Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-1206 October 30, 1947

THE MANILA ELECTRIC COMPANY, petitioner,

vs.
THE PUBLIC UTILITIES EMPLOYEES' ASSOCIATION, respondent.

Ross, Selph, Carrascoso and Janda for petitioner.

Ferdinand E. Marcos for respondent.
Eulogio R. Lerum as amicus curriae.

FERIA, J.:

This is an appeal by certiorari under Rule 44 of the Rules of Court interposed by the petitioner Manila
Electric Company against the decision of July 15, 1946 of the Court of Industrial Relations, which reads as
follows:

Although the practice of the company, according to the manifestations of counsel for said company, has
been to grant one day vacationwith pay to every workingman who had worked for seven
consecutivedays including Sundays, the Court considers justified the oppositionpresented by the
workingmen to the effect that they need Sundays andholidays for the observance of their religion and
for rest. The Court,therefore, orders the respondent company to pay 50 per cent increasefor overtime
work done on ordinary days and 50 per cent increase for work done during Sundays and legal holidays
irrespective of the numberof days they work during the week.

The appellant contends that the said decision of the Court of IndustrialRelations is against the provision
of section 4, Commonwealth Act No. 444, which reads as follows:

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 additionalsum of at
least twenty-five per centum of his regular remuneration: Provided, however, Thast this prohibition shall
not apply to publicutilities performing some public service such as supplying gas,electricity, power, water,
or providing means of transportationor communication.

After a careful consideration of the issue involved in this appeal, we are of the opinion and so hold that
the decision of the Court of Industrial Relations is erroneous od contrary to the clear and express
provision of the above quoted provisions. The power of theCourt to settle industrial disputes between
capital and labor, which include the fixing of wages of employees or laborers, granted by the general
provisions of section 1 of Commonwealth Act No. 103, has beenrestricted by the above quoted special
provisions of Commonwealth ActNo. 444, in the sense that public utilities supplying electricity,gas,
power, water, or providing means of transportation or communication may compel their employees or
laborers to work duringSundays and legal holidays without paying them an additional compensation of
not less than 25 per cent of their regular remuneration on said days.

Since the provisions of the above quoted section 4, are plain and unambiguous and convey a clear and
definite meaning, there is no need of resorting to the rules of statutory interpretation orconstruction in
order to determine the intention of the Legislature.Said section 1 consists of two parts: the first, which is
the enactmentclause, prohibits a person, firm or corporation, business establishment,or place or center
of labor from compelling an employee or laborer towork during Sundays and legal holidays, unless the
former pays thelatter an additional sum of at least twenty five per centum of his regular remuneration;
and the second part, which is an exception,exempts public utilities performing some public service, such
assupplying gas, electricity, power, water or providing means oftransportation or communication, from
the prohibition establishedin the enactment clause. As the appellant is a public utility that supplies the
electricity and provides means of transportation to the public, it is evident that the appellant is exempt
from the qualifiedprohibition established in the enactment clause, and may compel its employees or
laborers to work during Sundays and legal holidays without paying them said extra compensation.

To hold that the exception or second part of section 4, CommonwealthAct No. 444, only exempts public
utilities mentioned therein from the prohibition to compel employees or laborers to work during
Sundaysand legal holidays, but not from the obligation to pay them an extraor additional compensation
for compelling them to work during thosedays, is to make the exception meaningless or a superfluity,
thatis, an exception to a general rule that does not exist, because theprohibition in the enactment clause
is not an absolute prohibitionto compel a laborer or employee to work during Sundays and legal
holidays. The prohibition to compel a laborer or employee to workduring those days is qualified by the
clause "unless he is paid anadditional sum of at least twenty five per centum of his regular
remuneration," which is inseparable from the prohibition whichthey qualify and of which they are a part
and parcel. The secondportion of section 1 is in reality an exception and not a provisoalthough it is
introduced by the word "provided"; and it is elementalthat an exception takes out of an enactment
something which wouldotherwise be part of the subject matter of it.

To construe section 4, Commonwealth Act No. 444, as exempting public utilities, like the appellant, from
the obligation to pay the additional remuneration required by said section 4 should they compel their
employees or laborers to work on Sundays and legalholidays, would not make such exception a class
legislation, violative of the constitutional guaranty of equal protectionof the laws (section 1 [1] Art. III of
our Constitution). For itis a well-settled rule in constitutional law that a legislation which affects with
equal force all persons of the same class and notthose of another, is not a class legislation and does not
infringesaid constitutional guaranty of equal protection of the laws, if thedivision into classes is not
arbitrary and is based on differenceswhich are apparent and reasonable. (Magonn vs. Illinois Trust
Savings Bank, 170 N. S., 283, 294; State vs. Garbroski, 111 Iowa, 496; 56 L. R. A., 570.) And it is evident
that the division made by section 4, of Commonwealth Act No. 444, of persons, firms, and corporations
into two classes: one composed of public utilities performing somepublic service such as supplying gas,
electricity, power, water orproviding means of transportation; and another composed of persons,firms,
and corporations which are not public utilities and do notperform said public service , is not arbitrary
and is based ondifferences which are apparent and reasonable.

The division is not arbitrary, and the basis thereof is reasonable. Public utilities exempted from the
prohibition set forth in the enactment clause of section 4, Commonwealth Act No. 444, are required to
perform a continuous service including Sundays andlegal holidays to the public, since the public good so
demands,and are not allowed to collect an extra charge for services performed on those days; while the
others are not required to do so and are free to operate or not their shops, business, or industries on
Sundays and legal holidays. If they operate andcompel their laborers to work on those days it is but just
andnatural that they should pay an extra compensation to them, because it is to be presumed that they
can make money or business by operating on those days even if they have to pay such extra
remuneration. It would be unfair for the law to compel publicutilities like the appellant to pay an
additional or extra compensation to laborers whom they have to compel to work duringSundays and
legal holidays, in order to perform a continuous service to the public. To require public utilities
performingservice to do so, would be tantamount to penalize them forperforming public service during
said days in compliance withthe requirement of the law and public interest.

The conclusion on which the dissenting opinion is based, which is alsosubstantially the basis of the
resolution of the lower court, is that "As to them [referring to public utilities like the petitioner] section4
of Commonwealth Act No. 444 may be considered as not having been enacted at all. . . . Therefore,
when there is a labor dispute as in the present case, and the dispute is submitted to the Court of
Industrial Relations for decision or settlement, the court is free to providewhat it may deem just and
more beneficial to the interested parties,and that freedom to settle and decide the case certainly
includesthe power to grant additional compensation to workers who work onSundays and holidays. The
general power granted by section 1, 4, and13 of Commonwealth Act No. 103, are not affected in any way
or senseby section 4 of Commonwealth Act No. 444."

This conclusion finds no support in law, reason or logic. It is a well settled rule of statutory construction
adopted by courts of last resort in the States that if one statute enacts some thing in general terms,and
afterwards another statute is passed on the same subject, whichalthough expressed in affirmative
language introduces special conditions or restrictions, the subsequent statute will usually be considered
asrepealing by implication the former regarding the matter covered by the subsequent act; and more
specially so when the latter act is expressed in negative terms , as where for example it prohibits a
certain thing for being done, or where it declares that a given act shall be performed in a certain manner
and not otherwise. (See Black on Interpretation of Laws, 2d ed., p. 354, and Sutherland, Statutory
Construction, 3d ed., Vol. 1, section 1922, and cases therein cited.)

In accordance with this rule, the provision of Commonwealth Act No. 103 which confers upon the Court
of Industrial Relations power to settle dispute between employers and employees in general, including
those relating to compulsion of laborers to work on Sundays and legalholidays and additional
compensation for those working on those days,should be considered as impliedly repealed by section 4
of Act No. 444,which limits or restricts the minimum of the additional compensationand specifies the
persons, firms or corporation who may be requered to pay said compensation. That is, that the Court of
Industrial Relations may, under the provision of said section 4, order a person, firm orcorporation or
business establishment or place or center of labor whocompel an employee or laborer to work on
Sundays and legal holidays,to pay him an additional compensation of at least 25 per centum of his
regular remuneration; but said court can not require public utilities performing public service mentioned
therein to pay saidextra compensation to laborers and employees required by them towork on Sundays
and legal holidays, because the necessity of publicservice so requires.lawphil.net

It is evident that the principal purpose of the Legislature in enactingsaid section 4, is not only to restrict
the general power of the Court of Industrial Relations granted by Act No. 103, to fix the
minimumadditional compensation which an employer may be required to pay a laborer compelled to
work on those days, but principally to exemptpublic utilities affected with public interest, from the
payment ofsuch additional compensation. If it were the intention of the lawmakersin enacting section 4
of the Act No. 444 to fix the limit of the minimum of additional compensation of laborers working on
those days, withoutexempting the public utilities, that is, leaving intact the general power of the court to
require the public utilities to pay said additional compensation, the law would have only provided, in
substance, that allemployers are prohibited from compelling their laborers to work onSundays and legal
holidays without paying them an additional compensationof not less than 50 per cent of their regular
remuneration.

That the intention of the Legislature is to exempt the public utilitiesunder consideration from the
prohibition set forth in the enactmentclause of section 4, Act No. 444, is supported by the provision
ofsection 19 of Act No. 103. As amended this section provides "that with exception of employers
engaged in the operation of public services orin the business coupled with a public interest, employers
will notbe allowed to engage the services of the strike breakers within fifteendays after the declaration
of the strike; which shows a contrario sensu that public utilities performing public services are permitted
to engage the services of strike breakers within fifteen days, that is,immediately upon the declaration of
the strike. The same public interest, the reason of the exception in the above quoted provision, underlies
the exception provided in section 4, of Act No. 444.

Therefore, the ruling of the Court of Industrial Relations quoted in the first part of this decision appealed
from, being contrary to law, is set aside. So ordered.

Paras, Pablo, Hilado, Bengzon, Briones, Padilla, and Tuason, JJ., concur.

MORAN, C. J.:

I concur in the result.

Separate Opinions

PERFECTO, J., dissenting:

The petitioner complains against the following judgment of the Court of Industrial Relations with
reference to respondent's demand for 100per cent overtime pay on Sundays and holidays and 50 per
cent increase in pay after eigght hours work:

Although the practice of the Company, according to the manifestations of counsel for said company, has
been to grant one day vacation with pay to every workingman who had worked for seven consecutive
daysincluding Sundays, the Court considers justified the opposition presentedby the workingmen to the
effect that they need Sundays and holidaysfor observance of their religion and for rest. The Court,
therefore,orders the respondent company to pay 50 per cent increase for overtimework done on
ordinary days and 50 per cent work done during Sundays and legal holidays, irrespective of the number
of days they workduring the week.
The power and jurisdiction of the Court of Industrial Relations torender said judgment under the
authority given by section 1, 4, and 13 of Commonwealth Act No. 103, quoted below, cannot be
disputed.

SECTION 1. The Judge: his appointment, qualifications, compensation, tenure. — There is hereby
created a Court of Industrial Relations, whichshall have jurisdiction over the entire Philippines, to
consider,investigate, decide, and settle any question, matter, controversy ordispute 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 provisionsof thei Act. . . .

SEC. 4. Strikes and lockouts. — The Court shall take cognizance forpurposes of prevention, arbitration,
decision and settlement, ofany industrial or agricultural dispute causing or likely to cause a strike or
lockout, arising from differences as regards to 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 submittedto the Court
by the Secretary of Labor, or by any or both of the parties to the controversy and certified by the
Secretary of Laboras existing and proper to be dealt with by the Court for the sake of public interest. In
all such cases, the Secretary of Labor orthe party or parties submitting the disputes, shall clearly
andspecifically state in writing the questions to be decided. Upon thesubmission of such a controversy or
question by the Secretary ofLabor, his intervention therein as authorized by law, shall cease.

The Court shall, before hearing the dispute and in the course ofsuch 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 errand. — 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 may be deemed necessary or expedient for the purpose of settling
the dispute or of preventing further industrial or agricultural disputes.

The question raised by petitioner refers to the applicabilityto the controversy of section 4 of
CommonwealthAct No. 444, which reads as follows:

No person, firm or corporation, business establishments or placeor center of labor shall compel an
employee or laborer to work duringSundays and legal holidays, unless he is paid an additional sum of at
least twenty-five per centum of his regular renumeration: 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.
Petitioner prayed that the part of the decision of the Court of Industrial Relations of July 15, 1946,
relating todemand No. 4 of the respondent Labor Union, above quoted,and the order of the same court
of October 15, 1946, overruling petitioner's motion to set aside said part and for a new trial, be vacated.

As petitioner invokes the authority of section 4 of Commonwealth Act No. 444, above quoted, the whole
controversy in the in this case hinges upon the interpretation of said section.

No correct interpretation can be given unless the documentin dispute is read correctly. Section 4 of
CommonwealthAct No. 444 appears to be composed of two parts; a general provision and an exception.
The main provision is prohibitory in nature. It says that "no person, firm or corporation, business
establishment or place or center of labor shall compel employees or laborers to work during Sundays
and legal holidays unless he is paid an additional sum of at least twenty-five per centum of the regular
renumeration." The exception excludes from the prohibitory general provision public utilities performing
public service such as supplying gas, electricity, power, water or providing means of transportation or
communication.

It will be seen that section 4 of Commonwealth Act No.444 divides the employers into two classes: 1.
Those notengaged in public utilities, and 2. those engaged in publicutilities. The first class cannot compel
their employees orlaborers to work on Sundays and holidays without givingthem an additional salary or
renumeration equivalent to not less than twenty-five per centum of the basic remuneration. There is no
limit as to the time or circumstances under which the additional compensation is to be paid.Employers
engaged in public utilities are excluded from theprohibition. This means simply that employers engaged
in public utilities may or may not pay the additional compensation or any additional compensation for
compelling their laborers to work on Sundays and holidays.The exception should not be interpreted as
providing thatemployers engaged in public utilities cannot be compelledto pay additional compensation
to workers required to work on Sundays and holidays. As to them, section 4of Commonwealth Act No.
444 may be considered as nothaving been enacted at all. Exception or exemption from a negative or
prohibitory legal provision is not a positive or affirmative provision commanding the excepted or
exempted person to do what is enjoined in the general provision.

The general provision of said section does not work eitherway with respect to public utilities. Therefore,
when there is a labor dispute as in the present case, and the dispute is submitted to the Court of
Industrial Relations fordecision or settlement, the court is free to provide what it may deem just and
more beneficial to the interested parties,and that freedom to settle and decide the case
certainlyincludes the power to grant additional compensation toworkers who work on Sundays and
holidays. The general power granted by sections 1, 4, and 13 of Commonwealth Act No. 103,above
quoted, are not affected in any way or sense by section 4 of Commonwealth Act No. 444.

The right to collect an additional sum of at least twenty-five per centum of the basic remuneration is
guaranteed to allworklers and employees not engaged in public utilities and that right is enforceable not
only in the Court ofIndustrial Relations but in any other competent court ofjustice. It must be
remembered that the jurisdiction ofthe Court of Industrial Relations is limited to labor disputes in which
a minimum number of laborers are involved.Under section 4 of Commonwealth Act No. 444, a
singlelaborer may claim in a competent ordinary court of justicefor the additional compensation
provided therein in case he is compelled to work on Sundays and holidays.

Under the powers granted by sections 1, 4, and 13 of Commonwealth Act No. 103, the Court of
Industrial Relations had and still has perfect power and authority to make the award with respect to
demand No. 4 in the way expressed in the judgment quoted at the beginning of this opinion. In granting
50 per cent increase for work or service done on Sundays and legal holidays, the Court of Industrial
Relations undoubtedly had taken into consideration the circumstances of thecase.

Furthermore, it is a fact that Sundays and legal holidaysare set aside by law as days of rest. The life,
existence,and happiness of a person do not depend only on the satisfaction of his physical needs. There
are moral, intellectual and spiritual needs as imperative as the physical ones. Ordinarily, Sundays and
legal holidays are dedicated to reading and instruction so as to fill the mindwith culture or some sort of
advancement. On those days the laborerenjoyslonger hours in the company of his family. That gives him
an opportunity to satisfy his moral needs. During Sundays and holidays more time is dedicated to
worship and other religious services. That givesa laborer an opportunity to satisfy his spiritual needs.The
deprivation of that opportunity to satisfy mental, moral, and spiritual needs should not be ignored, and
should be properly compensated.

For all the foregoing, we are of opinion and so we vote, that the petitionshould be dismissed.
SECOND DIVISION

[G.R. NO. L-48437. SEPTEMBER 30, 1986.]

MANTRADE/FMMC DIVISION EMPLOYEES AND WORKERS UNION (REPRESENTED BY PHILIPPINE SOCIAL

SECURITY LABOR UNION — PSSLU FED. — TUCP), PETITIONER, V. ARBITRATOR FROILAN M. BACUNGAN
AND MANTRADE DEVELOPMENT CORPORATION, RESPONDENTS.

SYLLABUS

1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; VOLUNTARY ARBITRATORS; DECISIONS SUBJECT
TO JUDICIAL REVIEW. — THE CONTENTIONS OF RESPONDENT CORPORATION HAVE BEEN RULED
AGAINST IN THE DECISION OF THIS COURT IN THE CASE OF OCEANIC BIC DIVISION (FFW) V. ROMERO,
PROMULGATED ON JULY 16, 1984, WHEREIN IT STATED: . . . "A VOLUNTARY ARBITRATOR BY THE NATURE
OF HER FUNCTIONS ACTS IN A QUASIJUDICIAL CAPACITY. THERE IS NO REASON WHY HER DECISIONS
INVOLVING INTERPRETATION OF LAW SHOULD BE BEYOND THIS COURT’S REVIEW. ADMINISTRATIVE
OFFICIALS ARE PRESUMED TO ACT IN ACCORDANCE WITH LAW AND YET WE DO NOT HESITATE TO PASS
UPON THEIR WORK WHERE A QUESTION OF LAW IS INVOLVED OR WHERE A SHOWING OF ABUSE OF
DISCRETION IN THEIR OFFICIALS ACTS IS PROPERLY RAISED IN PETITIONS FOR CERTIORARI." (130 SCRA
392, 399, 400-401)

2. ID.; ID.; GRANT FOR HOLIDAY PAY MONTHLY PAID EMPLOYEES; ISSUE SETTLED IN THE CASES OF
INSULAR BANK OF ASIA AND AMERICA EMPLOYEES’ UNION VS. INCIONG, [132 SCRA 633], AND
CHARTERED BANK EMPLOYEES UNION VS. OPLE [141 SCRA 9]. — RESPONDENT ARBITRATOR OPINED
THAT RESPONDENT CORPORATION DOES NOT HAVE ANY LEGAL OBLIGATION TO GRANT ITS MONTHLY
SALARIED EMPLOYEES HOLIDAY PAY, UNLESS IT IS ARGUED THAT THE PERTINENT SECTION OF THE RULE
AND REGULATIONS IMPLEMENTING SECTION 94 OF THE LABOR CODE IS NOT IN CONFORMITY WITH THE
LAW, AND THUS, WITHOUT FORCE AND EFFECT. THIS ISSUE WAS SUBSEQUENTLY DECIDED ON OCTOBER
24, 1984 BY A DIVISION OF THIS COURT IN THE CASE OF INSULAR BANK OF ASIA AND AMERICAN
EMPLOYEES’ UNION (IBAAEU) V. INCIONG, WHEREIN IT HELD AS FOLLOWS: "WE AGREE WITH
PETITIONER’S CONTENTION THAT SECTION 2, RULE IV, BOOK III OF THE IMPLEMENTING RULES AND
POLICY INSTRUCTION NO. 9 ISSUED BY THE THEN SECRETARY OF LABOR ARE NULL AND VOID SINCE IN
THE GUISE OF CLARIFYING THE LABOR CODE’S PROVISIONS ON HOLIDAY PAY, THEY IN EFFECT AMENDED
THEM ENLARGING THE SCOPE OF THEIR EXCLUSION (P. 11, REC.). . . . "FROM THE ABOVE-CITED
PROVISIONS, IT IS CLEAR THAT MONTHLY PAID EMPLOYEES ARE NOT EXCLUDED FROM THE BENEFITS OF
HOLIDAY PAY. HOWEVER, THE IMPLEMENTING RULES ON HOLIDAY PAY PROMULGATED BY THE THEN
SECRETARY OF LABOR EXCLUDES MONTHLY PAID EMPLOYEES FROM THE SAID BENEFITS BY INSERTING
UNDER RULE IV, BOOK III OF THE IMPLEMENTING RULES, SECTION 2, WHICH PROVIDES THAT:
‘EMPLOYEES WHO ARE UNIFORMLY PAID BY THE MONTH, IRRESPECTIVE OF THE NUMBER OF WORKING
DAYS THEREIN , WITH THE SALARY OF NOT LESS THAN THE STATUTORY OR ESTABLISHED MINIMUM
WAGE SHALL BE PRESUMED TO BE PAID FOR ALL DAYS IN THE MONTH WHETHER WORKED OR NOT."
(132 SCRA 663, 672-673) THIS RULING WAS REITERATED BY THE COURT EN BANC ON AUGUST 28, 1985
IN THE CASE OF CHARTERED BANK EMPLOYEES ASSOCIATION V. OPLE, WHEREIN IT ADDED THAT: "THE
QUESTIONED SEC. 2, RULE IV, BOOK III OF THE INTEGRATED RULES AND THE SECRETARY’S POLICY
INSTRUCTION NO. 9 ADD ANOTHER EXCLUDED GROUP, NAMELY ‘EMPLOYEES WHO ARE UNIFORMLY
PAID BY THE MONTH’. WHILE ADDITIONAL EXCLUSION IS ONLY IN THE FORM OF A PRESUMPTION THAT
ALL MONTHLY PAID EMPLOYEES HAVE ALREADY BEEN PAID HOLIDAY PAID, IT CONSTITUTES A TAKING
AWAY OR A DEPRIVATION WHICH MUST BE IN THE LAW IF IT IS TO BE VALID. AN ADMINISTRATIVE
INTERPRETATION WHICH DIMINISHES THE BENEFITS OF LABOR MORE THAN WHAT THE STATUTE
DELIMITS OR WITHHOLDS IS OBVIOUSLY ULTRA VIRES." (138 SCRA 273, 282. SEE ALSO CBTC EMPLOYEES
UNION V. CLAVE, JANUARY 7, 1986, 141 SCRA 9.)

3. REMEDIAL LAW; SPECIAL CIVIL ACTION; MANDAMUS; APPROPRIATE EQUITABLE REMEDY IN CASE
AT BAR. — RESPONDENT CORPORATION CONTENDS THAT MANDAMUS DOES NOT LIE TO COMPEL THE
PERFORMANCE OF AN ACT WHICH THE LAW DOES NOT CLEARLY ENJOIN AS A DUTY. TRUE IT IS ALSO
THAT MANDAMUS IS NOT PROPER TO ENFORCE A CONTRACTUAL OBLIGATION, THE REMEDY BEING AN
ACTION FOR SPECIFIC PERFORMANCE (PROVINCE OF PANGASINAN V. REPARATIONS COMMISSION,
NOVEMBER 29, 1977, 80 SCRA 376). IN THE CASE AT BAR, HOWEVER, IN VIEW OF THE ABOVE-CITED
SUBSEQUENT DECISIONS OF THIS COURT CLEARLY DEFINING THE LEGAL DUTY TO GRANT HOLIDAY PAY
TO MONTHLY SALARIED EMPLOYEES, MANDAMUS IS AN APPROPRIATE EQUITABLE REMEDY (DIONISIO V.
PATERNO, JULY 23, 1980, 98 SCRA 677; GONZALES V. GOVERNMENT SERVICE INSURANCE SYSTEM,
SEPTEMBER 10, 1981, 107 SCRA 492).

DECISION

FERIA, J.:

THIS IS A PETITION FOR CERTIORARI AND MANDAMUS FILED BY PETITIONER AGAINST ARBITRATOR
FROILAN M. BACUNGAN AND MANTRADE DEVELOPMENT CORPORATION ARISING FROM THE DECISION
OF RESPONDENT ARBITRATOR, THE DISPOSITIVE PART OF WHICH READS AS
FOLLOWS:JGC:CHANROBLES.COM.PH

"CONSIDERING ALL THE ABOVE, WE RULE THAT MANTRADE DEVELOPMENT CORPORATION IS NOT
UNDER LEGAL OBLIGATION TO PAY HOLIDAY PAY (AS PROVIDED FOR IN ARTICLE 94 OF THE LABOR CODE
IN THE THIRD OFFICIAL DEPARTMENT OF LABOR EDITION) TO ITS MONTHLY PAID EMPLOYEES WHO ARE
UNIFORMLY PAID BY THE MONTH, IRRESPECTIVE OF THE NUMBER OF WORKING DAYS THEREIN, WITH A
SALARY OF NOT LESS THAN THE STATUTORY OR ESTABLISHED MINIMUM WAGE, AND THIS RULE IS
APPLICABLE NOT ONLY AS OF MARCH 2, 1976 BUT AS OF NOVEMBER 1, 1974."CRALAW VIRTUA1AW
LIBRARY

PETITIONER QUESTIONS THE VALIDITY OF THE PERTINENT SECTION OF THE RULES AND REGULATIONS
IMPLEMENTING THE LABOR CODE AS AMENDED ON WHICH RESPONDENT ARBITRATOR BASED HIS
DECISION.

ON THE OTHER HAND, RESPONDENT CORPORATION HAS RAISED PROCEDURAL AND SUBSTANTIVE
OBJECTIONS. IT CONTENDS THAT PETITIONER IS BARRED FROM PURSUING THE PRESENT ACTION IN
VIEW OF ARTICLE 263 OF THE LABOR CODE, WHICH PROVIDES IN PART THAT "VOLUNTARY ARBITRATION
AWARDS OR DECISIONS SHALL BE FINAL, INAPPEALABLE, AND EXECUTORY," AS WELL AS THE RULES
IMPLEMENTING THE SAME; THE PERTINENT PROVISION OF THE COLLECTIVE BARGAINING AGREEMENT
BETWEEN PETITIONER AND RESPONDENT CORPORATION; AND ARTICLE 2044 OF THE CIVIL CODE WHICH
PROVIDES THAT "ANY STIPULATION THAT THE ARBITRATORS’ AWARD OR DECISION SHALL BE FINAL, IS
VALID, WITHOUT PREJUDICE TO ARTICLES 2038, 2039, AND 2040." RESPONDENT CORPORATION
FURTHER CONTENDS THAT THE SPECIAL CIVIL ACTION OF CERTIORARI DOES NOT LIE BECAUSE
RESPONDENT ARBITRATOR IS NOT AN "OFFICER EXERCISING JUDICIAL FUNCTIONS" WITHIN THE
CONTEMPLATION OF RULE 65, SECTION 1, OF THE RULES OF COURT; THAT THE INSTANT PETITION RAISES
AN ERROR OF JUDGMENT ON THE PART OF RESPONDENT ARBITRATOR AND NOT AN ERROR OF
JURISDICTION; THAT IT PRAYS FOR THE ANNULMENT OF CERTAIN RULES AND REGULATIONS ISSUED BY
THE DEPARTMENT OF LABOR, NOT FOR THE ANNULMENT OF THE VOLUNTARY ARBITRATION
PROCEEDINGS; AND THAT APPEAL BY CERTIORARI UNDER SECTION 29 OF THE ARBITRATION LAW,
REPUBLIC ACT NO. 876, IS NOT APPLICABLE TO THE CASE AT BAR BECAUSE ARBITRATION IN LABOR
DISPUTES IS EXPRESSLY EXCLUDED BY SECTION 3 OF SAID LAW.CHANROBLES LAW LIBRARY : RED

THESE CONTENTIONS HAVE BEEN RULED AGAINST IN THE DECISION OF THIS COURT IN THE CASE OF
OCEANIC BIC DIVISION (FFW) V. ROMERO, PROMULGATED ON JULY 16, 1984, WHEREIN IT
STATED:JGC:CHANROBLES.COM.PH

"WE AGREE WITH THE PETITIONER THAT THE DECISIONS OF VOLUNTARY ARBITRATORS MUST BE GIVEN
THE HIGHEST RESPECT AND AS A GENERAL RULE MUST BE ACCORDED A CERTAIN MEASURE OF FINALITY.
THIS IS ESPECIALLY TRUE WHERE THE ARBITRATOR CHOSEN BY THE PARTIES ENJOYS THE FIRST RATE
CREDENTIALS OF PROFESSOR FLERIDA RUTH PINEDA ROMERO, DIRECTOR OF THE U.P. LAW CENTER AND
AN ACADEMICIAN OF UNQUESTIONED EXPERTISE IN THE FIELD OF LABOR LAW. IT IS NOT CORRECT,
HOWEVER, THAT THIS RESPECT PRECLUDES THE EXERCISE OF JUDICIAL REVIEW OVER THEIR DECISIONS.
ARTICLE 262 OF THE LABOR CODE MAKING VOLUNTARY ARBITRATION AWARDS FINAL, INAPPEALABLE
AND EXECUTORY, EXCEPT WHERE THE MONEY CLAIMS EXCEED P100,000.00 OR 40% OF THE PAID-UP
CAPITAL OF THE EMPLOYER OR WHERE THERE IS ABUSE OF DISCRETION OR GROSS INCOMPETENCE
REFERS TO APPEALS TO THE NATIONAL LABOR RELATIONS COMMISSION AND NOT TO JUDICIAL REVIEW.

"IN SPITE OF STATUTORY PROVISIONS MAKING ‘FINAL’ THE DECISIONS OF CERTAIN ADMINISTRATIVE
AGENCIES, WE HAVE TAKEN COGNIZANCE OF PETITIONS QUESTIONING THESE DECISIONS WHERE WANT
OF JURISDICTION, GRAVE ABUSE OF DISCRETION, VIOLATION OF DUE PROCESS, DENIAL OF SUBSTANTIAL
JUSTICE, OR ERRONEOUS INTERPRETATION OF THE LAW WERE BROUGHT TO OUR ATTENTION. . . .

X X X
"A VOLUNTARY ARBITRATOR BY THE NATURE OF HER FUNCTIONS ACTS IN A QUASI-JUDICIAL CAPACITY.
THERE IS NO REASON WHY HER DECISIONS INVOLVING INTERPRETATION OF LAW SHOULD BE BEYOND
THIS COURT’S REVIEW. ADMINISTRATIVE OFFICIALS ARE PRESUMED TO ACT IN ACCORDANCE WITH LAW
AND YET WE DO NOT HESITATE TO PASS UPON THEIR WORK WHERE A QUESTION OF LAW IS INVOLVED
OR WHERE A SHOWING OF ABUSE OF DISCRETION IN THEIR OFFICIAL ACTS IS PROPERLY RAISED IN
PETITIONS FOR CERTIORARI." (130 SCRA 392, 399, 400-401)

IN DENYING PETITIONER’S CLAIM FOR HOLIDAY PAY, RESPONDENT ARBITRATOR STATED THAT ALTHOUGH
MONTHLY SALARIED EMPLOYEES ARE NOT AMONG THOSE EXCLUDED FROM RECEIVING SUCH
ADDITIONAL PAY UNDER ARTICLE 94 OF THE LABOR CODE OF THE PHILIPPINES, TO WIT:CHANROBLES
VIRTUAL LAWLIBRARY

ART. 94.RIGHT TO HOLIDAY PAY. — (A) EVERY WORKER SHALL BE PAID HIS REGULAR DAILY WAGE DURING
REGULAR HOLIDAYS, EXCEPT IN RETAIL AND SERVICE ESTABLISHMENTS REGULARLY EMPLOYING LESS
THAN TEN (10) WORKERS;

(B) THE EMPLOYER MAY REQUIRE AN EMPLOYEE TO WORK ON ANY HOLIDAY BUT SUCH EMPLOYEE
SHALL BE PAID COMPENSATION EQUIVALENT TO TWICE HIS REGULAR RATE; AND

(C) AS USED IN THIS ARTICLE, "HOLIDAY" INCLUDES: NEW YEAR’S DAY, MAUNDY THURSDAY, GOOD
FRIDAY, THE NINTH OF APRIL, THE FIRST OF MAY, THE TWELFTH OF JUNE, THE FOURTH OF JULY, THE
THIRTIETH OF NOVEMBER, THE TWENTY-FIFTH AND THE THIRTIETH OF DECEMBER, AND THE DAY
DESIGNATED BY LAW FOR HOLDING A GENERAL ELECTION.

THEY APPEAR TO BE EXCLUDED UNDER SEC. 2, RULE IV, BOOK III OF THE RULES AND REGULATIONS
IMPLEMENTING SAID PROVISION WHICH READS THUS:CHANROB1ES VIRTUAL 1AW LIBRARY

SEC. 2. STATUS OF EMPLOYEES PAID BY THE MONTH. — EMPLOYEES WHO ARE UNIFORMLY PAID BY THE
MONTH, IRRESPECTIVE OF THE NUMBER OF WORKING DAYS THEREIN, WITH A SALARY OF NOT LESS
THAN THE STATUTORY OR ESTABLISHED MINIMUM WAGE SHALL BE PRESUMED TO BE PAID FOR ALL
DAYS IN THE MONTH WHETHER WORKED OR NOT.

RESPONDENT ARBITRATOR FURTHER OPINED THAT RESPONDENT CORPORATION DOES NOT HAVE ANY
LEGAL OBLIGATION TO GRANT ITS MONTHLY SALARIED EMPLOYEES HOLIDAY PAY, UNLESS IT IS ARGUED
THAT THE PERTINENT SECTION OF THE RULES AND REGULATIONS IMPLEMENTING SECTION 94 OF THE
LABOR CODE IS NOT IN CONFORMITY WITH THE LAW, AND THUS, WITHOUT FORCE AND EFFECT.

THIS ISSUE WAS SUBSEQUENTLY DECIDED ON OCTOBER 24, 1984 BY A DIVISION OF THIS COURT IN THE
CASE OF INSULAR BANK OF ASIA AND AMERICA EMPLOYEES’ UNION (IBAAEU) V. INCIONG, WHEREIN IT
HELD AS FOLLOWS:JGC:CHANROBLES.COM.PH

"WE AGREE WITH THE PETITIONER’S CONTENTION THAT SECTION 2, RULE IV, BOOK III OF THE
IMPLEMENTING RULES AND POLICY INSTRUCTION NO. 9, ISSUED BY THE THEN SECRETARY OF LABOR
ARE NULL AND VOID SINCE IN THE GUISE OF CLARIFYING THE LABOR CODE’S PROVISIONS ON HOLIDAY
PAY, THEY IN EFFECT AMENDED THEM BY ENLARGING THE SCOPE OF THEIR EXCLUSION (P. 11, REC.)
"ARTICLE 94 OF THE LABOR CODE, AS AMENDED BY P.D. 850, PROVIDES:CHANROB1ES VIRTUAL 1AW
LIBRARY

‘ART. 94. RIGHT TO HOLIDAY PAY. — (A) EVERY WORKER SHALL BE PAID HIS REGULAR DAILY WAGE
DURING REGULAR HOLIDAYS, EXCEPT IN RETAIL AND SERVICE ESTABLISHMENTS REGULARLY EMPLOYING
LESS THAN TEN (10) WORKERS . . .’

"THE COVERAGE AND SCOPE OF EXCLUSION OF THE LABOR CODE’S HOLIDAY PAY PROVISIONS IS SPELLED
OUT UNDER ARTICLE 82 THEREOF WHICH READS:CHANROB1ES VIRTUAL 1AW LIBRARY

‘ART. 82. COVERAGE. — THE PROVISION OF THIS TITLE SHALL APPLY TO EMPLOYEES IN ALL
ESTABLISHMENTS AND UNDERTAKINGS, WHETHER FOR PROFIT OR NOT, BUT NOT TO GOVERNMENT
EMPLOYEES, MANAGERIAL EMPLOYEES, FIELD PERSONNEL, MEMBERS OF THE FAMILY OF THE EMPLOYER
WHO ARE DEPENDENT ON HIM FOR SUPPORT, DOMESTIC HELPERS, PERSONS, IN THE PERSONAL
SERVICE OF ANOTHER, AND WORKERS WHO ARE PAID BY RESULTS AS DETERMINED BY THE SECRETARY
OF LABOR IN APPROPRIATE REGULATIONS.’

X X X

"FROM THE ABOVE-CITED PROVISIONS, IT IS CLEAR THAT MONTHLY PAID EMPLOYEES ARE NOT
EXCLUDED FROM THE BENEFITS OF HOLIDAY PAY. HOWEVER, THE IMPLEMENTING RULES ON HOLIDAY
PAY PROMULGATED BY THE THEN SECRETARY OF LABOR EXCLUDES MONTHLY PAID EMPLOYEES FROM
THE SAID BENEFITS BY INSERTING UNDER RULE IV, BOOK III OF THE IMPLEMENTING RULES, SECTION 2,
WHICH PROVIDES THAT: ‘EMPLOYEES WHO ARE UNIFORMLY PAID BY THE MONTH, IRRESPECTIVE OF THE
NUMBER OF WORKING DAYS THEREIN, WITH A SALARY OF NOT LESS THAN THE STATUTORY OR
ESTABLISHED MINIMUM WAGE SHALL BE PRESUMED TO BE PAID FOR ALL DAYS IN THE MONTH
WHETHER WORKED OR NOT.’" (132 SCRA 663, 672-673).

THIS RULING WAS REITERATED BY THE COURT EN BANC ON AUGUST 28, 1985 IN THE CASE OF
CHARTERED BANK EMPLOYEES ASSOCIATION V. OPLE, WHEREIN IT ADDED THAT:CHANROBLES
VIRTUALAWLIBRARY CHANROBLES.COM:CHANROBLES.COM.PH

"THE QUESTIONED SEC. 2, RULE IV, BOOK III OF THE INTEGRATED RULES AND THE SECRETARY’S POLICY
INSTRUCTION NO. 9 ADD ANOTHER EXCLUDED GROUP, NAMELY ‘EMPLOYEES WHO ARE UNIFORMLY
PAID BY THE MONTH.’ WHILE THE ADDITIONAL EXCLUSION IS ONLY IN THE FORM OF A PRESUMPTION
THAT ALL MONTHLY PAID EMPLOYEES HAVE ALREADY BEEN PAID HOLIDAY PAY, IT CONSTITUTES A TAKING
AWAY OR A DEPRIVATION WHICH MUST BE IN THE LAW IF IT IS TO BE VALID. AN ADMINISTRATIVE
INTERPRETATION WHICH DIMINISHES THE BENEFITS OF LABOR MORE THAN WHAT THE STATUTE
DELIMITS OR WITHHOLDS IS OBVIOUSLY ULTRA VIRES." (138 SCRA 273, 282. SEE ALSO CBTC EMPLOYEES
UNION V. , CLAVE, JANUARY 7, 1986, 141 SCRA 9.)

LASTLY, RESPONDENT CORPORATION CONTENDS THAT MANDAMUS DOES NOT LIE TO COMPEL THE
PERFORMANCE OF AN ACT WHICH THE LAW DOES NOT CLEARLY ENJOIN AS A DUTY. TRUE IT IS ALSO
THAT MANDAMUS IS NOT PROPER TO ENFORCE A CONTRACTUAL OBLIGATION, THE REMEDY BEING AN
ACTION FOR SPECIFIC PERFORMANCE (PROVINCE OF PANGASINAN V. REPARATIONS COMMISSION,
NOVEMBER 29, 1977, 80 SCRA 376). IN THE CASE AT BAR, HOWEVER, IN VIEW OF THE ABOVE CITED
SUBSEQUENT DECISIONS OF THIS COURT CLEARLY DEFINING THE LEGAL DUTY TO GRANT HOLIDAY PAY
TO MONTHLY SALARIED EMPLOYEES, MANDAMUS IS AN APPROPRIATE EQUITABLE REMEDY (DIONISIO V.
PATERNO, JULY 23, 1980, 98 SCRA 677; GONZALES V. GOVERNMENT SERVICE INSURANCE SYSTEM,
SEPTEMBER 10, 1981, 107 SCRA 492).

WHEREFORE, THE QUESTIONED DECISION OF RESPONDENT ARBITRATOR IS SET ASIDE AND RESPONDENT
CORPORATION IS ORDERED TO GRANT HOLIDAY PAY TO ITS MONTHLY SALARIED EMPLOYEES. NO COSTS.

SO ORDERED.
G.R. NO. 118289 DECEMBER 13, 1999

TRANS-ASIA PHILS. EMPLOYEES ASSOCIATION (TAPEA) AND ARNEL GALVEZ, PETITIONERS,

VS.
NATIONAL LABOR RELATIONS COMMISSION, TRANS-ASIA (PHILS.) AND ERNESTO S. DE CASTRO,
RESPONDENTS.

KAPUNAN, J.:

THIS PETITION FOR CERTIORARI UNDER RULE 65 OF THE RULES OF COURT SEEKS TO REVERSE AND SET
ASIDE THE RESOLUTIONS, DATED 23 NOVEMBER 1993 AND 13 SEPTEMBER 1994 OF THE NATIONAL
LABOR RELATIONS COMMISSION ("NLRC") WHICH DISMISSED PETITIONERS' APPEAL FROM THE ADVERSE
DECISION OF THE LABOR ARBITER AND DENIED PETITIONERS' MOTION FOR RECONSIDERATION,
RESPECTIVELY.

THE ANTECEDENTS OF THIS CASE ARE AS FOLLOWS:

ON 7 JULY 1988, TRANS-ASIA PHILIPPINES EMPLOYEES ASSOCIATION (TAPEA), THE DULY-RECOGNIZED

COLLECTIVE BARGAINING AGENT OF THE MONTHLY-PAID RANK-AND-FILE EMPLOYEES OF TRANS-ASIA
(PHILS.), ENTERED INTO A COLLECTIVE BARGAINING AGREEMENT ("CBA") WITH THEIR EMPLOYER. THE
CBA, WHICH WAS TO BE EFFECTIVE FROM 1 APRIL 1988 UP TO 31 MARCH 1991, PROVIDED FOR, AMONG
OTHERS, THE PAYMENT OF HOLIDAY PAY WITH A STIPULATION THAT IF AN EMPLOYEE IS PERMITTED TO
WORK ON A LEGAL HOLIDAY, THE SAID EMPLOYEE WILL RECEIVE A SALARY EQUIVALENT TO 200% OF THE
REGULAR DAILY WAGE PLUS A 60% PREMIUM PAY.

DESPITE THE CONCLUSION OF THE CBA, HOWEVER, AN ISSUE WAS STILL LEFT UNRESOLVED WITH
REGARD TO THE CLAIM OF TAPEA FOR PAYMENT OF HOLIDAY PAY COVERING THE PERIOD FROM
JANUARY OF 1985 UP TO DECEMBER OF 1987. THUS, THE PARTIES UNDERWENT PREVENTIVE
MEDIATION MEETINGS WITH A REPRESENTATIVE FROM THE NATIONAL MEDIATION AND CONCILIATION
BOARD IN ORDER TO SETTLE THEIR DISAGREEMENT ON THIS PARTICULAR ISSUE. SINCE THE PARTIES
WERE NOT ABLE TO ARRIVE AT AN AMICABLE SETTLEMENT DESPITE THE CONCILIATION MEETINGS,
TAPEA, LED BY ITS PRESIDENT, PETITIONER ARNIE GALVEZ, FILED A COMPLAINT BEFORE THE LABOR
ARBITER, ON 18 AUGUST 1988, FOR THE PAYMENT OF THEIR HOLIDAY PAY IN ARREARS. ON 18
SEPTEMBER 1988, PETITIONERS AMENDED THEIR COMPLAINT TO INCLUDE THE PAYMENT OF HOLIDAY
PAY FOR THE DURATION OF THE RECENTLY CONCLUDED CBA (FROM 1988 TO 1991), UNFAIR LABOR
PRACTICE, DAMAGES AND ATTORNEY'S FEES.
IN THEIR POSITION PAPER, PETITIONERS CONTENDED THAT THEIR CLAIM FOR HOLIDAY PAY IN ARREARS
IS BASED ON THE NON-INCLUSION OF THE SAME IN THEIR MONTHLY PAY. IN THIS REGARD, PETITIONERS
CITED CERTAIN CIRCUMSTANCES WHICH, ACCORDING TO THEM, WOULD SUPPORT THEIR CLAIM FOR
PAST DUE HOLIDAY PAY. FIRST, PETITIONERS PRESENTED TRANS-ASIA'S EMPLOYEES' MANUAL WHICH
REQUIRES, AS A PRE-CONDITION FOR THE PAYMENT OF HOLIDAY PAY, THAT THE EMPLOYEE SHOULD
HAVE WORKED OR WAS ON AUTHORIZED LEAVE WITH PAY ON THE DAY IMMEDIATELY PRECEDING THE
LEGAL HOLIDAY. PETITIONERS ARGUED THAT "IF THE INTENTION [OF TRANS-ASIA] WAS NOT TO PAY
HOLIDAY PAY IN ADDITION TO THE EMPLOYEE'S MONTHLY PAY, THEN THERE WOULD BE NO NEED TO
IMPOSE OR SPECIFY THE PRE-CONDITION FOR THE PAYMENT." 1 SECOND, PETITIONERS PROFFERED AS
EVIDENCE THEIR APPOINTMENT PAPERS WHICH DO NOT CONTAIN ANY STIPULATION ON THE INCLUSION
OF HOLIDAY PAY IN THEIR MONTHLY SALARY. ACCORDING TO PETITIONERS, THE ABSENCE OF SUCH
STIPULATION IS AN INDICATION THAT THE MANDATED HOLIDAY PAY IS NOT INCORPORATED IN THE
MONTHLY SALARY. THIRD, PETITIONERS NOTED THE INCLUSION OF A PROVISION IN THE CBA FOR THE
PAYMENT OF AN AMOUNT EQUIVALENT TO 200% OF THE REGULAR DAILY WAGE PLUS 60% PREMIUM
PAY TO EMPLOYEES WHO ARE PERMITTED TO WORK ON A REGULAR HOLIDAY. PETITIONERS CLAIMED
THAT THIS VERY GENEROUS PROVISION WAS THE REMEDY AVAILED OF BY TRANS-ASIA TO ALLOW ITS
EMPLOYEES TO RECOUP THE HOLIDAY PAY IN ARREARS AND, AS SUCH, IS A TACIT ADMISSION OF THE
NON-PAYMENT OF THE SAME DURING THE PERIOD PRIOR TO THE CURRENT CBA.

FINALLY, PETITIONERS CITED THE CURRENT CBA PROVISION WHICH OBLIGATES TRANS-ASIA TO GIVE
HOLIDAY PAY. PETITIONERS ASSERTED THAT THIS PROVISION IS AN ACKNOWLEDGMENT BY TRANS-ASIA
OF ITS FAILURE TO PAY THE SAME IN THE PAST SINCE, IF IT WAS ALREADY GIVING HOLIDAY PAY PRIOR TO
THE CBA, THERE WAS NO NEED TO STIPULATE ON THE SAID OBLIGATION IN THE CURRENT CBA.

WITH REGARD TO THE CLAIM FOR THE PAYMENT OF HOLIDAY PAY FOR THE DURATION OF THE CBA, THE
ACCUSATION OF UNFAIR LABOR PRACTICE AND THE CLAIM FOR DAMAGES AND ATTORNEY'S FEES,
PETITIONERS ASSERTED THAT TRANS-ASIA IS GUILTY OF BAD FAITH IN NEGOTIATING AND EXECUTING
THE CURRENT CBA SINCE, AFTER IT RECOGNIZED THE RIGHT OF THE EMPLOYEES TO RECEIVE HOLIDAY
PAY, TRANS-ASIA ALLEGEDLY REFUSED TO HONOR THE CBA PROVISION ON THE SAME.

IN RESPONSE TO PETITIONER'S CONTENTIONS, TRANS-ASIA REFUTED THE SAME IN SERIATIM. WITH

REGARD TO THE PRE-CONDITION FOR THE PAYMENT OF HOLIDAY PAY STATED IN THE EMPLOYEES'
MANUAL AND THE ABSENCE OF A STIPULATION ON HOLIDAY PAY IN THE EMPLOYEES' APPOINTMENT
PAPERS, TRANS-ASIA ASSERTED THAT THE ABOVE CIRCUMSTANCES ARE NOT INDICATIVE OF ITS NON-
PAYMENT OF HOLIDAY PAY SINCE IT HAS ALWAYS HONORED THE LABOR LAW PROVISIONS ON HOLIDAY
PAY BY INCORPORATING THE SAME IN THE PAYMENT OF THE MONTHLY SALARIES OF ITS EMPLOYEES. IN
SUPPORT OF THIS CLAIM, TRANS-ASIA POINTED OUT THAT IT HAS LONG BEEN THE STANDING PRACTICE
OF THE COMPANY TO USE THE DIVISOR OF "286" DAYS IN COMPUTING FOR ITS EMPLOYEES' OVERTIME
PAY AND DAILY RATE DEDUCTIONS FOR ABSENCES. TRANS-ASIA EXPLAINED THAT THIS DIVISOR IS
ARRIVED AT THROUGH THE FOLLOWING FORMULA:

52 X 44

———— = 286 DAYS

WHERE: 52 = NUMBER OF WEEKS IN A YEAR

44 = NUMBER OF WORK HOURS PER WEEK

8 = NUMBER OF WORK HOURS PER DAY

TRANS-ASIA FURTHER CLARIFIED THAT THE "286" DAYS DIVISOR ALREADY TAKES INTO ACCOUNT THE
TEN (10) REGULAR HOLIDAYS IN A YEAR SINCE IT ONLY SUBTRACTS FROM THE 365 CALENDAR DAYS THE
UNWORKED AND UNPAID 52 SUNDAYS AND 26 SATURDAYS (EMPLOYEES ARE REQUIRED TO WORK HALF-
DAY DURING SATURDAYS). TRANS-ASIA CLAIMED THAT IF THE TEN (10) REGULAR HOLIDAYS WERE NOT
INCLUDED IN THE COMPUTATION OF THEIR EMPLOYEES' MONTHLY SALARY, THE DIVISOR WHICH THEY
WOULD HAVE USED WOULD ONLY BE 277 DAYS WHICH IS ARRIVED AT BY SUBTRACTING 52 SUNDAYS, 26
SATURDAYS AND THE 10 LEGAL HOLIDAYS FROM 365 CALENDAR DAYS. FURTHERMORE, TRANS-ASIA
EXPLAINED THAT THE "286" DAYS DIVISOR IS BASED ON REPUBLIC ACT NO. 6640, 2 WHEREIN THE
DIVISOR OF 262 DAYS (COMPOSED OF THE 252 WORKING DAYS AND THE 10 LEGAL HOLIDAYS) IS USED IN
COMPUTING FOR THE MONTHLY RATE OF WORKERS WHO DO NOT WORK AND ARE NOT CONSIDERED
PAID ON SATURDAYS AND SUNDAYS OR REST DAYS. ACCORDING TO TRANS-ASIA, IF THE ADDITIONAL 26
WORKING SATURDAYS IN A YEAR IS FACTORED-IN TO THE DIVISOR PROVIDED BY REPUBLIC ACT NO.
6640, THE RESULTING DIVISOR WOULD BE "286" DAYS.

ON PETITIONERS' CONTENTION WITH REGARD TO THE CBA PROVISION ON THE ALLEGEDLY GENEROUS
HOLIDAY PAY RATE OF 260%, TRANS-ASIA EXPLAINED THAT THIS HOLIDAY PAY RATE WAS INCLUDED IN
THE CBA IN ORDER TO COMPLY WITH SECTION 4, RULE IV, BOOK III OF THE OMNIBUS RULES
IMPLEMENTING THE LABOR CODE. THE AFORESAID PROVISION READS:

SEC. 4. COMPENSATION FOR HOLIDAY WORK. — ANY EMPLOYEE WHO IS PERMITTED OR SUFFERED TO
WORK ON ANY REGULAR HOLIDAY, NOT EXCEEDING EIGHT (8) HOURS, SHALL BE PAID AT LEAST TWO
HUNDRED PERCENT (200%) OF HIS REGULAR DAILY WAGE. IF THE HOLIDAY FALLS ON THE SCHEDULED
REST DAY OF THE EMPLOYEE, HE SHALL BE ENTITLED TO AN ADDITIONAL PREMIUM PAY OF AT LEAST 30%
OF HIS REGULAR HOLIDAY RATE OF 200% BASED ON HIS REGULAR WAGE RATE.

ON THE CONTENTION THAT TRANS-ASIA'S ACQUIESCENCE TO THE INCLUSION OF A HOLIDAY PAY

PROVISION IN THE CBA IS AN ADMISSION OF NON-PAYMENT OF THE SAME IN THE PAST, TRANS-ASIA
REITERATED THAT IT IS SIMPLY A RECOGNITION OF THE MANDATE OF THE LABOR CODE THAT
EMPLOYEES ARE ENTITLED TO HOLIDAY PAY. IT CLARIFIED THAT THE COMPANY'S FIRM BELIEF IN THE
PAYMENT OF HOLIDAY PAY TO EMPLOYEES LED IT TO AGREE TO THE INCLUSION OF THE HOLIDAY PAY
PROVISION IN THE CBA.

WITH REGARD TO THE ACCUSATION OF UNFAIR LABOR PRACTICE BECAUSE OF TRANS-ASIA'S ACT OF
ALLEGEDLY BARGAINING IN BAD FAITH AND REFUSAL TO GIVE HOLIDAY PAY IN ACCORDANCE WITH THE
CBA, TRANS-ASIA EXPLAINED THAT WHAT PETITIONERS WOULD LIKE THE COMPANY TO DO IS TO GIVE
DOUBLE HOLIDAY PAY SINCE, AS PREVIOUSLY STATED, THE COMPANY HAS ALREADY INCLUDED THE SAME
IN ITS EMPLOYEES MONTHLY SALARY AND, YET, PETITIONERS WANT IT TO PAY A SECOND SET OF HOLIDAY
PAY.

ON 13 FEBRUARY 1989, THE LABOR ARBITER RENDERED A DECISION DISMISSING THE COMPLAINT, TO
WIT:
AFTER CONSIDERING CLOSELY THE ARGUMENTS OF THE PARTIES IN SUPPORT OF THEIR RESPECTIVE
CLAIMS AND DEFENSES, THIS BRANCH UPHOLDS A DIFFERENT VIEW FROM THAT ESPOUSED BY THE
COMPLAINANTS.

JUST LIKE IN THE CHARTERED BANK CASE (L-44717), AUGUST 28, 1985, 138 SCRA 273, WHICH IS CITED
BY THE COMPLAINANTS IN THEIR POSITION PAPER, THERE APPEARS TO BE NO CLEAR AGREEMENT
BETWEEN THE PARTIES IN THE INSTANT CASE, WHETHER VERBAL OR IN WRITING, THAT THE MONTHLY
SALARY OF THE EMPLOYEES INCLUDED THE MANDATED HOLIDAY PAY. IN THE ABSENCE OF SUCH
AGREEMENT, THE SUPREME COURT IN SAID CHARTERED BANK CASE TOOK INTO CONSIDERATION
EXISTING PRACTICES IN THE BANK IN RESOLVING THE ISSUE, SUCH AS EMPLOYMENT BY THE BANK OF A
DIVISOR OF 251 DAYS WHICH IS THE RESULT OF SUBTRACTING ALL SATURDAYS, SUNDAYS AND THE TEN
(10) LEGAL HOLIDAYS FROM THE TOTAL NUMBER OF CALENDAR DAYS IN A YEAR. FURTHER, THE COURT
TOOK NOTE OF THE FACT THAT THE BANK USED CONFLICTING OR DIFFERENT DIVISORS IN COMPUTING
SALARY-RELATED BENEFITS AS WELL AS THE EMPLOYEES' ABSENCE FROM WORK. IN THE CASE AT BAR,
NOT ONLY DID THE CBA BETWEEN THE COMPLAINANTS AND RESPONDENTS HEREIN PROVIDES (SIC)
THAT THE TEN (10) LEGAL HOLIDAYS ARE RECOGNIZED BY THE COMPANY AS FULL HOLIDAY WITH PAY.
WHAT IS MORE, THERE CAN BE NO DOUBT THAT SINCE 1977 UP TO THE EXECUTION OF THE CBA, THE
TRANS-ASIA, UNLIKE THAT OBTAINING IN THE CHARTERED BANK CASE, NEVER USED CONFLICTING OR
DIFFERENT DIVISORS BUT CONSISTENTLY EMPLOYED THE DIVISOR OF 286 DAYS, WHICH AS EARLIER
POINTED OUT, WAS ARRIVED AT BY SUBTRACTING ONLY THE UNWORKED 52 SUNDAYS AND THE 26
HALF-DAY-WORKED SATURDAYS FROM THE TOTAL NUMBER OF DAYS IN A YEAR. THE CONSISTENCY IN
THE ESTABLISHED PRACTICE OF THE TRANS-ASIA, WHICH INCIDENTALLY IS NOT DISPUTED BY
COMPLAINANTS, DID NOT GIVE RISE TO ANY DOUBT WHICH COULD HAVE BEEN RESOLVED IN FAVOR OF
COMPLAINANTS.

BESIDES, THE RESPONDENTS UNLIKE THE RESPONDENT BANK IN THE CHARTERED BANK EMPLOYEES
ASSOCIATION VS. HON. BLAS F. OPLE, ET AL. (SUPRA) CITING ALSO THE CASE OF IBAAEU VS. HON.
AMADO INCIONG (132 SCRA 663) WHICH CASE HAVE (SIC) INVALIDATED SECTION 2, RULE IV, BOOK III OF
THE IMPLEMENTING RULES OF THE LABOR CODE AND POLICY INSTRUCTION NO. 9, HAVE NEVER RELIED
ON THE SAID INVALIDATED RULE AND POLICY INSTRUCTION.

THE COMPLAINANTS' ARGUMENTS AND JUXTAPOSITIONS IN CLAIMING THAT THEY WERE DENIED
PAYMENT OF THEIR HOLIDAY PAY PALED IN THE FACE OF THE PREVAILING COMPANY PRACTICES AND
CIRCUMSTANCES ABOVESTATED.

ALSO, FOR THE REASONS ADVERTED TO ABOVE, THE COMPLAINANTS CHARGE OF UNFAIR LABOR
PRACTICE CLAIMING THAT RESPONDENTS IN BAD FAITH REFUSED TO COMPLY WITH THEIR
CONTRACTUAL OBLIGATION UNDER THE CBA BY NOT PAYING THE COMPLAINANTS' HOLIDAY PAY, MUST
FAIL. SINCE RESPONDENTS HAVE NOTHING MORE TO PAY BY WAY OF LEGAL HOLIDAY PAY AS IT HAS
ALREADY BEEN INCLUDED IN THEIR MONTHLY SALARIES, THE PROVISION IN THE CBA RELATIVE TO
HOLIDAY PAY IS JUST BUT A RECOGNITION OF THE COMPLAINANTS RIGHT TO PAYMENT OF LEGAL
HOLIDAY PAY AS MANDATED BY THE LABOR CODE.

WHEREFORE, ALL THE FOREGOING PREMISES BEING CONSIDERED, JUDGMENT IS HEREBY RENDERED
DISMISSING THE COMPLAINT FOR LACK OF MERIT.

SO ORDERED. 3
PETITIONERS APPEALED TO THE NATIONAL LABOR RELATIONS COMMISSION. IN ITS RESOLUTION, DATED
23 NOVEMBER 1993, THE NLRC DISMISSED THE APPEAL AND AFFIRMED THE DECISION OF THE LABOR
ARBITER, TO WIT:

WE FIND NO COGENT REASON TO CHANGE OR DISTURB THE DECISION APPEALED FROM, THE SAME
BEING SUBSTANTIALLY SUPPORTED BY THE FACTS AND EVIDENCE ON RECORD. "IT IS A WELL-SETTLED
RULE THAT FINDINGS OF FACTS OF ADMINISTRATIVE BODIES, IF BASED ON SUBSTANTIAL EVIDENCE ARE
CONTROLLING ON THE REVIEWING AUTHORITY." (PLANTERS PRODUCTS, INC. VS. NLRC, G.R. NO. 78524
& 78739, JANUARY 20, 1989; 169 SCRA 328).

WE FIND NO ABUSE OF DISCRETION AND/OR ERROR IN THE ASSAILED DECISION.

WHEREFORE, THE APPEAL ARE (SIC) HEREBY DISMISSED FOR LACK OF MERIT AND THE DECISION
APPEALED FROM IS AFFIRMED.

SO ORDERED. 4

PETITIONERS' MOTION FOR RECONSIDERATION WAS, LIKEWISE, DENIED BY THE NLRC IN ITS
RESOLUTION, DATED 13 SEPTEMBER 1994.

PETITIONERS ARE NOW BEFORE US FAULTING THE NLRC WITH THE FOLLOWING ASSIGNMENT OF
ERRORS:

PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION IN UPHOLDING THE LABOR ARBITER'S
DECISION DESPITE THE LACK OF SUBSTANTIAL EVIDENCE TO SUPPORT IT

II

IN UPHOLDING THE LABOR ARBITER'S DECISION DESPITE THE LACK OF SUBSTANTIAL EVIDENCE TO
SUPPORT IT, PUBLIC RESPONDENT NLRC VIOLATED THE CONSTITUTIONAL AND LEGAL MANDATE TO
RESOLVE ALL DOUBTS IN SOCIAL LEGISLATION IN FAVOR OF LABOR. 5

PETITIONERS, IN FURTHERANCE OF THEIR FIRST ASSIGNMENT OF ERROR, ASSERT THAT THE NLRC
"BLATANTLY AND UNASHAMEDLY DISREGARDED" THE NUMEROUS EVIDENCE IN SUPPORT OF THEIR
CLAIM AND RELIED MERELY ON THE SOLE EVIDENCE PRESENTED BY TRANS-ASIA, THE "286" DAYS
DIVISOR, IN DISMISSING THEIR APPEAL AND, IN SO DOING, IS GUILTY OF GRAVE ABUSE OF DISCRETION.
6

WE DO NOT AGREE.

TRANS-ASIA'S INCLUSION OF HOLIDAY PAY IN PETITIONERS' MONTHLY SALARY IS CLEARLY ESTABLISHED

BY ITS CONSISTENT USE OF THE DIVISOR OF "286" DAYS IN THE COMPUTATION OF ITS EMPLOYEES'
BENEFITS AND DEDUCTIONS. THE USE BY TRANS-ASIA OF THE "286" DAYS DIVISOR WAS NEVER
DISPUTED BY PETITIONERS. A SIMPLE APPLICATION OF MATHEMATICS WOULD REVEAL THAT THE TEN
(10) LEGAL HOLIDAYS IN A YEAR ARE ALREADY ACCOUNTED FOR WITH THE USE OF THE SAID DIVISOR. AS
EXPLAINED BY TRANS-ASIA, IF ONE IS TO DEDUCT THE UNWORKED 52 SUNDAYS AND 26 SATURDAYS
(DERIVED BY DIVIDING 52 SATURDAYS IN HALF SINCE PETITIONERS ARE REQUIRED TO WORK HALF-DAY
ON SATURDAYS) FROM THE 365 CALENDAR DAYS IN A YEAR, THE RESULTING DIVISOR WOULD BE 286
DAYS (SHOULD ACTUALLY BE 287 DAYS). SINCE THE TEN (10) LEGAL HOLIDAYS WERE NEVER INCLUDED IN
SUBTRACTING THE UNWORKED AND UNPAID DAYS IN A CALENDAR YEAR, THE ONLY LOGICAL
CONCLUSION WOULD BE THAT THE PAYMENT FOR HOLIDAY PAY IS ALREADY INCORPORATED INTO THE
SAID DIVISOR. THUS, WHEN VIEWED AGAINST THIS VERY CONVINCING PIECE OF EVIDENCE, THE
ARGUMENTS PUT FORWARD BY PETITIONERS TO SUPPORT THEIR CLAIM OF NON-PAYMENT OF HOLIDAY
PAY, I.E., THE PRE-CONDITION STATED IN THE EMPLOYEES' MANUAL FOR ENTITLEMENT TO HOLIDAY PAY,
THE ABSENCE OF A STIPULATION IN THE EMPLOYEES' APPOINTMENT PAPERS FOR THE INCLUSION OF
HOLIDAY PAY IN THEIR MONTHLY SALARY, THE STIPULATION IN THE CBA RECOGNIZING THE
ENTITLEMENT OF THE PETITIONERS TO HOLIDAY PAY WITH A CONCOMITANT PROVISION FOR THE
GRANTING OF AN "ALLEGEDLY" VERY GENEROUS HOLIDAY PAY RATE, WOULD APPEAR TO BE MERELY
INFERENCES AND SUPPOSITIONS WHICH, IN THE APROPOS WORDS OF THE LABOR ARBITER, "PALED IN
THE FACE OF THE PREVAILING COMPANY PRACTICES AND CIRCUMSTANCES ABOVESTATED."

HENCE, IT IS ON ACCOUNT OF THE CONVINCING AND LEGALLY SOUND ARGUMENTS AND EVIDENCE OF
TRANS-ASIA THAT THE LABOR ARBITER RENDERED A DECISION ADVERSE TO PETITIONERS.
ACKNOWLEDGING THAT THE DECISION OF THE LABOR ARBITER WAS BASED ON SUBSTANTIAL EVIDENCE,
THE NLRC AFFIRMED THE FORMER'S DISPOSITION. IT IS ALSO WITH THIS ACKNOWLEDGMENT THAT THE
COURT AFFIRMS THE QUESTIONED RESOLUTIONS OF THE NLRC. AS APTLY PUT BY THE SOLICITOR
GENERAL, CITING SUNSET VIEW CONDOMINIUM CORPORATION VS. NLRC, 7 "FINDINGS OF FACT OF
ADMINISTRATIVE BODIES SHOULD NOT BE DISTURBED IN THE ABSENCE OF GRAVE ABUSE OF
DISCRETION OR UNLESS THE FINDINGS ARE NOT SUPPORTED BY SUBSTANTIAL EVIDENCE." 8 IN THIS
REGARD, THE SOLICITOR GENERAL OBSERVED: "AS SAID ABOVE, PUBLIC RESPONDENT ACTED ON THE
BASIS OF SUBSTANTIAL EVIDENCE, HENCE, GRAVE ABUSE OF DISCRETION IS RULED OUT." 9

HOWEVER, PETITIONERS INSIST THAT THE AGREEMENT OF TRANS-ASIA IN THE CBA TO GIVE A
GENEROUS 260% HOLIDAY PAY RATE TO EMPLOYEES WHO WORK ON A HOLIDAY IS CONCLUSIVE PROOF
THAT THE MONTHLY PAY OF PETITIONERS DOES NOT INCLUDE HOLIDAY PAY. 10 PETITIONERS CITE AS
BASIS THE CASE OF CHARTERED BANK EMPLOYEES ASSOCIATION VS. OPLE, 11 WHICH READS:

ANY REMAINING DOUBTS WHICH MAY ARISE FROM THE CONFLICTING OR DIFFERENT DIVISORS USED IN
THE COMPUTATION OF OVERTIME PAY AND EMPLOYEES' ABSENCES ARE RESOLVED BY THE MANNER IN
WHICH WORK ACTUALLY RENDERED ON HOLIDAYS IS PAID. THUS, WHENEVER MONTHLY PAID
EMPLOYEES WORK ON A HOLIDAY, THEY ARE GIVEN AN ADDITIONAL 100% BASE PAY ON TOP OF A
PREMIUM PAY OF 50%. IF THE EMPLOYEES' MONTHLY PAY ALREADY INCLUDES THEIR SALARIES FOR
HOLIDAYS, THEY SHOULD BE PAID ONLY PREMIUM PAY BUT NOT BOTH BASE PAY AND PREMIUM PAY. 12

WE ARE NOT CONVINCED. THE CITED CASE CANNOT BE RELIED UPON BY PETITIONERS SINCE THE FACTS
OBTAINING IN THE CHARTERED BANK CASE ARE VERY DIFFERENT FROM THOSE IN THE PRESENT CASE. IN
THE CHARTERED BANK CASE, THE BANK USED DIFFERENT DIVISORS IN COMPUTING FOR ITS EMPLOYEES
BENEFITS AND DEDUCTIONS. FOR COMPUTING OVERTIME COMPENSATION, THE BANK USED 251 DAYS
AS ITS DIVISOR. ON THE OTHER HAND, FOR COMPUTING DEDUCTIONS DUE TO ABSENCES, THE BANK
USED 365 DAYS AS DIVISOR. DUE TO THIS CONFUSING SITUATION, THE COURT DECLARED THAT THERE
EXISTED A DOUBT AS TO WHETHER HOLIDAY PAY IS ALREADY INCORPORATED IN THE EMPLOYEES'
MONTHLY SALARY. SINCE DOUBTS SHOULD BE RESOLVED IN FAVOR OF LABOR, THE COURT IN THE
CHARTERED BANK CASE RULED IN FAVOR OF THE EMPLOYEES AND FURTHER STATED THAT ITS
CONCLUSION IS FORTIFIED BY THE MANNER IN WHICH THE EMPLOYEES ARE REMUNERATED FOR WORK
RENDERED ON HOLIDAYS. IN THE PRESENT CASE, HOWEVER, THERE IS NO CONFUSION WITH REGARD TO
THE DIVISOR USED BY TRANS-ASIA IN COMPUTING FOR PETITIONERS' BENEFITS AND DEDUCTIONS.
TRANS-ASIA CONSISTENTLY USED A "286" DAYS DIVISOR FOR ALL ITS COMPUTATIONS.

NEVERTHELESS, PETITIONERS' CAUSE IS NOT ENTIRELY LOST. THE COURT NOTES THAT THERE IS A NEED
TO ADJUST THE DIVISOR USED BY TRANS-ASIA TO 287 DAYS, INSTEAD OF ONLY 286 DAYS, IN ORDER TO
PROPERLY ACCOUNT FOR THE ENTIRETY OF REGULAR HOLIDAYS AND SPECIAL DAYS IN A YEAR AS
PRESCRIBED BY EXECUTIVE ORDER NO. 203 13 IN RELATION TO SECTION 6 OF THE RULES
IMPLEMENTING REPUBLIC ACT 6727. 14

SEC. 1 OF EXECUTIVE ORDER NO. 203 PROVIDES:

SEC. 1. UNLESS OTHERWISE MODIFIED BY LAW, ORDER OR PROCLAMATION, THE FOLLOWING REGULAR
HOLIDAYS AND SPECIAL DAYS SHALL BE OBSERVED IN THE COUNTRY:

A. REGULAR HOLIDAYS

NEW YEAR'S DAY — JANUARY 1

MAUNDY THURSDAY — MOVABLE DATE

GOOD FRIDAY — MOVABLE DATE

ARAW NG KAGITINGAN — APRIL 9

(BATAAN AND CORREGIDOR DAY)

LABOR DAY — MAY 1

INDEPENDENCE DAY — JUNE 12

NATIONAL HEROES DAY — LAST SUNDAY OF AUGUST

BONIFACIO DAY — NOVEMBER 30

CHRISTMAS DAY — DECEMBER 25

RIZAL DAY — DECEMBER 30

B. NATIONWIDE SPECIAL DAYS

ALL SAINTS DAY — NOVEMBER 1

LAST DAY OF THE YEAR — DECEMBER 31

ON THE OTHER HAND, SECTION 6 OF THE IMPLEMENTING RULES AND REGULATIONS OF REPUBLIC ACT
NO. 6727 PROVIDES:
SEC. 6. SUGGESTED FORMULA IN DETERMINING THE EQUIVALENT MONTHLY STATUTORY MINIMUM
WAGE RATES. — WITHOUT PREJUDICE FROM EXISTING COMPANY PRACTICES, AGREEMENTS OR
POLICIES, THE FOLLOWING FORMULAS MAY BE USED AS GUIDES IN DETERMINING THE EQUIVALENT
MONTHLY STATUTORY MINIMUM WAGE RATES:

XXX XXX XXX

D) FOR THOSE WHO DO NOT WORK AND ARE NOT CONSIDERED PAID ON SATURDAYS AND
SUNDAYS OR REST DAYS:

EQUIVALENT MONTHLY = AVERAGE DAILY WAGE RATE X 262 DAYS

RATE (EMR) 12

WHERE 262 DAYS =

250 DAYS — ORDINARY WORKING DAYS

10 DAYS — REGULAR HOLIDAYS

2 DAYS — SPECIAL DAYS (IF CONSIDERED PAID; IF ACTUALLY

WORKED, THIS IS EQUIVALENT TO 2.6 DAYS)

————

262 DAYS — TOTAL EQUIVALENT NUMBER OF DAYS

BASED ON THE ABOVE, THE PROPER DIVISOR THAT SHOULD BE USED FOR A SITUATION WHEREIN THE
EMPLOYEES DO NOT WORK AND ARE NOT CONSIDERED PAID ON SATURDAYS AND SUNDAYS OR REST
DAYS IS 262 DAYS. IN THE PRESENT CASE, SINCE THE EMPLOYEES OF TRANS-ASIA ARE REQUIRED TO
WORK HALF-DAY ON SATURDAYS, 26 DAYS SHOULD BE ADDED TO THE DIVISOR OF 262 DAYS, THUS,
RESULTING TO 288 DAYS. HOWEVER, DUE TO THE FACT THAT THE REST DAYS OF PETITIONERS FALL ON A
SUNDAY, THE NUMBER OF UNWORKED BUT PAID LEGAL HOLIDAYS SHOULD BE REDUCED TO NINE (9),
INSTEAD OF TEN (10), SINCE ONE LEGAL HOLIDAY UNDER E.O. NO. 203 ALWAYS FALLS ON THE LAST
SUNDAY OF AUGUST, NATIONAL HEROES DAY. THUS, THE DIVISOR THAT SHOULD BE USED IN THE
PRESENT CASE SHOULD BE 287 DAYS.

HOWEVER, THE COURT NOTES THAT IF THE DIVISOR IS INCREASED TO 287 DAYS, THE RESULTING DAILY
RATE FOR PURPOSES OF OVERTIME PAY, HOLIDAY PAY AND CONVERSIONS OF ACCUMULATED LEAVES
WOULD BE DIMINISHED. TO ILLUSTRATE, IF AN EMPLOYEE RECEIVES P8,000.00 AS HIS MONTHLY SALARY,
HIS DAILY RATE WOULD BE P334.49, COMPUTED AS FOLLOWS:

P8,000.00 X 12 MONTHS

—————————— = P334.49/DAY

287 DAYS
WHEREAS IF THE DIVISOR USED IS ONLY 286 DAYS, THE EMPLOYEE'S DAILY RATE WOULD BE P335.66,
COMPUTED AS FOLLOWS:

P8,000.00 X 12 MONTHS

—————————— = P335.66/DAY

286 DAYS

CLEARLY, THIS MUDDLED SITUATION WOULD BE VIOLATIVE OF THE PROSCRIPTION ON THE NON-
DIMINUTION OF BENEFITS UNDER SECTION 100 OF THE LABOR CODE. ON THE OTHER HAND, THE USE OF
THE DIVISOR OF 287 DAYS WOULD BE TO THE ADVANTAGE OF PETITIONERS IF IT IS USED FOR PURPOSES
OF COMPUTING FOR DEDUCTIONS DUE TO THE EMPLOYEE'S ABSENCES. IN VIEW OF THIS SITUATION,
THE COURT RULES THAT THE ADJUSTED DIVISOR OF 287 DAYS SHOULD ONLY BE USED BY TRANS-ASIA
FOR COMPUTATIONS WHICH WOULD BE ADVANTAGEOUS TO PETITIONERS, I.E., DEDUCTIONS FOR
ABSENCES, AND NOT FOR COMPUTATIONS WHICH WOULD DIMINISH THE EXISTING BENEFITS OF THE
EMPLOYEES, I.E., OVERTIME PAY, HOLIDAY PAY AND LEAVE CONVERSIONS.

FOR THEIR SECOND ASSIGNMENT OF ERROR, PETITIONERS ARGUE THAT, SINCE THEY PROVIDED THE
NLRC WITH "OVERWHELMING PROOF" OF THEIR CLAIM AGAINST TRANS-ASIA, THE LEAST THAT THE
NLRC COULD HAVE DONE WAS TO DECLARE THAT THERE EXISTED AN AMBIGUITY WITH REGARD TO
TRANS-ASIA'S PAYMENT OF HOLIDAY PAY. PETITIONERS THEN POSITS THAT IF THE NLRC HAD ONLY DONE
SO, THIS AMBIGUITY WOULD HAVE BEEN RESOLVED IN THEIR FAVOR BECAUSE OF THE CONSTITUTIONAL
MANDATE TO RESOLVE DOUBTS IN FAVOR OF LABOR.

WE ARE NOT PERSUADED. AS PREVIOUSLY STATED, THE DECISION OF THE LABOR ARBITER AND THE
RESOLUTIONS OF THE NLRC WERE BASED ON SUBSTANTIAL EVIDENCE AND, AS SUCH, NO AMBIGUITY OR
DOUBT EXISTS WHICH COULD BE RESOLVED IN PETITIONERS' FAVOR.

WHEREFORE, PREMISES CONSIDERED, THE RESOLUTIONS OF THE NLRC, DATED 23 NOVEMBER 1993 AND
13 SEPTEMBER 1994, ARE HEREBY AFFIRMED WITH THE MODIFICATION THAT TRANS-ASIA IS HEREBY
ORDERED TO ADJUST ITS DIVISOR TO 287 DAYS AND PAY THE RESULTING HOLIDAY PAY IN ARREARS
BROUGHT ABOUT BY THIS ADJUSTMENT STARTING FROM 30 JUNE 1987, THE DATE OF EFFECTIVITY OF
E.O. NO. 203.

SO ORDERED.
G.R. NO. 114698 JULY 3, 1995

WELLINGTON INVESTMENT AND MANUFACTURING CORPORATION, PETITIONER,

VS.
CRESENCIANO B. TRAJANO, UNDER-SECRETARY OF LABOR AND EMPLOYMENT, ELMER ABADILLA, AND 34
OTHERS, RESPONDENTS.

NARVASA, C.J.:
THE BASIC ISSUE RAISED BY PETITIONER IN THIS CASE IS, AS ITS COUNSEL PUTS IT, "WHETHER OR NOT A
MONTHLY-PAID EMPLOYEE, RECEIVING A FIXED MONTHLY COMPENSATION, IS ENTITLED TO AN
ADDITIONAL PAY ASIDE FROM HIS USUAL HOLIDAY PAY, WHENEVER A REGULAR HOLIDAY FALLS ON A
SUNDAY."

THE CASE AROSE FROM A ROUTINE INSPECTION CONDUCTED BY A LABOR ENFORCEMENT OFFICER ON
AUGUST 6, 1991 OF THE WELLINGTON FLOUR MILLS, AN ESTABLISHMENT OWNED AND OPERATED BY
PETITIONER WELLINGTON INVESTMENT AND MANUFACTURING CORPORATION (HEREAFTER, SIMPLY
WELLINGTON). THE OFFICER THEREAFTER DREW UP A REPORT, A COPY OF WHICH WAS "EXPLAINED TO
AND RECEIVED BY" WELLINGTON'S PERSONNEL MANAGER, IN WHICH HE SET FORTH HIS FINDING OF
"(N)ON-PAYMENT OF REGULAR HOLIDAYS FALLING ON A SUNDAY FOR MONTHLY-PAID EMPLOYEES."1

WELLINGTON SOUGHT RECONSIDERATION OF THE LABOR INSPECTOR'S REPORT, BY LETTER DATED

AUGUST 10, 1991. IT ARGUED THAT "THE MONTHLY SALARY OF THE COMPANY'S MONTHLY-SALARIED
EMPLOYEES ALREADY INCLUDES HOLIDAY PAY FOR ALL REGULAR HOLIDAYS . . . (AND HENCE) THERE IS
NO LEGAL BASIS FOR THE FINDING OF ALLEGED NON-PAYMENT OF REGULAR HOLIDAYS FALLING ON A
SUNDAY."2 IT EXPOUNDED ON THIS THESIS IN A POSITION PAPER SUBSEQUENTLY SUBMITTED TO THE
REGIONAL DIRECTOR, ASSERTING THAT IT PAYS ITS MONTHLY-PAID EMPLOYEES A FIXED MONTHLY
COMPENSATION "USING THE 314 FACTOR WHICH UNDENIABLY COVERS AND ALREADY INCLUDES
PAYMENT FOR ALL THE WORKING DAYS IN A MONTH AS WELL AS ALL THE 10 UNWORKED REGULAR
HOLIDAYS WITHIN A YEAR."3

WELLINGTON'S ARGUMENTS FAILED TO PERSUADE THE REGIONAL DIRECTOR WHO, IN AN ORDER

ISSUED ON JULY 28, 1992, RULED THAT "WHEN A REGULAR HOLIDAY FALLS ON A SUNDAY, AN EXTRA OR
ADDITIONAL WORKING DAY IS CREATED AND THE EMPLOYER HAS THE OBLIGATION TO PAY THE
EMPLOYEES FOR THE EXTRA DAY EXCEPT THE LAST SUNDAY OF AUGUST SINCE THE PAYMENT FOR THE
SAID HOLIDAY IS ALREADY INCLUDED IN THE 314 FACTOR," AND ACCORDINGLY DIRECTED WELLINGTON
TO PAY ITS EMPLOYEES COMPENSATION CORRESPONDING TO FOUR (4) EXTRA WORKING DAYS.4

WELLINGTON TIMELY FILED A MOTION FOR RECONSIDERATION OF THIS ORDER OF AUGUST 10, 1992,
POINTING OUT THAT IT WAS IN EFFECT BEING COMPELLED TO "SHELL OUT AN ADDITIONAL PAY FOR AN
ALLEGED EXTRA WORKING DAY" DESPITE ITS COMPLETE PAYMENT OF ALL COMPENSATION LAWFULLY
DUE ITS WORKERS, USING THE 314 FACTOR.5 ITS MOTION WAS TREATED AS AN APPEAL AND WAS
ACTED ON BY RESPONDENT UNDERSECRETARY. BY ORDER DATED SEPTEMBER 22, THE LATTER AFFIRMED
THE CHALLENGED ORDER OF THE REGIONAL DIRECTOR, HOLDING THAT "THE DIVISOR BEING USED BY
THE RESPONDENT (WELLINGTON) DOES NOT RELIABLY REFLECT THE ACTUAL WORKING DAYS IN A YEAR,
" AND CONSEQUENTLY COMMANDED WELLINGTON TO PAY ITS EMPLOYEES THE "SIX ADDITIONAL
WORKING DAYS RESULTING FROM REGULAR HOLIDAYS FALLING ON SUNDAYS IN 1988, 1989 AND
1990."6 AGAIN, WELLINGTON MOVED FOR RECONSIDERATION,7 AND AGAIN WAS REBUFFED.8

WELLINGTON THEN INSTITUTED THE SPECIAL CIVIL ACTION OF CERTIORARI AT BAR IN AN ATTEMPT TO
NULLIFY THE ORDERS ABOVE MENTIONED. BY RESOLUTION DATED JULY 4, 1994, THIS COURT
AUTHORIZED THE ISSUANCE OF A TEMPORARY RESTRAINING ORDER ENJOINING THE RESPONDENTS
FROM ENFORCING THE QUESTIONED ORDERS.9

EVERY WORKER SHOULD, ACCORDING TO THE LABOR CODE, 10 "BE PAID HIS REGULAR DAILY WAGE
DURING REGULAR HOLIDAYS, EXCEPT IN RETAIL AND SERVICE ESTABLISHMENTS REGULARLY EMPLOYING
LESS THAN TEN (10) WORKERS;" THIS, OF COURSE, EVEN IF THE WORKER DOES NO WORK ON THESE
HOLIDAYS. THE REGULAR HOLIDAYS INCLUDE: "NEW YEAR'S DAY, MAUNDY THURSDAY, GOOD FRIDAY, THE
NINTH OF APRIL, THE FIRST OF MAY, THE TWELFTH OF JUNE, THE FOURTH OF JULY, THE THIRTIETH OF
NOVEMBER, THE TWENTY-FIFTH OF DECEMBER, AND THE DAY DESIGNATED BY LAW FOR HOLDING A
GENERAL ELECTION (OR NATIONAL REFERENDUM OR PLEBISCITE).11

PARTICULARLY AS REGARDS EMPLOYEES "WHO ARE UNIFORMLY PAID BY THE MONTH, "THE MONTHLY
MINIMUM WAGE SHALL NOT BE LESS THAN THE STATUTORY MINIMUM WAGE MULTIPLIED BY 365 DAYS
DIVIDED BY TWELVE."12 THIS MONTHLY SALARY SHALL SERVE AS COMPENSATION "FOR ALL DAYS IN THE
MONTH WHETHER WORKED OR NOT," AND "IRRESPECTIVE OF THE NUMBER OF WORKING DAYS
THEREIN."13 IN OTHER WORDS, WHETHER THE MONTH IS OF THIRTY (30) OR THIRTY-ONE (31) DAYS'
DURATION, OR TWENTY-EIGHT (28) OR TWENTY-NINE (29) (AS IN FEBRUARY), THE EMPLOYEE IS
ENTITLED TO RECEIVE THE ENTIRE MONTHLY SALARY. SO, TOO, IN THE EVENT OF THE DECLARATION OF
ANY SPECIAL HOLIDAY, OR ANY FORTUITOUS CAUSE PRECLUDING WORK ON ANY PARTICULAR DAY OR
DAYS (SUCH AS TRANSPORTATION STRIKES, RIOTS, OR TYPHOONS OR OTHER NATURAL CALAMITIES), THE
EMPLOYEE IS ENTITLED TO THE SALARY FOR THE ENTIRE MONTH AND THE EMPLOYER HAS NO RIGHT TO
DEDUCT THE PROPORTIONATE AMOUNT CORRESPONDING TO THE DAYS WHEN NO WORK WAS DONE.
THE MONTHLY COMPENSATION IS EVIDENTLY INTENDED PRECISELY TO AVOID COMPUTATIONS AND
ADJUSTMENTS RESULTING FROM THE CONTINGENCIES JUST MENTIONED WHICH ARE ROUTINELY MADE
IN THE CASE OF WORKERS PAID ON DAILY BASIS.

IN WELLINGTON'S CASE, THERE SEEMS TO BE NO QUESTION THAT AT THE TIME OF THE INSPECTION
CONDUCTED BY THE LABOR ENFORCEMENT OFFICER ON AUGUST 6, 1991, IT WAS AND HAD BEEN
PAYING ITS EMPLOYEES "A SALARY OF NOT LESS THAN THE STATUTORY OR ESTABLISHED MINIMUM
WAGE," AND THAT THE MONTHLY SALARY THUS PAID WAS "NOT . . . LESS THAN THE STATUTORY
MINIMUM WAGE MULTIPLIED BY 365 DAYS DIVIDED BY TWELVE," SUPRA. THERE IS, IN OTHER WORDS,
NO ISSUE THAT TO THIS EXTENT, WELLINGTON COMPLIED WITH THE MINIMUM NORM LAID DOWN BY
LAW.

APPARENTLY THE MONTHLY SALARY WAS FIXED BY WELLINGTON TO PROVIDE FOR COMPENSATION FOR
EVERY WORKING DAY OF THE YEAR INCLUDING THE HOLIDAYS SPECIFIED BY LAW — AND EXCLUDING
ONLY SUNDAYS. IN FIXING THE SALARY, WELLINGTON USED WHAT IT CALLS THE "314 FACTOR;" THAT IS
TO SAY, IT SIMPLY DEDUCTED 51 SUNDAYS FROM THE 365 DAYS NORMALLY COMPRISING A YEAR AND
USED THE DIFFERENCE, 314, AS BASIS FOR DETERMINING THE MONTHLY SALARY. THE MONTHLY SALARY
THUS FIXED ACTUALLY COVERS PAYMENT FOR 314 DAYS OF THE YEAR, INCLUDING REGULAR AND
SPECIAL HOLIDAYS, AS WELL AS DAYS WHEN NO WORK IS DONE BY REASON OF FORTUITOUS CAUSE, AS
ABOVE SPECIFIED, OR CAUSES NOT ATTRIBUTABLE TO THE EMPLOYEES.

THE LABOR OFFICER WHO CONDUCTED THE ROUTINE INSPECTION OF WELLINGTON DISCOVERED THAT
IN CERTAIN YEARS, TWO OR THREE REGULAR HOLIDAYS HAD FALLEN ON SUNDAYS. HE REASONED THAT
THIS HAD PRECLUDED THE ENJOYMENT BY THE EMPLOYEES OF A NON-WORKING DAY, AND THE
EMPLOYEES HAD CONSEQUENTLY HAD TO WORK AN ADDITIONAL DAY FOR THAT MONTH. THIS
RATIOCINATION RECEIVED THE APPROVAL OF HIS REGIONAL DIRECTOR WHO OPINED 14 THAT "WHEN A
REGULAR HOLIDAY FALLS ON A SUNDAY, AN EXTRA OR ADDITIONAL WORKING DAY IS CREATED AND THE
EMPLOYER HAS THE OBLIGATION TO PAY ITS EMPLOYEES FOR THE EXTRA DAY EXCEPT THE LAST SUNDAY
OF AUGUST SINCE THE PAYMENT FOR THE SAID HOLIDAY IS ALREADY INCLUDED IN THE 314 FACTOR." 15

THIS INGENUOUS THEORY WAS ADOPTED AND FURTHER EXPLAINED BY RESPONDENT LABOR
UNDERSECRETARY, TO WHOM THE MATTER WAS APPEALED, AS FOLLOWS: 16
. . . BY USING SAID (314) FACTOR, THE RESPONDENT (WELLINGTON) ASSUMES THAT ALL THE REGULAR
HOLIDAYS FELL ON ORDINARY DAYS AND NEVER ON A SUNDAY. THUS, THE RESPONDENT FAILED TO
CONSIDER THE CIRCUMSTANCE THAT WHENEVER A REGULAR HOLIDAY COINCIDES WITH A SUNDAY, AN
ADDITIONAL WORKING DAY IS CREATED AND LEFT UNPAID. IN OTHER WORDS, WHILE THE SAID DIVISOR
MAY BE UTILIZED AS PROOF EVIDENCING PAYMENT OF 302 WORKING DAYS, 2 SPECIAL DAYS AND THE
TEN REGULAR HOLIDAYS IN A CALENDAR YEAR, THE SAME DOES NOT COVER OR INCLUDE PAYMENT OF
ADDITIONAL WORKING DAYS CREATED AS A RESULT OF SOME REGULAR HOLIDAYS FALLING ON
SUNDAYS.

HE POINTED OUT THAT IN 1988 THERE WAS "AN INCREASE OF THREE (3) WORKING DAYS RESULTING
FROM REGULAR HOLIDAYS FALLING ON SUNDAYS;" HENCE WELLINGTON "SHOULD PAY FOR 317 DAYS,
INSTEAD OF 314 DAYS." BY THE SAME PROCESS OF RATIOCINATION, RESPONDENT UNDERSECRETARY
THEORIZED THAT THERE SHOULD BE ADDITIONAL PAYMENT BY WELLINGTON TO ITS MONTHLY-PAID
EMPLOYEES FOR "AN INCREMENT OF THREE (3) WORKING DAYS" FOR 1989 AND AGAIN, FOR 1990.
WHAT HE IS SAYING IS THAT IN THOSE YEARS, WELLINGTON SHOULD HAVE USED THE "317 FACTOR,"
NOT THE "314 FACTOR."

THE THEORY LOSES SIGHT OF THE FACT THAT THE MONTHLY SALARY IN WELLINGTON — WHICH IS
BASED ON THE SO-CALLED "314 FACTOR" — ACCOUNTS FOR ALL 365 DAYS OF A YEAR; I.E.,
WELLINGTON'S "314 FACTOR" LEAVES NO DAY UNACCOUNTED FOR; IT IS PAYING FOR ALL THE DAYS OF A
YEAR WITH THE EXCEPTION ONLY OF 51 SUNDAYS.

THE RESPONDENTS' THEORY WOULD MAKE EACH OF THE YEARS IN QUESTION (1988, 1989, 1990), A
YEAR OF 368 DAYS. PURSUANT TO THIS THEORY, NO EMPLOYER OPTING TO PAY HIS EMPLOYEES BY THE
MONTH WOULD HAVE ANY DEFINITE BASIS TO DETERMINE THE NUMBER OF DAYS IN A YEAR FOR
WHICH COMPENSATION SHOULD BE GIVEN TO HIS WORK FORCE. HE WOULD HAVE TO ASCERTAIN THE
NUMBER OF TIMES LEGAL HOLIDAYS WOULD FALL ON SUNDAYS IN ALL THE YEARS OF THE EXPECTED OR
EXTRAPOLATED LIFETIME OF HIS BUSINESS. ALTERNATIVELY, HE WOULD BE COMPELLED TO MAKE
ADJUSTMENTS IN HIS EMPLOYEES' MONTHLY SALARIES EVERY YEAR, DEPENDING ON THE NUMBER OF
TIMES THAT A LEGAL HOLIDAY FELL ON A SUNDAY.

THERE IS NO PROVISION OF LAW REQUIRING ANY EMPLOYER TO MAKE SUCH ADJUSTMENTS IN THE
MONTHLY SALARY RATE SET BY HIM TO TAKE ACCOUNT OF LEGAL HOLIDAYS FALLING ON SUNDAYS IN A
GIVEN YEAR, OR, CONTRARY TO THE LEGAL PROVISIONS BEARING ON THE POINT, OTHERWISE TO
RECKON A YEAR AT MORE THAN 365 DAYS. AS EARLIER MENTIONED, WHAT THE LAW REQUIRES OF
EMPLOYERS OPTING TO PAY BY THE MONTH IS TO ASSURE THAT "THE MONTHLY MINIMUM WAGE SHALL
NOT BE LESS THAN THE STATUTORY MINIMUM WAGE MULTIPLIED BY 365 DAYS DIVIDED BY TWELVE," 17
AND TO PAY THAT SALARY "FOR ALL DAYS IN THE MONTH WHETHER WORKED OR NOT," AND
"IRRESPECTIVE OF THE NUMBER OF WORKING DAYS THEREIN."18 THAT SALARY IS DUE AND PAYABLE
REGARDLESS OF THE DECLARATION OF ANY SPECIAL HOLIDAY IN THE ENTIRE COUNTRY OR A
PARTICULAR PLACE THEREIN, OR ANY FORTUITOUS CAUSE PRECLUDING WORK ON ANY PARTICULAR DAY
OR DAYS (SUCH AS TRANSPORTATION STRIKES, RIOTS, OR TYPHOONS OR OTHER NATURAL CALAMITIES),
OR CAUSE NOT IMPUTABLE TO THE WORKER. AND AS ALSO EARLIER POINTED OUT, THE LEGAL
PROVISIONS GOVERNING MONTHLY COMPENSATION ARE EVIDENTLY INTENDED PRECISELY TO AVOID RE-
COMPUTATIONS AND ALTERATIONS IN SALARY ON ACCOUNT OF THE CONTINGENCIES JUST MENTIONED,
WHICH, BY THE WAY, ARE ROUTINELY MADE BETWEEN EMPLOYER AND EMPLOYEES WHEN THE WAGES
ARE PAID ON DAILY BASIS.
THE PUBLIC RESPONDENTS ARGUE THAT THEIR CHALLENGED CONCLUSIONS AND DISPOSITIONS MAY BE
JUSTIFIED BY SECTION 2, RULE X, BOOK III OF THE IMPLEMENTING RULES, GIVING THE REGIONAL
DIRECTOR POWER — 19

. . . TO ORDER AND ADMINISTER (IN CASES WHERE EMPLOYER-EMPLOYEE RELATIONS STILL EXIST), AFTER
DUE NOTICE AND HEARING, COMPLIANCE WITH THE LABOR STANDARDS PROVISIONS OF THE CODE AND
THE OTHER LABOR LEGISLATIONS BASED ON THE FINDINGS OF THEIR REGULATIONS OFFICERS OR
INDUSTRIAL SAFETY ENGINEERS (LABOR STANDARD AND WELFARE OFFICERS) AND MADE IN THE
COURSE OF INSPECTION, AND TO ISSUE WRITS OF EXECUTION TO THE APPROPRIATE AUTHORITY FOR
THE ENFORCEMENT OF HIS ORDER, IN LINE WITH THE PROVISIONS OF ARTICLE 128 IN RELATION TO
ARTICLES 289 AND 290 OF THE LABOR CODE, AS AMENDED. . . .

THE RESPONDENTS BEG THE QUESTION. THEIR ARGUMENT ASSUMES THAT THERE ARE SOME "LABOR
STANDARDS PROVISIONS OF THE CODE AND THE OTHER LABOR LEGISLATIONS" IMPOSING ON
EMPLOYERS THE OBLIGATION TO GIVE ADDITIONAL COMPENSATION TO THEIR MONTHLY-PAID
EMPLOYEES IN THE EVENT THAT A LEGAL HOLIDAY SHOULD FALL ON A SUNDAY IN A PARTICULAR
MONTH — WITH WHICH COMPLIANCE MAY BE COMMANDED BY THE REGIONAL DIRECTOR — WHEN
THE EXISTENCE OF SAID PROVISIONS IS PRECISELY THE MATTER TO BE ESTABLISHED.

IN PROMULGATING THE ORDERS COMPLAINED OF THE PUBLIC RESPONDENTS HAVE ATTEMPTED TO

LEGISLATE, OR INTERPRET LEGAL PROVISIONS IN SUCH A MANNER AS TO CREATE OBLIGATIONS WHERE
NONE ARE INTENDED. THEY HAVE ACTED WITHOUT AUTHORITY, OR AT THE VERY LEAST, WITH GRAVE
ABUSE OF THEIR DISCRETION. THEIR ACTS MUST BE NULLIFIED AND SET ASIDE.

WHEREFORE, THE ORDERS COMPLAINED OF, NAMELY: THAT OF THE RESPONDENT UNDERSECRETARY
DATED SEPTEMBER 22, 1993, AND THAT OF THE REGIONAL DIRECTOR DATED JULY 30, 1992, ARE
NULLIFIED AND SET ASIDE, AND THE PROCEEDING AGAINST PETITIONER DISMISSED.

SO ORDERED.
[G.R. NO. 146775. JANUARY 30, 2002]

SAN MIGUEL CORPORATION, PETITIONER, VS. THE HONORABLE COURT OF APPEALS-FORMER

THIRTEENTH DIVISION, HON. UNDERSECRETARY JOSE M. ESPAOL, JR., HON. CRESENCIANO B. TRAJANO,
AND HON. REGIONAL DIRECTOR ALLAN M. MACARAYA, RESPONDENTS.
DECISION
KAPUNAN, J.:

ASSAILED IN THE PETITION BEFORE US ARE THE DECISION, PROMULGATED ON 08 MAY 2000, AND THE
RESOLUTION, PROMULGATED ON 18 OCTOBER 2000, OF THE COURT OF APPEALS IN CA G.R. SP-53269.

THE FACTS OF THE CASE ARE AS FOLLOWS:

ON 17 OCTOBER 1992, THE DEPARTMENT OF LABOR AND EMPLOYMENT (DOLE), ILIGAN DISTRICT
OFFICE, CONDUCTED A ROUTINE INSPECTION IN THE PREMISES OF SAN MIGUEL CORPORATION (SMC) IN
STA. FILOMENA, ILIGAN CITY. IN THE COURSE OF THE INSPECTION, IT WAS DISCOVERED THAT THERE WAS
UNDERPAYMENT BY SMC OF REGULAR MUSLIM HOLIDAY PAY TO ITS EMPLOYEES. DOLE SENT A COPY OF
THE INSPECTION RESULT TO SMC AND IT WAS RECEIVED BY AND EXPLAINED TO ITS PERSONNEL OFFICER
ELENA DELA PUERTA.[1] SMC CONTESTED THE FINDINGS AND DOLE CONDUCTED SUMMARY HEARINGS
ON 19 NOVEMBER 1992, 28 MAY 1993 AND 4 AND 5 OCTOBER 1993. STILL, SMC FAILED TO SUBMIT
PROOF THAT IT WAS PAYING REGULAR MUSLIM HOLIDAY PAY TO ITS EMPLOYEES. HENCE, ALAN M.
MACARAYA, DIRECTOR IV OF DOLE ILIGAN DISTRICT OFFICE ISSUED A COMPLIANCE ORDER, DATED 17
DECEMBER 1993, DIRECTING SMC TO CONSIDER MUSLIM HOLIDAYS AS REGULAR HOLIDAYS AND TO PAY
BOTH ITS MUSLIM AND NON-MUSLIM EMPLOYEES HOLIDAY PAY WITHIN THIRTY (30) DAYS FROM THE
RECEIPT OF THE ORDER.

SMC APPEALED TO THE DOLE MAIN OFFICE IN MANILA BUT ITS APPEAL WAS DISMISSED FOR HAVING
BEEN FILED LATE. THE DISMISSAL OF THE APPEAL FOR LATE FILING WAS LATER ON RECONSIDERED IN
THE ORDER OF 17 JULY 1998 AFTER IT WAS FOUND THAT THE APPEAL WAS FILED WITHIN THE
REGLEMENTARY PERIOD. HOWEVER, THE APPEAL WAS STILL DISMISSED FOR LACK OF MERIT AND THE
ORDER OF DIRECTOR MACARAYA WAS AFFIRMED.

SMC WENT TO THIS COURT FOR RELIEF VIA A PETITION FOR CERTIORARI, WHICH THIS COURT REFERRED
TO THE COURT OF APPEALS PURSUANT TO ST. MARTIN FUNERAL HOMES VS. NLRC.[2]

THE APPELLATE COURT, IN THE NOW QUESTIONED DECISION, PROMULGATED ON 08 MAY 2000, RULED,
AS FOLLOWS:

WHEREFORE, THE ORDER DATED DECEMBER 17, 1993 OF DIRECTOR MACARAYA AND ORDER DATED JULY
17, 1998 OF UNDERSECRETARY ESPAOL, JR. IS HEREBY MODIFIED WITH REGARDS THE PAYMENT OF
MUSLIM HOLIDAY PAY FROM 200% TO 150% OF THE EMPLOYEE'S BASIC SALARY. LET THIS CASE BE
REMANDED TO THE REGIONAL DIRECTOR FOR THE PROPER COMPUTATION OF THE SAID HOLIDAY PAY.

SO ORDERED.[3]

ITS MOTION FOR RECONSIDERATION HAVING BEEN DENIED FOR LACK OF MERIT, SMC FILED A PETITION
FOR CERTIORARI BEFORE THIS COURT, ALLEGING THAT:

PUBLIC RESPONDENTS SERIOUSLY ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION WHEN THEY
GRANTED MUSLIM HOLIDAY PAY TO NON-MUSLIM EMPLOYEES OF SMC-ILICOCO AND ORDERING SMC
TO PAY THE SAME RETROACTIVE FOR ONE (1) YEAR FROM THE DATE OF THE PROMULGATION OF THE
COMPLIANCE ORDER ISSUED ON DECEMBER 17, 1993, IT BEING CONTRARY TO THE PROVISIONS, INTENT
AND PURPOSE OF P.D. 1083 AND PREVAILING JURISPRUDENCE.

THE ISSUANCE OF THE COMPLIANCE ORDER WAS TAINTED WITH GRAVE ABUSE OF DISCRETION IN THAT
SAN MIGUEL CORPORATION WAS NOT ACCORDED DUE PROCESS OF LAW; HENCE, THE ASSAILED
COMPLIANCE ORDER AND ALL SUBSEQUENT ORDERS, DECISION AND RESOLUTION OF PUBLIC
RESPONDENTS WERE ALL ISSUED WITH GRAVE ABUSE OF DISCRETION AND ARE VOID AB INITIO.

THE HON. COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT DECLARED THAT
REGIONAL DIRECTOR MACARAYA, UNDERSECRETARY TRAJANO AND UNDERSECRETARY ESPAOL, JR., WHO
ALL LIKEWISE ACTED WITH GRAVE ABUSE OF DISCRETION AND WITHOUT OR IN EXCESS OF THEIR
JURISDICTION, HAVE JURISDICTION IN ISSUING THE ASSAILED COMPLIANCE ORDER AND SUBSEQUENT
ORDERS, WHEN IN FACT THEY HAVE NO JURISDICTION OR HAS LOST JURISDICTION OVER THE HEREIN
LABOR STANDARD CASE.[4]
AT THE OUTSET, PETITIONER CAME TO THIS COURT VIA A PETITION FOR CERTIORARI UNDER RULE 65
INSTEAD OF AN APPEAL UNDER RULE 45 OF THE 1997 RULES OF CIVIL PROCEDURE. IN NATIONAL
IRRIGATION ADMINISTRATION VS. COURT OF APPEALS,[5] THE COURT DECLARED:

X X X (S)INCE THE COURT OF APPEALS HAD JURISDICTION OVER THE PETITION UNDER RULE 65, ANY
ALLEGED ERRORS COMMITTED BY IT IN THE EXERCISE OF ITS JURISDICTION WOULD BE ERRORS OF
JUDGMENT WHICH ARE REVIEWABLE BY TIMELY APPEAL AND NOT BY A SPECIAL CIVIL ACTION OF
CERTIORARI. IF THE AGGRIEVED PARTY FAILS TO DO SO WITHIN THE REGLEMENTARY PERIOD, AND THE
DECISION ACCORDINGLY BECOMES FINAL AND EXECUTORY, HE CANNOT AVAIL HIMSELF OF THE WRIT OF
CERTIORARI, HIS PREDICAMENT BEING THE EFFECT OF HIS DELIBERATE INACTION.

THE APPEAL FROM A FINAL DISPOSITION OF THE COURT OF APPEALS IS A PETITION FOR REVIEW UNDER
RULE 45 AND NOT A SPECIAL CIVIL ACTION UNDER RULE 65 OF THE RULES OF COURT, NOW RULE 45
AND RULE 65, RESPECTIVELY, OF THE 1997 RULES OF CIVIL PROCEDURE. RULE 45 IS CLEAR THAT
DECISIONS, FINAL ORDERS OR RESOLUTIONS OF THE COURT OF APPEALS IN ANY CASE, I.E., REGARDLESS
OF THE NATURE OF THE ACTION OR PROCEEDING INVOLVED, MAY BE APPEALED TO THIS COURT BY
FILING A PETITION FOR REVIEW, WHICH WOULD BE BUT A CONTINUATION OF THE APPELLATE PROCESS
OVER THE ORIGINAL CASE. UNDER RULE 45 THE REGLEMENTARY PERIOD TO APPEAL IS FIFTEEN (15)
DAYS FROM NOTICE OF JUDGMENT OR DENIAL OF MOTION FOR RECONSIDERATION.

XXX

FOR THE WRIT OF CERTIORARI UNDER RULE 65 OF THE RULES OF COURT TO ISSUE, A PETITIONER MUST
SHOW THAT HE HAS NO PLAIN, SPEEDY AND ADEQUATE REMEDY IN THE ORDINARY COURSE OF LAW
AGAINST ITS PERCEIVED GRIEVANCE. A REMEDY IS CONSIDERED "PLAIN, SPEEDY AND ADEQUATE" IF IT
WILL PROMPTLY RELIEVE THE PETITIONER FROM THE INJURIOUS EFFECTS OF THE JUDGMENT AND THE
ACTS OF THE LOWER COURT OR AGENCY. IN THIS CASE, APPEAL WAS NOT ONLY AVAILABLE BUT ALSO A
SPEEDY AND ADEQUATE REMEDY.[6]

WELL-SETTLED IS THE RULE THAT CERTIORARI CANNOT BE AVAILED OF AS A SUBSTITUTE FOR A LOST
APPEAL.[7] FOR FAILURE OF PETITIONER TO FILE A TIMELY APPEAL, THE QUESTIONED DECISION OF THE
COURT OF APPEALS HAD ALREADY BECOME FINAL AND EXECUTORY.

IN ANY EVENT, THE COURT FINDS NO REASON TO REVERSE THE DECISION OF THE COURT OF APPEALS.

MUSLIM HOLIDAYS ARE PROVIDED UNDER ARTICLES 169 AND 170, TITLE I, BOOK V, OF PRESIDENTIAL
DECREE NO. 1083,[8] OTHERWISE KNOWN AS THE CODE OF MUSLIM PERSONAL LAWS, WHICH STATES:

ART. 169. OFFICIAL MUSLIM HOLIDAYS. - THE FOLLOWING ARE HEREBY RECOGNIZED AS LEGAL MUSLIM
HOLIDAYS:

(A) AMUN JADĪD (NEW YEAR), WHICH FALLS ON THE FIRST DAY OF THE FIRST LUNAR MONTH OF
MUHARRAM;

(B) MAULID-UN-NABĪ (BIRTHDAY OF THE PROPHET MUHAMMAD), WHICH FALLS ON THE TWELFTH DAY
OF THE THIRD LUNAR MONTH OF RABI-UL-AWWAL;
(C) LAILATUL ISRĀ WAL MIRĀJ (NOCTURNAL JOURNEY AND ASCENSION OF THE PROPHET MUHAMMAD),
WHICH FALLS ON THE TWENTY-SEVENTH DAY OF THE SEVENTH LUNAR MONTH OF RAJAB;

(D) ĪD-UL-FITR (HARI RAYA PUASA), WHICH FALLS ON THE FIRST DAY OF THE TENTH LUNAR MONTH OF
SHAWWAL, COMMEMORATING THE END OF THE FASTING SEASON; AND

(E) ĪD-ŪL-ADHĀ (HARI RAYA HAJI),WHICH FALLS ON THE TENTH DAY OF THE TWELFTH LUNAR MONTH OF
DHŪL-HIJJA.

ART. 170. PROVINCES AND CITIES WHERE OFFICIALLY OBSERVED. - (1) MUSLIM HOLIDAYS SHALL BE
OFFICIALLY OBSERVED IN THE PROVINCES OF BASILAN, LANAO DEL NORTE, LANAO DEL SUR,
MAGUINDANAO, NORTH COTABATO, ILIGAN, MARAWI, PAGADIAN, AND ZAMBOANGA AND IN SUCH
OTHER MUSLIM PROVINCES AND CITIES AS MAY HEREAFTER BE CREATED;

(2) UPON PROCLAMATION BY THE PRESIDENT OF THE PHILIPPINES, MUSLIM HOLIDAYS MAY ALSO BE
OFFICIALLY OBSERVED IN OTHER PROVINCES AND CITIES.

THE FOREGOING PROVISIONS SHOULD BE READ IN CONJUNCTION WITH ARTICLE 94 OF THE LABOR
CODE, WHICH PROVIDES:

ART. 94. RIGHT TO HOLIDAY PAY. -

(A) EVERY WORKER SHALL BE PAID HIS REGULAR DAILY WAGE DURING REGULAR HOLIDAYS, EXCEPT IN
RETAIL AND SERVICE ESTABLISHMENTS REGULARLY EMPLOYING LESS THAN TEN (10) WORKERS;

(B) THE EMPLOYER MAY REQUIRE AN EMPLOYEE TO WORK ON ANY HOLIDAY BUT SUCH EMPLOYEE
SHALL BE PAID A COMPENSATION EQUIVALENT TO TWICE HIS REGULAR RATE; X X X.

PETITIONER ASSERTS THAT ARTICLE 3(3) OF PRESIDENTIAL DECREE NO. 1083 PROVIDES THAT (T)HE
PROVISIONS OF THIS CODE SHALL BE APPLICABLE ONLY TO MUSLIMS X X X. HOWEVER, THERE SHOULD
BE NO DISTINCTION BETWEEN MUSLIMS AND NON-MUSLIMS AS REGARDS PAYMENT OF BENEFITS FOR
MUSLIM HOLIDAYS. THE COURT OF APPEALS DID NOT ERR IN SUSTAINING UNDERSECRETARY ESPAOL
WHO STATED:

ASSUMING ARGUENDO THAT THE RESPONDENTS POSITION IS CORRECT, THEN BY THE SAME TOKEN,
MUSLIMS THROUGHOUT THE PHILIPPINES ARE ALSO NOT ENTITLED TO HOLIDAY PAYS ON CHRISTIAN
HOLIDAYS DECLARED BY LAW AS REGULAR HOLIDAYS. WE MUST REMIND THE RESPONDENT-APPELLANT
THAT WAGES AND OTHER EMOLUMENTS GRANTED BY LAW TO THE WORKING MAN ARE DETERMINED
ON THE BASIS OF THE CRITERIA LAID DOWN BY LAWS AND CERTAINLY NOT ON THE BASIS OF THE
WORKERS FAITH OR RELIGION.

AT ANY RATE, ARTICLE 3(3) OF PRESIDENTIAL DECREE NO. 1083 ALSO DECLARES THAT X X X NOTHING
HEREIN SHALL BE CONSTRUED TO OPERATE TO THE PREJUDICE OF A NON-MUSLIM.

IN ADDITION, THE 1999 HANDBOOK ON WORKERS STATUTORY BENEFITS, APPROVED BY THEN DOLE
SECRETARY BIENVENIDO E. LAGUESMA ON 14 DECEMBER 1999 CATEGORICALLY STATED:
CONSIDERING THAT ALL PRIVATE CORPORATIONS, OFFICES, AGENCIES, AND ENTITIES OR
ESTABLISHMENTS OPERATING WITHIN THE DESIGNATED MUSLIM PROVINCES AND CITIES ARE REQUIRED
TO OBSERVE MUSLIM HOLIDAYS, BOTH MUSLIM AND CHRISTIANS WORKING WITHIN THE MUSLIM
AREAS MAY NOT REPORT FOR WORK ON THE DAYS DESIGNATED BY LAW AS MUSLIM HOLIDAYS.[9]

ON THE QUESTION REGARDING THE JURISDICTION OF THE REGIONAL DIRECTOR ALLAN M. MACARAYA,
ARTICLE 128, SECTION B OF THE LABOR CODE, AS AMENDED BY REPUBLIC ACT NO. 7730, PROVIDES:

ARTICLE 128. VISITORIAL AND ENFORCEMENT POWER. -

XXX

(B) NOTWITHSTANDING THE PROVISIONS OF ARTICLE 129 AND 217 OF THIS CODE TO THE CONTRARY,
AND IN CASES WHERE THE RELATIONSHIP OF EMPLOYER-EMPLOYEE STILL EXISTS, THE SECRETARY OF
LABOR AND EMPLOYMENT OR HIS DULY AUTHORIZED REPRESENTATIVES SHALL HAVE THE POWER TO
ISSUE COMPLIANCE ORDERS TO GIVE EFFECT TO THE LABOR STANDARDS PROVISIONS OF THIS CODE
AND OTHER LABOR LEGISLATION BASED ON THE FINDINGS OF LABOR EMPLOYMENT AND
ENFORCEMENT OFFICERS OR INDUSTRIAL SAFETY ENGINEERS MADE IN THE COURSE OF THE
INSPECTION. THE SECRETARY OR HIS DULY AUTHORIZED REPRESENTATIVE SHALL ISSUE WRITS OF
EXECUTION TO THE APPROPRIATE AUTHORITY FOR THE ENFORCEMENT OF THEIR ORDERS, EXCEPT IN
CASES WHERE THE EMPLOYER CONTESTS THE FINDINGS OF THE LABOR EMPLOYMENT AND
ENFORCEMENT OFFICER AND RAISES ISSUES SUPPORTED BY DOCUMENTARY PROOFS WHICH WERE NOT
CONSIDERED IN THE COURSE OF INSPECTION.

XXX

IN THE CASE BEFORE US, REGIONAL DIRECTOR MACARAYA ACTED AS THE DULY AUTHORIZED
REPRESENTATIVE OF THE SECRETARY OF LABOR AND EMPLOYMENT AND IT WAS WITHIN HIS POWER TO
ISSUE THE COMPLIANCE ORDER TO SMC. IN ADDITION, THE COURT AGREES WITH THE SOLICITOR
GENERAL THAT THE PETITIONER DID NOT DENY THAT IT WAS NOT PAYING MUSLIM HOLIDAY PAY TO ITS
NON-MUSLIM EMPLOYEES. INDEED, PETITIONER MERELY CONTENDS THAT ITS NON-MUSLIM
EMPLOYEES ARE NOT ENTITLED TO MUSLIM HOLIDAY PAY. HENCE, THE ISSUE COULD BE RESOLVED EVEN
WITHOUT DOCUMENTARY PROOFS. IN ANY CASE, THERE WAS NO INDICATION THAT REGIONAL
DIRECTOR MACARAYA FAILED TO CONSIDER ANY DOCUMENTARY PROOF PRESENTED BY SMC IN THE
COURSE OF THE INSPECTION.

ANENT THE ALLEGATION THAT PETITIONER WAS NOT ACCORDED DUE PROCESS, WE SUSTAIN THE COURT
OF APPEALS IN FINDING THAT SMC WAS FURNISHED A COPY OF THE INSPECTION ORDER AND IT WAS
RECEIVED BY AND EXPLAINED TO ITS PERSONNEL OFFICER. FURTHER, A SERIES OF SUMMARY HEARINGS
WERE CONDUCTED BY DOLE ON 19 NOVEMBER 1992, 28 MAY 1993 AND 4 AND 5 OCTOBER 1993. THUS,
SMC COULD NOT CLAIM THAT IT WAS NOT GIVEN AN OPPORTUNITY TO DEFEND ITSELF.

FINALLY, AS REGARDS THE ALLEGATION THAT THE ISSUE ON MUSLIM HOLIDAY PAY WAS ALREADY
RESOLVED IN NLRC CA NO. M-000915-92 (NAPOLEON E. FERNAN VS. SAN MIGUEL CORPORATION BEER
DIVISION AND LEOPOLDO ZALDARRIAGA),[10] THE COURT NOTES THAT THE CASE WAS PRIMARILY FOR
ILLEGAL DISMISSAL AND THE CLAIM FOR BENEFITS WAS ONLY INCIDENTAL TO THE MAIN CASE. IN THAT
CASE, THE NLRC CAGAYAN DE ORO CITY DECLARED, IN PASSING:
WE ALSO DENY THE CLAIMS FOR MUSLIM HOLIDAY PAY FOR LACK OF FACTUAL AND LEGAL BASIS.
MUSLIM HOLIDAYS ARE LEGALLY OBSERVED WITHIN THE AREA OF JURISDICTION OF THE PRESENT
AUTONOMOUS REGION FOR MUSLIM MINDANAO (ARMM), PARTICULARLY IN THE PROVINCES OF
MAGUINDANAO, LANAO DEL SUR, SULU AND TAWI-TAWI. IT IS ONLY UPON PRESIDENTIAL
PROCLAMATION THAT MUSLIM HOLIDAYS MAY BE OFFICIALLY OBSERVED OUTSIDE THE AUTONOMOUS
REGION AND GENERALLY EXTENDS TO MUSLIMS TO ENABLE THEM THE OBSERVE SAID HOLIDAYS.[11]

THE DECISION HAS NO CONSEQUENCE TO ISSUES BEFORE US, AND AS APTLY DECLARED BY
UNDERSECRETARY ESPAOL, IT CAN NEVER BE A BENCHMARK NOR A GUIDELINE TO THE PRESENT CASE X
X X.[12]

WHEREFORE, IN VIEW OF THE FOREGOING, THE PETITION IS DISMISSED.

SO ORDERED.
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:

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 MEMORANDUM ISSUED

BY ASSISTANT MANAGER CECILIO B. INOCENCIO, JR. DATED MAY 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. 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.
DECISION
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 EMPLOYEES 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 XXX 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 XXX (P. 183, RECORDS), THAT XXX
COMPLAINANT BEFORE THE NATIONAL LABOR RELATIONS COMMISSION MUST PROVE WITH
DEFINITENESS AND CLARITY THE OFFENSE CHARGED. XXX (RECORD, P. 183); THAT XXX COMPLAINANT
FAILED TO SPECIFY UNDER WHAT PROVISION OF THE LABOR CODE PARTICULARLY ART. 248 DID
RESPONDENTS VIOLATE SO AS TO CONSTITUTE UNFAIR LABOR PRACTICE XXX (RECORD, P. 183); THAT
COMPLAINANTS FAILED TO PRESENT ANY WITNESS WHO MAY DESCRIBE IN WHAT MANNER
RESPONDENTS HAVE COMMITTED UNFAIR LABOR PRACTICE XXX (RECORD, P. 185); THAT XXX
COMPLAINANT LCP FAILED TO PRESENT ANYONE OF THE SO-CALLED 99 COMPLAINANTS IN ORDER TO
TESTIFY WHO COMMITTED THE THREATS AND INTIMIDATION XXX (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 KEHYENGS 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 ARBITERS 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 NLRCS 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:

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
ATTORNEYS 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 ARBITERS 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 ARBITERS 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 X X X 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 X X X (RECORDS, P. 183), THAT X X
X COMPLAINANT BEFORE THE NATIONAL LABOR RELATIONS COMMISSION MUST PROVE WITH
DEFINITENESS AND CLARITY THE OFFENSE CHARGED. X X X (RECORD, P. 183; THAT X X X COMPLAINANT
FAILED TO SPECIFY UNDER WHAT PROVISION OF THE LABOR CODE PARTICULARLY ART. 248 DID
RESPONDENTS VIOLATE SO AS TO CONSTITUTE UNFAIR LABOR PRACTICE X X X (RECORD, P. 183); THAT
COMPLAINANTS FAILED TO PRESENT ANY WITNESS WHO MAY DESCRIBE IN WHAT MANNER
RESPONDENTS HAVE COMMITTED UNFAIR LABOR PRACTICE X X X (RECORD, P. 185); THAT X X X
COMPLAINANT A [SIC] LCP FAILED TO PRESENT ANYONE OF THE SO CALLED 99 COMPLAINANTS IN
ORDER TO TESTIFY WHO COMMITTED THE THREATS AND INTIMIDATION X X X (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:

XXXXX

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 PETITIONERS 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
WORKERS 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. (ITALICS 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 PLAINTIFFS 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 MONTHS 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. 122468. SEPTEMBER 3, 1998]

SENTINEL SECURITY AGENCY, INC., PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION,
ADRIANO CABANO, JR., VERONICO C. ZAMBO, HELCIAS ARROYO, RUSTICO ANDOY, AND MAXIMO ORTIZ,
RESPONDENTS.
[G.R. NO. 122716. SEPTEMBER 3, 1998]

PHILIPIPPINE AMERICAN LIFE INSURANCE COMPANY, PETITIONER, VS. NATIONAL LABOR RELATIONS
COMMISSION, VERONICO ZAMBO, HELCIAS ARROYO, ADRIANO CABANO, MAXIMO ORTIZ, AND RUSTICO
ANDOY, RESPONDENTS.
DECISION
PANGANIBAN, J.:

THE TRANSFER OF AN EMPLOYEE INVOLVES A LATERAL MOVEMENT WITHIN THE BUSINESS OR

OPERATION OF THE EMPLOYER, WITHOUT DEMOTION IN RANK, DIMINUTION OF BENEFITS OR, WORSE,
SUSPENSION OF EMPLOYMENT EVEN IF TEMPORARY. THE RECALL AND TRANSFER OF SECURITY GUARDS
REQUIRE REASSIGNMENT TO ANOTHER POST AND ARE NOT EQUIVALENT TO THEIR PLACEMENT ON
FLOATING STATUS. OFF-DETAILING SECURITY GUARDS FOR A REASONABLE PERIOD OF SIX MONTHS IS
JUSTIFIED ONLY IN BONA FIDE CASES OF SUSPENSION OF OPERATION, BUSINESS OR UNDERTAKING.

THE CASE

THIS IS THE RATIONALE USED BY THE COURT IN DISMISSING THE TWO CONSOLIDATED PETITIONS FOR
CERTIORARI BEFORE US, SEEKING THE REVERSAL OF THE DECISION DATED AUGUST 25, 1995, AND THE
RESOLUTION DATE OCTOBER 24, 1995, BOTH PROMULGATED BY THE NATIONAL LABOR RELATIONS
COMMISSION[1] IN NLRC CASE NO. V-0317-94 (RAB VII-01-0097-94, RAB VII-020173-94, AND RAB VII-01-
0133-94).

IN THE ACTION FOR ILLEGAL DISMISSAL AND PAYMENT OF SALARY DIFFERENTIAL, SERVICE INCENTIVE
LEAVE PAY AND SEPARATION PAY FILED BY PRIVATE RESPONDENTS, LABOR ARBITER DOMINADOR A.
ALMIRANTE RENDERED A DECISION, WHICH DISPOSED:[2]

WHEREFORE, PREMISES CONSIDERED[,] JUDGMENT IS HEREBY RENDERED ORDERING XXX SENTINEL

SECURITY AGENCY, INC. JOINTLY AND SEVERALLY WITH XXX PHILAMLIFE, CEBU BRANCH, TO PAY
COMPLAINANTS THE TOTAL AMOUNT OF [S]IXTY [T]HOUSAND [O]NE [H]UNDRED [T]WELVE [P]ESOS AND
50/100 (P60,112.50) IN THE CONCEPT OF 13TH MONTH PAY AND SERVICE INCENTIVE LEAVE BENEFITS AS
COMPUTED BY OUR LABOR ARBITRATION ASSOCIATE WHOSE COMPUTATION IS HERETO ATTACHED AND
FORMING PART THEREOF.[3]

ON APPEAL, THE NLRC MODIFIED THE LABOR ARBITERS DECISION. THE DISPOSITIVE PORTION OF THE
NLRC DECISION[4]READS:

WHEREFORE, THE ASSAILED DECISION IS HEREBY MODIFIED IN SO FAR AS THE AWARD OF 13TH MONTH
PAY FOR THE PREVIOUS YEARS WHICH IS HEREBY EXCLUDED. FURTHER, XXX SENTINEL SECURITY AGENCY,
INC. IS HEREBY ORDERED TO PAY COMPLAINANTS SEPARATION PAY AT THE RATE OF MONTH PAY FOR
EVERY YEAR OF SERVICE AND FOR BOTH XXX PHILIPPINE AMERICAN LIFE INSURANCE, INC. AND
SENTINEL SECURITY AGENCY, INC. AND/OR DANIEL IWAY TO PAY TO THE [COMPLAINANTS] JOINTLY AND
SEVERALLY THEIR BACKWAGES FROM JANUARY 16, 1994 TO JANUARY 15, 1995 AND THE
CORRESPONDING 13TH MONTH PAY FOR THE SAID YEAR. THE MONETARY AWARDS HEREBY GRANTED
ARE BROKEN DOWN AS FOLLOWS [INTO SEPARATION PAY, BACK WAGES, 13TH MONTH PAY AND SERVICE
INCENTIVE LEAVE PAY]:

X X X X X X X X X.[5]

THE CHALLENGED RESOLUTION DENIED RECONSIDERATION FOR LACK OF MERIT.[6]

THE FACTS

THE UNDISPUTED FACTUAL BACKDROP IS NARRATED BY RESPONDENT COMMISSION AS FOLLOWS:[7]

THE COMPLAINANTS WERE EMPLOYEES OF SENTINEL [SECURITY AGENCY, INC. HEREAFTER REFERRED TO
AS THE AGENCY] SINCE MARCH 1, 1966 IN THE CASE OF VERONICO ZAMBO; OCTOBER 27, 1975 IN THE
CASE OF HELCIAS ARROYO; SEPTEMBER 20, 1985 IN THE CASE OF ADRIANO CABANO; FEBRUARY 1, 1990
IN THE CASE OF MAXIMO ORTIZ; AND ORTIZ AND NOVEMBER 1, 1967 IN THE CASE OF RUSTICO ANDOY.
THEY WERE ASSIGNED TO RENDER GUARD DUTY AT THE PREMISES OF [PHILIPPINE AMERICAN LIFE
INSURANCE COMPANY] AT JONES AVENUE, CEBU CITY. ON DECEMBER 16, 1993 PHILIPPINE AMERICAN
LIFE INSURANCE COMPANY [THE CLIENT, FOR BREVITY], THROUGH CARLOS DE PANO, JR., SENT NOTICE
TO ALL CONCERNED THAT THE [AGENCY] WAS AGAIN AWARDED THE CONTRACT OF [S]ECURITY
[S]ERVICES TOGETHER WITH A REQUEST TO REPLACE ALL THE SECURITY GUARDS IN THE COMPANYS
OFFICES AT THE CITIES OF CEBU, BACOLOD, CAGAYAN DE ORO, DIPOLOG AND ILAGAN. IN COMPLIANCE
THEREWITH, [THE AGENCY] ISSUED ON JANUARY 12, 1994, A RELIEF AND TRANSFER ORDER REPLACING
THE COMPLAINANTS AS GUARDS [OF THE CLIENT] AND FOR THEN TO BE RE-ASSIGNED [TO] OTHER
CLIENTS EFFECTIVE JANUARY 16, 1994. AS ORDERED, THE COMPLAINANTS REPORTED BUT WERE NEVER
GIVEN NEW ASSIGNMENTS BUT INSTEAD THEY WERE TOLD IN THE VERNACULAR, GUI-ILISA MO KAY
MGA TIGULANG NAMAN MO WHICH WHEN TRANSLATED MEANS, YOU WERE REPLACE[D] BECAUSE YOU
ARE ALREADY OLD. PRECISELY, THE COMPLAINANTS LOST NO TIME BUT FILED THE SUBJECT ILLEGAL
DISMISSAL CASES ON JANUARY 18, JANUARY 26 AND FEBRUARY 4, 1994 AND PRAYED FOR PAYMENT OF
SEPARATION PAY AND OTHER LABOR STANDARD BENEFITS.

[THE CLIENT AND THE AGENCY] MAINTAINED THERE WAS NO DISMISSAL ON THE PART OF THE
COMPLAINANTS, CONSTRUCTIVE OR OTHERWISE, AS THEY WERE PROTECTED BY THE CONTRACT OF
SECURITY SERVICES WHICH ALLOWS THE RECALL OF SECURITY GUARDS FROM THEIR ASSIGNED POSTS AT
THE WILL OF EITHER PARTY. IT ALSO ADVANCED THAT THE COMPLAINANTS PREMATURELY FILED THE
SUBJECT CASES WITHOUT GIVING THE [AGENCY] A CHANCE TO GIVE THEM SOME ASSIGNMENTS.

ON THE PART OF [THE CLIENT], IT AVERRED FURTHER THAT THERE [WAS] NO EMPLOYER-EMPLOYEE
RELATIONSHIP BETWEEN IT AND THE COMPLAINANTS AS THE LATTER WERE MERELY ASSIGNED TO ITS
CEBU BRANCH UNDER A JOB CONTRACT; THAT [THE AGENCY] HA[D] ITS OWN SEPARATE CORPORATE
PERSONALITY APART FROM THAT OF [THE CLIENT]. BESIDES, IT POINTED OUT THAT THE FUNCTIONS OF
THE COMPLAINANTS IN PROVIDING SECURITY SERVICES TO [THE CLIENTS] PROPERTY [WERE] NOT
NECESSARY AND DESIRABLE TO THE USUAL BUSINESS OR TRADE OF [THE CLIENT], AS IT COULD STILL
OPERATE AND ENGAGE IN ITS LIFE INSURANCE BUSINESS WITHOUT THE SECURITY GUARDS. IN FINE,
[THE CLIENT] MAINTAINS THAT THE COMPLAINANTS HAVE NO CAUSE OF ACTION AGAINST IT.

RULING OF RESPONDENT COMMISSION

RESPONDENT COMMISSION RULED THAT THE COMPLAINANTS WERE CONSTRUCTIVELY DISMISSED, AS

THE RECALL OF THE COMPLAINANTS FROM THEIR LONG TIME POST[S] AT [THE PREMISES OF THE
CLIENT] WITHOUT ANY GOOD REASON IS A SCHEME TO JUSTIFY OR CAMOUFLAGE ILLEGAL DISMISSAL.

IT RULED SUPERSTAR SECURITY AGENCY, INC. VS. NATIONAL LABOR RELATIONS COMMISSION[8] AND A
PRIME SECURITY SERVICES, INC. VS. NATIONAL LABOR RELATIONS COMMISSION[9] WERE NOT
APPLICABLE TO THE CASE AT BAR. IN THE FORMER, THE SECURITY GUARD WAS PLACED ON TEMPORARY
OFF-DETAIL DUE TO HIS POOR PERFORMANCE AND LACK OF ELEMENTARY COURTESY AND TACT, AND TO
THE COST-CUTTING PROGRAM OF THE AGENCY. IN THE LATTER, THE RELIEF OF THE SECURITY GUARD
WAS DUE TO HIS SLEEPING WHILE ON DUTY AND HIS REPEATED REFUSAL TO RESUME WORK DESPITE
NOTICE.

IN THE PRESENT CASE, THE COMPLAINANTS CASE, THE COMPLAINANTS WERE TOLD BY THE AGENCY
THAT THEY LOST THEIR ASSIGNMENT AT THE CLIENTS PREMISES BECAUSE THEY WERE ALREADY OLD,
AND NOT BECAUSE THEY HAD COMMITTED ANY INFRACTION OR IRREGULARITY. THE NLRC APPLIED RA
7641,[10] WHICH GIVES RETIREMENT BENEFITS OF ONE-HALF MONTH PAY PER YEAR OF SERVICE TO
RETIRABLE EMPLOYEES, VIZ.:

XXX AS STATED EARLIER XXX, THE COMPLAINANTS WERE IN THE SERVICE OF [THE CLIENT] FOR NEARLY
TWENTY (20) YEARS IN THE CASES OF HELCIAS ARROYO AND FOR MORE THAN TWENTY (20) YEARS IN
THE CASES OF VERONICO ZAMBO AND RUSTICO ANDOY, WHICH LONG YEARS OF SERVICE [APPEAR] ON
RECORD TO BE UNBLEMISHED. THE COMPLAINANTS WERE THEN CONFRONTED WITH AN IMPENDING
SUDDEN LOSS OF EARNING FOR WHILE THE ORDER OF [THE AGENCY] TO IMMEDIATELY REPORT FOR
REASSIGNMENT MOMENTARILY GAVE THEM HOPE, THERE WAS IN FACT NO IMMEDIATE
REINSTATEMENT. WHILE IT COULD HAVE BEEN PRUDENT FOR THE COMPLAINANTS TO WAIT, THEY WERE
SET UNSTABLE AND WERE ACTUALLY THREATENED BY THE STATEMENT OF THE PERSONNEL IN CHARGE
OF [THE AGENCY] THAT THEY WERE ALREADY OLD, THAT WAS WHY THEY WERE REPLACED.

AGAINST THESE GLARING FACTS IS THE NEW RETIREMENT LAW, R.A. 7641 WHICH TOOK EFFECT ON
JANUARY 7, 1993 GIVING RETIREMENT BENEFITS OF MONTH PAY PER YEAR OF SERVICE TO AN
EMPLOYEE UPON REACHING RETIREMENT AGE TO BE PAID BY THE EMPLOYER, IN THIS CASE AT QUIET A
SIZEABLE AMOUNT AND IN NOT SO LONG DUE TIME AS SOME OF THE COMPLAINANTS WERE DESCRIBED
AS ALREADY OLD.
AS COMPLAINANTS WERE ILLEGALLY DISMISSED, THE NLRC RULED THAT THEY WERE ENTITLED TO THE
TWIN REMEDIES OF BACK WAGES FOR ONE (1) YEAR FROM THE TIME OF THEIR DISMISSAL ON JANUARY
15, 1994, PAYABLE BY BOTH THE CLIENT AND THE AGENCY, AND SEPARATION PAY ONE-HALF MONTH PAY
FOR EVERY YEAR OF SERVICE PAYABLE ONLY BY THE AGENCY. REINSTATEMENT WAS NOT GRANTED DUE
TO THE RESULTING ANTIPATHY AND RESENTMENT AMONG THE COMPLAINANTS, THE AGENCY AND THE
CLIENT.

HENCE, THIS PETITION.[11]

THE ISSUES

IN THEIR MEMORANDA, THE AGENCY POSES THIS QUESTION:[12]

XXX [W]HETHER XXX SENTINEL IS GUILTY OF ILLEGAL DISMISSAL[,]

ON THE OTHER HAND, THE CLIENT RAISES THE FOLLOWING ISSUES:[13]

WHETHER XXX [THE COMPLAINANTS] WERE ILLEGALLY DISMISSED BY THEIR EMPLOYER, SENTINEL
SECURITY AGENCY, INC., AND IN HOLDING PETITIONER TO BE EQUALLY LIABLE THEREFOR.

WHETHER XXX PETITIONER IS JOINTLY AND SEVERALLY LIABLE WITH SENTINEL SECURITY AGENCY, INC.,
IN THE LATTERS PAYMENT OF BACKWAGES, 13TH MONTH PAY AND SERVICE INCENTIVE LEAVE PAY TO ITS
EMPLOYEES XXX.

IN SUM, THE RESOLUTION OF THESE CONSOLIDATED PETITIONS HINGES ON (1) WHETHER THE
COMPLAINANTS WERE ILLEGALLY DISMISSED, AND (2) WHETHER THE CLIENT IS JOINTLY AND SEVERALLY
LIABLE FOR THEIR THIRTEENTH-MONTH AND SERVICE INCENTIVE LEAVE PAYS.

THE COURTS RULING

THE PETITION IS PARTLY MERITORIOUS.

FIRST ISSUE: ILLEGAL DISMISSAL

THE PRIVATE RESPONDENTS TRANSFER, ACCORDING TO RESPONDENT COMMISSION, WAS AFFECTED TO

CIRCUMVENT THE MANDATE OF REPUBLIC ACT 7641 (NEW RETIREMENT LAW), WHICH BY THEN HAD
ALREADY TAKEN EFFECT, IN VIEW OF THE FACT THAT THE COMPLAINANTS HAD WORKED FOR BOTH THE
CLIENT AND THE AGENCY FOR 10 TO 20 YEARS AND WERE NEARING RETIREMENT AGE. WITH THIS
PREMISE, THE NLRC CONCLUDED THAT THE GUARDS WERE ILLEGALLY DISMISSED. THE COMPLAINANTS
ADD THAT THE FINDINGS OF THE COMMISSION MATCH THE REMARKS OF THE PERSONNEL MANAGER OF
THE AGENCY, FELICIANO MARTICION; THAT IS, THAT THEY WERE BEING REPLACED BECAUSE THEY WERE
ALREADY OLD. THEY INSIST THAT THEIR SERVICE RECORDS ARE UNBLEMISHED; HENCE, THEY COULD NOT
HAVE BEEN DISMISSED BY REASON OF ANY JUST CAUSE.

WE AGREE THAT THE SECURITY GUARDS WERE ILLEGALLY DISMISSED, BUT NOT FOR THE REASONS GIVEN
BY THE PUBLIC RESPONDENT. THE AFORECITED CONTENTIONS OF THE NLRC ARE SPECULATIVE AND
UNSUPPORTED BY THE EVIDENCE ON RECORD. AS THE SOLICITOR GENERAL SAID IN HIS MANIFESTATION
IN LIEU OF COMMENT, THE RELIEF AND TRANSFER ORDER WAS AKIN TO PLACING PRIVATE
RESPONDENTS ON TEMPORARY OFF-DETAIL.

BEING SIDELINED TEMPORARILY IS A STANDARD STIPULATION IN EMPLOYMENT CONTRACTS, AS THE

AVAILABILITY OF ASSIGNMENT FOR SECURITY GUARDS IS PRIMARILY DEPENDENT ON THE CONTRACTS
ENTERED INTO BY THE AGENCY WITH THIRD PARTIES. MOST CONTRACTS FOR SECURITY SERVICES, AS IN
THIS CASE, STIPULATE THAT THE CLIENT MAY REQUEST THE REPLACEMENT OF THE GUARDS ASSIGNED
TO IT. IN SECURITY AGENCY PARLANCE, BEING PLACED OFF DETAIL OR ON FLOATING STATUS MEANS
WAITING TO BE POSTED.[14] THIS CIRCUMSTANCE IS NOT EQUIVALENT TO DISMISSAL, SO LONG AS SUCH
STATUS DOES NOT CONTINUE BEYOND REASONABLE TIME.[15]

IN THE CASE AT BAR, THE RELIEF AND TRANSFER ORDER PER SE DID NOT SEVER THE EMPLOYMENT
RELATIONSHIP BETWEEN THE COMPLAINANTS AND THE AGENCY. THUS, DESPITE THE FACT THAT
COMPLAINANTS WERE NO LONGER ASSIGNED TO THE CLIENT, ARTICLE 287 OF THE LABOR CODE, AS
AMENDED BY RA 7641, STILL BINDS THE AGENCY TO PROVIDE THEM UPON THEIR REACHING THE
RETIREMENT AGE OF SIXTY TO SIXTY-FIVE YEARS RETIREMENT PAY OR WHATEVER ELSE WAS
ESTABLISHED IN THE COLLECTIVE BARGAINING AGREEMENT OR IN ANY OTHER APPLICABLE
EMPLOYMENT CONTRACT. ON THE OTHER HAND, THE CLIENT IS NOT LIABLE TO THE COMPLAINANTS
FOR THEIR RETIREMENT PAY BECAUSE OF THE ABSENCE OF AN EMPLOYER-EMPLOYEE RELATIONSHIP
BETWEEN THEM.

HOWEVER, THE AGENCY CLAIMS THAT THE COMPLAINANTS, AFTER BEING PLACED OFF-DETAIL,
ABANDONED THEIR EMPLOY. THE SOLICITOR GENERAL, SIDING WITH THE AGENCY AND THE LABOR
ARBITER, CONTENDS THAT WHILE ABANDONMENT OF EMPLOYMENT IS INCONSISTENT WITH THE FILING
OF A COMPLAINT FOR ILLEGAL DISMISSAL, SUCH RULE IS NOT APPLICABLE WHERE [THE COMPLAINANT]
EXPRESSLY REJECTS THIS RELIEF AND ASKS FOR SEPARATION PAY INSTEAD.

THE COURT DISAGREES. ABANDONMENT, AS A JUST AND VALID CAUSE FOR TERMINATION, REQUIRES A
DELIBERATE AND UNJUSTIFIED REFUSAL OF AN EMPLOYEE TO RESUME HIS WORK, COUPLED WITH A
CLEAR ABSENCE OF ANY INTENTION OF RETURNING TO HIS OR HER WORK.[16] THAT COMPLAINANTS
DID NOT PRAY FOR REINSTATEMENT IS NOT SUFFICIENT PROOF OF ABANDONMENT. A STRONG
INDICATION OF THE INTENTION OF COMPLAINANTS TO RESUME WORK IS THEIR ALLEGATION THAT ON
SEVERAL DATES THEY REPORTED TO THE AGENCY FOR REASSIGNMENT, BUT WERE NOT GIVEN ANY. IN
FACT, THE CONTENTION OF COMPLAINANT IS THAT THE AGENCY CONSTRUCTIVELY DISMISSED THEM.
ABANDONMENT HAS RECENTLY BEEN RULED TO BE INCOMPATIBLE WITH CONSTRUCTIVE DISMISSAL.
WE, THUS, RULE THAT COMPLAINANTS DID NOT ABANDON THEIR JOBS.[17] WE WILL NOW
DEMONSTRATE WHY WE BELIEVE COMPLAINANTS WERE ILLEGALLY DISMISSED.

IN SEVERAL CASES, THE COURT HAS RECOGNIZED THE PREROGATIVE OF MANAGEMENT TO TRANSFER
AN EMPLOYEE FROM ONE OFFICE TO ANOTHER WITHIN THE SAME BUSINESS ESTABLISHMENT, AS THE
EXIGENCY OF THE BUSINESS MAY REQUIRE, PROVIDED THAT THE SAID TRANSFER DOES NOT RESULT IN A
DEMOTION IN RANK OR A DIMINUTION IN SALARY, BENEFITS AND OTHER PRIVILEGES OF THE EMPLOYEE;
[18] OR IS NOT UNREASONABLE, INCONVENIENT OR PREJUDICIAL TO THE LATTER;[19] OR IS NOT USED
AS A SUBTERFUGE BY THE EMPLOYER TO RID HIMSELF OF AN UNDESIRABLE WORKER.[20]

A TRANSFER MEANS A MOVEMENT (1) FROM ONE POSITION TO ANOTHER OF EQUIVALENT RANK, LEVEL
OR SALARY, WITHOUT A BREAK IN THE SERVICE;[21] AND (2) FROM ONE OFFICE TO ANOTHER WITHIN
THE SAME BUSINESS ESTABLISHMENT.[22] IT IS DISTINGUISHED FROM A PROMOTION IN THE SENSE
THAT IT INVOLVES A LATERAL CHANGE AS OPPOSED TO A SCALAR ASCENT.[23]

IN THIS CASE, TRANSFER OF THE COMPLAINANTS IMPLIED MORE THAN A RELIEF FROM DUTY TO GIVE
THEM TIME TO REST A MERE CHANGING OF THE GUARDS. RATHER, THEIR TRANSFER CONNOTED A
RESHUFFLING OR EXCHANGE OF THEIR POSTS, OR THEIR REASSIGNMENT TO OTHER POSTS, SUCH THAT
NO SECURITY GUARD WOULD BE WITHOUT AN ASSIGNMENT.

HOWEVER, THIS LEGALLY RECOGNIZED CONCEPT OF TRANSFER WAS NOT IMPLEMENTED. THE AGENCY
HIRED NEW SECURITY GUARDS TO REPLACE THE COMPLAINANTS, RESULTING IN A LACK OF POSTS TO
WHICH THE COMPLAINANTS COULD HAVE BEEN REASSIGNED. THUS, IT REFUSED TO REASSIGN
COMPLAINANT ANDOY WHEN HE REPORTED FOR DUTY ON FEBRUARY 2, 4 AND 7, 1994; AND MERELY
TOLD THE OTHER COMPLAINANTS ON VARIOUS DATES FROM JANUARY 25 TO 27, 1994 THAT THEY WERE
ALREADY TOO OLD TO BE POSTED ANYWHERE.

THE AGENCY NOW EXPLAINS THAT SINCE, UNDER THE LAW, THE AGENCY IS GIVEN A PERIOD OF NOT
MORE THAN SIX MONTHS TO RETAIN THE COMPLAINANTS ON FLOATING STATUS, THE COMPLAINT FOR
ILLEGAL DISMISSAL IS PREMATURE. THIS CONTENTION IS INCORRECT.

A FLOATING STATUS REQUIRES THE DIRE EXIGENCY OF THE EMPLOYERS BONA FIDE SUSPENSION OF
OPERATION, BUSINESS OR UNDERTAKING. IN SECURITY SERVICES, THIS HAPPENS WHEN THE CLIENTS
THAT DO NOT RENEW THEIR CONTRACTS WITH A SECURITY AGENCY ARE MORE THAN THOSE THAT DO
AND THE NEW ONES THAT THE AGENCY GETS. HOWEVER, IN THE CASE AT BAR, THE AGENCY WAS
AWARDED A NEW CONTRACT BY THE CLIENT. THERE WAS NO SURPLUS OF SECURITY GUARDS OVER
AVAILABLE ASSIGNMENTS. IF THERE WERE, IT WAS BECAUSE THE AGENCY HIRED NEW SECURITY
GUARDS. THUS, THERE WAS NO SUSPENSION OF OPERATION, BUSINESS OR UNDERTAKING, BONA FIDE
OR NOT, THAT WOULD HAVE JUSTIFIED PLACING THE COMPLAINANTS OFF-DETAIL AND MAKING THEM
WAIT FOR A PERIOD OF SIX MONTHS. IF INDEED THEY WERE MERELY TRANSFERRED, THERE WOULD
HAVE BEEN NO NEED TO MAKE THEM WAIT FOR SIX MONTHS.

THE ONLY LOGICAL CONCLUSION FROM THE FOREGOING DISCUSSION IS THAT THE AGENCY ILLEGALLY
DISMISSED THE COMPLAINANTS. HENCE, AS A NECESSARY CONSEQUENCE, THE COMPLAINANTS ARE
ENTITLED TO REINSTATEMENT AND BACK WAGES.[24] HOWEVER, REINSTATEMENT IS NO LONGER
FEASIBLE IN THIS CASE. THE AGENCY CANNOT REASSIGN THEM TO THE CLIENT, AS THE FORMER HAS
RECRUITED NEW SECURITY GUARDS; THE COMPLAINANTS, ON THE OTHER HAND, REFUSE TO ACCEPT
OTHER ASSIGNMENTS. VERILY, COMPLAINANTS DO NOT PRAY FOR REINSTATEMENT; IN FACT, THEY
REFUSED TO BE REINSTATED. SUCH REFUSAL IS INDICATIVE OF STRAINED RELATIONS.[25] THUS,
SEPARATION PAY IS AWARDED IN LIEU OF REINSTATEMENT.[26]

SECOND ISSUE:
CLIENTS LIABILITY

THE CLIENT DID NOT, AS IT COULD NOT, ILLEGALLY DISMISS THE COMPLAINANTS. THUS, IT SHOULD NOT
BE HELD LIABLE FOR SEPARATION PAY AND BACK WAGES. BUT EVEN IF THE CLIENT IS NOT RESPONSIBLE
FOR THE ILLEGAL DISMISSAL OF THE COMPLAINANTS, IT IS JOINTLY AND SEVERALLY LIABLE WITH THE
AGENCY FOR THE COMPLAINANTS SERVICE INCENTIVE LEAVE PAY. IN ROSEWOOD PROCESSING, INC. VS.
NATIONAL LABOR RELATIONS COMMISSION,[27] THE COURT EXPLAINED THAT, NOTWITHSTANDING THE
SERVICE CONTRACT BETWEEN THE CLIENT AND THE SECURITY AGENCY, THE TWO ARE SOLIDARILY LIABLE
FOR THE PROPER WAGES PRESCRIBED BY THE LABOR CODE, PURSUANT TO ARTICLE 106, 107 AND 109
THEREOF, WHICH WE QUOTE HEREUNDER:

ART. 106. CONTRACTOR OR SUBCONTRACTOR.WHENEVER AN EMPLOYER ENTERS INTO A CONTRACT

WITH ANOTHER PERSON FOR THE PERFORMANCE OF THE FORMER[S] WORK, THE EMPLOYEES OF THE
CONTRACTOR AND OF THE LATTER[S] SUBCONTRACTOR, IF ANY, SHALL BE PAID IN ACCORDANCE WITH
THE PROVISIONS OF THIS CODE.

IN THE EVENT THAT THE CONTRACTOR OR SUBCONTRACTOR FAILS TO PAY THE WAGES OF HIS
EMPLOYEES IN ACCORDANCE WITH THIS CODE, THE EMPLOYER SHALL BE JOINTLY AND SEVERALLY
LIABLE WITH HIS CONTRACTOR OR SUBCONTRACTOR TO SUCH EMPLOYEES TO THE EXTENT OF THE
WORK PERFORMED UNDER THE CONTRACT, IN THE SAME MANNER AND EXTENT THAT HE IS LIABLE TO
EMPLOYEES DIRECTLY EMPLOYED BY HIM.

THE SECRETARY OF LABOR MAY, BY APPROPRIATE REGULATIONS, RESTRICT OR PROHIBIT THE

CONTRACTING OUT OF LABOR TO PROTECT THE RIGHTS OF WORKERS ESTABLISHED UNDER THIS CODE.
IN SO PROHIBITING OR RESTRICTING, HE MAY MAKE APPROPRIATE DISTINCTIONS BETWEEN LABOR-
ONLY CONTRACTING AND JOB CONTRACTING AS WELL AS DIFFERENTIATIONS WITHIN THESE TYPES OF
CONTRACTING AND DETERMINE WHO AMONG THE PARTIES INVOLVED SHALL BE CONSIDERED THE
EMPLOYER FOR PURPOSES OF THIS CODE, TO PREVENT ANY VIOLATION OR CIRCUMVENTION OF ANY
PROVISION OF THIS CODE.

XXX IN SUCH CASES [LABOR-ONLY CONTRACTING], THE PERSON OR INTERMEDIARY SHALL BE

CONSIDERED MERELY AS AN AGENT OF THE EMPLOYER WHO SHALL BE RESPONSIBLE TO THE WORKERS
IN THE SAME MANNER AND EXTENT AS IF THE LATTER WERE DIRECTLY EMPLOYED BY HIM.

ART. 107. INDIRECT EMPLOYER.THE PROVISIONS OF THE IMMEDIATELY PRECEDING ARTICLE SHALL
LIKEWISE APPLY TO ANY PERSON, PARTNERSHIP, ASSOCIATION OR CORPORATION WHICH, NOT BEING AN
EMPLOYER, CONTRACTS WITH AN INDEPENDENT CONTRACTOR FOR THE PERFORMANCE OF ANY WORK,
TASK, JOB OR PROJECT.

ART. 109. SOLIDARY LIABILITY.THE PROVISIONS OF EXISTING LAWS TO THE CONTRARY

NOTWITHSTANDING, EVERY EMPLOYER OR INDIRECT EMPLOYER SHALL BE HELD RESPONSIBLE WITH HIS
CONTRACTOR OR SUBCONTRACTOR FOR ANY VIOLATION OF ANY PROVISION OF THIS CODE. FOR
PURPOSE OF DETERMINING THE EXTENT OF THEIR CIVIL LIABILITY UNDER THIS CHAPTER, THEY SHALL BE
CONSIDERED AS DIRECT EMPLOYERS.

UNDER THESE PROVISIONS, THE INDIRECT EMPLOYER, WHO IS THE CLIENT IN THE CASE AT BAR, IS
JOINTLY AND SEVERALLY LIABLE WITH THE CONTRACTOR FOR THE WORKERS WAGES, IN THE SAME
MANNER AND EXTENT THAT IT IS LIABLE TO ITS DIRECT EMPLOYEES. THIS LIABILITY OF THE CLIENT
COVERS THE PAYMENT OF THE SERVICE INCENTIVE LEAVE PAY OF THE COMPLAINANTS DURING THE
TIME THEY WERE POSTED AT THE CEBU BRANCH OF THE CLIENT. AS SERVICE HAD BEEN RENDERED, THE
LIABILITY ACCRUED, EVEN IF THE COMPLAINANTS WERE EVENTUALLY TRANSFERRED OR REASSIGNED.

THE SERVICE INCENTIVE LEAVE IS EXPRESSLY GRANTED BY THESE PERTINENT PROVISIONS OF THE LABOR
CODE:
ART. 95. RIGHT TO SERVICE INCENTIVE LEAVE.(A) EVERY EMPLOYEE WHO HAS RENDERED AT LEAST ONE
YEAR OF SERVICE SHALL BE ENTITLED TO A YEARLY SERVICE INCENTIVE LEAVE OF FIVE DAYS WITH PAY.

(B) THIS PROVISION SHALL NOT APPLY TO THOSE WHO ARE ALREADY ENJOYING THE BENEFIT HEREIN
PROVIDED, THOSE ENJOYING VACATION LEAVE WITH PAY OF AT LEAST FIVE DAYS AND THOSE EMPLOYED
IN ESTABLISHMENTS REGULARLY EMPLOYING LESS THAN TEN EMPLOYEES OR IN ESTABLISHMENTS
EXEMPTED FROM GRANTING THIS BENEFIT BY THE SECRETARY OF LABOR AFTER CONSIDERING THE
VIABILITY OR FINANCIAL CONDITION OF SUCH ESTABLISHMENT.

(C) THE GRANT OF BENEFIT IN EXCESS OF THAT PROVIDED HEREIN SHALL NOT BE MADE A SUBJECT OF
ARBITRATION OR ANY COURT [OR] ADMNISTRATIVE ACTION.

UNDER THE IMPLEMENTING RULES AND REGULATIONS OF THE LABOR CODE, AN UNUSED SERVICE
INCENTIVE LEAVE IS COMMUTABLE TO ITS MONEY EQUIVALENT, VIZ.:

SEC. 5. TREATMENT OF BANEFIT. - THE SERVICE INCENTIVE LEAVE SHALL BE COMMUTABLE TO ITS
MONEY EQUIVALENT IF NOT USED OR EXHAUSTED AT THE END OF THE YEAR.

THE AWARD OF THE THIRTEENTH-MONTH PAY IS DELETED IN VIEW OF THE EVIDENCE PRESENTED BY THE
AGENCY THAT SUCH CLAIM HAS ALREADY BEEN PAID TO THE COMPLAINANTS. OBVIOUSLY THEN, THE
AWARD OF SUCH BENEFIT IN THE DISPOSITIVE PORTION OF THE ASSAILED DECISION IS MERELY AN
OVERSIGHT, CONSIDERING THAT RESPONDENT COMMISSION ITSELF DELETED IT FROM THE MAIN BODY
OF THE SAID DECISION.

WHEREFORE, THE PETITION IS DISMISSED AND THE ASSAILED DECISION AND RESOLUTION ARE HEREBY
AFFIRMED, BUT THE AWARD OF THE THIRTEENTH-MONTH PAY IS DELETED. COSTS AGAINST
PETITIONERS.

SO ORDERED.
[G.R. NO. 156367. MAY 16, 2005]

AUTO BUS TRANSPORT SYSTEMS, INC., PETITIONER, VS. ANTONIO BAUTISTA, RESPONDENT.
DECISION
CHICO-NAZARIO, J.:

BEFORE US IS A PETITION FOR REVIEW ON CERTIORARI ASSAILING THE DECISION[1] AND RESOLUTION[2]
OF THE COURT OF APPEALS AFFIRMING THE DECISION[3] OF THE NATIONAL LABOR RELATIONS
COMMISSION (NLRC). THE NLRC RULING MODIFIED THE DECISION OF THE LABOR ARBITER (FINDING
RESPONDENT ENTITLED TO THE AWARD OF 13TH MONTH PAY AND SERVICE INCENTIVE LEAVE PAY) BY
DELETING THE AWARD OF 13TH MONTH PAY TO RESPONDENT.

THE FACTS

SINCE 24 MAY 1995, RESPONDENT ANTONIO BAUTISTA HAS BEEN EMPLOYED BY PETITIONER AUTO BUS
TRANSPORT SYSTEMS, INC. (AUTOBUS), AS DRIVER-CONDUCTOR WITH TRAVEL ROUTES MANILA-
TUGUEGARAO VIA BAGUIO, BAGUIO- TUGUEGARAO VIA MANILA AND MANILA-TABUK VIA BAGUIO.
RESPONDENT WAS PAID ON COMMISSION BASIS, SEVEN PERCENT (7%) OF THE TOTAL GROSS INCOME
PER TRAVEL, ON A TWICE A MONTH BASIS.

ON 03 JANUARY 2000, WHILE RESPONDENT WAS DRIVING AUTOBUS NO. 114 ALONG STA. FE, NUEVA
VIZCAYA, THE BUS HE WAS DRIVING ACCIDENTALLY BUMPED THE REAR PORTION OF AUTOBUS NO. 124,
AS THE LATTER VEHICLE SUDDENLY STOPPED AT A SHARP CURVE WITHOUT GIVING ANY WARNING.

RESPONDENT AVERRED THAT THE ACCIDENT HAPPENED BECAUSE HE WAS COMPELLED BY THE
MANAGEMENT TO GO BACK TO ROXAS, ISABELA, ALTHOUGH HE HAD NOT SLEPT FOR ALMOST TWENTY-
FOUR (24) HOURS, AS HE HAD JUST ARRIVED IN MANILA FROM ROXAS, ISABELA. RESPONDENT FURTHER
ALLEGED THAT HE WAS NOT ALLOWED TO WORK UNTIL HE FULLY PAID THE AMOUNT OF P75,551.50,
REPRESENTING THIRTY PERCENT (30%) OF THE COST OF REPAIR OF THE DAMAGED BUSES AND THAT
DESPITE RESPONDENTS PLEAS FOR RECONSIDERATION, THE SAME WAS IGNORED BY MANAGEMENT.
AFTER A MONTH, MANAGEMENT SENT HIM A LETTER OF TERMINATION.

THUS, ON 02 FEBRUARY 2000, RESPONDENT INSTITUTED A COMPLAINT FOR ILLEGAL DISMISSAL WITH
MONEY CLAIMS FOR NONPAYMENT OF 13TH MONTH PAY AND SERVICE INCENTIVE LEAVE PAY AGAINST
AUTOBUS.

PETITIONER, ON THE OTHER HAND, MAINTAINED THAT RESPONDENTS EMPLOYMENT WAS REPLETE
WITH OFFENSES INVOLVING RECKLESS IMPRUDENCE, GROSS NEGLIGENCE, AND DISHONESTY. TO
SUPPORT ITS CLAIM, PETITIONER PRESENTED COPIES OF LETTERS, MEMOS, IRREGULARITY REPORTS,
AND WARRANTS OF ARREST PERTAINING TO SEVERAL INCIDENTS WHEREIN RESPONDENT WAS
INVOLVED.

FURTHERMORE, PETITIONER AVERS THAT IN THE EXERCISE OF ITS MANAGEMENT PREROGATIVE,

RESPONDENTS EMPLOYMENT WAS TERMINATED ONLY AFTER THE LATTER WAS PROVIDED WITH AN
OPPORTUNITY TO EXPLAIN HIS SIDE REGARDING THE ACCIDENT ON 03 JANUARY 2000.

ON 29 SEPTEMBER 2000, BASED ON THE PLEADINGS AND SUPPORTING EVIDENCE PRESENTED BY THE
PARTIES, LABOR ARBITER MONROE C. TABINGAN PROMULGATED A DECISION,[4] THE DISPOSITIVE
PORTION OF WHICH READS:

WHEREFORE, ALL PREMISES CONSIDERED, IT IS HEREBY FOUND THAT THE COMPLAINT FOR ILLEGAL
DISMISSAL HAS NO LEG TO STAND ON. IT IS HEREBY ORDERED DISMISSED, AS IT IS HEREBY DISMISSED.

HOWEVER, STILL BASED ON THE ABOVE-DISCUSSED PREMISES, THE RESPONDENT MUST PAY TO THE
COMPLAINANT THE FOLLOWING:

A. HIS 13TH MONTH PAY FROM THE DATE OF HIS HIRING TO THE DATE OF HIS DISMISSAL, PRESENTLY
COMPUTED AT P78,117.87;

B. HIS SERVICE INCENTIVE LEAVE PAY FOR ALL THE YEARS HE HAD BEEN IN SERVICE WITH THE
RESPONDENT, PRESENTLY COMPUTED AT P13,788.05.

ALL OTHER CLAIMS OF BOTH COMPLAINANT AND RESPONDENT ARE HEREBY DISMISSED FOR LACK OF
MERIT.[5]
NOT SATISFIED WITH THE DECISION OF THE LABOR ARBITER, PETITIONER APPEALED THE DECISION TO
THE NLRC WHICH RENDERED ITS DECISION ON 28 SEPTEMBER 2001, THE DECRETAL PORTION OF WHICH
READS:

[T]HE RULES AND REGULATIONS IMPLEMENTING PRESIDENTIAL DECREE NO. 851, PARTICULARLY SEC. 3
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,
PERFORMING A SPECIFIC WORK, IRRESPECTIVE OF THE TIME CONSUMED IN THE PERFORMANCE
THEREOF. XXX.

RECORDS SHOW THAT COMPLAINANT, IN HIS POSITION PAPER, ADMITTED THAT HE WAS PAID ON A
COMMISSION BASIS.

IN VIEW OF THE FOREGOING, WE DEEM IT JUST AND EQUITABLE TO MODIFY THE ASSAILED DECISION BY
DELETING THE AWARD OF 13TH MONTH PAY TO THE COMPLAINANT.

WHEREFORE, THE DECISION DATED 29 SEPTEMBER 2000 IS MODIFIED BY DELETING THE AWARD OF
13TH MONTH PAY. THE OTHER FINDINGS ARE AFFIRMED.[6]

IN OTHER WORDS, THE AWARD OF SERVICE INCENTIVE LEAVE PAY WAS MAINTAINED. PETITIONER THUS
SOUGHT A RECONSIDERATION OF THIS ASPECT, WHICH WAS SUBSEQUENTLY DENIED IN A RESOLUTION
BY THE NLRC DATED 31 OCTOBER 2001.

DISPLEASED WITH ONLY THE PARTIAL GRANT OF ITS APPEAL TO THE NLRC, PETITIONER SOUGHT THE
REVIEW OF SAID DECISION WITH THE COURT OF APPEALS WHICH WAS SUBSEQUENTLY DENIED BY THE
APPELLATE COURT IN A DECISION DATED 06 MAY 2002, THE DISPOSITIVE PORTION OF WHICH READS:

WHEREFORE, PREMISES CONSIDERED, THE PETITION IS DISMISSED FOR LACK OF MERIT; AND THE
ASSAILED DECISION OF RESPONDENT COMMISSION IN NLRC NCR CA NO. 026584-2000 IS HEREBY
AFFIRMED IN TOTO. NO COSTS.[7]

HENCE, THE INSTANT PETITION.

ISSUES

1. WHETHER OR NOT RESPONDENT IS ENTITLED TO SERVICE INCENTIVE LEAVE;

2. WHETHER OR NOT THE THREE (3)-YEAR PRESCRIPTIVE PERIOD PROVIDED UNDER ARTICLE 291 OF THE
LABOR CODE, AS AMENDED, IS APPLICABLE TO RESPONDENTS CLAIM OF SERVICE INCENTIVE LEAVE PAY.

RULING OF THE COURT

THE DISPOSITION OF THE FIRST ISSUE REVOLVES AROUND THE PROPER INTERPRETATION OF ARTICLE 95
OF THE LABOR CODE VIS--VIS SECTION 1(D), RULE V, BOOK III OF THE IMPLEMENTING RULES AND
REGULATIONS OF THE LABOR CODE WHICH PROVIDES:

ART. 95. RIGHT TO SERVICE INCENTIVE LEAVE

(A) EVERY EMPLOYEE WHO HAS RENDERED AT LEAST ONE YEAR OF SERVICE SHALL BE ENTITLED TO A
YEARLY SERVICE INCENTIVE LEAVE OF FIVE DAYS WITH PAY.

BOOK III, RULE V: SERVICE INCENTIVE LEAVE

SECTION 1. COVERAGE. THIS RULE SHALL APPLY TO ALL EMPLOYEES EXCEPT:

(D) FIELD PERSONNEL AND OTHER EMPLOYEES WHOSE PERFORMANCE IS UNSUPERVISED BY THE
EMPLOYER INCLUDING THOSE WHO ARE ENGAGED ON TASK OR CONTRACT BASIS, PURELY COMMISSION
BASIS, OR THOSE WHO ARE PAID IN A FIXED AMOUNT FOR PERFORMING WORK IRRESPECTIVE OF THE
TIME CONSUMED IN THE PERFORMANCE THEREOF; . . .

A CAREFUL PERUSAL OF SAID PROVISIONS OF LAW WILL RESULT IN THE CONCLUSION THAT THE GRANT
OF SERVICE INCENTIVE LEAVE HAS BEEN DELIMITED BY THE IMPLEMENTING RULES AND REGULATIONS
OF THE LABOR CODE TO APPLY ONLY TO THOSE EMPLOYEES NOT EXPLICITLY EXCLUDED BY SECTION 1 OF
RULE V. ACCORDING TO THE IMPLEMENTING RULES, SERVICE INCENTIVE LEAVE SHALL NOT APPLY TO
EMPLOYEES CLASSIFIED AS FIELD PERSONNEL. THE PHRASE OTHER EMPLOYEES WHOSE PERFORMANCE
IS UNSUPERVISED BY THE EMPLOYER MUST NOT BE UNDERSTOOD AS A SEPARATE CLASSIFICATION OF
EMPLOYEES TO WHICH SERVICE INCENTIVE LEAVE SHALL NOT BE GRANTED. RATHER, IT SERVES AS AN
AMPLIFICATION OF THE INTERPRETATION OF THE DEFINITION OF FIELD PERSONNEL UNDER THE LABOR
CODE AS THOSE WHOSE ACTUAL HOURS OF WORK IN THE FIELD CANNOT BE DETERMINED WITH
REASONABLE CERTAINTY.[8]

THE SAME IS TRUE WITH RESPECT TO THE PHRASE THOSE WHO ARE ENGAGED ON TASK OR CONTRACT
BASIS, PURELY COMMISSION BASIS. SAID PHRASE SHOULD BE RELATED WITH FIELD PERSONNEL,
APPLYING THE RULE ON EJUSDEM GENERIS THAT GENERAL AND UNLIMITED TERMS ARE RESTRAINED
AND LIMITED BY THE PARTICULAR TERMS THAT THEY FOLLOW.[9] HENCE, EMPLOYEES ENGAGED ON
TASK OR CONTRACT BASIS OR PAID ON PURELY COMMISSION BASIS ARE NOT AUTOMATICALLY
EXEMPTED FROM THE GRANT OF SERVICE INCENTIVE LEAVE, UNLESS, THEY FALL UNDER THE
CLASSIFICATION OF FIELD PERSONNEL.

THEREFORE, PETITIONERS CONTENTION THAT RESPONDENT IS NOT ENTITLED TO THE GRANT OF

SERVICE INCENTIVE LEAVE JUST BECAUSE HE WAS PAID ON PURELY COMMISSION BASIS IS MISPLACED.
WHAT MUST BE ASCERTAINED IN ORDER TO RESOLVE THE ISSUE OF PROPRIETY OF THE GRANT OF
SERVICE INCENTIVE LEAVE TO RESPONDENT IS WHETHER OR NOT HE IS A FIELD PERSONNEL.

ACCORDING TO ARTICLE 82 OF THE LABOR CODE, 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. THIS DEFINITION IS FURTHER
ELABORATED IN THE BUREAU OF WORKING CONDITIONS (BWC), ADVISORY OPINION TO PHILIPPINE
TECHNICAL-CLERICAL COMMERCIAL EMPLOYEES ASSOCIATION[10] WHICH STATES THAT:
AS A GENERAL RULE, [FIELD PERSONNEL] ARE THOSE WHOSE PERFORMANCE OF THEIR JOB/SERVICE IS
NOT SUPERVISED BY THE EMPLOYER OR HIS REPRESENTATIVE, THE WORKPLACE BEING AWAY FROM THE
PRINCIPAL OFFICE AND WHOSE HOURS AND DAYS OF WORK CANNOT BE DETERMINED WITH
REASONABLE CERTAINTY; HENCE, THEY ARE PAID SPECIFIC AMOUNT FOR RENDERING SPECIFIC SERVICE
OR PERFORMING SPECIFIC WORK. IF REQUIRED TO BE AT SPECIFIC PLACES AT SPECIFIC TIMES,
EMPLOYEES INCLUDING DRIVERS CANNOT BE SAID TO BE FIELD PERSONNEL DESPITE THE FACT THAT
THEY ARE PERFORMING WORK AWAY FROM THE PRINCIPAL OFFICE OF THE EMPLOYEE. [EMPHASIS
OURS]

TO THIS DISCUSSION BY THE BWC, THE PETITIONER DIFFERS AND POSTULATES THAT UNDER SAID
ADVISORY OPINION, NO EMPLOYEE WOULD EVER BE CONSIDERED A FIELD PERSONNEL BECAUSE EVERY
EMPLOYER, IN ONE WAY OR ANOTHER, EXERCISES CONTROL OVER HIS EMPLOYEES. PETITIONER
FURTHER ARGUES THAT THE ONLY CRITERION THAT SHOULD BE CONSIDERED IS THE NATURE OF WORK
OF THE EMPLOYEE IN THAT, IF THE EMPLOYEES JOB REQUIRES THAT HE WORKS AWAY FROM THE
PRINCIPAL OFFICE LIKE THAT OF A MESSENGER OR A BUS DRIVER, THEN HE IS INEVITABLY A FIELD
PERSONNEL.

WE ARE NOT PERSUADED. AT THIS POINT, IT IS NECESSARY TO STRESS THAT THE DEFINITION OF A FIELD
PERSONNEL IS NOT MERELY CONCERNED WITH THE LOCATION WHERE THE EMPLOYEE REGULARLY
PERFORMS HIS DUTIES BUT ALSO WITH THE FACT THAT THE EMPLOYEES PERFORMANCE IS
UNSUPERVISED BY THE EMPLOYER. AS DISCUSSED ABOVE, FIELD PERSONNEL ARE THOSE WHO
REGULARLY PERFORM THEIR DUTIES AWAY FROM THE PRINCIPAL PLACE OF BUSINESS OF THE EMPLOYER
AND WHOSE ACTUAL HOURS OF WORK IN THE FIELD CANNOT BE DETERMINED WITH REASONABLE
CERTAINTY. THUS, IN ORDER TO CONCLUDE WHETHER AN EMPLOYEE IS A FIELD EMPLOYEE, IT IS ALSO
NECESSARY TO ASCERTAIN IF ACTUAL HOURS OF WORK IN THE FIELD CAN BE DETERMINED WITH
REASONABLE CERTAINTY BY THE EMPLOYER. IN SO DOING, AN INQUIRY MUST BE MADE AS TO
WHETHER OR NOT THE EMPLOYEES TIME AND PERFORMANCE ARE CONSTANTLY SUPERVISED BY THE
EMPLOYER.

AS OBSERVED BY THE LABOR ARBITER AND CONCURRED IN BY THE COURT OF APPEALS:

IT IS OF JUDICIAL NOTICE THAT ALONG THE ROUTES THAT ARE PLIED BY THESE BUS COMPANIES, THERE
ARE ITS INSPECTORS ASSIGNED AT STRATEGIC PLACES WHO BOARD THE BUS AND INSPECT THE
PASSENGERS, THE PUNCHED TICKETS, AND THE CONDUCTORS REPORTS. THERE IS ALSO THE
MANDATORY ONCE-A-WEEK CAR BARN OR SHOP DAY, WHERE THE BUS IS REGULARLY CHECKED AS TO ITS
MECHANICAL, ELECTRICAL, AND HYDRAULIC ASPECTS, WHETHER OR NOT THERE ARE PROBLEMS
THEREON AS REPORTED BY THE DRIVER AND/OR CONDUCTOR. THEY TOO, MUST BE AT SPECIFIC PLACE
AS [SIC] SPECIFIED TIME, AS THEY GENERALLY OBSERVE PROMPT DEPARTURE AND ARRIVAL FROM THEIR
POINT OF ORIGIN TO THEIR POINT OF DESTINATION. IN EACH AND EVERY DEPOT, THERE IS ALWAYS THE
DISPATCHER WHOSE FUNCTION IS PRECISELY TO SEE TO IT THAT THE BUS AND ITS CREW LEAVE THE
PREMISES AT SPECIFIC TIMES AND ARRIVE AT THE ESTIMATED PROPER TIME. THESE, ARE PRESENT IN
THE CASE AT BAR. THE DRIVER, THE COMPLAINANT HEREIN, WAS THEREFORE UNDER CONSTANT
SUPERVISION WHILE IN THE PERFORMANCE OF THIS WORK. HE CANNOT BE CONSIDERED A FIELD
PERSONNEL.[11]

WE AGREE IN THE ABOVE DISQUISITION. THEREFORE, AS CORRECTLY CONCLUDED BY THE APPELLATE

COURT, RESPONDENT IS NOT A FIELD PERSONNEL BUT A REGULAR EMPLOYEE WHO PERFORMS TASKS
USUALLY NECESSARY AND DESIRABLE TO THE USUAL TRADE OF PETITIONERS BUSINESS. ACCORDINGLY,
RESPONDENT IS ENTITLED TO THE GRANT OF SERVICE INCENTIVE LEAVE.

THE QUESTION NOW THAT MUST BE ADDRESSED IS UP TO WHAT AMOUNT OF SERVICE INCENTIVE LEAVE
PAY RESPONDENT IS ENTITLED TO.

THE RESPONSE TO THIS QUERY INEVITABLY LEADS US TO THE CORRELATIVE ISSUE OF WHETHER OR NOT
THE THREE (3)-YEAR PRESCRIPTIVE PERIOD UNDER ARTICLE 291 OF THE LABOR CODE IS APPLICABLE TO
RESPONDENTS CLAIM OF SERVICE INCENTIVE LEAVE PAY.

ARTICLE 291 OF THE LABOR CODE STATES THAT ALL MONEY CLAIMS ARISING FROM EMPLOYER-
EMPLOYEE RELATIONSHIP SHALL BE FILED WITHIN THREE (3) YEARS FROM THE TIME THE CAUSE OF
ACTION ACCRUED; OTHERWISE, THEY SHALL BE FOREVER BARRED.

IN THE APPLICATION OF THIS SECTION OF THE LABOR CODE, THE PIVOTAL QUESTION TO BE ANSWERED
IS WHEN DOES THE CAUSE OF ACTION FOR MONEY CLAIMS ACCRUE IN ORDER TO DETERMINE THE
RECKONING DATE OF THE THREE-YEAR PRESCRIPTIVE PERIOD.

IT IS SETTLED JURISPRUDENCE THAT A CAUSE OF ACTION HAS THREE ELEMENTS, TO WIT, (1) A RIGHT IN
FAVOR OF THE PLAINTIFF BY WHATEVER MEANS AND UNDER WHATEVER LAW IT ARISES OR IS CREATED;
(2) AN OBLIGATION ON THE PART OF THE NAMED DEFENDANT TO RESPECT OR NOT TO VIOLATE SUCH
RIGHT; AND (3) AN ACT OR OMISSION ON THE PART OF SUCH DEFENDANT VIOLATIVE OF THE RIGHT OF
THE PLAINTIFF OR CONSTITUTING A BREACH OF THE OBLIGATION OF THE DEFENDANT TO THE PLAINTIFF.
[12]

TO PROPERLY CONSTRUE ARTICLE 291 OF THE LABOR CODE, IT IS ESSENTIAL TO ASCERTAIN THE TIME
WHEN THE THIRD ELEMENT OF A CAUSE OF ACTION TRANSPIRED. STATED DIFFERENTLY, IN THE
COMPUTATION OF THE THREE-YEAR PRESCRIPTIVE PERIOD, A DETERMINATION MUST BE MADE AS TO
THE PERIOD WHEN THE ACT CONSTITUTING A VIOLATION OF THE WORKERS RIGHT TO THE BENEFITS
BEING CLAIMED WAS COMMITTED. FOR IF THE CAUSE OF ACTION ACCRUED MORE THAN THREE (3)
YEARS BEFORE THE FILING OF THE MONEY CLAIM, SAID CAUSE OF ACTION HAS ALREADY PRESCRIBED IN
ACCORDANCE WITH ARTICLE 291.[13]

CONSEQUENTLY, IN CASES OF NONPAYMENT OF ALLOWANCES AND OTHER MONETARY BENEFITS, IF IT IS

ESTABLISHED THAT THE BENEFITS BEING CLAIMED HAVE BEEN WITHHELD FROM THE EMPLOYEE FOR A
PERIOD LONGER THAN THREE (3) YEARS, THE AMOUNT PERTAINING TO THE PERIOD BEYOND THE
THREE-YEAR PRESCRIPTIVE PERIOD IS THEREFORE BARRED BY PRESCRIPTION. THE AMOUNT THAT CAN
ONLY BE DEMANDED BY THE AGGRIEVED EMPLOYEE SHALL BE LIMITED TO THE AMOUNT OF THE
BENEFITS WITHHELD WITHIN THREE (3) YEARS BEFORE THE FILING OF THE COMPLAINT.[14]

IT IS ESSENTIAL AT THIS POINT, HOWEVER, TO RECOGNIZE THAT THE SERVICE INCENTIVE LEAVE IS A
CURIOUS ANIMAL IN RELATION TO OTHER BENEFITS GRANTED BY THE LAW TO EVERY EMPLOYEE. IN THE
CASE OF SERVICE INCENTIVE LEAVE, THE EMPLOYEE MAY CHOOSE TO EITHER USE HIS LEAVE CREDITS OR
COMMUTE IT TO ITS MONETARY EQUIVALENT IF NOT EXHAUSTED AT THE END OF THE YEAR.[15]
FURTHERMORE, IF THE EMPLOYEE ENTITLED TO SERVICE INCENTIVE LEAVE DOES NOT USE OR
COMMUTE THE SAME, HE IS ENTITLED UPON HIS RESIGNATION OR SEPARATION FROM WORK TO THE
COMMUTATION OF HIS ACCRUED SERVICE INCENTIVE LEAVE. AS ENUNCIATED BY THE COURT IN
FERNANDEZ V. NLRC:[16]
THE CLEAR POLICY OF THE LABOR CODE IS TO GRANT SERVICE INCENTIVE LEAVE PAY TO WORKERS IN ALL
ESTABLISHMENTS, SUBJECT TO A FEW EXCEPTIONS. SECTION 2, RULE V, BOOK III OF THE IMPLEMENTING
RULES AND REGULATIONS PROVIDES THAT [E]VERY EMPLOYEE WHO HAS RENDERED AT LEAST ONE YEAR
OF SERVICE SHALL BE ENTITLED TO A YEARLY SERVICE INCENTIVE LEAVE OF FIVE DAYS WITH PAY. SERVICE
INCENTIVE LEAVE IS A RIGHT WHICH ACCRUES TO EVERY EMPLOYEE WHO HAS SERVED WITHIN 12
MONTHS, WHETHER CONTINUOUS OR BROKEN RECKONED FROM THE DATE THE EMPLOYEE STARTED
WORKING, INCLUDING AUTHORIZED ABSENCES AND PAID REGULAR HOLIDAYS UNLESS THE WORKING
DAYS IN THE ESTABLISHMENT AS A MATTER OF PRACTICE OR POLICY, OR THAT PROVIDED IN THE
EMPLOYMENT CONTRACTS, IS LESS THAN 12 MONTHS, IN WHICH CASE SAID PERIOD SHALL BE
CONSIDERED AS ONE YEAR. IT IS ALSO COMMUTABLE TO ITS MONEY EQUIVALENT IF NOT USED OR
EXHAUSTED AT THE END OF THE YEAR. IN OTHER WORDS, AN EMPLOYEE WHO HAS SERVED FOR ONE
YEAR IS ENTITLED TO IT. HE MAY USE IT AS LEAVE DAYS OR HE MAY COLLECT ITS MONETARY VALUE. TO
LIMIT THE AWARD TO THREE YEARS, AS THE SOLICITOR GENERAL RECOMMENDS, IS TO UNDULY
RESTRICT SUCH RIGHT.[17] [ITALICS SUPPLIED]

CORRESPONDINGLY, IT CAN BE CONSCIENTIOUSLY DEDUCED THAT THE CAUSE OF ACTION OF AN

ENTITLED EMPLOYEE TO CLAIM HIS SERVICE INCENTIVE LEAVE PAY ACCRUES FROM THE MOMENT THE
EMPLOYER REFUSES TO REMUNERATE ITS MONETARY EQUIVALENT IF THE EMPLOYEE DID NOT MAKE
USE OF SAID LEAVE CREDITS BUT INSTEAD CHOSE TO AVAIL OF ITS COMMUTATION. ACCORDINGLY, IF THE
EMPLOYEE WISHES TO ACCUMULATE HIS LEAVE CREDITS AND OPTS FOR ITS COMMUTATION UPON HIS
RESIGNATION OR SEPARATION FROM EMPLOYMENT, HIS CAUSE OF ACTION TO CLAIM THE WHOLE
AMOUNT OF HIS ACCUMULATED SERVICE INCENTIVE LEAVE SHALL ARISE WHEN THE EMPLOYER FAILS TO
PAY SUCH AMOUNT AT THE TIME OF HIS RESIGNATION OR SEPARATION FROM EMPLOYMENT.

APPLYING ARTICLE 291 OF THE LABOR CODE IN LIGHT OF THIS PECULIARITY OF THE SERVICE INCENTIVE
LEAVE, WE CAN CONCLUDE THAT THE THREE (3)-YEAR PRESCRIPTIVE PERIOD COMMENCES, NOT AT THE
END OF THE YEAR WHEN THE EMPLOYEE BECOMES ENTITLED TO THE COMMUTATION OF HIS SERVICE
INCENTIVE LEAVE, BUT FROM THE TIME WHEN THE EMPLOYER REFUSES TO PAY ITS MONETARY
EQUIVALENT AFTER DEMAND OF COMMUTATION OR UPON TERMINATION OF THE EMPLOYEES
SERVICES, AS THE CASE MAY BE.

THE ABOVE CONSTRUAL OF ART. 291, VIS--VIS THE RULES ON SERVICE INCENTIVE LEAVE, IS IN KEEPING
WITH THE RUDIMENTARY PRINCIPLE THAT IN THE IMPLEMENTATION AND INTERPRETATION OF THE
PROVISIONS OF THE LABOR CODE AND ITS IMPLEMENTING REGULATIONS, THE WORKINGMANS
WELFARE SHOULD BE THE PRIMORDIAL AND PARAMOUNT CONSIDERATION.[18] THE POLICY IS TO
EXTEND THE APPLICABILITY OF THE DECREE TO A GREATER NUMBER OF EMPLOYEES WHO CAN AVAIL OF
THE BENEFITS UNDER THE LAW, WHICH IS IN CONSONANCE WITH THE AVOWED POLICY OF THE STATE
TO GIVE MAXIMUM AID AND PROTECTION TO LABOR.[19]

IN THE CASE AT BAR, RESPONDENT HAD NOT MADE USE OF HIS SERVICE INCENTIVE LEAVE NOR
DEMANDED FOR ITS COMMUTATION UNTIL HIS EMPLOYMENT WAS TERMINATED BY PETITIONER.
NEITHER DID PETITIONER COMPENSATE HIS ACCUMULATED SERVICE INCENTIVE LEAVE PAY AT THE TIME
OF HIS DISMISSAL. IT WAS ONLY UPON HIS FILING OF A COMPLAINT FOR ILLEGAL DISMISSAL, ONE
MONTH FROM THE TIME OF HIS DISMISSAL, THAT RESPONDENT DEMANDED FROM HIS FORMER
EMPLOYER COMMUTATION OF HIS ACCUMULATED LEAVE CREDITS. HIS CAUSE OF ACTION TO CLAIM THE
PAYMENT OF HIS ACCUMULATED SERVICE INCENTIVE LEAVE THUS ACCRUED FROM THE TIME WHEN HIS
EMPLOYER DISMISSED HIM AND FAILED TO PAY HIS ACCUMULATED LEAVE CREDITS.
THEREFORE, THE PRESCRIPTIVE PERIOD WITH RESPECT TO HIS CLAIM FOR SERVICE INCENTIVE LEAVE PAY
ONLY COMMENCED FROM THE TIME THE EMPLOYER FAILED TO COMPENSATE HIS ACCUMULATED
SERVICE INCENTIVE LEAVE PAY AT THE TIME OF HIS DISMISSAL. SINCE RESPONDENT HAD FILED HIS
MONEY CLAIM AFTER ONLY ONE MONTH FROM THE TIME OF HIS DISMISSAL, NECESSARILY, HIS MONEY
CLAIM WAS FILED WITHIN THE PRESCRIPTIVE PERIOD PROVIDED FOR BY ARTICLE 291 OF THE LABOR
CODE.

WHEREFORE, PREMISES CONSIDERED, THE INSTANT PETITION IS HEREBY DENIED. THE ASSAILED
DECISION OF THE COURT OF APPEALS IN CA-G.R. SP. NO. 68395 IS HEREBY AFFIRMED. NO COSTS.

SO ORDERED.
THIRD DIVISION

[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 THE SECURITY AGENCIES WAS
UNABLE TO FIX THE NEW CONTRACT RATE UNTIL MAY 12, 1986. 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.
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
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.

7. ID.; SOLIDARY LIABILITY OF PRINCIPAL AND CONTRACTOR; WITHOUT PREJUDICE TO THE RIGHT
OF REIMBURSEMENT TO EITHER PRINCIPAL OR DIRECT EMPLOYER AS WARRANTED. — WE 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.

DECISION

GUTIERREZ, JR., J.:

THE PETITIONER QUESTIONS THE RESOLUTION OF THE NATIONAL LABOR RELATIONS COMMISSION
(NLRC) DATED JANUARY 17, 1983 SETTING ASIDE THE ORDER OF DISMISSAL ISSUED BY THE LABOR
ARBITER AND THE RESOLUTION DATED JUNE 25, 1990 DENYING PETITIONER’S MOTION FOR
RECONSIDERATION.

THE FACTS ARE AS FOLLOWS:CHANROB1ES VIRTUAL 1AW LIBRARY

THE PETITIONER IS A GOVERNMENT-OWNED OR CONTROLLED CORPORATION CREATED BY P.D. NO. 977.

ON NOVEMBER 11, 1985, IT ENTERED INTO A CONTRACT WITH THE ODIN SECURITY AGENCY FOR
SECURITY SERVICES OF ITS ILOILO FISHING PORT COMPLEX IN ILOILO CITY. THE PERTINENT PROVISION OF
THE CONTRACT PROVIDES:CHANROBLES.COM : VIRTUAL LAW LIBRARY
OBLIGATION OF THE FISHING PORT COMPLEX:CHANROB1ES VIRTUAL 1AW LIBRARY

1. FOR AND IN CONSIDERATION OF THE SERVICES TO BE RENDERED BY THE AGENCY TO THE

FISHING PORT COMPLEX, THE LATTER SHALL PAY TO THE FORMER PER MONTH FOR EIGHT (8) HOURS
WORK DAILY AS FOLLOWS:CHANROB1ES VIRTUAL 1AW LIBRARY

OUTSIDE METRO MANILA

SECURITY GUARD P1,990.00

SECURITY SUPERVISOR 2,090.00

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.

THE ABOVE SCHEDULE OF COMPENSATION INCLUDES AMONG OTHERS, THE 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)

(G) 4% CONTRACTOR’S TAX

(H) OPERATIONAL EXPENSES

(I) OVERHEAD (ROLLO, PP. 197-198)

THE CONTRACT FOR SECURITY SERVICES ALSO PROVIDED FOR A ONE YEAR RENEWABLE PERIOD UNLESS
TERMINATED BY EITHER OF THE PARTIES. IT READS:CHANROB1ES VIRTUAL 1AW LIBRARY

9. THIS AGREEMENT SHALL TAKE EFFECT UPON APPROVAL FOR A PERIOD OF ONE (1) YEAR UNLESS
SOONER TERMINATED UPON NOTICE OF ONE PARTY TO THE OTHER PROVIDED, THAT 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 DESIRING TO TERMINATE THE
CONTRACT BEFORE THE EXPIRY DATE SHALL GIVE THIRTY (30) DAYS WRITTEN ADVANCE NOTICE TO THE
OTHER PARTY. (ROLLO, P. 198)

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

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)

REQUESTS FOR ADJUSTMENT OF THE CONTRACT PRICE WERE REITERATED ON JANUARY 14, 1988 AND
FEBRUARY 19, 1988 BUT WERE IGNORED BY THE PETITIONER.

THUS ON JUNE 7, 1988, THE PRIVATE RESPONDENT FILED WITH THE OFFICE OF THE 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 DIFFERENTIALS ARISING FROM THE
INTEGRATION OF THE COST OF LIVING ALLOWANCE UNDER WAGE ORDER NO. 1, 2, 3 AND 5 PURSUANT
TO EXECUTIVE ORDER NO. 178 PLUS THE AMOUNT OF P25,000.00 AS ATTORNEY’S FEES AND COST OF
LITIGATION.

ON JULY 29, 1988, THE PETITIONER FILED A MOTION TO DISMISS ON THE FOLLOWING
GROUNDS:CHANROB1ES VIRTUAL 1AW LIBRARY

(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 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:CHANROB1ES VIRTUAL 1AW LIBRARY

X X X

"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.

"THE 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].

"PREMISES CONSIDERED, THE SECURITY GUARDS’ IMMEDIATE RECOURSE FOR THE PAYMENT OF THE
INCREASES IS WITH THEIR DIRECT EMPLOYER, EAGLE. HOWEVER, IN ORDER FOR THE SECURITY AGENCY
TO COMPLY WITH THE NEW WAGE AND ALLOWANCE RATES IT HAS TO PAY THE SECURITY GUARDS, THE
WAGE ORDER MADE SPECIFIC PROVISION TO AMEND EXISTING CONTRACTS FOR SECURITY SERVICES BY
ALLOWING THE ADJUSTMENT OF THE 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 CONSIDERATION TO COVER THE SERVICE CONTRACTOR’S PAYMENT OF THE
INCREASES MANDATED. IN THE END, THEREFORE, ULTIMATE LIABILITY FOR THE PAYMENT OF THE
INCREASES RESTS WITH THE PRINCIPAL."CRALAW VIRTUA1AW LIBRARY

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. 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) NEITHER CAN THE 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.CHANROBLES LAW LIBRARY : RED

QUITE NOTEWORTHY IS THE FACT THAT THE PRIVATE RESPONDENT ENTERED INTO THE 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 NO. 6 WHICH WAS ON
NOVEMBER 1, 1984. THE RATES OF THE SECURITY GUARDS AS STIPULATED IN THE CONTRACT DID NOT
CONSIDER THE INCREASES IN THE MINIMUM WAGE MANDATED BY WAGE ORDER NO. 6. TWO YEARS
AFTER, THE PRIVATE RESPONDENT IS NOW ASKING FOR AN ADJUSTMENT IN THE CONTRACT PRICE
PURSUANT TO THE WAGE ORDER PROVISION.

SUCH ACTION OF THE PRIVATE RESPONDENT IS RATHER DISTURBING AND MUST NOT REMAIN
UNCHECKED. 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 THE SECURITY
AGENCIES WAS UNABLE TO FIX THE NEW CONTRACT RATE UNTIL MAY 12, 1986.

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.CHANROBLES.COM.PH : VIRTUAL
LAW LIBRARY

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. COSTS AGAINST THE PETITIONER.

SO ORDERED.
[G.R. NO. 146530. JANUARY 17, 2005]

PEDRO CHAVEZ, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION, SUPREME PACKAGING,
INC. AND ALVIN LEE, PLANT MANAGER, RESPONDENTS.
DECISION
CALLEJO, SR., J.:

BEFORE THE COURT IS THE PETITION FOR REVIEW ON CERTIORARI OF THE RESOLUTION[1] DATED
DECEMBER 15, 2000 OF THE COURT OF APPEALS (CA) REVERSING ITS DECISION DATED APRIL 28, 2000 IN
CA-G.R. SP NO. 52485. THE ASSAILED RESOLUTION REINSTATED THE DECISION DATED JULY 10, 1998 OF
THE NATIONAL LABOR RELATIONS COMMISSION (NLRC), DISMISSING THE COMPLAINT FOR ILLEGAL
DISMISSAL FILED BY HEREIN PETITIONER PEDRO CHAVEZ. THE SAID NLRC DECISION SIMILARLY REVERSED
ITS EARLIER DECISION DATED JANUARY 27, 1998 WHICH, AFFIRMING THAT OF THE LABOR ARBITER,
RULED THAT THE PETITIONER HAD BEEN ILLEGALLY DISMISSED BY RESPONDENTS SUPREME PACKAGING,
INC. AND MR. ALVIN LEE.

THE CASE STEMMED FROM THE FOLLOWING FACTS:

THE RESPONDENT COMPANY, SUPREME PACKAGING, INC., IS IN THE BUSINESS OF MANUFACTURING

CARTONS AND OTHER PACKAGING MATERIALS FOR EXPORT AND DISTRIBUTION. IT ENGAGED THE
SERVICES OF THE PETITIONER, PEDRO CHAVEZ, AS TRUCK DRIVER ON OCTOBER 25, 1984. AS SUCH, THE
PETITIONER WAS TASKED TO DELIVER THE RESPONDENT COMPANYS PRODUCTS FROM ITS FACTORY IN
MARIVELES, BATAAN, TO ITS VARIOUS CUSTOMERS, MOSTLY IN METRO MANILA. THE RESPONDENT
COMPANY FURNISHED THE PETITIONER WITH A TRUCK. MOST OF THE PETITIONERS DELIVERY TRIPS
WERE MADE AT NIGHTTIME, COMMENCING AT 6:00 P.M. FROM MARIVELES, AND RETURNING THERETO
IN THE AFTERNOON TWO OR THREE DAYS AFTER. THE DELIVERIES WERE MADE IN ACCORDANCE WITH
THE ROUTING SLIPS ISSUED BY RESPONDENT COMPANY INDICATING THE ORDER, TIME AND URGENCY
OF DELIVERY. INITIALLY, THE PETITIONER WAS PAID THE SUM OF P350.00 PER TRIP. THIS WAS LATER
ADJUSTED TO P480.00 PER TRIP AND, AT THE TIME OF HIS ALLEGED DISMISSAL, THE PETITIONER WAS
RECEIVING P900.00 PER TRIP.

SOMETIME IN 1992, THE PETITIONER EXPRESSED TO RESPONDENT ALVIN LEE, RESPONDENT COMPANYS
PLANT MANAGER, HIS (THE PETITIONERS) DESIRE TO AVAIL HIMSELF OF THE BENEFITS THAT THE
REGULAR EMPLOYEES WERE RECEIVING SUCH AS OVERTIME PAY, NIGHTSHIFT DIFFERENTIAL PAY, AND
13TH MONTH PAY, AMONG OTHERS. ALTHOUGH HE PROMISED TO EXTEND THESE BENEFITS TO THE
PETITIONER, RESPONDENT LEE FAILED TO ACTUALLY DO SO.

ON FEBRUARY 20, 1995, THE PETITIONER FILED A COMPLAINT FOR REGULARIZATION WITH THE
REGIONAL ARBITRATION BRANCH NO. III OF THE NLRC IN SAN FERNANDO, PAMPANGA. BEFORE THE
CASE COULD BE HEARD, RESPONDENT COMPANY TERMINATED THE SERVICES OF THE PETITIONER.
CONSEQUENTLY, ON MAY 25, 1995, THE PETITIONER FILED AN AMENDED COMPLAINT AGAINST THE
RESPONDENTS FOR ILLEGAL DISMISSAL, UNFAIR LABOR PRACTICE AND NON-PAYMENT OF OVERTIME
PAY, NIGHTSHIFT DIFFERENTIAL PAY, 13TH MONTH PAY, AMONG OTHERS. THE CASE WAS DOCKETED AS
NLRC CASE NO. RAB-III-02-6181-95.

THE RESPONDENTS, FOR THEIR PART, DENIED THE EXISTENCE OF AN EMPLOYER-EMPLOYEE

RELATIONSHIP BETWEEN THE RESPONDENT COMPANY AND THE PETITIONER. THEY AVERRED THAT THE
PETITIONER WAS AN INDEPENDENT CONTRACTOR AS EVIDENCED BY THE CONTRACT OF SERVICE WHICH
HE AND THE RESPONDENT COMPANY ENTERED INTO. THE SAID CONTRACT PROVIDED AS FOLLOWS:

THAT THE PRINCIPAL [REFERRING TO SUPREME PACKAGING, INC.], BY THESE PRESENTS, AGREES TO HIRE
AND THE CONTRACTOR [REFERRING TO PEDRO CHAVEZ], BY NATURE OF THEIR SPECIALIZED LINE OR
SERVICE JOBS, ACCEPTS THE SERVICES TO BE RENDERED TO THE PRINCIPAL, UNDER THE FOLLOWING
TERMS AND COVENANTS HERETOFORE MENTIONED:

1. THAT THE INLAND TRANSPORT DELIVERY/HAULING ACTIVITIES TO BE PERFORMED BY THE

CONTRACTOR TO THE PRINCIPAL, SHALL ONLY COVER TRAVEL ROUTE FROM MARIVELES TO METRO
MANILA. OTHERWISE, ANY CHANGE TO THIS TRAVEL ROUTE SHALL BE SUBJECT TO FURTHER
AGREEMENT BY THE PARTIES CONCERNED.
2. THAT THE PAYMENT TO BE MADE BY THE PRINCIPAL FOR ANY HAULING OR DELIVERY TRANSPORT
SERVICES FULLY RENDERED BY THE CONTRACTOR SHALL BE ON A PER TRIP BASIS DEPENDING ON THE
SIZE OR CLASSIFICATION OF THE TRUCK BEING USED IN THE TRANSPORT SERVICE, TO WIT:

A) IF THE HAULING OR DELIVERY SERVICE SHALL REQUIRE A TRUCK OF SIX WHEELER, THE PAYMENT ON A
PER TRIP BASIS FROM MARIVELES TO METRO MANILA SHALL BE THREE HUNDRED PESOS (P300.00) AND
EFFECTIVE DECEMBER 15, 1984.

B) IF THE HAULING OR DELIVERY SERVICE REQUIRE A TRUCK OF TEN WHEELER, THE PAYMENT ON A PER
TRIP BASIS, FOLLOWING THE SAME ROUTE MENTIONED, SHALL BE THREE HUNDRED FIFTY (P350.00)
PESOS AND EFFECTIVE DECEMBER 15, 1984.

3. THAT FOR THE AMOUNT INVOLVED, THE CONTRACTOR WILL BE TO [SIC] PROVIDE FOR [SIC] AT LEAST
TWO (2) HELPERS;

4. THE CONTRACTOR SHALL EXERCISE DIRECT CONTROL AND SHALL BE RESPONSIBLE TO THE PRINCIPAL
FOR THE COST OF ANY DAMAGE TO, LOSS OF ANY GOODS, CARGOES, FINISHED PRODUCTS OR THE LIKE,
WHILE THE SAME ARE IN TRANSIT, OR DUE TO RECKLESS [SIC] OF ITS MEN UTILIZED FOR THE PURPOSE
ABOVE MENTIONED;

5. THAT THE CONTRACTOR SHALL HAVE ABSOLUTE CONTROL AND DISCIPLINARY POWER OVER ITS MEN
WORKING FOR HIM SUBJECT TO THIS AGREEMENT, AND THAT THE CONTRACTOR SHALL HOLD THE
PRINCIPAL FREE AND HARMLESS FROM ANY LIABILITY OR CLAIM THAT MAY ARISE BY VIRTUE OF THE
CONTRACTORS NON-COMPLIANCE TO THE EXISTING PROVISIONS OF THE MINIMUM WAGE LAW, THE
EMPLOYEES COMPENSATION ACT, THE SOCIAL SECURITY SYSTEM ACT, OR ANY OTHER SUCH LAW OR
DECREE THAT MAY HEREAFTER BE ENACTED, IT BEING CLEARLY UNDERSTOOD THAT ANY TRUCK DRIVERS,
HELPERS OR MEN WORKING WITH AND FOR THE CONTRACTOR, ARE NOT EMPLOYEES WHO WILL BE
INDEMNIFIED BY THE PRINCIPAL FOR ANY SUCH CLAIM, INCLUDING DAMAGES INCURRED IN
CONNECTION THEREWITH;

6. THIS CONTRACT SHALL TAKE EFFECT IMMEDIATELY UPON THE SIGNING BY THE PARTIES, SUBJECT TO
RENEWAL ON A YEAR-TO-YEAR BASIS.[2]

THIS CONTRACT OF SERVICE WAS DATED DECEMBER 12, 1984. IT WAS SUBSEQUENTLY RENEWED TWICE,
ON JULY 10, 1989 AND SEPTEMBER 28, 1992. EXCEPT FOR THE RATES TO BE PAID TO THE PETITIONER,
THE TERMS OF THE CONTRACTS WERE SUBSTANTIALLY THE SAME. THE RELATIONSHIP OF THE
RESPONDENT COMPANY AND THE PETITIONER WAS ALLEGEDLY GOVERNED BY THIS CONTRACT OF
SERVICE.

THE RESPONDENTS INSISTED THAT THE PETITIONER HAD THE SOLE CONTROL OVER THE MEANS AND
METHODS BY WHICH HIS WORK WAS ACCOMPLISHED. HE PAID THE WAGES OF HIS HELPERS AND
EXERCISED CONTROL OVER THEM. AS SUCH, THE PETITIONER WAS NOT ENTITLED TO REGULARIZATION
BECAUSE HE WAS NOT AN EMPLOYEE OF THE RESPONDENT COMPANY. THE RESPONDENTS, LIKEWISE,
MAINTAINED THAT THEY DID NOT DISMISS THE PETITIONER. RATHER, THE SEVERANCE OF HIS
CONTRACTUAL RELATION WITH THE RESPONDENT COMPANY WAS DUE TO HIS VIOLATION OF THE
TERMS AND CONDITIONS OF THEIR CONTRACT. THE PETITIONER ALLEGEDLY FAILED TO OBSERVE THE
MINIMUM DEGREE OF DILIGENCE IN THE PROPER MAINTENANCE OF THE TRUCK HE WAS USING,
THEREBY EXPOSING RESPONDENT COMPANY TO UNNECESSARY SIGNIFICANT EXPENSES OF
OVERHAULING THE SAID TRUCK.

AFTER THE PARTIES HAD FILED THEIR RESPECTIVE PLEADINGS, THE LABOR ARBITER RENDERED THE
DECISION DATED FEBRUARY 3, 1997, FINDING THE RESPONDENTS GUILTY OF ILLEGAL DISMISSAL. THE
LABOR ARBITER DECLARED THAT THE PETITIONER WAS A REGULAR EMPLOYEE OF THE RESPONDENT
COMPANY AS HE WAS PERFORMING A SERVICE THAT WAS NECESSARY AND DESIRABLE TO THE LATTERS
BUSINESS. MOREOVER, IT WAS NOTED THAT THE PETITIONER HAD DISCHARGED HIS DUTIES AS TRUCK
DRIVER FOR THE RESPONDENT COMPANY FOR A CONTINUOUS AND UNINTERRUPTED PERIOD OF MORE
THAN TEN YEARS.

THE CONTRACT OF SERVICE INVOKED BY THE RESPONDENTS WAS DECLARED NULL AND VOID AS IT
CONSTITUTED A CIRCUMVENTION OF THE CONSTITUTIONAL PROVISION AFFORDING FULL PROTECTION
TO LABOR AND SECURITY OF TENURE. THE LABOR ARBITER FOUND THAT THE PETITIONERS DISMISSAL
WAS ANCHORED ON HIS INSISTENT DEMAND TO BE REGULARIZED. HENCE, FOR LACK OF A VALID AND
JUST CAUSE THEREFOR AND FOR THEIR FAILURE TO OBSERVE THE DUE PROCESS REQUIREMENTS, THE
RESPONDENTS WERE FOUND GUILTY OF ILLEGAL DISMISSAL. THE DISPOSITIVE PORTION OF THE LABOR
ARBITERS DECISION STATES:

WHEREFORE, IN THE LIGHT OF THE FOREGOING, JUDGMENT IS HEREBY RENDERED DECLARING

RESPONDENT SUPREME PACKAGING, INC. AND/OR MR. ALVIN LEE, PLANT MANAGER, WITH BUSINESS
ADDRESS AT BEPZ, MARIVELES, BATAAN GUILTY OF ILLEGAL DISMISSAL, ORDERING SAID RESPONDENT
TO PAY COMPLAINANT HIS SEPARATION PAY EQUIVALENT TO ONE (1) MONTH PAY PER YEAR OF SERVICE
BASED ON THE AVERAGE MONTHLY PAY OF P10,800.00 IN LIEU OF REINSTATEMENT AS HIS
REINSTATEMENT BACK TO WORK WILL NOT DO ANY GOOD BETWEEN THE PARTIES AS THE EMPLOYMENT
RELATIONSHIP HAS ALREADY BECOME STRAINED AND FULL BACKWAGES FROM THE TIME HIS
COMPENSATION WAS WITHHELD ON FEBRUARY 23, 1995 UP TO JANUARY 31, 1997 (CUT-OFF DATE)
UNTIL COMPLIANCE, OTHERWISE, HIS BACKWAGES SHALL CONTINUE TO RUN. ALSO TO PAY
COMPLAINANT HIS 13TH MONTH PAY, NIGHT SHIFT DIFFERENTIAL PAY AND SERVICE INCENTIVE LEAVE
PAY HEREUNDER COMPUTED AS FOLLOWS:

A) BACKWAGES .. P248,400.00
B) SEPARATION PAY .... P140,400.00
C) 13TH MONTH PAY .P 10,800.00
D) SERVICE INCENTIVE LEAVE PAY .. 2,040.00
TOTAL P401,640.00
RESPONDENT IS ALSO ORDERED TO PAY TEN (10%) OF THE AMOUNT DUE THE COMPLAINANT AS
ATTORNEYS FEES.

SO ORDERED.[3]

THE RESPONDENTS SEASONABLY INTERPOSED AN APPEAL WITH THE NLRC. HOWEVER, THE APPEAL WAS
DISMISSED BY THE NLRC IN ITS DECISION[4] DATED JANUARY 27, 1998, AS IT AFFIRMED IN TOTO THE
DECISION OF THE LABOR ARBITER. IN THE SAID DECISION, THE NLRC CHARACTERIZED THE CONTRACT OF
SERVICE BETWEEN THE RESPONDENT COMPANY AND THE PETITIONER AS A SCHEME THAT WAS
RESORTED TO BY THE RESPONDENTS WHO, TAKING ADVANTAGE OF THE PETITIONERS UNFAMILIARITY
WITH THE ENGLISH LANGUAGE AND/OR LEGAL NICETIES, WANTED TO EVADE THE EFFECTS AND
IMPLICATIONS OF HIS BECOMING A REGULARIZED EMPLOYEE.[5]
THE RESPONDENTS SOUGHT RECONSIDERATION OF THE JANUARY 27, 1998 DECISION OF THE NLRC.
ACTING THEREON, THE NLRC RENDERED ANOTHER DECISION[6] DATED JULY 10, 1998, REVERSING ITS
EARLIER DECISION AND, THIS TIME, HOLDING THAT NO EMPLOYER-EMPLOYEE RELATIONSHIP EXISTED
BETWEEN THE RESPONDENT COMPANY AND THE PETITIONER. IN RECONSIDERING ITS EARLIER
DECISION, THE NLRC STATED THAT THE RESPONDENTS DID NOT EXERCISE CONTROL OVER THE MEANS
AND METHODS BY WHICH THE PETITIONER ACCOMPLISHED HIS DELIVERY SERVICES. IT UPHELD THE
VALIDITY OF THE CONTRACT OF SERVICE AS IT POINTED OUT THAT SAID CONTRACT WAS SILENT AS TO
THE TIME BY WHICH THE PETITIONER WAS TO MAKE THE DELIVERIES AND THAT THE PETITIONER COULD
HIRE HIS OWN HELPERS WHOSE WAGES WOULD BE PAID FROM HIS OWN ACCOUNT. THESE FACTORS
INDICATED THAT THE PETITIONER WAS AN INDEPENDENT CONTRACTOR, NOT AN EMPLOYEE OF THE
RESPONDENT COMPANY.

THE NLRC RULED THAT THE CONTRACT OF SERVICE WAS NOT INTENDED TO CIRCUMVENT ARTICLE 280
OF THE LABOR CODE ON THE REGULARIZATION OF EMPLOYEES. SAID CONTRACT, INCLUDING THE FIXED
PERIOD OF EMPLOYMENT CONTAINED THEREIN, HAVING BEEN KNOWINGLY AND VOLUNTARILY ENTERED
INTO BY THE PARTIES THERETO WAS DECLARED VALID CITING BRENT SCHOOL, INC. V. ZAMORA.[7] THE
NLRC, THUS, DISMISSED THE PETITIONERS COMPLAINT FOR ILLEGAL DISMISSAL.

THE PETITIONER SOUGHT RECONSIDERATION OF THE JULY 10, 1998 DECISION BUT IT WAS DENIED BY
THE NLRC IN ITS RESOLUTION DATED SEPTEMBER 7, 1998. HE THEN FILED WITH THIS COURT A PETITION
FOR CERTIORARI, WHICH WAS REFERRED TO THE CA FOLLOWING THE RULING IN ST. MARTIN FUNERAL
HOME V. NLRC.[8]

THE APPELLATE COURT RENDERED THE DECISION DATED APRIL 28, 2000, REVERSING THE JULY 10, 1998
DECISION OF THE NLRC AND REINSTATING THE DECISION OF THE LABOR ARBITER. IN THE SAID DECISION,
THE CA RULED THAT THE PETITIONER WAS A REGULAR EMPLOYEE OF THE RESPONDENT COMPANY
BECAUSE AS ITS TRUCK DRIVER, HE PERFORMED A SERVICE THAT WAS INDISPENSABLE TO THE LATTERS
BUSINESS. FURTHER, HE HAD BEEN THE RESPONDENT COMPANYS TRUCK DRIVER FOR TEN CONTINUOUS
YEARS. THE CA ALSO REASONED THAT THE PETITIONER COULD NOT BE CONSIDERED AN INDEPENDENT
CONTRACTOR SINCE HE HAD NO SUBSTANTIAL CAPITAL IN THE FORM OF TOOLS AND MACHINERY. IN
FACT, THE TRUCK THAT HE DROVE BELONGED TO THE RESPONDENT COMPANY. THE CA ALSO OBSERVED
THAT THE ROUTING SLIPS THAT THE RESPONDENT COMPANY ISSUED TO THE PETITIONER SHOWED THAT
IT EXERCISED CONTROL OVER THE LATTER. THE ROUTING SLIPS INDICATED THE CHRONOLOGICAL ORDER
AND PRIORITY OF DELIVERY, THE URGENCY OF CERTAIN DELIVERIES AND THE TIME WHEN THE GOODS
WERE TO BE DELIVERED TO THE CUSTOMERS.

THE CA, LIKEWISE, DISBELIEVED THE RESPONDENTS CLAIM THAT THE PETITIONER ABANDONED HIS JOB
NOTING THAT HE JUST FILED A COMPLAINT FOR REGULARIZATION. THIS ACTUATION OF THE PETITIONER
NEGATED THE RESPONDENTS ALLEGATION THAT HE ABANDONED HIS JOB. THE CA HELD THAT THE
RESPONDENTS FAILED TO DISCHARGE THEIR BURDEN TO SHOW THAT THE PETITIONERS DISMISSAL WAS
FOR A VALID AND JUST CAUSE. ACCORDINGLY, THE RESPONDENTS WERE DECLARED GUILTY OF ILLEGAL
DISMISSAL AND THE DECISION OF THE LABOR ARBITER WAS REINSTATED.

IN ITS APRIL 28, 2000 DECISION, THE CA DENOUNCED THE CONTRACT OF SERVICE BETWEEN THE
RESPONDENT COMPANY AND THE PETITIONER IN THIS WISE:
IN SUMMATION, WE RULE THAT WITH THE PROLIFERATION OF CONTRACTS SEEKING TO PREVENT
WORKERS FROM ATTAINING THE STATUS OF REGULAR EMPLOYMENT, IT IS BUT NECESSARY FOR THE
COURTS TO SCRUTINIZE WITH EXTREME CAUTION THEIR LEGALITY AND JUSTNESS. WHERE FROM THE
CIRCUMSTANCES IT IS APPARENT THAT A CONTRACT HAS BEEN ENTERED INTO TO PRECLUDE
ACQUISITION OF TENURIAL SECURITY BY THE EMPLOYEE, THEY SHOULD BE STRUCK DOWN AND
DISREGARDED AS CONTRARY TO PUBLIC POLICY AND MORALS. IN THIS CASE, THE CONTRACT OF SERVICE
IS JUST ANOTHER ATTEMPT TO EXPLOIT THE UNWITTING EMPLOYEE AND DEPRIVE HIM OF THE
PROTECTION OF THE LABOR CODE BY MAKING IT APPEAR THAT THE STIPULATIONS OF THE PARTIES
WERE GOVERNED BY THE CIVIL CODE AS IN ORDINARY TRANSACTIONS.[9]

HOWEVER, ON MOTION FOR RECONSIDERATION BY THE RESPONDENTS, THE CA MADE A COMPLETE

TURN AROUND AS IT RENDERED THE ASSAILED RESOLUTION DATED DECEMBER 15, 2000 UPHOLDING
THE CONTRACT OF SERVICE BETWEEN THE PETITIONER AND THE RESPONDENT COMPANY. IN
RECONSIDERING ITS DECISION, THE CA EXPLAINED THAT THE EXTENT OF CONTROL EXERCISED BY THE
RESPONDENTS OVER THE PETITIONER WAS ONLY WITH RESPECT TO THE RESULT BUT NOT TO THE
MEANS AND METHODS USED BY HIM. THE CA CITED THE FOLLOWING CIRCUMSTANCES: (1) THE
RESPONDENTS HAD NO SAY ON HOW THE GOODS WERE TO BE DELIVERED TO THE CUSTOMERS; (2) THE
PETITIONER HAD THE RIGHT TO EMPLOY WORKERS WHO WOULD BE UNDER HIS DIRECT CONTROL; AND
(3) THE PETITIONER HAD NO WORKING TIME.

THE FACT THAT THE PETITIONER HAD BEEN WITH THE RESPONDENT COMPANY FOR MORE THAN TEN
YEARS WAS, ACCORDING TO THE CA, OF NO MOMENT BECAUSE HIS STATUS WAS DETERMINED NOT BY
THE LENGTH OF SERVICE BUT BY THE CONTRACT OF SERVICE. THIS CONTRACT, NOT BEING CONTRARY TO
MORALS, GOOD CUSTOMS, PUBLIC ORDER OR PUBLIC POLICY, SHOULD BE GIVEN THE FORCE AND
EFFECT OF LAW AS BETWEEN THE RESPONDENT COMPANY AND THE PETITIONER. CONSEQUENTLY, THE
CA REINSTATED THE JULY 10, 1998 DECISION OF THE NLRC DISMISSING THE PETITIONERS COMPLAINT
FOR ILLEGAL DISMISSAL.

HENCE, THE RECOURSE TO THIS COURT BY THE PETITIONER. HE ASSAILS THE DECEMBER 15, 2000
RESOLUTION OF THE APPELLATE COURT ALLEGING THAT:

(A)

THE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF DISCRETION AMOUNTING TO EXCESS OF

JURISDICTION IN GIVING MORE CONSIDERATION TO THE CONTRACT OF SERVICE ENTERED INTO BY
PETITIONER AND PRIVATE RESPONDENT THAN ARTICLE 280 OF THE LABOR CODE OF THE PHILIPPINES
WHICH CATEGORICALLY DEFINES A REGULAR EMPLOYMENT NOTWITHSTANDING ANY WRITTEN
AGREEMENT TO THE CONTRARY AND REGARDLESS OF THE ORAL AGREEMENT OF THE PARTIES;

(B)

THE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF DISCRETION AMOUNTING TO EXCESS OF

JURISDICTION IN REVERSING ITS OWN FINDINGS THAT PETITIONER IS A REGULAR EMPLOYEE AND IN
HOLDING THAT THERE EXISTED NO EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN PRIVATE
RESPONDENT AND PETITIONER IN AS MUCH AS THE CONTROL TEST WHICH IS CONSIDERED THE MOST
ESSENTIAL CRITERION IN DETERMINING THE EXISTENCE OF SAID RELATIONSHIP IS NOT PRESENT.[10]
THE THRESHOLD ISSUE THAT NEEDS TO BE RESOLVED IS WHETHER THERE EXISTED AN EMPLOYER-
EMPLOYEE RELATIONSHIP BETWEEN THE RESPONDENT COMPANY AND THE PETITIONER. WE RULE IN
THE AFFIRMATIVE.

THE ELEMENTS TO DETERMINE THE EXISTENCE OF AN EMPLOYMENT RELATIONSHIP ARE: (1) THE
SELECTION AND ENGAGEMENT OF THE EMPLOYEE; (2) THE PAYMENT OF WAGES; (3) THE POWER OF
DISMISSAL; AND (4) THE EMPLOYERS POWER TO CONTROL THE EMPLOYEES CONDUCT.[11] THE MOST
IMPORTANT ELEMENT IS THE EMPLOYERS CONTROL OF THE EMPLOYEES CONDUCT, NOT ONLY AS TO THE
RESULT OF THE WORK TO BE DONE, BUT ALSO AS TO THE MEANS AND METHODS TO ACCOMPLISH IT.
[12] ALL THE FOUR ELEMENTS ARE PRESENT IN THIS CASE.

FIRST. UNDENIABLY, IT WAS THE RESPONDENTS WHO ENGAGED THE SERVICES OF THE PETITIONER
WITHOUT THE INTERVENTION OF A THIRD PARTY.

SECOND. WAGES ARE DEFINED AS 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 SERVICE RENDERED OR TO BE RENDERED.[13] THAT THE
PETITIONER WAS PAID ON A PER TRIP BASIS IS NOT SIGNIFICANT. THIS IS MERELY A METHOD OF
COMPUTING COMPENSATION AND NOT A BASIS FOR DETERMINING THE EXISTENCE OR ABSENCE OF
EMPLOYER-EMPLOYEE RELATIONSHIP. ONE MAY BE PAID ON THE BASIS OF RESULTS OR TIME EXPENDED
ON THE WORK, AND MAY OR MAY NOT ACQUIRE AN EMPLOYMENT STATUS, DEPENDING ON WHETHER
THE ELEMENTS OF AN EMPLOYER-EMPLOYEE RELATIONSHIP ARE PRESENT OR NOT.[14] IN THIS CASE, IT
CANNOT BE GAINSAID THAT THE PETITIONER RECEIVED COMPENSATION FROM THE RESPONDENT
COMPANY FOR THE SERVICES THAT HE RENDERED TO THE LATTER.

MOREOVER, UNDER THE RULES IMPLEMENTING THE LABOR CODE, EVERY EMPLOYER IS REQUIRED TO
PAY HIS EMPLOYEES BY MEANS OF PAYROLL.[15] THE PAYROLL SHOULD SHOW, AMONG OTHER THINGS,
THE EMPLOYEES RATE OF PAY, DEDUCTIONS MADE, AND THE AMOUNT ACTUALLY PAID TO THE
EMPLOYEE. INTERESTINGLY, THE RESPONDENTS DID NOT PRESENT THE PAYROLL TO SUPPORT THEIR
CLAIM THAT THE PETITIONER WAS NOT THEIR EMPLOYEE, RAISING SPECULATIONS WHETHER THIS
OMISSION PROVES THAT ITS PRESENTATION WOULD BE ADVERSE TO THEIR CASE.[16]

THIRD. THE RESPONDENTS POWER TO DISMISS THE PETITIONER WAS INHERENT IN THE FACT THAT THEY
ENGAGED THE SERVICES OF THE PETITIONER AS TRUCK DRIVER. THEY EXERCISED THIS POWER BY
TERMINATING THE PETITIONERS SERVICES ALBEIT IN THE GUISE OF SEVERANCE OF CONTRACTUAL
RELATION DUE ALLEGEDLY TO THE LATTERS BREACH OF HIS CONTRACTUAL OBLIGATION.

FOURTH. AS EARLIER OPINED, OF THE FOUR ELEMENTS OF THE EMPLOYER-EMPLOYEE RELATIONSHIP,

THE CONTROL TEST IS THE MOST IMPORTANT. COMPARED TO AN EMPLOYEE, AN INDEPENDENT
CONTRACTOR IS ONE WHO CARRIES ON A DISTINCT AND INDEPENDENT BUSINESS AND UNDERTAKES TO
PERFORM THE JOB, WORK, OR SERVICE ON ITS OWN ACCOUNT AND UNDER ITS OWN RESPONSIBILITY
ACCORDING TO ITS OWN MANNER AND METHOD, FREE FROM THE CONTROL AND DIRECTION OF THE
PRINCIPAL IN ALL MATTERS CONNECTED WITH THE PERFORMANCE OF THE WORK EXCEPT AS TO THE
RESULTS THEREOF.[17] HENCE, WHILE AN INDEPENDENT CONTRACTOR ENJOYS INDEPENDENCE AND
FREEDOM FROM THE CONTROL AND SUPERVISION OF HIS PRINCIPAL, AN EMPLOYEE IS SUBJECT TO THE
EMPLOYERS POWER TO CONTROL THE MEANS AND METHODS BY WHICH THE EMPLOYEES WORK IS TO
BE PERFORMED AND ACCOMPLISHED.[18]

ALTHOUGH THE RESPONDENTS DENIED THAT THEY EXERCISED CONTROL OVER THE MANNER AND
METHODS BY WHICH THE PETITIONER ACCOMPLISHED HIS WORK, A CAREFUL REVIEW OF THE RECORDS
SHOWS THAT THE LATTER PERFORMED HIS WORK AS TRUCK DRIVER UNDER THE RESPONDENTS
SUPERVISION AND CONTROL. THEIR RIGHT OF CONTROL WAS MANIFESTED BY THE FOLLOWING
ATTENDANT CIRCUMSTANCES:

1. THE TRUCK DRIVEN BY THE PETITIONER BELONGED TO RESPONDENT COMPANY;

2. THERE WAS AN EXPRESS INSTRUCTION FROM THE RESPONDENTS THAT THE TRUCK SHALL BE USED
EXCLUSIVELY TO DELIVER RESPONDENT COMPANYS GOODS; [19]

3. RESPONDENTS DIRECTED THE PETITIONER, AFTER COMPLETION OF EACH DELIVERY, TO PARK THE
TRUCK IN EITHER OF TWO SPECIFIC PLACES ONLY, TO WIT: AT ITS OFFICE IN METRO MANILA AT 2320
OSMEA STREET, MAKATI CITY OR AT BEPZ, MARIVELES, BATAAN;[20] AND

4. RESPONDENTS DETERMINED HOW, WHERE AND WHEN THE PETITIONER WOULD PERFORM HIS TASK
BY ISSUING TO HIM GATE PASSES AND ROUTING SLIPS. [21]

A. THE ROUTING SLIPS INDICATED ON THE COLUMN REMARKS, THE CHRONOLOGICAL ORDER AND
PRIORITY OF DELIVERY SUCH AS 1ST DROP, 2ND DROP, 3RD DROP, ETC. THIS MEANT THAT THE
PETITIONER HAD TO DELIVER THE SAME ACCORDING TO THE ORDER OF PRIORITY INDICATED THEREIN.

B. THE ROUTING SLIPS, LIKEWISE, SHOWED WHETHER THE GOODS WERE TO BE DELIVERED URGENTLY
OR NOT BY THE WORD RUSH PRINTED THEREON.

C. THE ROUTING SLIPS ALSO INDICATED THE EXACT TIME AS TO WHEN THE GOODS WERE TO BE
DELIVERED TO THE CUSTOMERS AS, FOR EXAMPLE, THE WORDS TOMORROW MORNING WAS WRITTEN
ON SLIP NO. 2776.

THESE CIRCUMSTANCES, TO THE COURTS MIND, PROVE THAT THE RESPONDENTS EXERCISED CONTROL
OVER THE MEANS AND METHODS BY WHICH THE PETITIONER ACCOMPLISHED HIS WORK AS TRUCK
DRIVER OF THE RESPONDENT COMPANY. ON THE OTHER HAND, THE COURT IS HARD PUT TO BELIEVE
THE RESPONDENTS ALLEGATION THAT THE PETITIONER WAS AN INDEPENDENT CONTRACTOR ENGAGED
IN PROVIDING DELIVERY OR HAULING SERVICES WHEN HE DID NOT EVEN OWN THE TRUCK USED FOR
SUCH SERVICES. EVIDENTLY, HE DID NOT POSSESS SUBSTANTIAL CAPITALIZATION OR INVESTMENT IN THE
FORM OF TOOLS, MACHINERY AND WORK PREMISES. MOREOVER, THE PETITIONER PERFORMED THE
DELIVERY SERVICES EXCLUSIVELY FOR THE RESPONDENT COMPANY FOR A CONTINUOUS AND
UNINTERRUPTED PERIOD OF TEN YEARS.

THE CONTRACT OF SERVICE TO THE CONTRARY NOTWITHSTANDING, THE FACTUAL CIRCUMSTANCES

EARLIER DISCUSSED INDUBITABLY ESTABLISH THE EXISTENCE OF AN EMPLOYER-EMPLOYEE
RELATIONSHIP BETWEEN THE RESPONDENT COMPANY AND THE PETITIONER. IT BEARS STRESSING THAT
THE EXISTENCE OF AN EMPLOYER-EMPLOYEE RELATIONSHIP CANNOT BE NEGATED BY EXPRESSLY
REPUDIATING IT IN A CONTRACT AND PROVIDING THEREIN THAT THE EMPLOYEE IS AN INDEPENDENT
CONTRACTOR WHEN, AS IN THIS CASE, THE FACTS CLEARLY SHOW OTHERWISE. INDEED, THE
EMPLOYMENT STATUS OF A PERSON IS DEFINED AND PRESCRIBED BY LAW AND NOT BY WHAT THE
PARTIES SAY IT SHOULD BE.[22]

HAVING ESTABLISHED THAT THERE EXISTED AN EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE

RESPONDENT COMPANY AND THE PETITIONER, THE COURT SHALL NOW DETERMINE WHETHER THE
RESPONDENTS VALIDLY DISMISSED THE PETITIONER.

AS A RULE, THE EMPLOYER BEARS THE BURDEN TO PROVE THAT THE DISMISSAL WAS FOR A VALID AND
JUST CAUSE.[23] IN THIS CASE, THE RESPONDENTS FAILED TO PROVE ANY SUCH CAUSE FOR THE
PETITIONERS DISMISSAL. THEY INSINUATED THAT THE PETITIONER ABANDONED HIS JOB. TO
CONSTITUTE ABANDONMENT, THESE TWO FACTORS MUST CONCUR: (1) THE FAILURE TO REPORT FOR
WORK OR ABSENCE WITHOUT VALID OR JUSTIFIABLE REASON; AND (2) A CLEAR INTENTION TO SEVER
EMPLOYER-EMPLOYEE RELATIONSHIP.[24] OBVIOUSLY, THE PETITIONER DID NOT INTEND TO SEVER HIS
RELATIONSHIP WITH THE RESPONDENT COMPANY FOR AT THE TIME THAT HE ALLEGEDLY ABANDONED
HIS JOB, THE PETITIONER JUST FILED A COMPLAINT FOR REGULARIZATION, WHICH WAS FORTHWITH
AMENDED TO ONE FOR ILLEGAL DISMISSAL. A CHARGE OF ABANDONMENT IS TOTALLY INCONSISTENT
WITH THE IMMEDIATE FILING OF A COMPLAINT FOR ILLEGAL DISMISSAL, MORE SO WHEN IT INCLUDES A
PRAYER FOR REINSTATEMENT.[25]

NEITHER CAN THE RESPONDENTS CLAIM THAT THE PETITIONER WAS GUILTY OF GROSS NEGLIGENCE IN
THE PROPER MAINTENANCE OF THE TRUCK CONSTITUTE A VALID AND JUST CAUSE FOR HIS DISMISSAL.
GROSS NEGLIGENCE IMPLIES A WANT OR ABSENCE OF OR FAILURE TO EXERCISE SLIGHT CARE OR
DILIGENCE, OR THE ENTIRE ABSENCE OF CARE. IT EVINCES A THOUGHTLESS DISREGARD OF
CONSEQUENCES WITHOUT EXERTING ANY EFFORT TO AVOID THEM.[26] THE NEGLIGENCE, TO WARRANT
REMOVAL FROM SERVICE, SHOULD NOT MERELY BE GROSS BUT ALSO HABITUAL.[27] THE SINGLE AND
ISOLATED ACT OF THE PETITIONERS NEGLIGENCE IN THE PROPER MAINTENANCE OF THE TRUCK
ALLEGED BY THE RESPONDENTS DOES NOT AMOUNT TO GROSS AND HABITUAL NEGLECT WARRANTING
HIS DISMISSAL.

THE COURT AGREES WITH THE FOLLOWING FINDINGS AND CONCLUSION OF THE LABOR ARBITER:

AS AGAINST THE GRATUITOUS ALLEGATION OF THE RESPONDENT THAT COMPLAINANT WAS NOT
DISMISSED FROM THE SERVICE BUT DUE TO COMPLAINANTS BREACH OF THEIR CONTRACTUAL
RELATION, I.E., HIS VIOLATION OF THE TERMS AND CONDITIONS OF THE CONTRACT, WE ARE VERY
MUCH INCLINED TO BELIEVE COMPLAINANTS STORY THAT HIS DISMISSAL FROM THE SERVICE WAS
ANCHORED ON HIS INSISTENT DEMAND THAT HE BE CONSIDERED A REGULAR EMPLOYEE. BECAUSE
COMPLAINANT IN HIS RIGHT SENSES WILL NOT JUST ABANDON FOR THAT REASON ALONE HIS WORK
ESPECIALLY SO THAT IT IS ONLY HIS JOB WHERE HE DEPENDS CHIEFLY HIS EXISTENCE AND SUPPORT FOR
HIS FAMILY IF HE WAS NOT AGGRIEVED BY THE RESPONDENT WHEN HE WAS TOLD THAT HIS SERVICES AS
DRIVER WILL BE TERMINATED ON FEBRUARY 23, 1995.[28]

THUS, THE LACK OF A VALID AND JUST CAUSE IN TERMINATING THE SERVICES OF THE PETITIONER
RENDERS HIS DISMISSAL ILLEGAL. UNDER ARTICLE 279 OF THE LABOR CODE, AN EMPLOYEE WHO IS
UNJUSTLY DISMISSED IS ENTITLED TO REINSTATEMENT, WITHOUT LOSS OF SENIORITY RIGHTS AND
OTHER PRIVILEGES, AND TO THE PAYMENT OF FULL BACKWAGES, INCLUSIVE OF ALLOWANCES, AND
OTHER BENEFITS OR THEIR MONETARY EQUIVALENT, COMPUTED FROM THE TIME HIS COMPENSATION
WAS WITHHELD FROM HIM UP TO THE TIME OF HIS ACTUAL REINSTATEMENT.[29] HOWEVER, AS FOUND
BY THE LABOR ARBITER, THE CIRCUMSTANCES OBTAINING IN THIS CASE DO NOT WARRANT THE
PETITIONERS REINSTATEMENT. A MORE EQUITABLE DISPOSITION, AS HELD BY THE LABOR ARBITER,
WOULD BE AN AWARD OF SEPARATION PAY EQUIVALENT TO ONE MONTH FOR EVERY YEAR OF SERVICE
FROM THE TIME OF HIS ILLEGAL DISMISSAL UP TO THE FINALITY OF THIS JUDGMENT IN ADDITION TO
HIS FULL BACKWAGES, ALLOWANCES AND OTHER BENEFITS.

WHEREFORE, THE INSTANT PETITION IS GRANTED. THE RESOLUTION DATED DECEMBER 15, 2000 OF THE
COURT OF APPEALS REVERSING ITS DECISION DATED APRIL 28, 2000 IN CA-G.R. SP NO. 52485 IS
REVERSED AND SET ASIDE. THE DECISION DATED FEBRUARY 3, 1997 OF THE LABOR ARBITER IN NLRC
CASE NO. RAB-III-02-6181-5, FINDING THE RESPONDENTS GUILTY OF ILLEGALLY TERMINATING THE
EMPLOYMENT OF PETITIONER PEDRO CHAVEZ, IS REINSTATED.

SO ORDERED.
[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.[2]

THE FACTS AS FOUND BY THE LABOR ARBITER ARE AS FOLLOWS:[3]

"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;[4]

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.[5]

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:[7]

"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.[8]

PETITIONER BROUGHT THE CASE TO THIS COURT ALLEGING THAT RESPONDENT NLRC COMMITTED
GRAVE ABUSE OF DISCRETION CITING THE FOLLOWING GROUNDS:[9]

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.[13]

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:[17]

"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
UNEQUIVOCAL RECOGNITION 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:[18]

"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 MEDICAL REPRESENTATIVE 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:[22]

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.[25]

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. 128845. JUNE 1, 2000]

INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE), PETITIONER, VS. HON. LEONARDO A.

QUISUMBING IN HIS CAPACITY AS THE SECRETARY OF LABOR AND EMPLOYMENT; HON. CRESENCIANO B.
TRAJANO IN HIS CAPACITY AS THE ACTING SECRETARY OF LABOR AND EMPLOYMENT; DR. BRIAN
MACCAULEY IN HIS CAPACITY AS THE SUPERINTENDENT OF INTERNATIONAL SCHOOL-MANILA; AND
INTERNATIONAL SCHOOL, INC., RESPONDENTS.

DECISION

KAPUNAN, J.:

RECEIVING SALARIES LESS THAN THEIR COUNTERPARTS HIRED ABROAD, THE LOCAL-HIRES OF PRIVATE
RESPONDENT SCHOOL, MOSTLY FILIPINOS, CRY DISCRIMINATION. WE AGREE. THAT THE LOCAL-HIRES
ARE PAID MORE THAN THEIR COLLEAGUES IN OTHER SCHOOLS IS, OF COURSE, BESIDE THE POINT. THE
POINT IS THAT EMPLOYEES SHOULD BE GIVEN EQUAL PAY FOR WORK OF EQUAL VALUE. THAT IS A
PRINCIPLE LONG HONORED IN THIS JURISDICTION. THAT IS A PRINCIPLE THAT RESTS ON FUNDAMENTAL
NOTIONS OF JUSTICE. THAT IS THE PRINCIPLE WE UPHOLD TODAY.

PRIVATE RESPONDENT INTERNATIONAL SCHOOL, INC. (THE SCHOOL, FOR SHORT), PURSUANT TO
PRESIDENTIAL DECREE 732, IS A DOMESTIC EDUCATIONAL INSTITUTION ESTABLISHED PRIMARILY FOR
DEPENDENTS OF FOREIGN DIPLOMATIC PERSONNEL AND OTHER TEMPORARY RESIDENTS.[1] TO ENABLE
THE SCHOOL TO CONTINUE CARRYING OUT ITS EDUCATIONAL PROGRAM AND IMPROVE ITS STANDARD
OF INSTRUCTION, SECTION 2(C) OF THE SAME DECREE AUTHORIZES THE SCHOOL TO

EMPLOY ITS OWN TEACHING AND MANAGEMENT PERSONNEL SELECTED BY IT EITHER LOCALLY OR
ABROAD, FROM PHILIPPINE OR OTHER NATIONALITIES, SUCH PERSONNEL BEING EXEMPT FROM
OTHERWISE APPLICABLE LAWS AND REGULATIONS ATTENDING THEIR EMPLOYMENT, EXCEPT LAWS THAT
HAVE BEEN OR WILL BE ENACTED FOR THE PROTECTION OF EMPLOYEES.

ACCORDINGLY, THE SCHOOL HIRES BOTH FOREIGN AND LOCAL TEACHERS AS MEMBERS OF ITS FACULTY,
CLASSIFYING THE SAME INTO TWO: (1) FOREIGN-HIRES AND (2) LOCAL-HIRES. THE SCHOOL EMPLOYS
FOUR TESTS TO DETERMINE WHETHER A FACULTY MEMBER SHOULD BE CLASSIFIED AS A FOREIGN-HIRE
OR A LOCAL HIRE:

A.....WHAT IS ONE'S DOMICILE?

B.....WHERE IS ONE'S HOME ECONOMY?

C.....TO WHICH COUNTRY DOES ONE OWE ECONOMIC ALLEGIANCE?

D.....WAS THE INDIVIDUAL HIRED ABROAD SPECIFICALLY TO WORK IN THE SCHOOL AND WAS THE
SCHOOL RESPONSIBLE FOR BRINGING THAT INDIVIDUAL TO THE PHILIPPINES?[2]

SHOULD THE ANSWER TO ANY OF THESE QUERIES POINT TO THE PHILIPPINES, THE FACULTY MEMBER IS
CLASSIFIED AS A LOCAL HIRE; OTHERWISE, HE OR SHE IS DEEMED A FOREIGN-HIRE.

THE SCHOOL GRANTS FOREIGN-HIRES CERTAIN BENEFITS NOT ACCORDED LOCAL-HIRES. THESE INCLUDE
HOUSING, TRANSPORTATION, SHIPPING COSTS, TAXES, AND HOME LEAVE TRAVEL ALLOWANCE.
FOREIGN-HIRES ARE ALSO PAID A SALARY RATE TWENTY-FIVE PERCENT (25%) MORE THAN LOCAL-HIRES.
THE SCHOOL JUSTIFIES THE DIFFERENCE ON TWO "SIGNIFICANT ECONOMIC DISADVANTAGES" FOREIGN-
HIRES HAVE TO ENDURE, NAMELY: (A) THE "DISLOCATION FACTOR" AND (B) LIMITED TENURE. THE
SCHOOL EXPLAINS:

A FOREIGN-HIRE WOULD NECESSARILY HAVE TO UPROOT HIMSELF FROM HIS HOME COUNTRY, LEAVE
HIS FAMILY AND FRIENDS, AND TAKE THE RISK OF DEVIATING FROM A PROMISING CAREER PATH-ALL FOR
THE PURPOSE OF PURSUING HIS PROFESSION AS AN EDUCATOR, BUT THIS TIME IN A FOREIGN LAND.
THE NEW FOREIGN HIRE IS FACED WITH ECONOMIC REALITIES: DECENT ABODE FOR ONESELF AND/OR
FOR ONE'S FAMILY, EFFECTIVE MEANS OF TRANSPORTATION, ALLOWANCE FOR THE EDUCATION OF
ONE'S CHILDREN, ADEQUATE INSURANCE AGAINST ILLNESS AND DEATH, AND OF COURSE THE PRIMARY
BENEFIT OF A BASIC SALARY/RETIREMENT COMPENSATION.
BECAUSE OF A LIMITED TENURE, THE FOREIGN HIRE IS CONFRONTED AGAIN WITH THE SAME
ECONOMIC REALITY AFTER HIS TERM: THAT HE WILL EVENTUALLY AND INEVITABLY RETURN TO HIS
HOME COUNTRY WHERE HE WILL HAVE TO CONFRONT THE UNCERTAINTY OF OBTAINING SUITABLE
EMPLOYMENT AFTER A LONG PERIOD IN A FOREIGN LAND.

THE COMPENSATION SCHEME IS SIMPLY THE SCHOOL'S ADAPTIVE MEASURE TO REMAIN COMPETITIVE
ON AN INTERNATIONAL LEVEL IN TERMS OF ATTRACTING COMPETENT PROFESSIONALS IN THE FIELD OF
INTERNATIONAL EDUCATION.[3]

WHEN NEGOTIATIONS FOR A NEW COLLECTIVE BARGAINING AGREEMENT WERE HELD ON JUNE 1995,
PETITIONER INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS, "A LEGITIMATE LABOR UNION AND THE
COLLECTIVE BARGAINING REPRESENTATIVE OF ALL FACULTY MEMBERS"[4] OF THE SCHOOL, CONTESTED
THE DIFFERENCE IN SALARY RATES BETWEEN FOREIGN AND LOCAL-HIRES. THIS ISSUE, AS WELL AS THE
QUESTION OF WHETHER FOREIGN-HIRES SHOULD BE INCLUDED IN THE APPROPRIATE BARGAINING
UNIT, EVENTUALLY CAUSED A DEADLOCK BETWEEN THE PARTIES.

ON SEPTEMBER 7, 1995, PETITIONER FILED A NOTICE OF STRIKE. THE FAILURE OF THE NATIONAL
CONCILIATION AND MEDIATION BOARD TO BRING THE PARTIES TO A COMPROMISE PROMPTED THE
DEPARTMENT OF LABOR AND EMPLOYMENT (DOLE) TO ASSUME JURISDICTION OVER THE DISPUTE. ON
JUNE 10, 1996, THE DOLE ACTING SECRETARY, CRESCENCIANO B. TRAJANO, ISSUED AN ORDER
RESOLVING THE PARITY AND REPRESENTATION ISSUES IN FAVOR OF THE SCHOOL. THEN DOLE SECRETARY
LEONARDO A. QUISUMBING SUBSEQUENTLY DENIED PETITIONER'S MOTION FOR RECONSIDERATION IN
AN ORDER DATED MARCH 19, 1997. PETITIONER NOW SEEKS RELIEF IN THIS COURT.

PETITIONER CLAIMS THAT THE POINT-OF-HIRE CLASSIFICATION EMPLOYED BY THE SCHOOL IS

DISCRIMINATORY TO FILIPINOS AND THAT THE GRANT OF HIGHER SALARIES TO FOREIGN-HIRES
CONSTITUTES RACIAL DISCRIMINATION.

THE SCHOOL DISPUTES THESE CLAIMS AND GIVES A BREAKDOWN OF ITS FACULTY MEMBERS,
NUMBERING 38 IN ALL, WITH NATIONALITIES OTHER THAN FILIPINO, WHO HAVE BEEN HIRED LOCALLY
AND CLASSIFIED AS LOCAL HIRES.[5]THE ACTING SECRETARY OF LABOR FOUND THAT THESE NON-
FILIPINO LOCAL-HIRES RECEIVED THE SAME BENEFITS AS THE FILIPINO LOCAL-HIRES:

THE COMPENSATION PACKAGE GIVEN TO LOCAL-HIRES HAS BEEN SHOWN TO APPLY TO ALL,
REGARDLESS OF RACE. TRUTH TO TELL, THERE ARE FOREIGNERS WHO HAVE BEEN HIRED LOCALLY AND
WHO ARE PAID EQUALLY AS FILIPINO LOCAL HIRES.[6]

THE ACTING SECRETARY UPHELD THE POINT-OF-HIRE CLASSIFICATION FOR THE DISTINCTION IN SALARY
RATES:

THE PRINCIPLE "EQUAL PAY FOR EQUAL WORK" DOES NOT FIND APPLICATION IN THE PRESENT CASE. THE
INTERNATIONAL CHARACTER OF THE SCHOOL REQUIRES THE HIRING OF FOREIGN PERSONNEL TO DEAL
WITH DIFFERENT NATIONALITIES AND DIFFERENT CULTURES, AMONG THE STUDENT POPULATION.

WE ALSO TAKE COGNIZANCE OF THE EXISTENCE OF A SYSTEM OF SALARIES AND BENEFITS ACCORDED TO
FOREIGN HIRED PERSONNEL WHICH SYSTEM IS UNIVERSALLY RECOGNIZED. WE AGREE THAT CERTAIN
AMENITIES HAVE TO BE PROVIDED TO THESE PEOPLE IN ORDER TO ENTICE THEM TO RENDER THEIR
SERVICES IN THE PHILIPPINES AND IN THE PROCESS REMAIN COMPETITIVE IN THE INTERNATIONAL
MARKET.

FURTHERMORE, WE TOOK NOTE OF THE FACT THAT FOREIGN HIRES HAVE LIMITED CONTRACT OF
EMPLOYMENT UNLIKE THE LOCAL HIRES WHO ENJOY SECURITY OF TENURE. TO APPLY PARITY
THEREFORE, IN WAGES AND OTHER BENEFITS WOULD ALSO REQUIRE PARITY IN OTHER TERMS AND
CONDITIONS OF EMPLOYMENT WHICH INCLUDE THE EMPLOYMENT CONTRACT.

A PERUSAL OF THE PARTIES' 1992-1995 CBA POINTS US TO THE CONDITIONS AND PROVISIONS FOR
SALARY AND PROFESSIONAL COMPENSATION WHEREIN THE PARTIES AGREE AS FOLLOWS:

ALL MEMBERS OF THE BARGAINING UNIT SHALL BE COMPENSATED ONLY IN ACCORDANCE WITH
APPENDIX C HEREOF PROVIDED THAT THE SUPERINTENDENT OF THE SCHOOL HAS THE DISCRETION TO
RECRUIT AND HIRE EXPATRIATE TEACHERS FROM ABROAD, UNDER TERMS AND CONDITIONS THAT ARE
CONSISTENT WITH ACCEPTED INTERNATIONAL PRACTICE.

APPENDIX C OF SAID CBA FURTHER PROVIDES:

THE NEW SALARY SCHEDULE IS DEEMED AT EQUITY WITH THE OVERSEAS RECRUITED STAFF (OSRS)
SALARY SCHEDULE. THE 25% DIFFERENTIAL IS REFLECTIVE OF THE AGREED VALUE OF SYSTEM
DISPLACEMENT AND CONTRACTED STATUS OF THE OSRS AS DIFFERENTIATED FROM THE TENURED
STATUS OF LOCALLY RECRUITED STAFF (LRS).

TO OUR MIND, THESE PROVISIONS DEMONSTRATE THE PARTIES' RECOGNITION OF THE DIFFERENCE IN
THE STATUS OF TWO TYPES OF EMPLOYEES, HENCE, THE DIFFERENCE IN THEIR SALARIES.

THE UNION CANNOT ALSO INVOKE THE EQUAL PROTECTION CLAUSE TO JUSTIFY ITS CLAIM OF PARITY. IT
IS AN ESTABLISHED PRINCIPLE OF CONSTITUTIONAL LAW THAT THE GUARANTEE OF EQUAL PROTECTION
OF THE LAWS IS NOT VIOLATED BY LEGISLATION OR PRIVATE COVENANTS BASED ON REASONABLE
CLASSIFICATION. A CLASSIFICATION IS REASONABLE IF IT IS BASED ON SUBSTANTIAL DISTINCTIONS AND
APPLY TO ALL MEMBERS OF THE SAME CLASS. VERILY, THERE IS A SUBSTANTIAL DISTINCTION BETWEEN
FOREIGN HIRES AND LOCAL HIRES, THE FORMER ENJOYING ONLY A LIMITED TENURE, HAVING NO
AMENITIES OF THEIR OWN IN THE PHILIPPINES AND HAVE TO BE GIVEN A GOOD COMPENSATION
PACKAGE IN ORDER TO ATTRACT THEM TO JOIN THE TEACHING FACULTY OF THE SCHOOL.[7]

WE CANNOT AGREE.

THAT PUBLIC POLICY ABHORS INEQUALITY AND DISCRIMINATION IS BEYOND CONTENTION. OUR
CONSTITUTION AND LAWS REFLECT THE POLICY AGAINST THESE EVILS. THE CONSTITUTION[8] IN THE
ARTICLE ON SOCIAL JUSTICE AND HUMAN RIGHTS EXHORTS CONGRESS TO "GIVE HIGHEST PRIORITY TO
THE ENACTMENT OF MEASURES THAT PROTECT AND ENHANCE THE RIGHT OF ALL PEOPLE TO HUMAN
DIGNITY, REDUCE SOCIAL, ECONOMIC, AND POLITICAL INEQUALITIES." THE VERY BROAD ARTICLE 19 OF
THE CIVIL CODE REQUIRES EVERY PERSON, "IN THE EXERCISE OF HIS RIGHTS AND IN THE PERFORMANCE
OF HIS DUTIES, [TO] ACT WITH JUSTICE, GIVE EVERYONE HIS DUE, AND OBSERVE HONESTY AND GOOD
FAITH."

INTERNATIONAL LAW, WHICH SPRINGS FROM GENERAL PRINCIPLES OF LAW,[9] LIKEWISE PROSCRIBES
DISCRIMINATION. GENERAL PRINCIPLES OF LAW INCLUDE PRINCIPLES OF EQUITY,[10] I.E., THE GENERAL
PRINCIPLES OF FAIRNESS AND JUSTICE, BASED ON THE TEST OF WHAT IS REASONABLE.[11] THE
UNIVERSAL DECLARATION OF HUMAN RIGHTS,[12] THE INTERNATIONAL COVENANT ON ECONOMIC,
SOCIAL, AND CULTURAL RIGHTS,[13] THE INTERNATIONAL CONVENTION ON THE ELIMINATION OF ALL
FORMS OF RACIAL DISCRIMINATION,[14] THE CONVENTION AGAINST DISCRIMINATION IN EDUCATION,
[15] THE CONVENTION (NO. 111) CONCERNING DISCRIMINATION IN RESPECT OF EMPLOYMENT AND
OCCUPATION[16] - ALL EMBODY THE GENERAL PRINCIPLE AGAINST DISCRIMINATION, THE VERY
ANTITHESIS OF FAIRNESS AND JUSTICE. THE PHILIPPINES, THROUGH ITS CONSTITUTION, HAS
INCORPORATED THIS PRINCIPLE AS PART OF ITS NATIONAL LAWS.

IN THE WORKPLACE, WHERE THE RELATIONS BETWEEN CAPITAL AND LABOR ARE OFTEN SKEWED IN
FAVOR OF CAPITAL, INEQUALITY AND DISCRIMINATION BY THE EMPLOYER ARE ALL THE MORE
REPREHENSIBLE.

THE CONSTITUTION[17] SPECIFICALLY PROVIDES THAT LABOR IS ENTITLED TO "HUMANE CONDITIONS OF

WORK." THESE CONDITIONS ARE NOT RESTRICTED TO THE PHYSICAL WORKPLACE - THE FACTORY, THE
OFFICE OR THE FIELD - BUT INCLUDE AS WELL THE MANNER BY WHICH EMPLOYERS TREAT THEIR
EMPLOYEES.

THE CONSTITUTION[18] ALSO DIRECTS THE STATE TO PROMOTE "EQUALITY OF EMPLOYMENT

OPPORTUNITIES FOR ALL." SIMILARLY, THE LABOR CODE[19] PROVIDES THAT THE STATE SHALL "ENSURE
EQUAL WORK OPPORTUNITIES REGARDLESS OF SEX, RACE OR CREED." IT WOULD BE AN AFFRONT TO
BOTH THE SPIRIT AND LETTER OF THESE PROVISIONS IF THE STATE, IN SPITE OF ITS PRIMORDIAL
OBLIGATION TO PROMOTE AND ENSURE EQUAL EMPLOYMENT OPPORTUNITIES, CLOSES ITS EYES TO
UNEQUAL AND DISCRIMINATORY TERMS AND CONDITIONS OF EMPLOYMENT.[20]

DISCRIMINATION, PARTICULARLY IN TERMS OF WAGES, IS FROWNED UPON BY THE LABOR CODE.

ARTICLE 135, FOR EXAMPLE, PROHIBITS AND PENALIZES[21] THE PAYMENT OF LESSER COMPENSATION
TO A FEMALE EMPLOYEE AS AGAINST A MALE EMPLOYEE FOR WORK OF EQUAL VALUE. ARTICLE 248
DECLARES IT AN UNFAIR LABOR PRACTICE FOR AN EMPLOYER TO DISCRIMINATE IN REGARD TO WAGES
IN ORDER TO ENCOURAGE OR DISCOURAGE MEMBERSHIP IN ANY LABOR ORGANIZATION.

NOTABLY, THE INTERNATIONAL COVENANT ON ECONOMIC, SOCIAL, AND CULTURAL RIGHTS, SUPRA, IN
ARTICLE 7 THEREOF, PROVIDES:

THE STATES PARTIES TO THE PRESENT COVENANT RECOGNIZE THE RIGHT OF EVERYONE TO THE
ENJOYMENT OF JUST AND FAVOURABLE CONDITIONS OF WORK, WHICH ENSURE, IN PARTICULAR:

A.....REMUNERATION WHICH PROVIDES ALL WORKERS, AS A MINIMUM, WITH:

I.....FAIR WAGES AND EQUAL REMUNERATION FOR WORK OF EQUAL VALUE WITHOUT DISTINCTION OF
ANY KIND, IN PARTICULAR WOMEN BEING GUARANTEED CONDITIONS OF WORK NOT INFERIOR TO
THOSE ENJOYED BY MEN, WITH EQUAL PAY FOR EQUAL WORK;

X X X.

THE FOREGOING PROVISIONS IMPREGNABLY INSTITUTIONALIZE IN THIS JURISDICTION THE LONG

HONORED LEGAL TRUISM OF "EQUAL PAY FOR EQUAL WORK." PERSONS WHO WORK WITH
SUBSTANTIALLY EQUAL QUALIFICATIONS, SKILL, EFFORT AND RESPONSIBILITY, UNDER SIMILAR
CONDITIONS, SHOULD BE PAID SIMILAR SALARIES.[22] THIS RULE APPLIES TO THE SCHOOL, ITS
"INTERNATIONAL CHARACTER" NOTWITHSTANDING.

THE SCHOOL CONTENDS THAT PETITIONER HAS NOT ADDUCED EVIDENCE THAT LOCAL-HIRES PERFORM
WORK EQUAL TO THAT OF FOREIGN-HIRES.[23] THE COURT FINDS THIS ARGUMENT A LITTLE CAVALIER.
IF AN EMPLOYER ACCORDS EMPLOYEES THE SAME POSITION AND RANK, THE PRESUMPTION IS THAT
THESE EMPLOYEES PERFORM EQUAL WORK. THIS PRESUMPTION IS BORNE BY LOGIC AND HUMAN
EXPERIENCE. IF THE EMPLOYER PAYS ONE EMPLOYEE LESS THAN THE REST, IT IS NOT FOR THAT
EMPLOYEE TO EXPLAIN WHY HE RECEIVES LESS OR WHY THE OTHERS RECEIVE MORE. THAT WOULD BE
ADDING INSULT TO INJURY. THE EMPLOYER HAS DISCRIMINATED AGAINST THAT EMPLOYEE; IT IS FOR
THE EMPLOYER TO EXPLAIN WHY THE EMPLOYEE IS TREATED UNFAIRLY.

THE EMPLOYER IN THIS CASE HAS FAILED TO DISCHARGE THIS BURDEN. THERE IS NO EVIDENCE HERE
THAT FOREIGN-HIRES PERFORM 25% MORE EFFICIENTLY OR EFFECTIVELY THAN THE LOCAL-HIRES. BOTH
GROUPS HAVE SIMILAR FUNCTIONS AND RESPONSIBILITIES, WHICH THEY PERFORM UNDER SIMILAR
WORKING CONDITIONS.

THE SCHOOL CANNOT INVOKE THE NEED TO ENTICE FOREIGN-HIRES TO LEAVE THEIR DOMICILE TO
RATIONALIZE THE DISTINCTION IN SALARY RATES WITHOUT VIOLATING THE PRINCIPLE OF EQUAL WORK
FOR EQUAL PAY.

"SALARY" IS DEFINED IN BLACK'S LAW DICTIONARY (5TH ED.) AS "A REWARD OR RECOMPENSE FOR
SERVICES PERFORMED." SIMILARLY, THE PHILIPPINE LEGAL ENCYCLOPEDIA STATES THAT "SALARY" IS THE
"[C]ONSIDERATION PAID AT REGULAR INTERVALS FOR THE RENDERING OF SERVICES." IN SONGCO V.
NATIONAL LABOR RELATIONS COMMISSION,[24] WE SAID THAT:

"SALARY" MEANS A RECOMPENSE OR CONSIDERATION MADE TO A PERSON FOR HIS PAINS OR INDUSTRY
IN ANOTHER MAN'S BUSINESS. WHETHER IT BE DERIVED FROM "SALARIUM," OR MORE FANCIFULLY
FROM "SAL," THE PAY OF THE ROMAN SOLDIER, IT CARRIES WITH IT THE FUNDAMENTAL IDEA OF
COMPENSATION FOR SERVICES RENDERED. (EMPHASIS SUPPLIED.)

WHILE WE RECOGNIZE THE NEED OF THE SCHOOL TO ATTRACT FOREIGN-HIRES, SALARIES SHOULD NOT
BE USED AS AN ENTICEMENT TO THE PREJUDICE OF LOCAL-HIRES. THE LOCAL-HIRES PERFORM THE
SAME SERVICES AS FOREIGN-HIRES AND THEY OUGHT TO BE PAID THE SAME SALARIES AS THE LATTER.
FOR THE SAME REASON, THE "DISLOCATION FACTOR" AND THE FOREIGN-HIRES' LIMITED TENURE ALSO
CANNOT SERVE AS VALID BASES FOR THE DISTINCTION IN SALARY RATES. THE DISLOCATION FACTOR AND
LIMITED TENURE AFFECTING FOREIGN-HIRES ARE ADEQUATELY COMPENSATED BY CERTAIN BENEFITS
ACCORDED THEM WHICH ARE NOT ENJOYED BY LOCAL-HIRES, SUCH AS HOUSING, TRANSPORTATION,
SHIPPING COSTS, TAXES AND HOME LEAVE TRAVEL ALLOWANCES.

THE CONSTITUTION ENJOINS THE STATE TO "PROTECT THE RIGHTS OF WORKERS AND PROMOTE THEIR
WELFARE,"[25] "TO AFFORD LABOR FULL PROTECTION."[26] THE STATE, THEREFORE, HAS THE RIGHT
AND DUTY TO REGULATE THE RELATIONS BETWEEN LABOR AND CAPITAL.[27] THESE RELATIONS ARE NOT
MERELY CONTRACTUAL BUT ARE SO IMPRESSED WITH PUBLIC INTEREST THAT LABOR CONTRACTS,
COLLECTIVE BARGAINING AGREEMENTS INCLUDED, MUST YIELD TO THE COMMON GOOD.[28] SHOULD
SUCH CONTRACTS CONTAIN STIPULATIONS THAT ARE CONTRARY TO PUBLIC POLICY, COURTS WILL NOT
HESITATE TO STRIKE DOWN THESE STIPULATIONS.
IN THIS CASE, WE FIND THE POINT-OF-HIRE CLASSIFICATION EMPLOYED BY RESPONDENT SCHOOL TO
JUSTIFY THE DISTINCTION IN THE SALARY RATES OF FOREIGN-HIRES AND LOCAL HIRES TO BE AN INVALID
CLASSIFICATION. THERE IS NO REASONABLE DISTINCTION BETWEEN THE SERVICES RENDERED BY
FOREIGN-HIRES AND LOCAL-HIRES. THE PRACTICE OF THE SCHOOL OF ACCORDING HIGHER SALARIES TO
FOREIGN-HIRES CONTRAVENES PUBLIC POLICY AND, CERTAINLY, DOES NOT DESERVE THE SYMPATHY OF
THIS COURT.

WE AGREE, HOWEVER, THAT FOREIGN-HIRES DO NOT BELONG TO THE SAME BARGAINING UNIT AS THE
LOCAL-HIRES.

A BARGAINING UNIT IS "A GROUP OF EMPLOYEES OF A GIVEN EMPLOYER, COMPRISED OF ALL OR LESS
THAN ALL OF THE ENTIRE BODY OF EMPLOYEES, CONSISTENT WITH EQUITY TO THE EMPLOYER INDICATE
TO BE THE BEST SUITED TO SERVE THE RECIPROCAL RIGHTS AND DUTIES OF THE PARTIES UNDER THE
COLLECTIVE BARGAINING PROVISIONS OF THE LAW."[29] THE FACTORS IN DETERMINING THE
APPROPRIATE COLLECTIVE BARGAINING UNIT ARE (1) THE WILL OF THE EMPLOYEES (GLOBE DOCTRINE);
(2) AFFINITY AND UNITY OF THE EMPLOYEES' INTEREST, SUCH AS SUBSTANTIAL SIMILARITY OF WORK
AND DUTIES, OR SIMILARITY OF COMPENSATION AND WORKING CONDITIONS (SUBSTANTIAL MUTUAL
INTERESTS RULE); (3) PRIOR COLLECTIVE BARGAINING HISTORY; AND (4) SIMILARITY OF EMPLOYMENT
STATUS.[30] THE BASIC TEST OF AN ASSERTED BARGAINING UNIT'S ACCEPTABILITY IS WHETHER OR NOT
IT IS FUNDAMENTALLY THE COMBINATION WHICH WILL BEST ASSURE TO ALL EMPLOYEES THE EXERCISE
OF THEIR COLLECTIVE BARGAINING RIGHTS.[31]

IT DOES NOT APPEAR THAT FOREIGN-HIRES HAVE INDICATED THEIR INTENTION TO BE GROUPED
TOGETHER WITH LOCAL-HIRES FOR PURPOSES OF COLLECTIVE BARGAINING. THE COLLECTIVE
BARGAINING HISTORY IN THE SCHOOL ALSO SHOWS THAT THESE GROUPS WERE ALWAYS TREATED
SEPARATELY. FOREIGN-HIRES HAVE LIMITED TENURE; LOCAL-HIRES ENJOY SECURITY OF TENURE.
ALTHOUGH FOREIGN-HIRES PERFORM SIMILAR FUNCTIONS UNDER THE SAME WORKING CONDITIONS
AS THE LOCAL-HIRES, FOREIGN-HIRES ARE ACCORDED CERTAIN BENEFITS NOT GRANTED TO LOCAL-
HIRES. THESE BENEFITS, SUCH AS HOUSING, TRANSPORTATION, SHIPPING COSTS, TAXES, AND HOME
LEAVE TRAVEL ALLOWANCE, ARE REASONABLY RELATED TO THEIR STATUS AS FOREIGN-HIRES, AND
JUSTIFY THE EXCLUSION OF THE FORMER FROM THE LATTER. TO INCLUDE FOREIGN-HIRES IN A
BARGAINING UNIT WITH LOCAL-HIRES WOULD NOT ASSURE EITHER GROUP THE EXERCISE OF THEIR
RESPECTIVE COLLECTIVE BARGAINING RIGHTS.

WHEREFORE, THE PETITION IS GIVEN DUE COURSE. THE PETITION IS HEREBY GRANTED IN PART. THE
ORDERS OF THE SECRETARY OF LABOR AND EMPLOYMENT DATED JUNE 10, 1996 AND MARCH 19, 1997,
ARE HEREBY REVERSED AND SET ASIDE INSOFAR AS THEY UPHOLD THE PRACTICE OF RESPONDENT
SCHOOL OF ACCORDING FOREIGN-HIRES HIGHER SALARIES THAN LOCAL-HIRES.

SO ORDERED.
[G.R. NO. 140689. FEBRUARY 17, 2004]

BANKARD EMPLOYEES UNION-WORKERS ALLIANCE TRADE UNIONS, PETITIONER, VS. NATIONAL LABOR
RELATIONS COMMISSION AND BANKARD, INC., RESPONDENTS.
DECISION
CARPIO MORALES, J.:
THE PRESENT PETITION FOR REVIEW ON CERTIORARI UNDER RULE 45 OF THE RULES OF COURT RAISES
THE ISSUE OF WHETHER THE UNILATERAL ADOPTION BY AN EMPLOYER OF AN UPGRADED SALARY SCALE
THAT INCREASED THE HIRING RATES OF NEW EMPLOYEES WITHOUT INCREASING THE SALARY RATES OF
OLD EMPLOYEES RESULTED IN WAGE DISTORTION WITHIN THE CONTEMPLATION OF ARTICLE 124 OF THE
LABOR CODE.

BANKARD, INC. (BANKARD) CLASSIFIES ITS EMPLOYEES BY LEVELS, TO WIT: LEVEL I, LEVEL II, LEVEL III,
LEVEL IV, AND LEVEL V. ON MAY 28, 1993, ITS BOARD OF DIRECTORS APPROVED A NEW SALARY SCALE,
MADE RETROACTIVE TO APRIL 1, 1993, FOR THE PURPOSE OF MAKING ITS HIRING RATE COMPETITIVE IN
THE INDUSTRYS LABOR MARKET. THE NEW SALARY SCALE INCREASED THE HIRING RATES OF NEW
EMPLOYEES, TO WIT: LEVELS I AND V BY ONE THOUSAND PESOS (P1,000.00), AND LEVELS II, III AND IV BY
NINE HUNDRED PESOS (P900.00). ACCORDINGLY, THE SALARIES OF EMPLOYEES WHO FELL BELOW THE
NEW MINIMUM RATES WERE ALSO ADJUSTED TO REACH SUCH RATES UNDER THEIR LEVELS.

BANKARDS MOVE DREW THE BANKARD EMPLOYEES UNION-WATU (PETITIONER), THE DULY CERTIFIED
EXCLUSIVE BARGAINING AGENT OF THE REGULAR RANK AND FILE EMPLOYEES OF BANKARD, TO PRESS
FOR THE INCREASE IN THE SALARY OF ITS OLD, REGULAR EMPLOYEES.

BANKARD TOOK THE POSITION, HOWEVER, THAT THERE WAS NO OBLIGATION ON THE PART OF THE
MANAGEMENT TO GRANT TO ALL ITS EMPLOYEES THE SAME INCREASE IN AN ACROSS-THE-BOARD
MANNER.

AS THE CONTINUED REQUEST OF PETITIONER FOR INCREASE IN THE WAGES AND SALARIES OF
BANKARDS REGULAR EMPLOYEES REMAINED UNHEEDED, IT FILED A NOTICE OF STRIKE ON AUGUST 26,
1993 ON THE GROUND OF DISCRIMINATION AND OTHER ACTS OF UNFAIR LABOR PRACTICE (ULP).

A DIRECTOR OF THE NATIONAL CONCILIATION AND MEDIATION BOARD TREATED THE NOTICE OF STRIKE
AS A PREVENTIVE MEDIATION CASE BASED ON A FINDING THAT THE ISSUES THEREIN WERE NOT
STRIKEABLE.

PETITIONER FILED ANOTHER NOTICE OF STRIKE ON OCTOBER 8, 1993 ON THE GROUNDS OF REFUSAL TO
BARGAIN, DISCRIMINATION, AND OTHER ACTS OF ULP - UNION BUSTING. THE STRIKE WAS AVERTED,
HOWEVER, WHEN THE DISPUTE WAS CERTIFIED BY THE SECRETARY OF LABOR AND EMPLOYMENT FOR
COMPULSORY ARBITRATION.

THE SECOND DIVISION OF THE NLRC, BY ORDER OF MAY 31, 1995, FINDING NO WAGE DISTORTION,
DISMISSED THE CASE FOR LACK OF MERIT.

PETITIONERS MOTION FOR RECONSIDERATION OF THE DISMISSAL OF THE CASE WAS, BY RESOLUTION OF
JULY 28, 1995, DENIED.

PETITIONER THEREUPON FILED A PETITION FOR CERTIORARI BEFORE THIS COURT, DOCKETED AS G.R.
121970. IN ACCORDANCE WITH ITS RULING IN ST. MARTIN FUNERAL HOMES V. NLRC,[1] THE PETITION
WAS REFERRED TO THE COURT OF APPEALS WHICH, BY OCTOBER 28, 1999, DENIED THE SAME FOR LACK
OF MERIT.

HENCE, THE PRESENT PETITION WHICH FAULTS THE APPELLATE COURT AS FOLLOWS:
(1) IT MISAPPREHENDED THE BASIC ISSUES WHEN IT CONCLUDED THAT UNDER BANKARDS NEW WAGE
STRUCTURE, THE OLD SALARY GAPS BETWEEN THE DIFFERENT CLASSIFICATION OR LEVEL OF EMPLOYEES
WERE STILL REFLECTED BY THE ADJUSTED SALARY RATES[2]; AND

(2) IT ERRED IN CONCLUDING THAT WAGE DISTORTION DOES NOT APPEAR TO EXIST, WHICH
CONCLUSION IS MANIFESTLY CONTRARY TO LAW AND JURISPRUDENCE.[3]

UPON THE ENACTMENT OF R.A. NO. 6727 (WAGE RATIONALIZATION ACT, AMENDING, AMONG OTHERS,
ARTICLE 124 OF THE LABOR CODE) ON JUNE 9, 1989, THE TERM WAGE DISTORTION WAS EXPLICITLY
DEFINED AS:

... A SITUATION WHERE AN INCREASE IN PRESCRIBED WAGE RATES RESULTS IN THE ELIMINATION OR
SEVERE CONTRACTION OF INTENTIONAL QUANTITATIVE DIFFERENCES IN WAGE OR SALARY RATES
BETWEEN AND AMONG EMPLOYEE GROUPS IN AN ESTABLISHMENT AS TO EFFECTIVELY OBLITERATE THE
DISTINCTIONS EMBODIED IN SUCH WAGE STRUCTURE BASED ON SKILLS, LENGTH OF SERVICE, OR OTHER
LOGICAL BASES OF DIFFERENTIATION.[4]

PRUBANKERS ASSOCIATION V. PRUDENTIAL BANK AND TRUST COMPANY[5] LAID DOWN THE FOUR
ELEMENTS OF WAGE DISTORTION, TO WIT: (1.) AN EXISTING HIERARCHY OF POSITIONS WITH
CORRESPONDING SALARY RATES; (2) A SIGNIFICANT CHANGE IN THE SALARY RATE OF A LOWER PAY
CLASS WITHOUT A CONCOMITANT INCREASE IN THE SALARY RATE OF A HIGHER ONE; (3) THE
ELIMINATION OF THE DISTINCTION BETWEEN THE TWO LEVELS; AND (4) THE EXISTENCE OF THE
DISTORTION IN THE SAME REGION OF THE COUNTRY.

NORMALLY, A COMPANY HAS A WAGE STRUCTURE OR METHOD OF DETERMINING THE WAGES OF ITS
EMPLOYEES. IN A PROBLEM DEALING WITH WAGE DISTORTION, THE BASIC ASSUMPTION IS THAT THERE
EXISTS A GROUPING OR CLASSIFICATION OF EMPLOYEES THAT ESTABLISHES DISTINCTIONS AMONG
THEM ON SOME RELEVANT OR LEGITIMATE BASES.[6]

INVOLVED IN THE CLASSIFICATION OF EMPLOYEES ARE VARIOUS FACTORS SUCH AS THE DEGREES OF
RESPONSIBILITY, THE SKILLS AND KNOWLEDGE REQUIRED, THE COMPLEXITY OF THE JOB, OR OTHER
LOGICAL BASIS OF DIFFERENTIATION. THE DIFFERING WAGE RATE FOR EACH OF THE EXISTING CLASSES
OF EMPLOYEES REFLECTS THIS CLASSIFICATION.

PETITIONER MAINTAINS THAT FOR PURPOSES OF WAGE DISTORTION, THE CLASSIFICATION IS NOT ONE
BASED ON LEVELS OR RANKS BUT ON TWO GROUPS OF EMPLOYEES, THE NEWLY HIRED AND THE OLD, IN
EACH AND EVERY LEVEL, AND NOT BETWEEN AND AMONG THE DIFFERENT LEVELS OR RANKS IN THE
SALARY STRUCTURE.

PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION (NLRC) REFUTES PETITIONERS

POSITION, HOWEVER. IT, THROUGH THE OFFICE OF THE SOLICITOR GENERAL, ESSAYS IN ITS COMMENT
OF APRIL 12, 2000 AS FOLLOWS:

TO DETERMINE THE EXISTENCE OF WAGE DISTORTION, THE HISTORICAL CLASSIFICATION OF THE

EMPLOYEES PRIOR TO THE WAGE INCREASE MUST BE ESTABLISHED. LIKEWISE, IT MUST BE SHOWN THAT
AS BETWEEN THE DIFFERENT CLASSIFICATION OF EMPLOYEES, THERE EXISTS A HISTORICAL GAP OR
DIFFERENCE.
XXX

THE CLASSIFICATION PREFERRED BY PETITIONER IS BELIED BY THE WAGE STRUCTURE OF PRIVATE

RESPONDENT AS SHOWN IN THE NEW SALARY SCALE IT ADOPTED ON MAY 28, 1993, RETROACTIVE TO
APRIL 1, 1993, WHICH PROVIDES, THUS:

HIRING
MINIMUM
MAXIMUM
LEVEL
FROM
TO
FROM
TO
FROM
TO
I
3,100
4,100
3,200
4,200
7,200
9,250
II
3,200
4,100
3,300
4,200
7,500
9,500
III
3,300
4,200
3,400
4,300
8,000
10,000
IV
3,500
4,400
3,600
4,500
8,500
10,500
V
3,700
4,700
3,800
4,800
9,000
11,000
THUS THE EMPLOYEES OF PRIVATE RESPONDENT HAVE BEEN HISTORICALLY CLASSIFIED INTO LEVELS, I.E.
I TO V, AND NOT ON THE BASIS OF THEIR LENGTH OF SERVICE. PUT DIFFERENTLY, THE ENTRY OF NEW
EMPLOYEES TO THE COMPANY IPSO FACTO PLACE[S] THEM UNDER ANY OF THE LEVELS MENTIONED IN
THE NEW SALARY SCALE WHICH PRIVATE RESPONDENT ADOPTED RETROACTIVE [TO] APRIL 1, 1993.
PETITIONER CANNOT MAKE A CONTRARY CLASSIFICATION OF PRIVATE RESPONDENTS EMPLOYEES
WITHOUT ENCROACHING UPON RECOGNIZED MANAGEMENT PREROGATIVE OF FORMULATING A WAGE
STRUCTURE, IN THIS CASE, ONE BASED ON LEVEL.[7] (EMPHASIS AND UNDERSCORING SUPPLIED)

THE ISSUE OF WHETHER WAGE DISTORTION EXISTS BEING A QUESTION OF FACT THAT IS WITHIN THE
JURISDICTION OF QUASI-JUDICIAL TRIBUNALS,[8] AND IT BEING A BASIC RULE THAT FINDINGS OF FACTS
OF QUASI-JUDICIAL AGENCIES, LIKE THE NLRC, ARE GENERALLY ACCORDED NOT ONLY RESPECT BUT AT
TIMES EVEN FINALITY IF THEY ARE SUPPORTED BY SUBSTANTIAL EVIDENCE, AS ARE THE FINDINGS IN THE
CASE AT BAR, THEY MUST BE RESPECTED. FOR THESE AGENCIES HAVE ACQUIRED EXPERTISE, THEIR
JURISDICTION BEING CONFINED TO SPECIFIC MATTERS.[9]

IT IS THUS CLEAR THAT THERE IS NO HIERARCHY OF POSITIONS BETWEEN THE NEWLY HIRED AND
REGULAR EMPLOYEES OF BANKARD, HENCE, THE FIRST ELEMENT OF WAGE DISTORTION PROVIDED IN
PRUBANKERS IS WANTING.

WHILE SENIORITY MAY BE A FACTOR IN DETERMINING THE WAGES OF EMPLOYEES, IT CANNOT BE MADE
THE SOLE BASIS IN CASES WHERE THE NATURE OF THEIR WORK DIFFERS.

MOREOVER, FOR PURPOSES OF DETERMINING THE EXISTENCE OF WAGE DISTORTION, EMPLOYEES

CANNOT CREATE THEIR OWN INDEPENDENT CLASSIFICATION AND USE IT AS A BASIS TO DEMAND AN
ACROSS-THE-BOARD INCREASE IN SALARY.

AS NATIONAL FEDERATION OF LABOR V. NLRC, ET AL.[10] TEACHES, THE FORMULATION OF A WAGE

STRUCTURE THROUGH THE CLASSIFICATION OF EMPLOYEES IS A MATTER OF MANAGEMENT JUDGMENT
AND DISCRETION.

[W]HETHER OR NOT A NEW ADDITIONAL SCHEME OF CLASSIFICATION OF EMPLOYEES FOR

COMPENSATION PURPOSES SHOULD BE ESTABLISHED BY THE COMPANY (AND THE LEGITIMACY OR
VIABILITY OF THE BASES OF DISTINCTION THERE EMBODIED) IS PROPERLY A MATTER OF MANAGEMENT
JUDGMENT AND DISCRETION, AND ULTIMATELY, PERHAPS, A SUBJECT MATTER FOR BARGAINING
NEGOTIATIONS BETWEEN EMPLOYER AND EMPLOYEES. IT IS ASSUREDLY SOMETHING THAT FALLS
OUTSIDE THE CONCEPT OF WAGE DISTORTION.[11] (EMPHASIS AND UNDERSCORING SUPPLIED)

AS DID THE COURT OF APPEALS, THIS COURT FINDS THAT THE THIRD ELEMENT PROVIDED IN
PRUBANKERS IS ALSO WANTING. FOR, AS THE APPELLATE COURT EXPLAINED:

IN TRYING TO PROVE WAGE DISTORTION, PETITIONER UNION PRESENTED A LIST OF FIVE (5) EMPLOYEES
ALLEGEDLY AFFECTED BY THE SAID INCREASE:

PAY OF OLD/
PAY OF NEWLY
DIFFERENCE
REGULAR EMPLOYEES
HIRED EMPLOYEES
A. PRIOR TO APRIL 1, 1993
LEVEL I
P4,518.75
(SAMMY GUCE)
P3,100
P1,418.75
LEVEL II
P6,242.00
(NAZARIO ABELLO)
P3,200
P3,042.00
LEVEL III
P4,850.00
(ARTHUR CHAVEZ)
P3,300
P1,550.00
LEVEL IV
P5,339.00
MELISSA CORDERO)
P3,500
P1,839.00
LEVEL V
P7,090.69
(MA. LOURDES DEE)
P3,700
P3,390.69
B. EFFECTIVE APRIL 1, 1993
LEVEL I
P4,518.75
SAMMY GUCE)
P4,100
P418.75
LEVEL II
P6,242.00
(NAZARIO ABELLO)
P4,100
P2,142.00
LEVEL III
P4,850.00
(ARTHUR CHAVEZ)
P4,200
P650.00
LEVEL IV
P5,330.00
(MELISSA CORDERO)
P4,400
P939.00
LEVEL V
P7,090.69
(MA. LOURDES DEE)
P4,700
P2,390.69
EVEN ASSUMING THAT THERE IS A DECREASE IN THE WAGE GAP BETWEEN THE PAY OF THE OLD
EMPLOYEES AND THE NEWLY HIRED EMPLOYEES, TO OUR MIND SAID GAP IS NOT SIGNIFICANT AS TO
OBLITERATE OR RESULT IN SEVERE CONTRACTION OF THE INTENTIONAL QUANTITATIVE DIFFERENCES IN
THE SALARY RATES BETWEEN THE EMPLOYEE GROUP. AS ALREADY STATED, THE CLASSIFICATION UNDER
THE WAGE STRUCTURE IS BASED ON THE RANK OF AN EMPLOYEE, NOT ON SENIORITY. FOR THIS
REASON, ,WAGE DISTORTION DOES NOT APPEAR TO EXIST.[12] (EMPHASIS AND UNDERSCORING
SUPPLIED)

APART FROM THE FINDINGS OF FACT OF THE NLRC AND THE COURT OF APPEALS THAT SOME OF THE
ELEMENTS OF WAGE DISTORTION ARE ABSENT, PETITIONER CANNOT LEGALLY OBLIGATE BANKARD TO
CORRECT THE ALLEGED WAGE DISTORTION AS THE INCREASE IN THE WAGES AND SALARIES OF THE
NEWLY-HIRED WAS NOT DUE TO A PRESCRIBED LAW OR WAGE ORDER.

THE WORDINGS OF ARTICLE 124 ARE CLEAR. IF IT WAS THE INTENTION OF THE LEGISLATORS TO COVER
ALL KINDS OF WAGE ADJUSTMENTS, THEN THE LANGUAGE OF THE LAW SHOULD HAVE BEEN BROAD,
NOT RESTRICTIVE AS IT IS CURRENTLY PHRASED:

ARTICLE 124. STANDARDS/CRITERIA FOR MINIMUM WAGE FIXING.

XXX

WHERE THE APPLICATION OF ANY PRESCRIBED WAGE INCREASE BY VIRTUE OF A LAW OR WAGE ORDER
ISSUED BY ANY REGIONAL BOARD RESULTS IN DISTORTIONS OF THE WAGE STRUCTURE WITHIN AN
ESTABLISHMENT, THE EMPLOYER AND THE UNION SHALL NEGOTIATE TO CORRECT THE DISTORTIONS.
ANY DISPUTE ARISING FROM THE WAGE DISTORTIONS SHALL BE RESOLVED THROUGH THE GRIEVANCE
PROCEDURE UNDER THEIR COLLECTIVE BARGAINING AGREEMENT AND, IF IT REMAINS UNRESOLVED,
THROUGH VOLUNTARY ARBITRATION.

X X X (ITALICS AND EMPHASIS SUPPLIED)

ARTICLE 124 IS ENTITLED STANDARDS/CRITERIA FOR MINIMUM WAGE FIXING. IT IS FOUND IN CHAPTER
V ON WAGE STUDIES, WAGE AGREEMENTS AND WAGE DETERMINATION WHICH PRINCIPALLY DEALS
WITH THE FIXING OF MINIMUM WAGE. ARTICLE 124 SHOULD THUS BE CONSTRUED AND CORRELATED
IN RELATION TO MINIMUM WAGE FIXING, THE INTENTION OF THE LAW BEING THAT IN THE EVENT OF
AN INCREASE IN MINIMUM WAGE, THE DISTINCTIONS EMBODIED IN THE WAGE STRUCTURE BASED ON
SKILLS, LENGTH OF SERVICE, OR OTHER LOGICAL BASES OF DIFFERENTIATION WILL BE PRESERVED.

IF THE COMPULSORY MANDATE UNDER ARTICLE 124 TO CORRECT WAGE DISTORTION IS APPLIED TO
VOLUNTARY AND UNILATERAL INCREASES BY THE EMPLOYER IN FIXING HIRING RATES WHICH IS
INHERENTLY A BUSINESS JUDGMENT PREROGATIVE, THEN THE HANDS OF THE EMPLOYER WOULD BE
COMPLETELY TIED EVEN IN CASES WHERE AN INCREASE IN WAGES OF A PARTICULAR GROUP IS
JUSTIFIED DUE TO A RE-EVALUATION OF THE HIGH PRODUCTIVITY OF A PARTICULAR GROUP, OR AS IN
THE PRESENT CASE, THE NEED TO INCREASE THE COMPETITIVENESS OF BANKARDS HIRING RATE. AN
EMPLOYER WOULD BE DISCOURAGED FROM ADJUSTING THE SALARY RATES OF A PARTICULAR GROUP
OF EMPLOYEES FOR FEAR THAT IT WOULD RESULT TO A DEMAND BY ALL EMPLOYEES FOR A SIMILAR
INCREASE, ESPECIALLY IF THE FINANCIAL CONDITIONS OF THE BUSINESS CANNOT ADDRESS AN ACROSS-
THE-BOARD INCREASE.

PETITIONER CITES METRO TRANSIT ORGANIZATION, INC. V. NLRC[13] TO SUPPORT ITS CLAIM THAT THE
OBLIGATION TO RECTIFY WAGE DISTORTION IS NOT CONFINED TO WAGE DISTORTION RESULTING FROM
GOVERNMENT DECREED LAW OR WAGE ORDER.

RELIANCE ON METRO TRANSIT IS HOWEVER MISPLACED, AS THE OBLIGATION THEREIN TO RECTIFY THE
WAGE DISTORTION WAS NOT BY VIRTUE OF ARTICLE 124 OF THE LABOR CODE, BUT ON ACCOUNT OF A
THEN EXISTING COMPANY PRACTICE THAT WHENEVER RANK-AND-FILE EMPLOYEES WERE PAID A
STATUTORILY MANDATED SALARY INCREASE, SUPERVISORY EMPLOYEES WERE, AS A MATTER OF
PRACTICE, ALSO PAID THE SAME AMOUNT PLUS AN ADDED PREMIUM. THUS THIS COURT HELD IN SAID
CASE:

WE CONCLUDE THAT THE SUPERVISORY EMPLOYEES, WHO THEN (I.E., ON APRIL 17, 1989) HAD, UNLIKE
THE RANK-AND-FILE EMPLOYEES, NO CBA GOVERNING THE TERMS AND CONDITIONS OF THEIR
EMPLOYMENT, HAD THE RIGHT TO RELY ON THE COMPANY PRACTICE OF UNILATERALLY CORRECTING
THE WAGE DISTORTION EFFECTS OF A SALARY INCREASE GIVEN TO THE RANK-AND-FILE EMPLOYEES, BY
GIVING THE SUPERVISORY EMPLOYEES A CORRESPONDING SALARY INCREASE PLUS A PREMIUM. . . .[14]
(EMPHASIS SUPPLIED)

WAGE DISTORTION IS A FACTUAL AND ECONOMIC CONDITION THAT MAY BE BROUGHT ABOUT BY
DIFFERENT CAUSES. IN METRO TRANSIT, THE REDUCTION OR ELIMINATION OF THE NORMAL
DIFFERENTIAL BETWEEN THE WAGE RATES OF RANK-AND-FILE AND THOSE OF SUPERVISORY EMPLOYEES
WAS DUE TO THE GRANTING TO THE FORMER OF WAGE INCREASE WHICH WAS, HOWEVER, DENIED TO
THE LATTER GROUP OF EMPLOYEES.

THE MERE FACTUAL EXISTENCE OF WAGE DISTORTION DOES NOT, HOWEVER, IPSO FACTO RESULT TO AN
OBLIGATION TO RECTIFY IT, ABSENT A LAW OR OTHER SOURCE OF OBLIGATION WHICH REQUIRES ITS
RECTIFICATION.

UNLIKE IN METRO TRANSIT THEN WHERE THERE EXISTED A COMPANY PRACTICE, NO SUCH
MANAGEMENT PRACTICE IS HEREIN ALLEGED TO OBLIGATE BANKARD TO PROVIDE AN ACROSS-THE-
BOARD INCREASE TO ALL ITS REGULAR EMPLOYEES.

BANKARDS RIGHT TO INCREASE ITS HIRING RATE, TO ESTABLISH MINIMUM SALARIES FOR SPECIFIC JOBS,
AND TO ADJUST THE RATES OF EMPLOYEES AFFECTED THEREBY IS EMBODIED UNDER SECTION 2,
ARTICLE V (SALARY AND COST OF LIVING ALLOWANCE) OF THE PARTIES COLLECTIVE BARGAINING
AGREEMENT (CBA), TO WIT:

SECTION 2. ANY SALARY INCREASE GRANTED UNDER THIS ARTICLE SHALL BE WITHOUT PREJUDICE TO
THE RIGHT OF THE COMPANY TO ESTABLISH SUCH MINIMUM SALARIES AS IT MAY HEREAFTER FIND
APPROPRIATE FOR SPECIFIC JOBS, AND TO ADJUST THE RATES OF THE EMPLOYEES THEREBY AFFECTED
TO SUCH MINIMUM SALARIES THUS ESTABLISHED.[15] (ITALICS AND UNDERSCORING SUPPLIED)
THIS CBA PROVISION, WHICH IS BASED ON LEGITIMATE BUSINESS-JUDGMENT PREROGATIVES OF THE
EMPLOYER, IS A VALID AND LEGALLY ENFORCEABLE SOURCE OF RIGHTS BETWEEN THE PARTIES.

IN FINE, ABSENT ANY INDICATION THAT THE VOLUNTARY INCREASE OF SALARY RATES BY AN EMPLOYER
WAS DONE ARBITRARILY AND ILLEGALLY FOR THE PURPOSE OF CIRCUMVENTING THE LAWS OR WAS
DEVOID OF ANY LEGITIMATE PURPOSE OTHER THAN TO DISCRIMINATE AGAINST THE REGULAR
EMPLOYEES, THIS COURT WILL NOT STEP IN TO INTERFERE WITH THIS MANAGEMENT PREROGATIVE.
EMPLOYEES ARE OF COURSE NOT PRECLUDED FROM NEGOTIATING WITH ITS EMPLOYER AND LOBBY FOR
WAGE INCREASES THROUGH APPROPRIATE CHANNELS, SUCH AS THROUGH A CBA.

THIS COURT, TIME AND AGAIN, HAS SHOWN CONCERN AND COMPASSION TO THE PLIGHT OF WORKERS
IN ADHERENCE TO THE CONSTITUTIONAL PROVISIONS ON SOCIAL JUSTICE AND HAS ALWAYS UPHELD
THE RIGHT OF WORKERS TO PRESS FOR BETTER TERMS AND CONDITIONS OF EMPLOYMENT. IT DOES
NOT MEAN, HOWEVER, THAT EVERY DISPUTE SHOULD BE DECIDED IN FAVOR OF LABOR, FOR
EMPLOYERS CORRESPONDINGLY HAVE RIGHTS UNDER THE LAW WHICH NEED TO BE RESPECTED.

WHEREFORE, THE PRESENT PETITION IS HEREBY DENIED.

SO ORDERED.
G.R. NO. 104523. MARCH 8, 1993.

ARMS TAXI AND/OR DOROTHEA TANONGON, PETITIONER, VS. NATIONAL LABOR RELATIONS
COMMISSION AND LUDIVICO C. CULLA, RESPONDENTS.

[G.R. NO. 104526. MARCH 8, 1993.]

LUDIVICO C. CULLA, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION, HON. LABOR ARBITER,
SPOUSES NORBERTO TANONGON AND DOROTHEA TANONGON AND/OR ARMS TAXI AND AIDA DELA
CRUZ, RESPONDENTS.

ALFONSO A. OSIAS FOR PETITIONER.

THE SOLICITOR GENERAL FOR PUBLIC RESPONDENTS.

SISENANDO VILLALUZ, JR. FOR ARMS TAXI AND/OR SPOUSES TANONGON.

NARCISO RAMIREZ FOR AIDA DELA CRUZ.

SYLLABUS

1. CIVIL LAW; CONTRACTS; STATUTES OF FRAUD; DOES NOT INCLUDE AGREEMENT FOR
COMPENSATION OF SERVICES RENDERED. — AN AGREEMENT FOR COMPENSATION OF SERVICES
RENDERED IS NOT ONE OF THE CONTRACTS MENTIONED IN ART. 1403 WHICH MUST BE IN WRITING TO
BE ENFORCEABLE BY ACTION.
2. LABOR AND SOCIAL LEGISLATION; LABOR STANDARDS; SALARY; DISTINGUISHED FROM
COMMISSION; CASE AT BAR. — THE PAYMENT OF A P5,000.00 MONTHLY SALARY TO THE PETITIONER
FOR HIS SERVICES MAY NOT BE CONSIDERED AS PARTIAL COMPLIANCE BY HIS EMPLOYERS WITH THE
ALLEGED AGREEMENT TO PAY HIM A COMMISSION OR PERCENTAGE OF THE DAILY EARNINGS OF THEIR
TAXI BUSINESS BECAUSE, AS CORRECTLY POINTED OUT BY THE SOLICITOR GENERAL, A SALARY IS
DIFFERENT FROM A COMMISSION. WHILE A SALARY IS A FIXED COMPENSATION FOR REGULAR WORK OR
FOR CONTINUOUS SERVICE RENDERED OVER A PERIOD OF TIME (MORENO'S PHILIPPINE LAW
DICTIONARY, 3RD ED., P. 852 CITING LEE TEE VS. CHING CHIONG, 17518-R, JANUARY 13, 1959), A
COMMISSION IS A PERCENTAGE OR ALLOWANCE MADE TO A FACTOR OR AGENT FOR TRANSACTING
BUSINESS FOR ANOTHER (SUPRA, P. 171 CITING PEOPLE VS. SUA BOK, 1 O.G. 689). THUS, BEFORE
INVOKING THE EXCEPTION TO THE STATUE OF FRAUDS, PETITIONER SHOULD HAVE PROVEN THAT HE
HAS RECEIVED A COMMISSION, OR PART OF IT, IN THE PAST.

3. ID.; NATIONAL LABOR RELATIONS COMMISSION; FACTUAL FINDINGS THEREOF; RULE. —

REGARDING THE TANONGON SPOUSES' ALLEGATION IN G.R. NO. 104523, THAT THE PETITIONER WAS
NEVER THEIR EMPLOYEE, HENCE, THE NLRC GRAVELY ABUSED ITS DISCRETION IN GRANTING HIS
MONETARY CLAIMS, THAT ALLEGATION RAISES A FACTUAL ISSUE. THE FINDING THEREON OF THE NLRC,
IN THE ABSENCE OF ABUSE OF DISCRETION, IS NOT ONLY INVESTED WITH RESPECT, BUT EVEN WITH
FINALITY, SINCE IT IS SUPPORTED BY SUBSTANTIAL EVIDENCE (GREAT PACIFIC LIFE ASSURANCE
CORPORATION VS. NATIONAL LABOR RELATIONS COMMISSION, 187 SCRA 694).

4. ID.; REGULAR EMPLOYEES; RIGHTS THEREOF IN CASE OF ILLEGAL DISMISSAL; CASE AT BAR. —
PETITIONER WAS NOT A PROJECT EMPLOYEE. HE WAS A GARAGE SUPERVISOR, LIAISON MAN,
DISPATCHER, MECHANIC AND DRIVER, A JACK OF ALL TRADES, DOING WORK THAT WAS NECESSARY AND
DESIRABLE IN THE TAXI BUSINESS OF THE TANONGON SPOUSES. AS SUCH, HE WAS A REGULAR
EMPLOYEE ENTITLED TO SECURITY OF TENURE (TUCOR INDUSTRIES INC. VS. NATIONAL LABOR
RELATIONS COMMISSION, 197 SCRA 296). HIS EMPLOYMENT MAY BE TERMINATED ONLY IN
ACCORDANCE WITH LAW. BECAUSE HE WAS SUMMARILY DISMISSED FROM HIS JOB, HE IS ENTITLED TO
REINSTATEMENT WITHOUT LOSS OF SENIORITY AND OTHER PRIVILEGES AND TO RECEIVE THREE (3)
YEARS BACKWAGES. IN VIEW, HOWEVER, OF THE STRAINED RELATIONS BETWEEN THE PETITIONER AND
THE TANONGON SPOUSES, MAKING HIS REINSTATEMENT NO LONGER ADVISABLE NOR FEASIBLE,
PETITIONER SHOULD RECEIVE SEPARATION PAY IN ADDITION TO THREE YEARS BACKWAGES (TORILLO VS.
LEOGARDO, JR., 197 SCRA 471).

5. ID.; BACKWAGES; RULE PROVIDED UNDER REPUBLIC ACT NO. 6715; MAY NOT BE APPLIED
RETROACTIVELY. — THE FULL BACKWAGES CLAIMED BY CULLA AND PROVIDED IN SECTION 34 OF
REPUBLIC ACT NO. 6715, WHICH TOOK EFFECT ON MARCH 21, 1989, CANNOT BE GRANTED TO HIM FOR
HIS SUMMARY DISMISSAL OCCURRED ON JUNE 11, 1986, THREE (3) YEARS BEFORE R.A. NO. 6715 TOOK
EFFECT. THE NEW LAW MAY NOT BE APPLIED RETROACTIVELY (SEALAND SERVICE, INC. VS. NLRC, 190
SCRA 347; LANTION VS. NLRC, 181 SCRA 513).

6. ID.; DISMISSAL; LIABILITY OF EMPLOYER IN CASE OF NON-OBSERVANCE OF DUE PROCESS. — AS

PETITIONER'S DISMISSAL WAS EFFECTED WITHOUT PRIOR NOTICE AND INVESTIGATION OF THE CHARGES
AGAINST HIM, IN VIOLATION OF HIS RIGHT TO DUE PROCESS, HIS EMPLOYERS SHOULD INDEMNIFY HIM
FOR DAMAGES IN THE SUM OF ONE THOUSAND PESOS (P1,000.00) PURSUANT TO RULE XIV, SECS. 2, 5
AND 6 OF THE RULES IMPLEMENTING BATAS PAMBANSA BLG. 130 AND THE RULINGS OF THIS COURT IN
GREAT PACIFIC LIFE ASSURANCE CORPORATION VS. NLRC, 187 SCRA 694, 700, SHOEMART, INC. VS. NLRC,
176 SCRA 385, AND WENPHIL VS. NLRC, 170 SCRA 69.
DECISION

GRIÑO-AQUINO, J P:

IN THIS PETITION FOR CERTIORARI 1 THE PETITIONER, LUDIVICO C. CULLA, SEEKS THE ANNULMENT OF
THE DECISION DATED MARCH 5, 1992 OF THE NATIONAL LABOR RELATIONS COMMISSION (NLRC)
ORDERING THE SPOUSES NORBERTO AND DOROTHEA TANONGON AND/OR ARMS TAXI AND AIDA DELA
CRUZ JOINTLY AND SEVERALLY TO PAY HIM (CULLA) THE TOTAL SUM OF ONE HUNDRED NINETY-FIVE
THOUSAND PESOS (P195,000.00) AS BACKWAGES FOR THREE (3) YEARS AND SEPARATION PAY
COMPUTED AT ONE-HALF MONTH FOR EVERY YEAR OF SERVICE (NLRC NCR CASE NO. 7-2572-86).

THE SPOUSES TANONGON OWN AND OPERATE TAXICABS UNDER THE NAMES OF "ARMS TAXI" AND "LIN-
LIN TAXI." HOWEVER, THE TAXICABS ARE REGISTERED UNDER THE "KABIT" SYSTEM IN THE NAME OF
AIDA DELA CRUZ WHO HOLDS A CERTIFICATE OF PUBLIC CONVENIENCE TO OPERATE A TAXICAB SERVICE.

IN THE EARLY PART OF 1980, CULLA WAS HIRED BY THE TANONGON SPOUSES TO WORK AS MECHANIC,
SHOP MANAGER, GARAGE CARETAKER, DISPATCHER, AND LIAISON MAN IN THEIR TAXI BUSINESS, AT A
MONTHLY SALARY OF P5,000.00 PLUS COMMISSION ON THE DAILY OR MONTHLY GROSS INCOME OF THE
BUSINESS IN ADDITION TO THE PAYMENT OF HIS SOCIAL SECURITY SYSTEM (SSS) PREMIUMS.

ON JUNE 11, 1986, WITHOUT CULLA'S CONSENT, THE TANONGON SPOUSES ASKED ONE OF THEIR TAXI
DRIVERS TO FORCE OPEN HIS QUARTERS IN THE TANONGON COMPOUND AT THE ST. FRANCIS
SUBDIVISION IN CAINTA, RIZAL. THEY REMOVED HIS PERSONAL BELONGINGS AND BROUGHT THEM TO
HIS RESIDENCE IN STA. ANA, MANILA (P. 2, AFFIDAVIT OF COMPLAINANT, P. 24, ROLLO).

CULLA FILED WITH THE ARBITRATION BRANCH OF THE THEN MINISTRY OF LABOR AND EMPLOYMENT, A
COMPLAINT ALLEGING THAT HIS EJECTMENT FROM HIS LIVING QUARTERS AND DISMISSAL FROM
EMPLOYMENT WERE ILLEGAL BECAUSE THERE WAS NO PRIOR INVESTIGATION OR WRITTEN NOTICE OF
THE CHARGES AGAINST HIM. HIS DISMISSAL WAS ALLEGEDLY DUE TO HIS DEMANDS "FOR THE PAYMENT
OF THE BENEFITS, PERCENTAGE AND PRIVILEGES AND PREMIUMS TO THE SSS" (P. 3, AMENDED
COMPLAINT; P. 115, ROLLO). HE PRAYED FOR REINSTATEMENT WITH BACKWAGES, PLUS HIS
COMMISSION OF FIFTEEN PERCENT (15%) OF THE GROSS INCOME OF THE TAXI BUSINESS, IN THE
AMOUNT OF P480,000.00 WITH LEGAL INTEREST, PLUS MORAL, NOMINAL AND EXEMPLARY DAMAGES
IN THE TOTAL SUM OF P300,000.00 AND ACTUAL OR COMPENSATORY DAMAGES AND LITIGATION
EXPENSES.

IN THEIR POSITION PAPER, THE TANONGON SPOUSES DENIED THAT THEY WERE THE OPERATORS OF THE
ARMS TAXI AND LIN-LIN TAXI. THEY DENIED THE EXISTENCE OF AN EMPLOYER-EMPLOYEE RELATIONSHIP
BETWEEN THEM AND CULLA. THEY AVERRED THAT ARMS TAXI IS OWNED AND OPERATED BY AIDA DELA
CRUZ; THAT ON APRIL 25, 1986, THEY BOUGHT LIN-LIN TAXI FROM ONE JOSE LIM, BUT ITS OWNERSHIP
HAS NOT YET BEEN TRANSFERRED TO THEM AS THEIR APPLICATION WITH THE LAND TRANSPORTATION
OFFICE IS STILL PENDING.

FOR HER PART, AIDA DELA CRUZ ADMITTED OWNERSHIP AND OPERATION OF A FLEET OF TAXICABS
UNDER THE NAME ARMS TAXI AND THAT SHE HAD ENTERED INTO AN AGREEMENT WITH DOROTHEA
TANONGON FOR THE LATTER TO MANAGE FOR A FEE THE OPERATION OF SEVERAL OF HER TAXI UNITS.
DENYING THAT SHE HIRED CULLA, DELA CRUZ AVERRED THAT AT MOST, CULLA COULD BE CONSIDERED
AS AN INDEPENDENT CONTRACTOR PAID ON A PIECE-WORK BASIS AND THEREFORE, HE WAS NOT
ENTITLED TO REGULAR BENEFITS, MUCH LESS TO THE ALLEGED 15% COMMISSION.

IN A DECISION DATED FEBRUARY 14, 1990, LABOR ARBITER RICARDO C. NORA FOUND FOR CULLA. HE
DECLARED THAT CULLA WAS AN EMPLOYEE OF THE TANONGON SPOUSES WHO OPERATE SOME UNITS
OF THE ARMS TAXI AND LIN-LIN TAXI UNDER THE "KABIT" SYSTEM; THAT CULLA WAS ILLEGALLY
DISMISSED FROM EMPLOYMENT AND THAT AIDA DELA CRUZ SHOULD BE CONSIDERED AN INDIRECT
EMPLOYER OF CULLA PURSUANT TO ARTS. 106, 107 AND 109 OF THE LABOR CODE. HOWEVER, HE
DENIED CULLA'S CLAIM FOR 15% COMMISSION ON THE GROSS EARNINGS OF THE TAXI BUSINESS AS
CULLA FAILED "TO SUBSTANTIALLY PROVE THE SAME BY SOME PRECISE, CONCRETE AND CONVINCING
EVIDENCE" (P. 185, ROLLO). THE AGREEMENT ON THE COMMISSION "SHOULD HAVE BEEN IN WRITING,
NOTE OR MEMORANDUM, AND SUBSCRIBED BY THE PARTIES, TO BE ENFORCEABLE" (IBID). FURTHER
HOLDING THAT CULLA WAS NOT ENTITLED TO THE 13TH MONTH PAY UNDER P.D. NO. 851 AND TO
OVERTIME PAY, FOR TIME WAS NOT OF THE ESSENCE IN HIS KIND OF EMPLOYMENT, THE LABOR ARBITER
DISPOSED OF THE CASE THUS:

"WHEREFORE, RESPONDENTS DOROTHEA AND NORBERTO TANONGON AND AIDA DELA CRUZ ARE
HEREBY ORDERED TO PAY JOINTLY AND SEVERALLY COMPLAINANT THE AGGREGATE SUM OF ONE
HUNDRED NINETY-FIVE THOUSAND (P195,000.00) PESOS REPRESENTING COMPLAINANT'S BACKWAGES
FOR THREE (3) YEARS (P5,000.00/MO. X 36 MOS. PLUS P2,500.00/MO. [1/2 MO/YR. OF SERVICE X 6
YEARS) AND SEPARATION PAY COMPUTED AT ONE-HALF (1/2) FOR EVERY YEAR OF SERVICE WITHIN TEN
(10) DAYS FROM RECEIPT OF THIS DECISION.

"ALL OTHER ISSUES ARE HEREBY DISMISSED FOR LACK OF MERIT" (PP. 111-112, ROLLO)

THE PARTIES APPEALED TO THE NLRC. CULLA WAS DISASTIFIED WITH THE MONETARY AWARDS, BECAUSE
HE WAS NOT GIVEN FULL BACKWAGES NOR THE 15% COMMISSION, INCENTIVE LEAVE PAY, DAMAGES,
AND ATTORNEY'S FEES.

ON THE OTHER HAND, THE TANONGON SPOUSES ASSAILED THE LABOR ARBITER'S FINDING THAT CULLA
WAS THEIR EMPLOYEE. THEY ALLEGED THAT CULLA WAS AN INDEPENDENT CONTRACTOR DOING
MAINLY THE WORK OF A MECHANIC WHO WAS PAID ON A PIECE-WORK BASIS; THAT HE WAS FREE TO
ACCEPT REPAIR JOBS FROM OTHER CUSTOMERS, THAT HE HAD NO REGULAR HOURS OF WORK AND
THEY HAD NO CONTROL OVER HIS WORK EXCEPT TO INDICATE WHAT PART OF A TAXICAB NEEDED TO BE
REPAIRED.

AS EARLIER MENTIONED, THE FIRST DIVISION 2 OF THE NLRC AFFIRMED ON MARCH 5, 1991 THE
DECISION OF THE LABOR ARBITER. IT DISMISSED THE APPEAL OF THE TANONGON SPOUSES FOR HAVING
BEEN FILED LATE AND FOR LACK OF THE REQUIRED SUPERSEDEAS BOND. IT DENIED CULLA'S CLAIM FOR
THE 15% COMMISSION ON THE GROUND THAT:

"THERE IS NOTHING ON RECORD TO SUBSTANTIATE THIS CLAIM. IF, AS COMPLAINANT CLAIMS, HE IS

ENTITLED TO A COMMISSION AS PART OF HIS WAGE AND/OR IN ADDITION TO HIS BASIC PAY, WE
CANNOT UNDERSTAND WHY HE NEVER MADE ANY CLAIMS THEREFOR DURING HIS SIX YEARS OF
SERVICE." (EMPHASIS SUPPLIED; P. 23, ROLLO)

SEPARATE PETITIONS FOR CERTIORARI WERE FILED BY CULLA (G.R. NO. 104526) AND TANONGON OR
ARMS TAXI (G.R. NO. 104523) WHICH WERE LATER CONSOLIDATED.
CULLA ARGUES IN HIS PETITION THAT THE PAYMENT TO HIM OF P5,000.00 A MONTH FOR HIS SERVICES
WAS IN PARTIAL FULFILLMENT OF TANONGON'S PROMISE TO PAY HIM A 15% COMMISSION, REMOVING
SAID AGREEMENT FROM COVERAGE OF THE STATUTE OF FRAUDS.

CULLA'S REFERENCE TO THE STATUTE OF FRAUDS UNDER ART. 1403, PAR. 2 OF THE CIVIL CODE IS
MISPLACED. AN AGREEMENT FOR COMPENSATION OF SERVICES RENDERED IS NOT ONE OF THE
CONTRACTS MENTIONED IN ART. 1403 WHICH MUST BE IN WRITING TO BE ENFORCEABLE BY ACTION. 3

THE PAYMENT OF A P5,000.00 MONTHLY SALARY TO THE PETITIONER FOR HIS SERVICES MAY NOT BE
CONSIDERED AS PARTIAL COMPLIANCE BY HIS EMPLOYERS WITH THE ALLEGED AGREEMENT 4 TO PAY
HIM A COMMISSION OR PERCENTAGE OF THE DAILY EARNINGS OF THEIR TAXI BUSINESS BECAUSE, AS
CORRECTLY POINTED OUT BY THE SOLICITOR GENERAL, A SALARY IS DIFFERENT FROM A COMMISSION
(IBID., P. 222). WHILE A SALARY IS A FIXED COMPENSATION FOR REGULAR WORK OR FOR CONTINUOUS
SERVICE RENDERED OVER A PERIOD OF TIME (MORENO'S PHILIPPINE LAW DICTIONARY, 3RD ED., P. 852
CITING LEE TEE VS. CHING CHIONG, 17518-R, JANUARY 13, 1959), A COMMISSION IS A PERCENTAGE OR
ALLOWANCE MADE TO A FACTOR OR AGENT FOR TRANSACTING BUSINESS FOR ANOTHER (SUPRA, P. 171
CITING PEOPLE VS. SUA BOK, 1 O.G. 689). THUS, BEFORE INVOKING THE EXCEPTION TO THE STATUTE OF
FRAUDS, PETITIONER SHOULD HAVE PROVEN THAT HE HAD RECEIVED A COMMISSION, OR PART OF IT, IN
THE PAST.

FURTHERMORE, AS APTLY NOTED BY THE NLRC, IF IT WERE TRUE THAT THERE HAD BEEN AN
AGREEMENT REGARDING THE PAYMENT OF A 15% COMMISSION TO HIM, THE PETITIONER WOULD NOT
HAVE WAITED ALMOST SIX (6) YEARS TO CLAIM IT. CONSIDERABLE DELAY IN ASSERTING ONE'S RIGHT IS
STRONGLY PERSUASIVE OF THE LACK OF MERIT OF ONE'S CLAIM (QUINSAY VS. INTERMEDIATE
APPELLATE COURT, 195 SCRA 268).

REGARDING THE TANONGON SPOUSES' ALLEGATION IN G.R. NO. 104523, THAT THE PETITIONER WAS
NEVER THEIR EMPLOYEE, HENCE, THE NLRC GRAVELY ABUSED ITS DISCRETION IN GRANTING HIS
MONETARY CLAIMS, THAT ALLEGATION RAISES A FACTUAL ISSUE. THE FINDING THEREON OF THE NLRC,
IN THE ABSENCE OF ABUSE OF DISCRETION, IS NOT ONLY INVESTED WITH RESPECT, BUT EVEN WITH
FINALITY, SINCE IT IS SUPPORTED BY SUBSTANTIAL EVIDENCE (GREAT PACIFIC LIFE ASSURANCE
CORPORATION VS. NATIONAL LABOR RELATIONS COMMISSION, 187 SCRA 694).

AS AN EMPLOYEE OF THE TANONGON SPOUSES, WAS THE PETITIONER ENTITLED TO SECURITY OF

TENURE? HE WAS. ART. 280 OF THE LABOR CODE PROVIDES:

"ARTICLE 280. REGULAR AND CASUAL EMPLOYMENT. — THE PROVISIONS OF WRITTEN AGREEMENT TO
THE CONTRARY NOTWITHSTANDING AND REGARDLESS OF THE ORAL AGREEMENT OF THE PARTIES, AN
EMPLOYMENT SHALL BE DEEMED TO BE REGULAR WHERE THE EMPLOYEE HAS BEEN ENGAGED TO
PERFORM ACTIVITIES WHICH ARE USUALLY NECESSARY OR DESIRABLE IN THE USUAL BUSINESS OR
TRADE OF THE EMPLOYER, EXCEPT WHERE THE EMPLOYMENT HAS BEEN FIXED FOR A SPECIFIC PROJECT
OR UNDERTAKING THE COMPLETION OR TERMINATION OF WHICH HAS BEEN DETERMINED AT THE TIME
OF THE ENGAGEMENT OF THE EMPLOYEE OR WHERE THE WORK OR SERVICES TO BE PERFORMED IS
SEASONAL IN NATURE AND THE EMPLOYMENT IS FOR THE DURATION OF THE SEASON.

"AN EMPLOYMENT SHALL BE DEEMED TO BE CASUAL IF IT IS NOT COVERED BY THE PRECEDING

PARAGRAPH: PROVIDED, THAT, ANY EMPLOYEE WHO HAS RENDERED AT LEAST ONE YEAR OF SERVICE,
WHETHER SUCH SERVICE IS CONTINUOUS OR BROKEN, SHALL BE CONSIDERED A REGULAR EMPLOYEE
WITH RESPECT TO THE ACTIVITY IN WHICH HE IS EMPLOYED AND HIS EMPLOYMENT SHALL CONTINUE
WHILE SUCH ACTUALLY EXISTS," (EMPHASIS SUPPLIED.).

PETITIONER WAS NOT A PROJECT EMPLOYEE. HE WAS A GARAGE SUPERVISOR, LIAISON MAN,
DISPATCHER, MECHANIC AND DRIVER, A JACK OF ALL TRADES, DOING WORK THAT WAS NECESSARY AND
DESIRABLE IN THE TAXI BUSINESS OF THE TANONGON SPOUSES. AS SUCH, HE WAS A REGULAR
EMPLOYEE ENTITLED TO SECURITY OF TENURE (TUCOR INDUSTRIES INC. VS. NATIONAL LABOR
RELATIONS COMMISSION, 197 SCRA 296). HIS EMPLOYMENT MAY BE TERMINATED ONLY IN
ACCORDANCE WITH LAW. BECAUSE HE WAS SUMMARILY DISMISSED FROM HIS JOB, HE IS ENTITLED TO
REINSTATEMENT WITHOUT LOSS OF SENIORITY AND OTHER PRIVILEGES AND TO RECEIVE THREE (3)
YEARS BACKWAGES. IN VIEW, HOWEVER, OF THE STRAINED RELATIONS BETWEEN THE PETITIONER AND
THE TANONGON SPOUSES (P. 11, LABOR ARBITER'S DECISION, P. 184, ROLLO), MAKING HIS
REINSTATEMENT NO LONGER ADVISABLE NOR FEASIBLE, PETITIONER SHOULD RECEIVE SEPARATION PAY
IN ADDITION TO THREE YEARS BACKWAGES (TORILLO VS. LEOGARDO, JR., 197 SCRA 471).

THE FULL BACKWAGES CLAIMED BY CULLA AND PROVIDED IN SECTION 34 OF REPUBLIC ACT NO. 6715,
WHICH TOOK EFFECT ON MARCH 21, 1989, CANNOT BE GRANTED TO HIM FOR HIS SUMMARY
DISMISSAL OCCURRED ON JUNE 11, 1986, THREE (3) YEARS BEFORE R.A. NO. 6715 TOOK EFFECT. THE
NEW LAW MAY NOT BE APPLIED RETROACTIVELY (SEALAND SERVICE, INC., VS. NLRC, 190 SCRA 347;
LANTION VS. NLRC, 181 SCRA 513).

AS PETITIONER'S DISMISSAL WAS EFFECTED WITHOUT PRIOR NOTICE AND INVESTIGATION OF THE
CHARGES AGAINST HIM, IN VIOLATION OF HIS RIGHT TO DUE PROCESS, HIS EMPLOYERS SHOULD
INDEMNIFY HIM FOR DAMAGES IN THE SUM OF ONE THOUSAND PESOS (P1,000.00) PURSUANT TO RULE
XIV, SECS. 2, 5 AND 6 OF THE RULES IMPLEMENTING BATAS PAMBANSA BLG. 130 AND THE RULINGS OF
THIS COURT IN GREAT PACIFIC LIFE ASSURANCE CORPORATION VS. NLRC, 187 SCRA 694, 700,
SHOEMART, INC. VS. NLRC, 176 SCRA 385, AND WENPHIL VS. NLRC, 170 SCRA 69.

WHEREFORE, THE ASSAILED DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION IS MODIFIED
BY ORDERING THE PRIVATE RESPONDENTS, NORBERTO AND DOROTHEA TANONGON, IN G.R. NO. 104526
TO PAY PETITIONER LUDIVICO C. CULLA DAMAGES IN THE SUM OF ONE THOUSAND PESOS (P1,000.00),
IN ADDITION TO THE MONETARY AWARDS MADE BY THE NLRC IN HIS FAVOR, WHICH ARE HEREBY
AFFIRMED. THE PETITION FOR CERTIORARI OF ARMS TAXI AND/OR DOROTHEA TANONGON IN G.R. NO.
104523 IS DISMISSED FOR LACK OF MERIT. COSTS AGAINST NORBERTO AND DOROTHEA TANONGON.

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.
DECISION
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 PETITIONERS
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 ATTORNEYS 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 LATTERS 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
---------------

74,116.63

ATTORNEYS FEES (10%)

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
ARBITERS 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 BANDILAOS WAGE DIFFERENTIALS. THE NLRC, IN ITS DECISION OF DECEMBER 21,
1994, AFFIRMED THE VALIDITY OF PRIVATE RESPONDENTS DISMISSAL, BUT FOUND THAT SAID DISMISSAL
DID NOT COMPLY WITH THE PROCEDURAL REQUIREMENTS FOR DISMISSING EMPLOYEES.
FURTHERMORE, IT CORRECTED THE LABOR ARBITERS 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 BANDILAOS 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]
PETITIONERS 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 PETITIONERS 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.

X X X X X X X X X. (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 SALESMANS 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 EMPLOYEES 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 EMPLOYERS DECISION TO DISMISS HIM.[8] (ITALICS 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 PETITIONERS OWN ADMISSION, PRIVATE RESPONDENTS WERE NEVER TOLD IN SAID
NOTICE THAT THEIR DISMISSAL WAS BEING SOUGHT, ONLY THAT THEY SHOULD SETTLE THEIR
ACCOUNTABILITIES. IN PETITIONERS INCRIMINATING WORDS:

IT SHOULD BE EMPHASIZED HERE THAT AT THE TIME THE MISAPPROPRIATION WAS DISCOVERED AND
SUBSEQUENTLY THEREAFTER, THE PETITIONERS 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 EMPLOYERS 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 LATTERS 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 WORKERS 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 EMPLOYEES BASIC SALARY.[14]

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]

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
PETITIONERS 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.
[G.R. NO. 122827. MARCH 29, 1999]

LIDUVINO M. MILLARES, J. CAPISTRANO CORDITA, SHIRLEY P. UY, DIONISIO J. REQUINA, GABRIEL A.

DEJERO, NELSON T. GOMONIT, IMELDA IMPEYNADO SULPICIO B. SUMILE, MA. CONSUELO AVIEL, SILVINO
S. GUEVARRA, FIDEL DUMANHOG, NELFA T. POLOTAN, LEMUEL C. RISMA, JUANITO M. GONZALES,
ROGELIO B. CABATUAN, EPIFANCIO E. GANANCIAL, DOMINADOR D. ATOK, CONRADO U. SERRANO,
ISIDRO J. BARNAJA, ROMEO VIRTUDAZO, AVELINO NABLE, EDGAR TAMPOS, ERNESTO ORIAS, DALMACIO
LEGARAY, ROMEO R . BULA, ROBERTO G. GARCIA, RUDOLFO SUZON, JERRY S. DANO, AUGUST G.
ESCUDERO, OSCAR B. CATBAGAN, TEOFILO C. SISON, NARCISO BULASA, ALBERTO CORTEZ, LILIA C.
CABRERA, NESTOR A. ACASO, BIENVENIDO MOZO, ISIDORO A. ALMENDAREZ, VICENTE M. PILONGO,
ROBERTO N. LUMPOT, PATRICIO BANDOLA, MANUEL S. ESPINA, ISIDRO K. BALCITA, JR., EMMANUEL O.
ABRAHAM, OLEGARIO A. EPIS, NESTOR D. PEREGRINO, RAMON A. USANAGA, PRESTO BARTOLOME,
BRADY EMPEYNADO, PORFERIO N. CONDADO, AQUILLO V. CORDOVA, LEONARDO ESTOSI, PACIFICO B.
DACORINA, PABLITO B. LLUBIT, ANTONIO DOZA, LEONITO LABADIA, EDGARDO BELLIZA, FEDENCIO P.
GEBERTAS, VIRGILIO D. GULBE, MANUEL A. LERIO, JR., ROGELIO B. OCAMIA, RODOLFO A. CASTILLO,
EDMUNDO L PLAZA, ROBERTO D. YAGONIA, JR., PETRONIO ESTELA, JR, CRISOLOGO A. LOGRONIO,
ERNESTO T. MORIO, ROGELIO M. DAVID, BENJAMIN U. ARLIGUE, APOLONIO MUNDO, JR., NENE M. E
NOSA, NILO B. BALAORO, GERONIMO S. CONVI, VICENTE R. TARAGOZA, YOLANDO A. SALAZAR, MANUEL
A. NERI, ROGELIO C. TICAR, ROBERTO A. MACALAM, MIGUEL MACARIOLA, WALTERIO DAPADAP, SILVERIO
CUAMAG, EUPARQUIO PLANOS, GILBERTO M. MIRA, REYNALDO BACSARSA, DIOSDADO B. ABING,
ARISTARCO V. SALON, TOMAS N. CATACTE, RODOLFO MEMORIA, PAPENIANO CURIAS, JOSE S. CANDIA,
DESIDERIO C. NAVARRO, EMMANUEL O. ABRAHAM, JOSELITO D. ARLAN, FRANCISCO S. SANCHEZ,
MANSUETO B. LINGGO, ISIDRO BARNAJA, ROMEO S. CABRERA, LEODEGARIO CAINTIC, NESTOR G.
BLANDO, FLORENCIO B. DELIZO, MILAN M. ETES, GONZALO C. PADILLO, LEONARDO CAGAKIT, JOSEFINO
E. DULGUIME, PEPITO G. ARREZA, AMADOR G. CAGALAWAN, GAUDENCIO C. SARMIENTO, FLORENTINO J.
BRACAMONTE, DOMINADOR H. TY, LEOPOLDO T. SUPIL, JOSE A. DOHINOG, ANIANO T. REYES, CARLITO G.
UY, PLACIDO D. PADILLO, TERESITA C. ADRIANO, CANDIDO S. ADRIANO, AND AVELINO G. VENERACION,
PETITIONERS, VS. NATIONAL LABOR RELATIONS COMMISSION, (FIFTH DIVISION), AND PAPER INDUSTRIES
CORPORATION OF THE PHILIPPINES (PICOP), RESPONDENTS.
DECISION
BELLOSILLO, J.:

PETITIONERS NUMBERING ONE HUNDRED SIXTEEN (116)[1] OCCUPIED THE POSITIONS OF TECHNICAL
STAFF, UNIT MANAGER, SECTION MANAGER, DEPARTMENT MANAGER, DIVISION MANAGER AND VICE
PRESIDENT IN THE MILL SITE OF RESPONDENT PAPER INDUSTRIES CORPORATION OF THE PHILIPPINES
(PICOP) IN BISLIG, SURIGAO DEL SUR. IN 1992 PICOP SUFFERED A MAJOR FINANCIAL SETBACK
ALLEGEDLY BROUGHT ABOUT BY THE JOINT IMPACT OF RESTRICTIVE GOVERNMENT REGULATIONS ON
LOGGING AND THE ECONOMIC CRISIS. TO AVERT FURTHER LOSSES, IT UNDERTOOK A RETRENCHMENT
PROGRAM AND TERMINATED THE SERVICES OF PETITIONERS. ACCORDINGLY, PETITIONERS RECEIVED
SEPARATION PAY COMPUTED AT THE RATE OF ONE (1) MONTH BASIC PAY FOR EVERY YEAR OF SERVICE.
BELIEVING HOWEVER THAT THE ALLOWANCES THEY ALLEGEDLY REGULARLY RECEIVED ON A MONTHLY
BASIS DURING THEIR EMPLOYMENT SHOULD HAVE BEEN INCLUDED IN THE COMPUTATION THEREOF
THEY LODGED A COMPLAINT FOR SEPARATION PAY DIFFERENTIALS.

THE ALLOWANCES IN QUESTION PERTAINED TO THE FOLLOWING -

1. STAFF/MANAGER'S ALLOWANCE -

RESPONDENT PICOP PROVIDES FREE HOUSING FACILITIES TO SUPERVISORY AND MANAGERIAL

EMPLOYEES ASSIGNED IN BISLIG. THE PRIVILEGE INCLUDES FREE WATER AND ELECTRIC CONSUMPTION.
OWING HOWEVER TO SHORTAGE OF SUCH FACILITIES, IT WAS CONSTRAINED TO GRANT STAFF
ALLOWANCE INSTEAD TO THOSE WHO LIVE IN RENTED HOUSES OUTSIDE BUT NEAR THE VICINITY OF
THE MILL SITE. BUT THE ALLOWANCE CEASES WHENEVER A VACANCY OCCURS IN THE COMPANY'S
HOUSING FACILITIES. THE FORMER GRANTEE IS THEN DIRECTED TO FILL THE VACANCY. FOR UNIT,
SECTION AND DEPARTMENT MANAGERS, RESPONDENT PICOP GIVES AN ADDITIONAL AMOUNT TO MEET
THE SAME KIND OF EXPENSES CALLED MANAGER'S ALLOWANCE.

2. TRANSPORTATION ALLOWANCE -

TO RELIEVE RESPONDENT PICOP'S MOTOR POOL IN BISLIG FROM A BARRAGE OF REQUESTS FOR
COMPANY VEHICLES AND TO STABILIZE COMPANY VEHICLE REQUIREMENTS IT GRANTS
TRANSPORTATION ALLOWANCE TO KEY OFFICERS AND MANAGERS ASSIGNED IN THE MILL SITE WHO USE
THEIR OWN VEHICLES IN THE PERFORMANCE OF THEIR DUTIES. IT IS A CONDITIONAL GRANT SUCH THAT
WHEN THE CONDITIONS NO LONGER OBTAIN, THE PRIVILEGE IS DISCONTINUED. THE RECIPIENTS OF
THIS KIND OF ALLOWANCE ARE REQUIRED TO LIQUIDATE IT BY SUBMITTING A REPORT WITH A DETAILED
ENUMERATION OF EXPENSES INCURRED.

3. BISLIG ALLOWANCE -
THE BISLIG ALLOWANCE IS GIVEN TO DIVISION MANAGERS AND CORPORATE OFFICERS ASSIGNED IN
BISLIG ON ACCOUNT OF THE HOSTILE ENVIRONMENT PREVAILING THEREIN. BUT ONCE THE RECIPIENT IS
TRANSFERRED ELSEWHERE OUTSIDE BISLIG, THE ALLOWANCE CEASES.

APPLYING ART.,97, PAR. (F), OF THE LABOR CODE WHICH DEFINES IF WAGE," THE EXECUTIVE LABOR
ARBITER OPINED THAT THE SUBJECT ALLOWANCES, BEING CUSTOMARILY FURNISHED BY RESPONDENT
PICOP AND REGULARLY RECEIVED BY PETITIONERS, FORMED PART OF THE LATTER'S WAGES. RESOLVING
THE CONTROVERSY FROM ANOTHER ANGLE, ON THE STRENGTH OF THE RULING IN SANTOS V. NLRC[2]
AND SORIANO V. NLRC[3] THAT IN THE COMPUTATION OF SEPARATION PAY ACCOUNT SHOULD BE TAKEN
NOT JUST OF THE BASIC SALARY BUT ALSO OF THE REGULAR ALLOWANCES THAT THE EMPLOYEE HAD
BEEN RECEIVING, HE CONCLUDED THAT THE ALLOWANCES SHOULD BE INCLUDED IN PETITIONERS' BASE
PAY. THUS RESPONDENT PICOP WAS ORDERED ON 28 APRIL 1994 TO PAY PETITIONERS FOUR MILLION
FOUR HUNDRED EIGHTY-ONE THOUSAND PESOS (P4,481,000.00) REPRESENTING SEPARATION PAY
DIFFERENTIALS PLUS TEN PER CENT (10%) THEREOF AS ATTORNEY'S FEES.[4]

THE NATIONAL LABOR RELATIONS COMMISSION (NLRC) DID NOT SHARE THE VIEW OF THE EXECUTIVE
LABOR ARBITER. ON 7 OCTOBER 1994 IT SET ASIDE THE ASSAILED DECISION BY DECREEING THAT THE
ALLOWANCES DID NOT FORM PART OF THE SALARY BASE USED IN COMPUTING SEPARATION PAY.[5]

ITS RULING WAS BASED ON THE FINDING THAT THE CASES RELIED UPON BY THE EXECUTIVE LABOR
ARBITER WERE INAPPLICABLE SINCE THEY INVOLVED ILLEGAL DISMISSAL WHERE SEPARATION PAY WAS
GRANTED IN LIEU OF REINSTATEMENT WHICH WAS NO LONGER FEASIBLE. INSTEAD, WHAT IT
CONSIDERED IN POINT WAS ESTATE OF THE LATE EUGENE J. KNEEBONE V. NLRC[6] WHERE THE COURT
HELD THAT REPRESENTATION AND TRANSPORTATION ALLOWANCES WERE DEEMED NOT PART OF
SALARY AND SHOULD THEREFORE BE EXCLUDED IN THE COMPUTATION OF SEPARATION BENEFITS.
RELATING THE PRESENT CASE WITH ART. 97, PAR. (F), OF THE LABOR CODE, THE NLRC LIKEWISE FOUND
THAT PETITIONERS' ALLOWANCES WERE CONTINGENCY-BASED AND THUS NOT INCLUDED IN THEIR
SALARIES. ON 26 SEPTEMBER 1995 RECONSIDERATION WAS DENIED.[7]

IN THIS PETITION FOR CERTIORARI, PETITIONERS SUBMIT THAT THEIR ALLOWANCES ARE INCLUDED IN
THE DEFINITION OF "FACILITIES" IN ART. 97, PAR. (F), OF THE LABOR CODE, BEING NECESSARY AND
INDISPENSABLE FOR THEIR EXISTENCE AND SUBSISTENCE. FURTHERMORE THEY CLAIM THAT THEIR
AVAILMENT OF THE MONETARY EQUIVALENT OF THOSE "FACILITIES" ON A MONTHLY BASIS WAS
CHARACTERIZED BY PERMANENCY, REGULARITY AND CUSTOMARINESS. AND TO FORTIFY THEIR
ARGUMENTS THEY INSIST ON THE APPLICABILITY OF SANTOS,[8] SORIANO,[9] THE INSULAR LIFE
ASSURANCE COMPANY,[10] PLANTERS PRODUCTS, INC.[11] AND SONGCO[12] WHICH ARE ALL AGAINST
THE NLRC HOLDING THAT THE SALARY BASE IN COMPUTING SEPARATION PAY INCLUDES NOT JUST THE
BASIC SALARY BUT ALSO THE REGULAR ALLOWANCES.

THERE IS NO SHOWING OF GRAVE ABUSE OF DISCRETION ON THE PART OF THE NLRC. IN CASE OF
RETRENCHMENT TO PREVENT LOSSES, ART. 283 OF THE THE LABOR CODE IMPOSES ON THE EMPLOYER
AN OBLIGATION TO GRANT TO THE AFFECTED EMPLOYEES SEPARATION PAY EQUIVALENT TO ONE (1)
MONTH PAY OR AT LEAST ONE-HALF (1/2) MONTH PAY FOR EVERY YEAR OF SERVICE, WHICHEVER IS
HIGHER. SINCE THE LAW SPEAKS OF "PAY," THE QUESTION ARISES, "WHAT EXACTLY DOES THE TERM
CONNOTE?" WE CORRELATE ART. 283 WITH ART. 97 OF THE SAME CODE ON DEFINITION OF TERMS.
"PAY" IS NOT DEFINED THEREIN BUT "WAGE." IN SONGCO THE COURT EXPLAINED THAT BOTH WORDS
(AS WELL AS SALARY) GENERALLY REFER TO ONE AND THE SAME MEANING, I.E., A REWARD OR
RECOMPENSE FOR SERVICES PERFORMED. SPECIFICALLY, "WAGE" IS DEFINED IN LETTER (F) AS 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.

WE INVITE ATTENTION TO THE ABOVE-UNDERLINED CLAUSE. STATED DIFFERENTLY, WHEN AN EMPLOYER

CUSTOMARILY FURNISHES HIS EMPLOYEE BOARD, LODGING OR OTHER FACILITIES, THE FAIR AND
REASONABLE VALUE THEREOF, AS DETERMINED BY THE SECRETARY OF LABOR AND EMPLOYMENT, IS
INCLUDED IN "WAGE." IN ORDER TO ASCERTAIN WHETHER THE SUBJECT ALLOWANCES FORM PART OF
PETITIONER'S "WAGES," WE DIVIDE THE DISCUSSION ON THE FOLLOWING - "CUSTOMARILY
FURNISHED;" "BOARD, LODGING OR OTHER FACILITIES;" AND, "FAIR AND REASONABLE VALUE AS
DETERMINED BY THE SECRETARY OF LABOR."

"CUSTOMARY" IS FOUNDED ON LONG-ESTABLISHED AND CONSTANT PRACTICE[13] CONNOTING

REGULARITY.[14] THE RECEIPT OF AN ALLOWANCE ON A MONTHLY BASIS DOES NOT IPSO FACTO
CHARACTERIZE IT AS REGULAR AND FORMING PART OF SALARY[15] BECAUSE THE NATURE OF THE
GRANT IS A FACTOR WORTH CONSIDERING. WE AGREE WITH THE OBSERVATION OF THE OFFICE OF THE
SOLICITOR GENERAL- THAT THE SUBJECT ALLOWANCES WERE TEMPORARILY, NOT REGULARLY, RECEIVED
BY PETITIONERS BECAUSE -

IN THE CASE OF THE HOUSING ALLOWANCE, ONCE A VACANCY OCCURS IN THE COMPANY-PROVIDED
HOUSING ACCOMMODATIONS, THE EMPLOYEE CONCERNED TRANSFERS TO THE COMPANY PREMISES
AND HIS HOUSING ALLOWANCE IS DISCONTINUED X X X X

ON THE OTHER HAND, THE TRANSPORTATION ALLOWANCE IS IN THE FORM OF ADVANCES FOR ACTUAL
TRANSPORTATION EXPENSES SUBJECT TO LIQUIDATION X X X GIVEN ONLY TO EMPLOYEES WHO HAVE
PERSONAL CARS.

THE BISLIG ALLOWANCE IS GIVEN TO DIVISION MANAGERS AND CORPORATE OFFICERS ASSIGNED IN
BISLIG, SURIGAO DEL NORTE. ONCE THE OFFICER IS TRANSFERRED OUTSIDE BISLIG, THE ALLOWANCE
STOPS.[16]

WE ADD THAT IN THE AVAILMENT OF THE TRANSPORTATION ALLOWANCE, RESPONDENT PICOP SET
ANOTHER REQUIREMENT THAT THE PERSONAL CARS BE USED BY THE EMPLOYEES IN THE
PERFORMANCE OF THEIR DUTIES. WHEN THE CONDITIONS FOR AVAILMENT CEASED TO EXIST, THE
ALLOWANCE REACHED THE CUTOFF POINT. THE FINDING OF THE NLRC ALONG THE SAME LINE LIKEWISE
MERITS CONCURRENCE, I.E., PETITIONERS' CONTINUOUS ENJOYMENT OF THE DISPUTED ALLOWANCES
WAS BASED ON CONTINGENCIES THE OCCURRENCE OF WHICH WROTE FINIS TO SUCH ENJOYMENT.

ALTHOUGH IT IS QUITE EASY TO COMPREHEND "BOARD" AND "LODGING," IT IS NOT SO WITH

"FACILITIES." THUS SEC. 5, RULE VII, BOOK III, OF THE RULES IMPLEMENTING THE LABOR CODE GIVES
MEANING TO THE TERM AS INCLUDING ARTICLES OR SERVICES FOR THE BENEFIT OF THE EMPLOYEE OR
HIS FAMILY BUT EXCLUDING TOOLS OF THE TRADE OR ARTICLES OR SERVICE PRIMARILY FOR THE
BENEFIT OF THE EMPLOYER OR NECESSARY TO THE CONDUCT OF THE EMPLOYER'S BUSINESS. THE
STAFF /MANAGER'S ALLOWANCE MAY FALL UNDER "LODGING" BUT THE TRANSPORTATION AND BISLIG
ALLOWANCES ARE NOT EMBRACED IN "FACILITIES" ON THE MAIN CONSIDERATION THAT THEY ARE
GRANTED AS WELL AS THE STAFF/MANAGER'S ALLOWANCE FOR RESPONDENT PICOP'S BENEFIT AND
CONVENIENCE, I.E., TO INSURE THAT PETITIONERS RENDER QUALITY PERFORMANCE. IN DETERMINING
WHETHER A PRIVILEGE IS A FACILITY, THE CRITERION IS NOT SO MUCH ITS KIND BUT ITS PURPOSE.[17]
THAT THE ASSAILED ALLOWANCES WERE FOR THE BENEFIT AND CONVENIENCE OF RESPONDENT
COMPANY WAS SUPPORTED BY THE CIRCUMSTANCE THAT THEY WERE NOT SUBJECTED TO
WITHHOLDING TAX. REVENUE AUDIT MEMO ORDER NO. 1-87 PERTINENTLY PROVIDES -

3.2 X X X X TRANSPORTATION, REPRESENTATION OR ENTERTAINMENT EXPENSES SHALL NOT CONSTITUTE

TAXABLE COMPENSATION IF:

(A) IT IS FOR NECESSARY TRAVELLING AND REPRESENTATION OR ENTERTAINMENT EXPENSES PAID OR

INCURRED BY THE EMPLOYEE IN THE PURSUIT OF THE TRADE OR BUSINESS OF THE EMPLOYER, AND

(B) THE EMPLOYEE IS REQUIRED TO, AND DOES, MAKE AN ACCOUNTING/LIQUIDATION FOR SUCH
EXPENSE IN ACCORDANCE WITH THE SPECIFIC REQUIREMENTS OF SUBSTANTIATION FOR SUCH
CATEGORY OR EXPENSE.

BOARD AND LODGING ALLOWANCES FURNISHED TO AN EMPLOYEE NOT IN EXCESS OF THE LATTER'S
NEEDS AND GIVEN FREE OF CHARGE, CONSTITUTE INCOME TO THE LATTER EXCEPT IF SUCH
ALLOWANCES OR BENEFITS ARE FURNISHED TO THE EMPLOYEE FOR THE CONVENIENCE OF THE
EMPLOYER AND AS NECESSARY INCIDENT TO PROPER PERFORMANCE OF HIS DUTIES IN WHICH CASE
SUCH BENEFITS OR ALLOWANCES DO NOT CONSTITUTE TAXABLE INCOME.[18]

THE SECRETARY OF LABOR AND EMPLOYMENT UNDER SEC. 6, RULE VII, BOOK III, OF THE RULES
IMPLEMENTING THE LABOR CODE MAY FROM TIME TO TIME FIX IN APPROPRIATE ISSUANCES THE "FAIR
AND REASONABLE VALUE OF BOARD, LODGING AND OTHER FACILITIES CUSTOMARILY FURNISHED BY AN
EMPLOYER TO HIS EMPLOYEES." PETITIONERS' ALLOWANCES DO NOT REPRESENT SUCH FAIR AND
REASONABLE VALUE AS DETERMINED BY THE PROPER AUTHORITY SIMPLY BECAUSE THE
STAFF/MANAGER'S ALLOWANCE AND TRANSPORTATION ALLOWANCE WERE AMOUNTS GIVEN BY
RESPONDENT COMPANY IN LIEU OF ACTUAL PROVISIONS FOR HOUSING AND TRANSPORTATION NEEDS
WHEREAS THE BISLIG ALLOWANCE WAS GIVEN IN CONSIDERATION OF BEING ASSIGNED TO THE HOSTILE
ENVIRONMENT THEN PREVAILING IN BISLIG.

THE INEVITABLE CONCLUSION IS THAT, AS REACHED BY THE NLRC, SUBJECT ALLOWANCES DID NOT FORM
PART OF PETITIONERS' WAGES.

IN SANTOS[19] THE COURT DECREED THAT IN THE COMPUTATION OF SEPARATION PAY AWARDED IN LIEU
OF REINSTATEMENT, ACCOUNT MUST BE TAKEN NOT ONLY OF THE BASIC SALARY BUT ALSO OF
TRANSPORTATION AND EMERGENCY LIVING ALLOWANCES. LATER, THE COURT IN SORIANO, CITING
SANTOS, WAS GENERAL IN ITS HOLDING THAT THE SALARY BASE PROPERLY USED IN COMPUTING
SEPARATION PAY WHERE REINSTATEMENT WAS NO LONGER FEASIBLE SHOULD INCLUDE NOT JUST THE
BASIC SALARY BUT ALSO THE REGULAR ALLOWANCES THAT THE EMPLOYEE HAD BEEN RECEIVING.
INSULAR MERELY REITERATED THE AFOREMENTIONED RULINGS. THE RATIONALE IS NOT DIFFICULT TO
DISCERN. IT IS THE OBLIGATION OF THE EMPLOYER TO PAY AN ILLEGALLY DISMISSED EMPLOYEE THE
WHOLE AMOUNT OF HIS SALARIES PLUS ALL OTHER BENEFITS, BONUSES AND GENERAL INCREASES TO
WHICH HE WOULD HAVE BEEN NORMALLY ENTITLED HAD HE NOT BEEN DISMISSED AND HAD NOT
STOPPED WORKING.[20] THE SAME HOLDS TRUE IN CASE OF RETRENCHED EMPLOYEES. AND THUS WE
APPLIED INSULAR AND SORIANO IN PLANTERS IN THE COMPUTATION OF SEPARATION PAY OF
RETRENCHED EMPLOYEES. SONGCO LIKEWISE INVOLVED RETRENCHMENT AND WAS RELIED UPON IN
PLANTERS, SORIANO AND SANTOS IN DETERMINING THE PROPER AMOUNT OF SEPARATION PAY. AS
CULLED FROM THE FOREGOING JURISPRUDENCE, SEPARATION PAY WHEN AWARDED TO AN ILLEGALLY
DISMISSED EMPLOYEE IN LIEU OF REINSTATEMENT OR TO A RETRENCHED EMPLOYEE SHOULD BE
COMPUTED BASED NOT ONLY ON THE BASIC SALARY BUT ALSO ON THE REGULAR ALLOWANCES THAT
THE EMPLOYEE HAD BEEN RECEIVING. BUT IN VIEW OF THE PREVIOUS DISCUSSION THAT THE DISPUTED
ALLOWANCES WERE NOT REGULARLY RECEIVED BY PETITIONERS HEREIN, THERE WAS NO REASON AT ALL
FOR PETITIONERS TO RESORT TO THE ABOVE CASES.

NEITHER IS KNEEBONE APPLICABLE, CONTRARY TO THE FINDING OF THE NLRC, BECAUSE OF THE
DIFFERENCE IN FACTUAL CIRCUMSTANCES. IN KNEEBONE, THE COURT WAS TASKED TO RESOLVE THE
ISSUE WHETHER THE REPRESENTATION AND TRANSPORTATION ALLOWANCES FORMED PART OF SALARY
AS TO BE CONSIDERED IN THE COMPUTATION OF RETIREMENT BENEFITS. THE RULING WAS IN THE
NEGATIVE ON THE MAIN GROUND THAT THE RETIREMENT PLAN OF THE COMPANY EXPRESSLY
EXCLUDED SUCH ALLOWANCES FROM SALARY.

WHEREFORE, THE PETITION IS DISMISSED. THE RESOLUTION OF PUBLIC RESPONDENT NATIONAL LABOR
RELATIONS COMMISSION DATED 7 OCTOBER 1994 HOLDING THAT THE STAFF /MANAGER'S,
TRANSPORTATION AND BISLIG ALLOWANCES DID NOT FORM PART OF THE SALARY BASE USED IN
COMPUTING THE SEPARATION PAY OF PETITIONERS, AS WELL AS ITS RESOLUTION DATED 26 SEPTEMBER
1995 DENYING RECONSIDERATION, IS AFFIRMED. NO COSTS.

SO ORDERED.
G.R. NO. L-50999 MARCH 23, 1990

JOSE SONGCO, ROMEO CIPRES, AND AMANCIO MANUEL, PETITIONERS,

VS
NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION), LABOR ARBITER FLAVIO AGUAS, AND F.E.
ZUELLIG (M), INC., RESPONDENTS.

RAUL E. ESPINOSA FOR PETITIONERS.

LUCAS EMMANUEL B. CANILAO FOR PETITIONER A. MANUEL.

ATIENZA, TABORA, DEL ROSARIO & CASTILLO FOR PRIVATE RESPONDENT.

MEDIALDEA, J.:

THIS IS A PETITION FOR CERTIORARI SEEKING TO MODIFY THE DECISION OF THE NATIONAL LABOR
RELATIONS COMMISSION IN NLRC CASE NO. RB-IV-20840-78-T ENTITLED, "JOSE SONGCO AND ROMEO
CIPRES, COMPLAINANTS-APPELLANTS, V. F.E. ZUELLIG (M), INC., RESPONDENT-APPELLEE" AND NLRC
CASE NO. RN- IV-20855-78-T ENTITLED, "AMANCIO MANUEL, COMPLAINANT-APPELLANT, V. F.E. ZUELLIG
(M), INC., RESPONDENT-APPELLEE," WHICH DISMISSED THE APPEAL OF PETITIONERS HEREIN AND IN
EFFECT AFFIRMED THE DECISION OF THE LABOR ARBITER ORDERING PRIVATE RESPONDENT TO PAY
PETITIONERS SEPARATION PAY EQUIVALENT TO THEIR ONE MONTH SALARY (EXCLUSIVE OF
COMMISSIONS, ALLOWANCES, ETC.) FOR EVERY YEAR OF SERVICE.

THE ANTECEDENT FACTS ARE AS FOLLOWS:

PRIVATE RESPONDENT F.E. ZUELLIG (M), INC., (HEREINAFTER REFERRED TO AS ZUELLIG) FILED WITH THE
DEPARTMENT OF LABOR (REGIONAL OFFICE NO. 4) AN APPLICATION SEEKING CLEARANCE TO
TERMINATE THE SERVICES OF PETITIONERS JOSE SONGCO, ROMEO CIPRES, AND AMANCIO MANUEL
(HEREINAFTER REFERRED TO AS PETITIONERS) ALLEGEDLY ON THE GROUND OF RETRENCHMENT DUE TO
FINANCIAL LOSSES. THIS APPLICATION WAS SEASONABLY OPPOSED BY PETITIONERS ALLEGING THAT THE
COMPANY IS NOT SUFFERING FROM ANY LOSSES. THEY ALLEGED FURTHER THAT THEY ARE BEING
DISMISSED BECAUSE OF THEIR MEMBERSHIP IN THE UNION. AT THE LAST HEARING OF THE CASE,
HOWEVER, PETITIONERS MANIFESTED THAT THEY ARE NO LONGER CONTESTING THEIR DISMISSAL. THE
PARTIES THEN AGREED THAT THE SOLE ISSUE TO BE RESOLVED IS THE BASIS OF THE SEPARATION PAY
DUE TO PETITIONERS. PETITIONERS, WHO WERE IN THE SALES FORCE OF ZUELLIG RECEIVED MONTHLY
SALARIES OF AT LEAST P40,000. IN ADDITION, THEY RECEIVED COMMISSIONS FOR EVERY SALE THEY
MADE.

THE COLLECTIVE BARGAINING AGREEMENT ENTERED INTO BETWEEN ZUELLIG AND F.E. ZUELLIG
EMPLOYEES ASSOCIATION, OF WHICH PETITIONERS ARE MEMBERS, CONTAINS THE FOLLOWING
PROVISION (P. 71, ROLLO):

ARTICLE XIV — RETIREMENT GRATUITY

SECTION L(A)-ANY EMPLOYEE, WHO IS SEPARATED FROM EMPLOYMENT DUE TO OLD AGE, SICKNESS,
DEATH OR PERMANENT LAY-OFF NOT DUE TO THE FAULT OF SAID EMPLOYEE SHALL RECEIVE FROM THE
COMPANY A RETIREMENT GRATUITY IN AN AMOUNT EQUIVALENT TO ONE (1) MONTH'S SALARY PER
YEAR OF SERVICE. ONE MONTH OF SALARY AS USED IN THIS PARAGRAPH SHALL BE DEEMED
EQUIVALENT TO THE SALARY AT DATE OF RETIREMENT; YEARS OF SERVICE SHALL BE DEEMED
EQUIVALENT TO TOTAL SERVICE CREDITS, A FRACTION OF AT LEAST SIX MONTHS BEING CONSIDERED
ONE YEAR, INCLUDING PROBATIONARY EMPLOYMENT. (EMPHASIS SUPPLIED)

ON THE OTHER HAND, ARTICLE 284 OF THE LABOR CODE THEN PREVAILING PROVIDES:

ART. 284. REDUCTION OF PERSONNEL. — THE TERMINATION OF EMPLOYMENT OF ANY EMPLOYEE DUE
TO THE INSTALLATION OF LABOR SAVING-DEVICES, REDUNDANCY, RETRENCHMENT TO PREVENT LOSSES,
AND OTHER SIMILAR CAUSES, SHALL ENTITLE THE EMPLOYEE AFFECTED THEREBY TO SEPARATION PAY. IN
CASE OF TERMINATION DUE TO THE INSTALLATION OF LABOR-SAVING DEVICES OR REDUNDANCY, THE
SEPARATION PAY SHALL BE EQUIVALENT TO ONE (1) MONTH PAY OR TO AT LEAST ONE (1) MONTH PAY
FOR EVERY YEAR OF SERVICE, WHICHEVER IS HIGHER. IN CASE OF RETRENCHMENT TO PREVENT LOSSES
AND OTHER SIMILAR CAUSES, THE SEPARATION PAY SHALL BE EQUIVALENT TO ONE (1) MONTH PAY OR
AT LEAST ONE-HALF (1/2) MONTH PAY FOR EVERY YEAR OF SERVICE, WHICHEVER IS HIGHER. A FRACTION
OF AT LEAST SIX (6) MONTHS SHALL BE CONSIDERED ONE (1) WHOLE YEAR. (EMPHASIS SUPPLIED)

IN ADDITION, SECTIONS 9(B) AND 10, RULE 1, BOOK VI OF THE RULES IMPLEMENTING THE LABOR CODE
PROVIDE:

XXX
SEC. 9(B). WHERE THE TERMINATION OF EMPLOYMENT IS DUE TO RETRECHMENT INITIATED BY THE
EMPLOYER TO PREVENT LOSSES OR OTHER SIMILAR CAUSES, OR WHERE THE EMPLOYEE SUFFERS FROM
A DISEASE AND HIS CONTINUED EMPLOYMENT IS PROHIBITED BY LAW OR IS PREJUDICIAL TO HIS HEALTH
OR TO THE HEALTH OF HIS CO-EMPLOYEES, THE EMPLOYEE SHALL BE ENTITLED TO TERMINATION PAY
EQUIVALENT AT LEAST TO HIS ONE MONTH SALARY, OR TO ONE-HALF MONTH PAY FOR EVERY YEAR OF
SERVICE, WHICHEVER IS HIGHER, A FRACTION OF AT LEAST SIX (6) MONTHS BEING CONSIDERED AS ONE
WHOLE YEAR.

XXX

SEC. 10. BASIS OF TERMINATION PAY. — THE COMPUTATION OF THE TERMINATION PAY OF AN EMPLOYEE
AS PROVIDED HEREIN SHALL BE BASED ON HIS LATEST SALARY RATE, UNLESS THE SAME WAS REDUCED
BY THE EMPLOYER TO DEFEAT THE INTENTION OF THE CODE, IN WHICH CASE THE BASIS OF
COMPUTATION SHALL BE THE RATE BEFORE ITS DEDUCTION. (EMPHASIS SUPPLIED)

ON JUNE 26,1978, THE LABOR ARBITER RENDERED A DECISION, THE DISPOSITIVE PORTION OF WHICH
READS (P. 78, ROLLO):

RESPONSIVE TO THE FOREGOING, RESPONDENT SHOULD BE AS IT IS HEREBY, ORDERED TO PAY THE

COMPLAINANTS SEPARATION PAY EQUIVALENT TO THEIR ONE MONTH SALARY (EXCLUSIVE OF
COMMISSIONS, ALLOWANCES, ETC.) FOR EVERY YEAR OF SERVICE THAT THEY HAVE WORKED WITH THE
COMPANY.

SO ORDERED.

THE APPEAL BY PETITIONERS TO THE NATIONAL LABOR RELATIONS COMMISSION WAS DISMISSED FOR
LACK OF MERIT.

HENCE, THE PRESENT PETITION.

ON JUNE 2, 1980, THE COURT, ACTING ON THE VERIFIED "NOTICE OF VOLUNTARY ABANDONMENT AND
WITHDRAWAL OF PETITION DATED APRIL 7, 1980 FILED BY PETITIONER ROMEO CIPRES, BASED ON THE
GROUND THAT HE WANTS "TO ABIDE BY THE DECISION APPEALED FROM" SINCE HE HAD "RECEIVED, TO
HIS FULL AND COMPLETE SATISFACTION, HIS SEPARATION PAY," RESOLVED TO DISMISS THE PETITION AS
TO HIM.

THE ISSUE IS WHETHER OR NOT EARNED SALES COMMISSIONS AND ALLOWANCES SHOULD BE
INCLUDED IN THE MONTHLY SALARY OF PETITIONERS FOR THE PURPOSE OF COMPUTATION OF THEIR
SEPARATION PAY.

THE PETITION IS IMPRESSED WITH MERIT.

PETITIONERS' POSITION WAS THAT IN ARRIVING AT THE CORRECT AND LEGAL AMOUNT OF SEPARATION
PAY DUE THEM, WHETHER UNDER THE LABOR CODE OR THE CBA, THEIR BASIC SALARY, EARNED SALES
COMMISSIONS AND ALLOWANCES SHOULD BE ADDED TOGETHER. THEY CITED ARTICLE 97(F) OF THE
LABOR CODE WHICH INCLUDES COMMISSION AS PART ON ONE'S SALARY, TO WIT;
(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. 'FAIR REASONABLE VALUE' SHALL NOT INCLUDE ANY PROFIT TO THE EMPLOYER OR TO ANY
PERSON AFFILIATED WITH THE EMPLOYER.

ZUELLIG ARGUES THAT IF IT WERE REALLY THE INTENTION OF THE LABOR CODE AS WELL AS ITS
IMPLEMENTING RULES TO INCLUDE COMMISSION IN THE COMPUTATION OF SEPARATION PAY, IT COULD
HAVE EXPLICITLY SAID SO IN CLEAR AND UNEQUIVOCAL TERMS. FURTHERMORE, IN THE DEFINITION OF
THE TERM "WAGE", "COMMISSION" IS USED ONLY AS ONE OF THE FEATURES OR DESIGNATIONS
ATTACHED TO THE WORD REMUNERATION OR EARNINGS.

INSOFAR AS THE ISSUE OF WHETHER OR NOT ALLOWANCES SHOULD BE INCLUDED IN THE MONTHLY
SALARY OF PETITIONERS FOR THE PURPOSE OF COMPUTATION OF THEIR SEPARATION PAY IS
CONCERNED, THIS HAS BEEN SETTLED IN THE CASE OF SANTOS V. NLRC, ET AL., G.R. NO. 76721,
SEPTEMBER 21, 1987, 154 SCRA 166, WHERE WE RULED THAT "IN THE COMPUTATION OF BACKWAGES
AND SEPARATION PAY, ACCOUNT MUST BE TAKEN NOT ONLY OF THE BASIC SALARY OF PETITIONER BUT
ALSO OF HER TRANSPORTATION AND EMERGENCY LIVING ALLOWANCES." THIS RULING WAS REITERATED
IN SORIANO V. NLRC, ET AL., G.R. NO. 75510, OCTOBER 27, 1987, 155 SCRA 124 AND RECENTLY, IN
PLANTERS PRODUCTS, INC. V. NLRC, ET AL., G.R. NO. 78524, JANUARY 20, 1989.

WE SHALL CONCERN OURSELVES NOW WITH THE ISSUE OF WHETHER OR NOT EARNED SALES
COMMISSION SHOULD BE INCLUDED IN THE MONTHLY SALARY OF PETITIONER FOR THE PURPOSE OF
COMPUTATION OF THEIR SEPARATION PAY.

ARTICLE 97(F) BY ITSELF IS EXPLICIT THAT COMMISSION IS INCLUDED IN THE DEFINITION OF THE TERM
"WAGE". IT HAS BEEN REPEATEDLY DECLARED BY THE COURTS THAT WHERE THE LAW SPEAKS IN CLEAR
AND CATEGORICAL LANGUAGE, THERE IS NO ROOM FOR INTERPRETATION OR CONSTRUCTION; THERE IS
ONLY ROOM FOR APPLICATION (CEBU PORTLAND CEMENT CO. V. MUNICIPALITY OF NAGA, G.R. NOS.
24116-17, AUGUST 22, 1968, 24 SCRA 708; GONZAGA V. COURT OF APPEALS, G.R.NO. L-2 7455, JUNE
28,1973, 51 SCRA 381). A PLAIN AND UNAMBIGUOUS STATUTE SPEAKS FOR ITSELF, AND ANY ATTEMPT
TO MAKE IT CLEARER IS VAIN LABOR AND TENDS ONLY TO OBSCURITY. HOW EVER, IT MAY BE ARGUED
THAT IF WE CORRELATE ARTICLE 97(F) WITH ARTICLE XIV OF THE COLLECTIVE BARGAINING AGREEMENT,
ARTICLE 284 OF THE LABOR CODE AND SECTIONS 9(B) AND 10 OF THE IMPLEMENTING RULES, THERE
APPEARS TO BE AN AMBIGUITY. IN THIS REGARD, THE LABOR ARBITER RATIONALIZED HIS DECISION IN
THIS MANNER (PP. 74-76, ROLLO):

THE DEFINITION OF 'WAGE' PROVIDED IN ARTICLE 96 (SIC) OF THE CODE CAN BE CORRECTLY BE (SIC)
STATED AS A GENERAL DEFINITION. IT IS 'WAGE ' IN ITS GENERIC SENSE. A CAREFUL PERUSAL OF THE
SAME DOES NOT SHOW ANY INDICATION THAT COMMISSION IS PART OF SALARY. WE CAN SAY THAT
COMMISSION BY ITSELF MAY BE CONSIDERED A WAGE. THIS IS NOT SOMETHING NOVEL FOR IT CANNOT
BE GAINSAID THAT CERTAIN TYPES OF EMPLOYEES LIKE AGENTS, FIELD PERSONNEL AND SALESMEN DO
NOT EARN ANY REGULAR DAILY, WEEKLY OR MONTHLY SALARIES, BUT RELY MAINLY ON COMMISSION
EARNED.
UPON THE OTHER HAND, THE PROVISIONS OF SECTION 10, RULE 1, BOOK VI OF THE IMPLEMENTING
RULES IN CONJUNCTION WITH ARTICLES 273 AND 274 (SIC) OF THE CODE SPECIFICALLY STATES THAT THE
BASIS OF THE TERMINATION PAY DUE TO ONE WHO IS SOUGHT TO BE LEGALLY SEPARATED FROM THE
SERVICE IS 'HIS LATEST SALARY RATES.

X X X.

EVEN ARTICLES 273 AND 274 (SIC) INVARIABLY USE 'MONTHLY PAY OR MONTHLY SALARY'.

THE ABOVE TERMS FOUND IN THOSE ARTICLES AND THE PARTICULAR RULES WERE INTENTIONALLY
USED TO EXPRESS THE INTENT OF THE FRAMERS OF THE LAW THAT FOR PURPOSES OF SEPARATION PAY
THEY MEAN TO BE SPECIFICALLY REFERRING TO SALARY ONLY.

.... EACH PARTICULAR BENEFIT PROVIDED IN THE CODE AND OTHER DECREES ON LABOR HAS ITS OWN
PECULARITIES AND NUANCES AND SHOULD BE INTERPRETED IN THAT LIGHT. THUS, FOR A SPECIFIC
PROVISION, A SPECIFIC MEANING IS ATTACHED TO SIMPLIFY MATTERS THAT MAY ARISE THERE FROM.
THE GENERAL GUIDELINES IN (SIC) THE FORMATION OF SPECIFIC RULES FOR PARTICULAR PURPOSE.
THUS, THAT WHAT SHOULD BE CONTROLLING IN MATTERS CONCERNING TERMINATION PAY SHOULD BE
THE SPECIFIC PROVISIONS OF BOTH BOOK VI OF THE CODE AND THE RULES. AT ANY RATE, SETTLED IS
THE RULE THAT IN MATTERS OF CONFLICT BETWEEN THE GENERAL PROVISION OF LAW AND THAT OF A
PARTICULAR- OR SPECIFIC PROVISION, THE LATTER SHOULD PREVAIL.

ON ITS PART, THE NLRC RULED (P. 110, ROLLO):

FROM THE AFOREQUOTED PROVISIONS OF THE LAW AND THE IMPLEMENTING RULES, IT COULD BE
DEDUCED THAT WAGE IS USED IN ITS GENERIC SENSE AND OBVIOUSLY REFERS TO THE BASIC WAGE RATE
TO BE ASCERTAINED ON A TIME, TASK, PIECE OR COMMISSION BASIS OR OTHER METHOD OF
CALCULATING THE SAME. IT DOES NOT, HOWEVER, MEAN THAT COMMISSION, ALLOWANCES OR
ANALOGOUS INCOME NECESSARILY FORMS PART OF THE EMPLOYEE'S SALARY BECAUSE TO DO SO
WOULD LEAD TO ANOMALIES (SIC), IF NOT ABSURD, CONSTRUCTION OF THE WORD "SALARY." FOR
WHAT WILL PREVENT THE EMPLOYEE FROM INSISTING THAT EMERGENCY LIVING ALLOWANCE, 13TH
MONTH PAY, OVERTIME, AND PREMIUM PAY, AND OTHER FRINGE BENEFITS SHOULD BE ADDED TO THE
COMPUTATION OF THEIR SEPARATION PAY. THIS SITUATION, TO OUR MIND, IS NOT THE REAL INTENT OF
THE CODE AND ITS RULES.

WE RULE OTHERWISE. THE AMBIGUITY BETWEEN ARTICLE 97(F), WHICH DEFINES THE TERM 'WAGE'
AND ARTICLE XIV OF THE COLLECTIVE BARGAINING AGREEMENT, ARTICLE 284 OF THE LABOR CODE AND
SECTIONS 9(B) AND 10 OF THE IMPLEMENTING RULES, WHICH MENTION THE TERMS "PAY" AND
"SALARY", IS MORE APPARENT THAN REAL. BROADLY, THE WORD "SALARY" MEANS A RECOMPENSE OR
CONSIDERATION MADE TO A PERSON FOR HIS PAINS OR INDUSTRY IN ANOTHER MAN'S BUSINESS.
WHETHER IT BE DERIVED FROM "SALARIUM," OR MORE FANCIFULLY FROM "SAL," THE PAY OF THE
ROMAN SOLDIER, IT CARRIES WITH IT THE FUNDAMENTAL IDEA OF COMPENSATION FOR SERVICES
RENDERED. INDEED, THERE IS EMINENT AUTHORITY FOR HOLDING THAT THE WORDS "WAGES" AND
"SALARY" ARE IN ESSENCE SYNONYMOUS (WORDS AND PHRASES, VOL. 38 PERMANENT EDITION, P. 44
CITING HOPKINS VS. CROMWELL, 85 N.Y.S. 839,841,89 APP. DIV. 481; 38 AM. JUR. 496). "SALARY," THE
ETYMOLOGY OF WHICH IS THE LATIN WORD "SALARIUM," IS OFTEN USED INTERCHANGEABLY WITH
"WAGE", THE ETYMOLOGY OF WHICH IS THE MIDDLE ENGLISH WORD "WAGEN". BOTH WORDS
GENERALLY REFER TO ONE AND THE SAME MEANING, THAT IS, A REWARD OR RECOMPENSE FOR
SERVICES PERFORMED. LIKEWISE, "PAY" IS THE SYNONYM OF "WAGES" AND "SALARY" (BLACK'S LAW
DICTIONARY, 5TH ED.). INASMUCH AS THE WORDS "WAGES", "PAY" AND "SALARY" HAVE THE SAME
MEANING, AND COMMISSION IS INCLUDED IN THE DEFINITION OF "WAGE", THE LOGICAL CONCLUSION,
THEREFORE, IS, IN THE COMPUTATION OF THE SEPARATION PAY OF PETITIONERS, THEIR SALARY BASE
SHOULD INCLUDE ALSO THEIR EARNED SALES COMMISSIONS.

THE AFOREQUOTED PROVISIONS ARE NOT THE ONLY CONSIDERATION FOR DECIDING THE PETITION IN
FAVOR OF THE PETITIONERS.

WE AGREE WITH THE SOLICITOR GENERAL THAT GRANTING, IN GRATIA ARGUMENTI, THAT THE
COMMISSIONS WERE IN THE FORM OF INCENTIVES OR ENCOURAGEMENT, SO THAT THE PETITIONERS
WOULD BE INSPIRED TO PUT A LITTLE MORE INDUSTRY ON THE JOBS PARTICULARLY ASSIGNED TO
THEM, STILL THESE COMMISSIONS ARE DIRECT REMUNERATION SERVICES RENDERED WHICH
CONTRIBUTED TO THE INCREASE OF INCOME OF ZUELLIG . COMMISSION IS THE RECOMPENSE,
COMPENSATION OR REWARD OF AN AGENT, SALESMAN, EXECUTOR, TRUSTEES, 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 (BLACK'S LAW DICTIONARY, 5TH ED., CITING
WEINER V. SWALES, 217 MD. 123, 141 A.2D 749, 750). THE NATURE OF THE WORK OF A SALESMAN AND
THE REASON FOR SUCH TYPE OF REMUNERATION FOR SERVICES RENDERED DEMONSTRATE CLEARLY
THAT COMMISSION ARE PART OF PETITIONERS' WAGE OR SALARY. WE TAKE JUDICIAL NOTICE OF THE
FACT THAT SOME SALESMEN DO NOT RECEIVE ANY BASIC SALARY BUT DEPEND ON COMMISSIONS AND
ALLOWANCES OR COMMISSIONS ALONE, ARE PART OF PETITIONERS' WAGE OR SALARY. WE TAKE
JUDICIAL NOTICE OF THE FACT THAT SOME SALESMAN DO NOT RECEIVED ANY BASIC SALARY BUT
DEPEND ON COMMISSIONS AND ALLOWANCES OR COMMISSIONS ALONE, ALTHOUGH AN EMPLOYER-
EMPLOYEE RELATIONSHIP EXISTS. BEARING IN MIND THE PRECEEDING DICUSSIONS, IF WE ADOPT THE
OPPOSITE VIEW THAT COMMISSIONS, DO NOT FORM PART OF WAGE OR SALARY, THEN, IN EFFECT, WE
WILL BE SAYING THAT THIS KIND OF SALESMEN DO NOT RECEIVE ANY SALARY AND THEREFORE, NOT
ENTITLED TO SEPARATION PAY IN THE EVENT OF DISCHARGE FROM EMPLOYMENT. WILL THIS NOT BE
ABSURD? THIS NARROW INTERPRETATION IS NOT IN ACCORD WITH THE LIBERAL SPIRIT OF OUR LABOR
LAWS AND CONSIDERING THE PURPOSE OF SEPARATION PAY WHICH IS, TO ALLEVIATE THE DIFFICULTIES
WHICH CONFRONT A DISMISSED EMPLOYEE THROWN THE THE STREETS TO FACE THE HARSH
NECESSITIES OF LIFE.

ADDITIONALLY, IN SORIANO V. NLRC, ET AL., SUPRA, IN RESOLVING THE ISSUE OF THE SALARY BASE THAT
SHOULD BE USED IN COMPUTING THE SEPARATION PAY, WE HELD THAT:

THE COMMISSIONS ALSO CLAIMED BY PETITIONER ('OVERRIDE COMMISSION' PLUS 'NET DEPOSIT
INCENTIVE') ARE NOT PROPERLY INCLUDIBLE IN SUCH BASE FIGURE SINCE SUCH COMMISSIONS MUST BE
EARNED BY ACTUAL MARKET TRANSACTIONS ATTRIBUTABLE TO PETITIONER.

APPLYING THIS BY ANALOGY, SINCE THE COMMISSIONS IN THE PRESENT CASE WERE EARNED BY ACTUAL
MARKET TRANSACTIONS ATTRIBUTABLE TO PETITIONERS, THESE SHOULD BE INCLUDED IN THEIR
SEPARATION PAY. IN THE COMPUTATION THEREOF, WHAT SHOULD BE TAKEN INTO ACCOUNT IS THE
AVERAGE COMMISSIONS EARNED DURING THEIR LAST YEAR OF EMPLOYMENT.

THE FINAL CONSIDERATION IS, IN CARRYING OUT AND INTERPRETING THE LABOR CODE'S PROVISIONS
AND ITS IMPLEMENTING REGULATIONS, THE WORKINGMAN'S WELFARE SHOULD BE THE PRIMORDIAL
AND PARAMOUNT CONSIDERATION. THIS KIND OF INTERPRETATION GIVES MEANING AND SUBSTANCE
TO THE LIBERAL AND COMPASSIONATE SPIRIT OF THE LAW AS PROVIDED FOR IN ARTICLE 4 OF THE
LABOR CODE WHICH STATES THAT "ALL DOUBTS IN THE IMPLEMENTATION AND INTERPRETATION OF THE
PROVISIONS OF THE LABOR CODE INCLUDING ITS IMPLEMENTING RULES AND REGULATIONS SHALL BE
RESOLVED IN FAVOR OF LABOR" (ABELLA V. NLRC, G.R. NO. 71812, JULY 30,1987,152 SCRA 140; MANILA
ELECTRIC COMPANY V. NLRC, ET AL., G.R. NO. 78763, JULY 12,1989), AND ARTICLE 1702 OF THE CIVIL
CODE WHICH PROVIDES 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.

ACCORDINGLY, THE PETITION IS HEREBY GRANTED. THE DECISION OF THE RESPONDENT NATIONAL
LABOR RELATIONS COMMISSION IS MODIFIED BY INCLUDING ALLOWANCES AND COMMISSIONS IN THE
SEPARATION PAY OF PETITIONERS JOSE SONGCO AND AMANCIO MANUEL. THE CASE IS REMANDED TO
THE LABOR ARBITER FOR THE PROPER COMPUTATION OF SAID SEPARATION PAY.

SO ORDERED.
G.R. NO. 92174 DECEMBER 10, 1993

BOIE-TAKEDA CHEMICALS, INC., PETITIONER,

VS.
HON. DIONISIO DE LA SERNA, ACTING SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT,
RESPONDENT.

G.R. NO. L-102552 DECEMBER 10, 1993

PHILIPPINE FUJI XEROX CORP., PETITIONER,

VS.
CRESENCIANO B. TRAJANO, UNDERSECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT, AND
PHILIPPINE FUJI XEROX EMPLOYEES UNION, RESPONDENTS.

HERRERA, LAUREL, DE LOS REYES, ROXAS & TEEHANKEE FOR BOIE-TAKEDA CHEMICALS, INC. AND PHIL
XEROX CORP.

THE SOLICITOR GENERAL FOR PUBLIC RESPONDENTS.

NARVASA, C.J.:

WHAT ITEMS OR ITEMS OF EMPLOYEE REMUNERATION SHOULD GO INTO THE COMPUTATION OF

THIRTEENTH MONTH PAY IS THE BASIC ISSUE PRESENTED IN THESE CONSOLIDATED PETITIONS.
OTHERWISE STATED, THE QUESTION IS WHETHER OR NOT THE RESPONDENT LABOR OFFICIALS IN
COMPUTING SAID BENEFIT, COMMITTED "GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION," BY GIVING EFFECT TO SECTION 5 OF THE REVISED GUIDELINES ON THE
IMPLEMENTATION OF THE THIRTEENTH MONTH PAY (PRESIDENTIAL DECREE NO. 851) PROMULGATED BY
THEN SECRETARY OF LABOR AND EMPLOYMENT, HON. FRANKLIN DRILON, AND OVERRULING
PETITIONER'S CONTENTION THAT SAID PROVISION CONSTITUTED A USURPATION OF LEGISLATIVE
POWER BECAUSE NOT JUSTIFIED BY OR WITHIN THE AUTHORITY OF THE LAW SOUGHT TO BE
IMPLEMENTED BESIDES BEING VIOLATIVE OF THE EQUAL PROTECTION OF THE LAW CLAUSE OF THE
CONSTITUTION.
RESOLUTION OF THE ISSUE ENTAILS, FIRST, A REVIEW OF THE PERTINENT PROVISIONS OF THE LAWS AND
IMPLEMENTING REGULATIONS.

SECTIONS 1 AND 2 OF PRESIDENTIAL DECREE NO. 851, THE THIRTEENTH MONTH PAY LAW, READ AS
FOLLOWS:

SEC 1. ALL EMPLOYEES ARE HEREBY REQUIRED TO PAY ALL THEIR EMPLOYEES RECEIVING BASIC SALARY
OF NOT MORE THAN P1,000.00 A MONTH, REGARDLESS OF THE NATURE OF THE EMPLOYMENT, A 13TH
MONTH PAY NOT LATER THAN DECEMBER 24 OF EVERY YEAR.

SEC. 2. EMPLOYERS ALREADY PAYING THEIR EMPLOYEES A 13TH MONTH PAY OR ITS EQUIVALENT ARE
NOT COVERED BY THIS DECREE.

THE RULES AND REGULATIONS IMPLEMENTING P.D. 851 PROMULGATED BY THEN LABOR MINISTER BLAS
OPLE ON DECEMBER 22, 1975 CONTAINED THE FOLLOWING RELEVANT PROVISIONS RELATIVE TO THE
CONCEPT OF "THIRTEENTH MONTH PAY" AND THE EMPLOYERS EXEMPTED FROM GIVING IT, TO WIT:

SEC. 2. DEFINITION OF CERTAIN TERMS. — . . .

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 REMUNERATIONS 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.

SEC. 3. EMPLOYERS COVERED. — . . . (THE LAW APPLIES) TO ALL EMPLOYERS EXCEPT TO:

XXX XXX XXX

C) EMPLOYERS ALREADY PAYING THEIR EMPLOYERS A 13-MONTH PAY OR MORE IN CALENDAR YEAR
OR IS EQUIVALENT AT THE TIME OF THIS ISSUANCE;

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.

XXX XXX XXX

THE TERM "ITS EQUIVALENT" AS USED IN PARAGRAPH (C) SHALL INCLUDE CHRISTMAS BONUS, MID-YEAR
BONUS, PROFIT-SHARING PAYMENTS AND OTHER CASH BONUSES AMOUNTING TO NOT LESS THAN
1/12TH OF THE BASIC SALARY BUT SHALL NOT INCLUDE CASH AND STOCK DIVIDENDS, COST OF LIVING
ALLOWANCES AND ALL OTHER ALLOWANCES REGULARLY ENJOYED BY THE EMPLOYEE, AS WELL AS NON-
MONETARY BENEFITS. WHERE AN EMPLOYER PAYS LESS THAN 1/12TH OF THE EMPLOYEE'S BASIC
SALARY, THE EMPLOYER SHALL PAY THE DIFFERENCE.

SUPPLEMENTARY RULES AND REGULATIONS IMPLEMENTING P.D. 851 WERE SUBSEQUENTLY ISSUED BY
MINISTER OPLE WHICH INTER ALIA SET OUT ITEMS OF COMPENSATION NOT INCLUDED 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.

ON AUGUST 13, 1986, PRESIDENT CORAZON C. AQUINO PROMULGATED MEMORANDUM ORDER NO. 28,
WHICH CONTAINED A SINGLE PROVISION MODIFYING PRESIDENTIAL DECREE NO. 851 BY REMOVING THE
SALARY CEILING OF P1,000.00 A MONTH SET BY THE LATTER, AS FOLLOWS:

SECTION 1 OF PRESIDENTIAL DECREE NO. 851 IS HEREBY MODIFIED TO THE EXTENT THAT ALL
EMPLOYERS ARE HEREBY REQUIRED TO PAY ALL THEIR RANK-AND-FILE EMPLOYEES A 13TH MONTH PAY
NOT LATER THAN DECEMBER 24, OF EVERY YEAR.

SLIGHTLY MORE THAN A YEAR LATER, ON NOVEMBER 16, 1987, REVISED GUIDELINES ON THE
IMPLEMENTATION OF THE 13TH MONTH PAY LAW WERE PROMULGATED BY THEN LABOR SECRETARY
FRANKLIN DRILON WHICH, AMONG OTHER THINGS, DEFINED WITH PARTICULARITY WHAT
REMUNERATIVE ITEMS WERE AND WERE NOT EMBRACED IN THE CONCEPT OF 13TH MONTH PAY, AND
SPECIFICALLY DEALT WITH EMPLOYEES WHO ARE PAID A FIXED OR GUARANTEED WAGE PLUS
COMMISSION. THE RELEVANT PROVISIONS READ:

4. AMOUNT AND PAYMENT OF 13TH MONTH PAY.

XXX XXX XXX

THE BASIC SALARY OF AN EMPLOYEE FOR THE PURPOSE OF COMPUTING THE 13TH MONTH PAY SHALL
INCLUDE ALL REMUNERATIONS OR EARNINGS PAID BY THE EMPLOYER FOR SERVICES RENDERED BUT
DOES NOT INCLUDE ALLOWANCES AND MONETARY BENEFITS WHICH ARE NOT CONSIDERED OR
INTEGRATED AS PART OF THE REGULAR OR BASIC SALARY, SUCH AS THE CASH EQUIVALENT OF UNUSED
VACATION AND SICK LEAVE CREDITS, OVERTIME, PREMIUM, NIGHT DIFFERENTIAL AND HOLIDAY PAY,
AND COST-OF-LIVING ALLOWANCES. HOWEVER, THESE SALARY-RELATED BENEFITS SHOULD BE
INCLUDED AS PART OF THE BASIC SALARY IN THE COMPUTATION OF THE 13TH MONTH PAY IF BY
INDIVIDUAL OR COLLECTIVE AGREEMENT, COMPANY PRACTICE OR POLICY, THE SAME ARE TREATED AS
PART OF THE BASIC SALARY OF THE EMPLOYEES.

XXX XXX XXX

5. 13TH MONTH PAY FOR CERTAIN TYPES OF EMPLOYEES.

(A) EMPLOYEES PAID BY RESULTS. — EMPLOYEES WHO ARE PAID ON PIECE WORK BASIS ARE BY LAW
ENTITLED TO THE 13TH MONTH PAY.

EMPLOYEES WHO ARE PAID A FIXED OR GUARANTEED WAGE PLUS COMMISSION ARE ALSO ENTITLED TO
THE MANDATED 13TH MONTH PAY BASED ON THEIR TOTAL EARNINGS DURING THE CALENDAR YEAR,
I.E., ON BOTH THEIR FIXED OR GUARANTEED WAGE AND COMMISSION.

THIS WAS THE STATE OF THE LAW WHEN THE CONTROVERSIES AT BAR AROSE OUT OF THE FOLLOWING
ANTECEDENTS:

(RE G.R. NO. 92174) A ROUTINE INSPECTION WAS CONDUCTED ON MAY 2, 1989 IN THE PREMISES OF
PETITIONER BOIE-TAKEDA CHEMICALS, INC. BY LABOR
AND DEVELOPMENT OFFICER REYNALDO B. RAMOS UNDER INSPECTION AUTHORITY
NO. 4-209-89. FINDING THAT BOIE-TAKEDA HAD NOT BEEN INCLUDING THE COMMISSIONS EARNED BY
ITS MEDICAL REPRESENTATIVES IN THE COMPUTATION OF THEIR 13TH MONTH PAY, RAMOS SERVED A
NOTICE OF INSPECTION RESULTS 1 ON BOIE-TAKEDA THROUGH ITS PRESIDENT, MR. BENITO ARANETA,
REQUIRING BOIE-TAKEDA WITHIN TEN (10) CALENDAR DAYS FROM NOTICE TO EFFECT RESTITUTION OR
CORRECTION OF "THE UNDERPAYMENT OF 13TH MONTH PAY FOR THE YEAR(S) 1986, 1987 AND 1988 OF
MED REP (REVISED GUIDELINES ON THE IMPLEMENTATION OF 13TH MONTH PAY # 5) IN THE TOTAL
AMOUNT OF P558,810.89."

BOIE-TAKEDA WROTE THE LABOR DEPARTMENT CONTESTING THE NOTICE OF INSPECTION RESULTS, AND
EXPRESSING THE VIEW "THAT THE COMMISSION PAID TO OUR MEDICAL REPRESENTATIVES ARE NOT TO
BE INCLUDED IN THE COMPUTATION OF THE 13TH MONTH PAY . . . (SINCE THE) LAW AND ITS
IMPLEMENTING RULES SPEAK OF REGULAR OR BASIC SALARY AND THEREFORE EXCLUDE ALL OTHER
REMUNERATIONS WHICH ARE NOT PART OF THE REGULAR SALARY." IT POINTED OUT THAT, "IF NO SALES
IS (SIC) MADE UNDER THE EFFORT OF A PARTICULAR REPRESENTATIVE, THERE IS NO COMMISSION
DURING THE PERIOD WHEN NO SALE WAS TRANSACTED, SO THAT COMMISSIONS ARE NOT AND
CANNOT BE LEGALLY DEFINED AS REGULAR IN NATURE. 2

REGIONAL DIRECTOR LUNA C. PIEZAS DIRECTED BOIE-TAKEDA TO APPEAR BEFORE HIS OFFICE ON JUNE 9
AND 16, 1989. ON THE APPOINTED DATES, HOWEVER, AND DESPITE DUE NOTICE, NO ONE APPEARED
FOR BOIE-TAKEDA, AND THE MATTER HAD PERFORCE TO BE RESOLVED ON THE BASIS OF THE EVIDENCE
AT HAND. ON JULY 24, 1989, DIRECTOR PIEZAS ISSUED AN ORDER 3 DIRECTING BOIE-TAKEDA:

. . . TO PAY . . . (ITS) MEDICAL REPRESENTATIVES AND ITS MANAGERS THE TOTAL AMOUNT OF FIVE
HUNDRED SIXTY FIVE THOUSAND SEVEN HUNDRED FORTY SIX AND FORTY SEVEN CENTAVOS
(P565,746.47) REPRESENTING UNDERPAYMENT OF THIRTEENTH (13TH) MONTH PAY FOR THE YEARS
1986, 1987, 1988, INCLUSIVE, PURSUANT TO THE . . . REVISED GUIDELINES WITHIN TEN (10) DAYS FROM
RECEIPT OF THIS ORDER.

A MOTION FOR RECONSIDERATION 4 WAS SEASONABLY FILED BY BOIE-TAKEDA UNDER DATE OF AUGUST
3, 1989. TREATED AS AN APPEAL, IT WAS RESOLVED ON
JANUARY 17, 1990 BY THEN ACTING LABOR SECRETARY DIONISIO DE LA SERNA, WHO AFFIRMED THE
JULY 24, 1989 ORDER WITH MODIFICATION THAT THE SALES COMMISSIONS EARNED BY BOIE-TAKEDA'S
MEDICAL REPRESENTATIVES BEFORE AUGUST 13, 1989, THE EFFECTIVITY DATE OF MEMORANDUM
ORDER NO. 28 AND ITS IMPLEMENTING GUIDELINES, SHALL BE EXCLUDED IN THE COMPUTATION OF
THEIR 13TH MONTH PAY. 5
HENCE THE PETITION DOCKETED AS G.R. NO. 92174.

(RE G.R. NO. 102552) A SIMILAR ROUTINE INSPECTION WAS CONDUCTED IN THE PREMISES OF
PHILIPPINE FUJI XEROX CORP. ON SEPTEMBER 7, 1989 PURSUANT TO ROUTINE INSPECTION AUTHORITY
NO. NCR-LSED-RI-494-89. IN HIS NOTICE OF INSPECTION RESULTS, 6 ADDRESSED TO THE MANAGER, MR.
NICOLAS O. KATIGBAK, SENIOR LABOR AND EMPLOYMENT OFFICER NICANOR M. TORRES NOTED THE
FOLLOWING VIOLATION COMMITTED BY PHILIPPINE FUJI XEROX CORP., TO WIT:

UNDERPAYMENT OF 13TH MONTH PAY OF 62 EMPLOYEES, MORE OR LESS — PURSUANT TO REVISED

GUIDELINES ON THE IMPLEMENTATION OF THE 13TH MONTH PAY LAW FOR THE PERIOD COVERING
1986, 1987 AND 1988.

PHILIPPINE FUJI XEROX WAS REQUESTED TO EFFECT RECTIFICATION AND/OR RESTITUTION OF THE
NOTED VIOLATION WITHIN FIVE (5) WORKING DAYS FROM NOTICE.

NO ACTION HAVING BEEN TAKEN THEREON BY PHILIPPINE FUJI XEROX,

MR. EDUARDO G. GONZALES, PRESIDENT OF THE PHILXEROX EMPLOYEE UNION, WROTE THEN LABOR
SECRETARY FRANKLIN DRILON REQUESTING A FOLLOW-UP OF THE INSPECTION FINDINGS. MESSRS.
NICOLAS AND GONZALES WERE SUMMONED TO APPEAR BEFORE LABOR EMPLOYMENT AND
DEVELOPMENT OFFICER MARIO F. SANTOS, NCR OFFICE, DEPARTMENT OF LABOR FOR A CONCILIATION
CONFERENCE. WHEN NO AMICABLE SETTLEMENT WAS REACHED, THE PARTIES WERE REQUIRED TO FILE
THEIR POSITION PAPERS.

SUBSEQUENTLY, REGIONAL DIRECTOR LUNA C. PIEZAS ISSUED AN ORDER DATED AUGUST 23, 1990, 7
DISPOSING AS FOLLOWS:

WHEREFORE, PREMISES CONSIDERED, RESPONDENT PHILIPPINE FUJI XEROX IS HEREBY ORDERED TO

RESTITUTE TO ITS SALESMEN THE PORTION OF THE 13TH MONTH PAY WHICH AROSE OUT OF THE NON-
IMPLEMENTATION OF THE SAID REVISED GUIDELINES, TEN (10) DAYS FROM RECEIPT HEREOF,
OTHERWISE,
MR. NICANOR TORRES, THE SR. LABOR EMPLOYMENT OFFICER IS HEREBY ORDERED TO PROCEED TO THE
PREMISES OF THE RESPONDENT FOR THE PURPOSE OF COMPUTING THE SAID DEFICIENCY (SIC) SHOULD
RESPONDENT FAIL TO HEED HIS ORDER.

PHILIPPINE FUJI XEROX APPEALED THE AFOREQUOTED ORDER TO THE OFFICE OF THE SECRETARY OF
LABOR. IN AN ORDER DATED OCTOBER 120, 1991, UNDERSECRETARY CRESENCIANO B. TRAJANO DENIED
THE APPEAL FOR LACK OF MERIT. HENCE, THE PETITION IN G.R. NO. 102552, WHICH WAS ORDERED
CONSOLIDATED WITH G.R. NO. 92174 AS INVOLVING THE SAME ISSUE.

IN THEIR ALMOST IDENTICALLY-WORDED PETITIONER, PETITIONERS, THROUGH COMMON COUNSEL,

ATTRIBUTE GRAVE ABUSE OF DISCRETION TO RESPONDENT LABOR OFFICIALS
HON. DIONISIO DELA SERNA AND UNDERSECRETARY CRESENCIANO B. TRAJANO IN ISSUING THE
QUESTIONED ORDERS OF JANUARY 17, 1990 AND OCTOBER 10, 1991, RESPECTIVELY. THEY MAINTAIN
THAT UNDER P.D. 851, THE 13TH MONTH PAY IS BASED SOLELY ON BASIC SALARY. AS DEFINED BY THE
LAW ITSELF AND CLARIFIED BY THE IMPLEMENTING AND SUPPLEMENTARY RULES AS WELL AS BY THE
SUPREME COURT IN A LONG LINE OF DECISIONS, REMUNERATIONS WHICH DO NOT FORM PART OF THE
BASIC OR REGULAR SALARY OF AN EMPLOYEE, SUCH AS COMMISSIONS, SHOULD NOT BE CONSIDERED
IN THE COMPUTATION OF THE 13TH MONTH PAY. THIS BEING THE CASE, THE REVISED GUIDELINES ON
THE IMPLEMENTATION OF THE 13TH MONTH PAY LAW ISSUED BY THEN SECRETARY DRILON PROVIDING
FOR THE INCLUSION OF COMMISSIONS IN THE 13TH MONTH PAY, WERE ISSUED IN EXCESS OF THE
STATUTORY AUTHORITY CONFERRED BY P.D. 851. ACCORDING TO PETITIONERS, THIS CONCLUSION
BECOMES EVEN MORE EVIDENT WHEN CONSIDERED IN LIGHT OF THE OPINION RENDERED BY LABOR
SECRETARY DRILON HIMSELF IN "IN RE: LABOR DISPUTE AT THE PHILIPPINE LONG DISTANCE TELEPHONE
COMPANY" WHICH AFFIRMED THE CONTEMPORANEOUS INTERPRETATION BY THEN SECRETARY OPLE
THAT COMMISSIONS ARE EXCLUDED FROM THE BASIC SALARY. PETITIONERS FURTHER CONTEND THAT
ASSUMING THAT SECRETARY DRILON DID NOT EXCEED THE STATUTORY AUTHORITY CONFERRED BY P.D.
851, STILL THE REVISED GUIDELINES ARE NULL AND VOID AS THEY VIOLATE THE EQUAL PROTECTION OF
THE LAW CLAUSE.

RESPONDENTS THROUGH THE OFFICE OF THE SOLICITOR GENERAL QUESTION THE PROPRIETY OF
PETITIONERS' ATTACK ON THE CONSTITUTIONALITY OF THE REVISED GUIDELINES IN A PETITION FOR
CERTIORARI WHICH, THEY CONTEND, SHOULD BE CONFINED PURELY TO THE CORRECTION OF ERRORS
AND/OR DEFECTS OF JURISDICTION, INCLUDING MATTERS OF GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION AND NOT EXTEND TO A COLLATERAL ATTACK ON THE
VALIDITY AND/OR CONSTITUTIONALITY OF A LAW OR STATUTE. THEY AVER THAT THE PETITIONS DO NOT
ADVANCE ANY COGENT REASON OR STATE ANY VALID GROUND TO SUSTAIN THE ALLEGATION OF GRAVE
ABUSE OF DISCRETION, AND THAT AT ANY RATE, P.D. NO. 851, OTHERWISE KNOWN AS THE 13TH
MONTH PAY LAW HAS ALREADY BEEN AMENDED BY MEMORANDUM ORDER NO. 28 ISSUED BY
PRESIDENT CORAZON C. AQUINO ON AUGUST 13, 1986 SO THAT COMMISSIONS ARE NOW IMPUTED
INTO THE COMPUTATION OF THE 13TH MONTH PAY. THEY ADD THAT THE REVISED GUIDELINES ISSUED
BY THEN LABOR SECRETARY DRILON MERELY CLARIFIED A GRAY AREA OCCASIONED BY THE SILENCE OF
THE LAW AS TO THE NATURE OF COMMISSIONS; AND WORKED NO VIOLATION OF THE EQUAL
PROTECTION CLAUSE OF THE CONSTITUTION, SAID GUIDELINES BEING BASED ON REASONABLE
CLASSIFICATION. RESPONDENTS POINT TO THE CASE OF SONGCO VS. NATIONAL LABOR RELATIONS
COMMISSION, 183 SCRA 610, WHEREIN THE COURT DECLARED THAT ARTICLE 97(F) OF THE LABOR CODE
IS EXPLICIT THAT COMMISSION IS INCLUDED IN THE DEFINITION OF THE TERM "WAGE".

WE RULE FOR THE PETITIONERS.

CONTRARY TO RESPONDENTS' CONTENTION, MEMORANDUM ORDER NO. 28 DID NOT REPEAL,

SUPERSEDE OR ABROGATE P.D. 851. AS MAY BE GLEANED FROM THE LANGUAGE OF THE
MEMORANDUM ORDER NO. 28, IT MERELY "MODIFIED" SECTION 1 OF THE DECREE BY REMOVING THE
P1,000.00 SALARY CEILING. THE CONCEPT OF 13TH MONTH PAY AS ENVISIONED, DEFINED AND
IMPLEMENTED UNDER P.D. 851 REMAINED UNALTERED, AND WHILE ENTITLEMENT TO SAID BENEFIT
WAS NO LONGER LIMITED TO EMPLOYEES RECEIVING A MONTHLY BASIC SALARY OF NOT MORE THAN
P1,000.00, SAID BENEFIT WAS, AND STILL IS, TO BE COMPUTED ON THE BASIC SALARY OF THE
EMPLOYEE-RECIPIENT AS PROVIDED UNDER P.D. 851. THUS, THE INTERPRETATION GIVEN TO THE TERM
"BASIC SALARY" AS DEFINED IN P.D. 851 APPLIES EQUALLY TO "BASIC SALARY" UNDER MEMORANDUM
ORDER NO. 28.

IN THE CASE OF SAN MIGUEL CORP. VS. INCIONG, 103 SCRA 139, THIS COURT DELINEATED THE
COVERAGE OF THE TERM "BASIC SALARY" AS USED IN P.D. 851. WE SAID AT SOME LENGTH:

UNDER PRESIDENTIAL DECREE 851 AND ITS IMPLEMENTING RULES, THE BASIC SALARY OF AN EMPLOYEE
IS USED AS THE BASIS IN THE DETERMINATION OF HIS 13TH MONTH PAY. ANY COMPENSATIONS OR
REMUNERATIONS WHICH ARE DEEMED NOT PART OF THE BASIC PAY IS EXCLUDED AS BASIS IN THE
COMPUTATION OF THE MANDATORY BONUS.

UNDER THE RULES AND REGULATIONS IMPLEMENTING PRESIDENTIAL DECREE 851, THE FOLLOWING
COMPENSATIONS ARE DEEMED NOT PART OF THE BASIC SALARY:

A) COST-OF-LIVING ALLOWANCES GRANTED PURSUANT TO PRESIDENTIAL DECREE 525 AND LETTER

OF INSTRUCTIONS NO. 174;

B) PROFIT-SHARING PAYMENTS;

C) ALL ALLOWANCES AND MONETARY BENEFITS WHICH ARE NOT CONSIDERED OR INTEGRATED AS
PART OF THE REGULAR BASIC SALARY OF THE EMPLOYEE AT THE TIME OF THE PROMULGATION OF THE
DECREE ON DECEMBER 16, 1975.

UNDER A LATER SET OF SUPPLEMENTARY RULES AND REGULATIONS IMPLEMENTING PRESIDENTIAL

DECREE 851 PRESIDENTIAL DECREE 851 ISSUED BY THEN LABOR SECRETARY BLAS OPLE, OVERTIME PAY,
EARNINGS AND OTHER REMUNERATIONS ARE EXCLUDED AS PART OF THE BASIC SALARY AND IN THE
COMPUTATION OF THE 13TH MONTH PAY.

THE EXCLUSION OF THE COST-OF-LIVING ALLOWANCES UNDER PRESIDENTIAL DECREE 525 AND LETTER
OF INSTRUCTIONS NO. 174, AND PROFIT-SHARING PAYMENTS INDICATE THE INTENTION TO STRIP BASIC
SALARY OF OTHER PAYMENTS WHICH ARE PROPERLY CONSIDERED AS "FRINGE" BENEFITS. LIKEWISE, THE
CATCH-ALL EXCLUSIONARY PHRASE "ALL ALLOWANCES AND MONETARY BENEFITS WHICH ARE NOT
CONSIDERED OR INTEGRATED AS PART OF THE BASIC SALARY" SHOWS ALSO THE INTENTION TO STRIP
BASIC SALARY OF ANY AND ALL ADDITIONS WHICH MAY BE IN THE FORM OF ALLOWANCES OR "FRINGE"
BENEFITS.

MOREOVER, THE SUPPLEMENTARY RULES AND REGULATIONS IMPLEMENTING PRESIDENTIAL DECREE

851 IS EVEN MORE EMPHATIC IN DECLARING THAT EARNINGS AND OTHER REMUNERATIONS WHICH ARE
NOT PART OF THE BASIC SALARY SHALL NOT BE INCLUDED IN THE COMPUTATION OF THE 13TH-MONTH
PAY.

WHILE DOUBT MAY HAVE BEEN CREATED BY THE PRIOR RULES AND REGULATIONS 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 DEFINITIONS OF BASIC SALARY EARNINGS AND OTHER REMUNERATIONS PAID BY AN
EMPLOYER TO AN EMPLOYEE. A CURSORY PERUSAL OF THE TWO SETS OF RULES INDICATES THAT WHAT
HAS HITHERTO BEEN THE SUBJECT OF A 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 WORKS PERFORMED ON REST DAYS AND SPECIAL HOLIDAYS, PAYS
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 EXCLUDED, IT IS HARD TO FIND ANY "EARNINGS AND OTHER REMUNERATIONS"
EXPRESSLY EXCLUDED IN THE COMPUTATION OF THE 13TH MONTH PAY. THEN THE EXCLUSIONARY
PROVISION WOULD PROVE TO BE IDLE AND WITH NO PURPOSE.

THIS CONCLUSION FINDS STRONG SUPPORT UNDER THE LABOR CODE OF THE PHILIPPINES. TO CITE A
FEW PROVISIONS:

ART. 87.OVERTIME WORK. WORK MAY BE PERFORMED BEYOND EIGHT (8) HOURS A DAY PROVIDED THAT
THE EMPLOYEE IS PAID FOR THE OVERTIME WORK, ADDITIONAL COMPENSATION EQUIVALENT TO HIS
REGULAR WAGE PLUS AT LEAST TWENTY-FIVE (25%) PERCENT THEREOF.

IT IS CLEAR THAT OVERTIME PAY IS AN ADDITIONAL COMPENSATION OTHER THAN AND ADDED TO THE
REGULAR WAGE OR BASIC SALARY, FOR REASON OF WHICH SUCH IS CATEGORICALLY EXCLUDED FROM
THE DEFINITION OF BASIC SALARY UNDER THE SUPPLEMENTARY RULES AND REGULATIONS
IMPLEMENTING PRESIDENTIAL DECREE 851.

IN ARTICLE 93 OF THE SAME CODE, PARAGRAPH

C) WORK PERFORMED ON ANY SPECIAL HOLIDAY SHALL BE PAID AN ADDITIONAL COMPENSATION

OF AT LEAST THIRTY PERCENT (30%) OF THE REGULAR WAGE OF THE EMPLOYEE.

IT IS LIKEWISE CLEAR THE PREMIUMS FOR SPECIAL HOLIDAY WHICH IS AT LEAST 30% OF THE REGULAR
WAGE IS AN ADDITIONAL PAY OTHER THAN AND ADDED TO THE REGULAR WAGE OR BASIC SALARY. FOR
SIMILAR REASON, IT SHALL NOT BE CONSIDERED IN THE COMPUTATION OF THE 13TH MONTH PAY.

QUITE OBVIOUS FROM THE FOREGOING IS THAT THE TERM "BASIC SALARY" IS TO BE UNDERSTOOD IN
ITS COMMON, GENERALLY-ACCEPTED MEANING, I.E., AS A RATE OF PAY FOR A STANDARD WORK PERIOD
EXCLUSIVE OF SUCH ADDITIONAL PAYMENTS AS BONUSES AND OVERTIME. 8 THIS IS HOW THE TERM
WAS ALSO UNDERSTOOD IN THE CASE OF PLESS V. FRANKS, 308 S.W. 2ND. 402, 403, 202 TENN. 630,
WHICH HELD THAT IN STATUTES PROVIDING THAT PENSION SHOULD NOT LESS THAN 50 PERCENT OF
"BASIC SALARY" AT THE TIME OF RETIREMENT, THE QUOTED WORDS MEANT THE SALARY THAT AN
EMPLOYEE (E.G., A POLICEMAN) WAS RECEIVING AT THE TIME HE RETIRED WITHOUT TAKING INTO
CONSIDERATION ANY EXTRA COMPENSATION TO WHICH HE MIGHT BE ENTITLED FOR EXTRA WORK. 9

IN REMUNERATIVE SCHEMES CONSISTING OF A FIXED OR GUARANTEED WAGE PLUS COMMISSION, THE

FIXED OR GUARANTEED WAGE IS PATENTLY THE "BASIC SALARY" FOR THIS IS WHAT THE EMPLOYEE
RECEIVES FOR A STANDARD WORK PERIOD. COMMISSIONS ARE GIVEN FOR EXTRA EFFORTS EXERTED IN
CONSUMMATING SALES OR OTHER RELATED TRANSACTIONS. THEY ARE, AS SUCH, ADDITIONAL PAY,
WHICH THIS COURT HAS MADE CLEAR DO NOT FORM PART OF THE "BASIC SALARY."

RESPONDENTS WOULD DO WELL TO DISTINGUISH THIS CASE FROM SONGCO VS. NATIONAL LABOR
RELATIONS COMMISSION, SUPRA, UPON WHICH THEY RELY SO HEAVILY. WHAT WAS INVOLVED THEREIN
WAS THE TERM "SALARY" WITHOUT THE RESTRICTIVE ADJECTIVE "BASIC". THUS, IN SAID CASE, WE
CONSTRUED THE TERM IN ITS GENERIC SENSE TO REFER TO ALL TYPES OF "DIRECT REMUNERATIONS
FOR SERVICES RENDERED," INCLUDING COMMISSIONS. IN THE SAME CASE, WE ALSO TOOK JUDICIAL
NOTICE OF THE FACT "THAT SOME SALESMEN DO NOT RECEIVE ANY BASIC SALARY BUT DEPEND ON
COMMISSIONS AND ALLOWANCES OR COMMISSIONS ALONE, ALTHOUGH AN EMPLOYER-EMPLOYEE
RELATIONSHIP EXISTS," WHICH STATEMENT IS QUITE SIGNIFICANT IN THAT IT SPEAKS OF A "BASIC
SALARY" APART AND DISTINCT FROM "COMMISSIONS" AND "ALLOWANCES". INSTEAD OF SUPPORTING
RESPONDENTS' STAND, IT WOULD APPEAR THAT SONGCO ITSELF RECOGNIZES THAT COMMISSIONS ARE
NOT PART OF "BASIC SALARY."

IN INCLUDING COMMISSIONS IN THE COMPUTATION OF THE 13TH MONTH PAY, THE SECOND
PARAGRAPH OF SECTION 5(A) OF THE REVISED GUIDELINES ON THE IMPLEMENTATION OF THE 13TH
MONTH PAY LAW UNDULY EXPANDED THE CONCEPT OF "BASIC SALARY" AS DEFINED IN P.D. 851. IT IS A
FUNDAMENTAL RULE THAT IMPLEMENTING RULES CANNOT ADD TO OR DETRACT FROM THE
PROVISIONS OF THE LAW IT IS DESIGNED TO IMPLEMENT. ADMINISTRATIVE REGULATIONS ADOPTED
UNDER LEGISLATIVE AUTHORITY BY A PARTICULAR DEPARTMENT MUST BE IN HARMONY WITH THE
PROVISIONS OF THE LAW THEY ARE INTENDED TO CARRY INTO EFFECT. THEY CANNOT WIDEN ITS SCOPE.
AN ADMINISTRATIVE AGENCY CANNOT AMEND AN ACT OF CONGRESS. 10

HAVING REACHED THIS CONCLUSION, WE DEEM IT UNNECESSARY TO DISCUSS THE OTHER ISSUES
RAISED IN THESE PETITIONS.

WHEREFORE, THE CONSOLIDATED PETITIONS ARE HEREBY GRANTED. THE SECOND PARAGRAPH OF
SECTION 5 (A) OF THE REVISED GUIDELINES ON THE IMPLEMENTATION OF THE 13TH MONTH PAY LAW
ISSUED ON NOVEMBER 126, 1987 BY THEN LABOR SECRETARY FRANKLIN M. DRILON IS DECLARED NULL
AND VOID AS BEING VIOLATIVE OF THE LAW SAID GUIDELINES WERE ISSUED TO IMPLEMENT, HENCE
ISSUED WITH GRAVE ABUSE OF DISCRETION CORRECTIBLE BY THE WRIT OF PROHIBITION AND
CERTIORARI. THE ASSAILED ORDERS OF JANUARY 17, 1990 AND OCTOBER 10, 1991 BASED THEREON ARE
SET ASIDE.

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 THE
SALESMEN WHO MAKE OR CLOSE A SALE OF DUPLICATING MACHINES DISTRIBUTED BY PETITIONER
CORPORATION, CONSTITUTE PART OF THE COMPENSATION OR REMUNERATION PAID TO SALESMEN FOR
SERVING AS SALESMEN, AND HENCE AS PART OF THE "WAGE" OR SALARY OF PETITIONER'S SALESMEN.
INDEED, IT APPEARS THAT PETITIONER PAYS ITS SALESMEN A SMALL FIXED OR GUARANTEED WAGE; THE
GREATER PART OF THE SALESMEN'S WAGES OR SALARIES BEING COMPOSED OF THE SALES OR
INCENTIVE COMMISSIONS EARNED ON ACTUAL SALES CLOSED BY THEM. NO DOUBT THIS PARTICULAR
GALARY STRUCTURE WAS INTENDED FOR THE BENEFIT OF THE PETITIONER CORPORATION, ON THE
APPARENT ASSUMPTION THAT THEREBY ITS SALESMEN WOULD BE MOVED TO GREATER ENTERPRISE
AND DILIGENCE AND CLOSE MORE SALES IN THE EXPECTATION OF INCREASING THEIR SALES
COMMISSIONS. THIS, HOWEVER, DOES NOT DETRACT FROM THE CHARACTER OF SUCH COMMISSIONS
AS PART OF THE SALARY OR WAGE PAID TO EACH OF ITS SALESMEN FOR RENDERING SERVICES TO
PETITIONER CORPORATION.

IN OTHER WORDS, THE SALES COMMISSIONS RECEIVED FOR EVERY DUPLICATING MACHINE SOLD
CONSTITUTED PART OF THE BASIC COMPENSATION OR REMUNERATION OF THE SALESMEN OF
PHILIPPINE DUPLICATORS FOR DOING THEIR JOB. THE PORTION OF THE SALARY STRUCTURE
REPRESENTING COMMISSIONS SIMPLY COMPRISED AN AUTOMATIC INCREMENT TO THE MONETARY
VALUE INITIALLY ASSIGNED TO EACH UNIT OF WORK RENDERED BY A SALESMAN. ESPECIALLY
SIGNIFICANT HERE ALSO IS THE FACT THAT THE FIXED OR 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 THE FOLLOWING FACTS ON RECORD:

SALESMEN'S TOTAL EARNINGS AND 13TH MONTH PAY

FOR THE YEAR 19862

NAME OF TOTAL AMOUNT PAID MONTLY FIXED

SALESMAN EARNINGS AS 13TH MONTH PAY WAGES X 123

BAYLON, P76,610.30 P1,350.00 P16,200.00

BENEDICTO

BAUTISTA 90,780.85 1,182.00 14,184.00

SALVADOR

BRITO, 64,382.75 1,238.00 14,856.00

TOMAS

BUNAGAN, 89,287.75 1,266.00 15,192.00

JORGE

CANILAN, 74,678.17 1,350.00 16,200.00

ROGELIO

DASIG, 54,625.16 1,378,00 16,536.00

JEORDAN

CENTENO, 51,854.15 1,266.04 15,192.00

MELECIO, JR.

DE LOS SANTOS 73,551.39 1,322.00 15,864.00

RICARDO

DEL MUNDO, 108,230.35 1,406.00 16,872.00

WILFREDO

GARCIA, 93,753.75 1,294.00 15,528.00

DELFIN

NAVARRO, 98,618.71 1,266.00 15,192.00

MA. TERESA

OCHOSA, 66,275.65 1,406.00 16,872.00

ROLANO

QUISUMBING, 101,065.75 1,406.00 16,872.00

TEOFILO

RUBINA, 42,209.73 1,266.00 15,192.00

EMMA

SALAZAR, 64,643.65 1,238.00 14,856.00

CELSO

SOPELARIO, 52,622.27 1,350.00 16,200.00

LUDIVICO

TAN, 30,127.50 1,238.00 14,856.00

LEYNARD

TALAMPAS, 146,510.25 1,434.00 17,208.00

PEDRO

VILLARIN, 41,888.10 1,434.00 17,208.00

CONSTANCIO

CARRASCO, 50,201.20 403.75*

CICERO

PUNZALAN, 24,351.89 1,266.00 15,192.00

REYNALDO

POBLADOR, 25,516.75 323.00*

ALBERTO

CRUZ, 32,950.45 323.00*

DANILO

BALTAZAR, 15,681.35 323.00*

CARLITO

CONSIDERING THE ABOVE CIRCUMSTANCES, THE THIRD DIVISION HELD, CORRECTLY, THAT THE SALES
COMMISSIONS WERE AN INTEGRAL PART OF THE BASIC SALARY STRUCTURE OF PHILIPPINE
DUPLICATORS' EMPLOYEES SALESMEN. THESE COMMISSIONS ARE NOT OVERTIME PAYMENTS, NOR
PROFIT-SHARING PAYMENTS NOR ANY OTHER FRINGE BENEFIT. THUS, THE SALESMEN'S COMMISSIONS,
COMPRISING A PRE-DETERMINED PERCENT OF THE SELLING PRICE OF THE GOODS SOLD BY EACH
SALESMAN, WERE PROPERLY INCLUDED IN THE TERM "BASIC SALARY" FOR PURPOSES OF COMPUTING
THEIR 13TH MONTH PAY.

IN BOIE-TAKEDA THE SO-CALLED COMMISSIONS "PAID TO OR RECEIVED BY MEDICAL REPRESENTATIVES

OF BOIE-TAKEDA CHEMICALS OR BY THE RANK AND FILE EMPLOYEES OF PHILIPPINE FUJI XEROX CO.,"
WERE EXCLUDED FROM THE TERM "BASIC SALARY" BECAUSE THESE WERE PAID TO THE MEDICAL
REPRESENTATIVES AND RANK-AND-FILE EMPLOYEES AS "PRODUCTIVITY BONUSES."4 THE SECOND
DIVISION CHARACTERIZED THESE PAYMENTS AS ADDITIONAL MONETARY BENEFITS NOT PROPERLY
INCLUDED IN THE TERM "BASIC SALARY" IN COMPUTING THEIR 13TH MONTH PAY. WE NOTE THAT
PRODUCTIVITY BONUSES ARE GENERALLY TIED TO THE PRODUCTIVITY, OR CAPACITY FOR REVENUE
PRODUCTION, OF A CORPORATION; SUCH BONUSES CLOSELY RESEMBLE PROFIT-SHARING PAYMENTS
AND HAVE NO CLEAR DIRECTOR NECESSARY RELATION TO THE AMOUNT OF WORK ACTUALLY DONE BY
EACH INDIVIDUAL EMPLOYEE. MORE GENERALLY, A BONUS IS AN AMOUNT GRANTED AND 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 DEMANDABLE OR ENFORCEABLE
OBLIGATION. IN PHILIPPINE EDUCATION CO. INC. (PECO) V. COURT OF INDUSTRIAL RELATIONS,5 THE
COURT EXPLAINED THE NATURE OF A BONUS IN THE FOLLOWING GENERAL TERMS:

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 AND MADE POSSIBLE THE
REALIZATION OF PROFITS. IT IS AN ACT OF GENEROSITY OF THE 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 LEGAL POINT OF VIEW A BONUS IS NOT AND MANDABLE AND ENFORCEABLE
OBLIGATION. IT IS 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
DEPENDENT UPON THE REALIZATION OF PROFITS. . . .6 (EMPHASIS SUPPLIED)

IN ATOK-BIG WEDGE MINING CO., INC. V. ATOK-BIG WEDGE MUTUAL BENEFIT ASSOCIATION,7 THE
COURT AMPLIFIED:

. . . . WHETHER OR NOT [A] BONUS FORMS PART OF WAQES DEPENDS UPON THE CIRCUMSTANCES OR
CONDITIONS FOR ITS PAYMENT. IF IT IS AN ADDITIONAL COMPENSATION WHICH THE EMPLOYER
PROMISED AND AGREED TO GIVE WITHOUT ANY CONDITIONS IMPOSED FOR ITS PAYMENT, SUCH AS
SUCCESS OF BUSINESS OR GREATER PRODUCTION OR OUTPUT, THEN IT IS PART OF THE WAGE. BUT IF IT
IS PAID ONLY IF PROFITS ARE REALIZED OR A CERTAIN AMOUNT OF PRODUCTIVITY ACHIEVED, IT CANNOT
BE CONSIDERED PART OF WAGES. . . . IT IS ALSO PAID ON THE BASIS OF ACTUAL OR ACTUAL WORK
ACCOMPLISHED. IF THE DESIRED GOAL OF PRODUCTION IS NOT OBTAINED, OR THE AMOUNT OF ACTUAL
WORK ACCOMPLISHED, THE BONUS DOES NOT ACCRUE. . . . 8 (EMPHASIS SUPPLIED)

MORE RECENTLY, THE NON-DEMANDABLE CHARACTER OF A BONUS WAS STRESSED BY THE COURT IN
TRADERS ROYAL BANK V. NATIONAL LABOR RELATIONS COMMISSION:9

A BONUS IS A "GRATUITY OR ACT OF LIBERALITY OF THE GIVER WHICH THE RECIPIENT HAS NO RIGHT TO
DEMAND AS A MATTER OF RIGHT." (ARAGON V. CEBU PORTLAND CEMENT CO., 61 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)SERVICEMONTHS 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.
[G.R. NO. 113097. APRIL 27, 1998]

NASIPIT LUMBER COMPANY, INC., AND PHILIPPINE WALLBOARD CORPORATION, PETITIONERS, VS.
NATIONAL WAGES AND PRODUCTIVITY COMMISSION, WESTERN AGUSAN WORKERS UNION (WAWU-
ULGWP LOCAL 101), TUNGAO LUMBER WORKERS UNION (TULWU-ULGWP LOCAL 102) AND UNITED
WORKERS UNION (UWU-ULGWP LOCAL 103), RESPONDENTS.
DECISION
PANGANIBAN, J.:

THE LABOR CODE, AS AMENDED BY RA 6727 (THE WAGE RATIONALIZATION ACT), GRANTS THE
NATIONAL WAGES AND PRODUCTIVITY COMMISSION (NWPC) THE POWER TO PRESCRIBE RULES AND
GUIDELINES FOR THE DETERMINATION OF APPROPRIATE WAGES IN THE COUNTRY. HENCE, GUIDELINES
ISSUED BY THE REGIONAL TRIPARTITE WAGES AND PRODUCTIVITY BOARDS (RTWPB) WITHOUT THE
APPROVAL OF OR, WORSE, CONTRARY TO THOSE PROMULGATED BY THE NWPC ARE INEFFECTUAL, VOID
AND CANNOT BE THE SOURCE OF RIGHTS AND PRIVILEGES.

THE CASE

THIS IS THE PRINCIPLE USED BY THE COURT IN RESOLVING THIS PETITION FOR CERTIORARI UNDER RULE
65 OF THE RULES OF COURT ASSAILING THE DECISION[1] DATED MARCH 8, 1993, PROMULGATED BY THE
NWPC[2] WHICH DISPOSED AS FOLLOWS:

WHEREFORE, PREMISES CONSIDERED, THE DECISION APPEALED FROM IS HEREBY MODIFIED. THE
APPLICATION FOR EXEMPTION OF ANAKAN LUMBER COMPANY IS HEREBY GRANTED FOR A PERIOD OF
ONE (1) YEAR RETROACTIVE TO THE DATE SUBJECT WAGE ORDERS TOOK EFFECT UNTIL NOVEMBER 21,
1991. THE APPLICATIONS FOR EXEMPTION OF NASIPIT LUMBER COMPANY AND PHILIPPINE WALLBOARD
CORPORATION ARE HEREBY DENIED FOR LACK OF MERIT, AND AS SUCH, THEY ARE HEREBY ORDERED TO
PAY THEIR COVERED WORKERS THE WAGE INCREASES UNDER SUBJECT WAGE ORDERS RETROACTIVE TO
THE DATE OF EFFECTIVITY OF SAID WAGE ORDERS PLUS INTEREST OF ONE PERCENT (1%) PER MONTH.

SO ORDERED.

PETITIONERS ALSO CHALLENGE THE NWPCS DECISION[3] DATED NOVEMBER 17, 1993 WHICH DENIED
THEIR MOTION FOR RECONSIDERATION.

THE RTWPBS AUGUST 1, 1991 DECISION, WHICH THE NWPC MODIFIED, DISPOSED AS FOLLOWS:

WHEREFORE, ALL FOREGOING PREMISES CONSIDERED, THE INSTANT PETITION FOR EXEMPTION FROM
COMPLIANCE WITH WAGE ORDER NOS. RX-01 AND RX-01-A IS HEREBY APPROVED UNDER AND BY
VIRTUE OF CRITERIA NO. 2, SECTION 3 OF RTWPB GUIDELINES NO. 3 ON EXEMPTION, DATED NOVEMBER
26, 1990, FOR A PERIOD OF ONLY ONE (1) YEAR, RETROACTIVE TO THE DATE SAID WAGE ORDER TOOK
EFFECT UP TO NOVEMBER 21, 1991.

SO ORDERED.[4]
THE FACTS

THE UNDISPUTED FACTS ARE NARRATED BY THE NWPC AS FOLLOWS:

ON OCTOBER 20, 1990, THE REGION X [TRIPARTITE WAGES AND PRODUCTIVITY] BOARD ISSUED WAGE
ORDER NO. RX-01 WHICH PROVIDES AS FOLLOWS:

SECTION 1. UPON THE EFFECTIVITY OF THIS WAGE ORDER, THE INCREASE IN MINIMUM WAGE RATES
APPLICABLE TO WORKERS AND EMPLOYEES IN THE PRIVATE SECTOR IN NORTHERN MINDANAO (REGION
X) SHALL BE AS FOLLOWS:

A. THE PROVINCES OF AGUSAN DEL NORTE, BUKIDNON, MISAMIS ORIENTAL, AND THE CITIES OF
BUTUAN, GINGOOG, AND CAGAYAN DE ORO - - - - -P13.00/DAY

B. THE PROVINCES OF AGUSAN DEL SUR, SURIGAO DEL NORTE AND MISAMIS OCCIDENTAL, AND THE
CITIES OF SURIGAO OROQUIETA, OZAMIS AND TANGUB - - - - - P11.00/DAY

C. THE PROVINCE OF CAMIGUIN P9.00/DAY

SUBSEQUENTLY, A SUPPLEMENTARY WAGE ORDER NO. RX-01-A WAS ISSUED BY THE BOARD ON
NOVEMBER 6, 1990 WHICH PROVIDES AS FOLLOWS:

SECTION 1. UPON THE EFFECTIVITY OF THE ORIGINAL WAGE ORDER RX-01, ALL WORKERS AND
EMPLOYEES IN THE PRIVATE SECTOR IN REGION X ALREADY RECEIVING WAGES ABOVE THE STATUTORY
MINIMUM WAGE RATES UP TO ONE HUNDRED AND TWENTY PESOS (P120.00) PER DAY SHALL ALSO
RECEIVE AN INCREASE OF P13, P11, P9 PER DAY, AS PROVIDED FOR UNDER WAGE ORDER NO. RX-01;

APPLICANTS/APPELLEES NASIPIT LUMBER COMPANY, INC. (NALCO), PHILIPPINE WALLBOARD

CORPORATION (PWC), AND ANAKAN LUMBER COMPANY (ALCO), CLAIMING TO BE SEPARATE AND
DISTINCT FROM EACH OTHER BUT FOR EXPEDIENCY AND PRACTICAL PURPOSES, JOINTLY FILED AN
APPLICATION FOR EXEMPTION FROM THE ABOVE-MENTIONED WAGE ORDERS AS DISTRESSED
ESTABLISHMENTS UNDER GUIDELINES NO. 3, ISSUED BY THE HEREIN BOARD ON NOVEMBER 26, 1990,
SPECIFICALLY SEC. 3(2) THEREOF WHICH, AMONG OTHERS, PROVIDES:

A. FOR PURPOSES OF THIS GUIDELINES THE FOLLOWING CRITERIA TO DETERMINE WHETHER THE
APPLICANT-FIRM IS ACTUALLY DISTRESSED SHALL BE USED.

XXXXXXXXX

2. ESTABLISHMENT BELONGING TO DISTRESSED INDUSTRY - AN ESTABLISHMENT THAT IS ENGAGED IN

AN INDUSTRY THAT IS DISTRESSED DUE TO CONDITIONS BEYOND ITS CONTROL AS MAY BE DETERMINED
BY THE BOARD IN CONSULTATION WITH DTI AND NWPC. (UNDERSCORING SUPPLIED)

XXXXXXXXX

APPLICANTS/APPELLEES AVER THAT THEY ARE ENGAGED IN LOGGING AND INTEGRATED WOOD
PROCESSING INDUSTRY BUT ARE DISTRESSED DUE TO CONDITIONS BEYOND THEIR CONTROL, TO WIT: 1)
DEPRESSED ECONOMIC CONDITIONS DUE TO WORLDWIDE RECESSION; 2) PEACE AND ORDER AND
OTHER EMERGENCY-RELATED PROBLEMS CAUSING DISRUPTION AND SUSPENSION OF NORMAL
LOGGING OPERATIONS; 3) IMPOSITION OF ENVIRONMENTAL FEE FOR TIMBER PRODUCTION IN
ADDITION TO REGULAR FOREST CHARGES; 4) LOGGING MORATORIUM IN BUKIDNON; 5) A REDUCTION
IN THE ANNUAL ALLOWABLE VOLUME OF CUT LOGS OF NALCO & ALCO BY 59%; 6) HIGHLY INSUFFICIENT
RAW MATERIAL SUPPLY; 7) EXTRAORDINARY INCREASES IN THE COST OF FUEL, OIL, SPARE PARTS, AND
MAINTENANCE; 8) EXCESSIVE LABOR COST/PRODUCTION RATIO THAT IS MORE OR LESS 47%; AND 9)
LUMBER EXPORT BAN.

ON THE OTHER HAND, OPPOSITOR/APPELLANT UNIONS JOINTLY OPPOSED THE APPLICATION FOR
EXEMPTION ON THE GROUND THAT SAID COMPANIES ARE NOT DISTRESSED ESTABLISHMENTS SINCE
THEIR CAPITALIZATION HAS NOT BEEN IMPAIRED BY 25%.[5]

CITING LIQUIDITY PROBLEMS AND BUSINESS DECLINE IN THE WOOD-PROCESSING INDUSTRY, THE
RTWPB APPROVED THE APPLICANTS JOINT APPLICATION FOR EXEMPTION IN THIS WISE:

1. THE BOARD CONSIDERED THE ARGUMENTS PRESENTED BY PETITIONERS AND THE OPPOSITORS. THE
BOARD LIKEWISE TOOK NOTE OF THE FINANCIAL CONDITION OF PETITIONER FIRMS. ONE OF THE
AFFILIATES, ANAKAN LUMBER COMPANY, IS CONFIRMED TO BE SUFFERING FROM CAPITAL IMPAIRMENT
BY: 14:80% IN 1988, 71.35% IN 1989 AND 100% IN 1990. ON THE OTHER HAND, NALCO HAD A CAPITAL
IMPAIRMENT OF 6.41%. 13.53% AND 17.04% IN 1988, 1989 AND 1990, RESPECTIVELY, WHILE PWC HAD
NO CAPITAL IMPAIRMENT FROM 1988 TO 1990. HOWEVER, THE BOARD ALSO TOOK NOTE OF THE FACT
THAT PETITIONERS ARE CLAIMING FOR EXEMPTION, NOT ON THE STRENGTH OF CAPITAL IMPAIRMENT,
BUT ON THE BASIS OF BELONGING TO A DISTRESSED INDUSTRY - AN ESTABLISHMENT THAT IS ENGAGED
IN AN INDUSTRY THAT IS DISTRESSED DUE TO CONDITIONS BEYOND ITS CONTROL AS MAY BE
DETERMINED BY THE BOARD IN CONSULTATION WITH DTI AND NWPC.

2. INQUIRIES MADE BY THE BOARD FROM THE BOI AND THE DTI CONFIRM THAT ALL PETITIONER-FIRMS
ARE ENCOUNTERING LIQUIDITY PROBLEMS AND EXTREME DIFFICULTY SERVICING THEIR LOAN
OBLIGATIONS.

3. A PERUSAL OF THE PROVINCIAL TRADE AND INDUSTRY DEVELOPMENT PLAN FOR AGUSAN DEL NORTE
AND BUTUAN CITY WHERE PETITIONERS ARE OPERATING THEIR BUSINESS, CONFIRMS THE EXISTENCE OF
A SLUMP IN THE WOOD-PROCESSING INDUSTRY DUE TO THE GROWING SCARCITY OF [A] LARGE
VOLUME OF RAW MATERIALS TO FEED THE VARIOUS PLYWOOD AND LUMBER MILLS IN THE AREA. A LOT
OF FIRMS HAVE CLOSED AND SHIFTED TO OTHER VENTURES, THE REPORT CONTINUED, ALTHOUGH THE
COMPETITIVE ONES ARE STILL IN OPERATION.

4. THE BOARD TOOK NOTE OF THE FACT THAT MOST OF THE CIRCUMSTANCES RESPONSIBLE FOR THE
FINANCIAL STRAITS OF PETITIONERS ARE LARGELY EXTERNAL, OVER WHICH PETITIONERS HAVE VERY
LITTLE CONTROL. THE BOARD FEELS THAT AS AN ALTERNATIVE TO CLOSING UP THEIR BUSINESS[ES]
WHICH COULD BRING UNTOLD DETRIMENT AND DISLOCATION TO [THEIR] 4,000 WORKERS AND THEIR
FAMILIES, PETITIONERS SHOULD BE EXTENDED ASSISTANCE AND ENCOURAGEMENT TO CONTINUE
OPERATING - SO THAT JOBS COULD THEREBY BE PRESERVED DURING THESE DIFFICULT TIMES. ONE SUCH
WAY IS FOR THE BOARD TO GRANT THEM A TEMPORARY REPRIEVE FROM COMPLIANCE WITH THE
MANDATED WAGE INCREASE SPECIFICALLY W.O. RX-01 AND RX-01-A ONLY.[6]
DISSATISFIED WITH THE RTWPBS DECISION, THE PRIVATE RESPONDENTS LODGED AN APPEAL WITH THE
NWPC, WHICH AFFIRMED ALCOS APPLICATION BUT REVERSED THE APPLICATIONS OF HEREIN
PETITIONERS, NALCO AND PWC. THE NWPC REASONED:

THE GUIDELINES NO. 3 DATED NOVEMBER 26, 1990, ISSUED BY THE HEREIN BOARD CANNOT BE USED AS
VALID BASIS FOR GRANTING APPLICANTS/APPELLEES APPLICATION FOR EXEMPTION SINCE IT DID NOT
PASS THE APPROVAL OF THIS COMMISSION.

UNDER THE RULES OF PROCEDURE ON MINIMUM WAGE FIXING DATED JUNE 4, 1990, ISSUED BY THIS
COMMISSION PURSUANT TO REPUBLIC ACT 6727, PARTICULARLY SECTION 1 OF RULE VIII THEREOF
PROVIDES THAT:

SECTION 1. APPLICATION FOR EXEMPTION. WHENEVER A WAGE ORDER PROVIDES FOR EXEMPTION,
APPLICATIONS THERETO SHALL BE FILED WITH THE APPROPRIATE BOARD WHICH SHALL PROCESS THE
SAME, SUBJECT TO GUIDELINES ISSUED BY THE COMMISSION. (UNDERSCORING SUPPLIED)

CLEARLY, IT IS THE COMMISSION THAT IS EMPOWERED TO SET [THE] CRITERIA ON EXEMPTION FROM
COMPLIANCE WITH WAGE ORDERS. WHILE THE BOARDS MAY ISSUE SUPPLEMENTARY GUIDELINES ON
EXEMPTION, THE SAME SHOULD FIRST PASS THE COMMISSION FOR THE PURPOSE OF DETERMINING ITS
CONFORMITY TO THE LATTERS GENERAL POLICIES AND GUIDELINES RELATIVE THERETO. IN FACT, UNDER
THE GUIDELINES ON EXEMPTION FROM COMPLIANCE WITH THE PRESCRIBED WAGE/COST OF LIVING
ALLOWANCE INCREASES GRANTED BY THE REGIONAL TRIPARTITE WAGES AND PRODUCTIVITY BOARDS
DATED FEBRUARY 25, 1991, ISSUED BY THE COMMISSION, THERE IS A PROVISION THAT (T)HE BOARD
MAY ISSUE SUPPLEMENTARY GUIDELINES FOR EXEMPTION X X X SUBJECT TO REVIEW/APPROVAL BY THE
COMMISSION. (SECTION 11). IN THE CASE AT BAR, AFTER THE COMMISSION SECRETARIAT MADE SOME
COMMENTS ON SAID GUIDELINES NO. 3, THE SAME WAS NEVER SUBMITTED AGAIN FOR [THE]
COMMISSIONS APPROVAL EITHER JUSTIFYING ITS ORIGINAL PROVISIONS OR INCORPORATING THE
COMMENTS MADE THEREON. UNTIL AND UNLESS SAID GUIDELINES NO. 3 IS APPROVED BY THE
COMMISSION, IT HAS NO OPERATIVE FORCE AND EFFECT.

THE APPLICABLE GUIDELINES ON EXEMPTION THEREFORE IS THAT ONE ISSUED BY THE COMMISSION
DATED FEBRUARY 25, 1991, THE PERTINENT PORTION OF WHICH READS:

SECTION 3. CRITERIA FOR EXEMPTION

XXXXXXXXX

2. DISTRESSED EMPLOYERS/ESTABLISHMENT:

A. IN THE CASE OF A STOCK CORPORATION, PARTNERSHIP, SINGLE PROPRIETORSHIP OR NON-STOCK,

NON-PROFIT ORGANIZATION ENGAGED IN BUSINESS ACTIVITY OR CHARGING FEES FOR ITS SERVICES.

WHEN ACCUMULATED LOSSES AT END OF THE PERIOD UNDER REVIEW HAVE IMPAIRED BY AT LEAST 25
PERCENT THE:

- PAID-UP-CAPITAL AT THE END OF THE LAST FULL ACCOUNTING PERIOD PRECEDING THE APPLICATION,
IN THE CASE OF CORPORATIONS;
- TOTAL INVESTED CAPITAL AT THE BEGINNING OF THE LAST FULL ACCOUNTING PERIOD PRECEDING THE
APPLICATION, IN THE CASE OF PARTNERSHIP AND SINGLE PROPRIETOR-SHIPS(UNDERSCORING
SUPPLIED)

A PERUSAL OF THE FINANCIAL DOCUMENTS ON RECORD SHOWS THAT FOR THE YEAR 1990, WHICH IS
THE LAST FULL ACCOUNTING PERIOD PRECEDING THE APPLICATIONS FOR EXEMPTION, APPELLEES
NALCO, ALCO, AND PWC INCURRED A CAPITAL IMPAIRMENT OF 1.89%, 28.72%, AND 5.03%,
RESPECTIVELY. ACCORDINGLY, BASED ON THE CRITERIA SET FORTH ABOVE IN THE NWPC GUIDELINES ON
EXEMPTION, ONLY THE APPLICATION FOR EXEMPTION OF ALCO SHOULD BE APPROVED IN VIEW OF ITS
CAPITAL IMPAIRMENT OF 28.72%.

WE ARE NOT UNMINDFUL OF THE FACT THAT DURING THE BOARD HEARING CONDUCTED, BOTH LABOR
AND MANAGEMENT MANIFESTED THEIR DESIRE FOR A UNIFORM DECISION TO APPLY TO ALL THREE (3)
FIRMS. HOWEVER, WE CANNOT GRANT THE SAME FOR WANT OF LEGAL BASIS CONSIDERING THAT WE
ARE REQUIRED BY THE RULES TO DECIDE ON THE BASIS OF THE MERIT OF APPLICATION BY AN
ESTABLISHMENT HAVING A LEGAL PERSONALITY OF ITS OWN.[7]

IN DENYING PETITIONERS MOTION FOR RECONSIDERATION, PUBLIC RESPONDENT EXPLAINED:

THE FACT THAT APPLICANT COMPANIES RELIED IN GOOD FAITH UPON GUIDELINES NO. 3 ISSUED BY THE
BOARD A QUO, THE SAME IS NOT SUFFICIENT REASON THAT THEY SHOULD BE ASSESSED BASED ON THE
CRITERIA OF SAID GUIDELINES CONSIDERING THAT IT DOES NOT CONFORM TO THE POLICIES AND
GUIDELINES RELATIVE TO WAGE EXEMPTION ISSUED BY THIS COMMISSION PURSUANT TO REPUBLIC ACT
6727. CONSEQUENTLY, IT HAS NO FORCE AND EFFECT. AS SUCH, SAID GUIDELINES NO. 3 CANNOT
THEREFORE BE A SOURCE OF A RIGHT NO MATTER IF ONE HAS RELIED ON IT IN GOOD FAITH. IN LIKE
MANNER THAT THE WORKERS, WHO ARE SIMILARLY AFFECTED, CANNOT BE BOUND THEREOF.

MOREOVER, EVEN ASSUMING THAT GUIDELINES NO. 3 CONFORMS TO THE PROCEDURAL

REQUIREMENT, STILL, THE SAME CANNOT BE GIVEN EFFECT INSOFAR AS IT GRANTS EXEMPTION BY
INDUSTRY CONSIDERING THAT THE SUBJECT WAGE ORDER MENTIONED ONLY DISTRESSED
ESTABLISHMENTS AS ONE OF THOSE TO BE EXEMPTED THEREOF. IT DID NOT MENTION EXEMPTION BY
INDUSTRIES. WELL-SETTLED IS THE RULE THAT AN IMPLEMENTING GUIDELINES [SIC] CANNOT EXPAND
NOR LIMIT THE PROVISION OF [THE] LAW IT SEEKS TO IMPLEMENT. OTHERWISE, IT SHALL BE
CONSIDERED ULTRA VIRES. AND, CONTRARY TO APPLICANT COMPANIES CLAIM, THIS COMMISSION
DOES NOT APPROVE RULES IMPLEMENTING THE WAGE ORDERS ISSUED BY THE REGIONAL TRIPARTITE
WAGES AND PRODUCTIVITY BOARDS. PERFORCE, IT CANNOT BE SAID THAT THIS COMMISSION HAS
APPROVED THE RULES IMPLEMENTING WAGE ORDER NO[S]. RX-01 AND RX-01-A.[8]

HENCE, THIS RECOURSE.[9]

THE ISSUE

PETITIONERS RAISE THIS SOLITARY ISSUE:

WITH ALL DUE RESPECT, PUBLIC RESPONDENT NATIONAL WAGES AND PRODUCTIVITY COMMISSION
COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF OR IN EXCESS OF JURISDICTION IN
RULING THAT RTWPB-X-GUIDELINE NO. 3 HAS NO OPERATIVE FORCE AND EFFECT, AMONG OTHERS, AND
CONSEQUENTLY, DENYING FOR LACK OF MERIT THE APPLICATION FOR EXEMPTION OF PETITIONERS
NASIPIT LUMBER COMPANY, INC. AND PHILIPPINE WALLBOARD CORPORATION FROM THE COVERAGE OF
WAGE ORDERS NOS. RX-01 AND RX-01-A.

IN THE MAIN, THE ISSUE BOILS DOWN TO A QUESTION OF POWER. IS A GUIDELINE ISSUED BY AN RTWPB
WITHOUT THE APPROVAL OF OR, WORSE, CONTRARY TO THE GUIDELINES PROMULGATED BY THE NWPC
VALID?

THE COURTS RULING

THE PETITION IS UNMERITORIOUS. THE ANSWER TO THE ABOVE QUESTION IS IN THE NEGATIVE.

SOLE ISSUE: APPROVAL OF NWPC REQUIRED

PETITIONERS CONTEND THAT THE NWPC GRAVELY ABUSED ITS DISCRETION IN OVERTURNING THE
RTWPBS APPROVAL OF THEIR APPLICATION FOR EXEMPTION FROM WAGE ORDERS RX-01 AND RX-01-A.
THEY ARGUE THAT UNDER ART. 122 (E) OF THE LABOR CODE, THE RTWPB HAS THE POWER [T]O RECEIVE,
PROCESS AND ACT ON APPLICATIONS FOR EXEMPTION FROM PRESCRIBED WAGE RATES AS MAY BE
PROVIDED BY LAW OR ANY WAGE ORDER.[10] THEY ALSO MAINTAIN THAT NO LAW EXPRESSLY REQUIRES
THE APPROVAL OF THE NWPC FOR THE EFFECTIVITY OF THE RTWPBS GUIDELINE NO. 3. ASSUMING
ARGUENDO THAT THE APPROVAL OF THE NWPC WAS LEGALLY NECESSARY, PETITIONERS SHOULD NOT BE
PREJUDICED BY THEIR OBSERVANCE OF THE GUIDELINE, POINTING OUT THAT THE NWCPS OWN
GUIDELINES[11] TOOK EFFECT ONLY ON MARCH 18, 1991 LONG AFTER GUIDELINE NO. 3 WAS ISSUED ON
NOVEMBER 26, 1990.[12] LASTLY, THEY POSIT THAT THE NWPC GUIDELINES CANNOT BE GIVEN
RETROACTIVE EFFECT AS [THEY] WILL AFFECT OR CHANGE THE PETITIONERS VESTED RIGHTS.[13]

THE COURT IS NOT PERSUADED.

POWER TO PRESCRIBE GUIDELINES LODGED IN THE NWPC, NOT IN THE RTWPB

THE THREE GREAT BRANCHES AND THE VARIOUS ADMINISTRATIVE AGENCIES OF THE GOVERNMENT
CAN EXERCISE ONLY THOSE POWERS CONFERRED UPON THEM BY THE CONSTITUTION AND THE LAW.
[14] IT IS THROUGH THE APPLICATION OF THIS BASIC CONSTITUTIONAL PRINCIPLE THAT THE COURT
RESOLVES THE INSTANT CASE.

RA 6727 (THE WAGE RATIONALIZATION ACT), AMENDING THE LABOR CODE, CREATED BOTH THE NWPC
AND THE RTWPB AND DEFINED THEIR RESPECTIVE POWERS. ARTICLE 121 OF THE LABOR CODE LISTS THE
POWERS AND FUNCTIONS OF THE NWPC, AS FOLLOWS:

ART. 121. POWERS AND FUNCTIONS OF THE COMMISSION. - THE COMMISSION SHALL HAVE THE
FOLLOWING POWERS AND FUNCTIONS:

(A) TO ACT AS THE NATIONAL CONSULTATIVE AND ADVISORY BODY TO THE PRESIDENT OF THE
PHILIPPINE[S] AND CONGRESS ON MATTERS RELATING TO WAGES, INCOMES AND PRODUCTIVITY;

(B) TO FORMULATE POLICIES AND GUIDELINES ON WAGES, INCOMES AND PRODUCTIVITY

IMPROVEMENT AT THE ENTERPRISE, INDUSTRY AND NATIONAL LEVELS;
(C) TO PRESCRIBE RULES AND GUIDELINES FOR THE DETERMINATION OF APPROPRIATE MINIMUM WAGE
AND PRODUCTIVITY MEASURES AT THE REGIONAL, PROVINCIAL OR INDUSTRY LEVELS;

(D) TO REVIEW REGIONAL WAGE LEVELS SET BY THE REGIONAL TRIPARTITE WAGES AND PRODUCTIVITY
BOARDS TO DETERMINE IF THESE ARE IN ACCORDANCE WITH PRESCRIBED GUIDELINES AND NATIONAL
DEVELOPMENT PLANS;

(E) TO UNDERTAKE STUDIES, RESEARCHES AND SURVEYS NECESSARY FOR THE ATTAINMENT OF ITS
FUNCTIONS AND OBJECTIVES, AND TO COLLECT AND COMPILE DATA AND PERIODICALLY DISSEMINATE
INFORMATION ON WAGES AND PRODUCTIVITY AND OTHER RELATED INFORMATION, INCLUDING, BUT
NOT LIMITED TO, EMPLOYMENT, COST-OF-LIVING, LABOR COSTS, INVESTMENTS AND RETURNS;

(F) TO REVIEW PLANS AND PROGRAMS OF THE REGIONAL TRIPARTITE WAGES AND PRODUCTIVITY
BOARDS TO DETERMINE WHETHER THESE ARE CONSISTENT WITH NATIONAL DEVELOPMENT PLANS;

(G) TO EXERCISE TECHNICAL AND ADMINISTRATIVE SUPERVISION OVER THE REGIONAL TRIPARTITE
WAGES AND PRODUCTIVITY BOARDS;

(H) TO CALL, FROM TIME TO TIME, A NATIONAL TRIPARTITE CONFERENCE OF REPRESENTATIVES OF

GOVERNMENT, WORKERS AND EMPLOYERS FOR THE CONSIDERATION OF MEASURES TO PROMOTE
WAGE RATIONALIZATION AND PRODUCTIVITY; AND

(I) TO EXERCISE SUCH POWERS AND FUNCTIONS AS MAY BE NECESSARY TO IMPLEMENT THIS ACT.

X X X X X X X X X (UNDERSCORING SUPPLIED)

ARTICLE 122 OF THE LABOR CODE, ON THE OTHER HAND, PRESCRIBES THE POWERS OF THE RTWPB
THUS:

ART.122. CREATION OF REGIONAL TRIPARTITE WAGES AND PRODUCTIVITY BOARDS.

XXXXXXXXX

THE REGIONAL BOARDS SHALL HAVE THE FOLLOWING POWERS AND FUNCTIONS IN THEIR RESPECTIVE
TERRITORIAL JURISDICTION:

(A) TO DEVELOP PLANS, PROGRAMS AND PROJECTS RELATIVE TO WAGES, INCOME AND PRODUCTIVITY
IMPROVEMENT FOR THEIR RESPECTIVE REGIONS;

(B) TO DETERMINE AND FIX MINIMUM WAGE RATES APPLICABLE IN THEIR REGION, PROVINCES OR
INDUSTRIES THEREIN AND TO ISSUE THE CORRESPONDING WAGE ORDERS, SUBJECT TO GUIDELINES
ISSUED BY THE COMMISSION;

(C) TO UNDERTAKE STUDIES, RESEARCHES, AND SURVEYS NECESSARY FOR THE ATTAINMENT OF THEIR
FUNCTIONS, OBJECTIVES AND PROGRAMS, AND TO COLLECT AND COMPILE DATA ON WAGES, INCOMES,
PRODUCTIVITY AND OTHER RELATED INFORMATION AND PERIODICALLY DISSEMINATE THE SAME;
(D) TO COORDINATE WITH THE OTHER REGIONAL BOARDS AS MAY BE NECESSARY TO ATTAIN THE POLICY
AND INTENTION OF THIS CODE.

(E) TO RECEIVE, PROCESS AND ACT ON APPLICATIONS FOR EXEMPTION FROM PRESCRIBED WAGE RATES
AS MAY BE PROVIDED BY LAW OR ANY WAGE ORDER; AND

(F) TO EXERCISE SUCH OTHER POWERS AND FUNCTIONS AS MAY BE NECESSARY TO CARRY OUT THEIR
MANDATE UNDER THIS CODE. (UNDERSCORING SUPPLIED)

THE FOREGOING CLEARLY GRANTS THE NWPC, NOT THE RTWPB, THE POWER TO PRESCRIBE THE RULES
AND GUIDELINES FOR THE DETERMINATION OF MINIMUM WAGE AND PRODUCTIVITY MEASURES.
WHILE THE RTWPB HAS THE POWER TO ISSUE WAGE ORDERS UNDER ARTICLE 122 (B) OF THE LABOR
CODE, SUCH ORDERS ARE SUBJECT TO THE GUIDELINES PRESCRIBED BY THE NWPC. ONE OF THESE
GUIDELINES IS THE RULES ON MINIMUM WAGE FIXING, WHICH WAS ISSUED ON JUNE 4, 1990.[15] RULE
IV, SECTION 2 THEREOF, ALLOWS THE RTWPB TO ISSUE WAGE ORDERS EXEMPTING ENTERPRISES FROM
THE COVERAGE OF THE PRESCRIBED MINIMUM WAGES.[16] HOWEVER, THE NWPC HAS THE POWER
NOT ONLY TO PRESCRIBE GUIDELINES TO GOVERN WAGE ORDERS, BUT ALSO TO ISSUE EXEMPTIONS
THEREFROM, AS THE SAID RULE PROVIDES THAT [W]HENEVER A WAGE ORDER PROVIDES FOR
EXEMPTION, APPLICATIONS THERETO SHALL BE FILED WITH THE APPROPRIATE BOARD WHICH SHALL
PROCESS THE SAME, SUBJECT TO GUIDELINES ISSUED BY THE COMMISSION.[17] IN SHORT, THE NWPC
LAYS DOWN THE GUIDELINES WHICH THE RTWPB IMPLEMENTS.

SIGNIFICANTLY, THE NWPC AUTHORIZED THE RTWPB TO ISSUE EXEMPTIONS FROM WAGE ORDERS, BUT
SUBJECT TO ITS REVIEW AND APPROVAL.[18] SINCE THE NWPC NEVER ASSENTED TO GUIDELINE NO. 3
OF THE RTWPB, THE SAID GUIDELINE IS INOPERATIVE AND CANNOT BE USED BY THE LATTER IN
DECIDING OR ACTING ON PETITIONERS APPLICATION FOR EXEMPTION. MOREOVER, RULE VIII, SECTION
1 OF THE NWPCS RULES OF PROCEDURE ON MINIMUM WAGE FIXING ISSUED ON JUNE 4, 1990 -- WHICH
WAS PRIOR TO THE EFFECTIVITY OF RTWPB GUIDELINE NO. 3 -- REQUIRES THAT AN APPLICATION FOR
EXEMPTION FROM WAGE ORDERS SHOULD BE PROCESSED BY THE RTWPB, SUBJECT SPECIFICALLY TO
THE GUIDELINES ISSUED BY THE NWPC.
TO ALLOW RTWPB GUIDELINE NO. 3 TO TAKE EFFECT WITHOUT THE APPROVAL OF THE NWPC IS TO
ARROGATE UNTO RTWPB A POWER VESTED IN THE NWPC BY ARTICLE 121 OF THE LABOR CODE, AS
AMENDED BY RA 6727. THE COURT WILL NOT COUNTENANCE THIS NAKED USURPATION OF AUTHORITY.
IT IS A HORNBOOK DOCTRINE THAT THE ISSUANCE OF AN ADMINISTRATIVE RULE OR REGULATION MUST
BE IN HARMONY WITH THE ENABLING LAW. IF A DISCREPANCY OCCURS BETWEEN THE BASIC LAW AND
AN IMPLEMENTING RULE OR REGULATION, IT IS THE FORMER THAT PREVAILS.[19] THIS IS SO BECAUSE
THE LAW CANNOT BE BROADENED BY A MERE ADMINISTRATIVE ISSUANCE. IT IS AXIOMATIC THAT [A]N
ADMINISTRATIVE AGENCY CANNOT AMEND AN ACT OF CONGRESS.[20] ARTICLE 122 (E) OF THE LABOR
CODE CANNOT BE CONSTRUED TO ENABLE THE RTWPB TO DECIDE APPLICATIONS FOR EXEMPTION ON
THE BASIS OF ITS OWN GUIDELINES WHICH WERE NOT REVIEWED AND APPROVED BY THE NWPC, FOR
THE SIMPLE REASON THAT A STATUTORY GRANT OF POWERS SHOULD NOT BE EXTENDED BY
IMPLICATION BEYOND WHAT MAY BE NECESSARY FOR THEIR JUST AND REASONABLE EXECUTION.
OFFICIAL POWERS CANNOT BE MERELY ASSUMED BY ADMINISTRATIVE OFFICERS, NOR CAN THEY BE
CREATED BY THE COURTS IN THE EXERCISE OF THEIR JUDICIAL FUNCTIONS.[21]

THERE IS NO BASIS FOR PETITIONERS CLAIM THAT THEIR VESTED RIGHTS WERE PREJUDICED BY THE
NWPCS ALLEGED RETROACTIVE APPLICATION OF ITS OWN RULES[22] WHICH WERE ISSUED ON
FEBRUARY 25, 1991 AND TOOK EFFECT ON MARCH 18, 1991.[23] SUCH CLAIM CANNOT STAND BECAUSE
GUIDELINE NO. 3, AS PREVIOUSLY DISCUSSED AND AS CORRECTLY CONCLUDED BY THE NWPC,[24] WAS
NOT VALID AND, THUS, CANNOT BE A SOURCE OF A RIGHT; MUCH LESS, A VESTED ONE.

THE INSERTION IN GUIDELINE NO. 3 OF DISTRESSED INDUSTRY AS A CRITERION FOR EXEMPTION VOID

THE COURT WISHES TO STRESS THAT THE LAW DOES NOT AUTOMATICALLY GRANT EXEMPTION TO ALL
ESTABLISHMENTS BELONGING TO AN INDUSTRY WHICH IS DEEMED DISTRESSED. HENCE, RX-O1, SECTION
3 (4), MUST NOT BE CONSTRUED TO AUTOMATICALLY INCLUDE ALL ESTABLISHMENTS BELONGING TO A
DISTRESSED INDUSTRY. THE FACT THAT THE WORDING OF A WAGE ORDER MAY CONTAIN SOME
AMBIGUITY WOULD NOT HELP PETITIONERS. BASIC IS THE RULE IN STATUTORY CONSTRUCTION THAT
ALL DOUBTS IN THE IMPLEMENTATION AND THE INTERPRETATION OF THE PROVISIONS OF THE LABOR
CODE, AS WELL AS ITS IMPLEMENTING RULES AND REGULATIONS, MUST BE RESOLVED IN FAVOR OF
LABOR.[25] BY EXEMPTING ALL ESTABLISHMENTS BELONGING TO A DISTRESSED INDUSTRY, GUIDELINE
NO. 3 SURREPTITIOUSLY AND IRREGULARLY TAKES AWAY THE MANDATED INCREASE IN THE MINIMUM
WAGE AWARDED TO THE AFFECTED WORKERS. IN SO ACTING, THE RTWPB PROCEEDED AGAINST THE
DECLARED POLICY OF THE STATE, ENSHRINED IN THE ENABLING ACT, TO RATIONALIZE THE FIXING OF
MINIMUM WAGES AND TO PROMOTE PRODUCTIVITY-IMPROVEMENT AND GAIN-SHARING MEASURES
TO ENSURE A DECENT STANDARD OF LIVING FOR THE WORKERS AND THEIR FAMILIES; TO GUARANTEE
THE RIGHTS OF LABOR TO ITS JUST SHARE IN THE FRUITS OF PRODUCTION; X X X.[26] THUS, GUIDELINE
NO. 3 IS VOID NOT ONLY BECAUSE IT LACKS NWPC APPROVAL AND CONTAINS AN ARBITRARILY INSERTED
EXEMPTION, BUT ALSO BECAUSE IT IS INCONSISTENT WITH THE AVOWED STATE POLICIES PROTECTIVE
OF LABOR.

NWPC DECISION NOT ARBITRARY

TO JUSTIFY THE EXEMPTION OF A DISTRESSED ESTABLISHMENT FROM EFFECTS OF WAGE ORDERS, THE
NWPC REQUIRES THE APPLICANT, IF A STOCK CORPORATION LIKE PETITIONERS, TO PROVE THAT ITS
ACCUMULATED LOSSES IMPAIRED ITS PAID-UP CAPITAL BY AT LEAST 25 PERCENT IN THE LAST FULL
ACCOUNTING PERIOD PRECEDING THE APPLICATION[27] OR THE EFFECTIVITY OF THE ORDER.[28] IN THE
CASE AT BAR, IT IS UNDISPUTED THAT DURING THE RELEVANT ACCOUNTING PERIOD, NALCO, ALCO AND
PWC SUSTAINED CAPITAL IMPAIRMENTS OF 1.89, 28.72, AND 5.03 PERCENT, RESPECTIVELY.[29] CLEARLY,
IT WAS ONLY ALCO WHICH MET THE EXEMPTION STANDARD. HENCE, THE NWPC DID NOT COMMIT
GRAVE ABUSE OF DISCRETION IN APPROVING THE APPLICATION ONLY OF ALCO AND IN DENYING THOSE
OF PETITIONERS. INDEED, THE NWPC ACTED WITHIN THE AMBIT OF ITS ADMINISTRATIVE PREROGATIVE
WHEN IT SET GUIDELINES FOR THE EXEMPTION OF A DISTRESSED ESTABLISHMENT. ABSENT ANY GRAVE
ABUSE OF DISCRETION, NWPCS ACTIONS WILL NOT BE SUBJECT TO JUDICIAL REVIEW.[30] ACCORDINGLY,
WE DEEM THE APPEALED DECISIONS TO BE CONSISTENT WITH LAW.

WHEREFORE, THE PETITION IS HEREBY DISMISSED. THE ASSAILED DECISIONS ARE HEREBY AFFIRMED.
COSTS AGAINST PETITIONERS.

SO ORDERED.
G.R. NO. 96169 SEPTEMBER 24, 1991

EMPLOYERS CONFEDERATION OF THE PHILIPPINES, PETITIONER,

VS.
NATIONAL WAGES AND PRODUCTIVITY COMMISSION AND REGIONAL TRIPARTITE WAGES AND
PRODUCTIVITY BOARD-NCR, TRADE UNION CONGRESS OF THE PHILIPPINES, RESPONDENTS.

SYCIP SALAZAR, HERNANDEZ & GATMAITAN FOR PETITIONER.

GILBERT P. LORENZO FOR PRIVATE RESPONDENT.

SARMIENTO, J.:

THE PETITION IS GIVEN DUE COURSE AND THE VARIOUS PLEADINGS SUBMITTED BEING SUFFICIENT TO
AID THE COURT IN THE PROPER RESOLUTION OF THE BASIC ISSUES RAISED IN THIS CASE, WE DECIDE IT
WITHOUT FURTHER ADO.

THE EMPLOYERS CONFEDERATION OF THE PHILIPPINES (ECOP) IS QUESTIONING THE VALIDITY OF WAGE
ORDER NO. NCR-01-A DATED OCTOBER 23, 1990 OF THE REGIONAL TRIPARTITE WAGES AND
PRODUCTIVITY BOARD, NATIONAL CAPITAL REGION, PROMULGATED PURSUANT TO THE AUTHORITY OF
REPUBLIC ACT NO. 6727, "AN ACT TO RATIONALIZE WAGE POLICY DETERMINATION BY ESTABLISHING
THE MECHANISM AND PROPER STANDARDS THEREFORE, AMENDING FOR THE PURPOSE ARTICLE 99 OF,
AND INCORPORATING ARTICLES 120, 121, 122, 123, 124, 126, AND 127 INTO, PRESIDENTIAL DECREE NO.
442 AS AMENDED, OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES, FIXING NEW WAGE
RATES, PROVIDING WAGE INCENTIVES FOR INDUSTRIAL DISPERSAL TO THE COUNTRYSIDE, AND FOR
OTHER PURPOSES," WAS APPROVED BY THE PRESIDENT ON JUNE 9, 1989. ASIDE FROM PROVIDING NEW
WAGE RATES,1 THE "WAGE RATIONALIZATION ACT" ALSO PROVIDES, AMONG OTHER THINGS, FOR
VARIOUS REGIONAL TRIPARTITE WAGES AND PRODUCTIVITY BOARDS IN CHARGE OF PRESCRIBING
MINIMUM WAGE RATES FOR ALL WORKERS IN THE VARIOUS REGIONS2 AND FOR A NATIONAL WAGES
AND PRODUCTIVITY COMMISSION TO REVIEW, AMONG OTHER FUNCTIONS, WAGE LEVELS DETERMINED
BY THE BOARDS.3

ON OCTOBER 15, 1990, THE REGIONAL BOARD OF THE NATIONAL CAPITAL REGION ISSUED WAGE ORDER
NO. NCR-01, INCREASING THE MINIMUM WAGE BY P17.00 DAILY IN THE NATIONAL CAPITAL REGION.4
THE TRADE UNION CONGRESS OF THE PHILIPPINES (TUCP) MOVED FOR RECONSIDERATION; SO DID THE
PERSONNEL MANAGEMENT ASSOCIATION OF THE PHILIPPINES (PMAP).5 ECOP OPPOSED.

ON OCTOBER 23, 1990, THE BOARD ISSUED WAGE ORDER NO. NCR-01-A AMENDING WAGE ORDER NO.
NCR-01, AS FOLLOWS:

SECTION 1. UPON THE EFFECTIVITY OF THIS WAGE ORDER, ALL WORKERS AND EMPLOYEES IN THE
PRIVATE SECTOR IN THE NATIONAL CAPITAL REGION ALREADY RECEIVING WAGES ABOVE THE STATUTORY
MINIMUM WAGE RATES UP TO ONE HUNDRED AND TWENTY-FIVE PESOS (P125.00) PER DAY SHALL ALSO
RECEIVE AN INCREASE OF SEVENTEEN PESOS (P17.00) PER DAY.

ECOP APPEALED TO THE NATIONAL WAGES AND PRODUCTIVITY COMMISSION. ON NOVEMBER 6, 1990,
THE COMMISSION PROMULGATED AN ORDER, DISMISSING THE APPEAL FOR LACK OF MERIT. ON
NOVEMBER 14, 1990, THE COMMISSION DENIED RECONSIDERATION.

THE ORDERS OF THE COMMISSION (AS WELL AS WAGE ORDER NO. NCR-01-A) ARE THE SUBJECT OF THIS
PETITION, IN WHICH. ECOP ASSAILS THE BOARD'S GRANT OF AN "ACROSS-THE-BOARD" WAGE INCREASE
TO WORKERS ALREADY BEING PAID MORE THAN EXISTING MINIMUM WAGE RATES (UP TO P125. 00 A
DAY) AS AN ALLEGED EXCESS OF AUTHORITY, AND ALLEGES THAT UNDER THE REPUBLIC ACT NO. 6727,
THE BOARDS MAY ONLY PRESCRIBE "MINIMUM WAGES," NOT DETERMINE "SALARY CEILINGS." ECOP
LIKEWISE CLAIMS THAT REPUBLIC ACT NO. 6727 IS MEANT TO PROMOTE COLLECTIVE BARGAINING AS
THE PRIMARY MODE OF SETTLING WAGES, AND IN ITS OPINION, THE BOARDS CAN NOT PREEMPT
COLLECTIVE BARGAINING AGREEMENTS BY ESTABLISHING CEILINGS. ECOP PRAYS FOR THE
NULLIFICATION OF WAGE ORDER NO. NCR 01-A AND FOR THE "REINSTATEMENT" OF WAGE ORDER NO.
NCR-01.

THE COURT DIRECTED THE SOLICITOR GENERAL TO COMMENT ON BEHALF OF THE GOVERNMENT, AND
IN THE SOLICITOR GENERAL'S OPINION, THE BOARD, IN PRESCRIBING AN ACROSS-THE-BOARD HIKE DID
NOT, IN REALITY, "GRANT ADDITIONAL OR OTHER BENEFITS TO WORKERS AND EMPLOYEES, SUCH AS THE
EXTENSION OF WAGE INCREASES TO EMPLOYEES AND WORKERS ALREADY RECEIVING MORE THAN
MINIMUM WAGES ..."6 BUT RATHER, FIXED MINIMUM WAGES ACCORDING TO THE "SALARY-CEILING
METHOD."

ECOP INSISTS, IN ITS REPLY, THAT WAGE IS A LEGISLATIVE FUNCTION, AND REPUBLIC ACT NO. 6727
DELEGATED TO THE REGIONAL BOARDS NO MORE "THAN THE POWER TO GRANT MINIMUM WAGE
ADJUSTMENTS"7 AND "IN THE ABSENCE OF CLEAR STATUTORY AUTHORITY,"8 THE BOARDS MAY NO
MORE THAN ADJUST "FLOOR WAGES."9

THE SOLICITOR GENERAL, IN HIS REJOINDER, ARGUES THAT REPUBLIC ACT NO. 6727 IS INTENDED TO
CORRECT "WAGE DISTORTIONS" AND THE SALARY-CEILING METHOD (OF DETERMINING WAGES) IS
MEANT, PRECISELY, TO RECTIFY WAGE DISTORTIONS.10

THE COURT IS INCLINED TO AGREE WITH THE GOVERNMENT. IN THE NATIONAL WAGES AND
PRODUCTIVITY COMMISSION'S ORDER OF NOVEMBER 6, 1990, THE COMMISSION NOTED THAT THE
DETERMINATION OF WAGES HAS GENERALLY INVOLVED TWO METHODS, THE "FLOOR-WAGE" METHOD
AND THE "SALARY-CEILING" METHOD. WE QUOTE:

HISTORICALLY, LEGISLATION INVOLVING THE ADJUSTMENT OF THE MINIMUM WAGE MADE USE OF TWO
METHODS. THE FIRST METHOD INVOLVES THE FIXING OF DETERMINATE AMOUNT THAT WOULD BE
ADDED TO THE PREVAILING STATUTORY MINIMUM WAGE. THE OTHER INVOLVES "THE SALARY-CEILING
METHOD" WHEREBY THE WAGE ADJUSTMENT IS APPLIED TO EMPLOYEES RECEIVING A CERTAIN
DENOMINATED SALARY CEILING. THE FIRST METHOD WAS ADOPTED IN THE EARLIER WAGE ORDERS,
WHILE THE LATTER METHOD WAS USED IN R.A. NOS. 6640 AND 6727. PRIOR TO THIS, THE SALARY-
CEILING METHOD WAS ALSO USED IN NO LESS THAN ELEVEN ISSUANCES MANDATING THE GRANT OF
COST-OF-LIVING ALLOWANCES (P.D. NOS. 525, 1123, 1614, 1634, 1678, 1713 AND WAGE ORDER NOS. 1,
2, 3, 5 AND 6). THE SHIFT FROM THE FIRST METHOD TO THE SECOND METHOD WAS BROUGHT ABOUT
BY LABOR DISPUTES ARISING FROM WAGE DISTORTIONS, A CONSEQUENCE OF THE IMPLEMENTATION
OF THE SAID WAGE ORDERS. APPARENTLY, THE WAGE ORDER PROVISIONS THAT WAGE DISTORTIONS
SHALL BE RESOLVED THROUGH THE GRIEVANCE PROCEDURE WAS PERCEIVED BY LEGISLATORS AS
INEFFECTIVE IN CHECKING INDUSTRIAL UNREST RESULTING FROM WAGE ORDER IMPLEMENTATIONS.
WITH THE ESTABLISHMENT OF THE SECOND METHOD AS A PRACTICE IN MINIMUM WAGE FIXING, WAGE
DISTORTION DISPUTES WERE MINIMIZED.11

AS THE COMMISSION NOTED, THE INCREASING TREND IS TOWARD THE SECOND MODE, THE SALARY-CAP
METHOD, WHICH HAS REDUCED DISPUTES ARISING FROM WAGE DISTORTIONS (BROUGHT ABOUT,
APPARENTLY, BY THE FLOOR-WAGE METHOD). OF COURSE, DISPUTES ARE APPROPRIATE SUBJECTS OF
COLLECTIVE BARGAINING AND GRIEVANCE PROCEDURES, BUT AS THE COMMISSION OBSERVED AND AS
WE ARE OURSELVES AGREED, BARGAINING HAS HELPED VERY LITTLE IN CORRECTING WAGE
DISTORTIONS. PRECISELY, REPUBLIC ACT NO. 6727 WAS INTENDED TO RATIONALIZE WAGES, FIRST, BY
PROVIDING FOR FULL-TIME BOARDS TO POLICE WAGES ROUND-THE-CLOCK, AND SECOND, BY GIVING
THE BOARDS ENOUGH POWERS TO ACHIEVE THIS OBJECTIVE. THE COURT IS OF THE OPINION THAT
CONGRESS MEANT THE BOARDS TO BE CREATIVE IN RESOLVING THE ANNUAL QUESTION OF WAGES
WITHOUT LABOR AND MANAGEMENT KNOCKING ON THE LEGISLATURE'S DOOR AT EVERY TURN. THE
COURT'S OPINION IS THAT IF REPUBLIC NO. 6727 INTENDED THE BOARDS ALONE TO SET FLOOR WAGES,
THE ACT WOULD HAVE NO NEED FOR A BOARD BUT AN ACCOUNTANT TO KEEP TRACK OF THE LATEST
CONSUMER PRICE INDEX, OR BETTER, WOULD HAVE CONGRESS DONE IT AS THE NEED ARISES, AS THE
LEGISLATURE, PRIOR TO THE ACT, HAS DONE SO FOR YEARS. THE FACT OF THE MATTER IS THAT THE ACT
SOUGHT A "THINKING" GROUP OF MEN AND WOMEN BOUND BY STATUTORY STANDARDS. WE QUOTE:

ART. 124. STANDARDS / CRITERIA FOR MINIMUM WAGE FIXING. — THE REGIONAL MINIMUM WAGES TO
BE ESTABLISHED BY THE REGIONAL BOARD SHALL BE AS NEARLY ADEQUATE AS IS ECONOMICALLY
FEASIBLE TO MAINTAIN THE MINIMUM STANDARDS OF LIVING NECESSARY FOR THE HEALTH, EFFICIENCY
AND GENERAL WELL-BEING OF THE EMPLOYEES WITHIN THE FRAMEWORK OF THE NATIONAL
ECONOMIC AND SOCIAL DEVELOPMENT PROGRAM. IN THE DETERMINATION OF SUCH REGIONAL
MINIMUM WAGES, THE REGIONAL BOARD SHALL, AMONG OTHER RELEVANT FACTORS, CONSIDER THE
FOLLOWING:

(A) THE DEMAND FOR LIVING WAGES;

(B) WAGE ADJUSTMENT VIS-A-VIS THE CONSUMER PRICE INDEX;

(C) THE COST OF LIVING AND CHANGES OR INCREASES THEREIN;

(D) THE NEEDS OF WORKERS AND THEIR FAMILIES;

(E) THE NEED TO INDUCE INDUSTRIES TO INVEST IN THE COUNTRYSIDE;

(F) IMPROVEMENTS IN STANDARDS OF LIVING;

(G) THE PREVAILING WAGE LEVELS;

(H) FAIR RETURN OF THE CAPITAL INVESTED AND CAPACITY TO PAY OF EMPHASIS EMPLOYERS;

(I) EFFECTS OF EMPLOYMENT GENERATION AND FAMILY INCOME; AND

(J) THE EQUITABLE DISTRIBUTION OF INCOME AND WEALTH ALONG THE IMPERATIVES OF
ECONOMIC AND SOCIAL DEVELOPMENT.12

THE COURT IS NOT CONVINCED THAT THE REGIONAL BOARD OF THE NATIONAL CAPITAL REGION, IN
DECREEING AN ACROSS-THE-BOARD HIKE, PERFORMED AN UNLAWFUL ACT OF LEGISLATION. IT IS TRUE
THAT WAGE-FIXING, LIKE RATE CONSTITUTES AN ACT CONGRESS;13 IT IS ALSO TRUE, HOWEVER, THAT
CONGRESS MAY DELEGATE THE POWER TO FIX RATES14 PROVIDED THAT, AS IN ALL DELEGATIONS CASES,
CONGRESS LEAVES SUFFICIENT STANDARDS. AS THIS COURT HAS INDICATED, IT IS IMPRESSED THAT THE
ABOVE-QUOTED STANDARDS ARE SUFFICIENT, AND IN THE LIGHT OF THE FLOOR-WAGE METHOD'S
FAILURE, THE COURT BELIEVES THAT THE COMMISSION CORRECTLY UPHELD THE REGIONAL BOARD OF
THE NATIONAL CAPITAL REGION.

APPARENTLY, ECOP IS OF THE MISTAKEN IMPRESSION THAT REPUBLIC ACT NO. 6727 IS MEANT TO "GET
THE GOVERNMENT OUT OF THE INDUSTRY" AND LEAVE LABOR AND MANAGEMENT ALONE IN DECIDING
WAGES. THE COURT DOES NOT THINK THAT THE LAW INTENDED TO DEREGULATE THE RELATION
BETWEEN LABOR AND CAPITAL FOR SEVERAL REASONS: (1) THE CONSTITUTION CALLS UPON THE STATE
TO PROTECT THE RIGHTS OF WORKERS AND PROMOTE THEIR WELFARE;15 (2) THE CONSTITUTION ALSO
MAKES IT A DUTY OF THE STATE "TO INTERVENE WHEN THE COMMON GOAL SO DEMANDS" IN
REGULATING PROPERTY AND PROPERTY RELATIONS;16 (3) THE CHARTER URGES CONGRESS TO GIVE
PRIORITY TO THE ENACTMENT OF MEASURES, AMONG OTHER THINGS, TO DIFFUSE THE WEALTH OF THE
NATION AND TO REGULATE THE USE OF PROPERTY;17 (4) THE CHARTER RECOGNIZES THE "JUST SHARE
OF LABOR IN THE FRUITS OF PRODUCTION;"18 (5) UNDER THE LABOR CODE, THE STATE SHALL REGULATE
THE RELATIONS BETWEEN LABOR AND MANAGEMENT;19 (6) UNDER REPUBLIC ACT NO. 6727 ITSELF,
THE STATE IS INTERESTED IN SEEING THAT WORKERS RECEIVE FAIR AND EQUITABLE WAGES;20 AND (7)
THE CONSTITUTION IS PRIMARILY A DOCUMENT OF SOCIAL JUSTICE, AND ALTHOUGH IT HAS
RECOGNIZED THE IMPORTANCE OF THE PRIVATE SECTOR,21 IT HAS NOT EMBRACED FULLY THE CONCEPT
OF LAISSEZ FAIRE22 OR OTHERWISE, RELIED ON PURE MARKET FORCES TO GOVERN THE ECONOMY; WE
CAN NOT GIVE TO THE ACT A MEANING OR INTENT THAT WILL CONFLICT WITH THESE BASIC PRINCIPLES.

IT IS THE COURT'S THINKING, REACHED AFTER THE COURT'S OWN STUDY OF THE ACT, THAT THE ACT IS
MEANT TO RATIONALIZE WAGES, THAT IS, BY HAVING PERMANENT BOARDS TO DECIDE WAGES RATHER
THAN LEAVING WAGE DETERMINATION TO CONGRESS YEAR AFTER YEAR AND LAW AFTER LAW. THE
COURT IS NOT OF COURSE SAYING THAT THE ACT IS AN EFFORT OF CONGRESS TO PASS THE BUCK, OR
WORSE, TO ABDICATE ITS DUTY, BUT SIMPLY, TO LEAVE THE QUESTION OF WAGES TO THE EXPERTISE OF
EXPERTS. AS JUSTICE CRUZ OBSERVED, "[W]ITH THE PROLIFERATION OF SPECIALIZED ACTIVITIES AND
THEIR ATTENDANT PECULIAR PROBLEMS, THE NATIONAL LEGISLATURE HAS FOUND IT MORE NECESSARY
TO ENTRUST TO ADMINISTRATIVE AGENCIES THE POWER OF SUBORDINATE LEGISLATION' AS IT IS
CANED."23

THE LABOR CODE DEFINES "WAGE" AS FOLLOWS:

"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 REASONABLY VALUE, AS DETERMINED BY THE SECRETARY OF LABOR, OF
BOARD, LODGING, OR OTHER FACILITIES CUSTOMARILY FURNISHED BY THE EMPLOYER TO THE
EMPLOYEE. "FAIR AND REASONABLE VALUE" SHALL NOT INCLUDE ANY PROFIT TO THE EMPLOYER OR TO
ANY PERSON AFFILIATED WITH THE EMPLOYER.24

THE CONCEPT OF "MINIMUM WAGE" IS, HOWEVER, A DIFFERENT THING, AND CERTAINLY, IT MEANS
MORE THAN SETTING A FLOOR WAGE TO UPGRADE EXISTING WAGES, AS ECOP TAKES IT TO MEAN.
"MINIMUM WAGES" UNDERLIES THE EFFORT OF THE STATE, AS REPUBLIC ACT NO. 6727 EXPRESSES IT,
"TO PROMOTE PRODUCTIVITY-IMPROVEMENT AND GAIN-SHARING MEASURES TO ENSURE A DECENT
STANDARD OF LIVING FOR THE WORKERS AND THEIR FAMILIES; TO GUARANTEE THE RIGHTS OF LABOR
TO ITS JUST SHARE IN THE FRUITS OF PRODUCTION; TO ENHANCE EMPLOYMENT GENERATION IN THE
COUNTRYSIDE THROUGH INDUSTRY DISPERSAL; AND TO ALLOW BUSINESS AND INDUSTRY REASONABLE
RETURNS ON INVESTMENT, EXPANSION AND GROWTH,"25 AND AS THE CONSTITUTION EXPRESSES IT, TO
AFFIRM "LABOR AS A PRIMARY SOCIAL ECONOMIC FORCE."26 AS THE COURT INDICATED, THE STATUTE
WOULD HAVE NO NEED FOR A BOARD IF THE QUESTION WERE SIMPLY "HOW MUCH". THE STATE IS
CONCERNED, IN ADDITION, THAT WAGES ARE NOT DISTRIBUTED UNEVENLY, AND MORE IMPORTANT,
THAT SOCIAL JUSTICE IS SUBSERVED.

IT IS ANOTHER QUESTION, TO BE SURE, HAD CONGRESS CREATED "ROVING" BOARDS, AND WERE THAT
THE CASE, A PROBLEM OF UNDUE DELEGATION WOULD HAVE ENSUED; BUT AS WE SAID, WE DO NOT
SEE A BOARD (NATIONAL CAPITAL REGION) "RUNNING RIOT" HERE, AND WAGE ORDER NO. NCR-01-A AS
AN EXCESS OF AUTHORITY.

IT IS ALSO ANOTHER QUESTION WHETHER THE SALARY-CAP METHOD UTILIZED BY THE BOARD MAY
SERVE THE PURPOSES OF REPUBLIC ACT NO. 6727 IN FUTURE CASES AND WHETHER THAT METHOD IS
AFTER ALL, A LASTING POLICY OF THE BOARD; HOWEVER, IT IS A QUESTION ON WHICH WE MAY ONLY
SPECULATE AT THE MOMENT. AT THE MOMENT, WE FIND IT TO BE REASONABLE POLICY (APPARENTLY, IT
HAS SINCE BEEN GOVERNMENT POLICY); AND IF IN THE FUTURE IT WOULD BE PERCEPTIBLY UNFAIR TO
MANAGEMENT, WE WILL TAKE IT UP THEN.

WHEREFORE, PREMISES CONSIDERED, THE PETITION IS DENIED. NO PRONOUNCEMENT AS TO COSTS.

IT IS SO ORDERED.
[G.R. NO. 128399. JANUARY 15, 1998]

CAGAYAN SUGAR MILLING COMPANY, PETITIONER, VS. SECRETARY OF LABOR AND EMPLOYMENT,
DIRECTOR RICARDO S. MARTINEZ, SR., AND CARSUMCO EMPLOYEES UNION, RESPONDENTS.
DECISION
PUNO, J.:

IN THIS PETITION FOR CERTIORARI, PETITIONER CAGAYAN SUGAR MILLING COMPANY (CARSUMCO)
IMPUGNS THE OCTOBER 8, 1996 DECISION OF THE SECRETARY OF LABOR, DISMISSING ITS APPEAL AND
UPHOLDING THE ORDER OF REGIONAL DIRECTOR RICARDO S. MARTINEZ, SR. FINDING PETITIONER
GUILTY OF VIOLATING REGIONAL WAGE ORDER NO. RO2-02.

THE FACTS: ON NOVEMBER 16, 1993, REGIONAL WAGE ORDER NO. RO2-02[1] WAS ISSUED BY THE
REGIONAL TRIPARTITE WAGE AND PRODUCTIVITY BOARD, REGIONAL OFFICE NO. II OF THE DEPARTMENT
OF LABOR AND EMPLOYMENT (DOLE). IT PROVIDED, INTER ALIA, THAT:

"SECTION 1. UPON EFFECTIVITY OF THIS WAGE ORDER, THE STATUTORY MINIMUM WAGE RATES
APPLICABLE TO WORKERS AND EMPLOYEES IN THE PRIVATE SECTOR IN REGION II SHALL BE INCREASED
AS FOLLOWS:

XXX

1.2 P14.00 PER DAY .... CAGAYAN

X X X"

ON SEPTEMBER 12 AND 13, 1994, LABOR INSPECTORS FROM THE DOLE REGIONAL OFFICE EXAMINED
THE BOOKS OF PETITIONER TO DETERMINE ITS COMPLIANCE WITH THE WAGE ORDER. THEY FOUND
THAT PETITIONER VIOLATED THE WAGE ORDER AS IT DID NOT IMPLEMENT AN ACROSS THE BOARD
INCREASE IN THE SALARY OF ITS EMPLOYEES.

AT THE HEARING AT THE DOLE REGIONAL OFFICE FOR THE ALLEGED VIOLATION, PETITIONER
MAINTAINED THAT IT COMPLIED WITH WAGE ORDER NO. RO2-02 AS IT PAID THE MANDATED INCREASE
IN THE MINIMUM WAGE.

IN AN ORDER DATED DECEMBER 16, 1994, PUBLIC RESPONDENT REGIONAL DIRECTOR RICARDO S.
MARTINEZ, SR. RULED THAT PETITIONER VIOLATED WAGE ORDER RO2-02 BY FAILING TO IMPLEMENT AN
ACROSS THE BOARD INCREASE IN THE SALARY OF ITS EMPLOYEES. HE ORDERED PETITIONER TO PAY THE
DEFICIENCY IN THE SALARY OF ITS EMPLOYEES IN THE TOTAL AMOUNT OF P555,133.41.

ON JANUARY 6, 1995, PETITIONER APPEALED TO PUBLIC RESPONDENT LABOR SECRETARY LEONARDO A.

QUISUMBING. ON THE SAME DATE, THE REGIONAL WAGE BOARD ISSUED WAGE ORDER NO. RO2-02-A,
[2] AMENDING THE EARLIER WAGE ORDER, THUS:

"SECTION 1. SECTION 1 OF WAGE ORDER NO. RO2-02 SHALL NOW READ AS, "UPON EFFECTIVITY OF THIS
WAGE ORDER, THE WORKERS AND EMPLOYEES IN THE PRIVATE SECTOR IN REGION 2 SHALL RECEIVE AN
ACROSS THE BOARD WAGE INCREASE AS FOLLOWS:

XXX

1.2 P14.00 PER DAY .... CAGAYAN

XXX

"SECTION 2. THIS AMENDMENT IS CURATIVE IN NATURE AND SHALL RETROACT TO THE DATE OF THE
EFFECTIVITY OF WAGE ORDER NO. RO2-02."

ON OCTOBER 8, 1996, THE SECRETARY OF LABOR DISMISSED PETITIONER'S APPEAL AND AFFIRMED THE
ORDER OF REGIONAL DIRECTOR MARTINEZ, SR. PETITIONER'S MOTION FOR RECONSIDERATION WAS
LIKEWISE DENIED.[3]

ON FEBRUARY 12, 1997, PRIVATE RESPONDENT CARSUMCO EMPLOYEES UNION MOVED FOR EXECUTION
OF THE DECEMBER 16, 1994 ORDER. REGIONAL DIRECTOR MARTINEZ, SR. GRANTED THE MOTION AND
ISSUED THE WRIT OF EXECUTION. ON MARCH 4, 1997, PETITIONER MOVED FOR RECONSIDERATION TO
SET ASIDE THE WRIT OF EXECUTION. ON MARCH 5, THE DOLE REGIONAL SHERIFF SERVED ON
PETITIONER A NOTICE OF GARNISHMENT OF ITS ACCOUNT WITH THE FAR EAST BANK AND TRUST
COMPANY. ON MARCH 10, THE SHERIFF SEIZED PETITIONER'S DUMP TRUCK AND SCHEDULED ITS PUBLIC
SALE ON MARCH 20, 1997.

HENCE, THIS PETITION, WITH A PRAYER FOR THE ISSUANCE OF A TEMPORARY RESTRAINING ORDER
(TRO).
ON APRIL 3, 1997, THIS COURT ISSUED A TRO ENJOINING RESPONDENTS FROM ENFORCING THE WRIT
OF EXECUTION.[4] ON JULY 16, UPON PETITIONER'S MOTION, WE AMENDED THE TRO BY ALSO
ENJOINING RESPONDENTS FROM ENFORCING THE DECISION OF THE SECRETARY OF LABOR AND
CONDUCTING FURTHER PROCEEDINGS UNTIL FURTHER ORDERS FROM THIS COURT.[5]

IN THE CASE AT BAR, PETITIONER CONTENDS THAT:

WAGE ORDER RO2-02 IS NULL AND VOID FOR HAVING BEEN ISSUED IN VIOLATION OF THE PROCEDURE
PROVIDED BY LAW AND IN VIOLATION OF PETITIONER'S RIGHT TO DUE PROCESS OF LAW.

II

WAGE ORDER NO. RO2-02 CLEARLY PROVIDED FOR THE FIXING OF A STATUTORY MINIMUM WAGE RATE
AND NOT AN ACROSS THE BOARD INCREASE IN WAGES.

III

THE DECISION OF THE SECRETARY OF LABOR AND EMPLOYMENT IS NULL AND VOID FOR LACK OF ANY
LEGAL BASIS.

THE PETITION HAS MERIT.

WAGE ORDER NO. RO2-02, PASSED ON NOVEMBER 16, 1993, PROVIDED FOR AN INCREASE IN THE
STATUTORY MINIMUM WAGE RATES FOR REGION II. MORE THAN A YEAR LATER, OR ON JANUARY 6,
1995, THE REGIONAL BOARD PASSED WAGE ORDER RO2-02-A AMENDING THE EARLIER WAGE ORDER
AND PROVIDING INSTEAD FOR AN ACROSS THE BOARD INCREASE IN WAGES OF EMPLOYEES IN REGION
II, RETROACTIVE TO THE DATE OF EFFECTIVITY OF WAGE ORDER RO2-02.

PETITIONER ASSAILS THE VALIDITY OF WAGE ORDER RO2-02-A ON THE GROUND THAT IT WAS PASSED
WITHOUT THE REQUIRED PUBLIC CONSULTATION AND NEWSPAPER PUBLICATION. THUS, PETITIONER
CLAIMS THAT PUBLIC RESPONDENT LABOR SECRETARY QUISUMBING ABUSED HIS DISCRETION IN
UPHOLDING THE VALIDITY OF SAID WAGE ORDER.

WE AGREE.

ARTICLE 123 OF THE LABOR CODE PROVIDES:

"ART. 123. WAGE ORDER. -- WHENEVER CONDITIONS IN THE REGION SO WARRANT, THE REGIONAL
BOARD SHALL INVESTIGATE AND STUDY ALL PERTINENT FACTS, AND, BASED ON THE STANDARDS AND
CRITERIA HEREIN PRESCRIBED, SHALL PROCEED TO DETERMINE WHETHER A WAGE ORDER SHOULD BE
ISSUED. ANY SUCH WAGE ORDER SHALL TAKE EFFECT AFTER FIFTEEN (15) DAYS FROM ITS COMPLETE
PUBLICATION IN AT LEAST ONE (1) NEWSPAPER OF GENERAL CIRCULATION IN THE REGION.

"IN THE PERFORMANCE OF ITS WAGE-DETERMINING FUNCTIONS, THE REGIONAL BOARD SHALL
CONDUCT PUBLIC HEARINGS/CONSULTATIONS, GIVING NOTICES TO EMPLOYEES' AND EMPLOYERS'
GROUPS AND OTHER INTERESTED PARTIES.
X X X"

THE RECORD SHOWS THAT THERE WAS NO PRIOR PUBLIC CONSULTATION OR HEARINGS AND
NEWSPAPER PUBLICATION INSOFAR AS WAGE ORDER NO. RO2-02-A IS CONCERNED. IN FACT, THESE
ALLEGATIONS WERE NOT DENIED BY PUBLIC RESPONDENTS IN THEIR COMMENT. PUBLIC RESPONDENTS'
POSITION IS THAT THERE WAS NO NEED TO COMPLY WITH THE LEGAL REQUIREMENTS OF
CONSULTATION AND NEWSPAPER PUBLICATION AS WAGE ORDER NO. RO2-02-A MERELY CLARIFIED THE
AMBIGUOUS PROVISION OF THE ORIGINAL WAGE ORDER.

WE ARE NOT PERSUADED.

TO BEGIN WITH, THERE WAS NO AMBIGUITY IN THE PROVISION OF WAGE ORDER RO2-02 AS IT
PROVIDED IN CLEAR AND CATEGORICAL TERMS FOR AN INCREASE IN STATUTORY MINIMUM WAGE OF
WORKERS IN THE REGION. HENCE, THE SUBSEQUENT PASSAGE OF RO2-02-A PROVIDING INSTEAD FOR
AN ACROSS THE BOARD INCREASE IN WAGES DID NOT CLARIFY THE EARLIER ORDER BUT AMENDED THE
SAME. IN TRUTH, IT CHANGED THE ESSENCE OF THE ORIGINAL ORDER. IN PASSING RO2-02-A WITHOUT
GOING THROUGH THE PROCESS OF PUBLIC CONSULTATION AND HEARINGS, THE REGIONAL BOARD
DEPRIVED PETITIONER AND OTHER EMPLOYERS OF DUE PROCESS AS THEY WERE NOT GIVEN THE
OPPORTUNITY TO VENTILATE THEIR POSITIONS REGARDING THE PROPOSED WAGE INCREASE. IN WAGE-
FIXING, FACTORS SUCH AS FAIR RETURN OF CAPITAL INVESTED, THE NEED TO INDUCE INDUSTRIES TO
INVEST IN THE COUNTRYSIDE AND THE CAPACITY OF EMPLOYERS TO PAY ARE, AMONG OTHERS, TAKEN
INTO CONSIDERATION.[6] HENCE, OUR LEGISLATORS PROVIDE FOR THE CREATION OF REGIONAL
TRIPARTITE BOARDS COMPOSED OF REPRESENTATIVES FROM THE GOVERNMENT, THE WORKERS AND
THE EMPLOYERS TO DETERMINE THE APPROPRIATE WAGE RATES PER REGION TO ENSURE THAT ALL
SIDES ARE HEARD. FOR THE SAME REASON, ARTICLE 123 OF THE LABOR CODE ALSO PROVIDES THAT IN
THE PERFORMANCE OF THEIR WAGE-DETERMINING FUNCTIONS, THE REGIONAL BOARD SHALL
CONDUCT PUBLIC HEARINGS AND CONSULTATIONS, GIVING NOTICES TO INTERESTED PARTIES.
MOREOVER, IT MANDATES THAT THE WAGE ORDER SHALL TAKE EFFECT ONLY AFTER PUBLICATION IN A
NEWSPAPER OF GENERAL CIRCULATION IN THE REGION. IT IS A FUNDAMENTAL RULE, BORNE OUT OF A
SENSE OF FAIRNESS, THAT THE PUBLIC IS FIRST NOTIFIED OF A LAW OR WAGE ORDER BEFORE IT CAN BE
HELD LIABLE FOR VIOLATION THEREOF. IN THE CASE AT BAR, IT IS INDISPUTABLE THAT THERE WAS NO
PUBLIC CONSULTATION OR HEARING CONDUCTED PRIOR TO THE PASSAGE OF RO2-02-A. NEITHER WAS
IT PUBLISHED IN A NEWSPAPER OF GENERAL CIRCULATION AS ATTESTED IN THE FEBRUARY 3, 1995
MINUTES OF THE MEETING OF THE REGIONAL WAGE BOARD THAT THE NON-PUBLICATION WAS BY
CONSENSUS OF ALL THE BOARD MEMBERS.[7] HENCE, RO2-02-A MUST BE STRUCK DOWN FOR
VIOLATION OF ARTICLE 123 OF THE LABOR CODE.

CONSIDERING THAT RO2-02-A IS INVALID, THE NEXT ISSUE TO SETTLE IS WHETHER PETITIONER COULD
BE HELD LIABLE UNDER THE ORIGINAL WAGE ORDER, RO2-02.

PUBLIC RESPONDENTS INSIST THAT DESPITE THE WORDING OF WAGE ORDER RO2-02 PROVIDING FOR A
STATUTORY INCREASE IN MINIMUM WAGE, THE REAL INTENTION OF THE REGIONAL BOARD WAS TO
PROVIDE FOR AN ACROSS THE BOARD INCREASE. HENCE, THEY URGE THAT PETITIONER IS LIABLE FOR
MERELY PROVIDING AN INCREASE IN THE STATUTORY MINIMUM WAGE RATES OF ITS EMPLOYEES.

THE CONTENTION IS ABSURD. PETITIONER CLEARLY COMPLIED WITH WAGE ORDER RO2-02 WHICH
PROVIDED FOR AN INCREASE IN STATUTORY MINIMUM WAGE RATES FOR EMPLOYEES IN REGION II. IT IS
NOT JUST TO EXPECT PETITIONER TO INTERPRET WAGE RO2-02 TO MEAN THAT IT GRANTED AN ACROSS
THE BOARD INCREASE AS SUCH INTERPRETATION IS NOT SUSTAINED BY ITS TEXT. INDEED, THE REGIONAL
WAGE BOARD HAD TO AMEND WAGE ORDER RO2-02 TO CLARIFY THIS ALLEGED INTENT.

IN SUM, WE HOLD THAT RO2-02-A IS INVALID FOR LACK OF PUBLIC CONSULTATIONS AND HEARINGS AND
NON-PUBLICATION IN A NEWSPAPER OF GENERAL CIRCULATION, IN VIOLATION OF ARTICLE 123 OF THE
LABOR CODE. WE LIKEWISE FIND THAT PUBLIC RESPONDENT SECRETARY OF LABOR COMMITTED GRAVE
ABUSE OF DISCRETION IN UPHOLDING THE FINDINGS OF REGIONAL DIRECTOR RICARDO S. MARTINEZ,
SR. THAT PETITIONER VIOLATED WAGE ORDER RO2-02.

IN VIEW WHEREOF, THE PETITION IS GRANTED. THE DECISION OF THE SECRETARY OF LABOR, DATED
OCTOBER 8, 1996, IS SET ASIDE FOR LACK OF MERIT.

SO ORDERED.
[G.R. NO. 131247. JANUARY 25, 1999]

PRUBANKERS ASSOCIATION, PETITIONER, VS. PRUDENTIAL BANK & TRUST COMPANY, RESPONDENT.
DECISION
PANGANIBAN, J.:

WAGE DISTORTION PRESUPPOSES AN INCREASE IN THE COMPENSATION OF THE LOWER RANKS IN AN

OFFICE HIERARCHY WITHOUT A CORRESPONDING RAISE FOR HIGHER-TIERED EMPLOYEES IN THE SAME
REGION OF THE COUNTRY, RESULTING IN THE ELIMINATION OR THE SEVERE DIMINUTION OF THE
DISTINCTION BETWEEN THE TWO GROUPS. SUCH DISTORTION DOES NOT ARISE WHEN A WAGE ORDER
GIVES EMPLOYEES IN ONE BRANCH OF A BANK HIGHER COMPENSATION THAN THAT GIVEN TO THEIR
COUNTERPARTS IN OTHER REGIONS OCCUPYING THE SAME PAY SCALE, WHO ARE NOT COVERED BY SAID
WAGE ORDER. IN SHORT, THE IMPLEMENTATION OF WAGE ORDERS IN ONE REGION BUT NOT IN OTHERS
DOES NOT IN ITSELF NECESSARILY RESULT IN WAGE DISTORTION.

THE CASE

BEFORE US IS A PETITION FOR REVIEW ON CERTIORARI, CHALLENGING THE NOVEMBER 6, 1997

DECISION[1] OF THE COURT OF APPEALS IN CA-GR SP NO. 42525. THE DISPOSITIVE PORTION OF THE
CHALLENGED DECISION READS:

WHEREFORE, THE PETITION IS GRANTED. THE ASSAILED DECISION OF THE VOLUNTARY ARBITRATION
COMMITTEE DATED JUNE 18, 1996 IS HEREBY REVERSED AND SET ASIDE FOR HAVING BEEN ISSUED WITH
GRAVE ABUSE OF DISCRETION TANTAMOUNT TO LACK OF OR EXCESS OF JURISDICTION, AND A NEW
JUDGMENT IS RENDERED FINDING THAT NO WAGE DISTORTION RESULTED FROM THE PETITIONERS
SEPARATE AND REGIONAL IMPLEMENTATION OF WAGE ORDER NO. VII-03 AT ITS CEBU, MABOLO AND P.
DEL ROSARIO BRANCHES.

THE JUNE 18, 1996 DECISION OF THE VOLUNTARY ARBITRATION COMMITTEE,[2] WHICH THE COURT OF
APPEALS REVERSED AND SET ASIDE, DISPOSED AS FOLLOWS:

WHEREFORE, IT IS HEREBY RULED THAT THE BANKS SEPARATE AND REGIONAL IMPLEMENTATION OF
WAGE ORDER NO. VII-03 AT ITS CEBU, MABOLO AND P. DEL ROSARIO BRANCHES CREATED A WAGE
DISTORTION IN THE BANK NATIONWIDE WHICH SHOULD BE RESOLVED IN ACCORDANCE WITH ART. 124
OF THE LABOR CODE.[3]

THE FACTS

THE FACTS OF THE CASE ARE SUMMARIZED BY THE COURT OF APPEALS THUS:

ON NOVEMBER 18, 1993, THE REGIONAL TRIPARTITE WAGES AND PRODUCTIVITY BOARD OF REGION V
ISSUED WAGE ORDER NO. RB 05-03 WHICH PROVIDED FOR A COST OF LIVING ALLOWANCE (COLA) TO
WORKERS IN THE PRIVATE SECTOR WHO HA[D] RENDERED SERVICE FOR AT LEAST THREE (3) MONTHS
BEFORE ITS EFFECTIVITY, AND FOR THE SAME PERIOD [T]HEREAFTER, IN THE FOLLOWING CATEGORIES:
SEVENTEEN PESOS AND FIFTY CENTAVOS (P17.50) IN THE CITIES OF NAGA AND LEGASPI; FIFTEEN PESOS
AND FIFTY CENTAVOS (P15.50) IN THE MUNICIPALITIES OF TABACO, DARAGA, PILI AND THE CITY OF
IRIGA; AND TEN PESOS (P10.00) FOR ALL OTHER AREAS IN THE BICOL REGION.

SUBSEQUENTLY ON NOVEMBER 23, 1993, THE REGIONAL TRIPARTITE WAGES AND PRODUCTIVITY
BOARD OF REGION VII ISSUED WAGE ORDER NO. RB VII-03, WHICH DIRECTED THE INTEGRATION OF THE
COLA MANDATED PURSUANT TO WAGE ORDER NO. RO VII-02-A INTO THE BASIC PAY OF ALL WORKERS.
IT ALSO ESTABLISHED AN INCREASE IN THE MINIMUM WAGE RATES FOR ALL WORKERS AND EMPLOYEES
IN THE PRIVATE SECTOR AS FOLLOWS: BY TEN PESOS (P10.00) IN THE CITIES OF CEBU, MANDAUE AND
LAPULAPU; FIVE PESOS (P5.00) IN THE MUNICIPALITIES OF COMPOSTELA, LILOAN, CONSOLACION,
CORDOVA, TALISAY, MINGLANILLA, NAGA AND THE CITIES OF DAVAO, TOLEDO, DUMAGUETE, BAIS,
CANLAON, AND TAGBILARAN.

THE PETITIONER THEN GRANTED A COLA OF P17.50 TO ITS EMPLOYEES AT ITS NAGA BRANCH, THE ONLY
BRANCH COVERED BY WAGE ORDER NO. RB 5-03, AND INTEGRATED THE P150.00 PER MONTH COLA
INTO THE BASIC PAY OF ITS RANK-AND-FILE EMPLOYEES AT ITS CEBU, MABOLO AND P. DEL ROSARIO
BRANCHES, THE BRANCHES COVERED BY WAGE ORDER NO. RB VII-03.

ON JUNE 7, 1994, RESPONDENT PRUBANKERS ASSOCIATION WROTE THE PETITIONER REQUESTING THAT
THE LABOR MANAGEMENT COMMITTEE BE IMMEDIATELY CONVENED TO DISCUSS AND RESOLVE THE
ALLEGED WAGE DISTORTION CREATED IN THE SALARY STRUCTURE UPON THE IMPLEMENTATION OF THE
SAID WAGE ORDERS. RESPONDENT ASSOCIATION THEN DEMANDED IN THE LABOR MANAGEMENT
COMMITTEE MEETINGS THAT THE PETITIONER EXTEND THE APPLICATION OF THE WAGE ORDERS TO ITS
EMPLOYEES OUTSIDE REGIONS V AND VII, CLAIMING THAT THE REGIONAL IMPLEMENTATION OF THE
SAID ORDERS CREATED A WAGE DISTORTION IN THE WAGE RATES OF PETITIONERS EMPLOYEES
NATIONWIDE. AS THE GRIEVANCE COULD NOT BE SETTLED IN THE SAID MEETINGS, THE PARTIES AGREED
TO SUBMIT THE MATTER TO VOLUNTARY ARBITRATION. THE ARBITRATION COMMITTEE FORMED FOR
THAT PURPOSE WAS COMPOSED OF THE FOLLOWING: PUBLIC RESPONDENT FROILAN M. BACUNGAN AS
CHAIRMAN, WITH ATTYS. DOMINGO T. ANONUEVO AND EMERICO O. DE GUZMAN AS MEMBERS. THE
ISSUE PRESENTED BEFORE THE COMMITTEE WAS WHETHER OR NOT THE BANKS SEPARATE AND
REGIONAL IMPLEMENTATION OF WAGE ORDER NO. 5-03 AT ITS NAGA BRANCH AND WAGE ORDER NO.
VII-03 AT ITS CEBU, MABOLO AND P. DEL ROSARIO BRANCHES, CREATED A WAGE DISTORTION IN THE
BANK NATIONWIDE.

THE ARBITRATION COMMITTEE ON JUNE 18, 1996 RENDERED THE QUESTIONED DECISION.[4]

RULING OF THE COURT OF APPEALS

IN RULING THAT THERE WAS NO WAGE DISTORTION, THE COURT OF APPEALS HELD THAT THE VARIANCE
IN THE SALARY RATES OF EMPLOYEES IN DIFFERENT REGIONS OF THE COUNTRY WAS JUSTIFIED BY RA
6727. IT NOTED THAT THE UNDERLYING CONSIDERATIONS IN ISSUING THE WAGE ORDERS ARE DIVERSE,
BASED ON THE DISTINCTIVE SITUATIONS AND NEEDS EXISTING IN EACH REGION. HENCE, THERE IS NO
BASIS TO APPLY THE SALARY INCREASES IMPOSED BY WAGE ORDER NO. VII-03 TO EMPLOYEES OUTSIDE
OF REGION VII. FURTHERMORE, THE COURT OF APPEALS RULED THAT THE DISTINCTIONS BETWEEN
EACH EMPLOYEE GROUP IN THE REGION ARE MAINTAINED, AS ALL EMPLOYEES WERE GRANTED AN
INCREASE IN MINIMUM WAGE RATE.[5]

THE ISSUES

IN ITS MEMORANDUM, PETITIONER RAISES THE FOLLOWING ISSUES:[6]

WHETHER OR NOT THE COURT OF APPEALS DEPARTED FROM THE USUAL COURSE OF JUDICIAL
PROCEDURE WHEN IT DISREGARDED THE FACTUAL FINDINGS OF THE VOLUNTARY ARBITRATION
COMMITTEE AS TO THE EXISTENCE OF WAGE DISTORTION.

II

WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE ERROR IN LAW WHEN IT RULED THAT
WAGE DISTORTION EXISTS ONLY WITHIN A REGION AND NOT NATIONWIDE.

III

WHETHER OR NOT THE COURT OF APPEALS ERRED IN IMPLYING THAT THE TERM ESTABLISHMENT AS
USED IN ARTICLE 125 OF THE LABOR CODE REFERS TO THE REGIONAL BRANCHES OF THE BANK AND NOT
TO THE BANK AS A WHOLE.

THE MAIN ISSUE IS WHETHER OR NOT A WAGE DISTORTION RESULTED FROM RESPONDENTS
IMPLEMENTATION OF THE AFORECITED WAGE ORDERS. AS A PRELIMINARY MATTER, WE SHALL ALSO
TAKE UP THE QUESTION OF FORUM-SHOPPING.

THE COURTS RULING

THE PETITION IS DEVOID OF MERIT.[7]

PRELIMINARY ISSUE: FORUM-SHOPPING

RESPONDENT ASKS FOR THE DISMISSAL OF THE PETITION BECAUSE PETITIONER ALLEGEDLY ENGAGED IN
FORUM-SHOPPING. IT MAINTAINS THAT PETITIONER FAILED TO COMPLY WITH SECTION 2 OF RULE 42 OF
THE RULES OF COURT, WHICH REQUIRES THAT PARTIES MUST CERTIFY UNDER OATH THAT THEY HAVE
NOT COMMENCED ANY OTHER ACTION INVOLVING THE SAME ISSUES IN THE SUPREME COURT, THE
COURT OF APPEALS, OR DIFFERENT DIVISIONS THEREOF, OR ANY OTHER TRIBUNAL OR AGENCY; IF THERE
IS SUCH OTHER ACTION OR PROCEEDING, THEY MUST STATE THE STATUS OF THE SAME; AND IF THEY
SHOULD THEREAFTER LEARN THAT A SIMILAR ACTION OR PROCEEDING HAS BEEN FILED OR IS PENDING
BEFORE THE SAID COURTS, THEY SHOULD PROMPTLY INFORM THE AFORESAID COURTS OR ANY OTHER
TRIBUNAL OR AGENCY WITHIN FIVE DAYS THEREFROM. SPECIFICALLY, PETITIONER ACCUSES
RESPONDENT OF FAILING TO INFORM THIS COURT OF THE PENDENCY OF NCMB-NCR-RVA-04-012-97
ENTITLED IN RE: VOLUNTARY ARBITRATION BETWEEN PRUDENTIAL BANK AND PRUBANKERS
ASSOCIATION (HEREAFTER REFERRED TO AS VOLUNTARY ARBITRATION CASE), AN ACTION INVOLVING
ISSUES ALLEGEDLY SIMILAR TO THOSE RAISED IN THE PRESENT CONTROVERSY.

IN ITS REPLY, PETITIONER EFFECTIVELY ADMITS THAT THE VOLUNTARY ARBITRATION CASE WAS ALREADY
PENDING WHEN IT FILED THE PRESENT PETITION. HOWEVER, IT CLAIMS NO VIOLATION OF THE RULE
AGAINST FORUM-SHOPPING, BECAUSE THERE IS NO IDENTITY OF CAUSES OF ACTION AND ISSUES
BETWEEN THE TWO CASES.

WE SUSTAIN THE RESPONDENT. THE RULE ON FORUM-SHOPPING WAS FIRST INCLUDED IN SECTION 17
OF THE INTERIM RULES AND GUIDELINES ISSUED BY THIS COURT ON JANUARY 11, 1983, WHICH
IMPOSED A SANCTION IN THIS WISE: A VIOLATION OF THE RULE SHALL CONSTITUTE CONTEMPT OF
COURT AND SHALL BE A CAUSE FOR THE SUMMARY DISMISSAL OF BOTH PETITIONS, WITHOUT
PREJUDICE TO THE TAKING OF APPROPRIATE ACTION AGAINST THE COUNSEL OR PARTY CONCERNED.
THEREAFTER, THE COURT RESTATED THE RULE IN REVISED CIRCULAR NO. 28-91 AND ADMINISTRATIVE
CIRCULAR NO. 04-94. ULTIMATELY, THE RULE WAS EMBODIED IN THE 1997 AMENDMENTS TO THE RULES
OF COURT.

AS EXPLAINED BY THIS COURT IN FIRST PHILIPPINE INTERNATIONAL BANK V. COURT OF APPEALS,[8]

FORUM-SHOPPING EXISTS WHERE THE ELEMENTS OF LITIS PENDENTIA ARE PRESENT, AND WHERE A
FINAL JUDGMENT IN ONE CASE WILL AMOUNT TO RES JUDICATA IN THE OTHER. THUS, THERE IS FORUM-
SHOPPING WHEN, BETWEEN AN ACTION PENDING BEFORE THIS COURT AND ANOTHER ONE, THERE
EXIST: A) IDENTITY OF PARTIES, OR AT LEAST SUCH PARTIES AS REPRESENT THE SAME INTERESTS IN BOTH
ACTIONS, B) IDENTITY OF RIGHTS ASSERTED AND RELIEF PRAYED FOR, THE RELIEF BEING FOUNDED ON
THE SAME FACTS, AND C) THE IDENTITY OF THE TWO PRECEDING PARTICULARS IS SUCH THAT ANY
JUDGEMENT RENDERED IN THE OTHER ACTION, WILL, REGARDLESS OF WHICH PARTY IS SUCCESSFUL
AMOUNT TO RES JUDICATA IN THE ACTION UNDER CONSIDERATION; SAID REQUISITES ALSO
CONSTITUTIVE OF THE REQUISITES FOR AUTER ACTION PENDANT OR LIS PENDENS.[9] ANOTHER CASE
ELUCIDATES THE CONSEQUENCE OF FORUM-SHOPPING: [W]HERE A LITIGANT SUES THE SAME PARTY
AGAINST WHOM ANOTHER ACTION OR ACTIONS FOR THE ALLEGED VIOLATION OF THE SAME RIGHT
AND THE ENFORCEMENT OF THE SAME RELIEF IS/ARE STILL PENDING, THE DEFENSE OF LITIS PENDENTIA
IN ONE CASE IS A BAR TO THE OTHERS; AND, A FINAL JUDGMENT IN ONE WOULD CONSTITUTE RES
JUDICATA AND THUS WOULD CAUSE THE DISMISSAL OF THE REST.[10]

THE VOLUNTARY ARBITRATION CASE INVOLVED THE ISSUE OF WHETHER THE ADOPTION BY THE BANK OF
REGIONALIZED HIRING RATES WAS VALID AND BINDING.

ON THE OTHER HAND, THE ISSUE NOW ON HAND REVOLVES AROUND THE EXISTENCE OF A WAGE
DISTORTION ARISING FROM THE BANKS SEPARATE AND REGIONAL IMPLEMENTATION OF THE TWO
WAGE ORDERS IN THE AFFECTED BRANCHES. A CLOSER LOOK WOULD SHOW THAT, INDEED, THE
REQUISITES OF FORUM-SHOPPING ARE PRESENT.

FIRST, THERE IS IDENTITY OF PARTIES. BOTH CASES ARE BETWEEN THE BANK AND THE ASSOCIATION,
ACTING ON BEHALF OF ALL ITS MEMBERS. SECOND, ALTHOUGH THE RESPECTIVE ISSUES AND RELIEFS
PRAYED FOR IN THE TWO CASES ARE STATED DIFFERENTLY, BOTH ACTIONS BOIL DOWN TO ONE SINGLE
ISSUE: THE VALIDITY OF THE BANKS REGIONALIZATION OF ITS WAGE STRUCTURE BASED ON RA 6727.
EVEN IF THE VOLUNTARY ARBITRATION CASE CALLS FOR STRIKING DOWN THE BANKS REGIONALIZED
HIRING SCHEME WHILE THE INSTANT PETITION CALLS FOR THE CORRECTION OF THE ALLEGED WAGE
DISTORTION CAUSED BY THE REGIONAL IMPLEMENTATION OF WAGE ORDER NO. VII-03, THE ULTIMATE
RELIEF PRAYED FOR IN BOTH CASES IS THE MAINTENANCE OF THE BANKS NATIONAL WAGE STRUCTURE.
HENCE, THE FINAL DISPOSITION OF ONE WOULD CONSTITUTE RES JUDICATA IN THE OTHER. THUS,
FORUM-SHOPPING IS DEEMED TO EXIST AND, ON THIS BASIS, THE SUMMARY DISMISSAL OF BOTH
ACTIONS IS INDEED WARRANTED.

NONETHELESS, WE DEEM IT APPROPRIATE TO PASS UPON THE MAIN ISSUE ON ITS MERIT IN VIEW OF ITS
IMPORTANCE.

MAIN ISSUE: WAGE DISTORTION

THE STATUTORY DEFINITION OF WAGE DISTORTION IS FOUND IN ARTICLE 124 OF THE LABOR CODE, AS
AMENDED BY REPUBLIC ACT NO. 6727, WHICH READS:

ARTICLE 124. STANDARDS/CRITERIA FOR MINIMUM WAGE FIXING - XXX

AS USED HEREIN, A WAGE DISTORTION SHALL MEAN A SITUATION WHERE AN INCREASE IN PRESCRIBED
WAGE RESULTS IN THE ELIMINATION OR SEVERE CONTRACTION OF INTENTIONAL QUANTITATIVE
DIFFERENCES IN WAGE OR SALARY RATES BETWEEN AND AMONG EMPLOYEE GROUPS IN AN
ESTABLISHMENT AS TO EFFECTIVELY OBLITERATE THE DISTINCTIONS EMBODIED IN SUCH WAGE
STRUCTURE BASED ON SKILLS, LENGTH OF SERVICE, OR OTHER LOGICAL BASES OF DIFFERENTIATION.

ELABORATING ON THIS STATUTORY DEFINITION, THIS COURT RULED: WAGE DISTORTION PRESUPPOSES A
CLASSIFICATION OF POSITIONS AND RANKING OF THESE POSITIONS AT VARIOUS LEVELS. ONE VISUALIZES
A HIERARCHY OF POSITIONS WITH CORRESPONDING RANKS BASICALLY IN TERMS OF WAGES AND OTHER
EMOLUMENTS. WHERE A SIGNIFICANT CHANGE OCCURS AT THE LOWEST LEVEL OF POSITIONS IN TERMS
OF BASIC WAGE WITHOUT A CORRESPONDING CHANGE IN THE OTHER LEVEL IN THE HIERARCHY OF
POSITIONS, NEGATING AS A RESULT THEREOF THE DISTINCTION BETWEEN ONE LEVEL OF POSITION
FROM THE NEXT HIGHER LEVEL, AND RESULTING IN A PARITY BETWEEN THE LOWEST LEVEL AND THE
NEXT HIGHER LEVEL OR RANK, BETWEEN NEW ENTRANTS AND OLD HIRES, THERE EXISTS A WAGE
DISTORTION. XXX. THE CONCEPT OF WAGE DISTORTION ASSUMES AN EXISTING GROUPING OR
CLASSIFICATION OF EMPLOYEES WHICH ESTABLISHES DISTINCTIONS AMONG SUCH EMPLOYEES ON
SOME RELEVANT OR LEGITIMATE BASIS. THIS CLASSIFICATION IS REFLECTED IN A DIFFERING WAGE RATE
FOR EACH OF THE EXISTING CLASSES OF EMPLOYEES[11]

WAGE DISTORTION INVOLVES FOUR ELEMENTS:

1. AN EXISTING HIERARCHY OF POSITIONS WITH CORRESPONDING SALARY RATES

2. A SIGNIFICANT CHANGE IN THE SALARY RATE OF A LOWER PAY CLASS WITHOUT A CONCOMITANT
INCREASE IN THE SALARY RATE OF A HIGHER ONE

3. THE ELIMINATION OF THE DISTINCTION BETWEEN THE TWO LEVELS

4. THE EXISTENCE OF THE DISTORTION IN THE SAME REGION OF THE COUNTRY.

IN THE PRESENT CASE, IT IS CLEAR THAT NO WAGE DISTORTION RESULTED WHEN RESPONDENT
IMPLEMENTED THE SUBJECT WAGE ORDERS IN THE COVERED BRANCHES. IN THE SAID BRANCHES,
THERE WAS AN INCREASE IN THE SALARY RATES OF ALL PAY CLASSES. FURTHERMORE, THE HIERARCHY
OF POSITIONS BASED ON SKILLS, LENGTH OF SERVICE AND OTHER LOGICAL BASES OF DIFFERENTIATION
WAS PRESERVED. IN OTHER WORDS, THE QUANTITATIVE DIFFERENCE IN COMPENSATION BETWEEN
DIFFERENT PAY CLASSES REMAINED THE SAME IN ALL BRANCHES IN THE AFFECTED REGION. PUT
DIFFERENTLY, THE DISTINCTION BETWEEN PAY CLASS 1 AND PAY CLASS 2, FOR EXAMPLE, WAS NOT
ELIMINATED AS A RESULT OF THE IMPLEMENTATION OF THE TWO WAGE ORDERS IN THE SAID REGION.
HENCE, IT CANNOT BE SAID THAT THERE WAS A WAGE DISTORTION.

PETITIONER ARGUES THAT A WAGE DISTORTION EXISTS BECAUSE THE IMPLEMENTATION OF THE TWO
WAGE ORDERS HAS RESULTED IN THE DISCREPANCY IN THE COMPENSATION OF EMPLOYEES OF SIMILAR
PAY CLASSIFICATION IN DIFFERENT REGIONS. HENCE, PETITIONER MAINTAINS THAT, AS A RESULT OF THE
TWO WAGE ORDERS, THE EMPLOYEES IN THE AFFECTED REGIONS HAVE HIGHER COMPENSATION THAN
THEIR COUNTERPARTS OF THE SAME LEVEL IN OTHER REGIONS. SEVERAL TABLES ARE PRESENTED BY
PETITIONER TO ILLUSTRATE THAT THE EMPLOYEES IN THE REGIONS COVERED BY THE WAGE ORDERS ARE
RECEIVING MORE THAN THEIR COUNTERPARTS IN THE SAME PAY SCALE IN OTHER REGIONS.

THE COURT IS NOT PERSUADED. A WAGE PARITY BETWEEN EMPLOYEES IN DIFFERENT RUNGS IS NOT AT
ISSUE HERE, BUT A WAGE DISPARITY BETWEEN EMPLOYEES IN THE SAME RUNG BUT LOCATED IN
DIFFERENT REGIONS OF THE COUNTRY.

CONTRARY TO PETITIONERS POSTULATION, A DISPARITY IN WAGES BETWEEN EMPLOYEES HOLDING

SIMILAR POSITIONS BUT IN DIFFERENT REGIONS DOES NOT CONSTITUTE WAGE DISTORTION AS
CONTEMPLATED BY LAW. AS PREVIOUSLY ENUNCIATED, IT IS THE HIERARCHY OF POSITIONS AND THE
DISPARITY OF THEIR CORRESPONDING WAGES AND OTHER EMOLUMENTS THAT ARE SOUGHT TO BE
PRESERVED BY THE CONCEPT OF WAGE DISTORTION. PUT DIFFERENTLY, A WAGE DISTORTION ARISES
WHEN A WAGE ORDER ENGENDERS WAGE PARITY BETWEEN EMPLOYEES IN DIFFERENT RUNGS OF THE
ORGANIZATIONAL LADDER OF THE SAME ESTABLISHMENT. IT BEARS EMPHASIS THAT WAGE DISTORTION
INVOLVES A PARITY IN THE SALARY RATES OF DIFFERENT PAY CLASSES WHICH, AS A RESULT, ELIMINATES
THE DISTINCTION BETWEEN THE DIFFERENT RANKS IN THE SAME REGION.

DIFFERENT REGIONAL WAGES MANDATED BY RA 6727

PETITIONERS CLAIM OF WAGE DISTORTION MUST ALSO BE DENIED FOR ONE OTHER REASON. THE
DIFFERENCE IN WAGES BETWEEN EMPLOYEES IN THE SAME PAY SCALE IN DIFFERENT REGIONS IS NOT
THE MISCHIEF SOUGHT TO BE BANISHED BY THE LAW. IN FACT, REPUBLIC ACT NO. 6727 (THE WAGE
RATIONALIZATION ACT), RECOGNIZES EXISTING REGIONAL DISPARITIES IN THE COST OF LIVING. SECTION
2 OF SAID LAW PROVIDES:

SEC 2. IT IS HEREBY DECLARED THE POLICY OF THE STATE TO RATIONALIZE THE FIXING OF MINIMUM
WAGES AND TO PROMOTE PRODUCTIVITY-IMPROVEMENT AND GAIN-SHARING MEASURES TO ENSURE A
DECENT STANDARD OF LIVING FOR THE WORKERS AND THEIR FAMILIES; TO GUARANTEE THE RIGHTS OF
LABOR TO ITS JUST SHARE IN THE FRUITS OF PRODUCTION; TO ENHANCE EMPLOYMENT GENERATION IN
THE COUNTRYSIDE THROUGH INDUSTRY DISPERSAL; AND TO ALLOW BUSINESS AND INDUSTRY
REASONABLE RETURNS ON INVESTMENT, EXPANSION AND GROWTH.
THE STATE SHALL PROMOTE COLLECTIVE BARGAINING AS THE PRIMARY MODE OF SETTLING WAGES AND
OTHER TERMS AND CONDITIONS OF EMPLOYMENT; AND WHENEVER NECESSARY, THE MINIMUM WAGE
RATES SHALL BE ADJUSTED IN A FAIR AND EQUITABLE MANNER, CONSIDERING EXISTING REGIONAL
DISPARITIES IN THE COST OF LIVING AND OTHER SOCIO-ECONOMIC FACTORS AND THE NATIONAL
ECONOMIC AND SOCIAL DEVELOPMENT PLANS.

RA 6727 ALSO AMENDED ARTICLE 124 OF THE LABOR CODE, THUS:

ART. 124. STANDARDS/CRITERIA FOR MINIMUM WAGE FIXING. - THE REGIONAL MINIMUM WAGES TO
BE ESTABLISHED BY THE REGIONAL BOARD SHALL BE AS NEARLY ADEQUATE AS IS ECONOMICALLY
FEASIBLE TO MAINTAIN THE MINIMUM STANDARDS OF LIVING NECESSARY FOR THE HEALTH, EFFICIENCY
AND GENERAL WELL-BEING OF THE EMPLOYEES WITHIN THE FRAME WORK OF THE NATIONAL
ECONOMIC AND SOCIAL DEVELOPMENT PROGRAM. IN THE DETERMINATION OF SUCH REGIONAL
MINIMUM WAGES, THE REGIONAL BOARD SHALL, AMONG OTHER RELEVANT FACTORS, CONSIDER THE
FOLLOWING:

(A) THE DEMAND FOR LIVING WAGES;

(B) WAGE ADJUSTMENT VIS-A-VIS THE CONSUMER PRICE INDEX;
(C) THE COST OF LIVING AND CHANGES OR INCREASES THEREIN;
(D) THE NEEDS OF WORKERS AND THEIR FAMILIES;
(E) THE NEED TO INDUCE INDUSTRIES TO INVEST IN THE COUNTRYSIDE;
(F) IMPROVEMENTS IN STANDARDS OF LIVING;
(G) THE PREVAILING WAGE LEVELS;
(H) FAIR RETURN OF THE CAPITAL INVESTED AND CAPACITY TO PAY OF EMPLOYERS;
(I) EFFECTS ON EMPLOYMENT GENERATION AND FAMILY INCOME; AND
(J) THE EQUITABLE DISTRIBUTION OF INCOME AND WEALTH ALONG THE IMPERATIVES OF SOCIAL AND
ECONOMIC DEVELOPMENT.

FROM THE ABOVE-QUOTED RATIONALE OF THE LAW, AS WELL AS THE CRITERIA ENUMERATED, A
DISPARITY IN WAGES BETWEEN EMPLOYEES WITH SIMILAR POSITIONS IN DIFFERENT REGIONS IS
NECESSARILY EXPECTED. IN INSISTING THAT THE EMPLOYEES OF THE SAME PAY CLASS IN DIFFERENT
REGIONS SHOULD RECEIVE THE SAME COMPENSATION, PETITIONER HAS APPARENTLY MISUNDERSTOOD
BOTH THE MEANING OF WAGE DISTORTION AND THE INTENT OF THE LAW TO REGIONALIZE WAGE
RATES.

IT MUST BE UNDERSTOOD THAT VARYING IN EACH REGION OF THE COUNTRY ARE CONTROLLING
FACTORS SUCH AS THE COST OF LIVING; SUPPLY AND DEMAND OF BASIC GOODS, SERVICES AND
NECESSITIES; AND THE PURCHASING POWER OF THE PESO. OTHER CONSIDERATIONS UNDERSCORE THE
NECESSITY OF THE LAW. WAGES IN SOME AREAS MAY BE INCREASED IN ORDER TO PREVENT MIGRATION
TO THE NATIONAL CAPITAL REGION AND, HENCE, TO DECONGEST THE METROPOLIS. THEREFORE, WHAT
THE PETITIONER HEREIN BEWAILS IS PRECISELY WHAT THE LAW PROVIDES IN ORDER TO ACHIEVE ITS
PURPOSE.

PETITIONER CLAIMS THAT IT DOES NOT INSIST THAT THE REGIONAL WAGE BOARDS CREATED PURSUANT
TO RA 6727 DO NOT HAVE THE AUTHORITY TO ISSUE WAGE ORDERS BASED ON THE DISTINCTIVE
SITUATIONS AND NEEDS EXISTING IN EACH REGION. SO ALSO, XXX IT DOES NOT INSIST THAT THE [B]ANK
SHOULD NOT IMPLEMENT REGIONAL WAGE ORDERS. NEITHER DOES IT SEEK TO PENALIZE THE BANK
FOR FOLLOWING WAGE ORDER VII-03. XXX WHAT IT SIMPLY ARGUES IS THAT IT IS WRONG FOR THE
BANK TO PEREMPTORILY ABANDON A NATIONAL WAGE STRUCTURE AND REPLACE THE SAME WITH A
REGIONALIZED STRUCTURE IN VIOLATION OF THE PRINCIPLE OF EQUAL PAY FOR EQUAL WORK. AND, IT
IS WRONG TO SAY THAT ITS ACT OF ABANDONING ITS NATIONAL WAGE STRUCTURE IS MANDATED BY
LAW.

AS ALREADY DISCUSSED ABOVE, WE CANNOT SUSTAIN THIS ARGUMENT. PETITIONER CONTRADICTS

ITSELF IN NOT OBJECTING, ON THE ONE HAND, TO THE RIGHT OF THE REGIONAL WAGE BOARDS TO
IMPOSE A REGIONALIZED WAGE SCHEME; WHILE INSISTING, ON THE OTHER HAND, ON A NATIONAL
WAGE STRUCTURE FOR THE WHOLE BANK. TO REITERATE, A UNIFORM NATIONAL WAGE STRUCTURE IS
ANTITHETICAL TO THE PURPOSE OF RA 6727.

THE OBJECTIVE OF THE LAW ALSO EXPLAINS THE WAGE DISPARITY IN THE EXAMPLE CITED BY
PETITIONER: ARMAE LIBRERO, THOUGH ONLY IN PAY CLASS 4 IN MABOLO, WAS, AS A RESULT OF THE
WAGE ORDER, RECEIVING MORE THAN BELLA CRISTOBAL, WHO WAS ALREADY IN PAY CLASS 5 IN SUBIC.
[12] RA 6727 RECOGNIZES THAT THERE ARE DIFFERENT NEEDS FOR THE DIFFERENT SITUATIONS IN
DIFFERENT REGIONS OF THE COUNTRY. THE FACT THAT A PERSON IS RECEIVING MORE IN ONE REGION
DOES NOT NECESSARILY MEAN THAT HE OR SHE IS BETTER OFF THAN A PERSON RECEIVING LESS IN
ANOTHER REGION. WE MUST CONSIDER, AMONG OTHERS, SUCH FACTORS AS COST OF LIVING,
FULFILLMENT OF NATIONAL ECONOMIC GOALS, AND STANDARD OF LIVING. IN ANY EVENT, THIS COURT,
IN ITS DECISIONS, MERELY ENFORCES THE LAW. IT HAS NO POWER TO PASS UPON ITS WISDOM OR
PROPRIETY.

EQUAL PAY FOR EQUAL WORK

PETITIONER ALSO AVERS THAT THE IMPLEMENTATION OF THE WAGE ORDER IN ONLY ONE REGION
VIOLATES THE EQUAL-PAY-FOR-EQUAL-WORK PRINCIPLE. THIS IS NOT CORRECT. AT THE RISK OF BEING
REPETITIVE, WE STRESS THAT RA 6727 MANDATES THAT WAGES IN EVERY REGION MUST BE SET BY THE
PARTICULAR WAGE BOARD OF THAT REGION, BASED ON THE PREVAILING SITUATION THEREIN.
NECESSARILY, THE WAGES IN DIFFERENT REGIONS WILL NOT BE UNIFORM. THUS, UNDER RA 6727, THE
MINIMUM WAGE IN REGION 1 MAY BE DIFFERENT FROM THAT IN REGION 13, BECAUSE THE
SOCIOECONOMIC CONDITIONS IN THE TWO REGIONS ARE DIFFERENT.

MEANING OF ESTABLISHMENT

PETITIONER FURTHER CONTENDS THAT THE COURT OF APPEALS ERRED IN INTERPRETING THE MEANING
OF ESTABLISHMENT IN RELATION TO WAGE DISTORTION. IT QUOTES THE RA 6727 IMPLEMENTING
RULES, SPECIFICALLY SECTION 13 THEREOF WHICH SPEAKS OF WORKERS WORKING IN BRANCHES OR
AGENCIES OF ESTABLISHMENTS IN OR OUTSIDE THE NATIONAL CAPITAL REGION. PETITIONER INFERS
FROM THIS THAT THE REGIONAL OFFICES OF THE BANK DO NOT THEMSELVES CONSTITUTE, BUT ARE
SIMPLY BRANCHES OF, THE ESTABLISHMENT WHICH IS THE WHOLE BANK. IN EFFECT, PETITIONER
ARGUES THAT WAGE DISTORTION COVERS THE PAY SCALES EVEN OF EMPLOYEES IN DIFFERENT REGIONS,
AND NOT ONLY THOSE OF EMPLOYEES IN THE SAME REGION OR BRANCH. WE DISAGREE.

SECTION 13 PROVIDES THAT THE MINIMUM WAGE RATES OF WORKERS WORKING IN BRANCHES OR
AGENCIES OF ESTABLISHMENTS IN OR OUTSIDE THE NATIONAL CAPITAL REGION SHALL BE THOSE
APPLICABLE IN THE PLACE WHERE THEY ARE SANCTIONED. THE LAST PART OF THE SENTENCE WAS
OMITTED BY PETITIONER IN ITS ARGUMENT. GIVEN THE ENTIRE PHRASE, IT IS CLEAR THAT THE
STATUTORY PROVISION DOES NOT SUPPORT PETITIONERS VIEW THAT ESTABLISHMENT INCLUDES ALL
BRANCHES AND OFFICES IN DIFFERENT REGIONS.

FURTHER NEGATING PETITIONERS THEORY IS NWPC GUIDELINE NO. 1 (S. 1992) ENTITLED REVISED
GUIDELINES ON EXEMPTION FROM COMPLIANCE WITH THE PRESCRIBED WAGE/COST OF LIVING
ALLOWANCE INCREASES GRANTED BY THE REGIONAL TRIPARTITE WAGES AND PRODUCTIVITY BOARD,
WHICH STATES THAT ESTABLISHMENT REFERS TO AN ECONOMIC UNIT WHICH ENGAGES IN ONE OR
PREDOMINANTLY ONE KIND OF ECONOMIC ACTIVITY WITH A SINGLE FIXED LOCATION.

MANAGEMENT PRACTICE

PETITIONER ALSO INSISTS THAT THE BANK HAS ADOPTED A UNIFORM WAGE POLICY, WHICH HAS
ATTAINED THE STATUS OF AN ESTABLISHED MANAGEMENT PRACTICE; THUS, IT IS ESTOPPED FROM
IMPLEMENTING A WAGE ORDER FOR A SPECIFIC REGION ONLY. WE ARE NOT PERSUADED. SAID
NATIONWIDE UNIFORM WAGE POLICY OF THE BANK HAD BEEN ADOPTED PRIOR TO THE ENACTMENT
OF RA 6727. AFTER THE PASSAGE OF SAID LAW, THE BANK WAS MANDATED TO REGIONALIZE ITS WAGE
STRUCTURE. ALTHOUGH THE BANK IMPLEMENTED WAGE ORDER NOS. NCR-01 AND NCR-02
NATIONWIDE INSTEAD OF REGIONALLY EVEN AFTER THE EFFECTIVITY OF RA 6727, THE BANK AT THE
TIME WAS STILL UNCERTAIN ABOUT HOW TO FOLLOW THE NEW LAW. IN ANY EVENT, THAT SINGLE
INSTANCE CANNOT BE CONSTITUTIVE OF MANAGEMENT PRACTICE.

WHEREFORE, THE PETITION IS DENIED AND THE ASSAILED DECISION IS AFFIRMED. COSTS AGAINST
PETITIONER.

SO ORDERED.
G.R. NO. 114250 APRIL 5, 1995

DOMINICO C. CONGSON, PETITIONER,

VS.
NATIONAL LABOR RELATIONS COMMISSION, NOE BARGO, ROGER HIMENO, RAYMUNDO BADAGOS,
PATRICIO SALVADOR, SR., NEHIL BARGO, JOEL MENDOZA, AND EMMANUEL CALIXIHAN, RESPONDENTS.

PADILLA, J.:

PETITIONER DOMINICO C. CONGSON SEEKS THE NULLIFICATION OF THE DECISION RENDERED BY THE
NATIONAL LABOR RELATIONS COMMISSION IN CASE NO. NLRC CA M-000681-921 DATED 28 MAY 1993
AND ITS RESOLUTION DATED 28 JANUARY 1994, DENYING PETITIONER'S MOTION FOR
RECONSIDERATION..

IN THE CHALLENGED DECISION*, THE NLRC AFFIRMED IN TOTO LABOR ARBITER ARTURO APONESTO'S
DECISION DATED 27 SEPTEMBER 1991, HOLDING THUS:

WHEREFORE, THE APPEALED DECISION IS HEREBY AFFIRMED IN TOTO AND THE INSTANT APPEAL IS
DISMISSED FOR LACK OF MERIT.
SO ORDERED.2

PETITIONER IS THE REGISTERED OWNER OF SOUTHERN FISHING INDUSTRY. PRIVATE RESPONDENTS

WERE HIRED ON VARIOUS DATES 3 BY PETITION'ER AS REGULAR PIECE-RATE WORKERS. THEY WERE
UNIFORMLY PAID AT A RATE OF P1.00 PER TUNA WEIGHING THIRTY (30) TO EIGHTY (80) KILOS PER
MOVEMENT, THAT IS — FROM THE FISHING BOATS DOWN TO PETITIONER'S STORAGE PLANT AT A
LOAD/UNLOAD CYCLE OF WORK UNTIL THE TUNA CATCH REACHED ITS FINAL SHIPMENT/DESTINATION.
THEY DID THE WORK OF UNLOADING TUNA FROM FISHING BOATS TO TRUCK HAULERS; UNLOADING
THEM AGAIN AT PETITIONER'S COLD STORAGE PLANT FOR FILING, STORING, CLEANING, AND
MAINTENANCE; AND FINALLY LOADING THE PROCESSED TUNA FOR SHIPMENT. THEY WORKED SEVEN (7)
DAYS A WEEK.

DURING THE FIRST WEEK OF JUNE 1990, PETITIONER NOTIFIED HIS WORKERS OF HIS PROPOSAL TO
REDUCE THE RATE-PER-TUNA MOVEMENT DUE TO THE SCARCITY OF TUNA. PRIVATE RESPONDENTS
RESISTED PETITIONER'S PROPOSED RATE REDUCTION. WHEN THEY REPORTED FOR WORK THE NEXT DAY,
THEY WERE INFORMED THAT THEY HAD BEEN REPLACED BY A NEW SET OF WORKERS, WHEN THEY
REQUESTED FOR A DIALOGUE WITH THE MANAGEMENT, THEY WERE INSTRUCTED TO WAIT FOR
FURTHER NOTICE. THEY WAITED FOR THE NOTICE OF DIALOGUE FOR A FULL WEEK BUT IN VAIN.

ON 15 JUNE 1990, PRIVATE RESPONDENTS FILED A CASE AGAINST PETITIONER BEFORE THE NLRC SUB-
REGIONAL ARBITRATION BRANCH NO. XI IN GENERAL SANTOS CITY, DOCKETED AS CASE NO. RAB-11-06-
50165-90 FOR UNDERPAYMENT OF WAGES (NON-COMPLIANCE WITH REP. ACT NOS. 6640 AND 6727)
AND NON-PAYMENT OF OVERTIME PAY, 13TH MONTH PAY, HOLIDAY PAY, REST DAY PAY, AND FIVE (5)-DAY
SERVICE INCENTIVE LEAVE PAY; AND FOR CONSTRUCTIVE DISMISSAL. WITH RESPECT TO THEIR
MONETARY CLAIMS, PRIVATE RESPONDENTS CHARGED PETITIONER WITH VIOLATION OF THE MINIMUM
WAGE LAW, ALLEGING THAT WITH PETITIONER'S RATES AND THE SCARCITY OF TUNA CATCHES, PRIVATE
RESPONDENTS' AVERAGE MONTHLY EARNINGS EACH DID NOT EXCEED ONE THOUSAND PESOS
(P1,000.00).

ACCUSING PETITIONER OF CONSTRUCTIVE DISMISSAL, PRIVATE RESPONDENTS CLAIMED THAT

PETITIONER REFUSED TO GIVE THEM WORK ASSIGNMENTS AND REPLACED THEM WITH NEW WORKERS
WHEN THEY SHOWED RESISTANCE TO THE PETITIONER'S PROPOSED REDUCTION OF THE RATE-PER-
TUNA MOVEMENT.

ON 2 JULY 1990, PRIVATE RESPONDENTS FILED ANOTHER CASE AGAINST PETITIONER, DOCKETED AS
CASE NO. RAB; 11-07-50179-90 CONTAINING AN ADDITIONAL CLAIM FOR SEPARATION PAY SHOULD
THEIR COMPLAINT FOR CONSTRUCTIVE DISMISSAL BE UPHELD.

THE TWO (2) CASES WERE CONSOLIDATED. CONCILIATION CONFERENCES WERE SCHEDULED. ON 24 JULY
1990, HOWEVER, LABOR ARBITER APONESTO DIRECTED THE PARTIES TO SUBMIT THEIR RESPECTIVE
POSITION PAPERS WITHIN TWENTY (20) DAYS FROM RECEIPT OF THE DIRECTIVE, SINCE NO AMICABLE
SETTLEMENT WAS REACHED IN CONCILIATION BETWEEN THE PARTIES.

ON 22 AUGUST 1990, PRIVATE RESPONDENTS FILED THEIR POSITION PAPER REITERATING THE CHARGES
IN THEIR COMPLAINT FOR CONSTRUCTIVE DISMISSAL, ATTACHING THERETO A BILL OF PARTICULARS
CONTAINING THE COMPUTATIONS OF THEIR MONETARY CLAIMS. PETITIONER, INSTEAD OF FILING HIS
POSITION PAPER, SOUGHT, THROUGH COUNSEL, AN EXTENSION OF TIME WITHIN WHICH TO FILE HIS
POSITION PAPER.
ON 20 SEPTEMBER 1991, PETITIONER FILED HIS POSITION PAPER WHEREIN HE CLAIMED THAT THE ONLY
ISSUE FOR RESOLUTION WAS PRIVATE RESPONDENTS' MONETARY CLAIMS, AND THAT THERE WAS NO
CONSTRUCTIVE DISMISSAL. PETITIONER FURTHER ARGUED THAT PRIVATE RESPONDENTS WERE NOT
DISMISSED BUT RATHER, THEY ABANDONED THEIR WORK AFTER LEARNING OF PETITIONER'S PROPOSAL
TO REDUCE TUNA MOVEMENT RATES BECAUSE OF THE SCARCITY OF TUNA, AND THAT, IT TOOK PRIVATE
RESPONDENTS ONE (1) MONTH TO RETURN TO WORK, BUT THEY COULD NO LONGER BE
ACCOMMODATED AS PETITIONER HAD ALREADY HIRED THEIR REPLACEMENTS AFTER PRIVATE
RESPONDENTS FAILED TO HEED PETITIONER'S REPEATED DEMANDS FOR THEM TO RETURN TO WORK.
UPON SAID PREMISES, PETITIONER CONTENDED THAT PRIVATE RESPONDENTS WERE NOT ENTITLED TO
SEPARATION PAY.

ON 27 SEPTEMBER. 1991, LABOR ARBITER APONESTO RENDERED A DECISION, WITH THE FOLLOWING
DISPOSITION:

WHEREFORE, FINDING THAT COMPLAINANTS NOE BARGO, ROGER HIMENO, RAYMUNDO BADAGOS,
PATRICIO SALVADOR; SR., NEGIL BARGE, JOEL MENDOZA AND EMMANUEL CALIXIHAN WERE
(CONSTRUCTIVELY) DISMISSED FROM EMPLOYMENT WITHOUT JUST OR UNAUTHORIZED CAUSE HENCE
ILLEGAL, RESPONDENTS SOUTHERN FISHING INDUSTRY AND MR. DOMINICO CONGSON ARE HEREBY
DIRECTED TO PAY, JOINTLY AND SEVERALLY, THEIR RESPECTIVE SEPARATION PAY AND MONETARY CLAIMS
FOR SALARY DIFFERENTIALS, 13TH MONTH PAY AND SERVICE INCENTIVE LEAVE PAY, AS COMPUTED
ABOVE, IN THE TOTAL SUM OF FIVE HUNDRED TWO THOUSAND EIGHT HUNDRED SIXTY FIVE
(P502,865.00) PESOS.

THE CLAIMS FOR OVERTIME PAY, HOLIDAY PAY AND REST DAY PAY ARE, HOWEVER, DISMISSED FOR LACK
OF FACTUAL BASIS AND FOR REASONS AFORECITED.

SO ORDERED. 4

IN HOLDING PETITIONER GUILTY OF CONSTRUCTIVE DISMISSAL, LABOR ARBITER APONESTO MADE THE
FOLLOWING FINDINGS:

AFTER A CAREFUL EVALUATION OF THE FOREGOING FACTS, PROOFS, EVIDENCE, ARGUMENTS AND
COUNTER-ARGUMENTS ADDUCED BY THE PARTIES WE FIND THAT COMPLAINANTS WERE SUMMARILY
DISMISSED FROM EMPLOYMENT T ON THE FIRST WEEK OF JUNE, 1990, WHEN RESPONDENT DOMINICO
CONGSON ARBITRARILY REPLACED THEM WITH ANOTHER GROUP OF LABORERS TO DO THE WORK OF
COMPLAINANTS. THIS WAS BROUGHT ABOUT BY THEIR RELUCTANCE OR RESISTANCE TO ACCEPT A NEW
LOWER RATE PROPOSED BY RESPONDENT THE DAY BEFORE. THE ADVISE TO WAIT FOR FURTHER NOTICE'
WAS INDEED A CONFIRMATION THAT COMPLAINANTS WERE DISMISSED AS UNDERSCORED BY THE FACT
THAT SUCH NOTICE NEVER CAME EVEN UNTIL THIS DATE. HAVING BEEN CONSTRUCTIVELY AND
ILLEGALLY DISMISSED COMPLAINANTS ARE THEREFORE ENTITLED TO THEIR PRAYER FOR SEPARATION
PAY. THEIR LENGTH OF SERVICE 10 YEARS AND 6 YEARS, RESPECTIVELY(SUPRA), WHICH RESPONDENT
DISMALLY FAILED TO CONTROVERT OR REFUTE, SHALL BE THE BASIS OF OUR COMPUTATION, THUS:

N. BARGO
(P2,670 X 10)

P26,700

R. HIMENO

(P2,670 X 10)

26,700

R. BADAYOS

(P2,670 X 10)

26,700

P. SALVADOR, JR.

(P2,670 X 6)

16,020

NEGIL BARGO

(P2,670 X 10)

26,700

J. MENDOZA

(P2,670 X 6)

16,020

E. CALIXIHAN
(P2,670 X 6)

16,020

————

TOTAL

P154,860 5

EXCEPT FOR PRIVATE RESPONDENTS' CLAIM FOR OVERTIME PAY, HOLIDAY PAY, AND REST DAY PAY WHICH
WERE DISMISSED, LABOR ARBITER APONESTO GRANTED THE MONETARY CLAIMS OF PRIVATE
RESPONDENTS, IN THIS WISE:

WE LIKEWISE GRANT THE MONETARY CLAIMS OF COMPLAINANTS FOR WAGE DIFFERENTIALS, 13TH
MONTH PAY AND SERVICE INCENTIVE LEAVE PAY PAYMENT OF OR EXEMPTION FROM WHICH
RESPONDENTS FAILED TO SHOW. HENCE, GIVEN THE 3-YEAR PERIOD COVERED BY THEIR MONETARY
CLAIMS, I.E. FROM JUNE, 1987 TO JUNE, 1990 THE MONETARY AWARDS DUE COMPLAINANTS ARE AS
FOLLOWS:

NAME

WAGE

13TH

SIL

TOTAL

DIFF'L.

MON. PAY

NOE BARGO

42,120

6,510.00

1,085

P49,715.00

R. HIMENO

42,120
6,510.00

1,085

49,715.00

R. BADAGOS

42,120

6,510.00

1,085

49,715.00

P. SALVADOR

42,120

6,510.00

1,085

49,715.00

N. BARGO

42,120

6,510.00

1,085

49,715.00

J. MENDOZA

42,120

6,510.00

1,085

49,715.00

CALIXIHAN.
42,120

6,510.00

1,085

49,715.00

—————

TOTAL

P348,005.00

XXX XXX XXX

PERTAINING TO SALARY DIFFERENTIALS RESPONDENT FAILED TO ADDUCE ANY EVIDENCE OR

DOCUMENT AT ALL TO SHOW THAT UNDER THEIR PECULIAR ARRANGEMENTS COMPLAINANTS WERE
RECEIVING COMPENSATION AT PAR OR ABOVE THE THEN EXISTING MINIMUM WAGE; THIS, DESPITE
MORE THAN SUFFICIENT TIME AFFORDED. CONSEQUENTLY, WE HAVE NO OTHER ALTERNATIVE BUT TO
GIVE CREDENCE TO COMPLAINANTS' ASSERTION THAT THEIR AVERAGE INCOME (EACH) DID NOT EXCEED
P1,000.00 A MONTH (ANNEX "B") COMPLAINANTS' POSITION PAPER), THUS THE DIFFERENTIALS.6

ON THE OTHER HAND, LABOR ARBITER APONESTO MADE SHORT SHRIFT OF PETITIONER'S DEFENSE BY
RULING THAT:

WE CANNOT GIVE CREDENCE TO THE ALLEGATIONS OR DEFENSES PUT UP BY RESPONDENTS: AS STATED,

ONE OF THE PRINCIPAL CLAIMS OF COMPLAINANTS IS THE PAYMENT OF THEIR SEPARATION PAY WHICH
WAS SPECIFICALLY PRAYED BY COMPLAINANTS WHEN THEY FILED THE SECOND CASE ON JULY 2, 1990;
THIS CLAIM IS LIKEWISE INCLUDED IN THEIR BILL OF PARTICULARS (ANNEX "C" COMPLAINANTS'
POSITION PAPER). WE CANNOT SUSTAIN RESPONDENTS' THEORY OF ABANDONMENT. RECORD SHOWS
THAT SHORTLY AFTER COMPLAINANTS WERE CONSTRUCTIVELY DISMISSED ON THE FIRST WEEK OF JUNE,
1990 THEY IMMEDIATELY FILED THE INSTANT CASE FOR CONSTRUCTIVE DISMISSAL ON JUNE 15,1990.
THERE IS ALSO NO SHOWING OF A DELIBERATE REFUSAL ON THEIR PART TO RESUME WORK.
MOREOVER, RESPONDENTS DISMALLY FAILED TO SUBSTANTIATE THEIR GENERAL ALLEGATION THAT
"REPEATED DEMANDS" WERE MADE UPON COMPLAINANTS TO RETURN TO WORK.7

ON APPEAL BY PETITIONER, RESPONDENT NLRC FOUND PETITIONER GUILTY OF ILLEGAL DISMISSAL.

HOLDING THAT PETITIONER FAILED TO SUBSTANTIATE HIS CONTENTION THAT PRIVATE RESPONDENTS
ABANDONED THEIR WORK, RESPONDENT NLRC RULED THAT PETITIONER REPLACED PRIVATE
RESPONDENTS WITH A NEW SET OF WORKERS WITHOUT JUST CAUSE AND THE REQUIRED NOTICE AND
HEARING. RESPONDENT NLRC THEREFORE AFFIRMED LABOR ARBITER APONESTO'S FINDINGS AND
MONETARY AWARDS. PETITIONER'S MOTION FOR RECONSIDERATION AND SUPPLEMENTAL MOTION FOR
RECONSIDERATION WERE DENIED FOR LACK OF MERIT IN THE CHALLENGED RESOLUTION DATED 28
JANUARY 1994.

HENCE, THE PRESENT RECOURSE BY PETITIONER.

PETITIONER IMPUTES GRAVE ABUSE OF DISCRETION TO RESPONDENT NLRC IN COMPLETELY
DISREGARDING HIS MOTION FOR RECONSIDERATION AND SUPPLEMENTAL MOTION FOR
RECONSIDERATION. HE CONTENDS THAT SAID MOTIONS FOR RECONSIDERATION RAISED SUBSTANTIAL
ISSUES WHICH RESPONDENT NLRC FAILED TO CONSIDER AND RESOLVE.

PETITIONER'S MOTION FOR RECONSIDERATION AND SUPPLEMENTAL MOTION FOR RECONSIDERATION

RAISED ONLY TWO (2) ISSUES: A) THE ACCURACY OF LABOR ARBITER APONESTO'S COMPUTATIONS IN
ARRIVING AT THE MONETARY AWARDS REPRESENTING SALARY DIFFERENTIALS; AND B) THE PROPRIETY
OR CORRECTNESS OF LABOR ARBITER APONESTO'S GRANT OF SEPARATION PAY TO PRIVATE
RESPONDENTS.

PETITIONER TAKES ISSUE WITH THE MANNER LABOR ARBITER APONESTO COMPUTED PRIVATE
RESPONDENTS WAGE DIFFERENTIALS. IN HIS SUPPLEMENTAL MOTION FOR RECONSIDERATION,
PETITIONER ARGUED, THUS:

IN THE DECISION RENDERED, THE ARBITER AWARDED WAGE DIFFERENTIAL ON THE PREMISE THAT
COMPLAINANTS MONTHLY AVERAGE INCOME IS ONLY P1, 000.00 AS ALLEGED IN THEIR POSITION PAPER.
THIS IS ERRONEOUS. HERE IS WHY:

HEREIN COMPLAINANTS WERE EMPLOYED BY RESPONDENTS ON A LOAD-UNLOAD CYCLE OF HAULING

"BARILES" FROM THE FISHING BOATS TO THE TRUCK HAULER OF THE RESPONDENTS; THEN FROM THE
TRUCK HAULER DOWN TO THE COLD STORAGE; THE HEREIN COMPLAINANTS WERE PAID P 1.00 PER
MOVEMENT T; THAT IS, FROM THE FISHING BOAT TO THE COLD STORAGE, THE HEREIN COMPLAINANTS
ACTUALLY RECEIVED THE AMOUNT OF P2.00, ONE (1) PESO PER MOVEMENT; THAT THERE ARE TWO (2)
MOVEMENTS FROM THE FISHING BOAT TO THE COLD STORAGE, HENCE COMPLAINANTS ARE ACTUALLY
RECEIVING P2.00 PER PIECE OF TUNA. THE ARBITER MUST HAVE BEEN ON THE IMPRESSION THAT THERE
IS ONLY ONE (1) MOVEMENT FROM THE FISHING BOAT TO THE COLD STORAGE. THIS IS ERRONEOUS.

THAT FINALLY, WHEN THE TUNA IS READY FOR EXPORT, THE SAME IS TO BE TRANSFERRED FROM THE
COLD STORAGE TO THE OCEAN GOING VESSEL BERTHED AT RESPONDENTS WHARF AT TALISAY, GENERAL
SANTOS CITY, THIS TIME HEREIN COMPLAINANTS ARE PAID P3.00 PER PIECE OF TUNA FROM THE COLD
STORAGE TO THE OCEAN GOING VESSEL AS SHOWN IN THE HEREWITH ATTACHED ANNEXES.

IN FINE, ALL IN ALL, THERE ARE THREE (3)MOVEMENTS FROM THE TIME THE TUNA IS UNLOADED FROM
THE FISHING BOAT TO THE FISH CAR THEN TO THE COLD STORAGE; AND, FINALLY FROM THE COLD
STORAGE TO THE VESSEL.

IN ADDITION TO THE AMOUNT OF P1.00 PER 'BARILES' PER MOVEMENT HEREIN COMPLAINANTS GET
THE INTESTINES AND LIVER OF THE TUNA AS PART OF THEIR SALARY. THAT FOR EVERY TUNA DELIVERED,
HEREIN COMPLAINANTS EXTRACT AT LEAST THREE (3) KILOS OF INTESTINES AND LIVER. THAT THE
MINIMUM PREVAILING PRICE OF TUNA INTESTINE AND LIVER IN 1986 TO 1990 RANGE FROM P15.00 TO
P20.00/KILO. THE VALUE OF THE TUNA INTESTINE AND LIVER SHOULD BE COMPUTED IN ARRIVING AT
THE DAILY WAGE OF HEREIN COMPLAINANTS BECAUSE THE VERY ESSENCE OF THE AGREEMENT
BETWEEN COMPLAINANTS AND RESPONDENT IS: COMPLAINANTS SHALL BE PAID ONLY P1.00 PER TUNA
PER MOVEMENT BUT THE INTESTINES AND LIVER OF THE TUNA DELIVERED SHALL GO TO THE HEREIN
COMPLAINANTS. IT SHOULD BE NOTED THAT TUNA INTESTINES AND LIVER ARE EASILY DISPOSED OF IN
ANY PUBLIC MARKET. COMPLAINANTS THEMSELVES WOULD NOT HAVE AGREED AND WOULD NOT HAVE
SERVED RESPONDENT THAT LONG PERIOD OF TIME IF THEY ARE ONLY PAID P1.00 PER TUNA
MOVEMENT. WHAT THEY ARE AFTER, IN TRUTH AND IN FACT IS THE TUNA INTESTINES AND LIVER
WHICH THEY CAN EASILY CONVERT INTO CASH.8

QUITE CLEARLY, PETITIONER ADMITS THAT THE P1.00-PER-TUNA MOVEMENT IS THE ACTUAL WAGE RATE
APPLIED TO PRIVATE RESPONDENTS AS EXPRESSLY AGREED UPON BY BOTH PARTIES. PETITIONER
FURTHER ADMITS THAT PRIVATE RESPONDENTS, PER THEIR REQUEST, WERE ENTITLED TO RETRIEVE THE
TUNA INTESTINES AND LIVER AS PART OF THEIR COMPENSATION. FINALLY, PETITIONER DOES NOT
REFUTE LABOR ARBITER APONESTO WHEN THE LATTER FIXED PRIVATE RESPONDENTS' INDIVIDUAL
MONTHLY WAGE AT P2,670 COMPUTED AT THE MANDATORY DAILY WAGE OF P89.00.

HOWEVER, IT IS THE CONTENTION OF PETITIONER THAT NOTWITHSTANDING THE FACT THAT PRIVATE
RESPONDENTS' ACTUAL CASH WAGE FELL BELOW THE MINIMUM WAGE FIXED BY LAW, RESPONDENT
NLRC SHOULD HAVE CONSIDERED AS FORMING A SUBSTANTIAL PART OF PRIVATE RESPONDENTS' TOTAL
WAGES THE CASH VALUE OF THE TUNA LIVER AND INTESTINES PRIVATE RESPONDENTS WERE ENTITLED
TO RETRIEVE. PETITIONER THEREFORE ARGUES THAT THE COMBINED VALUE OF PRIVATE RESPONDENTS'
CASH WAGE AND THE MONETARY VALUE OF THE TUNA LIVER AND INTESTINES CLEARLY EXCEEDED THE
MINIMUM WAGE FIXED BY LAW.

PETITIONER'S FOREGOING ARGUMENTS DO NOT IMPRESS US.

THE LABOR CODE EXPRESSLY PROVIDES:

ARTICLE 102. FORMS OF PAYMENT. —NO. EMPLOYER SHALL PAY THE WAGES OF AN EMPLOYEE BY
MEANS OF, PROMISSORY NOTES, VOUCHERS, COUPONS, TOKENS TICKETS, CHITS, OR ANY OBJECT OTHER
THAN LEGAL TENDER, EVEN WHEN EXPRESSLY REQUESTED BY THE EMPLOYEE.

PAYMENT OF WAGES BY CHECK OR MONEY ORDER SHALL BE ALLOWED WHEN SUCH MANNER OF
PAYMENT IS CUSTOMARY ON THE DATE OF EFFECTIVITY OF THIS CODE, OR IS NECESSARY AS SPECIFIED IN
APPROPRIATE REGULATIONS TO BE ISSUED BY THE SECRETARY OF LABOR OR AS STIPULATED IN A
COLLECTIVE BARGAINING AGREEMENT. (EMPHASIS SUPPLIED)

UNDOUBTEDLY, PETITIONER'S PRACTICE OF PAYING THE PRIVATE RESPONDENTS THE MINIMUM WAGE
BY MEANS OF LEGAL TENDER COMBINED WITH TUNA LIVER AND INTESTINES RUNS COUNTER TO THE
ABOVE CITED PROVISION OF THE LABOR CODE. THE FACT THAT SAID METHOD OF PAYING THE MINIMUM
WAGE WAS NOT ONLY AGREED UPON BY BOTH PARTIES IN THE EMPLOYMENT AGREEMENT BUT EVEN
EXPRESSLY REQUESTED BY PRIVATE RESPONDENTS, DOES NOT SHIELD PETITIONER. ARTICLE 102 OF THE
LABOR CODE IS CLEAR. WAGES SHALL BE PAID ONLY BY MEANS OF LEGAL TENDER. THE ONLY INSTANCE
WHEN AN EMPLOYER IS PERMITTED TO PAY WAGES INFORMS OTHER THAN LEGAL TENDER, THAT IS, BY
CHECKS OR MONEY ORDER, IS WHEN THE CIRCUMSTANCES PRESCRIBED IN THE SECOND PARAGRAPH OF
ARTICLE 102 ARE PRESENT.

WE THEREFORE FIND NO GRAVE ABUSE OF DISCRETION ON THE PART OF RESPONDENT NLRC IN

UPHOLDING LABOR ARBITER APONESTO'S AWARD OF SALARY DIFFERENTIALS.

WITH RESPECT TO THE ISSUE CONCERNING THE PROPRIETY OR CORRECTNESS OF THE GRANT OF
SEPARATION PAY TO PRIVATE RESPONDENTS, PETITIONER CONTENDS THAT; ASSUMING ARGUENDO THAT
LABOR ARBITER APONESTO'S FINDINGS WERE PROPER AS TO PRIVATE RESPONDENTS' ILLEGAL
DISMISSAL, HIS DECISION DID NOT STATE THE REASON WHY INSTEAD OF REINSTATEMENT, SEPARATION
PAY HAS TO BE AWARDED TO PRIVATE RESPONDENTS. PETITIONER SUBMITS THAT UNDER EXISTING
LAWS AND JURISPRUDENCE, WHENEVER THERE IS A FINDING OF ILLEGAL DISMISSAL, THE AVAILABLE
AND LOGICAL REMEDY IS REINSTATEMENT. AS A PERMISSIBLE EXCEPTION TO THE GENERAL RULE,
SEPARATION PAY MAY BE AWARDED TO THE EMPLOYEE IN LIEU OF REINSTATEMENT, BY REASON OF
STRAINED RELATIONSHIP BETWEEN THE EMPLOYER AND EMPLOYEE. SINCE THERE WAS NO FINDING OR
EVEN ALLEGATION OF STRAINED RELATIONSHIP BETWEEN .PETITIONER AND PRIVATE RESPONDENTS,
RESPONDENT NLRC SHOULD HAVE DELETED, ACCORDING TO PETITIONER, THE AWARD OF SEPARATION
PAY IN LABOR ARBITER APONESTO'S DECISION.

WE FIND PETITIONER'S RATIOCINATION ON THE IMPROPRIETY OF THE AWARD OF SEPARATION PAY TO

PRIVATE RESPONDENTS TO BE SPECIOUS. PETITIONER SEEKS TO DEFEAT THE AWARD OF SEPARATION PAY,
IN LIEU OF REINSTATEMENT, ON THE PRETEXT THAT INASMUCH AS THE EXISTENCE OF STRAINED
RELATIONSHIP — AS A PERMISSIBLE EXCEPTION TO AN AXIOMATIC ORDER OF REINSTATEMENT IN CASES
OF ILLEGAL DISMISSAL — WAS NOT ADEQUATELY ESTABLISHED, LABOR ARBITER APONESTO SHOULD
NOT HAVE ENTERTAINED AT ALL PRIVATE RESPONDENTS' CLAIM FOR SEPARATION PAY.

A CAREFUL SCRUTINY OF THE RECORDS OF THE CASE AT BENCH, HOWEVER, READILY DISCLOSES THE
EXISTENCE OF STRAINED RELATIONSHIP BETWEEN THE PETITIONER AND PRIVATE RESPONDENTS.

FIRSTLY, PETITIONER CONSISTENTLY REFUSED TO RE-ADMIT PRIVATE RESPONDENTS IN HIS

ESTABLISHMENT. PETITIONER EVEN REPLACED PRIVATE RESPONDENTS WITH A NEW SET OF WORKERS
TO PERFORM THE TASKS OF PRIVATE RESPONDENTS; MOREOVER, ALTHOUGH PETITIONER OSTENSIBLY
ARGUED IN HIS SUPPLEMENTAL MOTION FOR RECONSIDERATION THAT REINSTATEMENT SHOULD HAVE
BEEN THE PROPER REMEDY IN THE CASE AT BENCH ON HIS PREMISE THAT THE EXISTENCE OF STRAINED
RELATIONSHIP WAS NOT ADEQUATELY ESTABLISHED, YET PETITIONER NEVER SINCERELY INTENDED TO
EFFECT THE ACTUAL REINSTATEMENT OF PRIVATE RESPONDENTS. FOR IF PETITIONER WERE TO PURSUE
FURTHER THE ENTIRE LOGIC OF HIS ARGUMENT, THE PRAYER IN HIS SUPPLEMENTAL MOTION FOR
RECONSIDERATION SHOULD HAVE CONTAINED NOT JUST THE MERE DELETION OF THE AWARD OF
SEPARATION PAY, BUT PRECISELY, THE REINSTATEMENT OF PRIVATE RESPONDENTS. QUITE OBVIOUSLY
THEN, NOTWITHSTANDING PETITIONER'S ARGUMENT FOR REINSTATEMENT HE WAS ONLY INTERESTED
IN THE DELETION OF THE AWARD OF SEPARATION PAY TO PRIVATE RESPONDENTS.

IN THE CASE OF FELIX ESMALIN VS. NATIONAL LABOR RELATIONS COMMISSION (3RD DIVISION) AND
CARE PHILIPPINES,9 WE HELD THAT STRAINED RELATIONSHIP IS FAIRLY ESTABLISHED IF THE RECORDS OF
THE CASE SHOWED CONSISTENT REFUSAL OF THE EMPLOYER TO ACCEPT THE DISMISSED EMPLOYEE, TO
WIT:

FROM THE RECORDS OF THE CASE IT CAN BE DISCERNED THAT REINSTATEMENT IS NO LONGER VIABLE IN
VIEW OF THE STRAINED RELATIONS BETWEEN PETITIONER-EMPLOYEE (FELIX ESMALIN) AND PRIVATE
RESPONDENT EMPLOYER (CARE PHILIPPINES). THIS IS VERY EVIDENT FROM THE VEHEMENT AND
CONSISTENT STAND OF CARE PHILIPPINES IN REFUSING TO ACCEPT BACK PETITIONER ESMALIN.
INSTEAD, PETITIONER SHOULD BE AWARDED SEPARATION PAY AS AN ALTERNATIVE FOR REINSTATEMENT.

AND SECONDLY, PRIVATE RESPONDENTS THEMSELVES, FROM THE VERY START, HAD ALREADY INDICATED
THEIR AVERSION TO THEIR CONTINUED EMPLOYMENT IN PETITIONER'S ESTABLISHMENT. THE VERY
FILING OF THEIR SECOND CASE BEFORE LABOR.
ARBITER APONESTO (RAB-1 1-07-90179-90) SPECIFICALLY FOR SEPARATION PAY IS CONCLUSIVE OF
PRIVATE RESPONDENTS' INTENTION TO SEVER THEIR WORKING TIES WITH PETITIONER.

IN THE CASE OF ARTURO LAGNITON, SR. VS. NATIONAL LABOR RELATIONS COMMISSION, ET A1., 10 WE
RULED THAT THE REFUSAL OF THE DISMISSED EMPLOYEE TO BE RE-ADMITTED IS CONSTITUTIVE OF
STRAINED RELATIONS, THUS:

IT APPEARS THAT RELATIONS BETWEEN THE PETITIONER AND THE COMPLAINANTS HAVE BEEN SO
STRAINED THAT THE COMPLAINANTS ARE NO LONGER WILLING TO BE REINSTATED. AS SUCH
REINSTATEMENT WOULD ONLY EXACERBATE THE ANIMOSITIES THAT HAVE DEVELOPED BETWEEN THE
PARTIES, THE PUBLIC RESPONDENTS WERE CORRECT IN ORDERING INSTEAD THE GRANT OF SEPARATION
PAY TO THE DISMISSED EMPLOYEES IN THE INTEREST OF INDUSTRIAL PEACE.

WE THEREFORE FIND NO GRAVE ABUSE OF DISCRETION ON THE PART OF RESPONDENT NLRC IN

UPHOLDING LABOR ARBITER APONESTO,'S GRANT OF PRIVATE RESPONDENTS' PRAYER FOR SEPARATION
PAY IN LIEU OF REINSTATEMENT.

WHEREFORE, PREMISES CONSIDERED, THE PETITION IS HEREBY DISMISSED. THE CHALLENGED DECISION
OF RESPONDENT NLRC DATED 28 MAY 1993 IS HEREBY AFFIRMED.
G.R. NO. L-11606 FEBRUARY 28, 1959

EUFROCIO BERMISO, ET AL., PETITIONERS,

VS.
HIJOS DE F. ESCAÑO, INC., ET AL., RESPONDENTS.

DELFIN N. MERCADER FOR PETITIONERS.

VICENTE L. FAELNAR FOR THE RESPONDENT HIJOS DE F. ESCAÑO, INC.
JOSE MUAÑA IN HIS OWN BEHALF AND FOR THE OTHER RESPONDENTS.

LABRADOR, J.:

PETITIONERS ORIGINALLY NUMBERING 45 AND FORMERLY COMPOSING THE DEMOCRATIC LABOR

ASSOCIATION AND THE KATUBSANAN SA MAMUMUO INSTITUTED THIS ACTION BEFORE THE COURT OF
INDUSTRIAL RELATIONS ON AUGUST 5, 1952, PRAYING FOR REINSTATEMENT WITH BACK WAGES, DIRECT
PAYMENT OF WAGES TO THE LABORERS INSTEAD OF THROUGH THE UNION, PAYMENT OF ACCRUED
OVERTIME PAY AND WAGE DIFFERENTIALS, PROHIBITION FROM CARRYING LOAD IN EXCESS OF 50 KILOS,
MINIMUM DAILY WAGE OF P5.00, VACATION AND SICK LEAVE, FREE HOSPITALIZATION, ACCIDENT
INSURANCE, FREE CHOICE OF LABOR UNION AND GRIEVANCE COMMITTEE. OF THE ORIGINAL
PETITIONERS ONLY FIVE CONTINUED TO TAKE INTEREST IN THE ACTION, THE OTHER HAVING DESISTED
THEREFROM. AFTER HEARING THE COURT OF INDUSTRIAL RELATIONS ORDERED THE REINSTATEMENT OF
THE SAID FIVE LABORERS TO THEIR FORMER WORK AND POSITIONS IN THE SABAY GROUP, BUT
WITHOUT BACK WAGES, BUT DISMISSED THE OTHER CLAIMS. NOT SATISFIED WITH THE DECISION THE
FIVE REMAINING PETITIONERS HAVE FILED THIS APPEAL BY A PETITION FOR CERTIORARI.

THE COURT OF INDUSTRIAL RELATIONS MADE THE FOLLOWING FINDINGS AS TO THE MANNER IN WHICH
THE UNION OR GROUP TO WHICH THE PETITIONERS BELONG OPERATE:
THE HIJOS DE F. ESCAÑO, INC., HEREAFTER REFERRED TO AS ESCAÑO OR COMPANY, IS A DOMESTIC
ENGAGED IN THE BUSINESS OF CARRYING OR TRANSPORTING PASSENGERS AND GOODS BY WATER FOR
COMPENSATION WITHIN THE PHILIPPINES . . . .

THE KATUBSANAN SA MAMUMUO, HEREAFTER CALLED THE UNION OR SIMPLY KATUBSANAN, IS A

LABOR ORGANIZATION DULY REGISTERED WITH THE DEPARTMENT OF LABOR AND WITH OFFICE
ADDRESS IN CEBU CITY. IT IS COMPOSED MAINLY OF LABORERS FROM THE VISAYAS AND MINDANAO
AND HAS RESPONDENT JOSE MUAÑA AND VITALIANO SABAY AS ITS GENERAL PRESIDENT AND GENERAL
TREASURER, RESPECTIVELY. ITS MEMBERS IN CEBU ARE NUMEROUS AND DIVIDED INTO SEVERAL
GROUPS, SOMETIMES CALLED CHAPTERS. ONE OF THEM IS HEADED BY RESPONDENT SABAY AS ITS
FOREMAN OR "CABO" AND KNOWN AS THE SABAY GROUP. TO THIS GROUP, IN WHICH THERE ARE NO
LESS THAN 50 MEN, FORMERLY BELONGED SOME OR ALL OF THE 45 PETITIONERS.

THE SABAY GROUP WAS ORGANIZED IN 1947. ITS MEMBERS GENERALLY PERFORM WORK SIMILAR TO
THAT DONE BY LABORERS OF STEVEDORING AND ARRASTRE FIRMS. THEY LOAD AND UNLOAD VESSELS
IN THE PORT OF CEBU AND HAUL OR TRANSPORT DISCHARGED CARGO FROM THE WATERFRONT TO THE
CONSIGNEES WAREHOUSES AS WELL AS CARGO TO BE SHIPPED OUT OF CEBU FROM THE SHIPPERS'
WAREHOUSE TO THE WATERFRONT. BEFORE THE PETITION WAS FILED WITH THE COURT, THERE WERE
OCCASIONS WHEN THEY ALSO PERFORMED FOR CERTAIN PERSONS NOT PARTIES TO THE CASE WORK
OTHER THAN LOADING, UNLOADING AND HAULING CARGO. WHEN THE PETITIONERS WERE STILL
CONNECTED WITH THE GROUP, THEY ALMOST ALWAYS PARTICIPATED IN EVERY WORK UNDERTAKEN BY
IT.

ONE OF THE CARRIERS FOR WHOM THE SABAY MEN REGULARLY SERVE AS STEVEDORES IS THE ESCAÑO.
THEIR RELATION HAD ITS INCEPTION IN 1947 WHEN, THROUGH THE REPRESENTATION MADE BY MUAÑA
AND SABAY, SALVADOR SALA, GENERAL MANAGER OF SAID CARRIER, PERMITTED THE SABAY GROUP TO
DO THE WORK OF LOADING AND UNLOADING ITS VESSELS TO THE EXCLUSION OF ALL OTHER PERSONS.
FROM THE BEGINNING THE COMPANY HAS NOT DIRECTLY PAID MUAÑA, SABAY OR THE GROUP ANY
COMPENSATION FOR THE LOADING OR UNLOADING SERVICES RENDERED BY SABAY MEN. NEITHER HAS
IT RECEIVED ANY PAYMENT FOR THE EXCLUSIVE PRIVILEGE ENJOYED BY THE GROUP. THE PRACTICE
WHICH THEY HAVE CONTINUOUSLY FOLLOWED IS THAT THE GROUP COLLECTS FROM THE SHIPPERS AND
CONSIGNEES THE CHARGES FOR THE HANDLING OF THE CARGO BASED ON A SCHEDULE OF RATES
WHICH APPEARS TO HAVE BEEN PREVIOUSLY APPROVED BY ALL THE PARTIES AFFECTED BY THE WORK,
WHILE THE COMPANY RECEIVES OR COLLECTS FROM THE SHIPPERS OR CONSIGNEES ONLY THE
FREIGHTAGE FOR THE CARGO.

ASIDE FROM SABAY, THE GROUP HAS A COLLECTOR, A TIMEKEEPER, A PAYMASTER, AND SEVERAL
CAPATACES AND SUBCAPATACES. THE FIRST THREE ASSIST SABAY IN THE COLLECTION OF THE HANDLING
FEES FROM THE SHIPPERS AND CONSIGNEES, THE RECORDING OF NAMES OF MEMBERS TAKING PART IN
THE WORK AND THEIR WORKING HOURS, AND THE PAYMENT TO THEM OF THEIR RESPECTIVE SHARES IN
THE EARNINGS OF THE GROUP. THE CAPATACES AND SUB-CAPATACES HELP HIM IN SUPERVISING THE
MEN. DURING THE LOADING AND UNLOADING OF THE ESCAÑO BOATS, HOWEVER, THE SHIPPING
MANAGER OF THE COMPANY, WHO IS USUALLY PRESENT, CALLS THEIR ATTENTION TO THEIR WORK.
FURTHERMORE, ITS CHECKERS AID THE MEN IN DETERMINING WHICH CARGO TO LOAD OR UNLOAD.
AND WHENEVER EXPEDIENT OR NECESSARY TO FINISH THE WORK IMMEDIATELY, THEY ARE ALLOWED TO
USE THE DIFFERENT MODERN APPARATUSES OF THE VESSELS FOR THE RAISING AND LOADING OF
CARGO. IN THE HAULING OF THE CARGO, CHECKERS OR AGENTS OF THE SHIPPERS AND CONSIGNEES
ACCOMPANY THEM AND LOOK OVER THEIR WORK.
GENERALLY, ONLY SABAY MEN ARE PERMITTED TO TAKE PART IN THIS WORK. BUT WHEN IT IS
VOLUMINOUS, THE GROUP, TO AVOID DELAY, ENLISTS THE SERVICES OF NON-MEMBERS. THESE
RECRUITS ARE TREATED AS CASUAL LABORERS AND PAID ON DAILY BASIS.

THE AMOUNT COLLECTED FROM THE SHIPPERS AND CONSIGNEES IS CONSIDERED AS THE GROSS
INCOME OF THE GROUP. FROM THIS INCOME ARE DEDUCTED ITS EXPENSES IF ANY, FOR GASOLINE AND
SPARE PARTS OF TRUCKS USED, DAMAGE TO, LOSS OR DESTRUCTION OF, CARGO NOT IMPUTABLE TO
ANY PARTICULAR INDIVIDUAL OR INDIVIDUALS, MEALS, RECREATION, WAGES OF CASUAL WORKERS,
AND AN AMOUNT EQUIVALENT OF TWO PER CENTUM FOR THE KATUBSANAN FOR THE MAINTENANCE
OF THE UNION CLINIC AND NEWSPAPER. THE NET INCOME IS THEN DIVIDED INTO EQUAL SHARES IN
ACCORDANCE WITH THE SHARING PLAN UNDER WHICH EACH COMMON LABORERS IS ENTITLED TO ONE
SHARE AND THE REST, INCLUDING THE SUB-CAPATACES, CAPATACES, SABAY AND THE OTHER OFFICERS
OF THE GROUP, TO ONE AND ONE-FOURTH, ONE AND ONE-HALF, ONE AND THREE-FOURTHS, TWO,
THREE, OR MORE EACH, DEPENDING ON THE LENGHT OF MEMBERSHIP AND IMPORTANCE OF THE
POSITION HELD IN THE GROUP. THIS DIVISION OF THE GROUP'S INCOME IS DONE EVERY SATURDAY AND
THE SHARES RECEIVED BY THE PARTICIPATING MEMBERS CONSTITUTE THEIR WAGES FOR THE WEEK.

BEFORE THE MINIMUM WAGE LAW (R. A. NO. 602) WENT INTO EFFECT, THE NUMBER OF HOURS EACH
LABORERS WORKED WAS NOT TAKEN INTO ACCOUNT BY THE GROUP. EVEN MEMBERS WHO DID NOT
ACTUALLY RENDER ANY SERVICE WERE GIVEN SHARES IF THEIR FAILURE TO WORK WAS FOUND TO HAVE
BEEN DUE A REASONABLE CAUSE. CERTAIN RECORDS WERE MADE OF THE DISPOSITION OF THE
GROUP'S INCOME BUT THEY, TOGETHER WITH SOME PAYROLLS, WERE DESTROYED BY WATER WHEN
CEBU WAS VISITED BY A STRONG TYPHOON IN 1951. AFTER AUGUST 4, 1951, THE SHARE WAS GIVEN A
FIXED VALUE: P0.39, AT FIRST P0.40, LATER, AND, FINALLY, P0.50 PER HOUR OF WORK OR SERVICE.
UNDER THIS MODIFIED PLAN, IF THE COMPUTATION WOULD RESULT IN WAGES FALLING SHORT OF THE
LEGAL MINIMUM BECAUSE THERE WERE MANY LABORERS WHO WORKED, THE GROUP COLLECTED
ADDITIONAL CHARGES FROM THE SHIPPERS AND CONSIGNEES. IF FURTHER PAYMENT WAS REFUSED
FOR THE REASON THAT THE WORK WAS DELAYED BY THE WORKERS, THE GROUP COVERED THE DEFICIT
FROM ITS SO-CALLED SINKING FUND WHICH WAS ACCUMULATED FROM THE SMALL UNDIVIDED OR
INVISIBLE AMOUNTS REMAINING AFTER EACH DISTRIBUTION OF NET INCOME. AT TIMES LABORERS
WERE ROTATED TO OBVIATE THE POSSIBILITY OF WAGE SHORTAGE. AS REGARDS THE EXPENSES,
WHETHER OR NOT THEY WERE DEDUCTIBLE FROM THE EARNINGS WAS LOOKED INTO BY THE AUDITOR-
BOOKKEEPER EMPLOYED BY THE KATUBSANAN. SINCE THE MODIFICATION OF THE SHARING PLAN WAS
MADE, THE GROUP HAS BEEN USING PAYROLLS PRINTED IN THE NAME OF THE UNION.

THE COURT HELD THAT INSOFAR AS THE STEVEDORES LOADING AND UNLOADING ITS VESSELS ARE
CONCERNED, THE HIJOS DE F. ESCAÑO IS AN EMPLOYER OF THE PETITIONERS. WITH RESPECT, HOWEVER,
TO THE ARRASTRE SERVICE, IT HELD THAT THE QUESTION IS BEYOND THE SCOPE OF THE RELATIONSHIP
BETWEEN IT AND THE PETITIONERS.

AFTER A REVIEW OF THE TESTIMONIES GIVEN BY THE PETITIONERS AND THOSE GIVEN ON BEHALF OF
THE RESPONDENTS, THE COURT BELOW ALSO FOUND THAT THE CLAIMANTS FAILED TO ESTABLISH ANY
REASONABLE BASIS FOR ALL THEIR CLAIMS EXCEPT THAT FOR THEIR REINSTATEMENT AND, THEREFORE,
DENIED THEM FOR LACK OF MERIT. CLAIMS FOR OVERTIME PAY, WAGE DIFFERENTIALS, MAXIMUM LOAD
OF 50 KILOS, MINIMUM WAGE OF P5.00 A DAY WERE DISMISSED. SO WERE THE CLAIMS FOR VACATION
AND SICK LEAVE, FREE HOSPITALIZATION, ACCIDENT INSURANCE, AND FREE CHOICE OF LABOR UNION
AND GRIEVANCE COMMITTEE, AS THE LATTER WERE NOT TOUCHED UPON BY THE PETITIONERS IN THE
PRESENTATION OF THEIR EVIDENCE, AND THAT AT ANY RATE THEY SHOULD BE THE SUBJECT OF
COLLECTIVE BARGAINING UNDER THE INDUSTRIAL PEACE ACT. AS TO THE REINSTATEMENT OF THE 5
PETITIONERS, NAMELY, OF EUFROCIO BERMISO, FOTUNATO GETESO, CONSTANCIO OLACO, LAUREANO
AMISTOSO AND VICENTE TUYOGAN, TO THEIR FORMER WORK AND POSITIONS IN THE SABAY GROUP;
THEIR CLAIM FOR BACK WAGES WERE DENIED. WITH RESPECT TO THE DIRECT PAYMENT OF WAGES TO
THE LABORERS, THE COURT FOUND THAT THERE WAS NO REASON FOR CHANGING THE PRACTICE OF
APPORTIONING THE WAGES FOR THEIR JOINT LABOR AND SHARING THEREIN, BECAUSE OF THE 150
MEMBERS ONLY 5 WERE DISSATISFIED.

PETITIONERS ARGUE BEFORE US THAT THE DECISION VIOLATES THE LAW ON DIRECT PAYMENT OF
WAGES. THE LAW RELIED UPON BY THEM IS SECTION 10, PAR. (B) OF REPUBLIC ACT NO. 602, WHICH
PROVIDES AS FOLLOWS:

SEC. 10. (B) WAGES, INCLUDING WAGES WHICH MAY BE PAID RETROACTIVELY FOR WHATEVER REASON,
SHALL BE PAID DIRECTLY TO THE EMPLOYEE TO WHOM THEY ARE DUE, EXCEPT:

(1) IN CASES WHERE THE EMPLOYEE IS INSURED WITH HIS CONSENT BY THE EMPLOYER, THE LATTER
SHALL ENTITLED TO DEDUCT FROM THE WAGE OF THE EMPLOYEE THE AMOUNT PAID BY THE EMPLOYER
FOR PREMIUMS ON THE INSURANCE;

(2) IN CASES OF FORCE MAJEURE RENDERING SUCH PAYMENTS IMPOSSIBLE; AND

(3) IN CASES WHERE THE RIGHT OF THE EMPLOYEE OR HIS UNION TO CHECK-OFF HAS BEEN
RECOGNIZED BY THE EMPLOYER OR AUTHORIZED IN WRITING BY THE INDIVIDUAL EMPLOYEES
CONCERNED.

THERE IS NO QUESTION THAT THE WORK OF STEVEDORING WAS UNDERTAKEN BY THE LABORERS, NOT
IN THEIR INDIVIDUAL CAPACITIES, BUT AS A GROUP. THE CONTRACT TO PERFORM THE SERVICE WAS
MADE BY THE LEADER OF THE GROUP, FOR AND ON BEHALF OF THE LATTER, NOT FOR EACH AND EVERY
ONE OF THEM INDIVIDUALLY. FOR THE SAKE OF CONVENIENCE IT WAS NECESSARY THAT THE GROUP
MUST BE LARGE ENOUGH TO BE ABLE TO PERFORM THE TASK OF LOADING AND UNLOADING IN AS
SHORT TIME AS POSSIBLE. AS THE GROUP UNDERTOOK TO RENDER SERVICE FOR VESSELS OTHER THAN
THOSE OF THE HIJOS DE F. ESCAÑO, IT WAS ABSOLUTELY NECESSARY THAT SOME SORT OF LEADERSHIP
BE INSTITUTED IN THE GROUP TO DETERMINE WHICH OF THE MEMBERS WILL WORK FOR ONE VESSEL
AND WHICH FOR ANOTHER. LEADERSHIP IS ALSO ESSENTIAL TO OBTAIN WORK FOR THE GROUP AS
EMPLOYERS NATURALLY PREFER TO DEAL WITH A LEADER OF A GROUP THAN WITH EACH MEMBER
INDIVIDUALLY. LEADERSHIP WAS, THEREFORE, ESSENTIAL NOT ONLY TO SECURE WORK FOR THE GROUP
BUT TO ARRANGE THE LABORERS WHO ARE TO PERFORM THE SERVICE. THE LEADERSHIP MUST BE PAID
FOR AND IT WAS NOT SHOWN THAT THE HEAD OF THE GROUPS GOT THE LION'S SHARE OF THE COST OF
THE SERVICE RENDERED. UNDER THE CIRCUMSTANCES WE ARE NOT PREPARED TO SAY THAT THE
PROVISION OF LAW ON DIRECT PAYMENT OF WAGES HAS BEEN VIOLATED. THE LOWER COURT DID NOT
FIND SUFFICIENT EVIDENCE TO SHOW THAT RACKETEERING WAS EMPLOYED BY THE LEADERS. IF ANY
EXISTED THE REMEDY CAN NOT BE FOUND IN THIS COURT; IT IS FOR THE GROUP OR ORGANIZE INTO A
CLOSELY KNITTED UNION WHICH WOULD SECURE THE PRIVILEGES THAT THE SELVES WHO WOULD NOT
EXPLOIT THEM.

LASTLY, THE RESPONDENT HIJOS DE F. ESCAÑO DID NOT PAY FOR THE STEVEDORING CHARGES. THESE
WERE COLLECTED BY THE GROUP FROM THE SHIPPERS THEMSELVES, WITHOUT THE INTERVENTION OF
THE RESPONDENT ESCAÑO. HOW CAN THE COURT ORDER THE LATTER TO PAY THE CHARGES TO THE
GROUP OR ITS MEMBERS, WHEN THE CHARGES WERE COLLECTED BY THE LATTER FROM THE SHIPPERS,
IN ACCORDANCE WITH THE PRACTICE OF THE GROUP ITSELF?

WE ALSO FINE NO GROUND FOR REQUIRING THE RESPONDENT HIJOS DE F. ESCAÑO TO PAY BACK
WAGES. THE LATTER RESPONDENT DID NOT DEAL WITH THE PETITIONERS INDIVIDUALLY, ENTERING INTO
A CONTRACT OF EMPLOYMENT WITH THEM. SAID RESPONDENT DEALT WITH THE GROUP THRU ITS
LEADERS. IF THE GROUP, THRU ITS LEADERS, DID NOT ALLOW THE PETITIONERS TO WORK AND SHARE IN
THE PRICE PAID THEREFOR, THE ONE RESPONSIBLE IS NOT THE RESPONDENT ESCAÑO BUT THE LEADER
THRU WHOM THE GROUP ITSELF MADE THE CONTRACT FOR WORK AND APPORTIONED THE TIME OF
WORK FOR EACH MEMBER AND THE PAY THEREFOR. AGAIN AS STATED ABOVE, THE REMEDY MUST BE
SOUGHT NOT IN THE TRIBUNALS OF THE COUNTRY BUT IN THE LABORERS THEMSELVES WHO SHOULD
ORGANIZED AND THRU SUCH ORGANIZATION AS THEY MAY ESTABLISH, AS ENVISIONED BY THE
INDUSTRIAL PEACE ACT, SECURE THE PRIVILEGES DEMANDED.

THE THIRD ERROR ATTRIBUTED TO THE COURT BELOW IS ITS DENIAL OF THE OTHER CLAIMS, SUCH AS
VACATION AND SICK LEAVE, ACCIDENT, INSURANCE, FREE HOSPITALIZATION, ETC. WE AGREE WITH THE
COURT BELOW THAT THESE MATTERS MUST ALSO BE SOUGHT FOR THRU LABOR ORGANIZATIONS,
WHICH SHOULD TAKE THEM UP WITH THEIR EMPLOYERS THRU COLLECTIVE BARGAINING.

THE DECISION SUBJECT OF REVIEW IS HEREBY AFFIRMED. WITHOUT COSTS.

G.R. NO. 80039 APRIL 18, 1989

ERNESTO M. APODACA, PETITIONER,

VS.
NATIONAL LABOR RELATIONS COMMISSION, JOSE M. MIRASOL AND INTRANS PHILS., INC.,
RESPONDENTS.

DIEGO O. UNTALAN FOR PETITIONER.

THE SOLICITOR GENERAL FOR PUBLIC RESPONDENT.

BARCELONA, PERLAS, JOVEN & ACADEMIA LAW OFFICES FOR PRIVATE RESPONDENTS.

GANCAYCO, J.:

DOES THE NATIONAL LABOR RELATIONS COMMISSION (NLRC) HAVE JURISDICTION TO RESOLVE A CLAIM
FOR NON-PAYMENT OF STOCK SUBSCRIPTIONS TO A CORPORATION? ASSUMING THAT IT HAS, CAN AN
OBLIGATION ARISING THEREFROM BE OFFSET AGAINST A MONEY CLAIM OF AN EMPLOYEE AGAINST THE
EMPLOYER? THESE ARE THE ISSUES BROUGHT TO THIS COURT THROUGH THIS PETITION FOR REVIEW OF
A DECISION OF THE NLRC DATED SEPTEMBER 18, 1987.

THE ONLY REMEDY PROVIDED FOR BY LAW FROM SUCH A DECISION IS A SPECIAL CIVIL ACTION FOR
CERTIORARI UNDER RULE 65 OF THE RULES OF COURT BASED ON JURISDICTIONAL GROUNDS OR ON
ALLEGED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION, NOT BY
WAY OF AN APPEAL BY CERTIORARI. NEVERTHELESS, IN THE INTEREST OF JUSTICE, THIS PETITION IS
TREATED AS A SPECIAL CIVIL ACTION FOR CERTIORARI.

PETITIONER WAS EMPLOYED IN RESPONDENT CORPORATION. ON AUGUST 28, 1985, RESPONDENT JOSE
M. MIRASOL PERSUADED PETITIONER TO SUBSCRIBE TO 1,500 SHARES OF RESPONDENT CORPORATION
AT P100.00 PER SHARE OR A TOTAL OF P150,000.00. HE MADE AN INITIAL PAYMENT OF P37,500.00. ON
SEPTEMBER 1, 1975, PETITIONER WAS APPOINTED PRESIDENT AND GENERAL MANAGER OF THE
RESPONDENT CORPORATION. HOWEVER, ON JANUARY 2, 1986, HE RESIGNED.

ON DECEMBER 19, 1986, PETITIONER INSTITUTED WITH THE NLRC A COMPLAINT AGAINST PRIVATE
RESPONDENTS FOR THE PAYMENT OF HIS UNPAID WAGES, HIS COST OF LIVING ALLOWANCE, THE
BALANCE OF HIS GASOLINE AND REPRESENTATION EXPENSES AND HIS BONUS COMPENSATION FOR
1986. PETITIONER AND PRIVATE RESPONDENTS SUBMITTED THEIR POSITION PAPERS TO THE LABOR
ARBITER. PRIVATE RESPONDENTS ADMITTED THAT THERE IS DUE TO PETITIONER THE AMOUNT OF
P17,060.07 BUT THIS WAS APPLIED TO THE UNPAID BALANCE OF HIS SUBSCRIPTION IN THE AMOUNT OF
P95,439.93. PETITIONER QUESTIONED THE SET-OFF ALLEGING THAT THERE WAS NO CALL OR NOTICE
FOR THE PAYMENT OF THE UNPAID SUBSCRIPTION AND THAT, ACCORDINGLY, THE ALLEGED OBLIGATION
IS NOT ENFORCEABLE.

IN A DECISION DATED APRIL 28, 1987, THE LABOR ARBITER SUSTAINED THE CLAIM OF PETITIONER FOR
P17,060.07 ON THE GROUND THAT THE EMPLOYER HAS NO RIGHT TO WITHHOLD PAYMENT OF WAGES
ALREADY EARNED UNDER ARTICLE 103 OF THE LABOR CODE. UPON THE APPEAL OF THE PRIVATE
RESPONDENTS TO PUBLIC RESPONDENT NLRC, THE DECISION OF THE LABOR ARBITER WAS REVERSED IN
A DECISION DATED SEPTEMBER 18, 1987. THE NLRC HELD THAT A STOCKHOLDER WHO FAILS TO PAY HIS
UNPAID SUBSCRIPTION ON CALL BECOMES A DEBTOR OF THE CORPORATION AND THAT THE SET-OFF OF
SAID OBLIGATION AGAINST THE WAGES AND OTHERS DUE TO PETITIONER IS NOT CONTRARY TO LAW,
MORALS AND PUBLIC POLICY.

HENCE, THE INSTANT PETITION.

THE PETITION IS IMPRESSED WITH MERIT.

FIRSTLY, THE NLRC HAS NO JURISDICTION TO DETERMINE SUCH INTRA-CORPORATE DISPUTE BETWEEN
THE STOCKHOLDER AND THE CORPORATION AS IN THE MATTER OF UNPAID SUBSCRIPTIONS. THIS
CONTROVERSY IS WITHIN THE EXCLUSIVE JURISDICTION OF THE SECURITIES AND EXCHANGE
COMMISSION. 1

SECONDLY, ASSUMING ARGUENDO THAT THE NLRC MAY EXERCISE JURISDICTION OVER THE SAID
SUBJECT MATTER UNDER THE CIRCUMSTANCES OF THIS CASE, THE UNPAID SUBSCRIPTIONS ARE NOT
DUE AND PAYABLE UNTIL A CALL IS MADE BY THE CORPORATION FOR PAYMENT. 2 PRIVATE
RESPONDENTS HAVE NOT PRESENTED A RESOLUTION OF THE BOARD OF DIRECTORS OF RESPONDENT
CORPORATION CALLING FOR THE PAYMENT OF THE UNPAID SUBSCRIPTIONS. IT DOES NOT EVEN APPEAR
THAT A NOTICE OF SUCH CALL HAS BEEN SENT TO PETITIONER BY THE RESPONDENT CORPORATION.

WHAT THE RECORDS SHOW IS THAT THE RESPONDENT CORPORATION DEDUCTED THE AMOUNT DUE TO
PETITIONER FROM THE AMOUNT RECEIVABLE FROM HIM FOR THE UNPAID SUBSCRIPTIONS. 3 NO
DOUBT SUCH SET-OFF WAS WITHOUT LAWFUL BASIS, IF NOT PREMATURE. AS THERE WAS NO NOTICE
OR CALL FOR THE PAYMENT OF UNPAID SUBSCRIPTIONS, THE SAME IS NOT YET DUE AND PAYABLE.
LASTLY, ASSUMING FURTHER THAT THERE WAS A CALL FOR PAYMENT OF THE UNPAID SUBSCRIPTION,
THE NLRC CANNOT VALIDLY SET IT OFF AGAINST THE WAGES AND OTHER BENEFITS DUE PETITIONER.
ARTICLE 113 OF THE LABOR CODE ALLOWS SUCH A DEDUCTION FROM THE WAGES OF THE EMPLOYEES
BY THE EMPLOYER, ONLY IN THREE INSTANCES, TO WIT:

ART. 113. WAGE DEDUCTION. — NO EMPLOYER, IN HIS OWN BEHALF OR IN BEHALF OF ANY PERSON,
SHALL MAKE ANY DEDUCTION FROM THE WAGES OF HIS EMPLOYEES, EXCEPT:

(A) IN CASES WHERE THE WORKER IS INSURED WITH HIS CONSENT BY THE EMPLOYER, AND THE
DEDUCTION IS TO RECOMPENSE THE EMPLOYER FOR THE AMOUNT PAID BY HIM AS PREMIUM ON THE
INSURANCE;

(B) FOR UNION DUES, IN CASES WHERE THE RIGHT OF THE WORKER OR HIS UNION TO CHECKOFF HAS
BEEN RECOGNIZED BY THE EMPLOYER OR AUTHORIZED IN WRITING BY THE INDIVIDUAL WORKER
CONCERNED; AND

(C) IN CASES WHERE THE EMPLOYER IS AUTHORIZED BY LAW OR REGULATIONS ISSUED BY THE
SECRETARY OF LABOR. 4

WHEREFORE, THE PETITION IS GRANTED AND THE QUESTIONED DECISION OF THE NLRC DATED
SEPTEMBER 18, 1987 IS HEREBY SET ASIDE AND ANOTHER JUDGMENT IS HEREBY RENDERED ORDERING
PRIVATE RESPONDENTS TO PAY PETITIONER THE AMOUNT OF P17,060.07 PLUS LEGAL INTEREST
COMPUTED FROM THE TIME OF THE FILING OF THE COMPLAINT ON DECEMBER 19, 1986, WITH COSTS
AGAINST PRIVATE RESPONDENTS.

SO ORDERED.
G.R. NO. 81477 APRIL 19, 1989

DENTECH MANUFACTURING CORPORATION AND JACINTO LEDESMA IN HIS CAPACITY AS GENERAL

MANAGER, PETITIONERS,
VS.
NATIONAL LABOR RELATIONS COMMISSION, CCLU, BENJAMIN MARBELLA, ARMANDO TORNO, JUANITO
TAJAN, JR. AND JOEL TORNO, RESPONDENTS.

GANCAYCO, J.:

THE PRINCIPAL ISSUE IN THIS PETITION IS WHETHER OR NOT THE PRIVATE RESPONDENTS ARE ENTITLED
AS A MATTER OF RIGHT TO A 13TH MONTH PAY.

THE HEREIN PETITIONER DENTECH MANUFACTURING CORPORATION IS A DOMESTIC CORPORATION

ORGANIZED UNDER PHILIPPINE LAWS. BEFORE THE FIRM BECAME A CORPORATE ENTITY, IT WAS
KNOWN AS THE J.L. LEDESMA ENTERPRISES, A SOLE PROPRIETORSHIP OWNED BY THE HEREIN
PETITIONER JACINTO LEDESMA. AT PRESENT, HE IS THE PRESIDENT AND GENERAL MANAGER OF THE
CORPORATION AS WELL AS THE OWNER OF THE CONTROLLING INTEREST THEREOF. THE FIRM IS
ENGAGED IN THE MANUFACTURE AND SALE OF DENTAL EQUIPMENT AND SUPPLIES.
THE HEREIN PRIVATE RESPONDENTS BENJAMIN MARBELLA, ARMANDO TORNO, JUANITO TAJAN, JR. AND
JOEL TORNO ARE MEMBERS OF THE CONFEDERATION OF CITIZENS LABOR UNION, A LABOR
ORGANIZATION REGISTERED WITH THE DEPARTMENT OF LABOR AND EMPLOYMENT. THEY USED TO BE
THE EMPLOYEES OF THE PETITIONER FIRM, WORKING THEREIN AS WELDERS, UPHOLSTERERS AND
PAINTERS. THEY WERE ALREADY EMPLOYED WITH THE COMPANY WHEN IT WAS STILL A SOLE
PROPRIETORSHIP. THEY WERE DISMISSED FROM THE FIRM BEGINNING FEBRUARY 14, 1985.

ON JUNE 26, 1985, THE PRIVATE RESPONDENTS FILED A COMPLAINT WITH THE ARBITRATION BRANCH
OF THE RESPONDENT NATIONAL LABOR RELATIONS COMMISSION (NLRC) AGAINST THE PETITIONERS
FOR, AMONG OTHERS, ILLEGAL DISMISSAL AND VIOLATION OF PRESIDENTIAL DECREE NO. 851.1 THEY
WERE ORIGINALLY JOINED BY ANOTHER EMPLOYEE, ONE RAYMUNDO LABARDA, WHO LATER WITHDREW
HIS COMPLAINT.

AT FIRST, THEY ONLY SOUGHT THE PAYMENT OF THEIR 13TH MONTH PAY UNDER PRESIDENTIAL DECREE
NO. 851 AS WELL AS THEIR SEPARATION PAY, AND THE REFUND OF THE CASH BOND THEY FILED WITH
THE COMPANY AT THE START OF THEIR EMPLOYMENT. LATER ON, THEY SOUGHT THEIR REINSTATEMENT
AS WELL AS THE PAYMENT OF THEIR 13TH MONTH PAY AND SERVICE INCENTIVE LEAVE PAY, AND
SEPARATION PAY IN THE EVENT THAT THEY ARE NOT REINSTATED. IT IS ALLEGED IN THE COMPLAINT AND
POSITION PAPER ACCOMPANYING THE SAME THAT THEY WERE DISMISSED FROM THE FIRM FOR
PURSUING UNION ACTIVITIES.2

ON THE OTHER HAND, THE PETITIONERS ALLEGED IN THEIR POSITION PAPER THAT THE PRIVATE
RESPONDENTS WERE NOT DISMISSED FROM THE FIRM ON ACCOUNT OF THEIR UNION ACTIVITIES. THEY
MAINTAINED THAT THE PRIVATE RESPONDENTS ABANDONED THEIR WORK WITHOUT INFORMING THE
COMPANY ABOUT THEIR REASONS FOR DOING SO AND THAT, ACCORDINGLY, THE PRIVATE RESPONDENTS
ARE NOT ENTITLED TO SERVICE INCENTIVE LEAVE PAY AND SEPARATION PAY.

THE PETITIONERS ALSO ARGUED THAT THE PRIVATE RESPONDENTS ARE NOT ENTITLED TO A 13TH
MONTH PAY. THEY MAINTAINED THAT EACH OF THE PRIVATE RESPONDENTS RECEIVE A TOTAL MONTHLY
COMPENSATION OF MORE THAT PL,000.00 AND THAT UNDER SECTION 1 OF PRESIDENTIAL DECREE NO.
851, SUCH EMPLOYEES ARE NOT ENTITLED TO RECEIVE A 13TH MONTH PAY. THE PETITIONERS LIKEWISE
ALLEGED THAT THE COMPANY IS IN BAD FINANCIAL SHAPE AND THAT PURSUANT TO SECTION 3 OF THE
DECREE, THE FIRM IS EXEMPTED FROM COMPLYING WITH THE PROVISIONS OF THE DECREE.3

A HEARING WAS CONDUCTED TO ALLOW THE PARTIES TO FURTHER VENTILATE THEIR VIEWS.
THEREAFTER, THE LABOR ARBITER ASSIGNED TO THE CASE RENDERED A DECISION DATED JANUARY 28,
1987, THE PERTINENT PORTIONS OF WHICH ARE AS FOLLOWS-

NOTICEABLE IN THIS CASE IS THAT COMPLAINANTS INITIALLY MADE MANIFEST THEIR LACK OF INTENT
TO SEEK REINSTATEMENT AND THEIR PREFERENCE TO COLLECT THEIR SEPARATION PAY. TOWARDS THE
END OF (THE) PROCEEDINGS THIS WAS CHANGED TO PREFERENCE FOR REINSTATEMENT ... . ON THE
OTHER HAND, RESPONDENT HAS INDICATED WITH SUFFICIENT CLARITY EVEN AT THE INCEPTION OF THE
CASE THAT IT IS CHARGING COMPLAINANT WITH ABANDONMENT AND IS WILLING TO ACCEPT THEM
BACK TO WORK. IN SHORT, WHILE COMPLAINANTS SUPPOSEDLY WANTED TO REPORT FOR WORK AND
RESPONDENTS, SUPPOSEDLY ... WILLING TO ACCEPT THEM BACK TO WORK, WE CANNOT IMAGINE WHY
THE PARTIES NEVER ACHIEVED (AN) UNDERSTANDING ON THIS ASPECT.
IN LINE WITH THE ABOVE MANIFESTATION OF THE PARTIES, WE HEREBY ORDER THE REINSTATEMENT OF
COMPLAINANTS. WE ALSO FIND RESPONDENT'S CONTENTION FOR EXEMPTION IN THE PAYMENT OF
(THE) 13TH MONTH PAY AS WITHOUT VALIDITY (SIC). THE CEILING OF P1,000.00 A MONTH IN THE
MATTER OF 13TH MONTH PAY HAS BEEN REMOVED AND COMPLAINANTS ARE ENTITLED TO RECEIVE
FROM RESPONDENTS AT LEAST THE UNPRESCRIBED 13TH MONTH PAY FOR THE LAST THREE YEARS
BASED ON THEIR UNCONTROVERTED PLEADINGS. THIS ORDER INCLUDES THE MONEY VALUE OF THE
SERVICE INCENTIVE LEAVE PAY OF COMPLAINANTS AND THE CASH BOND ... .

XXX XXX XXX

PREMISES CONSIDERED, JUDGMENT IS HEREBY RENDERED ORDERING RESPONDENTS TO REINSTATE

COMPLAINANTS TO THEIR FORMER POSITIONS, WITHOUT BACKWAGES AND TO PAY THEM THE
FOLLOWING AMOUNTS

1. BENJAMIN MARBELLA - P3,921.00

2. ARMANDO TORNO - 3,828.00

3. JUANITO TAJAN JR. - 3,270.00

4. JOEL TORNO - 878.00

P1 1,897.00

XXX XXX XXX

ALL OTHER CLAIMS ARE HEREBY DISMISSED. 4

BOTH PARTIES FILED THEIR RESPECTIVE APPEALS WITH THE NLRC. THE PETITIONERS MAINTAINED THAT
NO PROVISION OF LAW WAS CITED IN THE DECISION OF THE LABOR ARBITER TO SUPPORT THE VIEW
THEREIN THAT THE 13TH MONTH PAY CEILING OF P1,000.00 HAD BEEN DULY ELIMINATED. THE
PETITIONERS WENT ON TO REITERATE THAT THE FIRM IS IN BAD FINANCIAL SHAPE AND IS, THEREFORE,
EXEMPTED FROM COMPLYING WITH THE PROVISIONS OF PRESIDENTIAL DECREE NO. 851. THE
PETITIONERS ADDED THAT THE REFUND OF THE CASH BOND FILED BY THE PRIVATE RESPONDENTS
SHOULD NOT HAVE BEEN ORDERED BY THE LABOR ARBITER INASMUCH AS THE PROCEEDS OF THE SAME
HAD ALREADY BEEN GIVEN BY THE COMPANY TO A CERTAIN CARINDERIA 5 TO PAY FOR THE
OUTSTANDING ACCOUNTS OF THE PRIVATE RESPONDENTS THEREIN. 6

IN A RESOLUTION DATED NOVEMBER 4,1987, THE THIRD DIVISION OF THE NLRC AFFIRMED THE
DECISION OF THE LABOR ARBITER. THE PERTINENT PORTIONS THEREOF ARE AS FOLLOWS-

THE AWARD OF 13TH MONTH PAY TO THE COMPLAINANTS IS ASSAILED BY THE RESPONDENTS FOR THE
REASON THAT NO PROVISION OF LAW WAS CITED IN THE DECISION SUPPORTING THE STATEMENT THAT
THE CEILING OF 13TH MONTH PAY (SIC) HAS BEEN REMOVED.

FOR THE RECORD, MEMORANDUM ORDER NO. 28 ISSUED BY PRESIDENT CORAZON C. AQUINO
MODIFIED PRESIDENTIAL DECREE NO. 851 TO THE EXTENT THAT ALL EMPLOYERS ARE ... (NOW)
REQUIRED TO PAY ALL THEIR RANK-AND-FILE EMPLOYEES 13TH MONTH PAY, THUS IN EFFECT REMOVING
FROM EXCLUSION FROM ENTITLEMENT TO THE (SIC) 13TH MONTH PAY THOSE EMPLOYEES WHO WERE
RECEIVING A BASIC SALARY OF MORE THAN P1,000.00 A MONTH.

AT ANY RATE THE SIMPLE ASSERTION OF THE RESPONDENT THAT IT IS IN FINANCIAL DISTRESS AND THUS
EXEMPT (SIC) FROM PAYMENT OF 13TH MONTH PAY (SIC) TO THE COMPLAINANTS IS NOT IN ITSELF
SUFFICIENT TO EVADE PAYMENT OF THE 13TH MONTH PAY TO WHICH COMPLAINANTS WERE ENTITLED
PRIOR TO THE COMMENCEMENT OF THE RESPONDENT'S FINANCIAL PROBLEMS.

THE CASH BOND REQUIRED OF COMPLAINANTS IS LIKEWISE IN DIRECT CONTRAVENTION TO (SIC) THE
PROVISIONS OF ARTICLE 114 OF THE LABOR CODE, AS AMENDED. THUS, THE REFUND OF THE CASH
BOND APPEARS TO BE IN ORDER. 7

ON JANUARY 29, 1988, THE PETITIONERS ELEVATED THE CASE TO THIS COURT BY WAY OF THE INSTANT
PETITION. THE PRIVATE RESPONDENTS, HOWEVER, DECIDED NOT TO CHALLENGE THE RESOLUTION OF
THE NLRC.

THE MAIN PLEADING IS ERRONEOUSLY CAPTIONED "PETITION FOR REVIEW ON CERTIORARI." 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 RULES OF
COURT ON ACCOUNT OF A NUMBER OF JURISDICTIONAL ISSUES RAISED BY THE PETITIONERS.

THE PETITIONERS REITERATE THEIR CONTENTION THAT THE PRIVATE RESPONDENTS ABANDONED THEIR
WORK. IN SUPPORT OF THIS CLAIM, THEY CALL ATTENTION TO THE ALLEGED TESTIMONY OF THE
GENERAL MANAGER OF THE PETITIONER FIRM. 8 THE PETITIONERS LIKEWISE MAINTAIN THAT THE
COMPANY IS A FINANCIALLY DISTRESSED FIRM EXEMPTED FROM COMPLYING WITH THE PROVISIONS OF
PRESIDENTIAL DECREE NO. 851. 9

THE PETITIONERS ALSO CONTEND THAT MEMORANDUM ORDER NO. 28 CITED BY THE NLRC CANNOT
APPLY TO THE CASE AT BAR. THEY POINT OUT THAT THE SAID MEMORANDUM ORDER WAS SIGNED INTO
LAW ONLY IN 1986, LONG AFTER THE CASE WAS INSTITUTED WITH THE NLRC AND, ACCORDINGLY, THE
SAME CANNOT BE GIVEN A RETROACTIVE EFFECT. 10 IT IS LIKEWISE THE POSITION OF THE PETITIONERS
THAT THE REFUND OF THE CASH BOND FILED BY THE PRIVATE RESPONDENTS IS IMPROPER INASMUCH
AS THE PROCEEDS OF THE SAME HAD ALREADY BEEN GIVEN TO A CERTAIN CARINDERIA TO PAY FOR THE
OUTSTANDING ACCOUNTS OF THE PRIVATE RESPONDENTS THEREIN. 11

AS INSTRUCTED BY THE COURT, THE RESPONDENTS FILED THEIR RESPECTIVE COMMENTS ON THE
PETITION. IN SEEKING THE DISMISSAL OF THE PETITION, THE SOLICITOR GENERAL POINTS OUT THAT
EACH OF THE PRIVATE RESPONDENTS IS ACTUALLY PAID LESS THAN PL,000.00 A MONTH AND THAT,
ACCORDINGLY, THEY ARE ENTITLED TO A 13TH MONTH PAY PURSUANT TO PRESIDENTIAL DECREE NO.
851. THE SOLICITOR GENERAL ALSO ARGUES THAT UNDER THE RULES AND REGULATIONS
IMPLEMENTING THE SAID DECREE, A DISTRESSED EMPLOYER SHALL QUALIFY FOR EXEMPTION FROM
THE REQUIREMENTS OF THE DECREE ONLY UPON PRIOR AUTHORIZATION FROM THE SECRETARY OF
LABOR AND EMPLOYMENT. THE SOLICITOR GENERAL MANIFESTS THAT NO SUCH PRIOR AUTHORIZATION
HAD BEEN OBTAINED BY THE PETITIONER FIRM. THE SOLICITOR GENERAL LIKEWISE MAINTAINS THAT
THE PL,000.00 CEILING RECITED IN PRESIDENTIAL DECREE NO. 851 HAS BEEN ELIMINATED BY
PRESIDENTIAL DECREE NO. 1364, PROMULGATED ON MAY 1, 1978. 12
AS TO THE REFUND OF THE CASH BOND FILED BY THE PRIVATE RESPONDENTS, THE SOLICITOR GENERAL
SUBMITS THAT SUCH CASH BOND REQUIRED FROM THE PRIVATE RESPONDENTS IS DISALLOWED UNDER
ARTICLE 114 OF THE LABOR CODE. 13

AFTER THE PARTIES SUBMITTED OTHER SUPPLEMENTARY PLEADINGS, THE COURT RESOLVED TO GIVE
DUE COURSE TO THE PETITION, AND TO CONSIDER THE CASE SUBMITTED FOR DECISION.

THE PETITION IS DEVOID OF MERIT.

PRESIDENTIAL DECREE NO. 851 WAS SIGNED INTO LAW IN 1975 BY THEN PRESIDENT FERDINAND
MARCOS. UNDER THE ORIGINAL PROVISIONS OF SECTION 1 THEREOF, ALL EMPLOYERS ARE REQUIRED
TO PAY ALL THEIR EMPLOYEES RECEIVING A BASIC SALARY OF NOT MORE THAN PL,000.00 A MONTH,
REGARDLESS OF THE NATURE OF THEIR EMPLOYMENT, A 13TH MONTH PAY NOT LATER THAN DECEMBER
24 OF EVERY YEAR. UNDER SECTION 3 OF THE RULES AND REGULATIONS IMPLEMENTING SAID
PRESIDENTIAL DECREE FINANCIALLY DISTRESSED EMPLOYERS, I., E., THOSE CURRENTLY INCURRING
SUBSTANTIAL LOSSES, ARE NOT COVERED BY THE DECREE. SECTION 7 THEREOF REQUIRES, HOWEVER,
THAT SUCH DISTRESSED EMPLOYERS MUST OBTAIN THE PRIOR AUTHORIZATION OF THE SECRETARY OF
LABOR AND EMPLOYMENT BEFORE THEY MAY QUALIFY FOR SUCH EXEMPTION.

ON MAY 1, 1978, PRESIDENTIAL DECREE NO. 1364 WAS SIGNED INTO LAW. 14 THE DECREE ENJOINED
THE DEPARTMENT OF LABOR AND EMPLOYMENT TO STOP ACCEPTING APPLICATIONS FOR EXEMPTION
UNDER, INTER ALIA, PRESIDENTIAL DECREE NO. 851.

ON AUGUST 13, 1986, PRESIDENT CORAZON C. AQUINO ISSUED MEMORANDUM ORDER NO. 28 WHICH
MODIFIED SECTION 1 OF PRESIDENTIAL DECREE NO. 851. THE SAID ISSUANCE ELIMINATED THE
PL,000.00 SALARY CEILING.

FROM THE FOREGOING, IT CLEARLY APPEARS THAT THE PETITIONERS HAVE NO BASIS TO CLAIM THAT
THE COMPANY IS EXEMPTED FROM COMPLYING WITH THE PERTINENT PROVISIONS OF THE LAW
RELATING TO THE PAYMENT OF 13TH MONTH COMPENSATION.

THE PL,000.00 SALARY CEILING PROVIDED IN PRESIDENTIAL DECREE NO. 851 PERTAINS TO BASIC SALARY,
NOT TOTAL MONTHLY COMPENSATION. THE PETITIONERS ADMIT THAT THE PRIVATE RESPONDENTS
WORK ONLY FIVE DAYS A WEEK AND THAT THEY EACH RECEIVE A BASIC DAILY WAGE OF P40.00 ONLY. A
SIMPLE COMPUTATION OF THE BASIC DAILY WAGE MULTIPLIED BY THE NUMBER OF WORKING DAYS IN A
MONTH RESULTS IN AN AMOUNT OF LESS THAN PL,000.00. THUS, THERE IS NO BASIS FOR THE
CONTENTION THAT THE COMPANY IS EXEMPTED FROM THE PROVISION OF PRESIDENTIAL DECREE NO.
851 WHICH MANDATED THE PAYMENT OF 13TH MONTH COMPENSATION TO EMPLOYEES RECEIVING
LESS THAN P1,000.00 A MONTH.

EVEN ASSUMING, ARGUENDO, THAT THE PRIVATE RESPONDENTS ARE EACH PAID A MONTHLY SALARY OF
OVER PL,000.00, THE COMPANY IS STILL NOT IN A POSITION TO CLAIM EXEMPTION. THE RULES AND
REGULATIONS IMPLEMENTING PRESIDENTIAL DECREE NO. 851 PROVIDE THAT A DISTRESSED EMPLOYER
SHALL QUALIFY FOR EXEMPTION FROM THE REQUIREMENTS OF THE DECREE ONLY UPON PRIOR
AUTHORIZATION FROM THE SECRETARY OF LABOR AND EMPLOYMENT. AS CORRECTLY POINTED OUT BY
THE SOLICITOR GENERAL, NO SUCH PRIOR AUTHORIZATION HAD BEEN OBTAINED BY THE PETITIONER
FIRM.
THE REFUND OF THE CASH BOND FILED BY THE PRIVATE RESPONDENTS IS IN ORDER. ARTICLE 114 OF
THE LABOR CODE PROHIBITS AN EMPLOYER FROM REQUITING HIS EMPLOYEES TO FILE A CASH BOND OR
TO MAKE DEPOSITS, SUBJECT TO CERTAIN EXCEPTIONS, TO WIT-

ART. 114. DEPOSITS FOR LOSS OR DAMAGE.- NO EMPLOYER SHALL REQUIRE HIS WORKER TO
MAKE DEPOSITS FROM WHICH DEDUCTIONS SHALL BE MADE FOR THE REIMBURSEMENT OF LOSS OF OR
DAMAGE TO TOOLS, MATERIALS, OR EQUIPMENT SUPPLIED BY THE EMPLOYER, EXCEPT WHEN THE
EMPLOYER IS ENGAGED IN SUCH TRADES, OCCUPATIONS OR BUSINESS WHERE THE PRACTICE OF
MAKING DEDUCTIONS OR REQUIRING DEPOSITS IS A RECOGNIZED ONE, OR IS NECESSARY OR DESIRABLE
AS DETERMINED BY THE SECRETARY OF LABOR IN APPROPRIATE RULES AND REGULATIONS.

THE PETITIONERS HAVE NOT SATISFACTORILY DISPUTED THE APPLICABILITY OF THIS PROVISION OF THE
LABOR CODE TO THE CASE AT BAR. CONSIDERING FURTHER THAT THE PETITIONERS FAILED TO SHOW
THAT THE COMPANY IS AUTHORIZED BY LAW TO REQUIRE THE PRIVATE RESPONDENTS TO FILE THE CASH
BOND IN QUESTION, THE REFUND THEREOF IS IN ORDER.

THE ALLEGATION OF THE PETITIONERS TO THE EFFECT THAT THE PROCEEDS OF THE CASH BOND HAD
ALREADY BEEN GIVEN TO A CERTAIN CARINDERIA TO PAY FOR THE ACCOUNTS OF THE PRIVATE
RESPONDENTS THEREIN DOES NOT MERIT SERIOUS CONSIDERATION. AS CORRECTLY OBSERVED BY THE
SOLICITOR GENERAL, NO EVIDENCE OR RECEIPT HAS BEEN SHOWN TO PROVE SUCH PAYMENT.

ACCORDINGLY, THE COURT IS NOT CONVINCED THAT THE RESPONDENT NATIONAL LABOR RELATIONS
COMMISSION COMMITTED A GRAVE ABUSE OF DISCRETION AMOUNTING TO LOSS OF JURISDICTION IN
AFFIRMING THE DECISION OF THE LABOR ARBITER.

WHEREFORE, IN VIEW OF THE FOREGOING, THE INSTANT PETITION IS HEREBY DISMISSED FOR LACK OF
MERIT. WE MAKE NO PRONOUNCEMENT AS TO COSTS.

SO ORDERED.
G.R. NO. 111474 AUGUST 22, 1994

FIVE J TAXI AND/OR JUAN S. ARMAMENTO, PETITIONERS,

VS.
NATIONAL LABOR RELATIONS COMMISSION, DOMINGO MALDIGAN AND GILBERTO SABSALON,
RESPONDENTS.

EDGARDO G. FERNANDEZ FOR PETITIONERS.

R E SO L U T I O N

REGALADO, J.:

PETITIONERS FIVE J TAXI AND/OR JUAN S. ARMAMENTO FILED THIS SPECIAL CIVIL ACTION FOR
CERTIORARI TO ANNUL THE DECISION 1 OF RESPONDENT NATIONAL LABOR RELATIONS COMMISSION
(NLRC) ORDERING PETITIONERS TO PAY PRIVATE RESPONDENTS DOMINGO MALDIGAN AND GILBERTO
SABSALON THEIR ACCUMULATED DEPOSITS AND CAR WASH PAYMENTS, PLUS INTEREST THEREON AT
THE LEGAL RATE FROM THE DATE OF PROMULGATION OF JUDGMENT TO THE DATE OF ACTUAL
PAYMENT, AND 10% OF THE TOTAL AMOUNT AS AND FOR ATTORNEY'S FEES.

WE HAVE GIVEN DUE COURSE TO THIS PETITION FOR, WHILE TO THE CYNICAL THE DE MINIMIS
AMOUNTS INVOLVED SHOULD NOT IMPOSE UPON THE VALUABLE TIME OF THIS COURT, WE FIND
THEREIN A NEED TO CLARIFY SOME ISSUES THE RESOLUTION OF WHICH ARE IMPORTANT TO SMALL
WAGE EARNERS SUCH AS TAXICAB DRIVERS. AS WE HAVE HERETOFORE REPEATEDLY DEMONSTRATED,
THIS COURT DOES NOT EXIST ONLY FOR THE RICH OR THE POWERFUL, WITH THEIR REPUTED
MONUMENTAL CASES OF NATIONAL IMPACT. IT IS ALSO THE COURT OF THE POOR OR THE
UNDERPRIVILEGED, WITH THE ACTUAL QUOTIDIAN PROBLEMS THAT BESET THEIR INDIVIDUAL LIVES.

PRIVATE RESPONDENTS DOMINGO MALDIGAN AND GILBERTO SABSALON WERE HIRED BY THE
PETITIONERS AS TAXI DRIVERS 2 AND, AS SUCH, THEY WORKED FOR 4 DAYS WEEKLY ON A 24-HOUR
SHIFTING SCHEDULE. ASIDE FROM THE DAILY "BOUNDARY" OF P700.00 FOR AIR-CONDITIONED TAXI OR
P450.00 FOR NON-AIR-CONDITIONED TAXI, THEY WERE ALSO REQUIRED TO PAY P20.00 FOR CAR
WASHING, AND TO FURTHER MAKE A P15.00 DEPOSIT TO ANSWER FOR ANY DEFICIENCY IN THEIR
"BOUNDARY," FOR EVERY ACTUAL WORKING DAY.

IN LESS THAN 4 MONTHS AFTER MALDIGAN WAS HIRED AS AN EXTRA DRIVER BY THE PETITIONERS, HE
ALREADY FAILED TO REPORT FOR WORK FOR UNKNOWN REASONS. LATER, PETITIONERS LEARNED THAT
HE WAS WORKING FOR "MINE OF GOLD" TAXI COMPANY. WITH RESPECT TO SABSALON, WHILE DRIVING
A TAXICAB OF PETITIONERS ON SEPTEMBER 6, 1983, HE WAS HELD UP BY HIS ARMED PASSENGER WHO
TOOK ALL HIS MONEY AND THEREAFTER STABBED HIM. HE WAS HOSPITALIZED AND AFTER HIS
DISCHARGE, HE WENT TO HIS HOME PROVINCE TO RECUPERATE.

IN JANUARY, 1987, SABSALON WAS RE-ADMITTED BY PETITIONERS AS A TAXI DRIVER UNDER THE SAME
TERMS AND CONDITIONS AS WHEN HE WAS FIRST EMPLOYED, BUT HIS WORKING SCHEDULE WAS MADE
ON AN "ALTERNATIVE BASIS," THAT IS, HE DROVE ONLY EVERY OTHER DAY. HOWEVER, ON SEVERAL
OCCASIONS, HE FAILED TO REPORT FOR WORK DURING HIS SCHEDULE.

ON SEPTEMBER 22, 1991, SABSALON FAILED TO REMIT HIS "BOUNDARY" OF P700.00 FOR THE PREVIOUS
DAY. ALSO, HE ABANDONED HIS TAXICAB IN MAKATI WITHOUT FUEL REFILL WORTH P300.00. DESPITE
REPEATED REQUESTS OF PETITIONERS FOR HIM TO REPORT FOR WORK, HE ADAMANTLY REFUSED.
AFTERWARDS IT WAS REVEALED THAT HE WAS DRIVING A TAXI FOR "BULAKLAK COMPANY."

SOMETIME IN 1989, MALDIGAN REQUESTED PETITIONERS FOR THE REIMBURSEMENT OF HIS DAILY
CASH DEPOSITS FOR 2 YEARS, BUT HEREIN PETITIONERS TOLD HIM THAT NOT A SINGLE CENTAVO WAS
LEFT OF HIS DEPOSITS AS THESE WERE NOT EVEN ENOUGH TO COVER THE AMOUNT SPENT FOR THE
REPAIRS OF THE TAXI HE WAS DRIVING. THIS WAS ALLEGEDLY THE PRACTICE ADOPTED BY PETITIONERS
TO RECOUP THE EXPENSES INCURRED IN THE REPAIR OF THEIR TAXICAB UNITS. WHEN MALDIGAN
INSISTED ON THE REFUND OF HIS DEPOSIT, PETITIONERS TERMINATED HIS SERVICES. SABSALON, ON HIS
PART, CLAIMED THAT HIS TERMINATION FROM EMPLOYMENT WAS EFFECTED WHEN HE REFUSED TO PAY
FOR THE WASHING OF HIS TAXI SEAT COVERS.

ON NOVEMBER 27, 1991, PRIVATE RESPONDENTS FILED A COMPLAINT WITH THE MANILA ARBITRATION
OFFICE OF THE NATIONAL LABOR RELATIONS COMMISSION CHARGING PETITIONERS WITH ILLEGAL
DISMISSAL AND ILLEGAL DEDUCTIONS. THAT COMPLAINT WAS DISMISSED, THE LABOR ARBITER
HOLDING THAT IT TOOK PRIVATE RESPONDENTS TWO YEARS TO FILE THE SAME AND SUCH
UNREASONABLE DELAY WAS NOT CONSISTENT WITH THE NATURAL REACTION OF A PERSON WHO
CLAIMED TO BE UNJUSTLY TREATED, HENCE THE FILING OF THE CASE COULD BE INTERPRETED AS A
MERE AFTERTHOUGHT.

RESPONDENT NLRC CONCURRED IN SAID FINDINGS, WITH THE OBSERVATION THAT PRIVATE
RESPONDENTS FAILED TO CONTROVERT THE EVIDENCE SHOWING THAT MALDIGAN WAS EMPLOYED BY
"MINE OF GOLD" TAXI COMPANY FROM FEBRUARY 10, 1987 TO DECEMBER 10, 1990; THAT SABSALON
ABANDONED HIS TAXICAB ON SEPTEMBER 1, 1990; AND THAT THEY VOLUNTARILY LEFT THEIR JOBS FOR
SIMILAR EMPLOYMENT WITH OTHER TAXI OPERATORS. IT, ACCORDINGLY, AFFIRMED THE RULING OF THE
LABOR ARBITER THAT PRIVATE RESPONDENTS' SERVICES WERE NOT ILLEGALLY TERMINATED. IT,
HOWEVER, MODIFIED THE DECISION OF THE LABOR ARBITER BY ORDERING PETITIONERS TO PAY
PRIVATE RESPONDENTS THE AWARDS STATED AT THE BEGINNING OF THIS RESOLUTION.

PETITIONERS' MOTION FOR RECONSIDERATION HAVING BEEN DENIED BY THE NLRC, THIS PETITION IS
NOW BEFORE US IMPUTING GRAVE ABUSE OF DISCRETION ON THE PART OF SAID PUBLIC RESPONDENT.

THIS COURT HAS REPEATEDLY DECLARED THAT THE FACTUAL FINDINGS OF QUASI-JUDICIAL AGENCIES
LIKE THE NLRC, WHICH HAVE ACQUIRED EXPERTISE BECAUSE THEIR JURISDICTION IS CONFINED TO
SPECIFIC MATTERS, ARE GENERALLY ACCORDED NOT ONLY RESPECT BUT, AT TIMES, FINALITY IF SUCH
FINDINGS ARE SUPPORTED BY SUBSTANTIAL EVIDENCE. 3 WHERE, HOWEVER, SUCH CONCLUSIONS ARE
NOT SUPPORTED BY THE EVIDENCE, THEY MUST BE STRUCK DOWN FOR BEING WHIMSICAL AND
CAPRICIOUS AND, THEREFORE, ARRIVED AT WITH GRAVE ABUSE OF DISCRETION. 4

RESPONDENT NLRC HELD THAT THE P15.00 DAILY DEPOSITS MADE BY RESPONDENTS TO DEFRAY ANY
SHORTAGE IN THEIR "BOUNDARY" IS COVERED BY THE GENERAL PROHIBITION IN ARTICLE 114 OF THE
LABOR CODE AGAINST REQUIRING EMPLOYEES TO MAKE DEPOSITS, AND THAT THERE IS NO SHOWING
THAT THE SECRETARY OF LABOR HAS RECOGNIZED THE SAME AS A "PRACTICE" IN THE TAXI INDUSTRY.
CONSEQUENTLY, THE DEPOSITS MADE WERE ILLEGAL AND THE RESPONDENTS MUST BE REFUNDED
THEREFOR.

ARTICLE 114 OF THE LABOR CODE PROVIDES AS FOLLOWS:

ART. 114. DEPOSITS FOR LOSS OR DAMAGE. — NO EMPLOYER SHALL REQUIRE HIS WORKER TO
MAKE DEPOSITS FROM WHICH DEDUCTIONS SHALL BE MADE FOR THE REIMBURSEMENT OF LOSS OF OR
DAMAGE TO TOOLS, MATERIALS, OR EQUIPMENT SUPPLIED BY THE EMPLOYER, EXCEPT WHEN THE
EMPLOYER IS ENGAGED IN SUCH TRADES, OCCUPATIONS OR BUSINESS WHERE THE PRACTICE OF
MAKING DEPOSITS IS A RECOGNIZED ONE, OR IS NECESSARY OR DESIRABLE AS DETERMINED BY THE
SECRETARY OF LABOR IN APPROPRIATE RULES AND REGULATIONS.

IT CAN BE DEDUCED THEREFROM THAT THE SAID ARTICLE PROVIDES THE RULE ON DEPOSITS FOR LOSS
OR DAMAGE TO TOOLS, MATERIALS OR EQUIPMENTS SUPPLIED BY THE EMPLOYER. CLEARLY, THE SAME
DOES NOT APPLY TO OR PERMIT DEPOSITS TO DEFRAY ANY DEFICIENCY WHICH THE TAXI DRIVER MAY
INCUR IN THE REMITTANCE OF HIS "BOUNDARY." ALSO, WHEN PRIVATE RESPONDENTS STOPPED
WORKING FOR PETITIONERS, THE ALLEGED PURPOSE FOR WHICH PETITIONERS REQUIRED SUCH
UNAUTHORIZED DEPOSITS NO LONGER EXISTED. IN OTHER CASE, ANY BALANCE DUE TO PRIVATE
RESPONDENTS AFTER PROPER ACCOUNTING MUST BE RETURNED TO THEM WITH LEGAL INTEREST.

HOWEVER, THE UNREBUTTED EVIDENCE WITH REGARD TO THE CLAIM OF SABSALON IS AS FOLLOWS:
YEAR DEPOSITS SHORTAGES VALES

1987 P 1,403.00 P 567.00 P 1,000.00

1988 720.00 760.00 200.00

1989 686.00 130.00 1,500.00

1990 605.00 570.00

1991 165.00 2,300.00

———— ———— ————

P 3,579.00 P 4,327.00 P 2,700.00

THE FOREGOING ACCOUNTING SHOWS THAT FROM 1987-1991, SABSALON WAS ABLE TO WITHDRAW
HIS DEPOSITS THROUGH VALES OR HE INCURRED SHORTAGES, SUCH THAT HE IS EVEN INDEBTED TO
PETITIONERS IN THE AMOUNT OF P3,448.00. WITH RESPECT TO MALDIGAN'S DEPOSITS, NOTHING WAS
MENTIONED QUESTIONING THE SAME EVEN IN THE PRESENT PETITION. WE ACCORDINGLY AGREE WITH
THE RECOMMENDATION OF THE SOLICITOR GENERAL THAT SINCE THE EVIDENCE SHOWS THAT HE HAD
NOT WITHDRAWN THE SAME, HE SHOULD BE REIMBURSED THE AMOUNT OF HIS ACCUMULATED CASH
DEPOSITS. 5

ON THE MATTER OF THE CAR WASH PAYMENTS, THE LABOR ARBITER HAD THIS TO SAY IN HIS DECISION:
"ANENT THE ISSUE OF ILLEGAL DEDUCTIONS, THERE IS NO DISPUTE THAT AS A MATTER OF PRACTICE IN
THE TAXI INDUSTRY, AFTER A TOUR OF DUTY, IT IS INCUMBENT UPON THE DRIVER TO RESTORE THE UNIT
HE HAS DRIVEN TO THE SAME CLEAN CONDITION WHEN HE TOOK IT OUT, AND AS CLAIMED BY THE
RESPONDENTS (PETITIONERS IN THE PRESENT CASE), COMPLAINANT(S) (PRIVATE RESPONDENTS HEREIN)
WERE MADE TO SHOULDER THE EXPENSES FOR WASHING, THE AMOUNT DOLED OUT WAS PAID
DIRECTLY TO THE PERSON WHO WASHED THE UNIT, THUS WE FIND NOTHING ILLEGAL IN THIS PRACTICE,
MUCH MORE (SIC) TO CONSIDER THE AMOUNT PAID BY THE DRIVER AS ILLEGAL DEDUCTION IN THE
CONTEXT OF THE LAW." 6 (WORDS IN PARENTHESES ADDED.)

CONSEQUENTLY, PRIVATE RESPONDENTS ARE NOT ENTITLED TO THE REFUND OF THE P20.00 CAR WASH
PAYMENTS THEY MADE. IT WILL BE NOTED THAT THERE WAS NOTHING TO PREVENT PRIVATE
RESPONDENTS FROM CLEANING THE TAXI UNITS THEMSELVES, IF THEY WANTED TO SAVE THEIR P20.00.
ALSO, AS THE SOLICITOR GENERAL CORRECTLY NOTED, CAR WASHING AFTER A TOUR OF DUTY IS A
PRACTICE IN THE TAXI INDUSTRY, AND IS, IN FACT, DICTATED BY FAIR PLAY.

ON THE LAST ISSUE OF ATTORNEY'S FEES OR SERVICE FEES FOR PRIVATE RESPONDENTS' AUTHORIZED
REPRESENTATIVE, ARTICLE 222 OF THE LABOR CODE, AS AMENDED BY SECTION 3 OF PRESIDENTIAL
DECREE NO. 1691, STATES THAT NON-LAWYERS MAY APPEAR BEFORE THE NLRC OR ANY LABOR ARBITER
ONLY (1) IF THEY REPRESENT THEMSELVES, OR (2) IF THEY REPRESENT THEIR ORGANIZATION OR THE
MEMBERS THEREOF. WHILE IT MAY BE TRUE THAT GUILLERMO H. PULIA WAS THE AUTHORIZED
REPRESENTATIVE OF PRIVATE RESPONDENTS, HE WAS A NON-LAWYER WHO DID NOT FALL IN EITHER OF
THE FOREGOING CATEGORIES. HENCE, BY CLEAR MANDATE OF THE LAW, HE IS NOT ENTITLED TO
ATTORNEY'S FEES.

FURTHERMORE, THE STATUTORY RULE THAT AN ATTORNEY SHALL BE ENTITLED TO HAVE AND RECOVER
FROM HIS CLIENT A REASONABLE COMPENSATION FOR HIS SERVICES 7 NECESSARILY IMPORTS THE
EXISTENCE OF AN ATTORNEY-CLIENT RELATIONSHIP AS A CONDITION FOR THE RECOVERY OF
ATTORNEY'S FEES, AND SUCH RELATIONSHIP CANNOT EXIST UNLESS THE CLIENT'S REPRESENTATIVE IS A
LAWYER. 8

WHEREFORE, THE QUESTIONED JUDGMENT OF RESPONDENT NATIONAL LABOR RELATIONS

COMMISSION IS HEREBY MODIFIED BY DELETING THE AWARDS FOR REIMBURSEMENT OF CAR WASH
EXPENSES AND ATTORNEY'S FEES AND DIRECTING SAID PUBLIC RESPONDENT TO ORDER AND EFFECT
THE COMPUTATION AND PAYMENT BY PETITIONERS OF THE REFUND FOR PRIVATE RESPONDENT
DOMINGO MALDIGAN'S DEPOSITS, PLUS LEGAL INTEREST THEREON FROM THE DATE OF FINALITY OF
THIS RESOLUTION UP TO THE DATE OF ACTUAL PAYMENT THEREOF.

SO ORDERED.
G.R. NO. 87449 JANUARY 23, 1990

SOUTH MOTORISTS ENTERPRISES, PETITIONER,

VS.
ROQUE TOSOC, ET AL., AND HON. SECRETARY OF LABOR AND EMPLOYMENT, RESPONDENTS.

MANUEL M. PARADES FOR PETITIONER.

HENRY V. BRIGUERA FOR PRIVATE RESPONDENTS.

MELENCIO-HERRERA, J.:

AT ISSUE IN THIS SPECIAL CIVIL ACTION FOR CERTIORARI IS THE JURISDICTION OF THE REGIONAL
DIRECTORS OF THE DEPARTMENT OF LABOR AND EMPLOYMENT TO ACT ON MONEY CLAIMS.
PETITIONER SOUTH MOTORISTS ENTERPRISES (SOUTH MOTORISTS) MAINTAINS THAT SAID OFFICIALS
ARE BEREFT OF AUTHORITY TO ACT ON SUCH CLAIMS AS THIS FALLS UNDER THE ORIGINAL AND
EXCLUSIVE JURISDICTION OF LABOR ARBITERS. RESPONDENTS MAINTAIN OTHERWISE.

THE FACTS ARE AS FOLLOWS:

SOMETIME IN JANUARY OF 1983, COMPLAINTS FOR NON-PAYMENT OF EMERGENCY COST OF LIVING

ALLOWANCES WERE FILED BY 46 WORKERS, TOSOC, ET ALS., AGAINST SOUTH MOTORISTS BEFORE THE
NAGA CITY DISTRICT OFFICE OF REGIONAL OFFICE NO. 5 OF THE THEN MINISTRY OF LABOR. ON 10
JANUARY 1983 A SPECIAL ORDER WAS ISSUED BY THE DISTRICT LABOR OFFICER DIRECTING ITS LABOR
REGULATION OFFICERS TO CONDUCT AN INSPECTION AND VERIFICATION OF SOUTH MOTORISTS'
EMPLOYMENT RECORDS.

ON THE DATE OF THE INSPECTION AND VERIFICATION, SOUTH MOTORISTS WAS UNABLE TO PRESENT ITS
EMPLOYMENT RECORDS ON THE ALLEGATION THAT THEY HAD BEEN SENT TO THE MAIN OFFICE IN
MANILA. THE CASE WAS THEN SET FOR CONFERENCE ON 25 JANUARY 1983 BUT HAD TO BE RESET TO 8
FEBRUARY 1983 UPON THE REQUEST OF SOUTH MOTORISTS TO ENABLE IT TO PRESENT ALL THE
EMPLOYMENT RECORDS ON SUCH DATE. HOWEVER, ON 7 FEBRUARY 1983 SOUTH MOTORISTS ASKED
FOR ANOTHER DEFERMENT TO 16 FEBRUARY 1983 DUE TO ITS LAWYER'S TIGHT SCHEDULE. ON 16
FEBRUARY 1983, SOUTH MOTORISTS AGAIN REQUESTED FOR A RESETTING TO 3 MARCH 1983 BECAUSE
OF THE ALLEGED VOLUMINOUS RECORDS IT HAD TO LOCATE AND ITS DESIRE TO SUBMIT A
MEMORANDUM REGARDING COMPLAINANTS' CLAIMS. ON 2 MARCH 1983, SOUTH MOTORISTS ONCE
AGAIN REQUESTED AN EXTENSION OF 30 DAYS ON THE GROUND THAT THE DOCUMENTS WERE STILL
BEING PREPARED AND COLLATED AND THAT A FORMAL MANIFESTATION OR MOTION WOULD FOLLOW.
NOTHING DID.

ON 7 MARCH 1983, THE ASSIGNED LABOR REGULATION OFFICERS SUBMITTED AN INSPECTION REPORT
ON THE BASIS OF WHICH AN ORDER DATED 14 APRIL 1983 WAS ISSUED BY LABOR OFFICER DOMINGO
REYES DIRECTING SOUTH MOTORISTS TO PAY TOSOC, ET ALS., THE TOTAL AMOUNT OF ONE HUNDRED
EIGHTY FOUR THOUSAND SIX HUNDRED EIGHTY NINE AND 12/100 PESOS (P184,689.12) REPRESENTING
THE LATTER'S CORRESPONDING EMERGENCY COST OF LIVING ALLOWANCES.

SOUTH MOTORISTS MOVED FOR RECONSIDERATION OF THE ORDER, WHICH WAS DENIED. ON 11 JULY
1988, THE SECRETARY OF LABOR AND EMPLOYMENT AFFIRMED THE APPEALED ORDER. ON 28 JULY
1988, SOUTH MOTORISTS MOVED FOR RECONSIDERATION BUT THIS PROVED UNSUCCESSFUL. A SECOND
MOTION FOR RECONSIDERATION WAS FILED, WHICH WAS LIKEWISE DENIED IN AN ORDER DATED 7
MARCH 1989.

HENCE, THIS CERTIORARI PETITION QUESTIONING THE MONETARY AWARD BY THE REGIONAL DIRECTOR
AND, IN GENERAL, HIS JURISDICTION TO VALIDLY AWARD MONEY CLAIMS.

THE COURT RESOLVED TO GIVE DUE COURSE TO THE PETITION AND TO DECIDE THE CASE.

SOUTH MOTORISTS CONTENDS THAT ONLY THE LABOR ARBITER, WHO IS A TRIER OF FACTS, MAY
DETERMINE AFTER HEARING SUCH QUESTIONS AS WHETHER OR NOT AN EMPLOYER-EMPLOYEE
RELATIONSHIP EXISTS; WHETHER OR NOT THE WORKERS WERE PROJECT WORKERS; WHETHER OR NOT
THE EMPLOYEES WORKED CONTINUOUSLY OR WHETHER OR NOT THEY SHOULD RECEIVE EMERGENCY
COST OF LIVING ALLOWANCES AND IF ENTITLED, HOW MUCH EACH SHOULD RECEIVE. THUS, SOUTH
MOTORISTS SUBMITS THAT THIS CASE SHOULD BE REFERRED TO THE LABOR ARBITER FOR PROPER
PROCEEDINGS.

TWO PROVISIONS OF LAW ARE CRUCIAL TO THE ISSUE—ARTICLE 129 AND ARTICLE 217 OF THE LABOR
CODE, AS RECENTLY AMENDED BY REPUBLIC ACT NO. 6715, APPROVED ON 2 MARCH 1989. SAID
AMENDMENTS, BEING CURATIVE IN NATURE, HAVE RETROACTIVE EFFECT AND, THUS, SHOULD APPLY IN
THIS CASE (BRIAD AGRO VS. DE LA CERNA, G.R. NO. 82805, AND CAMUS ENGINEERING VS. DE LA CERNA,
G.R. NO. 83225, 9 NOVEMBER 1989). AT THIS JUNCTURE, IT SHOULD BE POINTED OUT IN THE LIGHT OF
THESE BRIAD-AGRO CASES, INCLUDING THE MODIFICATORY RESOLUTION THEREON OF 9 NOVEMBER
1989, PETITIONER'S INVOCATIONS OF THE RULINGS IN ZAMBALES BASE METALS, L-73184-88, 26
NOVEMBER 1986, AND KINDRED CASES, IS NOW OUT-DATED.

THE AFORESAID ARTICLES, AS AMENDED, RESPECTIVELY READ AS FOLLOWS:

ART. 129. RECOVERY OF WAGES, SIMPLE MONEY CLAIMS AND OTHER BENEFITS.— UPON
COMPLAINT OF ANY INTERESTED PARTY, THE REGIONAL DIRECTOR OF THE DEPARTMENT OF LABOR AND
EMPLOYMENT OR ANY OF THE DULY AUTHORIZED HEARING OFFICERS OF THE DEPARTMENT IS
EMPOWERED, THROUGH SUMMARY PROCEEDING AND AFTER DUE NOTICE, TO HEAR AND DECIDE
CASES INVOLVING THE RECOVERY OF WAGES AND OTHER MONETARY CLAIMS AND BENEFITS,
INCLUDING LEGAL INTEREST, OWING TO AN EMPLOYEE OR PERSON EMPLOYED IN DOMESTIC OR
HOUSEHOLD SERVICE AND HOUSEHELPER UNDER THIS CODE, ARISING FROM EMPLOYER-EMPLOYEE
RELATIONS: PROVIDED, THAT SUCH COMPLAINT DOES NOT INCLUDE A CLAIM FOR REINSTATEMENT:
PROVIDED, FURTHER, THAT THE AGGREGATE CLAIM OF EACH EMPLOYEE OR HOUSEHELPER DOES NOT
EXCEED FIVE THOUSAND PESOS (P5,000.00). . . .

AND

ART. 217. JURISDICTION OF LABOR ARBITERS AND THE COMMISSION. — (A) EXCEPT AS
OTHERWISE PROVIDED UNDER THIS CODE, THE LABOR ARBITERS SHALL HAVE ORIGINAL AND EXCLUSIVE
JURISDICTION TO HEAR AND DECIDE, WITHIN THIRTY (30) CALENDAR DAYS AFTER THE SUBMISSION OF
THE CASE BY THE PARTIES FOR DECISION WITHOUT EXTENSION, EVEN IN THE ABSENCE OF
STENOGRAPHIC NOTES, THE FOLLOWING CASES INVOLVING ALL WORKERS, WHETHER AGRICULTURAL
OR NON-AGRICULTURAL:

XXX XXX XXX

(6) EXCEPT CLAIMS FOR EMPLOYEES COMPENSATION, SOCIAL SECURITY, MEDICARE AND
MATERNITY BENEFITS, ALL OTHER CLAIMS ARISING FROM EMPLOYER-EMPLOYEE RELATIONS, INCLUDING
THOSE OF PERSONS IN DOMESTIC OR HOUSEHOLD SERVICE, INVOLVING AN AMOUNT EXCEEDING FIVE
THOUSAND PESOS (P5,000), WHETHER OR NOT ACCOMPANIED WITH A CLAIM FOR REINSTATEMENT.

XXX XXX XXX

CLEARLY, REGIONAL DIRECTORS ARE EMPOWERED TO HEAR AND DECIDE, IN A SUMMARY PROCEEDING,
CLAIMS FOR RECOVERY OF WAGES AND OTHER MONETARY CLAIMS AND BENEFITS, INCLUDING LEGAL
INTEREST, SUBJECT TO THE CONCURRENCE OF THE FOLLOWING REQUISITES:

1) THE CLAIM IS PRESENTED BY AN EMPLOYEE OR PERSON EMPLOYED IN DOMESTIC OR

HOUSEHOLD SERVICE, OR HOUSEHELPER UNDER THE CODE;

2) THE CLAIM ARISES FROM EMPLOYER-EMPLOYEE RELATIONS;

3) THE CLAIMANT NO LONGER BEING EMPLOYED, DOES NOT SEEK REINSTATEMENT; AND

4) THE AGGREGATE MONEY CLAIM OF EACH EMPLOYEE OR HOUSEHELPER DOES NOT EXCEED
P5,000.00 (ART. 129, LABOR CODE, AS AMENDED BY R.A. 6715).

BUT WHERE THESE REQUISITES DO NOT CONCUR, THE LABOR ARBITERS SHALL HAVE EXCLUSIVE
ORIGINAL JURISDICTION OVER CLAIMS ARISING FROM EMPLOYER-EMPLOYEE RELATIONSHIP EXCEPT
CLAIMS FOR EMPLOYEES' COMPENSATION, SOCIAL SECURITY, MEDICARE AND MATERNITY BENEFITS
(PARAG. 6, ART. 217, LABOR CODE AS AMENDED BY R.A. 6715).
THE RECORDS OF THIS CASE SHOW THAT THE AWARD OF ONE HUNDRED EIGHTY FOUR THOUSAND SIX
HUNDRED EIGHTY NINE AND 12/100 PESOS (P L84,689.12) GIVEN BY THE DISTRICT LABOR OFFICER ON
14 APRIL 1983 IS ITEMIZED AS FOLLOWS:

1. ANATALIO CADO P 3,203.20

2. MACARIO GAVINO 6,332.48
3. VITO T. EUSTE 6,073.76
4. DOMINGO RICAFORT 3,843.84
5. ROGER PAULO 4,176.48
6. ELIAS CLARIANES 4,201.12
7. ERNESTO BREQUILLO 4,176.48
8. SANTIAGO ASARES 4,114.88
9. MARCELITO VERDADERO 4,127.20
10. ELIAS PASCUA 4,348.96
11. FRANCISCO HERRERA 3,991.68
12. EFREN SAN JOAQUIN 3,979.36
13. DOMINADOR PAYO 4,201.12
14. JESUS MILITANTE 4,201.12
15. UBALDO OSOC, JR. 2,156.00
16. SALVADOR CLARIANES 3,843.84
17. VICENTE LOVENDINO 1,416.80
18. JOSE BREQUILLO 6,049.12
19. DOMINGO CIS 7,884.80
20. ALBERTO AGREDA 5,396.16
21. AMANCIO GALONA 6,418.72
22. EDUARDO BREQUILLO 2,858.24
23. LUIS CLARIANES4,127.20
24. ROQUE TOSOC 6,418.72
25. HILARION P. GUINOO 6,086.08
26. CARLOS PLEGINO 1,478.40
27. FELIPE CEA 6,024.48
28. SALVADOR CALAMBA 4,040.96
29. RAMON MARCO 4,669.28
30. EDDIE DEL CASTILLO 4,201.12
31. LOPE GUINOO 3,868.48
32. MARCELINO HABLA 1,096.48
33. ROBERTO GUINOO 5,938.24
34. EFREN ANDALIS 4,114.88
35. SOLOMON TOSOC 2,722.72
36. CORNELIO BALLARES 3,006.08
37. ERNESTO OSOC 6,024.48
38. BERNARDO GABRILLO 1,490.72
39. ROMEO ABARRO 2,722.72
40. ROGELIO USINAR 2,722.72
41. FORTUNATE SOLA 1,453.76
42. ROMEO CALPI 2,821.28
43. ROGELIO VILLAMOR 2,772.00
44. JOSE BANDAY 4,817.12
45. ALBERTO CORNELIO 2,882.88
46. PABLO OLARTE 2,192.96
—————

TOTAL P 184,689.12

IN ACCORDANCE WITH ARTICLES 129 AND 217 OF THE LABOR CODE, AS AMENDED, SUPRA, THOSE
AWARDS IN EXCESS OF P5,000.00, PARTICULARLY THOSE GIVEN TO MACARIO GAVINO, VITO T. EUSTE,
JOSE BREQUILLO, DOMINGO CIS, ALBERTO AGREDA, AMANCIO GALONA, ROQUE TOSOC, HILARION P.
GUINOO, FELIPE CEA, ROBERTO GUINOO, AND ERNESTO OSOC, EACH OF WHICH EXCEEDS P5,000.00,
SHOULD BE VENTILATED IN A PROCEEDING BEFORE THE LABOR ARBITERS. THE OTHER AWARDS, OR
THOSE NOT IN EXCESS OF P5,000.00 AND HAVING NO ISSUE OF REINSTATEMENT SET FORTH, SHOULD BE
AFFIRMED.

AS TO THE MATTER THAT THE RESPONDENT SECRETARY OF LABOR AND EMPLOYMENT ERRED IN
AFFIRMING THE AWARD BASED ON A MERE INSPECTION REPORT, WE SEE NO REASON FOR SOUTH
MOTORISTS TO COMPLAIN AS IT WAS AFFORDED AMPLE OPPORTUNITY TO PRESENT ITS SIDE. IT FAILED
TO PRESENT EMPLOYMENT RECORDS GIVING AS AN EXCUSE THAT THEY WERE SENT TO THE MAIN
OFFICE IN MANILA, IN VIOLATION OF SECTION 11 OF RULE X, BOOK II OF THE OMNIBUS RULES
IMPLEMENTING THE LABOR CODE PROVIDING THAT:

ALL EMPLOYMENT RECORDS OF THE EMPLOYEES OF THE EMPLOYER SHALL BE KEPT AND MAINTAINED IN
OR ABOUT THE PREMISES OF THE WORKPLACE. THE PREMISES OF A WORKPLACE SHALL BE
UNDERSTOOD TO MEAN THE MAIN OR BRANCH OFFICE OR ESTABLISHMENT, IF ANY, DEPENDING., UPON
WHERE THE EMPLOYEES ARE REGULARLY ASSIGNED. THE KEEPING OF THE EMPLOYEE'S RECORDS IN
ANOTHER PLACE IS PROHIBITED.

SOUTH MOTORISTS ALSO CAUSED THE RESETTINGS OF ALL SUBSEQUENT HEARINGS—FROM 25

JANUARY 1983 TO 8 FEBRUARY 1983, THEN TO 16 FEBRUARY 1983, THEN TO 3 MARCH AND FINALLY,
AGAIN REQUESTED FOR ANOTHER 30-DAY-EXTENSION ON THE GROUND THAT THE DOCUMENTS, WERE
STILL BEING PREPARED AND COLLATED. HAVING BEEN GIVEN THE OPPORTUNITY TO PUT FORTH ITS
CASE, SOUTH MOTORISTS HAS ONLY ITSELF TO BLAME FOR HAVING FAILED TO AVAIL OF THE SAME
(ADAMSON AND ADAMSON, INC. VS. JUDGE AMORES, G.R. NO. 58292, 23 JULY 1987,152 SCRA 237).
WHAT IS MORE, ITS REPEATED FAILURE TO ATTEND THE HEARINGS, AND TO SUBMIT ANY MOTION AS
MANIFESTED MAY BE CONSTRUED AS A WAIVER OF ITS RIGHT TO ADDUCE EVIDENCE TO CONTROVERT
THE WORKER'S CLAIMS.

WHEREFORE, THE AWARD OF ONE HUNDRED EIGHTY FOUR THOUSAND SIX HUNDRED EIGHTY NINE AND
12/100 (P L84,689.12) IS HEREBY MODIFIED. THE INDIVIDUAL CLAIMS OF MACARIO GAVINO, VITO T.
EUSTE JOSE, BREQUILLO, DOMINGO CIS, ALBERTO AGREDA, AMANCIO GALONA, ROQUE TOSOC,
HILARION P. GUINOO, FELIPE CEA, ROBERTO GUINOO, AND ERNESTO OSOC, EACH OF WHICH EXCEEDS
P5,000.00, ARE HEREBY REMANDED TO THE LABOR ARBITER FOR PROPER DISPOSITION. ALL OTHER
INDIVIDUAL AWARDS NOT IN EXCESS OF P5,000.00 ARE HEREBY AFFIRMED. COSTS AGAINST PETITIONER.

SO ORDERED.
G.R. NO. L-44169 DECEMBER 3, 1985
ROSARIO A. GAA, PETITIONER,
VS.
THE HONORABLE COURT OF APPEALS, EUROPHIL INDUSTRIES CORPORATION, AND CESAR R. ROXAS,
DEPUTY SHERIFF OF MANILA, RESPONDENTS.

FEDERICO C. ALIKPALA AND FEDERICO Y. ALIKPALA, JR. FOR PETITIONER.

BORBE AND PALMA FOR PRIVATE RESPONDENT.

PATAJO, J.:

THIS IS A PETITION FOR REVIEW ON CERTIORARI OF THE DECISION OF THE COURT OF APPEALS
PROMULGATED ON MARCH 30, 1976, AFFIRMING THE DECISION OF THE COURT OF FIRST INSTANCE OF
MANILA.

IT APPEARS THAT RESPONDENT EUROPHIL INDUSTRIES CORPORATION WAS FORMERLY ONE OF THE
TENANTS IN TRINITY BUILDING AT T.M. KALAW STREET, MANILA, WHILE PETITIONER ROSARIO A. GAA
WAS THEN THE BUILDING ADMINISTRATOR. ON DECEMBER 12, 1973, EUROPHIL INDUSTRIES
COMMENCED AN ACTION (CIVIL CASE NO. 92744) IN THE COURT OF FIRST INSTANCE OF MANILA FOR
DAMAGES AGAINST PETITIONER "FOR HAVING PERPETRATED CERTAIN ACTS THAT EUROPHIL INDUSTRIES
CONSIDERED A TRESPASS UPON ITS RIGHTS, NAMELY, CUTTING OF ITS ELECTRICITY, AND REMOVING ITS
NAME FROM THE BUILDING DIRECTORY AND GATE PASSES OF ITS OFFICIALS AND EMPLOYEES" (P. 87
ROLLO). ON JUNE 28, 1974, SAID COURT RENDERED JUDGMENT IN FAVOR OF RESPONDENT EUROPHIL
INDUSTRIES, ORDERING PETITIONER TO PAY THE FORMER THE SUM OF P10,000.00 AS ACTUAL
DAMAGES, P5,000.00 AS MORAL DAMAGES, P5,000.00 AS EXEMPLARY DAMAGES AND TO PAY THE
COSTS.

THE SAID DECISION HAVING BECOME FINAL AND EXECUTORY, A WRIT OF GARNISHMENT WAS ISSUED
PURSUANT TO WHICH DEPUTY SHERIFF CESAR A. ROXAS ON AUGUST 1, 1975 SERVED A NOTICE OF
GARNISHMENT UPON EL GRANDE HOTEL, WHERE PETITIONER WAS THEN EMPLOYED, GARNISHING HER
"SALARY, COMMISSION AND/OR REMUNERATION." PETITIONER THEN FILED WITH THE COURT OF FIRST
INSTANCE OF MANILA A MOTION TO LIFT SAID GARNISHMENT ON THE GROUND THAT HER "SALARIES,
COMMISSION AND, OR REMUNERATION ARE EXEMPTED FROM EXECUTION UNDER ARTICLE 1708 OF
THE NEW CIVIL CODE. SAID MOTION WAS DENIED BY THE LOWER COURT IN AN ORDER DATED
NOVEMBER 7, 1975. A MOTION FOR RECONSIDERATION OF SAID ORDER WAS LIKEWISE DENIED, AND ON
JANUARY 26, 1976 PETITIONER FILED WITH THE COURT OF APPEALS A PETITION FOR CERTIORARI
AGAINST FILED WITH THE COURT OF APPEALS A PETITION FOR CERTIORARI AGAINST SAID ORDER OF
NOVEMBER 7, 1975.

ON MARCH 30, 1976, THE COURT OF APPEALS DISMISSED THE PETITION FOR CERTIORARI. IN
DISMISSING THE PETITION, THE COURT OF APPEALS HELD THAT PETITIONER IS NOT A MERE LABORER AS
CONTEMPLATED UNDER ARTICLE 1708 AS THE TERM LABORER DOES NOT APPLY TO ONE WHO HOLDS A
MANAGERIAL OR SUPERVISORY POSITION LIKE THAT OF PETITIONER, BUT ONLY TO THOSE "LABORERS
OCCUPYING THE LOWER STRATA." IT ALSO HELD THAT THE TERM "WAGES" MEANS THE PAY GIVEN" AS
HIRE OR REWARD TO ARTISANS, MECHANICS, DOMESTICS OR MENIAL SERVANTS, AND LABORERS
EMPLOYED IN MANUFACTORIES, AGRICULTURE, MINES, AND OTHER MANUAL OCCUPATION AND
USUALLY EMPLOYED TO DISTINGUISH THE SUMS PAID TO PERSONS HIRED TO PERFORM MANUAL
LABOR, SKILLED OR UNSKILLED, PAID AT STATED TIMES, AND MEASURED BY THE DAY, WEEK, MONTH, OR
SEASON," CITING 67 C.J. 285, WHICH IS THE ORDINARY ACCEPTATION OF THE SAID TERM, AND THAT
"WAGES" IN SPANISH IS "JORNAL" AND ONE WHO RECEIVES A WAGE IS A "JORNALERO."

IN THE PRESENT PETITION FOR REVIEW ON CERTIORARI OF THE AFORESAID DECISION OF THE COURT OF
APPEALS, PETITIONER QUESTIONS THE CORRECTNESS OF THE INTERPRETATION OF THE THEN COURT OF
APPEALS OF ARTICLE 1708 OF THE NEW CIVIL CODE WHICH READS AS FOLLOWS:

ART. 1708. THE LABORER'S WAGE SHALL NOT BE SUBJECT TO EXECUTION OR ATTACHMENT, EXCEPT FOR
DEBTS INCURRED FOR FOOD, SHELTER, CLOTHING AND MEDICAL ATTENDANCE.

IT IS BEYOND DISPUTE THAT PETITIONER IS NOT AN ORDINARY OR RANK AND FILE LABORER BUT "A
RESPONSIBLY PLACE EMPLOYEE," OF EL GRANDE HOTEL, "RESPONSIBLE FOR PLANNING, DIRECTING,
CONTROLLING, AND COORDINATING THE ACTIVITIES OF ALL HOUSEKEEPING PERSONNEL" (P. 95, ROLLO)
SO AS TO ENSURE THE CLEANLINESS, MAINTENANCE AND ORDERLINESS OF ALL GUEST ROOMS,
FUNCTION ROOMS, PUBLIC AREAS, AND THE SURROUNDINGS OF THE HOTEL. CONSIDERING THE
IMPORTANCE OF PETITIONER'S FUNCTION IN EL GRANDE HOTEL, IT IS UNDENIABLE THAT PETITIONER IS
OCCUPYING A POSITION EQUIVALENT TO THAT OF A MANAGERIAL OR SUPERVISORY POSITION.

IN ITS BROADEST SENSE, THE WORD "LABORER" INCLUDES EVERYONE WHO PERFORMS ANY KIND OF
MENTAL OR PHYSICAL LABOR, BUT AS COMMONLY AND CUSTOMARILY USED AND UNDERSTOOD, IT
ONLY APPLIES TO ONE ENGAGED IN SOME FORM OF MANUAL OR PHYSICAL LABOR. THAT IS THE SENSE
IN WHICH THE COURTS GENERALLY APPLY THE TERM AS APPLIED IN EXEMPTION ACTS, SINCE PERSONS
OF THAT CLASS USUALLY LOOK TO THE REWARD OF A DAY'S LABOR FOR IMMEDIATE OR PRESENT
SUPPORT AND SO ARE MORE IN NEED OF THE EXEMPTION THAN ARE OTHER. (22 AM. JUR. 22 CITING
BRISCOE VS. MONTGOMERY, 93 GA 602, 20 SE 40; MILLER VS. DUGAS, 77 GA 4 AM ST REP 192; STATE EX
REL I.X.L. GROCERY VS. LAND, 108 LA 512, 32 SO 433; WILDNER VS. FERGUSON, 42 MINN 112, 43 NW
793; 6 LRA 338; ANNO 102 AM ST REP. 84.

IN OLIVER VS. MACON HARDWARE CO., 98 GA 249 SE 403, IT WAS HELD THAT IN DETERMINING
WHETHER A PARTICULAR LABORER OR EMPLOYEE IS REALLY A "LABORER," THE CHARACTER OF THE
WORD HE DOES MUST BE TAKEN INTO CONSIDERATION. HE MUST BE CLASSIFIED NOT ACCORDING TO
THE ARBITRARY DESIGNATION GIVEN TO HIS CALLING, BUT WITH REFERENCE TO THE CHARACTER OF
THE SERVICE REQUIRED OF HIM BY HIS EMPLOYER.

IN WILDNER VS. FERGUSON, 42 MINN 112, 43 NW 793, THE COURT ALSO HELD THAT ALL MEN WHO
EARN COMPENSATION BY LABOR OR WORK OF ANY KIND, WHETHER OF THE HEAD OR HANDS,
INCLUDING JUDGES, LAYWERS, BANKERS, MERCHANTS, OFFICERS OF CORPORATIONS, AND THE LIKE,
ARE IN SOME SENSE "LABORING MEN." BUT THEY ARE NOT "LABORING MEN" IN THE POPULAR SENSE
OF THE TERM, WHEN USED TO REFER TO A MUST PRESUME, THE LEGISLATURE USED THE TERM. THE
COURT FURTHER HELD IN SAID CASE:

THERE ARE MANY CASES HOLDING THAT CONTRACTORS, CONSULTING OR ASSISTANT ENGINEERS,
AGENTS, SUPERINTENDENTS, SECRETARIES OF CORPORATIONS AND LIVERY STABLE KEEPERS, DO NOT
COME WITHIN THE MEANING OF THE TERM. (POWELL V. ELDRED, 39 MICH, 554, ATKIN V. WASSON, 25
N.Y. 482; SHORT V. MEDBERRY, 29 HUN. 39; DEAN V. DE WOLF, 16 HUN. 186; KRAUSEN V. BUCKEL, 17
HUN. 463; ERICSON V. BROWN, 39 BARB. 390; COFFIN V. REYNOLDS, 37 N.Y. 640; BRUSIE V. GRIFFITH, 34
CAL. 306; DAVE V. NUNAN, 62 CAL. 400).
THUS, IN JONES VS. AVERY, 50 MICH, 326, 15 N.W. REP. 494, IT WAS HELD THAT A TRAVELING SALESMAN,
SELLING BY SAMPLE, DID NOT COME WITHIN THE MEANING OF A CONSTITUTIONAL PROVISION MAKING
STOCKHOLDERS OF A CORPORATION LIABLE FOR "LABOR DEBTS" OF THE CORPORATION.

IN KLINE VS. RUSSELL 113 GA. 1085, 39 SE 477, CITING OLIVER VS. MACON HARDWARE CO., SUPRA, IT
WAS HELD THAT A LABORER, WITHIN THE STATUTE EXEMPTING FROM GARNISHMENT THE WAGES OF A
"LABORER," IS ONE WHOSE WORK DEPENDS ON MERE PHYSICAL POWER TO PERFORM ORDINARY
MANUAL LABOR, AND NOT ONE ENGAGED IN SERVICES CONSISTING MAINLY OF WORK REQUIRING
MENTAL SKILL OR BUSINESS CAPACITY, AND INVOLVING THE EXERCISE OF INTELLECTUAL FACULTIES.

SO, ALSO IN WAKEFIELD VS. FARGO, 90 N.Y. 213, THE COURT, IN CONSTRUING AN ACT MAKING
STOCKHOLDERS IN A CORPORATION LIABLE FOR DEBTS DUE "LABORERS, SERVANTS AND APPRENTICES"
FOR SERVICES PERFORMED FOR THE CORPORATION, HELD THAT A "LABORER" IS ONE WHO PERFORMS
MENIAL OR MANUAL SERVICES AND USUALLY LOOKS TO THE REWARD OF A DAY'S LABOR OR SERVICES
FOR IMMEDIATE OR PRESENT SUPPORT. AND IN WEYMOUTH VS. SANBORN, 43 N.H. 173, 80 AM. DEC.
144, IT WAS HELD THAT "LABORER" IS A TERM ORDINARILY EMPLOYED TO DENOTE ONE WHO SUBSISTS
BY PHYSICAL TOIL IN CONTRADISTINCTION TO THOSE WHO SUBSISTS BY PROFESSIONAL SKILL. AND IN
CONSOLIDATED TANK LINE CO. VS. HUNT, 83 IOWA, 6, 32 AM. ST. REP. 285, 43 N.W. 1057, 12 L.R.A. 476,
IT WAS STATED THAT "LABORERS" ARE THOSE PERSONS WHO EARN A LIVELIHOOD BY THEIR OWN
MANUAL LABOR.

ARTICLE 1708 USED THE WORD "WAGES" AND NOT "SALARY" IN RELATION TO "LABORER" WHEN IT
DECLARED WHAT ARE TO BE EXEMPTED FROM ATTACHMENT AND EXECUTION. THE TERM "WAGES" AS
DISTINGUISHED FROM "SALARY", APPLIES TO THE COMPENSATION FOR MANUAL LABOR, SKILLED OR
UNSKILLED, PAID AT STATED TIMES, AND MEASURED BY THE DAY, WEEK, MONTH, OR SEASON, WHILE
"SALARY" DENOTES A HIGHER DEGREE OF EMPLOYMENT, OR A SUPERIOR GRADE OF SERVICES, AND
IMPLIES A POSITION OF OFFICE: BY CONTRAST, THE TERM WAGES " INDICATES CONSIDERABLE PAY FOR A
LOWER AND LESS RESPONSIBLE CHARACTER OF EMPLOYMENT, WHILE "SALARY" IS SUGGESTIVE OF A
LARGER AND MORE IMPORTANT SERVICE (35 AM. JUR. 496).

THE DISTINCTION BETWEEN WAGES AND SALARY WAS ADVERTED TO IN BELL VS. INDIAN LIVESTOCK CO.
(TEX. SUP.), 11 S.W. 344, WHEREIN IT WAS SAID: "'WAGES' ARE THE COMPENSATION GIVEN TO A HIRED
PERSON FOR SERVICE, AND THE SAME IS TRUE OF 'SALARY'. THE WORDS SEEM TO BE SYNONYMOUS,
CONVERTIBLE TERMS, THOUGH WE BELIEVE THAT USE AND GENERAL ACCEPTATION HAVE GIVEN TO THE
WORD 'SALARY' A SIGNIFICANCE SOMEWHAT DIFFERENT FROM THE WORD 'WAGES' IN THIS: THAT THE
FORMER IS UNDERSTOOD TO RELATE TO POSITION OF OFFICE, TO BE THE COMPENSATION GIVEN FOR
OFFICIAL OR OTHER SERVICE, AS DISTINGUISHED FROM 'WAGES', THE COMPENSATION FOR LABOR."
ANNOTATION 102 AM. ST. REP. 81, 95.

WE DO NOT THINK THAT THE LEGISLATURE INTENDED THE EXEMPTION IN ARTICLE 1708 OF THE NEW
CIVIL CODE TO OPERATE IN FAVOR OF ANY BUT THOSE WHO ARE LABORING MEN OR WOMEN IN THE
SENSE THAT THEIR WORK IS MANUAL. PERSONS BELONGING TO THIS CLASS USUALLY LOOK TO THE
REWARD OF A DAY'S LABOR FOR IMMEDIATE OR PRESENT SUPPORT, AND SUCH PERSONS ARE MORE IN
NEED OF THE EXEMPTION THAN ANY OTHERS. PETITIONER ROSARIO A. GAA IS DEFINITELY NOT WITHIN
THAT CLASS.
WE FIND, THEREFORE, AND SO HOLD THAT THE TRIAL COURT DID NOT ERR IN DENYING IN ITS ORDER OF
NOVEMBER 7, 1975 THE MOTION OF PETITIONER TO LIFT THE NOTICE OF GARNISHMENT AGAINST HER
SALARIES, COMMISSION AND OTHER REMUNERATION FROM EL GRANDE HOTEL SINCE SAID SALARIES,
COMMISSION AND OTHER REMUNERATION DUE HER FROM THE EL GRANDE HOTEL DO NOT
CONSTITUTE WAGES DUE A LABORER WHICH, UNDER ARTICLE 1708 OF THE CIVIL CODE, ARE NOT
SUBJECT TO EXECUTION OR ATTACHMENT.

IN VIEW OF THE FOREGOING, WE FIND THE PRESENT PETITION TO BE WITHOUT MERIT AND HEREBY
AFFIRM THE DECISION OF THE COURT OF APPEALS, WITH COSTS AGAINST PETITIONER.

SO ORDERED.
G.R. NO. L-56568 MAY 20, 1987

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE BUREAU OF CUSTOMS AND THE BUREAU OF
INTERNAL REVENUE, PETITIONER,
VS.
HONORABLE E.L. PERALTA, PRESIDING JUDGE OF THE COURT OF FIRST INSTANCE OF MANILA, BRANCH
XVII, QUALITY TABACCO CORPORATION, FRANCISCO, FEDERACION OBRERO DE LA INDUSTRIA
TABAQUERA Y OTROS TRABAJADORES DE FILIPINAS (FOITAF) USTC EMPLOYEES ASSOCIATION WORKERS
UNION-PTGWO, RESPONDENTS.

OSCAR A. PASCUA FOR ASSIGNEE F. CANDELARIA.

TEOFILO C. VILLARICO FOR RESPONDENT FEDERATION.

PEDRO A. LOPEZ FOR RESPONDENT USTC.

FELICIANO, J.:

THE REPUBLIC OF THE PHILIPPINES SEEKS THE REVIEW ON CERTIORARI OF THE ORDER DATED 17
NOVEMBER 1980 OF THE COURT OF FIRST INSTANCE OF MANILA IN ITS CIVIL CASE NO. 108395 ENTITLED
"IN THE MATTER OF VOLUNTARY INSOLVENCY OF QUALITY TOBACCO CORPORATION, QUALITY TOBACCO
CORPORATION, PETITIONER," AND OF THE ORDER DATED 19 JANUARY 1981 OF THE SAME COURT
DENYING THE MOTION FOR RECONSIDERATION OF THE EARLIER ORDER FILED BY THE BUREAU OF
INTERNAL REVENUE AND THE BUREAU OF CUSTOMS FOR THE REPUBLIC.

IN THE VOLUNTARY INSOLVENCY PROCEEDINGS COMMENCED IN MAY 1977 BY PRIVATE RESPONDENT

QUALITY TOBACCO CORPORATION (THE "INSOLVENT"), THE FOLLOWING CLAIMS OF CREDITORS WERE
FILED:

(I) P2,806,729.92, BY THE USTC ASSOCIATION OF EMPLOYEES AND WORKERS UNION-PTGWO USTC
AS SEPARATION PAY FOR THEIR MEMBERS. THIS AMOUNT PLUS AN ADDITIONAL SUM OF P280,672.99 AS
ATTORNEY'S FEES HAD BEEN AWARDED BY THE NATIONAL LABOR RELATIONS COMMISSION IN NLRC
CASE NO. RB-IV-9775-77. 1
(II) P53,805.05 BY THE FEDERACION DE LA INDUSTRIA TABAQUERA Y OTROS TRABAJADORES DE
FILIPINAS ("FOITAF), AS SEPARATION PAY FOR THEIR MEMBERS, AN AMOUNT SIMILARLY AWARDED BY
THE NLRC IN THE SAME NLRC CASE.

(III) P1,085,188.22 BY THE BUREAU OF INTERNAL REVENUE FOR TOBACCO INSPECTION FEES
COVERING THE PERIOD 1 OCTOBER 1967 TO 28 FEBRUARY 1973;

(IV) P276,161.00 BY THE BUREAU OF CUSTOMS FOR CUSTOMS DUTIES AND TAXES PAYABLE ON
VARIOUS IMPORTATIONS BY THE INSOLVENT. THESE OBLIGATIONS APPEAR TO BE SECURED BY SURETY
BONDS. 2 SOME OF THESE IMPORTED ITEMS ARE APPARENTLY STILL IN CUSTOMS CUSTODY SO FAR AS
THE RECORD BEFORE THIS COURT GOES.

IN ITS QUESTIONED ORDER OF 17 NOVEMBER 1980, THE TRIAL COURT HELD THAT THE ABOVE-
ENUMERATED CLAIMS OF USTC AND FOITAF (HEREAFTER COLLECTIVELY REFERRED TO AS THE "UNIONS")
FOR SEPARATION PAY OF THEIR RESPECTIVE MEMBERS EMBODIED IN FINAL AWARDS OF THE NATIONAL
LABOR RELATIONS COMMISSION WERE TO BE PREFERRED OVER THE CLAIMS OF THE BUREAU OF
CUSTOMS AND THE BUREAU OF INTERNAL REVENUE. THE TRIAL COURT, IN SO RULING, RELIED
PRIMARILY UPON ARTICLE 110 OF THE LABOR CODE WHICH READS THUS:

ARTICLE 110. WORKER PREFERENCE IN CASE OF BANKRUPTCY — IN THE EVENT OF BANKRUPTCY OR

LIQUIDATION OF AN EMPLOYER'S BUSINESS, HIS WORKERS SHALL ENJOY FIRST PREFERENCE AS REGARDS
WAGES DUE THEM FOR SERVICES RENDERED DURING THE PERIOD PRIOR TO THE BANKRUPTCY OR
LIQUIDATION, ANY PROVISION OF LAW TO THE CONTRARY NOTWITHSTANDING. UNION PAID WAGES
SHALL BE PAID IN FULL BEFORE OTHER CREDITORS MAY ESTABLISH ANY CLAIM TO A SHARE IN THE
ASSETS OF THE EMPLOYER.

THE SOLICITOR GENERAL, IN SEEKING THE REVERSAL OF THE QUESTIONED ORDERS, ARGUES THAT
ARTICLE 110 OF THE LABOR CODE IS NOT APPLICABLE AS IT SPEAKS OF "WAGES," A TERM WHICH HE
ASSERTS DOES NOT INCLUDE THE SEPARATION PAY CLAIMED BY THE UNIONS. "SEPARATION PAY," THE
SOLICITOR GENERAL CONTENDS,

IS GIVEN TO A LABORER FOR A SEPARATION FROM EMPLOYMENT COMPUTED ON THE BASIS OF THE
NUMBER OF YEARS THE LABORER WAS EMPLOYED BY THE EMPLOYER; IT IS A FORM OF PENALTY OR
DAMAGE AGAINST THE EMPLOYER IN FAVOR OF THE EMPLOYEE FOR THE LATTER'S DISMISSAL OR
SEPARATION FROM SERVICE. 3

ARTICLE 97 (F) OF THE LABOR CODE DEFINES "WAGES" IN THE FOLLOWING TERMS:

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. 'FAIR AND REASONABLE VALUE' SHALL NOT INCLUDE ANY PROFIT TO THE EMPLOYER OR TO
ANY PERSON AFFILIATED WITH THE EMPLOYER.(EMPHASIS SUPPLIED)
WE ARE UNABLE TO SUBSCRIBE TO THE VIEW URGED BY THE SOLICITOR GENERAL. WE NOTE, IN THIS
CONNECTION, THAT IN PHILIPPINE COMMERCIAL AND INDUSTRIAL BANK (PCIB) US. NATIONAL MINES
AND ALLIED WORKERS UNION, 4 THE SOLICITOR GENERAL TOOK A DIFFERENT VIEW AND THERE URGED
THAT THE TERM "WAGES" UNDER ARTICLE 110 OF THE LABOR CODE MAY BE REGARDED AS EMBRACING
WITHIN ITS SCOPE SEVERANCE PAY OR TERMINATION OR SEPARATION PAY. IN PCIB, THIS COURT AGREED
WITH THE POSITION ADVANCED BY THE SOLICITOR GENERAL.5 WE SEE NO REASON FOR OVERTURNING
THIS PARTICULAR POSITION. WE CONTINUE TO BELIEVE THAT, FOR THE SPECIFIC PURPOSES OF ARTICLE
110 AND IN THE CONTEXT OF INSOLVENCY TERMINATION OR SEPARATION PAY IS REASONABLY
REGARDED AS FORMING PART OF THE REMUNERATION OR OTHER MONEY BENEFITS ACCRUING TO
EMPLOYEES OR WORKERS BY REASON OF THEIR HAVING PREVIOUSLY RENDERED SERVICES TO THEIR
EMPLOYER; AS SUCH, THEY FALL WITHIN THE SCOPE OF "REMUNERATION OR EARNINGS — FOR
SERVICES RENDERED OR TO BE RENDERED — ." LIABILITY FOR SEPARATION PAY MIGHT INDEED HAVE THE
EFFECT OF A PENALTY, SO FAR AS THE EMPLOYER IS CONCERNED. SO FAR AS CONCERNS THE EMPLOYEES,
HOWEVER, SEPARATION PAY IS ADDITIONAL REMUNERATION TO WHICH THEY BECOME ENTITLED
BECAUSE, HAVING PREVIOUSLY RENDERED SERVICES, THEY ARE SEPARATED FROM THE EMPLOYER'S
SERVICE. THE RELATIONSHIP BETWEEN SEPARATION PAY AND SERVICES RENDERED IS UNDERSCORED BY
THE FACT THAT SEPARATION PAY IS MEASURED BY THE AMOUNT (I.E., LENGTH) OF THE SERVICES
RENDERED. THIS CONSTRUCTION IS SUSTAINED BOTH BY THE SPECIFIC TERMS OF ARTICLE 110 AND BY
THE MAJOR PURPOSES AND BASIC POLICY EMBODIED IN THE LABOR CODE. 6 IT IS ALSO THE
CONSTRUCTION THAT IS SUGGESTED BY ARTICLE 4 OF THE LABOR CODE WHICH DIRECTS THAT DOUBTS
— ASSUMING THAT ANY SUBSTANTIAL RATHER THAN MERELY FRIVOLOUS DOUBTS REMAIN-IN THE
INTERPRETATION OF THE PROVISIONS OF THE LABOR CODE AND ITS IMPLEMENTING RULES AND
REGULATIONS SHALL BE "RESOLVED IN FAVOR OF LABOR."

THE RESOLUTION OF THE ISSUE OF PRIORITY AMONG THE SEVERAL CLAIMS FILED IN THE INSOLVENCY
PROCEEDINGS INSTITUTED BY THE INSOLVENT CANNOT, HOWEVER, REST ON A READING OF ARTICLE 110
OF THE LABOR CODE ALONE.

ARTICLE 110 OF THE LABOR CODE, IN DETERMINING THE REACH OF ITS TERMS, CANNOT BE VIEWED IN
ISOLATION. RATHER, ARTICLE 110 MUST BE READ IN RELATION TO THE PROVISIONS OF THE CIVIL CODE
CONCERNING THE CLASSIFICATION, CONCURRENCE AND PREFERENCE OF CREDITS, WHICH PROVISIONS
FIND PARTICULAR APPLICATION IN INSOLVENCY PROCEEDINGS WHERE THE CLAIMS OF ALL CREDITORS,
PREFERRED OR NON-PREFERRED, MAY BE ADJUDICATED IN A BINDING MANNER. 7 IT IS THUS
IMPORTANT TO BEGIN BY OUTLINING THE SCHEME CONSTITUTED BY THE PROVISIONS OF THE CIVIL
CODE ON THIS SUBJECT.

THOSE PROVISIONS MAY BE SEEN TO CLASSIFY CREDITS AGAINST A PARTICULAR INSOLVENT INTO THREE
GENERAL CATEGORIES, NAMELY:

(A) SPECIAL PREFERRED CREDITS LISTED IN ARTICLES 2241 AND 2242,

(B) ORDINARY PREFERRED CREDITS LISTED IN ARTICLE 2244; AND

(C) COMMON CREDITS UNDER ARTICLE 2245.

TURNING FIRST TO SPECIAL PREFERRED CREDITS UNDER ARTICLES 2241 AND 2242, IT SHOULD BE NOTED
AT ONCE THAT THESE CREDITS CONSTITUTE LIENS OR ENCUMBRANCES ON THE SPECIFIC MOVABLE OR
IMMOVABLE PROPERTY TO WHICH THEY RELATE. ARTICLE 2243 MAKES CLEAR THAT THESE CREDITS
"SHALL BE CONSIDERED AS MORTGAGES OR PLEDGES OF REAL OR PERSONAL PROPERTY, OR LIENS
WITHIN THE PURVIEW OF LEGAL PROVISIONS GOVERNING INSOLVENCY." IT SHOULD BE EMPHASIZED IN
THIS CONNECTION THAT "DUTIES, TAXES AND FEES DUE [ON SPECIFIC MOVABLE PROPERTY OF THE
INSOLVENT] TO THE STATE OR ANY SUBDIVISION THEREOF" (ARTICLE 2241 [1]) AND "TAXES DUE UPON
THE [INSOLVENT'S] LAND OR BUILDING (2242 [1])"STAND FIRST IN PREFERENCE IN RESPECT OF THE
PARTICULAR MOVABLE OR IMMOVABLE PROPERTY TO WHICH THE TAX LIENS HAVE ATTACHED. ARTICLE
2243 IS QUITE EXPLICIT: "[T]AXES MENTIONED IN NUMBER 1, ARTICLE 2241 AND NUMBER 1, ARTICLE
2242 SHALL FIRST BE SATISFIED. " THE CLAIMS LISTED IN NUMBERS 2 TO 13 IN ARTICLE 2241 AND IN
NUMBERS 2 TO 10 IN ARTICLES 2242, ALL COME AFTER TAXES IN ORDER OF PRECEDENCE; SUCH CLAIMS
ENJOY THEIR PRIVILEGED CHARACTER AS LIENS AND MAY BE PAID ONLY TO THE EXTENT THAT TAXES
HAVE BEEN PAID FROM THE PROCEEDS OF THE SPECIFIC PROPERTY INVOLVED (OR FROM ANY OTHER
SOURCES) AND ONLY IN RESPECT OF THE REMAINING BALANCE OF SUCH PROCEEDS. WHAT IS MORE,
THESE OTHER (NON-TAX) CREDITS, ALTHOUGH CONSTITUTING LIENS ATTACHING TO PARTICULAR
PROPERTY, ARE NOT PREFERRED ONE OVER ANOTHER INTER SE. PROVIDED TAX LIENS SHALL HAVE BEEN
SATISFIED, NON-TAX LIENS OR SPECIAL PREFERRED CREDITS WHICH SUBSIST IN RESPECT OF SPECIFIC
MOVABLE OR IMMOVABLE PROPERTY ARE TO BE TREATED ON AN EQUAL BASIS AND TO BE SATISFIED
CONCURRENTLY AND PROPORTIONATELY. 8 PUT SUCCINTLY, ARTICLES 2241 AND 2242 JOINTLY WITH
ARTICLES 2246 TO 2249 ESTABLISH A TWO-TIER ORDER OF PREFERENCE. THE FIRST TIER INCLUDES ONLY
TAXES, DUTIES AND FEES DUE ON SPECIFIC MOVABLE OR IMMOVABLE PROPERTY. ALL OTHER SPECIAL
PREFERRED CREDITS STAND ON THE SAME SECOND TIER TO BE SATISFIED, PARI PASSU AND PRO RATA,
OUT OF ANY RESIDUAL VALUE OF THE SPECIFIC PROPERTY TO WHICH SUCH OTHER CREDITS RELATE.

CREDITS WHICH ARE SPECIALLY PREFERRED BECAUSE THEY CONSTITUTE LIENS (TAX OR NON-TAX) IN
TURN, TAKE PRECEDENCE OVER ORDINARY PREFERRED CREDITS SO FAR AS CONCERNS THE PROPERTY
TO WHICH THE LIENS HAVE ATTACHED. THE SPECIALLY PREFERRED CREDITS MUST BE DISCHARGED FIRST
OUT OF THE PROCEEDS OF THE PROPERTY TO WHICH THEY RELATE, BEFORE ORDINARY PREFERRED
CREDITORS MAY LAY CLAIM TO ANY PART OF SUCH PROCEEDS. 9

IF THE VALUE OF THE SPECIFIC PROPERTY INVOLVED IS GREATER THAN THE SUM TOTAL OF THE TAX
LIENS AND OTHER SPECIALLY PREFERRED CREDITS, THE RESIDUAL VALUE WILL FORM PART OF THE "FREE
PROPERTY" OF THE INSOLVENT — I.E., PROPERTY NOT IMPRESSED WITH LIENS BY OPERATION OF
ARTICLES 2241 AND 2242. IF, ON THE OTHER HAND, THE VALUE OF THE SPECIFIC MOVABLE OR
IMMOVABLE IS LESS THAN THE AGGREGATE OF THE TAX LIENS AND OTHER SPECIALLY PREFERRED
CREDITS, THE UNSATISFIED BALANCE OF THE TAX LIENS AND OTHER SUCH CREDITS ARE TO THE TREATED
AS ORDINARY CREDITS UNDER ARTICLE 2244 AND TO BE PAID IN THE ORDER OF PREFERENCE THERE SET
UP. 10

IN CONTRAST WITH ARTICLES 2241 AND 2242, ARTICLE 2244 CREATES NO LIENS ON DETERMINATE
PROPERTY WHICH FOLLOW SUCH PROPERTY. WHAT ARTICLE 2244 CREATES ARE SIMPLY RIGHTS IN
FAVOR OF CERTAIN CREDITORS TO HAVE THE CASH AND OTHER ASSETS OF THE INSOLVENT APPLIED IN A
CERTAIN SEQUENCE OR ORDER OF PRIORITY. 11

ONLY IN RESPECT OF THE INSOLVENT'S "FREE PROPERTY" IS AN ORDER OF PRIORITY ESTABLISHED BY

ARTICLE 2244. IN THIS SEQUENCE, CERTAIN TAXES AND ASSESSMENTS ALSO FIGURE BUT THESE DO NOT
HAVE THE SAME KIND OF OVERRIDING PREFERENCE THAT ARTICLES 2241 NO. 1 AND 2242 NO. I CREATE
FOR TAXES WHICH CONSTITUTED LIENS ON THE TAXPAYER'S PROPERTY. UNDER ARTICLE 2244,
(A) TAXES AND ASSESSMENTS DUE TO THE NATIONAL GOVERNMENT, EXCLUDING THOSE WHICH
RESULT IN TAX LIENS UNDER ARTICLES 2241 NO. 1 AND 2242 NO. 1 BUT INCLUDING THE BALANCE
THEREOF NOT SATISFIED OUT OF THE MOVABLE OR IMMOVABLE PROPERTY TO WHICH SUCH LIENS
ATTACHED, ARE NINTH IN PRIORITY;

(B) TAXES AND ASSESSMENTS DUE ANY PROVINCE, EXCLUDING THOSE IMPRESSED AS TAX LIENS
UNDER ARTICLES 2241 NO. 1 AND 2242 NO. 1, BUT INCLUDING THE BALANCE THEREOF NOT SATISFIED
OUT OF THE MOVABLE OR IMMOVABLE PROPERTY TO WHICH SUCH LIENS ATTACHED, ARE TENTH IN
PRIORITY; AND

(C) TAXES AND ASSESSMENTS DUE ANY CITY OR MUNICIPALITY, EXCLUDING THOSE IMPRESSED AS
TAX LIENS UNDER ARTICLES 2241 NO. I AND 2242 NO. 2 BUT INCLUDING THE BALANCE THEREOF NOT
SATISFIED OUT OF THE MOVABLE OR IMMOVABLE PROPERTY TO WHICH SUCH LIENS ATTACHED, ARE
ELEVENTH IN PRIORITY.

IT IS WITHIN THE FRAMEWORK OF THE FOREGOING RULES OF THE CIVIL CODE THAT THE QUESTION OF
THE RELATIVE PRIORITY OF THE CLAIMS OF THE BUREAU OF CUSTOMS AND THE BUREAU OF INTERNAL
REVENUE, ON THE ONE HAND, AND OF THE CLAIMS OF THE UNIONS FOR SEPARATION PAY OF THEIR
MEMBERS, ON THE OTHER HAND, IS TO BE RESOLVED. A RELATED VITAL ISSUE IS WHAT IMPACT ARTICLE
110 OF THE LABOR CODE HAS HAD ON THOSE PROVISIONS OF THE CIVIL CODE.

A. CLAIM OF THE BUREAU OF CUSTOMS FOR UNPAID CUSTOMS DUTIES AND TAXES-

UNDER SECTION 1204 OF THE TARIFF AND CUSTOMS CODE, 12 THE LIABILITY OF AN IMPORTER

FOR DUTIES, TAXES AND FEES AND OTHER CHARGES ATTACHING ON IMPORTATION CONSTITUTE A
PERSONAL DEBT DUE FROM THE IMPORTER TO THE GOVERNMENT WHICH CAN BE DISCHARGED ONLY
BY PAYMENT IN FULL OF ALL DUTIES, TAXES, FEES AND OTHER CHARGES LEGALLY ACCRUING IT ALSO
CONSTITUTES A LIEN UPON THE ARTICLES IMPORTED WHICH MAY BE ENFORCED WHILE SUCH ARTICLES
ARE IN THE CUSTODY OR SUBJECT TO THE CONTROL OF THE GOVERNMENT. (EMPHASIS SUPPLIED)

CLEARLY, THE CLAIM OF THE BUREAU OF CUSTOMS FOR UNPAID CUSTOMS DUTIES AND TAXES ENJOYS
THE STATUS OF A SPECIALLY PREFERRED CREDIT UNDER ARTICLE 2241, NO. 1, OF THE CIVIL CODE. ONLY
IN RESPECT OF THE ARTICLES IMPORTATION OF WHICH BY THE INSOLVENT RESULTED IN THE
ASSESSMENT OF THE UNPAID TAXES AND DUTIES, AND WHICH ARE STILL IN THE CUSTODY OR SUBJECT
TO THE CONTROL OF THE BUREAU OF CUSTOMS. THE GOODS IMPORTED ON ONE OCCASION ARE NOT
SUBJECT TO A LIEN FOR CUSTOMS DUTIES AND TAXES ASSESSED UPON OTHER IMPORTATIONS THOUGH
ALSO EFFECTED BY THE INSOLVENT. CUSTOMS DUTIES AND TAXES WHICH REMAIN UNSATISFIED AFTER
LEVY UPON THE IMPORTED ARTICLES ON WHICH SUCH DUTIES AND TAXES ARE DUE, WOULD HAVE TO
BE PAID OUT OF THE INSOLVENT'S "FREE PROPERTY" IN ACCORDANCE WITH THE ORDER OF PREFERENCE
EMBODIED IN ARTICLE 2244 OF THE CIVIL CODE. SUCH UNSATISFIED CUSTOMS DUTIES AND TAXES
WOULD FALL WITHIN ARTICLE 2244, NO. 9, OF THE CIVIL CODE AND HENCE WOULD BE NINTH IN
PRIORITY.

B. CLAIMS OF THE BUREAU OF INTERNAL REVENUE FOR TABACCO INSPECTION FEES —

UNDER SECTION 315 OF THE NATIONAL INTERNAL REVENUE CODE ("OLD TAX CODE"), 13 LATER
REENACTED IN IDENTICAL TERMS AS SECTION 301 OF THE TAX CODE OF 1977, 14 AN UNPAID "INTERNAL
REVENUE TAX," TOGETHER WITH RELATED INTEREST, PENALTIES AND COSTS, CONSTITUTES A LIEN IN
FAVOR OF THE GOVERNMENT FROM THE TIME AN ASSESSMENT THEREFOR IS MADE AND UNTIL PAID,
"UPON ALL PROPERTY AND RIGHTS TO PROPERTY BELONGING TO THE TAXPAYER."

TOBACCO INSPECTION FEES ARE SPECIFICALLY MENTIONED AS ONE OF THE MISCELLANEOUS TAXES
IMPOSED UNDER THE NATIONAL INTERNAL REVENUE CODE, SPECIFICALLY TITLE VIII, CHAPTER IX OF THE
OLD TAX CODE AND LITTLE VIII, CHAPTER VII OF THE TAX CODE OF 1977. 15 TOBACCO INSPECTION FEES
ARE COLLECTED BOTH FOR PURPOSES OF REGULATION AND CONTROL AND FOR PURPOSES OF REVENUE
GENERATION: HALF OF THE SAID FEES ACCRUES TO THE TOBACCO INSPECTION FUND CREATED BY
SECTION 12 OF ACT NO. 2613, AS AMENDED BY ACT NO. 3179, WHILE THE OTHER HALF ACCRUES TO THE
CULTURAL CENTER OF THE PHILIPPINES. TOBACCO INSPECTION FEES, IN OTHER WORDS, ARE IMPOSED
BOTH AS A REGULATORY MEASURE AND AS A REVENUE-RAISING MEASURE. IN COMMISSIONER OF
INTERNAL REVENUE US. GUERRERO, ET AL 16 THIS COURT HELD, THROUGH MR. CHIEF JUSTICE
CONCEPCION, THAT THE TERM "TAX" IS USED IN SECTION 315 OF THE OLD TAX CODE:

NOT IN THE LIMITED SENSE [OF BURDENS IMPOSED UPON PERSONS AND/OR PROPERTIES, BY WAY OF
CONTRIBUTIONS TO THE SUPPORT OF THE GOVERNMENT, IN CONSIDERATION OF GENERAL BENEFITS
DERIVED FROM ITS OPERATION], BUT, IN A BROAD SENSE, ENCOMPASSING ALL GOVERNMENT
REVENUES COLLECTIBLE BY THE COMMISSIONER OF INTERNAL REVENUE UNDER SAID CODE, WHETHER
INVOLVING TAXES, IN THE STRICT TECHNICAL SENSE THEREOF, OR NOT. X X X AS USED IN TITLE IX OF SAID
CODE, THE TERM 'TAX' INCLUDES 'ANY NATIONAL INTERNAL REVENUE TAX, FEE OR CHARGE IMPOSED BY
THE CODE. 17

IT FOLLOWS THAT THE CLAIM OF THE BUREAU OF INTERNAL REVENUE FOR UNPAID TOBACCO
INSPECTION FEES CONSTITUTES A CLAIM FOR UNPAID INTERNAL REVENUE TAXES 18 WHICH GIVES RISE
TO A TAX LIEN UPON ALL THE PROPERTIES AND ASSETS, MOVABLE AND IMMOVABLE, OF THE INSOLVENT
AS TAXPAYER. CLEARLY, UNDER ARTICLES 2241 NO. 1, 2242 NO. 1, AND 2246-2249 OF THE CIVIL CODE,
THIS TAX CLAIM MUST BE GIVEN PREFERENCE OVER ANY OTHER CLAIM OF ANY OTHER CREDITOR, IN
RESPECT OF ANY AND ALL PROPERTIES OF THE INSOLVENT. 19

C. CLAIMS OF THE UNIONS FOR SEPARATION PAY OF THEIR MEMBERS —

ARTICLE 110 OF THE LABOR CODE DOES NOT PURPORT TO CREATE A LIEN IN FAVOR OF WORKERS OR
EMPLOYEES FOR UNPAID WAGES EITHER UPON ALL OF THE PROPERTIES OR UPON ANY PARTICULAR
PROPERTY OWNED BY THEIR EMPLOYER. CLAIMS FOR UNPAID WAGES DO NOT THEREFORE FALL AT ALL
WITHIN THE CATEGORY OF SPECIALLY PREFERRED CLAIMS ESTABLISHED UNDER ARTICLES 2241 AND
2242 OF THE CIVIL CODE, EXCEPT TO THE EXTENT THAT SUCH CLAIMS FOR UNPAID WAGES ARE ALREADY
COVERED BY ARTICLE 2241, NUMBER 6. "CLAIMS FOR LABORERS' WAGES, ON THE GOODS
MANUFACTURED OR THE WORK DONE;" OR BY ARTICLE 2242, NUMBER 3: "CLAIMS OF LABORERS AND
OTHER WORKERS ENGAGED IN THE CONSTRUCTION, RECONSTRUCTION OR REPAIR OF BUILDINGS,
CANALS AND OTHER WORKS, UPON SAID BUILDINGS, CANALS OR OTHER WORKS." TO THE EXTENT THAT
CLAIMS FOR UNPAID WAGES FALL OUTSIDE THE SCOPE OF ARTICLE 2241, NUMBER 6 AND 2242,
NUMBER 3, THEY WOULD COME WITHIN THE AMBIT OF THE CATEGORY OF ORDINARY PREFERRED
CREDITS UNDER ARTICLE 2244.

APPLYING ARTICLE 2241, NUMBER 6 TO THE INSTANT CASE, THE CLAIMS OF THE UNIONS FOR
SEPARATION PAY OF THEIR MEMBERS CONSTITUTE LIENS ATTACHING TO THE PROCESSED LEAF
TOBACCO, CIGARS AND CIGARETTES AND OTHER PRODUCTS PRODUCED OR MANUFACTURED BY THE
INSOLVENT, BUT NOT TO OTHER ASSETS OWNED BY THE INSOLVENT. AND EVEN IN RESPECT OF SUCH
TOBACCO AND TOBACCO PRODUCTS PRODUCED BY THE INSOLVENT, THE CLAIMS OF THE UNIONS MAY
BE GIVEN EFFECT ONLY AFTER THE BUREAU OF INTERNAL REVENUE'S CLAIM FOR UNPAID TOBACCO
INSPECTION FEES SHALL HAVE BEEN SATISFIED OUT OF THE PRODUCTS SO MANUFACTURED BY THE
INSOLVENT.

ARTICLE 2242, NUMBER 3, ALSO CREATES A LIEN OR ENCUMBRANCE UPON A BUILDING OR OTHER REAL
PROPERTY OF THE INSOLVENT IN FAVOR OF WORKMEN WHO CONSTRUCTED OR REPAIRED SUCH
BUILDING OR OTHER REAL PROPERTY. ARTICLE 2242, NUMBER 3, DOES NOT HOWEVER APPEAR
RELEVANT IN THE INSTANT CASE, SINCE THE MEMBERS OF THE UNIONS TO WHOM SEPARATION PAY IS
DUE RENDERED SERVICES TO THE INSOLVENT NOT (SO FAR AS THE RECORD OF THIS CASE WOULD
SHOW) IN THE CONSTRUCTION OR REPAIR OF BUILDINGS OR OTHER REAL PROPERTY, BUT RATHER, IN
THE REGULAR COURSE OF THE MANUFACTURING OPERATIONS OF THE INSOLVENT. THE UNIONS' CLAIMS
DO NOT THEREFORE CONSTITUTE A LIEN OR ENCUMBRANCE UPON ANY IMMOVABLE PROPERTY
OWNED BY THE INSOLVENT, BUT RATHER, AS ALREADY INDICATED, UPON THE INSOLVENT'S EXISTING
INVENTORY (IF ANY OF PROCESSED TOBACCO AND TOBACCO PRODUCTS.

WE COME TO THE QUESTION OF WHAT IMPACT ARTICLE 110 OF THE LABOR CODE HAS HAD UPON THE
COMPLETE SCHEME OF CLASSIFICATION, CONCURRENCE AND PREFERENCE OF CREDITS IN INSOLVENCY
SET OUT IN THE CIVIL CODE. WE BELIEVE AND SO HOLD THAT ARTICLE 110 OF THE LABOR CODE DID NOT
SWEEP AWAY THE OVERRIDING PREFERENCE ACCORDED UNDER THE SCHEME OF THE CIVIL CODE TO
TAX CLAIMS OF THE GOVERNMENT OR ANY SUBDIVISION THEREOF WHICH CONSTITUTE A LIEN UPON
PROPERTIES OF THE INSOLVENT. IT IS FREQUENTLY SAID THAT TAXES ARE THE VERY LIFEBLOOD OF
GOVERNMENT. THE EFFECTIVE COLLECTION OF TAXES IS A TASK OF HIGHEST IMPORTANCE FOR THE
SOVEREIGN. IT IS CRITICAL INDEED FOR ITS OWN SURVIVAL. IT FOLLOWS THAT LANGUAGE OF A MUCH
HIGHER DEGREE OF SPECIFICITY THAN THAT EXHIBITED IN ARTICLE 110 OF THE LABOR CODE IS
NECESSARY TO SET ASIDE THE INTENT AND PURPOSE OF THE LEGISLATOR THAT SHINES THROUGH THE
PRECISELY CRAFTED PROVISIONS OF THE CIVIL CODE. IT CANNOT BE ASSUMED SIMPLICITER THAT THE
LEGISLATIVE AUTHORITY, BY USING IN ARTICLE 110 THE WORDS "FIRST PREFERENCE" AND "ANY
PROVISION OF LAW TO THE CONTRARY NOTWITHSTANDING" INTENDED TO DISRUPT THE ELABORATE
AND SYMMETRICAL STRUCTURE SET UP IN THE CIVIL CODE. NEITHER CAN IT BE ASSUMED CASUALLY
THAT ARTICLE 110 INTENDED TO SUBSUME THE SOVEREIGN ITSELF WITHIN THE TERM "OTHER
CREDITORS" IN STATING THAT "UNPAID WAGES SHALL BE PAID IN FULL BEFORE OTHER CREDITORS MAY
ESTABLISH ANY CLAIM TO A SHARE IN THE ASSETS OF EMPLOYER." INSISTENT CONSIDERATIONS OF
PUBLIC POLICY PREVENT US FROM GIVING TO "OTHER CREDITORS" A LINGUISTICALLY UNLIMITED SCOPE
THAT WOULD EMBRACE THE UNIVERSE OF CREDITORS SAVE ONLY UNPAID EMPLOYEES.

WE, HOWEVER, DO NOT BELIEVE THAT ARTICLE 110 HAS HAD NO IMPACT AT ALL UPON THE PROVISIONS
OF THE CIVIL CODE. BEARING IN MIND THE OVERRIDING PRECEDENCE GIVEN TO TAXES, DUTIES AND
FEES BY THE CIVIL CODE AND THE FACT THAT THE LABOR CODE DOES NOT IMPRESS ANY LIEN ON THE
PROPERTY OF AN EMPLOYER, THE USE OF THE PHRASE "FIRST PREFERENCE" IN ARTICLE 110 INDICATES
THAT WHAT ARTICLE 110 INTENDED TO MODIFY IS THE ORDER OF PREFERENCE FOUND IN ARTICLE 2244,
WHICH ORDER RELATES, AS WE HAVE SEEN, TO PROPERTY OF THE INSOLVENT THAT IS NOT BURDENED
WITH THE LIENS OR ENCUMBRANCES CREATED OR RECOGNIZED BY ARTICLES 2241 AND 2242. WE HAVE
NOTED THAT ARTICLE 2244, NUMBER 2, ESTABLISHES SECOND PRIORITY FOR CLAIMS FOR WAGES FOR
SERVICES RENDERED BY EMPLOYEES OR LABORERS OF THE INSOLVENT "FOR ONE YEAR PRECEDING THE
COMMENCEMENT OF THE PROCEEDINGS IN INSOLVENCY." ARTICLE 110 OF THE LABOR CODE
ESTABLISHES "FIRST PREFERENCE" FOR SERVICES RENDERED "DURING THE PERIOD PRIOR TO THE
BANKRUPTCY OR LIQUIDATION, " A PERIOD NOT LIMITED TO THE YEAR IMMEDIATELY PRIOR TO THE
BANKRUPTCY OR LIQUIDATION. THUS, VERY SUBSTANTIAL EFFECT MAY BE GIVEN TO THE PROVISIONS OF
ARTICLE 110 WITHOUT GRIEVOUSLY DISTORTING THE FRAMEWORK ESTABLISHED IN THE CIVIL CODE BY
HOLDING, AS WE SO HOLD, THAT ARTICLE 110 OF THE LABOR CODE HAS MODIFIED ARTICLE 2244 OF
THE CIVIL CODE IN TWO RESPECTS: (A) FIRSTLY, BY REMOVING THE ONE YEAR LIMITATION FOUND IN
ARTICLE 2244, NUMBER 2; AND (B) SECONDLY, BY MOVING UP CLAIMS FOR UNPAID WAGES OF
LABORERS OR WORKERS OF THE INSOLVENT FROM SECOND PRIORITY TO FIRST PRIORITY IN THE ORDER
OF PREFERENCE ESTABLISHED I BY ARTICLE 2244.

ACCORDINGLY, AND BY WAY OF RECAPITULATING THE APPLICATION OF CIVIL CODE AND LABOR CODE
PROVISIONS TO THE FACTS HEREIN, THE TRIAL COURT SHOULD INVENTORY THE PROPERTIES OF THE
INSOLVENT SO AS TO DETERMINE SPECIFICALLY: (A) WHETHER THE ASSETS OF THE INSOLVENT BEFORE
THE TRIAL COURT INCLUDES STOCKS OF PROCESSED OR MANUFACTURED TOBACCO PRODUCTS; AND (B)
WHETHER THE BUREAU OF CUSTOMS STILL HAS IN ITS CUSTODY OR CONTROL ARTICLES IMPORTED BY
THE INSOLVENT AND SUBJECT TO THE LIEN OF THE GOVERNMENT FOR UNPAID CUSTOMS DUTIES AND
TAXES.

IN RESPECT OF (A), IF THE INSOLVENT HAS INVENTORIES OF PROCESSED OR MANUFACTURED TOBACCO

PRODUCTS, SUCH INVENTORIES MUST BE SUBJECTED FIRSTLY TO THE CLAIM OF THE BUREAU OF
INTERNAL REVENUE FOR UNPAID TOBACCO INSPECTION FEES. THE REMAINING VALUE OF SUCH
INVENTORIES AFTER SATISFACTION OF SUCH FEES (OR SHOULD SUCH INSPECTION FEES BE SATISFIED
OUT OF OTHER PROPERTIES OF THE INSOLVENT) WILL BE SUBJECT TO A LIEN IN FAVOR OF THE UNIONS
BY VIRTUE OF ARTICLE 2241, NUMBER 6. IN CASE, UPON THE OTHER HAND, THE INSOLVENT NO LONGER
HAS ANY INVENTORY OF PROCESSED OR MANUFACTURED PRODUCT, THEN THE CLAIM OF THE UNIONS
FOR SEPARATION PAY WOULD HAVE TO BE SATISFIED OUT OF THE "FREE PROPERTY" OF THE INSOLVENT
UNDER ARTICLE 2244 OF THE CIVIL CODE. AS MODIFIED BY ARTICLE 110 OF THE LABOR CODE.

TURNING TO (B), SHOULD THE BUREAU OF CUSTOMS NO LONGER HAVE ANY IMPORTATIONS BY THE
INSOLVENT STILL WITHIN CUSTOMS CUSTODY OR CONTROL, OR SHOULD THE IMPORTATIONS STILL HELD
BY THE BUREAU OF CUSTOMS BE OR HAVE BECOME INSUFFICIENT IN VALUE FOR THE PURPOSE,
CUSTOMS DUTIES AND TAXES REMAINING UNPAID WOULD HAVE ONLY NINTH PRIORITY BY VIRTUE OF
ARTICLE 2244, NUMBER 9. IN RESPECT THEREFORE OF THE INSOLVENT'S "FREE PROPERTY, " THE CLAIMS
OF THE UNIONS WILL ENJOY FIRST PRIORITY UNDER ARTICLE 2244 AS MODIFIED AND WILL BE PAID
AHEAD OF THE CLAIMS OF THE BUREAU OF CUSTOMS FOR ANY CUSTOMS DUTIES AND TAXES STILL
REMAINING UNSATISFIED.

IT IS UNDERSTOOD THAT THE CLAIMS OF THE UNIONS REFERRED TO ABOVE DO NOT INCLUDE THE 10%
CLAIM FOR ATTORNEY'S FEES. ATTORNEY'S FEES INCURRED BY THE UNIONS DO NOT STAND ON THE
SAME FOOTING AS THE UNIONS' CLAIMS FOR SEPARATION PAY OF THEIR MEMBERS.

WHEREFORE, THE PETITION FOR REVIEW IS GRANTED AND THE ORDERS DATED 17 NOVEMBER 1980
AND 19 JANUARY 1981 OF THE TRIAL COURT ARE MODIFIED ACCORDINGLY. THIS CASE IS HEREBY
REMANDED TO THE TRIAL COURT FOR FURTHER PROCEEDINGS IN INSOLVENCY COMPATIBLE WITH THE
RULINGS SET FORTH ABOVE. NO PRONOUNCEMENT AS TO COSTS.

SO ORDERED.
[G.R. NO. 107487. SEPTEMBER 29, 1997]
THE MANILA BANKING CORPORATION (MANILABANK) AND ARNULFO B. AURELLANO IN HIS CAPACITY AS
STATUTORY RECEIVER OF MANILABANK, PETITIONERS, VS. THE NATIONAL LABOR RELATIONS
COMMISSION, VICTOR L. MENDOZA, RODOLFO VE. TIMBOL, RUBEN G. ASEDILLO, FLORINDA S. DAYRIT,
AND 19 OTHER SENIOR OFFICERS SIMILARLY SITUATED; HORACE REYES AND 14 OTHER SENIOR
MANAGERS SIMILARLY SITUATED; AURORA VILLACERAN AND 34 OTHER ASSISTANT MANAGERS
SIMILARLY SITUATED; CONSUELO RIZARRI, EMERENCIANA SAMSON, BRENDA C. BERMUDEZ, FLORYPEE
ABRIGO, EMMA BALDERAMA, AND 211 OTHER JUNIOR OFFICERS SIMILARLY SITUATED, RESPONDENTS.
[G.R. NO. 107902. SEPTEMBER 29, 1997]

THE MANILA BANKING CORPORATION (MANILABANK) AND ARNULFO B. AURELLANO IN HIS CAPACITY AS
STATUTORY RECEIVER OF MANILABANK, PETITIONERS, VS. THE NATIONAL LABOR RELATIONS
COMMISSION-NCR, LABOR ARBITER FELIPE PATI AND VICTOR L. MENDOZA, RODOLFO VE. TIMBOL,
RUBEN G. ASEDILLO, FLORINDA S. DAYRIT, AND 19 OTHER SENIOR OFFICERS SIMILARLY SITUATED;
HORACE REYES, JOSE BELMONTE AND 14 OTHER SENIOR MANAGERS AND 53 MANAGERS SIMILARLY
SITUATED; AURORA VILLACERAN AND 34 OTHER ASSISTANT MANAGERS SIMILARLY SITUATED; CONSUELO
RIZARRI, EMERENCIANA SAMSON, BRENDA C. BERMUDEZ, FLORYPEE ABRIGO, EMMA BALDERAMA, AND
211 OTHER JUNIOR OFFICERS SIMILARLY SITUATED, RESPONDENTS.
DECISION
KAPUNAN, J.:

THE PRINCIPAL ISSUE PRESENTED FOR RESOLUTION IN THESE PETITIONS FOR CERTIORARI[1] UNDER
RULE 65 OF THE RULES OF COURT IS WHETHER OR NOT PUBLIC RESPONDENT NATIONAL LABOR
RELATIONS COMMISSION (NLRC) COMMITTED GRAVE ABUSE OF DISCRETION IN AFFIRMING WITH
SLIGHT MODIFICATIONS LABOR ARBITER FELIPE PATIS DECISION AWARDING HEREIN PRIVATE
RESPONDENTS CLAIM OF P193,338,212.33 CONSISTING OF:

1. WAGE INCREASE OF 25% OF GROSS MONTHLY WAGE FROM JANUARY 1985 TO DECEMBER 1988;

2. CHRISTMAS BONUS OF ONE AND ONE-HALF (1-1/2) MONTHS PAY FROM DECEMBER 1985 TO
DECEMBER 1987;

3. MID-YEAR BONUS OF ONE (1) MONTH PAY FROM 1985 TO 1988, INCLUSIVE;

4. PROFIT SHARING OF 5% OF NET PROFIT FOR 1985 AND 1986;

5. DIFFERENTIALS ON ACCRUED LEAVES, RETIREMENT BENEFITS AND CHRISTMAS AND MID-YEAR

BONUSES;

6. LONGEVITY PAY, LOYALTY BONUS AND MEDICAL, DENTAL AND OPTICAL BENEFITS;

7. UNIFORM ALLOWANCE OF P600.00 PER YEAR FROM JANUARY 1985 TO JANUARY 1988, INCLUSIVE;

8. ONE-HALF (1/2) MONTH PAY 1987 CHRISTMAS BONUS WHICH WAS DEDUCTED FROM THE
RETIREMENT BENEFIT OF EACH COMPLAINANT;

9. TRAVEL PLAN AND CAR PLAN WITH RESPECT TO THE 23 COMPLAINANTS SENIOR OFFICERS; AND
10. CAR PLAN AND GASOLINE ALLOWANCE BENEFITS WITH RESPECT TO THE 15 COMPLAINANTS, SENIOR
MANAGERS AND 54 ASSISTANT MANAGERS.

ANNUAL INTEREST THEREON OF 12% AND ATTORNEYS FEES AMOUNTING TO 10% OF THE SAID
AMOUNT.

THE ANTECEDENTS SHOW THAT ON JUNE 5, 1984, PETITIONER MANILA BANKING CORPORATION
(MANILABANK) WAS PLACED UNDER COMPTROLLERSHIP BY THEN CENTRAL BANK GOVERNOR JOSE B.
FERNANDEZ IN VIEW OF THE BANKS FINANCIAL DISTRESS.[2]

THE DECISION OF THE MONETARY BOARD OF THE CENTRAL BANK WAS BASED ON THE FINDINGS THAT
THE BANK WAS EXPERIENCING LIQUIDITY PROBLEMS AND HAD INCURRED CHRONIC RESERVE
DEFICIENCIES AGAINST DEPOSIT LIABILITIES. IN FACT ON MAY 23, 1984, A MONTH BEFORE IT WAS
PLACED UNDER COMPTROLLERSHIP, MANILABANK WAS PROHIBITED BY THE MONETARY BOARD FROM
GRANTING NEW LOANS AND MAKING NEW INVESTMENTS EXCEPT INVESTMENTS IN GOVERNMENT
SECURITIES WITH CENTRAL BANK SUPPORT, AND FROM DECLARING CASH OR STOCK DIVIDENDS.[3]

A FEBRUARY 19, 1986 CENTRAL BANK REPORT ON MANILABANKS FINANCIAL CONDITION AS OF

DECEMBER 31, 1985 DISCLOSED, AMONG OTHER THINGS, THAT THE BANKS OPERATIONS FOR THE
PRECEDING YEAR RESULTED IN A NET LOSS OF P362.4 MILLION. IT LIKEWISE REVEALED THAT THE BANKS
FINANCIAL CONDITION CONTINUED TO DETERIORATE.[4]

CONSEQUENTLY, ON MAY 22, 1987, THE MONETARY BOARD ISSUED RESOLUTION NO. 505 PROHIBITING
MANILABANK FROM DOING BUSINESS IN THE PHILIPPINES. THE SAID RESOLUTION READS:

FINDING TO BE TRUE THE STATEMENTS OF THE ASSISTANT TO THE GOVERNOR AND OFFICER-IN-CHARGE,
SUPERVISION AND EXAMINATION SECTOR (SES) DEPARTMENT I, IN HIS MEMORANDUM DATED APRIL 28,
1987 SUBMITTING A REPORT ON THE FINANCIAL CONDITION OF THE MANILA BANKING CORPORATION
(TMBC) AS OF MARCH 31, 1987, THAT THE FINANCIAL CONDITION OF TMBC IS ONE OF INSOLVENCY AND
ITS CONTINUANCE IN BUSINESS WOULD INVOLVE PROBABLE LOSS TO ITS DEPOSITORS AND CREDITORS
AND CONSIDERING, AMONG OTHER THINGS, THAT:

1. DURING THE 3-MONTH PERIOD JANUARY 1 TO MARCH 31, 1987, TMBC INCURRED LOSSES OF 62.3
MILLION , BEFORE INTEREST ON CENTRAL BANK OVERDRAFT AND PENALTIES ON RESERVE DEFICIENCIES
(242.9 MILLION FOR THE THREE MONTHS);

2. PRIOR NOTICES HAD BEEN MADE TO TMBC OF A CONDITION WHICH MAY BE CONSIDERED AS ONE
INDICATING INSOLVENCY AS DEFINED UNDER SEC. 29 OF R.A. NO. 265, AS AMENDED, IN VARIOUS
LETTERS OF MR. ANTONIO T. CASTRO, JR., SPECIAL ASSISTANT TO THE GOVERNOR AND HEAD, SES
DEPARTMENT I, DATED DECEMBER 9, 1985, DECEMBER 13, 1985 AND OCTOBER 16, 1986 AND IN A
LETTER OF THE GOVERNOR, DATED FEBRUARY 27, 1987;

3. MR. VICENTE G. PUYAT, IN RESPONSE TO HIS REQUEST CONVEYED BY MRS. REYES TO THE MONETARY
BOARD, FOR A CHANCE TO APPEAR BEFORE THE MONETARY BOARD IN REPRESENTATION OF THE
MAJORITY STOCKHOLDERS OF TMBC, IN CONNECTION WITH THE REHABILITATION PLAN FOR TMBC, HAD
BEEN INVITED THREE TIMES TO APPEAR BEFORE THE BOARD: FIRST, ON MAY 13, 1987, THEN ON MAY 18,
1987 UPON HIS REQUEST, AND ON MAY 22, 1987, WHICH INVITATIONS HE DID NOT RESPOND TO
HIMSELF AND NEITHER DID HE ATTEND THE BOARD MEETINGS HELD ON MAY 18, 1987 AND MAY 22,
1987;

4. TMBC HAS NOT SUBMITTED A REHABILITATION PLAN ACCEPTED TO THE CENTRAL BANK; AND

5. THE SAID ASSISTANT TO THE GOVERNOR, WHO WAS PRESENT DURING THE MONETARY BOARD
MEETING HELD ON MAY 22, 1987, HAD CATEGORICALLY CONFIRMED THAT, AFTER CONSIDERING ALL THE
ADJUSTMENTS, TMBC WOULD STILL BE INSOLVENT EVEN WITH AN ADDITIONAL CAPITAL INFUSION OF
P500 MILLION.

THE BOARD DECIDED AS FOLLOWS:

1. TO PROHIBIT TMBC TO DO BUSINESS IN THE PHILIPPINES AND PLACE ITS ASSETS AND AFFAIRS UNDER
RECEIVERSHIP IN ACCORDANCE WITH THE PROVISIONS OF SECTION 29 OF R.A. NO. 265, AS AMENDED;
AND

2. TO DESIGNATE THE ASSISTANT TO THE GOVERNOR AND OFFICER-IN-CHARGE, SES DEPARTMENT I, AS

RECEIVER OF TMBC, TO IMMEDIATELY TAKE CHARGE OF ITS ASSETS AND LIABILITIES, AS EXPEDITIOUSLY
AS POSSIBLE COLLECT AND GATHER ALL THE ASSETS AND ADMINISTER THE SAME FOR THE BENEFIT OF
ITS CREDITORS EXERCISING ALL THE POWERS NECESSARY FOR THESE PURPOSES INCLUDING, BUT NOT
LIMITED TO, BRINGING SUITS AND FORECLOSING MORTGAGES IN ITS NAME.[5]

THEREAFTER, FELICIANO MIRANDA, JR. WAS DESIGNATED AS RECEIVER. HE IMMEDIATELY TOOK CHARGE
OF THE BANKS ASSETS AND LIABILITIES. HE LIKEWISE TERMINATED THE EMPLOYMENT OF ABOUT 343
OFFICERS AND TOP MANAGERS OF THE BANK. ALL THESE OFFICERS AND TOP MANAGERS, WHO ARE
PRIVATE RESPONDENTS HEREIN, WERE PAID WHATEVER SEPARATION AND/OR RETIREMENT BENEFITS
WERE DUE THEM.

ON NOVEMBER 11, 1988, THE MONETARY BOARD ISSUED RESOLUTION NO. 1003 ORDERING THE
LIQUIDATION OF MANILABANK ON ACCOUNT OF INSOLVENCY. THE RESOLUTION READS AS FOLLOWS:

HAVING DETERMINED AND CONFIRMED ON THE BASIS OF THE MEMORANDUM OF THE SPECIAL
ASSISTANT TO THE GOVERNOR AND HEAD, SUPERVISION AND EXAMINATION SECTOR (SES)
DEPARTMENT I, AND RECEIVER, THE MANILA BANKING CORPORATION (TMBC), DATED NOVEMBER 4,
1988, SUBMITTING A REPORT ON THE FINANCIAL CONDITION OF TMBC AS OF JULY 31, 1988, THAT THE
FINANCIAL CONDITION OF THE BANK CONTINUES TO BE ONE OF INSOLVENCY AND IT CAN NO LONGER
RESUME BUSINESS WITH SAFETY TO ITS DEPOSITORS, CREDITORS AND THE GENERAL PUBLIC,
CONSIDERING THE OPINION OF THE CENTRAL BANK LEGAL COUNSEL THAT, WITH THE SUPREME COURTS
DECISION DATED MARCH 10, 1988 (A) SETTING ASIDE THE DECISION OF THE COURT OF APPEALS
SUSTAINING THE DECISION OF THE REGIONAL TRIAL COURT TO ISSUE A WRIT OF PRELIMINARY
INJUNCTION DATED JULY 14, 1987 AGAINST THE ENFORCEMENT OF MONETARY BOARD RESOLUTION NO.
505 DATED MAY 22, 1987, (B) DISSOLVING THE SAID WRIT OF PRELIMINARY INJUNCTION, AND (C)
MAKING PERMANENT THE TEMPORARY RESTRAINING ORDER ISSUED BY THE SUPREME COURT ON
FEBRUARY 16, 1988, THE LIQUIDATION OF TMBC MAY NOW BE ORDERED BY THE MONETARY BOARD
AND THAT ITS AUTHORITY TO ORDER SUCH LIQUIDATION IS NOT AFFECTED BY THE PENDENCY OF CIVIL
CASE NO. 87-40659 NOR OF THE SUPREME COURTS RESOLUTION OF MARCH 10, 1988 (ENJOINING THE
COURT OF APPEALS FROM INTERFERING IN THE RECEIVERSHIP OF TMBC), THE BOARD DECIDED AS
FOLLOWS:
1. TO ORDER THE LIQUIDATION OF TMBC IN ACCORDANCE WITH SECTION 29 OF R.A. NO. 265, AS
AMENDED; AND

2. TO DESIGNATE MR. RENAN V. SANTOS, SPECIAL ASSISTANT TO THE GOVERNOR, AND HEAD,
SUPERVISION AND EXAMINATION SECTOR DEPARTMENT V, AS LIQUIDATOR OF TMBC.[6]

OF EVEN DATE, PRIVATE RESPONDENTS FILED A COMPLAINT AGAINST MANILABANK AND ITS STATUTORY
RECEIVER WITH THE ARBITRATION BRANCH OF THE NATIONAL LABOR RELATIONS COMMISSION (NLRC)
CLAIMING ENTITLEMENT TO THE FOLLOWING ADDITIONAL BENEFITS ALLEGED TO HAVE ACCRUED FROM
1984 TO THEIR EFFECTIVE DATES OF TERMINATION, VIZ: (A) WAGE INCREASES; (B) CHRISTMAS BONUSES;
(C) MID-YEAR BONUSES; (D) PROFIT SHARING; (E) CAR AND TRAVEL PLANS; (F) GASOLINE ALLOWANCES;
(G) DIFFERENTIALS ON ACCRUED LEAVES, RETIREMENT AND OTHER BONUSES; (H) LONGEVITY PAY AND
LOYALTY PAY; (I) MEDICAL, DENTAL AND OPTICAL BENEFITS; AND (J) UNIFORM ALLOWANCES.[7] SUCH
CLAIMS TO ENTITLEMENT OF THE FOREGOING BENEFITS WAS BASED ON MANILABANKS ALLEGED
PRACTICE, POLICY AND TRADITION OF AWARDING SAID BENEFITS. THEY CONTENDED THAT THE POLICY
HAS RIPENED INTO VESTED PROPERTY RIGHTS IN THEIR FAVOR.

MANILA BANK, ON ITS PART, ALLEGED THAT THE ADDITIONAL BENEFITS SOUGHT ARE WITHOUT BASIS IN
FACT AND IN LAW. IT ARGUED THAT THE SAME ARE CONFERRED BY MANAGEMENT ONLY WHEN IT
DEEMS NECESSARY TO DO SO. THE AWARD OF THE SAID BENEFITS IS IN THE NATURE OF A
MANAGEMENT PREROGATIVE WHICH, IT CONTENDED, CAN BE WITHHELD BY MANAGEMENT UPON A
CLEAR SHOWING THAT THE COMPANY IS NOT IN A POSITION TO GRANT THEM EITHER BECAUSE OF
FINANCIAL DIFFICULTIES OR CIRCUMSTANCES WHICH DO NOT WARRANT CONFERMENT OF SUCH
BENEFITS. AND SINCE IT WAS EXPERIENCING FINANCIAL DISTRESS, IT CLAIMED THAT IT WAS IN NO
POSITION TO GIVE THE BENEFITS SOUGHT. ADDITIONALLY, IT ASSEVERATED THAT IT WAS DEPRIVED OF
ITS RIGHT TO PRESENT EVIDENCE IN A FULL-BLOWN TRIAL BY THE LABOR ARBITER.

ON NOVEMBER 14, 1989, LABOR ARBITER FELIPE PATI RENDERED HIS DECISION ORDERING MANILABANK
AND ITS STATUTORY RECEIVER TO PAY IN FULL ALL THE CLAIMS OF PRIVATE RESPONDENTS AMOUNTING
TO P193,338,212.33, PLUS 12% INTEREST ANNUALLY AND 10% OF THE TOTAL AWARD AS ATTORNEYS
FEES. THE DISPOSITIVE PORTION OF THE DECISION READS:

WHEREFORE, JUDGMENT IS HEREBY RENDERED IN FAVOR OF THE COMPLAINANTS AND AGAINST THE
RESPONDENTS, ORDERING AND AUTHORIZING THE RECEIVER RENAN V. SANTOS TO PAY, PURSUANT TO
THE PROVISIONS OF ARTICLE 110 OF THE LABOR CODE, AS AMENDED:

1.THE COMPLAINANTS THE NET AMOUNT OF CLAIMS DUE APPEARING OPPOSITE THE NAME OF EACH
COMPLAINANT LISTED IN THE COMPUTATION OF NET CLAIM CONSISTING OF SIX (6) PAGES HERETO
ATTACHED AND MADE PART OF THIS DECISION;

2.THE COMPLAINANTS COUNSEL THE AMOUNT EQUAL TO 10% OF THE TOTAL AMOUNT AWARDED TO
COMPLAINANTS IN THIS ACTION AS ATTORNEYS FEES.

SO ORDERED.[8]

ON NOVEMBER 25, 1989, PETITIONERS MANILABANK AND THE CB STATUTORY RECEIVER APPEALED TO
THE NLRC AND POSTED AN APPEAL BOND IN THE FORM OF A CERTIFICATION FROM THE CENTRAL BANK
TO THE EFFECT THAT THE PORTION OF MANILABANKS FUNDS IN AN AMOUNT EQUAL TO THAT OF THE
TOTAL AWARD OF THE LABOR ARBITER, HAS BEEN RESERVED AND SET ASIDE BY THE CENTRAL BANK TO
ANSWER FOR THE PRIVATE RESPONDENTS CLAIMS SHOULD THEY FINALLY BE ADJUDGED TO BE ENTITLED
THERETO.

ON DECEMBER 8, 1989, PRIVATE RESPONDENTS OPPOSED THE APPEAL AND FILED A MOTION FOR THE
ISSUANCE OF A WRIT OF EXECUTION OF THE LABOR ARBITERS JUDGMENT ON THE GROUND THAT THE
CENTRAL BANK CERTIFICATION CANNOT BE CONSIDERED AS AN APPEAL BOND.

ON JUNE 21, 1991, THE NLRC ISSUED AN ORDER REQUIRING PETITIONERS TO DEPOSIT WITH THE
CASHIER OF THE NLRC A CASH BOND OR ITS EQUIVALENT IN TREASURY BILLS, WARRANTS AND/OR
OTHER GOVERNMENT SECURITIES IN THE AMOUNT OF P193,000,000.00, PLUS TEN PERCENT (10%)
THEREOF AS ATTORNEYS FEES WITHIN TEN (10) DAYS FROM RECEIPT THEREOF.

ON JULY 5, 1991, PETITIONERS MOVED TO RECONSIDER SAID ORDER. HOWEVER, PENDING RESOLUTION
OF SAID MOTION FOR RECONSIDERATION, PETITIONERS SUBMITTED TO THE NLRC A CERTIFICATE OF
TIME DEPOSIT ISSUED BY THE PHILIPPINE NATIONAL BANK (PNB) IN THE AMOUNT OF P212,700,000.00,
PAYABLE TO THE RECEIVER OF MANILABANK.

ON JANUARY 16, 1992, THE NLRC HELD A HEARING WHERE THE PARTIES AGREED THAT THE CERTIFICATE
OF TIME DEPOSIT SUBMITTED BY MANILABANK TO THE NLRC BE CONSIDERED SUBSTANTIAL
COMPLIANCE OF THE REQUIREMENT OF AN APPEAL BOND, ON THE CONDITION THAT IT WILL BE
PERIODICALLY RENEWED AND RE-DEPOSITED WITH THE NLRC CASHIER UPON ITS MATURITY, AND THAT
THE SECURITIES DEPOSITED SHOULD BE FREE FROM ANY OTHER CLAIMS OR LIENS.

ON SEPTEMBER 9, 1992, THE NLRC ISSUED A RESOLUTION ON THE MERITS OF THE CASE AND, AS ABOVE-
STATED, AFFIRMED WITH SLIGHT MODIFICATIONS, THE DECISION OF THE LABOR ARBITER. THE DECRETAL
PORTION OF THE SAME READS:

WHEREFORE, EXCEPT FOR THE MODIFICATION WE PROVIDED ON THE MANNER MEDICAL, DENTAL AND
OPTICAL BENEFITS SHOULD BE CLAIMED/PAID, AND OUR AWARDING ANNUAL INTEREST OF 12% TO
WHATEVER HAS BEEN AWARDED BELOW, THE APPEALED DECISION IS HEREBY AFFIRMED AND
RESPONDENTS APPEAL IS HEREBY DISMISSED.

SO ORDERED.[9]

PETITIONERS FILED A MOTION FOR RECONSIDERATION FROM THE AFOREQUOTED RESOLUTION.

ON OCTOBER 14, 1992, PRIVATE RESPONDENTS FILED AN EX PARTE MOTION FOR THE ISSUANCE OF A
WRIT OF EXECUTION. PETITIONERS OPPOSED THE SAME, REASONING THAT THE ASSETS OF
MANILABANK ARE EXEMPT FROM EXECUTION AND THAT THE NLRC RESOLUTION HAD NOT BECOME
FINAL AND EXECUTORY.

ON OCTOBER 22, 1992, THE NLRC ISSUED AN ORDER DIRECTING PETITIONERS, UNDER PAIN OF
CONTEMPT, TO RENEW THE CERTIFICATE OF TIME DEPOSIT AND TO HAVE THE SAME ISSUED IN THE
NAME OF , AND DEPOSITED WITH, THE CASHIER OF THE NLRC.
IN RESPONSE, PETITIONERS MANILABANK AND ARNULFO AURELLANO FILED PETITION FOR CERTIORARI
BEFORE THIS COURT, DOCKETED AS G.R. NO. 107487, TO SET ASIDE SAID ORDER ALLEGING THAT THE
SAME WAS ISSUED WITH GRAVE ABUSE OF DISCRETION BECAUSE IT (AS RE-PHRASED):

A. VIOLATED AN EXISTING STATUTE.[10]

B. ARBITRARY COMPELLED THE RECEIVER TO VIOLATE HIS STATUTORY DUTY TO PRESERVE MANILABANKS
ASSETS FOR THE BENEFIT OF ALL CREDITORS.[11]

C. WHIMSICALLY DEPRIVED PETITIONERS OF THEIR RIGHT TO FILE A MOTION FOR RECONSIDERATION OF

THE ORDER.[12]

D. WAS NOT ANCHORED UPON ANY COGENT REASON OTHER THAN TO PREEMPT PETITIONERS FROM
INVOKING THE CORRECTIVE POWERS OF THIS HONORABLE COURT OF LAST RESORT.[13]

ON NOVEMBER 26, 1992, PETITIONERS EARLIER MOTION FOR RECONSIDERATION OF THE NLRC
DECISION DATED SEPTEMBER 9, 1992 WAS DENIED FOR LACK OF MERIT IN AN ORDER WHICH
DISPOSITIVELY READS AS FOLLOWS:

WHEREFORE, PREMISES CONSIDERED, ORDER IS HEREBY ISSUED:

1. DENYING RESPONDENTS MOTION FOR RECONSIDERATION;

2. DIRECTING THE NLRC CASHIER TO HOLD IN HER CUSTODY RE-SUBMITTED CERTIFICATE OF TIME
DEPOSIT NO. 890530-D DATED OCTOBER 27, 1992 WITH MATURITY DATE ON DECEMBER 28, 1992;

3. DIRECTING THE RESPONDENTS TO POST AN ADDITIONAL BOND, EITHER IN CASH, SURETY, OR

CERTIFICATE OF TIME DEPOSIT DRAWN IN THE NAME OF THE CASHIER, NLRC, IN THE AMOUNT OF
P76,572,000.00 TO COVER, THE ADDITIONAL AWARD DETAILED IN OUR SEPTEMBER 9, 1992
RESOLUTION;

4. DIRECTING, ACCORDINGLY, THE EXECUTIVE CLERK TO CAUSE THE PERSONAL SERVICE OF THIS ORDER
UPON THE PARTIES, PARTICULARLY THE RESPONDENTS AND THEIR COUNSEL; AND

5. HOLDING IN ABEYANCE THE EXECUTION OF OUR SEPTEMBER 9, 1992 RESOLUTION (DESPITE ITS
FINALITY NOW) FOR A PERIOD OF TEN (10) CALENDAR DAYS FROM RESPONDENTS RECEIPT OF THIS
ORDER, WITH THE WARNING, HOWEVER, THAT SHOULD THIS COMMISSION NOT RECEIVE A
RESTRAINING ORDER FROM THE SUPREME COURT WITHIN SAID PERIOD OF TEN (10) CALENDAR DAYS,
THEN A WRIT OF EXECUTION WILL BE ISSUED TO ENFORCE OUR NOW FINAL JUDGMENT.

SO ORDERED.[14]

CONSEQUENTLY, PETITIONERS FILED ANOTHER PETITION FOR CERTIORARI BEFORE THIS COURT, THIS
TIME DOCKETED AS G.R. NO. 107902, CONTENDING THAT:

A. PUBLIC RESPONDENTS, IN GRAVE ABUSE OF DISCRETION, EFFECTIVELY VIOLATED PETITIONERS RIGHT

DUE PROCESS BECAUSE-
(1) THE MONSTROUS AWARD TOTALING ABOUT P212 MILLION WAS DECIDED BASED PURELY ON PRIVATE
RESPONDENTS WORTHLESS PAPERS WHICH WERE NEVER IDENTIFIED NOR SUPPORTED BY ANY SINGLE
AFFIDAVIT.

(2) THE LABOR ARBITER PROCEEDED TO DECIDE THE CASE SOLELY ON THE BASES OF THE PLEADINGS
FILED, DESPITE THE ENORMITY OF THE CLAIMS AND THE REAPETED DEMANDS FOR A FULL-DRESS TRIAL
(WHICH, IRONICALLY, WERE INITIALLY GRANTED BY THE OFFICE OF THE LABOR ARBITER), MADE
NECESSARY BY THE CONFLICTING FACTUAL ALLEGATIONS OF THE PARTIES AND THE WORTHLESS PAPERS
PASSED OFF BY PRIVATE RESPONDENTS AS THEIR EVIDENCE.[15]

B. PUBLIC RESPONDENTS UNLAWFULLY ARROGATED UNTO THEMSELVES THE JURISDICTION TO PASS

UPON THE QUESTION OF MANILABANKS INSOLVENCY, DESPITE THE PLEADED PENDENCY OF THAT
PREJUDICIAL QUESTION BEFORE THE RTC OF MANILA WHICH HAD AQUIRED EXCLUSIVE JURISDICTION
TO RULE ON THE ISSUE TO THE EXCLUSION OF ALL OTHERS.[16]

C. THE MONEY AWARD ADJUDGED AGAINST THE INSOLVENT MANILABANK VIOLATES ALL NOTIONS OF
JUSTICE AND EQUITY, CONSIDERING THAT THE BENEFICIARIES THEREOF ARE FORMER OFFICERS AND TOP
MANAGERS OF MANILABANK WHO, BEING PART OF MANAGEMENT, WERE PARTLY TO BLAME FOR THE
BANKS FINANCIAL DECLINE.[17]

D. A STATUTORY RECEIVER HAS THE POWER TO ADOPT AND IMPLEMENT PRUDENT POLICIES AIMED AT
PRESERVING THE ASSETS OF AN INSOLVENT BANK INCLUDING REGULATING, ACCORDING TO HIS OWN
DISCRETION AND JUDGMENT, ALL ASPECTS OF EMPLOYMENT.[18]

E. PUBLIC RESPONDENTS ARBITRARY FINDINGS THAT SALARY INCREASES, CHRISTMAS AND MID-YEAR
BONUSES AND OTHER BENEFITS HAVE BEEN REGULARLY AND UNCONDITIONALLY PAID BY MANILABANK
TO PRIVATE RESPONDENTS, AND THAT MANILABANK EARNED PROFITS IN 1984, 1985 AND 1986, ARE
CONTRARY TO THE EVIDENCE ON RECORD AND ARE BASED ON PURE UNSUBSTANTIATED GUESSWORK.
[19]

F. THE AWARD OF ATTORNEYS FEES IS UNCONSCIONABLE, ESPECIALLY IN LIGHT OF ITS DISSIPATIVE

EFFECT OF THE REMAINING ASSETS OF THE INSOLVENT MANILABANK AND ITS PREJUDICIAL
CONSEQUENCES ON MANILABANKS STOCKHOLDERS AND CREDITORS.[20]

G. THE NLRCS AWARD OF LEGAL INTEREST ON THE AMOUNT AWARDED BY THE LABOR ARBITER AND ITS
ORDER TO DEPOSIT AN ADDITIONAL BOND TO COVER SUCH INTEREST HAVE NO LEGAL BASIS AND GIVE
AN UNDUE ADVANTAGE TO OTHER CREDITORS OF THE INSOLVENT MANILABANK.[21]

H. THE NLRCS THREAT TO EXECUTE THE JUDGMENT WOULD BE UNLAWFUL IF CARRIED OUT, BECAUSE
MANILABANKS ASSETS ARE LEGALLY EXEMPT FROM EXECUTION.[22]

ON DECEMBER 9, 1992, THIS COURT ORDERED THAT G.R. NO. 107902 BE CONSOLIDATED WITH G.R. NO.
107487.[23]

ON DECEMBER 16, 1992, THIS COURT ISSUED A RESOLUTION TEMPORARILY ENJOINING PUBLIC
RESPONDENT NLRC FROM ENFORCING AND/OR CARRYING OUT THE DECISION OF THE LABOR ARBITER
DATED NOVEMBER 14, 1989 AND ITS RESOLUTION DATED SEPTEMBER 9, 1992 AND ORDER DATED
NOVEMBER 26, 1992, ALL ISSUED IN NLRC NCR CASE NO. 00-11-04624-88.[24]
G.R. NO. 107902 IS IMPRESSED WITH MERIT.

BOTH THE LABOR ARBITER AND THE NLRC OPTED TO AWARD ALL THE ADDITIONAL BENEFITS CLAIMED
BY THE 343 PRIVATE RESPONDENTS WHO HAD ALREADY BEEN DULY PAID SEPARATION PAY AND/OR
RETIREMENT BENEFITS UPON TERMINATION OF THEIR EMPLOYMENT. THE NLRC ERRONEOUSLY
ADOPTED THE FINDINGS OF THE LABOR ARBITER, MISAPPLYING THE TIME-HONORED RULE THAT
FACTUAL FINDINGS OF QUASI-JUDICIAL AGENCIES ARE ACCORDED NOT ONLY RESPECT BUT EVEN
FINALITY IF SUPPORTED BY SUBSTANTIAL EVIDENCE. IT DECLARED THAT THE ADDITIONAL BENEFITS
SOUGHT ARE IN THE NATURE OF BONUSES WHICH WHEN MADE PART OF THE WAGE OR SALARY OR
COMPENSATION OF AN EMPLOYEE BECOME DEMANDABLE AND ENFORCEABLE.[25]

BOTH THE LABOR ARBITERS AND THE NLRCS FINDINGS AND CONCLUSIONS ARE FLAWED.

BY DEFINITION, A BONUS IS A GRATUITY OR ACT OF LIBERALITY OF THE GIVER WHICH THE RECIPIENT
HAS NO RIGHT TO DEMAND AS A MATTER OF RIGHT.[26] 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 EMPLOYEES BASIC SALARIES OR WAGES,[27] ESPECIALLY SO IF IT IS INCAPABLE OF DOING SO.

IN PHILIPPINE EDUCATION CO., INC. V. COURT OF INDUSTRIAL RELATIONS,[28] CITED IN PHILIPPINE

DUPLICATORS, INC. V. NLRC,[29] THE COURT EXPOUNDED ON THE NATURE OF A BONUS, THUS:

AS A RULE, A BONUS IS AN AMOUNT GRANTED AND PAID TO AN EMPLOYEE FOR HIS INDUSTRY AND
LOYALTY WHICH CONTRIBUTED TO THE SUCCESS OF THE EMPLOYERS BUSINESS AND MADE POSSIBLE
THE REALIZATION OF PROFITS. IT IS AN ACT OF GENEROSITY OF THE 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. XXX FROM THE LEGAL POINT OF VIEW, A BONUS IS NOT A
DEMANDABLE AND ENFORCEABLE OBLIGATION. IT IS SO WHEN IT IS MADE PART OF THE WAGE OR
SALARY OR COMPENSATION. IN SUCH A CASE THE LATTER WOULD BE FIXED AMOUNT AND THE FORMER
WOULD BE A CONTINGENT ONE DEPENDENT UPON THE REALIZATION OF PROFITS. XXX . (ITALICS
SUPPLIED).[30]

CLEARLY THEN, A BONUS IS AN AMOUNT GIVEN EX GRATIA TO AN EMPLOYEE BY AN EMPLOYER ON

ACCOUNT OF SUCCESS IN BUSINESS OR REALIZATION OF PROFITS. HOW THEN CAN AN EMPLOYER BE
MADE LIABLE TO PAY ADDITIONAL BENEFITS IN THE NATURE OF BONUSES TO ITS EMPLOYEES WHEN IT
HAS BEEN OPERATING ON CONSIDERABLE NET LOSSES FOR A GIVEN PERIOD OF TIME?

RECORDS BEAR OUT THAT PETITIONER MANILABANK WAS ALREADY IN DIRE FINANCIAL STRAITS IN THE
MID-80S. AS EARLY AS 1984, THE CENTRAL BANK FOUND THAT MANILABANK HAD BEEN SUFFERING
FINANCIAL LOSSES. PRESUMABLY, THE PROBLEMS COMMENCED EVEN BEFORE THEIR DISCOVERY IN
1984. AS EARLIER CHRONICLED, THE CENTRAL BANK PLACED PETITIONER BANK UNDER
COMPTROLLERSHIP IN 1984 BECAUSE OF LIQUIDITY PROBLEMS AND EXCESSIVE INTERBANK
BORROWINGS. IN 1987, IT WAS PLACED UNDER RECEIVERSHIP AND WAS ORDERED TO CLOSE
OPERATION. IN 1988, IT WAS ORDERED LIQUIDATED.
IT IS EVIDENT, THEREFORE, THAT PETITIONER BANK WAS OPERATING ON NET LOSSES FROM THE YEARS
1984, 1985 AND 1986, THUS, RESULTING TO ITS EVENTUAL CLOSURE IN 1987 AND LIQUIDATION IN 1988.
CLEARLY, THERE WAS NO SUCCESS IN BUSINESS OR REALIZATION OF PROFITS TO SPEAK OF THAT WOULD
WARRANT THE CONFERMENT OF ADDITIONAL BENEFITS SOUGHT BY PRIVATE RESPONDENTS. NO
COMPANY SHOULD BE COMPELLED TO ACT LIBERALLY AND CONFER UPON ITS EMPLOYEES ADDITIONAL
BENEFITS OVER AND ABOVE THOSE MANDATED BY LAW WHEN IT IS PLAGUED BY ECONOMIC
DIFFICULTIES AND FINANCIAL LOSSES. NO ACT OF ENLIGHTENED GENEROSITY AND SELF-INTEREST CAN
BE EXACTED FROM NEAR EMPTY, IF NOT EMPTY, COFFERS.

CONSEQUENTLY, ON THE TEN (10) ITEMS AWARDED TO HEREIN PRIVATE RESPONDENTS (ENUMERATED
AT PAGE 3) WHICH REPRESENT ADDITIONAL BENEFITS, THEY HAVING ALREADY BEEN PAID SEPARATION
AND RETIREMENT BENEFITS, WE RULE AS FOLLOWS:

FIRST. THE AWARD OF 5% PROFIT SHARING OF PETITIONER BANKS NET PROFITS FOR THE YEARS 1985
AND 1986 IS DELETED AS THERE WERE CLEARLY NO PROFITS TO SHARE DURING THAT PERIOD GIVEN THE
BANKS FINANCIAL STATUS IN 1985 AND 1986 WHEN IT WAS OPERATING ON NET LOSSES.

SECOND. THE AWARD OF WAGE INCREASES AND CHRISTMAS AND MID-YEAR BONUSES FROM 1985 TO
1988, BEING IN THE NATURE OF GRATUITIES AND DEPENDENT AS THEY ON THE PETITIONERS LIBERALITY
AND CAPABILITY TO GIVE, IS LIKEWISE DELETED FOR SAME REASONS ABOVE STATED.

THIRD. THE AWARD OF DIFFERENTIALS ON ACCRUED LEAVES, RETIREMENT BENEFITS AND CHRISTMAS
AND MID-YEAR BONUSES IS ALSO DELETED AS A NECESSARY AND LOGICAL CONSEQUENCE OF THE
DENIAL OF THE WAGE INCREASES AND CHRISTMAS AND MID-YEAR BONUSES.

FOURTH. THE AWARD OF MEDICAL, DENTAL AND OPTICAL BENEFITS IS WELL-TAKEN AND, THEREFORE,
AFFIRMED.

FIFTH. THE CLAIM FOR TRAVEL PLANS FOR 23 SENIOR OFFICERS, AND CAR PLANS AND GASOLINE
ALLOWANCES FOR 23 SENIOR OFFICERS, 15 SENIOR MANAGERS AND 54 ASSISTANT MANAGERS MAY
ONLY BE GRANTED TO THOSE OFFICERS WHO HAVE NOT YET AVAILED OF THE SAID BENEFIT SUBJECT TO
THE PROPER DETERMINATION BY THE LABOR ARBITER.

SIXTH AND LAST. CLAIMS FOR LONGEVITY PAY, LOYALTY BONUSES AND UNIFORM ALLOWANCE OF
P600.00 FOR 1985 MAY BE GRANTED GIVEN THE APPARENT LOYALTY AND ALLEGIANCE SHOWN BY
HEREIN PRIVATE RESPONDENTS TO PETITIONER BANK DESPITE ROUGH SAILING DURING THE SAID
PERIOD OF TIME.

THAT DISPOSES OF G.R. NO. 107902.

WITH RESPECT TO G.R. NO. 107487, THE SAME IS DISMISSED, THE ISSUES RAISED THEREIN HAVING BEEN
RENDERED MOOT AND ACADEMIC BY THE FOREGOING DISQUISITIONS AND DISPOSITION. BESIDES, IT IS
BEYOND DISPUTE THAT EMPLOYEES INDEED ENJOY FIRST PREFERENCE IN THE EVENT OF BANKRUPTCY
OR LIQUIDATION OF AN EMPLOYERS BUSINESS.[31]

WHEREFORE, PREMISES CONSIDERED, G.R. NO. 107902 IS GRANTED AND IS HEREBY REMANDED TO THE
LABOR ARBITER FOR THE PROPER COMPUTATION OF THE MONETARY AWARDS IN ACCORDANCE WITH
THE FOREGOING DISQUISITION AND WITH REASONABLE DISPATCH. G.R. NO. 107487 IS HEREBY
DISMISSED.

SO ORDERED.
[G.R. NO. 146572. JANUARY 14, 2005]

CIRINEO BOWLING PLAZA, INC., PETITIONER, VS. GERRY SENSING, BELEN FERNANDEZ, MIRASOL DIAZ,
MARGARITA ABRIL, DARIO BENITEZ, MANUEL BENITEZ, RONILLO TANDOC, EDGAR DIZON, JOVELYN
QUINTO, KAREN REMORAN, JENIFFER RINGOR, DEPARTMENT OF LABOR AND EMPLOYMENT AND COURT
OF APPEALS, RESPONDENTS.
DECISION
AUSTRIA-MARTINEZ, J.:

BEFORE US IS A SPECIAL CIVIL ACTION FOR CERTIORARI FILED BY PETITIONER ASSAILING THE
RESOLUTION[1] DATED AUGUST 31, 2000 OF THE COURT OF APPEALS (CA) WHICH DISMISSED
PETITIONERS PETITION FOR CERTIORARI; AND THE RESOLUTION[2] DATED NOVEMBER 10, 2000 WHICH
DENIED PETITIONERS MOTION FOR RECONSIDERATION.

THE ANTECEDENT FACTS ARE AS FOLLOWS:

ON NOVEMBER 27, 1995, ELIGIO PAOLO, JR., AN EMPLOYEE OF PETITIONER, FILED A LETTER COMPLAINT
WITH THE DEPARTMENT OF LABOR AND EMPLOYMENT (DOLE FOR SHORT), DAGUPAN DISTRICT OFFICE,
DAGUPAN CITY, REQUESTING FOR THE INSPECTION/INVESTIGATION OF PETITIONER FOR VARIOUS LABOR
LAW VIOLATIONS LIKE UNDERPAYMENT OF WAGES, 13TH MONTH PAY, NON-PAYMENT OF REST DAY PAY,
OVERTIME PAY, HOLIDAY PAY AND SERVICE INCENTIVE LEAVE PAY.[3] PURSUANT TO THE VISITORIAL AND
ENFORCEMENT POWERS OF THE SECRETARY OF LABOR AND EMPLOYMENT, HIS DULY AUTHORIZED
REPRESENTATIVE UNDER ARTICLE 128 OF THE LABOR CODE, AS AMENDED, CONDUCTED INSPECTIONS
ON PETITIONERS ESTABLISHMENT THE FOLLOWING DAY. IN HIS INSPECTION REPORT,[4] LABOR AND
EMPLOYMENT OFFICER III, CRISANTO REY DINGLE, FOUND THAT PETITIONER HAS THIRTEEN[5]
EMPLOYEES AND HAD COMMITTED THE FOLLOWING VIOLATIONS: UNDERPAYMENT OF MINIMUM
WAGE, 13TH MONTH PAY, HOLIDAY PREMIUMS, OVERTIME PREMIUMS, AND NON-PAYMENT OF REST
DAY. THE FINDINGS IN THE INSPECTION REPORT WERE EXPLAINED TO PETITIONERS OFFICER-IN-CHARGE,
MA. FE BOQUIREN, WHO SIGNED THE SAME.

THE FIRST HEARING OF THE CASE WAS SCHEDULED ON DECEMBER 27, 1995, BUT PETITIONER FAILED TO
APPEAR, THUS, THE HEARING WAS RESET TO JANUARY 10, 1996. ON THE DATE SET, BOQUIREN, AS
PETITIONERS REPRESENTATIVE, APPEARED WITH THE INFORMATION THAT PETITIONERS
PRESIDENT/GENERAL MANAGER LUISITO CIRINEO WAS SICK AND CONFINED IN A HOSPITAL.

ON THE JANUARY 19, 1996 HEARING, CIRINEO APPEARED AND ASKED FOR MORE TIME TO SETTLE WITH
HIS EMPLOYEES. THE CASE WAS AGAIN SET ON JANUARY 26, 1996 BUT CIRINEO FAILED TO APPEAR.

ON APRIL 22, 1996, AN ORDER[6] WAS ISSUED BY THE DOLE REGIONAL OFFICE, THE DISPOSITIVE
PORTION OF WHICH READS:

WHEREFORE, PREMISES CONSIDERED AND CONSIDERING FURTHER THAT THE AMOUNT COMPUTED
CONSTITUTES PART OF THE LAWFUL REMUNERATIONS OF THIRTEEN AFFECTED EMPLOYEES,
RESPONDENT IS HEREBY ORDERED TO PAY THEM THE TOTAL AMOUNT OF THREE HUNDRED SEVENTY
SEVEN THOUSAND FIVE HUNDRED PESOS AND 58/100. (P377,500.58), REPRESENTING THEIR
UNPAID/UNDERPAID WAGES, 13TH MONTH PAY, HOLIDAY PREMIUMS, REST DAY PAY AND OVERTIME
PREMIUMS DISTRIBUTED AS FOLLOWS:

NAME AMOUNT
1. GERRY SENSING P 9,505.68
2. BELEN FERNANDEZ 14,258.52
3. MIRASOL DIAZ 12,458.52
4. MARGARITA ABRIL 31,557.12
5. LAMBERTO SOLANO 53,151.12
6. DARIO BENITEZ 53,151.12
7. MANUEL BENITEZ 53,151.12
8. RONILLO TANDOC 36,951.12
9. EDGAR DIZON 14,637.78
10. JOVELYN QUINTO 22,769.88
11. KAREN REMORAN 21,387.78
12. JENNIFER RINGOR 37,304.82
13. ELIGIO PAOLO, JR. 12,810.00
TOTAL P 373,094.58

AND TO SUBMIT THE PROOF OF PAYMENT TO THIS OFFICE WITHIN TEN (10) DAYS FROM RECEIPT
HEREOF. OTHERWISE, A WRIT OF EXECUTION WILL BE ISSUED TO ENFORCE THIS ORDER.

RESPONDENT IS FURTHER ORDERED TO ADJUST THE SALARIES OF ITS EMPLOYEES TO THE APPLICABLE
DAILY MINIMUM WAGES AND TO SUBMIT THE PROOF THEREOF WITHIN THE SAME PERIOD.

SO ORDERED.[7]

COPY OF WHICH WAS RECEIVED BY PETITIONERS COUNSEL ON MAY 17, 1996. NO MOTION FOR
RECONSIDERATION OR APPEAL MEMORANDUM WAS FILED BY PETITIONER.

ON MAY 27, 1996, PETITIONERS REPRESENTATIVE, CARMEN ZAPATA, APPEARED BEFORE THE DOLE
REGIONAL OFFICE AND SUBMITTED THE QUITCLAIMS, WAIVERS AND RELEASES OF EMPLOYEES-
AWARDEES, LAMBERTO SOLANO, JOVELYN QUINTO, MANUEL BENITEZ, EDGAR DIZON, RONILLO
TANDOC, ELIGIO PAOLO, JR., AND DARIO BENITEZ. LATER, HOWEVER, BENITEZ, TANDOC, QUINTO AND
DIZON WROTE DOLE A LETTER DENYING HAVING RECEIVED ANY AMOUNT FROM PETITIONER. THUS,
DOLES INSPECTOR DINGLE WENT TO PETITIONERS ESTABLISHMENT TO CONFIRM THE AUTHENTICITY OF
THE QUITCLAIMS AND RELEASES AND TALKED TO THE EMPLOYEES CONCERNED WHO STATED THAT THEY
SIGNED THE DOCUMENT WITHOUT KNOWING ITS CONTENTS BUT THEY ARE WILLING TO SETTLE IF THEY
WILL BE GIVEN THE AMOUNT COMPUTED BY DOLE.

ON JUNE 19, 1996, LUISITO CIRINEO AND A CERTAIN FE CIRINEO OCTAVIANO, OWNER OF ESPERANZA
SEAFOODS KITCHENETTE STATIONED IN PETITIONERS ESTABLISHMENT, WROTE DOLE A LETTER
REQUESTING THAT THE CASE BE ENDORSED TO THE NATIONAL LABOR RELATIONS COMMISSION SINCE
THE RESOLUTION OF THE CASE REQUIRED EVIDENTIARY MATTERS NOT DISCLOSED OR VERIFIED IN THE
NORMAL COURSE OF INSPECTION. THEY ALSO SUBMITTED DOCUMENTS TO SHOW THAT PETITIONER
AND ESPERANZA SEAFOODS KITCHENETTE ARE SEPARATE AND DISTINCT BUSINESS ENTITIES AND THAT
SOME OF THE EMPLOYEES-AWARDEES ARE ACTUALLY EMPLOYEES OF THE ESPERANZA SEAFOODS
KITCHENETTE.

ON SEPTEMBER 12, 1996, DOLE ISSUED ITS ORDER[8] STATING AMONG OTHERS:

RECORDS SHOW THAT RESPONDENT, LUISITO CIRINEO AND HIS REPRESENTATIVE APPEARED BEFORE
THIS OFFICE DURING THE SUMMARY INVESTIGATION OF THIS INSTANT CASE BUT THEY NEVER ONCE
MENTIONED THE ISSUE OF SEPARATE JURIDICAL PERSONALITIES. RESPONDENT HAD ALWAYS BEEN BENT
ON SETTLING THE RESPECTIVE CLAIMS OF ALL THIRTEEN (13) CONCERNED EMPLOYEES. IN THE PROCESS,
HOWEVER, HE ACKNOWLEDGED BEING THEIR EMPLOYER. HE CANNOT AT THIS JUNCTURE THEREFORE
SAY, THAT SOME OF THE AWARDEES IN OUR ORDER ARE EMPLOYEES OF ANOTHER BUSINESS ENTITY.
THIS BEING THE CASE, WE CANNOT GRANT HIS REQUEST FOR INDORSEMENT TO THE NLRC.

WHEREFORE, PREMISES CONSIDERED, THE CASE OF EMPLOYEES ELIGIO PAOLO, JR. AND LAMBERTO
SOLANO WHOSE RESPECTIVE CLAIMS HAD BEEN SETTLED BY RESPONDENT IS HEREBY DISMISSED. THE
ORDER FOR THE PAYMENT OF THE MONETARY CLAIMS OF THE ELEVEN (11) OTHER CASH AWARDEES
STANDS. LET EXECUTION FOLLOW IMMEDIATELY.[9] (EMPHASIS SUPPLIED)

ON OCTOBER 21, 1996, DOLE REGIONAL DIRECTOR MAXIMO B. LIM ISSUED A WRIT OF EXECUTION.[10]
ON NOVEMBER 13, 1996, PETITIONER FILED A MOTION TO QUASH[11] THE WRIT OF EXECUTION
ALLEGING THE FOLLOWING GROUNDS:

I. THE WRIT OF EXECUTION SEEKS TO SATISFY THE MONETARY AWARDS GIVEN TO EMPLOYEES WHO ARE
NOT EMPLOYEES OF CIRINEO BOWLING PLAZA, INC..

II. THE WRIT OF EXECUTION SEEKS TO SATISFY MONETARY AWARDS GIVEN TO EMPLOYEES OF FE
ESPERANZA C. OCTAVIANO WHO WAS NOT IMPLEADED.

III. THE WRIT OF EXECUTION SEEKS TO SATISFY MONETARY AWARDS WRONGFULLY GIVEN TO
EMPLOYEES EMPLOYED BY ESTABLISHMENTS EMPLOYING LESS THAN TEN (10) EMPLOYEES, WHO ARE
NOT FOR THIS REASON ENTITLED TO HOLIDAY AND HOLIDAY PREMIUM PAY, NOR TO UNDERPAYMENT OF
WAGES.

IV. THE WRIT OF EXECUTION SEEKS TO SATISFY THE AWARD OF BENEFITS IN EXCESS OF THE
JURISDICTIONAL AMOUNT ALLOWED BY LAW.

V. THE WRIT OF EXECUTION SEEKS TO ENFORCE AN ORDER ISSUED BEYOND THE QUASI-JUDICIAL
AUTHORITY OF THE REGIONAL DIRECTOR[12].

IN AN ORDER[13] DATED FEBRUARY 7, 1997, DOLE REGIONAL DIRECTOR LIM DENIED PETITIONERS
MOTION TO QUASH THE WRIT OF EXECUTION.

PETITIONER FILED ITS MEMORANDUM OF APPEAL TO THE SECRETARY OF LABOR AND EMPLOYMENT[14]
WHO DISMISSED THE APPEAL ON THE GROUND THAT SAME WAS FILED OUT OF TIME.[15] ON MOTION
FOR RECONSIDERATION, THE APPEAL WAS GRANTED AND THE APPEAL WAS GIVEN DUE COURSE.
HOWEVER, ON MARCH 30, 1999, DOLE UNDERSECRETARY JOSE ESPAOL DISMISSED THE APPEAL AND
AFFIRMED THE ORDER DATED FEBRUARY 7, 1997 OF THE DOLE REGIONAL DIRECTOR WITH THE
FOLLOWING DISQUISITIONS:

IN SUPPORT THEREOF, RESPONDENT ALLEGES THAT IT HAD ONLY EIGHT (8) EMPLOYEES AS THE OTHER
CLAIMANTS OF LABOR BENEFITS . . . ARE EMPLOYEES OF FE ESPERANZA OCTAVIANO DOING BUSINESS
UNDER THE NAME AND STYLE ESPERANZA SEAFOODS KITCHENETTE. THUS, IT POINTS OUT THAT:

...

HENCE, UNDER THE LABOR CODE, ARTICLE 94 THEREOF THE EMPLOYEES OF THE APPELLANT ARE NOT
ENTITLED TO HOLIDAY PAY AND HOLIDAY PREMIUM PAY.

UNDER REPUBLIC ACT 6727 AND ITS IMPLEMENTING RULES, CHAPTER 1, SECTION 1 THEREOF,
ESTABLISHMENTS EMPLOYING LESS THAN TEN (10) EMPLOYEES ARE EXEMPTED FROM COMPLIANCE
WITH MINIMUM WAGE RATES. HENCE, THE WAGES GIVEN TO RESPONDENTS DO NOT CONSTITUTE
UNDER PAYMENTS. AS TO THEIR CLAIMS FOR OVERTIME PAY AND REST DAY PAY, THERE IS NO PROOF
THAT RESPONDENTS RENDERED OVERTIME OR RESTDAY WORK, HENCE THEY ARE NOT ENTITLED TO THE
SAME. (CAGAMPANAN VS. NLRC, 195 SCRA 533)

WE DO NOT AGREE.

THE RECORDS SHOW THAT DURING THE SUMMARY INVESTIGATION RESPONDENT NEVER REFUTED THE
FINDINGS OF THE LABOR INSPECTOR PARTICULARLY THE IDENTITY OF THE THIRTEEN (13) CONCERNED
EMPLOYEES NOR RAISED THE ISSUE OF SEPARATE JURIDICAL PERSONALITIES OF RESPONDENT CIRINEO
AND ESPERANZA SEAFOODS KITCHENETTE. THUS, IN THE ORDER DATED 07 FEBRUARY 1997, THE
REGIONAL DIRECTOR RULED:

. . . RESPONDENTS ACTUATION DURING AND AFTER THE SUMMARY INVESTIGATION DISCLOSED THAT IT
WAS BENT ON SETTLING ALL THE CLAIMS OF THE CLAIMANT-AWARDEES AND NEVER DID IT REFUTE THE
IDENTITY OF THE CONCERNED AWARDEES. OTHERWISE, RESPONDENT COULD HAVE EASILY RAISED THE
ISSUE BY ADMITTING EVIDENCE SUCH AS PAYROLLS, DAILY TIME RECORDS AND ANY SIMILAR
DOCUMENT WHICH COULD HAVE PINPOINTED THE REAL EMPLOYER OF THE CLAIMANTS.

...

THE DOCUMENTS SUBMITTED TO THIS OFFICE BY RESPONDENT COULD BE INTERPRETED AS A

DESPERATE ATTEMPT TO MISLEAD THIS OFFICE AND TO EVADE LIABILITY.

ON THE ISSUE OF JURISDICTION, WE RULE THAT THE REGIONAL DIRECTOR HAS JURISDICTION OVER THE
INSTANT CASE.

THE OLD RULE LIMITING THE JURISDICTION OF THE SECRETARY OF LABOR AND EMPLOYMENT OR HIS
DULY AUTHORIZED REPRESENTATIVES TO MONEY CLAIMS NOT EXCEEDING P5,000.00 HAS BEEN
REPEALED BY THE PASSAGE OF R.A. NO. 7730, SECTION 1 OF WHICH READS:

SECTION 1. PARAGRAPH (B) OF ARTICLE 128 OF THE LABOR CODE. AS AMENDED, IS HEREBY FURTHER
AMENDED TO READ AS FOLLOWS:
ART. 128. VISITORIAL AND ENFORCEMENT POWER.

...

(B) NOTWITHSTANDING THE PROVISIONS OF ARTICLES 129 AND 217 OF THIS CODE TO THE CONTRARY,
AND IN CASES WHERE THE RELATIONSHIP OF EMPLOYER-EMPLOYEE STILL EXISTS, THE SECRETARY OF
LABOR AND EMPLOYMENT OR HIS DULY AUTHORIZED REPRESENTATIVE SHALL HAVE THE POWER TO
ISSUE COMPLIANCE ORDERS TO GIVE EFFECT TO THE LABOR STANDARDS PROVISIONS OF THIS CODE
AND OTHER LABOR LEGISLATION BASED ON THE FINDING OF THE LABOR EMPLOYMENT AND
ENFORCEMENT OFFICER OR INDUSTRIAL SAFETY ENGINEERS MADE IN THE COURSE OF INSPECTION. THE
SECRETARY OR HIS DULY AUTHORIZED REPRESENTATIVES SHALL ISSUE WRITS OF EXECUTION TO THE
APPROPRIATE AUTHORITY FOR THE ENFORCEMENT OF THEIR ORDERS, EXCEPT IN CASES WHERE THE
EMPLOYER CONTESTS THE FINDINGS OF THE LABOR EMPLOYMENT AND ENFORCEMENT OFFICER AND
RAISES ISSUES SUPPORTED BY DOCUMENTARY PROOFS WHICH WERE NOT CONSIDERED IN THE COURSE
OF INSPECTION.

PURSUANT TO R.A. 7730, THE JURISDICTIONAL LIMITATIONS IMPOSED BY ARTICLE 129 ON THE
VISITORIAL AND ENFORCEMENT POWERS OF THIS OFFICE UNDER ARTICLE 128 OF THE LABOR CODE,
HAVE BEEN REPEALED. THE PHRASE NOTWITHSTANDING THE PROVISION OF ARTICLES 129 AND 217 OF
THE LABOR CODE TO THE CONTRARY, ERASES ALL DOUBTS AS TO THE AMENDATORY NATURE OF R.A. NO.
7730. THE AMENDMENT, IN EFFECT, OVERTURNED THE RULINGS IN THE ABOITIZ AND SERVANDOS CASES
INSOFAR AS THE RESTRICTIVE EFFECT OF ARTICLE 129 ON THE USE OF THE POWER UNDER ARTICLE 128
IS CONCERNED.

INDEED, THE SUPREME COURT IN NAZARENO FURNITURE VS. HON. SECRETARY OF LABOR AND
EMPLOYMENT AND TOMAS MENDOZA (G.R. NO. 128546, APRIL 30, 1997), ALREADY RULED THAT:

PETITIONER IS INCORRECT IN STATING THAT R.A. 7730 DID NOT SPECIFICALLY AMEND ART. 217 OF THE
LABOR CODE. IN FACT, IT IS PLAINLY STATED THAT THE AMENDMENT APPLIES NOTWITHSTANDING THE
PROVISIONS OF ARTICLES 129 AND 217 TO THE CONTRARY. EVEN IF ARTICLE 217 CONFERS ORIGINAL
AND EXCLUSIVE JURISDICTION OVER CASES SUCH AS THE ONE SUBJECT OF THIS PETITION, THIS HAS
BEEN MODIFIED BY THE LATER ENACTMENT OF R.A. 7730. . . .[16]

PETITIONERS MOTION FOR RECONSIDERATION WAS DENIED IN A RESOLUTION DATED APRIL 18, 2000.
[17]

PETITIONER FILED A PETITION FOR CERTIORARI WITH PRAYER FOR THE ISSUANCE OF TEMPORARY
RESTRAINING ORDER WITH THE CA.

ON AUGUST 31, 2000, THE CA DISMISSED THE PETITION FOR FAILURE OF PETITIONER TO (1) ATTACH A
COPY OF THE LETTER COMPLAINT FILED BY PETITIONERS EMPLOYEES AND THE ORDER DATED FEBRUARY
7, 1997 OF THE DOLE REGIONAL DIRECTOR AND (2) STATE THE MATERIAL DATE WHEN THE ASSAILED
ORDERS/RESOLUTIONS WERE RECEIVED PURSUANT TO SECTION 1 OF RULE 65 AND SECTION 3 OF RULE
46 OF THE 1997 RULES OF CIVIL PROCEDURE. PETITIONER FILED A MOTION FOR RECONSIDERATION
WHICH WAS ALSO DENIED BY THE CA ON NOVEMBER 10, 2000, COPY OF WHICH WAS RECEIVED BY
PETITIONER ON NOVEMBER 24, 2000.
PETITIONER COMES TO US BY WAY OF A PETITION FOR CERTIORARI UNDER RULE 65 RAISING THE SOLE
ISSUE:

PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION WHEN IT DISMISSED THE INSTANT PETITION AND OUTRIGHT DISMISSAL OF PETITIONERS
MOTION FOR RECONSIDERATION DUE TO MERE TECHNICALITIES.

RESPONDENTS DID NOT FILE THEIR COMMENT ON THE PETITION.

WE DISMISS THE PETITION.

WE FIND NO GRAVE ABUSE OF DISCRETION COMMITTED BY THE CA IN ISSUING THE ASSAILED

RESOLUTIONS. THE CA DISMISSED THE PETITION FOR CERTIORARI FOR FAILURE OF PETITIONER TO
ATTACH CERTAIN DOCUMENTS AND TO STATE THE MATERIAL DATE. WHILE PETITIONER FILED ITS
MOTION FOR RECONSIDERATION, ATTACHING THE REQUIRED DOCUMENTS, THE CA CORRECTLY FOUND
THAT IT STILL DID NOT STATE THE MATERIAL DATE WHEN IT RECEIVED THE DOLES RESOLUTION DATED
APRIL 18, 2000 DENYING ITS MOTION FOR RECONSIDERATION. THUS, WITHOUT THE DATE OF RECEIPT
OF THE DENIAL OF SUCH MOTION, THE CA COULD NOT DETERMINE WHETHER THE PETITION WAS FILED
WITHIN THE REGLEMENTARY PERIOD OF SIXTY DAYS FOR FILING THE PETITION FOR CERTIORARI UNDER
RULE 65 OF THE RULES OF COURT. UNDER SECTION 3, RULE 46 OF THE 1997 RULES OF CIVIL
PROCEDURE, AS AMENDED BY SC CIRCULAR NO. 39-98, IN ORIGINAL ACTIONS FOR CERTIORARI FILED
WITH THE CA, THE PETITION MUST INCLUDE THE FOLLOWING MATERIAL DATES, TO WIT:

SECTION 3. CONTENTS AND FILING OF PETITION; EFFECT OF NON-COMPLIANCE WITH REQUIREMENTS.-

...

IN ACTIONS FILED UNDER RULE 65, THE PETITION SHALL FURTHER INDICATE THE MATERIAL DATES
SHOWING WHEN THE NOTICE OF THE JUDGMENT OR FINAL ORDER OR RESOLUTION SUBJECT THEREOF
WAS RECEIVED, WHEN A MOTION FOR NEW TRIAL OR RECONSIDERATION, IF ANY, WAS FILED AND WHEN
NOTICE OF THE DENIAL THEREOF WAS RECEIVED.

...

THE FAILURE OF THE PETITIONER TO COMPLY WITH ANY OF THE FOREGOING REQUIREMENTS SHALL BE
SUFFICIENT GROUND FOR THE DISMISSAL OF THE PETITION.

IT BEARS STRESSING THAT THE TIMELY PERFECTION OF AN APPEAL IS A MANDATORY REQUIREMENT,

WHICH CANNOT BE TRIFLED WITH AS A MERE TECHNICALITY TO SUIT THE INTEREST OF A PARTY. THE
RULES ON PERIODS FOR FILING APPEALS ARE TO BE OBSERVED RELIGIOUSLY, AND PARTIES WHO SEEK TO
AVAIL THEMSELVES OF THE PRIVILEGE MUST COMPLY WITH THE RULES.[18] THE FAILURE TO PERFECT AN
APPEAL AS REQUIRED BY LAW RENDERS THE JUDGMENT FINAL AND EXECUTORY.[19]

WHILE THERE ARE EXCEPTIONAL CASES WHERE WE SET ASIDE PROCEDURAL DEFECTS TO CORRECT A
PATENT INJUSTICE, THERE SHOULD BE AN EFFORT ON THE PART OF THE PARTY INVOKING LIBERALITY TO
AT LEAST EXPLAIN ITS FAILURE TO COMPLY WITH THE RULES.[20] IT APPEARS THAT PETITIONERS NEW
COUNSEL FAILED TO STATE THE MATERIAL DATE TWICE, FIRST IN ITS PETITION FILED WITH THE CA AND,
SECOND, IN ITS MOTION FOR RECONSIDERATION. PETITIONERS EXPLANATION FOCUSED ON THE FACT
THAT ITS PRESIDENT, LUISITO CIRINEO, ONLY LEARNED OF THE DOLES DENIAL OF ITS MOTION FOR
RECONSIDERATION ON AUGUST 1, 2000 WHEN HE CAME BACK FROM A TRIP FROM EUROPE; THAT
EFFORTS TO COMMUNICATE WITH ITS FORMER COUNSEL REMAINED FUTILE. WE FIND SUCH
EXPLANATION UNSATISFACTORY SINCE THE MATERIAL DATES CAN EASILY BE VERIFIED FROM THE FILES
OF THE DOLE OFFICE.

EVEN IF WE DISREGARD TECHNICALITY, WE FIND THE ARGUMENTS RAISED BY PETITIONER WITHOUT

MERIT. AS CORRECTLY HELD BY THE DOLE REGIONAL DIRECTOR AND SUSTAINED BY THE DOLE
UNDERSECRETARY, RECORDS SHOW THAT PETITIONER NEVER REFUTED THE FINDINGS OF THE LABOR
INSPECTOR AS TO THE IDENTITY OF THE THIRTEEN EMPLOYEES NOR RAISED THE ISSUE OF SEPARATE
JURIDICAL PERSONALITIES OF PETITIONER CIRINEO AND ESPERANZA SEAFOODS KITCHENETTE DURING
THE INVESTIGATION AND ON THE HEARINGS CONDUCTED.

LIKEWISE, WE SUSTAIN THE JURISDICTION OF THE DOLE REGIONAL DIRECTOR. THE VISITORIAL AND
ENFORCEMENT POWERS OF THE DOLE REGIONAL DIRECTOR TO ORDER AND ENFORCE COMPLIANCE
WITH LABOR STANDARD LAWS CAN BE EXERCISED EVEN WHERE THE INDIVIDUAL CLAIM EXCEEDS
P5,000.00.[21] IN ALLIED INVESTIGATION BUREAU, INC. VS. SECRETARY OF LABOR AND EMPLOYMENT,
[22] WE ELUCIDATED:

PETITIONER ARGUES THAT THE POWER TO ADJUDICATE MONEY CLAIMS BELONGS TO THE LABOR
ARBITER WHO HAS EXCLUSIVE JURISDICTION OVER EMPLOYEES CLAIMS WHERE THE AGGREGATE
AMOUNT OF THE CLAIMS OF EACH EMPLOYEE EXCEEDS P5,000.00; AND, THAT THE LABOR ARBITER HAS
JURISDICTION OVER ALL OTHER CLAIMS ARISING FROM EMPLOYER-EMPLOYEE RELATIONS, INCLUDING
THOSE OF PERSONS IN DOMESTIC OR HOUSEHOLD SERVICE, INVOLVING AN AMOUNT EXCEEDING FIVE
THOUSAND PESOS (P5,000.00), WHETHER OR NOT ACCOMPANIED WITH A CLAIM FOR REINSTATEMENT.

PETITIONERS ARGUMENTS ARE UNTENABLE.

WHILE IT IS TRUE THAT UNDER ARTICLES 129 AND 217 OF THE LABOR CODE, THE LABOR ARBITER HAS
JURISDICTION TO HEAR AND DECIDE CASES WHERE THE AGGREGATE MONEY CLAIMS OF EACH
EMPLOYEE EXCEEDS P5,000.00, SAID PROVISIONS OF LAW DO NOT CONTEMPLATE NOR COVER THE
VISITORIAL AND ENFORCEMENT POWERS OF THE SECRETARY OF LABOR OR HIS DULY AUTHORIZED
REPRESENTATIVES.

RATHER, SAID POWERS ARE DEFINED AND SET FORTH IN ARTICLE 128 OF THE LABOR CODE (AS
AMENDED BY R.A. NO. 7730) THUS:

ART. 128. VISITORIAL AND ENFORCEMENT POWER.

(A) THE SECRETARY OF LABOR OR HIS DULY AUTHORIZED REPRESENTATIVES, INCLUDING LABOR
REGULATION OFFICERS, SHALL HAVE ACCESS TO EMPLOYERS RECORDS AND PREMISES AT ANY TIME OF
THE DAY OR NIGHT WHENEVER WORK IS BEING UNDERTAKEN THEREIN, AND THE RIGHT TO COPY
THEREFROM, TO QUESTION ANY EMPLOYEE AND INVESTIGATE ANY FACT, CONDITION OR MATTER
WHICH MAY BE NECESSARY TO DETERMINE VIOLATIONS OR WHICH MAY AID IN THE ENFORCEMENT OF
THIS CODE AND OF ANY LABOR LAW, WAGE ORDER OR RULES AND REGULATIONS ISSUED PURSUANT
THERETO.
(B) NOTWITHSTANDING THE PROVISIONS OF ARTICLES 129 AND 217 OF THIS CODE TO THE CONTRARY,
AND IN CASES WHERE THE RELATIONSHIP OF EMPLOYER-EMPLOYEE EXISTS, THE SECRETARY OF LABOR
AND EMPLOYMENT OR HIS DULY AUTHORIZED REPRESENTATIVES SHALL HAVE THE POWER TO ISSUE
COMPLIANCE ORDERS TO GIVE EFFECT TO THE LABOR STANDARDS PROVISIONS OF THIS CODE AND
OTHER LABOR LEGISLATION BASED ON THE FINDINGS OF LABOR EMPLOYMENT AND ENFORCEMENT
OFFICERS OR INDUSTRIAL SAFETY ENGINEERS MADE IN THE COURSE OF INSPECTION. THE SECRETARY OR
HIS DULY AUTHORIZED REPRESENTATIVES SHALL ISSUE WRITS OF EXECUTION TO THE APPROPRIATE
AUTHORITY FOR THE ENFORCEMENT OF THEIR ORDERS, EXCEPT IN CASES WHERE THE EMPLOYER
CONTESTS THE FINDING OF THE LABOR EMPLOYMENT AND ENFORCEMENT OFFICER AND RAISES ISSUES
SUPPORTED BY DOCUMENTARY PROOFS WHICH WERE NOT CONSIDERED IN THE COURSE OF
INSPECTION.

AN ORDER ISSUED BY THE DULY AUTHORIZED REPRESENTATIVE OF THE SECRETARY OF LABOR AND
EMPLOYMENT UNDER THIS ARTICLE MAY BE APPEALED TO THE LATTER. IN CASE SAID ORDER INVOLVED
A MONETARY AWARD, AN APPEAL BY THE EMPLOYER MAY BE PERFECTED ONLY UPON THE POSTING OF
A CASH OR SURETY BOND ISSUED BY A REPUTABLE BONDING COMPANY DULY ACCREDITED BY THE
SECRETARY OF LABOR AND EMPLOYMENT IN THE AMOUNT EQUIVALENT TO THE MONETARY AWARD IN
THE ORDER APPEALED FROM.

...

THE AFOREQUOTED PROVISION EXPLICITLY EXCLUDES FROM ITS COVERAGE ARTICLES 129 AND 217 OF
THE LABOR CODE BY THE PHRASE (N)OTWITHSTANDING THE PROVISIONS OF ARTICLES 129 AND 217 OF
THIS CODE TO THE CONTRARY . . . THEREBY RETAINING AND FURTHER STRENGTHENING THE POWER OF
THE SECRETARY OF LABOR OR HIS DULY AUTHORIZED REPRESENTATIVE TO ISSUE COMPLIANCE ORDERS
TO GIVE EFFECT TO THE LABOR STANDARDS PROVISIONS OF SAID CODE AND OTHER LABOR LEGISLATION
BASED ON THE FINDINGS OF LABOR EMPLOYMENT AND ENFORCEMENT OFFICERS OR INDUSTRIAL
SAFETY ENGINEERS MADE IN THE COURSE OF INSPECTION.

IN THE CASE AT BAR, THE OFFICE OF RESPONDENT REGIONAL DIRECTOR CONDUCTED INSPECTION VISITS
AT PETITIONERS ESTABLISHMENT ON FEBRUARY 9 AND 14, 1995 IN ACCORDANCE WITH THE ABOVE-
MENTIONED PROVISION OF LAW. IN THE COURSE OF SAID INSPECTION, SEVERAL VIOLATIONS OF THE
LABOR STANDARD PROVISIONS OF THE LABOR CODE WERE DISCOVERED AND REPORTED BY SENIOR
LABOR ENFORCEMENT OFFICER EDUVIGIS A. ACERO IN HIS NOTICE OF INSPECTION RESULTS. IT WAS ON
THE BASES OF THE AFORESAID FINDINGS (WHICH PETITIONER DID NOT CONTEST), THAT RESPONDENT
REGIONAL DIRECTOR ISSUED THE ASSAILED ORDER FOR PETITIONER TO PAY PRIVATE RESPONDENTS THE
RESPECTIVE WAGE DIFFERENTIALS DUE THEM.

CLEARLY, AS THE DULY AUTHORIZED REPRESENTATIVE OF RESPONDENT SECRETARY OF LABOR, AND IN

THE LAWFUL EXERCISE OF THE SECRETARYS VISITORIAL AND ENFORCEMENT POWERS UNDER ARTICLE
128 OF THE LABOR CODE, RESPONDENT REGIONAL DIRECTOR HAD JURISDICTION TO ISSUE HIS
IMPUGNED ORDER.

IN A RECENT CASE, THE SUPREME COURT RULED IN THIS WISE:

ASSAILED IN THIS SPECIAL CIVIL ACTION FOR CERTIORARI IS THE ORDER DATED AUGUST 1, 1995 ISSUED
BY PUBLIC RESPONDENT REGIONAL DIRECTOR ROMEO A. YOUNG OF THE DEPARTMENT OF LABOR AND
EMPLOYMENT (DOLE) IN CASE NO. NCROO-9503-IS-035, ORDERING PETITIONER LORD AND LADY SALON
TO PAY PRIVATE RESPONDENT ATELDO BARROGA THE SUM OF P14,099.05 REPRESENTING HIS
UNDERPAID WAGES AND PREMIUM PAY FOR WORK ON HOLIDAYS. THIS SUIT IS AN OFFSHOOT OF THE
COMPLAINT FOR PAYMENT OF SALARY DIFFERENTIALS FILED BY PRIVATE RESPONDENT AGAINST
PETITIONER ON MARCH 20, 1995. UPON INVESTIGATION CONDUCTED BY PUBLIC RESPONDENTS OFFICE,
PETITIONER WAS FOUND TO HAVE COMMITTED THE FOLLOWING VIOLATIONS: (1) UNDERPAYMENT OF
WAGES, (2) NON-IMPLEMENTATION OF PREMIUM PAY FOR WORKED LEGAL HOLIDAYS, AND (3) NON-
AVAILABILITY OF RECORDS AT THE TIME OF INSPECTION. CONSEQUENT TO THE PARTIES FAILURE TO
REACH AN AMICABLE SETTLEMENT, PUBLIC RESPONDENT ISSUED THE ASSAILED RESOLUTION.
PETITIONER ASSERTS THAT PUBLIC RESPONDENT EXCEEDED HIS JURISDICTION IN TAKING COGNIZANCE
OF THE COMPLAINT AND ORDERING THE PAYMENT OF P14,099.05 TO PRIVATE RESPONDENT BECAUSE
THE AWARD OF THE LATTER AMOUNT GOES OVER THE JURISDICTIONAL AMOUNT OF P5,000.00 FOR
CASES FILED BEFORE THE REGIONAL DIRECTOR, THUS, IS PROPERLY COGNIZABLE BY THE LABOR ARBITER
INSTEAD.

WE DISMISS THE PETITION. PURSUANT TO SECTION 1 OF REPUBLIC ACT 7730 [APPROVED ON JUNE 2,
1994] WHICH AMENDED ARTICLE 128 (B) OF THE LABOR CODE, THE SECRETARY OF LABOR AND
EMPLOYMENT OR HIS DULY AUTHORIZED REPRESENTATIVE, IN THE EXERCISE OF THEIR VISITORIAL AND
ENFORCEMENT POWERS, ARE NOW AUTHORIZED TO ISSUE COMPLIANCE ORDERS TO GIVE EFFECT TO
THE LABOR STANDARDS PROVISIONS OF THIS CODE AND OTHER LABOR LEGISLATION BASED ON THE
FINDINGS OF LABOR EMPLOYMENT AND ENFORCEMENT OFFICERS OR INDUSTRIAL SAFETY ENGINEERS
MADE IN THE COURSE OF INSPECTION, SANS ANY RESTRICTION WITH RESPECT TO THE JURISDICTIONAL
AMOUNT OF P5,000.00 PROVIDED UNDER ARTICLE 129 AND ARTICLE 217 OF THE CODE.

THE INSTANT CASE THEREFORE FALLS SQUARELY WITHIN THE COVERAGE OF THE AFORECITED
AMENDMENT AS THE ASSAILED ORDER WAS ISSUED TO ENFORCE COMPLIANCE WITH THE PROVISIONS
OF THE CODE WITH RESPECT TO THE PAYMENT OF PROPER WAGES. HENCE, PETITIONERS CLAIM OF LACK
OF JURISDICTION ON THE PART OF PUBLIC RESPONDENT IS BEREFT OF MERIT.[23]

WHEREFORE, THE INSTANT PETITION IS DISMISSED FOR LACK OF MERIT.

SO ORDERED.
[G.R. NO. 131750. NOVEMBER 16, 1998]

FRANCISCO GUICO, JR., DOING BUSINESS UNDER THE NAME AND STYLE OF COPYLANDIA SERVICES &
TRADING, PETITIONER, VS. THE HON. SECRETARY OF LABOR & EMPLOYMENT LEONARDO A.
QUISUMBING, THE OFFICE OF REGIONAL DIRECTOR OF REGION I, DEP'T OF LABOR & EMPLOYMENT,
ROSALINA CARRERA, ET. AL., RESPONDENTS.
DECISION
PUNO, J.:

THIS IS A PETITION FOR CERTIORARI SEEKING REVIEW OF TWO (2) ORDERS[1] ISSUED BY THE
RESPONDENT SECRETARY OF LABOR AND EMPLOYMENT DISMISSING PETITIONER'S APPEAL.

THE CASE STARTED WHEN THE OFFICE OF THE REGIONAL DIRECTOR, DEPARTMENT OF LABOR AND
EMPLOYMENT (DOLE), REGION I, SAN FERNANDO, LA UNION, RECEIVED A LETTER-COMPLAINT DATED
APRIL 25, 1995, REQUESTING FOR AN INVESTIGATION OF PETITIONER'S ESTABLISHMENT, COPYLANDIA
SERVICES & TRADING, FOR VIOLATION OF LABOR STANDARDS LAWS. PURSUANT TO THE VISITORIAL AND
ENFORCEMENT POWERS OF THE SECRETARY OF LABOR AND EMPLOYMENT OR HIS DULY AUTHORIZED
REPRESENTATIVE UNDER ARTICLE 128 OF THE LABOR CODE, AS AMENDED, INSPECTIONS WERE
CONDUCTED AT COPYLANDIA'S OUTLETS ON APRIL 27 AND MAY 2, 1995. THE INSPECTIONS YIELDED THE
FOLLOWING VIOLATIONS INVOLVING TWENTY-ONE (21) EMPLOYEES WHO ARE COPIER OPERATORS: (1)
UNDERPAYMENT OF WAGES; (2) UNDERPAYMENT OF 13TH MONTH PAY; AND (3) NO SERVICE INCENTIVE
LEAVE WITH PAY.[2]

THE FIRST HEARING OF THE CASE WAS HELD ON JUNE 14, 1995, WHERE PETITIONER WAS REPRESENTED
BY JOSEPH BOTEA, OFFICER-IN-CHARGE OF THE DAGUPAN CITY OUTLETS, WHILE THE 21 EMPLOYEES
WERE REPRESENTED BY LEILANI BARROZO, GEMMA GALES, MAJESTINA RAYMUNDO AND LAURETA
CLAUNA. IT WAS ESTABLISHED THAT A COPIER OPERATOR WAS RECEIVING A DAILY SALARY RANGING
FROM P35.00 TO P60.00 PLUS COMMISSION OF P20.00 PER P500.00 WORTH OF PHOTOCOPYING. THERE
WAS ALSO INCENTIVE PAY OF P20.00 PER P250.00 WORTH OF PHOTOCOPYING IN EXCESS OF THE FIRST
P500.00.[3]

ON JULY 13, 1995, PETITIONER'S REPRESENTATIVE SUBMITTED A JOINT AFFIDAVIT SIGNED AND
EXECUTED BY THE 21 EMPLOYEES EXPRESSING THEIR DISINTEREST IN PROSECUTING THE CASE AND
THEIR WAIVER AND RELEASE OF PETITIONER FROM HIS LIABILITIES ARISING FROM NON-PAYMENT AND
UNDERPAYMENT OF THEIR SALARIES AND OTHER BENEFITS. INDIVIDUALLY SIGNED DOCUMENTS DATED
DECEMBER 21, 1994, PURPORTING TO BE THE EMPLOYEES' RECEIPT, WAIVER AND QUITCLAIM WERE
ALSO SUBMITTED.[4]

IN THE INVESTIGATION CONDUCTED BY HEARING OFFICER ADONIS PERALTA ON JULY 21, 1995, THE 21
EMPLOYEES CLAIMED THAT THEY SIGNED THE JOINT AFFIDAVIT FOR FEAR OF LOSING THEIR JOBS. THEY
ADDED THAT THEIR DAILY SALARY WAS INCREASED TO P92.00 EFFECTIVE JULY 1, 1995, BUT THE
INCENTIVE AND COMMISSION SCHEMES WERE DISCONTINUED. THEY ALLEGED THAT THEY DID NOT
WAIVE THE UNPAID BENEFITS DUE TO THEM.[5]

ON OCTOBER 30, 1995, REGIONAL DIRECTOR GUERRERO N. CIRILO ISSUED AN ORDER[6] FAVORABLE TO
THE 21 EMPLOYEES. FIRST, HE RULED THAT THE PURPORTED RECEIPT, WAIVER AND QUITCLAIM DATED
DECEMBER 21 AND 22, 1994, COULD NOT CAUSE THE DISMISSAL OF THE LABOR STANDARDS CASE
AGAINST THE PETITIONER SINCE THE SAME WERE EXECUTED BEFORE THE FILING OF THE SAID CASE.
MOREOVER, THE EMPLOYEES REPUDIATED SAID WAIVER AND QUITCLAIM. SECOND, HE HELD THAT
DESPITE THE SALARY INCREASE GRANTED BY THE PETITIONER, THE DAILY SALARY OF THE EMPLOYEES
WAS STILL BELOW THE MINIMUM DAILY WAGE RATE OF P119.00 UNDER WAGE ORDER NO. RB-I-03.
THIRDLY, HE HELD THAT THE REMOVAL OF THE COMMISSION AND INCENTIVE SCHEMES DURING THE
PENDENCY OF THE CASE VIOLATED THE PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF
BENEFITS UNDER ARTICLE 100 OF THE LABOR CODE, AS AMENDED. THE DISPOSITIVE PORTION OF THE
ORDER STATES:

"WHEREFORE, PREMISES CONSIDERED AND PURSUANT TO THE RULES ON THE DISPOSITION OF LABOR
STANDARDS CASES IN THE REGIONAL OFFICES ISSUED BY THE SECRETARY OF LABOR AND EMPLOYMENT
ON 16 SEPTEMBER 1987, RESPONDENT COPYLANDIA SERVICES AND TRADING THRU ITS
OWNER/MANAGER MR. FRANCISCO GUICO, IS HEREBY ORDERED TO PAY THE EMPLOYEES THE AMOUNT
OF ONE MILLION EIGHTY ONE THOUSAND SEVEN HUNDRED FIFTY SIX PESOS AND SEVENTY CENTAVOS
(P1,081,756.70) REPRESENTING THEIR BACKWAGES, DISTRIBUTED AS FOLLOWS:

1. ROSALINA CARRERA - P68,010.91

2. JOANNA VENTURA - 28,568.10
3. MERCELITA PAREDES - 68,010.91
4. AIDA LICUANAN - 68,010.91
5. GEMMA GALES - 68,010.91
6. CLOTILDA ZARATA - 27,808.33
7. CONSOLACION MIGUEL - 65,708.28
8. GEMMA MACALALAY - 68,010.91
9. WANDY AQUINO - 19,559.58
10. LAURETA CLAUNA - 68,010.91
11. JOSEPHINE VALDEZ - 27,808.33
12. LEILANI BERROZO - 27,808.33
13. MAJESTINA RAYMUNDO - 68,010.91
14. THERESA ROSARIO - 68,010.91
15. EDELYN MARAMBA - 68,010.91
16. YOLLY DIMABAYAO - 40,380.60
17. VILMA CALAGUIN - 68,010.91
18. MAILA BALOLONG - 40,380.60
19. CLARISSA VILLENA - 27,808.33
20. MARYANN GALINATO - 68,010.91
21. DESIREE CABASAG - 27,808.33

TOTAL P1,081,756.70

AND TO SUBMIT PROOF OF PAYMENT TO THIS OFFICE WITHIN SEVEN (7) DAYS FROM RECEIPT HEREOF.
OTHERWISE, A WRIT OF EXECUTION WILL BE ISSUED TO ENFORCE THIS ORDER.

"SO ORDERED."[7]

PETITIONER RECEIVED A COPY OF THE ORDER ON NOVEMBER 10, 1995. ON NOVEMBER 15, 1995,
PETITIONER FILED A NOTICE OF APPEAL.[8] THE NEXT DAY, HE FILED A MEMORANDUM OF APPEAL
ACCOMPANIED BY A MOTION TO REDUCE AMOUNT OF APPEAL BOND AND A MANIFESTATION OF AN
APPEAL BOND.

IN HIS APPEAL MEMORANDUM,[9] PETITIONER QUESTIONED THE JURISDICTION OF THE REGIONAL

DIRECTOR CITING ARTICLE 129 OF THE LABOR CODE, AS AMENDED,[10] AND SECTION 1, RULE IX OF THE
IMPLEMENTING RULES OF REPUBLIC ACT NO. 6715.[11] HE ARGUED THAT THE REGIONAL DIRECTOR HAS
NO JURISDICTION OVER THE COMPLAINT OF THE 21 EMPLOYEES SINCE THEIR INDIVIDUAL MONETARY
CLAIMS EXCEED THE P5,000.00 LIMIT. HE ALLEGED THAT THE REGIONAL DIRECTOR SHOULD HAVE
INDORSED THE CASE TO THE LABOR ARBITER FOR PROPER ADJUDICATION AND FOR A MORE FORMAL
PROCEEDING WHERE THERE IS AMPLE OPPORTUNITY FOR HIM TO PRESENT EVIDENCE TO CONTEST THE
CLAIMS OF THE EMPLOYEES. HE FURTHER ALLEGED THAT THE REGIONAL DIRECTOR ERRED IN
COMPUTING THE MONETARY AWARD SINCE IT WAS DONE WITHOUT REGARD TO THE ACTUAL NUMBER
OF DAYS AND TIME WORKED BY THE EMPLOYEES. HE ALSO FAULTED THE REGIONAL DIRECTOR FOR NOT
GIVING CREDENCE TO THE RECEIPT, WAIVER AND QUITCLAIM OF THE EMPLOYEES.

IN THE MOTION TO REDUCE AMOUNT OF APPEAL BOND,[12] PETITIONER CLAIMED HE WAS HAVING
DIFFICULTY IN RAISING THE MONETARY AWARD WHICH HE DENOUNCED AS EXORBITANT. PENDING
RESOLUTION OF THE MOTION, HE POSTED AN APPEAL BOND IN THE AMOUNT OF P105,000.00
INSISTING THAT THE JURISDICTION OF THE REGIONAL DIRECTOR IS LIMITED TO CLAIMS OF P5,000.00
PER EMPLOYEE AND THERE WERE 21 EMPLOYEES INVOLVED IN THE CASE.

ON NOVEMBER 22, 1995, PETITIONER ALSO FILED A REQUEST TO HOLD IN ABEYANCE ANY ACTION
RELATIVE TO THE CASE FOR A POSSIBLE AMICABLE SETTLEMENT WITH THE EMPLOYEES.[13]

ON JANUARY 10, 1996, DISTRICT LABOR OFFICER ADONIS PERALTA FORWARDED A REPORT SHOWING
THAT THE PETITIONER AND MOST OF THE 21 EMPLOYEES HAD REACHED A COMPROMISE AGREEMENT.
THE RELEASE, WAIVER AND QUITCLAIM WAS SIGNED BY THE FOLLOWING EMPLOYEES AND SHOW THE
FOLLOWING AMOUNTS THEY RECEIVED, VIZ:

1. AIDA LICUANAN - P3,000.00

2. CLARISSA VILLENA - 3,000.00
3. GEMMA GALES - 3,000.00
4. DESIREE CABANSAG - 3,000.00
5. CLOTILDA ZARATA - 3,000.00
6. CONSOLACION MIGUEL - 5,000.00
7. JOSEPHINE VALDEZ - 3,000.00
8. MARYANN GALINATO - 5,000.00
9. THERESA ROSARIO - 3,000.00
10.YOLLY DIMABAYAO - 3,000.00
11.VILMA CALAGUIN - 3,000.00
12.GEMMA MACALALAY - 3,000.00
13.EDELYN MARAMBA - 5,000.00
14.CHARITO GONZALES - 3,000.00
15.JOANNA VENTURA - 3,000.00

FOUR (4) EMPLOYEES DID NOT SIGN IN THE COMPROMISE AGREEMENT. THEY INSISTED THAT THEY BE
PAID WHAT IS DUE TO THEM ACCORDING TO THE ORDER OF THE REGIONAL DIRECTOR IN THE TOTAL
AMOUNT OF P231,841.06. THEY WERE LAURETA CLAUNA, MAJESTINA RAYMUNDO, LEILANI BARROZO
AND ROSALINA CARRERA.[14]

IN A LETTER[15] DATED FEBRUARY 23, 1996, THE REGIONAL DIRECTOR INFORMED PETITIONER THAT HE
COULD NOT GIVE DUE COURSE TO HIS APPEAL SINCE THE APPEAL BOND OF P105,000.00 FELL SHORT OF
THE AMOUNT DUE TO THE 4 EMPLOYEES WHO DID NOT PARTICIPATE IN THE SETTLEMENT OF THE CASE.
IN THE SAME LETTER, HE DIRECTED PETITIONER TO POST, WITHIN TEN (10) DAYS FROM RECEIPT OF THE
LETTER, THE AMOUNT OF P126,841.06 OR THE DIFFERENCE BETWEEN THE MONETARY AWARD DUE TO
THE 4 EMPLOYEES AND THE APPEAL BOND PREVIOUSLY POSTED.

ON MARCH 13, 1996, PETITIONER FILED A MOTION FOR RECONSIDERATION TO REDUCE AMOUNT OF
APPEAL BOND.[16] HE MANIFESTED THAT HE HAS CLOSED DOWN HIS BUSINESS OPERATIONS DUE TO
SEVERE FINANCIAL LOSSES AND IMPLORED THE REGIONAL DIRECTOR TO ACCEPT THE APPEAL BOND
ALREADY FILED FOR REASONS OF JUSTICE AND EQUITY.

IN AN ORDER DATED DECEMBER 3, 1996, THE RESPONDENT SECRETARY DENIED THE FOREGOING
MOTION FOR RECONSIDERATION ON THE GROUND THAT THE DIRECTIVE FROM THE REGIONAL
DIRECTOR TO POST AN ADDITIONAL SURETY BOND IS CONTAINED IN A "MERE LETTER" WHICH CANNOT
BE THE PROPER SUBJECT FOR A MOTION FOR RECONSIDERATION AND/OR APPEAL BEFORE HIS OFFICE.
HE ADDED THAT FOR FAILURE OF THE PETITIONER TO POST THE CORRECT AMOUNT OF SURETY OR CASH
BOND, HIS APPEAL WAS NOT PERFECTED FOLLOWING ARTICLE 128 (B) OF THE LABOR CODE, AS
AMENDED. DESPITE THE NON-PERFECTION OF THE APPEAL, RESPONDENT SECRETARY LOOKED INTO THE
RECEIPT, WAIVER AND QUITCLAIM SIGNED BY THE EMPLOYEES AND REJECTED IT ON THE GROUND THAT
THE CONSIDERATION WAS UNCONSCIONABLY INADEQUATE. HE RULED, NONETHELESS, THAT THE
AMOUNT RECEIVED BY THE SAID EMPLOYEES SHOULD BE DEDUCTED FROM THE JUDGMENT AWARD
AND THE DIFFERENCE SHOULD BE PAID BY THE PETITIONER.

ON DECEMBER 26, 1996, PETITIONER FILED A MOTION FOR RECONSIDERATION. ON FEBRUARY 13, 1997,
HE FILED A MOTION TO ADMIT ADDITIONAL BOND AND POSTED THE AMOUNT OF P126,841.06 IN
COMPLIANCE WITH THE ORDER OF THE REGIONAL DIRECTOR IN HIS LETTER DATED FEBRUARY 13, 1996.
[17]

ON OCTOBER 24, 1997, THE RESPONDENT SECRETARY DENIED THE MOTION FOR RECONSIDERATION. HE
RULED THAT THE REGIONAL DIRECTOR HAS JURISDICTION OVER THE CASE CITING ARTICLE 128 (B) OF
THE LABOR CODE, AS AMENDED. HE POINTED OUT THAT REPUBLIC ACT NO. 7730 REPEALED THE
JURISDICTIONAL LIMITATIONS IMPOSED BY ARTICLE 129 ON THE VISITORIAL AND ENFORCEMENT
POWERS OF THE SECRETARY OF LABOR AND EMPLOYMENT OR HIS DULY AUTHORIZED
REPRESENTATIVES. IN ADDITION, HE HELD THAT PETITIONER IS NOW ESTOPPED FROM QUESTIONING
THE COMPUTATION MADE BY THE REGIONAL DIRECTOR AS A RESULT OF THE COMPROMISE AGREEMENT
HE ENTERED INTO WITH THE EMPLOYEES. LASTLY, HE REITERATED HIS RULING THAT THE RECEIPT,
WAIVER AND QUITCLAIM SIGNED BY THE EMPLOYEES WAS NOT VALID.

PETITIONER IS NOW BEFORE THIS COURT RAISING THE FOLLOWING ISSUES:

WHETHER OR NOT PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OR IN EXCESS OF JURISDICTION WHEN HE SET ASIDE THE RELEASE AND QUITCLAIM EXECUTED BY
THE SEVENTEEN (SIC) COMPLAINANTS BEFORE THE OFFICE OF THE REGIONAL DIRECTOR WHEN PUBLIC
RESPONDENT HIMSELF RULED THAT THE APPEAL OF THE PETITIONER WAS NOT PERFECTED AND,
THEREFORE, PUBLIC RESPONDENT DID NOT ACQUIRE JURISDICTION OVER THE CASE.

II

WHETHER OR NOT PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OR IN EXCESS OF JURISDICTION WHEN IN COMPLETE DISREGARD OF ARTICLE 227 OF THE LABOR
CODE, PUBLIC RESPONDENT SET ASIDE AND NULLIFIED THE RELEASE AND QUITCLAIM EXECUTED BY THE
SEVENTEEN (SIC) COMPLAINANTS.

III

WHETHER OR NOT PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OR IN EXCESS OF JURISDICTION WHEN HE AFFIRMED THE ORDER OF THE REGIONAL DIRECTOR
WHO, IN COMPLETE DISREGARD OF THE DUE PROCESS REQUIREMENTS OF LAW, COMPUTED THE
MONETARY AWARD GIVEN TO THE PRIVATE RESPONDENTS WITHOUT NOTICE TO PETITIONER AND
WITHOUT BENEFIT OF HEARING.
IV

WHETHER OR NOT PETITIONER IS DEEMED ESTOPPED FROM APPEALING THE DECISION OF THE
REGIONAL DIRECTOR WHEN IT (SIC) ENTERED INTO A COMPROMISE SETTLEMENT WITH
COMPLAINANTS/PRIVATE RESPONDENTS.

THE THRESHOLD ISSUES THAT NEED TO BE SETTLED IN THIS CASE ARE: (1) WHETHER OR NOT THE
REGIONAL DIRECTOR HAS JURISDICTION OVER THE INSTANT LABOR STANDARDS CASE, AND (2)
WHETHER OR NOT PETITIONER PERFECTED HIS APPEAL.

WITH REGARD TO THE ISSUE OF JURISDICTION, PETITIONER ALLEGED THAT THE REGIONAL DIRECTOR
HAS NO JURISDICTION OVER THE INSTANT CASE SINCE THE INDIVIDUAL MONETARY CLAIMS OF THE 21
EMPLOYEES EXCEED P5,000.00. HE FURTHER ARGUED THAT FOLLOWING ARTICLE 129 OF THE LABOR
CODE, AS AMENDED, AND SECTION 1, RULE IX OF THE IMPLEMENTING RULES OF REPUBLIC ACT NO.
6715, THE JURISDICTION OVER THIS CASE BELONGS TO THE LABOR ARBITER, AND THE REGIONAL
DIRECTOR SHOULD HAVE INDORSED IT TO THE APPROPRIATE REGIONAL BRANCH OF THE NATIONAL
LABOR RELATIONS COMMISSION (NLRC). ON THE OTHER HAND, THE RESPONDENT SECRETARY HELD
THAT THE JURISDICTIONAL LIMITATION IMPOSED BY ARTICLE 129 ON HIS VISITORIAL AND
ENFORCEMENT POWER UNDER ARTICLE 128 (B) OF THE LABOR CODE, AS AMENDED, HAS BEEN
REPEALED BY REPUBLIC ACT NO. 7730.[18] HE POINTED OUT THAT THE AMENDMENT
"[N]OTWITHSTANDING THE PROVISIONS OF ARTICLE 129 AND 217 OF THE LABOR CODE TO THE
CONTRARY" ERASED ALL DOUBTS AS TO THE AMENDATORY NATURE OF THE NEW LAW, AND IN EFFECT,
OVERTURNED THIS COURT'S RULING IN THE CASE OF SERVANDO'S INC. V. SECRETARY OF LABOR AND
EMPLOYMENT.[19]

WE SUSTAIN THE JURISDICTION OF THE RESPONDENT SECRETARY. AS THE RESPONDENT CORRECTLY

POINTED OUT, THIS COURT'S RULING IN SERVANDO --- THAT THE VISITORIAL POWER OF THE SECRETARY
OF LABOR TO ORDER AND ENFORCE COMPLIANCE WITH LABOR STANDARD LAWS CANNOT BE
EXERCISED WHERE THE INDIVIDUAL CLAIM EXCEEDS P5,000.00, CAN NO LONGER BE APPLIED IN VIEW
OF THE ENACTMENT OF R.A. NO. 7730 AMENDING ARTICLE 128 (B) OF THE LABOR CODE, VIZ:

ARTICLE 128 (B) - NOTWITHSTANDING THE PROVISIONS OF ARTICLES 129 AND 217 OF THIS CODE TO THE
CONTRARY, AND IN CASES WHERE THE RELATIONSHIP OF EMPLOYER-EMPLOYEE STILL EXISTS, THE
SECRETARY OF LABOR AND EMPLOYMENT OR HIS DULY AUTHORIZED REPRESENTATIVES SHALL HAVE THE
POWER TO ISSUE COMPLIANCE ORDERS TO GIVE EFFECT TO THE LABOR STANDARDS PROVISIONS OF THE
CODE AND OTHER LABOR LEGISLATION BASED ON THE FINDINGS OF THE LABOR EMPLOYMENT AND
ENFORCEMENT OFFICERS OR INDUSTRIAL SAFETY ENGINEERS MADE IN THE COURSE OF INSPECTION.
THE SECRETARY OR HIS DULY AUTHORIZED REPRESENTATIVES SHALL ISSUE WRITS OF EXECUTION TO THE
APPROPRIATE AUTHORITY FOR THE ENFORCEMENT OF THEIR ORDERS, EXCEPT IN CASES WHERE THE
EMPLOYER CONTESTS THE FINDINGS OF THE LABOR EMPLOYMENT AND ENFORCEMENT OFFICER AND
RAISES ISSUES SUPPORTED BY DOCUMENTARY PROOFS WHICH WERE NOT CONSIDERED IN THE COURSE
OF INSPECTION.

AN ORDER ISSUED BY THE DULY AUTHORIZED REPRESENTATIVE OF THE SECRETARY OF LABOR AND
EMPLOYMENT UNDER THIS ARTICLE MAY BE APPEALED TO THE LATTER. IN CASE SAID ORDER INVOLVES A
MONETARY AWARD, AN APPEAL BY THE EMPLOYER MAY BE PERFECTED ONLY UPON THE POSTING OF A
CASH OR SURETY BOND ISSUED BY A REPUTABLE BONDING COMPANY DULY ACCREDITED BY THE
SECRETARY OF LABOR AND EMPLOYMENT IN THE AMOUNT EQUIVALENT TO THE MONETARY AWARD IN
ORDER APPEALED FROM. (ITALICS SUPPLIED.)

THE RECORDS OF THE HOUSE OF REPRESENTATIVES[20] SHOW THAT CONGRESSMEN ALBERTO S. VELOSO
AND ERIBERTO V. LORETO SPONSORED THE LAW. IN HIS SPONSORSHIP SPEECH, CONGRESSMAN VELOSO
CATEGORICALLY DECLARED THAT "THIS BILL SEEKS TO DO AWAY WITH THE JURISDICTIONAL LIMITATIONS
IMPOSED THROUGH SAID RULING (REFERRING TO SERVANDO) AND TO FINALLY SETTLE ANY LINGERING
DOUBTS ON THE VISITORIAL AND ENFORCEMENT POWERS OF THE SECRETARY OF LABOR AND
EMPLOYMENT."[21] PETITIONER'S RELIANCE ON SERVANDO IS THUS UNTENABLE.

THE NEXT ISSUE IS WHETHER PETITIONER WAS ABLE TO PERFECT HIS APPEAL TO THE SECRETARY OF
LABOR AND EMPLOYMENT. ARTICLE 128 (B) OF THE LABOR CODE CLEARLY PROVIDES THAT THE APPEAL
BOND MUST BE "IN THE AMOUNT EQUIVALENT TO THE MONETARY AWARD IN THE ORDER APPEALED
FROM." THE RECORDS SHOW THAT PETITIONER FAILED TO POST THE REQUIRED AMOUNT OF THE
APPEAL BOND. HIS APPEAL WAS THEREFORE NOT PERFECTED.

IN VIEW WHEREOF, THE PETITION FOR CERTIORARI IS DISMISSED. NO PRONOUNCEMENT AS TO COSTS.

SO ORDERED.
G.R. NO. 107225 JUNE 2, 1995

ARCHILLES MANUFACTURING CORPORATION, ALBERTO YU AND ADRIAN YU, PETITIONERS,

VS.
NATIONAL LABOR RELATIONS COMMISSION, GERONIMO MANUEL, ARNULFO DIAZ, JAIME
CARUNUNGAN AND BENJAMIN RINDON, RESPONDENTS.

BELLOSILLO, J.:

THERE ARE THREE ISSUES TO BE RESOLVED IN THIS SPECIAL CIVIL ACTION FOR CERTIORARI UNDER RULE
65 OF THE REVISED RULES OF COURT, NAMELY: (A) WHETHER A WRIT OF EXECUTION IS STILL NECESSARY
TO ENFORCE THE LABOR ARBITER'S ORDER OF IMMEDIATE REINSTATEMENT PENDING APPEAL; (B)
WHETHER DISMISSAL FOR CAUSE RESULTS IN THE FORFEITURE OF THE EMPLOYEE'S RIGHT TO A 13TH
MONTH PAY; AND, (C) WHETHER THE AWARD OF ATTORNEY'S FEES IS PROPER IN THE INSTANT CASE.

ARCHILLES MANUFACTURING CORPORATION (ARCHILLES FOR BREVITY), ALBERTO YU AND ADRIAN YU

ARE THE PETITIONERS, THE LATTER TWO (2) BEING THE CHAIRMAN AND THE VICE-PRESIDENT OF
ARCHILLES, RESPECTIVELY. PRIVATE RESPONDENTS GERONIMO MANUEL, ARNULFO DIAZ, JAIME
CARUNUNGAN AND BENJAMIN RINDON WERE EMPLOYED BY ARCHILLES AS LABORERS IN ITS STEEL
FACTORY LOCATED IN BARANGAY PANDAYAN, MEYCAUAYAN, BULACAN, EACH RECEIVING A DAILY WAGE
OF P96.00.1

ARCHILLES WAS MAINTAINING A BUNKHOUSE IN THE WORK AREA WHICH SERVED AS RESTING PLACE
FOR ITS WORKERS INCLUDING PRIVATE RESPONDENTS. IN 1988 A MAULING INCIDENT NEARLY TOOK
PLACE INVOLVING A RELATIVE OF AN EMPLOYEE. AS A RESULT ARCHILLES PROHIBITED ITS WORKERS
FROM BRINGING ANY MEMBER OF THEIR FAMILY TO THE BUNKHOUSE. BUT DESPITE THIS PROHIBITION,
PRIVATE RESPONDENTS CONTINUED TO BRING THEIR RESPECTIVE FAMILIES TO THE BUNKHOUSE,
CAUSING ANNOYANCE AND DISCOMFORT TO THE OTHER WORKERS. 2 THIS WAS BROUGHT TO THE
ATTENTION OF ARCHILLES.

ON 11 MAY 1990 THE MANAGEMENT ORDERED PRIVATE RESPONDENT TO REMOVE THEIR FAMILIES
FROM THE BUNKHOUSE AND TO EXPLAIN THEIR VIOLATION OF THE COMPANY RULE. PRIVATE
RESPONDENTS REMOVE THEIR FAMILIES FROM THE PREMISES BUT FAILED TO REPORT TO THE
MANAGEMENT AS REQUIRED; INSTEAD, THEY ABSENTED THEMSELVES FROM 14 TO 18 MAY 1990.
CONSEQUENTLY, ON 18 MAY 1990, ARCHILLES TERMINATED THEIR EMPLOYMENT FOR ABANDONMENT
AND FOR VIOLATION OF THE COMPANY RULE REGARDING THE USE OF THE BUNKHOUSE. 3

PRIVATE RESPONDENTS FILED A COMPLAINT FOR ILLEGAL DISMISSAL. ON 10 JULY 1991 THE LABOR
ARBITER FOUND THE DISMISSAL OF PRIVATE RESPONDENTS ILLEGAL AND ORDERED THEIR
REINSTATEMENT AS WELL AS THE PAYMENT TO THEM THE BACKWAGES, PROPORTIONATE 13TH MONTH
PAY FOR THE YEAR 1990 AND ATTORNEY'S
FEES. 4 ARCHILLES APPEALED.

ON 10 SEPTEMBER 1991 PRIVATE RESPONDENT FILED WITH PUBLIC RESPONDENT NATIONAL LABOR
RELATIONS COMMISSION A MOTION FOR THE ISSUANCE OF A WRIT OF EXECUTION FOR THEIR
IMMEDIATE REINSTATEMENT, PENDING APPEAL, EITHER PHYSICALLY OR IN THE COMPANY PAYROLL. ON
19 SEPTEMBER 1991 ARCHILLES OPPOSED THE MOTION.

SINCE NO ACTION WAS TAKEN BY NLRC ON THE MOTION OF 10 SEPTEMBER 1991, PRIVATE
RESPONDENTS FILED A SIMILAR MOTION ON 15 JULY 1992. BOTH MOTIONS HOWEVER HAVE REMAINED
UNRESOLVED.

ON 11 AUGUST 1992 NLRC VACATED AND SET ASIDE THE DECISION OF THE LABOR ARBITER AND RULED
THAT THE DISMISSAL OF PRIVATE RESPONDENTS WAS VALID SINCE THEY WILFULLY DISOBEYED A
LAWFUL ORDER OF THEIR EMPLOYER REQUIRING THEM TO EXPLAIN THEIR INFRACTION OF A COMPANY
RULE. IN THE DISPUTE PART OF ITS DECISION, HOWEVER, NLRC ORDERED ARCHILLES TO PAY PRIVATE
RESPONDENTS THEIR "WITHHELD" SALARIES FROM 19 SEPTEMBER 1991 WHEN IT FILED ITS OPPOSITION
TO THE MOTION FOR ISSUANCE OF A WRIT OF EXECUTION UNTIL THE PROMULGATION OF THE NLRC
DECISION (11 AUGUST 1992) ON THE GROUND THAT THE ORDER OF REINSTATEMENT OF THE LABOR
ARBITER WAS IMMEDIATELY EXECUTORY, EVEN PENDING APPEAL. AND SINCE ARCHILLES IN ITS
OPPOSITION ALLEGED THAT ACTUAL REINSTATEMENT WAS NO LONGER POSSIBLE AS IT WOULD AFFECT
THE PEACE AND ORDER SITUATION IN THE STEEL FACTORY, CLEARLY, ARCHILLES HAD OPTED FOR PAYROLL
REINSTATEMENT OF PRIVATE RESPONDENTS. NLRC ALSO ORDERED ARCHILLES TO PAY THEIR
PROPORTIONATE 13TH MONTH PAY FOR 1990 AND P12,351.30 REPRESENTING 10% OF THE TOTAL
JUDGMENT AWARD OF P123,513.00 AS ATTORNEY'S FEES. 5

THEIR MOTION FOR PARTIAL RECONSIDERATION HAVING BEEN DENIED BY PUBLIC RESPONDENT IN ITS
RESOLUTION OF 8 SEPTEMBER 1992, PETITIONERS FILED THE INSTANT PETITION PRAYING THAT THE
QUESTIONED NLRC DECISION OF 11 AUGUST 1992 AS WELL AS ITS RESOLUTION OF 8 SEPTEMBER 1992
BE PARTIALLY ANNULLED IN CONNECTION WITH THE AWARD OF "WITHHELD" SALARIES,
PROPORTIONATE 13TH MONTH PAY AND ATTORNEY'S FEES.

AS REGARDS THE FIRST ISSUE, I.E., WHETHER A WRIT OF EXECUTION IS STILL NECESSARY TO ENFORCE
THE LABOR ARBITER'S ORDER OF IMMEDIATE REINSTATEMENT EVEN WHEN PENDING APPEAL, WE
AGREE WITH PETITIONERS THAT IT IS NECESSARY. THE THIRD PARAGRAPH OF ART. 223 OF THE LABOR
CODE PROVIDES —

IN ANY EVENT, THE DECISION OF THE LABOR ARBITER REINSTATING A DISMISSED OR SEPARATED
EMPLOYEE, INSOFAR AS THE REINSTATEMENT ASPECT IS CONCERNED, SHALL BE IMMEDIATELY
EXECUTORY, EVEN PENDING APPEAL. THE EMPLOYEE SHALL EITHER BE ADMITTED BACK TO WORK
UNDER THE SAME TERMS AND CONDITIONS PREVAILING PRIOR TO HIS DISMISSAL OR SEPARATION OR,
AT THE OPTION OF THE EMPLOYER, MERELY REINSTATED IN THE PAYROLL. THE POSTING OF THE BOND BY
THE EMPLOYER SHALL NOT STAY THE EXECUTION FOR REINSTATEMENT PROVIDED HEREIN.

WE HAVE FULLY EXPLAINED THE LEGAL BASIS FOR THIS CONCLUSION IN MARANAW HOTEL RESORT
CORPORATION (CENTURY PARK SHERATON MANILA) V. NLRC AND GINA G. CASTRO 6 THUS —

IT MUST BE STRESSED, HOWEVER, THAT ALTHOUGH THE REINSTATEMENT ASPECT OF THE DECISION IS
IMMEDIATELY EXECUTORY, IT DOES NOT FOLLOW THAT IT IS SELF-EXECUTORY. THERE MUST BE A WRIT
OF EXECUTION WHICH MAY BE ISSUED MOTU PROPRIO OR ON MOTION OF AN INTERESTED PARTY.
ARTICLE 224 OF THE LABOR CODE PROVIDES:

ART. 224. EXECUTION OF DECISIONS, ORDERS OR AWARDS. — (A) THE SECRETARY OF LABOR AND
EMPLOYMENT OR ANY REGIONAL DIRECTOR, THE COMMISSION OR ANY LABOR ARBITER, OR MED-
ARBITER OR VOLUNTARY ARBITRATOR MAY, MOTU PROPRIO OR ON MOTION OF ANY INTERESTED PARTY,
ISSUE A WRIT OF EXECUTION ON A JUDGMENT WITHIN FIVE (5) YEARS FROM THE DATE IT BECOMES
FINAL AND EXECUTORY . . . .

THE SECOND PARAGRAPH OF SECTION 1, RULE XVIII OF THE NEW RULES OF PROCEDURE OF THE NLRC
ALSO PROVIDES:

THE LABOR ARBITER, POEA ADMINISTRATOR, OR THE REGIONAL DIRECTOR, OR HIS DULY AUTHORIZED
HEARING OFFICER OF ORIGIN SHALL, MOTU PROPRIO OR UPON MOTION OF ANY INTERESTED PARTY,
ISSUE A WRIT OF EXECUTION ON A JUDGMENT ONLY WITHIN FIVE (5) YEARS FROM THE DATE IT
BECOMES FINAL AND EXECUTORY . . . . NO MOTION FOR EXECUTION SHALL BE ENTERTAINED NOR A
WRIT BE ISSUED UNLESS THE LABOR ARBITER IS IN POSSESSION OF THE RECORDS OF THE CASE WHICH
SHALL INCLUDE AN ENTRY OF JUDGMENT.

IN THE ABSENCE . . . OF AN ORDER FOR THE ISSUANCE OF A WRIT OF EXECUTION ON THE

REINSTATEMENT ASPECT OF THE DECISION OF THE LABOR ARBITER, THE PETITIONER WAS UNDER NO
LEGAL OBLIGATION TO ADMIT BACK TO WORK THE PRIVATE RESPONDENT UNDER THE TERMS AND
CONDITIONS PREVAILING PRIOR TO HER DISMISSAL OR, AT THE PETITIONER'S OPTION, TO MERELY
REINSTATE HER IN THE PAYROLL. AN OPTION IS A RIGHT OF ELECTION TO EXERCISE A PRIVILEGE, AND
THE OPTION IN ARTICLE 223 OF THE LABOR CODE IS EXCLUSIVELY GRANTED TO THE EMPLOYER. THE
EVENT THAT GIVES RISE FOR ITS EXERCISE IS NOT THE REINSTATEMENT DECREE OF THE LABOR ARBITER,
BUT THE WRIT FOR ITS EXECUTION COMMANDING THE EMPLOYER TO REINSTATE THE EMPLOYEE, WHILE
THE FINAL ACT WHICH COMPELS THE EMPLOYER TO EXERCISE THE OPTION IS THE SERVICE UPON IT OF
THE WRIT OF EXECUTION WHEN, INSTEAD OF ADMITTING THE EMPLOYEE BACK TO HIS WORK, THE
EMPLOYEE CHOOSES TO REINSTATE THE EMPLOYEE IN THE PAYROLL ONLY. IF THE EMPLOYER DOES NOT
EXERCISE THIS OPTION, IT MUST FORTHWITH ADMIT THE EMPLOYEE BACK TO WORK, OTHERWISE IT
MAY BE PUNISHED FOR CONTEMPT.
IN THE CASE AT BENCH, THERE WAS NO OCCASION FOR PETITIONERS TO EXERCISE THEIR OPTION UNDER
ART. 223 OF THE LABOR CODE IN CONNECTION WITH THE REINSTATEMENT ASPECT OF THE DECISION OF
THE LABOR ARBITER. THE MOTIONS OF PRIVATE RESPONDENTS FOR THE ISSUANCE OF A WRIT OF
EXECUTION WERE NOT ACTED UPON BY NLRC. IT WAS NOT SHOWN THAT RESPONDENT EXERTED
EFFORTS TO HAVE THEIR MOTIONS RESOLVED. THEY ARE DEEMED TO HAVE ABANDONED THEIR
MOTIONS FOR EXECUTION PENDING APPEAL. THEY CANNOT NOW ASK THAT THE WRIT OF EXECUTION
BE ISSUED SINCE THEIR DISMISSAL WAS FOUND TO BE FOR CAUSE.

ON THE SECOND ISSUE, WHICH REFERS TO THE PROPRIETY OF THE AWARD OF A 13TH MONTH PAY,
PARAGRAPH 6 OF THE REVISED GUIDELINES ON THE IMPLEMENTATION OF THE 13TH MONTH PAY LAW
(P. D. 851) PROVIDES THAT "(A)N EMPLOYEE WHO HAS RESIGNED OR WHOSE SERVICES WERE
TERMINATED AT ANY TIME BEFORE THE PAYMENT OF THE 13TH MONTH PAY IS ENTITLED TO THIS
MONETARY BENEFIT IN PROPORTION TO THE LENGTH OF TIME HE WORKED DURING THE YEAR,
RECKONED FROM THE TIME HE STARTED WORKING DURING THE CALENDAR YEAR UP TO THE TIME OF
HIS RESIGNATION OR TERMINATION FROM THE
SERVICE . . . THE PAYMENT OF THE 13TH MONTH PAY MAY BE DEMANDED BY THE EMPLOYEE UPON THE
CESSATION OF EMPLOYER-EMPLOYEE RELATIONSHIP. THIS IS CONSISTENT WITH THE PRINCIPLE OF
EQUITY THAT AS THE EMPLOYER CAN REQUIRE THE EMPLOYEE TO CLEAR HIMSELF OF ALL LIABILITIES
AND PROPERTY ACCOUNTABILITY, SO CAN THE EMPLOYEE DEMAND THE PAYMENT OF ALL BENEFITS DUE
HIM UPON THE TERMINATION OF THE RELATIONSHIP."

FURTHERMORE, SEC. 4 OF THE ORIGINAL IMPLEMENTING RULES OF P.D. 851 MANDATES EMPLOYERS TO
PAY THEIR EMPLOYEES A 13TH MONTH PAY NOT LATER THAN THE 24TH OF DECEMBER EVERY YEAR
PROVIDED THAT THEY HAVE WORKED FOR AT LEAST ONE (1) MONTH DURING A CALENDAR YEAR. IN
EFFECT, THIS STATUTORY BENEFIT IS AUTOMATICALLY VESTED IN THE EMPLOYEE WHO HAS AT LEAST
WORKED FOR ONE MONTH DURING THE CALENDAR YEAR. AS CORRECTLY STATED BY THE SOLICITOR
GENERAL, SUCH BENEFIT MAY NOT BE LOST OR FORFEITED EVEN IN THE EVENT OF THE EMPLOYEE'S
SUBSEQUENT DISMISSAL FOR CAUSE WITHOUT VIOLATING HIS PROPERTY RIGHTS.

WITH RESPECT TO THE THIRD ISSUE, THE DISPUTED ATTORNEY'S FEES CAN ONLY BE ASSESSED IN CASES
OF UNLAWFUL WITHHOLDING OF WAGES. 7 IT CANNOT BE SAID THAT PETITIONERS WERE GUILTY OF
UNLAWFULLY WITHHOLDING PRIVATE RESPONDENTS' SALARIES SINCE, AS EARLIER DISCUSSED, THE
OCCASION NEVER AROSE FOR THEM TO EXERCISE THAT OPTION UNDER ART. 223 OF THE LABOR CODE.
CLEARLY, THE AWARD OF ATTORNEY'S FEES IS BASELESS.

WHEREFORE, THE INSTANT PETITION IS PARTLY GRANTED. THE CHALLENGED DECISION OF THE
NATIONAL LABOR RELATIONS COMMISSION DATED 11 AUGUST 1992 IS MODIFIED BY DELETING THAT
PORTION ORDERING PETITIONERS TO PAY PRIVATE RESPONDENTS THEIR SALARIES FROM 19 SEPTEMBER
1991 TO 20 SEPTEMBER 1992 AS WELL AS THAT PORTION AWARDING 10% OF THE TOTAL JUDGMENT
AWARD AS ATTORNEY'S FEES FOR LACK OF LEGAL AND FACTUAL BASIS. IN OTHER RESPECTS, THE
DECISION IS AFFIRMED.

SO ORDERED.
[G.R. NO. 120473. JUNE 23, 1999]

ULTRA VILLA FOOD HAUS, AND/OR ROSIE TIO PETITIONERS, VS. RENATO GENISTON, NATIONAL LABOR
RELATIONS COMMISSION PRESIDING COMMISSIONER (4TH DIVISION), RESPONDENTS.
DECISION
KAPUNAN, J.:

THIS SPECIAL CIVIL ACTION FOR CERTIORARI STEMS FROM A COMPLAINT FOR ILLEGAL DISMISSAL FILED
BY RENATO GENISTON, PRIVATE RESPONDENT HEREIN, AGAINST THE ULTRA VILLA FOOD HAUS
RESTAURANT AND/OR ITS ALLEGED OWNER ROSIE TIO. PRIVATE RESPONDENT ALLEGED THAT HE WAS
EMPLOYED AS A DO IT ALL GUY, ACTING AS WAITER, DRIVER, AND MAINTENANCE MAN, IN SAID
RESTAURANT. HIS EMPLOYMENT THEREIN SPANNED FROM MARCH 1, 1989 UNTIL HE WAS DISMISSED
ON MAY 13, 1992. FOR HIS SERVICES, PRIVATE RESPONDENT WAS PAID P60.00 IN 1989, P70.00 IN 1990,
P80.00 IN 1991 AND P90.00 WHEN HE WAS DISMISSED IN 1992.

DURING THE ELECTIONS OF MAY 11, 1992, PRIVATE RESPONDENT ACTED AS A POLL WATCHER FOR THE
NATIONAL UNION OF CHRISTIAN DEMOCRATS. THE COUNTING OF VOTES LASTED UNTIL 3:00 P.M. THE
NEXT DAY, MAY 12. PRIVATE RESPONDENT DID NOT REPORT FOR WORK ON BOTH DAYS ON ACCOUNT OF
HIS POLL-WATCHING.

UPON ARRIVING HOME ON MAY 12, PRIVATE RESPONDENT DISCOVERED THAT TIO HAD PHONED HIS
MOTHER THAT MORNING. TIO ALLEGEDLY GAVE HIS MOTHER AN INSCRUTABLE VERBAL LASHING, AND
INFORMED THE LATTER THAT PRIVATE RESPONDENT WAS DISMISSED FROM WORK. ON MAY 13, 1992,
PRIVATE RESPONDENT WENT TO TIOS RESIDENCE TO PLEAD HIS CASE ONLY TO BE SUBJECTED TO A
BROW BEATING BY TIO WHO EVEN ATTEMPTED TO FORCE HIM TO SIGN A RESIGNATION LETTER.

PRIVATE RESPONDENT PRAYED THAT THE LABOR ARBITER ORDER PETITIONER TIO TO PAY HIM OVERTIME
PAY, PREMIUM PAY, HOLIDAY PAY, SERVICE INCENTIVE LEAVE PAY, SALARY DIFFERENTIAL AND 13TH
MONTH PAY. HE LIKEWISE PRAYED FOR REINSTATEMENT PLUS BACKWAGES OR, IN THE ALTERNATIVE,
SEPARATION PAY, AS WELL AS MORAL DAMAGES, EXEMPLARY DAMAGES AND ATTORNEYS FEES.

PETITIONER ROSIE TIO, ON THE OTHER HAND, MAINTAINED THAT PRIVATE RESPONDENT WAS HER
PERSONAL DRIVER, NOT AN EMPLOYEE OF THE ULTRA VILLA FOOD HAUS. AS PETITIONERS PERSONAL
DRIVER, PRIVATE RESPONDENT WAS REQUIRED TO REPORT FOR WORK AT 7:00 A.M. TO DRIVE
PETITIONER TO MANDAUE CITY WHERE PETITIONER WORKED AS THE MANAGER OF THE CFC
CORPORATION. ACCORDINGLY, PRIVATE RESPONDENT WAS PAID P65.00 A DAY IN 1989 WHICH WAS
GRADUALLY INCREASED TO P70.00 THEN TO P90.00. PRIVATE RESPONDENT WAS LIKEWISE GIVEN FREE
MEALS AS WELL AS 13TH MONTH PAY AT THE END OF THE YEAR. PETITIONER DENIED DISMISSING
PRIVATE RESPONDENT WHOM SHE CLAIMED ABANDONED HIS JOB.

THOUGH WELL AWARE THAT MAY 12, 1992 WAS A HOLIDAY, PETITIONER CALLED UP PRIVATE
RESPONDENT THAT DAY TO ASK HIM TO REPORT FOR WORK AS SHE HAD SOME IMPORTANT MATTERS
TO ATTEND TO. PRIVATE RESPONDENTS WIFE, HOWEVER, COLDLY TOLD PETITIONER THAT PRIVATE
RESPONDENT WAS HELPING IN THE COUNTING OF BALLOTS. PETITIONER WAS THUS FORCED TO HIRE
ANOTHER DRIVER TO REPLACE PRIVATE RESPONDENT. PRIVATE RESPONDENT CAME BACK A WEEK AFTER
BUT ONLY TO COLLECT HIS SALARY.

THE LABOR ARBITER FOUND THAT PRIVATE RESPONDENT WAS INDEED PETITIONERS PERSONAL DRIVER.
PRIVATE RESPONDENTS CLAIM THAT HE WAS AN EMPLOYEE OF THE ULTRA VILLA FOOD HAUS WAS
DEEMED BY THE LABOR ARBITER TO BE A MERE AFTERTHOUGHT, CONSIDERING THAT:
X X X. IN HIS VERIFIED COMPLAINT, COMPLAINANT STATES THAT THE NATURE OF HIS WORK POSITION
WAS A DRIVER. IF IT [WERE] TRUE THAT HE WAS MADE TO PERFORM THESE FUNCTIONS AS A WAITER, IT
WOULD BE INCONGRUOUS WITH THE POSITION OF A DRIVER. THE NATURE OF THE POSITION OF A
WAITER IS ONE THAT REQUIRES HIM TO BE AT THE PLACE OF WORK AT ALL TIMES WHILE THAT OF A
DRIVER, COMPLAINANT HAD TO BE AWAY FROM THE RESTAURANT AT ALL TIMES. AT ANY RATE, AN
ADMISSION IS MADE THAT HE WAS ONLY A PERSONAL DRIVER OF THE INDIVIDUAL RESPONDENT.[1]

THE ADMISSION REFERRED TO ABOVE IS CONTAINED IN THE MANDATORY CONFERENCE ORDER ISSUED
BY THE LABOR ARBITER ON JANUARY 10, 1994, TO WIT:

ALSO ON THIS DATE, THE FOLLOWING MATTERS WERE THRESHED OUT:

THAT COMPLAINANT STARTED HIS EMPLOYMENT WITH THE INDIVIDUAL RESPONDENT AS THE LATTERS
PERSONAL DRIVER ON MARCH 1, 1989 AND THE LAST DAY OF HIS SERVICE WAS ON MAY 13, 1992;[2]

THE LABOR ARBITER CONCLUDED THAT PRIVATE RESPONDENT, BEING A PERSONAL DRIVER, WAS NOT
ENTITLED TO OVERTIME PAY, PREMIUM PAY, SERVICE INCENTIVE LEAVE PAY AND 13TH MONTH PAY.
PRIVATE RESPONDENTS CLAIM FOR SALARY DIFFERENTIAL WAS LIKEWISE DENIED SINCE HE RECEIVED A
DAILY SALARY OF P90.00 WHICH IS MORE THAN THAT SET BY LAW.[3]

NEITHER WAS PRIVATE RESPONDENT AWARDED SEPARATION PAY. WHILE THE HIRING OF A SUBSTITUTE
DRIVER AMOUNTED TO A CONSTRUCTIVE DISMISSAL, THE LABOR ARBITER RULED THAT THE SAME WAS
JUSTIFIED IN VIEW OF PETITIONERS DIRE NEED FOR THE SERVICES OF A DRIVER.

THE LABOR ARBITER, HOWEVER, NOTED THAT PETITIONER FAILED TO COMPLY WITH PROCEDURAL DUE
PROCESS IN DISMISSING PRIVATE RESPONDENT AND THUS ORDERED THE FORMER TO INDEMNIFY THE
LATTER THE AMOUNT OF P1,000.00. THE DISPOSITIVE PORTION OF THE LABOR ARBITER'S DECISION
STATES:

WHEREFORE, IN THE LIGHT OF THE FOREGOING PREMISES, JUDGMENT IS RENDERED FINDING

COMPLAINANT'S DISMISSAL FOR A VALID CAUSE. COMPLAINT IS HEREBY ORDERED DISMISSED.
HOWEVER, RESPONDENT IS DIRECTED TO INDEMNIFY COMPLAINANT THE AMOUNT OF P1,000.00 FOR
FAILURE TO OBSERVE THE DUE PROCESS REQUIREMENT BEFORE DISMISSING THE COMPLAINANT.

SO ORDERED.[4]

BOTH PARTIES APPEALED THE DECISION OF THE LABOR ARBITER TO THE NATIONAL LABOR RELATIONS
COMMISSION (NLRC).

PETITIONER QUESTIONED THE LABOR ARBITERS DECISION INSOFAR AS IT REQUIRED HER TO PAY PRIVATE
RESPONDENT THE AMOUNT OF P1,000.00. PETITIONER MAINTAINED THAT PRIVATE RESPONDENT
ABANDONED HIS JOB, AND WAS NOT CONSTRUCTIVELY DISMISSED AS FOUND BY THE LABOR ARBITER.
PETITIONER CONCLUDED THAT SHE COULD NOT BE HELD LIABLE FOR FAILING TO OBSERVE PROCEDURAL
DUE PROCESS IN DISMISSING PRIVATE RESPONDENT, THERE BEING NO DISMISSAL TO SPEAK OF.

ON THE OTHER HAND, PRIVATE RESPONDENT DENIED ADMITTING THAT HE WAS EMPLOYED AS
PETITIONERS PERSONAL DRIVER. HE ALLEGED THAT WHAT WAS ADMITTED DURING THE MANDATORY
CONFERENCE WAS THAT HE WAS MADE TO DRIVE FOR THE MANAGER AND HIS WIFE (PETITIONER) ON
TOP OF HIS OTHER DUTIES WHICH WERE NECESSARY AND DESIRABLE TO PETITIONERS BUSINESS.
PRIVATE RESPONDENT LIKEWISE MAINTAINED HIS CLAIM THAT HE WAS UNJUSTLY DISMISSED,
CONTENDING THAT HIS ABSENCE ON MAY 11 AND 12, 1992 DID NOT WARRANT DISMISSAL SINCE THOSE
DAYS WERE OFFICIAL HOLIDAYS.

THE NLRC FOUND PRIVATE RESPONDENTS ARGUMENTS MERITORIOUS, AND ORDERED PETITIONER TO
REINSTATE PRIVATE RESPONDENT AND TO PAY HIM THE SUM OF P45,311.55 IN BACKWAGES, OVERTIME
PAY, PREMIUM PAY FOR HOLIDAY AND REST DAYS, 13TH MONTH PAY, AND SERVICE INCENTIVE PAY. THUS:

WHEREFORE, THE RESPONDENTS ARE HEREBY ORDERED TO REINSTATE THE COMPLAINANT WITH
BACKWAGES FIXED FOR 6 MONTHS AS HE DELAYED IN FILING THIS CASE.

THE RESPONDENTS ARE LIKEWISE ORDERED TO PAY THE COMPLAINANT HIS OVERTIME PAY, HOLIDAY PAY,
PREMIUM PAY FOR HOLIDAY AND REST DAY, 13TH MONTH PAY, AND SERVICE INCENTIVE LEAVE
COVERING THE PERIOD FROM OCTOBER 28, 1990 TO MAY 10, 1992.

COMPLAINANT'S BACKWAGES UP TO THE TIME OF THIS DECISION AND HIS OTHER MONETARY CLAIMS
AS COMPUTED BY NAZARINA C. CABAHUG, FISCAL EXAMINER II OF THE COMMISSION ARE THE
FOLLOWING:

X X X.

SUMMARY

1) BACKWAGES P 14, 130.00

2) OVERTIME PAY P 22, 060.00

3) HOLIDAY PAY; PREMIUM PAY FOR HOLIDAY P 1,554.00

4) PREMIUM PAY FOR REST DAY P 1,683.00

5) 13TH MONTH PAY P 5,484.55

6) SERVICE INCENTIVE LEAVE P 400.00

TOTAL P 45,311.55

SO ORDERED.[5]

ACTING ON THE PARTIES RESPECTIVE MOTIONS FOR RECONSIDERATION, THE NLRC GRANTED PRIVATE
RESPONDENT SEPARATION PAY IN LIEU OF REINSTATEMENT ON ACCOUNT OF THE ESTABLISHMENTS
CLOSURE BUT DENIED HIS PRAYER FOR MORAL, ACTUAL AND EXEMPLARY DAMAGES, AND ATTORNEYS
FEES. THE NLRC ALSO DENIED PETITIONERS MOTION, REITERATING ITS EARLIER RULING THAT PRIVATE
RESPONDENT WAS AN EMPLOYEE OF THE ULTRA VILLA FOOD HAUS.

TWO ISSUES ARE THUS PRESENTED BEFORE THIS COURT:

(1) WHETHER PRIVATE RESPONDENT WAS AN EMPLOYEE OF THE ULTRA VILLA FOOD HAUS OR THE
PERSONAL DRIVER OF PETITIONER; AND

(2) WHETHER PRIVATE RESPONDENT WAS ILLEGALLY DISMISSED FROM EMPLOYMENT.

THE SOLICITOR GENERAL, IN HIS MANIFESTATION AND MOTION IN LIEU OF COMMENT, AGREES WITH
PETITIONERS SUBMISSION THAT PRIVATE RESPONDENT WAS HER PERSONAL DRIVER.[6]

WE FIND THAT PRIVATE RESPONDENT WAS INDEED THE PERSONAL DRIVER OF PETITIONER, AND NOT AN
EMPLOYEE OF THE ULTRA VILLA FOOD HAUS. THERE IS SUBSTANTIAL EVIDENCE TO SUPPORT SUCH
CONCLUSION, NAMELY:

(1) PRIVATE RESPONDENTS ADMISSION DURING THE MANDATORY CONFERENCE THAT HE WAS
PETITIONERS PERSONAL DRIVER.[7]

(2) COPIES OF THE ULTRA VILLA FOOD HAUS PAYROLL WHICH DO NOT CONTAIN PRIVATE RESPONDENTS
NAME.[8]

(3) AFFIDAVITS OF ULTRA VILLA FOOD HAUS EMPLOYEES ATTESTING THAT PRIVATE RESPONDENT WAS
NEVER AN EMPLOYEE OF SAID ESTABLISHMENT.[9]

(4) PETITIONER TIOS UNDISPUTED ALLEGATION THAT SHE WORKS AS THE BRANCH MANAGER OF THE
CFC CORPORATION WHOSE OFFICE IS LOCATED IN MANDAUE CITY. THIS WOULD SUPPORT THE LABOR
ARBITERS OBSERVATION THAT PRIVATE RESPONDENTS POSITION AS DRIVER WOULD BE INCONGRUOUS
WITH HIS FUNCTIONS AS A WAITER OF ULTRA VILLA FOOD HAUS.[10]

(5) THE JOINT AFFIDAVIT OF THE WAREHOUSEMAN AND WAREHOUSE CHECKER OF THE CFC
CORPORATION STATING THAT:

RENATO GENISTON USUALLY DRIVE[S] MRS. TIO FROM HER RESIDENCE TO THE OFFICE. THEREAFTER,
MR. GENISTON WILL WAIT FOR MRS. TIO IN HER CAR. MOST OF THE TIME, RENATO GENISTON SLEPT IN
THE CAR OF MRS. TIO AND WILL BE AWAKENED ONLY WHEN THE LATTER WILL LEAVE THE OFFICE FOR
LUNCH.

MR. GENISTON WILL AGAIN DRIVE MRS. TIO TO THE OFFICE AT AROUND 2:00 O'CLOCK IN THE
AFTERNOON AND THEREAFTER THE FORMER WILL AGAIN WAIT FOR MRS. TIO AT THE LATTER'S CAR
UNTIL MRS. TIO WILL AGAIN LEAVE THE OFFICE TO MAKE HER ROUNDS AT OUR BRANCH OFFICE AT THE
DOWNTOWN AREA.[11]

IN CONTRAST, PRIVATE RESPONDENT HAS NOT PRESENTED ANY EVIDENCE OTHER THAN HIS SELF-
SERVING ALLEGATION TO SHOW THAT HE WAS EMPLOYED IN THE ULTRA VILLA FOOD HAUS. ON THIS
ISSUE, THEREFORE, THE EVIDENCE WEIGHS HEAVILY IN PETITIONERS FAVOR. THE LABOR ARBITER THUS
CORRECTLY RULED THAT PRIVATE RESPONDENT WAS PETITIONERS PERSONAL DRIVER AND NOT AN
EMPLOYEE OF THE SUBJECT ESTABLISHMENT.
ACCORDINGLY, THE TERMS AND CONDITIONS OF PRIVATE RESPONDENTS EMPLOYMENT ARE GOVERNED
BY CHAPTER III, TITLE III, BOOK III OF THE LABOR CODE[12] AS WELL AS BY THE PERTINENT PROVISIONS
OF THE CIVIL CODE.[13] THUS, ARTICLE 141 OF THE LABOR CODE PROVIDES:

ART. 141. COVERAGE. - THIS CHAPTER SHALL APPLY TO ALL PERSONS RENDERING SERVICES IN
HOUSEHOLDS FOR COMPENSATION.

DOMESTIC OR HOUSEHOLD SERVICE SHALL MEAN SERVICES IN THE EMPLOYERS HOME WHICH IS
USUALLY NECESSARY OR DESIRABLE FOR THE MAINTENANCE AND ENJOYMENT THEREOF AND INCLUDES
MINISTERING TO THE PERSONAL COMFORT AND CONVENIENCE OF THE MEMBERS OF THE EMPLOYERS
HOUSEHOLD, INCLUDING SERVICES OF FAMILY DRIVERS. (UNDERSCORING SUPPLIED.)

CHAPTER III, TITLE III, BOOK III, HOWEVER, IS SILENT ON THE GRANT OF OVERTIME PAY, HOLIDAY PAY,
PREMIUM PAY AND SERVICE INCENTIVE LEAVE TO THOSE ENGAGED IN THE DOMESTIC OR HOUSEHOLD
SERVICE.

MOREOVER, THE SPECIFIC PROVISIONS MANDATING THESE BENEFITS ARE FOUND IN BOOK III, TITLE I OF
THE LABOR CODE,[14] AND ARTICLE 82, WHICH DEFINES THE SCOPE OF THE APPLICATION OF THESE
PROVISIONS, EXPRESSLY EXCLUDES DOMESTIC HELPERS FROM ITS COVERAGE:

ART. 82. COVERAGE. - THE PROVISION OF THIS TITLE SHALL APPLY TO EMPLOYEES IN ALL
ESTABLISHMENTS AND UNDERTAKINGS WHETHER FOR PROFIT OR NOT, BUT NOT TO GOVERNMENT
EMPLOYEES, MANAGERIAL EMPLOYEES, FIELD PERSONNEL, MEMBERS OF THE FAMILY OF THE EMPLOYER
WHO ARE DEPENDENT ON HIM FOR SUPPORT, DOMESTIC HELPERS, PERSONS IN THE PERSONAL SERVICE
OF ANOTHER, AND WORKERS WHO ARE PAID BY RESULTS AS DETERMINED BY THE SECRETARY OF LABOR
IN APPROPRIATE REGULATIONS. (UNDERSCORING SUPPLIED.)

THE LIMITATIONS SET OUT IN THE ABOVE ARTICLE ARE ECHOED IN BOOK III OF THE OMNIBUS RULES
IMPLEMENTING THE LABOR CODE.[15]

CLEARLY THEN, PETITIONER IS NOT OBLIGED BY LAW TO GRANT PRIVATE RESPONDENT ANY OF THESE
BENEFITS.

EMPLOYING THE SAME LINE OF ANALYSIS, IT WOULD SEEM THAT PRIVATE RESPONDENT IS NOT
ENTITLED TO13 MONTH PAY. THE REVISED GUIDELINES ON THE IMPLEMENTATION OF THE 13TH MONTH
PAY LAW ALSO EXCLUDES EMPLOYERS OF HOUSEHOLD HELPERS FROM THE COVERAGE OF PRESIDENTIAL
DECREE NO. 851, THUS:

2. EXEMPTED EMPLOYERS

THE FOLLOWING EMPLOYERS ARE STILL NOT COVERED BY P.D. NO. 851:

A. X X X;

B. EMPLOYERS OF HOUSEHOLD HELPERS X X X;

C. X X X,
D. X X X.

NEVERTHELESS, WE DEEM IT JUST TO AWARD PRIVATE RESPONDENT 13TH MONTH PAY IN VIEW OF
PETITIONERS PRACTICE OF ACCORDING PRIVATE RESPONDENT SUCH BENEFIT. INDEED, PETITIONER
ADMITTED THAT SHE GAVE PRIVATE RESPONDENT 13TH MONTH PAY EVERY DECEMBER.[16]

II

WE COME NOW TO THE ISSUE OF PRIVATE RESPONDENTS DISMISSAL. PETITIONER SUBMITS THAT
PRIVATE RESPONDENT ABANDONED HIS JOB, PREFERRING TO WORK AS AN ELECTION WATCHER
INSTEAD.

WE DO NOT AGREE. TO CONSTITUTE ABANDONMENT, TWO REQUISITES MUST CONCUR: (1) THE FAILURE
TO REPORT TO WORK OR ABSENCE WITHOUT VALID OR JUSTIFIABLE REASON, AND (2) A CLEAR
INTENTION TO SEVER THE EMPLOYER-EMPLOYEE RELATIONSHIP AS MANIFESTED BY SOME OVERT ACTS,
WITH THE SECOND REQUISITE AS THE MORE DETERMINATIVE FACTOR.[17] THE BURDEN OF PROVING
ABANDONMENT AS A JUST CAUSE FOR DISMISSAL IS ON THE EMPLOYER.[18] PETITIONER FAILED TO
DISCHARGE THIS BURDEN. THE ONLY EVIDENCE ADDUCED BY PETITIONER TO PROVE ABANDONMENT IS
HER AFFIDAVIT, THE PERTINENT PORTION OF WHICH STATES:

ON MAY 12, 1992, A DAY AFTER THE ELECTION, COMPLAINANT WAS AGAIN ABSENT. SINCE IT WAS A
HOLIDAY AND I HAVE NO WORK ON THAT DAY, I JUST DID NOT BOTHER TO CALL UP COMPLAINANT.
ALTHOUGH THE FOLLOWING DAY WAS STILL A HOLIDAY, I CALLED UP COMPLAINANT TO INFORM HIM
THAT HE HAS TO REPORT FOR WORK AS I WILL REPORT TO THE OFFICE TO DO SOME IMPORTANT THINGS
THERE. UNFORTUNATELY, COMPLAINANTS WIFE INSTEAD COLDLY TOLD ME THAT COMPLAINANT WAS
FETCHED BY THE LATTERS UNCLE TO HELP IN THE COUNTING OF BALLOTS. I THEN TOLD HIS WIFE TO LET
COMPLAINANT CHOOSE BETWEEN HIS JOB WITH ME OR THAT OF ELECTION WATCHER. THE FOLLOWING
DAY, I WAS INFORMED AGAIN BY COMPLAINANTS WIFE THAT HE IS NO LONGER INTERESTED TO WORK
WITH ME AS HE IS EARNING MORE AS ELECTION WATCHER. I WAS REALLY DISENCHANTED TO KNOW HIS
RESPON[SE] AS ALL OF A SUDDEN, I HAVE NO DRIVER TO DRIVE ME TO MY PLACE OF WORK.
NEVERTHELESS, I HAVE NO OTHER CHOICE TO ACCEPT IT AS I CAN NOT ALSO FORCED HIM TO CONTINUE
WORKING WITH ME. HENCE, I WAS REALLY INCONVENIENCE FOR ABOUT A WEEK DUE TO THE ABSENCE
OF A DRIVER.

COMPLAINANT THEN COLLECTED HIS SALARY AFTER ONE WEEKS ABSENCE.[19]

IT IS QUITE UNBELIEVABLE THAT PRIVATE RESPONDENT WOULD LEAVE A STABLE AND RELATIVELY WELL
PAYING JOB AS PETITIONERS FAMILY DRIVER TO WORK AS AN ELECTION WATCHER. THOUGH THE LATTER
MAY PAY MORE IN A DAY, ELECTIONS IN THIS COUNTRY ARE SO FAR IN BETWEEN THAT IT IS UNLIKELY
THAT ANY PERSON WOULD ABANDON HIS JOB TO EMBARK ON A CAREER AS AN ELECTION WATCHER,
THE FUNCTIONS OF WHICH ARE SEASONAL AND TEMPORARY IN NATURE. CONSEQUENTLY, WE DO NOT
FIND PRIVATE RESPONDENT TO HAVE ABANDONED HIS JOB. HIS DISMISSAL FROM PETITIONERS EMPLOY
BEING UNJUST, PETITIONER IS ENTITLED TO AN INDEMNITY UNDER ARTICLE 149 OF THE LABOR CODE:
[20]

ART. 149. INDEMNITY FOR UNJUST TERMINATION OF SERVICES. IF THE PERIOD OF HOUSEHOLD SERVICE
IS FIXED, NEITHER THE EMPLOYER NOR THE HOUSEHELPER MAY TERMINATE THE CONTRACT BEFORE
THE EXPIRATION OF THE TERM, EXCEPT FOR A JUST CAUSE. IF THE HOUSEHELPER IS UNJUSTLY
DISMISSED, HE OR SHE SHALL BE PAID THE COMPENSATION ALREADY EARNED PLUS THAT FOR FIFTEEN
(15) DAYS BY WAY OF INDEMNITY.

IF THE HOUSEHELPER LEAVES WITHOUT JUSTIFIABLE REASON HE OR SHE SHALL FORFEIT ANY UNPAID
SALARY DUE HIM OR HER NOT EXCEEDING FIFTEEN (15) DAYS. (UNDERSCORING SUPPLIED.)

PETITIONER LIKEWISE CONCEDES THAT SHE FAILED TO COMPLY WITH DUE PROCESS IN DISMISSING
PRIVATE RESPONDENT SINCE PRIVATE RESPONDENT HAD ALREADY ABANDONED HIS JOB.[21] AS WE
HAVE SHOWN EARLIER HOWEVER, PETITIONERS THEORY OF ABANDONMENT HAS NO LEG TO STAND ON,
AND WITH IT, HER ATTEMPTS TO JUSTIFY HER FAILURE TO ACCORD DUE PROCESS MUST ALSO FALL.
ACCORDINGLY, PRIVATE RESPONDENT IS ORDERED TO PAY PRIVATE RESPONDENT THE SUM OF
P1,000.00.[22]

WHEREFORE, THE DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION IS HEREBY REVERSED
AND A NEW ONE ENTERED DECLARING:

(1) PRIVATE RESPONDENT RENATO GENISTON, THE PERSONAL DRIVER OF PETITIONER ROSIE TIO, AND
NOT AN EMPLOYEE OF THE ULTRA VILLA FOOD HAUS;

(2) THE DISMISSAL OF PRIVATE RESPONDENT TO BE WITHOUT A VALID CAUSE AND WITHOUT DUE
PROCESS. ACCORDINGLY, PETITIONER ROSIE TIO IS ORDERED TO PAY PRIVATE RESPONDENT:

(A) THIRTEENTH MONTH PAY TO BE COMPUTED IN ACCORDANCE WITH THE RULES AND REGULATIONS,
AND THE REVISED GUIDELINES, IMPLEMENTING PRESIDENTIAL DECREE NO. 851;

(B) INDEMNITY EQUAL TO 15 DAYS OF HIS SALARY AS PERSONAL DRIVER AT THE TIME OF HIS UNJUST
DISMISSAL; AND

(C) INDEMNITY IN THE SUM OF P1,000.00.

SO ORDERED.
[G.R. NO. 145561. JUNE 15, 2005]

HONDA PHILS., INC., PETITIONER, VS. SAMAHAN NG MALAYANG MANGGAGAWA SA HONDA,

RESPONDENT.
DECISION
YNARES-SANTIAGO, J.:

THIS PETITION FOR REVIEW UNDER RULE 45 SEEKS THE REVERSAL OF THE COURT OF APPEALS
DECISION[1] DATED SEPTEMBER 14, 2000[2] AND ITS RESOLUTION[3] DATED OCTOBER 18, 2000, IN CA-
G.R. SP NO. 59052. THE APPELLATE COURT AFFIRMED THE DECISION DATED MAY 2, 2000 RENDERED BY
THE VOLUNTARY ARBITRATOR WHO RULED THAT PETITIONER HONDA PHILIPPINES, INC.S (HONDA) PRO-
RATED PAYMENT OF THE 13TH AND 14TH MONTH PAY AND FINANCIAL ASSISTANCE TO ITS EMPLOYEES
WAS INVALID.

AS FOUND BY THE COURT OF APPEALS, THE CASE STEMS FROM THE COLLECTIVE BARGAINING
AGREEMENT (CBA) FORGED BETWEEN PETITIONER HONDA AND RESPONDENT UNION SAMAHAN NG
MALAYANG MANGGAGAWA SA HONDA (RESPONDENT UNION) WHICH CONTAINED THE FOLLOWING
PROVISIONS:

SECTION 3. 13TH MONTH PAY

THE COMPANY SHALL MAINTAIN THE PRESENT PRACTICE IN THE IMPLEMENTATION [OF] THE 13TH
MONTH PAY.

SECTION 6. 14TH MONTH PAY

THE COMPANY SHALL GRANT A 14TH MONTH PAY, COMPUTED ON THE SAME BASIS AS COMPUTATION
OF 13TH MONTH PAY.

SECTION 7. THE COMPANY AGREES TO CONTINUE THE PRACTICE OF GRANTING, IN ITS DISCRETION,
FINANCIAL ASSISTANCE TO COVERED EMPLOYEES IN DECEMBER OF EACH YEAR, OF NOT LESS THAN
100% OF BASIC PAY.

THIS CBA IS EFFECTIVE UNTIL YEAR 2000. IN THE LATTER PART OF 1998, THE PARTIES STARTED RE-
NEGOTIATIONS FOR THE FOURTH AND FIFTH YEARS OF THEIR CBA. WHEN THE TALKS BETWEEN THE
PARTIES BOGGED DOWN, RESPONDENT UNION FILED A NOTICE OF STRIKE ON THE GROUND OF
BARGAINING DEADLOCK. THEREAFTER, HONDA FILED A NOTICE OF LOCKOUT. ON MARCH 31, 1999,
THEN DEPARTMENT OF LABOR AND EMPLOYMENT (DOLE) SECRETARY LAGUESMA ASSUMED
JURISDICTION OVER THE LABOR DISPUTE AND ORDERED THE PARTIES TO CEASE AND DESIST FROM
COMMITTING ACTS THAT WOULD AGGRAVATE THE SITUATION. BOTH PARTIES COMPLIED ACCORDINGLY.

ON MAY 11, 1999, HOWEVER, RESPONDENT UNION FILED A SECOND NOTICE OF STRIKE ON THE
GROUND OF UNFAIR LABOR PRACTICE ALLEGING THAT HONDA ILLEGALLY CONTRACTED OUT WORK TO
THE DETRIMENT OF THE WORKERS. RESPONDENT UNION WENT ON STRIKE AND PICKETED THE
PREMISES OF HONDA ON MAY 19, 1999. ON JUNE 16, 1999, DOLE ACTING SECRETARY FELICISIMO
JOSON, JR. ASSUMED JURISDICTION OVER THE CASE AND CERTIFIED THE SAME TO THE NATIONAL LABOR
RELATIONS COMMISSION (NLRC) FOR COMPULSORY ARBITRATION. THE STRIKING EMPLOYEES WERE
ORDERED TO RETURN TO WORK AND THE MANAGEMENT ACCEPTED THEM BACK UNDER THE SAME
TERMS PRIOR TO THE STRIKE STAGED.

ON NOVEMBER 22, 1999, THE MANAGEMENT OF HONDA ISSUED A MEMORANDUM[4] ANNOUNCING

ITS NEW COMPUTATION OF THE 13TH AND 14TH MONTH PAY TO BE GRANTED TO ALL ITS EMPLOYEES
WHEREBY THE THIRTY-ONE (31)-DAY LONG STRIKE SHALL BE CONSIDERED UNWORKED DAYS FOR
PURPOSES OF COMPUTING SAID BENEFITS. AS PER THE COMPANYS NEW FORMULA, THE AMOUNT
EQUIVALENT TO 1/12 OF THE EMPLOYEES BASIC SALARY SHALL BE DEDUCTED FROM THESE BONUSES,
WITH A COMMITMENT HOWEVER THAT IN THE EVENT THAT THE STRIKE IS DECLARED LEGAL, HONDA
SHALL PAY THE AMOUNT DEDUCTED.

RESPONDENT UNION OPPOSED THE PRO-RATED COMPUTATION OF THE BONUSES IN A LETTER DATED
NOVEMBER 25, 1999. HONDA SOUGHT THE OPINION OF THE BUREAU OF WORKING CONDITIONS (BWC)
ON THE ISSUE. IN A LETTER DATED JANUARY 4, 2000,[5] THE BWC AGREED WITH THE PRO-RATA
PAYMENT OF THE 13TH MONTH PAY AS PROPOSED BY HONDA.
THE MATTER WAS BROUGHT BEFORE THE GRIEVANCE MACHINERY IN ACCORDANCE WITH THE PARTIES
EXISTING CBA BUT WHEN THE ISSUE REMAINED UNRESOLVED, IT WAS SUBMITTED FOR VOLUNTARY
ARBITRATION. IN HIS DECISION[6] DATED MAY 2, 2000, VOLUNTARY ARBITRATOR HERMINIGILDO C.
JAVEN INVALIDATED HONDAS COMPUTATION, TO WIT:

WHEREFORE, IN VIEW OF ALL FOREGOING PREMISES BEING DULY CONSIDERED AND EVALUATED, IT IS
HEREBY RULED THAT THE COMPANYS IMPLEMENTATION OF PRO-RATED 13TH MONTH PAY, 14TH MONTH
PAY AND FINANCIAL ASSISTANCE [IS] INVALID. THE COMPANY IS THUS ORDERED TO COMPUTE EACH
PROVISION IN FULL MONTH BASIC PAY AND PAY THE AMOUNTS IN QUESTION WITHIN TEN (10) DAYS
AFTER THIS DECISION SHALL HAVE BECOME FINAL AND EXECUTORY.

THE THREE (3) DAYS SUSPENSION OF THE TWENTY ONE (21) EMPLOYEES IS HEREBY AFFIRMED.

SO ORDERED.[7]

HONDAS MOTION FOR PARTIAL RECONSIDERATION WAS DENIED IN A RESOLUTION DATED MAY 22, 2000.
THUS, A PETITION WAS FILED WITH THE COURT OF APPEALS, HOWEVER, THE PETITION WAS DISMISSED
FOR LACK OF MERIT.

HENCE, THE INSTANT PETITION FOR REVIEW ON THE SOLE ISSUE OF WHETHER THE PRO-RATED
COMPUTATION OF THE 13TH MONTH PAY AND THE OTHER BONUSES IN QUESTION IS VALID AND
LAWFUL.

THE PETITION LACKS MERIT.

A COLLECTIVE BARGAINING AGREEMENT REFERS TO THE NEGOTIATED CONTRACT BETWEEN A

LEGITIMATE LABOR ORGANIZATION AND THE EMPLOYER CONCERNING WAGES, HOURS OF WORK AND
ALL OTHER TERMS AND CONDITIONS OF EMPLOYMENT IN A BARGAINING UNIT.[8] AS IN ALL
CONTRACTS, THE PARTIES IN A CBA MAY ESTABLISH SUCH STIPULATIONS, CLAUSES, TERMS AND
CONDITIONS AS THEY MAY DEEM CONVENIENT PROVIDED THESE ARE NOT CONTRARY TO LAW, MORALS,
GOOD CUSTOMS, PUBLIC ORDER OR PUBLIC POLICY.[9] THUS, WHERE THE CBA IS CLEAR AND
UNAMBIGUOUS, IT BECOMES THE LAW BETWEEN THE PARTIES AND COMPLIANCE THEREWITH IS
MANDATED BY THE EXPRESS POLICY OF THE LAW.[10]

IN SOME INSTANCES, HOWEVER, THE PROVISIONS OF A CBA MAY BECOME CONTENTIOUS, AS IN THIS
CASE. HONDA WANTED TO IMPLEMENT A PRO-RATED COMPUTATION OF THE BENEFITS BASED ON THE
NO WORK, NO PAY RULE. ACCORDING TO THE COMPANY, THE PHRASE PRESENT PRACTICE AS
MENTIONED IN THE CBA REFERS TO THE MANNER AND REQUISITES WITH RESPECT TO THE PAYMENT OF
THE BONUSES, I.E., 50% TO BE GIVEN IN MAY AND THE OTHER 50% IN DECEMBER OF EACH YEAR.
RESPONDENT UNION, HOWEVER, INSISTS THAT THE CBA PROVISIONS RELATING TO THE
IMPLEMENTATION OF THE 13TH MONTH PAY NECESSARILY RELATE TO THE COMPUTATION OF THE SAME.

WE AGREE WITH THE FINDINGS OF THE ARBITRATOR THAT THE ASSAILED CBA PROVISIONS ARE FAR
FROM BEING UNEQUIVOCAL. A CURSORY READING OF THE PROVISIONS WILL SHOW THAT THEY DID NOT
STATE CATEGORICALLY WHETHER THE COMPUTATION OF THE 13TH MONTH PAY, 14TH MONTH PAY AND
THE FINANCIAL ASSISTANCE WOULD BE BASED ON ONE FULL MONTHS BASIC SALARY OF THE
EMPLOYEES, OR PRO-RATED BASED ON THE COMPENSATION ACTUALLY RECEIVED. THE ARBITRATOR
THUS PROPERLY RESOLVED THE AMBIGUITY IN FAVOR OF LABOR AS MANDATED BY ARTICLE 1702 OF THE
CIVIL CODE.[11] THE COURT OF APPEALS AFFIRMED THE ARBITRATORS FINDING AND ADDED THAT THE
COMPUTATION OF THE 13TH MONTH PAY SHOULD BE BASED ON THE LENGTH OF SERVICE AND NOT ON
THE ACTUAL WAGE EARNED BY THE WORKER.

WE UPHOLD THE RULINGS OF THE ARBITRATOR AND THE COURT OF APPEALS. FACTUAL FINDINGS OF
LABOR OFFICIALS, WHO ARE DEEMED TO HAVE ACQUIRED EXPERTISE IN MATTERS WITHIN THEIR
RESPECTIVE JURISDICTION, ARE GENERALLY ACCORDED NOT ONLY RESPECT BUT EVEN FINALITY, AND
BIND US WHEN SUPPORTED BY SUBSTANTIAL EVIDENCE. IT IS NOT OUR FUNCTION TO ASSESS AND
EVALUATE THE EVIDENCE ALL OVER AGAIN, PARTICULARLY WHERE THE FINDINGS OF BOTH THE ARBITER
AND THE COURT OF APPEALS COINCIDE.[12]

PRESIDENTIAL DECREE NO. 851, OTHERWISE KNOWN AS THE 13TH MONTH PAY LAW, WHICH REQUIRED
ALL EMPLOYERS TO PAY THEIR EMPLOYEES A 13TH MONTH PAY, WAS ISSUED TO PROTECT THE LEVEL OF
REAL WAGES FROM THE RAVAGES OF WORLDWIDE INFLATION. IT WAS ENACTED ON DECEMBER 16,
1975 AFTER IT WAS NOTED THAT THERE HAD BEEN NO INCREASE IN THE MINIMUM WAGE SINCE 1970
AND THE CHRISTMAS SEASON WAS AN OPPORTUNE TIME FOR SOCIETY TO SHOW ITS CONCERN FOR THE
PLIGHT OF THE WORKING MASSES SO THAT THEY MAY PROPERLY CELEBRATE CHRISTMAS AND NEW
YEAR.[13]

UNDER THE REVISED GUIDELINES ON THE IMPLEMENTATION OF THE 13TH MONTH PAY ISSUED ON
NOVEMBER 16, 1987, THE SALARY CEILING OF P1,000.00 UNDER P.D. NO. 851 WAS REMOVED. IT
FURTHER PROVIDED THAT THE MINIMUM 13TH MONTH PAY REQUIRED BY LAW SHALL NOT BE LESS
THAN ONE-TWELFTH (1/12) OF THE TOTAL BASIC SALARY EARNED BY AN EMPLOYEE WITHIN A
CALENDAR YEAR. THE GUIDELINES PERTINENTLY PROVIDES:

THE BASIC SALARY OF AN EMPLOYEE FOR THE PURPOSE OF COMPUTING THE 13TH MONTH PAY SHALL
INCLUDE ALL REMUNERATIONS OR EARNINGS PAID BY HIS EMPLOYER FOR SERVICES RENDERED BUT
DOES NOT INCLUDE ALLOWANCES AND MONETARY BENEFITS WHICH ARE NOT CONSIDERED OR
INTEGRATED AS PART OF THE REGULAR OR BASIC SALARY, SUCH AS THE CASH EQUIVALENT OF UNUSED
VACATION AND SICK LEAVE CREDITS, OVERTIME PREMIUM, NIGHT DIFFERENTIAL AND HOLIDAY PAY, AND
COST-OF-LIVING ALLOWANCES.[14] (EMPHASIS SUPPLIED)

FOR EMPLOYEES RECEIVING REGULAR WAGE, WE HAVE INTERPRETED BASIC SALARY TO MEAN, NOT THE
AMOUNT ACTUALLY RECEIVED BY AN EMPLOYEE, BUT 1/12 OF THEIR STANDARD MONTHLY WAGE
MULTIPLIED BY THEIR LENGTH OF SERVICE WITHIN A GIVEN CALENDAR YEAR. THUS, WE EXCLUDE FROM
THE COMPUTATION OF BASIC SALARY PAYMENTS FOR SICK, VACATION AND MATERNITY LEAVES, NIGHT
DIFFERENTIALS, REGULAR HOLIDAY PAY AND PREMIUMS FOR WORK DONE ON REST DAYS AND SPECIAL
HOLIDAYS.[15] IN HAGONOY RURAL BANK V. NLRC,[16] ST. MICHAEL ACADEMY V. NLRC,[17]
CONSOLIDATED FOOD CORPORATION V. NLRC,[18] AND SIMILAR CASES, THE 13TH MONTH PAY DUE AN
EMPLOYEE WAS COMPUTED BASED ON THE EMPLOYEES BASIC MONTHLY WAGE MULTIPLIED BY THE
NUMBER OF MONTHS WORKED IN A CALENDAR YEAR PRIOR TO SEPARATION FROM EMPLOYMENT.

THE REVISED GUIDELINES ALSO PROVIDED FOR A PRO-RATION OF THIS BENEFIT ONLY IN CASES OF
RESIGNATION OR SEPARATION FROM WORK. AS THE RULES STATE, UNDER THESE CIRCUMSTANCES, AN
EMPLOYEE IS ENTITLED TO A PAY IN PROPORTION TO THE LENGTH OF TIME HE WORKED DURING THE
YEAR, RECKONED FROM THE TIME HE STARTED WORKING DURING THE CALENDAR YEAR.[19] THE COURT
OF APPEALS THUS HELD THAT:
CONSIDERING THE FOREGOING, THE COMPUTATION OF THE 13TH MONTH PAY SHOULD BE BASED ON
THE LENGTH OF SERVICE AND NOT ON THE ACTUAL WAGE EARNED BY THE WORKER. IN THE PRESENT
CASE, THERE BEING NO GAP IN THE SERVICE OF THE WORKERS DURING THE CALENDAR YEAR IN
QUESTION, THE COMPUTATION OF THE 13TH MONTH PAY SHOULD NOT BE PRO-RATED BUT SHOULD BE
GIVEN IN FULL.[20] (EMPHASIS SUPPLIED)

MORE IMPORTANTLY, IT HAS NOT BEEN REFUTED THAT HONDA HAS NOT IMPLEMENTED ANY PRO-
RATING OF THE 13TH MONTH PAY BEFORE THE INSTANT CASE. HONDA DID NOT ADDUCE EVIDENCE TO
SHOW THAT THE 13TH MONTH, 14TH MONTH AND FINANCIAL ASSISTANCE BENEFITS WERE PREVIOUSLY
SUBJECT TO DEDUCTIONS OR PRO-RATING OR THAT THESE WERE DEPENDENT UPON THE COMPANYS
FINANCIAL STANDING. AS HELD BY THE VOLUNTARY ARBITRATOR:

THE COMPANY (HONDA) EXPLICITLY ACCEPTED THAT IT WAS THE STRIKE HELD THAT PROMPT[ED] THEM
TO ADOPT A PRO-RATA COMPUTATION, ASIDE [FROM] BEING IN [A] STATE OF REHABILITATION DUE TO
227M SUBSTANTIAL LOSSES IN 1997, 114M IN 1998 AND 215M LOST OF SALES IN 1999 DUE TO STRIKE.
THIS IS AN IMPLICIT ACCEPTANCE THAT PRIOR TO THE STRIKE, A FULL MONTH BASIC PAY COMPUTATION
WAS THE PRESENT PRACTICE INTENDED TO BE MAINTAINED IN THE CBA.[21]

THE MEMORANDUM DATED NOVEMBER 22, 1999 WHICH HONDA ISSUED SHOWS THAT IT WAS THE
FIRST TIME A PRO-RATING SCHEME WAS TO BE IMPLEMENTED IN THE COMPANY. IT WAS A CONVENIENT
COINCIDENCE FOR THE COMPANY THAT THE WORK STOPPAGE HELD BY THE EMPLOYEES LASTED FOR
THIRTY-ONE (31) DAYS OR EXACTLY ONE MONTH. THIS ENABLED THEM TO DEVISE A FORMULA USING
11/12 OF THE TOTAL ANNUAL SALARY AS BASE AMOUNT FOR COMPUTATION INSTEAD OF THE ENTIRE
AMOUNT FOR A 12-MONTH PERIOD.

THAT A FULL MONTH PAYMENT OF THE 13TH MONTH PAY IS THE ESTABLISHED PRACTICE AT HONDA IS
FURTHER BOLSTERED BY THE AFFIDAVITS EXECUTED BY FELITEO BAUTISTA AND EDGARDO CRUZADA.
BOTH ATTESTED THAT WHEN THEY WERE ABSENT FROM WORK DUE TO MOTORCYCLE ACCIDENTS, AND
AFTER THEY HAVE EXHAUSTED ALL THEIR LEAVE CREDITS AND WERE NO LONGER RECEIVING THEIR
MONTHLY SALARY FROM HONDA, THEY STILL RECEIVED THE FULL AMOUNT OF THEIR 13TH MONTH,
14TH MONTH AND FINANCIAL ASSISTANCE PAY.[22]

THE CASE OF DAVAO FRUITS CORPORATION V. ASSOCIATED LABOR UNIONS, ET AL.[23] PRESENTED AN
EXAMPLE OF A VOLUNTARY ACT OF THE EMPLOYER THAT HAS RIPENED INTO A COMPANY PRACTICE. IN
THAT CASE, THE EMPLOYER, FROM 1975 TO 1981, FREELY AND CONTINUOUSLY INCLUDED IN THE
COMPUTATION OF THE 13TH MONTH PAY THOSE ITEMS THAT WERE EXPRESSLY EXCLUDED BY THE LAW.
WE HAVE HELD THAT THIS ACT, WHICH WAS FAVORABLE TO THE EMPLOYEES THOUGH NOT
CONFORMING TO LAW, HAS RIPENED INTO A PRACTICE AND THEREFORE CAN NO LONGER BE
WITHDRAWN, REDUCED, DIMINISHED, DISCONTINUED OR ELIMINATED. FURTHERMORE, IN SEVILLA
TRADING COMPANY V. SEMANA,[24] WE STATED:

WITH REGARD TO THE LENGTH OF TIME THE COMPANY PRACTICE SHOULD HAVE BEEN EXERCISED TO
CONSTITUTE VOLUNTARY EMPLOYER PRACTICE WHICH CANNOT BE UNILATERALLY WITHDRAWN BY THE
EMPLOYER, WE HOLD THAT JURISPRUDENCE HAS NOT LAID DOWN ANY RULE REQUIRING A SPECIFIC
MINIMUM NUMBER OF YEARS. IN THE ABOVE QUOTED CASE OF DAVAO FRUITS CORPORATION VS.
ASSOCIATED LABOR UNIONS, THE COMPANY PRACTICE LASTED FOR SIX (6) YEARS. IN ANOTHER CASE,
DAVAO INTEGRATED PORT STEVEDORING SERVICES VS. ABARQUEZ, THE EMPLOYER, FOR THREE (3)
YEARS AND NINE (9) MONTHS, APPROVED THE COMMUTATION TO CASH OF THE UNENJOYED PORTION
OF THE SICK LEAVE WITH PAY BENEFITS OF ITS INTERMITTENT WORKERS. WHILE IN TIANGCO VS.
LEOGARDO, JR. THE EMPLOYER CARRIED ON THE PRACTICE OF GIVING A FIXED MONTHLY EMERGENCY
ALLOWANCE FROM NOVEMBER 1976 TO FEBRUARY 1980, OR THREE (3) YEARS AND FOUR (4) MONTHS.
IN ALL THESE CASES, THIS COURT HELD THAT THE GRANT OF THESE BENEFITS HAS RIPENED INTO
COMPANY PRACTICE OR POLICY WHICH CANNOT BE PEREMPTORILY WITHDRAWN. IN THE CASE AT BAR,
PETITIONER SEVILLA TRADING KEPT THE PRACTICE OF INCLUDING NON-BASIC BENEFITS SUCH AS PAID
LEAVES FOR UNUSED SICK LEAVE AND VACATION LEAVE IN THE COMPUTATION OF THEIR 13TH-MONTH
PAY FOR AT LEAST TWO (2) YEARS. THIS, WE RULE LIKEWISE CONSTITUTES VOLUNTARY EMPLOYER
PRACTICE WHICH CANNOT BE UNILATERALLY WITHDRAWN BY THE EMPLOYER WITHOUT VIOLATING ART.
100 OF THE LABOR CODE.[25] (EMPHASIS SUPPLIED)

LASTLY, THE FOREGOING INTERPRETATION OF LAW AND JURISPRUDENCE IS MORE IN KEEPING WITH THE
UNDERLYING PRINCIPLE FOR THE GRANT OF THIS BENEFIT. IT IS PRIMARILY GIVEN TO ALLEVIATE THE
PLIGHT OF WORKERS AND TO HELP THEM COPE WITH THE EXORBITANT INCREASES IN THE COST OF
LIVING. TO ALLOW THE PRO-RATION OF THE 13TH MONTH PAY IN THIS CASE IS TO UNDERMINE THE
WISDOM BEHIND THE LAW AND THE MANDATE THAT THE WORKINGMANS WELFARE SHOULD BE THE
PRIMORDIAL AND PARAMOUNT CONSIDERATION.[26] WHAT IS MORE, THE FACTUAL MILIEU OF THIS
CASE IS SUCH THAT TO RULE OTHERWISE INEVITABLY RESULTS TO DISSUASION, IF NOT A DETERRENT,
FOR WORKERS FROM THE FREE EXERCISE OF THEIR CONSTITUTIONAL RIGHTS TO SELF-ORGANIZATION
AND TO STRIKE IN ACCORDANCE WITH LAW.[27]

WHEREFORE, THE INSTANT PETITION IS DENIED. THE DECISION AND THE RESOLUTION OF THE COURT OF
APPEALS DATED SEPTEMBER 14, 2000 AND OCTOBER 18, 2000, RESPECTIVELY, IN CA-G.R. SP NO. 59052,
AFFIRMING THE DECISION RENDERED BY THE VOLUNTARY ARBITRATOR ON MAY 2, 2000, ARE HEREBY
AFFIRMED IN TOTO.

SO ORDERED.
G.R. NO. 72616-17 MARCH 8, 1989

FRAMANLIS FARMS, INC., ELOISA SYCIP AND LINCOLN SYCIP, PETITIONERS

VS.
HON. MINISTER OF LABOR, MANILA, PAFLU SEPTEMBER CONVENTION, ZOILO ESTANISLAO, EMILIO
ANITO, JAIME ARNEJO, CASIMIRO ARRABIS, RENATO BACONADOR ,VICENTE BACONADOR, ROMEO
BACONADOR, ROGELIO BAYONITA ,RODOLFO BAYONITA, ROGELIO BONDOCIO, NAPOLEON BONDOCIO,
TEODORO BLANCAFLOR, PANFILO BROÑOLA, ALFREDO DICHOSA, EDGARDO ENOPOSA, WILSON
ENOPOSA, SANCHO GALAGATE, GERARDO GALAGATE, NELITO GALLEGO, FRANCISCO INDORES,
EDUARDO LOZADA, JESUS LABRADOR, PANFILO LAORENTE, ROGELIO MITRA, FERNANDO MATTE,
EDUARDO MARONE, ROSELLER MARONE, IGLESERIO PANOGOT ,SILVERIO PANOGOT, ARTURO
PANOGOT ,ARMANDO SAGAYA ERNESTO TAGAMTAM, ROMEO GARCIA, TEODORICO ATANGAN, LOURDES
DE LA CRUZ, CLARITA DELORIA ,DANILO MENDOZA, WILLIAM GONZALES, RAFAEL PADRANES, JUAN
PADRANES, JUAN PANOGOT, MAGDALENA PANOGOT, JOSE SAGAYA, PABLO TUNDAG, VIVENCIO NABAY,
RAFAEL MARONE, RODOLFO ENOPOSA, BALODOY ACADEMIA AND GERARDO GALLEGO, RESPONDENTS.

RODOLFO B. GARBANZOS, JR. FOR PETITIONERS.

THE SOLICITOR GENERAL FOR PUBLIC RESPONDENT.

GRIÑO-AQUINO, J.:

IN APRIL 1980, EIGHTEEN (18) EMPLOYEES OF THE PETITIONERS FILED AGAINST THEIR EMPLOYER, AND
THE OTHER PETITIONERS TWO LABOR STANDARD CASES WHICH WERE DOCKETED IN THE REGIONAL
OFFICE OF THE MINISTRY OF LABOR IN BACOLOD CITY AS FAD CASES NOS. 179180 AND 0792-80 ("PAFLU
SEPTEMBER CONVENTION VS. FRAMANLIS FARMS"), ALLEGING THAT IN 1977 TO 1979 THEY WERE NOT
PAID EMERGENCY COST OF LIVING ALLOWANCE (ECOLA) MINIMUM WAGE, 13TH MONTH PAY, HOLIDAY
PAY, AND SERVICE INCENTIVE LEAVE PAY.

IN THEIR ANSWER TO THE AMENDED COMPLAINT, PETITIONERS ALLEGED THAT THE PRIVATE
RESPONDENTS WERE NOT REGULAR WORKERS ON THEIR HACIENDA BUT WERE MIGRATORY (SACADAS)
OR PAKYAW WORKERS WHO WORKED ON-AND-OFF AND WERE HIRED SEASONALLY, OR ONLY DURING
THE MILLING SEASON, TO DO PIECE-WORK ON THE FARMS, HENCE, THEY WERE NOT ENTITLED TO THE
BENEFITS CLAIMED BY THEM. THEY ALSO ALLEGED THAT UNDER THE DECREES, THE LIVING ALLOWANCE
SHALL BE PAID ON A MONTHLY, NOT PERCENTAGE, BASIS DEPENDING ON THE TOTAL ASSETS OR
AUTHORIZED CAPITAL STOCK OF THE EMPLOYER, WHICHEVER IS HIGHER AND APPLICABLE. THEY
ADMITTED THAT THEIR TOTAL ASSETS AND AUTHORIZED CAPITAL STOCK EXCEEDED P2 MILLION.
HOWEVER, IN 1977 THEY HAD APPLIED FOR EXEMPTION UNDER PDS 525 AND 1123 BUT NO RULING
HAS BEEN ISSUED BY THE MINISTRY OF LABOR ON THEIR APPLICATION.

THE CLAIMS FOR HOLIDAY PAY, SERVICE INCENTIVE LEAVE PAY, SOCIAL AMELIORATION BONUS AND
UNDERPAYMENT OF MINIMUM WAGE WERE NOT CONTROVERTED. WITH RESPECT TO THE
COMPLAINANTS' OTHER CLAIMS, THE PETITIONERS SUBMITTED ONLY RANDOM PAYROLLS WHICH
SHOWED THAT THE WOMEN WORKERS WERE UNDERPAID AS THEY WERE RECEIVING AN AVERAGE DAILY
WAGE OF P5.94 ONLY, ALTHOUGH THE MALE WORKERS RECEIVED P10 MORE OR LESS, PER DAY.

IN AN ORDER NOVEMBER 10, 1980, THE MINISTER OF LABOR, THROUGH ASSISTANT REGIONAL
DIRECTOR DANTE ARDIVILIA ADOPTING THE RECOMMENDATIONS OF THE CHIEF OF THE LABOR
REGULATION SECTION, BACOLOD DISTRICT OFFICE, DIRECTED THE RESPONDENTS (NOW PETITIONERS)
TO PAY THE FOLLOWING:

1. DEFICIENCY PAYMENT OF P2.00 PER DAY TO FEMALE WORKERS UNDER PD 925 ** FROM MAY 1,
1976 TO APRIL 30, 1979;

2. DEFICIENCY PAYMENT OF P3.00 PER DAY TO FEMALE WORKERS AND PL -00 PER DAY TO MALE
WORKERS, UNDER PD 1614 FROM APRIL 1, 1979 TO AUGUST 17, 1980;

3. DEFICIENCY PAYMENT OF P5.50 PER DAY TO FEMALE WORKERS AND P3.50 TO MALE WORKERS
UNDER MINISTRY ORDER NO. 5 EFFECTIVE AT THE START OF GRINDING (SIC) FOR THE CROP YEAR 1979-
80;

4. EFFECTIVE AUGUST 18, 1980, P6.50 PER DAY TO FEMALE WORKERS AND P4.50 TO MALE
WORKERS UP TO THE DATE OF RESTITUTION;

5. DEFICIENCY PAYMENT OF EMERGENCY LIVING ALLOWANCE AT P60 PER MONTH UNDER PD 1678
AND ANOTHER P60 PER MONTH UNDER MINISTRY ORDER NO. 5;
6. SERVICE INCENTIVE LEAVE PAY, HOLIDAY PAY AND SOCIAL AMELIORATION BONUS FOR 3 YEARS
FOR 1977 TO 1979;

7. THE CLAIMS FOR 13TH MONTH PAY FOR 1977 AND EMERGENCY LIVING ALLOWANCE UNDER PD
1123 AND 525 ARE HELD IN ABEYANCE DUE TO THE APPLICATION FOR EXEMPTION WHICH IS UNACTED
UP TO THE PRESENT.

COMPLIANCE MUST BE MADE WITHIN TEN (10) DAYS FROM RECEIPT OF THE ORDER." (P. 34, ROLLO.)

UPON THE PETITIONERS' APPEAL OF THAT ORDER, THE DEPUTY MINISTER OF LABOR VICENTE
LEOGARDO, JR. MODIFIED IT ON JANUARY 18, 1983 BY ORDERING THE EMPLOYER TO PAY:

1. ALL NON-PAKYAW WORKERS THEIR CLAIM FOR HOLIDAY AND INCENTIVE LEAVE PAY FOR THE
YEARS 1977, 1978 AND 1979;

2. ALL COMPLAINANTS THEIR 13TH MONTH PAY FOR THE YEARS 1978 AND 1979;

3. ALL 'PAKYAW' WORKERS FOR THE SAME PERIOD ON DAYS THEY WORKED FOR AT LEAST EIGHT (8)
HOURS AND EARNED BELOW P8.06 DAILY, THEIR PAY DIFFERENTIALS.

THE CLAIMS FOR 13TH MONTH PAY FOR 1977, AS WELL AS FOR ECOLA UNDER PD NOS. 525 AND 1123
SHALL, PENDING OUTCOME OF RESPONDENT'S APPLICATION FOR EXEMPTION THEREFROM, BE HELD IN
ABEYANCE." (ANNEX H, P. 55, ROLLO.)

THE DEPUTY MINISTER CLARIFIED THAT PAKYAW WORKERS WERE EXCLUDED FROM HOLIDAY AND
SERVICE INCENTIVE LEAVE PAY (P. 54, ROLLO).

UPON THE DENIAL OF ITS MOTION FOR RECONSIDERATION, FRAMANLIS FARMS, INC. FILED THIS
PETITION FOR CERTIORARI ALLEGING THAT THE DEPUTY MINISTER ERRED:

1. IN AWARDING PAY DIFFERENTIALS, HOLIDAY AND SERVICE INCENTIVE LEAVE FOR PAKYAW
WORKERS WHO ARE NOT REGULAR EMPLOYEES BUT ARE MERELY PAID ON PIECE-RATE, CONTRARY TO
ART. 82 OF THE LABOR CODE;

2. IN REQUIRING THE PETITIONERS TO PAY 13TH MONTH PAY DESPITE THE FACT THAT THEY
(PETITIONERS) HAD SUBSTANTIALLY COMPLIED WITH THE REQUIREMENT BY EXTENDING YEARLY
BONUSES AND OTHER BENEFITS IN KIND AND IN CASH TO THE COMPLAINANTS, PURSUANT TO SECTION
3(C) OF PD 851 WHICH EXEMPTS THE EMPLOYER FROM PAYING 13TH MONTH PAY WHEN ITS
EQUIVALENT HAS ALREADY BEEN GIVEN; AND

3. IN NOT PRECISELY STATING WHO AMONG THE PRIVATE RESPONDENTS ARE PAKYAW AND NON-
PAKYAW WORKERS.

THE PETITION IS NOT IMPRESSED WITH MERIT.

IN 1976, PD NO. 928 FIXED A MINIMUM WAGE OF P7.00 FOR AGRICULTURAL WORKERS IN ANY
PLANTATION OR AGRICULTURAL ENTERPRISE IRRESPECTIVE OF WHETHER OR NOT THE WORKER WAS
PAID ON A PIECE-RATE BASIS. HOWEVER, EFFECTIVE JULY 1, 1978, THE MINIMUM WAGE WAS
INCREASED TO P8.00 (SEC. 1, PD 1389). SUBSEQUENTLY, PD 1614 PROVIDED FOR A P2.00 INCREASE IN
THE DAILY WAGE OF ALL WORKERS EFFECTIVE APRIL 1, 1979. THE PETITIONERS ADMIT THAT THOSE
WERE THE MINIMUM RATES PREVAILING THEN. THEREFORE, THE RESPONDENT MINISTER DID NOT ERR
IN REQUIRING THE PETITIONERS TO PAY WAGE DIFFERENTIALS TO THEIR PAKYAW WORKERS WHO
WORKED FOR AT LEAST EIGHT HOURS DAILY AND EARNED LESS THAN P8.00 PER DAY IN 1978 TO 1979.

WITH REGARD TO THE 13TH MONTH PAY, PETITIONERS ADMITTED THAT THEY FAILED TO PAY THEIR
WORKERS 13TH MONTH PAY IN 1978 AND 1979. HOWEVER, THEY ARGUED THAT THEY SUBSTANTIALLY
COMPLIED WITH THE LAW BY GIVING THEIR WORKERS A YEARLY BONUS AND OTHER NON-MONETARY
BENEFITS AMOUNTING TO NOT LESS THAN 1/12TH OF THEIR BASIC SALARY, IN THE FORM OF:

1. A WEEKLY SUBSIDY OF CHOICE PORK MEAT FOR ONLY P9.00 PER KILO AND LATER INCREASED TO
P11 PER KILO IN MARCH 1980, INSTEAD OF THE MARKET PRICE OF P10 TO P15 PER KILO;

2. FREE CHOICE PORK MEAT IN MAY AND DECEMBER OF EVERY YEAR; AND

3. FREE LIGHT OR ELECTRICITY.

4. ALL OF WHICH WERE ALLEGEDLY "THE EQUIVALENT" OF THE 13TH MONTH PAY.

UNFORTUNATELY, UNDER SECTION 3 OF PD NO. 851, SUCH BENEFITS IN THE FORM OF FOOD OR FREE
ELECTRICITY, ASSUMING THEY WERE GIVEN, WERE NOT A PROPER SUBSTITUTE FOR THE 13TH MONTH
PAY REQUIRED BY LAW. PD 851 PROVIDES:

SECTION 3. EMPLOYEES COVERED — THE DECREE SHALL APPLY TO ALL EMPLOYEES EXCEPT TO:

X X X. XXX XXX

THE TERM 'ITS EQUIVALENT' AS USED IN PARAGRAPH (C) HEREOF SHALL INCLUDE CHRISTMAS BONUS,
MID-YEAR BONUS, PROFIT-SHARING PAYMENTS AND OTHER CASH BONUSES AMOUNTING TO NOT LESS
THAN 1/12 OF THE BASIC SALARY BUT SHALL NOT INCLUDE CASH AND STOCK DIVIDENDS, COST OF
LIVING ALLOWANCES AND ALL OTHER ALLOWANCES REGULARLY ENJOYED BY THE EMPLOYEE, AS WELL
AS NON-MONETARY BENEFITS.

WHERE AN EMPLOYER PAYS LESS THAN 1/12 OF THE EMPLOYEE'S BASIC SALARY, THE EMPLOYER SHALL
PAY THE DIFFERENCE."

NEITHER MAY YEAR-END REWARDS FOR LOYALTY AND SERVICE BE CONSIDERED IN LIEU OF 13TH MONTH
PAY. SECTION 10 OF THE RULES AND REGULATIONS IMPLEMENTING PRESIDENTIAL DECREE NO. 851
PROVIDES:

SECTION 10. PROHIBITION AGAINST REDUCTION OR ELIMINATION OF BENEFITS-NOTHING HEREIN SHALL

BE CONSTRUED TO AUTHORIZE ANY EMPLOYER TO ELIMINATE, OR DIMINISH IN ANY WAY,
SUPPLEMENTS, OR OTHER EMPLOYEE BENEFITS OR FAVORABLE PRACTICE BEING ENJOYED BY THE
EMPLOYEE AT THE TIME OF PROMULGATION OF THIS ISSUANCE."
THE FAILURE OF THE MINISTER'S DECISION TO IDENTIFY THE PAKYAW AND NON-PAKYAW WORKERS
DOES NOT RENDER SAID DECISION INVALID. THE WORKERS MAY BE IDENTIFIED OR DETERMINED IN THE
PROCEEDINGS FOR EXECUTION OF THE JUDGMENT.

WHEREFORE, THE PETITION FOR CERTIORARI IS DISMISSED WITH COSTS AGAINST THE PETITIONERS.

SO ORDERED.
G.R. NO. 75289 AUGUST 31, 1989

KAMAYA POINT HOTEL, PETITIONER,

VS.
NATIONAL LABOR RELATIONS COMMISSION, FEDERATION OF FREE WORKERS AND MEMIA QUIAMBAO,
RESPONDENTS.

FERNAN, C.J.:

THIS PETITION FOR REVIEW ON CERTIORARI FILED BY HEREIN PETITIONER KAMAYA POINT HOTEL SEEKS
TO SET ASIDE THE DECISION 1 OF THE NATIONAL LABOR RELATIONS COMMISSION DATED JUNE 25, 1986
IN NLRC CASE NO. RAB III-4-1191-83 WHICH AFFIRMED WITH MODIFICATION THE DECISION OF THE
LABOR ARBITER DATED MAY 31, 1984.

RESPONDENT MEMIA QUIAMBAO WITH THIRTY OTHERS WHO ARE MEMBERS OF PRIVATE RESPONDENT
FEDERATION OF FREE WORKERS (FFW) WERE EMPLOYED BY PETITIONER AS HOTEL CREW. ON THE BASIS
OF THE PROFITABILITY OF THE COMPANY'S BUSINESS OPERATIONS, MANAGEMENT GRANTED A 14TH
MONTH PAY TO ITS EMPLOYEES STARTING IN 1979. IN JANUARY 1982, OPERATIONS CEASED TO GIVE
WAY TO THE HOTEL'S CONVERSION INTO A TRAINING CENTER FOR LIBYAN SCHOLARS. HOWEVER, DUE
TO TECHNICAL AND FINANCING PROBLEMS, THE LIBYANS PRE-TERMINATED THE PROGRAM ON JULY 7,
1982, LEAVING PETITIONER WITHOUT ANY BUSINESS, ASIDE FROM THE FACT THAT IT WAS NOT PAID FOR
THE USE OF THE HOTEL PREMISES AND IN ADDITION HAD TO UNDERTAKE REPAIRS OF THE PREMISES
DAMAGED BY THE LIBYAN STUDENTS. ALL IN ALL PETITIONER ALLEGEDLY SUFFERED LOSSES AMOUNTING
TO P2 MILLION.

ALTHOUGH PETITIONER REOPENED THE HOTEL PREMISES TO THE PUBLIC, IT WAS NOT ABLE TO PICK-UP
ITS LOST PATRONAGE. IN A COUPLE OF MONTHS IT EFFECTED A RETRENCHMENT PROGRAM UNTIL
FINALLY ON JANUARY 7, 1984, IT TOTALLY CLOSED ITS BUSINESS. 2

ON APRIL 18, 1983, PRIVATE RESPONDENT FEDERATION OF FREE WORKERS (FFW); A LEGITIMATE LABOR
ORGANIZATION, FILED WITH THE MINISTRY OF LABOR AND EMPLOYMENT, BATAAN PROVINCIAL OFFICE,
BATAAN EXPORT PROCESSING ZONE, MARIVELES, BATAAN, A COMPLAINT AGAINST PETITIONER FOR
ILLEGAL SUSPENSION, VIOLATION OF THE CBA AND NON-PAYMENT OF THE 14TH MONTH PAY. 3
RECORDS HOWEVER SHOW THAT THE CASE WAS SUBMITTED FOR DECISION ON THE SOLE ISSUE OF
ALLEGED NON-PAYMENT OF THE 14TH MONTH PAY FOR THE YEAR 1982 .4

AFTER THE HEARING, EXECUTIVE LABOR ARBITER FRANCISCO M. JOSE, JR. RENDERED A DECISION DATED
MAY 31, 1984, THE DISPOSITIVE PORTION OF WHICH READS:
WHEREFORE, IN VIEW OF ALL THE FOREGOING, JUDGMENT IS HEREBY RENDERED:

1. ORDERING THE RESPONDENT KAMAYA POINT HOTEL TO PAY THE 14TH MONTH PAY FOR 1982 OF
ALL ITS RANK AND FILE EMPLOYEES;

2. ORDERING THE SAME RESPONDENT TO PAY THE MONETARY EQUIVALENT OF THE BENEFITS
MENTIONED IN SECTION 6 OF ARTICLE XII AND SECTIONS I AND 2 OF ARTICLE XII OF THE THEN EXISTING
COLLECTIVE BARGAINING AGREEMENT WHICH WILL EXPIRE ON 1 JULY 1984. 5

ON APPEAL, THE NATIONAL LABOR RELATIONS COMMISSION (NLRC) IN ITS DECISION DATED JUNE 25,
1986 SET ASIDE THE AWARD OF MONETARY BENEFITS UNDER THE CBA BUT AFFIRMED THE GRANT OF
THE 14TH MONTH PAY ADOPTING THE LABOR ARBITER'S REASONING, THUS:

XXX XXX XXX

WE AGREE WITH RESPONDENT THAT THERE IS NO LAW GRANTING A 14TH MONTH PAY. WE LIKEWISE
AGREE WITH RESPONDENT THAT THERE IS NO PROVISION IN THE COLLECTIVE BARGAINING AGREEMENT
GRANTING A 14TH MONTH PAY. DESPITE ALL THESE, HOWEVER, WE BELIEVE THAT INDIVIDUAL
COMPLAINANTS HEREIN ARE STILL ENTITLED TO THE 14TH MONTH PAY FOR 1982 BECAUSE TO OUR
MIND, THE GRANTING OF THIS 14TH MONTH PAY HAS ALREADY RIPENED INTO A COMPANY PRACTICE
WHICH RESPONDENT COMPANY CANNOT WITHDRAW UNILATERALLY. THIS 14TH MONTH PAY IS NOW AN
EXISTING BENEFIT WHICH CANNOT BE WITHDRAWN WITHOUT VIOLATING ARTICLE 100 OF THE LABOR
CODE. TO ALLOW ITS WITHDRAWAL NOW WOULD CERTAINLY AMOUNT TO A DIMINUTION OF EXISTING
BENEFITS WHICH COMPLAINANTS ARE PRESENTLY ENJOYING. PREMISED ON THE ABOVE, THE
INDIVIDUAL COMPLAINANTS ARE ENTITLED TO THE 14TH MONTH PAY FOR 1982 AND RESPONDENT
SHOULD PAY THE SAME. (EMPHASIS SUPPLIED) 6

BEFORE THIS COURT, PETITIONER NOW SEEKS TO REVERSE THE DECISION OF THE NLRC ARGUING THAT
THE LATTER TRIBUNAL COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT ADOPTED THE LABOR
ARBITER'S DECISION SAYING THAT THE 14TH MONTH PAY CANNOT BE WITHDRAWN WITHOUT
VIOLATING ARTICLE 100 OF THE LABOR CODE WHICH STATES:

PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS.- NOTHING IN THIS BOOK SHALL BE

CONSTRUED TO ELIMINATE OR IN ANY WAY DIMINISH SUPPLEMENTS, OR OTHER EMPLOYEE BENEFITS
BEING ENJOYED AT THE TIME OF PROMULGATION OF THIS CODE.

WE FIND IT DIFFICULT TO COMPREHEND WHY THE NLRC AND THE LABOR ARBITER, DESPITE THEIR
ADMISSION THAT THE 14TH MONTH PAY HAS NO CONTRACTUAL OR LEGAL BASIS, STILL CHOSE TO RULE
IN FAVOR OF PRIVATE RESPONDENTS. IT IS PATENTLY OBVIOUS THAT ARTICLE 100 IS CLEARLY WITHOUT
APPLICABILITY. THE DATE OF EFFECTIVITY OF THE LABOR CODE IS MAY 1, 1974. IN THE CASE AT BAR,
PETITIONER EXTENDED ITS 14TH MONTH PAY BEGINNING 1979 UNTIL 1981. WHAT IS DEMANDED IS
PAYMENT OF THE 14TH MONTH PAY FOR 1982. INDUBITABLY FROM THESE FACTS ALONE, ARTICLE 100
OF THE LABOR CODE CANNOT APPLY.

MOREOVER, THERE IS NO LAW THAT MANDATES THE PAYMENT OF THE 14TH MONTH PAY. THIS IS
EMPHASIZED IN THE GRANT OF EXEMPTION UNDER PRESIDENTIAL DECREE 851 (13TH MONTH PAY LAW)
WHICH STATES: "EMPLOYERS ALREADY PAYING THEIR EMPLOYEES A 13TH MONTH PAY OR ITS
EQUIVALENT ARE NOT COVERED BY THIS DECREE." NECESSARILY THEN, ONLY THE 13TH MONTH PAY IS
MANDATED. HAVING ENJOYED THE ADDITIONAL INCOME IN THE FORM OF THE 13TH MONTH PAY,
PRIVATE RESPONDENTS' INSISTENCE ON THE 14TH MONTH PAY FOR 1982 IS ALREADY AN
UNWARRANTED EXPANSION OF THE LIBERALITY OF THE LAW.

ALSO CONTRACTUALLY, AS GLEANED FROM THE COLLECTIVE BARGAINING AGREEMENT BETWEEN

MANAGEMENT AND THE UNION, THERE IS NO STIPULATION AS TO SUCH EXTRA REMUNERATION.
EVIDENTLY, THIS OMISSION IS AN ACKNOWLEDGMENT THAT SUCH BENEFIT IS ENTIRELY CONTILAGENT
OR DEPENDENT ON THE PROFITABILITY OF THE COMPANY'S OPERATIONS.

VERILY, A 14TH MONTH PAY IS A MISNOMER BECAUSE IT IS BASICALLY A BONUS AND, THEREFORE,
GRATUITOUS IN NATURE. THE GRANTING OF THE 14TH MONTH PAY IS A MANAGEMENT PREROGATIVE
WHICH CANNOT BE FORCED UPON THE EMPLOYER. IT IS SOMETHING GIVEN IN ADDITION TO WHAT IS
ORDINARILY RECEIVED BY OR STRICTLY DUE THE RECIPIENT. IT IS A GRATUITY TO WHICH THE RECIPIENT
HAS NO RIGHT TO MAKE A DEMAND. 7

THIS COURT IS NOT PREPARED TO COMPEL PETITIONER TO GRANT THE 14TH MONTH PAY SOLELY
BECAUSE IT HAS ALLEGEDLY RIPENED INTO A COMPANY PRACTICE" AS THE LABOR ARBITER HAS PUT IT.
HAVING LOST ITS CATERING BUSINESS DERIVED FROM LIBYAN STUDENTS, KAMAYA HOTEL SHOULD NOT
BE PENALIZED FOR ITS PREVIOUS LIBERALITY.

AN EMPLOYER MAY NOT BE OBLIGED TO ASSUME A "DOUBLE BURDEN" OF PAYING THE 13TH MONTH
PAY IN ADDITION TO BONUSES OR OTHER BENEFITS ASIDE FROM THE EMPLOYEE'S BASIC SALARIES OR
WAGES. 8 RESTATED DIFFERENTLY, WE RULE THAT AN EMPLOYER MAY NOT BE OBLIGED TO ASSUME THE
ONEROUS BURDEN OF GRANTING BONUSES OR OTHER BENEFITS ASIDE FROM THE EMPLOYEE'S BASIC
SALARIES OR WAGES 8 IN ADDITION TO THE REQUIRED 13TH MONTH PAY.

WHEREFORE, THE PETITION IS HEREBY GRANTED. THE PORTION OF THE DECISION OF THE NATIONAL
LABOR RELATIONS COMMISSION DATED JUNE 25, 1986 ORDERING THE PAYMENT OF 14TH MONTH PAY
TO PRIVATE RESPONDENTS IS SET ASIDE.

SO ORDERED.
G.R. NO. 111744 SEPTEMBER 8, 1995

LOURDES G. MARCOS, ALEJANDRO T. ANDRADA, BALTAZARA J. LOPEZ AND VILMA L. CRUZ, PETITIONERS,
VS.
NATIONAL LABOR RELATIONS COMMISSION AND INSULAR LIFE ASSURANCE CO., LTD., RESPONDENTS.

REGALADO, J.:

THIS PETITION FOR CERTIORARI SEEKS THE NULLIFICATION OF THE DECISION1 OF THE NATIONAL LABOR
RELATIONS COMMISSION (NLRC) PROMULGATED ON MAY 31, 1992 IN NLRC NCR CA NO. 004120-92,
AND ITS RESOLUTION DATED AUGUST 27, 1993 DENYING PETITIONER'S MOTION FOR RECONSIDERATION
THEREOF. THE SAID DECISION SET ASIDE ON APPEAL, THE DECISION OF LABOR ARBITER ALEX ARCADIO
LOPEZ ORDERING PRIVATE RESPONDENT TO PAY PETITIONERS THEIR SERVICE AWARDS, ANNIVERSARY
BONUS AND PRORATED PERFORMANCE BONUS IN THE AMOUNT OF P144,579.00 AND 10% ATTORNEY'S
FEES IN THE AMOUNT OF P14,457.90.2
FIRST, THE UNDISPUTED FACTS.

PETITIONERS WERE REGULAR EMPLOYEES OF PRIVATE RESPONDENT INSULAR LIFE ASSURANCE CO:, LTD.,
BUT THEY WERE DISMISSED ON NOVEMBER 1, 1990 WHEN THEIR POSITIONS WERE DECLARED
REDUNDANT. A SPECIAL REDUNDANCY BENEFIT WAS PAID TO THEM, WHICH INCLUDED PAYMENT OF
ACCRUED VACATION LEAVE AND FIFTY PERCENT (50%) OF UNUSED CURRENT SICK LEAVE, SPECIAL
REDUNDANCY BENEFIT, EQUIVALENT TO THREE (3) MONTHS SALARY FOR EVERY YEAR OF SERVICE; AND
ADDITIONAL CASH BENEFITS, IN LIEU OF OTHER BENEFITS PROVIDED BY THE COMPANY OR REQUIRED BY
LAW.3

BEFORE THE TERMINATION OF THEIR SERVICES, PETITIONER MARCOS HAD BEEN IN THE EMPLOY OF
PRIVATE RESPONDENT FOR MORE THAN TWENTY (20) YEARS, FROM AUGUST 26, ]970; PETITIONER
ANDRADA, MORE THAN TWENTY-FIVE (25) YEARS, FROM JULY 26, 1965; PETITIONER LOPEZ, EXACTLY
THIRTY (30) YEARS, FROM OCTOBER 31, 1960; AND PETITIONER CRUZ, MORE THAN TWENTY (20) YEARS,
FROM MARCH 1, 1970.4

PETITIONERS, PARTICULARLY BALTAZARA J. LOPEZ, SENT A LETTER DATED OCTOBER 23, 1990 TO
RESPONDENT COMPANY QUESTIONING THE REDUNDANCY PACKAGE, SHE CLAIMED THAT THEY SHOULD
RECEIVE THEIR RESPECTIVE SERVICE AWARDS AND OTHER PRORATED BONUSES WHICH THEY HAD
EARNED AT THE TIME THEY WERE DISMISSED. IN ADDITION, LOPEZ ARGUED THAT "THE CASH SERVICE
AWARDS HAVE ALREADY BEEN BUDGETED IN A FUND DISTINCT AND APART FROM REDUNDANCY FUND.5

THEREAFTER, PRIVATE RESPONDENT REQUIRED PETITIONERS TO EXECUTE A "RELEASE AND

QUITCLAIM,"6 AND PETITIONERS COMPLIED BUT WITH A WRITTEN PROTEST REITERATING THEIR
PREVIOUS DEMAND THAT THEY WERE NONETHELESS ENTITLED TO RECEIVE THEIR SERVICE AWARDS.

ON MARCH 21, 1991, PETITIONERS INQUIRED FROM THE LEGAL SERVICE OF THE DEPARTMENT OF
LABOR AND EMPLOYMENT7 WHETHER RESPONDENT CORPORATION COULD LEGALLY REFUSE THE
PAYMENT OF THEIR SERVICE AWARDS AS MANDATED IN THEIR EMPLOYEE'S MANUAL.

ABOUT THREE MONTHS LATER THE LABOR DEPARTMENT ISSUED ITS OPINION, WITH PERTINENT
AUTHORITIES, RESPONDING TO PETITIONERS' QUERY AS FOLLOWS:

XXX XXX XXX

THIS DEPARTMENT BELIEVES THAT YOUR QUERY PRESENTS SEVERAL ISSUES. THESE SHALL BE
ADDRESSED POINT BY POINT, THUS:

FIRST, THE DEPARTMENT DEEMS THE SERVICE AWARD TO BE PART OF THE BENEFITS OF THE EMPLOYEES
OF INSULAR LIFE. COMPANY POLICIES AND PRACTICES ARE FERTILE SOURCES OF EMPLOYEE'S RIGHTS.
THESE MUST BE APPLIED UNIFORMLY AS INTERPRETATION CANNOT VARY FROM ONE EMPLOYEE TO
ANOTHER. . . .

XXX XXX XXX

WHILE IT MAY BE ARGUED THAT THE ABOVE-CITED CASE APPLIES ONLY TO RETIREMENT BENEFITS, WE
FIND SOLACE IN THE CASES OF LIBERATION STEAMSHIP CO., INC. VS. CIR AND NATIONAL DEVELOPMENT
COMPANY VS. UNLICENSED CREW MEMBERS OF THREE DONS VESSELS (23 SCRA 1105) WHERE THE
SUPREME COURT HELD THAT A GRATUITY OR BONUS, BY REASON OF ITS LONG AND REGULAR
CONCESSION INDICATING COMPANY PRACTICE, MAY BECOME REGARDED AS PART OF REGULAR
COMPENSATION AND THUS DEMANDABLE.

XXX XXX XXX

SECOND, THE AWARD IS EARNED AT THE PERTINENT ANNIVERSARY DATE. AT THIS TIME, ENTITLEMENT
TO THE AWARD BECOMES VESTED. THE ANNIVERSARY DATE IS THE ONLY CRUCIAL DETERMINING
FACTOR. SINCE THE AWARD ACCRUES ON THAT DATE, IT IS OF NO MOMENT THAT THE ENTITLED
EMPLOYEE IS SEPARATED FROM SERVICE (FOR WHATEVER CAUSE) BEFORE THE AWARDS ARE PHYSICALLY
HANDED OUT.

XXX XXX XXX

THIRD, EVEN IF THE AWARD HAS NOT ACCRUED — AS WHEN AN EMPLOYEE IS SEPARATED FROM
SERVICE BECAUSE OF REDUNDANCY BEFORE THE APPLICABLE 5TH YEAR ANNIVERSARY, THE MATERIAL
BENEFITS OF THE AWARD MUST BE GIVEN, PRORATED, BY INSULAR LIFE. THIS IS ESPECIALLY TRUE (IN)
REDUNDANCY, WHEREIN HE/SHE HAD NO CONTROL.

XXX XXX XXX

FOURTH, THE FACT THAT YOU WERE REQUIRED TO SIGN "RELEASE AND QUITCLAIM" DOES NOT AFFECT
YOUR RIGHT TO THE MATERIAL BENEFITS OF THE SERVICE AWARD. . . .8

MEANWHILE, IN THE SAME YEAR, PRIVATE RESPONDENT CELEBRATED ITS 80TH ANNIVERSARY WHEREIN
THE MANAGEMENT APPROVED THE GRANT OF AN ANNIVERSARY BONUS EQUIVALENT TO ONE (1)
MONTH SALARY ONLY TO PERMANENT AND PROBATIONARY EMPLOYEES AS OF NOVEMBER 15, 1990.9

ON MARCH 26, 1991, RESPONDENT COMPANY ANNOUNCED THE GRANT OF PERFORMANCE BONUS TO
BOTH RANK AND FILE EMPLOYEES AND SUPERVISORY SPECIALIST GRADE AND MANAGERIAL STAFF
EQUIVALENT TO TWO (2) MONTHS SALARY AND 2.75 BASIC SALARY, RESPECTIVELY, AS OF DECEMBER 30,
1990. THE PERFORMANCE BONUS, HOWEVER, WOULD BE GIVEN ONLY TO PERMANENT EMPLOYEES AS
OF MARCH 30, 1991. 10

DESPITE THE AFOREQUOTED OPINION OF THE DEPARTMENT OF LABOR AND EMPLOYMENT, PRIVATE
RESPONDENT REFUSED TO PAY PETITIONERS SERVICE AWARDS. THIS PROMPTED THE LATTER TO FILE A
CONSOLIDATED COMPLAINT, WHICH WAS ASSIGNED TO NLRC LABOR ARBITER LOPEZ, FOR PAYMENT OF
THEIR SERVICE AWARDS, INCLUDING PERFORMANCE AND ANNIVERSARY BONUSES.

IN THEIR COMPLAINT, PETITIONERS CONTENDED THAT THEY ARE LIKEWISE ENTITLED TO THE
PERFORMANCE AND ANNIVERSARY BONUSES BECAUSE, AT THE TIME THE PERFORMANCE BONUS WAS
ANNOUNCED TO BE GIVEN, THEY WERE ONLY SHORT OF TWO (2) MONTHS SERVICE TO BE ENTITLED TO
THE FULL AMOUNT THEREOF AS THEY HAD ALREADY SERVED THE COMPANY FOR TEN (10) MONTHS
PRIOR TO THE DECLARATION OF THE GRANT OF SAID BENEFIT. ALSO, THEY LACKED ONLY FIFTEEN (15)
DAYS TO BE ENTITLED TO THE FULL AMOUNT OF THE ANNIVERSARY BONUS WHEN IT WAS ANNOUNCED
TO BE GIVEN TO EMPLOYEES AS OF NOVEMBER 15, 1990.
IN A DECISION DATED OCTOBER 8, 1992, THE LABOR ARBITER ORDERED RESPONDENT COMPANY TO PAY
PETITIONERS THEIR SERVICE AWARDS, ANNIVERSARY BONUSES AND PRORATED PERFORMANCE
BONUSES, INCLUDING TEN PERCENT (10%) THEREOF AS ATTORNEY'S FEES.

RESPONDENT COMPANY APPEALED TO PUBLIC RESPONDENT NLRC CLAIMING GRAVE ABUSE OF

DISCRETION COMMITTED BY THE LABOR ARBITER IN HOLDING IT LIABLE TO PAY SAID SERVICE AWARD,
PERFORMANCE AND ANNIVERSARY BONUSES, AND IN NOT FINDING THAT PETITIONERS WERE ESTOPPED
FROM CLAIMING THE SAME AS SAID BENEFITS HAD ALREADY BEEN GIVEN TO THEM.

IN SETTING ASIDE THE DECISION OF THE LABOR ARBITER, RESPONDENT NLRC UPHELD THE VALIDITY OF
THE QUITCLAIM DOCUMENT EXECUTED BY PETITIONERS. FOR THIS CONCLUSION, IT RATIONALIZED THAT
"(C)ERTAINLY, BEFORE COMPLAINANTS SIGNED THE QUITCLAIM AND RELEASE, THEY ARE AWARE OF THE
NATURE OF SUCH DOCUMENT. IN FACT, THEY NEVER ASSAILED THE GENUINENESS AND DUE EXECUTION
OF THE SAME. HENCE, WE CAN SAFELY SAY THAT THEY WERE NOT PLACED UNDER DURESS OR WERE
COMPELLED BY MEANS OF FORCE TO SIGN THE DOCUMENT." 11

FURTHERMORE, THE NLRC HELD THAT "(N)EITHER WAS THERE ANY UNWRITTEN AGREEMENT BETWEEN
COMPLAINANTS AND RESPONDENT UPON SEPARATION, WHICH ENTITLED THE FORMER TO OTHER
RENUMERATIONS OR BENEFITS. ON THE CONTRARY, THEY VOLUNTARILY ACCEPTED THE REDUNDANCY
BENEFIT PACKAGE, OTHERWISE, THEY WOULD NOT HAVE BEEN SEPARATED FROM EMPLOYMENT." 12

HENCE, THIS PETITION WHEREIN IT IS POSTULATED THAT THE BASIC ISSUE IS WHETHER OR NOT
RESPONDENT NLRC COMMITTED REVERSIBLE ERROR OR GRAVE ABUSE OF DISCRETION IN AFFIRMING
THE VALIDITY OF THE "RELEASE AND QUITCLAIM" AND, CONSEQUENTLY, THAT PETITIONERS ARE NOT
ENTITLED TO PAYMENT OF SERVICE AWARDS AND OTHER BONUSES. 13 THE SOLICITOR GENERAL PUBLIC
RESPONDENT NLRC AND PRIVATE RESPONDENT COMPANY DULY FILED THEIR RESPECTIVE COMMENTS.
14

IN THEIR PETITION, PETITIONERS STRESS THAT THEY HAVE ACTUALLY DEVOTED MUCH, IF NOT ALL, OF
THEIR EMPLOYABLE LIFE WITH PRIVATE RESPONDENT; THAT GIVEN THEIR LENGTH OF SERVICE, THEIR
LOYALTY TO THE LATTER IS EASILY DEMONSTRABLE; AND THAT THE SAME LENGTH OF SERVICE HAD
RENDERED SLIM, IF NOT ELIMINATED, THEIR CHANCES OF GETTING EMPLOYED SOMEWHERE ELSE." 15

ON THE OTHER HAND, RESPONDENT COMPANY REITERATES ITS BASIC CONTENTION THAT THE
CONSIDERATION FOR THE SETTLEMENT OF PETITIONERS' CLAIM IS CREDIBLE AND REASONABLE, MORE
THAN SATISFIES THE LEGAL REQUIREMENT THEREFOR, AND THAT PETITIONERS, IN EXECUTING THE
RELEASE AND QUITCLAIM, DID SO VOLUNTARILY AND WITH FULL KNOWLEDGE OF THE CONSEQUENCES
THEREOF. 16

THE PETITION BEING MERITORIOUS, WE FIND FOR PETITIONERS.

UNDER PREVAILING JURISPRUDENCE, THE FACT THAT AN EMPLOYEE HAS SIGNED A SATISFACTION
RECEIPT FOR HIS CLAIMS DOES NOT NECESSARILY RESULT IN THE WAIVER THEREOF. THE LAW DOES NOT
CONSIDER AS VALID ANY AGREEMENT WHEREBY A WORKER AGREES TO RECEIVE LESS COMPENSATION
THAN WHAT HE IS ENTITLED TO RECOVER. A DEED OF RELEASE OR QUITCLAIM CANNOT BAR AN
EMPLOYEE FROM DEMANDING BENEFITS TO WHICH HE IS LEGALLY ENTITLED. 17
WE HAVE HERETOFORE EXPLAINED THAT THE REASON WHY QUITCLAIMS COMMONLY FROWNED UPON
AS CONTRARY TO PUBLIC POLICY, AND WHY THEY ARE HELD TO BE INEFFECTIVE TO BAR CLAIMS FOR THE
FULL MEASURE OF THE WORKERS' LEGAL RIGHTS, IS THE FACT THAT THE EMPLOYER AND THE EMPLOYEE
OBVIOUSLY DO NOT STAND ON THE SAME FOOTING. THE EMPLOYER DROVE THE EMPLOYEE TO THE
WALL. THE LATTER MUST HAVE HARSH NECESSITIES OF LIFE. HE THUS FOUND HIMSELF IN NO POSITION
TO RESIST MONEY PROFFERED. HIS, THEN, IS A CASE OF ADHERENCE, NOT OF CHOICE. ONE THING SURE,
HOWEVER, IS THAT PETITIONERS DID NOT RELENT ON THEIR CLAIM. THEY PRESSED IT. THEY ARE
DEEMED NOT HAVE WAIVED ANY OF THEIR RIGHTS. RENUNTIATIO NON PRAESUMITUR. 18

ALONG THIS LINE, WE HAVE MORE TRENCHANTLY DECLARED THAT QUITCLAIMS AND/OR COMPLETE
RELEASES EXECUTED BY THE EMPLOYEES DO NOT ESTOP THEM FROM PURSUING THEIR CLAIMS ARISING
FROM UNFAIR LABOR PRACTICES OF THE EMPLOYER. THE BASIC REASON FOR THIS IS THAT SUCH
QUITCLAIMS AND/OR COMPLETE RELEASES ARE AGAINST PUBLIC POLICY AND, THEREFORE, NULL AND
VOID. THE ACCEPTANCE OF TERMINATION DOES NOT DIVEST A LABORER OF THE RIGHT TO PROSECUTE
HIS EMPLOYER FOR UNFAIR LABOR PRACTICE ACTS. 19 WHILE THERE MAYBE POSSIBLE EXCEPTIONS TO
THIS HOLDING, WE DO NOT PERCEIVE ANY IN THE CASE AT BAR.

FURTHERMORE, IN THE INSTANT CASE, IT IS AN UNDISPUTED FACT THAT WHEN PETITIONERS SIGNED
THE INSTRUMENT OF RELEASE AND QUITCLAIM, THEY MADE A WRITTEN MANIFESTATION RESERVING
THEIR RIGHT TO DEMAND THE PAYMENT OF THEIR SERVICE AWARDS. 20 THE ELEMENT OF TOTAL
VOLUNTARINESS IN EXECUTING THAT INSTRUMENT IS NEGATED BY THE FACT THAT THEY EXPRESSLY
STATED THEREIN THEIR CLAIM FOR THE SERVICE AWARDS, A MANIFESTATION EQUIVALENT TO A
PROTEST AND A DISAVOWAL OF ANY WAIVER THEREOF.

AS EARLIER STATED, PETITIONERS EVEN SOUGHT THE OPINION OF THE DEPARTMENT OF LABOR AND
EMPLOYMENT TO DETERMINE WHERE AND HOW THEY STOOD IN THE CONTROVERSY. THIS ACT ONLY
SHOWS THEIR ADAMANT DESIRE TO OBTAIN THEIR SERVICE AWARDS AND TO UNDERSCORE THEIR
DISAGREEMENT WITH THE "RELEASE AND QUITCLAIM" THEY WERE VIRTUALLY FORCED TO SIGN IN
ORDER TO RECEIVE THEIR SEPARATION PAY.

WE HAVE POINTED OUT IN VELOSO, ET AL., VS. DEPARTMENT OF LABOR AND EMPLOYMENT, ET AL.,21
THAT:

WHILE RIGHTS MAY BE WAIVED, THE SAME MUST NOT BE CONTRARY TO LAW, PUBLIC ORDER, PUBLIC
POLICY, MORALS OR GOOD CUSTOMS OR PREJUDICIAL TO A THIRD PERSON WITH A RIGHT RECOGNIZED
BY LAW.

ARTICLE 6 OF THE CIVIL CODE RENDERS A QUITCLAIM AGREEMENT VOID AB INITIO WHERE THE
QUITCLAIM OBLIGATES THE WORKERS CONCERNED TO FOREGO THEIR BENEFITS WHILE AT THE SAME
TIME EXEMPTING THE EMPLOYER FROM ANY LIABILITY THAT IT MAY CHOOSE TO REJECT. THIS RUNS
COUNTER TO ART. 22 OF THE CIVIL CODE WHICH PROVIDES THAT NO ONE SHALL BE UNJUSTLY ENRICHED
AT THE EXPENSE OF ANOTHER.

WE AGREE WITH THE FURTHER OBSERVATIONS OF THE SOLICITOR GENERAL WHO, IN RECOMMENDING
THE SETTING ASIDE OF THE DECISION OF RESPONDENT NLRC, CALLED ATTENTION TO THE FACT THAT
"CONTRARY TO PRIVATE RESPONDENT'S CONTENTION, THE "ADDITIONAL" REDUNDANCY PACKAGE
DOES NOT AND COULD NOT HAVE COVERED THE PAYMENT OF THE SERVICE AWARDS, PERFORMANCE
AND ANNIVERSARY BONUSES SINCE THE PRIVATE RESPONDENT COMPANY HAS INITIALLY MAINTAINED
THE POSITION THAT PETITIONERS ARE NOT LEGALLY ENTITLED TO THE SAME. . . . SURPRISINGLY, IN A
SUDDEN TURNABOUT, PRIVATE RESPONDENT NOW CLAIMS . . . THAT THE SUBJECT AWARDS AND
BONUSES ARE INTEGRATED IN THE REDUNDANCY PACKAGE. IT IS EVIDENT, THEREFORE, THAT PRIVATE
RESPONDENT HAS NOT TRULY CONSOLIDATED THE PAYMENT OF THE SUBJECT AWARDS AND BONUSES
IN THE REDUNDANCY PACKAGE PAID TO THE PETITIONERS. 22

WE ARE LIKEWISE IN ACCORD WITH THE FINDINGS OF THE LABOR ARBITER THAT PETITIONERS ARE
INDEED ENTITLED TO RECEIVE SERVICE AWARDS AND OTHER BENEFITS, THUS:

SINCE EACH OF THE COMPLAINANTS HAVE RENDERED SERVICES TO RESPONDENT IN MULTIPLE(S) OF

FIVE YEARS PRIOR TO THEIR SEPARATION FROM EMPLOYMENT, RESPONDENT SHOULD BE PAID THEIR
SERVICE AWARDS FOR 1990.

WE ARE NOT IMPRESSED WITH THE CONTENTION OF THE RESPONDENT THAT SERVICE AWARD IS A
BONUS AND THEREFORE IS AN ACT OF GRATUITY WHICH THE COMPLAINANTS HAVE NO RIGHT TO
DEMAND. SERVICE AWARDS ARE GOVERNED BY RESPONDENT'S EMPLOYEE'S MANUAL AND (ARE)
THEREFORE CONTRACTUAL IN NATURE.

ON THE MATTER OF ANNIVERSARY AND PERFORMANCE BONUSES, IT IS NOT DISPUTED THAT IT IS

RESPONDENT'S PRACTICE TO GIVE AN ANNIVERSARY BONUS EVERY FIVE YEARS FROM ITS
INCORPORATION; THAT PURSUANT TO THIS PRACTICE, RESPONDENT DECLARED AN ANNIVERSARY
BONUS FOR ITS 80TH ANNIVERSARY IN 1990; THAT PER TERMS OF THIS DECLARATION, ONLY THE
EMPLOYEES OF RESPONDENT AS OF 15 NOVEMBER 1990 WILL BE GIVEN THE BONUS; AND THAT
COMPLAINANTS WERE SEPARATED FROM RESPONDENT ONLY 25 DAYS BEFORE :THE RESPONDENT'S
ANNIVERSARY. ON THE OTHER HAND, IT IS ALSO (NOT) DISPUTED THAT RESPONDENT REGULARLY GIVES
PERFORMANCE BONUSES; THAT FOR ITS COMMENDABLE PERFORMANCE IN 1990, RESPONDENT
DECLARED A PERFORMANCE BONUS; THAT PER TERMS OF THIS DECLARATION, ONLY PERMANENT
EMPLOYEES OF RESPONDENT AS OF MARCH 30, 1991 WILL BE GIVEN THIS BONUS; AND THAT
COMPLAINANTS WERE EMPLOYEES OF RESPONDENTS FOR THE FIRST 10 MONTHS OF 1990.

WE CANNOT SEE ANY COGENT REASON WHY AN ANNIVERSARY BONUS WHICH RESPONDENT GIVES
ONLY ONCE IN EVERY FIVE YEARS WERE GIVEN TO ALL EMPLOYEES OF RESPONDENT AS OF 15
NOVEMBER 1990 (PRO RATA EVEN TO PROBATIONARY EMPLOYEES; ANNEX 9) AND NOT TO
COMPLAINANTS WHO HAVE RENDERED SERVICE TO RESPONDENT FOR MOST OF THE FIVE YEAR CYCLE.
THIS IS ALSO TRUE IN THE CASE OF PERFORMANCE BONUS WHICH WERE GIVEN TO PERMANENT
EMPLOYEES OF RESPONDENT AS OF 30 MARCH 1991 AND NOT TO EMPLOYEES WHO HAVE BEEN
CONNECTED WITH RESPONDENT FOR MOST OF 1990 BUT WERE SEPARATED PRIOR TO 30 MARCH 1991.

WE BELIEVE THAT THE PREROGATIVE OF THE EMPLOYER TO DETERMINE WHO AMONG ITS EMPLOYEE
SHALL BE ENTITLED TO RECEIVE BONUSES WHICH ARE, AS A MATTER OF PRACTICE, GIVEN PERIODICALLY
CANNOT BE EXERCISED ARBITRARILY. 23 (EMPHASIS AND CORRECTIONS IN PARENTHESES SUPPLIED.)

THE GRANT OF SERVICE AWARDS IN FAVOR OF PETITIONERS IS MORE IMPORTANTLY UNDERSCORED IN

THE PRECEDENT CASE OF INSULAR LIFE ASSURANCE CO., LTD., ET AL. VS. NLRC, ET AL., 24 WHERE THIS
COURT RULED THAT "AS TO THE SERVICE AWARD DIFFERENTIALS CLAIMED BY SOME RESPONDENT
UNION MEMBERS, THE COMPANY POLICY SHALL LIKEWISE PREVAIL, THE SAME BEING BASED ON THE
EMPLOYMENT CONTRACTS OR COLLECTIVE BARGAINING AGREEMENTS BETWEEN THE PARTIES. AS THE
PETITIONERS HAD EXPLAINED, PURSUANT TO THEIR POLICIES ON THE MATTER, THE SERVICE AWARD
DIFFERENTIAL IS GIVEN AT THE END OF THE YEAR TO AN EMPLOYEE WHO HAS COMPLETED YEARS OF
SERVICE DIVISIBLE BY 5.

A BONUS IS NOT A GIFT OR GRATUITY, BUT IS PAID FOR SOME SERVICES OR CONSIDERATION AND IS IN
ADDITION TO WHAT WOULD ORDINARILY BE GIVEN. 25 THE TERM "BONUS" AS USED IN EMPLOYMENT
CONTRACTS, ALSO CONVEYS AN IDEA OF SOMETHING WHICH IS GRATUITOUS, OR WHICH MAY BE
CLAIMED TO BE GRATUITOUS, OVER AND ABOVE THE PRESCRIBED WAGE WHICH THE EMPLOYER AGREES
TO PAY.

WHILE THERE IS A CONFLICT OF OPINION AS TO THE VALIDITY OF AN AGREEMENT TO PAY ADDITIONAL

SUMS FOR THE PERFORMANCE OF THAT WHICH THE PROMISEE IS ALREADY UNDER OBLIGATION TO
PERFORM, SO AS TO GIVE THE LATTER THE RIGHT TO ENFORCE SUCH PROMISE AFTER PERFORMANCE,
THE AUTHORITIES HOLD THAT IF ONE ENTERS INTO A CONTRACT OF EMPLOYMENT UNDER AN
AGREEMENT THAT HE SHALL BE PAID A CERTAIN SALARY BY THE WEEK OR SOME OTHER STATED PERIOD
AND, IN ADDITION, A BONUS, IN CASE HE SERVES FOR A SPECIFIED LENGTH OF TIME, THERE IS NO
REASON FOR REFUSING TO ENFORCE THE PROMISE TO PAY THE BONUS, IF THE EMPLOYEE HAS SERVED
DURING THE STIPULATED TIME, ON THE GROUND THAT IT WAS A PROMISE OF A MERE GRATUITY.

THIS IS TRUE IF THE CONTRACT CONTEMPLATES A CONTINUANCE OF THE EMPLOYMENT FOR A DEFINITE
TERM, AND THE PROMISE OF THE BONUS IS MADE AT THE TIME THE CONTRACT IS ENTERED INTO. IF NO
TIME IS FIXED FOR THE DURATION OF THE CONTRACT OF EMPLOYMENT, BUT THE EMPLOYEE ENTERS
UPON OR CONTINUES IN SERVICE UNDER AN OFFER OF A BONUS IF HE REMAINS THEREIN FOR A
CERTAIN TIME, HIS SERVICE, IN CASE HE REMAINS FOR THE REQUIRED TIME, CONSTITUTES AN
ACCEPTANCE OF THE OFFER OF THE EMPLOYER TO PAY THE BONUS AND, AFTER THAT ACCEPTANCE, THE
OFFER CANNOT BE WITHDRAWN, BUT CAN BE ENFORCED BY THE EMPLOYEE. 26

THE WEIGHT OF AUTHORITY IN AMERICAN JURISPRUDENCE, WITH WHICH WE ARE PERSUADED TO

AGREE, IS THAT AFTER THE ACCEPTANCE OF A PROMISE BY AN EMPLOYER TO PAY THE BONUS, THE SAME
CANNOT BE WITHDRAWN, BUT MAY BE ENFORCED BY THE EMPLOYEE. 27 HOWEVER, IN THE CASE AT
BAR, EQUITY DEMANDS THAT THE PERFORMANCE AND ANNIVERSARY BONUSES SHOULD BE PRORATED
TO THE NUMBER OF MONTHS THAT PETITIONERS ACTUALLY SERVED RESPONDENT COMPANY IN THE
YEAR 1990. THIS OBSERVATION SHOULD BE TAKEN INTO ACCOUNT IN THE COMPUTATION OF THE
AMOUNTS TO BE AWARDED TO PETITIONERS.

WHEREFORE, THE ASSAILED DECISION AND RESOLUTION OF RESPONDENT NATIONAL LABOR RELATIONS
COMMISSION ARE HEREBY SET ASIDE AND THE DECISION OF LABOR ARBITER ALEX ARCADIO LOPEZ IS
REINSTATED.

SO ORDERED.
G.R. NO. 103575. APRIL 5, 1993.

BUSINESSDAY INFORMATION SYSTEMS AND SERVICES, INC., AND RAUL LOCSIN, PETITIONERS,
VS.
NATIONAL LABOR RELATIONS COMMISSION, NEMESIO MOYA ALFREDO AMANTE, EDWIN BERSAMINA,
SAMUEL CUELA, ROMEO DELA CRUZ, MANUEL DE JESUS, SEVERINO DELA CRUZ, DANILO ESPIRITU,
ANGEL FLORES, DANILO FRANCISCO, FLORENCIO GLORIOSO, GERARDO MANUEL, ARMANDO MENDOZA,
PEDRO MORELOS, ALEXON ORBETA, ROMEO PEREZ, ALFREDO SABANDO, NESTOR SANTOS, ALFREDO
SEPTRIMO, OSCAR SEVILLA, EDUARDO SIOSON, REYMUNDO TIONGCO, TERESITA REYES, CARMENCITA
CARPIO, GENARO NABUTAS, DANILO NAMPLATA, AND ROLANDO GAMIT, RESPONDENTS.

QUISUMBING, TORRES & EVANGELISTA FOR PETITIONERS.

REYNALDO M. MARAAN FOR PRIVATE RESPONDENTS.

SYLLABUS

1. LABOR LAWS AND SOCIAL LEGISLATION; TERMINATION OF EMPLOYMENT; EMPLOYER MAY NOT,
IN THE GUISE OF EXERCISING MANAGEMENT PREROGATIVES, PAY SEPARATION BENEFITS UNEQUALLY;
CASE AT BAR. — PETITIONERS' RIGHT TO TERMINATE EMPLOYEES ON ACCOUNT OF RETRENCHMENT TO
PREVENT LOSSES OR CLOSURE OF BUSINESS OPERATIONS, IS RECOGNIZED BY LAW, BUT IT MAY NOT PAY
SEPARATION BENEFITS UNEQUALLY FOR SUCH DISCRIMINATION BREEDS RESENTMENT AND ILL-WILL
AMONG THOSE WHO HAVE BEEN TREATED LESS GENEROUSLY THAN OTHERS. "GRANTING THAT THE 16
MAY 1988 TERMINATION WAS A RETRENCHMENT SCHEME, AND THE 31 JULY 1988 AND THE 28
FEBRUARY 1989 WERE DUE TO CLOSURE, THE LAW REQUIRES THE GRANTING OF THE SAME AMOUNT OF
SEPARATION BENEFITS TO THE AFFECTED EMPLOYEES IN ANY OF THE CASES. THE RESPONDENT ARGUED
THAT THE GIVING OF MORE SEPARATION BENEFIT TO THE SECOND AND THIRD BATCHES OF EMPLOYEES
SEPARATED WAS THEIR EXPRESSION OF GRATITUDE AND BENEVOLENCE TO THE REMAINING EMPLOYEES
WHO HAVE TRIED TO SAVE AND MAKE THE COMPANY VIABLE IN THE REMAINING DAYS OF OPERATIONS.
THIS JUSTIFICATION IS NOT PLAUSIBLE. THERE ARE WORKERS IN THE FIRST BATCH WHO HAVE RENDERED
MORE YEARS OF SERVICE AND COULD EVEN BE SAID TO BE MORE EFFICIENT THAN THOSE SEPARATED
SUBSEQUENTLY, YET, THEY DID NOT RECEIVE THE SAME RECOGNITION. UNDERSTANDABLY, THEIR BEING
RETAINED LONGER IN THEIR JOB AND BE NOT INCLUDED IN THE BATCH THAT WAS FIRST TERMINATED,
WAS A CONCESSION ENOUGH AND MAY ALREADY BE CONSIDERED AS FAVOR GRANTED BY THE
RESPONDENTS TO THE PREJUDICE OF THE COMPLAINANTS. AS IT HAPPENED, THERE ARE WORKERS IN
THE FIRST BATCH WHO HAVE RENDERED MORE YEARS IN SERVICE BUT RECEIVED LESSER SEPARATION
PAY, BECAUSE OF THAT ARRANGEMENT MADE BY THE RESPONDENTS IN PAYING THEIR TERMINATION
BENEFITS . . ." CLEARLY, THERE WAS IMPERMISSIBLE DISCRIMINATION AGAINST THE PRIVATE
RESPONDENTS IN THE PAYMENT OF THEIR SEPARATION BENEFITS. THE LAW REQUIRES AN EMPLOYER TO
EXTEND EQUAL TREATMENT TO ITS EMPLOYEES. IT MAY NOT, IN THE GUISE OF EXERCISING
MANAGEMENT PREROGATIVES, GRANT GREATER BENEFITS TO SOME AND LESS TO OTHERS.
MANAGEMENT PREROGATIVES ARE NOT ABSOLUTE PREROGATIVES BUT ARE SUBJECT TO LEGAL LIMITS,
COLLECTIVE BARGAINING AGREEMENTS, OR GENERAL PRINCIPLES OF FAIR PLAY AND JUSTICE (UST VS.
NLRC, 190 SCRA 758). ARTICLE 283 OF THE LABOR CODE, AS AMENDED, PROTECTS WORKERS WHOSE
EMPLOYMENT IS TERMINATED BECAUSE OF CLOSURE OF THE ESTABLISHMENT OR REDUCTION OF
PERSONNEL (ABELLA VS. NLRC, 152 SCRA 141, 145).

2. ID.; ID.; CORPORATE OFFICER NOT PERSONALLY LIABLE FOR MONEY CLAIMS OF DISCHARGED
CORPORATE EMPLOYEES; EXCEPTION. — A CORPORATE OFFICER IS NOT PERSONALLY LIABLE FOR THE
MONEY CLAIMS OF DISCHARGED CORPORATE EMPLOYEES UNLESS HE ACTED WITH EVIDENT MALICE
AND BAD FAITH IN TERMINATING THEIR EMPLOYMENT. THERE IS NO EVIDENCE IN THIS CASE THAT
LOCSIN ACTED IN BAD FAITH OR WITH MALICE IN CARRYING OUT THE RETRENCHMENT AND EVENTUAL
CLOSURE OF THE COMPANY (GARCIA VS. NLRC, 153 SCRA 640), HENCE, HE MAY NOT BE HELD
PERSONALLY AND SOLIDARILY LIABLE WITH THE COMPANY FOR THE SATISFACTION OF THE JUDGMENT IN
FAVOR OF THE RETRENCHED EMPLOYEES.
3. ID.; GRANT OF BONUS; A PREROGATIVE, NOT AN OBLIGATION, OF EMPLOYER; ENTIRELY
DEPENDENT ON FINANCIAL CAPABILITY OF EMPLOYER TO GIVE IT. — IT IS SETTLED DO TRINE THAT THE
GRANT OF A BONUS IS A PREROGATIVE, NOT AN OBLIGATION, OF THE EMPLOYER (TRADERS ROYAL BANK
VS. NLRC, 189 SCRA 274). THE MATTER OF GIVING A BONUS OVER AND ABOVE THE WORKER'S LAWFUL
SALARIES AND ALLOWANCES IS ENTIRELY DEPENDENT ON THE FINANCIAL CAPABILITY OF THE EMPLOYER
TO GIVE IT. THE FACT THAT THE COMPANY'S BUSINESS WAS NO LONGER PROFITABLE (IT WAS IN FACT
MORIBUND) PLUS THE FACT THAT THE PRIVATE RESPONDENTS DID NOT WORK UP TO THE MIDDLE OF
THE YEAR (THEY WERE DISCHARGE IN MAY 1988) WERE VALID REASONS FOR NOT GRANTING THEM A
MID-YEAR BONUS. REQUIRING THE COMPANY TO PAY A MID-YEAR BONUS TO THEM ALSO WOULD IN
EFFECT PENALIZE THE COMPANY FOR ITS GENEROSITY TO THOSE WORKERS WHO REMAINED WITH THE
COMPANY "TILL THE END" OF ITS DAYS. (TRADERS ROYAL BANK VS. NLRC, SUPRA.) THE AWARD MUST
THEREFORE BE DELETED.

DECISION

GRIÑO-AQUINO, J P:

IN THIS PETITION FOR CERTIORARI, THE BUSINESSDAY INFORMATION SYSTEMS AND SERVICES INC. (OR
BSSI FOR BREVITY) AND ITS PRESIDENT/MANAGER, RAUL LOCSIN, SEEK TO ANNUL AND SET ASIDE THE
DECISION DATED FEBRUARY 13, 1991 OF THE NATIONAL LABOR RELATIONS COMMISSION (NLRC) WHICH
AFFIRMED THE LABOR ARBITER'S FINDING THAT THEY (PETITIONERS) ARE LIABLE TO PAY THE PRIVATE
RESPONDENTS SEPARATION PAY DIFFERENTIALS AND MID-YEAR BONUS.

BSSI WAS ENGAGED IN THE MANUFACTURE AND SALE OF COMPUTER FORMS. DUE TO FINANCIAL
REVERSES, ITS CREDITORS, THE DEVELOPMENT BANK OF THE PHILIPPINES (DBP) AND THE ASSET
PRIVATIZATION TRUST (APT), TOOK POSSESSION OF ITS ASSETS, INCLUDING A MANUFACTURING PLANT
IN MARILAO, BULACAN.

AS A RETRENCHMENT MEASURE, SOME PLANT EMPLOYEES, INCLUDING THE PRIVATE RESPONDENTS,

WERE LAID OFF ON MAY 16, 1988, AFTER PRIOR NOTICE, AND WERE PAID SEPARATION PAY EQUIVALENT
TO ONE-HALF (1/2) MONTH PAY FOR EVERY YEAR OF SERVICE. UPON RECEIPT OF THEIR SEPARATION PAY,
THE PRIVATE RESPONDENTS SIGNED INDIVIDUAL RELEASES AND QUITCLAIMS IN FAVOR OF BSSI.

BSSI RETAINED SOME EMPLOYEES IN AN ATTEMPT TO REHABILITATE ITS BUSINESS AS A TRADING

COMPANY.

HOWEVER, BARELY TWO AND A HALF MONTHS LATER, THESE REMAINING EMPLOYEES WERE LIKEWISE
DISCHARGED BECAUSE THE COMPANY DECIDED TO CEASE BUSINESS OPERATIONS ALTOGETHER. UNLIKE
THE PRIVATE RESPONDENTS, THAT BATCH OF EMPLOYEES RECEIVED SEPARATION PAY EQUIVALENT TO A
FULL MONTH'S SALARY FOR EVERY YEAR OF SERVICE PLUS MID-YEAR BONUS.

PROTESTING AGAINST THE DISCRIMINATION IN THE PAYMENT OF THEIR SEPARATION BENEFITS, THE
TWENTY-SEVEN (27) PRIVATE RESPONDENTS FILED THREE (3) SEPARATE COMPLAINTS AGAINST THE BSSI
AND RAUL LOCSIN. THESE CASES WERE LATER CONSOLIDATED.

AT THE CONCILIATION PROCEEDINGS BEFORE LABOR ARBITER MANUEL P. ASUNCION, PETITIONERS

DENIED THAT THERE WAS UNLAWFUL DISCRIMINATION IN THE PAYMENT OF SEPARATION BENEFITS TO
THE EMPLOYEES. THEY ARGUED THAT THE FIRST BATCH OF EMPLOYEES WAS PAID "RETRENCHMENT"
BENEFITS MANDATED BY LAW, WHILE THE REMAINING EMPLOYEES WERE GRANTED HIGHER
"SEPARATION" BENEFITS BECAUSE THEIR TERMINATION WAS ON ACCOUNT OF THE CLOSURE OF THE
BUSINESS.

BASED ON THE PLEADINGS OF THE PARTIES, LABOR ARBITER ASUNCION RENDERED A DECISION ON
APRIL 25, 1989 IN FAVOR OF THE COMPLAINANTS, NOW PRIVATE RESPONDENTS, THE DISPOSITIVE
PORTION OF WHICH READS:

"WHEREFORE, THE RESPONDENTS ARE HEREBY ORDERED TO PAY THE COMPLAINANTS THEIR
SEPARATION PAY DIFFERENTIALS AND MID-YEAR BONUS FOR THE YEAR 1988." (P- 38, ROLLO).

UPON APPEAL BY THE COMPANY TO THE NLRC, THE SECOND DIVISION ON FEBRUARY 13, 1991,
AFFIRMED THE DECISION OF THE LABOR ARBITER.

PETITIONERS' MOTION FOR RECONSIDERATION OF THE RESOLUTION HAVING BEEN DENIED, THEY HAVE
TAKEN THE PRESENT RECOURSE.

IN CASE OF RETRENCHMENT OF A COMPANY TO PREVENT LOSSES AND CLOSURE OF BUSINESS

OPERATION, THE LAW PROVIDES:

ART. 283. CLOSURE OF ESTABLISHMENT AND REDUCTION OF PERSONNEL. — THE EMPLOYER MAY
ALSO TERMINATE THE EMPLOYMENT OF ANY EMPLOYEE DUE TO THE INSTALLATION OF LABOR SAVING
DEVICES, REDUNDANCY, RETRENCHMENT TO PREVENT LOSSES OR THE CLOSING OR CESSATION OF
OPERATIONS OF THE ESTABLISHMENT OR UNDERTAKING UNLESS THE CLOSING IS FOR THE PURPOSE OF
CIRCUMVENTING THE PROVISIONS OF THIS TITLE, BY SERVING A WRITTEN NOTICE ON THE WORKERS
AND THE MINISTRY OF LABOR AND EMPLOYMENT AT LEAST ONE (1) MONTH BEFORE THE INTENDED
DATE THEREOF. IN CASE OF TERMINATION DUE TO THE INSTALLATION OF LABOR SAVING DEVICES OR
REDUNDANCY, THE WORKER AFFECTED THEREBY SHALL BE ENTITLED TO A SEPARATION PAY EQUIVALENT
TO AT LEAST HIS ONE (1) MONTH PAY OR TO AT LEAST ONE (1) MONTH PAY FOR EVERY YEAR OF SERVICE,
WHICHEVER IS HIGHER. IN CASE OF RETRENCHMENT TO PREVENT LOSSES AND IN CASES OF CLOSURES
OR CESSATION OF OPERATIONS OF ESTABLISHMENT OR UNDERTAKING NOT DUE TO SERIOUS BUSINESS
LOSSES OR FINANCIAL REVERSES, THE SEPARATION PAY SHALL BE EQUIVALENT TO ONE (1) MONTH PAY
OR AT LEAST ONE HALF (L /2) MONTH PAY FOR EVERY YEAR OF SERVICE, WHICHEVER IS HIGHER. A
FRACTION OF AT LEAST SIX (6) MONTHS SHALL BE CONSIDERED ONE (1) WHOLE YEAR." (LABOR CODE;
EMPHASIS SUPPLIED.)

UNDOUBTEDLY, PETITIONERS' RIGHT TO TERMINATE EMPLOYEES ON ACCOUNT OF RETRENCHMENT TO

PREVENT LOSSES OR CLOSURE OF BUSINESS OPERATIONS, IS RECOGNIZED BY LAW, BUT IT MAY NOT PAY
SEPARATION BENEFITS UNEQUALLY FOR SUCH DISCRIMINATION BREEDS RESENTMENT AND ILL-WILL
AMONG THOSE WHO HAVE BEEN TREATED LESS GENEROUSLY THAN OTHERS.

THE FOLLOWING OBSERVATIONS OF THE COMMISSION ARE RELEVANT:

"THE RESPONDENTS CITED FINANCIAL BUSINESS DIFFICULTIES TO JUSTIFY THEIR TERMINATION OF THE
COMPLAINANTS' EMPLOYMENT ON 16 MAY 1988. THEY WERE GIVEN ONE-HALF (1/2) MONTH OF THEIR
SALARY FOR EVERY YEAR OF SERVICE. DUE TO CONTINUING LOSSES, WHICH IS A SIGN THAT BUSINESS,
AFTER THE TERMINATION DID NOT IMPROVE, THEY CLOSED OPERATIONS ON 31 JULY 1989, WHERE THEY
DISMISSED THE SECOND BATCH OF EMPLOYEES WHO WERE GIVEN ONE (1) MONTH PAY FOR EVERY YEAR
THEY SERVED. THE THIRD BATCH OF EMPLOYEES WERE TERMINATED ON 28 FEBRUARY 1989, WHO WERE
LIKEWISE GIVEN ONE (1) MONTHLY PAY FOR EVERY YEAR OF SERVICE. THE BUSINESS CLIMATE
OBTAINING ON 16 MAY 1988 WHEN THE COMPLAINANTS WERE TERMINATED DID NOT AT ALL DEFER
(SIC) IMPROVEMENT-WISE, WITH THAT OF 31 JULY 1988 NOR TO 28 FEBRUARY 1989. THE INTERNAL
BETWEEN THE DATES OF TERMINATION WAS SO CLOSE TO EACH OTHER, SO THAT, NO IMPROVEMENT IN
BUSINESS MAYBE LIKELY EXPECTED. IN FACT, THE RESPONDENTS SUFFERED CONTINUOUS LOSSES,
HENCE, THERE IS NO DIFFERENCE IN THE CIRCUMSTANCES OF THE BUSINESS TO DISTINGUISH.

"GRANTING THAT THE 16 MAY 1988 TERMINATION WAS A RETRENCHMENT SCHEME, AND THE 31 JULY
1988 AND THE 28 FEBRUARY 1989 WERE DUE TO CLOSURE, THE LAW REQUIRES THE GRANTING OF THE
SAME AMOUNT OF SEPARATION BENEFITS TO THE AFFECTED EMPLOYEES IN ANY OF THE CASES. THE
RESPONDENT ARGUED THAT THE GIVING OF MORE SEPARATION BENEFIT TO THE SECOND AND THIRD
BATCHES OF EMPLOYEES SEPARATED WAS THEIR EXPRESSION OF GRATITUDE AND BENEVOLENCE TO THE
REMAINING EMPLOYEES WHO HAVE TRIED TO SAVE AND MAKE THE COMPANY VIABLE IN THE
REMAINING DAYS OF OPERATIONS. THIS JUSTIFICATION IS NOT PLAUSIBLE. THERE ARE WORKERS IN THE
FIRST BATCH WHO HAVE RENDERED MORE YEARS OF SERVICE AND COULD EVEN BE SAID TO BE MORE
EFFICIENT THAN THOSE SEPARATED SUBSEQUENTLY, YET THEY DID NOT RECEIVE THE SAME
RECOGNITION. UNDERSTANDABLY, THEIR BEING RETAINED LONGER IN THEIR JOB AND BE NOT INCLUDED
IN THE BATCH THAT WAS FIRST TERMINATED, WAS A CONCESSION ENOUGH AND MAY ALREADY BE
CONSIDERED AS FAVOR GRANTED BY THE RESPONDENTS TO THE PREJUDICE OF THE COMPLAINANTS. AS
IT HAPPENED, THERE ARE WORKERS IN THE FIRST BATCH WHO HAVE RENDERED MORE YEARS IN
SERVICE BUT RECEIVED LESSER SEPARATION PAY, BECAUSE OF THAT ARRANGEMENT MADE BY THE
RESPONDENTS IN PAYING THEIR TERMINATION BENEFITS . . ."

(PP. 36-37, ROLLO)

CLEARLY, THERE WAS IMPERMISSIBLE DISCRIMINATION AGAINST THE PRIVATE RESPONDENTS IN THE
PAYMENT OF THEIR SEPARATION BENEFITS. THE LAW REQUIRES AN EMPLOYER TO EXTEND EQUAL
TREATMENT TO ITS EMPLOYEES. IT MAY NOT, IN THE GUISE OF EXERCISING MANAGEMENT
PREROGATIVES, GRANT GREATER BENEFITS TO SOME AND LESS TO OTHERS. MANAGEMENT
PREROGATIVES ARE NOT ABSOLUTE PREROGATIVES BUT ARE SUBJECT TO LEGAL LIMITS, COLLECTIVE
BARGAINING AGREEMENTS, OR GENERAL PRINCIPLES OF FAIR PLAY AND JUSTICE (UST VS. NLRC, 190
SCRA 758). ARTICLE 283 OF THE LABOR CODE, AS AMENDED, PROTECTS WORKERS WHOSE
EMPLOYMENT IS TERMINATED BECAUSE OF CLOSURE OF THE ESTABLISHMENT OR REDUCTION OF
PERSONNEL (ABELLA VS. NLRC, 152 SCRA 141, 145).

WITH REGARD TO THE PRIVATE RESPONDENTS' CLAIM FOR THE MID-YEAR BONUS, IT IS SETTLED
DOCTRINE THAT THE GRANT OF A BONUS IS A PREROGATIVE, NOT AN OBLIGATION, OF THE EMPLOYER
(TRADERS ROYAL BANK VS. NLRC, 189 SCRA 274). THE MATTER OF GIVING A BONUS OVER AND ABOVE
THE WORKER'S LAWFUL SALARIES AND ALLOWANCES IS ENTIRELY DEPENDENT ON THE FINANCIAL
CAPABILITY OF THE EMPLOYER TO GIVE IT. THE FACT THAT THE COMPANY'S BUSINESS WAS NO LONGER
PROFITABLE (IT WAS IN FACT MORIBUND) PLUS THE FACT THAT THE PRIVATE RESPONDENTS DID NOT
WORK UP TO THE MIDDLE OF THE YEAR (THEY WERE DISCHARGED IN MAY 1988) WERE VALID REASONS
FOR NOT GRANTING THEM A MID-YEAR BONUS. REQUIRING THE COMPANY TO PAY A MID-YEAR BONUS
TO THEM ALSO WOULD IN EFFECT PENALIZE THE COMPANY FOR ITS GENEROSITY TO THOSE WORKERS
WHO REMAINED WITH THE COMPANY TILL THE END" OF ITS DAYS. (TRADERS ROYAL BANK VS. NLRC,
SUPRA.) THE AWARD MUST THEREFORE BE DELETED.
THERE IS MERIT IN THE CONTENTION OF PETITIONER RAUL LOCSIN THAT THE COMPLAINT AGAINST HIM
SHOULD BE DISMISSED. A CORPORATE OFFICER IS NOT PERSONALLY LIABLE FOR THE MONEY CLAIMS OF
DISCHARGED CORPORATE EMPLOYEES UNLESS HE ACTED WITH EVIDENT MALICE AND BAD FAITH IN
TERMINATING THEIR EMPLOYMENT. THERE IS NO EVIDENCE IN THIS CASE THAT LOCSIN ACTED IN BAD
FAITH OR WITH MALICE IN CARRYING OUT THE RETRENCHMENT AND EVENTUAL CLOSURE OF THE
COMPANY (GARCIA VS. NLRC, 153 SCRA 640), HENCE, HE MAY NOT BE HELD PERSONALLY AND
SOLIDARILY LIABLE WITH THE COMPANY FOR THE SATISFACTION OF THE JUDGMENT IN FAVOR OF THE
RETRENCHED EMPLOYEES.

WHEREFORE, THE RESOLUTION OF THE NLRC ORDERING THE PETITIONER COMPANY TO PAY SEPARATION
PAY DIFFERENTIALS TO THE PRIVATE RESPONDENTS IS AFFIRMED. HOWEVER, THE AWARD OF MID-YEAR
BONUS TO THEM IS HEREBY DELETED AND SET ASIDE. PETITIONER RAUL LOCSIN IS ABSOLVED FROM ANY
PERSONAL LIABILITY TO THE RESPONDENT EMPLOYEES. NO COSTS.

SO ORDERED.
[G.R. NO. 149434. JUNE 3, 2004]

PHILIPPINE APPLIANCE CORPORATION (PHILACOR), PETITIONER, VS. THE COURT OF APPEALS, THE
HONORABLE SECRETARY OF LABOR BIENVENIDO E. LAGUESMA AND UNITED PHILACOR WORKERS
UNION-NAFLU, RESPONDENTS.
DECISION
YNARES-SANTIAGO, J.:

BEFORE US IS AN APPEAL BY CERTIORARI UNDER RULE 45 OF THE RULES OF COURT WHICH SEEKS TO SET
ASIDE THE DECISION[1] OF THE COURT OF APPEALS IN CA-G.R. SP NO. 59011, DENYING DUE COURSE TO
PETITIONER PHILIPPINE APPLIANCE CORPORATIONS PARTIAL APPEAL, AS WELL AS THE RESOLUTION[2]
OF THE SAME COURT, DATED AUGUST 10, 2001, DENYING THE MOTION FOR RECONSIDERATION.

PETITIONER IS A DOMESTIC CORPORATION ENGAGED IN THE BUSINESS OF MANUFACTURING

REFRIGERATORS, FREEZERS AND WASHING MACHINES. RESPONDENT UNITED PHILACOR WORKERS
UNION-NAFLU IS THE DULY ELECTED COLLECTIVE BARGAINING REPRESENTATIVE OF THE RANK-AND-FILE
EMPLOYEES OF PETITIONER. DURING THE COLLECTIVE BARGAINING NEGOTIATIONS BETWEEN
PETITIONER AND RESPONDENT UNION IN 1997 (FOR THE LAST TWO YEARS OF THE COLLECTIVE
BARGAINING AGREEMENT COVERING THE PERIOD OF JULY 1, 1997 TO AUGUST 31, 1999), PETITIONER
OFFERED THE AMOUNT OF FOUR THOUSAND PESOS (P4,000.00) TO EACH EMPLOYEE AS AN EARLY
CONCLUSION BONUS. PETITIONER CLAIMS THAT THIS BONUS WAS PROMISED AS A UNILATERAL
INCENTIVE FOR THE SPEEDING UP OF NEGOTIATIONS BETWEEN THE PARTIES AND TO ENCOURAGE
RESPONDENT UNION TO EXERT THEIR BEST EFFORTS TO CONCLUDE A CBA. UPON CONCLUSION OF THE
CBA NEGOTIATIONS, PETITIONER ACCORDINGLY GAVE THIS EARLY SIGNING BONUS.[3]

IN VIEW OF THE EXPIRATION OF THIS CBA, RESPONDENT UNION SENT NOTICE TO PETITIONER OF ITS
DESIRE TO NEGOTIATE A NEW CBA. PETITIONER AND RESPONDENT UNION BEGAN THEIR NEGOTIATIONS.
ON OCTOBER 22, 1999, AFTER ELEVEN MEETINGS, RESPONDENT UNION EXPRESSED DISSATISFACTION AT
THE OUTCOME OF THE NEGOTIATIONS AND DECLARED A DEADLOCK. A FEW DAYS LATER, ON OCTOBER
26, 1999, RESPONDENT UNION FILED A NOTICE OF STRIKE WITH THE NATIONAL CONCILIATION AND
MEDIATION BOARD (NCMB), REGION IV IN CALAMBA, LAGUNA, DUE TO THE BARGAINING DEADLOCK.[4]
A CONCILIATION AND MEDIATION CONFERENCE WAS HELD ON OCTOBER 30, 1999 AT THE NCMB IN
IMUS, CAVITE, BEFORE CONCILIATOR JOSE L. VELASCO. THE CONCILIATION MEETINGS STARTED WITH
EIGHTEEN UNRESOLVED ITEMS BETWEEN PETITIONER AND RESPONDENT UNION. AT THE MEETING ON
NOVEMBER 20, 1999, RESPONDENT UNION ACCEPTED PETITIONERS PROPOSALS ON FOURTEEN ITEMS,
[5] LEAVING THE FOLLOWING ITEMS UNRESOLVED: WAGES, RICE SUBSIDY, SIGNING, AND RETROACTIVE
BONUS.[6]

PETITIONER AND RESPONDENT UNION FAILED TO ARRIVE AT AN AGREEMENT CONCERNING THESE FOUR
REMAINING ITEMS. ON JANUARY 18, 2000, RESPONDENT UNION WENT ON STRIKE AT THE PETITIONERS
PLANT AT BARANGAY MAUNONG, CALAMBA, LAGUNA AND AT ITS WASHING PLANT AT PARAAQUE,
METRO MANILA. THE STRIKE LASTED FOR ELEVEN DAYS AND RESULTED IN THE STOPPAGE OF
MANUFACTURING OPERATIONS AS WELL AS LOSSES FOR PETITIONER, WHICH CONSTRAINED IT TO FILE A
PETITION BEFORE THE DEPARTMENT OF LABOR AND EMPLOYMENT (DOLE). LABOR SECRETARY
BIENVENIDO LAGUESMA ASSUMED JURISDICTION OVER THE DISPUTE AND, ON JANUARY 28, 2000,
ORDERED THE STRIKING WORKERS TO RETURN TO WORK WITHIN TWENTY-FOUR HOURS FROM NOTICE
AND DIRECTED PETITIONER TO ACCEPT BACK THE SAID EMPLOYEES.[7]

ON APRIL 14, 2000, SECRETARY LAGUESMA ISSUED THE FOLLOWING ORDER:[8]

IN VIEW OF THE FOREGOING, WE FIX THE WAGE INCREASES AT P30 PER DAY FOR THE FIRST YEAR AND
P25 FOR THE SECOND YEAR.

THE RICE SUBSIDY AND RETROACTIVE PAY BASE ARE MAINTAINED AT THEIR EXISTING LEVELS AND RATES.

FINALLY, THIS OFFICE RULES IN FAVOR OF COMPANYS PROPOSAL ON SIGNING BONUS. WE BELIEVE THAT
A P3,000 BONUS IS FAIR AND REASONABLE UNDER THE CIRCUMSTANCES.

WHEREFORE, PREMISES CONSIDERED, PHILIPPINE APPLIANCE CORPORATION AND UNITED PHILACOR

WORKERS UNION-NAFLU ARE HEREBY DIRECTED TO CONCLUDE A COLLECTIVE BARGAINING AGREEMENT
FOR THE PERIOD JULY 1, 1999 TO JUNE 30, 2001. THE AGREEMENT IS TO INCORPORATE THE
DISPOSITION SET FORTH ABOVE AND INCLUDES OTHER ITEMS ALREADY AGREED UPON IN THE COURSE
OF NEGOTIATION AND CONCILIATION.

SO ORDERED. (EMPHASIS SUPPLIED)

ON APRIL 27, 2000, PETITIONER FILED A PARTIAL MOTION FOR RECONSIDERATION[9] STATING THAT
WHILE IT ACCEPTED THE DECISION OF SECRETARY LAGUESMA, IT TOOK EXCEPTION TO THE AWARD OF
THE SIGNING BONUS. PETITIONER ARGUED THAT THE AWARD OF THE SIGNING BONUS WAS PATENTLY
ERRONEOUS SINCE IT WAS NOT PART OF THE EMPLOYEES SALARIES OR BENEFITS OR OF THE COLLECTIVE
BARGAINING AGREEMENT. IT IS NOT DEMANDABLE OR ENFORCEABLE SINCE IT IS IN THE NATURE OF AN
INCENTIVE. AS NO CBA WAS CONCLUDED THROUGH THE MUTUAL EFFORTS OF THE PARTIES, THE
PURPOSE FOR THE SIGNING BONUS WAS NOT SERVED. ON MAY 22, 2000, SECRETARY LAGUESMA ISSUED
AN ORDER[10] DENYING PETITIONERS MOTION. HE RULED THAT WHILE THE BARGAINING
NEGOTIATIONS MIGHT HAVE FAILED AND THE SIGNING OF THE AGREEMENT WAS DELAYED, THIS
CANNOT BE ATTRIBUTED SOLELY TO RESPONDENT UNION. MOREOVER, THE SECRETARY NOTED THAT
THE SIGNING BONUS WAS GRANTED IN THE PREVIOUS CBA.
ON JUNE 2, 2000, PETITIONER FILED A PETITION FOR CERTIORARI WITH THE COURT OF APPEALS
DOCKETED AS CA-G.R. SP NO. 59011 WHICH WAS DISMISSED. THE LABOR SECRETARYS AWARD OF THE
SIGNING BONUS WAS AFFIRMED SINCE PETITIONER ITSELF OFFERED THE SAME AS AN INCENTIVE TO
EXPEDITE THE CBA NEGOTIATIONS. THIS OFFER WAS NOT WITHDRAWN AND WAS STILL OUTSTANDING
WHEN THE DISPUTE REACHED THE DOLE. AS SUCH, PETITIONER CAN NO LONGER ADOPT A CONTRARY
STAND AND DISPUTE ITS OWN OFFER.

PETITIONER FILED A MOTION FOR RECONSIDERATION BUT THE SAME WAS DENIED. HENCE THIS
PETITION FOR REVIEW RAISING A LONE ISSUE, TO WIT:

THE HONORABLE RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION WHEN
IT RENDERED A DECISION NOT IN ACCORD WITH THE APPLICABLE DECISIONS OF THE SUPREME COURT,
SPECIFICALLY THE CALTEX DOCTRINE OF 1997.

THE PETITION IS MERITORIOUS.

PETITIONER INVOKES THE DOCTRINE LAID DOWN IN THE CASE OF CALTEX V. BRILLANTES,[11] WHERE IT
WAS HELD THAT THE AWARD OF THE SIGNING BONUS BY THE SECRETARY OF LABOR WAS ERRONEOUS.
THE SAID CASE INVOLVED SIMILAR FACTS CONCERNING THE CBA NEGOTIATIONS BETWEEN CALTEX
(PHILIPPINES), INC. AND THE CALTEX REFINERY EMPLOYEES ASSOCIATION (CREA). UPON REFERRAL OF
THE DISPUTE TO THE DOLE, THEN LABOR SECRETARY BRILLANTES RULED, INTER ALIA:

FIFTH, SPECIFICALLY ON THE ISSUE OF WHETHER THE SIGNING BONUS IS COVERED UNDER THE
MAINTENANCE OF EXISTING BENEFITS CLAUSE, WE FIND THAT A CLARIFICATION IS INDEED IMPERATIVE.
DESPITE THE EXPRESSED PROVISION FOR A SIGNING BONUS IN THE PREVIOUS CBA, WE UPHOLD THE
PRINCIPLE THAT THE AWARD FOR A SIGNING BONUS SHOULD PARTAKE THE NATURE OF AN INCENTIVE
AND PREMIUM FOR PEACEFUL NEGOTIATIONS AND AMICABLE RESOLUTION OF DISPUTES WHICH
APPARENTLY ARE NOT PRESENT IN THE INSTANT CASE. THUS, WE ARE CONSTRAINED TO RULE THAT THE
AWARD OF SIGNING BONUS IS NOT COVERED BY THE MAINTENANCE OF EXISTING BENEFITS CLAUSE.

ON APPEAL TO THIS COURT, IT WAS HELD:

ALTHOUGH PROPOSED BY [CREA], THE SIGNING BONUS WAS NOT ACCEPTED BY [CALTEX PHILIPPINES,
INC.]. BESIDES, A SIGNING BONUS IS NOT A BENEFIT WHICH MAY BE DEMANDED UNDER THE LAW.
RATHER, IT IS NOW CLAIMED BY PETITIONER UNDER THE PRINCIPLE OF MAINTENANCE OF EXISTING
BENEFITS OF THE OLD CBA. HOWEVER, AS CLEARLY EXPLAINED BY [CALTEX], A SIGNING BONUS MAY NOT
BE DEMANDED AS A MATTER OF RIGHT. IF IT IS NOT AGREED UPON BY THE PARTIES OR UNILATERALLY
OFFERED AS AN ADDITIONAL INCENTIVE BY [CALTEX], THE CONDITION FOR AWARDING IT MUST BE DULY
SATISFIED. IN THE PRESENT CASE, THE CONDITION SINE QUA NON FOR ITS GRANTA NON-STRIKE WAS
NOT COMPLIED WITH.

IN THE CASE AT BAR, TWO THINGS MILITATE AGAINST THE GRANT OF THE SIGNING BONUS: FIRST, THE
NON-FULFILLMENT OF THE CONDITION FOR WHICH IT WAS OFFERED, I.E., THE SPEEDY AND AMICABLE
CONCLUSION OF THE CBA NEGOTIATIONS; AND SECOND, THE FAILURE OF RESPONDENT UNION TO
PROVE THAT THE GRANT OF THE SAID BONUS IS A LONG ESTABLISHED TRADITION OR A REGULAR
PRACTICE ON THE PART OF PETITIONER. PETITIONER ADMITS, AND RESPONDENT UNION DOES NOT
DISPUTE, THAT IT OFFERED AN EARLY CONCLUSION BONUS OR AN INCENTIVE FOR A SWIFT FINISH TO
THE CBA NEGOTIATIONS. THE OFFER WAS FIRST MADE DURING THE 1997 CBA NEGOTIATIONS AND THEN
AGAIN AT THE START OF THE 1999 NEGOTIATIONS. THE BONUS OFFERED IS CONSISTENT WITH THE VERY
CONCEPT OF A SIGNING BONUS.

IN THE CASE OF MERALCO V. THE HONORABLE SECRETARY OF LABOR,[12] WE STATED THAT THE SIGNING
BONUS IS A GRANT MOTIVATED BY THE GOODWILL GENERATED WHEN A CBA IS SUCCESSFULLY
NEGOTIATED AND SIGNED BETWEEN THE EMPLOYER AND THE UNION. IN THAT CASE, WE SUSTAINED
THE ARGUMENT OF THE SOLICITOR GENERAL, VIZ:

WHEN NEGOTIATIONS FOR THE LAST TWO YEARS OF THE 1992-1997 CBA BROKE DOWN AND THE
PARTIES SOUGHT THE ASSISTANCE OF THE NCMB, BUT WHICH FAILED TO RECONCILE THEIR
DIFFERENCES, AND WHEN PETITIONER MERALCO BLUNTLY INVOKED THE JURISDICTION OF THE
SECRETARY OF LABOR IN THE RESOLUTION OF THE LABOR DISPUTE, WHATEVER GOODWILL EXISTED
BETWEEN PETITIONER MERALCO AND RESPONDENT UNION DISAPPEARED. . . .

VERILY, A SIGNING BONUS IS JUSTIFIED BY AND IS THE CONSIDERATION PAID FOR THE GOODWILL THAT
EXISTED IN THE NEGOTIATIONS THAT CULMINATED IN THE SIGNING OF A CBA.[13]

IN THE CASE AT BAR, THE CBA NEGOTIATION BETWEEN PETITIONER AND RESPONDENT UNION FAILED
NOTWITHSTANDING THE INTERVENTION OF THE NCMB. RESPONDENT UNION WENT ON STRIKE FOR
ELEVEN DAYS AND BLOCKED THE INGRESS TO AND EGRESS FROM PETITIONERS TWO WORK PLANTS. THE
LABOR DISPUTE HAD TO BE REFERRED TO THE SECRETARY OF LABOR AND EMPLOYMENT BECAUSE
NEITHER OF THE PARTIES WAS WILLING TO COMPROMISE THEIR RESPECTIVE POSITIONS REGARDING
THE FOUR REMAINING ITEMS WHICH STOOD UNRESOLVED. WHILE WE DO NOT FAULT ANY ONE PARTY
FOR THE FAILURE OF THE NEGOTIATIONS, IT IS APPARENT THAT THERE WAS NO MORE GOODWILL
BETWEEN THE PARTIES AND THAT THE CBA WAS CLEARLY NOT SIGNED THROUGH THEIR MUTUAL
EFFORTS ALONE. HENCE, THE PAYMENT OF THE SIGNING BONUS IS NO LONGER JUSTIFIED AND TO
ORDER SUCH PAYMENT WOULD BE UNFAIR AND UNREASONABLE FOR PETITIONER.

FURTHERMORE, WE HAVE CONSISTENTLY RULED THAT A BONUS IS NOT A DEMANDABLE AND

ENFORCEABLE OBLIGATION.[14] TRUE, IT MAY NEVERTHELESS BE GRANTED ON EQUITABLE
CONSIDERATIONS AS WHEN THE GIVING OF SUCH BONUS HAS BEEN THE COMPANYS LONG AND
REGULAR PRACTICE.[15] TO BE CONSIDERED A REGULAR PRACTICE, HOWEVER, THE GIVING OF THE
BONUS SHOULD HAVE BEEN DONE OVER A LONG PERIOD OF TIME, AND MUST BE SHOWN TO HAVE
BEEN CONSISTENT AND DELIBERATE.[16] THE TEST OR RATIONALE OF THIS RULE ON LONG PRACTICE
REQUIRES AN INDUBITABLE SHOWING THAT THE EMPLOYER AGREED TO CONTINUE GIVING THE
BENEFITS KNOWING FULLY WELL THAT SAID EMPLOYEES ARE NOT COVERED BY THE LAW REQUIRING
PAYMENT THEREOF.[17] RESPONDENT DOES NOT CONTEST THE FACT THAT PETITIONER INITIALLY
OFFERED A SIGNING BONUS ONLY DURING THE PREVIOUS CBA NEGOTIATION. PREVIOUS TO THAT,
THERE IS NO EVIDENCE ON RECORD THAT PETITIONER EVER OFFERED THE SAME OR THAT THE PARTIES
INCLUDED A SIGNING BONUS AMONG THE ITEMS TO BE RESOLVED IN THE CBA NEGOTIATION. HENCE,
THE GIVING OF SUCH BONUS CANNOT BE DEEMED AS AN ESTABLISHED PRACTICE CONSIDERING THAT
THE SAME WAS GIVEN ONLY ONCE, THAT IS, DURING THE 1997 CBA NEGOTIATION.

WHEREFORE, PREMISES CONSIDERED, THE INSTANT PETITION IS GRANTED. THE DECISION OF THE
COURT OF APPEALS IN CA-G.R. SP NO. 59011 AFFIRMING THE ORDER OF THE SECRETARY OF LABOR AND
EMPLOYMENT, DIRECTING PETITIONER PHILIPPINE APPLIANCE CORPORATION TO PAY EACH OF ITS
EMPLOYEES A SIGNING BONUS IN THE AMOUNT OF THREE THOUSAND PESOS (P3,000.00), IS HEREBY
REVERSED AND SET ASIDE. NO PRONOUNCEMENT AS TO COSTS.
SO ORDERED.
G.R. NO. 81958 JUNE 30, 1988

PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC., PETITIONER,

VS.
HON. FRANKLIN M. DRILON AS SECRETARY OF LABOR AND EMPLOYMENT, AND TOMAS D. ACHACOSO, AS
ADMINISTRATOR OF THE PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION, RESPONDENTS.

GUTIERREZ & ALO LAW OFFICES FOR PETITIONER.

SARMIENTO, J.:

THE PETITIONER, PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC. (PASEI, FOR SHORT), A FIRM
"ENGAGED PRINCIPALLY IN THE RECRUITMENT OF FILIPINO WORKERS, MALE AND FEMALE, FOR
OVERSEAS PLACEMENT," 1 CHALLENGES THE CONSTITUTIONAL VALIDITY OF DEPARTMENT ORDER NO. 1,
SERIES OF 1988, OF THE DEPARTMENT OF LABOR AND EMPLOYMENT, IN THE CHARACTER OF
"GUIDELINES GOVERNING THE TEMPORARY SUSPENSION OF DEPLOYMENT OF FILIPINO DOMESTIC AND
HOUSEHOLD WORKERS," IN THIS PETITION FOR CERTIORARI AND PROHIBITION. SPECIFICALLY, THE
MEASURE IS ASSAILED FOR "DISCRIMINATION AGAINST MALES OR FEMALES;" 2 THAT IT "DOES NOT
APPLY TO ALL FILIPINO WORKERS BUT ONLY TO DOMESTIC HELPERS AND FEMALES WITH SIMILAR
SKILLS;" 3 AND THAT IT IS VIOLATIVE OF THE RIGHT TO TRAVEL. IT IS HELD LIKEWISE TO BE AN INVALID
EXERCISE OF THE LAWMAKING POWER, POLICE POWER BEING LEGISLATIVE, AND NOT EXECUTIVE, IN
CHARACTER.

IN ITS SUPPLEMENT TO THE PETITION, PASEI INVOKES SECTION 3, OF ARTICLE XIII, OF THE
CONSTITUTION, PROVIDING FOR WORKER PARTICIPATION "IN POLICY AND DECISION-MAKING
PROCESSES AFFECTING THEIR RIGHTS AND BENEFITS AS MAY BE PROVIDED BY LAW." 4 DEPARTMENT
ORDER NO. 1, IT IS CONTENDED, WAS PASSED IN THE ABSENCE OF PRIOR CONSULTATIONS. IT IS
CLAIMED, FINALLY, TO BE IN VIOLATION OF THE CHARTER'S NON-IMPAIRMENT CLAUSE, IN ADDITION TO
THE "GREAT AND IRREPARABLE INJURY" THAT PASEI MEMBERS FACE SHOULD THE ORDER BE FURTHER
ENFORCED.

ON MAY 25, 1988, THE SOLICITOR GENERAL, ON BEHALF OF THE RESPONDENTS SECRETARY OF LABOR
AND ADMINISTRATOR OF THE PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION, FILED A
COMMENT INFORMING THE COURT THAT ON MARCH 8, 1988, THE RESPONDENT LABOR SECRETARY
LIFTED THE DEPLOYMENT BAN IN THE STATES OF IRAQ, JORDAN, QATAR, CANADA, HONGKONG, UNITED
STATES, ITALY, NORWAY, AUSTRIA, AND SWITZERLAND. * IN SUBMITTING THE VALIDITY OF THE
CHALLENGED "GUIDELINES," THE SOLICITOR GENERAL INVOKES THE POLICE POWER OF THE PHILIPPINE
STATE.

IT IS ADMITTED THAT DEPARTMENT ORDER NO. 1 IS IN THE NATURE OF A POLICE POWER MEASURE. THE
ONLY QUESTION IS WHETHER OR NOT IT IS VALID UNDER THE CONSTITUTION.

THE CONCEPT OF POLICE POWER IS WELL-ESTABLISHED IN THIS JURISDICTION. IT HAS BEEN DEFINED AS
THE "STATE AUTHORITY TO ENACT LEGISLATION THAT MAY INTERFERE WITH PERSONAL LIBERTY OR
PROPERTY IN ORDER TO PROMOTE THE GENERAL WELFARE." 5 AS DEFINED, IT CONSISTS OF (1) AN
IMPOSITION OF RESTRAINT UPON LIBERTY OR PROPERTY, (2) IN ORDER TO FOSTER THE COMMON
GOOD. IT IS NOT CAPABLE OF AN EXACT DEFINITION BUT HAS BEEN, PURPOSELY, VEILED IN GENERAL
TERMS TO UNDERSCORE ITS ALL-COMPREHENSIVE EMBRACE.

"ITS SCOPE, EVER-EXPANDING TO MEET THE EXIGENCIES OF THE TIMES, EVEN TO ANTICIPATE THE
FUTURE WHERE IT COULD BE DONE, PROVIDES ENOUGH ROOM FOR AN EFFICIENT AND FLEXIBLE
RESPONSE TO CONDITIONS AND CIRCUMSTANCES THUS ASSURING THE GREATEST BENEFITS." 6

IT FINDS NO SPECIFIC CONSTITUTIONAL GRANT FOR THE PLAIN REASON THAT IT DOES NOT OWE ITS
ORIGIN TO THE CHARTER. ALONG WITH THE TAXING POWER AND EMINENT DOMAIN, IT IS INBORN IN
THE VERY FACT OF STATEHOOD AND SOVEREIGNTY. IT IS A FUNDAMENTAL ATTRIBUTE OF GOVERNMENT
THAT HAS ENABLED IT TO PERFORM THE MOST VITAL FUNCTIONS OF GOVERNANCE. MARSHALL, TO
WHOM THE EXPRESSION HAS BEEN CREDITED, 7 REFERS TO IT SUCCINCTLY AS THE PLENARY POWER OF
THE STATE "TO GOVERN ITS CITIZENS." 8

"THE POLICE POWER OF THE STATE ... IS A POWER COEXTENSIVE WITH SELF- PROTECTION, AND IT IS NOT
INAPTLY TERMED THE "LAW OF OVERWHELMING NECESSITY." IT MAY BE SAID TO BE THAT INHERENT
AND PLENARY POWER IN THE STATE WHICH ENABLES IT TO PROHIBIT ALL THINGS HURTFUL TO THE
COMFORT, SAFETY, AND WELFARE OF SOCIETY." 9

IT CONSTITUTES AN IMPLIED LIMITATION ON THE BILL OF RIGHTS. ACCORDING TO FERNANDO, IT IS

"ROOTED IN THE CONCEPTION THAT MEN IN ORGANIZING THE STATE AND IMPOSING UPON ITS
GOVERNMENT LIMITATIONS TO SAFEGUARD CONSTITUTIONAL RIGHTS DID NOT INTEND THEREBY TO
ENABLE AN INDIVIDUAL CITIZEN OR A GROUP OF CITIZENS TO OBSTRUCT UNREASONABLY THE
ENACTMENT OF SUCH SALUTARY MEASURES CALCULATED TO ENSURE COMMUNAL PEACE, SAFETY,
GOOD ORDER, AND WELFARE." 10 SIGNIFICANTLY, THE BILL OF RIGHTS ITSELF DOES NOT PURPORT TO BE
AN ABSOLUTE GUARANTY OF INDIVIDUAL RIGHTS AND LIBERTIES "EVEN LIBERTY ITSELF, THE GREATEST
OF ALL RIGHTS, IS NOT UNRESTRICTED LICENSE TO ACT ACCORDING TO ONE'S WILL." 11 IT IS SUBJECT TO
THE FAR MORE OVERRIDING DEMANDS AND REQUIREMENTS OF THE GREATER NUMBER.

NOTWITHSTANDING ITS EXTENSIVE SWEEP, POLICE POWER IS NOT WITHOUT ITS OWN LIMITATIONS. FOR
ALL ITS AWESOME CONSEQUENCES, IT MAY NOT BE EXERCISED ARBITRARILY OR UNREASONABLY.
OTHERWISE, AND IN THAT EVENT, IT DEFEATS THE PURPOSE FOR WHICH IT IS EXERCISED, THAT IS, TO
ADVANCE THE PUBLIC GOOD. THUS, WHEN THE POWER IS USED TO FURTHER PRIVATE INTERESTS AT THE
EXPENSE OF THE CITIZENRY, THERE IS A CLEAR MISUSE OF THE POWER. 12

IN THE LIGHT OF THE FOREGOING, THE PETITION MUST BE DISMISSED.

AS A GENERAL RULE, OFFICIAL ACTS ENJOY A PRESUMED VAHDITY. 13 IN THE ABSENCE OF CLEAR AND
CONVINCING EVIDENCE TO THE CONTRARY, THE PRESUMPTION LOGICALLY STANDS.

THE PETITIONER HAS SHOWN NO SATISFACTORY REASON WHY THE CONTESTED MEASURE SHOULD BE
NULLIFIED. THERE IS NO QUESTION THAT DEPARTMENT ORDER NO. 1 APPLIES ONLY TO "FEMALE
CONTRACT WORKERS," 14 BUT IT DOES NOT THEREBY MAKE AN UNDUE DISCRIMINATION BETWEEN THE
SEXES. IT IS WELL-SETTLED THAT "EQUALITY BEFORE THE LAW" UNDER THE CONSTITUTION 15 DOES NOT
IMPORT A PERFECT IDENTITY OF RIGHTS AMONG ALL MEN AND WOMEN. IT ADMITS OF
CLASSIFICATIONS, PROVIDED THAT (1) SUCH CLASSIFICATIONS REST ON SUBSTANTIAL DISTINCTIONS; (2)
THEY ARE GERMANE TO THE PURPOSES OF THE LAW; (3) THEY ARE NOT CONFINED TO EXISTING
CONDITIONS; AND (4) THEY APPLY EQUALLY TO ALL MEMBERS OF THE SAME CLASS. 16

THE COURT IS SATISFIED THAT THE CLASSIFICATION MADE-THE PREFERENCE FOR FEMALE WORKERS —
RESTS ON SUBSTANTIAL DISTINCTIONS.

AS A MATTER OF JUDICIAL NOTICE, THE COURT IS WELL AWARE OF THE UNHAPPY PLIGHT THAT HAS
BEFALLEN OUR FEMALE LABOR FORCE ABROAD, ESPECIALLY DOMESTIC SERVANTS, AMID EXPLOITATIVE
WORKING CONDITIONS MARKED BY, IN NOT A FEW CASES, PHYSICAL AND PERSONAL ABUSE. THE
SORDID TALES OF MALTREATMENT SUFFERED BY MIGRANT FILIPINA WORKERS, EVEN RAPE AND
VARIOUS FORMS OF TORTURE, CONFIRMED BY TESTIMONIES OF RETURNING WORKERS, ARE
COMPELLING MOTIVES FOR URGENT GOVERNMENT ACTION. AS PRECISELY THE CARETAKER OF
CONSTITUTIONAL RIGHTS, THE COURT IS CALLED UPON TO PROTECT VICTIMS OF EXPLOITATION. IN
FULFILLING THAT DUTY, THE COURT SUSTAINS THE GOVERNMENT'S EFFORTS.

THE SAME, HOWEVER, CANNOT BE SAID OF OUR MALE WORKERS. IN THE FIRST PLACE, THERE IS NO
EVIDENCE THAT, EXCEPT PERHAPS FOR ISOLATED INSTANCES, OUR MEN ABROAD HAVE BEEN AFFLICTED
WITH AN IDENTICAL PREDICAMENT. THE PETITIONER HAS PROFFERED NO ARGUMENT THAT THE
GOVERNMENT SHOULD ACT SIMILARLY WITH RESPECT TO MALE WORKERS. THE COURT, OF COURSE, IS
NOT IMPRESSING SOME MALE CHAUVINISTIC NOTION THAT MEN ARE SUPERIOR TO WOMEN. WHAT THE
COURT IS SAYING IS THAT IT WAS LARGELY A MATTER OF EVIDENCE (THAT WOMEN DOMESTIC WORKERS
ARE BEING ILL-TREATED ABROAD IN MASSIVE INSTANCES) AND NOT UPON SOME FANCIFUL OR
ARBITRARY YARDSTICK THAT THE GOVERNMENT ACTED IN THIS CASE. IT IS EVIDENCE CAPABLE INDEED
OF UNQUESTIONABLE DEMONSTRATION AND EVIDENCE THIS COURT ACCEPTS. THE COURT CANNOT,
HOWEVER, SAY THE SAME THING AS FAR AS MEN ARE CONCERNED. THERE IS SIMPLY NO EVIDENCE TO
JUSTIFY SUCH AN INFERENCE. SUFFICE IT TO STATE, THEN, THAT INSOFAR AS CLASSIFICATIONS ARE
CONCERNED, THIS COURT IS CONTENT THAT DISTINCTIONS ARE BORNE BY THE EVIDENCE.
DISCRIMINATION IN THIS CASE IS JUSTIFIED.

AS WE HAVE FURTHERMORE INDICATED, EXECUTIVE DETERMINATIONS ARE GENERALLY FINAL ON THE

COURT. UNDER A REPUBLICAN REGIME, IT IS THE EXECUTIVE BRANCH THAT ENFORCES POLICY. FOR
THEIR PART, THE COURTS DECIDE, IN THE PROPER CASES, WHETHER THAT POLICY, OR THE MANNER BY
WHICH IT IS IMPLEMENTED, AGREES WITH THE CONSTITUTION OR THE LAWS, BUT IT IS NOT FOR THEM
TO QUESTION ITS WISDOM. AS A CO-EQUAL BODY, THE JUDICIARY HAS GREAT RESPECT FOR
DETERMINATIONS OF THE CHIEF EXECUTIVE OR HIS SUBALTERNS, ESPECIALLY WHEN THE LEGISLATURE
ITSELF HAS SPECIFICALLY GIVEN THEM ENOUGH ROOM ON HOW THE LAW SHOULD BE EFFECTIVELY
ENFORCED. IN THE CASE AT BAR, THERE IS NO GAINSAYING THE FACT, AND THE COURT WILL DEAL WITH
THIS AT GREATER LENGTH SHORTLY, THAT DEPARTMENT ORDER NO. 1 IMPLEMENTS THE RULE-MAKING
POWERS GRANTED BY THE LABOR CODE. BUT WHAT SHOULD BE NOTED IS THE FACT THAT IN SPITE OF
SUCH A FICTION OF FINALITY, THE COURT IS ON ITS OWN PERSUADED THAT PREVAILING CONDITIONS
INDEED CALL FOR A DEPLOYMENT BAN.

THERE IS LIKEWISE NO DOUBT THAT SUCH A CLASSIFICATION IS GERMANE TO THE PURPOSE BEHIND THE
MEASURE. UNQUESTIONABLY, IT IS THE AVOWED OBJECTIVE OF DEPARTMENT ORDER NO. 1 TO
"ENHANCE THE PROTECTION FOR FILIPINO FEMALE OVERSEAS WORKERS" 17 THIS COURT HAS NO
QUARREL THAT IN THE MIDST OF THE TERRIBLE MISTREATMENT FILIPINA WORKERS HAVE SUFFERED
ABROAD, A BAN ON DEPLOYMENT WILL BE FOR THEIR OWN GOOD AND WELFARE.
THE ORDER DOES NOT NARROWLY APPLY TO EXISTING CONDITIONS. RATHER, IT IS INTENDED TO APPLY
INDEFINITELY SO LONG AS THOSE CONDITIONS EXIST. THIS IS CLEAR FROM THE ORDER ITSELF ("PENDING
REVIEW OF THE ADMINISTRATIVE AND LEGAL MEASURES, IN THE PHILIPPINES AND IN THE HOST
COUNTRIES . . ."18), MEANING TO SAY THAT SHOULD THE AUTHORITIES ARRIVE AT A MEANS IMPRESSED
WITH A GREATER DEGREE OF PERMANENCY, THE BAN SHALL BE LIFTED. AS A STOP-GAP MEASURE, IT IS
POSSESSED OF A NECESSARY MALLEABILITY, DEPENDING ON THE CIRCUMSTANCES OF EACH CASE.
ACCORDINGLY, IT PROVIDES:

9. LIFTING OF SUSPENSION. — THE SECRETARY OF LABOR AND EMPLOYMENT (DOLE) MAY, UPON
RECOMMENDATION OF THE PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION (POEA), LIFT THE
SUSPENSION IN COUNTRIES WHERE THERE ARE:

1. BILATERAL AGREEMENTS OR UNDERSTANDING WITH THE PHILIPPINES, AND/OR,

2. EXISTING MECHANISMS PROVIDING FOR SUFFICIENT SAFEGUARDS TO ENSURE THE WELFARE

AND PROTECTION OF FILIPINO WORKERS. 19

THE COURT FINDS, FINALLY, THE IMPUGNED GUIDELINES TO BE APPLICABLE TO ALL FEMALE DOMESTIC
OVERSEAS WORKERS. THAT IT DOES NOT APPLY TO "ALL FILIPINA WORKERS" 20 IS NOT AN ARGUMENT
FOR UNCONSTITUTIONALITY. HAD THE BAN BEEN GIVEN UNIVERSAL APPLICABILITY, THEN IT WOULD
HAVE BEEN UNREASONABLE AND ARBITRARY. FOR OBVIOUS REASONS, NOT ALL OF THEM ARE
SIMILARLY CIRCUMSTANCED. WHAT THE CONSTITUTION PROHIBITS IS THE SINGLING OUT OF A SELECT
PERSON OR GROUP OF PERSONS WITHIN AN EXISTING CLASS, TO THE PREJUDICE OF SUCH A PERSON OR
GROUP OR RESULTING IN AN UNFAIR ADVANTAGE TO ANOTHER PERSON OR GROUP OF PERSONS. TO
APPLY THE BAN, SAY EXCLUSIVELY TO WORKERS DEPLOYED BY A, BUT NOT TO THOSE RECRUITED BY B,
WOULD OBVIOUSLY CLASH WITH THE EQUAL PROTECTION CLAUSE OF THE CHARTER. IT WOULD BE A
CLASSIC CASE OF WHAT CHASE REFERS TO AS A LAW THAT "TAKES PROPERTY FROM A AND GIVES IT TO
B." 21 IT WOULD BE AN UNLAWFUL INVASION OF PROPERTY RIGHTS AND FREEDOM OF CONTRACT AND
NEEDLESS TO STATE, AN INVALID ACT. 22 (FERNANDO SAYS: "WHERE THE CLASSIFICATION IS BASED ON
SUCH DISTINCTIONS THAT MAKE A REAL DIFFERENCE AS INFANCY, SEX, AND STAGE OF CIVILIZATION OF
MINORITY GROUPS, THE BETTER RULE, IT WOULD SEEM, IS TO RECOGNIZE ITS VALIDITY ONLY IF THE
YOUNG, THE WOMEN, AND THE CULTURAL MINORITIES ARE SINGLED OUT FOR FAVORABLE TREATMENT.
THERE WOULD BE AN ELEMENT OF UNREASONABLENESS IF ON THE CONTRARY THEIR STATUS THAT
CALLS FOR THE LAW MINISTERING TO THEIR NEEDS IS MADE THE BASIS OF DISCRIMINATORY
LEGISLATION AGAINST THEM. IF SUCH BE THE CASE, IT WOULD BE DIFFICULT TO REFUTE THE ASSERTION
OF DENIAL OF EQUAL PROTECTION." 23 IN THE CASE AT BAR, THE ASSAILED ORDER CLEARLY ACCORDS
PROTECTION TO CERTAIN WOMEN WORKERS, AND NOT THE CONTRARY.)

IT IS INCORRECT TO SAY THAT DEPARTMENT ORDER NO. 1 PRESCRIBES A TOTAL BAN ON OVERSEAS
DEPLOYMENT. FROM SCATTERED PROVISIONS OF THE ORDER, IT IS EVIDENT THAT SUCH A TOTAL BAN
HAS HOT BEEN CONTEMPLATED. WE QUOTE:

5. AUTHORIZED DEPLOYMENT-THE DEPLOYMENT OF DOMESTIC HELPERS AND WORKERS OF SIMILAR

SKILLS DEFINED HEREIN TO THE FOLLOWING [SIC] ARE AUTHORIZED UNDER THESE GUIDELINES AND ARE
EXEMPTED FROM THE SUSPENSION.

5.1 HIRINGS BY IMMEDIATE MEMBERS OF THE FAMILY OF HEADS OF STATE AND GOVERNMENT;
5.2 HIRINGS BY MINISTER, DEPUTY MINISTER AND THE OTHER SENIOR GOVERNMENT OFFICIALS;
AND

5.3 HIRINGS BY SENIOR OFFICIALS OF THE DIPLOMATIC CORPS AND DULY ACCREDITED
INTERNATIONAL ORGANIZATIONS.

5.4 HIRINGS BY EMPLOYERS IN COUNTRIES WITH WHOM THE PHILIPPINES HAVE [SIC] BILATERAL
LABOR AGREEMENTS OR UNDERSTANDING.

XXX XXX XXX

7. VACATIONING DOMESTIC HELPERS AND WORKERS OF SIMILAR SKILLS--VACATIONING DOMESTIC

HELPERS AND/OR WORKERS OF SIMILAR SKILLS SHALL BE ALLOWED TO PROCESS WITH THE POEA AND
LEAVE FOR WORKSITE ONLY IF THEY ARE RETURNING TO THE SAME EMPLOYER TO FINISH AN EXISTING
OR PARTIALLY SERVED EMPLOYMENT CONTRACT. THOSE WORKERS RETURNING TO WORKSITE TO SERVE
A NEW EMPLOYER SHALL BE COVERED BY THE SUSPENSION AND THE PROVISION OF THESE GUIDELINES.

XXX XXX XXX

9. LIFTING OF SUSPENSION-THE SECRETARY OF LABOR AND EMPLOYMENT (DOLE) MAY, UPON

RECOMMENDATION OF THE PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION (POEA), LIFT THE
SUSPENSION IN COUNTRIES WHERE THERE ARE:

1. BILATERAL AGREEMENTS OR UNDERSTANDING WITH THE PHILIPPINES, AND/OR,

2. EXISTING MECHANISMS PROVIDING FOR SUFFICIENT SAFEGUARDS TO ENSURE THE WELFARE

AND PROTECTION OF FILIPINO WORKERS. 24

XXX XXX XXX

THE CONSEQUENCE THE DEPLOYMENT BAN HAS ON THE RIGHT TO TRAVEL DOES NOT IMPAIR THE
RIGHT. THE RIGHT TO TRAVEL IS SUBJECT, AMONG OTHER THINGS, TO THE REQUIREMENTS OF "PUBLIC
SAFETY," "AS MAY BE PROVIDED BY LAW." 25 DEPARTMENT ORDER NO. 1 IS A VALID IMPLEMENTATION
OF THE LABOR CODE, IN PARTICULAR, ITS BASIC POLICY TO "AFFORD PROTECTION TO LABOR," 26
PURSUANT TO THE RESPONDENT DEPARTMENT OF LABOR'S RULE-MAKING AUTHORITY VESTED IN IT BY
THE LABOR CODE. 27 THE PETITIONER ASSUMES THAT IT IS UNREASONABLE SIMPLY BECAUSE OF ITS
IMPACT ON THE RIGHT TO TRAVEL, BUT AS WE HAVE STATED, THE RIGHT ITSELF IS NOT ABSOLUTE. THE
DISPUTED ORDER IS A VALID QUALIFICATION THERETO.

NEITHER IS THERE MERIT IN THE CONTENTION THAT DEPARTMENT ORDER NO. 1 CONSTITUTES AN
INVALID EXERCISE OF LEGISLATIVE POWER. IT IS TRUE THAT POLICE POWER IS THE DOMAIN OF THE
LEGISLATURE, BUT IT DOES NOT MEAN THAT SUCH AN AUTHORITY MAY NOT BE LAWFULLY DELEGATED.
AS WE HAVE MENTIONED, THE LABOR CODE ITSELF VESTS THE DEPARTMENT OF LABOR AND
EMPLOYMENT WITH RULEMAKING POWERS IN THE ENFORCEMENT WHEREOF. 28

THE PETITIONERS'S RELIANCE ON THE CONSTITUTIONAL GUARANTY OF WORKER PARTICIPATION "IN

POLICY AND DECISION-MAKING PROCESSES AFFECTING THEIR RIGHTS AND BENEFITS" 29 IS NOT WELL-
TAKEN. THE RIGHT GRANTED BY THIS PROVISION, AGAIN, MUST SUBMIT TO THE DEMANDS AND
NECESSITIES OF THE STATE'S POWER OF REGULATION.

THE CONSTITUTION DECLARES THAT:

SEC. 3. THE STATE SHALL AFFORD FULL PROTECTION TO LABOR, LOCAL AND OVERSEAS, ORGANIZED AND
UNORGANIZED, AND PROMOTE FULL EMPLOYMENT AND EQUALITY OF EMPLOYMENT OPPORTUNITIES
FOR ALL. 30

"PROTECTION TO LABOR" DOES NOT SIGNIFY THE PROMOTION OF EMPLOYMENT ALONE. WHAT
CONCERNS THE CONSTITUTION MORE PARAMOUNTLY IS THAT SUCH AN EMPLOYMENT BE ABOVE ALL,
DECENT, JUST, AND HUMANE. IT IS BAD ENOUGH THAT THE COUNTRY HAS TO SEND ITS SONS AND
DAUGHTERS TO STRANGE LANDS BECAUSE IT CANNOT SATISFY THEIR EMPLOYMENT NEEDS AT HOME.
UNDER THESE CIRCUMSTANCES, THE GOVERNMENT IS DUTY-BOUND TO INSURE THAT OUR TOILING
EXPATRIATES HAVE ADEQUATE PROTECTION, PERSONALLY AND ECONOMICALLY, WHILE AWAY FROM
HOME. IN THIS CASE, THE GOVERNMENT HAS EVIDENCE, AN EVIDENCE THE PETITIONER CANNOT
SERIOUSLY DISPUTE, OF THE LACK OR INADEQUACY OF SUCH PROTECTION, AND AS PART OF ITS DUTY, IT
HAS PRECISELY ORDERED AN INDEFINITE BAN ON DEPLOYMENT.

THE COURT FINDS FURTHERMORE THAT THE GOVERNMENT HAS NOT INDISCRIMINATELY MADE USE OF
ITS AUTHORITY. IT IS NOT CONTESTED THAT IT HAS IN FACT REMOVED THE PROHIBITION WITH RESPECT
TO CERTAIN COUNTRIES AS MANIFESTED BY THE SOLICITOR GENERAL.

THE NON-IMPAIRMENT CLAUSE OF THE CONSTITUTION, INVOKED BY THE PETITIONER, MUST YIELD TO
THE LOFTIER PURPOSES TARGETTED BY THE GOVERNMENT. 31 FREEDOM OF CONTRACT AND
ENTERPRISE, LIKE ALL OTHER FREEDOMS, IS NOT FREE FROM RESTRICTIONS, MORE SO IN THIS
JURISDICTION, WHERE LAISSEZ FAIRE HAS NEVER BEEN FULLY ACCEPTED AS A CONTROLLING ECONOMIC
WAY OF LIFE.

THIS COURT UNDERSTANDS THE GRAVE IMPLICATIONS THE QUESTIONED ORDER HAS ON THE BUSINESS
OF RECRUITMENT. THE CONCERN OF THE GOVERNMENT, HOWEVER, IS NOT NECESSARILY TO MAINTAIN
PROFITS OF BUSINESS FIRMS. IN THE ORDINARY SEQUENCE OF EVENTS, IT IS PROFITS THAT SUFFER AS A
RESULT OF GOVERNMENT REGULATION. THE INTEREST OF THE STATE IS TO PROVIDE A DECENT LIVING
TO ITS CITIZENS. THE GOVERNMENT HAS CONVINCED THE COURT IN THIS CASE THAT THIS IS ITS INTENT.
WE DO NOT FIND THE IMPUGNED ORDER TO BE TAINTED WITH A GRAVE ABUSE OF DISCRETION TO
WARRANT THE EXTRAORDINARY RELIEF PRAYED FOR.

WHEREFORE, THE PETITION IS DISMISSED. NO COSTS.

SO ORDERED.
[G.R. NO. 118978. MAY 23, 1997]

PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY,* PETITIONER, VS. NATIONAL LABOR RELATIONS
COMMISSION AND GRACE DE GUZMAN, RESPONDENTS.
DECISION
REGALADO, J.:
SEEKING RELIEF THROUGH THE EXTRAORDINARY WRIT OF CERTIORARI, PETITIONER PHILIPPINE
TELEGRAPH AND TELEPHONE COMPANY (HEREAFTER, PT&T) INVOKES THE ALLEGED CONCEALMENT OF
CIVIL STATUS AND DEFALCATION OF COMPANY FUNDS AS GROUNDS TO TERMINATE THE SERVICES OF AN
EMPLOYEE. THAT EMPLOYEE, HEREIN PRIVATE RESPONDENT GRACE DE GUZMAN, CONTRARILY ARGUES
THAT WHAT REALLY MOTIVATED PT&T TO TERMINATE HER SERVICES WAS HER HAVING CONTRACTED
MARRIAGE DURING HER EMPLOYMENT, WHICH IS PROHIBITED BY PETITIONER IN ITS COMPANY
POLICIES. SHE THUS CLAIMS THAT SHE WAS DISCRIMINATED AGAINST IN GROSS VIOLATION OF LAW,
SUCH A PROSCRIPTION BY AN EMPLOYER BEING OUTLAWED BY ARTICLE 136 OF THE LABOR CODE.

GRACE DE GUZMAN WAS INITIALLY HIRED BY PETITIONER AS A RELIEVER, SPECIFICALLY AS A

SUPERNUMERARY PROJECT WORKER, FOR A FIXED PERIOD FROM NOVEMBER 21, 1990 UNTIL APRIL 20,
1991 VICE ONE C.F. TENORIO WHO WENT ON MATERNITY LEAVE.[1] UNDER THE RELIEVER AGREEMENT
WHICH SHE SIGNED WITH PETITIONER COMPANY, HER EMPLOYMENT WAS TO BE IMMEDIATELY
TERMINATED UPON EXPIRATION OF THE AGREED PERIOD. THEREAFTER, FROM JUNE 10, 1991 TO JULY 1,
1991, AND FROM JULY 19, 1991 TO AUGUST 8, 1991, PRIVATE RESPONDENTS SERVICES AS RELIEVER
WERE AGAIN ENGAGED BY PETITIONER, THIS TIME IN REPLACEMENT OF ONE ERLINDA F. DIZON WHO
WENT ON LEAVE DURING BOTH PERIODS.[2] AFTER AUGUST 8, 1991, AND PURSUANT TO THEIR
RELIEVER AGREEMENT, HER SERVICES WERE TERMINATED.

ON SEPTEMBER 2, 1991, PRIVATE RESPONDENT WAS ONCE MORE ASKED TO JOIN PETITIONER COMPANY
AS A PROBATIONARY EMPLOYEE, THE PROBATIONARY PERIOD TO COVER 150 DAYS. IN THE JOB
APPLICATION FORM THAT WAS FURNISHED HER TO BE FILLED UP FOR THE PURPOSE, SHE INDICATED IN
THE PORTION FOR CIVIL STATUS THEREIN THAT SHE WAS SINGLE ALTHOUGH SHE HAD CONTRACTED
MARRIAGE A FEW MONTHS EARLIER, THAT IS, ON MAY 26, 1991.[3]

IT NOW APPEARS THAT PRIVATE RESPONDENT HAD MADE THE SAME REPRESENTATION IN THE TWO
SUCCESSIVE RELIEVER AGREEMENTS WHICH SHE SIGNED ON JUNE 10, 1991 AND JULY 8, 1991. WHEN
PETITIONER SUPPOSEDLY LEARNED ABOUT THE SAME LATER, ITS BRANCH SUPERVISOR IN BAGUIO CITY,
DELIA M. OFICIAL, SENT TO PRIVATE RESPONDENT A MEMORANDUM DATED JANUARY 15, 1992
REQUIRING HER TO EXPLAIN THE DISCREPANCY. IN THAT MEMORANDUM, SHE WAS REMINDED ABOUT
THE COMPANYS POLICY OF NOT ACCEPTING MARRIED WOMEN FOR EMPLOYMENT.[4]

IN HER REPLY LETTER DATED JANUARY 17, 1992, PRIVATE RESPONDENT STATED THAT SHE WAS NOT
AWARE OF PT&TS POLICY REGARDING MARRIED WOMEN AT THE TIME, AND THAT ALL ALONG SHE HAD
NOT DELIBERATELY HIDDEN HER TRUE CIVIL STATUS.[5] PETITIONER NONETHELESS REMAINED
UNCONVINCED BY HER EXPLANATIONS. PRIVATE RESPONDENT WAS DISMISSED FROM THE COMPANY
EFFECTIVE JANUARY 29, 1992,[6] WHICH SHE READILY CONTESTED BY INITIATING A COMPLAINT FOR
ILLEGAL DISMISSAL, COUPLED WITH A CLAIM FOR NON-PAYMENT OF COST OF LIVING ALLOWANCES
(COLA), BEFORE THE REGIONAL ARBITRATION BRANCH OF THE NATIONAL LABOR RELATIONS
COMMISSION IN BAGUIO CITY.

AT THE PRELIMINARY CONFERENCE CONDUCTED IN CONNECTION THEREWITH, PRIVATE RESPONDENT

VOLUNTEERED THE INFORMATION, AND THIS WAS INCORPORATED IN THE STIPULATION OF FACTS
BETWEEN THE PARTIES, THAT SHE HAD FAILED TO REMIT THE AMOUNT OF P2,380.75 OF HER
COLLECTIONS. SHE THEN EXECUTED A PROMISSORY NOTE FOR THAT AMOUNT IN FAVOR OF PETITIONER.
[7] ALL OF THESE TOOK PLACE IN A FORMAL PROCEEDING AND WITH THE AGREEMENT OF THE PARTIES
AND/OR THEIR COUNSEL.
ON NOVEMBER 23, 1993, LABOR ARBITER IRENARCO R. RIMANDO HANDED DOWN A DECISION
DECLARING THAT PRIVATE RESPONDENT, WHO HAD ALREADY GAINED THE STATUS OF A REGULAR
EMPLOYEE, WAS ILLEGALLY DISMISSED BY PETITIONER. HER REINSTATEMENT, PLUS PAYMENT OF THE
CORRESPONDING BACK WAGES AND COLA, WAS CORRESPONDINGLY ORDERED, THE LABOR ARBITER
BEING OF THE FIRMLY EXPRESSED VIEW THAT THE GROUND RELIED UPON BY PETITIONER IN DISMISSING
PRIVATE RESPONDENT WAS CLEARLY INSUFFICIENT, AND THAT IT WAS APPARENT THAT SHE HAD BEEN
DISCRIMINATED AGAINST ON ACCOUNT OF HER HAVING CONTRACTED MARRIAGE IN VIOLATION OF
COMPANY RULES.

ON APPEAL TO THE NATIONAL LABOR RELATIONS COMMISSION (NLRC), SAID PUBLIC RESPONDENT
UPHELD THE LABOR ARBITER AND, IN ITS DECISION DATED APRIL 29, 1994, IT RULED THAT PRIVATE
RESPONDENT HAD INDEED BEEN THE SUBJECT OF AN UNJUST AND UNLAWFUL DISCRIMINATION BY HER
EMPLOYER, PT&T. HOWEVER, THE DECISION OF THE LABOR ARBITER WAS MODIFIED WITH THE
QUALIFICATION THAT GRACE DE GUZMAN DESERVED TO BE SUSPENDED FOR THREE MONTHS IN VIEW
OF THE DISHONEST NATURE OF HER ACTS WHICH SHOULD NOT BE CONDONED. IN ALL OTHER RESPECTS,
THE NLRC AFFIRMED THE DECISION OF THE LABOR ARBITER, INCLUDING THE ORDER FOR THE
REINSTATEMENT OF PRIVATE RESPONDENT IN HER EMPLOYMENT WITH PT&T.

THE SUBSEQUENT MOTION FOR RECONSIDERATION FILED BY PETITIONER WAS REBUFFED BY

RESPONDENT NLRC IN ITS RESOLUTION OF NOVEMBER 9, 1994, HENCE THIS SPECIAL CIVIL ACTION
ASSAILING THE AFORESTATED DECISIONS OF THE LABOR ARBITER AND RESPONDENT NLRC, AS WELL AS
THE DENIAL RESOLUTION OF THE LATTER.

1. DECREED IN THE BIBLE ITSELF IS THE UNIVERSAL NORM THAT WOMEN SHOULD BE REGARDED WITH
LOVE AND RESPECT BUT, THROUGH THE AGES, MEN HAVE RESPONDED TO THAT INJUNCTION WITH
INDIFFERENCE, ON THE HUBRISTIC CONCEIT THAT WOMEN CONSTITUTE THE INFERIOR SEX. NOWHERE
HAS THAT PREJUDICE AGAINST WOMANKIND BEEN SO PERVASIVE AS IN THE FIELD OF LABOR,
ESPECIALLY ON THE MATTER OF EQUAL EMPLOYMENT OPPORTUNITIES AND STANDARDS. IN THE
PHILIPPINE SETTING, WOMEN HAVE TRADITIONALLY BEEN CONSIDERED AS FALLING WITHIN THE
VULNERABLE GROUPS OR TYPES OF WORKERS WHO MUST BE SAFEGUARDED WITH PREVENTIVE AND
REMEDIAL SOCIAL LEGISLATION AGAINST DISCRIMINATORY AND EXPLOITATIVE PRACTICES IN HIRING,
TRAINING, BENEFITS, PROMOTION AND RETENTION.

THE CONSTITUTION, COGNIZANT OF THE DISPARITY IN RIGHTS BETWEEN MEN AND WOMEN IN ALMOST
ALL PHASES OF SOCIAL AND POLITICAL LIFE, PROVIDES A GAMUT OF PROTECTIVE PROVISIONS. TO CITE A
FEW OF THE PRIMORDIAL ONES, SECTION 14, ARTICLE II[8] ON THE DECLARATION OF PRINCIPLES AND
STATE POLICIES, EXPRESSLY RECOGNIZES THE ROLE OF WOMEN IN NATION-BUILDING AND COMMANDS
THE STATE TO ENSURE, AT ALL TIMES, THE FUNDAMENTAL EQUALITY BEFORE THE LAW OF WOMEN AND
MEN. COROLLARY THERETO, SECTION 3 OF ARTICLE XIII[9] (THE PROGENITOR WHEREOF DATES BACK TO
BOTH THE 1935 AND 1973 CONSTITUTION) POINTEDLY REQUIRES THE STATE TO AFFORD FULL
PROTECTION TO LABOR AND TO PROMOTE FULL EMPLOYMENT AND EQUALITY OF EMPLOYMENT
OPPORTUNITIES FOR ALL, INCLUDING AN ASSURANCE OF ENTITLEMENT TO TENURIAL SECURITY OF ALL
WORKERS. SIMILARLY, SECTION 14 OF ARTICLE XIII[10] MANDATES THAT THE STATE SHALL PROTECT
WORKING WOMEN THROUGH PROVISIONS FOR OPPORTUNITIES THAT WOULD ENABLE THEM TO REACH
THEIR FULL POTENTIAL.

2. CORRECTIVE LABOR AND SOCIAL LAWS ON GENDER INEQUALITY HAVE EMERGED WITH MORE
FREQUENCY IN THE YEARS SINCE THE LABOR CODE WAS ENACTED ON MAY 1, 1974 AS PRESIDENTIAL
DECREE NO. 442, LARGELY DUE TO OUR COUNTRYS COMMITMENT AS A SIGNATORY TO THE UNITED
NATIONS CONVENTION ON THE ELIMINATION OF ALL FORMS OF DISCRIMINATION AGAINST WOMEN
(CEDAW).[11]

PRINCIPAL AMONG THESE LAWS ARE REPUBLIC ACT NO. 6727[12] WHICH EXPLICITLY PROHIBITS
DISCRIMINATION AGAINST WOMEN WITH RESPECT TO TERMS AND CONDITIONS OF EMPLOYMENT,
PROMOTION, AND TRAINING OPPORTUNITIES; REPUBLIC ACT NO. 6955[13] WHICH BANS THE MAIL-
ORDER-BRIDE PRACTICE FOR A FEE AND THE EXPORT OF FEMALE LABOR TO COUNTRIES THAT CANNOT
GUARANTEE PROTECTION TO THE RIGHTS OF WOMEN WORKERS; REPUBLIC ACT NO. 7192,[14] ALSO
KNOWN AS THE WOMEN IN DEVELOPMENT AND NATION BUILDING ACT, WHICH AFFORDS WOMEN
EQUAL OPPORTUNITIES WITH MEN TO ACT AND TO ENTER INTO CONTRACTS, AND FOR APPOINTMENT,
ADMISSION, TRAINING, GRADUATION, AND COMMISSIONING IN ALL MILITARY OR SIMILAR SCHOOLS OF
THE ARMED FORCES OF THE PHILIPPINES AND THE PHILIPPINE NATIONAL POLICE; REPUBLIC ACT NO.
7322[15] INCREASING THE MATERNITY BENEFITS GRANTED TO WOMEN IN THE PRIVATE SECTOR;
REPUBLIC ACT NO. 7877[16] WHICH OUTLAWS AND PUNISHES SEXUAL HARASSMENT IN THE
WORKPLACE AND IN THE EDUCATION AND TRAINING ENVIRONMENT; AND REPUBLIC ACT NO. 8042,[17]
OR THE MIGRANT WORKERS AND OVERSEAS FILIPINOS ACT OF 1995, WHICH PRESCRIBES AS A MATTER
OF POLICY, INTER ALIA, THE DEPLOYMENT OF MIGRANT WORKERS, WITH EMPHASIS ON WOMEN, ONLY
IN COUNTRIES WHERE THEIR RIGHTS ARE SECURE. LIKEWISE, IT WOULD NOT BE AMISS TO POINT OUT
THAT IN THE FAMILY CODE,[18] WOMENS RIGHTS IN THE FIELD OF CIVIL LAW HAVE BEEN GREATLY
ENHANCED AND EXPANDED.

IN THE LABOR CODE, PROVISIONS GOVERNING THE RIGHTS OF WOMEN WORKERS ARE FOUND IN
ARTICLES 130 TO 138 THEREOF. ARTICLE 130 INVOLVES THE RIGHT AGAINST PARTICULAR KINDS OF
NIGHT WORK WHILE ARTICLE 132 ENSURES THE RIGHT OF WOMEN TO BE PROVIDED WITH FACILITIES
AND STANDARDS WHICH THE SECRETARY OF LABOR MAY ESTABLISH TO ENSURE THEIR HEALTH AND
SAFETY. FOR PURPOSES OF LABOR AND SOCIAL LEGISLATION, A WOMAN WORKING IN A NIGHTCLUB,
COCKTAIL LOUNGE, MASSAGE CLINIC, BAR OR OTHER SIMILAR ESTABLISHMENTS SHALL BE CONSIDERED
AS AN EMPLOYEE UNDER ARTICLE 138. ARTICLE 135, ON THE OTHER HAND, RECOGNIZES A WOMANS
RIGHT AGAINST DISCRIMINATION WITH RESPECT TO TERMS AND CONDITIONS OF EMPLOYMENT ON
ACCOUNT SIMPLY OF SEX. FINALLY, AND THIS BRINGS US TO THE ISSUE AT HAND, ARTICLE 136 EXPLICITLY
PROHIBITS DISCRIMINATION MERELY BY REASON OF THE MARRIAGE OF A FEMALE EMPLOYEE.

3. ACKNOWLEDGED AS PARAMOUNT IN THE DUE PROCESS SCHEME IS THE CONSTITUTIONAL

GUARANTEE OF PROTECTION TO LABOR AND SECURITY OF TENURE. THUS, AN EMPLOYER IS REQUIRED,
AS A CONDITION SINE QUA NON PRIOR TO SEVERANCE OF THE EMPLOYMENT TIES OF AN INDIVIDUAL
UNDER HIS EMPLOY, TO CONVINCINGLY ESTABLISH, THROUGH SUBSTANTIAL EVIDENCE, THE EXISTENCE
OF A VALID AND JUST CAUSE IN DISPENSING WITH THE SERVICES OF SUCH EMPLOYEE, ONES LABOR
BEING REGARDED AS CONSTITUTIONALLY PROTECTED PROPERTY.

ON THE OTHER HAND, IT IS RECOGNIZED THAT REGULATION OF MANPOWER BY THE COMPANY FALLS
WITHIN THE SO-CALLED MANAGEMENT PREROGATIVES, WHICH PRESCRIPTIONS ENCOMPASS THE
MATTER OF HIRING, SUPERVISION OF WORKERS, WORK ASSIGNMENTS, WORKING METHODS AND
ASSIGNMENTS, AS WELL AS REGULATIONS ON THE TRANSFER OF EMPLOYEES, LAY-OFF OF WORKERS,
AND THE DISCIPLINE, DISMISSAL, AND RECALL OF EMPLOYEES.[19] AS PUT IN A CASE, AN EMPLOYER IS
FREE TO REGULATE, ACCORDING TO HIS DISCRETION AND BEST BUSINESS JUDGMENT, ALL ASPECTS OF
EMPLOYMENT, FROM HIRING TO FIRING, EXCEPT IN CASES OF UNLAWFUL DISCRIMINATION OR THOSE
WHICH MAY BE PROVIDED BY LAW.[20]
IN THE CASE AT BAR, PETITIONERS POLICY OF NOT ACCEPTING OR CONSIDERING AS DISQUALIFIED FROM
WORK ANY WOMAN WORKER WHO CONTRACTS MARRIAGE RUNS AFOUL OF THE TEST OF, AND THE
RIGHT AGAINST, DISCRIMINATION, AFFORDED ALL WOMEN WORKERS BY OUR LABOR LAWS AND BY NO
LESS THAN THE CONSTITUTION. CONTRARY TO PETITIONERS ASSERTION THAT IT DISMISSED PRIVATE
RESPONDENT FROM EMPLOYMENT ON ACCOUNT OF HER DISHONESTY, THE RECORD DISCLOSES CLEARLY
THAT HER TIES WITH THE COMPANY WERE DISSOLVED PRINCIPALLY BECAUSE OF THE COMPANYS POLICY
THAT MARRIED WOMEN ARE NOT QUALIFIED FOR EMPLOYMENT IN PT&T, AND NOT MERELY BECAUSE
OF HER SUPPOSED ACTS OF DISHONESTY.

THAT IT WAS SO CAN EASILY BE SEEN FROM THE MEMORANDUM SENT TO PRIVATE RESPONDENT BY
DELIA M. OFICIAL, THE BRANCH SUPERVISOR OF THE COMPANY, WITH THE REMINDER, IN THE WORDS
OF THE LATTER, THAT YOURE FULLY AWARE THAT THE COMPANY IS NOT ACCEPTING MARRIED WOMEN
EMPLOYEE (SIC), AS IT WAS VERBALLY INSTRUCTED TO YOU.[21] AGAIN, IN THE TERMINATION NOTICE
SENT TO HER BY THE SAME BRANCH SUPERVISOR, PRIVATE RESPONDENT WAS MADE TO UNDERSTAND
THAT HER SEVERANCE FROM THE SERVICE WAS NOT ONLY BY REASON OF HER CONCEALMENT OF HER
MARRIED STATUS BUT, OVER AND ON TOP OF THAT, WAS HER VIOLATION OF THE COMPANYS POLICY
AGAINST MARRIAGE (AND EVEN TOLD YOU THAT MARRIED WOMEN EMPLOYEES ARE NOT APPLICABLE
[SIC] OR ACCEPTED IN OUR COMPANY.)[22] PARENTHETICALLY, THIS SEEMS TO BE THE CURIOUS REASON
WHY IT WAS MADE TO APPEAR IN THE INITIATORY PLEADINGS THAT PETITIONER WAS REPRESENTED IN
THIS CASE ONLY BY ITS SAID SUPERVISOR AND NOT BY ITS HIGHEST RANKING OFFICERS WHO WOULD
OTHERWISE BE SOLIDARILY LIABLE WITH THE CORPORATION.[23]

VERILY, PRIVATE RESPONDENTS ACT OF CONCEALING THE TRUE NATURE OF HER STATUS FROM PT&T
COULD NOT BE PROPERLY CHARACTERIZED AS WILLFUL OR IN BAD FAITH AS SHE WAS MOVED TO ACT
THE WAY SHE DID MAINLY BECAUSE SHE WANTED TO RETAIN A PERMANENT JOB IN A STABLE COMPANY.
IN OTHER WORDS, SHE WAS PRACTICALLY FORCED BY THAT VERY SAME ILLEGAL COMPANY POLICY INTO
MISREPRESENTING HER CIVIL STATUS FOR FEAR OF BEING DISQUALIFIED FROM WORK. WHILE LOSS OF
CONFIDENCE IS A JUST CAUSE FOR TERMINATION OF EMPLOYMENT, IT SHOULD NOT BE SIMULATED.[24]
IT MUST REST ON AN ACTUAL BREACH OF DUTY COMMITTED BY THE EMPLOYEE AND NOT ON THE
EMPLOYERS CAPRICES.[25] FURTHERMORE, IT SHOULD NEVER BE USED AS A SUBTERFUGE FOR CAUSES
WHICH ARE IMPROPER, ILLEGAL, OR UNJUSTIFIED.[26]

IN THE PRESENT CONTROVERSY, PETITIONERS EXPOSTULATIONS THAT IT DISMISSED PRIVATE

RESPONDENT, NOT BECAUSE THE LATTER GOT MARRIED BUT BECAUSE SHE CONCEALED THAT FACT,
DOES HAVE A HOLLOW RING. HER CONCEALMENT, SO IT IS CLAIMED, BESPEAKS DISHONESTY HENCE THE
CONSEQUENT LOSS OF CONFIDENCE IN HER WHICH JUSTIFIED HER DISMISSAL. PETITIONER WOULD
ASSEVERATE, THEREFORE, THAT WHILE IT HAS NOTHING AGAINST MARRIAGE, IT NONETHELESS TAKES
UMBRAGE OVER THE CONCEALMENT OF THAT FACT. THIS IMPROBABLE REASONING, WITH INTERSTITIAL
DISTINCTIONS, PERTURBS THE COURT SINCE PRIVATE RESPONDENT MAY WELL BE MINDED TO CLAIM
THAT THE IMPUTATION OF DISHONESTY SHOULD BE THE OTHER WAY AROUND.

PETITIONER WOULD HAVE THE COURT BELIEVE THAT ALTHOUGH PRIVATE RESPONDENT DEFIED ITS
POLICY AGAINST ITS FEMALE EMPLOYEES CONTRACTING MARRIAGE, WHAT COULD BE AN ACT OF
INSUBORDINATION WAS INCONSEQUENTIAL. WHAT IT SUBMITS AS UNFORGIVABLE IS HER
CONCEALMENT OF THAT MARRIAGE YET, AT THE SAME TIME, DECLARING THAT MARRIAGE AS A TRIVIAL
MATTER TO WHICH IT SUPPOSEDLY HAS NO OBJECTION. IN OTHER WORDS, PT&T SAYS IT GIVES ITS
BLESSINGS TO ITS FEMALE EMPLOYEES CONTRACTING MARRIAGE, DESPITE THE MATERNITY LEAVES AND
OTHER BENEFITS IT WOULD CONSEQUENTLY RESPOND FOR AND WHICH OBVIOUSLY IT WOULD HAVE
WANTED TO AVOID. IF THAT EMPLOYEE CONFESSES SUCH FACT OF MARRIAGE, THERE WILL BE NO
SANCTION; BUT IF SUCH EMPLOYEE CONCEALS THE SAME INSTEAD OF PROCEEDING TO THE
CONFESSIONAL, SHE WILL BE DISMISSED. THIS LINE OF REASONING DOES NOT IMPRESS US AS
REFLECTING ITS TRUE MANAGEMENT POLICY OR THAT WE ARE BEING REGALED WITH RESPONSIBLE
ADVOCACY.

THIS COURT SHOULD BE SPARED THE ENNUI OF STRAINED REASONING AND THE TEDIUM OF
PROPOSITIONS WHICH CONFUSE THROUGH LESS THAN CANDID ARGUMENTS. INDEED, PETITIONER
GLOSSES OVER THE FACT THAT IT WAS ITS UNLAWFUL POLICY AGAINST MARRIED WOMEN, BOTH ON
THE ASPECTS OF QUALIFICATION AND RETENTION, WHICH COMPELLED PRIVATE RESPONDENT TO
CONCEAL HER SUPERVENIENT MARRIAGE. IT WAS, HOWEVER, THAT VERY POLICY ALONE WHICH WAS
THE CAUSE OF PRIVATE RESPONDENTS SECRETIVE CONDUCT NOW COMPLAINED OF. IT IS THEN
APROPOS TO RECALL THE FAMILIAR SAYING THAT HE WHO IS THE CAUSE OF THE CAUSE IS THE CAUSE OF
THE EVIL CAUSED.

FINALLY, PETITIONERS COLLATERAL INSISTENCE ON THE ADMISSION OF PRIVATE RESPONDENT THAT SHE
SUPPOSEDLY MISAPPROPRIATED COMPANY FUNDS, AS AN ADDITIONAL GROUND TO DISMISS HER FROM
EMPLOYMENT, IS SOMEWHAT INSINCERE AND SELF-SERVING. CONCEDEDLY, PRIVATE RESPONDENT
ADMITTED IN THE COURSE OF THE PROCEEDINGS THAT SHE FAILED TO REMIT SOME OF HER
COLLECTIONS, BUT THAT IS AN ALTOGETHER DIFFERENT STORY. THE FACT IS THAT SHE WAS DISMISSED
SOLELY BECAUSE OF HER CONCEALMENT OF HER MARITAL STATUS, AND NOT ON THE BASIS OF THAT
SUPPOSED DEFALCATION OF COMPANY FUNDS. THAT THE LABOR ARBITER WOULD THUS CONSIDER
PETITIONERS SUBMISSIONS ON THIS SUPPOSED DISHONESTY AS A MERE AFTERTHOUGHT, JUST TO
BOLSTER ITS CASE FOR DISMISSAL, IS A PERCEPTIVE CONCLUSION BORN OF EXPERIENCE IN LABOR
CASES. FOR, THERE WAS NO SHOWING THAT PRIVATE RESPONDENT DELIBERATELY MISAPPROPRIATED
THE AMOUNT OR WHETHER HER FAILURE TO REMIT THE SAME WAS THROUGH NEGLIGENCE AND, IF SO,
WHETHER THE NEGLIGENCE WAS IN NATURE SIMPLE OR GRAVE. IN FACT, IT WAS MERELY AGREED THAT
PRIVATE RESPONDENT EXECUTE A PROMISSORY NOTE TO REFUND THE SAME, WHICH SHE DID, AND THE
MATTER WAS DEEMED SETTLED AS A PERIPHERAL ISSUE IN THE LABOR CASE.

PRIVATE RESPONDENT, IT MUST BE OBSERVED, HAD GAINED REGULAR STATUS AT THE TIME OF HER
DISMISSAL. WHEN SHE WAS SERVED HER WALKING PAPERS ON JANUARY 29, 1992, SHE WAS ABOUT TO
COMPLETE THE PROBATIONARY PERIOD OF 150 DAYS AS SHE WAS CONTRACTED AS A PROBATIONARY
EMPLOYEE ON SEPTEMBER 2, 1991. THAT HER DISMISSAL WOULD BE EFFECTED JUST WHEN HER
PROBATIONARY PERIOD WAS WINDING DOWN CLEARLY RAISES THE PLAUSIBLE CONCLUSION THAT IT
WAS DONE IN ORDER TO PREVENT HER FROM EARNING SECURITY OF TENURE.[27] ON THE OTHER
HAND, HER EARLIER STINTS WITH THE COMPANY AS RELIEVER WERE UNDOUBTEDLY THOSE OF A
REGULAR EMPLOYEE, EVEN IF THE SAME WERE FOR FIXED PERIODS, AS SHE PERFORMED ACTIVITIES
WHICH WERE ESSENTIAL OR NECESSARY IN THE USUAL TRADE AND BUSINESS OF PT&T.[28] THE
PRIMARY STANDARD OF DETERMINING REGULAR EMPLOYMENT IS THE REASONABLE CONNECTION
BETWEEN THE ACTIVITY PERFORMED BY THE EMPLOYEE IN RELATION TO THE BUSINESS OR TRADE OF
THE EMPLOYER.[29]

AS AN EMPLOYEE WHO HAD THEREFORE GAINED REGULAR STATUS, AND AS SHE HAD BEEN DISMISSED
WITHOUT JUST CAUSE, SHE IS ENTITLED TO REINSTATEMENT WITHOUT LOSS OF SENIORITY RIGHTS AND
OTHER PRIVILEGES AND TO FULL BACK WAGES, INCLUSIVE OF ALLOWANCES AND OTHER BENEFITS OR
THEIR MONETARY EQUIVALENT.[30] HOWEVER, AS SHE HAD UNDENIABLY COMMITTED AN ACT OF
DISHONESTY IN CONCEALING HER STATUS, ALBEIT UNDER THE COMPULSION OF AN UNLAWFUL
IMPOSITION OF PETITIONER, THE THREE-MONTH SUSPENSION IMPOSED BY RESPONDENT NLRC MUST
BE UPHELD TO OBVIATE THE IMPRESSION OR INFERENCE THAT SUCH ACT SHOULD BE CONDONED. IT
WOULD BE UNFAIR TO THE EMPLOYER IF SHE WERE TO RETURN TO ITS FOLD WITHOUT ANY SANCTION
WHATSOEVER FOR HER ACT WHICH WAS NOT TOTALLY JUSTIFIED. THUS, HER ENTITLEMENT TO BACK
WAGES, WHICH SHALL BE COMPUTED FROM THE TIME HER COMPENSATION WAS WITHHELD UP TO THE
TIME OF HER ACTUAL REINSTATEMENT, SHALL BE REDUCED BY DEDUCTING THEREFROM THE AMOUNT
CORRESPONDING TO HER THREE MONTHS SUSPENSION.

4. THE GOVERNMENT, TO REPEAT, ABHORS ANY STIPULATION OR POLICY IN THE NATURE OF THAT
ADOPTED BY PETITIONER PT&T. THE LABOR CODE STATES, IN NO UNCERTAIN TERMS, AS FOLLOWS:

ART. 136. STIPULATION AGAINST MARRIAGE. - IT SHALL BE UNLAWFUL FOR AN EMPLOYER TO REQUIRE
AS A CONDITION OF EMPLOYMENT OR CONTINUATION OF EMPLOYMENT THAT A WOMAN SHALL NOT
GET MARRIED, OR TO STIPULATE EXPRESSLY OR TACITLY THAT UPON GETTING MARRIED, A WOMAN
EMPLOYEE SHALL BE DEEMED RESIGNED OR SEPARATED, OR TO ACTUALLY DISMISS, DISCHARGE,
DISCRIMINATE OR OTHERWISE PREJUDICE A WOMAN EMPLOYEE MERELY BY REASON OF MARRIAGE.

THIS PROVISION HAD A STUDIED HISTORY FOR ITS ORIGIN CAN BE TRACED TO SECTION 8 OF
PRESIDENTIAL DECREE NO. 148,[31] BETTER KNOWN AS THE WOMEN AND CHILD LABOR LAW, WHICH
AMENDED PARAGRAPH (C), SECTION 12 OF REPUBLIC ACT NO. 679,[32] ENTITLED AN ACT TO REGULATE
THE EMPLOYMENT OF WOMEN AND CHILDREN, TO PROVIDE PENALTIES FOR VIOLATIONS THEREOF, AND
FOR OTHER PURPOSES. THE FORERUNNER TO REPUBLIC ACT NO. 679, ON THE OTHER HAND, WAS ACT
NO. 3071 WHICH BECAME LAW ON MARCH 16, 1923 AND WHICH REGULATED THE EMPLOYMENT OF
WOMEN AND CHILDREN IN SHOPS, FACTORIES, INDUSTRIAL, AGRICULTURAL, AND MERCANTILE
ESTABLISHMENTS AND OTHER PLACES OF LABOR IN THE THEN PHILIPPINE ISLANDS.

IT WOULD BE WORTHWHILE TO REFLECT UPON AND ADOPT HERE THE RATIONALIZATION IN ZIALCITA, ET
AL. VS. PHILIPPINE AIR LINES,[33] A DECISION THAT EMANATED FROM THE OFFICE OF THE PRESIDENT.
THERE, A POLICY OF PHILIPPINE AIR LINES REQUIRING THAT PROSPECTIVE FLIGHT ATTENDANTS MUST BE
SINGLE AND THAT THEY WILL BE AUTOMATICALLY SEPARATED FROM THE SERVICE ONCE THEY MARRY
WAS DECLARED VOID, IT BEING VIOLATIVE OF THE CLEAR MANDATE IN ARTICLE 136 OF THE LABOR CODE
WITH REGARD TO DISCRIMINATION AGAINST MARRIED WOMEN. THUS:

OF FIRST IMPRESSION IS THE INCOMPATIBILITY OF THE RESPONDENTS POLICY OR REGULATION WITH

THE CODAL PROVISION OF LAW. RESPONDENT IS RESOLUTE IN ITS CONTENTION THAT ARTICLE 136 OF
THE LABOR CODE APPLIES ONLY TO WOMEN EMPLOYED IN ORDINARY OCCUPATIONS AND THAT THE
PROHIBITION AGAINST MARRIAGE OF WOMEN ENGAGED IN EXTRAORDINARY OCCUPATIONS, LIKE
FLIGHT ATTENDANTS, IS FAIR AND REASONABLE, CONSIDERING THE PECULARITIES OF THEIR CHOSEN
PROFESSION.

WE CANNOT SUBSCRIBE TO THE LINE OF REASONING PURSUED BY RESPONDENT. ALL ALONG, IT KNEW
THAT THE CONTROVERTED POLICY HAS ALREADY MET ITS DOOM AS EARLY AS MARCH 13, 1973 WHEN
PRESIDENTIAL DECREE NO. 148, OTHERWISE KNOWN AS THE WOMEN AND CHILD LABOR LAW, WAS
PROMULGATED. BUT FOR THE TIMIDITY OF THOSE AFFECTED OR THEIR LABOR UNIONS IN CHALLENGING
THE VALIDITY OF THE POLICY, THE SAME WAS ABLE TO OBTAIN A MOMENTARY REPRIEVE. A CLOSE LOOK
AT SECTION 8 OF SAID DECREE, WHICH AMENDED PARAGRAPH (C) OF SECTION 12 OF REPUBLIC ACT NO.
679, REVEALS THAT IT IS EXACTLY THE SAME PROVISION REPRODUCED VERBATIM IN ARTICLE 136 OF THE
LABOR CODE, WHICH WAS PROMULGATED ON MAY 1, 1974 TO TAKE EFFECT SIX (6) MONTHS LATER, OR
ON NOVEMBER 1, 1974.

IT CANNOT BE GAINSAID THAT, WITH THE REITERATION OF THE SAME PROVISION IN THE NEW LABOR
CODE, ALL POLICIES AND ACTS AGAINST IT ARE DEEMED ILLEGAL AND THEREFORE ABROGATED. TRUE,
ARTICLE 132 ENJOINS THE SECRETARY OF LABOR TO ESTABLISH STANDARDS THAT WILL ENSURE THE
SAFETY AND HEALTH OF WOMEN EMPLOYEES AND IN APPROPRIATE CASES SHALL BY REGULATION
REQUIRE EMPLOYERS TO DETERMINE APPROPRIATE MINIMUM STANDARDS FOR TERMINATION IN
SPECIAL OCCUPATIONS, SUCH AS THOSE OF FLIGHT ATTENDANTS, BUT THAT IS PRECISELY THE FACTOR
THAT MILITATES AGAINST THE POLICY OF RESPONDENT. THE STANDARDS HAVE NOT YET BEEN
ESTABLISHED AS SET FORTH IN THE FIRST PARAGRAPH, NOR HAS THE SECRETARY OF LABOR ISSUED ANY
REGULATION AFFECTING FLIGHT ATTENDANTS.

IT IS LOGICAL TO PRESUME THAT, IN THE ABSENCE OF SAID STANDARDS OR REGULATIONS WHICH ARE AS
YET TO BE ESTABLISHED, THE POLICY OF RESPONDENT AGAINST MARRIAGE IS PATENTLY ILLEGAL. THIS
FINDS SUPPORT IN SECTION 9 OF THE NEW CONSTITUTION, WHICH PROVIDES:

SEC. 9. THE STATE SHALL AFFORD PROTECTION TO LABOR, PROMOTE FULL EMPLOYMENT AND EQUALITY
IN EMPLOYMENT, ENSURE EQUAL WORK OPPORTUNITIES REGARDLESS OF SEX, RACE, OR CREED, AND
REGULATE THE RELATIONS BETWEEN WORKERS AND EMPLOYEES. THE STATE SHALL ASSURE THE RIGHTS
OF WORKERS TO SELF-ORGANIZATION, COLLECTIVE BARGAINING, SECURITY OF TENURE, AND JUST AND
HUMANE CONDITIONS OF WORK X X X.

MOREOVER, WE CANNOT AGREE TO THE RESPONDENTS PROPOSITION THAT TERMINATION FROM

EMPLOYMENT OF FLIGHT ATTENDANTS ON ACCOUNT OF MARRIAGE IS A FAIR AND REASONABLE
STANDARD DESIGNED FOR THEIR OWN HEALTH, SAFETY, PROTECTION AND WELFARE, AS NO BASIS HAS
BEEN LAID THEREFOR. ACTUALLY, RESPONDENT CLAIMS THAT ITS CONCERN IS NOT SO MUCH AGAINST
THE CONTINUED EMPLOYMENT OF THE FLIGHT ATTENDANT MERELY BY REASON OF MARRIAGE AS
OBSERVED BY THE SECRETARY OF LABOR, BUT RATHER ON THE CONSEQUENCE OF MARRIAGE-
PREGNANCY. RESPONDENT DISCUSSED AT LENGTH IN THE INSTANT APPEAL THE SUPPOSED ILL EFFECTS
OF PREGNANCY ON FLIGHT ATTENDANTS IN THE COURSE OF THEIR EMPLOYMENT. WE FEEL THAT THIS
NEEDS NO FURTHER DISCUSSION AS IT HAD BEEN ADEQUATELY EXPLAINED BY THE SECRETARY OF LABOR
IN HIS DECISION OF MAY 2, 1976.

IN A VAIN ATTEMPT TO GIVE MEANING TO ITS POSITION, RESPONDENT WENT AS FAR AS INVOKING THE
PROVISIONS OF ARTICLES 52 AND 216 OF THE NEW CIVIL CODE ON THE PRESERVATION OF MARRIAGE AS
AN INVIOLABLE SOCIAL INSTITUTION AND THE FAMILY AS A BASIC SOCIAL INSTITUTION, RESPECTIVELY,
AS BASES FOR ITS POLICY OF NON-MARRIAGE. IN BOTH INSTANCES, RESPONDENT PREDICATES ABSENCE
OF A FLIGHT ATTENDANT FROM HER HOME FOR LONG PERIODS OF TIME AS CONTRIBUTORY TO AN
UNHAPPY MARRIED LIFE. THIS IS PURE CONJECTURE NOT BASED ON ACTUAL CONDITIONS,
CONSIDERING THAT, IN THIS MODERN WORLD, SOPHISTICATED TECHNOLOGY HAS NARROWED THE
DISTANCE FROM ONE PLACE TO ANOTHER. MOREOVER, RESPONDENT OVERLOOKED THE FACT THAT
MARRIED FLIGHT ATTENDANTS CAN PROGRAM THEIR LIVES TO ADAPT TO PREVAILING CIRCUMSTANCES
AND EVENTS.

ARTICLE 136 IS NOT INTENDED TO APPLY ONLY TO WOMEN EMPLOYED IN ORDINARY OCCUPATIONS, OR
IT SHOULD HAVE CATEGORICALLY EXPRESSED SO. THE SWEEPING INTENDMENT OF THE LAW, BE IT ON
SPECIAL OR ORDINARY OCCUPATIONS, IS REFLECTED IN THE WHOLE TEXT AND SUPPORTED BY ARTICLE
135 THAT SPEAKS OF NON-DISCRIMINATION ON THE EMPLOYMENT OF WOMEN.

THE JUDGMENT OF THE COURT OF APPEALS IN GUALBERTO, ET AL. VS. MARINDUQUE MINING &
INDUSTRIAL CORPORATION[34] CONSIDERED AS VOID A POLICY OF THE SAME NATURE. IN SAID CASE,
RESPONDENT, IN DISMISSING FROM THE SERVICE THE COMPLAINANT, INVOKED A POLICY OF THE FIRM
TO CONSIDER FEMALE EMPLOYEES IN THE PROJECT IT WAS UNDERTAKING AS SEPARATED THE MOMENT
THEY GET MARRIED DUE TO LACK OF FACILITIES FOR MARRIED WOMEN. RESPONDENT FURTHER
CLAIMED THAT COMPLAINANT WAS EMPLOYED IN THE PROJECT WITH AN ORAL UNDERSTANDING THAT
HER SERVICES WOULD BE TERMINATED WHEN SHE GETS MARRIED. BRANDING THE POLICY OF THE
EMPLOYER AS AN EXAMPLE OF DISCRIMINATORY CHAUVINISM TANTAMOUNT TO DENYING EQUAL
EMPLOYMENT OPPORTUNITIES TO WOMEN SIMPLY ON ACCOUNT OF THEIR SEX, THE APPELLATE COURT
STRUCK DOWN SAID EMPLOYER POLICY AS UNLAWFUL IN VIEW OF ITS REPUGNANCE TO THE CIVIL
CODE, PRESIDENTIAL DECREE NO. 148 AND THE CONSTITUTION.

UNDER AMERICAN JURISPRUDENCE, JOB REQUIREMENTS WHICH ESTABLISH EMPLOYER PREFERENCE OR

CONDITIONS RELATING TO THE MARITAL STATUS OF AN EMPLOYEE ARE CATEGORIZED AS A SEX-PLUS
DISCRIMINATION WHERE IT IS IMPOSED ON ONE SEX AND NOT ON THE OTHER. FURTHER, THE SAME
SHOULD BE EVENLY APPLIED AND MUST NOT INFLICT ADVERSE EFFECTS ON A RACIAL OR SEXUAL GROUP
WHICH IS PROTECTED BY FEDERAL JOB DISCRIMINATION LAWS. EMPLOYMENT RULES THAT FORBID OR
RESTRICT THE EMPLOYMENT OF MARRIED WOMEN, BUT DO NOT APPLY TO MARRIED MEN, HAVE BEEN
HELD TO VIOLATE TITLE VII OF THE UNITED STATES CIVIL RIGHTS ACT OF 1964, THE MAIN FEDERAL
STATUTE PROHIBITING JOB DISCRIMINATION AGAINST EMPLOYEES AND APPLICANTS ON THE BASIS OF,
AMONG OTHER THINGS, SEX.[35]

FURTHER, IT IS NOT RELEVANT THAT THE RULE IS NOT DIRECTED AGAINST ALL WOMEN BUT JUST
AGAINST MARRIED WOMEN. AND, WHERE THE EMPLOYER DISCRIMINATES AGAINST MARRIED WOMEN,
BUT NOT AGAINST MARRIED MEN, THE VARIABLE IS SEX AND THE DISCRIMINATION IS UNLAWFUL.[36]
UPON THE OTHER HAND, A REQUIREMENT THAT A WOMAN EMPLOYEE MUST REMAIN UNMARRIED
COULD BE JUSTIFIED AS A BONA FIDE OCCUPATIONAL QUALIFICATION, OR BFOQ, WHERE THE
PARTICULAR REQUIREMENTS OF THE JOB WOULD JUSTIFY THE SAME, BUT NOT ON THE GROUND OF A
GENERAL PRINCIPLE, SUCH AS THE DESIRABILITY OF SPREADING WORK IN THE WORKPLACE. A
REQUIREMENT OF THAT NATURE WOULD BE VALID PROVIDED IT REFLECTS AN INHERENT QUALITY
REASONABLY NECESSARY FOR SATISFACTORY JOB PERFORMANCE. THUS, IN ONE CASE, A NO-MARRIAGE
RULE APPLICABLE TO BOTH MALE AND FEMALE FLIGHT ATTENDANTS, WAS REGARDED AS UNLAWFUL
SINCE THE RESTRICTION WAS NOT RELATED TO THE JOB PERFORMANCE OF THE FLIGHT ATTENDANTS.
[37]

5. PETITIONERS POLICY IS NOT ONLY IN DEROGATION OF THE PROVISIONS OF ARTICLE 136 OF THE
LABOR CODE ON THE RIGHT OF A WOMAN TO BE FREE FROM ANY KIND OF STIPULATION AGAINST
MARRIAGE IN CONNECTION WITH HER EMPLOYMENT, BUT IT LIKEWISE ASSAULTS GOOD MORALS AND
PUBLIC POLICY, TENDING AS IT DOES TO DEPRIVE A WOMAN OF THE FREEDOM TO CHOOSE HER STATUS,
A PRIVILEGE THAT BY ALL ACCOUNTS INHERES IN THE INDIVIDUAL AS AN INTANGIBLE AND INALIENABLE
RIGHT.[38] HENCE, WHILE IT IS TRUE THAT THE PARTIES TO A CONTRACT MAY ESTABLISH ANY
AGREEMENTS, TERMS, AND CONDITIONS THAT THEY MAY DEEM CONVENIENT, THE SAME SHOULD NOT
BE CONTRARY TO LAW, MORALS, GOOD CUSTOMS, PUBLIC ORDER, OR PUBLIC POLICY.[39] CARRIED TO
ITS LOGICAL CONSEQUENCES, IT MAY EVEN BE SAID THAT PETITIONERS POLICY AGAINST LEGITIMATE
MARITAL BONDS WOULD ENCOURAGE ILLICIT OR COMMON-LAW RELATIONS AND SUBVERT THE
SACRAMENT OF MARRIAGE.

PARENTHETICALLY, THE CIVIL CODE PROVISIONS ON THE CONTRACT OF LABOR STATE THAT THE
RELATIONS BETWEEN THE PARTIES, THAT IS, OF CAPITAL AND LABOR, ARE NOT MERELY CONTRACTUAL,
IMPRESSED AS THEY ARE WITH SO MUCH PUBLIC INTEREST THAT THE SAME SHOULD YIELD TO THE
COMMON GOOD.[40] IT GOES ON TO INTONE THAT NEITHER CAPITAL NOR LABOR SHOULD VISIT ACTS
OF OPPRESSION AGAINST THE OTHER, NOR IMPAIR THE INTEREST OR CONVENIENCE OF THE PUBLIC.[41]
IN THE FINAL RECKONING, THE DANGER OF JUST SUCH A POLICY AGAINST MARRIAGE FOLLOWED BY
PETITIONER PT&T IS THAT IT STRIKES AT THE VERY ESSENCE, IDEALS AND PURPOSE OF MARRIAGE AS AN
INVIOLABLE SOCIAL INSTITUTION AND, ULTIMATELY, OF THE FAMILY AS THE FOUNDATION OF THE
NATION.[42] THAT IT MUST BE EFFECTIVELY INTERDICTED HERE IN ALL ITS INDIRECT, DISGUISED OR
DISSEMBLED FORMS AS DISCRIMINATORY CONDUCT DEROGATORY OF THE LAWS OF THE LAND IS NOT
ONLY IN ORDER BUT IMPERATIVELY REQUIRED.

ON THE FOREGOING PREMISES, THE PETITION OF PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY IS
HEREBY DISMISSED FOR LACK OF MERIT, WITH DOUBLE COSTS AGAINST PETITIONER.

SO ORDERED.
[G.R. NO. 123737. MAY 28, 1999]

CARLOS G. LIBRES, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION, NATIONAL STEEL
CORPORATION, OSMUNDO G. WAGA, JR., ANTOINE D. SEVA, PETER J. LOQUILLANO, SATURNINO P.
MEJORADA AND ISIDRO F. HYNSON, JR., RESPONDENTS.
DECISION
BELLOSILLO, J.:

THIS PETITION FOR CERTIORARI SEEKS TO ANNUL THE DECISION OF PUBLIC RESPONDENT NATIONAL
LABOR RELATIONS COMMISSION (NLRC) SUSTAINING THE LABOR ARBITERS FINDING THAT PETITIONER
WAS VALIDLY SUSPENDED BY PRIVATE RESPONDENTS, AS WELL AS THE NLRC RESOLUTION DENYING
PETITIONERS MOTION TO RECONSIDER ITS DECISION.

PETITIONER CARLOS G. LIBRES, AN ELECTRICAL ENGINEER, WAS HOLDING A MANAGERIAL POSITION

WITH NATIONAL STEEL CORPORATION (NSC) AS ASSISTANT MANAGER. ON 3 AUGUST 1993 HE RECEIVED
A NOTICE OF INVESTIGATION FROM ASSISTANT VICE PRESIDENT ISIDRO F. HYNSON JR., HIS IMMEDIATE
SUPERIOR, REQUESTING HIM TO SUBMIT A WRITTEN EXPLANATION RELATIVE TO THE CHARGE OF
SEXUAL HARASSMENT MADE BY SUSAN D. CAPIRAL, HYNSONS SECRETARY, ALLEGEDLY COMMITTED BY
LIBRES SOMETIME IN MAY 1992, AND SUBSEQUENTLY TO ANSWER CLARIFICATORY QUESTIONS ON THE
MATTER. THE NOTICE ALSO WARNED HIM THAT FAILURE TO FILE HIS WRITTEN EXPLANATION WOULD BE
CONSTRUED AS A WAIVER OF HIS RIGHT TO BE HEARD. ON 14 AUGUST 1993 PETITIONER SUBMITTED HIS
WRITTEN EXPLANATION DENYING THE ACCUSATION AGAINST HIM AND OFFERING TO SUBMIT HIMSELF
FOR CLARIFICATORY INTERROGATION.

SUBSEQUENTLY, HYNSON JR. CONDUCTED AN INTERNAL INVESTIGATION TO WHICH LIBRES AND CAPIRAL
WERE INVITED TO VENTILATE THEIR RESPECTIVE SIDES OF THE ISSUE. THEY READILY RESPONDED.
THEREAFTER, HYNSON JR. SUBMITTED HIS REPORT TO THE MANAGEMENT EVALUATION COMMITTEE
(MEC).
THE MEC, AFTER DELIBERATION, CONCLUDED THAT THE CHARGES AGAINST PETITIONER CONSTITUTED A
VIOLATION OF ITEM 2, TABLE V, OF THE PLANTS RULES AND REGULATIONS.[1] IT OPINED THAT
TOUCHING A FEMALE SUBORDINATES HAND AND SHOULDER, CARESSING HER NAPE AND TELLING
OTHER PEOPLE THAT CAPIRAL WAS THE ONE WHO HUGGED AND KISSED OR THAT SHE RESPONDED TO
THE SEXUAL ADVANCES ARE UNAUTHORIZED ACTS THAT DAMAGED HER HONOR.[2] REFERRING TO THE
MANUAL OF THE PHILIPPINE DAILY INQUIRER IN DEFINING SEXUAL HARASSMENT,[3] THE MEC FINALLY
CONCLUDED THAT PETITIONERS ACTS CLEARLY CONSTITUTED SEXUAL HARASSMENT AS CHARGED AND
RECOMMENDED PETITIONERS SUSPENSION FOR THIRTY (30) DAYS WITHOUT PAY.

ON 5 JANUARY 1994 PETITIONER WROTE MELCHOR Q. VILLAMOR, VICE PRESIDENT FOR

MANUFACTURING, REQUESTING RECONSIDERATION OF HIS SUSPENSION, BUT THE SAME WAS DENIED.
ON 12 FEBRUARY 1994 THE SUSPENSION ORDER WAS FINALLY IMPLEMENTED.

SEEKING TO REVERSE HIS MISFORTUNE, LIBRES FILED A COMPLAINT FOR ILLEGAL SUSPENSION AND
UNJUST DISCRIMINATION AGAINST RESPONDENT NSC AND ITS OFFICERS, PRIVATE RESPONDENTS
HEREIN, BEFORE THE LABOR ARBITER. CITING THE FAILURE OF THE MEC TO GRANT HIM AUDIENCE
DESPITE HIS OFFER TO ANSWER CLARIFICATORY QUESTIONS, PETITIONER CLAIMED DENIAL OF DUE
PROCESS. LABOR ARBITER NICODEMUS G. PALANGAN HOWEVER RULED THAT DUE PROCESS WAS
PROPERLY OBSERVED AND THAT THERE WAS A POSITIVE FINDING OF SEXUAL HARASSMENT TO JUSTIFY
PETITIONERS SUSPENSION. HE POINTED OUT THAT THERE WAS NO SUBSTANTIAL INCONSISTENCY
BETWEEN THE NARRATION OF COMPLAINANT CAPIRAL AND PETITIONER REGARDING THE INCIDENT IN
THE EVENING OF MAY 1992. THE LABOR ARBITER FOUND THAT ASIDE FROM A FEW FACTS WHICH WERE
CONTROVERTED BY CAPIRAL IN HER COMPLAINT-AFFIDAVIT, PETITIONERS ADMISSIONS APPROXIMATED
THE TRUTH; CONSEQUENTLY, HE RULED THAT THE MEC WAS CORRECT IN INCLUDING THAT SEXUAL
HARASSMENT HAD INDEED TRANSPIRED. THE LABOR ARBITER OBSERVED THAT PETITIONER SHOULD
WELCOME THAT HIS PENALTY WAS ONLY FOR SUSPENSION OF THIRTY (30) DAYS AS OPPOSED TO
TERMINATION IMPOSED IN VILLARAMA V. NLRC AND GOLDEN DONUTS.[4] IN THIS RECOURSE
PETITIONER MAINTAINS THAT PUBLIC RESPONDENT GRIEVOUSLY ERRED AMOUNTING TO LACK OR
EXCESS OF JURISDICTION IN FINDING THAT HE COMMITTED SEXUAL HARASSMENT JUSTIFYING HIS
SUSPENSION, AND IN CONCLUDING THAT HE WAS AFFORDED DUE PROCESS.

PETITIONER ARGUES THAT THE ISSUE OF SEXUAL HARASSMENT WAS NOT ADEQUATELY CONSIDERED AS
HE NOTED THAT THE FINDING OF THE NLRC WAS MADE WITHOUT PROPER BASIS IN FACT AND IN LAW.
HE MAINTAINS THAT THE NLRC MERELY ADOPTED THE CONCLUSIONS OF THE LABOR ARBITER WHICH IN
TURN WERE SIMPLY DERIVED FROM THE REPORT OF THE MEC. PETITIONER PRIMARILY DISPUTES THE
FAILURE OF THE NLRC TO APPLY RA NO. 7877, AN ACT DECLARING SEXUAL HARASSMENT UNLAWFUL IN
THE EMPLOYMENT, EDUCATION OR TRAINING ENVIRONMENT AND FOR OTHER PURPOSES, IN
DETERMINING WHETHER HE ACTUALLY COMMITTED SEXUAL HARASSMENT. HE ASSERTS THAT HIS ACTS
DID NOT FALL WITHIN THE DEFINITION AND CRITERIA OF SEXUAL HARASSMENT AS LAID DOWN IN SEC. 3
OF THE LAW.[5] SPECIFICALLY, HE CITES PUBLIC RESPONDENTS FAILURE TO SHOW THAT HIS ACTS OF
FONDLING THE HAND AND MASSAGING THE SHOULDERS OF CAPIRAL DISCRIMINATED AGAINST HER
CONTINUED EMPLOYMENT, IMPAIRED HER RIGHTS AND PRIVILEGES UNDER THE LABOR CODE, OR
CREATED A HOSTILE, INTIMIDATING OR OFFENSIVE ENVIRONMENT.[6]

PETITIONER ALSO CONTENDS THAT PUBLIC RESPONDENTS RELIANCE ON VILLARAMA V. NLRC AND
GOLDEN DONUTS[7] WAS MISPLACED. HE DRAWS ATTENTION TO VICTIM DIVINA GONZAGAS
IMMEDIATE FILING OF HER LETTER OF RESIGNATION IN THE VILLARAMA CASE AS OPPOSED TO THE ONE
YEAR DELAY OF CAPIRAL IN FILING HER COMPLAINT AGAINST HIM. HE NOW SURMISES THAT THE FILING
OF THE CASE AGAINST HIM WAS MERELY AN AFTERTHOUGHT AND NOT BORNE OUT OF A VALID
COMPLAINT, HENCE, THE VILLARAMA CASE SHOULD HAVE NO BEARING ON THE INSTANT CASE.

AS REGARDS HIS ASSERTION THAT HE WAS NOT AFFORDED DUE PROCESS, PETITIONER WOULD POINT
TO HIS DEMAND FOR PERSONAL CONFRONTATION WHICH WAS BRUSHED ASIDE BY THE MEC. HE
ARGUES STRONGLY THAT IN REJECTING HIS PLEA, THE MEC CLEARLY DENIED HIM AN OPPORTUNITY TO
BE HEARD AND PRESENT HIS SIDE.

THE ISSUES RAISED IN THIS PETITION REQUIRE THIS COURT TO DELVE INTO THE FINDINGS OF FACT BY
THE PUBLIC RESPONDENT. WE HAVE RULED IN A LITANY OF CASES THAT RESORT TO JUDICIAL REVIEW OF
THE DECISIONS OF THE NLRC UNDER RULE 65 OF THE RULES OF COURT IS CONFINED ONLY TO ISSUES OF
WANT OR EXCESS OF JURISDICTION AND GRAVE ABUSE OF DISCRETION ON THE PART OF THE TRIBUNAL
RENDERING THEM. IT DOES NOT INCLUDE AN INQUIRY ON THE CORRECTNESS OF THE EVALUATION OF
EVIDENCE, WHICH SERVED AS BASIS FOR THE LABOR OFFICIAL IN DETERMINING HIS CONCLUSION.
FINDINGS OF FACT OF ADMINISTRATIVE OFFICERS ARE GENERALLY GIVEN FINALITY.[8] NONETHELESS,
THE COURT SHALL DISCUSS THE MATTER IF ONLY TO EMPHASIZE THAT THE CONTENTIONS OF
PETITIONER ARE DEFINITELY WITHOUT MERIT.

PETITIONER ASSAILS THE FAILURE OF THE NLRC TO STRICTLY APPLY RA NO. 7877 TO THE INSTANT CASE.
WE NOTE HOWEVER, THAT PETITIONER NEVER RAISED THE APPLICABILITY OF THE LAW IN HIS APPEAL
TO THE NLRC NOR IN HIS MOTION FOR RECONSIDERATION. ISSUES OR ARGUMENTS MUST CHIEFLY BE
RAISED BEFORE THE COURT OR AGENCY CONCERNED SO AS TO ALLOW IT TO PASS UPON AND CORRECT
ITS MISTAKES WITHOUT THE INTERVENTION OF A HIGHER COURT. HAVING FAILED TO INDICATE HIS
EFFORT ALONG THIS LINE, PETITIONER CANNOT NOW BELATEDLY RAISE ITS APPLICATION IN THIS
PETITION.

REPUBLIC ACT NO. 7877 WAS NOT YET IN EFFECT AT THE TIME OF THE OCCURRENCE OF THE ACT
COMPLAINED OF. IT WAS STILL BEING DELIBERATED UPON IN CONGRESS WHEN PETITIONERS CASE WAS
DECIDED BY THE LABOR ARBITER. AS A RULE, LAWS SHALL HAVE NO RETROACTIVE EFFECT UNLESS
OTHERWISE PROVIDED, OR EXCEPT IN A CRIMINAL CASE WHEN THEIR APPLICATION WILL FAVOR THE
ACCUSED.[9] HENCE, THE LABOR ARBITER HAVE TO RELY ON THE MEC REPORT AND THE COMMON
CONNOTATION OF SEXUAL HARASSMENT AS IT IS GENERALLY UNDERSTOOD BY THE PUBLIC. FACED WITH
THE SAME PREDICAMENT, THE NLRC HAD TO AGREE WITH THE LABOR ARBITER. IN SO DOING, THE NLRC
DID NOT COMMIT ANY ABUSE OF DISCRETION IN AFFIRMING THE DECISION OF THE LABOR ARBITER.

PETITIONER NEXT TRAINS HIS GUN ON THE RELIANCE BY THE NLRC ON VILLARAMA AND CLAIMS IT WAS
ERRONEOUS. WE RULE OTHERWISE AND HOLD THAT IT WAS BOTH FITTING AND APPROPRIATE SINCE IT
SINGULARLY ADDRESSED THE ISSUE OF A MANAGERIAL EMPLOYEE COMMITTING SEXUAL HARASSMENT
ON A SUBORDINATE. THE DISPARITY IN THE PERIODS OF FILING THE COMPLAINTS IN THE TWO (2) CASES
DID NOT IN ANY WAY REDUCE THIS CASE INTO INSIGNIFICANCE. ON THE CONTRARY, IT EVEN INVITED
THE ATTENTION OF THE COURT TO FOCUS ON SEXUAL HARASSMENT AS A JUST AND VALID CAUSE FOR
TERMINATION. WHEREAS PETITIONER LIBRES WAS ONLY METED A 30-DAY SUSPENSION BY THE NLRC,
VILLARAMA, IN THE OTHER CASE WAS PENALIZED WITH TERMINATION. AS MR. JUSTICE PUNO
ELUCIDATED, AS A MANAGERIAL EMPLOYEE, PETITIONER IS BOUND BY MORE EXACTING WORK ETHICS.
HE FAILED TO LIVE UP TO HIS HIGHER STANDARD OF RESPONSIBILITY WHEN HE SUCCUMBED TO HIS
MORAL PERVERSITY. AND WHEN SUCH MORAL PERVERSITY IS PERPETRATED AGAINST HIS SUBORDINATE,
HE PROVIDES A JUSTIFIABLE GROUND FOR HIS DISMISSAL FOR LACK OF TRUST AND CONFIDENCE. IT IS
THE RIGHT, NAY, THE DUTY OF EVERY EMPLOYER TO PROTECT ITS EMPLOYEES FROM OVERSEXED
SUPERIORS.[10] PUBLIC RESPONDENT THEREFORE IS CORRECT IN ITS OBSERVATION THAT THE LABOR
ARBITER WAS IN FACT LENIENT IN HIS APPLICATION OF THE LAW AND JURISPRUDENCE FOR WHICH
PETITIONER MUST BE GRATEFUL AND NOT GRIPE AGAINST.

PETITIONER FURTHER CLAIMS THAT THE DELAY IN INSTITUTING THE COMPLAINT SHOWS THAT IT WAS
ONLY AN AFTERTHOUGHT. WE DISAGREE. AS POINTED OUT BY THE SOLICITOR GENERAL, IT COULD BE
EXPECTED SINCE LIBRES WAS CAPIRALS IMMEDIATE SUPERIOR. FEAR OF RETALIATION AND BACKLASH,
NOT TO FORGET THE SOCIAL HUMILIATION AND EMBARRASSMENT THAT VICTIMS OF THIS HUMAN
FRAILTY USUALLY SUFFER, ARE ALL REALITIES THAT CAPIRAL HAD TO CONTEND WITH. MOREOVER, THE
DELAY DID NOT DETRACT FROM THE TRUTH DERIVED FROM THE FACTS. PETITIONER LIBRES NEVER
QUESTIONED THE VERACITY OF CAPIRALS ALLEGATIONS. IN FACT HIS NARRATION EVEN CORROBORATED
THE LATTERS ASSERTION IN SEVERAL MATERIAL POINTS. HE ONLY RAISED ISSUE ON THE COMPLAINTS
PROTRACTED FILING.

ON THE QUESTION OF DUE PROCESS, WE FIND THAT THE REQUIREMENTS THEREOF WERE SUFFICIENTLY
COMPLIED WITH. DUE PROCESS AS A CONSTITUTIONAL PRECEPT DOES NOT ALWAYS AND IN ALL
SITUATIONS REQUIRE A TRIAL TYPE PROCEEDING. DUE PROCESS IS SATISFIED WHEN A PERSON IS
NOTIFIED OF THE CHARGE AGAINST HIM AND GIVEN AN OPPORTUNITY TO EXPLAIN OR DEFEND
HIMSELF. THE ESSENCE OF DUE PROCESS IS SIMPLY TO BE HEARD, OR AS APPLIED TO ADMINISTRATIVE
PROCEEDINGS, AN OPPORTUNITY TO EXPLAIN ONES SIDE, OR AN OPPORTUNITY TO SEEK A
RECONSIDERATION OF THE ACTION OR RULING COMPLAINED OF.[11] IT IS UNDENIABLE THAT
PETITIONER WAS GIVEN A NOTICE OF INVESTIGATION INFORMING HIM OF THE CHARGE OF SEXUAL
HARASSMENT AS WELL AS ADVISING HIM TO SUBMIT A WRITTEN EXPLANATION REGARDING THE
MATTER; THAT HE SUBMITTED HIS WRITTEN EXPLANATION TO HIS SUPERIOR, ISIDRO F. HYNSON JR.;
THAT HYNSON JR. FURTHER ALLOWED HIM TO AIR HIS GRIEVANCE IN A PRIVATE SESSION; AND, THAT
UPON RELEASE OF THE SUSPENSION ORDER MADE BY THE MEC PETITIONER REQUESTED ITS
RECONSIDERATION BUT WAS DENIED. FROM THE FOREGOING IT CAN BE GLEANED THAT PETITIONER
WAS GIVEN MORE THAN ADEQUATE OPPORTUNITY TO EXPLAIN HIS SIDE AND AIR HIS GRIEVANCES.

THE PERSONAL CONFRONTATION WITH THE MEC OFFICERS, WHICH HE REQUESTED, WAS NOT
NECESSARY. THE PARTIES HAD ALREADY EXHAUSTIVELY PRESENTED THEIR CLAIMS AND DEFENSES IN
DIFFERENT FORA. AS STATED IN HOMEOWNERS SAVINGS AND LOAN ASSOCIATION V. NLRC, LITIGANTS
MAY BE HEARD THROUGH PLEADINGS, WRITTEN EXPLANATIONS, POSITION PAPERS, MEMORANDA OR
ORAL ARGUMENTS.[12] PETITIONER HAS BEEN AFFORDED ALL OF THE ABOVE MEANS TO AIR HIS SIDE.
DUE PROCESS WAS THEREFORE PROPERLY OBSERVED.

WHEREFORE, THE PETITION IS DISMISSED, NO GRAVE ABUSE OF DISCRETION HAVING BEEN COMMITTED
BY PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION IN UPHOLDING THE SUSPENSION
OF PETITIONER CARLOS G. LIBRES AS JUSTIFIED AND IN ACCORDANCE WITH DUE PROCESS.
CONSEQUENTLY, ITS DECISION OF 28 AUGUST 1995 AS WELL AS ITS RESOLUTION OF 31 OCTOBER 1995 IS
AFFIRMED.

SO ORDERED.
[G.R. NO. 124617. APRIL 28, 2000]
PHILIPPINE AEOLUS AUTOMOTIVE UNITED CORPORATION AND/OR FRANCIS CHUA, PETITIONERS, VS.
NATIONAL LABOR RELATIONS COMMISSION AND ROSALINDA C. CORTEZ, RESPONDENTS.

DECISION

BELLOSILLO, J.:

THIS PETITION SEEKS TO SET ASIDE THE DECISION OF 15 FEBRUARY 1996 AND THE RESOLUTION OF 28
MARCH 1996 OF PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION IN NLRC NCR CA NO.
009753-95 (NLRC NCR CASE NO. 00-12-08759-94) WHICH MODIFIED THE DECISION OF THE LABOR
ARBITER FINDING PETITIONERS NOT GUILTY OF ILLEGAL DISMISSAL.

PETITIONER PHILIPPINE AEOLUS AUTOMOTIVE UNITED CORPORATION (PAAUC) IS A CORPORATION DULY

ORGANIZED AND EXISTING UNDER PHILIPPINE LAWS, PETITIONER FRANCIS CHUA IS ITS PRESIDENT
WHILE PRIVATE RESPONDENT ROSALINDA C. CORTEZ WAS A COMPANY NURSE[1] OF PETITIONER
CORPORATION UNTIL HER TERMINATION ON 7 NOVEMBER 1994. JLEXJ

ON 5 OCTOBER 1994 A MEMORANDUM WAS ISSUED BY MS. MYRNA PALOMARES, PERSONNEL

MANAGER OF PETITIONER CORPORATION, ADDRESSED TO PRIVATE RESPONDENT ROSALINDA C. CORTEZ
REQUIRING HER TO EXPLAIN WITHIN FORTY-EIGHT (48) HOURS WHY NO DISCIPLINARY ACTION SHOULD
BE TAKEN AGAINST HER (A) FOR THROWING A STAPLER AT PLANT MANAGER WILLIAM CHUA, HER
SUPERIOR, AND UTTERING INVECTIVES AGAINST HIM ON 2 AUGUST 1994; (B) FOR LOSING THE AMOUNT
OF P1,488.00 ENTRUSTED TO HER BY PLANT MANAGER CHUA TO BE GIVEN TO MR. FANG OF THE CLMC
DEPARTMENT ON 23 AUGUST 1994; AND, (C) FOR ASKING A CO-EMPLOYEE TO PUNCH-IN HER TIME
CARD THUS MAKING IT APPEAR THAT SHE WAS IN THE OFFICE IN THE MORNING OF 6 SEPTEMBER 1994
WHEN IN FACT SHE WAS NOT. THE MEMORANDUM HOWEVER WAS REFUSED BY PRIVATE RESPONDENT
ALTHOUGH IT WAS READ TO HER AND DISCUSSED WITH HER BY A CO-EMPLOYEE. SHE DID NOT ALSO
SUBMIT THE REQUIRED EXPLANATION, SO THAT WHILE HER CASE WAS PENDING INVESTIGATION THE
COMPANY PLACED HER UNDER PREVENTIVE SUSPENSION FOR THIRTY (30) DAYS EFFECTIVE 9 OCTOBER
1994 TO 7 NOVEMBER 1994. LEXJURIS

ON 20 OCTOBER 1994, WHILE CORTEZ WAS STILL UNDER PREVENTIVE SUSPENSION, ANOTHER
MEMORANDUM WAS ISSUED BY PETITIONER CORPORATION GIVING HER SEVENTY-TWO (72) HOURS TO
EXPLAIN WHY NO DISCIPLINARY ACTION SHOULD BE TAKEN AGAINST HER FOR ALLEGEDLY FAILING TO
PROCESS THE ATM APPLICATIONS OF HER NINE (9) CO-EMPLOYEES WITH THE ALLIED BANKING
CORPORATION. ON 21 OCTOBER 1994 PRIVATE RESPONDENT ALSO REFUSED TO RECEIVE THE SECOND
MEMORANDUM ALTHOUGH IT WAS READ TO HER BY A CO-EMPLOYEE. A COPY OF THE MEMORANDUM
WAS ALSO SENT BY THE PERSONNEL MANAGER TO PRIVATE RESPONDENT AT HER LAST KNOWN
ADDRESS BY REGISTERED MAIL. JURISMIS

MEANWHILE, PRIVATE RESPONDENT SUBMITTED A WRITTEN EXPLANATION WITH RESPECT TO THE LOSS
OF THE P1,488.00 AND THE PUNCHING-IN OF HER TIME CARD BY A CO-EMPLOYEE.

ON 3 NOVEMBER 1994 A THIRD MEMORANDUM WAS ISSUED TO PRIVATE RESPONDENT, THIS TIME
INFORMING HER OF HER TERMINATION FROM THE SERVICE EFFECTIVE 7 NOVEMBER 1994 ON
GROUNDS OF GROSS AND HABITUAL NEGLECT OF DUTIES, SERIOUS MISCONDUCT AND FRAUD OR
WILLFUL BREACH OF TRUST.[2]
ON 6 DECEMBER 1994 PRIVATE RESPONDENT FILED WITH THE LABOR ARBITER A COMPLAINT FOR
ILLEGAL DISMISSAL, NON-PAYMENT OF ANNUAL SERVICE INCENTIVE LEAVE PAY, 13TH MONTH PAY AND
DAMAGES AGAINST PAAUC AND ITS PRESIDENT FRANCIS CHUA.[3]

ON 10 JULY 1995 THE LABOR ARBITER RENDERED A DECISION HOLDING THE TERMINATION OF CORTEZ
AS VALID AND LEGAL, AT THE SAME TIME DISMISSING HER CLAIM FOR DAMAGES FOR LACK OF MERIT.[4]

ON APPEAL TO THE NLRC, PUBLIC RESPONDENT REVERSED ON 15 FEBRUARY 1996 THE DECISION OF THE
LABOR ARBITER AND FOUND PETITIONER CORPORATION GUILTY OF ILLEGAL DISMISSAL OF PRIVATE
RESPONDENT CORTEZ. THE NLRC ORDERED PETITIONER PAAUC TO REINSTATE RESPONDENT CORTEZ TO
HER FORMER POSITION WITH BACK WAGES COMPUTED FROM THE TIME OF DISMISSAL UP TO HER
ACTUAL REINSTATEMENT.[5]

ON 11 MARCH 1996 PETITIONERS MOVED FOR RECONSIDERATION. ON 28 MARCH 1996 THE MOTION
WAS DENIED;[6] HENCE, THIS PETITION FOR CERTIORARI CHALLENGING THE NLRC DECISION AND
RESOLUTION.

THE CRUX OF THE CONTROVERSY MAY BE NARROWED DOWN TO TWO (2) MAIN ISSUES: WHETHER THE
NLRC GRAVELY ABUSED ITS DISCRETION IN HOLDING AS ILLEGAL THE DISMISSAL OF PRIVATE
RESPONDENT, AND WHETHER SHE IS ENTITLED TO DAMAGES IN THE EVENT THAT THE ILLEGALITY OF
HER DISMISSAL IS SUSTAINED. JJJURIS

THE LABOR CODE AS AMENDED PROVIDES SPECIFIC GROUNDS BY WHICH AN EMPLOYER MAY VALIDLY
TERMINATE THE SERVICES OF AN EMPLOYEE,[7] WHICH GROUNDS SHOULD BE STRICTLY CONSTRUED
SINCE A PERSONS EMPLOYMENT CONSTITUTES "PROPERTY" UNDER THE CONTEXT OF THE
CONSTITUTIONAL PROTECTION THAT "NO PERSON SHALL BE DEPRIVED OF LIFE, LIBERTY OR PROPERTY
WITHOUT DUE PROCESS OF LAW" AND, AS SUCH, THE BURDEN OF PROVING THAT THERE EXISTS A VALID
GROUND FOR TERMINATION OF EMPLOYMENT RESTS UPON THE EMPLOYER.[8] LIKEWISE, IN LIGHT OF
THE EMPLOYEE'S RIGHT TO SECURITY OF TENURE, WHERE A PENALTY LESS PUNITIVE THAN DISMISSAL
WILL SUFFICE, WHATEVER MISSTEPS MAY HAVE BEEN COMMITTED BY LABOR OUGHT NOT TO BE
VISITED WITH A CONSEQUENCE SO SEVERE.[9]

A PERUSAL OF THE TERMINATION LETTER INDICATES THAT PRIVATE RESPONDENT WAS DISCHARGED
FROM EMPLOYMENT FOR "SERIOUS MISCONDUCT, GROSS AND HABITUAL NEGLECT OF DUTIES AND
FRAUD OR WILLFUL BREACH OF TRUST." SPECIFICALLY -JUSTICE

1. ON AUGUST 2, 1994, YOU COMMITTED ACTS CONSTITUTING GROSS DISRESPECT TO YOUR SUPERIOR
MR. WILLIAM CHUA, THE PLANT MANAGER.

2. ON AUGUST 23, 1994, THE PLANT MANAGER ENTRUSTED YOU THE AMOUNT OF P1,488.00 TO BE
SENT TO CLMC FOR MR. FANG BUT THE MONEY WAS ALLEGEDLY LOST IN YOUR POSSESSION AND WAS
NOT RECOVERED.

3. ON SEPTEMBER 6, 1994, YOU CAUSED SOMEONE ELSE TO PUNCH-IN YOUR TIME CARD TO SHOW THAT
YOU WERE AT WORK WHEN IN FACT YOU WERE DOING A PERSONAL ERRAND FOR RICHARD TAN. AS PER
TIME CARD YOU WERE IN AT 8:02 A.M. BUT YOU ONLY ARRIVED AT 12:35 P.M.
4. ON JULY 28, 1994, YOU RECEIVED AN AMOUNT OF P900.00 FROM MISS LUCY LAO TO OPEN AN ATM
CARD OF NINE (9) EMPLOYEES. ON SEPTEMBER 24, 1994, ONE OF THE EMPLOYEES COMPLAINED BY THE
NAME OF TIRSO AQUINO ABOUT THE STATUS OF HIS ATM CARD AND UPON QUERY FROM THE BANK IT
WAS FOUND OUT THAT NO APPLICATION AND NO DEPOSIT FOR SAID PERSON HAS BEEN MADE.
LIKEWISE, IT WAS FOUND OUT THAT YOU DID NOT OPEN THE ATM CARD AND DEPOSIT THE P800.00 FOR
THE 8 OTHER EMPLOYEES. IT TURNED OUT THAT SAID DEPOSIT WAS MADE AFTER A MONTH LATER.[10]

AS TO THE FIRST CHARGE, RESPONDENT CORTEZ CLAIMS THAT AS EARLY AS HER FIRST YEAR OF
EMPLOYMENT HER PLANT MANAGER, WILLIAM CHUA, ALREADY MANIFESTED A SPECIAL LIKING FOR
HER, SO MUCH SO THAT SHE WAS RECEIVING SPECIAL TREATMENT FROM HIM WHO WOULD
OFTENTIMES INVITE HER "FOR A DATE," WHICH SHE WOULD AS OFTEN REFUSE. ON MANY OCCASIONS,
HE WOULD MAKE SEXUAL ADVANCES - TOUCHING HER HANDS, PUTTING HIS ARMS AROUND HER
SHOULDERS, RUNNING HIS FINGERS ON HER ARMS AND TELLING HER SHE LOOKED BEAUTIFUL. THE
SPECIAL TREATMENT AND SEXUAL ADVANCES CONTINUED DURING HER EMPLOYMENT FOR FOUR (4)
YEARS BUT SHE NEVER RECIPROCATED HIS FLIRTATIONS, UNTIL FINALLY, SHE NOTICED THAT HIS
ATTITUDE TOWARDS HER CHANGED. HE MADE HER UNDERSTAND THAT IF SHE WOULD NOT GIVE IN TO
HIS SEXUAL ADVANCES HE WOULD CAUSE HER TERMINATION FROM THE SERVICE; AND HE MADE GOOD
HIS THREAT WHEN HE STARTED HARASSING HER. SHE JUST FOUND OUT ONE DAY THAT HER TABLE
WHICH WAS EQUIPPED WITH TELEPHONE AND INTERCOM UNITS AND CONTAINING HER PERSONAL
BELONGINGS WAS TRANSFERRED WITHOUT HER KNOWLEDGE TO A PLACE WITH NEITHER TELEPHONE
NOR INTERCOM, FOR WHICH REASON, AN ARGUMENT ENSUED WHEN SHE CONFRONTED WILLIAM
CHUA RESULTING IN HER BEING CHARGED WITH GROSS DISRESPECT.[11]

RESPONDENT CORTEZ EXPLAINS, AS REGARDS THE SECOND CHARGE, THAT THE MONEY ENTRUSTED TO
HER FOR TRANSMITTAL WAS NOT LOST; INSTEAD, SHE GAVE IT TO THE COMPANY PERSONNEL IN-
CHARGE FOR PROPER TRANSMITTAL AS EVIDENCED BY A RECEIPT DULY SIGNED BY THE LATTER.[12]

WITH RESPECT TO THE THIRD IMPUTATION, PRIVATE RESPONDENT ADMITS THAT SHE ASKED SOMEONE
TO PUNCH-IN HER TIME CARD BECAUSE AT THAT TIME SHE WAS DOING AN ERRAND FOR ONE OF THE
COMPANY'S OFFICERS, RICHARD TAN, AND THAT WAS WITH THE PERMISSION OF WILLIAM CHUA. SHE
MAINTAINS THAT SHE DID IT IN GOOD FAITH BELIEVING THAT SHE WAS ANYWAY ONLY
ACCOMMODATING THE REQUEST OF A COMPANY EXECUTIVE AND DONE FOR THE BENEFIT OF THE
COMPANY WITH THE ACQUIESCENCE OF HER BOSS, WILLIAM CHUA. BESIDES, THE PRACTICE WAS
APPARENTLY TOLERATED AS THE EMPLOYEES WERE NOT GETTING ANY REPRIMAND FOR DOING SO.[13]

AS TO THE FOURTH CHARGE REGARDING HER ALLEGED FAILURE TO PROCESS THE ATM CARDS OF HER
CO-EMPLOYEES, PRIVATE RESPONDENT CLAIMS THAT SHE HAS NO KNOWLEDGE THEREOF AND
THEREFORE DENIES IT. AFTER ALL, SHE WAS EMPLOYED AS A COMPANY NURSE AND NOT TO PROCESS
ATM CARDS FOR HER CO-EMPLOYEES. JKSM

THE SUPREME COURT, IN A LITANY OF DECISIONS ON SERIOUS MISCONDUCT WARRANTING DISMISSAL

OF AN EMPLOYEE, HAS RULED THAT FOR MISCONDUCT OR IMPROPER BEHAVIOR TO BE A JUST CAUSE
FOR DISMISSAL (A) IT MUST BE SERIOUS; (B) MUST RELATE TO THE PERFORMANCE OF THE EMPLOYEES
DUTIES; AND, (C) MUST SHOW THAT THE EMPLOYEE HAS BECOME UNFIT TO CONTINUE WORKING FOR
THE EMPLOYER.[14] THE ACT OF PRIVATE RESPONDENT IN THROWING A STAPLER AND UTTERING
ABUSIVE LANGUAGE UPON THE PERSON OF THE PLANT MANAGER MAY BE CONSIDERED, FROM A LAY
MAN'S PERSPECTIVE, AS A SERIOUS MISCONDUCT. HOWEVER, IN ORDER TO CONSIDER IT A SERIOUS
MISCONDUCT THAT WOULD JUSTIFY DISMISSAL UNDER THE LAW, IT MUST HAVE BEEN DONE IN
RELATION TO THE PERFORMANCE OF HER DUTIES AS WOULD SHOW HER TO BE UNFIT TO CONTINUE
WORKING FOR HER EMPLOYER. THE ACTS COMPLAINED OF, UNDER THE CIRCUMSTANCES THEY WERE
DONE, DID NOT IN ANY WAY PERTAIN TO HER DUTIES AS A NURSE. HER EMPLOYMENT IDENTIFICATION
CARD DISCLOSES THE NATURE OF HER EMPLOYMENT AS A NURSE AND NO OTHER.[15] ALSO, THE
MEMORANDUM INFORMING HER THAT SHE WAS BEING PREVENTIVELY SUSPENDED PENDING
INVESTIGATION OF HER CASE WAS ADDRESSED TO HER AS A NURSE.[16]

AS REGARDS THE THIRD ALLEGED INFRACTION, I.E., THE ACT OF PRIVATE RESPONDENT IN ASKING A CO-
EMPLOYEE TO PUNCH-IN HER TIME CARD, ALTHOUGH A VIOLATION OF COMPANY RULES, LIKEWISE DOES
NOT CONSTITUTE SERIOUS MISCONDUCT. FIRSTLY, IT WAS DONE BY HER IN GOOD FAITH CONSIDERING
THAT SHE WAS ASKED BY AN OFFICER TO PERFORM A TASK OUTSIDE THE OFFICE, WHICH WAS FOR THE
BENEFIT OF THE COMPANY, WITH THE CONSENT OF THE PLANT MANAGER. SECONDLY, IT WAS HER FIRST
TIME TO COMMIT SUCH INFRACTION DURING HER FIVE (5)-YEAR SERVICE IN THE COMPANY. FINALLY,
THE COMPANY DID NOT LOSE ANYTHING BY REASON THEREOF AS THE OFFENSE WAS IMMEDIATELY
KNOWN AND CORRECTED. ES M

ON ALLEGED INFRACTION NO. 4, AS MAY BE GLEANED FROM AND ADMITTED IN THE MEMORANDUM
OF PETITIONERS TO PRIVATE RESPONDENT DATED 20 OCTOBER 1994[17] AND THE NOTICE OF
TERMINATION DATED 3 NOVEMBER 1994, THE MONEY ENTRUSTED TO HER WAS IN FACT DEPOSITED IN
THE RESPECTIVE ACCOUNTS OF THE EMPLOYEES CONCERNED, ALTHOUGH BELATEDLY. WE AGREE WITH
THE SUBMISSION OF THE SOLICITOR GENERAL THAT -ES MSC

THE MERE DELAY/FAILURE TO OPEN AN ATM ACCOUNT FOR NINE EMPLOYEES IS NOT SUFFICIENT, BY
ITSELF, TO SUPPORT A CONCLUSION THAT ROSALINDA IS GUILTY OF GROSS AND HABITUAL NEGLECT OF
DUTIES. FIRST, PETITIONER DID NOT SHOW THAT OPENING AN ATM IS ONE OF HER PRIMARY DUTIES AS
COMPANY NURSE. SECOND, PETITIONER FAILED TO SHOW THAT ROSALINDA INTENTIONALLY,
KNOWINGLY, AND PURPOSELY DELAYED THE OPENING OF ATM ACCOUNTS FOR PETITIONERS
EMPLOYEES. IT IS OF COMMON KNOWLEDGE THAT A BANK IMPOSES UPON AN APPLICANT CERTAIN
REQUIREMENTS BEFORE AN ATM ACCOUNT CAN BE OPENED, I.E. PROPERLY FILLED UP APPLICATION
FORMS, IDENTIFICATION CARDS, MINIMUM DEPOSIT ETC. IN THE INSTANT CASE, PETITIONER DID NOT
PROVE THAT THE DELAY WAS CAUSED BY ROSALINDAS NEGLECT OR WILLFUL ACT (EMPHASIS SUPPLIED).
[18]

GROSS NEGLIGENCE IMPLIES A WANT OR ABSENCE OF OR FAILURE TO EXERCISE SLIGHT CARE OR

DILIGENCE, OR THE ENTIRE ABSENCE OF CARE. IT EVINCES A THOUGHTLESS DISREGARD OF
CONSEQUENCES WITHOUT EXERTING ANY EFFORT TO AVOID THEM.[19] THE NEGLIGENCE, TO WARRANT
REMOVAL FROM SERVICE, SHOULD NOT MERELY BE GROSS BUT ALSO HABITUAL. LIKEWISE, THE
GROUND "WILLFUL BREACH BY THE EMPLOYEE OF THE TRUST REPOSED IN HIM BY HIS EMPLOYER"
MUST BE FOUNDED ON FACTS ESTABLISHED BY THE EMPLOYER WHO MUST CLEARLY AND
CONVINCINGLY PROVE BY SUBSTANTIAL EVIDENCE THE FACTS AND INCIDENTS UPON WHICH LOSS OF
CONFIDENCE IN THE EMPLOYEE MAY FAIRLY BE MADE TO REST.[20] ALL THESE REQUIREMENTS
PRESCRIBED BY LAW AND JURISPRUDENCE ARE WANTING IN THE CASE AT BAR.

ON THE ISSUE OF MORAL AND EXEMPLARY DAMAGES, THE NLRC RULED THAT PRIVATE RESPONDENT
WAS NOT ENTITLED TO RECOVER SUCH DAMAGES FOR HER FAILURE TO PROVE THAT PETITIONER
CORPORATION HAD BEEN MOTIVATED BY MALICE OR BAD FAITH OR THAT IT ACTED IN A WANTON,
OPPRESSIVE OR MALEVOLENT MANNER IN TERMINATING HER SERVICES. IN DISBELIEVING THE
EXPLANATION PROFFERED BY PRIVATE RESPONDENT THAT THE TRANSFER OF HER TABLE WAS THE
RESPONSE OF A SPURNED LOTHARIO, PUBLIC RESPONDENT QUOTED THE LABOR ARBITER -

COMPLAINANTS ASSERTION THAT THE CAUSE OF THE ALTERCATION BETWEEN HER AND THE PLANT
MANAGER WHERE SHE THREW A STAPLER TO HIM AND UTTERED INVECTIVES AGAINST HIM WAS HER
REFUSAL TO SUBMIT TO HIS ADVANCES TO HER WHICH STARTED FROM HER EARLY DAYS OF
EMPLOYMENT AND LASTED FOR ALMOST FOUR YEARS, IS HARDLY BELIEVABLE. FOR INDEED, IF THERE
WAS SUCH HARASSMENT, WHY WAS THERE NO COMPLAINTS (SIC) FROM HER DURING THAT PERIOD?
WHY DID SHE STAY THERE FOR SO LONG? BESIDES, IT COULD NOT HAVE TAKEN THAT PERIOD FOR THE
PLANT MANAGER TO REACT. THIS ASSERTION OF THE COMPLAINANT DESERVES NO CREDENCE AT ALL.
[21]

PUBLIC RESPONDENT IN THUS CONCLUDING APPEARS BAFFLED WHY IT TOOK PRIVATE RESPONDENT
MORE THAN FOUR (4) YEARS TO EXPOSE WILLIAM CHUA'S ALLEGED SEXUAL HARASSMENT. IT REASONS
OUT THAT IT WOULD HAVE BEEN MORE PREPARED TO SUPPORT HER POSITION IF HER ACT OF
THROWING THE STAPLER AND UTTERING INVECTIVES ON WILLIAM CHUA WERE HER IMMEDIATE
REACTION TO HIS AMOROUS OVERTURES. IN THAT CASE, ACCORDING TO PUBLIC RESPONDENT, SHE
WOULD HAVE BEEN JUSTIFIED FOR SUCH OUTBURST BECAUSE SHE WOULD HAVE BEEN MERELY
PROTECTING HER WOMANHOOD, HER PERSON AND HER RIGHTS. ESMM IS

WE ARE NOT PERSUADED. THE GRAVAMEN OF THE OFFENSE IN SEXUAL HARASSMENT IS NOT THE
VIOLATION OF THE EMPLOYEE'S SEXUALITY BUT THE ABUSE OF POWER BY THE EMPLOYER. ANY
EMPLOYEE, MALE OR FEMALE, MAY RIGHTFULLY CRY "FOUL" PROVIDED THE CLAIM IS WELL
SUBSTANTIATED. STRICTLY SPEAKING, THERE IS NO TIME PERIOD WITHIN WHICH HE OR SHE IS EXPECTED
TO COMPLAIN THROUGH THE PROPER CHANNELS. THE TIME TO DO SO MAY VARY DEPENDING UPON
THE NEEDS, CIRCUMSTANCES, AND MORE IMPORTANTLY, THE EMOTIONAL THRESHOLD OF THE
EMPLOYEE. ESMSO

PRIVATE RESPONDENT ADMITTEDLY ALLOWED FOUR (4) YEARS TO PASS BEFORE FINALLY COMING OUT
WITH HER EMPLOYER'S SEXUAL IMPOSITIONS. NOT MANY WOMEN, ESPECIALLY IN THIS COUNTRY, ARE
MADE OF THE STUFF THAT CAN ENDURE THE AGONY AND TRAUMA OF A PUBLIC, EVEN CORPORATE,
SCANDAL. IF PETITIONER CORPORATION HAD NOT ISSUED THE THIRD MEMORANDUM THAT
TERMINATED THE SERVICES OF PRIVATE RESPONDENT, WE COULD ONLY SPECULATE HOW MUCH
LONGER SHE WOULD KEEP HER SILENCE. MOREOVER, FEW PERSONS ARE PRIVILEGED INDEED TO
TRANSFER FROM ONE EMPLOYER TO ANOTHER. THE DEARTH OF QUALITY EMPLOYMENT HAS BECOME A
DAILY "MONSTER" ROAMING THE STREETS THAT ONE MAY NOT BE EXPECTED TO GIVE UP ONE'S
EMPLOYMENT EASILY BUT TO HANG ON TO IT, SO TO SPEAK, BY ALL TOLERABLE MEANS. PERHAPS, TO
PRIVATE RESPONDENT'S MIND, FOR AS LONG AS SHE COULD OUTWIT HER EMPLOYER'S PLOYS SHE
WOULD CONTINUE ON HER JOB AND CONSIDER THEM AS MERE OCCUPATIONAL HAZARDS. THIS
UNEASINESS IN HER PLACE OF WORK THRIVED IN AN ATMOSPHERE OF TOLERANCE FOR FOUR (4) YEARS,
AND ONE COULD ONLY IMAGINE THE PREVAILING ANXIETY AND RESENTMENT, IF NOT BITTERNESS, THAT
BESET HER ALL THAT TIME. BUT WILLIAM CHUA FACED REALITY SOON ENOUGH. SINCE HE HAD NO
PLACE IN PRIVATE RESPONDENT'S HEART, SO MUST SHE HAVE NO PLACE IN HIS OFFICE. SO, HE
PROVOKED HER, HARASSED HER, AND FINALLY DISLODGED HER; AND FOR FINALLY VENTING HER PENT-
UP ANGER FOR YEARS, HE "FOUND" THE PERFECT REASON TO TERMINATE HER. MSE SM

IN DETERMINING ENTITLEMENT TO MORAL AND EXEMPLARY DAMAGES, WE RESTATE THE BASES

THEREFOR. IN MORAL DAMAGES, IT SUFFICES TO PROVE THAT THE CLAIMANT HAS SUFFERED ANXIETY,
SLEEPLESS NIGHTS, BESMIRCHED REPUTATION AND SOCIAL HUMILIATION BY REASON OF THE ACT
COMPLAINED OF.[22] EXEMPLARY DAMAGES, ON THE OTHER HAND, ARE GRANTED IN ADDITION TO,
INTER ALIA, MORAL DAMAGES "BY WAY OF EXAMPLE OR CORRECTION FOR THE PUBLIC GOOD"[23] IF
THE EMPLOYER "ACTED IN A WANTON, FRAUDULENT, RECKLESS, OPPRESSIVE OR MALEVOLENT
MANNER."[24]

ANXIETY WAS GRADUAL IN PRIVATE RESPONDENT'S FIVE (5)-YEAR EMPLOYMENT. IT BEGAN WHEN HER
PLANT MANAGER SHOWED AN OBVIOUS PARTIALITY FOR HER WHICH WENT OUT OF HAND WHEN HE
STARTED TO MAKE IT CLEAR THAT HE WOULD TERMINATE HER SERVICES IF SHE WOULD NOT GIVE IN TO
HIS SEXUAL ADVANCES. SEXUAL HARASSMENT IS AN IMPOSITION OF MISPLACED "SUPERIORITY" WHICH
IS ENOUGH TO DAMPEN AN EMPLOYEE'S SPIRIT IN HER CAPACITY FOR ADVANCEMENT. IT AFFECTS HER
SENSE OF JUDGMENT; IT CHANGES HER LIFE. IF FOR THIS ALONE PRIVATE RESPONDENT SHOULD BE
ADEQUATELY COMPENSATED. THUS, FOR THE ANXIETY, THE SEEN AND UNSEEN HURT THAT SHE
SUFFERED, PETITIONERS SHOULD ALSO BE MADE TO PAY HER MORAL DAMAGES, PLUS EXEMPLARY
DAMAGES, FOR THE OPPRESSIVE MANNER WITH WHICH PETITIONERS EFFECTED HER DISMISSAL FROM
THE SERVICE, AND TO SERVE AS A FOREWARNING TO LECHEROUS OFFICERS AND EMPLOYERS WHO TAKE
UNDUE ADVANTAGE OF THEIR ASCENDANCY OVER THEIR EMPLOYEES. EX SM

ALL TOLD, THE PENALTY OF DISMISSAL IS TOO EXCESSIVE AND NOT PROPORTIONATE TO THE ALLEGED
INFRACTIONS COMMITTED CONSIDERING THAT IT DOES NOT APPEAR THAT PRIVATE RESPONDENT WAS
AN INCORRIGIBLE OFFENDER OR THAT SHE INFLICTED SERIOUS DAMAGE TO THE COMPANY, NOR
WOULD HER CONTINUANCE IN THE SERVICE BE PATENTLY INIMICAL TO HER EMPLOYERS INTEREST.[25]
EVEN THE SUSPENSION IMPOSED UPON HER WHILE HER CASE WAS PENDING INVESTIGATION APPEARS
TO BE UNJUSTIFIED AND UNCALLED FOR.

WHEREFORE, THE DECISION OF PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMSSION

FINDING THE DISMISSAL OF PRIVATE RESPONDENT ROSALINDA C. CORTEZ TO BE WITHOUT JUST CAUSE
AND ORDERING PETITIONERS PHILIPPINE AEOLUS AUTOMOTIVE UNITED CORPORATION AND/OR
FRANCIS CHUA TO PAY HER BACK WAGES COMPUTED FROM THE TIME OF HER DISMISSAL, WHICH
SHOULD BE FULL BACK WAGES, IS AFFIRMED. HOWEVER, IN VIEW OF THE STRAINED RELATIONS
BETWEEN THE ADVERSE PARTIES, INSTEAD OF REINSTATEMENT ORDERED BY PUBLIC RESPONDENT,
PETITIONERS SHOULD PAY PRIVATE RESPONDENT SEPARATION PAY EQUIVALENT TO ONE (1) MONTH
SALARY FOR EVERY YEAR OF SERVICE UNTIL FINALITY OF THIS JUDGMENT. IN ADDITION, PETITIONERS
ARE ORDERED TO PAY PRIVATE RESPONDENT P25,000.00 FOR MORAL DAMAGES AND P10,000.00 FOR
EXEMPLARY DAMAGES. COSTS AGAINST PETITIONERS. KYLE

SO ORDERED.
G.R. NO. 94951 APRIL 22, 1991

APEX MINING COMPANY, INC., PETITIONER,

VS.
NATIONAL LABOR RELATIONS COMMISSION AND SINCLITICA CANDIDO, RESPONDENTS.

BERNABE B. ALABASTRO FOR PETITIONER.

ANGEL FERNANDEZ FOR PRIVATE RESPONDENT.
GANCAYCO, J.:

IS THE HOUSEHELPER IN THE STAFF HOUSES OF AN INDUSTRIAL COMPANY A DOMESTIC HELPER OR A

REGULAR EMPLOYEE OF THE SAID FIRM? THIS IS THE NOVEL ISSUE RAISED IN THIS PETITION.

PRIVATE RESPONDENT SINCLITA CANDIDA WAS EMPLOYED BY PETITIONER APEX MINING COMPANY, INC.
ON MAY 18, 1973 TO PERFORM LAUNDRY SERVICES AT ITS STAFF HOUSE LOCATED AT MASARA, MACO,
DAVAO DEL NORTE. IN THE BEGINNING, SHE WAS PAID ON A PIECE RATE BASIS. HOWEVER, ON JANUARY
17, 1982, SHE WAS PAID ON A MONTHLY BASIS AT P250.00 A MONTH WHICH WAS ULTIMATELY
INCREASED TO P575.00 A MONTH.

ON DECEMBER 18, 1987, WHILE SHE WAS ATTENDING TO HER ASSIGNED TASK AND SHE WAS HANGING
HER LAUNDRY, SHE ACCIDENTALLY SLIPPED AND HIT HER BACK ON A STONE. SHE REPORTED THE
ACCIDENT TO HER IMMEDIATE SUPERVISOR MILA DE LA ROSA AND TO THE PERSONNEL OFFICER,
FLORENDO D. ASIRIT. AS A RESULT OF THE ACCIDENT SHE WAS NOT ABLE TO CONTINUE WITH HER
WORK. SHE WAS PERMITTED TO GO ON LEAVE FOR MEDICATION. DE LA ROSA OFFERED HER THE
AMOUNT OF P 2,000.00 WHICH WAS EVENTUALLY INCREASED TO P5,000.00 TO PERSUADE HER TO QUIT
HER JOB, BUT SHE REFUSED THE OFFER AND PREFERRED TO RETURN TO WORK. PETITIONER DID NOT
ALLOW HER TO RETURN TO WORK AND DISMISSED HER ON FEBRUARY 4, 1988.

ON MARCH 11, 1988, PRIVATE RESPONDENT FILED A REQUEST FOR ASSISTANCE WITH THE DEPARTMENT
OF LABOR AND EMPLOYMENT. AFTER THE PARTIES SUBMITTED THEIR POSITION PAPERS AS REQUIRED BY
THE LABOR ARBITER ASSIGNED TO THE CASE ON AUGUST 24, 1988 THE LATTER RENDERED A DECISION,
THE DISPOSITIVE PART OF WHICH READS AS FOLLOWS:

WHEREFORE, CONFORMABLY WITH THE FOREGOING, JUDGMENT IS HEREBY RENDERED ORDERING THE
RESPONDENT, APEX MINING COMPANY, INC., MASARA, DAVAO DEL NORTE, TO PAY THE COMPLAINANT,
TO WIT:

1 SALARY

DIFFERENTIAL –– P16,289.20

2. EMERGENCY LIVING

ALLOWANCE –– 12,430.00

3. 13TH MONTH PAY

DIFFERENTIAL –– 1,322.32

4. SEPARATION PAY

(ONE-MONTH FOR

EVERY YEAR OF

SERVICE [1973-19881) –– 25,119.30

OR IN THE TOTAL OF FIFTY FIVE THOUSAND ONE HUNDRED SIXTY ONE PESOS AND 42/100 (P55,161.42).

SO ORDERED.1

NOT SATISFIED THEREWITH, PETITIONER APPEALED TO THE PUBLIC RESPONDENT NATIONAL LABOR
RELATIONS COMMISSION (NLRC), WHEREIN IN DUE COURSE A DECISION WAS RENDERED BY THE FIFTH
DIVISION THEREOF ON JULY 20, 1989 DISMISSING THE APPEAL FOR LACK OF MERIT AND AFFIRMING THE
APPEALED DECISION. A MOTION FOR RECONSIDERATION THEREOF WAS DENIED IN A RESOLUTION OF
THE NLRC DATED JUNE 29, 1990.

HENCE, THE HEREIN PETITION FOR REVIEW BY CERTIORARI, WHICH APPOPRIATELY SHOULD BE A SPECIAL
CIVIL ACTION FOR CERTIORARI, AND WHICH IN THE INTEREST OF JUSTICE, IS HEREBY TREATED AS SUCH.2
THE MAIN THRUST OF THE PETITION IS THAT PRIVATE RESPONDENT SHOULD BE TREATED AS A MERE
HOUSEHELPER OR DOMESTIC SERVANT AND NOT AS A REGULAR EMPLOYEE OF PETITIONER.

THE PETITION IS DEVOID OF MERIT.

UNDER RULE XIII, SECTION L(B), BOOK 3 OF THE LABOR CODE, AS AMENDED, THE TERMS
"HOUSEHELPER" OR "DOMESTIC SERVANT" ARE DEFINED AS FOLLOWS:

THE TERM "HOUSEHELPER" AS USED HEREIN IS SYNONYMOUS TO THE TERM "DOMESTIC SERVANT" AND
SHALL REFER TO ANY PERSON, WHETHER MALE OR FEMALE, WHO RENDERS SERVICES IN AND ABOUT
THE EMPLOYER'S HOME AND WHICH SERVICES ARE USUALLY NECESSARY OR DESIRABLE FOR THE
MAINTENANCE AND ENJOYMENT THEREOF, AND MINISTERS EXCLUSIVELY TO THE PERSONAL COMFORT
AND ENJOYMENT OF THE EMPLOYER'S FAMILY.3

THE FOREGOING DEFINITION CLEARLY CONTEMPLATES SUCH HOUSEHELPER OR DOMESTIC SERVANT

WHO IS EMPLOYED IN THE EMPLOYER'S HOME TO MINISTER EXCLUSIVELY TO THE PERSONAL COMFORT
AND ENJOYMENT OF THE EMPLOYER'S FAMILY. SUCH DEFINITION COVERS FAMILY DRIVERS, DOMESTIC
SERVANTS, LAUNDRY WOMEN, YAYAS, GARDENERS, HOUSEBOYS AND OTHER SIMILAR HOUSEHELPS.

THE DEFINITION CANNOT BE INTERPRETED TO INCLUDE HOUSEHELP OR LAUNDRYWOMEN WORKING IN

STAFFHOUSES OF A COMPANY, LIKE PETITIONER WHO ATTENDS TO THE NEEDS OF THE COMPANY'S
GUEST AND OTHER PERSONS AVAILING OF SAID FACILITIES. BY THE SAME TOKEN, IT CANNOT BE
CONSIDERED TO EXTEND TO THEN DRIVER, HOUSEBOY, OR GARDENER EXCLUSIVELY WORKING IN THE
COMPANY, THE STAFFHOUSES AND ITS PREMISES. THEY MAY NOT BE CONSIDERED AS WITHIN THE
MEANING OF A "HOUSEHELPER" OR "DOMESTIC SERVANT" AS ABOVE-DEFINED BY LAW.

THE CRITERIA IS THE PERSONAL COMFORT AND ENJOYMENT OF THE FAMILY OF THE EMPLOYER IN THE
HOME OF SAID EMPLOYER. WHILE IT MAY BE TRUE THAT THE NATURE OF THE WORK OF A
HOUSEHELPER, DOMESTIC SERVANT OR LAUNDRYWOMAN IN A HOME OR IN A COMPANY STAFFHOUSE
MAY BE SIMILAR IN NATURE, THE DIFFERENCE IN THEIR CIRCUMSTANCES IS THAT IN THE FORMER
INSTANCE THEY ARE ACTUALLY SERVING THE FAMILY WHILE IN THE LATTER CASE, WHETHER IT IS A
CORPORATION OR A SINGLE PROPRIETORSHIP ENGAGED IN BUSINESS OR INDUSTRY OR ANY OTHER
AGRICULTURAL OR SIMILAR PURSUIT, SERVICE IS BEING RENDERED IN THE STAFFHOUSES OR WITHIN THE
PREMISES OF THE BUSINESS OF THE EMPLOYER. IN SUCH INSTANCE, THEY ARE EMPLOYEES OF THE
COMPANY OR EMPLOYER IN THE BUSINESS CONCERNED ENTITLED TO THE PRIVILEGES OF A REGULAR
EMPLOYEE.

PETITIONER CONTENDS THAT IT IS ONLY WHEN THE HOUSEHELPER OR DOMESTIC SERVANT IS ASSIGNED
TO CERTAIN ASPECTS OF THE BUSINESS OF THE EMPLOYER THAT SUCH HOUSEHELPER OR DOMESTIC
SERVANT MAY BE CONSIDERED AS SUCH AS EMPLOYEE. THE COURT FINDS NO MERIT IN MAKING ANY
SUCH DISTINCTION. THE MERE FACT THAT THE HOUSEHELPER OR DOMESTIC SERVANT IS WORKING
WITHIN THE PREMISES OF THE BUSINESS OF THE EMPLOYER AND IN RELATION TO OR IN CONNECTION
WITH ITS BUSINESS, AS IN ITS STAFFHOUSES FOR ITS GUEST OR EVEN FOR ITS OFFICERS AND
EMPLOYEES, WARRANTS THE CONCLUSION THAT SUCH HOUSEHELPER OR DOMESTIC SERVANT IS AND
SHOULD BE CONSIDERED AS A REGULAR EMPLOYEE OF THE EMPLOYER AND NOT AS A MERE FAMILY
HOUSEHELPER OR DOMESTIC SERVANT AS CONTEMPLATED IN RULE XIII, SECTION L(B), BOOK 3 OF THE
LABOR CODE, AS AMENDED.

PETITIONER DENIES HAVING ILLEGALLY DISMISSED PRIVATE RESPONDENT AND MAINTAINS THAT
RESPONDENT ABANDONED HER WORK.1ÂWPHI1 THIS ARGUMENT NOTWITHSTANDING, THERE IS
ENOUGH EVIDENCE TO SHOW THAT BECAUSE OF AN ACCIDENT WHICH TOOK PLACE WHILE PRIVATE
RESPONDENT WAS PERFORMING HER LAUNDRY SERVICES, SHE WAS NOT ABLE TO WORK AND WAS
ULTIMATELY SEPARATED FROM THE SERVICE. SHE IS, THEREFORE, ENTITLED TO APPROPRIATE RELIEF AS A
REGULAR EMPLOYEE OF PETITIONER. INASMUCH AS PRIVATE RESPONDENT APPEARS NOT TO BE
INTERESTED IN RETURNING TO HER WORK FOR VALID REASONS, THE PAYMENT OF SEPARATION PAY TO
HER IS IN ORDER.

WHEREFORE, THE PETITION IS DISMISSED AND THE APPEALED DECISION AND RESOLUTION OF PUBLIC
RESPONDENT NLRC ARE HEREBY AFFIRMED. NO PRONOUNCEMENT AS TO COSTS.

SO ORDERED.