1).

GAA VS CA

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.


2). Songco Vs NLRC
This is a petition for certiorari seeking to modify the decision of the
National Labor Relations Commission in NLRC Case No. RB-IV-
20840-78-T entitled, "Jose Songco and Romeo Cipres,
Complainants-Appellants, v. F.E. Zuellig (M), Inc., Respondent-
Appellee" and NLRC Case No. RN- IV-20855-78-T entitled,
"Amancio Manuel, Complainant-Appellant, v. F.E. Zuellig (M), Inc.,
Respondent-Appellee," which dismissed the appeal of petitioners
herein and in effect affirmed the decision of the Labor Arbiter
ordering private respondent to pay petitioners separation pay
equivalent to their one month salary (exclusive of commissions,
allowances, etc.) for every year of service.

The antecedent facts are as follows:

Private respondent F.E. Zuellig (M), Inc., (hereinafter referred to as
Zuellig) filed with the Department of Labor (Regional Office No. 4)
an application seeking clearance to terminate the services of
petitioners Jose Songco, Romeo Cipres, and Amancio Manuel
(hereinafter referred to as petitioners) allegedly on the ground of
retrenchment due to financial losses. This application was
seasonably opposed by petitioners alleging that the company is not
suffering from any losses. They alleged further that they are being
dismissed because of their membership in the union. At the last
hearing of the case, however, petitioners manifested that they are
no longer contesting their dismissal. The parties then agreed that
the sole issue to be resolved is the basis of the separation pay due
to petitioners. Petitioners, who were in the sales force of Zuellig
received monthly salaries of at least P40,000. In addition, they
received commissions for every sale they made.

The collective Bargaining Agreement entered into between Zuellig
and F.E. Zuellig Employees Association, of which petitioners are
members, contains the following provision (p. 71, Rollo):

ARTICLE XIV Retirement Gratuity

Section l(a)-Any employee, who is separated from employment due
to old age, sickness, death or permanent lay-off not due to the
fault of said employee shall receive from the company a retirement
gratuity in an amount equivalent to one (1) month's salary per
year of service. One month of salary as used in this paragraph shall
be deemed equivalent to the salary at date of retirement; years of
service shall be deemed equivalent to total service credits, a
fraction of at least six months being considered one year, including
probationary employment. (Emphasis supplied)

On the other hand, Article 284 of the Labor Code then prevailing
provides:

Art. 284. Reduction of personnel. The termination of
employment of any employee due to the installation of labor
saving-devices, redundancy, retrenchment to prevent losses, and
other similar causes, shall entitle the employee affected thereby to
separation pay. In case of termination due to the installation of
labor-saving devices or redundancy, the separation pay shall be
equivalent to one (1) month pay or to at least one (1) month pay
for every year of service, whichever is higher. In case of
retrenchment to prevent losses and other similar causes, the
separation pay shall be equivalent to one (1) month pay or at least
one-half (1/2) month pay for every year of service, whichever is
higher. A fraction of at least six (6) months shall be considered one
(1) whole year. (Emphasis supplied)

In addition, Sections 9(b) and 10, Rule 1, Book VI of the Rules
Implementing the Labor Code provide:

x x x

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.

x x x

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.

3). Ruga Vs NLRC

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 fish-catch 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 employer-employee
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. In Negre 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 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.

4). Atok Big Wedge assn. vs atok big wedge co

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).

x x x x x x x x x

III

x x x x x x x x x

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 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 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.

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.

5). States Marine Corp and Royal Line Inc Vs Cebu Seamans
Association
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 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.

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, 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 lay-off, 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.

6). Mabeza vs NLRC

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 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-
05-0198-91 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 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.

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:

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
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.


7). Cebu Institute of Technology VS Ople

Facts:-The court awarded 10% of the back wages payable to all
members of the bargaining unit as negotiation fee w/c covers AF,
agency fee & the like. Only members of the bargaining unit should
be made to pay this assessment-Employer school contends that
the nego fee of 10% should not be charged against the
60%incremental proceeds from tuition fee increases on the ground
that this is not a bargainable matter as it has already been fixed by
law; hence, only 30% should be subject to the computation of the
10% nego fee-The faculty association asserts that the whole90%
incremental proceeds from TF increases should be the basis for
computing the 10% negofee. It alleged that were it not for the
demand made by the union & subsequent notice of strike that
ensued arising from the non implementation of PD 451, the school
would not grant the benefits there under.

Ruling:-The school is correct-The whole 90% economic package
awarded by the NLRC cannot be the basis for computing the
negotiation fees as the law has already provided for the minimum
percentage of TF increases to be allotted for teachers & other
school personnel. This is mandatory & cannot be diminished
although it may be increased by collective bargaining-Only the amt
beyond that mandated by law should be subject to nego fees & AF
since it is only this w/c the employees had to bargain for -The 60%
w/c the law grants is not a negotiable issue & not obtained by
negotiation.

8). ISAE vs Quisumbing

Receiving salaries less than their counterparts hired abroad, the
local-hires of private respondent School, mostly Filipinos, cry
discrimination. We agree. That the local-hires are paid more than
their colleagues in other schools is, of course, beside the point. The
point is that employees should be given equal pay for work of
equal value. That is a principle long honored in this jurisdiction.
That is a principle that rests on fundamental notions of justice.
That is the principle we uphold today.

Private respondent International School, Inc. (the School, for
short), pursuant to Presidential Decree 732, is a domestic
educational institution established primarily for dependents of
foreign diplomatic personnel and other temporary residents.[1] To
enable the School to continue carrying out its educational program
and improve its standard of instruction, Section 2(c) of the same
decree authorizes the School to

employ its own teaching and management personnel selected by it
either locally or abroad, from Philippine or other nationalities, such
personnel being exempt from otherwise applicable laws and
regulations attending their employment, except laws that have
been or will be enacted for the protection of employees.

Accordingly, the School hires both foreign and local teachers as
members of its faculty, classifying the same into two: (1) foreign-
hires and (2) local-hires. The School employs four tests to
determine whether a faculty member should be classified as a
foreign-hire or a local hire:

a.....What is one's domicile?

b.....Where is one's home economy?

c.....To which country does one owe economic allegiance?

d.....Was the individual hired abroad specifically to work in the
School and was the School responsible for bringing that individual
to the Philippines?[2]

Should the answer to any of these queries point to the Philippines,
the faculty member is classified as a local hire; otherwise, he or
she is deemed a foreign-hire.

The School grants foreign-hires certain benefits not accorded local-
hires. These include housing, transportation, shipping costs, taxes,
and home leave travel allowance. Foreign-hires are also paid a
salary rate twenty-five percent (25%) more than local-hires. The
School justifies the difference on two "significant economic
disadvantages" foreign-hires have to endure, namely: (a) the
"dislocation factor" and (b) limited tenure. The School explains:

A foreign-hire would necessarily have to uproot himself from his
home country, leave his family and friends, and take the risk of
deviating from a promising career path-all for the purpose of
pursuing his profession as an educator, but this time in a foreign
land. The new foreign hire is faced with economic realities: decent
abode for oneself and/or for one's family, effective means of
transportation, allowance for the education of one's children,
adequate insurance against illness and death, and of course the
primary benefit of a basic salary/retirement compensation.

Because of a limited tenure, the foreign hire is confronted again
with the same economic reality after his term: that he will
eventually and inevitably return to his home country where he will
have to confront the uncertainty of obtaining suitable employment
after a long period in a foreign land.

The compensation scheme is simply the School's adaptive measure
to remain competitive on an international level in terms of
attracting competent professionals in the field of international
education.[3]

When negotiations for a new collective bargaining agreement were
held on June 1995, petitioner International School Alliance of
Educators, "a legitimate labor union and the collective bargaining
representative of all faculty members"[4] of the School, contested
the difference in salary rates between foreign and local-hires. This
issue, as well as the question of whether foreign-hires should be
included in the appropriate bargaining unit, eventually caused a
deadlock between the parties.

On September 7, 1995, petitioner filed a notice of strike. The
failure of the National Conciliation and Mediation Board to bring the
parties to a compromise prompted the Department of Labor and
Employment (DOLE) to assume jurisdiction over the dispute. On
June 10, 1996, the DOLE Acting Secretary, Crescenciano B.
Trajano, issued an Order resolving the parity and representation
issues in favor of the School. Then DOLE Secretary Leonardo A.
Quisumbing subsequently denied petitioner's motion for
reconsideration in an Order dated March 19, 1997. Petitioner now
seeks relief in this Court.

Petitioner claims that the point-of-hire classification employed by
the School is discriminatory to Filipinos and that the grant of higher
salaries to foreign-hires constitutes racial discrimination.

The School disputes these claims and gives a breakdown of its
faculty members, numbering 38 in all, with nationalities other than
Filipino, who have been hired locally and classified as local
hires.[5]The Acting Secretary of Labor found that these non-
Filipino local-hires received the same benefits as the Filipino local-
hires:

The compensation package given to local-hires has been shown to
apply to all, regardless of race. Truth to tell, there are foreigners
who have been hired locally and who are paid equally as Filipino
local hires.[6]

The Acting Secretary upheld the point-of-hire classification for the
distinction in salary rates:

The principle "equal pay for equal work" does not find application in
the present case. The international character of the School requires
the hiring of foreign personnel to deal with different nationalities
and different cultures, among the student population.

We also take cognizance of the existence of a system of salaries
and benefits accorded to foreign hired personnel which system is
universally recognized. We agree that certain amenities have to be
provided to these people in order to entice them to render their
services in the Philippines and in the process remain competitive in
the international market.

Furthermore, we took note of the fact that foreign hires have
limited contract of employment unlike the local hires who enjoy
security of tenure. To apply parity therefore, in wages and other
benefits would also require parity in other terms and conditions of
employment which include the employment contract.

A perusal of the parties' 1992-1995 CBA points us to the conditions
and provisions for salary and professional compensation wherein
the parties agree as follows:

All members of the bargaining unit shall be compensated only in
accordance with Appendix C hereof provided that the
Superintendent of the School has the discretion to recruit and hire
expatriate teachers from abroad, under terms and conditions that
are consistent with accepted international practice.

Appendix C of said CBA further provides:

The new salary schedule is deemed at equity with the Overseas
Recruited Staff (OSRS) salary schedule. The 25% differential is
reflective of the agreed value of system displacement and
contracted status of the OSRS as differentiated from the tenured
status of Locally Recruited Staff (LRS).

To our mind, these provisions demonstrate the parties' recognition
of the difference in the status of two types of employees, hence,
the difference in their salaries.

The Union cannot also invoke the equal protection clause to justify
its claim of parity. It is an established principle of constitutional law
that the guarantee of equal protection of the laws is not violated by
legislation or private covenants based on reasonable classification.
A classification is reasonable if it is based on substantial
distinctions and apply to all members of the same class. Verily,
there is a substantial distinction between foreign hires and local
hires, the former enjoying only a limited tenure, having no
amenities of their own in the Philippines and have to be given a
good compensation package in order to attract them to join the
teaching faculty of the School.[7]

We cannot agree.

That public policy abhors inequality and discrimination is beyond
contention. Our Constitution and laws reflect the policy against
these evils. The Constitution[8] in the Article on Social Justice and
Human Rights exhorts Congress to "give highest priority to the
enactment of measures that protect and enhance the right of all
people to human dignity, reduce social, economic, and political
inequalities." The very broad Article 19 of the Civil Code requires
every person, "in the exercise of his rights and in the performance
of his duties, [to] act with justice, give everyone his due, and
observe honesty and good faith."

International law, which springs from general principles of law,[9]
likewise proscribes discrimination. General principles of law include
principles of equity,[10] i.e., the general principles of fairness and
justice, based on the test of what is reasonable.[11] The Universal
Declaration of Human Rights,[12] the International Covenant on
Economic, Social, and Cultural Rights,[13] the International
Convention on the Elimination of All Forms of Racial
Discrimination,[14] the Convention against Discrimination in
Education,[15] the Convention (No. 111) Concerning
Discrimination in Respect of Employment and Occupation[16] - all
embody the general principle against discrimination, the very
antithesis of fairness and justice. The Philippines, through its
Constitution, has incorporated this principle as part of its national
laws.

In the workplace, where the relations between capital and labor are
often skewed in favor of capital, inequality and discrimination by
the employer are all the more reprehensible.

The Constitution[17] specifically provides that labor is entitled to
"humane conditions of work." These conditions are not restricted to
the physical workplace - the factory, the office or the field - but
include as well the manner by which employers treat their
employees.

The Constitution[18] also directs the State to promote "equality of
employment opportunities for all." Similarly, the Labor Code[19]
provides that the State shall "ensure equal work opportunities
regardless of sex, race or creed." It would be an affront to both the
spirit and letter of these provisions if the State, in spite of its
primordial obligation to promote and ensure equal employment
opportunities, closes its eyes to unequal and discriminatory terms
and conditions of employment.[20]

Discrimination, particularly in terms of wages, is frowned upon by
the Labor Code. Article 135, for example, prohibits and
penalizes[21] the payment of lesser compensation to a female
employee as against a male employee for work of equal value.
Article 248 declares it an unfair labor practice for an employer to
discriminate in regard to wages in order to encourage or
discourage membership in any labor organization.

Notably, the International Covenant on Economic, Social, and
Cultural Rights, supra, in Article 7 thereof, provides:

The States Parties to the present Covenant recognize the right of
everyone to the enjoyment of just and favourable conditions of
work, which ensure, in particular:

a.....Remuneration which provides all workers, as a minimum,
with:

i.....Fair wages and equal remuneration for work of equal value
without distinction of any kind, in particular women being
guaranteed conditions of work not inferior to those enjoyed by
men, with equal pay for equal work;

x x x.

The foregoing provisions impregnably institutionalize in this
jurisdiction the long honored legal truism of "equal pay for equal
work." Persons who work with substantially equal qualifications,
skill, effort and responsibility, under similar conditions, should be
paid similar salaries.[22] This rule applies to the School, its
"international character" notwithstanding.

The School contends that petitioner has not adduced evidence that
local-hires perform work equal to that of foreign-hires.[23] The
Court finds this argument a little cavalier. If an employer accords
employees the same position and rank, the presumption is that
these employees perform equal work. This presumption is borne by
logic and human experience. If the employer pays one employee
less than the rest, it is not for that employee to explain why he
receives less or why the others receive more. That would be adding
insult to injury. The employer has discriminated against that
employee; it is for the employer to explain why the employee is
treated unfairly.

The employer in this case has failed to discharge this burden.
There is no evidence here that foreign-hires perform 25% more
efficiently or effectively than the local-hires. Both groups have
similar functions and responsibilities, which they perform under
similar working conditions.

The School cannot invoke the need to entice foreign-hires to leave
their domicile to rationalize the distinction in salary rates without
violating the principle of equal work for equal pay.

"Salary" is defined in Black's Law Dictionary (5th ed.) as "a reward
or recompense for services performed." Similarly, the Philippine
Legal Encyclopedia states that "salary" is the "[c]onsideration paid
at regular intervals for the rendering of services." In Songco v.
National Labor Relations Commission,[24] we said that:

"salary" means a recompense or consideration made to a person
for his pains or industry in another man's business. Whether it be
derived from "salarium," or more fancifully from "sal," the pay of
the Roman soldier, it carries with it the fundamental idea of
compensation for services rendered. (Emphasis supplied.)

While we recognize the need of the School to attract foreign-hires,
salaries should not be used as an enticement to the prejudice of
local-hires. The local-hires perform the same services as foreign-
hires and they ought to be paid the same salaries as the latter. For
the same reason, the "dislocation factor" and the foreign-hires'
limited tenure also cannot serve as valid bases for the distinction in
salary rates. The dislocation factor and limited tenure affecting
foreign-hires are adequately compensated by certain benefits
accorded them which are not enjoyed by local-hires, such as
housing, transportation, shipping costs, taxes and home leave
travel allowances.

The Constitution enjoins the State to "protect the rights of workers
and promote their welfare,"[25] "to afford labor full
protection."[26] The State, therefore, has the right and duty to
regulate the relations between labor and capital.[27] These
relations are not merely contractual but are so impressed with
public interest that labor contracts, collective bargaining
agreements included, must yield to the common good.[28] Should
such contracts contain stipulations that are contrary to public
policy, courts will not hesitate to strike down these stipulations.

In this case, we find the point-of-hire classification employed by
respondent School to justify the distinction in the salary rates of
foreign-hires and local hires to be an invalid classification. There is
no reasonable distinction between the services rendered by
foreign-hires and local-hires. The practice of the School of
according higher salaries to foreign-hires contravenes public policy
and, certainly, does not deserve the sympathy of this Court.

We agree, however, that foreign-hires do not belong to the same
bargaining unit as the local-hires.

A bargaining unit is "a group of employees of a given employer,
comprised of all or less than all of the entire body of employees,
consistent with equity to the employer indicate to be the best
suited to serve the reciprocal rights and duties of the parties under
the collective bargaining provisions of the law."[29] The factors in
determining the appropriate collective bargaining unit are (1) the
will of the employees (Globe Doctrine); (2) affinity and unity of the
employees' interest, such as substantial similarity of work and
duties, or similarity of compensation and working conditions
(Substantial Mutual Interests Rule); (3) prior collective bargaining
history; and (4) similarity of employment status.[30] The basic test
of an asserted bargaining unit's acceptability is whether or not it is
fundamentally the combination which will best assure to all
employees the exercise of their collective bargaining rights.[31]

It does not appear that foreign-hires have indicated their intention
to be grouped together with local-hires for purposes of collective
bargaining. The collective bargaining history in the School also
shows that these groups were always treated separately. Foreign-
hires have limited tenure; local-hires enjoy security of tenure.
Although foreign-hires perform similar functions under the same
working conditions as the local-hires, foreign-hires are accorded
certain benefits not granted to local-hires. These benefits, such as
housing, transportation, shipping costs, taxes, and home leave
travel allowance, are reasonably related to their status as foreign-
hires, and justify the exclusion of the former from the latter. To
include foreign-hires in a bargaining unit with local-hires would not
assure either group the exercise of their respective collective
bargaining rights.

WHEREFORE, the petition is GIVEN DUE COURSE. The petition is
hereby GRANTED IN PART. The Orders of the Secretary of Labor
and Employment dated June 10, 1996 and March 19, 1997, are
hereby REVERSED and SET ASIDE insofar as they uphold the
practice of respondent School of according foreign-hires higher
salaries than local-hires.

SO ORDERED.

9).

10).

11). SNTFM UWP VS NLRC

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 employers 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:

ARTICLE VII. Wages

Section 1. Defer

Section 2. Status quo

Section 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
managements sincerity but they are worried that in case there is a
new set of management, they can just show their CBA. The union
decided to defer this provision.[1]

In their joint affidavit dated January 30, 1992,[2] 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-the-board basis.

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 escalated increase ranging
from P6.99 to P14.30 and from P6.00 to P10.00, respectively.[3]

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 respondents promise and
assurance of an across-the-board salary increase should the
government mandate salary increases.[4] 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 respondents act of reneging on its
undertaking/promise clearly constitutes an 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, specifically bargaining in bad
faith, and prayed that it be awarded actual, moral and exemplary
damages.[5] In its position paper, the union added that it was
charging private respondent with violation of Article 100 of the
Labor Code.[6]

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 parties at the time they
negotiated or signed this Agreement.[7]

On March 11, 1992, Labor Arbiter Jose G. de Vera rendered a
decision dismissing the complaint for lack of merit.[8] 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 unions 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
managements 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 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 attorneys fees may
not be granted.

Not satisfied, petitioner appealed to the NLRC that, in turn,
promulgated the assailed Resolution of April 29, 1993[9]
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:

-A-

THE 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.

-B-

THE 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.

-C-

THE PUBLIC RESPONDENTS SERIOUSLY ERRED IN NOT FINDING
THE PRIVATE RESPONDENTS GUILTY OF HAVING VIOLATED
SECTION 4, ARTICLE XVII OF THE EXISTING CBA.

-D-

THE 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.

-E-

ASSUMING, 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.

-F-

THE PUBLIC RESPONDENTS ERRED IN NOT AWARDING TO THE
PETITIONERS HEREIN ACTUAL, MORAL, AND EXEMPLARY
DAMAGES AND ATTORNEYS 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 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 unions 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.

The CBA is the law between the contracting parties[10] the
collective bargaining representative and the employer-company.
Compliance with a CBA is mandated by the expressed policy to
give protection to labor.[11] 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
negotiated and purpose which it is intended to serve."[12] This is
founded on the dictum that a CBA is not an ordinary contract but
one impressed with public interest.[13] 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 does not find print in the CBA,[14] it is not a part
thereof and the proponent has no claim whatsoever to its
implementation.

Hence, petitioner unions 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 transpired therein.[15] 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 managements usual negotiation
strategies is to x x x agree tentatively as you go along with the
understanding that nothing is binding until the entire agreement is
reached.[16] 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 respondents 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.

Petitioners reliance on this Courts pronouncements[17] in Kiok
Loy v. NLRC[18] 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) Companys
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 Unions request for a counter-proposal is
left unanswered. Considering the facts of that case, the Court
concluded that the company was unwilling to negotiate and reach
an agreement with the Union.[19]

In the case at bench, however, petitioner union does not deny that
discussion on its proposal that all government-mandated salary
increases should be on an across-the-board basis was deferred,
purportedly because it relied upon the undertaking of the
negotiating panel of private respondent.[20] 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-board to its employees the mandated wage increase.
They simply assert that private respondent committed acts of
unfair labor practices by virtue of its contractual commitment made
during the collective bargaining process.[21] 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 does not include
the obligation to reach an agreement. x x x.[22]

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
exerted reasonable effort at good faith bargaining.[23]

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 partys
insistence on the inclusion of a particular substantive provision
unless it concerns trivial matters or is obviously intolerable.[24]

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 reached with respect to
other disputed clauses."[25]

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
respondents 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 unions contention
that by its failure to grant across-the-board wage increases,
private respondent violated the provisions of Section 5, Article VII
of the existing CBA[26] as well as Article 100 of the Labor Code.
The CBA provision states:

Section 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.

Article 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 unions
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.

The issue of whether or not a wage distortion exists is a question
of fact[27] that is within the jurisdiction of the quasi-judicial
tribunals below. Factual findings of administrative agencies are
accorded respect and even finality in this Court if they are
supported by substantial evidence.[28] 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 therefrom.[29]

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
respondents 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 itemization has not been successfully
traversed by the appellants. x x x.[30]

The NLRC then quoted the labor arbiters 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
petitioners contention on the issue of wage distortion and the
resulting allegation of discrimination against the private
respondents employees are anchored on its dubious position that
private respondents 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 that the rights of
workers and the promotion of their welfare shall be protected.[31]
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 Courts 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.

12). Traders Royal Bank VS NLRC

This petition for certiorari seeks to nullify or set aside the decision
dated September 2, 1988 of the National Labor Relations
Commission, which found the petitioner, Traders Royal Bank (or
TRB), guilty of diminution of benefits due the private respondents
and ordered it to pay the said employees' claims for differentials in
their holiday, mid-year, and year-end bonuses.

On November 18, 1986, the Union, through its president, filed a
letter-complaint against TRB with the Conciliation Division of the
Bureau of Labor Relations claiming that:

First, the management of TRB per memo dated October 10, 1986
paid the employees their HOLIDAY PAY, but has withheld from the
Union the basis of their computation.

Second, the computation in question, has allegedly decreased the
daily salary rate of the employees. This diminution of existing
benefits has decreased our overtime rate and has affected the
employees' take home pay.

Third, the diminution of benefits being enjoyed by the employees
since time immemorial, e.g. mid-year bonus, from two (2) months
gross pay to two (2) months basic and year-end bonus from three
(3) months gross to only two (2) months.

Fourth, the refusal by management to recall active union members
from the branches which were being transferred without prior
notice, solely at the instance of the branch manager. (p. 26, Rollo.)

In its answer to the union's complaint, TRB pointed out that the
NLRC, not the Bureau of Labor Relations, had jurisdiction over the
money claims of the employees.

On March 24, 1987, the Secretary of Labor certified the complaint
to the NLRC for resolution of the following issues raised by the
complainants:

l) The Management of TRB per memo dated October 10, 1986 paid
the employees their holiday pay but has withheld from the union
the basis of their computation.

2) The computation in question has allegedly decreased the daily
salary rate of the employees. This diminution of existing benefits
has decreased our overtime rate and has affected the employees'
take home pay.

3) The diminution of benefits being enjoyed by the employees
since the (sic) immemorial, e.g. mid-year bonus, from two (2)
months gross pay to two (2) months basic and year-end bonus
from three (3) months gross to only two (2) months.

4) The refusal by management to recall active union members
from the branches which were being transferred without prior
notice, solely at the instance of the branch, manager. (p. 28,
Rollo.)

In the meantime, the parties who had been negotiating for a
collective bargaining agreement, agreed on the terms of the CBA,
to wit:

1. The whole of the bonuses given in previous years is not
demandable, i.e., there is no diminution, as to be liable for a
differential, if the bonus given is less than that in previous years.

2. Since only two months bonus is guaranteed, only to that extent
are bonuses deemed part of regular compensation.

3. As regards the third and fourth bonuses, they are entirely
dependent on the income of the bank, and not demandable as part
of compensation. (pp. 67-68, Rollo.)

Despite the terms of the CBA, however, the union insisted on
pursuing the case, arguing that the CBA would apply prospectively
only to claims arising after its effectivity.

Petitioner, on the other hand, insisted that it had paid the
employees holiday pay. The practice of giving them bonuses at
year's end, would depend on how profitable the operation of the
bank had been. Generally, the bonus given was two (2) months
basic mid-year and two (2) months gross end-year.

On September 2, 1988, the NLRC rendered a decision in favor of
the employees, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of the
petitioner and ordering respondent bank to pay petitioner
members-employees the following:

1. Holiday differential for the period covering l983-1986 as
embodied in Resolution No. 4984-1986 of respondent's Board of
Directors but to start from November 11, 1983 and using the
Divisor 251 days in determining the daily rate of the employees;

2. Mid-year bonus differential representing the difference between
two (2) months gross pay and two (2) months basic pay and end-
year bonus differential of one (1) month gross pay for 1986.

The claim for holiday differential for the period earlier than
November 11, 1983 is hereby dismissed, the same having
prescribed.

Likewise, the charge of unfair labor practice against the respondent
company is hereby dismissed for lack of merit. (pp. 72-73, Rollo.)

A motion for reconsideration was filed by TRB but it was denied.
Hence, this petition for certiorari.

There is merit in the petitioner's contention that the NLRC gravely
abused its discretion in ordering it to pay mid-year/year-end bonus
differential for 1986 to its employees.

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 vs.
Cebu Portland Cement Co., 61 O.G. 4597). "It is something given
in addition to what is ordinarily received by or strictly due the
recipient." The granting of a bonus is basically a management
prerogative which cannot be forced upon the employer "who may
not be obliged to assume the onerous burden of granting bonuses
or other benefits aside from the employee's basic salaries or
wages" . . . (Kamaya Point Hotel vs. National Labor Relations
Commission, Federation of Free Workers and Nemia Quiambao,
G.R. No. 75289, August 31, 1989).

It is clear from the above-cited rulings that the petitioner may not
be obliged to pay bonuses to its employees. The matter of giving
them bonuses over and above their lawful salaries and allowances
is entirely dependent on the profits, if any, realized by the Bank
from its operations during the past year.

From 1979-1985, the bonuses were less because the income of the
Bank had decreased. In 1986, the income of the Bank was only
20.2 million pesos, but the Bank still gave out the usual two (2)
months basic mid-year and two months gross year-end bonuses.
The petitioner pointed out, however, that the Bank weakened
considerably after 1986 on account of political developments in the
country. Suspected to be a Marcos-owned or controlled bank, it
was placed under sequestration by the present administration and
is now managed by the Presidential Commission on Good
Government (PCGG).

In the light of these submissions of the petitioner, the contention of
the Union that the granting of bonuses to the employees had
ripened into a company practice that may not be adjusted to the
prevailing financial condition of the Bank has no legal and moral
bases. Its fiscal condition having declined, the Bank may not be
forced to distribute bonuses which it can no longer afford to pay
and, in effect, be penalized for its past generosity to its employees.

Private respondent's contention, that the decrease in the midyear
and year-end bonuses constituted a diminution of the employees'
salaries, is not correct, for bonuses are not part of labor standards
in the same class as salaries, cost of living allowances, holiday pay,
and leave benefits, which are provided by the Labor Code.

WHEREFORE, the petition for certiorari is granted. The decision of
the National Labor Relations Commission is modified by deleting
the award of bonus differentials to the employees for 1986. In
other respects, the decision is affirmed. Costs against the
respondent union.

SO ORDERED.

13). Universal Corn Products Vs NLRC

The petitioner invokes National Federation of Sugar Workers
(NFSW) v. Ovejera, 1 in which we held that Presidential Decree No.
851, 2 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 accordance with
the length of services that worker concerned has served during the
year . 3

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 with the
enactment of Presidential Decree No. 851 4 on December 16,
1975. It further claims that since 1975, it had been paying its
employees 13th-month pay pursuant to the Decree. 5

For failure of the petitioner to pay the seven-day Christmas bonus
for 1975 to 1978 inclusive, in accordance with the 1972 CBA, the
union went to the labor arbiter for relief. In his decision, 6 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
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 should also
be respected. 7

xxx xxx xxx

We hold that in the case at bar, Ovejera (La Carlota) case does not
apply.

We apply instead, United CMC Textile Workers Union v. Valenzuela
8 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 month pay is mandated by the law (P. D. 851). 9

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.

14). San Miguel Corp. VS Inciong

Petition for certiorari and prohibition, with preliminary injunction to
review the Order 1 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 reconsideration and ordered the immediate execution of
a prior Order 2 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.

An Order 3 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 Amado G. Inciong
issued an Order 4 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.

On February 14, 1979, this Court issued a Temporary Restraining
Order 5 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 performed on rest days, special and
regular holidays are included in the computation of the 13th-month
pay. 6 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
of a wage adjustment." 7

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.

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.

15). Philippine Duplicators Inc. VS NLRC

On 11 November 1993, this Court, through its Third Division,
rendered a decision dismissing the Petition for Certiorari filed by
petitioner Philippine Duplicators, Inc. (Duplicators) in G.R. No.
110068. The Court upheld the decision of public respondent
National Labor Relations Commission (NLRC), which affirmed the
order of Labor Arbiter Felipe T. Garduque II directing petitioner to
pay 13th month pay to private respondent employees computed on
the basis of their fixed wages plus sales commissions. The Third
Division also denied with finality on 15 December 1993 the Motion
for Reconsideration filed (on 12 December 1993) by petitioner.

On 17 January 1994, petitioner Duplicators filed (a) a Motion for
Leave to Admit Second Motion for Reconsideration and (b) a
Second Motion for Reconsideration. This time, petitioner invoked
the decision handed down by this Court, through its Second
Division, on 10 December 1993 in the two (2) consolidated cases
of Boie-Takeda Chemicals, Inc. vs. Hon. Dionisio de la Serna and
Philippine Fuji Xerox Corp. vs. Hon. Cresenciano B. Trajano, in G.R.
Nos. 92174 and 102552, respectively. In its decision, the Second
Division inter alia declared null and void the second paragraph of
Section 5 (a) 1 of the Revised Guidelines issued by then Secretary
of Labor Drilon. Petitioner submits that the decision in the
Duplicators case should now be considered as having been
abandoned or reversed by the Boie-Takeda decision, considering
that the latter went "directly opposite and contrary to" the
conclusion reached in the former. Petitioner prays that the decision
rendered in Duplicators be set aside and another be entered
directing the dismissal of the money claims of private respondent
Philippine Duplicators' Employees' Union.

In view of the nature of the issues raised, the Third Division of this
Court referred the petitioner's Second Motion for Reconsideration,
and its Motion for Leave to Admit the Second Motion for
Reconsideration, to the Court en banc en consulta. The Court en
banc, after preliminary deliberation, and inorder to settle the
condition of the relevant case law, accepted G.R. No. 110068 as a
banc case.

Deliberating upon the arguments contained in petitioner's Second
Motion for Reconsideration, as well as its Motion for Leave to Admit
the Second Motion for Reconsideration, and after review of the
doctrines embodied, respectively, in Duplicators and Boie-Takeda,
we consider that these Motions must fail.

The decision rendered in Boie-Takeda cannot serve as a precedent
under the doctrine of stare decisis. The Boie-Takeda decision was
promulgated a month after this Court, (through its Third Division),
had rendered the decision in the instant case. Also, the petitioner's
(first) Motion for Reconsideration of the decision dated 10
November 1993 had already been denied, with finality, on 15
December 1993, i.e.; before the Boie-Takeda decision became final
on 5 January 1994.

Preliminarily, we note that petitioner Duplicators did not put in
issue the validity of the Revised Guidelines on the Implementary on
of the 13th Month Pay Law, issued on November 16, 1987, by then
Labor Secretary Franklin M. Drilon, either in its Petition for
Certiorari or in its (First) Motion for Reconsideration. In fact,
petitioner's counsel relied upon these Guidelines and asserted their
validity in opposing the decision rendered by public respondent
NLRC. Any attempted change in petitioner's theory, at this late
stage of the proceedings, cannot be allowed.

More importantly, we do not agree with petitioner that the decision
in Boie-Takeda is "directly opposite or contrary to" the decision in
the present (Philippine Duplicators). To the contrary, the doctrines
enunciated in these two (2) cases in fact co-exist one with the
other. The two (2) cases present quite different factual situations
(although the same word "commissions" was used or invoked) the
legal characterizations of which must accordingly differ.

The Third Division in Durplicators found that:

In the instant case, there is no question that the sales commission
earned by the salesmen who make or close a sale of duplicating
machines distributed by petitioner corporation, constitute part of
the compensation or remuneration paid to salesmen for serving as
salesmen, and hence as part of the "wage" or salary of petitioner's
salesmen. Indeed, it appears that petitioner pays its salesmen a
small fixed or guaranteed wage; the greater part of the salesmen's
wages or salaries being composed of the sales or incentive
commissions earned on actual sales closed by them. No doubt this
particular galary structure was intended for the benefit of the
petitioner corporation, on the apparent assumption that thereby its
salesmen would be moved to greater enterprise and diligence and
close more sales in the expectation of increasing their sales
commissions. This, however, does not detract from the character of
such commissions as part of the salary or wage paid to each of its
salesmen for rendering services to petitioner corporation.

In other words, the sales commissions received for every
duplicating machine sold constituted part of the basic
compensation or remuneration of the salesmen of Philippine
Duplicators for doing their job. The portion of the salary structure
representing commissions simply comprised an automatic
increment to the monetary value initially assigned to each unit of
work rendered by a salesman. Especially significant here also is the
fact that the fixed or guaranteed portion of the wages paid to the
Philippine Duplicators' salesmen represented only 15%-30% of an
employee's total earnings in a year. We note the following facts on
record:

Salesmen's Total Earnings and 13th Month Pay
For the Year 1986 2

Name of Total Amount Paid Montly Fixed
Salesman Earnings as 13th Month Pay Wages x 12 3

Baylon, P76,610.30 P1,350.00 P16,200.00
Benedicto

Bautista 90,780.85 1,182.00 14,184.00
Salvador

Brito, 64,382.75 1,238.00 14,856.00
Tomas

Bunagan, 89,287.75 1,266.00 15,192.00
Jorge

Canilan, 74,678.17 1,350.00 16,200.00
Rogelio

Dasig, 54,625.16 1,378,00 16,536.00
Jeordan

Centeno, 51,854.15 1,266.04 15,192.00
Melecio, Jr.

De los Santos 73,551.39 1,322.00 15,864.00
Ricardo

del Mundo, 108,230.35 1,406.00 16,872.00
Wilfredo

Garcia, 93,753.75 1,294.00 15,528.00
Delfin

Navarro, 98,618.71 1,266.00 15,192.00
Ma. Teresa

Ochosa, 66,275.65 1,406.00 16,872.00
Rolano

Quisumbing, 101,065.75 1,406.00 16,872.00
Teofilo

Rubina, 42,209.73 1,266.00 15,192.00
Emma

Salazar, 64,643.65 1,238.00 14,856.00
Celso

Sopelario, 52,622.27 1,350.00 16,200.00
Ludivico

Tan, 30,127.50 1,238.00 14,856.00
Leynard

Talampas, 146,510.25 1,434.00 17,208.00
Pedro

Villarin, 41,888.10 1,434.00 17,208.00
Constancio

Carrasco, 50,201.20 403.75*
Cicero

Punzalan, 24,351.89 1,266.00 15,192.00
Reynaldo

Poblador, 25,516.75 323.00*
Alberto

Cruz, 32,950.45 323.00*
Danilo

Baltazar, 15,681.35 323.00*
Carlito

Considering the above circumstances, the Third Division held,
correctly, that the sales commissions were an integral part of the
basic salary structure of Philippine Duplicators' employees
salesmen. These commissions are not overtime payments, nor
profit-sharing payments nor any other fringe benefit. Thus, the
salesmen's commissions, comprising a pre-determined percent of
the selling price of the goods sold by each salesman, were properly
included in the term "basic salary" for purposes of computing their
13th month pay.

In Boie-Takeda the so-called commissions "paid to or received by
medical representatives of Boie-Takeda Chemicals or by the rank
and file employees of Philippine Fuji Xerox Co.," were excluded
from the term "basic salary" because these were paid to the
medical representatives and rank-and-file employees as
"productivity bonuses." 4 The Second Division characterized these
payments as additional monetary benefits not properly included in
the term "basic salary" in computing their 13th month pay. We
note that productivity bonuses are generally tied to the
productivity, or capacity for revenue production, of a corporation;
such bonuses closely resemble profit-sharing payments and have
no clear director necessary relation to the amount of work actually
done by each individual employee. More generally, a bonus is an
amount granted and paid ex gratia to the employee; its payment
constitutes an act of enlightened generosity and self-interest on
the part of the employer, rather than as a demandable or
enforceable obligation. In Philippine Education Co. Inc. (PECO) v.
Court of Industrial Relations, 5 the Court explained the nature of a
bonus in the following general terms:

As a rule a bonus is an amount granted and paid to an employee
for his industry loyalty which contributed to the success of the
employer's business and made possible the realization of profits. It
is an act of generosity of the employer for which the employee
ought to be thankful and grateful. It is also granted by an
enlightened employer to spur the employee to greater efforts for
the success of the business and realization of bigger profits. . . . .
From the legal point of view a bonus is not and mandable and
enforceable obligation. It is so when It is made part of the wage or
salary or compensation. In such a case the latter would be a fixed
amount and the former would be a contingent one dependent upon
the realization of profits. . . . 6 (Emphasis supplied)

In Atok-Big Wedge Mining Co., Inc. v. Atok-Big Wedge Mutual
Benefit Association, 7 the Court amplified:

. . . . Whether or not [a] bonus forms part of waqes depends upon
the circumstances or conditions for its payment. If it is an
additional compensation which the employer promised and agreed
to give without any conditions imposed for its payment, such as
success of business or greater production or output, then it is part
of the wage. But if it is paid only if profits are realized or a certain
amount of productivity achieved, it cannot be considered part of
wages. . . . It is also paid on the basis of actual or actual work
accomplished. If the desired goal of production is not obtained, or
the amount of actual work accomplished, the bonus does not
accrue. . . . 8 (Emphasis supplied)

More recently, the non-demandable character of a bonus was
stressed by the Court in Traders Royal Bank v. National Labor
Relations Commission: 9

A bonus is a "gratuity or act of liberality of the giver which the
recipient has no right to demand as a matter of right." (Aragon v.
Cebu Portland Cement Co., 61 O.G. 4567). "It is something given
in addition to what is ordinarily received by or strictly due the
recipient." The granting of a bonus is basically a management
prerogative which cannot be forced upon the employer "who may
not be obliged to assume the onerous burden of granting bonuses
or other benefits aside from the employee's basic salaries or wages
. . ." (Kamaya Point Hotel v. NLRC, 177 SCRA 160 [1989]). 10
(Emphasis supplied)

If an employer cannot be compelled to pay a productivity bonus to
his employees, it should follow that such productivity bonus, when
given, should not be deemed to fall within the "basic salary" of
employees when the time comes to compute their 13th month pay.

It is also important to note that the purported "commissions" paid
by the Boie-Takeda Company to its medical representatives could
not have been "sales commissions" in the same sense that
Philippine Duplicators paid its salesmen Sales commissions. Medical
representatives are not salesmen; they do not effect any sale of
any article at all. In common commercial practice, in the
Philippines and elsewhere, of which we take judicial notice, medical
representatives are employees engaged in the promotion of
pharmaceutical products or medical devices manufactured by their
employer. They promote such products by visiting identified
physicians and inform much physicians, orally and with the aid of
printed brochures, of the existence and chemical composition and
virtues of particular products of their company. They commonly
leave medical samples with each physician visited; but those
samples are not "sold" to the physician and the physician is, as a
matter of professional ethics, prohibited from selling such samples
to their patients. Thus, the additional payments made to Boie-
Takeda's medical representatives were not in fact sales
commissions but rather partook of the nature of profit-sharing
bonuses.

The doctrine set out in the decision of the Second Division is,
accordingly, that additional payments made to employees, to the
extent they partake of the nature of profit-sharing payments, are
properly excluded from the ambit of the term "basic salary" for
purposes of computing the 13th month pay due to employees.
Such additional payments are not "commissions" within the
meaning of the second paragraph of Section 5 (a) of the Revised
Guidelines Implementing 13th Month Pay.

The Supplementary Rules and Regulations Implementing P.D. No.
851 subsequently issued by former Labor Minister Ople sought to
clarify the scope of items excluded in the computation of the 13th
month pay; viz.:

Sec. 4. Overtime pay, earnings and other remunerations which are
not part of the basic salary shall not be included in the computation
of the 13th month pay.

We observe that the third item excluded from the term "basic
salary" is cast in open ended and apparently circular terms: "other
remunerations which are not part of the basic salary." However,
what particular types of earnings and remuneration are or are not
properly included or integrated in the basic salary are questions to
be resolved on a case to case basis, in the light of the specific and
detailed facts of each case. In principle, where these earnings and
remuneration are closely akin to fringe benefits, overtime pay or
profit-sharing payments, they are properly excluded in computing
the 13th month pay. However, sales commissions which are
effectively an integral portion of the basic salary structure of an
employee, shall be included in determining his 13th month pay.

We recognize that both productivity bonuses and sales
commissions may have an incentive effect. But there is reason to
distinguish one from the other here. Productivity bonuses are
generally tied to the productivity or profit generation of the
employer corporation. Productivity bonuses are not directly
dependent on the extent an individual employee exerts himself. A
productivity bonus is something extra for which no specific
additional services are rendered by any particular employee and
hence not legally demandable, absent a contractual undertaking to
pay it. Sales commissions, on the other hand, such as those paid in
Duplicators, are intimately related to or directly proportional to the
extent or energy of an employee's endeavors. Commissions are
paid upon the specific results achieved by a salesman-employee. It
is a percentage of the sales closed by a salesman and operates as
an integral part of such salesman's basic pay.

Finally, the statement of the Second Division in Boie-Takeda
declaring null and void the second paragraph of Section 5(a) of the
Revised Guidelines Implementing the 13th Month Pay issued by
former Labor Secretary Drilon, is properly understood as holding
that that second paragraph provides no legal basis for including
within the term "commission" there used additional payments to
employees which are, as a matter of fact, in the nature of profit-
sharing payments or bonuses. If and to the extent that such
second paragraph is so interpreted and applied, it must be
regarded as invalid as having been issued in excess of the
statutory authority of the Secretary of Labor. That same second
paragraph however, correctly recognizes that commissions, like
those paid in Duplicators, may constitute part of the basic salary
structure of salesmen and hence should be included in determining
the 13th month pay; to this extent, the second paragraph is and
remains valid.

ACCORDINGLY, the Motions for (a) Leave to File a Second Motion
for Reconsideration and the (b) aforesaid Second Reconsideration
are DENIED for lack of merit. No further pleadings will be
entertained.

16). Boei Takeda VS Dela Serna

What items or items of employee remuneration should go into the
computation of thirteenth month pay is the basic issue presented in
these consolidated petitions. Otherwise stated, the question is
whether or not the respondent labor officials in computing said
benefit, committed "grave abuse of discretion amounting to lack of
jurisdiction," by giving effect to Section 5 of the Revised Guidelines
on the implementation of the Thirteenth Month Pay (Presidential
Decree No. 851) promulgated by then Secretary of Labor and
Employment, Hon. Franklin Drilon, and overruling petitioner's
contention that said provision constituted a usurpation of
legislative power because not justified by or within the authority of
the law sought to be implemented besides being violative of the
equal protection of the law clause of the Constitution.
Resolution of the issue entails, first, a review of the pertinent
provisions of the laws and implementing regulations.
Sections 1 and 2 of Presidential Decree No. 851, the Thirteenth
Month Pay Law, read as follows:
Sec 1. All employees are hereby required to pay all
their employees receiving basic salary of not more
than P1,000.00 a month, regardless of the nature of
the employment, a 13th month pay not later than
December 24 of every year.
Sec. 2. Employers already paying their employees a
13th month pay or its equivalent are not covered by
this Decree.
The Rules and Regulations Implementing P.D. 851 promulgated by
then Labor Minister Blas Ople on December 22, 1975 contained the
following relevant provisions relative to the concept of "thirteenth
month pay" and the employers exempted from giving it, to wit:
Sec. 2. Definition of certain terms. . . .
a) "Thirteenth month pay" shall mean one twelfth
(1/12) of the basic salary of an employee within a
calendar year;
b) "Basic Salary" shall include all remunerations or
earnings paid by an employer to an employee for
services rendered but may not include cost of living
allowances granted pursuant to Presidential Decree
No. 525 or Letter of Instructions No. 174, profit
sharing payments, and all allowances and monetary
benefits which are not considered or integrated as
part of the regular or basic salary of the employee at
the time of the promulgation of the Decree on
December 16, 1975.
Sec. 3. Employers covered. . . . (The law applies)
to all employers except to:
xxx xxx xxx
c) Employers already paying their employers a 13-
month pay or more in calendar year or is equivalent
at the time of this issuance;
xxx xxx xxx
e) Employers of those who are paid on purely
commission, boundary, or task basis, and those who
are paid a fixed amount for performing a specific
work, irrespective of the time consumed in the
performance thereof, except where the workers are
paid on piece-rate basis in which case the employer
shall be covered by this issuance insofar as such
workers are concerned.
xxx xxx xxx
The term "its equivalent" as used in paragraph (c)
shall include Christmas bonus, mid-year bonus,
profit-sharing payments and other cash bonuses
amounting to not less than 1/12th of the basic salary
but shall not include cash and stock dividends, cost
of living allowances and all other allowances
regularly enjoyed by the employee, as well as non-
monetary benefits. Where an employer pays less
than 1/12th of the employee's basic salary, the
employer shall pay the difference.
Supplementary Rules and Regulations implementing P.D. 851 were
subsequently issued by Minister Ople which inter alia set out items
of compensation not included in the computation of the 13th month
pay, viz.:
Sec. 4. Overtime pay, earnings and other
remunerations which are not part of the basic salary
shall not be included in the computation of the 13th
month pay.
On August 13, 1986, President Corazon C. Aquino promulgated
Memorandum Order No. 28, which contained a single provision
modifying Presidential Decree No. 851 by removing the salary
ceiling of P1,000.00 a month set by the latter, as follows:
Section 1 of Presidential Decree No. 851 is hereby
modified to the extent that all employers are hereby
required to pay all their rank-and-file employees a
13th month pay not later than December 24, of
every year.
Slightly more than a year later, on November 16, 1987, Revised
Guidelines on the Implementation of the 13th Month Pay Law were
promulgated by then Labor Secretary Franklin Drilon which, among
other things, defined with particularity what remunerative items
were and were not embraced in the concept of 13th month pay,
and specifically dealt with employees who are paid a fixed or
guaranteed wage plus commission. The relevant provisions read:
4. Amount and payment of 13th Month Pay.
xxx xxx xxx
The basic salary of an employee for the purpose of
computing the 13th month pay shall include all
remunerations or earnings paid by the employer for
services rendered but does not include allowances
and monetary benefits which are not considered or
integrated as part of the regular or basic salary, such
as the cash equivalent of unused vacation and sick
leave credits, overtime, premium, night differential
and holiday pay, and cost-of-living allowances.
However, these salary-related benefits should be
included as part of the basic salary in the
computation of the 13th month pay if by individual
or collective agreement, company practice or policy,
the same are treated as part of the basic salary of
the employees.
xxx xxx xxx
5. 13th Month Pay for Certain Types of Employees.
(a) Employees Paid by Results. Employees who
are paid on piece work basis are by law entitled to
the 13th month pay.
Employees who are paid a fixed or guaranteed wage
plus commission are also entitled to the mandated
13th month pay based on their total earnings during
the calendar year, i.e., on both their fixed or
guaranteed wage and commission.
This was the state of the law when the controversies at bar arose
out of the following antecedents:
(RE G.R. No. 92174) A routine inspection was conducted on May 2,
1989 in the premises of petitioner Boie-Takeda Chemicals, Inc. by
Labor
and Development Officer Reynaldo B. Ramos under Inspection
Authority
No. 4-209-89. Finding that Boie-Takeda had not been including the
commissions earned by its medical representatives in the
computation of their 13th month pay, Ramos served a Notice of
Inspection Results
1
on Boie-Takeda through its president, Mr.
Benito Araneta, requiring Boie-Takeda within ten (10) calendar
days from notice to effect restitution or correction of "the
underpayment of 13th month pay for the year(s) 1986, 1987 and
1988 of Med Rep (Revised Guidelines on the Implementation of
13th month pay # 5) in the total amount of P558,810.89."
Boie-Takeda wrote the Labor Department contesting the Notice of
Inspection Results, and expressing the view "that the commission
paid to our medical representatives are not to be included in the
computation of the 13th month pay . . . (since the) law and its
implementing rules speak of REGULAR or BASIC salary and
therefore exclude all other remunerations which are not part of the
REGULAR salary." It pointed out that, "if no sales is (sic) made
under the effort of a particular representative, there is no
commission during the period when no sale was transacted, so that
commissions are not and cannot be legally defined as regular in
nature.
2

Regional Director Luna C. Piezas directed Boie-Takeda to appear
before his Office on June 9 and 16, 1989. On the appointed dates,
however, and despite due notice, no one appeared for Boie-
Takeda, and the matter had perforce to be resolved on the basis of
the evidence at hand. On July 24, 1989, Director Piezas issued an
Order
3
directing Boie-Takeda:
. . . to pay . . . (its) medical representatives and its
managers the total amount of FIVE HUNDRED SIXTY
FIVE THOUSAND SEVEN HUNDRED FORTY SIX AND
FORTY SEVEN CENTAVOS (P565,746.47)
representing underpayment of thirteenth (13th)
month pay for the years 1986, 1987, 1988,
inclusive, pursuant to the . . . revised guidelines
within ten (10) days from receipt of this Order.
A motion for reconsideration
4
was seasonably filed by Boie-Takeda
under date of August 3, 1989. Treated as an appeal, it was
resolved on
January 17, 1990 by then Acting Labor Secretary Dionisio de la
Serna, who affirmed the July 24, 1989 Order with modification that
the sales commissions earned by Boie-Takeda's medical
representatives before August 13, 1989, the effectivity date of
Memorandum Order No. 28 and its Implementing Guidelines, shall
be excluded in the computation of their 13th month pay.
5

Hence the petition docketed as G.R. No. 92174.
(RE G.R. No. 102552) A similar Routine Inspection was conducted
in the premises of Philippine Fuji Xerox Corp. on September 7,
1989 pursuant to Routine Inspection Authority No. NCR-LSED-RI-
494-89. In his Notice of Inspection Results,
6
addressed to the
Manager, Mr. Nicolas O. Katigbak, Senior Labor and Employment
Officer Nicanor M. Torres noted the following violation committed
by Philippine Fuji Xerox Corp., to wit:
Underpayment of 13th month pay of 62 employees,
more or less pursuant to Revised Guidelines on
the Implementation of the 13th month pay law for
the period covering 1986, 1987 and 1988.
Philippine Fuji Xerox was requested to effect rectification and/or
restitution of the noted violation within five (5) working days from
notice.
No action having been taken thereon by Philippine Fuji Xerox,
Mr. Eduardo G. Gonzales, President of the Philxerox Employee
Union, wrote then Labor Secretary Franklin Drilon requesting a
follow-up of the inspection findings. Messrs. Nicolas and Gonzales
were summoned to appear before Labor Employment and
Development Officer Mario F. Santos, NCR Office, Department of
Labor for a conciliation conference. When no amicable settlement
was reached, the parties were required to file their position papers.
Subsequently, Regional Director Luna C. Piezas issued an Order
dated August 23, 1990,
7
disposing as follows:
WHEREFORE, premises considered, Respondent
PHILIPPINE FUJI XEROX is hereby ordered to
restitute to its salesmen the portion of the 13th
month pay which arose out of the non-
implementation of the said revised guidelines, ten
(10) days from receipt hereof, otherwise,
MR. NICANOR TORRES, the SR. LABOR EMPLOYMENT
OFFICER is hereby Ordered to proceed to the
premises of the Respondent for the purpose of
computing the said deficiency (sic) should
respondent fail to heed his Order.
Philippine Fuji Xerox appealed the aforequoted Order to the Office
of the Secretary of Labor. In an Order dated October 120, 1991,
Undersecretary Cresenciano B. Trajano denied the appeal for lack
of merit. Hence, the petition in G.R. No. 102552, which was
ordered consolidated with G.R. No. 92174 as involving the same
issue.
In their almost identically-worded petitioner, petitioners, through
common counsel, attribute grave abuse of discretion to respondent
labor officials
Hon. Dionisio dela Serna and Undersecretary Cresenciano B.
Trajano in issuing the questioned Orders of January 17, 1990 and
October 10, 1991, respectively. They maintain that under P.D. 851,
the 13th month pay is based solely on basic salary. As defined by
the law itself and clarified by the implementing and Supplementary
Rules as well as by the Supreme Court in a long line of decisions,
remunerations which do not form part of the basic or regular salary
of an employee, such as commissions, should not be considered in
the computation of the 13th month pay. This being the case, the
Revised Guidelines on the Implementation of the 13th Month Pay
Law issued by then Secretary Drilon providing for the inclusion of
commissions in the 13th month pay, were issued in excess of the
statutory authority conferred by P.D. 851. According to petitioners,
this conclusion becomes even more evident when considered in
light of the opinion rendered by Labor Secretary Drilon himself in
"In Re: Labor Dispute at the Philippine Long Distance Telephone
Company" which affirmed the contemporaneous interpretation by
then Secretary Ople that commissions are excluded from the basic
salary. Petitioners further contend that assuming that Secretary
Drilon did not exceed the statutory authority conferred by P.D.
851, still the Revised Guidelines are null and void as they violate
the equal protection of the law clause.
Respondents through the Office of the Solicitor General question
the propriety of petitioners' attack on the constitutionality of the
Revised Guidelines in a petition for certiorari which, they contend,
should be confined purely to the correction of errors and/or defects
of jurisdiction, including matters of grave abuse of discretion
amounting to lack or excess of jurisdiction and not extend to a
collateral attack on the validity and/or constitutionality of a law or
statute. They aver that the petitions do not advance any cogent
reason or state any valid ground to sustain the allegation of grave
abuse of discretion, and that at any rate, P.D. No. 851, otherwise
known as the 13th Month Pay Law has already been amended by
Memorandum Order No. 28 issued by President Corazon C. Aquino
on August 13, 1986 so that commissions are now imputed into the
computation of the 13th Month Pay. They add that the Revised
Guidelines issued by then Labor Secretary Drilon merely clarified a
gray area occasioned by the silence of the law as to the nature of
commissions; and worked no violation of the equal protection
clause of the Constitution, said Guidelines being based on
reasonable classification. Respondents point to the case of Songco
vs. National Labor Relations Commission, 183 SCRA 610, wherein
the Court declared that Article 97(f) of the Labor Code is explicit
that commission is included in the definition of the term "wage".
We rule for the petitioners.
Contrary to respondents' contention, Memorandum Order No. 28
did not repeal, supersede or abrogate P.D. 851. As may be gleaned
from the language of the Memorandum Order No. 28, it merely
"modified" Section 1 of the decree by removing the P1,000.00
salary ceiling. The concept of 13th Month Pay as envisioned,
defined and implemented under P.D. 851 remained unaltered, and
while entitlement to said benefit was no longer limited to
employees receiving a monthly basic salary of not more than
P1,000.00, said benefit was, and still is, to be computed on the
basic salary of the employee-recipient as provided under P.D. 851.
Thus, the interpretation given to the term "basic salary" as defined
in P.D. 851 applies equally to "basic salary" under Memorandum
Order No. 28.
In the case of San Miguel Corp. vs. Inciong, 103 SCRA 139, this
Court delineated the coverage of the term "basic salary" as used in
P.D. 851. We said at some length:
Under Presidential Decree 851 and its implementing
rules, the basic salary of an employee is used as the
basis in the determination of his 13th month pay.
Any compensations or remunerations which are
deemed not part of the basic pay is excluded as
basis in the computation of the mandatory bonus.
Under the Rules and Regulations implementing
Presidential Decree 851, the following compensations
are deemed not part of the basic salary:
a) Cost-of-living allowances granted
pursuant to Presidential Decree 525
and Letter of Instructions No. 174;
b) Profit-sharing payments;
c) All allowances and monetary
benefits which are not considered or
integrated as part of the regular basic
salary of the employee at the time of
the promulgation of the Decree on
December 16, 1975.
Under a later set of Supplementary Rules and
Regulations Implementing Presidential Decree 851
Presidential Decree 851 issued by then Labor
Secretary Blas Ople, overtime pay, earnings and
other remunerations are excluded as part of the
basic salary and in the computation of the 13th
month pay.
The exclusion of the cost-of-living allowances under
Presidential Decree 525 and Letter of Instructions
No. 174, and profit-sharing payments indicate the
intention to strip basic salary of other payments
which are properly considered as "fringe" benefits.
Likewise, the catch-all exclusionary phrase "all
allowances and monetary benefits which are not
considered or integrated as part of the basic salary"
shows also the intention to strip basic salary of any
and all additions which may be in the form of
allowances or "fringe" benefits.
Moreover, the Supplementary Rules and Regulations
Implementing Presidential Decree 851 is even more
emphatic in declaring that earnings and other
remunerations which are not part of the basic salary
shall not be included in the computation of the 13th-
month pay.
While doubt may have been created by the prior
Rules and Regulations Implementing Presidential
Decree 851 which defines basic salary to include all
remunerations or earnings paid by an employer to an
employee, this cloud is dissipated in the later and
more controlling Supplementary Rules and
Regulations which categorically exclude from the
definitions of basic salary earnings and other
remunerations paid by an employer to an employee.
A cursory perusal of the two sets of Rules indicates
that what has hitherto been the subject of a broad
inclusion is now a subject of broad exclusion. The
Supplementary Rules and Regulations cure the
seeming tendency of the former rules to include all
remunerations and earnings within the definition of
basic salary.
The all embracing phrase "earnings and other
remunerations" which are deemed not part of the
basic salary includes within its meaning payments for
sick, vacation, or maternity leaves, premium for
works performed on rest days and special holidays,
pays for regular holidays and night differentials. As
such they are deemed not part of the basic salary
and shall not be considered in the computation of the
13th-month pay. If they were not excluded, it is hard
to find any "earnings and other remunerations"
expressly excluded in the computation of the 13th
month pay. Then the exclusionary provision would
prove to be idle and with no purpose.
This conclusion finds strong support under the Labor
Code of the Philippines. To cite a few provisions:
Art. 87. Overtime Work. Work may be performed
beyond eight (8) hours a day provided that the
employee is paid for the overtime work, additional
compensation equivalent to his regular wage plus at
least twenty-five (25%) percent thereof.
It is clear that overtime pay is an additional
compensation other than and added to the regular
wage or basic salary, for reason of which such is
categorically excluded from the definition of basic
salary under the Supplementary Rules and
Regulations Implementing Presidential Decree 851.
In Article 93 of the same Code, paragraph
c) work performed on any special holiday shall be
paid an additional compensation of at least thirty
percent (30%) of the regular wage of the employee.
It is likewise clear the premiums for special holiday
which is at least 30% of the regular wage is an
additional pay other than and added to the regular
wage or basic salary. For similar reason, it shall not
be considered in the computation of the 13th month
pay.
Quite obvious from the foregoing is that the term "basic salary" is
to be understood in its common, generally-accepted meaning, i.e.,
as a rate of pay for a standard work period exclusive of such
additional payments as bonuses and overtime.
8
This is how the
term was also understood in the case of Pless v. Franks, 308 S.W.
2nd. 402, 403, 202 Tenn. 630, which held that in statutes
providing that pension should not less than 50 percent of "basic
salary" at the time of retirement, the quoted words meant the
salary that an employee (e.g., a policeman) was receiving at the
time he retired without taking into consideration any extra
compensation to which he might be entitled for extra work.
9

In remunerative schemes consisting of a fixed or guaranteed wage
plus commission, the fixed or guaranteed wage is patently the
"basic salary" for this is what the employee receives for a standard
work period. Commissions are given for extra efforts exerted in
consummating sales or other related transactions. They are, as
such, additional pay, which this Court has made clear do not form
part of the "basic salary."
Respondents would do well to distinguish this case from Songco vs.
National Labor Relations Commission, supra, upon which they rely
so heavily. What was involved therein was the term "salary"
without the restrictive adjective "basic". Thus, in said case, we
construed the term in its generic sense to refer to all types of
"direct remunerations for services rendered," including
commissions. In the same case, we also took judicial notice of the
fact "that some salesmen do not receive any basic salary but
depend on commissions and allowances or commissions alone,
although an employer-employee relationship exists," which
statement is quite significant in that it speaks of a "basic salary"
apart and distinct from "commissions" and "allowances". Instead of
supporting respondents' stand, it would appear that Songco itself
recognizes that commissions are not part of "basic salary."
In including commissions in the computation of the 13th month
pay, the second paragraph of Section 5(a) of the Revised
Guidelines on the Implementation of the 13th Month Pay Law
unduly expanded the concept of "basic salary" as defined in P.D.
851. It is a fundamental rule that implementing rules cannot add to
or detract from the provisions of the law it is designed to
implement. Administrative regulations adopted under legislative
authority by a particular department must be in harmony with the
provisions of the law they are intended to carry into effect. They
cannot widen its scope. An administrative agency cannot amend an
act of Congress.
10

Having reached this conclusion, we deem it unnecessary to discuss
the other issues raised in these petitions.
WHEREFORE, the consolidated petitions are hereby GRANTED. The
second paragraph of Section 5 (a) of the Revised Guidelines on the
Implementation of the 13th Month Pay Law issued on November
126, 1987 by then Labor Secretary Franklin M. Drilon is declared
null and void as being violative of the law said Guidelines were
issued to implement, hence issued with grave abuse of discretion
correctible by the writ of prohibition and certiorari. The assailed
Orders of January 17, 1990 and October 10, 1991 based thereon
are SET ASIDE.
SO ORDERED.
17). PACIWU-TUCP VS NLRC

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 than their basic
minimum for eight (8) hours work. 1

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 Pay Law. 2 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.

On May 22, 1992, Labor Arbiter Reynaldo Gulmatico rendered a
decision dismissing the complaint. 3

The appeal of the petitioner to the National Labor Relations
Commission was likewise dismissed 4 so was the motion for
reconsideration of the said decision. 5

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.

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) hours work. 6 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 employee receives but the nature of the
remuneration 7 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.

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 on the profit of the principal. 8
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 services they render, 9
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 Philippine Duplicators, Inc. v. National Labor Relations
Commission, 10 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 corporation. 11

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.

18).
19). Labor Congress of the Philippines VS NLRC

In this special civil action for certiorari under Rule 65, petitioners
seek to reverse the 29 March 1995 resolution[1] of the National
Labor Relations Commission (NLRC) in NLRC RAB III Case No. 01-
1964-91 which affirmed the Decision[2] of Labor Arbiter Ariel C.
Santos dismissing their complaint for utter lack of merit.

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

The 99 persons named as petitioners in this proceeding were rank-
and-file employees of respondent Empire Food Products, which
hired them on various dates (Paragraph 1, Annex A of Petition,
Annex B; Page 2, Annex F of Petition).

Petitioners filed against private respondents a complaint for
payment of money claim[s] and for violation of labor standard[s]
laws (NLRC Case No. RAB-111-10-1817-90). They also filed a
petition for direct certification of petitioner Labor Congress of the
Philippines as their bargaining representative (Case No. R0300-
9010-RU-005).

On October 23, 1990, petitioners represented by LCP President
Benigno B. Navarro, Sr. and private respondents Gonzalo Kehyeng
and Evelyn Kehyeng in behalf of Empire Food Products, Inc.
entered into a Memorandum of Agreement which provided, among
others, the following:

1. That in connection with the pending Petition for Direct
Certification filed by the Labor Congress with the DOLE,
Management of the Empire Food Products has no objection [to] the
direct certification of the LCP Labor Congress and is now
recognizing the Labor Congress of the Philippines (LCP) and its
Local Chapter as the SOLE and EXCLUSIVE Bargaining Agent and
Representative for all rank and file employees of the Empire Food
Products regarding WAGES, HOURS OF WORK, AND OTHER TERMS
AND CONDITIONS OF EMPLOYMENT;

2. That with regards [sic] to NLRC CASE NO. RAB-III-10-1817-90
pending with the NLRC parties jointly and mutually agreed that the
issues thereof, shall be discussed by the parties and resolve[d]
during the negotiation of the Collective Bargaining Agreement;

3. That Management of the Empire Food Products shall make the
proper adjustment of the Employees Wages within fifteen (15)
days from the signing of this Agreement and further agreed to
register all the employees with the SSS;

4. That Employer, Empire Food Products thru its Management
agreed to deduct thru payroll deduction UNION DUES and other
Assessment[s] upon submission by the LCP Labor Congress
individual Check-Off Authorization[s] signed by the Union Members
indicating the amount to be deducted and further agreed all
deduction[s] made representing Union Dues and Assessment[s]
shall be remitted immediately to the LCP Labor Congress Treasurer
or authorized representative within three (3) or five (5) days upon
deductions [sic], Union dues not deducted during the period due,
shall be refunded or reimbursed by the Employer/Management.
Employer/Management further agreed to deduct Union dues from
non-union members the same amount deducted from union
members without need of individual Check-Off Authorizations [for]
Agency Fee;

5. That in consideration [of] the foregoing covenant, parties jointly
and mutually agreed that NLRC CASE NO. RAB-III-10-1817-90
shall be considered provisionally withdrawn from the Calendar of
the National Labor Relations Commission(NLRC), while the Petition
for direct certification of the LCP Labor Congress parties jointly
move for the direct certification of the LCP Labor Congress;

6. That parties jointly and mutually agreed that upon signing of
this Agreement, no Harassments [sic], Threats, Interferences [sic]
of their respective rights under the law, no Vengeance or Revenge
by each partner nor any act of ULP which might disrupt the
operations of the business;

7. Parties jointly and mutually agreed that pending negotiations or
formalization of the propose[d] CBA, this Memorandum of
Agreement shall govern the parties in the exercise of their
respective rights involving the Management of the business and the
terms and condition[s] of employment, and whatever problems and
grievances may arise by and between the parties shall be resolved
by them, thru the most cordial and good harmonious relationship
by communicating the other party in writing indicating said
grievances before taking any action to another forum or
government agencies;

8. That parties [to] this Memorandum of Agreement jointly and
mutually agreed to respect, abide and comply with all the terms
and conditions hereof. Further agreed that violation by the parties
of any provision herein shall constitute an act of ULP. (Annex A
of Petition).

In an Order dated October 24, 1990, Mediator Arbiter Antonio
Cortez approved the memorandum of agreement and certified LCP
as the sole and exclusive bargaining agent among the rank-and-
file employees of Empire Food Products for purposes of collective
bargaining with respect to wages, hours of work and other terms
and conditions of employment (Annex B of Petition).

On November 9, 1990, petitioners through LCP President Navarro
submitted to private respondents a proposal for collective
bargaining (Annex C of Petition).

On January 23, 1991, petitioners filed a complaint docketed as
NLRC Case No. RAB-III-01-1964-91 against private respondents
for:

a. Unfair Labor Practice by way of Illegal Lockout and/or
Dismissal;

b. Union busting thru Harassments [sic], threats, and interfering
with the rights of employees to self-organization;

c. Violation of the Memorandum of Agreement dated October 23,
1990;

d. Underpayment of Wages in violation of R.A. No. 6640 and R.A.
No. 6727, such as Wages promulgated by the Regional Wage
Board;

e. Actual, Moral and Exemplary Damages. (Annex D of Petition)

After the submission by the parties of their respective position
papers and presentation of testimonial evidence, Labor Arbiter Ariel
C. Santos absolved private respondents of the charges of unfair
labor practice, union busting, violation of the memorandum of
agreement, underpayment of wages and denied petitioners prayer
for actual, moral and exemplary damages. Labor Arbiter Santos,
however, directed the reinstatement of the individual
complainants:

The undersigned Labor Arbiter is not oblivious to the fact that
respondents have violated a cardinal rule in every establishment
that a payroll and other papers evidencing hours of work,
payments, etc. shall always be maintained and subjected to
inspection and visitation by personnel of the Department of Labor
and Employment. As such penalty, respondents should not escape
liability for this technicality, hence, it is proper that all individual
complainants except those who resigned and executed quitclaim[s]
and releases prior to the filing of this complaint should be
reinstated to their former position[s] with the admonition to
respondents that any harassment, intimidation, coercion or any
form of threat as a result of this immediately executory
reinstatement shall be dealt with accordingly.

SO ORDERED. (Annex G of Petition)

On appeal, the National Labor Relations Commission vacated the
Decision dated April 14, 1972 [sic] and remanded the case to the
Labor Arbiter for further proceedings for the following reasons:

The Labor Arbiter, through his decision, noted that xxx
complainant did not present any single witness while respondent
presented four (4) witnesses in the persons of Gonzalo Kehyeng,
Orlando Cairo, Evelyn Kehyeng and Elvira Bulagan xxx (p. 183,
Records), that xxx complainant before the National Labor
Relations Commission must prove with definiteness and clarity the
offense charged. xxx (Record, p. 183); that xxx complainant
failed to specify under what provision of the Labor Code particularly
Art. 248 did respondents violate so as to constitute unfair labor
practice xxx (Record, p. 183); that complainants failed to present
any witness who may describe in what manner respondents have
committed unfair labor practice xxx (Record, p. 185); that xxx
complainant LCP failed to present anyone of the so-called 99
complainants in order to testify who committed the threats and
intimidation xxx (Record, p. 185).

Upon review of the minutes of the proceedings on record, however,
it appears that complainant presented witnesses, namely,
BENIGNO NAVARRO, JR. (28 February 1991, RECORD, p. 91; 8
March 1991, RECORD, p. 92, who adopted its POSITION PAPER
AND CONSOLIDATED AFFIDAVIT, as Exhibit A and the annexes
thereto as Exhibit B, B-1 to B-9, inclusive. Minutes of the
proceedings on record show that complainant further presented
other witnesses, namely: ERLINDA BASILIO (13 March 1991,
RECORD, p. 93; LOURDES PANTILLO, MARIFE PINLAC, LENIE
GARCIA (16 April 1991, Record, p. 96, see back portion thereof; 2
May 1991, Record, p. 102; 16 May 1991, Record, p. 103; 11 June
1991, Record, p. 105). Formal offer of Documentary and
Testimonial Evidence was made by complainant on June 24, 1991
(Record, p. 106-109)

The Labor Arbiter must have overlooked the testimonies of some of
the individual complainants which are now on record. Other
individual complainants should have been summoned with the end
in view of receiving their testimonies. The complainants should be
afforded the time and opportunity to fully substantiate their claims
against the respondents. Judgment should be rendered only based
on the conflicting positions of the parties. The Labor Arbiter is
called upon to consider and pass upon the issues of fact and law
raised by the parties.

Toward this end, therefore, it is Our considered view [that] the
case should be remanded to the Labor Arbiter of origin for further
proceedings.(Annex H of Petition)

In a Decision dated July 27, 1994, Labor Arbiter Santos made the
following determination:

Complainants failed to present with definiteness and clarity the
particular act or acts constitutive of unfair labor practice.

It is to be borne in mind that a declaration of unfair labor practice
connotes a finding of prima facie evidence of probability that a
criminal offense may have been committed so as to warrant the
filing of a criminal information before the regular court. Hence,
evidence which is more than a scintilla is required in order to
declare respondents/employers guilty of unfair labor practice.
Failing in this regard is fatal to the cause of complainants. Besides,
even the charge of illegal lockout has no leg to stand on because of
the testimony of respondents through their guard Orlando Cairo
(TSN, July 31, 1991 hearing; p. 5-35) that on January 21, 1991,
complainants refused and failed to report for work, hence guilty of
abandoning their post without permission from respondents. As a
result of complainants[] failure to report for work, the cheese curls
ready for repacking were all spoiled to the prejudice of
respondents. Under cross-examination, complainants failed to
rebut the authenticity of respondents witness testimony.

As regards the issue of harassments [sic], threats and interference
with the rights of employees to self-organization which is actually
an ingredient of unfair labor practice, complainants failed to specify
what type of threats or intimidation was committed and who
committed the same. What are the acts or utterances constitutive
of harassments [sic] being complained of? These are the
specifics which should have been proven with definiteness and
clarity by complainants who chose to rely heavily on its position
paper through generalizations to prove their case.

Insofar as violation of [the] Memorandum of Agreement dated
October 23, 1990 is concerned, both parties agreed that:

2 - That with regards [sic] to the NLRC Case No. RAB III-10-1817-
90 pending with the NLRC, parties jointly and mutually agreed that
the issues thereof shall be discussed by the parties and resolve[d]
during the negotiation of the CBA.

The aforequoted provision does not speak of [an] obligation on the
part of respondents but on a resolutory condition that may occur or
may not happen. This cannot be made the basis of an imposition
of an obligation over which the National Labor Relations
Commission has exclusive jurisdiction thereof.

Anent the charge that there was underpayment of wages, the
evidence points to the contrary. The enumeration of complainants
wages in their consolidated Affidavits of merit and position paper
which implies underpayment has no leg to stand on in the light of
the fact that complainants admission that they are piece workers
or paid on a pakiao [basis] i.e. a certain amount for every
thousand pieces of cheese curls or other products repacked. The
only limitation for piece workers or pakiao workers is that they
should receive compensation no less than the minimum wage for
an eight (8) hour work [sic]. And compliance therewith was
satisfactorily explained by respondent Gonzalo Kehyeng in his
testimony (TSN, p. 12-30) during the July 31, 1991 hearing. On
cross-examination, complainants failed to rebut or deny Gonzalo
Kehyengs testimony that complainants have been even receiving
more than the minimum wage for an average workers [sic].
Certainly, a lazy worker earns less than the minimum wage but the
same cannot be attributable to respondents but to the lazy
workers.

Finally, the claim for moral and exemplary damages has no leg to
stand on when no malice, bad faith or fraud was ever proven to
have been perpetuated by respondents.

WHEREFORE, premises considered, the complaint is hereby
DISMISSED for utter lack of merit. (Annex I of Petition).[4]

On appeal, the NLRC, in its Resolution dated 29 March 1995,[5]
affirmed in toto the decision of Labor Arbiter Santos. In so doing,
the NLRC sustained the Labor Arbiters findings that: (a) there was
a dearth of evidence to prove the existence of unfair labor practice
and union busting on the part of private respondents; (b) the
agreement of 23 October 1990 could not be made the basis of an
obligation within the ambit of the NLRCs jurisdiction, as the
provisions thereof, particularly Section 2, spoke of a resolutory
condition which could or could not happen; (c) the claims for
underpayment of wages were without basis as complainants were
admittedly pakiao workers and paid on the basis of their output
subject to the lone limitation that the payment conformed to the
minimum wage rate for an eight-hour workday; and (d) petitioners
were not underpaid.

Their motion for reconsideration having been denied by the NLRC
in its Resolution of 31 October 1995,[6] petitioners filed the instant
special civil action for certiorari raising the following issues:

I

WHETHER OR NOT THE PUBLIC RESPONDENT NATIONAL LABOR
RELATIONS COMMISSION GRAVELY ABUSED ITS DISCRETION
WHEN IT DISREGARDED OR IGNORED NOT ONLY THE EVIDENCE
FAVORABLE TO HEREIN PETITIONERS, APPLICABLE
JURISPRUDENCE BUT ALSO ITS OWN DECISIONS AND THAT OF
THIS HONORABLE HIGHEST TRIBUNAL WHICH [WAS]
TANTAMOUNT NOT ONLY TO THE DEPRIVATION OF PETITIONERS
RIGHT TO DUE PROCESS BUT WOULD RESULT [IN] MANIFEST
INJUSTICE.

II

WHETHER OR NOT THE PUBLIC RESPONDENT GRAVELY ABUSED
ITS DISCRETION WHEN IT DEPRIVED THE PETITIONERS OF THEIR
CONSTITUTIONAL RIGHT TO SELF-ORGANIZATION, SECURITY OF
TENURE, PROTECTION TO LABOR, JUST AND HUMANE
CONDITIONS OF WORK AND DUE PROCESS.

III

WHETHER OR NOT THE PETITIONERS WERE ILLEGALLY EASED
OUT [OF] OR CONSTRUCTIVELY DISMISSED FROM THEIR ONLY
MEANS OF LIVELIHOOD.

IV

WHETHER OR NOT PETITIONERS SHOULD BE REINSTATED FROM
THE DATE OF THEIR DISMISSAL UP TO THE TIME OF THEIR
REINSTATEMENT, WITH BACKWAGES, STATUTORY BENEFITS,
DAMAGES AND ATTORNEYS FEES.[7]

We required respondents to file their respective Comments.

In their Manifestation and Comment, private respondents asserted
that the petition was filed out of time. As petitioners admitted in
their Notice to File petition for Review on Certiorari that they
received a copy of the resolution (denying their motion for
reconsideration) on 13 December 1995, they had only until 29
December 1995 to file the petition. Having failed to do so, the
NLRC thus already entered judgment in private respondents favor.

In their Reply, petitioners averred that Mr. Navarro, a non-lawyer
who filed the notice to file a petition for review on their behalf,
mistook which reglementary period to apply. Instead of using the
reasonable time criterion for certiorari under Rule 65, he used
the 15-day period for petitions for review on certiorari under Rule
45. They hastened to add that such was a mere technicality which
should not bar their petition from being decided on the merits in
furtherance of substantial justice, especially considering that
respondents neither denied nor contradicted the facts and issues
raised in the petition.

In its Manifestation and Motion in Lieu of Comment, the Office of
the Solicitor General (OSG) sided with petitioners. It pointed out
that the Labor Arbiter, in finding that petitioners abandoned their
jobs, relied solely on the testimony of Security Guard Rolando
Cairo that petitioners refused to work on 21 January 1991,
resulting in the spoilage of cheese curls ready for repacking.
However, the OSG argued, this refusal to report for work for a
single day did not constitute abandonment, which pertains to a
clear, deliberate and unjustified refusal to resume employment,
and not mere absence. In fact, the OSG stressed, two days after
allegedly abandoning their work, petitioners filed a complaint for,
inter alia, illegal lockout or illegal dismissal. Finally, the OSG
questioned the lack of explanation on the part of Labor Arbiter
Santos as to why he abandoned his original decision to reinstate
petitioners.

In view of the stand of the OSG, we resolved to require the NLRC
to file its own Comment.

In its Comment, the NLRC invokes the general rule that factual
findings of an administrative agency bind a reviewing court and
asserts that this case does not fall under the exceptions. The NLRC
further argues that grave abuse of discretion may not be imputed
to it, as it affirmed the factual findings and legal conclusions of the
Labor Arbiter only after carefully reviewing, weighing and
evaluating the evidence in support thereof, as well as the pertinent
provisions of law and jurisprudence.

In their Reply, petitioners claim that the decisions of the NLRC and
the Labor Arbiter were not supported by substantial evidence; that
abandonment was not proved; and that much credit was given to
self-serving statements of Gonzalo Kehyeng, owner of Empire
Foods, as to payment of just wages.

On 7 July 1997, we gave due course to the petition and required
the parties to file their respective memoranda. However, only
petitioners and private respondents filed their memoranda, with
the NLRC merely adopting its Comment as its Memorandum.

We find for petitioners.

Invocation of the general rule that factual findings of the NLRC bind
this Court is unavailing under the circumstances. Initially, we are
unable to discern any compelling reason justifying the Labor
Arbiters volte face from his 14 April 1992 decision reinstating
petitioners to his diametrically opposed 27 July 1994 decision,
when in both instances, he had before him substantially the same
evidence. Neither do we find the 29 March 1995 NLRC resolution
to have sufficiently discussed the facts so as to comply with the
standard of substantial evidence. For one thing, the NLRC
confessed its reluctance to inquire into the veracity of the Labor
Arbiters factual findings, staunchly declaring that it was not about
to substitute [its] judgment on matters that are within the province
of the trier of facts. Yet, in the 21 July 1992 NLRC resolution,[8]
it chastised the Labor Arbiter for his errors both in judgment and
procedure, for which reason it remanded the records of the case to
the Labor Arbiter for compliance with the pronouncements therein.

What cannot escape from our attention is that the Labor Arbiter did
not heed the observations and pronouncements of the NLRC in its
resolution of 21 July 1992, neither did he understand the purpose
of the remand of the records to him. In said resolution, the NLRC
summarized the grounds for the appeal to be:

1. that there is a prima facie evidence of abuse of discretion
and acts of gross incompetence committed by the Labor Arbiter in
rendering the decision.

2. that the Labor Arbiter in rendering the decision committed
serious errors in the findings of facts.

After which, the NLRC observed and found:

Complainant alleged that the Labor Arbiter disregarded the
testimonies of the 99 complainants who submitted their
Consolidated Affidavit of Merit and Position Paper which was
adopted as direct testimonies during the hearing and cross-
examined by respondents counsel.

The Labor Arbiter, through his decision, noted that x x x
complainant did not present any single witness while respondent
presented four (4) witnesses in the persons of Gonzalo Kehyeng,
Orlando Cairo, Evelyn Kehyeng and Elvira Bulagan x x x (Records,
p. 183), that x x x complainant before the National Labor
Relations Commission must prove with definiteness and clarity the
offense charged. x x x (Record, p. 183; that x x x complainant
failed to specify under what provision of the Labor Code particularly
Art. 248 did respondents violate so as to constitute unfair labor
practice x x x (Record, p. 183); that complainants failed to
present any witness who may describe in what manner
respondents have committed unfair labor practice x x x (Record,
p. 185); that x x x complainant a [sic] LCP failed to present
anyone of the so called 99 complainants in order to testify who
committed the threats and intimidation x x x (Record, p. 185).

Upon review of the minutes of the proceedings on record, however,
it appears that complainant presented witnesses, namely BENIGNO
NAVARRO, JR. (28 February 1991, RECORD, p. 91; 8 March 1991,
RECORD, p. 92), who adopted its POSITION PAPER AND
CONSOLIDATED AFFIDAVIT, as Exhibit A and the annexes thereto
as Exhibit B, B-1 to B-9, inclusive. Minutes of the proceedings on
record show that complainant further presented other witnesses,
namely: ERLINDA BASILIO (13 March 1991, RECORD, p. 93;
LOURDES PANTILLO, MARIFE PINLAC, LENI GARCIA (16 April 1991,
Record, p. 96, see back portion thereof; 2 May 1991, Record, p.
102; 16 May 1991, Record, p. 103; 11 June 1991, Record, p. 105).
Formal offer of Documentary and Testimonial Evidence was made
by the complainant on June 24, 1991 (Record, p. 106-109).

The Labor Arbiter must have overlooked the testimonies of some of
the individual complainants which are now on record. Other
individual complainants should have been summoned with the end
in view of receiving their testimonies. The complainants should
[have been] afforded the time and opportunity to fully substantiate
their claims against the respondents. Judgment should [have
been] rendered only based on the conflicting positions of the
parties. The Labor Arbiter is called upon to consider and pass upon
the issues of fact and law raised by the parties.

Toward this end, therefore, it is Our considered view the case
should be remanded to the Labor Arbiter of origin for further
proceedings.

Further, We take note that the decision does not contain a
dispositive portion or fallo. Such being the case, it may be well
said that the decision does not resolve the issues at hand. On
another plane, there is no portion of the decision which could be
carried out by way of execution.

It may be argued that the last paragraph of the decision may be
categorized as the dispositive portion thereof:

x x x x x

The undersigned Labor Arbiter is not oblivious [to] the fact that
respondents have violated a cardinal rule in every establishment
that a payroll and other papers evidencing hour[s] of work,
payment, etc. shall always be maintained and subjected to
inspection and visitation by personnel of the Department of Labor
and Employment. As such penalty, respondents should not escape
liability for this technicality, hence, it is proper that all the
individual complainants except those who resigned and executed
quitclaim[s] and release[s] prior to the filing of this complaint
should be reinstated to their former position with the admonition to
respondents that any harassment, intimidation, coercion or any
form of threat as a result of this immediately executory
reinstatement shall be dealt with accordingly.

SO ORDERED.

It is Our considered view that even assuming arguendo that the
respondents failed to maintain their payroll and other papers
evidencing hours of work, payment etc., such circumstance,
standing alone, does not warrant the directive to reinstate
complainants to their former positions. It is [a] well settled rule
that there must be a finding of illegal dismissal before
reinstatement be mandated.

In this regard, the LABOR ARBITER is hereby directed to include in
his clarificatory decision, after receiving evidence, considering and
resolving the same, the requisite dispositive portion.[9]

Apparently, the Labor Arbiter perceived that if not for petitioners,
he would not have fallen victim to this stinging rebuke at the hands
of the NLRC. Thus does it appear to us that the Labor Arbiter, in
concluding in his 27 July 1994 Decision that petitioners abandoned
their work, was moved by, at worst, spite, or at best,
lackadaisically glossed over petitioners evidence. On this score,
we find the following observations of the OSG most persuasive:

In finding that petitioner employees abandoned their work, the
Labor Arbiter and the NLRC relied on the testimony of Security
Guard Rolando Cairo that on January 21, 1991, petitioners refused
to work. As a result of their failure to work, the cheese curls ready
for repacking on said date were spoiled.

The failure to work for one day, which resulted in the spoilage of
cheese curls does not amount to abandonment of work. In fact
two (2) days after the reported abandonment of work or on
January 23, 1991, petitioners filed a complaint for, among others,
unfair labor practice, illegal lockout and/or illegal dismissal. In
several cases, this Honorable Court held that one could not
possibly abandon his work and shortly thereafter vigorously pursue
his complaint for illegal dismissal (De Ysasi III v. NLRC, 231 SCRA
173; Ranara v. NLRC, 212 SCRA 631; Dagupan Bus Co. v. NLRC,
191 SCRA 328; Atlas Consolidated Mining and Development Corp.
v. NLRC, 190 SCRA 505; Hua Bee Shirt Factory v. NLRC, 186
SCRA 586; Mabaylan v. NLRC, 203 SCRA 570 and Flexo
Manufacturing v. NLRC, 135 SCRA 145). In Atlas Consolidated,
supra, this Honorable Court explicitly stated:

It would be illogical for Caballo, to abandon his work and then
immediately file an action seeking for his reinstatement. We can
not believe that Caballo, who had worked for Atlas for two years
and ten months, would simply walk away from his job unmindful of
the consequence of his act, i.e. the forfeiture of his accrued
employment benefits. In opting to finally to [sic] contest the
legality of his dismissal instead of just claiming his separation pay
and other benefits, which he actually did but which proved to be
futile after all, ably supports his sincere intention to return to work,
thus negating Atlas stand that he had abandoned his job.

In De Ysasi III v. NLRC (supra), this Honorable Court stressed that
it is the clear, deliberate and unjustified refusal to resume
employment and not mere absence that constitutes abandonment.
The absence of petitioner employees for one day on January 21,
1991 as testified [to] by Security Guard Orlando Cairo did not
constitute abandonment.

In his first decision, Labor Arbiter Santos expressly directed the
reinstatement of the petitioner employees and admonished the
private respondents that any harassment, intimidation, coercion
or any form of threat as a result of this immediately executory
reinstatement shall be dealt with accordingly.

In his second decision, Labor Arbiter Santos did not state why he
was abandoning his previous decision directing the reinstatement
of petitioner employees.

By directing in his first decision the reinstatement of petitioner
employees, the Labor Arbiter impliedly held that they did not
abandon their work but were not allowed to work without just
cause.

That petitioner employees are pakyao or piece workers does not
imply that they are not regular employees entitled to
reinstatement. Private respondent Empire Food Products, Inc. is a
food and fruit processing company. In Tabas v. California
Manufacturing Co., Inc. (169 SCRA 497), this Honorable Court held
that the work of merchandisers of processed food, who coordinate
with grocery stores and other outlets for the sale of the processed
food is necessary in the day-to-day operation[s] of the company.
With more reason, the work of processed food repackers is
necessary in the day-to-day operation[s] of respondent Empire
Food Products.[10]

It may likewise be stressed that the burden of proving the
existence of just cause for dismissing an employee, such as
abandonment, rests on the employer, [11] a burden private
respondents failed to discharge.

Private respondents, moreover, in considering petitioners
employment to have been terminated by abandonment, violated
their rights to security of tenure and constitutional right to due
process in not even serving them with a written notice of such
termination.[12] Section 2, Rule XIV, Book V of the Omnibus Rules
Implementing the Labor Code provides:

SEC. 2. Notice of Dismissal. - Any employer who seeks to dismiss
a worker shall furnish him a written notice stating the particular
acts or omission constituting the grounds for his dismissal. In
cases of abandonment of work, the notice shall be served at the
workers last known address.

Petitioners are therefore entitled to reinstatement with full back
wages pursuant to Article 279 of the Labor Code, as amended by
R.A. No. 6715. Nevertheless, the records disclose that taking into
account the number of employees involved, the length of time that
has lapsed since their dismissal, and the perceptible resentment
and enmity between petitioners and private respondents which
necessarily strained their relationship, reinstatement would be
impractical and hardly promotive of the best interests of the
parties. In lieu of reinstatement then, separation pay at the rate of
one month for every year of service, with a fraction of at least six
(6) months of service considered as one (1) year, is in order.[13]

That being said, the amount of back wages to which each
petitioner is entitled, however, cannot be fully settled at this time.
Petitioners, as piece-rate workers having been paid by the
piece,[14] there is need to determine the varying degrees of
production and days worked by each worker. Clearly, this issue is
best left to the National Labor Relations Commission.

As to the other benefits, namely, holiday pay, premium pay, 13th
month pay and service incentive leave which the labor arbiter
failed to rule on but which petitioners prayed for in their
complaint,[15] we hold that petitioners are so entitled to these
benefits. Three (3) factors lead us to conclude that petitioners,
although piece-rate workers, were regular employees of private
respondents. First, as to the nature of petitioners tasks, their job
of repacking snack food was necessary or desirable in the usual
business of private respondents, who were engaged in the
manufacture and selling of such food products; second, petitioners
worked for private respondents throughout the year, their
employment not having been dependent on a specific project or
season; and third, the length of time[16] that petitioners worked
for private respondents. Thus, while petitioners mode of
compensation was on a per piece basis, the status and nature of
their employment was that of regular employees.

The Rules Implementing the Labor Code exclude certain employees
from receiving benefits such as nighttime pay, holiday pay, service
incentive leave[17] and 13th month pay,[18] inter alia, field
personnel and other employees whose time and performance is
unsupervised by the employer, including those who are engaged on
task or contract basis, purely commission basis, or those who are
paid a fixed amount for performing work irrespective of the time
consumed in the performance thereof. Plainly, petitioners as
piece-rate workers do not fall within this group. As mentioned
earlier, not only did petitioners labor under the control of private
respondents as their employer, likewise did petitioners toil
throughout the year with the fulfillment of their quota as supposed
basis for compensation. Further, in Section 8 (b), Rule IV, Book III
which we quote hereunder, piece workers are specifically
mentioned as being entitled to holiday pay.

SEC. 8. Holiday pay of certain employees.-

(b) Where a covered employee is paid by results or output, such
as payment on piece work, his holiday pay shall not be less than
his average daily earnings for the last seven (7) actual working
days preceding the regular holiday: Provided, however, that in no
case shall the holiday pay be less than the applicable statutory
minimum wage rate.

In addition, the Revised Guidelines on the Implementation of the
13th Month Pay Law, in view of the modifications to P.D. No.
851[19] by Memorandum Order No. 28, clearly exclude the
employer of piece rate workers from those exempted from paying
13th month pay, to wit:

2. EXEMPTED EMPLOYERS

The following employers are still not covered by P.D. No. 851:

d. Employers of those who are paid on purely commission,
boundary or task basis, and those who are paid a fixed amount for
performing specific work, irrespective of the time consumed in the
performance thereof, except where the workers are paid on piece-
rate basis in which case the employer shall grant the required 13th
month pay to such workers. (italics supplied)

The Revised Guidelines as well as the Rules and Regulations
identify those workers who fall under the piece-rate category as
those who are paid a standard amount for every piece or unit of
work produced that is more or less regularly replicated, without
regard to the time spent in producing the same.[20]

As to overtime pay, the rules, however, are different. According to
Sec. 2(e), Rule I, Book III of the Implementing Rules, workers who
are paid by results including those who are paid on piece-work,
takay, pakiao, or task basis, if their output rates are in accordance
with the standards prescribed under Sec. 8, Rule VII, Book III, of
these regulations, or where such rates have been fixed by the
Secretary of Labor in accordance with the aforesaid section, are not
entitled to receive overtime pay. Here, private respondents did not
allege adherence to the standards set forth in Sec. 8 nor with the
rates prescribed by the Secretary of Labor. As such, petitioners
are beyond the ambit of exempted persons and are therefore
entitled to overtime pay. Once more, the National Labor Relations
Commission would be in a better position to determine the exact
amounts owed petitioners, if any.

As to the claim that private respondents violated petitioners right
to self-organization, the evidence on record does not support this
claim. Petitioners relied almost entirely on documentary evidence
which, per se, did not prove any wrongdoing on private
respondents part. For example, petitioners presented their
complaint[21] to prove the violation of labor laws committed by
private respondents. The complaint, however, is merely the
pleading alleging the plaintiffs cause or causes of action.[22] Its
contents are merely allegations, the verity of which shall have to
be proved during the trial. They likewise offered their Consolidated
Affidavit of Merit and Position Paper[23] which, like the offer of
their Complaint, was a tautological exercise, and did not help nor
prove their cause. In like manner, the petition for certification
election[24] and the subsequent order of certification[25] merely
proved that petitioners sought and acquired the status of
bargaining agent for all rank-and-file employees. Finally, the
existence of the memorandum of agreement[26] offered to
substantiate private respondents non-compliance therewith, did
not prove either compliance or non-compliance, absent evidence of
concrete, overt acts in contravention of the provisions of the
memorandum.

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

1. DECLARING petitioners to have been illegally dismissed by
private respondents, thus entitled to full back wages and other
privileges, and separation pay in lieu of reinstatement at the rate
of one months salary for every year of service with a fraction of six
months of service considered as one year;

2. REMANDING the records of this case to the National Labor
Relations Commission for its determination of the back wages and
other benefits and separation pay, taking into account the
foregoing observations; and

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

Costs against private respondents.

SO ORDERED.

20). Honda Phils. VS Samahan ng Malayang Manggagawa sa
Honda

This petition for review under Rule 45 seeks the reversal of the
Court of Appeals decision[1] dated September 14, 2000[2] and its
resolution[3] dated October 18, 2000, in CA-G.R. SP No. 59052.
The appellate court affirmed the decision dated May 2, 2000
rendered by the Voluntary Arbitrator who ruled that petitioner
Honda Philippines, Inc.s (Honda) pro-rated payment of the 13th
and 14th month pay and financial assistance to its employees was
invalid.

As found by the Court of Appeals, the case stems from the
Collective Bargaining Agreement (CBA) forged between petitioner
Honda and respondent union Samahan ng Malayang Manggagawa
sa Honda (respondent union) which contained the following
provisions:

Section 3. 13th Month Pay

The COMPANY shall maintain the present practice in the
implementation [of] the 13th month pay.

Section 6. 14th Month Pay

The COMPANY shall grant a 14th Month Pay, computed on the
same basis as computation of 13th Month Pay.

Section 7. The COMPANY agrees to continue the practice of
granting, in its discretion, financial assistance to covered
employees in December of each year, of not less than 100% of
basic pay.

This CBA is effective until year 2000. In the latter part of 1998,
the parties started re-negotiations for the fourth and fifth years of
their CBA. When the talks between the parties bogged down,
respondent union filed a Notice of Strike on the ground of
bargaining deadlock. Thereafter, Honda filed a Notice of Lockout.
On March 31, 1999, then Department of Labor and Employment
(DOLE) Secretary Laguesma assumed jurisdiction over the labor
dispute and ordered the parties to cease and desist from
committing acts that would aggravate the situation. Both parties
complied accordingly.

On May 11, 1999, however, respondent union filed a second Notice
of Strike on the ground of unfair labor practice alleging that Honda
illegally contracted out work to the detriment of the workers.
Respondent union went on strike and picketed the premises of
Honda on May 19, 1999. On June 16, 1999, DOLE Acting
Secretary Felicisimo Joson, Jr. assumed jurisdiction over the case
and certified the same to the National Labor Relations Commission
(NLRC) for compulsory arbitration. The striking employees were
ordered to return to work and the management accepted them
back under the same terms prior to the strike staged.

On November 22, 1999, the management of Honda issued a
memorandum[4] announcing its new computation of the 13th and
14th month pay to be granted to all its employees whereby the
thirty-one (31)-day long strike shall be considered unworked days
for purposes of computing said benefits. As per the companys
new formula, the amount equivalent to 1/12 of the employees
basic salary shall be deducted from these bonuses, with a
commitment however that in the event that the strike is declared
legal, Honda shall pay the amount deducted.

Respondent union opposed the pro-rated computation of the
bonuses in a letter dated November 25, 1999. Honda sought the
opinion of the Bureau of Working Conditions (BWC) on the issue.
In a letter dated January 4, 2000,[5] the BWC agreed with the pro-
rata payment of the 13th month pay as proposed by Honda.

The matter was brought before the Grievance Machinery in
accordance with the parties existing CBA but when the issue
remained unresolved, it was submitted for voluntary arbitration. In
his decision[6] dated May 2, 2000, Voluntary Arbitrator
Herminigildo C. Javen invalidated Hondas computation, to wit:

WHEREFORE, in view of all foregoing premises being duly
considered and evaluated, it is hereby ruled that the Companys
implementation of pro-rated 13th Month pay, 14th Month pay and
Financial Assistance [is] invalid. The Company is thus ordered to
compute each provision in full month basic pay and pay the
amounts in question within ten (10) days after this Decision shall
have become final and executory.

The three (3) days Suspension of the twenty one (21) employees is
hereby affirmed.

SO ORDERED.[7]

Hondas Motion for Partial Reconsideration was denied in a
resolution dated May 22, 2000. Thus, a petition was filed with the
Court of Appeals, however, the petition was dismissed for lack of
merit.

Hence, the instant petition for review on the sole issue of whether
the pro-rated computation of the 13th month pay and the other
bonuses in question is valid and lawful.

The petition lacks merit.

A collective bargaining agreement refers to the negotiated contract
between a legitimate labor organization and the employer
concerning wages, hours of work and all other terms and
conditions of employment in a bargaining unit.[8] As in all
contracts, the parties in a CBA may establish such stipulations,
clauses, terms and conditions as they may deem convenient
provided these are not contrary to law, morals, good customs,
public order or public policy.[9] Thus, where the CBA is clear and
unambiguous, it becomes the law between the parties and
compliance therewith is mandated by the express policy of the
law.[10]

In some instances, however, the provisions of a CBA may become
contentious, as in this case. Honda wanted to implement a pro-
rated computation of the benefits based on the no work, no pay
rule. According to the company, the phrase present practice as
mentioned in the CBA refers to the manner and requisites with
respect to the payment of the bonuses, i.e., 50% to be given in
May and the other 50% in December of each year. Respondent
union, however, insists that the CBA provisions relating to the
implementation of the 13th month pay necessarily relate to the
computation of the same.

We agree with the findings of the arbitrator that the assailed CBA
provisions are far from being unequivocal. A cursory reading of the
provisions will show that they did not state categorically whether
the computation of the 13th month pay, 14th month pay and the
financial assistance would be based on one full months basic salary
of the employees, or pro-rated based on the compensation actually
received. The arbitrator thus properly resolved the ambiguity in
favor of labor as mandated by Article 1702 of the Civil Code.[11]
The Court of Appeals affirmed the arbitrators finding and added
that the computation of the 13th month pay should be based on
the length of service and not on the actual wage earned by the
worker.

We uphold the rulings of the arbitrator and the Court of Appeals.
Factual findings of labor officials, who are deemed to have acquired
expertise in matters within their respective jurisdiction, are
generally accorded not only respect but even finality, and bind us
when supported by substantial evidence. It is not our function to
assess and evaluate the evidence all over again, particularly where
the findings of both the arbiter and the Court of Appeals
coincide.[12]

Presidential Decree No. 851, otherwise known as the 13th Month
Pay Law, which required all employers to pay their employees a
13th month pay, was issued to protect the level of real wages from
the ravages of worldwide inflation. It was enacted on December
16, 1975 after it was noted that there had been no increase in the
minimum wage since 1970 and the Christmas season was an
opportune time for society to show its concern for the plight of the
working masses so that they may properly celebrate Christmas and
New Year.[13]

Under the Revised Guidelines on the Implementation of the 13th
month pay issued on November 16, 1987, the salary ceiling of
P1,000.00 under P.D. No. 851 was removed. It further provided
that the minimum 13th month pay required by law shall not be less
than one-twelfth (1/12) of the total basic salary earned by an
employee within a calendar year. The guidelines pertinently
provides:

The basic salary of an employee for the purpose of computing the
13th month pay shall include all remunerations or earnings paid by
his employer for services rendered but does not include allowances
and monetary benefits which are not considered or integrated as
part of the regular or basic salary, such as the cash equivalent of
unused vacation and sick leave credits, overtime premium, night
differential and holiday pay, and cost-of-living allowances.[14]
(Emphasis supplied)

For employees receiving regular wage, we have interpreted basic
salary to mean, not the amount actually received by an employee,
but 1/12 of their standard monthly wage multiplied by their length
of service within a given calendar year. Thus, we exclude from the
computation of basic salary payments for sick, vacation and
maternity leaves, night differentials, regular holiday pay and
premiums for work done on rest days and special holidays.[15] In
Hagonoy Rural Bank v. NLRC,[16] St. Michael Academy v.
NLRC,[17] Consolidated Food Corporation v. NLRC,[18] and similar
cases, the 13th month pay due an employee was computed based
on the employees basic monthly wage multiplied by the number of
months worked in a calendar year prior to separation from
employment.

The revised guidelines also provided for a pro-ration of this benefit
only in cases of resignation or separation from work. As the rules
state, under these circumstances, an employee is entitled to a pay
in proportion to the length of time he worked during the year,
reckoned from the time he started working during the calendar
year.[19] The Court of Appeals thus held that:

Considering the foregoing, the computation of the 13th month pay
should be based on the length of service and not on the actual
wage earned by the worker. In the present case, there being no
gap in the service of the workers during the calendar year in
question, the computation of the 13th month pay should not be
pro-rated but should be given in full.[20] (Emphasis supplied)

More importantly, it has not been refuted that Honda has not
implemented any pro-rating of the 13th month pay before the
instant case. Honda did not adduce evidence to show that the 13th
month, 14th month and financial assistance benefits were
previously subject to deductions or pro-rating or that these were
dependent upon the companys financial standing. As held by the
Voluntary Arbitrator:

The Company (Honda) explicitly accepted that it was the strike
held that prompt[ed] them to adopt a pro-rata computation, aside
[from] being in [a] state of rehabilitation due to 227M substantial
losses in 1997, 114M in 1998 and 215M lost of sales in 1999 due to
strike. This is an implicit acceptance that prior to the strike, a full
month basic pay computation was the present practice intended
to be maintained in the CBA.[21]

The memorandum dated November 22, 1999 which Honda issued
shows that it was the first time a pro-rating scheme was to be
implemented in the company. It was a convenient coincidence for
the company that the work stoppage held by the employees lasted
for thirty-one (31) days or exactly one month. This enabled them
to devise a formula using 11/12 of the total annual salary as base
amount for computation instead of the entire amount for a 12-
month period.

That a full month payment of the 13th month pay is the
established practice at Honda is further bolstered by the affidavits
executed by Feliteo Bautista and Edgardo Cruzada. Both attested
that when they were absent from work due to motorcycle
accidents, and after they have exhausted all their leave credits and
were no longer receiving their monthly salary from Honda, they
still received the full amount of their 13th month, 14th month and
financial assistance pay.[22]

The case of Davao Fruits Corporation v. Associated Labor Unions,
et al.[23] presented an example of a voluntary act of the employer
that has ripened into a company practice. In that case, the
employer, from 1975 to 1981, freely and continuously included in
the computation of the 13th month pay those items that were
expressly excluded by the law. We have held that this act, which
was favorable to the employees though not conforming to law, has
ripened into a practice and therefore can no longer be withdrawn,
reduced, diminished, discontinued or eliminated. Furthermore, in
Sevilla Trading Company v. Semana,[24] we stated:

With regard to the length of time the company practice should
have been exercised to constitute voluntary employer practice
which cannot be unilaterally withdrawn by the employer, we hold
that jurisprudence has not laid down any rule requiring a specific
minimum number of years. In the above quoted case of Davao
Fruits Corporation vs. Associated Labor Unions, the company
practice lasted for six (6) years. In another case, Davao
Integrated Port Stevedoring Services vs. Abarquez, the employer,
for three (3) years and nine (9) months, approved the
commutation to cash of the unenjoyed portion of the sick leave
with pay benefits of its intermittent workers. While in Tiangco vs.
Leogardo, Jr. the employer carried on the practice of giving a fixed
monthly emergency allowance from November 1976 to February
1980, or three (3) years and four (4) months. In all these cases,
this Court held that the grant of these benefits has ripened into
company practice or policy which cannot be peremptorily
withdrawn. In the case at bar, petitioner Sevilla Trading kept the
practice of including non-basic benefits such as paid leaves for
unused sick leave and vacation leave in the computation of their
13th-month pay for at least two (2) years. This, we rule likewise
constitutes voluntary employer practice which cannot be
unilaterally withdrawn by the employer without violating Art. 100
of the Labor Code.[25] (Emphasis supplied)

Lastly, the foregoing interpretation of law and jurisprudence is
more in keeping with the underlying principle for the grant of this
benefit. It is primarily given to alleviate the plight of workers and
to help them cope with the exorbitant increases in the cost of
living. To allow the pro-ration of the 13th month pay in this case is
to undermine the wisdom behind the law and the mandate that the
workingmans welfare should be the primordial and paramount
consideration.[26] What is more, the factual milieu of this case is
such that to rule otherwise inevitably results to dissuasion, if not a
deterrent, for workers from the free exercise of their constitutional
rights to self-organization and to strike in accordance with law.[27]

WHEREFORE, the instant petition is DENIED. The decision and the
resolution of the Court of Appeals dated September 14, 2000 and
October 18, 2000, respectively, in CA-G.R. SP No. 59052, affirming
the decision rendered by the Voluntary Arbitrator on May 2, 2000,
are hereby AFFIRMED in toto.

SO ORDERED.

21). JPL Marketing VS CA

This is a petition for review of the Decision[1] of the Court of
Appeals in CA-G.R. SP No. 62631 dated 03 October 2001 and its
Resolution[2] 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 Bicol
Region, Isabela, and Cagayan Valley effective 15 August 1996.[3]
They were advised to wait for further notice as they would be
transferred to other clients. However, on 17 October 1996,[4]
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 payment for
moral damages.[5] 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 the complaints for lack of merit.[6]
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 unilaterally severed their relation
with JPL, and cannot charge JPL with illegal dismissal.[7] The
Labor Arbiter held that it was incumbent upon private respondents
to wait until they were reassigned by JPL, and if after six months
they were not reassigned, they can file an action for separation pay
but not for illegal dismissal.[8] The claims for 13th month pay and
service incentive leave pay was also denied since private
respondents were paid way above the applicable minimum wage
during their employment.[9]



Private respondents appealed to the NLRC. In its
Resolution,[10] 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 may be reassigned it was unable to do so, and hence
they are entitled to separation pay.[11] 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;



2. Service Incentive Leave pay, and 13th month pay,
computed as in No.1 hereof.[12]





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 was no illegal
dismissal, it justified the award of separation pay on the grounds of
equity and social justice.[13] 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 month pay.[14] 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 denied on 25 January 2002.[15]



In the instant petition for review, JPL claims that the Court of
Appeals committed reversible error in rendering the assailed
Decision and Resolution.[16] 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 operation,[17] or disease of an
employee whose continued employment is prejudicial to him
or co-employees,[18] or illegal dismissal of an employee but
reinstatement is no longer feasible.[19] Meanwhile, an employee
who voluntarily resigns is not entitled to separation unless
stipulated in the employment contract, or the collective bargaining
agreement, or is sanctioned by established practice or policy of the
employer.[20] 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
to JPL so as to reward them with payment of separation pay.[21]



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 termination of CMCs contract,
and not up to the finality of the 27 July 2000 resolution of the
NLRC.[22] To compute separation pay, 13th month pay, and
service incentive leave pay up to 27 July 2000 would negate the
findings of both the Court of Appeals and the NLRC that private
respondents were not unlawfully terminated.[23] 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 to the same. Thus, service incentive
leave pay should be counted from the second year of service.[24]



On the other hand, private respondents maintain that they
are entitled to the benefits being claimed as per the ruling of this
Court in Serrano v. NLRC, et al.[25] They claim that their
dismissal, while not illegal, was tainted with bad faith.[26] They
allege that they were deprived of due process because the notice of
termination was sent to them only two (2) days before the actual
termination.[27] Likewise, the most that JPL offered to them by
way of settlement was the payment of separation pay of seven (7)
days for every year of service.[28]



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 transferred to other clients.[29]
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 good, much
less tender their resignation.[30] 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 of separation pay.[31]



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 dismissed.[32] 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 was dismissed
by the employer.[33] 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 so-called 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 thereof.[34]



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 notice from JPL.[35] 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 Court of
Appeals relied on the cases[36] 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.



In addition, the doctrine enunciated in the case of
Serrano[37] cited by private respondents has already been
abandoned by our ruling in Agabon v. National Labor Relations
Commission.[38] 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 or its equivalent are not
covered by said law.[39] 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 than 1/12 of the basic salary but shall not include cash
and stock dividends, cost-of-living-allowances and all other
allowances regularly enjoyed by the employee, as well as non-
monetary benefits.[40]



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 the
date the employee started working.[41] The Court has held in
several instances that service incentive leave is clearly
demandable after one year of service.[42]



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 employer. Justitia
nemini neganda est (Justice is to be denied to none).[43]



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.


22). Heavylift Manila VS CA

Before us is a petition for certiorari assailing the Resolution[1]
dated December 18, 2001 of the Court of Appeals in CA-G.R. SP
No. 68072 denying the petition for failure to comply with
procedural rules, as well as the Decision[2] dated August 30, 2001
and the Resolution[3] 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:

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 co-employees
for which she was constantly warned to improve. Petitioners aver
that Galays attitude resulted to the decline in the companys
efficiency and productivity. Petitioners presented a letter[4] dated
February 23, 1999 and a notice of termination[5] dated August 16,
1999.

The Labor Arbiter found that Galay was illegally terminated
for petitioners failure to prove that she violated any company
regulation, and for failure to give the proper notice as required by
law.[6]

Petitioner appealed to the NLRC. The latter, however,
denied the appeal for lack of merit and affirmed the decision of the
Labor Arbiter.[7] A motion for reconsideration was subsequently
filed but which was likewise denied.[8]

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 verify the petition; and certify
against forum-shopping. For these procedural lapses, the petition
was dismissed.[9] 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, and because
the attached board resolution was issued after the petition was
filed.[10]

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 security of
tenure is absolute.[11]

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.

The Rules of Court require that the petition for certiorari
shall be verified,[12] 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 non-forum shopping signed by the principal.[13]

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 ventilate their cases on the merits.
In that way, the ends of justice would be better served.[14]

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 matter of speculation, and that the
pleading is filed in good faith.[15]

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 Court does allow substantial
compliance.[16]

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.

Thus, mindful that the greater interest of justice would be
served if the petition is adjudicated on its merits,[17] 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 peace of the company is affected. Thus, an employees
attitude problem is a valid ground for his termination.[18] 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 ground of attitude.[19] 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 her negative attitude
does not amount to admission. Technical rules of procedure are
not binding in labor cases.[20] Besides, the burden of proof is not
on the employee but on the employer who must affirmatively show
adequate evidence that the dismissal was for justifiable cause.[21]

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
notice which informs the employee of the employers decision to
dismiss him.[22] Additionally, the letter never gave respondent
Galay an opportunity to explain herself, hence denying her due
process.

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.