Republic of the Philippines SUPREME COURT Manila FIRST DIVISION 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.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION 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, ComplainantAppellant, 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.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION

G.R. No. L-72654-61 January 22, 1990 ALIPIO R. RUGA, JOSE PARMA, ELADIO CALDERON, LAURENTE BAUTU, JAIME BARBIN, NICANOR FRANCISCO, PHILIP CERVANTES and ELEUTERIO BARBIN, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and DE GUZMAN FISHING ENTERPRISES and/or ARSENIO DE GUZMAN, respondents. J.C. Espinas & Associates for petitioners. Tomas A. Reyes for private respondent. FERNAN, C.J.: The issue to be resolved in the instant case is whether or not the fishermen-crew members of the trawl fishing vessel 7/B Sandyman II are employees of its owner-operator, De Guzman Fishing Enterprises, and if so, whether or not they were illegally dismissed from their employment. Records show that the petitioners were the fishermen-crew members of 7/B Sandyman II, one of several fishing vessels owned and operated by private respondent De Guzman Fishing Enterprises which is primarily engaged in the fishing business with port and office at Camaligan, Camarines Sur. Petitioners rendered service aboard said fishing vessel in various capacities, as follows: Alipio Ruga and Jose Parma patron/pilot; Eladio Calderon, chief engineer; Laurente Bautu, second engineer; Jaime Barbin, master fisherman; Nicanor Francisco, second fisherman; Philip Cervantes and Eleuterio Barbin, fishermen. For services rendered in the conduct of private respondent's regular business of "trawl" fishing, petitioners were paid on percentage commission basis in cash by one Mrs. Pilar de Guzman, cashier of private respondent. As agreed upon, they received thirteen percent (13%) of the proceeds of the sale of the fish-catch if the total proceeds exceeded the cost of crude oil consumed during the fishing trip, otherwise, they received ten percent (10%) of the total proceeds of the sale. The patron/pilot, chief engineer and master fisherman received a minimum income of P350.00 per week while the assistant engineer, second fisherman, and fisherman-winchman received a minimum income of P260.00 per week. 1 On September 11, 1983 upon arrival at the fishing port, petitioners were told by Jorge de Guzman, president of private respondent, to proceed to the police station at Camaligan, Camarines Sur, for investigation on the report that they sold some of their fish-catch at midsea to the prejudice of private respondent. Petitioners denied the charge claiming that the same was a countermove to their having formed a labor union and becoming members of Defender of Industrial Agricultural Labor Organizations and General Workers Union (DIALOGWU) on September 3, 1983. During the investigation, no witnesses were presented to prove the charge against petitioners, and no criminal charges were formally filed against them. Notwithstanding, private respondent refused to allow petitioners to return to the fishing vessel to resume their work on the same day, September 11, 1983. On September 22, 1983, petitioners individually filed their complaints for illegal dismissal and non-payment of 13th month pay, emergency cost of living allowance and service incentive pay, with the then Ministry (now Department) of Labor and Employment, Regional Arbitration Branch No. V, Legaspi City, Albay, docketed as Cases Nos. 1449-83 to 1456-83. 2 They uniformly contended that they were arbitrarily dismissed without being given ample time to look for a new job. On October 24, 1983, private respondent, thru its operations manager, Conrado S. de Guzman, submitted its position paper denying the employer-employee relationship between private respondent and petitioners on the theory that private respondent and petitioners were engaged in a joint venture. 3 After the parties failed to reach an amicable settlement, the Labor Arbiter scheduled the case for joint hearing furnishing the parties with notice and summons. On December 27, 1983, after two (2) previously scheduled joint hearings were postponed due to the absence of private respondent, one of the petitioners herein, Alipio Ruga, the pilot/captain of the 7/B Sandyman II, testified, among others, on the manner the fishing operations were conducted, mode of payment of compensation for services rendered by the fishermen-crew members, and the circumstances leading to their dismissal. 4 On March 31, 1984, after the case was submitted for resolution, Labor Arbiter Asisclo S. Coralde rendered a joint decision 5 dismissing all the complaints of petitioners on a finding that a "joint fishing venture" and not one of employer-employee relationship existed between private respondent and petitioners.

From the adverse decision against them, petitioners appealed to the National Labor Relations Commission. On May 30, 1985, the National Labor Relations Commission promulgated its resolution 6 affirming the decision of the labor arbiter that a "joint fishing venture" relationship existed between private respondent and petitioners. Hence, the instant petition. Petitioners assail the ruling of the public respondent NLRC that what exists between private respondent and petitioners is a joint venture arrangement and not an employer-employee relationship. To stress that there is an employer-employee relationship between them and private respondent, petitioners invite attention to the following: that they were directly hired by private respondent through its general manager, Arsenio de Guzman, and its operations manager, Conrado de Guzman; that, except for Laurente Bautu, they had been employed by private respondent from 8 to 15 years in various capacities; that private respondent, through its operations manager, supervised and controlled the conduct of their fishing operations as to the fixing of the schedule of the fishing trips, the direction of the fishing vessel, the volume or number of tubes of the fish-catch the time to return to the fishing port, which were communicated to the patron/pilot by radio (single side band); that they were not allowed to join other outfits even the other vessels owned by private respondent without the permission of the operations manager; that they were compensated on percentage commission basis of the gross sales of the fishcatch which were delivered to them in cash by private respondent's cashier, Mrs. Pilar de Guzman; and that they have to follow company policies, rules and regulations imposed on them by private respondent. Disputing the finding of public respondent that a "joint fishing venture" exists between private respondent and petitioners, petitioners claim that public respondent exceeded its jurisdiction and/or abused its discretion when it added facts not contained in the records when it stated that the pilot-crew members do not receive compensation from the boat-owners except their share in the catch produced by their own efforts; that public respondent ignored the evidence of petitioners that private respondent controlled the fishing operations; that public respondent did not take into account established jurisprudence that the relationship between the fishing boat operators and their crew is one of direct employer and employee. Aside from seeking the dismissal of the petition on the ground that the decision of the labor arbiter is now final and executory for failure of petitioners to file their appeal with the NLRC within 10 calendar days from receipt of said decision pursuant to the doctrine laid down in Vir-Jen Shipping and Marine Services, Inc. vs. NLRC, 115 SCRA 347 (1982), the Solicitor General claims that the ruling of public respondent that a "joint fishing venture" exists between private respondent and petitioners rests on the resolution of the Social Security System (SSS) in a 1968 case, Case No. 708 (De Guzman Fishing Enterprises vs. SSS), exempting De Guzman Fishing Enterprises, private respondent herein, from compulsory coverage of the SSS on the ground that there is no employer-employee relations between the boat-owner and the fishermen-crew members following the doctrine laid down in Pajarillo vs. SSS, 17 SCRA 1014 (1966). In applying to the case at bar the doctrine in Pajarillo vs. SSS, supra, that there is no employeremployee relationship between the boat-owner and the pilot and crew members when the boat-owner supplies the boat and equipment while the pilot and crew members contribute the corresponding labor and the parties get specific shares in the catch for their respective contribution to the venture, the Solicitor General pointed out that the boat-owners in the Pajarillo case, as in the case at bar, did not control the conduct of the fishing operations and the pilot and crew members shared in the catch. We rule in favor of petitioners. Fundamental considerations of substantial justice persuade Us to decide the instant case on the merits rather than to dismiss it on a mere technicality. In so doing, we exercise the prerogative accorded to this Court enunciated in Firestone Filipinas Employees Association, et al. vs. Firestone Tire and Rubber Co. of the Philippines, Inc., 61 SCRA 340 (1974), thus "the well-settled doctrine is that in labor cases before this Tribunal, no undue sympathy is to be accorded to any claim of a procedural misstep, the idea being that its power be exercised according to justice and equity and substantial merits of the controversy." Circumstances peculiar to some extent to fishermen-crew members of a fishing vessel regularly engaged in trawl fishing, as in the case of petitioners herein, who spend one (1) whole week or more 7 in the open sea performing their job to earn a living to support their families, convince Us to adopt a more liberal attitude in applying to petitioners the 10-calendar day rule in the filing of appeals with the NLRC from the decision of the labor arbiter. Records reveal that petitioners were informed of the labor arbiter's decision of March 31, 1984 only on July 3,1984 by their non-lawyer representative during the arbitration proceedings, Jose Dialogo who received the decision eight (8) days earlier, or on June 25, 1984. As adverted to earlier, the circumstances peculiar to petitioners' occupation as fishermen-crew members, who during the pendency of the case understandably have to earn a living by seeking

employment elsewhere, impress upon Us that in the ordinary course of events, the information as to the adverse decision against them would not reach them within such time frame as would allow them to faithfully abide by the 10-calendar day appeal period. This peculiar circumstance and the fact that their representative is a non-lawyer provide equitable justification to conclude that there is substantial compliance with the ten-calendar day rule of filing of appeals with the NLRC when petitioners filed on July 10, 1984, or seven (7) days after receipt of the decision, their appeal with the NLRC through registered mail. We have consistently ruled that in determining the existence of an employer-employee relationship, the elements that are generally considered are the following (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the employee with respect to the means and methods by which the work is to be accomplished. 8 The employment relation arises from contract of hire, express or implied. 9 In the absence of hiring, no actual employer-employee relation could exist. From the four (4) elements mentioned, We have generally relied on the so-called right-of-control test 10 where the person for whom the services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such end. The test calls merely for the existence of the right to control the manner of doing the work, not the actual exercise of the right. 11 The case of Pajarillo vs. SSS, supra, invoked by the public respondent as authority for the ruling that a "joint fishing venture" existed between private respondent and petitioners is not applicable in the instant case. There is neither light of control nor actual exercise of such right on the part of the boat-owners in the Pajarillo case, where the Court found that the pilots therein are not under the order of the boat-owners as regards their employment; that they go out to sea not upon directions of the boat-owners, but upon their own volition as to when, how long and where to go fishing; that the boat-owners do not in any way control the crew-members with whom the former have no relationship whatsoever; that they simply join every trip for which the pilots allow them, without any reference to the owners of the vessel; and that they only share in their own catch produced by their own efforts. The aforementioned circumstances obtaining in Pajarillo case do not exist in the instant case. The conduct of the fishing operations was undisputably shown by the testimony of Alipio Ruga, the patron/pilot of 7/B Sandyman II, to be under the control and supervision of private respondent's operations manager. Matters dealing on the fixing of the schedule of the fishing trip and the time to return to the fishing port were shown to be the prerogative of private respondent. 12 While performing the fishing operations, petitioners received instructions via a single-side band radio from private respondent's operations manager who called the patron/pilot in the morning. They are told to report their activities, their position, and the number of tubes of fish-catch in one day. 13 Clearly thus, the conduct of the fishing operations was monitored by private respondent thru the patron/pilot of 7/B Sandyman II who is responsible for disseminating the instructions to the crew members. The conclusion of public respondent that there had been no change in the situation of the parties since 1968 when De Guzman Fishing Enterprises, private respondent herein, obtained a favorable judgment in Case No. 708 exempting it from compulsory coverage of the SSS law is not supported by evidence on record. It was erroneous for public respondent to apply the factual situation of the parties in the 1968 case to the instant case in the light of the changes in the conditions of employment agreed upon by the private respondent and petitioners as discussed earlier. Records show that in the instant case, as distinguished from the Pajarillo case where the crew members are under no obligation to remain in the outfit for any definite period as one can be the crew member of an outfit for one day and be the member of the crew of another vessel the next day, the herein petitioners, on the other hand, were directly hired by private respondent, through its general manager, Arsenio de Guzman, and its operations manager, Conrado de Guzman and have been under the employ of private respondent for a period of 8-15 years in various capacities, except for Laurente Bautu who was hired on August 3, 1983 as assistant engineer. Petitioner Alipio Ruga was hired on September 29, 1974 as patron/captain of the fishing vessel; Eladio Calderon started as a mechanic on April 16, 1968 until he was promoted as chief engineer of the fishing vessel; Jose Parma was employed on September 29, 1974 as assistant engineer; Jaime Barbin started as a pilot of the motor boat until he was transferred as a master fisherman to the fishing vessel 7/B Sandyman II; Philip Cervantes was hired as winchman on August 1, 1972 while Eleuterio Barbin was hired as winchman on April 15, 1976. While tenure or length of employment is not considered as the test of employment, nevertheless the hiring of petitioners to perform work which is necessary or desirable in the usual business or trade of private respondent for a period of 8-15 years since 1968 qualify them as regular employees within the meaning of Article 281 of the Labor

Code as they were indeed engaged to perform activities usually necessary or desirable in the usual fishing business or occupation of private respondent. 14 Aside from performing activities usually necessary and desirable in the business of private respondent, it must be noted that petitioners received compensation on a percentage commission based on the gross sale of the fish-catch i.e. 13% of the proceeds of the sale if the total proceeds exceeded the cost of the crude oil consumed during the fishing trip, otherwise only 10% of the proceeds of the sale. Such compensation falls within the scope and meaning of the term "wage" as defined under Article 97(f) of the Labor Code, thus: (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 included 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. . . . The claim of private respondent, which was given credence by public respondent, that petitioners get paid in the form of share in the fish-catch which the patron/pilot as head of the team distributes to his crew members in accordance with their own understanding 15 is not supported by recorded evidence. Except that such claim appears as an allegation in private respondent's position paper, there is nothing in the records showing such a sharing scheme as preferred by private respondent. Furthermore, the fact that on mere suspicion based on the reports that petitioners allegedly sold their fish-catch at midsea without the knowledge and consent of private respondent, petitioners were unjustifiably not allowed to board the fishing vessel on September 11, 1983 to resume their activities without giving them the opportunity to air their side on the accusation against them unmistakably reveals the disciplinary power exercised by private respondent over them and the corresponding sanction imposed in case of violation of any of its rules and regulations. The virtual dismissal of petitioners from their employment was characterized by undue haste when less extreme measures consistent with the requirements of due process should have been first exhausted. In that sense, the dismissal of petitioners was tainted with illegality. Even on the assumption that petitioners indeed sold the fish-catch at midsea the act of private respondent virtually resulting in their dismissal evidently contradicts private respondent's theory of "joint fishing venture" between the parties herein. A joint venture, including partnership, presupposes generally a parity of standing between the joint co-venturers or partners, in which each party has an equal proprietary interest in the capital or property contributed 16 and where each party exercises equal lights in the conduct of the business. 17 It would be inconsistent with the principle of parity of standing between the joint co-venturers as regards the conduct of business, if private respondent would outrightly exclude petitioners from the conduct of the business without first resorting to other measures consistent with the nature of a joint venture undertaking, Instead of arbitrary unilateral action, private respondent should have discussed with an open mind the advantages and disadvantages of petitioners' action with its joint co-venturers if indeed there is a "joint fishing venture" between the parties. But this was not done in the instant case. Petitioners were arbitrarily dismissed notwithstanding that no criminal complaints were filed against them. The lame excuse of private respondent that the non-filing of the criminal complaints against petitioners was for humanitarian reasons will not help its cause either. We have examined the jurisprudence on the matter and find the same to be supportive of petitioners' stand. InNegre vs. WCC 135 SCRA 653 (1985), we held that fishermen crew members who were recruited by one master fisherman locally known as "maestro" in charge of recruiting others to complete the crew members are considered employees, not industrial partners, of the boat-owners. In an earlier case of Abong vs. WCC, 54 SCRA 379 (1973) where petitioner therein, Dr. Agustin Abong, owner of the fishing boat, claimed that he was not the employer of the fishermen crew members because of an alleged partnership agreement between him, as financier, and Simplicio Panganiban, as his team leader in charge of recruiting said fishermen to work for him, we affirmed the finding of the WCC that there existed an employer-employee relationship between the boat-owner and the fishermen crew members not only because they worked for and in the interest of the business of the boat-owner but also because they were subject to the control, supervision and dismissal of the boat-owner, thru its agent, Simplicio Panganiban, the alleged "partner" of Dr. Abong; that while these fishermen crew members were paid in kind, or by "pakiao basis" still that fact did not alter the character of their relationship with Dr. Abong as employees of the latter. In Philippine Fishing Boat Officers and Engineers Union vs. Court of Industrial Relations, 112 SCRA 159 (1982), we held that the employer-employee relationship between the crew members and the owners of the fishing vessels

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engaged in deep sea fishing is merely suspended during the time the vessels are drydocked or undergoing repairs or being loaded with the necessary provisions for the next fishing trip. The said ruling is premised on the principle that all these activities i.e., drydock, repairs, loading of necessary provisions, form part of the regular operation of the company fishing business. WHEREFORE, in view of the foregoing, the petition is GRANTED. The questioned resolution of the National Labor Relations Commission dated May 30,1985 is hereby REVERSED and SET ASIDE. Private respondent is ordered to reinstate petitioners to their former positions or any equivalent positions with 3-year backwages and other monetary benefits under the law. No pronouncement as to costs. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-7349 July 19, 1955 ATOK-BIG WEDGE MUTUAL BENEFIT ASSOCIATION, petitioner, vs. ATOK-BIG WEDGE MINING COMPANY, INCORPORATED, respondents. Pablo C. Sanidad for petitioner. Roxas and Sarmiento for respondents. REYES, J. B. L., J.: On September 4, 1950, the petitioner labor union, the Atok-Big Wedge Mutual Benefit Association, submitted to the Atok-Big Wedge Mining Co., Inc. (respondent herein) several demands, among which was an increase of P0.50 in daily wage. The matter was referred by the mining company to the Court of Industrial Relations for arbitration and settlement (Case No. 523-V). In the course of conciliatory measures taken by the Court, some of the demands were granted, and others (including the demand for increased wages) rejected, and so, hearings proceeded and evidence submitted on the latter. On July 14, 1951, the Court rendered a decision (Record, pp. 25-32) fixing the minimum wage at P2.65 a day with the rice ration, or P3.20 without rice ration; denying the deduction from such minimum wage, of the value of housing facilities furnished by the company to the laborers, as well as the efficiency bonus given to them by the company; and ordered that the award be made effective retroactively from the date of the demand, September 4, 1950, as agreed by the parties. From this decision, the mining company appealed to this Court (G.R. No. L-5276). Subsequently, an urgent petition was presented in Court on October 15, 1952 by the Atok-Big Wedge Mining Company for authority to stop operations and lay off employees and laborers, for the reason that due to the heavy losses, increased taxes, high cost of materials, negligible quantity of ore deposits, and the enforcement of the Minimum Wage Law, the continued operation of the company would lead to its immediate bankruptcy and collapse (Rec. pp. 100-109). To avert the closure of the company and the consequent lay-off of hundreds of laborers and employees, the Court, instead of hearing the petition on the merits, convened the parties for voluntary conciliation and mediation. After lengthy discussions and exchange of views, the parties on October 29, 1952 reached an agreement effective from August 4, 1952 to December 31, 1954 (Rec. pp. 18-23). The Agreement in part provides: I That the petitioner, Atok-Big Wedge Mining Company, Incorporated, agrees to abide by whatever decision that the Supreme Court may render with respect to Case No. 523-V (G.R. 5276) and Case No. 523-1 (10) (G.R. 5594). xxx xxx xxx III xxx xxx xxx That the petitioner, Atok-Big Wedge Mining Company, Incorporated, and the respondent, Atok-Big Wedge Mutual Benefit Association, agree that the following facilities heretofore given or actually being given by

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the petitioner to its workers and laborers, and which constitute as part of their wages, be valued as follows: Rice ration P.55 per day Housing facility 40 per day All other facilities such as recreation facilities, medical treatment to dependents of laborers, school facilities, rice ration during off-days, water, light, fuel, etc., equivalent to at least 85 per day It is understood that the said amount of facilities valued at the abovementioned prices, may be charged in full or partially by the Atok-Big Wedge Mining Company, Inc., against laborer or employee, as it may see fit pursuant to the exigencies of its operation. The agreement was submitted to the Court for approval and on December 26, 1952, was approved by the Court in an order giving it effect as an award or decision in the case (Rec., p. 24). Later, Case No. G.R. No. L-5276 was decided by this Court (promulgated March 3, 1953), affirming the decision of the Court of Industrial Relations fixing the minimum cash wage of the laborers and employees of the Atok-Big Wedge Mining Co. at P3.20 cash, without rice ration, or P2.65, with rice ration. On June 13, 1953, the labor union presented to the Court a petition for the enforcement of the terms of the agreement of October 29, 1952, as allegedly modified by the decision of this Court in G.R. No. L-5276 and the provisions of the Minimum Wage Law, which has since taken effect, praying for the payment of the minimum cash wage of P3.45 a day with rice ration, or P4.00 without rice ration, and the payment of differential pay from August 4, 1952, when the award became effective. The mining company opposed the petition claiming that the Agreement of October 29, 1952 was entered into by the parties with the end in view that the company's cost of production be not increased in any way, so that it was intended to supersede whatever decision the Supreme Court would render in G.R. No. L-5276 and the provisions of the Minimum Wage Law with respect to the minimum cash wage payable to the laborers and employees. Sustaining the opposition, the Court of Industrial Relations, in an order issued on September 22, 1953 (Rec. pp. 44-49), denied the petition, upon the ground that when the Agreement of the parties of October 29, 1952 was entered into by them, they already knew the decision of said Court (although subject to appeal to the Supreme Court) fixing the minimum cash wage at P3.20 without rice ration, or P2.65 with rice ration, as well as the provisions of the Minimum Wage Law requiring the payment of P4 minimum daily wage in the provinces effective August 4, 1952; so that the parties had intended to be regulated by their Agreement of October 29, 1952. On the same day, the Court issued another order (Rec. pp. 50-55), denying the claim of the labor union for payment of an additional 50 per cent based on the basic wage of P4 for work on Sundays and holidays, holding that the payments being made by the company were within the requirements of the law. Its motion for the reconsideration of both orders having been denied, the labor union filed this petition for review by certiorari. The first issue submitted to us arises from an apparent contradiction in the Agreement of October 29, 1952. By paragraph III thereof, the parties by common consent evaluated the facilities furnished by the Company to its laborers (rice rations, housing, recreation, medical treatment, water, light, fuel, etc.) at P1.80 per day, and authorized the company to have such value "charge in full or partially against any laborer or employee as it may see fit"; while in paragraph I, the Company agreed to abide by the decision of this Court (pending at the time the agreement was had) in G.R. No. L-5594; and as rendered, the decision was to the effect that the Company could deduct from the minimum wage only the value of the rice ration. It is contended by the petitioner union that the two provisions should be harmonized by holding paragraph III (deduction of all facilities) to be merely provisional, effective only while this Court had not rendered its decision in G.R. No. L-5594; and that the terms of said paragraph should be deemed superseded by the decision from the time the latter became final, some four or five months after the agreement was entered into; in consequence, (it is claimed), the laborers became entitled by virtue of said decision to the prevailing P4.00 minimum wage with no other deduction than that of the rice ration, or a net cash wage of P3.45. This contention, in our opinion, is untenable. The intention of the parties could not have been to make the arrangement in paragraph III a merely provisional arrangement pending the decision of the Supreme Court for "this agreement" was expressly made retroactive and effective as of August 4, 1952, and to be in force up to and including December 31, 1954" (Par. IV). When concluded on October 29, 1952, neither party could anticipate the

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date when the decision of the Supreme Court would be rendered; nor is any reason shown why the parties should desire to limit the effects of the decision to the period 1952-1954 if it was to supersede the agreement of October 29, 1952. To ascertain the true import of paragraph I of said Agreement providing that the respondent company agreed to abide by whatever decision the Supreme Court would render in G.R. No. L-5276, it is important to remember that, as shown by the records, the agreement was prompted by an urgent petition filed by the respondent mining company to close operations and lay-off laborers because of heavy losses and the full enforcement of the Minimum Wage Law in the provinces, requiring it to pay its laborers the minimum wage of P4; to avoid such eventuality, through the mediation of the Court of Industrial Relations, a compromise was reached whereby it was agreed that the company would pay the minimum wage fixed by the law, but the facilities then being received by the laborers would be evaluated and charged as part of the wage, but without in any way reducing the P2.00 cash portion of their wages which they were receiving prior to the agreement (hearing of Oct. 28, 1952, CIR, t.s.n. 47). In other words, while it was the objective of the parties to comply with the requirements of the Minimum Wage Law, it was also deemed important that the mining company should not have to increase the cash wages it was then paying its laborers, so that its cost of production would not also be increased, in order to prevent its closure and the lay-off of employees and laborers. And as found by the Court below in the order appealed from (which finding is conclusive upon us), "it is this eventuality that the parties did not like to happen, when they have executed the said agreement" (Rec. p. 49). Accordingly, after said agreement was entered into, the Company started paying its laborers a basic cash or "take-home" wage of P2.20 (Rec. p. 9), representing the difference between P4 (minimum wage) and P1.80 (value of all facilities). With this background, the provision to abide by our decision in G.R. No. L-5276 can only be interpreted thus: That the company agreed to pay whatever award this Court would make in said case from the date fixed by the decision (which was that of the original demand, September 4, 1950) up to August 3, 1952 (the day previous to the effectivity of the Compromise Agreement) and from August 4, 1954 to December 31, 1954, they are to be bound by their agreement of October 29, 1952. This means that during the first period (September 4, 1950 to August 3, 1952), only rice rations given to the laborers are to be regarded as forming part of their wage and deductible therefrom. The minimum wage was then fixed (by the Court of Industrial Relations, and affirmed by this Court) at P3.20 without rice ration, or P2.65 with rice ration. Since the respondent company had been paying its laborers the basic cash or "take-home" wage of P2 prior to said decision and up to August 3, 1952, the laborers are entitled to a differential pay of P0.65 per working day from September 4, 1950 (the date of the effectivity of the award in G.R. L-5276) up to August 3, 1952. From August 4, 1952, the date when the Agreement of the parties of October 29, 1952 became effective (which was also the date when the Minimum Wage Law became fully enforceable in the provinces), the laborers should be paid a minimum wage of P4 a day. From this amount, the respondent mining company is given the right to charge each laborer "in full or partially", the facilities enumerated in par. III of the Agreement; i.e., rice ration at P0.55 per day, housing facility at P0.40 per day, and other facilities "constitute part of his wages". It appears that the company had actually been paying its laborers the minimum wage of P2.20 since August 4, 1952; hence they are not entitled to any differential pay from this date. Petitioner argues that to allow the deductions stipulated in the Agreement of October 29, 1952 from the minimum daily wage of P4 would be a waiver of the minimum wage fixed by the law and hence null and void, since Republic Act No. 602, section 20, provides that "no agreement or contract, oral or written, to accept a lower wage or less than any other under this Act, shall be valid". An agreement to deduct certain facilities received by the laborers from their employer is not a waiver of the minimum wage fixed by the law. Wage, as defined by section 2 of Republic Act No. 602, "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." Thus, the law permits the deduction of such facilities from the laborer's minimum wage of P4, as long as their value is "fair and reasonable". It is not here claimed that the valuations fixed in the Agreement of October 29, 1952 are not fair and reasonable. On the contrary, the agreement expressly states that such valuations: "have been arrived at after careful study and deliberation by both representatives of both parties, with the assistance of their respective counsels, and in the presence of the Honorable Presiding Judge of the Court of Industrial Relations" (Rec. p. 2). Neither is it claimed that the parties, with the aid of the Court of Industrial Relations in a dispute pending before it, may not fix by agreement the valuation of such facilities, without referring the matter to the Department of Labor.

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Petitioner also argues that to allow the deductions of the facilities appearing in the Agreement referred to, would be contrary to the mandate of section 19 of the law, that "nothing in this Act . . . justify an employer . . . in reducing supplements furnished on the date of enactment. The meaning of the term "supplements" has been fixed by the Code of Rules and Regulations promulgated by the Wage Administration Office to implement the Minimum Wage Law (Ch. 1, [c]), as: extra renumeration or benefits received by wage earners from their employees and include but are not restricted to pay for vacation and holidays not worked; paid sick leave or maternity leave; overtime rate in excess of what is required by law; sick, pension, retirement, and death benefits; profit-sharing; family allowances; Christmas, war risk and cost-of-living bonuses; or other bonuses other than those paid as a reward for extra output or time spent on the job. "Supplements", therefore, constitute extra renumeration or special privileges or benefits given to or received by the laborers over and above their ordinary earnings or wages. Facilities, on the other hand, are items of expense necessary for the laborer's and his family's existence and subsistence, so that by express provision of the law (sec. 2 [g]) they form part of the wage and when furnished by the employer are deductible therefrom since if they are not so furnished, the laborer would spend and pay for them just the same. It is thus clear that the facilities mentioned in the agreement of October 29, 1952 do not come within the term "supplements" as used in Art. 19 of the Minimum Wage Law. For the above reasons, we find the appeal from the Order of the Court a quo of September 22, 1953 denying the motion of the petitioner labor union for the payment of the minimum wage of P3.45 per day plus rice ration, or P4 without rice ration, to be unmeritorious and untenable. The second question involved herein relates to the additional compensation that should be paid by the respondent company to its laborers for work rendered on Sundays and holidays. It is admitted that the respondent company is paying an additional compensation of 50 per cent based on the basic "cash portion" of the laborer's wage of P2.20 per day; i.e., P1.10 additional compensation for each Sunday or holiday's work. Petitioner union insists, however, that this 50 per cent additional compensation should be computed on the minimum wage of P400 and not on the "cash portion" of the laborer's wage of P2.20, under the provisions of the Agreement of October 29, 1952 and the Minimum Wage Law. SEC. 4. Commonwealth Act No. 444 (otherwise known as the Eight Hour Labor Law) provides: No person, firm, or corporations, business establishment or place or center of labor shall compel an employee or laborer to work during Sundays and holidays, unless he is paid an additional sum of at least twenty-five per centum of his regular renumeration: The minimum legal additional compensation for work on Sundays and legal holidays is, therefore, 25 per cent of the laborer's regular renumeration. Under the Minimum Wage Law, this minimum additional compensation is P1 a day (25 per cent of P4, the minimum daily wage). While the respondent company computes the additional compensation given to its laborers for work on Sundays and holidays on the "cash portion" of their wages of P2.20, it is giving them 50 per cent thereof, or P1.10 a day. Considering that the minimum additional compensation fixed by the law is P1 (25 per cent of P4), the compensation being paid by the respondent company to its laborers is even higher than such minimum legal additional compensation. We, therefore, see no error in the holding of the Court a quo that the respondent company has not violated the law with respect to the payment of additional compensation for work rendered by its laborers on Sundays and legal holidays. Finding no reason to sustain the present petition for review, the same is, therefore, dismissed, with costs against the petitioner Atok-Big Wedge Mutual Benefit Association.

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Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-12444 February 28, 1963 STATES MARINE CORPORATION and ROYAL LINE, INC., petitioners, vs. CEBU SEAMEN'S ASSOCIATION, INC., respondent. Pedro B. Uy Calderon for petitioners. Gaudioso C. Villagonzalo for respondent. PAREDES, J.: Petitioners States Marine Corporation and Royal Line, Inc. were engaged in the business of marine coastwise transportation, employing therein several steamships of Philippine registry. They had a collective bargaining contract with the respondent Cebu Seamen's Association, Inc. On September 12, 1952, the respondent union filed with the Court of Industrial Relations (CIR), a petition (Case No. 740-V) against the States Marine Corporation, later amended on May 4, 1953, by including as party respondent, the petitioner Royal Line, Inc. The Union alleged that the officers and men working on board the petitioners' vessels have not been paid their sick leave, vacation leave and overtime pay; that the petitioners threatened or coerced them to accept a reduction of salaries, observed by other shipowners; that after the Minimum Wage Law had taken effect, the petitioners required their employees on board their vessels, to pay the sum of P.40 for every meal, while the masters and officers were not required to pay their meals and that because Captain Carlos Asensi had refused to yield to the general reduction of salaries, the petitioners dismissed said captain who now claims for reinstatement and the payment of back wages from December 25, 1952, at the rate of P540.00, monthly. The petitioners' shipping companies, answering, averred that very much below 30 of the men and officers in their employ were members of the respondent union; that the work on board a vessel is one of comparative ease; that petitioners have suffered financial losses in the operation of their vessels and that there is no law which provides for the payment of sick leave or vacation leave to employees or workers of private firms; that as regards the claim for overtime pay, the petitioners have always observed the provisions of Comm. Act No. 444, (Eight-Hour Labor Law), notwithstanding the fact that it does not apply to those who provide means of transportation; that the shipowners and operators in Cebu were paying the salaries of their officers and men, depending upon the margin of profits they could realize and other factors or circumstances of the business; that in enacting Rep. Act No. 602 (Minimum Wage Law), the Congress had in mind that the amount of P.40 per meal, furnished the employees should be deducted from the daily wages; that Captain Asensi was not dismissed for alleged union activities, but with the expiration of the terms of the contract between said officer and the petitioners, his services were terminated. A decision was rendered on February 21, 1957 in favor of the respondent union. The motion for reconsideration thereof, having been denied, the companies filed the present writ of certiorari, to resolve legal question involved. Always bearing in mind the deep-rooted principle that the factual findings of the Court of Industrial Relations should not be disturbed, if supported by substantial evidence, the different issues are taken up, in the order they are raised in the brief for the petitioners. 1. First assignment of error. The respondent court erred in holding that it had jurisdiction over case No. 740-V, notwithstanding the fact that those who had dispute with the petitioners, were less than thirty (30) in number. The CIR made a finding that at the time of the filing of the petition in case No. 740-V, respondent Union had more than thirty members actually working with the companies, and the court declared itself with jurisdiction to take cognizance of the case. Against this order, the herein petitioners did not file a motion for reconsideration or a petition for certiorari. The finding of fact made by the CIR became final and conclusive, which We are not now authorized to alter or modify. It is axiomatic that once the CIR had acquired jurisdiction over a case, it continues to have that jurisdiction, until the case is terminated (Manila Hotel Emp. Association v. Manila Hotel Company, et al., 40 O.G. No. 6, p. 3027). It was abundantly shown that there were 56 members who signed Exhibits A, A-I to A-8, and that 103 members of the Union are listed in Exhibits B, B-1 to B-35, F, F-1 and K-2 to K-3. So that at the time of the filing of the petition, the respondent

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union had a total membership of 159, working with the herein petitioners, who were presumed interested in or would be benefited by the outcome of the case (NAMARCO v. CIR, L-17804, Jan. 1963). Annex D, (Order of the CIR, dated March 8, 1954), likewise belies the contention of herein petitioner in this regard. The fact that only 7 claimed for overtime pay and only 7 witnesses testified, does not warrant the conclusion that the employees who had some dispute with the present petitioners were less than 30. The ruling of the CIR, with respect to the question of jurisdiction is, therefore, correct. 2. Second assignment of error. The CIR erred in holding, that inasmuch as in the shipping articles, the herein petitioners have bound themselves to supply the crew with provisions and with such "daily subsistence as shall be mutually agreed upon" between the master and the crew, no deductions for meals could be made by the aforesaid petitioners from their wages or salaries. 3. Third assignment of error. The CIR erred in holding that inasmuch as with regard to meals furnished to crew members of a vessel, section 3(f) of Act No. 602 is the general rule, which section 19 thereof is the exception, the cost of said meals may not be legally deducted from the wages or salaries of the aforesaid crew members by the herein petitioners. 4. Fourth assignment of error. The CIR erred in declaring that the deduction for costs of meals from the wages or salaries after August 4, 1951, is illegal and same should be reimbursed to the employee concerned, in spite of said section 3, par. (f) of Act No. 602. It was shown by substantial evidence, that since the beginning of the operation of the petitioner's business, all the crew of their vessels have been signing "shipping articles" in which are stated opposite their names, the salaries or wages they would receive. All seamen, whether members of the crew or deck officers or engineers, have been furnished free meals by the ship owners or operators. All the shipping articles signed by the master and the crew members, contained, among others, a stipulation, that "in consideration of which services to be duly performed, the said master hereby agrees to pay to the said crew, as wages, the sums against their names respectively expressed in the contract; and to supply them with provisions as provided herein ..." (Sec. 8, par. [b], shipping articles), and during the duration of the contract "the master of the vessel will provide each member of the crew such daily subsistence as shall be mutually agreed daily upon between said master and crew; or, in lieu of such subsistence the crew may reserve the right to demand at the time of execution of these articles that adequate daily rations be furnished each member of the crew." (Sec. 8, par. [e], shipping articles). It is, therefore, apparent that, aside from the payment of the respective salaries or wages, set opposite the names of the crew members, the petitioners bound themselves to supply the crew with ship's provisions, daily subsistence or daily rations, which include food. This was the situation before August 4, 1951, when the Minimum Wage Law became effective. After this date, however, the companies began deducting the cost of meals from the wages or salaries of crew members; but no such deductions were made from the salaries of the deck officers and engineers in all the boats of the petitioners. Under the existing laws, therefore, the query converges on the legality of such deductions. While the petitioners herein contend that the deductions are legal and should not be reimbursed to the respondent union, the latter, however, claims that same are illegal and reimbursement should be made. Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted and approved by this Honorable Court, without prejudice to the parties adducing other evidence to prove their case not covered by this stipulation of facts. 1wph1.t We hold that such deductions are not authorized. In the coastwise business of transportation of passengers and freight, the men who compose the complement of a vessel are provided with free meals by the shipowners, operators or agents, because they hold on to their work and duties, regardless of "the stress and strain concomitant of a bad weather, unmindful of the dangers that lurk ahead in the midst of the high seas." Section 3, par. f, of the Minimum Wage Law, (R.A. No. 602), provides as follows (f) Until and unless investigations by the Secretary of Labor on his initiative or on petition of any interested party result in a different determination of the fair and reasonable value, the furnishing of meals shall be valued at not more than thirty centavos per meal for agricultural employees and not more than forty centavos for any other employees covered by this Act, and the furnishing of housing shall be valued at not more than twenty centavos daily for agricultural workers and not more than forty centavos daily for other employees covered by this Act.

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Petitioners maintain, in view of the above provisions, that in fixing the minimum wage of employees, Congress took into account the meals furnished by employers and that in fixing the rate of forty centavos per meal, the lawmakers had in mind that the latter amount should be deducted from the daily wage, otherwise, no rate for meals should have been provided. However, section 19, same law, states SEC. 19. Relations to other labor laws and practices. Nothing in this Act shall deprive an employee of the right to seek fair wages, shorter working hours and better working conditions nor justify an employer in violating any other labor law applicable to his employees, in reducing the wage now paid to any of his employees in excess of the minimum wage established under this Act, or in reducing supplements furnished on the date of enactment. At first blush, it would appear that there exists a contradiction between the provisions of section 3(f) and section 19 of Rep. Act No. 602; but from a careful examination of the same, it is evident that Section 3(f) constitutes the general rule, while section 19 is the exception. In other words, if there are no supplements given, within the meaning and contemplation of section 19, but merely facilities, section 3(f) governs. There is no conflict; the two provisions could, as they should be harmonized. And even if there is such a conflict, the respondent CIR should resolve the same in favor of the safety and decent living laborers (Art. 1702, new Civil Code).. It is argued that the food or meals given to the deck officers, marine engineers and unlicensed crew members in question, were mere "facilities" which should be deducted from wages, and not "supplements" which, according to said section 19, should not be deducted from such wages, because it is provided therein: "Nothing in this Act shall deprive an employee of the right to such fair wage ... or in reducing supplements furnished on the date of enactment." In the case of Atok-Big Wedge Assn. v. Atok-Big Wedge Co., L-7349, July 19, 1955; 51 O.G. 3432, the two terms are defined as follows "Supplements", therefore, constitute extra remuneration or special privileges or benefits given to or received by the laborers over and above their ordinary earnings or wages. "Facilities", on the other hand, are items of expense necessary for the laborer's and his family's existence and subsistence so that by express provision of law (Sec. 2[g]), they form part of the wage and when furnished by the employer are deductible therefrom, since if they are not so furnished, the laborer would spend and pay for them just the same. In short, the benefit or privilege given to the employee which constitutes an extra remuneration above and over his basic or ordinary earning or wage, is supplement; and when said benefit or privilege is part of the laborers' basic wages, it is a facility. The criterion is not so much with the kind of the benefit or item (food, lodging, bonus or sick leave) given, but its purpose. Considering, therefore, as definitely found by the respondent court that the meals were freely given to crew members prior to August 4, 1951, while they were on the high seas "not as part of their wages but as a necessary matter in the maintenance of the health and efficiency of the crew personnel during the voyage", the deductions therein made for the meals given after August 4, 1951, should be returned to them, and the operator of the coastwise vessels affected should continue giving the same benefit.. In the case of Cebu Autobus Company v. United Cebu Autobus Employees Assn., L-9742, Oct. 27, 1955, the company used to pay to its drivers and conductors, who were assigned outside of the City limits, aside from their regular salary, a certain percentage of their daily wage, as allowance for food. Upon the effectivity of the Minimum Wage Law, however, that privilege was stopped by the company. The order CIR to the company to continue granting this privilege, was upheld by this Court. The shipping companies argue that the furnishing of meals to the crew before the effectivity of Rep. Act No. 602, is of no moment, because such circumstance was already taken into consideration by Congress, when it stated that "wage" includes the fair and reasonable value of boards customarily furnished by the employer to the employees. If We are to follow the theory of the herein petitioners, then a crew member, who used to receive a monthly wage of P100.00, before August 4, 1951, with no deduction for meals, after said date, would receive only P86.00 monthly (after deducting the cost of his meals at P.40 per meal), which would be very much less than the P122.00 monthly minimum wage, fixed in accordance with the Minimum Wage Law. Instead of benefiting him, the law will adversely affect said crew member. Such interpretation does not conform with the avowed intention of Congress in enacting the said law. One should not overlook a fact fully established, that only unlicensed crew members were made to pay for their meals or food, while the deck officers and marine engineers receiving higher pay and provided with better victuals,

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were not. This pictures in no uncertain terms, a great and unjust discrimination obtaining in the present case (Pambujan Sur United Mine Workers v. CIR, et al., L-7177, May 31, 1955). Fifth, Sixth and Seventh assignments of error. The CIR erred in holding that Severino Pepito, a boatsman, had rendered overtime work, notwithstanding the provisions of section 1, of C.A. No. 444; in basing its finding ofthe alleged overtime, on the uncorroborated testimony of said Severino Pepito; and in ordering the herein petitioners to pay him. Severino Pepito was found by the CIR to have worked overtime and had not been paid for such services. Severino Pepito categorically stated that he worked during the late hours of the evening and during the early hours of the day when the boat docks and unloads. Aside from the above, he did other jobs such as removing rusts and cleaning the vessel, which overtime work totalled to 6 hours a day, and of which he has not been paid as yet. This statement was not rebutted by the petitioners. Nobody working with him on the same boat "M/V Adriana" contrawise. The testimonies of boatswains of other vessels(M/V Iruna and M/V Princesa), are incompetent and unreliable. And considering the established fact that the work of Severino Pepito was continuous, and during the time he was not working, he could not leave and could not completely rest, because of the place and nature of his work, the provisions of sec. 1, of Comm. Act No. 444, which states "When the work is not continuous, the time during which the laborer is not working and can leave his working place and can rest completely shall not be counted", find no application in his case. 8. Eighth assignment of error. The CIR erred in ordering petitioners to reinstate Capt. Carlos Asensi to his former position, considering the fact that said officer had been employed since January 9, 1953, as captain of a vessel belonging to another shipping firm in the City of Cebu. The CIR held Finding that the claims of Captain Carlos Asensi for back salaries from the time of his alleged lay-off on March 20, 1952, is not supported by the evidence on record, the same is hereby dismissed. Considering, however, that Captain Asensi had been laid-off for a long time and that his failure to report for work is not sufficient cause for his absolute dismissal, respondents are hereby ordered to reinstate him to his former job without back salary but under the same terms and conditions of employment existing prior to his layoff, without loss of seniority and other benefits already acquired by him prior to March 20, 1952. This Court is empowered to reduce the punishment meted out to an erring employee (Standard Vacuum Oil Co., Inc. v. Katipunan Labor Union, G.R. No. L-9666, Jan. 30, 1957). This step taken is in consonance with section 12 of Comm. Act 103, as amended." (p. 16, Decision, Annex 'G'). The ruling is in conformity with the evidence, law and equity. Ninth and Tenth assignments of error. The CIR erred in denying a duly verified motion for new trial, and in overruling petitioner's motion for reconsideration. The motion for new trial, supported by an affidavit, states that the movants have a good and valid defense and the same is based on three orders of the WAS (Wage Administration Service), dated November 6, 1956. It is alleged that they would inevitably affect the defense of the petitioners. The motion for new trial is without merit. Having the said wage Orders in their possession, while the case was pending decision, it was not explained why the proper move was not taken to introduce them before the decision was promulgated. The said wage orders, dealing as they do, with the evaluation of meals and facilities, are irrelevant to the present issue, it having been found and held that the meals or food in question are not facilities but supplements. The original petition in the CIR having been filed on Sept. 12, 1952, the WAS could have intervened in the manner provided by law to express its views on the matter. At any rate, the admission of the three wage orders have not altered the decision reached in this case. IN VIEW HEREOF, the petition is dismissed, with costs against the petitioners.

FIRST DIVISION [G.R. No. 118506. April 18, 1997] NORMA MABEZA, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, PETER NG/HOTEL SUPREME, respondents. DECISION KAPUNAN, J.: This petition seeking the nullification of a resolution of public respondent National Labor Relations Commission dated April 28, 1994 vividly illustrates why courts should be ever vigilant in the preservation of the constitutionally

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enshrined rights of the working class. Without the protection accorded by our laws and the tempering of courts, the natural and historical inclination of capital to ride roughshod over the rights of labor would run unabated. The facts of the case at bar, culled from the conflicting versions of petitioner and private respondent, are illustrative. Petitioner Norma Mabeza contends that around the first week of May, 1991, she and her co-employees at the Hotel Supreme in Baguio City were asked by the hotel's management to sign an instrument attesting to the latter's compliance with minimum wage and other labor standard provisions of law. [1] The instrument provides: [2] JOINT AFFIDAVIT We, SYLVIA IGANA, HERMINIGILDO AQUINO, EVELYN OGOY, MACARIA JUGUETA, ADELAIDA NONOG, NORMA MABEZA, JONATHAN PICART and JOSE DIZON, all of legal ages (sic), Filipinos and residents of Baguio City, under oath, depose and say: 1. That we are employees of Mr. Peter L. Ng of his Hotel Supreme situated at No. 416 Magsaysay Ave., Baguio City; 2. That the said Hotel is separately operated from the Ivy's Grill and Restaurant; 3. That we are all (8) employees in the hotel and assigned in each respective shifts; 4. That we have no complaints against the management of the Hotel Supreme as we are paid accordingly and that we are treated well. 5. That we are executing this affidavit voluntarily without any force or intimidation and for the purpose of informing the authorities concerned and to dispute the alleged report of the Labor Inspector of the Department of Labor and Employment conducted on the said establishment on February 2, 1991. IN WITNESS WHEREOF, we have hereunto set our hands this 7th day of May, 1991 at Baguio City, Philippines. (Sgd.) (Sgd.) (Sgd.) SYLVIA IGAMA HERMINIGILDO AQUINO EVELYN OGOY (Sgd) (Sgd.) (Sgd.) MACARIA JUGUETA ADELAIDA NONOG NORMA MABEZA (Sgd) (Sgd.) JONATHAN PICART JOSE DIZON SUBSCRIBED AND SWORN to before me this 7th day of May, 1991, at Baguio City, Philippines. Asst. City Prosecutor Petitioner signed the affidavit but refused to go to the City Prosecutor's Office to swear to the veracity and contents of the affidavit as instructed by management. The affidavit was nevertheless submitted on the same day to the Regional Office of the Department of Labor and Employment in Baguio City. As gleaned from the affidavit, the same was drawn by management for the sole purpose of refuting findings of the Labor Inspector of DOLE (in an inspection of respondent's establishment on February 2, 1991) apparently adverse to the private respondent. [3] After she refused to proceed to the City Prosecutor's Office - on the same day the affidavit was submitted to the Cordillera Regional Office of DOLE - petitioner avers that she was ordered by the hotel management to turn over the keys to her living quarters and to remove her belongings from the hotel premises. [4] According to her, respondent strongly chided her for refusing to proceed to the City Prosecutor's Office to attest to the affidavit. [5] She thereafter reluctantly filed a leave of absence from her job which was denied by management. When she attempted to return to work on May 10, 1991, the hotel's cashier, Margarita Choy, informed her that she should not report to work and, instead, continue with her unofficial leave of absence. Consequently, on May 13, 1991, three days after her attempt to return to work, petitioner filed a complaint for illegal dismissal before the Arbitration Branch of the National Labor Relations Commission - CAR Baguio City. In addition to her complaint for illegal dismissal, she alleged underpayment of wages, non-payment of holiday pay, service incentive leave pay, 13th month pay, night differential and other benefits. The complaint was docketed as NLRC Case No. RAB-CAR-050198-91 and assigned to Labor Arbiter Felipe P. Pati. Responding to the allegations made in support of petitioner's complaint for illegal dismissal, private respondent Peter Ng alleged before Labor Arbiter Pati that petitioner "surreptitiously left (her job) without notice to the management" [6] and that she actually abandoned her work. He maintained that there was no basis for the money claims for underpayment and other benefits as these were paid in the form of facilities to petitioner and the hotel's other employees. [7] Pointing to the Affidavit of May 7, 1991, the private respondent asserted that his employees actually have no problems with management. In a supplemental answer submitted eleven (11) months

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after the original complaint for illegal dismissal was filed, private respondent raised a new ground, loss of confidence, which was supported by a criminal complaint for Qualified Theft he filed before the prosecutor's office of the City of Baguio against petitioner on July 4, 1991. [8] On May 14, 1993, Labor Arbiter Pati rendered a decision dismissing petitioner's complaint on the ground of loss of confidence. His disquisitions in support of his conclusion read as follows: It appears from the evidence of respondent that complainant carted away or stole one (1) blanket, 1 piece bedsheet, 1 piece thermos, 2 pieces towel (Exhibits '9', '9-A,' '9-B,' '9-C' and '10' pages 12-14 TSN, December 1, 1992). In fact, this was the reason why respondent Peter Ng lodged a criminal complaint against complainant for qualified theft and perjury. The fiscal's office finding a prima facie evidence that complainant committed the crime of qualified theft issued a resolution for its filing in court but dismissing the charge of perjury (Exhibit '4' for respondent and Exhibit 'B-7' for complainant). As a consequence, complainant was charged in court for the said crime (Exhibit '5' for respondent and Exhibit 'B-6' for the complainant). With these pieces of evidence, complainant committed serious misconduct against her employer which is one of the just and valid grounds for an employer to terminate an employee (Article 282 of the Labor Code as amended). [9] On April 28, 1994, respondent NLRC promulgated its assailed Resolution [10] affirming the Labor Arbiter's decision. The resolution substantially incorporated the findings of the Labor Arbiter. [11] Unsatisfied, petitioner instituted the instant special civil action for certiorari under Rule 65 of the Rules of Court on the following grounds: [12] 1. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING TO GRAVE ABUSE OF DISCRETION IN ITS FAILURE TO CONSIDER THAT THE ALLEGED LOSS OF CONFIDENCE IS A FALSE CAUSE AND AN AFTERTHOUGHT ON THE PART OF THE RESPONDENT-EMPLOYER TO JUSTIFY, ALBEIT ILLEGALLY, THE DISMISSAL OF THE COMPLAINANT FROM HER EMPLOYMENT; 2. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING TO GRAVE ABUSE OF DISCRETION IN ADOPTING THE RULING OF THE LABOR ARBITER THAT THERE WAS NO UNDERPAYMENT OF WAGES AND BENEFITS ON THE BASIS OF EXHIBIT "8" (AN UNDATED SUMMARY OF COMPUTATION PREPARED BY ALLEGEDLY BY RESPONDENT'S EXTERNAL ACCOUNTANT) WHICH IS TOTALLY INADMISSIBLE AS AN EVIDENCE TO PROVE PAYMENT OF WAGES AND BENEFITS; 3. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING TO GRAVE ABUSE OF DISCRETION IN FAILING TO CONSIDER THE EVIDENCE ADDUCED BEFORE THE LABOR ARBITER AS CONSTITUTING UNFAIR LABOR PRACTICE COMMITTED BY THE RESPONDENT. The Solicitor General, in a Manifestation in lieu of Comment dated August 8, 1995 rejects private respondent's principal claims and defenses and urges this Court to set aside the public respondent's assailed resolution. [13] We agree. It is settled that in termination cases the employer bears the burden of proof to show that the dismissal is for just cause, the failure of which would mean that the dismissal is not justified and the employee is entitled to reinstatement. [14] In the case at bar, the private respondent initially claimed that petitioner abandoned her job when she failed to return to work on May 8, 1991. Additionally, in order to strengthen his contention that there existed sufficient cause for the termination of petitioner, he belatedly included a complaint for loss of confidence, supporting this with charges that petitioner had stolen a blanket, a bedsheet and two towels from the hotel. [15] Appended to his last complaint was a suit for qualified theft filed with the Baguio City prosecutor's office. From the evidence on record, it is crystal clear that the circumstances upon which private respondent anchored his claim that petitioner "abandoned" her job were not enough to constitute just cause to sanction the termination of her services under Article 283 of the Labor Code. For abandonment to arise, there must be concurrence of two things: 1) lack of intention to work; [16] and 2) the presence of overt acts signifying the employee's intention not to work. [17] In the instant case, respondent does not dispute the fact that petitioner tried to file a leave of absence when she learned that the hotel management was displeased with her refusal to attest to the affidavit. The fact that she made this attempt clearly indicates not an intention to abandon but an intention to return to work after the period of her leave of absence, had it been granted, shall have expired.

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Furthermore, while absence from work for a prolonged period may suggest abandonment in certain instances, mere absence of one or two days would not be enough to sustain such a claim. The overt act (absence) ought to unerringly point to the fact that the employee has no intention to return to work, [18] which is patently not the case here. In fact, several days after she had been advised to take an informal leave, petitioner tried to resume working with the hotel, to no avail. It was only after she had been repeatedly rebuffed that she filed a case for illegal dismissal. These acts militate against the private respondent's claim that petitioner abandoned her job. As the Solicitor General in his manifestation observed: Petitioner's absence on that day should not be construed as abandonment of her job. She did not report because the cashier told her not to report anymore, and that private respondent Ng did not want to see her in the hotel premises. But two days later or on the 10th of May, after realizing that she had to clarify her employment status, she again reported for work. However, she was prevented from working by private respondents. [19] We now come to the second cause raised by private respondent to support his contention that petitioner was validly dismissed from her job. Loss of confidence as a just cause for dismissal was never intended to provide employers with a blank check for terminating their employees. Such a vague, all-encompassing pretext as loss of confidence, if unqualifiedly given the seal of approval by this Court, could readily reduce to barren form the words of the constitutional guarantee of security of tenure. Having this in mind, loss of confidence should ideally apply only to cases involving employees occupying positions of trust and confidence or to those situations where the employee is routinely charged with the care and custody of the employer's money or property. To the first class belong managerial employees, i.e., those vested with the powers or prerogatives to lay down management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees or effectively recommend such managerial actions; and to the second class belong cashiers, auditors, property custodians, etc., or those who, in the normal and routine exercise of their functions, regularly handle significant amounts of money or property. Evidently, an ordinary chambermaid who has to sign out for linen and other hotel property from the property custodian each day and who has to account for each and every towel or bedsheet utilized by the hotel's guests at the end of her shift would not fall under any of these two classes of employees for which loss of confidence, if ably supported by evidence, would normally apply. Illustrating this distinction, this Court, in Marina Port Services, Inc. vs. NLRC, [20] has stated that: To be sure, every employee must enjoy some degree of trust and confidence from the employer as that is one reason why he was employed in the first place. One certainly does not employ a person he distrusts. Indeed, even the lowly janitor must enjoy that trust and confidence in some measure if only because he is the one who opens the office in the morning and closes it at night and in this sense is entrusted with the care or protection of the employer's property. The keys he holds are the symbol of that trust and confidence. By the same token, the security guard must also be considered as enjoying the trust and confidence of his employer, whose property he is safeguarding. Like the janitor, he has access to this property. He too, is charged with its care and protection. Notably, however, and like the janitor again, he is entrusted only with the physical task of protecting that property. The employer's trust and confidence in him is limited to that ministerial function. He is not entrusted, in the Labor Arbiter's words, 'with the duties of safekeeping and safeguarding company policies, management instructions, and company secrets such as operation devices.' He is not privy to these confidential matters, which are shared only in the higher echelons of management. It is the persons on such levels who, because they discharge these sensitive duties, may be considered holding positions of trust and confidence. The security guard does not belong in such category. [21] More importantly, we have repeatedly held that loss of confidence should not be simulated in order to justify what would otherwise be, under the provisions of law, an illegal dismissal. "It should not be used as a subterfuge for causes which are illegal, improper and unjustified. It must be genuine, not a mere afterthought to justify an earlier action taken in bad faith." [22] In the case at bar, the suspicious delay in private respondent's filing of qualified theft charges against petitioner long after the latter exposed the hotel's scheme (to avoid its obligations as employer under the Labor Code) by her act of filing illegal dismissal charges against the private respondent would hardly warrant serious consideration of loss of confidence as a valid ground for dismissal. Notably, the Solicitor General has himself taken a position opposite the public respondent and has observed that:

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If petitioner had really committed the acts charged against her by private respondents (stealing supplies of respondent hotel), private respondents should have confronted her before dismissing her on that ground. Private respondents did not do so. In fact, private respondent Ng did not raise the matter when petitioner went to see him on May 9, 1991, and handed him her application for leave. It took private respondents 52 days or up to July 4, 1991 before finally deciding to file a criminal complaint against petitioner, in an obvious attempt to build a case against her. The manipulations of private respondents should not be countenanced. [23] Clearly, the efforts to justify petitioner's dismissal - on top of the private respondent's scheme of inducing his employees to sign an affidavit absolving him from possible violations of the Labor Code - taints with evident bad faith and deliberate malice petitioner's summary termination from employment. Having said this, we turn to the important question of whether or not the dismissal by the private respondent of petitioner constitutes an unfair labor practice. The answer in this case must inevitably be in the affirmative. The pivotal question in any case where unfair labor practice on the part of the employer is alleged is whether or not the employer has exerted pressure, in the form of restraint, interference or coercion, against his employee's right to institute concerted action for better terms and conditions of employment. Without doubt, the act of compelling employees to sign an instrument indicating that the employer observed labor standards provisions of law when he might have not, together with the act of terminating or coercing those who refuse to cooperate with the employer's scheme constitutes unfair labor practice. The first act clearly preempts the right of the hotel's workers to seek better terms and conditions of employment through concerted action. We agree with the Solicitor General's observation in his manifestation that "[t]his actuation... is analogous to the situation envisaged in paragraph (f) of Article 248 of the Labor Code" [24] which distinctly makes it an unfair labor practice "to dismiss, discharge or otherwise prejudice or discriminate against an employee for having given or being about to give testimony" [25] under the Labor Code. For in not giving positive testimony in favor of her employer, petitioner had reserved not only her right to dispute the claim and proffer evidence in support thereof but also to work for better terms and conditions of employment. For refusing to cooperate with the private respondent's scheme, petitioner was obviously held up as an example to all of the hotel's employees, that they could only cause trouble to management at great personal inconvenience. Implicit in the act of petitioner's termination and the subsequent filing of charges against her was the warning that they would not only be deprived of their means of livelihood, but also possibly, their personal liberty. This Court does not normally overturn findings and conclusions of quasi-judicial agencies when the same are ably supported by the evidence on record. However, where such conclusions are based on a misperception of facts or where they patently fly in the face of reason and logic, we will not hesitate to set aside those conclusions. Going into the issue of petitioner's money claims, we find one more salient reason in this case to set things right: the labor arbiter's evaluation of the money claims in this case incredibly ignores existing law and jurisprudence on the matter. Its blatant one-sidedness simply raises the suspicion that something more than the facts, the law and jurisprudence may have influenced the decision at the level of the Arbiter. Labor Arbiter Pati accepted hook, line and sinker the private respondent's bare claim that the reason the monetary benefits received by petitioner between 1981 to 1987 were less than minimum wage was because petitioner did not factor in the meals, lodging, electric consumption and water she received during the period in her computations. [26] Granting that meals and lodging were provided and indeed constituted facilities, such facilities could not be deducted without the employer complying first with certain legal requirements. Without satisfying these requirements, the employer simply cannot deduct the value from the employee's wages. First, proof must be shown that such facilities are customarily furnished by the trade. Second, the provision of deductible facilities must be voluntarily accepted in writing by the employee. Finally, facilities must be charged at fair and reasonable value. [27] These requirements were not met in the instant case. Private respondent "failed to present any company policy or guideline to show that the meal and lodging . . . (are) part of the salary;" [28] he failed to provide proof of the employee's written authorization; and, he failed to show how he arrived at the valuations. [29] Curiously, in the case at bench, the only valuations relied upon by the labor arbiter in his decision were figures furnished by the private respondent's own accountant, without corroborative evidence. On the pretext that records prior to the July 16, 1990 earthquake were lost or destroyed, respondent failed to produce payroll records, receipts and other relevant documents, where he could have, as has been pointed out in the Solicitor General's

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manifestation, "secured certified copies thereof from the nearest regional office of the Department of Labor, the SSS or the BIR." [30] More significantly, the food and lodging, or the electricity and water consumed by the petitioner were not facilities but supplements. A benefit or privilege granted to an employee for the convenience of the employer is not a facility. The criterion in making a distinction between the two not so much lies in the kind (food, lodging) but the purpose. [31] Considering, therefore, that hotel workers are required to work different shifts and are expected to be available at various odd hours, their ready availability is a necessary matter in the operations of a small hotel, such as the private respondent's hotel. It is therefore evident that petitioner is entitled to the payment of the deficiency in her wages equivalent to the full wage applicable from May 13, 1988 up to the date of her illegal dismissal. Additionally, petitioner is entitled to payment of service incentive leave pay, emergency cost of living allowance, night differential pay, and 13th month pay for the periods alleged by the petitioner as the private respondent has never been able to adduce proof that petitioner was paid the aforestated benefits. However, the claims covering the period of October 1987 up to the time of filing the case on May 13, 1988 are barred by prescription as P.D. 442 (as amended) and its implementing rules limit all money claims arising out of employer-employee relationship to three (3) years from the time the cause of action accrues. [32] We depart from the settled rule that an employee who is unjustly dismissed from work normally should be reinstated without loss of seniority rights and other privileges. Owing to the strained relations between petitioner and private respondent, allowing the former to return to her job would only subject her to possible harassment and future embarrassment. In the instant case, separation pay equivalent to one month's salary for every year of continuous service with the private respondent would be proper, starting with her job at the Belfront Hotel. In addition to separation pay, backwages are in order. Pursuant to R.A. 6715 and our decision in Osmalik Bustamante, et al. vs. National Labor Relations Commission, [33] petitioner is entitled to full backwages from the time of her illegal dismissal up to the date of promulgation of this decision without qualification or deduction. Finally, in dismissal cases, the law requires that the employer must furnish the employee sought to be terminated from employment with two written notices before the same may be legally effected. The first is a written notice containing a statement of the cause(s) for dismissal; the second is a notice informing the employee of the employer's decision to terminate him stating the basis of the dismissal. During the process leading to the second notice, the employer must give the employee ample opportunity to be heard and defend himself, with the assistance of counsel if he so desires. Given the seriousness of the second cause (qualified theft) of the petitioner's dismissal, it is noteworthy that the private respondent never even bothered to inform petitioner of the charges against her. Neither was petitioner given the opportunity to explain the loss of the articles. It was only almost two months after petitioner had filed a complaint for illegal dismissal, as an afterthought, that the loss was reported to the police and added as a supplemental answer to petitioner's complaint. Clearly, the dismissal of petitioner without the benefit of notice and hearing prior to her termination violated her constitutional right to due process. Under the circumstances, an award of One Thousand Pesos (P1,000.00) on top of payment of the deficiency in wages and benefits for the period aforestated would be proper. WHEREFORE, premises considered, the RESOLUTION of the National Labor Relations Commission dated April 24, 1994 is REVERSED and SET ASIDE, with costs. For clarity, the economic benefits due the petitioner are hereby summarized as follows: 1) Deficiency wages and the applicable ECOLA from May 13, 1988 up to the date of petitioner's illegal dismissal; 2) Service incentive leave pay; night differential pay and 13th month pay for the same period; 3) Separation pay equal to one month's salary for every year of petitioner's continuous service with the private respondent starting with her job at the Belfront Hotel; 4) Full backwages, without qualification or deduction, from the date of petitioner's illegal dismissal up to the date of promulgation of this decision pursuant to our ruling in Bustamante vs. NLRC. [34] 5) P1.000.00. SO ORDERED.

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Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-58870 December 18, 1987 CEBU INSTITUTE OF TECHNOLOGY (CIT), petitioner, vs. HON. BLAS OPLE, in his capacity as Minister, Ministry of Labor and Employment, JULIUS ABELLA, ARSENIO ABELLANA, RODRIGO ALIWALAS, ZOSIMO ALMOCERA, GERONIDES ANCOG, GREGORIO ASIA, ROGER BAJARIAS, BERNARDO BALATAYO, JR., BASILIO CABALLES, DEMOCRITO TEVES, VOLTAIRE DELA CERNA, ROBERTO COBARRUBIAS, VILMA GOMEZ CHUA, RUBEN GALLITO, EDGARDO CONCEPCION, VICTOR COQUILLA, JOSE DAKOYKOY, PATERNO WONG, EVELYN LACAYA, RODRIGO GONZALES, JEOGINA GOZO, MIGUEL CABALLES, CONSUELO JAVELOSA, QUILIANO LASCO, FRANKLIN LAUTA, JUSTINIANA LARGO, RONALD LICUPA, ALAN MILANO, MARIA MONSANTO, REYNALDO NOYNAY, RAMON PARADELA, NATALIO PLAZA, LUZPURA QUIROGA, NOE RODIS, COSMENIA SAAVEDRA, LEONARDO SAGARIO, LETICIA SERRA, SIEGFREDO TABANAG, LUCINO TAMAOSO, DANILO TERANTE, HELEN CALVO TORRES, ERNESTO VILLANUEVA, DOLORES VILLONDO, EDWARD YAP, ROWENA VIVARES, DOLORES SANANAM, RODRIGO BACALSO, YOLANDA TABLANTE, ROMERO BALATUCAN, CARMELITA LADOT, PANFILO CANETE, EMMANUEL CHAVEZ, JR., SERGIO GALIDO, ANGEL COLLERA, ZOSIMO CUNANAN, RENE BURT LLANTO, GIL BATAYOLA, VICENTE DELANTE, CANDELARIO DE DIOS, JOSE MA. ESTELLA, NECITA TRINIDAD, ROTELLO ILUMBA, TEODORICO JAYME, RAYMUNDO ABSIN, RUDY MANEJA, REYNA RAMOS, ANASTACIA BLANCO, FE DELMUNDO, ELNORA MONTERA, MORRISON MONTESCLAROS, ELEAZAR PANIAMOGAN, BERNARDO PILAPIL, RODOLFO POL, DEMOSTHENES REDOBLE, PACHECO ROMERO, DELLO SABANAL, SARAH SALINAS, RENATO SOLATORIO, EDUARDO TABLANTE, EMMANUEL TAN, FELICISIMO TESALUNA, JOSE VERALLO, JR., MAGDALENO VERGARA, ESMERALDA ABARQUEZ, MAC ARTHUR DACUYCUY ACOMPANADA, TRINIDAD ADLAWAN, FE ELIZORDO ALCANTARA, REOSEBELLA AMPER, ZENAIDA BACALSO, ELIZA BADANA, GEORGIA BAS, ERLINDA BURIAS, ELDEFONSO BURIAS, CORAZON CASENAS, REGINO CASTANEDA, GEORGE CATADA, CARMENCITA G. CHAVEZ, LORETIA CUNANAN, FLORES DELFIN, TERESITA ESPINO, ELVIE GALANZA, AMADEA GALELA, TERESITA. JUNTILLA, LEONARDA KAPUNGAN, ADORACION LANAWAN, LINDA LAYAO, GERARDO LAYSON, VIRGILIO LIBETARIO, RAYMOND PAUL LOGARTA, NORMA LUCERO, ANATOLIA MENDEZ, ELIODORO MENDEZ, JUDALINE MONTE, ELMA OCAMPO, ESTEFA OLIVARES, GEORGE ORAIS, CRISPINA PALANG, GRETA PEGARIDO, MELBA QUIACHON, REMEDIOS QUIROS, VIRGINIA RANCES, EDNA DELOS REYES, VICENTE TAN, EMERGENCIA ROSELL, JULIETA TATING, MERCIA TECARRO, FELISA VERGARA, WEMINA VILLACIN, MACRINA YBARSABAL, MILAGROS CATALAN, JULIETA AQUINDE, SONIA ARTIAGA, MA. TERESITA OBANDO, ASUNCION ABAYAN, ESTHER CARREON, ECHEVARRE, BUENAFE SAMSON, CONCEPCION GONZALES, VITALIANA VENERACION, LEONCIA ABELLAR, REYNITA VILLACARLOS. respondents. No. L-68345 December 18, 1987 DIVINE WORD COLLEGE OF LEGAZPI, petitioner, vs. The Honorable Deputy Minister of Labor and Employment, VICENTE LEOGARDO, JR., the HONORABLE REGIONAL DIRECTOR (Regional Office No. 5) of the Ministry of Labor & Employment GERARDO S. CASTILLO, CECILIA MANUEL and other alleged complainants, respondents. Nos. L-69224-5 December 18, 1987 FAR EASTERN UNIVERSITY EMPLOYEES LABOR UNION, petitioner, vs. FAR EASTERN UNIVERSITY and the NATIONAL LABOR RELATIONS COMMISSION, respondents. No. 70832 December 18, 1987 GREGORIO T. FABROS, ROGELIO B. DE GUZMAN, CRESENCIANO ESPINO, JOSE RAMOS SUNGA, BAYLON BANEZ FERNANDO ELESTERIO, ISMAEL TABO, AMABLE TUIBEO CELSO TUBAY, RAFAEL HERNANDEZ, GERONIMO JASARENO, MEL BALTAZAR, MA. LOURDES PASCUAL, T. DEL ROSARIO ACADEMY TEACHERS and EMPLOYEES ASSOCIATION, DENNIS MONTE, BECKY TORRES, LOIDA VELASCO, ROMLY NERY, DAISY N. AMPIG, PATRICIO DOLORES, ROGELIO RAMIREZ, and NILDA L. SEVILLA, petitioners, vs. The HON. JAIME C. LAYA, in his capacity as Minister of Education, Culture and Sports, respondents.

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No. L-76524 December 18, 1987 JASMIN BISCOCHO, ROWENA MARIANO, AGNES GALLEGO, MA. ANA ORDENES, ISABEL DE LEON, LUZVIMINDA FIDEL, MARIQUIT REYES, SOTERA ORTIZ, ANGELINA ROXAS, BITUIN DE PANO, ELIZABETH ORDEN, APOLLO ORDEN, GUILLERMA CERCANO, IMELDA CARINGAL, EFREN BATIFORA, ROSIE VALDEZ, DELIA QUILATEZ, FELIX RODRIGUEZ, OSCAR RODRIGUEZ, JOVITA CEREZO, JOSEFINA BONDOC, BELEN POSADAS, DOLORES PALMA, ANTONINA CRUS, CONRADO BANAYAT, TERESITA LORBES, and CORAZON MIRANDA, petitioners, vs. THE HONORABLE AUGUSTO SANCHEZ, in his capacity as Minister of Labor and Employment, ESPIRITU SANTO PAROCHIAL SCHOOL AND ESPIRITU SANTO PAROCHIAL SCHOOL FACULTY ASSOCIATION, respondents. No. 76596 December 18, 1987 RICARDO C. VALMONTE and CORAZON BADIOLA, petitioners, vs. THE HONORABLE AUGUSTO SANCHEZ, in his capacity as Minister of Labor and Employment, ESPIRITU SANTO PAROCHIAL SCHOOL FACULTY ASSOCIATION, and ESPIRITU SANTO PAROCHIAL SCHOOL, respondents. CORTES, J.: Six cases involving various private schools, their teachers and non-teaching school personnel, and even parents with children studying in said schools, as well as the then Minister of Labor and Employment, his Deputy, the National Labor Relations Commission, and the then Minister of Education, Culture and Sports, have been consolidated in this single Decision in order to dispose of uniformly the common legal issue raised therein, namely, the allocation of the incremental proceeds of authorized tuition fee increases of private schools provided for in section 3 (a) of Presidential Decree No. 451, and thereafter, under the Education Act of 1982 (Batas Pambansa Blg. 232). Specifically, the common problem presented by these cases requires an interpretation of section 3(a) of Pres. Decree No. 451 which states: SEC. 3. Limitations. The increase in tuition or other school fees or other charges as well as the new fees or charges authorized under the next preceding section shall be subject to the following conditions; (a) That no increase in tuition or other school fees or charges shall be approved unless sixty (60%) per centum of the proceeds is allocated for increase in salaries or wages of the members of the faculty and all other employees of the school concerned, and the balance for institutional development, student assistance and extension services, and return to investments: Provided That in no case shall the return to investments exceed twelve (12%) per centum of the incremental proceeds; xxx xxx xxx In addition, there is also a need for a pronouncement on the effect of the subsequent enactment of B.P. Blg. 232 which provides for the allocation of tuition fee increases in section 42 thereof. In a nutshell, the present controversy was precipitated by the claims of some school personnel for allowances and other benefits and the refusal of the private schools concerned to pay said allowances and benefits on the ground that said items should be deemed included in the salary increases they had paid out of the 60% portion of the proceeds from tuition fee increases provided for in section 3 (a) of Pres. Decree No. 451. The interpretation and construction of laws being a matter of judicial power and duty [Marbury v. Madison, 1 Cranch 137 (1803); Endencia v. David, 93 Phil. 696 (1953)], this Court has been called upon to resolve the controversy. In the process of reading and at times, having to decipher, the numerous pleadings filed in the six cases, the Court found that the main issue has been approached by the parties from almost diametrical points, thereby bringing into focus three sub-issues: first, whether or not allowances and other fringe benefits of faculty members and other school employees may be charged against the 60% portion of the tuition fee increases provided for in section 3(a) of Pres. Dec. No. 451: second, whether or not the same items may be charged against said portion under the provisions of B.P. Blg. 232: and, third, whether or not schools and their employees may enter into a collective bargaining agreement allocating more than 60% of said incremental proceeds for salary increases and other benefits of said employees. After these sub-issues have been resolved, the Court will tackle the other incidents attending the individual cases, seriatim. The factual antecedents that brought these cases before this Tribunal are as follows:

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I.. FACTUAL BACKGROUND OF EACH CASE A. CEBU INSTITUTE OF TECHNOLOGY CASE This case originated from a Complaint filed with the Regional Office No. VII of the Ministry of Labor on February 11, 1981 against petitioner Cebu Institute of Technology (CIT) by private respondents, Panfilo Canete, et al., teachers of CIT, for non-payment of: a) cost of living allowances (COLA) under Pres. Dec. Nos. 525, 1123, 1614, 1678 and 1713, b) thirteenth (13th) month pay differentials and c) service incentive leave. By virtue of an Order issued by the then Deputy Minister of Labor Carmelo C. Noriel, a labor-management committee composed of one representative each from the Ministry of Labor and Employment (MOLE), the Minister of Education, Culture and Sports (MECS), and two representatives each from CIT and from the teachers was created. Said committee was to ascertain compliance with the legal requirements for the payment of COLA, thirteenth (13th) month pay and service incentive leave [Rollo, p. 84]. The position taken by CIT during the conference held by the labor management committee was that it had paid the allowances mandated by various decrees but the same had been integrated in the teacher's hourly rate. It alleged that the payment of COLA by way of salary increases is in line with Pres. Dec. No. 451. It also claimed in its position paper that it had paid thirteenth month pay to its employees and that it was exempt from the payment of service incentive leave to its teachers who were employed on contract basis [Rollo, pp. 85-86]. After the report and recommendation of the committee, herein public respondent, then Minister of Labor and Employment issued the assailed Order dated September 29, 1981 and held that the basic hourly rate designated in the Teachers' Program is regarded as the basic hourly rate of teachers exclusive of the COLA, and that COLA should not be taken from the 60% incremental proceeds of the approved increase in tuition fee. The dispositive portion of the Order reads: PREMISES CONSIDERED, CIT is hereby ordered to pay its teaching staff the following: 1) COLA under P.D.'s 525 and 1123 from February 1978 up to 1981; 2) COLA under P.D.'s l6l4,1634,1678 and l7l3;and 3) Service incentive leave from l978 upto l981. CIT is further directed to integrate into the basic salaries of its teachers and (sic) COLA under P.D.'s 525 and 1123 starting on January 1981, pursuant to P.D. 1751. For purposes of integration, the hourly rate shown in its Teachers' Program for school year 198182 shall be considered as the basic hourly rate. SO ORDERED. Petitioner assails the aforesaid Order in this Special Civil Action of certiorari with Preliminary Injunction and/or Restraining Order. The Court issued a Temporary Restraining Order on December 7, 1981 against the enforcement of the questioned Order of the Minister of Labor and Employment. B. DIVINE WORD COLLEGE OF LEGAZPI CASE Upon a complaint filed by ten faculty members for alleged non-compliance by herein petitioner Divine Word College of Legazpi with, among others, Pres. Dec. No. 451, i.e., allowances were charged to the 60% incremental proceeds of tuition fee increase, the Labor Regulation Section of Regional Office No. V (Legazpi City) of the Ministry of Labor and Employment conducted an inspection of the employment records of said school. On the basis of the report on the special inspection that the school did not comply with Pres. Dec. No. 451, herein respondent Regional Director issued an Order dated May 30, 1983, requiring compliance by the Divine Word College. The latter filed a Memorandum of Appeal from said Order which the Regional Director treated as a Motion for Reconsideration. Upon failure of the school to comply with the aforesaid Order, another Order (August 2, 1983) was issued by herein respondent Regional Director requiring herein petitioner to pay the faculty memberscomplainants (herein private respondents) the amounts indicated therein or the total sum of Six Hundred Seventeen Thousand Nine Hundred Sixty Seven Pesos and Seventy Seven Centavos (P 617,967.77). Petitioner's Motion for Reconsideration of the Order was denied. On appeal, the respondent Deputy Minister of Labor and Employment affirmed the Order of the Regional Director, viz: xxx xxx xxx Coming now to the substantial merit of the case, we share the view that the emergency allowances due the complainants under the several presidential decrees (PD's 525, 1123, etc.)

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cannot be charged by the respondent against the 60% of the incremental proceeds from increase in tuition fees authorized under PD 451, not only because as per decision of the Supreme Court (UE vs. UE Faculty Association, et. al., G.R. No. 57387, September 30, 1982) said allowances whether mandated by law or secured by collective bargaining should be taken only from the return to investment referred to in the decree if the school has no other resources to grant the allowances but not from the 60% incremental proceeds, but also because to hold otherwise would, to our mind, inevitably result in the loss of one benefit due the complainants-that is the salary or wage increase granted them by PD 451. In other words, we believe that by paying the complainants' allowances out of the 60% incremental proceeds intended for their salary increase they are practically being deprived of one benefit-their share in the 60% incremental proceeds in terms of salary or wage increase. WHEREFORE, for the reasons abovestated, the Order appealed from is hereby AFFIRMED, and the appeal DISMISSED, for lack of merit. SO ORDERED. (Annex "K " to Petition; Rollo, p. 108, 110). This special civil action of certiorari and Prohibition with Preliminary Injunction questions the interpretation of, and application by the respondent Deputy Minister, of the provisions of Pres. Dec. No. 45 1, as set forth in the assailed Order. On March 25, 1985, after considering the allegations, issues and arguments adduced in the Petition as well as the Comment thereon of the public respondent and dispensing with the private respondents' Comment, the Court resolved to dismiss the Petition for lack of merit (Rollo, p. 198). On April 26, 1985, petitioner filed a Motion for Reconsideration with Motion to Consider the Case En Banc. On June 26, 1985 the First Division of the Court referred the case to the Court En Banc for consolidation with G.R. No. 70832, entitled "Gregorio T. Fabros, et al vs. Hon. Jaime C. Laya, etc. " since it involves the same issue on the application of 60% incremental proceeds of authorized tuition fee increases [Rollo, p. 235]. The Court EN BANC resolved to accept the case. (Resolution of July 16, 1985). These cases were further consolidated with other cases involving the same issues. C. FAR EASTERN UNIVERSITY CASE On December 17, 1978, petitioner Union filed with the Ministry of Labor and Employment a complaint against respondent University for non-payment of legal holiday pay and under-payment of the thirteenth (13th) month pay. On July 7, 1979, while the case was pending, the Union President, in his personal capacity, filed another complaint for violation of Pres. Dec. No. 451 against the same respondent. The two cases were forthwith consolidated and jointly heard and tried. On March 10, 1980, Labor Arbiter Ruben A. Aquino promulgated a decision the dispositive portion of which is quoted hereunder: RESPONSIVE TO THE FOREGOING, respondent is hereby directed, within ten (10) days from receipt hereof, to: 1. To (sic) pay the paid legal holidays that it withdrew since January 14, 1976 up to the present; and 2. Pay the 13th month pay differential of complainant's for the covered period December 16, 1975 to December 17, 1978, date of filing of complaint for non-payment of legal holiday pay and under payment of the 13th month pay, and thereafter. Barred forever are money claims beyond three (3) years from the time the course (sic) of action occurred. Respondent's formula on transportation allowance which was deducted from the 13th month pay is thus subject to this prescriptive period, for purposes of computation of differentials for the 13th month pay. The claim under PD 451 is hereby dismissed for lack of merit. SO ORDERED. (Annex " E " to Petition; Rollo, p. 55, 65-66). Both parties appealed the decision of the Labor Arbiter. On September 18, 1984, the respondent Commission disposed of the appeal in the following manner: RESPONSIVE TO THE FOREGOING, the Decision of Labor Arbiter Ruben A. Aquino in the instant case dated March 10, 1980 is hereby Modified in the sense that complainant's claims for legal holiday pay and 13th month pay are likewise dismissed for lack of merit and the dismissal of the claim under P.D. 451 is hereby Affirmed en (sic) toto.

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(Annex "A" to Petition: Rollo, p. 24, 35). Petitioner's Motion for Reconsideration dated September 29, 1984 was denied for lack of merit on November 8, 1984. Before this Court is the petition on certiorari filed by the Union assailing the abovementioned decision of the Commissioner. D. FABROS CASE This petition is in the nature of a class suit brought by petitioners in behalf of the faculty members and other employees of more than 4000 private schools nationwide. Petitioners seek to enjoin the implementation of paragraphs 7 to 7.5 of MECS Order No. 5, series of 1985 on the ground that the said order is null and void for being contrary to Pres. Dec. No. 451 and the rulings of the Supreme Court in the cases of University of the East v. UE Faculty Association [G.R. No. L-57387, September 20, 1982, 117 SCRA 5541, University of Pangasinan Faculty Union v. University of Pangasinan and NLRC [G.R. No. 63122, February 20, 1984, 127 SCRA 691 ], St. Louis University Faculty Club v. NLRC and St. Louis University [G.R. No. 65585, September 28, 1984, 132 SCRA 380]. On September 11, 1982, Batas Pambansa Blg. 232 (Education Act of 1982) was signed into law. On the matter of tuition and other school fees of private schools, section 42 of said law provides as follows: Sec. 42. Tuition and other School Fees. Each private School shall determine its rate of tuition and other school fees or charges. The rates and charges adopted by schools pursuant to this provision shall be collectible, and their application or use authorized subject to rules and regulations promulgated by the Ministry of Education, Culture and Sports. (Emphasis supplied). Invoking section 42 of B.P. Blg. 232, among others, as its legal basis, the then Minister of Education Jaime C. Laya promulgated on April 1, 1985 the disputed MECS Order No. 25, s. 1985 entitled Rules and Regulations To Implement the Provisions of B.P. Blg. 232. The Education Act of 1982, Relative to Student Fees for School Year 19851986. The relevant portions of said Order are quoted hereunder: 7. Application or Use of Tuition and Other School Fees or Charges. 7.1. The proceeds from tuition fees and other school charges as well as other income of each school shall be treated as an institutional fund which shall be administered and managed for the support of school purposes strictly: Provided, That for the purpose of generating additional financial resources or income for the operational support and maintenance of each school two or more schools may pool their institutional funds, in whole or in part, subject to the prior approval of their respective governing boards. 7.2. Tuition fees shag be used to cover the general expenses of operating the school in order to allow it to meet the minimum standards required by the Ministry or any other higher standard, to which the school aspires. They may be used to meet the costs of operation for maintaining or improving the quality of instruction/training/research through improved facilities and through the payment of adequate and competitive compensation for its faculty and support personnel, including compliance with mandated increases in personnel compensation and/or allowance. 7.3. Tuition fees shag be used to cover minimum and necessary costs including the following: (a) compensation of school personnel such as teaching or academic staff, school administrators, academic non-teaching personnel, and non-academic personnel, (b) maintenance and operating expenses, including power and utilities, rentals, depreciation, office supplies; and (c) interest expenses and installment payments on school debts. 7.4. Not less than sixty (60) percent of the incremental tuition proceeds shall be used for salaries or wages, allowances and fringe benefits of faculty and support staff, including cost of living allowance, imputed costs of contributed services, thirteenth (13th) month pay, retirement fund contributions, social security, medicare, unpaid school personnel claims and payments as may be prescribed by mandated wage orders. collective bargaining agreements and voluntary employer practices, Provided That increases in fees specifically authorized for the purposes listed in paragraph 4.3.3 hereof shall be used entirely for those purposes. (Italics supplied). 7.5. Other student fees and charges as may be approved, including registration, library, laboratory, athletic, application, testing fees and charges shall be used exclusively for the indicated purposes, including (a) the acquisition and maintenance of equipment, furniture and fixtures, and buildings, (b) the payment of debt amortization and interest charges on debt

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incurred for school laboratory, athletic, or other purposes, and (c) personal services and maintenance and operating expenses incurred to operate the facilities or services for which fees and charges are collected. The Petition prayed for the issuance of a temporary restraining order which was granted by this Court after hearing. The dispositive portion of the resolution dated May 28, 1985 reads as follows: After due consideration of the allegations of the petition dated May 22, 1985 and the arguments of the parties, the Court Resolved to ISSUE, effective immediately and continuing until further orders from this Court, a TEMPORARY RESTRAINING ORDER enjoining the respondent from enforcing or implementing paragraphs 7.4 to 7.5 of MECS Order No. 25, s. 1985, which provide for the use and application of sixty per centum (60%) of the increases in tuition and other school fees or charges authorized by public respondent for the school year 1985-1986 in a manner inconsistent with section 3(a), P.D. No. 451, (which allocates such 60% of the increases exclusively "for increases in salaries or wages of the members of the faculty and other employees of the school concerned.") and directing accordingly that such 60% of the authorized increases shall be held in escrow by the respective colleges and universities, i.e., shall be kept intact and not disbursed for any purpose pending the Court's resolution of the issue of the validity of the aforementioned MECS Order in question. (Rollo, p. 21). In the same resolution, the Philippine Association of Colleges and Universities (PACU) was impleaded as respondent. Subsequent to the issuance of this resolution, four (4) schools, represented in this petition, moved for the lifting of the temporary restraining order as to them. In separate resolutions, this Court granted their prayers. Ateneo de Manila University, De La Sale University (Taft Avenue) and De La Salle University-South, through their respective counsels, manifested that for the school year 1985-1986, tuition fee increase was approved by the MECS and that on the basis of Pres. Dec. No. 451, 60% of the tuition fee increases shall answer for salary increase. However, a budgeted salary increase, exclusive of living allowances and other benefits, was approved for the same school year which when computed amounts to more than the 60%. This Court granted the motions in separate resolutions lifting the temporary restraining order with respect to these schools in order that they may proceed with the implementation of the general salary increase for their employees. In the case of St. Louis University, its Faculty Club, Administrative Personnel Association and the University itself joined in a petition seeking for leave that 49% of the increase in tuition and other fees for school year 1985-1986 be released. Petitioners manifested that the remaining balance shall continue to be held in escrow by the University. In a resolution dated January 28, 1986, the Court resolved as follows: Accordingly, the Temporary Restraining Order issued by this Court on May 28, 1985 is hereby ordered LIFTED with respect to Saint Louis University of Baguio City in order that it may proceed immediately with the implementation of salary increases for its employees. D. BISCOCHO CASE The Espiritu Santo Parochial School and the Espiritu Santo Parochial School Faculty Association were parties to a labor dispute which arose from a deadlock in collective bargaining. The parties entered into conciliation proceedings. The union went on strike after efforts at the conciliation failed. Subsequently, a return to work agreement was forged between the parties and both agreed to submit their labor dispute to the jurisdiction of the Minister of Labor. In the exercise of his power to assume jurisdiction, the Ministry of Labor and Employment issued an Order dated April 14, 1986 which provides for the following: IN CONSIDERATION OF ALL THE FOREGOING, the Ministry hereby declares the strike staged by the Union to be legal and orders the following: a) the School to submit the pertinent record of employment of Romualdo Noriego to the Research and Information Division of the NLRC for computation of his underpayment of wages and for the parties to abide by the said computation;

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b) the School to submit all pertinent record of collections of tuition fee increases for school year (sic) 1982-1983, 1983-1984 and 1984-1985 to the Research and Information Division of the NLRC for proper computation and for equal distribution of the amount to all employees and teachers during the abovementioned school year (sic) as their salary adjustment under P.D. 461; c) the parties to wait for the final resolution of the illegal dismissal (case) docketed as NLRC NCR Case No. 5-1450-85 and to abide by the said resolution; d) to furnish the MECS a copy of this order for them to issue the guidelines in the implementation of PRODED Program; e) the parties to execute a collective bargaining agreement with an economic package equivalent to 90% of the proceeds from tuition fee increases for school year 1985-1986 and another 90% for school year 1986-1987 and 85% for school year 1987-1988. The amount aforementioned shall be divided equally to all members of the bargaining unit as their respective salary adjustments. Such other benefits being enjoyed by the members of the bargaining unit prior to the negotiation of the CBA shall remain the same and shall not be reduced. f) the School to deduct the amount equivalent to ten (10%) per cent of the backwages payable to all members of the bargaining unit as negotiation fee and to deliver the same to the Union Treasurer for proper disposition (Emphasis supplied). SO ORDERED. (Rollo, pp. 16-17) Pursuant to the said order, private respondent Union agreed to incorporate in their proposed collective bargaining agreement (CBA) with the School the following: 2) The Union and School Administration will incorporate the following in their CBA 1) The computation of the tuition fee increase shall be gross to gross from which the corresponding percentage of 90% will be taken. The resulting amount will be divided among 141.5 employees for 1985-86 and 132.5 employees for 1986-87. 1/2 of the resulting increase will be added to basic and divided by 13.3 to arrive at monthly increase in basic. The other 1/2 will be divided by 12.3 to arrive at monthly increase in living allowance. xxx xxx xxx 4) xxx Upon request/demand of the Union, School win deduct from backwages of managerial employees and others outside the bargaining unit what Union win charge its own members in the form of attorney's fees, special assessment and union dues/agency fee. 5) The signing of the CBA and payment of backwages and others shall be on November 26, 1986 at the Espiritu Santo Parochial School Library. (Rollo, pp. 3-4). The herein petitioners, Jasmin Biscocho and 26 others, all employees and faculty members of the respondent School, filed the present petition for prohibition to restrain the implementation of the April 14, 1986 Order of respondent Labor Minister as well as the agreements arrived at pursuant thereto. They contend that said Order and agreements affect their rights to the 60% incremental proceeds under Pres. Dec. No. 451 which provide for the exclusive application of the 60% incremental proceeds to basic salary. Acting on the petitioners' prayer, this Court immediately issued a temporary restraining order on November 25, 1986 ". . . enjoining the respondents from enforcing, implementing and proceeding with the questioned order of April 14, 1986 and collective bargaining agreement executed between respondents Union and the School Administration in pursuance thereof." [Rollo, p. 20]. F. VALMONTE CASE This Petition was filed by parents with children studying at respondent school, Espiritu Santo Parochial School to nullify the Order dated April 14, 1986 issued by public respondent, then Minister of Labor and Employment, specifically paragraphs (e) and (f) thereof, quoted in the Biscocho case. The award contained in the said Order is the result of the assumption of jurisdiction by the public respondent over a labor dispute involving the private respondents school and faculty association. The latter had earlier filed a

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notice of strike because of a bargaining deadlock on the demands of its members for additional economic benefits. After numerous conciliation conferences held while the union was on strike, the parties voluntarily agreed that the public respondent shall assume jurisdiction over all the disputes between them. As to the subject matter of the instant case, the public respondent found that the latest proposals of the respondent school was to give 85% of the proceeds from tuition fee increases for the school years to be divided among the teachers and employees as salary adjustments. What the respondent faculty association offered to accept was a package of 95% for school year 1985-1986, 90% for school year 1986- 1987. The respondent school offered to strike the middle of the two positions, hence the Order complained of by the petitioners [See Annex "A", Petition; Rollo, pp. 9, 14-15; Comment of the Respondent Faculty Association: Rollo, p. 26]. II. RESOLUTION OF THE COMMON LEGAL ISSUE This long-drawn controversy has sadly placed on the balance diverse interests, opposed yet intertwined, and all deserving, and demanding, the protection of the State. On one arm of the balance hang the economic survival of private schools and the private school system, undeniably performing a complementary role in the State's efforts to maintain an adequate educational system in the country. Perched precariously on the other arm of the same balance is the much-needed financial uplift of schoolteachers, extolled for all times as the molders of the minds of youth, hence of every nation's future. Ranged with them with needs and claims as insistent are other school personnel. And then, anxiously waiting at the sidelines, is the interest of the public at large, and of the State, in the continued availability to all who desire it, high-standard education consistent with national goals, at a reasonable and affordable price. Amidst these opposing forces the task at hand becomes saddled with the resultant implications that the interpretation of the law would bear upon such varied interests. But this Court can not go beyond what the legislature has laid down. Its duty is to say what the law is as enacted by the lawmaking body. That is not the same as saying what the law should be or what is the correct rule in a given set of circumstances. It is not the province of the judiciary to look into the wisdom of the law nor to question the policies adopted by the legislative branch. Nor is it the business of this Tribunal to remedy every unjust situation that may arise from the application of a particular law. It is for the legislature to enact remedial legislation if that be necessary in the premises. But as always, with apt judicial caution and cold neutrality, the Court must carry out the delicate function of interpreting the law, guided by the Constitution and existing legislation and mindful of settled jurisprudence. The Court's function is therefore limited, and accordingly, must confine itself to the judicial task of saying what the law is, as enacted by the lawmaking body. FIRST SUB-ISSUE A. Whether or not allowances and other fringe benefits of employees may be charged against the 60% portion of the incremental proceeds provided for in sec. 3(a) of Pres. Dec. No. 451. 1. Arguments raised in the Cebu Institute of Technology case In maintaining its position that the salary increases it had paid to its employees should be considered to have included the COLA, Cebu Institute of Technology (CIT) makes reference to Pres. Dec. No. 451 and its Implementing Rules. The line of reasoning of the petitioner appears to be based on the major premise that under said decree and rules, 60% of the incremental proceeds from tuition fee increases may be applied to salaries, allowances and other benefits of teachers and other school personnel. In support of this major premise, petitioner cites various implementing rules and regulations of the then Minister of Education, Culture and Sports, to the effect that 60% of the incremental proceeds may be applied to salaries, allowances and other benefits for members of the faculty and other school personnel [Petition citing Implementing Rules and Regulations of Pres. Dec. No. 451 of various dates; Rollo, pp. 318-320]. Petitioner concludes that the salary increases it had granted the CIT teachers out of the 60% portion of the incremental proceeds of its tuition fee increases from 1974-1980 pursuant to Pres. Dec. No. 451 and the MECS implementing rules and regulations must be deemed to have included the COLA payable to said employees for those years [Rollo, pp. 911]. With leave of Court, the Philippine Association of Colleges and Universities, filed its Memorandum as Intervenor in support of the proposition that schools may pay the COLA to faculty members and other employees out of the 60% of the increase in tuition fees. In addition to the arguments already set forth in the memorandum of the petitioner CIT, intervenor PACU attacks the Decision of this Court in University of the East v. University of the East Faculty Association et. all G.R. No. 57387 as "not doctrinal" and inapplicable to the CIT case. The Court held in the UE case, which was promulgated on September 30, 1982, during the pendency of these cases, that:

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... allowances and benefits should be chargeable to the return to investment referred to in Sec. 3(a), if the schools should happen to have no other resources than incremental proceeds of authorized tuition fee increases ... (See Dispositive Portion of the Decision) Intervenor PACU alleges that the aforecited U.E. decision does not categorically rule that COLA and other fringe benefits should not be charged against the 60% incremental proceeds of the authorized tuition fee increase. The Solicitor General, on the other hand, argues in support of the Order of the public respondent that Pres. Dec. No. 451 allocates the 60% proceeds of tuition fee increases exclusively for salary increases of teachers and nonteaching supportive personnel of the school concerned, and that the Decree does not provide that said salary increases would take the place of the COLA [Rollo, p. 244-245]. He cites as authority for this stance, two (2) memoranda of the then President dated June 6, 1978 and March 30, 1979 both of which provide that the 60% incremental proceeds of tuition fee increases "shall be allocated for the increase in the salaries of teachers and supportive personnel. " Anent the U.E. case, the Solicitor General states that the Supreme Court in deciding said case took note of the stand of the Office of the President that the 60% incremental proceeds shall be solely applied to salaries of faculty members and employees. On August 7, 1986, considering the supervening events, including the change of administration, that have transpired during the pendency of these cases, the Court required the Solicitor General to state whether or not he maintains the action and position taken by his predecessor-in-office. In his Compliance with said Resolution, the Solicitor General Manifested the position that: a. If the tuition fee increase was collected during the effectivity oil Presidential Decree No. 451, 60% thereof shall answer exclusively for salary increase of school personnel. Other employment benefits shall be covered by the 12% allocated for return of investment, this is in accordance with the ruling of this Honorable Court in University of the East vs. U.E. Faculty Association, et. al (117 SCRA 554), ... and reiterated in University of Pangasinan Faculty Union v. University of Pangasinan, et. al. (127 SCRA 691) and St. Louis Faculty Club u. NLRC (132 SCRA 380). b. If the salary increase was collected during the effectivity of Batas Pambansa Blg. (sic) 232, 60% thereof shall answer not only for salary increase of school personnel but also for other employment benefits. (Rollo, at pp. 513-514) 2. Arguments raised in the Divine Word College Case Petitioner Divine Word College of Legazpi (DWC) advances the theory that the COLA, 13th month pay and other personnel benefits decreed by law, must be deemed chargeable against the 60% portion allocated for increase of salaries or wages of faculty and all other school employees. In support of this stance, petitioner points out that said personnel benefits are not included in the enumeration of the items for which the balance (less 60%) or 40% portion of the incremental proceeds may be alloted under section 3(a) of Pres. Dec. No. 451 [Rollo, pp. 29-30. Petitioner likewise cites the interpretation of the respondent Minister of Education, Culture and Sports embodied in the Implementing Rules and Regulations of P.D. 451, DEC Issuance, May 13, 1987; Rollo, p. 30], that the 60% incremental proceeds of authorized tuition fee increases may be applied to increases in emoluments and/or benefits for members of faculty, including staff and administrative employees of the school as the valid interpretation of the law, as against that made by the respondent Deputy Minister of Labor in the assailed Order. If the latter interpretation is upheld, petitioner would go as far as questioning the constitutionality of Pres. Dec. No. 451 upon the ground that the same discriminates against the petitioner and other private schools as a class of employers. According to the petitioner, the discrimination takes the form of requiring said class of employers to give 60% of their profits to their employees in addition to the COLA mandated by law, while other employers have to contend only with salary increases and COLA [Petition; Rollo, p. 46]. With regard to the Decision of this Court in the U.E. case, petitioner claims exemption therefrom upon the ground that the Court's interpretation of a law cannot be applied retroactively to parties who have relied upon the previous administrative interpretation which has not been declared invalid or unconstitutional [Petition; Rollo, pp. 50-51 1. Petitioner further argues on this point that if the court had intended to invalidate the MECS interpretation of the Decree, it should have positively stated so in the Decision [Petition; Rollo, p. 50]. The Comment of the public respondents cite as settled jurisprudence applicable to the case at bar, the ruling of this Court in the U.E. case, supra, which was reiterated in the subsequent cases of University of Pangasinan Faculty Union v. University of Pangasinan et all and St. Louis Faculty Club v. NLRC, et al.

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Public respondents Deputy Minister of Labor and Employment and Regional Director of the MOLE (Region V) likewise attack the validity of the Revised Implementing Rules and Regulations of Pres. Dec. No. 451 cited by the petitioner insofar as said rules direct the allotment of the 60% of incremental proceeds from tuition fee hikes for retirement plan, faculty development and allowances. They argue that said rules and regulations were invalid for having been promulgated in excess of the rule-making authority of the then Minister of Education under Pres. Dec. No. 451 which mandates that the 60% of incremental proceeds from tuition fee hikes should be allotted solely for salary increases [Comment; Rollo, pp. 184-185]. Finally, with respect to the issue on the allege unconstitutionality of Pres. Dec. No. 451, the public respondents posit that a legislation (such as Pres. Dec. No. 451) which affects a particular class does not infringe the constitutional guarantee of equal protection of the law as long as it applies uniformly and without discrimination to everyone of that class [Comment; Rollo, p. 14]. 3. Arguments raised in the Far Eastern University case It is the petitioner's contention that in respect of Pres. Dec. No. 451, the decision of the NLRC is a defiance of the rulings of this Court in the cases of University of the East v. U.E. Faculty, Association et al. and of University of Pangasinan Faculty Union v. University of Pangasinan and NLRC (supra). The Union submits that monetary benefits, other than increases in basic salary, are not chargeable to the 60% incremental proceeds. The respondent University in its Comment dated June 13, 1982 refers to Article 97(f) of the Labor Code which provides a definition of the term "wages" to support its position that "salaries or wages" as used in Pres. Dec. No. 451 should be interpreted to include other benefits in terms of money. As mentioned in the Cebu Institute of Technology case, the Solicitor General filed its Compliance with this Court's resolution dated August 7, 1986 requiring him to manifest whether public respondents maintain the position they have taken in these consolidated cases. The resolution of September 25, 1986 required petitioners to Comment on said Compliance. The Comment dated December 6, 1986 was received by this Court after petitioner Union was required to show cause why no disciplinary action should be taken against them for failure to comply earlier. The Union agreed with the position taken by the Solicitor General that under Pres. Dec. No. 451, 60% of the tuition fee increases, shall answer exclusively for salary increase. However, it expressed disagreement with the opinion that during the effectivity of B.P. Blg. 232, the 60% ncremental proceeds shall answer not only for salary increases but also for other employment benefits. The Union argues that whereas "Pres. Dec. No. 451 is a law on a particular subject, viz., increase of tuition fee by educational institutions and how such increase shall be allocated B.P. Blg. 232 is not a law on a particular subject of increase of tuition fee . . . ; at most it is a general legislation on tuition fee as it touches on such subject in general, " [Comment on Compliance; Rollo, p. 376], Suppletory to its argument that B.P. Blg. 232 did not impliedly repeal Pres. Dec. No. 451, the Union also invokes the principle that a special or particular law cannot be repealed by a general law. RESOLUTION OF THE FIRST SUB-ISSUE This Court has consistently held, beginning with the University of the East case, that if the schools have no resources other than those derived from tuition fee increases, allowances and benefits should be charged against the proceeds of tuition fee increases which the law allows for return on investments under section 3(a) of Pres. Dec. No. 451, therefore, not against the 60% portion allocated for increases in salaries and wages (See 117 SCRA at 571). This ruling was reiterated in the University of Pangasinan case and in the Saint Louis University case. There is no cogent reason to reverse the Court's ruling in the aforecited cases. Section 3(a) of Pres. Dec. No. 451 imposes among the conditions for the approval of tuition fee increases, the allocation of 60% per cent of the incremental proceeds thereof for increases in salaries or wages of school personnel and not for any other item such as allowances or other fringe benefits. As aptly put by the Court in University of Pangasinan Faculty Union v. University of Pangasinan, supra: ... The sixty (60%) percent incremental proceeds from the tuition increase are to be devoted entirely to wage or salary increases which means increases in basic salary. The law cannot be construed to include allowances which are benefits over and above the basic salaries of the employees. To charge such benefits to the 60% incremental proceeds would be to reduce the increase in basic salary provided by law, an increase intended also to help the teachers and other workers tide themselves and their families over these difficult economic times. [Italics supplied] (127 SCRA 691, 702). This interpretation of the law is consistent with the legislative intent expressed in the Decree itself, i.e., to alleviate the sad plight of private schools and that of their personnel wrought by slump in enrollment and increasing

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operational costs on the part of the schools, and the increasing costs of living on the part of the personnel (Preamble, Pres. Dec. No. 451). While coming to the aid of the private school system by simplifying the procedure for increasing tuition fees, the Decree imposes as a condition for the approval of any such increase in fees, the allocation of 60% of the incremental proceeds thereof, to increases in salaries or wages of school personnel. This condition makes for a quid pro quo of the approval of any tuition fee hike by a school, thereby assuring the school personnel concerned, of a share in its proceeds. The condition having been imposed to attain one of the main objectives of the Decree, which is to help the school personnel cope with the increasing costs of living, the same cannot be interpreted in a sense that would diminish the benefit granted said personnel. In the light of existing laws which exclude allowances from the basic salary or wage in the computation of the amount of retirement and other benefits payable to an employee, this Court will not adopt a different meaning of the terms "salaries or wages" to mean the opposite, i.e. to include allowances in the concept of salaries or wages. As to the alleged implementing rules and regulations promulgated by the then MECS to the effect that allowances and other benefits may be charged against the 60% portion of the proceeds of tuition fee increases provided for in Section 3(a) of Pres. Dec. No. 45 1, suffice it to say that these were issued ultra vires, and therefore not binding upon this Court. The rule-making authority granted by Pres. Dec. No. 451 is confined to the implementation of the Decree and to the imposition of limitations upon the approval of tuition fee increases, to wit: SEC. 4. Rules and Regulations. The Secretary of Education and Culture is hereby authorized, empowered and directed to issue the requisite rules and regulations for the effective implementation of this Decree. He may, in addition to the requirements and limitations provided for under Sections 2 and 3 hereof, impose other requirements and limitations as he may deem proper and reasonable. The power does not allow the inclusion of other items in addition to those for which 60% of the proceeds of tuition fee increases are allocated under Section 3(a) of the Decree. Rules and regulations promulgated in accordance with the power conferred by law would have the force and effect of law [Victorias Milling Company, Inc. v. Social Security Commission, 114 Phil. 555 (1962)] if the same are germane to the subjects of the legislation and if they conform with the standards prescribed by the same law [People v. Maceren, G.R. No. L-32166, October 18, 1977, 79 SCRA 450]. Since the implementing rules and regulations cited by the private schools adds allowances and other benefits to the items included in the allocation of 60% of the proceeds of tuition fee increases expressly provided for by law, the same were issued in excess of the rule-making authority of said agency, and therefore without binding effect upon the courts. At best the same may be treated as administrative interpretations of the law and as such, they may be set aside by this Court in the final determination of what the law means. SECOND SUB-ISSUE B. Whether or not allowances and other fringe benefits may be charged against the 60% portion of the incremental proceeds of tuition fee increases upon the effectivity of the Education Act of 1982 (B.P. Blg. 232). 1. Arguments raised in the Fabros case In assailing MECS Order No. 25, s. 1985, petitioners argue that the matter of allocating the proceeds from tuition fee increases is still governed by Pres. Dec. No. 451. It is their opinion that section 42 of B.P. Blg. 232 did not repeal Pres. Dec. No. 451 for the following reasons: first, there is no conflict between section 42 of B.P. Blg. 232 and section 3(a) of Pres. Dec. No. 451 or any semblance of inconsistency to deduce a case of a repeal by implication: second, Pres. Dec. No. 451 is a specific law upon a particular subject-the purposes and distribution of the incremental proceeds of tuition fee increases, while B.P. Blg. 232 is a general law on the educational system; as such, a specific law is not repealed by a subsequent general law in the absence of a clear intention; and third, Pres. Dec. No. 451 is still the only law on the subject of tuition fee increases there being no prescription or provision in section 42 of B.P. Blg. 232 or elsewhere in the law. They furthermore aver that the disputed MECS Order which imposed additional burdens against the 60% incremental proceeds of tuition fee increases are not provided in either Pres. Dec. No. 451 or B.P. Blg. 232. The logical result as intimated by petitioners is that the inclusion of paragraph 7.4 and related paragraphs 7 to 7.3 and 7.5 in the questioned MECS order contravenes the statutory authority granted to the public respondent, and the same are therefore, void. Respondent PACU takes the contrary view contending that MECS Order No. 25, s. 1985, complies with the mandate of section 42 of B.P. Blg. 232 which law had already repealed Pres. Dec. No. 451. PACU notes that the

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University of the East case invoked by petitioners is not applicable because the issue in that case does not involve the effect of B.P. Blg. 232 on Pres. Dec. No. 451. The Solicitor General, representing the public respondent, after giving a summary of the matters raised by petitioner and respondent PACU, points out that the decisive issue in this case is whether B.P. Big. 232 has repealed Pres. Dec. No. 451 because on the answer to this question depends the validity of MECS Order No. 25, s. 1985. Public respondent holds the view consistent with that of PACU on the matter of B.P. Blg. 232 having repealed Pres. Dec. No. 451. To support this contention, the Solicitor General compared the respective provisions of the two laws to show the inconsistency and incompatibility which would result in a repeal by implication. RESOLUTION OF THE SECOND SUB-ISSUE On the matter of tuition fee increases section 42 of B.P. Blg. 232 provides: SEC. 42. Tuition and Other School Fees. Each private school shall determine its rate of tuition and other school fees or charges. The rates and charges adopted by schools pursuant to this provision shall be collectible and their application or use authorized, subject to rules and regulations promulgated by the Ministry of Education, Culture and Sports. (Emphasis supplied). The enactment of B.P. Blg. 232 and the subsequent issuance of MECS Order No. 25, s. 1985 revived the old controversy on the application and use of the incremental proceeds from tuition fee increases. As can be gleaned from the pleadings and arguments of the parties in these cases, one side, composed of the teachers and other employees of the private schools, insist on the applicability of section 3(a) of Pres. Dec. No. 451 as interpreted arid applied in the University of the East, University of Pangasinan and St Louis University cases, while the private schools uphold the view that the matter of allocating the incremental proceeds from tuition fee increases is governed by section 42 of B.P. Blg. 232 as implemented by the MECS Rules and Regulations. As stated, the latter's argument is premised on the allegation that B.P. Blg. 232 impliedly repealed Pres. Dec. No. 451. On the second sub-issue, therefore, this Court upholds the view taken by the Solicitor General in the Fabros case, that the decisive issue is whether B.P. Blg. 232 has repealed Pres. Dec. No. 451. In recognition of the vital role of private schools in the country's educational system, the government has provided measures to regulate their activities. As early as March 10, 1917, the power to inspect private schools, to regulate their activities, to give them official permits to operate under certain conditions and to revoke such permits for cause was granted to the then Secretary of Public Instruction by Act No. 2706 as amended by Act No. 3075 and Commonwealth Act No. 180. Republic Act No. 6139, enacted on August 31, 1970, provided for the regulation of tuition and other fees charged by private schools in order to discourage the collection of exorbitant and unreasonable fees. In an effort to simplify the "cumbersome and time consuming" procedure prescribed under Rep. Act No. 6139 and "to alleviate the sad plight of private schools," Pres. Dec. No. 451 was enacted on May 11, 1974. While this later statute was being implemented, the legislative body envisioned a comprehensive legislation which would introduce changes and chart directions in the educational system, hence, the enactment of B.P. Blg. 232. What then was the effect of B.P. Blg. 232 on Pres. Dec. No. 451? The Court after comparing section 42 of B.P. Blg. 232 and Pres. Dec. No. 451, particularly section 3(a) thereof, finds evident irreconcilable differences. Under Pres. Dec. No. 451, the authority to regulate the imposition of tuition and other school fees or charges by private schools is lodged with the Secretary of Education and Culture (Sec. 1), where section 42 of B.P. Blg. 232 liberalized the procedure by empowering each private school to determine its rate of tuition and other school fees or charges. Pres. Dec. No. 451 provides that 60% of the incremental proceeds of tuition fee increases shall be applied or used to augment the salaries and wages of members of the faculty and other employees of the school, while B.P. Blg. 232 provides that the increment shall be applied or used in accordance with the regulations promulgated by the MECS. A closer look at these differences leads the Court to resolve the question in favor of repeal. As pointed out by the Solicitor General, three aspects of the disputed provisions of law support the above conclusion. First, the legislative authority under Pres. Dec. No. 451 retained the power to apportion the incremental proceeds of the tuition fee increases; such power is delegated to the Ministry of Education and Culture under B.P. Blg. 232. Second, Pres. Dec. No. 451 limits the application or use of the increment to salary or wage increase, institutional development, student assistance and extension services and return on investment, whereas B.P. Blg. 232 gives the MECS discretion to determine the application or use of the increments. Third, the extent of the application or use of the increment under Pres. Dec. No. 451 is fixed at the pre-determined percentage allocations; 60% for wage and salary

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increases, 12% for return in investment and the balance of 28% to institutional development, student assistance and extension services, while under B.P. Blg. 232, the extent of the allocation or use of the increment is likewise left to the discretion of the MECS. The legislative intent to depart from the statutory limitations under Pres. Dec. No. 451 is apparent in the second sentence of section 42 of B.P. Blg. 232. Pres. Dec. No. 451 and section 42 of B.P. Blg. 232 which cover the same subject matter, are so clearly inconsistent and incompatible with each other that there is no other conclusion but that the latter repeals the former in accordance with section 72 of B.P. Blg. 232 to wit: Sec. 72. Repealing clause. All laws or parts thereof inconsistent with any provision of this Act shall be deemed repealed or modified, as the case may be. Opinion No. 16 of the Ministry of Justice dated January 29, 1985, quoted below, supports the above conclusion: Both P.D. No. 451 and B.P. Blg. 232 deal with the imposition of tuition and other school fees or charges and their use and application, although the latter is broader in scope as it covers other aspects of the education system. We note substantial differences or inconsistencies between the provisions of the two laws. P.D. No. 451 prescribes certain limitations in the increase of tuition and other school fees and their application, whereas the latter law, B.P. Blg. 232 s silent on the matter. Under P.D. 451, rates of tuition/school fees need prior approval of the Secretary of Education, Culture (now Minister of Education, Culture and Sports), who also determines the reasonable rates for new school fees, whereas under B.P. Blg. 232, each private school determines its rate of tuition and other school fees or charges. P.D. No. 451 authorizes the Secretary of Education and Culture to issue requisite rules and regulations to implement the said Decree and for that purpose, he is empowered to impose other requirements and limitations as he may deem proper and reasonable in addition to the limitations prescribed by the Decree for increases in tuition fees and school charges, particularly, the limitations imposed in the allocation of increases in fees and charges, whereas under B.P. Blg. 232, the collection and application or use of rates and charges adopted by the school are subject to rules and regulations promulgated by the Ministry of Education, Culture and Sports without any mention of the statutory limitations on the application or use of the fees or charges. The authority granted to private schools to determine its rates of tuition and unconditional authority vested in the Ministry of Education, Culture and Sports to determine by rules and regulations the collection and application or use of tuition or fees rates and charges under B.P. Big. 232 constitute substantial and irreconcilable incompatibility with the provisions of P.D. No. 451, which should be for that reason deemed to have been abrogated by the subsequent legislation. Moreover, B.P. Blg. 232 is a comprehensive legislation dealing with the establishment and maintenance of an integrated system of education and as such, covers the entire subject matter of the earlier law, P.D. No. 451. The omission of the limitations or conditions imposed in P.D. No. 451 for increases in tuition fees and school charges is an indication of a legislative intent to do away with the said limitations or conditions. (Crawford, supra, p. 674). It has also been said that an act which purports to set out in full all that it intends to contain, operates as a repeal of anything omitted which was contained in the old act and not included in the amendatory act." (People vs. Almuete 69 SCRA 410; People vs. Adillo 68 SCRA 90) (Ministry of Justice, Op. No. 16, s. 1985). Having concluded that under B.P. Big. 232 the collection and application or use of tuition and other school fees are subject only to the limitations under the rules and regulations issued by the Ministry, the crucial point now shifts to the said implementing rules. The guidelines and regulations on tuition and other school fees issued after the enactment of B.P. Blg. 232 consistently permit the charging of allowances and other benefits against the 60% incremental proceeds. Such was the tenor in the MECS Order No. 23, s. 1983; MECS Order No. 15, s. 1984; MECS Order No. 25, s. 1985; MECS Order No. 22, s. 1986; and DECS Order No. 37, s. 1987. The pertinent portion of the latest order reads thus: In any case of increase at least sixty percent (60%) of the incremental proceeds should be allocated for increases in or provisions for salaries or wages, allowances and fringe benefits of faculty and other staff, including accruals to cost of living allowance, 13th month pay, social

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security, medicare and retirement contribution and increases as may be provided in mandated wage orders, collective bargaining agreements or voluntary employer practices. The validity of these orders, particularly MECS Order No. 25, s. 1985, is attacked on the ground that the additional burdens charged against ". . . the 60% of the proceeds of the increases in tuition fees constitute both as [sic] an excess of statutory authority and as (sic) a substantial impairment of the accrued, existing and protected rights and benefits of the members of faculty and non-academic personnel of private schools." Memorandum for Petitioners, Rollo, p. 1911. Petitioners alleged that these additional burdens under the MECS Order are not provided in the law itself, either in section 42 of B.P. Blg. 232 or section 3(a) of Pres. Dec. No. 451, except increases in salaries in the latter provision. Section 42 of B.P. Blg. 232 grants to the Minister of Education (now Secretary of Education) rule-making authority to fill in the details on the application or use of tuition fees and other school charges. In the same vein is section 70 of the same law which states: SEC. 70. Rule-making Authority. The Minister of Education, Culture and Sports charged with the administration and enforcement of this Act, shall promulgate the necessary implementing rules and regulations. Contrary to the petitioners' insistence that the questioned rules and regulations contravene the statutory authority granted to the Minister of Education, this Court finds that there was a valid exercise of rule-making authority. The statutory grant of rule-making power to administrative agencies like the Secretary of Education is a valid exception to the rule on non-delegation of legislative power provided two conditions concur, namely: 1) the statute is complete in itself, setting forth the policy to be executed by the agency, and 2) said statute fixes a standard to which the latter must conform [Vigan Electric Light Co., Inc. v. Public Service Commission, G.R. No. L19850, January 30, 1964, and Pelaez v. Auditor General, G. R. No. L-23825, December 24, 1965]. The Education Act of 1982 is "an act providing for the establishment and maintenance of an integrated system for education " with the following basic policy: It is the policy of the State to establish and maintain a complete, adequate and integrated system of education relevant to the goals of national development. Toward this end, the government shall ensure, within the context of a free and democratic system, maximum contribution of the educational system to the attainment of the following national development goals: 1. To achieve and maintain an accelerating rate of economic development and social progress; 2. To assure the maximum participation of all the people in the attainment and enjoyment of the benefits of such growth; and 3. To achieve and strengthen national unity and consciousness and preserve, develop and promote desirable cultural, moral and spiritual values in a changing world. The State shall promote the right of every individual to relevant quality education, regardless of sex, age, creed, socioeconomic status, physical and mental conditions, racial or ethnic origin, political or other affiliation. The State shall therefore promote and maintain equality of access to education as well as the enjoyment of the benefits of education by all its citizens. The State shall promote the right of the nation's cultural communities in the exercise of their right to develop themselves within the context of their cultures, customs, traditions, interests and belief, and recognizes education as an instrument for their maximum participation in national development and in ensuring their involvement in achieving national unity. (Section 3, Declaration of Basic Policy). With the foregoing basic policy as well as, specific policies clearly set forth in its various provisions, the Act is complete in itself and does not leave any part of the policy-making, a strictly legislative function, to any administrative agency. Coming now to the presence or absence of standards to guide the Minister of Education in the exercise of rulemaking power, the pronouncement in Edu v. Ericta [G.R. No. L-32096, October 24, 1970, 35 SCRA 481, 497] is relevant: The standard may be either expressed or implied. If the former, the non-delegation objection is easily met. The standard though does not have to be spelled out specifically. It could be implied from the policy and purpose of the act considered as a whole. In the Reflector Law, clearly the legislative objective is public safety. What is sought to be attained as in Calalang v. Williams is "safe transit upon the roads." (Italics supplied).

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Thus, in the recent case of Tablarin et al. v. Hon. Gutierrez, et al. (G.R. No. 78164, July 31, 1987], the Court held that the necessary standards are set forth in Section 1 of the 1959 Medical Act, i.e., "the standardization and regulation of medical education" as well as in other provisions of the Act. Similarly, the standards to be complied with by Minister of Education in this case may be found in the various policies set forth in the Education Act of 1982. MECS Order No. 25, s. 1985 touches upon the economic relationship between some members and elements of the educational community, i.e., the private schools and their faculty and support staff. In prescribing the minimum percentage of tuition fee increments to be applied to the salaries, allowances and fringe benefits of the faculty and support staff, the Act affects the economic status and the living and working conditions of school personnel, as well as the funding of the private schools. The policies and objectives on the welfare and interests of the various members of the educational community are found in section 5 of B.P. Blg. 232. which states: SEC. 5. Declaration of Policy and Objectives. It is likewise declared government policy to foster, at all times, a spirit of shared purposes and cooperation among the members and elements of the educational community, and between the community and other sectors of society, in the realization that only in such an atmosphere can the true goals and objectives of education be fulfilled. Moreover, the State shall: 1. Aid and support the natural right and duty of parents in the rearing of the youth through the educational system. 2. Promote and safeguard the welfare and interests of the students by defining their rights and obligations, according them privileges, and encouraging the establishment of sound relationships between them and the other members of the school community. 3. Promote the social and economic status of an school personnel, uphold their rights, define their obligations, and improve their living and working conditions and career prospects. 4. Extend support to promote the viability of those institutions through which parents, students and school personnel seek to attain their educational goals. On the other hand, the policy on the funding of schools in general, are laid down in section 33: SEC. 33. Declaration of Policy. It is hereby declared to be a policy of the State that the national government shall contribute to the financial support of educational programs pursuant to the goals of education as declared in the Constitution. Towards this end, the government shall: 1. Adopt measures to broaden access to education through financial assistance and other forms of incentives to schools, teachers, pupils and students; and 2. Encourage and stimulate private support to education through, inter alia, fiscal and other assistance measures. Given the abovementioned policies and objectives, there are sufficient standards to guide the Minister of Education in promulgating rules and regulations to implement the provisions of the Education Act of 1982, As in the Ericta and Tablarin cases, there is sufficient compliance with the requirements of the non-delegation principle. THIRD SUB-ISSUE C. Whether or not schools and their employees may enter into a collective bargaining agreement allocating more than 60% of said incremental proceeds for salary increases and other benefits of said employees. 1. Arguments raised in the Biscocho and Valmonte cases Assailed by the petitioners in the Biscocho and the Valmonte cases is the Order of the respondent Minister of Labor directing the execution of a CBA between the school and the respondent Espiritu Santo Parochial School Faculty Association which provides for an economic package equivalent to 90% of the proceeds of tuition fee increases for school year 1985-1986, another 90% for school year 1986-1987 and 85% for school year 1987-1988. Pursuant to said Order, petitioners in the Biscocho case alleged that the parties had agreed to incorporate in their CBA a provision which allocates one-half (1/2) of the 90% portion of the proceeds or 45% to increases in the monthly basic salaries and the other one-half (1/2) or 45% to increases in monthly living allowance. The petitioners in the two cases seek the nullification of the MOLE Order for exactly opposite reasons. In the Biscocho case, the controversy springs from what petitioners perceive to be a diminution of the benefits to be received by the school employees insofar as the CBA allocates only 45% for salary increases instead of 60%, which

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petitioners claim to be the portion set aside by Pres. Dec. No. 451 for that purpose. Parenthetically, the case questions the allocation of the remaining 45% of the 90% economic package under the CBA, to allowances. Stripped down to its essentials, the question is whether or not the 90% portion of the proceeds of tuition fee increases alloted for the economic package may be allocated for both salary increases and allowances. On the other hand, petitioners in the Valmonte case believe that the MOLE cannot order the execution of a CBA which would allocate more than 60% of the proceeds of tuition fee increases for salary increases of school employees. Furthermore, petitioners question the authority of the then Minister of Labor and Employment to issue the aforequoted Order insofar as this allocates the tuition fee increases of the respondent private school. According to them, only the Minister of Education, Culture and Sports has the authority to promulgate rules and regulations on the use of tuition fees and increases thereto, pursuant to the provisions of B.P. Blg. 232. They further argue that the assailed Order collides with the provisions of Pres. Dec. No. 451 insofar as it allocates 90% of the tuition fee increases for salary adjustments of the members of the bargaining unit which exceeds the 60% of the said increases allocated by the Decree for the same purpose. Before delving further into the questions raised, this Court notes that in the Valmonte case, respondent Minister and respondent Faculty Association raise a procedural objection to the filing of the Petition: the standing of the petitioners to bring this suit. Both respondents decry the petitioners' lack of the interest required in Rule 65 of the Rules of Court for the filing of the Petition for certiorari and Prohibition, since the latter do not appear to be in any way aggrieved by the enforcement of the Order. Petitioners-parents did not even participate in the proceedings below which led to the issuance of the assailed Order. This Court finds merit in the respondents' objection. Under Rule 65 of the Rules of Court (Secs. 1 and 2), only a person aggrieved by the act or proceeding in question may file a petition for certiorari and/or prohibition. The Valmonte petition fails to indicate how the petitioners would be aggrieved by the assailed Order. It appears that the petitioners are not parties and never at any time intervened in the conciliation conferences and arbitration proceedings before the respondent Minister. The parties therein, who stand to be directly affected by the Order of the respondent Minister, do not contest the validity of said Order. The petition does not even state that petitioners act as representative of the parents' association in the School or in behalf of other parents similarly situated. If indeed, petitioners Valmonte and Badiola are aggrieved by the said Order, they should have intervened and moved for a reconsideration of respondent Minister's Order before filing the instant petition. Petitioners failed to show that the case falls under any one of the recognized exceptions to the rule that a motion for reconsideration should first be availed of before filing a petition for certiorari and prohibition. In view of the foregoing, the resolution of the third sub-issue will be based mainly on the arguments raised in the Biscocho case. RESOLUTION OF THE THIRD SUB-ISSUE The Biscocho case involves the issue on the allocation of the incremental proceeds of the tuition fee increases applied for by the respondent Espiritu Santo Parochial School for school years 1985-1986, 1986-1987, and 19871988. With the repeal of Pres. Dec. No. 451 by B.P. Blg. 232, the allocation of the proceeds of any authorized tuition fee increase must be governed by specific rules and regulations issued by the Minister (now Secretary) of Education pursuant to his broadened rule making authority under section 42 of the new law. Thus, insofar as the proceeds of the authorized tuition fee increases for school year 1985-1986 are concerned, the allocation must conform with the pertinent section of MECS Order No. 25, s. 1985, to wit: 7. Application or Use of Tuition and Other School Fees or Charges. xxx xxx xxx 7.4. Not less than sixty (60) percent of the incremental tuition proceeds shall be used for salaries or wages, allowances and fringe benefits of faculty and support staff, including cost of living allowance, imputed costs of contributed services, thirteenth (13th) month pay, retirement fund contributions, social security, medicare, unpaid school personnel claims, and payments as may be prescribed by mandated wage orders, collective bargaining agreements and voluntary employer practices: Provided, That increases in fees specifically authorized for the purposes fisted in paragraph 4.3.3 hereof shall be used entirely for those purposes. xxx xxx xxx

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With regard to the proceeds of the tuition fee increases for school year 1986-1987, the applicable rules are those embodied in MECS Order No. 22, s. 1986 which made reference to MECS Order No. 25, s. 1985, the pertinent portion of which is quoted above. Finally, as to the proceeds of the tuition fee increases for school year 1987- 1988, DECS Order No. 37, s. 1987 must apply: c. Allocation of lncremental Proceeds (1) In any case of increase at least sixty percent (60%) of the incremental proceeds should be allocated for increases in or provisions for salaries or wages, allowances and fringe benefits of faculty and other staff, including accruals to cost of living allowance, 13th month pay, social security, medicare and retirement contributions and increases as may be provided in mandated wage orders, collective bargaining agreements or voluntary employer practices. (2) Provided, that in all cases of increase the allocation of the incremental proceeds shall be without prejudice to the Supreme Court cases on the interpretation and applicability of existing legislations on tuition and other fees especially on the allocation and use of any incremental proceeds of tuition and other fees increases. (Emphasis supplied). xxx xxx xxx Based on the aforequoted MECS and DECS rules and regulations which implement BP Blg. 232, the 60% portion of the proceeds of tuition fee increases may now be allotted for both salaries and allowances and other benefits. The 60% figure is, however, a minimum which means that schools and their employees may agree on a larger portion, or in this case, as much as 90% for salaries and allowances and other benefits. This is not in anyway to allow diminution or loss of the portion allotted for institutional development of the school concerned. Thus, paragraph 7.5 of MECS Order No. 25, series of 1985 specifically provides that other student fees and charges like registration, library, laboratory or athletic fees shall be used exclusively for the purposes indicated. III RESOLUTION OF THE SPECIFIC ISSUES CEBU INSTITUTE OF TECHNOLOGY CASE Petitioner assigns three other errors in the petition for certiorari: 1 RESPONDENT MINISTER OF THE MINISTRY OF LABOR AND EMPLOYMENT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO A DENIAL OF DUE PROCESS OF LAW IN DIRECTLY ISSUING THE ORDER DATED SEPTEMBER 29,1981 WITHOUT CONDUCTING A FORMAL INVESTIGATION AND ARBITRATION PROCEEDINGS. 2 PUBLIC RESPONDENT ERRED IN NOT DECLARING THAT PETITIONER IS EXEMPTED AND/OR NOT OBLIGED TO PAY SERVICE INCENTIVE LEAVE. 3 PUBLIC RESPONDENT ERRED IN NOT DECLARING THAT PRIVATE RESPONDENTS' CLAIMS FOR COLA AND SERVICE INCENTIVE LEAVE ARE FULLY BARRED BY LACHES AND/OR EXTINGUISHED BY PRESCRIPTION. 1. Petitioner assails the Order of the Minister of Labor on the ground that the same was issued without the benefit of a hearing and was merely based on the report of the labor management committee which is allegedly without power to pass upon the issues raised. On this premise, petitioner claims that it was denied its right to due process. Petitioner's contention is without merit. The Labor Management Committee was empowered to investigate the complaint against the petitioner for non-payment of the cost of living allowance, 13th month pay and service incentive leave from 1974-1981 [Annex "F"; Rollo, p. 37]. In the committee, petitioner was represented by its counsel, registrar and assistant accountant and in the conferences that were held, the representatives of the petitioner were present. Furthermore, the petitioner's position paper submitted to the committee reflects that in all the deliberations, it was never denied the right to present evidence and be heard on all the issues raised, particularly to demonstrate that it had complied with the various COLA, 13th month pay and service incentive leave decrees. The evidence presented during the conferences and the position paper of the parties were made the basis of the committee's report and recommendation which in turn became the basis of the order of the Minister of Labor directing the petitioner to pay the complainants their COLA and service incentive leave benefits. It could not therefore be contended that the petitioner was deprived of his right to be heard when it appears on the record that it was permitted to ventilate its side of the issues. There was sufficient compliance with the requirements of due process. In the face of the well- settled principle that administrative agencies are not strictly bound by the technical rules of procedure, this Court dismisses the petitioner's claim that formal investigative and

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arbitration proceedings should be conducted. "While a day in court is a matter of right in judicial proceedings, in administrative proceedings it is otherwise since they rest upon different principles." [Cornejo v. Gabriel and Provincial Board of Rizal, 41 Phil. 188 (1920); Tajonera v. Lamaroza, G.R. Nos. L-48907 and L-49035, December 19,1981, 110 SCRA 438]. 2. Going now to the matter of service incentive leave benefits, petitioner claims that private respondents are engaged by the school on a contract basis as shown by the individual teachers contract which defines the nature, scope and period of their employment; hence, they are not entitled to the said benefit according to Rule V of the Implementing Rules and Regulations of the Labor Code to wit: Sec. 1. Coverage. This rule [on Service Incentive Leave] shall apply to all employees, except: xxx xxx xxx (d) Field personnel and other employees whose performance is unsupervised by the employer including those who are engaged on task or contract basis, purely commission basis, or those who are paid in a fixed amount for performing work irrespective of the time consumed in the performance thereof; (MOLE Rules and Regulations, Rule V, Book III) The phrase "those who are engaged on task or contract basis" should however, be related with "field personnel " applying the rule on ejusdem generis that general and unlimited terms are restrained and limited by the particular terms that they follow, [Vera v. Cuevas, G.R. No. L-33693, May 31, 1979, 90 SCRA 379]. Clearly, petitioner's teaching personnel cannot be deemed field personnel which refers "to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. [Par. 3, Article 82, Labor Code of the Philippines]. Petitioner's claim that private respondents are not entitled to the service incentive leave benefit cannot therefore be sustained. 3. As a last ditch effort to bar private respondents'claims, petitioner asserts that the same are barred by laches and/or extinguished by prescription according to Article 291 of the Labor Code which provides: Art. 291. Money claims. All money claims arising from employer-employee , relations accruing during the effectivity of this Code shall be filed within three (3) years from the time the cause of action accrued; otherwise, they shall be forever barred. All money claims accruing prior to the effectivity of this Code shall be filed with the appropriate entities established under this Code within one (1) year from the date of effectivity, and shall be processed or determined in accordance with implementing rules and regulations of the Code; otherwise, they shall be forever barred. xxx xxx xxx Considering that the complaint alleging non-payment of benefits was filed only on February 11, 1981, petitioner argues that prescription has already set in. From the aforequoted provision, it is not fully accurate to conclude that the entire claims for COLA and service incentive leave are no longer recoverable. This Court finds no reason to disturb the following pronouncement of the Minister of Labor: xxx xxx xxx Simply stated, claims for COLA under P.D. 525, which took effect on August 1, 1974, for the months of August, September and October 1974 must be filed within one (1) year from November 1, 1974, otherwise they shall be considered prescribed; claims under the same decree that accrued on or after November 1, 1974 should be initiated within three (3) years from the date of accrual thereof, otherwise the same shall be deemed extinguished. Although this particular claim was filed on February 11, 1981, petitioners herein are entitled to COLA under P.D. 525 from February 1978 up to the present since the COLA that accrued in February 1978 has not yet prescribed at the time that the claim was filed in February 1981. In the same vein, petitioners herein should be granted COLA under P.D. 1123 from February 1978 up to 1981 inasmuch as said decree became effective only on May 11, 1977. Further, petitioners are entitled to the full amount of COLA provided under P.D.'s 1614, 1634, 1678 and 1713. It must be pointed out that the earliest of the just cited four (4) decrees, i.e., P.D. 1614, just took effect on April 1, 1979. Thus, the prescriptive period under Art. 292 of the Labor Code, as amended, does not as yet apply to money claims under the just mentioned decrees. DIVINE WORD COLLEGE CASE

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In assailing the disputed Order, petitioner contends that the public respondents acted with grave and patent abuse of discretion amounting to lack of jurisdiction in that: 1. The Regional Director has no jurisdiction over money claims arising from employer-employee relationship; and 2. The Regional Director and Deputy Minister of Labor adopted the report of the Labor Standards Division without affording the petitioner the opportunity to be heard. 1. Petitioner school claims that the case at bar is a money claim and should therefore be within the original and exclusive jurisdiction of the Labor Arbiter pursuant to article 217 of the Labor Code, as amended. It appears from the record, however, that the original complaint filed by ten (10) faculty members of the Divine Word College was for non-compliance with Pres. Dec. No. 451 and with Labor Code provisions on service incentive leave, holiday and rest day pay and which complaint specifically prayed that an inspection of the College be conducted. Contrary to the petitioner's protestation of lack of jurisdiction, the Secretary of Labor or his duly authorized representatives (which includes Regional Directors) are accorded the power to investigate complaints for noncompliance with labor laws, particularly those which deal with labor standards such as payment of wages and other forms of compensation, working hours, industrial safety, etc. This is provided for in article 128 of the Labor Code, as amended: Art. 128. Visitorial and enforcement power. (a) The Secretary of Labor or his duly authorized representatives including labor regulation officers, shall have access to employers' records and premises at any time of the day or night, whenever work is being undertaken therein, and the right to copy therefrom, to question any employee and investigate any fact, condition or matter which may be necessary to determine violations or which may aid in the enforcement of this Code and of any labor law, wage order or rules and regulations issued pursuant thereto. (b) The Secretary of Labor or his duly authorized representatives shall have the power to order and administer, after due notice and hearing, compliance with the labor standards provisions of this Code based on the findings of labor regulation officers or industrial safety engineers made in the course of inspection, and to issue writs of execution to the appropriate authority for the enforcement of their order, except in cases where the employer contests the findings of the labor regulations officer and raises issues which cannot be resolved without considering evidentiary matters that are not verifiable in the normal course of inspection. (Emphasis supplied). Furthermore, Policy Instruction No. 6 which deals with the distribution of jurisdiction over labor cases restates inter alia that "(L)abor standards cases arising from violation of labor standards laws discovered in the course of inspection or complaints where employer-employee relations still exist" are under the exclusive original jurisdiction of the Regional Director. Even assuming that respondent Regional Director was without jurisdiction to entertain the case at bar, petitioner is now barred at this stage to claim lack of jurisdiction having actively participated in the proceedings below. Petitioner never questioned the jurisdiction of the respondent Regional Director. 2. The petitioner claims that it was never afforded the opportunity to be heard and was therefore denied due process. There is no dispute that an inspection of the College was conducted after a complaint by some faculty members was filed with the Regional Office of the Ministry of Labor and Employment. A report was submitted on the basis of the findings contained therein. Petitioner was furnished a copy of said report to which it filed a comment. Finding this to be without merit, the Regional Director issued an order giving petitioner ten (10) days to manifest its compliance with the findings, otherwise, another would be issued to enforce payment. Petitioner appealed but instead of resolving the memorandum of appeal, which the Regional Director treated as a motion for reconsideration, said Director issued another Order dated August 2, 1983 directing the payment of the employees' share in the sixty (60%) percent incremental proceeds. Petitioner moved for a reconsideration of the latest order which the Regional Director, however, denied, thereby elevating the case to the Office of the Minister of Labor and Employment. The foregoing facts demonstrate that petitioner had the opportunity to refute the report on the inspection conducted. It submitted a comment thereto, which was in effect its position paper. The arguments therein and

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evidence attached thereto were considered by respondent Regional Director in the order issued subsequently. They, therefore, had ample opportunity to present their side of the controversy. What due process contemplates is not merely the existence of an actual hearing. The "right to be heard" focuses more on the substance rather than the form. In the case at bar, petitioner was actually heard through the pleadings that it filed with the Regional Office V. As it itself admitted in its petition that it was afforded the right to be heard on appeal [See Rollo, p. 581, petitioner cannot therefore insist that it was denied due process. FAR EASTERN UNIVERSITY CASE Two other issues are raised in this petition, to wit: 1 WHETHER OR NOT 'TRANSPORTATION ALLOWANCE' SHOULD BE CONSIDERED AS 'EQUIVALENT TO 13TH-MONTH PAY UNDER PRES. DEC. NO. 851. 2 WHETHER OR NOT LEGAL HOLIDAY PAY BENEFIT COULD BE VALIDLY WITHDRAWN AFTER BEING PRACTICED CONTINUOUSLY FOR EIGHT (8) MONTHS. 1. The issue on the thirteenth (13th) month pay involves an interpretation of the provisions of Pres. Dec. No. 851 which requires all employers "to pay all their employees receiving a basic salary of not more than Pl,000 a month, regardless of the nature of the employment, a 13th- month pay" (Sec. 1). However, "employer[s] already paying their employees a 13th-month pay or its equivalent are not covered" (Sec. 2). (Emphasis supplied) The Rules and Regulations Implementing Pres. Dec. No. 851 provide the following: SEC. 3. Employees. The Decree shall apply to all employers except to: ... c) Employers already paying their employees 13th-month or more in a calendar year or its equivalent at the time of this issuance; ... xxx xxx xxx The term "its equivalent" as used in paragraph (c) hereof shall include Christmas bonus, mid-year bonus, profit-sharing payments and other cash bonuses amounting to not less than 1/12th of the basic salary but shall not include cash and stock dividends, cost of living allowances and all other allowances regularly enjoyed by the employer, as well as non-monetary benefits. Where an employer pays less than 1/1 2th of the employees basic salary, the employer shall pay the difference. In the case at bar, the 13th month pay is paid in the following manner: FOR REGULAR EMPLOYEES: Transportation Allowance (TA) 50% of basic for the first year of service plus additional 5% every year thereafter but not to exceed 100% of basic salary Christmas Bonus (CB) 50% of basic salary for the first year of service plus additional 5% every year thereafter but not to exceed 100% of basic salary. For employees who have served the University for more than 10 years, the University pays them emoluments equivalent to the 14 months salaries. 13th Month Pay Formula: Monthly Rate x No. of months served for the year Less TA/CB = 13th Mo. pay 12 months FOR CASUAL EMPLOYEES: 13th Month Pay Formula: Add salaries from 16 December of previous year to 15th December of present year [and] divide by 12 months = 13th Mo. Pay (Rollo, pp. 60, 72). The University's answer to the Union's claim of underpayment of the 13th month pay is that the "transportation allowance" paid to its employees partakes the nature of a mid-year bonus which under section 2 of Pres. Dec. No. 851 and section 3(c) of the Implementing Rules and Regulations is equivalent to the 13th month pay, The Labor Arbiter ordered FEU to pay the 13th month pay differentials of the complainants reasoning that:

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CLEARLY, transportation allowance cannot be considered as equivalent" of 13th month pay as it is neither a Christmas bonus, mid-year bonus, profit sharing payment, or other cash bonuses, pursuant to paragraphs (c) and (e), Section 3 of PD 851. The regularity of its payment further cements this proposition. PERFORCE, complainants are underpaid of their 13th month pay in an amount equivalent to 50% of their basic salary for the lst year of service, plus additional 5% every year thereafter but not to exceed 100% of their basic salary which, per respondent's formula, corresponds to their transportation allowance. (Rollo, p. 61). On appeal, the Third Division of the National Labor Relations Commission reversed the Labor Arbiter's ruling by dismissing the complainant's claim for underpayment of the 13th month pay for lack of merit. The NLRC ruled that: From the above findings and conclusion, it is clear that insofar as employees with ten (10) years of service or more are concerned, they receive the equivalent of one (1) month pay for Christmas bonus and another one (1) month pay as transportation allowance or a total of fourteen (14) months salary in a year. Obviously, this group of employees are fully paid of their 13th month pay and are not therefore subject to the instant claim. As it is only those with less than ten (10) years of service are included or encompassed by the Labor Arbiter's resolution on this particular issue. With this clarification, we shall now proceed to discuss the crux of the controversy, that is, the determination of whether or not the so designated "transportation allowance" being paid to the employees should be considered among those deemed equivalent to 13th month pay. As adverted earlier, the Labor Arbiter opined that it cannot be so considered as the equivalent of 13th month pay. xxx xxx xxx In passing upon the issue, we deemed it best to delve deeper into the nature and intendment of the transportation allowances as designated by both the complainants and the respondent. Complainants claim that the transportation allowance they enjoy has always been called and termed allowance and never as bonus since the time the same was given to them. They assert that it simply was intended as an allowance and not a bonus. It would appear however that complainants do not dispute respondent's stand that transportation allowance is being paid only every March of each year as distinguished from other allowances that are being paid on a monthly basis or on a bimonthly basis; that the amount of transportation allowance to be paid is dependent on the length of service of the employee concerned (i.e. 50% basic in the first year and additional 5% for each succeeding years, etc.); that the said method of computing the amount of the transportation allowance to be paid the complainants is Identical to that used in determining Christmas bonus (respondent's exhibit 8) that the reason behind said transportation allowance is to financially assist employees in meeting their tax obligations as the same become due on or about the month of March of each year. xxx xxx xxx We are inclined to believe and so hold that by the manner by which said transportation allowance is being paid (only once a year) as well as the method in determining the amount to be paid (similar to Christmas bonus) and considering further the reason behind said payment (easing the burden of taxpayer-employee), the said transportation allowance given out by respondent while designating as such, partakes the nature of a mid-year bonus. It bears to note in passing that in providing for transportation allowance, respondent was not compelled by law nor by the CBA (Annex "A" of respondent's Appeal) as nowhere in the CBA nor in the Labor Code can be found any provision on transportation allowance. It was therefore a benefit that stemmed out purely from the voluntary act and generosity of the respondent FEU. Moreover, said transportation allowance is only being paid once a year. On the other hand, regular allowances not considered as 13th month pay equivalent under P.D. 851, to our mind, refer to those paid on regular intervals and catering for specific employees' needs and requirements that recur on a regular basis. Verily, if the intendment behind the disputed transportation allowance is to answer for the daily recurring transportation expenses of the employees, the same should have been paid to employees on regular periodic intervals. All indications, as we see it, point out to conclusion that the disputed transportation allowance, while dominated as such apparently for

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lack of better term, is in fact a form of bonus doled out by the respondent during the month of March every year. Hence, we hold that it is one of those that can very well be considered as equivalent to the 13th month pay (Rollo, pp. 73, 74, 75, 76). This Court sustains the aforequoted view of public respondent. The benefit herein designated as "transportation allowance" is a form of bonus equivalent to the 13th month pay. Nevertheless, where this does not amount to 1/12 of the employees basic salary, the employer shall pay the difference. The evident intention of the law was to grant an additional income in the form of a 13th month pay to employees not already receiving the same. This Court ruled in National Federation of Sugar Workers (NFSW) v. Ovejera [G.R. No. 59743, May 31, 1982, 114 SCRA 354]. Otherwise put, the intention was to grant some relief not to all workers but only to the unfortunate ones not actually paid a 13th month salary or what amounts to it, by whatever name called: but it was not envisioned that a double burden would be imposed on the employer already paying his employees a 13th month pay or its equivalent whether out of pure generosity or on the basis of a binding agreement and, in the latter case, regardless of the conditional character of the grant (such as making the payment dependent on profit), so long as there is actual payment. Otherwise, what was conceived to be a 13th month salary would in effect become a 14th or possibly 15th month pay. xxx xxx xxx Pragmatic considerations also weigh heavily in favor of crediting both voluntary and contractual bonuses for the purpose of determining liability for the 13th month pay. To require employers (already giving their employees a 13th month salary or its equivalent) to give a second 13th month pay would be unfair and productive of undesirable results. To the employer who had acceded and is already bound to give bonuses to his employees, the additional burden of a 13th month pay would amount to a penalty for his munificence or liberality. The probable reaction of one so circumstanced would be to withdraw the bonuses or resist further voluntary grants for fear that if and when a law is passed giving the same benefits, his prior concessions might not be given due credit; and this negative attitude would have an adverse impact on the employees (pp.369,370). The case of Dole Philippines, Inc. v. Leogardo [G.R. No. 60018, October 23, 1982, 117 SCRA 938 (1982)], citing the ruling in the above case also pointed out that: To hold otherwise would be to impose an unreasonable and undue burden upon those employers who had demonstrated their sensitivity and concern for the welfare of their employees. A contrary stance would indeed create an absurd situation whereby an employer who started giving his employees the 13th month pay only because of the unmistakable force of the law would be in a far better position than another who, by his own magnanimity or by mutual agreement, had long been extending his employees the benefits contemplated under PD No. 851, by whatever nomenclature these benefits have come to be known. Indeed, PD No. 851, a legislation benevolent in its purpose, never intended to bring about such oppressive situation. (p. 944) 2. Presidential Decree No. 570-A was issued on November 1, 1974 amending certain articles of Presidential Decree No. 442 (Labor Code of the Philippines promulgated on May 1, 1974 which took effect six months thereafter). Section 28 thereof provides that: Section 28. A new provision is hereby substituted in lieu of the original provision of Article 258 of the same Code to read as follows: Art. 258. Right to holiday pay(a) Every worker shall be paid his regular holidays, except in retail and service establishments regularly employing less than ten (10) workers; (b) The term "holiday" as used in this Chapter, shall 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 and thirtieth of December and the day designated by law for holding a general election. (c) When employer may require work on holidays. The employer may require an employee to work on any holiday but such employee shall be paid a compensation equivalent twice his regular rate.

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Presidential Decree No. 850 issued on December 16, 1975 also amending certain articles of Pres. Dec. No. 442 adopted the aforequoted provision. Two months later, on February 16, 1976, the Rules and Regulations Implementing the Labor Code, as amended, was released the pertinent portion of which states that: Section 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. For this purpose, the monthly minimum wage shall not be less than the statutory minimum wage multiplied by 365 days divided by twelve. (e) Section 3. Holiday Pay. Every employer shall pay his employees their regular daily wage for any unworked regular holiday. As used in the Rule, the term 'holiday' shall exclusively refer to: 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 thirtieth of December and the day designated by law for a general election or national referendum or plebiscite (MOLE Rules and Reg. Book III, Rule IV, sec. 2 (1976). After one week, on February 23, 1976, the Minister of Labor issued Policy Instruction No. 9, to clarify further the right to holiday pay, thus: The Rules Implementing PD 850 have clarified the policy in the implementation of the ten (10) paid legal holidays. Before PD 850. the number of working days a year in a firm was considered important in determining entitlement to the benefit. Thus, where an employee was working for at least 313 days, he was definitely already paid. If he was working for less than 313, there was no certainty whether the ten (10) paid legal holidays were already paid to him or not. The ten (10) paid legal holidays law, to start with, is intended to benefit principally daily employees. In the case of monthly, only those whose monthly salary did not yet include payment for the ten (10) paid legal holidays are entitled to the benefit. Under the rules implementing PD 850, this policy has been fully clarified to eliminate controversies on the entitlement of monthly paid employees. The new determining rule is this: If the monthly paid employee is receiving not less than P 240, the maximum monthly minimum wage, and his monthly pay is uniform from January to December, he is presumed to be already paid the ten (10) paid legal holidays. However, if deductions are made from his monthly salary on account of holidays in months where they occur, then he is entitled to the ten (10) legal holidays. These new interpretations must be uniformly and consistently upheld. This issuance shall take effect immediately. In the meantime, respondent University paid its employees holiday pay for the following days: DATE HOLIDAYS PAID June 9, 1975 for the previous nine legal holidays August, 1975 for the previous June 12 and July 4 Jan. 14, 1976 or the previous Nov. 30, Dec. 25 and 30 and Jan. 1 After January 14, 1976, however, the University ceased paying the holiday pay allegedly by reason of Policy Instruction No. 9. Specifically, the University claimed that the monthly salary of its employees was, as of 1976, more than P 240.00 without deductions from their monthly salary on account of holidays in months where they occurred and that therefore, by virtue of Policy Instruction No. 9, they were no longer entitled to the ten paid legal holidays. Petitioners, upon the other hand, contend that Policy Instruction No. 9 could not have possibly been the reason that prompted the University to withdraw such benefits from its faculty and employees because said implementing rule was issued only on April 23, 1976 or four months later. The Labor Arbiter ruled in favor of the complainant Union for the reason that ". . . the payment of the 10-paid legal holiday benefits from June 8, 1975 up to January 14, 1976 is considered an employer practice that can no longer be withdrawn." [Decision; Rollo, p. 59]. As in the case of the 13th month pay, the NLRC reversed the Labor Arbiter's ruling. The NLRC held that:

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Apparently, Arbiter Ruben Aquino concluded that payment by the respondent of the legal holiday pay preceded the effectivity of the Rules and Regulations Implementing P.D. 850 and which rules took effect on February 16, 1976. Hence, his conclusion that the payment of the legal holiday pay stemmed out from company practice and not from law. Tracing back, however, the payments made by respondent of said holiday pay will show that, if ever, the same was made pursuant to P.D. 570-A which took effect on November 1, 1974. Noteworthy is the undisputed fact that respondent first paid its employees legal holiday pay in June 1975 corresponding to nine (9) legal holidays. It bears to note that from the time of the effectivity of P.D. 570-A which was in November of 1974 up to June of 1975, the time respondent first paid legal holiday pay for nine (9) legal holidays, there, were indeed more or less nine legal holidays that transpired to wit: November 30, 1974, December 25, 1974, December 30, 1974, January 1, 1975, February 27, 1975 (Referendum Day), Maundy Thursday of 1975, Good Friday of 1975, April 9, 1975 and finally, May 1st of 1975. We are therefore inclined to lend credence to respondent's claim that the payment of legal holiday pay was in fact made pursuant to law, P.D. 570-A in particular, it is not one that arose out of company practice or policy. Finding that said payment was made based on an honest although erroneous interpretation of law, which interpretation was later on corrected by the issuance (sic) of Policy Instruction No. 9 and which issuance prompted respondent to withdraw the holiday pay benefits extended to the employees who were paid on a regular monthly basis, and finding further that under Policy Instructions No. 9, said subject employees are deemed paid their holiday pay as they were paid on a monthly basis at a wage rate presumably above the statutory minimum, we believe and so hold that the withdrawal of said holiday pay benefit was valid and justifiable under the circumstances (Rollo, pp. 33-4). This Court cannot sustain the foregoing decision of public respondent. Said decision relied on Section 2, Rule IV, Book Ill of the implementing rules and on Policy Instruction No. 9 which were declared by this Court to be null and void in Insular Bank of Asia and America Employee's Union (IBAAEU) v. Inciong (G.R. No. 52415, October 23, 1984, 132 SCRA 6631. In disposing of the issue at hand, this Court reiterates the ruling in that case, to wit: WE agree with the petitioner's contention that Section 2, Rule IV, Book Ill of the implementing rules and Policy Instruction No. 9 issued by the then Secretary of Labor are nun and void since in the guise of clarifying the Labor Code's provision on holiday pay, they in fact amended them by enlarging the scope of their exclusion. xxx xxx xxx It is elementary in the rules of statutory construction that when the language of the law is clear and unequivocal the law must be taken to mean exactly what it says. In the case at bar, the provisions of the Labor Code on the entitlement to the benefits of holiday pay are clear and explicit it provides for both the coverage of and exclusion from the benefits. In Policy Instruction No. 9, the then Secretary of Labor went as far as to categorically state that the benefit is principally intended for daily paid employees, when the law clearly states that every worker shall be paid their regular holiday pay. This is a flagrant violation of the mandatory directive of Article 4 of the Labor Code, which states that "All doubts in the implementation and interpretation of the provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of labor. " Moreover, it shall always be presumed that the legislature intended to enact a valid and permanent statute which would have the most beneficial effect that its language permits (Orlosky vs. Haskell, 155 A. 112). (pp. 673-4). BISCOCHO CASE At issue also in this petition is whether the 60% incremental proceeds may be subjected to attorney's fees, negotiation fees, agency fees and the like. The Court notes the fact that there are two classes of employees among the petitioners: (1) those who are members of the bargaining unit and (2) those who are not members of the bargaining unit. The first class may be further subdivided into two: those who are members of the collective bargaining agent and those who are not. It is clear that the questioned Order of the respondent Minister applies only to members of the bargaining unit. The CBA prepared pursuant to said Order, however, covered employees who are not members of the bargaining unit, although said CBA had not yet been signed at the time this petition was filed on November 24, 1986.

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Assuming it was signed thereafter, the inclusion of employees outside the bargaining unit should be nullified as this does not conform to said order which directed private respondents to execute a CBA covering only members of the bargaining unit. Being outside the coverage of respondent Minister's order, and thus, not entitled to the economic package involved therein, employees who are non- members of the bargaining unit should not be assessed negotiation fees, attorney's fees, agency fees and the like, for the simple reason that the resulting collective bargaining agreement does not apply to them. It should be clear, however, that while non-members of the bargaining unit are not entitled to the economic package provided by said order, they are, in lieu thereof, still entitled to their share in the 60% incremental proceeds of increases in tuition or other school fees or charges. As far as assessment of fees against employees of the collective bargaining unit who are not members of the collective bargaining agent is concerned, Article 249 of the Labor Code, as amended by B.P. Blg. 70, provides the rule: Art. 249. Unfair labor practices of employers.xxx xxx xxx (e) ... Employees of an appropriate collective bargaining unit who are not members of the recognized collective bargaining agent may be assessed a reasonable fee equivalent to the dues and other fees paid by members of the recognized collective bargaining agent, if such non- union members accept the benefits under the collective agreement . . . Employees of the collective bargaining unit who are not members of the collective bargaining agent have to pay the foregoing fees if they accept the benefits under the collective bargaining agreement and if such fees are not unreasonable. Petitioners who are members of the bargaining unit failed to show that the equivalent of ten (10%) percent of their backwages sought to be deducted is unreasonable. WHEREFORE, the Court rules: CEBU INSTITUTE OF TECHNOLOGY CASE In G.R. No. 58870, the Order of respondent Minister of Labor and Employment dated September 29, 1981 is SUSTAINED insofar as it ordered petitioner Cebu Institute of Technology to pay its teaching staff the following: (1) Cost of living allowance under Pres. Dec.Nos.525 and 1123 from February 1978 up to 1981; (2) Cost of living allowance under Pres. Dec. Nos. 1614, 1634, 1678 and 1713; and (3) Service incentive leave due them from 1978. The Temporary Restraining Order issued by this Court on December 7, 1981 is hereby LIFTED and SET ASIDE. No costs. DIVINE WORD COLLEGE CASE The petition in G.R. No. 68345 is DENIED for lack of merit. The questioned Orders of respondent Deputy Minister of Labor and Employment, dated December 19, 1983 and July 4, 1984 are SUSTAINED insofar as said Orders denied the payment of the emergency cost of living allowances of private respondents faculty teachers of the Divine Word College of Legazpi out of the sixty (60%) incremental proceeds of tuition and other school fee increases collected during the effectivity of Pres. Dec. No. 451. The Rules and Regulations implementing Pres. Dec. No. 451 are hereby declared invalid for being ultra vires No costs. FAR EASTERN UNIVERSITY CASE The Decision of public respondent National Labor Relations Commission dated September 18, 1984 is REVERSED insofar as it affirmed in toto the dismissal of petitioner Far Eastern University Employee Labor Union's claim under Pres. Dec. No. 451 and its claim for payment of holiday pay. Private respondent Far Eastern University is therefore ordered to pay its employees the following: (1) Their sixty (60) percent share in the increases in tuition and other school fees or charges which shall be allocated exclusively for increase in salaries or wages if the tuition or other school fee increase was collected during the effectivity of Pres. Dec. No. 451; (2) Their claim for holiday pay which was withdrawn since January 14, 1976 up to the present. The Decision of respondent National Labor Relations Commission, however, is SUSTAINED insofar as it denied petitioner's claim for thirteenth (1 3th month pay. No costs. FABROS CASE In G.R. No. 70832, the Petition for certiorari and Prohibition is DISMISSED. MECS Order No. 25. s. 1985, particularly paragraphs 7.0 to 7.5 thereof, which provide for the use and application of sixty (60%) percent of the increases in tuition and other school fees or charges, having been issued pursuant to B.P. Blg. 232 which repealed Pres. Dec.

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No. 451, is hereby declared VALID. The Temporary Restraining Order issued by this Court dated May 29, 1985 is LIFTED and SET ASIDE. No costs. BISCOCHO CASE The assailed portions of the Order of the Minister of Labor and Employment dated April 14, 1986 are AFFIRMED. The collective bargaining agreement prepared pursuant thereto should, however, be MODIFIED to cover only members of the bargaining unit. Only petitioners who are members of the collective bargaining unit, if they accept the benefits under the resulting collective bargaining agreement, shall be charged ten (10%) percent of the payable backwages as negotiation fees. The Temporary Restraining Order dated November 25, 1986 is LIFTED and SET ASIDE. No costs. VALMONTE CASE The petition in G.R. No. 76596 is DISMISSED for lack of merit. Effective September 1, 1982, the application and use of the proceeds from increases in tuition fees and other schools fees or charges shall be governed by section 42 of B.P. Blg. 232 as implemented by the Rules and Regulations issued by the then Ministry, now Department of Education, Culture and Sports. SO ORDERED. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION 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. 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.1wphi1.nt 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 1 temporary residents. 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 2 bringing that individual to the Philippines? 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.1avvphi1 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

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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 along period in a foreign land. The compensation scheme is simply the School's adaptive measure to remain competitive on an 3 international level in terms of attracting competent professionals in the field of international education. 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 4 members" 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 5 nationalities other than Filipino, who have been hired locally and classified as local hires. 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 6 tell, there are foreigners who have been hired locally and who are paid equally as Filipino local hires. 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 applications 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 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

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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 7 attract them to join the teaching faculty of the School. We cannot agree. That public policy abhors inequality and discrimination is beyond contention. Our Constitution and laws reflect the 8 policy against these evils. The Constitution 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. 9 International law, which springs from general principles of law, likewise proscribes discrimination. General 10 principles of law include principles of equity, i.e., the general principles of fairness and justice, based on the test 11 12 of what is reasonable. The Universal Declaration of Human Rights, the International Covenant on Economic, 13 Social, and Cultural Rights, the International Convention on the Elimination of All Forms of Racial Discrimination, 14 15 the Convention against Discrimination in Education, the Convention (No. 111) Concerning Discrimination in 16 Respect of Employment and Occupation 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. 17 The Constitution 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. 18 The Constitution also directs the State to promote "equality of employment opportunities for all." Similarly, the 19 Labor Code 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 20 conditions of employment. Discrimination, particularly in terms of wages, is frowned upon by the Labor Code. Article 135, for example, 21 prohibits and penalizes 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; xxx xxx xxx 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 22 similar conditions, should be paid similar salaries. This rule applies to the School, its "international character" notwithstanding.

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The School contends that petitioner has not adduced evidence that local-hires perform work equal to that of 23 foreign-hires. 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 24 the rendering of services." In Songco v. National Labor Relations Commission, 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. 25 The Constitution enjoins the State to "protect the rights of workers and promote their welfare," "to afford labor 26 full protection." 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, 28 collective bargaining agreements included, must yield to the common good. 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.1avvphi1 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 29 and duties of the parties under the collective bargaining provisions of the law." 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 30 employment status. 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 31 rights. 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 foreignhires 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.

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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. Cebu Autobus Company vs United Cebu Autobus Employees Association

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. 82511 March 3, 1992 GLOBE-MACKAY CABLE AND RADIO CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and IMELDA SALAZAR, respondents. Castillo, Laman, Tan & Pantaleon for petitioner. Gerardo S. Alansalon for private respondent. ROMERO, J.: For private respondent Imelda L. Salazar, it would seem that her close association with Delfin Saldivar would mean the loss of her job. In May 1982, private respondent was employed by Globe-Mackay Cable and Radio Corporation (GMCR) as general systems analyst. Also employed by petitioner as manager for technical operations' support was Delfin Saldivar with whom private respondent was allegedly very close. Sometime in 1984, petitioner GMCR, prompted by reports that company equipment and spare parts worth thousands of dollars under the custody of Saldivar were missing, caused the investigation of the latter's activities. The report dated September 25, 1984 prepared by the company's internal auditor, Mr. Agustin Maramara, indicated that Saldivar had entered into a partnership styled Concave Commercial and Industrial Company with Richard A. Yambao, owner and manager of Elecon Engineering Services (Elecon), a supplier of petitioner often recommended by Saldivar. The report also disclosed that Saldivar had taken petitioner's missing Fedders airconditioning unit for his own personal use without authorization and also connived with Yambao to defraud petitioner of its property. The airconditioner was recovered only after petitioner GMCR filed an action for replevin 1 against Saldivar. It likewise appeared in the course of Maramara's investigation that Imelda Salazar violated company reglations by involving herself in transactions conflicting with the company's interests. Evidence showed that she signed as a witness to the articles of partnership between Yambao and Saldivar. It also appeared that she had full knowledge of the loss and whereabouts of the Fedders airconditioner but failed to inform her employer. Consequently, in a letter dated October 8, 1984, petitioner company placed private respondent Salazar under preventive suspension for one (1) month, effective October 9, 1984, thus giving her thirty (30) days within which to, explain her side. But instead of submitting an explanations three (3) days later or on October 12, 1984 private respondent filed a complaint against petitioner for illegal suspension, which she subsequently amended to include illegal dismissal, vacation and sick leave benefits, 13th month pay and damages, after petitioner notified her in writing that effective November 8, 1984, she was considered dismissed "in view of (her) inability to refute and 2 disprove these findings. After due hearing, the Labor Arbiter in a decision dated July 16, 1985, ordered petitioner company to reinstate private respondent to her former or equivalent position and to pay her full backwages and other benefits she would have received were it not for the illegal dismissal. Petitioner was also ordered to pay private respondent 3 moral damages of P50,000.00. On appeal, public respondent National Labor Relations, Commission in the questioned resolution dated December 29, 1987 affirmed the aforesaid decision with respect to the reinstatement of private respondent but limited the 4 backwages to a period of two (2) years and deleted the award for moral damages.

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Hence, this petition assailing the Labor Tribunal for having committed grave abuse of discretion in holding that the suspension and subsequent dismissal of private respondent were illegal and in ordering her reinstatement with two (2) years' backwages. On the matter of preventive suspension, we find for petitioner GMCR. The inestigative findings of Mr. Maramara, which pointed to Delfin Saldivar's acts in conflict with his position as technical operations manager, necessitated immediate and decisive action on any employee closely, associated with Saldivar. The suspension of Salazar was further impelled by th.e discovery of the missing Fedders airconditioning unit inside the apartment private respondent shared with Saldivar. Under such circumstances, preventive suspension was the proper remedial recourse available to the company pending Salazar's investigation. By itself, preventive suspension does, not signify that the company has adjudged the employee guilty of the charges she was asked to answer and explain. Such disciplinary measure is resorted to for the protection of the 5 company's property pending investigation any alleged malfeasance or misfeasance committed by the employee. Thus, it is not correct to conclude that petitioner GMCR had violated Salazar's right to due process when she was promptly suspended. If at all, the fault, lay with private respondent when she ignored petitioner's memorandum of October 8, 1984 "giving her ample opportunity to present (her) side to the Management." Instead, she went directly to the Labor Department and filed her complaint for illegal suspension without giving her employer a chance to evaluate her side of the controversy. But while we agree with the propriety of Salazar's preventive suspension, we hold that her eventual separation from employment was not for cause. What is the remedy in law to rectify an unlawful dismissal so as to "make whole" the victim who has not merely lost her job which, under settled Jurisprudence, is a property right of which a person is not to be deprived without due process, but also the compensation that should have accrued to her during the period when she was unemployed? Art. 279 of the Labor Code, as amended, provides: Security of Tenure. In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld 6 from him up to the time of his actual reinstatement. (Emphasis supplied) Corollary thereto are the following provisions of the Implementing Rules and Regulations of the Labor Code: Sec. 2. Security of Tenure. In cases of regular employments, the employer shall not terminate the services of an employee except for a just cause as provided in the Labor Code or when authorized by existing laws. Sec. 3. Reinstatement. An employee who is unjustly dismissed from work shall by entitled to 7 reinstatement without loss of seniority rights and to backwages." (Emphasis supplied) Before proceeding any furthers, it needs must be recalled that the present Constitution has gone further than the 1973 Charter in guaranteeing vital social and economic rights to marginalized groups of society, including labor. Given the pro-poor orientation of several articulate Commissioners of the Constitutional Commission of 1986, it was not surprising that a whole new Article emerged on Social Justice and Human Rights designed, among other things, to "protect and enhance the right of all the people to human dignity, reduce social, economic and political inequalities, and remove cultural inequities by equitably diffusing wealth and political power for the common good." 8 Proof of the priority accorded to labor is that it leads the other areas of concern in the Article on Social Justice, viz., Labor ranks ahead of such topics as Agrarian and Natural Resources Reform, Urban Land Roform and 9 Housing, Health, Women, Role and Rights of Poople's Organizations and Human Rights. The opening paragraphs on Labor states 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. It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and 10 benefits is may be provided by law. (Emphasis supplied)

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Compare this with the sole.provision on Labor in the 1973 Constitution under the Article an Declaration of Principles and State Policies that 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 employers. The State shall ensure the rights of workers to selforganization, collective baegaining, security of tenure, and just and humane conditions of work. 11 The State may provide for compulsory arbitration. To be sure, both Charters recognize "security of tenure" as one of the rights of labor which the State is mandated to protect. But there is no gainsaying the fact that the intent of the framers of the present Constitution was to give primacy to the rights of labor and afford the sector "full protection," at least greater protection than heretofore accorded them, regardless of the geographical location of the workers and whether they are organized or not. It was then CONCOM Commissioner, now Justice Hilario G. Davide, Jr., who substantially contributed to the present formulation of the protection to labor provision and proposed that the same be incorporated in the Article on Social Justice and not just in the Article on Declaration of Principles and State Policies "in the light of the special importance that we are giving now to social justice and the necessity of emphasizing the scope and role of social 12 justice in national development." If we have taken pains to delve into the background of the labor provisions in our Constitution and the Labor Code, it is but to stress that the right of an employee not to be dismissed from his job except for a just or authorized cause provided by law has assumed greater importance under the 1987 Constitution with the singular prominence labor enjoys under the article on Social Justice. And this transcendent policy has been translated into law in the Labor Code. Under its terms, where a case of unlawful or unauthorized dismissal has been proved by the aggrieved employee, or on the other hand, the employer whose duty it is to prove the lawfulness or justness of his act of dismissal has failed to do so, then the remedies provided in Article 279 should find, application. Consonant with this liberalized stance vis-a-vis labor, the legislature even went further by enacting Republic Act No. 6715 which took effect on March 2, 1989 that amended said Article to remove any possible ambiguity that jurisprudence may 13 have generated which watered down the constitutional intent to grant to labor "full protection." To go back to the instant case, there being no evidence to show an authorized, much less a legal, cause for the dismissal of private respondent, she had every right, not only to be entitled to reinstatement, but ay well, to full 14 backwages." The intendment of the law in prescribing the twin remedies of reinstatement and payment of backwages is, in the former, to restore the dismissed employee to her status before she lost her job, for the dictionary meaning of the 15 word "reinstate" is "to restore to a state, conditione positions etc. from which one had been removed" and in the latter, to give her back the income lost during the period of unemployment. Both remedies, looking to the past, would perforce make her "whole." Sadly, the avowed intent of the law has at times been thwarted when reinstatement has not been forthcoming and the hapless dismissed employee finds himself on the outside looking in. Over time, the following reasons have been advanced by the Court for denying reinstatement under the facts of the case and the law applicable thereto; that reinstatement can no longer be effected in view of the long passage 16 of time (22 years of litigation) or because of the realities of the situation; or that it would be "inimical to the 17 18 employer's interest; " or that reinstatement may no longer be feasible; or, that it will not serve the best 19 interests of the parties involved; or that the company would be prejudiced by the workers' continued 20 employment; or that it will not serve any prudent purpose as when supervening facts have transpired which 21 make execution on that score unjust or inequitable or, to an increasing extent, due to the resultant atmosphere of "antipathy and antagonism" or "strained relations" or "irretrievable estrangement" between the employer and 22 the employee. 23 In lieu of reinstatement, the Court has variously ordered the payment of backwages and separation pay or solely 24 separation pay. In the case at bar, the law is on the side of private respondent. In the first place the wording of the Labor Code is clear and unambiguous: "An employee who is unjustly dismissed from work shall be entitled to reinstatement. . . . 25 and to his full backwages. . . ." Under the principlesof statutory construction, if a statute is clears plain and free from ambiguity, it must be given its literal meaning and applied without attempted interpretation. This plainmeaning rule or verba legis derived from the maxim index animi sermo est (speech is the index of intention) rests on the valid presumption that the words employed by, the legislature in a statute correctly express its intent or will

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and preclude the court from construing it differently. The legislature is presumed to know the meaning of the words, to:have used words advisedly, and to have expressed its intent by the use of such words as are found in the 27 statute. Verba legis non est recedendum, or from the words of a statute there should be no departure. Neither does the provision admit of any qualification. If in the wisdom of the Court, there may be a ground or grounds for non-application of the above-cited provision, this should be by way of exception, such as when the reinstatement may be inadmissible due to ensuing strained relations between the employer and the employee. In such cases, it should be proved that the employee concerned occupies a position where he enjoys the trust and confidence of his employer; and that it is likely that if reinstated, an atmosphere of antipathy and antagonism may be generated as to adversely affect the efficiency and productivity of the employee concerned. A few examples, will suffice to illustrate the Court's application of the above principles: where the employee is a 28 Vice-President for Marketing and as such, enjoys the full trust and confidence of top management; or is the 29 Officer-In-Charge of the extension office of the bank where he works; or is an organizer of a union who was in a 30 position to sabotage the union's efforts to organize the workers in commercial and industrial establishments; or is a warehouseman of a non-profit organization whose primary purpose is to facilitate and maximize voluntary 31 32 gifts. by foreign individuals and organizations to the Philippines; or is a manager of its Energy Equipment Sales. Obviously, the principle of "strained relations" cannot be applied indiscriminately. Otherwisey reinstatement can never be possible simply because some hostility is invariably engendered between the parties as a result of 33 litigation. That is human nature. Besides, no strained relations should arise from a valid and legal act of asserting one's right; otherwise an employee who shall assert his right could be easily separated from the service, by merely paying his separation pay 34 on the pretext that his relationship with his employer had already become strained. Here, it has not been proved that the position of private respondent as systems analyst is one that may be characterized as a position of trust and confidence such that if reinstated, it may well lead to strained relations between employer and employee. Hence, this does not constitute an exception to the general rule mandating reinstatement for an employee who has been unlawfully dismissed. On the other hand, has she betrayed any confidence reposed in her by engaging in transactions that may have created conflict of interest situations? Petitioner GMCR points out that as a matter of company policy, it prohibits its employees from involving themselves with any company that has business dealings with GMCR. Consequently, when private respondent Salazar signed as a witness to the partnership papers of Concave (a supplier of Ultra which in turn is also a supplier of GMCR), she was deemed to have placed. herself in an untenable position as far as petitioner was concerned. However, on close scrutiny, we agree with public respondent that such a circumstance did not create a conflict of interests situation. As a systems analyst, Salazar was very far removed from operations involving the procurement of supplies. Salazar's duties revolved around the development of systems and analysis of designs on a continuing basis. In other words, Salazar did not occupy a position of trust relative to the approval and purchase of supplies and company assets. In the instant case, petitioner has predicated its dismissal of Salazar on loss of confidence. As we have held countless times, while loss of confidence or breach of trust is a valid ground for terminations it must rest an some 35 basis which must be convincingly established. An employee who not be dismissed on mere presumptions and suppositions. Petitioner's allegation that since Salazar and Saldivar lived together in the same apartment, it "presumed reasonably that complainant's sympathy would be with Saldivar" and its averment that Saldivar's 36 investigation although unverified, was probably true, do not pass this Court's test. While we should not condone the acts of disloyalty of an employee, neither should we dismiss him on the basis of suspicion derived from speculative inferences. To rely on the Maramara report as a basis for Salazar's dismissal would be most inequitous because the bulk of the findings centered principally oh her friend's alleged thievery and anomalous transactions as technical operations' support manager. Said report merely insinuated that in view of Salazar's special relationship with Saldivar, Salazar might have had direct knowledge of Saldivar's questionable activities. Direct evidence implicating private respondent is wanting from the records. It is also worth emphasizing that the Maramara report came out after Saldivar had already resigned from GMCR on May 31, 1984. Since Saldivar did not have the opportunity to refute management's findings, the report remained obviously one-sided. Since the main evidence obtained by petitioner dealt principally on the alleged culpability of Saldivar, without his having had a chance to voice his side in view of his prior resignation, stringent examination

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should have been carried out to ascertain whether or not there existed independent legal grounds to hold Salatar answerable as well and, thereby, justify her dismissal. Finding none, from the records, we find her to have been unlawfully dismissed. WHEREFORE, the assailed resolution of public respondent National Labor Relations Commission dated December 29, 1987 is hereby AFFIRMED. Petitioner GMCR is ordered to REINSTATE private respondent Imelda Salazar and to pay her backwages equivalent to her salary for a period of two (2) years only. This decision is immediately executory. SO ORDERED. Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 113856 September 7, 1998 SAMAHANG MANGGAGAWA SA TOP FORM MANUFACTURING UNITED WORKERS OF THE PHILIPPINES (SMTFMUWP), its officers and members, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, HON. JOSE G. DE VERA and TOP FORM MANUFACTURING PHIL., INC., respondents. ROMERO, J.: The issue in this petition for certiorari is whether or not an employer committed an unfair labor practice by bargaining in bad faith and discriminating against its employees. The charge arose from the employer's refusal to grant across-the-board increases to its employees in implementing Wage Orders Nos. 01 and 02 of the Regional Tripartite Wages and Productivity Board of the National Capital Region (RTWPB-NCR). Such refusal was aggravated by the fact that prior to the issuance of said wage orders, the employer allegedly promised at the collective bargaining conferences to implement any government-mandated wage increases on an across-the-board basis. Petitioner Samahang Manggagawa sa Top Form Manufacturing United Workers of the Philippines (SMTFM) was the certified collective bargaining representative of all regular rank and file employees of private respondent Top Form Manufacturing Philippines, Inc. At the collective bargaining negotiation held at the Milky Way Restaurant in Makati, Metro Manila on February 27, 1990, the parties agreed to discuss unresolved economic issues. According to the minutes of the meeting, Article VII of the collective bargaining agreement was discussed. The following appear in said Minutes: Art. VII, Wages Sect. 1. Defer Sect. 2. Status quo Sec. 3. Union proposed that any future wage increase given by the government should be implemented by the company across-the-board or non-conditional. Management requested the union to retain this provision since their sincerity was already proven when the P25.00 wage increase was granted across-the-board. The union acknowledges management's sincerity but they are worried that in case there is a new set of management, they 1 can just show their CBA. The union decided to defer this provision. 2 In their joint affidavit dated January 30, 1992, union members Salve L. Barnes, Eulisa Mendoza, Lourdes Barbero and Concesa Ibaez affirmed that at the subsequent collective bargaining negotiations, the union insisted on the incorporation in the collective bargaining agreement (CBA) of the union proposal on "automatic across-the-board wage increase." They added that: 11. On the strength of the representation of the negotiating panel of the company and the above undertaking/promise made by its negotiating panel, our union agreed to drop said proposal relying on the undertakings made by the officials of the company who negotiated with us, namely, Mr. William Reynolds, Mr. Samuel Wong and Mrs. Remedios Felizardo. Also, in the past years, the company has granted to us government mandated wage increases on across-theboard basis.

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On October 15, 1990, the RTWPB-NCR issued Wage Order No. 01 granting an increase of P17.00 per day in the salary of workers. This was followed by Wage Order No. 02 dated December 20, 1990 providing for a P12.00 daily increase in salary. As expected, the union requested the implementation of said wage orders. However, they demanded that the increase be on an across-the-board basis. Private respondent refused to accede to that demand. Instead, it implemented a scheme of increases purportedly to avoid wage distortion. Thus, private respondent granted the P17.00 increase under Wage Order No. 01 to workers/employees receiving salary of P125.00 per day and below. The P12.00 increase mandated by Wage Order No. 02 was granted to those receiving the salary of P140.00 per day and below. For employees receiving salary higher than P125.00 or P140.00 per day, private respondent granted an 3 escalated increase ranging from P6.99 to P14.30 and from P6.00 to P10.00, respectively. On October 24, 1991, the union, through its legal counsel, wrote private respondent a letter demanding that it should "fulfill its pledge of sincerity to the union by granting an across-the-board wage increases (sic) to all employees under the wage orders." The union reiterated that it had agreed to "retain the old provision of CBA" on the strength of private respondent's "promise and assurance" of an across-the-board salary increase should the 4 government mandate salary increases. Several conferences between the parties notwithstanding, private respondent adamantly maintained its position on the salary increases it had granted that were purportedly designed to avoid wage distortion. Consequently, the union filed a complaint with the NCR NLRC alleging that private respondent's act of "reneging on its undertaking/promise clearly constitutes act of unfair labor practice through bargaining in bad faith." It charged private respondent with acts of unfair labor practices or violation of Article 247 of the Labor Code, as amended, 5 specifically "bargaining in bad faith," and prayed that it be awarded actual, moral and exemplary damages. In its position paper, the union added that it was charging private respondent with "violation of Article 100 of the Labor 6 Code." Private respondent, on the other hand, contended that in implementing Wage Orders Nos. 01 and 02, it had avoided "the existence of a wage distortion" that would arise from such implementation. It emphasized that only "after a reasonable length of time from the implementation" of the wage orders "that the union surprisingly raised the question that the company should have implemented said wage orders on an across-the-board basis." It asserted that there was no agreement to the effect that future wage increases mandated by the government should be implemented on an across-the-board basis. Otherwise, that agreement would have been incorporated and expressly stipulated in the CBA. It quoted the provision of the CBA that reflects the parties' intention to "fully set forth" therein all their agreements that had been arrived at after negotiations that gave the parties "unlimited right and opportunity to make demands and proposals with respect to any subject or matter not removed by law from the area of collective bargaining." The same CBA provided that during its effectivity, the parties "each voluntarily and unqualifiedly waives the right, and each agrees that the other shall not be obligated, to bargain collectively, with respect to any subject or matter not specifically referred to or covered by this Agreement, even though such subject or matter may not have been within the knowledge or contemplation of either or both of the 7 parties at the time they negotiated or signed this Agreement." 8 On March 11, 1992, Labor Arbiter Jose G. de Vera rendered a decision dismissing the complaint for lack of merit. He considered two main issues in the case: (a) whether or not respondents are guilty of unfair labor practice, and (b) whether or not the respondents are liable to implement Wage Orders Nos. 01 and 02 on an across-the-board basis. Finding no basis to rule in the affirmative on both issues, he explained as follows: The charge of bargaining in bad faith that the complainant union attributes to the respondents is bereft of any certitude inasmuch as based on the complainant union's own admission, the latter vacillated on its own proposal to adopt an across-the-board stand or future wage increases. In fact, the union acknowledges the management's sincerity when the latter allegedly implemented Republic Act 6727 on an across-the-board basis. That such union proposal was not adopted in the existing CBA was due to the fact that it was the union itself which decided for its deferment. It is, therefore, misleading to claim that the management undertook/promised to implement future wage increases on an across-the-board basis when as the evidence shows it was the union who asked for the deferment of its own proposal to that effect. The alleged discrimination in the implementation of the subject wage orders does not inspire belief at all where the wage orders themselves do not allow the grant of wage increases on an across-the-board basis. That there were employees who were granted the full extent of the

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increase authorized and some others who received less and still others who did not receive any increase at all, would not ripen into what the complainants termed as discrimination. That the implementation of the subject wage orders resulted into an uneven implementation of wage increases is justified under the law to prevent any wage distortion. What the respondents did under the circumstances in order to deter an eventual wage distortion without any arbitral proceedings is certainly commendable. The alleged violation of Article 100 of the Labor Code, as amended, as well as Article XVII, Section 7 of the existing CBA as herein earlier quoted is likewise found by this Branch to have no basis in fact and in law. No benefits or privileges previously enjoyed by the employees were withdrawn as a result of the implementation of the subject orders. Likewise, the alleged company practice of implementing wage increases declared by the government on an across-the-board basis has not been duly established by the complainants' evidence. The complainants asserted that the company implemented Republic Act No. 6727 which granted a wage increase of P25.00 effective July 1, 1989 on an across-the-board basis. Granting that the same is true, such isolated single act that respondents adopted would definitely not ripen into a company practice. It has been said that "a sparrow or two returning to Capistrano does not a summer make." Finally, on the second issue of whether or not the employees of the respondents are entitled to an across-the-board wage increase pursuant to Wage Orders Nos. 01 and 02, in the face of the above discussion as well as our finding that the respondents correctly applied the law on wage increases, this Branch rules in the negative. Likewise, for want of factual basis and under the circumstances where our findings above are adverse to the complainants, their prayer for moral and exemplary damages and attorney's fees may not be granted. 9 Not satisfied, petitioner appealed to the NLRC that, in turn, promulgated the assailed Resolution of April 29, 1993 dismissing the appeal for lack of merit. Still dissatisfied, petitioner sought reconsideration which, however, was denied by the NLRC in the Resolution dated January 17, 1994. Hence, the instant petition for certiorari contending that: -ATHE PUBLIC RESPONDENTS GROSSLY ERRED IN NOT DECLARING THE PRIVATE RESPONDENTS GUILTY OF ACTS OF UNFAIR LABOR PRACTICES WHEN, OBVIOUSLY, THE LATTER HAS BARGAINED IN BAD FAITH WITH THE UNION AND HAS VIOLATED THE CBA WHICH IT EXECUTED WITH THE HEREIN PETITIONER UNION. -BTHE PUBLIC RESPONDENTS SERIOUSLY ERRED IN NOT DECLARING THE PRIVATE RESPONDENTS GUILTY OF ACTS OF DISCRIMINATION IN THE IMPLEMENTATION OF NCR WAGE ORDER NOS. 01 AND 02. -CTHE PUBLIC RESPONDENTS SERIOUSLY ERRED IN NOT FINDING THE PRIVATE RESPONDENTS GUILTY OF HAVING VIOLATED SECTION 4, ARTICLE XVII OF THE EXISTING CBA. -DTHE PUBLIC RESPONDENTS GRAVELY ERRED IN NOT DECLARING THE PRIVATE RESPONDENTS GUILTY OF HAVING VIOLATED ARTICLE 100 OF THE LABOR CODE OF THE PHILIPPINES, AS AMENDED. -EASSUMING, WITHOUT ADMITTING THAT THE PUBLIC RESPONDENTS HAVE CORRECTLY RULED THAT THE PRIVATE RESPONDENTS ARE GUILTY OF ACTS OF UNFAIR LABOR PRACTICES, THEY COMMITTED SERIOUS ERROR IN NOT FINDING THAT THERE IS A SIGNIFICANT DISTORTION IN THE WAGE STRUCTURE OF THE RESPONDENT COMPANY. -FTHE PUBLIC RESPONDENTS ERRED IN NOT AWARDING TO THE PETITIONERS HEREIN ACTUAL, MORAL, AND EXEMPLARY DAMAGES AND ATTORNEY'S FEES. As the Court sees it, the pivotal issues in this petition can be reduced into two, to wit: (a) whether or not private respondent committed an unfair labor practice in its refusal to grant across-the-board wage increases in

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implementing Wage Orders Nos. 01 and 02, and (b) whether or not there was a significant wage distortion of the wage structure in private respondent as a result of the manner by which said wage orders were implemented. With respect to the first issue, petitioner union anchors its arguments on the alleged commitment of private respondent to grant an automatic across-the-board wage increase in the event that a statutory or legislated wage increase is promulgated. It cites as basis therefor, the aforequoted portion of the Minutes of the collective bargaining negotiation on February 27, 1990 regarding wages, arguing additionally that said Minutes forms part of the entire agreement between the parties. The basic premise of this argument is definitely untenable. To start with, if there was indeed a promise or undertaking on the part of private respondent to obligate itself to grant an automatic across-the-board wage increase, petitioner union should have requested or demanded that such "promise or undertaking" be incorporated in the CBA. After all, petitioner union has the means under the law to compel private respondent to incorporate this specific economic proposal in the CBA. It could have invoked Article 252 of the Labor Code defining "duty to bargain," thus, the duty includes "executing a contract incorporating such agreements if requested by either party." Petitioner union's assertion that it had insisted on the incorporation of the same proposal may have a factual basis considering the allegations in the aforementioned joint affidavit of its members. However, Article 252 also states that the duty to bargain "does not compel any party to agree to a proposal or make any concession." Thus, petitioner union may not validly claim that the proposal embodied in the Minutes of the negotiation forms part of the CBA that it finally entered into with private respondent. 10 The CBA is the law between the contracting parties the collective bargaining representative and the 11 employer-company. Compliance with a CBA is mandated by the expressed policy to give protection to labor. In the same vein, CBA provisions should be "construed liberally rather than narrowly and technically, and the courts must place a practical and realistic construction upon it, giving due consideration to the context in which it is 12 negotiated and purpose which it is intended to serve." This is founded on the dictum that a CBA is not an 13 ordinary contract but one impressed with public interest. It goes without saying, however, that only provisions embodied in the CBA should be so interpreted and complied with. Where a proposal raised by a contracting party 14 does not find print in the CBA, it is not a part thereof and the proponent has no claim whatsoever to its implementation. Hence, petitioner union's contention that the Minutes of the collective bargaining negotiation meeting forms part of the entire agreement is pointless. The Minutes reflects the proceedings and discussions undertaken in the process of bargaining for worker benefits in the same way that the minutes of court proceedings show what 15 transpired therein. At the negotiations, it is but natural for both management and labor to adopt positions or make demands and offer proposals and counter-proposals. However, nothing is considered final until the parties have reached an agreement. In fact, one of management's usual negotiation strategies is to ". . . agree tentatively 16 as you go along with the understanding that nothing is binding until the entire agreement is reached." If indeed private respondent promised to continue with the practice of granting across-the-board salary increases ordered by the government, such promise could only be demandable in law if incorporated in the CBA. Moreover, by making such promise, private respondent may not be considered in bad faith or at the very least, resorting to the scheme of feigning to undertake the negotiation proceedings through empty promises. As earlier stated, petitioner union had, under the law, the right and the opportunity to insist on the foreseeable fulfillment of the private respondent's promise by demanding its incorporation in the CBA. Because the proposal was never embodied in the CBA, the promise has remained just that, a promise, the implementation of which cannot be validly demanded under the law. 17 18 Petitioner's reliance on this Court's pronouncements in Kiok Loy v. NLRC is, therefore, misplaced. In that case, the employer refused to bargain with the collective bargaining representative, ignoring all notices for negotiations and requests for counter proposals that the union had to resort to conciliation proceedings. In that case, the Court opined that "(a) Company's refusal to make counter-proposal, if considered in relation to the entire bargaining process, may indicate bad faith and this is specially true where the Union's request for a counter-proposal is left unanswered." Considering the facts of that case, the Court concluded that the company was "unwilling to 19 negotiate and reach an agreement with the Union." In the case at bench, however, petitioner union does not deny that discussion on its proposal that all governmentmandated salary increases should be on an across-the-board basis was "deferred," purportedly because it relied 20 upon the "undertaking" of the negotiating panel of private respondent. Neither does petitioner union deny the fact that "there is no provision of the 1990 CBA containing a stipulation that the company will grant across-the-

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board to its employees the mandated wage increase." They simply assert that private respondent committed "acts 21 of unfair labor practices by virtue of its contractual commitment made during the collective bargaining process." The mere fact, however, that the proposal in question was not included in the CBA indicates that no contractual commitment thereon was ever made by private respondent as no agreement had been arrived at by the parties. Thus: Obviously the purpose of collective bargaining is the reaching of an agreement resulting in a contract binding on the parties; but the failure to reach an agreement after negotiations continued for a reasonable period does not establish a lack of good faith. The statutes invite and contemplate a collective bargaining contract, but they do not compel one. The duty to bargain 32 does not include the obligation to reach an agreement. . . . With the execution of the CBA, bad faith bargaining can no longer be imputed upon any of the parties thereto. All provisions in the CBA are supposed to have been jointly and voluntarily incorporated therein by the parties. This is not a case where private respondent exhibited an indifferent attitude towards collective bargaining because the negotiations were not the unilateral activity of petitioner union. The CBA is proof enough that private respondent 23 exerted "reasonable effort at good faith bargaining." Indeed, the adamant insistence on a bargaining position to the point where the negotiations reach an impasse does not establish bad faith. Neither can bad faith be inferred from a party's insistence on the inclusion of a 24 particular substantive provision unless it concerns trivial matters or is obviously intolerable. The question as to what are mandatory and what are merely permissive subjects of collective bargaining is of significance on the right of a party to insist on his position to the point of stalemate. A party may refuse to enter into a collective bargaining contract unless it includes a desired provision as to a matter which is a mandatory subject of collective bargaining; but a refusal to contract unless the agreement covers a matter which is not a mandatory subject is in substance a refusal to bargain about matters which are mandatory subjects of collective bargaining, and it is no answer to the charge of refusal to bargain in good faith that the insistence on the disputed clause was not the sole cause of the failure to agree or that agreement was not 25 reached with respect to other disputed clauses. On account of the importance of the economic issue proposed by petitioner union, it could have refused to bargain and to enter into a CBA with private respondent. On the other hand, private respondent's firm stand against the proposal did not mean that it was bargaining in bad faith. It had the right "to insist on (its) position to the point of stalemate." On the part of petitioner union, the importance of its proposal dawned on it only after the wage orders were issued after the CBA had been entered into. Indeed, from the facts of this case, the charge of bad faith bargaining on the part of private respondent was nothing but a belated reaction to the implementation of the wage orders that private respondent made in accordance with law. In other words, petitioner union harbored the notion that its members and the other employees could have had a better deal in terms of wage increases had it relentlessly pursued the incorporation in the CBA of its proposal. The inevitable conclusion is that private respondent did not commit the unfair labor practices of bargaining in bad faith and discriminating against its employees for implementing the wage orders pursuant to law. The Court likewise finds unmeritorious petitioner union's contention that by its failure to grant across-the-board 26 wage increases, private respondent violated the provisions of Section 5, Article VII of the existing CBA as well as Article 100 of the Labor Code. The CBA provision states: Sec. 5. The COMPANY agrees to comply with all the applicable provisions of the Labor Code of the Philippines, as amended, and all other laws, decrees, orders, instructions, jurisprudence, rules and regulations affecting labor. Art. 100 of the Labor Code on prohibition against elimination or diminution of benefits provides that "(n)othing 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 agree with the Labor Arbiter and the NLRC that no benefits or privileges previously enjoyed by petitioner union and the other employees were withdrawn as a result of the manner by which private respondent implemented the wage orders. Granted that private respondent had granted an across-the-board increase pursuant to Republic Act No. 6727, that single instance may not be considered an established company practice. Petitioner union's argument in this regard is actually tied up with its claim that the implementation of Wage Orders Nos. 01 and 02 by private respondent resulted in wage distortion.

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The issue of whether or not a wage distortion exists is a question of 27 fact that is within the jurisdiction of the quasi-judicial tribunals below. Factual findings of administrative agencies 28 are accorded respect and even finality in this Court if they are supported by substantial evidence. Thus, in Metropolitan Bank and Trust Company, Inc. v. NLRC, the Court said: The issue of whether or not a wage distortion exists as a consequence of the grant of a wage increase to certain employees, we agree, is, by and large, a question of fact the determination of which is the statutory function of the NLRC. Judicial review of labor cases, we may add, does not go beyond the evaluation of the sufficiency of the evidence upon which the labor officials' findings rest. As such, the factual findings of the NLRC are generally accorded not only respect but also finality provided that its decisions are supported by substantial evidence and devoid of any taint of unfairness or arbitrariness. When, however, the members of the same labor tribunal are not in accord on those aspects of a case, as in this case, this Court is well cautioned not to be as so conscious in passing upon the sufficiency of the evidence, let alone the conclusions derived 29 therefrom. Unlike in above-cited case where the Decision of the NLRC was not unanimous, the NLRC Decision in this case which was penned by the dissenter in that case, Presiding Commissioner Edna Bonto-Perez unanimously ruled that no wage distortions marred private respondent's implementation of the wage orders. The NLRC said: On the issue of wage distortion, we are satisfied that there was a meaningful implementation of Wage Orders Nos. 01 and 02. This debunks the claim that there was wage distortion as could be shown by the itemized wages implementation quoted above. It should be noted that this 30 itemization has not been successfully traversed by the appellants. . . . . The NLRC then quoted the labor arbiter's ruling on wage distortion. We find no reason to depart from the conclusions of both the labor arbiter and the NLRC. It is apropos to note, moreover, that petitioner's contention on the issue of wage distortion and the resulting allegation of discrimination against the private respondent's employees are anchored on its dubious position that private respondent's promise to grant an across-the-board increase in government-mandated salary benefits reflected in the Minutes of the negotiation is an enforceable part of the CBA. In the resolution of labor cases, this Court has always been guided by the State policy enshrined in the Constitution 31 that the rights of workers and the promotion of their welfare shall be protected. The Court is likewise guided by the goal of attaining industrial peace by the proper application of the law. It cannot favor one party, be it labor or management, in arriving at a just solution to a controversy if the party has no valid support to its claims. It is not within this Court's power to rule beyond the ambit of the law. WHEREFORE, the instant petition for certiorari is hereby DISMISSED and the questioned Resolutions of the NLRC AFFIRMED. No costs. SO ORDERED. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 120592 March 14, 1997 TRADERS ROYAL BANK EMPLOYEES UNION-INDEPENDENT, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and EMMANUEL NOEL A. CRUZ, respondents. REGALADO, J.: Petitioner Traders Royal Bank Employees Union and private respondent Atty. Emmanuel Noel A. Cruz, head of the E.N.A. Cruz and Associates law firm, entered into a retainer agreement on February 26, 1987 whereby the former obligated itself to pay the latter a monthly retainer fee of P3,000.00 in consideration of the law firm's undertaking 1 to render the services enumerated in their contract. Parenthetically, said retainer agreement was terminated by 2 the union on April 4, 1990.

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During the existence of that agreement, petitioner union referred to private respondent the claims of its members for holiday, mid-year and year-end bonuses against their employer, Traders Royal Bank (TRB). After the appropriate complaint was filed by private respondent, the case was certified by the Secretary of Labor to the National Labor Relations Commission (NLRC) on March 24, 1987 and docketed as NLRC-NCR Certified Case No. 3 0466. On September 2, 1988, the NLRC rendered a decision in the foregoing case in favor of the employees, awarding 4 them holiday pay differential, mid-year bonus differential, and year-end bonus differential. The NLRC, acting on a motion for the issuance of a writ of execution filed by private respondent as counsel for petitioner union, raffled 5 the case to Labor Arbiter Oswald Lorenzo. However, pending the hearing of the application for the writ of execution, TRB challenged the decision of the NLRC 6 before the Supreme Court. The Court, in its decision promulgated on August 30, 1990, modified the decision of the NLRC by deleting the award of mid-year and year-end bonus differentials while affirming the award of holiday 7 pay differential. The bank voluntarily complied with such final judgment and determined the holiday pay differential to be in the 8 amount of P175,794.32. Petitioner never contested the amount thus found by TRB. The latter duly paid its 9 concerned employees their respective entitlement in said sum through their payroll. 10 After private respondent received the above decision of the Supreme Court on September 18, 1990, he notified the petitioner union, the TRB management and the NLRC of his right to exercise and enforce his attorney's lien 11 over the award of holiday pay differential through a letter dated October 8, 1990. Thereafter, on July 2, 1991, private respondent filed a motion before Labor Arbiter Lorenzo for the determination of his attorney's fees, praying that ten percent (10%) of the total award for holiday pay differential computed by TRB at P175,794.32, or the amount of P17,579.43, be declared as his attorney's fees, and that petitioner union be 12 ordered to pay and remit said amount to him. The TRB management manifested before the labor arbiter that they did not wish to oppose or comment on private 13 respondent's motion as the claim was directed against the union, while petitioner union filed a comment and 14 opposition to said motion on July 15, 1991. After considering the position of the parties, the labor arbiter issued 15 an order on November 26, 1991 granting the motion of private respondent, as follows: WHEREFORE, premises considered, it is hereby ordered that the TRADERS ROYAL BANK EMPLOYEES UNION with offices at Kanlaon Towers, Roxas Boulevard is hereby ordered (sic) to pay without delay the attorney's fees due the movant law firm, E.N.A. CRUZ and ASSOCIATES the amount of P17,574.43 or ten (10%) per cent of the P175,794.32 awarded by the Supreme Court to the members of the former. This constrained petitioner to file an appeal with the NLRC on December 27, 1991, seeking a reversal of 16 that order. On October 19, 1994, the First Division of the NLRC promulgated a resolution affirming the order of the labor 17 arbiter. The motion for reconsideration filed by petitioner was denied by the NLRC in a resolution dated May 23, 18 1995, hence the petition at bar. Petitioner maintains that the NLRC committed grave abuse of discretion amounting to lack of jurisdiction in upholding the award of attorney's fees in the amount of P17,574.43, or ten percent (10%) of the P175,794.32 granted as holiday pay differential to its members, in violation of the retainer agreement; and that the challenged 19 resolution of the NLRC is null and void, for the reasons hereunder stated. Although petitioner union concedes that the NLRC has jurisdiction to decide claims for attorney's fees, it contends that the award for attorney's fees should have been incorporated in the main case and not after the Supreme Court had already reviewed and passed upon the decision of the NLRC. Since the claim for attorney's fees by private respondent was neither taken up nor approved by the Supreme Court, no attorney's fees should have been allowed by the NLRC. Thus, petitioner posits that the NLRC acted without jurisdiction in making the award of attorney's fees, as said act constituted a modification of a final and executory judgment of the Supreme Court which did not award attorney's fees. It then cited decisions of the Court declaring that a decision which has become final and executory can no longer be altered or modified even by the court which rendered the same. On the other hand, private respondent maintains that his motion to determine attorney's fees was just an incident of the main case where petitioner was awarded its money claims. The grant of attorney's fees was the consequence of his exercise of his attorney's lien. Such lien resulted from and corresponds to the services he

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rendered in the action wherein the favorable judgment was obtained. To include the award of the attorney's fees in the main case presupposes that the fees will be paid by TRB to the adverse party. All that the non-inclusion of attorney's fees in the award means is that the Supreme Court did not order TRB to pay the opposing party attorney's fees in the concept of damages. He is not therefore precluded from filing his motion to have his own professional fees adjudicated. In view of the substance of the arguments submitted by petitioner and private respondent on this score, it appears necessary to explain and consequently clarify the nature of the attorney's fees subject of this petition, in order to dissipate the apparent confusion between and the conflicting views of the parties. 20 There are two commonly accepted concepts of attorney's fees, the so-called ordinary and extraordinary. In its ordinary concept, an attorney's fee is the reasonable compensation paid to a lawyer by his client for the legal services he has rendered to the latter. The basis of this compensation is the fact of his employment by and his agreement with the client. In its extraordinary concept, an attorney's fee is an indemnity for damages ordered by the court to be paid by the losing party in a litigation. The basis of this is any of the cases provided by law where such award can be made, such as those authorized in Article 2208, Civil Code, and is payable not to the lawyer but to the client, unless they have agreed that the award shall pertain to the lawyer as additional compensation or as part thereof. It is the first type of attorney's fees which private respondent demanded before the labor arbiter. Also, the present controversy stems from petitioner's apparent misperception that the NLRC has jurisdiction over claims for attorney's fees only before its judgment is reviewed and ruled upon by the Supreme Court, and that thereafter the former may no longer entertain claims for attorney's fees. It will be noted that no claim for attorney's fees was filed by private respondent before the NLRC when it acted on the money claims of petitioner, nor before the Supreme Court when it reviewed the decision of the NLRC. It was only after the High Tribunal modified the judgment of the NLRC awarding the differentials that private respondent filed his claim before the NLRC for a percentage thereof as attorney's fees. It would obviously have been impossible, if not improper, for the NLRC in the first instance and for the Supreme Court thereafter to make an award for attorney's fees when no claim therefor was pending before them. Courts generally rule only on issues and claims presented to them for adjudication. Accordingly, when the labor arbiter ordered the payment of attorney's fees, he did not in any way modify the judgment of the Supreme Court. As an adjunctive episode of the action for the recovery of bonus differentials in NLRC-NCR Certified Case No. 0466, private respondent's present claim for attorney's fees may be filed before the NLRC even though or, better stated, especially after its earlier decision had been reviewed and partially affirmed. It is well settled that a claim for attorney's fees may be asserted either in the very action in which the services of a lawyer had been rendered or in 21 a separate action. With respect to the first situation, the remedy for recovering attorney's fees as an incident of the main action may 22 be availed of only when something is due to the client. Attorney's fees cannot be determined until after the main litigation has been decided and the subject of the recovery is at the disposition of the court. The issue over 23 attorney's fees only arises when something has been recovered from which the fee is to be paid. While a claim for attorney's fees may be filed before the judgment is rendered, the determination as to the propriety of the fees or as to the amount thereof will have to be held in abeyance until the main case from which the lawyer's claim for attorney's fees may arise has become final. Otherwise, the determination to be made by the 24 courts will be premature. Of course, a petition for attorney's fees may be filed before the judgment in favor of 25 the client is satisfied or the proceeds thereof delivered to the client. It is apparent from the foregoing discussion that a lawyer has two options as to when to file his claim for professional fees. Hence, private respondent was well within his rights when he made his claim and waited for the finality of the judgment for holiday pay differential, instead of filing it ahead of the award's complete resolution. To declare that a lawyer may file a claim for fees in the same action only before the judgment is reviewed by a higher tribunal would deprive him of his aforestated options and render ineffective the foregoing pronouncements of this Court. Assailing the rulings of the labor arbiter and the NLRC, petitioner union insists that it is not guilty of unjust enrichment because all attorney's fees due to private respondent were covered by the retainer fee of P3,000.00 which it has been regularly paying to private respondent under their retainer agreement. To be entitled to the additional attorney's fees as provided in Part D (Special Billings) of the agreement, it avers that there must be a separate mutual agreement between the union and the law firm prior to the performance of the additional

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services by the latter. Since there was no agreement as to the payment of the additional attorney's fees, then it is considered waived. En contra, private respondent contends that a retainer fee is not the attorney's fees contemplated for and commensurate to the services he rendered to petitioner. He asserts that although there was no express agreement as to the amount of his fees for services rendered in the case for recovery of differential pay, Article 111 of the Labor Code supplants this omission by providing for an award of ten percent (10%) of a money judgment in a labor case as attorney's fees. It is elementary that an attorney is entitled to have and receive a just and reasonable compensation for services performed at the special instance and request of his client. As long as the lawyer was in good faith and honestly trying to represent and serve the interests of the client, he should have a reasonable compensation for such 26 services. It will thus be appropriate, at this juncture, to determine if private respondent is entitled to an 27 additional remuneration under the retainer agreement entered into by him and petitioner. The parties subscribed therein to the following stipulations: xxx xxx xxx The Law Firm shall handle cases and extend legal services under the parameters of the following terms and conditions: A. GENERAL SERVICES 1. Assurance that an Associate of the Law Firm shall be designated and be available on a day-today basis depending on the Union's needs; 2. Legal consultation, advice and render opinion on any actual and/or anticipatory situation confronting any matter within the client's normal course of business; 3. Proper documentation and notarization of any or all transactions entered into by the Union in its day-to-day course of business; 4. Review all contracts, deeds, agreements or any other legal document to which the union is a party signatory thereto but prepared or caused to be prepared by any other third party; 5. Represent the Union in any case wherein the Union is a party litigant in any court of law or quasi-judicial body subject to certain fees as qualified hereinafter; 6. Lia(i)se with and/or follow-up any pending application or any papers with any government agency and/or any private institution which is directly related to any legal matter referred to the Law Firm. B. SPECIAL LEGAL SERVICES 1. Documentation of any contract and other legal instrument/documents arising and/or required by your Union which do not fall under the category of its ordinary course of business activity but requires a special, exhaustive or detailed study and preparation; 2. Conduct or undertake researches and/or studies on special projects of the Union; 3. Render active and actual participation or assistance in conference table negotiations with TRB management or any other third person(s), juridical or natural, wherein the presence of counsel is not for mere consultation except CBA negotiations which shall be subject to a specific agreement (pursuant to PD 1391 and in relation to BP 130 & 227); 4. Preparation of Position Paper(s), Memoranda or any other pleading for and in behalf of the Union; 5. Prosecution or defense of any case instituted by or against the Union; and, 6. Represent any member of the Union in any proceeding provided that the particular member must give his/her assent and that prior consent be granted by the principal officers. Further, the member must conform to the rules and policies of the Law Firm. C. FEE STRUCTURE In consideration of our commitment to render the services enumerated above when required or necessary, your Union shall pay a monthly retainer fee of THREE THOUSAND PESOS (PHP 3,000.00), payable in advance on or before the fifth day of every month. An Appearance Fee which shall be negotiable on a case-to-case basis. Any and all Attorney's Fees collected from the adverse party by virtue of a successful litigation shall belong exclusively to the Law Firm.

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It is further understood that the foregoing shall be without prejudice to our claim for reimbursement of all out-of-pocket expenses covering filing fees, transportation, publication costs, expenses covering reproduction or authentication of documents related to any matter referred to the Law Firm or that which redound to the benefit of the Union. D. SPECIAL BILLINGS In the event that the Union avails of the services duly enumerated in Title B, the Union shall pay the Law Firm an amount mutually agreed upon PRIOR to the performance of such services. The sum agreed upon shall be based on actual time and effort spent by the counsel in relation to the importance and magnitude of the matter referred to by the Union. However, charges may be WAIVED by the Law Firm if it finds that time and efforts expended on the particular services are inconsequential but such right of waiver is duly reserved for the Law Firm. xxx xxx xxx The provisions of the above contract are clear and need no further interpretation; all that is required to be done in the instant controversy is its application. The P3,000.00 which petitioner pays monthly to private respondent does not cover the services the latter actually rendered before the labor arbiter and the NLRC in behalf of the former. As stipulated in Part C of the agreement, the monthly fee is intended merely as a consideration for the law firm's commitment to render the services enumerated in Part A (General Services) and Part B (Special Legal Services) of the retainer agreement. The difference between a compensation for a commitment to render legal services and a remuneration for legal services actually rendered can better be appreciated with a discussion of the two kinds of retainer fees a client may pay his lawyer. These are a general retainer, or a retaining fee, and a special 28 retainer. A general retainer, or retaining fee, is the fee paid to a lawyer to secure his future services as general counsel for any ordinary legal problem that may arise in the routinary business of the client and referred to him for legal action. The future services of the lawyer are secured and committed to the retaining client. For this, the client pays the lawyer a fixed retainer fee which could be monthly or otherwise, depending upon their arrangement. The fees are paid whether or not there are cases referred to the lawyer. The reason for the remuneration is that the lawyer is deprived of the opportunity of rendering services for a fee to the opposing party or other parties. In fine, it is a compensation for lost opportunities. A special retainer is a fee for a specific case handled or special service rendered by the lawyer for a client. A client may have several cases demanding special or individual attention. If for every case there is a separate and independent contract for attorney's fees, each fee is considered a special retainer. 29 As to the first kind of fee, the Court has had the occasion to expound on its concept in Hilado vs. David in this wise: There is in legal practice what is called a "retaining fee," the purpose of which stems from the realization that the attorney is disabled from acting as counsel for the other side after he has given professional advice to the opposite party, even if he should decline to perform the contemplated services on behalf of the latter. It is to prevent undue hardship on the attorney resulting from the rigid observance of the rule that a separate and independent fee for consultation and advice was conceived and authorized. "A retaining fee is a preliminary fee given to an attorney or counsel to insure and secure his future services, and induce him to act for the client. It is intended to remunerate counsel for being deprived, by being retained by one party, of the opportunity of rendering services to the other and of receiving pay from him, and the payment of such fee, in the absence of an express understanding to the contrary, is neither made nor received in payment of the services contemplated; its payment has no relation to the obligation of the client to pay his attorney for the services for which he has retained him to perform." (Emphasis supplied). Evidently, the P3,000.00 monthly fee provided in the retainer agreement between the union and the law firm refers to a general retainer, or a retaining fee, as said monthly fee covers only the law firm's pledge, or as expressly stated therein, its "commitment to render the legal services enumerated." The fee is not payment for private respondent's execution or performance of the services listed in the contract, subject to some particular qualifications or permutations stated there.

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Generally speaking, where the employment of an attorney is under an express valid contract fixing the 30 compensation for the attorney, such contract is conclusive as to the amount of compensation. We cannot, however, apply the foregoing rule in the instant petition and treat the fixed fee of P3,000.00 as full and sufficient consideration for private respondent's services, as petitioner would have it. We have already shown that the P3,000.00 is independent and different from the compensation which private respondent should receive in payment for his services. While petitioner and private respondent were able to fix a fee for the latter's promise to extend services, they were not able to come into agreement as to the law firm's actual performance of services in favor of the union. Hence, the retainer agreement cannot control the measure of remuneration for private respondent's services. We, therefore, cannot favorably consider the suggestion of petitioner that private respondent had already waived his right to charge additional fees because of their failure to come to an agreement as to its payment. Firstly, there is no showing that private respondent unequivocally opted to waive the additional charges in consonance with Part D of the agreement. Secondly, the prompt actions taken by private respondent, i.e., serving notice of charging lien and filing of motion to determine attorney's fees, belie any intention on his part to renounce his right to compensation for prosecuting the labor case instituted by the union. And, lastly, to adopt such theory of petitioner may frustrate private respondent's right to attorney's fees, as the former may simply and unreasonably refuse to enter into any special agreement with the latter and conveniently claim later that the law firm had relinquished its right because of the absence of the same. The fact that petitioner and private respondent failed to reach a meeting of the minds with regard to the payment of professional fees for special services will not absolve the former of civil liability for the corresponding remuneration therefor in favor of the latter. 31 Obligations do not emanate only from contracts. One of the sources of extra-contractual obligations found in our Civil Code is the quasi-contract premised on the Roman maxim that nemo cum alterius detrimento locupletari 32 protest. As embodied in our law, certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasi-contract to the end that no one shall be unjustly enriched or benefited at the expense of another. A quasi-contract between the parties in the case at bar arose from private respondent's lawful, voluntary and unilateral prosecution of petitioner's cause without awaiting the latter's consent and approval. Petitioner cannot deny that it did benefit from private respondent's efforts as the law firm was able to obtain an award of holiday pay differential in favor of the union. It cannot even hide behind the cloak of the monthly retainer of P3,000.00 paid to private respondent because, as demonstrated earlier, private respondent's actual rendition of legal services is not compensable merely by said amount. Private respondent is entitled to an additional remuneration for pursuing legal action in the interest of petitioner before the labor arbiter and the NLRC, on top of the P3,000.00 retainer fee he received monthly from petitioner. The law firm's services are decidedly worth more than such basic fee in the retainer agreement. Thus, in Part C thereof on "Fee Structure," it is even provided that all attorney's fees collected from the adverse party by virtue of a successful litigation shall belong exclusively to private respondent, aside from petitioner's liability for appearance fees and reimbursement of the items of costs and expenses enumerated therein. A quasi-contract is based on the presumed will or intent of the obligor dictated by equity and by the principles of absolute justice. Some of these principles are: (1) It is presumed that a person agrees to that which will benefit him; (2) Nobody wants to enrich himself unjustly at the expense of another; and (3) We must do unto others what 33 we want them to do unto us under the same circumstances. As early as 1903, we allowed the payment of reasonable professional fees to an interpreter, notwithstanding the 34 lack of understanding with his client as to his remuneration, on the basis of quasi-contract. Hence, it is not necessary that the parties agree on a definite fee for the special services rendered by private respondent in order that petitioner may be obligated to pay compensation to the former. Equity and fair play dictate that petitioner should pay the same after it accepted, availed itself of, and benefited from private respondent's services. We are not unaware of the old ruling that a person who had no knowledge of, nor consented to, or protested against the lawyer's representation may not be held liable for attorney's fees even though he benefited from the 35 lawyer's services. But this doctrine may not be applied in the present case as petitioner did not object to private respondent's appearance before the NLRC in the case for differentials. Viewed from another aspect, since it is claimed that petitioner obtained respondent's legal services and assistance regarding its claims against the bank, only they did not enter into a special contract regarding the compensation 36 therefor, there is at least the innominate contract of facio ut des (I do that you may give). This rule of law,

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likewise founded on the principle against unjust enrichment, would also warrant payment for the services of private respondent which proved beneficial to petitioner's members. In any case, whether there is an agreement or not, the courts can fix a reasonable compensation which lawyers should receive for their professional services. 37 However, the value of private respondent's legal services should not be established on the basis of Article 111 of the Labor Code alone. Said article provides: Art. 111. Attorney's fees. (a) In cases of unlawful withholding of wages the culpable party may be assessed attorney's fees equivalent to ten percent of the amount of the wages recovered. xxx xxx xxx 38 The implementing provision of the foregoing article further states: Sec. 11. Attorney's fees. Attorney's fees in any judicial or administrative proceedings for the recovery of wages shall not exceed 10% of the amount awarded. The fees may be deducted from the total amount due the winning party. In the first place, the fees mentioned here are the extraordinary attorney's fees recoverable as indemnity for damages sustained by and payable to the prevailing part. In the second place, the ten percent (10%) attorney's fees provided for in Article 111 of the Labor Code and Section 11, Rule VIII, Book III of the Implementing Rules is 39 the maximum of the award that may thus be granted. Article 111 thus fixes only the limit on the amount of attorney's fees the victorious party may recover in any judicial or administrative proceedings and it does not even prevent the NLRC from fixing an amount lower than the ten percent (10%) ceiling prescribed by the article when 40 circumstances warrant it. The measure of compensation for private respondent's services as against his client should properly be addressed by the rule of quantum meruit long adopted in this jurisdiction. Quantum meruit, meaning "as much as he 41 deserves," is used as the basis for determining the lawyer's professional fees in the absence of a contract, but recoverable by him from his client. Where a lawyer is employed without a price for his services being agreed upon, the courts shall fix the amount on 42 quantum meruit basis. In such a case, he would be entitled to receive what he merits for his services. It is essential for the proper operation of the principle that there is an acceptance of the benefits by one sought to be charged for the services rendered under circumstances as reasonably to notify him that the lawyer performing the task was expecting to be paid compensation therefor. The doctrine of quantum meruit is a device to prevent undue enrichment based on the equitable postulate that it is unjust for a person to retain benefit without paying 43 for it. Over the years and through numerous decisions, this Court has laid down guidelines in ascertaining the real worth of a lawyer's services. These factors are now codified in Rule 20.01, Canon 20 of the Code of Professional Responsibility and should be considered in fixing a reasonable compensation for services rendered by a lawyer on the basis of quantum meruit. These are: (a) the time spent and the extent of services rendered or required; (b) the novelty and difficulty of the questions involved; (c) the importance of the subject matter; (d) the skill demanded; (e) the probability of losing other employment as a result of acceptance of the proffered case; (f) the customary charges for similar services and the schedule of fees of the IBP chapter to which the lawyer belongs; (g) the amount involved in the controversy and the benefits resulting to the client from the services; (h) the contingency or certainty of compensation; (i) the character of the employment, whether occasional or established; and (j) the professional standing of the lawyer. Here, then, is the flaw we find in the award for attorney's fees in favor of private respondent. Instead of adopting the above guidelines, the labor arbiter forthwith but erroneously set the amount of attorney's fees on the basis of Article 111 of the Labor Code. He completely relied on the operation of Article 111 when he fixed the amount of 44 45 attorney's fees at P17,574.43. Observe the conclusion stated in his order. xxx xxx xxx FIRST. Art. 111 of the Labor Code, as amended, clearly declares movant's right to a ten (10%) per cent of the award due its client. In addition, this right to ten (10%) per cent attorney's fees is supplemented by Sec. 111, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code, as amended. xxx xxx xxx As already stated, Article 111 of the Labor Code regulates the amount recoverable as attorney's fees in the nature of damages sustained by and awarded to the prevailing party. It may not be used therefore, as the lone standard in fixing the exact amount payable to the lawyer by his client for the legal services he rendered. Also, while it limits

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the maximum allowable amount of attorney's fees, it does not direct the instantaneous and automatic award of attorney's fees in such maximum limit. It, therefore, behooves the adjudicator in questions and circumstances similar to those in the case at bar, involving a conflict between lawyer and client, to observe the above guidelines in cases calling for the operation of the principles of quasi-contract and quantum meruit, and to conduct a hearing for the proper determination of attorney's fees. The criteria found in the Code of Professional Responsibility are to be considered, and not disregarded, in assessing the proper amount. Here, the records do not reveal that the parties were duly heard by the labor arbiter on the matter and for the resolution of private respondent's fees. 46 It is axiomatic that the reasonableness of attorney's fees is a question of fact. Ordinarily, therefore, we would have remanded this case for further reception of evidence as to the extent and value of the services rendered by private respondent to petitioner. However, so as not to needlessly prolong the resolution of a comparatively simple controversy, we deem it just and equitable to fix in the present recourse a reasonable amount of attorney's fees in favor of private respondent. For that purpose, we have duly taken into account the accepted guidelines therefor and so much of the pertinent data as are extant in the records of this case which are assistive in that regard. On such premises and in the exercise of our sound discretion, we hold that the amount of P10,000.00 is a reasonable and fair compensation for the legal services rendered by private respondent to petitioner before the labor arbiter and the NLRC. WHEREFORE, the impugned resolution of respondent National Labor Relations Commission affirming the order of the labor arbiter is MODIFIED, and petitioner is hereby ORDERED to pay the amount of TEN THOUSAND PESOS (P10,000.00) as attorney's fees to private respondent for the latter's legal services rendered to the former. SO ORDERED. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. L-60337 August 21, 1987 UNIVERSAL CORN PRODUCTS (A DIVISION OF UNIVERSAL ROBINA CORPORATION), petitioner, vs. THE NATIONAL LABOR RELATIONS COMMISSION and JOSE ARMAS, ENGRACIO ASIS, AUSTERINAO ELEUTERIO, FAUSTINO ATIENZA, MARIO ALTARES, JAIME ALTARES, ISIDRO ARANO, LEONILO ARANO, ALFREDO ANCHETA, DOMINGO ANCHETA, RIZALITO, ABANTO, RIZALITO, CRESENCIO ASCUTIA, JESUS ASCUTIA, FELICIANO ABORQUE, WILFREDO ARMENIO, ALEJANDRO ABAGAT, PABLO ADLAWAN, FILEMON ABADINES, ROMEO AREVALO, PABLO BUTIAL, BANAAG REMIGIO, LUCIO BERDIJO, ANTONIO BIONSON, ABELARDO BRACAMONTE, SAMSON BORDEOS, TEODORO, BARBIANA, FRANCISCO BABOR, HERCULANO BARRAMEDA, RODRIGO BONGAIS, JAIME BERANA, EDUARDO, BUENAVENTURA, RODRIGO BAUTISTA, FELEMON BAUTISTA, DIONISIO BERNALES, MARIANO BALAGTAS, ALFREDO BERNADAS, EPIGENIO BORDEOS, BRIGIDO BAER, OSCAR BONDOC, JOSE BONDOC, ROMEO BUCAYAN, VITALIANO BATOBATO, DOMINGO BALLON, JOSE BORLEO, JOSE BORJA, RUFINO CLEMENTE, JUAN CABALLERO, TRANQUILINA CAUSON, AUGORIO CALNEA, LEOPOLDO CUARTERO, ALBERTO CATBAGAN, ROMEO CALIVO, ANDRES CUNTAPAY, ALBERTO CASTRO, CASTOR RODRIGO, SIMPLICIO CACATIAN, NILO DALANON, BIENVENIDO DUMAGAT, SR., BIENVENIDO DUMAGAT, JR., DOMINADOR DUMANTAY, TEODORO DULOMBAL, RODOLFO DANDAN, SALVADOR DASIGO, ELIAS DASIGO, FRANCISCO ESTOLANO, LEOPOLDO ESTIOCO, ROGELIO ESTANISLAO, MONTANO ESTANISLAO, ELIAS ESTRADA, ERNESTO ESTABALLIO, FERNANDO FERNANDEZ, PEDRO GETEZO, ALFONSO DE GUZMAN, LORENZO DE GUZMAN, MODESTO DE GUZMAN, ARELLANO GARCIA, ALFREDO GARCIA, MANUEL GOROSPE, RAYMUNDO GELLIDO, RODOLFO GALEON, ROMEO GONZALES, GERARDO GERMEDIA, BENITO GALE, ROBERTO HASAL, EDILBERTO HERNANDEZ, RAFAEL IGUIZ, MARGARITO JAVIER, PABLO JOSE, PEDRO JOVE, CELEDONIO JACA, REYNALDO JALLA, EDUARDO JUMAQUIO, DOMINGO JUANO, AGUSTIN KHO, ANTONIO LAMERA, RODOLFO LINEZO, MANUEL LAMBATIN, MANUEL LOPEZ, BENEDICTO LOPEZ, MARIANO LARA, ELINO MISA, FRANCISCO MINA, RODOLFO MIRABEL, ROGER MIRABEL, ROLANDO MIRABEL, OSCAR MARTINEZ, MIGUEL MANACIO, PEDRO MANALO, LEOPOLDO MARQUEZ, ANTONIO, MEDINA, SALVADOR MARAINAN, NAPOLEON MAGAYA, ALFREDO MAQUI, EDUARDO MILLET, PABLO MENDEZ, DULCISIMO NATIVIDAD, ROMEO NAGTALON, ALFONSO NOQUEZ, ALEJANDRO NOQUEZ, ANASTACIO NIVAL, EMILIO ORTIZ, PONCIANO ORLANDA, GERARDO POSADAS, ATICO PEDRIGOZA, ALFREDO PASCUA, LEONARDO PATRON, MIGUEL PACHECO, DOMINGO PACHECO, FELIMON POLICARPIO, ERNESTO QUIJANO, EFREN QUIBOTE, SIMEON RESCO,

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FERNANDO REYNOSO, EMILIO RIVERA, GRACIANO RAMOS, REYNALDO RAMIREZ, PAQUITO RAMIREZ, THOMAS ROSARIO, JR., ROMULO REYES, REYNALDO RAPSING, ALFREDO DEL ROSARIO, FLORENCIO SASAN, ALFONSO SAMSON, LUIS SUAREZ, GREGORIO SOMODO, FRANCISCO SAPLAN, LUCIANO SARNO, RICARDO SOREL, CRESENCIO SANTOS, ARSENIO SERGA JR., BALTAZAR TALATO, DIOSDADO TULANG, EUGENIO TOLENTINO, AMADOR TABULOG, LAZARO TORRES, JAIME TRAJANO, GENEROSO TANTE, SERGIO TABUAC, ANASTACIO TIMOG, DANIEL UDAN, HERMENIGILDO VITO, VICENTE VITO, BENJAMIN VILLAMOR, ARTURO VALIENTE, ERNESTO VALIENTE, FELICISIMO VERA, respondents. SARMIENTO, J.: The petitioner invokes National Federation of Sugar Workers (NFSW) v. Ovejera, 1 in which we held that 2 Presidential Decree No. 851, the 13th-month pay law, does not cover employers already paying their employees an "equivalent" to the 13th month pay. There is no dispute as to the facts. Sometime in May, 1972, the petitioner and the Universal Corn Products Workers Union entered into a collective bargaining agreement in which it was provided, among other things, that: xxx xxx xxx The COMPANY agrees to grant all regular workers within the bargaining unit with at least one (1) year of continuous service, a Christmas bonus equivalent to the regular wages for seven (7) working days, effective December, 1972. The bonus shall be given to the workers on the second week of December. In the event that the service of a worker is not continuous due to factory shutdown, machine breakdown or prolonged absences or leaves, the Christmas bonus shall be prorated in 3 accordance with the length of services that worker concerned has served during the year . xxx xxx xxx The agreement had a duration of three years, effective June 1, 1971, or until June 1, 1974. On account however of differences between the parties with respect to certain economic issues, the collective bargaining agreement in question expired without being renewed. On June 1, 1979, the parties entered into an "addendum" stipulating certain wage increases covering the years from 1974 to 1977. Simultaneously, they entered into a collective bargaining agreement for the years from 1979 to 1981. Like the "addendum," the new collective bargaining agreement did not refer to the "Christmas bonus" theretofore paid but dealt only with salary adjustments. According to the petitioner, the new agreements deliberately excluded the grant of Christmas bonus 4 with the enactment of Presidential Decree No. 851 on December 16, 1975. It further claims that since 1975, it 5 had been paying its employees 13th-month pay pursuant to the Decree. For failure of the petitioner to pay the seven-day Christmas bonus for 1975 to 1978 inclusive, in accordance with 6 the 1972 CBA, the union went to the labor arbiter for relief. In his decision, the labor arbiter ruled that the payment of the 13th month pay precluded the payment of further Christmas bonus. The union appealed to the National Labor Relations Commission (NLRC). The NLRC set aside the decision of the labor arbiter appealed from and entered another one, "directing respondent company [now the petitioner] to pay the members concerned of complainants [sic] union their 7-day wage bonus in accordance with the 1972 CBA from 1975 to 1978." Justifying its reversal of the arbiter's decision, the NLRC held: xxx xxx xxx It is clear that the company implemented the aforequoted provision of the CBA in 1972, 1973 and 1974. In view thereof it is our considered opinion that the crediting of said benefit to the 13th month pay cannot be sanctioned on the ground that it is contrary to Section 10 of the Rules and Regulations Implementing Presidential Decree No. 85 1, which provides, to wit; 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. More so because the benefit involved was not magnanimously extended by the company to its employees but was obtained by the latter thru bargaining negotiations. The aforementioned CBA was the law between the parties and the provisions thereof must be faithfully observed by them during its effectivity. In this connection, it should be noted that the same parties entered into

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another 3-year CBA on June 11, 1979, which no longer provides for a 7-day wage Christmas bonus. In effect, therefore, the parties agreed to discontinue the privilege, which agreement 7 should also be respected. xxx xxx xxx We hold that in the case at bar, Ovejera (La Carlota) case does not apply. 8 We apply instead, United CMC Textile Workers Union v. Valenzuela a recent decision. In that case this Court, speaking through Mr. Justice Edgardo Paras, held: xxx xxx xxx ... If the Christmas bonus was included in the 13th month pay, then there would be no need for having a specific provision on Christmas bonus in the CBA. But it did not provide for a bonus in graduated amounts depending on the length of service of the employee. The intention is clear therefore that the bonus provided in the CBA was meant to be in addition to the legal requirement. Moreover, why exclude the payment of the 1978 Christmas bonus and pay only the 1979-1980 bonus. The classification of the company's workers in the CBA according to their years of service supports the allegation that the reason for the payment of bonus was to give bigger award to the senior employees-a purpose which is not found by P.D. 851. A bonus under the CBA is an obligation created by the contract between the management and workers while the 13th 9 month pay is mandated by the law (P. D. 851). xxx xxx xxx In the same vein, we consider the seven-day bonus here demanded "to be in addition to the legal requirement." Although unlike the Valenzuela CBA, which took effect after the promulgation of Presidential Decree No. 851 in 1975, the subject agreement was entered into as early as 1972, that is no bar to our application of Valenzuela. What is significant for us is the fact that, like the Valenzuela, agreement, the Christmas bonus provided in the collective bargaining agreement accords a reward, in this case, for loyalty, to certain employees. This is evident from the stipulation granting the bonus in question to workers "with at least one (1) year of continuous service." As we said in Valenzuela" this is "a purpose not found in P.D. 851." 10 It is claimed, however, that as a consequence of the impasse between the parties beginning 1974 through 1979, no collective bargaining agreement was in force during those intervening years. Hence, there is allegedly no basis for the money award granted by the respondent labor body. But it is not disputed that under the 1972 collective bargaining agreement, [i]f no agreement and negotiations are continued, all the provisions of this Agreement shall remain in full force up to the time a new agreement is executed." 11 The fact, therefore, that the new agreements are silent on the seven-day bonus demanded should not preclude the private respondents' claims thereon. The 1972 agreement is basis enough for such claims for the whole writing is " "instinct with an obligation," imperfectly express." 12 WHEREFORE, premises considered, the petition is hereby DISMISSED. The Decision of the public respondent NLRC promulgated on February 11, 1982, and its Resolution dated March 23, 1982, are hereby AFFIRMED. The temporary restraining order issued on May 19, 1982 is LIFTED. This Decision is IMMEDIATELY EXECUTORY. No pronouncement as to costs. SO ORDERED. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. L-49774 February 24, 1981 SAN MIGUEL CORPORATION (CAGAYAN COCA-COLA PLANT), petitioner, vs. Hon. AMADO G. INCIONG, Deputy Minister of Labor and CAGAYAN COCA-COLA FREE WORKERS UNION, respondents. DE CASTRO, J.:

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Petition for certiorari and prohibition, with preliminary injunction to review the Order dated December 19, 1978 rendered by the Deputy Minister of Labor in STF ROX Case No. 009-77 docketed as "Cagayan Coca-Cola Free Workers Union vs. Cagayan Coca-Cola Plant, San Miguel Corporation, " which denied herein petitioner's motion for 2 reconsideration and ordered the immediate execution of a prior Order dated June 7, 1978. On January 3, 1977, Cagayan Coca-Cola Free Workers Union, private respondent herein, filed a complaint against San Miguel Corporation (Cagayan Coca-Cola Plant), petitioner herein, alleging failure or refusal of the latter to include in the computation of 13th- month pay such items as sick, vacation or maternity leaves, premium for work done on rest days and special holidays, including pay for regular holidays and night differentials. 3 An Order dated February 15, 1977 was issued by Regional Office No. X where the complaint was filed requiring herein petitioner San Miguel Corporation (Cagayan Coca-Cola Plant) "to pay the difference of whatever earnings and the amount actually received as 13th month pay excluding overtime premium and emergency cost of living allowance. " Herein petitioner appealed from that Order to the Minister of Labor in whose behalf the Deputy Minister of Labor 4 Amado G. Inciong issued an Order dated June 7, 1978 affirming the Order of Regional Office No. X and dismissing the appeal for lack of merit. Petitioner's motion for reconsideration having been denied, it filed the instant petition. 5 On February 14, 1979, this Court issued a Temporary Restraining Order enjoining respondents from enforcing the Order dated December 19, 1978. The crux of the present controversy is whether or not in the computation of the 13th-month pay under Presidential Decree 851, payments for sick, vacation or maternity leaves, premium for work done on rest days and special holidays, including pay for regular holidays and night differentials should be considered. Public respondent's consistent stand on the matter since the effectivity of Presidential Decree 851 is that "payments for sick leave, vacation leave, and maternity benefits, as well as salaries paid to employees for work 6 performed on rest days, special and regular holidays are included in the computation of the 13th-month pay. On its part, private respondent cited innumerable past rulings, opinions and decisions rendered by then Acting Labor Secretary Amado G. Inciong to the effect that, "in computing the mandatory bonus, the basis is the total gross basic salary paid by the employer during the calendar year. Such gross basic salary includes: (1) regular salary or wage; (2) payments for sick, vacation and maternity leaves; (3) premium for work performed on rest days or holidays: (4) holiday pay for worked or unworked regular holiday; and (5) emergency allowance if given in the form 7 of a wage adjustment." Petitioner, on the other hand, assails as erroneous the aforesaid order, ruling and opinions, vigorously contends that Presidential Decree 851 speaks only of basic salary as basis for the determination of the 13th-month pay; submits that payments for sick, vacation, or maternity leaves, night differential pay, as well as premium paid for work performed on rest days, special and regular holidays do not form part of the basic salary; and concludes that the inclusion of those payments in the computation of the 13th-month pay is clearly not sanctioned by Presidential Decree 851. The Court finds petitioner's contention meritorious. The provision in dispute is Section 1 of Presidential Decree 851 and provides: All employers are hereby required to pay all their employees receiving a basic salary of not more than Pl,000 a month, regardless of the nature of the employment, a 13th-month pay not later than December 24 of every year. Section 2 of the Rules and Regulations for the implementation of Presidential Decree 851 provides: 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 on 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. 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.

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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 tile 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 issued by the 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 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 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 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 renumeration" which are deemed not part of the basic salary includes within its meaning payments for sick, vacation, or maternity leaves. Maternity 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 they, were not so 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 hours a day provided what 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 that prernium for special holiday which is at least 30% of the regular wage is an additional compensation 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. WHEREFORE, the Orders of the Deputy Labor Minister dated June 7, 1978 and December 19, 1978 are hereby set aside and a new one entered as above indicated. The Temporary Restraining Order issued by this Court on February 14, 1979 is hereby made permanent. No pronouncement as to costs. SO ORDERED. Republic of the Philippines SUPREME COURT Manila EN BANC

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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 BoieTakeda 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 1 the second paragraph of Section 5 (a) 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 BoieTakeda 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

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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 2 For the Year 1986 Name of Total Amount Paid Montly Fixed 3 Salesman Earnings as 13th Month Pay Wages x 12 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

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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 4 bonuses." 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 5 Relations, 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 6 would be a contingent one dependent upon the realization of profits. . . . (Emphasis supplied) 7 In Atok-Big Wedge Mining Co., Inc. v. Atok-Big Wedge Mutual Benefit Association, 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 8 obtained, or the amount of actual work accomplished, the bonus does not accrue. . . . (Emphasis supplied) More recently, the non-demandable character of a bonus was stressed by the Court in Traders Royal Bank v. 9 National Labor Relations Commission: 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

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employee's basic salaries or wages . . ." (Kamaya Point Hotel v. NLRC, 177 SCRA 160 [1989]). (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 profitsharing 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.

10

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Republic of the Philippines SUPREME COURT Manila SECOND DIVISION 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

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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 1 representatives in the computation of their 13th month pay, Ramos served a Notice of Inspection Results 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

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under the effort of a particular representative, there is no commission during the period when no sale was 2 transacted, so that commissions are not and cannot be legally defined as regular in nature. 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 3 to be resolved on the basis of the evidence at hand. On July 24, 1989, Director Piezas issued an Order 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. 4 A motion for reconsideration 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 5 computation of their 13th month pay. 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 6 Results, 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. 7 Subsequently, Regional Director Luna C. Piezas issued an Order dated August 23, 1990, 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 nonimplementation 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

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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.

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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, generallyaccepted meaning, i.e., as a rate of pay for a standard work period exclusive of such additional payments as 8 bonuses and overtime. 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 9 entitled for extra work. 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

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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. 10 They cannot widen its scope. An administrative agency cannot amend an act of Congress. 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. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 107994 August 14, 1995 PHILIPPINE AGRICULTURAL COMMERCIAL AND INDUSTRIAL WORKERS UNION (PACIWU)-TUCP, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION AND VALLACAR TRANSIT, INC., respondents. KAPUNAN, J.: This is a petition for certiorari seeking to reverse the decision of the National Labor Relations Commission (NLRC) in NLRC Case No. V-0159-92 which dismissed the appeal of petitioner union and in effect, affirmed the decision of the Labor Arbiter ordering the dismissal of the complaint of petitioner for payment of 13th month pay to the drivers and conductors of respondent company. Petitioner Philippine Agricultural Commercial and Agricultural Workers Union TUCP is the exclusive bargaining agent of the rank and file employees of respondent Vallacar Transit, Inc. Petitioner union instituted a complaint with NLRC Regional Arbitration Branch No. VI, Bacolod City, for payment of 13th month pay in behalf of the drivers and conductors of respondent company's Visayan operation on the ground that although said drivers and conductors are compensated on a "purely commission" basis as described in their Collective Bargaining Agreement (CBA), they are automatically entitled to the basic minimum pay mandated by law should said commission be less 1 than their basic minimum for eight (8) hours work. In its position paper, respondent Vallacar Transit, Inc. contended that since said drivers and conductors are compensated on a purely commission basis, they are not entitled to 13th month pay pursuant to the exempting provisions enumerated in paragraph 2 of the Revised Guidelines on the Implementation of the Thirteenth Month 2 Pay Law. It further contended that Section 2 of Article XIV of the Collective Bargaining Agreement (CBA) concluded on October 17, 1988 expressly provided that "drivers and conductors paid on a purely commission are not legally entitled to 13th month pay." Said CBA, being the law between the parties, must be respected, respondent opined. 3 On May 22, 1992, Labor Arbiter Reynaldo Gulmatico rendered a decision dismissing the complaint. 4 The appeal of the petitioner to the National Labor Relations Commission was likewise dismissed so was the 5 motion for reconsideration of the said decision. Hence, the present petition. The principal issue posed for consideration is whether or not the bus drivers and conductors of respondent Vallacar Transit, Inc. are entitled to 13th month pay. We rule in the affirmative. It may be recalled that on December 16, 1975, P.D. 851, otherwise known as the "13th Month Pay" Law, was promulgated. The same prescribed payment of 13th month pay in the following terms: Sec. 1. All employers are hereby required to pay all their employees receiving a 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.

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The Rules and Regulations Implementing P.D. No. 851, issued by the then Secretary of Labor and Employment on December 22, 1975, defined the following basic terms: xxx xxx xxx (a) 13th 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 employer for services rendered, but may not include cost of living allowances granted pursuant to Presidential Decree No. 525 or Letter of Instructions No. 174, profitsharing 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. xxx xxx xxx On August 13, 1986, President Corazon C. Aquino, exercising both executive and legislative authority, issued Memorandum Order No. 28 which provided as follows: xxx xxx xxx Sec.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. xxx xxx xxx In connection with and in implementation of Memorandum Order No. 28, the then Minister of Labor and Employment issued MOLE Explanatory Bulletin No. 86-12 on November 24, 1986. Item No. 5 (a) of the said issuance read: xxx xxx xxx Employees who are paid a fixed or guaranteed wage plus commission are also entitled to the mandated 13th month pay, based on their total earning(s) during the calendar year, i.e., on both their fixed and guaranteed wage and commission. xxx xxx xxx (emphasis ours) From the foregoing legal milieu, it is clear that every employee receiving a commission in addition to a fixed or guaranteed wage or salary, is entitled to a 13th month pay. For purposes of entitling rank and file employees a 13th month pay, it is immaterial whether the employees concerned are paid a guaranteed wage plus commission or a commission with guaranteed wage inasmuch as the botton line is that they receive a guaranteed wage. This is correctly construed in the MOLE Explanatory Bulletin No. 86-12. In the case at bench, while the bus drivers and conductors of respondent company are considered by the latter as being compensated on a commission basis, they are not paid purely by what they receive as commission. As admitted by respondent company, the said bus drivers and conductors are automatically entitled to the basic minimum pay mandated by law in case the commissions they earned be less than their basic minimum for eight (8) 6 hours work. Evidently therefore, the commissions form part of the wage or salary of the bus drivers and conductors. A contrary interpretation would allow an employer to skirt the law and would result in an absurd situation where an employee who receives a guaranteed minimum basic pay cannot be entitled to a 13th month pay simply because he is technically referred to by his employer per the CBA as an employee compensated on a purely commission basis. Such would be a narrow interpretation of the law, certainly not in accord with the liberal spirit of our labor laws. Moreover, what is controlling is not the label attached to the remuneration that the 7 employee receives but the nature of the remuneration and the purpose for which the 13th month pay was given to alleviate the plight of the working masses who are receiving low wages. This is extant from the "WHEREASES" of PD 851, to wit: WHEREAS, it is necessary to further protect the level of real wages from the ravage of world-wide inflation. WHEREAS, there has been no increase in the legal minimum wage since 1970. WHEREAS, the Christmas season is an opportune time for society to show its concern for the plight of the working masses so they may properly celebrate Christmas and New Year. Misplaced legal hermeneutics cannot be countenanced to evade paying the rank and file what is due to them under the law.

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Commission is the recompense, compensation, reward of an employee, agent, salesman, executor, trustee, receiver, factor, broker or bailee, when the same is calculated as a percentage on the amount of his transactions or 8 on the profit of the principal. While said commissions may be in the form of incentives or encouragement to inspire said bus drivers and conductors to put a little more zeal and industry on their jobs, still, it is safe to say that the same are direct remunerations for services rendered, given the small remuneration they receive for the 9 services they render, which is precisely the reason why private respondent allowed the drivers and conductors a guaranteed minimum wage. The conclusion is ineluctable that said commissions are part of their salary. In 10 Philippine Duplicators, Inc. v. National Labor Relations Commission, we had the occasion to estate that: . . . Article 97 (f) of the Labor Code defines the term "wage" (which is equivalent to "salary," as used in P.D. No. 851 and Memorandum Order No. 28) in the following terms: (f) "Wage" paid to any employee shall mean the remuneration or earnings, however designated, capable of being expressed in term of money, 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 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. In the instant case, there is no question that the sales commissions earned by 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 salary structure was intended for the benefit of 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 or its salesmen for rendering services to petitioner 11 corporation. In sum, the 13th month pay of the bus drivers and conductors who are paid a fixed or guaranteed minimum wage in case their commissions be less than the statutory minimum, and commissions only in case where the same is over and above the statutory minimum, must be equivalent to one-twelfth (1/12) of their total earnings during the calendar year. WHEREFORE, the petition is hereby GRANTED. The decision of respondent National Labor Relations Commission is hereby REVERSED and SET ASIDE. The case is remanded to the labor Arbiter for the proper computation of 13th month pay. SO ORDERED. Republic of the Philippines SUPREME COURT Manila THIRD DIVISION 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.

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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 1 incentive pay; (f) 13th month pay; and (g) benefits provided for under Wage Orders Nos. 1, 2, 3, 4 and 5. 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 2 3 company. Both respondents allegedly did not submit their explanation and did not report for work. Hence, they were dismissed by petitioners on February 4, 1985. They countered by filing a complaint for illegal dismissal 4 docketed as NLRC NCR Case No. 2-428-85 on February 5, 1985. 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. 5 SO ORDERED. From the foregoing decision, petitioners appealed to the NLRC. The latter on March 30, 1988 affirmed said 6 decision but limited the backwages awarded the Dioscoro Pelobello and Casimiro Zapata to only one (1) year. After their motion for reconsideration was denied, petitioners filed the instant petition raising the following issues: I THE SUBJECT DECISIONS ERRONEOUSLY CONCLUDED THAT AN EMPLOYER-EMPLOYEE RELATIONSHIP EXISTS BETWEEN PETITIONER HABERDASHERY AND RESPONDENTS WORKERS. II

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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 7 ILLEGALLY DISMISSED. 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 8 the employee's conduct. It is the so called "control test" that is the most important element. This simply means the determination of whether the employer controls or has reserved the right to control the employee not only as 9 to the result of the work but also as to the means and method by which the same is to be accomplished. 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. 10 For strict compliance. 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 11 9:30 a.m. and which is forfeited when they arrive at or after 9:30 a.m. 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 12 day, except where a payment by result rate has been established by the Secretary of Labor. ..." No such rate has been established in this case.

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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, 13 2, 3, 4, and 5 must perforce fall." 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 14 from the appellate court-, any affirmative relief other than the ones granted in the decision of the court below. " 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 15 wages are paid. " 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 16 employee whose continuance in the service is inimical to the employer's interest. 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

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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 17 employer. 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 18 favor of labor. 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 19 the existence of said cause in accordance with the norms of due process. 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. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 123938 May 21, 1998 LABOR CONGRESS OF THE PHILIPPINES (LCP) for and in behalf of its members, ANA MARIE OCAMPO, MARY INTAL, ANNABEL CARESO, MARLENE MELQIADES, IRENE JACINTO, NANCY GARCIA, IMELDA SARMIENTO, LENITA VIRAY, GINA JACINTO, ROSEMARIE DEL ROSARIO, CATHERINE ASPURNA, WINNIE PENA, VIVIAN BAA, EMILY LAGMAN, LILIAN MARFIL, NANCY DERACO, JANET DERACO, MELODY JACINTO, CAROLYN DIZON, IMELDA MANALOTO, NORY VIRAY, ELIZA SALAZAR, GIGI MANALOTO, JOSEFINA BASILIO, MARY ANN MAYATI, ZENAIDA GARCIA, MERLY CANLAS, ERLINDA MANALANG, ANGELINA QUIAMBAO, LANIE GARCIA, ELVIRA PIEDRA, LOURDES PANLILIO, LUISA PANLILIO, LERIZA PANLILIO, ALMA CASTRO, ALDA DAVID, MYRA T. OLALIA, MARIFE PINLAC, NENITA DE GUZMAN, JULIE GACAD, EVELYN MANALO, NORA PATIO, JANETH CARREON, ROWENA MENDOZA, ROWENA MANALO, LENY GARCIA, FELISISIMA PATIO, SUSANA SALOMON, JOYDEE LANSANGAN, REMEDIOS AGUAS, JEANIE LANSANGAN, ELIZABETH MERCADO, JOSELYN MANALESE, BERNADETH RALAR, LOLITA ESPIRITU, AGNES SALAS, VIRGINIA MENDIOLA, GLENDA SALITA, JANETH RALAR, ERLINDA BASILIO, CORA PATIO, ANTONIA CALMA, AGNES CARESO, GEMMA BONUS, MARITESS OCAMPO, LIBERTY GELISANGA, JANETH MANARANG, AMALIA DELA CRUZ, EVA CUEVAS, TERESA MANIAGO, ARCELY PEREZ, LOIDA BIE, ROSITA CANLAS, ANALIZA ESGUERRA, LAILA MANIAGO, JOSIE MANABAT, ROSARIO DIMATULAC, NYMPA TUAZON, DAIZY TUASON, ERLINDA NAVARRO, EMILY MANARANG, EMELITA CAYANAN, MERCY CAYANAN, LUZVIMINDA CAYANAN, ANABEL MANALO, SONIA DIZON, ERNA CANLAS, MARIAN BENEDICTA, DOLORES DOLETIN, JULIE DAVID, GRACE VILLANUEVA, VIRGINIA MAGBAG, CORAZON RILLION, PRECY MANALILI, ELENA RONOZ, IMELDA MENDOZA, EDNA CANLAS and ANGELA CANLAS, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, EMPIRE FOOD PRODUCTS, its Proprietor/President & Manager, MR. GONZALO KEHYENG and MRS. EVELYN KEHYENG, respondents. DAVIDE, JR., J.: 1 In this special civil action for certiorari under Rule 65, petitioners seek to reverse the 29 March 1995 resolution of 2 the National Labor Relations Commission (NLRC) in NLRC RAB III Case No. 01-1964-91 which affirmed the Decision of Labor Arbiter Ariel C. Santos dismissing their complaint for utter lack of merit.

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The antecedents of this case, as summarized by the Office of the Solicitor General in its Manifestation and Motion 3 in Lieu of Comment, 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

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the rank-and-file employee of Empire Food Products for purposes of collective bargaining with respect to wages, hours of work and other terms and conditions of employment" (Annex "B" of Petition). On November 9, 1990, petitioners through LCP President Navarro submitted to private respondents a proposal for collective bargaining (Annex "C" of Petition). On January 23, 1991, petitioners filed a complaint docketed as NLRC Case No. RAB-III-01-1964-91 against private respondents for: a. Unfair Labor Practice by way of Illegal Lockout and/or Dismissal; b. Union busting thru Harassments [sic], threats, and interfering with the rights of employees to self-organization; c. Violation of the Memorandum of Agreement dated October 23, 1990; d. Underpayment of Wages in violation of R.A. No. 6640 and R.A. No. 6727, such as Wages promulgated by the Regional Wage Board; e. Actual, Moral and Exemplary Damages. (Annex "D" of Petition) After the submission by the parties of their respective position papers and presentation of testimonial evidence, Labor Arbiter Ariel C. Santos absolved private respondents of the charges of unfair labor practice, union busting, violation of the memorandum of agreement, underpayment of wages and denied petitioners' prayer for actual, moral and exemplary damages. Labor Arbiter Santos, however, directed the reinstatement of the individual complainants: The undersigned Labor Arbiter is not oblivious to the fact that respondents have violated a cardinal rule in every establishment that a payroll and other papers evidencing hours of work, payments, etc. shall always be maintained and subjected to inspection and visitation by personnel of the Department of Labor and Employment. As such penalty, respondents should not escape liability for this technicality, hence, it is proper that all individual complainants except those who resigned and executed quitclaim[s] and releases prior to the filing of this complaint should be reinstated to their former position[s] with the admonition to respondents that any harassment, intimidation, coercion or any form of threat as a result of this immediately executory reinstatement shall be dealt with accordingly. SO ORDERED. (Annex "G" of petition) On appeal, the National Labor Relations Commission vacated the Decision dated April 14, 1972 [sic] and remanded the case to the Labor Arbiter for further proceedings for the following reasons: The Labor Arbiter, through his decision, noted that ". . . complainant did not present any single witness while respondent presented four (4) witnesses in the persons of Gonzalo Kehyeng, Orlando Cairo, Evelyn Kehyeng and Elvira Bulagan . . ." (p. 183, Records), that ". . . complainant before the National Labor Relations Commission must prove with definiteness and clarity the offense charged. . . ." (Record, p. 183); that ". . . complainant failed to specify under what provision of the Labor Code particularly Art. 248 did respondents violate so as to constitute unfair labor practice . . ." (Record, p. 183); that "complainants failed to present any witness who may describe in what manner respondents have committed unfair labor practice . . ." (Record, p. 185); that ". . . complainant LCP failed to present anyone of the so-called 99 complainants in order to testify who committed the threats and intimidation . . ." (Record, p. 185). Upon review of the minutes of the proceedings on record, however, it appears that complainant presented witnesses, namely, BENIGNO NAVARRO, JR. (28 February 1991, RECORD, p. 91; 8 March 1991, RECORD, p. 92, who adopted its POSITION PAPER AND CONSOLIDATED AFFIDAVIT, as Exhibit "A" and the annexes thereto as Exhibit "B", "B-1" to "B-9", inclusive. Minutes of the proceedings on record show that complainant further presented other witnesses, namely: ERLINDA BASILIO (13 March 1991, RECORD, p. 93; LOURDES PANTILLO, MARIFE PINLAC, LENIE GARCIA (16 April 1991, Record, p. 96, see back portion thereof ; 2 May 1991, Record, p. 102; 16 May 1991, Record, p. 103, 11 June 1991, Record, p. 105). Formal offer of Documentary and Testimonial Evidence was made by complainant on June 24, 1991 (Record, p. 106-109)

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The Labor Arbiter must have overlooked the testimonies of some of the individual complainants which are now on record. Other individual complainants should have been summoned with the end in view of receiving their testimonies. The complainants should be afforded the time and opportunity to fully substantiate their claims against the respondents. Judgment should be rendered only based on the conflicting positions of the parties. The Labor Arbiter is called upon to consider and pass upon the issues of fact and law raised by the parties. Toward this end, therefore, it is Our considered view [that] the case should be remanded to the Labor Arbiter of origin for further proceedings. (Annex "H" of Petition) In a Decision dated July 27, 1994, Labor Arbiter Santos made the following determination: Complainants failed to present with definiteness and clarity the particular act or acts constitutive of unfair labor practice. It is to be borne in mind that a declaration of unfair labor practice connotes a finding of prima facie evidence of probability that a criminal offense may have been committed so as to warrant the filing of a criminal information before the regular court. Hence, evidence which is more than a scintilla is required in order to declare respondents/employers guilty of unfair labor practice. Failing in this regard is fatal to the cause of complainants. Besides, even the charge of illegal lockout has no leg to stand on because of the testimony of respondents through their guard Orlando Cairo (TSN, July 31, 1991 hearing; p. 5-35) that on January 21, 1991, complainants refused and failed to report for work, hence guilty of abandoning their post without permission from respondents. As a result of complainants['] failure to report for work, the cheese curls ready for repacking were all spoiled to the prejudice of respondents. Under cross-examination, complainants failed to rebut the authenticity of respondents' witness testimony. As regards the issue of harassments [sic], threats and interference with the rights of employees to self-organization which is actually an ingredient of unfair labor practice, complainants failed to specify what type of threats or intimidation was committed and who committed the same. What are the acts or utterances constitutive of harassments [sic] being complained of? These are the specifics which should have been proven with definiteness and clarity by complainants who chose to rely heavily on its position paper through generalizations to prove their case. Insofar as violation of [the] Memorandum of Agreement dated October 23, 1990 is concerned, both parties agreed that: 2 That with regards [sic] to the NLRC Case No. RAB III-10-1817-90 pending with the NLRC, parties jointly and mutually agreed that the issues thereof shall be discussed by the parties and resolve[d] during the negotiation of the CBA. The aforequoted provision does not speak of [an] obligation on the part of respondents but on a resolutory condition that may occur or may not happen. This cannot be made the basis of an imposition of an obligation over which the National Labor Relations Commission has exclusive jurisdiction thereof. Anent the charge that there was underpayment of wages, the evidence points to the contrary. The enumeration of complainants' wages in their consolidated Affidavits of merit and position paper which implies underpayment has no leg to stand on in the light of the fact that complainants' admission that they are piece workers or paid on a pakiao [basis] i.e. a certain amount for every thousand pieces of cheese curls or other products repacked. The only limitation for piece workers or pakiao workers is that they should receive compensation no less than the minimum wage for an eight (8) hour work [sic]. And compliance therewith was satisfactorily explained by respondent Gonzalo Kehyeng in his testimony (TSN, p. 12-30) during the July 31, 1991 hearing. On cross-examination, complainants failed to rebut or deny Gonzalo Kehyeng's testimony that complainants have been even receiving more than the minimum wage for an average workers [sic]. Certainly, a lazy worker earns less than the minimum wage but the same cannot be attributable to respondents but to the lazy workers. Finally, the claim for moral and exemplary damages has no leg to stand on when no malice, bad faith or fraud was ever proven to have been perpetuated by respondents. WHEREFORE, premises considered, the complaint is hereby DISMISSED for utter lack of merit. 4 (Annex "I" of Petition).

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On appeal, the NLRC, in its Resolution dated 29 March 1995, affirmed in toto the decision of Labor Arbiter Santos. In so doing, the NLRC sustained the Labor Arbiter's findings that: (a) there was a dearth of evidence to prove the existence of unfair labor practice and union busting on the part of private respondents; (b) the agreement of 23 October 1990 could not be made the basis of an obligation within the ambit of the NLRC's jurisdiction, as the provisions thereof, particularly Section 2, spoke of a resolutory condition which could or could not happen; (c) the claims for underpayment of wages were without basis as complainants were admittedly "pakiao" workers and paid on the basis of their output subject to the lone limitation that the payment conformed to the minimum wage rate for an eight-hour workday; and (d) petitioners were not underpaid. 6 Their motion for reconsideration having been denied by the NLRC in its Resolution of 31 October 1995, petitioners filed the instant special civil action for certiorari raising the following issues: I WHETHER OR NOT THE PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION GRAVELY ABUSED ITS DISCRETION WHEN IT DISREGARDED OR IGNORED NOT ONLY THE EVIDENCE FAVORABLE TO HEREIN PETITIONERS, APPLICABLE JURISPRUDENCE BUT ALSO ITS OWN DECISIONS AND THAT OF THIS HONORABLE HIGHEST TRIBUNAL WHICH [WAS] TANTAMOUNT NOT ONLY TO THE DEPRIVATION OF PETITIONERS' RIGHT TO DUE PROCESS BUT WOULD RESULT [IN] MANIFEST INJUSTICE. II WHETHER OR NOT THE PUBLIC RESPONDENT GRAVELY ABUSED ITS DISCRETION WHEN IT DEPRIVED THE PETITIONERS OF THEIR CONSTITUTIONAL RIGHT TO SELF-ORGANIZATION, SECURITY OF TENURE, PROTECTION TO LABOR, JUST AND HUMANE CONDITIONS OF WORK AND DUE PROCESS. III WHETHER OR NOT THE PETITIONERS WERE ILLEGALLY EASED OUT [OF] OR CONSTRUCTIVELY DISMISSED FROM THEIR ONLY MEANS OF LIVELIHOOD. IV WHETHER OR NOT PETITIONERS SHOULD BE REINSTATED FROM THE DATE OF THEIR DISMISSAL UP TO THE TIME OF THEIR REINSTATEMENT, WITH BACKWAGES, STATUTORY BENEFITS, 7 DAMAGES AND ATTORNEY'S FEES. 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

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Arbiter only after carefully reviewing, weighing and evaluating the evidence in support thereof, as well as the pertinent provisions of law and jurisprudence. In their Reply, petitioners claim that the decisions of the NLRC and the Labor Arbiter were not supported by substantial evidence; that abandonment was not proved; and that much credit was given to self-serving statements of Gonzalo Kehyeng, owner of Empire Foods, as to payment of just wages. On 7 July 1997, we gave due course to the petition and required the parties to file their respective memoranda. However, only petitioners and private respondents filed their memoranda, with the NLRC merely adopting its Comment as its Memorandum. We find for petitioners. Invocation of the general rule that factual findings of the NLRC bind this Court is unavailing under the circumstances. Initially, we are unable to discern any compelling reason justifying the Labor Arbiter's volte face from his 14 April 1992 decision reinstating petitioners to his diametrically opposed 27 July 1994 decision, when in both instances, he had before him substantially the same evidence. Neither do we find the 29 March 1995 NLRC resolution to have sufficiently discussed the facts so as to comply with the standard of substantial evidence. For one thing, the NLRC confessed its reluctance to inquire into the veracity of the Labor Arbiter's factual findings, staunchly declaring that it was "not about to substitute [its] judgment on matters that are within the province of 8 the trier of facts." Yet, in the 21 July 1992 NLRC resolution, it chastised the Labor Arbiter for his errors both in judgment and procedure; for which reason it remanded the records of the case to the Labor Arbiter for compliance with the pronouncements therein. What cannot escape from our attention is that the Labor Arbiter did not heed the observations and pronouncements of the NLRC in its resolution of 21 July 1992, neither did he understand the purpose of the remand of the records to him. In said resolution, the NLRC summarized the grounds for the appeal to be: 1. that there is a prima facie evidence of abuse of discretion and acts of gross incompetence committed by the Labor Arbiter in rendering the decision. 2. that the Labor Arbiter in rendering the decision committed serious errors in the findings of facts. After which, the NLRC observed and found: Complainant alleged that the Labor Arbiter disregarded the testimonies of the 99 complainants who submitted their Consolidated Affidavit of Merit and Position Paper which was adopted as direct testimonies during the hearing and cross-examined by respondents' counsel. The Labor Arbiter, through his decision, noted that ". . . complainant did not present any single witness while respondent presented four (4) witnesses in the persons of Gonzalo Kehyeng, Orlando Cairo, Evelyn Kehyeng and Elvira Bulagan . . ." (Records, p. 183), that ". . . complainant before the National Labor Relations Commission must prove with definiteness and clarity the offense charged. . . ." (Record, p. 183; that ". . . complainant failed to specify under what provision of the Labor Code particularly Art. 248 did respondents violate so as to constitute unfair labor practice . . ." (Record, p. 183); that "complainants failed to present any witness who may describe in what manner respondents have committed unfair labor practice . . ." (Record, p. 185); that ". . . complainant a [sic] LCP failed to present anyone of the so called 99 complainants in order to testify who committed the threats and intimidation . . ." (Record, p.185). Upon review of the minutes of the proceedings on record, however, it appears that complainant presented witnesses, namely BENIGNO NAVARRO, JR. (28 February 1991, RECORD, p. 91; 8 March 1991, RECORD, p. 92), who adopted its POSITION PAPER AND CONSOLIDATED AFFIDAVIT as Exhibit A and the annexes thereto as Exhibit B, B-1 to B-9, inclusive. Minutes of the proceedings on record show that complainant further presented other witnesses, namely: ERLINDA BASILIO (13 March 1991, RECORD, p. 93; LOURDES PANTILLO, MARIFE PINLAC, LENI GARCIA (16 April 1991, Record, p. 96, see back portion thereof; 2 May 1991, Record, p. 102; 16 May 1991, Record, p. 103; 11 June 1991, Record, p. 105). Formal offer of Documentary and Testimonial Evidence was made by the complainant on June 24, 1991 (Record, p.106-109). The Labor Arbiter must have overlooked the testimonies of some of the individual complainants which are now on record. Other individual complainants should have been summoned with the end in view of receiving their testimonies. The complainants should [have been] afforded the time and opportunity to fully substantiate their claims against the respondents. Judgment should

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[have been] rendered only based on the conflicting positions of the parties. The Labor Arbiter is called upon to consider and pass upon the issues of fact and law raised by the parties. Toward this end, therefore, it is Our considered view the case should be remanded to the Labor Arbiter of origin for further proceedings. Further, We take note that the decision does not contain a dispositive portion or fallo. Such being the case, it may be well said that the decision does not resolve the issues at hand. On another plane, there is no portion of the decision which could be carried out by way of execution. It may be argued that the last paragraph of the decision may be categorized as the dispositive portion thereof: xxx xxx xxx The undersigned Labor Arbiter is not oblivious [to] the fact that respondents have violated a cardinal rule in every establishment that a payroll and other papers evidencing hour[s] of work, payment, etc. shall always be maintained and subjected to inspection and visitation by personnel of the Department of Labor and Employment. As such penalty, respondents should not escape liability for this technicality, hence, it is proper that all the individual complainants except those who resigned and executed quitclaim[s] and release[s] prior to the filing of this complaint should be reinstated to their former position with the admonition to respondents that any harassment, intimidation, coercion or any form of threat as a result of this immediately executory reinstatement shall be dealt with accordingly. SO ORDERED. It is Our considered view that even assuming arguendo that the respondents failed to maintain their payroll and other papers evidencing hours of work, payment etc., such circumstance, standing alone, does not warrant the directive to reinstate complainants to their former positions. It is [a] well settled rule that there must be a finding of illegal dismissal before reinstatement be mandated. In this regard, the LABOR ARBITER is hereby directed to include in his clarificatory decision, after 9 receiving evidence, considering and resolving the same, the requisite dispositive portion. Apparently, the Labor Arbiter perceived that if not for petitioners, he would not have fallen victim to this stinging rebuke at the hands of the NLRC. Thus does it appear to us that the Labor Arbiter, in concluding in his 27 July 1994 Decision that petitioners abandoned their work, was moved by, at worst, spite, or at best, lackadaisically glossed over petitioner's evidence. On this score, we find the following observations of the OSG most persuasive: In finding that petitioner employees abandoned their work, the Labor Arbiter and the NLRC relied on the testimony of Security Guard Rolando Cairo that on January 21, 1991, petitioners refused to work. As a result of their failure to work, the cheese curls ready for repacking on said date were spoiled. The failure to work for one day, which resulted in the spoilage of cheese curls does not amount to abandonment of work. In fact two (2) days after the reported abandonment of work or on January 23, 1991, petitioners filed a complaint for, among others, unfair labor practice, illegal lockout and/or illegal dismissal. In several cases, this Honorable Court held that "one could not possibly abandon his work and shortly thereafter vigorously pursue his complaint for illegal dismissal (De Ysasi III v. NLRC, 231 SCRA 173; Ranara v. NLRC, 212 SCRA 631; Dagupan Bus Co. v. NLRC, 191 SCRA 328; Atlas Consolidated Mining and Development Corp. v. NLRC, 190 SCRA 505; Hua Bee Shirt Factory v. NLRC, 186 SCRA 586; Mabaylan v. NLRC, 203 SCRA 570 and Flexo Manufacturing v. NLRC, 135 SCRA 145). In Atlas Consolidated, supra, this Honorable Court explicitly stated: It would be illogical for Caballo, to abandon his work and then immediately file an action seeking for his reinstatement. We can not believe that Caballo, who had worked for Atlas for two years and ten months, would simply walk away from his job unmindful of the consequence of his act. i.e. the forfeiture of his accrued employment benefits. In opting to finally to [sic] contest the legality of

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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 dayto-day operation[s] of the company. With more reason, the work of processed food repackers is 10 necessary in the day-to-day operation[s] of respondent Empire Food Products. It may likewise be stressed that the burden of proving the existence of just cause for dismissing an employee, such 11 as abandonment, rests on the employer, a burden private respondents failed to discharge. Private respondents, moreover, in considering petitioners' employment to have been terminated by abandonment, violated their rights to security of tenure and constitutional right to due process in not even serving 12 them with a written notice of such termination. Section 2, Rule XIV, Book V of the Omnibus Rules Implementing the Labor Code provides: Sec. 2. Notice of Dismissal Any employer who seeks to dismiss a worker shall furnish him a written notice stating the particular acts or omission constituting the grounds for his dismissal. In cases of abandonment of work, the notice shall be served at the worker's last known address. Petitioners are therefore entitled to reinstatement with full back wages pursuant to Article 279 of the Labor Code, as amended by R.A. No. 6715. Nevertheless, the records disclose that taking into account the number of employees involved, the length of time that has lapsed since their dismissal, and the perceptible resentment and enmity between petitioners and private respondents which necessarily strained their relationship, reinstatement would be impractical and hardly promotive of the best interests of the parties. In lieu of reinstatement then, separation pay at the rate of one month for every year of service, with 13 a fraction of at least six (6) months of service considered as one (1) year, is in order. That being said, the amount of back wages to which each petitioner is entitled, however, cannot be fully settled at 14 this time. Petitioners, as piece-rate workers having been paid by the piece, 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 15 labor arbiter failed to rule on but which petitioners prayed for in their complaint, 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 16 year, their employment not having been dependent on a specific project or season; and third, the length of time 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.

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The Rules Implementing the Labor Code exclude certain employees from receiving benefits such as nighttime pay, 17 18 holiday pay, service incentive leave and 13th month pay, 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 19 to P.D. No. 851 by Memorandum Order No. 28, clearly exclude the employer of piece rate workers from those exempted from paying 13th month pay, to wit: 2. EXEMPTED EMPLOYERS The following employers are still not covered by P.D. No. 851: d. Employers of those who are paid on purely commission, boundary or task basis, and those who are paid a fixed amount for performing specific work, irrespective of the time consumed in the performance thereof, except where the workers are paid on piece-rate basis in which case the employer shall grant the required 13th month pay to such workers. (emphasis supplied) The Revised Guidelines as well as the Rules and Regulations identify those workers who fall under the piece-rate category as those who are paid a standard amount for every piece or unit of work produced 20 that is more or less regularly replicated, without regard to the time spent in producing the same. 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 21 prove any wrongdoing on private respondents' part. For example, petitioners presented their complaint to prove the violation of labor laws committed by private respondents. The complaint, however, is merely "the pleading 22 alleging the plaintiff's cause or causes of action." Its contents are merely allegations, the verity of which shall 23 have to be proved during the trial. They likewise offered their Consolidated Affidavit of Merit and Position Paper which, like the offer of their Complaint, was a tautological exercise, and did not help nor prove their cause. In like 24 25 manner, the petition for certification election and the subsequent order of certification merely proved that petitioners sought and acquired the status of bargaining agent for all rank-and-file employees. Finally, the 26 existence of the memorandum of agreement 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.

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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-011964-91 are hereby SET ASIDE, and another is hereby rendered: 1. DECLARING petitioners to have been illegally dismissed by private respondents, thus entitled to full back wages and other privileges, and separation pay in lieu of reinstatement at the rate of one month's salary for every year of service with a fraction of six months of service considered as one year; 2. REMANDING the records of this case to the National Labor Relations Commission for its determination of the back wages and other benefits and separation pay, taking into account the foregoing observations; and 3. DIRECTING the National Labor Relations Commission to resolve the referred issues within sixty (60) days from its receipt of a copy of this decision and of the records of the case and to submit to this Court a report of its compliance hereof within ten (10) days from the rendition of its resolution. Costs against private respondents. SO ORDERED

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 145561 June 15, 2005 HONDA PHILS., INC., petitioner, vs. SAMAHAN NG MALAYANG MANGGAGAWA SA HONDA, respondent. DECISION YNARES-SANTIAGO, J.: 1 This petition for review under Rule 45 seeks the reversal of the Court of Appeals decision dated September 14, 2 3 2000 and its resolution 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

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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. 4 On November 22, 1999, the management of Honda issued a memorandum 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 5 sought the opinion of the Bureau of Working Conditions (BWC) on the issue. In a letter dated January 4, 2000, 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 6 the issue remained unresolved, it was submitted for voluntary arbitration. In his decision 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. 7 SO ORDERED. 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 8 unit. As in all contracts, the parties in a CBA may establish such stipulations, clauses, terms and conditions as they 9 may deem convenient provided these are not contrary to law, morals, good customs, public order or public policy. Thus, where the CBA is clear and unambiguous, it becomes the law between the parties and compliance therewith 10 is mandated by the express policy of the law. 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 11 the ambiguity in favor of labor as mandated by Article 1702 of the Civil Code. 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 12 coincide. Presidential Decree No. 851, otherwise known as the 13th Month Pay Law, which required all employers to pay th their employees a 13 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

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wage since 1970 and the Christmas season was an opportune time for society to show its concern for the plight of 13 the working masses so that they may properly celebrate Christmas and New Year. th Under the Revised Guidelines on the Implementation of the 13 month pay issued on November 16, 1987, the th salary ceiling of P1,000.00 under P.D. No. 851 was removed. It further provided that the minimum 13 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: th The "basic salary" of an employee for the purpose of computing the 13 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 14 allowances. (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 15 16 17 holidays. In Hagonoy Rural Bank v. NLRC, St. Michael Academy v. NLRC, Consolidated Food Corporation v. 18 th NLRC, and similar cases, the 13 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 19 time he worked during the year, reckoned from the time he started working during the calendar year. 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 20 given in full. (Emphasis supplied) th More importantly, it has not been refuted that Honda has not implemented any pro-rating of the 13 month pay th th before the instant case. Honda did not adduce evidence to show that the 13 month, 14 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 21 basic pay computation was the "present practice" intended to be maintained in the CBA. 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 th th their monthly salary from Honda, they still received the full amount of their 13 month, 14 month and financial 22 assistance pay. 23 The case of Davao Fruits Corporation v. Associated Labor Unions, et al. 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 th and continuously included in the computation of the 13 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 24 eliminated. Furthermore, in Sevilla Trading Company v. Semana, 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

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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 25 unilaterally withdrawn by the employer without violating Art. 100 of the Labor Code. (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 th exorbitant increases in the cost of living. To allow the pro-ration of the 13 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 26 paramount consideration. 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 self27 organization and to strike in accordance with law. 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. Republic of the Philippines SUPREME COURT SECOND DIVISION G.R. No. 151966 July 8, 2005 JPL MARKETING PROMOTIONS, Petitioner, vs. COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION, NOEL GONZALES, RAMON ABESA III and FAUSTINO ANINIPOT, Respondents. DECISION Tinga, J.: 1 This is a petition for review of the Decision of the Court of Appeals in CA-G.R. SP No. 62631 dated 03 October 2001 2 and its Resolution dated 25 January 2002 denying petitioners Motion for Reconsideration, affirming the Resolution of the National Labor Relations Commission (NLRC), Second Division, dated 27 July 2000, awarding separation pay, service incentive leave pay, and 13th month pay to private respondents. JPL Marketing and Promotions (hereinafter referred to as "JPL") is a domestic corporation engaged in the business of recruitment and placement of workers. On the other hand, private respondents Noel Gonzales, Ramon Abesa III and Faustino Aninipot were employed by JPL as merchandisers on separate dates and assigned at different establishments in Naga City and Daet, Camarines Norte as attendants to the display of California Marketing Corporation (CMC), one of petitioners clients. On 13 August 1996, JPL notified private respondents that CMC would stop its direct merchandising activity in the 3 Bicol Region, Isabela, and Cagayan Valley effective 15 August 1996. They were advised to wait for further notice as 4 they would be transferred to other clients. However, on 17 October 1996, private respondents Abesa and Gonzales filed before the National Labor Relations Commission Regional Arbitration Branch (NLRC) Sub V complaints for illegal dismissal, praying for separation pay, 13th month pay, service incentive leave pay and 5 payment for moral damages. Aninipot filed a similar case thereafter. After the submission of pertinent pleadings by all of the parties and after some clarificatory hearings, the complaints were consolidated and submitted for resolution. Executive Labor Arbiter Gelacio L. Rivera, Jr. dismissed 6 the complaints for lack of merit. The Labor Arbiter found that Gonzales and Abesa applied with and were employed by the store where they were originally assigned by JPL even before the lapse of the six (6)-month period given by law to JPL to provide private respondents a new assignment. Thus, they may be considered to have 7 unilaterally severed their relation with JPL, and cannot charge JPL with illegal dismissal. The Labor Arbiter held

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that it was incumbent upon private respondents to wait until they were reassigned by JPL, and if after six months 8 they were not reassigned, they can file an action for separation pay but not for illegal dismissal. The claims for 13th month pay and service incentive leave pay was also denied since private respondents were paid way above 9 the applicable minimum wage during their employment. 10 Private respondents appealed to the NLRC. In its Resolution, the Second Division of the NLRC agreed with the Labor Arbiters finding that when private respondents filed their complaints, the six-month period had not yet expired, and that CMCs decision to stop its operations in the areas was beyond the control of JPL, thus, they were not illegally dismissed. However, it found that despite JPLs effort to look for clients to which private respondents 11 may be reassigned it was unable to do so, and hence they are entitled to separation pay. Setting aside the Labor Arbiters decision, the NLRC ordered the payment of: 1. Separation pay, based on their last salary rate and counted from the first day of their employment with the respondent JPL up to the finality of this judgment; 12 2. Service Incentive Leave pay, and 13th month pay, computed as in No.1 hereof. Aggrieved, JPL filed a petition for certiorari under Rule 65 of the Rules of Court with the Court of Appeals, imputing grave abuse of discretion on the part of the NLRC. It claimed that private respondents are not by law entitled to separation pay, service incentive leave pay and 13th month pay. The Court of Appeals dismissed the petition and affirmed in toto the NLRC resolution. While conceding that there 13 was no illegal dismissal, it justified the award of separation pay on the grounds of equity and social justice. The Court of Appeals rejected JPLs argument that the difference in the amounts of private respondents salaries and the minimum wage in the region should be considered as payment for their service incentive leave and 13th 14 month pay. Notwithstanding the absence of a contractual agreement on the grant of 13th month pay, compliance with the same is mandatory under the law. Moreover, JPL failed to show that it was exempt from paying service incentive leave pay. JPL filed a motion for reconsideration of the said resolution, but the same was 15 denied on 25 January 2002. In the instant petition for review, JPL claims that the Court of Appeals committed reversible error in rendering the 16 assailed Decision and Resolution. The instant case does not fall under any of the instances where separation pay is due, to wit: installation of labor-saving devices, redundancy, retrenchment or closing or cessation of business 17 18 operation, or disease of an employee whose continued employment is prejudicial to him or co-employees, or 19 illegal dismissal of an employee but reinstatement is no longer feasible. Meanwhile, an employee who voluntarily resigns is not entitled to separation unless stipulated in the employment contract, or the collective bargaining 20 agreement, or is sanctioned by established practice or policy of the employer. It argues that private respondents good record and length of service, as well as the social justice precept, are not enough to warrant the award of separation pay. Gonzales and Aninipot were employed by JPL for more than four (4) years, while Abesa rendered his services for more than two (2) years, hence, JPL claims that such short period could not have shown their worth 21 to JPL so as to reward them with payment of separation pay. In addition, even assuming arguendo that private respondents are entitled to the benefits awarded, the computation thereof should only be from their first day of employment with JPL up to 15 August 1996, the date of 22 termination of CMCs contract, and not up to the finality of the 27 July 2000 resolution of the NLRC. To compute separation pay, 13th month pay, and service incentive leave pay up to 27 July 2000 would negate the findings of 23 both the Court of Appeals and the NLRC that private respondents were not unlawfully terminated. Additionally, it would be erroneous to compute service incentive leave pay from the first day of their employment up to the finality of the NLRC resolution since an employee has to render at least one (1) year of service before he is entitled 24 to the same. Thus, service incentive leave pay should be counted from the second year of service. On the other hand, private respondents maintain that they are entitled to the benefits being claimed as per the 25 ruling of this Court in Serrano v. NLRC, et al. They claim that their dismissal, while not illegal, was tainted with 26 bad faith. They allege that they were deprived of due process because the notice of termination was sent to 27 them only two (2) days before the actual termination. Likewise, the most that JPL offered to them by way of 28 settlement was the payment of separation pay of seven (7) days for every year of service. Replying to private respondents allegations, JPL disagrees that the notice it sent to them was a notice of actual termination. The said memo merely notified them of the end of merchandising for CMC, and that they will be 29 transferred to other clients. Moreover, JPL is not bound to observe the thirty (30)-day notice rule as there was no dismissal to speak of. JPL counters that it was private respondents who acted in bad faith when they sought employment with another establishment, without even the courtesy of informing JPL that they were leaving for

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good, much less tender their resignation. In addition, the offer of seven (7) days per year of service as separation pay was merely an act of magnanimity on its part, even if private respondents are not entitled to a single centavo 31 of separation pay. The case thus presents two major issues, to wit: whether or not private respondents are entitled to separation pay, 13th month pay and service incentive leave pay, and granting that they are so entitled, what should be the reckoning point for computing said awards. Under Arts. 283 and 284 of the Labor Code, separation pay is authorized only in cases of dismissals due to any of these reasons: (a) installation of labor saving devices; (b) redundancy; (c) retrenchment; (d) cessation of the employer's business; and (e) when the employee is suffering from a disease and his continued employment is prohibited by law or is prejudicial to his health and to the health of his co-employees. However, separation pay shall be allowed as a measure of social justice in those cases where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character, but only when he was illegally 32 dismissed. In addition, Sec. 4(b), Rule I, Book VI of the Implementing Rules to Implement the Labor Code provides for the payment of separation pay to an employee entitled to reinstatement but the establishment where he is to be reinstated has closed or has ceased operations or his present position no longer exists at the time of reinstatement for reasons not attributable to the employer. The common denominator of the instances where payment of separation pay is warranted is that the employee 33 was dismissed by the employer. In the instant case, there was no dismissal to speak of. Private respondents were simply not dismissed at all, whether legally or illegally. What they received from JPL was not a notice of termination of employment, but a memo informing them of the termination of CMCs contract with JPL. More importantly, they were advised that they were to be reassigned. At that time, there was no severance of employment to speak of. Furthermore, Art. 286 of the Labor Code allows the bona fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, wherein an employee/employees are placed on the socalled "floating status." When that "floating status" of an employee lasts for more than six months, he may be considered to have been illegally dismissed from the service. Thus, he is entitled to the corresponding benefits for his separation, and this would apply to suspension either of the entire business or of a specific component 34 thereof. As clearly borne out by the records of this case, private respondents sought employment from other establishments even before the expiration of the six (6)-month period provided by law. As they admitted in their comment, all three of them applied for and were employed by another establishment after they received the 35 notice from JPL. JPL did not terminate their employment; they themselves severed their relations with JPL. Thus, they are not entitled to separation pay. The Court is not inclined in this case to award separation pay even on the ground of compassionate justice. The 36 Court of Appeals relied on the cases wherein the Court awarded separation pay to legally dismissed employees on the grounds of equity and social consideration. Said cases involved employees who were actually dismissed by their employers, whether for cause or not. Clearly, the principle applies only when the employee is dismissed by the employer, which is not the case in this instance. In seeking and obtaining employment elsewhere, private respondents effectively terminated their employment with JPL. 37 In addition, the doctrine enunciated in the case of Serrano cited by private respondents has already been 38 abandoned by our ruling in Agabon v. National Labor Relations Commission. There we ruled that an employer is liable to pay indemnity in the form of nominal damages to a dismissed employee if, in effecting such dismissal, the employer failed to comply with the requirements of due process. However, private respondents are not entitled to the payment of damages considering that there was no violation of due process in this case. JPLs memo dated 13 August 1996 to private respondents is not a notice of termination, but a mere note informing private respondents of the termination of CMCs contract and their re-assignment to other clients. The thirty (30)-day notice rule does not apply. Nonetheless, JPL cannot escape the payment of 13th month pay and service incentive leave pay to private respondents. Said benefits are mandated by law and should be given to employees as a matter of right. Presidential Decree No. 851, as amended, requires an employer to pay its rank and file employees a 13th month pay not later than 24 December of every year. However, employers not paying their employees a 13th month pay 39 or its equivalent are not covered by said law. The term "its equivalent" was defined by the laws implementing guidelines as including Christmas bonus, mid-year bonus, cash bonuses and other payment amounting to not less

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than 1/12 of the basic salary but shall not include cash and stock dividends, cost-of-living-allowances and all other 40 allowances regularly enjoyed by the employee, as well as non-monetary benefits. On the other hand, service incentive leave, as provided in Art. 95 of the Labor Code, is a yearly leave benefit of five (5) days with pay, enjoyed by an employee who has rendered at least one year of service. Unless specifically excepted, all establishments are required to grant service incentive leave to their employees. The term "at least one year of service" shall mean service within twelve (12) months, whether continuous or broken reckoned from 41 the date the employee started working. The Court has held in several instances that "service incentive leave is 42 clearly demandable after one year of service." Admittedly, private respondents were not given their 13th month pay and service incentive leave pay while they were under the employ of JPL. Instead, JPL provided salaries which were over and above the minimum wage. The Court rules that the difference between the minimum wage and the actual salary received by private respondents cannot be deemed as their 13th month pay and service incentive leave pay as such difference is not equivalent to or of the same import as the said benefits contemplated by law. Thus, as properly held by the Court of Appeals and by the NLRC, private respondents are entitled to the 13th month pay and service incentive leave pay. However, the Court disagrees with the Court of Appeals ruling that the 13th month pay and service incentive leave pay should be computed from the start of employment up to the finality of the NLRC resolution. While computation for the 13th month pay should properly begin from the first day of employment, the service incentive leave pay should start a year after commencement of service, for it is only then that the employee is entitled to said benefit. On the other hand, the computation for both benefits should only be up to 15 August 1996, or the last day that private respondents worked for JPL. To extend the period to the date of finality of the NLRC resolution would negate the absence of illegal dismissal, or to be more precise, the want of dismissal in this case. Besides, it would be unfair to require JPL to pay private respondents the said benefits beyond 15 August 1996 when they did not render any service to JPL beyond that date. These benefits are given by law on the basis of the service actually rendered by the employee, and in the particular case of the service incentive leave, is granted as a motivation for the employee to stay longer with the employer. There is no cause for granting said incentive to one who has already terminated his relationship with the employer. The law in protecting the rights of the employees authorizes neither oppression nor self-destruction of the employer. It should be made clear that when the law tilts the scale of justice in favor of labor, it is but recognition of the inherent economic inequality between labor and management. The intent is to balance the scale of justice; to put the two parties on relatively equal positions. There may be cases where the circumstances warrant favoring labor over the interests of management but never should the scale be so tilted if the result is an injustice to the 43 employer. Justitia nemini neganda est (Justice is to be denied to none). WHEREFORE, the petition is GRANTED IN PART. The Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 62631 are hereby MODIFIED. The award of separation pay is deleted. Petitioner is ordered to pay private respondents their 13th month pay commencing from the date of employment up to 15 August 1996, as well as service incentive leave pay from the second year of employment up to 15 August 1996. No pronouncement as to costs. SO ORDERED. epublic of the Philippines SUPREME COURT FIRST DIVISION G.R. No. 154410 October 20, 2005 HEAVYLIFT MANILA, INC. and/or JOSEPHINE EVANGELIO, Administrative & Finance Manager, AND CAPT. * ROLANDO TOLENTINO, Petitioners, vs. THE COURT OF APPEALS, MA. DOTTIE GALAY and the NATIONAL LABOR RELATIONS COMMISSION, Respondents. DECISION QUISUMBING, J.: 1 Before us is a petition for certiorari assailing the Resolution dated December 18, 2001 of the Court of Appeals in 2 CA-G.R. SP No. 68072 denying the petition for failure to comply with procedural rules, as well as the Decision 3 dated August 30, 2001 and the Resolution dated September 28, 2001 of the National Labor Relations Commission (NLRC) which affirmed the Labor Arbiters decision finding petitioners guilty of illegal dismissal. The factual antecedents of the case are as follows:

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On February 23, 1999, petitioner Heavylift, a maritime agency, thru a letter signed by petitioner Josephine Evangelio, Administrative and Finance Manager of Heavylift, informed respondent Ma. Dottie Galay, Heavylift Insurance and Provisions Assistant, of her low performance rating and the negative feedback from her team members regarding her work attitude. The letter also notified her that she was being relieved of her other functions except the development of the new Access program. Subsequently, on August 16, 1999, Galay was terminated for alleged loss of confidence. Thereafter, she filed with the Labor Arbiter a complaint for illegal dismissal and nonpayment of service incentive leave and 13th month pay against petitioners. Before the labor arbiter, petitioners alleged that Galay had an attitude problem and did not get along with her coemployees for which she was constantly warned to improve. Petitioners aver that Galays attitude resulted to the 4 decline in the companys efficiency and productivity. Petitioners presented a letter dated February 23, 1999 and a 5 notice of termination dated August 16, 1999. The Labor Arbiter found that Galay was illegally terminated for petitioners failure to prove that she violated any 6 company regulation, and for failure to give the proper notice as required by law. Petitioner appealed to the NLRC. The latter, however, denied the appeal for lack of merit and affirmed the decision 7 8 of the Labor Arbiter. A motion for reconsideration was subsequently filed but which was likewise denied. Petitioner elevated the case by certiorari to the Court of Appeals. But, petitioners failed to: state the full names and actual addresses of all the petitioners; attach the copies of all pleadings and supporting documents; properly 9 verify the petition; and certify against forum-shopping. For these procedural lapses, the petition was dismissed. Petitioners moved for reconsideration and attached a board resolution authorizing petitioner Tolentino to legally represent the company. Nonetheless, the Court of Appeals denied the motion for lack of justifying circumstances, 10 and because the attached board resolution was issued after the petition was filed. Hence, the instant petition for certiorari alleging that I. The Honorable Court of Appeals grossly erred in relying too much on form rather than on the merits of the petition thereby denying petitioners of right to due process. II. The NLRC acted in a whimsical, arbitrary and despotic manner with grave abuse of discretion when it ruled that: a. Petitioners failed to submit substantial evidence that will prove petitioners had withdrawn their trust and confidence upon the respondent notwithstanding the admitted strained and irreconcilable relationship between respondent Galay and petitioners. b. The cause for terminating the employment of respondent by the petitioner appears foreign to the causes of terminating an employment either under loss of trust and confidence or under "analogous causes." c. The NLRC acted in a despotic manner when it ruled that complainant is entitled to service incentive pay and 13th month pay in the absence of any claim, prayer or evidence. III. It is a grave abuse of discretion on the part of the NLRC when it made it to appear that the right of worker for 11 security of tenure is absolute. Simply, the issues are (1) Were the petitioners denied due process with the Court of Appeals dismissal of the petition on technical grounds? (2) Is "attitude problem" a valid ground for the termination of an employee? (3) If in the affirmative, was this sufficiently proved? (4) Were the procedural requirements for an effectual dismissal present? and (5) Were the awards of service incentive pay and 13th month pay proper? Anent the first issue, petitioners posit that instead of denying outright their petition on technicalities, the Court of Appeals should have given it due course. Petitioners explain that only the name and address of petitioner Heavylift were stated in the petition because it was the real party in interest, while the rest were mere nominal parties. They also reasoned that it was not necessary to attach the pleadings submitted to the Labor Arbiter as the arguments asserted therein were sufficiently tackled and reiterated in the petition. Lastly, petitioners submit that petitioner Tolentino was authorized by the Board of Directors as the legal representative of the agency and its officers. Respondent counters that strict adherence to the rules of procedure is required to promote efficiency and orderliness. It adds that petitioners did not present any persuasive reason for a liberal application of the Rules. 12 The Rules of Court require that the petition for certiorari shall be verified, contain the full names and actual addresses of all the petitioners and respondents, accompanied by a certified true copy of the subject decision, order or resolution and other documents relevant or pertinent thereto, and be submitted with the certification of 13 non-forum shopping signed by the principal.

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We likewise have enunciated that the Rules of Court are designed for the proper and prompt disposition of cases. In not a few instances, we relaxed the rigid application of the rules to afford the parties opportunity to fully 14 ventilate their cases on the merits. In that way, the ends of justice would be better served. Additionally, verification of a pleading is a formal, not a jurisdictional requisite. It is intended to secure an assurance that what are alleged in the pleading are true and correct and not the product of the imagination or a 15 matter of speculation, and that the pleading is filed in good faith. The rule on certification against forum-shopping requires strict compliance. The requirement underscores its mandatory nature such that it cannot be altogether dispensed with. However, under justifiable circumstances, the 16 Court does allow substantial compliance. Further, we accept petitioners inadvertence to state the names and addresses of the other petitioners as a minor defect. We also accept their explanation on their failure to incorporate the Labor Arbiters decision. 17 Thus, mindful that the greater interest of justice would be served if the petition is adjudicated on its merits, we will proceed with the remaining issues, and discuss them jointly. Was there just cause in the termination of Galay? Petitioners assert that it terminated Galay because she had an attitude problem. This situation, according to petitioners, is analogous to loss of trust and confidence. They aver that respondent did not deny the strained and irreconcilable relationship between them, in effect, admitting the same. Further, petitioners aver that having lost their trust and confidence on Galay, they could no longer make her in-charge of the confidential Crew Information System which accounts for the personnel, management and professional records of all the employees of and seamen connected with the company. Lastly, petitioners maintain that because of Galays attitude, the companys work atmosphere had become very strained and had gravely affected the workers and their outputs. Galays dismissal, according to petitioners, was merely an act of self-preservation. Petitioners explained that they sent Galay a letter of notice dated February 23, 1999, apprising her of her low performance and her attitude problem, before the letter of her termination dated August 16, 1999. Petitioners claim that the company waited for six months, to give Galay a chance to undergo counseling before dismissing her from the service. Galay counters that petitioners failed to show a just and valid cause for her termination, and that letters of notice and termination did not comply with the twin requirement of notice and hearing. Galay argues that the letter dated February 23, 1999 neither informed her of her infraction of any company rule that warrants disciplinary action; nor required her to submit an explanation. An employee who cannot get along with his co-employees is detrimental to the company for he can upset and strain the working environment. Without the necessary teamwork and synergy, the organization cannot function well. Thus, management has the prerogative to take the necessary action to correct the situation and protect its organization. When personal differences between employees and management affect the work environment, the 18 peace of the company is affected. Thus, an employees attitude problem is a valid ground for his termination. It is a situation analogous to loss of trust and confidence that must be duly proved by the employer. Similarly, compliance with the twin requirement of notice and hearing must also be proven by the employer. However, we are not convinced that in the present case, petitioners have shown sufficiently clear and convincing evidence to justify Galays termination. Though they are correct in saying that in this case, proof beyond reasonable doubt is not required, still there must be substantial evidence to support the termination on the 19 ground of attitude. The mere mention of negative feedback from her team members, and the letter dated February 23, 1999, are not proof of her attitude problem. Likewise, her failure to refute petitioners allegations of 20 her negative attitude does not amount to admission. Technical rules of procedure are not binding in labor cases. Besides, the burden of proof is not on the employee but on the employer who must affirmatively show adequate 21 evidence that the dismissal was for justifiable cause. In our view, neither does the February 23, 1999 letter constitute the required notice. The letter did not inform her of the specific acts complained of and their corresponding penalty. The law requires the employer to give the worker to be dismissed two written notices before terminating his employment, namely, (1) a notice which apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the subsequent 22 notice which informs the employee of the employers decision to dismiss him. Additionally, the letter never gave respondent Galay an opportunity to explain herself, hence denying her due process.

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In sum, we find that Galay was illegally dismissed, because petitioners failed to show adequately that a valid cause for terminating respondent exists, and because petitioners failed to comply with the twin requirement of notice and hearing. Apropos the award of service incentive pay and 13th month pay, we find that they were properly prayed for by Galay. These were subsumed in the complaint and under the position papers general prayer of "such other relief as are just and equitable under the law". Petitioners failed to present evidence that these benefits were already paid. Moreover, this issue involves a question of fact which is not proper in a petition for certiorari and the determinations of the Labor Arbiter and the NLRC are afforded great weight and respect by the courts on these matters, when these findings are supported by substantial evidence, and devoid of any unfairness or arbitrariness. 23 Hence, their findings must be sustained. WHEREFORE, the Decision dated September 16, 2000 of the Labor Arbiter in NLRC NCR Case No. 00-08-08461-99 as well as Decision dated August 30, 2001 and the Resolution dated September 28, 2001 of the National Labor Relations Commission in NLRC NCR CA No. 026466-2000 are hereby affirmed. Costs against petitioners. SO ORDERED.

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