mainly with servicing of existing clientele.23 Bondoc, however, described
respondents functions and duties as critical.24
The following ruling of this Court in Paper Industries Corp. of the Philippines v.
Laguesma25 is instructive:
"Managerial employees are ranked as Top Managers, Middle Managers and
First Line Managers. The mere fact that an employee is designated "manager"
does not ipso facto make him one-designation should be reconciled with the
actual job description of the employee for it is the job description that
determines the nature of employment." 24 (Underscoring supplied).
The absence of a written job description or prescribed work standards, however,
leaves this Court in the dark.
Even assuming, however, that respondent was a managerial employee, the
stated ground (in the letter of termination) for her dismissal, "loss of
confidence," should have a basis and determination thereof cannot be left
entirely to the employer.
Loss of trust and confidence to be a valid ground for an employees dismissal
must be based on a willful breach and founded on clearly established facts. 26 A
breach is willful if it is done intentionally, knowingly and purposely,
without justifiable excuse, as distinguished from an act done carelessly, company policy, clearly mirroring his insubordination and disrespect to express
thoughtlessly, heedlessly or inadvertently.27 instructions of management.

Respondents detailed REPORT dated September 8, 1993, quoted above, While this Court, in the Buiser case (supra), held that "[f]ailure to
relative to SAS profit and loss for 1993, which was closely examined and observe prescribed standards of work, or to fulfill reasonable work assignments
analyzed by the Labor Arbiter, contains an explanation of what brought about due to inefficiency" may be just cause for dismissal, petitioner has neither
the decline in sales revenues. And it contains too a number of recommended shown what standards of work or reasonable work assignments were
measures on improvement of sales for the remainder of 1993 and for 1994. prescribed which respondent failed to observe nor that if she did fail to observe
any such, it was due to inefficiency.
As did the Labor Arbiter and the Court of Appeals, this Court finds respondents
explanation in her Report behind the decline in sales revenues as due to Finally and at all events, given respondents previous work experience as herein
market forces beyond respondents control plausible. In any event, there is no below indicated, to wit:
showing that the decline is reflective of any willfull breach of duties by
respondent.
"Period Company Position
The two letters sent by SAS to respondent in 1994 in fact negate willful breach
of her duties by respondent. The first (received on May 21, 1994) congratulated Express
1960-1967 Clerk-Reservations & Ticketing
her and Zozobrado for exceeding "sale (sic) result in April" 1994. Petitioners Tours, Inc.
argument that respondent could not invoke these letters in her favor as they
were intended for Zozobrado fails. The letters were addressed to respondent House of
and Zozobrado. The second letter (received on July 18, 1994) which was 1968-1970 Sales Manager
Travel, Inc.
addressed to respondent, while noting that the sales for June 1994 did not
reach the target in "C/class", noted that in "M/class" she "managed very well".
1971-1973 Super Travel Manager, Administration
And it went on to state that "[t]he pre-bookings eff. 14 July looks (sic) very good
and encouraging and with 2 weeks to go July should not be a problem." In fact
it requested respondent to "send . . . regards to all the girls and tell them to American Manager, World Health Organization
1973-1978
keep up the good work." Express, Inc. Account

While petitioner attributes the improvement of sales in 1994 to Zozobrado, the F.A.R. Travel
fact remains that respondent was still the Sales Manager up to July 1994, in 1978-1983 President & General Manager
Masters, Inc.
charge of those "sales meetings" during which pertinent market strategies were
developed and utilized to increase sales.
1983-1984 Cebu Plaza Director, Convention

In another vein, petitioner attributes loss of confidence to respondents alleged

"gross inefficiency and incompetence," it citing, as earlier stated, the cases of Manager-World Health Organization
American
Grand Motor Parts Corp. (supra) and Buiser et al. (supra). 1985-1989 In-Plant Office Senior Manager-Asian
Express, Inc.
Development Bank In-Plant Office
The Grand Motors case, however, involved a probationary employee-manager
who failed to, among other things, submit required monthly reports and violated
 Asia Pacific Sales Manager, Passenger & Cargo
1992-1994 Chartering GSA Operations, Scandinavian
Phil. Inc. Airlines System."
(Exhibit "A", p. 72, Court of Appeals Rollo),
this Court is not prepared to find for petitioner. It bears noting that there is no
showing that respondent represented herself as possessed of the highest
degree of skill and care known in the trade. And it is not disputed that
respondent was approached by petitioners then Sales Manager Murray,
and offered the position of Sales Manager. She thus could not just be
unceremoniously discharged for "loss of confidence" arising from alleged
incompetency28.
"While an employee may be dismissed because of inefficiency, neglect or
carelessness, the law implies a situation or undertaking by an employee in
entering into a contract of employment that he is competent to perform the work
undertaken and is possessed of the requisite skill and knowledge to enable him
to do so, and that he will do the work of the employer in a careful manner. If he
is not qualified to do the work which he undertakes, if he is incompetent,
unskillful or inefficient, or if he executes his work in a negligent manner or is
otherwise guilty of neglect of duty, he may lawfully be discharged before the
expiration of his term of employment."29
In fine, this Court finds that respondent had been illegally dismissed and is
accordingly entitled to reinstatement to her former position without loss of
seniority rights and payment of backwages.30 But as the matter of
reinstatement is no longer feasible as the GSA contract between SAS and
petitioner had been terminated in May of 1996, respondent is, as correctly held
by the Court of Appeals, entitled to separation pay in an amount equivalent to
one (1) month salary for every year of service, a fraction of six (6) months to be
considered a year.
Having been hired on December 16, 1992 and terminated on July 18, 1994,
respondent is considered to have worked for two (2) years for purposes of
computing her separation pay.
Respondent is also entitled to the award of backwages computed from July 18,
1994 up to May of 1996.
As regards the award to respondent of moral and exemplary damages,
petitioner assails it in this wise: "The award of damages in so far as the same
was based solely on respondents affidavit containing general and
uncorroborated statement that she suffered damages as a result of her
termination is null and void [it being] insufficient to overcome the presumption o
good faith."
The following pertinent portions of petitioners Affidavit which Affidavit was
submitted as part of her testimony are self-explanatory, however.
"x x x
8. On July 4, 1994, Messrs. Bondoc and Zozobrado summoned me and without
any clear explanation, ordered me to submit a letter of resignation; they
informed me that I was not the person whom SAS was looking for to handle the
position of Sales Manager; even as I was deeply hurt, shocked, and humiliated,
I declined to resign from my position as I strongly believed that the instruction
for me to resign was unjust and violative of my rights; during the conference, I
was never given the chance to know precisely why I was being asked to resign
or to explain my position; furthermore, I was informed then that Mr. Donald
Marshall was the one who decided and insisted on my termination.
9. On July 18, 1994, again without regard to the basic requirements of due
process, I was given a notice of termination signed by Mr. Bondoc; the
supposed ground for my termination was APCs alleged loss of confidence in
my managerial and marketing capabilities due to the companys alleged dismal
performance during my term of office as GSA Sales Manager; once more, I was
never called to answer this charge; a copy of the notice of termination is hereto
attached as Annex E;
10. The news of my termination circulated at once in the travel industry and as
a result, I was and still am frequently asked by my friends and acquaintances in
the industry about my termination from APC to my endless humiliation and
embarrassment; this up to now causes me endless emotional pain that I even
avoid my friends and acquaintances for fear that they might look at me
differently after my termination from APC; my reputation as a professional has Costs against petitioner. SO ORDERED.
been totally shattered by the unjust act of APC;

11. Because of the extreme social humiliation, and serious anxiety over my
now besmirched reputation in the travel industry, I decided to seek legal advise;
on July 21, 1994, my counsel wrote APC demanding for my immediate
reinstatement without loss of seniority rights and for damages; a copy of the
letter-demand is hereto attached as Annex F;

x x x".

They need no amplification and/or corroboration. Indeed, petitioner was

deprived of due process and denied "basic precepts of fairness" when she was
terminated. Her resultant sufferings thus entitle her to an award of moral
damages.

To warrant award of moral damages, it must be shown that the dismissal of the
employee was attended to by bad faith, or constituted an act opposite to labor,
or was done in a manner contrary to morals, good customs or public policy.31

Award of moral and exemplary damages for an illegally dismissed employee is

proper where the employee had been harassed and arbitrarily terminated by
the employer.32

In determining the amount of moral damages recoverable, however, the

business, social and financial position of the offended party and the business or
financial position of the offender are taken into account. 33 Given petitioners
business position or standing before and at the time of termination and
petitioners business and financial position, this Court reduces the amount of
moral damages awarded to P500,000.00 which it finds reasonable. The
amount of exemplary damages awarded is accordingly reduced too
to P250,000.00.

WHEREFORE, the decision of the Court of Appeals is hereby AFFIRMED with

the MODIFICATION that the amount of moral damages and exemplary
damages awarded to respondent, Ma. Linda R. Farolan, is hereby reduced to
Five Hundred Thousand (P500,000.00) Pesos and Two Hundred Fifty
Thousand (P250,000.00) Pesos, respectively.
 G.R. No. 112574. October 8, 1998
MERCIDAR FISHING CORPORATION represented by its President
DOMINGO B. NAVAL, Petitioner, v. NATIONAL LABOR RELATIONS
COMMISSION and FERMIN AGAO, JR., Respondents.
DECISION
MENDOZA, J.:
This is a petition for certiorari to set aside the decision, dated August 30, 1993,
of the National Labor Relations Commission dismissing the appeal of petitioner
Mercidar Fishing Corporation from the decision of the Labor Arbiter in NLRC
NCR Case No. 09-05084-90, as well as the resolution dated October 25, 1993,
of the NLRC denying reconsideration.
This case originated from a complaint filed on September 20, 1990 by private
respondent Fermin Agao, Jr. against petitioner for illegal dismissal, violation of
P.D. No. 851, and non-payment of five days service incentive leave for 1990.
Private respondent had been employed as a bodegero or ships quartermaster
on February 12, 1988. He complained that he had been constructively
dismissed by petitioner when the latter refused him assignments aboard its
boats after he had reported to work on May 28, 1990.1cräläwvirtualibräry
Private respondent alleged that he had been sick and thus allowed to go on
leave without pay for one month from April 28, 1990 but that when he reported
to work at the end of such period with a health clearance, he was told to come
back another time as he could not be reinstated immediately. Thereafter,
petitioner refused to give him work. For this reason, private respondent asked
for a certificate of employment from petitioner on September 6, 1990. However,
when he came back for the certificate on September 10, petitioner refused to
issue the certificate unless he submitted his resignation. Since private
respondent refused to submit such letter unless he was given separation pay,
petitioner prevented him from entering the premises.2cräläwvirtualibräry
Petitioner, on the other hand, alleged that it was private respondent who
actually abandoned his work. It claimed that the latter failed to report for work
after his leave had expired and was, in fact, absent without leave for three
months until August 28, 1998. Petitioner further claims that, nonetheless, it
assigned private respondent to another vessel, but the latter was left behind on
September 1, 1990. Thereafter, private respondent asked for a certificate of
employment on September 6 on the pretext that he was applying to another
fishing company. On September 10, 1990, he refused to get the certificate and
resign unless he was given separation pay.3cräläwvirtualibräry
On February 18, 1992, Labor Arbiter Arthur L. Amansec rendered a decision
disposing of the case as follows:
ACCORDINGLY, respondents are ordered to reinstate complainant
with backwages, pay him his 13th month pay and incentive leave pay
for 1990.
All other claims are dismissed.
SO ORDERED.
Petitioner appealed to the NLRC which, on August 30, 1993, dismissed the
appeal for lack of merit. The NLRC dismissed petitioners claim that it cannot be
held liable for service incentive leave pay by fishermen in its employ as the
latter supposedly are field personnel and thus not entitled to such pay under the
Labor Code.4cräläwvirtualibräry
The NLRC likewise denied petitioners motion for reconsideration of its decision
in its order dated October 25, 1993.
Hence, this petition. Petitioner contends:
I
THE RESPONDENT COMMISSION PALPABLY ERRED IN RULING AND
SUSTAINING THE VIEW THAT FISHING CREW MEMBERS, LIKE FERMIN
AGAO, JR., CANNOT BE CLASSIFIED AS FIELD PERSONNEL UNDER
ARTICLE 82 OF THE LABOR CODE.
II
THE RESPONDENT COMMISSION ACTED WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT UPHELD
THE FINDINGS OF THE LABOR ARBITER THAT HEREIN PETITIONER HAD
CONSTRUCTIVELY DISMISSED FERMIN AGAO, JR., FROM
EMPLOYMENT.
The petition has no merit.
Art. 82 of the Labor Code provides:
ART. 82. Coverage. - The provisions of this Title [Working
Conditions and Rest Periods] shall apply to employees in all
establishments and undertakings whether for profit or not, but not to
government 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.
..........
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.
Petitioner argues essentially that since the work of private respondent is
performed away from its principal place of business, it has no way of verifying
his actual hours of work on the vessel. It contends that private respondent and
other fishermen in its employ should be classified as field personnel who have
no statutory right to service incentive leave pay.
In the case of Union of Filipro Employees (UFE) v. Vicar,5 this Court explained
the meaning of the phrase whose actual hours of work in the field cannot be
determined with reasonable certainty in Art. 82 of the Labor Code, as follows:
Moreover, the requirement that actual hours of work in the field
cannot be determined with reasonable certainty must be read in
conjunction with Rule IV, Book III of the Implementing Rules which
provides:
Rule IV Holidays with Pay
Section 1. Coverage - This rule shall apply to all employees
except:
..........
(e) Field personnel and other employees whose
time and performance is unsupervised by the employer xxx
(Italics supplied)
While contending that such rule added another element not found in
the law (Rollo, p. 13), the petitioner nevertheless attempted to show
that its affected members are not covered by the abovementioned
rule. The petitioner asserts that the companys sales personnel are
strictly supervised as shown by the SOD (Supervisor of the Day)
schedule and the company circular dated March 15, 1984 (Annexes
2 and 3, Rollo, pp. 53-55).
Contrary to the contention of the petitioner, the Court finds that the
aforementioned rule did not add another element to the Labor Code
definition of field personnel. The clause whose time and performance
is unsupervised by the employer did not amplify but merely
interpreted and expounded the clause whose actual hours of work in
the field cannot be determined with reasonable certainty. The former
clause is still within the scope and purview of Article 82 which defines
field personnel. Hence, in deciding whether or not an employees
actual working hours in the field can be determined with reasonable
certainty, query must be made as to whether or not such employees
time and performance is constantly supervised by the
employer.6cräläwvirtualibräry
Accordingly, it was held in the aforementioned case that salesmen of Nestle
Philippines, Inc. were field personnel:
It is undisputed that these sales personnel start their field work at
8:00 a.m. after having reported to the office and come back to the
office at 4:00 p.m. or 4:30 p.m. if they are Makati-based.
 The petitioner maintains that the period between 8:00 a.m. to 4:00 or 20) is inconsistent with respondents defense of abandonment (Hua
4:30 p.m. comprises the sales personnels working hours which can Bee Shirt Factory v. NLRC, 188 SCRA 586).10cräläwvirtualibräry
be determined with reasonable certainty.
It is trite to say that the factual findings of quasi-judicial bodies are generally
The Court does not agree. The law requires that the actual hours of
binding as long as they are supported substantially by evidence in the record of
work in the field be reasonably ascertained. The company has no
the case.11 This is especially so where, as here, the agency and its subordinate
way of determining whether or not these sales personnel, even if
who heard the case in the first instance are in full agreement as to the
they report to the office before 8:00 a.m. prior to field work and come
facts.12cräläwvirtualibräry
back at 4:30 p.m., really spend the hours in between in actual field
work.7cräläwvirtualibräry
As regards the labor arbiters award which was affirmed by respondent NLRC,
there is no reason to apply the rule that reinstatement may not be ordered if, as
In contrast, in the case at bar, during the entire course of their fishing voyage,
a result of the case between the parties, their relation is strained. 13 Even at this
fishermen employed by petitioner have no choice but to remain on board its
late stage of this dispute, petitioner continues to reiterate its offer to reinstate
vessel. Although they perform non-agricultural work away from petitioners
private respondent.14cräläwvirtualibräry
business offices, the fact remains that throughout the duration of their work
they are under the effective control and supervision of petitioner through the
vessels patron or master as the NLRC correctly held.8cräläwvirtualibräry WHEREFORE, the petition is DISMISSED.

Neither did petitioner gravely abuse its discretion in ruling that private SO ORDERED.
respondent had constructively been dismissed by petitioner. Such factual
finding of both the NLRC and the Labor Arbiter is based not only on the
pleadings of the parties but also on a medical certificate of fitness which,
contrary to petitioners claim, private respondent presented when he reported to
work on May 28, 1990.9 As the NLRC held:

Anent grounds (a) and (b) of the appeal, the respondent, in a nutshell,
would like us to believe that the Arbiter abused his discretion (or
seriously erred in his findings of facts) in giving credence to the
factual version of the complainant. But it is settled that (W)hen
confronted with conflicting versions of factual matters, the Labor
Arbiter has the discretion to determine which party deserves
credence on the basis of evidence received. [Gelmart Industries
(Phils.), Inc. v. Leogardo, 155 SCRA 403, 409, L-70544, November 5,
1987]. And besides, it is settled in this jurisdiction that to constitute
abandonment of position, there must be concurrence of the intention
to abandon and some overt acts from which it may be inferred that
the employee concerned has no more interest in working (Dagupan
Bus Co., Inc. v. NLRC, 191 SCRA 328), and that the filing of the
complaint which asked for reinstatement plus backwages (Record, p.
 G.R. No. 123938 May 21, 1998
LABOR CONGRESS OF THE PHILIPPINES (LCP) for and in behalf of its
members, ANA MARIE OCAMPO, MARY INTAL, ANNABEL CARESO,
MARLENE MELQIADES, IRENE JACINTO, NANCY GARCIA, IMELDA
SARMIENTO, LENITA VIRAY, GINA JACINTO, ROSEMARIE DEL ROSARIO,
CATHERINE ASPURNA, WINNIE PENA, VIVIAN BAA, EMILY LAGMAN,
LILIAN MARFIL, NANCY DERACO, JANET DERACO, MELODY JACINTO,
CAROLYN DIZON, IMELDA MANALOTO, NORY VIRAY, ELIZA SALAZAR,
GIGI MANALOTO, JOSEFINA BASILIO, MARY ANN MAYATI, ZENAIDA
GARCIA, MERLY CANLAS, ERLINDA MANALANG, ANGELINA
QUIAMBAO, LANIE GARCIA, ELVIRA PIEDRA, LOURDES PANLILIO,
LUISA PANLILIO, LERIZA PANLILIO, ALMA CASTRO, ALDA DAVID,
MYRA T. OLALIA, MARIFE PINLAC, NENITA DE GUZMAN, JULIE GACAD,
EVELYN MANALO, NORA PATIO, JANETH CARREON, ROWENA
MENDOZA, ROWENA MANALO, LENY GARCIA, FELISISIMA PATIO,
SUSANA SALOMON, JOYDEE LANSANGAN, REMEDIOS AGUAS, JEANIE
LANSANGAN, ELIZABETH MERCADO, JOSELYN MANALESE,
BERNADETH RALAR, LOLITA ESPIRITU, AGNES SALAS, VIRGINIA
MENDIOLA, GLENDA SALITA, JANETH RALAR, ERLINDA BASILIO,
CORA PATIO, ANTONIA CALMA, AGNES CARESO, GEMMA BONUS,
MARITESS OCAMPO, LIBERTY GELISANGA, JANETH MANARANG,
AMALIA DELA CRUZ, EVA CUEVAS, TERESA MANIAGO, ARCELY PEREZ,
LOIDA BIE, ROSITA CANLAS, ANALIZA ESGUERRA, LAILA MANIAGO,
JOSIE MANABAT, ROSARIO DIMATULAC, NYMPA TUAZON, DAIZY
TUASON, ERLINDA NAVARRO, EMILY MANARANG, EMELITA CAYANAN,
MERCY CAYANAN, LUZVIMINDA CAYANAN, ANABEL MANALO, SONIA
DIZON, ERNA CANLAS, MARIAN BENEDICTA, DOLORES DOLETIN,
JULIE DAVID, GRACE VILLANUEVA, VIRGINIA MAGBAG, CORAZON
RILLION, PRECY MANALILI, ELENA RONOZ, IMELDA MENDOZA, EDNA
CANLAS and ANGELA CANLAS, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, EMPIRE FOOD
PRODUCTS, its Proprietor/President & Manager, MR. GONZALO
KEHYENG and MRS. EVELYN KEHYENG, respondents.
DAVIDE, JR., J.:
In this special civil action for certiorari under Rule 65, petitioners seek to
reverse the 29 March 1995 resolution 1 of the National Labor Relations
Commission (NLRC) in NLRC RAB III Case No. 01-1964-91 which affirmed
the Decision 2 of Labor Arbiter Ariel C. Santos dismissing their complaint
for utter lack of merit.
The antecedents of this case, as summarized by the Office of the Solicitor
General in its Manifestation and Motion in Lieu of Comment, 3 are as
follows:
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 (Paragraph 1, Annex "A" of Petition, Annex
"B;" Page 2, Annex "F" of Petition).
Petitioners filed against private respondents a complaint for payment of
money claim[s] and for violation of labor standard[s] laws (NLRC Case No.
RAB-111-10-1817-90). They also filed a petition for direct certification of
petitioner Labor Congress of the Philippines as their bargaining
representative (Case No. R0300-9010-RU-005).
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 which provided, among others, the
following:
1. That in connection with the pending Petition for Direct Certification
filed by the Labor Congress with the DOLE, Management of the Empire
Food Products has no objection [to] the direct certification of the LCP
Labor Congress and is now recognizing the Labor Congress of the
Philippines (LCP) and its Local Chapter as the SOLE and EXCLUSIVE
Bargaining Agent and Representative for all rank and file employees of
the Empire Food Products regarding "WAGES, HOURS Of WORK, AND
OTHER TERMS AND CONDITIONS OF EMPLOYMENT;"
2. That with regards [sic] to NLRC CASE NO. RAB-III-10-1817-90 pending
with the NLRC parties jointly and mutually agreed that the issues thereof,
shall be discussed by the parties and resolve[d] during the negotiation of
the Collective Bargaining Agreement;
3. That Management of the Empire Food Products shall make the proper
adjustment of the Employees Wages within fifteen (15) days from the
signing of this Agreement and further agreed to register all the
employees with the SSS;
4. That Employer, Empire Food Products thru its Management agreed to
deduct thru payroll deduction UNION DUES and other Assessment[s]
upon submission by the LCP Labor Congress individual Check-Off
Authorization[s] signed by the Union Members indicating the amount to
be deducted and further agreed all deduction[s] made representing Union
Dues and Assessment[s] shall be remitted immediately to the LCP Labor
Congress Treasurer or authorized representative within three (3) or five (5)
days upon deductions [sic], Union dues not deducted during the period
due, shall be refunded or reimbursed by the Employer/Management.
Employer/Management further agreed to deduct Union dues from
non-union members the same amount deducted from union members
without need of individual Check-Off Authorizations [for] Agency Fee;
5. That in consideration [of] the foregoing covenant, parties jointly and
mutually agreed that NLRC CASE NO. RAB-III-10-1817-90 shall be
considered provisionally withdrawn from the Calendar of the National
Labor Relations Commission (NLRC), while the Petition for direct
certification of the LCP Labor Congress parties jointly move for the direct
certification of the LCP Labor Congress;
6. That parties jointly and mutually agreed that upon signing of this
Agreement, no Harassments [sic], Threats, Interferences [sic] of their
respective rights under the law, no Vengeance or Revenge by each
partner nor any act of ULP which might disrupt the operations of the
business;
7. Parties jointly and mutually agreed that pending negotiations or
formalization of the propose[d] CBA, this Memorandum of Agreement
shall govern the parties in the exercise of their respective rights involving
the Management of the business and the terms and condition[s] of
employment, and whatever problems and grievances may arise by and
between the parties shall be resolved by them, thru the most cordial and
good harmonious relationship by communicating the other party in
writing indicating said grievances before taking any action to another
forum or government agencies;
8. That parties [to] this Memorandum of Agreement jointly and mutually
agreed to respect, abide and comply with all the terms and conditions
hereof. Further agreed that violation by the parties of any provision
herein shall constitute an act of ULP. (Annex "A" of Petition).
In an Order dated October 24, 1990, Mediator Arbiter Antonio Cortez
approved the memorandum of agreement and certified LCP "as the sole
and exclusive bargaining agent among the rank-and-file employee of
Empire Food Products for purposes of collective bargaining with respect
to wages, hours of work and other terms and conditions of employment"
(Annex "B" of Petition).
On November 9, 1990, petitioners through LCP President Navarro
submitted to private respondents a proposal for collective bargaining
(Annex "C" of Petition).
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. (Annex "D" of Petition)
After the submission by the parties of their respective position papers
and presentation of testimonial evidence, Labor Arbiter Ariel C. Santos
absolved private respondents of the charges of unfair labor practice,
union busting, violation of the memorandum of agreement,
underpayment of wages and denied petitioners' prayer for actual, moral
and exemplary damages. Labor Arbiter Santos, however, directed the
reinstatement of the individual complainants:
The undersigned Labor Arbiter is not oblivious to the fact that
respondents have violated a cardinal rule in every establishment that a
payroll and other papers evidencing hours of work, payments, etc. shall
always be maintained and subjected to inspection and visitation by
personnel of the Department of Labor and Employment. As such penalty,
respondents should not escape liability for this technicality, hence, it is
proper that all individual complainants except those who resigned and
executed quitclaim[s] and releases prior to the filing of this
complaint should be reinstated to their former position[s] with the
admonition to respondents that any harassment, intimidation, coercion
or any form of threat as a result of this immediately executory
reinstatement shall be dealt with accordingly.
SO ORDERED. (Annex "G" of petition)
On appeal, the National Labor Relations Commission vacated the
Decision dated April 14, 1972 [sic] and remanded the case to the Labor
Arbiter for further proceedings for the following reasons:
The Labor Arbiter, through his decision, noted that ". . . 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 . . ." (p. 183, Records), that ". . . complainant
before the National Labor Relations Commission must prove with
definiteness and clarity the offense charged. . . ." (Record, p. 183); that
". . . complainant failed to specify under what provision of the Labor Code
particularly Art. 248 did respondents violate so as to constitute unfair
labor practice . . ." (Record, p. 183); that "complainants failed to present
any witness who may describe in what manner respondents have
committed unfair labor practice . . ." (Record, p. 185); that ". . .
complainant LCP failed to present anyone of the so-called 99
complainants in order to testify who committed the threats and
intimidation . . ." (Record, p. 185).
Upon review of the minutes of the proceedings on record, however, it
appears that complainant presented witnesses, namely, BENIGNO
NAVARRO, JR. (28 February 1991, RECORD, p. 91; 8 March 1991,
RECORD, p. 92, who adopted its POSITION PAPER AND CONSOLIDATED
AFFIDAVIT, as Exhibit "A" and the annexes thereto as Exhibit "B", "B-1"
to "B-9", inclusive. Minutes of the proceedings on record show that
complainant further presented other witnesses, namely: ERLINDA
BASILIO (13 March 1991, RECORD, p. 93; LOURDES PANTILLO, MARIFE
PINLAC, LENIE GARCIA (16 April 1991, Record, p. 96, see back portion
thereof ; 2 May 1991, Record, p. 102; 16 May 1991, Record, p. 103, 11 June
1991, Record, p. 105). Formal offer of Documentary and Testimonial
Evidence was made by complainant on June 24, 1991 (Record, p. 106-109)
The Labor Arbiter must have overlooked the testimonies of some of the
individual complainants which are now on record. Other individual
complainants should have been summoned with the end in view of
receiving their testimonies. The complainants should be afforded the time
and opportunity to fully substantiate their claims against the respondents.
Judgment should be rendered only based on the conflicting positions of
the parties. The Labor Arbiter is called upon to consider and pass upon
the issues of fact and law raised by the parties.
Toward this end, therefore, it is Our considered view [that] the case
should be remanded to the Labor Arbiter of origin for further proceedings.
(Annex "H" of Petition)
In a Decision dated July 27, 1994, Labor Arbiter Santos made the
following determination:
Complainants failed to present with definiteness and clarity the particular
act or acts constitutive of unfair labor practice.
It is to be borne in mind that a declaration of unfair labor practice
connotes a finding of prima facie evidence of probability that a criminal
offense may have been committed so as to warrant the filing of a criminal
information before the regular court. Hence, evidence which is more than
a scintilla is required in order to declare respondents/employers guilty of
unfair labor practice. Failing in this regard is fatal to the cause of
complainants. Besides, even the charge of illegal lockout has no leg to
stand on because of the testimony of respondents through their guard
Orlando Cairo (TSN, July 31, 1991 hearing; p. 5-35) that on January 21,
1991, complainants refused and failed to report for work, hence guilty of
abandoning their post without permission from respondents. As a result
of complainants['] failure to report for work, the cheese curls ready for
repacking were all spoiled to the prejudice of respondents. Under
cross-examination, complainants failed to rebut the authenticity of
respondents' witness testimony.
As regards the issue of harassments [sic], threats and interference with
the rights of employees to self-organization which is actually an
ingredient of unfair labor practice, complainants failed to specify what
type of threats or intimidation was committed and who committed the
same. What are the acts or utterances constitutive of harassments [sic]
being complained of? These are the specifics which should have been
proven with definiteness and clarity by complainants who chose to rely
heavily on its position paper through generalizations to prove their case.
Insofar as violation of [the] Memorandum of Agreement dated October 23,
1990 is concerned, both parties agreed that:
2 — That with regards [sic] to the NLRC Case No. RAB III-10-1817-90
pending with the NLRC, parties jointly and mutually agreed that the
issues thereof shall be discussed by the parties and resolve[d] during the
negotiation of the CBA.
The aforequoted provision does not speak of [an] obligation on the part
of respondents but on a resolutory condition that may occur or may not
happen. This cannot be made the basis of an imposition of an obligation
over which the National Labor Relations Commission has exclusive
jurisdiction thereof.
Anent the charge that there was underpayment of wages, the evidence
points to the contrary. The enumeration of complainants' wages in their
consolidated Affidavits of merit and position paper which implies
underpayment has no leg to stand on in the light of the fact that
complainants' admission that they are piece workers or paid on
a pakiao [basis] i.e. a certain amount for every thousand pieces of cheese
curls or other products repacked. The only limitation for piece workers
or pakiao workers is that they should receive compensation no less than
the minimum wage for an eight (8) hour work [sic]. And compliance
therewith was satisfactorily explained by respondent Gonzalo Kehyeng in
his testimony (TSN, p. 12-30) during the July 31, 1991 hearing. On
cross-examination, complainants failed to rebut or deny Gonzalo
Kehyeng's testimony that complainants have been even receiving more
than the minimum wage for an average workers [sic]. Certainly, a lazy
worker earns less than the minimum wage but the same cannot be
attributable to respondents but to the lazy workers.
Finally, the claim for moral and exemplary damages has no leg to stand
on when no malice, bad faith or fraud was ever proven to have been
perpetuated by respondents.
WHEREFORE, premises considered, the complaint is hereby DISMISSED
for utter lack of merit. (Annex "I" of Petition). 4
On appeal, the NLRC, in its Resolution dated 29 March 1995, 5 affirmed in
toto the decision of Labor Arbiter Santos. In so doing, the NLRC
sustained the Labor Arbiter's findings that: (a) there was a dearth of
evidence to prove the existence of unfair labor practice and union busting
on the part of private respondents; (b) the agreement of 23 October 1990
could not be made the basis of an obligation within the ambit of the
NLRC's jurisdiction, as the provisions thereof, particularly Section 2,
spoke of a resolutory condition which could or could not happen; (c) the
claims for underpayment of wages were without basis as complainants
were admittedly "pakiao" workers and paid on the basis of their output
subject to the lone limitation that the payment conformed to the minimum
wage rate for an eight-hour workday; and (d) petitioners were not
underpaid.
Their motion for reconsideration having been denied by the NLRC in its
Resolution of 31 October 1995, 6 petitioners filed the instant special civil
action for certiorari raising the following issues:
I
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.
II
WHETHER OR NOT THE PUBLIC RESPONDENT GRAVELY ABUSED ITS
DISCRETION WHEN IT DEPRIVED THE PETITIONERS OF THEIR
CONSTITUTIONAL RIGHT TO SELF-ORGANIZATION, SECURITY OF
TENURE, PROTECTION TO LABOR, JUST AND HUMANE CONDITIONS
OF WORK AND DUE PROCESS.
III
WHETHER OR NOT THE PETITIONERS WERE ILLEGALLY EASED OUT
[OF] OR CONSTRUCTIVELY DISMISSED FROM THEIR ONLY MEANS OF
LIVELIHOOD.
IV
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. 7
We required respondents to file their respective Comments.
In their Manifestation and Comment, 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.
In their Reply, 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 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.
In its Manifestation and Motion in Lieu of Comment, the Office of the
Solicitor General (OSG) sided with petitioners. It pointed out that the
Labor Arbiter, in finding that petitioners abandoned their jobs, relied
solely on the testimony of Security Guard Rolando Cairo that petitioners
refused to work on 21 January 1991, resulting in the spoilage of cheese
curls ready for repacking. However, the OSG argued, this refusal to report
for work for a single day did not constitute abandonment, which pertains
to a clear, deliberate and unjustified refusal to resume employment, and
not mere absence. In fact, the OSG stressed, two days after allegedly
abandoning their work, petitioners filed a complaint for, inter alia, illegal
lockout or illegal dismissal. Finally, the OSG questioned the lack of
explanation on the part of Labor Arbiter Santos as to why he abandoned
his original decision to reinstate petitioners.
In view of the stand of the OSG, we resolved to require the NLRC to file its
own Comment.
In its Comment, the NLRC invokes the general rule that factual findings of
an administrative agency bind a reviewing court and asserts that this
case does not fall under the exceptions. The NLRC further argues that
grave abuse of discretion may not be imputed to it, as it affirmed the
factual findings and legal conclusions of the Labor Arbiter only after
carefully reviewing, weighing and evaluating the evidence in support
thereof, as well as the pertinent provisions of law and jurisprudence.
In their Reply, petitioners claim that the decisions of the NLRC and the
Labor Arbiter were not supported by substantial evidence; that
abandonment was not proved; and that much credit was given to
self-serving statements of Gonzalo Kehyeng, owner of Empire Foods, as
to payment of just wages.
On 7 July 1997, we gave due course to the petition and required the
parties to file their respective memoranda. However, only petitioners and
private respondents filed their memoranda, with the NLRC merely
adopting its Comment as its Memorandum.
We find for petitioners.
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.
What cannot escape from our attention is that the Labor Arbiter did not
heed the observations and pronouncements of the NLRC in its resolution
of 21 July 1992, neither did he understand the purpose of the remand of
the records to him. In said resolution, the NLRC summarized the grounds
for the appeal to be:
1. that there is a prima facie evidence of abuse of discretion and acts of
gross incompetence committed by the Labor Arbiter in rendering the
decision.
2. that the Labor Arbiter in rendering the decision committed serious
errors in the findings of facts.
After which, the NLRC observed and found:
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.
The Labor Arbiter, through his decision, noted that ". . . 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 . . ." (Records, p. 183), that ". . . complainant
before the National Labor Relations Commission must prove with
definiteness and clarity the offense charged. . . ." (Record, p. 183; that ". . .
complainant failed to specify under what provision of the Labor Code
particularly Art. 248 did respondents violate so as to constitute unfair
labor practice . . ." (Record, p. 183); that "complainants failed to present
any witness who may describe in what manner respondents have
committed unfair labor practice . . ." (Record, p. 185); that ". . .
complainant a [sic] LCP failed to present anyone of the so called 99
complainants in order to testify who committed the threats and
intimidation . . ." (Record, p.185).
Upon review of the minutes of the proceedings on record, however, it
appears that complainant presented witnesses, namely BENIGNO
NAVARRO, JR. (28 February 1991, RECORD, p. 91; 8 March 1991,
RECORD, p. 92), who adopted its POSITION PAPER AND
CONSOLIDATED AFFIDAVIT as Exhibit A and the annexes thereto as
Exhibit B, B-1 to B-9, inclusive. Minutes of the proceedings on record
show that complainant further presented other witnesses, namely:
ERLINDA BASILIO (13 March 1991, RECORD, p. 93; LOURDES PANTILLO,
MARIFE PINLAC, LENI GARCIA (16 April 1991, Record, p. 96, see back
portion thereof; 2 May 1991, Record, p. 102; 16 May 1991, Record, p. 103;
11 June 1991, Record, p. 105). Formal offer of Documentary and
Testimonial Evidence was made by the complainant on June 24, 1991
(Record, p.106-109).
The Labor Arbiter must have overlooked the testimonies of some of the
individual complainants which are now on record. Other individual
complainants should have been summoned with the end in view of
receiving their testimonies. The complainants should [have been]
afforded the time and opportunity to fully substantiate their claims
against the respondents. Judgment should [have been] rendered only
based on the conflicting positions of the parties. The Labor Arbiter is
called upon to consider and pass upon the issues of fact and law raised
by the parties.
Toward this end, therefore, it is Our considered view the case should be
remanded to the Labor Arbiter of origin for further proceedings.
Further, We take note that the decision does not contain a dispositive
portion or fallo. Such being the case, it may be well said that the decision
does not resolve the issues at hand. On another plane, there is no portion
of the decision which could be carried out by way of execution.
It may be argued that the last paragraph of the decision may be
categorized as the dispositive portion thereof:
xxx xxx xxx
The undersigned Labor Arbiter is not oblivious [to] the fact that
respondents have violated a cardinal rule in every establishment that a
payroll and other papers evidencing hour[s] of work, payment, etc. shall
always be maintained and subjected to inspection and visitation by
personnel of the Department of Labor and Employment. As such penalty,
respondents should not escape liability for this technicality, hence, it is
proper that all the individual complainants except those who resigned
and executed quitclaim[s] and release[s] prior to the filing of this
complaint should be reinstated to their former position with the
admonition to respondents that any harassment, intimidation, coercion
or any form of threat as a result of this immediately executory
reinstatement shall be dealt with accordingly.
SO ORDERED.
It is Our considered view that even assuming arguendo that the
respondents failed to maintain their payroll and other papers evidencing
hours of work, payment etc., such circumstance, standing alone, does
not warrant the directive to reinstate complainants to their former
positions. It is [a] well settled rule that there must be a finding of illegal
dismissal before reinstatement be mandated.
In this regard, the LABOR ARBITER is hereby directed to include in his
clarificatory decision, after receiving evidence, considering and resolving
the same, the requisite dispositive portion.9
Apparently, the Labor Arbiter perceived that if not for petitioners, he
would not have fallen victim to this stinging rebuke at the hands of the
NLRC. Thus does it appear to us that the Labor Arbiter, in concluding in
his 27 July 1994 Decision that petitioners abandoned their work, was
moved by, at worst, spite, or at best, lackadaisically glossed over
petitioner's evidence. On this score, we find the following observations of
the OSG most persuasive:
In finding that petitioner employees abandoned their work, the Labor
Arbiter and the NLRC relied on the testimony of Security Guard Rolando
Cairo that on January 21, 1991, petitioners refused to work. As a result of
their failure to work, the cheese curls ready for repacking on said date
were spoiled.
The failure to work for one day, which resulted in the spoilage of cheese
curls does not amount to abandonment of work. In fact two (2) days after
the reported abandonment of work or on January 23, 1991, petitioners
filed a complaint for, among others, unfair labor practice, illegal lockout
and/or illegal dismissal. In several cases, this Honorable Court held that
"one could not possibly abandon his work and shortly thereafter
vigorously pursue his complaint for illegal dismissal (De Ysasi III v. NLRC,
231 SCRA 173; Ranara v. NLRC, 212 SCRA 631; Dagupan Bus Co. v.
NLRC, 191 SCRA 328; Atlas Consolidated Mining and Development Corp.
v. NLRC, 190 SCRA 505; Hua Bee Shirt Factory v. NLRC, 186 SCRA 586;
Mabaylan v. NLRC, 203 SCRA 570 and Flexo Manufacturing v. NLRC, 135
SCRA 145). In Atlas Consolidated, supra, this Honorable Court explicitly
stated:
It would be illogical for Caballo, to abandon his work and then
immediately file an action seeking for his reinstatement. We can not
believe that Caballo, who had worked for Atlas for two years and ten
months, would simply walk away from his job unmindful of the
consequence of his act. i.e. the forfeiture of his accrued employment
benefits. In opting to finally to [sic] contest the legality of his dismissal
instead of just claiming his separation pay and other benefits, which he
actually did but which proved to be futile after all, ably supports his
sincere intention to return to work, thus negating Atlas' stand that he had
abandoned his job.
In De Ysasi III v. NLRC (supra), this Honorable Court stressed that it is the
clear, deliberate and unjustified refusal to resume employment and not
mere absence that constitutes abandonment. The absence of petitioner
employees for one day on January 21, 1991 as testified [to] by Security
Guard Orlando Cairo did not constitute abandonment.
In his first decision, Labor Arbiter Santos expressly directed the
reinstatement of the petitioner employees and admonished the private
respondents that "any harassment, intimidation, coercion or any form of
threat as a result of this immediately executory reinstatement shall be
dealt with accordingly.
In his second decision, Labor Arbiter Santos did not state why he was
abandoning his previous decision directing the reinstatement of
petitioner employees.
By directing in his first decision the reinstatement of petitioner
employees, the Labor Arbiter impliedly held that they did not abandon
their work but were not allowed to work without just cause.
That petitioner employees are "pakyao" or piece workers does not imply
that they are not regular employees entitled to reinstatement. Private
respondent Empire Food Products, Inc. is a food and fruit processing
company. In Tabas v. California Manufacturing Co., Inc. (169 SCRA 497),
this Honorable Court held that the work of merchandisers of processed
food, who coordinate with grocery stores and other outlets for the sale of
the processed food is necessary in the day-to-day operation[s] of the
company. With more reason, the work of processed food repackers is
necessary in the day-to-day operation[s] of respondent Empire Food
Products. 10
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, 11 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. 12 Section 2, Rule XIV, Book V of
the Omnibus Rules Implementing the Labor Code provides:
Sec. 2. 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 dismissal. In cases of
abandonment of work, the notice shall be served at the worker's last
known address.
Petitioners 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. 13
That being said, the amount of back wages to which each petitioner is
entitled, however, cannot be fully settled at this time. Petitioners, as
piece-rate workers having been paid by the piece, 14 there is need to
determine the varying degrees of production and days worked by each
worker. Clearly, this issue is best left to the National Labor Relations
Commission.
As to the other benefits, namely, holiday pay, premium pay, 13th month
pay and service incentive leave which the labor arbiter failed to rule on
but which petitioners prayed for in their complaint, 15 we hold that
petitioners are so entitled to these benefits. Three (3) factors lead us to
conclude that petitioners, although piece-rate workers, were regular
employees of private respondents. First, as to the nature of petitioners'
tasks, their job of repacking snack food was necessary or desirable in the
usual business of private respondents, who were engaged in the
manufacture and selling of such food products; second, petitioners
worked for private respondents throughout the year, their employment
not having been dependent on a specific project or season; and third, the
length of time 16 that petitioners worked for private respondents. Thus,
while petitioners' mode of compensation was on a "per piece basis," the
status and nature of their employment was that of regular employees.
The Rules Implementing the Labor Code exclude certain employees from
receiving benefits such as nighttime pay, holiday pay, service incentive
leave 17 and 13th month pay, 18 inter alia, "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."
Plainly, petitioners as piece-rate workers do not fall within this group. As
mentioned earlier, not only did petitioners labor under the control of
private respondents as their employer, likewise did petitioners toil
throughout the year with the fulfillment of their quota as supposed basis
for compensation. Further, in Section 8 (b), Rule IV, Book III which we
quote hereunder, piece workers are specifically mentioned as being
entitled to holiday pay.
Sec. 8. Holiday pay of certain employees. —
(b) Where a covered employee is paid by results or output, such as
payment on piece work, his holiday pay shall not be less than his average
daily earnings for the last seven (7) actual working days preceding the
regular holiday: Provided, however, that in no case shall the holiday pay
be less than the applicable statutory minimum wage rate.
In addition, the Revised Guidelines on the Implementation of the 13th
Month Pay Law, in view of the modifications to P.D. No. 851 19 by
Memorandum Order No. 28, clearly exclude the employer of piece rate
workers from those exempted from paying 13th month pay, to wit:
2. EXEMPTED EMPLOYERS
The following employers are still not covered by P.D. No. 851:
d. Employers of those who are paid on purely commission, boundary or
task basis, and those who are paid a fixed amount for performing specific
work, irrespective of the time consumed in the performance
thereof, except where the workers are paid on piece-rate basis in which
case the employer shall grant the required 13th month pay to such
workers. (emphasis supplied)
The Revised Guidelines as well as the Rules and Regulations identify
those workers who fall under the piece-rate category as those who are
paid a standard amount for every piece or unit of work produced that is
more or less regularly replicated, without regard to the time spent in
producing the same. 20
As to overtime pay, the rules, however, are different. According to Sec.
2(e), Rule I, Book III of the Implementing Rules, workers who are paid by
results including those who are paid on piece-work, takay, pakiao, or task
basis, if their output rates are in accordance with the standards
prescribed under Sec. 8, Rule VII, Book III, of these regulations, or where
such rates have been fixed by the Secretary of Labor in accordance with
the aforesaid section, are not entitled to receive overtime pay. Here,
private respondents did not allege adherence to the standards set forth in
Sec. 8 nor with the rates prescribed by the Secretary of Labor. As such,
petitioners are beyond the ambit of exempted persons and are therefore
entitled to overtime pay. Once more, the National Labor Relations
Commission would be in a better position to determine the exact amounts
owed petitioners, if any.
As to the claim that private respondents violated petitioners' right to
self-organization, the evidence on record does not support this claim.
Petitioners relied almost entirely on documentary evidence which, per se,
did not prove any wrongdoing on private respondents' part. For example,
petitioners presented their complaint 21 to prove the violation of labor
laws committed by private respondents. The complaint, however, is
merely "the pleading alleging the plaintiff's cause or causes of
action." 22 Its contents are merely allegations, the verity of which shall
have to be proved during the trial. They likewise offered their
Consolidated Affidavit of Merit and Position Paper 23 which, like the offer
of their Complaint, was a tautological exercise, and did not help nor prove
their cause. In like manner, the petition for certification election 24 and the
subsequent order of certification 25 merely proved that petitioners sought
and acquired the status of bargaining agent for all rank-and-file
employees. Finally, the existence of the memorandum of
agreement 26 offered to substantiate private respondents'
non-compliance therewith, did not prove either compliance or
non-compliance, absent evidence of concrete, overt acts in contravention
of the provisions of the memorandum.

IN VIEW WHEREOF, the instant petition is hereby GRANTED. The

Resolution of the National Labor Relations Commission of 29 March 1995
and the Decision of the Labor Arbiter of 27 July 1994 in NLRC Case No.
RAB-III-01-1964-91 are hereby SET ASIDE, and another is hereby
rendered:

1. DECLARING petitioners to have been illegally dismissed by private

respondents, thus entitled to full back wages and other privileges, and
separation pay in lieu of reinstatement at the rate of one month's salary
for every year of service with a fraction of six months of service
considered as one year;

2. REMANDING the records of this case to the National Labor Relations

Commission for its determination of the back wages and other benefits
and separation pay, taking into account the foregoing observations; and

3. DIRECTING the National Labor Relations Commission to resolve the

referred issues within sixty (60) days from its receipt of a copy of this
decision and of the records of the case and to submit to this Court a
report of its compliance hereof within ten (10) days from the rendition of
its resolution.

Costs against private respondents.

SO ORDERED.

[G.R. No. 132805. February 2, 1999.]
PHILIPPINE AIRLINES, INC., Petitioner, v. NATIONAL LABOR RELATIONS
COMMISSION, LABOR ARBITER ROMULUS PROTACIO and DR.
HERMINIO A. FABROS, Respondents.
DECISION
PUNO, J.:
Petitioner Philippine Airlines, Inc. assails the decision of the National Labor
Relations Commission dismissing its appeal from the decision of Labor Arbiter
Romulus S. Protacio which declared the suspension of private respondent Dr.
Herminio A. Fabros illegal and ordered petitioner to pay private respondent the
amount equivalent to all the benefits he should have received during his period
of suspension plus P500,000.00 moral damages.
The facts are as follow:chanrob1es virtual 1aw library
Private respondent was employed as flight surgeon at petitioner company. He
was assigned at the PAL Medical Clinic at Nichols and was on duty from 4:00 in
the afternoon until 12:00 midnight.
On February 17, 1994, at around 7:00 in the evening, private respondent left
the clinic to have his dinner at his residence, which was about five-minute drive
away. A few minutes later, the clinic received an emergency call from the PAL
Cargo Services. One of its employees, Mr. Manuel Acosta, had suffered a heart
attack. The nurse on duty, Mr. Merlino Eusebio, called private respondent at
home to inform him of the emergency. The patient arrived at the clinic at 7:50 in
the evening and Mr. Eusebio immediately rushed him to the hospital. When
private respondent reached the clinic at around 7:51 in the evening, Mr.
Eusebio had already left with the patient. Mr. Acosta died the following day.
Upon learning about the incident, PAL Medical Director Dr. Godofredo B.
Banzon ordered the Chief Flight Surgeon to conduct an investigation. The Chief
Flight Surgeon, in turn, required private respondent to explain why no
disciplinary sanction should be taken against him.
In his explanation, private respondent asserted that he was entitled to a
thirty-minute meal break; that he immediately left his residence upon being
informed by Mr. Eusebio about the emergency and he arrived at the clinic a few
minutes later; that Mr. Eusebio panicked and brought the patient to the hospital
without waiting for him.
Finding private respondent’s explanation unacceptable, the management
charged private respondent with abandonment of post while on duty. He was
given ten days to submit a written answer to the administrative charge.
In his answer, private respondent reiterated the assertions in his previous
explanation. He further denied that he abandoned his post on February 17,
1994. He said that he only left the clinic to have his dinner at home. In fact, he
returned to the clinic at 7:51 in the evening upon being informed of the
emergency.
After evaluating the charge as well as the answer of private respondent,
petitioner company decided to suspend private respondent for three months
effective December 16, 1994.
Private respondent filed a complaint for illegal suspension against petitioner.
On July 16, 1996, Labor Arbiter Romulus A. Protasio rendered a decision 1
declaring the suspension of private respondent illegal. It also ordered petitioner
to pay private respondent the amount equivalent to all the benefits he should
have received during his period of suspension plus P500,000.00 moral
damages. The dispositive portion of the decision reads:chanrob1es virtual 1aw
library
WHEREFORE, in view of all the foregoing, judgment is hereby rendered
declaring the suspension of complainant as illegal, and ordering the
respondents the restitution to the complainant of all employment benefits
equivalent to his period of suspension, and the payment to the complainant of
P500,000.00 by way of moral damages. 2
Petitioner appealed to the NLRC. The NLRC, however, dismissed the appeal
after finding that the decision of the Labor Arbiter is supported by the facts on
record and the law on the matter. 3 The NLRC likewise denied petitioner’s
motion for reconsideration. 4
Hence, this petition raising the following arguments:chanrob1es virtual 1aw
library
1. The public respondents acted without or in excess of their jurisdiction and
with grave abuse of discretion in nullifying the 3-month suspension of private
respondent despite the fact that the private respondent has committed an
offense that warranted the imposition of disciplinary action.
2. The public respondents acted without or in excess of their jurisdiction and
with grave abuse of discretion in holding the petitioner liable for moral
damages:chanrob1es virtual 1aw library
(a) Despite the fact that no formal hearing whatsoever was conducted for
complainant to substantiate his claim;
(b) Despite the absence of proof that the petitioner acted in bad faith in
imposing the 3-month suspension; and
(c) Despite the fact that the Labor Arbiter’s award of moral damages is highly
irregular, considering that it was more than what the private respondent prayed
for. 5
We find that public respondents did not err in nullifying the three-month
suspension of private Respondent. They, however, erred in awarding moral
damages to private Respondent.
First, as regards the legality of private respondent’s suspension. The facts do
not support petitioner’s allegation that private respondent abandoned his post
on the evening of February 17, 1994. Private respondent left the clinic that night
only to have his dinner at his house, which was only a few minutes’ drive away
from the clinic. His whereabouts were known to the nurse on duty so that he
could be easily reached in case of emergency. Upon being informed of Mr.
Acosta’s conditions, private respondent immediately left his home and returned
to the clinic. These facts belie petitioner’s claim of abandonment.
Petitioner argues that being a full-time employee, private respondent is obliged
to stay in the company premises for not less than eight (8) hours. Hence, he
may not leave the company premises during such time, even to take his meals.
We are not impressed.
Articles 83 and 85 of the Labor Code read:chanrob1es virtual 1aw library
ARTICLE 83. Normal hours of work. — The normal hours of work of any
employee shall not exceed eight (8) hours a day.
Health personnel in cities and municipalities with a population of at least one
million (1,000,000) or in hospitals and clinics with a bed capacity of at least one
hundred (100) shall hold regular office hours for eight (8) hours a day, for five (5)
days a week, exclusive of time for meals, except where the exigencies of the
service require that such personnel work for six (6) days or forty-eight (48)
hours, in which case they shall be entitled to an additional compensation of at
least thirty per cent (30%) of their regular wage for work on the sixth day. For
purposes of this Article, "health personnel" shall include: resident physicians,
nurses, nutritionists, dieticians, pharmacists, social workers, laboratory
technicians, paramedical technicians, psychologists, midwives, attendants and
all other hospital or clinic personnel. (Emphasis supplied)
ARTICLE 85. Meal periods. — Subject to such regulations as the Secretary of
Labor may prescribe, it shall be the duty of every employer to give his
employees not less than sixty (60) minutes time-off for their regular meals.
Section 7, Rule I, Book III of the Omnibus Rules Implementing the Labor Code
further states:chanrob1es virtual 1aw library
SECTION 7. Meal and Rest Periods. — Every employer shall give his
employees, regardless of sex, not less than one (1) hour time-off for regular
meals, except in the following cases when a meal period of not less than twenty
(20) minutes may be given by the employer provided that such shorter meal
period is credited as compensable hours worked of the employee;
(a) Where the work is non-manual work in nature or does not involve strenuous
physical exertion;
(b) Where the establishment regularly operates not less than sixteen hours a
day;
(c) In cases of actual or impending emergencies or there is urgent work to be
performed on machineries, equipment or installations to avoid serious loss All other aspects of the decision are AFFIRMED.
which the employer would otherwise suffer; and
SO ORDERED.
(d) Where the work is necessary to prevent serious loss of perishable goods.

Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall
be considered as compensable working time.

Thus, the eight-hour work period does not include the meal break. Nowhere in
the law may it be inferred that employees must take their meals within the
company premises. Employees are not prohibited from going out of the
premises as long as they return to their posts on time. Private respondent’s act,
therefore, of going home to take his dinner does not constitute abandonment.

We now go to the award of moral damages to private Respondent.

Not every employee who is illegally dismissed or suspended is entitled to

damages. As a rule, moral damages are recoverable only where the dismissal
or suspension 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. 6 Bad faith does not simply mean
negligence or bad judgment. It involves a state of mind dominated by ill will or
motive. It implies a conscious and intentional design to do a wrongful act for a
dishonest purpose or some moral obliquity. 7 The person claiming moral
damages must prove the existence of bad faith by clear and convincing
evidence for the law always presumes good faith. 8

In the case at bar, there is no showing that the management of petitioner

company was moved by some evil motive in suspending private Respondent. It
suspended private respondent on an honest, albeit erroneous, belief that
private respondent’s act of leaving the company premises to take his meal at
home constituted abandonment of post which warrants the penalty of
suspension. Also, it is evident from the facts that petitioner gave private
respondent all the opportunity to refute the charge against him and to defend
himself. These negate the existence of bad faith on the part of petitioner. Under
the circumstances, we hold that private respondent is not entitled to moral
damages.

IN VIEW WHEREOF, the petition is PARTIALLY GRANTED. The portion of the

assailed decision awarding moral damages to private respondent is DELETED.
G.R. No. 78210 February 28, 1989
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.
Koronado B. Apuzen and Jose C. Espinas for petitioners.
The Solicitor General for public respondent.
Dominguez & Paderna Law Offices Co. for private respondent.
PARAS, J.:
This is a petition for review on certiorari of the decision of the National Labor
Relations Commission dated December 12, 1986 in NLRC Case No. 2327
MC-XI-84 entitled Teofilo Arica et al. vs. Standard (Phil.) Fruits Corporation
(STANFILCO) which affirmed the decision of Labor Arbiter Pedro C. Ramos,
NLRC, Special Task Force, Regional Arbitration Branch No. XI, Davao City
dismissing the claim of petitioners.
This case stemmed from a complaint filed on April 9, 1984 against private
respondent Stanfilco for assembly time, moral damages and attorney's fees,
with the aforementioned Regional Arbitration Branch No. XI, Davao City.
After the submission by the parties of their respective position papers (Annex
"C", pp. 30-40; Annex "D", Rollo, pp. 41-50), Labor Arbiter Pedro C. Ramos
rendered a decision dated October 9, 1985 (Annex 'E', Rollo, pp. 51-58) in
favor of private respondent STANFILCO, holding that:
Given these facts and circumstances, 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.
WHEREFORE, in view of the foregoing considerations, the instant complaint
should therefore be, as it is hereby, DISMISSED.
SO ORDERED. (Rollo, p. 58)
On December 12, 1986, after considering the appeal memorandum of
complainant and the opposition of respondents, the First Division of public
respondent NLRC composed of Acting Presiding Commissioner Franklin Drilon,
Commissioner Conrado Maglaya, Commissioner Rosario D. Encarnacion as
Members, promulgated its Resolution, upholding the Labor Arbiters' decision.
The Resolution's dispositive portion reads:
'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.
The Commission cannot ignore these hard facts, and we are constrained to
uphold the dismissal and closure of the case.
WHEREFORE, let the appeal be, as it is hereby dismissed, for lack of merit.
SO ORDERED. (Annex "H", Rollo, pp. 86-89).
On January 15, 1987, petitioners filed a Motion for Reconsideration which was
opposed by private respondent (Annex "I", Rollo, pp. 90-91; Annex J Rollo, pp.
92-96).
Public respondent NLRC, on January 30, 1987, issued a resolution denying for
lack of merit petitioners' motion for reconsideration (Annex "K", Rollo, p. 97).
Hence this petition for review on certiorari filed on May 7, 1987.
The Court in the resolution of May 4, 1988 gave due course to this petition.
Petitioners assign the following 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 res judicata applies when the facts obtaining in the prior case
and in the case at bar are significantly different from each other in that there is
merit in the case at bar.
3) Whether or not there is finality in the decision of Secretary Ople in view of the
compromise agreement novating it and the withdrawal of the appeal.
4) Whether or not estoppel and laches lie in decisions for the enforcement of
labor standards (Rollo, p. 10).
Petitioners contend that the preliminary activities as workers of respondents
STANFILCO in the assembly area is compensable as working time (from 5:30
to 6:00 o'clock in the morning) since these preliminary activities are necessarily
and primarily for private respondent's benefit.
These preliminary activities of the workers are as follows:
(a) First there is the roll call. This is followed by getting their individual work
assignments from the foreman.
(b) Thereafter, 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 (Rollo, Petition, p. 11).
Contrary to this contention, respondent avers that the instant complaint is not
new, the very same claim having been brought against herein respondent by
the same group of rank and file employees in the case of Associated Labor
Union and Standard Fruit Corporation, NLRC Case No. 26-LS-XI-76 which was
filed way back April 27, 1976 when ALU was the bargaining agent of
respondent's rank and file workers. The said case involved a claim for "waiting
time", as the complainants purportedly were required to assemble at a
designated area at least 30 minutes prior to the start of their scheduled working
hours "to ascertain the work force available for the day by means of a roll call,
for the purpose of assignment or reassignment of employees to such areas in
the plantation where they are most needed." (Rollo, pp. 64- 65)
Noteworthy is the decision of the Minister of Labor, on May 12, 1978 in the
aforecited case (Associated Labor Union vs. Standard (Phil.) Fruit Corporation,
NLRC Case No. 26-LS-XI-76 where significant findings of facts and
conclusions had already been made on the matter.
The Minister of Labor held:
The thirty (30)-minute assembly time long practiced and institutionalized by
mutual consent of the parties under Article IV, Section 3, of the Collective
Bargaining Agreement cannot be considered as waiting time within the purview
of Section 5, Rule I, Book III of the Rules and Regulations Implementing the
Labor Code. ...
Furthermore, the thirty (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 farm 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 CBA does not contain any provision to this effect;
the record is also bare of any proof on this point. This, therefore, demonstrates
the indubitable fact that the thirty (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.
(Annex "E", Rollo, p. 57).
Accordingly, the issues are reduced to the sole question as to whether public
respondent National Labor Relations Commission committed a grave abuse of
discretion in its resolution of December 17, 1986.
The facts on which this decision was predicated continue to be the facts of the
case in this questioned resolution of the National Labor Relations Commission.
It is clear 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.
Be that as it may, 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. 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.
As aptly observed by the Solicitor General that this petition is "clearly violative
of the familiar principle of res judicata. There will be no end to this controversy if
the light of the Minister of Labor's decision dated May 12, 1979 that had long
acquired the character of finality and which already resolved that petitioners'
thirty (30)-minute assembly time is not compensable, the same issue can be
re-litigated again." (Rollo, p. 183)
This Court has held:
In this connection account should be taken of the cognate principle that res
judicata operates to bar not only the relitigation 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. The law provides that 'the judgment or order is,
with respect to the matter directly adjudged or as to any other matter that could
have been raised in relation thereto, conclusive between the parties and their
successors in interest by title subsequent to the commencement of the action ..
litigating for the same thing and in the same capacity.' So, even if new causes
of action are asserted in the second action (e.g. fraud, deceit, undue
machinations in connection with their execution of the convenio de transaccion),
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. (Vda. de Buncio v. Estate of the late Anita de
Leon, 156 SCRA 352 [1987]).
Moreover, as a rule, the findings of facts of quasi-judicial agencies which have
acquired expertise because their jurisdiction is confined to specific matters are
accorded not only respect but at times even finality if such findings are
supported by substantial evidence (Special Events & Central Shipping Office
Workers Union v. San Miguel Corporation, 122 SCRA 557 [1983]; Dangan v.
NLRC, 127 SCRA 706 [1984]; Phil. Labor Alliance Council v. Bureau of Labor
Relations, 75 SCRA 162 [1977]; Mamerto v. Inciong, 118 SCRA 265 (1982];
National Federation of Labor Union (NAFLU) v. Ople, 143 SCRA 124 [1986];
Edi-Staff Builders International, Inc. v. Leogardo, Jr., 152 SCRA 453 [1987];
Asiaworld Publishing House, Inc. v. Ople, 152 SCRA 219 [1987]).
The records show that the Labor Arbiters' decision dated October 9, 1985
(Annex "E", Petition) pointed out in detail the basis of his findings and
conclusions, and no cogent reason can be found to disturb these findings nor of
those of the National Labor Relations Commission which affirmed the same.
PREMISES CONSIDERED, the petition is DISMISSED for lack of merit and the
decision of the National Labor Relations Commission is AFFIRMED.
SO ORDERED
G.R. Nos. 64821-23 January 29, 1993
UNIVERSITY OF PANGASINAN FACULTY UNION, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and UNIVERSITY OF
PANGASINAN, respondents.
Tanopo & Serafica for petitioner.
Hermogenes S. Decano for private respondents.
ROMERO, J.:
In the instant petition for mandamus and certiorari, petitioner union seeks to
enjoin the respondent National Labor Relations Commission (NLRC) to resolve,
or direct the Labor Arbiter to hear and decide, the merits of three of petitioner's
unresolved complaints, and to annul and set aside the resolution of the NLRC
affirming the decision of the Executive Labor Arbiter dismissing the petitioner's
complaints for violation of certain labor standards laws but requiring respondent
university to integrate the cost of living allowance into the basic pay of the
covered employees and reminding it to pay its employees at intervals not
exceeding sixteen (16) days.
The uncontroverted facts show that on various dates, petitioner filed the
following complaints against the University of Pangasinan (University for brevity)
before the Arbitration Branch of the NLRC in Dagupan City:
1. October 14, 1980: for nonpayment of benefits under P.D. No. 1713 and
emergency cost of living allowance (ecola) to part-time teachers, and for
prompt and accurate computation of benefits under P.D. No. 451 and the
payment of ecolas;
2. November 7, 1980: for nonpayment of all ecolas to instructors from October
18-31, 1980;
3. November 20, 1980: for nonpayment of ecolas under P.D. Nos. 525, 1123,
1614, 1634, 1678 and 1713 for November 1-15, 1980, and extra loads during
typhoons "Nitang" and "Osang" on July 21 and 25, 1980, respectively;
4. April 13, 1981: for violation of P.D. No. 1751 and nonpayment of extra loads
on February 12-13, 1980 (Anniversary celebration);
5. April 27, 1981: for nonpayment of all ecolas for April 1-15, 1981 to faculty
members who were also members of the union;
6. May 21, 1981: for violation of Wage Order No. 1 and delayed payment of
salaries; and
7. June 17, 1981: for nonpayment of salary differentials for summer under P.D.
No. 451.1
The Regional Director in San Fernando, La Union certified six (6) of these
complaints to Labor Arbiter Pedro Fernandez of the Dagupan City District
Office of the then Ministry of Labor and Employment for compulsory
arbitration. 2 According to the petitioner, it was made to understand by
Fernandez that the seventh complaint should also be discussed in its position
paper. Accordingly, petitioner filed a position paper discussing the merits of all
the seven complaints. On the other hand, the University limited its discussion to
only four: the complaints filed on April 13, 1981, April 27, 1981, May 21, 1981
and June 17, 1981. Petitioner was of the view that Executive Labor Arbiter
Sotero L. Tumang adopted the stand of the University on the four complaints
and accordingly dismissed them in his decision of January 25, 1982. 3
Observing that in its position paper, the petitioner included matters which were
"beyond the scope of the issues alleged in the complaints," said Labor Arbiter
discussed the four complaints individually. On the April 13, 1981 complaint, he
ruled that because at the time P.D. No. 1123 took effect on May 1, 1977, the
University had not increased its tuition fees, there was of "nothing to
integrate."4 However, from June 16, 1979 when the University increased its
tuition fees, it was obligated to cause the integration of the across-the-board
increase of P60.00 in emergency allowance into the basic pay as mandated by
P.D. Nos. 1123 and 1751.
On the alleged nonpayment of extra loads handled by the employees on
February 12 and 13, 1981 when classes were suspended, Tumang stated that
Consuelo Abad, the petitioner's president, had no cause to complain because
her salary was fully paid and that, since there were "no complainants for the
alleged nonpayment of extra loads for two days," the issue had become
academic.
With respect to the April 27, 1981 complaint, Tumang said that since the salary
paid to Consuelo Abad and other faculty members for the April 1-15, 1981
period had been earned "as part of their salary for the ten-month period," she
was no longer entitled to an emergency cost of living allowance. He added that
"payment of emergency cost of living allowance is based on actual work
performed except when they (employees) are on leave with pay." Hence,
because classes ended in March 1981, the teachers who did not report for work
could not be considered on leave with pay and, therefore, they were not entitled
to an emergency cost of living allowance.
As regards the May 21, 1981 complaint alleging violation of Wage Order No. 1,
Tumang found that the University had actually implemented the additional living
allowance of P2.00 a day required therein. On the alleged delay in the payment
of salaries of the employees, he rationalized that delays could not be avoided
but he reminded the University to pay its employees on time.
The June 17, 1981 complaint was also resolved in favor of the University.
Stating that P.D. No. 451 which mandates salary increases is dependent on
enrollment and allowable deductions, Tumang ruled that, again, Consuelo
Abad had no cause to complain as she had been paid out of the allowable
12.74% for distribution which was a "substantial compliance with P.D. No.
451." 5 The dispositive portion of the decision states:
IN THE LIGHT OF THE FOREGOING CONSIDERATION, the above-entitled
cases are dismissed for lack of merit. Respondent however, is required to
integrate the allowance of P60.00 under P.D. 1123 into the basic pay of the
covered employees if the same has not as yet been complied with. Respondent
is also reminded to pay the employees at intervals not exceeding sixteen (16)
days pursuant to Article 102 of the Labor Code.
SO ORDERED.
The petitioner appealed the said decision to the NLRC. In its resolution of June
20, 1993, the NLRC affirmed the decision of Executive Labor Article Tumang.
Hence, the instant petition for mandamus and certiorari with the following
prayer:
WHEREFORE, the foregoing premises considered, it is respectfully prayed that
this petition be given due course and that judgment issue:
1. Declaring petitioner as possessed with capacity to represent its members in
the complaints it filed thru its president, Miss Consuelo Abad, against private
respondent, and the complaints are pertaining to the members who are entitled
under the law to the claims sought herein, not to Miss Abad alone;
2. Annulling and setting aside the appealed resolution insofar as the issues of
nonpayment of Ecola for April 1-15, 1981 and nonpayment of salary
differentials for summer of 1981 under P.D. No. 451 are concerned;
3. Ordering private respondent to pay covered members of petitioner their
Ecola for April 1-15, 1981 and their salary differentials for summer of 1981
pursuant to the mandate of P.D. 451;
4. Enjoining public respondent to resolve on the merits the issues of
nonpayment of extra loads of February 12-13, 1980 and violation of Wage
Order No. 1 which were properly brought on appeal to said office;
5. Enjoining public respondent to resolve on the merits the issues or grievances
alleged in the complaints filed on October 14, November 7 and November 20,
all in 1980, which were not resolved by the labor arbiter but nonetheless
appealed to public respondents, or
6. Enjoining public respondent to order or direct the labor arbiter to resolve on
the merits the said issues or grievances alleged in the complaints mentioned in
the next preceding paragraph;
7. Attorney's fee in such amount as this Honorable Tribunal may deem just and
reasonable in the premises;
8. Ordering private respondent to pay costs of suit, including this appeal.
Petitioner further prays for safeguards and/or measures to insure the correct
computation of the amount of claims herein sought due to each covered
member of petitioner, and for such other reliefs just and equitable in the
premises.6
We shall first deal with the propriety of the special civil action of mandamus. In
this regard, petitioner contends that the NLRC should have, in the exercise of
its appellate jurisdiction, resolved the issues raised in the three (3) complaints
filed on October 14, November 7 and November 20, 1980 or, in the alternative,
ordered the Labor Arbiter to hear and decide the aforementioned three (3)
complaints, it having the power of supervision over Labor Arbiters.
Sec. 3, Rule 65 of the Rules of Court provides:
Sec. 3. Petition for Mandamus. — When any tribunal, corporation, board, or
person unlawfully neglects the performance of an act which the law specifically
enjoins as a duty resulting from an office, trust, or station, or unlawfully
excludes another from the use and enjoyment of a right or office to which such
other is entitled, and there is no other plain, speedy and adequate remedy in
the ordinary course of law, the person aggrieved thereby may file a verified
petition in the proper court alleging the facts with certainty and praying that
judgment be rendered commanding the defendant, immediately or at some
other specified time, to do the act required to be done to protect the rights of the
petitioner, and to pay the damages sustained by the petitioner by reason of the
wrongful acts of the defendant.
As succinctly provided in this section, anyone who wishes to avail of the
remedy of mandamus must state in a verified petition "the facts with certainty."
On account of this requirement, mandamus is never issued in doubtful cases
and showing of a clear and certain right on the part of the petitioner is
required. 7 Indeed, while the labor arbiter is duty bound to resolve all
complaints referred to him for arbitration and, therefore, he may be compelled
by mandamus to decide them (although not in any particular way or in favor of
anyone),8 we find that the peculiar circumstances in this case do not merit the
issuance of the writ of mandamus.
Petitioner admits that only six of the complaints were certified to Labor Arbiter
Fernandez for compulsory arbitration. It failed, however, to allege why this was
the case or whether it had exerted any effort to include the remaining complaint
in the certification. What it stresses is the alleged assurance of Labor Arbiter
Fernandez that the seventh complaint may be discussed in its position paper. It
turned out, however, that, according to the unrebutted allegation of the Solicitor
General, Labor Arbiter Fernandez inhibited himself from handling the cases
referred to him as he was teaching at the University. Hence, Labor Arbiter
Fernandez forwarded the complaints to the Assistant Director for Arbitration in
Regional Office No. 1 in San Fernando, La Union for appropriate action. He
should have forwarded all of the complaints to the said Assistant Director, but it
appears that Fernandez turned over only four of them. In turn, the Assistant
Director referred only complaints Nos. 5, 6 and 7, which had been docketed as
RBI-C-24-81, LS-42-81 and LS-43-81, to Executive Labor Arbiter Sotero L.
Tumang for compulsory arbitration. However, while only these three docket
numbers appear on the caption of the decision, the same actually resolved four
complaints, as earlier mentioned. 9
From these facts, one may infer that there must have been a mishandling of the
complaints and/or the records of the cases. However, the petitioner failed to
substantiate by evidence such negligence on the part of the public respondents
as to warrant the issuance of a writ of mandamus. 10 Its officials even neglected
the simple act of verifying from the MOLE office in Dagupan City whether the
records of all the cases filed had been forwarded to the proper official who
should resolve them. 11 Infact, nowhere in its pleadings 12 is there an allegation
to that effect.
On the contrary, the petitioner took Fernandez' words seriously and allowed the
proceedings to reach its inevitable conclusion. When it received a copy of the
decision, the petitioner should have taken note of Executive Labor Arbiter
Tumang's observation therein that it had discussed matters "beyond the scope
of the issues alleged in the complaints." In its memorandum of appeal, it should
have prayed for the inclusion of the three complaints inasmuch as in labor
cases, an appeal may be treated as a motion for reconsideration or
vice-versa. 13 The fact that three complaints had been omitted did not escape
the attention of the NLRC which stated in its resolution that "since those cases
were not consolidated it is now too late to consolidate them" with the four
decided cases. 14 We agree with the NLRC that the said complaints should
proceed separately as long as their resolution would not conflict with the
resolved
cases.15 It should be added that under Art. 217(b) of the Labor Code, the NLRC
has "exclusive appellate jurisdiction over all cases decided by the Labor
Arbiters." Needless to say, the NLRC could not have acted on matters outside
of the cases appealed to it.
Petitioner's contention that the cases filed by Consuelo Abad as its president
should affect, not only herself, but all the other union members similarly
situated as she was, is well taken. The uncontroverted allegation of the
petitioner is that it is the holder of Registration Certificate No. 9865-C, having
been registered with the then Ministry of Labor and Employment on February
16, 1978. As such, petitioner possessed the legal personality to sue and be
sued under its registered name.16 Corollarily, its president, Consuelo Abad,
correctly filed the complaints even if some of them involved rights and interest
purely or exclusively appertaining to individual employees, it appearing that she
signed the complaints "for and in behalf of the University of Pangasinan Faculty
Union."17
The University's contention that petitioner had no legal personality to institute
and prosecute money claims must, therefore, fail. To quote then Associate
Justice Teehankee in Heirs of Teodelo M. Cruz v. CIR,18 "[w]hat should be
borne in mind is that the interest of the individual worker can be better
protected on the whole by a strong union aware of its moral and legal
obligations to represent the rank and file faithfully and secure for them the best
wages and working terms and conditions. . . . Although this was stated within
the context of collective bargaining, it applies equally well to cases, such as the
present wherein the union, through its president, presented its individual
members' grievances through proper proceedings. While the complaints might
not
have disclosed the identities of the individual employees claiming monetary
benefits,19 such technical defect should not be taken against the claimants,
especially because the University appears to have failed to demand a bill of
particulars during the proceedings before the Labor Arbiter.
On the merits of the petition, the NLRC did not abuse its discretion in resolving
the appeal from the decision of Executive Labor Arbiter Tumang except for the
disallowance of the emergency cost of living allowance to members of the
petitioner. The Rules Implementing P.D. No. 1713 which took effect on August
18, 1980 provide:
Sec. 6. Allowances of full-time and part-time employees. — Employees shall be
paid in full the monthly allowance on the basis of the scales provided in Section
3 hereof, regardless of the number of their regular working days if they incur no
absences during the month. If they incur absences without pay, the amounts
corresponding to the absences may be deducted from the monthly allowance
provided that in determining the equivalent daily allowance of such deduction,
the applicable monthly allowance shall be divided by thirty (30) days.
xxx xxx xxx
(Emphasis supplied).
This Section, which is a virtual reproduction of Section 12 of the old Rules
Implementing P.D. No. 1123, has been interpreted by this Court as requiring
that the full amount of the cost of living allowance mandated by law should be
given monthly to each employee if the latter has worked continuously for each
month, regardless of the number of the regular working days.20 But
more apropos is the ruling of this Court in University of Pangasinan Faculty
Union v. University of Pangasinan and NLRC,21 a case involving the same
parties as in the instant petition and dealing with a complaint filed by the
petitioner on December 18, 1981 seeking, among others, the payment of
emergency cost of living allowances for November 7 to December 5, 1981, a
semestral break. The Court held therein:
. . . The "No work, no pay" principle does not apply in the instant case. The
petitioner's members received their regular salaries during this period. It is clear
from the . . . law that it contemplates a "no work" situation where the employees
voluntarily absent themselves. Petitioners, in the case at bar, certainly do
not, ad voluntatem absent themselves during semestral breaks. Rather, they
are constrained to take mandatory leave from work. For this, they cannot be
faulted nor can they be begrudged that which is due them under the law. To a
certain extent, the private respondent can specify dates when no classes would
be held. Surely, it was not the intention of the framers of the law to allow
employers to withhold employee benefits by the simple expedient of unilaterally
imposing "no work" days and consequently avoiding compliance with the
mandate of the law for those days.
As interpreted and emphasized in the same case, the law granting emergency
cost of living allowances was designed to augment the income of the
employees to enable them to cope with the rising cost of living and inflation.
Clearly, it was enacted in pursuance of the State's duty to protect labor and to
alleviate the plight of the workers. To uphold private respondent's interpretation
of the law would be running counter to the intent of the law and the Constitution.
WHEREFORE, the petition for mandamus is hereby DISMISSED. The decision
of the NLRC is AFFIRMED subject to the MODIFICATION that private
respondent University of Pangasinan shall pay its regular and fulltime teachers
and employees emergency cost of living allowance for the period April 1-15,
1981. Costs against private respondent.

SO ORDERED.
GR No. L-1309 July 26, 1948
THE SHELL COMPANY OF PHILIPPINE ISLANDS, LIMITED, recurring,
vs.
NATIONAL LABOR UNION, appealed.
Messrs. Ross, Selph, Carrascoso and Janda on behalf of the appellant.
Messrs. Paguia and Villanueva on behalf of the respondent.
BRIONES, J .:
Acting on a petition of the labor entity called "National Labor Union," the
Industrial Relations Court has issued a decision in which, among other things,
the oil firm "The Shell Company of Philippine Islands, Limited" is obliged to pay
to their workers who work at night (since the sun sets until it rises the next day)
an additional compensation of 50% on their regular wages if they work during
the day. It seems that the region is in need of night service for a certain number
of workers, as planes from abroad tend to land and take off at night, which is
why it is necessary to do night work for the supply of gasoline and lubricants,
and to Other necessities. The oil company has been exempted against this
decision from there the present appeal of certiorari for us to revoke it.
The recurring company alleges and argues that not only does there not exist
any legal provision that entitles the Industrial Relations Court to order the
payment of additional compensation to workers who work at night, but, on the
contrary, Commonwealth Law No. 444 exempts the employer from such an
obligation whenever the law provides the cases in which the payment of
"overtime" (additional compensation) is compulsory, and among such cases
does not include night work.
For its part, the labor union under appeal maintains that the power under
discussion is part of the broad and effective powers that Commonwealth Law
No. 103 - the organic letter of the Industrial Relations Court - grants to said
court; and that Commonwealth Law No. 444 that is invoked does not have any
application to the present case, since it is necessarily limited in scope, referring
particularly and exclusively to the maximum day of continuous work permitted
in industrial establishments - the day of 8 hours.
Our conclusion is that the labor union under appeal is right on its part. For a
clear and thorough elucidation of the points discussed, we consider it
convenient, even at the risk of extending this paper, to transcribe the relevant
legal provisions that are Articles 1, 4 and 13 of Commonwealth Law No. 103.
Here you are:
SECTION 1. The Judge: his appointment, qualifications, compensation,
tenure . - There is hereby created a Court of Industrial Relations, which shall
have jurisdiction over the entire Philippines, to consider, investigate, decide,
and settle any question, matter, controversy or dispute arising between, and /
or affecting, employers and employees or laborers , and landlords and tenants
or farm-laborers, and regulate the relation between them, subject to, and in
accordance with, the provisions of this Act. The Court shall keep a record of all
its proceedings and shall be presided over by a Judge to be appointed by the
President of the Philippines with the consent of the Commission on
Appointments of the National Assembly. The Judge of the Court shall hold
office during good behavior until he reaches the age of seventy years, or
becomes incapacitated to discharge the duties of his office. His qualifications
shall be the same as those provided in the Constitution for members of the
Supreme Court and he shall receive an annual compensation of ten thousand
pesos and shall be entitled to traveling expenses and per diems when
performing official duties outside of the City of Manila. The Department of
Justice shall have executive supervision over the Court.
SEC. 4. Strikes and lockouts . - The Court shall take cognizance for purpose of
prevention, arbitration, decision and settlement, of any industrial or agricultural
dispute causing or likely to cause a strike or lockout, arising form differences as
regards wages, shares or compensation, hours of labor or conditions of
tenancy or employment, between employers and employees or laborers and
between landlords and tenants or farm-laborers, provided that the number of
employees, laborers or tenants or farm-laborers involved exceeds thirty, and
such industrial or agricultural dispute is submitted to the Court by the Secretary
of Labor, or by any or both of the parties to the controversy and certified by the
Secretary of Labor as existing and proper to be dealt with by the Court for the
sake of public interest. In all such cases, the Secretary of Labor or the party or
parties submitting the disputes, shall clearly and specifically state in writing the
questions to be decided. Upon the submission of such a controversy or
question by the Secretary of Labor, his intervention therein as authorized by
law, shall cease.
The Court shall, before hearing the dispute and in the course of such hearing,
endeavor to reconcile the parties and induce them to settle the dispute by
amicable agreement. If any agreement as to the whole or any part of the
dispute is arrived at by the parties, a memorandum of its terms shall be made in
writing, signed and acknowledged by the parties thereto before the Judge of
the Court or any official acting in his behalf and authorized to administer oaths
or acknowledgments, or, before a notary public. The memorandum shall be
filed in the office of the Clerk of the Court, and, unless otherwise ordered by the
Court, shall, as between the parties to the agreement, have the same effect as,
and be deemed to be, a decision or award .
SEC. 13. Character of the award . - In making an award, order or decision,
under the provisions of section four of this Act, the Court shall not be restricted
to the specific relief claimed or demands made by the parties to the industrial or
agricultural dispute, but may include in the award , order or decision any matter
or determination which my be deemed necessary or expedient for the purpose
of setting the dispute or of preventing further industrial or agricultural disputes.
It is evident from the provisions transcribed as follows: (a) that when a dispute
arises between the principal and the employee or worker, vgr. On the question
of salaries, the Industrial Relations Court has jurisdiction throughout the
Philippines to consider, investigate and resolve said dispute, setting the wages
it deems fair and reasonable; (b) that for the purposes of prevention, arbitration,
decision and settlement, the same Industrial Relations Court also has
jurisdiction to hear of any dispute - industrial or agricultural - resulting from any
differences with respect to wages, shares or compensation, hours of work,
conditions of employment or partnership between employers and employees or
workers and between owners and landowners or agricultural workers prior to
the fulfillment of certain requirements and conditions, when it is seen that such
dispute causes or may cause a strike; (c) that in the exercise of its powers
specified above, the Industrial Relations Tribunal is not limited, in deciding the
dispute, to grant the remedy or remedies requested by the parties to the
dispute, but may include in the order or decision any matter or determination for
the purpose of resolving the dispute or preventing further industrial or
agricultural disputes.
In the case at hand there is undoubtedly an industrial disposition. While the
company, the Shell company, is not willing to pay its night workers higher
wages than the outbound workers, the "National Labor Union", to which the
Shell workers are affiliated, claims another type of salary for the service
nocturnal - 50% more. This is the dispute, the industrial litigation. Now, what
has the Industrial Relations Court done, after submitting the conflict to its
jurisdiction? For precisely what the aforementioned Commonwealth Law No.
103 mandates, an organic letter of its creation and operation, namely: to
consider, investigate and prosecute the dispute, resolving it later in the sense in
which it has resolved it, that is, remunerating the work at night with 50% more
than day wages. And this is perfectly legal both within the scope of Article 1 of
the aforementioned Law No. 103 that empowers the Industrial Relations Court
to decide any dispute over wages and compensation in the manner it deems
reasonable and convenient, as well as within the framework of the article. 4 of
the same law that authorizes said court to prosecute and decide any industrial
or agricultural dispute or dispute determines the outbreak of a strike or store to
cause it. Moreover, what has been done by the Industrial Relations Court in this
case is also legal within the framework of article 13 of the same law No. 103, an
article that, as it is seen, not only empowers said court to grant the remedy that
collect the parties, but even to go beyond, that is, to grant remedies not
expressly requested, provided that they are directed to resolve the dispute at
once or prevent the outbreak of further disputes or strikes.
It is clear that with these broad powers the State has proposed to equip the
Industrial Relations Court to the maximum possible of utility and efficiency,
making it not a simple academic agency, but truly active, dynamic and efficient
- in a word, the official machinery par excellence in the formidable and thorny
task of resolving industrial conflicts, yagricolas of a certain class, preventing
and avoiding those strikes and strikes that both afflict and harm not only
companies and workers, but, in general, all community. In his concurring
opinion in the authoritative case of Ang Tibay v Industrial Relations Court 1 (RG
No. 46496), Judge Laurel has rightly expressed the fundamental idea that
underlines the creation of said court, with the following statement:
In Commonwealth Act No. 103, and by it, our government no longer performs
the role of mere mediator or intervenor but that of supreme arbiter . (The italics
are ours.)
The appellant argues, however, that although it is true that in case of dispute
the Industrial Relations Court has, by virtue of its organic law, the power to set
wages, such power is not absolute, but is subject to certain restrictions and
clippers, provided in the law commonly known by law on the eight-hour day,
Commonwealth Law No. 444, whose relevant articles are fully transacted
below:
SECTION 1. The legal working day for any person employed by another shall
be of not more than eight hours daily. When the work is not continuous, the
time during which the laborer is not working and can leave his working place
and can rest completely shall not be counted.
SEC. 3. Work may be performed beyond eight hours a day in case of actual or
impending emergencies caused by serious accidents, fire, flood, typhoon,
earthquake, epidemic, or other disaster or calamity in order to prevent loss to
life and property or imminent danger to public safety; or in case urgent work to
be performed on the machines, equipment, or installations in order to avoid a
serious loss which the employer would otherwise suffer, or some other just
cause of a similar nature; but in all such cases the laborers and employees
shall be entitled to receive compensation for the overtime work performed at
the same rate as their regular wages or salary, plus at least twenty-five per
centum additional.
In case of national emergency the government is empowered to establish rules
and regulations for the operation of the plants and factories and to determine
the wages to be paid the laborers.
SEC. 4. No person, firm, or corporation, business establishment or place or
center of labor shall compel an employee or laborer to work during Sundays
and legal holidays, unless he is paid an additional sum of at least
twenty-five per centum of his regular remuneration: Provided however , That
this prohibition shall not apply to public utilities performing some public service
such as supplying gas, electricity, power, water, or providing means of
transportation or communication.
As you wish - the appellant's lawyers argue - that these articles specify the
cases in which the payment of extra or additional compensation is authorized
and are only, namely: (a) in case of "overtime" or work in excess of regular
hours for urgent reasons of urgency due to a disaster or accident, or to avoid
loss or repair; (b) in case of work for Sundays and holidays; (c) in case of
emergency, and there is nothing that refers to night work; then the order in
question is illegal, as it is not authorized by law. "In the absence - stress the
lawyers of the appellant - legislation authorizing the payment of extra
compensation for work done at night, the Court of Industrial Relations has no
power or authority to order the petitioner company to pay extra compensation
for work done by its laborers at night Expressio unius est exclusio
alterius Where, as in the case at bar, statute expressly specifies the cases
where payment of extra compensation may be demanded, extra compensation
may be allowed in those cases only, and in no others. Commonwealth Act No.
444 cannot be enlarged by implication or otherwise Expressum facit cessare
tacitum .
The argument is wrong. Law No. 444 is not applicable to the present case, it
being evident that it has a specific purpose, namely: (a) set the maximum
workday in 8 hours; (b) point out certain exceptional cases in which work may
be authorized outside said day; (c) provide a bonus, which should not be less
than 25% of the regular salary, for overtime or work in excess of 8 hours.
In the case of Manila Electric, applicant-appellant, against The Public Utities
Employees' Association, 2 appealed, L-1206 (45 Off. Gaz., 1760), this Court
has declared that the power conferred by article 1 of the law Commonwealth
No. 103 to the Industrial Relations Court to prosecute and decide industrial
disputes and disputes between capital and labor, which includes the setting of
salaries and compensation of employees and workers, has been restricted by
Article 4 of the Commonwealth Law No 444, which at the same time that limits
the minimum of the additional compensation that the court may grant for work
on Sundays and official holidays to 25% of the worker's regular salary or
compensation, exempts the payment of such additional compensation to the
entities of public utility that provide some public service, such as those that
supply gas, electricity, mortuary force, water, or provide means of
transportation or communication. Such restriction becomes an exception of the
general power of the court to set, in cases of dispute, the salaries and
compensation that employers must pay to employees and workers; and since
this article 4 refers only to salary or compensation for work during the days of
Sunday and official holidays, it is obvious that it cannot refer to salary or
additional compensation for work outside the eight-hour day that is generally
done from the beginning In the morning at the end of the afternoon, it is one
thing to work on Sunday days and official holidays, and another thing is to work
at night or outside the eight-hour day on weekdays. Applying the maximum
legal " expressio unius est exclusio alterius ," it can be argued, without fear of
being mistaken, that a law that provides a specific exception to its general
provisions, such as additional compensation for work on Sunday days and
official holidays, excludes any another, such as additional compensation for
night work on weekdays. "Another case in which this maxim may almost
invariably by followed is that of statute which makes certain specific exceptions
to its general provisions. Here wemay safely assume that all other exceptions
were intended to be excluded. " (Wabash R. Co.vs. United States, 178 Fed., 5,
101 CCA 133; Cella Commision Co. vs. Bohlinger, 147 Fed., 419; 78 CCA 467;
Kunkalman vs. Gibson, 171 Ind., 503; 84 NE 985; Hering vs. Clement, 133 App.
Div., 293; 117 NY, Supp. 747.).
The work last night that the Shell company demands of its workers is not
perhaps an "overtime", in the sense that this word is used in Le No. 444, but is
a full day of work, also 8 hours: only which, instead of being done by day, is
done at night. In other words, the night work in question here is not only an
unexcess, prolongation or "overtime" of regular day work, but it is another
type of work, absolutely independent of the daytime. That is why there are two
shifts: the shift of workers who work during the day; and the turn of those who
work at night. So it is not strange that the legislator did not include this type of
work among the cases of "overtime" indicated in the aforementioned law No.
444.
The question that, in our opinion, must be determined is whether among the
general powers of the Industrial Relations Court that are admitted without a
deputy, is to consider the day at night as a full day of work; that of estimating it
as more burdensome than the day; and consequently, to provide and order that
it be reimbursed with 50% more of the regular day wages. Our answer is
affirmative: all this is included among the general powers of the Industrial
Relations Court. If this court has, in cases of dispute, the power to set the
wages it deems fair and reasonable for day work, there is no reason why it
should not have the same power with respect to night wages; It is as much
work as one. And with respect to the assessment that night work is heavier and
more expensive than day work and, therefore, deserves higher pay, there is
also no reason to revoke or alter it. There is no possible argument against the
universal fact that regular, normal and ordinary work is that of day, and that
night work is very exceptional and justified only for certain imperatively
unavoidable reasons. For something humanity has always worked by day.
Reasons for hygiene, medicine, morals, culture, sociology, establish in
common that the work of nocho has many disadvantages, and when there is no
choice but to do so, it is only fair that it be better than ordinary to compensate
until it is true. point to the worker of such inconveniences. Undoubtedly, night
work not only affects the worker's health in the long run, but also deprives him
of certain things that make life relatively pleasant, such as, for example, a
complete and uninterrupted rest and certain times of solace. , leisure or
spiritual and cultural expansion that you might have when you finish work in the
afternoon and during the first hours of the night. It is said that the worker can
rest by day after having worked all night; But can the rest of the day give the
body that tonic and that full reparative effect that only the natural rest at night
can provide? It is also said that some prefer to work at night under our
scorching weather, thus avoiding the heat of the day. We fear, however, that
this is better spoken than practiced. We believe that since time immemorial the
universal rule is that man works at night more for an irremediable need than for
pleasurable convenience.
To the vulgar, universal opinion, we must add the expert opinion, the specialist
criterion. The opinion of the writers and experts strongly militates in favor of the
thesis that night work is harder and more expensive than day work, considering
this with marked disgust and consequently compelling capitalist management
to establish a higher scale of wages as an incentive for workers to accept
it . You could cite virias authorities, but not to extend this paper too much we
opted to transcribe only a few, namely:
. . . Then, it must be remembered that it is distinctly unphysiological to turn the
night into day and deprive the body of the beneficial effects of sunshine. The
human organism revolts against this procedure. Added to artificial lighting are
reversed and unnatural times of eating, resting, and sleeping. Much of the
inferiority of nightwork can doubtless be traced to the failure of the workers to
secure proper rest and sleep, by day. Because of inability or the lack of
opportunity to sleep, nightworkers often spend their days in performing
domestic duties, joining the family in the midday meal, 'tinkering about the
place', watching the baseball game, attending the theater or taking a ride in the
car. It is not strange that nightworkers tend to be less efficient than dayworkers
and lose more time. . . (The Management of Labor Relations, by Watkins &
Dodd, page 524.).
Nightwork - Nightwork has gained a measure of prominence in the modern
industrial system in connection with continuous industries, that is, industries in
which the nature of the processes makes it necessary to keep machinery and
equipment in constant operation. Even in continuous industries the tendency is
definitely in the direction of FOUR shifts of 6 hours each, with provision for an
automatic change of shift for all workers at stated intervals. Some discussion
has taken place with regard to the lengths of the period any workers should be
allowed to remain on the night shift. A weekly change of shifts is common,
specially where three or four shifts are in operation; in other cases the change
is made fortnightly or monthly; in still other instances, no alternation is provided
for, the workers remaining on day - or nightwork permanently, except where
temporary changes are made for individual convenience.
There is sharp difference of opinion concerning the relative merits of these
systems. Advocates of the weekly change of shifts contend that the strain of
nightwork and the difficulty of getting adequate sleep during the day make it
unwise for workers to remain on the "graveyard" shift for more than a week at a
time. Opponents urge that repeated changes make it more difficult to settle
down to either kind of shift and that after the first week nightwork becomes less
trying while the ability to sleep by day increases. Workers themselves react in
various ways to the different systems. This much, however, is certain: Few
persons react favorably to nightwork, whether the shift be continuous or
alternating. Outside of continuous industries, nightwork can scarcely be
justified, and, even in these, it presents serious disadvantages which must be
recognized in planing for industrial efficiency, stabilization of the working force,
the promotion of industrial good-will, and the conservation of the health and
vitality of the workers.
Nightwork cannot be considered as desirable, either from the point of view of
the employer or of the wage earner. It is uneconomical unless overhead costs
are unusually heavy. Frequently the scale of wages is higher as an inducement
to employees to accept employment on the night shift, and the rate of
production is generally lower. (Management of Labor Relations, by Watkins &
Dodd, pp. 522-524; emphasis ours.)
. . . The lack of sunlight tends to produce anemia and tuberculosis and to
predispose to other ills. Nightwork brings increased liability to eyestrain and
accident. Serious moral dangers also are likely to result from the necessity of
traveling the streets alone at night, and from the interference with normal home
life. From an economic point of view, moreover, the investigations showed that
nightwork was unprofitable, being inferior to day work both in quality and in
quantity. Wherever it had been abolished, in the long run the efficiency both of
the management and of the workers was raised. Furthermore, it was found that
nightwork laws are a valuable aid in enforcing acts fixing the maximum period
of employment. (Principles of Labor Legislation, by Commons and Andrews,
4th Revised Edition, p. 142.)
Special regulation of nightwork for adult men is a comparatively recent
development. Some European countries have adopted laws placing special
limitations on hours of nightwork for men, and others prohibit such work except
in continuous processes. (Principles of Labor legislation, 4th Revised Edition by
Common & Andrews, p. 147.)
Nightwork has almost invariably been looked upon with disfavor by students of
the problem because of the excessive strain involved, especially for women
and young persons, the large amount of lost time consequent upon exhaustion
of the workers, the additional strain and responsibility upon the executive staff ,
the tendency of excessively fatigued workers to "keep going" on artificial
stimulants, the general curtailment of time for rest, leisure, and cultural
improvement, and the fact that night workers, although precluded to an extent
from the activities of day life, do attempt to enter into these activities, with
resultant impairment of physical well-being. It is not contended, of course, that
nightwork could be abolished in the continuous-process industries, but it is
possible to put such industries upon a three- or four-shifts basis, and to prohibit
nightwork for women and children. (Labor's Progress and Problems, Vol. I, p.
464, by Professors Millis and Montgomery.)
Nightwork - Civilized peoples are beginning to recognize the fact that except in
cases of necessity or in periods of great emergency, nightwork is socially
undesirable. Under our modern industrial system, however, nightwork has
greatly aided the production of commodities, and has offered a significant
method of cutting down the ever-increasing overhead costs of industry. This
result has led employers to believe that such work is necessary and
profitable. Here again one meets a conflict of economic and social
interests. Under these circumstances it is necessary to discover whether
nightwork has deleterious effects upon the health of laborers and tends to
reduce the ultimate supply of efficient labor. If it can proved that nightwork
affects adversely both the quality and quantity of productive labor, its
discontinuance will undoubtedly be sanctioned by employers. From a social
point of view, even a relatively high degree of efficiency in night operations
must be forfeited if it is purchased with rapid exhaustion of the health and
energy of the workers. From an economic point of view, nightwork may be
necessary if the employer is to meet the demand for his product, or if he is to
maintain his market in the face of increasing competition or mounting variable
production costs.
Industrial experience has shown that the possession of extra-ordinary physical
strength and self-control facilitates the reversal of the ordinary routine of day
work and night rest, with the little or no unfavorable effect on health and
efficiency. Unusual vitality and self-control, however, are not common
possessions. It has been found that the most serious obstacle to a reversal of
the routine is the lack of self-discipline. Many night workers enter into the
numerous activities of day life that preclude sleep, and continue to attempt to
do their work at night. Evidence gathered by the British Health of Munition
Workers' Committee places permanent night workers, whether judged on the
basis of output or loss of time, in a very unfavorable positions as compared with
day workers.
Systems of nightwork differ. There is the continuous system, in which
employees labor by night and do not attend the establishment at all by day, and
the discontinuous system, in which the workers change to the day turn at
regular intervals, usually every other week. There are, of course, minor
variations in these systems, depending upon the nature of the industry and the
wishes of management. Such bodies as the British Health Munition Workers'
Committee have given us valuable conclusions concerning the effect of
nightwork. Continuous nightwork is definitely less productive than the
discontinuous system. The output of the continuous day shift does not make up
for this loss in production.
argument against nightwork in the case of women is that the night shift forces
the workers to go to and from the factory in darkness. Recent experiences of
industrial nations have added much to the evidence against the continuation of
nightwork, except in extraordinary circumstances and unavoidable
emergencies. The immediate prohibition of nightwork for all laborers is hardly
practicable; its discontinuance in the case of women employees is
unquestionably desirable. 'The night was made for rest and sleep and not for
work' is a common saying among wage-earning people, and many of them
dream of an industrial order in which there will be no night shift. (Labor
Problems, 3rd Edition, pp. 325-328, by Watkins & Dodd.).
On the merits of the foregoing, the appeal filed by certiorari is denied and the
judgment of the Industrial Claims Court is confirmed, with costs incurred by the
appellant. That's how it is ordered.

There is, moreover, a marked difference between the rates of output of night
and day shifts on the discontinuous plan. In each case investigated the
inferiority of night labor was definitely established. This inferiority is evidently
the result of the night worker's failure to secure proper amounts of sleep and
rest during the day. The system of continuous shifts, especially for women, is
considered by all investigators as undesirable. Women on continuous
nightwork are likely to perform domestic duties, and this added strain
undoubtedly accounts for the poorer results of their industrial activities. The
tendency to devote to amusement and other things the time that should be
spent in rest and sleep is certainly as common among men as among women
workers and accounts largely for the loss of efficiency and time on the part of
both sexes in nightwork.

The case against nightwork, then, may be said to rest upon several grounds. In
the first place, there are the remotely injurious effects of permanent nightwork
manifested in the later years of the worker's life. Of more immediate importance
to the average worker is the disarrangement of his social life, including the
recreational activities of his leisure hours and the ordinary associations of
normal family relations. From an economic point of view, nightwork is to be
discouraged because of its adverse effect upon efficiency and output. A moral
G.R. Nos. 83380-81 November 15, 1989
MAKATI HABERDASHERY, INC., JORGE LEDESMA and CECILIO G.
INOCENCIO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, CEFERINA J. DIOSANA
(Labor Arbiter, Department of Labor and Employment, National Capital
Region), SANDIGAN NG MANGGAGAWANG PILIPINO (SANDIGAN)-TUCP
and its members, JACINTO GARCIANO, ALFREDO C. BASCO, VICTORIO
Y. LAURETO, ESTER NARVAEZ, EUGENIO L. ROBLES, BELEN N. VISTA,
ALEJANDRO A. ESTRABO, VEVENCIO TIRO, CASIMIRO ZAPATA,
GLORIA ESTRABO, LEONORA MENDOZA, MACARIA G. DIMPAS,
MERILYN A. VIRAY, LILY OPINA, JANET SANGDANG, JOSEFINA
ALCOCEBA and MARIA ANGELES, respondents.
Ledesma, Saludo & Associates for petitioners.
Pablo S. Bernardo for private respondents.
FERNAN, C.J.:
This petition for certiorari involving two separate cases filed by private
respondents against herein petitioners assails the decision of respondent
National Labor Relations Commission in NLRC CASE No. 7-2603-84 entitled
"Sandigan Ng Manggagawang Pilipino (SANDIGAN)-TUCP etc., et al. v.
Makati Haberdashery and/or Toppers Makati, et al." and NLRC CASE No.
2-428-85 entitled "Sandigan Ng Manggagawang Pilipino (SANDIGAN)-TUCP
etc., et al. v. Toppers Makati, et al.", affirming the decision of the Labor Arbiter
who jointly heard and decided aforesaid cases, finding: (a) petitioners guilty of
illegal dismissal and ordering them to reinstate the dismissed workers and (b)
the existence of employer-employee relationship and granting respondent
workers by reason thereof their various monetary claims.
The undisputed facts are as follows:
Individual complainants, private respondents herein, have been working for
petitioner Makati Haberdashery, Inc. as tailors, seamstress, sewers, basters
(manlililip) and "plantsadoras". They are paid on a piece-rate basis except
Maria Angeles and Leonila Serafina who are paid on a monthly basis. In
addition to their piece-rate, they are given a daily allowance of three (P 3.00)
pesos provided they report for work before 9:30 a.m. everyday.
Private respondents are required to work from or before 9:30 a.m. up to 6:00 or
7:00 p.m. from Monday to Saturday and during peak periods even on Sundays
and holidays.
On July 20, 1984, the Sandigan ng Manggagawang Pilipino, a labor
organization of the respondent workers, filed a complaint docketed as NLRC
NCR Case No. 7-2603-84 for (a) underpayment of the basic wage; (b)
underpayment of living allowance; (c) non-payment of overtime work; (d)
non-payment of holiday pay; (e) non-payment of service incentive pay; (f) 13th
month pay; and (g) benefits provided for under Wage Orders Nos. 1, 2, 3, 4 and
5.1
During the pendency of NLRC NCR Case No. 7-2603-84, private respondent
Dioscoro Pelobello left with Salvador Rivera, a salesman of petitioner
Haberdashery, an open package which was discovered to contain a "jusi"
barong tagalog. When confronted, Pelobello replied that the same was ordered
by respondent Casimiro Zapata for his customer. Zapata allegedly admitted
that he copied the design of petitioner Haberdashery. But in the afternoon,
when again questioned about said barong, Pelobello and Zapata denied
ownership of the same. Consequently a memorandum was issued to each of
them to explain on or before February 4, 1985 why no action should be taken
against them for accepting a job order which is prejudicial and in direct
competition with the business of the company. 2 Both respondents allegedly did
not submit their explanation and did not report for work. 3 Hence, they were
dismissed by petitioners on February 4, 1985. They countered by filing a
complaint for illegal dismissal docketed as NLRC NCR Case No. 2-428-85 on
February 5, 1985. 4
On June 10, 1986, Labor Arbiter Ceferina J. Diosana rendered judgment, the
dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in NLRC NCR Case No. 2-428-85
finding respondents guilty of illegal dismissal and ordering them to reinstate
Dioscoro Pelobello and Casimiro Zapata to their respective or similar positions
without loss of seniority rights, with full backwages from July 4, 1985 up to
actual reinstatement. The charge of unfair labor practice is dismissed for lack of
merit.
In NLRC NCR Case No. 7-26030-84, the complainants' claims for
underpayment re violation of the minimum wage law is hereby ordered
dismissed for lack of merit.
Respondents are hereby found to have violated the decrees on the cost of
living allowance, service incentive leave pay and the 13th Month Pay. In view
thereof, the economic analyst of the Commission is directed to compute the
monetary awards due each complainant based on the available records of the
respondents retroactive as of three years prior to the filing of the instant case.
SO ORDERED. 5
From the foregoing decision, petitioners appealed to the NLRC. The latter on
March 30, 1988 affirmed said decision but limited the backwages awarded the
Dioscoro Pelobello and Casimiro Zapata to only one (1) year. 6
After their motion for reconsideration was denied, petitioners filed the instant
petition raising the following issues:
I memorandum issued by Assistant Manager Cecilio B. Inocencio, Jr. dated May
THE SUBJECT DECISIONS ERRONEOUSLY CONCLUDED THAT AN
EMPLOYER-EMPLOYEE RELATIONSHIP EXISTS BETWEEN PETITIONER
HABERDASHERY AND RESPONDENTS WORKERS.
II
THE SUBJECT DECISIONS ERRONEOUSLY CONCLUDED THAT
RESPONDENTS WORKERS ARE ENTITLED TO MONETARY CLAIMS
DESPITE THE FINDING THAT THEY ARE NOT ENTITLED TO MINIMUM
WAGE.
III
THE SUBJECT DECISIONS ERRONEOUSLY CONCLUDED THAT
RESPONDENTS PELOBELLO AND ZAPATA WERE ILLEGALLY
DISMISSED. 7
The first issue which is the pivotal issue in this case is resolved in favor of
private respondents. We have repeatedly held in countless decisions that the
test of employer-employee relationship is four-fold: (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 employee's conduct. It is the so
called "control test" that is the most important element. 8 This simply means the
determination of whether the employer controls or has reserved the right to
control the employee not only as to the result of the work but also as to the
means and method by which the same is to be accomplished. 9
The facts at bar indubitably reveal that the most important requisite of control is
present. As gleaned from the operations of petitioner, when a customer enters
into a contract with the haberdashery or its proprietor, the latter directs an
employee who may be a tailor, pattern maker, sewer or "plantsadora" to take
the customer's measurements, and to sew the pants, coat or shirt as specified
by the customer. Supervision is actively manifested in all these aspects — the
manner and quality of cutting, sewing and ironing.
Furthermore, the presence of control is immediately evident in this
30, 1981 addressed to Topper's Makati Tailors which reads in part:
4. Effective immediately, new procedures shall be followed:
A. To follow instruction and orders from the undersigned Roger Valderama,
Ruben Delos Reyes and Ofel Bautista. Other than this person (sic) must ask
permission to the above mentioned before giving orders or instructions to the
tailors.
B. Before accepting the job orders tailors must check the materials, job orders,
due dates and other things to maximize the efficiency of our production. The
materials should be checked (sic) if it is matched (sic) with the sample, together
with the number of the job order.
C. Effective immediately all job orders must be finished one day before the due
date. This can be done by proper scheduling of job order and if you will
cooperate with your supervisors. If you have many due dates for certain day,
advise Ruben or Ofel at once so that they can make necessary adjustment on
due dates.
D. Alteration-Before accepting alteration person attending on customs (sic)
must ask first or must advise the tailors regarding the due dates so that we can
eliminate what we call 'Bitin'.
E. If there is any problem regarding supervisors or co-tailor inside our shop,
consult with me at once settle the problem. Fighting inside the shop is strictly
prohibited. Any tailor violating this memorandum will be subject to disciplinary
action.
For strict compliance. 10
From this memorandum alone, it is evident that petitioner has reserved the right
to control its employees not only as to the result but also the means and
methods by which the same are to be accomplished. That private respondents
are regular employees is further proven by the fact that they have to report for
work regularly from 9:30 a.m. to 6:00 or 7:00 p.m. and are paid an additional
allowance of P 3.00 daily if they report for work before 9:30 a.m. and which is
forfeited when they arrive at or after 9:30 a.m. 11
Since private respondents are regular employees, necessarily the argument
that they are independent contractors must fail. As established in the preceding
paragraphs, private respondents did not exercise independence in their own
methods, but on the contrary were subject to the control of petitioners from the
beginning of their tasks to their completion. Unlike independent contractors
who generally rely on their own resources, the equipment, tools, accessories,
and paraphernalia used by private respondents are supplied and owned by
petitioners. Private respondents are totally dependent on petitioners in all these
aspects.
Coming now to the second issue, there is no dispute that private respondents
are entitled to the Minimum Wage as mandated by Section 2(g) of Letter of
Instruction No. 829, Rules Implementing Presidential Decree No. 1614 and
reiterated in Section 3(f), Rules Implementing Presidential Decree 1713 which
explicitly states that, "All employees paid by the result shall receive not less
than the applicable new minimum wage rates for eight (8) hours work a day,
except where a payment by result rate has been established by the Secretary
of Labor. ..." 12 No such rate has been established in this case.
But all these notwithstanding, the question as to whether or not there is in fact
an underpayment of minimum wages to private respondents has already been
resolved in the decision of the Labor Arbiter where he stated: "Hence, for lack
of sufficient evidence to support the claims of the complainants for alleged
violation of the minimum wage, their claims for underpayment re violation of the
Minimum Wage Law under Wage Orders Nos. 1, 2, 3, 4, and 5 must perforce
fall." 13
The records show that private respondents did not appeal the above ruling of
the Labor Arbiter to the NLRC; neither did they file any petition raising that
issue in the Supreme Court. Accordingly, insofar as this case is concerned, that
issue has been laid to rest. As to private respondents, the judgment may be
said to have attained finality. For it is a well-settled rule in this jurisdiction that
"an appellee who has not himself appealed cannot obtain from the appellate
court-, any affirmative relief other than the ones granted in the decision of the
court below. " 14
As a consequence of their status as regular employees of the petitioners, they
can claim cost of living allowance. This is apparent from the provision defining
the employees entitled to said allowance, thus: "... All workers in the private
sector, regardless of their position, designation or status, and irrespective of the
method by which their wages are paid. " 15
Private respondents are also entitled to claim their 13th Month Pay under
Section 3(e) of the Rules and Regulations Implementing P.D. No. 851 which
provides:
Section 3. Employers covered. — The Decree shall apply to all employers
except to:
xxx xxx xxx
(e) Employers of those who are paid on purely commission, boundary, or task
basis, and those who are paid a fixed amount for performing a specific work,
irrespective of the time consumed in the performance thereof, except where the
workers are paid on piece-rate basis in which case the employer shall be
covered by this issuance insofar as such workers are concerned. (Emphasis
supplied.)
On the other hand, while private respondents are entitled to Minimum Wage,
COLA and 13th Month Pay, they are not entitled to service incentive leave pay
because as piece-rate workers being paid at a fixed amount for performing
work irrespective of time consumed in the performance thereof, they fall under
one of the exceptions stated in Section 1(d), Rule V, Implementing Regulations,
Book III, Labor Code. For the same reason private respondents cannot also
claim holiday pay (Section 1(e), Rule IV, Implementing Regulations, Book III,
Labor Code).
With respect to the last issue, it is apparent that public respondents have
misread the evidence, for it does show that a violation of the employer's rules
has been committed and the evidence of such transgression, the copied
barong tagalog, was in the possession of Pelobello who pointed to Zapata as
the owner. When required by their employer to explain in a memorandum
issued to each of them, they not only failed to do so but instead went on AWOL
(absence without official leave), waited for the period to explain to expire and
for petitioner to dismiss them. They thereafter filed an action for illegal
dismissal on the far-fetched ground that they were dismissed because of union
activities. Assuming that such acts do not constitute abandonment of their jobs
as insisted by private respondents, their blatant disregard of their employer's
memorandum is undoubtedly an open defiance to the lawful orders of the latter,
a justifiable ground for termination of employment by the employer expressly
provided for in Article 283(a) of the Labor Code as well as a clear indication of
guilt for the commission of acts inimical to the interests of the employer,
another justifiable ground for dismissal under the same Article of the Labor
Code, paragraph (c). Well established in our jurisprudence is the right of an
employer to dismiss an employee whose continuance in the service is inimical
to the employer's interest. 16
In fact the Labor Arbiter himself to whom the explanation of private respondents
was submitted gave no credence to their version and found their excuses that
said barong tagalog was the one they got from the embroiderer for the
Assistant Manager who was investigating them, unbelievable.
Under the circumstances, it is evident that there is no illegal dismissal of said
employees. Thus, We have ruled that:
No employer may rationally be expected to continue in employment a person
whose lack of morals, respect and loyalty to his employer, regard for his
employer's rules, and appreciation of the dignity and responsibility of his office,
has so plainly and completely been bared.
That there should be concern, sympathy, and solicitude for the rights and
welfare of the working class, is meet and proper. That in controversies between
a laborer and his master, doubts reasonably arising from the evidence, or in the
interpretation of agreements and writings should be resolved in the former's
favor, is not an unreasonable or unfair rule. But that disregard of the employer's
own rights and interests can be justified by that concern and solicitude is unjust
and unacceptable. (Stanford Microsystems, Inc. v. NLRC, 157 SCRA 414-415
[1988] ).
The law is protecting the rights of the laborer authorizes neither oppression nor
self-destruction of the employer. 17 More importantly, 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 labor dispute will automatically be decided
in favor of labor. 18
Finally, it has been established that the right to dismiss or otherwise impose
discriplinary sanctions upon an employee for just and valid cause, pertains in
the first place to the employer, as well as the authority to determine the
existence of said cause in accordance with the norms of due process. 19
There is no evidence that the employer violated said norms. On the contrary,
private respondents who vigorously insist on the existence of
employer-employee relationship, because of the supervision and control of
their employer over them, were the very ones who exhibited their lack of
respect and regard for their employer's rules.
Under the foregoing facts, it is evident that petitioner Haberdashery had valid
grounds to terminate the services of private respondents.
WHEREFORE, the decision of the National Labor Relations Commission dated
March 30, 1988 and that of the Labor Arbiter dated June 10, 1986 are hereby
modified. The complaint filed by Pelobello and Zapata for illegal dismissal
docketed as NLRC NCR Case No. 2-428-85 is dismissed for lack of factual and
legal bases. Award of service incentive leave pay to private respondents is
deleted.

SO ORDERED.
 [G.R. No. 94825. September 4, 1992.]
PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY, Petitioner, v.
NATIONAL LABOR RELATIONS COMMISSION, and ODIN SECURITY
AGENCY, as representative of its Security Guards, Respondents.
Franklin J. Andrada for Petitioner.
Ramon Encarnacion and Reynato V. Siozon for Private Respondents
SYLLABUS
1. LABOR AND SOCIAL LEGISLATIONS; PRINCIPAL AND CONTRACTOR;
JOINTLY AND SEVERALLY LIABLE FOR PAYMENT OF UNPAID WAGES;
TERM ‘EMPLOYER’ CONSTRUED. — Notwithstanding that the petitioner is a
government agency, its liabilities, which are joint and solidary with that of the
contractor, are provided in Articles 106, 107 and 109 of the Labor Code. This
places the petitioner’s liabilities under the scope of the NLRC. Moreover, Book
Three, Title II on Wages specifically provides that the term "employer" includes
any person acting directly or indirectly in the interest of an employer in relation
to an employee and shall include the Government and all its branches,
subdivisions and instrumentalities, all government-owned or controlled
corporation and institutions as well as non-profit private institutions, or
organizations (Art. 97 [b], Labor Code; Eagle Security Agency, Inc. v. NLRC,
173 SCRA 479 [1989]; Rabago v. NLRC, 200 SCRA 158 [1991]). Settled is the
rule that in job contracting, the petitioner as principal is jointly and severally
liable with the contractor for the payment of unpaid wages. The statutory basis
for the joint and several liability is set forth in Articles 107, and 109 in relation to
Article 106 of the Labor Code.
2. ID.; ID.; ID.; WAGE ORDERS, MANDATORY AND CANNOT BE WAIVED.
— In the case at bar, the action instituted by the private respondent was for the
payment of unpaid wage differentials under Wage Order No. 6. The liabilities of
the parties were very well explained in the case of Eagle Security v. NLRC,
supra where the court held: . . . "The solidary liability of PTSI and EAGLE,
however, does not preclude the right of reimbursement from his co-debtor by
the one who paid [See Article 1217, Civil Code]. It is with respect to this right of
reimbursement that petitioners can find support in the aforecited contractual
stipulation and Wage Order provision. "That Wage Orders are explicit that
payment of the increases are `to be borne’ by the principal or client.’To be
borne’, however, does not mean that the principal, PTSI in this case, would
directly pay the security guards the wage and allowance increases because
there is no privity of contract between them. The security guards’ contractual
relationship is with their immediate employer, EAGLE. As an employer, EAGLE
is tasked, among others, with the payment of their wages [See Article VII Sec. 3
of the Contract for Security Services, supra and Bautista v. Inciong, G.R. No.
52824, March 16, 1988, 158 SCRA 556]. . . . The Wage Orders are statutory
and mandatory and can not be waived. The petitioner can not escape liability
since the law provides the joint and solidary liability of the principal and the
contractor for the protection of the laborers.
3. ID.; ID.; ID.; DUE PROCESS OBSERVED IN CASE AT BAR. — The
contention that it was deprived due process because no hearing was
conducted does not deserve merit. A decision on the merits is proper where the
issues raised by the parties did not involve intricate questions of law. (See Blue
Bar Coconut Phils. Inc. v. Minister of Labor, 174 SCRA 25 [1989]) There can be
no question that the security guards are entitled to wage adjustments. The
computation of the amount due to each individual guard can be made during
the execution of the decision where hearings can be held. (See Section 3, Rule
VIII of the New Rules of Procedure of the NLRC).
4. ID.; INDIRECT EMPLOYER; ESTOPPED FROM ASSAILING CONTRACT.
— Petitioner assail the contract for security services for being void ab initio on
the ground that it did not comply with the bidding requirements set by law.
Undeniably, services were rendered already and the petitioner benefitted from
said contract for two (2) years now. The petitioner is therefore estopped from
assailing the contract.
5. ID.; PHIL. ASSOCIATION OF DETECTIVE AND PROTECTIVE AGENCY
OPERATORS (PADPAO); PURPOSE FOR ITS CREATION. — In the
complaint filed, the private respondent alleged that it requested the Regional
Director, NCR Region of the Department of Labor and Employment for their
intercession in connection with the illegal bidding and award made by the
petitioner in favor of Triad Security Agency which was below the minimum
wage law. Undeniably, the private respondent is equally guilty when it entered
into the contract with the petitioner without considering Wage Order No. 6. The
private respondent tries to explain that the Philippine Association of Detective
and Protective Agency Operators (PADPAO) which fixes the contract rate of respondent is also at fault for entering into the contract without taking into
the security agencies was unable to fix the new contract rate until May 12, 1986. consideration the minimum wage rates under Wage Order No. 6.
We, however, agree with the posture that the setting of wages under PADPAO
is of no moment. The PADPAO memorandum was not necessary to make
Wage Order No. 6 effective. The PADPAO memo was merely an internal
agreement among the operators to set the ceiling of the contract rates. It was
aimed to curb the practice of security agencies which were in cutthroat
competition to request for wage adjustments after proposals were accepted in
good faith to the prejudice of the parties. DECISION

6. ID.; SECURITY AGENCY; CANNOT ESCAPE LIABILITY FOR PAYMENT

OF UNPAID WAGES; PAYMENT OF WAGES TO EMPLOYEES
GUARANTEED UNDER THE CONSTITUTION. — it bears emphasis that it GUTIERREZ, JR., J.:
was the private respondent which first deprived the security personnel of their
rightful wage under Wage Order No. 6. The private respondent is the employer
of the security guards and as the employer, it is charged with knowledge of
The petitioner questions the resolution of the National Labor Relations
labor laws and the adequacy of the compensation that it demands for
Commission (NLRC) dated January 17, 1983 setting aside the order of
contractual services is its principal concern and not any other’s (Del Rosario &
dismissal issued by the Labor Arbiter and the resolution dated June 25, 1990
Sons Logging Enterprises, Inc. v. NLRC, 136 SCRA 669 [1985]). Given this
denying petitioner’s motion for reconsideration.
peculiar circumstance, the private respondent should also be faulted for the
unpaid wage differentials of the security guards. By filing the complaint in its
The facts are as follows:chanrob1es virtual 1aw library
own behalf and in behalf of the security guards, the private respondent wishes
to exculpate itself from liability on the strength of the ruling in the Eagle case
The petitioner is a government-owned or controlled corporation created by P.D.
that the ultimate liability rests with the principal. Nonetheless, the inescapable
No. 977.
fact is that the employees must be guaranteed payment of the wages due them
for the performance of any work, task, job or project. They must be given ample
On November 11, 1985, it entered into a contract with the Odin Security
protection as mandated by the Constitution (See Article II, Section 18 and
Agency for security services of its Iloilo Fishing Port Complex in Iloilo City. The
Article XIII, Section 3). Thus, to assure compliance with the provisions of the
pertinent provision of the contract provides:chanrobles.com : virtual law library
Labor Code including the statutory minimum wage, the joint and several liability
of the contractor and the principal is mandated.
OBLIGATION OF THE FISHING PORT COMPLEX:chanrob1es virtual 1aw
library
7. ID.; SOLIDARY LIABILITY OF PRINCIPAL AND CONTRACTOR; WITHOUT
PREJUDICE TO THE RIGHT OF REIMBURSEMENT TO EITHER PRINCIPAL
1. For and in consideration of the services to be rendered by the AGENCY to
OR DIRECT EMPLOYER AS WARRANTED. — We hold the petitioner and the
the FISHING PORT COMPLEX, the latter shall pay to the former per month for
private respondent jointly and severally liable to the security guards for the
eight (8) hours work daily as follows:chanrob1es virtual 1aw library
unpaid wage differentials under Wage Order No. 6. As held in the Eagle case,
the security guards’ immediate recourse is with their direct employer, private
OUTSIDE METRO MANILA
respondent Odin Security Agency. The solidary liability is, however, without
prejudice to a claim for reimbursement by the private respondent against the
Security Guard P1,990.00
petitioner for only one-half of the amount due considering that the private
 desiring to terminate the contract before the expiry date shall give thirty (30)
Security Supervisor 2,090.00 days written advance notice to the other party. (Rollo, p. 198)

Det. Commander 2,190.00.
The Security Group of the AGENCY will be headed by a detachment
commander whose main function shall consist of the administration and
supervision control of the AGENCY’s personnel in the FISHING PORT
COMPLEX. There shall be one supervisor per shift who shall supervise the
guards on duty during a particular shift.
On October 24, 1987, and during the effectivity of the said Security Agreement,
the private respondent requested the petitioner to adjust the contract rate in
view of the implementation of Wage Order No. 6 which took effect on
November 1, 1984.chanroblesvirtualawlibrary
The private respondent’s request for adjustment was anchored on the provision
of Wage Order No. 6 which states:chanrob1es virtual 1aw library

The above schedule of compensation
following:chanrob1es virtual 1aw library
(a) Minimum wage (Wage Order No. 5)
(b) Rest Day Pay
(c) Night Differential Pay
(d) Incentive Leave Pay
(e) 13th Month Pay
(f) Emergency Cost of Living Allowance (up to Wage Order No. 5)
includes among others, the SECTION 9. In the case of contracts for construction projects and for security,
janitorial and similar services, the increases in the minimum wage and
allowance rates of the workers shall be borne by the principal or client of the
construction/service contractor and the contracts shall be deemed amended
accordingly, subject to the provisions of Section 3(c) of this Order. (Rollo, p. 49)
Section 7, par. c of the Security Services Contract which calls for an automatic
escalation of the rate per guard in case of wage increase also
reads:chanrob1es virtual 1aw library
The terms and conditions herein set forth shall be modified by the applicable
provisions of subsequent laws or decrees, especially as they pertain to
increases in the minimum wage and occupational benefits to workers. (Rollo, p.
46)

(g) 4% Contractor’s Tax Requests for adjustment of the contract price were reiterated on January 14,
1988 and February 19, 1988 but were ignored by the petitioner.
(h) Operational Expenses
Thus on June 7, 1988, the private respondent filed with the Office of the
(i) Overhead (Rollo, pp. 197-198) Sub-Regional Arbitrator in Region VI, Iloilo City a complaint for unpaid amount
of re-adjustment rate under Wage Order No. 6 together with wage salary
The contract for security services also provided for a one year renewable differentials arising from the integration of the cost of living allowance under
period unless terminated by either of the parties. It reads:chanrob1es virtual Wage Order No. 1, 2, 3 and 5 pursuant to Executive Order No. 178 plus the
1aw library amount of P25,000.00 as attorney’s fees and cost of litigation.

9. This agreement shall take effect upon approval for a period of one (1) year On July 29, 1988, the petitioner filed a Motion to Dismiss on the following
unless sooner terminated upon notice of one party to the other provided, that grounds:chanrob1es virtual 1aw library
should there be no notice of renewal within thirty (30) days before the expiry
date, the same shall be deemed renewed, and provided further, that the party (1) The Commission has no jurisdiction to hear and try the case;

(2) Assuming it has jurisdiction, the security guards of Odin Security Agency
have no legal personality to sue or be sued; and
(3) Assuming the individual guards have legal personality the action involves
interpretation of contract over which it has no authority. (Rollo, p. 75)
On August 19, 1988, the Labor Arbiter issued an Order dismissing the
complaint stating that the petitioner’s being a government-owned or controlled
corporation would place it under the scope and jurisdiction of the Civil Service
Commission and not within the ambit of the NLRC.
This Order of dismissal was raised on Appeal to the NLRC and on January 17,
1989 the NLRC issued the questioned resolution setting aside the order and
entered a decision granting reliefs to the private Respondent.
A motion for reconsideration was subsequently filed raising among others that
the resolution is:chanroblesvirtualawlibrary
(1) In violation of the right of the respondent to due process under the
Constitution;
(2) Granting arguendo that the due process clause was observed, the
resolution granting relief is without any legal basis; and
(3) Granting arguendo that there is legal basis for the award, the stipulation
under the contract allowing an increase of wage rate is void ab initio. (Rollo, p.
86)
On June 25, 1990, the motion for reconsideration was denied.
The petitioner now comes to this Court reiterating substantially the same
grounds it raised in its motion for reconsideration, to wit:chanrob1es virtual 1aw
library
(1) The National Labor Relations Commission failed to observe due process.
(2) Granting the award of the National Labor Relations Commission is valid,
reliefs granted are not legal.
(3) Assuming the award complies with the requirements of due process, the
National Labor Relations Commission erred when it failed to declare the
contract for security services void. (Rollo, pp. 201-202)
The petitioner is a government-owned or controlled corporation with a special
charter. This places it under the scope of the civil service (Art. XI [B] [1] and [2],
1987 Constitution); Boy Scouts of the Philippines v. NLRC, 196 SCRA 176
[1991]; PNOC-Energy Development Corp. v. NLRC, 201 SCRA 487 [1991]).
However, the guards are not employees of the petitioner. The contract of
services explicitly states that the security guards are not considered employees
of the petitioner (Rollo, p. 45). There being no employer-employee relationship
between the petitioner and the security guards, the jurisdiction of the Civil
Service Commission may not be invoked in this case.
The contract entered into by the petitioner which is merely job contracting
makes the petitioner an indirect employer. The issue, therefore, is whether or
not an indirect employer is bound by the rulings of the NLRC.
Notwithstanding that the petitioner is a government agency, its liabilities, which
are joint and solidary with that of the contractor, are provided in Articles 106,
107 and 109 of the Labor Code. This places the petitioner’s liabilities under the
scope of the NLRC. Moreover, Book Three, Title II on Wages specifically
provides that the term "employer" includes any person acting directly or
indirectly in the interest of an employer in relation to an employee and shall
include the Government and all its branches, subdivisions and instrumentalities,
all government-owned or controlled corporation and institutions as well as
non-profit private institutions, or organizations (Art. 97 [b], Labor Code; Eagle
Security Agency, Inc. v. NLRC, 173 SCRA 479 [1989]; Rabago v. NLRC, 200
SCRA 158 [1991]). The NLRC, therefore, did not commit grave abuse of
discretion in assuming jurisdiction to set aside the Order of dismissal by the
Labor Arbiter.chanrobles virtual lawlibrary
The underlying issue in this case is who should carry the burden of the wage
increases.
Settled is the rule that in job contracting, the petitioner as principal is jointly and
severally liable with the contractor for the payment of unpaid wages. The
statutory basis for the joint and several liability is set forth in Articles 107, and
109 in relation to Article 106 of the Labor Code. (Del Rosario and Sons Logging
Enterprises, Inc. v. NLRC, 136 SCRA 669 [1985]; Baguio v. NLRC, 202 SCRA
465 [1991]; Ecal v. NLRC, 195 SCRA 224 [1991]). In the case at bar, the action issues raised by the parties did not involve intricate questions of law. (See Blue
instituted by the private respondent was for the payment of unpaid wage Bar Coconut Phils. Inc. v. Minister of Labor, 174 SCRA 25 [1989]) There can be
differentials under Wage Order No. 6. The liabilities of the parties were very no question that the security guards are entitled to wage adjustments. The
well explained in the case of Eagle Security v. NLRC, supra where the court computation of the amount due to each individual guard can be made during
held:chanrob1es virtual 1aw library the execution of the decision where hearings can be held. (See Section 3, Rule
VIII of the New Rules of Procedure of the NLRC) Neither can the petitioner
x x x assail the contract for security services for being void ab initio on the ground
that it did not comply with the bidding requirements set by law. Undeniably,
services were rendered already and the petitioner benefitted from said contract
for two (2) years now. The petitioner is therefore estopped from assailing the
"The solidary liability of PTSI and EAGLE, however, does not preclude the right
contract.chanrobles law library : red
of reimbursement from his co-debtor by the one who paid [See Article 1217,
Civil Code]. It is with respect to this right of reimbursement that petitioners can
Quite noteworthy is the fact that the private respondent entered into the
find support in the aforecited contractual stipulation and Wage Order provision.
contract when Wage Order No. 6 had already been in force. The contract was
entered into in November 11, 1985 one year after the effectivity of Wage Order
"The Wage Orders are explicit that payment of the increases are `to be borne’
No. 6 which was on November 1, 1984. The rates of the security guards as
by the principal or client.’To be borne’, however, does not mean that the
stipulated in the contract did not consider the increases in the minimum wage
principal, PTSI in this case, would directly pay the security guards the wage
mandated by Wage Order No. 6. Two years after, the private respondent is now
and allowance increases because there is no privity of contract between them.
asking for an adjustment in the contract price pursuant to the wage order
The security guards’ contractual relationship is with their immediate employer,
provision.
EAGLE. As an employer, EAGLE is tasked, among others, with the payment of
their wages [See Article VII Sec. 3 of the Contract for Security Services, supra
Such action of the private respondent is rather disturbing and must not remain
and Bautista v. Inciong, G.R. No. 52824, March 16, 1988, 158 SCRA 556].
unchecked. In the complaint filed, the private respondent alleged that it
requested the Regional Director, NCR Region of the Department of Labor and
"Premises considered, the security guards’ immediate recourse for the
Employment for their intercession in connection with the illegal bidding and
payment of the increases is with their direct employer, EAGLE. However, in
award made by the petitioner in favor of Triad Security Agency which was
order for the security agency to comply with the new wage and allowance rates
below the minimum wage law. Undeniably, the private respondent is equally
it has to pay the security guards, the Wage Order made specific provision to
guilty when it entered into the contract with the petitioner without considering
amend existing contracts for security services by allowing the adjustment of the
Wage Order No. 6.
consideration paid by the principal to the security agency concerned. What the
Wage Orders require, therefore, is the amendment of the contract as to the
The private respondent tries to explain that the Philippine Association of
consideration to cover the service contractor’s payment of the increases
Detective and Protective Agency Operators (PADPAO) which fixes the contract
mandated. In the end, therefore, ultimate liability for the payment of the
rate of the security agencies was unable to fix the new contract rate until May
increases rests with the principal."cralaw virtua1aw library
12, 1986.
The Wage Orders are statutory and mandatory and can not be waived. The
We, however, agree with the posture that the setting of wages under PADPAO
petitioner can not escape liability since the law provides the joint and solidary
is of no moment. The PADPAO memorandum was not necessary to make
liability of the principal and the contractor for the protection of the laborers. The
Wage Order No. 6 effective. The PADPAO memo was merely an internal
contention that it was deprived due process because no hearing was
agreement among the operators to set the ceiling of the contract rates. It was
conducted does not deserve merit. A decision on the merits is proper where the
aimed to curb the practice of security agencies which were in cutthroat
competition to request for wage adjustments after proposals were accepted in Costs against the petitioner.
good faith to the prejudice of the parties.chanrobles.com.ph : virtual law library
SO ORDERED.
While it is true that security personnel should not be deprived of what is lawfully
due them, it bears emphasis that it was the private respondent which first
deprived the security personnel of their rightful wage under Wage Order No. 6.
The private respondent is the employer of the security guards and as the
employer, it is charged with knowledge of labor laws and the adequacy of the
compensation that it demands for contractual services is its principal concern
and not any other’s (Del Rosario & Sons Logging Enterprises, Inc. v. NLRC,
136 SCRA 669 [1985]).

Given this peculiar circumstance, the private respondent should also be faulted
for the unpaid wage differentials of the security guards. By filing the complaint
in its own behalf and in behalf of the security guards, the private respondent
wishes to exculpate itself from liability on the strength of the ruling in the Eagle
case that the ultimate liability rests with the principal. Nonetheless, the
inescapable fact is that the employees must be guaranteed payment of the
wages due them for the performance of any work, task, job or project. They
must be given ample protection as mandated by the Constitution (See Article II,
Section 18 and Article XIII, Section 3). Thus, to assure compliance with the
provisions of the Labor Code including the statutory minimum wage, the joint
and several liability of the contractor and the principal is mandated.

We, therefore, hold the petitioner and the private respondent jointly and
severally liable to the security guards for the unpaid wage differentials under
Wage Order No. 6. As held in the Eagle case, the security guards’ immediate
recourse is with their direct employer, private respondent Odin Security Agency.
The solidary liability is, however, without prejudice to a claim for reimbursement
by the private respondent against the petitioner for only one-half of the amount
due considering that the private respondent is also at fault for entering into the
contract without taking into consideration the minimum wage rates under Wage
Order No. 6.chanrobles lawlibrary : rednad

WHEREFORE, the questioned resolutions of the National Labor Relations

Commission are hereby AFFIRMED with the modification that both the
petitioner and the private respondent are ORDERED to pay jointly and
severally the unpaid wage differentials under Wage Order No. 6 without
prejudice to the right of reimbursement for one-half of the amount which either
the petitioner or the private respondent may have to pay to the security guards.
 G.R. No. 121439. January 25, 2000
AKLAN ELECTRIC COOPERATIVE INCORPORATED (AKELCO), Petitioner,
vs. NATIONAL LABOR RELATIONS COMMISSION (Fourth Division),
RODOLFO M. RETISO and 165 OTHERS,1 Respondents.
DECISION
GONZAGA-REYES, J.:
In his petition for certiorari and prohibition with prayer for writ of preliminary
injunction and/or temporary restraining order, petitioner assails (a) the decision
dated April 20, 1995, of public respondent National Labor Relations
Commission (NLRC), Fourth (4th) Division, Cebu City, in NLRC Case No.
V-0143-94 reversing the February 25, 1994 decision of Labor Arbiter Dennis D.
Juanon and ordering petitioner to pay wages in the aggregate amount of
P6,485,767.90 to private respondents, and (b) the resolution dated July 28,
1995 denying petitioners motion for reconsideration, for having been issued
with grave abuse of discretion.
A temporary restraining order was issued by this Court on October 9, 1995
enjoining public respondent from executing the questioned decision upon a
surety bond posted by petitioner in the amount of
P6,400,000.00.2cräläwvirtualibräry
The facts as found by the Labor Arbiter are as follows:3cräläwvirtualibräry
"These are consolidated cases/claims for non-payment of salaries and wages,
13th month pay, ECOLA and other fringe benefits as rice, medical and clothing
allowances, submitted by complainant Rodolfo M. Retiso and 163 others, Lyn E.
Banilla and Wilson B. Sallador against respondents Aklan Electric Cooperative,
Inc. (AKELCO), Atty. Leovigildo Mationg in his capacity as General Manager;
Manuel Calizo, in his capacity as Acting Board President, Board of Directors,
AKELCO.
Complainants alleged that prior to the temporary transfer of the office of
AKELCO from Lezo Aklan to Amon Theater, Kalibo, Aklan, complainants were
continuously performing their task and were duly paid of their salaries at their
main office located at Lezo, Aklan.
That on January 22, 1992, by way of resolution of the Board of Directors of
AKELCO allowed the temporary transfer holding of office at Amon Theater,
Kalibo, Aklan per information by their Project Supervisor, Atty. Leovigildo
Mationg, that their head office is closed and that it is dangerous to hold office
thereat;
Nevertheless, majority of the employees including herein complainants
continued to report for work at Lezo Aklan and were paid of their salaries.
That on February 6, 1992, the administrator of NEA, Rodrigo Cabrera, wrote a
letter addressed to the Board of AKELCO, that he is not interposing any
objections to the action taken by respondent Mationg
That on February 11, 1992, unnumbered resolution was passed by the Board
of AKELCO withdrawing the temporary designation of office at Kalibo, Aklan,
and that the daily operations must be held again at the main office of Lezo,
Aklan;4cräläwvirtualibräry
That complainants who were then reporting at the Lezo office from January
1992 up to May 1992 were duly paid of their salaries, while in the meantime
some of the employees through the instigation of respondent Mationg
continued to remain and work at Kalibo, Aklan;
That from June 1992 up to March 18, 1993, complainants who continuously
reported for work at Lezo, Aklan in compliance with the aforementioned
resolution were not paid their salaries;
That on March 19, 1993 up to the present, complainants were again allowed to
draw their salaries; with the exception of a few complainants who were not paid
their salaries for the months of April and May 1993;
Per allegations of the respondents, the following are the facts:
1. That these complainants voluntarily abandoned their respective work/job
assignments, without any justifiable reason and without notifying the
management of the Aklan Electric Cooperative, Inc. (AKELCO), hence the
cooperative suffered damages and systems loss;
2. That the complainants herein defied the lawful orders and other issuances by
the General Manager and the Board of Directors of the AKELCO. These
complainants were requested to report to work at the Kalibo office x x x but
despite these lawful orders of the General Manager, the complainants did not
follow and wilfully and maliciously defied said orders and issuance of the
General Manager; that the Board of Directors passed a Resolution resisting
and denying the claims of these complainants, x x x under the principle of "no
work no pay" which is legally justified; That these complainants have "mass
leave" from their customary work on June 1992 up to March 18, 1993 and had
a "sit-down" stance for these periods of time in their alleged protest of the
appointment of respondent Atty. Leovigildo Mationg as the new General
Manager of the Aklan Electric Cooperative, Inc. (AKELCO) by the Board of
Directors and confirmed by the Administrator of the National Electrification
Administration (NEA), Quezon City; That they engaged in " . . . slowdown mass
leaves, sit downs, attempts to damage, destroy or sabotage plant equipment
and facilities of the Aklan Electric Cooperative, Inc. (AKELCO)."
On February 25, 1994, a decision was rendered by Labor Arbiter Dennis D.
Juanon dismissing the complaints.5cräläwvirtualibräry
Dissatisfied with the decision, private respondents appealed to the respondent
Commission.
On appeal, the NLRCs Fourth Division, Cebu City,6 reversed and set aside the
Labor Arbiters decision and held that private respondents are entitled to unpaid
wages from June 16, 1992 to March 18, 1993, thus:7cräläwvirtualibräry
"The evidence on records, more specifically the evidence submitted by the
complainants, which are: the letter dated April 7, 1993 of Pedrito L. Leyson,
Office Manager of AKELCO (Annex "C"; complainants position paper; Rollo,
p.102) addressed to respondent Atty. Leovigildo T. Mationg; respondent
AKELCO General Manager; the memorandum of said Atty. Mationg dated 14
April 1993, in answer to the letter of Pedrito Leyson (Annex "D" complainants
position paper); as well as the computation of the unpaid wages due to
complainants (Annexes "E" to "E-3"; complainants position paper, Rollo, pages
1024 to 1027) clearly show that complainants had rendered services during the
period - June 16, 1992 to March 18, 1993. The record is bereft of any showing
that the respondents had submitted any evidence, documentary or otherwise,
to controvert this asseveration of the complainants that services were rendered
during this period. Subjecting these evidences submitted by the complainants
to the crucible of scrutiny, We find that respondent Atty. Mationg responded to
the request of the Office Manager, Mr. Leyson, which We quote, to wit:
"Rest assured that We shall recommend your aforesaid request to our Board of
Directors for their consideration and appropriate action. This payment, however,
shall be subject, among others, to the availability of funds."
This assurance is an admission that complainants are entitled to payment for
services rendered from June 16, 1992 to March 18, 1993, specially so that the
recommendation and request comes from the office manager himself who has
direct knowledge regarding the services and performance of employees under
him. For how could one office manager recommend payment of wages, if no
services were rendered by employees under him. An office manager is the
most qualified person to know the performance of personnel under him. And
therefore, any request coming from him for payment of wages addressed to his
superior as in the instant case shall be given weight.
Furthermore, the record is clear that complainants were paid of their wages and
other fringe benefits from January, 1992 to May, 1992 and from March 19, 1993
up to the time complainants filed the instant cases. In the interegnum, from
June 16, 1992 to March 18, 1993, complainants were not paid of their salaries,
hence these claims. We could see no rhyme nor reason in respondents refusal
to pay complainants salaries during this period when complainants had worked
and actually rendered service to AKELCO.
While the respondents maintain that complainants were not paid during this
interim period under the principle of "no work, no pay", however, no proof was
submitted by the respondents to substantiate this allegation. The labor arbiter,
therefore, erred in dismissing the claims of the complainants, when he adopted
the "no work, no pay" principle advanced by the respondents.
WHEREFORE, in view of the foregoing, the appealed decision dated February
25, 1994 is hereby Reversed and Set Aside and a new one entered ordering
respondent AKELCO to pay complainants their claims amounting to
P6,485,767.90 as shown in the computation (Annexes "E" to "E-3")."
A motion for reconsideration was filed by petitioner but the same was denied by
public respondent in a resolution dated July 28, 1995.8cräläwvirtualibräry
Petitioner brought the case to this Court alleging that respondent NLRC
committed grave abuse of discretion citing the following
grounds:9cräläwvirtualibräry
1. PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION
IN REVERSING THE FACTUAL FINDINGS AND CONCLUSIONS OF THE
LABOR ARBITER, AND DISREGARDING THE EXPRESS ADMISSION OF
PRIVATE RESPONDENTS THAT THEY DEFIED PETITIONERS ORDER
TRANSFERRING THE PETITIONERS OFFICIAL BUSINESS OFFICE FROM
LEZO TO KALIBO AND FOR THEM TO REPORT THEREAT.
2. PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION
IN CONCLUDING THAT PRIVATE RESPONDENTS WERE REALLY
WORKING OR RENDERING SERVICE ON THE BASIS OF THE
COMPUTATION OF WAGES AND THE BIASED RECOMMENDATION
SUBMITTED BY LEYSON WHO IS ONE OF THE PRIVATE RESPONDENTS
WHO DEFIED THE LAWFUL ORDERS OF PETITIONER.
3. PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION
IN CONSIDERING THE ASSURANCE BY PETITIONERS GENERAL
MANAGER MATIONG TO RECOMMEND THE PAYMENT OF THE CLAIMS
OF PRIVATE RESPONDENTS AS AN ADMISSION OF LIABILITY OR A
RECOGNITION THAT COMPENSABLE SERVICES WERE ACTUALLY
RENDERED.
4. GRANTING THAT PRIVATE RESPONDENTS CONTINUED TO REPORT
AT THE LEZO OFFICE, IT IS STILL GRAVE ABUSE OF DISCRETION FOR
PUBLIC RESPONDENT TO CONSIDER THAT PETITIONER IS LEGALLY
OBLIGATED TO RECOGNIZE SAID CIRCUMSTANCE AS COMPENSABLE
SERVICE AND PAY WAGES TO PRIVATE RESPONDENTS FOR DEFYING
THE ORDER FOR THEM TO REPORT FOR WORK AT THE KALIBO OFFICE
WHERE THE OFFICIAL BUSINESS AND OPERATIONS WERE
CONDUCTED.
5. PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION
AND SERIOUS, PATENT AND PALPABLE ERROR IN RULING THAT THE
"NO WORK, NO PAY" PRINCIPLE DOES NOT APPLY FOR LACK OF
EVIDENTIARY SUPPORT WHEN PRIVATE REPONDENTS ALREADY
ADMITTED THAT THEY DID NOT REPORT FOR WORK AT THE KALIBO
OFFICE.
6. PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION
IN ACCORDING WEIGHT AND CREDIBILITY TO THE SELF-SERVING AND
BIASED ALLEGATIONS OF PRIVATE RESPONDENTS, AND ACCEPTING
THEM AS PROOF, DESPITE THE ESTABLISHED FACT AND ADMISSION
THAT PRIVATE RESPONDENTS DID NOT REPORT FOR WORK AT THE
KALIBO OFFICE, OR THAT THEY WERE NEVER PAID FOR ANY WAGES
FROM THE TIME THEY DEFIED PETITIONERS ORDERS.
Petitioner contends that public respondent committed grave abuse of discretion
in finding that private respondents are entitled to their wages from June 16,
1992 to March 18, 1993, thus disregarding the principle of "no work, no pay". It
alleges that private respondents stated in their pleadings that they not only
objected to the transfer of petitioners business office to Kalibo but they also
defied the directive to report thereat because they considered the transfer
illegal. It further claims that private respondents refused to recognize the
authority of petitioners lawful officers and agents resulting in the disruption of
petitioners business operations in its official business office in Lezo, AKlan,
forcing petitioner to transfer its office from Lezo to Kalibo transferring all its
equipments, records and facilities; that private respondents cannot choose
where to work, thus, when they defied the lawful orders of petitioner to report at
Kalibo, private respondents were considered dismissed as far as petitioner was
concerned. Petitioner also disputes private respondents allegation that they
were paid their salaries from January to May 1992 and again from March 19,
1993 up to the present but not for the period from June 1992 to March 18, 1993
saying that private respondents illegally collected fees and charges due
petitioner and appropriated the collections among themselves for which reason
they are claiming salaries only for the period from June 1992 to March 1993
and that private respondents were paid their salaries starting only in April 1993
when petitioners Board agreed to accept private respondents back to work at
Kalibo office out of compassion and not for the reason that they rendered
service at the Lezo office. Petitioner also adds that compensable service is best
shown by timecards, payslips and other similar documents and it was an error
for public respondent to consider the computation of the claims for wages and
benefits submitted merely by private respondents as substantial evidence.
The Solicitor General filed its Manifestation in lieu of Comment praying that the
decision of respondent NLRC be set aside and payment of wages claimed by
private respondents be denied for lack of merit alleging that private
respondents could not have worked for petitioner's office in Lezo during the
stated period since petitioner transferred its business operation in Kalibo where
all its records and equipments were brought; that computations of the claims for
wages and benefits submitted by private respondents to petitioner is not proof
of rendition of work. Filing its own Comment, public respondent NLRC claims
that the original and exclusive jurisdiction of this Court to review decisions or
resolutions of respondent NLRC does not include a correction of its evaluation
of evidence as factual issues are not fit subject for certiorari.
Private respondents, in their Comment, allege that review of a decision of
NLRC in a petition for certiorari under Rule 65 does not include the correctness
of its evaluation of the evidence but is confined to issues of jurisdiction or grave
abuse of discretion and that factual findings of administrative bodies are
entitled to great weight, and accorded not only respect but even finality when
supported by substantial evidence. They claim that petitioner's Board of
Directors passed an unnumbered resolution on February 11, 1992 returning
back the office to Lezo from Kalibo Aklan with a directive for all employees to
immediately report at Lezo; that the letter-reply of Atty. Mationg to the letter of
office manager Leyson that he will recommend the payment of the private
respondents' salary from June 16, 1992 to March 18, 1993 to the Board of
Directors was an admission that private respondents are entitled to such
payment for services rendered. Private respondents state that in appreciating
the evidence in their favor, public respondent NLRC at most may be liable for
errors of judgment which, as differentiated from errors of jurisdiction, are not
within the province of the special civil action of certiorari.
Petitioner filed its Reply alleging that review of the decision of public
respondent is proper if there is a conflict in the factual findings of the labor
arbiter and the NLRC and when the evidence is insufficient and insubstantial to
support NLRCs factual findings; that public respondents findings that private
respondents rendered compensable services were merely based on private
respondents computation of claims which is self-serving; that the alleged
unnumbered board resolution dated February 11, 1992, directing all employees
to report to Lezo Office was never implemented because it was not a valid
action of AKELCOs legitimate board.
The sole issue for determination is whether or not public respondent NLRC
committed grave abuse of discretion amounting to excess or want of jurisdiction
when it reversed the findings of the Labor Arbiter that private respondents
refused to work under the lawful orders of the petitioner AKELCO management;
hence they are covered by the "no work, no pay" principle and are thus not
entitled to the claim for unpaid wages from June 16, 1992 to March 18, 1993.
We find merit in the petition.
At the outset, we reiterate the rule that in certiorari proceedings under Rule 65,
this Court does not assess and weigh the sufficiency of evidence upon which
the labor arbiter and public respondent NLRC based their resolutions. Our
query is limited to the determination of whether or not public respondent NLRC
acted without or in excess of its jurisdiction or with grave abuse of discretion in
rendering the assailed resolutions.10 While administrative findings of fact are
accorded great respect, and even finality when supported by substantial
evidence, nevertheless, when it can be shown that administrative bodies
grossly misappreciated evidence of such nature as to compel a contrary
conclusion, this court had not hesitated to reverse their factual
findings.11 Factual findings of administrative agencies are not infallible and will
be set aside when they fail the test of arbitrariness. 12 Moreover, where the
findings of NLRC contradict those of the labor arbiter, this Court, in the exercise
of its equity jurisdiction, may look into the records of the case and reexamine
the questioned findings.13cräläwvirtualibräry
We find cogent reason, as shown by the petitioner and the Solicitor General,
not to affirm the factual findings of public respondent NLRC.
We do not agree with the finding that private respondents had rendered
services from June 16, 1992 to March 18, 1993 so as to entitle them to
payment of wages. Public respondent based its conclusion on the following: (a)
the letter dated April 7, 1993 of Pedrito L. Leyson, Office Manager of AKELCO
addressed to AKELCOs General Manager, Atty. Leovigildo T. Mationg,
requesting for the payment of private respondents unpaid wages from June 16,
1992 to March 18, 1993; (b) the memorandum of said Atty. Mationg dated 14
April 1993, in answer to the letter request of Pedrito Leyson where Atty.
Mationg made an assurance that he will recommend such request; (c) the
private respondents own computation of their unpaid wages. We find that the
foregoing does not constitute substantial evidence to support the conclusion
that private respondents are entitled to the payment of wages from June 16,
1992 to March 18, 1993. Substantial evidence is that amount of relevant
evidence which a reasonable mind might accept as adequate to justify a
conclusion.14 These evidences relied upon by public respondent did not
establish the fact that private respondents actually rendered services in the
Kalibo office during the stated period.
The letter of Pedrito Leyson to Atty. Mationg was considered by public
respondent as evidence that services were rendered by private respondents
during the stated period, as the recommendation and request came from the
office manager who has direct knowledge regarding the services and
performance of employees under him. We are not convinced. Pedrito Leyson is
one of the herein private respondents who are claiming for unpaid wages and
we find his actuation of requesting in behalf of the other private respondents for
the payment of their backwages to be biased and self-serving, thus not
credible.
On the other hand, petitioner was able to show that private respondents did not
render services during the stated period. Petitioners evidences show that on
January 22, 1992, petitioners Board of Directors passed a resolution
temporarily transferring the Office from Lezo, Aklan to Amon Theater, Kalibo,
Aklan upon the recommendation of Atty. Leovigildo Mationg, then project
supervisor, on the ground that the office at Lezo was dangerous and unsafe.
Such transfer was approved by then NEA Administrator, Rodrigo E. Cabrera, in
a letter dated February 6, 1992 addressed to petitioners Board of
Directors.15 Thus, the NEA Administrator, in the exercise of supervision and
control over all electric cooperatives, including petitioner, wrote a letter dated
February 6, 1992 addressed to the Provincial Director PC/INP Kalibo Aklan
requesting for military assistance for the petitioners team in retrieving the
electric cooperatives equipments and other removable facilities and/or fixtures
consequential to the transfer of its principal business address from Lezo to
Kalibo and in maintaining peace and order in the cooperatives coverage
area.16 The foregoing establishes the fact that the continuous operation of the
petitioners business office in Lezo Aklan would pose a serious and imminent
threat to petitioners officials and other employees, hence the necessity of
temporarily transferring the operation of its business office from Lezo to Kalibo.
Such transfer was done in the exercise of a management prerogative and in the
absence of contrary evidence is not unjustified. With the transfer of petitioners
business office from its former office, Lezo, to Kalibo, Aklan, its equipments,
records and facilities were also removed from Lezo and brought to the Kalibo
office where petitioners official business was being conducted; thus private
respondents allegations that they continued to report for work at Lezo to
support their claim for wages has no basis.
Moreover, private respondents in their position paper admitted that they did not
report at the Kalibo office, as Lezo remained to be their office where they
continuously reported, to wit:17cräläwvirtualibräry
"On January 22, 1991 by way of a resolution of the Board of Directors of
AKELCO it allowed the temporary holding of office at Amon Theater, Kalibo,
Aklan, per information by their project supervisor, Atty. Leovigildo Mationg that
their head office is closed and that it is dangerous to hold office thereat.
Nevertheless, majority of the employees including the herein complainants,
continued to report for work at Lezo, Aklan and were paid of their salaries.
xxx
The transfer of office from Lezo, Aklan to Kalibo, Aklan being illegal for failure
to comply with the legal requirements under P.D. 269, the complainants
remained and continued to work at the Lezo Office until they were illegally
locked out therefrom by the respondents. Despite the illegal lock out however,
complainants continued to report daily to the location of the Lezo Office,
prepared to continue in the performance of their regular duties.
Complainants thus could not be considered to have abandoned their work as
Lezo remained to be their office and not Kalibo despite the temporary transfer
thereto. Further the fact that they were allowed to draw their salaries up to May,
1992 is an acknowledgment by the management that they are working during
the period.
xxx
It must be pointed out that complainants worked and continuously reported at
Lezo office despite the management holding office at Kalibo. In fact, they were
paid their wages before it was withheld and then were allowed to draw their
salaries again on March 1993 while reporting at Lezo up to the present.
Respondents acts and payment of complainants salaries and again from March
1993 is an unequivoecognition on the part of respondents that the work of
complainants is continuing and uninterrupted and they are therefore entitled to
their unpaid wages for the period from June 1992 to March 1993."
The admission is detrimental to private respondents cause. Their excuse is that
the transfer to Kalibo was illegal but we agree with the Labor Arbiter that it was
not for private respondents to declare the managements act of temporarily
transferring the AKELCO office to Kalibo as an illegal act. There is no allegation
nor proof that the transfer was made in bad faith or with malice. The Labor
Arbiter correctly rationalized in its decision as follows:18cräläwvirtualibräry
"We do not subscribe to complainants theory and assertions. They, by their
own allegations, have unilaterally committed acts in violation of
managements/respondents directives purely classified as management
prerogative. They have taken amongst themselves declaring managements
acts of temporarily transferring the holding of the AKELCO office from Lezo to
Kalibo, Aklan as illegal. It is never incumbent upon themselves to declare the
same as such. It is lodged in another forum or body legally mantled to do the
same. What they should have done was first to follow managements
orders temporarily transferring office for it has the first presumption of legality.
Further, the transfer was only temporary. For:
"The employer as owner of the business, also has inherent rights, among which
are the right to select the persons to be hired and discharge them for just and
valid cause; to promulgate and enforce reasonable employment rules and
regulations and to modify, amend or revoke the same; to designate the work as
well as the employee or employees to perform it; to transfer or promote
employees; to schedule, direct, curtail or control company operations; to
introduce or install new or improved labor or money savings methods, facilities
or devices; to create, merge, divide, reclassify and abolish departments or
positions in the company and to sell or close the business.
xxx
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.
The free will of management to conduct its own business affairs to achieve its
purpose can not be denied. The transfer of assignment of a mediepresentative
from Manila to the province has therefore been held lawful where this was
demanded by the requirements of the drug companys marketing operations
and the former had at the time of his employment undertaken to accept
assignment anywhere in the Philippines. (Abbot Laboratories (Phils.), Inc., et al.
vs. NLRC, et al., G.R. No. L-76959, Oct. 12, 1987).
It is the employers prerogative to abolish a position which it deems no longer
necessary, and the courts, absent any findings of malice on the part of the
management, cannot erase that initiative simply to protect the person holding
office (Great Pacific Life Assurance Corporation vs. NLRC, et al., G.R. No.
88011, July 30, 1990)."
Private respondents claim that petitioners Board of Directors passed an
unnumbered resolution dated February 11, 1992 returning back the office from
its temporary office in Kalibo to Lezo. Thus, they did not defy any lawful order of
petitioner and were justified in continuing to remain at Lezo office. This
allegation was controverted by petitioner in its Reply saying that such
unnumbered resolution was never implemented as it was not a valid act of
petitioners Board. We are convinced by petitioners argument that such
unnumbered resolution was not a valid act of petitioners legitimate Board
considering the subsequent actions taken by the petitioners Board of Directors
decrying private respondents inimical act and defiance, to wit (1) Resolution No.
411, s. of 1992 on September 9, 1992, dismissing all AKELCO employees who
were on illegal strike and who refused to return to work effective January 31,
1992 despite the directive of the NEA project supervisor and petitioners acting
general manager;19 (2) Resolution No. 477, s. of 1993 dated March 10, 1993
accepting back private respondents who staged illegal strike, defied legal
orders and issuances, out of compassion, reconciliation, Christian values and
humanitarian reason subject to the condition of "no work, no pay" 20 (3)
Resolution No. 496, s. of 1993 dated June 4, 1993, rejecting the demands of
private respondents for backwages from June 16, 1992 to March 1993 adopting
the policy of "no work, no pay" as such demand has no basis, and directing the
COOP Legal Counsel to file criminal cases against employees who
misappropriated collections and officers who authorized disbursements of
funds without legal authority from the NEA and the AKELCO Board. 21 If indeed
there was a valid board resolution transferring back petitioners office to Lezo
from its temporary office in Kalibo, there was no need for the Board to pass the
above-cited resolutions.
We are also unable to agree with public respondent NLRC when it held that the
assurance made by Atty. Mationg to the letter-request of office manager
Leyson for the payment of private respondents wages from June 1992 to March
1993 was an admission on the part of general manager Mationg that private
respondents are indeed entitled to the same. The letter reply of Atty. Mationg to
Leyson merely stated that he will recommend the request for payment of
backwages to the Board of Directors for their consideration and appropriate
action and nothing else, thus, the ultimate approval will come from the Board of
Directors. We find well-taken the argument advanced by the Solicitor General
as follows:22cräläwvirtualibräry
The allegation of private respondents that petitioner had already approved
payment of their wages is without basis. Mationgs offer to recommend the
payment of private respondents' wages is hardly approval of their claim for
wages. It is just an undertaking to recommend payment. Moreover, the offer is
conditional. It is subject to the condition that petitioners Board of Directors will
give its approval and that funds were available. Mationgs reply to Leysons letter
for payment of wages did not constitute approval or assurance of payment. The
fact is that, the Board of Directors of petitioner rejected private respondents
demand for payment (Board Resolution No. 496, s. 1993).
We are accordingly constrained to overturn public respondents findings that
petitioner is not justified in its refusal to pay private respondents wages and
other fringe benefits from June 16, 1992 to March 18, 1993; public respondents
stated that private respondents were paid their salaries from January to May
1992 and again from March 19, 1993 up to the present. As cited earlier,
petitioners Board in a Resolution No. 411 dated September 9, 1992 dismissed
private respondents who were on illegal strike and who refused to report for
work at Kalibo office effective January 31, 1992; since no services were
rendered by private respondents they were not paid their salaries. Private
respondents never questioned nor controverted the Resolution dismissing
them and nowhere in their Comment is it stated that they questioned such
dismissal. Private respondents also have not rebutted petitioners claim that
private respondents illegally collected fees and charges due petitioner and
appropriated the collections among themselves to satisfy their salaries from
January to May 1992, for which reason, private respondents are merely
claiming salaries only for the period from June 16, 1992 to March 1993.
Private respondents were dismissed by petitioner effective January 31, 1992
and were accepted back by petitioner, as an act of compassion, subject to the
condition of "no work, no pay" effective March 1993 which explains why private
respondents were allowed to draw their salaries again. Notably, the
letter-request of Mr. Leyson for the payment of backwages and other fringe
benefits in behalf of private respondents was made only in April 1993, after a
Board Resolution accepting them back to work out of compassion and
humanitarian reason. It took private respondents about ten months before they
requested for the payment of their backwages, and the long inaction of private
respondents to file their claim for unpaid wages cast doubts as to the veracity of
their claim.
The age-old rule governing the relation between labor and capital, or
management and employee of a "fair days wage for a fair days labor" remains
as the basic factor in determining employees wages. If there is no work
performed by the employee there can be no wage or pay unless, of course, the
laborer was able, willing and ready to work but was illegally locked out,
suspended or dismissed,23 or otherwise illegally prevented from working,24 a
situation which we find is not present in the instant case. It would neither be fair
nor just to allow private respondents to recover something they have not
earned and could not have earned because they did not render services at the
Kalibo office during the stated period.
Finally, we hold that public respondent erred in merely relying on the
computations of compensable services submitted by private respondents.
There must be competent proof such as time cards or office records to show
that they actually rendered compensable service during the stated period to
entitle them to wages. It has been established that the petitioners business
office was transferred to Kalibo and all its equipments, records and facilities
were transferred thereat and that it conducted its official business in Kalibo
during the period in question. It was incumbent upon private respondents to
prove that they indeed rendered services for petitioner, which they failed to do.
It is a basic rule in evidence that each party must prove his affirmative
allegation. Since the burden of evidence lies with the party who asserts the
affirmative allegation, the plaintiff or complainant has to prove his affirmative
allegations in the complaint and the defendant or the respondent has to prove
the affirmative allegation in his affirmative defenses and
counterclaim.25cräläwvirtualibräry
WHEREFORE, in view of the foregoing, the petition for CERTIORARI is
GRANTED. Consequently the decision of public respondent NLRC dated April
20, 1995 and the Resolution dated July 28, 1995 in NLRC Case No. V-0143-94
are hereby REVERSED and SET ASIDE for having been rendered with grave
abuse of discretion amounting to lack or excess of jurisdiction. Private
respondents complaint for payment of unpaid wages before the Labor Arbiter is
DISMISSED.
SO ORDERED.
 G.R. No. 121927 April 22, 1998
ANTONIO W. IRAN (doing business under the name and style of Tones
Iran Enterprises), petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (Fourth Division),
GODOFREDO O. PETRALBA, MORENO CADALSO, PEPITO TECSON,
APOLINARIO GOTHONG GEMINA, JESUS BANDILAO, EDWIN MARTIN,
CELSO LABIAGA, DIOSDADO GONZALGO, FERNANDO M.
COLINA, respondents.
ROMERO, J.:
Whether or not commissions are included in determining compliance with the
minimum wage requirement is the principal issue presented in this petition.
Petitioner Antonio Iran is engaged in softdrinks merchandising and distribution
in Mandaue City, Cebu, employing truck drivers who double as salesmen, truck
helpers, and non-field personnel in pursuit thereof. Petitioner hired private
respondents Godofredo Petralba, Moreno Cadalso, Celso Labiaga and
Fernando Colina as drivers/salesmen while private respondents Pepito Tecson,
Apolinario Gimena, Jesus Bandilao, Edwin Martin and Diosdado Gonzalgo
were hired as truck helpers. Drivers/salesmen drove petitioner's delivery trucks
and promoted, sold and delivered softdrinks to various outlets in Mandaue City.
The truck helpers assisted in the delivery of softdrinks to the different outlets
covered by the driver/salesmen.
As part of their compensation, the driver/salesmen and truck helpers of
petitioner received commissions per case of softdrinks sold at the following
rates:
SALESMEN:
Ten Centavos (P0.10) per case of Regular softdrinks.
Twelve Centavos (P0.12) per case of Family Size softdrinks.
TRUCK HELPERS:
Eight Centavos (P0.08) per case of Regular softdrinks.
Ten Centavos (P0.10) per case of Family Size softdrinks.
Sometime in June 1991, petitioner, while conducting an audit of his operations,
discovered cash shortages and irregularities allegedly committed by private
respondents. Pending the investigation of irregularities and settlement of the
cash shortages, petitioner required private respondents to report for work
everyday. They were not allowed, however, to go on their respective routes. A
few days thereafter, despite aforesaid order, private respondents stopped
reporting for work, prompting petitioner to conclude that the former had
abandoned their employment. Consequently, petitioner terminated their
services. He also filed on November 7, 1991, a complaint for estafa against
private respondents.
On the other hand, private respondents, on December 5, 1991, filed complaints
against petitioner for illegal dismissal, illegal deduction, underpayment of
wages, premium pay for holiday and rest day, holiday pay, service incentive
leave pay, 13th month pay, allowances, separation pay, recovery of cash bond,
damages and attorney's fees. Said complaints were consolidated and docketed
as Rab VII-12-1791-91, RAB VII-12-1825-91 and RAB VII-12-1826-91, and
assigned to Labor Arbiter Ernesto F. Carreon.
The labor arbiter found that petitioner had validly terminated private
respondents, there being just cause for the latter's dismissal. Nevertheless, he
also ruled that petitioner had not complied with minimum wage requirements in
compensating private respondents, and had failed to pay private respondents
their 13th month pay. The labor arbiter, thus, rendered a decision on February
18, 1993, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering
the respondent Antonio W. Iran to pay the complainants the following:
1. Celso Labiaga P10,033.10
2. Godofredo Petralba 1,250.00
3. Fernando Colina 11,753.10
4. Moreno Cadalso 11,753.10
5. Diosdado Gonzalgo 7,159.04
6. Apolinario Gimena 8,312.24
7. Jesus Bandilao 14,729.50
8. Pepito Tecson. 9,126.55
————
Attorney's Fees (10%) 74,116.63
of the gross award 7,411.66
————
GRAND TOTAL AWARD P81,528.29
========
The other claims are dismissed for lack of merit.
SO ORDERED. 1
Both parties seasonably appealed to the NLRC, with petitioner contesting the
labor arbiter's refusal to include the commissions he paid to private
respondents in determining compliance with the minimum wage requirement.
He also presented, for the first time on appeal, vouchers denominated as 13th
month pay signed by private respondents, as proof that petitioner had already
paid the latter their 13th month pay. Private respondents, on the other hand,
contested the findings of the labor arbiter holding that they had not been
illegally dismissed, as well as mathematical errors in computing Jesus
Bandilao's wage differentials. The NLRC, in its decision of December 21, 1994,
affirmed the validity of private respondent's dismissal, but found that said
dismissal did not comply with the procedural requirements for dismissing
employees. Furthermore, it corrected the labor arbiter's award of wage
differentials to Jesus Bandilao. The dispositive portion of said decision reads:
WHEREFORE, premises considered, the decision is hereby MODIFIED in that
complainant Jesus Bandilao's computation for wage differential is corrected
from P154.00 to P4,550.00. In addition to all the monetary claim (sic) originally
awarded by the Labor Arbiter a quo, P1,000.00 is hereby granted to each
complainants (sic) as indemnity fee for failure of respondents to observe
procedural due process.
SO ORDERED.2
Petitioner's motion for reconsideration of said decision was denied on July 31,
1995, prompting him to elevate this case to this Court, raising the following
issues:
1. THE HONORABLE COMMISSION ACTED WITH GRAVE ABUSE OF
DISCRETION AND CONTRARY TO LAW AND JURISPRUDENCE IN
AFFIRMING THE DECISION OF THE LABOR ARBITER A QUO EXCLUDING
THE COMMISSIONS RECEIVED BY THE PRIVATE RESPONDENTS IN
COMPUTING THEIR WAGES;
2. THE HONORABLE COMMISSION ACTED WITH GRAVE ABUSE OF
DISCRETION IN FINDING PETITIONER GUILTY OF PROCEDURAL LAPSES
IN TERMINATING PRIVATE RESPONDENTS AND IN AWARDING EACH OF
THE LATTER P1,000.00 AS INDEMNITY FEE;
3. THE HONORABLE COMMISSION GRAVELY ERRED IN NOT CREDITING
THE ADVANCE AMOUNT RECEIVED BY THE PRIVATE RESPONDENTS AS
PART OF THEIR 13TH MONTH PAY.
The petition is impressed with merit.
The NLRC, in denying petitioner's claim that commissions be included in
determining compliance with the minimum wage ratiocinated thus:
Respondent (petitioner herein) insist assiduously that the commission should
be included in the computation of actual wages per agreement. We will not fall
prey to this fallacious argument. An employee should receive the minimum
wage as mandated by law and that the attainment of the minimum wage should
not be dependent on the commission earned by an employee. A commission is
an incentive for an employee to work harder for a better production that will
benefit both the employer and the employee. To include the commission in the
computation of wage in order to comply with labor standard laws is to negate
the practice that a commission is granted after an employee has already
earned the minimum wage or even beyond it.3
This holding is unsupported by law and jurisprudence. Article 97(f) of the Labor
Code defines wage as follows:
Art. 97(f) — "Wage" paid to any employee shall mean the remuneration or
earnings, however designated, capable of being expressed in terms of money,
whether fixed or ascertained on a time, task, piece, or commission basis, or
other method of calculating the same, which is payable by an employer to an
employee under a written or unwritten contract of employment for work done or
to be done, or for services rendered or to be rendered and includes the fair and
reasonable value, as determined by the Secretary of Labor, of board, lodging,
or other facilities customarily furnished by the employer to the employee.
xxx xxx xxx (Emphasis supplied)
This definition explicitly includes commissions as part of wages. While
commissions are, indeed, incentives or forms of encouragement to inspire
employees to put a little more industry on the jobs particularly assigned to them,
still these commissions are direct remunerations for services rendered. In fact,
commissions have been defined as the recompense, compensation or reward
of an agent, salesman, executor, trustee, receiver, factor, broker or bailee,
when the same is calculated as a percentage on the amount of his transactions
or on the profit to the principal. The nature of the work of a salesman and the
reason for such type of remuneration for services rendered demonstrate clearly
that commissions are part of a salesman's wage or salary. 4
Thus, the commissions earned by private respondents in selling softdrinks
constitute part of the compensation or remuneration paid to drivers/salesmen
and truck helpers for serving as such, and hence, must be considered part of
the wages paid them.
The NLRC asserts that the inclusion of commissions in the computation of
wages would negate the practice of granting commissions only after an
employee has earned the minimum wage or over. While such a practice does
exist, the universality and prevalence of such a practice is questionable at best.
In truth, this Court has taken judicial notice of the fact that some salesmen do
not receive any basic salary but depend entirely on commissions and
allowances or commissions alone, although an employer-employee
relationship exists. 5 Undoubtedly, this salary structure is intended for the
benefit of the corporation establishing such, 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 the
corporation.6
Likewise, there is no law mandating that commissions be paid only after the
minimum wage has been paid to the employee. Verily, the establishment of a
minimum wage only sets a floor below which an employee's remuneration
cannot fall, not that commissions are excluded from wages in determining
compliance with the minimum wage law. This conclusion is bolstered
by Philippine Agricultural Commercial and Industrial Workers Union
vs. NLRC, 7 where this Court acknowledged that drivers and conductors who
are compensated purely on a commission basis are automatically entitled to
the basic minimum pay mandated by law should said commissions be less than
their basic minimum for eight hours work. It can, thus, be inferred that were said
commissions equal to or even exceed the minimum wage, the employer need
not pay, in addition, the basic minimum pay prescribed by law. It follows then
that commissions are included in determining compliance with minimum wage
requirements.
With regard to the second issue, it is settled that in terminating employees, the
employer must furnish the worker with two written notices before the latter can
be legally terminated: (a) a notice which apprises the employee of the particular
acts or omissions for which his dismissal is sought, and (b) the subsequent
notice which informs the employee of the employer's decision to dismiss
him. 8 (Emphasis ours) Petitioner asseverates that no procedural lapses were
committed by him in terminating private respondents. In his own words:
. . . when irregularities were discovered, that is, when the misappropriation of
several thousands of pesos was found out, the petitioner instructed private
respondents to report back for work and settle their accountabilities but the
latter never reported for work. This instruction by the petitioner to report back
for work and settle their accountabilities served as notices to private
respondents for the latter to explain or account for the missing funds held in
trust by them before they disappeared. 9
Petitioner considers this return-to-work order as equivalent to the first notice
apprising the employee of the particular acts or omissions for which his
dismissal is sought. But by petitioner's own admission, private respondents
were never told in said notice that their dismissal was being sought, only that
they should settle their accountabilities. In petitioner's incriminating words:
It should be emphasized here that at the time the misappropriation was
discovered and subsequently thereafter, the petitioner's first concern was not
effecting the dismissal of private respondents but the recovery of the
misappropriated funds thus the latter were advised to report back to work. 10
As above-stated, the first notice should inform the employee that his dismissal
is being sought. Its absence in the present case makes the termination of
private respondents defective, for which petitioner must be sanctioned for his
non-compliance with the requirements of or for failure to observe due
process. 11 The twin requirements of notice and hearing constitute the essential
elements of due process, and neither of these elements can be disregarded
without running afoul of the constitutional guarantee. Not being mere
technicalities but the very essence of due process, to which every employee is
entitled so as to ensure that the employer's prerogative to dismiss is not
exercised arbitrarily, 12 these requisites must be complied with strictly.
Petitioner makes much capital of private respondents' failure to report to work,
construing the same as abandonment which thus authorized the latter's
dismissal. As correctly pointed out by the NLRC, to which the Solicitor General
agreed, Section 2 of Book V, Rule XIV of the Omnibus Rules Implementing the
Labor Code requires that in cases of abandonment of work, notice should be
sent to the worker's last known address. If indeed private respondents had
abandoned their jobs, it was incumbent upon petitioner to comply with this
requirement. This, petitioner failed to do, entitling respondents to nominal
damages in the amount of P5,000.00 each, in accordance with recent
jurisprudence, 13 to vindicate or recognize their right to procedural due process
which was violated by petitioner.
Lastly, petitioner argues that the NLRC gravely erred when it disregarded the
vouchers presented by the former as proof of his payment of 13th month pay to
private respondents. While admitting that said vouchers covered only a ten-day
period, petitioner argues that the same should be credited as amounts received
by private respondents as part of their 13th month pay, Section 3(e) of the
Rules and Regulations Implementing P.D. No. 851 providing that the employer
shall pay the difference when he pays less than 1/12th of the employee's basic
salary. 14
It must also be borne in mind that the intent of P.D. No. 851 is the granting of
additional income in the form of 13th month pay to employees not as yet
receiving the same and not that a double burden should be imposed on the
employer who is already paying his employees a 13th month pay or its
equivalent. 19 An employer who pays less than 1/12th of the employees basic
salary as their 13th month pay is only required to pay the difference. 20
The foregoing notwithstanding, the vouchers presented by petitioner covers
only a particular year. It does not cover amounts for other years claimed by
private respondents. It cannot be presumed that the same amounts were given
on said years. Hence, petitioner is entitled to credit only the amounts paid for
the particular year covered by said vouchers.
WHEREFORE, in view of the foregoing, the decision of the NLRC dated July 31,
1995, insofar as it excludes the commissions received by private respondents
in the determination of petitioner's compliance with the minimum wage law, as
well as its exclusion of the particular amounts received by private respondents
as part of their 13th month pay is REVERSED and SET ASIDE. This case is
REMANDED to the Labor Arbiter for a recomputation of the alleged
deficiencies. For non-observance of procedural due process in effecting the
dismissal of private respondents, said decision is MODIFIED by increasing the
award of nominal damages to private respondents from P1,000.00 to
P5,000.00 each. No costs.
SO ORDERED.

While it is true that the vouchers evidencing payments of 13th month pay were
submitted only on appeal, it would have been more in keeping with the directive
of Article 221 15 of the Labor Code for the NLRC to have taken the same into
account. 16 Time and again, we have allowed evidence to be submitted on
appeal, emphasizing that, in labor cases, technical rules of evidence are not
binding. 17 Labor officials should use every and all reasonable means to
ascertain the facts in each case speedily and objectively, without regard to
technicalities of law or procedure. 18
 [G.R. No. 172161, March 02 : 2011]
SLL INTERNATIONAL CABLES SPECIALIST AND SONNY L. LAGON,
PETITIONERS, VS. NATIONAL LABOR RELATIONS COMMISSION, 4TH
DIVISION, ROLDAN LOPEZ, EDGARDO ZUÑIGA AND DANILO CAÑETE,
RESPONDENTS.
DECISION
MENDOZA, J.:
received the amount of P145.00, the minimum prescribed daily
wage for Region VII. In July 1997, the amount of P145 was
increased to P150.00 by the Regional Wage Board (RWB) and
in October of the same year, the latter was increased to
P155.00. Sometime in March 1998, Zuñiga and Cañete
were engaged again by Lagon as project employees for its
PLDT Antipolo, Rizal project, which ended sometime in (sic)
the late September 1998. As a consequence, Zuñiga and
Cañete's employment was terminated. For this project,
Zuñiga and Cañete received only the wage of P145.00 daily.
The minimum prescribed wage for Rizal at that time was
P160.00.

Sometime in late November 1998, private respondents

Assailed in this petition for review on certiorari are the January 11, 2006
re-applied in the Racitelcom project of Lagon in Bulacan.
Decision[1] and the March 31, 2006 Resolution[2] of the Court of
Zuñiga and Cañete were re-employed. Lopez was also
Appeals (CA), in CA-G.R. SP No. 00598 which affirmed with modification the
hired for the said specific project. For this, private respondents
March 31, 2004 Decision[3] and December 15, 2004 Resolution[4] of the
received the wage of P145.00. Again, after the completion of
National Labor Relations Commission (NLRC). The NLRC Decision found the
their project in March 1999, private respondents went home to
petitioners, SLL International Cables Specialist (SLL) and its manager, Sonny L.
Cebu City.
Lagon (petitioners), not liable for the illegal dismissal of Roldan Lopez, Danilo
Cañete and Edgardo Zuñiga (private respondents) but held them jointly and
On May 21, 1999, private respondents for the 4th time worked
severally liable for payment of certain monetary claims to said respondents.
with Lagon's project in Camarin, Caloocan City with Furukawa
Corporation as the general contractor. Their contract would
A chronicle of the factual antecedents has been succinctly summarized by the
expire on February 28, 2000, the period of completion of the
CA as follows:
project. From May 21, 1997-December 1999, private
respondents received the wage of P145.00. At this time, the
Sometime in 1996, and January 1997, private respondents
minimum prescribed rate for Manila was P198.00. In January
Roldan Lopez (Lopez for brevity) and Danilo Cañete
to February 28, the three received the wage of P165.00. The
(Cañete for brevity), and Edgardo Zuñiga (Zuñiga for
existing rate at that time was P213.00.
brevity) respectively, were hired by petitioner Lagon as
apprentice or trainee cable/lineman. The three were paid the
For reasons of delay on the delivery of imported materials from
full minimum wage and other benefits but since they were only
Furukawa Corporation, the Camarin project was not completed
trainees, they did not report for work regularly but came in as
on the scheduled date of completion. Face[d] with economic
substitutes to the regular workers or in undertakings that
problem[s], Lagon was constrained to cut down the overtime
needed extra workers to expedite completion of work. After
work of its worker[s][,] including private respondents. Thus,
their training, Zuñiga, Cañete and Lopez were engaged as
when requested by private respondents on February 28, 2000
project employees by the petitioners in their Islacom project in
to work overtime, Lagon refused and told private respondents
Bohol. Private respondents started on March 15, 1997 until
that if they insist, they would have to go home at their own
December 1997. Upon the completion of their project, their
expense and that they would not be given anymore time nor
employment was also terminated. Private respondents
 allowed to stay in the quarters. This prompted private
respondents to leave their work and went home to Cebu. On
March 3, 2000, private respondents filed a complaint for illegal
dismissal, non-payment of wages, holiday pay, 13th month pay
for 1997 and 1998 and service incentive leave pay as well as
damages and attorney's fees.
In their answers, petitioners admit employment of private
respondents but claimed that the latter were only project
employees[,] for their services were merely engaged for a
specific project or undertaking and the same were covered by
contracts duly signed by private respondents. Petitioners
further alleged that the food allowance of P63.00 per day as
well as private respondents allowance for lodging house,
transportation, electricity, water and snacks allowance should
be added to their basic pay. With these, petitioners claimed
that private respondents received higher wage rate than that
prescribed in Rizal and Manila.
Lastly, petitioners alleged that since the workplaces of private
respondents were all in Manila, the complaint should be filed
there. Thus, petitioners prayed for the dismissal of the
complaint for lack of jurisdiction and utter lack of merit.
(Citations omitted.)
On January 18, 2001, Labor Arbiter Reynoso Belarmino (LA) rendered his
decision[5] declaring that his office had jurisdiction to hear and decide the
complaint filed by private respondents. Referring to Rule IV, Sec. 1 (a) of the
NLRC Rules of Procedure prevailing at that time,[6] the LA ruled that it had
jurisdiction because the "workplace," as defined in the said rule, included the
place where the employee was supposed to report back after a temporary
detail, assignment or travel, which in this case was Cebu.
As to the status of their employment, the LA opined that private respondents
were regular employees because they were repeatedly hired by petitioners and
they performed activities which were usual, necessary and desirable in the
business or trade of the employer.
With regard to the underpayment of wages, the LA found that private
respondents were underpaid. It ruled that the free board and lodging, electricity,
water, and food enjoyed by them could not be included in the computation of
their wages because these were given without their written consent.
The LA, however, found that petitioners were not liable for illegal dismissal. The
LA viewed private respondents' act of going home as an act of indifference
when petitioners decided to prohibit overtime work.[7]
In its March 31, 2004 Decision, the NLRC affirmed the findings of the LA. In
addition, the NLRC noted that not a single report of project completion was filed
with the nearest Public Employment Office as required
by the Department of Labor and Employment (DOLE) Department Order No. 19,
Series of 1993.[8] The NLRC later denied[9] the motion for
reconsideration[10] subsequently filed by petitioners.
When the matter was elevated to the CA on a petition for certiorari, it affirmed
the findings that the private respondents were regular employees. It considered
the fact that they performed functions which were the regular and usual
business of petitioners. According to the CA, they were clearly members of a
work pool from which petitioners drew their project employees.
The CA also stated that the failure of petitioners to comply with the simple but
compulsory requirement to submit a report of termination to the nearest Public
Employment Office every time private respondents' employment was
terminated was proof that the latter were not project employees but regular
employees.
The CA likewise found that the private respondents were underpaid. It ruled
that the board and lodging, electricity, water, and food enjoyed by the private
respondents could not be included in the computation of their wages because
these were given without their written consent. The CA added that the private
respondents were entitled to 13th month pay.
The CA also agreed with the NLRC that there was no illegal dismissal. The CA
opined that it was the petitioners' prerogative to grant or deny any request for
overtime work and that the private respondents' act of leaving the workplace
after their request was denied was an act of abandonment.
In modifying the decision of the labor tribunal, however, the CA noted that
respondent Roldan Lopez did not work in the Antipolo project and, thus, was
not entitled to wage differentials. Also, in computing the differentials for the
period January and February 2000, the CA disagreed in the award of
differentials based on the minimum daily wage of P223.00, as the prevailing
minimum daily wage then was only P213.00. Petitioners sought reconsideration
but the CA denied it in its March 31, 2006 Resolution.[11]
Wellcome Philippines, Inc. v. Nagkakaisang Empleyado Ng
Wellcome-DFA[15] should be applied by analogy, in the sense that the lack of
written acceptance of the employees of the facilities enjoyed by them should
not mean that the value of the facilities could not be included in the computation
of the private respondents' "wages."

In this petition for review on certiorari,[12] petitioners seek the reversal and On November 29, 2006, the Court resolved to issue a Temporary Restraining
setting aside of the CA decision anchored on this lone: Order (TRO) enjoining the public respondent from enforcing the NLRC and CA
decisions until further orders from the Court.
GROUND/
ASSIGNMENT OF ERROR After a thorough review of the records, however, the Court finds no merit in the
petition.
THE PUBLIC RESPONDENT NLRC This petition generally involves factual issues, such as, whether or not there is
COMMITTED A SERIOUS ERROR IN LAW evidence on record to support the findings of the LA, the NLRC and the CA that
IN AWARDING WAGE DIFFERENTIALS TO private respondents were project or regular employees and that their salary
THE PRIVATE COMPLAINANTS ON THE
differentials had been paid.This calls for a re-examination of the evidence,
BASES OF MERE TECHNICALITIES, THAT which the Court cannot entertain. Settled is the rule that factual findings of labor
IS, FOR LACK OF WRITTEN CONFORMITY officials, who are deemed to have acquired expertise in matters within their
x x x AND LACK OF NOTICE TO THE respective jurisdiction, are generally accorded not only respect but even finality,
DEPARTMENT OF LABOR AND and bind the Court when supported by substantial evidence. It is not the Court's
EMPLOYMENT (DOLE)[,] AND THUS, THE
function to assess and evaluate the evidence
COURT OF APPEALS GRAVELY ERRED IN
AFFIRMING WITH MODIFICATION THE all over again, particularly where the findings of both the Labor tribunals and the
NLRC DECISION IN THE LIGHT OF THE CA concur. [16]
RULING IN THE CASE OF JENNY M.
AGABON and VIRGILIO AGABON vs, NLRC, As a general rule, on payment of wages, a party who alleges payment as a
ET AL., GR NO. 158963, NOVEMBER 17, defense has the burden of proving it.[17] Specifically with respect to labor cases,
2004, 442 SCRA 573, [AND
the burden of proving payment of monetary claims rests on the employer, the
SUBSEQUENTLY IN THE CASE OF GLAXO rationale being that the pertinent personnel files, payrolls, records, remittances
WELLCOME PHILIPPINES, INC. VS. and other similar documents -- which will show that overtime, differentials,
NAGAKAKAISANG EMPLEYADO NG service incentive leave and other claims of workers have been paid -- are not in
WELLCOME-DFA (NEW -DFA), ET AL., GR the possession of the worker but in the custody and absolute control of the
NO. 149349, 11 MARCH 2005], WHICH
employer.[18]
FINDS APPLICATION IN THE INSTANT
CASE BY ANALOGY.[13] In this case, petitioners, aside from bare allegations that private respondents
received wages higher than the prescribed minimum, failed to present any
Petitioners reiterated their position that the value of the facilities that the private evidence, such as payroll or payslips, to support their defense of payment.
respondents enjoyed should be included in the computation of the "wages" Thus, petitioners utterly failed to discharge the onus probandi.
received by them. They argued that the rulings in Agabon v. NLRC[14]and Glaxo
Private respondents, on the other hand, are entitled to be paid the minimum
wage, whether they are regular or non-regular employees.
Section 3, Rule VII of the Rules to Implement the Labor Code[19] specifically
enumerates those who are not covered by the payment of minimum wage.
Project employees are not among them.
On whether the value of the facilities should be included in the computation of
the "wages" received by private respondents, Section 1 of DOLE Memorandum
Circular No. 2 provides that an employer may provide subsidized meals and
snacks to his employees provided that the subsidy shall not be less that 30% of
the fair and reasonable value of such facilities. In such cases, the employer
may deduct from the wages of the employees not more than 70% of the value
of the meals and snacks enjoyed by the latter, provided that such deduction is
with the written authorization of the employees concerned.
Moreover, before the value of facilities can be deducted from the employees'
wages, the following requisites must all be attendant: first, proof must be shown
that such facilities are customarily furnished by the trade; second, the provision
of deductible facilities must be voluntarily accepted in writing by the employee;
and finally, facilities must be charged at reasonable value.[20] Mere availment is
not sufficient to allow deductions from employees' wages.[21]
These requirements, however, have not been met in this case. SLL failed to
present any company policy or guideline showing that provisions for meals and
lodging were part of the employee's salaries. It also failed to provide proof of
the employees' written authorization, much less show how they arrived at their
valuations. At any rate, it is not even clear whether private respondents actually
enjoyed said facilities.
The Court, at this point, makes a distinction between "facilities" and
"supplements." It is of the view that the food and lodging, or the electricity and
water allegedly consumed by private respondents in this case were not facilities
but supplements. In the case of Atok-Big Wedge Assn. v. Atok-Big Wedge
Co.,[22] the two terms were distinguished from one another in this wise:
"Supplements," therefore, constitute extra remuneration or
special privileges or benefits given to or received by the
laborers over and above their ordinary earnings or wages.
"Facilities," on the other hand, are items of expense necessary
for the laborer's and his family's existence and subsistence so
that by express provision of law (Sec. 2[g]), they form part of
the wage and when furnished by the employer are deductible
therefrom, since if they are not so furnished, the laborer would
spend and pay for them just the same.
In short, the benefit or privilege given to the employee which constitutes an
extra remuneration above and over his basic or ordinary earning or wage is
supplement; and when said benefit or privilege is part of the laborers' basic
wages, it is a facility. The distinction lies not so much in the kind of benefit or
item (food, lodging, bonus or sick leave) given, but in the purpose for which it is
given.[23] In the case at bench, the items provided were given freely by SLL for
the purpose of maintaining the efficiency and health of its workers while they
were working at their respective projects.
For said reason, the cases of Agabon and Glaxo are inapplicable in this case.
At any rate, these were cases of dismissal with just and authorized causes. The
present case involves the matter of the failure of the petitioners to comply with
the payment of the prescribed minimum wage.
The Court sustains the deletion of the award of differentials with respect to
respondent Roldan Lopez. As correctly pointed out by the CA, he did not work
for the project in Antipolo.
WHEREFORE, the petition is DENIED. The temporary restraining order issued
by the Court on November 29, 2006 is deemed, as it is hereby
ordered, DISSOLVED.
SO ORDERED.

G.R. No. 110068 February 15, 1995
PHILIPPINE DUPLICATORS, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and PHILIPPINE
DUPLICATORS EMPLOYEES UNION-TUPAS, respondents.
RESOLUTION
FELICIANO, J.:
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. This time, petitioner invoked the decision handed down by
this Court, through its Second Division, on 10 December 1993 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, in G.R.
Nos. 92174 and 102552, respectively. In its decision, the Second Division inter
alia declared null and void the second paragraph of Section 5 (a) 1 of the
Revised Guidelines issued by then Secretary of Labor Drilon. 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.
In view of the nature of the issues raised, the Third Division of this Court
referred the petitioner's Second Motion for Reconsideration, and its Motion for
Leave to Admit the Second Motion for Reconsideration, to the Court en banc
en consulta. The Court en banc, after preliminary deliberation, and inorder to
settle the condition of the relevant case law, accepted G.R. No. 110068 as
a banc case.
Deliberating upon the arguments contained in petitioner's Second Motion for
Reconsideration, as well as its Motion for Leave to Admit the Second Motion for
Reconsideration, and after review of the doctrines embodied, respectively,
in Duplicators and Boie-Takeda, we consider that these Motions must fail.
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 dated 10 November 1993 had already been denied, with finality, on 15
December 1993, i.e.; before the Boie-Takeda decision became final on 5
January 1994.
Preliminarily, we note that petitioner Duplicators did not put in issue the validity
of the Revised Guidelines on the Implementary on of the 13th Month Pay Law,
issued on November 16, 1987, by then Labor Secretary Franklin M. Drilon,
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.
More importantly, we do not agree with petitioner that the decision
in Boie-Takeda is "directly opposite or contrary to" the decision in the present
(Philippine Duplicators). To the contrary, the doctrines enunciated in these two
(2) cases in fact co-exist one with the other. The two (2) cases present quite
different factual situations (although the same word "commissions" was used or
invoked) the legal characterizations of which must accordingly differ.
The Third Division in Durplicators found that:
In the instant case, there is no question that the sales commission earned by Bunagan, 89,287.75 1,266.00 15,192.00
the salesmen who make or close a sale of duplicating machines distributed by Jorge
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 Canilan, 74,678.17 1,350.00 16,200.00
of petitioner's salesmen. Indeed, it appears that petitioner pays its salesmen a Rogelio
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 Dasig, 54,625.16 1,378,00 16,536.00
actual sales closed by them. No doubt this particular galary structure was Jeordan
intended for the benefit of the petitioner corporation, on the apparent
assumption that thereby its salesmen would be moved to greater enterprise Centeno, 51,854.15 1,266.04 15,192.00
and diligence and close more sales in the expectation of increasing their sales Melecio, Jr.
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
De los Santos 73,551.39 1,322.00 15,864.00
rendering services to petitioner corporation.
Ricardo

In other words, the sales commissions received for every duplicating machine
del Mundo, 108,230.35 1,406.00 16,872.00
sold constituted part of the basic compensation or remuneration of the
Wilfredo
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 Garcia, 93,753.75 1,294.00 15,528.00
salesman. Especially significant here also is the fact that the fixed or Delfin
guaranteed portion of the wages paid to the Philippine Duplicators' salesmen
represented only 15%-30% of an employee's total earnings in a year. We note Navarro, 98,618.71 1,266.00 15,192.00
the following facts on record: Ma. Teresa

Salesmen's Total Earnings and 13th Month Pay Ochosa, 66,275.65 1,406.00 16,872.00
For the Year 19862 Rolano

Name of Total Amount Paid Montly Fixed Quisumbing, 101,065.75 1,406.00 16,872.00
Salesman Earnings as 13th Month Pay Wages x 123 Teofilo

Baylon, P76,610.30 P1,350.00 P16,200.00 Rubina, 42,209.73 1,266.00 15,192.00

Benedicto Emma

Bautista 90,780.85 1,182.00 14,184.00 Salazar, 64,643.65 1,238.00 14,856.00

Salvador Celso

Brito, 64,382.75 1,238.00 14,856.00 Sopelario, 52,622.27 1,350.00 16,200.00

Tomas Ludivico
Tan, 30,127.50 1,238.00 14,856.00 generally tied to the productivity, or capacity for revenue production, of a
Leynard corporation; such bonuses closely resemble profit-sharing payments and have
no clear director necessary relation to the amount of work actually done by
Talampas, 146,510.25 1,434.00 17,208.00 each individual employee. More generally, a bonus is an amount granted and
Pedro paid ex gratia to the employee; its payment constitutes an act of enlightened
generosity and self-interest on the part of the employer, rather than as a
Villarin, 41,888.10 1,434.00 17,208.00 demandable or enforceable obligation. In Philippine Education Co. Inc. (PECO)
Constancio v. Court of Industrial Relations,5 the Court explained the nature of a bonus in
the following general terms:
Carrasco, 50,201.20 403.75*
Cicero As a rule a bonus is an amount granted and paid to an employee for his
industry loyalty which contributed to the success of the employer's business
Punzalan, 24,351.89 1,266.00 15,192.00 and made possible the realization of profits. It is an act of generosity of the
Reynaldo employer for which the employee ought to be thankful and grateful. It is also
granted by an enlightened employer to spur the employee to greater efforts for
the success of the business and realization of bigger profits. . . . . From the
Poblador, 25,516.75 323.00*
legal point of view a bonus is not and mandable and enforceable obligation. It is
Alberto
so when It is made part of the wage or salary or compensation. In such a case
the latter would be a fixed amount and the former would be a contingent one
Cruz, 32,950.45 323.00* dependent upon the realization of profits. . . .6 (Emphasis supplied)
Danilo
In Atok-Big Wedge Mining Co., Inc. v. Atok-Big Wedge Mutual Benefit
Baltazar, 15,681.35 323.00* Association,7 the Court amplified:
Carlito
. . . . Whether or not [a] bonus forms part of waqes depends upon the
Considering the above circumstances, the Third Division held, correctly, that circumstances or conditions for its payment. If it is an additional compensation
the sales commissions were an integral part of the basic salary structure of which the employer promised and agreed to give without any conditions
Philippine Duplicators' employees salesmen. These commissions are not imposed for its payment, such as success of business or greater production or
overtime payments, nor profit-sharing payments nor any other fringe benefit. output, then it is part of the wage. But if it is paid only if profits are realized or a
Thus, the salesmen's commissions, comprising a pre-determined percent of certain amount of productivity achieved, it cannot be considered part of
the selling price of the goods sold by each salesman, were properly included in wages. . . . It is also paid on the basis of actual or actual work accomplished. If
the term "basic salary" for purposes of computing their 13th month pay. the desired goal of production is not obtained, or the amount of actual work
accomplished, the bonus does not accrue. . . . 8 (Emphasis supplied)
In Boie-Takeda the so-called commissions "paid to or received by medical
representatives of Boie-Takeda Chemicals or by the rank and file employees of More recently, the non-demandable character of a bonus was stressed by the
Philippine Fuji Xerox Co.," were excluded from the term "basic salary" because Court in Traders Royal Bank v. National Labor Relations Commission:9
these were paid to the medical representatives and rank-and-file employees as
"productivity bonuses."4 The Second Division characterized these payments as
A bonus is a "gratuity or act of liberality of the giver which the recipient has no
additional monetary benefits not properly included in the term "basic salary" in
right to demand as a matter of right." (Aragon v. Cebu Portland Cement Co., 61
computing their 13th month pay. We note that productivity bonuses are
O.G. 4567). "It is something given in addition to what is ordinarily received by or
strictly due the recipient." The granting of a bonus is basically a management
prerogative which cannot be forced upon the employer "who may not be
obliged to assume the onerous burden of granting bonuses or other benefits
aside from the employee's basic salaries or wages . . ." (Kamaya Point Hotel v.
NLRC, 177 SCRA 160 [1989]). 10 (Emphasis supplied)
If an employer cannot be compelled to pay a productivity bonus to his
employees, it should follow that such productivity bonus, when given, should
not be deemed to fall within the "basic salary" of employees when the time
comes to compute their 13th month pay.
It is also important to note that 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. Medical representatives are not salesmen; they
do not effect any sale of any article at all. In common commercial practice, in
the Philippines and elsewhere, of which we take judicial notice, medical
representatives are employees engaged in the promotion of pharmaceutical
products or medical devices manufactured by their employer. They promote
such products by visiting identified physicians and inform much physicians,
orally and with the aid of printed brochures, of the existence and chemical
composition and virtues of particular products of their company. They
commonly leave medical samples with each physician visited; but those
samples are not "sold" to the physician and the physician is, as a matter of
professional ethics, prohibited from selling such samples to their patients. Thus,
the additional payments made to Boie-Takeda's medical representatives
were not in fact sales commissions but rather partook of the nature of
profit-sharing bonuses.
The doctrine set out in the decision of the Second Division is, accordingly, that
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.
The Supplementary Rules and Regulations Implementing P.D. No. 851
subsequently issued by former Labor Minister Ople 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.
We observe that the third item excluded from the term "basic salary" is cast in
open ended and apparently circular terms: "other remunerations which are not
part of the basic salary." However, what particular types of earnings and
remuneration are or are not properly included or integrated in the basic salary
are questions to be resolved on a case to case basis, in the light of the specific
and detailed facts of each case. In principle, where these earnings and
remuneration are closely akin to fringe benefits, overtime pay or profit-sharing
payments, they are properly excluded in computing the 13th month pay.
However, sales commissions which are effectively an integral portion of the
basic salary structure of an employee, shall be included in determining his 13th
month pay.
We recognize that both productivity bonuses and sales commissions may have
an incentive effect. But there is reason to distinguish one from the other here.
Productivity bonuses are generally tied to the productivity or profit generation of
the employer corporation. Productivity bonuses are not directly dependent on
the extent an individual employee exerts himself. A productivity bonus is
something extra for which no specific additional services are rendered by any
particular employee and hence not legally demandable, absent a contractual
undertaking to pay it. Sales commissions, on the other hand, such as those
paid in Duplicators, are intimately related to or directly proportional to the extent
or energy of an employee's endeavors. Commissions are paid upon the
specific results achieved by a salesman-employee. It is a percentage of the
sales closed by a salesman and operates as an integral part of such
salesman's basic pay.
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 issued by former Labor Secretary Drilon, is
properly understood as holding that that second paragraph 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. If and to the extent that such second
paragraph is so interpreted and applied, it must be regarded as invalid as
having been issued in excess of the statutory authority of the Secretary of
Labor. 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.

ACCORDINGLY, 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.
G.R. No. 81176 April 19, 1989
PLASTIC TOWN CENTER CORPORATION, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION AND NAGKAKAISANG
LAKAS NG MANGGAGAWA (NLM)-KATIPUNAN, respondents.
Generosa R. Jacinto for petitioner.
The Solicitor General for public respondent.
GUTIERREZ, JR., J.:
An issue in this petition is the interpretation of certain provisions of the
Collective Bargaining Agreement (CBA) between Plastic Town Center
Corporation and the respondent union.
On September 7,1984, the respondent Nagkakaisang Lakas ng Manggagawa
(NLM)-Katipunan filed a complaint dated August 30, 1984 charging the
petitioner with:
a. Violation of Wage Order No. 5, by crediting the Pl.00 per day increase in the
CBA as part of the compliance with said Wage Order No. 5, and y instead of
thirty (30) days equivalent to one (1) month as gratuity pay to resigning
employees. (p. 3, Rollo)
b. Unfair labor practice thru violation of the CBA by giving only twenty-six (26)
days pay instead of thirty (30) days equivalent to one (1) month as gratuity pay
to resigning employees. (p. 3, Rollo)
On July 25,1985, Labor Arbiter Ruben Alberto ruled in favor of Plastic Town
Center Corporation. The pertinent portions of the decision read as follows:
... In this particular case, the P1.00 increase was ahead of the implementation
of the CBA provision or could be said was advantageous to complainant
members, chronologically stated. For the above cogent reason we can not fault
respondent for its refusal to grant a second Pl.00 increase on July 1, 1984.
xxx xxx xxx
Complainant sustains the view that a month salary pertains to salary for 30
days, citing the provision of the Civil Code on the matter.
Upon the other hand, respondents understanding of the controverted provision
is pragmatic or practical. Since the workers are paid on daily basis, it computed
the salary received by the worker in a month as a month salary. In this case the
salary of 26 days is a month salary.
We agree with the respondent's interpretation. As daily wage earner, there
would be no instance that the worker would work for 30 days a month since
work does not include Sunday or rest days. In the mind of the daily worker in a
month he could not expect a month salary exceeding the equivalent of 26 days
service. To award the daily wage earner pay for more than 26 days is pay for
days he does not work. But as regards the monthly- paid workers he expects
his monthly salary to be fixed which is a month salary. Hence, a distinction
separates him with the daily wages.
IN VIEW OF THE FOREGOING, the unfair labor practice charge should be, as
it is hereby dismissed for lack of legal and factual basis. (pp- 56-57, Rollo)
On August 30, 1987, the respondent labor union appealed to the National
Labor Relations Commission.
On June 30, 1987, the NLRC rendered the questioned decision with the
following dispositive portion:
WHEREFORE, the appealed decision is hereby reversed and the respondent
is ordered to grant Pl.00 increase for July 1, 1984 and the equivalent of thirty
days salary in gratuity pay, as required by its CBA with the complainants. (p. 39,
Rollo)
The motion for reconsideration of said decision was denied on December 7,
1987. Hence, this petition.
The applicable provisions of the CBA read as follows:
Section 1 -The company agrees to grant permanent regular rank and file
workers covered by this Agreement who have rendered at least one year of
continuous service, across-the-board wage increases as follows:
a. Effective 1 July, 1983-Pl.00 per worked day;
b Effective 1 July, 1984-Pl.00 per worked day;
c. Effective 1 July, 1985-Pl.00 per worked day;
Section 3- It is agreed and understood by the parties herein that the
aforementioned increase in pay shall be credited against future allowances or
wage orders hereinafter implemented or enforced by virtue of Letters of
Instructions, Decrees and other labor legislation. (pp. 36-37, Rollo)
Wage Order No. 4 provided for the integration of the mandatory emergency
cost of living allowances (ECOLA) under Presidential Decrees 1614,1634,1678
and 1713 into the basic pay of all covered workers effective May 1, 1984. It
further provided that after the integration, the applicable statutory minimum
daily wage rate must be complied with, which in this case is P32.00.
The petitioner incurred a deficiency of P1.00 in the wage rate after integrating
the ECOLA with basic pay. So the petitioner advanced to May 1, 1984 or two
months earlier the implementation of the one-peso wage increase provided for
in the CBA starting July 1, 1984 for the benefit of the workers.
The petitioner argues that it did not credit the Pl.00 per day across the board
increase under the CBA as compliance with Wage Order No. 5 implemented on
June 16,1984 since it gave an additional P3.00 per day to the basic salary
pursuant to said order. It, however, credited the Pl.00 a day increase to the
requirement under Wage Order No. 4 to which the private respondents
allegedly did not object.
The other controverted provision of the CBA reads:
Section 2. It is the intention of both the COMPANY and the UNION, that the
grant of gratuity pay by the COMPANY herein set forth is to reward employees
and laborers, who have rendered satisfactory and efficient service with the
COMPANY. THUS, in case of voluntary resignation, which is not covered by
Section 1 above, the COMPANY nevertheless agrees to grant a gratuity pay to
the resigning employee or laborer as follows:
1. Two to Five years of service : 1 month salary
2. Six (6) to Ten (10) yrs. of : Two and One-half (21/2)service months salary
3 Eleven (ll) to Fifteen yrs. of service : 4 months salary
4 Sixteen (16) to twenty yrs. of : 5 months
5 Twenty one yrs. of service and above : Twelve (12) months salary.
(p. 38, Rollo)
The petitioner alleges that one month salary for daily paid workers should be
computed on the basis of twenty-six (26) days and not thirty (30) days since
daily wage workers do not work every day of the month including Sundays and
holidays.
The petition is devoid of merit.
The subject for interpretation in this petition for review is not the Labor Code or
its implementing rules and regulations but the provisions of the collective
bargaining agreement entered into by management and the labor union. As a
contract, it constitutes the law between the parties (Fegurin v. National Labor
Relations Commission, 120 SCRA 910 [1983]) and in interpreting contracts, the
rules on contract must govern.
Contracts which are not ambiguous are to be interpreted according to their
literal meaning and should not be interpreted beyond their obvious intendment
(Herrera v. Petrophil Corp., 146 SCRA 385 [1986]).
In the case at bar, the petitioner alleges that on May 1, 1984, it granted a Pl.00
increase pursuant to Wage Order No. 4 which in consonance with Section 3 of
the CBA was to be credited to the July 1, 1984 increase under the CBA. It was,
therefore, a July increase. Section 3 of the CBA, however, clearly states that
CBA granted increases shall be credited against future allowances or wage
orders. Thus, the CBA increase to be effected on July 1, 1984 can not be
retroactively applied to mean compliance with Wage Order No. 4 which took
effect on May 1, 1984. The words of the contract are plain and readily
understandable so we find no need for any further construction or interpretation
petition (Dihiansan v. Court of Appeals, 153 SCRA 712 [1987]). Furthermore,
we agree with the NLRC as it held:
It is our finding that the respondent is bound by the CBA to grant an increase on
July 1, 1984.
In this case, between July 1, 1983 and July 1, 1984, there were actually two
increases mandated by Wage Order No. 4 on May 1, 1984 and by Wage Order
No. 5 on June 16,1984. The fact that the respondent had complied with Wage
Order No. 4 and Wage Order No. 5 does not relieve it of its obligation to grant
the P1.00 increase under the CBA. (pp. 37-38, Rollo)
With regards to the second issue, the petitioner maintains that under the
principle of "fair day's wage for fair day's labor", gratuity pay should be
computed on the basis of 26 days for one month salary considering that the
employees are daily paid.
We find no abuse of discretion on the part of the NLRC in granting gratuity pay
equivalent to one month or 30 days salary .
We quote with favor the NLRC decision which states:
xxx xxx xxx
... To say that awarding the daily wage earner salary for more than 26 days is
paying him for days he does not work misses the point entirely. The issue here
is not payment for days worked but payment of gratuity pay equivalent to one
month or 30 days salary. (p. 29, Rollo)
Looking into the definition of gratuity, we find the following in
Moreno's Philippine Law Dictionary, to wit:
Something given freely, or without recompense; a gift; something voluntarily
given in return for a favor or services; a bounty; a tip. -Pirovano v. De la Rama
Steamship Co., 96 Phil. 357.
That paid to the beneficiary for past services rendered purely out of the
generosity of the giver or grantor.-Peralta v. Auditor General, 100 Phil. 1054.
Salary or compensation. The very term 'gratuity' differs from the words 'salary'
or 'compensation' in leaving the amount thereof, within the limits of reason, to
the arvitrament of the giver.-Herranz & Garriz v. Barbudo,12 Phil. 9.
From the foregoing, gratuity pay is therefore, not intended to pay a worker for
actual services rendered. It is a money benefit given to the workers whose
purpose is "to reward employees or laborers, who have rendered satisfactory
and efficient service to the company." (Sec. 2, CBA) While it may be enforced
once it forms part of a contractual undertaking, the grant of such benefit is not
mandatory so as to be considered a part of labor standard law unlike the salary,
cost of living allowances, holiday pay, leave benefits, etc., which are covered
by the Labor Code. Nowhere has it ever been stated that gratuity pay should be
based on the actual number of days worked over the period of years forming its
basis. We see no point in counting the number of days worked over a ten-year
period to determine the meaning of "two and one- half months' gratuity."
Moreover any doubts or ambiguity in the contract between management and
the union members should be resolved in the light of Article 1702 of the Civil
Code that:
In case of doubt, all labor legislation and all labor contracts shall be construed
in favor of the safety and decent living for the laborer.
This is also in consonance with the principle enunciated in the Labor Code that
all doubts should be resolved in favor of the worker.
The Civil Code provides that when months are not designated by name, a
month is understood to be thirty (30) days. The provision applies under the
circumstances of this case.
In view of the foregoing, the public respondent did not act with grave abuse of
discretion when it rendered the assailed decision which is in accordance with
law and jurisprudence.
WHEREFORE, the petition is hereby DISMISSED for lack of merit.
SO ORDERED.
G.R. No. 85073 August 24, 1993
DAVAO FRUITS CORPORATION, petitioner,
vs.
ASSOCIATED LABOR UNIONS (ALU) for in behalf of all the rank-and-file
workers/employees of DAVAO FRUITS CORPORATION and NATIONAL
LABOR RELATIONS COMMISSION, respondents.
Dominguez & Paderna Law Offices for petitioners.
The Solicitor General for public respondents.
QUIASON, J.:
This is a petition for certiorari to set aside the resolution of the National Labor
Relations Commission (NLRC), dismissing for lack of merit petitioner's appeal
from the decision of the Labor Arbiter in NLRC Case No. 1791-MC-X1-82.
On December 28, 1982 respondent Associated Labor Unions (ALU), for and in
behalf of all the rank-and-file workers and employees of petitioner, filed a
complaint (NLRC Case No. 1791-MC-XI-82) before the Ministry of Labor and
Employment, Regional Arbitration Branch XI, Davao City, against petitioner, for
"Payment of the Thirteenth-Month Pay Differentials." Respondent ALU sought
to recover from petitioner the thirteenth month pay differential for 1982 of its
rank-and-file employees, equivalent to their sick, vacation and maternity leaves,
premium for work done on rest days and special holidays, and pay for regular
holidays which petitioner, allegedly in disregard of company practice since
1975, excluded from the computation of the thirteenth month pay for 1982.
In its answer, petitioner claimed that it erroneously included items subject of the
complaint in the computation of the thirteenth month pay for the years prior to
1982, upon a doubtful and difficult question of law. According to petitioner, this
mistake was discovered only in 1981 after the promulgation of the Supreme
Court decision in the case of San Miguel Corporation v. Inciong (103 SCRA
139).
A decision was rendered on March 7, 1984 by Labor Arbiter Pedro C. Ramos,
in favor of respondent ALU. The dispositive portion of the decision reads as
follows:
WHEREFORE, in view of all the foregoing considerations, judgment is hereby
rendered ordering respondent to pay the 1982 — 13th month pay differential to
all its rank-and-file workers/employees herein represented by complainant
Union (Rollo, p. 32).
Petitioner appealed the decision of the Labor Arbiter to the NLRC, which
affirmed the said decision accordingly dismissed the appeal for lack of merit.
Petitioner elevated the matter to this Court in a petition for review under Rule
45 of the Revised Rules of Court. This error notwithstanding and in the interest
of justice, this Court resolved to treat the instant petition as a special civil action
for certiorari under Rule 65 of the Revised Rules of Court (P.D. No. 1391, Sec.
5; Rules Implementing P.D. No. 1391, Rule II, Sec. 7; Cando v. National Labor
Relations Commission, 189 SCRA 666 [1990]: Pearl S. Buck Foundation, Inc. v.
National Labor Relations Commission, 182 SCRA 446 [1990]).
The crux of the present controversy is whether in the computation of the
thirteenth month pay given by employers to their employees under P.D.
No. 851, payments for sick, vacation and maternity leaves, premiums for work
done on rest days and special holidays, and pay for regular holidays may be
excluded in the computation and payment thereof, regardless of long-standing
company practice.
Presidential Decree No. 851, promulgated on December 16, 1975, mandates
all employers to pay their employees a thirteenth month pay. How this pay shall
be computed is set forth in Section 2 of the "Rules and Regulations
Implementing Presidential Decree No. 851," thus:
SECTION 2. . . .
(a) "Thirteenth month pay" shall mean one twelfth (1/12) of the basic salary of
an employee within a calendar year.
(b) "Basic Salary" shall include all renumerations or earnings paid by an
employer to an employee for services rendered but may not include cost of
living allowances granted pursuant to Presidential Decree No. 525 or Letter of
Instructions No. 174, profit-sharing payments, and all allowances and monetary
benefits which are not considered or integrated as part of the regular or basic
salary of the employee at the time of the promulgation of the Decree on
December 16, 1975.
The Department of Labor and Employment issued on January 16, 1976 the
"Supplementary Rules and Regulations Implementing P.D. No. 851" which in
paragraph 4 thereof further defines the term "basic salary," thus:
4. Overtime pay, earnings and other renumerations which are not part of the
basic salary shall not be included in the computation of the 13th month pay.
Clearly, the term "basic salary" includes renumerations or earnings paid by the
employer to employee, but excludes cost-of-living allowances, profit-sharing
payments, and all allowances and monetary benefits which have not been
considered as part of the basic salary of the employee as of December 16,
1975. The exclusion of cost-of-living allowances and profit sharing payments
shows the intention to strip "basic salary" of payments which are otherwise
considered as "fringe" benefits. This intention is emphasized in the catch all
phrase "all allowances and monetary benefits which are not considered or
integrated as part of the basic salary." Basic salary, therefore does not merely
exclude the benefits expressly mentioned but all payments which may be in the
form of "fringe" benefits or allowances (San Miguel Corporation v.
Inciong, supra, at 143-144). In fact, the Supplementary Rules and Regulations
Implementing P.D. No. 851 are very emphatic in declaring that overtime pay,
earnings and other renumerations shall be excluded in computing the thirteenth
month pay.
In other words, whatever compensation an employee receives for an eight-hour
work daily or the daily wage rate in the basic salary. Any compensation or
remuneration other than the daily wage rate is excluded. It follows therefore,
that payments for sick, vacation and maternity leaves, premium for work done
on rest days special holidays, as well as pay for regular holidays, are likewise
excluded in computing the basic salary for the purpose of determining the
thirteen month pay.
Petitioner claims that the mistake in the interpretation of "basic salary" was
caused by the opinions, orders and rulings rendered by then Acting Labor
Secretary Amado C. Inciong, expressly including the subject items in
computing the thirteenth month pay. The inclusion of these items is clearly not
sanctioned under P.D. No. 851, the governing law and its implementing rules,
which speak only of "basis salary" as the basis for determining the thirteenth
month pay.
Moreover, whatever doubt arose in the interpretation of P.D. No. 851 was
erased by the Supplementary Rules and Regulations which clarified the
definition of "basic salary."
As pointed out in San Miguel Corporation v. Inciong, (supra):
While doubt may have been created by the prior Rules and Regulations and
Implementing Presidential Decree 851 which defines basic salary to include all
remunerations or earnings paid by an employer to an employee, this cloud is
dissipated in the later and more controlling Supplementary Rules and
Regulations which categorically, exclude from the definition of basic salary
earnings and other remunerations paid by employer to an employee. A cursory
perusal of the two sets of Rules indicates that what has hitherto been the
subject of broad inclusion is now a subject of broad exclusion. The
Supplementary Rules and Regulations cure the seeming tendency of the
former rules to include all remunerations and earnings within the definition of
basic salary.
The all-embracing phrase "earnings and other remunerations which are
deemed not part of the basic salary includes within its meaning payments for
sick, vacation, or maternity leaves, premium for work performed on rest days
and special holidays, pay for regular holidays and night differentials. As such
they are deemed not part of the basic salary and shall not be considered in the
computation of the 13th-month pay. If they were not so excluded, it is hard to
find any "earnings and other remunerations" expressly excluded in computation
of the 13th month-pay. Then the exclusionary provision would prove to be idle
and with purpose.
The "Supplementary Rules and Regulations Implementing P.D. No. 851,"
which put to rest all doubts in the computation of the thirteenth month pay, was
issued by the Secretary of Labor as early as January 16, 1976, barely one
month after the effectivity of P.D. No. 851 and its Implementing Rules. And yet,
petitioner computed and paid the thirteenth month pay, without excluding the
subject items therein until 1981. Petitioner continued its practice in December
1981, after promulgation of the afore-quoted San Miguel decision on February
24, 1981, when petitioner purportedly "discovered" its mistake.

From 1975 to 1981, petitioner had freely, voluntarily and continuously included
in the computation of its employees' thirteenth month pay, the payments for
sick, vacation and maternity leaves, premiums for work done on rest days and
special holidays, and pay for regular holidays. The considerable length of time
the questioned items had been included by petitioner indicates a unilateral and
voluntary act on its part, sufficient in itself to negate any claim of mistake.

A company practice favorable to the employees had indeed been established

and the payments made pursuant thereto, ripened into benefits enjoyed by
them. And any benefit and supplement being enjoyed by the employees cannot
be reduced, diminished, discontinued or eliminated by the employer, by virtue
of Section 10 of the Rules and Regulations Implementing P.D. No. 851, and
Article 100 of the labor of the Philippines, which prohibit the diminution or
elimination by the employer of the employees' existing benefits (Tiangco v.
Leogardo, Jr., 122 SCRA 267, [1983]).

Petitioner cannot invoke the principle of solutio indebiti which as a civil law
concept that is not applicable in Labor Law. Besides, in solutio indebiti, the
obligee is required to return to the obligor whatever he received from the latter
(Civil Code of the Philippines, Arts. 2154 and 2155). Petitioner in the instant
case, does not demand the return of what it paid respondent ALU from 1975
until 1981; it merely wants to "rectify" the error it made over these years by
excluding unilaterally from the thirteenth month pay in 1982 the items subject of
litigation. Solutio indebiti, therefore, is not applicable to the instant case.

WHEREFORE, finding no grave abuse of discretion on the part of the NLRC,

the petition is hereby DISMISSED, and the questioned decision of respondent
NLRC is AFFIRMED accordingly.